Broadcasting, Cable, the Internet and Beyond
Chapter 5
Quick Facts
 Network share of audience (prime-time) 1975: 90%
 Network share of audience (prime-time) 2002: 47%
 Number of TV networks, 1975: 3
 Number of TV networks, 2002: 7
 Number of homes with one or more TVs: 106,641,910
 Percent of TV homes with more than 100 cable
channels: 40 (est. 2002)
 Percent of TV homes with HBO: 30 (1999)
Broadcasting, Cable, the Internet and Beyond
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Transition sums up television today
 Television is moving from analog to digital, highdefinition
 There are more television networks and cable networks
today that 10 years ago
 Television competes with home video, video games, and
the Internet for viewers
 About 70% of homes subscribe to cable television
 About 15% of homes subscribe to DBS
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Types of Television Stations
TV stations by type
VHF Educational
7%
UHF Educational
15%
UHF Commercial
44%
UHF Commercial
VHF Commercial
UHF Educational
VHF Educational
VHF Commercial
34%
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Types of Television Stations
VHF - Channels 2 - 13 - about 570 stations
UHF - Channels 14 and above - 750 stations
DTV - new allocation for digital television
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Commercial versus Noncommercial
 Commercial TV - 78% of all television stations are
commercial.
Commercial stations program information and entertainment in
order to attract an audience.
Stations sell airtime to advertisers based on how large the
viewing audience is.
 Noncommercial TV - 22% stations are commercial free
Most are affiliated with PBS or with a college or educational
institution
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Network Television - The Big 4
 Big Three - started originally as radio networks
NBC - National Broadcasting Company
CBS - Columbia Broadcasting System
ABC - American Broadcasting Company
 Fox Broadcasting Company - started in 1986 by Rupert
Murdoch
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Television Networks - The New Networks
 UPN - United Paramount Network
Started 1995
Star Trek and WWE Smackdown
 WB - Warner Brothers
Started 1995
Buffy, 7th Heaven and Smallville
 Pax TV Started 1998
Programming based on family values
Broadcasting, Cable, the Internet and Beyond
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Network Television (continued)
 The 4 major networks (ABC, CBS, NBC and FOX) have
the majority of television viewers
About 47% of all television viewers watch these four networks
 New networks such as UPN, WB, and Pax have smaller
audiences.
They tend to program less time than the big 4. Viewership is
much smaller, too
Broadcasting, Cable, the Internet and Beyond
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Television is a business comprised of two
separate business models:
 Network Television develops programs and distributes
them to be shown by local affiliates.
 Networks sell time within the programming.
 Local Television Stations schedule programs when
networks do not program.
Local news, syndicated shows and network reruns are staple
programming.
Broadcasting, Cable, the Internet and Beyond
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Local Television stations rated by profitability
 Network owned and operated stations (O&Os) are most
profitable (***** VHF, **** UHF)
 “Big Four” network affiliates (**** VHF, *** UHF)
 WB - UPN - Pax affiliates (*** VHF, ** UHF)
 Independent stations (* VHF, * UHF)
 Low- power TV (1/2* VHF, 1/2* UHF)
(more stars the better)
Broadcasting, Cable, the Internet and Beyond
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Lower-Power Television
 This service was created originally to promote minority
ownership in 1982.
 Stations are limited to
100 watts VHF
1000 watts on UHF
 About 500 LPTV are in operation, mainly in rural areas
Alaska has the most LPTV stations
 Special Interest and minority programming are likely
Broadcasting, Cable, the Internet and Beyond
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TV Station Ownership
 Television owners tend to be large corporations
 Station ownership was limited before the
Telecommunications Act of 1996
 In 2003, Group owners can own as many stations as
they wants as long as the total number of U.S.
Total TV homes reached by those stations cannot exceed about
35% (actually the FCC discounts penetration of some UHF stations)
Broadcasting, Cable, the Internet and Beyond
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TV's TOP 25 STATION GROUP OWNERS
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
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Rank Group
# of Stations
1
Viacom
40
2
Fox TV
34
3
Paxson
68
4
NBC
24
5
Tribune
23
6
ABC
10
7
Univision
32
8
Gannett
22
9
Hearst-Argyle
34
10 Trinity
23
Source: Broadcasting and Cable
Percent of TV Households
39.50%
38.10%
33.70%
30.40%
28.70%
23.80%
21.00%
17.50%
15.90%
15.80%
Broadcasting, Cable, the Internet and Beyond
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Public Television
 PBS programs to more than 350 stations in the U.S., and
U.S. territories and protectorates
 Watched by nearly 98 million homes weekly
PBS has a loyal following
Typically PBS ratings hover around 2% of homes in the US
Viewers have high incomes and are well educated
 PBS garners funding from local television stations, from
underwriting, and through federal grants
 PBS has been an early advocate of digital television
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Cable Television
 Cable is a strong competitor to over-the-air television
 Cable revenues exceed $48 billion (2003)
 Cable systems growth
Small 12 channel systems in the 1960s were the norm
1970s, 35 channel systems typical
2003, most people receive nearly 90 different channels
 Basic cable services include local channels and
advertiser-supported program services
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Cable Television Program Services
 Current ‘Must-Carry’ / Retransmission Consent Rules
Broadcasters could choose either ‘must carry’ - cable operators
are obligated to carry local station
Retransmission consent - need to negotiate carriage with cable
company
Today, most cable operators continue to carry programming of
TV stations in their service areas
 Major nets made programming available to cable in
return for channel space for new services
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Cable Television Program Services
 USA, Lifetime, CNN and ESPN - examples of advertiser
supported basic cable services
 Pay services such as HBO and Showtime - commercial
free services.
Nearly one of three cable homes subscribes to HBO
 Electronic Program Guides (EPGs), local government
channels - examples of specialty services
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Cable Terminology
 Homes passed - about 98 of the 105 million homes in
the U.S. are capable of subscribing to cable
 Households that subscribe to services like HBO are
called pay households
 Multipay households subscribe to more than one pay
service
 Systems with addressable converters allow
subscribers to pick movies and events on demand
(PPV)
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Chapter 5
Cable Ownership
 Multiple System Operators (MSOs) tend to be large
corporations.
Rank
MSOs
subscription households
1
2
3
4
5
Comcast*
Time Warner Cable
Charter Comm
Cox Comm
Adelphia
21,757,300
12,847,000
6,783,900
6,250,000
5,453,000
* (Comcast is now merged with AT&T Cable)
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Cable Economics
 High up-front capitalization (cost to wire each home)
 Tier system provides additional revenues
 Local systems now sell local advertising
 Additional services such as high speed Internet access
provides additional revenue streams
 Cable television systems are sold on the basis of cost
per subscriber.
Broadcasting, Cable, the Internet and Beyond
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Direct Broadcasting Satellites (DBS)
 Started in 1994, DBS has 1 in 5 television viewers
 Two companies provide DBS services
DirecTV
The Dish Network
 Broadcasts from powerful KU band satellites
 Sells packages of services
 Generally cheaper than cable television
 Few DBS markets have local television channels
included
Broadcasting, Cable, the Internet and Beyond
Chapter 5
Television Station Organization
Television stations generally have 5 divisions
Sales - sells time to advertisers
Engineering - keeps the station operating
Business - responsible for collecting money and
paying the bills
Programming - develops programming for station
News - produces local newscasts and informational
programming
Broadcasting, Cable, the Internet and Beyond
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Cable System Organization
 Departments of the cable franchise
Technology
Marketing
Customer service
Broadcasting, Cable, the Internet and Beyond
Chapter 5