Part 1

Chpt 6
Commercial Operations
Big Picture
• Part 1 (today’s presentation) will focus on commercial
media and corporate structures in general. A bigpicture approach.
• There are some general business concepts that
could be a little mind boggling, so TAKE GOOD
• The second part (next class) will break down
organizational structure, advertising, subscription fee
• All of the above topics are in the text. Have the
chapter read by NEXT CLASS. You will be expected
to know about these concepts. I will ask you.
Public Service/BBC vs
Commercial Models
• Public service
– Seeks to please
pluralistic tastes free
from commercial
– Revenue from licensing
– The goal is public
service, especially when
it comes to journalism
– Relative monopoly
• Commercial
– Seeks to attract audience
through marketable news
and entertainment
– Revenue from
advertising and/or
subscription fees (for pay
cable and PPV)
– The goal is marketability,
even in the case of
– No monopoly
Do we have a more free
• So since the BBC model is a relative
monopoly and not market driven, does
that mean the market system is better?
• Since we have a number of broadcast
journalism majors, which model do you
think provides better journalism?
Media Concentration
• Traditionally broadcast and cable are seen as
two separate sectors with different
organizational structures.
• True to an extent (see the differences in
organization in text)
• But multiple-system operators (MSOs) and a
trend toward vertical integration concentrates
media ownership into a very small group of
Multiple System Operators
• There were no cable ownership limits in
place until 1992, so cable companies
were able to grow larger and larger
• Throughout the 1990s and 2000’s,
cable companies have been challenging
limits on “horizontal” integration
Vertical vs Horizontal
• What the heck does that mean?
• “Horizontal” and “Vertical” integration are business management
terms describing types of ownership and control.
• Horizontal Integration means when a company takes over
another company in the same industry. Imagine the horizontal
line being companies that do the same thing and companies in
the vertical line are related companies
• So if a big cable operator (like Comcast) buys a smaller one
(like Adelphia) that is considered “horizontal.” If Comcast buys a
production company, that would be considered “vertical”
because it is related but exists in a different part of the
production chain.
Vertical vs Horizontal
• If it helps, think of Coca-Cola
• All of its competitors are horizontally
connected (Pepsi, Snapple etc…)
• The corn-syrup plant that produces its
sweetener, the can manufacturing
company, the shipping business that
gets cans of Coke from Scranton, PA to
Toronto, Canada are all vertical. Get it?
Multiple-System Operators
• We’re back to this again? Yes.
• So what happened is that cable operators were
making more and more money and they were buying
other cable systems.
• Even with some FCC limits, this trend increased in
the 1990s
• Currently, the top 25 MSOs serve 90% of ALL cable
subscribers in the US.
• On top of that, MSOs tend to try to form “clusters.”
Clusters form when multiple cable systems combine
in a geographic area.
Vertical Integration
• This is linkage between program
production, distribution and delivery.
• Huh?
• Think Time Warner.
Time Warner
• Second largest MSO (after Comcast) with over 13
million subscribers
• Time Warner merged with Turner Broadcasting
Systems (TBS) in 1996.
• Current TBS assets include current assets include
CNN,HLN,TBS, Turner Network Television, Cartoon
Network, Adult Swim, Boomerang, NBA TV, TruTV,
Turner Classic Movies, and over-the-air Atlanta
station WPCH-17 (formerly WTBS), and a bunch of
other stuff including movies and video games.
• Time Warner also has partial ownership of CW
• Time Warner and Competitor News Corp
• This is happening across all media
• In radio, for example, some markets have 8
“competing” stations all owned by the same
• In NY, news radio competitors WCBS and 1010
WINS are owned by the same company (CBS Radio,
formally Infinity) which is owned by CBS, which was
split from Viacom, but both are controlled by National
• Plus in 2007 the FCC overturned a “cross-ownership”
ban and allowed broadcasters in the country's top 20
media markets to own a TV or radio station and a
newspaper in the same market.
What this looks like
• Some of this information is a few years old, but the point is the
– Media Channel’s Chart (from about 2000)
– The Nation’s Big 10 (from 2002)
– CJR’s Who Owns What (this is up to date) :
– Common Cause’s Timeline of Media Mergers (up to 2006)
– Well Connected Interactive Map (up to date)
Bill Moyers
• This piece aired in 2007 before cross
ownership ban was lifted:
• This is the part of the class where you
show off your critical thinking skills.