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Evolution of Radio and Television Networks

Discover the history and consolidation of radio stations, the impact of telecommunications acts, network competition, and TV production markets. Learn about ad revenues, product placement, and the big TV networks.

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Evolution of Radio and Television Networks

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  1. Some History • Radio signals the beginning of…? • Broadcasting • Wireless communication. • The end of…? • Records • Able to hear free music • Sound Familiar???

  2. Industrialization • The goal: one point to many • 1919, the formation of RCA • Government created monopolies: • in radio for GE and Westinghouse • in telephone for AT&T • Nov. 2 1920: Elections • KDKA Pittsburgh • 1st Commercial station

  3. Radio Competition • 13,500 AM/FM stations • 2,000 educational stations • Top 10 groups own • 2,330 stations (17%) • Top 20 groups own • 2,814 (21%) • Not about numbers owned, its… • Control in valuable geographical markets

  4. Largest Geographical Markets • For 2010: • Los Angeles ($1.1 billion) • New York ($755 million) • Chicago ($555 million) • Dallas-Ft. Worth ($416 million) • Atlanta ($398.5 million)

  5. Radio and Consolidation • Consolidation= • Competition • Diversity • Localism

  6. Laying Out Some Effects • Since the Telecommunications Act of 1996 • Formed large radio chains • playlists have narrowed • advertising rates have nearly doubled • Few locally owned, locally serving stations • 4 or fewer groups control 70% of the ad revenue • Music= • Promotion? • Or Ad Sales?

  7. Markets…

  8. Da Players • 840 stations?, $2.7B ($6.8B) • 240 international stations • 130 stations, $1.9B ($14.5B) • 84 stations, $500M ($12B) • 277 stations, $400M ($36B) • 313 stations, $326M (=)

  9. Some Money/Property Thangs • Versus: • ad based vs. subscription based • localism vs. nationalism • censored vs. uncensored • “Listens” model as opposed to sales/rating • Terrestrial=Free promotion for label and performer • Terrestrial pays blanket license for musical work to ASCAP or BMI • The musical work as public performance • Satellite and Internet radio pay every time a song is played • Both the musical work AND sound recordings • SoundExchange collects and distributes the digital public performance royalty

  10. Cont’d • A “non profit” • Board members from… • Pandora= 2.91 cents/hr/listener • Sirius XM= 1.6 cents/hr/listener • Clear Channel= 0 cents

  11. History… • Television built upon?... • Networking • Programming • Advertising • Technologies • Infrastructure • Commercially based model

  12. Networks Begin • 1946, Dumont first commercial network • 1947, NBC as first regularly operating network • 1948, CBS and ABC jump in • “Chain Broadcasting”: AT&T lines and microwave relay, reaching west by 50s

  13. Local TV stations remain independent • Independently owned/Franchise content from networks • Early local stations got programming from numerous networks • Eventually, stations would affiliate with one network and carry their prime time programs

  14. Distribution • National Networks • Local Stations/Network Affiliates • Content and Ads • Not owned by network • O&O • Local station owned by network • In largest markets • $$$

  15. Distro Cont’d • Independent • Cable/Satellite • Sometimes pick up local stations • Basic, Pay, Pay Per View • Public Stations • National Broadcast Networks???

  16. Competition • Local level, stations compete for??? • Audiences • Local advertisers • Against? • Cable • Internet • National level, networks compete for??? • Audiences • Advertisers

  17. Competition Cont’d • National networks= • Oligopoly • Local Stations= • Oligopoly • Cable= • Monopoly • Direct TV= • Oligopoly 19.2M subscribers

  18. Ad Revenues • $46.5B (Cable=$85B) • In 2009, Network revenues -7.2% • In 2009, Local Broadcasters -13.8% • Expected a 3% decline in 2011 • Ad revenues -12.9% in 2009

  19. Product Placement • $7B, expect $10B in 2010 ($190M in 1974) • Ad purchase contingent upon product placement, usually a combo fee • Film Placements • Reverse Placements?

  20. Markets

  21. TV Production: • TV Networks: • Local Stations: • 35 • Cable: • Pay Cable:

  22. TV Production: • TV Networks: • Cable Systems: • 12.8M Subscribers • Cable: • Pay Cable:

  23. TV Production: • TV Networks: • Local Stations: • 10 • Cable:

  24. These 3 Corporations Are??? • Vertically integrated? • Horizontally integrated? • Diversified? • Use synergy(ies) to promote/sell its commodities?

  25. The New Fox News

  26. Big 4 (or 5?) TV Networks • Fox Ent. Group ($2.5B/$30B) • CBS ($2B/$14B) • NBC ($1.9B/$157B) • ABC ($1.3B/$36B) • The CW ($26.5M?...private)

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