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

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

Radio Competition 13,500 AM/FM stations Top 10 groups own 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

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)

Radio and Consolidation Competition Diversity Localism

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?

Markets…

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

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

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

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

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

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

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

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

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

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

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

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

Markets

TV Production: TV Networks: Local Stations: 35 Cable: Pay Cable:

TV Production: TV Networks: Cable Systems: Cable: Pay Cable: 12.8M Subscribers Cable: Pay Cable:

TV Production: TV Networks: Local Stations: 10 Cable:

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

The New Fox News

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)