1. Broadcasting, Cable, the Internet and Beyond Chapter 5 Quick Facts zNetwork share of audience (prime-time) 1975: 90% zNetwork share of audience (prime-time) 2002: 47% zNumber of TV networks, 1975: 3 zNumber of TV networks, 2002: 7 zNumber of homes with one or more TVs: 106,641,910 zPercent of TV homes with more than 100 cable channels: 40 (est. 2002) zPercent of TV homes with HBO: 30 (1999)

2. Broadcasting, Cable, the Internet and Beyond Chapter 5 Transition sums up television today zTelevision is moving from analog to digital, high- definition zThere are more television networks and cable networks today that 10 years ago zTelevision competes with home video, video games, and the Internet for viewers zAbout 70% of homes subscribe to cable television zAbout 15% of homes subscribe to DBS

3. Broadcasting, Cable, the Internet and Beyond Chapter 5 Types of Television Stations

4. Broadcasting, Cable, the Internet and Beyond Chapter 5 Types of Television Stations zVHF - Channels 2 - 13 - about 570 stations zUHF - Channels 14 and above - 750 stations zDTV - new allocation for digital television

5. Broadcasting, Cable, the Internet and Beyond Chapter 5 Commercial versus Noncommercial zCommercial TV - 78% of all television stations are commercial. yCommercial stations program information and entertainment in order to attract an audience. yStations sell airtime to advertisers based on how large the viewing audience is. zNoncommercial TV - 22% stations are commercial free yMost are affiliated with PBS or with a college or educational institution

6. Broadcasting, Cable, the Internet and Beyond Chapter 5 zNetwork Television - The Big 4 zBig Three - started originally as radio networks yNBC - National Broadcasting Company yCBS - Columbia Broadcasting System yABC - American Broadcasting Company zFox Broadcasting Company - started in 1986 by Rupert Murdoch

7. Broadcasting, Cable, the Internet and Beyond Chapter 5 Television Networks - The New Networks zUPN - United Paramount Network yStarted 1995 yStar Trek and WWE Smackdown zWB - Warner Brothers yStarted 1995 yBuffy, 7th Heaven and Smallville zPax TV - yStarted 1998 yProgramming based on family values

8. Broadcasting, Cable, the Internet and Beyond Chapter 5 zNetwork Television (continued) zThe 4 major networks (ABC, CBS, NBC and FOX) have the majority of television viewers yAbout 47% of all television viewers watch these four networks zNew networks such as UPN, WB, and Pax have smaller audiences. yThey tend to program less time than the big 4. Viewership is much smaller, too

9. Broadcasting, Cable, the Internet and Beyond Chapter 5 Television is a business comprised of two separate business models: zNetwork Television develops programs and distributes them to be shown by local affiliates. y Networks sell time within the programming. zLocal Television Stations schedule programs when networks do not program. yLocal news, syndicated shows and network reruns are staple programming.

10. Broadcasting, Cable, the Internet and Beyond Chapter 5 Local Television stations rated by profitability zNetwork owned and operated stations (O&Os) are most profitable ( ***** VHF, **** UHF) z“Big Four” network affiliates ( **** VHF, *** UHF) zWB - UPN - Pax affiliates ( *** VHF, ** UHF) zIndependent stations ( * VHF, * UHF) zLow- power TV ( 1/2 * VHF, 1/2 * UHF) (more stars the better)

11. Broadcasting, Cable, the Internet and Beyond Chapter 5 Lower-Power Television zThis service was created originally to promote minority ownership in 1982. zStations are limited to y100 watts VHF y1000 watts on UHF zAbout 500 LPTV are in operation, mainly in rural areas yAlaska has the most LPTV stations zSpecial Interest and minority programming are likely

12. Broadcasting, Cable, the Internet and Beyond Chapter 5 TV Station Ownership zTelevision owners tend to be large corporations zStation ownership was limited before the Telecommunications Act of 1996 zIn 2003, Group owners can own as many stations as they wants as long as the total number of U.S. yTotal TV homes reached by those stations cannot exceed about 35% (actually the FCC discounts penetration of some UHF stations)

13. Broadcasting, Cable, the Internet and Beyond Chapter 5 TV's TOP 25 STATION GROUP OWNERS Rank Group # of Stations Percent of TV Households z1Viacom4039.50% z2Fox TV3438.10% z3Paxson6833.70% z4NBC2430.40% z5Tribune2328.70% z6ABC1023.80% z7Univision3221.00% z8Gannett2217.50% z9Hearst-Argyle3415.90% z10Trinity2315.80% Source: Broadcasting and Cable

14. Broadcasting, Cable, the Internet and Beyond Chapter 5 Public Television zPBS programs to more than 350 stations in the U.S., and U.S. territories and protectorates zWatched by nearly 98 million homes weekly yPBS has a loyal following yTypically PBS ratings hover around 2% of homes in the US yViewers have high incomes and are well educated zPBS garners funding from local television stations, from underwriting, and through federal grants zPBS has been an early advocate of digital television

15. Broadcasting, Cable, the Internet and Beyond Chapter 5 Cable Television zCable is a strong competitor to over-the-air television zCable revenues exceed $48 billion (2003) zCable systems growth ySmall 12 channel systems in the 1960s were the norm y1970s, 35 channel systems typical y2003, most people receive nearly 90 different channels zBasic cable services include local channels and advertiser-supported program services

16. Broadcasting, Cable, the Internet and Beyond Chapter 5 Cable Television Program Services zCurrent ‘Must-Carry’ / Retransmission Consent Rules yBroadcasters could choose either ‘must carry’ - cable operators are obligated to carry local station yRetransmission consent - need to negotiate carriage with cable company yToday, most cable operators continue to carry programming of TV stations in their service areas zMajor nets made programming available to cable in return for channel space for new services

17. Broadcasting, Cable, the Internet and Beyond Chapter 5 Cable Television Program Services zUSA, Lifetime, CNN and ESPN - examples of advertiser supported basic cable services zPay services such as HBO and Showtime - commercial free services. yNearly one of three cable homes subscribes to HBO zElectronic Program Guides (EPGs), local government channels - examples of specialty services

18. Broadcasting, Cable, the Internet and Beyond Chapter 5 Cable Terminology zHomes passed - about 98 of the 105 million homes in the U.S. are capable of subscribing to cable zHouseholds that subscribe to services like HBO are called pay households zMultipay households subscribe to more than one pay service zSystems with addressable converters allow subscribers to pick movies and events on demand (PPV)

19. Broadcasting, Cable, the Internet and Beyond Chapter 5 Cable Ownership zMultiple System Operators (MSOs) tend to be large corporations.  Rank MSOs subscription households   1Comcast*21,757,300  2Time Warner Cable12,847,000  3Charter Comm6,783,900  4Cox Comm6,250,000  5Adelphia 5,453,000   * (Comcast is now merged with AT&T Cable)

20. Broadcasting, Cable, the Internet and Beyond Chapter 5 Cable Economics zHigh up-front capitalization (cost to wire each home) zTier system provides additional revenues zLocal systems now sell local advertising zAdditional services such as high speed Internet access provides additional revenue streams zCable television systems are sold on the basis of cost per subscriber.

21. Broadcasting, Cable, the Internet and Beyond Chapter 5 Direct Broadcasting Satellites (DBS) zStarted in 1994, DBS has 1 in 5 television viewers zTwo companies provide DBS services yDirecTV yThe Dish Network zBroadcasts from powerful KU band satellites zSells packages of services zGenerally cheaper than cable television zFew DBS markets have local television channels included

22. Broadcasting, Cable, the Internet and Beyond Chapter 5 Television Station Organization zTelevision stations generally have 5 divisions ySales - sells time to advertisers yEngineering - keeps the station operating yBusiness - responsible for collecting money and paying the bills yProgramming - develops programming for station yNews - produces local newscasts and informational programming

23. Broadcasting, Cable, the Internet and Beyond Chapter 5 zCable System Organization zDepartments of the cable franchise yTechnology yMarketing yCustomer service

24. Broadcasting, Cable, the Internet and Beyond Chapter 5