TV Broadcast & Cable Networks
Description
Companies in this industry broadcast television programs for free to the public and for a fee to cable subscribers. In the US, major broadcast TV networks are ABC, NBC, and Paramount, while leading cable networks include ESPN, Fox News, MS NOW, and USA Network. Other leading companies outside US include ITV (UK), Mediaset (Italy), NHK or Japan Broadcasting Corporation (Japan), and RTL Group (Luxembourg).
Global advertising spending in the TV and video advertising market is expected to reach $353.9 billion by the end of 2025.
In the US the TV broadcast and cable network industry includes about 2,800 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $145 billion.
The industry doesn't include companies that broadcast primarily on the internet, produce and sell taped TV programs, distribute cable and other TV programs, or use TV as a retail outlet. TV program production and distribution is covered in a separate industry profile.
COMPETITIVE LANDSCAPE
Business advertising, program popularity, and consumer demographics drive demand. The profitability of individual companies depends on advertising volume, programming mix, and efficient operations. Large companies have advantages of market dominance, often owning the only TV stations in a geographic area. Small companies can compete effectively with special programming that attracts a targeted audience.
The US industry is highly concentrated: the top 50 TV broadcasting companies account for about 90% of TV broadcasting revenue. Top 20 Cable TV accounts for about more than 95%.
TV broadcast and cable networks compete with other media, including magazines, newspapers, radio, and internet services, for consumer attention and advertiser dollars. The industry also competes with other leisure activities, such as movie theaters and live music and sporting events.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major industry product lines television airtime for national and regional advertising, accounting for 40% of the industry's revenue. Other product lines include television air time for network compensation (20%) and television air time for local advertising (15%).
TV stations comprise the majority of industry firms. A national network may own dozens of TV stations and have hundreds of affiliate stations that use the network's branding and primarily buy its programming. A large independent broadcast group (non-network-owned) often owns multiple TV stations and, like a national network, achieves advantages of scale in negotiating advertising and programming contracts and in centralizing back office operations. Broadcast companies are small compared to firms in other industries.
Industry companies produce or acquire TV programs and/or operate TV broadcasting studios and transmission facilities. TV networks and stations provide a variety of programs and sell advertising time ("inventory") to businesses and organizations. Ad sales and audience size are major industry metrics. Stations attract advertisers' targeted audiences by airing programs that appeal to them. A station earns a reputation for the type of programs ("format") it typically broadcasts. TV stations sell air time directly to advertisers or to brokers under time brokerage agreements. The broker finds programming and sells advertising slots. Ad rates generally depend on the size of a station's audience, as measured by independent ratings firms such as Nielsen. Funding for public TV stations comes mainly from the Corporation for Public Broadcasting and donations from foundations, companies, and individuals, but many stations also run subtle advertising.
Program sources include local productions and syndicated and network shows. Stations often produce local news, sports, "talk," and local-interest programs, but may also buy shows from local sources. Stations buy syndicated programs from owners or independent producers or through brokers. TV networks often produce their own shows for distribution to stations they own and for syndication to affiliates or other stations. Syndicated shows are available for cash or for "cash-plus-barter," which includes commercials the syndicator sells.
Cable TV programming typically is "narrowcast," with a limited format, such as mostly news, sports, or education, or a narrowly targeted audience based on viewer demographics, such as youth, Latinos, or women. Cable programming generally goes to third-party cable systems or direct-to-home satellite systems for transmission to consumers. In addition to programming, TV personalities are a major draw for stations, especially during early evening ("prime time"), when the largest number of viewers is watching.
A TV station becomes an affiliate of a national network by signing an exclusive agreement that grants the station the right to air network programs, and allows the network to sell a significant amount of advertising to appear with its programs. The network pays network compensation fees to the TV station for broadcasting network programs and advertising; the station pays an affiliate fee. Affiliation agreements typically cover varying durations of at least three years. Unaffiliated stations may incur higher relative costs to acquire current programs, but don't have to relinquish ad revenue to a network.
Global advertising spending in the TV and video advertising market is expected to reach $353.9 billion by the end of 2025.
In the US the TV broadcast and cable network industry includes about 2,800 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $145 billion.
The industry doesn't include companies that broadcast primarily on the internet, produce and sell taped TV programs, distribute cable and other TV programs, or use TV as a retail outlet. TV program production and distribution is covered in a separate industry profile.
COMPETITIVE LANDSCAPE
Business advertising, program popularity, and consumer demographics drive demand. The profitability of individual companies depends on advertising volume, programming mix, and efficient operations. Large companies have advantages of market dominance, often owning the only TV stations in a geographic area. Small companies can compete effectively with special programming that attracts a targeted audience.
The US industry is highly concentrated: the top 50 TV broadcasting companies account for about 90% of TV broadcasting revenue. Top 20 Cable TV accounts for about more than 95%.
TV broadcast and cable networks compete with other media, including magazines, newspapers, radio, and internet services, for consumer attention and advertiser dollars. The industry also competes with other leisure activities, such as movie theaters and live music and sporting events.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major industry product lines television airtime for national and regional advertising, accounting for 40% of the industry's revenue. Other product lines include television air time for network compensation (20%) and television air time for local advertising (15%).
TV stations comprise the majority of industry firms. A national network may own dozens of TV stations and have hundreds of affiliate stations that use the network's branding and primarily buy its programming. A large independent broadcast group (non-network-owned) often owns multiple TV stations and, like a national network, achieves advantages of scale in negotiating advertising and programming contracts and in centralizing back office operations. Broadcast companies are small compared to firms in other industries.
Industry companies produce or acquire TV programs and/or operate TV broadcasting studios and transmission facilities. TV networks and stations provide a variety of programs and sell advertising time ("inventory") to businesses and organizations. Ad sales and audience size are major industry metrics. Stations attract advertisers' targeted audiences by airing programs that appeal to them. A station earns a reputation for the type of programs ("format") it typically broadcasts. TV stations sell air time directly to advertisers or to brokers under time brokerage agreements. The broker finds programming and sells advertising slots. Ad rates generally depend on the size of a station's audience, as measured by independent ratings firms such as Nielsen. Funding for public TV stations comes mainly from the Corporation for Public Broadcasting and donations from foundations, companies, and individuals, but many stations also run subtle advertising.
Program sources include local productions and syndicated and network shows. Stations often produce local news, sports, "talk," and local-interest programs, but may also buy shows from local sources. Stations buy syndicated programs from owners or independent producers or through brokers. TV networks often produce their own shows for distribution to stations they own and for syndication to affiliates or other stations. Syndicated shows are available for cash or for "cash-plus-barter," which includes commercials the syndicator sells.
Cable TV programming typically is "narrowcast," with a limited format, such as mostly news, sports, or education, or a narrowly targeted audience based on viewer demographics, such as youth, Latinos, or women. Cable programming generally goes to third-party cable systems or direct-to-home satellite systems for transmission to consumers. In addition to programming, TV personalities are a major draw for stations, especially during early evening ("prime time"), when the largest number of viewers is watching.
A TV station becomes an affiliate of a national network by signing an exclusive agreement that grants the station the right to air network programs, and allows the network to sell a significant amount of advertising to appear with its programs. The network pays network compensation fees to the TV station for broadcasting network programs and advertising; the station pays an affiliate fee. Affiliation agreements typically cover varying durations of at least three years. Unaffiliated stations may incur higher relative costs to acquire current programs, but don't have to relinquish ad revenue to a network.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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