Television Broadcasting
Description
Companies in this industry broadcast television programs to the public. The major US broadcast TV networks, often referred to as the Big Four, are ABC, CBS, Fox, and NBC; leading companies based outside the US include the BBC (UK), NHK World - Japan (Japan), ProSiebenSat1 Media (Germany), and RTL Group (Luxembourg).
Global TV revenues from broadcast advertising, subscriptions, and public funding total some $226 billion, according to Nscreen Media. The highest TV revenue generating countries are the US, Japan, and Germany, according to Yahoo Finance.
In the US the television broadcast industry includes about 2,100 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $60 billion. Both broadcast networks and individual stations are included in the industry. TV cable networks are covered in a separate industry profile.
Broadcast television is also known as terrestrial television (primarily in Europe) or over-the-air television (OTA). The industry doesn't include companies that broadcast primarily on the internet, produce and sell taped TV programs, distribute cable and other pay TV programs, or use TV as a retail outlet.
COMPETITIVE LANDSCAPE
Advertising spending, program popularity, and consumer demographics drive demand. The profitability of individual companies depends on programming mix and efficient operations. Large companies have advantages of economies of scale in production and distribution. Small companies can compete effectively with special programming that attracts a targeted audience. The US industry is highly concentrated: the top 50 companies account for more than 90% of revenue.
TV broadcasters compete for advertiser dollars with a variety of other media, including radio, outdoor display, newspapers, magazines, direct mail, and internet sites. Broadcast television was the dominant method of television delivery until cable television gained prominence in the 1970s; as such, cable is a major competitor for TV viewership.
More recently, internet streaming services from companies such as Amazon and Netflix have emerged as a source of competition, though broadcast networks may also consider such outlets to be a potential partner for distributing their content. (A number of broadcasters also engage in content production, generating additional revenue from licensing and syndication.)
PRODUCTS, OPERATIONS & TECHNOLOGY
Advertising for television air time for national and regional advertising for about 40%, followed by network compensation at 19% and local advertising (15%).
TV stations comprise the majority of companies in the industry. The major commercial TV broadcasting networks -- ABC, CBS, Fox and NBC -- air their programming on hundreds of local, affiliate stations across the country, yet they only own a handful of stations in major markets such as New York, Los Angeles, and Chicago. Such stations are referred to as owned and operated (O&O). A network generally has about 10 to 30 O&O stations.
Outside the top markets, hundreds of affiliate stations use the broadcast network's branding and primarily buy its programming. A large independent broadcast group (not network-owned) often owns multiple affiliate TV stations and, like a national network, achieves advantages of scale in negotiating advertising and programming contracts and in centralizing backoffice operations. For example, Tribune Broadcasting, a major independent broadcast group in the US, has a portfolio of some 40 stations across the country affiliated with all four major networks, plus CW.
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.
Broadcast 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. TV stations sell air time directly to advertisers or to brokers under time brokerage agreements. The broker finds programming and sells advertising slots. Stations attract advertisers' targeted audiences by airing programs that appeal to them. Ad rates generally depend on the size of a station's audience, as measured by independent ratings firms such as Nielsen. Rates are generally higher during early evening -- "prime time" -- when viewership peaks.
Public television is a major component of the TV broadcasting industry. The Public Broadcasting Act of 1967 led to the establishment of the Public Broadcasting Service (PBS) as the national distribution network for public television. Funding for public TV stations comes mainly from the Corporation for Public Broadcasting (CPB) and donations from foundations, companies, and individuals, but many stations also run subtle advertising.
Program sources include local productions and syndicated and network shows. Syndication is a method of delivery of programming to local television stations nationwide. Like network programming, it can be first-run (Jeopardy!, Entertainment Tonight), or it can be re-runs of popular network series (Frasier, The Big Bang Theory). 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.
Global TV revenues from broadcast advertising, subscriptions, and public funding total some $226 billion, according to Nscreen Media. The highest TV revenue generating countries are the US, Japan, and Germany, according to Yahoo Finance.
In the US the television broadcast industry includes about 2,100 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $60 billion. Both broadcast networks and individual stations are included in the industry. TV cable networks are covered in a separate industry profile.
Broadcast television is also known as terrestrial television (primarily in Europe) or over-the-air television (OTA). The industry doesn't include companies that broadcast primarily on the internet, produce and sell taped TV programs, distribute cable and other pay TV programs, or use TV as a retail outlet.
COMPETITIVE LANDSCAPE
Advertising spending, program popularity, and consumer demographics drive demand. The profitability of individual companies depends on programming mix and efficient operations. Large companies have advantages of economies of scale in production and distribution. Small companies can compete effectively with special programming that attracts a targeted audience. The US industry is highly concentrated: the top 50 companies account for more than 90% of revenue.
TV broadcasters compete for advertiser dollars with a variety of other media, including radio, outdoor display, newspapers, magazines, direct mail, and internet sites. Broadcast television was the dominant method of television delivery until cable television gained prominence in the 1970s; as such, cable is a major competitor for TV viewership.
More recently, internet streaming services from companies such as Amazon and Netflix have emerged as a source of competition, though broadcast networks may also consider such outlets to be a potential partner for distributing their content. (A number of broadcasters also engage in content production, generating additional revenue from licensing and syndication.)
PRODUCTS, OPERATIONS & TECHNOLOGY
Advertising for television air time for national and regional advertising for about 40%, followed by network compensation at 19% and local advertising (15%).
TV stations comprise the majority of companies in the industry. The major commercial TV broadcasting networks -- ABC, CBS, Fox and NBC -- air their programming on hundreds of local, affiliate stations across the country, yet they only own a handful of stations in major markets such as New York, Los Angeles, and Chicago. Such stations are referred to as owned and operated (O&O). A network generally has about 10 to 30 O&O stations.
Outside the top markets, hundreds of affiliate stations use the broadcast network's branding and primarily buy its programming. A large independent broadcast group (not network-owned) often owns multiple affiliate TV stations and, like a national network, achieves advantages of scale in negotiating advertising and programming contracts and in centralizing backoffice operations. For example, Tribune Broadcasting, a major independent broadcast group in the US, has a portfolio of some 40 stations across the country affiliated with all four major networks, plus CW.
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.
Broadcast 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. TV stations sell air time directly to advertisers or to brokers under time brokerage agreements. The broker finds programming and sells advertising slots. Stations attract advertisers' targeted audiences by airing programs that appeal to them. Ad rates generally depend on the size of a station's audience, as measured by independent ratings firms such as Nielsen. Rates are generally higher during early evening -- "prime time" -- when viewership peaks.
Public television is a major component of the TV broadcasting industry. The Public Broadcasting Act of 1967 led to the establishment of the Public Broadcasting Service (PBS) as the national distribution network for public television. Funding for public TV stations comes mainly from the Corporation for Public Broadcasting (CPB) and donations from foundations, companies, and individuals, but many stations also run subtle advertising.
Program sources include local productions and syndicated and network shows. Syndication is a method of delivery of programming to local television stations nationwide. Like network programming, it can be first-run (Jeopardy!, Entertainment Tonight), or it can be re-runs of popular network series (Frasier, The Big Bang Theory). 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.
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
Pricing
Currency Rates
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