Television Management Midterm

Other names for broadcast and cable

Traditional TV, linear TV, legacy TV

Netflix is

8.8% of all TV watching

Broadcast business model

All major channels are free; supported by advertising

Broadcast demographics/generational gap

Older people watch more linear TV than younger people

Audience fragmentation

Intense competition for eyeballs because digital platforms create markets of abundance → infinite channels available, but the costs of program storage and distribution get so high

% of TV that is streaming

47.3%

Some distributors, like Sony:

ONLY distribute, and they don’t produce their own programming

Production companies (studios) create content and own all rights; TV networks pay the studios so they can distribute the content to their viewers in a

LICENSE FEE

Deficit financing

A production company will sell the distribution rights to a network for 80% of the license fee; whoever owns the content takes the fall if the project cannot market itself in different distribution windows to recoup its production costs

Syndication

Selling and reselling television content to distributors in exchange for annual revenue

“Friends” example of syndication

The show was originally sold to NBC from Warner Bros; 1M per episode became 10M per episode → syndication royalties are 2%, and each member of the cast gets 20M

5 major broadcast channels

NBC, FOX, CW, CBS, ABC

What are the functions of these major channels?

They serve as motherships for local affiliates for free, in exchange that these channels bring in more viewers that can raise the cost of advertising

What do local affiliates get out of this deal?

A free means by which to exist AND their own local ads that become their revenue.

2 major features of broadcast

1. FREE and supported by advertising

2. Single feed, so not on-demand

Concerns for broadcast

As streaming options proliferate, broadcast will have less and less viewers. These viewers are who supports advertising, so they will have no business

Broadcast drop across all viewers and 18-49 year-olds

40-50% decline in 10 years, 83.54% drop in 18-49 y/os

Why is broadcast still out there?

They make most of their money from sports (ESPN) and once-a-year awards shows

Appeal of broadcast

Advertisers will still pay a premium for a large, live audience

Kinds of shows that broadcast needs

High volume, habit forming, family friendly, usually procedurals, broad appeal

Ad relations in broadcast

Ad sales is based on a system of predictions in which the network sells based on how many predicted viewers they’ll have; if they underperform, they have to show the ad for free until they reach that predicted amount of viewers.

Lead in effect

A show that comes in after a popular show may have more eyeballs from the first show

Why did ABC keep Grey’s Anatomy even though actor fees didn’t make them money for a while?

Because Grey’s anatomy had the lead-in effect and potential for syndication, which is only possible for networks if you have a large number of episodes to syndicate

In 2024, Netflix spent

16 billion on programming and got 12K new titles with 500+ originals

Streaming has been a mostly

money losing business until now

Why might streaming not turn a profit in 2025?

Audience fragmentation, password sharing, production costs, subscription costs too low, pirating, lack of ad support

What is most popular on streaming?

30 min comedies, self contained procedurals, long-running shows for kids and with broad appeal

Lean back TV

you don’t need a lot of brainpower to watch the show

Why would a streaming platform invest in its own originals?

IP access and exploitation, branding, awards, OWNERSHIP

Cable is built on

branded channels

Cable

television that you pay for, either delivered to your house or through satellite

Why does cable have a dual revenue stream?

Subscriptions AND ad costs

Why are people cutting the cord?

WAY too expensive, cheaper and more efficient alternatives

Top rated cable channels

FOX, ESPN, MSNBC, ION

Why is cable so expensive?

ESPN: spends 2.7B/year on football alone

Benefit of cable for ad sales

target demos are crucial, and cable can more easily predict who likes what based on watch patterns

What does FAST TV stand for?

free, ad-supported, streaming television

Examples of FAST TV

Roku, Tubi

Tubi’s model

no sub required and fewer ads than cable - acquire cheap older shows and movies and support them with ads; not yet profitable

Netflix’s brand

personalization

Netflix recommendation engine

website adapts to the individual taste of the user → this is how 80% of shows are chosen. uses “implicit ratings” which are more valuable than demos because they split viewers into taste communities that focus solely on your interest in TV

Importance of thumbnails

82% of user focus while browsing; we spend 1.8 seconds choosing a title, and thumbnails change based on what Netflix thinks you’ll like

social proof

looking at others for permission to try things

Netflix global strategies

find hits in 1 country, then deciders to move it to other countries: a) hiring local programming execs in each country b) dub every program c) deep data targets viewers d) create new deal types to own rights to the shows they produce

Cost Plus financing

Netflix pays 100% budget + 30% profit in exchange for total ownership to the rights

Why has Netflix started doing ad tiers?

Because they aren’t getting a lot of new subscribers, and many of the ones they do have are price sensitive

How can TV best monetize content with ads?

Single sponsorships, product placement, product integration

Single sponsorship

one sponsor buys out the whole show and sometimes has creative control

Product placement

advertiser supplies product on set, raising intent to buy; can be virtual

Product integration

sponsorship of a show element, integrated into the storyline and narrative of the show (organic or inorganic)