Television Broadcasting Stations

SIC 4833

Companies in this industry

Industry report:

This category covers establishments primarily broadcasting visual programs by television to the public, except cable and other pay television services (discussed in SIC 4841: Cable and Other Pay Television Services. Included in this industry are commercial, religious, educational, and other television stations. Also included are establishments primarily engaged in television broadcasting and that produce taped television program materials. Separate establishments primarily engaged in producing taped television program materials are classified in SIC 7812: Motion Picture and Video Tape Production.

Industry Snapshot

According to the U.S. Census Bureau, there were 2,235 establishments primarily broadcasting visual programs by television to the public, except cable and other pay television services in 2008 with industry-wide employment of 126,788 professionals. California led with 269 stations followed by New York with 184 stations, Texas with 183 stations, and Florida with 172 stations.

The industry reported 3,821 television broadcasting stations with annual sales of $61,601.7 million in 2010 with a workforce totaling 150,468 professionals. On average, each television broadcasting station employed 48 professionals that generated about $32.5 million.

During the late 2000s, the television broadcasting industry endured one of the worst economic downturns in recent history. Between the stagnant economy and tightened lending practices, consolidation among the top television broadcasters was slow throughout 2009. In fact, television broadcasting stations newsrooms went through a period in which they shed some of their top anchors. Throughout all the economic uncertainties, the television broadcasting industry also weathered a writer's strike. However, the most significant industry development was the approved merger between Comcast and NBC in January 2011 will likely bring profound changes to the television broadcasting industry in the years to come.

During the early 2000s, the television broadcasting industry was challenged by weak economic conditions that had a negative impact on corporate spending and thus advertising revenues. This decline included the fall of many "dot-com" companies that previously had spent hefty sums on advertising. These conditions were made even worse by the terrorist attacks against the United States on September 11, 2001. While the industry achieved positive growth during most of the 1990s, in 2001 revenues fell for the first time in 10 years, dropping from $44.8 billion in 2000 to $38.9 billion in 2001. In addition to a difficult economic climate, the industry has faced a number of other challenges brought on by new competition, regulatory changes, and technological developments.

In recent years, the major broadcast networks--ABC, CBS, NBC, and Fox --have struggled for the top ratings position. The increased reach of cable television, direct broadcast satellite operators, and even the Internet are eroding audiences for network broadcasts. New federal rules regarding ownership, programming content, and digital transmission continue to reshape the competitive landscape in the 2000s.

In this frenetic atmosphere, the once-bleak outlook of the networks in the early 1990s improved considerably later in the decade. Although they continued to see a drop in audience share from the 1980s, the networks still held a strong position in prime-time ratings and saw increased advertising revenues by the mid-2000s. Beginning in 1995, the major networks gained new syndication revenues resulting from a relaxation of federal regulations. They also began creating their own cable networks, such as ESPN2 and MSNBC, using their considerable production resources. Furthermore, viewing audiences had made it clear that they did not want cable television service that did not include local broadcast network affiliates. Thus, the networks became increasingly concerned with production and programming, as they created a strong role for themselves in the growing system of television delivery and services. Writing for Time, Richard Zoglin commented, "If the network business is thriving, it is as a radically different sort of business. The line between distributors (the networks) and suppliers (outside producers) is being blurred. The networks, given the chance to produce and own their own shows, are acting more like studios, while the studios, afraid of being squeezed out, are trying to become networks."

Organization and Structure

The networks include in their stables both network-owned stations, which are often flagship stations in major media markets, and affiliated stations, independently owned stations that have contractual agreements with a network to broadcast their lines of programming. In December 1996 Variety noted that the merger of Westinghouse with CBS "had no greater impact than on the station side, where both companies had established strong station businesses long before their teaming." At the same time, the acquisition of New World Communications by Fox Televisions Stations Group contributed to the radical changes that took place among station holdings. Fox vaulted from being a medium-sized group to being the largest operation by the end of 1998, with 23 stations (including channels in New York, Los Angeles, Chicago, and Philadelphia) and 35 percent penetration of U.S. television households.

A shake-up in station ownership started in May 1994 when Fox lured twelve stations affiliated with the other networks to its side, including several in major markets. This affiliation switch, the biggest in television history, signaled a significant change in the balance of power between the networks and individual television stations. In Business Week, Tribune Television President Dennis FitzSimons noted that the deal highlighted "the importance of the distribution of programming--something that has been ignored recently. Furthermore, it gives the control back to the stations." Fox's success in these matters subsequently inspired the creation of additional netlets, the United Paramount Network (UPN) and the Warner Brothers (WB) Television Network, which launched in January 1995 with more than 80 percent national coverage.

The leading broadcast networks--ABC, CBS, NBC, and FOX--are also the longest established. In terms of prime-time ratings, ABC was the leading network at the beginning of the 1990s, but by the decade's end it had been overtaken by both NBC and CBS. By 2007, CBS and FOX led the industry in the ratings race, followed by ABC and then NBC. By station ownership, CBS led the industry with 39 stations in 2007. NBC owned 14 stations and had 230 affiliates, and ABC had 225 affiliates and owned 10 stations. ABC was owned by the Walt Disney Co., NBC primarily by General Electric, and CBS was acquired by Viacom in 1999, although the two companies split at the beginning of 2006. All of the major broadcast networks and their parent companies had ownership interests in cable television networks or other media properties.

At the beginning of 2006, media giant Viacom split with CBS, creating the new Viacom Inc. and CBS Corp. The new Viacom concentrates primarily on cable and film through its ownership of BET and MTV networks and Paramount Pictures.

Other industry leaders included Spanish-language Univision (60 stations); Gannett Co. (23 stations); Hearst-Argyle (30 stations); and Trinity Broadcasting (25 stations and 30 affilliates).

Background and Development

The first television networks in America--NBC, ABC, CBS, and DuMont--were actually divisions of major radio networks or subsidiaries of television and radio manufacturers. Recognizing that centralized sales and distribution companies could be more profitable than scattered businesses, networks offered programs to individual stations that the affiliates could not afford to underwrite individually. Advertisers were fond of the network arrangement as well, for it enabled them to reach the entire nation with one commercial contract rather than dozens.

In the early years of television, the networks competed for programs, viewers, and advertisers in much the same manner as they do today. CBS was the recognized leader of the networks by any measure, while a number of other fledgling networks failed to crack the wall separating the leading triumvirate from the rest of the pack. The DuMont Network was the hardiest of the challengers; at one point DuMont had 80 stations under its banner and twice that many part-time affiliate subscribers. The company's financial fortunes fell, however, and ABC plucked a number of the network's chief attractions. By 1955 the company folded; the affiliates it owned became the Metromedia chain of independent stations.

With the outbreak of World War II, England and Germany, America's chief competitors in television technology, halted their research programs. By remaining at peace for two additional years before entering that conflict, by continuing government-sponsored television research even during the war, and by realizing the benefits of advances in electronics that resulted from the war effort, the United States took a major lead in this technology.

The Federal Communications Commission (FCC) then sought nationwide standards guaranteeing that all Americans could enjoy equal access to television and that no single television company, beginning with industry pioneer NBC, could achieve a monopoly. From this point on, much of the government's regulation of the limited available airwave space reflected the dichotomy of television being a public service people were entitled to, as well as big business.

Initially, the high costs of establishing a television station and the paucity of television sets meant that losses far outweighed profits. The popularity of the television increased dramatically in a very short time, however, and industry profits grew every year between 1951 and 1986, at which point growth was stalled. Network growth also was radically affected by the growing pay television industry that, by the early 1990s, established itself as a major rival. The big three broadcast networks had a 91 percent share of the prime-time television audience during the 1978-79 season, which dropped to 75 percent in 1986-87, and further to 61 percent in 1993-94. Part of an overall loss in audience share, however, was credited to the success of Fox Broadcasting, which drew viewers with its coverage of National Football League (NFL) games and strong children's shows.

Competition.
In 1995 cable systems actually experienced a drop in subscribers and reached about 65 percent of television homes. Subscribers balked at price hikes that followed rate deregulation, and some opted for satellite television services. In order to give broadcasters the chance to compete against pay television services and the netlets, the FCC agreed to gradually lift a ban on the syndication of network programming. Previously, networks were wholly dependent on advertisers for their revenue and had access to the airwaves only by permission of the government, whereas cable companies could charge subscribers as well as advertisers. In 1993 the networks gained rights to profit from reruns of their prime-time shows. This triumph for the networks affected the outside producers that made and financed much of the prime-time programming. Permitted to undertake a greater proportion of in-house production of prime-time programming, the networks could now negotiate for more financially rewarding deals with outside producers. By 1995 all such restrictions on network ownership of programming and on their right to syndicate programs were lifted.

Networks War with Nielsen.
With an eye on advertising revenues, the networks found fault with Nielsen Media Research, the company that had long provided the broadcasters and advertisers with viewer ratings. Changes in Nielsen methodology coincided with a reported decline in NFL football ratings, which caused both NBC and Fox to question their validity. CBS also complained about the accuracy of ratings for the CBS Evening News. The networks were concerned that Nielsen's new methods of selecting participants and an increased sample size were skewing the resulting ratings. In December 1996, Fox, CBS, NBC, and ABC joined ranks to criticize the research company by placing ads in media and advertising trade publications that denounced Nielsen's claims of reliability. As Broadcasting and Cable reported, the ads read "Our confidence in Nielsen is DOWN" and "There is a growing disparity between local overnight ratings and national ratings." At the same time, the FCC was asked to investigate Nielsen's services.

The New York Times reported what CBS President Leslie Moonves said about the November, February, and May sweeps system: "On the edge of a technical revolution, we're using a system that belongs to the dinosaurs. It's ludicrous." Due to the fact many stations enhance their sweep month schedules, it was believed there was added potential for skewing sweep numbers.

Nielsen launched a branding campaign in February 2005 to heighten awareness about its purpose and efforts to accurately reflect viewing habits of diverse people. The "Every View Counts" campaign highlighted inclusiveness of diverse people by spotlighting multiracial print ads.

Programming Content Debate.
Another issue that the networks and the cable television industries faced was that of violent programming content. Under pressure from the federal government, CBS, ABC, NBC, and Fox all agreed to place parental advisory labels on violent programming--in order to avoid having a system imposed upon them. The group unveiled its age-based ratings system that was similar to that of the movie industry in December 1996, which labeled programs (with the exception of news) with one of six categories ranging from children's programming to shows for mature audiences: TV-Y, TV-Y7, TV-G, TV-PG, TV-14, and TVM. Viewers saw the appropriate icon in the upper left corner of the television screen at the beginning of the program and, if the program exceeded one hour in length, at the beginning of subsequent hours. On June 4, 1997, television executives met with representatives of the American Medical Association and the National PTA to review the ratings system. Several networks agreed to add V (for violence), S (for sexual content), and L (for language) to the age-based system.

At the same time, the federal government was proceeding with plans to give parents the ability to black out violent programming with a device called the V-chip. Mandated by the White House and Congress in 1996, television manufacturers were waiting for FCC specifications before adding the chip to new television models and designing V-chip converter boxes. By 1999 V-chips were being installed in new television sets, and the broadcast networks were implementing a system that would help parents to select programs based on their content. Many of the major cable networks were also committed to designing their own rating system, although some refused to comply based on First Amendment issues.

During 1999 several major deals were announced that would further consolidate the industry. Viacom announced a $35.9 billion buyout of CBS. NBC announced it would acquire a 32 percent interest in Paxson Communications, which owned or had a significant financial stake in seventy-two television stations, for $415 million. Following its announced merger with Viacom, CBS offered nearly $2.2 billion to acquire Chris-Craft Industries, which operated ten television stations (including stations in New York City and Los Angeles) and owned 50 percent of UPN.

In late 1999 current FCC regulations limited companies from owning stations that reached more than 35 percent of the national television audience. The industry, however, expected the ownership limit to be raised, sooner if not later. For example, NBC could not acquire more than a one-third interest in Paxson under FCC ownership limits, because Paxson-owned stations were already reaching more than 34 percent of television viewers. NBC, however, had an option to acquire up to 49 percent of Paxson after February 1, 2002, if the FCC raised its current ownership limit. By 2004, NBC owned 32 percent of Paxson.

The top four networks experienced declining viewerships from 1997 to 1999 and, for the future, faced the possibility of an explosion of competitors. The advent of digital television will boost channel capacity, making cable networks even more formidable competitors. For the 1999-2000 season, fewer than half of the new network shows were expected to achieve a double-digit share of audience, compared to 1997-98 when 76 percent of the new network shows achieved a 10 or better audience share.

Among the major networks the battle for prime-time ratings continued to be very intense and very close. In the 1998-99 season CBS barely edged NBC for the top spot with a 9.0 household rating and 14.3 percent audience share, compared to NBC's 8.9 household rating and 15.0 percent audience share. ABC ranked third, followed by Fox, WB, and UPN.

The May 2004 sweeps period was ranked as one of the most competitive ratings periods ever. CBS news operations were viewed as making inroads in major news markets. NBC held onto its news leads in many markets and combined newsrooms in the six markets where it also owned Telemundo affiliates. Fox turned out to have a smart strategy for gaining viewers with its local alternatives to network morning news shows.

After rising from $40.0 billion in 1999 to $44.8 billion in 2000, industry revenues fell to $38.9 billion in 2001 in the wake of a sluggish economy that included the fall of dot-com advertisers and overall reductions in corporate spending. The terrorist attacks of September 11, 2001, only made these conditions worse. However, by 2002 conditions began to improve. Standard & Poor's estimated that revenues would reach $40.5 billion that year.

Major developments like the terrorist attacks of September 11, 2001, and the U.S.-led war with Iraq, which began in March 2003, impacted the way broadcast networks delivered news, as well as the costs involved. According to Broadcasting & Cable, a survey conducted by Frank N. Magid Associates revealed that 45 percent of viewers turned to cable news first for the latest information about the war, whereas 22 percent turned first to the so-called "Big Three" networks' evening news broadcasts first. Local TV news came in third, at 20 percent. In addition to lost advertising revenue due to periods of commercial-free coverage, the conflict in Iraq was expected to cost broadcasting networks $30-$40 million. The publication explained that networks had trained "correspondents for combat and for chemical and biological attacks, outfitting them with military-grade gas masks and chemical suits. Nearly every aspect of coverage, from new technology to deployment, has been rehearsed and tested. . . . TV and print journalists are traveling with military units, embedded into military units, and, in some cases, they have the ability to televise their reports live."

Into the 2000s, the industry continued to face many of the same challenges that were evident in the late 1990s. Network broadcasters continued to slowly lose viewers to cable operators offering digital services like video-on-demand and high-speed Internet access. In addition to cable companies, other forms of competition included the Internet, film studios, telephone companies, computer companies, consumer-electronics companies, and publishers.

The top networks continued to buy, sell, and merge divisions of their organizations as they navigated through the same challenges--competition from cable, wireless media, and the Internet. Among concerns to the industry in the late 2000s for networks is seeking further revenue gains from online and wireless ventures, which was relatively small but expected to grow over the next several years. Sales of downloads of popular shows was hoped to be the catalyst for this type of growth.

Industry Consolidation.
Consistent with past trends, consolidation continued to affect the industry. ABC, CBS, and NBC took in more than 40 percent of the advertising revenue for the television broadcast industry during the early 2000s, and they were expected to continue to lead the industry in both television advertising and viewership. The UPN and WB networks merged in 2006 to form the CW network, blending established shows from each network with new programs. In addition to providing programming, the networks also owned television stations. By the early 2000s there were approximately 1,290 individual broadcast stations operating in the United States, up from about 1,200 in 1998. The top twenty-five owners controlled 36 percent of the nation's commercial stations in 1998. However, by 2001 the ten leading owners controlled 23 percent of all stations (up from 19 percent the previous year).

James Gattuso claimed media monopolies should not be the major concern because consumers faced "a bewildering and unprecedented amount of choice." He believed the focus should be on reviewing outdated and unnecessary FCC laws restricting improvements in media markets and technologies.

A trio of USA Today reporters noted that changes in FCC laws would facilitate more media deals. They also noted that more newspaper companies were acquiring stations in their print markets.

Children Now released a study examining the impact of media consolidation among major Los Angeles TV stations, before and after media giants that already owned stations purchased independent stations in the city. One finding reflected that the number of children's shows decreased by almost half (47 percent) during the past five years. That meant there was a drop form eighty-eight programs per week across all stations in 1998 to just forty-seven shows in 2003. Furthermore, the study found that many children's series on stations owned by large media corporations were repeats of shows that also aired on jointly-owned cable channels.

Industry insiders predicted NBC's $14 billion purchase of Universal Studios would make a big difference. The French media giant and former owner, Vivendi, retains a 20 percent in NBC Universal.

Digital Television.
At the close of 1996 the industry moved one step closer to digital transmission of television signals, as the FCC selected a DTV standard. The "Grand Alliance Standard" was adopted, minus specifications regarding picture formats on which the broadcast, computer, and film industries could not agree. Video compression, sound delivery, and transmission of signals were part of the specifications. The commission still needed to determine how long broadcasters could use existing analog channels, how digital channels would be assigned, and if high-definition programming would be required. Although the FCC initially mandated that all television stations be capable of transmitting high-definition television by May 2002, this deadline was not enforced and conversion became voluntary. In addition, some industry analysts indicated that consumer adoption of HDTV, which requires the purchase of relatively expensive television sets, would likely take a great deal of time before it reached a high percentage. By the mid-2000s many broadcasters had begun the transition, and it was announced that the FCC's date to end analog transmission entirely was February 17, 2009. At that point, all television programs would be transmitted in digital format only. An FCC rule adopted on September 11, 2007, eases the transition for cable subscribers, allowing them continued access to local stations, at least until 2012.

Current Conditions

The television broadcasting industry will long remember the 100 day Writers Guild of America (WGA) strike that began in November 2007 and ended in February 2008. "The walkout�proved to be far more economically damaging than the studios had expected, shutting down more than 60 TV shows, hampering ratings and depriving the networks of tens of millions in advertising dollars." While there were mixed reviews of the outcome of the strike, Guild members were satisfied, especially when it came to their involvement with television broadcasts streamed online and their compensation.

As the economy struggled in the late 2000s, ABC, CBS, and NBC networks were trimming their news personnel as revenue and market share declined. Even the top news anchors were't immune from this latest trend. One CBS station in Chicago let one of their top dollar anchors go, and another CBS station in Los Angeles let go two highly recognized anchors and an additional five on-air long time anchors at their station in San Francisco. Elsewhere, another top paid anchor earning $2 million per year at Chicago-based WBBT-TV as well as about 18 others. ABC reported cutting 10 positions in 2008 with another 10 slated for 2009. NBC began cutting its overhead in 2006 with plans of shedding some 700 positions by the end of 2008, 30 in which worked in the newsroom.

In one survey conducted by Clicker found 50 percent of television episodes made their way online within 24 hours after airing, and by the sixth day of airing, 90 percent of television episodes were available online during the 2009-10 broadcast TV season. Based on a total of 4,420 full episodes from 127 various shows across all networks, ABC, FOX, and NBC each offered a little over 90 percent of their shows online, while CBS offered about 88 percent of their shows. Additionally, the survey revealed 60 percent of web-based television episodes were taken offline within three weeks. Since free broadcast is only available online for a limited time, the survey suggested this service may be free for the time being, but for how long?

For 2011, local television revenue was expected to decline 7.9 percent to about $17 billion compared to about $18 billion in 2010, according to one media consultant BIA/Kelsey. "The "more pronounced decrease" in 2011 is due to an "unusually robust political campaign season" Still, the industry was in a much better position compared to both 2008 and much of 2009 when their chief advertisers, the auto industry cut back on their advertising the industry's ad dollars fell 23.7 percent in 2009 before climbing 27.8 percent during the first three-quarters of 2010. In addition, the industry generated $600 million from its digital sources projected to climb to $800 million in 2011. BIA forecast digital revenue to reach $1.2 billion by 2014 and broadcast revenue by the same time totaling $19.2 billion.

As television broadcasters viewers continued to shrink to cable and ad revenue fell as advertisers shifted to the Internet, Fox's focus shifted to its non-owned affiliates for a piece of the pie relating to "transmission fees" from cable and satellite operators that utilize their signals. Although CBS, ABC, and NBC were also in discussions with cable and satellite operators, Joe Flint of the Los Angeles Times wrote "None of the Big Three has yet threatened to drop its local affiliate if it doesn't get the money," unlike FOX in February 2011.

On January 17, 2011, the Federal Communications Commission approved the $30 billion merger of Comcast and NBC Universal. While there were limitations, none were mentioned at the time of the approval. Over the past few years there has been a lot of heated debate over the highly anticipated merger. The industry argued there would be more restrictions on what content consumers can access as well as how they view it, and possible rate increases. More importantly, this merger may lead to further media consolidation in an effort for other players to just keep up with Comcast and NBC that will further limit competition.

In one article published in The Huffington Post in January 2011, Josh Silver questioned President Barack Obama's comment he made during an earlier interview that focused on "media consolidation" while on the campaign trail in 2008 and wrote, "I strongly favor diversity of ownership of outlets and protection against the excessive concentration of power in the hands of any one corporation, interest or small group. I strongly believe that all citizens should be able to receive information from the broadest range of sources."

Industry Leaders

The three leading broadcast networks--ABC, CBS, and NBC--are also the longest established. In terms of prime-time ratings, ABC was the leading network at the beginning of the 1990s, but by the decade's end it had been overtaken by both NBC and CBS. By 2007, CBS and FOX led the industry in the ratings race, followed by ABC and then NBC. By station ownership, CBS led the industry with 39 stations in 2007. NBC owned 14 stations and had 230 affiliates, and ABC had 225 affiliates and owned 10 stations. ABC was owned by the Walt Disney Co., NBC primarily by General Electric, and CBS was acquired by Viacom in 1999, although the two companies split at the beginning of 2006. All three broadcast networks and their parent companies had ownership interests in cable television networks or other media properties.

The FOX Broadcasting Company was launched in 1986 and aggressively pursued young viewers, especially teenagers and adults ages 18 to 34. By the 1998-99 season, FOX was established as the fourth broadcast network, and by 2007 was in second place, due in part to huge hits like American Idol. FOX Broadcasting was part of the FOX Entertainment Group, which also included FOX Filmed Entertainment; FOX Sports Networks LLC; and baseball's Los Angeles Dodgers Inc. Through FOX Television Studios, the company owned 35 television stations and more than 200 affiliates. FOX's parent company was Rupert Murdoch's News Corporation, which owned 81.4 percent of FOX Entertainment following an initial public offering that made 18.6 percent of the company's stock available to the public.

In 2009, CBS had more than 200 affiliate stations and 29 stations with an estimated 6,400 employees. Additionally, CBS oversees The CW Network, a 50 percent owned joint venture with Time Warner's Warner Bros. Entertainment. Fox Broadcasting held the number two spot with more than 200 affiliates and 17 company-owned stations with 425 employees. ABC with more than 230 affiliates and 10 corporate owned stations held the number three spot with 22,175 employees. NBC held the fourth spot with 200 affiliate stations including 10 company owned with 6,500 employees.

Of the reported 114.9 million television viewing households in 2009, CBS captured (38.4 percent) of viewers; Fox with (37.2 percent) of viewers; NBC grabbed (35.8 percent) of viewers; ABC (23.3 percent) of viewers.

With an interest in 94 primarily UHF affiliate stations, ION Media Networks (formerly Paxson Communications) owns an interest in 94 primarily UHF affiliate stations. In 1999 NBC invested $415 million in the former Paxson and took a 32 percent ownership interest in the company. In 1997 the company launched a new network, PAX TV. PAX TV reached approximately 85 percent of U.S. households in 2002 through 69 company-owned stations and 63 network affiliates. The name change brought with it much change for the network, which primarily airs syndicated shows and movies, and unlike the major networks, several hours of paid programming (or infomercials) each day. The broadcast reached more than 95 million U.S. households in 2009.

The new Viacom Inc., which split from CBS in early 2006, and now concentrates on cable networks MTV and BET, as well as films through Paramount Pictures. The company reported revenues totaling more than $13 billion in 2009 with 11,470 employees.

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