9.4 Issues and Trends in the Television Industry

Although advertising agencies once relinquished control of production to networks, they have retained some influence over program content. One executive commented, “If my client sells peanut butter and the script calls for a guy to be poisoned eating a peanut butter sandwich, you can bet we’re going to switch that poison to a martini (Newcomb).” While streaming services and digital advertising have introduced new avenues for advertisers, traditional methods like financial support and sponsorship withdrawal still play a significant role.

For instance, in 2020, Netflix faced criticism for its film Cuties, leading to advertisers like Burger King and Papa John’s pulling their ads. This incident highlights how social media and public opinion can quickly influence advertisers’ decisions. Additionally, the rise of “cancel culture” has made companies more cautious about associating with potentially controversial content.

Furthermore, the increasing political polarization in the United States has led to advertisers being more selective in their choices. Companies are more likely to consider social and ethical factors when deciding which programs to sponsor. This shift reflects a growing emphasis on corporate social responsibility and the desire to avoid negative publicity.

In conclusion, while the advertising landscape has evolved, advertisers continue to play a role in shaping program content. Factors such as public opinion, social media, and corporate social responsibility now influence their decisions more than ever before.

Public Television and Corporate Sponsorship

Corporate sponsorship does not just affect network television. Even public television has become subject to the influence of advertising. Established in 1969, the Public Broadcasting Service (PBS) developed out of a report by the Carnegie Commission on Educational Television, which examined the role of educational, noncommercial television in society. The report recommended that the government finance public television to provide a diversity of programming during the network era—a service created “not to sell products” but to “enhance citizenship and public service (McCauley, 2003).” The government intended for public television to provide universal access to television for viewers in rural areas or viewers who could not afford to pay for private television services. PBS focused on educational program content, targeting viewers who did not appeal to the commercial networks and advertisers, such as the over-50 age demographic and children under 12.

The Carnegie Commission’s vision of a federally funded public television system was significantly curtailed by industry lobbying. While the original proposal called for a manufacturer’s excise tax on TV sets to establish a trust fund, the National Association of Broadcasters successfully opposed this measure. As a result, public television has historically relied on a combination of viewer contributions and federal funding.

Federal funding for public television has faced significant challenges in recent decades. Despite a successful effort to block President George W. Bush’s 2007 proposal to drastically cut federal funding, PBS has increasingly turned to corporate sponsorship to maintain its operations. By 2006, corporate sponsors funded over 25% of public television programming. While this has allowed many programs to continue, it has also raised concerns about commercialization. When PBS began selling banner advertisements on its website in 2006, Gary Ruskin, executive director of the consumer group Commercial Alert, commented, “It’s just one more intrusion of the commercial ethos into an organization that was supposed to be firmly noncommercial. The line between them and the commercial networks is getting fuzzier and fuzzier (Gold, 2006).”

The competitive landscape for public television has also evolved. The rise of cable channels like The Discovery Channel and premium networks like HBO and Showtime has offered audiences a wider range of niche programming. PBS has had to rely on its long-running programs like Nova and Nature to attract viewers. The future of public television remains uncertain as it navigates the challenges posed by declining federal funding, increased competition, and the evolving expectations of audiences.

The Rise and Fall of the Network

The network era occurred in a period between 1950 and 1970 when, aside from a small portion of airtime controlled by public television, the three major networks (known as the Big Three) dominated the television industry, collectively accounting for more than 95 percent of prime-time viewing. In 1986, Rupert Murdoch, the head of multinational company News Corp, launched the Fox network, challenging the dominance of the Big Three. In its infancy, Fox acted as at best a minor irritation to the other networks. With fewer than 100 affiliated stations (the other networks all had more than 200 affiliates each), reaching just 80 percent of the nation’s households (compared with the Big Three’s 97 percent coverage rate), and broadcasting just one show (The Late Show Starring Joan Rivers), Fox barely impacted the ratings war. During the early 1990s, these dynamics began to change. The tremendous success of The Simpsons transformed the network and attracted large audiences, and Fox established itself as an edgy, youth-oriented network with shows such as Beverly Hills 90210, Melrose Place, and In Living Color. Luring affiliates away from other networks to increase its viewership, Fox also extended its programming schedule beyond the initial two-night-a-week broadcasts. By the time the fledgling network acquired the rights to National Football League (NFL) games with its $1.58 billion NFL deal in 1994, entitling it to four years of NFL games, Fox stood as a worthy rival to the other three broadcast networks. Its success turned the Big Three into the Big Four. In the 1994–1995 television season, 43 percent of U.S. households were watching the Big Four at any given moment during prime time (Poniewozik, 2009).

Fox’s success in the mid-1990s prompted the launch of several smaller networks. UPN (owned by Paramount, which merged with Viacom in 2005) and WB (owned by Time Warner at the time) both debuted in January 1995. Using strategies similar to Fox, the networks initially began broadcasting programs two nights a week, expanding to a six-day schedule by 2000. Targeting young and minority audiences with shows such as Buffy the Vampire Slayer, Moesha, Dawson’s Creek, and The Wayans Bros., the new networks hoped to draw stations away from their old network affiliations. However, rather than repeating the success of Fox, UPN and WB struggled to make an impact. Unable to attract many affiliate stations, the two fledgling networks reached fewer households than their larger rivals because some smaller cities could not obtain their programming. High start-up costs, relatively low audience ratings, and increasing production expenses spelled the end of the “netlets,” a term coined by Variety magazine for minor-league networks that lacked a full week’s worth of programming. After losing $1 billion each, parent companies CBS (having split from Viacom) and Time Warner agreed to merge UPN and WB, resulting in the creation of the CW network in 2006. Targeting the desirable 18–34 age group, the network retained the most popular shows from before the merger—America’s Next Top Model and Veronica Mars from UPN and Beauty and the Geek and Smallville from WB—as well as launching new shows such as Gossip Girl and The Vampire Diaries. Despite its cofounders’ claims that the CW would earn the distinction of the “fifth great broadcast network,” the collaboration got off to a shaky start. Frequently outperformed by Spanish-language television network Univision in 2008 and with declining ratings among its target audience, critics began to question the future of the CW network (Grego, 2010). However, the relative success of shows such as Gossip Girl and 90210 gave the network a foothold on its intended demographic, quashing rumors that co-owners CBS Corporation and Warner Bros. might disband the network. Warner Bros. Television Group President Bruce Rosenblum said, “I think the built-in assumption and the expectation is that the CW is here to stay (Collins, 2009).”

In 2019, CBS Corporation and Warner Bros. merged their shares in The CW, forming a joint venture. However, in 2022, Nexstar Media Group acquired a majority stake in the network. This acquisition led to several changes, including a shift in programming focus towards more conservative content. The network has also faced challenges with declining viewership and the departure of several popular shows. Despite these setbacks, The CW continues to operate, albeit with a different trajectory than it had in previous years.

Cable Challenges the Networks

The increasing dominance of cable television proved a far greater challenge to network television than the emergence of smaller competitors. Between 1994 and 2009, the percentage of U.S. households watching the Big Four networks during prime time plummeted from 43 percent to 27 percent (Poniewozik, 2009). Two key factors influenced the rapid growth of cable television networks: industry deregulation and the use of satellites to distribute local TV stations around the country.

FCC regulations restricted the growth of cable television during the 1970s, which protected broadcasters by establishing franchising standards and enforcing anti-siphoning rules that prevented cable from taking sports and movie programming away from the networks. However, during the late 1970s, a court ruled that the FCC had exceeded its authority and repealed anti-siphoning rules. This decision paved the way for the development of cable movie channels, contributing to the exponential growth of cable in the 1980s and 1990s. Further deregulation of cable in the 1984 Cable Communications Policy Act removed restrictions on cable rates, enabling operators to charge what they wanted for cable services as long as the service had effective competition (a standard that over 90 percent of all cable markets could meet). Other deregulatory policies during the 1980s included the eradication of public-service requirements and the elimination of regulated amounts of advertising in children’s programming, expanding the scope of cable channel stations. The government intended for deregulation to encourage competition within the industry but instead enabled local cable companies to establish monopolies all over the country. In 1989, U.S. Senator Al Gore of Tennessee commented, “Precipitous rate hikes of 100 percent or more in one year have not been unusual since cable was given total freedom to charge whatever the market will bear…. Since cable was deregulated, we have also witnessed an extraordinary concentration of control and integration by cable operators and program services, manifesting itself in blatantly anticompetitive behavior toward those who would compete with existing cable operators for the right to distribute services (Zaretsky, 1995).” The FCC reintroduced regulations for basic cable rates in 1992, by which time more than 56 million households (over 60 percent of the households with televisions) subscribed to a cable service.

The growth of cable TV gained assistance by a national satellite distribution system. Pioneered by Time Inc., which founded cable network company HBO, the corporation used satellite transmission in 1975 to beam the “Thrilla from Manila”—the historic heavyweight boxing match between Muhammad Ali and Joe Frazier—into people’s homes. Shortly afterward, entrepreneur Ted Turner, owner of independent Atlanta-based station WTBS, uplinked his station’s signal onto the same satellite as HBO, enabling cable operators to downlink the station on one of their channels. Initially provided free to subscribers to encourage interest, the station offered TV reruns, wrestling, and live sports from Atlanta. Having created the first “superstation,” Turner expanded his realm by founding 24-hour news network CNN in 1980. At the end of the year, cable television networks offered 28 national programming services, and the cable revolution had begun. Over the next decade, the industry underwent a period of rapid growth and popularity, and by 1994 viewers could choose from 94 basic and 20 premium cable services.

Narrowcasting

Because the proliferation of cable channels provided viewers with so many choices, broadcasters began to move away from mass-oriented programming in favor of more targeted shows. Whereas the broadcast networks sought to obtain the widest audience possible by avoiding programs that might only appeal to a small minority of viewers, cable channels sought out niche audiences within specific demographic groups—a process known as narrowcasting. In much the same way that specialist magazines target readers interested in a particular sport or hobby, cable channels emphasize one topic, or group of related topics, that appeal to specific viewers (often those who have been neglected by broadcast television). People interested in current affairs can tune into CNN, MSNBC, Fox News, or any number of other news channels, while those interested in sports can switch to ESPN, Fox Sports, or NBC Sports. Other channels focus on music, shopping, comedy, science fiction, or programs aimed at specific cultural or gender groups. Narrowcasting has proved beneficial for advertisers and marketers, who no longer need to time their communications based on the groups of people most likely to watch television at certain times of the day. Instead, they concentrate their approach on subscription channels that appeal directly to their target consumers.

Impact on Networks

The rise of cable television has significantly reshaped the broadcasting landscape. Cable channels, with their ability to offer specialized programming, have introduced more explicit content, including heightened levels of violence, sexuality, and mature themes. To compete, major broadcast networks have gradually relaxed their content restrictions, allowing for shows with more graphic elements. While this has attracted larger audiences for programs like Game of Thrones and The Walking Dead, it has also drawn criticism from conservative groups.

Broadcast networks have responded by adopting a more targeted approach to programming. Newer networks like The CW have focused on younger demographics, particularly women, with shows like Riverdale and Batwoman. Established networks have also grouped similar programs together to retain viewers. For instance, CBS’s NCIS franchise and FBI series are often scheduled consecutively.

Despite these efforts, broadcast networks have faced declining viewership. The increasing availability of streaming services and on-demand content has diverted audiences away from traditional television. As a result, broadcast networks have had to adapt their strategies to remain competitive in the evolving media landscape.