Broadcast Networks Under Siege

What You Should Have Read, May 26, 2008

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Broadcast Networks Under Siege

The Los Angeles Times writer Scott Collins lays out why declining viewers and cable's subscriber-fee revenue advantage are forcing TV executives to consider radical changes in the way they do business. Broadcasting, simply put, isn't casting broadly anymore. When you look at the steep declines posted by the broadcasters, two statistics are telling. One is that compared with last May, the number of people using TV actually went up, by 2%. The other is that this season, the average total viewing for ad-supported cable networks rose a healthy 7%, to 51.6 million. So more people are watching TV -- specifically cable. And fewer, dramatically fewer, are watching broadcast. But the legacy networks can't just learn to be content with cable-size ratings and then call it a day. That's because cable networks have a huge, built-in competitive advantage. Unlike broadcasters, they derive revenue not just from advertising but also subscriber fees, which are part of viewers' monthly cable and satellite bills. Broadcasters have been utterly dependent on income from 30-second commercials.
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