Who owns what in radio? (Courtesy of airtalent.com)

ABC RADIO - ABC Radio includes ABC Radio Network, Inc., its syndicated radio programming network, and 73 owned and operated stations located in leading markets throughout the United States. ABC's radio business is part of ABC, Inc., a subsidiary of the Walt Disney Company.

The ABC Radio Network has approximately 4,600 affiliate stations reaching about 109 million listeners age 12 and over each week. Programs and services include ABC New Radio, Paul Harvey News and Comment, The Sean Hannity Show, The Satellite Sisters, The Tom Joyner Morning Show, and more.

The ABC Radio Network is headquartered in Dallas and New York.

BEASLEY BROADCASTING - Beasley Broadcast Group, Inc. has proudly served listeners and advertisers in large and small communities across America since 1961. Today, with 42 radio stations (26 FM and 16 AM), Beasley Broadcast Group is "On Air" in ten large and mid-sized markets, ranging from Philadelphia, Pennsylvania and Miami, Florida to Augusta, Georgia.

BONNEVILLE BROADCASTING - Bonneville is a dynamic, diversified media company with television, radio, broadcasting, advertising, and satellite operations in some of the top markets across the country. The company is headquartered in Salt Lake City, Utah.

BUCKLEY RADIO - Currently, Buckley Radio owns and operates twenty radio stations in seven markets. In addition, the WOR Radio Network is operated as an independent syndicated programming provider with affiliates in over 400 markets.

CBS RADIO - INFINITY BROADCASTING - CBS radio is one of the largest major-market radio operators in the United States, with stations covering news, alternative rock, country, FM talk, classic rock, oldies, JACK and urban formats, among others. A division of CBS Corporation, CBS RADIO operates 179 radio stations, the majority of which are in the nation's top 50 markets. The overall mix of each radio station's programming is designed to fit the station's specific format and serve its local community.

CLEAR CHANNEL - Clear Channel and its joint venture partners operate more than 240 radio stations in the U.S., Australia, Mexico and New Zealand programming 20 different formats with more than 17 million listeners weekly and a total of more than 2,000 employees.

COX RADIO - Cox Radio is one of the largest radio broadcasting companies in the United States. The Company operates, acquires and develops radio stations primarily in markets ranked 10-70 based on revenues. A majority of the Company's stations are concentrated in the Sunbelt. Cox Radio owns, operates or provides sales and marketing services to 80 stations in 18 markets. This radio portfolio includes 67 FM stations and 13 AM stations. In 15 of its 18 markets, Cox Radio operates three or more stations.

CUMULUS - Cumulus Media Inc. owns and operates FM and AM radio station clusters serving mid-size markets throughout the United States. They are the second largest radio broadcasting company in the United States based on the number of stations owned or operated. According to Arbitron’s Market Report and data published by Miller Kaplan, they have assembled market-leading groups or clusters of radio stations that rank first or second in terms of revenue share or audience share in substantially all of our markets. As of March 31, 2004, they owned and operated 306 radio stations in 61 mid-sized U.S. media markets. In addition, they own and operate a multi-market network of five radio stations in the English-speaking Caribbean.

EMMIS - Emmis (the Hebrew word for “truth”) went public in 1994 and now owns and operates radio stations in the nation's largest markets, including: WRKS-FM (98.7 KISS FM), WQHT-FM (HOT 97) and WQCD-FM (CD 101.9) in New York City; KPWR-FM (Power 106) and KZLA-FM (Country 93.9) in Los Angeles; and WKQX-FM (Q101) and WLUP-FM (The Loop) in Chicago.

Emmis Radio also owns and operates: KKFR-FM in Phoenix; KDHT-FM, KEYI-FM, KGSR-FM. KLBJ-AM, KLBJ-FM, and KROX-FM in Austin; KSHE-FM (KSHE95), KPNT-FM (105.7 The Point), KFTK-FM (Radio 97.1), KIHT-FM (K-Hits 96) and WMLL-FM (104.1 The Mall) in St. Louis; WLHK (97.1 FM), WIBC (1070 AM), WNOU (RadioNow93.1), WYXB (105.7 FM), and Network Indiana in Emmis' hometown of Indianapolis; and WTHI (99.9 FM) and WWVR (105.5 FM) in Terre Haute, IN. The company's international division operates Sláger Rádío, the #1 radio network in Hungary, be one in Belgium, and Radio Expres in Slovakia.

ENTERCOM - Entercom owns and operates a nationwide portfolio of radio stations. They operate multi-station operations with leading positions in virtually all of our markets, which includes many of the country’s top markets. These markets include Boston, Seattle, Denver, Sacramento, Portland, Kansas City, Indianapolis, Milwaukee, New Orleans, Norfolk, Buffalo, Memphis, Providence, Greensboro, Rochester, Greenville/Spartanburg, Madison, Wichita, Wilkes- Barre/Scranton and Gainesville/Ocala .

Entercom’s stations provide many different types of programming from oldies to rock, news/talk to country, smooth jazz to sports. In addition, the Company is the exclusive radio broadcaster of the Boston Red Sox, Boston Celtics, Seattle Seahawks, New Orleans Saints, Buffalo Sabres and numerous major college sports teams.

GREATER MEDIA - Greater Media, founded in 1956 by two Yale classmates, is a privately owned company with corporate headquarters in Braintree, Massachusetts. From the ownership of a single radio station in Southbridge, Massachusetts, Greater Media steadily and quietly built a broad-based combination of successful communications companies, spanning America from coast to coast. By the 1980’s, Greater Media’s business included radio, cable television, printing, publishing, and telecommunications operations. In 1999, the company sold its cable business in order to focus more exclusively on its radio and newspaper operations.

Today, Greater Media is the parent company of 19 AM and FM radio stations in Boston, Detroit, Philadelphia and New Jersey; a modern printing plant and a group of weekly newspapers in central New Jersey; and several telecommunications towers throughout the United States.

JEFFERSON PILOT, NOW LINCOLN FINANCIAL - Lincoln Financial Media is a wholly owned subsidiary of Lincoln National Corporation, an insurance and financial services company. Beginning with its first radio station in 1934, Lincoln Financial Media now boasts 18 radio stations, all in top 50 markets; 3 television stations in major southeastern markets including North Carolina's first TV station; and Lincoln Financial Sports, a TV production company that facilitates the broadcast of Atlantic Coast Conference and Southeastern Conference football and basketball throughout the Southeast.

Lincoln Financial Media is based in Greensboro, NC.

REGENT BROADCASTING - A holding company in the radio broadcasting business. Regent was incorporated in Delaware in November 1996 by William L. Stakelin and Terry S. Jacobs with the objective of acquiring radio properties, primarily in medium and smaller radio markets, that have a history of growing revenues and broadcast cash flow, have capable operating management and are in communities with good growth prospects or have attractive competitive environments. Regent acquired its first radio station in 1997. Pending the close of all announced transactions, Regent will own and operate 64 stations (48 FM and 16 AM) clustered in 13 markets in Colorado, Illinois, Indiana, Kentucky, Louisiana, Michigan, Minnesota, New York, and Texas.

Radio Overview

Radio

HISTORY

Early Radio Milestones

1873:  James Maxwell of Scotland suggests an electromagnetic signal could be sent through

space without using wires

1887:  Heinrich Hertz, of Germany, verifies Maxwell's theory in a series of experiments by

sending and detecting radio waves

1896:  Guglielmo Marconi sends wireless signal two miles in Morse Code (letters encoded by

a system of dots and dashes); sees promise of "wireless" (radio's first name) as a

ship-to-shore or ship communication medium; starts wireless telegraph company

1906: Reginald Fessenden, with the help of G.E., makes first high-speed continuous-wave

generator that can broadcast the human voice and music; makes first "broadcast" of

music to ships in New York Harbor on Christmas Eve

1908:  American Lee de Forest, inventor of vacuum tube which made it much easier to receive

audio waves, broadcasts a classical phonograph concert from the Eiffel Tower

Patent wars between inventors severely hampers early radio’s development; but when the US Navy assumes responsibility for all relevant patents at the outbreak of World War I, the log jam is broken and great technical strides take place.

The Evolution of Radio as a Mass Medium

Big Business

While radio development before World War I had been characterized by individual inventions, during the postwar years it would be characterized by corporate maneuvers.  In 1919 the Marconi Company sells its radio rights to General Electric (GE) who, in turn, created the Radio Corporation of America (RCA) to house the new division.  Stock would be jointly held by GE, the American Telephone and Telegraph Company (AT&T), and Westinghouse Electric.  David Sarnoff, an RCA  mid-manager but soon-to-be president of RCA, suggests radio would be a household appliance.

Mass Audience

Shortly before 1920 Frank Conrad, a Westinghouse engineer, begins broadcasting a potpourri of sports scores and music from his garage.  A local department store promotes the broadcasts by offering $10 discounts on their ready-built wireless sets.  Westinghouse sees opportunity and initiates the first radio station, KDKA of Pittsburgh, on November 20, 1920.  RCA begins broadcasting in 1921 and GE in 1922.  By 1926 there are over two million sets in operation and climbing rapidly.  By discovering that an audience existed for broadcast programs intended for the general public, radio had found the role it was to play for the foreseeable future.

Better Receivers

Early radios were bulky, filled with tubes and batteries, and required lots of patience from users in order to find—and keep—the desired radio signal for which they were looking.  In 1925 Gimbel's Department Store displays a bulky radio set in their window ($99, a huge sum in the 20s); that same day they sell 5,300 sets.  Radio receivers quickly evolve from a bulky, battery-dependent, one-listener hobby kit into a major piece of fashionable furniture running on household current that everyone could listen to at once.  Living room family radio had arrived.  Between 1925-1930, some 17 million sets are sold at an average price of $80.

Radio Goes Commercial

Station operating and equipment costs rose steadily along with personnel expenses.  Radio needed a steady revenue source to meet expenses.  AT&T's radio station begins charging a "toll" to anyone who wished to broadcast a message, and the most logical customers for that service were businesses who had services or products to sell.  Almost overnight, advertising becomes the new answer to how stations would make money.

Networks

The fifth element of radio's evolution came about when stations saw they could drastically cut their production costs by sharing program content; this inter-station agreement came to be known as a network.  Additionally, if enough stations were networked, an advertiser could reach a much larger audience yet deal with only one network broker.  The first network was the National Broadcasting Company (NBC) who went on the air in 1926; actually, NBC opened with two separate networks, one made up of solely owned RCA stations, and another made up of stations originally owned by AT&T.

By 1937 NBC had 111 affiliates and CBS had 105.  It wasn’t long before advertisers were spending more than $27 million annually on network advertising.

Government Regulation

As more radio stations came online in the 1920s, interference became a major problem.  In response, Congress passes the Radio Act of 1927 and creates the Federal Radio Commission to curtail practices that were causing massive interference problems by using non-authorized frequencies and power levels.  The FRC defines the AM band, standardizes channel designations, and abolishes portable stations.  Thus by the end of the 1920s the framework for modern radio was in place.  It would be a commercially supported medium dominated by networks and regulated by an agency of the federal government.

The Depression 1930-1940

Unlike other industries, radio fared fairly well in the Depression years.  Radio revenues tripled and  radio’s audience did the same (by 1940, radio was in 81 percent of US homes).  But there were also other significant evolutionary events for radio during this period.

            .  Federal Communications Commission (FCC) formed in 1934. President Roosevelt creates a new agency in charge of regulating all types of electronic communications; this seven-

member, appointed-for-life commission remains intact today and generally follows its original mandate

Birth of FM

In the mid-1930s Edwin Howard Armstrong, a noted inventor, demonstrated frequency modulated radio, or FM.  Despite FM's obvious superior quality over AM radio, Armstrong's audience, RCA, is not interested, opting instead to concentrate on developing TV as an emerging technology.  Though a few companies buy licenses from Armstrong to develop sets, WW II curtails FM's development.

Radio Programs

The gloom of the Depression years meant more people turned to radio for free entertainment, thus popular radio programs of this era reflected a need for diversion and escape.  Dramatic programs, such as The Lone Ranger, Gangbusters, The Shadow, Dick Tracy, and Buck Rogers flourished. Then radio created an entirely new dramatic genre, the soap opera; by 1940 there were some 40 different soaps on the air such as Helen Trent, Our Gal Sunday, Backstage Wife, and Clara, Lu 'n' Em.

The 1930s saw network news grow into a serious and highly respected field.  News commentator Edward R. Murrow with CBS news quickly becomes one of America's most respected news personalities (another first for radio).  President Franklin Roosevelt also finds a new and controversial role for radio, political speeches, with his famous Depression era "Fireside chats."

World War II

Radio thrives during WW II era.  Ad revenues double from 1940-1945, outpacing newspapers as the top national advertising vehicle in 1943.  In that same year, the Supreme Court forever alters the broadcast landscape by forcing NBC to divest itself of one of its two networks.  The new network that emerges, ABC, ends the war years with 195 affiliates, making it a full-fledged competitor with NBC and CBS.

Innovation and Change: 1945-1954

In the nine years following WW II, the growth of television forced radio to abandon its role as a dramatic entertainer and switch instead to a reliance on playing pre-recorded music.  The public’s focus on television as the nation’s new entertainment medium also helped delay the widespread acceptance of FM radio.

FM

Although FM sounded better than AM, was static free, and could reproduce a wider range of sound frequencies, a number of pieces of bad fortune hampered FM’s quick development.  Initially, of course, World War II froze FM development, but later these problems added to FM’s woes:

.            FM was trying to develop simultaneously with television’s evolution

.            FM and TV shared nearly the same electromagnetic wave area; in 1945 the FCC gave TV FM’s former bandwidths, moving FM into the 88-108-MHz band where it remains today.

Television

The emergence of TV meant changes in the contents, economics, and functions of radio.  Although TV did not have a negative effect on individual station revenues, it did drastically affect network radio.  Network affiliations were nearly cut in half; but despite a brief drop in revenues, radio profits continued to steadily increase.  To do that, radio stations turned less to network-based advertising and more to local advertisers for support.  Local stations created new formats (music, talk and news) to help fill the now vacated network program airtime.

Specialized Formats

More than anything these changes allowed local radio to adopt specialized formats, sounds that had distinctive appeal to a certain segment of the audience.  One highly successful format, the Top-40, soon became indistinguishable from any other Top-40 station—until, that is, the advent of the radio DJ, a home-grown personality in his own right that gave a station a distinctive edge over any other competition.  The clock hour, a program scheduling tool that specified every element of a station’s programming within a given time frame, soon emerged as a way to keep order within a program.

Growth and Stabilization: 1955-1990

Radio stations more than doubled during this period, and the Top-40 format became popular enough to tempt record promoters to bribe DJs to play selected music (an illegal practice known as payola). The idea that prompted payola was that the more a record was played on air, the more that record would sell.  Format specialization continued to grow even into the network level.  ABC, which was imitated by the other networks, soon splintered into four different formats for its 1300 affiliate stations.

The most significant development to radio, however, happened in 1970 with the final emergence of FM as a mass medium.  FM licenses were easier to get than AM, and in 1965 the FCC passed the nonduplication rule, which prevented AM-FM sister stations from duplicating more than 50 percent of the AM content to its sister FM station.  Faced with these factors, and the fact that FM had  a much better sound quality, FM stations became an attractive commodity.  By 1990, FM had captured over 70 percent of the national radio audience.

Country music became the most popular radio format, followed by adult contemporary, while AM became the home to news-talk, oldies, and religious stations.  National Public Radio (NPR) went on the air in the early 1970s as the country’s first non-commercial network; by 1980 it had over 160 affiliates and was reaching five million people weekly.  Its two most successful offerings are its daily news programs, “Morning Edition” and “All Things Considered.”

The Volatile 1990s

An unprecedented era of station consolidation began in 1994 when an FCC ruling upped the number of stations a company could own to 20 AM and 20 FM stations, and also allowing holdings of up to four stations in a single market.  Congress later passed the Telecommunications Act of 1996 which completely eliminated the number of stations a company could own and also upped the number of allowable single-owned stations within a single market to eight.

The overall philosophy that first guided the development of radio was localism.  Radio stations were, in principle, licensed primarily to serve the public interest of those within the listening area of the station.  Today, however, continuing station mergers and acquisitions by large corporations has greatly diminished the localist philosophy.  A corporatist view now commands center stage, which essentially advocates the idea that the public interest is whatever interests the public the most.

DEFINING FEATURES OF RADIO    

portable – small and convenient enough to go anywhere, anytime

supplemental – most listening occurs while doing something else: driving, working, studying

universal --  most homes have six radios with one in almost every car; 75% of us listen daily

selective – radio is a niche medium, with specialized formats attracting narrowly defined audiences; only 2 or 3 % of the available audience is usually sufficient to generate a profit

ORGANIZATION OF THE RADIO INDUSTRY

There are about 12,500 radio stations in the United States, many of which use network programming (wherein all affiliates carry the same program at the same time) and/or syndication services (stations decide themselves when to use program content); in practice, however, most radio stations broadcast whatever content they get whenever it suits them best.

Local Stations, Nets, and Syndicators

Network radio, a dominant force in the 1930-42, has greatly diminished in its role as a content provider.  Today the leading networks (ABC, Westwood, and Premiere) generally limit what they offer to news and public affairs programming, and, of course, limited national advertising.

By contrast, syndicated shows now enjoy an all-time demand, such as the programs based on “stars” such as Rush Limbaugh, John Tesh, Ryan Seacrest, Zac Sang and the Gang, Dr. Laura Schlessinger, Glenn Beck, etc.  Other, more specialized, syndicated shows also enjoy a niche market such as the Comedy Network and NASCAR.

AM and FM Stations

Everything being equal, AM (amplitude modulation) signals travel further than FM (frequency modulation) signals, especially at night.  With AM listenership on decline, FM radio commands about 75 percent of the total audience.

AM radio has three channel classifications:

. clear -- a single dominant station designed to provide service over a wide area, almost

always urban, and broadcasting with 50,000 watts of power

.  regional -- a channel shared by many stations that serve fairly large areas

.  local -- a channel designed to be shared by a large number of stations that broadcast only

to their local communities

FM, though not as powerful as AM, does have these significant technical advantages:

            .  superior sound quality

            .  less likely to be affected by outside interferences (storms)

Like AM, FM stations are also organized by classes in a descending order of output power--

an FM class “C” station (100,000 watts), for example, has more power than a class “B” or “A” station.

Station Formats

Perhaps the best way to categorize a station is by its format, a type of consistent programming designed to appeal to a certain segment of the audience.  This gives the station a distinctive type of personality that attracts a certain audience, which in turn attracts advertisers seeking to connect with that type of audience.  There are three basic categories: music, ethnic, and news/talk.

. The Music Format The largest category with many subdivisions and variations; the two most listened to music formats by 2014: 

Adult Contemporary (with four distinct subgroups with 15% of the audience), and

Country, (two subgroups with 11%).

News/Talk Format   

Most popular on AM, news/talk accounts for some 17% of all radio

listening time and attracts primarily a male audience in the 25-54-year-old category.  The talk show format attracts a similar audience, using such format variations as call-ins, advice shows, interviews, and the occasional abrasive and/or opinionated host. These shows are often blended in with hard news, sports, weather, and traffic reports.

Format Homogenization

Many radio stations sound alike wherever they are because of a number of factors:

            .  many group-owned stations assume that what works well in one city should work well in another city

            .  satellite-delivered music services are becoming more common and thus delivering standardized music throughout the countInbo.  Programming decisions are often   based on recommendations of program consultants and audience research firms that compile playlists based on audience surveys and focus groups, recommendations tend to be the same from station to station

Noncommercial Radio

In 1945 the FCC set aside several FM frequencies for educational broadcasting.  By 2000 there were about 1,900 noncommercial radio stations on the air (operated and supported mostly by universities and private foundations).  Programming for these stations is largely supplied by two networks:

.            National Public Radio  (NPR, founded in 1970, serves about 530 affiliates.  Stations pay NPR a programming fee based on audience size and annual budget).  The public radio stations that help support NPR receive financial support from the Corporation  for Public Broadcasting (CPB), a private non-profit organization funded by Congress. 

.            Public Radio International (PRI), formerly American Public Radio, is a network that acquires and distributes programming from station-based, independent, and international producers.  Unlike NPR, PRI does not produce any of its programming but does finance program production at member stations.

A noncommercial station can be an affiliate of either or both NPR and PRI.

OWNERSHIP IN THE RADIO INDUSTRY

The Telecommunications Act of 1996 spawned a flurry of major multi-billion dollar station mergers and acquisitions, among them a $23.5 billion merger between Clear Channel Communications and AMFM Incorporated, which resulted in the largest radio company in history; also of note is the $4.9 billion merger between Westinghouse/CBS and Infinity Broadcasting which now boasts a 163-station empire of multiple stations in top markets. (You'll find an updated list of radio station ownership in a different post). 

PRODUCING RADIO PROGRAMS

Departments and Staff

Though departmental radio organization varies by station size, most organizations feature the same two top positions:

.  general manager  enforces station policies, maintains contact with the community, and

   monitors program content, ratings, and sales information

.  program director  responsible for the station’s sound, plus hiring/firing on air personalities

Most stations are also divided into four departments:

sales                                                                                                                           news

programming                                                                                                             engineering

Putting Together a Program

Music Format

When the staff of a station puts together a program, the first step is generally to lay out a format wheel (a.k.a. format clock), a pie chart of an hour divided into segments representing different program elements and the times they’re scheduled to be aired.

Talk Format

Produced by the local staff, talk show topics are geared to the interests of the local audience listening in at a particular time.  Producing a talk show requires more equipment and technical expertise than a DJ program, such as a delay time (used to censor anything unseemly from a caller) and a call screener (someone who ranks waiting calls for importance and probable interest).

All-News Format

Similar to a music format programming wheel, an all-news format schedules in specific spots for news, weather, sports, business reports, and commercials.  The cycle (the time that elapses before the program order is repeated) generally starts at the top and/or bottom of the hour.  This is the most difficult and costly program format because of the large staff required to produce the programming.

ECONOMICS

Sources of Revenue

Radio stations earn money by selling advertising time, the amount for which is generally included in the station’s rate card.  Revenue for on air commercials comes from three sources (average percentage of station revenue follows):

            .            national ads (usually on network programs to national advertisers)   5 %

            .            regional ads or national spot ads (less market coverage than national, more than local)  16 %

            .            local ads (purchased generally by local business or organizations)   79 %

General Expenses

Expenses in radio are divided into five areas:

            .            technical-- engineering staff payroll plus technical repairs and maintenance

            .            programming-- covers talent salaries, tape and record costs, music fees

            .            selling-- sales staff salaries and sales-related expenses

            .            administration--management and business staff salaries, building expenses, supplies

            .            news-- news source fees

Radio Audience Profiles

            . 550 million radio sets in the US (about two per person), one third of which are in cars

            .  on a typical day three-fourths of all adults will listen to some radio

            .   the average person will have the radio on for about three hours daily

            .   most people listen to radio during the twice daily rush-hour drive times (6-10 am and 4-7 pm)

           

            .    as a person ages, he or she tends to evolve out of one radio format and go into another

What TV Ratings Really Mean (From Nielsen Media Research)

There are two questions which Nielsen Media Research ratings answer about TV viewing: "Who is watching TV?" and "What are they watching?" These are not easy questions to answer, and we use research methods, which have been developed and refined over many years to provide answers every single day.

Knowing who is watching

The way that Nielsen Media Research finds out about who is watching is to measure what a sample of television viewers are watching. For our national ratings estimates, we use a sample of more than 5,000 households, containing over 13,000 people who have agreed to participate. Since there are over 110 million households with TVs in the U.S., it might seem that a sample of

5,000 is just not big enough to represent the nation.

Actually, a representative sample doesn't have to be very large to

represent the population it is drawn from. For example, you don't

need to eat an entire pot of vegetable soup to know what kind of

soup it is. A cup of soup is more than adequate to represent what is

in the pot. If, however, you don't stir the soup to make sure that all

of the various ingredients have a good chance of ending up in the

cup, you might just pour a cup of vegetable broth. Stirring the soup

is a way to make sure that the sample you draw represents all the

different parts of what is in the pot.

While a sample doesn't have to be very large to represent the

population, the sample does need to be selected in a way, which

gives all members of the population the same chance of being

chosen.

If 50% of the vegetable pieces in a huge pot are carrot cubes, the only way to know it for sure would be to examine and count the contents of the entire pot. Let's say we stir well and pour a cup of soup with 10 vegetable pieces in the cup. If sampling were a perfect process, we would get five carrot cubes out of ten pieces. What actually happens is that we usually get close to five

carrot cubes-sometimes a little more and sometimes a little less and sometimes exactly five. It is possible, but really unlikely, to stir well and get no carrot pieces-or to get all carrot pieces. So we could get a rough estimate of the proportion of carrots in the pot from counting what is in the cup.

If we wanted a closer estimate, we would take a larger sample. Imagine if we stirred well and then poured out enough soup to contain 5,000 vegetable pieces. We probably wouldn't get exactly 2,500 carrot pieces, but the chance of getting no carrots at all is very remote. In fact, according to sampling theory and a very tasty laboratory test, 19 out of 20 times we take a wellstirred sample of soup containing 5,000 vegetable pieces; we get between 48% and 52% carrots.

There is no guarantee that the percentage of carrots in a sample of this size will be between 48% and 52% (one time in 20 it will be outside this range, but usually not far outside this range). The same sampling errors apply to a representative sample of television viewers.

Measuring homes, TVs, programs, commercials and people

In order to provide all the information, which the TV and advertising industries need, Nielsen Media Research actually measures all of the above. We report the amount of TV usage on every set in a sample household - those are homes which have agreed to participate in our research for a specific period of time.

Just like a recipe in which several ingredients have to be combined, Nielsen Media Research constructs TV ratings from several different sources of information.

Measuring TV sets
Identifying TV programs

In a specially selected sample of homes, Nielsen Media Research

technicians install metering equipment on TV sets, VCRs and cable boxes

(and even satellite dishes). The Nielsen Media Research meters

automatically and invisibly keep track of when the sets are on and what

the sets are tuned to. These meters are connected to a central "black box,"

which is actually a very small computer and modem. Information from

the meters is collected by the black box, and in the middle of the night all

the black boxes call in their information to our central computers.

For us to know what is on the channel at the time it is tuned, we have to collect a large amount of information every day about what is on every TV station and cable channel all across the country. A network may schedule a program, but some stations that usually carry that network may not carry that program, or may delay the program and show it at a different time. Nielsen Media Research's primary source of information about which programs are airing for

each station or cable channel comes from a very special coded ID number that is part of almost every TV picture-a series of lines and dots in the top edge of the picture which labels the program and episode. Nielsen Media Research developed and patented this system, which we call AMOL, or Automated Measurement Of Line-ups. All across the country, we have sites where TV stations are monitored and the program ID codes are detected and collected. Each night, these monitoring sites connect up to our central computer and download the information. We compile the electronic program information and compare it to other sources of information we have already received. If there are discrepancies, we call TV stations and cable operators to verify what actually was aired. Keeping track of what is on TV is also done with the help of program listings provided by networks, stations and cable systems, as well as published TV listings.

We track more than 1,700 TV stations and 11,000 cable systems. With this database as a starting point, we can credit tuning and viewing to all of the networks, syndicates, cable networks, TV stations and cable systems involved in providing TV programming to the viewing public.

Identifying commercials

Although there are many TV programs, there are even more commercials. Keeping track of what commercials are on TV is another service provided by Nielsen Media Research. Using a special passive TV signal identification technology, commercials on TV stations are continuously monitored and converted into a digital "fingerprint". These fingerprints are then compared to a

computer file of fingerprints from thousands of different commercials and automatically identified whenever possible (which is about 95% of the time). The other 5% of the time, recordings  of unmatched commercials are sent to a central office to be viewed and properly credited. This information is used to produce reports detailing when and where TV commercials actually aired.

Measuring People

This is the main ingredient in the recipe for ratings: who is watching? When we combine the measurement of who is watching with what channel is tuned and what program is on that channel, we can credit viewing to a program.

Nielsen Media Research measures who is watching programs, which reach the entire nation with the Nielsen People Meter. In our national sample, we install set meters which have an attachment called a "People Meter". The People Meter is a box, about the size of a paperback book, which is placed on or near each TV set.

The box has buttons and lights, which are assigned to each person who live in the household (with additional buttons for guests). There is also a remote control to operate the people meter from anywhere in the room.

When a viewer begins watching TV, they push their button, changing their indicator light from red to green. When they finish watching, they push their button again and the indicator changes back to red. Periodically, the lights flash to remind people to check to make sure that the information in the people meter is accurate.

Information from the people meters is combined with set tuning information and relayed to Nielsen Media Research each night.

National and local measurement

So far, we have been describing how Nielsen Media Research measures audiences to programs, which reach the entire nation. But the television system in the United States also requires a local measurement of how programs perform in specific markets. In fact, Nielsen Media Research measures more than 200 individual local television markets in addition to the national measurement service. There are many important differences in the way Nielsen Media Research measures local television.

Diaries: Another way to know who is watching

To measure the audiences for local television, Nielsen Media Research gathers viewing information using TV diaries, booklets in which samples of viewers record their television viewing during a measurement week. We conduct diary measurement for each of the 210 television markets in the country four times each year, during February, May, July, and November: (You may have heard of these as "sweep" months, in which we conduct a complete diary measurement across the nation.)

The diary requests that viewers write down not only who watched, but also what program and what channel they watched.

We have tried to make the task of filling out a diary as easy as possible by asking people to report what they do by quarter hours (instead of minute-by-minute). Once the diaries are filled out, viewers mail them back to us and we transfer the information into our computers in order to calculate ratings.

In 50+ of the largest markets, we have a sample of homes with set meters (not people meters), which provide the tuning status (set on/off, channel and time) of TV sets in the home. We collect information about who is viewing from separate samples of homes in these markets with diaries for each TV set. We combine the meter and diary information in a way which projects the diary viewing data adjusted to the meter tuning data.

Information Accuracy

No measurement system is perfect, whether it measures the entire population or just a sample. Errors are always a possibility. When measurement is based on a sample, there is the additional source of error, which comes from sampling variation (some samples are going to be a bit high, others a bit low).

For this reason, Nielsen Media Research regularly crosschecks the information obtained from different samples and different measurement methods. Remarkably, the ratings produced from more than 100,000 diaries collected from all markets during each sweep month have been similar

to the ratings based on 5,000 People Meter homes for the same period of time. Different measurement methods, completely separate samples-and a vast difference in sampling size-yet they both produce similar estimates of audience.

In addition to this, we have ongoing audits and quality checks to make sure that all of our procedures are working correctly.

Nielsen Media Research Families

The Nielsen Media Research families are a cross-section of the households with television sets all across America. Because we have selected them in a way, which gives every household an equal chance of being picked, we have all

kinds of households in the sample. This means that we have homes from all fifty states, from cities and towns, suburbs and rural areas. We have people who own their homes and people who live in apartments. Some homes in the panel

have children and some don't.

Various ethnic and income groups are represented. When we check the characteristics of households in our samples against the U.S. Census data, we find that our samples look very much like the population. Of course, the match is not perfect. When you draw a representative sample, it is usually close to the population on a given characteristic.

Between 11 and 12 percent of the Nielsen Media Research samples are African American, for example, and this matches the percentage of all TV households in the United States, which are classified as African American.

Let's look at the individual samples in terms of African American representation. National People Meter Sample -- There are 5,000 households in this sample. The number fluctuates daily as about 300 households come in and out of the sample every month. Of this number, nearly 550 households are African American, or about 11 percent of the total.

Sample Selection

Our sample homes are selected strictly through chance. Naturally we'd like to accommodate people who offer to be in our sample, but doing so would violate basic laws of sampling practice. The sample would immediately become biased because those who asked to join may be systematically different from the population at large.

Instead, we carefully draw our sample in a way that offers every U.S. television household an equal chance of being selected. Once the homes are selected and agree to participate, Nielsen Media Research protects their privacy by keeping their identities confidential.

Representative Samples

If every member of the population has an equally good chance of being in the sample, then this makes it a representative sample. Through statistical theory (and many years of practical experience which is consistent with that theory), we know that fairly drawn (or random) samples vary in usually small ways from the population. Over time these small differences tend to average out.

We check our samples in various ways. Where we do know something about the characteristics of the entire population (thanks to U.S. Census Bureau data), we compare our sample to the population. We find that although the samples aren't identical to the population, they are about as close to it as statistical theory predicts. The most important thing to check in our samples is the

television viewing information. Although no one has measured the viewing of the entire population, we do have ways to cross check against other samples and other methods of measurement. We regularly compare our National People Meter audience data to the combined information from the diaries all across the 210 markets we measure.

Occasionally, we do special studies called Telephone Coincidentals. In these tests, we call thousands of randomly selected telephone numbers and ask people if their TV sets are on and who is watching. This research provides a completely independent check on the amount of TV usage and viewing, and

when we have found some differences, it has helped us zero in on ways to improve our ongoing measurement systems.

Viewing Confirmation

Confirming whether people are actually watching television is really one of the most difficult questions we face. Some of the information we measure is possible to check by independent means. Stations carry programs and we can observe that when it happens. TV sets are tuned to particular stations and not to others, and we can measure that when it happens.

The only person who knows when viewing occurs is the viewer. Viewing is not necessarily looking at a TV; it is not necessarily being in the room with a TV; it is something that only the viewer can define. This is why we use the diary and the people meter; so that viewers can tell us what they do.

We conduct special research among former members of our TV meter and diary ratings samples to learn more about how they actually watch television and how accurately they have reported their viewing. With the help of the viewing public, we are constantly learning more about the partnership between TV and its audience.

Ratings Usage

Nielsen Media Research's role is to measure both what is transmitted and what is received. By doing this, we provide the programmers and advertisers with vital feedback on their audience. Nielsen Media Research ratings are used like currency in the marketplace of advertiser-supported TV. When advertisers want a commercial to reach an audience, they need to place it in TV programs, which deliver an audience. The more audience a program delivers, the more the commercial time is worth to advertisers. So the amount charged for advertising is usually a negotiated rate per thousand viewers multiplied by the Nielsen

Media Research audience estimate (in thousands).

Programs are expensive to produce, whether they attract large audiences or not. In the long run, TV programmers can't pay more for a program than they can earn from selling advertising in it.

Program Cancellations

Occasionally some viewers find that a program they watch gets canceled. By estimating the audience, our information helps programmers keep the popular shows on TV, and it also helps them make the difficult decisions to cancel unpopular shows.

The irony of the mass medium of television is that a program with "only" a few million viewers may be an unpopular program. It may take ten million viewers for a network or nationally syndicated program to be popular enough to be a business success. Every time a program is canceled, a few million viewers feel betrayed. But if programmers tried to keep all programs going, the shows that lose money would eventually put the programmers out of business. Nielsen Media Research ratings are also used by non-commercial television. They can learn about the audience they serve and make better programming decisions.

Understanding TV Ratings

Understanding TV Ratings

(From TVByTheNumbers.com)

This video is quite instructive:

Here are some definitions and explanations directly from Nielsen.

Common Terms:

TV HHs: the Nielsen estimate of the number of television households in the USA

LIVE+Same Day: The number that watched a program either while it was broadcast OR watched via DVR on the same day the program was broadcast (kind of, see below)

LIVE+7: Same as above, but 7 days rather than 3.

Ratings: Nielsen uses a ratings point system. 1 ratings point = 1% of the Nielsen estimate for the category being measured (more detail below).

A18-49 or Adults 18-49 Ratings  - this is the advertising demographic advertisers are usually most interested in for primetime shows.  It's the important number in terms of how well a show is doing.  Total viewers (P2+ above) don't really make a difference.

***

It is our goal to demystify the #s wherever possible. Here are some helpful numbers to keep in mind.

Nielsen uses a ratings point system. One rating point = 1% of the Nielsen universe. 

If you see a HHs rating of 6.2, that means 6.2% of the households were tuned into that program. The math works like this (based on Nielsen estimates):

6.2% of 112,800,000 = 6,993,600 TV HHs were tuned in.

While TV HHs are a good proxy for how many people are watching, Nielsen also tracks how many people in each household were watching a show. 

Different shows have different numbers of people per household watching. It's not the same for every show. So it's very possible for one show with less households to have more viewers. It happens all the time. Again, we seek to eliminate that complexity by focusing on viewers and ranking our lists accordingly.

Nielsen further breaks their universe estimates into age groups (2-11, 18-34, 25-54, etc.). The particular age group ranking generally available is the 18-49 demographic. This equals roughly 131,050,000 (or less than HALF of the total universe of 286,000,000).

Advertisers tend to like the 18-49 and 25-54 brackets. Currently we only have access to data segmented by 18-49.

Has your head popped off from thinking about all of this yet? If not, read on.

Time Shifted Viewing – Program ratings for national sources are produced in three streams of data – Live, Live + Same Day (Live+SD) and Live + 7 Day (Live+7). Time shifted figures account for incremental viewing that takes place with DVRs which are currently in approximately 24.4% of all U.S. TV households. Live + Same Day include viewing during the same broadcast day as the original telecast, with a cut-off of 3:00AM local time when meters transmit daily viewing to Nielsen for processing. Live+ 7 Day ratings include incremental viewing that takes place during the 7 days following a telecast.

To simplify this, if you have Two Broke Girls on your DVR (and shame on you if you do) that was recorded at 9pm, as long as you watch it prior to 3AM, it will count in the LIVE+SD numbers. So same day isn't exactly the same day, but they always measure this the same, so it's consistent. If you don't watch until 4am (why are you still awake at 4am!?) it will not count in the LIVE+SD numbers but it will count in the LIVE+7 (live usage plus 7 days worth of DVR usage).

Households Using Television (HUT): The percentage of all television households in a survey area with one or more sets in use during a specific time period. The sum of the average ratings for a given time period will sometimes be higher than the HUT number because of households viewing multiple programs at the same time. If a household is watching two programs, it is counted toward each program rating but only once toward a HUT number.

Sound Recording Overview (Mostly Music)

Sound recordings (mainly music)

HISTORY

. Thomas Edison invents phonograph in 1877 (records on metal cylinder format); earliest
uses thought to be for dictation and other business needs

. Emile Berliner patents gramophone; makes spiral track recordings on flat disc

. nickelodeons: 1890s amusement arcade device that plays back a two-minute recording
for five cents; immensely popular. Demand for “entertainment cylinders” grows

Rivalry

Berliner premiers the Victrola in 1906, the first disc player designed to look like the furniture. He forms the Victor Talking Machine Company (the trademark is the famous picture of a dog peering into the bell of a gramophone with the logo, “His Master’s Voice”). The superiority of his device essentially ends the intense business rivalry going on in the recording industry between him, Edison, and the Columbia Phonograph Company.

Early popular recorded music included sentimental favorites, ragtime, jazz, and film musicals. By 1914 record players and record collections become a household standard, encouraged by a national dance craze that lasts through the World War I years. The boom continued into the 1920s with the dawn of the Jazz Age, the blues and jazz music foundation for the Roaring Twenties era.

The Impact of Radio on the Recording Industry

By 1924 record player sales drop 50 percent from 1923, largely due to the popularity of live music delivered via the new radio medium. Record companies counter in 1926 by introducing electronic recording which much improved sound quality, and the marketing of radio-phonograph combination devices. Audiences soon identify radio as the home of “live” music compared to the “canned” music of records. RCA and Victor merge in 1929 to dominate the radio and recording industry.

The Great Depression

With a hard economy imposing record low profits on the industry, a new coin-operated music device called the juke box helps rescue the industry during the Depression years. Installed in bars, diners, and drugstores, juke boxes help boost record sales nearly 500 percent by 1939.

World War II and After

Shellac, a vital manufacturing ingredient for records, is declared a vital defense commodity by the government during the war, and record making plummets. Adding to industry woes is the American Federation of Musicians' strike, 1942-44, who fear losing jobs from canned music. Capitol records, however, begins novel idea of sending free records to radio stations to promote certain songs; it becomes a practice that soon revolutionizes both mediums.

In 1947 the 3M Company introduces magnetic recording tape (an idea borrowed from wartime Germany) which provides better sound quality, easier editing, reduced costs, and multitrack recording capabilities. In 1948 Columbia Records introduces the 33 1/3 long-playing record (the LP). RCA enters the fray with its 45 rpm record, and the marketing battles of this era soon became known as the "Battle of the Speeds." Soon the 33 1/3 becomes the preferred format for albums, and the 45 remains the choice for single hits; the older 78 rpm format quietly disappears. In the 1950s stereophonic players debut, which quickly double the number of records being sold.

Other events that also help heighten record sales:

. emergence of small independent labels (made possible by lowered manufacturing costs)

. emergence of radio as a promotion device (the "promotion" department now a permanent
fixture in every recording company office )

. the nearly unbreakable new records enabled them to be sent through the mail, thus making
possible the birth of record clubs

. as an emerging TV medium strips radio of its standard formats in the early 1950s, radio
looks to new ways to attract audiences; playing the Top 40 songs becomes one of the most
popular ideas.

The Coming of Rock and Roll

As teenagers in the 1950s began to create their own identifiable, American sub-culture (unique clothes, customized cars, and hair styles), they lack their own brand of music. Rock and roll, with its roots in rhythm and blues, commercial white popular music, country and western, and jazz, quickly fill the void.  Rock and roll owed much of its explosive popularity to new singers such as Elvis Presley, Bill Haley, Buddy Holly, Little Richard, Jerry Lee Lewis, and Chuck Berry, all of whom brought to rock and roll their own unique styles that helps give even more richness to the emerging music genre.

Rock Goes Commercial

For various reasons (some scandalous, some not), all the original rock stars had left the scene by 1959. The radio-recording payola scandals of the period further blemishes an already suspect image of rock and roll. In the early 1960s the industry counters by cleaning up rock's image with a new wave of wholesome, clean-cut American singers: Ricky Nelson, Bobby Vinton, Paul Anka, Connie Francis, Fabian, the Four Seasons, Annette Funicello, and Brenda Lee to name a few.

The British Invasion

In 1964 the Beatles took rock and roll by storm with a sound that was widely recognized as upbeat and innovative. Many other British groups followed, but not all followed the same music style; the Rolling Stones and the Animals, for example, exemplified a new blues-based, harsher, and slightly more aggressive sound. Both styles merged somewhat with two music genres currently coming of age in the United States: folk (with artists such as Bob Dylan, Joan Baez, and Peter, Paul, and Mary) and the Motown sound (with artists such as Diana Ross and the Supremes, and the Jackson Five).

Transitions

Music genres in the late 1960s reflect the social experimentation and cultural transition of the times. Freedom, experimentation, and innovation are in. The group Blood, Sweat, and Tears blend jazz, rock and classical music. The Who record a rock opera, Tommy. By the 1970s rock music becomes synonymous with the counter culture, giving rise to non-mainstream groups who play the brash new heavy metal sounds. Countering heavy metal, a softer rock sound emerges, and a few years later a crossover movement sees both genres merging somewhat with a country western music sound. Often the same top songs are featured on the charts of both rock and country music charts.

Industry Trends 1970-1990s

Profits in the record industry followed several roller coaster trends since the 70s, some of which were due to trends (disco), high profile artists (Michael Jackson), new technologies (CDs), the 80s promotional vehicles of music videos and MTV, and the main stream debut of rap music in the 90s.


More Diversity

The availability of digital music on the Internet direct to the consumer is yet another example of the trend toward disintermediation.

DEFINING FEATURES OF SOUND RECORDING

• Sound recording is a cultural force, characterizing social groups, defining movements, and setting trends in society and, in turn, helps to shape modern culture.

• Second, sound recording is an international enterprise (five record companies dominate the global market, each company headquartered in a different country).

• Third, the recording business is a unique blend of business and talent.


ORGANIZATION OF THE RECORD INDUSTRY

The recording industry can be divided into four major segments:

. talent
. distribution
. production
. retail

Talent

The talent segment of the industry consists of all the singers, musicians, songwriters, arrangers, and lyricists who hope to make money by recording and selling songs, but the road to success is hard and long. Few make it big. A group's first step is usually to perform for local clubs and events; next, if they survive, they'll take their act on the road to gain experience, money, and a little recognition. Traveling acts play in bars and clubs where the band is little more than a human jukebox providing accompaniment or background music. If the talent is lucky, they might be noticed by an A&R (artist and repertoire) scout from a record label. If so, they might be invited to sign a contract.

Production

At a recording studio the group records an album or a few singles. Audio engineers use elaborate sound-mixing systems to perfect the right sound. When the label releases the group's single or album, promotion, publicity, advertising, merchandising, and packaging expertise start in. Though there are dozens of record labels, five firms dominate the industry: Sony, AOL-Time Warner, Bertelsmann, Universal, and EMI.

Distribution There are five main outlets for music distributors:

. direct retail stores (most of which have gone out of business in the past five years)
. rack jobbers they serve department stores and major discount chains (WalMart, Target, etc.)
. one-stops buy CDs from industry, then resell to CD stores and juke box firms
. direct consumer sales (a.k.a. packagers) sales from TV promotions and record clubs
. online sales the consumer deals directly with an online retailer (iTunes, amazon.com, etc.)


Retail

There are two major trends in the retail music segment: consolidation and online selling. Big music chain stores used to dominate, such as Sam Goody, Media Play, Camelot, but brick-and-mortar retailers faced increasing competition from online retailers such as Amazon.com and iTunes (and the general transition to digital music) and most have closed their doors.

WalMart has done well with its music sales (CDs and its online downloads). Today, most music sold comes from either iTunes or WalMart.


OWNERSHIP IN THE RECODING INDUSTRY

The recording industry is one of the most concentrated of all media industries, with just FOUR companies accounting for more than 87 percent of all sales. In addition, these companies are multinational conglomerates with interests in many different industries.

Here's a list-- courtesy of the AP-- of the top recording companies and a sampling of the artists they represent:

By The Associated Press

Here's a look at the top record labels, their artists and their U.S. market share as of Oct. 9:

_ UNIVERSAL MUSIC GROUP: 35.12 percent market share in U.S.

Labels include: Geffen Records, Island Def Jam Music Group, Motown Records, Verve Music Group, Decca Music Group.

Artists include: Gwen Stefani, Elton John, Jimi Hendrix, Kanye West, Shania Twain.
Universal Music Group also owns: _ EMI GROUP PLC: 8.35 percent market share.**

Labels include: Capitol Records, Virgin, Blue Note.

Artists include: Coldplay, Katy Perry, The Rolling Stones, Lenny Kravitz.
**EMI Group PLC is now a subsidiary of Universal Music Group, so its effective market share is 43.47%.

_ SONY MUSIC ENTERTAINMENT INC.: 22.79 percent market share.

Labels include: Arista Records, Columbia Records, Jive Records, RCA Records.

Artists include: Carrie Underwood, Alicia Keys, Usher, Chris Brown, AC/DC, Leona Lewis.

_ WARNER MUSIC GROUP CORP.: 21.12 percent market share.

Labels include: Atlantic Records, Warner Bros. Records.

Artists include Madonna, R.E.M., Green Day, Eric Clapton.

_ ALL OTHERS: 12.61 percent.

Source: Nielsen SoundScan, company Web sites.




PRODUCING RECORDS

Departments and Staff

There are seven departments within the typical recording company:

. artists and repertoire (A&R) at times industry talent scouts; also administrative duties. YouTube and Vimeo have effectively eliminated A&R departments. While they still exist, their numbers and duties have changed drastically. Today, most artists are 'discovered' online.
. sales and distribution sells products, makes sure inventory gets to targeted markets
. advertising and merchandising aids sales by planning media ad campaigns
. business lawyers, accountants, researchers, financial analysts, secretarial staff
. promotion get releases played on radio stations
. publicity tries to get press coverage and reviews for new performers in trade press
. artist development helps further artist’s career with tours, concerts, and TV appearances



FEEDBACK

Feedback in the record industry is measured by Billboard magazine’s weekly ratings of stars, triangles, and bullets. Stars are “mover” titles, bullets go to one million seller singles, and triangles to the two million single sellers. In general, the Billboard’s “Hot-100 Chart is based on two components: exposure and sales.

For sales figures, Billboard measures the top 50 retail sales markets, subjectively choosing the most influential music outlets; about 185 outlets are surveyed weekly.

To measure exposure, Billboard surveys the play lists of about 240 leading radio stations, all of which are weighted by audience reach (bigger audiences count more than smaller markets). As evidence of their symbiotic relationship, radio stations usually monitor Billboard magazine to see which records they ought to be playing. The magazine then combines the two components to forge a final figure, which is reported as that song’s rating. Billboard publishes a chart for almost all popular music formats.   Although sampling numbers may vary, the underlying process remains the same.

Sound-Recording Audiences

Demographic profiles for record audiences are difficult to come by because the recording industry is supported by audience purchases and not by advertising. This means that recording companies concentrate on overall sales figures rather than seeking detailed demographic information about their audiences. What information that does exist centers mainly on estimates of the number and type of playback equipment, CDs, files, etc. in the average household. In terms of music sales, people over 35 now account for more than 60 percent of sales (a 30 percent increase over the past 20 years ), while spending by those 19 and under has decreased from 35 to 15 percent during the same period (which gives us an indication as to how popular file-sharing is among teens).

Reaction #5 deadline extended

Good afternoon,

Because I was late posting Reaction #5, the due date has been extended from Midnight, April 3rd (PDT) to Midnight, April 5 (PDT).

Jack

Reaction #5 prompt (Due Sunday April 3rd by midnight, PDT)

For your fifth and final reaction piece, read the following article and post a 250-500-word reaction piece on Sakai about the topic. Does the future of TV  belong to the "device" or the "app?" Why does it belong to one and not the other? Explain. As a television consumer, which would you prefer? Would your opinion change if you were a television content producer? Why or why not? Do you believe that eventually all TV viewing will be done via wifi rather than traditional cable or broadcast signals? Why or why not?

Does the Future of Television Belong to the Device or the App?

 

This week, the FCC hears reaction to a controversial proposal. The MPAA says it violates the U.S. Constitution. The WGA is in favor.

The past and future of the TV cable box is at the center of a big war-of-words this week at the Federal Communications Commission. The fight has gotten scant press attention, but it's a subject that's fueling strong commentary from the likes of tech giants Google and Amazon and even dividing Hollywood. The MPAA is even going so far as to suggest that a proposal to revolutionize the TV device market would violate both the First and Fifth Amendments to the U.S. Constitution. The Writers Guild disagrees.

Upon direction from Congress, the FCC is looking at new standards for "downloadable security" on set-top boxes. That might sound dry until one realizes that it has something to do with cable boxes currently costing the average household $231 a year, new cheaper devices such as Roku or Amazon's FireTV entering the market, and the fact that Netflix, HBO, CBS and other programmers are delivering "over the top" services.

Who controls how television will be presented? Do consumers wants lots of apps to choose from? Or do they want more nimble devices? These are some of the big questions being considered by media regulators.

At the moment, there are two big proposals on the table to replace the expensive, rarely used security protocols that were established in the mid-90s when Congress allowed companies like TiVo to offer competing devices to standard cable boxes.

One is a hands-off approach favored by the cable industry and Hollywood studios. It would basically allow content operators to provide their own apps and user interfaces. Advocates for this proposal believe it will be flexible enough to accommodate different platforms.

But critics argue that it leaves cable companies and their partners with too much control and what's needed are devices able to do a lot more.

"The MVPD's app-based proposal falls short in this regard," states a filing by Public Knowledge on Wednesday. "It takes the proprietary set-top box and transforms it into a proprietary app — hardly an improvement. Under the MVPD-supported approach, a third-party device would do nothing more than display a user interface and expose features entirely designed and controlled by the MVPD. No differentiation between devices would be possible."

Instead, the second approach — called alternatively the "virtual head-end" proposal or the "competitive navigation" proposal — aims to force programming into a much simpler format so that the devices can construct varying user interfaces and implement features like wider searching of content upon discretion.

Cable companies and programmers worry what this would mean at a time when networks like ESPN, Fox, Showtime have developed their own apps. Would it be the end of bundling? And what about contracts addressing such subjects as channel placement, on-demand access, place- and time-shifting and cloud access?

"Third-parties could potentially seek to disassemble the programming, features, and functions offered over distribution services and selectively reassemble some of them for their own commercial exploitation," states a filing by the MPAA on Thursday. "This could interfere with contracts, upset copyright law, and run afoul of the First and Fifth Amendments to the U.S. Constitution. It would also impose significant costs, require the restructuring of networks, and necessitate standards yet to be developed."

Not everyone is concerned that such an approach would constitute "compelled speech" or represent a taking of private property for public use without proper compensation. Not all have warned as Comcast did on Thursday the proposal would mean "leaving content vulnerable to piracy" and the creation of "a single, national point of attack vulnerable to hackers."

For example, the Writers Guild of America acknowledged that its members have benefited from the MVPD system, but nevertheless nodded towards media consolidation and spoke about how it was "imperative" that third party devices not be tied down by the old system. The guild argued in favor of the more controversial approach favored by tech companies and consumer advocates. "We urge the Commission to carry out its legal mandate to create a competitive market and to resist industry pressure to eviscerate any reasonably effective regulations," states the WGA's filing. "The time to act is now."