Competition Demystified by Bruce C. Greenwald

Author:Bruce C. Greenwald
Language: eng
Format: epub
Publisher: Penguin Publishing Group
Published: 2016-08-31T16:49:22+00:00

Programming costs are fixed. Networks contract for new shows before they or the producers know the size of the audience they will reach. It is true that some crucially popular shows, and especially their star performers, can demand more money for renewals. Sometimes the networks pay, sometimes they pass. In the main, however, programming costs do not rise proportionately with the size of the audience.

Network distributions costs are fixed. AT&T did not charge more to transmit popular shows from the networks to the local stations. A new network trying to establish itself would initially be at a severe cost-per-viewer disadvantage in paying this bill.

Local distribution costs are fixed. For broadcast signals of equivalent range, it costs no more to reach 50 percent of the potential viewers than to reach 5 percent. Even newspapers do not have an economy of scale advantage as clear-cut as broadcasters do.

Local production costs, like news programs, are somewhat fixed. Popular newscasters get paid more than less popular ones, it seems clear, but not in proportion to the size of their audience. Studio fixtures don’t vary with the size of the audience, nor do the cameras and other equipment that send out the signals.

Advertising costs are fixed. The ads the networks or stations run on themselves and for themselves, and the ads they place in newspapers, magazines, or even on competing stations, do not vary with the size of their own audience. And advertising sales costs are essentially the same for all national networks regardless of viewership.

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