The answer, it turns out, is neither simple nor clear-cut, especially in a time of rapid technological change and shifting TV viewing habits. The economics of television started out fairly simply. Back in Don Draper’s day, broadcast networks sent their signal filled with entertaining shows to anyone willing to watch their advertising, which paid most of the bills. If you lived in a place where the signal didn’t reach, you could pay a cable company a monthly fee to bring it to you over a wire. Soon «broadcasters» agreed for a fee to send their shows over the cable. Got a question about business or personal finance? Send it along to Explains cnbc. Each week, we’ll answer as many of your questions as we .
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One vital piece to understand is that broadcast networks and cable networks are fundamentally different. They make money in distinct ways, though that may now be changing. With the right antenna, anyone can get broadcast television for free. A cable network is available only by subscription through a cable or satellite provider. Cable networks are further separated into basic cable and premium cable. Basic cable includes ads in its programming. Premium cable — like HBO and Showtime — does not. Fees for premium cable are higher than those for basic cable. In the traditional broadcast TV business model, networks distribute their shows through a collection of local television stations. Networks used to pay their affiliates to air their shows, but the payments have become smaller as audiences have shrunk. Comcast and Time Warner are the largest in cable, but there are also many other smaller, local cable providers. DirecTV is the big player in satellite. In addition to these fees, cable networks also air ads during their programs so they get revenue from advertisers. These two revenue streams mean that cable networks have fared better during the rough economic climate. Networks get paid in two ways — by selling their shows for a per episode fee on sites like iTunes or by streaming them with embedded ads on sites like Hulu and their own network websites. Some networks like CBS refuse to put shows online because they cannot sufficiently get paid for them. Zucker famously likened it to trading analog dollars for digital pennies. The industry has yet to work out the online TV business model. The Federal Communications Commission has legally allowed them to do so since the s, but broadcast networks have traditionally not sought such retransmission fees for airing their shows. Network affiliates make up the other two-thirds. That remains a contentious issue. Such a move would force affiliates to become independent local stations that air their own original programming. Naturally, regulators would have something to say about this. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. May 14, No Comments.
Media valuation metrics
By using our site, you acknowledge that you have read and understand our Cookie Policy , Privacy Policy , and our Terms of Service. Whenever a big budget movie comes out we see some statistics like first week earning breaks this and that record. IMDb shows us some stats like budget for the movie, gross earning, net earning. Though it can’t be a measurement for the quality of the movie, but somewhat it gives an idea that yes this is a popular movie. Specially I use this stat sometimes for movies that are not in English. It helps me somehow to have an idea about the popularity of the movie hit or flop factor. But for a TV show the above case is not true. The front end audience only gets to know a TV show is on for next season or not to my knowledge. Earning stats are not that much revealed that even if a show is a hit, it it cut off because of the earning! So here are a few questions. How is budget calculated, season wise or episode by episode? How is earning or profit calculated? Is there any way to see those stats like for movies in IMDb? And lastly how do TV shows actually earn money? Is it only through advertisement? TV Stations are constantly updating their ‘revenue map’ — this is how much money they make at certain times on certain days — it’s really just an annual calendar, it has to be annual to take into account seasonal variations viewing drops in the summer and special events Christmas, easter etc. Actual viewing figures are really more used for revenue creation, i. The Nielsen system in the US is actually one of the least accurate and most costly viewing management figure systems in the world as it only captures a very small sample of viewing data — but it’s a well known and understood mechanism and nobody’s too keen to replace it because they all know how to manipulate it! They then commission shows to the budget they can afford for a certain slot, so if it’s a 2am Sunday morning show the budget is smaller than say a Saturday 9pm slot. They know they’ll get it wrong all the time, a supposed-hit will fail, a smaller show will blow-up — but over the course of a year they balance out and in the absence of a crystal-ball it’s the best system available. They get to hold onto their data as they wish and in fact have VERY accurate viewing figures as their playouts are inherently log’able and reportable. I’m the designer of a similar system to these and we get a staggering amount of data back that we can use to understand viewing patterns and this really does help with predicting future viewing figures.
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Media and entertainment services are part of the consumer discretionary sector. These are cyclical services, which directionally follow the economic trend and expectations. During economic downturns, they usually underperform the market. However, in economic upswings, they often perform better than the overall market. Investors who want exposure to media sector stocks throughout the business cycle should watch for key domestic and global economic and consumer spending indicators. Consumer confidence is a crucial driver for sectors such as media. It gets bolstered by declining unemployment rates and rising disposable income levels. Advertising constitutes a significant portion of media sector revenues throughout its value chain, from media networks to distributors. Investors should keep an eye on traditional media companies with robust business models. But you should also keenly watch for service innovators in the segment. This is particularly important for investors who want to remain invested throughout the business cycle. After the completion of the initial expansion in the business cycle, investors may experience declining returns due to the sector fundamentals we mentioned earlier. Mobile and Internet solutions are increasingly delivering media content. In the earlier parts of this series, we learned how diverse the media sector is. We also learned about the high level of integration within the media industry. The media sector in the United States is dominated by conglomerates. The price-based multiples take into account value from a shareholder perspective. These are forward multiples based on expected values of the denominator after a year. One of the reasons we use these multiples is to take out the impact of various capital investments made by distributors such as cable companies and satellite TV providers. As you can see in the above chart, cable and satellite providers are trading at a discount to media producers and aggregators. Overall, the ETF has 86 holdings. We also learned about capital-intensive media content distributors such as cable companies, and that cable companies also provide voice and broadband services similar to telecoms. Debt repayment capacity is the number of years it will take a media company to repay its debt, excluding any cash and equivalent liquid securities it holds. The FCC primarily regulates competition and protects consumer interest in the media and telecom sector. In terms of content, media is a largely unregulated sector in the United States.
How TV Channels/Serials Make Money — What Is TRP ? — Hindi
Media: A competitive, complex market ripe with investment opportunities Part 3 of Continued from Part 2. Media networks. In the last part of this series, we learned that the US media sector is characterized by vertical integration. We also learned that content producers are often aggregators in the industry. This is due in large part to high media content production costs. They include broadcasters and cable networks. Broadcasters air television and radio content through owned or affiliated broadcasting stations. They often own some television and radio stations.
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