The Political Economy of U.S. Television

By Downing, John | Monthly Review, May 1990 | Go to article overview

The Political Economy of U.S. Television


Downing, John, Monthly Review


THE POLITICAL ECONOMY OF U.S TELEVISION

The analysis of television has several strands, ranging from its operation as a business to its functions as a politico-cultural institution. The primary focus here will be on the rapidly changing economic dimensions of TV, with questions about the political implications of these changes raised in the conclusions.

To understand the flux currently underway in U.S. television, it is necessary to note certain general characteristics of the industry over the past decade in particular. Like every other leading sector of the economy - and by 1987 the overall recreation and leisure industry was riding very high - corporate television has been characterized by an ongoing wave of mergers and a growing internationalization.

For example, the ABC network was taken over by Capital Cities in 1985, NBC by General Electric in 1986, and CBS (effectively) by Loew's Corporation. The Fox Broadcasting Company, Rupert Murdoch's putative fourth network which he acquired and transformed in 1986, was part of his News Corporation's 93 publishing, broadcasting, and other communications operations across the globe. The 1989 merger between Time, Inc., and Warner Communications, creating a mega-corporation whose estimated value was $18 billion and annual revenue $10 billion, was developed explicitly to get a favorable position in global marketing.

As these examples indicate, television was often only one of various communications activities, and indeed sat quite often cheek by jowl with totally non-media corporate divisions.

Further background dimensions of especial importance to TV were the integration of a number of communications technologies, including computing and telecommunications, and the successive steps taken to cut back traditional areas of state regulation over the communications industry.

With these in mind, we turn our attention to the leading indicators of flux in the television business: the decline of the networks, the rise of cable and other independent sources of TV viewing, and the future of "broadband" telecommunications. We will then examine concurrent changes in the advertising industry and in TV audience measurement, whose linkage spells still further problems for TV corporations. Then we will focus briefly on the recent attack on labor in the communication industry. Finally we will review some of the political implications of these changes. It has to be said, such is the flux currently in process, that some of the names of corporations below are likely to change.

Television Network Decline

Over the period 1980-1987 one consumer home in eight was "lost" to the three big networks. In 1988, NBC's chief executive forecast that by the early 1990s, the networks' combined audience share might go as low as 55 percent. All the networks engaged in substantial cost-cutting exercises during the 1980s to deal with actual or envisaged losses. CBS sold its $2 billion record division to Sony, and also off its magazine division ($650 million) and its textbook division ($500 million). Capital Cities ABC axed 10 percent of its workforce, and in 1988 NBC announced the sale of all its radio stations.

These are some indications of the major setbacks encountered by network TV. Gone are the days when the three network reigned supreme, and dealt with but one telecommunications corporation, AT & T, together enjoying an effectively undisputed hegemony over production and distribution. What happened?

The Rise of Competitive TV Suppliers

The surface answer is that other operators had taken an increasing slice of the pie. Chief among these was the cable TV industry, which had moved from being simply a transmission aid to the networks to enable better reception in certain areas, to feeding into virtually half of U.S. homes by the end of the 1980s, providing from 12 to 140 channels depending on the area. …

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