Commercial Television Is Financed Almost Entirely By Advertising

By Author: Cornelia
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The networks' share of the U.S. audience has been dropping as the audience for cable and the Internet has risen. Five years ago, according to Nielsen Media Research, the networks commanded 70 percent of the audience. On an average night in 1999, net-work prime-time television was watched by about 50 percent of the nation; about 40 percent watched cable.

Although the 1999—2000 television season produced the lowest total ratings over-all for the broadcast networks, ad expenditures on television rose again. For the fall 1999 season alone, advertisers purchased $7.2 billion worth of ads on prime-time broadcast television. The reason for the expenditure is GHD IV MK4 Kiss explained by Paul Schulman, president of Schulman/Advancers New York: "It's a great way to reach a huge audience as opposed to cable, which is so fragmented that the highest rated cable networks are still lower rated than the lowest-rated network shows." The top-rated program on television in the 1998—99 season was ER, attracting 25.4 million viewers per show.

When television ...
... networks solicit the attention of advertisers, they do so in terms that make plain that what they are selling is their audience. For example, in Electronic Media in 1995, CBS promoted the Late Show with David Letterman, calling the pro-gram "America's #1 Late Night Entertainment." The promotional copy read, "From coast to coast, Dave is America's late night favorite. He dominates the demos with young, upscale influential viewers and he's tops in households, too."

Audiences are drawn to news in times of perceived crisis. The result is a revenue windfall for news networks. For example, when Iraq moved into Kuwait in summer 1990, coverage of the resulting Middle East crisis pushed network news ratings up by 19 percent. This meant that in early August 1990, the network news programs had a larger average audience than did prime-time entertainment.

Commercial television is financed almost entirely by advertising. Network and sta-tion profits are the difference between programming costs (including salaries, equip-ment, and facilities) and the prices that advertisers are charged to air commercials. For example, if the price of producing the network GHD IV MK4 Gold evening news is $100,000, but $400,000 worth of advertising can be sold, the network's profit is $300,000.

The prices charged for advertising on individual television programs are determined by Nielsen ratings.