are organizations that produce or acquire the rights to programs,
distribute these on systems of interconnection, and secure uniform
scheduled broadcast on a dispersed group of local outlets. In commercial
broadcasting, "networking" was recognized at an early date as the
clearest path to profitability, because the costs of program production
were--and are--fixed, and revenue turned on securing the maximum
degree of efficient distribution and exposure to mass audiences.
the United States, the number of broadcast networks existing at
a particular time, and the prospects for entry by new networks,
have always been the combined result of the current state of technology,
in tension with an extensive role for government regulation. Television
broadcasting, tentatively begun prior to the American entry to World
War II in 1941, was suspended for the duration of the war, and did
not resume until the first wave of station activations in 1946 through
1948. In radio, as was to be the case in television, industry leadership
was exercised by a charismatic executive and/or founder: David Sarnoff
at NBC, William S. Paley at CBS, Allen B. DuMont, and a few others.
Beginning in 1920, radio entrepreneurs had developed an array of
informational and entertainment fare, originated in live performances
at local stations, and increasingly at network studios in New York
City, from which feeds to stations could be disseminated in real
time over telephone lines. Commercials, like other copy, were read
and performed live. Strong local stations prospered in this system,
but the highest return was enjoyed by two major networks, Columbia
Broadcasting System, and the National Broadcasting Company unit
of a premier radio equipment manufacturer, Radio Corporation of
America (RCA). RCA operated dual networks, the Red and Blue. In
radio, as was to be the case in television, industry leadership
was exercised by a charismatic executive and founder, Robert Sarnoff
at NBC, William S. Paley at CBS, Allen B. DuMont and a few others.
The first comprehensive radio law, the Radio Act of 1927, did not
confer on government any express power to regulate networks directly,
but empowered it to regulate stations engaged in "chain broadcasting."
This served to consolidate industry control by the network organizations
already underway. The law mandated that radio broadcasting stations
be allotted in a manner that equitably served the various states
and localities, but withheld actual station ownership of broadcast
channels, in favor of renewable licenses for limited times. It also
prohibited the licensing of a person or entity that had been convicted
of unfair competition or monopolization. These precepts carried
over with the Communications Act of 1934, and shaped the relationship
among stations, networks and the government throughout the emergence
At the eve of American entry to the War the Federal Communications
Commission (FCC), acting under its powers to investigate and regulate
stations, concluded a probe of "chain broadcasting" and announced
a series of prohibited practices in radio. These included contracts
that permitted networks to command and resell advertising time for
their own account, or to option time. The rulings also prohibited
the specific ownership of dual networks by a single entity, NBC
being the singular example. The Supreme Court's decision upholding
these actions in 1943 prompted the divestiture of NBC Blue, acquired
that year by Lifesaver magnate Edward J. Noble, and renamed the
American Broadcasting Companies. (National Broadcasting Co. v.
U.S., 319 U.S. 190 (1943).
1945, as Americans turned to peace time pursuits, including the
realization of television, commercial radio already was settled
into a pattern with program fare dominated by two or, generously,
perhaps three networks, each of them fortified against hard times
by the ownership of a handful of highly-profitable local stations
in the largest trading areas. The critical determinant of the number
of networks that could be supported was--as it is today--the number
of local outlets that could be assured for network audience, by
ownership or by contract.
1945 the FCC preliminarily had allotted some 19 VHF Channels, 1
through 19, for television broadcasting. Almost immediately Channels
14 through 19 were reallocated to the military, and Channel 1 was
put aside for two-way radio. By the end of 1946, seven stations
were broadcasting (all on Channels 2 through 6), and approximately
5,000 household receivers were in use. From that point, and even
in the absence of detailed technical standards to guard against
mutual interference, or other standards, applications for new stations
poured in. The FCC imposed a freeze on new applications on 30 September
1948. Virtually all pre-freeze filers actually built broadcasting
facilities, so that by the time the freeze was lifted on 13 April
1952, some 107 VHF stations had been activated in 63 markets, and
receivers in use had grown to 15.5 million. Denver led the list
of many important markets that had no television at all. During
the freeze, NBC moved aggressively to apply for and activate stations
in the top markets. CBS got a late start, and proceeded to acquire
its first stations by purchase. ABC and a fourth network, DuMont
Laboratories, participated actively in the FCC proceedings, but
were unable or unwilling to initiate major station investment, pending
resolution of the knotty regulatory issues.
The framework adopted by the FCC in 1952 allotted television channels
to specific communities throughout the United States, roughly in
proportion to market size. VHF Channels 2 through 13 and UHF channels
14 to 83 were utilized, but as of 1952, virtually all TV sets were
capable of VHF reception only. The first UHF set-top converter was
introduced in March 1952. The decision also sacrificed efficiency,
and reduced the potential number of stations, by grandfathering
the existing 107 outlets, helter-skelter wherever they had started.
Practically speaking, the FCC's allocations provided only enough
VHF outlets to provide two-channel service to about 90% of the population,
and third-channel service to substantially less. NBC and CBS, each
emerging with five powerful owned-and-operated stations, and program
offerings spun off from their popular radio fare, quickly expanded
Emmy Awards, first presented on 25 January 1949, were an accurate
barometer of network emergence. A local station, KTLA in Los Angeles,
dominated the awards for year 1948, with the most popular program
(Pantomime Quiz Time), most outstanding personality (Shirley
Dinsdale and her puppet, Judy Splinters), and the station award.
By the second year, with KTLA still prominent, NBC cracked the line-up,
jointly with its New York flagship KNBH, winning best kinescope
show (Texaco Star Theatre) and personality (Milton Berle).
A network spot for Lucky Strike won best commercial. In the third
presentation, for 1950, Alan Young and Gertrude Berg were best actor
and actress, for CBS jointly with Los Angeles independent KTTV,
and their co-produced Alan Young Show was recognized for
best variety show. Outstanding personality was NBC/KNBH's Groucho
Marx. By the end of the FCC's freeze these networks had unqualified
leadership of program origination.
In the complex fight over regulation DuMont Laboratories had advocated
a plan with a minimum of four VHF's allotted to each of the 140
largest trading areas. Rebuffed at the FCC DuMont never achieved
more than 10 primary or full schedule network affiliates. As the
few UHF operators incurred mounting losses, DuMont folded its network
in 1955. These by-products of the freeze and subsequent FCC decision
to grandfather incumbent stations and intermix VHF and UHF channels
have been harshly criticized.
this period, ABC was barely operating, and Noble stated that he
had never declared a dividend nor taken a salary through 1952. In
1953, however, ABC received FCC approval to merge with United Paramount
Theaters. The chain had been spun off from Paramount Pictures Corp.,
under court decree that followed the Supreme Court's antitrust decision
of 1948, upholding divestment of theatrical production from exhibition.
The significance of government involvement could not be more clear,
with ABC's very existence jeopardized by one government action,
and resolved favorably by another. ABC used its Hollywood connections
adroitly, teaming with a studio to co-venture a break-through program,
to that date the most expensively produced in history, Disneyland.
the networks could have only so many affiliates as there were stations
on the air. Commercial VHF stations grew from 233 in 1954 to 458
in 1962. Commercial UHF stations stood at 121 in 1954, and struggled
against the lack of UHF receivers. Many UHFs went dark and returned
their licenses for cancellation, and by 1962 their numbers had shrunk
to 83. In total, the commercial station universe as it grew roughly
from 350 to 550 was adequate to support approximately two-and-a-half
national networks. Local stations, in the enviable position of having
multiple suitors, frequently left ABC with no local outlet. Congress
enacted a law in 1962 mandating that all receivers be capable of
UHF tuning, but it was only by the mid-seventies that local stations
were plentiful enough for ABC to achieve full comparability.
the networks consolidated their control of station time during the
l950s, a broad shift occurred in their relationship with the sponsor,
enhancing their control even further. In the early part of the decade,
shows typically were produced by the sponsor live, or contracted
for by the sponsor and delivered to the network on expensive film
or kinescope. Production centered in New York. With the introduction
by Ampex of quadruplex videotape recording in 1956, it became possible
for programs to be produced and recorded anywhere, and the new orders
for entertainment fare shifted to the concentration of expertise
in Hollywood studios. Increasingly, the network replaced the sponsor
in development, acquisition, and revision to final programming form.
From the 1950s can be charted the realization of core concepts in
prime time programming, including the ensemble situation comedy,
cop shows, westerns, and regularly scheduled newscasts. The interval
often is referred to as the Golden Age of television, perhaps precisely
because of its experimental flavor. But while major -market stations
achieved immediate and impressive profitability, networking was
still a gamble, the program performance remained uneven, and in
1961 critic-for-a-day Newton N. Minow derided the totality as a
The true golden age of three-network hegemony probably traces from
1963, when each network inaugurated a half-hour prime time newscast,
and network television drew the entire nation together in grief
after the assassination of President Kennedy. From 1963 until the
late 1970s, the networks created a refracted version of the significant
events of the day that was shared by all. This cohesion intensified
with expanding use of color transmissions and color set sales during
the 1960s. One nation resonated with the networks' triune voice,
in a manner unparalleled in the past, and likely never again to
be seen in the future. ABC, gradually shoring up its group of strong
affiliates, and hiring a visionary programmer in Fred Silverman,
finally took the Summer Olympics to its first full-season ratings
victory in 1976-77. The "third network's" potential had been clear
for years, but several attempts to acquire ABC during the 1960s
were rebuffed, and an attempted buyout by IT and T foundered in
1968, after criticisms were vetted during two years of FCC proceedings.
The membership quota for this elite club of three networks, however,
was eventually dismantled by a technology developing quietly during
these same years--cable television. The FCC's original framework
of 1952 did not assure three-network or any network service, to
all households, and was particularly deficient where terrain obstacles
degraded reception over the air. Community antenna television (CATV)
was a local self-help response, tying hilltop repeaters to wires
into the home. Because cablers did not utilize the broadcast spectrum,
the government was uncertain of its jurisdiction until a Supreme
Court decision came down in favor of a broad authority to regulate,
U.S. v Southwestern Cable Co., 392 U.S. 157 (1968). Thereafter
broadcasters, well aware of the potential competition, leaned on
the FCC to retard cable, specifically by forbidding the importation
of distant signals that were not available in the local market over-the-air.
By 1970, a regime of anti-cable regulation was firmly in place and
for ten year it served to retard competition and preserve the networks'
position. A newer technological device again led to significant
change in this arrangement.
Domestic communications satellites were authorized in 1972, and
by 1975 RCA and Western Union had space satellites launched and
working. In 1975 RCA sold time on its Satcom I for Home Box Office,
the first program service designed to bypass conventional delivery
channels, and offer a unified program lineup directly to cable systems
and thus to the home--in the true sense a network. The following
year, uncertainties surrounding the re-sale of broadcast programs
to cable were resolved, with passage of a new Copyright Act, requiring
broadcasters to license to cablers under certain conditions, at
below-market rates to be established through a bureaucratic process.
opportunity presented by the resolution of the two knottiest issues--distribution
and rights--was first recognized by Ted Turner, not a cabler but
a broadcaster, operator of WGTB in Atlanta (later, WTBS), an independent
UHF on Channel 17. By 1978, the FCC had been having second thoughts
about the heavy hand it had placed on cable development. Turner
approached the agency with a plan to offer Channel 17 to a common
carrier he created for the purpose, Southern Satellite Systems.
In turn, Southern would deliver the station by satellite to cable
head-ends, charging five cents per household per month. Because
imbedded in FCC common carrier regulation was the idea of non-discriminatory
rates, for large and small customers (or cable systems) alike, Southern
needed a waiver to charge by the number of local subscribers. Astonishingly,
the FCC said yes. The debut of Channel 17 as the first "super station"
in 1980 assured, year by year, that the three-network share of the
program universe would continue to shrivel inexorably. By 1981 the
FCC also was in process of a cable "deregulation," abandoning its
10-year folly of attempting to re-bottle the genie of cable program
origination. The networks, barred by FCC rules from owning cable
systems, began to invest in new cable program services side-by-side
with cable companies, Turner, and others.
President Ronald Reagan taking office in 1981, the deregulatory
thrust continued. The former actor, when he thought about such matters,
was willing to favor Hollywood studios in their primordial battles
with the television networks, and to endorse the expansion of channels
for program delivery. A cable television bill, passed in 1984, pre-empted
local rate regulation, and so gave the cable industry working capital
to continue its strides as program creator and distributor.
strides were being matched with the opening of a wholly new channel
into the home. Sony had introduced a practical, consumer videotape
player recorder, the Beta VCR, in 1976, at suggested retail of $1,295.
Recording time was one hour. Sony's Japanese rival, Matsushita,
which markets under the name Panasonic, followed shortly with an
incompatible format that eventually became standard, VHS. Hollywood
studios, led by Universal Pictures and Disney, promptly brought
a challenge in Federal Court, claiming that the device inherently
was useful only for stealing copyrighted material. The issue oscillated
in court until 1984, when the U.S. Supreme Court ruled that home
taping for home use was not an infringement of copyright, Sony
Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984),
the "Betamax case." From that date, sales of home recorders and
the rental of tapes exploded. The studios have come to enjoy greater
revenue from cassette sales and rentals than from theatrical exhibition,
and must look back in wonder at their temporary insanity when the
player-recorders first were sighted in North America. But for the
networks, this technology presents long-term problems. The rating
services have assumed so far that programs can be credited as viewed
if they are recorded, but it may become apparent in time that the
facts of actual audience behavior are otherwise. VCRs in their most
typical use occupy the household's attention for non-network fare
such as movies, just coming off their initial theatrical run.
cable and cassette continued to splinter the market, Reagan's FCC
abolished many of the rules and policies that had stood in the background
of television broadcasting also. In 1984, the rule restricting each
television network to the ownership of a maximum five VHF stations,
and seven VHF plus UHF, was replaced with a quota of up to twelve
VHF so long as the station grouping did not exceed 25% all TV households.
While this liberalization was still at the discussion stage at the
FCC, Thomas S. Murphy, chairman of the Capital Cities station group,
approached ABC about a merger. Once the rule was finalized, Capital
Cities in 1986 announced the acquisition of the much larger network,
for $3.5 billion, with financing from Warren E. Buffett and Berkshire
1986, RCA was a diminished echo of the industrial giant of the post-war.
It had departed the computer main-frame business in the early 1970s
with massive losses, and its equipment markets had been overtaken
by Japanese manufacturers. Its television network remained competitive
and highly successful, but in no position to refurbish from working
capital for the intensified program battles ahead. RCA and its NBC
network were sold to General Electric in 1986 for $6.3 billion.
General Electric had been instrumental in creating RCA in the 1920s
before David Sarnoff, and now closed the circle in an era more receptive
entered this period smarting from a lengthy battle with Gen. William
C. Westmoreland over the CBS Reports documentary, The
Uncounted Enemy: A Vietnam Deception. The advocacy group, Accuracy
in Media, and Sen. Jesse Helms in 1985 were urging their constituencies
to take over CBS by stock purchase, with the ultimate goal to fire
Dan Rather. Seeing an opportunity, Ted Turner announced the intention
to do his own hostile take-over, to be financed with junk bonds.
The network beat back this effort with a $1 billion stock repurchase,
but was left with more debt, little working capital, and a reduced
stock valuation. The Board and the aging founder, Paley, passed
leadership, and thereafter effective control of the stock, to Loews
Corp. and its proprietor, Lawrence Tisch. By a combination of ill-fated
acquisitions and divestments, and under competitive pressure, CBS
had to focus on cost containment. The news division, successors
of Edward R. Murrow, was pruned by 230 people. In 1987 CBS dropped
to third place in the season ratings for the first time.
since the sputtering start for UHF in the first two decades of television,
FCC commissioners had spoken longingly of the desire, first to assure
three-network service to every corner of the nation, and next to
somehow realize the dream of a fourth network. By the time the fourth
network arrived, conditions had so changed as to raise the question,
four of what? In any given household at any given time, two or three
television sets could be in use, watching network fare; or independent
stations; or movies, sports, original fare and reruns on cable;
or first-run movies on premium, pay cable; or movies or exercise
videos on cassette; or possibly computer games. Nevertheless, the
fabled fourth network did indeed come in 1990, when an Australian
publisher, naturalized as a U.S. citizen, Rupert Murdoch, acquired
the strong major-market grouping of Metro Media stations, and placed
them under the same roof with the Twentieth Century-Fox studio.
Murdoch eschewed ABC's original 1950s approach--programming mostly
cannon fodder against its rivals on a full seven nights--instead
making a staged entry with two nights, then three, four. The FOX
network finally attained a full-time run, and in less than five
years from launch, FOX could be seen actually winning a time period
here and there. In 1994 FOX purchased rights to the National Football
Conference, building from sports, and luring affiliates in NFC territories,
all exactly as dictated by the ancient scripting of ABC.
the l990s the FCC continued to chip away at rules intended to adjust
the playing field between Hollywood studios and other program suppliers
on one hand, the networks on the other. Rules had evolved that imposed
a quota on network self-produced fare, that forbade the networks
to own rights for secondary distribution of the programs they originated
(called the Fin Syn Rules), and that kept an hour of prime time
out of the hands of networks, reserved for local stations to program
(the Prime Time Access Rule). Because FOX combined a network with
a studio, some of these rules had the perverse effect of thwarting
development of a fourth network, and for a time the FCC liberally
accorded waivers to FOX alone.
Other rules no longer served a purpose in the multi-channel environment.
By 1994, the liberalization of ground rules emboldened three more
Hollywood studios to try their hand at networking directly. Warner
Brothers launched a network in its own name, and Universal, which
had grown to eminence as a prime source for NBC, teamed with Paramount,
proud source of the inexhaustible Star Trek, to form UPN (United
Paramount Network). The aspirations of these mini-networks remain
ad hoc, choosing their nights and their time periods with care.
It is obvious that there are too few local television broadcast
stations to support five, six or more full-time networks. The immediate
impact of these entrants was to drive up the prices of television
stations, as too many programs chased too few outlets. In time,
a new wave of consolidations is assured.
1995, Westinghouse, a strong group owner, acquired CBS, in a transaction
that echoed the Cap Cities take-over of ABC ten years earlier. Also
in 1995, Capital Cities ABC agreed to be acquired by Walt Disney
Studios for $19 billion in cash and stock. In the long view, the
CBS sale is likely to appear as but one more episodic reorganization.
The Disney combination with CapCities prefigures a new level of
competition among few great communications trusts equipped to provide
multiple channels of information, entertainment and merchandising
in coordinated fashion throughout the world. Such networks are difficult
to describe, because none yet exists. The largest multiple system
cable operator, TCI, which has diverse program interests, is poised
to be one in the future. Viacom, as owner of Paramount, impresario
of UPN, owner of Blockbuster Video, and cable programmer in other
capacities, may be another.
1996 Congress passed and the president signed a new telecommunications
act. It reduces or eliminates historic barriers that have separated
telephone long distance companies and the regional Bell operating
companies from the local cable television companies. In broadcasting,
it abolishes the numerical limit on television stations in common
ownership, and provides a liberalized cap of 35% of national audience
for any one station owner. It abolishes the "dual network" ban that
divested NBC Blue in 1941, and invites the FCC to undertake proceedings,
looking to the authorization of more than one local TV station in
common ownership (now forbidden). Since the advent of television
in 1941, there never has been a regulatory change--permitting combinations
not previously allowed--that did not trigger moves by the affected
parties, to the full, lawful outer limits. The turn of the century
is bound to witness the additional three networks (now a college
of four) dropping below that point where they own even so much as
a majority of prime time viewing attention. But that development,
in steady process for thirty years, will be overshadowed by the
emergence of new network forms, rendering the classical shape of
the three no longer recognizable.
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