In 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. By then, the dynamics of technology and regulation established for radio broadcasting already had shaped the possibilities for television networks.

Beginning in 1920, radio entrepreneurs in the United States 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 (CBS), and the National Broadcasting Company (NBC) 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 U.S. 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 under-way. 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 periods. 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 of television.

At the eve of American entry into World War II, 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 ac-count, 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 became part of the group American Broadcasting Companies, Inc. (National Broadcasting Co. v. U.S., 319 U.S. 190, 1943).

After 1945, as Americans turned to peace-time pursuits, including the development 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.

By 1945 the FCC preliminarily had allotted some 19 VHF Channels, numbered 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, applications for new stations poured in. The FCC imposed a freeze on new applications on September 30, 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 percent 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 affiliations.

The Emmy Awards, first presented on January 25, 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 Theater) and personality (Milton Berle). A network spot for Lucky Strike cigarettes 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 frequencies 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 inter-mix VHF and UHF channels have led to harsh criticism of the FCC’s decisions.

Throughout 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 Corporation, 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.

Collectively the networks could have only as 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-1970s that local stations were plentiful enough for ABC to achieve full comparability.

As the networks consolidated their control of station time during the 1950s, 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 was 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. This period often is referred to as the Golden Age of television in the United States, 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 described the totality as a “vast wasteland.”

The true golden age of three-network hegemony probably dates 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, shared by all, of the significant events of the day. 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 used coverage of the Summer Olympics as the basis for 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&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 years 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.

The 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 WTCG 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 embedded in FCC common carrier regulation was the idea of nondiscriminatory 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.

With 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.

These 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 a suggested retail price of $1,295. Recording time per tape was one hour. Sony’s Japanese rival, Matsushita, which markets under the name Panasonic, followed shortly with an incompatible format that eventually became standard, called 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], called 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. In the United States (unlike some other countries, such as Britain), 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.

As cable and cassettes 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 percent of 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 Hathaway, Inc.

By 1986, RCA was a diminished echo of the industrial giant of the post-war years. 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 1985 for $6.3 billion. General Electric had been instrumental in creating RCA in the 1920s before David Sarnoff’s tenure in charge, and now closed the circle in an era more receptive to combinations.

CBS entered this period smarting from a lengthy battle with General William C. Westmoreland over the CBS Reports documentary, The Uncounted Enemy: A Vietnam Deception. The advocacy group, Accuracy in Media, Senator Jesse Helms, and Ted Turner were each, in 1985, separately talking up plans to acquire the network. CBS beat back these efforts 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 effective control of the stock to Loews Corporation and its proprietor, Laurence Tisch. Soon 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.

Ever 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, and next to realize somehow the dream of a fourth network. By the time the fourth network arrived, family viewing had fractured into discrete-person viewing, multi-set households were common, and broadcast networks had to contend with cable networks, premium cable, home video, even computer games.

Nevertheless, the fabled fourth network did come in 1990, when Rupert Murdoch, an Australian publisher, naturalized as a U.S. citizen to make him eligible for the deal, acquired the strong major-market grouping of Metro Media stations, and placed them under the same roof with the 20th 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 and four. The FOX network finally attained a full-time run, and in less than five years from launch, FOX could first be seen actually winning a prime-time slot here and there. In 1994 FOX purchased rights to the National Football Conference (NFC), building from sports, and luring affiliates in NFC territories, moves taken from the ancient game plan on which ABC’s strategy had previously been built.

The rise of FOX placed new pressure on FCC rules intended to adjust the playing field between program suppliers and the networks. These rules imposed a networks to own rights for secondary distribution of the programs they originated (called the Fin-Syn Rules), and by keeping an hour of prime time out of the hands of networks, reserved for local stations to program, usually by purchase from syndicators (the Prime-Time Access Rule). Because Fox combined a network with a studio, it sought and obtained waivers, and soon the rules were repealed for all networks.

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 franchise, to form UPN (United Paramount Network).

In 1995, Capital Cities/ABC agreed to be acquired by Walt Disney Studios for $19 billion in cash and stock. The Disney combination with Capital Cities was the opening round of a new level of consolidation among few great communications trusts equipped to provide multiple channels of in formation, entertainment, and merchandizing in coordinated fashion throughout the world.

In 1999 Viacom and CBS (acquired earlier by a strong group owner, Westinghouse) merged, in the largest such conglomeration at that time, valued at $50 billion. From the Viacom side, the merged entity included Paramount, Blockbuster Video, television stations, publishing, and other media. Westinghouse/CBS brought to the table its television group, but also from Infinity a major radio group and outdoor advertising. This combination was possible only because the new Telecommunications Act of 1996 abolished the numerical limit on television stations in common ownership, and provided a liberalized cap of 35 percent of national audience for any one station owner. The Viacom/CBS merger also came in the immediate aftermath of an FCC action repealing the “dual network” ban that had divested NBC Blue in 1941. Bill Clinton’s arrival in 1993 gradually shifted the partisan striping of the FCC Commissioners. But the bedrock principles in Washington, D.C., did not change much: receptivity to market forces and competition in theory, and receptivity to large media players getting their wish lists in practice.

That power was drifting away from the “club” of three—now four—was evident in the rise of Time Warner, or AOL Time Warner, as it was dubbed at the $183 billion merger in 2000. Without ownership of any one of the “major” networks, Time Warner, with all the growing pains accompanying the initial years, was and remains the most highly capitalized media organization in the world. It has a pervasive impact on television through the WB network, HBO, Turner Classic Movies and TNT, CNN and CNN Headline News, Warner Brothers Television, and other program originators, and major footprints in online services, books and magazines, to mention only the highlights.

Since the advent of U.S. 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. In 2003 the FCC voted to liberalize most of its remaining restrictions on media ownership, including the phase out of “cross-ownership” restrictions in more than one category of mass media, and an increase in the maximum audience that could be served by network-owned stations, from 35 percent to 45 percent, or higher if the stations broadcast in UHF. But this time the implications appeared obvious to a broad cross-section of the public, from the National Rifle Association to Fairness and Accuracy in Reporting. The proposals created a negative reaction in public comment and meetings when proposed, and then a storm of objections when adopted 3–2 by a sharply divided FCC. Both houses of Congress appeared poised to roll back some or all, unless dissuaded by the Bush administration.

If the latest regulations go into effect they will prompt a new wave of consolidations. For all the heat they have generated, they are but the capstone of a 20- year bi-partisan trend. Another FCC action at the end of 2003 may turn out to have even greater significance. News Corporation, the owner of FOX, was permitted to acquire the ownership of DirecTV, which had a direct satellite feed to eleven million homes, and was the second largest pay-TV provider (after cable TV giant Comcast). No “vertical” combination of program and distribution assets quite like this has been seen at any time since the motion picture combinations were broken up in the 1950s. In blessing this merger, the FCC noted that the new company planned by the end of 2004 to put local TV stations on the satellite—known as local-into-local, for the 100 largest markets.

By 2002, 67 percent of households had cable television, providing at least potential competition for satellites. Eighty-five percent of homes subscribed to a multi-channel video service, so that as few as 15 percent of homes were served by over-the-air broadcast only. The slow emergence of digital television will increase options—eventually—by enabling multi-casting of several feeds on a station’s video channel. Internet streaming gradually will become more practical, in step with broadband deployment.

Unbound from terrestrial broadcasting, and even from the idea of a single channel, what will a network look like? The answer is already seen on satellite and cable today. The CNN franchise, a Ted Turner legacy acquired by Time Warner, now is seen on cable as CNN, CNN International, CNN en Español, CNN Headline News, CNN fn, and CNN Interactive. CNN Radio is a cable service. All of these can supply news briefs to other channels in the corporate family and can be re-purposed in books, magazines, and elsewhere.

The logical basis for networking in mass media will endure. Production costs are fixed, so the advantage is with those who can achieve the greatest exposure. Exorbitant capital costs in satellite, cable, and high-end digital origination are unlikely to vanish. But the new demand for customization and niche programming points in a very different direction. The large network organizations may have no inherent advantage in reaching a local, specialist, or individualized audience. That provides a possible opening for nimble, adaptive, and small services to endure and even thrive, embracing new technologies as they emerge. In the absence of any governmental brake on consolidation, that would have to be the hope, at least, for any society that depends for its survival on the free flow of information to its citizens.