This category covers establishments primarily broadcasting visual programs by television to the public, except cable and other pay television services (discussed in SIC 4841: Cable and Other Pay Television Services. Included in this industry are commercial, religious, educational, and other television stations. Also included are establishments primarily engaged in television broadcasting and that produce taped television program materials. Separate establishments primarily engaged in producing taped television program materials are classified in SIC 7812: Motion Picture and Video Tape Production.
During the early 2000s, the television broadcasting industry was challenged by weak economic conditions that had a negative impact on corporate spending and thus advertising revenues. This decline included the fall of many "dot-com" companies that previously had spent hefty sums on advertising. These conditions were made even worse by the terrorist attacks against the United States on September 11, 2001. While the industry achieved positive growth during most of the 1990s, in 2001 revenues fell for the first time in 10 years, dropping from $44.8 billion in 2000 to $38.9 billion in 2001. In addition to a difficult economic climate, the industry has faced a number of other challenges brought on by new competition, regulatory changes, and technological developments.
In recent years, the long-established networks—ABC, CBS, and NBC—have struggled for the top ratings position, as two of the three acquired new owners. In 1995 Disney purchased ABC and Westinghouse purchased CBS. CBS subsequently merged with Viacom Inc. in 1999. The established networks also had to contend with Fox Broadcasting, which established itself in the 1990s as the fourth major broadcast network. Smaller "netlets," not yet meeting the Federal Communications Commission (FCC)'s definition of a network, were established by Paramount and Warner Brothers in 1995, and in 1997 Pax Communications launched a seventh network, PAX TV. The increased reach of cable television, direct broadcast satellite operators, and even the Internet are eroding audiences for network broadcasts. New federal rules regarding ownership, programming content, and digital transmission continue to reshape the competitive landscape.
In this frenetic atmosphere, the once-bleak outlook of the networks in the early 1990s improved considerably later in the decade. Although they continued to see a drop in audience share from the 1980s, the networks still held a strong position in prime-time ratings and saw increased advertising revenues. Beginning in 1995, the major networks gained new syndication revenues resulting from a relaxation of federal regulations. They also began creating their own cable networks, such as ESPN2 and MSNBC, using their considerable production resources. Furthermore, viewing audiences had made it clear that they did not want cable television service that did not include local broadcast network affiliates. Thus, the networks became increasingly concerned with production and programming, as they created a strong role for themselves in the growing system of television delivery and services. Writing for Time, Richard Zoglin commented, "If the network business is thriving, it is as a radically different sort of business. The line between distributors (the networks) and suppliers (outside producers) is being blurred. The networks, given the chance to produce and own their own shows, are acting more like studios, while the studios, afraid of being squeezed out, are trying to become networks."
The networks include in their stables both network-owned stations, which are often flagship stations in major media markets, and affiliated stations, independently owned stations that have contractual agreements with a network to broadcast their lines of programming. In December 1996 Variety noted that the merger of Westinghouse with CBS "had no greater impact than on the station side, where both companies had established strong station businesses long before their teaming." At the same time, the acquisition of New World Communications by Fox Televisions Stations Group contributed to the radical changes that took place among station holdings. Fox vaulted from being a medium-sized group to being the largest operation by the end of 1998, with 23 stations (including channels in New York, Los Angeles, Chicago, and Philadelphia) and 35 percent penetration of U.S. television households.
In early 2004, Viacom (home to CBS and UPN) was the industry leader, with 39 stations reaching almost 40 percent of the U.S. market. Fox was second, with 35 stations reaching about 38 percent of the market. Paxson Communications ranked third with 61 stations reaching almost 31 percent of U.S. television homes. NBC followed with 29 network-owned stations reaching almost 34 percent of all American homes. Tribune Broadcasting ranked fifth with 27 stations and 30 percent penetration. Other industry leaders included ABC, with 10 stations and almost 24 percent market coverage; Univision (36 stations, almost 22 percent coverage); Gannett Broadcasting (22 stations, almost 18 percent coverage); Hearst-Argyle (34 stations, 16 percent coverage); and Trinity Broadcasting (23 stations, almost 16 percent coverage).
A shake-up in station ownership started in May 1994 when Fox lured twelve stations affiliated with the other networks to its side, including several in major markets. This affiliation switch, the biggest in television history, signaled a significant change in the balance of power between the networks and individual television stations. In Business Week, Tribune Television President Dennis Fitz Simons noted that the deal highlighted "the importance of the distribution of programming—something that has been ignored recently. Furthermore, it gives the control back to the stations." Fox's success in these matters subsequently inspired the creation of additional netlets, the United Paramount Network (UPN) and the Warner Brothers (WB) Television Network, which launched in January 1995 with more than 80 percent national coverage.
The first television networks in...