I did promise we would discuss mass media corporate consolidation (I JUST KNOW YOU WERE CLAMORING FOR IT) so what we're going to do today is focus on early days of TV (Instead of focusing on the acquisition of channels by studios. Remember Part 1? If not go back and skim it real quick. Stare at the chart for a hot 15 seconds at least.) For this section from 1905 to 1955 we're going to delve into the creation of television network Owned and Operated vs franchise ownership affiliates.
While every media professional knows this fact and how these processes work many of you at home have just but an inkling and WANT TO KNOW MORE so let's go go go!
This story begins with one of life's two inevitabilities: taxes. Specifically the taxes that pay for the US Census. WHICH YOU ALL SHOULD BE FILLING OUT RIGHT NOW. Go. Do that. I'll wait. It's online and takes like five minutes. When the US census is complete, the Federal government spends a few years analyzing that data and creates Metropolitan Statistical Areas (MSAs). These are used for a variety of government applications, usually in regard to allocating federal dollars for municipal use, disaster relief, or in this post's case FCC broadcasting licenses. Here's the map from 2013 with the 374 MSAs in the darker of the two greens.
Radio was wildly lucrative but also wildly expensive and therefore wildly risky. One way to mitigate the initial setup and content creation costs was consolidate ownership. Larger stations bought ownership of smaller ones. In turn smaller stations would form consortia to remain independent. For the purposes of this post, know that one of these consortia was the United Independent Broadcasters who coordinated their stations to all broadcast the same signal at the same time using Bell's AT&T telephone system. This was an expensive venture and Columbia Records invested heavily in them in hopes that a massive down-payment would result in a massive profit, renaming the group Columbia Phonographic Broadcasting System. When Columbia Records couldn't handle the cost anymore, they sold their shares. The Phonographic nomenclature was dropped but the Columbia Broadcasting System (CBS) name remained.
Meanwhile, one of those large companies buying up small stations was Thomas Edison's General Electric (GE). To mitigate their risk, GE spun off a legally distinct but wholly owned company called Radio Corporation of America (RCA). Who in turn did the same, spinning off the legally distinct but wholly owned National Broadcasting Company (NBC). NBC's parent company RCA found fantastic ways to cut corners and save money in radio's heyday. One of which was not using AT&T's expensive telephone lines to send signals from station to station for simulcasts but instead rely on the cheaper, poorer quality, not-intended-for-this-purpose-at-all Western Union telegraph lines for voice transmission.
By the early 1940s NBC had two nationwide radio channels: the Red Network (and its West Coast, time shifted re-broadcast the Orange Network) and the Blue Network (and its West Coast, time-shifted re-broadcast the Gold Network). Their marketshare was titanic - far larger than any other consortium or rival corporation - so much so it attracted anti-monopoly lawsuits. And in 1943 the Federal Government broke apart NBC's two channels into desperate companies: NBC Red and NBC Blue, the former remaining in the hands of GE and the latter of which was purchased by the up and coming American Broadcasting Corporation (ABC).
Aside from the breakup of NBC, the 1940s a second major development rocked the radio world: the advent of television. Three of the four major radio companies quickly and feverishly expanded into the television market (the previously unmentioned Mutual Broadcast System stubbornly remained radio-only) and within 15 years television had wholly and without understatement completely replaced radio as Americans' main form of entertainment. [BIG EDITORIAL WARNING NOTE TIME AIR HORN NOISE MAJOR OVERSIMPLIFICATION AHEAD] While the rise and consolidation of radio broadcasting was a slow and steady processes over the course of four decades which allowed for the Big Four Radio Companies to manage most of their assets through corporate Owned and Operated (O&O) Stations, the pivot to television broadcasting occurred in less than a decade and therefore required a much heavier reliance on locally-owned franchise stations than radio broadcasting had previously. As television equipment was cutting edge, its investment was an even greater risk than previous radio equipment. Even the biggest television corporations could only afford to directly own and operate a dozen or so local affiliate rebroadcast stations in the hundreds of MSAs.
By the 1950s, hundreds of independently owned television stations fought with each other for the favors of the Big Three networks, paying them for content and the quality assurance that came with their corporate branding. The FCC stepped up and in 1955 simplified the MSA system into Television Market Areas (TMAs), of which there are 210 of them seen here:
So much like the radio of the 1920s, locally owned television stations in the 1950s began forming consortia or being bought out by larger companies. But unlike the radio of the 1920s, what was being bought and consolidated was not primarily the content but instead it was the means of distribution.
A philosophical pivot with financial business applications. HUNH. How bout them apples?
Well I'm sorry to leave y'all hanging in 1955, McFly, but in Part Five I'll
- Catch you up to the Modern Day!
- Explain what happened to all those independent affiliates who weren't O&Os!
- The Death(!?) of Local(???) News! (FOR REALLY REAL THIS TIME)
- The Green Bay Packers (no really!) aka WOO PACKERS WIN THE SUPER BOWL
- And I guess some more? The SO much more will be Part Six!
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