3 - Broadcast TV Industry and its Business Model
3.1 - Historical Background
The first broadcast commercial use occurred in 1922 when a representative of a real estate company read ten minutes statementon the microphones of the Weafer radio station in New York, inviting the audience to visit his new venture. A few moments later, the company's office received dozens of calls from listeners (McDowell and Batten, 2008). This was the beginning of an industry that ended the twentieth century generating annually more than fifty billion U.S. dollars (Vogel, 2007).
The beginning was not easy, the first radio stations in the U.S. were supported by manufacturers and sellers of radio receivers so they intended to promote sales. The first commercial experience described was a result of an approach of American Telephone and Telegraph (AT & T), which created the radio station Weafer, in 1922. The idea was based on charge a fee for the transmission of a message service - for the entire audience, just as he was charged an amount for transmitting private message through the phone. At first no one appeared. After a long wait, in August, the first message was sold at a price of USD $ 50 (Vane and Gross, 1994).
In 1930 NBC - National Broadcasting Company - started experimental television broadcasts from the Empire State Building in New York City. However, only nine years later, in 1939, this same company has started regular broadcasts. Despite the high interest that this new medium has awakened consumers, given the high price of the reception apparatus, the economic constraints, the contingencies arising from World War II and the War in Korea, only in 1950 a significant number of homes owned reception equipment (Vogel, 2007).
The first business model of television then copied the model used by radio, by adopting their methods of programming, advertisers and stars. Following the model of radio stations had a very small influence on the programs, these were incurred and the responsibility of the advertiser who was its owner. The advertising company had thus all the responsibility on the idea, hiring talent and production. The stations only gave up their facilities and equipment for the production and broadcast of the program, broadcast live from the studio. Businesses radio or television based their business on the distribution of content, that is charged to advertisers for the use of studios and broadcast their programs (Vane and Gross, 1994).
Spending programs on television were much higher than those of radio and many programs started to be the responsibility of two or more advertisers. However, NBC, wanting to gain greater control over content, has introduced the "magazine concept" in the period 1953-1955, which was the insertion of advertising blocks in the programs, but without any interference from advertisers in the program content.
In 1959, a scandal came to completely change the course of the model and gain control of content for television companies. Quiz programs in the format had become huge successes, companies that produced and sponsored these programs saw their record sales increases noted. The problem is that competitors were handled by the production of the program. Those whom the public did not like were quickly defeated, while the preferred and most successful, were trained to respond correctly to maximize the suspense and win public sympathy. When the entire plot became public, those responsible for TV companies blamed the advertisers and advertising agencies that had provided the programs and about which they had all the responsibility (Vane and Gross, 1994).
With the growing success of television, radio has fallen in their income and had to change. The change occurred at the level of content, rather than broadcasting entertainment programs in a format "radio soap opera, began to stream music. At this time the model was released "Top 40", which was based on transmission of the forty most successful songs. Also the success of Rock & Roll contributed to this change, allowing the radio to gain a new audience: teenagers. In the 1950s, the music thus became the main contents of the radio.
The advent of television did not affect just the radio, also had a direct impact on cinema. The number of viewers in the U.S. dropped four billion in 1946 to billion in 1960. Paradoxically, the television turned out to be a key driver in the film industry (Vogel, 2007).
One of the characteristics of television activity is the importance of intangible assets. In a typical television company, most of its assets consists of intangible assets, such as licensing, rights to display on programs, talent contracts, advertising contracts, among others. The product sold by this industry is something that can be quite valuable, but can not be seen or touched: time of issue. Throughout the history of television, measure, monitor and report on these intangible assets has proved a huge challenge for management (sin and Sanders, 2008).