The Business of Media

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Media organizations range from tiny production companies to huge international conglomerates (such as Sony) that are parent companies to a number of other large organizations (such as Sony Pictures, which itself is the parent company of Columbia Pictures and Screen Gems, among others). Some companies form just for the purpose of making one movie or television show, while others, such as Universal and Disney, oversee, purchase, or distribute hundreds of movies and TV programs each year. But all of these companies are businesses—they need to make money to stay in business.

A half-hour TV sitcom can range from several hundred thousand dollars per episode to several million.

Sources of Revenue. There are two main sources of revenue for the mass media: consumer purchases and advertising. Consumers pay directly for some media messages, such as going to the movies, subscribing to cable or satellite services, and buying magazines, e-books, or DVDs and Blu-ray discs. Advertising dollars also support many of the same media that consumers purchase (magazines, newspapers, cable TV) because purchases alone are not enough to keep these industries afloat. Advertising is also the sole support for several other media, including broadcast TV and radio and much of the World Wide Web. Advertising rates are determined mainly by how many people are in the audience (and for how long). For print media, this means circulation size (the number of people who buy or subscribe to newspapers and magazines); for TV and radio, this primarily means ratings (the number of households that are in the viewing or listening audience for a given time slot). For Web sites, usage data gets more complicated, but everything gets measured—from unique hits (that is, individual visitors to a site) and the amount of time people spend browsing to people’s patterns of click-through behavior with links.

Big box office and high ratings are keys to mass media success because mass communication messages are expensive to make and deliver. A half-hour TV sitcom can range from several hundred thousand dollars per episode to several million. Such high investment costs mean that profit can be elusive. In fact, most new TV shows are canceled, few movies become blockbusters, most novels do not become bestsellers, and few albums sell strongly (Vogel, 2011). How, then, do the media ever make money? The few blockbuster movies, bestselling books, and hit television shows or albums must make up for all the rest. In economics, this is called exponentiality: relatively few items bring most of the income, while the rest add only a little (Vogel, 2011). Across the media industries, about 80 to 90 percent of mass media revenue comes from only 10 to 20 percent of the products made.

Broad Versus Narrow Appeal. For the biggest of the mass media, network television, messages must have very broad appeal to attract the millions of viewers that are needed in order to sell profitable advertising time. The Super Bowl is such a widely popular event that the cost of advertising is extremely expensive: in 2012, a thirty-second commercial during the Super Bowl cost around $3.5 million. But prime-time network TV (ABC, CBS, NBC, Fox, and The CW) requires programming that attracts a very large audience on a regular basis. The traditional way for networks to capture broad audiences has been to rely on content that is often described as low culture—entertainment that appeals to most people’s baser instincts, typified by lurid, sensational images and stories charged with sex, violence, scandal, and abuse (Berger, 2007). In addition, the networks have relied on programming that doesn’t require a great deal of thought or cultural sophistication, leading critics to echo the sentiments of former FCC chairman Newton Minow when, in 1961, he first called commercial television a “vast wasteland” (Minow, 1961; Minow & Cate, 2003).

But, wait, you say: there are a lot of popular shows on television right now that are intellectually stimulating, well written, and impressively produced. Scholars agree. Jason Mittel (2006), for example, makes the case that the landscape of television during the last twenty years has actually gotten “smarter.” He notes that, while there is much popular content on TV that remains highly conventional, the past two decades have seen a huge increase in critically acclaimed and popular TV shows with narrative complexity—complicated plots and connections between characters, a blurring of reality and fantasy, and time that is not always linear or chronological. Beginning with hits like The X-Files (1993–2002) and Buffy the Vampire Slayer (1997–2003) and continuing with shows like Lost (2004–2010) and The Good Wife (since 2009), intricate plots, subplots, and “story arcs” weave between stand-alone episodes and continuous serial storytelling (Mittel, 2006). Many of these shows give you a cognitive “workout” because you must think carefully to make sense of what is happening (Johnson, 2005).

This trend did not likely emerge out of any charity on the part of the entertainment industry. Rather, it is because audiences themselves have gotten more cognitively demanding, and there is money to be made in meeting that demand (Johnson, 2005). Many of these are hit shows, after all. But even without major hits, uniquely appealing shows are possible because of another major industry trend. Narrowcasting (also called niche marketing) is the process of targeting smaller, specific audiences. Beginning with cable television in the 1980s and continuing today with satellite television and a diverse array of specialty media outlets, including the Web, media industries can tap into multiple smaller, but loyal and often passionate, audiences (Mittel, 2006). Thus, while it’s not surprising that a megahit like CBS’s NCIS averaging close to twenty million viewers each week) pulls in solid advertising revenue (Rice, 2011), shows with smaller audiences (like FX’s Justified, with just under four million weekly viewers) can still be profitable—particularly if the audience watching them represents a key demographic group that advertisers want to target (Gorman, 2011).

Although the most popular cable/satellite shows have not yet attracted anywhere near the size of prime-time network audiences, they are increasingly taking viewers away from the networks and spreading audiences across a much wider spectrum of more specialized entertainment choices (Gorman, 2010; Stelter, 2011). Of course, narrowcasting doesn’t necessarily result in more intellectually demanding or sophisticated content. But popular cable programming (and creative Internet content) provides competition that can lead to more innovative network programming. The media industries must adapt to the challenges and opportunities presented by digital technologies in order to remain profitable in an increasingly fragmented media landscape.

Minimizing Risk. The desire for a large audience often means minimizing risk wherever possible. The TV networks do this in part by promoting content that they believe reflects the cultural and moral values of their audiences. They do extensive audience research, attempting to understand the passions, commitments, values, and relational bonds of viewers and listeners. They also engage in self-censorship, carefully monitoring their own content and eliminating messages that might offend their viewers or sponsors. If network executives believe a show’s script is too explicit or its message is too morally risky, they may insist on rewrites or prevent the show from airing altogether.

The fear of offending viewers or advertisers does not mean that the media avoid controversy. Indeed, controversy can be used to increase ratings. We discussed earlier that lurid, sensational coverage is common across news media outlets, whether about celebrity sex scandals and drug overdoses or political corruption and gruesome murder cases. Entertainment programming can also benefit from controversy—the already highly rated and popular Two and a Half Men saw a jump in viewers (even in repeats) during Charlie Sheen’s much-publicized meltdown in 2011 (Oldenburg, 2011). But controversy doesn’t always translate into high ratings or long-term success.

Perhaps the most prominent way media industries try to minimize risk is to repeat what has already been proven to work. Although they do aim to discover some fresh new idea that will lead to the next big blockbuster or hit TV show, that kind of success is difficult to predict in advance. So media professionals often count on the sure thing, the products or ideas that have already been successful. Thus, hit films—from Iron Man to Saw—are usually followed by a sequel (or two, or three ad infinitum). Popular films are also frequently derived from successful novels (such as The Girl with the Dragon Tattoo), graphic novels and comic book franchises (like The Avengers), foreign films (The Grudge, for example), or existing films or television programs (for instance, Dark Shadows) that bring with them built-in audiences. For television, this means copycat shows (as is the case with the hugely successful American Idol, an Americanized version of the British hit Pop Idol) and spin-offs (Family Guy begat The Cleveland Show). While some such offerings are failures, studios continue to mine familiar stories and characters that they believe audiences already enjoy.