CIEE Contemporary Television

Class #5: Media Conglomerates, Product

Integration and TV Production in the 21st
Century
TV production 101: production companies, networks, and stations (1)
• When television viewers tune into television, they are tuning into one of 1,200+
local television stations: independently licensed entities that (re)broadcast
television signals from the networks to local communities across the United States

• Although some television stations are owned and operated by the networks (these
are referred to as O&O’s), most television stations are affiliated with the networks
instead – these are known as affiliates
• Affiliates promise their parent networks that they will air their prime-time lineup
of (national shows), in return for a flat, monthly fee, known as network
compensation (or net comp) and network adjacencies (local ad space)
TV production 101: production companies, networks, and stations (2)
TV production 101: production companies, networks, and stations (3)
• The remainder of a local television station’s programming is reserved for local
programming, which takes the form of (1) local interest programming (chiefly
newscasts) and (2) first-run or off-network syndicated shows
• While local programming is sponsored by local ads, the revenue they pull in pales
in comparison with network adjacencies, which pull in the highest rates
– An hour-long network show typically includes 15 minutes of national ads (which travel
with the network programming); only 2 minutes of these 15 minutes are set aside for
network adjacencies
• The networks do not grant more commercial time to stations, since they need
these (national) ad dollars to offset or recuperate (recoup) the production costs,
which are also known as front-end/up-front costs
• Television series are produced through deficit financing, whereby the producer
operates at a loss; if the producer is an indepent production company, the network
purchases the single-copy finished product (the TV show) by licensing the show
(i.e. by paying a license fee)
• Since the license fee does not cover the full cost of production, the producer will
seek to recuperate the remainder of the up-front costs on the back-end: e.g. by
syndicating the show, by selling the show internationally, by selling the streaming
rights, through product placement/integration deals, or ancillary merchandising.
TV production 101: production companies, networks, and stations (4)
“Branding, Synergy, and Product Integration on NBC” (Gillan)
• Gillan begins her article by pointing out that NBC ruled the airwaves in the
1990s, thanks in large part to its Must See TV programming, which was
powered by sitcoms (Cheers, Friends, Frasier) and critically acclaimed dramas
(L.A. Law, ER)
• By the late 1990s, NBC’s dominance was challenged by CBS and FOX, who
pioneer unscripted, reality television programming – or RTV) – e.g. American
Idol, Survivor, The Amazing Race
• While NBC would go on to lauch its own RTV programming, it opted instead to
invest in format(ted) sitcoms, like The Office
– Why did NBC’s RTV programming fail and why did they shift focus to format sitcoms?
“Branding, Synergy, and Product Integration on NBC” (Gillan)
• Crucially, format sitcom share some of the characteristics of the gamedoc while
also allowing for product placement and product integration opportunities
– How are format sitcoms (which Gillan refers to also as ironicoms) similar to gamedocs?
– Why does product placement and product integration become so important to the networks?
• How do we differentiate between product placement and product integration
(both of which are referred to also as paid inserts)?
– Product placement: a product is included in the episode for clear visibility, but does not
receive any explicit focus – the goal is for the product to fit seamlessly into the context
of the episode
• VISUAL PLACEMENT
• VERBAL PLACEMENT
• SIGNAGE PLACEMENT
– Product integration: a product is highlighted in the episode and becomes central to the
story that is told; often, the product’s function(s) and qualities will be highlighted
• In today’s fragmented media environment (characterized by time-shifting, place-
shifting, ad-skipping and the accompanying drop in advertising rates), TV shows
can create a sponsorship-friendly environment by either using, placing or
integrating products into TV shows
• The end result is a blurring between content and promotion, by interweaving
brands into scripts – or creating branded entertainment
“Branding, Synergy, and Product Integration on NBC” (Gillan)
• The standards and benchmarks for PI and PP differ depending on the genre of
television; while these are expected for reality television, scripted television is held
to a higher standard (art vs. commerce)
– How is the 30 Rock McFlurry controversy an example of the tensions produced by PI and PP?
– The McFlurry episode highlights the role played by added value storylines (no money changes
hands, but a sponsor-friendly landscape is created)
• Ultimately, the product needs to be shown in a positive light, but comedies have
more creative leeway than dramas (why?)
– 30 Rock excels at meta-product integration; what are the potential risks and benefits of this
approach to PP and PI?
• Products that are integrated may be critiqued, so long as they are redeemed and
story-consistent and do not create a disconnect with the commercials broadcast
within the flow
• Tangent: the McDonald’s ads that were part of the regular commercial pods were
an instance of a scatter buy:
– 15-35% of the ad inventory is set aside and sold outside of the upfronts – at a higher price
– What are some of the (dis)advantages of scattering ads vs. regular ads?
– Advertisers are given rating guarantees during upfront buys – and make goods to compensate for
lower than expected ratings
• Product placement jumped by 30% in 2005, while the duration of these inserts
rose by 22% -- facilitated in part by media conglomerate synergy
 Media conglomeration/consolidation (1)
• A conglomerate is a combination of two or more corporations engaged in
different business sectors that fall under one corporate entity (i.e. the parent
company), with the component business known as the subsidiaries; a media
conglomerate is a conglomerate that provides goods and services in the media
industry
 Media conglomeration/consolidation (2)
• The rise of media conglomerates (facilitated by the lapsing of Fin-Syn and
increased deregulation of telecommunications in the 1990s) has led to a highly
concentrated and consolidated US media landscape
 Media conglomeration/consolidation (3)
• The U.S. television landscape has been profoundy impacted by this drive
toward media consolidation
Media conglomeration/consolidation (4)
 Toward a circular media landscape (1)
• These media conglomerates are, at the core, massively vertically and
horizontally integrated companies
• Vertical integration: An ownership structure in which one conglomerate owns
or operates all aspects of production and distribution within a single segment
of the media industry
• Horizontal integration: An ownership structure in which one conglomerate
owns or operates different kinds of media (film studios, TV networks, theme
parks, publishers, etc.) and concentrates ownership across these different
segments of the media industry
• This, in turn, allows for synergy: the promotion and sale of a product
throughout the various subsidiaries of a media conglomerate – in the case of
television, it allows for cross-media promotion and network identity
placement (benefiting different brand assets owned by the parent company)
• In conclusion: today’s television landscape is characterized by a circulatory
paradigm, which transforms television series into potential circulation
platforms for consumer goods and network brand assets/equity (causes:
time-shifting + media consolidation + decrease in ad rates + rise of formats
and franchises + sponsor and network brand-based programming).
Tracing the media product supply chain
Toward a circular media landscape (2)
Case study: NBCUniversal
Economies of scale and the rise of the media mogul
Enter the media conglomerate wars (1)
Enter the media conglomerate wars (2)
Enter the media conglomerate wars (3)