The future is about whatever I want, wherever and whenever I want it. . . . and the more ways you do that, the more revenue there is for everybody in the business.
—Josh Bernoff, Forrester Research1
An age-old debate within the television industry concerns whether con-tent or distribution is “king.” Your position on this question depends greatly on what sector of the business you work in, with favor going to your own role as either a creator of content or a controller of the means by which content reaches viewers—i.e., a distributor. This debate was somewhat less complicated in the network era, when ways to distribute television were scarce. Producers sold series either to networks or to local stations—a situation that created a significant bottleneck that allowed only a limited amount of programming to get through to viewers. After programs had an “original run” on a network, producers typically resold the episodes in international markets, to independent stations, and to broadcast affiliates to recoup the costs of deficit financing. These oppor-tunities to sell content after and even during the original network run are called “distribution windows.”2The limited number of distribution win-dows in the network era greatly contributed to the ephemeral nature of television programming at the time, for without personal recording ca-pabilities and few alternative ways to receive programming, viewers had hardly any opportunities to re-screen content and never on their own terms.
The limited ability to reach viewers was such a fundamental aspect of the network era that few realized how considerably it defined the basic functioning of the medium. As the post-network era develops, however, the distribution bottleneck is being eliminated. Previously unimagined
4
119
possibilities for television have developed as new ways for video story-telling to reach audiences have emerged, including easy distribution of amateur and non-commercial content. New distribution methods ranging from the DVD to the myriad Internet video services that exploded throughout 2006 have changed the nature of television: no longer a lin-ear trickle of programming dictated by network executives, it has come to be a wide ocean of content into which viewers can dip at will. New forms of distribution have also created new revenue streams for studios and adjusted the types of programming they develop. The growing vari-ety of ways to reach viewers has decreased some of the risk of unconven-tional programs because new distribution routes provide opportunities to make money on shows that fail to achieve high ratings during network runs. Internet distribution also provides a venue for additional and sup-plemental programming, as well as circumventing the gatekeepers of cable systems and satellite providers.
The expansion of standard network-era distribution windowing—in which shows were sold first to broadcast networks, then local affiliates, international markets, cable, and so on—and new developments in bring-ing content to viewers have thus affected all the other components of pro-duction, from business models, which have altered the type and range of content that can be profitable, to creative processes, which have re-sponded to new opportunities in the industry. Changing the nature of television as a cultural institution, these new distribution methods have contributed significantly to inaugurating a post-network era of U.S. tele-vision.
To be sure, ways to distribute television were already expanding ap-preciably throughout the multi-channel transition. Cable networks rapidly proliferated and hungered insatiably for programming. Broadcast stations increased from 1,011 to 1,442 between 1980 and 1990—some of which remained independent or established affiliation with non-full-service networks (FOX, The WB). Video tapes initiated an affordable way for viewers to purchase programs—called “sell-through” in the in-dustry—and such media became particularly viable and significant a decade later with the creation of the DVD.3Cable systems then began of-fering programming on demand, and soon after, the possibility of dis-tributing video on the Internet gave viewers even more ready and varied access to programming, as did new technologies such as portable and mo-bile devices. All of these developments opened new distribution windows and created new markets for producers to sell programs.
Importantly, “distribution” describes a broad range of activities—
some of which are interrelated, others of which are fairly independent.
Changes in distribution after the network era are best understood in terms of those relating to new “distribution windows” and to new forms of “distribution to the home.” Distribution windows include the differ-ent locations producers sell programs after their original run on a net-work. In the network era, the only options were international markets and local stations. During the multi-channel transition these windows ex-panded to include cable networks, direct sale on VCR tapes, and then DVD and VOD; more recently they have also come to encompass Inter-net sites, where episodes can be downloaded or streamed. Distribution to the home, though related, involves another perspective that takes into ac-count how television content reaches the home and the convergence or competition among communication and entertainment technologies once it arrives there. While television once came into the home only through signals broadcast over the air, an increasing range of possibilities devel-oped during the multi-channel transition. Cable and satellite became common mechanisms of delivery, and companies traditionally limited to telephony such as at&t and Verizon prepared to join the competition by the mid-2000s. Even more significantly, broadband Internet distribution of video exploded in 2006, diminishing the domination of cable and satel-lite as the only pipeline for most channels into the home—although cable services continue to provide the broadband connection for many viewers.
Indeed, not only can Internet distribution seem to eliminate any scarcity by allowing an exponential expansion in content capabilities—including that not produced by a commercial media system—but also wireless In-ternet can eliminate the place-based viewing that tethers audiences of cable channels.
Conventions of Distribution during the
Network Era and the Multi-Channel Transition
Like the film industry, which releases films in theaters, then to pay-per-view, VHS/DVD, premium cable, and broadcast or basic cable, the television in-dustry has also utilized similar standardized, time-delayed distribution win-dows with tiered pricing that makes content cheaper in later winwin-dows.4In this way, the network paying the license fee could enjoy a period of exclu-sivity in which viewers could find the program only on the network
sup-porting the original run. Viewers typically could not watch syndicated episodes until a show had been on the air for about five years, and the buyer of that first syndication run enjoyed exclusivity in the syndication market.
To understand how the process works, consider the example of the comedy Friends, which the Warner Bros. studio produced for NBC be-ginning in 1994. Although syndicated episodes could not begin airing until September 1998 in order to have produced enough episodes, the se-ries was sold for its first syndication run in 1995. This first-run of syndi-cation went to individual stations in each market—the major metropoli-tan areas with television stations.5 Often the stations in a market bid against each other for multi-year rights to a series, because being the ex-clusive provider of a popular show is important for stations’ schedules.
Consequently, syndicated episodes of Friends might air in the early evening on the FOX station in your area, while new episodes would con-tinue to be found nationwide during prime time on NBC. After selling the series exclusively to local stations two or three times, Warner Bros. then sold syndication runs of the hit show to cable, with the result that there could be old Friends episodes on your local FOX station and on cable channel TBS and still new episodes weekly in prime time on NBC.
Such practices were highly standardized in the network era and much of the multi-channel transition. Series did not begin airing in syndication until one hundred episodes had been produced; stations paid cash for the episodes and had exclusive rights to the show in their market.6 Subse-quently, however, what windows a show was distributed through, in what order, and how much money a show made have come to vary greatly. Studios can sell shows and begin syndication runs before a series reaches one hundred episodes; stations can purchase the shows with var-ious cash and barter agreements—meaning they trade advertising time to the distributor in exchange for a lower cash payment—and they rarely maintain exclusivity as most series become available on DVD and even through online distribution before beginning syndication.
Unquestionably, cable channels provided the first significant shift in dis-tribution and marked the beginning of practices characteristic of the multi-channel transition. Budgets for original cable programs were diminutive relative to those in broadcast television, but the rapid proliferation of cable networks meant the creation of new buyers to which studios could sell syn-dicated programming, as well as cheaply produced original content. The average one hundred channels received in homes by 2003 created many op-portunities for studios to sell both old and new programming.
Although the advent of cable seemed to revolutionize distribution, these developments appear quite subtle now that digital technologies have radically expanded viewers’ opportunities to access video. First, di-rect sale of full seasons of shows on DVD began to change distribution practices in a way that eroded the exclusivity and ephemerality of pro-gramming, and then, in a few chaotic months in late 2005, industry workers threw out all the old rules. New technologies ranging from VOD and broadband delivery to devices such as the newly video-enabled iPod are eliminating the need for viewers to rely solely on networks to trans-port programs to them. Viewers can now pay directly for episodes, intro-ducing a fairly unprecedented “transactional” model to television. In the process, decades-old practices that derived their value from exclusivity and delay among windows have been tossed aside overnight, with regret and uncertainty, but new technologies and viewers’ embrace of them has made it impossible to cling to network-era practices any longer. To be sure, many feared the consequence of immediate transactional purchase on later windows, but with the very real possibility that programs could illegally circulate online within hours of airing, studios and networks have had no choice but to experiment—recalling the consequences of the recording industry’s unwillingness to alter distribution practices a few years earlier. Banking on the notion that the best defense against piracy has been to make content legally available for purchase, networks have made shows available within hours of their original airing. Thus the tele-vision industry has jumped into new norms of distribution that allow viewers their desired access to content anytime and anywhere, but often at a price.
Close a Window, Open a Door: Shifting Norms of Video Distribution Windows
The proliferation of networks throughout the multi-channel transition created many new buyers for original and syndicated programming, but until the whirlwind of new viewing devices and platforms, networks and studios did not experiment extensively with varying distribution practices.
As they have come to do so, many in the studios have feared that new dis-tribution methods would destroy old models of revenue that the industry relies upon, but, in the course of developing and adopting distribution ex-periments, they have also found unanticipated benefits. The opening of
myriad distribution windows has provided networks with new promo-tional tools to reach audience members, as well as creating revenue-pro-ducing opportunities for both studios and networks to amortize failures.
For their part, studios have found new opportunities to profit from their libraries. Many of the new distribution windows were just emerging in 2006, but they have already become significant and suggestive of substan-tive long-term consequences for creasubstan-tive possibilities for the industry.
Changes in distribution shifted production economics enough to allow audiences that were too small or specific to be commercially viable for broadcast or cable to be able to support niche content through some of the new distribution methods—particularly those featuring transactional financial models. Just as cable had radically expanded the array of con-tent that could be found on television, the new distribution windows promise to again rewrite the possibilities for what can be found on tele-vision. Fearing added competition, networks did at first try to quash some of the new distribution opportunities. The true push to change came from other industries and viewer behavior. Cable providers wanted to offer VOD because it differentiated their service from satellite competitors, and an eager consumer electronics industry hoped to expand product lines by adding to the technologies used by most viewers. Early adopters then used new technologies and technical savvy to redistribute content on var-ious online peer-to-peer services without network clearance. With tech-nology available and viewers clamoring to use it, the networks realized they could no longer slow the evolution and began openly experimenting with new models of distribution and financing.
Repurposing and Reallocation
The practice of original run repurposing that began in 1999 marked the first significant adjustment to distribution practices after the industry adapted to cable.7 “Repurposing” refers to a practice in which content providers crafted deals that allowed a series to earn additional revenue during its original run either by airing multiple times on the broadcast network licensing the series (more than a typical rerun) or by airing con-currently on a cable network. Repurposing consequently shortened the previous window between original run and syndication to as little as a matter of days.8
In the case of one of the earliest examples, NBC and the USA cable channel arranged a financing deal giving USA rights to air Law & Order:
Special Victims Unit (SVU) within two weeks of its broadcast airing (Stu-dios USA produced SVU for NBC).9 In the same season, Lifetime aired the new series Once and Again the same week it appeared on ABC. In-dustry journalist Deborah McAdams credited the vertical integration of the entities involved—Disney’s Touchstone produced Once and Again, the series first aired on Disney’s ABC, and was repurposed on Lifetime, half-owned by Disney—with the deal’s rapid resolution.10But the role of conglomerated ownership caused concern as networks announced repur-posing arrangements that appeared to favor products from commonly owned studios. Not only did commonly owned broadcast and cable net-works frequently develop these pacts, but repurposed series were often produced by studios also owned by the broadcast network or its con-glomerate. To many in the industry, it seemed repurposing developed from the deregulatory policies of allowing conglomeration and eliminat-ing the fin-syn rules. Nonetheless, the practice expanded in 2001–2002 as networks and production studios established repurposing deals for The WB series Charmed on TNT, NBC’s Law & Order: Criminal Intent on USA, and FOX’s 24 on FX.11Subsequently, repurposing has been a conventional, although not particularly widely used, practice. By fall of 2001, broadcast networks officially began “double runs” of series on their own network by airing the same episode twice in one week, a prac-tice common on cable channels but a significant change in the established procedures of broadcasters.12 FOX first offered this as part of its an-nounced upfront schedule for 2001 as the “FOX Comedy Wheel” in which it aired encore episodes of comedies in a Friday timeslot.
The utility of these deals depends on one’s perspective. For production companies, the increase in license payments decreased initial risk, thus making more expensive productions possible and helping to finance ris-ing production costs—as in the case of Once and Again noted in the pre-vious chapter. At the same time, however, conventional wisdom suggested that over-exposing a series in its original run would be likely to diminish profits from more traditional syndication opportunities, particularly be-fore norms of exclusivity were eroded by other distribution changes.
Broadcast networks that first aired the series argued that the second air-ing would brair-ing viewers to their networks for the original run, although media analysts produced data indicating that the availability of a show in any form of syndication negatively affected the audience size of the orig-inal run airing.13Nevertheless, repurposing continued as cable program-mers hoped the cachet of top network series would increase audiences’
awareness of the cable channel and its brand. This strategy seems to have been particular to the multi-channel transition; as non-linear program-ming norms emerge, cable channels’ reliance on broadcast network con-tent becomes less beneficial.14
The late multi-channel transition strategy of reallocating content be-tween broadcast and cable networks also related to repurposing and the conglomerated ownership of broadcast and cable networks. “Realloca-tion” involves shifting shows that were developed for broadcast networks but that found insufficient audiences there to cable networks, where they might reach niche audiences and be considered more successful. In rare occasions, programming developed for cable has aired as a special event on broadcast networks or during otherwise rerun-heavy summer sched-ules, as in the case of special episodes of Bravo’s Queer Eye for the Straight Guy aired by NBC and the reallocation of USA’s Psych on NBC in summer 2006. The opportunity to shift programming to a commonly owned cable network allows the conglomerate to amortize development and production costs that it would otherwise have to absorb and provides an important distribution option. Reallocation consequently decreases the risk inherent to program development; it also encourages program-mers to pursue shows that would otherwise be deemed too uncertain by offering an additional opportunity to recoup production expenditures.
Common ownership among production studios, broadcast networks, and cable channels facilitates the reallocation of programming, but is not a requirement for the practice. Cable channels owned by conglomerates also owning broadcast networks often operate in a manner similar to baseball’s farm team system, as a space to test boundary-pushing or niche-focused content (Significant Others) or as a venue for demoting struggling programs to amortize their costs (Boomtown). In other cases, networks use reallocation to provide additional promotion for underper-forming content (Veronica Mars) or to recover the cost of particularly ex-pensive productions (The Court).
In the case Significant Others, this unconventional improvisational comedy was initially developed for NBC and produced by NBC Studios, but the series aired instead on Bravo in 2004 and 2005.15The creators may have originally targeted the broadcast network, but NBC shifted the show to the commonly owned cable network as its uncommon nature
In the case Significant Others, this unconventional improvisational comedy was initially developed for NBC and produced by NBC Studios, but the series aired instead on Bravo in 2004 and 2005.15The creators may have originally targeted the broadcast network, but NBC shifted the show to the commonly owned cable network as its uncommon nature