Hollywood studios, or their corporate parents,
now own all the television broadcast networks in America.
How does their control over television affect their
The six television networks–
CBS, NBC, ABC, FOX, UPN, and WB– are the cash
cows for the movie studios today. They pay the studios
a licensing fee for the right to show studio-produced
movies, cartoons, and television programs over a limited
time period. Last year, these network fees totaled $5.1
billion, which was $1.2 billion more than the studios
received from the entire American box office. What makes
this a real windfall for the studios is that they do
not have to pay any advertising or marketing costs
out of the proceeds, as they do in their movie business.
So the licensing fees flow directly into the studios’
coffers as almost pure profit.
addition, networks help establish television series
and movies for syndication to local and foreign television
stations. So after the networks’ licenses expire,
the studios can sell the same programs over and over
again. And a hit series can be extremely lucrative:
the 125 episodes of The Cosby Show has earned a half-billion
dollars for Viacom to date, according to its chairman
Sumner Redstone. In 2003, this local aftermarket provided
studios with another $5.5 billion. Aside from the small
percentage that gets paid out in residuals to actors,
directors, and writers, the take from these sales goes
directly to the studios’ bottom line.
This bonanza explains
why studio executives are not unhappy that the percentage
of Americans who go to the movies every week nowadays
is only a fraction of what it was 50 years ago. The
audience that is staying home in droves is now their
main source of profits.