i Financial Analysis of Broadcast TV Programming A Thesis Submitted to the Faculty Of Drexel University By Alejandra M. Zannier Acha In partial fulfillment of the requirements for the degree of Master of Science in Television Management July 2012 ii ii Table of contents List of Tables .............................................................................................................................. v List of Figures ............................................................................................................................ vi Chapter One : Introduction........................................................................................................1 Statement of the Problem .....................................................................................................2 Advertising revenue...........................................................................................................3 Syndication revenue. .........................................................................................................4 Home video market. ..........................................................................................................5 Time shifting technology....................................................................................................6 Background and Need............................................................................................................7 Advertising revenue...........................................................................................................9 Syndication revenue. .......................................................................................................10 Home video market. ........................................................................................................11 Time shifting technology..................................................................................................13 Purpose of the Study............................................................................................................14 Research Questions .............................................................................................................16 Significance to the Field.......................................................................................................16 Definitions............................................................................................................................17 Limitations ...........................................................................................................................18 Ethical Considerations..........................................................................................................19 Chapter Two : Review of the Literature...................................................................................20 Advertising Revenue ............................................................................................................21 Syndication...........................................................................................................................32 Home Video Market.............................................................................................................43 The Impact of Time-shifting Technology .............................................................................54 DVR...................................................................................................................................55 Internet. ...........................................................................................................................61 Summary..............................................................................................................................71 Chapter Three : Methods.........................................................................................................73 Sample .................................................................................................................................74 Advertising Revenue Analysis. .........................................................................................74 Syndication Revenue Analysis..........................................................................................74 iii Home Video Revenue Analysis. .......................................................................................75 DVR Playback and Programming Decisions. ....................................................................75 Online Revenue Analysis..................................................................................................75 Measurement Instruments..................................................................................................76 Data Collection.....................................................................................................................77 Advertising Revenue. .......................................................................................................77 Syndication Revenue........................................................................................................78 Home Video Revenue. .....................................................................................................78 DVR Playback and Programming Decisions. ....................................................................78 Online Revenue................................................................................................................78 Data Analysis........................................................................................................................79 Advertising Revenue Analysis. .........................................................................................79 Syndication Revenue Analysis..........................................................................................80 Home Video Revenue Analysis. .......................................................................................81 DVR Playback and Programming Decisions. ....................................................................81 Online Revenue Analysis..................................................................................................81 Chapter Four : Results..............................................................................................................83 Advertising Revenue Analysis ..............................................................................................83 Syndication Revenue Analysis..............................................................................................87 Home Video Revenue Analysis ............................................................................................90 DVR Playback and Programming Decisions .........................................................................92 Online Revenue Analysis......................................................................................................96 Online Advertising Revenue.............................................................................................96 License Fees. ....................................................................................................................96 Paid Downloads. ..............................................................................................................99 Chapter Five : Discussion .......................................................................................................103 Limitations .........................................................................................................................109 Recommendations for Future Research ............................................................................110 Conclusions ........................................................................................................................111 Bibliography ...........................................................................................................................115 Appendix A: Syndication Revenue .........................................................................................122 Appendix B: Fictional Case Study...........................................................................................124 Modeling the Current State of TV......................................................................................124 Exhibits...............................................................................................................................128 iv Teaching note ....................................................................................................................130 Suggested Solution ............................................................................................................132 v List of Tables 2.1 Top Ten Shows of the 2010-11 Season Classified by Ad Spot Price .................. 27 2.2 Top Ten Shows of the 2010-11 Season Classified by Ratings Performance...... 28 4.1 Revised Multiple Regression Results................................................................. 85 4.2 Syndication Revenue Correlation Matrix.......................................................... 88 4.3 30 Rock/Lost Syndication Revenue Comparison ............................................... 89 4.4 Advertising and Syndication Revenue Comparison........................................... 89 4.5 Amazon’s Top 20 Bestselling DVDs ................................................................... 90 4.6 Amazon’s Top 5 Bestselling