0
50
100
Revenue (millions)
1989 1995 2001 2007 2013
Year
Total Advertising
Fee
Figure 7.13 US programming market revenue by source, 1989–2013. Notes: Depicted is the revenue of
programming networks (channels) arising from advertising versus affiliate fees in the television
programming market between 1989 and 2013. See also
Tables 7.1–7.3 for a breakdown by channel
and channel type of revenue sources in 2012. Source:
SNL Kagan (2014a).
0
25
50
Programming expenditure (millions)
1989 1995 2001 2007 2013
Year
Total Cable
Broadcast
Premium
RSN
Figure 7.14 Total programming expenditure by program type, 1989–2013. Notes: Depicted are the
expenditures on programming paid by four different types of programming networks (channels) in
the television programming market between 1989 and 2013: Broadcast, Cable, Regional Sports
Network, and Premium Networks. See also
Tables 7.1–7.3 for further details about expenditures by
these networks in 2012. Source:
SNL Kagan (2014a).
290
Handbook of Media Economics
enabled channels to negotiate ever-increasing affiliate fees from downstream distributors.
Of particular note in
Figure 7.15 is the recent growth in “Retransmission Consent” fees
negotiated by broadcast networks from distributors for the right to distribute broadcast
signals that are otherwise available free over the air.
30
The contribution of retransmission
consent fees has merely increased the already considerable growth in affiliate fees for cable
networks. These, in turn, are important factors in the pattern of ever-increasing prices to
households for pay-television service presented in
Figure 7.6.
The overall growth in channel advertising revenue shown in
Figure 7.13 hides an
important compositional effect. While relative ratings for broadcast networks remain
strong (e.g., compare
Tables 7.1 and 7.2), Figure 7.16 shows that total household viewing
on cable networks exceeded that on broadcast networks in the mid-2000s and has con-
tinued to grow, as of 2012 comprising 74.4% of household 24-h viewing. All these pat-
terns point to a large and growing importance of pay television in the functioning of US
television markets.
0
10
20
30
Avg. aff. fee per month (USD)
1989 1995 2001 2007 2013
Year
Avg. cable aff. fee per Month Avg. retrans. fee per Month
Total aff. fee per Month
Figure 7.15 Total average affiliate fees per month, 1989–2013. Notes: Depicted are the total affiliate
fees paid by pay-television distributors between 1989 and 2013. See also
Tables 7.1–7.3 for further
details about average affiliate fees by channel type and channel in 2012. Source:
SNL Kagan
(2014a)
. Pew State of the Media, 2013.
30
This effect is not shown in Table 7.1 as these fees largely accrue to television stations and not to the
television networks providing the majority of the programming on those stations. This is a source of dis-
pute between broadcast networks and stations, however, as networks seek to share in these revenue
streams.
291
The Economics of Television and Online Video Markets
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