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Murphy interview


thefatbaboon
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Great interview - thanks for posting. 

 

There is one thing I don't understand.  Why was the broadcasting business so good? 

And by that I mean why didn't the 3 big networks squeeze the affiliate broadcasters much more?

Hard to get a good answer on this.

 

 

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Great interview - thanks for posting. 

 

There is one thing I don't understand.  Why was the broadcasting business so good? 

And by that I mean why didn't the 3 big networks squeeze the affiliate broadcasters much more?

Hard to get a good answer on this.

 

 

 

Basically, both the networks and the affiliates behaved rationally.  Look at the power dynamics.  The content (network) was valuable, but the distribution of content (TV station license) was relatively more valuable.  There basically was a government enforced monopoly at the local TV station level, only a few licenses were available.  The excess, more station positions, were in the higher channels with poorer signal propagation.  That said, even the independent non-network stations did well.

 

Say you were ABC, back in the day, you had a channel 3 affiliate (great signal over the market) and there was a channel 36 available to affiliate with, well you did not want your premium content on a crappy (pre-cable) signal that had lots of noise.  There was zero threat to your existing affiliate on channel 3 that you were going to move. Plus, you did not want to rile up all of your other affiliates, to what purpose and the local audience knew channel 3 was ABC, that was part of the brand. 

 

(More speculatively, I would also argue that in mature markets in advanced economy, sometimes intra industry, there is a norm of collegiality, that is pretty well defined, at least it was in post war US.)

 

In any case, in TV through the 80's, everybody was fat, dumb and happily making money. (And if as an independent, you managed to score the Fox affiliation in your market, woo-hoo!)

 

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Excellent analysis netnet.  Super helpful.  I did not think of the channel as a brand.  I would also add that they local station had important content - news, etc.

 

What about channels 7-12 or so?  Could those of been used as leverage to pay the affiliates less?

 

Much appreciated.

 

Great interview - thanks for posting. 

 

There is one thing I don't understand.  Why was the broadcasting business so good? 

And by that I mean why didn't the 3 big networks squeeze the affiliate broadcasters much more?

Hard to get a good answer on this.

 

 

 

Basically, both the networks and the affiliates behaved rationally.  Look at the power dynamics.  The content (network) was valuable, but the distribution of content (TV station license) was relatively more valuable.  There basically was a government enforced monopoly at the local TV station level, only a few licenses were available.  The excess, more station positions, were in the higher channels with poorer signal propagation.  That said, even the independent non-network stations did well.

 

Say you were ABC, back in the day, you had a channel 3 affiliate (great signal over the market) and there was a channel 36 available to affiliate with, well you did not want your premium content on a crappy (pre-cable) signal that had lots of noise.  There was zero threat to your existing affiliate on channel 3 that you were going to move. Plus, you did not want to rile up all of your other affiliates, to what purpose and the local audience knew channel 3 was ABC, that was part of the brand. 

 

(More speculatively, I would also argue that in mature markets in advanced economy, sometimes intra industry, there is a norm of collegiality, that is pretty well defined, at least it was in post war US.)

 

In any case, in TV through the 80's, everybody was fat, dumb and happily making money. (And if as an independent, you managed to score the Fox affiliation in your market, woo-hoo!)

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What about channels 7-12 or so?  Could those of been used as leverage to pay the affiliates less?

 

There is no leverage there because typically a major East Coast  market you would have say channels 2,4, 7 as the ABC, CBS, and NBC affiliates, then you might have another independent station (old movies, crappy children shows, etc.) say at 11 on the dial.  For propagation  and signal issues, per FCC that would be it for the lower channels. So the ABC is not going to induce the CBS affiliate to move so that is out.  The independent?  Well, that was the station owner clown with the bad toupee, who did ridiculous stunts like pushing a baseball around an infield with just his forehead (see Ted Turner circa 1977). You want to put your quality product and ratings with that fool?

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So for technology, brand, collusion and regulatory reasons it was basically a great business.

How do you think the "moat" has changed over the years with digital TV and cable?

 

Is there a place where I can read more about this power balance? I am really interested. 

Thank You

 

What about channels 7-12 or so?  Could those of been used as leverage to pay the affiliates less?

 

There is no leverage there because typically a major East Coast  market you would have say channels 2,4, 7 as the ABC, CBS, and NBC affiliates, then you might have another independent station (old movies, crappy children shows, etc.) say at 11 and for propagation  and signal issues that would be it for the lower channels. So the ABC is not going to induce the CBS affiliate to move so that is out.  The independent?  Well that was the station owner clown with the bad toupee who do ridiculous stunts like pushing a baseball around an infield with just his forehead (see Ted Turner circa 1977). You want to put your quality product and ratings with that fool?

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