Broadcasting

Broadcasting companies operate a distribution system built on licensed electromagnetic spectrum, transmitting programming to receivers within defined coverage areas at zero marginal cost per additional viewer. This cost structure makes audience aggregation the central economic activity: programming must attract audiences whose characteristics advertisers value, while advertising loads must remain tolerable enough to sustain viewership. The feedback loop between programming investment, audience delivery, and advertising revenue is the core operating dynamic.

Revenue derives from two primary sources: advertising sales priced by audience size and demographic composition, and retransmission fees negotiated with pay-TV distributors for the right to carry broadcast signals. Local television stations occupy a distinctive structural niche through local news production, which generates audience loyalty that national networks and streaming services cannot easily replicate. The combination of local news, network-affiliated entertainment programming, and retransmission fees creates a multi-source revenue structure.

Spectrum license scarcity and regulatory obligations around content standards, ownership limits, and public interest requirements define the operating envelope. Programming costs are committed before audience response is known, creating an inherent mismatch between fixed content investment and variable advertising revenue that fluctuates with economic conditions and audience fragmentation across competing distribution platforms.