Show Business: $2 Billion a Year

For the first time, TV broadcasting last year became a $2 billion business.

According to a new Federal Communications report, industry revenues (largely sponsors’ fees) rose by 12% to a record $2.2 billion; pretax profits increased by 10% to $492 million.

Oddly enough, the three networks did relatively poorly: while grossing $904 million from time and program sales, they netted only $79 million before taxes, a mere 8.7% of the gross—compared with such corporations as Amerada Petroleum (49%). One reason is the high cost of filming documentaries and maintaining big news-gathering organizations. Another is the higher cost of developing new entertainment programs; the networks spend $15 million to $24 million a year replacing shows that have flopped.

By contrast, TV stations themselves have fewer such costs and, sometimes, less “public service” conscience. As a result, the 15 network-owned stations netted $108 million last year before taxes —41.2% of gross earnings. The other 593 stations included in the FCC report turned a pretax profit of $306 million—29.6% of gross.