An office for gathering or distributing news. Similar terms are used for specialized bureaus, often to indicate geographic location or scope of coverage: a Tokyo bureau refers to a given news operation’s office in Tokyo, Japan; foreign bureau is a generic term for a news office set up in a country other than the primary operations center; a Washington bureau is an office, typically located in Washington, D.C., that covers news related to national politics in the United States.
A video distribution system that uses coaxial cable and optical fiber to deliver multichannel service to households within a geographically defined franchise area (Webster, J. et al., from Ratings Analysis: The Theory and Practice of Audience Research).
The cost an advertiser pays for every thousand viewers who watch a 30-second television ad (cost per thousand, in industry terms). For example, if Nielsen estimates that 1 million people watch Fox News on a given day, a 30-second ad would cost $3.97 times a thousand (or $3,970 per ad). These costs vary depending on the show and day part.
Cumulative audience measurement
A way of measuring audience. “Cume” is short for cumulative audience. This calculation refers to the number of individual (or “unique”) viewers who watch a channel for at least a minute over the course of a span of time, such as a week or a month. Cume is sometimes referred to as “reach” in the industry.
Daytime refers to the hours between 6 a.m. and 6 p.m., in which the average cable audience for that time period is measured by Nielsen Media.
Prime time refers to the hours between 8 p.m. and 11 p.m., in which the average audience is measured by Nielsen (on Sundays, the prime-time hours are 7 p.m. to 11 p.m.).
The expenses incurred by a cable programmer in the production of original programming and the purchase of rights to non-original programming.
Selling, general & administrative expenses. These include any overhead costs not directly associated with programming at a cable channel.
Also known as license fees, subscriber fees come to cable channels indirectly from viewers. The channels are paid the fees by cable systems (in exchange for their programs), which in turn recoup that money in cable bills to consumers. The amounts of those fees are negotiated with the cable systems based on an estimate of how many subscribers the system will have during the life of the agreement.
Measurement of how many people are in an audience.
Median vs. mean in audience measurement
Audience trends in television can be measured using one of two calculations: median and mean.
This report offers the numbers in both forms.
The cable news channels prefer to calculate their year-to-year ratings by converting the Nielsen ratings data into annual “averages” using the mean. Academic advisers to the Project have persuaded us, however, that the median is a better indicator of core audience.
Here is why.
Mean, or simple average, is calculated by taking each month’s ratings, adding them together and dividing by the number of months. By that accounting, wild fluctuations in the audience due to occasional events can heavily influence the numbers.
Median examines all the monthly numbers in a year and identifies which one is most typical, or falls in the middle (the middle value).
Esther Thorson, associate dean for graduate studies for the University of Missouri’s School of Journalism, explains the choice of median rather than mean this way: The median is a better indicator of central tendency when there are extremely high or extremely low observations in the distribution. Those greatly influence the mean, but have little effect on the median. In other words, the median is the closest on the average to all of the scores in the distribution. Very high levels of cable viewing during a big event pull the mean too far away from realistic viewing scores. For that reason, the median is the better indicator of typical viewing levels.
For instance, in 2003, when the war in Iraq began, mean viewership numbers showed the cable news business booming — up 34% for daytime and 32% for prime time from the year before. But using the median, the middle value of the 12 months of that year, the picture that emerged was that cable viewership was basically stable. It showed no growth during the day and a gain of just 3% in prime time. How can that be? The reason is that cable news did not retain the audience that it gained during those first weeks of the war. Median was a better reflection of a year in which viewership spiked only for two months and then fell back down again.
In 2006, the median numbers actually meant better news for cable channels. Taking the average viewership for 2006 and comparing it to 2005 shows a significant decline in the cable news audience — down 11% for daytime and 12% for prime time. But using the median, there was a decline of just 4% during the day and 8% in prime time. Thus in times of major breaking news, mean can help the numbers. But in years when there are fewer major events, the mean will suffer. The spikes, when using mean, can cut both ways.
In short, our research team and the staff at the Pew Research Center believe the median is the fairest way to try to understand the core audience for cable, given the volatility of ratings spikes. The mean, or simple average, tends to be disproportionately inflated by the spikes and, consequently, also exaggerates any declines in cable audiences when those spikes do not occur. In contrast, median offers a truer sense of the core or base audience, those people who are watching day in and day out, without ignoring the cumulative effect of the size of the audience that gathers momentarily if extraordinary things happen.
The two revenue streams of cable
Cable TV channels generate revenue through two streams: advertising and subscriber fees.
Advertising makes up roughly half of the revenue the channels generate each year.
Cable news channels do not earn as much from advertisers as the broadcast networks or some sports or niche entertainment networks. In large part, this is because the ratings for cable news for any one program are fairly low. The ratings of the highest-rated cable show, Bill O’Reilly, are still only about a quarter of that of the lowest-rated evening network newscast, the CBS Evening News With Katie Couric, for instance, and most cable programs are only a fraction of that.
In general, analysts view advertising as having greater potential than subscriptions for long-term growth. That is because it is harder to sign new cable subscribers, or get existing ones to pay substantially more each month for the cable bill, than to generate more ad revenue.
Ad revenues are the total number of ads sold, multiplied by the average number of viewers (in thousands), which is then multiplied by the CPM.
The other source of revenue is subscriber fees, also referred to as license fees.
The viability of subscriber fees as a strong area of future growth, though, may be threatened by the emergence of broadcast networks commanding costly retransmission fees. If cable operators must pay broadcast networks to carry their programming, the operators may then decide to keep the subscriber fees of smaller, niche cable channels — which draw smaller audiences than the networks — flat, or even reduce them.
The highest fees are typically paid for sports and general entertainment channels. The highest is the $3.77 per subscriber per month, commanded by ESPN.
If Fox’s audience is so much larger than CNN’s is, then why are the average license fees almost identical for these two channels? Part of the answer is that not all of Fox’s contract negotiations have fully kicked in. SNL Kagan projects that 2010 will be another year of much higher license fees for Fox as more contracts come into play. Second, CNN brings a “two channels for the price of one” advantage to the table. The fee for HLN is rolled into one single fee for the two channels.