The media industry has its own terminology, and the following glossary provides the definition of terms used throughout this report: Typically, the general public views television programming through broadcast or subscription video service. Broadcast television provides free over-the-air programming to the public through local television stations. By contrast, consumers pay fees for subscription video service to video providers, including cable operators, satellite providers, or telecommunications companies. Programming for broadcast and subscription video service differs, as illustrated in figure 1. Broadcast television consists mainly of four major broadcast networks (ABC, CBS, Fox, and NBC) and several smaller networks, such as the CW Television Network, MyNetworkTV, and ION Television. Each of the four major broadcasters owns and operates some local television stations; other stations can be affiliated with one of the major broadcasters or, as is the case with public television, unaffiliated with the major broadcasters. The four major broadcasters provide scripted and nonscripted programming to the local television stations that is produced either by the major broadcasters’ affiliated production companies or by independent producers. The development process of scripted programs (i.e., drama and comedy series) for prime time programming involves steps that allow major broadcasters to periodically assess the program as it develops, as described in figure 2. In contrast, the development process for nonscripted programs, such as reality programs and game shows, does not involve most of the steps shown in figure 2. Scripts and pilots do not need to be developed for nonscripted programs, making them less expensive to produce than scripted programs. For subscription video service, video providers obtain a variety of programming from both broadcasters (which can include major networks and local stations) and cable networks. Video providers must negotiate with broadcasters and cable networks to air and distribute their programming. Negotiations include the price, terms, and conditions for distribution on the video providers’ systems. Video providers have the discretion to select which cable networks will be available and, subject to negotiation, how they will be packaged and marketed to subscribers. According to a recent FCC report, more than 500 cable networks exist, including national cable networks (such as CNN, Discovery Channel, ESPN, and Fox News) as well as regional cable networks (such as the California Channel, Comcast SportsNet Chicago, and the YES Network). Cable networks can provide niche programming—that is, programming that targets specific demographics. For instance, Lifetime Network offers programming that specifically targets women, while MTV Network targets programming for the 18-to-34 age demographic. The general public receives radio programming through commercial and public radio stations. Over the last 5 years, the number of full-power radio stations has increased from 13,590 in 2005 to over 14,600 in 2009, with the vast majority of these stations being commercial (78 percent, or 11,430 stations) and the remainder being public (22 percent, or 3,198 stations). Following passage of the Telecommunications Act of 1996, concentration in radio station ownership increased significantly because of the act’s relaxation of national and local multiple radio ownership limits. For example, in 1996, the two largest radio station owners held fewer than 65 radio stations each. By contrast, as of 2009, Clear Channel Communications Inc. owned over 800 radio stations (down from 1,135 in 2007), and the second largest group owner, Cumulus Broadcasting LLC, owned about 300 radio stations (see table 2). In 2009, the top 10 radio station owners owned 20 percent of all commercial radio stations. In addition, each radio station has a primary programming format designation that describes the programming content on that station. For example, in 2009, radio station KQSD in Lowry, South Dakota’s, primary format was Classical, its secondary format was News, and its tertiary format was Jazz. As such, the station primarily plays Classical music, but it also provides some news and plays some Jazz. FCC awards licenses to television and radio stations to use the airwaves expressly on the condition that licenses serve the public interest and licensees are responsive to the needs of its local community. Toward this end, FCC has long identified localism, competition, and diversity as its three core goals of media policy. Within this framework, FCC has considered the public interest best served by promoting free expression of diverse views and has promoted program diversity by limiting the number of broadcast outlets any one entity may own. As such, individual radio and television stations generally have discretion to select programming and to determine how best to serve the local community audience. Since the mid-1990s, FCC has amended or repealed a number of rules and regulations affecting the media industry. In 1995, FCC repealed the Financial Interest and Syndication Rules (Fin-Syn rules) so that a major broadcaster can own programming that it airs during prime time hours, as well as own syndication rights to programs purchased from independent producers. Following the repeal of the Fin-Syn rules, each of the four major broadcasters merged with, or acquired an ownership interest in, at least one major production studio. For instance, the Walt Disney Company acquired ABC and developed ABC Television Studio; CBS became affiliated with the studio Paramount Television; and NBC merged with Universal Pictures. In addition, News Corporation—which launched the Fox Broadcasting Network in 1986—owns several production studios, including 20th Century Fox. FCC is required to review media ownership rules every 4 years and determine whether those rules are necessary in the public interest. Although FCC regulates television primarily through ownership rules and station licensing, some of its other rules also affect aspects of television programming. Some of the key rules that affect programming and carriage were adopted in 1992 and are summarized below. Retransmission consent and must carry rules. Under these rules, every 3 years local commercial television stations (including those owned and operated by the major broadcasters) must decide whether to negotiate individual retransmission consent agreements with each cable operator in its designated market area for compensation in exchange for the cable operator’s right to carry the broadcast signal. In lieu of negotiation, stations may elect to require each cable operator in its designated market area to carry its signal (i.e., must carry), without receiving compensation for such carriage. Program carriage rule. This rule prevents a video provider from requiring a financial interest in programming or coercing a programmer (i.e., cable network) to grant exclusive rights as a condition for carriage, or from discriminating against an independent cable network in a way that unreasonably restrains the ability of the network to compete. Commercial leased access rule. Under this rule, cable operators are required to set aside a certain number of channels, depending on the size of the cable system, that can be leased out to independent cable networks for access on its distribution system. Congress has required FCC to (1) determine the maximum reasonable rates that a cable operator may establish for commercial use of the designated channels; (2) establish reasonable terms and conditions for such use, including those for billing and collections; and (3) establish procedures for the expedited resolution of disputes concerning rates or carriage. Major broadcasters and their affiliated studios have produced the majority of broadcast prime time programming in each of the selected years that we analyzed. In particular, major broadcaster-affiliated studios produced from 76 to 84 percent of broadcast prime time programming hours, with the remaining hours coming from independent producers. As shown in figure 3, in most of the years that we reviewed, the share of major broadcaster- produced prime time programs did not change significantly. However in 2008, the prime time programming from independent producers increased slightly compared with such programming in 2005. For the fall 2009 broadcast prime time schedule, the top five program producers as measured in prime time program hours were studios affiliated with ABC, CBS, Fox, NBC, and Warner Bros. These producers provided approximately 76 total programs, amounting to about 82 percent, in the fall prime time schedule. We identified 11 prime time programs that fell into the independent producer category for the fall 2009 prime time schedule. Of those, Sony Pictures Television Studio produced 3 programs, and eight other independent producers each supplied a program. Although most of the programs produced during the years we reviewed were affiliated with major broadcasters, a previous FCC-commissioned study indicated that the number and affiliation of prime time programming producers has changed significantly since the repeal of the Fin-Syn rules in 1995. The study found that in 1995, the top five program producers provided about 54 percent of prime time programming, with three producers affiliated with a major broadcaster. Since basic cable networks are also a source of television programming, we analyzed the ownership of those networks as an indicator of which entities control the television programming on the networks. On the basis of our analysis of ownership interests over the last decade, we found that a number of companies have ownership interests in a basic cable network (cable network), but a much smaller group of companies have ownership interests in 5 or more such networks. From 1998 to 2008, 94 companies on average have owned an interest in at least 1 cable network. The number of companies has declined somewhat over time, however, from a high of 106 companies in 1998 to a low of 81 companies in 2008. Cable network owners include owners of major broadcasters, such as News Corporation, which owns Fox, and Walt Disney Company, which owns ABC; cable operators, such as Comcast and Cablevision; owners of major publications and television stations, such as Tribune Company and Hearst Corporation; and other media companies, such as Liberty Media Corporation and Scripps Networks Interactive. On the basis of our analysis of all the companies with cable network ownership interests from 1998 to 2008, we found a range of 11 to 13 companies that owned an interest in 5 or more networks in at least 1 year. Of these companies, we found a range of 5 to 7 companies that owned at least 12 cable networks over the decade. As shown in figure 4, the number of basic cable networks owned by these top 5 companies has not changed significantly over the last 11 years.