by Joyce Nelson
Cut, no. 20, 1979, pp. 31-33
It's an astonishing but little-known fact that in 1972 a crucial vote regarding television took place in the United Nations General Assembly. The issue at hand was the prospect of TV broadcasting via satellites across national borders and directly into home TV receivers, a technological capability which does exist. Since 1969, the Soviet Union's position on this issue has been that countries broadcasting via satellite should be obliged to obtain "prior consent" from the governments of nations receiving such broadcasts. When, in 1972, the USSR introduced a proposal calling for binding principles governing international satellite broadcasting, a vote was taken in the UN General Assembly. The result was overwhelmingly in favor of such trans-border satellite restrictions: 102 countries voted in the affirmative and one country voted against them. The United States opposed the proposal as a threat to "the free flow of Information." 
I suppose this shouldn't be surprising, given the nature of the U.S. commercial television broadcasting industry. Arguably, the so-called "free flow of information" is one of those terms which should rank with other bits of industry jargon, like "stunting," "stripping," and "dumping." "Stunting" is the network tactic of using special events rather than recurring series to bring in the ratings: like televising Evel Kneivel's Grand Canyon jump. (NBC has been big on stunting lately; in Canada, so has the CBC with its Super-Specials.) We'll get to "stripping" later. "Dumping" is more difficult to define, but it's certainly been honed to perfection over the past two decades. A few examples come to mind:
But neither of these examples fully illuminate the practice. In a way, dumping could be a synonym for the "free flow of information" as it is presently operating. If you ask for a definition of dumping as a television practice internationally, the short answer would be that it's an economic tactic by which a big TV-program-producing country effectively prevents other countries from developing their own homegrown programs and TV industries. The long answer is obviously more complex than that, and to get to it, we have to shovel our way through some more TV jargon and industry euphemisms.
"Webs," for instance. A web is a TV network, if you read Variety and other television trade papers. It's a lovely choice of words, dead on, especially if you're talking about the three commercial U.S. networks. By comparison, the networks of any other country are mere mini-webs, caught inside the parameters of the U.S. webs. Take Canada, for instance. As of 1977 Canada has become the top foreign market for U.S. TV programming. Our Canadian networks pay the top price in the world for buying U.S. programs. In other words, when dumping is measured in financial terms, Canada is at the bottom of the heap. The following table, compiled from Variety figures of 1976 through 1978, shows the average price range paid by the seven major importing countries for U.S. TV shows. The price given is for each half-hour of programming. Double it for an hour-long show.
Country 1975 / 1976 / 1977
Remembering that Canada has only about twenty-four million people, the above figures become even more interesting. Aside from Australia, the population base for the other major importing countries ranges from at least twice that of Canada to almost five times its size (Japan).
Robert Sarnoff must be proud of Canada. Robert Sarnoff is an important guy to include in this small treatise on TV international economics. He made what I consider to be a "landmark" statement back in 1962. At the time, he was chairperson of the board for NBC. He was talking to the European Broadcasting Union, which had gathered in New York during October of that year. He told them:
Just a few months earlier, though, Saturday Review had run a little item that could be called the subtext for Sarnoff's speech:
Actually, that Sarnoff speech has a familiar ring to it, if you remember the early sixties when Canadian academics (and others) were blowing their minds over notions like "the wired nation" and "the global village — concepts which completely ignored the economic underpinnings of television and played directly into the hands of the U.S. TV business interests. It's probably as a direct result that Canada has the most complex, signal delivery system for extending TV transmission to every outpost in the country, is the leader in communications satellite technology, is the most cabled country in the world, and is the top foreign market for U.S. TV shows. In other words, we have the most advanced technology in the world for delivering U.S. programs to Canadian viewers. If anybody gobbled up Sarnoff-style rhetoric, Canada did.
But Canada is not alone. By 1976 there were only five countries in the world which did not broadcast any U.S. TV programs — Mainland China, North Korea, North Vietnam, Albania, and Mongolia.  Small wonder. The late fifties and early sixties were busy times for the U.S. networks. CBS signed a contract with the Italian Broadcasting Corporation (RAI) in 1961 to provide "help" with program production, news, public affairs, and sales — and then went on to construct Israel's nationwide TV system. NBC assisted the TV networks of Portugal, Peru, Sweden, and Yugoslavia; built stations in Egypt, Argentina, Hong Kong, and Italy; designed the networks of Kenya, Sierra Leone, the Sudan, Uganda, Nigeria, and Saudi Arabia; and then, in 1966, built the national TV system for South Vietnam. Remember those long years when ABC was low dog on the ratings totem pole? Poor ABC. Actually, they were quite busy elsewhere, buying up stock in the television systems of Costa Rica, Honduras, Guatemala, El Salvador, Nicaragua, Japan, Australia, and the Philippines. Also, ABC went into program production companies in Mexico, Great Britain, and West Germany. Andrew R. Horowitz, who reported this information for More magazine in 1975,  states:
Well, it should come as no big surprise, then, that United Nations researchers investigating the global flow of TV programs in 1974 found quite an extraordinary imbalance.  Given the fact that all these countries have TV systems, and given the fact that TV is supposedly some kind of "true universal language," you'd think that there'd be some kind of vast mutual exchange of programming going on. What they found was that most countries are program importers. And of the four major program exporters, the U.S. annually exported 150,000 hours of TV material, the United Kingdom — 20,000 hours, France — 20,000 hours, and West Germany — 6,000 hours. In other words, the U.S. annually exports three times as much programming as the other three countries combined and enough program material to completely fill the broadcasting schedules of twenty-two networks operating eighteen hours per day for an entire year.
It should be mentioned that by 1971 the FCC (Federal Communications Commission) required the U.S. networks to divest themselves of their foreign holdings. About a decade too late, obviously. By then, virtually everybody knew that "good television" meant BONANZA and PETYON PLACE. Besides, such a ruling couldn't touch at least two key aspects of the U.S. TV industry. Let's take them one at a time.
During the fifties the U.S. networks produced most of their shows themselves and sold sponsorship of an entire show to one or two advertisers. In the early sixties, however, the networks began to depend increasingly on independent production companies and studio conglomerates to provide their programs. At the same time, the networks turned away from the practice of selling small spots of time on a show to lots of advertisers. With the increasing desirability of TV as an advertising medium, the networks have escalated their rates over the years until now the average primetime ad-minute sells for over $100,000 on each of the three (CBS, ABC, NBC) commercial networks. This increased ad-revenue is accompanied by a brilliant financing system that the networks have arranged with the companies which make the TV shows. A program producer, like Norman Lear for instance, does not literally sell a show to a network. Instead, he rents it to them for a license fee that covers two showings of the program. Typically, this fee covers only 50% to 75% of the costs of making the program.
Let's say it costs a producing company $400,000 to make each episode of a one-hour action-adventure series — a standard figure in the U.S for this format. If the series is meant to run for twenty-two episodes, this would mean a cost of $8,800,000 to the producing company. The network, however, would license the series for at most 75% of the costs, or $6,600,000 — meanwhile selling ad-time on each episode at a rate which could bring in nearly double what they paid out for the series. This arrangement between a network and a producing company is called "deficit financing." In a personal interview, Les Brown, TV critic for the New York Times and author of Television: The Business Behind the Box, explained:
Norman Lear has stated that the occasion of a new series becoming a popular hit with the public is not necessarily a time for breaking out the champagne. It's more often a time for internal squabbles and legal battles, as the show's cast begin to demand "star-status" salaries from the production house.  If a show becomes a hit according to the ratings, it's the network which profits from the success because of its increased ad-revenues, without having to pay out any more money to the producing company. In fact, that company would seem to be losing a few million dollars on the deal.
In an article for Fortune magazine, Peter Schuyten provides a good description of how domestic syndication works:
Anyone who has ever wondered about the dreary and repetitious character of daytime and late-night commercial television can find the explanation here. According to the dictates of deficit financing, it is to the economic advantage of producing companies to concentrate on building up their "in the can" series libraries. This assembly-line approach to programming is bolstered by the local stations, for whom it is economically advantageous to rely on "stripping" rather than to produce their own local shows for non-network time slots. In short, domestic syndication solves many of the financial problems created by the economic structure.
The first year of domestic syndication could adequately cover the losses incurred through deficit financing. Subsequent reruns and foreign sales provide the clear profits.
The deficit financing situation is obviously a key to understanding commercial television as it operates both within the U.S. and around the globe. With foreign sales built as a necessity into the economic structure, the U.S. TV industry plays an aggressive role around the world, peddling its "in the can" libraries to foreign networks at prices well below what it would cost these foreign networks to make comparable homegrown programs. For example, in Canada, it costs about $60,000 to make each episode of the CBC sitcom KING OF KENSINGTON, which might bring in the same amount of advertising revenue as the imported MARY TYLER MOORE, which costs $25,000 for one episode. This is precisely how dumping works. In quantitative terms, the area of the world which has been most dumped on is Latin America, where the broadcasting schedules of some countries contain as much as 85% of their programming given over to U.S. reruns. 
In other words, as the United Nations researchers found, there really is no "free flow" of programs and information. It's pretty much a one-way street.
The director of the traffic is an organization called the Motion Picture Exporters Association of America — the MPEAA — which is the other thing that 1971 Federal Communications Commission ruling can't touch.
The MPEAA was established in 1960 by ten multinational entertainment conglomerates: Allied Artists, Avco-Embassy, Four-Star Entertainment, MCA, MGM, Paramount, Screen Gems, 20th Century-Fox, United Artists, and Warner Brothers. This so-called "Hollywood Ten" vested the MPEAA with the authority to represent its members in dealings with foreign governments and entrepreneurs for the sale of U.S. TV shows.
Two recent events come to mind which illustrate the power of the MPEAA. Most countries, in order to promote and protect at least some glimmer of their own TV industry, set a quota on the amount of foreign programming which can be bought and televised. France, Italy, Denmark, Sweden, Australia, and Japan follow this practice. One of the most stringent quotas has been Great Britain's — 14% of televised programming can be foreign. This past year the Independent Broadcasting Authority (Britain's regulatory agency) had planned to trim that quota even further — to 12%, thereby freeing more broadcast time for home-grown programs and further fostering employment within its own TV industry. According to Variety (July 12, 1978), the MPEAA fought that plan tenaciously and "hinted at retaliatory action" if the quota were lowered. As a result, "the new plan, instead of lowering the quota, is expected to raise it to 15.5%." A similar thing happened in Spain last year, where broadcasters balked at the latest price increases for U.S. reruns. After a boycott threat by the MPEAA, Spain accepted a price markup of 100%. Variety (June 21, 1978) called this "part of a larger effort to land higher prices for U.S. films and TV shows in various countries in Europe and the Middle East." So much for a nation "speaking peace unto other nations."
At the same time, the U.S. TV industry seems absolutely xenophobic in its own programing policy. The three commercial networks import less than 2% of their overall annual schedule" and react with heightened paranoia at the slightest invasion of their domestic market. For example, in 1976 the Mexican commercial network Televisa, based in Mexico City, made part-time affiliates of nine U.S. stations, providing them with twenty-five hours of Spanish programming per week. The broadcast signal was carried across the border by landlines to San Diego, where it was switched to the Westar satellite and beamed across the country to the other eight stations. According to the New York Times (October 3, 1976), Richard Wiley, then chairperson of the Federal Communications Commission, was reported to have said that while this doesn't violate any of the agency's regulations, the implications were "staggering" because "if Mexico can do it, why not also Canada?" His particular worry was that the private-Canadian CTV network might make part-time affiliates in the U.S., and "Canadian television would come spilling across the border." Meanwhile, Canada has been inundated by U.S. television for a generation, the economic and cultural costs of which we are only now beginning really to perceive.
In The Media Are American, Jeremy Tunstall has looked at communications from a global perspective and perceived:
Even China may no longer be that keen, if we take note of Variety's perspective on recent events:
That seeming "inevitability" is part of the media-box, and I suspect that if the dimensions of that media-box were made familiar to the public, people would be a lot more "keen" to demand some changes.
"Corporate diversification" has become a buzzword in the TV industry. It means corporate takeovers, and a good illustration of that is a rundown of television's tie-ins with the publishing industry. NBC's parent company, RCA, owns Random House, Alfred A. Knopf, Pantheon Books, Vintage Books, Modern Library, and Ballantine Books. CBS, Inc. owns Holt, Rinehart & Winston Publishers Fawcett Publications, BFA Educational Media, W.B. Saunders Co., Winston Press, Frederick Praeger, Inc., and Popular Paperbacks. ABC, Inc. owns Wallace-Homestead Book Co., W. Schwann, Inc., Los Angeles magazine, American West magazine, ABC Farm Publications, and Leisure Magazines — which includes High Fidelity and Modern Photography.
Of the major suppliers of TV programs, Paramount Pictures (a subsidiary of Gulf-Western Oil) owns Simon & Schuster, Monarch Books, Washington Square Press, Esquire, Inc., and Pocketbooks. Warner Communications (the parent company for Warner Brothers Pictures) has its Warner Books and owns Independent News, DC Comics, Mad magazine, and E.C. Publications. MCA-Universal (which in 1976 produced nearly one-third of all primetime U.S. commercial network programming) owns G. Putnam's Sons, Coward McCann & Geoghegan, and Berkeley Paperbacks. 
"Corporate diversification" doesn't stop with publishing, however. Warner Communications, Inc., for instance (perhaps best known for its Warner Brothers motion pictures, Warner Brothers Television, The Wolper Organization, Panavision, Licensing Corporation of America, and The Burbank Studios — with Columbia), actually gains its greatest percentage of revenues from its recording and music publishing interests: Warner Brothers Records, Elektra, Asylum, Nonesuch, Atlantic Records, WEA Corp. (marketing and distribution), WEA International (with eleven international affiliates), and Warner Brothers Music. Warner Communications, Inc. also owns Atari, Inc. (a manufacturer of electronic video games), the Knickerbocker Toy Company, major shares in Coca-Cola Bottling Company of New York, major shares in Bausch & Lomb Optical Company, 95% of the North American Soccer League's Cosmos, and several major cable-TV companies, including the one being tested in Columbus, Ohio.
Metro-Goldwyn-Mayer owns the Grand Hotel in Las Vegas and a new hotel-casino complex in Reno. Twentieth Century-Fox Film Corp. is part owner of a pay-cable company called Hollywood Home Theatre and owns theatre chains in other countries (such as the Hoyts Theatre chain in Australia) within its International Theatres Division. Columbia Pictures, Inc. recently purchased O. Gottlieb & Company, a manufacturer of pinball machines.
Gulf-Western, which owns Paramount Pictures, also owns more than 300 other subsidiaries, including: hotels and sugar refineries in the Dominican Republic, Schrafft's Candies, Madison Square Garden, Washington Park and Arlington Race Tracks in Chicago, the New York Knicks and the New York Rangers, a major movie theater chain in Canada called Famous Players, mining-manufacturing and automotive companies, as well as apparel products like Cole of California, Catalina, Supp-hose, and No Nonsense pantyhose. Gulf-Western's Paramount also financially helped develop Sony's Betamax system — a video cassette machine for home use.
Competing with Gulf-Western as the biggest conglomerate connected with TV programming is MCA-Universal. Not only is it the major producer of movies and prime-time TV programs, and the owner of three important book publishing companies; MCA-Universal also owns the concessions for Yosemite National Park, a mail-order house called Spencer Gifts, a savings and loan association, the recording contracts of such popular singers as Elton John and Olivia Newton-John for MCA records, the complete pre-1948 Paramount film library consisting of 750 feature films rentable to TV, its own Universal Studio tour, major shares in Coca-Cola of Los Angeles, and the development of another competing playback system for home use, DiscoVision, made by Phillips of Holland. MCA-Universal is also trying to bypass the network deficit financing system by setting up its own attempt at a "fourth network" called Operation Prime Time, which distributed the TV miniseries called TESTIMONY OF TWO MEN to independent TV stations across the U.S.. As Peter Schuyten puts it in his article about this conglomerate, MCA-Universal "looks for tie-ins with almost everything else. The company licenses KOJAK lollipops, EMERGENCY lunch boxes, BIONIC WOMAN dolls, and JAWS t-shirts."  Business Week predicts that "perhaps the most likely candidates for an MCA take-over are in the amusement park business." According to an economist within the conglomerate, "we have a lot of expertise in crowd control, food merchandising, and basic park operations." 
Of course, this should remind us of one of the most familiar diversified conglomerates of them all — Walt Disney Productions. After Disneyland, Disneyworld, the California Institute of the Arts, hundreds of feature films, TV shows, cartoons, comic books, and merchandising spin-offs, the company is now planning yet another Florida amusement park and Tokyo Disneyland (a $300 million amusement park in Tokyo Bay, Japan). 
The U.S. TV networks themselves have also become giant conglomerates of diversification.  The dominant parent company in broadcasting is the RCA Corporation, which was founded just after World War I. A leader in the field of radio and electronics, RCA was created by American Telephone and Telegraph, Western Electric, General Electric, and Westinghouse. RCA Corporation has four major operating divisions, of which the National Broadcasting Company (NBC) is the most profitable. Of the other three divisions, RCA Electronics manufactures color TVs, radios, solid-state components, picture tubes, government and commercial electronics systems, and the SelectaVision video-disc project. According to Business Week,
RCA Communications division includes a cable TV and radio service, six book publishing companies, and RCA Records. RCA Diversified Businesses includes Banquet Foods Corp., Coronet Industries (carpets and furnishings for home and office), Hertz auto rental, a real estate business called Cushman and Wakefield, and Oriel Foods Ltd. (a British food processor and distributor). RCA also owns major interests in the domestic satellites, services NASA, owns the Alaska long-lines telephone system (ALASCOM), has the rights to broadcast the 1980 summer Olympics in Moscow, and will market Matsushita's videotape units under the RCA label.
CBS, Inc. has been the most powerful company in broadcasting because of its ratings lead over the past twenty years (which ended recently). Besides its broadcasting division for radio and television, CBS, Inc. is the largest producer, manufacturer, and marketer of records in the world, through its CBS Records International. CBS Columbia Group includes toy manufacturing through Creative Playthings and Wonder Products, and the manufacturing of musical instruments such as Steinway pianos, Fender guitars, and Rogers drums. In addition to its seven book publishing holdings mentioned earlier, CBS, Inc. publishes more than 60 magazines, including Field & Stream, Road & Track, Cycle World, World Tennis, Women's Day, Mechanix Illustrated, and Rudder.
American Broadcasting Companies, Inc. is the result of a merger between ABC and United Paramount Theatres Corporation. ABC has three major groups. The ABC Broadcasting Group includes all of its TV and radio operations. The ABC Leisure Group #1 has ABC Records, ABC Record & Tape Sales, Word, Inc. (which is a religious communications division), ABC Farm Publications, ABC Leisure Magazines, and ABC Entertainment Center in Century City. The ABC Leisure Group #2 includes the ABC United Paramount Theaters (278 movie theaters around the U.S.), and ABC Scenic and Wildlife Attractions (which operates a wildlife preserve in Maryland, an historical town near Atlantic City, two Florida scenic attractions, and a tourist spot in Texas).
With the U.S. TV industry involved in everything from sugar cane and oil to pinball machines and pantyhose, there is very little in our lives left outside its domain. Leisure time itself has become the object of industry scrutiny, since the television oligarchy is interested in far more than just our TV-viewing habits. Add to this the fact of an MPEAA stranglehold on global program distribution, and you come up with a "global village" far more nightmarish than any ever dreamed of by Marshall McLuhan and friends. It's no wonder that Iceland has banned television broadcast for one day out of every week,  or that the chancellor of West Germany has urged his citizenry to voluntarily do the same.  Even McLuhan now suggests we consider "pulling the plug" on TV.
Nevertheless, given the present pervasiveness of the medium, it's probably more realistic to consider ways of dealing with the strong-arm tactics of the MPEAA, for a start. Among Canadians, for instance, there is a growing recognition that a great deal of economic and political clout accompanies the position of being the number-one foreign market for U.S. TV product. If our networks could get their acts together and stop competing with one another for this programming, they could present a united front for bargaining and bring the price of imports down to a more reasonable level. As it is, current estimates of the amount of money leaving the country annually for U.S. TV shows put it in the neighborhood of $100 million dollars. That's outrageous.
But the tide may be turning, as more and more Canadians are beginning to perceive that their own culture may be disappearing down the tubes. By turning to other countries besides the U.S. as the source for a greater variety of imported programming, by fostering its own indigenous TV production through tough quotas and levies, and by standing up to potential MPEAA reprisals with a united front, Canada could be effective in changing the present economic, political, and cultural imperialistic measures that now characterize commercial television on a global level. After twenty-five years, it's become obvious that the only "true universal language" of interest to the U.S. television conglomerates is money.
1. Jonathan F. Gunter, "An Introduction to the Great Debate," Journal of Communications, Autumn 1978.
2. Toronto Star, May 23, 1978.
3. Variety, December 13, 1978.
4. Reprinted in Problems and Controversies in TV and Radio, Harry Skornia and Jack Kitseon, eds. (Palo Alto: Pacific Books, 1968).
5. John Telbel, "U.S. TV Abroad: Big New Business," Saturday Review, July 14, 1962.
6. William H. Read, Journal of Communications, Summer 1976.
7. "The Global Bonanza of American TV," reprinted in Media Culture, James Moncaco, ed. (New York: Delta Books, 1978).
9. Kaarle Nordenstreng and Taplo Vans, Television-Traffic: A One-Way Street?, UNESCO, 1974.
10. "Interview of June 1977 for CBC-FM "Ideas" series: TELEVISION — A SURROGATE WORLD, by Joyce Nelson.
11. "Interview of August 1977 for CBC-FM "Ideas" series: TELEVISION — A SURROGATE WORLD, by Joyce Nelson.
12. Les Brown interview.
13. Peter J. Schuyten, "How MCA Rediscovered Movieland's Golden Lode," Fortune, November 1976.
15. Jeremy Tunstall, The Media Are American (London: Constable Press, 1977).
16. Nordenstreng and Varis.
17. Andrew Horowitz, in Media Culture.
20. Variety, December 20, 1978.
21. This and the subsequent information on program suppliers' corporate holdings have been gathered from the following sources: "RCA's New Vista — The Bottom Line," Business Week (July 4, 1977); "The Book Boom — Action in Paperbacks," Business Week (July 4, 1977); "The Cash-Rich Movie Companies," Business Week (May 16, 1977); Robert Lindsey, "The Film Giant with No Studio," New York Times (March 27, 1977); John Mahoney, "Book and Movie Tie-ins," New York Times (March 13, 1977); Peter J. Schuyten, "How ACA Rediscovered Movieland's Golden Lode," Fortune (November 1976); and James Monaco, ed., "Appendix 2: Who Owns What?" Media Culture (New York: Delta Books, 1978).
23. Business Week, May 16, 1977.
24. Toronto Star, January 3, 1979.
25. Much of the subsequent information regarding network holdings has been gleaned from Alan Pearce, "The TV Networks: A Primer," Journal of Communications, Autumn 1976.
26. Business Week, July 4, 1977.
27. Ontario Royal Commission on Violence in the Media, 1977.
28. Toronto Star, May 23, 1978.