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February 7, 2020
Role of Online Services in Entertainment Industry Diversity
The representation of diverse points of view and diverse
ownership of businesses within the television industry has
long been of interest to Congress. Among other laws,
Section 257(b) of the Communications Act [47 U.S.C.
§257], enacted as part of the Telecommunications Act of
1996, directs the Federal Communications Commission
(FCC) to promote policies favoring diversity of media
voices and vigorous economic competition. Given this
statutory direction, the FCC has sought to encourage
diversity of viewpoints, as reflected in the availability of
media content offering a variety of perspectives as well as
diverse programming formats and content. To accomplish
this, the FCC has relied on its authority over broadcasters,
as well as over cable and satellite services that distribute
television programming to consumers. For example, the
FCC's Equal Employment Opportunity (EEO) rules and
policies govern employee recruitment by broadcast stations,
as well as cable and satellite video programming
distributors.
In July 2017, FCC Chairman Ajit Pai chartered the FCC's
Advisory Committee on Diversity and Digital
Empowerment (ACDDE), and re-chartered it in July 2019.
The ACDDE's purpose is to issue recommendations to the
FCC on how to empower disadvantaged communities and
accelerate the entry of small businesses, including those
owned by women and minorities, into the media, digital
news and information, and audio and video programming
industries, including as owners, suppliers, and employees.
However, structural and technological changes in the
television industry are limiting the FCC's ability to address
diversity concerns as more viewers turn to entities that are
not subject to FCC regulation, such as online subscription
video-on-demand services (SVODs).
For the last 70 years, broadcast networks, and then cable
networks, were the gatekeepers of television programs.
While the FCC has never had direct authority over
television programming, it has been able to use its oversight
of broadcasting and satellite and cable distribution to
encourage diversity in programming. For example, when
the FCC approved Comcast Corporation's purchase of NBC
Universal's broadcast television stations, networks, and
studios in 2011, the agency required Comcast to distribute
10 new independently owned and operated cable networks.
Furthermore, the FCC cited Comcast's pledge to expand its
offering of programming targeting racial and ethnic
minority audiences as evidence of Comcast's commitment
to diversity.
Over the last ten years, however, SVODs, such as Netflix,
Amazon Prime Video, and Hulu, have attracted an
increasing number of subscribers while subscriptions to
cable and satellite services have declined. The growth of
SVODs has created additional demand for video
programming, particularly for shows that appeal to specific
market segments rather than viewers at large.
Traditionally, broadcast television networks have relied on
the research firm The Nielsen Company to measure
viewership, and have used this information to guide
decisions about commissioning new programs. In most
cases, the networks work with showrunners.
A showrunner is the creative force behind a television
program and has overall managerial responsibility, hiring
and overseeing the cast, producers, directors, and crew.
According to a 2016 article from the trade publication
Variety,
Writers used to work their way up through a system
and patiently wait their turn to run their own show.
But the proliferation of outlets, increasing demand
for bold content, and opportunities to scale a show
to specific creative needs have combined to open
the door for showrunners of various backgrounds
and experience levels.
Network executives generally ask a showrunner to produce
a pilot a sample program and do not commission an
entire season of shows until research indicates that the
program will attract a sufficiently large audience.
A broadcast network's goal is to convince as many people
as possible within a broad demographic group to tune into
the program at a specific time, and then to sell advertising
targeting that audience. Cable networks typically target
narrower demographic groups, but they still generate
revenue from selling advertising aimed at viewers who are
watching at a specific time and from convincing cable and
satellite operators that their subscribers desire the networks'
programming.
In contrast to broadcast and cable networks, which air
programs on fixed schedules throughout a day, SVODs
offer subscribers a library of programming on an on-
demand basis. Because SVODs generally rely on
subscription revenue rather than advertising revenue, they
generally judge a program's success by the number of new
subscribers a program attracts or current subscribers it
interests rather than by the number of people who watch at
a particular time. Thus, for many SVODs, the programming
goal is to offer a few high-profile shows that attract many
viewers, and then a selection of shows that convinces those
viewers to maintain their subscriptions. They have the
technical ability to offer more programs at any given time
than traditional television networks, and can target their
marketing of programs to individual subscribers. They may
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