How Do Channels Make Money?
By now we all are aware that channels which we get through TV antenna are free of cost. All that is required to pay from the viewer’s side is the expense for the TV antenna. Does it ever come to your mind that is it really legal to view those free channels through TV antenna? If the viewers do not pay money to the channels, then how come the broadcasters can afford to show us those channels for free of cost? Firstly, there is nothing wrong in those Free channels that we get to watch through TV antenna. You would be only receiving those local channels which are broadcasted through your nearest transmission tower. Basically it is the antenna that would be picking up the reception signals and these signals are then converted to a format for the viewers to view them. Hence you may notice that not all of the channels show up. There are certain channels for which the viewers have to pay no money and on the other hand there are certain other channels as well for which you would need to pay some subscription amount for viewing those channels. Let us discuss on how these free TV channels actually make their money.
Advertising and subscriber fees are the two ways wherein TV channels can earn money. But maximum channels follow the advertising route for earning money. Let us have a look at the breakdown in terms of earning revenue.
- The TV channels can charge their broadcasters for carrying their channel or their content. This is referred to as Sub or Retrans fee. The programmers whose content is in great demand such as the popular sports channel or news channels can negotiate and demand a fee from the broadcasters for carrying their channel. So to put in simple, you can say that the programmer is paid for making its channel available to its viewers. It does not depend on what would be actually watching the channel.
- TV channels also earn money from the various advertising on their channels. Here the viewers are taken into consideration. The commercials are aired for various time such as :15, :60 and :120 seconds. These are basically referred to as spots. These spots are sold as Per Inquiry or PI, Direct Response ad or DR, local spots or national spots. The PI are considered to be the lowest priority ad. The DR are value based wherein it depends on the amount of response received. The more number of people call up, the more valuable it becomes. The national spots would mean brand advertising on the channels.
- TV channels also earn through sponsorships that come in various form. There is show sponsorship, title sponsorship, network sponsor, launch sponsor and category sponsor and so on.
- Another mode of making money for TV channels is through product integration. The product of the brand can be highlighted time and again in the content of the TV channels programs. Hence you may see your favourite actor or actress promoting a special product on that channel.