This business model, perhaps as much as artistic creativity, is
responsible for TV’s current golden age. Networks have effectively
entered into a quality war. Basic-cable channels have to broadcast
shows that are so good that audiences will go nuts when denied
them. Pay-TV channels, which kick-started this economic model, are
compelled to make shows that are even better. And somehow, they
all seem to be making insane amounts of money. This year, NBC
Universal’s cable operations are expected to bring in around $5
billion, half of which is profit. Viacom’s revenue will be more
than $8 billion, with 49 percent profit. Apple had one of its best
years ever in 2012, but its profit margin is expected to be only
37 percent, which is still well above its 23 percent average over
the past five years. An auto company would be thrilled with
something in the high single digits.
What I love is that it’s entirely predicated on producing better and better shows. It’s profitable and the art is great.