A NEW ENTRY
A NEW ENTRY IN THE TELEVISION BROADCASTING INDUSTRY AND PROGRAM DIVERSITY :
IN THE CASE OF THE EMERGENCE OF SBS-TV IN KOREA
MYUNG-HYUN KANG
1451 Spartan VLG Apt. L
E-Lansing, MI 48823
(517) 355-1267
[log in to unmask]
Ph.D.Student
Mass Media Ph.D. Program
Michigan State University
A NEW ENTRY IN THE TELEVISION BROADCASTING INDUSTRY AND PROGRAM DIVERSITY :
This paper investigates the relationship between the program format diversity
and network competition caused by an addition of the new network, using
Herfindahl-Hirschman Index. Based on the oligopoly theory and its relevant
research, this study hypothesizes that networks competition encourages their
program diversity. Consistent with the oligopoly theory, the findings of this
study supported the hypothesis. More specifically, this study first showed the
existing networks maintained limited program formats until they observed the new
rivalry. Next, broadcasters tried more diverse formats due to networks
competition. Finally, the networks continued their oligopoly practices after
temporal competition period.
1. Introduction and Research Question
Since the three public service networks (KBS-1, KBS-2, and MBC) had long
dominated the Korean network television, a new commercial TV (SBS-TV: Seoul
Broadcasting System) network came out at the end of 1991. The emergence of the
fourth network may be related to the change of structure in the Korean
television industry in which the three networks had enjoyed their dominance for
over 30 years, thereby signaling television network competition for the first
time in Korea.
The new network has attempted to position itself as an alternative to existing
networking programming from the beginning, making various strategies such as
producing special programs, involving popular stars, and making different
programming to gain higher ratings. In particular, the network aired its main
evening news at 8 p.m., which was a dramatic change because the traditional
networks broadcast their main evening news at 9 p.m. for a long time. Thus, the
network has received both praise and criticism from producers, public interest
groups, and television critics concerning its programming, just as Fox network
had in the late of 1980s.
In general, scholars have raised some questions regarding this increased media
competition. The questions focused mainly on the level of competition among
networks, how the networks respond in the increased competitive structure, and
whether the increased competition helps or hurts the viewing public (Litman,
1979). Out of these questions, this study was designed to assess the behavior of
the networks before and after the new emergence of the network in terms of the
number and types of program choices available to the viewers.
The question guiding this study, therefore, may be stated as follows: Has the
emergence of the SBS network affected television format diversity in Korea ?
2. Competition and Program Diversity
It is generally recognized that program format diversity offered by the US
television networks has declined over time, and this has been attributed to an
economic theory known as oligopoly (Dominick&Peace, 1976; Litman, 1979;
Wakshlag&Adams, 1985).
The assumption of oligopoly theory is that there are relatively few firms which
collectively comprise the entire industry. Because of this fewness, according to
oligopoly theory, each oligopolist is so powerful that each one's actions such
as its pricing, product differentiation or research activities directly affect
the market. As a result, since rivals desire to maintain their relative
standing, they must react, and thus, the reaction is, in general, what is
referred to as mutual interdependence. Why firms may choose cooperation over
competition was well illustrated by Litman (1979). He explained that because
firms want to increase their market share, they may compete vigorously in every
possible area of contact (i.e., by lowering prices, maintaining high quality
standard, and introducing new produce). However, after full-fledged competition
which was attempted by "price cut, new advertising campaign and new product
innovation," they will just watch their market shares decline (Litman, p.394).
Based on this aftermath, therefore, they recognized that it is wiser to
cooperate with each other in order to maximize industry profits than to engage
in such unprofitable skirmishes. Finally, through mutual interdependence and
cooperation using "high product prices, low input prices, and limited
advertising expenditure," they may watch their profits grow (Litman, P. 394). As
a result, they resemble one another again under the oligopolistic norm, and
their product may be homogeneous (Picard, 1989).
Consistent with oligopoly theory, there was an evidence that the broadcast
networks employed oligopolistic practices, resulting in a general decrease in
program format diversity. Dominick and Pearce (1976) found that an overall
decline in program diversity between 1953 and 1974 when the networks perfected
their oligopolistic practices. They analyzed the program diversity of network
prime-time programming during the fall season of each year into 14 categories of
programming, using diversity and homogeneity indices. The diversity index refers
to the extent to which a few categories dominate prime time, which was
calculated by summing the percentages in the top three categories per season and
subtracting from 100 (1-CR3), whereas the homogeneity is about how much the
networks resembled each other within and across these categories. The result
presented that both of these indices have declined over time and that networks
have copied each other's successful program types, which exhibited a mutual
interdependence among program formats. Although program diversity declined
during this period, if the network cartel appeared to be unstable due to a
temporary competitive action, the fact that the networks offered more diverse
program was also supported by their study. That is, Dominick and Pearce found
some peaks in diversity such as the period from 1961 to 1963 and 1969 to 1970.
Litman (1979) confirmed that an unexpected upheaval in an equilibrium,
triggered by an industry leader, contributes to greater diversity. Observing the
big three networks' competitive activities (i.e., by increasing spending on
programming and experimenting with new format) during the late 1970s as a
network rivalry, he hypothesized that such intense rivalry should stimulate
greater experimentation and program diversity. Using a Herfindahl-Herschman
Index to assess the program diversity during that time period, he found that a
dramatic increase of program diversity from the 1975-76 program season. In
addition, he discovered that the average number of program options per time, a
kind of horizontal diversity, increased during this period, which means that
viewers had greater choices at any particular point during the period. In sum,
his study supported the assumption that network competition prompted an increase
in the networks program diversity.
Analyzing the entire time period involving the period of Dominick and Pearce's
and Litman's studies, Wakshlag and Adams (1985) confirmed that there was an
overall decline in program diversity over the thirty years and that the
temporary increase in the late 1970s was caused by the outbreak of rivalry.
They also noticed that as the networks restored their cooperative spirit during
the early 1980s, network diversity decreased accordingly. More importantly they
found that a sharp decline of diversity beginning 1971 was associated with the
imposition of the FCC's Prime-Time Access Rules.
According to Albarron et al.'s study (1991), an introduction of a new network
as well as network rivalry also increased the network diversity. They examined
how the introduction of the Fox network affected the program diversity. Based on
the hypothesis that the Fox network, which was introduced in 1986, increased
program diversity, the study analyzed all regularly scheduled prime time
programs on the broadcast networks from 1983 to 1990. Using 21 content
categories, the study compared the diversity before and after the emergence of
the network through the diversity index adapted from Dominick and Pearce's study
(1976). The result illustrated that the diversity index increased from 1985 to
1988, and part of the changes in the diversity index may be, the researchers
believe, attributed to the Fox network.
On the other hand, although network diversity was increased by the emergence of
a new network as well as by the outbreak of rivalry, the overall impact of the
exogenous media competition (i.e., cable and VCR outlets) on network format
diversity remains unclear (Litman et al., 1994; Lin, 1995).
According to Adams et al. (1992), despite the disquieting disequilibrium caused
by new media competition, the number of new seasonal network programs remained
relatively stable even in the midst of 1980s.
Litman et al. (1994) examined program diversity across a sample week of
programming of 1992 involving commercial broadcast television, public
television, basic cable, and premium cable programs, using 15 program
categories. They noted that each individual cable network has a relatively
narrow range of program offerings. However, they suggested that collectively, a
modicum of overall diversity is somehow obtained by each individual network
through a process of counterprogramming and product differentiation.
Lin (1995) analyzed the trends in prime-time network program diversity during
the 1980s to test the hypothesis that network program diversity should have
increased with new program format because the 1980s were characterized by the
increasing threat of new media competition. The findings of the study suggested
that, even in the competitive video marketplace of the 1980s, shifts in program
diversity were rather limited. That is, according to this study, intermedia
competition has not forced the networks to fundamentally increase program format
diversity, unlike intense intranetwork competition which altered network conduct
during the late 1970s.
In summation, although the broadcast network diversity has declined over time
under the oligopolistic practices, it is clear that some intramedia competitions
caused by network rivalry activity or the emergence of new network increase its
diversity.
This study, therefore, hypothesizes that an emergence of a new network in an
existing network industry forced the networks to increase program diversity,
experimenting with new program formats, like Litman's study in the 1970s.
To test this hypothesis, this study was designed to examine a case of the
emergence of SBS-TV in Korean television industry. Actually, compared to
American commercial broadcasting structure, Korean television structure differs
in two dimensions. First, before the introduction of the first commercial
television (SBS-TV) in 1991, only public broadcasting networks dominated
network television for many years in Korea. Second, Korean broadcasting
structure had been long affected more by political forces rather than by
economic forces. Despite these differences, this study addresses the question:
to what extent has the earlier studies applied to the specific Korean case
caused by an introduction of a new network ?
3. Method
In order to answer the research question, this study compared the degree of
program diversity before and after the emergence of the new channel, SBS, which
was introduced in the end of 1991. Therefore, this study highlighted the
program diversity between the preceding period from 1989 to 1991 (3 years) and
the following period from 1992 to 1994 (3 years).
Measurement Index
In measuring program diversity, the most complex and disputatious aspects
involves the selection of program categories chosen and the diversity index
utilized (Litman et al, 1994). Mentioning that subjective decisions in two
dimensions can distort the research findings, Litman et al. suggest that the
Herfindahl-Hirschman index yields findings consistent with other relevant index
such as Relative Entropy Index, and remains a robust measure (See, Kambara, 1992
; Litman, 1992). Based on this suggestion, this study calculates program
diversity by using the Herfindahl-Hirschman index. In addition to this index,
this study also employs the Diversity index modified from Dominick and Pearce
(1976), because the index can highlight the difference of diversity between
before and after the emergence of the new channel.
Program category
On the other hand, as program categories utilized, this study adopted 15
program categories to classify, which were drawn from an earlier study (Litman
et al., 1994). This categories are useful in this study because they were made
to analyze the cross-cultural programming, considering the difference of various
program formats in the entire world.
Study data involves all regularly scheduled entire week programs
(Monday-Sunday, 6 a.m.-midnight) in all Korean networks from the 1989 - 1990 to
the 1994-1995 seasons. Listings of programs were obtained from Korean
Broadcasting Commission (KBC), in which all programming of the Korean television
networks were supervised.
In this study, the individual program was coded as the unit of analysis, and
thus the total number of coded programs were 3212.
All program entries were carefully coded by two graduate students who were
familiar with Korean broadcasting programs. Two coders underwent two training
sessions, the first one for explanation for the coding system and categories and
a second one to reinforce the category definition and work through any problem
categories or definitions.
The followings are the categories involved in this study.[1]()
Table1
TV Narrative Game
Cinematic Narrative Sports
Theatrical Narrative Art/Music
Documentary Children
News/ Current Affairs Religion
Educational/ Instructional Minority
Hobby/Personal Interest Others
Variety/ Show
Intercoder reliability
Intercoder reliability was determined by applying Holsti's formula to a sample
of 1 year's programs (1989). The results yields an average intercoder
reliability across all categories of .89 for the program category
classification.
4. Results
Trends of program formats
Table 2 presents the trends of program formats from 1989-1994. Examining the
analyzed time periods, the overall programs on the Korean networks were
dominated by three categories; "News/Current Affairs"(26.40%), "Hobby/Personal
Interest"(16.20%) and "Children"(11.30%). These categories accounted for 53.9%
of all network programs during this time period.
Table 2. A trend (by %) of program categories in Korean networks (Fall seasons)
Categories
89-90 90-91 91-92 92-93 93-94
94-95 Total
TV Narrative
Cinematic Nar. Theatrical Nar.
Documentary
News/Curren.
Educational
Hobby/P.Inter.
Variety/ Show
Game
Sports
Arts/Music
Children
Religion
Minority
Others
Total
9.37 (46) 10.33 (50) 8.89 (44) 11.33 (69) 13.08 (73) 11.48 (66)
10.75
3.26 (16) 3.51 (17) 2.43 (12) 2.30 (14) 2.51 (14) 2.78
(16) 2.80
- - - -
- -
3.87 (19) 5.79 (28) 5.46 (27) 5.75 (35) 6.45 (36) 6.96
(40) 5.71
25.46(125) 26.45(128) 27.88(138) 25.45(155) 26.88(150) 26.26(151)
26.40
4.89 (24) 2.48 (12) 4.85 (24) 5.09 (31) 4.12 (23) 1.74
(10) 3.86
19.14 (94) 20.45 (99) 19.19 (95) 14.45 (88) 11.29 (63) 12.70 (73)
16.20
7.54 (37) 9.92 (48) 7.88 (39) 7.22 (44) 7.35 (41) 6.61
(38) 7.75
1.43 ( 7) 1.03 ( 5) 1.01 ( 5) 3.78 (23) 5.73 (32) 3.83
(22) 2.80
4.48 (22) 5.58 (27) 5.45 (27) 5.42 (33) 5.20 (29) 6.26
(36) 5.40
3.87 (19) 1.24 ( 6) 2.83 (14) 2.79 (17) 2.51 (14) 2.26
(13) 2.58
12.63(62) 9.92 (48) 9.49 (47) 10.18 (62) 11.47 (64) 14.09 (81)
11.30
0.20 ( 1) 0.21 ( 1) 0.20 ( 1) 0.16 ( 1) -
- 0.19
1.43 ( 7) 0.41 ( 2) 0.40 ( 2) 0.49 ( 3) 0.90 ( 5)
0.70 ( 4) 0.72
2.44 (12) 2.69 (13) 4.04 (20) 5.58 (34) 2.51 (14) 4.35
(25) 3.60
100 (491) 100 (484) 100 (495) 100 (609) 100 (558) 100 (575)
100.0
* ( ) : The number of programs
However, this trend had changed over time, especially before and after the year
1992 when a new network was introduced. While the percentage of the dominant
program genres declined, the percentage of other genres has increased after the
1992-1993 season. For instance, "News/Current Affairs" and "Hobby/Personal
Interest", which represented 26.60% and 19.59% in the 1989-1991 period, dropped
to 26.20% and 12.81% respectively in the 1992-1994 period. In contrast, the
percentage of "TV Narrative", "Documentary" and "Game" genres rose from 9.53% to
11.96%, 5.04% to 6.39% and 1.56% to 4.45% in the same period. "Children" genre,
however, represented increasing trend over the time period analyzed; from 10.68%
to 11.91%.
Some parts of these changes may be attributed to the introduction of a new
network, SBS-TV. As the new network introduced and reinforced various formats
such as "Documentary" genre (i.e., "unsolved mystery" and "Special documentary")
and "Sports" genre (i.e., "NBA Basketball," "Wednesday Bowling," "Thursday
Boxing" and "Friday Golf"), the network tried to introduce more various programs
available to the audience. In particular, the network attempted lots of
"Variety/Show" genres such as the program "Naughty fellow's parade," targeting
its programs toward the young audience. In addition to these various formats,
SBS-TV scheduled its programs differently from existing network programming,
scheduling its main evening news at 8 a.m. and miniseries adjacently. These
strategies forced other networks to try to produce more diverse formats. For
example, the percentage of documentary genre in the KBS-1 network began to
increase from 6.5% in the 91-92 season to 12.5 % in the 92-93 season. Also, that
of TV narrative genre in the KBS-2 and MBC rose from 9.94%, 12.3% to 18.2% and
13.1% respectively between the same period.
Comparison of the Herfindahl-Hirschman Index between, before, and after the
emergence of the new network
To test this study's hypothesis, predicting clear difference in program
diversity between, before, and after the introduction of the new network, the
Herfindahl-Hirschman Index was calculated.
As Table 3 indicates, the overall mean for the Herfindahl-Hirschman Index for
the time period analyzed, is . 1402. In regard to previous research (Litman et
al., 1994 and Lin, 1995), the index indicates a moderate degree of concentration
across all program categories. That is, the degree of this diversity is
relatively higher than that of Litman et al.'s, in which the mean of the
Herfindahl-Hirschman Index for the US' four networks is .20. However, it is
similar to the Lin's study, in which the mean of the index is .131.
The most significant finding illustrated by the data is that there is a clear
change of this index between the year 1991 and 1992 when the new network was
introduced.
As Table 3 illustrated, the yearly Herfindahl-Hirschman Index is over the total
mean (.1402) before the year 1992, which indicates relatively lower levels of
diversity occurring in this period. In contrast, the index dropped to .1287 in
1992 dramatically, supporting the hypothesis that more diverse program formats
will be offered by the emergence of the new network. While the index continued
to increase a little since the sharp drop, the data reveal that each index is
respectively lower after the year 1992 rather than before the year. Thus,
consistent with the findings of previous researches such as Litman's (1979) and
Albarron et al. (1991), this finding supported this study's hypothesis that the
introduction of the new networks affected the type of program categories
available to the audience.
Table 3. A trends of H-H Index from the 1989 to the 1994
--------------------------------------------------------------------------------
-----------------------------
1989 1990 1991 1992
1993 1994 Total
_______________________________________________________________________
Herfindahl-Hirschman .1413 .1514 .1491 .1287 .1344
.1362 .1402
Index
--------------------------------------------------------------------------------
----------------------------
Comparison of Diversity Index between, before, and after the emergence of new
network
To test the hypothesis about the change of diversity since the addition of new
networks, this study also tried to measure Diversity Index which was introduced
by Dominick and Pearch's study (1976).
The result of the Diversity Index is charted in Figure 1.
Figure 1. Diversity Index trends from 1989 to 1994
As Figure 1 shows, the diversity index presented a low point during the period
from the 1989 to 1991 seasons, ranging between 42.77 - 43.44. However, the
diversity index rose to 48.77 in 1992 season. This is another finding to support
the hypothesis that more diverse formats is associated with network competition
caused by the emergence of the new network.
The index began to decline since the year 1992 to 48.57 and 46.95 respectively,
which implies that the networks continued their oligopoly practices again by
developing similar programming to each other.
5. Discussions and Conclusions
The purpose of this study is to examine the relationship between the program
format diversity and increased network competition caused by an addition of the
new network in an existing market industry. Based on the oligopoly theory and
its relevant research, this study assessed the Korean networks' program
diversity during the end of the 1980s and the early 1990s, hypothesizing that
networks competition encourages their program diversity.
Consistent with past works (Litman, 1979; Albarron et al., 1991), the findings
of this study supported the hypothesis. That is, despite different broadcasting
industry like Korea, the essential logic of oligopolistic structure can be
explained in the Korean broadcasting market, and thus the oligopolistic
practices by the networks also proliferate as found in this study.
First, the traditional networks maintained limited program formats until they
observed the new rivalry. For example, just two or three program formats such as
"News/Current Affairs," "Hobby/Personal Interest" and "Children" were dominated
on existing Korean networks without changes. "Documentary" and "TV Narrative"
has often emerged as the dominant program genre with increased networks
competition.
Second, although broadcasters tried more diverse formats due to networks
competition, the formats were mostly cheaper formats such as "Sports" (usually
imported) or "Documentary" (usually imported), except some documentaries such as
"unsolved mystery" which was produced by high-cost. In this study, program
diversity was highly increased through the genres such as "documentary,"
"sports" and "game" associated with much lower cost rather than TV drama genre
(See, the Thomas & Litman's study (1991)).
Finally, the networks continued their oligopoly practices after temporal
program experimentation. In this study, the Herfindahl-Hirschman Index has been
slowly increased again since the shakeup of 1992. This result may also explain a
correlation between increasing profits and decreasing diversity, because program
experimentation typically increases program input costs and carries a
potentially high degree of economic risk (Adams et al., 1992). Thus, this study
illustrates how the broadcasters try to continue oligopoly practices by
imitating their programming of each other.
Despite these findings, it is necessary to include more various dimensions for
future research to see the relationship between media competitive structure or
activity and its performance. For example, if possible, the quality aspects of
the individual program itself should be considered in this research area, using
AI (Appreciation Index) which is a kind of program quality index or VI (violence
index) which was employed by Gerbner.
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[1] () The definition for each category is as follows.
( TV Narrative : TV narrative involves the dramatic presentation which were
created specially for television.
( Cinematic Narrative : Unlike the TV Narrative, it referred to the dramatic
presentation designated for cinema.
( Theatrical Narrative : It contains the movie for the theatrical stage.
( Documentary : This category encompasses all documentary formatted programs.
( News/ Current Affairs : This category encompasses daily newscasts as well as
discussion and interview programs dealing with news and public affairs.
( Educational/ Instructional : This category includes just formal and academic
instructional programs.
( Hobby/Personal Interest : This category encompasses the informal programs such
as fitness, cooking, other personal instruction techniques as well as other
information or talk show dealing with general interest topic.
( Variety/ Show : This category contains light entertainment performances,
different musical and entertainment acts and stand-up comedy performances as
well.
( Game : This category contains all the programs that were created for
entertainment and appeared in the game format involving quiz shows and game
shows.
( Sports : This category involves all sporting events, live or taped, including
commentary, interview, or previews of upcoming events.
( Art/Music : This category involves live or taped fine arts performances such
as music, dance or concerts.
( Children : This category involves all programs that are specially produced and
targeted to children below the age of 13. This category can span all program
content areas such television and cinematic narrative and cartoon drama.
( Religion : This category contains any program which is related to religion,
including religious services and instruction.
( Minority : This category contains all program, regardless of content, that are
specially produced and targeted to ethnic minorities and above the age of 60.
( Others : This category includes the residual for programming that doesn't fit
any of the preceding categories such as home shopping and campaign program.
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