American commercial television has always been solely supported by advertisers. While other countries like the UK chose to support their programming through taxes on televisions, that option was never seriously considered in the United States. While the economics behind television have changed over the years, the basic need for sponsorship money has remained the same. This week, we’re taking a deep look at the economics behind your favorite shows through the years. Today, we’ll begin in television’s earliest days.
In the early years of television, programming was seen as disposable. Who would want to ever watch the same programming over again? Most programming went out live and was rarely recorded. When it did get recorded, a simple device known as a kinescope was used. The kinescope was just a camera pointed at a television screen running the broadcast. The result left a lot to be desired, but nobody really cared for the most part. After all, who would ever want to watch this programming again? This thinking kept budgets down because the networks knew that they only had one chance to profit from their programming. The math was rather simple: (sponsorship) - (Production cost) = profit. As long as sponsorship was higher than the production cost, the network would be happy and profitable.
Since the networks wanted to take less risks, they would often produce programs with just one sponsor. Instead of having to beat the bushes for multiple sponsors and hope they can sell enough slots to make a profit, the sponsored shows only required them to negotiate with one sponsor and lock-in a guaranteed profit. Instead of having to break for ads, many of these sponsored shows would work their ads into the programming itself. Texaco Star Theater was a perfect example of this.
These shows often made less money than other unsponsored programming and sponsors had a huge amount of control over the programming. If Texaco wanted something cut from Texaco Star Theater, it got cut regardless of what the talent requested. While the network could earn guaranteed profits with this format, it had to give up most of its autonomy. This method of financing programming would get disrupted by a Cuban bandleader who had no experience in television, but who would teach the network veterans a lesson in the future of television.
Desi Arnaz and Lucille Ball were trailblazers. When they first approached CBS with the idea that became I Love Lucy, the network loved the idea but wanted some changes- the first and biggest of which was to cast someone else as Lucy’s husband. The idea of a Cuban man married to an “American” woman was seen as being too controversial. Both Lucy and Desi insisted that they would play the married couple, racists be damned. CBS caved on this and another demand- that I Love Lucy be recorded on film instead of going out live. This added to the production costs of the show, but CBS acquiesced to get the production off the ground. They thought that Desi was just being eccentric, but Desi saw something that they didn’t- that these shows could live on forever, generating money in perpetuity through reruns. When I Love Lucy became a mega hit, Desi’s decision to produce the episodes in a way that would guarantee them a future looked like a stroke of genius. And it was. His visionary decision would bring a tsunami of change to the American television landscape.
