Television Markets 101
Some information to clear up some of the TV Market talk. Normal market TV HH numbers are usually in the 98-99% of all the HH in a DMA. A TV HH is one that has at least 1 set and can see in-market signals over free-air, cable, or Sat.dish. The normal threshold for viewing a particular station in a parish or county to be counted as in market or out of market is 50% of the HH viewing in that geo during the duration of a ratings period. So, KPLC can pick up a Lafayette market Parish if over 50% of the HH viewing in that parish in a sweeps period is to KPLC.
Why are the larger markets important in this equation? It allows C-USA, Big East, Etc. to market boat loads of HH (translates to demos) to a sports network or distributor for producing and airing games. Program rights are sets up and offered to cable nets, traditional nets, etc for airing. That's one revenue stream as rights are paid to the conference. Another happens at the selling level where the network sales department goes to work selling the available commercial time. This is not done with a "5 spots for $500 pitch". Instead, Ad Agency media planners and buyers will gauge interest from the client with a presentation that includes things like reach and frequency, which is a formula for how many times a commerical is seen by a set of viewers during a set time. The larger the Potential audience the greater the chance this number is golden for both the client and agency. The agency will then price out the rating points (a pt. is 1% of the total HH or age set (demo) in a dma) Its sort of a "price by the pound" if you will.
The seller (after management prices the inventory for the season) will then Project ratings (as does the agency). The projection is based on share of viewing by a demo divided by all viewing for that time period, its a %. So, lets say with men, 25-54 years old, the season of C-USA football, 12 games, will deliver a total of 75 rating points M25-54. The agency has valued a rating point at $300, giving those 12 commercials a cumulative value of $22500. Say there's room for 20 advertiser per game. Just to keep it simple, thats 240 commercials. 1,440 rating points (avg 6 rtg) at a cost of $300 a point = $4.3 million total dollars. That's why having teams in larger markets help to raise the level of the smaller markets. You can't buy a spot for $300 a point in a market smaller than #20. Therefore, C-USA looking for top 20 market participation. Then there are the local avails, which generate revenue at the local level, like Service Chevrolet buying a package for a UL game on KADN at 5 spots for $500.
http://www.tvb.org/media/file/TVB_Ma...DMA_Ranks2.pdf
http://en.wikipedia.org/wiki/Media_market
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Originally Posted by Turbine
