Role of Online Services in Entertainment Industry Diversity

Role of Online Services in Entertainment Industry Diversity

February 7, 2020
Role of Online Services in Entertainment Industry Diversity
Government Interest in Media Diversity
cable and satellite services have declined. The growth of
The representation of diverse points of view and diverse
SVODs has created additional demand for video
ownership of businesses within the television industry has
programming, particularly for shows that appeal to specific
long been of interest to Congress. Among other laws,
market segments rather than viewers at large.
Section 257(b) of the Communications Act [47 U.S.C.
§257], enacted as part of the Telecommunications Act of
The Changing Art of Choosing Programs
1996, directs the Federal Communications Commission
Traditionally, broadcast television networks have relied on
(FCC) to promote policies favoring “diversity of media
the research firm The Nielsen Company to measure
voices” and “vigorous economic competition.” Given this
viewership, and have used this information to guide
statutory direction, the FCC has sought to encourage
decisions about commissioning new programs. In most
diversity of viewpoints, as reflected in the availability of
cases, the networks work with showrunners.
media content offering a variety of perspectives as well as
diverse programming formats and content. To accomplish
A showrunner is the creative force behind a television
this, the FCC has relied on its authority over broadcasters,
program and has overall managerial responsibility, hiring
as well as over cable and satellite services that distribute
and overseeing the cast, producers, directors, and crew.
television programming to consumers. For example, the
According to a 2016 article from the trade publication
FCC’s Equal Employment Opportunity (EEO) rules and
Variety,
policies govern employee recruitment by broadcast stations,
as well as cable and satellite video programming
Writers used to work their way up through a system
distributors.
and patiently wait their turn to run their own show.
But the proliferation of outlets, increasing demand
In July 2017, FCC Chairman Ajit Pai chartered the FCC’s
for bold content, and opportunities to scale a show
Advisory Committee on Diversity and Digital
to specific creative needs have combined to open
Empowerment (ACDDE), and re-chartered it in July 2019.
the door for showrunners of various backgrounds
The ACDDE’s purpose is to issue recommendations to the
and experience levels.
FCC on “how to empower disadvantaged communities and
accelerate the entry of small businesses, including those
Network executives generally ask a showrunner to produce
owned by women and minorities, into the media, digital
a pilot—a sample program—and do not commission an
news and information, and audio and video programming
entire season of shows until research indicates that the
industries, including as owners, suppliers, and employees.”
program will attract a sufficiently large audience.
However, structural and technological changes in the
television industry are limiting the FCC’s ability to address
A broadcast network’s goal is to convince as many people
diversity concerns as more viewers turn to entities that are
as possible within a broad demographic group to tune into
not subject to FCC regulation, such as online subscription
the program at a specific time, and then to sell advertising
video-on-demand services (SVODs).
targeting that audience. Cable networks typically target
narrower demographic groups, but they still generate
Recent Developments
revenue from selling advertising aimed at viewers who are
For the last 70 years, broadcast networks, and then cable
watching at a specific time and from convincing cable and
networks, were the gatekeepers of television programs.
satellite operators that their subscribers desire the networks’
While the FCC has never had direct authority over
programming.
television programming, it has been able to use its oversight
of broadcasting and satellite and cable distribution to
In contrast to broadcast and cable networks, which air
encourage diversity in programming. For example, when
programs on fixed schedules throughout a day, SVODs
the FCC approved Comcast Corporation’s purchase of NBC
offer subscribers a library of programming on an on-
Universal’s broadcast television stations, networks, and
demand basis. Because SVODs generally rely on
studios in 2011, the agency required Comcast to distribute
subscription revenue rather than advertising revenue, they
10 new independently owned and operated cable networks.
generally judge a program’s success by the number of new
Furthermore, the FCC cited Comcast’s pledge to expand its
subscribers a program attracts or current subscribers it
offering of programming targeting racial and ethnic
interests rather than by the number of people who watch at
minority audiences as evidence of Comcast’s commitment
a particular time. Thus, for many SVODs, the programming
to diversity.
goal is to offer a few high-profile shows that attract many
viewers, and then a selection of shows that convinces those
Over the last ten years, however, SVODs, such as Netflix,
viewers to maintain their subscriptions. They have the
Amazon Prime Video, and Hulu, have attracted an
technical ability to offer more programs at any given time
increasing number of subscribers while subscriptions to
than traditional television networks, and can target their
marketing of programs to individual subscribers. They may
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therefore find it in their strategic interests to offer programs
Film directors disagree about whether producing a movie
that appeal to various demographic segments.
for SVOD exhibition offers advantages comparable to those
of traditional cinema distribution. To qualify for the
Because their business models do not require that every
“Oscar” awards presented by the Academy of Motion
program successfully reach large numbers of viewers, some
Picture Arts and Sciences, a movie must play in a
SVODs have commissioned series from first-time
commercial motion picture theater. Several major theater
showrunners who draw on ethnically and racially diverse
chains have refused to exhibit films commissioned by
crew and casts. Showrunners, the people who head
SVODs unless the SVOD agreed to give then an exclusive
production companies, are a creative force behind television
70- to 90-day distribution window before offering the film
programs. Along with creative authority, they have overall
to its subscribers. Thus, for example, because Netflix did
managerial responsibility, hiring and overseeing the cast,
not want to wait this long before distributing The Irishman
producers, directors, and crew. SVODs typically pre-order
to its subscribers, the movie did not get a wide theatrical
entire series of multiple episodes rather than commissioning
release.
pilots, potentially eliminating an obstacle to showrunners
who lack the financial backing required to produce a pilot.
Diversity Statistics
Research indicates that while the proportion of movie
Each SVOD, however, may have a different programming
directors of the most popular movies in the U.S. who are
strategy, depending in part on its corporate owner. Some
female and/or from a minority or ethnic group has changed
major broadcast and cable network owners, such as
over the last decade, it is still relatively small. A January
Comcast and The Walt Disney Company, have started their
2020 study by University of Southern California’s
own SVODs that may focus on marketing shows their
Annenberg Initiative tracked directors of the 100 highest
parent companies already own, rather than investing in
grossing films released in the U.S. over a 13- year period.
first-time showrunners. For example, HBO Max, which is
According to the study, 10.6% (12 of 113) of directors of
owned by the telecommunications conglomerate AT&T,
films released in 2019 were female, while 16.8% (19 out of
reportedly paid its sister company, WarnerMedia, more
113) were from a minority racial or ethnic group. In
than $400 million to be the exclusive SVOD distributor of
comparison, 2.7% (3 out of 112) of directors of films
the 1990s-era television series Friends. Similarly, when
released in 2007 were female, while 12.5% (14 out of 112)
Disney acquired studios and cable networks from 20th
were from a minority racial or ethnic group.
Century Fox in 2019, its chief executive officer explained
that a major reason for the transaction was to give Disney’s
Studies indicate similar trends for showrunners overall, as
SVOD access to Fox’s large archive of television programs
Table 1 illustrates.
and movies.
Table 1. Programs Created by Minority and
The Changing Art of Movie Exhibition
Female Showrunners by Type of Television
SVODs are increasingly acquiring and/or commissioning
Programming Packager
full-length movies in addition to television series. As with

2016 – 2017 Season
2013 – 2014 Season
television programs, SVODs have different goals from
incumbent distributors—in this case, film studios—and

Minority Female
Minority
Female
may therefore be willing to invest in a more diverse range
of movies that individually appeal to smaller audiences.
Broadcast
9.4%
22.2%
3.3%
21.5%
Network
Bringing a full-length feature film into cinemas is an
(117)
(117)
(120)
(121)
Programs
expensive business: a studio may spend tens or even
hundreds of millions of dollars to produce a film or acquire
Cable
11.2%
22.7%
7.8%
18.2%
the distribution rights, and as much as $100 million more to
Network
(188)
(189)
(180)
(182)
market the film worldwide. Studios mitigate these risks by
Programs
devoting their resources to sequels of previously successful
Online
16.5%
34.8%
6%
16%
films, remakes of older movies, or movies based on widely
(182)
(184)
(32)
(32)
known fictional characters, such as comic books heroes. In
contrast, SVODs, when deciding whether to finance an
Total U.S.
39.4%
50.8%
38.1%
50.8%
original movie, focus on attracting and retaining subscribers
Population
and are not dependent on convincing millions of consumers
Sources: Ralph J. Bunche Center for African American Studies at
to purchase tickets at a movie theater.
UCLA, 2019 Hollywood Diversity Report, pp. 34-36; 2016 Hollywood
Diversity Report, pp. 23-25. CRS analysis of data from the U.S. Census
Unlike a television series director, whose execution of a
Bureau for 2017 and 2014.
production is constrained by the vision of the showrunner, a
film director has a major role in shaping the creative vision
Notes: Table I presents percentage of programs and total number of
of the production. In 2019, Netflix released 19 original
programs in each season. Individual showrunners may create multiple
movies from first-time directors (out of 58 original movies)
programs.
on its service. According to the Los Angeles Times, about
half of the first-time directors were female, and some
Dana A. Scherer, Specialist in Telecommunications Policy
directors were from were from a minority racial or ethnic
group.
IF11424
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Role of Online Services in Entertainment Industry Diversity

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