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TV’s New Golden Age Predicted By Economists

Jan 12, 2020

Credit Dr. Chris Erickson

Commentary: Critics have designated this the new Golden Age of Television. The list of recent great TV shows is long starting with the “Sopranos” continuing with “Breaking Bad,” “Mad Men,” and going on to “Game of Thrones” and “The Marvelous Mrs. Maisel..” Add to this list “Walking Dead,” “Stranger Things,” “Fringe” and “Arrow”—there is something great for everyone.

Interestingly, the emergence of really good TV was all predicted by economists way back in the 1970s. Back then, Cable TV was an unrealized technology. Over-the-air television was highly regulated by the FCC. Most people watched only three or four channels.

During the 1960s and 70s it was generally acknowledged that TV was bad. Even though there were only three channels, so much less air to fill, much of what was on those three channels was not very good. Newton Minow, the chair of the FCC, described TV as a “vast wasteland” because of its lack of redeeming content.

It was, in fact, the shortage of channels that explains the bad TV. Because network programing was paid for by advertising, the goal was gathering as many eyeballs possible to watch. Because of the limited number of channels, the way to do this was to provide programing that appealed the widest possible audience. The corollary to this was that TV had to be pablum—offering no offense to anyone—thereby being bland and uninteresting.

A show like “Get Smart” was critically acclaimed while “Gilligan’s Island” was panned. But if you watch either of these shows today, neither really hold up well. Both relied on jokes that were stale even then.

The question for economists was whether the move from limited channels over-the-air to multi-channel cable TV would be a positive or a negative for TV watchers. Would more channels mean…just a yet vaster wasteland or would it mean more quality?

What economists predicted, especially Michael Spence who would later win the Nobel Prize, is that as the number of channels increased, the way to attract eyeballs would change from appealing to the masses to offering programing better tuned to the eclectic tastes of individual viewers.

Rather than one bland program attracting millions of viewers, the strategy would be to offer 100 programs, each appealing to a particular slice of the audience. More viewers in the aggregate, but programing not having to appeal to everyone so could be more interesting, at least for a subset of viewers.

Economists refer to this as product differentiation, meaning that each product, while similar to that of competitors, differing in some features so as to be more tailored to the tastes of individual consumers. This is both more profitable for producers and more enjoyable for viewers.

Economists’ successful prediction of the new Golden Age of Television illustrates what economists do best, which is to study the effect of changes in market institutions. Massively multiplying the number of channels meant better TV—not an extension of the “vast wasteland.”

While all this seems obvious now, it was not so in the 1970s when new rules regulating cable were being developed. Work by economists back then helped to develop the rules making for better TV today. Now if we can just come up with a way to predict the next recession.

Christopher A. Erickson, Ph.D., is a professor of economics at NMSU. Even though “Get Smart” does stand up today, he still enjoyed it back then. The opinions expressed may not be shared by the regents and administration of NMSU. Chris can be reached at chrerick@nmsu.edu.