Network news divisions existed largely as loss leaders to satisfy broadcast licensing law
Evidence
Network executives were afraid that a failure to work in the “public interest, convenience and necessity,” as set forth in the Radio Act of 1927, might cause the Federal Communications Commission to suspend or even revoke their licenses. The three major networks pointed to their news divisions (which operated at a loss or barely broke even) as evidence that they were fulfilling the FCC’s mandate. News was, in a manner of speaking, the loss leader that permitted NBC, CBS and ABC to justify the enormous profits made by their entertainment divisions. — Lee McIntyre, Post-Truth, 128
Categorization
- ADDENDUM: This is a striking mechanism for the origins of the ‘public good as fig leaf for private profit’ dynamic — relevant background for how infrastructure and public-service rationales get captured, though it points more toward media than the three existing articles.
- XREF: connects to: Regulatory license threat made news divisions unprofitable loss leaders that shielded network profits.