It's the Golden Age of TV—but Why, Exactly?

Broadcast and cable are both in the TV business. But they're not in the same TV business.
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This is a seriously cool graphic from Wired showing how NBC, CBS, and ABC lost their stranglehold on Emmy nominations in the 1990s. First HBO came along with "The Sopranos", "Sex and the City", and "Six Feet Under." Then Showtime, AMC, and FX gobbled up the nods in the last few years.

"More Competition = Better TV," Wired concludes. That's right. It is awesome to love TV at a time when half a dozen premium cable channels will throw tens of millions of dollars at auteurs and showrunners. But the *real* reason that great television is (a) in its golden age and (b) mostly on cable is all about the business model.

Broadcast channels (like CBS) and cable channels (like TNT) are both in the television business. But they're not in the same television business.

Broadcast gets more of its money from advertisers. Cable networks get more of their money from being on cable. Out of every $80 you pay to Comcast, each channel gets a little cut. That cut is the lifeblood of cable earnings.

If you own a broadcast channel, your job is to develop as many shows as possible that attract a wide audience. The formal term for most of these shows is "produced for a mass audience" but the common term is "relentless crap." Then again, it's an advertising game. So broadcast aims broad.

But if you own a cable channel, your first goal is to develop a handful of "hits" that get you on that bundle to get guaranteed monthly income from tens of millions of subscribers. The rest of your lineup can be cheap "Law & Order" and "House" reruns, for all you care. Ratings don't matter as much if advertising doesn't matter as much. America's "best" shows -- like "Breaking Bad" and "Mad Men" -- are all ratings dogs, each struggling to get a Nielsen rating higher than 3. But it doesn't matter, because AMC's cost structure allows for a few elite shows, one huge show ("Walking Dead"), and a lot of reruns.

Television audiences hate the cable bundle, because they think they're paying for television they don't want to watch. But they don't often appreciate that (a) the bundle is created by media companies, not cable companies, and (b) it's at least partially responsible for the golden age of television that we're living through. It's created a motivation for no-name cable companies to make great entertainment.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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