Abstract
This article proposes a new approach to explaining network program selection behavior. It draws on literature in the area of finance to build a model of networks' program choice. The basis for the model is the traditional theory of portfolio selection. It will be argued that networks' management of program schedules is analogous to the management of a portfolio of investments. Networks maximize profits or returns while minimizing risk, and invest in programs to achieve this goal. Programs are, in effect, a network's assets. A network's selection of programs is motivated by its desire to maximize returns for a given level of risk. Therefore, its selection of programs and construction of a program schedule can be conceived of as an exercise in selecting financial securities in a portfolio. The network investor strives to develop a portfolio of securities that fulfills its investment objective. Earlier studies have looked at factors governing the cancellation and renewal of programs. A portfolio theory approach goes beyond these studies and provides a more comprehensive understanding of the factors that determine the selection of programs and the resulting optimal program mix.
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