The TV can be placed in the Yard, and prisoners will use it. However, they do need to be directly connected to an Electrical Cable. They will not be powered by local cables.
If the Events option is used in the game, the city mayor may demand the removal of all TVs in the prison at random occasions.
The small TV broadcasts to a 3x3 viewing area, shown as a green box when clicking on the TV. Prisoners in this area can use the TV and do other things (e.g. eating in the canteen) at the same time. There is a more expensive Large TV, which has a viewing area of 6x6.