Cable Industry

1
Cable Industry

• November 2, 1999

2
Evolution of the Cable Industry

• Early to mid-70s brought changes from a rural
  television industry to larger entertainment
  market
• Introduction of premium programming and new
  channels
• Formation of super stations

3
Changes in Regulation

• 1984 Cable Communications Policy Act
  deregulated cable television
• 1992 Re-regulation largely as a response to
  customer complaints about service and rising rates

4
Telecommunications Act

• Reduces barriers between cable and telephone
• Reduces rate regulation for all but basic
  services
• From June 1997 June 1998, cable prices increase
  7.3 compared to CPI of 1.7

5
Market Structure

• Delivery of video programming
• Competition
• Mergers
• Acquisition of video programming
• Ownership of program creation by service
  providers

6
Delivery of Video Programming

• Relevant market is local
• Increasing concentration among service operators
  or multichannel video programming distributors
  (MVPDs)

7
Competing technologies

• Cable 85.3
• DBS 12.1
• Wireless cable 1.3
• SMATV (Satellite Master Antenna Television
  Systems) 1.2

8
DBS vs. Cable

• Advantages
• Higher customer satisfaction
• Superior channel capacity
• Digital quality picture and sound
• Specialized programming

9
DBS vs. Cable

• Disadvantages
• Lack of local broadcasts
• Legislation coming
• Upfront installation costs
• New promotions lower installation costs

10
Cable vs. Other Technologies

• Big issue is accessibility to programming
• Broadcast networks are competitors in advertising
  and program acquisition markets
• Wireless cable not a viable competitor
• SMATV distribute signal to MDUs
• Not growing but potential still exists

11
Acquisition of Video Programming

• Relevant market is local or national
• Level of concentration relatively low

12
Other Entrants

• Internet video
• Home video sales and rentals
• Local exchange carriers
• Electric and gas utilities