Cable and the Specialization of Television Chapter 6

Cable Breaks In l Cable frustrated by broadcast – l l HBO and WTBS help break in Rapid growth from the 1970 s – – – l l Growth stunted first twenty-five years 1977 = 14% penetration 1985 = 46% 2003 = 70% (declining since) Cable serves rural Cable serves niche

Cable Origins l Devised by appliance store dealers and electronics firms, 1940 s – l l Needed to get TV programming to rural, remote areas Built antenna relay towers in remote rural communities Ran wires to homes

CATV: Community Antenna TV l l First small cable systems In communities where mountains or tall buildings blocked broadcast signals Served 10 percent of U. S. , with twelve channels Advantages: – – No over-the-air interference Increased channel capacity

The Mechanics of Cable l l l Headend: computerized nerve center Downlinks program channels from satellite Relays programming through coaxial or fiberoptic cables attached to utility poles Signals run through drop lines into homes through converter boxes. Satellites – HBO and WTBS first networks to make use of satellites

Cable Threatens Broadcasting l NAB resists cable. – – l l Competition Diminished local control Frustrates local advertisers Potential breakdown of network system Cable offers better quality image. Cable not owned by broadcasters. – Monopoly considerations

Cable Regulations, 1972 l Must-carry rules – – l l l Required cable operators to carry all local TV broadcasts Local stations benefited from cable’s clearer reception. Limited number of distant commercial stations carried Mandate for public access channels and leased channels Electronic publishers vs. common carriers

Franchising l Local communities awarded monopoly to selected cable company. – l Franchises awarded by local municipalities and sometimes, state governments – l Late 1970 s through early 1990 s Franchise fee: money the cable company would pay the city annually for the right to operate Opportunities for corruption in bidding – Example: Sammon Communication bid in Fort Worth, TX

New Rules Aid Cable’s Growth l l 1934 Communications Act insufficient By mid-1980 s, most early cable regulations repealed. – – l Stimulated growth Triggered rate increases 1992 act required must-carry rules or retransmission consent. – Broadcasters could ask cable companies for fees to carry their channels.

The Growing Business of Cable l In 1978, the cable industry employed about 23, 000 people. l By 2006, the cable industry employed over 137, 000 people.

Telecommunications Act of 1996 l l l First major change since 1934, finally incorporating cable under federal regulation Removed market barriers between phone companies, long-distance carriers, and cable operators Reaffirmed must-carry rules to protect local broadcasters

Merger Mania l Buyouts among telephone, hardware, and cable – l Companies claim mergers lead to innovations in programming, services, and technology. Risk of vertical monopoly – – About 98 percent of American homes have only one choice for cable TV. Rates have risen by 54 percent since 1996.

Cable Comes of Age l l l Networks (ABC, NBC, CBS) slipped from 95 percent to less than 50 percent of prime-time audience. Networks join cable world: e. g. , CNBC, MSNBC, Fox News Narrowcasting – – Specialized programming for diverse and fragmented groups Advertisers access niche audiences. l E. g. , golf-equipment manufacturer buys ads on the Golf Channel.

Basic Cable Services l Thirty-six to seventy-two channels – – Local broadcast signals Nonbroadcast access channels l – – Regional PBS stations Services retrieved from national communications satellites l l E. g. , local government and public use E. g. , ESPN, CNN, MTV, the Weather Channel, and superstations (WTBS in Atlanta) Consumers pay one monthly fee.

The CNN Revolution l l 24 -hour TV news channel, 1980 1982: Turner launched Headline News channel as well. Lost money until 1985 Emerged as major news competitor during Persian Gulf War (1991) with 24 hour coverage – Maintained live phone links from downtown Baghdad hotel during initial U. S. bombing

CNN’s “Formula” l l l 24 -hour format allowed unprecedented viewer access. Changed the rules of the news business Delivers timely news in greater detail Offers live, unedited continuous coverage of breaking events Emphasizes international news

We Want Our MTV l 1981, Warner Communications – l Bought by Viacom in 1985 Global offspring and strong international presence: – – 440 million homes worldwide MTV Asia, MTV Europe, MTV Brazil, MTV Japan, MTV Africa, MTV Russia, MTV Latin America

MTV’s Business Model l Rotation of music videos – l l In early 1990 s, added original programming Partnership with recording industry – l A new media form in 1981 MTV bought exclusive rights to music videos. Exclusive agreements with cable systems to limit competition

HBO l l l Oldest and most influential premium channel Owned by Time Warner Monthly subscriptions to over 27 million homes by 2006 Starting in the mid-1980 s developed own original programming – Shows: Fraggle Rock, The Sopranos, Deadwood, Entourage – Films: Partner in creation of Tri. Star Pictures (later bought by Sony) Now an imitated programming force – Liberty Media’s Encore – STARZ! – Showtime

Premium Cable Services l Premium channels – l E. g. , HBO, Showtime Other services – – – Pay-per-view Video-on-demand Two-way services l – l Consumers use television to bank, shop, play games, and access the Internet. Cable music Subscribers pay extra fees in addition to the fee for basic cable.

Cable TV a la Carte l Most Americans watch only 15 -17 channels per month. l Disney is already offering a la carte downloads of Lost, Desperate Housewives, and other ABC shows. l Are “expanded-basic” channel packages fading into history?

Direct Broadcast Satellites (DBS) l l DBS bypasses cable to get programming directly from satellite. Legal issues – l l l Who owns the satellite signals? Early satellite dishes huge and expensive FCC restricted DBS services in 1970 s and 1980 s. Full, legalized DBS services in 1994 – Direc. TV and Echo. Star industry leaders

Media Giant

Cable Ownership Issues l l Multiple-system operators (MSOs) Oligopoly: handful of corporations control most of the programming – – l By 2006, Top 5 MSOs served almost 70 percent of all U. S. cable subscribers. Comcast and Time Warner two major players In such domination, is there room for alternative voices?