24 research outputs found

    Vertical Integration and Media Regulation in the New Economy

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    Prospects for Cable in the 100 Largest Television Markets

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    The Federal Communications Commission, hoping "to get cable moving without jeopardizing over-the-air broadcasting," recently proposed rules that would allow cable systems in the 100 largest television markets to carry a limited number of distant signals. This paper employs a nonlinear model of cable penetration to assess the effect of the proposed rules. The model is developed using a sample of 63 cable systems located where several signals can be received over the air with no particular reception problems. Applying the model to some typical top-100 market situations, the author concludes that the proposed rules "will meet the Commission's objective. But more is necessary to keep cable moving, because the rules by themselves are probably not sufficient to make cable profitable in most of the top-100 markets. To succeed in the cities, cable must attract customers with new services in addition to the traditional package of better reception plus distant signals."

    New Television Networks

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    A simple model of television network competitive behavior is used to explore the prospects for new networks. Overall, the prospects are not very bright. A fourth network with complete, unhandicapped, nationwide coverage could coexist profitably with the existing three, but the industry would need a severe regulatory restructuring to make such a network possible. Most networks with incomplete coverage would not be profitable, including networks of existing independent stations, cable systems, new VHF "drop-in" stations (suggested by an Office of Telecommunications Policy report), or combinations of these. A network using existing independents plus new UHF stations constructed to give it nationwide coverage may become profitable as the UHF reception handicap continues to drop. None of the new networks considered threatens the profitability of the existing three networks.
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