Cable: A Wired versus Wired World Chapter 6

Through satire and sharp-witted lampoon of politics, the fake news on The Daily Show has become an effective critic of television and cable news...

Cable Breaks In Cable frustrated by broadcasters Growth stunted first twenty-five years HBO and WTBS help break in Rapid growth from the 1970s 1977 = 14% penetration 1985 = 46% 1999 = 70% (declining since) Cable serves rural communities. Cable serves niche communities.

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

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

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

Figure 6.1

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

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

Local communities awarded monopoly to selected cable company. Late 1970s through early 1990s Franchises awarded by local municipalities and, sometimes, state governments 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, Tex. Franchising

Figure 6.2

1934 Communications Act insufficient By mid-1980s, most early cable regulations repealed. 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. New Rules Aid Cables Growth

Telecommunications Act of 1996 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

The Growing Business of Cable Cable industry invested $110 billion in technological infrastructure between 1996 and By 2007, U.S. cable companies had signed more than thirty-four million households to digital programming packages. Triple play of television, Internet, and telephone

Networks (ABC, NBC, CBS) slipped from 95% to less than 50% 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. E.g., golf-equipment manufacturer buys ads on the Golf Channel. Cable Comes of Age

100+ channels Local broadcast signals Nonbroadcast access channels E.g., local government and public use Regional PBS stations Services retrieved from national communications satellites E.g., ESPN, CNN, MTV, the Weather Channel, and superstations (WPIX in New York) Consumers pay one monthly fee. Basic Cable Services

24-hour TV news channel, : 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 The CNN Revolution

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 CNNs Formula

Created in 1981 by Warner Communications Bought by Viacom in 1985 Global offspring and strong international presence: 412 million homes worldwide MTV Asia, MTV Europe, MTV Brasil, MTV Japan, MTV Africa, MTV Russia, MTV Latin America We Want Our MTV

Rotation of music videos A new media form in 1981 In early 1990s, added original programming Partnership with recording industry MTV bought exclusive rights to music videos. Exclusive agreements with cable systems to limit competition Now shows non-music programming to provide advertisers with constant audience MTVs Business Model

HBO Oldest and most influential premium channel Owned by Time Warner Monthly subscriptions to over 28 million homes by 2007 Starting in the mid-1980s developed own original programming Shows: Fraggle Rock, The Sopranos, The Wire, Entourage Films: Partner in creation of TriStar Pictures (later bought by Sony) Now an imitated programming force Liberty Medias Encore STARZ! Showtime

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

DBS bypasses cable to get programming directly from satellite. Legal issues Who owns the satellite signals? Early satellite dishes huge and expensive FCC restricted DBS services in 1970s and 1980s. Full, legalized DBS services in 1994 DirecTV and EchoStar industry leaders DBSs share of the multichannel video market went from 13.8% in 2000 to 32% in Direct Broadcast Satellite (DBS)

Cell Phones as a Television Portal Phones not meant to be a mass medium Development of WiMax technology has made cell phones a place to download music, TV programs, and movies. WiMax (Worldwide Interoperability for Microwave Access): communication technology that provides data over long distances in multiple ways 2008: Major cable, phone, and Internet companies began talks to create a U.S. wireless network to link computers, televisions, and cell phones using WiMax technology.

Cable Ownership Issues Multiple-system operators (MSOs) By 2008, Top 5 MSOs served almost 80% of all U.S. cable subscribers. Comcast and Time Warner two major players Industry moving toward oligopoly: handful of corporations control most of the programming Concerns that cable, DBS, computer, and phone services will merge into giant communication overlords, fixing prices without the benefit of competition

Figure 6.3

What Viacom Owns Cable Channels BET Networks – BET – BET Gospel – BET Hip Hop – BET J MTV Networks – CMT: Country Music Television – Comedy Central – Logo – MTV International – MTV: Music Television – MTV2 – mtvU – The N – Nick at Nite – Nicktoons Network – Nickelodeon – Nickelodeon Movies – Noggin – Spike TV – TurboNick – TV Land – URGE – VH1 – VSPOT Internet AtomFilms iFILM (online video) Neopets Quizilla Web sites for all Viacom owned cable channels Movies Paramount Pictures Dream Works SKG Paramount Vantage MTV Films Nickelodeon Movies Music Rhapsody Video Games AddictingGames.com GameTrailers Harmonix Shockwave Xfire (online gaming community)

Alternative Voices Consumers threaten cable companies with alternatives to gain better service. Cedar Falls, Iowa: Citizens create municipal cable system, forcing provider TCI to upgrade options. Cable still has not developed potential to be true alternative to network TV. How can cable providers attain this goal?