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Cable and the Specialization of Television Chapter 6.

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Presentation on theme: "Cable and the Specialization of Television Chapter 6."— Presentation transcript:

1 Cable and the Specialization of Television Chapter 6

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

3 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

4 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 CATV: Community Antenna TV

5 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 first networks to make use of satellites The Mechanics of Cable

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

7 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

8 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, TX Franchising

9 1934 Communications Act insufficient By mid-1980s, most early cable regulations repealed.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

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

11 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

12 Merger Mania Buyouts among telephone, hardware, and cable – 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.

13 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. E.g., golf-equipment manufacturer buys ads on the Golf Channel. Cable Comes of Age

14 Thirty-six to seventy-two 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 (WTBS in Atlanta) Consumers pay one monthly fee. Basic Cable Services

15 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

16 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

17 1981, Warner Communications – 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 We Want Our MTV

18 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 MTVs Business Model

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

20 Premium channels – E.g., HBO, Showtime Other services – Pay-per-view – Video-on-demand – Two-way services 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. Premium Cable Services

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

22 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 Direct Broadcast Satellites (DBS)

23 Media Giant

24 Cable Ownership Issues Multiple-system operators (MSOs) Oligopoly: handful of corporations control most of the programming – 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?

25 Cable Ownership Issues Multiple-system operators (MSOs) Oligopoly: handful of corporations control most of the programming – 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?


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