Understanding Cable By: Marla Gaspard Research Associate Radio Advertising Bureau Dallas, Texas

Understanding Cable Major Cable Players and Their Ad Sales Departments Difference Between a Viewer and Subscriber Cable Packaging for the Consumer Cable Penetration Cable Zones Interconnects Interconnects and Network Availability

Understanding Cable Ratings Niche Networks Production Turnaround Pricing Scheduling Reach and Frequency Spot Insertion Cable’s Threats Cable’s New Weapon?

Major Cable Players and Their Ad Sales Departments Adelphia Communications-Adelphia Media Services Cable One-Cable One Advertising Charter Communications-Charter Media Comcast-Comcast Spotlight Cox Communications-Cox Media Time Warner Cable-Time Warner Cable

Difference Between Viewer and Subscriber A viewer is a person who watches an ad- supported network. A subscriber is a person who is paying to subscribe to a cable service. The number of subscribers equal cable penetration.

Cable Packaging for the Consumer Cable services are often provided in tiers. A tier is a category of cable service or services provided by a cable operator for which a separate rate is charged by the cable operator. There are three types of cable service: basic service, cable programming service, and per-channel or per-program (sometimes called pay-per-view) service. Basic service is the lowest level of cable service a subscriber can buy. It includes, at a minimum, all over-the-air television broadcast signals and any public, educational, or government access channels required by the system's franchise agreement. It may include additional signals chosen by the operator. A consumer can buy one of two types of tiered service: analog or digital. Digital is more expensive and requires a converter box. However, this will change on February 17,2009 when both local TV stations and cable systems will convert completely to digital by FCC mandate. Source: FCC Cable Television Fact Sheet FCC Digital Television Fact Sheet

Cable Penetration Unlike radio, with stations that are available to anyone with a receiver, cable has to rely on penetration. That is the percentage of homes in an area that subscribe to cable. Cable penetration is 85% nationally. Some markets have high penetration rates, Boston has a cable penetration rate of 86.4%. While some markets have low penetration rates, Dallas has a 46.1% penetration rate. Source: Cabletelevision Advertising Bureau, Comcast Spotlight, Boston Comcast Spotlight, Dallas

Cable Zones Local cable is sold as zones. A zone is cable system in a Designated Market Area or DMA (a term used by Nielsen Media Research to identify an exclusive geographic area of counties in which the home market television stations hold a dominance of total hours viewed. There are 210 DMA's in the U.S.) that is supported by one headend (master facility for receiving signals then processing and distributing over the system). This is Cable is sold by zones because it allows local clients to reach customers only in their business area. Comcast in Dallas has 25 zones. Source: Comcast Spotlight Dallas Nielsen Media Research

Interconnects On the other end of the spectrum, an interconnect is a collection of two or more cable TV systems (either owned by the same company or by different companies) that are sold together as a wider geographic area within a DMA. For example, if an advertiser wanted to buy the Dallas interconnect, he would have to buy ten cable systems: Charter, Comcast, Cox. Communicomm, TVMax, Northland Cable, Friendship Cable, Nortex Cable, Texas Cablevision and Classic Communications. Source: Comcast Spotlight Dallas Nielsen Media Research Cabletelevision Advertising Bureau, Dallas Interconnect

Interconnects and Network Availability There are some networks that are not available in all systems on an interconnect. For example, Great American Country is available on Cox Communications in Terrell but it is not available on Comcast in Dallas.

Ratings Nets, like the broadcast networks, are measured by Nielsen Media Services. They are measured in February, May, July and November. Larger markets are also measured in January, March and October. Not all nets will be measured because they do not subscribe to the Nielsen.

Niche Networks Ad-supported cable networks (or “nets”) target particular demographics. For example, according to the 2005 Cable Network Profiles, USA Network reaches Adults 18-49, Lifetime reaches Women 18-49, Cartoon Network reaches Kids 2-11 and BET reaches African-American Adults Production Turnaround It takes two weeks for a spot to be produced for cable television. Source: Cabletelevision Advertising Bureau 2005 Cable Network Profiles

Pricing Prices for nets are determined by three things: reach, daypart and geography. The more viewers a net reaches, the higher the price. For example, BET was one of the highest priced nets in the New Orleans market because it reached one of the largest demographics in the market: African-American Adults Cable dayparts include: early morning 5-8a, morning 8- 11a, afternoon 11a-3p, early fringe 3-5p, early evening 5-6p, prime access 6-7p, prime-time 7-10p, late fringe 10-10:30p, late night 10:30p-12a, Overnight 12-5a. Prime-time is cable’s highest priced daypart. The more areas an advertiser wants, the higher the rate. The rate for one zone will be less than the rate for an interconnect.

Scheduling Unlike radio, where a spot can run once an hour, local cable spots are scheduled one spot every two hours on a net. This is because the net limits a local cable system to 2-4 minutes of avails per hour.

Reach and Frequency In order to give the advertiser both the reach and frequency needed, more than one net would be presented in a sample schedule. For example, to reach Women 18-49, Lifetime network (a net with a high reach) and Oxygen (a net with a low reach) would be chosen. The sample schedule would show Oxygen with more spots than Lifetime. The reasons: nets like Lifetime generally have tight inventory and Oxygen will have open inventory. By having more spots on Oxygen, the frequency would increase and provide the advertiser with both reach and frequency.

Spot Insertion Local cable spots are inserted into the net. In other words, a local spot is inserted on top of another spot. A viewer will see a local spot on a net, he or she then will see two to three seconds of another spot. All nets have set minutes in the hour allotted for local spots (like a hot clock in a radio network program). However, the net will run a national spot during that time anyway. There will be two to three seconds of black before the national spot. This is used as an insertion marker. Hence, the viewer will see a local spot then see two to three seconds of the national spot. If a local spot is not sold, the cable system will run promos during that time.

Cable’s Threats Television viewing other media such as DBS (Direct Broadcast Satellite), DVDs, internet TV (websites such as television.aol.com/in2tv), rented DVDs, multimedia cell phones, podcasting and cyber cinema (websites such Movielink.com that offers downloadable movies). Time-Shifting. Time-Shifting is when a program is recorded to be watched at a later date.

Cable’s New Weapon? Cable television has been experimenting with a platform called Video on Demand (VOD). VOD accompanies digital cable service in which the viewer can choose from an array of movies, TV programs or paid programming. Clients must buy at 30 minutes of commercial time for a paid program. The Upside: Viewers can chose to watch the paid programming. The message is not forced upon them. The Downsides: VOD only reaches digital cable customers. Viewers can chose not to watch the paid program.

Marla Gaspard Research Associate-RAB Worked in cable television research for Cox Media-New Orleans (formerly CableRep Advertising) from 2004 to 2006.