CABLE and SATELLITE TELEVISION

1
CABLE and SATELLITE TELEVISION

• What Kind of Alternative?

2
1996 Statistics for Cable

• 11,600 Cable TV systems in the U.S.
• Serving 64 million homes (DTH 5m 2002 17m).
• Serving 66 of U.S. homes.
• Passes 97 of all TV households.
• 26 billion revenues.
• 90 of systems owned by 600 MSOs.
• 2 of MS0s serve 42 of all clients.
• Two dominant MSOs TCI, Time Warner.
• 2003ncta.com/industry_overview/indStats.cfm/indOv
  erviewID2

3
Cable Revenues

• Advertising (particularly specialized networks
  targeted to particular demographics).
• Direct payment from subscribers.
• Subscription revenue dominates
• with some channels (e.g. HBO) entirely
  dependent on subscription.

4
The Contribution of Satellite

• Point to multipoint delivery serves many cable
  systems at lower cost
• Provide signal transport to places where
  terrestrial systems are unavailable.
• Promote diversification in program sources
• Also compete with cable by means of DBS
• Satellite construction dominated by Hughes and
  Lockheed Launches dominated by Lockheed and
  Boeing. Delivery of DBS now concentrated between
  DirecTV and EchoStar.

5
Content The Basic Tier

• Affiliates of major networks
• Signals of local independents (these now
  stronger as result of cable)
• Imported distant stations
• Super-stations (local signals distributed
  nationally by satellite)
• Local access channels (education,
• government, community sometimes split)
• Text services (news, weather, sports etc.).

6
Content Expanded Basic Tier

• Advertiser-supported networks (e.g. CNN, ESPN,
  MTV, USA Network, BET).
• Shopping Channels (e.g. Home Shopping, QVC).
• C-SPAN 12

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Content Premium Tier and PPV

• Film channels (e.g. HBO and The Movie Channel
  Showtime and Home Box Office)
• Pay-Per-View (e.g. video on demand for films and
  sports events).
• Audio services.

8
Programming categories

• General entertainment (most watched non-network
  channels) e.g. USA, TNT, TBS.
• News and current affairs e.g. CNN.
• Sports e.g. ESPN.
• Demographics e.g. Nickelodeon, Lifetime.
• Specialty / genre e.g. MTV, Sci-Fi.
• Information and Education e.g. History,
  Discovery
• Improvement, religious, shopping, special
  interest
• Film.

9
Convergence of Cable and Telephony

• POTS will grow only gradually
• Enhanced services (call-waiting, call-forwarding,
  business service etc., wireless and data
  communications).
• Video distribution by cable
• 1996 Telecommunications Act allowed Telco mergers
  with Cable.

10
Cable and Network Television

• ABC/NBC/CBS prime time share (of all viewers)
  fell from 90 to 53 in 1979-1995.
• Basic cable share rose from less than 10 to 30
  (and 42 in cable households).
• But combined prime time rations of top 20 basic
  cable networks in 1995 was only 22.4, less than
  half the combined ratings for the broadcast
  networks

11
Expansion of DTH

• 1996 limits on local authority restrictions on
  setting up dishes
• Smaller dishes, with more power and higher
  frequency (C to Ku-band to Ka-band)
• 1999 court permission to DTH services to carry
  local TV signals without payment to broadcasters
• Mass production, lower cost of dishes

12
Satellite DTH Merger

• GMs Hughes (owner of DirecTV) sold to EchoStar
  in 2002, pending reg. Approval. Rejected by FCC.
  NewsCorp has now bid for DirecTV
• DirecTVEchoStar combination would have
  controlled 91 of DTH market.
• 17m. (10) homes, surpasses ATT Broadband 14m.
  (but Comcast purchase of ATT B. would be
  bigger).
• 78 of 210 TV markets, with plans to serve all
• 42m US homes still without DTH option.
• May have to carry all (1500) local signals
• Would bring broadband to rural U.S.