Cable and Satellite Industries

Lil Context

• Cable + Satellite=– Multi-Channel Television Industries

• 87-90% of U.S. TV households get programming.

• 60% of Americans households subscribe to cable. This means…– Most Americans PAY for service!!!

• 347 million global subscribers• Industry employs about 300,000, $178B

History

• 1948, retransmitting broadcast signals in rural areas

• CATV– Community Antenna Television– Astoria, Oregon– Leroy E. "Ed" Parsons – $3, $125

History/Reg.• First commercial services beginning in

1949– Pay fee=get city network signals– CATV systems set up across the rural U.S.

• 1949, the FCC catches wind

• In the next decade some other parties catch wind and aren’t too fond of CATV?– Local Stations– Networks

History/Reg. Cont’d

• In the 1960s, the Supreme Court upholds the FCC’s right to regulate CATV

• CATV as an industry slowly developed until the 1970s???– New programming– New Services– Basic, Premium and…– SUPERSTATIONS– Deregulation???

Funding???

• Advertising

• Installation Services

• Basic Cable subscriptions

• Premium Cable subscriptions

Regulation?• Regulates mainly…

– content

• Not?– Rate price– Cross ownership

• 1990s, gov. regulated…$20 for plans• From 1993-98, the FCC resolved…

– 18,000 complaints – In 5,700 communities – Ordering $100 million in consumer refunds to

40 million cable subscribers

Regulation Cont’d

• From 1998-2003, cable rates soar 3x’s the inflation rate– Up 59% since 1998

• So, what happened???– 1996 Telecommunications Act– Allows Cable providers to own ISPs and

phone companies– Gov. does not have the right to keep cable

rates in check

Markets

• Local/National– Audiences and advertisers

• Most lucrative market?– Basic cable, 55% of industry revenues– Premium/Pay, 11% of revenues– Other 34%

• Rentals, installation fees, modems, pay-per-view

• Phone and ISPs???

Competition???

Major Players

• Comcast– 2002, bought AT&T Broadband

• Time Warner

• Charter Communications

• Cox Communications

• 26.7M subscribers

• $22.25B in revenues

• Lobby against "family tier" and "a la carte" bills

• Hire family members of mayors, congressmen, senators, etc.

• Brian and Ralph Roberts own 1/3 stock

Resistance???

The Present Market

• In 2008 digital cable subscribers up 14%

• Satellite subscribers 6%.

• 2008, 85% of households subscribed to either cable or satellite.

• Top 20 multiple system operators (MSOs) serve??? – 90 percent of cable subscribers in U.S.– This indicates…???