Market Structure and Local Signal Carriage Decisions in the Cable Television Industry: Results From Count Analysis

Abstract

Using historical data collected by the U.S. General Accounting Office (GAO) in 1990 (GAO, 1990), a time when the must-carry rules were not in effect, this study empirically tested the effects of horizontal concentration, vertical integration, and other system-specific variables on cable operators' carriage decisions regarding local television stations. Results from the negative binomial regression model (a count model) indicate that horizontal concentration or firm size had a negative effect on cable system carriage of local broadcast stations, holding other factors constant. However, the study did not find any significant vertical integration effects on such carriage.

Triple-Play Competition in the U.S. Telecommunications Industry: Exploring Cable Operators' Adoption Pattern of Triple-Bundled Services

“…Above all, the findings of most previous studies have suggested that the size efficiency of MSOs does not increase consumer benefit (Clements & Brown, 2006;Emmons & Prager, 1997;Karikari, Brown, & Abramowitz, 2003;U.S. General Accounting Office, 2002Yan, 2002). To the contrary, the findings of other studies suggested that an increase in MSO size enhances consumer welfare (Ford & Jackson, 1997;Savage & Wirth, 2005).…”

Cable consolidation and deployment of advanced broadband service

“…Most previous literature has investigated the implications of horizontal integration in the cable industry in terms of subscribers' welfare. The findings of most previous studies have suggested that the size efficiency of MSOs does not increase consumer benefit (Aufderheide, 1992;Clements and Brown, 2006;Emmons and Prager, 1997;Karikari et al, 2003;US GAO, 2002;Yan, 2002). For example, according to US GAO (2002), cable rates are higher when a cable system affiliates with one of the ten largest MSOs.…”

“…Emmons and Prager (1997), using two-year cross-sectional data, examined the effects of ownership on the levels of rates and offerings of cable services in the USA and found that cable systems operated by MSOs have no significant impact on subscription rates and the number of channels for basic-tier-cable services. Yan (2002) investigated the effect of horizontal integration on cable operators' carriage decisions for local television stations and found that horizontal integration has a negative impact on these decisions. Interestingly, Aufderheide (1992) maintained that the US cable television industry provides consumers with a very limited diversity of sources and points-of-view on public issues and civic activism due to its market structure in which a few MSOs control half of the cable television market.…”