Abstract

http://ssrn.com/abstract=2031731
 


 



The Effects of Cable Clustering on the Flow of Cable Programming Networks


Sung Wook Ji


Michigan State University - Dept. of Telecommunication, Information Studies and Media

August 15, 2012

2012 TRPC

Abstract:     
Over the past two decades, the horizontal concentration of most media distribution markets at the national level has increased, and the same is true for the multi-channel video programming distribution (MVPD) market as well. In particular, regional concentration or clustering (the combination of geographically contiguous cable systems) in the cable TV market was typical after the 1990s, because it enabled cable operators to take advantage of the economies of scale to provide a full range of digital and broadband services. As a result, in 2008 87.5% (50.7 million) of all basic cable TV subscribers were served by cable systems within clusters, with the average size of each of those clusters consisting of 600,000 subscribers.

Theoretically, clustering itself allows cable operators to offer more cable programming through economies of scale (the “pro-competitive” effect). However, when regional concentration is combined with vertical integration, the incentives of vertically integrated MSOs to favor carrying their own affiliated cable network may increase while, at the same time, the incentives to foreclose a rival network increase (the “anti-competitive” effect). Therefore, such a combination of concentration and integration may also serve to strengthen the foreclosure strategy of a vertically structured MSO.

In order to empirically test the effect of cable clustering, this study analyze the carriage decisions of vertically integrated and regionally concentrated MSOs regarding affiliated or rival cable networks, primarily using a 2009 Warrens Publishing’s Television and Cable Factbook database.

It was found that the vertical favoritism of vertically integrated MSOs still remains; however, the increase in regional concentration may serve to mitigate this vertical favoritism.


Note: This study has not been presented or published at anywhere.

Biography: Sung Wook Ji is a fixed-term assistant professor in the department of Telecommunication, Information Studies and Media at Michigan State University. His primary research interests center on the social and economic impact of new media technology on the media industry and its policy implications. Specifically, his research focuses on the new media technologies (Internet and IPTV) and how those technologies have changed our society from the perspective of Economics.

Number of Pages in PDF File: 63

Keywords: MVPD market, Cable TV clustering, Local concentration, Vertical integration

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Date posted: March 31, 2012 ; Last revised: August 25, 2012

Suggested Citation

Ji, Sung Wook, The Effects of Cable Clustering on the Flow of Cable Programming Networks (August 15, 2012). 2012 TRPC. Available at SSRN: http://ssrn.com/abstract=2031731 or http://dx.doi.org/10.2139/ssrn.2031731

Contact Information

Sung Wook Ji (Contact Author)
Michigan State University - Dept. of Telecommunication, Information Studies and Media ( email )
442 Communication Arts & Sciences Building
East Lansing, MI 48824-1212
United States
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