Broadcasters vs. MVPDs: Economic Effects of Digital Transition on Television Program Supply
19 Pages Posted: 13 Feb 2012
Date Written: August 15, 2009
Although FCC policy has mostly focused on broadcasters, the digital transition of television has involved a variety of other players, notably cable television, DBS, and other multi-channel video providers (MVPDs). We assemble an historical database of consumer spending, advertising revenue and related data to argue that non-broadcast suppliers of TV programming, especially cable operators, have been able to take much greater economic advantage of the digital television transition than have broadcasters. Cable and DBS systems have used digital technology to greatly expand the amount of programming available and to more efficiently price discriminate on the basis of program quality—including the direct sale to consumers of broadcast and other HD programming. The result has been rapidly raising cable and DBS revenues since the mid-1990s, and a general shift from advertiser to direct payment support for television services. Overall, digital transition has enhanced the economic viability of cable and DBS delivery, and decreased that of broadcasting. It is evident that consumers have much higher quality and variety of programming available as a result, though usually at higher prices. In conclusion, we speculate on the effects of emerging Internet video services.
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