The Effects of Regional Concentration and Vertical Integration on the Flow of Cable Programming Networks

• In Event: ICA Plenary Interactive Paper/Poster Session and Reception
  In Interactive Paper Session: Communication Law and Policy Interactive Poster Session

Abstract

Using a 2009 cross-sectional database of digital cable systems in the U.S., this study examines the combined effects of vertical integration and regional concentration (cable TV clusters) on the carriage and tier positioning decisions of cable networks. Focusing on four basic cable network segments—the Outdoor, Cartoon, Movie, and Comcast affiliated networks—this study finds that the effects of vertical integration (the vertical favoritism of affiliated networks and vertical exclusion of their rival networks) still exist, confirming the results of previous studies. This study shows that in general, integrated cable systems (a) have a tendency to increase their subscriber base by carrying their affiliated networks more frequently, positioning them on an analog tier with more subscriber access, or both; and (b) tend to limit rivals’ subscribers by either carrying unaffiliated rival networks less frequently or positioning them on digital tiers. This study also examines the effects of cable clustering (the regional concentration of cable systems), a subject that has not been investigated in previous studies. In general, the increase in the regional concentration of cable systems positively affects the carriage rate of overall basic cable networks regardless of vertical ownership, while it negatively affects the placement of basic cable networks on the analog tier. The increase in regional concentration is also associated with the decrease in the effects of vertical integration, suggesting that system efficiency through regional concentration may mitigate the vertical integration effect.

Author

• Sung Wook Ji, Michigan State University