From: king@cogsci.ucsd.EDU (Jonathan King)
Newsgroups: misc.consumers,alt.politics.elections
Subject: whose advertising? (was Re: Cable Bill Rip-off)
Summary: cable is not a simple subject
Date: 7 Oct 92 21:30:58 GMT
Followup-To: misc.consumers
Organization: University of California, San Diego

(This is now way off the topic of alt.politics.elections, so I've
redirected follow-ups.)

byrd@lucerne.rice.edu (Marc J Byrd) writes:
>strnlght@netcom.com (David Sternlight) writes:
>|> [argument about advertising, over-the-air and cable distribution
     deleted, since summarized below]
>
>Great analysis!  I was wondering just how to interpret all of this.  I
>think you really hit the nail on the head in that second paragraph.
>May I state it in steps:
>
>  1)  Broadcast networks are paid, according to the number of viewers, 
>      by advertisers.

More or less true, as long as you remember that some advertisers try
to focus in on target populations and may only care about these groups.

>  2)  Cable companies, by providing a user-friendly medium for broadcast
>      networks to integrate into, are actually providing a service to 
>      these companies, providing more viewers and therefore should be paid 
>      the fair market value for these services.  

But cable companies don't do just what you're saying here.  Cable
companies also offer *competing* programming, and programming that
*also* contains advertising.  In many cases, you could argue that
cable companies are using not-produced-for-cable local programming to
help sell *their* programming which carries *their* advertising.
Let's put it this way: how many people would opt for cable just for
premium channels and the other non-local stuff?  Sure, some would--but
would most of you?

There is also the question about what to do with public television
stations, for whom the "bigger market" argument you make doesn't work
as well.

Another point you raise is that cable provides "regular" broadcast
stations with larger audiences, which should translate into more
money.  But does it really work this way?  And if it does, how big an
effect is it?  I don't know the answer.  And you could even imagine
situations where cable could hurt local broadcast stations by piping
in other "local" stations that didn't used to compete in the market
because of that incoveniently placed mountain.

>Extremely simple!  

Whenever anybody says something like this about what you *know* has to
be a complex system, the bells and whistles should immediately go off.

For example, the above "market" argument doesn't attempt to address
the local monopoly issues that are often tied up in the cable
question.  While I don't know exactly what the recent bill
accomplishes along these lines, I think it is silly to discuss the
effect of broadcast retransmission fees without acknowledging the
existence of local cable monopolies.

>But congress, with influence from who knows where (maybe its a payoff 
>for the way the press treated the democratic convention ;^), decides 
>that, while (justly, IMHO) regulating the cable industry to prevent 
>monopolies, to also make cable companies pay broadcasters.  

Oh please.  As if cable companies don't have money of their own to
throw around.  (And as if nobody in Washington watches CNN. :-)) As
long as the retransmission fees are freely negotiable, I just don't
see the problem.

>For what?!?!?  

The right to retransmit copyrighted programming and get money for it.
Seriously, if this were phrased in terms of doing deluxe editions of
library books, wouldn't it occur to you that the owner of the
copyright is getting shafted?  (Note: you could argue that the notion
of copyright is the problem; if this is your argument, ignore the
preceding.)

>I think if I ran a cable company, I would stop carrying the networks, and
>let people put in antennea to pick them up.  A little extra hassle, but 
>could provide the service less expensively than the competitors.

Funny.  If I ran a cable company in a non-monopoly cable market, I
would offer the networks serious money for an exclusive deal, and at
least some money for a non-exclusive deal.  I would also be forced to
price my services competitively, and try to offer more popular
programming, from whatever source.

And the very best thing that could happen, in my opinion, is for the
Cable market to become competitive enough to force "unpackaging",
where you could pick and choose exactly what stations you wanted to
receive off the cable companies' menus at what would become the market
price.  This way, *nobody* would end up being "special" in the deal.

jking


Newsgroups: misc.consumers