of the growth in cable channels will come from multiplexing, or transmitting multiple channels from one network. Several major cable networks, including ESPN, VH1, and the Discovery Channel, own several channels.
The cable industry has also been affected by changes in government regulation. In the early 90s, concerns over poor service and high rates led to a revolt against the cable industry. As a result, Congress passed legislation in 1993 that rolled back the provisions of the Cable Television Act of 1984, allowed local governments to regulate basic cable rates, and forced cable operators to pay licensing fees for local broadcast programming they used to retransmit for free. The Telecommunications Act of 1996 allows local phone companies to offer cable service. However, as part of this act, federal regulation of the cable industry expired on April 1, 1999, and cable rates are now deregulated.26
One of the biggest threats facing the cable industry is competition from direct broadcast satellite (DBS) services, which use a system whereby TV and radio programs are sent directly from a satellite to homes equipped with a small dish. DBS companies such as DirecTV and EchoStar now have nearly 10 million subscribers, many of whom have come to them at the expense of cable companies. DBS companies have been aggressively marketing their service, superior picture quality, and greater channel choice as subscribers receive as many as 200 channels that include news, music, and sports in crisp, digital video and CD-quality sound. A major competitive restriction to DBS services was removed in late 1999 when the federal government passed legislation allowing satellite TV companies to carry local broadcast signals in most major markets.27
The future of cable as an advertising medium will ultimately depend on the size and quality of the audiences cable stations can reach with their programs. This in turn will depend on cable's ability to offer programs that attract viewers and subscribers. Cable's image as a stepchild in program development and acquisition has changed. Cable networks such as VH1, E!, TBS, and others have been creating original films, documentaries, and other programs that draw significant ratings. Networks like A&E, the Discovery Channel, and the Learning Channel provide outstanding cultural and educational programming. IMC Perspective 11-4 discusses how MTV recently created one of the most popular entertainment shows ever shown on cable—The Osbournes.
Cable TV will continue to be a popular source of sports programming and is very important to advertisers interested in reaching the male market. There are over 11 regional cable sports networks, and with companies such as Fox Sports, advertisers Exhibit 11-7 CNN can buy multiple regions with one media buy. Cable networks are also paying large
International is the sums for the rights to sports programming. Deals by ESPN for exclusive Sunday night authoritative source for coverage of National Football League and Major League Baseball games, along with news throughout the world its new six-year deal to broadcast National Basketball Association games, have proved that cable networks can compete with the major networks in a sports bidding war.28
As cable penetration increases, its programming improves, and more advertisers discover its efficiency and ability to reach targeted market segments, cable's popularity as an advertising medium should continue to grow. Many agencies have developed specialists to examine the use of cable in their clients' media schedules. Cable networks are also looking to international markets as a source of future growth. Both ESPN and MTV have expanded into South America, Europe, and Asia, while TV viewers throughout the world tune to CNN International for news (Exhibit 11-7).
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