Evil Cable Companies

In my media economics class I was assigned to research the business model of a cable company or “Multiple System Operator” as they are called in television. I had previously heard casually that the FCC is the real evil in the television industry because of the endless regulations they enforce upon the different channels and networks. From a certain point of view the FCC can be viewed as restricting public speech but that is from a pretty extreme perspective.

To me, the real evil is being done by the MSO’s like Comcast and Time-Warner. Through my research I found that these cable Gods receive 80 percent of their revenue from subscribers and the other 20 percent comes from local/regional advertisers. That doesn’t really make them evil corporations but it shows the shift in the traditional television revenue of advertising. What makes me worried is what I found about how cable companies reach agreements with municipalities to have local monopolies over service.

That’s right, I used the “M” word. Monopolies aren’t good things unless you are playing as the shoe in the board game and you own all the utilities. In some regards, the cable companies do own all the utilities as they bid to local municipalities to feature only their service. The MSO’s offer six to eight percent of their revenues to the local government in return for allowing them to set up their system in the region and not allow other service providers to compete in that area. It’s a dirty business of offering different incentives to the local governments and the bidding process is basically a bribing war of which MSO will give the government more cash.

Now good things do come from this bidding war like funding for libraries and public access television studios, but the local monopoly obviously restricts competition between the cable companies allowing them to basically charge what ever they feel to subscribers in that region. This is terrible for the average joe who has been steadily watching his cable bill rise even though the MSO’s have been making ridiculous profits since the nineties. In fact, the big cable companies have not been in any sort of debt since the eighties.

What else is scary is that these cable corporations have become so diversified and huge that they own other mediums of entertainment you wouldn’t know about unless you bothered to investigate. For instance, DirecTV has become a popular alternative to cable but did you know that it is owned by News Corporation which is also the parent company of Fox, Myspace, The New York Post and of course dozens of cable television channels and movie studios. Time-Warner obviously owns numerous channels and movie studios but it also owns Golf Monthly, Mad Magazine and Mapquest.

I don’t know if you share the same concern I do about so many different forms of media being owned by only a half dozen giant diversified corporations, but what I do know is this has to hurt the diversity of opinion being published or broadcasted by the media. But beyond the monsters these corporations have become, what bothers me the most is the local monopolies they live off of. It hurts us as consumers and it is against the principles of the market economy.

The great hope is for the rise of satellite providers to continue and for consumers to rally against the current system in place. Local officials would have to be elected to office that would ensure competition between the cable companies in their jurisdiction and ensure there wouldn’t be any price gouging. Until then our cable bills are going to follow the trend of gas prices and continue to rise.