Vertical Foreclosure in the U.S. Cable Television Market: An Empirical Study of Program Network Carriage and Positioning
49 Pages Posted: 25 Feb 2020
Date Written: October 2005
We provide new evidence of vertical foreclosure in the U.S. cable television market, primarily using a 2004 database of 680 cable systems. Focusing on four program network groups (basic outdoor entertainment, basic cartoon, basic movie, and premium movie), we find that more frequent carriage of affiliated networks and less frequent carriage of rival networks, a pattern identified by previous empirical studies, persists in spite of extensive channel capacity expansion and digitization of cable systems, as well as new competition from DBS - developments that might be expected to reduce or eliminate vertical foreclosure effects. We also find a new form of vertical foreclosure in the digital environment: integrated cable operators that do carry rival networks are more likely to position them on higher priced digital tiers, or in other ways that appear to limit demand for them.
Keywords: Vertical integration, cable television, foreclosure
JEL Classification: l22, l82
Suggested Citation: Suggested Citation