Cappy H's List: state of the industry brief

• Most basic cable   networks charge the cable systems for their service.
• The fee is   based on the number of subscribers the cable system has. A typical   basic network charges a cable system an amount between 3 and 25   cents per month per subscriber, depending on its popularity.
• Most basic networks   sell advertising. As a result they have two sources of income--cable   system subscriber fees and fees paid by advertisers.
• Among the more   than 60 basic networks, there is considerable variation in operating   procedure.
• Some basic channels   produce most of their own programming.
• Pay cable networks,   such as HBO, The Movie Channel, Showtime, Cinemax, and The Disney   Channel, do not sell advertising. They derive all income from the   cable systems that carry them.
• ost of these channels present feature films.   The networks purchase rights from motion picture studios allowing   them to show feature films shortly after their theatrical runs and   prior to their availability to broadcast networks. They show the   films uncut and without commercial interruptions.
• Some pay channels also offer commercial-free specials such   as sporting events, documentaries, miniseries, comedy specials,   musical concerts, and original movies created for the pay service.
• Some of the channels, primarily HBO and Showtime, produce their   own television series. These programs usually contain language or   themes that commercial networks do not present to their larger,   general audiences.
• The Museum of Broadcast Communications (MBC)

8 more annotations...

• No longer able to simply stock their channels with reruns of "Seinfeld," "Golden Girls" and old movies, cable programmers have ratcheted up spending in the last five years to distinguish themselves with marquee franchises
• But while the spending increases are staggering, cable channels remain the most profitable divisions of many media conglomerates
• Cable TV networks collectively spent $20 billion in content costs last year, according to SNL Kagan's recent report. Over the last five years, programming expenses industrywide have increased at an annual rate of nearly 9%.

• So far, rising costs have been offset by rising returns. Over the last decade, cable networks have increased their advertising revenue an average of 9% a year, according to SNL Kagan, which reported that annual programming expenses over the last five years have risen at the same rate. Last year, cable networks collected $22.3 billion in ad revenue and nearly $25 billion in fees from their affiliates and cable and satellite television operators such as Time Warner Cable and DirecTV.

  That brought cable networks' total revenue in 2010 to nearly $48 billion.
• home construction, which can mean new cable households, is down since the recession.
• Competition has been increasing too
• cable companies have, since 1996, increased cable TV prices at twice the rate of inflation

5 more annotations...