3.2 Cable Network Organizations

Cable networks operate differently from broadcast networks, relying on subscriptions and targeting specific audiences. They generate revenue through fees and ads, offering flexible programming schedules. This unique structure allows cable networks to cater to niche interests and repeat popular content.

Cable systems involve franchises, local operators, and vertical integration. These elements shape how networks are distributed, negotiate carriage agreements, and compete. Vertical integration can provide advantages but also raises concerns about competition and diversity in the industry.

Cable Network Organizations and Structure

Cable vs broadcast network organization

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• Cable networks distributed through cable, satellite, or telco providers while broadcast networks use over-the-air transmission
  • Cable networks require viewer subscriptions through providers to access content (Comcast, DirecTV)
  • Broadcast networks offer free programming accessible with an antenna (ABC, NBC, CBS)
• Cable networks generate revenue through subscriber fees and advertising while broadcast networks rely heavily on advertising
  • Cable networks receive a portion of monthly subscription fees paid by viewers (ESPN, HBO)
  • Broadcast networks do not directly receive subscriber fees
• Cable networks target specific demographics or niche audiences while broadcast networks aim for broad, mass appeal
  • Cable networks tailor content to specific viewer interests (sports on ESPN, news on CNN, lifestyle on HGTV)
  • Broadcast networks offer a mix of programming to attract a wide range of viewers (sitcoms, dramas, reality shows)
• Cable networks have more flexibility in programming schedules and can air content multiple times while broadcast networks adhere to set schedules with limited re-runs
  • Cable networks can repeat popular programs throughout the day or week (marathons, multiple airings)
  • Broadcast networks usually air new episodes at specific times with fewer re-run opportunities

Affiliates and operators in cable systems

• Franchises are agreements between cable operators and local governments granting the right to provide cable services in a specific area
  • Franchises outline terms and conditions for the cable operator to install and maintain necessary infrastructure
  • Franchises may include requirements for channel capacity, public access channels, and franchise fees paid to the local government
• Local operators, or multiple system operators (MSOs), own and operate cable systems in multiple markets
  • Local operators distribute cable networks to subscribers in their service areas (Comcast, Charter Communications)
  • Local operators negotiate carriage agreements with cable networks, determining which networks are included in channel lineups and fees paid to networks
  • Local operators handle customer service, billing, and technical support for subscribers in their markets

Vertical integration in cable networks

• Vertical integration occurs when a company owns or controls multiple stages of production and distribution
  • Media conglomerates often own both cable networks and distribution platforms (cable, satellite, or telco providers)
• Vertical integration provides cable networks with guaranteed distribution on owned platforms, increasing potential audience reach
  • Vertically integrated companies may prioritize their own networks in channel lineups and promotions (Comcast owning NBCUniversal networks)
• Vertically integrated companies can leverage distribution platforms to negotiate better carriage terms with other cable networks
  • This can lead to higher subscriber fees for independent networks or difficulty securing distribution on vertically integrated platforms
• Vertical integration can influence content produced by cable networks owned by the same parent company
  • Networks may be encouraged to create content aligning with the parent company's strategy or cross-promote content from other owned properties
• Critics argue vertical integration can reduce competition and diversity in the cable industry as independent networks struggle to secure distribution and compete with vertically integrated networks

Cable network competition strategies

• Invest in high-quality, original programming to attract and retain viewers
  • Develop critically acclaimed series and movies to differentiate from competitors and justify higher subscriber fees (HBO's Game of Thrones, AMC's Breaking Bad)
• Focus on niche programming and targeted demographics to build loyal audiences
  • Cater to specific interests or age groups to create a strong brand identity and viewer loyalty (Food Network, Nickelodeon)
• Experiment with new formats and genres to stand out in a crowded market
  • Introduce innovative programming styles or combine elements from different genres to capture viewer attention (MTV's reality shows, FX's anthology series)
• Leverage digital platforms and streaming services to expand reach and engage viewers
  • Offer content through network-specific apps, websites, or third-party streaming services to adapt to changing viewer habits and compete with streaming platforms (HBO Max, ESPN+)
• Collaborate with streaming platforms to distribute content and reach new audiences
  • License content to streaming services or co-produce original series to generate additional revenue and expand viewer base (Showtime's content on Hulu, AMC's content on Netflix)
• Invest in marketing and promotional campaigns to build brand awareness and attract viewers
  • Utilize effective marketing strategies, such as social media engagement, cross-platform promotion, and targeted advertising, to compete in a fragmented media landscape