Cable, Cities, and Copyrights

Bridger M. Mitchell, R. H. Smiley

Expert InsightsPublished 1973

Examines the profitability of major market cable TV systems under the highly restrictive new FCC rules, as affected by several alternative copyright fee proposals, including one embodied in pending legislation. Comanor and Mitchell's model is used, modified according to the new rules and Park's (R-875) demand study. The results indicate that cable systems will typically be unprofitable in central urban areas having good broadcast reception, but marginally profitable on the edges of the larger cities. In these latter cases rates of return are not far above the estimated cost of capital. Copyright fees of the magnitude that have been proposed are likely to deter cable construction in many of these areas, since rates of return are sensitive to the additional costs and, because demand is price-elastic, higher prices could not increase revenues. (For the [Bell Journal of Economics and Management Science].)

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1973
  • Pages: 53
  • Document Number: P-5086

Citation

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Mitchell, Bridger M. and R. H. Smiley, Cable, Cities, and Copyrights. Santa Monica, CA: RAND Corporation, 1973. https://www.rand.org/pubs/papers/P5086.html.
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