Audience Diversion Due to Cable Television

A statistical analysis of new data suggests that television broadcasting will continue to prosper, despite increasing competition from cable TV carrying distant signals. Data on cable and noncable audience in 121 countries with well-defined signal choice support generalized least squares estimates of two models: total audience and audience shares. The models are used to simulate the effect of cable on the audience of local stations in a wide variety of situations. In markets with three network stations, the simulations show 2 percent audience loss due to cable operating under current regulations, 7 percent loss in the near term under relaxed regulations allowing carriage of more distant signals, and up to 20 percent loss in the future if cable penetration increases substantially. Losses are greater in smaller markets. Comparison shows these results are broadly consistent with previous studies. This is a contribution to the FCC's inquiry into the economic relationship between television broadcasting and cable television.