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As the cable industry consolidates, the market for multichannel programming changes. Such is the unsurprising result of a recent sophisticated role-playing/experimental economic study - Horizontal Concentration in the Cable Television Industry - conducted by the Federal Communications Commission's Office of Plans and Policy.

While many of the study's conclusions are breathtakingly obvious, some may provide clues to how the Commission will view future mergers within the multichannel universe. Among the key results of the weighty tome (along with some less weighty interpretations):

Fewer buyers (i.e. a more consolidated industry) means a less efficient market for programming particularly when the buyers don't have enough channel space to accommodate all the programmers. AKA: Monopolies are generally good only for the monopolists.

More concentration of buyers can make life very difficult for less popular programming. AKA: New players will likely get their lunch eaten in a world of big buyers.

More concentration of buyers means lower fees for programmers. AKA: Unless you're at the top of the popular-programming heap, expect your affiliate fees to decline with the number of buyers.

In a Never-Neverland aspect of the study, the authors concluded that NO capacity constraints on the side of the buyers (i.e. plenty of channels for all comers) results in successful trades for all sellers. Unfortunately, the study did not include consumers in its equations - nor did it consider the sophisticated, and often immensely complicated, bandwidth management required to juggle all the different programs and services offered by multichannel video providers.

In case you wish to put your two cents in, the FCC is now accepting comments on the study at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-02-1304A1.pdf. To access the study itself, go to: http://www.fcc.gov/Bureaus/OPP/working_papers/oppwp35.pdf.

From SkyReport (Used with Permission)
 
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