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Vertical integration and the must carry rules in the cable television industry: An empirical analysis
Unformatted Document Text:  Must carry rules 21 Regarding the effect of station type, being an independent station increased the chance of not being carried ( β = .655, p < .05). Relative to public stations, the odds of being denied carriage by a cable system for independent stations was 92.5% higher. In addition, while an independent station from a different ADI from a cable system was no more likely to be denied carriage by the cable system than a public station from a different ADI (that is, DIFF_IND had no significant effect on DROP), the opposite was true for a network affiliate station from a different ADI ( β = .837, p < .10). The probability of not being carried for a network affiliate station from a different ADI was .051 higher than a public station from another media market. In terms of odds ratio, the odds of not being carried for a distance network affiliate station was 130.8% higher, compared to its pubic station counterpart. Together, the results of the station-level variables showed that independent stations and network affiliate stations from a different ADI were more likely to be denied carriage by a cable system. In addition, less popular and younger stations were more likely to be turned away by a cable system, all other things equal. These results point to a pro-competition theory for local carriage denials. Conclusion This study tested whether vertically integrated cable system owners are more likely to deny carriage of broadcast stations, all other things equal. The results indicate that the effect of vertical integration on cable’s local carriage decisions was positive. That is, firms with more cable program interests were actually less likely to deny carrying broadcast stations on their systems. This result does not square well with the accusations made by the government and other must carry proponents that vertically integrated cable

Authors: Yan, Zhaoxu.
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Must carry rules
21
Regarding the effect of station type, being an independent station increased the
chance of not being carried (
β
= .655, p < .05). Relative to public stations, the odds of
being denied carriage by a cable system for independent stations was 92.5% higher.
In addition, while an independent station from a different ADI from a cable
system was no more likely to be denied carriage by the cable system than a public station
from a different ADI (that is, DIFF_IND had no significant effect on DROP), the
opposite was true for a network affiliate station from a different ADI (
β
= .837, p < .10).
The probability of not being carried for a network affiliate station from a different ADI
was .051 higher than a public station from another media market. In terms of odds ratio,
the odds of not being carried for a distance network affiliate station was 130.8% higher,
compared to its pubic station counterpart.
Together, the results of the station-level variables showed that independent
stations and network affiliate stations from a different ADI were more likely to be denied
carriage by a cable system. In addition, less popular and younger stations were more
likely to be turned away by a cable system, all other things equal. These results point to a
pro-competition theory for local carriage denials.
Conclusion
This study tested whether vertically integrated cable system owners are more
likely to deny carriage of broadcast stations, all other things equal. The results indicate
that the effect of vertical integration on cable’s local carriage decisions was positive. That
is, firms with more cable program interests were actually less likely to deny carrying
broadcast stations on their systems. This result does not square well with the accusations
made by the government and other must carry proponents that vertically integrated cable


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