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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 23 2). Lower rating stations, independent stations or duplicate network affiliates originating from a different ADI were more likely to be denied carriage by a cable system. These results are the most damaging to the anticompetitive theory for carriage denials as they are entirely consistent with an efficiency rational. 3). The study found that cable system operators faced local signal carriage pressures. As the number of local market stations available in the local market increase, the likelihood of a cable system operator not carrying broadcast stations likewise increases. However, the results also showed that the expansion of system capacity could ease the pressure on cable systems and make the carriage of additional stations possible. 4). Competition in local media markets affected cable’s local carriage behaviors. In particular, cable operators in bigger media markets (presumptively with greater media competition) carried more broadcast stations and were more likely to carry a broadcast station. This result is hardly consistent with an anticompetitive rational for carriage denials which predicts that more adverse carriage instances take place in more competitive markets. Instead, this result reflects one of the incentives cable system operators had for local signal carriage, that is, carrying popular local stations to increase the competitiveness of cable television service vis-à-vis OTA broadcast and DBS services. 5). The above result suggests that more non-carriage instances took place in smaller markets. These findings, taken as a whole, support the notion that cable’s local station carriage decisions were more a result of efficient rather than anti-competitive motives, although some of the results raise questions regarding the motivations behind cable’s

Authors: Yan, Zhaoxu.
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Must carry rules
23
2). Lower rating stations, independent stations or duplicate network affiliates
originating from a different ADI were more likely to be denied carriage by a cable
system. These results are the most damaging to the anticompetitive theory for carriage
denials as they are entirely consistent with an efficiency rational.
3). The study found that cable system operators faced local signal carriage
pressures. As the number of local market stations available in the local market increase,
the likelihood of a cable system operator not carrying broadcast stations likewise
increases. However, the results also showed that the expansion of system capacity could
ease the pressure on cable systems and make the carriage of additional stations possible.
4).
Competition in local media markets affected cable’s local carriage behaviors.
In particular, cable operators in bigger media markets (presumptively with greater media
competition) carried more broadcast stations and were more likely to carry a broadcast
station. This result is hardly consistent with an anticompetitive rational for carriage
denials which predicts that more adverse carriage instances take place in more
competitive markets. Instead, this result reflects one of the incentives cable system
operators had for local signal carriage, that is, carrying popular local stations to increase
the competitiveness of cable television service vis-à-vis OTA broadcast and DBS
services.
5). The above result suggests that more non-carriage instances took place in
smaller markets.
These findings, taken as a whole, support the notion that cable’s local station
carriage decisions were more a result of efficient rather than anti-competitive motives,
although some of the results raise questions regarding the motivations behind cable’s


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