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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 3 However, although the anti-competitive theory propagated by the must-carry proponents has been adopted by Congress and later vindicated by the Supreme Court, very little evidence has been presented or debated in and out of the courts to explain cable’s broadcast signal carriage behaviors. 6 As Justice O’Connor noted in her dissenting opinion, the principal opinion of the Turner court exhibited “a profound fear of delving into complex economic matters, and a willingness to substitute untested assumptions for evidence” (Turner II, p. 230). In addition, she charged that the Turner plurality failed to explain the nature of cable operators’ allegedly anticompetitive conduct (Turner II, p. 233). For example, are cable systems owned by vertically integrated and bigger-sized firms more likely to engage in adverse local signal carriage behaviors? How do other market structural and technological factors (such as system penetration rate, market competition and channel capacity) influence a cable system’s carriage decisions? Or, in general, were the non-carriage instances experienced by some broadcast stations in the late 1980s a result of cable’s efficient or anticompetitive motives? These questions have not been empirically investigated. The academic contribution to the debate over the must carry rules has been confined largely to legal analysis. Research on must-carry on the empirical front is scant even as the debate and the ensuing litigation over the must-carry rules climaxed in the1990s. Two notable exceptions are Vita (1997) and Yan (2002). Both have studied the 6 While this paper is not a legal analysis of the must carry rules, two things about Turner II are worth noticing. First is the great deference the Court gave to the congressional judgment when confronted with contrary evidence from the other side. According to the Court, the question is not whether Congress was correct as an objective matter, but “whether the legislative conclusion was reasonable and supported by substantial evidence…” (p. 211). Second, the Supreme Court did not judge the validity of the must carry rules in association with the governmental goal to “promote fair competition.” It seemed as if the goal of the must carry rules was solely to protect the economic viability of the broadcasting industry, and whether cable operators’ non-carriage action actually hurt competition simply did not matter. For analysis of Turner II, see Hazlett (2000) and Whitmore (2001).

Authors: Yan, Zhaoxu.
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Must carry rules
3
However, although the anti-competitive theory propagated by the must-carry
proponents has been adopted by Congress and later vindicated by the Supreme Court,
very little evidence has been presented or debated in and out of the courts to explain
cable’s broadcast signal carriage behaviors.
6
As Justice O’Connor noted in her dissenting
opinion, the principal opinion of the Turner court exhibited “a profound fear of delving
into complex economic matters, and a willingness to substitute untested assumptions for
evidence” (Turner II, p. 230). In addition, she charged that the Turner plurality failed to
explain the nature of cable operators’ allegedly anticompetitive conduct (Turner II, p.
233). For example, are cable systems owned by vertically integrated and bigger-sized
firms more likely to engage in adverse local signal carriage behaviors? How do other
market structural and technological factors (such as system penetration rate, market
competition and channel capacity) influence a cable system’s carriage decisions? Or, in
general, were the non-carriage instances experienced by some broadcast stations in the
late 1980s a result of cable’s efficient or anticompetitive motives? These questions have
not been empirically investigated.
The academic contribution to the debate over the must carry rules has been
confined largely to legal analysis. Research on must-carry on the empirical front is scant
even as the debate and the ensuing litigation over the must-carry rules climaxed in
the1990s. Two notable exceptions are Vita (1997) and Yan (2002). Both have studied the
6
While this paper is not a legal analysis of the must carry rules, two things about Turner II are worth
noticing. First is the great deference the Court gave to the congressional judgment when confronted with
contrary evidence from the other side. According to the Court, the question is not whether Congress was
correct as an objective matter, but “whether the legislative conclusion was reasonable and supported by
substantial evidence…” (p. 211). Second, the Supreme Court did not judge the validity of the must carry
rules in association with the governmental goal to “promote fair competition.” It seemed as if the goal of
the must carry rules was solely to protect the economic viability of the broadcasting industry, and whether
cable operators’ non-carriage action actually hurt competition simply did not matter. For analysis of Turner
II
, see Hazlett (2000) and Whitmore (2001).


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