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The Rise and Rise of Cable TV: Demand elasticity of cable television during the Great Recession
Unformatted Document Text:  CABLE SUBSCRPITIONS Results Utilizing the above methodology yielded the following answers to the research questions. RQ1 asked if, in media markets hit hardest by the recent economic recession, a correlation existed between Cable/ADS penetration rates and the unemployment rates. H1 posited that, in accordance with the PIH, Cable/ADS penetration rates would positively correlate with the unemployment rate. Analysis of the data using the above methodology showed a positive correlation (Figures 1 & 2). As the unemployment rates rose in both recession-weak and recession-strong DMAs, the percentage of Cable/ADS subscriptions positively correlated, thus supporting this hypothesis. RQ2 asked if demand for Cable/ADS services remained inelastic throughout the recession. H2 posited that demand for Cable/ADS services with respect to unemployment would be inelastic. From February 2006 to November 2007, the mean Cable/ADS penetration in recession-weak DMAs increased 2.64% ( ∆ Q = .0264). During that same time period, the change in the mean unemployment rate was 92.15% ( ∆ P = .9215). When applying the formula for elasticity, η = .03. Therefore Cable/ADS penetration with respect to unemployment in the two years prior to the recession was inelastic ( η <1). From February 2008 to November 2009, the mean Cable/ADS penetration in recession-strong DMA’s increased 2.01% ( ∆ Q = .0201). During that same time period, the change in the mean unemployment rate was 33.18% ( ∆ P = .3318). When applying the formula for elasticity, η = .06. Therefore Cable/ADS penetration with respect to unemployment in the two years prior to the recession was inelastic ( η <1). Since demand remained inelastic throughout both non-recession and recession months, H2 was supported. 9

Authors: Danelo, Matthew.
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CABLE SUBSCRPITIONS
Results
Utilizing the above methodology yielded the following answers to the research questions. 
RQ1 asked if, in media markets hit hardest by the recent economic recession, a correlation 
existed between Cable/ADS penetration rates and the unemployment rates. H1 posited that, in 
accordance with the PIH, Cable/ADS penetration rates would positively correlate with the 
unemployment rate. Analysis of the data using the above methodology showed a positive 
correlation (Figures 1 & 2). As the unemployment rates rose in both recession-weak and 
recession-strong DMAs, the percentage of Cable/ADS subscriptions positively correlated, thus 
supporting this hypothesis. 
RQ2 asked if demand for Cable/ADS services remained inelastic throughout the 
recession. H2 posited that demand for Cable/ADS services with respect to unemployment would 
be inelastic. From February 2006 to November 2007, the mean Cable/ADS penetration in 
recession-weak DMAs increased 2.64% (
Q = .0264). During that same time period, the change 
in the mean unemployment rate was 92.15% (
P = .9215). When applying the formula for 
elasticity, 
η
 = .03. Therefore Cable/ADS penetration with respect to unemployment in the two 
years prior to the recession was inelastic (
η
<1). From February 2008 to November 2009, the 
mean Cable/ADS penetration in recession-strong DMA’s increased 2.01% (
Q = .0201). During 
that same time period, the change in the mean unemployment rate was 33.18% (
P = .3318). 
When applying the formula for elasticity, 
η
 = .06. Therefore Cable/ADS penetration with respect 
to unemployment in the two years prior to the recession was inelastic (
η
<1). Since demand 
remained inelastic throughout both non-recession and recession months, H2 was supported.
9


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