After deregulation began in the 1980s, many players in TV and cable consolidated to broaden their offerings, expand their market share, and lower expenses. For example, Disney now owns both ABC and ESPN and can spread the costs of sports programming over their networks and their various ESPN cable channels. This business strategy has produced an oligopoly in which just a handful of media corporations now controls programming.

The Major Broadcast Networks

Despite their declining reach and the rise of cable, the traditional networks have remained attractive business investments. In 1985, General Electric, which once helped start RCA/NBC, bought back NBC. In 1995, Disney bought ABC for $19 billion; in 1999, Viacom acquired CBS for $37 billion (Viacom and CBS split in 2005, but Viacom’s CEO remains CBS’s main stockholder). And in January 2011, the FCC and the Department of Justice approved Comcast’s purchase of NBC Universal from GE—a deal valued at $30 billion.

To combat audience erosion in the 1990s, the major networks began acquiring or developing cable channels to recapture viewers. Thus, what appears to be competition between TV and cable is sometimes an illusion. NBC, for example, operates MSNBC, CNBC, and Bravo. ABC owns ESPN along with portions of Lifetime, A&E, History, and the E! channel. However, the networks continue to attract larger audiences than their cable or online competitors. For the 2011–12 season, CBS led the broadcast networks in ratings, followed by Fox, ABC, NBC, Univision, and the CW. CBS averaged 11.6 million viewers while CW drew about 1.7 million viewers each evening, although Fox reached more of the viewers most cherished by advertisers—eighteen- to forty-nine-year-olds. (For more on Fox, see “What News Corp. Owns”.)

Major Cable and DBS Companies

In the late 1990s, cable became a coveted investment, not so much for its ability to carry television programming as for its access to households connected with high-bandwidth wires. Today, there are about 7,100 U.S. cable systems, down from 11,200 in 1994. Since the 1990s, thousands of cable systems have been bought by large multiple-system operators (MSOs), corporations like Comcast and Time Warner Cable that own many cable systems. The industry now calls its major players multichannel video programming distributors (MVPDs); this includes DBS providers like DirecTV and DISH Network. By 2012, the Top 10 companies controlled about 70 percent of cable and DBS households (see Table 6.2).

TABLE 6.2

TOP 10 MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTORS (MVPD), 2012

Source: National Cable & Telecommunications Association, “Top 25 Multichannel Video Programming Distributors as of March 2012,” http://www.ncta.com/Stats/TopMSOs.aspx.

In cable, the industry behemoth is Comcast, especially after its takeover of NBC and move into network broadcasting. Back in 2001, AT&T had merged its cable and broadband industry in a $72 billion deal with Comcast, then the third-largest MSO. The new Comcast instantly became the cable industry leader, and it now serves more than twenty-five million households. Comcast’s cable properties also include interests in Versus, E!, and the Golf Channel. Other major cable MSOs include Time Warner Cable (formerly part of Time Warner), Cox Communications, Charter Communications, and Cablevision Systems.

In the DBS market, DirecTV and DISH Network control virtually all of the DBS service in the continental United States. In 2008, News Corp. sold DirecTV to cable service provider Liberty Media, which also owns the Encore and Starz movie channels. The independently owned DISH Network was founded as EchoStar Communications in 1980. DBS’s market share has grown from 14 percent in 2000 to nearly 40 percent in 2011. Television services (combined with existing voice and Internet services) offered by telephone giants Verizon (FiOS) and AT&T (U-verse) are also developing into viable competition for cable and DBS companies.

The Effects of Consolidation

There are some concerns that the trend toward cable, broadcasting, and telephone companies merging will limit expression of political viewpoints, programming options, and technical innovation, and lead to price-fixing. These concerns raise an important question: In an economic climate in which fewer owners control the circulation of communication, what happens to new ideas or controversial views that may not always be profitable to circulate?

The response from the industries is that, given the tremendous capital investment it takes to run television, cable, and other media enterprises, it is necessary to form business conglomerates in order to buy up struggling companies and keep them afloat. This argument suggests that without today’s MVPD-type services, many smaller ventures in programming would not be possible. However, there is evidence that large MVPDs can wield their monopoly power unfairly. Business disputes have caused disruptions as networks and cable providers have dropped one another from their services, leaving customers in the dark. For example, in October 2010 News Corp. pulled six channels including the Fox network from over three million Cablevision customers for two weeks. This unusually long and bitter standoff meant Cablevision subscribers missed two World Series games, various professional football matches, and popular programs like Family Guy. This shows what can happen when a few large corporations engage in relatively minor arguments over prices and programs: Consumers are often left with little recourse or choice in markets with minimal or no competition and programming from just a handful of large media companies.