4
The Rise of Cable Television

When television broadcasting got its start in the United States in the 1940s, the broadcast networks sent the electromagnetic signals that carried TV programs exclusively over the airwaves. They built tall towers that broadcast audio (sound) and video (picture) signals through the air to surrounding areas. Viewers used antennas on rooftops or attached to television sets to receive the signals. The main problem with this system of television transmission was that the signals grew weaker as they traveled farther from the towers. In addition, TV networks tended to concentrate their operations in heavily populated urban areas, where their signals would reach the largest number of viewers. As a result, millions of Americans living in rural areas found themselves with either poor TV reception or no access to broadcast television signals at all.

Within a few years of the start of TV broadcasting, creative citizens began experimenting with alternative ways to transmit television signals so that broadcasts would reach small towns and rural areas. The first successful alternative transmission method—originally known as Community Antenna Television (CATV) and later called cable TV—appeared around 1948. For the next thirty years, however, cable TV systems simply delivered existing broadcast network signals to communities that could not receive them over the airwaves. Unlike the extensive services cable TV companies provide in the 2000s, the first systems offered just a few channels and did not create their own programming. According to Ralph Lee Smith in "The Wired Nation," an influential 1970 article about the potential of cable TV, "The original purpose, and still the principal function, of CATV is to provide the viewer with better reception and a larger selection of existing TV stations than he can get from the air."

One of the people credited with inventing cable TV is Robert J. Tarlton. Born in Lansford, Pennsylvania, in 1914, Tarlton opened a radio sales and service shop after graduating from high school. He served overseas as a radio communications expert during World War II, then returned to his hometown and added the new technology of television to his business offerings. But Tarlton soon found that no one in Lansford was willing to invest in a TV set because the town had terrible reception. The closest TV stations were located 65 miles away in Philadelphia, and a mountain at the edge of town blocked the already weak signals before they reached residents' homes. Hoping to sell more TV sets, Tarlton convinced some investors to help him build a large antenna on top of the mountain in 1949. This antenna picked up signals from the Philadelphia TV stations, fed them into an amplifier to return them to full strength, and carried them down into Lansford through coaxial cables. (Coaxial cable—which consisted of copper wire surrounded by insulation, with an aluminum covering—could be used to transmit TV, telephone, and data signals.) In exchange for a $125 installation charge and $3 monthly service fee, Lansford residents got the same quality reception for Philadelphia's three network television channels as residents of the big city.

Other independent businessmen developed similar CATV systems around the same time, including John Walson, a power-company lineman and appliance store owner who built an antenna in the Poconos to serve the residents of Mahanoy City, Pennsylvania; and L. E. (called Ed) Parsons, who erected an antenna on the roof of his apartment building in Astoria, Oregon, so that his wife could watch TV. Cable TV systems spread gradually across the rural United States during the 1950s and 1960s. In 1950 there were 70 systems providing service to 14,000 subscribers; by 1960 these totals had increased to 640 systems with 650,000 subscribers.

The FCC steps in

The growth of cable TV alarmed the main broadcast television networks—ABC, CBS, and NBC—which had almost totally controlled American TV audiences from the time television technology was first introduced in the 1940s. The networks expressed concerns about the impact of cable from the beginning. They argued that cable TV systems stole their programming by intercepting their signals and then charged subscribers a fee for delivering them. Network complaints got more extreme when various cable systems began using new technology to bring in television signals from distant cities. This development changed the nature of cable services from simply improving the reception of local TV stations to providing viewers with new program options from distant stations.

The three major networks urged the Federal Communications Commission (FCC) to impose rules and restrictions on cable operators. (The FCC, a government agency, was created in 1934 to oversee and regulate all types of communications, including radio, television, telephone, and telegraph.) For many years after the invention of cable TV, though, the FCC was unwilling to step in and make rules to control the technology. The Communication Act of 1934 only allowed the agency to regulate communication technologies that operated over the airwaves, such as radio. Cable, by contrast, was a hybrid (combination) communication system that used fixed cables to deliver over-the-air signals. In 1956 the FCC ruled that it did not have the authority to regulate cable since the technology did not use the airwaves. By 1962, however, the agency reconsidered this decision. The FCC asserted its authority over cable TV because cable had an impact on broadcast television—an industry that the agency was required to support and promote.

The FCC issued its first official guidelines regarding cable television in a 1965 document titled "First Cable Television Report and Order." The following year the agency issued its "Second Cable Television Report and Order." Taken together, these two sets of regulations successfully limited cable TV systems to small, local markets that were not being served by the major broadcast networks. The regulations included "must carry" rules, which required cable operators to carry local broadcast signals, and "nonduplication" rules, which prohibited cable operators from bringing in programs from distant stations that were already available through local stations. The FCC commissioners believed that these rules were necessary in order to allow the broadcast networks to maintain their control over national TV audiences.

In 1969 the FCC issued new regulations that further limited the growth of cable TV. These rules prevented cable TV systems from entering urban markets, where they would compete directly with the broadcast networks. The rules also tied cable operators more closely to rural communities by requiring them to provide channels for local residents to air their own programming. Finally, the FCC placed limits on the content of cable programming in order to protect broadcasters. For instance, cable systems were forbidden to show movies that were less than ten years old or sporting events that had occurred within the past five years.

Despite the FCC's efforts, however, cable television continued to grow. By 1970 there were 2,500 cable TV systems in the United States serving 4.5 million subscribers. Around this time, various community groups and educational institutions began complaining about the limitations the government had placed on cable TV. They argued that cable had the potential to bring new social, educational, and entertainment services to the American people. They claimed that the FCC regulations, in protecting the interests of the powerful broadcast networks, actually harmed the public interest by preventing cable from reaching its potential.

Cable enters a growth phase

During the mid-1970s the FCC faced increasing public pressure to revise its rules limiting the growth of cable TV. This pressure came from cable customers who wanted access to appealing new channels and services that were then being developed. The FCC started loosening the restrictions on cable TV in 1972, when it issued another "Cable Television Report and Order" that allowed cable operators to bring in distant television signals. But the agency continued to restrict cable systems from providing service to the nation's top TV markets or airing recent programs.

Following the FCC's 1972 order, the information company Time Inc. launched a regional cable network called Home Box Office (HBO). HBO started out offering movies and special-event programming to markets on the East Coast on a pay-per-view basis. In 1975 the FCC issued a decision that allowed satellites (antennas that orbit Earth and relay communication signals over large areas) to be used for TV broadcasting. Under the leadership of Gerald Levin (1937–), HBO immediately took advantage of the ruling and began distributing its signal nationwide via satellite. HBO provided dozens of local cable operators across the country with dish-shaped antennas 30 feet (9 meters) wide in order to receive the signal. The local cable systems then delivered HBO programs to their subscribers through traditional cable lines. HBO demonstrated the power of satellite technology by broadcasting the 1975 world heavyweight boxing title match between Muhammad Ali (1942–) and Joe Frazier (1944–) live from Manila, in the Philippines. This event marked the first time that American television viewers were able to watch a major sporting event as it occurred halfway around the world.

With the success of the Ali-Frazier broadcast, HBO filed a lawsuit against the FCC in order to force the agency to give cable operators greater access to current programming. The federal district court in Washington, D.C., that heard the case of HBO v. FCC issued its decision in 1977. It ruled that the FCC was not justified in restricting cable TV in order to protect the broadcast networks. Following this first ruling, a whole series of court decisions overturned other FCC restrictions on cable TV. Cable operators gained the right to air current movies and sporting events, for instance, and to offer services in the nation's top television markets. The rulings also freed the cable industry from FCC requirements to provide local communities with special channels to air their own programming.

New cable networks emerge

The sudden reduction in FCC regulations led to tremendous growth in cable TV systems from the mid-1970s to the mid-1980s. In 1975 there were 3,500 cable systems serving 10 million subscribers, and within a decade these numbers jumped to 6,600 systems serving nearly 40 million subscribers. The increase in cable TV subscribers encouraged a number of independent business people to begin new cable networks. As a result, the number of cable networks grew from 28 in 1980 to 79 in 1990. These new networks no longer simply delivered programs that aired on the broadcast networks. Instead, they came up with unique programs and services, often targeted toward specific, narrow audience groups. Several of the cable networks that emerged during this period affected the development of television specifically and American society and culture in general.

Ted Turner (1938–) was a pioneer in forming national cable TV networks and offering innovative cable programming. Turner started his career by working in his father's billboard advertising business. After purchasing several radio stations in the late 1960s, Turner bought his first television station in 1970. This station, WTCG in Atlanta, Georgia, was located at channel 17 on the inferior UHF portion of the broadcast spectrum. At that time, stations affiliated with the three main national broadcast networks occupied the scarce VHF channels in nearly every important television market. But Turner disliked network programming and believed that independent stations could succeed by providing more wholesome options. He began showing old movies, cartoons, and sporting events to give viewers an alternative to the network offerings.

In 1976 Turner turned his small, independent station into a national cable network. Like HBO had done the year before, Turner arranged to deliver his signal to cable systems across the country via satellite. He changed his call letters to WTBS (for Turner Broadcasting System) and referred to it as a "Superstation" because of its nationwide reach. He soon convinced a number of national advertisers to begin placing their commercials on his cable network.

Several other creative cable networks began sending their programs across the country via satellite shortly after HBO and TBS. The Christian Broadcast Network launched CBN (which later became the Family Channel) in 1976, for instance, and the Showtime premium movie and sports service first appeared in 1978. A second Superstation, WGN from Chicago, achieved national satellite distribution that year as well.

Sports and music on cable

As cable television continued to grow into more areas of the United States, more and more specialized channels were launched.

ESPN

One of the most successful of all the cable networks made its debut in 1979. Its founder, Bill Rasmussen, had recently lost his job as communications director for the Hartford Whalers, a professional hockey team. In thinking about a new career, Rasmussen came up with the idea of starting a sports network that would provide programming to regional cable TV systems. After doing some research, Rasmussen discovered that satellite transmission would cost the same whether he beamed a television signal over a small region or across the whole country, so he decided to form a national network. He gathered some investors, built a studio in Bristol, Connecticut, and made his initial broadcast on September 7, 1979. This new network was called the Entertainment and Sports Programming Network (ESPN).

For the first few years of its existence, ESPN had trouble convincing the broadcast television networks to share their coverage of major sporting events, such as pro football and basketball games. Instead, the new cable network often found itself broadcasting unusual sporting events, such as slow-pitch softball games, the World's Strongest Man Competition, and Australian Rules Football. ESPN soon connected with sports fans, however, with its technical innovations, story-like highlight reels, and lively on-air personalities. Over the next twenty-five years, ESPN became a multi-billion-dollar business and made a tremendous impact on American society and culture. "Two decades of round-the-clock coverage have changed the way we view sports, the way we talk about sports, even the way athletes play sports," Greg Guss wrote in Sport. For instance, the increased exposure provided by sports networks like ESPN helped turn athletes into celebrities who earned millions of dollars to endorse products for advertisers.

CNN

In 1980 Turner launched the Cable News Network (CNN) to provide viewers with news and information twenty-four hours per day. When promoting the new network, he claimed that he wanted to provide the American people with a source of news that was independent of the powerful broadcast networks. Compared to the major broadcast networks, the new CNN had a small budget, and many people criticized its simple studio sets and low-cost production techniques. In fact, it appeared that CNN might be a short-lived experiment, as the network lost $20 million in its first year. But Turner's all-news format gradually attracted viewers and became profitable. It moved to the forefront of international news coverage during the 1991 Persian Gulf War, when CNN eporters provided live coverage of U.S.-led bombing raids from a hotel balcony in downtown Baghdad, Iraq.

CNN thus created a huge change in up-to-the-minute television news coverage. Its success led to the creation of numerous competing cable news channels, and it also prompted the broadcast networks to begin their own late-night news shows. "When the leaders of the world wanted to find out what was happening in the world—and, sometimes, in their own countries—they turned to CNN," L. J. Davis noted in The Billionaire Shell Game. Due to CNN news coverage, cable became Americans' top choice for information about breaking news events. By the time of the terrorist attacks on the United States of September 11, 2001, surveys showed that 45 percent of viewers went to cable news first for the latest information, while 22 percent turned to the three main broadcast networks and 20 percent to local newscasts.

Some critics, however, insisted that CNN's effects on American society were not entirely positive. For instance, they claimed that the need to provide round-the-clock news pushed the American media toward sensational journalism, which emphasized celebrity-centered stories instead of important, but more complex, national and international news events.

MTV

Another influential early cable network was MTV—Music Television. Following its launch in 1981, MTV focused its programming on music. Record companies already produced short videos to accompany songs by the artists they wanted to promote, so MTV was able to keep its programming costs low by simply arranging to air these promotional videos. Even though there were a limited number of videos available at first, ratings for the network soared. It proved to be especially popular among teenagers and young adults. The music industry realized that MTV had the power to bring musical groups to their audiences, and music videos became essential tools for artists seeking to attract and connect with fans. MTV's influence could also be seen in broadcast network programming. Shows such as Miami Vice adopted the fast-paced, colorful style of music videos and were often accompanied by rock-music soundtracks. In the late 1980s MTV began offering original programming in addition to videos, and several of these programs launched new television trends. For instance, MTV's Real World, a show that brings seven strangers together to live in a house, is widely credited with launching the reality-TV craze—unscripted TV programming depicting people in real-life situations—that blossomed in the late 1990s and into the 2000s.

Cable becomes big business

After the FCC lost a series of court challenges in the late 1970s, the agency began loosening its regulations concerning cable TV. The move toward deregulation (removal of regulations) received a big boost when Mark S. Fowler (1943–) became chairman of the FCC in 1981. Fowler was appointed by President Ronald Reagan (1911–2004; served 1981–89), who believed that the federal government should limit its role in controlling private business. Upon taking office, Fowler made it clear that he intended to reduce FCC regulations governing television and allow direct competition between cable and broadcast networks.

Fowler achieved many of his goals with the passage of the Cable Communications Policy Act of 1984. This act effectively completed the deregulation of the cable TV industry and placed it on equal footing with broadcast TV. The act eliminated must-carry rules, so that cable systems were no longer required to carry local broadcast stations. The new law also removed FCC-imposed limits on the monthly rates that cable companies charged subscribers. Cable operators could now charge customers as much as they wanted, as long as they operated in a competitive market. The FCC defined this term to mean any television market in which viewers had access to at least three over-the-air broadcast signals, and 90 percent of American cities met this condition.

With the removal of the last few limitations on its growth and profitability, cable TV entered a period of rapid expansion. Cable networks started competing directly with the broadcast networks for the right to air major sporting events, and they also started showing reruns of popular network series. As the number of cable channels expanded and the quality of cable programming improved, cable systems increasingly moved into urban and suburban areas that had previously been off-limits. Davis wrote: "cable could offer its customers something that the networks didn't have, and the number of new choices could only grow."

How Cable TV Works

Cable television works on the same principles in the 2000s as it did fifty years earlier. Cable systems include a central facility where television signals are received, processed, and distributed to subscribers. Such facilities typically feature a large antenna that receives program signals and a vast system of cables that deliver the signals to customers. Television signals gradually lose strength as they pass through the cables, so the cable companies place amplifiers (devices that boost the strength of the signals) at regular intervals to return the signals to their original strength.

Vast networks of cables carry television signals to connected homes, where they are changed into images that can be viewed on a TV screen by either a cable box on top of the TV or a cable converter inside the TV set itself. Since the cables must be buried in the ground or strung along telephone or electric poles, cable providers have to make agreements with local communities to use this type of public property, known as a right of way. Communities usually grant cable operators access through a type of business arrangement known as a franchise. A cable operator pays the local city government a percentage of its revenues in exchange for the exclusive right to provide cable services for a certain period of time. Cable subscribers typically pay an initial installation fee to be connected to the cable company's network, and a monthly fee to receive programming. The monthly fee varies depending on the number and type of channels a viewer wishes to receive.

Since TV cables had to be buried underground or strung along telephone or electrical poles, the cable companies needed to negotiate agreements with local communities to use this type of property, known as a right of way. Communities usually granted cable operators access through a type of business arrangement called a franchise. The cable companies agreed to pay a fee (usually 5 percent of their revenues) to the community in exchange for the exclusive (not shared with others) right to provide cable service for a certain period of time. In this way, most communities—and even entire regions—ended up being served by a single cable provider. A cable franchise thus allowed a company to operate as a monopoly (without competition), so operators competed fiercely for the right to provide service to the nation's top television markets. Some cable companies tried to convince city councils to select them for a franchise by offering to plant trees, build libraries, and provide new channels and services that did not even exist yet.

By the early 1990s, cable TV had become big business. The industry was dominated by a handful of large companies known as multi-system operators (MSOs). These companies purchased thousands of small, local cable providers in order to gain access to their valuable franchises. Tele-Communications Inc. (TCI), under the leadership of John Malone, became the largest MSO by gobbling up smaller competitors. TCI's reach eventually extended to forty-eight U.S. states, and in 1989 its cash flow was greater than the three broadcast networks combined. Malone also invested heavily in programming services; at one time, TCI's Liberty Media subsidiary held stakes in twenty-two of the top fifty cable channels in the United States. But TCI also became involved in questionable business deals and financial arrangements that gave the company billions of dollars of debt.

As part of the battle for profitable franchises, TCI and other major players in the cable industry spent more than $15 billion on infrastructure, or the basic tools and foundation needed to conduct business. Between 1984 and 1992, they launched communication satellites, built transmission towers, and laid cable in new areas. According to the Encyclopedia of Emerging Industries, this industry-wide effort was the largest private construction project in the United States since World War II (1939–45). But the cable companies passed much of the expense on to their customers, and rates for basic cable service grew rapidly. In fact, average cable rates increased by 25 to 30 percent between 1986 and 1988 alone.

The cable companies' rapid growth and massive spending did not please many people outside the industry. Some consumer groups began to complain about high cable rates and poor customer service, which they attributed to the cable companies' monopoly power over communities and regions. (A monopoly is where one company controls an entire industry or line of business.) Noticing the widespread problems with cable service, some lawmakers openly questioned whether deregulation had been a good idea.

Consumer concerns lead to re-regulation

By 1992 about 60 percent of American households subscribed to cable television service, yet the industry's unregulated growth had created widespread negative feelings. In addition to consumer complaints about high rates and poor customer service, the cable industry also faced a longstanding conflict with the broadcast networks. The three broadcast networks continued to claim that cable services profited from their programming illegally. The networks demanded that cable operators pay royalties (a fee for the use of material protected by copyright) in exchange for retransmitting their programs.

In 1992 the U.S. Congress responded to widespread concerns about the cable TV industry by passing the Cable Television Consumer Protection and Competition Act. This law gave local communities the power to regulate rates for basic cable television services. It also required the FCC to develop a plan to ensure that the broadcast networks would receive fair pay for their original programming.

In 1995 the number of cable TV subscribers declined for the first time. Industry observers attributed the drop to customer dissatisfaction with cable services, as well as increased competition from new technologies, such as Direct Broadcast Satellite (DBS). The following year the cable industry received some relief from government regulations with the passage of the Telecommunications Act of 1996. Although this legislation focused primarily on the telephone industry, it relaxed some of the 1992 rules affecting cable TV. For instance, it gradually eliminated all regulation of basic cable rates.

The main impact of the 1996 law, however, was to remove some of the restrictions that prevented companies from competing in multiple parts of the telecommunications industry. For example, it allowed telephone companies and broadcast television networks to own cable franchises. Following passage of the Telecommunications Act, the cable TV industry experienced a great deal of merger and acquisition activity (when one company buys another or two companies combine into one). In one of the largest deals in U.S. business history, the telephone company AT&T purchased TCI's cable services for $54 billion in 1999. More than ever, the cable TV industry came to be dominated by large MSOs that were also involved in other communication businesses. As of 2001, 95 percent of all cable subscribers received services from the top twenty-five companies in the industry. Comcast, with 21.4 million subscribers, took over the top spot among cable providers in 2002 by purchasing TCI's cable operations from AT&T.

Satellite services provide new competition

Around 2000, cable providers began to face intense competition from satellite television systems. The transmission of TV signals using satellites orbiting the Earth was not a new technology at that time. In fact, a communications satellite was first used to transmit a broadcast television signal across the Atlantic Ocean in 1962. A decade later, the FCC authorized the use of communication satellites for transmitting signals within the United States. Cable TV systems such as HBO and TBS adopted satellite transmission in the mid-1970s, and the Public Broadcasting Service (PBS) became the first broadcast network to deliver all of its programming via satellite in 1978.

Almost as soon as satellite programming became available, a few enterprising people began setting up their own dish-shaped antennas to intercept the signals. But picking up a television signal from a conventional communication satellite required dish antennas that were very large and quite expensive. Even so, the early dishes did not work very well and often had to be adjusted by hand as satellites moved across the horizon. These problems prevented a solid market from developing for home satellite TV for many years. In 1990, however, Primestar became the first company to offer commercial satellite TV service direct to customers' homes. Subscribers had to lease a three-foot-wide dish antenna in order to receive Primestar signals.

A major change in satellite technology occurred in 1993, when Hughes Electronics launched the first direct broadcast satellite (DBS). In DBS systems, the service provider receives programs from broadcast and cable TV networks at a technologically advanced broadcast center. These signals are encrypted, digitally compressed, and transmitted to a direct-broadcast satellite orbiting 23,000 miles above Earth. The DBS beams a digital stream of audio and video data to small, individual reception dishes on the roofs of houses and buildings. These 18-inch dish antennas capture the signals and carry them to the television set, where they are decoded and decompressed by a box on top of the TV set.

DBS suddenly made satellite TV available and affordable for American homes. Shortly after the Hughes DBS became available, DirecTV launched a home satellite TV service with an 18-inch dish antenna. Given the high level of dissatisfaction with cable TV providers at this time, DirecTV attracted 100,000 customers in its first year. But the cable TV industry, which had become more politically powerful as it had grown, recognized that DBS systems represented a threat to its business. The FCC soon took action to protect the interests of the cable industry, just as it had worked to support the broadcast industry in the early days of cable.

In 1994 the U.S. Congress passed the Satellite Home Viewer Act, which limited the ability of DBS systems to provide their subscribers with access to local TV channels. The law prohibited satellite services from offering programming from the three major broadcast networks—which consistently attracted more viewers than any cable network—except in certain cases. For instance, the satellite systems were allowed to provide broadcast stations to customers who could not receive good reception over the air and had not subscribed to cable TV in the previous six months. These restrictions limited the growth of DBS services and prevented satellite providers from competing against cable systems in most major markets.

Over the next few years, the FCC continued to hear complaints from consumers about problems with cable TV providers, including rate increases and poor customer service. As more people became aware of DBS services, they started demanding that the FCC allow satellite service to compete directly with cable. Congress responded in November 1999 by passing the Satellite Home Viewer Improvement Act, which allowed DBS services to rebroadcast local network signals just like cable providers. The law marked a major defeat for the cable companies and gave the two types of television delivery services equal rights for the first time.

Satellite TV services grew rapidly, especially after the 1999 law removed the restrictions against carrying broadcast network channels. The number of subscribers to DBS systems more than doubled from 8.2 million in 1998 to 17.4 million in 2001. Many new customers switched to DBS from cable because they were dissatisfied with their cable service. By 2003 DBS provided service to more than 20 million American households, to claim 15.6 percent of the market. Meanwhile, the number of cable subscribers declined to 66 million households, or 68.6 percent of the market. Like the cable industry, DBS is dominated by a few large companies. As a result of the high costs in leasing satellites, providing home reception equipment, and acquiring programming, there are only four competitors in the DBS industry. The two largest, DirecTV and EchoStar, control 95 percent of the market.

Cable's impact on American television

Cable television has come a long way since its origins in the late 1940s, when it was used exclusively as a way to expand the reach of traditional over-the-airwaves television broadcasts. In the Museum of Broadcast Communications article "Cable Television," Sharon Strover described cable as a "cultural force" that changed people's concept of television. Far from being a simple retransmission service, cable came to be considered an important form of communication in its own right, and its development led to profound changes in the overall television industry.

In the early 2000s, national cable networks created a huge variety of original programs. Although ABC, NBC, and CBS still produced popular shows, TV viewers could also choose from among hundreds of cable channels that offered news, sports, music, movies, and other forms of entertainment. The cable networks offered programming designed to appeal to specialized interests of small, distinct audiences. The variety of options available on cable also contributed to changes in television viewing habits, by encouraging Americans to surf, or move quickly, across the various channels.

As the quality of cable programming improved, cable channels began to draw more and more viewers away from the broadcast networks. Over the decade from 1983 to 1994, for example, the share of weekly television audiences held by the broadcast networks declined from 69 to 52 percent, while the share held by cable networks increased from 9 to 26 percent. By the 2000s, the cable networks actually earned higher ratings than the broadcast networks in some time periods. Cable channels earned particularly high audience ratings during the summer months, when the broadcast networks typically aired reruns (repeated episodes of programs that had aired earlier). The summer of 2005 marked the fifth year in a row that cable networks had triumphed in the ratings, nearly doubling the audience share earned by the broadcast networks, 60.9 to 32.4.

Despite such successes, however, cable TV continued to face significant challenges in the early twenty-first century. For instance, cable providers continued to face stiff competition from satellite services, which generally offered subscribers more channels and more interactive features than cable. In addition, an increasing number of telephone companies and Internet service providers were expected to enter the television market. Cable operators also experienced ongoing disputes about rates and content, as well as a continuing need to upgrade facilities and equipment.

As of the early 2000s cable TV showed potential for growth, especially in the area of digital services. Digital compression of television signals allows cable systems to offer more channels, superior picture quality, and new interactive services. As a result, the number of subscribers to digital cable services grew from 9.7 million in 2000 to 19.2 million in 2002. Cable companies also expanded their services to provide long-distance telephone calling and Internet access for their customers.

History shows the development of cable TV brought major changes to the television industry. As other players evolved to take advantage of these changes, however, cable companies unexpectedly found themselves struggling to keep up. "The cable industry remade the television world of the 'Big Three' networks, upsetting their hold on programming and viewers and initiating a 24-hour … domain," Strover noted. "As the larger video media industry changes, the cable industry's boundaries, roles, and influences will likewise be reshaped, but the historical legacy of its accomplishments will surely continue to be felt."

For More Information

BOOKS

Auletta, Ken. Media Man: Ted Turner's Improbable Empire. New York: W. W. Norton, 2004.

"Cable and Other Pay Television Services." Encyclopedia of American Industries. Farmington Hills, MI: Gale Group, 2004.

"Cable Television." Encyclopedia of Emerging Industries, 2nd ed. Farmington Hills, MI: Gale Group, 1999.

Davis, L. J. The Billionaire Shell Game: How Cable Baron John Malone and Assorted Corporate Titans Invented a Future Nobody Wanted. New York: Doubleday, 1998.

"Direct Broadcast Satellite Television." Encyclopedia of Emerging Industries, 2nd ed. Farmington Hills, MI: Gale Group, 1999.

Hirshberg, Charles. ESPN 25. New York: Hyperion, 2004.

PERIODICALS

Becker, Anne. "Cable's Summer Slam." Broadcasting and Cable, August 22, 2005, p. 10.

"Cable Television's Long March." The Economist, November 16, 1996, p. 63.

Guss, Greg. "Cult of Personalities." Sport, July 1998, p. 28.

Hill, Lee Alan. "Building a TV Sports Empire: How ESPN Created a Model for Cable Success." Television Week, September 6, 2004, p. 11.

Hoffer, Richard. "Bill Rasmussen." Sports Illustrated, September 19, 1994, p. 120.

Smith, Ralph Lee. "The Wired Nation." The Nation (special issue), May 18, 1970.

Taylor, Chris. "To Dish or Not to Dish." Time, October 28, 2002, p. 70.

WEB SITES

Couzens, Michael. "United States: Networks." Museum of Broadcast Communications. http://www.museum.tv/archives/etv/U/htmlU/unitedstatesn/unitedstatesn.htm (accessed on June 14, 2006).

Strover, Sharon. "United States: Cable Television." Museum of Broadcast Communications, http://www.museum.tv/archives/etv/U/htmlU/unitedstatesc/unitedstatesc.htm (accessed on June 14, 2006).

"Wired, Zapped, and Beamed: 1960s through 1980s" and "Digitally Networked: 1990s through Today." FCC History Project. http://www.fcc.gov/omd/history/tv/ (accessed on June 14, 2006).