Vertical integration in cable television

by David Waterman

Vertical ownership ties between cable television programming suppliers, such as CNN, HBO, and the Discovery Channel, and multiple cable television system operators, such as Time Warner and TCI, have become extensive. Many claim that such ownership ties reduce programming diversity, restrict entry of competitors to cable, such as local telephone exchange carriers or direct broadcast satellites, or have other socially undesirable effects. David Waterman and Andrew A. Weiss address those and related issues from an economic perspective. On the basis of that analysis, they conclude that to the extent there are economic or other social problems with the cable television industry's performance, policy solutions to those problems lie not with regulatory or other constraints on vertical ownership but with reducing the horizontal market power of the multiple cable television system operators. In a postscript the authors evaluate the Federal Trade Commission's approval of the Time Warner-Turner B