Blue Skies
Blue Skies
A History of Cable Television

Cable television is arguably the dominant mass media technology in the U.S. today. Blue Skies traces its history in detail, depicting the important events and people that shaped its development, from the precursors of cable TV in the 1920s and '30s to the first community antenna systems in the 1950s, and from the creation of the national satellite-distributed cable networks in the 1970s to the current incarnation of "info-structure" that dominates our lives. Author Patrick Parsons also considers the ways that economics, public perception, public policy, entrepreneurial personalities, the social construction of the possibilities of cable, and simple chance all influenced the development of cable TV. Since the 1960s, one of the pervasive visions of "cable" has been of a ubiquitous, flexible, interactive communications system capable of providing news, information, entertainment, diverse local programming, and even social services. That set of utopian hopes became known as the "Blue Sky" vision of cable television, from which the book takes its title. Thoroughly documented and carefully researched, yet lively, occasionally humorous, and consistently insightful, Blue Skies is the genealogy of our media society.

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excerpt the basic commodity offered by CATV was highly prized. As noted earlier, demand, especially in CATV’s early days, often out- stripped supply. No matter how many channels were available in a given community, the public has always been interested in more, especially when “more” meant not just more of the same, but more choice and greater vari- ety. This has always been the foundation stone upon which cable television has built. 191 on 2/2/2020, 6:50:02 PM

excerpt In the early 1960s, however, the idea that the television universe might some day encompass 100 or more special interest, advertiser-supported chan- nels was within reach of only a few far-sighted individuals. For most of the viewing public, just getting all three networks was an eagerly anticipated event. Because of the FCC’s allocation policy and the technical and finan- cial difficulties that retarded UHF development, 30 percent of the country received only one over-the-air signal by 1961, and 60 percent of the country could receive only two broadcast TV signals.49 Even by 1965, only 544 com- mercial stations were on the air; another 1,171 available licenses, most of them UHF, went wanting.50 Nine states still lacked a full three-station mar- ket, fourteen states had only one three-station city.51 Of the 253 TV markets in the continental United States, only ninety-three had three or more stations; 172 had one or two stations, and more than half of them just one. 191 on 2/2/2020, 6:50:49 PM

excerpt The marketability of cable’s only real commodity, retransmitted broadcast signals, was restricted to those commu- nities without full access to broadcast television. And cable in the early 1960s was beginning to saturate its coverage of underserved areas. Communities without adequate broadcast TV coverage were being quickly claimed and wired. The remaining isolated rural areas and farmhouses were too widely dispersed to make service economically feasible. Moreover, as the number of operational TV stations increased, the demand for cable decreased. In cities with a full complement of network affiliates, cable could attract customers only by importing regional, independent stations (those stations not affiliated with a network). 197 on 2/2/2020, 6:53:11 PM

references Carnegie Commission on Educational Television on 2/2/2020, 6:59:05 PM

excerpt According to the paper, which became known as the “Rostow Report,” direct broadcast satellites were technically and economically infeasible, and established terrestrial broadcaster were too constrained by limited chan- nel capacity to provide for the program breadth necessary to serve public needs.37 Cable television, with its multichannel capacity was the key to the future... 244 on 2/2/2020, 7:00:20 PM

references On the Cable on 2/2/2020, 7:01:07 PM

excerpt By the late 1960s, the most advanced dual cable technology could handle forty to perhaps fifty channels, a very large number in comparison with the existing over-the-air service, but still nowhere near the exuberant claims of some writers and analysts. More importantly, technological capacity did not translate into direct application. Television Factbook’s annual survey of ca- ble in 1970 showed only 86 of the nation’s 2,490 system were capable of programming more than twelve channels 246 on 2/2/2020, 7:02:03 PM

excerpt In October 1969, the Commission more than extended that license. In keeping with the developing construction of cable as a local communications utility, the FCC ordered all cable systems with 3,500 or more subscribers to create a channel for local origination programming.82 Part of the rationale was the value of cable as a means of local community ex- pression, especially in service to minority interests. The programming could not be of the automated “time and temperature” variety, and operators were urged to avoid mass appeal fare common to network broadcasting. The Equal Time and Fairness Doctrine requirements of the broadcast industry were also applied. Again, the language used by the Commission was revealing. Cable operators who produced their own material were dubbed “cablecasters,” active participants in the nation’s telecommunications system. The FCC’s cablecasters were allowed to sell advertising on the local channel, revers- ing the earlier prohibition. But bowing to pressure from broadcasters who opposed any form of cable origination, the FCC limited the flexibility of commercial insertions. Advertising could only come at the beginning or end of programming or during “natural breaks” within the cablecast. 257 on 2/2/2020, 7:04:07 PM

excerpt According to an A. C. Nielsen, cable penetration by November 1969 was heaviest in the small towns and barely existent in the largest. 275 on 2/2/2020, 7:06:45 PM

excerpt The Commission determined that the broad- cast networks exerted too much control over prime time programming and, in 1970, enacted a set of rules designed to open the programming market- place. The Prime Time Access Rule (PTAR) limited networks from providing more than three hours of prime time programming a night, in effect opening a half hour (from 7:30 to 8:00 pm Eastern Time) to non-network providers. 280 on 2/2/2020, 7:08:02 PM

excerpt The hope that operators could attract national advertising was simply unrealistic until the advent of system interconnection and the amalgamation of audiences of national scope. The message from country’s large advertising agencies, in essence, was “when you have the numbers, we’ll talk.” 304 on 2/2/2020, 7:12:28 PM

excerpt Despite the Commission’s public service goals, of course, the cable in- dustry’s interest in interconnection had little to do with the advancement of social welfare. It had everything to do with the advancement of the eco- nomic well-being of the cable system operators. As NCTA’s Frederick Ford and others understood, cable’s future lay in interconnection. Only by spread- ing production costs across a national audience could sufficient revenue be generated to make alternative programming possible. The practical methods of national distribution were limited, however. To the extent that any na- tionwide distribution system existed at the time, it consisted largely in the physical transport of films and videotapes, usually by mail or messenger ser- vice, a process known as “bicycling.” The only feasible alternative was cable’s off-stage nemesis, AT&T. The telephone company owned and operated the nation’s only true network of linked telecommunications facilities. Leasing long lines and microwave services from Bell was unappealingly expensive, however. In the mid-1960s, the three broadcast networks were paying AT&T about $50 million a year in networking fees, a figure that doubled by the early 1970s.30 The broadcasters were also tying together fewer broadcast outlets and using fewer channels than was envisioned in some of the cable proposals 308 on 2/2/2020, 7:13:36 PM

excerpt That kind of desperate concern, although manifest in less public ways, was endemic throughout the cable industry between 1973 and 1975. Na- tional penetration in 1975 was only 13 percent and it was not clear that it would climb much higher. Cable television was failing in the major markets. TelePrompTer’s Bill Bresnan summed it up many years later. “At that time, the industry was dying. The rural areas were wired and we were moving to the urban markets, but we didn’t have things to give people that they could get without cable.” 320 on 2/2/2020, 7:14:48 PM

excerpt Specialty audiences could be aggregated across the country sufficiently large to justify economically the targeted programming.85 Johnson noted that such a system would “tend to erode and fragment existing large audiences enjoyed by particular programs today” but the trade-off would be expanded viewer choice. 326 on 2/2/2020, 7:16:09 PM

excerpt The Commission also initiated, in 1978, a special staff investigation into the dominance of television by the three major networks.73 The two-year study would conclude with a recommendation that the Commission en- courage alternative TV distribution systems, including cable television, as a method of bringing greater TV diversity to the public. 363 on 2/2/2020, 7:20:33 PM

excerpt More than 4,000 cable systems were in operation in the United States by 1980, but public attention focused on fewer than fifty situated in top markets where two thirds of the nation’s potential subscriber pool resided. 404 on 2/2/2020, 7:22:10 PM

excerpt In system construction, the race was to secure a presence in the finite markets of urban America. In programming, would-be cable networks confronted a scarcity of both satellite transponders and cable system channel capacity. Three cable satellites—Satcom IIIR, Comstar D-2, and Westar III—were in operation at the beginning of 1982, hosting a total of about thirty-five channels. 448 on 2/2/2020, 7:23:49 PM

excerpt For basic, advertiser-supported services, advertising revenue was a ne- cessity and a problem. The advertising community, entrenched in its own routinized pattern of business practice, gave little heed to the nascent cable programming community, at both the national and local level. Audience fig- ures were assumed to be tiny in comparison to the traditional broadcast net- works, although the exact number of people watching was unclear because accurate methods of measuring the new audience were not yet well estab- lished. In fact, one of the greatest problems confronting cable was the lack of good audience data, which advertisers nationally and locally demanded. In 1981, the industry established the Cable Advertising Bureau (CAB); its mission in part, to help solve such problems. Advertisers, nonetheless, were loath to put large sums of money into, at-best, soft figures, so advertising dol- lars that went to cable were often experiments, insurance, or afterthoughts, and always a small part of the overall ad budget. Total cable industry adver- tising revenue grew from $58 million in 1980 to $595 million by 1984, but this was still a fraction of the broadcast ad revenue, more than $18 billion in 1984. 449 on 2/2/2020, 7:24:54 PM

excerpt CNN on 2/2/2020, 7:26:41 PM

quote There are only four things that television does, Reese. It does movies, and HBO has beaten me to that. It does sports, and now ESPN’s got that. There’s the regular kind of stuff, and the three networks have beaten me to that. All that’s left is news! And I’ve got to get there before anybody else does, or I’m gonna be shut out. on 2/2/2020, 7:27:50 PM

note The FCC banned broadcast networks from owning cable stations. CBS had to spin out its efforts in the space -- which became Viacom. on 2/2/2020, 7:30:08 PM

note There was a freeze on new cable installations (or something?) in the 1970s. on 2/2/2020, 7:30:48 PM

excerpt The FCC’s 1970 financial interest and syndication (fin-syn) rules (see Chapter 6) were intended to break the network’s oligopoly on the creation and ownership of national prime time programming. 457 on 2/2/2020, 7:31:30 PM

excerpt CNN’s reputation for quick reaction to breaking news and lengthy follow-up coverage grew in harness with its penetration rates. By 1991, cable was in 60 percent of the nation’s TV homes. At the turn of the decade, when a major story broke, more than half the country could turn immediately to CNN, and the country made full use of the opportunity in the first month of that year. 481 on 2/2/2020, 7:34:21 PM

excerpt Cable, with its expanding menu of specialty programming, also made substantial gains in mid and smaller markets that had not been thought to be financially attractive when cable was only a retransmission service. The number of cable systems nationwide more than doubled, from a reported 4,225 in 1980 to 9,575 by 1990. 484 on 2/2/2020, 7:35:14 PM

excerpt The foundation for cable’s success was, as it had been from the start, the ability to offer more TV content and greater program variety, and this, in turn, was made possible by steady, incremental improvements in technology. New construction in the early and mid-1980s was typically 400 MHz, about fifty to fifty-four channels. In 1984, Times Fibre introduced a full line of 600-MHz equipment (in practice 550 MHz), and two years later a line of 1- GHz technology. By 1987, the standard for new rebuilt systems in the larger markets was 550 MHz, about seventy to eighty channels (although smaller markets usually upgraded to 400-MHz equipment). In 1983, only about 180 cable systems in the country had fifty-four channels or more; that figure rose to nearly 1,000 by the end of the decade 484 on 2/2/2020, 7:36:07 PM

excerpt As the coaxial line snapped into home after home and people turned with more frequency to MTV, CNN, and ESPN, the big three broadcast networks began feeling the squeeze of technological displacement. Viewers voted with their remote controls; ratings and “share” increased for cable and began a slow but unwavering trek southward for the broadcast networks.19 The combined prime-time share for ABC, NBC, and CBS fell from above 90 percent in 1977 to 74 percent in 1986 and 62 percent in 1990. 488 on 2/2/2020, 7:36:57 PM

excerpt Audience erosion did not automatically translate into a decline in net- work advertising revenue. Some national advertising money was beginning to move to cable, from about $487 million in 1984 to just over $2 billion by 1991. But the advertising industry was habituated to network television and was yet to be convinced of cable’s reach or power. Moreover, a booming economy in the 1980s and 1990s helped fuel spiraling advertising rates for the networks. Total advertising revenue for the big three networks continued to climb, generally, through the 1980s, from a total of about $5 billion in 1980 to more than $10 billion in 1990.22 At the same time, those revenues, when adjust for inflation remained fairly flat, and in 1985 actually took a small dip,23 the first such decline since 1971 when cigarette advertising was banned from broadcasting. The expanding economy helped sustain the networks, but not in the same grand manner as the television oligopoly of prior decades. Network expenses remained high so profitability slackened. In 1986, CBS profits declined 30 percent despite draconian cost cutting and personnel reductions at the Tiffany network. In 1991, NBC publicly claimed that all three networks were losing money. By the early 1990s, the broadcast networks were becoming increasingly sensitive to advertiser complaints about ballooning rates in the face of declin- ing audiences. The networks defended themselves, explaining that, although they admittedly were no longer the only television game in town, they were still the most heavily viewed of all the available networks, and given their reach, history, and quality programming, deserved the premium they charged in ad rates. The pitch became less convincing with every drop in share point, however. 489 on 2/2/2020, 7:38:17 PM

excerpt An important part of the heritage was a belief that broadcasting, es- pecially network broadcasting, was a public trust and the control of NBC, CBS, and ABC carried with it a social responsibility not associated with other businesses. The corporate culture was not unalloyed. It was, in fact, fed by the immense profits that came with the broadcasting oligopoly. Through the 1970s, the heads of the big three could easily afford to be prosocial and culturally magnanimous. By the mid-1980s, however, the historic dom- inance of the major networks was, at least in the eyes of many, coming into jeopardy. The change was in part generational. The men and women who had built broadcasting (and cable), especially the veterans of World War II, were moving into the twilight of their careers, retiring or looking to do so.49 These pioneers often took seriously the social responsibility frequently attached to radio and television. Now, their sons and daughters were moving in to the corporate boardrooms, a generation schooled more on MBA programs, bottom-line goals, and in too many cases, a sense of personal entitlement. The new generation was much more likely to see the business as just that, a business, not significantly different from selling paper towels or washing machines. 502 on 2/2/2020, 7:40:35 PM

excerpt Penetration grew from 61.5 percent to 66.7 percent between 1992 and 1996; revenue climbed from about $20.7 billion to almost $25.7 billion. Channel capacity continued to expand. Most cable viewers had access to well over thirty channels, 14 percent of all subscribers could view up to ninety channels. The public continued to watch ever-increasing amounts of cable programming while ratings for broadcast TV slipped a notch in almost every quarter. In cable households, viewing of broadcast network affiliates fell from a forty-six share in the 1992–1993 season to less than a forty share in the 1996–1997 season, while primetime aggregate viewing of cable networks rose to a little less than seventeen and the basic cable share for the year rose to thirty. 587 on 2/2/2020, 7:47:41 PM

excerpt By 1990, the broadcast networks were feeling the pinch. As noted above, cable was fragmenting the audience and broadcast ratings were eroding. Programming costs, at the same time, continued to escalate. The networks responded along a variety of fronts. While they were no longer the only tele- vision game in town, they remained the largest. No single cable channel could offer the national coverage of NBC, CBS, or ABC. The combined primetime ratings of the top twenty basic cable networks in 1995 was only 22.4, less than half that of the combined ratings for the three broadcast networks.57 The USA network, consistently one of the most watched cable channels, drew a rating of only about 2.3. Entrenched industry practice worked in the networks’ favor as well. Advertising planners who determined where to place ads for national clients found calculating total reach across various fragmented cable programming bases difficult and foreign. Buying network time was the known, comfortable, conservative, and easy route. Demand for network ad space, driven by an expanding economy and especially in the mid-1990s the dot-com bubble, therefore grew. The networks raised ad rates about 15 percent annually through the mid-1990s, far outstripping the pace of inflation. 622 on 2/2/2020, 7:53:09 PM

excerpt By 2000, the NCTA listed more than 300 premium and advertiser-supported cable networks available for local distribution. 691 on 2/16/2020, 8:42:14 PM

excerpt Researchers discovered in the 1980s that viewers typically settled into a routine of viewing a dozen or fewer channels, what was labeled the individ- ual’s “channel repertoire.”77 But that repertoire was distinct to each person, and very much not the 1960s experience of a nationally shared TV menu served up by ABC, CBS, and NBC. 691 on 2/16/2020, 8:42:28 PM

excerpt Programmers sought market niches to dominate, starting in the early 1980s. Those niches needed to be sufficiently small to be substantively dis- tinguished from existing alternative programmers, but also sufficiently large to sustain the financial requirements of national production. The program- matic homesteading of hard news by CNN, children’s TV by Nickelodeon, and sports by ESPN were among the dominant examples. 691 on 2/16/2020, 8:42:42 PM

excerpt In an effort to separate themselves from the competition and extend exiting audience bases, programmers also pushed the boundaries of taste and culture that historically had circumscribed the limits of acceptability in U.S. television, and before that radio. Topics, language, and visual material that once had been unacceptable to regulators and to many television consumers began to seep into the programming mix. What viewers began watching on cable in the 1980s, in substance and style, was often radically different from the programming of television’s first two decades, arguably a consequence of changing cultural values, but also encouraged by the new economics of cable television. 691 on 2/16/2020, 8:43:01 PM