Basic Networks

The majority of channels on most cable systems are devoted to basic cable networks. These are termed “basic” because the subscriber can obtain a large number of them for a relatively low price. The following are some of the most popular basic cable networks in the United States:

Arts and Entertainment (A&E): cultural fiction and non fiction.

Black Entertainment Television (BET): talk shows, children’s programs, game shows, and other fare particularly aimed at people of color.

Bravo: cultural programming.
Cable News Network (CNN): 24 hours a day of news and information.
Comedy Central: situation comedies, stand-up comedians, comedy movies, and similar fare.
Consumer News and Business Channel (CNBC): primarily business news.
Courtroom Television: coverage of cases being tried in the courts and other programming related to the justice system.
C-SPAN: coverage of Congress and other political bodies and events.
The Discovery Channel: documentaries and in formational programming.
E! Entertainment Television: programming by and about the entertainment industry. ESPN: 24-hour sports programming.
The Family Channel: wholesome programming including reruns of older commercial TV series.
The Food Channel: cooking shows and other information about food

The Learning Channel (TLC): formal college credit courses and general education material.
Lifetime Television: information and entertainment shows aimed primarily at women.
MTV: music videos and music-related material aimed at teenagers.
Nickelodeon: children’s and family programming. QVC Network: a home shopping service.
Turner Network TV (TNT): old movies and some original programming.
TVLand: reruns of previous network television shows. USA Network: a general service that includes network reruns, children’s programs, and originally produced material.
VH-1: primarily music videos and music shows aimed at post-adolescent viewers.
The Weather Channel: 24 hours a day of weather information.

Most basic cable networks charge the cable systems for their service. The fee is based on the number of subscribers the cable system has. A typical basic network charges a cable system an amount between 3 and 25 cents per month per subscriber, depending on its popularity. ESPN, for example, can charge more than TVLand.

The systems must recoup their expenses, and potentially garner some profit, by selling the cable TV service to consumer households. Most cable systems offer a “basic service” as a package to their subscribers. This includes all local origination and public access channels, all local broadcast stations, and all basic networks for a cost of about $20 a month. Some cable systems divide this basic package into two or more “tiers.” They offer local origination, public access, local broadcast stations, and some of the public service and less glamorous basic networks (C-SPAN, The Learning Channel) for a very inexpensive price, about $5. The second, and more expensive, tier may include MTV, ESPN, USA, A&E, and other more entertainment-oriented basic networks.

Most basic networks sell advertising. As a result they have two sources of income: cable system subscriber fees and fees paid by advertisers. Cable advertising rates are not as high as those for commercial U.S. networks such as NBC, ABC, or CBS because cable audiences are not as large. Most cable networks are delighted if they obtain a rating of 4, whereas commercial network program ratings tend to be in the 11-to-15 range. One reason cable network audiences are smaller is that many cable networks program for relatively specific audiences: Lifetime to women, ESPN to sports fans, Nickelodeon to children.

Among the basic networks, there is considerable variation in operating procedure. C-SPAN, which features the proceedings of the U.S. House and Senate, is noncommercial. All revenue comes from money paid to it by the cable systems. The home shopping networks, which make their money because viewers call in and buy the products shown, are usually provided to cable systems free of charge. As an initial enticement to try their material, networks sometimes pay systems to carry their programming. If the system later decides to carry the network on a regular basis, the system must start paying the network.

In addition to “moving picture” networks, other services are offered to cable systems as part of the basic package. These include digital sound services such as Music Choice and electronic text services such as news bulletins from Associated Press and Reuters.

Some basic channels produce most of their own programming. ESPN, for example, provides its own coverage of sporting events, and CNN produces its own newscasts. The same applies to C-SPAN, Courtroom Television, the Weather Channel, and the home shopping channels. Many networks, however, acquire programming from other sources. Lifetime, the Family Channel, Nickelodeon, and others often contract with independent producers to develop movies or series for them, a practice that has become more common as channels seek to provide original programming. Even sports, music, and court channels now sometimes offer original movies and series. Other channels obtain movies from the major motion picture studios. A&E and Discovery buy some of their programming from the British Broadcasting Corporation (BBC). Many channels program old commercial network series. USA Network, for example, has programmed Murder, She Wrote and Lifetime has used Cagney and Lacey in addition to programming an expanding array of original movies and series. In a few instances, cable networks have picked up commercial series canceled by the major broadcast networks (Paper Chase, The Days and Nights of Molly Dodd ), produced new episodes, and aired them as a series.

Pay Networks

Pay-cable networks, such as HBO, the Movie Channel, Showtime, and Cinemax, do not sell advertising. They derive all income from the cable systems that carry them. The systems, in turn, charge consumers subscription fees for each pay network, usually at a rate of $10 to $20 per month per pay service. In other words, the pay services are on a more expensive tier than basic services. The systems and the networks divide the consumer fee, usually about 50-50, but this ratio is subject to negotiation. Consumers who do not subscribe to the pay services receive scrambled signals on channels occupied by those services. To justify their additional monthly fees, pay channels must offer subscribers programming or services they cannot receive for free. Most of these channels present feature films. The pay networks purchase rights from motion picture studios that allow these channels to show feature films shortly after their theatrical runs and prior to their availability to broadcast networks. Such networks show the films uncut and without commercial interruptions. To many viewers, this programming policy is worth the extra dollars they pay each month. Some pay channels also offer commercial-free specials such as sporting events, documentaries, miniseries, comedy specials, music concerts, and original movies created for the pay service. Some of the channels, primarily HBO and Showtime, cablecast their own television series, either by producing them in-house or by obtaining them from outside production companies. Such programs usually contain language or themes that commercial networks do not present to their larger, general audiences. Notable among these series are The Sopranos, Sex in the City, and Six Feet Under, all on HBO.

Pay-per-View Networks

Of all forms of cable networks, pay-per-view networks are the newest, and therefore the most unsettled. With these systems, subscribers pay only for those programs they actually watch. If they have not paid for a particular program, a scrambled signal appears on the pay-per-view channel. The network and the system divide the subscriber fees, based on a negotiated percentage. The subscriber pays what the market will bear. Movies can be seen for a few dollars, while major sports events may have a price tag in the $20-to-$50 range.

Most cable systems that offer pay-per-view programming employ addressable technology that allows for interaction. Viewers who want to see a particular program can press a button on a remote control device that sends a signal back through the wire to the cable system. The program is then unscrambled or otherwise made viewable by the consumer. A computer also notes that the subscriber should be billed for the program, and the cost is added to the monthly amount the subscriber must pay. Systems without addressable technology can operate pay-per-view options by having subscribers call a toll-free number to order a particular program, but the instant access provided by the remote control works better.

Some pay-per-view services program 24 hours a day. They mainly show newly released hit movies, but they also present sports and entertainment specials. Other pay-per-view networks cablecast on an asneeded basis. For example, VideoSeat Pay-Per-View shows only football games from some of the top universities. Playboy at Night cablecasts each evening and is the oldest of the services that are now pay-per-view. It was originally a pay-cable service, but many community groups objected to the “adult entertainment” content of the material. They pointed out that if parents subscribed to the Playboy Channel on a monthly basis, unsupervised children could easily tune in—accidentally or on purpose. As a pay-per-view option, each Playboy program must be specifically requested.

By the early 21st century, many pay-per-view networks were turning into near-video-on-demand (NVOD) services. These networks occupy a number of cable system channels, so they can show the same moves at different times, usually 15 minutes apart. That way a viewer who wants to see the movie but misses the 8:00 P.M. starting time on channel 48 can catch it on channel 49 starting at 8:15.

An even tighter programming form, video-on-demand (VOD), is in the experimental stages. With this service, individual viewers can watch programs precisely when they want to. As of 2002, a large number of video-on-demand experiments were under way, most of which involved a large server at the cable system that contains an enormous amount of information: movies, TV programs, video games, and so on. When a consumer asks for a particular movie (or anything else), it is downloaded on one of the cable system channels into a digital box on top of the consumer’s TV set. (The movie, of course, also remains in the cable server so that another customer can request and receive it.) The consumer can then play the movie, stop it, rewind, and fast-forward at will.

Regional Networks

Regional networks that supply programming to a limited geographic area are fairly numerous in the cable world. Almost all of them are sports- or news-oriented (e.g., Home Team Sports, Madison Square Garden Network, and New York 1 News). Regional sports networks are active only when games are in progress, but most of the news services provide 24 hours a day of regional news information. Some of these news services are operated in conjunction with a local newspaper or local TV station.

Even though they contain advertisements, some regional sports networks are considered pay or pay-perview services. The placement of such sports channels in the “basic” or “pay” category usually depends on the particular system. Some systems juggle regional sports networks between basic and pay. If the system can obtain greater revenue by offering a pay service, it may do so. If there is little interest among consumers, the network is placed in the basic tier.

History

The first cable network was Home Box Office (HBO). This service was established in 1972 by Time, Inc., as a movie/special service for Time’s local cable system in New York City. The company then decided to expand the service to other cable systems and set up a traditional broadcast-style microwave link to a cable system in Wilkes-Barre, Pennsylvania. In November 1972, HBO sent its first programming from New York to Wilkes-Barre. During the next several years, HBO expanded its microwave system to include about 14 cable companies The venture was not overly successful, nor was it profitable for Time.

In 1975, however, shortly after domestic satellites were launched, Time used satellite transmission from Manila to program the Muhammad Ali–Joe Frazier heavyweight championship match for two of its U.S. cable systems. The experiment was technically and financially successful, and HBO decided to distribute all its programming by satellite. The satellite distribution system was easier and cheaper than the microwave system. It also made it possible for HBO signals to be received throughout the United States by any cable system willing and able to buy an Earth station satellite-receiving dish.

HBO began marketing its service to cable systems across the United States, but this effort initially was not very successful. Few local systems were willing to pay the almost $150,000 required for the technology required to receive the signal. However, satellite technology changed quickly, and by 1977 dishes sold for less than $10,000. Other pricing and programming problems had to be overcome as well, but once the service reached consumers, it was readily accepted. Viewers were willing to pay to watch uncut movies without commercial interruptions. By October 1977, Time was able to announce that HBO had turned its first profit.

Shortly after HBO beamed onto the satellite, Ted Turner, who owned WTBS, a low-rated UHF station in Atlanta, Georgia, decided to put his station’s signal on the same satellite as HBO. Cable operators who had installed a receiving dish for HBO could now also place Turner’s station, complete with network reruns and the Atlanta Braves baseball games, on one of their channels. A company transmitting the station charged cable operators 10 cents a month per subscriber for the signal, but the systems provided WTBS free to their subscribers. The rationale for presenting the station in this manner was that the extra program service would entice more subscribers. The charge to the cable companies did not cover WTBS’s own costs, but the station was now able to set higher advertising rates because its audience was spread over the entire United States.

With two successful programming services on the satellite, the floodgates opened, and many other companies set up cable networks. Viacom launched a pay-cable service, Showtime, to compete with HBO. Like Time, Viacom owned various cable systems throughout the United States and had been feeding them movies and special events through a network that involved shipping the tapes by mail for microwave relay. Following the launch of Showtime, Warner Amex began the Movie Channel, a pay service that provided movies 24 hours a day. Not to be outdone, Time established a second network, Cinemax, a service that consisted mostly of movies, programmed at times complementary to HBO. Other pay services that sprung up were Galavision, a Spanish-language movie service; Spotlight, a Times Mirror movie service; Bravo and the Entertainment Channel, both cultural programming services; and Playboy, an adult service that entered the cable business by joining forces with an already established network, Escapade.

Services that accepted commercials (later to be known as basic services) also exploded in number. ESPN was an early entry, and its sports programming was much in demand. Other basic services that appeared by the early 1980s were CNN (also owned by Turner), the Christian Broadcasting Network (CBN), USA, MTV, and C-SPAN. Two basic cultural services were formed: one, owned by ABC, was called ARTS; the other was CBS Cable, a service very expensive for its broadcast-network owner because it featured a great deal of originally produced material. Satellite News Channel (SNC), a 24-hour news joint venture between Westinghouse and ABC, was established to compete with CNN. Daytime was a service geared toward women, and Cable Health Network programmed material dealing with physical and mental health.

For several years in the early 1980s, new pay and basic networks were announced at a rapid rate—sometimes several in one day. Some of these never materialized and some existed only for short periods, but many showed signs of longevity. The entire cable TV industry was growing. Revenues and profits increased by more than 100 percent a year.

Of course, this could not last forever. In the mid- 1980s, cable growth began to decline and the entire cable industry went through a period of retrenchment. Many cable networks consolidated or went out of business. Both Galavision and Bravo converted from pay services to basic services. Spotlight went out of business. The Entertainment Channel turned its pay programming over to the basic network ARTS, which then became A&E. The Playboy Channel shifted programming between hard-core and soft pornography, caught between angry citizens who objected to televised nudity and a small but loyal group of viewers who wanted access to it. This shifting strategy angered its partner, Escapade, and the two parted company, with Playboy paying Escapade $3 million. MTV’s ownership changed from Warner Amex to Viacom, as did Nickelodeon’s. Getty Oil, which owned ESPN, was purchased by Texaco. The new owner had no interest in the sports network and sold it to ABC. CBN changed from a strictly religious format to a broader, family-oriented format and became the Family Channel. Daytime and Cable Health Network joined to form Lifetime.

The most highly touted failure was that of the CBS- owned cultural channel, CBS Cable, which ended programming in 1983 after losing $50 million. The service did not receive sufficient financial support from either subscribers or advertisers. Its demise was almost applauded by some cable companies that resented the encroachment of the broadcast networks into their business. Another well-publicized coup occurred when Ted Turner’s CNN bought out the Westinghouse/ABC Satellite News Channel. This transaction meant less competition for CNN, which proceeded on less tenuous financial footing. The Turner organization then established CNN2, a headline service that used the same writers and reporters as the original CNN.

Very few new U.S. cable networks were introduced in the mid- to late 1980s, in part because many cable systems had filled all their channels and had no room for newcomers. One notable exception was the Discovery Channel, launched in 1985, which became quite successful.

The U.S. cable network landscape changed somewhat in the 1990s. The downsizing of the late 1980s allowed for moderate growth in the next decade. In addition, in 1992 Congress passed a bill requiring cable networks to sell their programming to services in competition with cable, such as direct broadcast satellite (DBS) and multichannel multipoint distribution service (MMDS). Prior to this time, cable systems had tried to keep cable network programming to themselves. In fact, many cable system owners also owned all or part of cable networks, making it convenient and financially rewarding to make sure their cable networks provided content for their own cable systems. For example, TCI (Telecommunications, Inc.), at that time the largest cable system owner, had a financial stake in American Movie Classics, Black Entertainment Television, CNN, the Discovery Channel, the Family Channel, QVC Home Shopping, Turner Network TV, and WTBS.

Technology also improved in the 1990s and 2000s. A digitally based technology called “compression” allows video and audio to be squeezed into a much smaller space than previously possible. When compressed video is delivered over fiber optics, many more channels can be brought into the home, upwards of 500. Although not many cable systems have 500 channels, many have rebuilt their systems so that they have more than 100. The systems must find some way to fill all those channels, and with new markets and new technologies in mind, a number of companies launched new networks.

Although a few of the newer channels, such as the Military Channel, come from companies with no experience in the cable TV business, most of the channels are run by well-established companies that operate other channels. These companies have the infrastructure to develop and sell channels that will have only small numbers of interested viewers. For example, a new Do-It-Yourself channel that programs primarily information about remodeling homes was started by the same company that owns the Food Channel. Noggin, an educational channel, comes from Viacom, which also has Nickelodeon.

Often, the channels are just repackaged programs of another channel. For example, Discovery has reorganized the material it has broadcast over the years into channels dealing with such subjects as science, health, animals, and children—each of which is a new channel. Lifetime created an offspring, Lifetime Movies, which shows various made-for-television movies previously shown on the parent channel.

Another way cable systems are looking to utilize their expanded channels is through video-on-demand and near-video-on-demand. Some pay-per-view channels, such as HBO, have a form of NVOD in that they distribute multiple versions of their programming over different channels. Some of this variation is to accommodate different time zones, but it also gives viewers flexibility as to when they watch the program material. True VOD is not widespread as yet, but it is on the horizon.

The changes in both technology and policy will continue to keep cable television services at the center of issues surrounding television. Just as early cable networks transformed the meaning and experience of television programming and viewing, the newer practices will undoubtedly continue to alter our understanding and use of the television medium.