'Narrowcasting' on Cable Television: A Program Choice Model.

Previous economic models suggested that, due to the high channel capacity of cable technology and its capability of pricing television programs directly to the viewers, its diffusion would promote specialized "narrow appeal" programming designed to serve relatively small audience segments. While this has clearly occurred, these models do not account for other developments, such as cable's function as an aftermarket or foremarket for increasingly expensive dramatic programming, the frequent repetition of programs on cable, and the extreme contrasts in audience sizes and production budgets that characterize cable and broadcast programs. This paper summarizes relevant data and then offers a modified "program choice" model in order to explain these phenomena. In this version, decision-makers not only select among program types, but can vary production expenditures and exhibit programs more than once. Under these assumptions, direct pricing mechanisms and new channel capacity are shown to induce a monopoly cable operator not to fragment audiences by offering more specialized programs, but to increase production investments for "mass appeal,""lowest common denominator" programs. Twelve figures are included, and a discussion of the effects of a shift from advertiser to pay support on continuous demand and production functions is appended. (14 references) (Author/EW)