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 NEWS  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  This  is  an  unofficial  announcement  of  Commission  action.  Release  of  the  full  text  of  a  Commission  order  constitutes  official  action.  See  MCI  v.  FCC.  515  F  2d  385  (D.  C.  Circ  1974).  News  Media  Information  202  /  418-  0500  Internet:  http://  www.  fcc.  gov  TTY:  1-  888-  835-  5322 
 FOR  IMMEDIATE  RELEASE:  News  Media  contact:  June  3,  2002  David  Fiske  at  (202)  418-  0513 
 FCC  RELEASES  STUDY  ON  HORIZONTAL  CONCENTRATION  IN  THE  CABLE  TELEVISION  INDUSTRY 
 Study  Examines  the  Relationship  Between  Changes  in  Horizontal  Concentration  and  the  Flow  of  Programming  to  Viewers 
 Washington,  D.  C.  –  The  Federal  Communications  Commission’s  Office  of  Plans  and  Policy  (OPP)  today  released  OPP  Working  Paper  No.  35,  “Horizontal  Concentration  in  the  Cable 
 Television  Industry:  An  Experimental  Analysis.”  Written  by  Mark  Bykowsky  and  William  Sharkey  of  OPP  and  by  Anthony  Kwasnica  of  Pennsylvania  State  University,  the  paper  examines 
 the  effects  of  changes  in  horizontal  concentration  among  cable  operators  on  the  flow  of  video  programming  to  consumers.  Also  released  today  are  the  data  upon  which  the  study’s 
 conclusions  are  based. 
 OPP  periodically  issues  working  papers  on  emerging  issues  in  communications  in  order  to  stimulate  debate.  These  papers  represent  the  individual  views  of  their  authors  and  do  not 
 necessarily  reflect  the  views  of  the  FCC,  any  FCC  commissioner,  or  other  staff. 
 The  paper  uses  experimental  economics,  introducing  a  new  approach  in  analyzing  important  telecommunications  public  policy  issues.  Under  this  approach,  the  interactions  among 
 market  participants  (e.  g.,  programming  networks  and  multichannel  video  program  distributors  (“  MVPDs”))  are  examined  in  a  controlled  laboratory  setting.  These  interactions  occurred  in  an 
 “experimental  market”  that  attempts  to  parallel  the  market  in  which  programming  networks  (i.  e.,  sellers)  and  MVPD  service  providers  (i.  e.,  buyers)  negotiate  the  price  terms  (“  affiliate  fees.”) 
 under  which  the  latter  obtain  the  right  to  distribute  the  formers’  programming.  A  series  of  experiments  were  conducted  using  real  “subjects”  that  faced  incentives  similar  to  those  that 
 participants  in  the  actual  market  face.  Experiments  examined,  among  other  things,  the  effects  of  changes  in  the  level  of  horizontal  concentration  among  cable  operators.  Three  different 
 experimental  “treatments”  were  considered,  in  which  the  largest  cable  operator  served,  respectively,  27%,  44%,  and  51%  of  the  MVPD  market.  Different  measures  were  used  to  assess 
 performance,  including  buyer  bargaining  power  and  seller  profits  and  losses. 
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 The  paper  is  intended  to  stimulate  an  informed  discussion  regarding  horizontal  ownership  in  the  cable  television  industry. 
 Today  the  Media  Bureau  also  is  releasing  a  Public  Notice  (DA  02-  1304)  seeking  comment  on  the  value  of  the  study  in  providing  empirical  evidence  relevant  to  the  ownership 
 issues  raised  in  the  Commission’s  pending  cable  ownership  rulemaking  proceeding  and  the  AT&  T/  Comcast  license  transfer  proceeding. 


 The  full  text  of  the  paper  is  available  at  either  www.  fcc.  gov/  opp  or  www.  fcc.  gov/  mb.  OPP  contact:  Mark  Bykowsky  (202)  418-  1695. 
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