Abstract
This study examines cable system diversification into three nontraditional services: pay-per-view television, high-speed Internet access, and telephony. An econometrics model based on the Industrial Organization Model is used to explore the factors that have led to variation in diversification among cable systems. Specifically, this study examines how three sets of variables, namely, cable system characteristics, market structure, and market demographics, influenced cable system diversification. Multiple linear regression was performed to identify the determinants of cable system total degree of diversification, which is defined to be the number, from 0 to 3, of the three nontraditional services offered by a cable system. Regression results indicate that Multiple System Operator (MSO) ownership, the number of basic cable service subscribers, and the number of broadcast television stations receivable over the air all had a statistically significant positive relationship to cable system total degree of diversification, whereas the number high-speed Internet service providers in a cable franchise area had a statistically significant negative relationship to cable system's total degree of diversification.
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