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UnitedStatesGeneralAccountingOfficeGAOFact Sheet for the HonorableHoward M. Metzenbaum, U.S. SenateSeptembermCOMMSJNICATIONS1988Ohio Cable TelevisionRate Increases, 1986toPresent/1GAO/RCED-tM-236FS

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GAOUnited StatesGeneral Accounting OfliceWashington, D.C. 20548Resources, Community,Economic DevelopmentandDivisionB-226720September29,1988The HonorableUnited StatesDear SenatorHoward M. MetzenbaumSenateMetzenbaum:your officerequestedus toIn a meetinq on August 9, 1988,obtaindata and reporton the extent of recent cableAs agreed, we aretelevisionrate increasesin Ohio.providinginformationon rate increasessince 1986 for 25large cable companies servingsubscribersin Ohio.1 through4 of this fact sheet provideinformationSectionson changes in these companies'rates for (1) the lowestpricedbasic cableservice,1 (2) the Home Box Officepayand (3) installation.channel,These sectionscompare therates for servicesin 19862 with currentrates (August 1988)and show the percentagechanges for each company and for the25 companies as a group.Section5 computes for eachcompany the basic servicerate per channel offered.Sections6 and 7 compare basic rate increasesbetweencompanies charginghigher and lower than average rates.In summary, we found that,on average,the 25 Ohiocompanies we examined (1) increasedbasic servicerates by(2) decreasedHome Box Officerates by 227 percent,and (3) increasedinstallationcharges by 6percent,While these 25 companies comprise 8 percentofpercent.companies and togetherserve 1.1 million(aboutOhio's cable59 percent)of Ohio's cable subscribers,3our sample was notselectedin a manner which would enable us to projecttheresultsto all companies in the state.IBasic cableretransmissionserviceis any serviceof local television2The CableCommunicationsPolicygovernmentalregulationof cableeffectiveDecember 29, 1986.3The Television1,911,892basicand Cablesubscriberstierthat includesbroadcastsignals.Act of 1984 prohibitedrates in most communities,Factbook,in Ohio1988(p.Edition,B-841).reported

B-226720CABLE RATES HAVE GENERALLY INCREASEDThe data we compiledshow that,from 1986 to August 1988,basic servicerates and installationcharges have increased,while Home Box Officerates have declinedslightly.4Basiccable servicerate increasesranged from 0 to 76 percent,with an average increaseper company of 27 percent(from 10.93to S13.88 per month).Average basicserviceratesper subscriberincreased26 percentfrom 10.86to 13.70.Home Box Officerates decreasedon average per company by 2from 11.40to 11.18per month, with 20 of the 25percent,companies showing eitherno rate change or a decrease inInstallationrates increasedon averageby 6 percentrates.to 22.20.per company, from 21.02The number of basic servicechannelscurrentlyofferedbythe 25 companies ranged from 12 to 37, with an average of 27Dividingeach company's basic rate bychannels per company.the number of channels offeredyieldsan average monthlycost per basic channel rangingfrom .29 to 1.25.We found a wide range of basic cable rates,rangingfrom 3.95 to 14.95per month in 1986,and from 6.95 to 18.85currently.In order to provideperspectiveon the extenttowhich rates increasedin companies that were chargingeitherhigher or lower than average rates in 1986,we calculatedWe found that therate increasesseparatelyfor each group.12 companieschargingbelow average rates in 1986 increasedtheirrates on average by 34 percent,from 9.14to 12.22.In comparison,the remaining13 above-average-pricedcompanies increasedtheirrates by 23 percent,from 12.58to 15.42.We found littledifferencein the average numberof basic channelscurrentlyofferedby the lower and higherpricedcompanies-- an average of 26 channels versus 28channels,respectively.In reportingbasic servicerate changes, we did not assessthe extentto which additionalchannelsand servicesmayhave accompaniedrate increases,providingadded value tothe basic cable subscriber.We could not determinewhetheradditionalchannels were offeredbecausewe were unable tocalculate,from the informationsources we reliedon for1986data, the number of basic channels offeredpriortocable rate deregulation.Nor could we determine,from ourinformationsources,whether formerlyoptionalservices4Because our startingwe have not calculated2pointin 1986average ratewas not always the same,changes on an annual basis.

B-226720(second set connections,remote controlunits,etc.)wereadded to the post-deregulationbasic servicestructure.Inan officialof a cablecompany that ownsthis regard,severalcompanies in our survey informedus that his companyhad simplifiedits post-deregulationrate structuresbyincludingas basic servicea number of servicespreviouslyofferedat extra cost.whether cable operatorswere ableto determine,however,consolidatedmultipletiersof basic channelsinto a broaderWe foundsinglepost-deregulationbasic servicestructure.that 18 operatorsdid not consolidatecable servicetiers,Our data sources were not completewhile 3 systems did.enough to determinethe situationfor the four othersystems.WeOur statisticsdo not take into account possiblediscountsand/or package rates for installationplus a combinationofbasic and pay services,which offera savings over theindividualrates added together.Therefore,the individualHome Box Office,and installationcharges we havebasic,reporteddo not necessarilyrepresentthe amount which atypicalsubscriberwould be billed.Similarly,the ratechanges we have reportedare not necessarilyindicativeofwhat a typicalsubscriberhas incurred.SCOPE AND METHODOLOGYAs agreed with your office,we are providinga compilationof readilyavailable1986data from governmentand industrydata sources for the following--basicservicerate,installationcharge, and the rate for a popularpaychannel --Home Box Office.To obtaincurrent(August 1988)rate information,we conducteda telephonesurvey of thecompanies duringthe periodAugust 15-30, 1988.The 25companies we selectedare among the largest5of the 314operatingin Ohio,6 and had subscriberlevelsrangingfrom16,000to157,000.In performingour work, we used data from either(1) theLibraryof Congress CopyrightOfficeor (2) TelevisionandCable Factbook,for informationon cable company name,locationsserved,subscriberlevels,and 1986 charges for50ur listdoes not necessarilyrepresentthe 25 largestcable operatorsin Ohio since we noted some discrepanciessubscriberdata between our two data sources.6Television3and CableFactbook,1988 Edition,p. B-841.in

B-226720basic service,installation,and Home Box Office.TheCopyrightOfficeobtainsdata semi-annuallyfrom cableoperatorsand collectsroyaltypayments from them ascompensationfor theirrebroadcastof televisionsignalsfrom distantcities.Televisionand Cable Factbook-isacommerciallyavailableannual referencebook coveringa widerange of cable company operations.Our primarysource ofinformationwas the CopyrightOffice,where we obtaineddatadirectlyfrom forms submittedand attestedto by the cablecompanies.We used the Televisionand Cable Factbook ininstanceswhen it reportedmore currentdata, and whenCopyrightOfficefileswere incompleteor inconclusive.Inaddition,where possiblewe compared data from both sourcesfor consistencyto check for discrepanciesin the reporteddata.Because we used two data sources,and since TelevisionandCable Factbook did not always reportdata as of the samedate, the dates of comparisonfor our data were not alwaysconstant.To obtainbaselinedata for rates while they werestillsubjectto regulation,we used 1986 data as near aspossibleand priorto December 29, 1986, the date rates werederegulated.The dates for the 1986 rates obtainedrangedfrom January to December 1986.Similarly,the dates forcurrentsubscriberlevelsranged from January 1987 to March1988 and were also obtainedfrom both these sources.As you requested,we did not obtainofficialagency commentson this fact sheet.However, we did discussour work withFederal ryofficialsin the course of identifyingdata sourcesand developingour methodology.As agreed, we plan nofurtherdistributionof this fact sheet for 3 days or untilyou publiclyreleaseit.At that time we willsend copiesto interestedpartiesand make copies availableto othersupon request.AppendixI listsSincerelyyours,majorFlora H. Milans AssociateDirector4contributorsto thisfactsheet.

CONTENTSPage1LETTERSECTION1TWENTY-FIVE LARGE CABLE COMPANIES OPERATINGIN OHIO62INCREASES IN MONTHLY BASIC CABLE RATES,1986 TO AUGUST 198873CHANGES IN MONTHLY HOME BOX OFFICE (HBO)PAY CHANNEL CABLE RATES, 1986 TO AUGUST 198884CHANGES IN CABLE INSTALLATION1986 TO AUGUST 198895CURRENT BASIC CABLE RATES PER CHANNELOFFERED106COMPARISON OF BASIC RATE INCREASES ABOVE/BELOWAVERAGE 1986 RATES117CABLE COMPANIES CHARGING BELOW AVERAGE RATESINCREASED RATES 34 PERCENT WHILE THOSE CHARGINGABOVE AVERAGE RATES INCREASED THEM 23 PERCENT12CHARGES,APPENDIXIMAJOR CONTRIBUTORS TO THIS FACT SHEETABBREVIATIONSGAOGeneralAccountingHBOHome Box OfficeOffice13

SECTION 1TWENTY-FIVE LARGE CABLE COMPANIES OPERATING IN OHIONameLocationWarner Cable Comm., Inc.Buckeye Cablevision,Inc.Warner Cable Comm., Inc.Viacom CablevisionWarner Cable Comm., ner Cable of CantonCox Cable ClevelandAreaViacom CablevisionAmerican TV & Comm. Corp.Mahoning lTV CableMiami ValleyCable, Inc.ContinentalCablevisionTCI Cablevisionof OhioDimension Cable, Inc.MassillonCable TV, Inc.Warner Cable Erie County CablevisionTCI CableCentury Ohio Cable TV Corp.TotalSource:subscribersTelevisionnoted llePortsmouthservedNumber of subscribersas of '19881987*1987*19881,119,151and Cable Factbook,1988 Edition,exceptasterisk--Libraryof Congress,Copyright6where

SECTION 2INCREASES IN MONTHLY BASIC CABLE RATES,1986 TO AUGUST 1988SubscribersNameWarner-- CincinnatiMahoning Valley--WarrenAmerican--ColumbusCentury ngfieldErie County--SanduskyCoaxial --ColumbusTCI --ZanesvilleWarner-- YoungstownViacom--DaytonWarner --AkronContinental--EastlakeBuckeye --ToledoWarner--CantonMu1 g --BoardmanMiamiValley--HamiltonTCI Viacom-- ClevelandCox Cable--ParmaMassillonCable- sic1986 .9512.95(c)11.00(d)11.9512.95(e)cablerateAug.1988 19Averageallcompanies 10.93 13.8827Averagepersubscriber 10.86 13.7026Source:SubscribersFactbook,--Televisionand CableEdition,except where noted (a)--LibraryofCongress,CopyrightOffice.1986 Rates-as of June 1986, from Libraryof Congress,CopyrightOffice,except Televisionand CableFactbook,1987Edition,as follows:(b) as of January 1986(c) as of November 1986(d) as of December 1986(e) as of September 19861988 Rates--GAOtelephonesurvey,August1988.Name and1988

SECTION 5CURRENT BASIC CABLE RATESPER CHANNEL dMultichannel--MansfieldWarner-- YoungstownAmerican--ColumbusMahoning Valley--WarrenCox arkWarner le--MassillonTCI-- ZanesvilleArmstrong inental--EastlakeTCI --MiddletownMiami oodCentury Ohio--PortsmouthErie County--SanduskyWarner-- Cincinnati 14.5014.0012.9512.206.951221162328273028Averageall 13.8827Averageallper AO telephone2930313020282530333026263433313724Rate perchannel 500.500.480.460.450.450.440.440.430.420.420.330.29 0.54survey,August101988.

SECTION 6COMPARISON OF BASIC RATE INCREASESABOVE/BELOW AVERAGE 1986 RATESSubscribersNamecox-- ParmaViacom- -ClevelandCoaxial--ColumbusWarner-- -- 2,275(a)38,00045,551rates716.237Basic1986cable rateAug. 1988 12.00(d)11.9511.5511.00(b)10.9510.9512.58 - ZanesvilleArmstrong --BoardmanMassillon --MassillonMiami ltichannel--MansfieldMahoning Valley--WarrenErie County--SanduskyCentury Ohio--PortsmouthWarner-- Cincinnati16,416(a)16,000157,0008.828.758.353.95 9,72527,991(a)21,552(a)21,23928,231(a)36,084(a) 10.45(e)10.3310.2510.00(b)9.929.929.659.25(d) 10.93Percentincrease 13.8827--Televisionand Cable Factbook,1988except where noted (a) Libraryof Congress,Office.1986 Rates-as of June 1986,from Libraryof Congress,CopyrightOffice,except Televisionand CableFactbook,1987Edition,as follows:(b) as of December 1986(c) as of September 1986(d) as of November 1986(e) as of January 19861988 Rates--GAO telephonesurvey,August 1988.Name andSubscribersEdition,Copyright11