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Cable TV has hefty impact; job growth, spending are a big boost for economy, study finds

Thu, 07/17/2003 - 8:00pm
Staff

Copyright 2003 Denver Publishing Co.

Rocky Mountain News (Denver, CO)

July 17, 2003 Thursday Final Edition

Love it for providing lots of channels and speedy Internet access . . . or hate it for jacking up prices. But the cable-TV industry's economic impact on the United States looks sizeable.

A study commissioned by Daniels & Associates, a Denver mergers and acquisition firm that handles cable deals, concludes that the cable industry — directly and indirectly — has produced more than 1.1 million jobs in the United States since 1990. That represents more than $42 billion in personal income, the study says.

The industry also generated more than $173 billion in annual "gross economic output" in 2002, representing direct and indirect spending that began with cable operators and flowed through to cable programmers, equipment makers and others.

Prepared by Bortz Media & Sports Group, a Denver research firm, the study links much of the industry's growth to the landmark Telecommunications Act of 1996.

The law, which opened the communications business to competition, sparked a $75 billion, industry-wide network upgrade that resulted in new consumer services such as digital cable, high-speed Internet, local phone service and video-on-demand, the study said.

"Through the aggressive reinvestment of capital over the past several years, the industry has put in place a broadband infrastructure that supports the ongoing expansion of the range of services provided to the American consumer," the study says.

But one consumer group wasn't impressed.

"The cable industry has exhibited its anti-competitive and monopolistic tendencies every day since the passage of the Telecom Act," said Mark Cooper, director of research for the Consumer Federation of America. He added that "transferring consumers' money to cable monopolists . . . is not the best way to maximize consumers' well-being."

A recent government study said cable-TV prices nationwide jumped 8.2 percent in the year ended in July 2002. That was more than five times faster than consumer prices rose, prompting Sen. John McCain, (R-Ariz) and chairman of the Senate Commerce Committee, to accuse the industry of price gouging.

Bruce Leichtman, president of Leichtman Research Group in Durham, N.H., said he had no reason to doubt the numbers in the Daniels report. "We're talking about a very robust business that really has expanded tremendously in the last decade," he said.

A spokeswoman for Daniels & Associates wasn't able to say how much the firm paid Bortz Media for the study, which has been compiled periodically since the 1980s.

Study findings:

1.1 million — Direct and indirect employment, since 1990, attributable to the cable industry, an increase of more than 570,000 jobs

3 percent — Percentage of job growth of all net new jobs created by the economy over the 12-year period

$42 billion — Estimate of how much flowed directly to cable industry suppliers in 2002, including employee wages and other costs such as the purchase of goods and services, utilities, transportation, construction.

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