Cox Cable CASE ANALYSIS: COX CABLE A Problem and Is

The major problem facing the franchise is the instability of its subscriber base. Approximately threepercent of the firm's subscribers are disconnected each month, although the total number of basic cable subscribers continues to rise. This phenomenon is referred to as "churn." As both connection and disconnection operations are among the most cost intensive activities involved in the operation of the franchise, the high churn level is significant. Sixmonths of continuous connection and payment, therefore, are required for the company to recoup variable installation and service costs, while 12months of continuous connection and payment, therefore, are required for the company to recoup variable installation and service costs, and amortized fixedplant costs. Only subsequent to these continuous connection periods can the company begin to earn a profit on a customer. A 36percent annual subscriber turnover, thus, is devastating to the firm's bottomline.

The subscriber turnover problem is further aggravated by the fact that approximately onethird of the monthly disconnects are the result of

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local stations do not have to be sited in the area served by the cable company; however, the cable company is required to also carry stations in their area over the cable); (2) television superstations; and (3) pay television companies. Original programming creation is a very minor activity at most cable companies. The cable television companies derive their revenues from their individual subscribers. 9. Video cassette recorder programming, provides thousands of motion pictures, film documentaries, old television programs, adult motion pictures, educational programs, and a wide variety of other offerings are available on video cas sette tapes for viewing in the home. The copyright owners of the programming derive their revenues from sales of the program cassettes. Most home viewers of video cassettes, however, rent the cassettes from local stores. 10. Blank video cassette tapes, which may be used by viewers to copy any program transmitted over their television sets. The copied programs may be retained for viewing again and again, or they may be used to permit the viewing of a program at a more convenient time. These tapes may be reused to 6copy additional programs, once the home viewer no longer desi
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Approximate Word count = 2546
Approximate Pages = 10 (250 words per page)