Show Cable TV Born right after world war II Cable TV formerly known as has grown into a viable rival of the major broadcasters IT BEGAN as a system erected erected erected ted in mountain communities where reception was poor to receive and distribute television television television tele tele- vision programs from original broadcasters through a network network network net net- work of coaxial cable and electronic components to the homes of individual subscribers ers for a nominal fee However the industry's frontier has been extended to the metropolitan centers where an even larger market promises promises promises pro pro- a far more rewarding profit potential IN ADDITION recent regulatory regulatory regulatory regu regu- decisions coupled with Cable TV technology are expected expected expected ex ex- ex- ex to stimulate expansion far beyond the initial goals of the founders The FCC now authorizes the origination of programs and the right to sell commercials Also the Commission will permit the industry to transmit transmit transmit trans trans- mit via microwave possibly making way for a national Cable TV network And cable operators have blocked the telephone companies from f fur further ir- ir r- r ther controlling the needed physical facilities pole attachments attachments attachments attach attach- ments BESIDES beaming in TV of adequate quality the cable system system system tem provides reception of far higher fidelity vastly improving improving ing both the picture and the sound The betterment is particularly particularly particularly substantial in the case of color TV where there are arc ghosts or shadows CABLE TV means greater program selectivity many more channels than are ordinarily ordinarily ordinarily or or- provided and offers far more services such as the clock weather in information information information in- in formation local educational broadcasts stock market and financial reporting public service service service ice and a number of local entertainment programs Although this industry is still fragmented there is a trend toward consolidation by major operators THERE ARE according to latest available count some 2300 Cable TV systems in operation running their cables into an estimated 36 million homes mostly in small cities and towns But despite the phenomenal growth in the last three years only 62 percent of TV households households households house house- holds are wired for cable TOTAL industry revenues now stand at about million Charges for service run around 5 a month plus an additional 25 time one installation fee The ten top operators account for 29 percent of the total in in- in- in As it stands at this time the contenders in the field are the Cable TV operators operators operators op op- op- op the national broadcasters broadcasters broadcasters broad broad- casters many of whom own such systems and the pay or subscription TV proponents FOR MOST manufacturers and distributors of coaxial cable cable ca ca- ca ble and electronic components the industry has offered lucrative lucrative lucrative lu lu- lu- lu opportunities Except for Cor the component suppliers many of the firms are involved in more than one segment of Cable TV Most systems are depreciated on schedules of ten years even though they have a usual life expectancy of 20 years or more The fast write-off write policies pro pro- duce a substantial cash flow and significant tax shelters SUBSCRIBERS PAY an average average average av av- av- av of 60 annually while operating expenses are around 30 Thus the pretax profit potential can be considerable General Instrument Corporation Corpora Corpora- tion a diversified electronic company is the term long-term choice of the Research Staff of Babson's Reports for participation participation participation par par- in the industry Its Jerrold division is one of the leaders in Cable TV EARNINGS were adversely affected by temporary problems in Jerrolds Jerrold's activities for the fiscal year ended February 28 1970 plus production difficulties in semi conductor operations Management however has indicated that a return to former former former for for- mer levels of profitability is in store for fiscal 1971 The speculative stock near 15 NYSE appears to be a turnaround turnaround turnaround turn turn- around candidate for |