Pay or premium cable is a cable television service that supplements the basic cable service. Most cable system operators carry one or more pay cable services (called "multipay") on their systems and make them available to customers for a monthly fee that is added to the basic fee. Cable customers who choose not to subscribe to pay cable receive a scrambled signal on the pay cable channel or channels. The monthly pay cable fee is subject to unit discounts whenever a customer subscribes to two or more pay cable services. Pay-per-view (PPV) is a second form of pay cable that requires cable television customers to pay for individual programs rather than a program package. The cable customer's monthly cable bill reflects the total cost of each PPV program or event viewed during the preceding month.

Since pay cable services are supported by subscriber fees, they carry no commercials. Pay cable programmers usually schedule programs that are unique and that may never be seen on basic cable or broadcast television. These include sports events, musical concerts, and first-run uncut movies. Some movies carried on pay cable are especially produced by the pay cable service; others were released originally for theatrical viewing prior to their availability for a pay cable audience.

Pay cable subscribers pay an average of $15 per month (in 1995 figures) above their basic cable service cost. Any cost figure above or below the average depends upon the total number of pay cable services in the subscriber's package and the package discount allowed by the subscriber's cable system operator. The operator him/herself keeps approximately 50% of the fees collected from pay cable subscribers. The other 50% goes to the company or companies originating the pay cable service.

The origin of pay cable predates the cable industry by several years. The first known pay television or subscription television (STV) service in the United States was a short-lived experimental effort by Zenith Radio Corporation in 1951 called Phonevision. During its 90-day life span, Phonevision offered daily movies carried by a special telephone line to some 300 Chicago households. Two other experimental STV services, one in New York City and one in Los Angeles, followed the Phonevision lead in 1951 but met with similar fate.

The Federal Communications Commission (FCC) enacted rules in 1957 that severely limited STV program acquisition. The rules prevented STV from "siphoning" movies and special events such as sports from "free" television to pay television. Revised FCC rules in 1968 limited any STV service to a single channel only in communities already served by at least five commercial television stations. Such restrictions for STV and, by then, pay cable were eliminated by a 1977 U.S. Court of Appeals decision that declared that the FCC's pay television rules infringed upon the cable television industry's First Amendment rights.

The Court of Appeals decision was especially important to the Home Box Office (HBO) pay cable service. The idea behind HBO was conceived by Charles F. Dolan. Financial assistance from Time-Life Cable to launch HBO was followed by agreements with Madison Square Garden and Universal Pictures allowing HBO to carry live sports events and recent movies. HBO was launched on 8 November 1972, providing pay cable programming (a professional hockey game and a movie) to 365 Service Electric Cable subscribers in Wilkes-Barre, Pennsylvania. In less than one year HBO's service was carried by 14 cable television systems to more than 8,000 cable customers.

New ground was broken in pay cable distribution in 1975 when HBO first carried its service via satellite to UA Columbia Cablevision subscribers in Fort Pierce and Vero Beach, Florida and to American Television and Communications Corporation subscribers in Jackson, Mississippi. The first satellite distributed (via RCA's Satcom) pay cable programming was the Ali-Frazier championship boxing match from Manila. A nationally distributed pay cable network was in the making but would not be a reality until HBO managed to convince prospective cable system affiliates to spend nearly $100,000 to purchase the necessary satellite receiving dish and accompanying hardware.

By 1995, fourteen national and six regional companies had launched pay cable services in the United States. HBO remained the largest with 18 million subscribers receiving the service from over 9,000 cable systems. Other leading national pay cable services in 1995, based on subscribership numbers that exceeded a million, were The Disney Channel, Showtime, Cinemax, Encore, and The Movie Channel. Leading regional pay cable services whose 1995 subscribership numbered more than a million included Sports Channel Pacific, Sports Channel New York, and Sports Channel New England.

Pay cable services, since their inception, have struggled to satisfy subscribers who too often have chosen to disconnect from pay cable after a brief sampling period. Such "churn" has resulted from subscribers who have indicated in surveys that low quality movies that are repeated too often rank pay cable as a low entertainment value.

The pay cable industry is at a disadvantage in combating this criticism because of the preference (based on financial considerations) that the movie industry has for pay cable's chief rival--home video. Production companies whose movies score particularly well at the box office generally follow the movies' theatrical run by release to the home video market. The movies are then available for rental or purchase on videocassettes long before they appear on pay cable. Pay cable services that are best able to compete with home video in coming years may be those that have the financial resources to produce their own movies.

-Ronald Garay


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See also Cable Networks; Pay-Per-View Cable; Pay Television; United States: Cable Television