Pursuant to a congressional request, GAO provided information on: (1) the status of competition in the subscription television market; (2) the extent to which ownership ties between cable companies and program suppliers may be affecting the development of competition; and (3) key factors that may influence the development of competition in the future.

GAO noted that: (1) the cable industry maintains a high share of the subscription television market nationally and is not very competitive; (2) however, the satellite industry competes against cable companies throughout the United States, and its market share has increased considerably since the introduction of a new generation of satellite television service, known as direct broadcast satellite (DBS) service, in 1994; (3) satellite's share of customers purchasing subscription television service grew from 4 percent in 1994 to 12 percent by mid-1998; (4) during that same period, the market share of the cable industry declined from 93 percent to 85 percent; (5) despite expectations of rapid entry into the subscription television market, telephone companies have progressed more slowly and are providing only limited competition to cable; (6) competitors to incumbent cable companies are pursuing strategies to compete more effectively through pricing, the number of channels offered, and customer service; (7) partly in response to competition, cable companies are upgrading their systems, improving service, and introducing new services, such as Internet access; (8) these behaviors by both incumbent cable companies and other providers may indicate that the market is becoming more competitive despite the continued high market share held by the cable industry; (9) however, some of these behaviors may have occurred even in the absence of increased competition from other subscription television providers; (10) while many cable companies provide television programming throughout the United States, the four largest cable companies as of June 1998 accounted for 55 percent of all television subscribers; (11) the six largest cable companies at that time had significant ownership interests in program suppliers (that is, owners of subscription channels); (12) most cable companies are following strategies to cluster their operations geographically so that they operate most of the cable systems in a particular city or region; (13) these companies realize benefits from their size, ownership interests, and clustering; (14) some industry participants have expressed concerns about competitive advantages that the ownership relationships may create for incumbent cable companies; and (15) the likely future development of competition in the subscription television market is difficult to predict, but certainly several key factors will influence it.