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The past decade has been a boom time for the cable companies operating in Chicago, with their total revenues rising by 82 percent between 2002 and 2010 to reach $453 million, and the franchise fees they pay Chicago soaring from $12.5 million in 2002 to over $22 million today. Comcast dominates this market—it operates in all five of the city’s cable areas and controls more than three-quarters of the cable accounts. RCN entered the market in 2001 in four areas, but quickly pulled back to two, and today it operates only along the lakefront (and at Presidential Towers). Its revenues climbed by 91 percent.
Here's how Chicago's cable market is now divided:
Total subscribers: 435,089
Comcast, from five cable areas: 76.75% (333,659 subscribers)
RCN, from two cable areas: 17.5% (76,361 subscribers)
WOW!, from one cable area: 5.75% (25,069 subscribers)
Back in the 1970s, the FCC required the emerging cable industry to guarantee public access television; cable has since become commonplace, but public access is feeling less secure than ever. In Chicago, the cable companies have paid CAN TV (Chicago Access Network Television) a flat grant per contract per area. When RCN abandoned two of its four areas it was CAN TV that suffered, and when RCN, having retrenched, then prospered, CAN TV didn’t prosper with it. As revenues poured in to Chicago’s cable companies, funding for CAN TV—which operates on a modest $2.3 million annual budget—dropped by 14 percent.
Under the new RCN contract, 1 percent of RCN’s gross revenues will be dedicated to what’s called PEG (public, educational, and governmental) programming in Chicago; and two-thirds of that money will flow to CAN TV. I asked CAN TV’s executive director, Barbara Popovic, to comment, and she wrote me:
"As part of RCN’s agreement, CAN TV’s funding will grow as the company grows. . . . The agreement also secures technical parity for the public's channels with access to Video on Demand Services and the conversion of CAN TV channels to High Definition (HD) in the future. RCN’s support means CAN TV will stay current as technology evolves, expanding its position as a bridge between cable and Internet viewers.”
What's most important about the RCN contract is that it sets a bar for the Comcast contracts, which will come up for renewal over the next few years. (The cable contracts are negotiated by area.) Of course, Comcast—and Chicago’s third cable company, WOW! (formerly WideOpenWest)—could try to get under the bar. And if either does, the more generous terms Chicago agrees to will automatically be extended to RCN as well.
But Popovic prefers to think of the bar as a floor. She wrote me: “Comcast and WideOpenWest will be negotiating cable franchise renewals in the next few years. City officials made it clear during recent hearings that the standard set by RCN represents a minimum commitment to Chicago’s public. Like New York City with its recent cable franchise renewals, the City of Chicago is putting the public first.”