Building on the innovation of satellite delivery pioneered by HBO, the cable industry begins to be viewed as more than just a relay service for stations. Now it can offer alternative channels. The strategy pays off in increased demand: In 1980, cable has 20% penetration of U.S. TV households; by the end of the decade, that number is 60%.
Ted Turner launches CNN June 1, 1980, sending 24-hour-a-day news to 172 cable systems. Broadcasters decide it makes more sense to get into this growing industry than to fight it. In July 1980, Capital Cities Communications buys the 43 systems of RKO General's Cablecom-General for $139 million. In 1981, CBS is the first of TV's Big Three to announce plans to enter cable, with CBS Cable set to launch in October. But ABC makes it first when its ARTS performing arts service premieres April 12, piggybacked with Warner Amex Satellite Entertainment Co.'s Nickeoldeon.
The decade is a blur of launches, giving birth to most of today's cable networks.
Westinghouse buys TelePrompTer for $646 million, cable's largest deal at the time. The 1984 Cable Communications Policy Act deregulates rates and caps franchise fees at 5% of revenue. Turner attempts a takeover of CBS but fails and buys MGM/ UA for $1.5 billion. Viacom International buys Showtime, Movie Channel, MTV and VH-1 for $690 million. The U.S. Court of Appeals finds the FCC's must-carry rules unconstitutional.
Most pay cable channels begin to scramble their satellite signals. AT&T demos laser-modulated fiber optics, with wider bandwidth and better quality than coaxial cable. Time Inc. and Warner Communications merge, creating the world's largest media and entertainment company.