Choice of Payoff Horizon and Firm Performance: Strategic Investments by Cable TV Operators 1972--1996

One type of long horizon investment---system additions---is associated with the intuitive pattern of lower performance in the short run and higher performance in the long run. However, another type of long horizon investment---in programming networks---is associated with lower performance at all times. These results illustrate that long horizon investments are capable of producing higher returns, but such returns are not guaranteed. Further analysis suggests that firms making long horizon investments despite limited capital availability are particularly unlikely to achieve positive returns from these investments.