http://www.nytimes.com/2006/04/16/business/yourmoney/16frenzy.html
Media Frenzy
Why Can't I Have Just the Cable Channels I Want?
By RICHARD SIKLOS
The New York Times
April 16, 2006
AT the National Cable and Telecommunications Association convention in
Atlanta last week, the cable guys were at it again. They were
kvetching that the Federal Communications Commission had gotten it
terribly wrong in pushing to loosen the way that cable television
channels were packaged and sold. Essentially, the cable contingent
says that its current practice of selling a package of 75 or so
broadcast and cable channels is better for consumers and the public
good than letting people pick and choose the 10 or 20 stations they
actually watch.
The average price of extended basic cable -- the type of channel
package to which most of the nation's 73 million cable-watching
lds subscribe -- is $41 a month, according to Kagan Research.
Plenty of other premium channels and services are available, but the
only cheaper option is truly basic: a package of mostly local stations
with none of the popular cable channels (ESPN, MTV and CNN, to name
but a few). At my house in Connecticut, for instance, basic cable runs
me $13 a month.
The cable operators say that forcing them to give people more latitude
over the channels they buy would constitute rank government
interference, the equivalent of forcing restaurants to sell burgers
and buns separately. The ala carte model favored by some regulators
would lead to much higher rates for individual channels, executives
argue. Whereas that same $41 might get you only 10 hand-picked
channels, the bundle model both pays for the infrastructure -- all
those pipes and set-top boxes and servers and repair trucks -- and
preserves the smorgasbord of big and small channels to suit all
demographics and tastes.
Without bundling, programmers like Disney and Viacom might no longer
be able to afford shows with smaller but loyal followings. Under the
current system, they can produce niche channels like ESPN Classic
because they are bundled with ESPN and other channels, the
programmers say.
For the most part, the F.C.C. rolls its watchdog eyes and notes that
the price of expanded basic has increased well beyond other goods and
services over the past few years. It and the cable association have
drawers full of studies disputing the other's studies about their
studies. Kevin J. Martin, the F.C.C. chairman, showed up briefly in
Atlanta to reiterate that he was not giving up the fight, even after
recently cajoling cable companies to agree to put together a new,
smaller tier of family-oriented channels that was a few dollars less
than extended basic. "Putting more control in the hands of consumers
is always good," he said.
Alas, the legislative year is rapidly winding to a close in
Washington, making it unlikely that Congress will pass any =E0 la
carte legislation this time around. Still, even a few renegade
television providers are finding it difficult not to side with
Mr. Martin. Cablevision Systems in New York and the satellite service
EchoStar have done so, though they remain a clear minority. Comcast,
Time Warner, the News Corporation, Walt Disney and others are lined up
to harrumph at Mr. Martin.
The great paradox of this debate is that it comes as the number of
media options is exploding and the way they are being priced is all
over the map. The much-maligned bundle will most probably prevail as
the most popular business model for media, although it, too, is likely
going to need an extreme makeover.
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Monty Solomon (monty@roscom.com)