LAWMAKERS QUESTION BUNDLING ARRANGEMENTS FOR TV CHANNELS
Rep. Deal (R-Ga.) assailed large TV programming companies Wed., saying Congress gave companies such as Viacom and Disney free broadcast signals only to have the companies turn around and “force homeowners to buy additional services whether they want them or not.” Small and rural cable operators say those companies force them to carry unwanted cable channels like SoapNet and MTV if they also want to carry local broadcast affiliates. Deal said 5 or 6 conglomerates “control what comes into every American home” and “can tie and bundle their products with the power of a near monopoly and yet are exempt from our antitrust laws.” His remarks came during a House Commerce Subcommittee meeting on a la carte cable offerings.
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Commerce Committee leaders ordered the hearing at the behest of Deal, who agreed to withdraw an amendment to the SHVIA bill that would have allowed cable companies to offer a la carte services. He agreed to withdraw if the committee explored the issue. Deal said companies like Time Warner had mischaracterized the issue as govt.-mandated a la carte. “They have created a straw man to attack in an effort to divert our attention,” Deal said. He questioned why the programmers include provisions in their contracts that prevent cable operators from telling anyone how much they're charging for the channels. “They can set prices that include the broadcast networks we have given them free of charge and refuse to tell this Committee, the FCC or the Justice Department how those prices are arrived at, and by contract seal the lips of the cable operators who deliver their products,” Deal said.
Buford Media Group CEO Bennett Hooks told the subcommittee that, by contract, he can’t explain to his customers why they have to buy SoapNet when they don’t want it and why consumers’ bills keep increasing. He said the American Cable Assn., which he represented at the hearing, doesn’t support mandated a la carte, but small and rural cable operators want their hands untied in negotiations with large programmers. Deal agreed with him, asking why a family that wants to see NickToons programming must also buy LOGO, a gay and lesbian channel, or MTV or Spike TV with its Stripperella series. “These megaconglomerates have taken an arrogant approach that says to this committee that we just don’t understand their business methods,” Deal said. “If that same business philosophy applied everywhere, candy stores would be required to sell marijuana.” MTV Networks objected to what it called the “outrageous characterizations” of its networks’ business practices and programming. “They distorted the truth and were obviously designed to mislead consumers. No distributor is required to take all of our services,” a spokeswoman said.
Under questioning by Deal, Hooks said he would waive confidentiality to discuss the prices of channels, but Time Warner Cable Pres. Thomas Baxter sat, mouth agape, when Deal asked him whether he would waive confidentiality. Baxter said it was a mutual agreement, but Deal was having none of it. “I think the answer is ‘no.’ It’s obvious that this whole process is shrouded in secrecy,” Deal said.
Deal’s ideas weren’t supported by many House colleagues. Rep. Wynn (D-Md.) questioned how minority and niche programming would ever get off the ground or survive under an a la carte regime. Consumers Union Senior Dir.-Advocacy & Public Policy Gene Kimmelman told Wynn that such programming could make it as part of a theme package, such as family- friendly programming, in addition to being individually sold. Wynn questioned how niche channels could attract advertising, but Kimmelman said such channels weren’t attracting much advertising now, except from companies seeking to reach a specific audience.
TV One Chmn. Alfred Liggins and Rev. Glenn Plummer, chmn. of the National Religious Bcstrs., told the subcommittee their networks likely wouldn’t make it in an a la carte world because they appeal to a slice of society. Both said they benefit from “channel surfing,” and such viewer behavior is the only way they have a chance to win new viewers.
Telecom Subcommittee Chmn. Upton (R-Mich.) said in his opening remarks said he was opposed to any attempt by the govt. to impose an a la carte system. “In my view, the vast majority of Americans enjoy more choice, more programming and more services than any time in history,” Upton said. Commerce Committee Chmn. Barton (R-Tex.) said he was also concerned about prices but pointed out that DBS has captured 22% of the multichannel video program distributor market in little over a decade, providing competition to the cable industry.
Ranking Committee member Rep. Dingell (D-Mich.) said he was concerned that a la carte would lead to higher prices and fewer choices for consumers and said he would rather see the emergence of additional video competition from phone companies and “true price competition” than reregulation of cable rates. With the committee and subcommittee leadership generally opposed to regulation, several observers said they thought it was unlikely any legislative initiative could be pushed through this Congress, which adjourns this fall before the presidential election.