NCTA, DISNEY, VIACOM, OTHER PROGRAMMERS PAN A LA CARTE
NCTA and some of the country’s biggest TV programming companies offered lengthy economic analyses as proof that govt.-mandated a la carte TV would be an economic debacle for consumers and the companies. The studies were part of comments to the FCC on the effects an a la carte programming regime would have on the way Americans watch TV and pay for it. Comments were due Thurs., and there were few that supported a la carte.
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NCTA said that nearly everything cable companies offer is optional, that subscribers don’t have to buy expanded basic and that a number of premium channels and packages are offered a la carte already. Offering all channels a la carte would present technological difficulties requiring set-top boxes on every TV and it would undermine the economic model for many networks that rely on ad revenues, as well as subscriber fees. Only consumers who want to watch a handful of the most popular networks “might conceivably end up paying less” under an a la carte approach, NCTA said. An economic analysis performed by Booz Allen & Hamilton on behalf of NCTA found that a la carte would result in consumers paying more for fewer channels and that subscribers would need to select as few as 6 channels to reduce their monthly bills from today’s levels.
Booz Allen also projects that, even if a few subscribers chose the a la carte option and the rest stayed with their current packages, the price would increase for everyone. Booz Allen found that as many as half to 3/4 of new and emerging networks could fail and that even established networks would likely have to reduce programming expenditures, possibly leading to further industry consolidation, NCTA said.
The NCTA also produced a paper by law professors Geoffrey Stone and David Strauss of the U. of Chicago, who found that govt.-required a la carte or themed tiers would impinge on cable operators’ First Amendment rights. “There is no government interest of sufficient importance to justify the substantial burdens of an a la carte requirement. And even if the government did have a substantial and important interest in enabling cable customers to lower their bills and keep out unwanted programming by purchasing only those program networks they wanted, an a la carte requirement would still fail the test,” NCTA said, summarizing the professors’ paper.
Disney, which has been accused of forcing bundled programming upon small and rural cable operators, has said it has always offered operators the option of paying cash for only those networks they do wish to carry. ABC offered another economic analysis that concludes the average value for the ABC-owned TV stations falls within the range of $2- $2.09 per subscriber. Disney said under an a la carte regime, consumers would pay more and get less and that the FCC doesn’t have the statutory authority to interfere with private contracts to require any type of a la carte or tiered offerings. ABC’s analysis by Economists Inc. said bundling is an efficient method for delivering a wide array of networks to consumers.
Viacom said that under an a la carte regime, the programming consumers typically get for about $40 monthly as a package today, would cost upwards of $200 per month. Viacom also produced an economic analysis by Economists Inc. that had similar findings as the others.
C-SPAN told the FCC is not insulated from the effects of an a la carte pricing requirement and that its ability to produce quality public affairs TV could be destroyed. Lifetime TV said a la carte or themed tiering would reduce diversity of programming and consumer choice. The National Black Chamber of Commerce also feared a loss in diversity of programming.
A joint filing by Blonder Tongue Labs, San Bruno Municipal Cable TV and Stanford Cable TV Service said there is technology available to provide a la carte services, even without a set-top in the home, if the operator “could secure the programming contract that allow the programs to be sold in smaller tiers or individually.” A product called TV Channel Blocker and Interdiction technology in general can control in the clear analog channels without the need for set-tops in every home, the companies said.
The Alliance for Community Media feared the implications of a la carte for public, educational and govt. (PEG) access channels. They asked that such channels continue to be made available to all cable subscribers. The Broadband Service Providers Assn. (BSPA) said it opposes all forms of mandatory a la carte but that voluntary a la carte needs further study. BSPA said a market test is warranted.
The N.J. Div. of the Ratepayer Advocate told the FCC, “the time has come to give consumers more choice in picking the cable channels they want instead of being forced into buying a tier of channels, some of which they never watch.” Parents TV Council said it wrote to members of Congress, urging them to make the cable industry offer consumers cable subscriptions a la carte.