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Deal’s Indecency Proposal

5/02/2004 8:00 PM Eastern

Rep. Nathan Deal (R-Ga.) has made the cable industry an indecency proposal.

Alarmed by coarse and vulgar programming that cable consumers are required to buy if they want simultaneous access to C-SPAN and Disney Channel, Deal unveiled last Wednesday his solution for TV indecency.

It’s called voluntary a la carte.

Under a plan that divided cable, Deal wants to force the country’s programming giants to allow cable and satellite carriers to sell their networks a la carte, though the distributors would be under no obligation to retail the channels that way.

ANTITRUST THREAT

Deal expressed outrage that ABC, NBC, CBS and Fox could use the power of their federally granted TV licenses to force cable consumers to pay for indecent programming. He warned that if his approach failed, the networks should expect changes in antitrust law to discipline their conduct.

Deal floated his proposal as an amendment to legislation that would allow EchoStar Communications Corp. and DirecTV Group Inc. to continue to sell local TV stations to subscribers.

“My amendment will allow families to choose the channels they want, and to begin to rein in the escalating cost of television reception,” Deal said.

To give his colleagues on the Telecommunications and the Internet Subcommittee time to absorb the nuances, Deal agreed to withdraw his amendment, though he indicated he might revive it in a few weeks in the full Energy and Commerce Committee.

Deal’s proposal exposed cable’s lack of consensus on a la carte, an issue which began as an economic debate before Janet Jackson’s Super Bowl breast exposure turned it into a matter of program indecency.

ACA LIKES IT

The American Cable Association, the small cable operator outfit that has been looking to tackle ESPN’s take-it-or-leave bargaining style, immediately endorsed Deal’s proposal.

“Consumers do not have choice and cable operators do not have choice,” ACA president Matt Polka said. “We are supporting it because Mr. Deal has had the courage to raise the issue of choice.”

The National Cable & Telecommunications Associations, which guards the interests of cable operators and networks, dumped on Deal, saying his proposal would likely result in the death of niche networks and jack up rates, not to mention consumer costs associated with the lease of addressable set-top boxes.

“Having the government dictate the terms of contracts between program networks and distributors, or mandate how programming must be packaged or sold, could threaten the economic underpinnings and very vitality of the multichannel video marketplace, adversely impacting cable consumers,” NCTA president Robert Sachs said in a statement.

Discovery Communications Inc. developed a research model on the price impact if the top 30 cable networks (by revenue) were sold a la carte.

$187.50 FOR 30 NETS

“In an a la carte environment, a consumer would have to pay approximately $187.50 for 30 channels,” DCI CEO Judith McHale said in a letter to Senate Commerce Committee chairman John McCain (R-Ariz.), an a la carte advocate.

Deal said the U.S. cable industry shouldn’t have difficulty adjusting to a la carte because subscribers with very large satellite dishes (called C-Band) may purchase programming a la carte at reasonable prices, as do Canada’s cable customers.

“In an open and full discussion, we will see that most of those objections really have no merit,” Deal said.

Dean’s colleagues were as divided as cable.

MARKEY: TRY IT

Rep. Edward Markey (D-Mass.) said Dean’s approach was worth a try, though he was not prepared to go so far as to require cable operators to engage in retail a la carte.

“This amendment is not a mandate. If Time Warner and Comcast don’t want to do this, they don’t have to,” Markey said.

The NCTA has argued that networks geared to minority viewers would be put at risk the most by a la carte, because embedding niche networks into large tiers gives them the broadest introduction possible and the best chance of survival.

DIVERSITY IMPACT?

“I believe that an a la carte pricing amendment would be a disastrous amendment for diversity of programming among the cable networks,” said Rep. Bobby Rush (D-Ill.), one of the few African-American lawmakers on the subcommittee.

Deal shot back that if cable operators weren’t forced to fill their channels with networks affiliated with a half-dozen media conglomerates, cable systems would have channel capacity to carry networks aimed at minority viewers.

On May 5, a coalition of conservative organizations is planning to release a poll showing that parents do not want to pay cable companies for indecent programming as a condition of receiving channels that they think are appropriate for their children.

The poll will be released at a Capitol Hill press conference by Concerned Women for America, which has 500,000 members and considers itself the country’s largest public-policy women’s organization. The groups plan to launch print and radio campaign to drive home their message.

September