News

Iger Protests ESPN A La Carte Plan

7/12/1998 8:00 PM Eastern

Washington -- ABC Inc. president Robert Iger spoke out last
week against government policies that would force cable operators to sell cable networks
on an a la carte basis.

In Senate testimony, Iger said the bundling of cable
networks into packages has been the lifeblood of the industry, generating revenue from
subscribers and advertisers that has caused a "veritable explosion" in
cable-programming choices.

Forcing the sale of popular networks like ESPN -- which is
owned by ABC's parent, The Walt Disney Co. -- as a la carte services "would
destroy the very model that has spawned the growth of cable programming," Iger said.

Current cable rules do not require a la carte selling. Rep.
Billy Tauzin (R-La.) has mentioned expansion of a la carte, as well as the creation of
smaller programming tiers, as ways to enhance consumer choice.

Tauzin is expected to unveil his legislation at a July 28
hearing on cable-rate issues by the Senate Commerce Committee.

Iger, appearing before the Senate Subcommittee on
Antitrust, Business Rights and Competition, said he also opposed efforts to keep large
cable operators price-regulated beyond March 31, 1999.

On broadcast issues, Iger called for the removal of various
regulatory restrictions on the TV industry, including one that limits ABC from owning
stations that reach more than 35 percent of U.S. households. He called the 35 percent cap
and other such rules "almost anachronisms."

Iger said local stations are "far more lucrative"
to run than national networks, and the profits of the former will be needed to sustain the
operations of the latter.

He added that nine of the 10 most profitable TV networks
are cable networks. Only NBC made the list from the broadcast ranks.

Sen. John McCain (R-Ariz.), chairman of the Senate Commerce
Committee, said he agreed with Iger on the ownership issue.

"I am in favor of lifting ownership caps," McCain
said. "I think that there is enough out there that ownership caps are not
necessary."

McCain, however, poked fun at another Iger proposal: that
TV stations should be exempt for a while from paying federal fees on subscription income
obtained from digital-spectrum services.

"I'm simply suggesting that the government should
do everything that it possibly can to stimulate investment in this new technology, and not
to thwart it," Iger said. "And if one means of stimulating that investment is to
reduce the cost to us, which is already substantial, then I would applaud that."

McCain said, with obvious sarcasm, that ABC won't want
to pay fees "because they are so impoverished, and there is no reason why they should
pay anything for a public asset."

The Federal Communications Commission has a rulemaking
pending on the collection of fees. About two-dozen local TV stations are set to begin
beaming digital pictures in November.

"And they will probably succeed [in paying
nothing]," McCain said. "We all know the power of the broadcasters."

Iger, in response to a question from Sen. Mike DeWine
(R-Ohio), denied that ESPN's eight-year, $4.8 billion National Football League
contract was causing higher cable rates, saying that the deal would add "just a few
pennies" to subscribers' bills.

September