Policy

A La Carte Hits Home for Ferree

7/22/2004 11:30 AM Eastern

Newport, R.I. -- The cable industry just spent a small fortune on lawyers and consultants to draft comments for the Federal Communications Commission arguing against the mandated sale of cable networks a la carte. But all that lobbying clout might be no match for one person: the wife of FCC Media Bureau chief Kenneth Ferree.

Ferree, a Cox Communications Inc. subscriber who in May described himself as an “unabashed fan” of a la carte, said his wife nags him all the time about their cable package.

“The input I get most frequently is from my wife screaming at me about why we are paying for ESPN when we never watch ESPN. And that happens about every other day. We are not big sports consumers in our household,” Ferree told a New England Cable & Telecommunications Association audience here Thursday.

Ferree’s staff is preparing an a la carte report for Congress due Nov.18. Many cable operators and programmers filed lengthy FCC comments last week arguing that from a legal and business perspective, a la carte made no sense.

Ferree said he suspects that as Internet download speeds increase and more content deals bring TV programming to computers, cable’s network bundling strategy will come under tremendous pressure.

“When we get to 50- or 100-megabit per second downstream speeds, there is going to be a lot of content on broadband and if the cable operator is still trying to shove a 200-channel package down people’s throat, take it or leave it, there’re going to be a lot more leaving it at that point,” Ferree said.

The a la carte issue was complicated and not given to easy solutions, Ferree added.

Cable executives call a la carte the wrong business model that in the name of consumer choice would actually have the opposite effect of driving cable bills higher and leaving consumers with fewer channels to select.

“If you add in the capital investment and the equipment cost for going to an a la carte world, you’re talking about anywhere from a 12% to 20% increase in cable bills on a monthly basis,” Comcast Corp. executive vice president David Cohen said.

Many in cable have argued that the biggest losers in an a la carte world would be niche networks that couldn’t get the audience exposure that large tiers provide.

John Bickham, president of cable and communications at Cablevision Systems Corp., left the door ajar for sports programming tiers, partly consistent with the company’s approach to its carriage battle with the Yankees Entertainment & Sports Network, the pay-TV home of the New York Yankees Major League Baseball team.

“The idea of providing individual channel, a la carte selectivity is probably not a business model that’s ever going to work for anyone,” Bickham said. “But there are categories of programming that are so expensive and that people may or may not have an interest in, that you have to provide some flexibility for, which was the whole idea behind the sports programming thing.”

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