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PTC, McCain Slam a la Carte Report

11/22/2004 3:23 AM Eastern

The Parents Television Council, claiming that cable television is flooded with obscene and pornographic content, ripped a Federal Communications Commission report that found that the per-channel sale of cable networks would cause more harm than good, even for subscribers who want to block indecent content.

“The FCC’s report on `a la carte’ was hopelessly inadequate, as it barely mentioned the prime reason why so many people want cable choice: Cable is completely awash in raunch,” PTC executive director Tim Winter said in a prepared statement.

The FCC report, released Friday, found that a la carte would raise rates for consumers who wanted to continue to watch their favorite channels, disrupt the operations of cable operators and inflict likely ruinous pain on small networks that couldn’t survive outside of a large tier.

Sen. John McCain (R-Ariz.), who has pushed cable to offer more services a la carte, complained that the report failed to give proper weight to cable-pricing plans that included both tiers and a la carte menus.

“Instead, it appears that the industry has been successful once again in distracting policymakers with a `parade of horribles’ that they allege would result from a mandatory a la carte offering,” McCain said in a statement late Friday.

McCain -- who steps down next year as chairman of the Senate Commerce Committee -- said he would continue to work to lower cable rates and inject greater competition in the pay TV market.

The FCC report concluded that efforts to promote more competition in the pay TV distribution market -- whether from TV stations using their digital spectrum in flexible ways or from big phone companies rolling out fiber networks -- was preferable to upending cable’s established business model.

The PTC is a leading advocate for greater enforcement of federal indecency laws against broadcasters and the a la carte sale of cable networks so that parents don’t have to pay for channels they consider harmful to their children.

Because of the PTC’s dissatisfaction with the FCC’s study, Winter said his group would ask the agency to prepare a new report on indecent cable programming and demand that the cable industry yield on the a la carte issue.

The PTC released a study last week that included excerpts from Comedy Central, MTV: Music Television, E! Entertainment Television, Spike TV, TBS and FX that the group said proved that basic “cable was awash in raunch” that had to be stopped if a la carte were not an option.

“If the cable industry won’t do it, then we’ll take our fight to our elected officials and demand that they give American families the freedom to choose smut-free television,” Winter said.

Legislation that would have banned most violent programming on cable until after 10 p.m. died in the Senate this year. The cable industry has said that time restrictions on pay TV services violate the First Amendment. In March, McCain withdrew a proposal requiring cable and satellite to offer a la carte under FCC regulation.

In the report, prepared by the Media Bureau staff, the commission addressed the relationship between a la carte and indecency.

The agency concluded that the sale of cable networks in tiers was more cost-efficient than per-channel sales, citing a host of factors that would drive up consumer costs and drive out niche networks from the market if tiers were unbundled.

The FCC found that in an a la carte world, the price of nine networks would approximate the cost of expanded basic. Since the average consumer watches 17 channels, the price of cable would rise for consumers who wanted to pay to continue to maintain access to their favorite 17 channels.

The FCC said a la carte would raise cable rates 14%-30% before factoring in set-top-box rental fees. As a result, the agency said, channel blocking would cost consumers less than a la carte, given that many cable companies have promised to provide free blocking technology to those who need it.

“As a tool to allow subscribers to block objectionable content from reaching their homes, an a la carte requirement seems to be a particularly blunt instrument,” the FCC said. “Technical solutions that block unwanted content exist today at a lesser cost than a mandated a la carte requirement.”

Officials at Scripps Networks -- which includes Home & Garden Television and Food Network -- expressed satisfaction with the FCC’s findings.

“We’re in agreement with what the rest of the programming community felt,” Scripps Networks president of affiliate sales and international development Susan Packard said. “A la carte would be really disastrous. It would be a very negative thing for the consumer to have an a la carte option, and in the past, it hasn’t worked anyway. It’s one of those things that sounds really good, but when you try to execute on it, it all falls apart.”

A la carte would have been especially detrimental to Scripps’ networks, which are about 10 years old or less and are more dependent on ad revenue than affiliate fees than more established channels are.

“We tend to be much more ad-supported in terms of our revenue structure,” Packard said. “So it’s impossible to imagine us having a business in the future if a la carte were to be enacted. Then our ad structure, really our model, is destroyed because we are so much more dependent on ad revenue than we are on licensing revenue.”

The American Cable Association, which represents small independent cable operators, agreed with the FCC that mandatory a la carte was a bad idea. But in its remarks on the wholesale market for programming, the commission raised concerns and questions about issues that are on the top of the list for the ACA, such as retransmission consent, antitrust, bundling and tying and rate discrimination.

“Now the FCC has basically said mandatory a la carte is not a good solution,” ACA president Matt Polka said. “We agree with that. That issue is now off the table.”

With the “red herring” of a la carte put to rest, now it’s time for Congress to examine the other issues that the FCC talked about in its report, Polka said.

However, the report stated that retransmission consent -- the right of broadcasters to negotiate cable carriage -- appeared to be working in the manner designed by Congress, and anti-competitive issues raised by small cable companies were better left to the Justice Department’s antitrust division.

Linda Moss contributed to this report.

 

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