Dinner Is Served: FCC Now Favors A La Carte Cable Programming

by Wayne Friedman, Nov 30, 2005, 1:00 PM

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True Republican thinking has finally taken hold in the world of cable programming: let the market decide. The Federal Communications Commission chairman Kevin Martin is now in favor of a la carte programming.

That's good news for consumers--and bad news for cable programmers, cable operators, and national TV advertisers.

Martin wants cable operators to stop forcing people to subscribe to channels they don't watch. No doubt Martin is finally reading long-known research from media agencies and others that have shown over and over again that a typical cable TV subscriber regularly views only five channels--or maybe as many as 10. The FCC itself last year pointed to a 17-network average.

Still, this is nowhere near the hundreds of networks that cable--and now satellite-- distributors insist consumers buy. Martin now says a la carte pricing is good on many fronts--it would allow parents to block objectionable programming, as well as lowering overall bills. Previously, as an FCC commissioner under former chairman Michael Powell, Martin thought the exact opposite--citing the idea thatconsumers would end up paying more a la carte.

Martin must have been affected by recent news of major networks such as ABC, CBS, and NBC making business decisions that will allow consumers to buy big-name networks programs on a per-play basis. With the true so-called age of video-on-demand getting the seal of approval by the biggest TV players in the land, the FCC probably thought it was time to throw in the towel.

But Kyle McSlarrow, president/CEO of the National Cable & Telecommunications Association, called all this a "very dangerous idea," saying that it would violate cable companies' free-speech rights.

Well, you know where his bread is buttered. Cable operators would stand to lose millions if there were lower monthly subscriber fees. Just look at the historical evidence of those pay TV channels such as HBO and Showtime, which have had churn rates of near 50 percent or more for over a decade.

The FCC could mandate a la carte cable program packaging, but a better approach would be to offer true consumer freedom--a choice of a la carte OR traditional cable program packaging.

The real worry for a la carte viewing is not just for cable operators--but for cable networks. Were consumers able to pick and chose channels, established networks with 60 million, 70 million, or 85 million subscriber bases, for example, would seriously dwindle--and so would those all-important advertising revenues.

For national advertisers, this means only one thing: If you thought digital video recorders were a threat that would increase skipping over commercials, how about the much greater threat of having fewer national TV networks to run those commercials?

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