• by Wayne Friedman , March 16, 2006

In an effort to save the possible loss of billions of dollars in national advertising and subscriber fees, the National Cable & Telecommunications Association and Walt Disney Co. launched a major offensive against the Federal Communications Commission's position that favors offering a la carte programming to consumers.

The NCTA and Disney offered an array of financial experts, at a Washington, D.C. press conference yesterday, to explain that cable consumers will get less but pay more if the cable industry moves to a la carte network deals--which disputed the previous findings by an FCC-backed study that says consumers would benefit from such a change.

"You would be amortizing the cost of network programming over a smaller base," said Preston Padden, executive vice president of governmental relations for Walt Disney Co. "Consumers would get less and pay more."

One financial expert claimed that nine of ten benefit-cost studies support the NCTA-Disney position that a la carte would be bad for consumers. Disney says major media companies Viacom Inc. and NBC Universal also support its position.

With these efforts, marketing experts say media companies are looking to protect their most valuable streams of revenue--that of billions they receive from national advertisers and from subscribers' fees they get through cable operators.

Should the industry move to a la carte programming, cable networks could stand to lose hundreds of millions of advertising dollars as many established cable networks with 80 million to 90 million subscribers might lose anywhere from one-quarter to possibly one-half of their customers.

For its own part, Disney says it has a long experience in the a la carte area--and it's not a good one. For the first 15 years of its life, Disney Channel was a premium channel costing consumers $12-$14 per month. But it couldn't get past 30 percent of U.S. TV households--around 30 million subscribers. Now, for the last several years as a basic service, Disney Channel reaches 87 million homes and has been able to increase money for original TV production by over 140 percent.

One FCC argument is that with a la carte programming available, consumers have more choice to pick and choose. But NCTA findings countered that it's been proven that "more consumers find new channels by channel surfing," says Michigan State University economist Steven Wildman. Another problem with a la carte network offerings is that cable networks can become financially unstable. Says Wildman: "You lose predictability."