• by Wayne Friedman , Staff Writer, January 19, 2007

FCC Chairman Kevin Martin says à la carte selling of cable networks is just what advertisers need to better target their viewers. Martin may have a point in today's fragmented media world. But there are other financial considerations.

For a long time, advertisers liked the fact that big cable networks could act as competitive foils to the high-priced broadcast networks. In addition, media buying and planning can be a tedious experience these days, especially now with lots of audience fragmentation. Can you imagine if the 70 or so advertising-supported cable networks were to split up into different shapes and sizes, all of which could change month to month?

That is what à la carte selling of cable network would bring.

Talk to the MTVs, the Discoveries, the ESPNs, the Turners, and they'll tell you another story--that their production costs for shows are dependent on full national distribution of at least 70 million to 80 million or more subscribers. Tear that down, and with it goes their respective economic structures.

Worst still is that Martin's projection misses the big advertising cost point. Cutting up traditional networks into smaller pieces would put pressure on cable network sales executives to raise CPMs for all that targeting they'll be giving marketers.

But we do like Martin's magazine analysis--even if it seems a little retro. This is what he told attendees at an Association of National Advertisers conference: "Suppose the publishing industry were arranged such that consumers who paid $100 per month would each receive a copy of 200 different magazines. In this scenario consumers could not purchase magazines individually or on the street. You either pay $100 per month for all magazines, or you get no magazines."

Of course these days you don't have to buy those magazines--there are newsletters, both electronic and paper, the Internet, video-on-demand, and a host of other new media.

Turn the cable business into an à la carte industry now, and you just may turn those marketers away from cable and toward other technologies--making their job even harder to accomplish.