Cable counts cost of protecting the young
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Six months ago, the biggest US cable companies banded together to launch a $250m public awareness campaign aimed at helping parents protect their children from inappropriate programming. Named “Take Control. It’s Easy,” the campaign featured a new ratings system and technological fixes to block offensive channels.
While the cable companies expressed their concern for the nation’s children, they were probably at least as concerned with protecting their own business.
As America’s culture wars have flared, religious conservatives and “indecency” opponents have been promoting an à la carte plan that would allow consumers to choose which channels are allowed into their homes, as opposed to the current system in which channels are bundled together.
Cable networks have long resisted such a system because it would reduce the revenues they receive from subscribers as well as lowering their advertising bases.
In recent months, the indecency debate appeared to have dropped off the top of the political agenda. It hit headlines yesterday, and à la carte supporters got an unexpected boost, after Kevin Martin, new chairman of the Federal Communications Commission, issued a study suggesting à la carte could benefit consumers – the opposite of predecessor Michael Powell’s conclusion.
Yet the move by Mr Martin is unlikely to result in the à la carte rules being adopted, say analysts.
“Despite the additional headline risk, the fundamental risk for both pay-TV providers and programmers remains low,” said Douglas Shapiro, analyst at Bank of America Securities, in a report. “Mandating à la carte would be a tremendously complex, controversial, and likely litigious process with unclear consumer benefits and numerous unintended consequences.”
In addition, the introduction of à la carte would require legislative changes, which analysts say Congress is unlikely to push through with any speed owing to the complications arising from technical difficulties associated with the need for digital equipment; the potential for some cable channels to go out of business; and because such changes might clash with the existing cable industry legal framework.
More likely, the FCC is believed to be using the threat of à la carte to prod cable companies to offer a less radical “family tier” of cable channels. “The cable industry will feel the pressure to do something, perhaps voluntarily, to reduce the perceived problem,” say Legg Mason analysts.
The à la carte idea first emerged as a consumer fairness issue, with advocates arguing that it would lead to lower cable bills. But it gained new momentum following the uproar over indecency after the 2004 Super Bowl show, in which singer Janet Jackson exposed a nipple on network TV.
However, the cable industry fought back, sending programmers and executives to Capitol Hill. They were armed with a study last year by Booz Allen, the consultancy, which found that à la carte pricing would increase costs of current cable packages by 7 to 15 per cent, while reducing the diversity of channels available.
With pressure building again, the cable industry is likely to step up its TV ads promoting its channel blocking tools as well as its lobbying efforts in Washington.
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