FCC Rigs Cost-Benefit Report to Side With Industry on Cable A La Carte

The Federal Communications Commission (FCC) sided with the cable and big media industries against regulation mandating à la carte cable service, justifying its position with a cost-benefit analysis rigged against à la carte options. The vision of cable à la carte is that cable customers could pick and pay for only the channels they want. Most American consumers can only purchase cable service in large tiered packages, like “basic” and “expanded” service packages, which require them to pay for channels they never watch in order to receive the channels they do want. Under enormous pressure from large cable companies and media conglomerates, the FCC has signaled its rejection of the possibility of cable à la carte by releasing an analysis that it rigged in favor of the cable and media industries and against consumers. Consumers Union criticized the FCC analysis as “dramatically flawed” because it “focuses primarily on a mandatory à la carte system rather than the voluntary system Consumers Union and other public interest groups have proposed. It also inflates the cost by assuming that everyone would have to buy or rent a special cable box, when consumer groups have said that the proposal should target digital cable subscribers, who already pay for the box.” Consumers Union noted that the analysis also inflated the cost of the addressable converter boxes considered necessary for the most feasible implementation of cable à la carte. Further, the FCC’s analysis mentioned in passing without seriously contemplating the possibility that one company’s trap boxes—addressable boxes installed outside of a building—could effectively manage à la carte and mixed bundling alternatives, much less that à la carte regulation could drive down the implementation costs of necessary technology or spur other innovations. One of the most startling developments in the debate over à la carte cable is the effectiveness with which gigantic media corporations isolated consumer groups by wedging apart other potential public interest allies. The key was the industry’s re-framing of its targeted and niche marketing efforts to program for women and minority groups as public service. The megacorporations involved downplayed their control over such channels as TV-One (in which the giant cable provider Comcast is an investor) and Oxygen (likewise owned in part by Time Warner, a giant in both cable service and cable/broadcast content) and lured identity politics groups into the battle by claiming that à la carte would threaten the diversity of programming available on cable. Having successfully enlisted groups such as the Ms. Foundation, the Rainbow/PUSH Coalition, and the NAACP into criticisms of à la carte as a threat to diversity, the cable and media giants opposed to à la carte successfully downplayed the real threat to diversity in programming: their own monopolistic and monopsonistic market dominance. Two key factors contribute to the current market climate, which à la carte would counteract: Media Consolidation: Most broadcast and cable channels are owned by a small number of gigantic media corporations. Many cable channels, such as ESPN, are in such demand that they are essential components of any successful package in the current non-à la carte tiered-and-bundled market. The companies that own these must-carry channels, especially the broadcast networks, are able to exploit that dominant position by forcing cable providers to carry other channels in the media companies’ portfolios. This factor is particularly relevant in the retransmission agreements that any cable company must sign in order to carry the over-the-air broadcast networks, which are owned by corporate megaliths. Cable Monopsony: With the exception of a few communities across the country, American cable companies are government-sanctioned monopolies: the only company in town allowed to offer wired cable TV services. As monopoly sellers of cable service, the cable companies are, in turn, exclusive or monopsony buyers of cable programming. Accordingly, the cable companies are empowered to extract concessions from would-be providers of cable programming. Consumer groups observed that TV-One, a new cable channel created by black media entrepreneurs, is available on Comcast cable systems because the original owners finally sold a stake in the channel to Comcast. Oxygen, a new channel founded by women and directed at women, likewise secured its status when it won carriage on New York City’s cable provider—which is owned by Time Warner, an investor in Oxygen. In the current environment, it would probably be impossible for an independent or black- or women-owned cable channel to secure adequate carriage in enough cable systems to succeed as a viable enterprise, in part because media consolidation consumes most of the available real estate in a cable channel line-up, and in part because cable monopsony means that scarce channel openings will most likely be given to programming in which the cable company giants like Comcast or Liberty Media are investors. The Crowded Field The following is only a brief glance at the consolidated ownership and related investments of some of the major cable and media companies. Comcast
  • E!
  • Style Network
  • Outdoor Life
  • The Golf Channel
  • G4
  • Comcast regional sports channels
  • TV One
Disney
  • ABC
  • ABC Family
  • ESPN
  • ESPN-2
  • The Disney Channel
  • TOON Disney
  • SOAPnet
  • Lifetime
  • A & E
  • E!
  • Style
GE/Vivendi/NBC Universal
  • NBC
  • Telemundo
  • CNBC
  • MSNBC
  • Bravo
  • Sci-Fi
  • TRIO
  • USA
  • ShopNBC
  • PAX
Liberty Media
  • QVC
  • Encore
  • STARZ!
  • Discovery
  • TLC
  • Animal Planet
  • The Travel Channel
  • Discovery Health
  • GSN
  • Hallmark
  • And a stake in NewsCorp
NewsCorp
  • FOX
  • Fox Movie Channel
  • Fox regionalsports channels
  • FX
  • Fuel
  • National GeographicChannel
  • SPEED Channel
  • FOX News
Time Warner
  • The WB
  • HBO
  • CNN
  • CNN Headline News
  • TBS
  • TNT
  • Turner Classic Movies
  • Cartoon Network
  • Oxygen
Viacom
  • CBS
  • UPN
  • MTV
  • BET
  • VH-1
  • Nickelodeon
  • Comedy Central
  • TV Land
  • Spike TV
  • CMT
  • Sundance Channel
  • Showtime
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