National Regulation

NCTA Plan: Allow Limited Regulation

11/25/2005 7:00 PM Eastern

Washington — The cable industry would agree to regulation of its most-popular programming tiers for indecency — on condition that any federal legislation governing its content for profanity or sexual behavior wouldn't take effect until after the courts had ruled on the law's constitutionality.

The proposal, endorsed by the National Cable & Telecommunications Association leadership, could lead to the Federal Communications Commission's policing the content of basic and expanded-basic channels for the first time in cable's half-century of history. Violators currently can be fined only $32,500 per offense. But in February, the House passed a bill that would raise the maximum to $500,000.

Currently, the only media whose content is monitored for indecency are radio and broadcast television, on the basic grounds that they employ public airspace and are universal.

Enforcement of indecency rules can get messy — and expensive. Last September, the FCC fined CBS a total of $550,000 after it televised a brief glimpse of Janet Jackson's breast at the end of the Feb. 1, 2004, Super Bowl XXXVIII halftime show produced by MTV: Music Television.

How to deal with indecency in cable and broadcasting is the subject of an “open forum” being held tomorrow by the Senate Commerce Committee.

NCTA president Kyle McSlarrow, who industry executives say is pushing the proposal that indecency regulation might conditionally be extended to basic-cable channels, is scheduled to appear. Committee chairman Sen. Ted Stevens (R-Alaska), an outspoken critic of cable programming, has warned about possible regulation if sexual content on cable isn't kept away from kids.

On Jan. 19, Stevens is holding a second indecency forum, which will kick off a series of hearings designed to lay the foundation for sweeping changes in telecommunications law. An overhaul could radically reshape competition between telephone, cable and other communication companies.

FCC regulations generally prohibit the use of excretory and sexual dialogue and images deemed patently offensive to a typical local community. The rules apply to programming broadcast from 6 a.m. to 10 p.m. every day of the week. Violations can result in large fines and possible loss of license.

Viewer complaints typically trigger FCC enforcement, which can result in some rather arbitrary outcomes.

While the FCC fined CBS $550,000 for the Janet Jackson episode, the panel five months later refused to fine ABC for airing the film Saving Private Ryan, an intensely violent war classic laced with the F-word and scatological references.

Basic and expanded basic are the cable home of scores of networks, both regional and national. Some, like FX and MTV, have come under assault from the Parents Television Council for salacious content. If subject to indecency laws, those networks could get hauled before the FCC — not sure whether they will be treated like Janet Jackson or Saving Private Ryan.

For business and political reasons, the NCTA has concluded that allowing regulation on basic channels for indecency would be the least disruptive to the financial interests of cable system operators.

Alternatives include encouraging customers to buy programs a la carte or in small chunks of channels, such as family tiers.

But such an approach would undermine the sale of expanded-basic service as a package, breaking up the all-you-can-eat cable bill into smaller fees levied for individual portions of programming. That could strike at the heart of how cable programming is sold today.

“We continue to believe that both a la carte and tiering will disserve consumers by causing them to pay more for less,” said Preston Padden, The Walt Disney Co.'s executive vice president of worldwide government relations.

Cable executives said the NCTA's plan was the brainchild of Disney, which owns 80% of sports network ESPN, an expanded-basic mainstay.

Disney's biggest fear is a financial meltdown at ESPN — basic cable's most expensive channel — induced by a la carte and tiering. ESPN's current license fee stands at about $2.50 per subscriber, some of which is passed through to all who buy the basic tier.

While Disney's development of the plan was self-serving, cable operators gravitated toward it, sharing the view that the indecency rules were less financially disruptive than, in effect, subdividing expanded basic services.

NCTA's other programming members signed on once they found out the courts would decide if the law could take effect.

The NCTA also wants to see the indecency fight come to a conclusion so the industry can focus on larger telecommunications issues, such as whether cable systems should be neutral carriers of Internet services; how franchises to provide video programming in communities across the country should be awarded; who pays what into the federal Universal Service Fund, which subsidizes communication service to rural areas; or whether Internet protocol-based voice services should be regulated.

For years, NCTA has fought indecency regulation, claiming that because subscription video is invited into the home, it deserves greater First Amendment protection than radio and TV. Without giving any constitutional ground, cable has decided that politically, the best move now is to fight indecency regulation in the courts, according to executives familiar with the proposal to allow limited regulation of cable content.

Several months ago, McSlarrow began to pitch the NCTA's indecency proposal to Capitol Hill leaders, including Stevens, these executives said. Because Stevens was among the lawmakers who reacted negatively, McSlarrow decided to discontinue any heavy lobby.

The NCTA plan has anecdotally been derided as a “legislate-to-litigate” proposal that should not be taken seriously.

“We did not feel that a legislative solution predicated on a court decision was the right way to go on resolving the decency issue,” said Lisa Sutherland, the committee's staff director. The condition is uncommon. George Washington University law professor Jonathan Turley said he hadn't seen a law that wouldn't take effect until a court ruled on its constitutionality.

“I think it's unusual and it's also unnecessary,” Turley said. “If the industry has a leg to stand on, it will be able to secure an injunction.”

McSlarrow also spoke with FCC chairman Kevin Martin, who has pressured cable to offer more a la carte channels and family packages.

Though the NCTA plan was not exactly what he had been asking for, Martin praised it in private, according to a member of his staff.

Three top cable officials told Multichannel News about cable's willingness to allow some regulation of its content on indecency. All three — a cable-system operator, a lobbyist and a programming executive — declined to speak on the record.

Two cable lobbyists claimed that the NCTA embraced the indecency plan now to appease Martin while Comcast Corp.'s and Time Warner Inc.'s takeover of Adelphia Communications Corp. was before the agency.

Martin's top cable adviser, Heather Dixon, is legally barred from discussing the Adelphia merger under agency conflict-of-interest rules. On previous occasions, Media Bureau chief Donna Gregg and another Martin aide have disputed that Martin has put pressure on the two operators to develop a la carte channels and family tiers.

During a merger, Martin has maximum leverage to exact voluntary concessions from companies. In April, Martin said the FCC does not have legal authority to regulate cable content for indecency.

Adam Thierer, an author and media analyst at the Progress & Freedom Foundation, said it was probably a good thing that no deal was reached, because cable's gamble on winning in court might have failed.

“I think the cable industry is playing a very risky game here,” Thierer said.

Indecency Proposals
Here's where the NCTA, federal legislators and the FCC chairman stand on what kind of action could control indecent content in cable TV programming:
National Cable & Telecommunications Association: Would not fight regulation of basic and expanded basic tiers of TV service for indecent content — but only if the courts approve. Excludes premium channels.
Sen. Ron Wyden (D-Ore): Has introduced legislation that would fine cable operators that fail to create a child-friendly tier.
Sens. Jay Rockefeller (D-W. Va.) and Kay Bailey Hutchison (R-Texas): Would regulate cable programming for violence if ratings and blocking found ineffective.
Senate Commerce Committee chairman Ted Stevens (R-Alaska): Supports more family-friendly programming in basic tier.
FCC Chairman Kevin Martin: Favors more a la carte programming and family tiers from cable operators, without explicit regulation.
Source: Multichannel News research

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