PTC, McCain Slam FCC on 'Carte’ Report

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Washington — The Parents Television Council, claiming cable television is flooded with obscene and pornographic content, ripped a Federal Communications Commission report that found the per-channel sale of networks would cause more harm than good, even for subscribers that want to block indecent programming.

“The FCC’s report on 'a la carte’ was hopelessly inadequate, as it barely mentioned the prime reason that so many people want cable choice: Cable is completely awash in raunch,” PTC executive director Tim Winter said in a statement.

The agency’s report, released Nov. 19, found that a la carte carriage would raise rates for consumers that wanted to continue to watch their favorite channels, disrupt the operations of cable operators and inflict likely ruinous pain on small networks that couldn’t survive outside a large tier.

'PARADE OF HORRIBLES’

Sen. John McCain (R-Ariz.), who has pushed cable to offer more services a la carte, complained the report failed to give proper weight to cable pricing plans that included both tiers and a la carte menus.

“Instead, it appears the industry has been successful once again in distracting policymakers with a 'parade of horribles’ that they allege would result from a mandatory a la carte offering,” McCain said in a statement Nov. 19.

McCain, who steps down next year as chairman of the Senate Commerce Committee, said he would continue to work to lower cable rates and inject greater competition into the pay-TV market.

The FCC report concluded that efforts to promote more competition in the pay-TV distribution market — whether from TV stations that use their digital spectrum in flexible ways, or from big phone companies rolling out fiber networks — was preferable to upending cable’s established business model.

The PTC is a leading advocate for greater enforcement of federal indecency laws against broadcasters, as well as the a la carte sale of cable networks so that parents don’t have to pay for channels they consider harmful to their children.

Because of the PTC’s dissatisfaction with the FCC’s study, Winter said his group would ask the agency to prepare a new report on indecent cable programming and demand that the cable industry yield on the a la carte issue.

PTC released a study last week that included excerpts from Comedy Central, MTV, E! Entertainment Television, Spike TV, TBS and FX which the group said proved that basic “cable was awash in raunch” that had to be stopped if a la carte were not an option.

“If the cable industry won’t do it, then we’ll take our fight to our elected officials, and demand that they give American families the freedom to choose smut-free television,” Winter said.

Legislation that would have banned most violent programming on cable until after 10 p.m. died in the Senate this year.

The cable industry has said that time restrictions on pay-TV services violate the First Amendment. In March, McCain withdrew a proposal requiring cable and satellite to offer a la carte under FCC regulation.

TIERS ARE EFFICIENT

In the report prepared by the Media Bureau staff, the FCC addressed the relationship between a la carte and indecency.

The agency concluded that the sale of cable networks in tiers was more cost efficient than per-channel sales, citing a host of factors that would drive up consumer costs and drive out niche networks from the market if tiers were unbundled.

In an a la carte world, the FCC found, the price of nine networks would approximate the cost of expanded basic. Since the average consumer watches 17 channels, the price of cable would rise for consumers that wanted to pay to continue to maintain access to their favorite 17 channels.

The FCC said a la carte would raise cable rates between 14% and 30%, before factoring in set-top box rental fees.

As a result, the agency said channel blocking would cost consumers less than a la carte, given that many cable companies have promised to provide free blocking technology to those that need it.

“As a tool to allow subscribers to block objectionable content from reaching their homes, an a la carte requirement seems to be a particularly blunt instrument,” the FCC said. “Technical solutions that block unwanted content exist today at a lesser cost than a mandated a la carte requirement.”

Officials at Scripps Networks, which includes Home & Garden Television and Food Network, expressed satisfaction with the FCC’s findings.

“We’re in agreement with what the rest of the programming community felt,” said Susan Packard, Scripps Networks president of affiliate sales and international development. “A la carte would be really disastrous. It would be a very negative thing for the consumer to have an a la carte option, and in the past it hasn’t worked anyway. It’s one of those things that sounds really good, but when you try to execute on it, it all falls apart.”

A la carte would have been especially detrimental to Scripps Networks, whose services are all about 10 years old or younger. Compared with the more-established channels, the Scripps services depend more on advertising revenue than affiliate license fees.

“We tend to be much more ad-supported in terms of our revenue structure,” Packard said. “So it’s impossible to imagine us having a business in the future if a la carte were to be enacted. Then our ad structure, really our model, is destroyed, because we are so much more dependent on ad revenue than we are on licensing revenue.”

CONCERNS FROM ACA

The American Cable Association, which represents small, independent cable operators, said it agreed with the FCC that mandatory a la carte was a bad idea. But in its remarks on the wholesale market for programming, the FCC raised concerns and questions about issues that are on the top of the list for the ACA, such as retransmission consent, antitrust, bundling and tying and rate discrimination.

“Now the FCC has basically said mandatory a la carte is not a good solution,” said ACA president Matt Polka. “We agree with that. That issue is now off the table.”

With the “red herring” of a la carte put to rest, now it’s time for Congress to examine the other issues that the FCC talked about in its report, Polka said.

But the FCC report stated that retransmission consent — the right of broadcasters to negotiate the terms of cable carriage — appeared to be working in the manner designed by Congress, and anti-competitive issues raised by small cable companies were better left to the Justice Department’s Antitrust Division.

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