Tiers and the Family Way - Multichannel

Tiers and the Family Way

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Washington — The nation's two largest cable-system operators — Comcast Corp. and Time Warner Cable — are moving toward creating new tiers of TV programming that include only family-oriented TV channels.

The potential shakeup of their programming packages comes in response to calls from Federal Communications Commission chairman Kevin Martin, Senate Commerce Committee chairman Ted Stevens (R-Alaska) and other federal officials who are concerned about excess profanity and sex appearing on home screens.

Time Warner Inc. chairman and CEO Richard Parsons confirmed that cable operators were at least investigating the creation of a family-friendly tier after his presentation at the Credit Suisse First Boston Global Media Week conference in New York Thursday.

Collaboration Underway

Parsons said the cable industry is collaborating “to find a creative response and an appropriate response.”

The sentiment was echoed by Comcast. “We have catered to individual needs in the past, whether it might be Hispanic-language programming, whether it might be sports programming, and created tiers around those needs,” Comcast co-chief financial officer John Alchin said at the UBS Warburg LLC Global Media Conference last Thursday. “If there is, in fact, a demonstrable need for a family tier and it can be accommodated within the programming contracts that we have, then we could probably” come up with a workable approach.

Parsons was vague about when a family friendly tier would be introduced, but said it would come “sooner rather than later.” A description of what would constitute family tiers of programming could come as early as today, when National Cable & Telecommunications Association president Kyle McSlarrow addresses the second indecency forum in two weeks held by the Senate Commerce Committee.

The move to family tiers would represent a major concession by the industry and likely redefine relationships between programmers and distributors. Networks once guaranteed exposure to nearly every cable home could see a decline in penetration, cutting into license fee and advertising revenue.

McSlarrow is expected, in fact, to describe how most of the ten largest operators, including Comcast, Time Warner and Insight Communications Co., are moving toward delivering 'family choice' combinations of analog and digital progams (see story at right). Martin is not scheduled to speak at the Commerce Committee forum.

MARTIN: 'Good thing'

Martin last Thursday applauded cable's apparent movement to organize voluntarily family programming tiers, “I think that's a good thing. I certainly have been encouraging all kinds of providers to try to address the issues that have been raised.''

The exact structure of a family tier is unclear and could vary from one operator to another. A family tier could be a standalone, optional product, separate from existing basic and expanded-basic offerings.

Another approach could be to add channels that are free of sex and profanity to the basic tier, which all subscribers must purchase. The later option could, in effect, transform expanded basic into the “indecent” tier, by comparison.

The push comes after cable first promoted technical solutions to blotting out indecency, telling parents to use digital set-top boxes to block unwanted channels. In the past month, some cable executives, led by McSlarrow, backed application of broadcast indecency rules to programming on basic and expanded basic tiers, which would, for instance, have cleaned up content that appears on screen between 6 a.m. and 10 p.m.

But Martin and Stevens have kept pressing for a more fundamental reformation of how cable lets families see only what each deems clean. That has raised the specter of “a la carte” programming of individual channels, which cable networks in particular violently oppose.

Comcast and Time Warner are apparently more motivated to accommodate Washington, D.C., officials than cable networks such as ESPN, MTV: Music Television and the like. The two firms currently need FCC and Federal Trade Commission approval of their $17.6 billion of Adelphia Communications Corp., the bankrupt MSO with 5.2 million subscribers.

PTC's Not Satisfied

Dan Isett, director of corporate and government affairs for the Parents Television Council, said a family tier was “a step in the right direction, but it doesn't solve the fundamental problem.” The PTC, he added, favors a la carte so parents can keep unwanted programming from entering the home.

At the UBS Warburg conference, McSlarrow predicted that Congress would not pass a law imposing a la carte pricing.

“I don't think a la carte is going to be mandated,” he said. “A la carte is just such an extreme, big government micromanagement of the private sector.”

And Alchin argued that tiers of programming still work in favor of families concerned about the content coming into their homes. Currently, he said, expanded basic programming costs $1.50 a day, for 45 channels, roughly.

“If you start doing a la carte pricing and even come anywhere near what the average viewer does in terms of television viewing and paying a la carte for that level of viewership, you rapidly go way beyond $1.50 a day,'' he said. Tiers, or bundles of channels, he said, have “added tremendous value, tremendous choice.”

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