Martin On Board with ACA on Program-Tying Issue

American Cable Association, Federal Communications Commission Chairman Still Disagree on a la Carte

By John Eggerton -- Broadcasting & Cable, 4/8/2008 1:28:00 PM

Federal Communications Commission chairman Kevin Martin told small cable operators Tuesday that he stood with them on the issue of program tying, suggesting afterward that it might include untying programming bundled in retransmission-consent deals.

Unlike larger operators, smaller cable operators represented by the American Cable Association want the FCC to require cable programmers to offer their channels individually, as well as in bundles.

In a speech to the ACA Tuesday, Martin said, "We stand on common ground" on that issue. Martin has pushed for both wholesale unbundling of programming and retail unbundling -- a la carte -- as a way to lower cable bills and give parents more control over programming. The ACA does not stand with him on a la carte, however.

"As you well know, he said, "broadcast and cable programmers routinely tie marquee or ‘must-have’ programming, such as premium channels or regional sports programming, with less desirable programming. The commission is currently considering whether to require programmers to offer their channels to operators on a per-channel basis.”

He continued, "I believe that if a cable operator only wants to carry one channel, it should not be required to buy 10 or 20 channels in order to do so. I believe this is a particularly important issue for those of you who are small operators or serve rural communities."

He framed it as a consumer issue, as well, saying that consumers were bearing the burden "in the form of higher prices."

"I take cable operators at their word when they identify increased programming costs as the reason for the dramatic rise in consumers' cable bills," he added. "As the commission examines these tying arrangements, we must bear in mind their impact on consumers in terms of prices and program choice."

According to ESPN, however, 30% of all cable systems take only ESPN and ESPN II and 25% of all systems take only ABC Family and Disney Channel, rather than having to buy them in packages with other channels. AS for the high cost of programming. Proramming costs as a percentage of total expenditures has remained flat, counters ESPN spokesperson Katina Arnold.

After the speech, Martin amplified tying to include retransmission-consent negotiations, in which owners of both cable channels and TV stations often make carriage deals that include both.

According to a source, Martin suggested that for "particularly expensive programming over a certain amount" -- say 75 cents or $1 per subscriber, per month -- unbundling should apply.

Martin said he was concerned about programming tying arrangement's impact on small programmers and consumers’ cable bills. He also cited the impact on new programming, which might get pushed off cable systems.