BC DC

Cable Still a Bargain, a la Carte or Not

9/11/2009 10:34:52 AM

The New York Times editorialized Sept. 5 about the federal court smackdown of the FCC’s 30% cap on cable subscribers, saying the decision was bad and that the FCC needs to step in.

The paper opined that not only should the cap have remained, but that it should have been accompanied by other FCC regulations, perhaps some form of mandatory a la carte, citing the “disturbing lack of price competition” and stifling market power of major players.

It is unusual for this blog to respond to an editorial directly, but these are unusual times for the media, still unsure just how the new FCC chairman will balance his experience as a media executive, the leavening force of a tanking economy, and the strident calls for re-regulation.

The Times suggestion of undue cable market power comes despite the fact that satellite is a growing force previously ignored by the FCC. Then there is the per-channel price, which makes cable a bargain compared to the a la carte movie system of choosing films at 10 bucks a pop, $15 if that pop includes popcorn. And that is per person. Take a family out to the movies, even sneaking in your own snacks, and you have almost paid for basic cable service for a month. Try to feed them there and you can throw in HBO and Showtime.

Combine four episodes apiece of Man Men, Project Runway, and a few guilty pleasures like L.A. Ink or Toddlers & Tiaras, and you’ve got an entertainment value. And just to remind everyone, cable is not a utility. Broadcast TV is a free alternative, and with beautiful pictures. Satellite is ubiquitous, and for the most part, can have any programming cable does at similar pricing.

Don’t fret, cable will have to provide more choice to keep up with the competition. NCTA President Kyle McSlarrow has said as much.

It is already trying to provide more choice and flexibility with more VOD-including HD versions of new movies if the FCC will get off the stick and make a decision-and with its TV Everywhere test of online distribution.

The Times once owned cable operations before selling them a couple of decades ago, so it should know that cable’s business model is based on choice, as in giving subscribers the choice of hundreds of channels and now other services like phone and Internet.

Bundling channels allows the smaller, niche networks to survive, helped by the traffic to the anchor stores in the video mall, like ESPN or Lifetime.

Critics of government-mandated a la carte have frequently invoked the newspaper business to defend their business model from critics.

The last time we looked, the Times was not allowing engaged couples, for example, to buy just the Wedding, travel and real estate sections.

Just imagine the squawking if the government stepped in and told the paper it had to sell its sections a la carte, and was warned not to charge too much for them since the whole point of a la carte was to artificially cut cable bills.

April
May