Disney Supports Bundling in FCC Filing

Media Giant: Federal Communications Commission Has No Jurisdiction to Prevent Bundling

Disney, with its ESPN becoming something of a poster channel for those criticizing the pricing of must-have programming and its bundling with other channels, told the Federal Communications Commission that it has no jurisdiction to prevent such bundling.

In comments to the FCC -- which, in September, opened an inquiry into whether it should step in and regulate bundled-programming arrangements -- Disney said the commission has no express authority from Congress to do so.

"No part of the Communications Act -- including the retransmission-consent provision, the good-faith-negotiation requirement and the unfair-competition provision -- authorizes the FCC to interfere with the substance of carriage negotiations," the company said.

And even if the FCC could prevent them, the company added, it shouldn't, since they are in the public interest, reducing costs to consumers as do other bundling arrangements -- such as the triple play of voice, video and data -- the FCC has found to be pro-consumer.

Using its retransmission-consent negotiations for the 10 ABC-owned stations, Disney says its packages are not "tying" arrangements because it always starts with a stand-alone cash offer, then negotiates for a deal involving other channels if the operator "does not wish to pay a reasonable amount."

In a separate filing, the American Cable Association, which represents small and midsized cable operators, argued that the stand-alone price is inflated, citing one member as saying: "Consolidation of programmers has led to more multinetwork deals, such as ESPN, Disney, Viacom and Turner network families. Either channels are directly tied or the economic penalty for not carrying them forces bundled carriage."

But ACA is not arguing for retail a la carte, saying that regime is unworkable.

Disney argued that prohibiting packaged offers would also violate the First Amendment; that it would not lead to a la carte, saying that operators would continue to use tiers to keep costs down; and that mandatory a la carte would "force consumers to pay more to get less, would decrease program diversity and would harm competition."