Sky is falling, the sequel
Senator John McCain has asked the GAO, with the FCC's help, to investigate the "skyrocketing" cable rates that customers have to "endure." The language may be alarmist, but the facts hardly support him.
As was the case last year when the Chicken Littles were convening over the same issue, and as we said on this page when this year's study came out, on a per-channel basis, cable rates as a function of money for services rendered have not skyrocketed. In fact, according to the FCC's annual study, per-channel rates increased 1.5 percent for the 12-month period ending July 1, 2001. Factor in an inflation rate of 2.7 percent for the same period and the price of cable actually went down. And that's facing higher programming costs and investment in system upgrades to bridge the digital divide, the very same digital divide that congressmen like to cite in speeches as a priority.
If the GAO wants to put a few more pennies in our pockets, we suggest it instead try to commandeer some of those barrels full of pork that regularly roll down from Capitol Hill.
While we were on the subject of off-the-wall undertakings from inside the Beltway, we were going to include in the above editorial some comment on the letter from Sen. Daschle and Rep. Gephardt complaining that the White House was getting too much coverage on the cable news networks (see page 22). It seemed to us, however, to stand on its own as self-parody. Must be something in that Potomac water.
A dose of reality
If a Kaiser Family Foundation study released last week is any indication, those blaming the high price of prescription drugs on direct-to-consumer advertising may be popping the wrong pills. Because D-to-C advertising of prescription drugs is relatively new to the mix—only since 1997—and has grown quickly to $2.5 billion a year, it is a high-profile target. But, as the Kaiser study points out, the drug companies spend more than five times that amount—$13.2 billion—on physician promotions including free samples, travel, meals and event tickets from drug company representatives. Call us small-D democrats, but we think the drug companies ought to shift more marketing dollars from physicians to the public in the form of those D-to-C ads. The public is entitled to the information.
With pressure on Congress to produce some form of drug prescription benefit bill, some ad agencies are understandably worried that drug companies will be spooked into cutting back their TV advertising as some sort of appeasement tactic. Understandably because they need look no further than NBC's decision to drop liquor ads in the face of congressional pressure to see the kind of "voluntary" steps regulated companies can be made to take.