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Calls for a la carte channels fail to unnerve cable companies

Steven Titch
November 30, 2005, 8:34am

If he surveyed today's political scene in Washington, Oscar Wilde may have quipped, "The only thing worse than being controversial is not being controversial." The day after FCC Chairman Kevin Martin called for "a la carte" cable TV pricing, reversing a previous FCC position that had been backed by research by the General Accounting Office, Wall Street reacted with a "collective yawn," as the on-line edition of Multichannel News, the cable industry trade book, reports today.
The investor indifference to Federal Communications Commission chairman Kevin Martin's comments at a Senate hearing Tuesday, where he said a la carte was feasible, mirrored the sentiments of several Wall Street analysts. In research reports in the past two days, several analysts said the possibility of forced a la carte pricing for cable networks was highly unlikely, with most adding that Martin's comments could be a political ploy to push through his longtime desire for a family-friendly tier at most [multiple system operators]. "Mandating a la carte would be a tremendously complex, controversial and likely litigious process with unclear consumer benefits and numerous potential unintended consequences," Banc of America Securities LLC media analyst Doug Shapiro wrote in a research note. "We think any change in stance by the FCC on a la carte is actually aimed at persuading the pay TV industry to offer a 'family-friendly' tier, as chairman Martin has long supported," he added. "This would have far less potential adverse impact than pure a la carte."
So much for Martin's effort to light a fire under the cable companies. The sanguine investor attitude may also stem from the simple fact that the FCC has no regulatory jurisdiction over cable. At this point, Martin's thoughts carry no more than the weight of personal opinion. Martin should keep this in mind as he picks his battles. He is just beginning to emerge from the shadow of Michael Powell, his charismatic predecessor. Yet with his call for a la carte cable, coming in the wake of his ineffectual attempt to address the VoIP 911 problem, he stands to go 0-for-2 in his attempts at policy leadership. One bit of unsolicited advice to the Chairman: While the job does require work with the broadcast industry, it is wise to keep one's distance from the glitter and glare. Ten years ago, Reed Hundt, in a similar attempt to regulate content, got star struck and spent most of his tenure preening in Hollywood circles. He got us the V-chip and content ratings, but provided little if no leadership for the telecom industry at the very period when service alternatives like wireless were booming and the Internet was emerging as commercial engine. Most analysts think that a la carte programming is a non-starter for cable companies, but may be feasible for phone companies using Video over IP platforms. Family-tier bundles may emerge as the market gets more competitive. OK, Chairman Martin is on the record as supporting all this. If the market goes in that direction, he can claim a spot on the "winning side." Beyond that, he should let it go. Read the full Multichannel News story here.


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