A La Carte Cable and Politics (2007 May)

 by Barry A. Liebling

When you subscribe to cable television you purchase a “bundle” of stations. For example, Basic has the smallest number of stations, Expanded Basic has more, and Premium has the most channels. You decide which bundle to buy, but the cable provider decides what will be in the bundles. Of course, once you subscribe to a service it is up to you which channels you watch. If you find any particular channels objectionable you can adjust your cable box to block them.

A large number of people are not satisfied with bundled cable television. Rather than buying tiers of channels from the cable provider they would prefer to subscribe to channels one-at-a-time, or a la carte. They argue that they should not be forced to purchase stations they have no interest in viewing, especially stations that have material they find offensive.

The National Cable & Telecommunications Association (www.ncta.com), an industry trade group has resisted calls for a la carte services and has maintained that unbundling would not be advantageous to consumers and would result in “higher prices, less choice and diminished programming diversity.”

Among those who are calling for the unbundling of cable stations are socially conservative political organizations such as the Media Research Center (www.mediaresearch.org) with a mission to “restore America’s culture, character, traditional values, and morals,” the Parents Television Council (www.parentstv.org) “committed to protecting children and families from graphic sex, violence and profanity in the media,” and Concerned Women for America (www.cwalc.org) that does not “want to subsidize programs that, by any standard, promote immorality.”

The conservative groups are urging legislation that would require cable providers to make a la carte programming available to consumers. To a free market advocate a call for forcing either buyers or sellers into doing anything is unacceptable. Transactions of all kinds should only occur by mutual consent. But, unfortunately the cable television industry is not organized along free market principles.

Cable television providers cannot enter markets and provide services at will. Instead a provider has to strike a bargain with a local cable regulator. There are about 8,000 local regulators in the United States. The provider gets exclusive – or almost exclusive – rights to the local customers, and the local government gets a cut of the revenues.

The cable operator obtains its income from subscribing consumers. It has to purchase the channels from programmers, who often own multiple channels. For example, NBC owns CNBC, Bravo, SciFi, and USA. Viacom owns Nickelodeon as well as MTV, VH-1, and Logo.

Programmers that own multiple channels incentivize the cable operators to sell bundles and make it disadvantageous for them to offer a la carte programming. There is no doubt that Viacom will give a cable operator a better deal if it buys all of its channels rather than just a few of them. Viacom can accept a lower fee from the operator if it expects higher potential advertising revenues.

Of course the ethical way to make a la carte programming available is not to force it but to open up the national market to anyone who wants to enter. If it becomes very easy for providers to enter local markets some will offer unbundled programming packages to consumers. No cable providers would be immune from competition the way they are now.

What is likely to happen when a la carte programming becomes widely available?

First, it may truly be more expensive for consumers to buy channels one-at-a-time. Restaurants generally charge more for “a la carte” entrees than for the same food “bundled” in a dinner. Cable providers may decide to offer discounts to consumers who buy an entire array of channels.

If this comes to pass the socially conservative consumer will have a portentous choice. She can buy the less expensive bundle and simply not watch the stations she finds objectionable. Alternatively, she can actively unsubscribe from the offending stations, pay more money, and feel satisfaction that she is expressing her political position. This is parallel to what leftists do when they intentionally buy more costly “fair trade coffee” or disposable plates made from recycled paper.

Second, while a la carte consumer choices can be used to spite offensive channels it can also support favored channels – even if you never watch them. Will socially conservative consumers who do not have children deliberately subscribe to Nickelodeon to give family-friendly channels a boost?

Third, using a la carte program choices as a political tool will not be restricted to social conservatives. It is easy to imagine leftist pundits urging their constituents to subscribe to “politically correct” channels and to boycott channels that are not “progressive.”

The full impact of a la carte programming remains to be seen and may turn out to be most surprising to those who are now calling for it.

*** See other entries at AlertMindPublishing.com in “Monthly Columns.” ***


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