Comments in FCC's A La Carte Proceeding
The FCC issued a Public Notice last week requesting comments on a la carte and “themed tier”1 programming and pricing options for programming distributed on cable television and DBS systems (“MVPDs”). The Notice was issued pursuant to a letter from House Energy and Commerce Committee members, which instructs the FCC to study the practicalities of a la carte and to submit a report to the Committee by November 18, 2004. The Committee’s letter asks the FCC to address numerous issues concerning a la carte carriage including the current ability of cable and DBS operators to offer programming on an a la carte or themed tier basis; the impact that any federally imposed requirement would have on consumer rates; the ability of programming networks to attract advertising revenue; the impact on programming diversity; and the constitutionality of any such requirements.
The report sought by the Committee is intended to help lawmakers decide whether to adopt legislation that would either require MVPDs to offer programming on an a la carte or themed tier basis, or that would require programming networks to make programming available in this manner so that MVPDs could “voluntarily” offer a la carte or themed tiers. Either way, such legislation would threaten the very foundation of program network distribution – the tiering model. The tiering model has enabled cable networks to generate revenues – through subscription fees and advertising – necessary for networks to become and remain commercially viable, and to offer the diverse, niche programming that consumers have come to identify with cable television. Under the tiering model, the number of cable networks has grown to over 400. The a la carte model being considered by Congress threatens to undo that growth, and would require a fundamental restructuring of the cable and programming business.
We will be filing comments in response to the FCC’s Notice on behalf of our program network clients. In addressing the questions posed by the FCC, our comments will demonstrate that a la carte is not a viable business model; that it threatens the ability of cable networks to generate subscription and advertising revenue; that it would inevitably reduce, if not eliminate, program diversity; and that it would ultimately increase the prices to consumers. CRB intends to draw upon the experience of its program network clients to demonstrate that it is not possible to launch and sustain new networks when the only available platform is a la carte or themed tiers that necessarily would have lower subscriber penetration. The niche networks represented by CRB are particularly well poised to make this showing because they can provide anecdotal evidence of the need for wider distribution, especially in the start-up phase.
Please contact us if you are interested either in participating in joint comments to be filed on behalf of a group of program networks, or in individual comments. With initial comments due July 8, it is particularly important that we hear from you as soon as possible.
1 "Themed tiers" are smaller tiers of programming centered around a particular theme of programming.