A La Carte Update
This is a brief update on the status of legislative and regulatory developments concerning proposals to require a la carte distribution of satellite-delivered multichannel programming.
A la carte legislative proposals have been floating around Washington, D.C., for some time. Last October, the General Accounting Office (“GAO”) issued a report to the Senate Committee on Commerce, Science, and Transportation, chaired by Sen. John McCain (R-Ariz.), a long-time critic of the cable industry. That report, which focused primarily on rising cable rates, found that a governmentally-imposed a la carte mandate likely would increase cable rates and would cause programming diversity to suffer. The industry (incorrectly) assumed that the GAO Report would be the end of a la carte legislative proposals.
The issue was revived, ironically, by the Janet Jackson incident during the 2004 Super Bowl halftime show, which brought the issue of indecent programming to the national forefront. Since its revival, the a la carte bandwagon has attracted an eclectic group of riders, including:
- Socially conservative interest groups (e.g., Concerned Women of America) and politicians (e.g., Rep. Nathan Deal (R-Ga.)), who view a la carte distribution of programming as a tool to curb indecent or objectionable programming;
- The American Cable Association, an association of small and rural cable operators, who view a la carte legislation as a means to control media concentration; and
- Consumer advocacy groups, such as Consumers Union, who view a la carte legislation as a way to curb rising MVPD retail rates.
In March, the Senate Commerce Committee held hearings on this issue, and in April, Rep. Deal introduced legislation that would have imposed a “voluntary” a la carte mandate on networks—i.e., networks would be required to permit MVPDs to distribute their services on an a la carte or “themed-tier” basis. Rep. Deal later withdrew that legislation, but only after the House Subcommittee on Telecommunications and the Internet (of which he is a member) agreed to (a) conduct a hearing on a la carte legislation and (b) request that the FCC study the issue.
The hearing took place on July 14. It lasted over four hours and was heavily attended by members of Congress, staff, and the public. Members seemed very engaged in the issue, but clearly there was no consensus among members for specific legislation or even a need for legislation. Program networks were well represented at the hearing by three witnesses: Paul Fitzpatrick of Hallmark Channel, Alfred Liggins of TV One, and Ben Pyne of ESPN/Disney.
II. FCC Consideration of an a la carte mandate
In May, the House Subcommittee sent a letter to the FCC, requesting that the Commission submit to it a report on a la carte or themed tier distribution of programming services by Nov. 18, 2004. The primary focus of the FCC’s Report will be whether networks should be required to allow MVPDs to distribute their services on an a la carte basis or as part of a themed-tier of services. Of particular concern is that fact that the chief of the FCC’s Media Bureau, Ken Ferree, has stated that he is an “unabashed fan” of a la carte distribution and several FCC Commissioners have expressed limited support for the concept.
On May 25, the Commission issued a Public Notice requesting comment on the subject. Initial comments in response to the Public Notice were filed yesterday. So far, over 150 sets of comments have been filed with the Commission, and more are expected. We prepared and filed comments on behalf of twenty one program networks, including:
- The Weather Channel, and WeatherScan by the Weather Channel
- Scripps Network
- Home and Garden Television
- Food Network
- Do-It-Yourself Network
- Fine Living Network
- Joint Program Networks
- Altitude Sports & Entertainment
- Casino & Gaming Television
- Comcast SportsNet
- Comcast SportsNet Mid-Atlantic
- E! Entertainment Television
- The Golf Channel
- Inspirational Life Television
- The Inspiration Network
- Martial Arts Channel
- Outdoor Life Network
- Style Network
- The Tennis Channel
- Wisdom Television
III. Next steps
The FCC has ordered that reply comments may be filed in its proceeding by July 30. We will review the initial comments in order to make recommendations about whether reply comments should be filed as well.
On July 29, the FCC will conduct a symposium to examine the legal, technical and economic issues surrounding a la carte distribution of programming on cable and DBS systems. The speakers at the symposium will include representatives from program networks, MVPDs, and advocacy groups, as well as academicians.
Finally, we plan to schedule ex parte meetings with the FCC Commissioners and their legal advisors, the chief of the Media Bureau, and the other principal players at the FCC. We may also schedule meetings with certain members of Congress (and/or their staff) who will be considering the FCC’s report. In the past, we have found such meetings to be an effective way to hammer home the key themes of our position and to put a “face” on the issue for government officials.
The a la carte issue has shown a surprising degree of resiliency in Washington. Such a legislative mandate would have profound impact on the operations and economic viability of program networks. Please contact us if you have any questions or if you would like us to assist you in participating in this process in any way.