THURSDAY - FCC DOES A TURN-AROUND

In what appeared to be a 180-degree turn, the FCC on Thursday released a study concluding that an a la carte system for selling cable channels would offer consumers "substantial benefits," including a reduction in their cable bills of as much as 13 percent. In November 2004, the FCC issued a report concluding just the opposite. The current study said that the earlier one was flawed because it contained inaccurate information from a study by Booz Allen Hamilton Inc. that was funded by the National Cable & Telecommunications Assn. That study concluded that an à la carte system would result in blacking out niche networks, thereby reducing choice, and cause companies that sold advertising over a combination of channels to depend on revenue from only the surviving ones, thereby forcing them to raise their rates for those channels. Booz Allen Hamilton, while admitting that it erred "in one of our calculations" -- since corrected -- nevertheless said that it stood by its conclusions and underlying assumptions. In a statement, Sen. John McCain of Arizona, who has been pushing for an à la carte system, stated: "The report confirms what I have believed for years -- if consumers are allowed to choose the channels their families view then their monthly cable bill will be less. Choice is far preferable to being forced to buy a host of channels they don't even watch." Kyle McSlarrow, president of the National Cable & Telecommunications Assn., commented, "It is disappointing that the updated report relies on assumptions that are not in line with the reality of the marketplace." The study was particularly welcomed by conservative family groups who saw an à la carte system as a way to block "indecent" programs from coming into homes. But religious broadcasters warned that such a system could shut them down. Rod Tapp, an executive with the Inspiration Networks, told today's (Friday) Chicago Tribune that it "could represent the death knell for much of the wholesome programming available today from smaller independent channels" like his. And Geraldine Laybourne, chairman of the Oxygen network, observed in an interview with the online edition of Broadcasting & Cable: "TV viewers often don't know what they want to watch until it's there for them as an option. Who would have known to subscribe to Bravo to watch Queer Eye for the Straight guy prior to it airing? Hits come from new channels all the time. Would consumers really want to switch networks every few weeks so they can watch the newest shows on cable? And how would shows become hits if they don't have the viewers to watch them?"

10/02/2006