Editorial: Mandating a la Carte Is Not the Way to Go

Apr 5, 2004  •  Post A Comment

Selling cable TV networks individually or in small, defined groups-the so-called “a la carte” system-holds obvious appeal for consumers troubled by rising cable TV bills. It seems so simple: Receive only the channels they want in return for a lower bill. And it is an obvious way for politicians to curry favor with constituents.
However, the lesson of the recent rush to judgment in Washington on the station ownership cap and more recently on the question of broadcast indecency is that things are never as simple as they look. In fact, we believe being in a hurry to pass legislation of some kind out of political expediency can cause as many problems as it solves.
The reality of a la carte and programming tiers is that the economics are not that simple. The ability of cable networks to license and broadcast big-time sports or top entertainment programming requires a broad base of viewers that can be leveraged to attract national advertising. Without advertising and sponsorships, the entire cost would fall on the MSOs and would be passed on to consumers.
That doesn’t even take into account that many cable subscribers do not have a sophisticated enough cable box to handle multiple tiers of programming. The very people to whom saving money by going to tiers is most appealing are likely to be those who have minimum service. In the cable world, that means they probably have less-sophisticated converter boxes than do frequent consumers of pay channels and pay-per-view services. The cost to upgrade those homes has been estimated at more than $30 billion, and that too would be passed on to the very consumers trying to save a few bucks.
We think it is time for politicians and others to think outside the cable box. Let’s leave the most important events and mainstream sports and entertainment channels as they are-for a general audience. Let’s encourage the cable industry to create additional tiers with real value that would boost their economic model. MSOs can bundle lesser sports and events in a way that gives extra incentive to those interested enough to pay more.
As ratings for the broadcast networks continue to erode and license fees climb, more and more shows and big events will migrate to cable. Despite the simplistic approach of some politicians, we will need general sports and entertainment channels even more in the future to support the costs of this programming.
There are ways to help the consumer but they need study, not a rush to ram them through Congress and the White House during a politically charged presidential election year. Government does best when it creates the rules for a fair game and then lets the participants determine success or failure in an open marketplace.