Tough Stance for New NCTA Chief

Mar 28, 2005  •  Post A Comment

With lawmakers threatening to extend their crackdown on indecency to the cable industry and vows of competition from telephone companies on a precipitous rise, Kyle McSlarrow could hardly have picked a more challenging time to step in as president and CEO of the National Cable & Telecommunications Association.

But in an interview last week with TelevisionWeek‘s Washington bureau chief Doug Halonen, Mr. McSlarrow made clear that the industry won’t capitulate to initiatives aimed at regulating cable programming.

The former Bush administration executive, who began his NCTA job March 1, also said the industry will continue to fight efforts by broadcasters to require cable operators to carry all of the programming streams offered on digital TV channels-even though broadcasters believe the initiative may have been given new life by changes in leadership at the Federal Communications Commission.

TelevisionWeek: Sen. Ted Stevens of Alaska has basically told cable to retier to give subscribers the option of a family-friendly tier of programming or face the legislative consequences. What are you going to tell Sen. Stevens when he visits the NCTA convention (April 3-5 in San Francisco)?

Kyle McSlarrow: First of all, he hasn’t necessarily told us anything. I’ve seen the comments printed in media reports. But more importantly, I’ve talked to him. I’m not going to go into a lot of details here. But the process here is we are listening to him. We’re explaining what it is we’re doing today. We’re trying to understand not just his concerns but we’re meeting with lots of members and trying to work through whether or not their concerns are being addressed by things we’re already doing today.

TVWeek: Sen. Stevens has said consumers don’t feel blocking technology goes far enough to adequately resolve their concerns, that they do not want to have to subsidize programming to which they object. What do you tell him?

Mr. McSlarrow: This is an issue that the industry has treated seriously already, is my point. I know that economics isn’t everybody’s favorite thing. But there’s a strong case to be made that the choices that are available to consumers today are as cheap as they are precisely because the market between providers and consumers has developed something we call tiering, which we actually live with in our everyday lives and don’t even realize it. Newspapers are tiered in that sense. People in other contexts intuitively get why that works, why packaging actually works to the benefit all.

TVWeek: So you haven’t ruled out retiering?

Mr. McSlarrow: I’ve seen nothing that’s persuaded me that that’s the fix that’s necessary. I do think we have to listen and continue, ourselves, being creative about possible solutions.

TVWeek: It seems pretty obvious that the landscape on tiering issues has changed since Sen. Stevens has been in there as Senate Commerce Committee chairman, because now you’ve got Sen. Stevens, Congressman Joe Barton, the Republican chairman of the House Energy and Commerce Committee, and new FCC chairman, Kevin Martin, who have all gone on the record saying they want cable to retier.

Mr. McSlarrow: What matters to me is what they say to me. What matters is the here and now. I’m prepared to listen and work with anybody on these issues. I’m not going to assume anything away. I certainly don’t go into it with any illusions about where people’s positions might be. I do think that we have a case that needs to be made. We will make it. We will also listen at the same time. And then we’ll see how it goes.

TVWeek: The Walt Disney Co. has made clear that it would prefer leveling the playing the field by simply extending broadcast indecency regulations at least through the enhanced basic tier. And Disney has argued that there’s no real constitutional distinction between broadcast and cable anymore. Has Disney really blown a hole in the cable industry’s arguments here?

Mr. McSlarrow: No. No policymaker is making policy judgments based on what the Disney company is saying. They’ve arrived at a concern because they’re concerned. Our industry as a whole has a lot in common and a unified voice on many issues. There are some places where we simply don’t. The strength of our position on these kinds of issues is not going to be hurt at all whether or not there’s one or two companies that have a difference of opinion, which is fair. It will get hashed out in the arena of public debate, one way or another.

TVWeek: With Rep. Barton, Chairman Martin and Sen. Stevens all on board for a family tier, it seems like a tricky political issue for cable, too, because they have their hands on the regulatory levers for a lot of other things you are going to need.

Mr. McSlarrow: The key thing is we’re engaged, and we’re engaged on a lot of fronts, not just issues surrounding indecency. We’re covering a lot of issues, and you’re right, there’s a lot on the plate. So the obviously intelligent thing to do is to keep our eye on the bigger picture here and not just [on] one issue. It’s not going to drive everything else.

TVWeek: The broadcasters regularly alleged that Chairman Michael Powell was anti-broadcaster and pro-cable. On the other hand, the broadcasters see Kevin Martin as a friend. I’m wondering if cable feels threatened now that you’ve lost your old friend Chairman Powell?

Mr. McSlarrow: It would be an odd situation and very rare that any commissioner or chairman would be uniformly in lock step with any particular industry. The main thing is are we dealing with people who are open to listening to us and allow us to make our case and are we doing the job we need to do to make our case? I have no doubt that any of these commissioners will allow us to do that.

TVWeek: With Chairman Martin now in charge there and with some new commissioners cycling in, do you think there’s a threat that you’ll have to have that multicast battle again at the FCC, and this time around do you think you’ll lose? (In a major loss for broadcasters, the FCC recently voted 4-1, with Mr. Martin the sole dissenter, to reject a proposal to require cable operators to carry all of the programming streams broadcasters multicast on a digital TV channel.)

Mr. McSlarrow: I don’t think we’re going to have to have that battle again.

TVWeek: Why not?

Mr. McSlarrow: Because I think they’ve ruled on it twice now, and it’s clear that Congress in some form or another is going to get into the Telecom Act, and I think the interplay between what Congress is doing and the FCC is doing now is probably going to be a factor in a way it might not have been in the last couple of years. [The FCC has] enough on their plate … that it doesn’t seem to be a very useful expenditure of time.

TVWeek: Sen. Stevens recently told reporters that he favored a multicast carriage requirement that would require cable operators to carry the main signal and any additional programming stream that focused on public service, and his examples were news and weather. Would that be something that cable could support as an alternative?

Mr. McSlarrow: We’re in a position where anytime anyone’s offering compelling content for customers it is in our interest to carry it. Now we don’t need the government to tell us what that is. The customers are going to drive that, and we’re going to end up doing it because otherwise they wouldn’t end up being our customers for very long.

TVWeek: What do you see as the big challenges or threats to the cable industry?

Mr. McSlarrow: Everybody wants to offer video, you know. That’s our core business. But the good news is that the leaders of this industry long before I arrived here figured out that the way to stay ahead of the curve was to innovate and made the decision to invest $95 billion in the infrastructure to begin broadband deployment and to begin offering high-speed Internet service and video-on-demand. And increasingly giving customers the kinds of control and choices they can’t get anywhere else. And as long as we stay ahead of that curve, I think we will do very nicely.

TVWeek: What do you see your GOP credentials doing for the industry?

Mr. McSlarrow: I think the partisan credentials are overstated. Obviously, there is a set of relationships that I bring to this job with the leaders in the House and the Senate. That’s a useful thing. But people often confuse having people willing to listen to you as being the same thing as being willing to agree with you. You still have to be an effective advocate. You still have to have the arguments on your side.

TVWeek: Do you have any personal agenda for the industry?

Mr. McSlarrow: It’s hard for me to quibble with success. It would be presumptuous for me to say, gee, you ought to completely pivot and go out in a different direction.

TVWeek: Well, for example, would you be an advocate for cleaning up the character of some of the basic tier programming?

Mr. McSlarrow: I see my role as one as an advocate for the entire industry. I don’t think it’s my place, nor am I comfortable making judgments about business decisions. I just don’t want to go there. I do think that collectively, if there’s one place where I think we all agree we could do better and where I hope actually to be able to help, is to really make the case better about just the enormous value that we offer with our services.

Too often, reflexively, people just sort of fall into the, `Oh, cable prices are too high, you know,’ and the stuff has been kicking around for 20 years. And it does not reflect the reality of what is actually happening today. Whether it’s quality of service, whether the number of services and choices people are provided, it’s changing. I think we need to be a lot more aggressive.