MSOs May Add Family Tier

Dec 12, 2005  •  Post A Comment

Hoping to take the momentum out of an effort to regulate cable TV’s programming content, Time Warner, Comcast and other top multiple system operators are giving serious consideration to offering subscribers a tier of family-friendly programming, industry sources said last week.

The plans, according to the sources, were still in the preliminary stages last week, and each MSO was said to be exploring the concept on its own. But a common hope is that the new packages will pre-empt escalating calls for an a la carte system that would require cable TV operators to let subscribers pick and pay for only the cable TV channels they want.

Cable TV industry operators and programmers contend that a la carte would devastate their business.

“A la carte is an economic nonstarter,” an MSO source said.

Giving cable operators incentive to deal, Federal Communications Commission Chairman Kevin Martin told lawmakers during a forum on indecency late last month that a soon-to-be-released agency report concludes that a la carte is in the best interests of consumers. The new report contradicts an FCC study released late last year, when Michael Powell was the agency’s chairman.

Mr. Martin has also made clear that he sees a family tier as an effective alternative to a la carte when it comes to addressing concerns about the edginess of some basic cable programming.

Time Warner and Comcast have particular reason to gain Mr. Martin’s favor now. They are seeking FCC approval of their $18 billion acquisition of Adelphia Communications.

If Comcast and Time Warner, the nation’s two largest MSOs, adopt a family tier, industry observers said, the concept is bound to become an industry standard.

“The whole industry is going to have to swallow hard and accept it,” said one well-placed industry observer.

Cable TV industry sources last week said they were not prepared to discuss important details about their possible tiering plans, such as which channels would be included in the packages, how the tiers would be affected by existing program contracts, what a family-friendly tier would cost, how many new set-top boxes would be needed or when a new service could be launched.

But the family tiers are expected to exclude cable’s edgier networks, such as Fox’s FX and Viacom’s MTV and VH1.

“We haven’t been contacted by either Comcast or Time Warner with respect to any tiering proposals,” said Catherine Brett, a spokeswoman for The Walt Disney Co.’s ESPN. “We have existing distribution agreements with both companies covering all of our [Disney and ESPN] networks, and we fully expect those commitments to be fulfilled.”

In his remarks during the Senate forum on indecency, the FCC’s Mr. Martin also made clear that he believes there is a third alternative for cleaning up cable programming: extending FCC broadcast indecency regulation to basic and enhanced basic cable tiers. Cable programming currently is exempt from FCC indecency regulation.

“I continue to believe that something needs to be done to address this issue, and the industry’s lack of action is notable,” Mr. Martin said.

Disney has made clear that its preferred alternative would be to extend broadcast indecency regulation to basic cable.

But the National Cable & Telecommunications Association has charged that cable indecency regulations would be unconstitutional-and that’s an opinion that was seconded in a recent Congressional Research Service report for Congress.

“In our back yard, the most viable option, if any is viable, would be [to offer a tier of] family-friendly [programming],” an MSO source said.

Still, at least some advocates are expected to continue promoting a la carte on grounds that a family tier doesn’t go far enough.

“It’s a step in the right direction but it doesn’t address the fundamental problem because it doesn’t allow families to define what a family-friendly tier is,” said Dan Isett, director of corporate and government affairs for the indecency watchdog Parents Television Council.

On a related note, the Senate Commerce Committee last week announced that Jack Valenti, former chief of the Motion Picture Association of America, and Kyle McSlarrow, NCTA president and CEO, will brief the committee publicly on indecency issues Dec. 12.

Mr. Valenti, according to the committee, is expected to provide an update on the recent call by Sen. Ted Stevens, R-Alaska, for the establishment of an industrywide uniform system of content ratings and blocking technologies that will let parents easily control what their kids see and hear.