An FCC with a contrite emphasis on leveling the playing field with cable operators and independent channel owners, have rewritten the Cable Television Consumer Protection and Competition Act of 1992 which prohibits operators from discriminating against channel competitors. Although current rules have been enacted for almost 20 years, the process of channel carriage and positioning can be a complicated and messy process which can take years to sort out, if ever. These new rules are up-ending cable’s channel “apple cart”.
Make no mistake, the most enduring and successful programmers created channels early on, during the glory days, when negotiating channel carriage and positioning was easy, with low fees and heavy advertising revenues to support their startups. Those lucky early adopters and visionaries are now reaping the benefits of coming to the game early. But others, trying to create a unique and targeted audience can languish in TV never-never-land or not reach the channel lineup entirely, if not heavily funded with capital to burn, in order to be carried, or seen at all. See (FCC seeks more channel choices in cable lineups)
One can say that times and circumstances have changed, and that limited channel capacity and tiers created to drive revenues, have changed the channel lineup landscape. It’s true, the complexity of negotiations, pricing, and channel placement have become big business. Also true, are long-standing relationships with existing programmers, having garnered favorable channel positioning, discriminating with or without prejudice, against those late starters wishing to have similar deals. Realistically, it’s the nature of the business in 2011. With limited channel capacity and positioning options, cable operators must decide and negotiate contracts based on a much different and competitive market than in 1992.
Michael Powell, former FCC Chairman and now head of the National Cable & Telecommunications Association, indicated his displeasure upon hearing of the news saying; “the agency’s actions show a disturbing lack of appreciation of the potential impact of government intervention on consumers or the marketplace.” See (FCC order angers cable industry)
The FCC seems to being delving into a possible quagmire that can become quite sticky.
- If a certain channel position is being sought by a programmer, or if it believes it should be in a perceived neighborhood, then should it be given priority in the placement process?
- Next, what is to be done with the existing channel the negotiator is to replace? There are obvious existing agreements and customer considerations to ponder.
- How should channel ownership intricacies and preferences be regulated as not to advertently or inadvertently discriminate against competitors?
- Where do customer preferences stand in this process and how will rules affect retail pricing?
This scenario, although quite simplistic, could play out all over the cable TV universe. Since every channel owner wants the best position, with the most viewers, and the FCC steps in to decide discrimination issues, the whole “apple cart” of channel placement could be up-ended. Realistically, this does not seem to be the best solution, either for the FCC as a governing body, cable TV operators, or programmers. Forcing new channel carriage rules will just create a more expensive process for all those concerned, not to mention customers, who will ultimately suffer from increased rates and channel disruption.
Do these new rules make sense from an economic and logistical standpoint? Does it not hold more credence to referee just the most egregious offenses, based on existing rules? I’m at a loss as to how the FCC picks and chooses its rule making process. Is there a significant problem which needs intervention?