The indecency wars: Book II

You know that old political axiom that says, “When they say it’s not about the money, it’s about the money?” Well, in the case of FCC chairman Kevin Martin's "a la carte cable" study that made headlines yesterday, we have the reverse. Because when Phyllis Schlafly, Brent Bozell, Rev. Jerry Falwell, James Dobson and Rev. Donald Wildmon all swear that a plan to give Americans a la carte cable is all about the money, you can be assured of this: It’s not about the money.

The double-spaced, 61-page report issued under the good-enough-for-government title, “Further Report On the Packaging and Sale of Video Programming Services To the Public,” effectively reverses a report commissioned by Martin's predecessor, Michael Powell. That 2004 FCC study found that forcing the industry to offer cable on a per-channel basis would not produce savings for consumers.

As my editor pointed out this morning, when you buy food off the menu a la carte, do you really save money?

Anyway, Martin's rebuttal was issued Thursday. In the early news reports, most people missed the fact that Martin, and Martin alone, issued it. His fellow commissioners were en route to Texas for a community FCC meeting being held this morning. Only Martin issued a statement. In it, he declared that the “the earlier report contained mistaken calculations” and that his version 2.0 “reveals that a la carte … could offer consumers greater choice and the opportunity to lower their bills.”

The story had undeniable news appeal. Almost everyone has experienced the heartbreak of opening the monthly cable bill and seeing the annual rate hike has gone through.

Martin knows this. He didn’t get into Harvard Law School for nothing. But we need to see this bureaucratic maneuver for what it really is: an incredibly brazen attempt by Martin, and his allies on the religious right, to get the federal government into the business of regulating what people can and cannot watch on cable TV.

“This is not a consumer protection measure,” said John Higgins, (deputy editor) and finance columnist for the trade publication Broadcasting & Cable. “This is about indecency control. He whipped out this a la carte idea in the middle of an indecency hearing. It startled us all.”

The proposal involves a simple trade-off: The FCC, under Martin’s leadership, force cable operators to move to an a la carte system. You save a couple of bucks on your cable bill.

And MTV — smutty, filthy MTV — goes away. Or so the theory goes.

If you're a regular reader of TV Barn, you know this. The week after the Janet Jackson Super Bowl incident two years ago, I quoted the research director of the Parents Television Council, the outfit that monitors TV shows for dirty content, as saying that the broadcast networks were just the beginning. It would begin monitoring MTV and other networks on cable, “to express our displeasure and hold them accountable,” in her words.

Sure enough, the Parents Television Council issued a press release Thursday lauding Martin. The PTC's chief, Brent Bozell, wrote, "Cable Choice will help, not hurt, consumers. Consumers – and especially families – must be afforded the ability to pick and choose and pay for only those networks they want in their homes.”

Martin’s proposal has other cheerleaders behind it, most of them with conservative Christian, Republican Party ties, including the American Family Association in Mississippi, which led the recent protest against NBC’s “The Book of Daniel,” and the Concerned Women for America.

That's not surprising, according to Jeff Chester of the Center for Digital Democracy.

"Martin and the Bush Administration are catering to one of their core constituencies," he wrote me this morning. "I am no fan of cable; I am one of its biggest critics." (So is his wife Kathryn Montgomery, whom I quoted in this story.)

But, says Chester, "the move to a la carte was not motivated about saving consumers money.  It was to help deliver a promise to conservatives that the Bush FCC would address so-called programming indecency.  They helped Martin get the chair's job."

Martin’s report never comes right out and says that a la carte will lower your cable bills. Again, he is too smart to try that. Instead, like CNN playing that oh-so-brief video clip of Janet Jackson’s breast over and over and over, Martin is interested only in creating a perception, not establishing something as solid fact. The perception is that he's out there, fighting for the consumers. The fact is that he's in service to the Schlafly wing of the GOP. (By the way, former FCC chair Michael Powell, whose report is the punching bag in Thursday's "Further Report," now can claim one more shared experience with his father, former Secretary of State Colin Powell: They both know what it’s like to be stabbed in the back.)

If you actually read the report, you'll be amazed at how little Martin actually asserts as fact. There are a thousand “coulds,” “mights” and “mays” the cumulative effect of which is to create the perception it has refuted the Powell report line by line. In reality, Martin's report has more fudge in it than Grandma’s cupboard.

Take the Economic Appendix in the back. It does little more than refute the same portion of the Powell report. It's a purely academic exercise -- one guy's economist nitpicking another guy's economist -- completely divorced from the real world.  Here's a sample:

Suppose that there are two buyers (Aaron and Betty in the table below) and two networks, X and Y, which are assumed to have $6 in programming costs each. Suppose that Aaron values Networks X and Y at $5 and $3, respectively (instead of at $5 and $2, as described in the example in the Economic Appendix to the First Report), and Betty values Networks X and Y at $3 and $5 respectively (instead of at $2 and $5 as described in the example shown in the Economic Appendix to the First Report). Then the profit maximizing a la carte price for each network is $3, generating two sales of each network and total revenue to the cable operator of $12. This revenue is sufficient to cover the assumed programming costs of $6 for each network. The bundled price, however, is $8, so that consumers are forced to pay $2 more than under a la carte for the two networks. The total revenue under bundling is $16, which covers the programming costs of $12 and provides a profit of $4.6 Thus, with bundling, consumers pay more than they would under pure a la carte without getting more service.

What -- other than taking my name in vain -- does this example accomplish? It sufficiently muddies the economic waters and ensures that a raging debate will continue over whether a la carte does or doesn't save money for we the consumers.

Meanwhile, the Trojan horse of cable indecency gets waved right through. The FCC knows it cannot win an indecency case against MTV, no matter how much evidence the PTC watchdogs collect. So instead, it is going the intimidation route. It may just work.

 

Comments

[Joe]

"When you buy food off the menu a la carte, do you really save money?" Er, I do. I'm not a big fan of either refried beans or Mexican rice. So, when I go to a Mexican restaurant, I can save a few bucks by ordering two tacos off the a la carte menu instead of the taco platter.

But of course lots of people do like beans and rice. So, the restaurant gives us all a choice -- a la carte or by the plate. And, believe me, it makes plenty of money off of either option.

Now, let's strain the analogy a little further: What if all the tacos in the world were sold by the same taco supplier, which insisted that rice and beans had to come with every taco. How good do you think those rice and beans would be?

That's what you have with the cable/satellite networks (Fox, ABC,Viacom, etc.). No venue offers true a la carte pricing, so there is no alternative.

It's even worse: You can't even get the tacos and rice and beans unless you also agree do buy soft drinks from the same guys.

OK, I'll stop the bad analogy here. The point is, evil programming giant FoxNews got its start because Fox insisted that cable systems had to run the channel if it wanted to permission for Fox over-the-air programming. Local systems had no choice. (Another example: ESPN-2 became a must carry for systems that wanted ESPN; VH1 was a prerequisite for keeping MTV.)

And, that's where the power of a la carte comes in. The current system is a welfare state. NBC, for example, gets its money for MSNBC, CNBC, Bravo, ShopNBC, etc., and has no incentive to "work for it." Maybe a Bravo wouldn't be so inclined to run the same Poker and informercial programming ad infinitum if it found no subscriber base would support it.

Finally, your supposition that this must be a bad idea because boneheads like Bozell support it is ridiculous. For better or worse (and I think it's for worse), Bozell has gotten rich and wielded huge influence with the current system. He'll be no worse off if the current system stays in place. And, if his favorite bully pulpit, FoxNews, were subject to the realities of a free marketplace, he could find himself with no voice at all. For, outside of its core constituency, who is going to pay a la carte for Fox?