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Monday, April 9, 2007

A La Carte Regulation and "Family-Friendly" Programming
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Over at TCS Daily today, Derek Hunter points out why a la carte regulation is going to backfire for those who support it in the name of "cleaning up" cable and satellite television:

Smaller religious and family cable stations do not subsidize MTV, VH1, and other channels some people may find objectionable. Rather, the opposite is true, MTV, VH1, et. al, subsidize the small religious and family stations. By bundling them all together, it exposes the smaller channels to people who otherwise wouldn't choose them, netting them more potential customers. If providers were forced to offer channels individually, the small networks with few subscribers would fizzle out due to lack of exposure. Given the choice between channels, the majority of people would not pick those small channels, their potential audience would shrink dramatically, and less audience means smaller revenues. So that "solution" would actually make the problem worse.

That's exactly right and I discussed why a la carte regulation would have such unintended consequences in my December 2005 PFF paper, "Moral and Philosophical Aspects of the Debate over A La Carte Regulation." As I pointed out then:

[T]he channels and shows that these lawmakers and regulatory activists really want to drive off basic cable--MTV, F/X, Comedy Central, Spike, and so on--will likely continue to be some of television's most popular networks well into the future. They are all among the Top 20 networks on cable and satellite TV today. Even under a new regulatory regime, people will still flock to these networks in fairly large numbers.

The only thing that will change under the new regulatory regime--especially if it is an a la carte regime--is that the smaller, niche -oriented networks could be driven under if they lack the support of stronger networks and TV advertisers. If cable is "unbundled" what that really means is that the contracts that content providers strike with video service operators must be voided. (Although that is troubling in its own right, I’ll ignore the fact that Congress is abrogating contracts to concentrate on other themes here). This move will certainly have adverse consequences for smaller cable networks, many of which only exist because they are bundled alongside other networks. In other words, a la carte threatens the rich diversity of content we are currently offered in our 500-channel universe of cable and satellite programming. For example, religious and female-oriented cable networks are opposed to a la carte because they are rightly concerned about their chances of survival in an unbundled world.

In the meantime, a la carte isn't even going to help lower monthly prices for most subscribers for reasons Prof. Thomas Hazlett of George Mason University makes clear in this study.

Of course, none of this will likely stop the a la carte train from rolling down the tracks. This regulatory crusade continues to gain steam and supporters of a la carte mandates aren't going to understand how destructive these rules are until they see them in action.

posted by Adam Thierer @ 10:13 AM | A La Carte , Free Speech

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