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Tuesday, October 21, 2008

The King Can Do No Wrong, Or Do As I Say, Not As I Do
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Although it is true that a foolish consistency is the hobgoblin of simple minds, a foolish inconsistency is worse. The FCC is guilty of the latter.

For years the cable industry has been subjected to regulatory assault in detail because it has steadfastly refused to adopt formal a la carte pricing models. As your correspondent has said before, one can argue about whether or not a la carte pricing might reduce cable rates for some class of customer (i.e., extremely light users or those who abstain from high cost services such as sports and movies), but there is no doubt that it would reduce programming diversity and diminish investment in programming services. Nonetheless, there is an appeal to the populist notion that consumers should not have to pay for programming channels they don't watch and don't want.

Why then, though, when the NFL Network -- another high cost sports programming service owned by the millionaires club known as the NFL -- asks the FCC to intervene in its carriage negotiations, would the FCC side with the programmer seeking to force itself onto the basic programming tier and thereby into the living rooms and onto the cable bills of millions of unwilling subscribers? What is it about the NFL Network that has the FCC spinning on its heels to add the cost of that service to the basic cable bill? Is it, like AIG, "too big to fail"? One might think that, so long as the FCC is interested in trading programming diversity for potentially lower cable prices, programmers seeking to use the regulatory machinery to compel basic tier carriage would be told to pound sand.

Oddly, the NFL Network probably is not even at risk should it not gain basic tier carriage. While many niche services no doubt would be unsustainable if sold on an a la carte basis - resulting in a thinner, less robust cable programming menu - services like the NFL Network with a large, dedicated viewer base likely will survive whether or not it is included within the basic tier. That is, this is not a case in which the FCC must trade off some loss in diversity to help control basic cable rates. Whatever the underlying rationale for the FCC's sympathy toward the NFL Network, it appears to be completely upside-down.

Similarly confusing is the FCC's recent decision to buy embedded advertising on a NASCAR automobile while it is at the same time contemplating limiting the ability of commercial advertisers to do likewise. According a recent Notice of Proposed Rulemaking, the FCC appears to regard embedded advertising as dangerously misleading to consumers. It is far from clear at this point what the Commission intends to do, but it certainly seems poised to do something to restrict embedded advertising.

Yet, in an effort to promote awareness of the DTV transition, the FCC recently purchased labeling rights on a NASCAR racer. Is that not, in fact, a form of embedded advertising? Will not benighted NASCAR fans be confused or misled by the messages? Shouldn't some form of disclosure be required to make it clear that the message is not that of the driver or the racing team, but of a paid sponsor? Perhaps such messages should be banned entirely because the risk of subtle subconscious manipulation is simply too great.

Or maybe the FCC's NASCAR sponsorship suggests that those concerns were all overblown from the start; embedded advertising is simply an effective means of delivering a message. If so, the FCC would do well to avoid promulgating silly behavioral rules or policies with which it will not abide.

posted by W. Kenneth Ferree @ 12:49 PM | A La Carte , Sports , The FCC

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