The Trouble with A la carte
Posted on May 14, 2013 by Hilary Shelton, Senior VP Advocacy & Policy/Director of the Washington Bureau
A la carte was the really bad idea from several years ago which would have required cable and satellite companies to provide customers access to channels on a “price-per-channel” or a la carte basis. These companies would have also been forbidden from providing that programing in the tiers that over 100 million households currently buy from DirecTV, Comcast, and Verizon.
At the time the proposal was first floated, the NAACP strongly opposed a la carte as it would be economically detrimental for communities of color, and we still harbor those concerns today.
When legislation was first introduced in 2006 to mandate per-channel pricing the idea was notable mostly because of the near universal opposition it generated from virtually every political persuasion and perspective. The civil rights community, women’s organizations, the leading sports programmers and organizations, religious programmers, social and economic conservatives all joined forces to say the idea was bad, very bad.
Every reputable study shows that the a la carte would dramatically raise prices for most consumers (anyone who watches more than a handful of networks) and kill diversity in programming.
The cable industry’s practice of creating program packages, or “tiers,” created the abundance of programming available today – literally hundreds of channels. Tiers combine new networks with established networks, thereby allowing new networks to be sampled by consumers. In this way, new networks are able to find and build an audience. Tiers provide a critical financial base for new networks to obtain the revenue necessary for survival. And over the years the multi-channel video distributors have provided more and more differentiated tiers of service in response to consumer demand for more choice.
New niche networks, from TVOne to Speed to the religious broadcasters would never survive a per-channel pricing regime. These networks rely on tiers, which give them a much broader exposure and thus more growth. The tiers also mean that more eyeballs will see a niche network – when channel surfing for instance – and that means more revenue.
Reviews by the Government Accountability Office, the FCC, Bear Stearns and others all confirmed these basic and immutable facts. For example, the GAO found that in an a la carte world, “some cable networks, especially small and independent networks, would not be able to gain enough subscribers to support the network.” And financial analyst Bear Stearns concluded that “many of the smaller, nascent networks would find it difficult to survive in an a la carte environment, reducing consumer choice.”
And its not just new networks that would get hurt in a price-per-channel approach. Most consumers would suffer as well. Expensive networks – like ESPN for instance – would become far more expensive for consumers if the large production costs were spread out among a smaller customer base.
Today, cable, satellite, and telephone companies offer access to hundreds of channels. These include networks devoted to children and families, women’s issues, news and public affairs, minorities and foreign languages, sports, science, history, religion, music, technology, and more. And there is more diversity and choice today than there ever has been.
That’s why a la carte was so vehemently opposed the last time it was proposed, both by big successful general-audience programmers and by minority programmers and others targeting diverse audiences. During the last debate, the NAACP’s was joined in our vocal opposition by, among others, the Leadership Conference on Civil and Human Rights; the National Urban League; the Congressional Black Caucus; the National Coalition on Black Civic Participation; the League of United Latin American Citizens; the Hispanic Federation; the Minority Media and Telecommunications Council; and the Presidents of BET, TV One and Sí TV (now nuvo TV), Nickelodeon, the Food Network, Home and Garden Television, Oxygen; and Univision.
The NAACP strongly opposed a la carte then and we do now. In short, a la carte would cause serious harm to consumers, and especially viewers from communities of color, by reducing the programming diversity they enjoy today.
One of the lessons learned in the previous election is that both parties need to reach out and address the needs of diverse communities – including African Americans, Hispanics and other communities of color. A la carte goes in exactly the opposite direction and is aimed squarely a squelching new and emerging voices on television that represent the proud and diverse fabric that is contemporary America.