Turner to FCC: Tiers Make the Most Sense

Forcing a la carte sale requirements on cable operators would undermine efficiencies afforded by programming tiers, including the ability of subscribers to hop from channel to channel without incurring additional costs.

That was part of Turner Broadcasting System Inc.’s recent pitch to federal regulators, who are about six weeks away from a congressional deadline to produce a report on the pros and cons of a la carte programming.

Turner, a division of Time Warner Inc., told staff at the Federal Communications Commission last week that their economic consultants concluded that a la carte mandates would thwart cable’s ability to offer consumers a broad range of programming in the most economically efficient manner.

According to Analysis Group Inc. economists Coleman Bazelon and Thomas Hazlett, bundling “dramatically lowers distribution costs for programmers and transaction costs for customers who are able to continuously sample a wide variety of programs at no additional cost.”

The two analysts also concluded, “Bundling enables consumers to share the costs of facilities delivering a broad menu of popular services.” A la carte, they added, “results in higher prices and is rejected by consumers in those instances in the multichannel-video market where it has been tried.”

Turner’s presentation to the FCC did not discuss whether a la carte would be advantageous for consumers who want to filter indecent programming by purchasing only those channels they want.

The cable industry addressed this issue early in the year when the top 10 cable operators agreed to provide free blocking technology to consumers who don’t already have it, and cable networks reaffirmed their commitment to apply ratings and content warnings to their programming.