Big Picture on A La Carte Diversity

The Cable Industry’s Lies about Programming Diversity and A la Carte

 

30 June 2004

 

The cable lobby has launched an effort to undermine proposals by consumer advocates that would help break the economic lock that a few companies have over multichannel programming.  Under a new A la Carte system, subscribers could choose and pay only for the channels they wished to watch.  Today, in contrast, subscribers have to accept a “bundle” of channels from cable operators.  Cable conglomerates control this bundle and are able to make monopoly profits off the channels they include.  In the words of media scholar Mark Cooper of Consumer Federation of America, this amounts to a “media concentration tax.”

Desperate to fend off a requirement for A la Carte, the cable industry has engaged in various lobbying ploys.  One specious argument is that today’s cable line-up is diverse.  The industry’s claims that many of its channels, which feature niche perspectives including those serving women and persons of color, would be threatened in a system in which consumers don’t have to accept the cable-approved programming bundle.  In Washington, DC, cable has employed its lobbyists to generate opposition to A la Carte.  On June 23, for example, a Time Warner representative helped organize an anti-A la Carte meeting that featured spokespersons from several cable channels, including Oxygen, TV One, and Si TV, whose questionable ownership pedigrees are described below. 

First, here’s a brief fact sheet responding to cable’s claims that they offer diverse programming: 

Lie 1: A la Carte will have “a chilling effect on programming diversity.”

Truth:  The cable monopoly keeps a firm grip on all programming ventures.  If they don’t own a piece of you, assuming that they even want your programming, you don’t stand a chance.  The reason there’s no diversity on cable is because that’s what the industry wants.  A la Carte will help break the stranglehold that the cable monopoly has over American programming.

Lie 2: Cable is in Favor of Diversity on TV

Truth:  The cable industry and giants such as Time Warner have bitterly fought--at FCC, Congress, and in courts--any proposal that would limit the number of channels that a single cable company can own.  According to the Writers Guild of America, six companies control much of what we can see on cable.  Only by breaking the tight grip that the cable industry giants have on channel capacity can new entrants successfully enter the programming marketplace.  For cable, diversity means meeting the needs of advertisers for highly targeted demographic marketing; it has nothing to do with addressing the needs of the public for information, news, and independent perspectives.

Lie 3: Cable is in Favor of Diversity on the Internet

Truth:  Cable is opposed to a public policy of nondiscriminatory access to the high-speed Internet.  It has employed its many lobbyists and lawyers to change the fundamentally democratic nature of the Internet by successfully obtaining new rules for broadband at the FCC.  The ACLU has called cable’s actions a serious threat to our First Amendment freedoms.

Lie 4: Cable Seeks to Promote Diverse Viewpoints.

Truth:  Cable’s track record shows a consistent pattern against diversity of expression.  Comcast and Cox, for example, refused to air ads against the war in Iraq.  Comcast has refused to support an expansion of public access in such communities as Seattle and San Jose.  Viacom (owner of BET) has refused to allow that channel to expand its news and public affairs programming services.  Comcast rejected the programming ventures of two African-American creative artists (Russ Simmons and Tim Reid) because it felt their programming plans for news and entertainment were too “high-minded.”

Lie 5: Cable is the Home to Diversely owned Channels. 

Truth:  Media concentration is one of America’s most important issues.  In particular, it is essential that the public have access to serious news, diversely owned entertainment, and programming not affiliated with the major cable/broadcast giants.  Here’s an example of so-called diversity on cable today: National Geographic is controlled by Murdoch’s News Corp; local Spanish language news channels in New York and Tampa are owned by Time Warner; TeleFutura (Univision); Toon Disney in Spanish (Disney/ABC); WHUno (MTV-Viacom); CNN en Espanol (Time Warner); Discovery Espanol (Liberty Media, Cox, Advance Newhouse); Fox Sports en Espanol (Murdoch’s News Corp); HBO Latino (Time Warner); mun2 (GE/NBC)

Who Really Owns TV One?  Comcast handpicked this new channel serving African-Americans.  Alfred Liggins’ Radio One has only 40 percent of the new network, according to its most recent annual 10 K report to the SEC.  Majority control rests with Comcast and other investors.  Comcast insisted on “operational” control of any African-American channel as it evaluated proposals from Liggins, Russ Simmons, and Tim Reid.  TV One is ultimately part of Comcast’s programming empire.[1]

Who Really Owns Oxygen Media?  Geraldine Laybourne has been the lone woman inside the all-male club of cable industry powerbrokers.  She was the one who took what was supposed to be a noncommercial channel for children and made it into a super-commercial force (Nickelodeon).  Cable has a bulletproof glass ceiling when it comes to women actually owning channels.  Some of the biggest cable companies are major investors in Oxygen, giving them significant control.  They include Time Warner and Charter Communications (via Paul Allen’s Vulcan Ventures).  The Securities and Exchange Commission is investigating Oxygen’s cozy financial relationship with Time Warner (and AOL).  According to press reports, Oxygen was able to secure cable distribution from Time Warner after it agreed to buy $100 million worth of ads on AOL.  Laybourne is also on the board of cable system giant Insight Communications.  She is frequently sent by cable to lobby on its behalf to give the industry the pretense that it reflects the interests of women.[2]

Who Really Owns Si TV?  Si TV was co-founded by former top execs of media conglomerate Viacom.  Cable giant Time Warner is a major investor (as is Echostar, which operates one of the two principal direct broadcast satellite services).  Citigroup handled the financial transaction for its well-heeled investors.  Si TV says it is “an English-language, Latino network featuring hip and irreverent culturally relevant programming targeting the growing young Latino and multi-cultural TV audience.”[3]

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[1] 10 K Annual Report filed by Radio One, SEC.  3/11/04. Diane Mermigas, “Comcast Courting Bornstein,” TV Week Nov. 18, 2002); R. Thomas Umstead, “Comcast’s Clout: Giant MSO Flexes its Muscle with Nets,” Multichannel News Nov. 25, 2002.  For an example of an independently owned African American channel having problems with cable carriage, see R. Thomas Umstead, “What’s in a Name Change? More Subs for MBC,” Multichannel News June 21, 2004.

[2] “Economics of Basic Cable Networks,” Kagan World Media (2003); “SEC Probes if AOL Double-Booked Revenue on Oxygen Deal,’ The Street.com, Nov. 7, 2002; Hoovers Online, http://www.hoovers.com/oxygen-media/--ID__59171--/free-co-factsheet.xhtml.

[3] “Si TV Adds Backing,” Multichannel News Apr. 12, 2004; “Si TV Secures Funding From Investors Including EchoStar and Time Warner,” press release, PR Newswire, Apr. 5, 2004.

Broadband Diversity and Democracy by National Organization for Women (NOW)

PRESERVING OPENNESS, DIVERSITY AND DEMOCRACY IN BROADBAND MEDIA
National Organization for Women (NOW)

2001 Conference Resolution

WHEREAS, the Internet has been hailed as the most democratic and participatory medium in history, based on principals of openness and diversity; and

WHEREAS, the National Organization for Women (NOW) recognizes the importance of the Internet and other communications media in its work, as well as its function as a vital organizing and communications tool for feminists; and

WHEREAS, these communications technologies are rapidly changing and converging as we advance in the digital age; and

WHEREAS, the very openness and diversity of the Internet as we know it is under threat by those who own and control other forms of mass media; and

WHEREAS, as digital platforms (Internet, television, cable, telephone) converge into a single delivery platform know as broadband, ownership of those platforms and content also converges, serving to reinforce the power of already enormous companies; and

WHEREAS, it is largely speculated that digital cable will become the dominant means of broadband delivery of these services and content; and

WHEREAS, cable companies operate in municipal franchises that are virtual monopolies, and cable rates have risen at a rate 3 times that of inflation since being recently deregulated, casting doubt on the notion that "competition" can successfully regulate the market; and

WHEREAS, these corporations have developed enormous influence over all levels of government and have successfully eroded regulatory standards and limits placed on their power while the public pays little attention; and

WHEREAS, most people still rely on dial-up Internet access and are able to select any Internet Service Provider (ISP) or email program or web browser, broadband operators have opposed "open access" provisions and would force customers to access the Internet through the operator's portal; and

WHEREAS, in what has been referred to as "walled gardens" these portals will direct traffic on the Internet to benefit their operators and their corporate partners, maximizing profits and substituting endless consumer choices for real information and consumer freedom; and

WHEREAS, the battle for the future freedom of the Internet and broadband is currently being fought in Congress and in the courts;

THEREFORE BE IT RESOLVED, that NOW will stand in support of openness, diversity, and democracy on the Internet and other forms of digital media; and

BE IT FURTHER RESOLVED, that NOW will take the following actions to be a meaningful and vocal advocate for broadband democracy:

 

• Empowering the Feminist Communications Task Force and a NOW Action Center staff member to address these issues;
• Applying this information to any future organizational plans for media/technology;
• Educating all members about the critical nature of these issues;
• Initiating or participating in relevant coalitions or campaigns.

Congressional Black Caucus Cable Fight

Call to Action: Congressional Black Caucus

September 26, 2003

 

1. Cable television is the dominant system delivering television in the US.

Approximately 70 percent of all households subscribe to cable television service. Only 15 percent of Americans now receive TV solely from over-the-air ("free") broadcasting. The remaining 15 percent subscribe to direct broadcast satellite services.

2. The Cable TV industry has a long history of anti-competitive practices. Hence refusal by major cable companies to give capacity to African-American-backed entrepreneurs should be viewed from that perspective.

Cable giants have often forced competing programmers to cede them control or ownership stake in their ventures, as a condition of access. Or they have blocked a proposed channel from succeeding. Hence the recent disclosure that Comcast was insisting that both Russell Simmons and Tim Reid cede it "operational control" of their proposed channels should be viewed in that light. Another example was the refusal of the cable industry in 2001 to back a public affairs channel specifically for African-American concerns.

3. The cable TV industry is highly concentrated and is dominated by a handful of companies. New FCC Rules will allow even greater consolidation.

The cable industry has dramatically consolidated, with just a few companies controlling most of the industry. Comcast (which just purchased AT&T's cable holdings) and (AOL) Time Warner dominate. Comcast now controls at least 29% of all multichannel (cable and DBS) subscribers. The FCC is expected soon to issue rules that further weaken cable ownership safeguards, and will permit further control by even fewer companies. This will foster even greater media concentration beyond what the FCC just approved last June for the broadcast and newspaper markets.

4. The Cable industry has enough capacity to add many more programming channels and new digital services.

The industry has upgraded the majority of its cable systems so it can deliver scores of new digital TV channels, pay-per-view and video-on-demand services, and high-speed Internet access (broadband). Cable's business strategy is to leverage its monopoly control over its network to dominate any new programming ventures. Cable and broadcast giants can start new channels at will, however. For example, Comcast now has a new G4 game channel and its TV One service; News Corp/Fox has just created its "extreme sports" Fuel channel.

5. Cable is also the leading US provider of broadband to the home, which will allow it to expand its monopolistic practices to new digital media.

At stake is not just competition, diversity, and access to information/entertainment in the TV market. TV and the Internet are merging as a result of broadband technology. Cable controls an essential facility through which all sorts of digital communications will flow. The ability of African-American programmers and others marginalized in today's media business to distribute digital products will be greatly affected by cable TV industry practices. Cable companies can ensure that their websites and services receive preferential online treatment-while competitors are relegated to second-class service.

6. Greater overall media concentration threatens democratic expression and competition. New FCC rules will allow for cable to merge with broadcasters and major daily newspapers in many communities.

According to a recent report from the Writers Guild of America, west, just five companies control the majority of TV channels people view. Newly formed cable giants such as Comcast can now also make or break potential cable programmers. The broadcast networks and large station groups have been able to create channels, because they successfully lobbied Congress in 1992 to give them leverage over cable operators ("retransmission consent"). But everyone else-unaffiliated, start-up, minority programmers-is left out. The upcoming takeover of DirecTV-the country's largest DBS service-by Fox and GE/NBC's acquisition of Vivendi-Universal film and cable holdings will further narrow opportunity, competitiveness, diversity, and access.

7. What can be done?

The CBC should hold national and local field hearings on cable TV's potential to serve both national and community programming needs more effectively. Congress should enact policies to ensure that both local and national programmers have nondiscriminatory access to cable and other broadband networks. The cable industry must also embrace policies that ensure meaningful diversity and choice of programming services. Congress should also repeal "retransmission consent," so that big broadcasters no longer get a free multi-billion federal handout for their cable and satellite channels.