Speaking of of the regular media.. good piece on the cable company conglomerates.
Cable TV Packages Scrutinized
By Christopher Stern
Washington Post Staff Writer
Wednesday, May 7, 2003; Page E01
Key members of a Senate Committee lashed out at the cable television industry yesterday for repeatedly raising rates on service that effectively forces consumers to subscribe to dozens of channels they may never watch.
Senate Commerce, Science and Transportation Committee Chairman John McCain (R-Ariz.) said the price increases have followed merger wave that has left just a few big players dominating the industry. "I do not subscribe to the notion that big is always bad in the corporate environment," McCain said. "But along the way to significant consolidation in the cable industry, we have seen a pattern of annual rate increases imposed on consumers that greatly outpace inflation."
Since 1996, when Congress voted to deregulate the industry, the average monthly cable bill has risen 50 percent -- more than three times the rate of inflation.
Yesterday's hearing is one in a series that McCain has held to examine the impact of consolidation in the media industries. Next month, the Federal Communications Commission is scheduled to vote on whether to change regulations to allow media companies to get even bigger.
Cable industry executives testifying at yesterday's hearing said the rising cost of television programming, particularly sports programming, is a major reason why bills are higher. But they insisted that consumers on average tend to receive more channels for their money than they once did, giving them more value for their dollar.
Several senators said that consumers should be given more freedom to pick and choose among the channels they want to pay for.
Sen. Ron Wyden (D-Ore.) compared the predicament of the average cable television subscriber to a hungry customer who accidentally stumbles into a high-priced restaurant. "Consumers want a modest meal at a modest price and they end up being force-fed a five-course meal," Wyden said.
The industry has generally resisted such a move because many smaller channels would find it difficult to survive on their own. But Cox Communications Inc. chief executive James O. Robbins suggested that cable companies could put all programming that costs more than $1 a month a subscriber on a separate, optional tier for consumers to pick and choose from.
The proposal amounted to a slap at Walt Disney Co.-owned ESPN, which announced last week that it would seek a 20 percent increase in the fee it charges cable operators, the latest of several similar hikes over the past five years. The all-sports network is believed to be the only broadly distributed channel that charges more than $1 a month.
Robbins pinned the blame on the multimillion-dollar contracts for star athletes, which teams and leagues try to recoup by demanding more lucrative television deals. When Texas Rangers shortstop Alex Rodriguez "signs a baseball contract for $25 million a year, the team and league hike their TV broadcast-rights fees," Robbins said of Rodriguez's 10-year, $252 million contract.
ESPN and ABC Sports President George Bodenheimer issued a statement yesterday, taking exception to Robbins' proposal.
"This would produce a firestorm of protest from cable subscribers," Bodenheimer said. With the monthly cable bill running about "$40 and the net cost of ESPN at about $1, there is no basis to take that step."
More than the higher cost of sports programming, McCain suggested consumers are suffering because the cable industry does not face enough competition.
McCain said he was disappointed that the federal government rejected last year the proposed merger of two satellite television companies, EchoStar Communications Corp. and Hughes Electronics Corp, parent company of DirecTV, the nation's largest satellite provider. He said the merger would have created a stronger competitor for cable.
McCain released a General Accounting Office report showing that, in markets where cable companies compete with one another, monthly rates are 17 percent below the national average. But that is in a minority of markets. Less than 5 percent of the more than 70 million cable consumers have a choice of providers. |
