March 21, 2013

Cable providers seek end to forced channels

Cablevision and others argue that TV producers are driving consumers to Web-based viewing.

The Washington Post

Cable viewers have long complained about paying ever-higher bills for hundreds of channels they don't want to watch. Now, in a twist, some cable companies are beginning to agree.

Verizon and Cablevision are pressing media companies that own the programming to stop pushing them to distribute unwanted channels and instead offer cable bundles based on what viewers actually watch.

If successful, the efforts could lead to cheaper options for consumers and a sea change in how the television industry has done business and protected its profits for more than two decades.

Such change has become necessary, Cablevision and other cable companies argue, as more Americans cut their cable cord in favor of cheaper Web-based video provided by Netflix, Apple and Today, 5 million households get their television solely from the Internet, up from 2 million in 2007, according to Nielsen.

But Hollywood and media companies have said that breaking up the bundles would lead to the demise of smaller niche programming that does not have mass-market appeal.

Analysts say it is too early to tell whether the spat between cable firms and their media partners will lead to lower bills or a la carte TV. Even the federal government has failed in its efforts to persuade the TV industry to charge viewers only for what they watch.

"This is the beginning," said Gene Kimmelman, a former senior antitrust official at the Justice Department. "If the conflict between cable distributors and content owners persists and prices keep rising, there will be enormous market pressure to begin unbundling offerings, give consumers more choices and ultimately let consumers control what they buy and how much they pay."

Cablevision took its case to a federal court in New York last month, suing Viacom -- owner of Comedy Central, MTV and Nickelodeon, among other programming -- for forcing the cable company to buy and distribute 14 channels that are hardly watched (including VH1 Classic and Logo). The penalty for not carrying those channels is more than a $1 billion. The suit was cheered by Time Warner and DirecTV.

Viacom and other media companies have argued that bundling allows creative minds to start new programming with less risk.

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