Cable a la Carte
Wednesday, May 12, 2004SUZANNE PRATT: It`s official: the peacock is spreading its feathers. NBC and Vivendi Universal Entertainment said today they have completed their merger and the creation of a new media and entertainment giant. The new company, NBC Universal, will consist of the NBC Network, several cable channels, a major movie studio and theme parks. It also gives NBC a major television production studio, which assures future content, particularly its highly successful "Law & Order" franchise.
BOB WRIGHT, CHMN. & CEO, NBC UNIVERSAL: This was an opportunistic acquisition. We did not have to do it, but it was an opportunity, and when we really got into it, we realized that they do the same kinds of things we do. They develop, produce and market programming, their programming is almost all entertainment. We do it with news, entertainment and information. And so it gave us a sense, a great deal sense of balance.
PRATT: NBC parent General Electric (GE) owns 80 percent of the new company. Vivendi Universal (V) owns the remaining 20 percent and has the right to sell it beginning in 2006.
YASTINE: Well, NBC is just one of many programming companies that bundle its channels when selling them to satellite and cable companies. That means fewer companies own more cable channels, and it`s one reason Congress is considering a proposal to let cable and satellite companies sell individual channels to consumers. Stephanie Woods looks at the possibility of cable a la carte.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: McDonald`s (MCD) doesn`t make you buy a Coke and fries with your burger. You can choose off the menu, a la carte. But when it comes to cable TV, the channels come as a package deal. Now there`s legislation to give cable and satellite customers an a la carte option when it comes to choosing channels.
GENE KIMMELMAN, DIRECTOR, CONSUMERS UNION: We think a la carte is the best alternative now to give people at least more choice, more control over their bill and over what channels come in their home.
WOODS: But cable companies argue a la carte pricing would mean higher cable rates and fewer program choices.
BRIAN ROBERTS, PRES. & CEO, COMCAST: I think it would be -- have a huge consequence to all of what we get on television today if you can`t offer it in a package, just like a newspaper, where if you want the sports section, you`ve got to buy the whole paper.
WOODS: A la carte pricing picked up support after the Janet Jackson`s Super Bowl wardrobe malfunction. Consumer groups and conservative family activists banded together against cable and satellite providers` all-or- nothing programming choice. But analysts warn it may not be that easy.
PAUL GALLANT, MEDIA ANALYST, SCHWAB SOUNDVIEW CAPITAL MARKETS: Unless Congress is going to regulate per-channel rates for a la carte, cable companies and satellite companies could price individual channels at such a level that the whole package becomes more attractive to the customer than individual channels.
WOODS: In TV terms, Congress hasn`t had a hit in cable rate regulation. The last time Congress tried to lower cable rates, prices went up for almost a third of customers. That`s something politicians don`t want to repeat. Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.
