Retrans fight pushes cable closer to a la carte

A Senate subcommittee hearing on cable retransmission may fulfill the ultimate threat: Be careful what you wish for, you just might get it.

Cable operators like Cablevision Systems (NYSE: CVC) and Time Warner Cable (NYSE: TWC-WI) have been wishing for government help to stop broadcasters from holding channels hostage as part of retransmission negotiations, as was most publicly the case when News Corp. (Nasdaq: NWSA) pulled its broadcast array from Cablevision. "We've called for regulatory changes and we think it's necessary to fight for your customers and keep the price low for the product given the economic situation people are in," Cablevision COO Tom Rutledge said during a third quarter earnings conference call.

Help might not come in a form Rutledge might like. "We need slimmed-down channel packages that better respect what we really want to watch," West Virginia Sen. Jay Rockefeller and chairman of the Senate Commerce Committee told the retrans hearing, pointing that satellite and cable prices have climbed three times faster than inflation in recent years. "And we need to find ways to provide greater value for television viewers at a lower cost because people are tired of always escalating rates."

Slimmed-down packages are government code for a la carte programming, a long sought--and opposed--way of splitting apart the channel packages that both broadcasters and cable operators use to keep lesser-watched channels alive through bundled fees.

On another front, Sen. John Kerry, chair of the subcommittee looking into retransmission disputes has proposed legislation that would let the FCC determine when--and how--broadcasters could black out channels in a dispute.

"Our constituents should not be pawns," Kerry said.

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