Cable companies consider family tier
Copyright 2005 Gannett Company, Inc.
December 7, 2005, Wednesday, CHASE EDITION
By Leslie Cauley
NEW YORK -- Bowing to growing pressure in Washington, Comcast and Time Warner are considering offering cable-TV customers a special "family tier" including Disney, Discovery and other family-friendly offerings, say people with direct knowledge of the companies' plans.
The plans, which are still being finalized, are expected to be announced within the next few weeks, these people say. They declined to be identified, because negotiations among various parties are confidential and ongoing.
Comcast and Time Warner are the U.S.A.'s No.1 and No. 2 cable operators, serving 33 million subscribers. Any move they make is likely to influence other cable operators. By offering programming that is free of sex, violence and rough language, Comcast and Time Warner would address the Federal Communications Commission's increasing concerns about offensive cable content and surging rates.
FCC Chairman Kevin Martin said last week cable companies should make channels available on an individual, or a la carte, basis, so people only have to pay for what they want to watch.
The cable companies' motivation isn't entirely altruistic: Comcast and Time Warner, which are buying Adelphia for $18 billion, need the FCC's blessing to close the deal.
Their initiative might pay off for them in another way. Customers would need a digital cable box to subscribe to the family tier, so Comcast and Time Warner could further drive their digital TV business while meeting the FCC's warning call on giving consumers more choice and flexibility.
Gene Kimmelman, senior director of public policy for Consumers Union, says he is encouraged: "It's wonderful to see the big cable companies finally responding to the concerns of customers."
The success of such a tier, he says, will depend on what channels are included and how much it costs.
Disney and Discovery -- whose channels would likely be included -- have tentatively signed off on the family-tier plan, according to the same sources. But Fox and Viacom are balking, arguing that the tiers could hurt them financially.
As envisioned by Comcast and Time Warner, the family tiers would contain at most 30 or 40 channels. The same channels would still be offered on other tiers.
The tiers probably won't include Fox -- known for its racy content -- or Viacom's MTV and VH1, for years the source of complaints by parents.
Time Warner, Comcast and Discovery declined to comment. Disney, Viacom and Fox representatives did not return calls.
Programmers reject the idea of selling channels on an a la carte basis. They also oppose special tiers, seeing them as a slippery slope to a la carte.
Why so wary? Cable programmers make their money from fees per subscriber and advertising. Fewer subscribers means reduced fee revenue and fewer viewers, threatening advertising rates.