McCain Bill Proposes to Radically Alter Cable Television

Michael Teague |

John McCain Bill Proposes to Radically Alter Cable TelevisionVeteran Senator and former presidential candidate John McCain (R-AZ) introduced legislation on Friday that, if enacted, would radically alter the way consumers pay for cable television services.

The Television Consumer Freedom of Choice act of 2013 stipulates three main objectives, as McCain laid out in comments to the Senate:

(1) encourage the wholesale and retail ‘unbundling’ of programming by distributors and programmers
(2) establish consequences if broadcasters choose to ‘downgrade’ their over-the-air service
(3) eliminate the sports blackout rule for events held in publicly-financed stadiums.

McCain, who introduced similar legislation some 7 years ago to no effect, pointed to his long-standing support for allowing consumers an “a la carte” model of picking what channels they pay for, compared to the current practice of “bundling”, which forces viewers to pay a flat rate for different packages of channels.

The Arizona Senator said that this practice limits consumers’ options to being forced to pay for more channels than they may want, or to not pay for any programming at all: “This is unfair and wrong – especially when you consider how the regulatory deck is stacked in favor of industry and against the American consumer. This is clear when one looks at how cable prices have gone up over the last 15 years.”

Citing an FCC survey, McCain singled out cable and satellite service providers who have more than doubled their rates over the last two decades, as well as the big networks that sell the programming to them at exorbitant cost. Comcast (CMCSA), Time Warner (TWC), Viacom (VIA), and The Walt Disney Company (DIS) were all called out by name.

McCain said that his bill would force programmers who bundle their services to also offer them to cable providers on a per channel basis, and would forbid broadcasters and programmers from downgrading or pulling their signals, even threatening them with the loss of their spectrum allocation.

Finally, the bill proposes to repeal the “sports blackout rule” for broadcasted sporting events that take place in taxpayer-funded venues, and between taxpayer financed teams.

The Television Consumer Freedom Act is heavily reliant on the often neglected fact the that the airwaves are part of the public domain, and finds a historical precedent in efforts during the 1990s by McCain’s former Republican colleague Bob Dole. Dole was highly and vocally critical of the Federal Communications Commission when it decided to give away the first broadcast licenses to digital television broadcasters for free in 1997.

If passed into law, the bill would presumably affect all cable and satellite service providers as well as the big television networks, to say nothing of consumers and investors. One arrangement in particular that could be disrupted is the deal made not long ago between the NCAA, CBS (CBS) and Turner Cable, a subsidiary of Time Warner Cable (TWC) over the broadcasting rights for the NCAA March Madness tournament. Currently, the tournament is split across four different channels, three of which are cable, and presumably changes to the sports blackout rule could have some bearing as well.

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Companies

Symbol Name Price Change % Volume
CBS CBS Corporation Class B 54.15 2.10 4.03 11,189,671
CMCSA Comcast Corporation Class A Common Stock 66.68 0.51 0.77 7,806,127
DIS Walt Disney Company (The) 92.20 0.48 0.52 8,272,345
RCKY Rocky Brands Inc. 10.24 -0.02 -0.19 9,928
TWC Time Warner Cable Inc n/a n/a n/a 0
VIA Viacom Inc. 40.92 1.06 2.66 309,758

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