No easy lay-ups in distribution game

Customers face issues with rising cable bills

By BRIAN LOWRY

Comcast CEO Brian Roberts has realized that his company needs to diversify from existing means of distributing content.

A fellow UCLA basketball fan recently griped about the high cost of his season tickets. For less than the money the school is demanding, he noted, he could pay an inflated price for scalped seats to attend only the handful of games he genuinely wanted.

Without realizing it, he neatly summarized the issue facing consumers presented with the prospect of rising cable or satellite bills -- and the option of getting favorite programs or watching movies on an a la carte basis.

According to the Wall Street Journal, News Corp. has joined CBS in pressing for cash retransmission payments from cable operators, similar to the ones that basic channels receive. On its face, this is understandable: Networks are struggling financially, and even today are watched by far more people than most cable outlets. Inasmuch as viewers would howl if deprived their weekly dose of "American Idol" or "The Big Bang Theory," why shouldn't Fox and CBS share in DirecTV or Time Warner Cable's monthly tab as compensation for carrying their signals?

Networks pushing for fees, however, should be cautious about what they wish for. Because assuming customary economics prevail, additional costs will eventually be passed on to consumers -- and the public, increasingly, has choices at its disposal that bypass conventional models.

The Los Angeles Times just wrote about people who opt to do without cable, accessing programming via the Internet. Admittedly, that still represents a very small portion of the audience -- and the story was based mostly on flimsy anecdotal evidence.

Still, the anecdotes are clearly out there -- and could gain statistical heft as the double whammy of a tough economy/job market and $90-$100 monthly cable bills prompts people to reconsider their devotion to cable or satellite connections. Because unless you're into sports -- where basic cable has become even more indispensable as key events migrate off broadcast TV -- it's very possible to entertain yourself quite well using some combination of Hulu, iTunes and a Netflix subscription. Moreover, talk of new online systems -- the latest flurry involving retailer Best Buy and Apple -- seemingly crops up daily.

Some friends, for example, skipped cable while living in London and paid the few bucks required each week to keep pace with select U.S. TV series online. And I know more than one person in their 20s or 30s who uses the TV only to watch DVDs, downloading everything else via the computer.

Although the threat remains nascent, the vulnerability of existing means of distribution underlies experimentation with on-demand services and Comcast's interest in NBC Universal. While many analysts have poor-mouthed the potential deal, Comcast CEO Brian Roberts appears to realize that even though synergy has seldom worked out as harmoniously as big companies planned, being heavily dependent on program delivery via fragile wires into the home could be very bad news if the shifting media winds suddenly blow in the wrong direction.

For all that, networks are understandably determined to siphon off their share of those revenues right now, especially as ratings dwindle and the advertising market grows more challenging. It's a logical move if not a long-term solution -- sort of like laboring a little too hard to convince the press that DVRs really offer an unexpected boon to advertiser-supported television.

Yet like the newspaper industry's exploration of reinstating pay-walls and charging for content, no one should be naïve enough to assume possible gains won't come with tradeoffs and the risk of unforeseen consequences. Cable, satellite and phone companies accustomed to jockeying amongst each other have good reason to fear less-expensive alternatives capable of bypassing all of them.

As for the aforementioned basketball fan, that particular addiction thus far appears to be trumping the impulse to save money. There's plenty of grumbling and moaning, sure, but old habits tend to die hard. That said, who would have believed a next generation would begin giving up landlines and simply relying on cell phones?

In the process, one-time money-printing enterprises -- like major-market local broadcasters -- have often discovered the hard way how quickly fortunes can shift. Because in today's media game, there's seldom such a thing anymore as an easy lay-up or slam-dunk case.