November 2005

For upcoming media policy events, see http://www.benton.org

NEWS FROM DECENCY FORUM
Martin Seeks To Boost Cable Regulation
Martin Touts Cable A La Carte, Regulation
A la Carte Cable Could be a Tough Sell
CU Responds to FCC Chairman=92s Support for Cable "a la carte"

BROADCASTING
TVs Turn into Vending Machines for Programs
Cherry: Pony Up for Scripted Product Placement
DTV Broadcasters Must File Ancillary Services Report
Disney fine-tunes ABC Radio Auction

QUICKLY -- Vonage Continues Sales as Mandate On 911 Goes Unmet; Tate=20
Reports Media-Stock Holdings; Hollywood faces uncertain economic outlook; A=
=20
false Wikipedia =91biography'; SEC proposes Internet "e-proxy" postings;=20
Security Flaw Allows Wiretaps to Be Evaded

MORE NEWS FROM DECENCY FORUM

NEWS FROM DECENCY FORUM

MARTIN SEEKS TO BOOST CABLE REGULATION
[SOURCE: Technology Daily, AUTHOR: Drew Clark]
FCC Chairman Kevin Martin urged Congress to grant the FCC authority to=20
regulate the content or the manner in which the cable television industry=
=20
provides programming to the public, presenting a dramatic challenge to the=
=20
cable sector. One of Martin's proposals was that laws against "indecency"=
=20
be applied to cable and satellite programming. If adopted, it would be the=
=20
first time such content has been regulated since the industry began in=20
1948. "The best solution is for the industry to voluntary" adopt a=20
"family-friendly" tier of channels, or to offer programming on a=20
channel-by-channel or a la carte basis, Chairman Martin said. Failing that,=
=20
"I believe that something does need to be done."
http://www.njtelecomupdate.com/lenya/telco/live/tb-OJOK1133302262209.html
* Chairman Martin's Statement:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262484A1.doc
* FCC boss prods pay TV to do more on decency
http://today.reuters.com/news/newsArticle.aspx?type=3DtechnologyNews&sto...
D=3D2005-11-29T230554Z_01_BAU966091_RTRUKOC_0_US-MEDIA-DECENCY.xml&archived=
=3DFalse
* FCC's Martin: 'Something Has to be Done' on Indecency
http://www.mediaweek.com/mw/news/recent_display.jsp?vnu_content_id=3D100...
2377

MARTIN TOUTS CABLE A LA CARTE, REGULATION
[SOURCE: Broadcasting&Cable, AUTHOR: PJ Bednarski, John M. Higgins and Mike=
=20
Grebb]
The Senate Commerce Committee=92s =93Open Forum on Decency=94 on Tuesday tu=
rned=20
into a face-off between FCC Chairman Kevin Martin and NCTA chief Kyle=20
McSlarrow, with Martin calling for one of the industry=92s most feared=20
mandates, that cable programming be sold on an a la carte basis. Chairman=
=20
reported that FCC Chief Economist Leslie Marx analysis of a la carte=20
pricing counters the Commission=92s previous stance that forcing cable=20
systems to sell all programming on a per channel basis -- as they sell pay=
=20
movie networks like HBO and Showtime -- would substantially increase=20
consumers' costs because operators and networks would have to raise prices.=
=20
Chairman Martin said that the old report prepared under then-FCC Chairman=
=20
Michael Powell by the FCC Media Bureau =93makes mistakes in its basic=20
calculations=94 and is based on =93incorrect and biased analysis.=94 A new =
report=20
to be issued by commission staff soon shows that a la carte =93could be=20
economically feasible and in consumers=92 best interest.=94 McSlarrow,=20
president of the National Cable & Telecommunications Association, came out=
=20
Tuesday morning clearly against a la carte, tiering or indecency=20
regulations for cable. McSlarrow said the Supreme Court has =93very clearly=
=94=20
ruled in the past that any restrictions of that sort would be a violation=
=20
of the First Amendment.
http://www.broadcastingcable.com/article/CA6287567?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)
http://www.multichannel.com/article/CA6287703.html?display=3DBreaking+News

A LA CARTE CABLE COULD BE A TOUGH SELL
[SOURCE: USAToday, AUTHOR: Paul Davidson and Laura Petrecca]
It's unlikely that Congress will pass legislation any time soon requiring=
=20
cable companies to offer =93a la carte=94 pricing plans. Cable companies ar=
gue=20
that a la carte would be a death knell for small cable channels that are=20
now bundled with other stations. More likely, some analysts say, is that=20
the Federal Communications Commission's new conclusion will pressure cable=
=20
and satellite companies to offer better ways for parents to screen cable=20
stations that show risqu=E9 programs. Legg Mason says the cable industry=20
could allow parents to screen out channels such as MTV, FX and Comedy=20
Central, which draw complaints from children's TV advocates. The FCC now=20
finds that its 2004 report on a la carte pricing was flawed in three ways:=
=20
1) It said the average cable household, which watches about 17 channels,=20
would see its bill rise 14% to 30% with a la carte. The average channel=20
price would be $3.90 to $4.73, the report said, and only subscribers who=20
paid for fewer than nine channels would save. But the study, according to=
=20
the FCC staff, mistakenly included the broadcast channels on the basic tier=
=20
in the 17-channel model. If those stations were omitted, the effect of a la=
=20
carte on bills would range from a 13% drop in prices to a 4% increase, the=
=20
new report is expected to say. Consumers who order as many as 14 channels=
=20
would save money. 2) It assumed every household would have to pay for a=20
digital set-top box in order to order individual channels, raising monthly=
=20
costs by $12. The new report suggests that a al carte could be offered only=
=20
to those who already have digital boxes. Under that scenario, prices would=
=20
actually fall about 2%. 3) The report wrongly assumed that a la carte would=
=20
prompt consumers to watch 25% less TV (well, sure, you'd save all that time=
=20
flipping through 100 channels you don't want.)
http://www.usatoday.com/printedition/money/20051130/fcc_consumers30.art.htm
* FCC CHAIRMAN URGES CABLE TV TO POLICE ITSELF OVER INDECENCY
[SOURCE: Los Angeles Times, AUTHOR: Jube Shiver Jr]
"While the testimony will likely garner headlines, we don't believe it will=
=20
significantly increase the risk that the government will require cable=20
operators to offer a la carte programming, at least anytime soon," said=20
Blair Levin, a financial analyst for investment firm Legg Mason. "I think=
=20
what's going on here is there is an effort in Congress to get cable=20
operators to do something about indecency on their own."
http://www.latimes.com/business/printedition/la-fi-indecency30nov30,1,25...
9.story?coll=3Dla-headlines-pe-business
(requires registration)
* CABLE BY THE CHANNEL FAVORED
[SOURCE: Washington Post, AUTHOR: Arshad Mohammed]
Without endorsing any particular solution, Chairman Martin outlined three=
=20
options to deal with the issue. He said providers could offer customers a=
=20
family-friendly programming package; they could sell channels a la carte,=
=20
allowing parents to buy only those channels they want; or the government's=
=20
limits on broadcast indecency and violence could be extended to core=20
offerings from cable and satellite companies. "We continue to believe it=20
will be an uphill battle to enact cable indecency legislation," Stanford=20
Washington Research Group analyst Paul Gallant wrote in a report. He said=
=20
mandatory a la carte rules could hurt cable and satellite providers, TV=20
programmers and telephone companies now entering the video business. "As a=
=20
result, legislation would have to overcome significant lobbying efforts by=
=20
powerful industries," Gallant said.
http://www.washingtonpost.com/wp-dyn/content/article/2005/11/29/AR200511...
1354.html
(requires registration)

CU RESPONDS TO FCC CHAIRMAN'S SUPPORT FOR CABLE "A LA CARTE"
[SOURCE: Consumers Union]
FCC Chairman Kevin Martin should be strongly commended for striking at the=
=20
heart of the cable industry=92s flawed pricing model which forces people to=
=20
buy packages of television channels they don't want and shouldn't have to=
=20
pay for. His support for =93a la carte pricing=94 should help push it forwa=
rd,=20
giving consumers=92 wallets a break and allowing them more control over the=
ir=20
television choices. Cable companies and broadcasters have fought a la carte=
=20
pricing for years, hiding behind the fallacious argument that popular and=
=20
unpopular programming had to be bundled together to keep all programming=20
afloat. Last year, the FCC issued a staff report based on erroneous=20
assumptions that kept this charade going. Today, Chairman Martin has blown=
=20
a huge hole through this fortress of deceit. Consumers Union hopes to work=
=20
closely with Chairman Martin, his colleagues at the FCC and members of=20
Congress to ensure that consumers receive the true benefit of being able to=
=20
choose the channels of their choice at a fair price on cable and satellite=
=20
television systems.
http://www.hearusnow.org/other/newsroom/tvradiocable/curespondstofccchai...
nkevinmartinssupportforcablechannelchoice/

** On an otherwise slow telecom news day, Chairman Kevin "I do believe that=
=20
something needs to be done" Martin stole the show. There's more coverage of=
=20
his statements at the decency forum at the bottom of this email. **

BROADCASTING

TV's TURN INTO VENDING MACHINES FOR PROGRAMS
[SOURCE: USAToday, AUTHOR: David Lieberman]
With network TV moving towards, video on demand (VOD), ten years from now,=
=20
who'll pay for new network TV shows? And how will potential viewers=20
discover that they exist? By 2010, viewers in 76.4 million homes (up from=
=20
12.5 million this year) will be able to watch shows when they want and zip=
=20
through ads, Morgan Stanley projects -- due to aggressive promotion by=20
cable, satellite and electronics companies of digital video recorders=20
(DVRs) and other devices. The growth of VOD could threaten the building=20
blocks of the TV business.
http://www.usatoday.com/printedition/money/20051130/tvfuture.art.htm

CHERRY: PONY UP FOR SCRIPTED PRODUCT PLACEMENT
[SOURCE: Broadcasting&Cable, AUTHOR: Ben Grossman]
While Writers Guild of America, West President Patric Verrone said recently=
=20
that securing compensation for writers who pen shows that include product=
=20
integration was not part of his agenda, Desperate Housewives executive=20
producer Mark Cherry apparently feels differently. Speaking at a Tuesday=20
luncheon in Beverly Hills hosted by the Hollywood Radio and Television=20
Society, Cherry said he wants his show to be compensated if he and his=20
staff have to take the time to write a product into a scene. =93I'm all for=
=20
product placement if I can get some of the money, but if it just all goes=
=20
to the company, then we'll just put the car in the parking lot behind the=
=20
characters,=94 he said. The guilds took on the product-integration issue wi=
th=20
a code of conduct released on Nov. 14. The code comprises four points: the=
=20
visual and aural disclosure of product integration deals at the beginning=
=20
of each program, limiting integration within children=92s programming,=20
including writers in decision-making regarding integration, and extending=
=20
product integration regulation to cable TV.
http://www.broadcastingcable.com/article/CA6287705?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)

DTV BROADCASTERS MUST FILE ANCILLARY SERVICES REPORT
[SOURCE: Federal Communications Commission]
Under FCC rules, commercial and noncommercial television licensees=20
transmitting digitally must annually remit a fee of five percent of the=20
gross revenues derived from all ancillary or supplementary services that=20
are feeable. Additionally, on December 1, these stations must submit a=20
report to the FCC covering: 1) whether or not they provided ancillary or=20
supplementary services in the twelve months ending on the preceding=20
September 30; 2) a brief description of the services provided; 3) which=20
services were feeable ancillary or supplementary services; 4) whether any=
=20
ancillary or supplementary services provided were not subject to a fee; 5)=
=20
gross revenues received from all feeable ancillary and supplementary=20
services provided during the applicable period; and 6) the amount of=20
bitstream used to provide ancillary or supplementary services during the=20
applicable period. For further information, please contact James Brown, of=
=20
the Media Bureau's Video Division, at (202) 418-1600, or John Berresford,=
=20
of the Media Bureau's Policy Division at (202) 418-1886.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-05-3095A1.doc

DISNEY FINE-TUNES ABC RADIO AUCTION
[SOURCE: Financial Times, AUTHOR: James Politi and Aline van Duyn]
Walt Disney has narrowed the field of bidders for its ABC Radio division.=
=20
The move should pave the wave for a sale by the end of the year. Analysts=
=20
have estimated the unit could be valued at between $2-3 billion. The=20
potential buyers were Entercom Communications of Pennsylvania, Cumulus=20
Radio of Georgia -- which recently acquired a large portfolio of radio=20
assets from Susquehanna Pfaltzgraff, a Pennsylvania-based conglomerate --=
=20
and Kohlberg Kravis Roberts, the US private equity group that unexpectedly=
=20
emerged as a player in the race in recent days. It was still unclear=20
yesterday whether KKR had teamed up with a trade buyer in order to win the=
=20
bidding, and perhaps structure the deal as a Reverse Morris Trust, under=20
which ABC Radio would be spun off and then sold with Disney shareholders=20
retaining a large stake. The Disney deal comes at a time when valuations in=
=20
the radio sector are at a much lower level than when most of the mergers=20
and acquisitions activity occurred in the early 1990s. However, the=20
relatively high valuation of $1.2bn obtained by Susquehanna in its sale to=
=20
Cumulus encouraged Disney to proceed, in the hope of clinching a deal=20
before the end of the year. Disney=92s radio group includes 72 stations, wi=
th=20
44 in the top 25 markets. In 2004, Disney group reported an estimated $710=
=20
million in revenue.
http://news.ft.com/cms/s/58e3bb80-6131-11da-9b07-0000779e2340.html
(requires subscription)

QUICKLY

VONAGE CONTINUES SALES AS MANDATE ON 911 GOES UNMET
[SOURCE: Wall Street Journal, AUTHOR: Shawn Young shawn.young( at )wsj.com & Amy=
=20
Schatz Amy.Schatz( at )wsj.com]
Vonage, the nation's largest Internet telephone service company by=20
subscribers, has missed the FCC's deadline to provide full 911 service to=
=20
all its customers, but the company continues to sign-up new customers as it=
=20
awaits an answer from the FCC on a request for an extension. At least 14=20
other Internet-calling companies also filed for extensions and waivers,=20
according to FCC documents. The FCC had given Internet-based phone=20
companies 120 days, a time frame that ended Monday, to ensure that all 911=
=20
callers would reach emergency operators who could automatically see their=
=20
phone number and location. The FCC imposed the 120-day deadline after=20
several incidents in which callers with Internet-based phone service=20
couldn't reach emergency operators in life-threatening crises. An FCC=20
official said a ban on marketing to new customers is unlikely, though sales=
=20
materials must be clear about limitations in 911 service.
http://online.wsj.com/article/SB113327621868909100.html?mod=3Dtodays_us_...
ketplace
(requires subscription)

TATE REPORTS MEDIA-STOCK HOLDINGS
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
Deborah Taylor Tate, President Bush's pick for a Republican seat on the=20
Federal Communications Commission, reported in a recent federal financial=
=20
disclosure that her husband owns technology and telecommunications stocks=
=20
with a high-end range of about $150,000. Investments include: Comcast,=20
Verizon Communications, IBM, Microsoft, Motorola, Cisco Systems, Lucent=20
Technologies, Hewlett-Packard, Intel and Nokia.
http://www.multichannel.com/article/CA6287460.html?display=3DBreaking+News
(requires subscription)

HOLLYWOOD FACES UNCERTAIN ECONOMIC OUTLOOK
[SOURCE: Reuters]
Hollywood faces uncertain prospects for jobs and growth in 2006 due to=20
slowing DVD sales, the loss of local film and television production and=20
looming labor talks, according to a report issued on Tuesday by the Los=20
Angeles County Economic Development Corp.
http://today.reuters.com/news/newsArticle.aspx?type=3DtechnologyNews&sto...
D=3D2005-11-29T225209Z_01_ARM979288_RTRUKOC_0_US-STUDIOS.xml&archived=3DFal=
se

A FALSE WIKIPEDIA 'BIOGRAPHY'
[SOURCE: USAToday, AUTHOR: John Seigenthaler]
[Commentary] This is a story of how vandals, hiding behind federal privacy=
=20
laws, can use the highly popular, free online encyclopedia to attack fellow=
=20
citizens.
http://www.usatoday.com/printedition/news/20051130/oplede17.art.htm

SEC PROPOSES INTERNET "E-PROXY" POSTINGS
[SOURCE: Reuters, AUTHOR: Kevin Drawbaugh]
Corporations would be allowed to post proxy statements and annual reports=
=20
on Web sites, instead of sending the bulky documents through the mail,=20
under a plan proposed on Tuesday by the Securities and Exchange Commission.=
=20
Under the proposed rule, investors would still have to get a postcard=20
notice in the mail telling them a proxy statement and annual report had=20
been made available online. In addition, investors wishing to continue=20
receiving printed matter could request it. The present system of mailing=20
out proxies is costly, but past efforts to reform it have been stymied by=
=20
concerns that online distribution could exclude off-line investors.
http://today.reuters.com/news/newsArticle.aspx?type=3DinternetNews&storyID=
=3D2005-11-29T202842Z_01_BAU960554_RTRUKOC_0_US-FINANCIAL-SEC-PROXY.xml

SECURITY FLAW ALLOWS WIRETAPS TO BE EVADED, STUDY FINDS
[SOURCE: New York Times, AUTHOR: John Schwartz and John Markoff]
The technology used for decades by law enforcement agents to wiretap=20
telephones has a security flaw that allows the person being wiretapped to=
=20
stop the recorder remotely, according to research by computer security=20
experts who studied the system. It is also possible to falsify the numbers=
=20
dialed, they said.
http://www.nytimes.com/2005/11/30/national/30tap.html?pagewanted=3Dall
(requires registration)

MORE NEWS FROM DECENCY FORUM

* New Package Deals Urged for Cable and Satellite TV
[SOURCE: New York Times, AUTHOR: Stephen Labaton]
http://www.nytimes.com/2005/11/30/business/media/30cable.html?pagewanted...
all
(requires registration)

* Cable Companies See New Threat In FCC Shift on a la Carte Service
[SOURCE: Wall Street Journal, AUTHOR: Amy Schatz Amy.Schatz( at )wsj.com, Peter=
=20
Grant peter.grant( at )wsj.com & Matthew=20
Karnitschnig matthew.karnitschnig( at )wsj.com]
http://online.wsj.com/article/SB113328183325809204.html?mod=3Dtodays_us_...
e_one
(requires subscription)

* FCC: Let users set cable TV lineups
[SOURCE: USAToday, AUTHOR: Paul Davidson]
http://www.usatoday.com/printedition/news/20051130/1a_lede30.art.htm

* Cable groups attack pay-TV reforms
[SOURCE: Financial Times, AUTHOR: Stephanie Kirchgaessner]
http://news.ft.com/cms/s/ca62e8c6-60ff-11da-9b07-0000779e2340.html
(requires subscription)
--------------------------------------------------------------
Communications-related Headlines is a free online news summary service=20
provided by the Benton Foundation (www.benton.org). Posted Monday through=
=20
Friday, this service provides updates on important industry developments,=
=20
policy issues, and other related news events. While the summaries are=20
factually accurate, their often informal tone does not always represent the=
=20
tone of the original articles. Headlines are compiled by Kevin Taglang=20
headlines( at )benton.org -- we welcome your comments.
--------------------------------------------------------------