Is the earth shaking yet? First the FCC does an about-face to recommend that cable companies let customers pick and choose their channels -- and now a cable company is actually agreeing with them.
"Cablevision agrees with FCC Chairman Kevin Martin's assertion before the Senate Commerce Committee on November 29 that the opportunity to purchase programming on an a la carte basis would be in the best interests of consumers. . Consumers should not be obliged directly or indirectly to buy services they do not want."
So said Charles Dolan, chairman of No. 5 cable television provider Cablevision (NYSE:CVC), in a statement to the Senate Committee on Commerce, Science & Transportation, which is currently collecting comments on whether it should enact legislation requiring cable TV providers to allow their customers to choose which channels they want to pay for. Cablevision's statement presents cable investors with a dilemma. Why is Cablevision contradicting the National Cable & Telecommunications Association, which argues that forcing consumers to buy packages of channels "provide[s] both choice and quality to consumers?"
Theory No. 1: Don't spit into the wind
Since a new hand rules the FCC this year, perhaps Cablevision is bowing to the inevitable -- "pulling a Vichy" and switching sides before it's too late. With FCC Chairman Kevin Martin arguing for consumer choice, consumers opposed to paying for 100 channels when they watch only 20, and Congress staring at an upcoming election, maybe Cablevision sees the writing on the wall. This theory would be fine, except for one thing: Cablevision has advocated a la carte programming since at least 2003.
Theory No. 2: Brownie points
Practically every industry analyst interviewed in recent days has sung the same song: No way will a la carte fly. It would bankrupt unpopular, niche television channels, ruin an industry pricing system that has taken decades to erect, and ultimately raise the cost of cable TV service so much that popular support among consumers will evaporate. If a la carte will never happen anyway, Cablevision might as well collect some brownie points from consumers and Congress by siding with the underdog.
Theory No. 3: Maybe it's true
Finally, consider the unthinkable: What if Cablevision is telling the truth? Could it be that Comcast (NASDAQ:CMCSA) and Motley Fool Stock Advisor pick Time Warner (NYSE:TWX), Cox and Charter (NASDAQ:CHTR) are crying crocodile tears when they say that a la carte programming will raise the cost of cable access for consumers?
If Cablevision is telling the truth, this would truly be the best scenario for all parties concerned. If a la carte pricing makes cable programming costs more transparent, if it lowers costs -- or even just slows down the relentless rise in cable rates -- that's clearly good for consumers. And if giving the customer what it wants won't really bankrupt the cable providers, well, that's good news for cable companies and their investors alike.
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Fool contributor Rich Smith does not own shares of any company named above.
