ANAHEIM — The current political outcry over rate increases for cable television, which many expect to result in re-regulation of the industry next year, is largely a byproduct of a "political muscle game that has nothing to do with consumers," one of the most powerful figures in cable television told an industry gathering Wednesday.
John C. Malone, chairman of Tele-Communications Inc., the nation's largest operator of cable systems, specifically cited a "scurrilous" anti-cable lobbying effort by telephone companies as contributing to anti-cable sentiment on Capitol Hill. He said the chances of a new cable law being passed next year were 50-50, even though he argued that rate increases had been reasonable and consumers were generally satisfied.
Malone's remarks to the Western Cable Show in Anaheim came during a lively panel discussion that also featured cable entrepreneur Ted Turner and movie producer Ron Howard. Turner, whose Turner Broadcasting Co. is a cable programmer rather than a system operator, declined to comment on the re-regulation issue except to express his distaste for anything the TV networks might want.
The debate over re-regulation pits three of the nation's most powerful lobbies--the National Cable Television Assn., the National Assn. of Broadcasters and the United States Telephone Assn.--against each other in a high-stakes battle over the future of American television.
The cable industry is fiercely opposed to revisions of the 1984 Cable Act, which prohibited any government entity from regulating the rates charged by most cable companies. The broadcasters are in favor of new restrictions and also want cable companies to be required to carry all broadcast signals in their area. The telephone companies, for their part, are seeking permission to enter the cable television business, which the cable companies oppose.
James H. (Trey) Smith, chairman of the California Cable Television Assn. and a senior vice president at Times Mirror Cable Television, called it "a bitter irony that (the cable industry's) very success is creating a whole new series of difficulties." (Times Mirror Cable Television is a subsidiary of Times Mirror Co., which also owns the Los Angeles Times.) Smith suggested that re-regulation would result in "political management" of the cable industry and an end to the dynamic growth that cable has experienced over the past two decades.
Congress, however, is beginning to see things differently. In response to constituent outrage over increases in basic cable prices that have far outstripped inflation, a number of bills have been introduced that would place various restrictions on the cable companies.
The proposal receiving the most attention thus far is one from Sen. John Danforth (R-Mo.), which would give back to local governments the authority to regulate cable rates in most areas. It would also place certain restrictions on cable programmers that are also cable operators. In addition, the bill would limit the overall size of a cable company to 15% of all subscribers nationwide, a provision that would effect only Malone's Tele-Communications.
The Danforth bill horrifies cable operators, who would much prefer to be regulated on a uniform national basis by the Federal Communications Commission, if regulation is inevitable.
Malone acknowledged that while the cable industry prefers no action, it would have to work with legislators in fashioning an acceptable compromise.
"Are we going to stonewall? Absolutely not," Malone said. Some of the proposals now being considered--including one that would require the purchaser of a cable system to hold it for three or five years before reselling it to discourage speculators--meet little opposition in the industry.
The threat from the telephone companies, however, is another story. Some on Capitol Hill have advocated allowing the phone companies into the cable business as a way of promoting competition and avoiding the need for reregulation.
But Malone said even rate regulation would be preferable to allowing the telephone companies to operate cable systems in the areas where they offer telephone service. Such permission, he said, would guarantee a phone company monopoly on cable.
Permission for phone providers to offer cable service outside their phone service areas, Malone said, should be linked to allowing the the cable companies to offer telephone service.
A compromise will also have to be reached with broadcasters on a complex array of issues, including whether cable operators should be required to carry local broadcast signals, on what channels they should be carried, and whether they should pay for them.
U.S. CABLE ADVERTISING REVENUE
In 1980, revenue for the cable advertising market totaled $58 million. By 1989, the total U.S. revenue had reached almost $2 billion. 1989: 1.96 billion.
Source: Paul Kagan Associates, Inc., SCOTT BROWN / Los Angeles Times
AVERAGE CABLE FEES
Here are the rates for basic cable service and for premium channels such as HBO and Showtime:
Basic Premium Year Rate Channel 1980 $7.85 $8.80 1981 8.14 9.03 1982 8.46 9.56 1983 8.76 9.84 1984 9.20 10.08 1985 10.24 10.42 1986 11.09 10.31 1987 13.27 10.15 1988 14.45 10.18
\o7 Source: The Pay TV Newsletter, Paul Kagen Associates\f7