Cable Contracts Limit Number of Family Tier Customers

Cox and others face the challenge of offering family- friendly programming packages that can’t be bought by too many customers. Cox this week unveiled its family tier lineup, following Comcast and Time Warner. “We have to balance the attractiveness with the tier… with the fact that our contracts won’t let us drop too much on penetration,” said Robert Wilson, Cox senior vp- programming. Wilson and other cable executives declined to comment on specifics of programming agreements. Their terms are usually closely guarded by networks and cable operators.

Selling a so-called family package is “significantly governed by our programming agreements, and what we can realistically do,” Wilson told us. Cox’s tier has pricing and channels like those of Comcast and Time Warner. It will be available to 1.2 million Cox cable customers by March 31 (CD Jan 11 p12). It won’t be long before the service is offered to all the more than 6 million subscribers to Cox cable, said Wilson: “There is every intention that this will be rolled out to all systems.”

But it’s unlikely many people will sign up for family programming, said an industry official who asked not to be identified. Analysts we spoke with agreed. “The expectations for family tier penetration have always been pretty modest,” said Stanford Washington Research Group’s Paul Gallant, a former FCC 8th floor staffer: “It’s pretty unclear whether those triggers would even be reached.” The package doesn’t appeal to many customers because it excludes highly rated networks like ESPN, said Adi Kishore, a Yankee Group analyst: “I think there’s a small and vocal community that will probably adopt it, but I would be surprised if we see big, national numbers.”

A lack of consumer interest could pose political hurdles for the cable industry, said one media activist. FCC Chmn. Martin hasn’t expressed support for the 3 companies’ family tiers, noted Gallant. Last month, NCTA said some members would offer family tiers, after facing pressure by Martin (CD Dec 13 p1). Martin’s office hasn’t released a controversial report that he has said found many customers’ cable bills would fall if channels were offered separately. FCC officials declined to say when the document might be publicized. Martin’s sense of urgency in releasing the report may have been tempered by cable’s quick move to offer a family tier, said several lawyers who asked not to be identified.

Some question whether the family tier goes far enough in addressing concerns about the pervasiveness of raunchy TV shows. “Commissioner Copps seemed to express some skepticism about the whole family tier process at his confirmation hearing” late last month, said analyst Gallant: “Copps has expressed interest in scrutinizing whether the family tiers are meaningful options for families.” The commissioner, who began his 2nd term Jan. 3, didn’t comment by our deadline. NCTA declined comment, while officials at Comcast and Time Warner Cable didn’t return our calls. A media activist questioned whether cable operators want family tiers to become popular. “There is no question about it that the cable industry is hoping that, and will work to make sure that, the idea of family tiers will fall flat on its face,” said Center for Digital Democracy’s Jeff Chester, a frequent critic of large cable and media firms: “It’s quite possible the cable industry has successfully taken the wind out of the sails of its opponents until after the election”