ABC-Cablevision showdown raises issues

Analyst mulls cable bundle versus 'a la carte' offers

NEW YORK -- Will public carriage fee disputes, like the one between Cablevision and ABC, undermine the cable bundle and lead to renewed calls for "a la carte" cable network offers?

Barclays Capital analyst Anthony DiClemente mulled those issues in a report Friday.

The answers are "potentially significant to investors: presuming an "a la carte" model is more cost-efficient to consumers (an unproven assumption), an unbundled business model would raise the longer-term risk profile of the $25.4 billion per year affiliate fee stream paid from cable TV providers to programmers -- quite relevant to our covered names Disney, Viacom, Time Warner, News Corp., Discovery, and Scripps Networks," DiClemente said.

The ABC-Cablevision showdown follows similar recent ones between Scripps and Cablevision, as well as Fox and Time Warner Cable.

"While such public disputes appear troubling, we are of the view that "the bundle" is NOT at heightened risk," DiClemente concluded.

He mentioned five reasons:

1) Cable network owners would oppose unbundling as niche networks would be unable to reach critical mass, "stifling innovation and hurting the consumer."

2) Consumers like the simplicity of the bundle.

3) Unbundled cable TV would be too difficult for cable/ satellite operators to administer.

4) "Regulatory powers currently view "a la carte" a low priority," DiClemente also wrote. "While former FCC chairman Kevin Martin had been a major proponent of "a la carte," we believe current FCC chairman Julius Genachowski rates media consolidation and net neutrality higher on Washington's list of priorities."

5) Consumers are unlikely to vote with her wallets, because there is not enough content online for cable TV "cord-cutting."