The Department of Justice recently launched an investigation
into whether cable operators are engaged in anti-competitive behavior against over-the-top Internet video rivals. The DOJ's investigation is broad, and appears to be exploring every angle of the TV business -- from preferred content licensing arrangements to usage caps. One angle of inquiry involves why the industry never shifted to a la carte programming options (channels being made individually) despite a significant interest in the option on the part of the consumer.
As the DOJ inquiry grows, analysts Laura Martin and Dan Medina at Needham & Company are claiming that a la carte would eliminate 1 million jobs
as smaller niche channels die:
"Minority and special-interest channels would be unlikely to survive," Martin and Medina wrote. "Since the average household watches 12-14 channels each month, every household would lose channels that they believe are important to them. In an a la carte world, consumer satisfaction would be destroyed." While a la carte would lower consumer prices in the short term, "it bankrupts all niche channels within five years, destroying enormous value for the highly diverse U.S. population and especially the smallest minority groups," the Needham analysts said.
Martin and Medina interestingly don't try to calculate just how many jobs have been destroyed by the cable industry's relentless effort to destroy innovative technologies and companies that could challenge cable television. They also don't really note that while a la carte could destroy smaller traditional niche channels, niche is one area where Internet video options would pick up the slack rather easily by offering content to a broad audience on demand. In fact, some niche content would be better suited to the Internet
This is the second bunch of investment analysts who've tried to attack the Department of Justice's probe into anti-competitive cable behavior in as many weeks. Sanford Berstein telecom analyst Craig Moffett last week tried to pretend that the investigation would result in higher broadband rates
-- ignoring the fact he's been pushing for higher rates for a decade and benefits directly from higher prices. It's fairly clear Wall Street and the cable industry aren't too thrilled at the investigation into the cable industry's cash parade and the potential for anti-competitive behavior aimed at keeping the money flowing.