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Sen. Feingold doesn't like cable industry's bundling habits

February 18, 2010 |  1:19 pm

Looks like Sen. Russell D. Feingold (D-Wis.) isn't a fan of bundling.

In written questions to Comcast and NBC Universal about their $30-billion merger proposal, the senator, a member of the Judiciary Committee, asked: "Is it common practice now to require a television distributor ...  to carry several less popular channels in order to get a cable channel that they and consumers really want?" He then wondered whether Comcast and NBC would stop the practice, according to people familiar with his letter.

FEINGOLD What Feingold was referring to is how big media companies package channels together in deals with distributors instead of selling them individually. In other words, it's pretty hard to cut a deal to carry just ESPN without having to carry all the spinoff channels. It's a similar story at other companies that own lots of cable channels, and if Comcast took over all of NBC's big cable networks including USA, Syfy and Bravo, it too would have leverage to do some serious bundling.

What the content companies will tell you is that a distributor can  choose to carry just one channel, but the more it carries, the bigger the discount. In other words, it's a better deal for it and consumers.

That sounds nice, but what they are leaving out is that this is basically big media companies making a land grab of channel space. That makes it very difficult for smaller players that don't have the leverage to get their channels off the ground.

Of course getting some limits on the practice of bundling will be very difficult. Even cable operators that are not fans of bundling would probably be wary of some sort of official rule about it because that would move everyone one step closer to a la carte -- which is consumers' fantasy of being able to pick the channels they want and leave out the ones they don't. Neither programmers nor distributors want that to happen, and there are convincing arguments on both sides on whether going a la carte would really lower cable bills.

Feingold's questions, which were part of a bunch of questions from senators, are part of Comcast and NBC Universal's dance through Capitol Hill. A few weeks ago, executives from both companies testified at hearings on the deal, and other hearings are planned as well including February 25 in front of the House Judiciary Committee.

Ultimately, though, it is up to the Federal Communications Commission and the Justice Department to decide whether the deal goes through. But if lawmakers make enough noise, regulators will take note.

-- Joe Flint

Photo: Sen. Russell Feingold. Credit: Alex Wong/Getty Images