Canada's Quiet Revolution Against Cable

Americans are dimly aware of Canada’s existence, their propensity to say ‘eh,’ and not much else.  But while we were busy  shutting down our government to preserve the right to go bankrupt when we get sick, Canadian lawmakers have  been up to something that American cable operators are watching with nervous interest. 

In 2004, Senator John McCain noted that our cable TV packages give consumers “all the choice of a Soviet election ballot.”  Most customers don’t realize that you pay for each channel on your box:  C-SPAN: $0.06/month.  Comedy Central: $0.18.  MSNBC: $0.21.   And the king of the lineup, ESPN: $5.54.  Your grandmother’s paying nearly $70/year for ESPN, whether she watches or not.

Content providers like Disney sell their channels as bundles, packaging really popular channels like ESPN with also-rans (Soapnet).  This allows Disney to add new channels at a whim, and charge for them, all while continually ramping up the price for the package.  This buy-everything-or-nothing approach is passed on to cable customers.  The content providers win.  The cable companies win.  Grandma pays for College Gameday.

Which takes us back to Senator McCain, and his 2006 effort to break up this bundling practice.  The bill failed to emerge from the Senate Commerce Committee, losing on a 20-to-2 bipartisan vote.  Why were senators so united on the side of the media conglomerate, and so against grandma?

Perhaps it something to do with how adept Disney is at gladhandling politicians.  In February 2005, Disney flew the chairman of the House Energy and Commerce Committee Joe Barton (and his wife) down to DisneyWorld.  From February 5^th to the 7^th, Disney spent $3,354 on the Bartons lodging, $1,616 on airfare, and $1,200 for meals.  At that price, I hope Mickey was personally feeding the good couple from Texas.  Of course, this is chump change for Disney, but it ensures that politicians vote the right way on the right votes.  Or as McCain described it:  “They beat me like a drum.”

Which brings us back to our friends in Ottawa.  “"We don't think it's right for Canadians to have to pay for bundled television channels that they don't watch. We want to unbundle television channels and allow Canadians to pick and pay the specific television channels that they want,” explains Canada's Interior Minister James Moore.   Note that the Conservatives hold both the majority in Parliament and a good understanding of the true definition of Conservatism.  Sounds like free market, Adam Smith stuff to me, eh?

The clout of moneyed interests is at the root of Washington’s dysfunction.  While we’re distracted by heated debates about gay marriage, abortions, and the War Against Christmas, the votes that would save the 77% of American cable and satellite households hundreds of dollars a year are quietly killed in committee.  

Think about that the next time you reach for the remote.

Note: This post was inspired by an article I read in the August 26, 2013 edition of The New York Times entitled “To Protect Its Empire, ESPN Stays on Offense.”