Commentary

Will FCC Enter the Final Frontier?

By Christopher S. Yoo and Thomas A. Firey

This article originally appeared in the San Francisco Examiner on May 12, 2005.

When NBC announced plans to cancel the original “Star Trek” series in 1968, fans responded with a massive letter-writing campaign that won the program an additional season. But this time, Trekkies responded with something networks understand better — cash.

Specifically, a group of loyal fans working in the aerospace industry pledged $3 million to bring back the venerable show’s latest version for a fifth season. And yet, the series still seems doomed. Why?

The answer lies in the fact that UPN, the series’ current network, is a broadcaster. That means it survives solely on advertising revenue, so it is forced to base its programming decisions on what appeals to advertisers, not to fans.

But that is not the case for all portions of the television dial. Fee-based programming is exploding, led by the expansion of pay-per-view offerings, evolution into major networks of “premium” cable programmers like HBO and Showtime, and broad public access to cable and satellite TV.

With the emergence of the XM and Sirius satellite networks, even radio is getting into the act.

When fans have the opportunity to pay for the shows that they like most, fee-based programmers do not need to rely as heavily on advertising for revenue. Subscription channels are more inclined to offer diverse niche programming that appeals to a variety of small but passionate audiences.

HBO is a prime example. Charging premium prices for premium programming allows it to earn eight times more revenue per viewer than “free” broadcaster CBS. This in turn makes it easier for HBO to show programs that appeal to small audiences.

HBO also has incentive to spend money on programs of high quality and production value, because those programs attract viewers willing to pay subscription fees. For proof of the power of those incentives, see HBO’s consistent domination of recent Emmy awards.

But UPN is a broadcaster, not a subscription programmer. And the Federal Communications Commission, which regulates the television industry, wants broadcasters to remain “free.” This means UPN must air programming that appeals to advertisers, not passionate fans who are willing to spend money to see certain shows.

The FCC has actually waged a 40-year war against fee-based programming. At the behest of now-threatened VHF and UHF broadcast stations, government regulators have imposed “must-carry” regulations on cable operators. And many local governments make “franchise” requirements that force cable systems to use some of their channels for specified purposes.

For a time, regulators even placed rate caps on cable that narrowed the variety and quality of programming that cable systems could include in their “basic cable” packages.

But the FCC’s vision for mass communications is fading. Americans are leaving the broadcast networks in droves, in favor of “narrowcast” programming found on less-regulated cable and satellite systems — including the subscriber channels. Simply put, viewers are realizing that “free” television isn’t really free. One way or another, they still end up paying for it.

Broadcast networks and government regulators now face a simple choice: They can continue their efforts to regulate cable and satellite programming so subscription-based media become as bland as broadcast fare, or they can let broadcasters experiment with subscriber services.

Hopefully, if the “Star Trek” series gets yet another revival, it will be in a mass communications environment where niche shows have a better chance to live long and prosper.

Christopher S. Yoo is an associate professor at Vanderbilt University Law School, where he specializes in telecommunications and media. Thomas A. Firey is managing editor of Regulation magazine, a publication of the Cato Institute.