FCC Chmn. Martin used his first news briefing to push for deregulation of telco video to compete with cable, plus looser media ownership limits. Fiber to the home “should also be free of many regulations… and I think the Commission should act on that,” Martin said: “I am hopeful that we will be able to provide some regulatory relief.” Fiber deployments such as Verizon’s estimated $20 billion FiOS project also help boost broadband deployment, Martin said, calling broadband “the top priority for this Commission.”

A record batch of FCC indecency fines drew widespread criticism from industry executives and others as failing to set clear precedents that broadcasters can follow. Inconsistencies cited included fining only CBS-owned stations for the infamous Janet Jackson Super Bowl breast-baring episode, while finding more than 100 affiliates and stations owned by that network liable for airing another show. Insiders predicted at least some of the $4 million in fines will lead to lawsuits. Stations can also ask the FCC to reconsider fines, or choose not to pay them and face possible DoJ action, said industry sources.

The FCC’s so-called a la carte report is plain wrong, NCTA and Disney said, attacking the analysis for overstating benefits of selling channels individually and not relying on real-world experience. A rebuttal paid for by the cable group and another by Disney defended program bundling, calling a la carte a bad deal for customers. The findings were expected (CD March 15 p10). “People like to pay for what they use and not for what they don’t use, so superficially a la carte has long had appeal,” said Dan Brenner, NCTA senior vp-law & regulatory policy. Bundling’s benefits are “significantly understated” and mischaracterized in a revised Media Bureau report issued last month, he said. Brenner said several times that report “misses the mark.” Selling the Disney Channel as a separate network was failure due to a low take rate and $12-$14 monthly additional fee on cable bills, Preston Padden, Disney exec. vp-govt. relations, said. “We don’t have to rely on theoretical economic analysis, we have history,” he told a press briefing. The FCC misread a 2004 Booz Allen study saying viewership might decline if cable offered a la carte, didn’t discuss the risk of increased customer defections and inadequately analyzed arguments for more, not less bundling, said Mich. State U. Prof. Steven Wildman, hired by NCTA to review the Commission report. Jeffery Eisenach, employed by Disney, said the FCC study wasn’t a cost-benefit analysis and didn’t effectively rebut the Commission’s earlier conclusions. As with shoes, software and other products, “bundling in almost all circumstances is helpful for consumers,” he said. The report backed by FCC Chmn. Martin offered cable operators 3 options including more bundling, instead of selling channels piecemeal (CD Feb 10 p2).

Comcast could pay $1 billion for Disney’s 40% stake in E! Entertainment, analysts predicted after Broadcasting & Cable said the firms are in talks. Comcast would likely fund such a deal with cash, said analysts, including Sanford Bernstein’s Craig Moffett and Aryeh Bourkoff of UBS. A bond sale is also possible, Bourkoff wrote investors. E! is part of broader negotiations between Comcast and Disney, said a person familiar with the talks who asked not to be identified. Although talks are under way, a deal isn’t imminent, said the source. “The sale may be wrapped into the renegotiation of ESPN carriage on Comcast,” wrote Moffett. “Renewing ESPN carriage contracts with cable operators has been a top priority for Disney.” Comcast and Disney had no comment.

IPSphere Forum doesn’t seek to control the Web, said Chmn. Kevin Dillon. Center for Digital Democracy Exec. Dir. Jeffrey Chester criticized the group as having that ambition. “That is most certainly not the case,” Dillon, a Juniper vp, told us last week. The group isn’t engaged in lobbying, it’s working on boosting the quality of video online, he said: “Broadband TV providers partnering with network providers [could lead to] an enhanced experience for people who are prepared to pay for that enhanced experience… Our philosophy is there are opportunities for markets to develop, but that some of the mechanisms that are in place make it difficult for those markets to develop.” Dillon didn’t elaborate.

Knight Ridder’s sale price beat some expectations thanks to its growing Web operations, said a broker and an Internet analyst. The owner of the Real Cities network of regional websites and CareerBuilder job site agreed to be sold for about $4.5 billion ($6.5 billion including assumed debt) to McClatchy. “It’s a strong price… possibly reflective of the actual buyer and Knight Ridder’s presence in the Internet world,” said Mark Fratrik, vp of BIA Financial. Businesses such as Knight Ridder Digital, which runs sites for papers, are popular because “a lot of people are reading their hometown newspapers when they're not in their hometown,” said Fratrik. Greg Sterling, senior vp of Kelsey Group, agreed. He emphasized the Web operations are the publisher’s most attractive asset. “Those are some of the jewels in that acquisition,” he said: “Print is slack and online is where the growth is… The online ad stuff is really going to be helpful to McClatchy, which doesn’t have all of the online things that Knight Ridder Digital has.”

Cable firms, subject to much FCC scrutiny, may see less oversight thanks to increased competition from the merger of AT&T and BellSouth, said sources and consultants, who expect that to occur. AT&T’s $67 billion ($89.4 billion with assumed debt) buy of its rival will bolster cable arguments that cable needs less regulation due to competition from new entrants in the pay TV market, observers and industry lawyers told us. After largely sitting out pay TV, BellSouth is set to move faster with IPTV (CD March 6 p5).

A group called Video Access Alliance formed Thurs. to aid independent programmers in getting wider carriage on pay TV and broadband. The alliance maintains that “emerging and minority” networks need video franchise reform to increase their chances of striking deals, it said. AT&T and Verizon, selling IPTV and fiber TV respectively, back franchise reform. Alliance members include upstart digital network The America Channel and investor MultiChannel Ventures. One alliance goal is recruitment, said member Deborah Lathen, former FCC Cable Services Bureau chief and now a consultant. “We should be able to get more members because there are so many would-be programmers that are looking to have their content carried,” she told us. It’s too soon to say what bills the group will back, Lathen said: “We're going to try to bring successful minority programmers and cable and other companies to talk about how do you create content” at a summer Minority Media & Telecom Council conference. “Distribution models such as IPTV over the Net” will boost programming competition, said MultiChannel Ventures Pres. Michael Gerrity.

RCN is meeting with possible buyers of its L.A. and San Francisco systems, said Richard Ramlall, senior vp-strategic & external affairs. It may jettison assets to focus on what Ramlall called RCN’s “core” Northeast “corridor” of systems. The company said Wed. it agreed to sell a stake in Mexico’s Megacable for $300 million cash, after taxes. That deal may improve RCN’s credit rating, Ramlall told us Thurs. The firm will raise $200 million by selling its West Coast and Chicago operations within 18 months, Oppenheimer & Co. analyst Ian Zaffino told us. But Ramrall said there are “no immediate plans” for Chicago.

N.Y. Attorney Gen. Eliot Spitzer slammed the FCC for not probing payola more aggressively, after getting settlements with 2 big music labels and bringing a fresh suit. Spitzer joined activists, a media professor and small broadcaster in saying the FCC has lagged in acting on his documentation of pervasive pay-for-play practices. Spitzer’s attack came as his office unveiled the first suit involving payola.