It’s coming undone

U.K. forges ahead with cable reform

LONDON — Despite pressure from Viacom, Universal and other TV programmers, the U.K.’s Independent Television Commission is proceeding with its controversial plans to allow the unbundling of cable and satellite channel packages.

The reforms — to be announced on Thursday — will herald the end of bundling, the practice of guaranteeing niche TV channels distribution in large channel packages. The question, however, is how much Britain’s TV regulatory org will cushion the blow by extending the time frame for the new regulations.

While cable operators are hoping to offer consumers channels on a small package or an individual basis by Christmas — as opposed to continuing with “big basic” packages of 30 or so services — some insiders say that the more likely start date for unbundling is early 2000.

Both Viacom and Universal have threatened to shift their London operations to the continent if unbundling proceeds. Many niche channels in the U.K. — such as L!ve TV, which is threatening to sue the ITC — operate at a loss and are reliant on the old system of cablers and satcaster BSkyB guaranteeing channels at least 80% distribution to subscribers.

Allowing existing carriage contracts to run a year or two longer may go some way to appease concerns that unbundling will force many channels to shut down. New contracts will probably need to conform to the new rules immediately.

A rep from the Viacom-parented MTV said that while the ITC was playing its cards close to the chest on details and that there had been no backroom negotiations between the org and programmers, he expected the ITC’s decision to be something of a “face-saving exercise.”

One TV exec added that unbundling could prove a legal minefield if the reforms are implemented too quickly for the market to adjust. “If the period is too short it’s going to be a nightmare,” he said.