Eisenach Report Finds Bundling of TV Programming Does Not Harm Consumers

January 4, 2008

In a report submitted today to the Federal Communications Commission, Criterion Chairman Jeffrey Eisenach finds that bundling of television programming by broadcast and cable television programmers is economically efficient and does not harm competition or consumers. The report, prepared on behalf of The Walt Disney Company ("Disney"), also finds that bundling reduces, rather than lowers, the cost of programming to cable operators. Finally, Eisenach concludes that programming costs are not responsible for cable price increases and, indeed, that recent data indicate cable prices are actually rising less quickly than overall inflation.

Eisenach’s report, Economic Implications of Bundling in the Market For Network Programming, was prepared in response to the FCC’s Notice of Proposed Rulemaking in MB Docket 07-29, in which the Commission proposes to prohibit "tying" of either broadcast or cable programming to other programming. Eisenach demonstrates that the bundling (which is not technically "tying") that occurs in such markets is economically efficient, and shows that "mixed bundles are nothing more or less than an offer by the seller to share with the buyer the efficiency benefits of moving to a more efficient means of creating and distributing the product." As a result, "prohibiting bundling would raise costs and ultimately result in higher prices for consumers."

To view the Eisenach report, click here.