FCC chairman Kevin Martin made some strange economic assumptions in his pro-a la carte study that was released last month. His strangest conclusion is that cable nets’ ad rates won’t be affected by a move to a la carte. Martin thinks ad buyers will pay just as much for fewer eyeballs, since those eyeballs will have proactively ordered a channel in his a la carte system. This would "reduce advertisers’ uncertainty regarding how many consumers their advertisements are actually reaching," Martin’s report says. The previous report says MSOs make $5/sub/month from local ads. Another of Martin’s bizarre assumptions is his belief that an a la carte scheme wouldn’t cause back-office expenses, like customer care and billing, to increase. Martin believes MSOs already have the a la carte network and system costs in place with their premium, PPV and VOD businesses. He doesn’t think the much bigger size and scope of a full a la carte system will affect these costs. The original report said customer care and billing cost $3.25/sub/month and will rise to $5.25-$5.75 with a la carte. PREPARING FOR DISASTERS Has anyone reviewed your company’s insurance policies recently? Insurance-related problems have turned out to be one of the biggest gripes from cable companies affected by last fall’s hurricanes. "Companies need to prepare for worst-case scenarios," says Outdoor Channel controller Mark Corcoran, who plans to moderate a panel on disaster preparedness next month at the National Show. Corcoran referenced smaller cable systems as the ones that are having the most insurance problems, as they need insurance payouts to continue their business. Corcoran’s advice? "The key is to make sure you have the right amount of coverage." Make sure your policies cover disaster scenarios unique to your spot in the country: from floods to high winds to earthquakes. THE STOCK-WATCH HORSE RACE Telco stocks outpaced MSO stocks by a huge margin during the first eight weeks of 2006 (see chart). BellSouth, AT&T, Verizon and Qwest each posted gains more than twice as the highest cable stock. DirecTV also showed a double-digit gain. Comcast, Charter and Time Warner shares fared more poorly than the Dow Jones and Nasdaq averages.

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