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Channel Choice Could Crush Cable

This column was originally published on RealMoney on Nov. 29 at 9:37 a.m. EST. It's being republished as a bonus for readers.

Just when I thought it couldn't get worse for cable, suddenly I am given choices? You have to be kidding me. Is the Federal Communications Commission really going to show that much muscle and make the cable companies unbundle channels and packages? Choice is the killer for Comcast (CMCSA - Get Report) and Cablevision (CVC - Get Report) and Time Warner (TWX - Get Report).

Of course, they tell you that people love choices, just love them. When I interviewed Brian Roberts for Philadelphia Magazine last year, he emphasized over and over again that what mattered was choice, that people loved to pick among lots of different offerings.

But we all know the truth. There's lots of stuff that we want, but there is much more stuff that we don't want that we have to pay for. On my dial at home, for example, from channels 15 to 37, I have bubkes, a bunch of Spanish and Korean stations and a massive amount of shopping channels. How much would I pay not to have them between the shows that I really want? And the only choice that I actually can't live without -- the NFL package -- isn't even offered on cable.

Remember why we liked cable stocks: The companies could raise rates at will and had a virtual monopoly. Now they no longer have that control, and if we can pay for only the channels we want, if we can get unbundled cable stations, the cable bill will drop to a level that will make the cash flow of these companies a frighteningly unpredictable element.

Now, I know that the buyback that Comcast has kept that stock from being crushed here, and I know that Icahn has kept a bit of a premium to Time Warner. But if the FCC allows this to go through, I can't understand why I would even want to be in the cable business, let alone own the shares.
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