Here’s a way to spook investors: Hold Congressional hearings questioning the legitimacy of long-established industry practices. Last week, the Senate Commerce Committee vented its wrath at the cable television industry – and by extension the satellite television and nascent telephone video industries – which purchases the rights to retransmit and package cable networks such as ESPN, Lifetime, and CNN.

Senators are troubled by two related industry practices: that video networks retransmit indecent and other potentially unwelcome programming material and that consumers have no choice but to purchase a broad package of networks, which sometimes contains indecent material, even if a consumer doesn’t wish to buy or watch it.

Nearly 90% of American households, each paying several hundred dollars annually, subscribe to cable or satellite companies such as Comcast, Time Warner, EchoStar, and DirecTV. Practically all subscribers buy packages that include scores of cable channels.

Although Congress’s anger seems focused on the cable industry, the companies most vulnerable are the ones producing content, including Disney, News Corporation, General Electric, Viacom, Liberty Media, Time Warner, and Comcast. This industry has the most to lose from Congressional oversight and government restrictions on the contracts that govern the distribution of cable networks.

Today, those contracts have two price structures for cable, satellite, and other distributors: one rate per customer if all customers receive the channel or a much higher rate per customer if they do not. Disney might hypothetically charge $2 a subscriber if all subscribers receive ESPN, or $10 a subscriber if all of them do not receive it. The empirical observation is that practically every cable, satellite, or other video distribution system includes ESPN as part of a package for all customers. No video distribution company dares to incur the higher price for ESPN by offering it on a specialized sports tier or a la carte, as a choice only to those customers who actually want to pay for it.

From the perspective of the content companies, the current pricing structure works well. The tens of millions of dollars necessary to launch a cable network could not likely be recovered for a network available only on an a la carte basis. Over the past 25 years, dozens of new cable networks have used this pricing model. This explosion of programming benefits those households that have wide-ranging tastes.

But for those consumers who do not wish to invite all forms of cable programming into their home, packages of hundreds of cable channels are unsatisfactory. The chairman of the Federal Communications Commission, Kevin Martin, made headlines at the Senate hearing by being the first government official to say that consumers might be better off with a la carte choices or specialized tiers of cable and satellite programming.

Mr. Martin is certainly right about consumer benefits. But for all of the discomfort in Washington about the ubiquity of indecent programming, the government is ill-equipped to regulate private contracts between willing buyers and sellers, much less regulate the content of programming.

The more imminent threat to the current business model of video distribution is the Internet. Today, consumers buy programming for the home primarily through cable or satellite services. Tomorrow, content providers may sell access to those programs online, bypassing both cable and satellite distributors.

The current structure of video networks is based on the premise that the most sensible technology for the distribution of video programming is a onetime broadcast. That was true for broadcast television and for earlier generations of cable and satellite service distribution.

But with households acquiring ever faster broadband services, opportunities emerge for video-on-demand services ranging from 30-minute segments to 24 hours of programming, from sitcom episodes to full-length movies. Broadcast networks still have a long and profitable future, but the current structure of distribution will likely evolve in response to the changing means of distribution.

The final arbiter for programming is neither the content companies, nor the distribution companies, nor government officials worried about indecency. The final arbiter will be the consumer, and technology will ultimately enable consumers to choose – packages or no – what they receive.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.