Cable Fees Set to Rise in New Year

Despite rising affiliate fees, pay TV operators are managing to keep expanded basic video rate increases below 5% for the coming year, although the hikes are much stiffer for broadcast and regional sports network fees.

Related:Fans Rate RSNs as Key Channels in Bundle

Pay TV operators are increasingly parsing out their biggest cost increases – for retransmission consent for broadcast stations and for high sports rights fees – through separate charges on customer bills.

While overall basic video rate hikes are under 5% for many of the top operators across the country – Charter Communications, the second largest cable operator in the country did not respond to requests for information – charges under the heading of “broadcast fees” and “sports surcharges” have soared, in some cases by as much as 66%.

At the country’s largest cable operator, Comcast, with about 22 million basic video customers, monthly rates for video service are scheduled to increase 3.8% on average beginning in Jan. 1. In addition, Comcast said its broadcast fee – a charge to help offset rising retransmission consent charges – will increase 40% to $7 per month from $5 per month and regional sports network fees will rise 66% to $5 per month from $3 per month.

“We continue to make investments in our network and technology to give customers more for their money – like faster Internet service and more WiFi hotspots, more video across viewing screens, better technology like X1 and a better customer experience,” Comcast said in a statement. “Unfortunately, the costs we are charged to carry popular networks continue to increase significantly - especially broadcast television and sports programming, which are the largest drivers of increases in price adjustments.  On average, nationally, the customer bill will increase by 3.8% in 2017, less than half the projected increase in our programing costs.”

Dish Network, which has managed to avoid imposing broadcast and RSN surcharges in the past, couldn’t hold out any longer as retrans fees continue to soar.

“The largest cost for Dish is the amount we pay programmers,” Dish said in a statement. “The fastest growing programming costs relate to local channels. We work hard for fair deals that keep channel costs as low as possible. Unfortunately, Dish and all other TV providers have had to accept some significant price increases from programmers. Dish is absorbing some of these costs rather than passing everything on to our customers.”

Beginning in January, Dish is separating out the charges for local channels from its core programming package, to show customers the impact of rising charges.

“To offset this change, we have reduced core programming package charges by $5 per month,” Dish said in an email message. “However, the combined impact of these changes will result in a $5 increase to the monthly bill.”

Dish customers that receive the two-year price guarantee won’t see any change to their bill for that period, and neither will customers currently in a promotional pricing period. Hall added that customers of Dish’s Flex Pack, Welcome Pack or DishLATINO Basico also will not see increases.

Cox Communications has begun notifying customers of increases that will take place in the first quarter of next year. Spokesman Todd Smith said broadcast fees will increase from $3 to $4 and RSN fees will range from $2.60 to $6, depending on the market.

Driving the increases are higher sports costs, retransmission consent charges and overall adjustments to the cost of content.

Increased costs are also behind Mediacom Communications’ decision to raise expanded basic video rates by about $2 per month, according to vice president of government affairs Tom Larsen. He added that Mediacom’s average broadcast surcharge is rising by about $1.75 per month in January, and the average sports surcharge is rising by 46 cents.

DirecTV was one of the first pay TV companies to impose an RSN fee back in 2012. Earlier this month DirecTV  parent AT&T confirmed that it will raise prices in nine of the satellite TV company’s video tiers ranging from $2 to $6 per month.

“We are making modest price adjustments to our offerings that reflect increased content costs,” AT&T said in a statement. “We continue to add new features and content that add value and make the experience even better for our customers.”

At Altice USA, the average customer bill is expected to rise by about 3.4% in 2017, mainly related to certain video services, equipment fees and programming surcharges. They are in line with those of their largest competitors and reflect the rising cost of programming, particularly from sports programmers and broadcasters.

“We provide our customers with superior products and services at a great value, continually introducing faster internet speeds and with plans to roll out an enhanced video experience,” Altice said in a statement. “Our pricing remains extremely competitive in the face of rapidly rising programming costs.”