The Price at the Programming Pump

Robert Gessner, president of cable operator MCTV in Massillon, Ohio, recently reached out to customers via video to explain why a pending mid-year rate increase could not be avoided. A partial transcript of his comments follows.

I want to tell you about a change in TV prices that will take effect on July 1. On the surface, it’s pretty straightforward: Basic Cable will increase by $3 a month; Basic Plus will increase by $1 a month.

The reason for this increase is also pretty straightforward. Our cost to purchase the TV programs you enjoy has increased. Like a gas station or grocery store, we must adjust our prices when our costs increase. Normally we do this only once a year. However, this year has been very unusual. The cost for some of the TV networks so many of you enjoy has increased dramatically.

The monthly rate for all other services — like high-speed Internet and phone service, and other TV services, like HBO — will remain the same. The monthly service charge for DVRs and other equipment also will remain the same.

The reason these prices remain the same while Basic and Basic Plus are increasing is because the costs to provide these other services are not increasing. We are able to control other costs very well. It is only the cost of TV services that is so problematic.

I am sure most of you know why the price of gas increases at the pump, and that it’s not the local gas station. It happens when a large oil company raises the wholesale price of gasoline. A local gas station can either pay the higher price or stop selling gas. The same forces are at work in the TV industry. Large media companies control all of the TV programming, and they raise the price. Like a local gas station, I can either pay the higher wholesale cost or stop selling cable TV. It’s not much of a choice.

It is becoming increasingly obvious that the traditional cable TV model is in need of reform. I have been one of the outspoken voices in our industry calling for reform.

MCTV works with other cable and satellite companies for legislative change at the federal level. Political leaders in Washington are starting to notice the growing consumer frustration and slowly beginning to realize that the laws governing this dysfunctional TV marketplace need to change.

Let’s all hope our lawmakers make meaningful reforms to rein in these large media companies before they destroy the U.S. TV industry and before too many more Americans are harmed.