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Sports Surcharges Surging Across Pay TV

Add Cablevision Systems to the list of multichannel-TV companies adding a $2.98 additional monthly fee to help cover the rising cost of sports programming.

Cablevision is the third pay TV provider to slap an additional fee on customers to off - set high sports-channel license fees, which Cablevision claims account for one-third of its overall content costs.

DirecTV was the first multichannel firm to implement a surcharge, of $3 per month, last August. Verizon’s FiOS TV followed suit in January, telling customers it would begin charging them an additional $2.42 per month in February to help offset the high cost of sports.

“We are very focused on the price our customers pay for our services and the value we deliver,” Cablevision vice president of video product management Bradley Feldman said in a statement. “We have not raised our cable television prices in more than two years, even as we have added channels, on-demand content, new TV-to-go services and other benefits. Unfortunately, the rising cost of programming has resulted in this sports surcharge, which is similar to those introduced by other TV providers.”

Separately, Cablevision said it’s raising prices for its 45-channel Spanish-language package Optimum Español by $2 per month, and its Optimum Business commercial video service also is going up by $4 per month. Charter Communications also said it will raise rates an average 2.3% across its systems, effective this quarter.

The New York market, where Cablevision has 3 million customers, has at least four regional sports networks: MSG Network and sister channel MSG Plus; YES Network; and SNY, the cable home of the New York Mets. Madison Square Garden was spun out of Cablevision as a separate entity in 2010 but Cablevision CEO James Dolan also serves as executive chairman of MSG.

Aside from ESPN, which is the priciest general cable network at $5.26 per customer per month, Cablevision’s sports-channel lineup includes NBA TV, MLB Network, the Golf Channel, Sportsman Channel, NFL Network, CBS Sports Network and others.

Cablevision, like other distributors, said the surcharge won’t come close to covering its total sports costs.

According to SNL Kagan data, the average number of sports channels per multichannel subscriber has risen from just two in 1995 to 14 in 2012, and the average charges for those channels per customer per month has risen more from $1.17 in 1995 to $12.81 in 2012.

Cablevision didn’t single out any specific channels in its sports surcharge. But most pay TV operators have zeroed in on regional sports networks.

In Los Angeles, for example, Time Warner Cable SportsNet launched, charging an estimated $3.95 per month per customer. A Los Angeles Dodgers-based RSN is launching in the same market next year, with estimated carriage fees of nearly $4. Other teams are expected to follow suit. Los Angeles could have at least four RSNs — including two existing Fox Sports channels — charging upwards of a combined $10 per subscriber per month.

Other distributors are at least considering surcharges. Dish Network CEO Joe Clayton said on an earnings call last week an RSN surcharge is almost inevitable. “We can’t just continue to eat this,” he said of sports costs. “We’ll have to pass it forward if the costs continue to escalate. When and how and where we’ll do that still remains to be seen.”