Rising Programming Costs Putting Small Cable Systems Out Of Business

High programming costs have caused over 1,000 small and rural cable systems to go out of business over the last seven years.

In an August 21 filing with the Federal Communications Commission, the American Cable Association -- which represents small and mid-size cable systems -- says 1,078 cable systems serving 50,000 subscribers have gone out of business since 2008 due to rapidly escalating programming costs from rising rates of traditional cable networks as well as broadcast TV stations.

In 2014 alone, 47 cable operators shut down 91 systems serving 5,307 customers in 32 states. The group now says there are 4,833 cable systems versus 5,127 of a few years ago.

The Association says programming costs grew at an average annual rate of 9.4% from 2010 to 2015, citing research from SNL Kagan. Over the same time span, average revenue per pay-TV subscriber only grew at a rate of 4.1%. 

For smaller cable systems, programming costs are even higher -- climbing 10.6% a year from 2010 to 2015 -- and the group says this excludes two of the fastest-growing programming categories, regional sports networks and broadcast TV stations.



The group says the situation will only get worse, especially with the likes of CBS expecting to see higher retransmission revenue in the coming years -- growing to $2 billion in 2020 from $500 million in 2013, at a 21% increase per year.

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