Even As TV Addicts Start To Cough, Cable Raises The Cost Of Its Matchsticks

If you lived your entire lifetime in MediaTown instead of just driving through it and stopping at a few traffic lights like most people do, you would have to believe cable subscribers are nearly extinct, like, say, people with Blackberry phones.

That’s just not so. Not yet. Millions of people subscribe to cable so when Bloomberg Business titled a recent story, “Cable Bills Are Rising Again (Those Of You Who Still Have Cable)” the headline was a slap at the industry, not a very fair estimation of the enormous clout the cable/satellite business still has.

But as the Pew Research Center reported last week, its latest survey finds that 19% of adults 18-to-29 have become cord cutters and another 16% never had a cord to cut in the first place. In all, 24% of American adults don’t have a cable or satellite service, and of those, 15% have become cord cutters recently. 

Significantly, 74% say the high cost of cable/satellite service is what took them over the edge.



Faced with this revolt, the largest cable and satellite services have decided it’s time to raise rates. 

Good plan!

Bloomberg reports: “In the coming weeks, Time Warner Cable is raising its sports programming fee by $2.25 to $5 per month and its broadcast programming fee by $1 to $3.75. Comcast, the biggest U.S. cable company, will increase its broadcast fee by $1.75 to $5 and its regional sports fee by $2 to $3. Phone and satellite companies are planning similar increases, which vary depending on the package. All say the moves are because of the rising cost of carrying broadcast and sports networks.”

The networks are just transmission fee gluttons and they're eating themselves to death. The broadcast networks, having discovered the joys of dual revenue streams, have been feasting on cable and satellite operators for the last 15 years or so, charging more and more to bring CBS, NBC, ABC and Fox into American homes.

Likewise, in the sports realm, ESPN has lost seven million subscribers in the the last two years, losses that occurred as non-sports viewers decided not to subsidize the jock next door. 

Comcast has pulled the YES network that carries New York Yankees games and other regional teams, from the homes it serves in Pennsylvania, New Jersey and Connecticut, claiming YES wants too much for the service.

In its statement, Comcast said, in the past season, “well over 90% of our 900,000-plus customers who receive YES Network didn’t watch the equivalent of even one quarter of those games” YES beamed during the season.

It makes no similar calculation for what percentage of its viewers watch the other channels you are forced to buy as part of the infamous cable package. I have the stain of Honey Boo-Boo on my hands, just like you do, even if you never saw that piece of garbage.

CBS got $500 million in retrans fees in 2013 according to reports, and expects to meet its goal of $2 billion by 2020. That’s good for CBS, for now, but while blowing that much new revenue oxygen into the network, it has to hope its CBS All Access pay-streaming service makes up for the steady leak in over-the-air viewing that in large part comes from cord cutters.

Without a strong mother ship, traditional broadcast and cable networks have their work cut out as neo-streamers. Those network shows you watch on Hulu or CBS All Access only succeed because viewers have pre-sampled them. As that cable/satellite showcase narrows, the value of off-network will diminish too. Over the air television is an addiction and cord-cutters, when given a choice, are kicking the habit, or not even starting.


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