A new calendar year is upon us, and that means your local cable company is introducing new ways to take more money out of your pocket.
Starting in January, Time Warner Cable will join a growing list of cable and satellite providers which are charging for sports. For instance, DirecTV has a regional sports channel fee that can go as high as $2.14 a month depending on where a subscriber lives. Time Warner Cable’s charge will increase subscribers’ bills by $2.75 a month. That’s in addition to a broadcast TV fee that will jump from $2.25 to $2.75 a month.
So what are these fees? The sports channel fee is there to pay for Regional Sports Networks (RSNs), which we covered in this article. Most RSNs already charge pay TV providers between $2 and $3 per month per subscriber in carriage fees. Some RSNs — including Time Warner Cable’s two Los Angeles-based RSNs, TWC SportsNet and SportsNet LA — charge as much as $4/month per subscriber. With local TV rights contracts increasing in size for NBA, MLB, and NHL teams, RSNs can act like their national counterparts and demand higher and higher carriage fees from pay TV providers. TWC has simply become the latest to sneak those costs into your cable bill, hoping you won’t notice them in the fine print.
TWC already did this once with their “Broadcast TV Fee”, which is increasing in 2015. This fee covers the increasing Retransmission Consent Fees that broadcast networks have been allowed to demand since Congress passed the Cable Television Consumer Protection and Competition Act of 1992.
Naturally, that law had unintended consequences. Rather than being a source of support for local broadcasters, Retransmission Fees are now a subsidy for national broadcast networks. According to the Wall Street Journal, broadcast networks collected $612 million in Retransmission Fees in 2014, and they’re aiming to collect at least $1 billion in 2017. That would be an annual increase of nearly 18% per year. By contrast, ESPN’s annual carriage fee increase is 6.5% per year.
For the price of a year’s worth of those Broadcast TV Fees, you could purchase an antenna and get those broadcast channels for free for as long as local TV stations continue broadcasting — unless, of course, you live in a building that blocks that signal or in a house too far away from the transmitter. That’s one way TWC manages to stay profitable. You might have had Aereo as an option, but after multiple courts ruled against Aereo, the broadcast networks use Retransmission Consent to force the startup into bankrupcy.
Naturally, TWC and other pay TV providers want to separate those fees from your regular TV bill, so that they can advertise prices that appear to be competitive with satellite and IPTV providers — but as Karl Bode notes on Techdirt, that’s not the only reason:
These costs not only are an assault on customers in uncompetitive TV and broadband markets, but they skew all policy conversations on industry pricing because they’re historically not included in price analysis. In other words, all of those studies that already indicate how U.S. consumers pay significantly more for broadband and television aren’t even including this layer of creative pricing fat companies pile on top. One can only guess the new heights of obnoxious fee creativity obtainable by a larger, combined Comcast and Time Warner Cable.
Comcast and TWC did nothing in 2014 to improve their rock-bottom customer satisfaction rankings in 2013. Expect more of the same from those companies in 2015 — and perhaps something even worse if Comcast is allowed to buy out TWC. That new Sling TV service is already looking more interesting now, isn’t it?