Cable Rates Rise 3%-4% on Average in 2016Evercore Says Programming Costs Up 8%-10% Annually 1/18/2016 10:45 AM Eastern
Rising programing costs again are the culprit for cable rate increases, according to Evercore ISI Group media analysts David Joyce and Vijay Jayant, with the cable charges on average rising 3% to 4% in 2016 while programming costs have risen between 8% and 10% annually over the past four years.
Three of the four top cable operators have announced their 2016 rate increases – Charter Communications is the only holdout so far – with Cablevision Systems the only top operator that has not increased video rates.
According to the analysts, almost all of Comcast’s double play packages increased by $3 –to-$4 per month (2%-5%) and triple play packages rose by $1.50 per month (1%). Limited basic video packages increased by about $1 per month while expanded basic video decreased by $1 per month. Some of the increases took the form of installation and service fees. Retransmission consent fees forced the largest cable operator in the country to nearly double the broadcast fee from $3 to $5 per month. Comcast said its average bill will rise by 3.9% in 2016.
At Time Warner Cable, which hopes to complete its merger with Charter by the end of the first quarter, monthly charges for its Starter TV and Standard TV rose by $4 (20%) and $2 (2%), respectively. The second largest cable operator also announced new broadband pricing packages and has increased most of its equipment and service fees, in addition to raising rates for premium channels Cinemax and Starz.
Cablevision Systems, which is expecting to complete its $17.7 billion merger with Altice in the first half of this year, said it will not incrase pricing for its base products, but is raising set-top box rental charges and DVR fees by $1 per month each for residential and commercial customers. All commercial customers will now be paying $9.99 per month for modem rental fees. Cablevision has said that the average customer bill will increase by 2.9%.
Satellite TV and telco TV operators also have announced increases, with DirecTV (now part of AT&T) announcing price increases for its video packages ranging from $1 to $9 per month, according to the analysts. Dis Network has announced increases between $2 and $8 per month for all its packages effective Jan. 14.
On the telco TV side, AT&T announced increases of between $2 and $4 per month for all its video packages, effective Jan.28. The analysts wrote that they haven’t seen any official announcements from Verizon’s FiOS TV but their own channel checks indicate that all premium channels saw a $2 monthly price increase , while its Showtime Starz Entertainment Package was increased by $4/month.