GAO: Sports Impact on Cable Rates is Limited

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Washington -- Despite MSO complaints that sports
programming is driving up cable rates, a U.S. General Accounting Office study found that
costs had "a limited impact" on the prices subscribers pay.

The GAO report was done at the request of U.S. Sen. Byron
Dorgan, D-N.D., and is based on 1997 data for 15 cable systems -- admittedly, two-year-old
figures.

But based on that available information from a 1999 Federal
Communications Commission report on cable-industry prices, "sports programming
accounted for about 29 percent of the cable system operators' programming costs and
about 6.8 percent of the monthly amount that cable systems charged to their
subscribers" in 1997, according to the GAO study.

The FCC report also found that "sports programming
accounted for 7.5 percent of the increase in a subscriber's average monthly cable
bill from July 1, 1997, through July 1, 1998," according to the GAO.

"Recent FCC studies have found that increases in
sports-programming costs have been a relatively minor contributor to higher cable
rates," the GAO also concluded. It instead blamed total programming costs for being
"a substantial contributor to cable rate increases."

The June GAO report conceded that since it used 1997 data,
"sports programming costs may have a greater impact in the future when the increased
costs of recent contract agreements with major sports leagues are more fully reflected in
cable operators' rates."

Since the GAO depended on data that is not up to date, the
report does not reflect the 20 percent license-fee increase ESPN levied against operators
last year or the additional 20 percent hike that just kicked in Aug. 1. Those increases
put the sports service's monthly subscriber fee at over a dollar for some operators.

MediaOne spokesman Dave Wood said his MSO had not seen the
GAO report yet, but questioned the fact that it used 1997 data. On that basis alone, he
said, the report did not factor in the two recent ESPN license-fee increases.

"You have to look at some of the sports costs over the
past two years to get a sense of their impact [on cable rates]," Wood said.

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