Ops See Sports, Broadcast Surcharges Rise in 2015

Cablevision, Mediacom, Charter Expecting 2015 Increases
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As programming costs rise with little hope of near term relief, several operators said they are expecting to increase their sports and broadcast surcharges in 2015 to help lessen the blow.

Cablevision Systems was one of the latest to join the growing list of pay TV distributors looking to increase the surcharges, warning customers that it will hike its surcharge by about $1 per month.

In an insert in customers’ December bills, Cablevision said that due to increased programming costs, the monthly Sports and Broadcast TV Surcharge would rise from $4.98 per month to $5.98 per month beginning in January. The monthly set-top box rental fee will rise about 12% to $7.56 per month from $6.71 per month. In the insert, Cablevision said pricing for its Optimum Online high-speed Internet service and its telephony product Optimum Voice are not affected.

Cablevision implemented  its sports and broadcast TV surcharge  in 2013 and has raised it at least twice since then. Other pay TV distributors have implemented similar surcharges – including DirecTV, Mediacom Communications and Verizon Communications – mainly to offset the high costs of regional sports networks. DirecTV has implemented its surcharge in markets with multiple RSNs, including New York and Los Angeles. The company said it anticipates a modest increase in RSN surcharges in 2015 as part of its overall annual rate increases in February.

Mediacom, which said its sports surcharge varies depending on the number of RSNs in a particular market, said it is planning an increase in the fee – averaging about 20 cents per subscriber – in January.

In New York, New Jersey and Connecticut – Cablevision’s service territory – there are about four RSNs, two (MSG and MSG Plus) that are owned by former Cablevision subsidiary Madison Square Garden Co. The other RSNs include the Yankees Entertainment and Sports Network (YES), and SportsNet NY (SNY). Cablevision spun off Madison Square Garden Co. as a separate publicly traded company in 2010.

According to sources, Cablevision quietly completed a carriage renewal deal with the YES Network earlier this year.

“In November we announced modest adjustments to 2015 video pricing, representing an average customer bill increase of less than 2%,” Cablevision said in a statement. “These changes are only a fraction of the rising costs of sports and other programming.  Our pricing continues to remain extremely competitive and Optimum TV is the best value in the market.”

Verizon began implementing a monthly sports surcharge to some FiOS TV customers in February 2013. Spokesman John Bonomo said in an e-mail message that the fees vary per market – for example it is $3.48 per month in New York, which has a high concentration of RSNs, and $2.42 per month in other markets. Bonomo declined to comment whether those fees would go up in 2015.

Charter Communications began charging a broadcast TV surcharge back in 2010 and said it expects to raise that rate 25 cents in 2015 to $5.25 per month.

Those that have implemented the surcharges have argued that they don’t satisfy all of the costs associated with RSNs, which can reach as high as $4 per subscriber per month for a single channel. But they do serve to highlight the problem of rising sports fees with customers.  

Not every operator has implemented a sports surcharge. Cox Communications, for example, has recently piloted a program in Cleveland where a $3 “broadcast fee,” is broken out of customer bills.

“This is not an increased fee, simply a breakout of the existing bill to make consumers aware of costs associated with broadcasting - network costs, copyright costs, retrans, etc.,” Cox spokesman Todd Smith said in an e-mail message. “We will expand this to other markets in 2015.”

Dish Network doesn’t have a sports surcharge per se – although CEO Joe Clayton has said in the past it is almost an inevitability given the rising costs of programming. The company did say that it will make moderate rate adjustments effective Feb. 1. Customers will begin receiving bills in mid-January for February service.

Dish said the percentage increase in its core package price is less than its programming costs increases, adding that customers currently receiving introductory rates will continue to pay the same rates through their promotional periods. Customers paying the everyday package price will see an increase of $2 to $5 per month on English programming packages and $5 per month on select Spanish programming packages. Charges for its Multi-Sport Pack will rise $2 to $13 per month with a qualifying package.

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