Giants including Comcast Corp., Dish Network Corp. And AT&T Inc.’s DirecTV plan to raise rates again in the new year, a move that could boost revenue but risks alienating subscribers who have been ditching their traditional TV subscriptions in record numbers.
Cable and satellite providers are hoping to squeeze more money from consumers who remain loyal to their packages with hundreds of channels, Philip Cusick, a JPMorgan Chase & Co. Analyst, said in a note this week, even though “this strategy could accelerate video sub declines.”
It’s common for pay-TV providers to raise prices in the new year. They are passing on the rising costs they pay to carry networks like CBS and ABC, as well as regional sports channels like the YES Network, which are shelling out more and more for sports broadcast rights.
The latest price increases come as cord-cutting accelerates. In the third quarter, the TV industry saw its largest-ever rate of decline, with subscribers shrinking by 3.7 percent, according to MoffettNathanson LLC. Consumers are dropping traditional TV for lower-cost online options like Netflix Inc. And slimmer TV options from Hulu and YouTube.
Rising Fees
Comcast, the largest U.S. Cable company, is raising its fee for regional sports networks by $1.50 on average and its fee for broadcast channels by $2 a month, according to Cusick. Charter Communications Inc., the second-largest U.S. Cable provider, recently boosted its monthly fee for a set-top box by about 50 cents and its broadcast channel fee by about $1.
DirecTV is raising rates on all English-language video packages by $3 to $8 a month while hiking fees for regional sports networks by $1 to $1.90 in most markets. Dish said it’s increasing prices for English-language video packages by $3 to $5 a month. Altice USA, the fourth-largest cable operator, recently raised rates by 3 percent on Optimum subscribers.
A Comcast spokeswoman said the changes were necessary because of rising broadcast television and sports programming costs, “which are the largest drivers of price increases,” while an AT&T spokesman noted some DirecTV plans won’t increase. The other companies didn’t respond to requests for comment.
To avoid raising prices more and losing more customers, pay-TV companies have tried taking a hard line with channel owners demanding more money. Charter subscribers in 24 markets are currently not getting broadcast channels owned by Tribune Media Co. Because of a contract dispute that could black out NFL playoff games this weekend.