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Price of Cable TV Up 6.7% in 1st Half of ’87

Associated Press

The price of cable television service increased 6.7% during the first six months of rate deregulation, according to a survey released Monday by an industry group.

The study by the National Cable Television Assn. found the price of basic service--which includes local broadcast stations and a few cable networks like CNN, ESPN and C-SPAN--rose 10.6%. The survey also showed that operators have added slightly to the number of basic channels.

At the same time, the price of premium channels--those that subscribers pay extra to receive--dropped 2.3%, the survey found.

Overall, the average subscriber’s bill went up from $21.59 to $23.04, or about 6.7%, during the period between December, 1986 and June, 1987, the report said.

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Additionally, cable subscribership has remained unchanged since the changes last December, which “suggests that deregulation has not diminished consumers’ interest in cable television,” the association’s report said.

Cable deregulation took effect Dec. 29, 1986, allowing most cable operators to price the basic service without first getting approval from local governments.

The cable association hired the national accounting firm of Arthur Andersen & Co. to conduct the survey on the impact of deregulation. Survey forms were mailed to 2,577 randomly selected cable operators and 598, or 23%, were returned with answers.

The operators that responded to the survey constituted about 8% of the nation’s more than 7,000 cable systems and serve about 7.2 million cable subscribers, about 16% of the nation’s total.

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The average size of the system responding to the survey was larger than the national average--12,180 subscribers in the survey, compared to 5,628 subscribers nationally.

The results of the survey had been expected by industry observers and cable operators. A status report by the cable group last April reported the same trends that were detailed in the more extensive survey.

“What you had in the cable industry for a very long time was a pricing structure that placed a lot of stress on the premium and expanded basic tiers, while the price of basic service was held artificially low,” said Cynthia Brumfield, the association’s vice president for research and policy analysis.

The survey found cable systems are lowering the price of their premium channels while raising the price of basic service and the number of basic channels from 27.3 to 28.9, restoring a pricing “equilibrium,” she said.

One unexpected finding, she said, was the resurgence in the number of subscribers who take one or more premium channels--from 81.6% in December to 82% in June. Although the increase is small, it is measured against declines in premium penetration since 1984, she said.


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