Another year, another increase to your monthly pay-TV bill.
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 TV providers are hoping to squeeze more money from people 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 early in the year. They are passing along the rising costs they pay to carry networks such as CBS and ABC, as well as regional sports channels such as the YES Network, which are shelling out more and more money 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 3.7%, according to MoffettNathanson. People are dropping traditional TV subscriptions and choosing lower-cost online options such as Netflix and slimmer TV options from Hulu and YouTube.
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, Cusick said. 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% 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.” 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 experiencing a blackout of broadcast channels owned by Tribune Media Co., including KTLA in Los Angeles, because of a contract dispute.