Will cable service improve?

The pay-TV industry needs to treat customers more reasonably, or its customers will continue their steady march to the exit sign.

If you believe that the problem with cable companies is that they're just not big enough, today is a really good day.

Comcast's proposed $45.2-billion acquisition of Time Warner Cable will create a behemoth with about 30 million customers and dominance in 19 of the nation's 20 largest pay-TV markets.


Comcast's chief executive, Brian Roberts, said Thursday that the merger would be "pro-consumer," "pro-competitive" and "in the public's interest."

It's not yet clear what he means by any of that, since there would be less competition in the cable industry and more market power in a single company's hands, a combination that history has shown tends to result in higher prices and lousier service.

And it's not as if the cable industry wins any points at the moment for consumer friendliness.

Take the case of Joyce Griffin. She signed up with Time Warner Cable for video, Internet and phone service last year. Her introductory rate was $182.96 a month.

She received an email from the company the other day informing her that when her introductory period ends next month, the next bill will reflect "the current standard rate of $214.97 per month" — a more than 17% rate hike.

But as "a thank you for your continued business," the company said, it will give Griffin "another special offer."

Instead of paying $214.97 a month, she'll instead have to pay the low-low-low price of just $207.96 until next January — a roughly 14% increase.

Griffin's reaction to this incredible act of corporate generosity: "You have got to be kidding!"

I find Time Warner Cable's who's-your-buddy efforts intriguing for two reasons. First, the company genuinely seems to think that people won't feel they're being gouged for cable service if they pay $207 monthly rather than $214.

Second, Time Warner seems to be tacitly acknowledging that it knows its rates are too darn high, but its only response is to try to bamboozle customers into not noticing.

There's a better way: Give customers a true break by allowing them more control over the channels they want to watch and pay for.

"Consumers deserve lower-cost TV," said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "Give them the right to choose the TV that they want, instead of being forced to pay for the TV they don't want."

What's particularly striking about the stance of Time Warner and all other cable companies is that they know they're fighting a losing battle. They know that with each passing year, more and more people will cut the cord and turn to online video-streaming services such as Netflix and Hulu Plus.

In one particularly telling sign of the times, the NPD Group, a market researcher, said last month that the percentage of households subscribing to an online streaming service increased to 27% from 23% during an 18-month period through August.


During the same period, it said, the percentage that subscribed to a premium TV channel such as HBO or Showtime declined to 32% from 38%.

Russ Crupnick, senior vice president of industry analysis for the NPD Group, said consumers increasingly view online services as an adequate alternative to premium cable channels, not to mention a good way to cut monthly bills.

Time Warner Cable says it lost 215,000 video subscribers in the fourth quarter last year, bringing its total customer losses for the year to about 825,000. That's more than the loss of 530,000 subscribers a year earlier.

So when the company pats itself on the back for shaving three percentage points from Griffin's rate hike, it does so in the face of clear evidence that people have had enough of sky-high cable bills.

Which isn't to say the cable industry or its satellite kin are the only bad guys here. Some industry execs have spoken publicly about the need for more consumer choices.

"The villains are also the broadcasters," said Warren Grimes, a Southwestern Law School professor who specializes in antitrust and telecom issues.

He said programming heavyweights such as Viacom, Fox and Disney force cable and satellite companies to pay for fat packages of channels, the costs of which are passed along to pay-TV subscribers.

The cable industry plays the same game. Comcast, for example, owns Universal Pictures, NBC and more than a dozen cable networks. Time Warner Cable makes subscribers pay for its Lakers and Dodgers channels, regardless of whether they want them.

Grimes said the current system is unsustainable. At some point, he said, pay-TV industry players will have to accept — likely at the prodding of lawmakers — that they can no longer get away with charging consumers for products they don't want.

"But until then," Grimes said, "they'll try to make as much profit as they can."

Which brings us back to Time Warner's lame attempt at convincing a customer that the company is on her side.

Dennis Johnson, a company spokesman, called the notice to Griffin a "typical transition" from introductory prices to regular prices.

He said Time Warner already has worked with her to provide a new package that's "less than the price indicated on the letter she received."

As for the wedding bells with Comcast, Johnson said the merged company "will be able to better compete for customers."

"Expect to see groundbreaking innovations on our superior network," he said.

Grimes, though, called the deal "bad for consumers, bad for competition and bad for independent programmers who might wish to get their offerings carried on cable."

At least this much is clear: The pay-TV industry needs to wake up and smell the Internet.

Either it stops behaving in a defiantly oligopolistic manner and treats customers more reasonably, or its customers will continue their steady march to the exit sign.

It seems pretty simple: Fair profits are better than no profits. You'd think these guys, who aren't really our friends, would realize that.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to