Column: Spectrum is planning a 20% fee hike for local channels as pay-TV customers dwindle
We’re so accustomed to having our cable bills routinely go up by absurd amounts, it hardly seems like news when a cable company inflicts more pain on customers.
So perhaps Spectrum subscribers won’t be surprised to learn that the monthly fee they pay for access to local channels will rise March 1 to $11.99 from $9.95 — a more than 20% increase.
The rate hike comes just a few months after the last increase in the fee, in November, when it climbed 12% from $8.85 a month.
But where Spectrum really shows its cunning is in the way it’s slapping around some of its most loyal customers as it copes with higher programming costs.
West Los Angeles resident Hershl Hartman, 89, has subscribed to Spectrum (and its previous corporate incarnations) for nearly 30 years.
Along with internet ($64.99) and phone ($19.99) service, he pays $140.48 monthly for Spectrum’s TV Gold plan, which provides access to more than 200 channels, including premium channels.
His most recent bill contained a nasty surprise. Beginning Feb. 15, it said, his TV Gold package no longer would include the Cinemax, Starz, Starz Encore and Epix premium channels.
However, Hartman could order those channels on an a la carte basis — for additional fees — if he wanted them back.
He told me he immediately called Spectrum, fought his way through the company’s deeply unfriendly automated switchboard, waited for about 20 minutes on hold and finally asked a service representative what was going on.
“She said I could pay $15 each if I wanted to keep Starz, Cinemax and Epix,” Hartman recalled. “That was $45 a month. So I asked if my TV Gold cost was going down by $45.”
You’ll find this hard to believe. It wasn’t.
“I told her this was like ordering $10 of a pound of something from the butcher, and then being given only three-quarters of a pound but still being charged the full $10,” Hartman said.
That’s an apt metaphor. It’s also like being charged $140 a month for pay-TV, then having the value of that service diminished in financial terms by a third but still having to pay the same amount, and being mauled with a 32% rate hike if you want to keep your service quality the same.
I asked Hartman what he thought about Spectrum’s tactics.
“It seems pretty weaselly,” he replied.
A quick disclaimer: The L.A. Times will have a nightly show on Spectrum’s new cable channel, Spectrum News 1, beginning this month, making the two companies business partners.
I called a Spectrum service rep and learned that what Hartman had been told in his bill had already changed. She said Starz, Starz Encore and Epix are not being dropped from the TV Gold plan. Cinemax, however, was still going a la carte for a monthly charge of $9.99.
The rep was unable to explain why this was happening. She confirmed, though, that the cost of TV Gold isn’t going down.
That means if Hartman wants to keep watching Cinemax after Feb. 15, the price of his TV Gold plan will be 7% higher.
The inflation rate for all of last year was just 1.9%.
I laid all this out for Dennis Johnson, a Spectrum spokesman. I asked why the Starz and Epix channels were originally cut and then restored. I asked why only Cinemax was going a la carte.
I asked why TV Gold’s base price wasn’t going down, seeing as it had lost a premium channel that had been included in the original plan.
Johnson had this, and only this, to say: “We change our programming packages from time to time, including adding networks and occasionally removing them.”
Then there’s that big increase in the monthly broadcast fee. The service rep told me it reflects the latest standoff between a cable or satellite company and one if its content providers.
In this case, Spectrum’s parent, Charter Communications, dropped KTLA and dozens of other Tribune Media stations nationwide for a little more than a week last month in yet another spat over how much money should be changing hands. The two sides didn’t disclose how much they settled for.
This much, though, is clear: That 20% fee increase means big bucks for Charter. The company reported Thursday that it had just over 16 million residential pay-TV subscribers as of the fourth quarter of last year.
Hitting up each of them for an extra $2.04 a month means Charter, the country’s second-largest cable company, will be raking in an additional $391 million in annual revenue, on top of the tens of billions of dollars it already earns.
I’d be curious to find out how much of that $391 million will go to Tribune in programming fees and how much will fatten the pockets of Charter shareholders, who have been pushing the company to find new ways to make money amid a surge in pay-TV cord cutting.
Charter lost an additional 36,000 residential TV customers in the most recent quarter.
Remember, it was just in November that Charter raised the local-channels fee by 12%, or $1.10 monthly, boosting annual revenue by $211 million.
That’s over half a billion in extra cash within the span of just a few months.
I asked Johnson if the latest price hike is commensurate with Spectrum’s new contract with Tribune.
“This charge reflects the rapidly rising cost of local broadcast channels,” he replied.
It’s almost as if Spectrum is uncomfortable trying to justify its actions to customers.
After nearly 30 years as a Southland cable subscriber, Hartman told me he’s sick of all the nickel-and-diming, not to mention what he sees as reduced service quality for the money he has to pay (and pay and pay).
I asked what he plans to do about it.
“I’m looking into alternatives,” Hartman said. “What do you think of satellite?”
Different technology, same business model.
My advice is to cut the cord and stream content via a broadband internet connection.
Unfortunately, Spectrum/Charter sees the writing on the wall. It may be losing pay-TV subscribers, but it added 289,000 residential internet customers in the fourth quarter.
So guess what? In November the company raised its internet-only monthly price by a buck to $65.99.