Time Warner Cable will soon charge its 15 million customers for watching sports as the major cable provider tries compensating for the rising costs of broadcasting local channels and athletic programming.
Effective Jan. 1, the cable company – which has a major Charlotte administrative office and serves about 50 percent of local households – will charge subscribers a new $2.75-per-month fee for sports programming. Other changes include a 9-month-old broadcasting TV surcharge increasing from $2.25 to $2.75 per month, and an $8-per-month Internet modem lease, up from $5.99.
Subscribers who pay for HBO movie channels selectively on an “a la carte” basis will see those rates increase on their bills from $14.99 to $16.99. Customers who get those channels as part of a package deal will not be charged more.
Customers only with Time Warner’s Internet services will not have to pay the broadcasting TV or sports programming fees, and vice versa for customers only with TV services.
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The rate hikes come after Time Warner, which earlier this year announced a proposed $45 billion merger with Comcast, invested millions into deploying new modems to support faster Internet speeds, said Scott Pryzwansky, company spokesman.
The higher leasing fee helps pay for the new equipment and for maintenance on modems that malfunction, he said. Subscribers can avoid the fee by purchasing their own modems.
There’s no opting out of the sports programming fees. Most of the networks Time Warner Cable carries, Pryzwansky said, don’t allow providers to offer channels on a stand-alone basis.
The sports fee and increased broadcasting TV surcharge are the results of rising costs in how much local and sports channels charge cable providers, he said. The cost to Time Warner for carrying sports networks has gone up by 91 percent since 2008, and the fees the provider pays to show local channels have soared by 60 percent over the past two years.
The higher surcharges are only “a fraction of what we actually pay for broadcast TV and sports content,” he said.
Both sports-specific and broadcast TV fees are common among major TV providers, including Time Warner’s competitors. DirecTV charges about $3 for sports programming and Wow! TV charges nearly $8 for transmitting local networks.
Sports programming costs
ESPN is, by far, the most expensive channel for cable and satellite providers. ESPN charges companies $6.04 a month per customer – the highest fee charged by any of the 10 most expensive channels, followed by TNT at $1.44 per customer and the NFL Network at $1.22 per customer, said Derek Baine, research director at media research firm SNL Kagan.
That doesn’t include ESPN 2, which SNL Kagan says charges 76 cents per customer, he said. Other expensive channels on that list include Fox Sports 1, Fox News, the NFL Network, USA and the Disney Channel.
Cable providers currently pay about $28 per customer each month for a dozen channels, but SNL Kagan expects that cost to jump by 36 percent in 2018.
By 2018, SNL Kagan predicts that ESPN will charge cable providers more than $8 per customer.
As sports teams and athletic conferences charge more for broadcast rights, networks raise their rates, and “eventually somebody’s got to pay for it,” Baine said.
Some charges frozen
About 30 percent of Time Warner’s TV customers will not see the sports programming or broadcast TV surcharge increases immediately because their service is part of a promotional package, Pryzwansky said. Once their deals end, those customers will find new fees on their bills.
Prices for Time Warner’s cable and Internet package deals will not change, he said.
But that’s little comfort for Charlotte’s John Shaw, who balked when he got his cable bill on Thursday and saw the new charges.
He said he and his family might keep TWC’s Internet service, buy an antenna for his TVs and subscribe to Hulu or Netflix to fill in the gaps. That will reduce his TV and Internet bill to $70 per month, down from about $135, he said. He’s also considering subscribing to AT&T, which also announced price increases for next year.
“Time Warner Cable is out of control with these insane increases,” said Shaw, 48. “I intend to cancel effective Jan. 1, 2015.”