With no resolution in sight between the state’s largest cable TV provider and the channel that broadcasts Denver Nuggets and Colorado Avalanche games, Comcast is moving into 2020 without Altitude Sports and plans to increase a separate local-broadcast fee by 57%.
Starting Jan. 1, Comcast will reduce its regional sports network fee in Colorado by $1.25 to $6.75 a month.
But Comcast isn’t stopping there. Its broadcast TV fee — which it pays to ABC, CBS, NBC and Fox and passes most of it on to customers — is increasing 57% to $13.65 per month, or $163.80 a year. The change will affect all Comcast customers in Colorado, from Fort Collins to Pueblo and Denver to Glenwood Springs.
“Programming costs are our largest expense,” Alison Busse, a Comcast spokeswoman in Denver, said in an email. “…For example, our broadcast retransmission costs – the amount Comcast pays to broadcasters – have risen more than 1,350% since 2010, and continue to increase significantly.”
In the past decade, TV fees have become a new source of revenue for local TV channels. As cable companies saw their costs rise, they started separating out the fee — and several others — in customer bills. But the ballooning fees have, on average, inflated customer bills by 24%, according to Consumer Reports. This has resulted in more consumers cutting the cord, more channels getting blacked out and now pending federal legislation to increase transparency of fees.
“So, in response to cord cutting, broadcasters seek even higher fees,” said Tony Lenoir, a senior research analyst at Kagan, which is part of S&P Global Market Intelligence. “You can already tell that this is a vicious cycle.”
Companies like Comcast say they are in a bind. Even though consumers can watch the local networks for free with a TV antenna, the cost to Comcast is not free. Despite charging customers more, the increase “does not fully recover the rapidly rising costs associated with providing broadcast programming,” Busse wrote.
Comcast’s broadcast fee was $1.50 a month four years ago. That jumps to $13.65 next month, and it’s reportedly higher in other states. Add that to the regional sports fee that all customers on digital starter plans and above must pay, and the two fees add an extra $20.40 a month or $244.80 a year.
It wasn’t always this way, said Lenoir, with Kagan. Local networks didn’t always charge a fee to cable companies. The broadcasts were included in the bundled price of TV plans for consumers. Then the 2008 recession happened.
“The broadcast industry used to rely almost entirely on advertising,” Lenoir said. “By charging retrans fees to the (pay-TV companies), they get a revenue source that is really subscription based and more reliable than advertising.”
TV channels don’t disclose the rates they charge cable companies. But according to Kagan’s research, the collected broadcast fees now make up 35% of a local channel’s revenue. In 2009, the fees made up just 4%. There’s no sign of price hikes going away.
“We’re just about a decade into this and the problem is that every year or every time there’s a contract, obviously they want to charge more,” Lenoir said. “This is passed on to the consumer, which, in turn, turns to a higher monthly bill every year.”
The fees in your TV bill
Comcast isn’t the only one increasing fees. DirecTV charges $8.49 for regional sports, and that’s going up to $9.99 on Jan. 19. Charter Communications, which offers cable TV service in 50 counties, cities and towns in Colorado, recently raised its broadcast fee is $13.50. That’s up 53% from last year, according to a Consumer Reports study titled “What the fee?!”
In the Consumer Reports study, which analyzed 800 cable bills from consumers nationwide, it found that 24% of an average cable bill were “hidden, sneaky fees to disguise the true cost of cable service.” Besides the two fees mentioned, other charges included high-definition fees, equipment fees and regulatory fees. Sometimes there was even an internet fee.
“We basically wanted to break down and make the case, this is way too expensive,” said Jonathan Schwantes, senior policy counsel at Consumer Reports. “That adds an extra 24% of the advertised price to the overall bill. That averages $37 a month or $450 a year. And if you run the numbers of the total number of cable and video subscribers, not including satellite because of the different regulatory treatment, it’s $28 billion a year.”
Broadcast fees became legal with the 1992 Cable Act. The law requires cable companies to carry local broadcast channels. The rule also allowed the channels to charge a fee to carry them. This didn’t apply to satellite TV companies. And not all channels charge providers — Rocky Mountain PBS does not charge a fee to cable companies to retransmit the broadcast, said Amanda Mountain, its CEO.
But because cable companies must include the major local broadcast channels, they’re kind of stuck, Schwantes said. However, cable companies and broadcasters are big and powerful and hire lobbyists to make sure policy is in their favor, said Schwantes, who used to lobby for the cable industry. Regardless if they’re stuck, it’s the customers who pay for it.
“That’s the Gordian knot that exists. How do you unravel this?” Schwantes said. “One novel approach is to give consumers a choice whether or not they want their cable company to carry the local channels and if I want them, then I can pay for it. But I shouldn’t have to be forced to pay a broadcast TV fee to help the cable companies maintain their profit margin.”
The organization is supporting the Television Viewer Protection Act, which is winding its way through Congress. It would force cable and satellite TV providers to present the total monthly price up front, as well as allow customers to cancel service without any early cancellation penalties within 24 hours, and prevent companies from charging extra fees if the customer uses his own equipment.
Dish Network, based in Douglas County, doesn’t charge a regional sports fee or a local broadcast fee, per se. In 2017, it created a local-channel plan that customers could add on to other packages for $12. Or they could choose to skip local channels and not pay the $12 per month.
“What we did was we actually reduced the price of our packages and we introduced the local channel package as a separate package that customers could or could not subscribe to,” said Brian Neylon, Dish TV’s group president. “We gave customers a choice.”
Neylon declined to share how many customers opted to pay for the local TV plan, but he said that the company also works with customers who want to go the old-fashioned route of a TV antenna. Dish will install one for free for qualifying customers. The company later clarified that this offer is only available “in the event of a broadcast blackout.”
Dish has been one of the more outspoken TV providers against the rising costs of programming. In 2014, Dish founder Charlie Ergen bluntly shared in an earnings call why negotiations stalled with Turner Broadcasting, leaving Dish subscribers without CNN: “We know how many minutes people watch CNN and how many minutes they watched five years ago and it’s hard to pay a double-digit price increase for something that people are watching half as much as they used to watch.”
The company has felt the same way about Altitude Sports, which is no longer airing for Dish and Comcast customers as the companies continue to negotiate new contracts. Besides Altitude Sports pulling its channel from Comcast and Dish Network (and earlier DirecTV), 2019 has been a record year for blackouts, according to the American Television Alliance. The organization tallied up around 276 blackouts so far this year.
Altitude sued Comcast last month and accused the cable provider of trying to run it out of business. Comcast wanted to pay Altitude much less since internal data showed that a very small percentage of subscribers watch the channel. But the 70% drop in payments would not cover Altitude’s operations, Altitude’s President Matt Hutchings said in an earlier interview.
“All we ever asked for was to be treated fairly and equitably, like any other regional sports network in the country,” Hutchings said.
Comcast has meanwhile been refunding affected customers $1.25 a month since the September dispute began. The remaining $6.75 Regional Sports Network charge covers AT&T SportsNet.
“If an agreement with Altitude is not reached by the end of the year,” said Leslie Oliver, a Comcast spokeswoman, in an email, “the RSN Fee will be permanently adjusted to reflect the fact that Comcast will no longer be carrying Altitude and not incurring related carriage costs.”
Updated at 9:40 a.m. on Dec. 13, 2019: This story was updated to clarify that Dish provides the free antenna installation offer only when a TV dispute results in a broadcast blackout.
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