Have you ever wondered why your cable bill is going up?
It’s the result of the bidding war
with the various television networks with your favorite professional sports leagues. To cover the costs of these contract deals, these sports networks have increased their carriage fees. To compensate for the increased fees, several of these cable providers have increased the fees they charge their customers or will soon increase their fees.
One example of a provider that will increase its fees come February is DirecTV. Starting February 5, they will raise their fees 5.7%.
One of the key networks behind this price increase is ESPN, a result of some of its recent deals with various sports leagues -- it is estimated that it now pays the NFL $1.9 billion to air games. Also, ESPN and TNT have recently signed a $2.6 billion deal per year for NBA games.
It should be noted that ESPN is also the most expensive premium channel. On average, customers are charged $6 on their bills just to have ESPN. The reason for this is the fact that ESPN has a massive reach that only the major networks have.
It’s not just ESPN that has caused the prices to go up. Even the sports contracts with the major networks like CBS and Fox have also caused prices to increase. Not only that, but you have more competition for sports broadcast rights with channels such as Fox Sports 1, NBC Sports and Turner Broadcasting.
And to make things even more expensive, broadcast companies have package deals to carry their various networks. As a result, cable providers carry channels that a few customers if any would be interested in. One example is CLTel has to carry the SEC network which is owned by ESPN in Northern Iowa even though there aren’t any Southeastern Conference teams in the area.
The monthly increase for customers of cable providers such as Time Warner, Cablevision and other smaller cable providers range from $2 to $5. Analysts believe that this trend of ever increasing fees with last for years.
So, if this trend continues, it will test the patience of customers, if not already. It should be noted there has been a trend of customers dropping cable with 150,000 dropping cable in the last quarter.
With more streaming options coming soon, there will be even more customers dropping cable. There is a limit as to how far this racket can go and sports leagues and cable providers will be doing themselves in if this continues.
Photos courtesy of: Wikipedia