Cable TV prices keep going up as more people cut the cord
By Associated Press January 5, 2018 | 11:13am
Cable and satellite TV providers are ringing in the
new year with an unwelcome gift: higher cable bills.
Comcast, for instance, says customer bills will rise
2.2 percent, on average, in 2018. AT&T is raising DirecTV’s prices by up to
$8 a month in mid-January. Smaller providers are planning increases, too.
Over the past decade, prices for TV service have risen
almost twice as fast as inflation, according to an analysis of government data.
Data provider S&P Global Market Intelligence says customers’ cable and
satellite TV bills have soared 53 percent since 2007, to $100.98 in 2017.
Annual rate hikes are as guaranteed as death and
taxes. But you can push back and trim your bill.
Why prices rise
Cable companies point to rising fees they pay to carry
TV networks. The networks, in turn, have their own rising costs – particularly
sports, as they willingly pay more to sports leagues for what they consider
must-have programming. But the networks also know they can pass those costs
back to cable companies and ultimately their subscribers.
It’s industry convention that a cable bundle needs
live sports. Otherwise, cable companies risk losing subscribers to Netflix and
other sports-less alternatives.
The consulting firm PwC estimates that sports leagues
in North America raked in $18.4 billion in 2016 from TV, radio and tech
companies that stream games, up from $11.6 billion in 2012. That’s expected to
keep growing as tech companies such as Amazon and Facebook become more
interested in sports, meaning more competition for rights to televise games.
The big winner in the TV ecosystem? “If anyone’s the
beneficiary it’s NFL players,” Pivotal Research Group analyst Brian Wieser
said.
Meanwhile, to get the biggest audience possible, many
entertainment companies like Disney require cable companies to include
expensive channels in the most popular bundles. Verizon tried to offer a
cheaper package by dropping Disney’s ESPN from a basic package, making it an
optional add-on. ESPN sued, and now Verizon offers a sports-focused basic
package with ESPN alongside ones that doesn’t have sports.
Beyond sports, networks pay for high-quality TV series
to compete with hits on Amazon, Netflix and other services. Those costs are
passed along, too.
In all, S&P Global Market Intelligence estimates
that network fees that cable companies are paying are nearly 2.5 times what
they were a decade ago.
You can threaten to ditch your cable company in hopes
of getting a discount. Companies will often offer a promotional rate for a year
or two – though they may also try to get you to upgrade packages in the
process. BillFixers, a service that fights on your behalf in return for a cut
of your savings, estimates that 55 percent of customers are on a promotion at
any given time.
But just having a discount doesn’t mean it’s a good
one. BillFixers’ founder, Ben Kurland, recommends calling to complain about
prices and rejecting the first deal offered. More often than not, a better
discount will be available if you ask for it. Repeatedly.
If you decide to cut one of your services, like your
home phone, but you feel that you are still paying too much, Kurland advises
calling back again in a month and seeing if there are any new discounts.
Cable companies are already dealing with customers
dropping TV service entirely. That hurts the networks, too, as their fees are
based on the number of subscribers. It’s in everyone’s interest to keep you as
a customer, even if you are paying less.
Many promotions are automatic after you initially sign
up for service and last for a year or two. That may protect you from immediate
price hikes, at least partially. Those deals don’t always include equipment
charges and separate fees for over-the-air networks, including ABC, CBS, Fox
and NBC (yes, you’re paying for them, too, even though they are free with an
antenna).
An increasingly popular option is to just peace out.
Though there are still 94 million cable and satellite TV customers, that’s
roughly 4 million fewer than two years ago, according to MoffettNathanson
Research.
You don’t have to drop TV networks completely. Online
TV services such as YouTube TV, DirecTV Now and Sling TV offer smaller packages
of channels, often for less than what cable charges. MoffettNathanson estimates
these services have 3.5 million customers combined. Make sure the service has
your favorite channels, as these services have notable gaps.
Antennas are also available for $50 or less. You get
over-the-air networks for free, although reception might not be perfect.
Be careful: Paying for online services to replace TV
could eventually add up to more than a $100 cable bill, especially as more
services are created to compete for your dollars. Disney, for instance, is
pulling its movies from Netflix and plans its own streaming service in 2019. On
the other hand, it’s easy to cancel after a month or two of catching up on
shows; canceling cable is a chore by comparison.
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