The average price for basic cable TV service increased 2.3% to $23.79 for the 12-month period ending January 1, 2015, driven in large part by soaring costs for video programming, according to a new FCC pay TV price survey. Expanded basic cable service rates increased by 2.7% between 2013 and 2014 to $69.03.
Those are substantial increases, considering that the overall inflation rate was essentially flat for that time period. FCC data also suggests that soaring retransmission consent fees were a key driver of the price increases.
Costs for Video Programming
The average pay TV provider paid nearly $12.7 million to local broadcast stations for retransmission of broadcast programming in 2014 – up from $7.8 million in 2013. That’s an increase of 63.2% in one year. The monthly fee per subscriber per broadcast station was $1.07 in 2014, up from 75 cents in 2013 – a 43% increase.
The FCC survey was based on information provided by cable TV providers and telecom companies offering video services but did not include input from satellite TV providers or AT&T U-verse. Survey results were published in the FCC’s “Report on Cable Industry Prices” released October 12.
Pay TV providers, particularly smaller telcos and cablecos, have been complaining that soaring programming costs are making their businesses increasingly non-viable. Nevertheless, the FCC has declined to take action to further regulate broadcasters with regard to retransmission fees.
FCC Pay TV Price Survey
The FCC pay TV price survey is conducted annually to compare pricing in markets that are deemed competitive versus those that are not.
This year’s report, based on data collected in January 2015, found that prices for basic cable were 6.4% lower in competitive markets in comparison with non-competitive markets.
It was a different story for expanded basic service, however. The average price paid for expanded basic service was actually 3.6% lower in non-competitive markets.
The FCC noted, however, that cable companies in competitive markets tend to offer more channels in their expanded cable package. When measured on a per-channel basis, the cost of expanded basic service was 17% lower in competitive markets, the FCC found.