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Cable, TV networks blame each other for high rates
Reuters, 05.06.03, 3:24 PM ET
By Andy Sullivan
WASHINGTON, May 6 (Reuters) - Cable TV operators and content providers blamed each other for steadily rising cable rates on Tuesday, prompting lawmakers to suggest that consumers should have more say over which channels they wish to pay for.
Cable subscription fees have increased by nearly 50 percent since regulations governing the industry were relaxed in 1996, leading to charges of price-gouging from consumer advocates and tough questions by the Senate Commerce Committee.
Cable officials told the committee they were forced to raise rates to keep up with wholesale increases by channels such as Disney Co.'s (nyse: DIS - news - people) ESPN sports network, which has raised its fees by 20 percent each year for the last five years. Contracts that require cable operators to carry many channels consumers may not want also lead to further rate increases, they said.
"Unwanted programming is being forced into the home, particularly sports programming," said Charles Dolan, chairman of Cablevision Systems Corp. (nyse: CVC - news - people). "The cable bill at the end of the month is increasing against the customer's wishes."
Sports networks said they were being made scapegoats by cable operators like Cablevision that often own competing sports programming and up to half of the channels they carry.
"I find it beyond irresponsible for cable industry leaders to blame programmers for their often excessive rate increases," said Leo Hindery, whose YES Network broadcasts New York Yankees baseball games and other sporting events.
Committee Chairman John McCain and several other senators suggested that prices could be held in check by allowing consumers to sign up for only the channels they wanted.
"I fail to understand why any customer should be forced to pay for programming they don't want," said McCain, an Arizona Republican.
Hindery and several cable company operators said they supported that idea to varying degrees, but noted that technical limitations in cable equipment might not make a complete a-la-carte approach possible.
ESPN said in a statement consumers would protest if cable companies removed it from their basic subscription packages and noted that it only accounted for a fraction of the average consumer cable bill.
The Federal Communications Commission is considering whether to relax ownership rules that limit the reach of media companies, with a decision expected in June. Cable industry officials warned that any change could allow a few media giants, such as News Corp. Ltd. <NCP.AX> (nyse: NWS - news - people), to wield more power and raise fees for programming as much as they wished.
YES's Hindery noted that the cable industry is already dominated by a handful of firms, with seven companies reaching 90 percent of all customers.
A News Corp. spokesman declined to comment, noting that company Chairman Rupert Murdoch is scheduled to testify before a House of Representatives committee in two days.
Copyright 2003, Reuters News Service
Reuters, 05.06.03, 3:24 PM ET
By Andy Sullivan
WASHINGTON, May 6 (Reuters) - Cable TV operators and content providers blamed each other for steadily rising cable rates on Tuesday, prompting lawmakers to suggest that consumers should have more say over which channels they wish to pay for.
Cable subscription fees have increased by nearly 50 percent since regulations governing the industry were relaxed in 1996, leading to charges of price-gouging from consumer advocates and tough questions by the Senate Commerce Committee.
Cable officials told the committee they were forced to raise rates to keep up with wholesale increases by channels such as Disney Co.'s (nyse: DIS - news - people) ESPN sports network, which has raised its fees by 20 percent each year for the last five years. Contracts that require cable operators to carry many channels consumers may not want also lead to further rate increases, they said.
"Unwanted programming is being forced into the home, particularly sports programming," said Charles Dolan, chairman of Cablevision Systems Corp. (nyse: CVC - news - people). "The cable bill at the end of the month is increasing against the customer's wishes."
Sports networks said they were being made scapegoats by cable operators like Cablevision that often own competing sports programming and up to half of the channels they carry.
"I find it beyond irresponsible for cable industry leaders to blame programmers for their often excessive rate increases," said Leo Hindery, whose YES Network broadcasts New York Yankees baseball games and other sporting events.
Committee Chairman John McCain and several other senators suggested that prices could be held in check by allowing consumers to sign up for only the channels they wanted.
"I fail to understand why any customer should be forced to pay for programming they don't want," said McCain, an Arizona Republican.
Hindery and several cable company operators said they supported that idea to varying degrees, but noted that technical limitations in cable equipment might not make a complete a-la-carte approach possible.
ESPN said in a statement consumers would protest if cable companies removed it from their basic subscription packages and noted that it only accounted for a fraction of the average consumer cable bill.
The Federal Communications Commission is considering whether to relax ownership rules that limit the reach of media companies, with a decision expected in June. Cable industry officials warned that any change could allow a few media giants, such as News Corp. Ltd. <NCP.AX> (nyse: NWS - news - people), to wield more power and raise fees for programming as much as they wished.
YES's Hindery noted that the cable industry is already dominated by a handful of firms, with seven companies reaching 90 percent of all customers.
A News Corp. spokesman declined to comment, noting that company Chairman Rupert Murdoch is scheduled to testify before a House of Representatives committee in two days.
Copyright 2003, Reuters News Service
