Cox raising cable rates, cites higher costs
Cox Communications will raise its cable rates an average of nearly $5 per month as of Jan. 15, while Internet service will go up less than $4 per month for most customers, a company spokeswoman said Thursday.
The increase in cable costs will vary depending on the services a customer orders, but about 60 percent of customers will see an increase of less than $7 per month, spokeswoman Sharon Bethea said. The company will also increase telephone rates $1 per month, which will basically cover regulatory costs, she said.
“We really work hard to manage costs, but these fees that we pay national networks like Disney, ESPN, FX and others are skyrocketing,” Bethea said.
The price Cox pays to retransmit the programming of local affiliates like ABC, CBS, NBC and Fox also has soared, Bethea said. Even though Cox negotiates aggressively with all the networks, the cable company can’t absorb the increased costs and was forced to make the difficult decision to raise its rates, she said.
Bethea said those increased costs for programming are the main reason for the price increase.
However, Mark Cooper, director of research for the Consumer Federation of America, said while cable companies’ costs have risen, the firms always increase their margins more than the costs themselves.
“It’s a down economy. They’re the only ones that get that much,” Cooper said. “Their costs didn’t go up four bucks a month. No way. I guarantee you their margins are going up.”
Bethea said Cox is absorbing the majority of the cost increase.
She pointed to stories in The Wall Street Journal and Business Week that describe ESPN and the National Football League as both wildly popular and costly.
Under the most recent contracts with the National Football League, NBC, CBS and Fox will pay $27.9 billion for the rights to broadcast games from 2014 to 2022. That’s an average of 63 percent more than the networks paid under the last contract.
ESPN’s most recent deal to broadcast Monday Night Football calls for annual payments of $1.6 billion, a 73 percent increase, according to BusinessWeek, and a cost that will be passed along to cable companies and their customers.
Bethea said Cox is looking for ways to offset the price increase for people in the most need.
The company will increase the discount on basic cable for low-income seniors to 30 percent from 25 percent, she said. For video, the company is introducing a new economy tier of service for customers on a tight budget.