Despite a report suggesting that cable companies will experience the highest profitability in the media and entertainment industry this year, Cable One says sports-licensing costs are spiraling out of control and it wants it customers to help pay the freight.
The Phoenix, Ariz.-based operator, owned by Graham Holdings Company and touting 730,000 subscribers across 19 states, has notified its video subscribers that they'll soon be paying a $2.94 surcharge to help cover the cost of sports licensing.
"Networks are now paying billions of dollars for the ability to broadcast college and professional sporting events," the MSO's letter to customers reads. Sports, the MSO says, now represents a third of its overall programming costs.
"These increasingly expensive sporting events are carried by networks in every level of our channel lineup, including dedicated sports channels such as ESPN, NBC Sports and the NFL Network, as well as on general entertainment networks such as TNT, TBS, USA Network and your Regional Sports Networks, " the memo goes on to say.
Cable One subscribers will begin feeling the hit during their next billing cycle.
Cable One spokeswoman Patricia Niemann provided FierceCable with the memo it sent to customers but spoke at length to Mississippi's Sun Herald, telling the paper that the MSO absorbed the increase in sports licensing "as long as we could, but it's now gotten to the point that while we're never going to pass it all on to our customers we do have to pass a small portion of what we're paying sports programmers onto our customers."
Like virtually every other pay-TV company operating in the Southeast, Cable One signed a deal with the Walt Disney Company over the summer to carry the SEC Network. However, the channel costs operators only around $1.33 per subscriber in the 11-state footprint covering the Southeastern Conference.
Such surcharges are increasingly common in the pay-TV industry. For example, despite its refusal to carry Time Warner Cable's Dodgers channel, DirecTV dings its Los Angeles-area subscribers $3.63 per month to cover a "regional sports fee."
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