Cable subscribers learning that the buck stops in their mailbox

For better or worse, cable subscribers are learning that when it comes to cable, there is no such thing as "free" over-the-air broadcast TV. As media monsters like News Corp. (Nasdaq: NWSA) post big profits, cable operators are increasingly forced to pass along retransmission costs to subscribers to fuel their own successful businesses.

"Mediacom is absorbing a big chunk of the elevated programming costs in various ways with better technologies and improved processes," Mediacom spokeswoman Phyllis Peters told of Bloomington, Ill. What Mediacom can't absorb, though, it's charging back to consumers in the guise of a $3 a month family subscription increase for Central Illinois customers. "Mathematically, the $3 change to family cable subscriptions can in no way cover the entire jump in programming costs. Every penny of this $3 goes right out of our door."

Charter Communications (Nasdaq: CHTR) has been putting the increased programming costs right on the monthly bill. "We thought this was the best way to not go back to historic rate card rate adjustments but simply pass through the costs associated with carrying those broadcast services," Charter President-CEO said during a third quarter earnings call. "The reaction from the customers has been very, very limited. We're very pleased with how this has played out."

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Related articles:
Retransmission fees pay off for News Corp. (Nasdaq: NWSA) in fiscal 1Q
Charter ready to meet challenges of an online-hungry subscriber base
It had to happen; Charter bills 'broadcast TV surcharge'

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