Massachusetts operator SELCO goes broadband-first after 6-fold increase in retrans fees

High retrans fees are prompting SELCO's shift to a broadband-first strategy. (Image: Town of Shrewsbury)

Shrewsbury Electric and Cable Operations (SELCO) of Massachusetts is the latest smaller cable operator to back away from the video business amid escalating costs for program licensing. 

Speaking to the Worcester Telegram & Gazette, SELCO General Manager Michael Hale said total broadcast retransmission licensing fees have risen from $1.91 a month per SELCO customer in 2011 to over $12 a month. SELCO’s cost to operate its pay TV service has increased from around $290,000 to nearly $1.3 million today, he added. 

RELATED: Dish Network accuses broadcaster Lockwood of blacking out Super Bowl in Texas

“We’re still going to offer television to our customers,” Hale told the paper. “There are no plans to get rid of video as a product offering. We are now at a crossroads where we will be pivoting from our primary product of video, or cable television, to our primary product being broadband, and our secondary products being phone and video.”

Hale said SELCO has lost more than 2,000 video customers since he became GM in 2011, and it now has just 9,200 TV subscribers remaining compared to 12,703 high-speed internet users. 

Speaking alongside American Cable Association President and CEO Matthew Polka in the T&G story, Hale attempted to blow the whistle on what he feels are runaway broadcast retransmission licensing costs.

“I do not consider 75 to 100 percent increases reasonable and I have not met a customer who has either,” he said. “We are actually improving their (broadcasters’) signals when they go through the cable, and they’re making us pay.”

Dish Network has been out with its megaphone too this week, using the propaganda surrounding its retrans battle with Lockwood Broadcasting to tout SNL Kagan data showing the sharp rise in retransmission revenue. 

According to the research company, total retrans revenue reached $9.3 billion in 2017, up from $7.9 billion in 2016. SNL Kagan said retrans is expected to generate $12.8 billion for broadcasters by 2013 at the current growth rate.