3 Reasons Your Cable Bill Is Rising

Americans are sending bigger checks to their cable companies these days. Both Comcast (NASDAQ: CMCSA  ) and Time Warner Cable (NYSE: TWC  ) reported last week that they're collecting more cash from subscribers lately. And while it's true that big cable is after bigger profits, that's not the only reason bills are on the rise.

Here's a look at the trend in average monthly revenue per customer for the two cable giants:

Company

2010

2011

2012

2013 Q2

Comcast  

$127

$138

$149

$160 

Time Warner 

$97

$102

$104

$105 

Source: Time Warner and Comcast financial filings.

It's important to note that these figures include high-speed Internet and phone services in addition to straight-up cable programing. That said, let's dig in to exactly why the numbers have been spiking.

Higher speeds and more services
First, people are opting to upgrade to higher Internet speeds. While Time Warner's video revenue rose by just 3% last year, the company's high-speed data sales leapt by 14%. The same goes for Comcast. It saw high-speed Internet revenue rise by better than 9% over each of the past two years while cable sales crept up by 1.3% and 2.5% in 2011 and 2012, respectively.

Bundling is also doing its part to raise average bills. The number of "triple play" subscribers on Time Warner's books jumped by 12% last year as it persuaded more folks to subscribe to all three of its major services: voice, data, and cable. With additional services attached to our bills, it's no wonder we're paying more in total.

Expensive programming
And content is getting more expensive for cable companies, giving them a good reason to raise prices. Time Warner's programming costs spiked by 6.4% in 2012 thanks to a rise in sports-related broadcasting expenses. Comcast expects its content costs to jump by 10% this year. The culprit? You guessed it: sports programming.

That's been a boon for the likes of Disney (NYSE: DIS  ) , which owns ESPN. Disney reported a sharp rise in affiliate income last quarter that was driven by a 7% bounce in the prices it charges for ESPN. To some extent, cable companies have just been passing those extra costs on to consumers.

Add-on fees
But we can't let Big Cable off scot-free. Increased fees and plain old pricing changes have been a factor in rising cable bills as well. For example, Time Warner credits price increases and "an increase in equipment rental charges" as helping its revenue last quarter. Comcast says "rate adjustments" contributed to boosting sales toward that record $160 monthly figure last quarter.

Overall, both companies managed to book higher total revenue despite losing a small amount of cable subscribers. The loss from those cord-cutters was more than offset by sales gains from other services.

While cable giants have held their ground lately, the television landscape is changing quickly, with new entrants such as Netflix and Amazon.com disrupting traditional networks. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!


Read/Post Comments (15) | Recommend This Article (6)

Comments from our Foolish Readers

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  • Report this Comment On August 04, 2013, at 2:06 PM, dogjudge wrote:

    How about TWO reasons for these bills?

    #1 - Community agreements with the cable companies that essentially give cable companies a monopoly.

    #2 - The inference on the pricing is that the cable companies pay the providers a fixed price no matter how many people sign up for a particular channel. I'm highly doubtful that this is the case, even with channels such as Disney. My guess is that the cable companies pay the providers based on their subscribers. Yet cable pricing is based on giving people a bunch of channels they don't want in order to get channels they do want.

    With the advent of services such as Aereo and Roku, my guess is that the providers and the cable companies are going to have to develop different business models.

    Why should I pay cable to get PBS, etc. when I can get it via streaming for significantly less?

  • Report this Comment On August 04, 2013, at 2:11 PM, sirbialik wrote:

    Ya, I'm one of the dump ones paying higher instead of lower or break even pricing. I had Dish what I wanted n told them that the pricing increasing was one of my main concerns. What do they do?

    They take away my Bravo!

    They raise their fees $20.00! We only have two TV's?

    Then they give us what I call dead channels that pretty much have no interest to/for us!

    I called, complained, demanded and all the rep could do after I got done talking was tell me that the contracts hadn't been renewed therefore, they gave us what they thought would be of interest to us.

    That's where I asked the rep, "would u have that channel (one of the dead channels) in ur home?" His response was, "no."

    Can u imagine that! I went past insane n hung up on the rep. I was so pissed!

    I still don't have my Bravo; I have those dead channels tho, how convenient!

  • Report this Comment On August 04, 2013, at 3:04 PM, Regork wrote:

    Just purchased a cable modem to replace my $7 a month Comcast rental and was told the rental was obsolete! $84 a year for 3 years and obsolete !

    What a deal. Go Roku

  • Report this Comment On August 04, 2013, at 3:48 PM, Ryan959 wrote:

    The two reasons...

    #1- Greedy Cable Companies

    there isn't a second.

  • Report this Comment On August 04, 2013, at 4:03 PM, dumbdude12345678 wrote:

    I switched from Comcast to Verizon. I saved about $65 a month due to bundling my phone with my internet and tv. I am still paying a ton but at least I can see where the money is going on Verizon's bill. My only complaint is with ease of use. Comcast was easier to navigate in my opinion, but that ease was not worth the price difference,

  • Report this Comment On August 04, 2013, at 5:29 PM, geomosch wrote:

    My cable bill is not going up because I dumped cable months ago. The price has out paced the value and it is no longer worth it.

  • Report this Comment On August 04, 2013, at 6:48 PM, ceh4702 wrote:

    I gave up on cable TV. It is not worth getting. I only have internet service. There are a lot of places to watch TV on the Internet. I watch a lot of Korean TV programs with english sub-titles.

  • Report this Comment On August 04, 2013, at 6:54 PM, ceh4702 wrote:

    I really think TV is for brainwashing the public.

  • Report this Comment On August 04, 2013, at 7:06 PM, kimy2k13 wrote:

    I had cable for two tv's and prices kept going up so

    i cut off cable in 2008 and never looked back.

    I use antenna's for both of my tv's now and it's FREE!!

    I use a mobile hotspot for internet, its better for me because I can use it anywhere and just as fast for checking emails etc also 4g is FREE UNLIMITED on my device.

  • Report this Comment On August 04, 2013, at 7:17 PM, VitoA wrote:

    I pay for 280 channels for which 260 I do not watch. Kind of feels like spending $200 on groceries and giving $175 of it to my neighbor.

  • Report this Comment On August 04, 2013, at 10:04 PM, cablecutter wrote:

    we cut the umbilcal to cable after the bill was headed to 170.00 plus a month ,we had a fight in our house once every month because of the bill, we had triple play plus premium HBO big deal, they would tell us we were a valued customer and they would see what they would do, which was nothing,Iam with another company and all I get is phone and internet service and suscribed to hulu,netflix and stream with roku ,hee haw what a way to go !!!!! we cut over 100.00 a month how do u like me now cable company,your valued customer !!!!!

  • Report this Comment On August 04, 2013, at 10:45 PM, TRussGA wrote:

    Outside antenna $100 (one time fee) and Nexflix $8 (per month). Great choice of channels and movies when nothing else is on. If all else fails I can watch programs on my computer. Who needs cable or Dish and Direct TV.

  • Report this Comment On August 04, 2013, at 11:31 PM, kavacat wrote:

    I just cut cable last week. I had the most basic of basic, internet, and phone. It went up to over $150/month. No way is that worth is.

    I'm now still paying for internet because there's nothing that comes even close. I get 40 mbps download with Comcast and if I Century Link it would drop to 7 mbps. As soon as that changes, I'm leaving comcast internet too.

  • Report this Comment On August 04, 2013, at 11:42 PM, Dadw5boys wrote:

    Many of those 100's of VHS tapes people were giving away on Freecycle ended up on my shelves to be turned into dvds so we got rid of cable and we watch movies when we want and which ones we want. ALL FREE.

  • Report this Comment On August 05, 2013, at 3:59 AM, stevenatorr wrote:

    We are cutting our comcrap cable/phone and maybe the net i think 7mbps (more like 1mbps). $188 a month for basic VHS quality cable is BS. i don't even watch tv and haven't for over 3 years. the kids are gonna either live with it or pay the bill (LOL yea right). i got about 1000 movies ive built up over the years. everything on tv is dog crap anyways. told comcrap we wanted a lower price or we was gonna consider dish as a bluff but they wouldn't budge . well i guess its by by comcrap with your 20 year old outdated Vhs quality junk.

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