Subscription TV Prices to Be Raised in 2019 to Counter Cord Cutting

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Companies comprising Comcast®, AT&T’s DIRECTV®, and DISH Network® plan to increase prices in 2019, a strategy that could increase revenue but runs the risk of alienating customers who have been cancelling traditional TV subscriptions.

Satellite and cable providers are expecting to squeeze more amounts from subscribers who stay faithful to their packages with hundreds of channels, said the analyst of JPMorgan Chase & Co., Philip Cusick, in a recent note, although “this strategy could accelerate video sub declines.”

It is common for subscription TV service providers to increase prices in a new year, and the trend seems to have extended from the past. Higher bills target the cost of broadcast and local sports channels. Pay TV providers are passing on rising costs that they pay to carry TV networks such as ABC and CBS, and regional sports channels such as YES Network, that are paying more and more for rights for sports broadcast.

The latest increases in price come at a time when cord cutting accelerates. In 2018’s third quarter, the TV segment saw its biggest ever decline rate, with customers shrinking by 3.7 percent, as per MoffettNathanson LLC. Subscribers are cancelling traditional TV services for lower-cost streaming options such as Netflix, and slimmer TV choices from YouTube and Hulu. This is a practice, which is commonly referred to as “cord cutting”.

The fastest internet provider and the biggest cable company in the US, Comcast®, is increasing its fee by $1.50 on average for regional sports networks and is raising its fee by $2.00 per month for broadcast channels, as per Cusick.

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DIRECTV® is increasing rates on all English language video packages by $3.00 to $8.00 per month while raising fees for regional sports networks by $1.00 to $1.90 in most markets. DISH Network® said it is raising prices for English video packages by $3.00 to $5.00 per month.

A Comcast® spokesperson said that the changes were necessary due to rising broadcast TV as well as sports programming costs, “which are the largest drivers of price increases.” On the other hand, an AT&T® spokesperson noted some DIRECTV® plans’ price will not increase. The other pay TV companies did not respond to the media’s requests for comment.

To avoid increasing prices more as well as losing more subscribers, subscription-TV providers have tried taking a hard line with owners of channels who are demanding more money.

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