Originally Published: February 1, 2001 7:15 p.m.
PRESCOTT – For the fifth time in as many years, Cable One is increasing its rates.
The local cable television provider plans to inform its subscribers of the latest increase – effective March 1 – with their February bills.
Cable One will increase the monthly charge for its "limited basic" service, which includes channels 2 through 13, by $1.28 (or 8.7 percent) from $14.75 to $16.03. It also will raise the monthly rates for its "standard basic" service, which includes a total of 53 channels, by $2.53 (or 7.7 percent) from $32.97 to $35.50.
The company will adjust its other charges, such as taxes and franchise fees, accordingly.
With nearly 2,200 customers signed up for "limited basic" and about 26,000 people signed up for "standard," Cable One stands to make a monthly gain of about $68,000 from the increases.
Since it took over the local cable operations in 1996, Cable One has raised its standard rate four times:
• June 1997, $2;
• March 1998, $4;
• March 1999, $2.90; and
• March 2000, $1.65.
Including next month's increase of $2.53, the company will have raised its rates by a total of $13.08, or nearly 37 percent, in the past five years.
Also in that time, the company has added 18 new channels to its standard lineup (including Animal Planet and Comedy Central earlier this month); rebuilt its existing infrastructure into a digital network that offers hundreds of premium, pay-per-view and music channels; and it has become an Internet service provider, for both dial-up and high-speed access.
Mark St. Cyr, marketing and sales manager for Cable One's local office, said that rising programming fees are primarily driving Cable One's rate increases.
Each of the networks and other major channels charge cable providers – such as Cable One – a licensing fee for the right to carry their channel. On average, those fees increase by about 10 percent each year, St. Cyr said.
"We have to walk a line between customer requests for specific programming, like ESPN or TNT, with what the programmers want in return from Cable One in regards to licensing fees," he said.
But, he said, those programmers know that they can play "hard ball" with cable providers because they know that consumers will not stand for having their ESPNs and TNTs yanked from their local cable lineup.
Furthermore, St. Cyr explained, as the competition among channels has grown more intense, they often drive up their own expenses by trying to outbid each other for various shows or sporting events.
Those increased costs eventually trickle down to the cable providers, and then to consumers.
"We absorb what we can and pass the remaining costs on to the customers," St. Cyr explained.
At the end of last year, Cable One reached an 11th-hour deal with The Disney Channel to keep the children's network in its lineup. Prior to the agreement, Cable One publicly accused Disney of charging too much.
At the time, John Pezzini, general manager of the local Cable One office, said that Disney had increased its programming fees by 40 percent in the past three years.
St. Cyr said that Cable One's aggressive negotiations with Disney Channel helped keep the latest round of rate increases lower than what they would have been if Cable One had paid Disney the amount that it originally asked.
In addition to cable companies, satellite dish companies also are feeling the pinch from programmers.
The Dish Network recently increased the monthly rates for its Top 40 package by $2, from $19.99 to $21.99, and its Top 100 package by $2, from $29.99 to $31.99. Direct-TV raised its rates by a similar amount last year.
St. Cyr said that Cable One's various costs of doing business also contribute to its need to increase its subscriber rates.
Those costs include a growing staff, capital expenditures and high gasoline prices.
"It's difficult to announce rate increases because we don't want to alienate any of our good and loyal customers," St. Cyr said. "But in the cable business, rate adjustments appear to be inevitable."
Cable One, which is the country's ninth largest cable company with 740,000 customers across 18 states, is a subsidiary of The Washington Post Co.