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Why Does Cable & Satellite Keep Raising Prices?

This young man is experience intense stress over a time of economic downturn or other financial hardship.

Q. My DIRECTV bill just went up again! Why do they raise prices every year? I don’t know how much longer I can take it! Haven’t they heard about cord-cutting? Do they even care if I leave? — Ed, Westminster Maryland.

Ed, it’s not just DIRECTV. Six major pay TV operators — DIRECTV, U-verse, Cox, Dish, Comcast and Charter — decided to raise prices last month.

And this wasn’t the first time. As you note, most pay TV services have raised prices at the beginning of the year for the last several years.

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The price hikes have come although the cable and satellite operators have collectively lost several million subscribers over the last decade. And the biggest reason why people say they are dropping their pay TV service is that their monthly TV bills are out of control.

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So you would think that the pay TV executives would take note and keep prices where they are, or perhaps even lower them. Right?

Well, it’s not that easy.

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In order to stay in business, cable and satellite services have to pay for the channels and programming they carry. And the price of program acquisition has also soared over the last several years.

Consequently, the pay TV services have to raise subscriber prices to keep up with the rising cost of buying the programming.

In the last few years, pay TV executives have tried to turn the tide by refusing to carry certain channels which are particularly expensive and may not reach a large audience. For instance, DIRECTV, once considered the industry’s sports leader, has refused to add SportsNet LA (the TV home of the Los Angeles Dodgers) and the Pac 12 Network, which airs the conference’s football and basketball games. The AT&T-owned satellite service is trying to save a few bucks to avoid raising your monthly bills even further.

But, of course, this is a calculated gamble. If DIRECTV, or any other pay TV service, refuses to carry certain popular channels, subscribers might leave for that reason as well. So a pay TV service can only hold the line so much.

The pay TV services have also tried to meet subscribers half-way by offering slimmed-down packages that contain fewer channels, but cost less per month. It remains to be seen just how successful the so-called ‘skinny TV bundle’ will become.

The cable and satellite operators are desperately trying to strike a balance that will keep the largest number of subscribers happy while maintaining the highest profit possible. (While they do care that subscribers leave, maintaining profits is more important.)

With the explosion of less expensive, multi-channel streaming services, such as DIRECTV Now and Sling TV, this has become more difficult. Faced with a $100 (or more) monthly bill, many consumers are opting to subscribe to a live streaming service for less than $50 a month, even if streaming isn’t always technically reliable.

Bottom line, Ed: Don’t expect your monthly bill from DIRECTV to go down anytime soon. The programmers will keep asking for more money, and the pay TV operators will keep raising your programming fees to offset the cost.

Have a question about new TV technologies? Send it to The TV Answer Man at swann@tvpredictions.com. Please include your first name and hometown in your message.

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— Phillip Swann

About TV Answer Man (1282 Articles)
The TV Answer Man is veteran journalist Phillip Swann who has covered the TV technology scene for more than two decades. He will report on the latest news and answer your questions regarding new devices and services that are changing the way you watch television.

3 Comments on Why Does Cable & Satellite Keep Raising Prices?

  1. Good article. I’m with Comcast and fortunately, Google Fiber arrived in my neighborhood, forcing Comcast to offer some pretty sweet deals to maintain customers. While I’m halfway through a 3-year deal with Comcast with a price lock, my “broadcast” and “regional sports fees” have gone up $7. With those being “fees”, they can go up anytime as they are separate from my package.

  2. This is where A La Carte TV needs to really come together. While SLing and DTN offer “skinny bundle” they are still bundled with junk I dont watch and yet have to pay for. I also see Disney/ESPN as one of the worse offenders. I dont care about ESPN, yet I have to pay $8 (according most industry sources) a month for something I have no desire to have. Disney is comparable in that both mandate in their carriage agreements that they be included in the lowest tiers to reach the most eyes but cost almost as much as STARZ, etc.

    Lastly the FCC and Government has totally failed us. One of the BIGGEST costs is retransmission fees to locals. Yes they pay to show what is offered for FREE and it is not cheap. This is a scam that simply lines the pockets of the locals. I cut the cord and havent watched a local channel or network show since…..once you jump you will find other content and before you know it you wont miss the locals.

    P.S. Ed, I am also Westminster, check out Freedom Broadband to save on your Internet access!

  3. So the cable company raises their rates because the cable channels raise their rates. But then you have to ask, why do the cable channels keep raising their rates knowing that it will cause them to lose viewers?

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