Q. I can not believe that Dish is raising prices after they lost all those channels in blackouts. How can they justify doing that? They should be lowering our prices. Right?! Can you explain this other than simple GREED on their part?!! — Jenny, Nashville.
Jenny, Dish revealed over the weekend that it will increase the cost of its programming packages by $5 a month in January, The price hike is ill-timed with the satcaster now missing 223 channels in eight different carriage disputes, including one this month in which Dish lost 164 Nexstar-owned local network affiliates. (Dish did settle yesterday with Cox Media and Apollo Global, bringing back 14 local stations.)
With so many channels blacked out, it’s reasonable to ask how Dish can justify raising customer prices. The logical assumption would be that Dish should lower prices now because it doesn’t have to pay to carry those missing 223 channels. (Pay TV providers pay the programmers to carry their signals, not the other way around.) Plus, customers are angry now that they have to pay the same prices for fewer channels, and the idea of paying even more in January is insult to injury.
However, there’s a reason why Dish is raising prices in the face of all those logical assumptions, the same reason why DIRECTV will raise prices next month as well although it’s now missing 60 Tegna-owned local channels.
Despite the blackouts, Dish is still paying more in program acquisition costs than it did a year ago. Programmers are dramatically increasing carriage rates for their channels, forcing pay TV providers to increase subscriber fees to offset the cost of carrying them.
You could argue that Dish Chairman Charlie Ergen is a billionaire and should be able to handle the added expense without passing it down to his customers. But businesses don’t operate that way. Ergen must run Dish as if he was broke or otherwise the time will soon come when it will begin losing considerable money. And when that happens, businesses close.
Dish also must factor in that program acquisition costs may rise again if it settles one of those eight carriage disputes. For example, if Dish signs a deal with Nexstar in January, it will significantly increase its programming expense. But it’s unlikely that Dish would raise prices again after one increase in January so the planned increase next month will cover current actual expenses and possible future ones. (Dish, like DIRECTV, has raised existing customer prices in January every year for the last several years. It’s not likely to raise them twice, or more, to cover new carriage deals.)
While you may think Dish should lower prices, it should be noted that it does offer lower prices than its rivals, including DIRECTV. Dish also offers a two-year price guarantee which is quite rare in the pay TV industry.
Jenny, hope that makes sense. I know how you and other satellite subscribers feel now, and it’s not easy to take a price hike while missing your favorite channels.
The TV Answer Man will continue to monitor this situation, and report back here if anything changes. Until then, happy viewing, and stay safe!
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