Comcast TWC Merger

Free Press, a strong critic of Comcast-TW Cable merger, massages rate-hike data in lobbying against deal

The eye-popping claim certainly got some headline play: Comcast raised basic-cable rates 68% from 2009-13, while Time Warner Cable — the target of Comcast’s proposed $45 billion acquisition — actually reduced them by 2.5% over the same time period.

That’s according to an analysis of rates for several providers conducted by Free Press, a public-interest group that vehemently opposes the MSOs’ combination. Cablevision basic rates climbed 47% over that time frame, while those for AT&T U-verse TV didn’t increase at all.

“If the Obama administration signs off on the merger, you can bet your bottom dollar — while you still have it — that Comcast’s vast market power will allow it to dictate prices no matter which company is your actual cable and Internet access provider,” Free Press editor Amy Kroin wrote in a blog post Monday.

Comcast did not have a response to Free Press’s claims by press time.

But there are some big caveats attached to the Free Press analysis of SNL Kagan data.

First, the organization’s analysis looked only at data from individual markets for wireline providers: Boston for Comcast, Rochester, N.Y., for TW Cable, Chicago for AT&T’s U-verse and Long Island for Cablevision.

Why did the study look only at those markets? In an email, Free Press research director Derek Turner said his choices were based on which markets had complete data for nonpromotional prices of basic and premium packages. Total video revenue per subscriber for all pay-TV providers is on the rise, he acknowledged, but Comcast “is near the top, so it’s not as if Comcast over all its franchises is somehow a better company for consumers, which is the point of our original infographic,” he wrote.

SEE ALSO: Comcast, TW Cable Execs Grilled By Skeptical Senators at Merger Hearing

Still, it’s not clear how reflective the rate changes in those markets are for Comcast, Time Warner Cable or AT&T across the board.

Meanwhile, the term “basic cable” doesn’t really mean “cable TV” at all — it refers to the entry-level packages operators are required to offer that include broadcast networks, without pay channels like ESPN or Fox News.

For basic cable, the biggest factor in cost increases are retransmission-consent fees paid to broadcasters – which more than tripled from $758 million in 2009 to $3 billion in 2013, according to SNL Kagan. So in Boston, Comcast was apparently socked with considerably higher retrans fees than Time Warner Cable in Rochester, while AT&T appears to have locked in retrans rates in Chicago over that time period. (In citing the 11% price increase for Dish Network’s “basic” service from 2009-13, Free Press used the satcaster’s America’s Top 120 rates — which isn’t an apples-to-apples comparison, as Dish doesn’t offer a broadcast-only tier.)

In addition, basic-cable fee increases come off lower price points than expanded basic or other premium TV packages. The average monthly price of basic TV in 2012 was $20.55 for the industry at large, according to the FCC’s 2013 video competition report.

Now, the Free Press analysis also compared price increases of “premium” TV packages. Here Comcast rates increased 21% from 2009-13, not too out of line with Time Warner Cable (+17%), Dish (+17%) and Cablevision (+15%), while AT&T rates rose 8%. But again, with the exception of Dish, those are specific to individual markets; the study didn’t look at average increases across all subscribers.

Finally, the rates Free Press studied were for standalone TV services, whereas most cable and telco customers buy video in a bundle with broadband and/or phone service — and operators offer discounts as an incentive for subscribers to take multiple services.

To be sure, pay-TV rates are indeed rising, and they will continue to for the foreseeable future. But they’re increasing among all pay-TV providers, not just Comcast.

For its part, Comcast continues to insist that its takeover of Time Warner Cable won’t result in higher consumer bills: “I will make one firm commitment that there is absolutely nothing in this transaction that will result in an increase in prices for Comcast customers,” exec VP David L. Cohen said at a Senate hearing last week.

That carefully worded statement is not meant to imply that cable TV prices will decline. In fact, as Cohen told reporters when the deal was announced in February, “We’re certainly not promising that customer bills are going to go down or even that they’re going to increase less rapidly.” Comcast blames programmers, of course, saying programming costs of Comcast, Time Warner Cable and Charter Communications have increased, on average, by 54% in the last five years.

Sure, Comcast may be the biggest, greediest cable company in the biz. It’s worth noting that both Comcast and Time Warner Cable engage in the customer-unfriendly practice of charging a one-time fee of up to $6 to downgrade to a lower-priced TV package. That’s just one of many things that go toward explaining why Comcast and Time Warner Cable rank near the bottom of the pay-TV industry in customer satisfaction, according to a survey by Consumers Union (although — another caveat — that group also is actively lobbying against the proposed deal). But claiming Comcast boosted cable TV prices 68% whereas TW Cable actually dropped them is misleading.

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