|As our Nation struggles to pull itself out of what has been called the Great Recession, we recognize that these are challenging times for the hardworking men and women living in the communities that we serve. While we strive to keep expenses in check, there are some costs that we are simply unable to control. Our programming expenses, particularly with respect to broadcast television channels and live sports content, are escalating at a pace well in excess of inflation.
The fees we pay to retransmit local broadcast stations like ABC, CBS, FOX and NBC are by far our fastest growing programming cost component. Outdated federal laws give the local broadcast stations monopoly power over network and syndicated programming within their respective market areas. Over the past few years, many broadcasters have used their monopoly powers to demand 100%, 200% and even 300% rate increases during contract negotiations. This has driven up both cable and satellite rates and forced American consumers to pay billions of dollars for "free" over-the-air television.
The problems with sports programming are equally as alarming. One look at the skyrocketing rights fees announced with recent deals and it is easy to see that the marketplace for live televised sports is out of control. Broadcast networks and national and regional sports networks are shelling out billions of dollars for the rights to carry pro sports like the NFL, NBA, MLB and NHL, the Olympic Games, World Cup and NCAA football and basketball games. Unrestrained spending has become the hallmark of the sports programming business, and the American consumer, whether a sports fan or not, is left to pay the price.
Contrary to public perception, cable companies are reluctant to raise video prices because when we do, we lose subscribers. Mediacom does not make more money when we raise video rates, since we remit virtually every penny of the increase on to the programmers. In fact, over the last three years, our programming cost increases were more than double our video revenue increases.
Since so many members of the programming community have been unwilling to exercise even the slightest measure of self-restraint when it comes to reigning in their spending or increasing their price demands, Mediacom has taken the fight to Washington. We have asked the Federal Communications Commission and Members of Congress to protect senior citizens, low-income households and rural residents from practices that are rendering pay television unaffordable for more and more Americans (see letter from Mediacom's Chairman and CEO to the FCC).
We invite you to join us in the fight against rising programming costs.
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