Cable operator Cox, ESPN agree on rates

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By Rudy Martzke, USA TODAY
The battle over ESPN's hefty subscriber rate increases ended Thursday when No. 4-ranked cable operator Cox agreed to a nine-year deal averaging 7% annual rate increases for the cable giant.
   
Cox, which had led the fight against ESPN's 20% annual rate boosts that are in the expiring contract, blamed ESPN for rising cable rates and ESPN maintained that its channel brought customers to Cox. The deal guarantees that ESPN will stay on basic rather than move to a higher-cost sports tier.
According to Cox spokesman Bobby Amirshahi, rates that ESPN charges Cox (6.3 million customers) will rise from the current $2.61 a month per subscriber to about $4.38 after nine years.
ESPN's rate increases will decline over the nine years, with 5%-6% boosts in the final five years, Amirshahi said. The new rates begin April 1.
Charter Communications, No. 3 with 6.4 million homes, also agreed to a new deal with ESPN. Comcast (21 million) and Time Warner (12.4 million), the top two cable operators, are expected to carve similar agreements. Comcast's almost $50 billion bid recently to buy ABC/ESPN parent Disney was rejected.
"This is a healthy rate increase off our industry-leading base," ESPN vice president Mike Soltys said.
ESPN had indicated it would come off its 20% rate increases if cable operators contracted for new technology such as video on demand, ESPN HD and Spanish-language ESPN Deportes, all which come with separate charges.
"Unless Cox and Charter are telling you because of this deal we don't have to raise our rates at all or more than half as much as in the past five years, then this may mean nothing for the consumer," said Gene Kimmelman, public policy director of the Consumers Union. "It tells you who is going to make money between the sports programming monopoly or the cable monopoly."