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ESPN'S PLAN TO RAISE RATES HAS CABLE OPERATORS MIFFED
Published April 15, 1998
The nation's big cable operators "are balking" at ESPN's plan to raise rates 20% "or more" annually through the year 2006, and people familiar with the matter say it "could more than quadruple the cost" of the network to operators, according to Leslie Cauley of the WALL STREET JOURNAL. ESPN's proposal is "causing howls" within the cable-TV industry, "which will have to decide whether to pass the new costs along to customers ... or to absorb them in their own right," and some cable execs have called the move "blatant price-gouging." The companies say the plan, compounded over nine years, "could push the cost of ESPN to well over the $4-a-subscriber mark." In addition, several cable execs said that smaller cable companies "have been informed" by ESPN that their rates "could jump as much as" 40% in the coming years. Cauley reports that to date, "only a few big operators have signed up for ESPN's 2006 plan, fearing they will face even higher fees later." ESPN Exec VP/Sales George Bodenheimer declined to discuss the matter, but said that it "hasn't set its rates beyond next summer." He "declined to rule out" the possibility that ESPN's rates "could exceed" $4 "over the long haul" (WALL STREET JOURNAL, 4/15). ESPN spokesperson Mike Soltys said the net effect of the new plan on operators "will be only a few cents" per subscriber. He added that local affils can make up the cost with the 46 additional 30-second commercials that ESPN is adding to its NFL inventory (Rudy Martzke, USA TODAY, 4/15).