Comcast Pressures Local Cable Firms to Curb Low-Cost TV Packages

(Bloomberg) -- Comcast Corp. is trying to restrict cable operators’ sales of low-cost TV service to ensure its regional sports networks don’t lose too many subscribers, according to a trade group of about 750 smaller companies that have taken their complaint to regulators.

Comcast has tried to limit the availability of sports-free offerings in contract talks with pay-TV operators, according to the American Cable Association, whose members have about 7 million subscribers. In addition to being the largest U.S. cable provider, Comcast owns regional sports channels in markets such as Boston, Chicago and Philadelphia.

The claim shows programmers are fighting back as more consumers seek TV options that don’t include sports. Cable operators are trying to stem subscriber losses by offering a “basic” service with just a few channels and internet access for fans of Netflix or Amazon. Philadelphia-based Comcast, for instance, recently started selling Instant TV, a streaming service with mostly broadcast channels but not ESPN, for $18 a month.

In contract talks, Comcast has told small cable operators that if more than 15 percent of their subscribers get basic TV and internet service, they must include the regional sports networks in that bundle, according to a person familiar with the matter who asked not to be identified because the discussions are private.

That drives up the cost of the basic service and forces cable operators to suppress demand by raising prices, according to the cable group. The organization spelled out its concerns with Comcast in a letter Tuesday to the U.S. Federal Communications Commission. The agency regulates the industry and issues an annual report to Congress about competition among pay-TV operators.

Officials with Comcast, which also owns NBC and cable channels including USA Network and Bravo, didn’t respond to a request for comment.

Cable Burden

“Comcast, it seems, is standing in the way of ACA members that want to help their customers escape the burdens of the big and expensive expanded basic bundle of channels,” ACA Chief Executive Officer Matthew M. Polka said in a statement.

Cable operators are typically required in programming contracts to offer some channels to a minimum percentage of subscribers so those networks gain the widest distribution. “Basic” TV packages have long been excluded, the trade group said, allowing cable operators to offer regional sports channels in a separate, more expensive tier of service.

Sports channels are among the most expensive parts of the cable bundle. And as a cable operator, Comcast has drawn a hard line with some regional sports networks. The company dropped the YES Network, home to the New York Yankees, for more than a year starting in November 2015 in a contract dispute with channel owner 21st Century Fox Inc.

To contact the reporter on this story: Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum