NY Attorney General Questions Cable’s ‘Sports Surcharge’ As Live Games Are On Hold

If you read the fine print on your cable or satellite TV bill, you’ll see a plethora of fees and add-on charges on top of the base cost of your package. Among the heftiest of these is the “regional sports surcharge,” which funnels money from subscribers to the various sports leagues, via the sports-related networks that have the live broadcast rights to those events. This isn’t a government-imposed tax or regulatory fee; it’s the cable company passing one of their costs along to their customers to help pay for the content that remains one of the main reasons people keep cable instead of cutting the cord.

Now New York State Attorney General Letitia James has called on seven major cable and satellite providers to reduce or eliminate those charges as long as the COVID-19 pandemic is keeping sports on the sidelines. “Despite the fact that all live sporting events in the United States have been cancelled, cable and satellite television providers continue to charge and collect high fees for live sports programming and refuse to reduce the cost of packages that normally include live sports programming,” said James in a statement released on the Attorney General’s website April 29.

James says that with more than 1.2 million New Yorkers out of work and many more in financial hardship due to the COVID-19 crisis, cable companies should do their part to help ease the burden by suspending the surcharge, even though the cable companies are under no contractual obligation to do so, and may themselves have contractual obligations to content providers that have not been waived.

James’s office sent letters to Altice USA, AT&T Inc. , Charter Communications
CHTR
, Comcast Cable, DISH Network, RNC Corporation and Verizon Corporation, requesting the companies immediately prepare and provide plans for how they will offer financial relief to customers until live sports programming is resumed.

“Customers rightly do not understand why they should have to continue to pay the higher fees that are attributable to live sports,” reads the letter in part. “Sports channels showing solely reruns and sports video game simulations, as is now the practice, is not what customers bargained for. It is unfair and inappropriate to require consumers to continue paying the same amount for the ghost of a service they contracted for. In addition, it would be unfair and inappropriate to charge customers termination fees if they wish to cancel service because of economic hardship or because essential programming has been cancelled.”

Spectrum, Charter Communication’s cable service in New York responded in a statement to Forbes that “We continue to be charged by our suppliers for their sports programming, despite the fact that no live games are being played. Ultimately, this is a decision for the leagues, teams and networks to resolve, but we have consistently said that to the extent we receive any rebates for cancelled sports programming, we of course will pass it along to our customers.”

The sports fees at issue are surcharges imposed by regional cable networks on customers to cover the rapidly rising costs of sports programming, resulting from contracts negotiated between the sports leagues (or teams) and sports networks. These costs have risen much faster than the rate of inflation, according to the cable industry, and are a main reason why the value of sports franchises has gone through the roof in the last 20 years.

The fees go to carriers including regional sports networks, such as SportsNet New York (SNY), owned by Sterling Entertainment, national sports channels like Disney
DIS
’s ESPN, and to general cable carriers who broadcast some live sports as part of their programming, such as WarnerMedia’s TNT and TBS.

According to Consumer Reports, regional sports surcharges can add $7-12 per month to a household’s cable or satellite TV bill. In New York, it can go as high as $20 per month, pushing the cost of even basic cable far beyond the low advertised price.

James’s strongly-worded letter may give voice to the frustrations of consumers and sports fans. It’s always good politics to stand up for hard-pressed constituents, especially if it also makes unpopular companies like cable providers into the villains. Whether or not it is good law – or law at all – is a different matter.