Time Warner Cable (NYSE:TWC) is waiting to get its approval from the FCC for its merger with Comcast. The total deal price has been recorded to be at $45 billion. Meanwhile, the company has found a sneaky way to gather some more cash from the pockets of customers through its latest billing strategy.
The company will be charging its customers a rate of $2.75 for all the sports programs, according to the report of Charlotte Observer. This new subscription fee will be implemented from the first month of next year. Moreover, what is interesting to note here is the fact that the customers will not be given any option to opt out the sports programs; meaning that the company gets extra cash without providing any additional services.
But wait, this is not it. Time Warner Cable (NYSE:TWC) has also planned to charge its customers with the old TV broadcast fee. This fee will range from $2.25 to $2.75 monthly. The company reported its quarterly reports a couple of weeks back. The revenue spiked up by 3.6 percent and the OIBDA saw an increase of 2.4 percent on yearly basis. Justifying the increase in subscription fees, the company said that increased programming costs had to be balanced out.
The spokesman of Time Warner Cable (NYSE:TWC), Scott Pryzwansky, told the media that the increased fees are the result of increasing costs that the cable providers have to bear in order to provide sports programs to the customers. Scott further mentioned that the total costs of broadcasting sports networks have increased by 91 percent over the last 6 years whereas the subscription fees have been raised by 60 percent only.
The management of the company said that the increase in fees is just a fraction of what Time Warner Cable (NYSE:TWC) has to pay for the sports networks’ broadcasts. The company has lost a lot of subscribers over the last two years; however, it has maintained its profitability by charging more to the ones who are still with the company.
The residential division of Time Warner saw a decrease in the cable and video revenues on yearly basis. This decrease resulted due to a smaller subscribers’ base. The decline was balanced out by an increase in the average revenue for each customer, which resulted due to premium pricing.
By increasing the prices, the company offset the loss of $103 million that it saw in its cable segment. The total revenues of this segment declined $2.49 billion on yearly basis. The rise in prices, however, added $1.62 billion in the revenue, thus narrowing the gap.
Coming to the stock prices of Time Warner Cable (NYSE:TWC), the company, during the last trading session of December 28, 2014, started its stocks at a price of $151.51 and closed at an increased price of $152.83 . As far as the total market capitalization of the company is concerned, the figures currently stand at $42.87 billion.
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