Could Comcast’s TCM price hike, Starz dispute push more customers to cut the cord?

Comcast Corp. customers who want to keep watching Turner Classic Movies (TCM) and Starz will have to pay more after the cable giant shook up its TV packages last week.

The Philadelphia-based company has moved TCM to a more expensive “sports entertainment” package that costs customers an additional $9.95 a month. Comcast also announced that it will drop Starz from premium packages in December, replacing it with Epix, so customers with those packages will have to pay $12 more a month to keep Starz. The plan to dump Starz from its packages comes as the cable giant battles the network over how much it pays to carry Starz content.

Comcast said the changes would slow the rapid rise of programming costs while allowing those who want TCM and Starz to pay for them. But the decisions could anger consumers at a time when Comcast is losing hundreds of thousands of cable customers to cheaper online streaming options.

Upset customers on social media said Comcast was effectively raising their prices, especially on seniors who enjoy classic movies on TCM. Despite removing TCM from lower-tier packages, the cable company won’t cut prices for those packages. Comcast is also reducing its own cost for premium packages by replacing Starz content with Epix, which is less expensive to carry.

“If the customer didn’t buy a sports package, and now they have to just to get TCM, it’s an increase in the customer cost. And the customer doesn’t want that,” said Jeff Kagan, an independent telecommunications industry analyst. “This gives a reason for customers to look elsewhere.”

Still, cable providers like Comcast are “almost indifferent or apathetic” to losing pay-TV customers because video is less profitable than its growing broadband internet business, according to Bloomberg analyst Geetha Ranganathan.

Comcast said its programming costs have more than doubled since 2006, and some of those costs are passed on to consumers in their cable bills. Viewership of TCM is low, Comcast said, as more than 90% of its customers watch fewer than two movies a month. Moving TCM to the sports entertainment package will help manage programming costs and let those who want the channel pay for the package, Comcast said.

“While this change won’t cause the prices to go down on existing packages, it will help reduce the speed at which they go up,” the company said on its website.

Some customers said they were surprised when they lost access to TCM on Oct. 10, though Comcast said it notified customers of the decision on their monthly bills. As for why TCM was moved to what’s mostly a sports package, Comcast noted that the bundle includes other nonsports channels, such as Military History and CMT (formerly known as Country Music Television). The package includes sports channels that carry out-of-market games and commentary, including NFL Redzone, MLB Network, and NBA TV. This is different from standard packages that include regional sports networks, such as NBC Sports Philadelphia, that cover local sports.

TCM is owned by Comcast’s key competitor, AT&T, which plans to launch a streaming service next year called HBO Max that could include TCM content. Comcast is also launching a streaming service next year called Peacock, which will carry NBCUniversal content.

A TCM spokesperson declined to comment on Comcast’s decision.

Meanwhile, Comcast is locked in a contract dispute with Starz, as their current deal is set to expire at the end of the year.

Content makers typically ask distributors such as Comcast to pay more to carry their TV channels, while distributors try to keep costs low to compete with cheaper online streaming options, such as Netflix, Hulu, and Sling TV. The fee disputes have become more contentious in recent years as consumers get more options to access programming.

Comcast wants to offer Starz as a direct-to-consumer subscription service instead of bundling it in a package. Doing this would allow customers who want Starz to subscribe, without forcing others to pay for it, Comcast said. The cable giant noted that Starz allows its content to be sold a la carte through Amazon Prime, Roku, and its own app for $8.99.

“All we are asking for is the same treatment for our customers,” Comcast said in a statement.

Lionsgate, Starz’s parent company, believes it is beneficial for Starz to be in a premium package with millions of subscribers, even if the per-subscriber rate is lower. Comcast has roughly 21 million video subscribers and could make up roughly 40% of Starz’s customer base, according to estimates from Evercore ISI, a New York-based investment advisory.

Ten weeks before a potential blackout, Comcast said it would remove Starz from all packages and drop 11 Starz and Encore channels on Dec. 10, replacing Starz with rival Epix, which is owned by MGM. Those who still want Starz can subscribe for $12 a month, though Comcast’s current deal with Starz ends Dec. 31.

Starz warned Comcast customers on Thursday that they would lose popular shows such as Outlander and Power, which Starz says is the top-rated premium series among African American audiences.

“They’re basically taking money out of their consumers’ pockets,” Lionsgate vice chairman Michael Burns said of Comcast, calling Epix an “inferior product.”

Launched in 2009, Epix has ramped up its original series with such shows as Pennyworth and the Godfather of Harlem and plans to launch ScreenPix, a suite of library channels offering a collection of classic movies.

Lionsgate shares have plummeted over the last two years, from a high poin of about $35 in January 2018 to $8.45 as of the market close Monday. The company has considered selling or spinning off Starz, according to reports.

The move by Comcast comes months after it similarly swapped out Cinemax from packages in favor of its own on-demand movie network, Hitz. Like the plan for Starz, Comcast now makes Cinemax available for $12 a month.