Charter Subscribers Victims of Retransmission 'Surcharge'

[Commentary] Is Charter Communications, the big St. Louis-based cable company, gouging its customers? It sure seems like it.

Cable's sixth largest operator has begun itemizing the fees that it pays to local broadcasters for the privilege of retransmitting their signals to its subscribers. The monthly bills now going out show that Charter is paying around $1 a month for the broadcast signals. But it is charging customers $25 per month for the basic tier containing the signals.

And Charter is listing the broadcast fees in the "Taxes and Fees" section of its bills and calling it a "surcharge," suggesting that they are some kind of government-mandated fees rather than just another cost of doing business. That's more than a little misleading. Charter tries to explain the new fees on its website, but rather than clarifying matters it sinks deeper into the muck of its own misinformation. The broadcast signals "were historically made available to Charter at no cost, or low cost," the site says. True enough. But then it goes on to say that "the prices now demanded by broadcast stations have necessitated that we pass these costs on to customers." That's kind of a lie, too, isn't it? Who necessitated that they pass the costs along in the form of a special fee? It was not the "prices" or broadcasters. It was nobody other than Charter itself. Charter doesn't have to pass along the costs of retrans. It could absorb the costs and settle for a slightly lower margin. Or, it could make room in the budget for retrans by whacking other costs, perhaps some of those networks that nobody watches.

Broadcasters in markets where Charter operates -- St. Louis; Madison, Wis.; parts of North and South Carolina, much of Michigan and Montgomery, Ala., -- ought to make sure could demand that Charter reveal what it is paying for each of the other programming services, from ESPN on down. Broadcasters then will come out looking good. The 25 cents or so that Charter is paying each network affiliate will look like a bargain compared to what it's paying cable networks with far fewer viewers.