We were pleased to see that this Wall Street Journal article touched on a few key issues of relevance in their discussion of cable’s price increases. First, they referenced the price increases of our satellite competitors, which have been more frequent and larger than the price increases implemented by many cable operators in recent years. This clearly supports something that we at Cox have been saying for years—that programming is the single biggest driver in the retail price we charge for cable TV. In the article, Cox was the only cable operator to highlight rising costs of our wholesale product as a driver in our retail prices.

The fact is that the universe of programming content is not infinite and often not competitive in nature. All video service providers buy content from the same providers, and in many cases the retailers have interests on the wholesale side as well. Several cable and satellite video distributors own programming networks (or have ownership stakes in them) which they distribute themselves, and sell to their peers and competitors. (Cox Communications, for example, holds about a 24% stake in Discovery. )

A major premise of this story is that competition from DBS and more recently the telcos has already slowed the rate of cable price increases. While we agree wholeheartedly that competition is always good for consumers, we still suggest that telco competition in the video space will not be the panacea suggested by policy-makers and the media. There is much additional room for studying the food chain in television; it’s nice to see the Journal taking some initial steps toward that end.