Cable Companies Powerless Against Rising Network Fees, Cablevision CEO Says

Illustration by: Paweł Jońca

James Dolan also reiterates that "connectivity has surpassed video as the primary product" for companies like his.

Cablevision Systems expects profit margins in its broadband business to expand, while video margins will decline mainly due to a continuing increase in programming costs, CEO James Dolan said on the cable operator's fourth-quarter earnings conference call on Wednesday.

Pay TV companies have in recent years emphasized that the rising fees cable networks operators charge them are a key cost factor, and some carriage fee showdowns have led to temporary blackouts. "There is very little that a cable company can do to reduce its exposure in terms of increasing programming costs," Dolan said Wednesday. "And there is no real way to continue to pass that on to the customer in a competitive environment."

He also reiterated comments that broadband services have become the lead product for his company and other pay TV firms. "Connectivity has surpassed video as the primary product for a company like ours," Dolan said. Consumers, if given a choice between video and broadband, now will overwhelmingly take Internet services, he said.

He added: "We need to continue to strategize our product offerings to reflect that with different packaging etc, which is something I think we will do in 2015." Dolan on Wednesday also called WiFi one of the company's most strategic assets.

In a Wall Street Journal interview in 2013, Dolan had said: "Ultimately over the long term I think that the whole video product is eventually going to go to the Internet." He added: "I’m not willing to cede that position now, and I’ve got a lot of customers that buy my video product…[but] the handwriting is on the wall, particularly when you look at young customers."

Asked about the current debate on the regulation of broadband under Title II as proposed by the FCC, Dolan said he expects it won't have "any real effect" on the company's business.

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