Why are we changing our channel line-up?

Last several years has been very challenging for the cable industry with the rising costs of programming and obligations demanded by networks for all their channels to be carried (and paid for) while cable providers trying to keep the costs down. Cable companies have to pay programmers for every channel they carry on per subscriber basis and on an average of 50 percent of what subscribers pay goes to those networks while the rest goes to up-keeping of their systems, upgrades, employees, etc.

Programmers also demand that their channels are delivered and paid for on an average of 80 percent of total cable company subscribers, and this forces cable companies to deliver and pay for all those channels. When a cable company provides more channels, the cost of programming increases and the monthly rates go up whether subscribers watch those channels or not.

That is why cable companies need to be very careful on selecting which networks they will be carrying on their channel line-ups in order to keep rates as down as possible. This is quite challenging since while they make some of their subscribers happy, not having a channel may make some others unhappy. The solution to this problem might be solved by carrying everything but that results in higher monthly rates and that will make everybody unhappy.

We are trying to find a happy medium with our channel line-up.

Based on the channel line-up that was offered last year, the cost of programming was at 110 percent (example: if a subscriber pays $10 for their cable service, cable company needs to pay $11 to networks which the company will be at loss and this does not include all the other costs like electricity, employees, etc.). This means the cable company would be losing money. The new line-up we are creating will be at 60 percent which is higher than other cable companies but we decided to work hard and make this happen.

We are hoping this explanation helps our subscribers to understand why we are making changes and the reasons behind it.

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