Pay-TV consumer rate increases have not kept up with programming costs growth, Evercore says

While pay-TV operators continue to face year-end rebuke for their annual rate increases for video services, these price increases have not kept up with the growth in programming costs, Evercore analyst Vijay Jayant told investors.

While consumers will pay, on average, about 3 percent to 4 percent more per month on their pay-TV bill, operators will pay 8 percent to 10 percent more this year for programming, Jayant said in an investor note. 

"Faced with ever-increasing programming costs, almost all of the major Pay TV operators have announced rate increases for 2016," he said. "We estimate that gross margins on video have decreased by nearly 800 basis points over the last four years as price increases generally averaged around 3-4 percent whereas programming costs have increased in the 8-10 percent range annually."

Detailing increases for most of the major pay-TV operators, Jayant noted the following:

> Comcast (NASDAQ: CMCSA) - Increased its double-play packages by 2-5 percent, or $3 to $4 a month, with the average bill spiking by 3.9 percent in 2016.

> Time Warner Cable (NYSE: TWC) - Upped the price of its "Starter TV" package by 20 percent, or $4 a month. Also increased equipment and service fees.

> Cablevision (NYSE: CVC) - Average video services price rose 2.9 percent.

> DirecTV - Announced price increases ranging from $1 to $9 a month.

> Dish Network (NASDAQ: DISH) - Raised prices by $2 to $8 a month. 

> AT&T U-verse (NYSE: T) - Raised prices by $2 to $4 a month. 

> Verizon FiOS (NYSE: VZ) - Hasn't made a price-increase announcement yet, but Jayant believes it raised its monthly prices about $2 a month across tiers. 

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