For the last several years, cable subscribers have lamented that the advertised price of service falls short of the real “out-the-door” cost shown on one’s monthly bill.

Charter Spectrum is one of the worst offenders, having avoided to mention in its advertising the spiraling-upwards “Broadcast TV Fee,” applied without exception to cable television customers’ bills.

The “Broadcast TV Fee,” (recently increased to $11.99 a month) is compulsory for cable TV customers and subject to change, regardless if you have a “rate guarantee” with Spectrum or not. The fee is the same for new and old customers, regardless of any promotion, and it has not been well-disclosed in Spectrum’s print and online advertising. Only customers subscribing to one of Spectrum’s new streaming TV packages will get a break. One of Spectrum’s most advertised stream-only packages applies a $5/mo Broadcast TV Fee, less than half of what Spectrum charges traditional cable TV customers for the same local stations.

As of this month, Spectrum.com now includes the fee on its price quote system for customers looking for an estimated cost of service. It adds enough to put the monthly cost of cable TV above $60 for new customers (including the rental cost of one, now-mandatory, HD-set top box), despite the fact Spectrum advertises a rate of $44.99/mo for the first year of service. This reality might further aggravate cord-cutting or “cable-TV nevers” from considering bundling television service with Spectrum.

For its part, Spectrum explains the fee represents “a fee by the owners of local broadcast ‘network-affiliated’ TV stations (affiliates of CBS, NBC, ABC, Fox, and so on). This fee enables Spectrum to continue to offer these channels for our customers.”

But in fact, it is just another cost of doing business. Cable programmers also charge similar fees, and some — notably ESPN — charge more than many local stations do for cable carriage. Cable operators are trying to make a political statement about the high cost of cable carriage of local TV stations that viewers can watch for free over-the-air. But they are also trying to hide the true cost of cable television, sensitive to the fact many customers are reaching their limit on bloated TV packages of hundreds of expensive channels that mostly go unwatched. Sticker shock can only worsen cord-cutting and cause more to rule out new subscriptions to cable television, especially as cable operators continue to raise the price of broadband internet service at the same time.

This isn’t going to be your parent’s HBO much longer.

In a recent town hall attended by 150 employees, AT&T laid out its new vision for the premium network it recently acquired. one almost similar at times to the business plan of a drug pusher.

“We need hours a day,” said John Stankey, a recent transplant from AT&T’s executive suites now tapped to run WarnerMedia — AT&T’s new name for what used to be Time Warner (Entertainment) and owner of HBO. Stankey was complaining that HBO was out of touch with the times, attracting too few viewers to its multiplex of premium channels only a handful of times a week, if that. In a world shared by Netflix, that was not nearly good enough.

HBO, which began life as Home Box Office in November, 1972 is by far America’s oldest cable television channel. Originally a venue for high profile, unedited, commercial-free movies, along with sports and specials, HBO grew into a well-respected producer of high budget (often millions of dollars per episode), cutting-edge original movies and series, showcased to loyal audiences on Sunday nights for years. Series like The Wire, The Sopranos, Sex in the City, Oz and Game of Thrones are well-known across the country, but fewer than half of Americans subscribe to HBO to watch them. HBO has also been the critics’ choice for original content, showering awards on the network in unprecedented numbers for almost 20 years.

Now that AT&T is in charge, that is all about to change, as executives prepare to shift HBO away from “quality over quantity” towards “quality and quantity.” Stankey also made it clear the changes are first and foremost about making money — a lot of it earned by keeping subscribers on HBO property so their viewing habits can be studied and sold.

Stankey

“It’s going to be a tough year,” Stankey warned. “It’s going to be a lot of work to alter and change direction a little bit.”

“It’s not hours a week, and it’s not hours a month,” Stankey said of how long he expects HBO subscribers to spend time watching the service. “It’s hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes. I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”

That will be a major shift for a network overseen top to bottom since 1992 by Richard Plepler, HBO’s chief executive. Plepler expanded on HBO original movies by launching expensive scripted series in the late 1990s that stood out by escaping broadcast television network censorship. But Plepler was very selective about the number of shows on HBO’s schedule, with some series taking years to develop. Under Stankey’s leadership, HBO will now be expected to dramatically expand original content, much like Netflix has done to keep viewers coming back for more.

“As I step back and think about what’s unique about the brand and where it needs to go, there’s got to be a little more depth to it, there’s got to be more frequent engagement,” Stankey said, adding HBO’s brand has to broaden its appeal to new audiences.

That will require a big boost to HBO’s budget. The pay movie channel is already extremely profitable, making almost $6 billion in profits over the last three years. It invested $2 billion in programming development, much less than the $8 billion Netflix is investing in less costly, but more prolific programming. HBO’s business plan depends heavily on American cable subscribers paying $10-15 a month for the network. It also earns money selling its original shows to television outlets in other countries. Its high monthly cost has always limited subscriber numbers, especially these days with cord-cutting and bill shaving. Premium movie channels are often the first networks to be dropped in return for a lower bill.

Plepler

To monetize its subscriber base, HBO either has to cut the cost of the network, transform it into must-have television, or a combination of both. Stankey is unhappy HBO has wavered around 40 million subscribers (out of 142 million American potential households) for years. He told audiences the network has to find ways to move the network beyond its perpetual 35-40% penetration “to have this become a much more common product.”

There was a clear sense of tension between Plepler, who is part of the New York City entertainment scene, and Stankey, a business-focused Texan with decades of experience in the Bell System — later AT&T. Plepler’s deference to Stankey’s new vision seemed uncomfortable at times, as Stankey made it clear who was now in charge:

Stankey: “We’ve got to make money at the end of the day, right?”
Plepler: “We do that.”
Stankey: “Yes, you do, just not enough.”

Plepler’s clearly defined tenure and vision at HBO had not wavered much since taking over in the early 1990s. But that vision was nervously discarded almost immediately as Stankey looked on.

“I’ve said, ‘More is not better, only better is better,’ because that was the hand we had,” Plepler explained. “I’ve switched that, now that you’re here, to: ‘More isn’t better, only better is better — but we need a lot more to be even better.’”

As a result, HBO, which used to be the darling of critics and well-to-do viewers in big cities on the east and west coast is getting a radical makeover. Onlookers can expect a much more aggressive marketing effort and free samples of the service to attract and hold new customers. It will have to keep its pricing closer to the competition, particularly as many consumers already subscribe to 1-2 different streaming services. Then it will have to give people a reason to subscribe to just one more service.

Viacom and Charter Communications today announced a multi-year renewal of a carriage agreement that will bring back Viacom’s cable networks to almost all Spectrum cable television customers.

As part of the agreement, Charter has agreed to return Nickelodeon, BET, MTV, Comedy Central, Spike (Paramount Network), VH1, TV Land and CMT to Spectrum Select, Charter’s entry-level cable television tier. In 2016, Charter began moving Viacom’s cable networks to its most expensive tiers, Spectrum Silver or Gold, to protest Viacom’s high carriage prices. Most existing customers never realized the networks were moved because the company grandfathered current customers to keep the channels from disappearing. But as Bright House Networks and Time Warner Cable customers migrated to Spectrum packages, many were annoyed to learn Viacom’s networks were missing from the lineup of Spectrum’s most popular cable television tier. Customers had to pay at least $11 a month extra to get many of those networks back.

Charter indicated its agreement allows Spectrum to keep other Viacom-owned networks not mentioned above on its Silver or Gold tiers. The agreement also grants Charter customers access to Viacom networks’ on-demand programming through set-top boxes or mobile apps.

Viacom and Charter have also entered into a partnership for co-production of new original content that will exclusively premiere for subscribers on Charter’s platform in the U.S. Under the agreement, Viacom’s Paramount Television and Charter will jointly produce programming. Viacom will distribute the co-produced programming internationally, as well as in additional domestic markets, including potentially on Viacom Networks, after Charter’s premiere period.

Viacom has also agreed to collaborate on Charter’s forthcoming effort to crackdown on unauthorized password sharing, allowing non-cable subscribers access to programming using a friend or family member’s Spectrum account details.

Spectrum cable subscribers still watching cable television without a set-top box will soon need one, or a functional equivalent, for every television connected in their home or business as Charter Communications continues its effort to encrypt all cable channels.

The campaign has now reached Kentucky, where Spectrum is preparing to encrypt every television channel on the lineup and is sending notices to its residential and commercial customers.

The University of Kentucky is working to get the word out to facilities operated by UK they may lose all television service as early as July 11 if they don’t take action.

Encryption forces customers to use set-top boxes or other equipment, often at an additional expense, to continue watching cable television service. Cable companies use encryption to reduce signal theft and eliminate the need to send trucks to disconnect customers at the pole. Instead, Charter will simply deauthorize a customer’s set-top box or other equipment so they can no longer watch when the customer cancels or does not pay their bill.

Consumers who refuse to pay for cable television today still won’t pay for it tomorrow, even if they are offered a slimmed-down “skinny bundle” of cable networks for less money.

Sanford Bernstein media analyst Todd Juenger continued a series of focus groups with consumers to find if alternatives to cable television are attractive to consumers. The under-40 sample mixed cord-cutters and current cable and satellite customers and presented them with a range of recently available options from Sling, DirecTVNow and YouTube TV and asked if they would subscribe.

Once again, Juenger discovered the group most likely to subscribe to a cable-TV alternative already had pay television and often paid for the top-tier of service. So far, many of those customers are sampling different services but have not taken the last step of dropping their existing cable television package.

Multichannel News reports most won’t disconnect because of the lack of DVR service from most cable-TV alternatives. Until robust cloud-based DVR service is widely available and not hobbled by a lack of fast-forwarding functionality, new streaming services like DirecTVNow probably will never replace cable television.

Cable-nevers — mostly younger consumers that have never paid for cable television, still don’t seem to be willing to pay for online alternatives either. Most cited the fact they watched individual shows, not channels, and most “skinny bundles” invariably lacked certain networks with the programming they wanted to watch. Many would prefer to subscribe to television shows, not networks.

Cable TV pricing, widely slammed by many customers as too high, didn’t seem to matter as much to those participating in the series of focus groups. When asked what cable networks they would be willing to pay $5 a month each to watch, ESPN was rated on top, followed by Food Network, FX, HGTV, Logo, NBCSN, Syfy and VH1 — many carrying niche shows and original content not available elsewhere. If all eight networks were bundled together, that would cost $40, considerably more than the per channel price of much larger packages.

While older cable subscribers tend to watch programming from the same 6-10 cable networks, younger viewers seek out specific shows, and may not be able to identify what cable networks air them. They also watch on-demand more than older viewers.