Illinois News

Some cities see decline in cable franchise fees

By Herald-Whig
Posted: Jul. 11, 2018 10:10 am

QUINCY -- Cable franchise fees paid to the city of Quincy fell by nearly 16 percent during the first quarter of 2018.

"Cable franchise fees were $109,521 (during that quarter) last year and only $92,013.74 this year. That was a decline of $17,507," Quincy Comptroller Sheri Ray said.

Those figures were shared with the Quincy Finance Committee on Monday and reflect franchise fees paid by Comcast. Alderman Mike Farha, R-4, who is chairman of the committee said the trend of "cutting the cable" has been seen in the U.S. for several years, but this is the first big ripple in Quincy revenues.

Leichtman Research Group released an annual survey in March that showed pay-TV providers in the U.S. lost 1,495,000 video subscribers during 2017, nearly double the loss of 760,000 in 2016.

Satellite services, such as DirecTV and Dish, lost the majority of those customers. But many of the customers were dropping contract services to use the Internet options offered by the same satellite providers.

Six of the largest traditional cable companies lost 660,000 customers last year and 275,000 during 2016.

Hannibal, Mo., also saw a decline in franchise fees from Charter Communications. City Manager Jeff LaGarce said the city received $208,000 in the past year, down from $219,000 the year before.

"I don't know if it's a trend or situational, but it's a concern," LaGarce said.

Not all cities have seen similar declines. Palmyra City Clerk Deena Parsons said the city collected $21,421.08 during the fiscal year that ended April 30. That's up from $16,300.83 the previous year. Charter Communications is the franchise holder in Palmyra.

Charter Communications is a national player that reported higher overall customers as Internet hookups have more than covered the loss of video customers. Charter saw a net loss of 97,000 cable customers between the fourth quarter of 2017 and the end of the first quarter of 2018. During those same two quarters the company added 525,000 Internet subscribers.

There are lots of video options available and consumers are slicing up the communications pie in a variety of ways.

Cowen & Co. surveyed of 2,500 U.S. adults during May that showed 27 percent of respondents use Netflix more than any other source. Another 20 percent used traditional cable the most, 18 percent were primarily getting broadcast signals and 11 percent relied on YouTube.

Quincy officials say they will need to watch the revenue from cable franchise fees to make sure it does not continue to erode. Ray said a shortfall of $17,500 in the first quarter of the fiscal year, on top of a decline in sales tax revenues, is not what she wanted to see.

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