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Tuesday, August 3, 2010

True cost of Pay-TV

The True Cost of Pay TV
*fine print: AFTER THE 6 MONTH PROMOTIONAL PERIOD, COMCAST’S REGULAR CHARGES APPLY UNLESS SERVICE IS CANCELLED. SERVICE MAY BE CANCELLED BY CALLING 1-800-COMCAST. Comcast’s current monthly service charge ranges from $56 to $62 for Digital Starter, $72 to $78 for Digital Preferred, and $105 to $130 for Digital Premier, depending on area. Limited to service to a single outlet. Equipment, installation, taxes and franchise fees extra. May not be combined with other offers. Certain services are available separately or as a part of other levels of service. Basic Service subscription required to receive other levels of service. On Demand selections subject to charge indicated at the time of purchase. Converter and remote required to receive certain services. HD choices include HD channel lineup and HD programming available from Comcast On Demand. Choices and availability may vary by market. Call Comcast for full details and restrictions. DVR service may require a deposit. DVR service requires an additional monthly DVR service fee. Number of recording hours varies by model. Please call your local Comcast office for restrictions and complete details about service, prices and equipment. Comcast ©2010. All rights reserved. HD choices based on a comparison of satellite’s HD channel lineup to the combination of Comcast HD channel lineup and Comcast HD programming available On Demand.
Sure, that $29.95 offer from the pay TV sevices looks inviting.
But once the "promo" expires, whats it really going to cost you?

Recent Surveys indicate the average pay TV subscriber pays about $70 a month. This price generally does not include "premium" channels or packages, or even an occasional Pay-Per-View. Even HD is extra for some providers. About a hundred channels, including lots of infomercial-religious-and useless,and about 4 local stations.

Your Monthly bill: assuming 2 receivers or cable boxes:
$70 a month = $840 annually
And, don't forget the annual electric cost for your boxes, with annual energy costs @ $.11 Kw/hr, here's a list of common costs.

•CRT TV: $1.00
•LCD TV: $2.97
•Plasma TV: $2.97
•DVD: $1.53
•VCR: $4.63
•Digital cable box: $17.65
•Satellite cable box: $15.50
•DVR: $36.63
•Digital cable box with DVR: $43.01
•Set-top satellite box with DVR: $27.52
•Video game console: $1.00
•Portable stereo: $1.64
•AM/FM tuner: $1.11
•CD player: $4.99

We'll have 2 boxes, please! One for the living room ,and one for the bedroom. (We'll call it $16.50 * 2 as an average). Now we're up to:
$840 + $33 = $873 a year

Wow, thats still not too bad. But wait, you're forgetting that you're counting in PRE-TAX dollars. You must earn $1.49 to bring home one dollar:

SO, $873 x 1.49 = $1300.77 is the amount of money you must earn for a year of Pay TV. And of course, if you're self-employed, your cost for a "tax free dollar" is closer to $2

Well, now! As you can see, you have to earn an extra $108.40 a month to pay for your $70 TV bill. Thats $1300.77 x 20 years = $26015.40 But what could you do with just $108.40 a month, if you didn't spend it on cable? How about investing it in a regular (pre-tax) IRA? Even at the paltry rate of 4%, heres the result of compounding:

Years = 20
Percent Yield = 4
Initial Balance = $108.40
Monthly Contribution = $108.40

Year# : Balance

1 : 1437.73
2 : 2821.22
3 : 4261.07
4 : 5759.59
5 : 7319.16
6 : 8942.27
7 : 10631.51
8 : 12389.57
9 : 14219.25
10 : 16123.48
11 : 18105.29
12 : 20167.84
13 : 22314.43
14 : 24548.47
15 : 26873.52
16 : 29293.31
17 : 31811.68
18 : 34432.65
19 : 37160.4
20 : 39999.29

 lets call it $40,000. Of course, that money IS taxable, unless you don't have a lot of income when you withdraw it - Say, when you retire.

 And that doesn't even take into consideration:
  • Additional set top boxes
  • DVR fees
  • Rising pay TV bills (every year!)
  • Increasing Taxes (Thank you, Uncle Sam!)
  • Increasing electric bills, too!



  1. To save money the obvious choice would be DISH Network for HD. Working for DISH Network as well as subscribing I know you can get "more bang for your buck" with DISH, over 200 HD channels available to you. As well as still offering HD Free For Life to all new and existing customers. It's the best option for HD as well as a TV provider.

  2. Fabian,
    Of the Pay TV providers, Dish is the most cost effective solution. Nobody should be paying extra for HD, and Dish does not charge extra for HD. But did you even read the post? I have had Dish, DirecTV, Comcast, Cox, and Time Warner. The only reason I would ever go back to any of them would be if there was no OTA reception where I lived, or if I was a sports nut.

    To really save money, the obvious choice is still free OTA TV with an antenna. Have you tried it? It's the best value in TV, and the best HD, hands down.