This week Charter Communications, the fourth largest cable operator in the U.S., notified customers that a “broadcast TV surcharge” was being added to their bills (in St. Louis, one of the largest cities they operate in, the charge is 94 cents). Charter customers will find this new surcharge in the “taxes and fees” section of their bill. The cable operator is justifying the surcharge by pointing to the increased fees it is paying to the broadcast networks (NBC, ABC, and others) to distribute their content to customers.

Receiving payment beyond the money generated through advertising – or so called double dipping -- is common for cable networks, but it’s a relatively new development for the broadcasting industry. For instance, cable networks like USA and TBS have long received payments from cable operators for their content, in addition to the advertising dollars generated during the airing of the content. Of course cable operators are none too pleased that they now have to pay for content from broadcasters when it was once free. Because of this new cost Charter decided to levy a separate fee to customers for broadcast content. While customers will surely enjoy knowing how much of their money is going to the broadcast networks each month, there are serious problems with the way Charter has gone about this billing and disclosure.

Earlier this year, SNL Kagan publicly disclosed estimates that cable companies, including Charter, pay for each channel in their lineups. In 2010, St. Louis customers are paying as much for all the content they consume on the broadcast networks as they are for…the Disney Channel. Charter customers would undoubtedly find this type of comparison helpful. After all, a lot more people consume broadcast content than spend their evenings glued to the Disney Channel.

Since cable operators routinely blame rate increases on rising programming costs, you’d think they’d be eager to provide customers with a breakdown of content costs. The reason they don’t is because customers would gain a pretty good idea of how much of their money actually stays with cable operators.

For instance in St. Louis, Charter’s limited basic tier costs consumers around $17 per month. The programming costs for channels in the basic tier included in that package the total cost for programming looks to be $1.62 and that includes the 94 cents going to the broadcasters. While clearly Charter incurs other costs, they make a good living off customers. SNL Kagan found that Charter has a cash flow margin (one way of determining a profit margin) of 36.5 percent! That, of course, is a number they’d prefer you didn’t know when talking with customer service about the latest rate increase.

In a nutshell, Charter believes it is paying more than it should for the broadcast networks, and it wants its customers to know. Guess what Charter? Join the club. I’m sure most of your customers have plenty of channels they are angry about paying for. Unfortunately customers don’t have anyone to pass those costs on to in the form of a “surcharge.”

While we welcome cable operators disclosing how much of a monthly cable payment goes to content owners, this was clearly not done to benefit customers. Unlike all other cable content, Charter decided that customers should pay broadcast networks through a separate fee that is in addition to their monthly cost of cable service. Lumping this content cost in with “taxes and fees” is disingenuous. If Charter believes that content costs should be itemized then customers should get a look at what they pay for every channel, and how much of their total bill goes towards lining Charter’s pockets.