Cox Communications Releases Two Economic Studies Addressing Impact of Rising Programming Costs on Cable TV Prices.

Business Editors

ATLANTA--(BUSINESS WIRE)--Nov. 13, 2003

Studies and Cox comments regarding GAO report on cable competition

online at www.MakeThemPlayFair.com

Cox Communications, Inc. today announced the release of two new industry studies, conducted by Dr. William P. Rogerson of Northwestern University, that address factors influencing consumer cable TV rates and tiered distribution of programming content.

The studies, commissioned and funded by Cox, were submitted on record to the Senate Committee on Commerce, Science and Transportation on November 10, 2003.

The first study, "Correcting The Errors In The ESPN/Cap Analysis Study On Programming Cost Increases," addresses the critical question: What impact has programming cost increases had on cable rates in recent years? Dr. Rogerson's calculation compares the rise in basic cable rates over the past three years with the increase in basic cable programming costs (offset by net advertising revenues) over the same period. Using industry-wide data from the FCC, a recent U.S. General Accounting Office (GAO) report, and other industry studies, Dr. Rogerson calculated that, industry-wide, programming cost increases represented fully 42 percent of basic cable rate increases between 1999 and 2002.

At Cox, the number is even higher because the company's retail rate increases are significantly less than the industry average. Over the past three years, more than half of Cox's rate increases were directly attributable to programming cost increases. Last year, that number rose to 66 percent. Therefore, only 34 percent of the company's price increases remained to cover other increased costs, including labor, customer service and technology investments.

The second study, "Cable Program Tiering: A Decision Best And Properly Made By Cable System Operators, Not Government Regulators," concludes that a separate programming tier for the most expensive sports networks could well benefit cable consumers. Dr. Rogerson also concludes, however, that the decision about whether to create such a tier should be left up to the cable system operator, and not be dictated by government regulators. Economic theory indicates that cable operators will develop customer-friendly solutions for how best to tier cable programming, based on their assessment of a variety of complex marketplace factors.

In addition to both reports, Cox has posted online its comments regarding the October 2003 GAO report on issues related to competition and subscriber rates in the cable industry. The GAO report corroborates Cox's position that sports programming fees are skyrocketing and that sports programming is disproportionately priced to non-sports cable programming. Cox asserts that the GAO report correctly concludes that competition in the video marketplace protects consumers' interests. Furthermore, Cox agrees that the private sector, not the government, holds the key to moderating cable price increases in the future.

Both studies and Cox's complete comments are online at www.MakeThemPlayFair.com.

Cox commissioned Dr. Rogerson to gather evidence and provide analysis on how programming costs are impacting cable television retail rates. The studies reinforce Cox's assertion that sports programming fees in particular have skyrocketed. Cox's cost for ESPN and Fox Regional Sports networks has risen approximately 99 percent in the last five years, compared to a 34 percent increase for the top 40 standard cable channels. Fox Sports is requesting an increase of 35 percent in 2004 for six of its regional sports networks, and ESPN has raised its price about 20 percent a year for the past five years. Left unchecked, the cost of ESPN alone could rise to $10 per customer per month in less than a decade.

The author, Dr. William P. Rogerson, is Professor of Economics at Northwestern University. He received his B.A., Economics, from the University of Alberta, and his Ph.D. from the California Institute of Technology. Dr. Rogerson was elected a Fellow of the Econometric Society in 1999. During a leave from Northwestern, he served as Chief Economist for the FCC from June 1998 until May 1999. He also acted as a consultant to the FCC, Federal Trade Commission, Office of the Secretary of Defense and U.S. Department of Justice.

Cox Communications (NYSE: COX), a Fortune 500 company, is a multi-service broadband communications company with approximately 6.5 million total customers, including 6.3 million basic cable subscribers. The nation's fourth-largest cable television provider, Cox offers both analog cable television under the Cox Cable brand as well as advanced digital video service under the Cox Digital Cable brand. Cox provides an array of other communications and entertainment services, including local and long distance telephone under the Cox Digital Telephone brand; high-speed Internet access under the Cox High Speed Internet brand; and commercial voice and data services via Cox Business Services. Local cable advertising, promotional opportunities and production services are sold under the Cox Media brand. Cox is an investor in programming networks including Discovery Channel. More information about Cox Communications can be accessed on the Internet at www.cox.com.