TV Providers Tying Bargains to Full Buy-Ins

In the good old days – just a few years ago – a cable/internet provider such as Time Warner Cable would pay a co-op or condo association an upfront cash bonus and “revenue-share fees” for getting a majority of residents to sign up and for letting the provider do occasional marketing. Those days have gone the route of rabbit-ears TV antennas. Today, many cable providers offer bulk discounts only if a property guarantees the equivalent of a 100-percent signup. The change has forced co-op and condo boards to negotiate deals more aggressively – and find ways to bill residents fairly. 

Bulk purchasing is nothing new for co-op and condo boards. In the past, bulk TV/internet deals typically required about a 70-percent sign-up, recalls Vito Mangini, director of management at Tudor Realty, and buildings didn’t have to make up the difference as they do now. Billing arrangements were flexible: apartments could be billed individually or as part of a single master bill. Today, however, providers send a master bill for the basic contracted services, and then individual bills to the residents for extras. 

According to Mike Weston, executive director of Verizon’s Enhanced Communities Group, Fios sets up an individual account for each resident. Even though the master bill is being paid by the co-op or condo association, residents get an individual bill for zero dollars each month. If the apartment-owner wants to upgrade to a higher internet speed or sign up for additional premium channels, he or she would pay an upgrade differential charge that would appear on his or her monthly bill. 

With Charter Communications, another major New York City provider, the bill goes to one master account for the co-op or condo governing body, says Adam Ray, a Charter group vice president. Only those residents desiring additional channels or faster internet and the like get billed separately and individually for those additional choices. Once the building gets the master bill, it can pass on that cost as a “technology fee” or an “entertainment fee,” notes Ray. “But that is up to them – that has no bearing on us at Charter. It’s their responsibility to handle that the way they see fit.” 

Attorney Tara Snow, a partner at Novitt, Sahr & Snow, offers a different scenario: “Let’s say the building is getting a cheap rate and divides that up among the people who have cable. If 100 percent of the apartments signed up, then each apartment is paying an equal share. But if only 90 apartments signed up, they each are paying a little more. Let’s say the bulk rate would be $50 a unit. But each apartment is paying $55 in order to cover the 10 units that aren’t signed up.” 

Yet another method, she says, is to have your building consider cable and high-speed internet as amenities, like a laundry room. It’s part of the overhead cost of the building, and even if a particular resident doesn’t use it, he or she still has access to it and indirectly pays for it through the monthly maintenance or common charges. 

But in the individual payment method, what if some residents decide not to pay? How do you shut them off? The provider can’t cut off service because the bill it sends to management for the entire package is getting paid, says Carl Borenstein, president of Veritas Property Management. 

In that case, the co-op/condo would have to absorb the loss – most budgets have room for such contingencies. If it can’t be absorbed, the board would have to assess it, says Carl Cesarano, a principal in the accounting firm Cesarano & Khan. Never a popular move, but sometimes necessary now that the good old days are ancient history.