If they were losing money in Kansas City, they'd be violating anti-trust laws doing that. It's exactly what Standard Oil did 100 years ago. I imagine they are not losing money, even at the discount.
They no doubt are. It probably covers programming costs, but labor and other expenses probably push them over the edge.
Plenty of ISPs serve markets that are unprofitable either due to low uptake or being too small of a market. Anti-trust or not, they still do. The FCC is even trying to pay them to do so.
