Cablevision and Time Warner Beat the Drum for New Subs

Cable World, Sept 9, 2002

Byline: MAVIS SCANLON

With just weeks left in the third quarter, the two big cable operators in New York City pushed promotions to sign up new customers.

The marketing blitz highlights the need for MSOs to grow both basic and digital customers. Basic-customer growth in general has slowed as cable has matured, and after two years of high growth rates for digital, its growth curve has plateaued.

In Cablevision's case, basic subscriber growth has flagged - the MSO lost 10,000 customers in the second quarter - due to the company's heated feud with the YES Network, and the company has drastically reduced its expectations for its digital service. And though Time Warner Cable added basic subscribers in the second quarter, the MSO's customer base will shrink by about 2 million when it dissolves its partnership with Advance/Newhouse, so every new customer helps.

With incentives of free installation and one month's free HBO - timed perfectly to leverage the premiere of The Sopranos' fourth season - Cablevision offered a 100-channel package including 27 digital networks, Mag Rack, broadcast basic and the digital box for about $25. The ads tout great "basic" packages for under $20, but for those who want the networks featured in the ads - CNN, ESPN, Discovery and Nickelodeon - the price jumps to about $45, depending on location. The campaign, tagged "Really Big Tremendously Great Cablevision Event," ended Sept. 6; after that date customers will have to pay for installation.

While Cablevision continually markets its products and services, "this campaign in particular is an attempt at something a little more bold and a little more tongue-in-cheek," said Keith Cocozza, a Cablevision spokesman.

In its DTValue Package, TWC NYC is discounting a digital package by about 10%, for new customers only. The $49.95 monthly cost for the 150-channel package includes basic, standard, standard plus (where available) digital box and remote. Through Sept. 30, installation is $9.95; after that it jumps to $30.50.

"We have 500,000 DTV customers, and we wanted to think how to bring in the other 500,000," said Harriet Novet, a spokeswoman for the New York system. The promotional price is only being offered in New York, according to a spokesman for TWC corporate.

Continued concern over basic subscriber growth was evident at Charter Communications' first-ever analyst confab in St. Louis last week.

CFO Kent Kalkwarf told analysts assembled at the meeting that July's basic subscriber numbers were soft, and that the company was trending toward the low end of its guidance for revenue and cash flow.

"We need to find an answer for the lull in basic subscribers," Kalkwarf said at the meeting. With intense competition from satellite, Charter has little pricing power and may not seek any price increases next year. That, in turn, could add fuel to the simmering price war between cable and satellite.

THE NEXT QUESTION:

*Can Cablevision reverse the subscriber declines it suffered this year?

*How aggressive can cable operators be in pricing without hurting revenue?