Cable Operators

Study: Cable TV Bills Up 7.5%

4/19/2009 2:00 AM Eastern

Even as the economy plunged into a recession through the back half of 2008, Americans saw the cost of their cable and satellite-TV services creep up to an average of more than $70 per month.

Cable-TV bills increased 7.5% in the second half of 2008, to an average of $71 a month — up $5 from a year earlier, according to a study released last week by research firm Centris. By contrast, Centris found no significant change between 2006 and 2007 in the average amount people paid for cable TV.

Meanwhile, satellite-TV bills rose even more, up $6 — almost 9% — to an average of $74 per month in the last six months of 2008, according to the Centris study.

The data is based on an ongoing phone survey Centris conducts of U.S. consumers, averaging 1,000 respondents per week. The time period in the Centris report reflected an average month from July through December 2008.

The higher cable and satellite bills are mainly because prices of programming packages have continued to increase, Centris president Bill Beaumont said.

Also factored into the increases may be that more consumers are taking higher-end options, like DVRs and HD service; the Centris survey didn't track those options.

Even so, Centris' research indicates the number of people canceling cable outright will remain small.

“The overall industry is known to be resilient to economic downturns,” Beaumont said. “That's the dominant trend. The overwhelming number of consumers will continue to watch TV and buy entertainment services.”

According a smaller survey Centris conducted in February, 81% of cable-TV households said they were “not at all likely” to cancel their service, while 9% responded that they were “very/somewhat likely” to do so.

Among satellite subscribers, however, the intent to cancel service spiked. Centris' February survey found satellite-TV customers are now five times more likely to cancel a subscription than they were just a few months earlier.

Centris also identified an uptick in the last several months of people calling their TV provider to “get a deal” in order to reduce their monthly bill. The increase correlates with the rising unemployment rate, Beaumont said.

About 36% of cable customers and 31% of satellite customers surveyed in February said they recently called to see if there were any discounts or lower-priced packages.

Other research supports the findings that pay-TV services are steadily becoming more expensive.

The Federal Communications Commission tracks the average monthly price of expanded basic cable service (which excludes premium-programming packages and other options). In January, the FCC's Media Bureau issued a report pegging monthly expanded basic at an industry average $49.65 per month, an increase of 122% since 1995.

The cable industry prefers to use a different metric: cost per viewing hour. By that measure, cable-TV prices have declined from 35 cents in 1997 to 33 cents in 2007, according to the National Cable & Telecommunications Association. In other words, while cable customers are paying more, they're getting more programming.

In other findings from Centris' report covering the second half of 2008, the research firm estimated that nearly 46 million households have an HDTV set while 74% of them — about 34 million — subscribe to high-definition service.

About 55% of households reported having a large-screen TV set (32 inches or more), up from 49% in the second half of 2007. All told, 50 million U.S. households have a digital TV, according to Centris.

The firm found that pay-per-view usage was flat, with 12.6 million households ordering PPV programs each month for the period, similar to the previous year's period.

March