System consolidation and diverging interests have made
marketing co-ops as endangered a species as the spotted owl and the snail darter.
But those that remain are playing a crucial role for
operators in holding back voracious competitors that are knocking on the same doors that
cable has been serving for years.
Just five years ago, there were 22 active co-ops, according
to a CTAM directory. Each of the major markets was covered, and some of the efforts were
For instance, in the late 1980s, the co-op in Los Angeles
launched an attempt, which ultimately failed, to unify the channel lineups of more than
one-dozen MSOs across two counties, after research showed that people identified
programmers by channel numbers, rather than by name.
But when co-ops focused on the basic business -- new
installations and premium acquisitions -- they reported good cost-per-sales and ancillary
public-affairs benefits. One example was a campaign several years ago that partnered
Detroit-area operators and the local McDonald's franchisees, which gained money for
the Ronald McDonald House charity and goodwill and new customers for operators.
Today, however, operators and co-op directors said it is
harder to work together in many markets. Only a handful of co-ops remain, according to
CTAM, which no longer actively tracks them, as single operators have moved in to control
markets and to buy up the co-op partners.
In other regions, operators have shifted scarce marketing
capital to new products such as high-speed data or digital.
One Midwest co-op is currently thriving, but its days may
be numbered. The Chicago Cable Marketing Council boasts support from Tele-Communications
Inc., Prime Cable, MediaOne, Time Warner Cable, Multimedia Cable and Jones Intercable Inc.
But will it be around at this time next year?
"Truly, only time will tell. This has been a strong
co-op for a long time. It was kind of late to market, but since then, it's been very
progressive," said Ginny LaVone, executive director of the Chicago co-op.
The organization may fall victim to consolidation. TCI has
announced that system swaps or purchases are pending with each of the co-op members, with
the exception of Prime. At this time next year, TCI may be the co-op.
But the group can't afford to sit back and contemplate
the future, because Ameritech Corp.'s Ameritech New Media cable arm is gnawing at its
customer base within the city of Chicago, as are smaller competitors, like 21st Century
Cable TV Inc. The marketing council hasn't done any anti-telco campaigns, instead
remaining keyed in on basic business issues like building viewership.
Radio is the medium of choice in Chicago, because over
several years, the group has developed a symbiotic relationship with a group of radio
stations. Due to a trade-out arrangement, the co-op can leverage a $200,000 buy funded
jointly by operators and programmers into an $800,000 value, LaVone said. Operators
support the specific tune-in message ("Tonight, on Biography ... ") with
Although several of the operators have launched digital and
cable modems, they are still spending money on the joint effort, LaVone said, even as they
push the new services within their own systems.
Pressure from ANM is credited with keeping the co-op alive
in Columbus, Ohio, and with helping one to grow in Michigan. There, the Southeast Michigan
Cable Association (SEMCA) might have to change its name, as it has added operators from
Flint and Saginaw, and it is in talks with operators in Lansing, according to Steve Smith,
executive vice president of Tailford Cooper Smith Inc., which designs campaigns for
operators and co-ops.
As in Chicago, the marketing groups in Michigan have not
produced any anti-Ameritech ads.
"It's a lot easier to do 'real cable'
versus DBS [direct-broadcast satellite] ads," Smith said, jokingly adding that no
incumbent operator has been motivated yet to take on "the black forces from the outer
limits," represented by ANM, with an "us-versus-them" campaign.
To stay out of a ruinous price war, operators opt for
championing rate offers that they consider very competitive, in hopes of claiming every
possible nonwired home before the telco can get to them.
The telco threat has led the Detroit-area systems to offer
some of the most aggressive come-ons in years, such as free installation plus one
month's free service. Operators maximized their reach by negotiating trade-outs with
the state's dominant newspapers, The Detroit News and the Detroit Free
Press. They gained greater publicity valueby using the Detroit Tigers
Major League Baseball team and Detroit Pistons National Basketball Association team as
"With competition bearing down on us, we haven't
lost sight of the need to share [marketing dollars]," Smith said.
Besides price, co-ops fight to maintain an upbeat local
image. Gaining attention with a popular local charity gains viewers' eyes and
improves cable's image. Cincinnati's co-op will tie its acquisition effort this
year to a local food bank, Smith noted.
Of the cooperatives represented by Tailford Cooper Smith,
the one representing the smallest market might be the first to team up to sell ancillary
products, such as cable modems.
The systems are in Allentown, Scranton and Wilkes-Barre,
Pa. The operators -- Service Electric Cable, Blue Ridge Cable and Verto Cable -- make up
Penteledata, a separate online-service consortium. Smith said the group would like to sell
their data service jointly, but they haven't, due to budgetary restraints. Instead,
co-op members are strengthening their image in advance of a threatened incursion by an
independent telco and possible competition long-term from Bell Atlantic Corp.
Joint efforts also remain strong in the Washington,
D.C./Baltimore area and the Delaware Valley (Philadelphia and its suburbs), even though
some member companies are switching their strategies to regional marketing, rather than
local-system marketing, said Dave Stutts, president of DAS management, which directs those
co-ops. But urban penetration remains low, so there is still room for synergies if the
campaign focuses on basic acquisition, he added.
For instance, even though Comcast Corp. dominates
Philadelphia, with 40 percent of the market, joint efforts can efficiently attack piracy
and do acquisitions with major retail partners, attracted by the number of homes that the
co-op can reach.
Sharing research is just as critical as teaming up to sell,
Operators from mid-Atlantic systems have been tracking DBS
competitors, gauging the amount and timing of their ad expenditures. They will share their
findings at an informal lunch that marketers have planned during the CTAM conference in
Chicago this week.
Perhaps the strongest co-op remains the Metro Cable
Marketing Council of New York. Its membership has actually increased (to 4 million
subscribers), with the addition to the co-op of franchises acquired by members Cablevision
Systems Corp., Comcast and Time Warner.
More companies on board means more revenue (co-op support
is calculated on a cents-per-subscriber basis), so the co-op will increase its number of
campaigns this year to seven, from two historically. Four of those campaigns target
Hispanics, who, for the first time, will be able to respond to their own 800 number. So
far, call volume is up 30 percent compared with 1997, said Tina Segali, executive director
for the New York co-op.
"We feel strongly about the need to continue to
niche-market. A lot of our growth will continue here," Segali said.
For the English-speaking audience, the Metro co-op is
testing a pay-per-view tune-in campaign. The co-op, with the support of movie studios,
bought a flight of radio ads for Saturdays from May through July. One or two key titles
receive promotion each month, and the co-op then analyzes the results to determine their
Unlike in the Midwest, competition from RCN Corp. and DBS
has not been a factor in designing campaigns in the New York area.
"Everyone's focused on upgrading their systems,
rebuilding their plant, improving customer service and getting their own house in
order," Segali said.
So what's the next major focus on the horizon for
The rollout of "digital will be a very stressful time
for co-ops," Smith said, adding that there will be a big commitment of resources away
from basic cable.
Other than that, co-op directors said, their crystal balls
were cloudy when trying to pick a date for regional promotion of services such as cable
modems or telephony.
One way that co-ops definitely will not be adding members
is from their competitors. Each co-op said it has had its bylaws vetted in the last two
years by attorneys to ensure that it could legally refuse entry to companies like ANM and
"We now know more about Sherman Antitrust laws then we
ever thought we'd have to know," Smith joked.