Small cable operators are beginning to see the recession impact their subscriber bases, but are combating the downturn through innovative pricing packages and a focus on the bundle, a panel of executives said at an industry conference Monday..
And one in particular boiled down the magic recipe for success in four simple words:
"Earn more, spend less," said Wave Division Holdings chief financial officer Wayne Schattenkerk, at The Independent Show, sponsored by the National Cable Television Cooperative and the American Cable Association.
While Schattenkerk comment was said partially tongue in cheek, the other operators on the panel -- Charter Communications senior vice president of programming Greg Rigdon, CableOne senior vice president, chief sales and marketing officer Jerry McKenna, GCI Communications vice president of content and product management Bob Ormberg -- all took a similar no-nonsense approach to the challenges facing them.
At CableOne, for instance, McKenna said that the company is changing some of its marketing processes. McKenna said that CableOne noticed in the fourth quarter that phone subscribers were declining and responded by rejiggering its packages to place more of a discount on phone service. In other cases, the company is offering a free cable modem to help offset some of the upfront cost of high-speed data service. And in June, the company began implementing a 24-month price guarantee.
"We may lose some revenue in the short term, but in the long term we will be better off," McKenna said.
Charter's Rigdon agreed, adding that his company's focus has been primarily on the value of the bundle. He added that Charter customers aren't really concerned about the ongoing company bankruptcy, as long as the service continues without a hitch.
"The financial reorganization is not something they [customers] really care about," Rigdon said, adding that once the company emerges from bankruptcy protection -- hopefully by the end of the summer -- it plans on concentrating on ways to grow the customer base. Initiatives to differentiate video, including primetime VOD and authentication -- offering video subscribers online access to programming -- are things the company "would be very interested in developing," he said.
GCI, which operates exclusively in the state of Alaska, has combated recessionary declines in several different ways. Ormberg added that the company has launched a new ad campaign targeted at more rural areas for its phone and high speed data service that uses humor to get its message across.
GCI also is finding ways to win back customers, in ways that are specific to Alaska's unique geography. For example, the frequent earthquakes in the state usually knock satellite TV customers' dishes out of alignment. And because GCI is the incumbent phone company, many customers call them to repoint their dishes. Ormberg said GCI uses that opportunity to try to convince them to switch to cable service.
Satellite competition has become less of a problem for many of the operators, and in light of the difficulties facing Dish Network, has presented opportunities for some.
McKenna, for instance, said that CableOne is readying a dish buyback program, similar to one initiated by Cablevision Systems, to win back old customers. In most instances, CableOne will buy out the customers long-term dish contract as well, he said.
"What we see now is more ups and down with the satellite guys, DirecTV is growing share, Dish is not," McKenna said. "In some cases the battle has shifted."