Time Warner Softens Bad News on Rates

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Time Warner Cable customers in several California systems
have received direct-mail pieces designed to keep the phones from ringing at the
systems' call centers.

The system issued the marketing materials to notify Time
Warner subscribers that they would see rate increases in the new year. Past rate hikes
have promoted a flood of telephone complaints to customer-service agents.

"This is one of the few campaigns that we've
designed where our clients didn't want a response," said Mark Seigler, creative
director for SCDRG Advertising Inc., which created the campaign.

Time Warner systems in Torrance, Hawthorne, El Segundo, Los
Angeles, Gardena and Lawndale sent a glossy, six-panel brochure to subscribers, featuring
a letter from the local vice president and general manager, Robert V. Moel.

The notice announced new channels and a "1999 price
guide," which compared last year's prices with this year's. The brochure
also introduced new premium-movie packages and featured a timeline of cable-television
milestones.

"If you look at the piece, it doesn't look like a
rate-notification piece," said David Robertson, vice president at SCDRG, adding that
the company met all of the Federal Communications Commission's requirements for
rate-increase notifications.

"It's not packaged as a message of doom,"
Seigler said.

Robertson said other operators should follow Time
Warner's lead and frame any communications that they have with their customers as a
positive in some way. Historically, cable operators have spent the least amount of money
that they could get away with to communicate rate increases, he added.

"What people have failed to do in the past is to
communicate the value that goes along with the rate increase," Seigler said.

As far as communicating the value, these Time Warner
California systems had their work cut out for them because they added only three new
channels, and one was a premium-movie service.

Seigler recommended that cable operators let their
customers know that they would be delivering new services in the future, "even if
they're in a six-month lull right now."

In this case, Time Warner didn't commit to a
particular date for a fiber optic rebuild, but it did let subscribers know that digital
technology would be on its way during 1999, bringing new channels and high-speed Internet
access.

"This allows the systems to start pre-marketing
digital, and to put people on a mailing list," Seigler said.

Cable operators don't necessarily have to communicate
rate increases as bad news, Robertson insisted.

"A rate notification packaged in the right way
actually sells new services," he said.

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