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Cable Operators

Analysts: Attention to Innovation, Budgets Gives Cable an Edge

6/20/2011 12:01 AM Eastern

Chicago — Innovative products like online content
authentication and packages that are mindful
of customers’ economic pressures will help cable
maintain its competitive edge, a panel of industry
analysts said here last week.

Most of the analysts participating on last Tuesday’s
Cable Show panel “Profits, Platforms and Projections:
Investment Analysts on the State of the Cable Economy”
agreed that cable has weathered a slew of competitive
storms: first from satellite,
then from telcos and so far as
been able to hold off threats
from over-the-top services.
But cable operators and programmers
must continue to
innovate to keep a step ahead
of that competition, Collins
Stewart media analyst Tom
Eagan said.

Eagan added that over
the past few years, the development
cycle of new
products has shrunk significantly,
from about 12-
18 months to around six
months today. That, he said, is a big advantage for cable
operators.

And those accelerated development cycles have
led to products like HBO Go and ESPN Live, which
Morgan Stanley media analyst Benjamin Swinburne
called game changers for the industry.

“Having these two embedded authenticated products
is a major step for the industry,” Swinburne said. “Content
and distribution have a critical relationship to move
over the next 12 months into an exciting position.”

Keeping a step ahead of the competition will require
a sharp focus on customer service, said Citigroup
media analyst Jason Bazinet. And even though
cable operators have made strides on that front, the
perception is that they still have a long road to travel.

“Most consumers don’t like the way they are being
treated by their cable company,” Bazinet said. “You are
not giving consumers reasons to love your companies.”

Eagan said cable companies also can stay a step
ahead of the competition by listening to their customers
and identifying trends as they emerge. The analyst
pointed to a common culprit for basic customer losses:
sluggish new-home growth. He added that while newhome
growth has been at its lowest point in years, single-
person households have also been affected.

“The market seems to think that the people that
churn out of pay TV can’t afford it.” Eagan said.
“About 14% [of that churn] are single-person households.
That rises to 16% to 18% in major cities who believe
that cable isn’t worth it.”

That, Eagan said, is a segment of the market that cable
has failed to address.

“On the base business, keep your variables open,”
Eagan said. “On video, offer different prices to keep
single-person households from going away.”

Bazinet agreed, adding that he has long proposed
that cable operators develop pricing and packaging
aimed at individual connections instead of households.
That, the analyst said, would allow cable companies
to charge more affluent households higher
rates than those that are more price-sensitive.

 

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