Cable vs. satellite in prize fight for viewers

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Cable and satellite companies are in the midst of preparations for the biggest-selling period of the year- spanning the holidays, the January renewal sales and the Super Bowl. A slew of aggressive marketing campaigns is hitting the airwaves with the aim of selling consumers everything from high-definition services to digital video recorders.

While both sides of the pay-TV industry are spending big bucks to acquire new customers, losing them appears to be easier for everyone. As Merrill Lynch media analyst Jessica Reif Cohen points out in a Nov. 9 note, DirecTV suffered its highest churn rates in two years in the third quarter. DirecTV's U.S. churn rate was 1.67%. According to figures quoted by EchoStar, the cable industry lost over 100,000 subscribers for the period.

"We see our strongest subscriber growth in the holiday period. Retailers Best Buy and Circuit City see a spike in foot traffic and that correlates with a strong selling period for us," a spokesman for DirecTV says.

DirecTV is already out of the gate with two separate ad campaigns from Omnicom Group's BBDO, New York. New spots promote both DirecTV's own DVR which is equipped with TiVo technology, while another promotes the satellite broadcaster's NBA coverage.

While DirecTV typically spends more on fourth-quarter marketing, a spokesman said that media spending had been more consistent across the year. Indeed, DirecTV added a million subscribers in the third quarter, its highest quarterly increase in 10 years, in part because of heavy advertising of the NFL Sunday Ticket packages. DirecTV spends upward of $100 million on media annually, according to estimates and has 13.5 million subscribers.

Satellite rival DISH Network, owned by EchoStar Communications, has chosen to highlight pricing differences between satellite and cable in its current campaign. Spokesman Marc Lumpkin says third-quarter subscriber numbers rose by 350,000. Dish Network has 10.4 million subscribers.

cable fights back

The cable industry, meanwhile, is countering with its own messages that underscore its high-definition capabilities and DVRs. While the regional nature of cable companies tends to leads to more balkanized marketing assaults, Char Beales, president-CEO, Cable Telecommunications Association, says there are many joint initiatives airing over the holiday period.

"Cable will be emphasizing what [satellite doesn't] have, on-demand programming. We have a two-way multidimensional platform, they don't," Beales says. By that, she means that cable can offer connectivity to services such as high-speed Internet as well as receive orders for programming.

Electronics retailer Samsung and HD channel provider INHD are supporting a CTAM initiative called "Only Cable Can," to promote a Nov. 21 Bon Jovi concert exclusively on cable in HD format. Samsung is contributing online, print and TV marketing efforts to push HD broadcasts on digital cable.

A separate promotion involving Sony also backs HDTV on cable via a "Go for Two" campaign involving the merchandising of both the HDTV sets and purchase of HD coverage of the NFL.

Individual cable companies are also ramping up their marketing efforts and a number have swapped smaller independent creative shops for more mainstream advertising agencies. Time Warner Cable, which used independent Shepardson, Stern & Kaminsky, New York, for creative is now working with WPP Group's Ogilvy & Mather, New York. The cable company, which has 11 million subscribers, spent $65.5 million in measured media in 2003, according to TNS Media Intelligence/CMR.

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