Cable Execs Banking on Being Recession-Proof

At CTAM: But Still Plan to Stress Value to Consumers

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BOSTON (AdAge.com) -- Retail may be the latest sector to take a major hit in consumer spending, but consumers are still holding on to their cable bills as they enter the first holiday shopping season of a recession.
Joe Rooney, senior VP-chief marketing officer for Atlanta-based Cox Communications, said a recent poll of Cox subscribers found high-speed internet to be the last item they slash from their household spending.
Joe Rooney, senior VP-chief marketing officer for Atlanta-based Cox Communications, said a recent poll of Cox subscribers found high-speed internet to be the last item they slash from their household spending. Credit: Arnold Adler

During several panels at the Cable Telecommunications Association of Marketing Summit in Boston, cable marketers, analysts and programming executives all remained bullish as consumers have proven reluctant to cut out their cable bill even during times of recession.

Addicted to DVRs
Joe Rooney, senior VP-chief marketing officer for Atlanta-based Cox Communications, said a recent poll of Cox subscribers found high-speed internet to be the last item they slash from their household spending, followed closely by their digital video recording device, or DVRs. Those findings helped inform the company's current fourth-quarter marketing campaign, which Mr. Rooney was able to rewrite at the storyboard level to enhance the value message around cable subscriptions. "We want to remind people of the terrific value, whether you buy the bundle or just one or two features," he said.

During the same panel, Sam Howe, chief marketing officer for Time Warner Cable, said his company has seen 1 million subscribers take advantage of the price-lock guarantee, which enables them to renew their subscriptions at a fixed price for two years. "Our subscribers have ultimately been working with a negative emotion. They don't feel like they have control," he said. "Price-lock guarantee has turned out to be a great value tool. People need to control value and finance."

Cablers better diversified
Cable programmers are also experiencing a boon from their multiple revenue streams and their ability to scale national ad buys for less money, while their broadcast counterparts are being hit hard by declines in the local ad market. David Zaslav, CEO of Discovery Communications, said Discovery's cable revenues are up 9% in 2008 to date; local broadcast, on the other hand, has been down as much as 30% to 35%. "The value of cable has made us the last man standing in the media business on the advertising side in terms of maintaining some real strength in price and volume," he said during the CTAM Summit's closing panel.

Jessica Reif Cohen, a media analyst for Merrill Lynch, added that cable companies are among companies best positioned to thrive even during times of recession, with strong cash flow and an established presence in developed markets. "Certainly all the big operators are very liquid, big names with fairly strong balance sheets," she said. "There's a notion that cable is recession-proof, and while that's not true, business tends to hold up better for cable."
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