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Cable Industry Vows to Win Customers Back from Satellite Television

Posted on: Thursday, 12 June 2003, 06:00 CDT

Jun. 12--CHICAGO--Coming off a year of losing hundreds of thousands of subscribers to satellite television, top executives of Comcast Corp. and other US cable companies yesterday expressed confidence they can fight back and begin winning more customers back from satellite than they lose.

Comcast Cable chief Stephen B. Burke and other cable leaders, closing a four-day meeting here of the National Cable & Telecommunications Association, said cable's phone and Internet features will help the industry hold off satellite TV. They professed no fear of media mogul K.

Rupert Murdoch buying a controlling stake in Hughes' DirecTV operation and using his Fox news and sports properties to promote defections to dish TV.

Referring to Murdoch's pending DirecTV purchase, Burke said, "It doesn't matter. It's all up to us. We have a platform that's clearly superior" because it can offer advanced data services, video on demand, phone service, and TV.

While satellite TV has been grabbing cable business, Burke said, "there's no immutable law of economics that says that bleed of customers [must] continue. I can even imagine a situation two or three years from now where we gain back customers, and the trend reverses itself." Comcast has offered $400 rebates to satellite customers switching back to cable, paid as $25 off premium cable service for 18 months.

"If you are aggressive right back," Burke said, "you can go to people and start to pick customers right back," although he gave no figures on how many customers have accepted the rebate plan.

Cox Communications chief executive James Robbins said of satellite, "In the final analysis, I think you're dealing with a one-trick pony, video without all the bells and whistles." For high-value customers interested in having one company provide TV, broadband, and phone services, Robbins said, "The importance of one-stop shopping can not be underestimated."

US cable companies lost about 1 million net basic cable subscribers last year, and analysts from Morgan Stanley estimate they may achieve net gains of only 65,000 cable TV subscribers this year. Strong growth in high-speed data, phone service, and upgrades of basic cable subscribers to digital TV are driving cable industry revenue growth.

Burke said that "the past 12 to 24 months have been somewhat of an aberrational period," marked by financial scandal and bankruptcy for Adelphia Communications Corp. and AT&T Broadband's $45 billion acquisition by Comcast last December. Both situations led those companies to be more vulnerable to losing TV subscribers to satellite.

In other comments, Burke said Comcast will probably not make aggressive efforts to market phone service over its cable lines until 2005 at the earliest, saying the company's top priority is improving operating profit margins at former AT&T Broadband franchises.

Comcast has 1.3 million phone customers, including tens of thousands in Eastern Massachusetts, but it has scaled way back on marketing phone service compared to AT&T.

The imperative of raising AT&T's 20 percent margins to the 40 percent standard at Comcast "outweighs anything else we could possibly come up with on the telephone side" for financial value to Comcast, Burke said.

Burke said that once Comcast has video on demand deployed throughout its 39 million-home US service territory and growth in broadband data subscriptions begins to ease, "then we really need to make phone work.

At some point in 2005, 2006, 2007, we really have to make phone a big business, and we plan to do that."

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(c) 2003, The Boston Globe. Distributed by Knight Ridder/Tribune Business News.

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