Many cable viewers pick just the basics

May 05, 1992|By Leslie Cauley | Leslie Cauley,Staff Writer

Many cable customers in Maryland are taking a hard look at their monthly cable television bills and deciding they can live without Home Box Office, Cinemax and other "premium" channels.

Cable operators say an increasing number of viewers in the Baltimore area are dropping the extra-pay channels while holding onto basic service, mirroring a national trend that began about two years ago.

Many of those customers are migrating to pay-per-view television, for which there is no monthly charge, only a one-time charge that varies according to the event, from a few dollars for a first-run movie to $30 or more for a live prizefight.

Cable operators hope revenues from pay-per-view and other optional services will make up for the exodus by their coveted premium customers, who traditionally have been willing to pay $10 or more a month for a single movie channel in addition to the regular monthly charge of $10 to $25 for basic cable service.

Most cable companies, including those in Maryland, sell package deals that offer discounts to customers who sign up for more than one premium service.

"It definitely hurts," said Curt Pendleton, general manager of Comcast Cablevision, which provides cable service in Baltimore, Harford and Howard counties. "We're used to having certain numbers [of subscribers]. We're just hoping that those numbers migrate to other services, such as pay-per-view."

Comcast's system in Baltimore County -- the company's largest, with 160,000 customers -- has been hit hard by the loss of premium customers. Although Comcast has continued to in crease the number of basic subscribers, comparisons between the first quarters of 1991 and 1992 show an across-the-board decline in the number of customers subscribing to HBO, Showtime, Cinemax and Home Team Sports.

As of March 31 last year, for example, 52,000 cable customers in Baltimore County were subscribing to HBO. Twelve months later, there were 48,000.

During the same period, Home Team Sports and Cinemax lost 1,000 subscribers each and Showtime lost 2,000. Comcast's latest figures show Home Team Sports with 13,000 subscribers, Cinemax with 16,000 and Showtime with 23,000 subscribers.

The story is much the same in Howard and Anne Arundel counties, where cable operators are beefing up marketing efforts in an effort to hold on to premium customers.

"We're throwing a lot of dollars behind premium campaigns to keep our numbers steady," said Evelyn Ofong, marketing director for Jones Intercable of Anne Arundel County.

In an effort to stem the loss of premium subscribers, Jones recently added Home Team Sports and the Disney Channel to its new "super basic" service, which costs $19.45 a month.

United Artists, which provides cable service to 101,000 households in Baltimore, claims to be the lone bright spot in the Baltimore area.

Gary MacGregor, marketing manager for United, said the number of premium subscribers in the city has increased over the past year, bucking the national trend.

But he declined to provide numbers to back up that claim.

United's Encore service costs $7 a month, or $1.50 if purchased as part of a five-program package, much less than most premium services.

The average cost of most premium services, such as HBO and Home Team Sports, is $10 a month, according to the National Cable Television Association, a Washington-based group that represents the nation's cable operators.

The decline in premium subscribers has caused some concern for companies such as Home Box Office, which depend on revenue from subscriber growth to fuel long-range plans.

HBO lost 100,000 subscribers last year, a first for the original pay television service. HBO still has 18 million subscribers, but company officials say they are paying close attention.

"It's the kind of trend you don't like to see after 19 years of steady subscriber growth," said David Fiedler, director of affiliate operations for New York-based HBO, a division of Time-Warner that is celebrating its 20th anniversary this year.

In an effort to lure viewers back and fight inroads by video stores and pay-per-view, HBO is doing what it can to present itself as a good value. That includes offering more original programming, such as "Tales from the Crypt" and original movies.

HBO is also experimenting with "multiplexing," which gives viewers three channels for the price of one. Multiplexing is new to the industry and available in only a few markets, including Harford County and Salisbury.

"The days when people would buy premium services just for the Hollywood movies are behind us," Mr. Fiedler said.

Indeed, the days when the cable companies could dangle a new, expensive service in front of customers and expect customers to jump is probably over, a victim of tight economic times and increasingly knowledgeable customers who have come to recognize that they don't need to fork over an extra $10 a month just to watch a first-run movie, said Ned Zachar, a cable analyst with Duff & Phelps in Chicago.

"With 40 or more channels to choose from, most people can find something to watch. . . . They just aren't willing to pay a monthly fee for one channel anymore," Mr. Zachar said.

"The cable companies are trying a lot of different things to add value back into the equation."

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