SkyBOX: The $400 Dish

[Gregg Lengling]

by Evie Haskell evie@mediabiz.com

"Money breeds money," a friend of ours used to say. Never has that adage been more apparent than in second quarter results from our friends in the wired world.

For the most part, the past several months have brought cheer to the big (read richer) cable guys – the Comcasts, the Time Warners, the Coxes, respectively numbers 1, 2 and 4 on the cable MSO big cheese list. (Number 3, Charter, is dealing with its own special set of problems these days, so we'll leave them out of this equation.) At any rate, these wired heavyweights generally reported good basic cable results for the period ending June 30, 2003.

Not so for the smaller guys.Notably, recent results from Mediacom (No. 8 among MSOs) and Insight (No. 9) indicate a continuing, painful drift of customers away to DBS.

Some of the folks on Wall Street blame the difficulties facing the smaller cable companies on local-into-local incursions from DBS players. To be sure, that's a factor. But Comcast, Cox and Time Warner all have DBS local channels in many of their areas. So why are they apparently doing better?

We got a clue driving down the highway the other day. There on U.S. 6 a big, black billboard screaming these bright words, "Give Us Your Dish. Get $400."

Now dishes haven't cost $400 since the days of the early adopters. So who would offer such a sum? Comcast, of course, as it hurries to rebuild and strength its recently acquired AT&T Broadband systems. Being snoopy by nature, we called the local Comcast guys. Turns out they weren't ready to write us a check for $400 (there goes that new pair of skis) but they were willing to give us a $25 "discount" on their higher level video packages for 16 months. In return, all we had to do was hand them a recent bill from a satellite operator and a satellite receiver. Not quite as good as a new pair of skis, but not bad either. And for the company handing it out, that's one big chunk of money to add on to subscriber acquisition costs.

So is this working, as in our "money breeds money" adage? Consider this: The Comcast dollars-for-dishes program is limited to specific areas. Not surprisingly, those appear to be mainly the regions once run by AT&T Broadband which practically drove subscribers into the arms of dish heads. A recent Deutsche Bank report on Comcast notes that for the second quarter 2003, the systems acquired from AT&T GAINED 35,200 new subscribers. Meanwhile, the historical Comcast systems LOST 23,100 basic subscribers..

So there you have it. Money does breed money or, in this case, subscribers. The next question, of course, is how long Comcast will keep it up. And whether the cable offerings will be strong enough to keep those $400 subscribers after their 16 months are up.

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