Slump Leads Pay TV to Fight Frill Image
The major pay-television networks, already battered by the rise of the VCR and spiraling prices for basic cable service, are preparing for a tougher battle: surviving the recession.</br></br>Growth for the pay networks has come to a near standstill over the past two years, and now some major cable-system operators are reporting significant declines in pay subscriptions. While industry wisdom says basic cable subscriptions won't be hurt in a recession because Americans will stay at home and watch TV more, consumers may cut frills like pay channels.</br></br>"Clearly, in a down economic period, pay TV is a tougher proposition," says Robert Stengel, senior vice president at Boston-based Continental Cablevision Inc. He says the increase in pay-network disconnections at his company's cable systems has been significant, particularly in the Northeast.</br></br>According to figures compiled by Paul Kagan Associates, subscriptions in the pay-TV category were flat last year, with some services posting small year-to-year subscription declines. Time Warner Inc.'s powerful Home Box Office, which wowed operators with annual growth of a million units or more in the mid-1980s, reported subscriber increases of only a third of that in 1990. Walt Disney Co.'s Disney Channel, buoyed by its family appeal, was the only service to post a significant rise.</br></br>To stem the erosion, archrivals Home Box Office and Viacom International Inc.'s Showtime are mounting aggressive marketing attacks. Home Box Office, which operates both HBO and a sister service, Cinemax, has started defensive TV ads maintaining that now is the time to hang on or hook up. It's also increasing the funds it gives cable operators for local marketing. Showtime, which also operates a sister channel, the Movie Channel, has just begun a drive imploring cable operators to institute a rate structure that would make Showtime more affordable.