With the nation's unemployment rate relentlessly above 9 percent and cable subscribers cutting the cord, Comcast Corp. has lowered the price of its entry-level 50-channel TV-only package to $29.95 a month in the Philadelphia area, a 25 percent drop from its previous $39.95 level.
Separately, the nation's No. 2 cable company, Time Warner Cable Inc., is experimenting in New York City and Ohio with lower prices targeted at economically distressed consumers.
Time Warner's TV Essentials $49.95 package has been discounted to $29.99 in the Cleveland area and $39.99 in New York "as extra evidence to customers that Time Warner Cable is trying to provide more price flexibility during challenging economic times," said company spokeswoman Maureen Huff.
Comcast spokeswoman Jennifer Khoury said the $29.95 price for its "digital economy" TV package simplified the cable company's pricing structure and allowed basic-cable subscribers to more easily upgrade. The digital-economy package does not include the popular ESPN channels, the most expensive in the cable-channel lineup.
The pricing moves at the nation's two largest cable companies come amid a troubling period for the cable industry, which lost 741,000 basic-video customers in the third quarter, the largest quarterly decline on record, according to research firm SNL Kagan.
Some industry experts blame over-the-top Internet providers such as Hulu or streaming services such as Netflix. But Comcast officials have pointed to economic factors and issues related to the over-the-air digital-TV conversion in 2009.
Neil Smit, the new president of Comcast's cable operations, said in a conference call with analysts that it appeared people were switching to over-the-air TV broadcasts, not the Internet, when they cut the cable cord.
The nation's TV broadcasters modernized over-the-air signals in 2009 with digital transmissions to sharpen TV picture quality and boost the number of over-the-air channels through multicasting.
Richard Schneider, the president of a seven-year-old company in St. Louis that manufactures over-the-air digital-TV antennas, said November and December were the two biggest months for sales at the privately held Antennas Direct Inc. The antennas cost between $50 and $150 and are sold through Costco, Best Buy, and other retailers.
Customers who canceled their pay-TV service were switching to traditional over-the-air TV and then supplementing those local channels with entertainment content on the Internet, Schneider said.
People thought antenna sales would decline after the broadcasters' transition to digital signals in 2009, Schneider said. "We just added a third factory line, and Best Buy is cleaning us out," he said, insisting, "Something is happening here."
Comcast's new price for the "digital economy" package was contained in statements mailed to Comcast customers in South Jersey. Those statements generally contained cable-rate increases of 1.5 percent to 4 percent in TV packages.
Prices for the bread-and-butter standard cable package will increase 4 percent in South Jersey to $65 a month. This package also is called the "digital starter." The top-of-the-line "digital preferred with 1 premium" package increased to $101.90 a month from $100.40.
Comcast spokesman Jeff Alexander said the typical Comcast subscriber in the Philadelphia area would see rates increase 2.4 percent in 2011. He noted that 60 percent of Comcast customers in the region would not see any price increase in February because they participate in promotional deals.
Before these new changes, Comcast offered the "economy digital" package in a bundled rate of $29.95 for TV and Internet, or TV and phone. It sold the TV-only service for $39.95. Now the TV-only service is the same as the bundled TV/Internet or TV/phone prices, Comcast's Khoury said.
The new slate of prices takes effect in February in the Philadelphia area, including South Jersey and Delaware. The company does not disclose how many customers take the digital-economy tier.
Dish Network, DirecTV, and AT&T's U-verse service, which is not available in the Philadelphia area, recently have announced pay-TV rate increases.