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Life After Death of Co-Op

Charter Communications and Cox Communications will step up their “guerrilla” marketing and direct-mail efforts to make up for the estimated 28,000 leads handed to the two operators annually from the Los Angeles Cable Marketing Co-op.

Due to consolidation stemming from Time Warner Cable and Comcast's purchase of Adelphia Communications, the former now serves 75% of the greater Los Angeles market and 95% of the city of Los Angeles. Time Warner Cable has launched its own branding and acquisition campaigns. As a result, the Los Angeles co-op will cease operations in the market at the end of December.

That development means Cox and Charter, as minority players, will no longer be able to afford broadcast advertising in the Los Angeles market.

SATELLITE SENDUP

The co-op — in its current incarnation — was formed five and one-half years ago by Charter, Cox, Time Warner, Adelphia and Comcast. The operators pooled their money as a way to efficiently buy broadcast time to promote their joint interests. Viewers were directed to dial 800-800-CABLE, with the leads routed to the cable operator that served the prospective customer's neighborhood.

Originally, the message of the broadcast spots was to communicate that digital cable was a competitive choice to satellite services. With digital's arrival, satellite became the “old” technology, according to early ads that were created by agency Doner Advertising, which featured a commercial character dubbed “The Satellite Guy.” The character, an actor in a silver suit with a dish on his head, informed homeowners in the commercials of the limitations of their satellite hardware. The campaign was updated yearly, focusing on new products once they became available from each of the co-op members.

For instance, in a DVR iteration, the homeowners told Satellite Guy they wanted to watch last night's episode of The Sopranos.

“And I'd really like a pony, but that's not going to happen either,” the character retorted.

During the last five years, the co-op has spent $22 million on broadcast ads on behalf of its members, according to Skip Harris, executive director of the co-op.

Though the joint effort helped get the word out, it did not match the ad tonnage funded by the competition. Harris said information collected by the co-op demonstrated that during the last five-and-a-half years, DirecTV and EchoStar Communications' Dish Network spent a total of $80 million on broadcast in Los Angeles, while Verizon Communications and AT&T spent $300 million.

Despite this competition, the co-op ads attracted 715,000 leads to 800-800-CABLE number over the years. Harris did not have data on how many of those leads were converted to installations.

Colleen Langer, Cox's regional vice president of marketing, sales and production, said her company got about 2% of the leads generated by the co-op. She characterized them as the “icing on the cake” to her company's own sales efforts. For instance, the company's main sales and image effort currently focuses on spots featuring members of its own work force and highlights localism and Cox's customer-service reputation. That campaign will continue through the end of the year, she said.

Cox is not concerned about the noise in the market generated by the many Time Warner image and offer ads.

“It creates excitement about the product. These are products we've offered for years,” she said.

Charter officials also believe Time Warner's regional messages will have a “halo effect” for other operators by raising the profile of products offered via cable. Charter, with 20% of the Los Angeles market, will lose approximately 26,000 leads a year, according to Multichannel News calculations.

Sheila Gilmore, western division vice president, sales and marketing, said the company will step up direct marketing efforts to help make up for the loss of leads. Radio advertising remains an effective vehicle in the company's Riverside area, but broadcast in Los Angeles is not as efficient, she said.

Charter will look for more events it can sponsor, she added.

COOPERATING ELSEWHERE

Cox and Charter officials said they are in negotiations with Time Warner Cable to determine areas of cooperation. For instance, the companies hope to negotiate an agreement in which Time Warner Cable will transfer, in real time, any Cox or Charter customers who mistakenly call Time Warner seeking service.

The companies also cooperate on generating local content for their VOD platforms, noted Craig Watson, Charter's vice president of communications, Southern California.