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Study: MDU Subs Ripe for DBS Defection

Cable operators should start paying more attention to
multiple-dwelling unit subscribers, despite the added costs, or they risk losing them to
direct-broadcast satellite companies, according to researcher Steve Liebmann.

In a presentation at the recent DBS Summit, Liebmann noted
that MDU residents (also known as apartment, co-op or condo dwellers) represent about 25
percent of cable subscribers and a "very attractive and largely underserved market
for DBS."

What's more, Liebmann said, research that he did with
consultant Howard Horowitz for their annual "Digital/DBS Study" suggested that
targeting the 75 percent of MDU households with annual incomes of more than $25,000 can
yield penetration rates exceeding those for single-family households.

According to Liebmann's and Horowitz's survey of
cable-subscribing households that live in MDUs, more customers in apartments (15 percent)
said they would likely buy satellite dishes in the next six months than residents of
single-family homes (13 percent), after being informed of the features that are available
with DBS.

"The lesson is that it's in the cable
operator's interest to find ways to make MDUs work economically," Liebmann said,
"because they may find that a good portion of their customer base has defected."

Cable operators acknowledged that while MDUs represent an
economic challenge -- because of payments that have to be made to owners of buildings and
the effort involved in dealing with building managers -- competition from DBS has
increased the attention that MDUs are now getting.

Cable One has recently begun to hire specialists to work
with MDUs, said Jerry McKenna, vice president of strategic marketing for the MSO.

"We're starting programs to [give incentive to
building] managers to bring customers in quickly, because there's a fair amount of
turnover," McKenna said.

Cable One has also begun to treat renters as priority
customers, he added, by offering them incentives like free installation and previews of
pay services. "We want to make them feel more wanted," McKenna said, "and
expose them to a broad array of products."

Another MSO marketer said, "You have to pay more to
get in the door [for MDU subscribers], but we know that we have to make it work, because
we know that we could lose them."

Ironically, Liebmann's research found that while 23
percent of MDU subscribers rated their cable operator as "excellent," only 20
percent of single-family customers did the same.