New York -- Time Warner Cable has begun testing a lower-tier video package aimed at price-conscious customers, offering a host of popular channels - with the exception of ESPN - for between $29.95 and $39.99 per month.
The MSO will begin testing the service - called TV Essentials - in New York on Nov. 22, and in Northeastern Ohio on Dec. 15. The package, which includes broadcast channels and about 40 other cable channels, will be priced at $39.99 per month in New York and $29.95 in the Ohio markets for a promotional period of 12 months. The package is valued at about $49.99 per month. After evaluating the trials, Time Warner Cable will roll out the package more widely beginning next year.
The package will include broadcast networks NBC, ABC, CBS, Fox and PBS as well as popular cable channels like USA Network, TBS, Nickelodeon, CNN, MTV and AMC. Enhanced features like Start Over and Look Back will also be offered where available.
Not included in the tier are pricier networks like ESPN, although other Disney-owned networks like ESPN News and the Disney Channel will be available on the new tier.
During a panel discussion at the SNL Kagan Cable MSO Summit conference here Thursday, Time Warner Cable executive vice president and chief marketing officer Sam Howe said about 12% of Time Warner Cable's customer base are so-called "value shoppers" that would be the target of such a tier. He added that base is predominantly female and more concerned with local-oriented programming, etc.
Although he said TV Essentials is basically "margin neutral," Howe said there are ample opportunities to upsell these customers to higher tier packages once their economic situation improves.
"Value shoppers love TV," Howe said. "They become fertile people for higher level packages tiers."
Time Warner Cable chairman and CEO Glenn Britt has been talking about offering more economical packages for consumers hit hard by the recession for months. Earlier this month, in a conference call with analysts to discuss third quarter results, Britt hinted that a lower tier package would be forthcoming.
Analysts were surprised that Time Warner Cable was able to create a basic tier without ESPN, which usually insists on the broadest carriage in its programming agreements. But Howe said at the conference that the recently completed carriage agreement with Disney allowed for more flexibility.
In a research note, Sanford Bernstein cable and satellite analyst Craig Moffett, who moderated the panel on which Howe spoke, said the TV essentials package is a critical step in addressing the needs of lower-end video customers and represents an "extraordinary compromise between content owners and distributors."
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