Updated at 3:00 p.m. ET
Reacting to a weak economy that is forcing customers to cut back and rising program costs, Time Warner Cable plans to test market a new cable TV package that will cost less and offer fewer channels.
TWC chief marketing officer Sam Howe, speaking at a panel hosted by SNL Kagan Thursday, talked about the new TV Essentials package, which won't include some popular but expensive channels, such as ESPN, Fox News, TNT, Comedy Central, Food Network and TLC.
Beginning Monday, TV Essentials will be offered in New York City for $39.99 a month, below the $46.40 TWC charges for expanded basic. It will also be offered in Northeast Ohio beginning Dec. 15 for $29.99. Those prices are good for a 12 month promotional period..
The channel lineup represents most major genres and includes networks from all of the major programmers. But at least one key network from almost every programmer has been omitted to bring the cost down. TV Essentials subscribers also will be watching most of their live sports on broadcast channels.
The networks being offered are: A&E, AMC, Animal Planet, BET, Biography, Boomerang, Bravo, CNN, Cartoon , Centric, Cooking Channel, Discovery, Disney, ESPNews, FX, FitTV, G4, GAC, GSN, Gospel Music, HGTV, HLN, HSN, Hallmark, History, Jewelry TV, Lifetime, MTV, Military Channel, Nickelodeon, Nick Jr, QVC, Shop NBC, TBS, TV Guide, TV One, Teen Nick, USA and, VH1.
"The TV Essentials package is a critical step in addressing the needs of lower-end video subscribers, and represents an extraordinary compromise between content owners and distributors," Bernstein Research analyst Craig Moffett, who moderated the panel, wrote in a research note. "In agreeing to support this package at this price point, the media companies appear to be acknowledging the importance of lower-priced offerings to maintain relevance to lower-end customers."
Moffett also said that for distributors, the development is important because it is aimed at the possibility of cord-cutting by consumers.
"An enormous body of evidence suggests that cord-cutting remains primarily a low-end phenomenon, more typically a result of poverty than of Internet choice and convenience. That may not remain the case for long, but there can be no question that would-be on-line competitors are bolstered by the increasing disparity between video price and disposable income," Moffett said.
In addition to the channels, the TV Essentials package includes two standard definition digital set-top boxes, Music Choice, Time Warner Cable's StartOver and LookBack features, and a library of paid VOD content.
NOTE: This story has been updated to include new information from Time Warner Cable, including the precise list of networks being offered as part of Time Warner Essentials and the locations of the test markets.
Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.
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