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Don't Count Out Pay TV Just Yet


Many complain about cable, but people keep tuning in

One of the big questions looming over the cable industry is whether Americans will cancel their subscriptions. Some are cutting the cord to save money; more and more are watching shows online. In a recent survey by research firm GFK-Roper Consulting, 40% of respondents said they would consider canceling their pay-TV subscriptions.

The cable guys profess to be unfazed. Of course they would say that. But so far significant numbers of people aren't ditching pay TV. "People love to complain about their cable bill," says Craig Moffett, an analyst at Sanford C. Bernstein (AB). "But it's hard to find a better bargain in entertainment."

Online video remains a minnow next to TV. The average viewer watches 151 hours of TV a month vs. three hours of video online, according to Nielsen. And for now the range of offerings online is paltry compared with what is available on cable. Hulu, for example, doesn't offer recent-run movies, live sports, or many of the most popular shows on cable. That helps explain why 1.7 million people signed up for cable, satellite, and phone TV last year.

Subscribers also have a powerful incentive to keep their pay TV. It's called the triple play, wherein a customer pays about $29 a month each for basic cable, broadband, and phone. Cancel cable, and the price for the other two services can rise substantially.

If the cable companies don't make TV viewing more Weblike, they will lose out eventually. But with subscriptions still growing, the cable guys probably have time to get their act together.

Lowry is a senior writer for BusinessWeek in New York.

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