Now that the battle for cable television franchises in the San Gabriel Valley is all but over, cable companies are discovering a surprise: Not as many people want their service as they thought.
Falcon Communications, which has emerged from the franchise battles as the valley's largest cable operator, said only 36% of its potential customers are subscribing--far below 50%, the statewide average for cable systems and the percentage that Falcon has had as its goal.
Yet Falcon is doing better than some other cable companies in the area. Heritage Cablevision in South El Monte has signed up just 16% of its potential customers and TCI Pomona has captured only 26% of its market.
Cable operators offer a number of reasons for low subscribership: good over-the-air television reception, the abundance of local channels, competition from videotape recorders and rented movies, and the Southern California outdoor life style.
To attract subscribers, cable companies are putting a new emphasis on marketing, from direct mail to television commercials to telephone solicitations.
The San Gabriel Valley has turned out to be a surprisingly tough market, said John Kobara, director of operations for Pasadena-based Falcon Communications. Falcon, with nearly 50,000 subscribers locally, has more subscribers in the valley than all the other cable operators combined, but it would have another 17,000 customers if it had met its own projection that it could capture half the available homes.
Falcon has won 17 of the 20 franchises it sought, including franchises for Pasadena, Alhambra, San Gabriel, Temple City, Monterey Park, West Covina and Walnut. Kobara said the company has invested $100 million in plant and equipment and still expects to become profitable in a few years even though making money with cable has turned out to be harder than expected. One unpleasant surprise for cable operators, Kobara said, has been the number of people who try cable and find they either cannot afford it or don't need it. Kobara said in some communities more than 40% of the customers quit the service within the year. Half of those disconnecting are simply moving, Kobara said, but others have decided that cable isn't worth the cost. At Falcon, for example, a subscriber can spend from about $10 to $30 or more a month for the different levels of service.
Kobara said the high disconnect rate has forced cable companies to expand their marketing efforts, rethink their systems and look for new ways to attract subscribers.
In areas where over-the-air reception is poor, such as in the foothills, Kobara said, families will subscribe to cable because it is the only way to get decent televison reception. But in the San Gabriel Valley's flatlands, with a direct line to the television towers on Mt. Wilson, reception of some stations is sometimes better from rooftop antennas than through cable, Kobara said. Although the difference in picture quality is slight, some customers have quit cable because of it.
Reception by antenna is particularly good in the west San Gabriel Valley, Kobara said, and that may help explain why only 28% to 32% of the potential subscribers in Pasadena, Alhambra and Monterey Park have signed up for cable, compared to 60% in West Covina and 72% in Walnut.
What makes the San Gabriel Valley and the entire Los Angeles area different from most cable markets in the country, Kobara said, is the high number of local stations. In many other places, only four or five stations are available without cable, Kobara said, but local residents can pick up 18.
Kobara said cable is being hurt by the competition from videotape recorders because people regard renting video movies as a cheap alternative to cable. But eventually, he believes, owners of video recorders will want to hook up to cable because it will give them much more to tape.
The influx of Asian immigrants in Monterey Park and Alhambra has complicated things for Falcon, Kobara said. To appeal to Chinese-speaking customers, Falcon started the Jade channel, carrying programs from a Hong Kong television station on a subscription basis. The channel has attracted 1,500 subscribers, Kobara said, but the percentage of Asian families who are cable customers is still far below their representation in the general population. Neither Rich or Poor
Kobara said the people most likely to subscribe to cable are families that are neither poor or rich. The poor can't afford cable and the rich are too busy to watch, he said.
Robert Fisher, general manager of American Cablevision, a Time-Life company that serves San Marino and South Pasadena, said he has heard that affluent areas are a poor cable market, but cable is reaching one-third of the potential subscribers in San Marino. And once subscribers do sign up in San Marino, he said, they are less likely to disconnect than subscribers elsewhere.