Pay-TV providers send mixed signals on pricing

“With velocity in existing home sales at the lowest levels since World War II, customers are not moving, and therefore are not changing pay-TV providers,” Moffett said. “Low housing velocity inevitably increases inertia, even in an environment of high unemployment and crumbling consumer balance sheets, making eye-catching promotions more necessary to offset lower gross additions. Faced with fewer purchase occasions, competitors are left to resort to more aggressive promotions to counteract the inertia of ‘staying put.’”

This inertia also increases the opportunity for selective pricing increases, Moffett added. More so than pricing, the mix of increasing adoption of digital, HDTV, digital video recorders and premium programming packages is what has driven recent ARPU gains and what will continue to drive ARPU throughout the recession, he said.

Bernstein Research forecasts video ARPU growth at a little more than zero at Comcast and other cable operators as they raise prices, but lose out from falling take rates for premium channels and low-paying customers acquired around the digital transition. For DirecTV, Bernstein is forecasting a 4% ARPU gain from its more affluent subscriber base. Overall, the research firm continues to value the pay-TV sector as among the best insulated within the consumer economy for 2009.