Study: Satellite companies better at selling to blacks, Hispanics than cable firms

By Linda Haugsted
MultiChannel News
(July 7, 2006) Direct-broadcast satellite companies continue to be more successful at selling their video services to African-American and Hispanic households than cable providers, according to two recently released studies focusing on ethnic markets.

“Focus: African-American,” a study from the Surveys Unlimited division of Larchmont, N.Y.-based Horowitz Associates, indicates that those households continue to be among cable’s best customers. But in the study, based on a survey of 500 African-American heads of households, results indicated that there is a high risk of churn in the sector.

These households have traditionally been big spenders on video services, paying an average of $58.17 per month for services, compared to the industry norm of $54 per month. In digital households, the sector spends $66.74 monthly on cable, compared to an industry average of $64.36, according to the study. Among current satellite subscribers, African-American households spend $63.70 a month, versus $56.73 spent by other urban satellite users.

In response to questioning, those heads of household indicated a higher intent to switch providers than in the past. That could mean an increase of penetration among African-American homes of 22% in the near future, compared to the current estimate of 16%. That would result in cannibalization of digital-cable penetration in those urban households, dropping the rate to 23% from its current level of 30%.

A clue to the potential switch may be found in the broadband use responses. More consumers interested in high-speed Internet connections indicated they were considering DSL service, a product which is heavily promoted in packages bundled with discounted DBS services. But there is room for growth for all providers: Internet penetration is estimated to grow from 45 % to 62% in African-American homes, while high-speed use should grow from the current 28% to 46%, based on “likely purchase” questions in the survey.

A study prospectus is available at http://horowitzassociates.com/faapro.pdf.

Hispanic households remain an under-served market, according to a different survey by the Total TV Audience Monitor (www.totaltvmonitor.com). The fall 2005 report, released this month, indicates that 26 million Hispanics watch TV in an average week, and 71% of that time is spent watching broadcast. By contrast, non-Hispanic males spend 58% of their time watching broadcast, and non-Hispanic women spend 62% of their time viewing that medium.

Hispanic adults are less likely to buy or use digital video recorders or video on demand, according to the survey. But they subscribe a little more to satellite television than non-Hispanics (25% penetration v. 24% in non-Hispanic households) and buy slightly more premium satellite-delivered services (32% v. 31%).


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As the American economy continues to move sluggishly, African-American households are curtailing their spending in many categories, including food, clothing and basic household items, while investing more in home repair, home entertainment and consumer electronics. Although they are trimming back, black consumers are still spending more than their white counterparts on most of these products.
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