Why Cable Will Survive the Meltdown

Cable looks like a decent place to park your money in the event of a catastrophic market meltdown. The logic is this: People like TV. They don't want to give it up even if the economy is going to hell in a handbasket. Actually, they may be less willing to sacrifice it in a recession, according to some Wall Street analysts. And even if cable operators won't grow gangbusters, they may not bleed subscribers -- unlike other businesses. "Generally speaking, incumbent cable providers are better protected [from the economy] than other businesses for a couple reasons. The only competitive pressures they have are coming from Verizon and AT&T, and they don't have the scale to pose a serious threat yet," says Chris King, an analyst with Stifel Nicolaus. "And as Americans, we would rather cut off our arms than cut off our TV service." In a major market downturn, there aren't many sectors that will escape unscathed. And there's some expectation that if people are forced to trim spending, they will give up premium cable TV services such as HBO. But generally speaking, cable providers have proven more resilient to the market downturn than telecom competitors. (Both AT&T and Verizon posted dismal broadband growth last quarter, before this little financial crisis really took hold of the market.)