Oct. 27 (Bloomberg) -- Comcast Corp. and Time Warner Cable Inc. may rely more on Internet and phone services to sustain growth in coming quarters as viewers pressed by a slowing economy cut back on extras such as HBO.

While subscriber numbers probably held steady in the third quarter, the amount customers are willing to pay may drop, said Timothy Horan, an Oppenheimer & Co. analyst in New York. Monthly cable bills can often exceed $100, he said.

``Consumers will be trying to cut back on how much they spend per month,'' Horan said in an interview.

About 15 percent of Comcast's sales comes from additional channels, video-on-demand services and digital video recorders that cost customers more, according to an Oct. 15 report by analysts at Sanford C. Bernstein & Co.

Comcast, the largest cable provider with 24.6 million customers, reports earnings Oct. 29. Next week brings reports from No. 2 Time Warner Cable, with 13.3 million viewers, and Cablevision Systems Corp., which has 3.1 million subscribers.

Economists surveyed by Bloomberg in the first week of October anticipated the economy contracted at a 0.2 percent annual pace last quarter and will shrink at a 0.8 percent pace in the last three months of the year. Declines in consumer spending will tip the economy into a recession, the survey showed.

Shrinking local advertising, downgrades to cheaper service, increased competition and higher programming costs will slow growth at Comcast next year, Rich Greenfield, an analyst at Pali Capital LLC in New York, said in an Oct. 22 note.

`Very Concerned'

Comcast Chief Financial Officer Michael Angelakis told an investors' conference last month that he was ``very concerned'' about the ripple effect the credit crunch may have on consumers.

The company's stock has lost 25 percent this year. It rose 55 cents to $13.62 at 4 p.m. New York time in Nasdaq Stock Market trading. Cablevision added 26 cents to $14.28 on the New York Stock Exchange. Time Warner Cable slipped 29 cents to $18.01.

Representatives of pay networks and some analysts suggest that cable TV won't suffer from the same belt-tightening that's cutting earnings in other businesses.

The premium Showtime channel, which costs $8 to $10 a month, has been gaining viewers and could add 1 million subscribers this year, said spokesman Stuart Zakim. Larger rival HBO sells for about $14 a month, said spokesman Jeff Cusson.

``Historically, premium channels weather economic downturns quite well,'' HBO's Cusson said in an interview. The cable channel is a unit of New York-based Time Warner Inc.

Cheaper Alternatives

Cable providers normally don't lose subscribers during troubled times, said Laura Martin, a Los Angeles-based analyst for Soleil Securities Corp. The companies retain customers by offering cheaper alternatives including lower-priced channel packages and slower Internet access, she said in an interview.

``It's not all or nothing,'' she said.

Cable will also continue to win a bigger share of new subscribers for high-speed Internet service as it competes with Verizon Communications Inc. and AT&T Inc., said Goldman Sachs Group Inc. analyst Ingrid Chung.

High-speed Internet was 21 percent of Comcast's revenue last year, compared with 20 percent the year before. Phone service jumped to 5.7 percent from 3.7 percent in the same period, according to data compiled by Bloomberg.

After years of roughly even competition with its telephone competitors, cable took 78 percent of new high-speed Internet customers in the second quarter of 2008, Chung said. She said that proportion may decrease to 68 percent, in part due to vigorous promotions by AT&T and Verizon, the two biggest U.S. phone carriers.

`Vast Majority'

``Cable's going to continue to get the vast majority of share'' because it offers higher connection speeds in most places, Chung said. The phone companies' fast fiber-optic Internet products reach only about 10 percent of homes served by cable, she said.

Cable could benefit as AT&T and Verizon continue to lose landline phone customers -- as many as 2 million in the third quarter, said Thomas Eagan, senior media analyst at Stewart Collins LLC in New York, said in an interview.

``What happens to those lines?'' Eagan said. ``Does it go to cable, or does it just become wireless?''

In an Oct. 3 note, Eagan estimated Comcast may add 688,000 telephone lines, 4 percent more than the same quarter last year.

Comcast may report adjusted earnings of 22 cents a share, compared with 18 cents a year earlier, according to the average of 21 estimates compiled by Bloomberg.

Horan expects Comcast shares to trail the market amid lower demand and increased competition from AT&T and Verizon. He downgraded the stock to ``underperform'' in a Sept. 29 note.

New York-based Time Warner Cable, which is preparing to split from its parent Time Warner Inc., may report earnings of 29 cents, up from 27 cents last year, according to the average of 20 estimates. According to the average of 10 estimates, Bethpage, New York's Cablevision may report earnings of 11 cents a share, compared with a loss of 6 cents a year earlier.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

Last Updated: October 27, 2008 16:14 EDT