Los Angeles – Consolidation will help make the industry as a whole more competitive and will give cable operators a leg up on new technologies, according to Comcast chairman and CEO Brian Roberts and Charter Communications CEO Tom Rutledge at the Cable Show 2014 General Session Wednesday.
Comcast agreed on Feb. 13 to acquire Time Warner Cable, in a deal worth about $69 billion that will boost the combined company’s reach to just under 30% of the television households across the country. On Monday, Comcast agreed to divest about 4 million customers to Charter in a trio of deals worth about $20 billion. The deals, which include the outright sale of 1.4 million TWC subscribers to Charter, a swap between Comcast and Charter involving systems with 1.6 million customers and the spin-off of an additional 2.5 million customers into a separate publicly traded company managed by and 33% owned by Charter, will effectively double the Connecticut-based company’s owned and managed systems to about 8.2 million customers.
In a briefly tense moment at the session when moderator, CNBC on-air editor John Fortt, reminded Rutledge of his past criticism of the deal and asked why the Charter CEO believes it is a good one now. Rutledge quickly wiped an annoyed look off his face, telling the moderator that this deal is different.
“It’s a smaller deal from a Comcast perspective, from an organization of the industry perspective,” Rutledge said. “This is a much better outcome. It’s good for employees of the companies. Both [companies] are committed to serving communities, employees and customers in a dynamic, positive way. I spent 23 years at Time Warner Cable. I have enormous respect for the people that work there. All of the people in Time Warner Cable will end up in great companies. They will all end up in a better, more efficient industry that is committed to being successful.”
Roberts concentrated on the numbers. Once the deal is closed, Comcast is essentially adding about 7 million customers, and even with 28 million to 29 million subscribers, it will still be dwarfed by social media giant Facebook (with 1.2 billion global users) and Netflix with more than 60 million subscribers worldwide.
Roberts said the merger will give the industry a regional and hopefully national footprint that will enable it to compete more effectively.
That competitive edge could be seen in faster and faster Internet speeds and better authentication for TV Everywhere, outcomes that should also help drive gains at content companies.
Showtime Networks CEO Matt Blank said that his main goal is to stay a step ahead of technology, pointing to the content giant’s popular Showtine Anytime app.
“We just want to stay ahead of it,” Blank said. “Developing apps wasn’t our core competency; it became our core competency.”
Roberts added that wireless offerings, particularly WiFi service, is going to play a growing role in the business going forward.
Asked if in five years cable will need to buy a wireless carrier to be effective Roberts wouldn’t go that far, adding that cable operators will be involved in providing access to wireless devices either through another wireless company, WiFi or “some combination thereof.”
He likened the current climate to the early days of cable telephony, when some operators decided to offer circuit-switched service and some waited for VoIP
Arris CEO Bob Stanzione added that WiFi is a booming area for equipment makers and noted his company is looking at all aspects of the business. One area it is investigating: WiFi assurance, or equipment that can allow users to control their home experience, giving priority to certain devices on their networks.
Rutledge, who was a major proponent of WiFi service when he was chief operating officer of Cablevision Systems, said that no matter what form the technology takes in the future cable should be at the leading edge.
“We serve everyone, we’re not in the business of being the latest thing from a consumer electronics point of view,” Rutledge said. “The delivery of a WiFi system with a really powerful wireless network distinguishes us from our competitors.”