Altice USA CEO Dexter Goei said the fourth largest cable operator in the country will take a hard look at programming costs, including replacing more expensive networks with cheaper channels if customers value them less.
Goei pointed to Suddenlink Communications, which Altice purchased in December for $9.1 billion. Suddenlink dropped the Viacom suite of channels almost two years ago, with “relatively minimal” subscriber impact on the company.
Suddenlink replaced many of the Viacom channels with less expensive fare like Comedy.TV and others.
Goei said what Altice USA is trying to do is “make sure we’re allocating capital appropriately relative to the customer experience and viewership of the channel.”
That includes evaluating and considering lower priced alternatives to some channels and paying high prices for those that are popular with viewers.
“Given that it’s such a large part of our cost structure and it continues to grow at a very rapid pace, where we think that there are alternatives for our customers, we will look at them or where we think there is great programming to be had and a price to be paid, we will do that for our customers.”
According to Altice, the U.S. cable businesses contributed about 31% of Altice’s total Q2 revenue and 41% of its total free cash flow. On an individual basis, the former Cablevision operations, now called Optimum, reported a revenue increase of 2% while improving basic video customer losses to 2,000 in the period. It was Optimum’s best video subscriber performance in four years.
On a conference call with analysts, Goei said that the seven-week long Verizon strike (Cablevision has the highest exposure to Verizon than any other operator) played a role, even without the work stoppage “it would have been a terrific quarter.”
At Suddenlink, revenue was up 5.7% and video losses improved to 23,000 in the period.
While it keeps its eye on programming costs, Altice said it is also saving money on salaries.
Goei said that about 120 former Cablevision workers submitted their resignations after its deal to purchase the company closed in June, including between 40 and 50 people in senior positions and the 10 most highly compensated executives. Losing those executives – which include members of the once-ruling Dolan family – will save the company about $50 million to $100 million on an annualized basis, Goei said.
That could help Altice’s plans to shed $900 million in costs from the company in the next four to five years. Altice founder Patrick Drahi has said in the past that he believed U.S. media executive were paid too much, while Goei noted that about 300 Cablevision executives were paid in excess of $300,000 per year.