New York -- A word of advice to those hawking new cable networks: Tell cable operators how you can help them to make money, not how they can make your life easier.
That was a key message Time Warner Cable senior vice president of programming Fred Dressler had for attendees at a Kagan Research conference here Thursday on start-up cable networks.
“The first visit is always with a network in hand, with a concept in hand, with a business plan in hand, and this is what you need from the cable operator, or whomever the distributor is, for you to be successful with your plan, as if -- and not to be overly arrogant about it -- as if we’re supposed to care,” Dressler told an audience filled with executives at start-up cable networks.
“What we care about is our customers and our business plan,” he added.
Comcast Corp. senior VP of programming investments Allan Singer told attendees they had little chance of distributing new linear networks on Comcast that didn’t include nonlinear components such as video-on-demand content.
He added that the MSO looking for additional ethnic programming to help it compete against satellite.
“I don’t think you’ll see us doing anything in the traditional linear space -- setting aside niches like local sports, local content, Hispanic and ethnic -- that doesn’t have a nonlinear component,” Singer said. “It doesn’t make sense, and I can’t sell it to [Dressler], much less my own company.”
Sanford C. Bernstein & Co. analyst Crag Moffett predicted that within the next eight to 12 months, major cable operators will begin duplicating analog channels on digital platforms in order to eventually reclaim digital bandwidth -- a process he called “digital simultrans.”
But Dressler pointed out that cable-programming contracts would make it difficult to move analog cable networks to digital.
Dressler also bemoaned the fact that just as expanded-basic-programming tiers have ballooned to about 75 channels, Time Warner’s digital-basic tier has also rapidly expanded to the point where it’s becoming difficult to compete with the more flexible and inexpensive programming tiers that competitors like EchoStar Communications Corp. are marketing to consumers.
“So we went from, when we launched digital, having anywhere from five to 10 channels on the tier to having 25, 30, 40 channels on digital and, once again, we’ve got this big, fat, expensive tier, and you can’t compete in the competitive world we’re in with that kind of model,” he added.
Time Warner will eventually respond by moving some networks out of basic tiers, Dressler said, citing sports networks as an example.
“What’s going to have to happen over time, I believe, is that there’s going to be some dislocation of networks,” he added.
When asked about high digital-cable churn rates, Dressler said options to reduce digital churn include dropping some networks from digital tiers and cutting the price, or possibly adding new content to the tiers at the same price.
“I think the consumer is telling us that they’re not getting enough value for what they’re paying. We have a couple of choices. One of them is to take away some of the networks and some of the cost and lower the price. Another is to find additional and better programming, but finding additional value in the digital proposition is where we’re focused,” he added.
Dressler also said Comcast is “light-years ahead” of Time Warner when it comes to offering customers VOD content. He said Time Warner is still trying to figure out the best model for VOD, which could be to charge customers extra fees.
“All of these we’re learning as we go along. None of these models is carved in stone,” Dressler said. “They’re our best guess.”
“We’re all just trying to figure out how to make this work,” he added. “If what [Comcast is] doing works, we’ll drop what we’re doing and jump on board, and vice versa.”