New York — Time Warner Cable chief operating officer Rob Marcus said the MSO could boost speeds of its high-speed Internet offerings in Kansas City to compete with Google, but so far hasn’t had to.
Google launched its Google TV service in parts of Kansas City in September to much fanfare, offering data speeds of as much as 1 gigabit per second to select consumers in the market.
At the B&C/Multichannel News OnScreen Summit here Thursday, Marcus said Google’s offering only affects about 100,000 Time Warner Cable video customers and 100,000 high-speed Internet subscribers in the area. He added that Kansas City already is a competitive market – there are at least five other companies competing for customers in the area. And he questioned the need for a 1 Gbps service.
“It will be interesting to find out whether there are applications that will take advantage of a 1 Gbps service,” Marcus said. “If there is, we will provide it. Our infrastructure has the ability to provide much faster speeds today. We’re prepared to compete head to head with Google.”
Switching to programming costs, Marcus reiterated comments earlier this week from Time Warner chairman and CEO Glenn Britt concerning high programming costs. Britt said at the UBS Global Media and Communications conference Monday that TWC could drop some networks that do not perform commensurate to their price.
Marcus said that an ecosystem where the cost of programming is rising at twice the rate a cable company can charge its customers is not sustainable.
“Something has got to give,” Marcus said. “We either lower the cost through a change in the negotiating process, or we pass through even higher costs to customers. That second choice is a challenging one."
Time Warner Cable has been criticized for being part of the programming costs problem through its Los Angeles regional sports network – Time Warner Cable SportsNet – that carries Los Angeles Lakers NBA contests as well as other content. TWC has said in the past that creating the network – spurred from its estimated $3 billion purchase of Lakers’ programming rights for 20 years – was a defensive move.
Marcus said at the Summit that the SportsNet deal was largely about managing the company’s costs.
Marcus said the alternative of allowing a third party to buy the rights and then charge TWC a potentially hefty affiliate fee was unacceptable.
“We had a unique opportunity to go to the Lakers and manage our costs more effectively,” Marcus said. “If the revenue we can get from third party affiliates, plus advertising inventory, if that number when subtracted from the costs of the network looks better, then that is a good deal for us.”
Marcus said that TWC would evaluate whether to expand its sports network presence in other areas on a case-by-case basis. But he noted tha most sports poragmming rights rae locked up with other parties for the foreseeable future. And any deal TWC would do would have to be in an area where it has a substantial cable presence and be for a marquee name.
“In L.A., there is no bigger brand than the Lakers,” Marcus said.
On a more somber note, Marcus said that the impact from Superstorm Sandy on its east coast operations was minimal – 95% of the customers affected by the storm in its footprint were back in service within two weeks after the storm.
He praised TWC employees for their efforts.
“Crises like Sandy really bring out a company’s true colors,” Marcus said. “I thought our employees were spectacular.”