Rutledge: Subs Maxed Out


Cablevision Systems
chief operating officer Tom Rutledge said
worries that subscribers can’t afford to pay
more for cable were the biggest factor in the
MSO’s carriage dispute with Fox Networks.

Cablevision and Fox last week continued
to disagree on compensation for Fox broadcast
and cable outlets, even as Federal Communications
Commission chairman Julius
Genachowski urged the parties to bury their
differences and reach a deal.

Citing a decline in the industry’s multichannel
subscribers in the most recent quarter,
Rutledge said during the closing general
session at the CTAM Summit last Wednesday
that Cablevision’s refusal to pay retransmission-
fee increases to News Corp.-owned
Fox was based on customer’s ability to pay
those increases.

The industry-wide decline in subscribers
is a direct result of the economy, Rutledge
said, while noting that Cablevision actually
managed to grow subscribers by taking market
share from competitors.

“It’s not cord-cutting — it’s people actually
unable to afford to stay in the homes,” Rutledge
said during a panel discussion. “The actual occupancy
rate in housing has declined.”

Citing an unemployment rate of 15%, including
the jobless and those who have quit
looking for work, “it is a bad economic situation,”
he said. “We don’t think it’s a time to be
raising rates on people who can’t afford it.”

Rutledge said the situation calls for government
intervention, in part because all basic
rates of cable operators are regulated by
the FCC.

The weak economy and contraction of
households came up again and again when
the panel discussed new services.

“I think that we have to be aware of the
poverty and what it means for growing this
industry,” Sanford Bernstein senior analyst
Craig Moffett said.

In a report released a two days after the
conference, Moff ett noted the anemic economy’s
affect on the poor. “After food, shelter,
and transportation each month, the bottom
40% of U.S. households had just $100
of disposable left for everything else,” Moffett
wrote. “For health care. For clothing. For
debt service. For cable. For phone.

“Leaving aside the societal implications
of our findings, the picture of an America
where 40% of households are essentially
bereft of discretionary spending power has
incredibly important implications for the
companies in our coverage,” Moffett said.