Smit: Charter System Sales Could Help Retrans Talks

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Charter Communications CEO Neil Smit told an audience at an industry conference Wednesday that moves the St. Louis-based operator made last year to tighten up its footprint could have another unexpected benefit -- strengthening its position in retransmission-consent negotiations.

Charter sold about 390,000 subscribers in several nonstrategic geographic markets last year. The sales helped to consolidate the MSO’s footprint and reduced its total number of headends by about 45%.
At the Bear Stearns Media Conference in Palm Beach, Fla., Smit said Charter has multiyear retransmission agreements in place with the Big Four networks’ station groups (CBS, NBC, ABC and Fox), and it has a cordial relationship with the other smaller station groups in its footprint.

He added that Charter’s stance has been not to pay cash for retransmission consent because it believes broadcast licenses were granted “so the consumer could receive the signals for free. That value proposition should continue.”

And while other station owners have pushed hard for retransmission cash -- and received it -- Smit said Charter’s moves to clean up its footprint have increased the densities of its existing clusters, which could make it harder for station groups to play hardball, given that they would put greater portions of their ad revenue at stake.

“[The sales] really improved the density of our clusters, which I think brings negotiating strength to the conversation with broadcasters,” he added.

While there has been speculation that Charter would continue selling off systems -- including its larger Los Angeles and Fort Worth, Texas, properties -- to help pay down its massive $19 billion debt, Smit said that is not in the mix.

“We’re not really of the belief that because someone wants an asset, we feel pressured to move an asset,” he added. “We’re focused on driving the revenue and [cash-flow] growth of the business.”

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