TWC, Charter Chiefs Are Focused on Fundamentals

Carrying On, With Or Without A Merger

NEW YORK — While merger speculation and consolidation chatter continues to swirl around them, Time Warner Cable chief operating officer Rob Marcus and Charter Communications CEO Tom Rutledge want to assure investors their companies are prepared to improve separately, if not together.

TWC’s Marcus, set to take over for retiring chairman and CEO Glenn Britt next month, was the first out of the gate, kicking off the cable operator portion of the UBS Global Media & Communications conference Dec. 9 here by downplaying merger talk.

Marcus reiterated TWC’s commitment to increasing shareholder value, adding that management is “completely focused on running Time Warner Cable for the long haul.” He pointed to a recent hire to back that assertion up.


Aside from the pressure of merger speculation — Charter reportedly began making overtures to TWC in June and is said to have lined up at least $25 billion in bank financing for a bid — Time Warner Cable has been plagued with poor operating results. In the third quarter, largely because of a month-long retransmission- consent dispute with CBS, the cable operator shed 306,000 residential video subscribers in the period. It was one of TWC’s worst quarters ever.

Since releasing those results, TWC has hired former Insight Communications chief operating officer Dinni Jain to assume those duties with TWC in January. Jain, a 20- year cable veteran, has a reputation for turning cable systems around. When he was at Insight, the small-market MSO had five straight years of video-customer growth. He recently signed a three-year employment deal with the TWC that will bring him at least $7.5 million annually in total compensation.

“The guy knows how to run cable systems,” Marcus said of Jain at the UBS conference.

Improving TWC’s operations will rely on bettering network reliability, improving packaging and pricing for its products and improving customer service, Marcus said. All three initiatives are underway, he said.

Marcus had previously talked about the company’s all-digital initiatives and plans to aggressively market high-speed Internet service to digital subscriber line customers. Last week, he also unveiled plans to significantly increase TWC’s video-on- demand offerings, eventually increasing the number of programming hours from about 5,000 hours to roughly 75,000.

TWC also is accelerating deployment of its first generation user interface, currently in about 1.4 million homes, Marcus added.

Its next generation UI, which will require new set-top boxes featuring a six-tuner gateway with 1 terabyte of storage (enough for 150 hours of HD video) that can feed content over the home network to a new type of Internet-protocol set-top client, is set for rollout in 2014.

Rutledge also plans to drive video growth with better technology, products and service. Later at the UBS conference he said the hope is that Charter will eventually be able to reverse the trend of video-customer losses. Charter is already growing video subscribers in markets where it has upgraded its plant to all-digital, he said.

Rutledge said the Charter strategy is simple — offer a high-quality product and service so that when a customer must pay more after a promotional period ends, they believe it is worth it. “Cheap and not very good don’t have any step-up power,” Rutledge said.


Charter is concentrating on some of the same aspects of the business as TWC. It’s focusing on improving customer service, which Rutledge believes is the lynchpin, as well as plant upgrades and new packaging and pricing.

On the guide issue, however Charter is taking a different tack , focusing on a product that can be used in existing boxes. And the company has avoided offering lower cost high-speed data packages — its lowest tier is now 30 Megabits per second — in the hopes that customers will see the value in the product as they are able to do more things with it.

“Charter’s biggest opportunity is to grow its market share,” Rutledge said. “I am not particularly interested in raising prices; I’m interested in growing our business.”