Cablevision Vice Chair Talks Consolidation, "Cord Cutter" Packages
Gregg Seibert sees no local-market consolidation — recently touted by his CEO — in the near future, discusses the Charter-Time Warner Cable deal and why Cablevision isn't launching a nationwide streaming video service.
Cablevision Systems CEO James Dolan recently touted the benefits of possible consolidation of cable operators in New York, but vice chairman Gregg Seibert said Wednesday that was unlikely over the near term.
Speaking at the Bank of America Merrill Lynch Global Telecom and Media Conference in London, he reiterated his CEO's recent comments on his "desire to ultimately see the New York market come together in some manner," calling the consolidation of individual markets "one of the great opportunities" in the sector as it would help "rationalize" it further.
But Seibert added: "Perhaps there is some opportunity in the future for the cable industry to rationalize further in certain markets...That feels to me like it’s a ways away." While it is an "interesting opportunity" for the industry, "I don’t see it as a today or tomorrow opportunity," he said.
Asked about Charter Communications' deal for Time Warner Cable and whether Cablevision could be part of dealmaking, the vice chair said the company was focused on operating "our business as well as we can operate it," introducing new and innovative products, giving consumers what they want and maximizing long-term shareholder value.
He said consolidation can help there. "It is encouraging to see a new entrant coming into the New York market," he said about Charter's deal for TW Cable. "We have emphasized Wifi for a number of years." He added that the deal gives Cablevision "a degree of optimism that there will be more Wifi build-out" in the market and beyond, which he argued would be good for consumers and industry.
Asked if Cablevision could launch a nationwide Internet-based video service, Seibert said Cablevision has been refocusing on its New York home market, which he called "one of the most attractive if not the most attractive" in the U.S. He added that management feels that serves shareholders best as well. "Within that framework, we are a regional distributor...We don’t have national programming services. If you look at that business, it’s a different business than the one that we operate in." He concluded: "The concept of Cablevision starting a national OTT service is just not the direction that we are interested in going in."
Seibert on Wednesday also reiterated Cablevision management focus on serving changing subscriber needs. "The industry is very clearly in transition," with video services becoming "less important with every passing year," he said.
Is Cablevision giving up on the video product or bundle? "It’s anything but that," Seibert said. "The video market is evolving very rapidly...We’re focused on being able to give our customers the ability to consume video content in whatever manner makes sense for them." He said it was important in today's environment to "provide the customer with whatever they are looking for," from bare-bones products to full-service packages.
Cablevision has been caching Netflix, because "we wanted our customers to be able to get the best possible performance they can get from an over-the-top service that many people view as being a competitor to cable. We view it as being a complementary to our connectivity business."
He acknowledged that the Cablevision's "cord cutter" packages, which provide an Internet connection with a digital antenna, are "giving some of our programming friends heartburn." But he added: "Is that going to be our core product in the future? No."
Asked if Cablevision was focusing on growing its video subscribers again one day and expected to be able to do so, the vice chair said: "Whether or not you grow video subscribers is a function of a number of factors," adding that aggressively promoting and cutting prices would allow video subscriber growth. "That’s not our strategy." Instead, the company wants to build long-term customer relationships, serve consumers who want its services and provide the best service and increase average revenue per user.
Discussing the traditional pay TV bundle and triple-play offering, Seibert said Wednesday that it would "remain an important part of the product offering for an extended period of time." He predicted though there would be "significant" changes to consumer offers over the next 5-10 years. "We want to be part of that," he said.
Will there be a la carte services in five years? The vice chair said that was something Cablevision probably won’t determine. He said the company would continue to make OTT offers available. "I don't think you will see us go out and necessarily pioneer new programming," he added. "We’re a distributor, we're not a programmer ... It’s our desire to make sure that we distribute the product that our customers are looking for over the best network."
Asked about Luxembourg-based Altice's acquisition of U.S. cable operator Suddenlink, Seibert said Cablevision would be "watching closely" if it can improve margins at Suddenlink. "We certainly wish them well and welcome them to the U.S. cable business," he said.