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Password sharing, which streaming giant Netflix is looking to crack down on, is hurting the value of content across the media industry, Tom Rutledge, chairman and CEO of cable operator Charter Communications, said on Friday.
“We knew it is a problem,” the executive said on the company’s first-quarter earnings conference call. “It is not just a problem for the company that is not controlling their passwords, but it is a problem for everybody in the industry, because all that content that is used without anybody paying for it affects the supply and demand of all content.” He added that, as a result, this “diminishes the value of content for everybody, which is the point we have been trying to make for years.”
Rutledge made the comments after Charter, in which John Malone’s Liberty Broadband owns a big stake, reported its first-quarter results.
It lost 112,000 pay TV subscribers in its latest quarter, fewer than in the year-ago period, when its user base had dropped by 138,000. Asked on Friday’s call why Charter seems to be outperforming its peers in terms of video subscribers, Rutledge said: “Why we are somewhat of an outlier – you know, we try hard, for one thing. And we try to [add] value, where we can, for the consumer.” He added: “There is still opportunity in video. And one of the things we have had success with is the creation of additional packaging and the mix of video products that we actually sell to consumers.”
Concluded the Charter CEO: “It has been difficult, because of the way historically video has been packaged in this very fat, expensive bundle that is driven by sports rights costs.” But the firm has “been able to get some of the content out of that ecosystem and put it into tiers, and we are successfully selling them.”
Charter’s broadband user growth slowed as it added 185,000 customers in the first quarter, down from 355,000 in the year-ago period. Cable operators’ stocks have been hit hard in recent months amid slower broadband user growth.
As of the end of March, it had nearly 30.3 million total broadband customers and more than 15.7 million total video subscribers.
Charter also added 373,000 mobile phone lines in the first quarter, up from 300,000 additions in the year-ago period. It ended March with more than 3.9 million total mobile lines.
“We remain focused on our primary goal of driving connected customer and mobile broadband relationship growth,” said Rutledge in the company’s earnings report. “We continue to grow our business by offering superior converged connectivity products. And our new joint venture with Comcast will allow us to provide a next-generation streaming platform that offers new and differentiated direct-to-consumer products to meet demand in a fast-changing video environment.”
The two cable giants on Wednesday unveiled a 50:50 joint venture “to develop and offer a next-generation streaming platform on a variety of branded 4K streaming devices and smart TVs.”
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