Cord-cutting has hit new heights. Cable giant Charter Communications has performed better than peers in this regard, but even its CFO Jessica Fischer acknowledged the challenges of the traditional pay TV bundle business on Wednesday.
“The biggest issue in video has been and continues to be a cost issue,” she told the J.P. Morgan 51st Annual Global Technology, Media and Communications Conference in a session that was webcast. “It relates to programmers wanting to pass through price increases, and the linear business shrinks, and they try to pass through additional price increases, and it’s sort of a vicious cycle.”
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She noted that Charter and other pay TV firms have traditionally always sold a broader package of products, including broadband, now the core service for many cable companies, and, more recently, wireless products. “But I think that the greater factor is the vicious cycle of video,” Fischer said. “And absent finding a way to sort of break that cycle, I think it’s difficult to not have losses of video customers. So we continue to advocate for consumers to try to get packages … that they want to buy that are slimmer in nature and therefore more cost-effective, and we’ll continue to do that.”
Emphasizing that the Charter team gets asked “a lot” why it has held up better in the video services business than rivals, the executive said that “some of that has been that we are migrating customers into bundles that are consistent with what they actually want, which includes lighter packages.”
For example, the Charter CFO mentioned that, “we have a Choice product where a customer can choose 15 channels from a … set of channels,” adding: “That’s a fairly successful product.” The executive concluded: “It doesn’t mean that’s the limit of what we’ll do. Obviously, as the market evolves, we continue to try to pull together packages that are valuable to consumers.”
Fischer also touched on Comcast’s Tuesday unveiling of a $20 a-month streaming video product, dubbed Now TV like its Sky streaming services, aimed at the low end of the U.S. market with packages of linear TV, FAST and subscription video-on-demand channels.
The Charter CFO noted that Comcast packaged this with its streamer Peacock, highlighting the opportunities for Xumo, a streaming joint venture between the two companies. Said Fischer: “When you think about what we’ll be able to do with something like Xumo, which is an integrated platform that will enable our customers to have sort of seamless access to our product as well as direct-to-consumer products, I think that there’s opportunity to do those sorts of things in a more interesting way than maybe than what we’ve done before.”
