Charter CEO Says Programming Costs Will "Moderate" Amid Digital Disruption

Tom Rutledge-Getty-H 2016
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"I don't see the whole world imploding from the programming perspective," Tom Rutledge told an investors conference.

Tom Rutledge, head of cable operator Charter Communications, told investors Monday he doesn't see programming costs falling anytime soon.

But Rutledge did predict fiscal discipline industry-wide tempering series production costs as they skyrocket in an era of peak TV. "I don't see the whole world imploding from the programming perspective," the Charter CEO and chairman told the UBS Global Media and Communications Conference in New York during a session that was webcast.

Rutledge said high programming costs remain necessary to generate new customers, but could be constrained. "They'll moderate a bit, but I don't think you get a whole new paradigm," he added. Charter spends around $11 billion a year on content.

Charter, in which John Malone's Liberty Broadband owns a big stake, isn't eyeing acquisitions of content players to moderate its programming costs. Instead, Rutledge said his company would continue to focus on providing connectivity and pay TV services, without the need to own a content company.

And Charter has done some content development deals, specifically with AMC and Viacom, where it has an exclusive initial window in the U.S. to the co-produced content for use on its own platform. Charter is also getting into original content development.

Asked about whether Charter can turn around recent video subscriber losses, Rutledge said he expected his company to take share from telecom, satellite providers and streaming services as the pay-TV pie shrinks. "We still think the competitive nature of our product, relative to other video services, means we can grow our piece of it, given where satellite and over-the-top stands," the exec told investors.

The cable firm lost 100,000 net residential pay TV subscribers in its recent first quarter, compared with a gain of 24,000 in the year-ago period on a pro forma basis. Analysts had on average forecast a drop of around 25,000.

Rutledge also discussed FCC chairman Ajit Pai's proposal to dismantle net neutrality rules, projecting no new revenue streams for his company from such legislation.

The FCC last month proposed removing existing rules that prohibit internet service providers from blocking, slowing down or charging varied prices to access different internet content. "We've never had a business plan that included pay prioritization, throttling or blocking of any kind," the CEO argued.

But Rutledge voiced support for "light-touch regulation administration" of the internet by the FCC. And he welcomed ending the Title II regulation of internet service providers as common carriers to remove uncertainty around future investment and innovation in new products.