Charter CEO Speaks Out for Pay TV Subscriber Rebates for Canceled Sports Events

Charter CEO Tom Rutledge
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Charter CEO Tom Rutledge

"We would love to see our customers relieved if they can be” for sports events that don't take place," says Tom Rutledge.

Cable operator Charter Communications, in which John Malone's Liberty Broadband owns a big stake, would love to see financial relief for its subscribers for sports events that have been canceled amid the novel coronavirus pandemic. 

Charter chairman and CEO Tom Rutledge on the company's Friday first-quarter earnings conference call said that he and his team have talked "for years about the reality of programming costs and how sports drives" most of them. He highlighted that monthly video programming wholesale costs for pay TV giants are in the upper $60 range, with more than half of that coming from sports. "Sports is the major driver in the cost of content" and makes the whole service bundle expensive and difficult to sell, he said.

Could customers get some financial compensation for sports affected by the virus pandemic? "We would love to see our customers relieved if they can be” for sports events that don't take place, Rutledge said, but highlighted that the way the industry works makes it unclear how they would be rebated. "It's all bundled together and tied together contractually," he said. 

The Charter CEO said one key challenge is that many sports have not been officially canceled so far, but delayed, saying "we will see what happens" ultimately in terms of delayed sports events. He also argued that control over potential repayments lies elsewhere, saying that in the end it would come down to whether athletes are willing to give up some of their pay so rebates can be passed through to pay TV customers. "Someone has to give up their money and give it back to the consumer, and that has not happened yet," Rutledge said.

Some U.S. observers have suggested that pay TV firms reduce or temporarily pause the costs for sports while live sports are on ice, similar to how Comcast's European pay TV giant Sky has allowed U.K. subscribers to sports packages to pause those services until live sports return.

Rutledge later on the call reiterated past comments that the high cost is the main challenge for pay TV services, which have been affected by cord-cutting amid the rise of streaming video services.

Asked about the value of sports TV rights coming out of the pandemic, Rutledge said on the call: "Everybody misses sports, and it's obviously a really valuable product and is the glue that holds the [pay TV] bundle together." He concluded that the trend of sports rights prices won't see a major change after the pandemic unless there is a "complete collapse" of the sports business.