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Charter Communications chairman and CEO Tom Rutledge and his team didn’t comment on their M&A priorities on the cable giant’s Thursday earnings conference call after CFO Christopher Winfrey said the company would continue to look for opportunistic and accretive deal opportunities.
When an analyst asked for further insight, adding that her firm assumed nothing was imminent and that Charter would not acquire a content company following AT&T’s $85.4 billion deal for Time Warner, Winfrey only said that if anything was “material and probable,” Charter would have to disclose that.
On Thursday’s call, Rutledge was asked about upcoming streaming services, particularly AT&T’s soon-to-launch DirecTV Now, which will offer more than 100 channels for $35 per month. One analyst asked if that was priced below the cost of content. “From what I’m seeing, the descriptions of the product set are consistent with the price,” Rutledge replied. “I don’t think they are below price. But I also don’t think they are full packages.”
What’s missing from DirecTV Now? “I don’t think all the broadcast signals are in it,” the Charter boss said, adding: “This doesn’t add up to the price, so I think it does have some [profit] margin.”
Asked about planned video services from Google and other digital companies, Rutledge said Charter takes all competition seriously, but is focusing on winning by offering the best services. “We have a great physical infrastructure that is under-penetrated,” he said, adding that “we will win” based on pricing, packaging and product mix and the like.
Asked if Charter would offer more skinny bundles itself, Rutledge said that the company has done so. But it hasn’t really “found that magic mixture” that addresses major customer needs, he said in reiterating past comments. “To the extent that content companies want to let us sell in smaller packages that have lower penetrations, we would be glad to take advantage of that,” he said.
But Rutledge highlighted that “the rate of customers that take full packages from us is increasing,” adding that “the mix is actually going heavier.”
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