Liberty Global CEO: Netflix's Reed Hastings Has "Good Reason to Be Scared in Our Markets"
"We got OTT on the run in Europe," says Mike Fries in touting the company's TV Everywhere offers and improving subscriber momentum.
John Malone's international cable operator Liberty Global reported a lower third-quarter operating profit, but touted improving subscriber momentum at the end of the week. And CEO Mike Fries on a conference call said Netflix CEO Reed Hastings was right when he recently said that he was most afraid of TV Everywhere services, saying that Liberty Global in Europe has been replicating the experience of online video services with much more content.
"In our world, connectivity to customer households is a golden ticket, whatever services they take. And in the third quarter, we had positive cord connections on a consolidated basis, adding new customers in half of our markets and remaining flat or down in the remainder," Fries said on the earnings conference call on Friday in discussing his views on cord cutting in the company's markets. “Interestingly, Reed Hastings said earlier this week … that he has always been most scared of TV Everywhere."
Highlighting Liberty Global's expanding TV Everywhere offers in Europe, Fries said: "I think his words were ‘you get all this incredible content that the ecosystem provides on-demand, at no extra cost.’ And while Halloween was a week ago, Reed’s got a good reason to be scared in our markets.” He later added: “I think Reed was right ... If you look at what we have done in Europe, we have been able to create essentially look-alike OTT products, hard-bundle them into our traditional video platforms, and more importantly our innovative cloud-based video platforms, and provide those to customers essentially at no additional cost.”
Fries suggested that "we got OTT on the run in Europe" with major content offers for "skinny" prices. "One of the things that gives us confidence in OTT generally as we look at is as a competitive factor is our ability to essentially duplicate the experience and have 10 times the amount of content," he added. "How about if I say to you you get the same experience as Netflix or Amazon, pick your provider, but oh, by the way, you don't have to give up on your broadcast network, you don't have to give up on free-to-air, which is 80 percent of your programming viewing anyway, you don't have to give up on sports?"
In the company's Latin American markets, OTT offers are only starting to become available, Fries said.
"We've always been most scared of TV Everywhere as the fundamental threat," Hastings said during a New York appearance, Re/code reported. "That is, you get all of this incredible content that the ecosystem presents, now on demand, for your same $80 a month. And yet the inability of that ecosystem to execute on that, for a variety of reasons, has been troubling.”
Fries touted his company’s IP-capable, next-generation video and TV Everywhere platform Horizon TV and its Horizon Go mobile service.
Liberty Global reported record customer growth in the U.K. of 42,000 in the latest quarter and added 14,000 subscribers in Germany. The company ended September with a total subscriber base of 25.8 million, adding a total of 320,000 subscribers in the third quarter. That compared with 344,000 in the year-ago period and 239,000 in the second quarter.
"Subscriber growth is back on track with 320,000 revenue generating unit additions in the third quarter, including 220,000 new broadband subscribers," said Fries.
Video subscriber losses of 64,000 in the third quarter were bigger than the 49,000 loss in the year-ago period, but Fries lauded the improvement since a loss of 159,000 video subs in the first quarter. The latest quarter had the lowest quarterly net attrition in 2015. The company has seen improvement across Europe, Fries said.
On the call, he touted the accelerating sub momentum and said "I feel better and better about our competitive position every quarter."
Quarterly operating profit reached $545.5 million, down from $703.7 million in the year-ago period. Operating earnings exclude stock-based compensation and other items. The company didn't report net income. Revenue increased 2 percent over the year-ago period to $4.29 billion, helped by the firm's Ziggo acquisition in the Netherlands.
Liberty Global recently confirmed that it was in talks about a possible acquisition of London-based Cable & Wireless Telecommunications, which offers telecom and cable services in the Caribbean and Panama.