Time Warner Cable CEO Touts Demand for Big Video Packages Despite Skinny Bundle Obsession

Courtesy of Time Warner Cable
Time Warner Cable CEO Rob Marcus

Rob Marcus says regulators' review of Charter's planned acquisition of the cable firm seems to continue on track and argues it may be “a little premature" to say that pay TV operators are gaining leverage over content companies.

Time Warner Cable chairman and CEO Rob Marcus said Tuesday that "skinny" bundles get a lot of pay TV industry attention and headlines, but haven't become a bigger part of the cable company's business.

“In spite of the fact that every analyst, every reporter is obsessing over this skinny bundle trend, the reality is our mix of video subs hasn’t really changed much over the last several years," he told the Deutsche Bank Media, Internet and Telecom Conference.

The company's highest-end pay TV tier, which offers 200-plus channels, accounted for "just under 80 percent of our base" at the end of 2015, Marcus said. The standard tier accounted for 11.5 percent, while the low-end bundle offer of around 20 channels, mostly broadcast networks and some others, accounted for 8.5 percent of the company's video subscriber base.

That final number "really hasn’t changed materially over the last several years," the exec said. "If anything, if you go back maybe five years … we were a little bit higher," around 10 percent.

“If anything, our video subscriber base seems to be shifting up," said Marcus. "That’s not by accident," he added, as the company has pushed triple-play service offers that include higher-tier packages. Plus, consumers feel that they are "really good values," he said. "For now, we are doing pretty well with our big video" packages.

Asked if pay TV operators are gaining leverage over network owners amid pay TV consolidation and over-the-top competition, Marcus said it was a "fresh" thought that people are even thinking that way. With programming cost growth still close to double digit percentages, he said it may be “a little premature to declare a fundamental shift in the negotiating leverage."

Marcus added: "That said, I do think there is reason to believe that things may change going forward.” For example, he said it could change how carriage negotiations go and bring more moderate programming cost growth given that users can now keep their pay TV service and simply add an OTT service during any carriage dispute.

Asked about the regulatory review of Charter Communications' planned acquisition of Time Warner Cable, Marcus said the FCC deal review "shot clock" is on Day 164 as of Tuesday, meaning it is set to run out on March 24. The Department of Justice review is likely to be concluded in synch with the FCC, he said. "Finally, after more than two years of non-stop regulatory review," management feels the company was in the home stretch, he concluded.

California is expected to become the final state to decide on the deal, with a preliminary decision expected on April 12 and a final one on May 12. Said Marcus: "My expectation is California is going to be the last thing to happen."