Retrans Talks Need Not Be Antagonistic, Britt Says
Time Warner Cable approaches upcoming retransmission consent talks with broadcasters and their networks with an eye toward partnerships, CEO Glenn Britt told investors Thursday. “You can look at this work negatively and say we have a static or shrinking pool of economics and we're all going to squabble about that and it’s a zero sum game … and quite frankly it’s what killed the music business.” Partnerships can be forged around new technologies and business opportunities, he said. “And there’s plenty of money for everybody if we behave that way.”
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So far, TWC has succeeded taking that approach with programmers, Britt said. The cable operator’s recent deal with Univision is a good example of that, he said. “For many years now, unlike some others, I have said we've always paid for retrans. It’s just a matter of how we've paid for it.”
TWC also is looking at new technology that could replace its set-top boxes in the next five or six years, Britt said. “We are beginning to work on an architecture that would essentially move the multiple set tops into potentially one device that is somewhere in the home,” he said. Rather than sending multiple signals to each set-top box in the home, as TWC does now, the company would send one signal to the new device, which would then split it up to be delivered to various sets, he said.
Some manufacturers are already putting that kind of technology into chips, Britt said. “In the longer run I think we're moving toward a more-efficient plant configuration and potentially less spending on set tops, but that’s going to evolve over the next five or six years.” For now, spending on cable boxes fell sharply in Q3 because it signed up few new subscribers, so it didn’t need to spend as much on boxes for them, Britt said. Costs for the boxes it did purchase have dropped as well, Chief Financial Officer Rob Marcus said. “We're continuing to make strides on cost per box.”
The bad economy is taking a toll on cable operators more than previous recessions have, Britt said. “This one is a little different for us in that it’s been so focused on housing,” he said. “It looks like the household vacancy rate is the highest that it’s been since 1966. I don’t think we've seen that in the previous cycles in the past 20 to 30 years.” In some regions, TWC is faring worse than others, Chief Operating Officer Landel Hobbs added.
The company is focused on keeping existing and adding higher-paying customers from rivals and won’t “chase” lower- paying customers just to pump up its subscriber rolls, Hobbs said. “You have to be very careful in this environment in that you want to hang onto your high value ARPU [average revenue per unit] customers -- and listen, all customers are important.” But the company doesn’t want to go after lower ARPU customers who “drive a tremendous amount of transaction costs,” he said.