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NEW YORK – Charter Communications expects a return to video subscriber growth and continued programming cost increases, CEO Tom Rutledge reiterated at an investor conference organized by UBS on Monday. And he indirectly addressed continuing deal chatter in the industry, which has of late often included talk that Charter was looking to acquire Time Warner Cable.
Appearing in the final session of the day at the 41st Annual Global Media and Communications Conference, Rutledge said overlap and cost of programming synergies are among the opportunities behind consolidation. Operating well and thereby unlocking the value of properties is the “huge upside” he would also be interested in that is often overlooked, he added.
“Charter doesn’t need to do any deals to make itself a highly valuable business,” he said at one point though when discussing the topic of potential deals. “There is an opportunity to grow Charter for years to come” even without deals. Rutledge wasn’t specifically asked about latest reports that Charter, Comcast and Cox Communications were exploring possible bids for Time Warner Cable.
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He said interest rates are attractive though right now and allow companies to borrow large amounts of money cheaply.
Liberty Media chairman John Malone, whose company owns a 27 percent stake in Charter, has touted the financial and strategic benefits of cable consolidation. TW Cable has turned down two bids from Charter, according to a recent Wall Street Journal report.
Earlier in the conference day, TW Cable CEO designate Rob Marcus had said that his management team was “completely focused” on running the company “for the long haul.” But he added that he would not let personal ambition get in the way of a possible sale of the company if that was the best path for shareholders. “Whether or not Time Warner Cable will participate in M&A as a buyer or seller is 100 percent driven by what’s in the best interest of shareholders,” he said.
Rutledge on Monday was also asked how Charter can keep programming cost increases in check. “It’s a rough environment from a regulatory [viewpoint] if you are a distributor,” he said, discussing recurring retransmission consent and carriage disputes. “The trend lines don’t seem to be changing.”
He also said that the FCC so far hasn’t stepped in to play a role in retrans fights, although he feels the agency has the authority to do so. Rutledge added though that the FCC now has a new chairman, Tom Wheeler, meaning things could change.
Addressing his goal of returning Charter to video subscriber growth, he said that pricing, packaging and technological innovation would help drive the company there. He had first vowed to concentrate on getting Charter back to video subscriber growth in early 2012. On Monday, he didn’t provide timing guidance for the return to video sub growth.
Rutledge also again signaled openness to offering over-the-top broadband video services on Charter’s platforms. Netflix, for example, has struck deals with European cable operators to be offered via their set-top boxes.
He also said he was “not particularly interested” in raising Charter’s prices right now, but growing subscribers and market share. “I want them to use bandwidth,” he said, explaining why he doesn’t plan to launch usage-based broadband service pricing, which some have suggested.
E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai
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