Matt Daneman

The acceleration of cord-cutting and cord-nevering is due more to costs than virtual MVPD growth, Charter Communications CEO Tom Rutledge said Wednesday at a MoffettNathanson event. He said subscriber losses over the past five years are at the margins, with the bulk of customers sticking with pay-TV packages. Programmers increasingly are interested in "rekindl[ing] an affiliation" instead of just a transactional relationship, with Charter helping them sell their products, Rutledge said. He said in coming years, the cost trajectory for content "is marginally going to change to our benefit, but not much. On the edges, there's a lot of pressure on the price for content companies."

Satellite broadband operators and the Competitive Carriers Association continue to joust over a satellite push for reconsideration of spectrum frontiers earth station deployment restrictions in the 27.5-28.35 GHz band. CCA objections come from "a fundamental misunderstanding as to the nature of satellite earth station deployment in this band" and don't recognize how extensively satellite is using the 28 GHz band already to provide broadband service, as well as the ability of satellite and terrestrial wireless to coexist, the satellite operators said in a filing Friday in docket 14-177. That satellite use of the band would be only "at discrete and identifiable locations, not ubiquitous deployment at customers’ premises" should satisfy many CCA concerns, the operators said. Boeing, EchoStar, Inmarsat, Intelsat, O3b, SES and OneWeb said the limited deployment of local multipoint distribution service, with 58 percent of the LMDS license areas not being issued licenses, particularly in rural areas, doesn't back up CCA arguments competitive carriers are using the spectrum in rural and regional service footprints. The satellite broadband proposals "will devalue and interfere with rural broadband providers’ mobile service to consumers in hard to serve parts of the country," CCA emailed us. It said issues like the unreliability of satellite service due to atmospheric conditions need to be considered "before granting more rights to satellite operators that could substantially interfere with more reliable terrestrial-based services. The FCC must consider the interference potential to reliable services before encumbering operators that have relied upon FCC rules to build out networks. This is sort of like changing the ‘rules of the game’ during halftime; it is not a good idea.”

Ongoing Electronic Comment Filing System woes at the FCC bothered all industry lawyers we queried, with many filings still unavailable and at times ECFS not working, as it has at times throughout the week (see 1705080042 and 1705100062).

The skinny bundle in the U.S. "is a fiction" for now, though an $8-$12 monthly package will be offered at some point, akin to what's available in other markets internationally, Discovery Communications CEO David Zaslav said in an analyst call Tuesday. So-called skinny bundle offerings in the U.S., with prices closer to $40 monthly, are "overstuffed turkeys." He said subscription VOD offerings like Netflix and Amazon Prime are effective, but "we as an industry need to complement that with a quality offering ... that's a true skinny bundle in the spirit of what's working around the world, and I think that'll happen." Discovery said Q1 revenue was $1.6 billion, up 3 percent due to gains in global distribution sales and progress in expanding digital and direct-to-consumer businesses. Zaslav said since the start of the year, the company has expanded its Amazon SVOD channels partnership and Eurosport Player streaming service and entered into a number of new digital partnerships, including creation of a streaming over-the-top service in Europe.

Comcast and Charter Communications' testing some wireless collaboration is likely unwelcome news in the wireless industry, experts told us. The team-up could open the door to potentially a fifth facilities-based wireless carrier joining the market -- either cable ISPs collectively, or by providing wholesale service to a smaller wireless operator, said technology consultant Ira Brodsky of Datacomm Research. In a note to investors, New Street Research analyst Jonathan Chaplin said, "A new entrant with deep pockets and ... a near national fiber footprint is obviously not good for wireless carriers in an already competitive market."

Financially, Philippe Dauman had a good 2016, with Viacom's former CEO topping the ranks of pay-TV executives in salary and other non-equity compensation, according to our analysis of 2016 proxy statements of publicly traded companies in the pay-TV universe. Benefiting Dauman was a $58 million separation payment he received in August when he left (see 1608220029). That came atop his $3.6 million salary and $9.7 million cash bonus under Viacom's executive short-term incentive plan. He also received equity in the form of Viacom stock and options that the programmer valued at more than $21 million. The company didn't comment. In our analysis, we looked at compensation as two separate silos -- salary and other non-equity items; and stock and stock options. We used dollar value estimates of the equity awards as reported by the companies, and not estimates of future values.

Viacom is in talks about creation of a skinny bundle package of content, and such offerings from programmers "will be a catalyst for more," CEO Bob Bakish said during an analyst call Thursday. "Everyone acknowledges there's a marketplace opportunity there." While licensing content to subscription VOD offerings, one big Viacom goal is ensuring it's not undercutting itself by creating inexpensive alternatives for consumers to access its content, he said. Pointing to Hulu carrying some Nickelodeon content, he said while Viacom builds out its own consumer products business, it makes sense to have some content available across multiple platforms. Bakish said the uneven subscriber results being reported by different MVPDs reflects differences in execution, and the industry overall needs to put more focus on the product and marketing. He said Charter Communications is retiering some of its channels for new subscribers -- an issue still the focus of talks between the two. Viacom said Q1 revenue was up 8 percent, to $3.26 billion, driven largely by filmed entertainment and more affiliate revenue. The CEO said as part of Viacom's announced turnaround plan (see 1702090029), Paramount has a new leadership team in place and MTV is installing a new team and pivoting to a new programming pipeline with a heavier focus on unscripted content. The programmer's stock closed down 7.7 percent to $37.85.

While pricing is generally driving down MVPD subscriber numbers, Charter Communications has room to boost subscribership largely by taking market share from direct broadcast satellite, CEO Tom Rutledge said in an analyst call Tuesday. He said MVPD subscriber losses trend won't change anytime soon, but it also isn't accelerating. Charter said in a news release the number of residential video customers dropped by 100,000 in Q1, largely due to churn from legacy Time Warner Cable customers, ending the quarter with 16.7 million customers. During the quarter, it said it added 428,000 residential internet customers, putting its subscriber base at 21.8 million, and 37,000 residential voice customers, giving it 10.4 million. Wells Fargo analyst Marci Ryvicker wrote investors that the subscriber numbers from churn off of lower-value products are apparently hiding customers shifting to higher-end packages. She said despite Charter assertions that streaming bundles shouldn't pose a competitive threat, "we'll believe it when we see it." MoffettNathanson analyst Craig Moffett wrote that the subscriber numbers confirm that cord-cutting is accelerating across MVPDs. Rutledge said Charter has now launched new pricing and service packages across all its legacy TWC and Bright House Networks territories -- with Charter having bought the two in 2016 -- except for Hawaii, with the pricing and packages launching there soon. He said minimum broadband speeds are 60 Mbps or 100 Mbps across Charter's footprint, depending on the market, and that Charter is about to restart its all-digital conversion across TWC and BHN markets that aren't all digital yet, with the work to last through early 2019. Rutledge said Charter is testing "5G-like services" on various spectrum bands in a variety of different markets. Asked about Charter not pursing 600 MHz incentive auction spectrum, unlike Comcast, Rutledge said Charter's mobile virtual network operator agreement with Verizon is sufficient for a planned wireless offering launch in 2018, and Charter doesn't see any need now for that spectrum, though "opportunities will be available to get it." Pointing to Charter integrating Netflix into its user interface, Rutledge said the company is in similar talks with YouTube.

Dish Network has multiple options for how to build out its planned IoT network expected to be operational by March 2020 (see 1703080026) and should make decisions later this year on frequencies being used, CEO Charlie Ergen said in an analyst call Monday. The planning process will then follow, with construction to start in late 2018, he said.

Comcast continues to look into offering its Xfinity Mobile service outside its footprint, but the mobile service won't go beyond the footprint anytime soon, CEO Brian Roberts said. The company hasn't found a business model that works beyond the footprint, since its competitive advantage is in bundling mobile with other services, he told analysts during an earnings call Thursday. The company didn't take questions about spectrum or the broadcast incentive auction, in which it spent $1.7 billion for 73 licenses (see 1704130056). In a note to investors, MoffettNathanson analyst Craig Moffett said despite speculation Comcast's relatively slim spectrum buy was a sign it plans to buy a wireless operator, it very likely points to Comcast knowing it needs to get heavily into mobile wireless but not seeing an attractive takeover target in the near future. He also said a Comcast-Charter Communications deal is unlikely given the antitrust hurdles it would face and the risk it raises of prompting further regulation of the broadband marketplace. Asked during the call about the competitive threat of 5G, Comcast Cable CEO Dave Watson said, "It's early," especially given the time it will take 5G to scale, so it doesn't yet pose a significant threat. He also said Comcast is doing fixed and mobile 5G testing. Pointing to NBC being the top-rated prime-time network by a wider margin than it has enjoyed in more than a decade, plus next year's Super Bowl and Winter Olympics, NBCUniversal CEO Stephen Burke said he expects that to translate into notable leverage going into the ad sales upfronts. He said the company already is in discussions with big ad-buying groups. Roberts also said May will bring the launch of Comcast's cloud-based home networking Wi-Fi gateway, xFi.