Britt: Cable needs a boost; TWC chair looks to VOD, HDTV
Copyright 2004 BPI Communications, Inc.
The Hollywood Reporter
March 11, 2004, Thursday
Even though he is pleased that Time Warner Cable has been free-cash-flow-positive for the past few years, chairman and CEO Glenn Britt said Wednesday that core cable TV services are a mature business, meaning that his company must continue to aggressively develop and push new products to maintain growth momentum amid increased satellite competition.
"It's basically flat," Britt said about the core cable TV business in a presentation at the Bear Stearns Media, Entertainment and Information Conference in Palm Beach, Fla. "We're just fighting for market share back and forth with the satellite companies."
Since News Corp.'s takeover of DirecTV, industry observers have kept a close eye on how cable operators are trying to combat the rival service.
Citing video-on-demand, high-definition TV and digital video recorders as the key parts of future growth as high-speed Internet levels off, Britt said: "The way we're growing this business is with new products."
TWC also will look at adding wireless phone services to its current service portfolio, Britt said. Satellite TV provider EchoStar Communications and telecom firm SBC Communications have been working on a product bundle that includes wireless service.
As for voice-over-Internet protocol telephony, Britt said he believes it is fair that the sector be regulated appropriately. "If what you're operating is essentially a phone service, it should be regulated like a phone service," he said. Fees, too, should be paid to use the phone network, he said, referring to "social" obligations Congress has found are part of cable operators' responsibilities, like 911.
Britt said TWC has been working aggressively with movie studios to market its VOD offerings, though his company has to be careful not to take away revenue from the movie studios of corporate parent Time Warner. "Half of the revenue of movies these days comes from home video, and the lion's share of that comes from sales of DVDs," he said.
Will the second-largest cable operator in the country be looking to snap up assets? "I don't think there are benefits to getting much bigger," said Britt, adding that it would be attractive to find the right deal at the right price. TW chairman and CEO Richard Parsons also has said that he would like to grow his firm's cable footprint, but only for the right price.
Britt acknowledged Comcast Corp.'s play to buy the Walt Disney Co. and compared the advantages of a combined company to the ones TW has. "The benefits of vertical integration are obvious," he said. "It's all about risk-sharing and dealing with the changing world around us and understanding each other better. Hollywood, New York, studios and cable — by being together, we can understand each other's business better."