After 41 years in the cable industry, Time Warner Cable CEO and Chairman Glenn Britt took part in his last quarterly earnings conference call this morning.
Britt spent about the first 20 minutes of the call with analysts speaking about the state of the cable industry in general while providing his own views and experiences. Britt is set to retire from running Time Warner Cable at the end of the year with currently chief operating office and president Rob Marcus taking over as CEO starting next year.
This year rumors have run rampant that John Malone, though Liberty Media’s 27 percent stake in Charter Communications, has approached Britt and Time Warner Cable in regards to combining Charter and Time Warner Cable to achieve better economies of scale. To date, those advances have been rebuffed by Britt and his management team.
“My reading (of) the press, sometimes directly and sometimes by innuendo, is that I’m not interested in consolidation, and that after I retire Time Warner Cable might have a more enlightened attitude,” said Britt, who earlier this week announced he was undergoing treatment for cancer. “The implication is that somehow I have been interested in entrenching myself and my colleagues. If you think about it, that’s obviously absurd.
“We’ve demonstrated repeatedly that our job is to make money for our (stockholder) owners and in M&A we are open to deals that do exactly that. I personally have a great deal of my net worth tied up in time Warner Cable stock, and after Dec. 31 I won’t be the CEO anymore. I care a whole lot about maximizing value.”
Britt said he wasn’t opposed to consolidation in the cable industry, but cited Time Inc.’s 1990 merger with Warner Communications and the AOL/Time Warner Cable merger in 2000 as deals that favored one side of shareholders over the other.
“You shouldn’t be surprised that we are focused on making money for you rather than just some fuzzy notion of industry consolidation,” Britt said. “Consolidation can be a good thing, but the terms really matter.”
In addition to mergers and acquisitions, Britt also “philosophized” about products, competition, technology choices, the timing of capital spending and sourcing of capital, public policy and regulation during his opening statement.
Britt said the current form of competition was essentially focused on promotional pricing, which allows “customers to jump from provider to provider to get the best deal,” he said.
“We need to wakeup and learn more sophisticated marketing techniques. Anyone can gain share by starting a price war. Profits and happy customers over the long term are something else,” Britt said. “My last point on competition should be obvious but it often isn’t. For the most part cable companies don’t compete with each other in the consumer marketplace. None of us have a national footprint even though some of us are very large companies. We do compete with companies that are much larger and in some cases they have a national and even global footprint. As a result, the cable industry tends to cooperate on things like technology and public policy. In addition we all use pretty much the same vendors and the same consultants. Having watched this for many years I can say that the history will tell you that the larger, geographically diverse cable operators tend to perform similarly and gravitate to the same technologies over time.
“So why bother saying that? Well, we do compete for investment dollars and there are not many public vehicles to invest in so management is trying to tell you that they each have some secret operational formula or some magical technology that will make them better, but the reality is there is no secret formula or secret technology. Instead there are lots of details.”