Light Reading
Calling TW Cable "a turnaround project," Charter executives rip apart TWC's operating strategy and lay out a case for the takeover bid to Wall Street and shareholders.

Charter Goes Over TWC's Head

Alan Breznick
1/14/2014
50%
50%

Frustrated by Time Warner Cable's intransigence, Charter Communications executives ripped into TWC's go-to-market strategy as they took their company's takeover bid to Wall Street and TWC shareholders Tuesday.

In a nearly hour-long call with financial analysts after the markets closed, Charter Communications Inc. officials laid out the case for the $61.3 billion merger bid, which TW Cable's board of directors unanimously rejected late Monday. Charter officials also made a direct appeal to TWC shareholders, urging them to pressure their company's management and board to enter serious negotiations. (See Charter Makes $61B Offer to Acquire TWC , Charter's $61.3B Bid for TWC Rebuffed Again, and TWC Rebuffs Charter's Latest Offer.)

"We're asking Time Warner Cable shareholders to weigh in now," Charter president and CEO Tom Rutledge, a onetime TWC executive, said on the call. "We're trying to get management to engage."

Seeking to buttress their position, Charter executives spent much of the call ripping into TW Cable's "failed operating strategy" over at least the past five years and explaining how they would overhaul the much bigger MSO. Calling TWC "a turnaround project," they said they needed to act quickly to stave off a further deterioration in its assets and market value.

"The biggest risk in this whole business plan is timing because of the rapid loss of customers that Time Warner faces," Rutledge said. "Our only concern is market-timing risk."

Just on the video end of the cable business, Charter executives criticized TW Cable for losing more than 800,000 video subscribers last year, shedding broadband and voice customers in recent quarters, not upgrading its systems to all-digital channels, keeping too many analog channels, and carrying too few HD channels. "They allowed their video products to become inferior," said John Bickham, Charter's COO and another former TWC executive.

On the broadband side, the officials faulted TWC for offering "substandard" broadband products, not boosting broadband speeds high enough, competing too much on price, and nickel and diming customers with hidden fees and taxes. "This strategy results in high disconnects and churn rates," Bickham said. "They wound up looking much like their telco competitors."

Citing the revival of their company's once-moribund cable operations, Charter executives sought to prove they could turn around TW Cable in a similar fashion. Armed with a hefty PowerPoint presentation, they aimed to show that they could restore TWC to its former glory by investing heavily in all-digital system upgrades, putting more digital set-top boxes in each subscriber's home, increasing the number of HD channels in each system to 100 or more, boosting broadband speeds, upgrading the company's phone offerings, and simplifying its pricing structure, among other measures.

In addition to raising revenue, Charter officials said that they could wring out $750 million in operating synergies from TW Cable's annual operating costs over time. TWC executives have challenged this figure, arguing that only about $500 million in operating synergies could be realized.

With Time Warner Cable's board and management showing no signs of giving in yet, speculation has run rampant that TWC is still looking for a white knight to save it from Charter's clutches. Industry pundits have frequently mentioned both Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Cox Communications Inc. as friendly suitors for TWC or partners for Charter in carving up the company.

In the call with analysts, Charter executives shrugged off the notion of another MSO or bidder swooping in right now to thwart their company. "We're not aware of any other bidder," Rutledge said. "So our bid stands alone."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/17/2014 | 6:09:16 PM
Re: no dime?
Sure you can. Good point. But Rutledge still represents Charter. Anyway, how the mighty have fallen. Think TWC still has a prayer of staying independent?  
JonathanT231
50%
50%
JonathanT231,
User Rank: Light Beer
1/16/2014 | 6:16:05 PM
Re: no dime?
Yes, to have Charter lecturing, that's a stretch. To have Tom Rutledge doing so, less of one. If I can make that distinction...
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/16/2014 | 5:50:55 PM
Re: no dime?
True, Jonathan. But didn't TWC used to be more of a pioneer than it's become now? To have Charter lecturing it on how to be a tech leader is almost ludicrous. Could you have even imagined that five years ago when Charter went bankrupt and almost collapsed underr the weight of its own debt and ineptitude? I couldn't have.
JonathanT231
50%
50%
JonathanT231,
User Rank: Light Beer
1/15/2014 | 6:48:36 PM
no dime?
"No dime before it's time" was the mantra I used to hear from old-timers TWC - and other MSOs. (A few high-profile tech showcases being the exception.) That reputation for frugality may have shifted in the industry, but not sure the ex C'vision execs running Charter ever adhered to it. Their emphasis is more like - 'Spend that dime (or million) right on time, if not a little early.'
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/15/2014 | 11:45:49 AM
Re: Defending its bid
Yep, you're right about that. So TWC really has fallen behind the cable curve on innovation. It seems to be living a bit off its past reputation as a technology pioneer. What happened?. 
KBode
50%
50%
KBode,
User Rank: Light Sabre
1/15/2014 | 11:29:48 AM
Re: Defending its bid
True. Time Warner Cable's also rather glacial when it comes to faster speeds and DOCSIS 3.0 upgrades. 100 Mbps still is only in a handful of Time Warner Cable markets if I recall correctly.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/15/2014 | 11:28:24 AM
Re: Defending its bid
True. But Rutledge and Bickham are also right that TWC had already been shedding tons of video subs even before the CBS debacle. And TWC has been awfully slow to go all-digital. So at least some of Charter's criticisms are on mark.  
KBode
50%
50%
KBode,
User Rank: Light Sabre
1/15/2014 | 8:56:34 AM
Re: Defending its bid
Yes.

Even if their logic isn't logical. Most of Time Warner Cable's losses were by their own hand courtesy of the CBS feud, and IIRC Charter's CEO just got done admitting their own video product(s) haven't been of the utmost quality.
DOShea
50%
50%
DOShea,
User Rank: Blogger
1/14/2014 | 8:53:45 PM
Defending its bid
Dressing down TWC is also one way for Charter to make the case that it's price is right.
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Mosaik Solutions presents its 2014 maps of the wireless world in the US, including cable WiFi deployments, LTE network expansion and 600MHz auction boundaries.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Photos: Qualcomm Takes Over San Francisco
Sarah Reedy, Senior Editor, 9/19/2014
Exclusive: Microwave Maven Exalt Is Cooked
Dan Jones, Mobile Editor, 9/22/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
EMC Mulls Merger With HP or Dell – Reports
Mitch Wagner, West Coast Bureau Chief, Light Reading, 9/22/2014
North KC Says Free Gigabit for All
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/16/2014
Like Us on Facebook
Twitter Feed