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Margins on Streaming TV Packages 'Nothing to Write Home About' – Charter CFOMargins on Streaming TV Packages 'Nothing to Write Home About' – Charter CFO

But new, slimmer options enable Charter to focus on broadband-only customers that haven't responded to offers for traditional pay-TV service, Charter's Chris Winfrey says.

Jeff Baumgartner

February 27, 2019

3 Min Read
Margins on Streaming TV Packages 'Nothing to Write Home About' – Charter CFO

Charter Communications has been rolling out a variety of slimmer streaming video packages and products to help it respond to the growing cord-cutting trend. While those products aren't nearly as profitable as Charter's traditional pay-TV offerings, they don't lose money and enable the MSO to make hay with its higher-margin broadband service.

"There's margin in the product, but it's nothing to write home about," Chris Winfrey, Charter's CFO, said Tuesday at the Morgan Stanley Investor Conference in San Francisco, when asked about the MSO's new array of streaming products. "It's really about enhancing our connectivity relationships."

Those new offerings include Spectrum TV Essentials, an OTT-delivered package of more than 60 channels that won't include broadcast TV networks and major sports networks and will launch by the end of March, starting at $14.99 per month. Charter also offers two, home-based managed IPTV services -- Spectrum TV Stream and Spectrum TV Choice -- that don't require a Charter-supplied box but run as an app on retail devices such as Roku players, Samsung smart TVs and Apple TV boxes.

Charter's goal, he said, is to focus on selling traditional pay-TV packages, but noted that the new packages are tailored for smaller, niche segments of broadband-only customers that so far haven't responded to Charter's regular video services.

Charter is also using Spectrum Mobile, a service powered in part by an MVNO deal with Verizon Wireless, to drive its broadband business and take share from other ISPs and go after the 20% of the market that has yet to get broadband. Charter ended 2018 with 113,000 Spectrum Mobile lines, but the service, launched across all of the MSO's markets last September, is not yet profitable due in part to the startup costs involved.

"Mobile offers an interesting way to accelerate the growth of overall broadband penetration," Winfrey said, noting later than a key reason Charter got into the mobile business was to sell and retain cable services.

Winfrey was also asked if Charter had any interest in revisiting its MVNO relationship with Verizon or seeking another partner. "I think having options is always a good thing," Winfrey said, calling Verizon a "good partner" with respect to the MVNO deal but allowing that the relationship between Charter and Verizon could evolve over time.

He also stressed that Charter is "very interested" in licensed spectrum, pointing to the trials it has conducted or has planned in millimeter wave bands and the 3.5GHz CBRS band, and its sizing up of the C-Band. (See Satellite Companies Balk at T-Mobile's $11B C-Band Proposal and Charter's 'Inside-Out' Wireless Plan Starts to Take Shape.)

The 3.5GHz band, which will eventually support both licensed and unlicensed use cases, is "pretty attractive to a cable operator" based on the anticipated low deployment costs and the speed at which those networks could be deployed, Winfrey said.

But any move by Charter in licensed spectrum will be "entirely driven by payback," he stressed.

Winfrey also talked up the economics of the HFC network and the costs of capacity upgrades when compared to dollars required for competitive buildouts.

He said Charter's recently completed DOCSIS 3.1 upgrade cost about $9 per passing, and that incremental speed bumps to come using technologies such as Full Duplex DOCSIS, which is aiming for symmetrical speeds up to 10 Gbit/s, will also be done at "pretty low cost." (See CES 2019: Cable's 10G Tech 'Will Work'.)

Being able to incrementally add capabilities at those economics "allow us to stay way ahead of the curve" against the competition, he said.

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— Jeff Baumgartner, Senior Editor, Light Reading

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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