Seibert: Consumers Will Drive Programming Cost ReductionsCablevision CFO Says McCain's A la Carte Program, Others Will Depend on Consumer Reaction 5/15/2013 8:38 AM Eastern
Consumer reaction could be the biggest catalyst for programming cost reform, Cablevision Systems vice chairman and chief financial officer Gregg Seibert told an investment conference audience Wednesday.
Seibert, speaking at the JP Morgan Technology, Media and Telecom conference in Boston, said recent initiatives by Sen. John McCain to force a la carte options also could help foster reform.
“I anticipate over time we will hear more from consumers about the increases in programming costs, maybe that will create some degree of recognition from programmers that they are pushing the envelope a little bit too hard here," Seibert said. "Maybe then Sen. McCain’s and other initiatives in Washington will have more impact.”
Seibert did not want to speculate whether regulators would allow operators to further consolidate their operations in an effort to gain greater scale to rein in programming charges. But he noted that even with companies the size of Cablevision, scale matters.
“My guess is the difference in programming costs between what a three-million-subscriber MSO versus what an 18-to-20 million subscriber MSO pays is fairly significant,” Seibert said. “Part of the question might be what do you think of [Liberty Media chairman] John Malone’s investment in Charter? That seems to have certainly gotten people speculating more and more about additional consolidation.”
In May, Liberty completed a $2.6 billion investment in Charter for 27.3% of its outstanding stock, a move that some believe could lead to further consolidation in the industry.
Again, Seibert would not speculate, but added that Malone’s investment is a validation of the cable business.
“Having a sophisticated investor come in, put that much money to work, and listening to their recent comments, they certainly are expanding Charter,” Seibert said. “[Charter CEO] Tom [Rutledge] bought Bresnan from us, a transaction that is still on track to close in the third quarter this year. I don’t think, however, the Charter’s investment thesis is entirely focused on additional acquisitions.”
At Cablevision, Seibert said the focus continues to be on operations and the company has invested more money in its plant, has increased mobility offerings and built out its Wi-Fi network. He also noted a cost efficiency initiative spearheaded by CEO James Dolan aimed at reducing call volumes and truck rolls.
“We’re not interested in doing a wholesale cost cutting exercise,” Seibert added. “We certainly don’t want to cut any areas that would adversely affect the interface with our customers. Right now we are targeted on efficiency. We are going to have continuing conversations about that over the coming months and I am quite hopeful we will find ways to bring the expense line down.”