TMT tycoon John Malone and several former colleagues on the Charter Communications board of directors have agreed to pay $87.5 million to settle a 6-year-old investor lawsuit tied to the $78.7 billion purchase of Time Warner Cable by Charter in 2015.

Investor Matthew Sciabacucchi sued Malone, along with Gregory Maffei and former Charter CEO and Chairman Tom Rutledge, among several others, claiming they “received unfair tax benefits” through a “side deal” carved out amid the merger. 

At the time of the TWC purchase, Malone’s Liberty Media was Charter’s largest shareholder, controlling 26% of stock. The suit said Malone and the rest of the defendants received an all-stock consideration in shares Liberty held in TWC, while other investors received a mix of stock and cash. 

The suit was filed back in February 2017 in Delaware. (You can read it here.)

Bloomberg was the first to report on the settlement. 

For their part, the defendants don't admit wrongdoing and claim they settled the complaint to “avoid the burden, expense, disruption, and distraction of further litigation.” 

The settlement money will actually go to Charter, which the suit alleges was unfairly compensated. ■

Brian E. Kelly, a longtime cable marketer who was the chief marketing officer for Time Warner Cable's East Region when he retired after more than 20 years with the company, died Nov. 17 at his home in Charlotte, North Carolina, after a three-year battle with cancer. He was 62 years old. A native of Quincy, Massachusetts and a lifelong Red Sox fan, he is survived by his spouse, Renee Kelly, and his two daughters, Stephanie Mercer (Cortland Mercer) and Caroline Kelly, as well as his brother and sister, Kenneth Kelly and Maureen Shepard. He is preceded in death by his brother, John Kelly.

A graduate of Quincy High School and Boston College, Kelly was an accomplished wrestler, family and friends said. He always cited the wrestling mat as the source of the dedication, hard work, and integrity that would become hallmarks of his professional reputation, according to his published obituary in the Charlotte Observer. He began on the ground floor of the telecommunications industry selling cable subscriptions door to door in the Boston area before climbing the corporate ranks and holding a variety of senior leadership roles. His career also included general manager stints at Continental Cablevision and American Cablesystems in the 1980s, per his LinkedIn page. He also was very involved with the CTAM New England chapter. (A Cable Center oral history conversation including Kelly can be found here.)

Among the online tributes to Kelly were one by longtime cable marketer Ellen Schned, who said: "The pride of Time Warner Cable, the cable, media, music and telecommunications industries, North Carolina, his vast circle of friends and his beautiful wife & family who he loved like crazy, including his daughter Stephanie (here). We all are a little better having known Brian Kelly."

In lieu of flowers, a gift in his memory can be made to the Levine Cancer Institute via their website at http://AtriumHealthFoundation.org or the Red Sox Foundation at http://redsoxfoundation.org/BrianKelly

A visitation will be held at 10 AM on Thursday, Dec. 16, at St. Gabriel Catholic Church 3016 Providence Road, Charlotte, North Carolina, followed by a funeral Mass at 11 AM. You may view live streaming of the funeral at https://stgabrielchurch.org/livefunerals.

An unlikely group of stakeholders has coalesced to tell the FCC that its additional 14 days for comment on Charter's petition to get get out from under two Time Warner Cable merger conditions doesn't cut it.

The comment window had been July 22 to Aug. 6, but the FCC's Wireline Competition Bureau said Monday (Aug. 18) it was extending the deadline until Sept. 2 "to ensure that the Bureau has a full record upon which to evaluate the effects of the conditions."

But in a letter to the FCC Wednesday (Aug. 19), Entertainment Studios Networks, Free Press, INCOMPAS, Newsmax Media, Inc., Open Technology Institute, Public Knowledge, and Sports Fans Coalition said that the FCC should extend that 14 days to 30. "Only by doing so can the Commission ensure that all interested parties have had a full and fair opportunity to address the issues so that the Commission has a sufficient record on which to render its decision. This approach is made more imperative given the procedural irregularities and other concerns that have already arisen in this proceeding," they said.

The procedural irregularities is a reference to the timing of the FCC's request for comment. (Newsmax Media has told the FCC its request for comment only two days after Charter sought an early termination of some Time Warner Cable merger deal conditions jumped the gun and created the appearance of favoritism toward the company.)

"The Commenters appreciate the fact that the Bureau took a step toward ameliorating its prejudicial action in prematurely putting the Charter Petition out for comment before the date specified by the Commission," they continued. "However, a fourteen-day comment period is not consistent with the full comment cycle anticipated in the Commission’s order, and is patently insufficient under the current circumstances. As the Bureau recognizes, the D.C. Circuit recently issued an order on review of several challenges to the conditions imposed on Charter that may bear directly on this proceeding."

The U.S. Court of Appeals for the D.C. Circuit last week threw out two of the Charter-Time Warner Cable broadband-related conditions, the one "prohibiting Charter from charging programming suppliers for access to its broadband subs" and the one "requiring New Charter to provide steeply discounted broadband service to needy subscribers," with the court saying it essentially had no choice after the FCC failed to defend them.

Charter is looking to get out from under the "no charging for interconnection" and "no usage-based pricing" conditions.

The FCC, in imposing all the conditions, said they were to ensure Charter could not “hamper or prevent its current and future online video rivals from expanding, becoming more competitive, or starting up in the first place.”

Charter has suggested those rivals hardly need protection from the company given that its rival internet service providers have not had similar conditions and the over-the-top marketplace has flourished.

A federal appeals court has thrown out two of the Charter/Time Warner Cable broadband-related conditions, the ones "prohibiting Charter from charging programming suppliers for access to its broadband subs" — no charging for interconnects — and the one "requiring New Charter to provide steeply discounted broadband service to needy subscribers," with the court saying it essentially had no choice after the FCC failed to defend them. 

Three customers of the combined Charter/Time Warner Cable/Newhouse, represented by the Competitive Enterprise Institute, had filed suit saying the conditions were responsible for their cable bills going up and wanted the conditions set aside due to that "injury."

Because the FCC did not defend the conditions, imposed by the Tom Wheeler FCC, the court vacated both, but made clear that the other conditions — usage-based pricing and buildout conditions— remained in force. The petitioners had challenged them as well. Charter separately is looking to get out from under the usage-based pricing conditions.  

A three judge-panel of the U.S. Court of Appeals for the D.C. Circuit said the FCC appeared to have imposed irrelevant and nongermane conditions, but did not have to get to those issues. 

"We need not resolve these questions, however, for there is a simpler ground of decision," the court said. "The lawfulness of the interconnection and discounted-services conditions are properly before us, yet the FCC declined to defend them on the merits. The agency’s only explanation for doing so was its view that we cannot reach the merits. Having lost on that question, the FCC has no further line of defense. “Because the Commission chose not to argue the merits in the alternative, we have no choice but to vacate the challenged portions of the order.” 

The decision was two to one, with judge David Sentelle dissenting. Sentelle did not weigh in on the merits, but dissented because he thought the court should not be weighing in at all. "[T]here is insufficient evidence to show that the injury to the consumer appellants would be redressed if this court were to order the vacation of the conditions imposed by the government on New Charter," he wrote. "It may be that New Charter would take actions beneficial to the appellants, but it is not the case that this court can redress their injuries."

Free State Foundation president Randolph May focused on the court's opining on non-germane conditions.  

“Aside from the court’s decision regarding specific merger conditions, I was very pleased to see the court affirm what I’ve been preaching for two decades — the so-called ‘voluntary’ conditions that merger proponents offer up in order to get the FCC to act on their pending merger applications are a not-so-subtle form of unseemly regulatory exhortation," he said. "Hopefully, other courts will build on the foundation the opinion has laid for challenging these 'voluntary' commitments often having nothing to do with the specific merger at hand.” 

One reason the FCC did not challenge the petitioners on the conditions is that chairman Ajit Pai has long criticized "regulation by deal condition" and even voted against the Charter/TWC merger not because he opposed the merger, but what he saw as overregulation (or even extortion) by non-merger-specific condition. 

In his statement on the Charter/TWC deal, he said the FCC had “turned the transaction into a vehicle for advancing its ambitious agenda to micromanage the internet economy.”  

In 2017, Pai led the FCC vote to modify the Charter/TWC deal by removing the condition that Charter overbuild a million internet access customers who could already get high-speed access from another provider.

Longtime cable executive and NAMIC board member Nate Garner has died at the age of 75.

Garner began his long cable career in 1978 with Time Inc’s American Telecommunications and Cable (ATC), where he served in numerous executive roles within Time Warner Cable’s Manhattan Cable system. He was named President of Manhattan's Paragon Cable in 1986, making him the first African-American president of a cable system in New York.

In 1994, he served as Senior Vice President of USA Network’s eastern region affiliate sales, playing a key role in the launch of the SYFY channel. Garner also launched several start-up companies, including a broadcast venture in Johannesburg, South Africa in 1999.

During his tenure within the cable industry Garner also worked to ensure access and equality in the media and entertainment. In the early 1990s Garner was instrumental in helping to launch the National Association of Multi-Ethnicity in Cable diversity organization. As a founding member and eventual board member of NAMIC, Garner used the organization’s strength and reach to raise awareness regarding pathways to cable system ownership.

“NAMIC would not exist today if it were not for Nate Garner,” said Douglas Holloway, former NBCUniversal executive and current founder of the UKW Media Roku channel. “Nate was a true cable pioneer and in particular a black cable pioneer. He set a standard for excellence and was a person that mentored so many, including me. He led the industry in advocating Black ownership of cable systems and entrepreneurship. He will be sorely missed.”

Garner is survived by his five adult children, including A+E Networks executive VP, content licensing and business development Mark Garner. 

Charter Communications is asking the FCC to terminate the interconnection condition of its deal to acquire Time Warner Cable and Bright House Networks next year — May 18, 2021, two years early — in light of the ”dramatic“ changes in the online video marketplace. 

The 2016 conditions were to last seven years, but the Federal Communications Commisssion anticipated such a possible early termination given that it could not anticipate where the competitive market would be that far out. 

Currently, Charter must ”offer to interconnect its IP network to any qualifying entity free of charge and on standardized terms.“ 

The company provided pages of statistics and examples to buttress its argument that over-the-top video will do just fine if Charter is given control of its interconnection deals. 

“[T]itans of the video industry, such as Disney and HBO, have begun shifting their programmatic efforts to focus on online delivery,” it said. “By every metric imaginable, OVDs [online video distributors] are seeing record-breaking growth and gains across all performance indicators, including in the number of subscribers, the number of OVD platforms, streaming hours, revenue, and the amount and success of original content on these,” it told the FCC. 

"The seven-year term for the Conditions was a ceiling, included to allow the OVD market 'room to become more mature and better positioned to withstand attempts by New Charter to impose data caps and UBP at levels indeed to blunt their competitiveness," it pointed out, adding that the five-year early out trigger was included given that the OVD market might mature before that. 

”[I]ndeed, the OVD marketplace has flourished in the four years since the merger closed,” it said. “In fact, far from seeking to harm OVDs, Charter, like many other established broadband providers, is actually actively working to increase its subscribers’ access to online video services. Eliminating these Conditions at the end of five years will therefore advance, rather than thwart the competitive gains that have been made, giving Charter the flexibility it needs to best meet the data usage needs of all of its subscribers and to configure its network to deliver data in the most efficient way possible.” 

Netflix, which had opposed the eventually-scuttled merger of Comcast with Time Warner Cable, supported the Charter-led merger after Charter agreed to extend “settlement-free“ interconnection for the systems it would be acquiring from TWC and Bright House. Netflix reluctantly entered paid interconnection deals with Comcast, TWC, AT&T and Verizon Communications while arguing that such arrangements violated network-neutrality rules. 

Charter also wants a similar early exit from its ”no data caps or usage-based pricing“ conditions. The company points out the FCC had said at the time it would entertain such early exits if the marketplace had changed sufficiently. 

Charter says the market definitely has changed sufficiently and has petitioned the FCC for the changes. 

The FCC said the conditions were to ensure Charter could not “hamper or prevent its current and future online video rivals from expanding, becoming more competitive, or starting up in the first place.” 

Charter suggests those rivals hardly need protection from the company given that its rival internet-service providers have not had similar conditions and the OTT marketplace has flourished. 

Time Warner Cable (now under Charter's Spectrum) has agreed to pay $18.8 million to settle with Los Angeles County over allegations of unlawful business practices. 

Time Warner Cable cooperated with the investigation but did not concede any liability. 

L.A. County District Attorney Jackie Lacey announced the settlement on behalf of the 170,000 California consumers she said had paid for internet speeds they didn't get because of outdated modems or limited infrastructure that prevented them from getting advertised speeds. 

Related: Charter Settles with New York Over TWC Advertised Speeds 

She said it was the largest settlement the country had ever secured in a consumer protection case, with those consumers getting $16.9 million of that settlement and the DA's offices of L.A. County, Riverside and San Diego splitting $1.9 million for costs. 

She also said that every Time Warner Cable Internet customer will be offered a free cable service (three free months of Showtime if they take cable) or one free month of a streaming service if they don't have traditional cable. Lacey said the settlement should serve as a warning that deceptive practices--promising internet speeds that could not be delivered, in this case--is bad for both consumers and business. 

The agreement settles a lawsuit filed last month in Los Angeles County Superior Court which was joined by the district attorneys of San Diego and Riverside. 

Also as part of the agreement, Time Warner Cable said it won't advertise internet speeds "it knows or should know it cannot consistently deliver during peak hours," and has to issue modems that can deliver its advertised speeds." 

D. Lowell Hussey, a marketing leader and entrepreneur whose career included a rapid-growth period at Time Warner Cable in the 1980s and then at upstart wireless cable TV firm Cross Country Wireless in the 1990s, has died at age 67 in Portland, Ore., on Feb. 3. The cause was cancer, his family said.

"Lowell was a larger than life personality," his family said in a statement. "He combined his affable demeanor with a brilliant mind to help transform the television industry." At Time Warner Cable, where he was senior vice president of marketing and programming and worked from 1980 to 1992, "he was known for his innovative ideas, his robust way of communicating them, and the results they produced. Most importantly, he was a great people leader."

One speaker bio of Hussey noted that he "was an important player in the group of pioneers who introduced CNN, MTV, video on demand and cable ad sales to the world."

Char Beales, the former longtime CEO of cable TV marketing trade association CTAM (who ran the group after Hussey had left cable), said that "Lowell was a giant at CTAM. He inspired the members and was revered by the CTAM staff. Lowell stories are legendary."

A graduate of Babson College and Harvard Business School, Douglas Lowell Hussey also was a top executive at Cross Country Wireless, in Riverside, California, which provided competitive multichannel TV services using microwave spectrum, starting in the late 1980s. He helped negotiate the sale when Cross Country was acquired by Pacific Telesis in 1995 during that wave of Baby Bell entries into TV via wireless cable. Later he was involved in sports and real estate ventures, including introducing American football in Poland, and lately represented extreme surfer Garrett McNamara, according to his LinkedIn biography.

"Being fearless in his approach to life, Lowell found himself catching the early wave of cable TV, the wireless industry, and then of renewable energy and many tech startups," his family statement said. "His 'joie de vivre' led him to live and work all around the world, sucking the marrow out of life, while leaving his mark in each and every place he touched."

He is survived by his beloved wife, Aggie Cooke, his adoring son Maxx, and two brothers Dennis and Donald, the family said. "Lowell had an oversized impact on his many friends and extended family. While Lowell fought cancer bravely, his last years were eased by the constant attention and love of his wife, and the knowledge that his son was there to carry on his legacy. The two people who were as Lowell put it 'the best thing that had happened to him in his life' were there in the end, to ease his way."

The family will be honoring his life privately "and asks that as a tribute, you simply encourage someone, anyone, to dare greatly. That’s what Lowell would want and do."

The U.S. Supreme Court has ruled that Manhattan Neighborhood Network (MNN), the private nonprofit that New York City tapped to operate its public educational and government (PEG) channels, is a private speaker, not a governmental entity, and thus not subject to claims of abridgment of speech. 

That came in a ruling reversing the U.S. Court of Appeals for the Second Circuit's finding that MNN was a state actor. The Supreme Court decision was rendered by newest Justice Brett Kavanaugh, who is familiar with communications issues from his time on the D.C. Circuit appeals court. 

Cable franchisees and local governments are prohibited from "'exercis[ing] any editorial control' over the channels, aside from regulating obscenity and other unprotected content."

"It does not matter that a provision in the franchise agreements between the City and Time Warner allowed the City to designate a private entity to operate the public access channels on Time Warner’s cable system," Kavanaugh wrote, referring to the cable system now owned by Charter Communications. "Nothing in the agreements suggests that the City possesses any property interest in the cable system or in the public access channels on that system."

The case centered on a video critical of MNN that DeeDee Halleck and Jesus Papoleto produced and which MNN aired, but then suspended the pair from its facilities. 

The two sued over being denied public access to the channel by the people operating the public access channel, which they said violated their free speech rights. A district court dismissed the claim on the ground that MNN was not a state actor. The Second Circuit disagreed, but the High Court's conservative majority sided--by a vote of 5-4--with the district court.

"Operating public access channels on a cable system is not a traditional, exclusive public function. A private entity such as MNN who opens its property for speech by others is not transformed by that fact alone into a state actor," Kavanaugh wrote. 

Joining Kavanaugh were Supreme Court Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Neil Gorsuch. Dissenting were Justices Sonia Sotomayor, Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan. 

Penning the dissent, Sotomayor said that MNN had been appointed by the government to administer a constitutional public forum and that the city "secures a property interest in the channels" when it grants a cable franchisee its license.

"State regulations require those public-access channels to be made open to the public on terms that render them a public forum. The City contracted out the administration of that forum to a private organization, petitioner Manhattan Community Access Corporation (MNN). By accepting that agency relationship, MNN stepped into the City’s shoes and thus qualifies as a state actor, subject to the First Amendment like any other."

Sotomayor and company said the Second Circuit should have been affirmed because: "The channels are clearly a public forum: The City has a property interest in them, and New York regulations require that access to those channels be kept open to all."

That was the minority's theory of the case, but it fell one vote short of being the precedent that has now been set, which is that while governments and cable operators can't regulate speech beyond the extremes of obscenity and other unprotected speech, PEG administrators can.

Gail MacKinnon, EVP of government affairs, for the Motion Picture Association of America, has been named senior EVP, global policy and government affairs.  

That is according to an email to staffers from MPAA chairman Charles Rivkin obtained by Multichannel News. 

MacKinnon will oversee all international advocacy and policy as well as her current government affairs duties.  

"With her deep industry experience and outstanding management skills, combined with the critical support of our regional presidents, I am confident that Gail will strengthen the coordination and value of this core MPAA function to our Members," Rivkin told the staffers.  

He said MacKinnon's promotion reflected the increasingly evolving and global nature of TV, film and streaming content and was a step toward building "a more globally aligned organization." 

MacKinnon, formerly EVP, government relations for Time Warner Cable, joined MPAA in 2017. Before that she was SVP of of government relations at the National Cable & Telecommunications Association (now NCTA-The Internet & Television Association). 

Her extensive resume also includes posts with Turner Broadcasting, TCI, CBS, and Viacom.

Charter Communications chair and CEO Tom Rutledge said the MSO is prepared to go to court with the New York State Public Service Commission over the agency’s recent decision to rescind its approval of the cable company’s 2016 merger with Time Warner Cable, adding that the battle could last a while.

The PSC announced on July 27 that it was rescinding its approval of the TWC deal, and gave Charter 60 days to come up with a plan to divest of its New York cable systems, which have about 2 million customers. The state said Charter has repeatedly failed to comply with approval conditions to extend its broadband network to unserved and underserved homes throughout New York.

Charter has maintained that it is in compliance, and Rutledge held his ground in a conference call with analysts to discuss Q2 results. Investors appeared pleased, driving Charter stock up more than 5% ($15.01) to $308.91 per share in early trading Tuesday.

“We believe we’re in compliance with the plain reading of the build-out requirements that the state imposed on us in merger conditions and we have a very strong legal case and ability to defend ourselves,” Rutledge said on the call. “It could play out over a lengthy period of time. 

"To put it in perspective, we’re operating in 41 states, we have thousands of franchise agreements, and generally we have good relationship with the communities we serve," Rutledge added. "We live up to our commitments and we have in New York State; in fact we’re well ahead of our obligations in terms of speed upgrades and in the build-out itself.

"We do have labor issues in New York City which we believe may have politicized the actions of the PSC and we’re concerned about that," he continued. "We have successfully negotiated other agreements with the same union, IBEW, in other parts of the country during this period. We're hopeful that we can work all this out, if necessary we’ll litigate and we believe we’re in the right.”

Members of the International Brotherhood of Electrical Workers went on strike against Charter in March 2017, claiming loss of benefits and shoddy working conditions. New York Gov. Andrew Cuomo and New York City Mayor Bill de Blasio have shown support  for the union in the past, and Cuomo is facing a potentially contentious re-election campaign this November. 

[embed]https://twitter.com/CentralLaborNYC/status/909863022113509377[/embed]

Rutledge also commented on Liberty Media chair John Malone’s decision to step down from Charter’s board of directors, adding that the cable legend will remain as director emeritus and will still have a significant say in the company.

“We think that John will continue to be engaged with the company, that he likes the  business. I like having him engaged with the company,” Rutledge said. “He brings tremendous insight to us. But he wants to reduce his work load, his 'over-boarding' so to speak and he's just reached a point in his life where he feels like he has to. We do board meetings in Denver and we may do them in Florida, so we think he’ll be involved with us for years to come.”

Charter Communications is appealing the decision by a judge of the Supreme Court of the State of New York that the FCC doesn't have the authority to preempt state laws and that its speed claims are actionable.

New York State Attorney general Eric Schneiderman filed a complaint alleging that Time Warner Cable (which Charter acquired) "promised to provide broadband speeds it knew it could not deliver and mischaracterized the reliability of access to certain online content."

Charter countered, in seeking to dismiss the complaint, that the allegations were preempted by the 2015 Open Internet's Transparency Rule and other FCC guidance, and that the state had failed to cite a legitimate cause of action because the FCC's speed test showed that TWC was "clearly capable of providing — and often did provide — the broadband speeds it advertised, and its “up to” representations thus could not have misled a reasonable consumer."

NAD Asks DirecTV to Stop 'Worry Free' Ad Claims

Charter also argued that other claims in TWC's ads were subjective "non-actionable puffery," which is actually a legal term for a promotional "exaggeration" that consumers aren't supposed to take seriously.

On Feb. 16, the court denied Charter's motion to dismiss, saying that while some of the claims were puffery, others were not and were actionable. It also found that the FCC can't preempt state law, which the FCC has asserted it can in its recent Restoring Internet Freedom rollback of the 2015 Open Internet order rules.

Charter wants that denial reversed, arguing that the FCC's broadband speed test preempts the speed claims in the company's advertising, and that some of its speed claims are backed up by the FCC test, while others are non-actionable promotional puffery.

Charter Communications bucked the trend of video customers declines in the fourth quarter largely due to improvements at its two most recently acquired units – Time Warner Cable and Bright House Networks – and chairman and CEO Tom Rutledge told analysts Friday he thinks continued growth is still possible.

Charter added 2,000 residential video subscribers in Q4 –15,000 when business customers are included – a turnaround from the 51,000 it lost in the prior year. Driving that gain was a significant improvement in video losses at its Time Warner Cable legacy systems. TWC lost 1,000 video customers in the period, compared to a loss of 105,000 video subscribers in the prior year. Coupled with a gain of 13,000 video customers at Bright House (less than half the 34,000 additions it had in the previous year) and a loss of 10,000 legacy Charter video customers and the company moved into the black for the full period.

“The worst of Time Warner Cable churn is behind us,” Rutledge said on a conference call with analysts to discuss results. Charter, which closed its purchase of TWC and Bright House in 2016,  has been challenged as Time Warner Cable customers rolled off heavy promotional discounts in the later months after the deal.

“We believe this shows that the expected turn in the acquired TWC systems has begun, and gives us increased confidence in the company’s ability to repeat the Charter transformation in the TWC systems,” Evercore ISI media analyst Vijay Jayant wrote in a research note. Charter’s video additions beat his estimate of a loss of 90,000 video customers.

Charter’s gain is in contrast to a loss of 33,00 video customers at Comcast in Q4.

On the call, Rutledge said that he still believes that positive video growth is possible, although chief financial officer Christopher Winfrey added it will likely be choppy.

“Progress will not be linear,” Winfrey said on the call.

Rutledge outlined a litany of projects the cable operator has planned for 2018, including making 1-Gigabit per second high-speed data service available across the footprint by the end of the year, and taking advantage of earlier original content agreements the company made last year with AMC Networks and Viacom.

Earlier this month Charter hired television veteran Katherine Pope to head up its content business.

Rutledge said the AMC and Viacom deals will create properties that form a “brand halo” around Charter products.

“It creates a window of opportunity for us,” Rutledge said. “An opportunity for us to be associated with original content.”

Rutledge had little new to say about M&A opportunities, only that if Charter sees compelling properties at a reasonable price, they will pursue them. But he added that despite sentiment that the government’s attitude has softened around regulations and taxes, little much has changed,.

“I don’t know how tax reform changes the environment,” Rutledge said. “[The industry] still has all the issues it always had.”

Despite larger than expected losses on the video side, which helped trigger a minor sell-off in its stock on Thursday morning (Oct. 26), Charter Communications chairman and CEO Tom Rutledge stressed to analysts that the cable operator still has substantial room for growth.

Charter lost 104,000 video customers in the third quarter, more than twice the 47,000 it shed in the same period last year. The decline was in part responsible for a dip in Charter’s stock price early Thursday. The MSO has been one of the best performing stocks in the sector since it began its pursuit of Time Warner Cable in 2015, culminating in a purchase that transformed Charter into the second-largest cable operator in the country behind Comcast with about 16.5 million residential video customers.

Partly because of anticipation that it may buy more companies and partly because of the potential to grow subscribers inside its own footprint, Charter has been considered more of a growth stock than some of its larger peers. But some recent glitches around the integration of its Time Warner Cable and Bright House Networks systems over the past several months have cast some doubt on those growth prospects.

RELATED: Rutledge at Cable-Tex Expo extols platform, warns against 'poor service'

On a conference call with analysts Thursday to discuss third quarter results, Rutledge tried to ease any investor fears, stressing that Charter has plenty of mojo left.

“We still have a very rapidly growing good business,” Rutledge said on the call. “Yes, the video business has pressure in it and it has had pressure in it. We still think we can grow the video business going forward and expect to grow the video business going forward. And we expect to sell packaged products going forward including data, mobility, voice and video.”

Rutledge added that the pressures on the video business include pricing, and something he has spoken out against in the past – content providers that allow customers to share passwords for streaming services with non-subscribers.

“Many programmers now are distributors whether they know it or not,” Rutledge added, either through authenticated TV Everywhere platforms or streaming shows direct-to-consumer. But he stressed that allowing consumers to share passwords affects the price-value relationship of video.

“There is an enormous ability for people to receive free content because of the way content distributors are securing their product ineffectively,” Rutledge said. “As a result of that, I think you will see continued pressure on video. But we expect that we can still grow a rich video package inside our product bundles. We’ll think we’ll do that at the expense of our competitors and we think that the general category will continue to decline slightly.”

Rutledge continued that Charter is happy with the way it is pricing and packaging its products, adding that he believes the company has “an excellent growth trajectory based on our pricing structure.”

RELATED: Hurricanes drive Q3 video losses at Comcast

Charter lost about 90,000 video customers in the second quarter, an improvement over the prior year period and better than the 100,000 video customers it lost in Q1 2017. Rutledge has said in the past that he believed the company had turned the corner on subscriber defections as it has ironed out integration wrinkles in former Time Warner Cable systems. Despite what seems like an acceleration of those losses in Q3, Rutledge said he stands behind his words.

“We have turned the corner in terms of our operating strategy which will produce future revenue growth in excess of current revenue growth,” Rutledge said. “The way we know we turned the corner is we have more sales than we had year over year and we have less disconnects. That translates ultimately into more customers, higher quality customers, too, through time that produce revenue and produce net gains as well. Given the way we budgeted this business and the way we operate this business, it's almost exactly on the screws as to where we thought would be.”

MoffettNathanson principal and senior analyst Craig Moffett initiated coverage of Altice USA with a “neutral” rating and a $28 per share price target on its stock, adding that despite its early success, the cable operator’s cost-cutting initiatives will get harder to achieve as time progresses.

Altice USA burst on the scene in 2015, first as a dark horse buyer for Time Warner Cable – it lost out to Charter Communications – and later as the purchaser of Suddenlink Communications and Cablevision Systems. Altice USA, led by European telecom guru and John Malone disciple Patrick Drahi, was going to bring European management techniques to the U.S. cable business, drastically cut costs and make the business more efficient. At the time of its Cablevision purchase – for a hefty $17.7 billion –  Altice said it would cut $900 million in costs out of that New York area business, which raised eyebrows.

Since then Altice said it has come closer to that goal and embarked on an ambitious five-year fiber-to-the-home buildout that it claims will bring even more efficiencies to the network. In the second quarter, cash flow increased 22%, more than double its peers, largely resulting from those cost cutting and efficiency efforts.

In his note, Moffett said that so far Altice USA has reduced its non-programming operating expenses per subscriber by almost 20%.

“But getting the rest will be much harder,” Moffett wrote, adding that the combination of continued cord-cutting pressure and an aggressive $80 per month 1-Gigabit per second broadband offering from rival Verizon may be too tough for the company to overcome.

“Verizon’s broadband offering steals the thunder from what would otherwise be Altice’s pressure release valve,” Moffett wrote, adding that he believes Altice will be able to raise profit margins but only at the expense of growth.

“There is no free lunch,” he continued.

Altice USA went public in June at $30 each and the stock rose quickly, mainly on deal speculation. But as that chatter has waned, so have the shares. Altice USA was priced at $25.97 each, down 3% (78 cents) in early trading Oct. 11. 

Moffett also was skeptical of the cost savings Altice could extract from it fully fibered network, and doubted that the operator would be able to significantly add to its scale via acquisition.

Altice USA was said to have been lining up bankers for a bid for Charter Communications earlier this year, although that speculation has died down considerably. Charter has made it clear it is not interested in a deal.

But Moffett thinks that Altice USA’s other perennial target – Cox Communications, which also has said repeatedly it is not for sale – isn’t any more feasible.

“There appears no realistic path by which Altice can achieve meaningful scale in the U.S.,” Moffett wrote. “A Charter acquisition is out of reach. Cox appears uninterested in selling especially to Altice. Comcast? Ha. That leaves only table scraps. Small acquisitions (of under 1 million subscribers each) are possible, but there aren’t many of those out there. Very small acquisitions (of under 200,000 subscribers) are plentiful, but too costly to integrate. The window on being big enough to ‘matter’ has already closed.”

Charter Communications is informing customers that it will cease to carry The Sportsman Channel, the hunting and fishing network owned by Stan Kroenke’s Outdoor Sportsman Group, on Oct. 30.

Charter’s action was first reported by TV Answerman.

Charter declined to comment.

Sportsman Channel spokesman Thomas Caraccioli confirmed via an email message that the channel had been dropped by Charter. The other Outdoor Sportsman Group channels were not affected.  

“We were looking for wider distribution and we couldn’t come to terms,” he said in the e-mail message, noting that Charter represented less than 5% of the network's overall carriage.

The Sportsman Channel airs hunting, fishing and outdoor lifestyle shows like Davidson’s Gallery of Guns,MeatEater, Rival Wild, and Sheep Shape. It became part of Kroenke Sports & Entertainment in 2014 after the billionaire sports mogul (he owns the Los Angeles Rams, the Denver Nuggets and the Colorado Avalanche, to name a few) purchased its parent InterMedia Outdoor Holdings, combining it with his Outdoor Channel and World Fishing Network. Outdoor Sportsman Group was formed about a year later.

Kroenke, who also owns British Premier League soccer power Arsenal, has come under fire in the U.K. for launching the My Outdoor TV channel in that country, which some critics have said features trophy hunting of endangered animals.

Heavy promotions at former Time Warner Cable systems were the main culprit in Charter Communications’ disappointing first quarter basic video customer losses, but chairman and CEO Tom Rutledge said the cable operator has “turned the corner” in terms of unit growth.

Charter lost a total of 100,000 residential basic video customers in the first quarter, well above what most analysts were expecting. Charter blamed most of those losses on heavy promotions at former Time Warner cable systems. Charter completed its purchase of Time Warner cable and Bright House Networks in May 2016.

At the MoffettNathanson Media & Communications Summit in New York Wednesday (May 17), Rutledge said that many of those TWC promotional bundles are coming to an end.

“Time Warner [Cable] wanted to make a video number,” Rutledge said at the conference. "There were data packages that were discounted that cost less if you took video than if you didn’t. A lot of them are churning out. A lot of them were basic-only. On the margin, in the last year, they were selling 40% of their connects basic-only.”

Rutledge said TWC had “90,000 different promotional offers” in the period leading up to the close of those deal. He said customers only needed to call into the system to receive a generous discount.

“It was a Turkish bazaar,” Rutledge said. “You’d call in, bargain, and they would invent a package.”

He said those deals were “exploding packages,” meaning they converted to full price after the promo period ended, leaving many customers reeling from sticker shock.

“We, up until recently, were unable to see that or intervene in that prior to it happening,” Rutledge said. “We’ve already turned the corner in terms of unit growth, and we are selling more on a year-over-year basis than we were within TWC and the whole company.”

Univision Communications said it has named cable veteran Bobby Amirshahi senior vice president, corporate communications effective immediately. He will be based in New York and report to Univision EVP and chief communications officer Rosemary Mercedes.

Amirshahi will work closely with UCI’s corporate communications and investor relations teams to support and align and elevate the Company’s communications initiatives. Amirshahi will also be responsible for developing and executing UCI’s comprehensive PR plan to expand the Company’s positioning as the media destination for the diverse and increasingly multicultural audiences in the United States.

“Bobby has over 20 years of experience managing corporate communications for some of the largest, most influential media companies, giving him a deep understanding of our business and the unique opportunities and challenges faced by our industry,” Mercedes said in a statement. “With a strong track record of implementing successful programs spanning media relations, issues management, financial communications, and corporate social responsibility, Bobby is uniquely equipped to help us expand and deepen our communications efforts with all of our stakeholders.”

Amirshahi has a long track record in the cable and network business. Most recently serving in senior communications positions at Time Warner Cable, Vaicom’s MTV Networks and Cox Communications. He began his career in communications at the Telecommunications Industry Association in Washington, D.C.

“I am honored to have the opportunity to join such a dynamic and differentiated company like Univision,” Amirshahi said in a statement. “I look forward to working closely with UCI’s talented communicators to continue building and enhancing UCI’s profile among our employees, influencers and investors.”

Charter Communications may have promised President Trump it would add 20,000 new jobs over the next few years, but at least 1,700 of the cable operator's employees in New York and New Jersey walked off the job Tuesday, claiming they have lost benefits and endured shoddy working conditions ever since the company bought out Time Warner Cable in May.

The workers, former Time Warner Cable workers ranging from warehouse employees to field technicians, are members of the International Brotherhood of Electrical Workers Local 3 and say they have been without a contract since 2013.

According to The Daily News, the union claims Charter wants to stop contributing to workers’ pension and medical plans. The company, according to the article, denied the pension claims but said it has proposed increasing employee compensation and offering “competitive and robust” health and retirement benefits.

“Spectrum's primary objective is to provide great service to our customers, and we believe fairly compensated field technicians are critical to that objective," Charter VP of field communications Rich Ruggiero said in a statement. "This is why Spectrum is offering our field technicians an even larger pay increase than the union has demanded, along with competitive and robust healthcare and retirement benefits.

"Spectrum made this offer on Feb. 12 and didn't receive a counterproposal from Local 3 until two days ago (March 26)," he continued.  "We believe this greater compensation to be more beneficial to our employees than continuing to fund the failing union-managed benefits program. We have a solid contingency plan in place and don’t expect customers to be impacted by Local 3’s actions.”

The strike comes days after Charter chairman and CEO Tom Rutledge met with President Trump to announce its plans to invest $25 billion in network upgrades over four years. The company also reiterated a pledge to add up to 20,000 new workers over that same period. 

Charter Communications, nearly a year after closing its purchase of Time Warner Cable, is nearing the finish line in its system-wide transition to the Spectrum brand, rolling out the moniker in Charlotte, N.C., and Upstate N.Y. this month.

Charter completed its $80 billion purchase of Time Warner Cable in May, 2016. Shortly after the company started rolling out its new brand – Charter Spectrum – in southern California and Texas in September and in New York City, Lincoln, Neb., and all former Bright House Networks markets in November.

The third phase of the transition began in January with the Midwest (Ohio, including Akron, Cincinnati, Cleveland, Columbus), Kentucky (including Lexington and Louisville), Wisconsin (including Green Bay and Milwaukee), Kansas City, Erie (Pa.) and some smaller systems in Indiana and West Virginia.

The fourth phase began with the Charlotte Spectrum rollout, on March 14, which will involve about 500,000 homes in that market. Upstate New York and New England will also make the switch to Spectrum this month.

After that, the only remaining former Time Warner Cable market left will be in Hawaii. Since its previous brand changes were spaced out by two months, logic would hold that Hawaii was due for a transition in May, but Charter hasn't finalized a date just yet.

As in other markets, the switchover is an opportunity for Charter to promote its high-speed Intent service, which has higher initial speeds, as well as other service features.

Sprint was awarded $139.8 million by a federal jury Friday, stemming from a six-year old suit that claimed Time Warner Cable infringed on its patents for voice-over-Internet-Protocol (VoIP), a method of transferring voice calls over digital lines.

Sprint originally filed the suit in 2011, alleging that TWC, Comcast, Cox and Cable One violated at least 12 VoIP patents by selling systems and services that used technology protected by the patents. The suits were filed in federal court in Kansas City.

Sprint was obviously pleased with the verdict and according to a report in Bloomberg News, Charter was disappointed and weighing its options.

Comcast is next up on the trial docket, scheduled to go before the same judge – John W. Lungstrum – on March 7.

According to Bloomberg, TWC (now owned by Charter Communications) “willfully infringed” on five of Sprint’s patents, meaning the damages could be trebled.

Cox Communications countersued Sprint in 2011 alleging that Sprint’s claims were too vague and therefore invalid. A federal court agreed with Cox but that decision was reversed on appeal in 2016. The current status of that case could not be determined.

Sprint’s suit against Cable One was dismissed by the court in November 2016, according to court documents.

Attorney General Eric T. Schneiderman has lobbed a lawsuit at Charter Communications and its subsidiary, Spectrum Management Holdings, over claims that cable systems formerly operated by Time Warner Cable in New York under-delivered on promised Internet speeds.

The suit alleges that Spectrum-TWC conducted “a deliberate scheme to defraud and mislead New Yorkers by promising internet service that they knew they could not deliver.”

The complaint claims that since at least January 2012 Spectrum-TWC’s marketing promised subscribers they’d get a “fast, reliable connection” and points to a 16-month investigation by the AG’s office that subs “were getting dramatically short-changed on both speed and reliability,” holding that those on certain premium plans (100 Mbps, 200 Mbps and 300 Mbps) were up to 70% slower than promised, and WiFi speeds were more than 80% slower than what was advertised.

Charter countered that the allegations stem from before the consummation of the TWC merger (the merger was completed in May 2016), that it has been investing and upgrading the former TWC systems there and that it would defend against the allegations. Charter’s full statement is as follows:

“We are disappointed that the NY Attorney General chose to file this lawsuit regarding Time Warner Cable’s broadband speed advertisements that occurred prior to Charter’s merger.  Charter made significant commitments to NY State as part of our merger with Time Warner Cable in areas of network investment, broadband deployment and offerings, customer service and jobs.  In addition, Charter was among the highest rated broadband providers in the 2016 FCC Broadband Report.  Charter has already made substantial investments in the interest of upgrading the Time Warner Cable systems and delivering the best possible experience to customers.  We will continue to invest in our business and deliver the highest quality services to our customers while we defend against these allegations involving Time Warner Cable practices."

The AG’s announcement holds that damages and restitution tied to the suite “could be worth upwards of hundreds of millions of dollars.”

Among the claims, the suit alleges that Spectrum-TWC leased “deficient cable modems” – including older single-channel DOCSIS 1.0 and DOCSIS 2.0 models -- to more than 900,000 subs in New York that could not deliver advertised speeds.  

The full contents of the complaint (PDF), filed Jan. 31 in state Supreme Court, can be accessed here.

“The allegations in today’s lawsuit confirm what millions of New Yorkers have long suspected -- Spectrum-Time Warner Cable has been ripping you off,” Schneiderman said, in a statement.“Today’s action seeks to bring much-needed relief to the millions of New Yorkers we allege have been getting cheated by Spectrum-Time Warner Cable for far too long. Even now, Spectrum-Time Warner Cable continues to offer Internet speeds that we found they cannot reliably deliver.”

The announcement noted that Columbia University law professor Tim Wu served as a consultant to the Office of the Attorney General in connection with the lawsuit against Spectrum-TWC.

The public-interest group Public Knowledge also weighed in, via a statement from senior counsel John Bergmayer: “Public Knowledge is glad to see the New York Attorney General protecting broadband users. Consumers deserve to get the speeds they’re paying for. In uncompetitive markets like consumer broadband, it's too easy for companies to offer customers a substandard service, year after year, including tricking them into upgrades that are never delivered. As Attorney General Schneiderman stated, your cable company ‘has been ripping you off.’ "

NBCUniversal said it is at an impasse in its carriage negotiations with Charter Spectrum and that the content company’s cable and broadcast networks will likely go dark when their respective agreements expire Dec. 31.

“NBCUniversal values its partnership with Charter Spectrum, our third largest distributor,” the Comcast-owned programmer said in a statement. “Charter Spectrum has been unyielding in its demand for terms superior to those agreed to by the rest of the industry, including larger distributors. Given this position, we feel the responsibility to inform viewers that Charter Spectrum may drop NBCUniversal’s networks at the end of the year, including NBC, Telemundo, USA, Bravo and hit shows including the #1 show on TV — Sunday Night Football, WWE, the Golden Globes, This is Us and more.”

Charter officials declined to comment, but noted any loss of signal in a dispute would have to be initiated by the programmer.

Charter is the second largest cable operator and the third largest pay TV provider in the country with about 17 million customers, trailing DirecTV and Comcast. The cable operator bulked up with more than $90 billion worth of acquisitions, closing its $80 billion purchase of Time Warner Cable and its $10.4 billion purchase of Bright House Networks in May.

The cable company tweaked the noses of some programmers earlier this year when it tried to impose Time Warner Cable’s rate card on its Charter systems. Some programmers objected, claiming those old, pricier deals with Charter weren’t set to expire until later, prompting some to file lawsuits. Charter, according to some of the suits, had tried to explain the shift by claiming it was acquired by TWC, not the other way around. 

NBCU has set up a informational web site for customers concerning the dispute at Delivermyshows.com, and has provided a toll-free number for customers at 1-844-55-Deliver (1-844-553-3548).

If the dispute goes long, Charter customers stand to miss sports programming like NFL Sunday Night Football, the NHL Centennial Classic and Premier League soccer on NBC as well as returning broadcast shows like Blindspot (Jan. 4); The Blacklist (Jan. 5); The 74th Golden Globe Awards (Jan. 8) and This is Us (Jan.10).

It was the best of times and the worst of times for Major League Baseball. The Chicago Cubs won the World Series after a 108-year absence, the Cleveland Indians almost won the World Series after a 68-year drought and Fox reversed their long-standing ratings decline for the Fall Classic… AND, got a Game 7 for the ages! Further, in a testament to the influence and social impact team sports can have, a reported 5 million people came out for the victory parade through the streets of Chicago land. The best of times for Cubs fans, no doubt.

But on the morning of Game 7, the worst of times were represented when the Department of Justice filed a civil antitrust action against DirecTV Group Holdings LLC and AT&T for violating Section 1 of the Sherman Act. The complaint states that DirecTV colluded with other Southern California MVPDs against distributing the Dodgers Channel since its inception. Amidst a myriad of intricate details and testimony, the DOJ complaint paid little attention to the fact Time Warner Cable guaranteed the Dodgers a big increase in rights fees, shattering MLB's RSN economics like a fastball does a poorly milled bat. Or that the impasse has protected existing subscribers from an additional $3+ dollar per month on their So Cal bills.

My guess is there are some Cable Hall of Fame MVPD programming execs that understand and, in some private manner, appreciate the extraordinary commitment it takes to withstand sports network carriage battles. And while the inside baseball on the DOJ action is likely a brush back pitch for the pending AT&T-Time Warner merger approval process, they may want to take the time to look at the good ‘ole expanded basic bundle and run some quick numbers on the level of sports expense included in such.

It would also appear that the postgame fireworks are just getting started. Adding to this hardball madness: it's been long rumored that the Cubs' owners want their own RSN. Early this year, TheChicago Tribune’s Mark Gonzales even penned an article headlined “New TV arrangement at forefront of Cubs' business decisions.”Mr. Gonzales’s piece didn’t make any mention of the current standoff between Comcast and YES Network, which has now entered year two and has benched Yankees (and New Jersey Nets) games for nearly 1 million Comcast subscribers in the New York and Hartford DMAs. Likewise, nothing about the extra innings distribution marathon the Baltimore Orioles encountered launching MASN, or any mention of failed MLB team owned RSNs in Houston and Minnesota. No indeed, it’s all good in Wrigleyville, to the victor go the spoils and bring on Bill Murray and CubbyTV!

The longstanding debate over where pro sports teams and their RSNs belong in the MVPD packaging scheme will not be settled anytime soon. Looking back at the carriage history of pro sports, the original concept of offering professional team games via RSNs was created by Mr. Charles Dolan and his Cablevision Sports 3 in 1976, followed shortly thereafter by MSG Network in 1977. Originally, Mr. Dolan offered these as “mini pay services” at a price above that of the entry-level packages. The concept of moving RSNs to the larger and more heavily penetrated basic tiers first surfaced south of the nation’s capital in the outer markets that carried Home Team Sports. Recounting those days with veteran distribution exec Jim Bates, he explained the move to expanded basic as more a function of convenience for the cable operators in and around Norfolk, Va., who didn’t have the marketing muscle to drive them as pay services, and saw the reasonable license fee as an appropriate tradeoff.  

As the 90s rolled around, the idea that there was larger ad sales success to pursue for the RSNs gave way to negotiations for pay to basic re-positioning, and the game was on. Couple that with the strategic consolidation of the RSNs by SportsChannel and then Fox Sports Net, add in Fox’s David Hill’s proclamation that “sports are tribal,” then finish it off with the sales pitch that RSNs were higher rated than ESPN and, well, ESPN is in expanded basic. Game set and match! Wait a minute, that’s a tennis term. How about “a walk off homer” for the RSNs? Much better.  

But enough about the badness of protracted and painful baseball/RSN distribution strikeouts as this will inevitably play out and probably cure itself with the shift in purchasing trends currently disrupting Pay TV. Let’s end on a high note for our nation’s pastime. There is a youth movement in baseball with 15 players under the age of 25 playing in the world series, Bob Bowman and his MLB Advanced Media team have created the best of the U.S. pro leagues’ digital platforms, and commissioner Rob Manfred is a forward thinking leader who is looking to shorten games through various rules innovations.  

People watch winners, and having 5 million Cubs show up for a victory parade may be a strong pitch for placing yet another RSN on expanded basic. If only the Cubs could win it every year!

(Chicago Cubs' victory parade photo by Ryan Dickey on Flickr.com)

Matt Cacciato is an Adjunct Professor in Ohio University’s No. 1-ranked Sports Management Program and founder of American Education Television. Prior to that, he spent 20 years negotiating affiliate distribution agreements for YES Network, Fox Sports Net’s L.A., Arizona and Washington state RSNs, ESPN (including the company’s only RSN effort, ESPN West) and SportsChannel NY. 

Hearst Television has promoted Roger Keating, senior vice president, digital media, to chief strategy and business development officer, the company said.

Keating, a former cable industry executive, joined Hearst in 2008 to lead its digital media business. In that role he established a number of cross-industry initiatives, including the Dyle mobile television alliance, the local video-news aggregator NewsON and the Pearl consortium’s advanced TV advertising initiatives, Hearst TV said.

"Roger has provided our company and our industry prescient leadership in a rapidly changing media landscape,” Jordan Wertlieb, Hearst TV president, said.

In his new position Keating will work on developing additional partnerships and business opportunities.

Keating's resume includes stints at Time Warner Cable, where he ran a number of regional businesses, and Comcast, where he launched the MSO's high-speed broadband business, Hearst TV said. He also led AOL’s health and travel verticals and founded “Zatso,” a venture-backed online video news site.

Rep. Tony Cárdenas (D-Calif.) , who has long pushed for carriage deals to restore Dodgers baseball, weighed in Wednesday on the news that the Justice Department is suing AT&T and DirecTV for alleged collusion that blocked carriage of Time Warner Cable's Dodgers Channel (AT&T says it will fight those allegations in court).

“The allegations made by the Department of Justice against AT&T and DirecTV are troubling. For three years, Dodgers games have been blacked out for everyone in Los Angeles except Charter/Time Warner Cable subscribers. Dodgers fans, and I include myself in that group, deserve to see their home team play. For the good of our Los Angeles baseball tradition, we must find a way to make sure these games are available for the fans who want to watch them at home.” The Dodgers Channel is still not carrier by Cox, AT&T or DirecTV.

In 2014, Cárdenas and some of his L.A. delegation colleagues wrote Wheeler asking him to mediate the stalemate between TWC and other operators, including Cox and Charter, who were cited for sharing information with DirecTV but not named as defendants in the suit.

Wheeler wrote Time Warner Cable CEO Rob Marcus to register his concern. Marcus advised the FCC to widen its net to look at DirecTV and other distributors for why a deal had not been done. Clearly DOJ did just that.

The DOJ suit was announced by Jonathan Sallet, currently with Justice's antitrust division but until recently FCC general counsel.

Time Warner Cable launched SportsNet LA in February, but a number of distributors complained about the price — some reports put is as high as $4 per sub per month — especially when combined with three other RSNs in the market (Prime Ticket, Fox Sports LA and Time Warner Cable SportsNet) and aren't taking the network.

In hammering against the AT&T-Time Warner deal last week, some individual groups appeared to be treating the CEO of Time Warner as “He-Who-Must-Not-Be-Named.” OK, we know, Lord Voldemort is a TW employee, sort of, but that is strictly in his capacity as the archest of arch villains in the Harry Potter tales.

For example, Sen. Bernie Sanders (I-Vt.), in his letter to the Department of Justice slamming the deal, proposal referred only to “the CEO of Time Warner” decrying all those millions in stock options that could be coming his way.

Having dutifully added the name of Time Warner CEO “Jeff Bewkes” to those nameless reports on the pushback, The Wire was momentarily panicked when the Senate Judiciary Committee sent out this notice last week about the oversight hearing on the deal: “Both Randall Stephenson, the CEO of AT&T, and Robert Marcus, the CEO of Time Warner, will testify.”

Could we have been wrong, or perhaps this was a case of “He-Who-Must-Not-Be-Named-Correctly.”

As readers of these pages know, Marcus is the now-former CEO of Time Warner Cable who also exited with millions in the bank after the Charter Communications merger.

Within 15 minutes, which is nanoseconds in D.C. time, the committee had sent as a follow-up an amended announcement with Bewkes where Marcus had been, plus an apology for any confusion.

Accepted.

The Progressive Policy Institute has named its Top 25 investment heroes for 2016 and, as was the case in last year's report, the telecom/cable sector had the lion's share of domestic capital expenditures at $48 billion, with the energy sector next at 33.8 billion.

The Top 25 is calculated according to "estimated domestic investment in their most recent fiscal year" -- 2015 in this case.

The list's telecom/cable sector comprised the same four companies as last year -- AT&T, Verizon, Comcast, and Time Warner Cable. Together, they cut capex by 1.3% in 2015, which PPI ascribes to "increased regulatory uncertainty" combined with normal business decisions, such as Verizon investing less in traditional wireline as it moves more into wireless, for example.

"The fact that the telecom and cable companies manage to stay on the top of the list reflects the rapid pace of innovation in the industry and the desire to meet growing demand for high-speed broadband," PPI said.

ISPs have long argued that the threat -- realized in mid-2015 -- to reclassify broadband as a Title II service would depress investment. PPI is also historically no fan of the FCC's Title II ISP reclassification.

AT&T again topped the list, with $18.7 billion in capital expenditures, though that represented an 11.6% reduction in investment compared with fiscal year 2014.

Verizon followed in second place, with 2015 capex of $16.5 billion. The telco's spending was up 3.4% due to boosts in domestic wireless, which overset declines in spending on traditional wireline.

Comcast weighed in at No. 8 (unchanged from last year) with $8.3 billion in capex, while Time Warner Cable was No. 21 -- down from No. 19 in last year's report -- with capital expenditures of $4.5 billion.

Switched digital video is not a new technology, but Adara Technologies, a supplier that’s been focused on independent cable operators, has added a new wrinkle that could help those providers migrate to IP video without breaking the bank.

MSOs such as Cablevision Systems (now part of Altice), Time Warner Cable and Charter Communications have used SDV for years to conserve bandwidth by putting lesser-viewed networks on “switched” tiers. The idea is to send a multicast stream of a specific channel or network only when a viewer in a given service group selects it for viewing. Once that stream is nailed up, others in the service group can tune into that stream. The multicast stream is then torn down when no one is watching that channel.

But Adara has taken SDV to the next level, enabling cable operators to deliver their full video service — not just the long-tail stuff — in a switched environment. The company recently carved out that switched-IP solution as a standalone product.

Adara has plenty of company in that arena, though. Evolution Digital, for example, is pitching National Television Cooperative members and other independent operators on IP video transition strategies that center on its new eVUE-TV platform.

Adara has expanded beyond its early reliance on a Cisco-centric offering to support multiple vendor platforms and set-tops, including products from equipment makers such as Arris and TiVo.

“We changed the purpose of switched-IP video,” Joseph Nucara, Adara’s CEO and cofounder, said. “It’s not just for long-tail [content] anymore.”

Under Adara’s approach, an operator can set aside channels that are typically used for broadcast TV to the new switched-IP video QAMs. Legacy set-tops, meanwhile, are preserved by embedding software from Adara that allows those devices to support the new IP-based multicast video streams.

Because new boxes aren’t required, “It’s extremely non-intrusive to the subscribers,” Nucara said.

He estimates that deployment requires freeing up eight to 24 6MHz-wide channels, depending on how much headroom the MSO needs to accommodate capacity demands.

“It’s like bandwidth on demand,” Nucara said.

Adara’s system monitors usage in real-time, and is designed to flag the operator when available bandwidth usage for the IP switched offering nears the 80% mark on a consistent basis. That, Nucara said, tells the operator when it needs to add capacity to those service groups or subdivide them.

Because that spectrum is now used to deliver IP-style “switched” technology, operators can support “unlimited content” in a smaller swatch of bandwidth, and can use reclaimed bandwidth for other needs, such as DOC SIS 3.1, Nucara said.

He said the same process could also support 4K video services, as MSOs look to take advantage of the new pixel- packed format.

Adara hasn’t broken down the exact costs of its system, but Nucara said a typical deployment requires about half a rack of equipment in the MSO’s headend, plus the new SDV components.

While Adara doesn’t preclude Tier 1s from using the platform, it has been taking hold mostly with small- and mid-tier operators, including Cass Cable of Central Illinois; CCAP in Quebec City and Cable Cable of Ontario, Canada; Cablevision in Warwick, N.Y.; Darien Telephone in Georgia; and Fayetteville Public Utility in Tennessee.

Nucara estimates that more than 75 operators are using Adara’s technology. He also thinks that the switched IP video component will draw the attention of larger, Tier 2 MSOs.

Rachel Welch, formerly head of federal legislative at Time Warner Cable, has joined Cox as VP of government affairs.

She is based in Cox's D.C. office and will report to Joab Lesesne, VP of public policy and government affairs.

Welch will focus on Congress and particularly telecom, privacy, copyright and cybersecurity issues.

Welch's resume includes stints with Time Warner Inc. and AT&T. She is also former counsel for the Senate Commerce Committee.

She was also named one of a Women In Telecommunications' Women to Watch in 2015.

An industry source confirmed that former Time Warner Cable exec Peter Stern has been hired by Apple as a vice president with a focus on subscription services.

Apple and Stern did not respond to inquiries on Tuesday about the hire, but The Wall Street Journal was first to report the hiring today, noting that Stern will report to Eddy Cue, the company’s SVP of Internet software and services, who has reportedly been trying to secure deals with programmers for a pay TV service but his brash negotiation style did not play well with broadcasters and other programmers, per an earlier report from the WSJ.

Apple also confirmed to the paper that Stern will be focused on cloud services and subscription services such as Apple Music and a potential (and long-rumored) streaming TV service.

Stern, who joined TWC in 2004, most recently served as the MSO’s EVP and chief product, people and strategy officer. Stern was also an important player there amid the emergence of authenticated TV Everywhere services, an inititiative embraced eagerly by TWC, which extended support to wide range of connected platforms, including Roku devices, the Xbox 360 and Xbox One and Samsung smart TVs. He departed following Charter Communication’s acquisition of TWC earlier this year.

The WSJ said Stern was part of a team that discussed a deal with Apple about delivering the MSO’s video service on an Apple TV device. A source with knowledge of those negotiations said Apple was viewed as arrogant by TWC and that it “wanted too much” amid promises that affixing the MSO’s service to the Apple brand would be more than enough to help the MSO reverse mounting video subscriber losses.

RELATED: Forbidden Fruit

The WSJ suggested that Stern’s knowledge and understanding of the pay TV industry and its business models (something that Apple has struggled with) could help Apple rekindle its pay TV plans. 

The FCC is trying to spur separate competition to cable-leased set-tops in the delivery of video programming, but according to one federal court, the two are inseparable.

A panel of the U.S. Court of Appeals for the Second Circuit has upheld a lower court decision dismissing a class action suit against Time Warner Cable (now part of Charter Communications) for allegedly tying premium cable services to leasing cable boxes, finding that for the purposes of antitrust law, at least, cable boxes and the premium cable service they transmit are not separate products so can't be anticompetitively tied.

"A cable box must be cable-provider-specific, like the keys to a padlock," the court found. "Although the plaintiffs frame their claim as a tie-in, the core issue is a cable provider's right to refuse to enable cable boces it doesn not control to unscramble its coded signal."

The decision was handed down Friday.

A group of subs had alleged antitrust violations, but a district court judge dismissed two different iterations of the suit, after which the complainants appealed.

A three-judge panel of the court--Judges Denny Chin and Ralph Winter supporting, Judge Christopher Droney dissenting --concluded that the complaint failed to come up with facts adequate to prove, if established, "that 1) the set-top cable boxes and the premium programming they transmit are separate products for the purposes of antitrust law, and that 2) Time Warner possesses sufficient market power in the relevant markets to establish and illegal tie-in."

The majority judges also point to the FCC rule capping the price of leased set-tops, saying: "We doubt that Time Warner would attempt to monopolize the market for bi-directional cable boxes when an FCC regulation caps the amount of profits that Time Warner may reap from that market."

The court also said the FCC's inability to create a competitive market also argues against the tying claim.

In his dissent, Droney said the complainants had produced evidence that "plausibly alleges a separate product market for consumer-purchased cable boxes, which is suppressed by Time Warner's anticompetitive conduct." He said concluding otherwise "imposes too high a bar on plaintiffs."

Long-time programming executive Allan Singer will leave his post as senior vice president of programming at Charter Communications, the cable operator confirmed Friday.

Singer, who joined Charter in 2011 from OWN: The Oprah Winfrey Network, had informed the company that he did not want to relocate from his Denver home to Charter’s Stamford, Conn. headquarters. No specific departure date has been determined, according to Charter spokesman Justin Venech, and Singer will continue at the company in the transition period. While no permanent decisions have been made regarding Singer’s position, former Time Warner Cable SVP of content acquisition Andrew Rosenberg will oversee the programming team in the interim. Rosenberg was Time Warner Cable programming chief Melinda Witmer’s No. 2 programing executive while at the company.

Singer has had a long career in the cable business. Prior to his role as EVP of distribution and strategy at OWN, he had served in a series of executive positions at Comcast, including SVP of content acquisition and SVP of sports business development.

Charter completed its $78.7 billion merger with Time Warner Cable on May 18. Since then the company has made several changes in the exective suite, including naming former Cablevision Systems executive David Ellen senior executive vice president, former Madison Square Garden executive Michael Bair as executive vice president of Spectrum Networks and former Cablevision Systems executive Clifford Harris as senior vice president of law -- programming, product and regulatory.   

Univision has filed suit against Charter over fees for carriage of the network, including on Time Warner Cable systems now part of Charter. 

"Charter insists that the contract Univision had with Time Warner Cable is controlling, rather than its own contract with Univision," said Univision in a statement. "Charter bases this argument on the preposterous theory that as a result of the merger, Time Warner Cable, rather than Charter, is managing all these cable systems. But everyone knows that is not true: the longstanding CEO and the executive team of Charter, as well as its pre-existing board of directors, now manage and control all of the cable systems," said Univision.

According to a copy of the suit, Univision says Charter is trying to get the lower TWC fee for all its systems through 2022.

"Disregarding its clear contractual commitments, New Charter now implausibly asserts that through June 2022, the prior TWC agreement [with Univision] not only governs the Legacy TWC Systems, but also grants it the right to distribute Univision’s programming on the Legacy Charter Systems over the same period. New Charter rests these unbelievable claims on a clause in the prior 2009 distribution agreement between Univision and TWC (the “TWC Agreement”) that defines “Systems” governed by that agreement. New Charter points to the definition of “System” as defined, in relevant part, as one “that is managed with respect to programming matters by a Time Warner Company . . .” (emphasis added). By its own plain terms, however, the TWC Agreement cannot apply because, following the Acquisition, TWC clearly does not manage any of the cable systems at issue, as Defendants themselves have repeatedly stated and as they have demonstrated incontrovertibly through their actions."

"We have a long-term contract with Univision and we expect them to honor it," said a Charter spokesperson.

Frontier Communications, which has been growing as a pay-TV provider through acquisitions (including former Verizon Fios and AT&T U-verse systems) and by introducing an IPTV-based service called Vantage in other markets, has applied to provide TV service in Middletown, N.Y., where Time Warner Cable operates.

Mid-HudsonNews.com reported that Frontier officials discussed video expansion plans in the city of Middletown at a common council public meeting Tuesday night. Norwalk, Conn.-based Frontier offers the recently rebranded Vantage service throughout much of Connecticut and recently launched the service, based on the Ericsson Mediaroom platform, in Durham, N.C., as well. Officials have said the company hopes to expand video service into 40 more markets over the next three to four years. Frontier has applied for a statewide franchise in Ohio, according to officials.

The news site reported Frontier proposed paying the city a franchise fee based on revenue, as Time Warner Cable (now owned by Charter Communications) does, and would not have to rip up streets to provide TV service. 

After completing a $10.5-billion buyout of former Verizon wireline operations in California, Florida and Texas, Frontier has about 1.5 million video subscribers on its networks, making it the eighth-biggest pay-TV provider in the country, according to MCN estimates. The next biggest company on that list, Mediacom Communications, is headquartered near Middletown, a community about 70 miles north of New York City in Orange County.

UPDATE: Patricia Amendola, communications manager for Frontier's East Region, told Multichannel News: "Frontier has filed a cable franchise application with the City of Middletown and other nearby communities served by Frontier. The City of Middletown held a public hearing as the first step in approval of a cable franchise where Frontier presented its plans to offer competitive cable service and choice in the City of Middletown. We are also currently installing some of the equipment in our central offices so that we are ready once the regulatory process concludes. The equipment upgrades will occur within our existing buildings and facilities without any disturbance to the public." Frontier also will seek New York State Public Service Commission approval to launch Vantage TV in Middletown and the other communitites, she said. 

Charter and Time Warner Cable (now part of Charter) have failed to refund customers for overcharges, but both have taken steps to correct the issue, according to a copy of a staff report from the Senate Permanent Subcommittee on Investigations.

The report found that MVPDs vary greatly in how they handle billing overcharges, but that while "Time Warner Cable and Charter have procedures for identifying overcharges and removing them from customers’ bills prospectively, [n]either company, however, has automatically provided full retroactive refunds or credits for past overcharges."

By contrast, the report said, "Comcast and DirecTV provide automatic refunds or credits to overcharged customers, while Dish’s billing system is designed to prevent these types of overcharges from occurring in the first place."

The report comes as the subcommittee holds a hearing on cable customer service and billing that will feature execs from those companies.

Related:Senate Subcommittee Eyes Fall Wrap-Up for MVPD Investigation

The report found that "between January and April, Time Warner Cable overbilled customers nationwide an estimated $639,948," and projected that in 2016, "Time Warner Cable will overbill customers nationwide a total of $1,919,844."

It said Charter had not completed the "underlying work necessary to determine how much it has overbilled customers," but said the MSO had informed the subcommittee it overbilled by at least $442,691 per month.

The subcommittee is headed by Rob Portman (R-Ohio) and Claire McCaskill (D-Mo.).

Related:McCaskill Hammers MVPDs Over Customer Service, Fees

"Time Warner Cable estimates that, in 2015, it overbilled 40,193 Ohio customers a total of $430,393 and 4,232 Missouri customers a total of $44,152," the study found, while "Charter estimates that it has annually overcharged approximately 5,897 Missouri customers a total of $494,000 each year. Charter does not provide service in Ohio."

The report also said Charter and Time Warner Cable have taken steps to correct the situation as a result of the investigation.

"Each month, Time Warner Cable performs an audit comparing its billing records with service records," the report said. "Going forward, the company will provide an automatic one-month credit to anyone who is identified in the audit as having been overcharged. Time Warner Cable will not, however, investigate when it began overcharging customers unless customers bring specific concerns to the company’s attention, nor will it provide a full refund dating back to when the overcharge began. Similarly, Charter will provide customers with a one-year credit for any equipment overcharges. Charter has also implemented systemic controls that it says will prevent equipment overcharges in the future."

Charter responded in a statement: “Since 2012, we have invested $7 billion in network improvements and added more than 7,000 jobs resulting in growing and longer customer relationships. An audit of our set-top boxes charges over the last nine months found them to be over 99 percent accurate. To move us closer to 100 percent accuracy and permanently resolve this issue, we have installed new controls to ensure discrepancies are caught and eliminated on a daily basis. Customers who were incorrectly charged for set-top boxes are being notified and given a 12-month credit for these fees.”

Charter said it believes it now has a system in place to fix the mismatches between equipment and billing going forward, adding that it has been auditing since last summer and and has found that it now has a 99.4% accuracy rate between equipment and billing. The MSO said it is working to eliinate the .6% error rate.

It said it is now running daily audits to catch any mismatches and correct them. It is providing a 12 month credit to those who have been overcharged.

John Keib, former EVP and COO for residential services at Time Warner Cable, pointed out during the hearing that Time Warner Cable had been undercharging more than it was overcharging.

Portman said the undercharges don't help those who are being overcharged. The point was that when an overcharge was discovered, customers be made whole, not just giving them a 12-month credit, or in the case of legacy TWC systems, only a month. Portman pressed Charter on why only a month.

Charter explained it this way in its testimony: "In May of 2016, Charter completed its acquisition of Time Warner Cable. At just a little more than 30 days post-closing, Charter has been advised that TWC currently catches and corrects any overcharges on a monthly basis," the company said. "We will put controls into place to catch such instances daily, as we now have installed at Charter, but that will take approximately 60--‐90 days. Until then, we will proactively issue a one month credit to any customer that the current monthly process reveals was overcharged."

Portman said auditing was a step forward, but the company was still not fully compensating those who had been overcharged.

McCaskill said the MVPD business model appears to be to set a low, promotional entry price, upsell, then deal with angry people in a way to calm them and keep them. Nobody knows how to get the best price, Said McCaskill, and the secret sauce appears to be getting mad.

McCaskill said she was really frustrated by "never advertised" secret rates offered by retention agents. Noone on the panel disagreed that such rates were offered. She said that was the kind of "hide the ball" regime that angers customers.

As the weather gets hotter, pay TV customers could be shedding their television subscriptions — along with their long pants and sweaters — in greater numbers, according to Sanford Bernstein media analyst Todd Juenger.

Juenger took a deep dive into the trend of pay TV customer “seasonality,” the annual summer decline in monthly video subscriptions as customers purportedly moved to summer residences or to more permanent homes. Summer is traditionally the most popular time of the year to move, primarily because it allows parents to settle in before the school year starts.

On a conference call, of which the analyst provided a transcript to clients, Juenger conceded that the seasonality phenomenon is nothing new. But what he found in his research is that summer pay TV disconnects could be a trigger for cord-cutting because, unlike in past years, the customers who cancel service in the summer don’t seem to be coming back. He pointed to last summer, when pay TV subscriptions rose substantially in the second and third quarters.

TRIGGERED LOWER GUIDANCE

Juenger said year-over-year pay TV subscriptions declined by 0.6% in the second quarter of 2015 (compared to a gain of about 1% in Q2 2014) and by 1.4% in the third quarter (compared to a 0.9% gain in Q3 2014). That sharp decline, he said, helped to trigger decisions by The Walt Disney Co. and Time Warner Inc. to reduce subscriber and financial guidance, which, in turn, fueled even more cord-cutting fears.

Cord-cutting wasn’t as bad in Q4 2015 and in the first quarter of this year, when video subscriptions were down about 0.9% and 0.4%, respectively. But Juenger said he sees the signs.

“We have a theory that summertime is now always going to be the worst time for cord-cutting, because that’s when people move and that’s their chance to cut the cord,” he said. “We have serious concerns that this summer is going to look like last summer.”

Not everyone agrees.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said seasonal churn is commonplace in the pay TV business, and he sees no correlation with cord-cutting.

“I doubt it is that material of a driver,” Wlodarczak said.

Telsey Advisory Group media analyst Tom Eagan pointed to recent gains in the cable-subscriber universe — both Charter Communications and Time Warner Cable reported full-year video subscriber gains, while Comcast has consistently improved losses and reported a gain of 53,000 video customers in the first quarter, its best Q1 showing in nine years.

“If you look at the numbers, they continue to be pretty good,” Eagan said, adding that the summer is usually when churn is highest, and that’s likely to remain so. “Video is looking better than it has ever looked.”

The key to any increase in cord-cutting would be how attractive the alternatives are, Eagan said. While there have been some changes in products like Sling TV, which is testing a multistream service that includes regional sports networks, for the most part over-the-top offerings don’t offer the same value as pay TV.

“They [OTT] are nominally more attractive, not materially more attractive,” Eagan said.

Juenger argues that distributors aren’t the only ones affected by cord-cutters. With a declining subscriber base, network affiliate fees also fall. Couple that with an expected dip in advertising revenue growth and it could indeed be a long, hot summer for programmers.

Most networks have guided to slower growth in the second half of the year, Juenger noted, so that is not a surprise.

“The issue is how fast it will slow down,” Juenger said, adding that the Summer Olympics will be good for NBC’s ad sales but bad for every other network. He added that the loss of fantasy-football ad money — several states are deciding whether daily fantasy sports sites like FanDuel and DraftKings are gambling operations, or games of skill, which has caused a pullback in advertising on TV — and what he thinks will be the replacement of higher-priced scatter ad revenue with lower-priced upfront inventory all “conspires for an advertising slowdown.”

ACCOUNT REVIEWS CITED

Eagan said his main concern about the ad market is how much it will be driven by the slowdown of last year. In 2015, he said, several advertisers put their accounts up for review, which had an effect on total ad revenue.

“There was a slowdown in spending because of all the account reviews,” Eagan said. “To a degree, the significantly higher agency changes are catching up with us now.”

As a result, Eagan predicted that ad revenue could rise by the mid-to-high single digits for most programmers in 2016, compared to 1% to 8% declines in the prior year.

But that growth will depend on the company, Eagan said. In a research note last week, he predicted that ad sales would dip 2.5% for CBS in the second quarter, rising to 4% growth in the third quarter and 5.8% in the fourth quarter. At 21st Century Fox, ad revenue should spike 10.5% in the second quarter — fueled by Fox News Channel and the presidential election — and 11.9% in the third quarter before settling to 0.7% growth in the fourth.

The election, he said, could also impact local TV advertising.

“A lot of the regional advertisers that would spend locally, and spend higher on a CPM basis, can’t go local because of the elections,” Eagan said. “That should continue for the balance of the year.”

Today (June 14) is the 20th anniversary of the release of what at the time was thought to be actor/comedian Jim Carrey’s biggest flop, and a movie that was universally hated in the cable community – The Cable Guy. But I come not to praise the movie – although I do have a bit of a soft spot for a certain scene. Instead my aim is to point out that its obvious stereotypes of cable installers nothwithstanding, the movie is a bit misunderstood.

I’m not the only one who thinks so. The Cable Guy came after what was a remarkable one-year box office run for Carrey – Ace Ventura: Pet Detective, The Mask and Dumb and Dumber came out in quick succession in 1994, transforming him from TV comedy actor to movie star. The next year he played The Riddler in the biggest box office hit that year, Batman Forever.

Taking on The Cable Guy was a bit of a risk for Carrey – the character was a lot darker than he was used to and the role wasn’t a starring one. And despite being directed by Ben Stiller (in just his second movie) and produced by a young Judd Apatow – who both went on to much bigger things – The Cable Guy was considered a flop.

In a review Tuesday on avclub.com, A.A. Dowd pointed out that the movie actually wasn’t the disaster most remember it as – something I cannot say about Freddy Got Fingered.  According to Dowd’s article, The Cable Guy ended up raking in twice its $47 million budget (when international box office is included) and reviews were mixed at worst, not universally despised.

But according to Dowd – and this is the whole point of this blog – Cable Guy wasn’t a flop it just “took on the reputation of a flop.”

There you go. Cable Guy wasn’t so bad; it’s just that everybody thinks it is. I think there are some obvious parallels to the cable industry.

Take customer service. I’m not saying there isn’t room for improvement but if the industry truly was as bad as it appears to be in customer service surveys, it wouldn’t have lasted a month. Sure there is the argument that for a long time cable was the only pay TV game in town, but that hasn’t been the case for decades. And cable has managed to pull out of all of its past death spirals caused by satellite TV and telco TV, improving losses and even adding video customers in the past year. And it probably will do the same with the latest threat – over-the-top.

High-speed data growth continues to outpace the competition and cable operator consistently place higher in broadband customer surveys. Pretty ironic since they both travel over the same network and use a lot of the same customer service personnel.

Charter Communications chairman and CEO Tom Rutledge, who last month became the head of the second largest cable operator and the third largest multichannel video service provider in the country, has a stellar customer service reputation. As chief operating officer of Cablevision Systems, he helped reverse that operator’s once dismal customer service rep. At Charter, he has worked hard to bring customer service in house, taking transactions out of the business and  giving customers more opportunities to solve their own service problems remotely. At Comcast, the country’s largest cable company, has been building call centers and retail stores, compressing appointment windows and guaranteeing on-time service. 

The point of all of this is that cable obviously has a long way to go, but it is making progress. Let’s hope that in another 20 years, the cable industry outpaces The Cable Guy, and reality overtakes reputation, for the better.        

Liberty Global chairman John Malone is reportedly close to buying up a local cable operator in Poland in a deal that would consolidate the cable company’s holdings in that country.

According to Reuters, reports in Polish business newspaper Puls Biznesu said that Liberty is close to a deal with cable operator Multimedia and combining it with its UPC Polska operations,. The combined companies would cover half of the country with about 2.2 million subscribers.

UPC Polska is the largest cable operator in Poland. Any deal would have to be approved by regulatory  authorities. Terms of the deal weren’t disclosed but reports said the combined company would have annual revenue of about $574 million.

Liberty Global has been aggressive on the deal front – it completed a $7.4 billion buy of Caribbean telecom provider Cable & Wireless in May and has made a big splash in the European cable market in the past, snapping up Virgin Media in 2013 and partnering with Vodafone in February in a 50-50 joint venture to combine their Dutch operations in a deal valued at about $29 billion.

Malone was a big player in U.S. cable consolidation – his Liberty Broadband spinoff owns a 27% interest in Charter Communications and helped fund that cable company’s purchases of Time Warner Cable and Bright House Networks. After that landmark deal, the cable legend has apparently turned at least some of his attention to Europe, with reports saying he would be open to a deal with Vodafone, the continent’s largest wireless company. Talk of a Liberty-Vodafone deal has been common over the past several years – as early as 2014 the wireless conglomerate was reportedly considering a takeover -- but haven’t materialized, largely over valuation issues. That could still be the case although it hasn’t stopped the speculation.

On the domestic side, Malone also has been looking for a suitor for premium channel Starz, which was spun off from Liberty Media in 2013. In February 2015 Malone swapped a 4.5% stake in Starz for a 3.4% interest in movie studio Lionsgate, which fueled speculation that a combination was imminent. In February of this year, Lionsgate filed documents with the Securities and Exchange Commission noting it intended to start merger talks with Starz, but those discussions were cut off after Lionsgate stock fell hard on disappointing box office from the final installment in the Hunger Games franchise – Hunger Games: Mockingjay Part 2.

At the Gabelli Movies & Entertainment conference yesterday, Starz CEO Chris Albrecht echoed what he has said in the past, that more deals will happen in the space, whether it be between Viacom, Time Warner Inc., Starz or Lionsgate, but it all depends on the timing.

"Once something happens, there are going to more things that happen,” Albrecht said. “…I don't predict any particular occurrence, but I do predict that we will see more activity in the M&A space among the companies I mentioned and more, and young Dr. Malone will be somewhere, you can be sure," Albrecht said at the conference.  

It was Sir Isaac Newton who said, “If I have seen further, it is by standing on the shoulders of giants.” The same might be said of many of the companies that today comprise the television and internet universe. This is particularly noteworthy today, as some of the companies responsible for fundamental innovations in the way we connect and communicate, are being absorbed, by consolidation, into larger entities.

A quintessential example is Time Warner Cable (TWC), an enormously and historically influential cable operator that recently became part of the “new” Charter Communications. 

Time Warner Cable was an assemblage of earlier, smaller predecessors, dating back to the pioneering, 1960s era of the cable television business – companies such as American Television and Communications (ATC) and Warner Cable. Co-founded in 1968 by cable pioneers Monty Rifkin and Bill Daniels, ATC and later TWC led a decades-long charge in technological innovation that created sweeping changes in the way we watch TV and access content. 

As noted in the chronicle of TWC’s corporate history, Making Connections, the passion for dramatic-yet-pragmatic technological advancement as a core strategic tenet was fostered by the company’s visionary leaders. And many of those enhancements – some dating back 30 years – paved the way to the anytime, anything, anywhere, any-device nature of today’s consumer experience. 

TWC’s technological prowess stems back to major projects in the 1970s, ’80s and ’90s: such as the seminal two-way, interactive network called QUBE, developed by Warner Cable in the late 1970s; ATC’s invention of a way to use optical fiber as a principal medium for transporting signals and data in the late 1980s; and, the truly innovative Full Service Network (FSN) – a precursor to the fully-addressable 500-channel, on-demand universe – launched by Time Warner Cable in Orlando in 1994. (Pictured in a MCN file photo: then Time Warner Inc. CEO Gerry Levin with an oversized version of the FSN remote in Orlando, Fla.)

Some detail: ATC was the first cable operator (or telephone operator, for that matter) to spearhead the use of fiber optics as a method of transmitting video content. Under the leadership of cable technology pioneer Jim Chiddix, the company’s Oceanic Cablevision division tested and used optical fiber during the 1980s to transport video signals, initially on the island of Oahu.

After subsequent lab testing and development, led by Senior Engineering Fellow Louis Williamson in partnership with then-supplier Ortel Corp., fiber-based video carriage was readied for implementation throughout ATC/TWC. It spread ultimately to virtually the entire cable industry, even setting the table for later entrants/competitors such as Verizon Fios.

ATC coined the term “hybrid fiber-coax” (HFC) to characterize the new technology. HFC works by threading optical fiber – known for its robust, clean and passive (meaning no amplifiers required) characteristics – in the core of the network. The fiber optic cable then adjoins to coaxial cable at nodes, and the “coax” (pronounced “co-axe”) then delivers content the rest of the way to customer households.

Starting in the mid-90s and into the following decade, TWC and other cable companies invested tens of billions of dollars to deploy “two-way” HFC networks – capable of carrying transmissions both to and from subscriber households. This move enabled the delivery of interactive digital video services, as well as the introduction of affordable residential broadband service to American households. As a result of ongoing technological advancements and tens of billions of dollars of further investment, HFC networks are now delivering Gigabit Internet speeds to consumers, with the potential to expand to transmission speeds of more than 10 Gigabits per second.

Appropriately, in 1994 Time Warner Cable won the first Emmy Award earned by a cable operator – the Engineering Award for Outstanding Achievement in Technological Development, which recognized TWC’s pioneering work in using fiber optics to transmit video and broadband signals. Time Warner Cable went on to win eight additional Technology and Engineering Emmy Awards in later years.

TWC’s Full Service Network was a truly aspirational proof-of-concept network that was recognized in 2001 with another Technology Emmy. The FSN pioneered many of today’s most popular video services: Video On Demand, full “trick-play” (the ability to mimic analog technology, with pause, rewind, and fast-forward functions), and other interactive services now commonplace in the video ecosystem and the Internet.

TWC continued its innovative contributions in the 2000s with the introduction of video service features such as Start Over® and Look Back®: Start Over to satisfy viewers who happen upon a program after it has started, and want to simply begin it from the start; Look Back to find not-yet-seen episodes of programs from the recent past, to replay them from the start.

On the capacity front, Time Warner Cable in 1991 took the earliest steps into bandwidth expansion beyond known upper boundaries -- at the time, 750 MHz -- when it stretched its Brooklyn-Queens infrastructure in New York City out to 1 GHz. The initiative, code-named “Quantum,” was intended to provide the first-ever 150-channel, two-way system. This was before digital video compression had entered the scene, let alone switched digital video or analog spectrum reclamation, as bandwidth optimization strategies. The barriers included the need for a 1 GHz tuner and amplifier, neither of which existed at the time.

Time Warner Cable also spearheaded the development of the bandwidth-conserving technique known as “switched digital video,” based on the premise of transmitting only content that is requested, not the full broadcast of all channels, all of the time. More recently, TWC had led the way in developing video service apps delivered to retail video boxes such as Roku, and smart TVs made by Samsung and LG. In November 2015, TWC launched the TWC TV Roku Trial, becoming the first cable operator to deliver a full multichannel video lineup via Internet Protocol (IP) through an app, to satisfy the consumer appetite for using apps to experience multichannel video.   

Geographically, Time Warner Cable was also at the forefront of the concept of “clustering” of cable systems – both to achieve economies of scale, and to strategically share services, such as marketing and engineering, within geographic divisions. Beginning in the 1980s, and continuing through the ensuing decades, ATC/TWC (and many other cable companies) engaged in “system swaps” and acquisitions to further refine geographic and technological efficiencies.

The TWC family of companies also made significant and innovative contributions to the creation of unique cable content that customers love. When the QUBE system was completed in the late 1970s, for instance, TWC predecessor Warner Cable saw a need to fill up its (then-enormous!) 36-channel capacity. Together, with its parent company, TWC launched MTV and what would become Nickelodeon. Later, in 1992, TWC launched its award winning local news channel NY1, which became the model for dozens of 24-hour local news channels – run by TWC and other cable operators – across the country.   

The brand and company name we have known as “Time Warner Cable” soon will be leaving our collective consciousness, so it’s an appropriate time to reflect on the company’s contributions -- if only to imagine what might not exist, were it not for TWC’s substantial achievements. They will continue to serve generations to come.

Cable operators were literally the best and worst of telecommunications services providers yet again in a new customer-satisfaction survey.

The good news was that cable operators, who have pumped money, resources and personnel into improving customer service across the board, stopped their two-year slide in the pay TV portion of the survey. The bad news was they still finished last.

But the data also shows something about the mindset of the typical cable subscriber. The same customers that rate their cable provider among the worst for pay TV service see them as stellar broadband service providers.

Never mind that both services are traveling over the same network and use essentially the same customer-service personnel. It’s almost as if hating your cable company is a birthright. Broadband hasn’t been around long enough yet to foster that kind of hatred.

BROADBAND IS ESSENTIAL

Part of the reason also could be that customers perceive their broadband service as more important to their lives. Maybe this is further proof that customers are paying less attention to linear TV, and when they do, it’s because their tablets don’t work.

Another anomaly: Telco TV providers are at the top of the pay TV ranks yet have been losing customers over the past several quarters.

For the most part, cable’s performance in the American Customer Satisfaction Index — an annual survey of 12,710 customers on the often-touchy subject of customer satisfaction — has been consistent. For the past five years, cable operators have mostly received scores in the high 50s to low 60s.

Cox Communications usually got the highest rating. The big exception was last year, when despite fullyear gains in basic video subscribers at Time Warner Cable (53,000) and Charter (11,000), some operators, including TWC, turned in their worst showings ever.

Mediacom Communications has been battling a PR war after being singled out by some news outlets as “The Most Hated Company in America,” based on its ACSI showing. Mediacom’s scores of 54 in pay TV and 57 in Internet service providers was the lowest in all of the industries ACSI tracks, including cellular, wireless and wireline telephone. TWC (up 15.7%) and Comcast (up 14.8%) bounced back this year off declines.

Mediacom has countered that the sample size of its customers was small, which could skew the results, and has pointed out that it has boosted Internet speeds and introduced night and weekend service calls and 30-minute appointment windows.

MERGERS AREN’T HELPFUL

ACSI director of research Dr. Forrest Morgeson said in an interview that cable’s performance will likely decline this year and next as Charter moves to integrate TWC and Bright House.

“What we generally see is in the wake of mergers, for a year or two after, both of the companies involved tend to do a little bit worse,” Morgeson said. “It’s tough to say what will happen in this case, but it is fair to say that neither Charter nor Time Warner are stellar in terms of customer satisfaction. My guess is you’ll see a little bit of erosion as new customers come on to the Charter brand and there are problems with accounts and expensive plans and so forth.”

Charter has said it has been preparing for the integration of Bright House and TWC for about two years and plans to take a slow, steady approach to minimize disruptions. It has said it plans to hire 20,000 customer-facing employees over the years to help improve the customer experience.

Charter’s intentions sound good, Morgeson said, but there is always room for unforeseen circumstances.

“It’s not the things that you prepare for that go wrong,” he said.

As I read the news of the closing of the Charter Communications-Time Warner Cable transaction, I am sad, as a former TWC/ATC executive, to see the company disappear.

I worked for ATC and then Manhattan Cable in the 1980s. Under Trygve Myhren’s leadership (ATC’s CEO from 1975 to 1988), the company rationalized markets and realized that serving major DMAs was the way to go. But more importantly, Trygve and the team saw the future.

ATC pioneered advancing cable technology and capability: first video-on-demand, then pay-per-view, advertising sales (a tiny business), data services and retail. ATC also created one of the first national customer service/ retention departments, of which I was a proud manager.

Related:Charter’s New Road Map [subscription required] | Charter Sets Its New Technology Team [subscription required]

The company’s innovation continued as it became Time Warner Cable (merging with Warner Cable). TWC achieved great financial success and did bold experiments like the Full Service Network. Wow! What a concept — 500 channels. TWC took the leadership role in rolling out fiber networks and continued achieving meaningful adsales revenues, solidifying its position.

Today, as TWC winds down, Charter and Comcast are both at the forefront of delivering the most compelling customer offerings and services ever delivered by cable companies. They’ve become the innovators, creating meaningful business revenue above and beyond delivering programming — from advertising to content creation to serving businesses’ and consumers’ technology needs.

Related:Rob Marcus: Tuning Up TWC Before Handing Over the Keys [subscription required]

It will make a great case study to see Charter and Comcast evolve side by side, and to assess why both surpassed and survived the once much larger Time Warner Cable. I wish the entire Time Warner Cable team all the best.

R.I.P. Time Warner Cable and Bright House Networks (another storied company). Here’s hoping the Charter team, led by Tom Rutledge with his deep ATC/TWC roots, leads the company to new heights and pioneers the next chapter.

RELATED:Charter’s New Road Map [subscription required] | Charter Sets Its New Technology Team [subscription required] | Goodbye, Time Warner Cable

BOSTON — Before handing Time Warner Cable over to new owner Charter, chairman and CEO Rob Marcus gave the second largest cable operator in the nation company the equivalent of a tune-up, some body work and a new coat of paint.

It’s arguably the best the company has looked in years.

Charter officially closed on its $78.7 billion Time Warner Cable purchase on May 18, the same day it completed its $10.4 billion purchase of Bright House Networks. After the ink dries, Charter will have about 17.3 million video customers, 19.4 million high-speed data customers and 9.4 million phone customers in a footprint that includes the two largest markets in the country, New York and Los Angeles.

Marcus said the key to TWC’s success is shockingly simple: Make sure what you deliver works.

BACK TO BASICS

“We doubled our efforts on the nuts and bolts, making sure customers were experiencing what they were paying to experience; that the stuff worked the way it was supposed to work and when it didn’t, ensuring that we really took care of customers better than they ever have had before,” Marcus said.

Time Warner Cable ended 2015 with positive growth in video subscribers (32,000) for the first time since 2006. The momentum continued in the first quarter of this year with a gain of 21,000 video customers and revenue growth of 7.2% (its best Q1 showing in eight years), while cash flow increased 8.2% (its best Q1 in six years).

“In TWC’s most recent chapter, CEO Rob Marcus and chief operating officer Dinni Jain have steered the ship through a two-year merger pendency that might have understandably crushed morale and results,” MoffettNathanson principal and senior analyst Craig Moffett said in a recent research note. “It didn’t. It is an extraordinary achievement that the company’s employees have not only maintained the asset, but have spurred TWC to its best operating performance in years.”

Marcus also gave a lot of credit for the turnaround to Jain, who joined TWC on Jan. 13, 2014, the same day Charter lobbed in an offer to buy the company for $130 per share.

“Would the execution have been as successful if he [Jain] were not here? I suspect not,” Marcus said. “Beyond that, both he and I gave opportunities to some really talented other executives in the company who had been with us, but just hadn’t been given much latitude to really do all they could do to contribute to our success.”

Through it all, Marcus and his team kept their focus through Charter’s first offer — and a brutal conference call where management sharply criticized TWC’s leadership, a move that Marcus later used as a “rallying cry” for employees to do better — followed by a 2014 bid by Comcast that was shelved less than a year later and a much-richer Charter deal. At the close, the Charter offer valued TWC at about $200 per share, $70 per share better than the January 2014 bid.

TURNING THE PAGE

In an interview the day before the Charter deal closed, Marcus was reflective and a little sad to leave behind what he considered his dream job. As a young lawyer fresh out of Columbia Law School and working for Time Warner Inc.’s outside counsel, Paul, Weiss, Rifkind, Wharton & Garrison, Marcus said one of his first assignments was to take American Television and Communications (ATC), the predecessor company of Time Warner Cable, private so the assets could be included in Time Warner Entertainment, a complex vehicle created in the early 1990s to help alleviate some of Time Warner Inc.’s massive debt load.

“I’ve been in and around this company for 25-plus years,” Marcus said. “And on Thursday [May 19], it will be the first time in my working life that I haven’t had an affiliation with this company.”

Marcus leaves an industry at a crossroads, with new threats from over-the-top players and so-called skinny bundles. The now-former TWC chairman and CEO said the reports of the death of cable are premature.

“My expectation is that we’ve still got runway,” Marcus said. “There is a lot of juice left for things we haven’t tried yet.”

Marcus doesn’t believe OTT players will disappear — he expects more to come on the scene — but he sees the relationship between OTT companies and pay TV evolving. “I think there will be more mixing and matching,” he said. “I’ve been a longstanding believer that over-the-top video is the killer app for the sale of high-speed data, so the guy who has the best Internet pipe is going to benefit.”

Marcus also said the industry may be getting too complicated with the skinny bundle concept and that the most popular offering could be the simplest: a full programming bundle, minus sports networks like ESPN.

“For some customers, if you could reduce their bills by $20, which I think you could be reducing [exclusive] sports, that might be an interesting alternative,” Marcus said.

While Verizon Communications’s attempt to do something similar — its Custom TV package initially didn’t include ESPN — didn’t work out, Marcus said subscribers still could get plenty of sports through broadcast and cable networks like TBS and TNT. “I think someone will try it soon,” he said.

Marcus also was excited about the evolution of apps like TWCTV, which he sees as the main delivery vehicle for video in the future.

THE FUTURE IS AN APP

“We’ve already moved to a world where the video app replicates our video experience,” he said. “The key is when that becomes the only experience. The only thing that is holding us back on that front is compliance with the FCC.”

Marcus said the Title VI regulatory requirements for closed captioning, emergency alerts, and coding for local PEG channels have held back apps becoming the main vehicle for video delivery. But he said in its New York City IPTV trial, TWC has done just that.

Outside the home, programming rights are the main obstacle. But that could change as more operators push for national rights. “I’ve never thought it was very compelling for any of us to launch service over-the-top, but to have customers in our territory have the ability to access what they are already paying for at home when they’re on the road is a very compelling value add,” Marcus said. “Those are two very different things.”

Marcus said he hasn’t decided his next move — over the short term, he may get some sun and spend time driving his kids to school. Being chairman and CEO of Time Warner Cable is a hard act to follow, he said.

“What you don’t want to do is make the next thing a second seat to what you’ve already done,” Marcus said. “You want it to be something you’re excited about. Finding out what that is going to be, the bar is pretty high. Even being under siege for two to three years, it was pretty fun. It was exciting in every way. I was challenged: It drew on everything I had.”

Charter Communications won’t fill the spot on the S&P 500 Index left by its merger partners Time Warner Cable once its deal is completed, a move that according to one analyst could put some short-term pressure on the stock.

JP Morgan media analyst Phil Cusick said S&P’s decision to replace TWC with Digital Realty Trust on the Index could force more shareholders to sell their stock.

In a note to clients, Cusick said that instead of the 10 million shares previously expected to be sold by indexers he expects 32 million shares to be sold by May 17, the expected closing date of the Charter-TWC deal.

In a note to clients Cusick said that could rpresent a buying opportunity for long-term investors in the stock.

“While this does not change our long-term thesis or price target on Charter, it is likely to create significant disruption this week going into the close Friday and removes what we had expected to be a significant driver of near-term performance in Charter shares,” Cusick wrote. “We would recommend fundamental holders buy Charter on weakness as the stock remains our top pick."