Charter Communications said Wednesday that it has named Christopher Winfrey president and CEO and that current chairman and CEO Tom Rutledge will become executive chairman effective December 1, ending a 10-year run as the chief architect of the cable giant’s strategy.

Rutledge joined Charter in 2012, after serving as chief operating officer of Cablevision Systems for about 10 years, and led the company through its biggest period of growth, engineering the 2016 purchase of Time Warner Cable that vaulted Charter into the No. 2 spot among cable operators in the country.  Rutledge will serve as Charter’s executive chairman and serve on its board of directors through 2023, where he will maintain oversight of government affairs and help with a smooth transition. He then plans to retire after a 50-year career in the cable industry. 

“It has been an honor and a pleasure to lead Charter and this incredible team over the past 10 years,” Rutledge said in a press release. “We have grown the company through innovation and strategic investments and have positioned Charter to provide the best-converged connectivity products and services available today. During my 50 years in this industry, I have witnessed first-hand its ability to continually evolve and change the world, and our opportunity today is greater than ever with ubiquitous connectivity being central to everything we do.”

Also: SCTE Cable-Tec Expo: Talent Gap Depends on What You’re Doing, Cable Chiefs Say

Rutledge can trace his cable roots back to 1972, when he served as a technician for Eastern Telecom while still attending college. His first permanent job in the industry came in 1977, when he joined American Television and Communications (ATC), a predecessor of Time Warner Cable, as a manager trainee. He eventually became president of Time Warner Cable, and in 2002 left to head up operations for Cablevision, joining Charter a decade later and steering it to its greatest period of growth. Under Rutledge’s watch, Charter’s annual revenue rose more than 600% while its customer base has increased 500%. Rutledge also oversaw the launch of the Spectrum brand, the company’s forays into mobile and 1-gigabit per second broadband. Today Charter has more than 32 million customer relationships, second only to Comcast. 

“When Tom was chosen to lead Charter in 2012, his reputation as a skilled operator was second to none, but we never anticipated the new heights to which he would take this company,” Charter’s lead independent director, Eric Zinterhofer, said in a press release. “He redefined and exceeded every measure of success, establishing Charter as a best-in-class U.S. connectivity provider. He grew the company both organically and through transformative acquisitions, which included Time Warner Cable, Bright House Networks and Optimum West (Bresnan). In addition, Tom has skillfully developed the next generation of leaders at Charter, including Chris. We are pleased Tom will continue to serve Charter and its shareholders as Executive Chairman of the Company and its Board in 2023.” 

Winfrey “has consistently demonstrated significant leadership and delivered an impressive track record of successes. He earned the respect and trust of his colleagues, the industry, the financial community and this Board,” Zinterhofer added. 

Winfrey joined Charter in 2010 as chief financial officer and was named chief operating officer in 2021. He has nearly 25 years of experience in the cable business, and before Charter served as managing director for cable operations, broadcasting and satellite entities at Unitymedia GmbH, Germany's second-largest cable operator. Earlier in his career, he served as senior VP, corporate finance and development at Cablecom GmbH, and was previously a director of financial planning and analysis and director of operations services of NTL’s Continental Europe operations, and a senior associate in the private equity group at Communications Equity Associates. 

“Chris’s leadership and expertise in both operations and finance have been pivotal to Charter’s growth and success,” Rutledge said in a press release. “He has repeatedly demonstrated innate strategic insight and keen market and industry awareness to drive an organization to perform at the highest level. Having worked closely with Chris for more than 10 years, he is the right choice to be our next CEO and will serve Charter’s customers, employees and shareholders with integrity and skill, leading the company to new and extraordinary heights.” 

Also: Texas Judge Cuts Charter Damages Bill to $1.15 Billion in Case of Customer Murdered by Installer

Currently, Winfrey is leading Charter’s rural construction initiative including its $5 billion investment associated with the Rural Digital Opportunity Fund (RDOF), making gigabit broadband connectivity available to more than 1 million currently unserved locations. He also will lead the company’s path to a fully converged broadband offering with symmetrical and multi-gigabit speeds across its entire network. As CFO, he spearheaded Charter’s transformative M&A activity, played an integral role in the Time Warner Cable and Bright House Networks integrations and managed Charter’s financial activities through a period of significant growth. 

“I am grateful to Tom and the Board for entrusting me with this appointment and the incredible opportunity to lead this top-flight management team and company,” Winfrey said in the press release. “I am deeply committed to Charter’s success and will continue our track record of delivering the best connectivity products and service to our customers, investing in the careers of our employees and building long-term value for shareholders.” ■

As companies scramble to build out fiber networks to capture market share in the increasingly competitive broadband market, Charter Communications chairman and CEO Tom Rutledge told an industry audience Wednesday that wireless connectivity will separate the winners from the losers.

At the Goldman Sachs Communacopia + Technology conference Wednesday, Rutledge, when asked about the company's competitive stance against fixed wireless and fiber broadband competitors, said the combination of its broadband and mobile networks only makes it stronger.

Charter does well in markets where it competes with fiber and fixed wireless broadband, Rutledge added. Its mobile network can offer speeds up to 1 Gigabit per second today, and could get even faster as more and more traffic is shifted from its Verizon MVNO to its own WiFi network, he said.

“We can have the fastest mobile product around,” Rutledge said. “Eighty percent of the bits are actually on the WiFi network and we’ve got a pathway to put even more traffic onto the WiFi network and to CBRS.”

He added that more and more of the business is wireless — there are 450 million devices connected to Charter’s network and most are wireless — which also gives his company the upper hand against the competition.

“I think we have a competitive advantage there because we have advanced WiFi, we have an integrated mobile product with that, and even our future video product with the Xumo joint venture is wirelessly delivered,” Rutledge said. “We’re going to an environment where every device connected to our network is wireless.”

Charter entered into the JV with Comcast in April, where Comcast is licensing its Flex streaming platform as well as the retail business of its XClass TVs and its Xumo streaming service. Charter will contribute $900 million over several years.

That Comcast partnership also could serve as a boost to the video business, which  continued to lose subscribers in Q2, but could be on the cusp of an evolution in part spurred along by the JV.

“I don’t think it’s about to precipitously fall apart,” Rutledge said of the current video business, adding that reductions in subscribers and increases in costs will likely remain for the next several years. But as the video business moves to an app-based model, the Comcast JV puts Charter in a strong position.

Also: Could Comcast and Charter’s New Streaming Platform Be The Launching Pad for Something Bigger?

“I think this new platform that we’re developing with Comcast, the joint venture, gives us an opportunity to monetize video and to use our customer relationships to drive that platform deeper into the market and to create an advertising business and a transaction business where we monetize the platform by helping direct-to-consumer media companies get more customers and take a fee for doing that, helping them sell the product,” Rutledge said. “The other opportunity that comes from it is advertising. To the extent that you get a big platform deployed and you’ve got viewership, you can monetize that and get better CPMs because it’s targeted advertising.” ■

Charter Communications officially opened its new Stamford, Connecticut, headquarters Monday, a state-of-the-art facility that has been five years in the making. 

Charter first unveiled plans for a  new Stamford HQ in 2017. The new facility  was officially unveiled on Monday (June 6) in a ribbon-cutting ceremony that included Connecticut Gov. Ned Lamont and Stamford Mayor Caroline Simmons. Located in the city’s revitalized Harbor Point neighborhood, Charter’s new corporate campus provides the company’s Stamford-based employees with an amenity-rich, commuter-friendly workspace with room for continued growth.

“Over the past 10 years we have been proud members of the Stamford community and have experienced tremendous growth,” Charter chairman and CEO Tom Rutledge said in a press release. “Our Stamford headquarters has grown from a handful of employees in a small portion of a single floor to 1,700 employees in a two-building, 900,000 square-foot campus. This region provides access to a robust talent base and at Charter, we are committed to attracting and retaining highly-skilled employees who live and work in this area and to contributing to the growth and success of this community.”

Also: Charter Chief Tom Rutledge Sees the Day When All Video Is IP-Delivered

Charter has more than 93,000 employees nationwide, and the company is currently hiring for more than 150 positions at the new Stamford campus, including professional-level roles in business planning, corporate security, customer operations, facilities, field operations, finance, human resources, information technology, legal, marketing, network engineering and sales.  

“Charter is a leading Connecticut-based business, invested in the success of the state, Stamford and the many communities it serves across the country,” Lamont said in a press release. “The company’s continued growth is a testament to its commitment to employees, customers and the communities in which they live and work.”

Charter’s Stamford campus is conveniently located by car, bus or train from New York City and other areas of Connecticut and Westchester County and has direct access to the Stamford train station platform, which offers Metro-North and Amtrak Acela services, and is located just off Interstate 95. 

Also: Charter, Comcast Set Joint Venture To Create New Streaming Platform

“We are so thrilled and grateful to have Charter Communications in Stamford,” Simmons said in a press release. “Charter has brought over 1,700 jobs and invested over $500 million in this headquarters, bringing economic prosperity to our city. Charter has also been an excellent corporate partner, contributing to philanthropic efforts including a five year commitment to funding job training programs within our Community Action Agency in the South End. We are so grateful and happy to see Charter’s continued growth in Stamford.”

The new campus includes:

• A two-story food hall, three 24/7 self-serve markets; a coffee shop serving Starbucks coffee and food, and a Pure Juice Bar with indoor and outdoor dining space.
• A free fitness center with complimentary group exercise classes, fitness assessments and individualized exercise programs.
• A health-care center that is scheduled to open in August, which will provide employees in-building access to services.
• A conference center with 10 conference rooms, three huddle rooms, three phone rooms, a break room, and a training room that holds more than 100 people.
• A 250-seat auditorium set to open in August.
• An outdoor amphitheater scheduled to open in the fall.

More information about Stamford job openings is available here. 

Charter Communications chairman and CEO Tom Rutledge gave voice to one of the telecom industry’s biggest dilemmas at an industry conference Wednesday. Despite the billions of dollars the federal government is pouring into programs earmarked to create fiber networks to bring broadband to rural areas, there aren’t enough workers to build them.

“There is no labor force,” Rutledge said at the MoffettNathanson Media & Communications Summit in New York, when asked about the worker shortage. “For all the construction that hasn’t been done, there is no skilled labor force that is currently out there.”

Adding to the dilemma is that many of the areas where the build outs are taking place have small populations, meaning that workers have to be brought in, which creates logistic and transportation issues.

Also: Equipment, Worker Shortage Could Delay Fiber Buildout

Rutledge added that the problem is greater for smaller operators.

“We are a big operator and we can manage through these big projects,” he said. “We’ve already invested a lot of money in new construction equipment and hired a couple of thousand people just to manage the contract process of building out these new assets.”

Still, it hasn’t been entirely smooth sailing, even a company the size of Charter.

“We have thousands of unfilled positions,” Rutledge said.

Colleges and companies throughout the country have started training programs to fill the gap. In April, AT&T and Corning launched a fiber optic training program in North Carolina and trade organizations like the Wireless Infrastructure Association and the Fiber Broadband Association have launched training and certification programs to beef up and educate the future workforce.

But training takes months and even years to fully complete. And in the meantime, the shortage continues. In 2021, a group of industry associations warned that there could be a need for as many as 850,000 additional workers in the telecom business through 2025, as more and more fiber projects go online.

Also: Could Fiber Save Netflix?

Charter has extended its fiber footprint by about 1 million homes per year over the past few years through its edge-out programs. And the company was one of the biggest recipients of federal Rural Digital Opportunity Fund (RDOF) grants to extend service to unserved and underserved areas.  

Rutledge said that Charter will be an eager participant in federal projects to bring broadband service to rural areas.

“We’re very interested. There’s $42 billion there. That’s a lot of money,” Rutledge said. ■ 

A day after Charter Communications announced a joint venture with Comcast to create a streaming platform based on the latter’s Flex broadband-only product, chairman and CEO Tom Rutledge said that he sees a day when the bulk of its Spectrum video customers receive service via internet protocol delivery. He called the Comcast partnership a step in that direction. 

“I expect that incrementally most of our customer base will be all-IP,” Rutledge said after being asked about the JV on Charter’s Q1 earnings conference call with analysts. He added that unused video spectrum can be recaptured and used to increase broadband speeds or provide additional capacity over time.

In a research note Friday, MoffettNathanson senior analyst Craig Moffett noted that if the Flex box does become Charter’s new set-top, effectively moving all of its video to IP-based apps, it would free up enormous amounts of capacity. 

Rutledge didn’t say when that would happen, and what he said is something that cable operators have been quietly moving toward for years. But it was a public admission that cable is acknowledging that streaming is becoming the dominant force in video. This is coming from one of the better performers in the video space — Charter lost about 112,000 video customers in Q1, compared to a loss of 512,000 video subs for Comcast. Later on the call, Rutledge said that he still believes in the video business and Charter’s ability to keep its pay TV losses low can be attributed to its knack for packaging.

“We’re continuously improving the rights structures around what we’re able to sell,” Rutledge said. “It’s been difficult because of the way historically video’s been packaged in this very fat, expensive bundle that is driven by sports rights costs. We’ve been able to get some of the content out of that ecosystem and put it into tiers and we’re successfully selling those. I think that over time, we’ll be able to build a very nice video business.” 

Also: Could Comcast’s and Charter’s New Streaming Platform Be the Launching Pad for Something Bigger? 

That’s a key point, and whether or not Rutledge was making it as a hint of bigger things to come, being able to package video correctly is going to be crucial going forward no matter what delivery system is used. I talk a lot about the day when cable operators will aggregate streaming apps and sell them in bundles, replacing the current video model — and Rutledge has hinted at that in the past, too. But with streamers starting to feel the pressure from high costs, competition and viewer fatigue, having someone with a proven track record driving subscriptions could be invaluable. Whether they take the industry up on it remains to be seen.

Maybe streamers are beginning to learn their lesson. Netflix, after years of saying they didn’t care if subscribers shared passwords, last month said they would crack down on the practice. Other streamers are keeping a closer eye on password sharing, something that Rutledge warned about years ago. 

And though it would have been easy to gloat about Netflix’s current dilemma, aside from a brief “I-told-you-so” joke, Rutledge took the high road, pointing out that the practice affects the entire media industry. 

“It’s not just a problem for the companies that are not controlling their passwords, it’s a problem for everybody in the industry, because all of that content that comes out without anybody paying for it affects the supply and demand of all content, not just the provider that is selling the content,” Rutledge said. “[That] diminishes the value of content for everybody, which is a point we had been trying to make for years.”

Another plus for Charter is that Rutledge actually likes the video business. He doesn’t see it as an albatross, or as a roadblock to offering more profitable broadband service, but as a good product in a growing lineup of good products. It helps that he has seen the various transformations of that product over the years, and not just in video. During the call, he was asked how he felt about the explosion of new fiber builds and fixed wireless offerings geared at taking broadband share away from cable. 

“There have been periods in my cable career where sentiment has gone up and down, and my sentiment has remained the same,” Rutledge said. “I think it [broadband] is a great business and I think we have a great opportunity to continue to grow the business successfully. When everybody’s euphoric it’s probably odd, and when everybody’s pessimistic it’s odd, and I’m unchanged.” ▪️

Charter Communications chairman and CEO Tom Rutledge received total compensation of $41.9 million in 2021, about an 8% increase over the $38.8 million he took home in the prior year.

According to a proxy statement filed with the Securities and Exchange Commission on March 17, Rutledge’s base salary increased to $2.5 million from $2.1 million in the prior year. His stock option awards remained constant at $30 million, while non-equity incentive plan compensation rose 41% to $8.9 million from $6.3 million for the year. 

Chief product and technology officer Rich DiGeronimo saw his total compensation rise 35% to $8.9 million from $6.6 million in the prior year, fueled by increases in option awards and non-equity compensation. 

Also: Charter’s Starting Minimum Wage Reaches $20 Per Hour Company-Wide

Senior executive vice president David Ellen’s total compensation dipped 13% to $9.4 million from $10.8 million in 2020, mainly due to a decrease in option awards from $6.75 million in 2020 to $4.725 million in 2021.

Chief operating officer Christopher Winfrey’s total compensation remained stable at around $11.7 million for the year. 

Vice chairman John Bickham received about $7.5 million in total compensation in 2021 according to the proxy, down from $36.5 million in the prior year. Bickham said he would retire from the company at the end of this year.

 The spring conference season is upon us, a time of new beginnings, when nature and CEOs of major media companies show the world just what they have been hiding under their drab little husks for the past four months. For nature, the metamorphosis bursts forth in an explosion of color, new life and possibilities. For cable CEOs, it comes in a series of presentations and fireside chats with the investment community to prove their businesses aren’t going to die this year.

Investors have been lining up for cable’s funeral for decades. The industry’s death rattle supposedly began in the nineties with competitive threats from satellite TV and telcos. Now streaming video, direct-to-consumer offerings that bypass the traditional bundle and fixed wireless access service that is expected to steal away broadband customers are expected to deliver the fatal blow. But instead, every year cable survives. It weathered the satellite onslaught, the multiple attempts by AT&T to weasel its way into the video business, and by the looks of things, it is preparing itself to ride out the latest storms. 

I’m not saying cable, or any industry, is invulnerable. Taking even a cursory look at the industry is proof that the business is nothing like it was a decade ago. But unlike buggy whips and the Betamax, whenever the collective consciousness began to stray, cable operators have for the most part managed to figure out a way to make themselves attractive again to consumers. 

In the past century, cable pushed back video competition by introducing more channels, more choices and better pictures through digital and later HDTV offerings. Later, competitive wireline phone offerings, high-speed internet service and in the past few years, mobile service have helped the industry not only survive, but thrive. Now cable companies have twice as many broadband customers as video subscribers, and mobile service, once thought of as merely a retention tool, is becoming a real threat to traditional carriers. In the meantime, cable continues to invest in the business, build out fiber networks and reinvent itself.

Even though those moves are far from secret, operators continue to make the seasonal rounds, reminding investors that although they may not be the latest thing, they are what makes that latest thing work.

Investor Conference Rites of Spring

March is the traditional beginning of the spring conference season (I know spring doesn’t officially begin until March 20, but it was 74 degrees in New York this week, for gosh sake), with Morgan Stanley's Technology, Media & Telecom conference on March 7, and Deutsche Bank Securities hosting the next media get-together on March 14. There is expected to be a bit of a reprieve in April, followed by MoffettNathanson’s Media & Communications conference and J.P. Morgan’s Global Technology Media & Communications conference slated for May. Evercore ISI should wind down the spring season with its TMT event expected sometime in June, although others could be sprinkled in between. And then the fall season starts.   

Already, CEOs of the top three publicly held cable companies have hit the conference circuit and have had to reassure investors that: Yes, they still intend to add broadband subscribers; no, they haven’t given up on video quite yet; and yes, mobile service is on the path to becoming profitable.

Comcast chairman and CEO Brian Roberts kicked off the spring season with his March 7 appearance at the Morgan Stanley conference, He spent most of his time telling the investment community that while broadband growth is indeed slowing down, it has lots of runway ahead of it. He pointed to four areas where he sees Comcast can boost broadband growth: expanding its footprint; competing more aggressively; bundling with other products like wireless; and growing its business services reach.

Comcast has been expanding its reach to about 1 million more homes per year within its footprint through edge-out programs. This year, he expects that expansion to be even greater, given government initiatives to build out unserved and underserved rural areas. 

“Where it's been uneconomic previously, it will be economic in the future for us to extend our broadband,” Roberts said. “And we're going to compete aggressively to do that.”

Roberts also defended cable broadband against the latest competitive threat — fixed wireless access from the telcos — adding that at the moment it is an inferior product to high-speed data service from cable, reminding the audience again that cable has a history in pushing back competitive threats. 

“We don't take it for granted, but we've seen lower-price, lower-speed offerings before,” Roberts said. “And in the long run, I don't know how viable the [FWA] technology holds up.”

Altice USA CEO Dexter Goei, who has been dealing with a steep drop in his company’s stock price since it lost broadband subscribers in 2021, spent his time at the Morgan Stanley conference reiterating plans to accelerate its fiber network buildout, and hinting about faster speeds becoming available to a wider swath of customers. 

Altice‘s accelerated fiber rollout has been well-documented, and Goei said at Morgan Stanley that it is expected to make a big difference. 

Goei said Altice has been talking about fiber for three years, and the slowdown in deployment has been a combination of permitting and COVID-19 related delays and the company’s inability to “get its own ducks in a row.” But now with a restructured management and a clearer focus,  growth is expected to take hold in 2023.     

“The goal was to reinvigorate distribution, rebrand the company, address some customer service-related issues we were dealing with and make that a one-time investment,” Goei said, which “leads to a nice payback in 2023.”

Goei hinted at “multi-gig” speeds for its Optimum broadband service in the second quarter, stopping short of saying just how fast its offering would be. But the company has said publicly — back in May 2021 at the MoffettNathanson Media & Communications conference — that its goal was to offer 10 Gigabit per second broadband within 18 months.       

On the video side, Charter Communications chairman and CEO Tom Rutledge said there is “more damage to come” regarding continued customer losses, but all is not lost quite yet.

“There’s nothing about the old model that’s really changed, Rutledge said at the Morgan Stanley conference, adding that prices for traditional video service continue to rise, driven by ever-increasing sports rights fees. “There’s nothing to really constrain the cost of live sports in the linear business and that’s still the glue that holds it together. I see that business continuing to get more and more expensive for consumers.”

Eyeing a Mobile Future

Despite the shift toward streaming, Rutledge isn’t expecting the pay TV business to change that much over the next few years. But he echoed Roberts in saying that the mobile/broadband bundle will be the future. And he acknowledged that he often thinks of how cable could eventually aggregate and package streaming services for consumers. 

“The opportunity going forward is to start to reaggregate and use that aggregation to give a better, more cost-efficient consumer experience to more people,” Rutledge said. “We think about that every day and how that might happen. I don’t want to be overly Pollyannaish and say that is about to happen because the current model is still very much in force. I don’t see that disappearing in the next couple of years.”

But Rutledge said Charter is laying the groundwork for that day when it does come, making itself available on apps like Roku, where it is one of the most used applications. He added that nearly 12 million customers access Charter services (broadband-only as well as video) via an app instead of a set-top box.

“The upside is still yet to be realized,” Rutledge said. “The reaggregation is somewhat far away, but we’ve been thinking about how to build a platform that can be used by customers  in a more efficient way.” 

It’s a concept that has been well-documented in this column over the past year, and a place where, whether participants say it aloud or not, the industry is headed. But it is also an example of something that cable has been famous for, at least during the 30 years I’ve been covering it: No matter what gets thrown at it, this industry has managed to adapt. It sounds a lot easier than it is to do, and the landscape is littered with the carcasses of companies that underestimated the resilience of this business. This March and beyond, cable executives will get to remind investors of that fact once again. ■

Charter Communications gained about 190,000 broadband customers in Q4, short of analysts’ consensus estimates of about 210,000 additions, but wireless well exceeded expectations, adding 380,000 customers for its best fourth quarter yet.

Charter’s results were in line with its closest competitor, No. 1 cable operator Comcast, which said yesterday it added 212,000 broadband subscribers in Q4. And while analysts were expecting Comcast’s additions to slow — it said so back in December — some believed Charter, which hadn’t offered Q4 guidance prior to Friday’s release, might do better. That wasn’t to be.

“Recall that while Comcast had officially lowered the Street during the December conference season, Charter had not,” Wells Fargo Securities media analyst Steven Cahall wrote in a note to clients. “As such, it remained possible their trends would diverge, but it appears that Comcast Cable and Charter remain highly correlated from a net add perspective.”

Also: Comcast Q4 Broadband Results Narrowly Miss Consensus; Dividend Upped

For the full year, Charter added 1.2 million broadband subscribers, below 2020’s 2.2 million additions and 2019’s 1.4 million additions. 

While broadband continued to slow in line with the rest of the industry, mobile subscribers increased by 380,000, soundly beating analysts’ estimates that ranged between 260,000 and 325,000 additions. Spectrum Mobile dropped its prices in October to $29.99 per month, per line for a minimum of two lines, which likely was a big part of the surge in customer additions.  

In the quarter, revenue rose 4.7% to $13.2 billion, while earnings before interest, taxes, depreciation and amortization (EBITDA) were up 7.7% to $5.4 billion. For the full year, revenue was up 7.5% to $51.7 billion and EBITDA increased 11.4% to $20.6 billion.

”In 2022, we remain focused on driving additional customer growth by offering better services while saving customers money on their total communications spend, driving EBITDA growth, free cash flow growth and shareholder value,“ Charter chairman and CEO Tom Rutledge said in a press release. ■  

The slowdown in cable broadband subscriber additions may be even slower than anticipated after executives at two of the top three publicly traded cable companies -- Comcast and Altice USA -- hinted that customer growth is trending at an even more decelerated pace than expected. 

Comcast Cable CEO Dave Watson touched off a mini firestorm on Dec. 7, telling the virtual audience at the UBS Global TMT Virtual Conference that he expected to end 2021 with 1.3 million additional broadband subscribers. That is lower than the 1.4 million Comcast added in 2019 and implies that Comcast would add about 185,000 high-speed data customers in Q4, its lowest growth since Q2 2017. 

Most analysts had expected Comcast to end 2021 with about 1.4 million additional broadband customers. In a recent research report, MoffettNathanson principal and senior analyst Craig Moffett predicted Comcast would add about 286,000 broadband customers in Q4. Moffett expects Charter to add 271,000 broadband customers and Altice to add 3,000 high-speed internet subscribers in the period. 

While Charter may well hit Moffett's target, chances are that Altice USA, coming off a third quarter where it lost 13,000 broadband customers, could see negative growth in Q4.

“We probably are trending -- and we still have a big month of December coming up -- slightly negative in Q4, which probably leads us to be down in a range of 5,000 to 10,000 for the year,” Goei said at the UBS conference.

He added that the declines are in markets where Altice USA competes with Verizon Communications’ Fios Internet product, which Goei described as heavily promotional. 

“These losses are in Fios zones,” Goei said. “I think Fios has been saying they have not lost momentum. We’ve slowed momentum relative to Fios and we really need to drive to the first quarter when we have a better mobile product.”

The news sent Comcast shares down 7% on Dec. 7, as well as the rest of the sector. At the end of the day, losses eased a bit -- Comcast stock closed down 5%, Charter down 3% and Altice USA fell 2%. But the fear that sluggish broadband growth could last a while longer didn’t seem quite as irrational as the day before. Between Dec. 6 and Dec. 8 the three stocks fell 6.5%, 4.6% and 6.4%.

Charter Communications chairman and CEO Tom Rutledge spoke at the UBS conference on Dec. 8, and avoided making any specific broadband predictions. Rutledge did say that as the spike in pandemic-fueled consumer acceptance of the broadband product begins to unwind, there is still plenty of runway left. 

“I do think that the opportunity to grow the business is pretty much unchanged,” Rutledge said at the UBS conference. “If you look at it on a four- or five-year growth rate trend, it’s pretty solid, pretty straightforward and pretty consistent. I think that that future will look more like the trend than it will look like the third or fourth quarter.”

Cable operators have consistently denied that stepped up telco 5G wireless and fiber broadband initiatives would cut into their businesses, and at the UBS conference tried to stress that in addition to strong opportunities ahead for broadband, their other services are even more robust. Watson said at the conference that wireless subscriber additions should break records in Q4, and added that cable EBITDA growth should be between 7% and 8% in the period, exceeding analysts expectations.  

Watson said Comcast would add a record number of mobile customers in Q4, after signing on 285,000 additional Xfinity Mobile customers in Q3, its best quarterly performance since launching the wireless product in 2017. At the UBS conference, Watson said Comcast expects cable EBITDA growth to be in the 7% to 8% range in Q4, while net cash flow growth will be in the low double-digit percentages. 

“In wireless, we’ll  beat Q3 in Q4,” Watson said. “We’ll set a record.”

Rutledge didn’t make any wireless subscriber predictions, but said mobile service will be Charter’s biggest growth engine going forward, likening the mobile opportunity to that of the wireline telephone business several years ago. Back then, traditional phone companies were offering wireline phone service for $72 per month. Today, cable companies are selling wireline service for $13 per month and dominate the industry, with Comcast and Charter the two largest wireline phone companies in the U.S. 

“We took that business,” Rutledge said. “So, what kind of upside is there [to the mobile business]? That kind of upside.” ■ 

Charter Communications chairman and CEO Tom Rutledge expects 2022 to be the year when the cable business gets back to normal, or as close to that benchmark as it can, while it takes advantage of what he believes to be the company’s biggest growth driver -- wireless. 

“I see 2022 as a sort of return to normalcy kind of year for us,” Rutledge said at the UBS Global TMT Virtual conference Wednesday, adding that the past two years have been disruptive for Charter and the industry as a whole. “We’re getting back on plan in ‘22 in terms of growing the business, and growing the kinds of product sets we want to deploy. The biggest growth opportunity, the biggest growth driver going forward starting in ‘22 is mobile.”

Rutledge said the mobile opportunity is even bigger since Charter has revamped its billing system. 

“The initial billing system that we launched with didn’t really scale as well as we wanted it to,” Rutledge said. “We actually had to hold back marketing and efforts to grow that business because of the scale issue that we had before we could switch out systems. Those are done and we have the ability to accelerate growth in the mobile platform and do that in a logical way.”

Charter currently has about 3.2 million wireless subscribers. 

Rutledge acknowledged that broadband subscriber growth is slowing, but didn’t give any specifics like his peers earlier in the UBS conference. The Charter chief said that the pandemic changed consumer behavior towards broadband and led to huge spikes in subscriber growth -- Charter added about 2.2 million broadband customers in 2020, nearly double the 1.4 million it added in 2019. While it’s inevitable that that kind of growth will wane as people return to work and school -- he called it the “unwinding” of that earlier behavior -- he still sees a lot of opportunity in the sector. 

Also: Cable Shares Slip After Comcast’s Watson Says Operator Will Add 1.3 Million Broadband Subs in 2021

“I do think that the opportunity to grow the business is pretty much unchanged,” Rutledge said. “If you look at it on a four- or five-year growth rate trend, it’s pretty solid, pretty straightforward and pretty consistent. I think that that future will look more like the trend than it will look like the third or fourth quarter.”

On the video side, Rutledge does see subscriber declines continuing, but added that might slow as well as customers, especially sports fans, see the value of the bundle. 

With 32 million total customers and just under 16 million video subscribers, half of Charter’s customers don’t subscribe to its video product anyway, Rutledge added. Charter’s strategy is to provide as many different video packages as it can, while also helping consumers who have cut the cord better access direct-to-consumer products. 

“I see us becoming more transactional and helping these direct-to-consumer businesses work and to help sell those direct-to-consumer models,” Rutledge said, adding that he still feels a responsibility to provide a robust video product. 

“I think the decline in full package services will abate to some extent, because it’s still the primary way to get sports,” he continued. “But how it ultimately breaks up and gets into sports direct and entertainment direct, that could be a long way away. We’ll continue to play in all of those parts and try to find the opportunities for us in our relationship with our customers that video presents us.” ■ 

 Just weeks after Charter Communications slashed prices for its Spectrum Mobile offering to $29.99 per month, chairman and CEO Tom Rutledge said charges for wireless cable offerings could drop further as the cost to provide service continues to decline.

“I think the mobile opportunity is very similar to the wireline opportunity that existed 15 years ago,” Rutledge said at the virtual/in-person Liberty Media Investor Day in New York. “Look at what happened there — we had a high-priced wireline phone service — in the metro area here, it was about $72 a month. That product now is less than $15 a month. And the biggest wireline phone companies in America are Comcast and Charter. So, I think the opportunity in mobile is similar. It’s got its own complexities, but the opportunity is there to create value for consumers. Consumers actually save money and we make money. That’s a pretty attractive business model that is available to us. And yeah, I think it leads toward convergence.” 

Charter introduced its $29.99 price point — for a minimum of two lines each — in October, a big discount from its previous charge of $45 per month, per line. That price reduction came on the heels of Comcast introducing a $30 per line service (for a minimum of four lines) which took effect in April. 

In a research note, Bernstein media analyst Peter Supino wrote that Rutledge’s comments provided “a muscular reminder of Charter’s ambitions and competitive advantages.” 

“Charter will sell wireless as aggressively as necessary to ensure that it achieves growth of customers and EBITDA per customer,” Supino added.

Also: Analyst Says It’s Time to Take Cable Wireless Seriously

Liberty Media chairman John Malone said that while convergence of fixed and wireless assets is common in Europe, where Liberty, a major Charter shareholder, has substantial holdings, it hasn’t yet taken hold in the U.S. While European companies have made bigger strides in deploying fiber networks compared to their U.S. counterparts, Malone stressed that every company and every market is different. 

“I’d start by reminding everybody that Europe is largely converged, the broadband companies are also wireless companies,” Malone said at the Investor Day. “That’s been true in every market we’re still operating in. In terms of technology, existing network structure, the nature of technological upgrade, the pressure from competition, etc. Every market is different.”

Malone added that in the U.K. for example, Liberty overbuilt itself with fiber, initially to capture more B2B business and because it was relatively cheap to build. The U.K., he said, also is relatively underbuilt — there isn’t a lot of fiber capacity and areas will be built out as opportunities present themselves. In the U.S., Malone said the biggest area for growth could be in boosting upstream capacity. 

“That may be more of a political reality than a business reality in the near term,” Malone said.  “And the cable industry contemplated that, and does have the capability of vastly expanding the upstream capacity.”

Malone said outside of the U.S., there has been a movement toward collectively building networks.

“In some places there is only one fiber backbone network that will be built and everyone will share and use it. So the models vary and in each location it depends on capital efficiency, the current state of play, cooperation between multiple players. It’s not uncommon. For instance in the U.K. there are four meaningful cell phone providers but only two networks, and those four competitors share  those two 2 nets as a matter of capital efficiency.”

Liberty CEO Greg Maffei added that the path U.S. cable companies have taken by upgrading using DOCSIS and other technologies to boost capacity and efficiency gives them some leeway before having to decide whether to go deeper into fiber expansion.     

“It’s a long ride for U.S. cable,” Maffei said. ■ 

According to Charter Communications chairman and CEO Tom Rutledge, the company‘s Spectrum TV app is the "most widely used live streaming app" in the world, with more than 10 million customers using the software exclusively to get video from the cable operator. 

Rutledge's declaration is probably confined to virtual MVPD apps, and not social video platforms like TikTok, Facebook and Twitter. But still, the number is impressive. And it could grow soon if Charter were to expand its streaming OS outside its footprint, as Comcast is doing with Xfinity X1/Flex.

Speaking during Charter's third-quarter earnings call Friday, Rutledge was responding  to a question about the Spectrum TV app being supported by Comcast's XClass TV initiative, which involves selling X1-powered Hisense smart TVs at Walmart to customers both in and out of Comcast's footprint. 

Also read: Charter Misses Analysts’ Targets With 265,000 Q3 Broadband Additions

“We like the Comcast strategy with regard to putting their platform on televisions,” Rutledge said. ”We think there's lots of opportunity for us to continue to change the video model, and to take advantage of our relationship with customers and to make the video model more efficient for programmers and for operators and to bring value back into television.”

Credit both of the top U.S. cable companies with successfully changing the narrative around the product that first put them in business many decades ago — using wires to transport TV/video signals into homes. 

Charter lost another 121,000 linear video customers in the third quarter, dropping its traditional TV base under 16 million. These ever-eroding metrics once stood drearily front and center amid the earnings reports for the top cable operators, but they're barely even noticed now. 

The focus, of course, is on the growth of Charter's high-speed internet business, with the cable company adding 265,000 broadband HSI users in Q3 and closing in on 30 million customers nationwide. 

About half of those subscribers are demurring on traditional TV/video service these days. And an unclear but seemingly growing portion of this broadband-only base seems to be taking Charter's $20-a-month skinny bundle of 60 live channels, streamed over the Spectrum TV app. 

The app-delivered bundle includes A&E, AMC, History, Comedy Central and Hallmark Channel and can be signed up for and cancelled immediately, not contracts, set-tops or fees included.

Charter is also selling this skinny streaming bundle to the growing customer ranks of Spectrum Mobile, which now tallies 3.2 million user lines. 

The Spectrum TV app is also used by Charter‘s still-robust traditional TV base as a TV Everywhere tool, streaming managed linear pay TV service on OTT devices. 

Notably, the app was recently restored to the Roku Channel Store, following a lengthy contract impasse. 

The app is also supported by Apple TV, Google Chromecast (but not Android TV/Google TV), Samsung smart TVs, Xbox One … and now XClass TV. 

Charter Communications chairman and CEO Tom Rutledge told analysts Friday that the cable company’s recent deal with ViacomCBS, especially its streaming component, was a "modern agreement" that reflects the changing video landscape, hinting that similar deals could be reached in the future. 

Charter said it reached a multi-year carriage deal with ViacomCBS on July 15, and though terms were not disclosed both companies said it included the ability for Charter to license ViacomCBS’ suite of streaming services, including Paramount Plus, Pluto TV, BET Plus and Noggin, for future distribution to Spectrum customers. 

“[I]t was a modern agreement, a new agreement and recognized that the video business is changing,” Rutledge said on a conference call to discuss Charter’s Q2 results.  “And it addressed our legacy relationship and addressed our new direct-to-consumer relationship with Viacom.”

ViacomCBS launched Paramount Plus in March and like other programmers, has looked to streaming services as the future of distribution. Viacom CBS said it had about 36 million subscribers to its streaming services at the end of the first quarter. 

The Charter deal seems to be in line with the general consensus that cable distributors, who now count on broadband service to drive most of their profit, want a deeper relationship with streaming services. Most already integrate apps from SVOD pioneers like Netflix, Hulu and  Amazon Prime into their set-top boxes. As more and more customers opt for broadband-only service -- Charter said its single play service penetration rose nearly two percentage points in Q2 to 45.7% from 44% in Q2 2020 -- operators are looking for additional content options to drive growth. 

Also Read: Streaming: It's Not a War, It's a Revolution

Rutledge said the streaming component to the  Viacom CBS deal was “integral to the discussion and consistent with our view that we'd like to be part of the marketplace and to enhance our video and customer relationship with customers through managing transactions for them.”

ViacomCBS has been working hard to improve the footprint of its streaming services. Reports surfaced earlier this month that chairman Shari Redstone and CEO Bob Bakish had informal meetings with Comcast chairman and CEO Brian Roberts about a possible partnership  involving international streaming. During Comcast’s Q2 results conference call July 29, Roberts didn’t confirm those meetings, but said he would be open to partnerships that promoted international streaming. Comcast’s NBCUniversal launched its streaming service -- Peacock -- nationally on July 15, 2020 In the second quarter, Comcast said Peacock had 54 million signups and 20 million monthly active users representing a 50% increase from the previous period. 

Rutledge also offered more insight into Charter’s seemingly uncanny ability to report stronger video subscriber results than its peers. Charter added about 56,000 video customers in 2020, while other operators struggled with increased losses. In the most recent Q2, the company lost 63,000 video subscribers, better than the 160,000 most analysts believed it would lose, and well behind the 399,000 losses endured by its closest peer, No. 1 cable operator Comcast. Rutledge said there is no secret formula to Charter’s video performance, just common sense. 

“We're selling more packages that allow us to tailor video to customer needs,” Rutledge said. “It's a difficult business because in general, video is very expensive. Our costs for video to provide it to customers are very high and continuously going up.”

Rutledge added although some consumers are priced out of the market because of the high cost of some traditional video packages, the alternatives are experiencing even higher churn.

“The new products that have been developed -- direct-to-consumer products -- are churning at higher levels,” Rutledge said. “And so our products also are in that re-adoption process of - that occurs as a result of churn.”

While that may make some think that the video business is stabilizing, Rutledge said the downward trend of the overall traditional video business can’t be ignored.  

“The fundamental trends haven't stopped, which is that prices are being continuously passed through to consumers, and there's real pressure on the total cost of the bundle,” Rutledge said. “The reason we're relatively better, we've been moderate with our pricing, and we've created new packages that cost less.” 

Cox Communications CEO Patrick Esser’s decision to retire at the end of the year — he will be succeeded by company veteran Mark Greatrex — was met throughout the industry with equal parts regret at losing yet another of cable’s old guard and good wishes that one of the good guys gets to end his decades-long cable story on his own terms. 

Esser got his start in the cable business in 1979 as a pole climber for a small cable operator in Waterloo, Iowa. According to an interview he did with this reporter back in 2013 after receiving the industry’s highest honor — the Vanguard Award for Distinguished Leadership — Esser packed up his belongings and drove 1,000 miles to Hampton Roads, Virginia, the site of Cox's latest system buy. The catalyst? One of his sales managers in the Waterloo system was a former Cox employee who couldn’t stop talking about what a great company it was to work for. The then 20-something Esser decided to see for himself.  

“I knocked on the door of the cable system and I got a job as the public-access director,” Esser said at the time. “Everything I heard about Cox was true from the moment I stepped on the property.”

Esser’s first job at Cox was officially director of programming at the Hampton Roads system, and he was part of the management team that pioneered Cox’s advertising sales division now known as Cox Media. In 1991 he was named corporate vice president of advertising sales, rising to vice president of operations for Cox’s Western Division in 1999. A  year later he was promoted to senior vice president of operations and in 2004, Esser was promoted to executive vice president and chief operating officer.

In 2006, Esser was tapped to succeed CEO James Robbins, who had said earlier that he would retire that year. Robbins, who died in 2007,  said in a July 2005 interview he couldn’t have hoped for a better person to take the reins.

“Pat has absolutely been the home-run selection,” Robbins said in that July 2005 interview. 

Esser didn’t just have an impact on his own company. While he spearheaded and pushed along efforts to diversify Cox’s workforce and bring the company into the information age, he also enthusiastically waved the cable banner wherever he went. Throughout the years he served as chairman of  NCTA: The Internet & Television Association;  C-SPAN; CableLabs; adviser to the National Association for Multi-Ethnicity in Communications (NAMIC) and on the national Board of Governors of the Boys & Girls Clubs of America. 

“Pat Esser’s contribution to our industry has been invaluable,” said NCTA: The Internet and Television Association CEO Michael Powell in a statement. “He’s a true cable success story, rising through the ranks from local executive to company CEO. Throughout, he has represented the heart and soul of our industry, always committed first to the welfare of Cox customers and employees.”

Through his journey throughout the industry, Esser has worked closely with other cable and telecom CEOs. He serves on C-SPAN’s board with Charter Communications chairman and CEO Tom Rutledge and has served with Mediacom Communications founder, chairman and CEO Rocco Commisso on the C-SPAN and NCTA boards. 

“Pat’s had a great career starting at entry level and rising to the top,” Rutledge said in a statement. “I’ve enjoyed working aside him on Industry efforts at NCTA and CableLabs.  Pat’s contribution to the industry is unmatched.  I have been personally lucky to work with Pat in an industry where long term business success has kept us on the same team for decades.  It’s been a pleasure.”

National Cable Television Cooperative CEO Lou Borrelli has known Esser for years, dating back to their early days in cable. Borrelli has logged 43 years in the cable business, beginning with UA-Columbia Cablevision in 1978. Borrelli also was a founding partner of Marcus Cable in 1986. 

"I had the good fortune to meet Pat back when our cable careers were getting off the ground," Borrelli said in a statement. "His energy was infectious and his word was his bond. Through numerous CTAM collaborations, Pat never ran out of ideas and always was up to the challenge. His track record at Cox is a testament to his work ethic and his ethics in business and life. Good luck and godspeed."

Esser also helped drive Cox forward as the industry changed, building on its decades-long reputation as the “gold standard” for the cable industry and unafraid to invest in new businesses like broadband.

“During Pat’s 15 years at the helm, Cox Communications became the gold standard of U.S. telecom companies,” Commisso said in a statement. “Through his many operational successes at Cox and his leadership within NCTA, Pat motivated us all to make the significant private investments necessary to turn our collective broadband networks into America’s most powerful technology platform.   I thank him for his tremendous contributions to our industry and wish Pat and his family all the best in the years ahead.” 

Powell also pointed to Esser’s history as a champion of the NCTA, leading its board of directors and trade show several times, and his commitment to diversity, both at Cox and throughout the industry. 

“Pat has been a leader and innovator in cable marketing; a visionary in cable operations and technology; an ally and champion for diversity, equity, and inclusion; and a thoughtful, forward-looking President & CEO of his company,” Powell continued. “As one of our industry’s most trusted and authentic voices, Pat has immense credibility with policy makers. He has helped provide a strong presence for our industry here in Washington and always has committed Cox Communications to the public good. I will miss Pat enormously as a friend, mentor, and advisor on all of our critical issues. We wish only the very best for him in his next chapter. We’re looking forward to working with Mark Greatrex, another formidable presence in our industry who will be a positive force as we move into the future.”

Esser has served as chairman of C-SPAN for about two years but has been a member of the organization since 2005. The Cox chief has also been a regular video contributor, participating in trade show forums broadcast on the channel ranging from the future of the cable business to Open Internet and consolidation. 

“You can't ask for a better chairman than Pat Esser,” C-SPAN said in a statement. “He is passionate about C-SPAN's mission and shares that enthusiasm throughout Cox. Over the past two years, he has been readily available with strategic guidance and encouragement as our network navigates a changing marketplace and we are confident we can continue to call on his wise counsel into the future.”

In 2006, Cox was first named in DiversityInc's listing of the Top 50 Companies for Diversity and in 2020, reached its highest ranking at No.11. Women in Cable Telecommunications (WICT) regularly recognizes Cox among the top operators for women.

"Pat Esser is an industry legend — 15 years of exemplary leadership at the helm of Cox and countless beneficiaries of his dedication to the industry and its DEI efforts,” Maria E. Brennan, WICT President & CEO, said in a statement. “We likewise congratulate Pat’s accomplished successor at Cox, Mark Greatrex, and look forward to continuing our strong partnership with the Cox leadership team."

As video subscriber losses continue to rise across the board in the pay TV segment, Comcast Cable CEO Dave Watson and Charter Communications chairman and CEO Tom Rutledge told a virtual industry audience Wednesday that a new double play that ties wireless and broadband is beginning to emerge. 

Comcast lost about 491,000 video subscribers in the first quarter, up from the 409,000 it lost in the prior year and a trend that Watson said would likely continue. While the cable operator will continue to focus on high-end video subscribers who want a full package of video, at Wednesday’s MoffettNathanson Virtual Media & Communications Summit, Watson said the company is not ignoring the growth at its wireless unit.

Comcast launched Xfinity Mobile in 2017, part of its MVNO agreement with Verizon Communications, and has grown the business to about 3.1 million customers. The mobile unit had its best quarter ever in Q1, adding about 278,000 customers (its highest quarterly number) and becoming profitable for the first time.

Watson said the mobile product has “energized our sales channels,” including digital, call center agents and retail. 

“I think there’s definitely an opportunity to combine an elegant and seamless broadband- mobile offering. We’ve done it in a whole bunch of our go-to-market approaches and for the right segment, it's a great way to start the relationship,” Watson said. He added that tacking on the Xfinity Flex product to that double play could make it even more attractive. 

“That is a really unique proposition that we have that no one else has,” Watson continued.  “Over time, look for us to do more of that.”

Later on in the conference, Rutledge said that wireless is an integral part of the company’s connectivity strategy, adding that that ultimate goal is to converge wireless and broadband.

Charter, which also has an MVNO agreement with Verizon for its Spectrum Mobile service, added about 300,000 wireless customers in Q1. It ended the quarter with 2.7 million wireless customers. 

“I look at our opportunity to create customers that buy mobile services, and create those customers along with the capabilities that we have added through our broadband network, which are vast, and to converge the product itself into a single product,” Rutledge said. "If you look at the total prices that people pay for these products today, I think we could gain significant market share at much lower pieces than people are currently paying. I think mobile represents the opportunity for us to save people money and give them better products than they have today. .... The combination of the product is bigger than the component pieces.”  

Rutledge added that profitability for Spectrum Mobile isn’t that far off. 

“They [Comcast] reached a point that we will reach,” Rutledge said. “From a break even perspective, we said previously that about 2 million customers is all we needed to make the business profitable. That’s true and that proved out to be true. The difference between us and Comcast at the moment, I believe, is where we are in the cycle and how much new growth we have versus how much base.” 

Rutledge added that he expects mobile to be a real contributor to profitability going forward.

“To the extent  you create a customer that raises your ARPU but saves the customer money on their household spend and creates additional EBITDA per customer for you, that both allows your existing base to be more profitable and your incremental growth opportunities to be greater because you more valuable, that’s a really attractive model,” Rutledge said. “I think that’s what mobile does for us.”

On the flip side, some have complained that the emergence of streaming apps and the trend toward content companies shifting content -- like sports -- to their direct-to-consumer products, adds more pressure to carriage negotiations.   

“Obviously it changes the dynamic,” Rutledge said, adding that in the current climate, content distributors would be “much better off not blowing up the existing model just now," mainly because it generates much more revenue than its streaming counterpart. 

The dilemma, he continued, for content companies is in deciding whether to keep raising linear prices while premium content is available on streaming apps and risk being dropped by traditional distributors, or maintaining or lowering rates to preserve that distribution relationship. 

Rutledge guessed that content companies would choose the second route, which would mean less money “but it’s still better than the alternative.”  

And despite continued pay TV subscriber losses -- MoffettNathanson estimates that pay TV is losing about 7% of its video customer base per year -- Rutledge believes there is still some life left in the traditional linear video business.

“It’s hard for me to believe that there won't be linear TV at all in the near term,” Rutledge said. “I think the model is under pressure, it's been under pressure for a  long time. I don’t think it’s about to collapse, but I do think it's shrinking rapidly. I think the most likely scenario is that rate changes will moderate and you’ll still have a pretty expensive linear model. I don’t see it just collapsing.”  

Charter Communications chairman and CEO Tom Rutledge received $38.8 million in total compensation in 2020, a period where the company broke records in broadband subscriber growth and its stock price rose 35%, according to the company’s annual proxy statement filed Thursday.

According to the filing, Rutledge’s base salary rose slightly to $2.1 million from $2 million, but he received $30 million in option awards in 2020 after not receiving any in the previous two years. Rutledge signed a new employment agreement in October that will keep him chairman and CEO at least through 2024. Overall, Rutledge’s total compensation was $37.7 million, nearly five times the $8.7 million he received in 2019.

Charter added more than 2 million broadband customers in 2020, a new record fueled by work-at-home orders as a result of the pandemic. In 2020, Charter’s stock price rose about 35% from $485.08 on Dec. 31 2019 to $653.49 on Dec. 31 2020.

Also Read: Charter’s Giffen Good

Chief operating officer John Bickham also received a big windfall in the form of option awards -- $31. 5 million -- in the period, pushing his total compensation for the year to $36.5 million. Bickham, who said in February that he will retire at the end of 2022, received about $5 million in total compensation in 2019. 

Other senior executives that saw big increases in compensation were chief financial officer Christopher Winfrey, who received $11.2 million in total compensation (up from $2.5 million in the prior year), and senior executive VP David Ellen, whose total haul rose from $3.3 million in 2019 to $10.8 million in 2020. Winfrey received $8.1 million in option awards and Ellen received $6.75 million in option awards during the year.

Charter Communications said late Wednesday that long-time president and chief operating officer John Bickham will retire at the end of 2022. In addition, the company said chief product and technology officer Rich DiGeronimo and chief financial officer Christopher Winfrey will expand their duties.

Bickham is a 35-year veteran of the cable industry, joining Charter in 2012 from Cablevision Systems (now Altice USA) where he worked with current Charter chairman and CEO Tom Rutledge. Rutledge had been CEO of Cablevision and was named Charter CEO in December 2011. The two had also been colleagues at Time Warner Cable.

“It has been a privilege to work alongside John for nearly 30 of his 35 years in the cable industry,” Rutledge said in a press release. “He is widely regarded as one of the best operators in cable and has been instrumental in the successful integration of our three companies, and subsequent trajectory as the fastest growing cable company in the nation. I am grateful that he will remain as President & COO to provide continued leadership and support throughout this transition.”

Bickham will continue to oversee the field operations, customer operations, network operations, and financial planning and analysis (FP&A) and business planning teams, led by EVP field operations Tom Adams; EVP customer operations Cliff Hagan; EVP network operations Magesh Srinivasan; and EVP FP&A and business planning Jim Nuzzo.

Charter said that effective immediately, DiGeronimo will add oversight of Charter’s ad sales business -- Spectrum Reach –  headed by EVP David Kline – to his current responsibilities of leading the company’s product and technology unit. DiGeronimo will report directly to Rutledge.

Winfrey will assume operational leadership for sales and marketing, and Spectrum Community Solutions overseen by EVP and chief marketing officer Jon Hargis and EVP of Spectrum Community Solutions Adam Ray. Winfrey will report to Bickham on operations and to Rutledge as CFO. He also will retain responsibility for Spectrum Enterprise led by EVP Bill Archer.

“We have developed a sound operating strategy and an outstanding leadership team at Charter,” Rutledge said. “Chris’s influence on our operations has expanded beyond traditional finance areas, and I look forward to seeing the impact of his leadership more formally within our cable operations. Under Rich’s guidance, the technology team has shaped the customer experience through our leading products and services, and it is that innovation and collaborative spirit that will benefit Spectrum Reach as it helps businesses reach their audiences in new ways.”

David Ellen, senior EVP; Catherine Bohigian, EVP, government affairs; and Rick Dykhouse, EVP, general counsel and corporate secretary, will continue to report to Rutledge.

Charter Communications hopes that Citizens Broadband Radio Service (CBRS) can soon divert a big chunk of its mobile data traffic off Verizon’s network, for which it has an MVNO agreement to use. 

“I think over the long haul, meaning four, five years, [CBRS] could be up to a third of our traffic that's ... currently [used] on an MVNO kind of basis,” Charter Chairman and CEO Tom Rutledge told investment analysts during the cable operator’s fourth-quarter/full-2020 earnings call Friday.

Charter recently spent $465 million to purchase 21 CBRS priority access licenses. Rutledge said that 80% of Charter’s current mobile traffic is delivered over WiFi. And it aims to soon have even more data usage defrayed from more expensive wholesale usage of Verizon’s network. 

“We intend to use those licenses, along with significant unlicensed CBRS spectrum on a targeted 5G small cell site strategy, with our [hybrid fiber-coaxial] network providing power and backhaul,” Rutledge said. “Those small cells, combined with improving WiFi capabilities enable better throughput while driving significantly better economics for Charter. This year, we'll focus on scaling our systems to actively manage traffic on handsets using our MVNO, WiFi and CBRS spectrum. We will also build some targeted 5G small cell sites, which will help us learn how to pace our purely return on investment based CBRS deployment.”

Charter added 300,000 mobile lines in the fourth quarter and now controls 2.32 million total lines. Mobile revenue in the fourth quarter reached $428 million, versus $236 million in Q4 2019. 

The cable company is spending more on its mobile business days—the wireless unit’s costs were up 40.5% year over year to $522 million. But Charter insisted that costs—and subscriber lines—aren’t rising due to device subsidy promotions. 

“We’re not giving away free phones to get a kick up the wireless net adds,” said CFO Chris Winfrey, speaking alongside Rutledge.

As for CBRS, Rutledge said it will have an “opportunistic” role in Charter’s technology portfolio. “It depends on traffic flows, it depends on the quantity of flows and where they are and whether it pays for us to put out the capital to reduce those costs, but it is necessary. And if you think through our WiFi deployment as well, there is a mixture between WiFi and CBRS in terms of offload and how that works.”

Beyond pure economics, Rutledge said CBRS could improve overall user experience.

“We've looked at CBRS strictly as a incremental opportunity from a return-on-investment point of view to move traffic onto our network, but it also does have the potential of increasing the consumers' experience in terms of their satisfaction because of the quality of that connection,” he said. “And so that's sort of an unstated opportunity going forward, hard to quantify, but part of our strategy.”

Charter Communications reported a narrow loss of 35,000 pay TV users in the fourth quarter and ended 2020 in the entirely outlying position of adding 56,000 video customers for the year. 

U.S. cable operators collectively lost around 500,000 linear pay TV subscribers in 2020. And factoring in the fast-declining satellite TV business, all linear operators will have seen more than 1 million users cut the cord for the year. 

But Charter somehow ended up in the black in a pandemic year in which it added more than 2.1 million residential internet users, 216,000 of them in the fourth quarter. 

Also Read: Broadband Gains are Light But Charter Improves Video Losses 

Speaking to media and telecom investment analysts during Charter’s Q4/full-2020 earnings call Friday morning, Chairman and CEO Tom Rutledge seemed to once again concede that the video performance was an anomaly, caused by “outsized growth in connectivity.”

The video customer growth, he said, was caused by having broadband "market share shift to us from other providers.” As Charter connected these customers to its DOCSIS 3.1-powered high-speed internet, he explained, these consumers also took old-fashioned, bundled video. 

In Los Angeles, customers who sign on for 200 Mbps-speed broadband through Charter can also get more than 125 pay TV networks in a package value-priced at $90 a month on a one-year promotion.

The growth “goes against the macro trend of the industry,” Rutledge conceded. “And that macro trend  hasn’t gone away.”

Certainly, the trend didn’t abate for Comcast in Q4, with the No. 1 U.S. cable operator losing another 227,000 pay TV customers … a factor that seems to make Charter’s video growth all the more confounding. 

Also Read: Broadband Drives Q4 Again For Comcast Cable

Comcast’s X1 video platform is still the state-of-the art in terms of traditional linear pay TV products. And the operator has evolved its video portfolio to include its own OTT device ecosystem, Xfinity Flex, which combines parts of the X1 experience, including voice control, with access to a wide variety of popular streaming apps. 

As for Charter’s Spectrum-branded TV services, its long-deployed Spectrum Guide video OS is designed to utilize older set-tops. Rutledge said Wednesday that “multiple millions” of Spectrum TV customers have the newer “World Box” CPE platform. But it’s hard to tell what percentage of Charter’s 16.2 million pay TV homes have the newer equipment. 

Charter’s Spectrum TV product does include the Stream app, which is designed to let users stream Netflix and other major OTT apps from pretty much any device they want to use. But a dispute with Roku has kept that app from being downloadable on the No. 1 connected TV device platform since December. 

Rutledge said Charter “has the ability” to add a thin-client OTT device platform, similar to Xfinity Flex, that would provide Charter’s broadband-only customers with a video option. Charter has reportedly been in talks with Comcast about licensing Flex, so for all we know, Rutledge was talking about that technology specifically. 

“That opportunity is still in front of us,” he said. 

In any event, as broadband uptake begins to “normalize” (their words, not ours), it’s hard to predict the company’s video growth will be sustained. 

“I don’t think we’ll have quite the internet growth in 2021 that we had in 2020,” Rutledge said. “Maybe we’ll be able to grow with OTT products and smaller packages. The net of those two things is difficult to [predict], but I think we’ll do better than the industry in general when you look at multichannel video growth.”

Charter Communications chairman and CEO Tom Rutledge extended his employment contract with the cable company through 2024, seeing his annual salary increase by about 25% to $2.5 million.

Rutledge, who joined Charter in 2012, has helped steer the company through the purchase of Time Warner Cable in 2016 and transformed the cable operator into one of the premier pure play distribution companies in the sector. Charter stock is up about 20% this year and has risen nearly ten-fold since he joined the company.  S hares were up 4.2% ($24 each) to $600 per share in early trading Thursday. His old employment deal was set to expire at the end of this year. 

“More time in the salt mine,” Rutledge joked about his new employment deal on a conference call Thursday to discuss Q3 results, where the company continued its  torrid growth streak, adding 537,000 broadband customers and 67,000 video customers.

Related: Charter's 'Giffen Good'

As part of his new deal, Rutledge’s annual salary will rise 25% to $2.5 million from $2 million. In addition, he will be eligible for an annual cash bonus of up to 300% of his annual base salary. On Nov. 3, he will also receive $30 million in stock option awards, and will receive the same amount annually in each year of his employment deal. According to a Securities and Exchange Commission filing on the employment deal, each stock option grant will vest on the third anniversary of the grant date, subject to Rutledge’s continued employment or an earlier qualifying termination of service.

In the event that he is terminated involuntarily without cause, Rutledge would receive cash severance of 2.5 times his annual base salary and bonus, a prorated annual bonus for that year,  a cash payment equal to the cost of COBRA coverage for 30 months, and continued vesting of the stock options awarded during the term of the agreement.

Charter Communications’ success over the past few years, to hear chairman and CEO Tom Rutledge say it, is due to the ability of its employees to execute a relatively simple strategy: Offering high-value products at reasonable prices with top-notch customer service. And it doesn’t hurt to have a “Giffen good.”

For non-economics majors out there, a Giffen good is a product that, despite its higher price, continues to be in high demand. For 19th century Scottish economist Sir Robert Giffen, who coined the phrase in 1890, that product was bread. For Rutledge and Charter, it’s broadband. And in the cable business, broadband is everything.

Related: Charter's Wild, Wild West

Charter, the Multichannel News Operator of the Year for 2020, has managed record broadband and positive video subscriber growth during the pandemic by sticking to its game plan, initiated more than four years ago when it completed the purchase of Time Warner Cable. Back then, Rutledge and his team set out to make Charter’s plant across its 41-state footprint fully digital (achieved in 2018), to roll out DOCSIS 3.1 (completed in 2018), to uniformly align products and packaging across all markets (as of Q4 2019, 85% of its customers were in Spectrum pricing and packaging) and to raise broadband speeds (in 2019, it raised the minimum speed to 200 Megabits per second for 60% of the footprint and that rate continues to grow; the remaining 40% are at 100 Mbps). Four years later, the company is reaping the benefits of those investments.

Charter, in the words of Sanford Bernstein media analyst Peter Supino, is “making its own luck.”

Record-Setting Year

In the second quarter — the height of the pandemic — Charter added a record 850,000 broadband customers, outpacing the old mark, set in Q1, by nearly 50%. It also managed to grow residential video subscribers by 102,000 and wireless customers by 325,000. So far this year, Charter has added 1.4 million broadband customers (more than double last year’s gains) and is the only publicly traded cable operator to show positive video customer growth (32,000) for the first half of 2020. 

In a research note, Barclays Global media analyst Kannan Venkateshwar was impressed with Charter’s ability to grow video subscribers as other multichannel video programming distributors (MVPDs), including Comcast, are losing video customers at an accelerated pace. In Q2, Comcast lost about 427,000 video customers (up from a loss of 209,000 in Q2 2019), while other publicly traded operators like Altice USA and Cable One also saw video subs decline at an accelerated pace.

“It is also quite remarkable that in a world where every MVPD is managing the video business for cash, Charter is growing video subs, which is likely because of the revenue growth impact of video on overall cable and on headline broadband revenue growth,” Venkateshwar wrote in a note to clients.

Rutledge has a reputation of downplaying his own role in the success of the company, and that hasn’t changed. He gives all the credit to Charter’s 95,000 employees in the field and in the trenches, who’ve managed to steer the company toward record growth in the midst of a worldwide pandemic. At the Goldman Sachs Communacopia conference earlier this month, he pointed out that having the right product also is a big part of Charter’s success.

“The product is really valuable,” Rutledge said at Communacopia. “The product is valuable from a price perspective, relative to all the things you can spend your money on, particularly if you have nothing better to do. It’s a very attractive product — the ‘Giffen good,’ so to speak as an economic notion. It’s worth a lot of money, even in a down market. Our demand is up, our churn is down, and our ability to execute is pretty good.”

Cord-cutting will likely continue, Rutledge agreed, adding that future success across Charter’s product lines will depend in large part on the strength of the broadband service. And the operator is doing all it can to ensure that broadband growth continues on an upward slope for the foreseeable future.

“We look at our future in video as more of a video store of a whole range of kinds of products, including tiers, sports channels, traditional video products, linear products, AVOD products and making that an easy transaction for the customer, and making that part of the overall connectivity experience," Rutledge said at Communacopia. “We think we can continue to do that and that is the fundamental aspect of video that we’re interested in.”

The health of the video business will continue to depend on the sustained growth of broadband: As Rutledge noted, satellite-TV customers who switch to Charter’s Spectrum video offerings often buy a broadband connection, too. And broadband growth is showing no signs of letting up. 

“As they come loose from their satellite relationships, they are reevaluating their broadband connections as well,” Rutledge said.

The COVID-19 Conundrum

The demand for broadband has become even more pronounced during the pandemic. When most states began implementing work-from-home orders and mandating remote learning for students, having a reliable, fast internet connection became a necessity.

Charter, like other operators, scrambled to make its workplaces safe and to switch call-center employees and field operations to remote working status. There were some hiccups: Some complained that call centers in some areas were slower than others in letting workers do their jobs remotely. Charter, as an essential employer, remained open and leadership continued to come into the office to support essential front-line workers. Employees who could work remotely have been doing so since March, including more than 50% of call center operators shifting to remote work. As regions across the country have begun to open up, Charter is moving to a hybrid schedule of remote and office work in accordance with CDC guidelines.

Charter raised hourly pay for frontline workers by $1.50 per hour and increased the minimum wage for hourly workers by $1.50 per hour from $15 per hour. It also pledged that in 2022 all hourly employees will have a starting wage of $20 per hour or more. Charter gave workers an additional 15 days of paid COVID-19 flex time — not including paid quarantine time — and continued to pay its direct sales team when they were not allowed to go door-to-door (wages plus six-month average commission). There were no furloughs or layoffs in that time.

At its retail operations, Charter was able to deal with the shift in customer needs: Demand for and questions about broadband service spiked as more and more communities fell under work-from-home orders. Senior VP of Spectrum Stores and retail Pattie Eliason said that Charter, which managed to keep most of its retail operations open during the pandemic, was up to the challenge.

The retail operations have been undergoing a massive overhaul. Charter currently has about 430 retail locations and plans to end this year with about 530 stores. The goal is to finish 2021 with about 685 retail locations.

The idea is to make the retail stores a focal point for new customers, driving interest in new products and services. While customers were initially full of questions regarding broadband service, Eliason said, that has expanded into other areas such as wireless. The retail operations have helped with overall subscriber growth, she said.

“We’re very sales-focused,” Eliason said. “Consumers who have never thought about Spectrum are walking in the door and asking questions.”

In addition to mobile, broadband and video service, customers are asking about adding landlines, a product that in the past had been on the downswing, Eliason added.

 “People want to have a solid landline in their homes,” she said. “It definitely has increased overall in what we’re doing. Honestly, with people in the pandemic and being home, they wanted the safety of an extra landline.”

Charter managed to keep most of its Spectrum stores open throughout the pandemic, Eliason said, which to many customers was a needed breath of fresh air. 

“Customers were so thankful we were open, “ Eliason said. “They needed the service and they needed it now.”

That meant gearing up to get customers the equipment they needed to self-install the product and making sure there were answers to their questions. While traffic at the stores slowed during the pandemic’s first days — transactions were down about 50% early on — they have recovered to about 90% of what they were. In the meantime, Charter has significantly modified the way it does business in the retail locations.

“We have redone how we do everything,” Eliason added. “All of our employees wear masks, we have a social-distancing floor, so people know where they need to stand, we have plexiglass up, sanitizing at all times, making sure we’re following all the CDC guidelines. The biggest part is making sure the customers feel comfortable in all of the stores, as well as our employees.”

Charter also is limiting the stores’ capacity to about 50%, putting greeters outside each location to let customers know they can book appointments online and come back to the store later, rather than wait. 

The importance of the broadband product was evident by the Federal Communications Commission’s initial reaction to the pandemic, creating the Keep Americans Connected pledge. Just about every U.S. cable operator, including Charter, agreed to the pledge, promising to not disconnect any broadband connection for lack of payment during the pandemic. Charter, like other operators, also extended its free broadband offering to low-income homes with school-age children to ensure kids were able to learn remotely.

While the KAC pledge may have skewed the broadband numbers a bit, the company and most analysts believe that the bulk of those customers will be retained.

In a research note, MoffettNathanson principal and senior analyst Craig Moffett said even without the KAC and Remote Education Offer-related customers, Charter added 588,000 broadband customers in the period, a record for the company. Charter’s broadband growth rate was an “extraordinary” 8.3%, including KAC and REO, and 7.2% without, still its highest level since Q4 2016, according to Moffett. 

“The COVID crisis has shone a spotlight on the criticality of digital infrastructure and all cable operators have benefitted from the superiority of their broadband facilities,” Moffett said in an interview. “Charter, over the long term, is the best positioned cable operator because they have all the tailwinds of broadband’s ascendancy, but they also have a longer runway for margin expansion and free cash-flow growth.”

Maintaining the Growth Curve

But that leaves a question in every cable investor’s mind: Can Charter keep that momentum going? Analysts who follow the company said Charter is making moves to add more homes passed to ensure just that.

Like other operators, Charter has been extending its reach within its service territory, adding homes that are in the footprint but not receiving service. It has a lot of room to do that: Charter passes about 53 million homes in 41 states, and last month crossed 30 million customers, a major milestone but one that leaves room for growth. 

As part of the conditions for approval of its Time Warner Cable acquisition, Charter agreed to build out about 2 million additional underserved homes across the country and has been adding between 850,000 and 950,000 homes passed per year since 2015.  

The buildout program is just one of the many tasks that come under the purview of executive VP of field operations Tom Adams. Even in a pandemic construction continues, said Adams, who has overseen the buildout, adding more than 1.5 million homes in the last two years. 

Adams said Charter learned a lot from those early buildouts. “We learned what the hurdles were, administrative requirements to get on the poles, the difference in the quality of the infrastructure in rural America.”

Adams said the pace of the buildout will rely on economics, which varies depending on the geography. While he wouldn’t say how many more homes the company plans to add to the footprint in later years, he said Charter is committed to the program.  

“We would certainly like to build [out] more of rural America in the future,” Adams said. “We do believe there is an economic model that works that we can build some of the underserved rural markets that we’re in, and we’re going to make an effort to go after that in the future.”   

According to Moffett, the popularity of broadband service has made the economics of extending the network even to the most sparsely populated rural areas attractive.

 In a research note, Moffett said extending fiber into an urban area used to cost operators from $1,000 to $2,000 per home passed. For rural markets, where the runs are longer and the number of homes passed is lower, that figure could balloon to as much as $4,000 per home passed.

But rural markets, with fewer competitors, have much higher opportunity to sign up passed homes for service. Moffett wrote in his note that while 40% to 50% penetration rates could be assumed for urban builds, in rural markets 80% penetration rates are not unreasonable. That return on investment makes the higher costs more manageable. An urban market with a 50% penetration rate implies a cost of $4,000 per home, while a rural market with 80% penetration implies a cost that is just 25% higher, according to Moffett.  

“Suddenly, secondary markets look in many ways more attractive than primary markets,” Moffett said in an interview. “Ten years ago, everybody thought that the densest urban markets were the place to be, with the best advertising revenue and the lowest cost to serve. Today, the exposure to secondary markets with lots of rural adjacencies that allow for insistent edge-outs are more attractive than urban markets. You tend to see less broadband competition, you tend to see better new household formation, particularly now that people are fleeing the densest urban areas, and you have the longest runway for broadband growth.”

Wireless Takes Hold

While broadband growth has grabbed all the headlines, Charter has also made huge progress on the wireless front, adding 325,000 customers to its Spectrum Mobile service in the quarter, well above analysts’ expectations. Charter’s footprint expansion program, which largely involves rural markets, could prove to be a big help to the wireless side of the business, as well. 

Charter launched Spectrum Mobile in July 2018, part of a mobile virtual network operator deal with Verizon Communications. Spectrum Mobile debuted a few months after Comcast exercised the same MVNO, and in the last year and a half has grown strongly, ending the second quarter with 1.7 million subscribers. 

Charter is participating in the federal Rural Digital Opportunity Fund (RDOF) auction, a long-term program encouraging wireless companies to expand into rural markets and close the digital divide. The first phase of RDOF includes $16 billion in funding over 10 years. The second phase is a $4 billion program to extend wireless into underserved areas.

Charter has acknowledged participating in the auction, but because of quiet-period restrictions, has had to limit its conversations about the program.

But Moffett expects Charter to be a significant player in the RDOF auction. He expects “the longer growth runway provided by RDOF participation to be a welcome development for investors increasingly focused on broadband subscriber growth as the single most important metric to watch.”

With that many growth irons in the fire, Wall Street has taken notice. This year, Charter’s stock is up about 30% to  $630.07 each as of Sept. 16, and its share price has nearly tripled from $227.41 each just after the Time Warner Cable merger was completed. 

That performance has got to feel like a bit of a vindication for the Charter team. As one analyst put it, it wasn’t that long ago when, after a light quarter or two and the impending threat of streaming video casting a dark cloud over the industry, many in Wall Street were calling for Rutledge to step down and the TWC merger a failure. That Rutledge — who said on Charter’s Q2 analyst call that he would like to remain chairman and CEO beyond 2021, when his contract expires — wants to stick around is a clear indication that he is confident the company’s run of good luck will continue.

“We think Rutledge’s desire to remain at the helm is a bullish fact in that it supports confidence in management’s conviction about the company’s ability to gain market share, efficiency and cash flow for the long term,” Supino said in a recent report. “Remember, it was only six quarters ago when some on Wall Street were calling Charter’s TWC acquisition a flop and calling for a new CEO.”

Most of that turmoil was due to what some investors believed at the time was an indifference to deals, to the detriment of Charter’s stock. Market chatter was heavy concerning possible interest from Verizon, Japanese wireless company Softbank and even Altice USA, all of which never materialized. Rutledge and the rest of the Charter family weathered the storm by keeping their heads down and executing the plan.

“Tom is one of these rare CEOs that is just as comfortable with high-level strategy and economics as he is with nuts-and bolts-operations,” Moffett said. “There was a time when he was viewed as the consummate operator, but I think what has become clear to investors over the past 10 years is he’s a remarkably thoughtful economist and has really good insights into the economics and broad strategic issues in front of the cable industry.” 

To its credit, Charter has managed to keep the message uncomplicated in an increasingly complicated business. 

“I don’t think they’ve done anything that differently than anyone else,” Moffett continued. “It’s a refreshingly simple story: They told you what they were going to do, they’ve done it and it’s working.”

Charter Communications surprised the cable community by actually adding video customers in Q2 during a pandemic, but chairman and CEO Tom Rutledge told an industry audience that the increases were no fluke and in fact are quite sustainable.

Charter added 102,000 video customers in Q2,  a time when other larger cable operators were shedding large numbers of pay TV subscribers as the pandemic forced some homes to opt for higher data speeds and a streaming video connection.  But Rutledge, speaking at the virtual Goldman Sachs Communacopia conference Wednesday, said that a combination of good service and a substantial number of customers defecting from satellite TV -- DirecTV lost about 886,000 subscribers in the same period  -- helped Charter reverse the trend.

Rutledge attributed the video growth to the strength of Charter’s Spectrum broadband offering -- it added 825,000 broadband customers in Q2, a record -- and the rapid decline of satellite TV. Satellite TV service providers DirecTV and Dish Network lost about 1 million subscribers in Q2 alone, and nearly 8 million customers since Q3 2018, according to MoffettNathanson.  

“We still have a macro trend of cord-cutting going on, meaning people have a hard time paying for the fat bundle of services, but we’re selling other products as well,” Rutledge said.

“We look at our future in video as more of a video store of a whole range of kinds of products, including tiers, sports channels, traditional video products, linear products, AVOD products and making that an easy transaction for the customer and make that part of the overall connectivity experience," he continued. “We think we can continue to do that and that is the fundamental aspect of video that we’re interested in.”

Rutledge said the health of the video business will continue to depend on the sustained growth of broadband -- he noted that satellite TV customers that switch to Charter often buy a broadband connection too. And broadband growth is showing no signs of letting up. 

"As they come loose from their satellite relationships, they are reevaluating their broadband connections as well,” Rutledge said.

Rutledge also was optimistic about the rapid growth of Charter’s Spectrum Mobile wireless service. Spectrum Mobile added about 325,000 customers in Q2, ending the period with 1.7 million subscribers.

“I think it will accelerate,” Rutledge said of Spectrum Mobile’s growth. “I think we’re just getting going.” 

No, Charter Communications’s 102,000 net video additions in the second quarter isn’t a sign that the rapidly quickening dynamic of linear pay TV cord cutting has magically disappeared. 

“The secular trends haven’t changed,” Tom Rutledge, Chairman and CEO for the No. 2 U.S. cable company, told equity analysts Friday. “We've always said that we thought it was possible to grow video if our overall relationship growth was high enough.” (A transcript of the call was provided by Seeking Alpha.)

Also read: Cord Cutting Shocker: Charter Added 102K Spectrum TV Subscribers in Q2

Charter added an enormous 755,000 customers through second quarter promotions billed as connected disadvantaged students and families, as well as small business owners, to the internet during the pandemic. Charter said 149,000 customers signed up through the company’s Keep America Connected promotion also chose to bundle video. 

Charter didn’t cut off customers who were unable to pay their cable bill during the second quarter, limiting churn. 

“If you grow faster than that rate of decline, then you create video growth,” Rutledge said. ‘And that's really what's happened here.”

It was the first time in three years that Charter had reported video customer gains. The company lost 70,000 Spectrum TV customer in the first quarter and 141,000 in the second quarter of 2019. 

Rutledge conceded that at least part of the second quarter growth was achieved through a skinny bundling strategy, enticing broadband customer with economy-sized video products in some markets. But contract limitations with programmers limit just how much Charter can exploit these opportunities,” he said.  

“The skinny packages have limits in terms of what we can penetrate with because of the way the contract language works, our programming deals and the minimums that are required in the--the minimum distribution required in a big bundle,” Rutledge said.

So will Charter bundle third-party vMVPD services like YouTube TV, Philo and fuboTV, as other cable operators have

“I think you'll see us selling more and more packages of OTT product that we don't necessarily own but more on a consignment basis or on a--potentially even a packaging basis,’ Rutledge added. 

Charter Communications chairman and CEO Tom Rutledge said that the cable operator is doing better than expected. Video results in the first quarter were driven by a combination of sports-free offerings and the availability of its products via apps.

Charter lost about 70,000 video customers in Q1, less than half the 152,000 it lost in the same period last year and well below analysts’ consensus estimates for 170,000 losses. 

At the virtual MoffettNathanson Media & Communications conference Monday, Rutledge said a combination of broadband pull-through -- where new broadband customers, especially from satellite TV services, buy a video package as well as a high-speed data product -- and sports-free video packages, like ethnic offerings and Spectrum Essentials, helped drive results.

Rutledge told moderator Craig Moffett -- principal and senior analyst at MoffettNathanson -- that even those offerings are limited because of broader traditional video contracts that require Charter sell a minimum threshold of sports-driven programming before other tiers. But he added customers are finding ways to access the services they want. 

“We also have gone to an app-based distribution model,” Rutledge said. “We have 8 million customers now who are connected to us through apps as opposed to set-top boxes. What that does is it reduces our capital intensity, it reduces our revenue from equipment, but it also allows us to have a better user experience and it allows us to be on more devices, the consumer can save money. Our application is the No. 1 rated app in the country for its category.”

Although those factors gave Charter a slightly different trajectory than its industry peers in the quarter, it doesn’t negate the trend that traditional video’s decline is accelerating.

“We just have some tools that make it a little better for us,” Rutledge said. “Ultimately, being an app based provider will allow us to be, over the longer term, a better marketer of new video.”

As video’s importance in the overall cable bundle has diminished over the years -- every major publicly traded cable operator has significantly more broadband customers than video customers -- Rutledge said distributors’ leverage with non-sports programmers has changed.

Related: Rutledge: Sports Cost Relief is Up to Networks, Leagues 

“We have leverage in the sense that there’s not that much margin in the video business, so letting our customers have higher and higher rates is a problem, ” Rutledge said, adding that as sports costs rise, sports programming is becoming more of an elite product.

Related: Sinclair: Sports Rebates Could Come 

“[T]he sports package is still pretty much intact as a product and we haven’t chosen to try to destroy it, or do anything but continue to sell it,” Rutledge said. “But continuing to sell it means it’s continuously increasing in cost and therefore customers have higher and higher bundled cable bills. Some of the downside of selling that product is that people’s ire about their bill is projected onto us as opposed to the content companies. There’s some negativity associated with being a purveyor of high-cost content, but people still want to watch it in big numbers and it’s just becoming more of an exclusive product, slowly, because of its high cost.” 

Charter Communications chairman and CEO Tom Rutledge said that the cable operator is doing better than expected. Wideo results in the first quarter were driven by a combination of sports-free offerings and the availability of its products via apps.

Charter lost about 70,000 video customers in Q1, less than half the 152,000 it lost in the same period last year and well below analysts’ consensus estimates for 170,000 losses. 

At the virtual MoffettNathanson Media & Communications conference Monday, Rutledge said a combination of broadband pull-through -- where new broadband customers, especially from satellite TV services, buy a video package as well as a high-speed data product -- and sports-free video packages, like ethnic offerings and Spectrum Essentials, helped drive results.

Rutledge told moderator Craig Moffett -- principal and senior analyst at MoffettNathanson -- that even those offerings are limited because of broader traditional video contracts that require Charter sell a minimum threshold of sports-driven programming before other tiers. But he added customers are finding ways to access the services they want. 

“We also have gone to an app-based distribution model,” Rutledge said. “We have 8 million customers now who are connected to us through apps as opposed to set-top boxes. What that does is it reduces our capital intensity, it reduces our revenue from equipment, but it also allows us to have a better user experience and it allows us to be on more devices, the consumer can save money. Our application is the No. 1 rated app in the country for its category.”

Although those factors gave Charter a slightly different trajectory than its industry peers in the quarter, it doesn’t negate the trend that traditional video’s decline is accelerating.

“We just have some tools that make it a little better for us,” Rutledge said. “Ultimately, being an app based provider will allow us to be, over the longer term, a better marketer of new video.”

As video’s importance in the overall cable bundle has diminished over the years -- every major publicly traded cable operator has significantly more broadband customers than video customers -- Rutledge said distributors’ leverage with non-sports programmers has changed.

Related: Rutledge: Sports Cost Relief is Up to Networks, Leagues 

“We have leverage in the sense that there’s not that much margin in the video business, so letting our customers have higher and higher rates is a problem, ” Rutledge said, adding that as sports costs rise, sports programming is becoming more of an elite product.

Related: Sinclair: Sports Rebates Could Come 

“[T]he sports package is still pretty much intact as a product and we haven’t chosen to try to destroy it, or do anything but continue to sell it,” Rutledge said. “But continuing to sell it means it’s continuously increasing in cost and therefore customers have higher and higher bundled cable bills. Some of the downside of selling that product is that people’s ire about their bill is projected onto us as opposed to the content companies. There’s some negativity associated with being a purveyor of high-cost content, but people still want to watch it in big numbers and it’s just becoming more of an exclusive product, slowly, because of its high cost.” 

Charter Communications chairman and CEO Tom Rutledge said he would like to get some rate relief when it comes to sports channels that aren’t showing sports during the COVID-19 pandemic, but said the matter is out of the distributors' hands and will depend heavily on when games return.

Rutledge’s response was similar to that of some of the other major cable distributors -- Comcast and Altice USA have said pretty much the same over the past two days. New York State Attorney General Letitia James sent letters to the biggest pay TV operators in her state on April 29 asking them to voluntarily reduce charges to customers during the pandemic, but that would depend on whether the channels themselves get a break from the respective leagues. 

The National Basketball Association and National Hockey Leagues suspended their regular seasons in March, and Major League Baseball postponed its season later that same month due to concerns over the pandemic. While several scenarios have been put forth about a return to play for those leagues in the coming months, nothing has been decided yet.

Related: Strong Broadband Adds Drive Charter in Q1

Some major sporting events are beginning to return -- NASCAR said it will restart the auto racing circuit on May 17 -- and The Kentucky Derby and French Open have been postponed until September. The Derby is holding The Triple Crown showdown, a social distancing, computer-simulated event on May 2 pitting the 13 horses that have won the Triple Crown against each other to raise money for COVID-19 relief. The showdown will be aired on NBC Sports. 

On a conference call with analysts to discuss its Q1 results, Rutledge estimated that sports costs make up more than half of the $60 per customer, per month that Charter doles out in programming fees. He added any relief from sports costs would be welcome and would be passed directly to consumers, but didn’t seem too optimistic that he would get it.

“Sports is a major driver of the cost of content, and obviously it makes the whole product difficult to sell because of the cost consumers have to pay,” Rutledge said, adding that Charter would love to pass through any savings it received from the networks if games aren’t played.

“There is still a big question of whether the games will be played, and if they are played, most likely the cost will not be rebated to the customer,” Rutledge added. “At this point in time we have a structure in the industry of how we pay for content. It's all bundled together and tied together contractually, and we have very little control over it directly. We’d love to see our customers relieved, if they can be. Ultimately, it’s the athletes who are getting the money. At some point somebody has to give up their money to give it back to the customer. That hasn’t happened yet.” 

Charter Communications chairman and CEO Tom Rutledge said streaming video services aren’t as big a factor in the acceleration of cord cutting in the past few years, adding that password sharing and TV Everywhere are having a greater impact.

Rutledge has been a big opponent of password sharing in the past -- many of Charter’s recent carriage deals include pledges by programmers to help curb the practice.  At the UBS Global TMT Conference in New York Monday, he reiterated that stance, adding that “TV Everywhere and the lack of security has been the bigger issue.” 

Related: Defending the Bundle 

According to MoffettNathanson principal and senior analyst Craig Moffett, the pay TV business lost about 3.8% of its subscribers in Q3, its largest losses yet and mainly driven by a loss of 1.1 million DirecTV satellite TV customers in the period. But as programming costs continue to rise, consumers -- especially younger ones -- are turning toward over-the-top providers with smaller video packages and lower monthly charges.

But Rutledge warned that OTT offerings, many without broadcast channels and sports networks, could fall short for consumers as their entertainment needs change. And he added that although direct-to-consumer offerings like Apple TV Plus and Disney + are having an impact now, it may not last long.

“It does, it will it could,” Rutledge said of D2C’s impact on pay TV subscriber losses. “That hasn’t been the main driver to date. I think TV Everywhere and its lack of security has been the bigger issue.”

Rutledge said the lack of live sports and news in many of the D2C offerings are just some of the reasons he believes those products “aren't going to satisfy the full need for television consumers."

“When you add them all up, it’s a lot of money,” Rutledge said. “You get back to the same problem. The bundle is very expensive, but the disaggregated a la carte repackaged product is even more expensive.”

While Rutledge believes that video customer losses will slow down for cable operators -- Charter’s losses are around 2.3% of its base, more than a full percentage point below the industry average -- the importance of those losses on the overall business is also diminishing.

Related: Moffett: Video Just Doesn’t Matter 

“I grew up selling TV, and I like to sell TV, but it isn’t really what our main business is,” Rutledge said, adding that video is just another part of cable’s overall connectivity offering.

“I look at video as a business that we want to be in,” Rutledge continued. “We’d like to do well in it because our consumers want that product and we want to make it efficient for them from a connection point of view. We want the best video service we can get for customers, so when they subscribe to a connectivity relationship they subscribe to us. But it isn’t the main be-all and end-all of the business. In fact it’s not the primary motivation. It’s kind of like what wireline was in the triple play 10 or 15 years ago. It was really designed to just enhance the value of the total relationship.” 

Charter Communications chairman and CEO Tom Rutledge said streaming video services aren’t as big a factor in the acceleration of cord cutting in the past few years, adding that password sharing and TV Everywhere are having a greater impact.

Rutledge has been a big opponent of password sharing in the past -- many of Charter’s recent carriage deals include pledges by programmers to help curb the practice. At the UBS Global TMT Conference in New York Monday, he reiterated that stance, adding that “TV Everywhere and its lack of security has been the bigger issue.” 

Related: Defending the Bundle 

According to MoffettNathanson principal and senior analyst Craig Moffett, the pay TV business lost about 3.8% of its subscribers in Q3, its largest losses yet and mainly driven by a loss of 1.1 million DirecTV satellite TV customers in the period. But as  programming costs continue to rise, consumers -- especially younger ones -- are turning toward over-the-top providers with smaller video packages and lower monthly charges.    

But Rutledge warned that OTT offerings, many without broadcast channels and sports networks, could fall short for consumers as their entertainment needs change. And he added that although direct-to-consumer offerings like Apple TV Plus and Disney + are having an impact now, it may not last long. 

“It does, it will it could,” Rutledge said of D2C’s impact on pay TV subscriber losses. “That hasn’t been the main driver to date. I think TV Everywhere and its lack of security has been the bigger issue.”

Rutledge said the lack of live sports and news in many of the D2C offerings are just some of the reasons he believes those products “aren't going to satisfy the full need for television consumers."

“When you add them all up, it’s a lot of money,” Rutledge said. “You get back to the same problem. The bundle is very expensive, but the disaggregated a la carte repackaged product is even more expensive.”

While Rutledge believes that video customer losses will slow down for cable operators -- Charter’s losses are around 2.3% of its base, more than a full percentage point below the industry average -- the importance of those losses on the overall business is also diminishing.

Related: Moffett: Video Just Doesn’t Matter 

“I grew up selling TV, and I like to sell TV, but it isn’t really what our main business is,” Rutledge said, adding that video is just another part of cable’s overall connectivity offering.

“I look at video as a business that we want to be in,” Rutledge continued. “We’d like to do well in it because our consumers want that product and we want to make it efficient for them from a connection point of view. We want the best video service we can get for customers, so when they subscribe to a connectivity relationship they subscribe to us. But it isn’t the main be-all and end-all of the business. In fact it’s not the primary motivation. It’s kind of like what wireline was in the triple play 10 or 15 years ago. It was really designed to just enhance the value of the total relationship.”  

Charter continues to talk to Comcast about licensing X1 video technology, and those discussions appear to have evolved to include Xfinity Flex, the video streaming service being offered to Comcast’s broadband-only customers.

"We have discussed that with Comcast. It's an interesting idea," Charter Communications Chairman and CEO Tom Rutledge said, responding to an analyst question during this morning’s third-quarter earnings call.

Rutledge said Charter is “considering” a technology license for Flex. “It has advantages,” he noted.

In May, Rutledge surprised the video industry, noting that Charter has had talks with Comcast to license the X1 video tech platform. Already, Cox Communications, along with Canada’s Rogers Communications, Shaw Communications and Videotron, make X1 the technological backbone of their video service offerings.

Charter has had its own video distribution system, which it calls Spectrum Guide, in place since 2014. Spectrum Guide is based on technology provided by ActiveVideo, a company Charter jointly purchased with the erstwhile Arris (now part of CommScope) in 2015.

“Spectrum Guide has been deployed to millions of set-top boxes across our footprint providing a reliable, modern navigation experience, and virtualization has been key to that success,” said Jake Perlman, senior VP of software development at Charter, said in a statement last month.

However, with Charter continuing to emphasize wireline broadband growth—and wireless broadband convergence—video becomes less and less of a factor for the MSO.

At Cable-Tec Expo in New Orleans earlier this month, one video tech vendor told MCN that discussion about Charter surrendering the task of continuing to develop video delivery tech to Comcast and X1 “keeps coming up.”

As for Flex, it’s the latest extension of X1—a skinny service offered, ostensibly, for free to Comcast and Sky broadband customers. (As tech blogs including the Verge noted, however, the true cost of Flex should probably include the $13 a month users are required to pay to lease a modem and router.)

Comcast sees Flex as a key distribution point for Peacock, the soon-to-launch, ad-supported streaming service being hoisted by the company’s NBCUniversal division.

Charter sees value in a skinny client device like Flex, too.

“We have a significant number of app-based relationships that we’ve developed on multiple devices,” Rutledge told investors. "That strategy is working for us but putting inexpensive devices out with our service makes some sense to us.” 

Charter Communications chairman and CEO Tom Rutledge has never been afraid to tout his belief in the continued strength of the cable bundle to about anyone who would listen, and this week was no different, even as his cable company doubled video losses in the most recent quarter. In Charter’s Q2 earnings conference call with analysts Friday, Rutledge again voiced his belief in the continued power of wrapping video, voice and data products together, blaming the perceived decline of video on reckless programmers.

Charter lost about 150,000 residential video customers in Q2, more than double the 73,000 it lost in the prior year. But Rutledge refused to blame the decline only on the trend toward smaller video packages from streaming services. According to him, equally at fault are content providers who have wrecked what had been a working model by letting customers share passwords for streaming services and making content available for free on their own apps and websites.

“Our video strategy today is to not look at video as a standalone business,” Rutledge told analysts on the call, adding that Charter sells connectivity. And to him, connectivity involves all products, not just broadband. Connectivity to the internet, to content networks and to each other via broadband, pay TV and wireless.

“There is still a lot of value in the bundle to a lot of consumers,” Rutledge said. “The problem with the bundle of video today is that the content companies that supply it have essentially put their services for free available everywhere, through TV Everywhere, excessive streams, password sharing, and free over the air television. It’s hard to compete with free.”

That shouldn’t be a surprise to anyone who has followed Charter for any length of time. Rutledge has consistently lamented password sharing among customers as a major pain and other executives may feel the same way, but they don’t say it nearly as much. That has attracted some ridicule from some analysts, but for the most part many see the focus on broadband as a strength for cable.

[embed]https://twitter.com/RichatTBD/status/1154739211897114625[/embed]

“We look at video as an attribute of our overall customer relationship,” Rutledge said. “We want to have the best video services of all the kinds available and make it easy for consumers to consume our product. We look it as an attribute of the connectivity relationship we have with the customer.”

That’s nice, but there is no denying that many cable operators are increasingly looking at video as more of a nuisance that is getting in the way of selling more profitable broadband service. Every major provider has more broadband customers than video customers, and the gap will only widen. Sure, they still want the video subscribers that buy the Platinum package with all the premium channels and spend $300 per month, but they’re getting more and more annoyed with customers that want really narrow packages for low prices that they are powerless to provide.

I have personally heard some operators say that they don’t even care that much about video price increases anymore -- if the price of a network or a broadcast station is too high, so what, they can just pass it along to the customer. And if the customer wants to switch video providers, so be it. Chances are cable broadband is still the best service around, so the operator just converts that subscriber to a broadband-only customer paying $65 per month for service instead of the bundled price of $45 per month. And there is considerably less hassle.

That may be a bit of an exaggeration, but it is getting clear that video is becoming less and less of a focus. MoffettNathanson principal and senior analyst Craig Moffett has been a cheerleader for accelerated video losses -- in one report he said a broadband customer is seven times more valuable than a video customer. After Charter reported its Q2 results, Moffett noted that its video losses accelerated to 2.2% in the period from 1.7% in Q1, but were still less than half the 5% rate of decline for the rest of the industry.

And it should be noted that customer relationships are on the rise, mainly because of broadband growth. Charter added 203,000 customer relationships in Q2, up from 196,000 last year. And with that, profit margins should grow as video-connected costs fall. Moffett noted that Charter’s cost of service decreased by about 1% -- the second consecutive quarter of declines -- and marketing costs were flat.

Related: Moffett: Let Video Find its Own Level 

On the conference call, Rutledge said he doesn’t like raising video prices for customers, mainly because they don’t understand that the increase is coming from the content provider, not the distributor. And that has an impact on how that customer perceives the service provider as a whole. Think about that for a second. Look at the customer satisfaction surveys over the past few years and how customers say how much they hate their cable provider and love their broadband service, not realizing they are the same company.

“I don’t like raising prices to our customers,” Rutledge said. “Customers don’t know where the price increase is coming from and they attribute it to us and that affects our overall satisfaction and our overall relationship and our brand equity so to speak with the customer. I think hitting rates and asking people to disconnect is not a very attractive way to manage a video business. On the other hand, if you don’t fight the programmers to maintain some sort of price integrity for the customer, they’ll pass through a lot of product. It’s a balancing act from my point of view.”

Now programmers will argue, correctly, that developing and buying high quality programming costs money, and pay TV wouldn’t be pay TV without content. Broadcasters have said consistently that they get about 12% to 14% of the economics while representing 35% of total viewership. But I think they are missing a key point here. Cable operators aren’t really saying that their programming isn’t worth much, they’re saying that customers don’t want to pay that much for it. And the blame for that lies squarely in content’s court, according to Rutledge.

“What I really wish is that the price value of programming wasn’t being destroyed by the programmers,” Rutledge said. “The reason I say that is, if you do a 10% programming price increase and you lose 10% of your customers, you don’t really get anywhere and yet you’ve alienated a lot of people. That is actually happening.”

Rutledge argued that programmers don’t fully realize price increases on their revenue line because they make their product available for free, either directly or by ignoring what he claims is a “massive” amount of password sharing. And aside from the obvious financial pitfalls, those practices have other consequences.

“That changes the price value relationship with the customers and makes it impossible [for operators] to raise prices and generate revenue,” Rutledge said. “My wish would be that the content industry would manage their content and their copyright to their own benefit instead of pushing through price. We still think we have a lot of video customers and they don’t want to have price increases, so I expect continuous fighting for the foreseeable future.” 

Charter Communications Chairman and CEO Tom Rutledge said during today’s first quarter earnings call that his company has had talks with Comcast about licensing the X1 video platform, as well as the new related streaming video product, Xfinity Flex.

“If we can make that the best platform for us, we’re certainly willing to do that,” Rutledge told investment analysts, after being asked about the possibility of becoming a white-label licensor of X1 at the end fo the earnings call.

Rutledge didn’t say how recent the discussions were. And he expressed fondness for Charter’s current video technology.

RELATED: Rutledge: Video’s Still Important

“We like having our own UI, and we like having the ability to change that UI at the pace we want to change it and have it reflect our marketing strategy,” Rutledge said.

“If we could check all the boxes in terms of flexibility and low cost, we could be a vendor of Comcast and their platform,” he added. “But to date, we haven’t been able to do that.”

Comcast licenses X1 to Cox Communications in the U.S., as well as Rogers Communications, Shaw Communications and Videotron in Canada.

The fact that Charter would even consider licensing X1 is noteworthy, considering it has put so much time and money developing its own cloud-based video platform.

In 2015, for example, Charter teamed with Arris to pay $135 million to buy Active Video, the company that provides the backbone to its Spectrum Guide video system. 

As was the case with its other cable peers, video losses increased in Q1 at Charter Communications, but despite those losses, chairman and CEO Tom Rutledge said pay TV service remains an integral part of the overall service offering.

With streaming products from Disney, Apple and AT&T coming on line in the fall, Rutledge said on a conference call with analysts to discuss Q1 results that the video business continues to have its challenges, but he still believes it is an attractive product.

“We still believe video is an attractive product that we should sell and should be integral to our product [offering] and help drive our core relationships,” Rutledge said of video service. “All the trends in video that have been going on continue to go on and the issues that are knocking video growth down are the price of the big bundle and the security of the big bundle. ...We continue to develop new video products and we’re trying to sell to the whole marketplace and be available as a video provider with a high-quality, integrated video service to all the customers that want to buy that service from us.”

Charter launched a streaming skinny bundle service -- TV Essentials -- in March and sees opportunities in rapidly declining subscriber rolls at satellite TV companies.

“The macro trends are that video is on the decline and the question is how fast,” Rutledge said. With satellite declining at the rate it is, there are opportunities to convert those customers into our customers and making them our broadband customers. We still think video is a driver for us, in terms of customer creation, but it’s prioritized in our internal operational tactics.

Charter also had strong growth in its mobile service, which Rutledge added is another retention tool.

In a research note, MoffettNathanson principal and senior analyst Craig Moffett wrote that Charter’s broadband growth exceeded analysts’ consensus estimates for the third straight quarter. And he added that while video losses continue, Charter’s pay TV base is shrinking at a lower rate (1.7%) than the overall industry (4%).

The mix shift from video to broadband also has had an impact on margins, Moffett wrote. Cash flow margins grew 110 basis points to 37.7% in Q1, as average revenue per unit (ARPU) has increased with the unwinding of bundled discounts and non-programming costs have fallen.

Moffett added that investors have looked to 2019 as the year when Charter’s Time Warner Cable integration issues would be behind it, allowing the company to focus on growth.

This was -- will be -- the year that Charter will either put up or shut up,” Moffett wrote. “With one quarter in the books, score one for ‘put up.’” 

Charter Communications chairman and CEO Tom Rutledge it a 5% raise in 2018, reeling in $8.2 million in total compensation, mainly via an increase in his non-equity incentives for the year, according to the company's annual proxy filing with the Securities and Exchange Commission.

Rutledge’s base salary stayed the same at $2 million, but his non-equity incentive plan compensation rose 3.6% from $5.5 million in 2017 to $5.7 million in 2018. He received $419,152 in "other" compensation, nearly double the $233,763 he received the year before.

Other executives has similarly small increases, with president and chief operating officer John Bickham actually making slightly less in 2018 than in the prior year. Bickham’s total compensation in 2018 was $4.7 million, down 4% from the $4.9 million he made in 2017. That was due mainly to a change in Bickham’s pension value and deferred compensation from $356,409 in 2017 to $1,859 in 2018.

Rounding out the executive suite, chief financial officer Christopher Winfrey received $2.1 million in total compensation, a 3% increase; senior executive vice president David Ellen received $3.2 million, up 3.2%; and chief accounting officer and controller Kevin Howard received $1.6 million, up 2% from the prior year. 

Charter Communications stock rose as much as 14.6% in early trading Thursday, after the company reported strong Q4 financial results and said it expected capital expenditures to fall by $2 billion this year.

Charter stock rose as high as $332.24 per share (up 14.6% or $42.33 per share) in early trading Jan. 31. The stock was priced at $330.07 (up 13.9% or $40.16 per share) at 10:11 a.m. on Thursday.

The stock, which was down about 15% in 2018, is quickly erasing that deficit with today’s early gains. At it's high point earlier today, Charter shares were up 16.6% for 2019.

Charter said that its all-digital and DOCSIS 3.1 build-outs have been completed, which should dramatically reduce capital expenditures for this year and for the foreseeable future. Capital expenditures should be about $7 billion in 2019, $2 billion less than the $9.1 billion it spent in 2018. At the same time, the cable operator expects subscriber metrics to improve, noting that churn characteristics in the former Time Warner Cable and Bright House Networks systems it acquired in 2015 are getting better.

In a research note, MoffettNathanson principal and senior analyst Craig Moffett wrote that uncertainty around capital expenditures -- investors knew it would go down but not by how much -- and the company’s reticence to give guidance has hurt the stock in the past. But now, with such a dramatic fall in capex -- most models didn’t see it reaching $7 billion for at least three years -- and strong financial and operating results, the veil around Charter has been lifted.

“Charter can legitimately be seen as a growth story again,” MoffettNathanson principal and senior analyst Craig Moffett wrote.

On a conference call with analysts to discuss Q4 results, Charter chairman and CEO Tom Rutledge said the capex reduction is expected to be more than just a one-off development.

"We do think that in general, going forward that beyond 2019 and beyond our guidance that capital intensity will come down," Rutledge said. "That's a function of revenue growth and continued opportunities to be more efficient with our capital spending. But it really depends on how fast you're growing, and how fast the opportunities to become more efficient are in terms of your customer service infrastructure."

Charter is rolling out its Worldbox platform “on the increment” across its footprint, Rutledge said, which offers a dramatically improved user interface and should help make Charter video product stickier and more compelling. Rutledge added that Charter’s video strategy is to embrace new technology as well as well as more traditional tenets.

“We embrace where the marketplace is going,” Rutledge said on the conference call. “We want people to use video services on our network. We think there are ways for us to be in the connected video business in a way that provides incremental margins for us, at the same time using the video business to drive our core business which is connectivity.”

He added that while bundled services still make up the bulk of the video side of the business, Charter is willing and able to accommodate consumers that bring their own CPE devices to the equation.

“The mix of direct-to-consumer and the mix of direct-to-consumer hardware -- bring your own device -- in the video space will change over time and we are going to allow it to change as the market dictates and try to make our products work best on every device we provide,” Rutledge continued. “There is still significant opportunities for us to provide CPE devices to consumers, bringing all their services together in one consistent way. That said, there are consumers that definitely want CPE and there may be CPE vendors creating great CPE. We’re open to being a supermarket of video services, however those services develop. We think we can run our traditional models and new models simultaneously. When we look at video usage on our network, it is actually going up.”

Charter Communications chairman and CEO Tom Rutledge told an industry audience Monday that he still believes there is ample room for growth in the video business, adding that pricing and margin pressure could continue to squeeze virtual MVPD competitors.

Charter is nearing the finish of its all-digital upgrade — Rutledge said it should be completed this year — and the cable operator has increased data speeds across its footprint. Today, about 60% of Charter’s footprint has a minimum data speed of 100 Mbps per second. For the remaining 40%, the minimum speed is 200 Mbps.

“We went through long, arduous integration process to build a company that was a single platform everywhere we operate,” Rutledge said. “We’re wrapping it up this quarter,” adding that Charter should be able to reap the fruits of those labors in 2019 with lower capital expenditures and better products.

Rutledge said that despite the rumors of the death of pay TV video, content is still an important part of the business.

“What we sell is a connective relationship to the customer,” Rutledge said at the UBS Global Media & Communications conference in New York Monday. “Video is important to that.”

Despite continued pressure around pricing and packaging that has caused disruption in the pay TV industry, he added that in two to three years, he expects the business to be pretty much the same.

“The trend lines will continue, but I don’t think it is going to precipitously restructure in that time frame,” Rutledge said. “Our view is there is an opportunity for us to continue to have video products integrated with our data, mobile and wireline voice products that are economically and from a product perspective better than our competitors,” Rutledge said. “We need video to do that.”

While margin pressure has been increasing on the video product for years as costs increase, Rutledge said he sees life there too.

“I don’t think margins go to zero in a three-year time frame,” he said. ”I think the overall margin in the business can be sustained, if not grown. Our competitors have the same cost structures we do, generally. I think we can mix and match video.”

As for those competitors, virtual MVPDs like Sling TV, DirecTV Now and others have experienced a slowdown in subscriber growth rates. Rutledge said it all comes down to customer relationships.

“I think that part of the issue with virtual MVPDs is your overall relationship with the customer and how sticky that is,” Rutledge said. “I think we have an opportunity to make a stickier relationship. That isn’t to say you can’t have a virtual MVPD that makes money, but it creates a very expensive product from a programming perspective and a marketing and churn perspective. Running a business with no gross margin and with a lot of marketing cost is a challenge over time. Unless someone wants to do it for another reason, there should be some lessening of price pressure.”

Reporting subscriber numbers for its new mobile service for the first time, Charter Communications said it ended the third quarter with 21,000 Spectrum Mobile users.

Charter launched its mobile service in July, leveraging an MVNO agreement to use Verizon’s LTE network, its own network of WiFi hotspots, as well as a technology partnership with Comcast, which has a similar MVNO agreement with the No. 1 U.S. wireless operator.

Charter, however, pegs the official launch for Spectrum Mobile on Sept. 4—when it started promoting the service.

Related: Charter Launches Spectrum Mobile

Charter made its disclosure during its third-quarter earnings report, a day after Comcast revealed that its similarly priced and packaged Xfinity Mobile service had reached the one million lines served benchmark. Much of the pricing and strategy for Charter’s mobile service was borrowed from Xfinity Mobile, which launched in early 2017.

Related: Charter Stock Dips 9% as Dow Falls 400 Points

Charter revealed that it had spent about $94 million in the third quarter launching Spectrum Mobile, generating around $17 million in revenue for the service. The company defined the “break-even” point for the platform at around two million users.

Related: ARRIS IDs CBRS As An Opportunity 'Right Now'

Speaking to analysts Friday, Charter chair and CEO Tom Rutledge lamented the lack of “owner’s economics” offered by the Verizon MVNO agreement. With Charter currently expiring business opportunities in the Citizens Broadband Radio Service (CBRS) spectrum, Rutledge pondered the possibility of Spectrum Mobile users one day deploying a new dual SIM technologies that would let users simultaneously use Verizon and Charter networks.

Rutledge once again declared Charter interested in acquiring CBRS spectrum, but said he doesn’t believe that the FCC will get around to auctioning off that spectrum until at least 2020. 

Charter Communications Chairman and CEO Tom Rutledge picked up where his CFO, Chris Winfrey, left off last week, explaining to CNBC Thursday why 5G isn’t an existential threat to cable’s connectivity business.

“We have a better platform to deploy [5G] technology, I think, than the cellular industry does because we are fully distributed from a high-capacity wireline perspective,” said Rutledge, who was making public-speaking rounds while appearing at the Goldman Sachs Communicopia Broker’s Conference.

Related: Charter’s Winfrey: 5G ‘Not Comparable’ to DOCSIS 3.1

“If you think about what 5G is, it is small cells,” Rutledge added. “Small cells mean you needs lots of wired line connectivity to make the small cells work. We think we are actually in a better position to do that than traditional cellular companies. Yes, 5G can be used to compete against us. It is very capital intensive. It requires essentially a wireline network like Fios to support the small cells.

“If you look at [Verizon’s] forecast, they will build 30 million homes over a 10-year period,” Rutledge noted. “Ten years from now, there will be 140 million homes in the United States. They will have 20% of the homes. Our footprint would represent 8% of the homes.”

In 10 years, the Charter executive predicted, the cable company will have widely deployed 10 Gbps symmetrical internet service.

Rutledge’s comments extrapolated on those made at another investment bank conference last week by Winfrey, who said, “I don’t see anything about 5G that ever makes it comparable to DOCSIS 3.1 or DOCSIS 3.1 Full Duplex, or any capability we have through fixed line service.”

The competitive positioning by the No. 2 cable operator comes as the wireless industry this week made 5G the front-and-center topic at its big Mobile World Conference Americas trade show in Los Angeles.

Verizon has announced that it will launch its 5G fixed wireless service in four cities on October 1, challenging Comcast and Charter in metropolitan areas including Los Angeles, Houston, Indianapolis and Sacramento/Stockton.

Verizon is promising peak speeds of 1 Gbps, but users will average only around 300 Gbps. 

As Congress prepares to grill Facebook CEO Mark Zuckerberg starting Tuesday (April 10), Charter CEO Tom Rutledge says it is time for uniform privacy protection legislation, including opt-in sharing of all information beyond use for its initial purpose. so long as it applies to the edge as well as ISPs.

That means and monetizing of third party use of all that online information.

In a blog post Monday, Rutledge urged Congress to pass strong standards that apply to everyone.

Zuckerberg is in the Hill hot seat over revelations that the information from millions of Facebook users--at least 50 million and perhaps more than 87 million--was shared with Cambridge Analytica, a political data firm that built profiles and sold them to political campaigns, including Donald Trump's.

"Tomorrow, Congress will begin important hearings to examine who is collecting what, how that data is shared and sold, and how best to protect and secure personal data when much of our lives are increasingly taking place online," he blogged.

Related: Facebook Boosts Political Ad Disclosures

"Internet users should have 'opt-in' protections, meaning all entities must receive opt-in consent to collect and share their data for purposes other than the actual service they engaged in. Additionally all online entities must be transparent about their information collection and sharing practices by providing concise, easy-to-find, understandable privacy notices to consumers. Again, these consumer protections only work if all members of the ecosystem – like social media apps, web browsers, broadband providers, online advertisers and data brokers – participate."

The FCC under chairman Tom Wheeler approved a privacy framework that included opt-in, but it did not apply to the edge. That was eventually nullified by Republicans in Congress.

In pushing back on an opt-in regime for ISPs alone, NCTA-The Internet & Television Association did point out the larger impact on the Web, arguing that data collection and sharing with third parties could threaten the ad-supported model that allows so much internet content to be free.

Charter Communications executives saw their total compensation plunge in 2017 – due mainly to the lack of massive one-time stock option awards – with chairman and CEO Tom Rutledge taking a $91 million haircut in a year that saw cable operators across the board struggle with the new pay TV paradigm.

Rutledge made $7.8 million in total compensation in 2017, a far cry from the $98.5 million he received in 2016, which made him the highest paid executive in media. The difference was in option awards – he received $77.9 million in 2016, nothing in 2017. The cable chief also did not receive stock awards in 2017, compared to $10.1 million in 2016. His base salary, at $2 million, stayed the same.

Other Charter executives also saw their big declines in total compensation, including chief operating officer John Bickham, whose total take fell from $47.4 million in 2016 to $4.9 million in 2017, and chief financial officer Christopher Winfrey. Winfrey’s compensation dropped from $29.2 million in 2016 to $2.1 million in 2017, while senior EVP David Ellen’s haul fell from $22.1 million in 2016 to $3.1 million in 2017. Lack of option awards were again the culprit – $35 million for Bickham, $23 million for Winfrey and $17.8 million for Ellen in 2016. None of those executives received option awards in 2017.

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.”

DENVER – Charter Communications CEO Tom Rutledge preached to the cable engineering choir about the cable network’s “superior infrastructure” and future “6G” wireless products while pointing out how the industry has suffered because of poor service.

In a keynote speech to the Cable-Tec Expo here Wednesday, Rutledge – who was chided in a leaflet handed out near the convention center, tied to Charter’s strike situation in New York – also called password sharing a “significant issue” affecting the video business.

In a speech given from notes, Rutledge cited various companies he’d worked for in cable dating back to 1972, lastly Charter, which he noted was not long out of bankruptcy reorganization when he joined it six years ago. Today it’s the second-biggest U.S. cable operator, with a $350 stock and $90 billion market cap.

“We have been building connectivity and capacity for decades and we will be for decades to come,” he said.

Read More: Complete coverage of Cable-Tec Expo 2017

Wireless – already a big part of Charter’s business, via WiFi, with mobile services on the way next year – is poised for big growth inside the home, using techniques such as 802.11ax, he said. “We’ll be able to go from eight simultaneous streams of wireless to 64 and manage the quality throughout the home.”

He talked about the potential to combine licensed and unlicensed spectrum to get 10-gigabit per second broadband speeds in the home and enhanced WiFi. “I call it 6G inside wireless speeds,” he said. “Why 6G? Just because it’s something we have and the phone guys don’t and I want to have it.”

He described a pathway being developed with CableLabs to use coherent fiber and two-way DOCSIS to help enable future data-heavy consumer applications that haven’t been invented yet, such as creating holograms in a personal-space environment.

As for the overhang of poor service by cable companies, he called it “an issue that has affected the industry.”

“Service is a business,” he said. “Service itself is a product, and it’s also an attribute of how we’re perceived from a regulatory perspective. Which has dramatic impacts on the way our business grows and attracts capital.”

Security was another term he stressed, both in terms of protecting customers’ privacy and in terms of over-the-top providers protecting against over-use of sharing online accounts.

“It’s a significant issue and it’s not well appreciated by the people who are new to distribution,” Rutledge said. “And everybody with an app, including the programmers that we pay, are in the distribution business now, whether they know it or not.”

He said “they have an obligation to protect their product and they don’t do a very good job and that’s affecting the business.”

Rutledge said he was confident those issues would get resolved over time. Charter will integrate more apps and popular OTT services like Netflix and Hulu and make it easier for customers to find what they want. New bundles will emerge to break up “the big fat video package.”

Charter is going to continue to build its network, he said, using all-fiber infrastructure “on the increment” toward new homes.

“We have a great future doing what we’ve always been doing in a much more sophisticated way,” he concluded. “We have an industry built to grow and last.”

Rutledge led off by saluting Charter employees recognized during the conference: Debi Picciolo received the Women in Technology award; Tom Adams, Cynthia Carpenter and Charlotte Field were inducted into the Cable TV Pioneers.

But Charter’s labor problems in New York City – where 1,800 members of Local 3 of IBEW have been on strike since March 28 and getting increasingly vocal in agitating against Charter – also were present here as union workers handed out a flyer to people walking into the Colorado Convention Center.

It cited Rutledge earning $98 million in 2016 (reported at the time to include $78 million in performance-related stock options) and said that salary “should buy better customer service.”

Charter chairman and CEO Tom Rutledge argued that cable operators should embrace over-the-top and direct-to-consumer offerings to give customers more options, but added he still doesn’t see a compelling model for cable operators to offer their own OTT service.

At the Goldman Sachs Communacopia conference in New York Tuesday, Rutledge said Charter is already putting direct-to-consumer services onto its user interface platform that can be delivered to TV sets and other devices via the internet.

“We embrace whatever products our customers want to use as part of our value proposition, we’re not fighting it in any way,” Rutledge said. “We will enable those direct-to-consumer services, and to the extent that they pressure the bundle from a pricing perspective, that may work out to our advantage in many ways.”

But Rutledge said he doesn’t see any advantage in cable operators going over-the-top themselves.

“The bundling of the significant players in content still exist in the OTT world just as it does in the MVPD world,” Rutledge said. “There’s not a lot of differentiation we can cause by selling it over the top. What’s the advantage? Going outside of our service area? I don’t know the value of just replicating our own service OTT.”

READ MORE: More outages as Charter, union continue stalemate

Rutledge added that technically you can stream any content, the real question is how it’s packaged, presented and priced whether it’s going to satisfy the consumer.

“We’re selling in our fully featured rich package of video to about 98% of video orders, most consumers want it,” Rutledge said. “If you price it right and make it fully featured and fully valued, we think it is still a sticky product.”

He added that Charter is experimenting with some niche offerings targeted at data-only customers, but even that group is more influenced by pricing than anything else.

“We haven’t seen a breakthrough yet that makes us think we should change our business model, but we keep pushing around the margins to see if there is anything there,” Rutledge said. “Interestingly, data-only customers, who you’d think would be the coolest cord cutters around, tend to be the easiest people to sell bundles of fully featured video to, because they’re price driven. They actually do want it all and its price that keeps them from buying it all.”

READ MORE: Comcast's Roberts tries to calm investors after dip on subscriber losses

Rutledge added that Charter has restarted its all-digital initiative, put on hold during the early stages of integrating Time Warner Cable into the fold, and all its system should be fully digital by the end of 2018.

“Our assets actually work better in a two-way on-demand world than they did in a linear world from a value perception perspective relative to competitors,” Rutledge said. “I think we have a big advantage against satellite going forward that is even more pronounced now than it was a few years ago.”

On the minus side, Rutledge added that prices are still high and ratings are down as viewers are diverted to other activities like social media, but he still sees growth ahead.

READ MORE: AT&T looking to improve on Comcast's model (B&C)

“I think there are challenges to the video business that didn’t exist, and they are going to continue to be challenging, but we still have increasing advantages on a relative basis,” Rutledge said. “I think we’ll have more video customers three years from now than we do today. I’m not sure the whole category will be bigger, but I think we will be.”

Helping to boost those numbers will be the addition of new products, like wireless. Charter expects to begin employee field testing of its wireless offering through its Mobile Virtual Network Operator (MVNO) agreement with Verizon, in 30 to 60 days, with a broad launch expected in Q2 next year.   

Liberty Global CEO Mike Fries will be the first of two general session keynote speakers when the Society of Cable Telecommunications Engineers (SCTE) and its global arm, the International Society of Broadband Experts™ (ISBE), host SCTE•ISBE Cable-Tec Expo 2017 on Oct. 18, in Denver.

Fries will discuss a wide range of topics during his keynote conversation, including how the convergence of wireline and wireless is helping to drive new business opportunities for pay-TV providers.

Fries joins another top cable executive – Charter Communications chairman and CEO Tom Rutledge – at the Cable-Tec Expo general session.  Rutledge will offer keynote remarks on the future of cable telecommunications and how network innovation will be a significant contributor to business results.

“With multiple industry organizations holding events during Expo Week, the eyes of the industry will be on SCTE•ISBE Cable-Tec Expo 2017,” said SCTE-ISBE CEO Mark Dzuban in a statement.  “Mike Fries’ insights and vision will underscore the impact of technology innovation, seamless product deployment and SCTE•ISBE in helping all sectors of our industry achieve success in a rapidly changing marketplace.”

Under Fries, Liberty Global as grown to provide broadband, entertainment, voice and mobile services to 25 million customers in more than 30 countries. A founding member of the management team that launched the company’s international expansion over 25 years ago, Fries was named president and CEO of Liberty Global in 2005. Fries also serves as the company ‘s vice chairman, alongside founder and chairman Dr. John Malone.

“Technology and constant innovation are the keys to keeping our customers happy in this ever changing digital world,” Fries said in a statement.  “SCTE•ISBE and its Cable-Tec Expo play vital roles in delivering the education, the standards leadership and the technology advances that will make this happen.”

SCTE•ISBE Cable-Tec Expo will be held Oct. 17-20 at the Colorado Convention Center. Expo Week begins Oct. 17 with the start of almost four-dozen technical workshops, as well as the Cable TV Pioneers Annual Banquet and Class of 2017 induction ceremonies. Registration and additional information on registration options are available at http://expo.scte.org.

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.”

Charter Communications chair/CEO Tom Rutledge had been re-elected chairman of NCTA-The Internet & Television Association.

Cable execs were in Washington this week for the Cable Hall of Fame and NCTA's Near Future conference.

Also re-elected for second, one-year terms, on the board were Pat Esser, president, Cox Communications, vice chair; and John Skipper, ESPN president and co-chair, Disney Media Networks, secretary.

Dave Watson was elected to a first term as treasurer. He is president of Comcast Cable and EVP of Comcast Corp.

Bob Stanzione, executive chairman of Arris, was re-elected to a two-year term.

Elected at-large programmer directors were: David Zaslav, president, Discovery Communications; Peter Rice, chairman, Fox Networks Group; and Josh Sapan, president, AMC Networks, each to two-year terms.

Bob Bakish, president of Viacom, was elected for a one-year term.

Elected at-large system directors to new, three-year terms were John Evans, chairman, Evans Telecommunications, and Pat McAdaragh, president, Midco.

Nancy Dubuc, president of A+E Networks, and Alfred Liggins, president of Radio One and chairman of TV One, were named to at-large director seats for two-year terms.

On Tuesday nights at 9 o’clock on Bounce TV, Tamela and David Mann play a fictional married couple in the original sitcom Mann & Wife, recently back for a third season.

Starting this Tuesday (April 4), the Manns are also starring in a new unscripted series about their real lives, The Manns, at 8 p.m. on basic-cable network TV One.

The gospel-singing duo — stars of the play, movie and TBS TV-series versions of Tyler Perry’s Meet the Browns, though as father and daughter, not husband and wife — told The Wire that in a perfect world, the shows would be scheduled on different nights. They’re confident, though, that viewers looking for good, family-themed television will find and watch both series.

David Mann even coined the tagline of “The Manns’ Takeover on Tuesday Nights” for the two-hour block of Mann family programming on two different African-American focused networks.

Tamela Mann said she likes the authenticity of doing the reality series because it allows her to be in a more relaxed, family element, whereas David Mann said both the scripted show and the docuseries offer viewers family-friendly content that counters some of the more salacious programming from cable networks.

TV producers “offered ratchet, so viewers now expect to see ratchet,” David Mann said, using a term website Urban Dictionary defines as, in part, diva behavior. “But there’s an audience for family programming.”

The March 28 return of Mann & Wife — in which the two play a newly married couple with a blended family of children from different marriages — drew nearly 450,000 viewers to become the most-watched original sitcom telecast in Bounce TV’s short history, the multicast network said, citing Nielsen.

TV One, in announcing The Manns series in February, called the Manns “a great modern-day example of a family that works together, plays together and prays together.” (A previous reality series about the family, It’s a Mann’s World, aired on BET in 2015 and 2016.)

Tamela and David said that, despite their busy TV schedules, their marriage and family remain their top priority. “We put God first, then our marriage and family — everything else follows that,” said Tamela, who will appear on TV One on Sunday, April 9, as part of the network’s taped coverage of the gospel music-themed Stellar Awards ceremony, where she took home six awards.
— R. Thomas Umstead

For Charter, Job Creation Starts At the Home Office
Charter Communications’s plans to keep adding thousands of employees, following last year’s acquisition of Time Warner Cable and Bright House Networks, earned chairman and CEO Tom Rutledge a March 24 visit with President Donald Trump in the Oval Office. Many of those thousands of jobs are to be at call centers. But the second-biggest U.S. cable operator also has been adding corporate-office jobs across the country, including its headquarters in downtown Stamford, Conn.

Sources tell The Wire Charter is starting to look for additional office space in Stamford to expand into — preferably in a building Charter could actually put its name on.

Rutledge moved Charter’s HQ to Stamford from St. Louis in late 2012, after receiving incentives from the state of Connecticut pegged to creating jobs there. Charter shares the 15-floor building at 400 Atlantic St. with other tenants, and continues to move into additional space there, but doesn’t own the building and can’t stick its brand on it prominently.

Charter wouldn’t comment, and sources said nothing was happening imminently along the lines of expanding the company’s footprint in its new hometown.
— Kent Gibbons

‘Simpsons’ Showrunner Tries Some New Tricks to Keep a Classic Current
More than 600 episodes into its run, Fox’s The Simpsons remains keen to try some new things to keep the show current, showrunner Al Jean says. It was a year ago that The Simpsons featured Homer live at the end of an episode, with viewers tweeting questions and comments his way. The show will give the next live honors to Bart at Comic-Con, Jean reports.

“We’ll have Bart animated live on the screen as he answers questions from people who are there,” Jean told The Wire and other outlets during a Fox call.

The show remains “adaptable” to new technological developments, the showrunner said, and “people want to work with us because of who we are.”

The Sunday, April 2, episode touched on current events just a bit, as Mr. Burns, disappointed with how Yale operates, decides to open a for-profit university. His professors have more star power than anything one might have found at Trump University. Jason Alexander was tasked with assembling teachers, and came up with Jeopardy! star Ken Jennings, financial wiz Suze Orman, scientist Neil deGrasse Tyson and screenwriting teacher Robert McKee.

“The topic is a really good one and Mr. Burns is the perfect guy to run [a for-profit university],” said Jean, who adds that the idea was mostly in motion before President Donald Trump was called on to defend his own for-profit university.

Asked if the president might tweet about the episode, Jean seemed to think it unlikely, but said he’d be “honored” if it happened.

The Simpsons crew will note a special anniversary on April 16, marking 30 years since The Simpsons shorts first appeared on The Tracey Ullman Show.

As season 28 winds down, Jean said The Simpsons is going strong. “I know we’ll go through 30 seasons, but I wouldn’t say that’s the end,” he said. “As long as the cast is willing and the economics work, it’ll go on.”
— Michael Malone

This article was updated on April 3 to correct the time that The Manns airs on TV One. It airs at 8 p.m., not 10 p.m.

Charter Communications is moving forward with its wireless plans, planning to launch its own wireless product next year while it currently conducts tests of the next generation technology, 5G.

Charter chairman and CEO Tom Rutledge said on a conference call with analysts to discuss Q4 earnings that the company has already activated its Mobile Virtual Network Operator (MVNO) with Verizon Communications. But unlike Comcast – which activated its Verizon MVNO last year and plans to launch a wireless product by mid-year – Charter’s product won’t likely come out until sometime in 2018.

On the conference call, Rutledge said the MVNO will serve Charter’s wireless needs in the short term. Longer term, he said the company is currently conducting tests of 5 G technology.

Charter said back in December that it had applied for experimental licenses to test 5G, which it said at the time could service as the backbone for a 10 Gigabit per second broadband service. 

On the conference call, Rutledge said he sees 5G more as a capacity play than a mobility play.

Rutledge pointed to Charter’s current high-speed network which has 22 million customers and 200 million connected devices. He added that 75% to 80% of the bits being used by those devices, mostly cellphones, are coming in through its WiFi network. For that reason he believes that products developed for 5G will be virtual reality and augmented reality products more geared toward fixed wireless services.

“How that manifests itself is a little unclear, but my sense is that many of those will not be mobile products,” Rutledge said. “They will be fixed products in the dwelling or the office. They’ll be how you learn and how you play. They’re less about mobility than they are about capacity and low latency.”

Charter also addressed disappointing subscriber growth, which the company said was primarily tied to heavy promotions at the former Time Warner Cable. Basic video subscribers declined by 51,000 in the fourth quarter, as increases of 20,000 and 34,000 at legacy Charter and Bright House systems were erased by a loss of 105,000 video customers at the former Time Warner Cable properties.

Chief financial officer Chris Winfrey said TWC promotions – including a $10 per month basic TV offering and $45 per month double play of basic TV and Internet service – were the culprits. While Charter is rolling out its own pricing and packaging across the entire footprint – it should be finished by the end of March – it could take some time for those promotions, some of which were initiated in eh Fall of 2015 and early 2016, to roll off.

“We’re doing some things to mitigate it that have taken us time to put in place, because of the complexity – there were 96,000 different promotional offers out there,” Rutledge said.   

“Just the sheer logistics of managing that has been a challenge. We’ve gotten some control over it, and are getting better every day. We think we can mitigate some of the churn through better management of the step-up process.”

Charter Communications chairman and CEO Tom Rutledge said the cable operator is moving toward a future where broadband speeds of up to 10 Gigabits per second are possible, but stopped short of pinpointing exactly when that future will be.

At the UBS Media and Communications conference in New York, Rutledge pointed to the cable operator’s current MVNO agreement with Verizon, which he said could take hold in late 2017 or 2018. But building on that deal – which would allow Charter to resell a Verizon wireless service under its own brand – would be an even faster wireline service that Rutledge said could open up a “whole new industry.”

Rutledge said there are already about 200 million wireless devices connected to Charter’s wireline network and about 80% of the bits on a mobile company’s network travel through that same network.

“We are a wireless company,” Rutledge said.

Charter has already exercised its Verizon MNVO rights, part of the SpectrumCo sale of wireless licenses to Verizon in 2011. Comcast also has said it exercised those rights.

Charter currently offers data speeds of up to 100 Megabits per second in most of its markets and its minimum speed is 60 Mbps. Other operators have offered 10 Gbps download speeds in select areas, and symmetrical 10 Gbps is part of the “Full Duplex” enhancement to the DOCSIS 3.1 standard. The spec for the Full Duplex extension is expected to be completed sometime in 2017. However, commercial deployment probably won't begin until 2018 or 2019.

At the UBS conference, Rutledge said MVNOs have their limitations, but with future technologies on the horizon like 5G wireless – he said Charter has applied for experimental licenses for testing that technology – the possibilities surrounding hybrid wireline and wireless networks are endless.

“I think we’ll begin to move toward building out a 10 Gigabit symmetrical infrastructure that is ubiquitously deployable across our footprint at fairly low capital investments relatively to anybody else,” Rutledge said. “…We can attach wireless devices to that high-capacity wireline network in a way I don’t think anybody else can do at the same level of capital efficiency and get tremendous throughput, low latency, high compute networks that bring the possibility down the road to a whole new industry essentially.”