Time Warner Cable Chief Executive Rob Marcus said Tuesday the emergence of Internet-based television may compete with cable companies' video product but it goes to show how important cable companies have been to broadband connectivity.
"Over-the-top video is one of the things that highlights the value of high-speed connection," Marcus said, speaking at the Cable Show conference in Los Angeles. It creates the potential for competition on the video side, but "there's a whole lot out there that makes our offering more valuable."
Cable companies have long been on a trend of bleeding video subscribers, attributed to ever-rising bill prices and to a lesser extent the emergence of online television alternatives like Netflix, even as broadband subscription business has grown. Time Warner Cable's proposed $45.2 billion merger with Comcast, which would combine the No. 1 and No. 2 cable operators in the country, has raised competitive worries among consumer advocates less so for the concentration of video distribution it would create than for the consolidation of so much high-speed broadband delivery in one corporation.
Time Warner Cable shares were down 7 cents, or less than 1 percent, at $140.88 in recent trading.
Marcus addressed the problem of rising cable bills, reiterating a "fundamental problem with the ecosystem" in which the growth in programming costs -- how much cable distributors pay networks like ESPN to deliver content to subscribers -- outpaces how much cable operators can raise prices. "At the end of day we've got to figure out a way that our willingness to pay is more reflective of what end users want," he said, saying cable companies are "stuck in the middle" between hearing how much subscribers want to pay for an ESPN and how much ESPN thinks those subscribers should pay.
Despite complaints about high cable bills, "we essentially charge 20 cents for an hour of video viewing," he said. "That's a staggering good value."
He also said that despite barriers like onerous authentication to access TV Everywhere on Internet-connected devices outside the home, usage of TV Everywhere has been "pretty impressive and growing very quickly."
He said 1 million unique users accessed some sort of TV Everywhere video through a device other than a set-top box last month, he said, calling it strong growth for a format that didn't exist a few years ago.
Though Marcus disagreed with the notion that the success of Netflix exposed a failure of the cable industry, peers like Michael Fries, the chief executive of international cable company Liberty Global, said Netflix did expose problems in the cable business, speaking during a later panel. "We have a massive functionality gap" with the over-the-top providers, Fries said.
The Cable Show is a conference organized by the National Cable and Telecommunications Association.