Time Warner Cable CEO Glenn Britt may be the most prominent media exec making this important point: “Our whole (entertainment) ecosystem should try to create affordability,” he told investors today at the Morgan Stanley Technology, Media & Telecom Conference. “A lot of the people who are living paycheck to paycheck want our product, but simply can’t afford it. Many entertainment executives are in denial about this, but it’s happening.” Big Media ignores that fact at its peril: The vast majority of the industry’s profits come from cable networks — but the chief of the No. 2 cable company says that the pay TV business “is fundamentally not growing.” Programmers and networks have ignored that: “What they’re trying to do is grow by raising prices” on companies like Time Warner Cable, Britt says. That may work for a while, but “it clearly is not sustainable.” One of his strategies to deal with that is offering TV Essentials — a low-cost package of channels that doesn’t include costly sports services led by ESPN as well as popular networks such as TNT, Comedy Central, Fox News and MSNBC. “We’re clearly moving away from one size fits all,” Britt says.
That also applies to Time Warner Cable’s broadband service: This week the company introduced a plan around San Antonio, Texas that gives subscribers the opportunity to sign up for a $5 a month discount if they hold their usage to less than 5 gigabytes. “It’s not coercive,” Britt says. “I think we’ll roll that out further as we go along.” Customers pay an additional $1 for each gigabyte that they use beyond the 5 gb ceiling, up to a maximum of $25 a month. Britt says that customers can shift back and forth to the undiscounted, unlimited service plan as much as they want. “We’re trying to be very consumer friendly.” That’s important to the company, which ran into a PR firestorm in 2009 when it briefly tried to cap Internet usage.
Britt says that his focus on affordability also makes him skeptical about forecasts predicting that Internet video services will begin to compete with cable and satellite — resulting in massive cord cutting. “The economics of that are pretty tough,” he says. Most networks run other people’s programming, and lack the legal authority to offer the shows online. It’s also inefficient to transmit popular videos via the Web. “The Internet is neither magical nor free,” Britt says. “Sure, people are going to try….But I think it’s a daunting thing and the current (pay TV) model is quite powerful.”