Charter CEO Tom Rutledge indicated to analysts this morning that he’s intrigued by opportunities to consolidate. But he didn’t provide the details they wanted about what he and his largest shareholder, Liberty Media’s John Malone, are doing to make something happen with potential targets including Time Warner Cable, Cox, or Cablevision. Charter can be successful as it is, but “potentially, with the right deal, [we could] be even more successful,” Rutledge says. Charter will “continue to be disciplined about M&A opportunities when and if they arise.” Rutledge also sidestepped a question about how large Charter would have to become in order to significantly reduce outlays to cable networks, which typically offer their best rates to their biggest customers. “If you have a certain scale you have a certain leverage in programming negotiations,” Rutledge said although “how big you need to be is a difficult question to answer.” Independent analyst Craig Moffett was more definitive in a report this morning, observing that Charter’s programming costs “are unsustainably high, and only a deal with fix them.”
Over the long term, though, Rutledge says that days are numbered for the current pay TV model based on bundled programming. His former boss, Cablevision CEO Jim Dolan, was “essentially correct” in his recent prediction that viewers accustomed to watching Internet services such as Netflix and Amazon Prime will demand more choice. Video “will become an on-demand product over time,” Rutledge says. Operators have begun to openly discuss the possibility of just offering consumers a broadband pipe; others could use it to offer video services. Rutledge says that Charter is committed to “a video product,” but emphasized that it “doesn’t necessarily have to be” like the current one.