Charter CEO Tom Rutledge sports makes up more than half of the wholesale price of its cable bundle and while the company would like customers to be made whole while sports is dark, “Now we have a structure where its all bundled together and tied together contractually and we have very little control over it.”
“We would love to see our customers be relieved if they can be,” he said. “Ultimately it’s the athletes who are getting the money and … someone has to give up their money and give it back to the consumer and that has not happened yet.”
Rutledge made the comments on a conference call to discuss the giant cable provider’s latest quarterly financial results.
This week New York State Attorney General Letitia James asked big major cable and satellite providers to cut or eliminate those charges while the coronavirus pandemic has shut down live sports.
“We’ve talked for years about the reality of programming costs and how sports drive the bulk of that,” he said. “If you look at the average cost of programming of $60 a month [the wholesale cost Charter pays], if sports was not involved in the negotiations … that cost would be less than half of what it is. So sports is the major driver in the cost of content and obviously it makes the whole product difficult to sell because of the cost.”
“Everybody misses sports and obviously it’s an extremely valuable product and it is the glue that holds the bundle together,” Rutledge said.
“Assuming that sports come back and leagues generally play … the same forces will exist going forward that existed before the crisis,” he added.
He said the overall high programming costs that cablers pass on to customers have been a blot – unfair in his view – on the industry’s reputation but that may change as streaming services and other option have become ubiquitous.
“Programming costs have increased massively because programming is a copyright, which is a legal monopoly, and they have had pricing power,” he said. With “a la carte, with Netflix and Warner home media, a lot of our customers have [services] they want to buy at prices they want to pay. So I think the biggest driver to negativity is breaking up.”
Asked about negotiations to carry NBCUniversal’s new streaming service Peacock, which will be available outside the Comcast universe in July, he said discussions with NBC are ongoing but “we haven’t concluded anything yet.”