Charter Chief Tom Rutledge Expects “More Damage” To Hit Pay-TV Bundle, Which Is “More And More Expensive For Customers”

FILE - This April 1, 2015, file photo shows signage at an entrance to Charter Communications' headquarters in Town and Country, Mo. Charter Communications Inc. reports financial results, Tuesday, May 2, 2017. (AP Photo/Jeff Roberson, File)

After a conversation covering broadband, wireless spectrum, DOCSIS and other “wonky” corners of Charter Communications’ business, CEO Tom Rutledge saved his pay-TV punches for the closing stretch.

“We still think about it a lot,” the exec said of cable TV in a keynote session at Morgan Stanley’s Technology, Media & Telecom Conference. With 15.2 million residential video customers, Charter is the No. 2 cable operator in the U.S., though cord-cutting has steadily trimmed that subscriber base and its business strategy has evolved.

“There’s more damage to come in video,” Rutledge said. “There’s nothing about the old model that’s really changed. The price keeps going up. If you look at all the rights fees that broadcasters paid in the most recent NFL deal. Baseball players want more. Everybody wants more. So 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. So, I see that business continuing to get more and more expensive for consumers.”

In the direct-to-consumer model being pursued by media companies with entertainment fare, as Disney, WarnerMedia, NBCUniversal, Paramount and others race to catch up with Netflix, the economics are different. “Advertising will shrink in direct-to-consumer, distribution will shrink,” Rutledge predicted. “And it’s really hard to find anything.”

Asked if Charter could do more to help customers navigate a world of thousands of streaming apps, Rutledge said that curation “is an opportunity for us.” But he said Charter is “more of a pass-through” than the prime mover in the streaming age. “The opportunity moving forward for somebody who can manage to pull it off is to start to reaggregate and to use that aggregation to give a better, more cost-efficient experience to more people. We think about that every day and how that might happen.”

Despite the massive changes rippling through the media business, though, Rutledge said he did not expect a full-scale reordering of the TV and video universe in the next couple of years. “The current model is very much in force,” he said.

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