Charter, Netflix, and the new TV bundle
Charter buying Time Warner Cable looks like a done deal. But what about the other main opponent to Comcast buying out TWC?
Netflix has nothing to say about America’s latest big cable merger — John McDuling, qz.com, today
[A]sked by Quartz whether Netflix had any position on Charter’s merger with Time Warner Cable, a spokesperson said, “We don’t have a comment on this deal at this time.” Perhaps it is weighing its options. More likely, since the deal was widely expected and details have been filtering out over the past week, it just isn’t that concerned.
In a sense this is interesting, because Charter Communications and Time Warner Cable actually fare slightly worse on Netflix’s ranking of broadband providers by speed than Comcast does. The two companies say their prposed combination will “drive investment into the combined entity’s advanced broadband network” which will ultimately result in result in “faster broadband speeds, better video products…and more competition,” but Comcast said the same type of thing.
Aha, but look! Just a few short weeks ago (May 1st), as reported by David Lieberman at Deadline:
The most surprising news from Charter Communications’ call with analysts this morning didn’t involve any plans to buy Time Warner Cable — although CEO Tom Rutledge says he’s still talking with Bright House Networks to possibly revive his company’s $10.4 billion acquisition. (More on that in a moment.) It’s what he’s doing with his current cable systems which serve about 4.2 million subscribers: He’s open to offering Netflix and other streaming services directly to his TV customers. In addition, he’s looking at crafting so-called skinny bundles of lower cost TV packages with fewer channels…
Rutledge says he now believes “we can mix those products into products that we sell to satisfy the customer’s entire video needs.” That would effectively treat the subscription streaming services as premium cable channels, like HBO, Showtime or Starz…
In addition, the Charter chief would like to craft lower-cost alternatives to the traditional basic cable bundle. “The price of the full package is expensive” and has led to cord cutting, he says. As a result, “we are looking at all the alternatives.”
In short — yeah, Charter’s broadband kind of stinks, as does Time Warner’s. Comcast’s is better. But Charter is (and arguably has always been) more open to partnering up with Netflix than competing with it outright, or using its control of the pipes to play hardball. At times, Comcast seemed like it was prepared to do both of those things, which is why Netflix and others were so anxious about it getting even bigger.
Let’s assume that Charter’s gesture towards Netflix partnerships and skinny bundles and its acquisition of TWC aren’t an either/or, i.e., that Charter won’t take its expanded subscriber base and say “just kidding!” Maybe that’s a big assumption, but I don’t think so — even though Charter wasn’t talking publicly about acquiring TWC, they knew this was a possible and even a likely outcome.
If Netflix and Charter can strike the kind of deal Rutledge describes above — and I’m sure they’re talking about it right now — Netflix isn’t going to say anything negative about a Charter/TWC merger. They’ll have gotten what they wanted, or something close to it. And Charter will have too.
And customers? Well, a more tailored and varied bundle that makes it easier to watch any and all video content in the same place is what people say they want, so… we’ll wait and see what Disney and the other content folks have to say about it and what price they can strike.
Everything is negotiable.
