Password sharing, which streaming giant Netflix is seeking to clamp down on, hurts the value of content in the media industry, said Tom Rutledge, chief executive of cable operator Charter Communications, on Friday.
“We knew it was a problem,” the executive said on the company’s first-quarter earnings conference call. “It’s not just a problem for the company that doesn’t control its passwords, but it’s a problem for everyone in the industry, because all this content that is used without anyone paying for it affects supply and demand for all content.” He added that as a result, it “diminishes the value of the content for everyone, which is something we’ve been trying to make for years.”
Rutledge made the comments after Charter, in which John Malone’s Liberty Broadband has a large stake, announced its first quarter results.
It lost 112,000 pay-TV subscribers in its most recent quarter, less than a year ago when its user base fell by 138,000. Asked on Friday’s call why which Charter seems to outperform its peers in terms of video subscribers, Rutledge said, “Why we’re kind of an outlier — you know, we try hard, for one thing. And we try to [add] value, where we can, for the consumer. He added, “There are still opportunities in video. And one of the things we’ve had success with is creating additional packaging and combining video products that we actually sell to consumers.
The CEO of Charter concluded: “It has been difficult, due to the way video has historically been packaged in this very large and expensive package which is driven by sports rights costs.” But the company has “been able to pull some of the content out of that ecosystem and level it up, and we’re selling it successfully.”
Growth in Charter’s broadband users slowed as it added 185,000 customers in the first quarter, compared with 355,000 a year ago. Cable operator stocks have been hit hard in recent months amid slowing growth in broadband users.
By the end of March, it had nearly 30.3 million total broadband customers and more than 15.7 million total video subscribers.
Charter also added 373,000 mobile phone lines in the first quarter, compared to 300,000 additions a year ago. It ended in March with over 3.9 million total mobile lines.
“We remain focused on our core objective of driving growth in connected customer relationships and mobile broadband,” Rutledge said in the company’s earnings report. “We continue to grow our business by delivering superior converged connectivity products. And our new joint venture with Comcast will enable us to deliver a next-generation streaming platform that delivers new and differentiated direct-to-consumer products to meet demand in a rapidly changing video environment.
The two cable giants on Wednesday unveiled a 50:50 joint venture “to develop and deliver a next-generation streaming platform on a variety of branded 4K streaming devices and smart TVs.”