Monday, November 4, 2013

Time Warner Cable Needs A Partner in Charter

Hit em when they are down.  The loss of both cable and broadband subscribers for Time Warner Cable has opened up the box once again for a potential merger with Charter Cable.  That TWC's losses were attributed to blacking out CBS and its sister channels for a month does not spell good news for any cable operator.  Each and everyone faces similar battles when license fee negotiations come up for renewal.

A friend from Los Angeles recently shared his story with me.  His family was a Time Warner Cable subscriber till CBS was dropped.  It was for them the last straw.  And being in a major DMA, they were fortunate enough to have alternatives.  TWC was limited in their response.  They offered a measly free movie to try and appease them.  Instead my friend switched to DirecTv for cable and AT&T for broadband and phone and discovered two immediate benefits, more channels and a total lower monthly cost.  Of course, I asked what he would do when or if CBS or another broadcaster was forced off their line-up as well.  He responded, with a wait and see attitude.  And what did TWC do to save the account.  Nothing when they notified them of their switch and nothing when they delivered their set top boxes back to TWC.  What irked them more, was a call placed by TWC to their home at 8am on a Saturday morning to try and win them back.  It was met with a firm hang up and a reminder that they had in fact made a good decision.

Consumers annoyed with current tactics and dropped channels will continue to seek alternatives.  Can a Charter merger save TWC? Not unless, once combined,  they go back to the drawing board with new, lower pricing models that take advantage of economies of scale.  That and a desire to do business differently or watch as more consumers leave, first for cheaper alternatives offered by competition, and soon enough streaming OTT platforms with enough content to encourage a steady stream of cord cutters.  That means not dropping channels unless you plan to keep them off.  Reducing the profit margin on cable subscriptions.  Better customer service and cheaper packages.  The trend toward OTT instead of cable is moving quickly and current operators are doing little to change their strategies. 

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