Rutledge Magic Rubbing Off On Charter Communication

As the new COO of Charter, Tom Rutledge had a lot on his plate when he started at the end of 2011.It seems that whatever skills he brought over from Cablevision has paid off.  With Rutledge at the helm, Charter announced  "an increase of video customers in the first quarter of 20,000 subscribers, the first time the cable company has reached that milestone in about five years."  Make that a triple play growth as high speed and telco subscriptions also grew for the quarter too.

Whether it was the direct impact he had or simply the energy he brought to his new company, Charter is looking recharged, coordinated, and ready to tackle its mission.  The hope is that the momentum continues and it is not an anomaly to future subscription losses.

How Many Social Networks Do You Belong To?

As Groucho Marx liked to say, I wouldn't join a social network, or club, that would have me as a member. Of course we all like to belong to the club and for social networking, it is easy to sign up and join.  But is too many, too many?  With so many around and more being created, are we being spread to thin in our social network membership?

We use different social networks for different purposes, LinkedIn for business contacts, Facebook for friendship, Pinterest for scrapbooking, Twitter for random thoughts and links to interesting articles.  And of course there is MySpace, Google+, Ning, Meetup, Plaxo and many many more.

So how many is too many?  If we spend all of our time social networking, do we spend enough time doing?  Can we possibly manage all these social networks or is it time to cut back to a more manageable number?  And can the long tail of social networks exist?  Obviously the answer is yes.  To every unique interest or hobby or passion, there is a social network to share with other like minded individuals.  Within the category of interest, whether it be business, family, arts, dating, etc. there will be the leader and the rest of the pack.  But as long as there is a revenue stream, either subscription or advertising or e-commerce, that can keep it thriving, the multitude of social networks will continue to survive.  Groucho may not have joined the club, but for the rest of us, there are plenty to find, join, and participate.

Why Is Dish Dropping All AMC Networks?

As cable, satellite, and telco cable providers seek to keep subscribers signed on, the concern by some may be that they shouldn't have to compete against web offering the same content. For networks, offering access to programs on other platforms brings new revenue streams but is also argued as a way for viewers to "catch up" on series that they haven't watched from the beginning.  Missed Season 1 of "Mad Men"; rent on Netflix, or others and be caught up to watch the latest season from your cable provider.

So why is Dish Network threatening to drop all of AMC Networks, including AMC, WE, IFC, and Sundance,  channels from its line up? Is it because: 1)  the rates are too high, 2) their shows are available on competing platforms, 3) viewership is too low across the networks, or 4) Get back at their ownership for the court loss they faced regarding the Voom lawsuit?  AMC claims it is #4, while Dish is arguing that it is the first three.

Certainly the first three arguments can be applied to every cable network on Dish and every other cable provider. Arguments regarding rates, exclusivity of shows, and viewership affect every contract negotiation.  Unique to these proceedings is the previous relationship between Dish and Cablevision regarding their Voom partnership, a satellite service that offered 100% original  HD channels. Unfortunately it was a failed business model that was structured in a way that  limited additional distribution.  With our regular channels finally offering HD feeds, these original channels were deemed less valuable and Dish pulled out.  So the  fight with AMC, even though it has spun away from Cablevision, may be a way to get back at its common owners, the Dolan family.

Regardless, these fights between networks and distributors are common place.  They tend to take longer and longer to work out, but eventually they all do.  A fight like this one may take even longer though as it may not be about the business but about personal feelings.

Cablevision Empire May Get Even Smaller

Cablevision is spending more money to retain subscribers and while the cost is high, they did report sub gains while other operators posted sub losses.  But their low cost pricing strategy and high marketing costs were not kind to the bottom line as profit and cash flow dropped.  The result perhaps of a strategy that former leadership chose not to follow and thus have been departing from the team.

Cablevision, once known as both a programmer and distributor, has been spinning off assets to concentrate itself as a pure play cable operator.  First came the spin off of MSG Network, followed close behind by Rainbow Networks, renamed AMC Networks.  And now comes word that its Clearview Cinema movie chain is being pushed out next.  "Chief Financial Officer Gregg Seibert said on a conference call that the company planned to explore strategic alternatives with its Clearview Cinemas movie theater chain, which had 45 theaters in the New York tri-state area including the Ziegfeld Theater in New York City."

For a company that once owned Nobody Beats The Wiz stores, today's Cablevision is looking quite different.  Will Newsday be the next asset to be discarded?  And is all this being done to make Cablevision easier for selling it to another cable operator?  All I know is that there is always something interesting going on at Cablevision.

Content's Long Tail Gets Longer And Longer

New content is competing for consumer attention thanks to the rise of the web.  As broadband speeds get faster, content creators have found they can bypass the broadcast and cable distribution model to get their content viewed.  Many have entered the fray already, from NextNewNetworks, which was acquired by Google to My Damn Channel. Hulu and Netflix has announced new original shows exclusive to their platform.  And You Tube has been churning out more original content as well and now Amazon has announced plans to create new content.  "Starting now, Amazon is accepting ideas for TV shows from anybody who has a pilot script, an idea for five or six episodes, and an Internet connection. Amazon says that it wil be selecting one idea per month to put into development."

But with all this clutter of content, a two-fold challenge remains for viewers, how to find out about shows (recommendations and marketing) and where to find them (which distribution aggregator or unique website). Like our TV line-ups, we will have to surf or find guides to help us learn what is on and where it is located.  The audience to watch all these programs will only get more and more fragmented.  The likely winners should continue to be cable networks, provided they expand their linear and on demand viewing to a TV Everywhere, multi-platform  approach.  But they will see lower ratings as the fringe viewership is swayed to the growing pile of programming now being created for web consumption.  Hence a longer and longer tail of content choices.

The web has clearly lowered the barrier to entry for distribution of content.  It has led to cord cutting and new ways to watch content.  Like broadcast changed  the radio model, and cable changed the broadcast model, so too will web programming change the cable model.  History ultimately repeats itself.

For Comcast, The Growth Comes From High Speed Subscriptions

Just last week, my post on Time Warner discussed the growing value on the pipeline for broadband and telco subscription verse the cable subscription.  Today's news from Comcast strengthens my point.  While cable subscriptions dropped in the quarter, both high speed data/broadband and telco subscription grew.  Like Time Warner Cable, Comcast is watching their cable subscription business decrease as viewers seek lower cost alternatives for video consumption.  Their own broadband pipeline being the ideal means to watch their web based programming from Netflix, Hulu, and others.

As a content producing company, Comcast sees growth from its content creation business, NBC.  With double digit revenue growth, NBC benefits by getting business from its parent company's rivals including DirecTv, U-Verse, and FIOS, as well as from streaming deals.  Comcast subs may be dropping but NBC viewership can be gained from these competitors and other platforms.

Still, for Time Warner Cable, Comcast, and other cable distributors, the value of the business is the pipeline.  While it was initially built for cable subscription, it will one day be overtaken by high speed and telephone subscription.  Taking advantage of the pipeline, cable companies must invest in other businesses that can take advantage of these connections between home and plant.  And adding value by supporting home connections with WIFI mobile hotspots will only increase its demand.

As cable subscription costs continue to rise, consumers will seek ways to lower their bills.  It may be smaller packages of services; it may become a la carte.  As programming license fees continue to rise, the old cable model is breaking apart.  Subscribers will continue to flee the cable model as costs continue to rise. The future is the broadband pipe.

Content Producers Look Like Winners

Earning reports are coming out and the big news seems to be that companies creating and selling content are big winners.  Time Warner is doing well because of its film and TV units. NBC's unit inside of Comcast is also reporting higher than expected earnings.  And even CBS has reported huge earnings increase from streaming fees for its television content.  Content is king.

Perhaps it also reflects a better economy that is pushing rates higher and the  rise of digital platforms and new streams of revenue.  Still, as more content producers like ABC, Fox, and others report, we can truly say that it is good content that is driving the bus.

Is Cablevision In Trouble?

More defections at Cablevision as another top executive leaves the team.  The latest is Barry Frey, EVP of Advance Advertising, who is following David Kline, President of Media Sales, who left last month.  Will the revolving door ever stop?

Also announced the team of Rutledge and Bickham have reunited.  The former Cablevision COO is joining the former Cablevision CEO at Charter Communications. Both now have their same titles at their new cable firm.

Will the reunion at Charter shortly include Kline and Frey?  As the Cablevision senior team members depart, one has to wonder if it is time for Cablevision to finally put up the For Sale sign.  Should Time Warner Cable come in with an offer and try to complete its ownership of the NY DMA?  Or will the arrival of Rutledge and Bickham to Charter give them reason to want an pick up their old system to add to Charter's system list?

Somethings happening at Cablevision to lead to such a mass exodus.  Perhaps we should soon get a whiff of what the trouble is that  is causing all these departures.

Will Microsoft Sell Products In Barnes & Noble Stores?

There are obvious gains for Microsoft to partner with B&N.  It gets a footprint in the e-book space, it offers an app store to compete with Apple, and it eventually puts its new operating system into new devices.  But it also gets access to retail space, in bookstores and especially in college bookstores.  But will Microsoft take advantage of the brick and mortar side of this partnership or are all efforts directed strictly to the digital business?

Just as Apple has gained great traction with its stores, Microsoft now has a retail partners to offer a similar relationship.  Areas can be built up within these locations to sell all sorts of Microsoft products, including its new Nokia phones and XBox systems.  And B&N stores need diversification as physical book sales are declining.  A Microsoft presence gives another push to enter a store.

Shareholders like to look strictly at value that is perceived by spinning off and combining assets. Whether the Nook business is spun off or not for unlocking value may be a financial goal; but, for the overall health of the  business, the synergies of the store and digital presence are key to their mutual survival.