TWC, Cablevision Finance Chiefs Say Battle for Customers Continues
Verizon’s FiOS remains a fierce competitor for pay-TV subscribers, even though its corporate sibling has cut a marketing deal with some of the largest cable operators and it has seemingly changed its promotional marketing strategy, cable executives said during a Bank of America conference Wednesday. FiOS is one of “the tougher competitors we have out there,” said Irene Esteves, Time Warner Cable (TWC) Chief Financial Officer. The co-marketing agreements TWC has with Verizon Wireless will give TWC an edge if customers decide they want to bundle cellphone service in with broadband and pay-TV, she said. “But it doesn’t change the fact that it’s very, very competitive on the FiOS side of the house,” she said.
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Likewise, Cablevision has seen intense marketing from Verizon in its New York area footprint, Executive Vice President Gregg Seibert said later Wednesday. “Anyone who saw the Jets’ game at MetLife Stadium [on Sunday] saw there was more Verizon advertising for FiOS than I can ever remember seeing before,” he said. FiOS has seemingly changed promotional offers, Seibert said, and has not been undercutting Cablevision’s price on its three-product bundle as much as it had been doing a year ago. “Of course, I could wake up tomorrow and find out they’re back to $69.95.”
In general the promotional activity in the pay-TV sector has moved away from targeting new customer acquisitions and toward retaining customers that companies already serve, Seibert said. That’s a development Cablevision supports and is trying to encourage, he said. “The focus [for Cablevision] today is retention, it’s not cutting the price and being the cheapest provider in the market,” he said. The company has recently introduced a new branding campaign it hopes will instill in its subscribers the idea that Cablevision puts customers first, he said. The goal is to “increase the amount of trust and transparency with our customer base,” he said.
Discussing Google’s fiber operations in Kansas City, Kan., Esteves said the company takes all competition seriously and is watching Google’s operations closely. “We can’t really speak to their intentions,” she said when asked if TWC believed Google might expand the operation beyond Kansas City. “But we can’t imagine an economic model for them to expand it beyond this Kansas City experiment,” she said. Based on the amount of money Verizon has disclosed it spent building FiOS, which only covers about 15 percent of the U.S., it could take up to $200 billion to build a national fiber network along the lines of Google’s Kansas City operations, she said. “We can’t imagine a model which makes sense for Google’s shareholders to expand.”
Both executives lamented the rising cost of pay-TV programming. “Programming increases from our perspective are obscene. Out of control,” Esteves said. Seibert said Cablevision will continue efforts in Washington to ‘try and get the playing field a little more balanced on the programming side.” For now programming costs are rising faster than distributors’ ability to pass the costs on to customers, he said. “It’s not well balanced and it does feel like something has to give.”