Charter CEO Tries To Blame Netflix Password 'Piracy' For Company's Failure To Adapt To Cord Cutting

from the blame-everything-but-yourself dept

Like most pay TV providers, Charter Communications (Spectrum) continues to bleed pay TV subscribers tired of paying an arm and a leg for giant, bloated channel bundles. Also like most pay TV providers, the company isn’t willing to really own the fact that their only real “solution” to this problem has been to double down on the same, bad ideas. Charter just got done gobbling up Time Warner Cable and Bright House Networks subscribers in a $79 billion deal that resulted in rate hikes as high as 40% and somehow even worse customer service than the historically-awful customer service the sector is known for.

That said, it shouldn’t be particularly surprising that Charter lost another 104,000 traditional video subscribers last quarter. Those losses came after losing 90,000 TV subscribers during the second quarter, and another 100,000 during the first quarter of the year. While skyrocketing prices, horrible customer service, and the rise of streaming video competition are the obvious culprits here, Charter CEO tried lay the blame elsewhere. Namely, those troublesome rabblerousers who share streaming service passwords:

?There?s a lot of pressure on the video business,? Rutledge said. ?The biggest pressure is price. But the second biggest pressure is that many programmers are distributors, whether they know it or now. And because of password sharing and multiple-stream products ? You have 35 million one-person households in the U.S. The multiscreen products sold to those households also them to purchase one product and share it with multiple users.?

This isn’t the first time Rutledge has complained about the practice of password sharing. While companies like Netflix and HBO have made it clear they see password sharing as a form of creative marketing, Rutledge has long stated he sees the practice as some sort of nefarious menace:

“The lack of control over the content by content companies and authentication processes has reduced the demand for video because you don?t have to pay for it,? Mr. Rutledge said on the earnings call. ?That?s going on in the college market.”

That’s a pretty stellar misunderstanding of the evolving video market for the highest paid executive in America last year. Netflix and HBO have both stated that such password sharing has no meaningful impact on the industry, and if anything helps sell new subscriptions once users (especially Millennials riding on their parents subscriptions) get hooked on the value proposition. Compare that business plan to Charter, a company that’s currently being sued for using hidden fees to jack up rates and for intentionally shortchanging subscribers at every conceivable opportunity.

Cable providers could easily combat streaming video competition by lowering rates and offering more flexible channel bundles, an idea they pay a lot of lip service to, but rarely implement. Instead, execs like Rutledge have tried to downplay the threat of cord cutting in the belief they can nurse the traditional cable TV cash cow indefinitely. They’re afraid to offer a cheaper, better product for fear of accelerating the trend. What they often don’t seem to understand is this isn’t going to be a choice. The days of cable TV wink-wink, nod nod non-price competition are over, and if these companies want to remain in the TV business — they’re going to have to (gasp) seriously compete on price.

Filed Under: , , ,
Companies: charter, netflix

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Charter CEO Tries To Blame Netflix Password 'Piracy' For Company's Failure To Adapt To Cord Cutting”

Subscribe: RSS Leave a comment
Anonymous Coward says:

Is there any topic your bias doesn't automatically get wrong?

Just a couple links that should be read:

“Most millennials don’t want to pay for Netflix – MarketWatch”
“Young Americans want to binge-watch shows using the same account.”

“How the internet has all but destroyed the market for films, music and newspapers | Media | The Guardian”
“The author of Free Ride warns that digital piracy and greedy technology firms are crushing the life out of the culture business”

Stephen T. Stone (profile) says:

Re: Is there any topic your bias doesn't automatically get wrong?

Young Americans want to binge-watch shows using the same account

Okay, and this is different from cable, how?

The author of Free Ride warns that digital piracy and greedy technology firms are crushing the life out of the culture business

*[citation needed]

Anonymous Coward says:

Re: Is there any topic your bias doesn't automatically get wrong?

Is there any topic YOUR bias doesn’t automatically get wrong?

From the Netflix article “Netlfix had its best quarterly subscriber growth in the fourth quarter of last year. The company said it added 7.05 million subscribers during the fiscal fourth quarter, bringing its worldwide total to 93.8 million.”

So while millenials “don’t want to pay for Netflix” that’s an awful lot of new subscribers they have there.

As far as the second article goes, the internet isn’t destroying the market, but it is redefining it. Legacy corps need to adapt or die. People are still buying films, music, and newspapers, but many of them want it through an easier, online portal.

aerinai says:

Has someone done the math on this?!

Charter has 30 million customers. Dude made $98.6 million in a year…
That is quite literally $3 dollars PER CUSTOMER just for this dude’s salary! This is not the entire support staff keeping the internet working, the customer support staff, the salesmen… That is $3 for one guy…
Charter, your next below-the-line-fee can be a $0.25 CEO tax… now THAT is transparecy!

John85851 (profile) says:

Re: Has someone done the math on this?!

Wow! That’s an amazing and horrifying way to look at it.
As a Charter/ Spectrum customer, I never realized that $3 of my bill is going straight to his salary!

Your math is a little off since your numbers are per-year, so each customer is paying $3 divided by 12 months on their monthly bill.
Though your point still stands: it’s $3 per customer just to pay the CEO’s salary.

Tim R says:

Mergers & Acquisitions

“Charter just got done gobbling up Time Warner Cable and Bright House Networks subscribers in a $79 billion deal…”

Actually, the deal was for $10 million, but after the papers were signed, there was a merger recovery fee, a regional office fee and a few overages that bumped the price up.

However, Time Warner & Bright House both declared that they did this in the spirit of transparency.

Jason says:

Leaving aside the argument about whether the reason you’re losing customers matters, the part I found most interesting was this:

And because of password sharing and multiple-stream products … You have 35 million one-person households in the U.S. The multiscreen products sold to those households also [allows?] them to purchase one product and share it with multiple users.

Is the problem he’s lamenting here that every single pair of eyes (adult, child, visiting friend, pet cat, etc.) watching video "products" isn’t paying for their own subscription, and should have to be in order to watch? Because it sure sounds like it.

I’m sure the cable TV industry, along with many others, would love to boil things down to a permanent pay-per-view model. (Everyone pays each time they open a book, everyone pays each time they watch an old rerun, everyone pays each time they crank up a song…) But aside from a few specific situations (e.g., theater tickets) that kind of wishful thinking just doesn’t reflect reality.

Anonymous Coward says:

Re: Cable is the same way

Here is complaining about someone else doing what he’s doing. One cable comes into the house on one bloated subscription and 5 televisions are connected to it.

That’s becoming more difficult with digital signals and encryption. Cablecard is dead; if you want extra TVs, it’s likely each will need a box rented from the cableco.

But yes, back when cable TV was analog (and something young people cared about), I lived in some buildings popular with students… it was not rare to see "unofficial" coax sneaking along shared balconies, or between the windows of multi-apartment houses, or in college residences along the hallway ceilings (the bookstore sold splitters…)

Anonymous Coward says:

Cable providers could easily combat streaming video competition by lowering rates and offering more flexible channel bundles

Agreed, and to add other things that they ought to do (but almost certainly won’t):

  • Modernize the set-top-box mess. Currently, they fight very hard to ensure that your set-top-box is just barely adequate. Some of these are problems with the hardware they choose to use. Some are problems with the software they run. Some are problems with how the provider serves the cable box. All are irritating to the user, regardless of cause.
    • It’s expensive for what you get.
    • It’s power-hungry / runs hot for what you get.
    • It reboots very slowly. I’ve seen 10+ minutes from connecting wall power to when the box is ready to serve. Doubtless some of this is waiting to download something from the provider, rather than pure internal problems.
    • It hangs (requiring a reboot) in reaction to external events (rare, but still disruptive when they happen) such as provider maintenance temporarily interrupting service.
    • It hangs in a way that isn’t obvious until you try to watch content through it. Glancing at the front-panel clock LED isn’t enough to be sure it’s in good order. Combine this with the pathetically slow reboots, and you need to pre-check its viability well before the start of anything you want to access with it.
    • Major functionality can only be driven through using the remote to navigate the on-screen overlay (so you can’t configure a PVR to autonomously record a show through the "On Demand" offering).
    • The on-screen overlay is itself slow and cumbersome to use, even by hand.
    • Minor functionality, such as anti-idle, is also driven purely through on-screen overlays. It’s unnecessarily complicated to have a PVR perform unattended recording of a long piece of content (usually movies, but sometimes a block of several back-to-back shows on the same channel). Partway through the content, the PVR will begin inserting an on-screen "Are you there? We want to shutdown now." prompt. The PVR faithfully records this prompt, but has no idea it’s there, and doesn’t answer yes. You lose the latter part of the recording. I understand the reason they want not to stream to an unattended device. I disagree with the implementation that makes it so inconvenient for a PVR to keep the set-top-box going.
    • For a really radical approach, revert to practice of a few years ago when set-top-boxes were not required to view live streams, but live streams could instead be tuned and viewed directly on a television or PVR.
  • Clean up the "On Demand" offering. Clearly document in an easy-to-find place, for every channel in your subscription package:
    • Whether content from the channel is ever published through On Demand
    • If it is published, what are its terms (some of these may vary per-show, depending on licensing; each show with unique terms would need its own block):
      • How many days delay between live airing and appearance in On Demand?
      • How many days is it available through On Demand before it is removed?
      • On what date the contract providing access to this content will expire, since the cable provider might be forced by contractual issues to change the above terms after that date.
  • Provide machine-readable scheduling data direct to the customer, updated on a best effort basis when special events interfere (breaking news, sports programs running long, etc.). This would require some collaboration with the networks, but the networks already sell this data to third-parties, so making it available to customers is just a distribution problem. Currently, this data has to be fetched through third-party Internet sites that, while surprisingly effective, usually don’t handle well when the provider changes the schedule within a day of the program in question. Worse, this data is often only approximately accurate. Some channels are very bad about moving the first or last 30-90 seconds of a program across the half-hour/whole-hour boundary, so if you don’t start recording early and end recording late, you lose part of the program you tried to record. Combine a network that runs late with another network that starts early and you get a scheduling conflict (assuming you know to adjust your times, rather than recording for the published times and discovering later that you lost the ending). Some of this is on the networks, not on the cable providers (in those increasingly rare cases where the cable provider doesn’t own the network), but decisions by the cable providers make it unnecessarily difficult for customers to compensate for networks getting this wrong.

This list deliberately avoids anything that involves them actually investing in infrastructure that they should have upgraded a decade (or more) ago, because shots there are just too easy.

Anonymous Coward says:

Good TV isn't rocket science

All thats necessary is a way to watch steams from many different content providers including over the internet and through an antenna within a common interface which would be simple enough for your grandparents to use. It would run in a set top box written using open and extensible software and would be seperate from your dumb television set which wouldn’t need to be replaced for a decade.

Improving on the Kodi interface shouldn’t be that hard as Kodi requires a bit technical expertise to use.

The industry had a chance in 2015 with Set Top Box reform. They didn’t want it.

R.H. (profile) says:

Re: Good TV isn't rocket science

Honestly, even writing good add-ons for Kodi is a good place to start. I know grandparents who use Kodi on a regular basis now and that would have surprised me even two years ago.

Design a set-top box with Kodi installed and put add-ons for your cable provider, Netflix, Hulu, etc on it. Set up a repository for trusted add-ons and, just like the current versions of Kodi do, make installing from outside the included repos require clicking through a warning stating that installing unknown add-ons could break things.

I’ve seen well-designed program guides in Kodi, in fact, I’m using one now. If you put some professional coders on the case to add a bit of UI and UX polish, they’d easily beat what’s on the market now for set-top boxes.

It’s too bad the FCC didn’t manage to get set-top box reform through. If they had, we might have seen something like I just described this decade.

Rhiadon (profile) says:

This is wierd

I get it. I used to get horrendous service from a previous cable company. The weirdest thing is that for me in my limited area, Charter actually borders on really good service. It kind of freaks me out.

We moved to a new house that didn’t have cable run to it. But we wanted sable internet since AT&T DSL is horrendous. Charter went ahead and buried new cable to our house. Didn’t charge me a penny. It’s still more expensive that it should be by global standards though.

Then I discovered they’d launched a streaming TV app for Roku, android and iPhone. For $20 a month. I had nothing to lose to try it. It’s actually better than Sling in my opinion, includes locals and works way better than their cable boxes (which are terrible).

So in some ways, it seems like portions of Charter get it. Other parts don’t. The company is schizophrenic.

hunted23 (profile) says:

Tom Rutledge is nothing more than a greedy corporate exec blaming everything on anything, ask for a median salary comparison to his employees and himself……lets see he makes 98 million a year and a cable tech makes about 16.00 an hr. do the math and also while he`s trying to do his union busting along with his crying about Netflix, and other streaming accts

hunted23 (profile) says:

lets all try and understand cable tv, internet and telephones are not as easy as everyone would like to think, there is tons of information that run through those cables,or fiber lines, while I don`t disagree with streaming but unless you`ve set up your network flawlessly then you are and will have buffering issues, however getting back to the greed company Charter ,yes a new cable backbone should have been started by now, sure we should be using 100 percent fiber by now, sure your internet speeds should be gigabit by now especially with the pricing , but it greed my friends, the company will try and over-charge all customers that the company does not have any intentions on upgrading the infrastructure to give the customers what they`re paying for . No Charter will continue to use the old HFC infrastructure and try to convince us that this is still good enough when its not… my advise switch your ISP and demand the best for your money. Charter Spectrum is all about deceit ,showing commercials but can`t back up their product. Tom Rutledge give your worker a fair and just contract then maybe your service will work!

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...