Hulu’s still-to-be-announced live TV streaming service designed to give subscribers an alternative to bloated and expensive cable-TV packages will lose “real money” if it is priced at around $40.

BTIG Reseach analyst Brandon Ross’ research note to investors (reported by Fierce Cable) claims Hulu faces big expenses to include sports and CBS programming — the one network that isn’t a part-owner of Hulu — into its forthcoming package of live and on-demand programming. With most sources claiming Hulu intends to price the service starting at prices as low as $35-40 a month for a slimmed down package of cable television and over-the-air stations viewable on one device and $50 a month for those wanting to watch on multiple devices, Ross predicts the service will rapidly run into the red because of programming costs.

Hulu’s live streaming service could be a real game changer for online cable TV alternatives, because it is expected to contain a robust assortment of popular cable networks and regional sports channels that could appeal to a wider marketplace than even slimmer packages from Sling TV.

Video margins are dropping as programming costs continue to grow. Cable operators are turning to broadband to make up the difference, but virtual providers like Hulu don’t have that option.

“The ramifications of success could have an effect that goes far beyond just Hulu’s partners, from [competing cable TV providers] to cable networks to Netflix. A failed Hulu virtual [cable-TV provider] could dispel the idea of widespread competition for incumbent bundles from virtual bundled competitors,” Ross wrote in his research note. “We are skeptical that the Hulu bundle will meaningfully impact the [cable-TV] landscape from a subscriber standpoint. We simply wonder whether the price/value will be strong enough to attract customers at ~$40, with much less content than the current larger bundles.”

Ross predicted Hulu will bundle several expensive sports networks, as indicated in surveys Hulu sent to potential customers. Those surveys suggested Hulu’s service will include a variety of Regional Sports Networks from Hulu’s owners, which include Fox and Comcast-NBC. One potential exclusion is Madison Square Garden Network (MSG), a potential omission that concerned MSGN investors enough to drive the share price down after a significant spike in mid-August.

The issue of MSG could open an interesting new front in the war on cable television pricing. MSG’s viewership is focused in New York, New Jersey and Connecticut and one of the largest cable providers in the region is cost-conscious Altice USA, which took over Cablevision. Ross states MSG Network’s addition on the Hulu lineup could give Altice more leverage to force better contract renewal terms.

“For instance, Altice could theoretically tell those that want MSGN to switch their video provider to Hulu, while staying on Altice for broadband,” Ross wrote. “We do not believe this would be an ideal approach for either party, but it is possible.”

Look what’s in the box. MergeMaster Patrick Drahi. (Illustration: Michel Kichka)

Cable conglomerate baron Patrick Drahi promised American, French and Portuguese consumers he would bring them value for money by taking control of large established telecom companies in both countries and revamp their products and services to bring improved service. Consumer advocates in all three countries continue to argue customers are still waiting for Drahi’s debt-laden Altice empire to deliver on its promises.

A flurry of mid-summer articles in the French media continue to acknowledge Drahi’s formula has brought results — for him and his top executive minions, but has caused headaches for employees, customers, and even the government.

The biggest firestorm involves Altice-owned SFR’s newly-announced plan to slash at least 5,000 more jobs at France’s fourth-largest mobile operator, which also provides wired cable-TV and broadband services in parts of the country. That represents at least one-third of SFR’s total workforce. The planned cuts run so deep, some in the French press call them “violent.” These new cuts are on top of the 1,200 jobs Drahi cut when he took control of SFR two years ago. An Altice executive warned that if they still perceive to be “fat on the bone,” there will be further cuts after that, presumably starting in 2019.

The job cuts have raised the ire of some in the French press because one of the conditions of Altice’s takeover of SFR was a commitment not to cut jobs. But some reporters may have missed the fine print negotiated with regulators  — the job protection agreement expires in July 2017, after which Drahi can slash at will. And he will.

Investment banks love it. American and European banks have loaned €50 billion ($55 billion) — a record amount — to Drahi to buy up telecom companies on a virtual credit card and deliver short-term results by slashing expenses, which at least temporarily boosts profits. When customers find out the implications of the draconian cuts, they complain and tend to leave. But savvy investors learn how to cash out before that happens, often walking away with huge returns. Such methods have been business-as-usual in the United States for a long time. But Drahi has improved on the old formula of relying on OPM – Other People’s Money – to build his empire.

Some of the money flowing through Altice’s coffers comes from the French taxpayer, currently footing the bill for unpopular French President François Hollande’s key measure to boost the competitiveness of French companies — the Tax Credit for Competitiveness and Employment (CICE), which significantly cuts employer’s labor expenses. Altice has been a grateful recipient of this gift from French taxpayers, who pay for it through new ecological taxes and an increase in Value Added Tax (VAT) rates, which like our sales tax, applies to goods and services one buys. The standard VAT rate in France is now 20%, with 10% charged on restaurant meals, transport, renovation/improvement works and certain medical drugs, and 5.5% on food, water and non alcoholic beverages, books, special equipment for the disabled and school meals. The other half of the money spent implementing the CICE came from decreased public spending on infrastructure and social service programs. Take from the poor and middle class and give to the corporations, Hollande’s critics claim. The program was supposed to protect employment, but critics say it has had little or no effect beyond enriching large corporate conglomerates who hire and fire for their own reasons, and are not particularly concerned about what that could do to future government payouts.

French newspaper l’Humanité is calling on the government and Mr. Drahi to account for his use of taxpayer-funded CICE aid. The paper demands the Hollande government to disclose exactly how much Altice’s SFR has received from the program.

Unemployment office in Connecticut

Altice continues to claim the job cuts will be voluntary — a suggestion scoffed at by employee unions in both France and Portugal, where Altice operates telecommunications companies. In addition to asking Altice-owned Suddenlink and Cablevision employees whether the recent sudden separation from their paychecks was voluntary, unions claim they have the benefit of past experience.

“When they say ‘no job cuts’ and 1,200 have already been cut over the past 18 months, how can we trust them?” asked Frederic Retourney, a spokesman for the CGT-FAPT employee union. “We know that voluntary redundancies are made under duress in most cases. When SFR announces 5,000 job cuts when there are 14,400 employees at the company now, we do not see how one can speak of voluntary departures.”

The job cuts at Altice’s U.S. operations — Suddenlink and Cablevision — have just begun. In a filing with the Connecticut Department of Labor, Altice disclosed it is issuing a total of 587 termination notices in that state — 482 call center workers in Shelton who will lose their jobs Nov. 1 and another 105 in Stratford leaving in two waves Oct. 14 and Dec. 15. Cablevision’s chief Connecticut competitor Frontier Communications is turning Altice’s lemons into Frontier’s lemonade by capitalizing on the job cuts with a quickly organized media push for a job fair on Aug. 31 in New Haven targeting the soon-to-be-former Cablevision workers.

Frontier will hold interviews for the former Altice call-center workers and field technicians. The alternative, if those former Cablevision workers still want to work for Altice, is to move to New York or New Jersey and hope their jobs don’t get cut again. With Frontier, they can stay in Connecticut.

Altice-owned SFR Francophone call center workers face even bigger challenges from relentless demands for cost cuts. In 2015, Altice announced it was open to relocating its Moroccan-based customer care call center to Madagascar, a large and severely economically depressed island nation off the eastern coast of southern Africa. Drahi, who told Wall Street he likes to pay as little as he can in salaries, is evidently upset labor costs in Morocco now force Altice to pay salaries up to €500 a month ($560). The company said it was open to seeking solace hiring French-fluent replacement workers in Antananarivo, Madagascar’s capital city, where the average annual salary is $260. In contrast, Connecticut call center workers make an average of $14.80/hour, according to Indeed.

Connecticut State Rep. Laura Hoydick (R-Stratford) acknowledges employee life with Altice in charge of Cablevision may be a tough ride.

“Having gone through unemployment with family members — and now me — emphasizes how the Cablevision employees are nervous for their livelihood and existence,” Hoydick told The Hour. “I thought it was great that the Frontier folks saw that there was an already-trained workforce here in Connecticut.”

Other state Republicans are attempting to blame Democratic Gov. Dannel P. Malloy for Cablevision’s job cuts, characterizing them as evidence employers are fleeing the high taxes and expenses associated with running a business in Connecticut.

“People are making a choice: ‘Do I stay in Connecticut and weather the storm, or do I move out of the state?’” said state Rep. Jason Perillo (R-Shelton).

For now, those decisions are mostly made by Altice’s cable company call center workers and some members of middle management. But Patrick Drahi’s long-term plan to conquer the media business depends on implementing his “convergence” strategy, which means owning and controlling not only the means of distribution, but also the product being distributed. l’Humanité compared Drahi’s business to a multibillion cephalopod, with octopus-like tentacles extending his control and influence well beyond the cable business.

In France, he is accomplishing his mission by buying up cable networks, newspapers, and other media outlets which he packages together. Now a customer doesn’t just buy cable TV — he buys TV, internet, phone, the daily newspaper, and magazines for one flat price. For about $22 a month, SFR customers get unlimited digital access to 17 newspapers and magazines including Libération, l’Express, and l’Expansion. Then you can watch Drahi’s new sports channels and local news channel — all owned by Altice. Drahi told the French Senate his new bundled media model could “save the press.” But dig a little deeper and you discover Drahi’s altruism is considerably more limited.

By bundling everything together, the Altice-owned businesses each enjoy the enormous benefit of having their products taxed at the special press VAT rate of 2.1%, down from the usual 20% that would be otherwise owed. Altice pockets the savings for itself — a considerable boost in gross revenue.

More conservative investors worry about how Altice is managing to pay for all of its acquisitions and still manage to cover its existing massive debt, especially as Drahi plots to bring his model to the United States. His goal in America: to create the largest or second-largest telecom company in the country. Worried shareholders have been placated by the news massive layoffs are in SFR’s future, with the cost-savings they bring. Those still not satisfied were quieted after Numericable, another Altice concern, borrowed almost two billion dollars and raided Altice’s treasury for another billion to finance a dividend payout to shareholders worth more than $2.5 billion. Of course, Mr. Drahi himself is among the top recipients.

At least 600 Cablevision employees will be out of a job by this November as parent company Altice USA continues to slash expenses to squeeze cost savings out of the cable business for the benefit of shareholders.

Altice announced this morning that the Cablevision call center in Shelton and a back office in Stratford, Conn., will be closed, with some jobs shifted to existing Altice USA call centers in New Jersey and Long Island, N.Y. The job cuts hit hard, with 50-100 employees being employed by Cablevision for more than 15 years, with some close to retiring.

“People have kids and everything like that to take care of at home. So, I’m sure it was sudden for a lot of them to hear this news.”

Employees said about 50 to 100 workers had been there over 15 years, some close to retiring.

“People have kids and everything like that to take care of at home,” an unnamed employee told WTNH-TV. “So, I’m sure it was sudden for a lot of them to hear this news. Some people are upset for sure.”

A spokesperson for Cablevision said employees will be given a severance package and can re-apply for an unspecified number of jobs in and out of the state.

“Over the last few years, there have been investments and enhancements to our Optimum products and services, making them more reliable and providing more customer service touch points than ever before,” the company said in a statement. “As a result, we have seen a significant improvement in customer call volume and patterns. As we look to strengthen our operations in the nation’s most competitive market, we are aligning our contact center organization to meet the current needs of our customers.”

Some employees speculate the real motive is saving money. An employee told WTNH that customer calls have slowed down, but Cablevision is also still hiring workers, presumably for less compensation.

“I don’t think it’s because of calls to be honest. They’re hiring a lot of people to work from home too,” the employee said.

Altice told New York and New Jersey regulators it wouldn’t lay off customer service employees for four years, but made no such agreement in Connecticut.

Altice’s bean counters have completed the first wave of cost cuts as part of the company’s notorious practice of “cutting to the bone,” laying off about 100 Cablevision employees managing IT, human resources, accounting and other back office operations at the cable company’s Bethpage, N.Y. headquarters.

Newsday reports Altice’s ability to cut Cablevision employees is constrained by an agreement with the New York Public Service Commission not to lay off any customer-facing employees or technicians for the next few years, as a condition of approving Altice’s buyout of Cablevision, which was completed in June. But once that condition expires, Altice management has signaled it will seek to further consolidate their holdings in the United States.

An Altice spokesperson confirmed the layoffs, but claimed Altice also hired 49 new workers “to its U.S. operations” in the last two weeks, which also includes Suddenlink. Altice’s career website shows the company is still hiring, but likely at a substantially lower compensation rate than workers used to receive before the acquisition.

Altice also showed it had little interest in the newspaper business and sold 75% of its recently acquired interest in the Long Island-based Newsday newspaper back to the Dolan family.

Patrick Drahi’s vision of unwanted employees he’d like to lay off.

Patrick Drahi, who oversees a global telecom empire that now includes Suddenlink and Cablevision in the United States, is quietly seething over the regulators who forced him to accept commitments not to kill jobs at the companies he’s acquired. To him, an unwanted Altice employee is nothing more than a washing machine ready to be tossed out after outliving its usefulness.

Drahi points to his French wireless company SFR as a prime example of how job protection agreements are bad news for his business plans. In Drahi’s view, SFR, like many of the companies he has acquired, is overstaffed. But he cannot slash jobs for three years because of regulator conditions imposed when acquiring the company.

“We have one year left on our guarantee of employment for three years,” Drahi told investors in New York. “Today we’re in a situation where people know that the guarantee stops in one year. It’s like buying a washing machine from [home good retailer] Darty with a three-year warranty. After three years the washing machine breaks down. What should we do, [pay for it to be repaired]? They know we’re overstaffed.”

In Drahi’s view, the unnecessary employees are just a drain on company’s resources, something their competitors are fully aware of and are ready to exploit. Drahi said the protected employees also create tension in the company. Their union representatives claim the opposite, arguing Drahi’s draconian cost-cutting makes for a hostile workplace where employees often have to take pay cuts and in some cases pay for their own toilet paper, office supplies, and break room equipment out-of-pocket. As a result, as many as 1,200 employees have already voluntarily left SFR for other jobs. In many cases, those vacant positions were never filled again, helping Drahi achieve desired job cuts through other means.

Drahi’s cost cutting even extends to the top. He admitted he was able to convince the current managers of Cablevision and Suddenlink to cut their salaries while suggesting they could share in the long-term profits of the companies sometime in the future.