Out

In a widely anticipated move, Time Warner Cable CEO Glenn Britt will retire from his leadership role in December, replaced by his chief operating officer Robert Marcus.

Marcus will assume control of the nation’s second largest cable company with a promise to improve customer service, corporate culture, and growth in residential subscriptions.

Marcus told the New York Times the company has to develop a level of emotional connection with customers, many who loathe the cable company and complain regularly about the increasing cost of cable service.

Time Warner Cable has lost cable television customers and growth in other services has continued to slow as consumers explore competitive offers from the phone company and satellite providers. The company has made up the loss of revenue by raising prices and aggressively expanding business service by wiring offices and complexes for cable broadband.

In

Wall Street has complained Time Warner’s financial performance has fallen behind other cable operators, notably Comcast. Some also mention Time Warner’s broadband speeds are slower than other cable operators. Some analysts also continue to pressure the company to drop flat rate Internet access to accelerate earnings.

The cable company’s current market position has made them a target for a takeover, notably by John Malone and Charter Communications. The two companies have met informally to discuss a potential merger deal, but Britt doubted Charter — far smaller than Time Warner Cable itself — could run the combined entity effectively.

Marcus told the newspaper Time Warner Cable’s attitude towards a merger would depend entirely on how much value it would create for the company’s shareholders.

What was best for customers was not mentioned as a factor.

Time Warner Cable is once again raising its broadband prices, reflecting the fact Internet access continues to be a “must-have” product with room to raise the cost without driving customers away.

On average Time Warner Cable customers in the northeast with broadband-only service will pay $3 more a month starting Aug. 9, according to public relations manager Joli Plucknette-Farmen. Customers now pay $51 a month for 15/1Mbps service. After the increase, customers will pay $54.99, not including the modem rental fee. In early 2010, customers were paying $39.95, around $15 less.

Time Warner Cable’s new broadband prices will range from $34.99 a month for Lite 1/1Mbps service to $104.99 a month for 50/5Mbps service.

The rate hike will likely spread across the rest of Time Warner Cable’s systems around the country over the summer and fall.

Plucknette-Farmen said the increase will help the company offer the best possible broadband service.

Not every customer will immediately face higher pricing. Customers on promotional pricing packages will remain unaffected until those offers expire.

Because Time Warner Cable increasingly prices its services on a customer-by-customer basis, assessing the full impact of rate changes is extremely difficult because customers can pay dramatically different rates for the same services. A Time Warner Cable customer paying regular prices for standalone Internet service will find their neighbors with bundled service packages paying much less and those with promotional/customer retention deals paying the lowest rates of all.

In 2012, Stop the Cap! wrote a guide for Time Warner Cable customers to negotiate a better deal for themselves. Readers report the method still works.

Verizon is “redefining the power of the Internet” in select FiOS areas with the introduction of a new 500/100Mbps speed tier that blows away Time Warner Cable and leaves Cablevision and other competitors woefully behind.

Just weeks after Cablevision boosted upload speeds, Verizon has responded with service offerings up to a half gigabit in speed, telling customers FiOS Quantum 150/65Mbps, 300/65Mbps, and 500/100Mbps plans will “radically change everything you do online right now – and in the future.” It is ten times faster than the fastest service available from Time Warner Cable in the northeast: 50/5Mbps.

Verizon’s fastest broadband does not come cheap, however. The 500Mbps package starts at $294.99 a month for new customers with a two-year contract. Verizon Voice service is required to get the promotional price and a $165 early termination fee applies (reduced by $7.50 for each month a customer maintains service). A $59.99 activation and other fees, taxes, charges, and terms apply. Customers must also pass a credit check to avoid a deposit. Skip the contract and other requirements and the rate is only slightly more: $304.99 a month.

Verizon is charging nearly four times more than what Google charges for its twice as fast gigabit service. But analysts believe that Google will never venture into Verizon FiOS territory so price competition is unlikely in the near term. Cable operators that compete with Verizon would have to dedicate a considerable amount of bandwidth to best Verizon’s download speeds, and matching upstream speeds will be even more problematic unless and until cable operators transition their systems to all digital video to free up bandwidth.

But Verizon’s fastest Internet speeds are not available in all FiOS areas. The company warns “500/100Mbps service availability may be limited in your area based on network qualification requirements.”

Verizon’s competitors, which don’t have the benefit of an all-fiber network, continue to stress consumers simply don’t need any speeds faster than what they now offer. Frontier Communications believes most consumers do just fine with 6Mbps DSL. Verizon’s larger cable competitors range from Time Warner Cable, which does not even try to match its competitor’s fiber speeds, to Bright House, which competes with Verizon FiOS in Florida, to Comcast, which offers faster Internet service but regularly threatens to cap how much customers can use each month. Verizon FiOS has, in practical terms, no usage caps.

“For some, the discussion about the broadband Internet seems to begin and end on the issue of ‘gigabit’ access. The issue with such speed is really more about demand than supply. Most websites can’t deliver content as fast as current networks move, and most U.S. homes have routers that can’t support the speed already available.” — David Cohen, chief lobbyist, Comcast Corp., May 2013

“Residential customers, at this time, do not need the bandwidth offered with dedicated fiber – however, Bright House has led the industry in comprehensively deploying next-generation bandwidth services (DOCSIS 3.0) to its entire footprint in Florida – current speeds offered are 50Mbps with the ability to offer much higher. We provision our network according to our customers’ needs.” – Don Forbes, Bright House Networks, February 2011

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Verizon FiOS introduces faster broadband speeds to help customers accomplish more of what they want to do online. Verizon’s Fowler Abercrombie says ‘it’s only the beginning’ as Verizon continues to innovate on its fiber to the home network. (2 minutes)

Several million Time Warner Cable and Bright House customers in New York, California, Texas and Florida will lose CBS programming this Wednesday at 5pm if the three companies do not iron out their differences in contract renewal negotiations.

CBS and Time Warner Cable have taken their fight public over retransmission consent talks that have left the two sides far apart. The cable operators say CBS has gotten greedy asking for as much as 600 percent more than what the cable companies paid under the old agreement that expired in June. CBS says the fact its stations have never been thrown off cable systems before is proof that their terms are reasonable.

Cable analysts say CBS’ old agreement cost the two cable operators between 75 cents and one dollar a month per subscriber. Most believe CBS is now asking for between $1-2 a month per subscriber to renew the agreement.

CBS wants to be paid at levels comparable to the most popular cable networks and believes the fact the network is now number one in the ratings delivers negotiating power. CBS has not made its aggressive position on carriage fees a secret. Executives have told investors it plans to quadruple cable and satellite fees over the next four years with a goal to raise an extra $1 billion. Wall Street analysts have recommended the stock to investors and its value has risen at least 65% in the past year.

But Time Warner Cable spokeswoman Maureen Huff believes CBS is asking for too much.

“Broadcasters have already hit customers with 84 broadcaster blackouts in the past 18 months,” Huff said in a statement. “Les Moonves, president and CEO of CBS, has always been outspoken about the programming fees he believes he deserves. He has said ‘the sky is the limit’ when talking about the price he thinks he deserves for his CBS stations, and he clearly means it. He doesn’t seem to care about our customers’ budgets or the going rates for CBS programming.”

But critics contend Time Warner Cable does not come to the table with clean hands on the issue of expensive carriage fees. Time Warner Cable seemed less concerned about the skyrocketing costs of cable programming when it set high asking prices for TWC-owned regional sports networks SportsNet and TWC Deportes.

CBS says it deserves at least as much as what Time Warner Cable pays Time Warner Entertainment’s TNT, which reportedly charges at least $1 a subscriber.

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CBS is now running this ad in New York City warning Time Warner Cable customers they are about to lose WCBS-TV, the local CBS affiliate.  (1 minute)

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Not so fast, says Time Warner Cable. CBS wants 600% more for WCBS, driving up the price customers pay for cable television. (1 minute)

If no agreement is reached, CBS expects customers will lose access to its network-0wned affiliates starting at 5pm Wednesday afternoon. Although most media reports are focused on the fact CBS stations in New York, Los Angeles, and Dallas are affected, not all are CBS affiliates. In fact, customers in a few other cities will also find their CBS-owned stations dropped:

• New York: WCBS (TWC)
• Los Angeles: KCBS, KCAL (TWC)
• Dallas-Ft. Worth: KTVT, KTXA (TWC)
• St. Petersburg-Tampa: WTOG (Bright House)
• Riverhead (Long Island): WLNY (TWC)

Some Bright House customers are also affected by dispute.

The Wall Street Journal reported that Time Warner Cable and Bright House would also drop Showtime from lineups across the country in a retaliatory move, but this was not confirmed by either cable company.

Station owners are seeking higher retransmission consent payments from cable and satellite operators to establish additional sources of revenue. Pay television customers ultimately foot the bill with higher priced cable television service. As prices rise, pay television operators increasingly worry customers will either defect to a competitor or cut the cable television cord for good. Some operators are adopting a tougher stance, willing to drop stations from the lineup.

Most station owners believe the larger number of stations they own or control, the less likely a cable operator will actually throw a station off the lineup. This month, Wisconsin-based Journal Broadcast Group is threatened with the loss of nearly half of its 15 television stations on Time Warner Cable systems in Wisconsin, Nebraska, and California:

• WTMJ Milwaukee
• KMTV Omaha
• WGBA Green Bay/Appleton, Wisc.
• WACY Green Bay/Appleton, Wisc.
• KMIR Palm Springs, Calif.
• KPSE Palm Springs, Calif.

Bigger is better

Some stations have been off the lineup since July 10 in some markets, with digital sub-channels first removed by Time Warner Cable in a warning shot in others.

Larger station owners like Sinclair Broadcast Group have felt less threatened. The more stations under negotiation, the more leverage station owners have in contract renewal talks.

Sinclair is further boosting its position in the local TV station business, spending almost $2 billion in the last 18 months buying 81 more television stations.

Sinclair owns and operates, programs or provides advertising sales services to 140 television stations in 72 markets nationwide. They are a force to be reckoned with. Despite angry words over the station owner’s asking price, both Dish Networks and DirecTV renewed their carriage agreements with Sinclair without disrupting viewing.

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The Wall Street Journal’s “Moneybeat” looks into the retransmission dispute between CBS and Time Warner Cable and what impact it may have on viewers. (5 minutes)

Time Warner Cable will get up to $4 million in tax breaks courtesy of New York taxpayers to create a new call center in Buffalo’s now defunct Sheehan Hospital.

Time Warner Cable donated $175,000 to the New York Democratic State Committee that aired a series of pro-Gov. Andrew Cuomo ads, including one touting the governor’s efforts to get corporate money out of politics.

The cable company donated the funds to the Committee’s “housekeeping” account, exempt from New York’s campaign finance laws which ordinarily limit the maximum amount a corporation can contribute to $5,000. The New York Democrats spent nearly $5.3 million to air the advertising on stations across the state this spring.

Asked how Cuomo could justify promoting campaign finance reform while exploiting various loopholes to accept unlimited corporate contributions, Cuomo told the Albany Times-Union, “It’s not a loophole — it’s the law.”

“You can only live within the system that exists,” Cuomo added. “As soon as the campaign finance system is changed — and I’ve worked very hard to change it, I’ll continue to work very hard to change it — no one will be more pleased than myself.”

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Time Warner Cable, CBS, a giant teacher’s union and other large corporations helped pay to run this ad featuring New York Gov. Andrew Cuomo promising to cut the influence of money in politics. (1 minute)

Time Warner Cable was hardly alone. Other major donors were rooted out by the newspaper’s Capitol Confidential:

• — $250,000 came from “Educators United,” an offshoot of the United Federation of Teachers.
• — $200,000 arrived from the Hospitals Insurance Corporation.
• — $750,000 from George Soros. His son, Jonathan, has been a vocal proponent of establishing a system of public campaign finance.
• — Lucy Waletzky and Larry Rockefeller, children of Laurance Rockefeller and niece and nephew to Gov. Nelson A. and uber-banker David, each gave $25,000.
• — Hedge funder James Simons, the founder of Renaissance Technologies, gave $1,000,000.
• — $102,000 from “New Yorkers for Affordable Housing,” whatever the hell that is, an entity that shares an address with The Arker Companies’ Queens headquarters.
• — $50,000 from SONY Pictures Entertainment, $25,000 from Paramount Pictures and $50,000 from CBS.
• — $350,000 from Brookfield Properties, $200,000 from Tishman-Speyer and $100,000 from The Related Companies, all major New York City real estate firms.
• — $150,000 from billionaire fertilizer tycoon Alexander Rovt.
• — $200,000 from Leonard Litwin. Oh wait, I’m sorry: mega-donor Leonard Litwin’s name doesn’t appear in the filing. As is his wont, Litwin funneled his donations through various property-based LLCs he controls. New York’s glorious campaign finance laws treat an LLC like an individual.

Virtually all the donors have some business or regulatory dealings with the state government.

Last month, the governor’s office announced Time Warner Cable was being given taxpayer assistance to take over office space in the former Sheehan Hospital in Buffalo.

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This week, the Erie County Industrial Agency approved $757,000 in additional tax abatements for Time Warner Cable. That does not include the $3.1 million in state and local tax breaks already granted the cable company in return for job creation at a new call center being opened in Buffalo. WGRZ-TV reports. (1 minute)