The ongoing soap opera between Charter Communications, Time Warner Cable and Bright House Networks entered its second act Friday after Charter CEO Tom Rutledge confirmed that the company is in talks with Bright House Networks, adding that the Connecticut-based cable operator also is exploring ways to integrate over-the-top offerings into its existing and future bundles.
On a conference call with analysts to discuss first-quarter results May 1, Rutledge confirmed reports that Charter was in talks with the 2-million subscriber MSO.
“Our agreement with Advance Newhouse requires that we negotiate in good faith upon the termination of the Comcast transaction, and we’re doing that,” Rutledge said on the call. He declined to elaborate.
Charter had agreed to purchase Bright House in March in a deal valued at $10.4 billion, but that transaction was contingent on Comcast’s $67 billion purchase of Time Warner Cable being completed. Comcast’s decision to terminate that deal on April 27 also scuttled the Bright House transaction as well.
While Charter was expected to revisit the Bright House transaction, Time Warner Cable also has the right of first offer for the cable operator and reports have claimed it too is in preliminary discussions with the company as well.
In a research note, Telsey Advisory Group media analyst Tom Eagan has suggested Time Warner Cable could buy Bright House as a defensive play to discourage Charter from making a second attempt at acquiring the larger operator.
On the call, Rutledge said that Charter also was investigating whether it could devise new video packages that include direct-to-consumer offerings like Netflix, Hulu and HBO Now.
“We’ve been considering ways to provide compelling services and packages at lower retail price points and with a lower content cost structure and with the inclusion of direct to consumer services all in an offering that satisfies the unserved marketplace,” Rutledge said. “If we can create a new video product that offers real value to this segment we target and that customers will stick with, that also gives us an opportunity to upgrade customers to our full featured video product as consumer needs change, and obvious we will do it if we can. We haven’t found that product mix yet and we don’t think anyone else has either.”
Later, Rutledge explained that he meant developing offerings that include over-the-top services like Netflix, HBO Now, Hulu and others like that where the purveyor of the content has a direct relationship with the consumer.
“Our view is that we can mix those products into products we sell to satisfy the customers entire video needs,” Rutledge said. “I am assuming that products can be built that would be sold by us within our footprint, but would also include products sold outside our footprint delivered by the Internet, generally but not necessarily.”
