CHICAGO — Cord-cutting and consolidation were on the curriculum Tuesday afternoon as an INTX panel of C-suite executives looked at how change was affecting their businesses.
“I would say you’re either disrupting or you’re being disrupted,” said David Kenny, CEO of the Weather Co. When Kenny arrived at Weather, “my concern was being disrupted by Google honestly,” he said. “They map the earth, we map the atmosphere.”
Those concerns led Weather to develop better data, which led to a deal with Apple and later, a deal with Google.
“On the cable side, the degree of disruption we’re only beginning to see now,” said Kenny.
Balan Nair, executive VP and chief technical officer at Liberty Global, said that its difficult for companies in the cable industry to keep up with change because negotiations between programmers and distributors start with a question about who wins. But they’ve got to be win-win.
“Every new distribution opportunity has to be a new revenue stream” for the programmer, but for the distributor, the “business model is already challenged so there’s not much to share,” Nair said. Much time is spent debating that impasse until both sides come to an understanding that they need one another other, he said.
One factor in the disruption the panelists cited was over-the-top video streaming.
Kristin Dolan, chief operating officer of Cablevision Systems, said the MSO has been moving to become a connectivity company from a linear company. The Bethpage, N.Y.-based MSO has introduced a couple of cord-cutter packages and has been making it easy for companies to hook up with OTT services, with Netflix, HBO Now and most recently Hulu. Noting that broadband margins are more attractive, Dolan said millennials in particular are moving toward over-the-top.
“Our goal is to meet the consumer where they are,” she said.
Dolan said millennials like to watch on a small screen, but they like to share things socially. But cord-cutting packages and other skinny bundles aren’t just for youngsters. She said there are a lot of affluent empty nesters who watch less than 10 hours of TV a week — PBS, weather and local news — and would be a target for a cord-cutter-like package.
Jill Campbell, executive VP and chief operating officer of Cox Communications, said the sky isn’t necessarily falling. “I don’t underestimate inertia in the business. We’ll see more OTT but I’m not that sure it’s that disruptive,” she said. She said that when consumers ultimately compare prices and what they’re getting for their money, “the bundle is still the best value. … the bundle is really what they’re looking for.”
It’s happened already. We’re going to see even more on the operator side and the vendor side, Nair said, pointing to the Arris-Pace combination. “There will be a few acronyms missing."
Campbell agreed that vendors and programmers would be merging. “At Cox, we’re not for sale,” she added.
But Weather’s Kenny disputed the logic of consolidation, pointing to the multiplicity of companies represented at the Apple app store. The economics are not as clear a year from now as they were a few years ago, he said.
