Time Warner Cable CEO: Cable TV Pricing Is So High Because We're The Mercedes Of Entertainment

from the not-just-a-river-in-Egypt dept

Fri, Sep 18th 2015 12:36pm — Karl Bode

Over the last year we've finally started to see the emergence of more flexible Internet video options like the "skinny bundle," where customers nab a cheaper, smaller base package of channels, with the option to pick and choose from add-on "channel packs." SlingTV is perhaps the most well-known option (though broadcasters have ensured it lacks DVR functionality), and Verizon has also been experimenting with the concept as well (and were sued by ESPN for their trouble). While not the pure "a la carte" play many had called for, it's at least a baby step away from massive, over-priced cable lineups.

Not surprisingly, however, the same cable industry executives that don't think cord cutting is real state they don't see what the skinny bundle fuss is about. In fact, Time Warner Cable CEO Robert Marcus recently crowed that the cable giant isn't seeing any interest in the skinny bundle:

"The headlines over the last several months have been way ahead of the facts," Marcus said. "We're not seeing this mass migration to skinny bundles. In fact, in the second quarter, roughly 82 percent of our video connects took the preferred bundle…which is the fattest of the fat bundle. It's still a great value. We can't lose track of that."

Marcus ignores several things here. One, Time Warner Cable lost 45,000 basic cable subscribers last quarter, users who are either fleeing toward more competitively-priced cable options, or toward the Internet video options Marcus pretends aren't slowly changing the game. Two, many existing Time Warner Cable customers continue to bundle services like television and voice with their cable service, because they're usually penalized financially if they try to purchase services piecemeal. Three, you might see broader adoption of more flexible channel options and pricing -- if you actually offered some.

Like most cable companies, Time Warner Cable pays a lot of lip service to "value," but the bottom line is that it refuses to compete on price. And these companies will continue to refuse to compete on price until Internet video reaches critical mass and customers begin to defect in greater numbers. Until then, cable executives spend the lion's share of their time trying to somehow justify cable's ridiculous pricing. For example, Marcus recently defended his company's high prices by insisting Time Warner Cable is the Mercedes of video viewing options:

"There continues to be this perception that it is not a competitive market; that the market is not somehow working," Marcus says in an interview with Multichannel News. "Living in the world we do every day, competing for customers, that couldn’t be further from the truth. The best governor of pricing is an effective marketplace and we live in that world every day."

"...It can’t be the case that you can get for the really low price all of the great attributes in the products that you can at the higher-end prices. There is always going to be the Hyundai and the Mercedes."

Here's the problem with Time Warner Cable claiming high prices are all you need to claim you offer a luxury service: Time Warner Cable is literally the least liked company in any industry in America, with arguably the worst customer service in the country. Of course, it's not particularly surprising that a guy who is about to personally make $85 million from Charter's acquisition of Time Warner Cable isn't particularly in-tune with the value-needs of his typical customer, but executives like Marcus are going to have to pull their collective heads of of the sand post haste if they want to minimize the impact of the Internet video revolution, and the cheaper, more flexible channel options they insist nobody wants.

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Filed Under: bundles, cable tv, pricing, robert marcus
Companies: time warner cable

29 Comments

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Mason Wheeler (profile), 18 Sep 2015 @ 12:50pm

We're not seeing this mass migration to skinny bundles. In fact, in the second quarter, roughly 82 percent of our video connects took the preferred bundle…which is the fattest of the fat bundle.

So roughly 18 percent--almost one-fifth--of your "connects" migrated to skinny bundles in the first two quarters alone and you don't see a mass migration?

Dude is either blind or delusional.
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Anonymous Coward, 18 Sep 2015 @ 1:00pm

I think he got the wrong car, it more like a trabant, it will get you there, but you replace it as soon as you can get something better.
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Anonymous Coward, 18 Sep 2015 @ 1:04pm

We're not seeing this mass migration to skinny bundles...
Well maybe if you put what I want in the skinny bundle I'd buy it.

BUT NOOOOOOOOOO........

What I want is in the preferred bundle and nowhere else.

So my choice is the highly inflated price or do without.

Guess what I'm going to choose very soon.
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Anonymous Coward, 18 Sep 2015 @ 1:06pm

He's trying to sell Yugos at Mercedes prices.
If he keeps this up, he'll make a small fortune in the cable business after starting with a large one.
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John Nemesh, 18 Sep 2015 @ 1:10pm

Mercedes of entertainment?
So you are overpriced and unreliable? Except, unlike a Mercedes, you can't trade it in for a better brand. Nice.
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Anonymous Coward, 18 Sep 2015 @ 1:13pm

Exclusive
I own a Toyota, oh yeah and a Roku.
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Max (profile), 18 Sep 2015 @ 1:15pm

"We're The Mercedes Of Entertainment"

BWAHAHAHAHAHAHAHA....

...suuuure, mate.
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TasMot (profile), 18 Sep 2015 @ 1:19pm

Time Warner Cable isn't particularly in-tune with the value-needs of his typical customer, but executives like Marcus are going to have to pull their collective heads of of the sand post haste if they want to minimize the impact of the Internet video revolution, and the cheaper, more flexible channel options they insist nobody wants.

Nope, executives like Marcus are putting their $85 million in the bank and looking the other way. He/They don't care what anybody else wants, they got their money. How else are they going to get all that money if they don't take it from their customers?
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John Fenderson (profile), 18 Sep 2015 @ 1:22pm

Skinny bundle scam
The "skinny bundle" is nothing but a PR scam, intended to allow companies to claim that people aren't interested in something other than the fattest, most lucrative options they offer. It doesn't appeal to many people because it's not intended to. It doesn't address the problems that are causing people to cut cable.

As someone who ditched cable TV years ago, I can honestly say that I don't miss it at all. When I see cable now, it reminds me of what a crappy product cable TV actually is. It is so bad in my eyes that I wouldn't take it if it were free.
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Anonymous Coward, 18 Sep 2015 @ 1:23pm

"skinny bundle" is a "weightist" remark
Shame on you!

http://dictionary.reference.com/browse/weightist
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CyberKender, 18 Sep 2015 @ 1:51pm

"Time Warner is the Mercedes of entertainment"
Sure. Mercedes during the Chrsyler years...
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dave blevins (profile), 18 Sep 2015 @ 1:53pm

They and Comcast the rest of this gang are more like a Yugo.
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DCL, 18 Sep 2015 @ 2:06pm

Re:
keep in mind the numbers for initial video connects are likely skewed since there is almost always a initial signup / short term discount for the premium bundle and it is unlikely for people to forgo that.

An interesting stat would be the what is the bundle distribution at 6mths, 9mth and 12mths after the start of service/video connect.
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Bob Buttons, 18 Sep 2015 @ 2:20pm

"And these companies will continue to refuse to compete on price until Internet video reaches critical mass and customers begin to defect in greater numbers."

Or... they will impose lower and lower bandwidth caps while continuously increasing internet prices making it a downright pain to manage and stay under while streaming your TV watching online 'til people start giving up and getting TV again to give themselves room to breathe browsing the web.
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SolkeshNaranek (profile), 18 Sep 2015 @ 2:58pm

executive heads
"executives like Marcus are going to have to pull their collective heads of of the sand"

Sand is not where their heads are, it is more like a place where the sun doesn't shine.
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Anonymous Coward, 18 Sep 2015 @ 3:12pm

Once again, it is hard to get someone to see a problem when they are paid no to. I notice no where in those remarks of Marcus is there any mention of all the new households that aren't getting wired for cable. That's the future they are look at. One where no one is actually buying these high priced packages but choosing instead not to wire up.

I cut cable long ago. Even in those years cable wasn't satisfying me with quality broadcasting. The quality was going down hill then and over the years hasn't done anything to improve it's array of trash offered for public consumption. When you look at the amount of reruns coming in back to back (I'm assuming they still do that) you've already lost 1/2 the value of your money in the product you are paying for. Then consider you are forking out the money and still seeing commercials after you have paid for a service. That's a step much too far for me. I don't accept that on tv, I won't accept it on the internet, I damn sure am not going to accept it for PPV.

It's great to hear Markus believes his product is running swimmingly. I hope he still sees it that way in another 10 years at the rate it's going. Personally I see nothing I want from tv nor from PPV. There will not be a dish nor a cable run to this residence for the purposes of tv nor phone. That eliminates any need to speak of what sort of packages are being offered. Neither fat nor skinny is wanted in this household.
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Anonymous Coward, 18 Sep 2015 @ 3:20pm

his opinion is typical of all the entertainment industries bosses, particularly of the film industries. they all think that no one could exist without films! they all think that if they were to cease making films, the world would stop spinning, governments would fall and wars erupt everywhere! they ignore that before films, people had other ways of enjoying entertainment, such as theater. films and music are a great way of being entertained, but to have the opinion that they are essential is self important bullshit!
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Anonymous Coward, 18 Sep 2015 @ 3:44pm

but executives like Marcus are going to have to pull their collective heads" of of "the sand post haste if they want to minimize the impact of the Internet video revolution, and the cheaper, more flexible channel options they insist nobody wants.

typo
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Anonymous Coward, 18 Sep 2015 @ 3:57pm

"Time Warner Cable CEO: Cable TV Pricing Is So High Because We're The Mercedes Of Entertainment"

Yes, and I'm the Dolores of your Cojones.
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Anonymous Coward, 18 Sep 2015 @ 10:32pm

Re: We're not seeing this mass migration to skinny bundles...
Guess what I'm going to choose very soon.

And that is the problem in a nutshell, isn't it...?
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Anonymous Coward, 18 Sep 2015 @ 11:57pm

the second half of that statement is "the people in charge of regulating our prices are all guillable idiots, who believe whatever we tell them"
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ahow628 (profile), 19 Sep 2015 @ 9:17am

Building a bridge
"We've decided not to build a bridge over the river because so far, we haven't seen anyone swimming across." -City planning department
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Anonymous Coward, 20 Sep 2015 @ 1:40am

Re: We're not seeing this mass migration to skinny bundles...
another well known company does that too, looks they they do it intentionally, knowingly

Hope you find a good alternative
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Anonymous Coward, 20 Sep 2015 @ 1:43am

Re: executive heads
If someones foot happens to be in the general area.......
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Anonymous Coward, 20 Sep 2015 @ 9:47am

No, Time Warner, you're the Bugatti of cable - vastly overpriced, you do fuck-all to the gallon and you're out of your depth.
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Anonymous Coward, 22 Sep 2015 @ 2:13pm

If you look at the TW website, it becomes very clear why everyone takes the preferred bundle. The lowest tier gets 20 channels. And costs $20, so $1 per channel. The next tier gets 70 channels and costs $40/mo. The preferred tier gets 200+ and costs $50/mo. Of course people are going to take the preferred tier!
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Anonymous Coward, 24 Sep 2015 @ 9:26am

Time Warner is more like the Volkswagen.
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Anonymous Coward, 25 Sep 2015 @ 7:28am

Re: He's trying to sell Yugos at Mercedes prices.
My Yugo still works fine after 30 years, I can't say the same of the company
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Peter, 10 Nov 2015 @ 4:50am

Skinny bundles are more of the same
Why should I be interested in in skinny cable bundles when I can find ad free streaming services costing less than any cable bundle, fat or skinny?

The problem lies with the cable model itself. You force customers to pay ever-increasing rates for access to low-quality content crammed full of commercials. I wouldn't pay a nickel for that kind of viewing experience. Even free apps that blast me with ads get deleted from my Roku.
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