Charter Communications (Nasdaq: CHTR) is ready to follow the path that Time Warner Cable (NYSE: TWC-WI) is hacking though the multi-channel universe by developing a lower cost, lower count channel package aimed specifically at re-attracting subscribers who are turned off by the high cost of basic cable TV service.
While company executives did not offer any specifics (Time Warner got so specific it actually launched a half-price service in New York) CEO Michael Lovett said the company is looking at a "lower tier, more economic package (so) we can go back to those households that are experiencing challenging times in this economy with something that would be better suited for them."
The biggest drawback to such a package is the way MSOs get programming. Many channels are tightly bundled into packages that cannot be pulled apart to create smaller tiers, putting unpopular niche channels on the same level with more popular high-end programming options. Lovett admitted that this is an issue that Charter must overcome, but said something must be done to stem the subscriber drain amid the early signs that subscribers are leaving to pursue over-the-top offerings.
"We don't see over-the-top as a substitution long-term," Lovett said. "We see a near-term impact relative to the economy on the video business."
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