LAS VEGAS—While he still sees the video business as viable, Charter Communications Chairman and CEO Tom Rutledge concedes that the MSO’s $10 billion annual budget for program licensing is taking a toll on pay-TV profitability.
"That's a lot of money per-sub, per-year, and without significant rate increases, that would take away a lot of margins in the video business," Rutledge said Wednesday, while speaking to investors in Las Vegas at the Citi 2017 Internet, Media and Telecommunications Conference. (The event was webcast and covered by the Hollywood Reporter.)
However, despite the fact the traditional pay-TV business is shrinking due to high operational costs, Rutledge said once again that he doesn’t see the big, traditional bundle riding off into the sunset.
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"I think there's a lot of reasons why the packages, the big rich packages, will stay together, and why people will continue to pursue their historic patterns," he said.
Charter is currently knee-deep in the process of integrating its two big 2016 acquisitions, Time Warner Cable and Bright House Networks. Capital intensity is currently high for the company, Rutledge conceded, but he said the company’s investments into cloud-based network infrastructure will eventually render it competitive against wireless competitors and their 5G services.
"We think we have the best network to build the next generation of wireless services," Rutledge said.