The loss of 100,000 pay TV users in the first quarter was largely the result of Charter inheriting unfavorable customer relationships from Time Warner Cable, built on unsustainable promotional deals, Charter Chairman and CEO Tom Rutledge said.
Speaking at the MoffettNathanson Media & Communications Summit Wednesday, an appearance transcribed by Seeking Alpha, Rutledge described TWC’s sales environment in the run-up to the company’s merger with Charter as a “Turkish bazaar of promotional deals."
“Time Warner wanted to make a video number, and there were data packages that were discounted that cost less if you took video than if you didn’t,” he said. “And a lot of those were churning out. And a lot of them were basic-only. So on the margin, at the end – in the last year, I think they were selling 40% of their connects as basic-only.”
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Rutledge added that TWC had “90,000 different promotional offers. And many of them were deeply discounted and also piled on top of each other.”
He said many of the deals were made up on the fly.
“You'd call in, bargain … And so there's a lot of that out there. And they're also exploding packages. Meaning, at the end of the term, they go back to full price.”
That sticker shock, Rutledge said, resulted in most of the customer defections, as opposed to customer unwillingness to transition to Charter’s “Spectrum” brand.
“We don't take our existing customer base and say, ‘You have to change,’” Rutledge added. “You can keep your package whatever it is. What we do, though, is start marketing a high-value product package, the triple-play that we offer, set some branded package, and people move into it. But it takes time to move them into it, and they move in at their own pace.”