Meida execs with their head in the sand on cord-cutting

Media executives, with the exception of DirecTV, appear to deny the existence of the cord-cutting phenomena that is gripping the country and is likely to grow stronger over the next few years. DirecTV is addressing it head-on with their Cinema initiative, but others from both the content and distribution side, are flat out denying it, with NewsCorp's CEO stating that he "does not get this cord-cutting issue". My guidance to them is wake up. Cord-cutting is real. Remember the denials from the newspapers about the threat from the Internet?


Chase Carey - News Corporation - President and COO
No. In fact, I think we would be looking at subs going up, but I think an awful lot was read into that. I don't get this core cutting issue. I just don't see it. I mean, realistically, I think it is a second or third quarter in a mature market, probably a little tougher quarters and cable down a bit and satellite and telcos still up and I feel it is a fundamental service that for American households is a fundamental part of what they do with their time, and what they value in their life and I think it is a service without comparison, but, no, we would not be seeing that.


Philippe Dauman>: Viacom - President and Chief Executive Officer
As it relates to Netflix. Netflix itself has positioned itself not as being a substitute for television viewing, but as a complementary service, and that is the way it is being used. I think it's remarkable that in the teeth of a powerful recession that we went through, that continued viewership of subscription television has held up as well as it has. So I think there's been much ado about little, in terms of all the talk about cord-cutting. Television provides a great value with a lot of and certainly as it relates to our networks, we have actually seen the number of subscribers, on our fully distributed - or more fully distributed networks, increase from the data that we had through the second quarter. And that's because we continue to achieve incremental distribution
through services like the telcos, which provide a broader array of channels than some of the distributors in the various markets. So we don't see cord-cutting as affecting our business. The economy obviously holds down growth in distribution. As the economy recovers, we expect to see the number of television subscribers in the U.S. grow at a better clip than it has over the last year and a half or so.


Robert A. Iger, Disney - President and Chief Executive Officer
On the multichannel front, we've had conversations with a few multichannel providers very recently. And we know that there are concerns about cord cutting and the impact of all this digital distribution on their business. And the sense that we get is that the trends that they've seen very recently, which is a slight decrease in subscribers, is due mostly to the economy and the fact they went into the marketplace a year ago with some pretty low priced offers to mostly address the economy. And as those have expired, some of those consumers or subscribers have fallen by the wayside. The sense that we get is that no one has any evidence, at least currently, of cord cutting, but I still think that it's in the best interest of this company to see to it that the multichannel business remain robust, continues to flourish because obviously it creates so much value for us. So we're looking at basically the multichannel business in a bullish way, but we feel that we have to very carefully balance that business with our interests as a company to grow revenue on new platforms. And creating new product like the one I described for ESPN and authenticated ESPN and these other services, like Buzzer Beater and Red Zone, is one way to help the multichannel providers do that. So we're going to continue to look for opportunities on new devices because we think it improves monetization. But we're also going to look for opportunities to strengthen our relationship with the multichannel providers and create product that is beneficial to us, to them, and to their consumers.

John K. Martin, Time Warner, Executive Vice President and Chief Financial Officer
I also want to stress that we haven't really seen any evidence of cord cutting relating to over the top competitors. On the cord cutting, we're not seeing it - we doubt that we're going to see it, although we'll all watch for it.

Tom Cullen - DISH Network Corporation - EVP
And some cord cutting is inevitable, but if you read many of the reports, you would view these as binary. That is the assumption is if I consume some content over-the-top, I've therefore cut the cord. We don't really see it that way. We see it as multiple forms of delivery co-existing in the household for the most part, and that's why we are pursuing things like a greater focus on connectivity of our boxes with ethernet, where we're delivering more movie services, why we're doing things with Google TV and so forth. So nobody can predict the future perfectly, but we see it as -- not as binary as most people are projecting it to be.


Mike White - DIRECTV - President, CEO
How does that leads into the DIRECTV Cinema relaunch thought? Do you feel like you're getting a lot mine share on that as an alternative to Netflix over time?

I think we plan to, but in fairness, our DIRECTV -- even though our pay-per-view movies are up over 30% in the quarter, you'd think we already relaunched DIRECTV Cinema. Actually, the relaunch really happens in December. And so I would expect that you will begin to see the impact of that more likely in the first quarter of next year when we really ramp-up our advertising. We just put out some new ads that you may have seen that are specific on the whole movie thing, but they are like a week out as we finished up the NFL SUNDAY TICKET stuff in the quarter. So, I am very bullish about what we will be able to do with the consumer, and I certainly believe -- look, we recognize in our space we have to look very broadly at competitors, and we have a lot of respect for what Netflix has done. But we don't -- we intend to compete and compete aggressively in that space. And I think you will see a lot of that as we roll of our new DIRECTV Cinema service in December of this year. I think that will give you a bit of the taste of where we are going, and I think the bigger metric to keep in mind is, as I said, our VOD per subscriber is less than half of what cable guys are today, much less were Netflix is. So, we think it is a big revenue growth opportunity for our
Company.


Landel Hobbs - Time Warner Cable Inc. - COO
By and large, similar to what we saw on the connect side, these subs were in our two lowest value segments. On the other hand, we've been performing well in high-end, high ARPU segments. By the way, we haven't been able to identify any increase in video cord cutting related to over-the-top video. A couple of examples -- first, as Rob mentioned, our video losses in the quarter were driven by single play video customers and second, our video high speed data Double Plays actually increased in the quarter. That's the opposite of what we'd expect to see if there were meaningful cord cutting. And another example, we looked at college towns like Austin, Texas and Columbus, Ohio in our footprint to examine the thesis that video cord cutting might have contributed to weaker connect volume this quarter. Turns out, the college enrollment flat this year compared to last and our video connect volumes were also flat. So, we'll continue to monitor cord cutting, but haven't found evidence where you might expect to see it.

Neil Smit - Comcast Corporation - President, Cable
John Hodulik - UBS - Analyst
Thanks, guys. Good morning. The Video losses were a little higher than we expected. Can you comment on what do you think is driving that? Is that -- now you said some hangover from the digital transition but is there evidence in the numbers that you are seeing more cord-cutting from over the top or even competition from AT&T and Verizon?

Hi, John. It's Neil. I think there were a few factors and let me break them down. The first was the economic situation that Mike referred to, we are seeing fewer occupied housing units and the unemployment is still a factor. I think the second is the digital transition and the promotional roll off. 42% of the customers we lost were basic customers. The digital transition appears to be mostly behind us. I think the third reason is the rate increases we took so this year we took rate increases over the last six months so Q2 and Q3 in about 75% of our footprint versus about 3% last year. From an over-the-top impact, we have -- all our exit surveys have seen almost no impact. We have seen customers who are disconnecting and not going to a competitor. That small number of customers appear to be going over-the-air much more than any over-the-top impact. The competitive situation really hasn't changed much. We have seen year-over-year a buildout of the RBOCs, so AT&T about 2.2 million home buildout. We haven't seen a significant increase of that competitive factor.


Vijay Jayant - Citadel Securities - Analyst
I really have sort of an observation and want to get your reaction to it is there has been a lot of talk about over-the-top impact to multichannel video, but if you sort of look at the pricing that most operators have for the faster speed tiers of broadband, if there is over-the-top cord-cutting, aren't cable operators actually on the margin a little better or even neutral given the margin of the two businesses? Thanks.

I think you are right in terms of the potential opportunity. If over-the-top and there -- comes into being and there is more consumption of online video, we feel very good about our capacity. That is one of the reasons we have invested so heavily in DOCSIS 3. We feel that that big pipe into the house is important and we will continue to invest in speed increases like that, like DOCSIS 3. We think it's an important component and the consumers continue to consume more bandwidth.