Time Warner Cable executives cast aside any fears Thursday that Google’s fledgling broadband and TV service will pose much of a challenge. CEO Glenn Britt suggested Google Fiber isn’t offering much different than the status quo and described it as an “overbuilder,” which TWC has jousted with for years.
Some of the hype around the Google offering, which competes with TWC in the Kansas City market and will in Austin, might simply be the result of Google’s reputation.
“That company has been so successful, and they have a glow about them,” Britt said on an earnings call.
At a high end, Google Fiber does offer faster broadband service, while it provides an opportunity for free Internet connectivity at a much slower speed (with a one-time installation fee). But its TV service largely has a standard channel line-up. It does offer the Longhorn Network (LHN), which might appeal to customers in Austin.
Britt said Google looks to be “very aggressive” with pricing. TWC has competed with AT&T (which carries LHN) in the Kansas City and Austin areas.
“Who knows what (Google’s) intentions are,” Britt said. “I would question the economics of this and therefore, what the motivation is, but we'll have to see what they do.”
TWC CFO Robert Marcus said so far, Google Fiber has landed customers in maybe 2,000 homes within the TWC footprint. Britt called the number of defections minimal at this point.
Addressing other topics, Marcus said TWC is likely to increase marketing spend by one metric as the year goes by. In the first quarter, it spent around $150 million, based on what Marcus said was about 2.7% of revenues. The figure is likely to bump up to the traditional level of around 3%, he said.
TWC has a deal to distribute a would-be new regional sports network (RSN) in Southern California with Los Angeles Dodgers games, but Marcus said it hasn’t begun negotiations with providers yet. As it found out with its Los Angeles Lakers RSNs, Marcus said the deals tend to come in the months close to launch.
Britt said TWC continues to be intrigued by how Aereo, the online distributor of live TV service, fares. Broadcasters have sued -- looking to shut it down, in part because they don’t want to lose retrans consent fees. TWC would love to avoid paying them, and Aereo legal victories might help.
Aereo has won two court rulings and the case could go to the Supreme Court. Meantime, News Corp.’s Chase Carey has threatened to move Fox to pay-TV distribution should Aereo continue to exist post-litigation.
“If it is found to be legal, then I think it has very interesting implications for the whole broadcast and broadcast network ecosystem and for the future of retrans,” Britt said. “Obviously, it would give people a route to receive the signals that are otherwise free through the air without paying retrans fees.”
In the first quarter, TWC reported revenues of $5.5 billion, up from $5.1 billion, but helped in part when figures from an acquisition are taken into account. Profit rose 5% to $401 million.