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COO: Time Warner Cable Not Becoming a Streaming Service

11 Sep, 2013 By: Erik Gruenwedel

Time Warner Cable COO Rob Marcus

Rob Marcus, who becomes CEO of the No. 2 cable operator at the end of the year, said he expects wider replacement of cable boxes with wireless connections

Time Warner Cable has no interest in rolling out a stand-alone subscription streaming service similar to Netflix, COO Rob Marcus told an investor group.

Speaking Sept. 11 at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference in Los Angeles, Marcus said he remained skeptical of over-the-top subscription video services as a viable business model for Time Warner Cable.

“At this point we don’t really aspire to delivering an over-the-top service,” Marcus said. “Our value proposition [to subscribers], is delivering video via our [current] facilities as opposed to being a retailer of somebody else’s video, which is a somewhat commoditized product.”

The COO said the foreseeable future TWC would focus on delivering video within its subscriber footprint, which he said would increasingly include out-of-the-home access.

Indeed, last month it launched software that enables subscribers to access repurposed programming on the Xbox 360.

The No. 2 cable operator continues to implement infrastructure that will enable it provide service to subscribers without a required cable box. The COO said it remained key that consumers be allowed to access the multichannel video program distributor via technology they were most comfortable with, including traditional cable box, Roku streaming player, Xbox or Android device, among others.

Instead of delivering video and Internet connectivity through a cable box, TWC would incorporate the use of a modem to deliver both video and wireless functionality within the home.

“Over the next year, we will be knocking down some of the current obstacles that are in the way of not just having [on-demand video] being a complementary experience, but also a replacement service,” Marcus said.

He said allowing TWC subs to singularly access video content through a Roku device, for example, still requires encoding local programming networks (about two-thirds completed, Marcus said), close-captioning, emergency alerts and contractional sports blackouts, among other issues.

“Sometime over the next year or so we’ll be a position to deliver that box-less [option],” he said.

Separately, Marcus said the absence of CBS shows in the New York, Los Angeles and Dallas markets due to a blackout and retransmission fee dispute over a 32-day period in August and September had an impact on about 3 million subscribers.

Indeed, late in the negotiations, TWC offered to reimburse subscribers for the purchase of digital antennas, in addition to Amazon gift cards, in order to watch CBS programming over-the-air.

“While those are short-term hits that are not insignificant … the reality is that we never like to lose a sub and we never like to lose a prospect,” Marcus said, adding that the long-term implications in the dispute with CBS left TWC with few options.

In addition to how much Time Warner Cable is paying CBS for its programming, issues such as rights to retransmissions over the Internet via proprietary and third-party streaming services rose to the forefront.

In addition, Marcus feels the imbroglio shed new light on changes needed to the 1992 Cable Act, and the federal government’s role in arbitrating private sector dispute involving consumer interests.

“At the end of the day, we ended up in a much better place than we started,” he said.

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