Charter CFO Says Adding Streaming To Pay-TV And Broadband Will Lower Spectrum Churn, But “Too Early” Yet To Gauge Impact

A few months into its push to integrate streaming into its pay-TV and broadband packages, Charter Communications remains convinced the strategy is a winning one.

Asked at the Bank of America Media, Communications and Entertainment Conference if streaming integrations have kept Spectrum customers loyal, Charter CFO Jessica Fischer replied, “I’m not willing to call it yet. I think we’ll get there, I think it will drive lower churn, but it’s statistically today I wouldn’t feel right saying that.”

The No. 1 U.S. pay-TV distributor, which operates Spectrum broadband and cable systems, struck a high-profile, new-model carriage deal with Disney in September 2023 after a 10-day blackout of its networks. The agreement left a handful of TV networks without carriage but secured Disney+ and ESPN+ a spot alongside major linear channels, a key beachhead for Disney.

The issue of reconciling declining linear TV networks with emerging streaming outlets has been front-and-center in Disney’s current carriage battle with DirecTV. Integrating streaming services into pay-TV and broadband, a strategy long pursued by Comcast and others, has not been fully proven to work across the industry, as cord-cutting continues to ravage the once-fat profit margins in pay-TV. A report in July by Puck’s sports business reporter, John Ourand, cited sources indicating that only a single-digit percentage of Spectrum customers had downloaded Disney+ or ESPN+.

Fischer didn’t address the Disney-DirecTV situation, and wasn’t asked about it, but she said the company has added streaming outlets with a retail value of more than $30 a month at no extra cost to subscribers. Spectrum customers have gained access to Disney+, ESPN+, Vix and Paramount+ between January and August, and earlier Wednesday the company sealed a renewal with AMC Networks that included streamer AMC+.

Ehrlich observed that Charter has yet to meaningfully promote its new streaming offerings and Fischer confirmed as much. Before committing to a marketing campaign, the CFO said, “We want to make sure that we fully understand sort of how we get those roped in. And I think we want to have a fulsome package and to believe it’s a fulsome package to market to customers. We do do some marketing. I think we’ve had some good marketing arrangements with some of our programming partners to try to get people to understand what’s available to them as part of their package. But I think we’ll get there.”

Hybrid bundles with both linear and streaming have ushered in “an exciting and transformational change,” Fischer added. In addition to providing value, she said, such offerings can generate “a real affiliation with video and broadband,” and that resulting customer loyalty is “going to drive the business going forward.”

Fischer said she “sort of chuckles” whenever she sees an ad for a product that helps customers “track how many of the services you’re paying for.” (She didn’t name names, but one broadly available tool for that is Rocket Money.)

“There’s a solution to that,” she said. “We’ve been here before. Bundled products are good for consumers and they’re good for the businesses that are being bundled because they make their revenue stream more consistent over time. And so I think the desire for it in the market is there. As we attract this bundle of products, including the linear product, which is still valuable for a large number of consumers, I think that there’s great potential.”