Challenges Ahead: Top MSO Execs Work to Overcome Obstacles

Speaking separately Mon at a Merrill Lynch conference, Comcast CEO Brian Roberts and Time Warner Cable COO Landel Hobbs both admitted some maturation in the HSD sector—and even acknowledged some business leaks that require plugging. While confident that Comcast can sustain its double-digit growth model amid competition and a flagging economy, Roberts said the MSO’s ad sales are experiencing the “worst year, maybe ever,” leading to cash flow retardation. Accordingly, Comcast is “deeply involved” in creating interactive advertising standards for the cable industry, a “major priority for me,” said Roberts. Hobbs also eyes this industry ad initiative “as a significant opportunity [for] ’09 and beyond,” citing promising potential on the VOD platform. But he also said the company’s HSD adds continue to suffer from seasonality in 3Q, although sequential growth versus 2Q is expected. Pali’s Rich Greenfield now foresees Time Warner’s 3Q RGU, HSD and video adds all missing Wall St estimates. “The only conclusion we can really draw is that TWC is having a more difficult time integrating Adelphia/Comcast systems than it envisioned,” he wrote. Hobbs said that undertaking has cost the MSO $30mln in incremental quarterly investment in L.A. and Dallas alone. Dallas requires a nearly total system rebuild and upgrade, now 75% completed. “We have to methodically correct these systems,” he said, noting the complexity in hiring and training new employees within acquired systems. The L.A. market just introduced a triple-play bundle Aug 1. Meanwhile, cable’s top 2 MSOs are pursuing low speed tier customers, hoping to advance them to higher tiers later. Roberts sees growth in ’08 from the industry rollout of DOCSIS 3.0 specs. — Time Warner Cable notes: “Start Over” has a 93% satisfaction rate among customers, who apparently don’t mind viewing the inherent ads in exchange for the convenience; commercial phone was launched Aug 31 in 11 cities, including Austin, Milwaukee and Syracuse; double- and triple-play subs in NYC, Austin and San Antonio may now avail themselves of a 3Kmin calling plan covering landline calls to more than 100 countries for $20/month. — Comcast notes: the MSO seeks to offer more HD shows than channels, a strategy that Roberts says counters satcasters’ channel claims.