Image source: Charter Communications
While wireless leaders Verizon, T-Mobile and AT&T leave behind pay TV, entertainment and television networks and go back to their core mobile and telecom business, cable TV companies Comcast Xfinity, Charter Spectrum and Altice continue to show growth outside of their core pay TV space. They are showing growth in wireless and broadband.
Let’s take a closer look at how cable TV giant Charter Spectrum is doing and what its path forward looks like.
At the J.P. Morgan investor conference, Charter Spectrum CFO Christopher Winfrey explained the company's long-term growth strategy in various areas including broadband and wireless.
Charter Spectrum at J.P. Morgan Investor Conference
Spectrum Mobile is Charter Communications' brand name for wireless service. It resells the Verizon Wireless network with an MVNO agreement.
Charter Spectrum sees growth coming from different areas than in the past. Yesterday, Charter Spectrum was a cable TV company. Today, it is expanding into new areas like broadband and wireless and that growth seems strong. The next question is, will it be long-term?
The magic sauce that Charter is mixing into this recipe turns the company's offerings into a sticky bundle. If it can get customers using multiple different services, then customers become sticky. That reduces the churn rate and enables the company to stabilize and grow going forward.
Sticky bundle helps Charter Spectrum hang onto customers
Over the last decade we have seen the pay TV industry completely reinvent itself. It’s a very different industry than it was a decade ago.
Ten years ago, Charter Communications was a cable TV company. Today, while it still sells cable TV, real growth is coming from new areas like other kinds of pay TV, broadband and now wireless.
Today, cable TV is no longer a growth business. It is shrinking while other kinds of pay TV are growing. There are also many competitors who are winning market share away from the cable TV industry. And this list continues to grow.
Charter Spectrum faces increasing competition
A few examples are streaming services, which are the newest area including services like HBO Max, Disney+, Apple TV+, Paramount+, Discovery+ and so many more. We are also seeing more competitors move into this streaming space on an ongoing basis.
Plus, quite a few new and existing pay TV competitors like Dish Network, DirecTV, Hulu, Amazon TV, YouTubeTV, AT&T TV and so many others have also entered the marketplace taking market share.
Fundamental shift away from cable TV
This fundamental shift in the cable TV industry is forcing all players to expand into new areas. If they don't, they will simply lose market share and continue to shrink.
Think about it like a Growth Wave. Companies, products and services all ride a growth wave. The growth wave rises, crests then falls.
So, companies must stay on the growth side of the Growth Wave.
Cable TV is on the falling side of the Growth Wave. It is still with us and will be for a long time to come, but it is no longer a growth business.
Charter Spectrum investors looking for growth
Investors are looking for growth with their investments. That means public companies need to find the next growth wave to keep their investors happy.
That’s why we are seeing the changes occurring in the cable TV industry. All players like Comcast Xfinity, Charter Spectrum and Altice are going through this metamorphosis.
Yesterday, they used to be cable TV companies. Today, they are expanding into other areas for growth. What should they be called today? Remember, cable TV is no longer the focus.
Suggestions? I'd love to hear from you.
Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/
Equities Columnist: Jeff Kagan
Source: Equities News