@ UBS Media Week: TWC’s Britt: Cable Will Do Better Than Rest Of The Economy — But Not By Much

imageThe conventional wisdom has been that as the economic downturn continues to squeeze consumers, cable TV will benefit as more people opt for home entertainment. Glenn Britt, president and CEO of Time Warner (NYSE: TWX) Cable, was certainly happy to promote that view during a Q&A at the UBS Global Media and Communications (PDF) conference in New York. But he noted that certain aspects of the business have fallen off. One example is DVR adoption, as demand is down 40 percent, though that could be due to a great deal of cable customers already having taken on the service, he said.

— I spoke with Britt after his presentation and asked him if Time Warner Cable (NYSE: TWC) will consider serving targeted ads to its broadband subscribers as the company searches for new sources of revenue in the down economy. Not too soon, was his answer, and given the heat ISP providers like Charter Communications (NSDQ: CHTR) got for trying out Nebuad’s behavioral targeting service this summer, his reluctance was expected. “I think there is a pretty significant backlash against the whole policy of behavioral targeting. We’ve been trying to take a careful approach and work with Washington and other ISPs on a solution that would give us the consumer benefits from targeting without creating privacy problems. That’s where we are now.” More after the jump.

– As to whether the negative economy makes it easier to engage in more M&A activity, Britt said it doesn’t. “The cable business is a small world and we all know each other. And one thing we all know is that this is not a good environment to sell in.”

— Cap ex will come down. About 70 percent of our cap ex is “success-based,” so that will come down a bit.

— Costs are coming from two big categories. Programming is under pressure from re-transmission consent from sports, and from labor. We have had some restructuring costs related to layoffs.

The spinoff: Britt said the company is comfortable with being spun off from parent Time Warner. “We’re just waiting for regulatory approval. There are three buckets, first two are state and local franchises. We have those settled in order to close the deal. Then we need FCC approval. To date, the chairman has not put that on the agenda. So we don’t know when that will happen.”

Competitive environment: AT&T (NYSE: T) and Verizon are rolling out their pay TV models. “There’s no real change, just more of the same. AT&T overlaps us 40 percent and 30 percent for Verizon (NYSE: VZ). U-verse overlaps us in 12 percent and Verizon sells broadband in about 6 percent of the markets we’re in. In the meantime, we’re continuing to take voice customers at a rapid rate.”

Broadband: Britt said he doesn’t want to “punish” consumers for using more broadband. However, the question is, what is the right structure to encourage more usage and whether cable companies can charge more money for it? Britt: “If we can’t pay for it, we can’t build it.”

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