Time Warner Cable (s TWC) is planning to introduce a new, lower-priced cable bundle that it hopes will help stem subscriber losses. The new package, which will cost less than $40 a month, will have cable programming from Viacom, (s VIA) Time Warner, (s TWX) Discovery (s DISCA) and News Corp., (s NWS) but it won’t include ESPN. (s DIS)
Like many other cable providers, Time Warner Cable is reeling from a loss of subscribers, as customers choose to cancel their cable subscriptions. In the third quarter, Time Warner Cable lost 155,000 basic cable subscribers, which is blamed on a weak economy and competitive pressures from IPTV and satellite providers. To help retain customers, Time Warner Cable has teased investors with the possibility of a lower-priced cable package in the past, most recently mentioning the bundle as part of its latest earnings call.
Speaking at a conference held by research firm SNL Kagan today, Time Warner Cable CMO Sam Howe gave the first details of the new, mid-priced cable package. The bundle, named “TV Essentials,” is currently being test-marketed at the price of $29.99 and $39.99, pricing it in-between the cable provider’s Broadcast Basic package, which ranges from $10-$15, and its Expanded Basic Package, which costs $50-$60.
While the total content mix isn’t available, Howe did give some insight into which content providers will participate. While Time Warner Cable has negotiated deals with various media companies, including Viacom, Time Warner Corporation, Discovery and News Corp., one notable network that won’t be included is Disney’s ESPN. The Disney Channel will also not be included as part of the TV Essentials package.
The introduction of the new package is made possible by Time Warner Cable’s recent contract negotiations with Disney, which apparently gives it more flexibility to create the lower-priced package without having to bundle in all Disney channels. That deal allows Time Warner Cable to offer the package at a more reasonable rate, since ESPN typically carries the highest per-subscriber rate among cable networks, reportedly around $4 (or more) per subscriber.
What’s unclear is how much niche or specialty content will be available through these bundles; while Time Warner Cable will try to keep as many customers online with “must-have” networks like the top broadcasters and cable programming like MTV, Comedy Central, TNT, TBS, Discovery and FX, it might be less inclined to include multiple channels of cooking, home improvement or other specialty programming. That could be bad news for programmers that don’t have the market heft of News Corp. or Time Warner, and could spell trouble for niche cable networks if these types of mid-tier cable packages catch on.
One thing that is clear: Time Warner Cable needs to do something to stop customers from fleeing cable to sign up with IPTV or satellite providers, or stop paying for TV altogether. While we don’t believe that a lower-priced cable offering will necessarily stop cord cutting, it could possibly stop some subscribers from canceling cable altogether.
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