Charter (CHTR) CEO Tom Rutledge spoke with Alex Sherman on Bloomberg Television’s “Market Makers” about Charter’s plan to buy Time Warner Cable Inc. (TWC).
Rutledge confirmed there are no future plans to sell assets from this deal: “We’re content with this entire assets, and have no plans to sell any of it.”
On what makes this deal different, Rutledge said, “Really we’re a very different transaction from what went before. We’re not vertically integrated. We have a different history and we bring an alternative source of development to this space that might not have existed in the Comcast-Time Warner transaction.”
On the price that Charter paid for TWC, Rutledge said: “We’re comfortable with where we are today and our price today. It’s a different circumstance than it was then. And both their behavior and our behavior is different. And I’m really pleased the way it all came out.”
ALEX SHERMAN, BLOOMBERG NEWS: To be joined by Tom Rutledge here, now the CEO of a much larger company, assuming this deal goes through, Tom. Thank you for joining with us. I want to start with the big question of the day here, which is what is the public benefit, specifically? What is the public benefit or benefits that this deal offers that the Comcast deal didn’t offer?
THOMAS RUTLEDGE, CEO, CHARTER COMMUNICATIONS: Well I think that it offers a company, a pure play cable company that’s committed to the development of the cable business no matter where it goes, and is efficient, and expansive and customer-facing, and customer oriented. We think that we can hire a lot of people because of our operating model. We think we can provide excellent customer service, and as a result of that actually generate greater customer satisfaction, which turns into positive margins because our customers stay with us longer and are happier.
And as a result if that, they actually cost less to serve. So we’re quality-based, growth-oriented company that’s investing in new technologies. We’ve developed an open platform downloadable security system. We’ve developed open user interfaces that allow to integrate what was traditionally cable TV with over-the-top providers in a seamless presentation. And we are in-sourcing jobs from overseas. And we’re investing in plant expansion both in the Wi-Fi are and in commercial areas in a way that is beneficial to not only our employees, our customers, but also the country in the sense that it’s going to have a better telecommunications infrastructure as a result of this transaction.
SHERMAN: You spoke already, we reported, with FCC Chairman, Tom Wheeler. Without getting into specifics, did he give you any guidance on what you would need to offer so that this deal passes through regulatory approval?
RUTLEDGE: I think the chairman’s comments that he has made in public are guidance. And I wouldn’t characterize or confirm any kind of report about my personal conversations with him. I think his public conversations are consistent with everything I know about him.
And I think you should take those and look at us. And really we’re a very different transaction from what went before. We’re not vertically integrated. We have a different history and we bring an alternative source of development to this space that might not have existed in the Comcast-Time Warner transaction.
SHERMAN: I’m curious. Should we expect future asset sales from this deal, or are you content to hold all of Time Warner Cable?
RUTLEDGE: No. We’re content with this entire assets, and have no plans to sell any of it.
SHERMAN: How big of a piece is Wi-Fi development with this deal? That seems like a very concrete public benefit that you could do. And it’s something I know we talked about before, the combination of wireless and Wi-Fi. Is that an essential piece of this deal?
RUTLEDGE: It is. I think in the long run when you look at who our competitors are and what our scale is, we’re a much smaller company even today with this transaction being completed than is Comcast, or Verizon, or AT&T, DirecTV. And even the two big other cellular companies have as many customers as this company will have.
So when you look at where competition is moving, going forward, the Wi-Fi that we’re putting out, the ability to use high-capacity Wi-Fi and have roaming capabilities across the cable industry on those platforms, and then ultimately integrating those into cellular businesses, I think, is in our destiny. We don’t have a current business plan to get all that done, but our initial plan is to build out Wi-Fi in not only in the home, but in the public spaces where people work and play, and to make our service essentially available in a lot more places.
SHERMAN: Tom, last question for you. In January of 2014 Time Warner Cable threw out a price of $160 a share. In hindsight, do you wish you had just bought Time Warner Cable for $160 a share in January of 2014?
RUTLEDGE: Well you remember we didn’t have the ability then to do the cash component of that request. And I think that since then Time Warner has realized that our business plan actually works. And we presented that plan to Time Warner in this process.
They have seen how we’ve succeeded. Our currency is therefore more valuable. Time Warner is more valuable a company today because they have actually been successful during this process. Rob and his team have continued to keep their eye on the ball. They have grown their business. We’ve grown our business.
So we’re comfortable with where we are today and our price today. It’s a different circumstance than it was then. And both their behavior and our behavior is different. And I’m really pleased the way it all came out.
SHERMAN: Tom Rutledge, CEO of Charter Communications, maybe a surprising day that you’re joining us here, almost two years later after negotiations for this deal started. Thanks for joining us.
RUTLEDGE: Thank you.
Video for viewing here.
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