Skip to main content

The cost of sports programming on cable "appears to be out of control," the chief of Time Warner's (TWX) cable TV systems said Tuesday.

Time Warner Cable CEO Glenn Britt also said that the company was exploring the practice of "tiering" high-speed Internet service, or offering different levels of service for different prices. While the company has always envisioned that it would someday start tiering, he said, "We're coming to that day quickly."

Meanwhile, Britt and


(CMCSA) - Get Comcast Corporation Class A Report

Treasurer John Alchin, speaking separately at a New York investment conference Tuesday, each discussed promising operational results from their respective companies' introduction of advanced digital services.

Britt's comments about sports programming mark an exception to the recent practice of most major cable TV operators to stay mum on the subject of sports programming costs.



CEO Jim Robbins has publicly attacked


TheStreet Recommends

(DIS) - Get Walt Disney Company Report

subsidiary ESPN over rising fees. But other major operators, including Comcast, have declined to join the public fray.

Time Warner is the nation's second-largest operator of cable systems, after Comcast.

Britt said that though he didn't like the idea of making subscribers pay extra to receive sports programming that's usually included in basic cable packages, cable operators might be forced to take that tack because sports teams and programmers don't seem to have any mechanism in place for putting a lid on sports costs.

Britt's comments on tiering are notable since tiering of broadband service has been interpreted by investors as a sign of price erosion, though Britt said he expected tiering's impact on revenue to be "very modest."

Britt and Alchin, who both spoke at the Credit Suisse First Boston Media & Telecom Week conference, both spent most of their respective presentations discussing the promise of advanced services, such as digital video recorders and telephony, which the industry expects will grow even as capital expenditures decline.

With basic cable subscriptions proceeding slowly, operators have bet on these new services to fuel their growth. Time Warner, for example, announced Monday that it would make a major push in offering telephone service to cable customers using a technology known as voice over Internet protocol, or VoIP.

Britt, who promised accelerating growth in 2004 cable operating income before depreciation and amortization, used the example of Time Warner's systems in New York to illustrate the increase in average revenue per subscriber from growing digital video penetration. On a recent Saturday afternoon, there was a two-hour wait outside the company's customer service center in Manhattan as customers lined up for the new boxes.

Alchin said that by the end of 2004, Comcast hopes to have video-on-demand available in 80% of customers' households, high-definition television in more than 90%, and DVRs in 100%.

In the Philadelphia market, where Comcast already has had a big rollout of VOD -- which enables customers to select programming from a central system library, then pause, fast-forward and rewind shows as if they were playing on a household VCR -- 45% of digital video customers use VOD each month.

In a northern Virginia market where Comcast offers DVRs, 46% of customers with DVRs also use VOD -- indicating that the two interactive TV technologies are complementary, said Alchin, not mutually exclusive. Of the customers with DVRs in that market, about 95% of them use the DVR on an ongoing basis, he said.