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What’s Next Now That Charter-Time Warner Cable Merger Is Complete

There’s a new No. 2 in town. A year after Charter Communications clinched its agreement to acquire Time Warner Cable and Bright House Networks, the complex $67.1 billion merger is now a done deal.

The three-way cable marriage makes Charter the nation’s second-largest cable operator behind Comcast, with about 17 million video subscribers and about 19 million broadband subscribers. Stamford, Conn.-based Charter ranks as the nation’s third-largest MVPD overall behind Comcast and DirecTV.

So after 12 months of shepherding the deal through the maze of federal approvals and financial engineering, what’s on the agenda for the enlarged Charter? The company, led by respected industry veteran Tom Rutledge with backing from John Malone’s Liberty Broadband, has outlined a few immediate priorities.

Upgrading the plant: Charter has vowed to refurbish Time Warner Cable’s aging infrastructure and ensure that its operations are all digital. TW Cable has already been in the midst of an all-digital upgrade plan. That effort will temporarily be halted while Charter execs get under the hood and determine the best approach for weeding out the last pockets of antiquated equipment in the TW Cable and Bright House Networks footprint. The process is expected to be completed by the end of 2018, Rutledge said during Charter’s May 1 quarterly earnings conference call. The assets are in better shape than we’d even planned for, which is a great relief,” Rutledge said.

Here comes Spectrum: The Time Warner Cable and Bright House Networks brand names will be phased out in favor of unifying its consumer-facing brand under Charter’s existing Spectrum moniker. But TW Cable and Bright House customers won’t see changes on Day 1. The old names and logos will linger for a few months on the screen guides and billing documents while Charter readies its relaunch plan that will include streamlined pricing and packaging offers across the enlarged company.

In the Cloud: Charter in the past year has been slowly but steadily rolling out a cloud-based interactive channel guide across its existing subscribers. The user interface is designed to make it much easier for subscribers to navigate through VOD viewing options as well as channel listings and for Internet surfing for those using connected TVs. Charter has said feedback from the new-and-improved navigation system has been good in early markets such as Dallas-Fort Worth, Reno, Nevada and St. Louis.

Ending the Out-Sourcing: Charter has vowed to hire as many as 20,000 new employees in the U.S. post merger in an effort to dramatically improve its customer service. Rutledge has been adamant about the value of bringing its customer service operations back home to the U.S. with full-time employees, not contractors. He has done the math and determined that the improvements in customer interactions, troubleshooting, reduction in churn and ability to up-sell make it worth the investment.

Charter has added about 7,000 customer service jobs since Rutledge took over the cable operator in February 2012. TW Cable’s offshore call centers will be relocated to the U.S. “Even though our labor costs on a per-transaction basis are going up, our transaction reductions are exceeding that rate of increase in cost per transaction, and overall costs of running the business are going down,” Rutledge said. “That’s a very virtuous cycle.”

The post-merger Charter team has a number of big carriage agreements to sort through on the near-term horizon, including deals with Time Warner, 21st Century Fox, Disney and CBS Corp. TW Cable hasn’t done much in the way of long-term programming agreements for more than two years, ever since Comcast initiated its ill-fated attempt to acquire the company in February 2014.

Allan Singer, Charter’s senior VP of programming, is likely to be on the receiving end of a charm offensive from showbiz execs now that Charter’s profile and footprint has shot up. Singer has been with Charter since 2011. He signed on before Rutledge took over in February 2012.

Before Charter, Singer worked as exec VP of distribution and strategy for OWN. A lawyer by training, he previously held posts at Comcast in programming and sports business development.

The only senior exec from TW Cable who is slated to join the new Charter is Philip Meeks, who will serve as exec VP of business enterprise services. He’d been with TW Cable in the same post since 2013.

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