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Comcast’s Brian Roberts: Rising Programming Costs Fuel ‘Real Tension’ in Cable Biz

Comcast’s high industry perch as cable operator and major broadcast and cable programmer gives the company a unique perspective on the pressure points in the pay-TV arena. Comcast chairman-CEO Brian Roberts told a group of investors Tuesday that rising programming costs and contractual commitments to carry suites of channels are flashpoints that have to be addressed as operators adjust to consumer demands for smaller channel packages.

“I think you’re going to see real tension around (the question of) is that sustainable? Is that a product that is going to shrink?” Roberts said at the Morgan Stanley Technology, Media and Telecom conference in San Francisco. With Comcast’s ownership of NBCUniversal, “we’re going to be on both sides of that conversation” and hope to “help shape it in a way that is good for consumers.”

Comcast during its fourth-quarter earnings announcement last month warned Wall Street that its programming costs would be higher than usual in 2016 because of the timing of contractual increases. Costs have been growing at 7%-8% a year in recent years, he said, far faster than the rate of inflation. But some programmers are getting the message, he said. “In the pendulum swinging, there is a real awareness among the programmers that we’ve got to create alternatives for consumers,” Roberts said.

Nonetheless, Roberts was bullish on the bedrock cable business, noting Comcast’s run of subscriber growth in recent quarters.

“We have more video customers today than we did a year ago,” Roberts said. “That’s the first time we’ve been able to make that statement in over a decade.”

Roberts also cited Comcast’s focus on boosting the availability of its Xfinity authenticated streaming service. Only 35% of Comcast video customers use the service now; the goal is to raise it to 50% this year. And he talked up the potential of Comcast’s new voice-activated remote control, which have been distributed in 5 million households to date. He called Comcast’s fastest ramp-up of any product in its history.

Roberts said in the wake of the Time Warner Cable merger getting squashed, he doesn’t see any transformative transactions on the horizon for Comcast in the near term.

“I don’t envision any great activity that would require a whole other conversation about us (among regulators),” Roberts said. “We’re trying to execute this year with the momentum we’ve got.”

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