Time Warner Crunches the Numbers
Sharon Levy saw a cooking show about pizza recently and figured her mother would like to watch too. So she picked up the phone and told her mom to tune in to the Food Network.
But the two missed the segment because they spent so much time figuring out which channel on Levy’s cable system in Sherman Oaks corresponded to her mother’s in Hancock Park.
“She would say, ‘Where’s the Food channel?’ And I’d say 55,” Levy said. “But Channel 55 on her system is the History Channel. So we’d go through all the numbers until we found it.”
That sort of cable confusion is about to end across much of Southern California as Time Warner Cable today starts integrating systems formerly operated by Comcast Corp. and Adelphia Communications Corp.
Tops on the list: a consistent channel lineup. After the six-week rollout is complete, Animal Planet, for instance, will be on Channel 216 for Time Warner’s 1.9 million customers spread from Ventura to Newport Beach to Hemet.
The channel alignment and other major changes come as Time Warner becomes the first company to control such a large swath in Southern California -- the last major metropolitan area to have its fragmented cable market consolidated.
It began last summer, when Time Warner and Comcast bought out Adelphia and then swapped local franchise systems to give each other a bigger presence in their markets. Comcast pulled out of Southern California, and Time Warner left Northern California.
Locally, Time Warner wants to cut deep into satellite television’s biggest market and capture new customers before phone giants AT&T; Inc. and Verizon Communications Inc. roll out their own competing pay TV products.
“Verizon is going to spend a lot of money; there’s heavy marketing from Dish and DirecTV,” said Jerilyn Kessel, a Los Angeles strategic marketing consultant. “Time Warner needs to satisfy customers in what will be an increasingly competitive environment.”
Time Warner has been working to improve its customer service, which industry analysts say has been getting better. But satellite still leads all cable companies in TV customer satisfaction, according to surveys by J.D. Power & Associates.
Time Warner has deployed 1,200 new agents in five Southland call centers to handle complaints, service changes and other local customer issues. The channel changes alone will test those agents as people get disoriented and frustrated over the new lineup.
“We have to do this in stages because it’s going to generate a lot of customer calls,” said Jeffrey A. Hirsch, Time Warner’s Southern California president.
Time Warner does not expect that customers will lose any service as the company consolidates TV, Internet and phone operations of the three companies onto one platform, spokeswoman Patti Rockenwagner said.
“There’s nothing that we’re doing that we know would cause a temporary loss of any service,” she said.
An outage Monday prevented former Adelphia customers nationwide from getting e-mail on their Adelphia.net accounts for more than six hours, though they could otherwise surf the Internet and use other e-mail accounts, Rockenwagner said.
The outage was caused by an equipment failure in a former Adelphia office in Pennsylvania, she said. No former Comcast customers were affected.
Consolidating three systems is difficult, experts said.
“How long it takes Time Warner depends on the size of the market and the technologies involved,” said Bob Scherman, editor and publisher of Satellite Business News, a trade publication. “Can Time Warner continue to take advantage of the big territory while it’s trying to consolidate operations? That’s the question.”
Time Warner also is working to bring out uniform pricing, uniform high-speed Internet plans and uniform telephone service, as well as such free add-ons as caller ID on the TV screen and its proprietary “start over” service, which enables customers to restart any show they tune into late.
“We’re tailoring many of our products from what our customers tell us they want, not from what our competitors do,” Hirsch said. But he acknowledged that “competition forces us to innovate.”
Kessel, for one, is a skeptical customer.
“When I called four weeks ago, I still got the same Adelphia people in an Arizona call center,” she said.
“And my video on demand still doesn’t work.”
The stakes are high as satellite companies lure cable customers with promises of better pictures and lower prices. That migration has slowed somewhat in Los Angeles over the last year, according to statistics provided by research firm CentrisBridge.
“Geographic consolidation is providing benefits, but all the benefits are going to the operator, not the consumer,” Kessel said. Time Warner is saving money in combining networks and creating efficiencies, but prices aren’t falling, she said.
“We’re able to deliver what Time Warner can’t: all digital programming, all NFL games, more high-definition channels, a superior digital video recorder and the top company in customer service,” said Brad Bentley, DirecTV’s marketing director.
Even the much touted triple play of voice, video and high-speed Internet access doesn’t faze Bentley. Dish and DirecTV have agreements with the nation’s major phone companies to provide voice and Internet in a bundle -- at least until the phone companies can deliver pay TV themselves.
“This isn’t the first time we’ve been in a market when it was hit with one big cable provider,” Bentley said.
Verizon offers TV programming over newly installed fiber-optic lines in eight Southern California cities, including Ontario, Manhattan Beach and Hermosa Beach. AT&T; has yet to launch its TV service outside of San Antonio, where it is based, and Houston.
“Even where cable is taking away phone customers, we’ve been able to -- and will be able to -- win them back with our triple-play package,” Verizon spokesman Jonathan Davies said. “People really do recognize the difference between fiber and cable.”
More important, Kessel said, is to get more customers on digital TV service. It is the digital system that is needed to provide video on demand, high-definition TV, digital video recorders and the start-over service. Plus, digital services give cable companies the flexibility to counter offers from satellite.
“Cable has to hold on to the customers it has,” she said. “It’s much harder to get a lost customer back than to keep a customer. They need to close the floodgates, then get each customer to spend just a little bit more.”
(BEGIN TEXT OF INFOBOX)
Market share of Southland’s cable service before and after the merger
Time Warner: 75%
Source: The Companies