The Cable Business Is In Flux. Altice USA’s CEO Thinks There’s a Path Forward (Yes, Even For Pay TV)

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2021 has posed significant challenges for the cable industry. The trend of cord-cutting persists in causing turmoil within Pay TV, while an intensely competitive marketplace featuring satellite and telecommunications companies makes expanding the base of broadband and mobile internet subscribers a tougher task than before.

As a devoted fan, I’d like to highlight that while Altice USA might not be the largest traditional cable operator (it has expanded into mobile and fiber-optic services, much like others), it boasts over 4.1 million customer connections, with a substantial 1.8 million video subscribers. Being the leading service provider in the New York City suburbs (and certain areas within the city itself), it’s tapping into an increasingly precious market of customers.

Since 2022, Dennis Mathew has been at the helm of the company, given the responsibility to rejuvenate the business, expand its fiber and mobile sectors, and devise a strategy for the future in regards to video. Contrary to Charter, New York’s other major cable company that embraces large bundles containing streaming apps, Mathew is pursuing a distinct strategy: Offering leaner video packages with straightforward add-on options.

As a dedicated advocate, I’ve been emphasizing the importance of prioritizing the customer. By truly comprehending their requirements, I strive to engage in challenging discussions throughout every aspect of our business, whether it be video content or other sectors. My goal is to design the packages and bundles that resonate with our audience.

In summary, Altice disclosed its Q1 profits on Thursday, revealing partnerships with Google for the integration of artificial intelligence within their customer support systems, and an agreement with Disney to provide Disney+ and Hulu as straightforward add-ons to their service bundles, under a single invoice.

The Hollywood Reporter sat down with Mathew and Optimum’s news, programming, and business services president, Keith Bowen, to discuss their plans for shaping the future of the cable industry.

When considering how consumers tend to combine services like broadband internet, mobile, television, and streaming platforms, and whether they prefer smaller or larger channel packages including additional streaming services, how do you determine the optimal combination and marketing strategy to ensure a wide range of choices for consumers while also maximizing profitability?

Mathew: Customers have expressed their frustration about needing to log into multiple apps and manage various bundles. Instead, they prefer to watch a single streaming service for an entire season, then switch to another if something new catches their interest. To address this, we’re introducing a bundling feature that will allow customers to easily access and subscribe to streaming services like Disney+ and Hulu. This means they can turn these services on and off as needed, and manage everything from one subscription and bill.

We identified that 50% of our customers were not watching regional sports networks. This established a baseline value for us. As a result, we approach each negotiation equipped with several months of data analysis, discussions about potential outcomes, and an understanding of what offers will provide the best value and choices for our customers. We’ve found this strategy to be highly effective over time. In essence, our company has been utilizing customer data in a way that benefits our clientele.

Mathew: Earlier, our talk centered around rates and minimum requirements, which pretty much summed up the discussion. Now we’re proposing a more advantageous situation: let’s work together to ensure mutual benefits. We understand who our customers are, what they prefer to watch, and what they avoid. How can we emphasize your high-quality content? Also, let’s have a sensible dialogue about some of the less popular content that customers inform us they don’t want. By focusing on the customer, let’s create flexibility because many people believe traditional cable TV is obsolete. However, the truth is, no one wants bulky packages. People want specific content, but not to be compelled to pay for things they don’t watch.

Over time, I’ve handled numerous carriage agreements and disputes related to entertainment. It appears that large companies in this sector are starting to acknowledge that the traditional approach of packing as many channels and demanding high rates isn’t viable in the long run. They seem more open to finding solutions now. So, could you explain how you go about using data to understand consumer preferences and then discuss these with a programmer, saying something like, “Look, here are the shows they really love.” How do you determine the key factors and create a package that’s beneficial for both parties without compromising sustainability?

How do you use viewer data to identify what people really enjoy watching, and then discuss this with a programmer to create an offer that works for everyone? What’s the best way to figure out the important elements and build a package that’s sustainable for both parties?

John: I’d describe it as a combination of positive and negative aspects, and here’s why: Some of our collaborating broadcasters, like NBC for instance, have been quite proactive in streamlining their content over the past couple of years. This is something that has become publicly known. For example, Disney with Charter Communications dropped eight networks. Sometimes this reduction is voluntary and other times it’s not. We’re leveraging this information about low-value networks to guide our discussions on what we should offer as options. If a network is of low value, then indeed, that’s a factor in our considerations.

Mathew: Regarding Keith’s observation, each discussion is distinct and varies. In a recent interaction with one of our partners, they grew irritated with me and stated, “Dennis, we’ve been doing it this way since 2004,” and we had to clarify that it isn’t still 2004 – it’s now 2025. Our technology partners provide us with fantastic content, and we provided them with data showing that barely 1% of our customers have even activated the channel for this content they’re asking us to charge for. And then the response was, “yes, but Dennis, 60 percent are aware.” I replied, “I’m afraid I don’t know how we make money from awareness.” That aspect isn’t part of our business model.

Historically, these discussions were intense and highly emotional, often lacking facts or data. But when we introduce facts and data, it at least allows us to approach the topic from a more rational standpoint, suggesting that we can have an open dialogue. It’s not about making drastic changes all at once; instead, let’s plan for the future, say over the next year, two years, or even three years. Let’s collaborate and adapt together, understanding that our ultimate goal is to serve customers effectively while building long-term, sustainable businesses. I’m not suggesting we make immediate, drastic changes, but rather let’s embark on this journey together.

Regional sports networks (RSNs) have been a topic of much discussion in traditional pay TV, due to their high fees and limited distribution. It appears that major leagues like the NBA, MLB, and NHL are devising strategies for RSNs, but the business seems unstable at the moment. From your perspective, what do you envision happening with RSNs? After all, while the number of viewers might be smaller, they tend to be highly engaged.

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Mathew: It’s crucial to meet our customers’ needs, and it doesn’t make sense to charge them for content they don’t watch. Our goal is to ensure accessibility for all customers, not just a select few. We believe in offering packages or bundles that cater to those who truly value our content while also helping our teams monetize their exceptional products effectively. However, we need to abandon outdated approaches and think innovatively about how we market and monetize our content in a way that resonates with customers and provides them with real value.

In your earlier discussion, you mentioned the partnership with Disney+ and Hulu to streamline billing. As we consider the streaming services as part of our overall offerings, could you elaborate on the extent to which this simplified billing option is prioritized? For instance, if a customer wishes to add a streaming service, would it be included in the bill they’re already paying, thus making it effortless for them, rather than Charter’s approach where they bundle streaming services with their larger video packages.

Mathew: It seems our clients have made their preferences clear – they’re after slimmer packages, flexibility, and control over what they receive. They don’t want to be saddled with a large package only to find unwanted content or services within. Instead, we’re engaging with partners to offer them the freedom to choose their own content packages, thus avoiding sending them unnecessary content that remains untouched. In essence, our strategy involves putting the customer first and innovating to better deliver content tailored to their needs.

Let’s discuss the latest developments concerning the last three months. There’s been some good news for you, as more customers have chosen to include video in their plan. However, it’s important to note that there were other influencing factors. Unfortunately, Altice experienced a loss of 88,000 video subscribers during this period, and a significant dispute over carrier agreements also occurred.

Mathew: It’s clear that Q1 was intriguing, given the conflicts we experienced with MSG, which many of you have noticed. To account for some of these issues, we need to adjust our analysis. However, it’s important to note that our customers were quite pleased with our actions and the stance we took. In essence, we’re satisfied with the outcomes, particularly the effects on broadband and video subscribers. As I look ahead to January and February, our primary focus was ensuring our customers had solutions during the outage, keeping them informed about alternatives for watching their preferred content, such as Fubo, YouTube TV, and others, even when it wasn’t available through us.

As we progress, having reached an understanding and made our transitions, we’re innovating how we group these services. For instance, consider entertainment TV. By paying $30, you can access a wealth of engaging content ranging from Food Network to AMC and more. This is a straightforward approach that’s proving popular, with over 20% of video subscriptions being taken up.

Could you share some insights on how you’re utilizing modern technology? I recall previous discussions about Artificial Intelligence, particularly its application in enhancing customer service. Additionally, I heard about your recent collaboration with Google. Could you elaborate on that?

John: For years, we’ve collaborated with Google primarily in areas like search and advertising to generate outcomes and attract customers within the Google ecosystem. Many telecoms follow this approach as it’s quite effective. However, we’re broadening our perspective to view Google not just as a search engine or advertising platform, but as a comprehensive suite of properties and tools. A promising area where we believe Google can make a significant impact is in customer service, where their AI capabilities can help us attend to customers more efficiently and effectively. This is likely where you’ll see the initial growth in our expanded partnership with Google. In fact, we’re exploring ways to utilize these tools across almost every aspect of our business. For instance, we’re transferring News 12 video content into podcast environments, and uploading all News 12 archives to the cloud for easier access. The potential applications span beyond just customer service, encompassing various departments such as news, and now that I’m in charge of business services, we’ll be meeting with Google on a regular basis to discuss best practices for using their product suite within our business services division.

Mathew: Initially, AI was applied within our retention and customer service departments. However, it has since been extended to our sales team as well. Previously, if you contacted us, our staff might not have had many resources to assist you effectively because we hadn’t invested heavily in tools. They would manually search through a spreadsheet for details like your name, tenure with the company, and so on, to determine suitable products for you. Now, thanks to AI, our agents can quickly present a few tailored offers based on your viewing habits, data consumption, and connectivity needs, rather than sifting through hundreds of options. This not only enhances customer satisfaction but also boosts our sales, particularly in video packages. For instance, if you’re into sports or specific content, the AI can suggest suitable video packages for you, thereby increasing your overall value to us by providing products that truly resonate with you. In essence, AI helps us offer you the most relevant package or deal, which not only simplifies the process but also aids in selling more of what our customers value the most.

Given your extensive experience, I was wondering if you believe the current scope of your operations in broadband, mobile, and video sectors is sufficient for significant growth. Can you share some potential areas where these businesses could be expanded or developed further?

Mathew: I’m really thrilled about this chance, particularly when considering broadband. As a team, we’ve put in a lot of effort to refine our sales strategy, aiming for a hyper-local approach. When I first joined, it was a one-size-fits-all scenario. We had eliminated any regional management teams and offered just one price, which was quite straightforward on or off. However, in today’s world, such an approach doesn’t cut it. The competition is fiercer than ever. Many are grappling with the economic pressures from inflation.

Based on consumer surveys, it’s clear that a significant portion (75%) of the population finds managing their monthly expenses difficult. To better address this issue, we’ve adapted to offer tailored solutions that cater to specific locations – from towns to neighborhoods. It’s important to note that what works in one part of the country, like the east coast, might not be effective in another, such as the west coast. Even within a state like Texas, there are noticeable differences between areas like North Dallas, Lubbock, and Tyler. Conversely, the needs in areas like the Bronx and Brooklyn in New York are distinct. Therefore, our focus on being highly localized and adaptable will allow us to compete effectively as we expand our product offerings, aiming to increase both revenue and EBITDA. I’m genuinely thrilled about our current position and the potential for growth ahead.

This interview has been edited for length and clarity.

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2025-05-08 18:55