After that, derek wall bank of bloomberg looks at a future trade legislation. Your phone calls, facebook comments, and tweets. Washington journal live at 7 a. M. Eastern on cspan. My city in a tin can far above the world planet earth there is nothing left to do sunday night on cspan q a a veteran astronaut produced many activities on the International Space station as your scientific and personal aspects of life in space. The only time i for a shiver of fear go up my back was on the dark side of the earth looking at one side of eastern australia in the darkness and watching a shooting star come in between me and the earth. At first i have the standard reaction of wishing upon a star, but then i had the sobering realization that was a huge rock from the universe going who knows . It missed us. If it hit us, it was a big enough one you could see it. Sunday night at it 00 eastern and pacific on cspan q a. Leaders from the cable and Telecommunications Industries recently gathered for the annual cable show, now called the internet and television expo. The fcc chair tom wheeler spoke about his agencys recent adoption of open internet rules and why Internet Service providers should be regulated. This is an hour and a half. The threeday event was held in chicago. This is about an hour in 25 minutes. Thank you. Its great to be here at the wait a minute. Its good to be here at ints, the internet and television expo. You know, cable isnt in the title of the show anymore. I heard the Michael Powell now said that cable is a dirty word. I remember when the show was very creatively named Something Like catv77 or things like this, and in some young whippersnapper nothing ever happens without barbara york changed the name to the cable show, and now you have moved on from that. Congratulations on once again reimagining and reimaging this industry and this gathering. Reflecting back on the days of catv, and forward to the broadband era, is to trace an amazing path from Community Television to the expansion of television, and now beyond to broadband. You deserve congratulations for what you achieved as cable companies, as video companies, and as network builders. You also deserve Straight Talk about what it means now that you are first and foremost broadband companies. You have pledged as an industry to assure that the internet remains open and free. In that goal, we are in violent agreement. We do differ on what that means. We part company, according to your recently filed motion papers, over the socalled internet conduct standard, the requirement that Internet Service providers not engage in conduct that impairs an open and free internet. And goes beyond the obvious bright line rules of blocking, throttling, and paid prioritization. The internet conduct standard is the Going Forward rule. Often people say to me, tom, i know that you wont do anything crazy in this internet conduct standard. But what about those people that follow you . My response is, i take you at your word. That you will protect an open internet. But what about those people that follow you . The purpose of the Internet Order is not to create an Obstacle Course to test the ingenuity of isps and how they structure certain activities. It is rather to address broad outcomes, not just the bright line rules of blocking throttling, had paid prioritization. The purpose of the general conduct standard is to address effects that are antithetical to the concept of openness. Namely, to not unreasonably interfere with or disadvantage access to the public internet. So too with the application of title ii to interconnection arrangements. On june 12, when this order goes into effect, there will be in effect strong protections to shield against harm to an open internet. And from that point on, we cannot go backwards. Now, beyond the open internet, i want to celebrate today the two great accomplishments of this industry, accomplishments that run from your roots to today and one great new challenge created by your revolution be on Cable Television to become the nations dominant broadband provider. Part one of the story begins with the primary business of Cable Systems when it was video. Cable was an investor in infrastructure, a fierce competitor, and an innovator. The first accomplishment of that era was the coaxial wiring of america. It is something that took an enormous effort by what began as a remarkably entrepreneurial but also fragmented industry. It required a tremendous amount of Civil Engineering and a tremendous amount of ingenuity to me the extraordinarily diverse circumstances of our farflung nation. And it was accomplished against the determined opposition of a telephone industry that recognized from the very beginning the threat inherent in the second wire into the home and office. And it was accomplished despite legal constraints from the industrys offerings that were downright hostile. Is everybody in this audience knows, the investment that set the foundation for todays industry was undertaken for purposes that have almost nothing to do with what the industry has become. What began as a coaxial cable network, designed to retransmit distant broadcast television signals, has become literally an essential part of our countrys infrastructure. The metamorphosis began when sport engineers recognize that fiber and Coaxial Networks could become by to produce very high speed transmissions. It has become the enabler of one of the most transformative developments in human history. In the process, it is also provided an illustration of the challenges of the challenge, of the challenge and response nature of competition. This is a theme i have tried to focus on during my time at the fcc. For every challenge, there is always a response. Two decades ago, as the cable industry began to expand its broadband capabilities, the telephone industry responded by unleashing dsl, a technology that had long existed but had not been deployed in american homes. Both cable and telco customers benefited, and both businesses flourished. The resulting telephone and cable competitions helped bring us to where we are today. Vastly better transmission speeds, and an unimaginably larger and more vibrant internet ecosystem. The second great accomplishment of your industry was the expansion of programming that you and to be fair, the dbs industry, that your Distribution Network facilitated. The great increase in programming is a reflection of an effect that your industrys Entrepreneurial Energy and investment have had on the broader ecosystem. Good Distribution Systems do that sort of thing. They invigorate new uses. Todays viewers may not be fully conscious of it, but the increase in the quantity and quality of programming according to professor david waterman, the most astounding chapter in the history of television. That story can be told in a quantitative fashion as well. The number of Cable Tv Networks has grown from a handful in the mid1970s to over 900 today. The fcc itself stopped counting at 565 in our annual video competition report for 2006. In investment terms, Cable Networks spent only about 250 Million Dollars on programming in 1983. 30 years later, that figure exploded over 26 billion. More than twice the spending of all the National Broadcast networks combined. The result is in a normas enormous inventory of programming. That expansion of programming is seen and heard in shows that push the boundaries of creativity. It also greatly expanded sports programming. We remember when it was the game of the week, and that is all you could see. Now you can watch the Ohio State Buckeyes every week all the way to the national championship. You knew i would get ohio state in here somewhere. If some say this is truly the golden age of television. It is you that made this possible. Like your entry into Internet Access in the 1990s, the creation of so many programming possibilities in this century spurred others to respond, including new and potential competitors who use your broadband pathways to deliver video to their customers. Last year at this gathering i said you had become more than about video. That you had become broadband, and your new business had become and would be going forth broadband. Thats true. Last year the cable industry hit a critical Tipping Point. In 2014 and for the first time the number of cable broadband subscribers exceeded cabletv subscribers. The trend has continued. You have wisely changed the name of the cable show to emphasize the internet. There is a more profound name change going on. You are no longer the cable industry as Michael Powell said yesterday. You are the leading association of leading broadband providers. It is something to celebrate. The recent decision of comcast and time warner to abandon their proposed merger has relevance to this point. Brian roberts leadership and his poignant statement that it is time to move on was not only a thoughtful response, but it was also directionally correct. It is time to look forwards, not backwards. The department of justice reached the conclusion that this proposed transaction would not be in the public interest. It is important to understand that the Tipping Point from cable to broadband came while this transaction was under review. We recognize the industry had changed, and we saw concrete evidence of the new competition and Business Models made possible by highspeed Internet Access. In other words, we recognize that broadband had to be at the center of our analysis, and that video was an application that flows over networks, and that could be supplied both by the owners of facilities and by competitors that use of broadband pathways to compete against the owners of those broadband pathways. This shift has implications far beyond this transaction for the industry at large. When i appeared before you in the Second Quarter of last year at the moment when this Tipping Point was actually happening made happening happening, i made two points. First, i said that we have to assure the openness of Broadband Networks and the internet for all lawful uses. Im living up to my commitment at that time. You can be assured that i will raise this issue every time i am invited to address and an cta address an ncta conference. It is to engage an unusual situation. The only way to maintain that situation is to uphold your responsibilities. Now your principal business is broadband. The service you offer is critically important to all americans. From getting and keeping a job to staying in touch with family and friends, accessing entertainment, engaging in government, not to mention doing schoolwork if you are a student, and countless other applications. And the broader ecosystem you help support is extremely important to the creation of american innovation, the growth of the american economy. No as you have changed, so have the issues and the obligations and the opportunities. This is the key challenge for your industry. First, to continue to invest and innovate so that the United States has firstclass rock band transmission broadband transmission. Second, to live up to the commitments you have made in the open internet debate to avoid discriminatory acts that will impair the value of broadband, and affect the internet for those who make use of its manifold possibilities. There are some factors that can complicate meeting these obligations. We dont have a lot of competition. Especially at higher speeds that are increasingly important to the consumer of online video. A fully competitive marketplace would bring with it intense and constant pressure, pressure to improve just as it did in the days of cable dsl competition. More competition would be better. And that is why we granted the preemption petitions filed by two communities that wish to expand their Gigabit Networks in the surrounding areas, including those where people had no broadband at all. Now i recognize the challenges of overbuilding. To encourage it is not to assume its immediate appearance. And while i know that it is an anathema to your geographically defined way of looking at the industry, i believe as some in the industry have already demonstrated that it can also be an opportunity. Let me tell you a story. Many years ago, at ncta when we were trying to grow out of the catv is less, we passed out little lucite paper with papers in which were embedded small, dried flowers. And imprinted on those paperweights in gold capital letters was, plant a flower in the vast wasteland. By bringing competitive alternatives to television viewers, this industry did just that and the video business was changed forever. Then your industry went on to upgrade, to compete with the telcos and dominate broadband. Now the question is whether consumers will have competitive alternatives for broadband. To harken back to what you did before, will you now plant a flower in the competitive broadband desert . I know the only rationale for such an investment is to generate economic return. That is why in the open Internet Order we constructed it so as to put broadband providers in a situation where they could profit from the value of their investments free from any limiting rate regulation. History proves that absent competition, a predominant position in the market such as yours creates economic incentives to use those use that market power to protect her traditional business in a way that is ultimately harmful to consumers. This was chairman powells message in his well celebrated silicon flat iron speech, in which he identified four internet freedoms that were essential for the industry to preserve. This was a recognition repeated often since and most recently in the open Internet Order that it is not just useful, but necessary to ascribe rights to the users of the internet Distribution System visavis the owners and operators of the system. Your challenge will be to overcome the temp tatian to use your predominant position and broadband to protect your traditional cable business. The internet will disrupt your existing business model. I know im not telling you anything you dont know, and you know you can take that to the bank. Because it has done that to everyone. My thought today is that you have disrupted your business twice before on the path from catv to cable programmers to broadband. Those who stay on top are the ones who embrace change. In ways large and small, the fcc has done and continues to do what it can to encourage your industry to meet its broadband related challenges and responsibilities. Large measures include the open Internet Orders freedom to secure a return on your investments, while also prohibiting actions that would harm the open internet. The open internet requirements are intended to safeguard the internets dynamism by assuring what your companies that pledged that the internet will remain open and free. The commission has its work to do to clear obstacles to competition. We will proceed to consider whether to adopt a technologically neutral definition of a Multichannel Program to stricter distributor, and to be candid, i favor a technological neutral definition that includes internetbased companies that choose Business Models that fit in this status. New obligations from congress are also focused on competition. An Advisory Committee is working hard to deliver a report by september on the critical question of security that promotes commercial availability of devices. We must begin a rulemaking to review how to apply the totality of the circumstances test to assess where the retransmission consent negotiations are being conducted in good faith. On these issues, we will seek your comment. We are committed to empowering competition. And one more important thing that has come into focus following are open Internet Order, i intend to ensure that you do not confront excessive rates for pole attachments. Today the Wireline Competition Bureau is issuing a short Public Notice calling for comment on the pending ncta petition for reconsideration seeking to clarify the commissions intent reforms for pole attachments. Once the record is refreshed, my expectation it is that a recommendation will be made to the full commission to take any action that it can to further align cable and telecommunications rates. I know this industry, and this association do not support the recent open Internet Order. As i have made plain hopefully throughout this presentation today, i believe the rules we have crafted provide what is needed to enable an economic return that will justify new investment and secure an open internet. But i also believe that we can note where we agree and not only where we disagree. This year Michael Powell told congress that, quote, cable broadband providers are unequivocally committed to building and maintaining an open internet experience. We welcome that pledge. Maintaining, improving, and protecting the broadband Transmission System is the right thing to do. America depends on it. Thank you very much. [applause] ladies and gentlemen, please welcome the moderator for this mornings first panel. Media and entertainment reporter for cnbc, julia boorstin. First, james dolan. Next, the president of cox communications, pat esser. The president and ceo of liberty global, michael freed michael fries. The chairman and ceo of time warner cable, rob marcus. And the president and ceo of charter communications, tom rutledge. I want to thank you all for joining us or this morning. And on the heels of chairman wheelers comments, i would like to have your react to them. First, we have to address the elephant in the room. I think you guys maybe can work out some deals in the next half an hour. Anything you want to discuss . Tom where is brian . Seriously, and a day m and a, what is the next by thing . Tom we are poised for time warner now and we are not going to comment any further on m a. Tom the world is full of possibilities, but i cant tell you. [laughter] you have something to say. I would like to see us move on to consolidation of markets. Rather than paying attention to the entire country or just individual operators. The one market i know best, new york, which we share, i think consolidation of that marketplace would provide a great deal of an and much more access to resources for the customer and lower prices. I think it would be a great business. Im not sure if i got asked that on a date or to get married. [laughter] i think i am proposing economy in. [laughter] host what are you proposing . [laughter] what i think is that, for instance in new york, if new york was one market, if new york was operated like one market you would see things like wifi distributed throughout the entire marketplace. And that very Important Technology would become ubiquitous through the entire marketplace. The be quick the ubiquity of how customers react in that marketplace provides a lot of efficiency and there would be a lot of opportunity for innovation. Host what would that look like . You compete a lot with verizon fires. No. New york is one marketplace. If you look at marketplaces, los angeles, chicago, etc. If they operated as one operation, there is a lot more we could do. Host what do you think, tom . Tom i agree. The deal that we had that did not work had a lot of trade swaps and a logical putting together of assets so you could get the scale, even at the local level that you need to be a Quality Service provider and to rollout products in a way that are efficient and innovative. The industry is still in a state because of the way it grew up, have a lots of tv marketplaces where the efficiency of the platform isnt being fully realized. That is true throughout the country. There are scale opportunities all throughout the business that are not being realized. Host where do you fill in on all of this. Pat i feel like i am on match. Com. [laughter] we are all trying to update our relationship status right now in front of 10,000 people. I dont think anybody is going to speculate upon what we are going to do on a stage in front of a lot of people. At cox enterprises, if we believe in the space, we have consistently made acquisitions did the right thing for the business longterm. We are very committed to it. I agree with the concept that there are scale and benefits for consumers if we fit the markets like pieces of a puzzle in the industry. Michael i am baffled by the chairmans remarks. And im baffled because he does not regulate my business. [laughter] i am very curious. On the one hand, he says the true consolidation, true scale innovation of programming as a close network, yet there is a presumption of guilt and a punishment of success that this industry has achieved that i have never witnessed before in my life. [laughter] for years, i asked european regulators and European Business folks to look at the u. S. Market for guidance. That is not happening today. European regulators are also baffled by what is happening here. On the issue of scale, i will tell you that we are able to achieve that in a country like holland, which is only 7 million homes. We can own those homes, and and, and regulators end to end and regulators see that. And we do not have assume some action that may be harmful, but just in case we are going to do these things. It is terrible regulation. Host do you think there are lessons to be learned in the u. S. From the way European Regulation has been handled . Michael what european realtors have focused on is infrastructure competition, a light touch, and have not arbitrarily identified as identified broadband as we five makes. There is a number of things that the u. S. Market could have learned. Is it too late . I dont know and that is not my game here. You guys will find out. But we are happy to be abroad. Lets put it that way. [laughter] host icu knotting. I see you nodding. Tom we still are a video business, broadband business. We are a Communication Service provider. When we started building our net worth with fiber optics, we were not building them to build brand but broadband. We were doing it to build telephone. What people call the broadband market today, 15 years from now will be a different kind of product set. And what we call ourselves will be different. And the way we describe our products will be different. But our networks and the capability of the Digital Infrastructure that we have and our ability to provide Quality Service is where the opportunity is. I find these artificial distinctions interesting academically. But they are not what i think about from a marketplace perspective. Host rob, it looks like you have worked hard to grow video subscriber numbers. Rob i want to comment on one of the thing. Unlike my, i have a business that is related by the chairman. I feel like we operate in a different environment than he seems to live in and in my world, broadband is incredible competitive. I think the competition has in fact fueled a tremendous amount of investment on our part. And it is investment that we continue to make day in and day out to make our broadband product better. So i wonder what the problem really is. We are making broadband more and more capable. That is reflective of the success of the environment in which we work. Michael the cable industry here are any aware in the world that does not embrace the platform is crazy. Tv everywhere is at a Tipping Point. The fact that i can watch my extremity go xfinity go app anywhere in the world, if that is not a Distribution Platform for video, i dont know what is. I agree with you. I dont think that is an accurate refection of what is happening here. Rob so let me get to your question. We embrace overthetop video. We think it is a fantastic application of the broadband capability we deliver. We welcome and we try to facilitate great experiences for our customers on that front. We long ago abandoned focusing on individual products as opposed to Customer Relationships. We are committed to growing Customer Relationships. We want to sell as many customers as many products as we can. We want to expand the breadth of our Customer Base and sell them as many things as we can and that may not all happen at the same time. A Broadband Customer today may be a triple play customer tomorrow. Similarly, a video customer today may be a triple play customer tomorrow. Of course, every individual one is important. We are very proud of the fact that we grew video customers escorted. Post before we talk about overthetop host before we talk about overthetop, i want to get some reactions to wheelers comments. How problematic do you think title ii is to your business . Pat our industry has industry has illustrated that we are dedicated to the principles of that. We dont block sites. We are not choosing which bit comes to your home. We have been demonstrating that since 1997, 18 years. Title ii is different. It is taking a business that is heavily funded 23 billion we have invested in our Network Since 1997. And we are taking all of this investment and all of this risk and the rules get changed. While we are totally expose and continuing to invest in our network am all of a sudden the rules get changed. The rules were written in 1932 apply to a business in 1930 two apply to a business. We have only seen early signs that, within weeks after title ii coming out of the fcc, we are already seeing fees go up. We see a new classification of taxes. By legal costs are going up. The legal structure we have to put in place for all the legal filings and complaints they go through this process. And my customer pays for that. I just dont think it is needed. It is unnecessary. Common gain was a president ial candidate. Herman cain was on the air the other day. He says there are three things you know about our government. If it doesnt move, they will funded, sustain it, create programs to support it. If it moves, they will tax it. And if it moves too fast, they will regulate it. I feel like we created this American Dream [applause] i agree. And somewhere we got out of sync with the regulators. And weve got a find a more balance. Jim i agree with what pat is saying. For cablevision, we are in a very competitive marketplace. I dont see any of these regulations affecting us much at all. The competition is what regulate our markets. He did say the competition is what was important. One of the things i thought i heard the chairman say is something akin to governmentsubsidized competition. Which i think is very dangerous. Host one thing you have been focused on his aside idea disrupting the traditional tv bundle. It seems like you are embracing cord cutting with some of your new offerings. Jim we are embracing the customer. We did on accounting study and we attempted to associate all of the direct indirect eggs expenses with our products. We found that broadband outperforms video by 71. For every dollar profit in making video, i am making seven dollars in profit in broadband. And we see the customer is wanting more and more broadband and wanting better and better conductivity. They wanted in their homes. They wanted outside of their homes. They dont want to wait. And if it breaks, they want service immediately and fixed the first time. Those are the things we are focusing on. To the extent that there are ways of consuming content that are better for customers. We have to embrace that. Our business depends on enabling customers to get what they want, when they want it and how they want it. I think those of us who embrace it will be the one who is suck see. Host the question is what does the future look like . We have tv doing the news. You have glenn package. And then you have verizon. So im sort of curious where you see the future going in terms of the over the top packages. Youre bundling hbo with broadband and hulu with broadband. Youre the only one doing that. So im curious what youre doing with the bundles and if you consider these over the top cord cutter bundles. Tom, what do you think . Tom there have always been bundles. Before television available you know before the kids come back from college or work for economic reasons, personal reasons that has always been going on. And theyve tried to get different packages together to satisfy people mostly income related with Television Service and if you sell products to people that isnt what they expect in terms of the full access to the services in their mind they think that are cable they dont stick very much. People come out of them. The more variety in package functionality that you can provide in individuals the better off you are as a company. Peoples needs change with time. Whats going on now you have some products that are coming direct. Some products that are coming in packages. You can mix and match those together and satisfy the customers. People who buy hbo people who buy showtime. Some people dont. In fact the majority dont. People have always had a choice in what they be in the subscription package. How we put that together is how we satisfy people. Where it comes from or whether its over the top from cable service, it really doesnt matter. What cable is three regulatory regimes for bits an two copy right regimes for bit. And how you mix and match that and satisfy customers is the art of being a good packager. Host what do you think, mike . Mike were nod burdened like the u. S. Operators are burdened by. When we look at it, were in the business of plug and play. Were in the business of seamless connectivity, in our case connectivity in the mobile business. We want them to feel connected to their networks wherever they are. And we want them to choose our networks because theyre the fastest, the most reliable. But on top of that we want them to play on our networks. We want them to play more or less. Play with content, play with the internet, play with any aspect at your choosing. Theyre becoming device agnostic. The fact that my kids watch their content on tablet or smart phones they dont care what it comes from. What did netflix teach us . Its about the app. Its about the user interface. What weve done is adopted an app that puts that experience together and allows you to find con innocent a way that youre used to doing in other applications. We preempted o. T. T. Well launched our own product called usage. In the end its about plug and play and you keep it simple. Why would they get rid of one or the other . It is the story that gets missed all the time. If you look at video consumption in general theres more video consumption in the world going on. And much of that is because of the investments the companies sitting on this stage have made. You want to talk about d. V. R. s or multiple tunerings. Over 90 tv every where gap. The point is, we ourselves have given our customers more places more devices to do the contact and one of them is this release of information that as long as im into business connecting customers to the thing they care about im ok. Do you need to be in the business of selling them a bundle or can they pick and choose . Sometimes i will. And sometimes i will not. Thats their choose. Theyre the customer. Were in favor of choice. And to the extent we can have more flexibility of video products i think thats a good thing. Theres a dependency to defleat two different concepts. One is packaging. The other one is technology. And the reason weapon tend to conflate them is that because the programmers have caught with over the top providers seem to be a lot more flexibility than the once that have been qut traditional video companies. So i think thats a temporary state of affairs. But on the simple question of passing, i think more flexibility is better. That said weve offered different tears of service inner many yeeshes. And by and large, the vast majority of customers tend to take the larger bundle. And the reason is its a dang good volume. Technology people found a new way to get around paying for sports content. Obviously its very new technology. Piracy is an internet problem. But there raises the question. Such an enter gral part of holding the bundle together. Are you worried about these new technological thre. The content were over cable. I done think you know, i dont think whether the content bundle breaks apar. From our point of view find content on a wholesale. Its probably more expensive for us. From large content companies. But the big issue Going Forward what youre referencing is that security is a huge problem with the digital age. And we have very fast type speed network. Storage that you can buy is getting cheaper every day. So people can keep content and move it around the world ibstantly. Thats true of live content. So the security of content and how content wants to sell their products and whether theyre secure or not ultimately is a real issue. If they dont secure their content it wont be worth much. Thats the lesson of what we saw this weekend. But i think theres another dimension to it which is the analogue device. You know the real issue arose out of the mass transmission of somethng that was otherwise simply seen by another person. Im not sure how to solve the problem securitywise but certainly for all of us who live in this ecos system. Host how are the Companies Going to have to adapt to be changing consumer needs. There are panels going on about new millenials and the kind of expectations they have and how they want to pay for it or not pay for it. How does that change your business . Pat they want access. They want different size packages. They want it on multiple screens. Were trying to do that. At the same time we had a conversation about parascope. These are real. Thats the world we now do our business in. There are good reasons those apps are being used. But it is our new world. One thing i agree with the chairman is weve had moments in our history where we reinvented ourselves. I think were going to have those moments in my career Going Forward. I mean, the future is very bright. I look at our company and i say look whats going on. We rolled these services in multiple markets. We have more markets than in the next few months. I look at the fact that Business Services is on the cusp of hitting 2 billion. I find most of the results from my public friends, were growing Customer Relations as an industry. Theres a lot of indications that the future is exciting. But were going to grapple with it as we go along. We have amazing networks. We all know that. Powerful networks that have over time become even more powerful and we reinvented those networks. We have great content relationships. Together we spend billions every year with great content providers. As we invest all of us, and we are for sure in that app in that experience i think we solved the big series of issues that are a good conversation. Millenials what do they do . They dont like cable. The experience can and should be incredible and will be. Were finding our customer when we launch verizon, they dont go anywhere. They keep using infinity. But i watch them on the x1 app. If it works its beautiful simple. And we aspire to be like the companies we know that exist. Weve got it. Host i know youve been working outside the traditional cable system with all of your new introductions. Do you care about selling cable tv or is your future about broadband . We look at traditional tv. We look at it sort of like the convenience store. Its the milk and the eggs and youve got to have it. But for the future of cable vision, you know well continue to innovate in that space and well continue to offer those products in multiple ways including to millenials who only watch an hour of tv a day. But what we know is most important to them is connectivity. And thats where were going to focus. And were in a highly competitive market and we want to be the dominant provider. So were going to focus on what people want the most. Fascinating Tipping Point for the industry not just in terms of m. A. But also what youre offering consumers. Thank you for joining us today. [applause] and now ladies and gentlemen, please welcome our next panel which will also be moderated by julia foresten. First the chairman and c. E. O. Of Showtime Networks matt blaine. Blank. Host thank you, guys. Im sure you were listening backstage. And theres a lot of talk about over the top and how the cable carriers arent so worried about cord cutting because they also sell broadband. But for you you have to think about cable in your channels both for retransition use but also for advertising. How worried are you about cord cutting . Look, we need to grow our business. The traditional distribution is very mature right now. I think one of the key sound bites of this past week was in the comcast earnings where they announced that they now have more broadband subscribers than video subscribers. Theres a new message. For us video subscribers have been critical. We intend to grow households. So i wouldnt say that im worried about cord cutting. I think theres a lot of opportunities in a lot of different corners to grow showtime and we want to take advantage of that. Host what do you think . I think we need ghetto the consumer. I think cord cutting is a terrific catchy term. Its not as ubiquitous of what people think it is. It was reflected on the previous pap nell is that the interface by what people find that have Great Stories is shifting over time. And essentially what were all seeing that their comparable. Host what do you think . The Previous Panel was encouraging to me because i think the changes that are being made are intended to sort of free up consumers from feeling obligation. I think when they do that its a more pleasurable experience its more fun. I think a lot of that stuff which sounds discorruptive and different can recapture the imagination. You can feel he or she can feel better about themselves and have more flexibility. And i think focus on my interface is called app. I think interfaces are not faceless. When you get one you just love it to death. And if you combine that with the feeling that you can get what you want and i think cable vision is doing that, when you want it. I think your motivation increases. And i think you actually consume even more. So i thought it was very encouraging. Host i think the question is whether you want to go directly to consumer showtimes working on an app. Ru well, weve been talking to everybody. Most importantly, ive spent a good part of the last three years. So thats a good place to start. We think theres a lot of opportunity out there. Were going to take advantage of i t. The question is when is the right time . Host we done know exact numbers but so far its off to a good start. Do you think there are any lessons to be learned with how its been going so far . The one tremendous advantage we see and weve begun to see it with showtime any time. If the consumers are getting used to buying all sorts of products whether its an uber ride their dinner delivered with really excellent consumer interface. Thats something we havent experienced. And you see what the difference is when you can present your product with an interface that is consistent with the types of product that are being consumed through all the changes and technology. And thats the big deal. I think what were all facing is that the number of broadband only customers was diminutive and now it got to be a large enough share of the market that each of us who have the National Consumer brand and i think these are great Consumer Brands have to Pay Attention to that smaller segment of the market. So we have to figure out a methodology. I done want to discount the pastway through our relationships through our operator who are in the brad band business. Symbiotic relationships served us really, really well for a long time. So we have a problem. Weve got a group of 10 million hopes and s the going to grow up to 1020 million and direct to them is one path. But theres another path that goes through broadband an evolution of our existing relationships. I watch all of your shows and i can watch them obviously on your network. Sime theyre on netflix or amazon there are all these ways that one can consume these contexts. Do you see that eating into your score subscriber number. . I think you can see that theres a lot of nonlinear con surpgs of the very best event. R 3 have a significant percentage. Fortunately for us we also own a lot of that content and we benefit from the consumption. Weve been focused at preserving the first window for our Cable Partners in providing really good we have the stacking rights. In season full episode through all of our shows. Its about 20e original series. Were focused through providing them with the app as welcome as our own lamb. Its largely replacing syndication. Sounds like for you ownership of that content is really integral to your strategy . It is. We started Fx Productions more than a decade ago. If we were in the business of renting programs i dont think we could make the numbers work. It turns timeout be a bad business. You know, we have businesses that are very good at launch ling ing those shows are great. The back end are shows captured by our own Programming Service our brand and the way hbo go captures thes the programming. If there was an economic path doing it. But also were in business wore in partnership with contact creators and theyre going to go with the way theyre going to get the best. And the bottom line those syndication revenues after being critical after being able to con pen sate art. You have this blocking dead. And this is has been a real driver. I know you all have time chipping program. But walking dead has really been very unique in that live programming. How do you encourage that or drive it or keep that show alive and what is that value of that live event. Which the current regime may under go very important. Its how the count goes and all the money slows. The younger one phenomenon of watching when something is scheduled. When theres always these opportunities at your own choice. It has increased ratings at 10 00 p. M. Every sunday. Its occurring now and i think it is i think its to some degree in response to a greater the growing trend of people watching alone and binging and taking advantage. And taking advantage of all the improvements. So theres a big wad of fun, of course, when you watch the super bowl life or the Academy Awards but its an also lot of fun when we were watching the talking dead. I think hes seeing that experience in an empire. Of course, youve seen certain broadcast networks trying to take advantage of literal life with theatrical musicals. So i think theres oddly Bright Future that will be defineed with the greatest specificity about what wins and a time slot. Theres a totally cool because its in service of people being together. You got to hit it right. And it zigs against the zag of on demand. But i think its a pretty Rich Television opportunity. Well, first to go back to your question with john. You know, looking at this environment with netflix and all these competitions in the home. Some more things change, the more they stay the same. Weve seen this heavy business useers in multipay. Now when we look at hulu or netflix. We see amazon prime we see that theyre very high in our homes. So you can take a glass half empty or glass half full. The half full which i prifer to take is were seeing these users where that audience is saying give us more. Give us more this great dramatic content as much of it as we can get. And the the event that we had is that, you know, we really dont care how somebody watches something. And the example i use is. 10 years ago we launched dexter. 2 3 of it was denied. When dexter wednesday up for the hinal season. It was a complete reverse. 2 3 of the viewing game on deband y, in that final season. We had three times the viewing that we had in season one. So that says that our building who using Technology Creates a workforce. Do you think there need to be a shift in government then when youre john, when youre trying to advertise with. Well, look, its differ. Its more difficult than that in the sterms of the fundamental advertising stevert. I think ull matly what the consumer is telling us is theyre not willing to give us of their time an 45 minutes. Theyre always to give us relative time for a im very bullish and. Bill here reinvened over the time when you count all those very sincht streams. And ultimately well we had an advertising issue that i i think. Very transformative marketplace. Its going to be different thans the now. I think the business of making great son qumers and being pead for thosetories. And i dont see it going anywhere. Ultimately i think it all comes back to creativity and storytelling. I think that the moment of interaction is vie tool the consumer but no one is going to be able to corner the market on great storytelling. It refusing to be corralled into one single bucket. I trust that you can come back in a decade and these three brands will be very healthy and there will be other brands that will be healthy in 10 years. I want to hear about the decisionmaking content. Were heading into the upfront. Whats your outlook for it this year . Hows it going to handle the fact that there are all theas other competitors like netflix stealing those . Theres an evolution. Theres the appeal which has not with standing the measurement issues associated with it. I think they have some precision thats advantageous. Ity think they will organization and is getting much more specific. And the data opportunities for being able to sell someone who wants to sell a product are improving dramatically. And so it wont be like it was. It will actually be tremendously more efficient for people who spend their money. And thats really occurring as a consequence of all of the data thats being corrected and now organized and seeing so i think thats really great tail wind. I think ill echo what john said there are so many shows and have this aparent appeal that its an overused word high engagement. If you sort of think about what your favorites are. And youd like to think how much you like your favorites. I wait for the comedians. I watched the first especial of of the afather. And value those things nore mousely. When that stuff is on but thats not lost on people who spend money. And so i think when you have things that are favorite. I think you have something thats unique and when you combine that with improving analytics. Youve got a pretty good opposition for someone who spends money because they want to move the product. Essentially the standard for a 20second commercial is the commercial with the audio. And the standard is 50 of the mixles were two seconds. And thats creating an section in the marketplace. But that standard is insufficient. Im talking about the video the video internet. That it cannot continue. And once that standard is sharpened up. Supplys will con contract. And i think the marketplace. And the or an i too tunes or amazon. Do you think well see them and release the temperatures at once. We live in a very quickly changing mark. But we still like the model of premiering a show seeing the viewership fills. Seeing all of the social activity from weekto week. You know, we could switch that tomorrow. But at the moment we dont. You know we watch the consumer very carefully. We watch all these things and were very happy with our current model. We dont have to wond irabout what kind of. We have perhaps a lot more flexibility to move more quickly, fe with have to. You know, its also unreasonably to film all the different demos that we are going to behind. You should you vowled have. If we want to we always do. In the season of home lance. People watching the previous season on demand. So this will be a lot for thrinchte times of end. And all these impacts must be impacting the way you make programming decisions. When you talk about what new somehow to add to your lineup. How are all of these content decisions impacted to all changes in the landscape. I think, its a very good question. What it does is it puts a lot more pressure on us as programmers. To put that ferings and you know ill tell you john talkedability it at length. We. Incredibly important but not just in terms of if really significant incremental revenue we have generated and last year. It gives you. To make the decisions about how this program went dough have to worry about. Im going to per mect them. All those things are in the. I dont want him to i have a better chance and it all makes great at the chance. In the orlando world and you had sort of fragmented attention to. You have young kids you either caught it or and then this was missed it out. And its a story that i fell over number one times. Toward good and great. Because of the different ways people are con sermed. I think that television used to be some what disposable. It was immediate on some level before the night it went on the air. Now we make television. We make stories and were evaluating. I dont know that it will be ready 20 years from now. Thats an austin to beyond if. And thats great. What thawszun you. You ask yourself the question will people watch this on a sunday night . Now can we imagine 10 years after itself after our air. I think that really matters when you combine that and we own incressingly the shows we make. It really is just you wait for your friends to say electronically. You want to go watch blank. You havent seen it. You really ought to catch i. And if its somewhere available. Their some pretty good of action. You think oh, gee i want to pie the. Then it was different than. Its high on intention. And i actually think that in this world. Its a fairly big upsize. And the social secure talk about the water cooler. Its people telling their friends on face book and twitter. I think in terms of a soda pop, they. In and i gi. People done know how many times the show you checked out. Was referred to you by a friend who made a suggestion that you should watch it but you werent quick sure of it. How many teams when you finally got it sometime you say not good for me. Sometimes you say this is good. Ill get into it. So i think the system is a new system. If you think hough. But if you mark it and you tern people out for the may yers. And now marketing doesnt really mean much because they figure out whether the movie is very well. Youve got make gooder television series. You dont get that unless he chooses to. You know we had a movie called boyhood which listed on show time. It was very quiet and very small