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Charter CFO calls password sharing a 'massive issue' affecting video providers

Charter Communications Inc. CFO Christopher Winfrey sees multiple opportunities for his company in broadband.

Speaking at a Sept. 12 investor conference, Winfrey said the proliferation of devices inside the home means that people will be looking for a way to manage and enable devices connecting to a network. In March, Charter CEO Thomas Rutledge said that this fall, the company will be launching a service in Austin, Texas, that manages and secures devices connected to a network. Rutledge said he suspects the service will "roll everywhere."

Winfrey said people increasingly are going to be looking to Charter to help them "manage those devices that are connecting to the network and to provide privacy and to provide security."

When it comes to video, Winfrey said, the company is getting to a point where it is "more economically indifferent" as to whether it wins or loses with stand-alone video. However, he still views it as an "important aspect" of the company's connectivity service, despite continued video subscriber losses.

"What makes us a little bit different is that we're selling a bundle of network connectivity services inside the home," said Winfrey. "And we're using video, always have, as an ... application for that connectivity service. And so it still matters to us."

Password sharing among consumers, according to Winfrey, has taken its toll on the company's video business, which he thinks would be stronger otherwise.

"If password sharing were not an issue, our firm belief is that we'd be growing and we'd be growing significantly," he said. "It's a massive issue. It's rampant."

When it comes to margins, Winfrey said, the company is focused on long-term free-cash-flow growth. Growth, Winfrey said, often requires increases in capital expenditures and sales and marketing expenses as well as better service to reduce churn, all of which the company has done.

"Right now, despite everything that I've said, our EBITDA margin is increasing and our capital intensity is declining, which when those both are taking place at the same time means an accelerated free-cash-flow growth," he said. "That's what we're seeing at Charter, and I think that's the opportunity for many years to come."