It has been a difficult year for the cable business. Cord-cutting continues to wreak havoc on Pay TV, while a competitive environment with satellite and telecoms means that it is more challenging than ever to grow broadband and mobile internet customers.

Altice USA, which operates under the Optimum brand name, may not be the biggest of the traditional cable companies (like most others, it has moved into mobile and fiber-optic options), but it still counts more than 4.1 million “customer relationships,” including 1.8 million video customers. And as the dominant provider in the suburbs around New York City (and parts of the city itself), it reaches an increasingly valuable pool of customers.

The company has been led by Dennis Mathew since 2022, with the former Comcast executive tasked with turning the company around, building out its fiber and mobile businesses, and figuring out a path forward in video. And while the other big New York cable company Charter has leaned in to big bundles full of included streaming apps, Matthew is taking a different approach: Skinnier bundles of video, with easy add-ons.

“This has been all about putting the customer at the center, understanding what their needs are, and then having the hard conversations across every part of our business, which includes video, and it includes making sure that we can create the packages and bundles that folks are looking for,” Mathew says.

To that end, Altice reported its Q1 earnings Thursday, announcing deals with Google to incorporate AI into its customer service functions, and a deal with Disney to offer Disney+ and Hulu as a simple add-on to its packages, all in one bill.

The Hollywood Reporter spoke with Mathew and Optimum president of news, programming, and business services Keith Bowen to dig into their vision for the future of the cable business.

As you look ahead and think about the way consumers bundle services, broadband internet, mobile, and in the video space smaller options of channels versus larger options that may also include some secondary streaming services. How do you figure out the right mix and the right market approach, to make sure that you not only have the options available to consumers?

Mathew: On the product side, customers have said, “hey, we we are tired of having to log into all these different apps. We’re tired of having to manage these different bundles.” Quite frankly, they want to be able to watch one streaming service for a season, literally a season, because something came out and they want to watch that season, and then something comes out in another product, and then they want to watch that season. And so we are launching our bundling on behalf of capability, where we’re going to be able to bundle in streaming products, beginning with an exciting partnership with Disney+ and Hulu, where customers who want to be able to ultimately turn streaming services on and off and have a simple experience in terms of being able to access that content and be able to have one subscription and one bill, we’re going to bring that to life.

Bowen: We have a tremendous amount of data. We understand our customers. We understand what they’re watching, how they’re watching it, how much. So we’ve been leveraging the data and putting together models to understand that data. So to Dennis’s point, for example, right? We knew that on regional sports networks, 50 percent of our customers were never watching it. So there’s a value that’s established for us at a baseline. So we enter in to every negotiation with months of work, months of data, months of conversations about outcomes, what is going to give us the best value and the best choice on behalf of our customers. And we’ve been doing that time and time again. With every next conversation we’re having, a negotiation we’ve had, and we find it to be very, very successful. So I think the big change in the company is leveraging data, customer data, on behalf of our customer base.

Mathew: The conversation prior was just the rate discussion and these minimum penetration levels, and that was literally the extent of the conversation. Now we’re saying, look, why can’t we have a win-win situation? We know the customer. We know what content in your portfolio they want to watch, what they don’t want to watch. How we can accelerate the great content that you have, how can we have a rational conversation on some of this other content that customers are telling us they don’t want. And let’s put the customer at the center and create that flexibility, because some folks are like “oh, cable TV is dead, nobody wants cable TV.” The reality is, nobody wants these massively fat packages. There’s content that they do want to watch, but they don’t want to be forced into taking things that they don’t watch and pay for them.

I’ve covered my fair share of carriage agreements and disputes over the years. But it does seem like there’s a realization from the large entertainment companies that the old model of let’s cram as many channels and get the highest rate possible for all of them is not going to be sustainable long term, and they’ve been a little bit more amenable to figuring out solutions. So can you help me understand, if you’re looking at the data to really understand what your consumers are watching and engaging with, how do you approach a conversation with a programmer to say, “okay, look, here are the things that they really seem to enjoy.” How do you figure out what the most important pieces are, and how can you build a puzzle that allows for them to have them as an offering that that is sustainable for both parties.

Bowen: I’d say it’s a mixed bag, and I’ll explain what that really means. Some of our programming partners, and I think I can say this because it’s out there, but NBC, they’ve been really good and active the last couple of years in skinnying down their program offerings. You saw Disney with Charter, eight networks were dropped. So sometimes it’s voluntary and sometimes it’s not. So we’re using that data around the low value networks to inform our conversations about what we want to provide in terms of options, and if it’s of low value, that’s absolutely part of the conversation.

Mathew: Unfortunately, to Keith’s point, every conversation is unique and different. One of the conversations I had with one of our partners, they just got frustrated with me and said, “Dennis we’ve been doing it this way since 2004,” and we had to have a level set discussion that it is not 2004, it’s 2025. We have incredible content now from these technology partners, and we shared some data with them that you know this content that you’re asking our customers to pay for? Literally less than 1 percent have even turn the channel on. And then the conversation was, “yeah, but Dennis, 60 percent are aware.” I said, “my friend, I don’t know how we monetize awareness.” That’s not part of the business model.

Historically, these were hard conversations with emotion, and it was very emotion based, without the facts, without the data, and now, when we bring the data, it at least opens the door to say, hey, we’re all rational business folks. Let’s have the discussion. And by the way, this doesn’t have to be all or nothing. Let’s figure out what the next year, two years, three years look like, and how do we partner and evolve? Because, you know, we all wanted to serve the customer and build long term, sustainable business models. I’m not saying we have to rip the band aid off, but let’s work together on the journey.

I think regional sports networks have been one of the most talked about aspects of traditional pay television, because of the high fees and with the relatively small distribution. It does seem like a lot of the leagues, the NBA, MLB and NHL are beginning to develop a strategy for RSNs, but the business does seem to be in kind of flux right now. From your point of view, on the other side of the table here, what do you hope happens there? Because obviously the people that watch those are very engaged even though its a smaller percentage.

Mathew: We have to meet the customer where they are, and forcing customers to pay for content that they don’t watch is not long term sustainable. That has been our message, and we tried to be loud and clear that, because we want to make it available to one customer, forcing a million customers doesn’t make sense. There are customers that really value this content, and so how do we partner to create packages, create bundles that allow those customers to watch the content and help the teams monetize their incredible products and assets in the right way. But we have to break ourselves of, this legacy mindset, this legacy thinking and really kind of reimagine the go to market strategy and the way we monetize that content in a way that customers actually want and value.

You mentioned before this new partnership with Disney+ and Hulu to kind of centralize the billing. As you look at streaming as part of what you’re what you’re offering here, how much of it is built around offering this, what I would call simplified billing option, where if you want to add a streaming service, we’ll add it on the bill you’re already paying. Make it super easy for you, versus, Charter, where they’ve gone this route where they bundle in streaming services if you get the big, jumbo video package.

Mathew: Our customers have been clear. They want skinnier packages. They want flexibility. They want the ability to turn things on and off. They don’t want to have to take this huge package and then receive content that or services that they may or may not value. And so we’re having these conversations with these partners and creating flexibility for our customers and the ability to have packages with the content that they want, and not have to push content into their homes that they never turn on, that they never log into. So our approach is a little bit different, but it is one where we’re putting the customer at the center and then really forcing ourselves to reimagine the way that we bring this content to our customers.

Let’s talk about the quarter. You’ve had some positive news recently with the attachment rate (the rate of customers opting to add video to a package), though there were some other factors at play (Altice lost 88,000 video subs in the quarter, with a high-profile carriage dispute taking place).

Mathew: Q1 was interesting, as you and many others are aware, we had some disputes in Q1 with MSG, so we have to normalize for some of that. The good news is that our customers were really appreciative of what we did and the stand that we took. Ultimately, we’re really happy with the results in terms of the impact that we saw on broadband and video subscribers so as I think about January and February, it was really all about making sure that we provided our customers with solutions while we had that outage, and made sure that they were aware of how they could watch the content they wanted to watch while it was not available with us, whether it was through Fubo or YouTube TV and others.

But as we move forward, now that we have moved on and we’ve come to an agreement, we are reimagining how we bundle in these packages. Entertainment TV is a great example. For $30 we can provide you with great entertainment content, whether it’s Food Network or AMC or others. And so it’s just a simple solution, and we’re seeing take rates of north of 20 percent of the video attach.

How are you leveraging new technologies? I know you’ve talked about AI before, incorporating AI into the customer service side. And you announced a partnership with Google this week.

Bowen: So we’ve always worked with Google on the search and marketing side, to drive results, to find customers in the Google environment. Most telecoms do. It’s an effective technique. But we’ve recently expanded that to look at Google as a whole holistic suite of properties and products. One of the areas where we see a tremendous amount of application is in the customer care side of the business, where we can leverage their AI tools to take better care of our customers in real time. That’s, I think, where you’re going to see the first foray in terms of the expanded Google partnership. But we’re using it for almost everything. We’re taking video content, for example, from News 12 and dropping into a podcast environment. We’re putting all of our archives fro News 12 up in the cloud so we could source quicker. There’s a lot of application across, not just the care part of the company, the news part, but every part of the company, and now that I’m running business services, we’re sitting with Google on Monday to figure out what’s best practices inside the business services group with leveraging Google’s suite of products.

Mathew: The first application of AI for us was in our retention channel and care channel. It’s now expanded to sales, where, historically, if you called us — our poor retention folks, we had not historically invested in tools — so they would have to pull up a spreadsheet say, “okay, this is Dennis Matthew. They’ve been with the us for…” and try to look at a hundreds of lines to figure out what products to offer you to meet your needs. Now we’re using AI to really help the customer get the maximum amount of value based on what their viewing habits are, what their data consumption is, their connectivity needs. Instead of going through hundreds of lines, the agents can now see two, three, four offers, and we’re including our video packages. “Hey, are you watching sports? Are you more interested in this content?” And this is allowing us to maximize customer lifetime value by getting the products that they actually want. And so rather than having to pick through hundreds of line items, we can now use AI to offer them the right package, the right offer, which is helping us sell in video and sell in the packages that they actually most value.

I know you’ve gotten this question plenty over the years, but do you feel like you’ve got the scale that you need to really drive growth in the businesses you’re operating in, broadband, mobile and video? What are the opportunities to grow or expand?

Mathew: I’m excited about the opportunity, especially as I think about broadband. And we’ve as a team, worked hard to really evolve our go to market strategy, compete at a hyper local level. When I joined, it was literally one size fits all. We had kind of stripped away any of our regional management teams, and we had one price, and it was very binary on and off. In this day and age, that does not work. It’s more competitive than ever. There are folks that are feeling the pressure from the macroeconomic challenges with inflation.

We’ve done consumer research. 75 percent of the population literally feels challenged with their monthly expenses. And so now we’ve evolved where we’re able to evolve our offers and provide hyper local offers. At the town level, at the neighborhood level, it’s no longer the same from east coast to west coast, 50 states might as well be 50 different countries. And then within those, Texas, we know is even more different, whether you’re talking about North Dallas or you’re talking about Lubbock or you’re talking about Tyler, which is obviously very different than the Bronx and Brooklyn and Long Island. And so the ability to be hyper local, the ability to be flexible and agile is what’s ultimately going to be allow us to compete most effectively… I’m really excited about where we sit, the portfolio of products and our ability to grow top line revenue and EBITDA as we move forward.

This interview has been edited for length and clarity.