By Stuart Thomson

TV remains a crucial part of the multi-play bundle and a profitable one for Liberty Global, according to CEO Mike Fries, while the falling cost of in-home equipment means that gross margins from the video business remain high.

Speaking to analysts after the company posted its Q2 earnings, Fries said that “the vast majority of broadband customers want to see a TV product in the bundle and that is hugely impactful on their purchase decision” when choosing a service provider, citing research Liberty itself has commissioned.

“You can’t just eliminate the entertainment product and we wouldn’t do that anyway because it’s a big part of our revenue and it contributes to EBITDA. It is still a highly relevant part of the bundle for consumers across Europe who watch a lot of free-to-air television still and who are embracing OTT apps but thankfully embracing them on our platform,” he said.

Fries said that TV still generated high gross margins by comparison with those of US operators because “we don’t have a massive expense in our basic package for sports”.

At the same time, he said, the company recognises that “the overall economics of TV are evolving”, with Liberty “spending quite a bit of time” on reducing the cost of in-home equipment, historically the biggest capital expenditure line for operators of TV services, as well as integrating OTT TV apps and services into its platform.

Fries said that Liberty had lost “a handful of customers” due to the sports lockdown, but most had paused their subscription and the company had been reimbursed for the cost of cancelled competitions.

Fries also identified fixed-mobile convergence as of ever-growing importance as a driver of growth for the industry and said that the group’s planned UK JV with Telefónica is “off to a great start” and “will be a transformational deal for the UK”.