Delivering Valuable Service
The recipient of the National Cable & Telecommunications Association’s 2009 Distinguished Vanguard Award for Leadership (Man) is one of the cable industry’s most successful executives, Rocco Commisso, chairman and CEO of Mediacom Communications Corp. Under Mr. Commisso’s guidance, Mediacom Communications has grown into the eighth-largest cable operator in the nation, with more than 1.4 million subscribers in 23 states and more than $1.2 billion in annual revenue. In anticipation of the Cable Show, Mr. Commisso spoke with TelevisionWeek correspondent Allison J. Waldman about the upcoming NCTA conference, the state of the cable industry and Mediacom’s future.
TelevisionWeek: What’s your reaction to winning the Distinguished Vanguard Award for Leadership?
Rocco Commisso: I’m very humbled by the honor, especially when considering that I grew up admiring the legendary cable entrepreneurs recognized since 1965—Alan Gerry, John Malone, Ralph Roberts, Chuck Dolan, Bill Bresnan, Amos Hostetter and Bill Daniels, who I believe was the first Vanguard honoree. I am particularly happy for our 4,500 hard-working employees in 22 states, to whom I dedicate this award.
TVWeek: Tell me about the last year at Mediacom—why do you think you’re being recognized with the Vanguard at this time?
Mr. Commisso: I’ve been involved in the industry for over 30 years and on the NCTA board since 1998. You could say jokingly that they are giving me this award after searching for an individual to represent the immigrant community. I don’t think this recognition is for Mediacom’s 2008 performance necessarily. Hopefully, it’s because of my long and passionate commitment to our industry.
It is true that 2008 was an excellent year for Mediacom. We delivered record [revenue-generating unit] additions and double-digit cash-flow growth. I’m extremely proud that we increased our employee base while, regrettably, America has lost over 4 million jobs just in the past eight months. Our stock performed better than any other public cable or telephone company in 2008. We just had a great year.
TVWeek: Why do you think Mediacom has been able to thrive in these harsh economic times?
Mr. Commisso: It’s not just Mediacom. I think every major cable company has done well in this downturn. In my three decades in cable, I’ve witnessed at least three recessions. This is obviously much worse than anything I’ve seen, but cable has proved itself as a good business during cyclical downturns. Consumers love our products and the value proposition of the triple play is an added advantage in this tough economic environment.
TVWeek: The cable connection has become a true necessity…
Mr. Commisso: The last things consumers will disconnect are cable, water and electricity. Why is that? In our case, it’s because we offer phenomenal value for must-have products. With the introduction of phone and the triple play, not only are our customers staying with us longer, but they are seeing significant savings in their telecom and entertainment budgets in these rough times. It’s cheaper to watch a movie or a baseball game at home. It’s more timely and convenient to get your news, stock quotes or look for a job through our cable modem service. And with our unlimited calling plans, our phone customers can dial up their friends and family with no toll charges.
On the phone side, I would like to proudly point out that our industry should be credited for reducing America’s phone bills by $17 billion annually, either because of our own phone products or because the competition we have introduced has forced the phone companies to reduce their outrageous line and toll charges.
TVWeek: So in a sense, cable bundling has become a utility, like electricity or water, yes?
Mr. Commisso: No and yes. No, because our business has real competition given that the consumer has multiple choices of providers. Yes, in that over 90% of our revenues come from recurring monthly subscription fees. Unlike the other media sectors (i.e., newspapers, radio and television stations, outdoor advertising) that are getting clobbered in this recession as a result of their over-reliance on advertising spending, we are fortunate that over the years we have developed a subscription-based business model, which should do OK in tough economic times.
TVWeek: How did you get into the cable business?
Mr. Commisso: I got started making loans to the cable industry in 1978 at the Chase Manhattan Bank at a time when almost all of the major urban markets were still not cabled. Interestingly, cable lending then was viewed as high-risk, since cable was not yet a proven business, and the leading entrepreneurs were all undercapitalized. Luckily for me, as soon as I got exposed to this new industry, I not only fell in love with its entrepreneurial spirit, but every single one of the high-risk loans I made got paid off on time. I joined Alan Gerry’s Cablevision Industries as his CFO in 1986 and the rest is history.
TVWeek: Was that the greatest challenge you’ve faced in your career?
Mr. Commisso: No. I don’t think so. My greatest challenge has been not only to form Mediacom in 1995 in the basement of my home with my very limited life savings, but to operate it as an independent, entrepreneurial cable company in a radically changed competitive environment all these years. With the wave of consolidations that have taken place in our industry the past decade, the rise of satellite companies as much larger, well-capitalized competitors, and with Verizon and AT&T entering the video business, it is certainly more difficult than 20 years ago to succeed as an independent, smaller cable company. So far we have proved all the naysayers wrong. What the future holds, I just don’t know, other than my belief in the strong long-term fundamentals of our business.
The other big challenge has been trying to succeed financially while at the same time doing the right thing for our employees and customers, and delivering on the promises we have made at all levels of government. In the past eight years, we have spent over $1.8 billion to essentially close the “digital divide” in our markets, offering our customers in smaller and rural communities all kinds of advanced digital and broadband services, while increasing our labor force by over 900 new jobs. We are one of the few companies out there that still has not exported any jobs overseas. Yet we also managed to deliver strong returns to the original pre-IPO equity investors that believed in Mediacom, not to mention the good reputation we still enjoy with our debt-holders in the midst of the massive wave of defaults and bankruptcies taking place across all sectors of the economy as we speak.
TVWeek: What do you see in Mediacom’s future?
Mr. Commisso: On the financing front, we are OK for at least two years, even though, unlike some other industries, we are getting no assistance whatsoever from the government. Naturally, if the financial markets do not improve by then, we’re going to have problems just like most other non-investment-grade companies. Luckily for us, two years is an eternity in the financial world, and I am confident that the economy and our banking system will be on better footings by 2011.
TVWeek: When were you born?
Mr. Commisso: November 1949. I was born in southern Italy, in the region of Calabria. I came to the United States when I was 12.
TVWeek: What do you remember from that time?
Mr. Commisso: Italy was devastated by the war; so we were all very poor, especially in southern Italy. But the memories of my youth are happy ones. I did not work—I just went to school and played a lot. I learned the accordion, which got me into high school when I came to this country. I also learned how to play soccer without the benefit of a coach on concrete streets in the winters and on the beach in the summertime, and that’s what helped me get into Columbia University, where I co-captained the soccer team to its first NCAA playoffs.
TVWeek: What would your peers not know about you?
Mr. Commisso: Aside from playing the piano and accordion, I was a disco owner. My brother and I ran a disco for seven years in the Bronx called Act Three.