Who can see the emperor's new clothes?

Tue, 12/31/1996 - 7:00pm
Roger Brown

By now, most people are aware of the blood-letting that took place last month: 2,600 workers — nearly seven percent of the company's workforce — were given pink slips as the company slashed its costs. The cuts hit the local systems hard, but the corporate headquarters wasn't spared, either. As of this writing, rumors were running rampant about the eventual fate of some of the more visible corporate executives.

This much is clear: J.C. Sparkman, who along with John Malone made TCI a feared entity in Hollywood and the place where all programmers and hardware vendors came to pay homage, is back at the helm. During an unusually somber General Instrument Christmas party in Denver last month, vendors were literally lining up to welcome the man back into the fold.

TCI's recent economic problems have by now been well analyzed. The company was overextended. It's new materials management program apparently didn't work, forcing the company to, once again, turn away equipment it had ordered and cancel everything else. Malone and other officers took pay cuts as the corporation restructured itself to meet its economic goals and reassure investors who have seen the stock languish. The company is also mulling selling off as many of its assets as possible, including Liberty, its programming arm, to inject more cash into the bottom line and reduce its overhead.

In years past, such a series of events would have sent the cable industry into a tailspin lasting probably 12 to 18 months. But this time, the landscape is different.

The big difference is competition. TCI's colleagues are plowing their revenues back into their networks to upgrade bandwidth, improve reliability and activate the return path. They have to: DBS, MMDS and the telcos are beginning to nip at their heels, and a "do nothing" approach would be fatal.

So, where did TCI go wrong? Was the new regime unable to sustain the old level of growth? Was the company guilty of promising plenty but delivering nothing? Did it lose too many subscribers to DirecTv and other competitors? The answer to all those questions is yes, and it's time for TCI to come out swinging.

Simply stated, TCI has to put up or shut up. Investors and observers can now see past the empty promises, the high-profile press conferences and the excuses. The time is now to deploy services that people want, at reasonable prices. It's time the customer was treated like nothing less than a king.

TCI claims to be taking television into tomorrow. If it's not careful, though, it may be out of tomorrows.

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