CED Person of the Year
The way Suddenlink’s business and operations worked to complement each other so fruitfully is why this year’s CED Person of the Year is actually two people.
For Cequel Communications Holdings, doing business as Suddenlink, 2012 was the occasion of a remarkably simultaneous culmination of several multi-year efforts. These efforts included both engineering and business aspects, which ultimately amplified each other.
At the end of September, the company wrapped a three-year, $350 million capital investment program called Project Imagine. The improvements put in place during Project Imagine were large factors in helping the company make significant leaps in performance.
Those performance improvements were themselves a factor in pulling off a $6.6 billion sale of the company to an investor group that includes some of senior management. That deal, valuing the company at about $6.6 billion, was announced in July, and it closed in November.
The way business and operations worked to complement each other so fruitfully is why this year’s CED Person of the Year is actually two people: Suddenlink Chairman and CEO Jerald (Jerry) Kent and senior vice president and chief technology officer Terry Cordova.
Together, these two men led the modernization of an agglomeration of cable systems, many of them once neglected, into a far more efficient, largely unified network.
For the fast-moving cable industry, 10 years ago qualifies as ancient history, but Suddenlink’s recent success is more strongly presaged by the past than most other companies are.
Almost exactly 30 years ago, Kent, a certified public accountant, joined Cencom Cable Associates with responsibility for finance and, notably, acquisitions. By 1991, Kent had risen to CFO and had helped build Cencom to 550,000 customers. That year, Cencom was sold to Crown Media.
That was Kent’s first taste of what would become a pattern of expanding cable companies through growth, and then ushering them through some form of sale.
In the sale of Cencom, Kent went with the company to Crown. Two years later, in 1993, he left to co-found Charter Communications. Charter bought from Crown the operations Kent had been involved in selling just two years before.
By 1998, the year Microsoft co-founder Paul Allen bought the company, Kent had approximately doubled Charter’s size, to 1.3 million customers. Kent continued as president and CEO, subsequently tripling the company’s customer count, bringing the total to 7 million, making it the nation’s fourth-largest cable company at the time. The sale this time took the form of an initial public offering (IPO); in 1999, Charter went public.
Along the way, Kent became acquainted with the man he would later help hire as Suddenlink’s CTO. Kent left the company in 2001.
In 2003, Classic Communications, then the 12th-largest MSO, emerged from bankruptcy. Kent and his partners assumed management of Classic’s assets, which became the core of the company that three years later would be renamed Suddenlink. Also that year, they hired Cordova, the former division vice president of engineering for Charter Communications' Southeast Division, to lead technology operations at the new company.
Through the intervening years, the company – largely via acquisition – quadrupled in size, from about 325,000 subscribers to 1.4 million, spread across 18 states, but with concentrations in Texas, Arkansas, Louisiana, North Carolina, Oklahoma, Texas and West Virginia.
The pattern held with another sale, this time to European and Canadian venture partners. The twist this time was that Kent not only participated in the selling, but he and other managers also were among the buyers in the $6.6 billion transaction.
One of the things that made Suddenlink attractive for the new investors was the pattern of continuous investment in operations that yielded direct results in improved performance in a range of performance metrics (see accompanying chart).
The upgrades kicked into overdrive in 2009. Flush with the proceeds from a $600 million debt offering, Kent, Cordova and other Suddenlink managers devised Project Imagine, which would add another $350 million to the company’s regular budget for capital expenditures.
Project Imagine was billed as a bandwidth reclamation effort designed to support new product and service deployment. The company upgraded most of its footprint to DOCSIS 3.0 (DOCSIS 3.0-based broadband is available to 93 percent of its subscribers) and converted many of its systems to all-digital.
The improvements have enabled the company to greatly expand its HD channel lineup, from a typical 24-channel lineup to an average of more than 85 channels after Project Imagine was completed. The company also expanded its VOD library (VOD is now available to 91 percent of its subscribers). The company experienced vastly improved adoption rates of both HD and VOD services.
DOCSIS upgrades have been a common benefit for all cable operators, but Suddenlink has been particularly focused on the technology. The company secured bragging rights by introducing a broadband tier that set a speed mark at 107 Mbps. The company has also leveraged its DOCSIS network to introduce home security services.
But more than that, the company has been particularly successful at compensating for the same losses in low-margin basic subscribers that have been experienced by almost all of its peers by gradually, but inexorably, shifting its product mix to higher-margin broadband and telephony. All the while, the company’s average revenue per user (ARPU) has been growing at a fairly steady compound annual growth rate (CAGR) of about 10 percent.
The company has been aggressively leveraging its relationship with TiVo to innovate with TiVo-based services. Late last year, Suddenlink was the first company to provide TiVo Stream, first in Lubbock, Texas, and then in other systems. The company also said it would offer the TiVo Mini, which will enable it to provide a relatively inexpensive and easy-to-use whole-home solution. That complements the company’s home Wi-Fi service.
The company has been installing fiber-optic networks to connect its systems in Arkansas, Mississippi and elsewhere to the company’s national backbone. It has also been investing in improving customer service, with the payoff evident in considerably improved ratings in the J.D. Power customer satisfaction polls, going from a decided laggard to industry average.
All the while, both Kent and Cordova have been active advocates for the industry at large.
Cordova is a long-standing member of the SCTE, a three-term board member, and now serves as vice chairman of the board of directors.
In 2011, Cordova was named a member of the Cable TV Pioneers, was inducted into the SCTE Hall of Fame and served as chairman of SCTE’s Cable-Tec Expo. The SCTE credited Cordova with helping to sharpen the focus of Expo’s technical program.
SCTE President Mark Dzuban said: “Terry’s technical accomplishments with Suddenlink speak for themselves, but it’s the way he achieves success that makes him stand out. In all of his dealings – with members of his Suddenlink team, with the rest of the SCTE board or simply with other cable professionals – Terry has a high degree of integrity, a tremendous respect for other people and a real ability to build teams that share those values. He’s truly a role model that anyone within or outside of our industry would do well to emulate.”
Kent, meanwhile, serves on the boards of directors and executive committees for CableLabs and the NCTA. He is chairman of The Cable Center board of directors, and he also serves on the board for C-SPAN and the advisory board for Cable in the Classroom. Last month, he was inducted into the Cable Hall of Fame.
When you’re talking about Cable Hall of Famers, there’s always the issue of legacy. The problem, as such, with discussing Kent and Cordova’s legacy at this point is that the two are far from done at Suddenlink. The company has vowed to continue implementing further improvements. These two guys could, potentially, be People of the Year again sometime soon.