Suddenlink’s Kent sounds off on cable industry, Vanguard Award
This Wednesday, Suddenlink Communications Chairman and CEO Jerry Kent, along with Bridget Baker, president of TV networks distribution at NBCUniversal, will be honored with the NCTA’s Vanguard Award for Distinguished Leadership during a luncheon and awards ceremony.
Kent has enjoyed a distinguished career in the cable operator industry. He played a pivotal role in building Suddenlink into the seventh-largest cable operator in the U.S., and he also serves as CEO of Cequel III, which he co-founded in January 2002.
Kent began his cable career in 1983, heading up acquisitions and finance for Cencom Cable Associates, and later served as the company’s chief financial officer. Following the sale of Cencom, Kent co-founded Charter Communications. Under Kent’s leadership, Charter became one of the 10 largest cable operators in the U.S., serving 1.3 million customers. In 1998, Microsoft co-founder Paul Allen acquired Charter.
Kent serves on the boards of directors and executive committees of CableLabs and the NCTA. He currently serves as chairman of the Cable Center board of directors. He also serves on the board for C-SPAN and the advisory board for Cable in the Classroom. Last year, Kent co-chaired The Cable Show 2011 in Chicago.
Prior to the start of The Cable Show this week, Kent shared a few thoughts with CED in regard to winning the Vanguard Award and his career in the cable industry.
CED: How did you find out you were a Vanguard Award winner, and were you surprised?
Kent: I received a call from Amy Tykeson, who chaired the Vanguard Committee this year for NCTA. I was surprised but thrilled. It’s a great honor to be recognized by your peers.
CED: You co-chaired last year’s Cable Show in Chicago. What was your biggest takeaway from that event?
Kent: First, co-chairing the show is a lot more work than you might expect, especially during the show. Last year, Barbara York and her team kept David Zaslav and I hopping from one event or meeting to the next.
Second, at the show last year, I noted a feeling of optimism that hadn’t been present for a couple years. As an industry, we’re now much more open to innovation and flexible platforms than we used to be. We’re on the right side of technological innovation, and the show in Chicago highlighted our opportunity.
CED: What’s on your radar at this year’s Cable Show?
Kent: I always like to walk the floor and see the demonstrations of product initiatives. I’m pretty busy as the chair of The Cable Center and hosting the Cable Hall of Fame dinner, along with being chair of CablePAC and hosting its breakfast. I also have meetings with other operators and with vendors to learn more about what they’re focused on. Finally, my wife and children are coming to Boston for the Vanguard ceremony. It’s a full schedule.
CED: Four years ago, Suddenlink embarked on its Project Imagine initiative to foster the build-out of services across its footprint by spending approximately $350 million. Since then, Project Imagine has enabled DOCSIS 3.0, more HD channels and more VOD for your subscribers. With Project Imagine slated to wrap up this year, from an engineering standpoint, what’s next?
Kent: As we wrap up Project Imagine, our focus will be on making the most of the upgraded capabilities we now have across both our residential and commercial services. We’ll be increasing the speeds of our residential Internet services and expanding our leading 107 Mbps service to more markets. We’re also rolling out DOCSIS 3.0-enabled speeds to our business customers.
In addition, we continue to enhance Suddenlink2Go with additional services and mobile apps. We’re doing more with TiVo. And, finally, we’re working to keep up with the explosion in demand from wireless carriers for fiber-to-the-tower (FTTT) installations, with 2012 shaping up to be a record year for us in that area.
CED: TiVo Premiere is available across almost all of Suddenlink’s footprint. What does it bring to the table, and does it give you a competitive advantage?
Kent: TiVo provides a terrific competitive advantage. In the markets where we offer TiVo Premiere, we’re the only multichannel provider to do so. Importantly, TiVo Premiere combines our video service with TiVo's best-in-class user interface to offer access to thousands of hours of entertainment choices, including content from Suddenlink’s video-on-demand library and the Web, all accessible through TiVo's advanced search and discovery features.
Other features include the ability to schedule recordings from locations outside of the home through a Web-connected computer or smartphone device, including iPads and iPhones. With customized apps, customers who have integrated Suddenlink-TiVo devices can also use their iPads and iPhones as advanced remote controls – changing channels, browsing video content, and even commenting on their favorite shows through Facebook and Twitter – without interrupting what they’re watching.
We’ve also introduced enhancements to our TiVo Premiere DVR service to enable a multi-room DVR experience. As an example, Suddenlink customers with three TiVo Premiere devices can record up to six shows at the same time; watch recordings on any TV; start watching a recorded program in one room, pause, and resume it in another; and have up to 600 hours of recording space.
Finally, we’re working with TiVo now to develop and deploy other advanced services, with details to be announced in the future. Overall, this has been – and we expect it will continue to be – a great partnership.
CED: Your cable career dates back to 1983. Who were some of your mentors over the years?
Kent: I’ve had several, including Howard Wood, my longtime business partner who hired me out of college at Arthur Anderson before joining me at Cencom and later helping me found Charter, and then Cequel III.
My father – who was an entrepreneur in his day – was a mentor, as was Bob Brooks, who hired me at Cencom. Also, when I joined Cencom, there were two of the board members in particular that I listened to and learned from. They were Bill Bresnan and Frank Drendel. What a great introduction to cable.
I owe a lot to each and every one of these mentors. They taught me the value of building a company with a strong culture, one that emphasizes honesty and integrity, providing a superior level of customer service, caring about others, and giving our people the training they need to succeed.
CED: Best advice you’ve received?
Kent: I’ve received several great pieces of advice over the years. Wood taught me the importance of what he calls the three most important words in business: “I need help.” And my dad taught me that in business, you should always choose your partners as carefully as you choose your spouse.
CED: What advice would you give to someone who is just entering the cable operator industry?
Kent: I’d share with them the advice that Howard and my father shared with me. I’d also encourage them to remember that it’s all about the customer. As I tell our employees, we should guard our customers as jealously as we guard our own children, and that if we take better care of customers than the competition does, we win. It’s really as simple as that, and following that advice has helped us build Suddenlink into a company of which we can all be very proud, one that has consistently led the industry in operating results.
CED: Cable operators are facing more competition along various fronts. What does the industry need to do to acquire and retain subscribers?
Kent: We need to continue to promote the value of the bundle. We have the best delivery system into the home, and we can keep our competitive advantage if we encourage an open and innovative ecosystem that delivers new services to our customers. We need to continue to build on the market-leading Internet services we offer. And we need to get the pricing right on video. For years now, we’ve seen programming rate increases of 7 percent to 8 percent a year, and that accelerated last year to nearly 10 percent, with broadcasters demanding ever-higher retransmission consent fees. That model can’t be sustained. If it continues, I’m concerned we will start pricing a number of households out of the multichannel video market.
CED: Will broadband become a bigger service than video down the road?
Kent: I suspect it will. Today we have about 1.3 million video customers; we’re already approaching 1 million residential Internet customers, and our growth in Internet customers far exceeds what we’re seeing in video.
In addition, in 2007, video services represented 61 percent of our total dollars of gross margin, while telephone and Internet services accounted for 39 percent. By the end of the first quarter of 2011, our Internet and phone services accounted for 54 percent of total dollar gross margin. At current growth rates, our total dollar gross margin just from Internet services will exceed video gross margin this year. And we believe this trend will continue as customers continue to love our Internet and bundled services, providing us significant upside in terms of future cash flow growth.
But we haven’t given up on video. We continue to invest in and improve our video offerings, fighting for every single customer.
CED: Is the industry getting closer to gaining the content rights for video content anywhere, to any device, at any time?
Kent: That depends on the owners of the content rights: the programmers. Some, like HBO and Turner, have been very forward-thinking in this area, readily embracing and working with operators on their TV Everywhere efforts, including our Suddenlink2Go service. Some of the other programmers have not been as quick to embrace the opportunity. What’s more, the complex subjects of intellectual property rights and content delivery rights are proving difficult to navigate.
CED: You got your start at a smaller cable operator, and we’ve recently seen a wave of consolidation among Tier 2 and Tier 3 providers. Do you expect that to continue, and what role will Suddenlink play?
Kent: Industry consolidation will continue. Scale matters when negotiating programming contracts, and, increasingly, it matters in the deployment of new technology. Tier 2 and Tier 3 operators will find it increasingly difficult to deploy state-of-the-art technology in this rapidly changing environment. For Suddenlink’s part, we continue to be interested in looking at acquisition opportunities that are a sound, strategic fit with our current operations, namely those that are proximate to our current operations and/or serve vibrant secondary markets like the ones we serve today.
CED: What’s the latest app you’ve downloaded, and do you have a favorite app?
Kent: I love Sportacular. It gives me scores and stats for my favorite teams at the touch of a finger, no matter the time or place. Also, I recently downloaded an app called “pzizz.” A friend told me it helps you sleep at night. I’m not a great sleeper; too much on my mind. So far, I’ve had mixed results with “pzizz.”
CED: Any time for hobbies?
Kent: Not as much as I’d like, but I really enjoy snow skiing with my family. It’s the greatest family sport. We also have a lake house where we go water skiing and tubing. Finally, golf is one of the few things I do that takes my mind off of business, but finding the time is challenging.