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Cable Operators

Cox Communications: 50 Years in Cable

8/27/2012 12:01 AM Eastern

As cable and telecommunications
provider Cox Communications
marks 50 years in the multichannelvideo
business this year, it’s instructive
to look much further back — to
the early part of the 20th century —
to see how some of its family traditions
took root.

James M. Cox — who founded the
company that is now Cox Enterprises
by buying the Dayton (Ohio) Evening
News
in 1898 — enacted several
milestone laws as governor of Ohio,
governing workmen’s compensation,
mothers’ pensions and enhancements
to the penal system.

The newspaper company that
“Jimmy” Cox created, and that later
expanded into TV and radio broadcasting,
embraced many of the ideals
and principles he employed as a
public servant.

He was dedicated to treating employees, customers and
communities fairly and respectfully, according to biographies.
His theory: take care of your employees and they will
take care of your customers.

Cox died in 1957. But his family and his family business
have carried on a spirit of civic and corporate involvement
and responsibility.

A PEOPLE COMPANY

Cox Communications — the Atlanta-based cable business
that today represents about two-thirds of the parent company’s
revenue and a higher share of the profit — has built and
maintained a reputation for taking care of its people and customers
and offering new products and services, all while delivering
strong financial results.

Cox has won repeated customer-service surveys and has
been considered a leader
in diversity and workplace
excellence by cable industry
groups such as Women
in Cable Telecommunications
and the Cable and Telecommunications
Human Resources Association.

Outside experts have agreed:
DiversityInc has named Cox as
one of the best places for people of
color and gender to work for the past
several years.

Cox Communications president Pat Esser credits the
Cox family for Cox Communications’ corporate culture,
which James M. Cox kick-started more than a century ago
and which current Cox Enterprises chairman James C.
Kennedy continues today.

“It all started with the governor,” Esser said. “We have fourth-generation
family members working inside the business" — Jamie Kennedy, vice president of corporate development at Cox Enterprises, and Alex Taylor, senior vice president of field operations
for Cox Communications -- "and that helps ensure the authentic
business model and culture here.”

Cox has always cared about their employees and its
customers, Turner Broadcasting System vice chairman
Andrew Heller said.

“It’s like family for them,” he said. “This is a family-owned
business and it shows in how they treat their customers and their
employees. It starts with Jim Kennedy and it flows through Pat
Esser all the way through the company.

“They [the Cox family] pushed their family values into
corporate America and that’s unusual here,” Heller added.
“They made a bet early on that their values infused into their corporate mindset were good business. And it turned out to
be a good bet for Cox.”

Cox Enterprises CEO Jimmy Hayes said Cox Communications’
20,000 employees are just as important to the preservation
and embodiment of the company’s corporate values
and environment. “Every decision Cox makes starts with
answering the question, ‘How will this impact our employees?’
” Hayes said. “They are the key ingredient in the secret
sauce that is all about making Cox, Cox.”

JOB OF A LIFETIME

Longevity and loyalty are in short supply in business, but Cox
has worked hard to create an environment where employees
want to stick with the company for life.

“We like for people to think about that when they join
the company that they’re going to be here for the duration,”
Hayes, a 16-year veteran of the cable company who was
its chief financial officer when he moved to Cox Enterprises
in 2005, said. “I know some of my best very best friends
are right here at Cox and that we’ll be celebrating at each
other’s retirements.”

Cox is famous for grooming its employees to rise through
the ranks. The company has extensive career-management and
advancement programs in place enabling employees to move
up the ranks; improve their skill sets; and feel fulfilled professionally.

Esser’s history typifies the Cox culture. He has been
with the company for almost 34 years, starting as “the local
programming/public-access/community relations/
whatever-needed-to-be-done guy” at Cox’s Hampton Roads,
Va., system.

Jill Campbell, who was appointed senior vice president and
chief operating officer this past March, has been an operations
executive with Cox for 29 years.

Other long-timers in the senior ranks include Billy Farina,
senior vice president, Cox Media (28 years); David Pugliese,
senior vice president, product marketing (16 years); Bob Wilson,
senior vice president, content acquisition (33 years); and
Joe Rooney, senior vice president, brand marketing, advertising
and social media (25 years).

The company has long been a champion for diversifying
its ranks and is one of the reasons Cox has received so many
shout-outs from WICT and CTHRA.

“Cox’s belief in diversity starts with Pat Esser and goes
down from there,” WICT president and CEO Maria Brennan
said. “Women consistently rise to the highest levels there, and
they are always among the top companies in our PAR (Pay Equity;
Advancement Opportunities; and Resources for Work/
Life Support) surveys because of their employee resources, hiring
practices, and retention programs. They are big proponents
of lifelong learning and they have always supported programs
to retain and promote their talent.”

For all their attention to lifelong career planning for the company’s
employees, Cox’s management has not shied away from
external expertise. Some of the company’s most innovative executives
have come from outside its incubator-like environment.

Ajit Dalvi was a marketing marvel when he came to Cox
from The Coca-Cola Co. in 1982, setting “a high bar for cable
marketing,” CTAM president and CEO Char Beales said.
Dalvi retired in 2000.

For years, Cox was the only cable company to include extensive customer research into its marketing strategies, Beales
noted.

“Today, Mark Greatrex is reinventing cable marketing as
a research-driven marketing machine,” she said of the company’s
senior vice president, chief marketing and sales officer,
who also came to Cox from Coke about a year ago.

Esser’s top team consists of long-term veterans and newcomers
in an effort to infuse new energy and ideas with stability
and institutional knowledge of the company and its
core values.

RISK-TAKERS

Like its focus on employees and customers, Cox’s reputation
for taking risks goes back to the parent company and
the Cox family.

Cox was primarily a newspaper and broadcasting company
until 1962, when it jumped into the cable business by
buying systems in Lewistown, Lock Haven and Tyrone, Pa.
Cox was one of the first broadcasters to see the potential of
cable as an asset and ally, rather than a competitor or enemy.

The unit went public in 1964 and other acquisitions followed.
By 1971, Cox was so bullish on the cable business it
started building its own systems.

The company began experimenting with home-shopping
services and expanded its reach by buying a 30% stake in
a Denmark cable system in 1974. A year later, Cox served
386,861 customers and had 765 employees. The average customer
bill was $6.47 a month.

By 1981, Cox served 1 million customers, was testing new
services like INDAX (the precursor to interactive TV) and
had begun delivering video signals via fiber-optic cable.

Cox Communications was the first MSO to offer phone
service. Kennedy made the first ever phone call over a PCS
network to the chairman of the FCC in 1997.

The company jumped into the commercial services business
with both feet in 2000; that business now generates more than $1.3 billion in revenue a year.

The MSO was first out of the gate when it came to digital
channels and broadband as well, Esser said. It was a risk in
2002 when Cox exited the @Home partnership that delivered
high-speed Internet services for a consortium of MSOs.
But Cox’s team believed the company’s customers would be
better served if it could deliver voice, video and data services
over one network.

Cox built its own Internet and transitioned 1.5 million
customers to it in 90 days, Esser said.

“We have a culture that allows you to take risks,” Esser
said. “We’ve had some missteps, but we have a belief in our
network and our people. And if we take care of our customers,
we’ll always make money.”

One area that didn’t turn out as expected was wireless
phone service. Cox had purchased $500 million in spectrum,
intending to build out its own wireless network,
Esser said. “But five years later, we realized that the business had evolved differently than we thought. We decided there
were better ways to handle this, and we changed direction.”

Cox — as part of another multi-MSO group — has agreed
to sell that spectrum to Verizon Wireless, and the companies
are partnering to offer wireless services in Cox markets.
(Verizon is also doing the same thing with Comcast,
Time Warner Cable and Bright House Networks under a
separately but similar arrangement that, like the Cox pact,
recently was granted conditional approval by the U.S. Department
of Justice.)

In the wake of the 1984 Cable Act, which removed most
local regulation of the cable industry, Cox’s cable operations
were spun off into a separately held company. Parent Cox
Enterprises took the MSO private a year later.

AT YOUR SERVICE

At a time when the cable industry as a whole was somewhat
cavalier in trying to make their customers happy, Cox
was conducting its first customer-service survey and making
changes in its policies to make sure its customers were
satisfied. Other operators scratched their heads at what they
perceived as a waste of Cox’s time and money.

“I remember we were at an NCTA board meeting in the
mid-1980s and some executives were outwardly mocking
[Cox president] Jim Robbins for his attention to customer
service,” Char Beales, president and CEO of the Cable &
Telecommunications Association for Marketing, said. “You
have to remember at the time, there was no real competition
for cable and they didn’t see the value in spending money
on [customer service]. But Jim was willing make the bet
that taking care of his customers was good for business and
the bottom line.”

By the time cable companies came up against true nationwide
competition from satellite-TV providers, Cox was
relatively well situated to compete against the “dark stars.”
Satellite penetration rates were consistently lower in Cox
markets than those served by other MSOs, according to
Beales.

Here’s an example of why: A short time after Cox began
offering phone service to its customers in San Diego, Calif.,
the company accidently released a number of customers’ private
and unpublished phone numbers.

“It could have been a nightmare,” Esser said. “But our
general manager there, Bill Geppert, contacted every single
customer and told them we would do whatever it would
take to fix the problem.”

In some cases, that meant giving the customer a new
phone number. But the company also installed security systems
in some homes and even helped some customers move
to ensure their privacy. It took a couple of months, but it was
worth every second, Esser said. And, he noted, the number
of phone customers at that system went up after the incident
“because we stood behind our customers and did the
right thing.”

“One of the key things about Cox historically — and
we’ve been around since 1898 — is that we have really great
employees and really great relationships with our customers,”
Hayes said.

“It’s that relationship with our customers that has allowed
us to justify spending to improve customer service — it’s
what we do and it’s what sets Cox apart from the rest. We
have and will continue to invest aggressively in technology
and in our relationship with our customers.”

MUTUAL RESPECT

Cox’s employees and customers aren’t the only groups that
generally enjoy positive relationships with the company. The
cable operator rarely finds itself in public spats with its program
distributors, be it broadcasters or cable programming
executives.

That’s not to say the company has been able to sidestep
every contract negotiation landmine.

Cox has publicly sparred with Fox and LIN TV over retransmission
consent fees and Robbins took ESPN to task in
2003 over rising carriage fees and sports-rights costs. Even
so, the imbroglios are few and far between and when they do
arise, they tend to be short-lived and non-disruptive.

Robbins, who served as Cox’s president from 1995 until his 2005 retirement, didn't take his fights personally either.
ESPN executive vice president sales and marketing Sean
Bratches remembers being paired with Robbins for an industry
golf tournament during the public spat between the
two companies.

“I was a little nervous about it,” Bratches, who ran the affiliate negotiation team at ESPN, said. "But Jim came up
to me and said, ‘Let’s put the knives away and have some
fun.’ And we did. And we worked out our differences, too.”

Heller, also a longtime distribution executive at Turner,
said Cox manages to avoid potentially messy and unsettling
negotiations because of the way its executives conduct
themselves. Its executives (including Wilson) come to negotiations
with respect for the people on the other side of the
table, Heller said.

The Cox team can drive a hard bargain, Heller said, but
negotiations are fair, respectful and professional, usually resulting in smooth talks and deals that benefit both parties.

Like other MSOs in the 1980s and early 1990s, Cox invested
in programming companies and ventured outside the
U.S. to offer services. The company created U.K. Gold in
1991, in a programming partnership with BBC and Thames
Entertainment.

It also offered cable and phone services to U.K. residents in a partnership formed in 1993 with Telewest that ended
when Cox sold its stake in that MSO six years later.

Cox was also one of the original investors in Discovery
Communications in 1985. The company held on to that asset
until 2007, when it sold its stake in the programmer for
$1.3 billion and cable network Travel Channel.

Until that time, said Discovery Communications CEO
David Zaslav, Cox plowed every dime it made on the investment
back into the programming entity.

LONG-TERM THINKERS

“Cox’s philosophy is different from so many other players in
that they take long-term views of the business and everything
they do is driven by customer satisfaction,” Zaslav said. “Their
philosophy with their investment in Discovery was the same.
They always took the long-term view of sustainable growth
and they wanted quality content. It’s one of the reasons Discovery
is as successful today as it is.”

Cox sold controlling interest in Travel Channel to Scripps
Networks Interactive in 2009 for about $975 million, continuing
to own 35% of Travel Channel Media.

Cox Enterprises CEO Hayes spent 16 of his 32 years with
Cox at Cox Communications. He was the MSO's chief financial officer in 1994, when it bought Times Mirror Cable and increased its subscriber base to 3.2 million from 1.9 million
overnight.

As part of that deal, the blended company was spun off and
became a publicly traded company — again.

“It was truly a watershed event for our company and the single
best transaction we could have made,” Hayes said.

In the two decades that followed, Cox continued to expand
its reach, eventually serving 6 million video customers in 18
states.

It launched high-speed data; became the first operator to get into the phone business;
launched a commercial-services
unit and created the bundled
service offering of voice, video
and data on one network, from
one company.

Along the way, Cox continued
to come up with creative
and innovative ways to help its
employees succeed and make
its customers happy and satisfied.

In 2004, Cox Enterprises, which had maintained a majority ownership stake in the publicly
traded Cox Communications, decided to take the company
private — again.

Esser recalled getting a phone call from Kennedy on a Sunday
morning telling him that the Cox Enterprises board had
voted to take Cox Communications private.

“He told me, ‘I know we have an incredible product and I am
willing to make a bet on you and the company,’ ” Esser said. “I
was speechless. They were willing to borrow $8.5 billion because
they believed in us.

“As an employee, you should feel good about that, and
I think everyone at the time did.”

Hayes said that “while being part of a public company was
exciting, our company’s strategic mindset was better aligned
with being a private company.”

“Going public allowed us to rapidly accelerate our growth, but
it also made us focus more on
short-term tactics to appease the
market than we like to,” Hayes
said. “The chance to go private again in 2004 allowed us
to reinvest in one of the greatest
assets we know of — Cox
Communications. Going private
allowed, and continues to
afford us, greater control and
the opportunity to really focus
on our long-term strategy — on
what’s right for the company —
for our employees, customers and shareholders.”

While founder James M. Cox set the framework that enabled
the cable company to be created and succeed, he probably never
envisioned anything like the multiple-service provider that
eventually emerged, according to his grandson, company
chairman James C. Kennedy.

“I think my grandfather would be very proud and amazed by
all the things that we do at Cox Communications that he didn’t
even know would exist,” Kennedy said. “I’m very thankful that
we got into this business. It’s been a great 50 years and the opportunities
for future growth remain plentiful.”

Cox Communications Management Team

PATRICK J. ESSER
President

Years With The Company: 33

First Job With Cox: Director of programming
in Hampton Roads, Va.

Experience: Esser was part of the original
managemen team that formed Cox Media,
Cox’s ad sales division

JILL CAMPBELL
Executive Vice President, Chief Operations Officer

Years With The Company: 29

First Job With Cox: Director of Communications
in Oklahoma City

Experience: Campbell currently serves on the Board
of Directors for the Special Olympics of Georgia.

MARK F. BOWSER
Executive
Vice President,
Chief Financial
Officer

Years With The Company: 6

First Job With Cox: Vice President of Cox Business

Experience: Bowser began his career with the FBI
investigating white-collar crime.

LEN BARLIK

Executive Vice
President Of
Product
Management And
Development

Years With The Company: 1

Experience: Prior to Cox, Barlik served as VP of
wireless and wireline product development for
Sprint Nextel.

KEVIN HART
Executive Vice President, Chief Technology
Officer

Years With The Company: 1

Experience: Hart was most recently chief information officer at Clearwire

ASHEESH SAKSENA

Executive Vice
President Chief
Strategy Officer

Years With The Company: 1

Experience: Saksena served on the transition team
for New York Gov. Andrew Cuomo and supported
New York Mayor Michael Bloomberg’s NYC 2020
initative.

RHONDA TAYLOR

Executive
Vice President,
Chief People
Officer

Years With The Company: 4

First Job With Cox: VP of people services for Cox
in Baton Rouge, La.

Experience: Taylor is actively involved in the
community fostering student education and
development through speaking engagements
and serving on boards and other organizations such as
Junior Achievement and Alpha Kappa Alpha sorority.

September