News

Solution Driver: Payne: Cox’s Programming Dealmaker

1/24/2009 2:00 AM Eastern

Kathy Payne’s computer crashed a few days before Christmas. As a top content negotiator for Cox Communications, she was busy wrapping up a number of deals that needed to close before the end of 2008.

“My computer is completely dead,” she said with surprising calm. “That’s not very good for the end of year. You have a lot of end-of-year deals.”

Payne, 47, has been cutting programming deals for Cox since 2001. A lawyer by training, she is the company’s vice president of programming, a key link between 5.4 million cable subscribers and hundreds of cable networks seeking all kinds of concessions from Cox.

“Kathy has an amazing ability to identify and focus on problems so that she can drive solutions,” said her boss, Cox senior vice president of programming Bob Wilson. “In the face of extremely challenging responsibilities negotiating with programmers, Kathy ably represents our needs without allowing contentiousness to adversely impact outcomes at the negotiations table.”

Payne grew up in West Point, N.Y., where her father was a professor at the storied military academy. She received her undergraduate and law degrees from Duke University.

She joined Cox in 1993, spending seven years in the legal department before her elevation to the programming division to supervise content contracts with some of the largest media companies in the U.S.

Over the past eight years, Payne’s job has seen more change than just about anybody’s in the cable business. A programming deal today is layered with complexity because technology allows operators to do so much more with content than they could before.

“We’ve really gone from just a world where we negotiated simply a linear channel to now where we are looking at the standard-definition version of that channel, to a high-definition version, as well as video on demand,” Payne said.

Cox, she adds, also needs to guard against deals that could needlessly restrict what the company can do with evolving technology.

“When we negotiate deals, we have to try to tie down everything we’re talking about today but also leave flexibility so that we can grow our business, without having to go back every single day and say, 'Oh, can we do this or can we do that?’ ” she said.

Payne has won the respect of her peers on the opposite side of the bargaining table.

“The opportunity to get to know people like Kathy Payne is one of the real perks of working in the cable business,” ESPN executive vice president of sales and marketing Sean Bratches said. “She is a great advocate for the operator and a smart, creative contributor to our collective businesses.”

These are challenging times for Cox. Phone companies have invaded its markets; the Internet is growing as a cable substitute; former Federal Communications Commission chairman Kevin Martin has investigated Cox’s use of switched digital video and its movement of analog channels to digital; and the national economy has tumbled into a severe recession.

“We have been looking at our business quite thoroughly for the last year to prepare for the economy right now, to help make Cox a stronger company,” Payne said. “I think cable is somewhat recession-resistant but it’s not recession-proof.”

AT&T and Verizon Communications are providing pay TV service and reselling DirecTV’s satellite service. The telcos entered after losing millions of phone customers to Cox and other cable companies.

“It has definitely heightened the level of intensity. We have to run our business much more efficiently,” Payne said.

Having the FCC looking over her shoulder has been a distraction. Martin put regulatory heat on cable after the industry refused to break up its programming packages and offer channels on an individual or a la carte basis. A la carte mandates, Payne said, would fail to achieve greater consumer choice.

“I know Kevin Martin has wanted a la carte for a long time,” she said. “I don’t think the customer is going to be happy if suddenly a lot of the niche channels that they like are not in business anymore because no one is buying them.”

Another challenge: Cox is paying for cable and broadcast programming that is available for free over the Internet. That situation has to change, Payne explained.

“We pay a lot of money overall for this content and we can’t have it out there being streamed for free over the Internet and everywhere else, for it completely devalues the business proposition that we are paying for,” she said.

Payne and her husband David, an advertising executive formerly with CNN.com, have two girls — Kendall, 14, and Halle, 12 — whose viewing habits only confirm the new choices arrayed before today’s cable family.

“They’re much more watchers of recorded programs than live TV,” Payne said. “They really like to watch TV on demand.”

When her schedule permits, Payne and her family “love to travel.” But it’s never a problem for Payne to pack for home and return to her desk at Cox.

“I like going to work because I work in a really interesting, challenging industry,” she said. “There’s no way one could ever get bored in this industry. I think that’s the reason people stay in it for so long, because it’s constantly changing.”

September