News

Ops Swing Big Winter Swaps

1/07/2001 7:00 PM Eastern

Top MSOs-including Comcast Corp., Adelphia Communications Corp. and AT&T Broadband-last week closed several previously announced deals that helped strengthen their clusters in markets such as Detroit, Los Angeles and South Florida.

At press time, AT&T was also expected to soon close its purchase of Cablevision Systems Corp.'s Boston-area cable properties. Cablevision signed a deal to sell its more than 2 million Boston area customers to AT&T last April.

Larger clusters give operators greater efficiencies of scale and help to lessen consumer confusion over marketing offers and programming lineups within a given market.

"It makes us much more effective in marketing to a broader base of customers," Comcast executive vice president of marketing and customer service David Watson said.

Because clusters give MSOs a larger base of customers to target, Comcast can use traditional media such as broadcast-TV, radio and print ads to market its new products rather than relying only on more targeted advertising.

Clusters also open up the opportunity to sponsor large community events, Watson added.

In addition, market clusters should help bolster cable's relationship with retail, Watson predicted. It's harder for a retail chain to do business in a fragmented cable market, he noted.

Through its deal with Adelphia, Comcast picked up about 470,000 customers in New Jersey, eastern Pennsylvania, Michigan, Indiana, New Mexico, Ohio and Western Florida. In exchange, Adelphia gets about 440,000 customers in Los Angeles and Palm Beach, Fla.

Comcast also gained about 750,000 customers from AT&T in Washington, D.C., Pennsylvania, New Jersey, Florida and Michigan. AT&T gained about 750,000 customers from Comcast in California, Colorado, Chicago, Florida, Georgia and Pennsylvania.

The Adelphia and AT&T swaps helped Comcast increase its Detroit-area market share from 30 percent to 80 percent, said Comcast Midwest division president David Scott. The No. 3 MSO will serve more than 900,000 of metropolitan Detroit's 1.1 million cable customers. Time Warner Cable and Charter Communications Inc. control the remaining systems, Scott added.

The Detroit system plans to promote the Comcast rebranding with a customer mailer sometime soon. It also plans a big employee welcome within the next two or three months.

Some of the employees Comcast picks up from AT&T had worked for MediaOne Group Inc. The Comcast consolidation in Detroit should bring local employees a sense of certainty, Scott said.

Comcast will also add an additional customer call center from AT&T, as well as the legacy phone system that MediaOne introduced into the Detroit market.

"We'll continue to build on telephony in the AT&T markets" in Wayne and Oakland counties, which pass more than 200,000 homes, Scott said.

Comcast's control of the Detroit market also allows the MSO to take over management of the local advertising interconnect, AdNex Detroit. Over time, Comcast is likely to change the interconnect's name, Scott acknowledged.

Adelphia plans to notify its new customers of the name change through first-class letters and bill inserts, corporate spokesman Paul Heimel said. He does not expect customers to see any substantive changes in programming or prices for the foreseeable future.

In Los Angeles, Adelphia will now control 1.3 million customers and 2,500 employees, giving the MSO the largest cable footprint in Southern California, Adelphia regional vice president Bill Rosendahl said.

Los Angeles has long been one of the most fragmented cable markets in the country. Even today, it is served by four other MSOs: Cox Communications Inc., AT&T, Charter and Time Warner.

"I don't think the consolidation is complete yet," Rosendahl said.

Rosendahl acknowledged the company would need to upgrade some of its newer systems to 860 MHz to help bring some former Comcast and Jones customers "into the digital age."

Some of the newly acquired properties had not yet launched digital cable. In addition to digital, Adelphia plans to roll out high-speed data services and eventually telephony to its new customers.

In Los Angeles, Adelphia markets high-speed data over both the PowerLink and @Home brands. Scott said it's too soon to say whether the MSO will market all its cable-modem products under a single brand name.

Adelphia's first goals for the larger Los Angeles market include improving customer service and integrating its new employees into the MSO's work force, Scott said. The company will evaluate its employee base to see whether it's been underpaid or undertrained, he added.

Down the road, Adelphia hopes to institute a common programming lineup for the Los Angeles market, so customers who move across town don't face different packages and prices. In the shorter term, Adelphia will introduce its local-origination programming to its new customers.

Comcast has already launched its CN8: The Comcast Network to 90,000 newly-acquired customers in its Philadelphia cluster.

Want to read more stories like this?
Get our Free Newsletter Here!