CABLES SUMMER OF FEAR Consolidation Starts to Take Its Toll8/23/1998 8:00 PM Eastern
Anxiety levels will almost certainly rise in threecorporate MSO headquarters this week, as consolidation details are sorted out that couldspell layoffs for hundreds of executives and employees.
This week, employees at Jones Intercable Inc.,which is being purchased by Comcast Corp., will hear from Comcast's top brass aboutseverance packages and stay bonuses.
Marcus Cable Co. L.P. -- which softwareentrepreneur Paul Allen bought, and which he will fold into his other, more recent cablepawn, Charter Communications Inc. -- is also expected to hear from Charter'shuman-resources department this week about consolidation details.
And Tele-Communications Inc., which isperhaps the least affected by its coming role as a division of AT&T Corp., is stillunclear about several consolidation details, including whether many of TCI'sDenver-based staffers will move to AT&T's headquarters in Basking Ridge, N.J.,insiders said.
Also on the decision board at AT&T/TCI: the fate ofTCI's Internet-services arm, TCI.NET. TCI president and chiefoperating officer Leo J. Hindery Jr. was expected to make a decision late last week aboutwhether that division will stay as it is or be assimilated into TCI's cable unit, TCICommunications Inc. (TCIC).
Combined, the steamroller known as consolidation isflattening out enthusiasm and leaving fear and anxiety in its wake, executives involved inall three mergers said last week.
On the surface, corporate officers are promising fewpersonnel changes and vowing to handle any modifications generously. But nevertheless,executives affected by the changes are shining up their resumes, putting out calls andwondering about their futures.
Not surprisingly, one executive at a top 10 MSO reportedfielding phone calls last week from Jones employees who have predictably begun"looking around."
"They're tripping over there," the industryofficial said. "This [buyout] had been rumored, but nobody took it seriously. Now,it's unclear what's going to happen."
One Jones insider said 250 of the 700 employees atJones' Englewood, Colo., headquarters -- long the glassy, angular cable sentinelalong Denver's southern I-25 corridor -- will be affected by the Comcast sale. Theremainder work for various other companies, including Jones International Inc., JonesRadio Networks and Knowledge TV.
Comcast had asked Jones to try to keep as many employees onboard as possible throughout the transition, but it did not specify how the company shoulddo it.
As a result, experts familiar with similar industry-relatedbuyouts in the past said Jones is putting together "retention packages" toencourage employees to stay with the MSO until the Comcast deal closes early next year.
One source familiar with the company's plans saidemployees who stay through next year's closing could be "guaranteed" oneyear's salary, or more, if they keep the company running smoothly.
"It's easy: You get it if you stay through theinterim," the source said. "Jones is going to treat its people very fairly.I'd be shocked if anybody left."
In fact, one 15-year-plus Jones corporate employee saidlast week, "I'm in this until the end," describing the situation as onethat was not a surprise, "but still bittersweet, because we're like a family,and this is an ending." The executive said the silver lining is the catalyst to"try something new that I may not have otherwise done."
At Marcus, the situation is similar. One source withinMarcus' corporate office said, "Virtually everyone in the Dallas office hascalls out," inquiring about other job opportunities.
That's despite the fact that Charter CEO Gerald Kentrecently made the rounds in Dallas and spent a lot of time talking to a range of employees-- not just department heads, but middle managers, too, insiders said. One Marcus sourceexpressed relief when Kent told employees, "We're going to need a ton ofpeople."
Still, workers were told that they would receive notice onterminations, stay-put offers or permanent positions Aug. 28.
For Marcus, there's also an issue of uprooting.Allen's plans to relocate Marcus staffers to Charter's St. Louis headquarters,after telling them earlier that they could remain in Dallas, seemed reminiscent of theflap that happened when U S West Media Group (UMG) bought Continental Cablevision Inc. UMGpromised executives that they could stay in Boston, but it then moved the renamed MSO,MediaOne, to Denver.
But some employees said that in their case, it's notthat big of a deal. "This is just another stop on the road of one's cablecareer," one source said, quipping that the scorching Dallas summer this year mayhave something to do with that ambivalence.
Charter's corporate employees remained serene lastweek. "My mood ring is blue," one admittedly tranquil senior executive said.That's not surprising, since Charter is the lead dog so far in Allen'sacquisition binge.
Rumors of Allen's acquisitive appetite, though, areonly adding to the jitters at Marcus. Workers are even wondering what will happen to themand to Charter employees if the billionaire buys yet another cable operation, and if thatacquisition becomes the new big dog.
The wave of acquisitions also carries several trickle-downeffects for the industry's many trade associations. Because some association bylawsrequire that companies -- and not individuals -- be voted in as board members, manyassociations may be faced with depopulated boards. Because of bylaws, MSO representativeswho were on the board may need to resign, then get voted back in.
Executive-search firms contacted last week advisedpotentially displaced workers to ignore rumors and to try to take a giant, dispassionatestep back from the situation. "Ask yourself, 'If I were the acquiring company,would I keep this position?'" experts said.
Affected workers will face very difficult decisions in thecoming months, recruiters said. That's because there are decent jobs out there forthose staffers who choose to break away now.
One headhunter suggested that executives look into wirelesscable and telephony, which are easy transitions for the skill sets that have been honed incable. Hardware and software start-ups and Internet firms are also hiring, headhunterssaid.
Complicating the decision process will be stay-put offers,where acquiring companies offer workers amounts that can range into the hundreds ofthousands of dollars to aid in the transition before their jobs are eliminated.
With a carrot that size dangling in front of an executive,it may be hard to jump to a job for the same salary or less at an unknown firm, executivesearchers explained.
For those who do stay on and become part of a merged MSO,there are inevitable "us-versus-them" conflicts to deal with next, said oneformer Viacom Cable administrator who was assimilated into TCI two years ago. "Thereare culture clashes. They get better with time," the staffer said.
Still, apathy is not advised, either. One executivesearcher, who aided workers from Pacific Bell, noted that telephony workers felt confidentwhen the utility was taken over by SBC Communications Inc., because the companies did notphysically overlap. They reasoned that the communications giant would need on-sitemanagers. Today, the executive searcher said, most of those local executives are gone.