Adelphia Gloom Penetrated Summit


Adelphia Communications Corp.'s financial meltdown created an ill-timed backdrop for the cable industry's biggest marketing confab last week, when the scandal surfaced as a topic and prominent officials went public with their condemnation.

Last Monday, the day the Cable & Telecommunications Association for Marketing Summit kicked off, USA Today
broke a front-page story which claimed that federal indictments of Adelphia founder John Rigas and his sons were imminent.

The story prompted a buzz at the show, putting the long-unfolding saga top-of-mind again. Meanwhile, Wall Street continued to slide, in part because of uneasiness over scandal-ridden companies such as Adelphia, Enron Corp. and WorldCom Inc.

During his keynote address a day later, Viacom Inc. president Mel Karmazin sounded off loudly, saying corporate executives who play fast and furious with their books belong behind bars.


The CTAM program billed Karmazin as "outspoken," and he didn't disappoint when he was asked about the current "crisis of confidence" in the stock market. While he didn't refer to Adelphia specifically, Karmazin's comments hit close to home, regarding CEOs charged with financial wrongdoing.

"I truly believe that these bad people — the ones who are legitimately proven to have done something illegal — they should go to jail, and they shouldn't go to one of these country-club jails," Karmazin told his CTAM audience. "They should to Sing Sing, if it still exists, so that people will be discouraged from fraud."

Regarding the market decline, Karmazin said, "It's really sad to see what's happening to people's 401-Ks."

At the show, even National Cable & Telecommunications Association president Robert Sachs was candid — and detailed — about his reaction to the Adelphia scandal, saying his feelings have evolved from "sadness" to "anger." But he added that his trade organization has no plans to intervene in terms of crafting uniform reporting or accounting standards for the cable industry.

Sachs, after offering CTAM attendees an update on HDTV, was pressed by reporters during a press briefing about why he thought the Rigases acted as they did.


"To me, these are inexplicable actions, if what is reported is true, which are unacceptable for any executive in any business," said Sachs, adding that his reaction to the Adelphia scandal has evolved as its details unfolded.

"The first emotion was of sadness, personal tragedy," he said. "That emotion became one of anger or betrayal. There are good people who work for that company … Their lives have all been affected."

Sachs said it wasn't the NCTA's place to try to create any uniform reporting standards on financial data for cable operators to use. Insight Communications CEO and NTCA chairman Michael Willner had, during a recent call with analysts, suggested that the cable industry might look into at least making its numbers "more understandable."

Sachs said the victims of the Adelphia situation were the company's employees and shareholders, as well as the cable industry as a whole.

"That is the real tragedy: People have suffered because of the action of a few," Sachs said. "Every MSO has been impacted by Adelphia," he added — a reference to how cable stocks have tanked. He also pointed out that some NCTA members, specifically programmers, are also owed money by Adelphia, which has filed for Chapter 11 bankruptcy protection.


The Adelphia mess even was discussed in the context of offering potential "content" for cable networks.

During a session on branding, Court TV CEO Henry Schleiff was asked by moderator Marianne Paskowski, Multichannel News's editor in chief, whether his network would television the trial of Adelphia officials if, in fact, they are indicted.

Schleiff said the fundamental question was, "will it play" to a broad consumer audience?

While describing the Adelphia family scandal as "a human-interest story," Schleiff questioned whether viewers would stick with coverage of it by the third day, when the focus would likely shift to dry financial documents.

Reminders of the ongoing financial scandals popped up in the most unexpected places. During CTAM's master course on "Brand Soup: Integrating Your Branding and Product Marketing" Sunday, instructor Rick Jacobs, a principal of marketing consultancy Monigle Associates Inc., showed a slide of his company's present and former clients.

That roster included WorldCom.