Adelphia Marketing Chief Eyes Brand Growth

Author:
Updated:
Original:

At age 47, Adelphia Communications Corp. already has one ofthe oldest brands in the cable business.

And if Tom Cady, the MSO's vice president of marketing andsales for the past six months, has anything to say about it, the Adelphia brand will nowextend further than ever.

Adelphia is fueling its growth through virtually everymeans available: acquiring other MSOs, moving into new regions, deploying new products,targeting business customers, building a national fiber backbone and exploring multipletechnologies for last-mile delivery to the home or office.

Thanks to the name change of its Adelphia BusinessSolutions Inc. subsidiary (formerly Hyperion Telecommunications Inc.), Adelphia's brandextension will move beyond areas where the MSO has cable franchises. The company's boardofficially approved the name change last Monday, but the brand transition has been underway since this past spring.

Some consider it risky to tag a business division with acable brand. "We believe Adelphia has a pretty good track record," Cady said."As we develop our brand over time, it will definitely be something we want to carryover across both markets."

With the help of its national fiber backbone, which shouldbe completed by the end of next year, Adelphia plans a national expansion on thecommercial side. "We'll be serving most markets in the continental United States,with a few exceptions," Cady said.

Adelphia will use a mix of fiber, digital subscriber lineand wireless local multipoint distribution service to establish last-mile connectivity,Cady said.

When asked whether using technologies typically associatedwith phone companies might raise eyebrows in the cable community, Cady answered,"We're a service provider. We're not depending on any one technology."

For its national expansion outside of its cable-franchiseterritories, Adelphia will focus on the business market first. But eventually, Cady said,the company might take DSL into new residential markets where it's established a businesspresence, or even overbuild a cable network outside of its current cable properties.

Cady led Hyperion's marketing team prior to his promotion.His biggest challenge in his new role is pulling the marketing teams from both theresidential and business sides and "finding where we could leverage our strengthsacross both sides of the business."

Adelphia plans to offer all four of its core productcategories -- video, voice, data and messaging -- to homes and businesses, although someapplications differ between the two markets. Businesses may want videoconferencing or dataapplications such as frame relay that residential customers don't need.

After a recent marketing reorganization, Adelphia now hasone executive overseeing each of the four product categories, responsible for both thebusiness and residential markets. In each product category, there's also a specialist foreach market, business and residential.

Cady acknowledged that it was still relatively unusual foran MSO to have a dedicated team for the business market.

SG Cowen Securities Corp. analyst Gary Farber said thebusiness telephone market represents "big dollars," adding that having abusiness strategy will prove attractive for any cable operator that chooses to do so.

To reach business customers, Adelphia primarily uses adirect-sales force, which Cady predicted would more than double in size, exceeding 1,000,by the end of next year.

Adelphia also allows outside sales agents to sell itsservices, but only under the Adelphia brand. "We don't wholesale our services,"Cady said. "We want a direct relationship with our customer."

The MSO's residential-sales strategy includes field sales,call centers and retail.

The company will keep the "Power Link" brand forits cable-modem service, rather than signing up with Excite@Home Corp. or Road Runner,Cady said.

Ultimately, Cady wants to use retail to sell all Adelphiaconsumer services, such as digital cable, cable modems and paging.

Cable & Telecommunications Association for Marketingpresident Char Beales said one of Adelphia's top priorities today is integrating its newproperties. Early last month, the MSO closed on deals to acquire Century CommunicationsCorp., FrontierVision Partners L.P. and Harron Communications Corp.

Rebranding the new systems presents a great marketingopportunity, if it's done right, Beales said, adding, "'New and improved' has alwaysbeen the most powerful marketing message."

Adelphia has just begun the rebranding efforts for its newsystems. The process is expected to take about 90 days. "At some point, you have tostop, because otherwise, people will say, 'I've got it! Why do you keep telling methis?'" Cady said.

With the new acquisitions, Adelphia plans to revamp itsadvertising and promotional efforts. "We're not using the Century or Harron approach,or even the Adelphia approach," Cady said. "It's all new."

Adelphia will test a customer-loyalty program in itsBuffalo, N.Y., system, where it has a longtime presence on both the residential andbusiness sides, and where it owns the Buffalo Sabres National Hockey League team.

While growth is a clearly a priority for Adelphia,"Customer retention is a key goal for next year," Cady said, because "thevalue of the customer has gone up dramatically."

Adelphia's stock price doesn't yet reflect the value of thecustomer, which has led Wall Street analysts to strongly recommend the stock in recentweeks.

"Given what we view as outstanding fundamentals and byfar the least expensive statistical valuation in the [cable] group, we regard the stock astruly compelling at the current price," Goldman, Sachs & Co. analysts BarryKaplan and Lou Kerner wrote in a report two weeks ago.

Residential Adelphia customers are worth $200 to $300 permonth when factoring in cable, telephone, paging, high-speed Internet and home security insome markets, Cady estimated.

"The loss [of a subscriber] in the future will hurt awhole lot more than a loss in the past," he added.

Related