Altice USA chairman and CEO Dexter Goei isn’t looking to make any immediate major changes as its $17.7 billion purchase of Cablevision Systems comes to a conclusion.
Instead, the head of the fourth largest cable operator in the country with about 4.6 million subscribers in 20 states is going to take his time in whittling two medium-sized operators – Altice purchased 1.5-million subscriber Suddenlink Communications in December – into the lean, efficient machine that Altice N.V. founder Patrick Drahi envisioned when he first agreed to buy the cable company back in September.
Goei, who gave up the CEO spot at Altice N.V., the European cable, telecom and wireless magnate, to take the top spot at the U.S. cable operations, said Job 1 will be to continue to intertwine the various Suddenlink and Cablevision management teams adapt to Altice’s way of thinking and the things the company wants to achieve. After that, the focus will be on operations, combining the various back office units and making sure both companies are using the same suppliers and equipment. That, he said, should take the next six months.
Altice USA has named some of its top officers already. Joining Goei at Altice USA are co-president and chief financial officer Charles Stewart and co-president and chief operating officer Hakim Boubazine. Former Cablevision employees making the transition included Lisa Rosenblum, general counsel; Lee Schroeder as head of government affairs; Media Sales president Ed Renicker, chief accounting officer Victoria Mink; and News 12 Networks president Patrick Dolan. Altice USA named former Comcast/NBCUniversal exec Michael Schreiber chief content officer last week.
On the operations side, former Cablevision SVP of infrastructure engineering Pragash Pillai will head up the Optimum operations, while David Gilles, former Suddenlink SVP of operations, Southwest region, will head up the Suddenlink unit. Former Suddenlink president of commercial and advertising operations Kevin Stephens is president of business services, and former Suddenlink chief technology officer Terry Cordova becomes CTO for the entire company.
Rounding out the top executives, Suddenlink SVP of sales Gregg Graff will become head of residential sales; former Cablevision SVP of branding Matthew Lake will be chief marketing officer; Cablevision CIO Keith Sherwell becomes CIO of Altice USA; and former Cablevision SVP of human resources Colleen Schmidt will be head of human resources and talent development.
For the time being, the Optimum and Suddenlink brands will remain the same.
“We’ve got a lot of work ahead of us for the next six months, really getting ready for 2017, where hopefully we’ll show our colors even more than we do today,” Goei said.
One of the biggest questions ever since the deal was first announced was how Altice was going to extract $900 million in costs from Cablevision’s business. Goei said those cost savings will come over a span of four to five years and will involve some easy wins like reducing corporate overhead and more efficiently managing the business. Others will have a longer time line, like upgrading the networks and the customer experience with new home equipment and determining which vendors to use.
“Those things take time,” Goei said, adding that the financial goal is to double Cablevision’s cash flow margins from its current 20% to more than 40% over the next five years.
Some critics have said that the only way to achieve its cost cutting goal is to decimate customer service. Goei said that couldn’t be further from the truth: “Why would we ever do that? Why would we ever make our customers unhappy that they would want to churn and go somewhere else? That’s not what we’re talking about. This is not about doing large cuts in the workforce.”
As part of the approval process, Altice promised the New York State Public Service Commission that it would not cut any customer-facing jobs for four years after the deal closes. That should keep the customer service force intact for at least that time.
While the NYS PSC took its time in finally approving the deal, Altice moved relatively smoothly through the regulatory process, winning Federal Communications Commission approval in May with few conditions and getting the nod from the New Jersey Board of Public Utilities later that month.
But at the same time, the federal government appears to be cracking down on cable service, particularly on the broadband side, reaffirming net-neutrality rules last week and going forward with an “unlock the box” set-top proposal that has had heavy pushback from the industry. Despite the potentially onerous regulatory environment, Goei said he wasn’t concerned. As a European telecom service provider, Altice is all too familiar with sometime overzealous regulatory agencies.
“Nothing really surprises us from a regulatory standpoint, given how aggressive the European regulators are,” he said.
And though a newcomer to the U.S. cable business, Goei added that Altice has its roots in entrepreneurship – Drahi grew up on the streets of Morocco and built a global telecom empire before he was 52 years old, modeling his business in part after John Malone’s Liberty Media.
“I would line him [Drahi] up with any other entrepreneur out there,” Goei said.
Goei himself has a an interesting background – the son of a Beverly Hills obstetrician, he received a degree in Foreign Service from the Edmund A. Walsh School of Foreign Service at Georgetown University in 1993. He joined Altice in 2009 after 15 years as an investment banker with J.P. Morgan and Morgan Stanley.
Drahi also is replacing another legendary entrepreneur, Cablevision founder and chairman Charles Dolan. As one of the founding members of the modern cable industry, Dolan had his hand in practically every major development in the cable business in the past 50 years, from the formation of Home Box Office to the advent of broadband. But as acquisitions and consolidation has taken hold, that club has dwindled in size.
Altice USA could help whittle down that list even further – it has said it would be interested in acquiring other cable operations, especially Cox Communications – but not in the short term, Goei said.
“Absolutely not today,” Goei said of other acquisitions. “We’re very focused on integrating our business. 2016 was a year of integration and operation. Thereafter we’ll see. It would be an outright misdirection to tell you we won’t acquire something again. But we are not focused on that today.”