CATA TO FOLD ITS HAND? Association Conducts Strategic Review

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The Cable Telecommunications Association (CATA) has begun astrategic review that could result in it being absorbed into the National Cable TelevisionAssociation, according to sources familiar with the talks.

While some executives involved in the negotiationscautioned that the review remains "a work in progress," and that it could resultin a different type of reorganization, both parties are working aggressively to make theplan work, these sources added.

In any event, those close to the review said one thing iscertain: Industry consolidation, changing technology and a sea change in the nature of thecable business have conspired to put the future of CATA in serious jeopardy.

CATA represents small and midsized cable operators.

This year's CATA chairman, Barry Babcock, chairman ofCharter Communications Inc., said a decision might come as early as February.

NCTA president Decker Anstrom made it clear that"whatever happens is CATA's decision, and the NCTA did not initiate the reviewprocess." He added that the NCTA's executive committee wouldn't even consider thematter until after CATA votes on its review.

Talk of reorganization began about 18 months ago, whenmembers of CATA's board brought up the idea of reviewing the organization's operations inlight of industry consolidation and convergence.

According to one source, the fact that two-thirds of thetop 20 MSOs were members of both CATA and the NCTA also prompted some board members toquestion the need for both groups.

After several months of kicking the idea around, CATA'sboard voted to formally launch a review in September, hiring cable consultant Robert Sachsto head up the inquiry.

Sachs -- a cable veteran who was a senior executive atContinental Cablevision Inc. before leaving shortly after U S West Media Group acquiredthe MSO and moved its headquarters from Boston to Denver -- now jointly runs aBoston-based consulting firm, Continental Consulting Group.

Sachs declined to comment about the review, although othersfamiliar with CATA's current situation confirmed that he is heavily involved.

Sources familiar with the talks said a number of issuesremain unresolved, including the timing of the expected consolidation and the fate ofnumerous CATA staffers, some of whom are longtime industry veterans.

Most expect that 23-year CATA president Stephen Effroswon't have a formal role at the NCTA, instead opting to take a severance package andpossibly to start his own private consulting firm.

Effros wouldn't comment specifically on his plans, but hesaid the goal of the review "is to find a more efficient way to supply all of ourservices. We're not clear what the answer is at this point of the strategic review."

While Anstrom walks the halls of the Federal CommunicationsCommission and testifies before Congress, Effros, during the past several years, has spentmost of his time helping his members to make sense of byzantine Washington, D.C.,regulations from CATA's Fairfax, Va., offices.

But one source noted that Effros would likely maintain someties to the NCTA, as long as it didn't involve a public role that might dilute Anstrom's"one voice" there.

CATA's services include a fax alert that warns members ofinside-the-beltway developments, a multimillion-dollar public-relations-training programand a number of database-related information services.

CATA has also been active at state and smaller regionalcable trade shows, especially with its "CATA Open Forums," which feature aDonahue-esque Effros pelting industry executives with questions.

Less clear was the fate of other CATA staffers, some ofwhom are industry veterans in their own rights. Among them is CATA's vice president ofpublic affairs, Anne Cowan, whose name had already been floated to fill the NCTA's topcommunications post that Torie Clarke just vacated.

Another vacant NCTA post is the No. 2 spot currently heldby June Travis, who is leaving at the end of January to return to Denver.

Although sources close to the review said key CATAexecutives would likely be "taken care of," both Effros and Anstrom declined tocomment on any pending personnel decisions.

All sides have an interest in making any transition assmooth as possible, especially as the cable industry enters a crucial period of lobbyingin Washington, D.C.

Foremost, few want the NCTA to be distracted as it works toensure that the March 31 deregulation deadline sticks.

In addition, the NCTA is embroiled in a contentiousproceeding at the FCC to head off possible rules requiring digital must-carry, along withseveral other regulatory minefields.

Sources said any consolidation likely wouldn't take effectuntil June at the earliest.

One big question is whether the NCTA would be able to fillthe member-service vacuum left by CATA. One source said a considerable amount of slackcould be picked up by the Small Cable Business Association, which has grown into asignificant lobbying presence in the past few years.

But most agreed that without the support of CATA'smembership, any reorganization or consolidation could create bad feelings at a time whenindustry unity is more important than ever.

"If something is going to happen, now is the time forit," Effros said. "But it's not clear yet that [a joined NCTA and CATA] cansupply all of the member services during this kind of move. That's not nailed down yetand, until it is, this is a work in progress."

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