CEOs Address Current Challenges

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While the cable industry should survive the fallout from Adelphia's woes, it will struggle to remain viable with consumers if it doesn't become more diverse on the screen and in the executive suite, according to industry executives.

The recent Adelphia Communications Corp. accounting scandals have thrown the industry for a loop, but are not indicative of cable's overall financial practices, said MSOs who spoke at a NAMIC Conference forum here last week.

"There aren't similarities with what's happening with Adelphia and the rest of the industry," Insight Communications Co. CEO Michael Willner said. "I think you will see very little concern about the industry overall."

"I think it comes down to character," E! Entertainment president Mindy Herman added. "If you can instill a commitment of character within your organization, then these [problems] become the exception, rather than the rule."

Vigilance needed

The executives said the scandals have forced directors to become more vigilant and involved in the financing and accounting decisions that companies make.

"The days of board-member rubber-stamping are long gone," National Cable Television Cooperative president Mike Pandzik said. "It never should have been a passive exercise, and it certainly isn't now."

The accounting scandals have helped to depress cable stocks, curtailing the financing of technological and infrastructure investments — and potentially leading to more industry regulation, which would further chill budgets.

"If we stifle innovation by overregulation, it will have a chilling effect on the economy, as well as the industry as a whole," Herman said. But Pandzik said government intervention might be necessary to help corral skyrocketing programming costs, which small operators have a difficult time absorbing while trying to keep cable rates to a minimum.

"That is a life-and-death issue for small operators," Pandzik said. "I would like to solve that within the industry, but the there are some who would like to take the issue to Washington."

Pushing financially vital digital technology into the home looks like it'll be a huge challenge, panelists added. To do that, executives said it's imperative to develop programming that provides value to consumers — especially minority viewers in urban markets, who are projected to be the biggest users of digital-cable products.

Seeking Nets, shows

That means launching networks and programming targeted to minorities. Herman admonished the industry for having just one highly penetrated minority-targeted service, Black Entertainment Television.

"That is a failing of the industry," she said. "These are very good customers with a lot of buying power, and if we fail to offer more variety of programming, it's just bad business on our part.

"As an industry, we need to get behind a channel and see it through."

While Nickelodeon has effectively diversified its programming to reflect people of color through such shows as Little Bill
and The Brothers Garcia, Nickelodeon, Nick at Nite and TV Land president Herb Scannell admitted the organization hasn't done enough to diversify upper management.

"I think the screen says that we've done a lot to encourage more diversity," he said. "But we're not diverse enough behind the screen."

Overall, Willner said cable has to do a better job in embracing diversity.

"We'll have to be more responsive to the customers that we serve," he said. "It's just good business."