Operator Of The Year: Managing Change At Time Warner Cable

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Glenn Britt has never been accused of being a flashy CEO, but he’s never really had to be. As head of what is arguably the largest and most profitable division of media giant Time Warner Inc., he has had bosses over the past decade like Ted Turner who more than made up for that.

But as Time Warner Cable moves closer to separating from its parent — expected sometime before the end of the year — investors will increasingly look to Britt and his top managers for leadership, guidance and, maybe once in a while, a little tough love.

Britt has already created a bit of a stir. At last May’s Cable Show in New Orleans, when asked if TWC minds cable networks putting online for free programming that the operator pays for, he replied “Guess what? We do mind.”

While some programmers may have been miffed at the time, any controversy quickly subsided. But the remark indicated that the man who has quietly led Time Warner Cable through some of its most explosive growth over the past nine years was not averse to stepping into the spotlight.

Britt has been with Time Warner for about 36 years, starting as a controller with Time Inc. in 1972 and becoming president and CEO of TWC in 2006. He has run the cable division since 1999. In between he has held senior positions in content and distribution businesses including chief financial officer of Home Box Office, vice president and treasurer of Manhattan Cable Television, finance director of Time-Life Books Iran Project and director of business development of Time Inc.’s video group.

“One thing Glenn brings to the table is a history of being in the entertainment industry,” said Collins Stewart media analyst Tom Eagan. “He’s not just a cable guy. He understands the business model from the content perspective. That should help them in their negotiations with programmers. As they formally separate those ties with their content cousins, it’s going to be important to have someone who has that perspective.”

Now, as the formal separation from Time Warner nears, Britt has surrounded himself with a team steeped in finance, operations, marketing, deal-making and financial and organizational restructuring: chief operating officer Landel Hobbs, chief financial officer Robert Marcus, chief marketing officer Sam Howe, chief technology officer Mike Lajoie and a slew of regional operations executives.

Hobbs became COO in 2006, after serving a five-year stint as CFO of Time Warner Cable and before that in several senior finance and accounting positions at AOL Time Warner and Turner Broadcasting. Marcus became CFO in January after a stint as senior vice president of mergers and acquisitions at Time Warner Inc., serving as one of the parent company’s chief deal markers since 1998.

Late last year, Britt shook up the regional management ranks a bit, moving several executives into new slots where their expertise was needed. While he said that most of those changes were due to normal personnel movement — one executive retired, requiring a rejiggering of the regional staff — Britt admitted that moving regional managers out into the field, a move TWC made last year as well, has his imprint.

“I think the positive of that movement is that each situation gets someone new looking at it,” Britt said. “I don’t believe in having the same people in the same job for 15 years. That’s not a good thing.”

Today, each TWC regional executive is based in the market they head. In the past, the regional execs were based in Stamford, Conn. — TWC’s former headquarters — and relied heavily on local general managers.

“Our company was historically organized by divisions, essentially cities or DMAs,” Britt said. “Given how our industry grew up, pretty much in the business of selling television, each city was separate from the other cities — it had its own channel lineup, technologically it was its own island. Fast forward to today. First thing, these things are no longer technological islands, they are connected to the Internet, the public switched network, they’re two-way, so there is a great need to operate common technology and common operating procedure across a bigger footprint than just cities.”

Britt added that cable’s competition has a bigger geography. “Satellite companies are national, the phone companies are super-regional,” he said. “In order to better compete, it seemed wise to be more of a region organization than a city organization.”

He also said the new regional focus will “result in much more consistent operations, and certainly will result in better customer service.”

And while the top three executives seem to be cut from totally different cloth — Britt, the fatherly intellectual, Hobbs the Southern gentleman and Marcus the brash deal maker — so far they seem to be meshing well.

“Glenn, Landel and I work extremely well together,” Marcus said. “It’s not the case that each of us is involved in every last detail of one another’s day to day jobs, but we do work really well together. They’re involved in big financial decisions, even to the point of big financial or accounting calls that you would say primarily fall within the responsibility of the CFO. Similarly, if there is a significant operational move that we are going to make, Landel and I talk about it and Glenn is involved in virtually everything. We really kind of do everything collaboratively.”

FINANCE FOCUS



Miller Tabak media analyst David Joyce noted that all three executives have at least one thing in common: each is steeped in the financial aspects of the business.

“It is interesting that their main operating guy used to be their main money guy,” Joyce said. “So they are clearly paying attention to the financial metrics of whatever they do. Cable wins by being a very local, customer service oriented business, that’s why they have a lot of regional and local managers in their systems, that’s how they keep their ear to the ground. They are probably weighted more towards a financial and deal-making acumen than other cable operators, that’s not to denigrate their operating ability because clearly they have been on the cutting edge for a long time operations wise.”

Britt seems a little embarrassed by the controversy he caused at the Cable Show, adding that much of the brouhaha was a misunderstanding.

“I really don’t care what people put on the Internet, they can do what they want,” Britt said. “But over time, if programming is on the Internet for free, free is going to win. That’s all I’ve been trying to say.”

Putting on his technology hat — TWC has been a leader in technological innovation in the industry practically since its inception — the CEO said programmers who believe that the day when Internet content finds its way to the television screen is a long way off may be in for a surprise.

COLLIDING WORLDS



“I think the reality is that the screen on your PC and the screen on your TV are both just display devices, and they ultimately are both capable of displaying the same thing,” Britt said. “Today it is not all that easy to get Internet material onto the TVs, but the technology is certainly available to do that, and there are companies big and little working on making that happen. I think those two worlds are going to come together because consumers want them to come together.”

And that day, Britt added, is something the programmers may not be prepared for.

“If you put all of your shows on the Internet for free, eventually they’re going to be on TV for free, and consumers like free and that means the subscription revenue stream is going to go away,” Britt added. “We’ll find a way to make money from broadband and whatever services we can come up with — maybe we’ll be in the cloud computing [network-based] business — but the networks will be missing half their revenue. The only revenue stream that seems to work on the Internet is advertising. The last time I checked the overall pool of advertising in our country is growing maybe at the speed of the GNP, certainly not much more. I think this whole TV eco system is in danger by people putting their content on the Internet for free.”

At the same time, cable companies are moving farther away from video — while it is still the biggest portion of overall revenue, the growth areas in most cable companies are high-speed data and phone service. And Britt believes that the gap will widen over the coming years.

“Things change over time,” Britt said. “You look at consumers and technology and say, how can I provide services that are useful? So the first idea was reception for people who couldn’t get over it the air, for 30 years we rode on this idea of more television for residential consumers. For the last 10 years it has been more about broadband and phone. Things evolve.”

Who’s Who: TWC’s Management Team
Glenn Britt, President and CEO
Britt joined Time Inc. in 1972. He steadily rose through the ranks, serving in various posts across the company, including at Time-Life Books, Manhattan Cable Television, HBO and American Television and Communications (ATC). Named TWC chief executive in 2001 and president and CEO in 2006, he has overseen the launch of digital phone, VOD, Start Over, Look Back and DVRs.
Landel Hobbs, Chief Operating Officer
Hobbs joined TWC in 2001 as executive VP and chief financial officer and was named COO in 2006. He started with Time Warner in 1993 at Turner Broadcasting System as senior VP, controller and chief accounting officer. In 2000, he was named VP of financial analysis and operations support for AOL Time Warner, where he oversaw budgeting, financial forecasts and profit improvement for various divisions.
Robert Marcus, Chief Financial Officer
Marcus joined Time Warner in 1998 after a stint with law firm Paul, Weiss, Rifkind, Wharton & Garrison, and has become the MSO’s top deal guy. He has been in on virtually every Time Warner deal between 1998 and 2007, including the $17.6 billion joint purchase of Adelphia Communications with Comcast. Marcus moved over to cable in January, in part to be more involved in day-to-day decision making.
CORPORATE
Sam Howe , Executive Vice President and Chief Marketing Officer
Howe had been in charge of voice marketing for the MSO before taking the CMO reins in 2005, after the resignation of Chuck Ellis. But his biggest test has yet to come: the marketing battle versus Verizon Communications’ FiOS TV service in Manhattan
Peter C. Stern , Executive Vice President and Chief Strategy Officer
Just 36 years old, Stern has steadily moved up the Time Warner Inc. and TWC ranks. He was VP of strategic initiatives at Time Warner Inc. before coming to cable in 2004 as senior VP of strategic planning and has also served as executive VP of product management.
Melinda Witmer , Executive Vice President and Chief Programming Officer
A disciple of late programming legend Fred Dressler, Witmer has shown her chops in battles with The NFL Network and the Big Ten Network — TWC still doesn’t have a deal with NFL but reached a favorable agreement with BTN in August.
Mike L. LaJoie, Executive Vice President and Chief Technology Officer
Prior to joining Time Warner in 1998 as VP of corporate development, LaJoie was a software developer and a NASDAQ broker/dealer. He has overseen the development of VOD and worked on The Full Service Network, Road Runner and IP telephony.
Ellen East, Executive Vice President and Chief Communications Officer
Recruited from Cox Communications to succeed Lynn Yaeger in 2007, East provides counsel on companywide public relations, industry affairs and regulatory issues. She started in journalism, and was assistant city editor at Cox’s Atlanta Journal-Constitution.
REGIONAL
William R. Goetz Jr., Executive Vice President of Operations, Northeast Region
A long-time veteran of Time Warner Cable, Goetz is in charge of customers in Portland, Maine, and Upstate New York (including Buffalo, Syracuse and Albany). The region has 2.8 million basic video subscribers.
Carol A. Hevey, Executive Vice President of Operations, Carolina Region
A 25-year TWC veteran, Hevey was responsible for launching pioneering VOD channel Wisconsin on Demand. She was senior VP of the Milwaukee and Ohio markets before taking her current post, in charge of 1.7 million customers in North and South Carolina.
Terry O’Connell, Executive Vice President of Operations, Midwest Region
A long-time veteran of Time Warner Cable — he has led the Carolinas; Upstate New York; and Portland, Maine divisions — O’Connell was moved to head the Midwest division (which includes Ohio, Milwaukee and Green Bay, Wis.) in 2005.
Stephen Pagano, Executive Vice President of Operations, West Region
Pagano joined ATC in 1982, and has been GM of TWC’s Staten Island system and president of the Albany, N.Y., system. In 2007, Pagano was tapped to help solve integration problems in Los Angeles. He now heads L.A., San Diego and Hawaii systems.
Barry Rosenblum , Executive Vice President of Operations, Texas Region
Head of the New York region for nearly 18 years, Rosenblum has recently been the MSO’s turnaround specialist. He was dispatched with Pagano to Los Angeles and successfully turned around that market. Next up for Rosenblum is the Texas region.
Howard Szarfarc, Executive Vice President of Operations, New York City Region
A 25-year veteran of TWC’s New York City operations, Szarfarc was promoted to head the system after Rosenblum was named to executive VP of the Texas region. With all eyes on Verizon’s FiOS TV roll-out, Szarfarc is expected to be a busy man.

 To read more of the Operator of the Year report, check out the Sept. 29 issue of Multichannel News, or click here.

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