When I first heard that Rocco
Commisso was forming his own cable
company in 1995, I told a colleague at the
time that I knew a nice guy who was about
to make the biggest mistake of his life.
The cable industry was under regulation, Wall Street was
pounding values into the dirt, and operators were fast consolidating.
Cable’s old guard — Alan Gerry, Amos Hostetter and
others — were getting out, not in.
Poor Rocco, I thought; he’ll be out of business
As the decade passed, Mediacom Communications
went public, grew up and became a force in
the cable-TV industry, as Mike Farrell reports in
this week’s cover story.
Along the way, Rocco became an unabashed
spokesman for cable operators big and small,
unafraid to say exactly what he was thinking, regardless
of the repercussions.
He battled Sinclair over retransmission-consent
fees in a fight that drew national attention, the focus
of Congress and thanks from his peers. He fought
ESPN over rising fees and his desire to put the
network on a sports tier in another skirmish. In
both dust-ups, Rocco blazed a trail for operators
who followed him against the same adversaries.
In time he was recognized — inside his company and out — as
a risk-taker, a diplomat and leader whose word was his bond.
There is only one Rocco Commisso and, like Elvis, you need
only mention his first name for people to know whom you’re
Now, in part because of the market’s low estimation of cable
stocks, he wants to take the empire he’s assembled private.
The plan isn’t a slam dunk — investors could hold out for more
money, and Rocco would have to pay.
As long as there has been a cable-TV industry in the U.S.,
shares in cable operators have always been whipsawed by
diverse forces, from fiery D.C. regulators threatening new
rules, to new disrupting technologies, to the whims of Hollywood
studios. The share price, in analyst terms, is “eventdriven.”
More attention is always lavished on public companies. If
Mediacom goes private, the cable industry could
lose an important voice and a bright personality at
a time when they’re needed the most. Cable needs
Mediacom’s effort to go private reflects a widely
felt and longtime disconnect between cable owners
and investors. That’s why Insight and Cox went
private, and why others, notably Cablevision, have
Investors care mostly about stock price, not
the longevity of a strategy. For example, if a cable
CEO feels the need for further upgrades to match
a competitor or offer more services, a call for more
capital spending would almost certainly send the
share price tumbling.
But investors should take note: Maybe cable
stocks are undervalued. Why have so many cable CEOs
chosen to get away from SEC scrutiny, gadfly investors and a
public fixation with quarterly reports?
The decision to go private is a testament of faith in the underlying
business. It’s an indication that managers running
these companies have more confidence in their intrinsic
value. And it shows that owner-managers are more convinced
of cable’s future than fickle investors.