Sowing and Reaping

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Several years have now elapsed since that famous "summer of love"-a term Leo J. Hindery Jr., then Tele-Communications Inc.'s president, coined for what was to become a frenzied mating dance among MSOs that were wheeling and dealing with the vision of creating major, cost-efficient mega-clusters, all poised to roll out new products and services.

Those deals are now largely in place, and the real work of implementing all of those grandiose strategies has begun in earnest.

The good news is that the fruits of all of that labor are very much in sight.

The bad news is that Wall Street isn't buying into it yet. And that's not surprising. Nor is it particularly distressing if cable tends to the field.

Wall Street-never known for its patience, let alone for having a rooting in the basics of agronomy or any other science that tries to impose law and order on how the real world operates-is currently not responding well to cable.

So is it really surprising that most cable stocks are down an average of 37 percent this year?

No one knows that better than an outsider to cable, Paul Allen, the former cofounder of Microsoft who quickly became an insider after he gambled big-time on cable's broadband pipeline.

Just last week, he had to sit through his first annual shareholders' meeting, where Charter Communications Inc. president Jerald Kent had to deliver the bad news that since the company went public in November, it has lost 38 percent of the value from its IPO.

Kent actually did a masterful job of steering shareholders toward the future successes of Charter. Making lemonade out of a lemon, he noted that the MSO had signed up 225,000 subscribers for "Charter Digital Cable"-a figure he said was well above most analysts' expectations.

He also singled out Charter's progress with data service, and said that at the end of this year's first quarter, the company had signed on 123,000 customers-again, a figure above most analysts' expectations.

But mostly, Kent talked about something we all need to hear more about: just how difficult it is for a consolidator to integrate all of its acquisitions.

Personally, being in a company myself that is still trying to integrate all of its acquisitions, I liked what Kent said.

He made a very big deal about making the integration process seamless to the company's customers.

He pointed to strong improvements at the former Marcus Cable systems, which had flat growth and anemic revenues and cash flow, but which are now on track. In fact, today, Marcus is one of the best performers in the industry.

And apparently, Charter learned a heck of a lot just from integrating that acquisition as far as what it will do with its other properties. Charter, like most MSOs, is now focusing on upgrading its plant, spending $3.5 billion over the next two years as it simultaneously rolls out new products in its revamped markets when the upgrades are completed.

That is agronomy in the works-tilling and preparing the fields for the new crop. Believe me, the fruits are there.

Charter has Allen's vision of a "wired world," creating a network to deliver traditional services, but one that will be souped-up enough to deliver multimedia applications to its customer base.

But Charter is also very realistic about how dumb the pipe actually is. This pipe needs human intervention. The company acquired 12 different cable companies, which had 12 different ways of doing business. Kent says it is focused on that challenge.

One of the most interesting things Kent said to shareholders, in my humble opinion, was that last year, the company hired a vice president of customer care. And what a great title that is for the cable industry, which has never been very nurturing of the customer relationship.

His name is Doyle Minton. And his mission is to establish procedures that ensure the same quality of service across the nation for the Charter brand.

In the next few weeks in this space, you'll be hearing a lot more about Minton's role and vision as he shares his game plan with Multichannel News. I wonder if he's a gardener? We'll all find out soon enough.

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