The Telco Siren Song

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SBC Communications Inc. and Verizon Communications Inc. are busy considering the choicest TV executives from the realms of satellite, cable operations and channels as they prepare to launch video service later this year. And it’s a tactic that other telcos are expected to follow as they start up their video operations in the future.

It’s not just a matter of raiding the enemy camp. “I will go so far to say if the telephone companies don’t [hire multichannel talent] they won’t be successful,” says Tracy O’Such, a managing partner of U.S. operations for executive search firm Ray & Berndtson, which is helping SBC fulfill its video mission. “There’s no question cable is freaking out, and they should be.”

Consider recent additions to the SBC and Verizon rosters. Terry Denson, who is leading the video strategy at Verizon’s FiOS Television unit as vice president of programming and marketing, was vice president of programming at Insight Communications Co. and also worked in affiliate sales at MTV Networks. At Verizon, Denson has hired former Insight colleague Bill Binford as director of programming, as well as Ann Schick, who hails from Starz Encore Group LLC’s ranks and currently serves as director of consumer acquisition and marketing. Also on the team is former Discovery Communications Inc. affiliate sales executive Roger Seiken, who is now negotiating the legal deals with networks as executive director and assistant general counsel for Verizon.

“Terry [Denson] now has seven or eight direct reports, and he’s looking to hire people at lower levels. And I’m looking to hire one or two people to handle legal and business affairs side of it,” Seiken reports. Will Verizon continue to pull talent from television? “As long as I’m doing the hiring,” says Denson.

“We’re like a cable company on steroids,” says Binford, describing how Denson and crew are playing “Beat the Clock” to launch service in the second or third quarter of this year.

SBC’s Dan York is working in much the same manner. A former executive at In Demand LLC and Home Box Office, York started working for the regional Bell operating company in mid-November as executive vice president of programming and is setting his sights on a video launch at the end of this year.

To get the job done, he’s hired former HBO vice president of business development John Penney as executive director of products and strategy, as well as Roland Noll, a video technology specialist from Discovery. York’s new senior vice president of programming, Amy Friedlander, was an executive at Intertainer Inc. York says he’ll add another half-dozen people in the next month.

Bill Simon, managing director of the worldwide entertainment and media practice at Korn/Ferry International, says that the two hot hiring areas in the media realm these days are video-related telco positions and jobs related to short-form content on mobile devices. But he says some talent has reservations about crossing over to telco TV.

That’s not only because of the perceived cultural differences, but the telcos’ failed attempts at video in bygone eras. Remember TeleTV, a venture formed by NYNEX Corp., Pacific Telesis Group and Bell Atlantic Corp.?

But the telcos have “learned a lot of lessons,” says Simon. “A lot of telco people are very smart.” One indicator is SBC’s decision to base its programming operations in Los Angeles rather than at its corporate facilities in San Antonio — a programmer’s version of Siberia.

What’s more, the telcos are evolving. “I think the old type of buttoned-up culture at the telcos has changed,” says Rene Hauch, vice president of candidate outreach at the search firm Carlsen Resources.

“They’re starting to have fun, and they’re recruiting the right people, because people from the cable industry have that can-do attitude. It’s kind of scary,” says Marilyn Humphrey, a former U S West executive who is now vice president and general manager at Cox Communications Inc.’s system in Roanoke, Va.

Seiken certainly finds Verizon conducive. Building a programming department from scratch is a “once in a lifetime opportunity. To realize that everything that exists tomorrow will be due to what we do today,” he says.

And the salaries aren’t bad either. Telcos are definitely willing to meet the higher price tags required to lure people with the right TV stuff. “It’s not a magic formula, but if they’re looking at a person in-house that’s making $150,000, it would take $300,000 to attract someone from cable,” says O’Such.

Certainly they have plenty of motivation. “The cable companies have been the aggressor in taking the telephone companies’ customer base, so it’s an imperative for the telephone companies to respond competitively by offering video services,” says Helen Britton, a Washington-based media consultant.

“The twist on the story is there are as many people on the telco side that are coming to the cable business,” says Chuck Morris, a senior partner at the search firm Warren & Morris Ltd.

Indeed, cable companies have been snapping up telco talent for years. For example, Time Warner Cable has 31 vice presidents and general managers handling telco strategy at its divisions, and “the majority” hail from telephone companies. A few more phone veterans are also in the ranks at headquarters in Stamford, Conn., according to a spokesman at the MSO.

The bidirectional talent flow promises to intensify. “Wireless hasn’t been a major focus for cable so far,” says Kishore Reddy, director of voice services at CableOne in Phoenix and an AT&T veteran. When wireless catches fire with MSOs over the next few years, “all kinds of skills and talents will be needed in every single company.”