TWC’s Britt Steps Down; Marcus Takes Reins

Successor Will Steer No. 2 MSO as Consolidation Talk Continues
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One of cable’s worst-kept secrets became reality last week, when Time Warner Cable announced that longtime chairman and CEO Glenn Britt would retire at the end of the year and be replaced in January by current TWC chief operating officer Rob Marcus.

The Wall Street Journal first reported speculation about Britt’s imminent departure in February. But the news comes as little surprise to analysts that have watched the company for any length of time — Britt himself told Multichannel News last week that he began talking to TWC’s board of directors about retirement and succession plans as early as 2008.

Britt, 64, who has emerged as one of the most outspoken executives in the cable industry over the past several years, will be missed. He was the first to talk about economy video packages and usage-based pricing for broadband, and has been a vocal critic of networks that charge fees not in sync with their ratings or relevance to customers.

But in the 48-year-old Marcus, Time Warner Cable gets a chairman and CEO with intimate knowledge of all aspects of the business. Over his more than 20 years with the company, he has been its chief dealmaker, chief financial officer and chief operating officer.

“Rob has always been very highly regarded by Wall Street,” Moffett Research founder and senior analyst Craig Moffett said of Marcus. “He’s whip-smart, he’s a straight shooter and he has already helped make shareholders an awful lot of money over the past few years.”

Still, Marcus will have his challenges. Time Warner Cable has stumbled over the past five quarters as its basic-subscriber losses have outpaced expectations. Marcus has made moves to rectify the situation, as the MSO has eliminated heavy discounting and has tailored offerings to better serve customer needs. But the recent attention from Charter Communications and one of its largest shareholders — Liberty Media chairman John Malone — could prove to be a distraction.

Charter has reportedly made overtures to acquire TWC, which have been rebuffed but have managed to boost TWC’s stock price more than 20% since mid-June.

“Rob is in a tough spot,” Moffett said. “TWC’s stock price already prices in a relatively high probability of a deal with Charter. That gives Rob a lot less room to maneuver.”

Wunderlich Securities media analyst Matt Harrigan said that although he has been with the company for years, Marcus is still unproven as an operations executive — he has been COO for just about two years — and the recent performance glitches will have to be overcome.

“Probably [a] brilliant guy, at least academically, but running a cable operation is another matter,” Harrigan said.

Marcus is not shy about the challenge, addressing operational questions head-on. Among his top priorities as chairman and CEO will be to ensure the customer is the focus of everything the company does — he said establishing an emotional connection with subscribers is critical to success — and to reinvigorate a corporate culture that is more performance- oriented. “We need to continue to be willing to reinvent ourselves,” Marcus said.

On the acquisitions front, Marcus said TWC would continue to evaluate options as it always has.

“Neither of us has ever suggested that there isn’t potential value in consolidation,” Marcus said. “The question is how you go about it.”

Time Warner Cable will be disciplined in its approach, Marcus added, and will evaluate the use of capital for potential deals compared with such alternatives as buying back stock. “That’s not going to change,” he said.

Britt also is confident that his successor is the right person to lead the company forward.

“Rob has uncommonly good common sense and good judgment,” Britt said. “That is probably the most important attribute for a CEO, and he’s got that in spades.”

TAKEAWAY

Rob Marcus, No. 2 executive at Time Warner Cable, will take command of the second-biggest U.S. MSO starting in January.

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