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Howard Wood

Interview Date: Wednesday August 06, 2003
Interview Location: St. Louis, MO USA
Interviewer: Paul Maxwell
Program: Hauser Project


Howard Wood

MAXWELL: I'm Paul Maxwell with The Cable Center in Denver, and this is part of the Gus Hauser oral histories. Today we've got Howard Wood, who joined Cencom in... Howard, when did you join?

WOOD: 1987.

MAXWELL: 1987, but you'd been a little bit involved with it before that, is that right?

WOOD: I went back with Bob Brooks, who was the basic founder of Cencom, into the mid-70s. In 1976, when I was at Arthur Anderson I helped Bob syndicate the equity to new build in Columbia, Missouri. At that time, believe it or not, that was the first time where a syndication had been done on a new build cable system. There had been other syndications that were done to buy systems that were up and running, but never one to do a new build and we did it with Tucker Anthony in Boston. They liked the deal so well it never got out the front door. The partners at Tucker Anthony bought it all.

MAXWELL: Did they really? How much was that in those days?

WOOD: Oh, gee. You know, Paul, I don't even remember anymore. It was not much money by today's standards; let's put it that way, maybe 20 million dollars.

MAXWELL: Columbia's a nice sized system, isn't it?

WOOD: The University of Missouri is there, it's the largest city in middle Missouri.

MAXWELL: It's a nice town.

WOOD: Yes, it is. So they built that system and then Bob and his partners went on to build St. Charles, which is now one of the fastest growing cities in the United States, as well as some other towns in St. Charles county, and then they sold out to TelePrompTer, or the successor to TelePrompTer, Westinghouse and so forth. I forget who it was at the time they sold, but I guess it was Westinghouse. They got out of the cable business. Bob founded Cencom, which I was involved with, again, as an advisor, not in any way as a principle. Bob had a heart attack, a fairly serious heart attack, had open heart surgery and over a period of a year finally convinced me to come out to basically run Cencom for him. As it turned out, he recovered better than he thought and he went on to some other bigger and better things in the telephone business and so forth. Bob was a real pioneer, as you well know, in the cable business and started out in his early career... Columbia was the first system that he had ever been involved with as a builder or operator. Prior to that, he'd always been a consultant, primarily to cities, in the franchising arena. So, that's how I got involved in the cable business.

MAXWELL: What were you doing when you got involved in the cable business? You were with Arthur Anderson?

WOOD: I was a regional tax partner for Arthur Anderson. I ran the St. Louis tax department and then I had about seven other offices that reported into me in the Midwest area.

MAXWELL: So where did you grow up? Around here?

WOOD: I grew up about an hour south of where we're sitting right now and went to Washington University in St. Louis. Unlike very many other people in public accounting, I spent my whole career in St. Louis, including my cable career. I now live on my farm about four miles from where I grew up.

MAXWELL: That's great! And your friends, like Jerry Kent, are following much the same path. A local boy, Washington University, accounting, cable television.

WOOD: I hired Jerry out of Washington University when I was running the tax department. Jerry was an MBA graduate from Washington U. He stayed with me at Arthur Anderson for four years and it was during that time that the partnership that had been Columbia and St. Charles and so forth was dissolved and Bob formed Cencom more or less by himself with a couple of other guys that he had working for him. Jerry in '83, I believe it was, left Arthur Anderson, went out as Bob's primary financial person then they worked on Cencom for the four years before I went out. It was about 130,000 subscribers when I went out there and we grew it to about 500,000 or 600,000 before we sold it to Hallmark.

MAXWELL: And you sold it to Hallmark and found that Kansas City is different from St. Louis?


WOOD: Well, yes. We were really entrepreneurs in some ways although I have never thought of us as entrepreneurs some people have said that. I've always looked at us as being one of the early groups of professional managers.

MAXWELL: You came in it from a financial accounting and numbers background.

WOOD: Jerry and I are both CPAs. Barry Babcock, who was with us when we formed Charter, is a lawyer by training. We've always tried to run the business as a professional manager would run the business even though we never hung a wire on poles or did any of the things that many of the pioneers in the industry did, we really came in at a time that I've always felt like cable was starting to come into its own. The cities were being franchised and built in the early '80s, so they were up and running. In fact, in Cencom our biggest system of course was St. Louis County, and there had been a lot of franchising problems in St. Louis. As with many big cities there were rather questionable issues, but by the time we got there most of that was all gone. They had franchised St. Louis County into about six franchisees. That had been somebody's brilliant idea. What we did, basically, was one by one we got them put together into one system.

MAXWELL: When you guys got into it though, that's just as programming – cable only, at that time – really exploded. CNN went up in '80 and then the start-ups across the next four or five years is really kind of impressive growth of creativity.

WOOD: We've watched the whole programming industry, if you want to call it that, just explode. It's the niche programming that is successful and it really never ceases to amaze me. I guess you forget how many people there are in this country, is what it really boils down to, and I think as time has gone on you're seeing more and more competitive programming, which I think is good because at one point you had only one real news channel, now you've got two or three and I think that's good. They give maybe little different points of view. I used to always laugh... when I came into the industry in 1987 it was not uncommon, and you probably remember it, you'd go to some of these industry meetings and somebody would get up and pontificate about this mature industry and how it had no place to go because it had grown all it was going to grow and it was mature, and oh my goodness, what were we going to do? I always kind of laughed because I thought there was nothing further from the truth. The industry was in many respects just a babe in arms. A lot of the companies were still... it wasn't poorly managed, but they weren't necessarily managed by a lot of people that had been used to running a big business or a big company and they were becoming big companies.

MAXWELL: Well, in the '80s there were still a lot of the guys who had literally strung the first poles still very, very much involved, and there still are a few.

WOOD: And still are... Bresnan and some of them are still around. Bill Bresnan was on Cencom's board when I came to work. He about had a heart attack because he thought Brooks paid me too much. I haven't seen Bill for awhile, but you go back to those guys and a lot of them built great companies. Bill Bresnan for sure.

MAXWELL: He certainly did, a couple times. And doing it again.

WOOD: Yes. I think it's been really fun to watch the industry go from what people thought was mature to what it is today and what it may well become. It's got a long ways to go yet, in my opinion.

MAXWELL: I couldn't agree more. Bill, by the way, is the chairman of The Cable Center.

WOOD: I knew he had been. I didn't know if he still was.

MAXWELL: He still is. In selling to Kansas City, you guys got out of the way.

WOOD: What we really thought we were doing, to be honest, is we thought that... Hallmark had a strategic vision. People look back at what they did and they say, "Well, why did they do that?" But they looked at themselves as a communication company. They said, "You know, we think that there's some kind of link here between cable television and what we do, which is visual. We maybe ought to be in this business." So that's what got them to where they were when they bought Cencom. That was kind of in some ways maybe an unfortunate event as it turned out. We would probably have sold Cencom to Gaylord Entertainment, or the Gaylord family, OPUBCO, which was our primary partner.

MAXWELL: Yeah, Oklahoma Publishing Company.

WOOD: Oklahoma Publishing Company – one of our primary partners in Cencom. They had bought with our management the California systems and had become a major player in Cencom and they really wanted to buy Cencom in total at the time that we sold it, but they were in the middle of a public offering. The family had gotten large and so they were splitting off entertainment and it was a very difficult accounting situation. Cencom – God bless us – we created an accounting nightmare we had so many companies and partnerships and so forth. They just said, "Look, we'd love to do it, but we can't do it because it will delay our public offering for another year if we take this on." And so we ended up making a deal with Hallmark, which we really wanted to stay and continue to build the company. Irv Hockaday, who was the CEO of Hallmark, and Jim Hoak, who I'm sure you know, had been college roommates, as I remember, or something like that, and so Jim was involved and Jim was in Dallas. So after a year, I guess, we just decided that what we wanted to do was not what they wanted to do and we left. In the meantime, they had moved the company to Dallas, which our employment contracts had a proviso that said they couldn't do that without dealing us out so we in effect just worked out something with them and got dealt out, so to speak. Within a year or so, they had decided they didn't want to be in the cable business anymore. It was during that second round of re-reg and as you recall nobody wanted anything to do with cable so we kind of became a buyer of last resort, and gosh, I'm sure they didn't want to sell their systems back to those three guys in St. Louis but that's the way it worked out. Of course that was the start of Charter and we bought our first systems from the McDonald brothers and then bought our old systems back, which were really, Paul, what allowed us to build Charter. A lot of people look at it and say, "How did you build that company so fast?"

MAXWELL: You already knew them.

WOOD: We had everybody we had built in Cencom and they were all still there, so we just got them back in a bunch. So we didn't miss a stride. You knew the people, you didn't have to worry about the culture of the company or anything like that, which we were always very proud of and we just were able to take off from there, so to speak. So it made it a lot easier at Charter because of that. There was one interesting event I'll just tell you about because it might be historically significant. About two months before we sold to Hallmark, Ed Whitaker, who I knew – and Southwestern Bell, of course, was headquartered here at that time – so Ed and I were at a cocktail party one night and he said, "You know, we need to get together for lunch." I said, "Really? Okay, you have to buy, though. You have the fancier dining room." So I went down and had lunch with Ed and he said, "We want to get in the cable business." I said, "Really? What has that got to do with me?" He said, "We don't know much about the cable business. What would you guys think if we bought the systems and you managed them?" I said, "Well, that would be fine except we're in the process of being sold to Hallmark. That deal's not quite done." He said, "That's all right. I know the guys at Hallmark. We'll partner with Hallmark." I said, "Terrific! I'll get you guys together." So I did. I got Hockaday and Whitaker together right after the transaction was done and they got together and said hello and everything was fine. So we went out and they said, "You've got to find a system," because what they wanted to do was they were going to really go into the cable business with the idea of competing with the resident RBOC and lo and behold, Bob Bass had Atlanta on the market at that point. So we went back and said, "Look, here's what you want." Well, it took about two weeks to sell SBC on the deal. The problem was we couldn't sell Hallmark, and they couldn't get there. Of course it was a huge acquisition and SBC finally said, "Look, we'll do whatever you don't want to do," but obviously one of the requirements was that the three of us were going to be in the management and that may have had something to do with why it was taking so long. But at any rate, we finally got everybody through the hoops and over the hill and went back to Bob and he said, "Look, you guys are taking so long I don't want anything to do with this. I'm out of here. We're not going to sell." So he didn't until a couple years later. That was when the three of us said, "You know, we probably need to get out of here."

MAXWELL: I can understand that problem.

WOOD: But it would have been interesting because but for Hallmark's reluctance, SBC would be the owner of Atlanta today.

MAXWELL: It's interesting that Whitaker, as he's acquired other RBOCs, got out of cable immediately.

WOOD: Well, he went on then looking for other alternatives. He got the system around Washington D.C.

MAXWELL: Which Hauser owned.

WOOD: Right, which Gus had. It never really worked the way they thought it was going to work, I guess, and they just abandoned the idea, in effect. Ed's a very decisive guy. When he decides to abandon something it's abandoned. That's one of the few things in my career that I've often looked back on and wondered, what would have happened had that deal have happened the way the SBC people wanted it to happen and what could have gone on from there? That was obviously before there were any kind of restrictions on ownership and so forth, but it was an interesting time.

MAXWELL: That's interesting. I didn't know that it had gotten that close.

WOOD: It got very close.

MAXWELL: I knew they had been sniffing around back then, but I didn't know it had gotten that close at that time.

WOOD: We actually put the offer on the table. He just said, "I've been watching you guys and you've been flopping around like a fish out of water and I don't want anything to do with this and I'm out of here."

MAXWELL: So when you guys got back together without a Kansas City connection at that time and started Charter you then got essentially everything back.

WOOD: Exactly. We did. At that point in time, I would have retired probably but Jerry and Barry both were too young and didn't want to retire and so they talked me into staying as well. We formed Charter and the three of us ran Charter as a three-man office of the chairman, so to speak, for a few years until it got big enough that that didn't work very well, so it was time for the youngest of the crew to put his shoulder to the wheel. So we nominated Jerry because he was younger than both of us. Of course it worked out extremely well and we then went on to build Charter and were ready to go public, but Paul Allen came along and cut that short. So we sold the company to Paul Allen. I stayed on the board. Jerry, of course, stayed on as the CEO for his three-year contract and then decided to leave, as I did as well, and Paul knew that I would stay only as long as Jerry was CEO. That was the end of our Charter routine. Meanwhile, it was 7 million subscribers, but probably in some ways not as much fun as when we had a million.

MAXWELL: Different issues.

WOOD: It's fun building a company but when you build it as fast as Charter was built in that last 18 months, two years, that creates a lot of issues that are very hard to control in terms of keeping your culture in place, you're bringing in a lot of new people, the HR – human resource – aspect of that is enormous. I didn't know what Jerry would do after he left Charter, but after he drove carpool a couple of days and had fun with his kids for awhile he decided he wanted to do it again. I said, "I'm too old. I'm not going to do that again." Well, that wasn't the answer he wanted to hear, so we talked about it some more and Dan Bergstein, who'd been our lawyer for many years... Barry, meanwhile, was smarter than I was. He said, "Look, I'm retired. I'm staying retired. Just go away." So Dan and I and Jerry formed Cequel and it's done exceedingly well.

MAXWELL: You're off to a good start.

WOOD: It's off to a very fast start and I think it'll be fun to build it just like we did with the pure cable company. This one, of course, has some other aspects to it.

MAXWELL: Well, you've got an awful lot of sticks. You really do. That's an interesting, different business, too. I can see why you did what you did.

WOOD: I'll tell you what, Jerry and I both like the business very much. One of the features that I love about the cable business was that it has a lot of customers paying a small amount each month. That business a little different in that you have only half a dozen big customers, but on the other hand it's a business that if you believe in wireless, telephony, why I don't see any way that it's not going to be a great business for a long time.

MAXWELL: I see kids and new households forming keeping cellular and not getting landlines. That's an interesting phenomenon.

WOOD: Yes, there was a statistic that surfaced somewhere this week, I think, that said 7 million households now have wireless only.

MAXWELL: Right. It's an interesting culture shift happening. My daughter's going to be one of those, I know.

WOOD: Your kids and my grandkids. There's no telling what they're going to do. They're not in any way inhibited by technology. My generation said, "Well, I can still just as soon have a plain old push button phone as opposed to one that lets me do all these other things." There's a bit of a resistance in my generation to technology.

MAXWELL: One of the fastest growing internet connections is people over 60.

WOOD: Really? Well, we overcome everything. It took color TV fifteen years to make it, so we're adopting high-speed internet a lot faster.

MAXWELL: Well, there's good reason. There's a connectivity aspect as well as an entertainment aspect.

WOOD: It certainly is.

MAXWELL: It's a different kind of thing. Jerry was saying that he looks as that as the savior for the rural systems that you're in now.

WOOD: It certainly is going to be big in the future of those systems, I think, because the only thing, Paul, that really... you could say, well, DSL could compete, but not really, not in those rural areas like that, at least not cost effectively.

MAXWELL: Well, they're not going to put central [???] in those places anyway. They're never going to.

WOOD: That's right. They can't afford to put it where they need it.


WOOD: So you have some of the wireless technology that's being deployed out there, primarily 'mom and pop' stuff, the old MMDS.

MAXWELL: Those things have a high failure rate.

WOOD: If you recall, one thing I left out is when we first started Charter, we didn't own a system for a year and four months. During that time we did a consulting project for PacTel, which was kind of interesting, but we also got involved in an MMDS operation down in Texas with Charterhouse. They had an investment there and they were having trouble and wanted to know if we'd go down and see if we could salvage it kind of thing. So Ralph Kelly moved to Austin – who's now with us back here as a treasurer, he was treasurer at Charter as well – Ralph went down there as well as a couple of other people and we didn't salvage much of anything but we did get them out of the investment. We looked at it and said this thing isn't going to work because the churn just ate you alive. The video churn rate and dish was coming on at that point and comparatively there really was no comparison. Dish was going to make it uneconomic and did and that's why all of them did a belly flop. Now, wireless internet is maybe a little bit more viable in the sense that it doesn't have any competition in a lot of these rural towns unless the cable company has two-way or high-speed. Consequently, you can find some places around that have toeholds but they're not anything substantial.

MAXWELL: No. There's one in my neighborhood but it had bankrupted and come out and is doing better. Comcast will kill them when they go high-speed.

WOOD: If it has a future, Paul, it's in probably the medium sized cities that are not wired for cable in the business area and that can cover a business area pretty effectively.

MAXWELL: That's true, it can, especially if the city's flat.

WOOD: That's right, if your terrain's all right. But other than that, the rural cable company, given what technology has done for us, we couldn't do what we're doing today two years ago.

MAXWELL: That's an opportunistic chance, then.

WOOD: That's exactly what we're doing and that's exactly why we're doing it. It is an opportunistic investment because of what technology did within the last 12 months or so.

MAXWELL: In the antenna business that you've got with all those sticks around, you've only got five or six or seven customers, I guess, and that puts you mind of cable systems dealing with programmers who now think they only have eight to ten customers. But you'll have half a million subscribers by the end of the year?

WOOD: I think so.

MAXWELL: So that puts you on a little different ground than the Comcasts, the Coxes, the Cablevisions and the Time Warners.

WOOD: You know, Paul, I think there's a real issue there and I think that somehow it's got to be fixed. If I were a programmer I would probably pay attention to it because as you well know, for rural cable operators, their programming costs for the same signal is enormously higher than for a Comcast or one of the large companies.

MAXWELL: Or more specifically, for Dish or Direct, which I think is a shame.

WOOD: It is. Everybody says well, you know, it's volume. Volume discounts are what arose when you got operating efficiencies from size. Arguably there is no operating efficiency from a satellite signal.

MAXWELL: Well, no, but there is some argument for some discount.

WOOD: Maybe some, but not like there is now. I think eventually, as is normally the case, it happened with telephone, if the programmers do not address the issue, if they leave it as is where is, I think Congress will address it because it will come under this whole issue of equal opportunity and so forth for rural America, particularly if high-speed because as important as Jerry and I think it's going to become in that rural marketplace. Well, the cable company is the one providing it. As Barry Babcock used to say, "Plain old cable – don't ever forget what it is." If you can't make that work, then you're not going to make high-speed data by itself work. So I think all of these things are interrelated and it's one of the things that will be interesting to see. There was a time when I thought that the programmers might well be able to challenge the MSOs in a major way for their margins, but time has gone on and as the consolidation has gone to the extent that it has, I don't really believe that anymore. The big MSOs have so much clout that I think they will always be able to defend themselves, so to speak, in that environment, but there was a time when we were starting Charter – back that long ago – that I wasn't so sure that that was always going to be the case.

MAXWELL: Well, that was right as the programmers had, to a degree, consolidated. Viacom got stronger and stronger, Disney's group got... Cap Cities was right at about that time, I believe, and that changed the nature of how they looked at what their programming was because when they picked up ESPN they discovered cable in a big way.

WOOD: I think that playing field between the MSOs and the big programmers, even though it's the 800 pound gorilla against the 1,000 pound gorilla, they playing field is probably pretty level at this point, I think. I don't think either one of them are going to hurt the other one too much.

MAXWELL: No, they're pretty symbiotically dependent to it to a rather startling degree.

WOOD: Some of them vertically integrated to the point where that's a factor, too.

MAXWELL: We have News Corp acquiring Direct TV, which changes the playing field quite a lot.

WOOD: It does.

MAXWELL: What kind of impact is that going to have on your business?

WOOD: It's not going to make it any easier, I don't think. Again, you go back to high-speed data being an important piece of this. You know rural America, and so do I. I live in a town of 3,000 people. Their needs and what they want and desire and so forth are a little different than what you have out the window of this office here in suburban St. Louis. How that all plays out I'm not sure and I've always felt that Direct and EchoStar and all the rest of them are going to find the same thing that everybody else knew, and that is density is a heck of a lot more fun to work with when you've got high-density than when you've got low-density. By definition would you go into our small towns and build a cable plant today? No, but it's already there. Technology is making it capable of doing things that it had never been capable of doing before. So, on that basis, I think it becomes very competitive given the fact that it can deliver some services that Dish can't.

MAXWELL: We do have the bigger guys to thank for driving down those hardware prices, which is a significant change in the last few years.

WOOD: Big change! Means all the difference, Paul. It's not just technology. You make an excellent point; it is the price of hardware as well and maybe even more importantly. You have the greatest technology in the world and if the hardware was still too expensive you couldn't do it.

MAXWELL: The interesting thing in your career with Jerry – you've been together a long time now – how do two people like you complement and work together?

WOOD: Well, I hired Jerry out of college so I was with him during his early years. I was badly hurt when he left me at the end of four years to go to the cable industry, but by the same token, Jerry and I are different in our styles. We have always, for whatever reason, been able to accommodate that and Jerry, as I have always said, is one of the brightest and best that I've ever been associated with and I've enjoyed watching what he's been able to do. I do some things better than he does, and he does lots of things better than I do. I love to build the organization. Jerry's a tremendous operator, which people don't always recognize. They always used to look at us and say, "Oh! We understand how you guys do all this – you're M&A guys. You know how to do all that stuff." Well, that was true – we did now how to do all that, but what they lots of times didn't get was the fact that what we really knew how to do was operate a cable system and our operating results were very, very good throughout all of our companies. I gave Jerry his first operating job. He was my CFO at Cencom. We had the California investment that I mentioned with Gaylord. Barry Babcock was deciding to split between California and the rest of the company, which was getting to be a pretty good size, so I decided to let Jerry take a hand at doing some operations work so we sent him to California to run the California systems, be responsible for the California system out of St. Louis. Well, he did a great job and the rest was history, so to speak. I like the organizational aspect of building the company. I like to have the people where they're supposed to be when they're supposed to be there.

MAXWELL: You seem to shun the spotlight, too.

WOOD: Over the years at Arthur Anderson, I watched people that I thought were the most successful in the organization and I found that one of the things that they almost universally did is they stayed behind the scenes and they let the people that were really good get out in the spotlight. It was amazing how much better off everybody was in that kind of a situation. Jerry hasn't been much for the spotlight – in fact, none of us have been up until the Paul Allen area then Jerry was much more in the spotlight, but we all kind of figured that there wasn't necessarily anything to be gained by sticking our head above the trench line too far, and we were a small company. We're still small since we sold out in both companies relatively speaking by today's standards.

MAXWELL: In your career, what's the most rewarding moment?

WOOD: The most rewarding moment was watching Charter be able to absorb almost five million subscribers in 18 months and not blow it. That's the people side of the business again, and watching people really take on a challenge. It was unique, Paul. I spent 26 years at Arthur Anderson. I'd seen a lot of pretty good managers and a lot of business challenges with my clients in that period of time, and I worked for most of the big clients in St. Louis – General Dynamics, May Company and so forth. I will tell you that that was the toughest management assignment that I had ever seen in my business career to do what they did in that 18-month period, and down to the guys climbing the poles, they did it. It may not have always been perfect everywhere, but given the results they got from it, I was nothing short of amazed. That was probably the most rewarding thing. We made a lot of millionaires when we sold to Charter. That was fun, too, for people that had started with us and worked with us, but that was probably, because of what I like to do in business, that was the thing that was probably the most rewarding.

MAXWELL: And among the most challenging, I would think.

WOOD: Oh, yeah. Many of those people will go on to do... it would be interesting to track all of that management group down to the middle management level that were at Charter during that two-year period, let's say, and see where they are ten years from now. I would tell you there will be a lot of successful business people in that group.

MAXWELL: That's good. How about other people that mentored you? We've asked Jerry and you were the first words out of his mouth.

WOOD: I had some mentors in the accounting firm that were very important to me, and I had some clients that were very important to me. There was Jerry Lobe who was the president of May Department Stores Company and is now retired. Jerry, although he never thought of it as mentoring, was extremely helpful to me. Brooks was a mentor of sorts. He was always a challenge. The guy that ran the tax division for Arthur Anderson for the whole firm, in fact, was and still is a very good friend of mine. He's retired and has been for a number of years, but he was certainly a mentor. I have more than one; I had several in my career. I was very fortunate in that regard. I've tried to do somewhat the same thing. Of course Jerry I've been with probably the longest, but there are others that I'm very proud of as well.

MAXWELL: Good. How about other people in the cable industry that you've worked with or against or across the table from in the past few years?

WOOD: Well, you know, there's always John Malone. I got acquainted with John right out of the chute when I was with Brooks. John was arguably the best strategic thinker that the industry has ever produced. He, of course, owned through TCI 35-40 percent of our first company, Cencom. When you think about people in the industry he obviously has to really stand out. In the operating side you have to look at the Roberts. They've done a good job with Comcast over the years. Cox has been very effective with all the people down there. I think that in the last ten years, particularly, there have been a lot of people generated in the cable business that I would say have done an admirable job of what they had to do, but there weren't very many John Malone, Amos Hostetter... a few, but when I got into the cable business the management ranks, if you were to rank them against other industries in terms of the quality it was pretty dismal, it really was. But that has changed a lot. It had to or these companies wouldn't make it given the size of the cable companies today.

MAXWELL: Absolutely for sure. What do you think is going to happen in the next five to ten years in cable?

WOOD: Well, I think there are two scenarios. The one that might be most challenging would be a scenario that said that wireless was somehow able to effectively deliver high-speed data. Now, the technocrats might tell you that that probably isn't going to happen, others might say it could.

MAXWELL: A lot of money's been lost on that already.

WOOD: Yep, a lot of money, a lot of people thought they had it fixed and didn't. I'm not one of those people, Paul, that tries to see too far in the future. If that happens, it's a dog eat dog competition.

MAXWELL: Can A-band work for satellite to enable that competition?

WOOD: I don't know. I don't know.

MAXWELL: They're going to try.

WOOD: I'm not enough of a technician to be able to figure that out.

MAXWELL: Malone is there with Wild Blue.

WOOD: I always pay attention where Malone is. He's not always in the right place, but he's usually not too far away from it. I think the other scenario is that cable continues to have a decided advantage on the delivery of high-speed data, which will eventually lead it into more telephony. There's no question about that and will probably lead there in any event. You referenced what we did in our consulting agreement with PacTel. That was a very interesting four months – that was all we could stand working for a telephone company – but it was extremely interesting and I told the guys when we did that, I said, "You know, there is one job in this world that I would not want right now and that's the CEO of and RBOC because they have no place to go." I still believe that to this day and I think what's happened to them has proven the point. They're in a terrible position, Paul, because it's just like what's happening now with the relaxing of the tax on dividends. It's sucking a lot of companies into the big dividend distribution, which is exactly where the phone companies are. They're locked into that. Their investors have been taught that that's what you get from the phone company. Their capital for their capital availability is restricted. They still have a lot of regulation problems. The regulators still drive them nuts and I'm somewhat sympathetic to that, but by the same token they frankly haven't done a heck of a lot to help themselves. The reason I said what I said about being the CEO of an RBOC goes back to the culture thing, and I am a great believer in a company's culture, and you get a particular culture in the 100,000 employees and let's see you change it. In today's world change is rapid. It's not like it used to be; actually it's happening at the speed of light and when you have a huge organization like that that's got a culture that is hard to change or almost impossible to change and you have to go to non-competitive to competitive – can't do it. They may get there over some period of time, but in the meantime they're going to be hurt badly, I think.

MAXWELL: Cable operators by and large were in that position, but certainly responded to satellite better than one might have thought.

WOOD: They have and we'll see what happens in another five years. Satellite's made some inroads.

MAXWELL: Serious inroads.

WOOD: Serious inroads, and I think that you've got to always be looking forward. You can't be looking backward, you've got to be always looking forward to what that next revenue stream is. Frankly, when you look at the telephone, telephony, generally, everybody's taken the margin out of every part of it, Paul. You can't find a part of telephony that you can look at and say, "Gee, I'd like to be in that business," because the next thing you know there's no barriers to entry, you've got eight more people in it and off you go. So now there's no margin, you can't make any money. I think that cable companies have the plant in place. I don't think it's going to be a situation where we're going to continually upgrade like we have during my career in cable. You never had enough money. I think those days are passing and I think that you can become a low cost provider, which is something that cable has never really been.

MAXWELL: No, and never tried to be. That's an interesting point of view. That ought to scare Charlie.

WOOD: You might think so.

MAXWELL: That's interesting. Just dealing with SBC is intriguing.

WOOD: I've heard different stories about that. I've heard from the SBC side it's still very much an experiment, quote, quote. The only thing I can tell you is SBC is tough.

MAXWELL: Whitaker's just no nonsense.

WOOD: He is no nonsense and neither are his people that work with him. I would tell you that they're not to be ignored in that joint venture. I think that that could develop into something. Can Charlie and Ed get along?

MAXWELL: Good question.

WOOD: That ought to be interesting.

MAXWELL: What are you going to do with Broadway?

WOOD: That's Jerry's deal. (LAUGHTER) He got involved with it in the beginning – Jerry, not me – because of the potential in the cable usage and connectivity, although with the tower business there are also some synergies there, so these three or four businesses may go together better than I thought. Now, as a practical matter, given the size of that and the size of the network and all that, there isn't anything in cable that's going to make it happen. It's got to be in the telephony business in a big way. I don't pretend to be of much help there, Paul. We have a separate CEO that is down in Austin with that, so it's a little different than anything we've ever done before and Jerry's more closely involved than I am by far. I'm not involved at all, in fact.

MAXWELL: Anything you want to tell The Cable Center?

WOOD: I think it's great what you're doing. So much in so many industries is lost. I came along at a time when the real pioneers of the industry were mostly all still alive and could all go to the pioneer dinner at the show and have a great old time. Brooks had dragged me along once in awhile and it was kind of fun. It was nice to see those guys. Those guys like Bill Bresnan that can really regale you with stories for two hours about driving his pick-up backwards in a snow storm for 40 miles to get from where he was working on a cable tower to someplace.

MAXWELL: He did that, too!

WOOD: So it was good to be in on that ground floor with those guys even though a lot of them were getting out of the active management. It's been fun. If you like building an organization, it's been fun watching an industry grow. I think the industry has some things that need to be changed for it to... this may be heresy, but I think we need to focus somehow – and I don't think we will – but I thought we've always needed to focus on the MSOs versus the programmers. We have succeeded because they've cooperated but we have to recognize that they're two different businesses in many ways.

MAXWELL: They kept them under the NCTA tent despite the natural tendency to break apart.

WOOD: Yep, they have and they will forever, I think, Paul, because there's enough ownership now in the big MSOs of programming that I don't foresee that that will ever break apart, and the one thing that worries me about that is their interest are sometimes not aligned. As I've learned, as the industry has learned, when you're not proactive in that political environment bad things happen to you.

MAXWELL: Very bad things happen, and it's happened a couple of times.

WOOD: So I would hope that, and it's not an adversarial relationship, but that relationship that exists between programmers and MSOs doesn't keep the NCTA from doing what it needs to do sometimes.

MAXWELL: That's a good point and a good perspective. Of course, we wouldn't have a lot of these programmers if the MSOs hadn't created them, in effect.

WOOD: Well, we did, and there's no question that the MSOs created programming. I think that some of the programmers at times have been fairly arrogant to some of us. You're likely to get your comeuppance. It's amazing that what goes around comes around. If you go back through my cable history, it's just been almost frightening how that's happened, and so you never want to get too comfortable with what you're doing. If you think that you've got the world by the short hair, well, you'd better think again because it just doesn't always work that way. The minute you get lazy is the minute you probably make a mistake. We try to work hard to do neither one.

MAXWELL: We deeply appreciate your time.

WOOD: You're welcome.

MAXWELL: Thank you, and The Cable Center thanks you.

WOOD: You're welcome, Paul. Thank you for taking the time.

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