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Not Quite An Exit Interview

About 12 hours after announcing what is one of the biggest cable deals in history, Time Warner Cable chairman and CEO Rob Marcus spoke with me about the company’s (and his) decision to join forces with Comcast.

“There is an element of it that is bittersweet,” Marcus said of the $69 billion deal. “Because I really do think this team is coming together in a way that is special and the opportunities ahead of us are terrific and we’ve got great momentum.”

Marcus has been fighting off the unwanted advances of Charter Communications for almost a year, planning instead to right the ship via a three-year strategic plan heavy on customer service improvements, doubling commercial services revenue by 2018 and adding 1 million new customer relationships over the next three years. It was a plan that he had every intention of carrying out.

“Our Plan A was to run this business as well as we possibly could pursuant to the operating plan we set out,” Marcus said. “I do have a great deal of confidence in the team we’ve assembled and I do think the plan was logical, ambitious and achievable.”

Marcus even added to that team – TWC hired former Insight COO Dinni Jain in January, with the express intent of boosting subscriber numbers. It didn’t seem like a move by a company that was merely looking for the highest sale price.

Still, Marcus said even though his desire was to run TWC the best way he could, he knew that his responsibilities as chairman and CEO didn’t stop there.   

“Even if that’s a really good plan, you have to evaluate what kind of value that plan would yield for shareholders,” Marcus said. “If there is an alternative that you believe is going to generate more value for shareholders, my view is that you really don’t have the option to stick with Plan A. … Once I concluded that the Comcast deal would generate more value for shareholders, the conversation was over. You have to remove yourself personally from these valuations. While we all have ambitions and personal desires, that’s not the responsibility that I have been given.”

I met Marcus for the first time in 2007, a few days before he was officially to take the position as Time Warner Cable's Chief Financial Officer, a job that some people were skeptical he could fill, not necessarily having a background in finance. A lawyer by trade and a deal maker in his heart, we hit it off almost immediately, spending the better part of an hour talking about the intricacies of one of the most complicated partnerships ever created in cable, and one he helped create, Time Warner Entertainment. Marcus struck me then as he does now as a smart, savvy and incredibly enthusiastic executive who couldn't wait to get his hands dirty in operations and finance. Marcus quickly proved his skeptics wrong almost immediately, by the way, steering Time Warner Cable toward a path of greater transparency -- you know all those trending schedules that cable operators regularly release with earnings today offering more detailed financial metrics? Marcus helped start it all. And he was one of the first cable CFOs to focus on free cash flow generation, a foreign concept back in 2009 to most cable observers, but a building block to valuations today.

Marcus quickly moved up the ranks, becoming chief operating officer in 2010 and being named chairman and CEO in January, a job I truly believe he thought of as his dream job. Now, 44 days later, Marcus is again being characterized in some places as a deal maker, a guy who only cares about money, who never wanted to run the company, instead preferring to take the money and run.

Nothing could be further from the truth.

In talking with a few TWC employees, I got a strong sense that a lot of them were saddened that they wouldn't get to work with Marcus, the guy who just a few weeks ago at TWC annual two-day management retreat was enthusiastically rallying the troops as Charter Communications and Liberty Media chairman John Malone were stepping up the pressure for a deal.

"He would have made a hell of a CEO," one TWC executive told me last week.

And he still has an opportunity to prove himself – the Comcast deal isn’t expected to be completed until at least the end of the year

“You better believe we are going to use every day of it to knock the ball out of the park in terms of executing our operating plan,” Marcus said. “Simply as a point of pride, we want to hand the baton over to Comcast with this company in the best shape it’s ever been in.”

And that pride extends to TWC’s senior executives, he said.

“What I am so proud of is they all share the same desire,” Marcus said. “I didn’t hear anybody say, ‘Let’s give up because we just did a deal.’ I heard the exact opposite, which is ‘Let’s surprise people. Let’s show them how good we can really be.’”  

 Marcus wouldn't talk about his plans after the Comcast close, adding that he is focusing on keeping TWC on the right operational path.

“At this point what I am going to do post-closing is a question I will leave to a later date,” Marcus said. “I’m catching my breath at this point, and I still have a long road ahead of me focusing on ensuring that Time Warner Cable continues to deliver great things to customers and great results to shareholders. At some point along the way I will take a breath and figure out what might happen after closing.”

So in other words, you haven’t heard the last from Rob Marcus just yet.