Charter Communications chair/CEO Tom Rutledge had been re-elected chairman of NCTA-The Internet & Television Association.

Cable execs were in Washington this week for the Cable Hall of Fame and NCTA's Near Future conference.

Also re-elected for second, one-year terms, on the board were Pat Esser, president, Cox Communications, vice chair; and John Skipper, ESPN president and co-chair, Disney Media Networks, secretary.

Dave Watson was elected to a first term as treasurer. He is president of Comcast Cable and EVP of Comcast Corp.

Bob Stanzione, executive chairman of Arris, was re-elected to a two-year term.

Elected at-large programmer directors were: David Zaslav, president, Discovery Communications; Peter Rice, chairman, Fox Networks Group; and Josh Sapan, president, AMC Networks, each to two-year terms.

Bob Bakish, president of Viacom, was elected for a one-year term.

Elected at-large system directors to new, three-year terms were John Evans, chairman, Evans Telecommunications, and Pat McAdaragh, president, Midco.

Nancy Dubuc, president of A+E Networks, and Alfred Liggins, president of Radio One and chairman of TV One, were named to at-large director seats for two-year terms.

Arris, a top supplier of broadband and video gear to the cable and telecom industries, said its board has appointed Bruce McClelland as the company’s new CEO, effective Sept. 1, 2016.

McClelland, who is also joining the Arris board, succeeds long-time company CEO Bob Stanzione, who has been appointed executive chairman of Arris. Stanzione will continue to serve as chairman of the board at Arris.

Stanzione will continue to serve as chairman of the board. In his new role, Stanzione will focus on strategic planning and customer engagement while also supporting McClelland in his new CEO role. Stanzione is the founding president and CEO of Arris Interactive, a joint venture of Nortel Networks and Antec that was created in 1995. Antec bought out Nortel’s position in the J.V. in 2000 and went forward with the Arris name. 

The shifts up top are coming into play about nine months after Arris salted away its $2.1 billion acquisition of U.K.-based Pace plc, cementing Arris’s position as the world’s largest maker of set-top boxes. Arris, again with Stanzione at the helm, began to add true scale, expand market share and broaden its international presence when it acquired Motorola Home in April 2013 for $2.35 billion.  

Arris said the appointment of McClelland followed a formal CEO succession process started in early 2016 by the board. The Arris board retained the firm of Spencer Stuart to assist with an "extensive search process."

Arris ultimately did not have to look very far. 

McClelland, currently president, network and cloud and global services, is a vet of Arris and the industry. He joined Arris in 1999 as vice president of engineering, and later being upped to roles that include group president for products and services and GM of Arris’s customer premises equipment division.  Prior to Arris, McClelland spent 11 years at Nortel Networks/Bell Northern Research (BNR), and sarted his career with BNR in Ottawa, Canada, where he was key to the development of Nortel's SS7 switching products. McClelland has a Bachelor of Electrical Engineering degree from the University of Saskatchewan.

McClelland has also been tied to the FCC’s pursuit of controversial new set-top box rules aimed at spurring a retail market for video devices that can support MVPD services. He served on the Downloadable Security Technology Advisory Committee (DSTAC), an FCC-appointed group that provided the Commission with multiple, potential paths toward a post-CableCARD world for cable operators and other types of MVPDs.

"Since its formation, ARRIS has grown from a small joint venture to a global leader in entertainment and communications technology," Bob Stanzione, said in a statement. "With integration efforts from the Pace acquisition substantially complete, now is the right time to transition the role of CEO to a new leader who will continue ARRIS's growth and success. Bruce has played an integral role in transforming the Company since he joined the ARRIS Interactive Joint Venture more than 16 years ago. He will provide leadership and strategic vision to keep ARRIS and our customers ahead of today's rapid pace of change and will ensure we remain at the forefront of tomorrow's connected world."

"It is often said that a company takes on the personality of the CEO, and ARRIS is a perfect example of this adage,” McClelland added. “Bob Stanzione's relentless focus on 'Customer First' has become the motto for the company," said Bruce McClelland. "His belief in the people of ARRIS and his tireless drive to innovate and to exceed customer expectation has led ARRIS to where it is today. Our 'on demand, always connected' society will continue to fuel exponential Internet traffic growth, and ARRIS is in a strong position to continue to grow and deliver results for our employees, shareholders and customers.  I am honored to have the opportunity to lead the ARRIS team at this exciting time in our history, and I look forward to continuing this tradition of commitment."

Arris chairman and CEO Robert Stanzione declared that the supplier of video and broadband gear is off to a “good start” as revenues rose 33% in the first quarter, but paired that optimism with concerns about possible pauses on the horizon in the second half of the year amid ongoing consolidation of some of its largest customers.

In its first earnings call since closing its acquisition of U.K.-based set-top maker Pace plc in January, Arris pulled in Q1 revenues of $1.61 billion, up $399.5 million, or 33%, versus the year-ago period. Aided by the addition of Pace, revenues were also up 47% versus the previous quarter. In Q1, Arris has three customers that represented 10% of more of revenue – together, those customers brought in $840 million, or 52% of total sales. Q1 sales beat Wall Street's expectation of $1.58 billion.

“We're off to a good start in 2016 and I can say that we're increasingly confident that we'll meet the 2016 financial goals that we outlined in our,” Stanzione said, referring to full-year guidance of between $6.6 billion to $6.8 billion in sales, and non-GAAP earnings per share of $2.45 to $2.60.

Arris expects second quarter sales of between $1.67 billion to $1.72 billion, and GAAP earnings of $0.09 to $0.14.

As for caution about the second half of the year, consolidation activities, such as  Charter Communications’ pending deal for Time Warner Cable and Bright House Networks, “give me some degree of concern that there might be a pause,” Stanzione said. “I don't think there's any reduction in the end demand for our products, but there could be some shifts.”

However, telco spending, a recent trouble spot for Arris, is starting to recover, Stanzione said, noting that Frontier  Communications is expected to be aggressive with upgrades following its acquisition of some of Verizon’s wireline properties in California, Texas and Florida. He also expects to see “more uplift” as the year goes along from AT&T/DirecTV now that they are starting to ramp up new programs.

Among individual product areas, Arris’s flagship cable access platform, the E6000, hit record revenues as well as total downstream and upstream channels shipped and downstream software licenses, according to Bruce McClelland, president of Arris’s Network & Cloud and Global Services unit.

Arris, which is already involved in most of Comcast’s initial DOCSIS 3.1 deployments, also inked a commercial agreement with a tier 1 international operator to deploy the vendor’s D3.1 products later this year, but didn’t identify the MSO.

McClelland said Arris in Q1 made its software release for D3.1 generally available. Arris is also working on second-gen line cards for the E6000 that will supportdirect fiber, passive optical network interfaces, and support for the new distributed access architectures. “The first of these new cards will begin field trials in the third quarter,” he said.

Stanzione was also asked to weigh in again on the FCC’s proposed set-top rules, which could impact Arris, the world’s largest supplier of set-tops.

“In the worst case, if it were to be enacted exactly the way the FCC is proposing, that would open up a retail market, one which we're pretty excited about anyway,” Stanzione said, pointing to a new retail home networking products launched by Arris last month that uses a combo of WiFi and G.hn-based powerline technologies.  “We're building up our retail channel and I think even if it goes in a direction that we don't like, we would still be okay and I think the effect is couple years away.”

Update: Raymond James analyst Simon Leopold maintained his "Strong Buy" rating and a $33 price target on Arris following Q1 results. Arris shares were up 96 cents (4.15%) to $24.09 each in mid-day trading Thursday. 

A proposed set of new set-top rules might not necessarily set the stage for a new (and much more vibrant) retail era for video devices that can support pay TV services from cable operators, telcos and satellite providers alike.

Though there’s still much work to be done, it’s crystal clear that Federal Communications Commission chairman Tom Wheeler and backers of the rules, such as Google, firmly believe that new regulations will open the retail floodgates.

On the other end, the cable industry, led by the National Cable & Telecommunications Association, claims that the market for retail video devices is doing just fi ne on its own, free of mandates and driven by an apps-based economy.

As for the retail device makers, Google, which is still trying to establish Android TV’s market presence, has been successful with the Chromecast streaming adapter. The $35 device accounted for 35% of the 42 million streaming devices shipped last year, followed by Apple TV, Roku devices and Amazon’s Fire TV products, according to Strategy Analytics.

Of that group, Roku is in trials with Time Warner Cable and Charter Communications on IP-based pay TV offerings that rely on retail streaming devices.

Comcast, meanwhile, has pushed its own leased products harder than ever — with about 40,000 X1 boxes being deployed per day at last count — as the MSO continues to accelerate the rollout of its next-generation video product, aiming to deploy it to about half of its video base by year-end.

But the new rules, if they come to pass, aren’t exactly trying to leap over the highest of bars.

By the National Cable & Telecommunications Association’s last count, the nation’s nine largest incumbent cable operators had deployed 55 million operator-supplied set-tops with CableCards, versus just 589,000 of the security modules in TiVo boxes and other devices sold at retail.

Industry observers and a CE company that’s been close to the retail set-top mix since the early CableCard days say it’s too early to know if the FCC’s new proposed rules will have a meaningful impact, given that they could change during the comment process and will require new standards. Plus, the FCC anticipates a two-year compliance window.

“This is going to take a long time to hash through — not only to set the technical standards, but to see if anything actually happens [amid] coming changes at the administration, and possible changes of the chairman and other members of the FCC,” Mike Paxton, senior analyst at SNL Kagan, said.

Assuming the rules are executed, Paxton doesn’t believe that they’ll have as big of an impact as Wheeler and others who desire a successor to the CableCard expect.

“Our feeling is this is only going to have a modest impact at most on how consumers access … and consume video,” Paxton said. “This is by no means a slam dunk … that millions of consumers in the U.S. are going to go out and do this.”

TiVo has championed the retail distribution model, but it’s had limited success in that area since the original CableCard rules took effect almost a decade ago. Of TiVo’s 6.8 million subs, 5.47 million come way of cable-operator partnerships.

“I think it’s too early to make a guess right now” with respect to the impact of the FCC’s rules, Matthew Zinn, TiVo’s senior vice president, general counsel and chief privacy officer, said. “I think things will change during the comment process.”

TiVo has plenty of questions about the rules, but it also has a goal in mind: “We are looking for something that is workable.”

By that, Zinn means a successor to the CableCard that uses standards, but doesn’t require TiVo and others to adhere to an excessive number of technical approaches.

A major challenge is for the FCC to balance MVPDs’ desire for flexibility while assembling standards with which to build a vibrant retail ecosystem that enables device portability across different pay TV operators, he said.

The FCC’s rules will aim directly at incumbent suppliers with plenty of turf to protect. The global set-top business is fragmented, with Technicolor, Arris, Huawei, Skyworth and Pace comprising 40% of the market, at the end of 2014, according to SNL Kagan (it hasn’t released 2015 market share data yet). Arris, which acquired U.K.-based Pace in January, is now the largest set-top box maker in the world and has a dominant position in the U.S., so it has the most to lose.

But it isn’t losing a lot of sleep — yet. “We’re not terribly concerned about this FCC drama,” Bob Stanzione, Arris’s chairman and CEO, said March 16 at the company’s investor day.

Should the rules establish a stronger retail market for set-tops, “it’s one we’re very well-positioned to support,” Larry Robinson, president of customer premises equipment at Arris, said, in a reference to Arris’s current retail efforts around cable modems and its previous (but brie_) experience selling set-tops at retail after buying Paul Allen’s Digeo in 2009. Paxton also said he doesn’t think Arris and other incumbents have a lot to worry about, viewing the proposed rules as “moderately negative” on their set-top box business. They could pose the potential for losing some business on the lower end of the set-top box market, Paxton said — the sub-$100 area where retail video products will generate the most success. Devices on the higher end of that range — DirecTV’s Genie and Dish Network’s Hopper 3, for example — will continue to be leased.

“I don’t think [the rules] will have a huge impact on Arris and Technicolor, but it certainly won’t have a positive impact,” Paxton said.

The Society of Cable Telecommunications Engineers (SCTE) said Bob Stanzione, chairman and CEO of Arris, will be a featured speaker during the SCTE/ISBE Leadership Institute at Tuck Executive Education program at Dartmouth, set for April 17-22 on the Dartmouth College campus in Hanover, N.H.

SCTE, along with the International Society of Broadband Experts (SCTE’s global brand,), said Stanzione will share insights into how operators and technology partners create and integrate new products and services.

Stanzione, who headed up Arris’s recently closed acquisition of Pace plc, is the first executive of a technology provider to be invited to speak at the SCTE/ISBE Leadership Institute at Tuck program, SCTE said. Michael Powell, NCTA’s president and CEO, is  also on tap to speak at the event, offering  legal and regulatory perspective.

SCTE/ISBE-Tuck, in its sixth year, is designed to help C-Level executives, vice presidents and senior directors foster the leadership and critical-thinking skills needed for the creation and implementation of successful business and technology strategies, SCTE said. 

In addition to gunning for more global scale, the closure of Arris’s $2.1 billion acquisition of Pace last week will ensure that Arris retains global pole position in the increasingly tough cable set-top box market.

Arris held that slot following its purchase of Motorola Home in 2014, and will now expand its lead while also buying share among satellite-TV and telco service providers in key European markets. By most analyst estimates, Arris will be home to about 25% of global revenues in the set-top sector, staying ahead of such rivals as Samsung, Humax, Technicolor (which just bought Cisco’s set-top business), EchoStar and Advanced Digital Broadcast, among others.

Pace and Arris will also share some key clients. Both supply Comcast with the primary HD DVR that powers the operator’s next-generation, IP-based X1 platform. Comcast ended Q3 2015 with a 25% penetration of X1 while shipping about 40,000 X1 boxes per day.

Arris’s acquisition of Pace was opportunistic and, in some ways, necessary, SNL Kagan senior research analyst Jeff Heynen said.

“Pace was winning share at Comcast and DOCSIS CPE (consumer premises equipment),” he said. “I think that spooked Arris quite a bit. And financial analysts watch Arris very closely now.”

The deal also gives Arris a way to shore up its share in the optical node arena, and perhaps give the company means to balance things out amid a declining set-top box market. Arris is also somewhat insulated via its partial ownership of ActiveVideo, which virtualizes many set-top box functions in the cloud.

During the vetting process there were concerns that regulators might require Arris to divest part of its optical business, but the deal ended up sailing through without such conditions.

“I’m surprised the deal went through without more scrutiny,” Heynen said.

Arris now faces the difficult task of integrating Pace and achieving the deal’s anticipated financial synergies.

CEO: SMOOTH SAILING

Bob Stanzione, Arris’s chairman and CEO, believes that integration will be easier to achieve than the one Arris went through after it acquired Motorola Home almost two years ago.

“I think we’ll be able to move faster on this one than we did with Motorola Home,” Stanzione said. In the case of Motorola Home, Arris was not assuming the IT or the financial infrastructure, and had to build it all from scratch. Plus, there were some complicated transition service agreements in the Motorola deal that are not needed with the Pace merger.

Stanzione isn’t predicting when the Pace integration will be completed, but he does expect the “big milestones” to occur in the first half of 2016.

One area of early focus will be combining the sales teams. That’s already happening under the establishment of a new executive team that has former Pace executive Tim O’Loughlin now in charge of North American sales and Ron Coppock now running a new dedicated international sales organization.

“The first thing we’ll do … is combine the sales organizations,” Stanzione said. “We don’t want there to be any confusion in front of the customers; we’ll move most quickly on that.”

The longer-term focus will include back-office integration and the merger of product roadmaps where there are overlaps. In addition to the Comcast X1 example, Arris and Pace have also been supplying similar set-top products to AT&T.

“We will combine [set-top] product lines,” Stanzione said. “But it will take time, because we have to collaborate with customers … If they want us to manufacture two products for the next year, we’ll manufacture two products for the next year.” Those conversations just recently got underway, as they were restricted from occurring before the deal was consummated.

Overlaps in other areas will also force Arris to make some moves with respect to its employee base, which is now at about 8,000, Stanzione acknowledged.

“We have nothing to announce at this point,” Stanzione said in regard to that, but said Arris will update the market on those activities in February during its normal quarterly earnings call while also keeping employees up to speed.

EYEING OVERLAPS

“There are some overlaps and we’re going to work through them as quickly as we can and keep everyone in the loop as to what our thinking is,” he said.

Though the mergers with Motorola Home and Pace aren’t apples-to-apples comparisons, Arris reduced its workforce by about 500 employees about two months after closing the Motorola Home deal.

As for the grander strategy behind the deal, Stanzione still believe it “gives us an incredible boost in scale” and the opportunity to grow internationally, particularly in markets such as Australia, where Arris and Pace were working with different customers and can now combine those efforts.

“We’ll want to see both [the U.S. and international markets] grow,” he said. “But I think the opportunities for us to grow internationally are greater.”

Even though Arris has its hands full integrating Pace, don’t count out more M&A moves.

“We want to be prepared for that, we need to be prepared for that,” Stanzione said, noting that Arris closed the Pace deal with a strong balance sheet intact. “Any company that kinds of gets itself painted into a corner in this world and this environment that is fast-moving will regret it.”

Arris and Pace wrapped up their $2.1 billion merger yesterday. The deal encountered some bumps during the vetting process, but now comes the hard (or harder) part – integrating the two companies and achieving the merger’s anticipated financial synergies.

However, Bob Stanzione, Arris’s chairman and CEO, believes that integration will be easier to achieve than the one Arris went through after it acquired Motorola Home in April 2014 for $2.35 billion.

“I think we’ll be able to move faster on this one than we did with Motorola Home,” Stanzione said in an interview. In the case of Motorola Home, Arris was not assuming the IT or the financial infrastructure, and had to build it all from scratch. Plus, there were some complicated transition service agreements in the Motorola deal that are not needed with the Pace merger.

Stanzione isn’t predicting when the Pace integration will be completed, but he does expect the “big milestones” to occur in the first half of 2016.

One area of early focus will be the combination of the sales teams. That’s already happening under the establishment of the company’s new executive team, with former Pace exec Tim O’Loughlin now in charge of North American sales, and Ron Coppock now running a new dedicated international sales organization.

“The first thing we’ll do…is combine the sales organizations,” Stanzione said. “We don't want there to be any confusion in front of the customers; we'll move most quickly on that." 

The longer-term focus will include backoffice integrations and the merging of product roadmaps where there are overlaps. Comcast, for example, sources X1 boxes from both Arris and Pace. Arris and Pace have also been supplying similar set-top products to AT&T.

“We will combine [set-top product lines,” Stanzione said. “But it will take time because we have to collaborate with customers…If they want us to manufacture two products for the next year, we'll manufacture two products for the next year." 

Those conversations just recently got underway due to gun-jumping restrictions that were preventing them before the deal was consummated.

Stanzione also acknowledged that overlaps in other areas will also force Arris to make some moves with respect to its employee base, which is now at about 8,000.

 “We have nothing to announce at this point,” Stanzione said in regard to that, but said Arris will update the market on those activities in February during its normal quarterly earnings call while also keeping employees up to speed.

“There are some overlaps and we're going to work through them as quickly as we can and keep everyone in the loop as to what our thinking is,” he said.

Though the mergers with Motorola Home and Pace aren’t apples-to-apples comparisons, Arris reduced its workforce by about 500 employees about two months after closing the Motorola Home deal.

As for the grander strategy behind the deal, Stanzione still believe it “gives us an incredible boost in scale” and the opportunity to grow internationally, particularly in markets like Australia, where Arris and Pace were working with different customers and can now combine those efforts.

“We’ll want to see both [the U.S. and international markets] grow,” he said. “But I think the opportunities for us to grow internationally are greater." 

And even though Arris has its hands full integrating Pace, don’t count out more M&A moves.

“We want to be prepared for that, we need to be prepared for that,” Stanzione said, noting that Arris closed the Pace deal with a strong balance sheet intact. “Any company that kinds of gets itself painted into a corner in this world and this environment that is fast moving will regret it."