The world of cable is getting ever smaller. The huge pace of acquisitions over the past two years has dramatically shifted Broadcasting & Cable's annual ranking of the 25 largest MSOs. Players with decades of history in the business have exited, not only shattering the clubby makeup of the industry, but dramatically changing its character.
The new ownership of the top-three cable operators illustrates what's happening. Almost 60% of cable subscribers will be in the hands of AT & T, Time Warner and Charter-players whose agendas are much different from those of traditional cable operators.
AT & T took over Tele-Communications Inc. for $50 billion primarily to use its wires to get into the local phone business. America Online is acquiring Time Warner for $181 billion primarily for access to its high-speed Internet pipes. And Microsoft co-founder Paul Allen has amassed a huge $20 billion portfolio under the Charter Communications umbrella primarily to develop interactive services.
These recent entrants regard cable almost as an afterthought.
In some ways, the new players give longtime operators added muscle in the financial and regulatory communities on issues, something about which all MSOs can agree. But they also risk splintering the once-cohesive industry as some operators'agendas increasingly diverge and conflict.
A little number crunching reveals some interesting results.
For example, the MSOs that are most aggressive in deploying digital cable aren't necessarily the best at actually selling it to customers. When it comes to that portion of its systems that are ready for digital cable, Comcast's 85% level lags behind AT & T, Time Warner and Cox. But Comcast ranks second when it comes to selling digital, 9% of basic customers, about 2 points more than Cox and double Time Warner.
The same goes for Insight Communications, ninth in deploying digital with 52% of its homes being digital ready. But 7.6% of its basic subscribers actually have digital.
It's no surprise that small fry like Buckeye Cablevision and Blue Ridge Cable don't have any digital-ready homes.
But what about top 10 MSO Cablevision Systems? Zero digital-ready homes and of course, zero digital subscribers. That's because Cablevision has bigger plans, putting digital converters in every home that already has some sort of set-top device. That's 65% of all subscribers getting the pricey equipment, even if they don't actually add a subscription to digital cable.
Cablevision CEO James Dolan contends that once he gets the box in the house, subscribers will pay for it by using interactive services and buying video-on-demand movies. That rollout starts later this year.
And it's not just the big operators that are focusing on new products.
While Cox has been the most aggressive about prepping systems to deliver high-speed Internet service, tiny GS Communications isn't far behind, reporting that 80% of its basic homes are Internet ready compared to 82% for Cox. Susquehanna comes in fourth with 71%, just behind third-ranked Time Warner cable. Even AT & T, which boasts the most about Internet services, has only readied 37% of its subscribers for high-speed data. That's just above Service Electric's 35.7%.
But no cable operator is very impressive when it comes to actually selling high-speed Internet subscriptions. Sales leader Cox has signed up just 4% of its basic subscribers to Internet services, followed by Time Warner (3.5%) and small-fry Armstrong (2.9%).
Seven members of our 1999 list have disappeared into larger MSOs or are about to: Falcon Cable, Jones Intercable, Bresnan Communications, Prime Cable, Multimedia, Fanch Communications, Garden State Cable.
What's more, Time Warner is in the process of selling out to America Online, though its cable division will remain intact. MediaOne, which last year had just cut a deal to sell out to AT & T, is still trying to complete its exit. Ten members of our list the year before-1998-were swallowed up in 1999.
Last year, the 25th-largest MSO was Galaxy Cablevision. It's only moved up one notch because Galaxy executives have been hurriedly selling off systems to keep their bankers at bay. Last year's 24th largest MSO, Susquehanna, has moved up to 19th without acquiring a single system. The 25th largest operator two years ago, venerable Service Electric, perhaps the oldest operator still in business, is now 12th, purely through attrition of the larger operators.
Looking at the chances of larger operators such as Cablevision Systems, Adelphia or Classic Communications trying to sell out in the next two or three years, it's easy to see Service Electric moving up even further.
So for all the changes sweeping the industry, late cable-pioneer John Walson's old company could again become a top-10 operator, just as he was in the 1950s.
The data were gathered primarily from the companies themselves and the ranking was determined by the number of basic subscribers. In the case of uncooperative companies, we rely on securities and other regulatory filings or estimates by analysts and industry executives-sometimes, former employees of the company. In a few instances, no reliable estimates were available. Those items are marked NA.
The list also does not include DBS services EchoStar and DirecTV, although they are among the largest multichannel video providers. DirecTV's 8.3 million customers makes the DBS service bigger than third-ranked MSO Charter, while EchoStar's 3.9 million customers makes it bigger than ninth-ranked Cablevision Systems.
Top 25 cable operators
6. Adelphia Communications
5 West 3rd Street
Coudersport, Pa. 16915
(814) 274-9830
Top executive: John Rigas, chairman
Ownership: publicly traded; controlled by Rigas family
Homes passed: 7,722,933
Basic subscribers: 4,990,092
Basic penetration: 64.6%
Digital-ready homes: 2,300,000
Digital subs: 233,949
Digital penetration: 10%
Internet-ready homes: 940,000
Internet subs: 37,495
Internet penetration: 4%
7. Cablevision Systems
1111 Stewart Avenue
Bethpage, N.Y. 11714
(516) 803-2300
Top executive: Charles Dolan, chairman; James Dolan, president and CEO
Ownership: publicly traded; major investors include the Dolan family, AT & T and Gabelli Funds Inc.
Homes passed: 4,603,695
Basic subscribers: 3,135,370
Basic penetration: 68.1%
Digital-ready homes: NA
Digital subs: year-end launch
Digital penetration: NA
Internet-ready homes: 874,000
Internet subs: 52,100
Internet penetration: 6%
8. Insight Communications
810 Seventh Avenue
New York, N.Y. 10019
(212) 371-2266
Top Executive: Michael Willner, president and CEO
Ownership: publicly traded, major shareholder Vestar Capital Partners and Willner
Homes passed: 2,392,000
Basic subscribers: 1,435,000
Basic penetration: 60%
Digital-ready homes: 750,000
Digital subs: 109,000
Digital penetration: 14.5%
Internet-ready homes: 900,000
Internet subs: 18,000
Internet penetration: &1%
9. Mediacom
100 Crystal Run Road
Middletown, N.Y. 10941
(914) 695-2600
Top Executive: Rocco Commisso, chairman
Ownership: publicly traded, Commisso controls company; Morris Communications owns 31% equity
Homes passed: 1,100,000
Basic subscribers: 747,000
Basic penetration: 67.9%
Digital-ready homes: 168,000
Digital subs: 5,300
Digital penetration: 3.2%
Internet-ready homes: 120,000
Internet subs: 500
Internet penetration: &1%
10. Cable One
1314 N. 3rd Street
3rd Floor
Phoenix, Ariz. 85004
(602) 364-6000
Top Executive: Tom Might, chairman
Ownership: Washington Post Co.; Graham family controls company
Homes passed: 1,032,000
Basic subscribers: 741,000
Basic penetration: 71.8%
Digital-ready homes: 459,420
Digital subs: May 2000 launch
Digital penetration: NA
Internet-ready homes: 192,956
Internet subs: 300
Internet penetration: &1%
11. Classic Cable
515 Congress Ave., Suite 2626
Austin, Texas 78701
(512) 476-9095
Top Executive: J. Merritt Belisle, chairman
Ownership: publicly traded; major investors include Brera Capital Partners (38%) and Austin Ventures
Homes passed: 707,000
Basic subscribers: 413,000
Basic penetration: 58.4%
Digital-ready homes: 174,000
Digital subs: 5,000
Digital penetration: 2.9%
Internet-ready homes: 113,000
Internet subs: 1,200
Internet penetration: 1%
12. Service Electric Television
201 West Centre Street
Mahanoy City, Pa. 17948
(570) 773-2585
Top Executive: Margaret Walson, CEO
Ownership: the Walson family
Homes passed: 412,000
Basic subscribers: 294,000
Basic penetration: 71.4%
Digital-ready homes: 100,000
Digital subs: 10,500
Digital penetration: 10.5%
Internet-ready homes: 105,000
Internet subs: 2,150
Internet penetration: 2%
13. RCN Corp.
105 Carnegie Center
Princeton, N.J. 08540
(609) 734-3700
Top Executive: David McCourt, chairman
Ownership: publicly traded; major investors Vulcan Ventures, Level 3 Comm.
Homes passed: 713,823*
Basic subscribers: 292,204*
Basic penetration: 19.4%
Digital-ready homes: 292,204
Digital subs: 15,000
Digital penetration: 5%
Internet-ready homes: 713,823
Internet subs: 21,654
Internet penetration: 3%
*Basic subs include RCN's core advanced video systems plus conventional cable systems and a wireless cable system. Penetration reflects advanced system subscribers only.
14. Ameritech New Media
300 S. Riverside
Suite 1800 N.
Chicago, Ill. 60606
800-257-0902
Top Executive: David Mahachek, president, SBC CATV
Ownership: SBC Corp.
Homes passed: 1,300,000
Basic subscribers: 280,000
Basic penetration: 21.5%
Digital-ready homes: None
Digital subs: None
Digital penetration: None
Internet-ready homes: None
Internet subs: None
Internet penetration: None
15. Tele-Media Corporation
320 West College Avenue
P.O. Box 5301
Pleasant Gap, Pa.
(814) 359-3481
Top Executive: Robert E. Tudek, chairman, president and CEO
Ownership: Tudek and Everett I. Mundy
Homes passed: 357,430
Basic subscribers: 266,919
Basic penetration: 74.7%
Digital-ready homes: NA
Digital subs: NA
Digital penetration: NA
Internet-ready homes: NA
Internet subs: NA
Internet penetration: NA
16. Northland Communications
1201 Third Avenue
Seattle, Wash. 98101
(206) 621-1351
Top Executive: John S. Whetzell, chairman
Ownership: Whetzell owns 22%
Homes passed: 410,473
Basic subscribers: 260,615
Basic penetration: 63.5%
Digital-ready homes: 6,684
Digital subs: 495
Digital penetration: 7.4%
Internet-ready homes: 13,191
Internet subs: 275
Internet penetration: 2.1%
17. Midcontinent Communications Inc.
7900 Xerxes Ave. S., Suite 1100
Minneapolis, Minn. 55431
(952) 844-2600
Top Executive: N. Lawrence Bentson, chairman and CEO
Ownership: partnership, Joseph Floyd and N. Lawrence Bentson
Homes passed: 327,953
Basic subscribers: 215,371
Basic penetration: 65.7%
Digital-ready homes: 234,594
Digital subs: 9,085
Digital penetration: 3.9%
Internet-ready homes: 234,594
Internet subs: 3,669
Internet penetration: 1.6%
18. Armstrong Utilities
One Armstrong Place
Butler, Pa. 16001
(724) 283-0925
Top Executive: Michael Haislip, president, Armstrong Cable Services
Ownership: privately held; owned by the Sedwick family
Homes passed: 259,404
Basic subscribers: 204,950
Basic penetration: 79%
Digital-ready homes: 4,400
Digital subs: launching May 15, 2000
Digital penetration: NA
Internet-ready homes: 125,418
Internet subs: 5,887
Internet penetration: 4.7%
19. Susquehanna Cable
330 Basin Street
Williamsport, Pa. 17701
(717) 848-5500
Top Executive: James D. Munchel, president, COO
Ownership: Susquehanna Pfaltzgraff Co.
Homes passed: 244,267
Basic subscribers: 188,543
Basic penetration: 77%
Digital-ready homes: 101,400
Digital subs: 7,185
Digital penetration: 7.1%
Internet-ready homes: 134,100
Internet subs: 4,751
Internet penetration: 3.5%
20. Millennium Digital Media
120 South Central Avenue
Suite 150
St. Louis, Mo. 63105
(314) 802-2400
Top Executive: Kelvin R. Westbrook, president, CEO
Ownership: privately held
Homes passed: 303,000
Basic subscribers: 175,000
Basic penetration: 58%
Digital-ready homes: 49,500
Digital subs: NA
Digital penetration: NA
Internet-ready homes: 95,500
Internet subs: NA
Internet penetration: NA
21. Blue Ridge Cable/Pencor Services
613 Third Street
Palmerton, Pa. 18071
(610) 826-2552
Top Executive: Don Reinhard, chairman
Ownership: Reinhard family
Homes passed: 201,000
Basic subscribers: 167,000
Basic penetration: 83%
Digital-ready homes: None
Digital subs: None
Digital penetration: None
Internet-ready homes: 30,000
Internet subs: 750
Internet penetration: 2.5%
22. Buckeye Cablevision
5566 Southwyck Blvd.
Toledo, Ohio 43614
(419) 724-9802
Top Executive: Allan Block, vice chairman, Blade Communication
Ownership: Blade Communication
Homes passed: 258,789
Basic subscribers: 161,520
Basic penetration: 59%
Digital-ready homes: fourth quarter 2000
Digital subs: None
Digital penetration: None
Internet-ready homes: 210,000
Internet subs: 3,000
Internet penetration: 1.4%
23. U. S. Cable Corp.
Montvale Plaza
28 West Grand Ave.
Montvale, N.J. 07645
(201) 930-9000
Top Executive: James Pearson, president, CEO
Ownership: U.S. Cable Partners and AT & T-BIS
Homes passed: 241,352
Basic subscribers: 140,129
Basic penetration: 58%
Digital-ready homes: 36,767
Digital subs: 2,857
Digital penetration: 7.8%
Internet-ready homes: None
Internet subs: None
Internet penetration: None
24. Galaxy Cablevision
1220 North Main St.
Sikeston, Mo. 63801
(573) 472-8200
Top Executive: Tom Gleason Jr., chairman and CEO
Ownership: privately held; majority owned by the Gleason family
Homes passed: 214,341
Basic subscribers: 126,861
Basic penetration: 59%
Digital-ready homes: 5,000
Digital subs: 1,000
Digital penetration: 20%
Internet-ready homes: 1,100
Internet subs: 44
Internet penetration: &1%
25. GS Communications
P.O. Box 398
Frederick, Md. 21705-0398
(301) 662-6822
Top Executive: Robert W. Cole, president
Ownership: Great Southern Printing & Manufacturing Co.
Homes passed: 160,063
Basic subscribers: 119,219
Basic penetration: 74.5%
Digital-ready homes: 102,475
Digital subs: 8,559
Digital penetration: 8.3%
Internet-ready homes: 94,949
Internet subs: 875
Internet penetration: &1%
