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Continental’s Cautionary Cable Tale: Mergers Don’t Always End Well

With the recent push toward mergers and consolidation in the cable business, a new book provides not only a historical accounting of one of the most highly respected companies in the industry, but also a cautionary tale for acquirers and their targets.

The Continental Cablevision Story: From Community Antenna Television to the Information Superhighway, published by Pilot House Associates, tells the 33-year saga of the cable company from its founding by two former Harvard Business School classmates — Amos B. Hostetter Jr. and Harold “Irv” Grousbeck — to its sale to US West Group’s Media One in 1996. The 259-page tome was commissioned by Hostetter and spearheaded by ex-National Cable & Telecommunications Association chief (and former Continental exec) Robert Sachs and written by former Wall Street Journal business reporter Scott McMurray for The History Factory. It tells in sharp prose one of the more fascinating entrepreneurial stories in an industry full of them.

Sachs told The Wire that Hostetter began kicking the idea of a book around about four years ago, mainly as a way to show his now post-college-aged kids what their dad used to do for a living.

But putting together the history was no easy task. Unlike some other cable companies, Continental had no archives. Most of the research for the book was conducted through personal interviews with the players themselves by McMurray.

“This was really a labor of love,” Sachs said.

And what a story it is. Cable wasn’t even on the list when Hostetter and Grousbeck began looking for business ventures more than 50 years ago. They had considered several, from inflatable toys to bowling alleys, but changed their minds after a meeting with legendary entrepreneur Bill Daniels.

Along the way Continental gave the cable industry some of its biggest profit centers: Its Highway 1 high-speed Internet service was one of the first broadband services, and its New England Cable News was a pioneering first regional cable news network.

Continental also served as the starting point for some of cable’s top executives: former Cox Communications CEO Jim Robbins, former Hearst Television chief Ray Joslin, Layer3 TV founder Dave Fellows and Sachs are among the alumni.

When Continental finally succumbed to US West’s acquisition overtures in the 1990s, the company was looking for ways to fund a needed network rebuild. While the telco’s deep pockets seemed to hold the answer, the merger began to unravel shortly after it closed in 1996. Less than a year later, after US West reneged on a promise to keep the Continental management team intact and in Boston, Hostetter and several of his top executives resigned.

Of the 120 executives Continental had in Boston, fewer than a dozen made the trip west. The cable operation, renamed Media One, ultimately faltered and was sold to AT&T Broadband in 1999. Comcast bought AT&T Broadband in 2002.

According to Sachs, only about 1,500 copies of the book were printed, mostly for former employees, friends and family. But he said Pilot House is readying a website that should be launched by Dec. 1, where anyone can view the book online or download a full copy for free.

AT&T’s ‘Amazing Hubris’: Opposing Other TV Mergers After Getting Its Deal Done

Cable operators are getting it from all sides as critics of their size (success?) use comments in the Federal Communications Commission’s Charter-Time Warner Cable merger docket as the vehicle to run down the wired medium.

Last week, sparks flew between the National Cable & Telecommunications Association and AT&T.

First the National Association of Broadcasters (see Rules) chided cable in a filing that took even some its members by surprise.

Then came an attack from AT&T that raised eyebrows — particularly since it came from the company that just combined with DirecTV to form the country’s biggest pay TV provider.

AT&T broke out the blunderbuss, aimed at Cable- Labs, cable’s collective push for more WiFi spectrum and its efforts to protect the spectrum it already uses from interference.

AT&T also took umbrage at cable operators’ history of not overbuilding each other, but instead clustering their holdings, leading to “geographically segregated” companies that have chosen not to compete with each other.

The NCTA called AT&T’s filing “an amazing act of hubris” to “implore the government to help them diminish the effectiveness of a competitor, disparagingly citing actions that are common, pro-consumer or purely imaginary.”

“Having long criticized others for making sweeping, vague, industry-wide allegations in the context of its own mergers, it is precious to see [AT&T] employing the same self-serving tactic against others,” NCTA said.

AT&T’s response, via email, was to emphasize that “if cable companies have chosen not to compete with each other, for whatever reason, it is not in the public interest that they then be allowed to coordinate to damage a common competitor. NCTA seems to deny any such thing occurs, while also defending cable’s right to nonetheless engage in such conduct if it wants. This is the very point we feel should be discussed and debated in the context of the proposed merger.”

Charter’s merger plans also drew a number of petitions to deny on the deadline day for such filings, though many of them appeared to be the usual regulatory arbitrage by competing interests — Dish, COMPTEL— seeking conditions in the absence of which they said the deal would not be in the public interest.

— John Eggerton