Rocco Commisso has done a lot of smart things during his long tenure in the cable industry, but perhaps the smartest thing is something he didn't do.
It goes all the way back to the earlier part of the decade, shortly after Commisso, the chairman and CEO of mid-sized market operator Mediacom Communications, made the biggest gamble of his career, buying more than 800,000 subscribers from AT&T Broadband for $2.2 billion. That deal doubled Mediacom's size and among other things made Commisso the undisputed King of Iowa cable (about 500,000 of those subscribers were in that state).
The AT&T acquisition launched Mediacom into the big leagues — at the time the deal made it the eighth largest MSO in the nation, it is currently the ninth largest — but also significantly increased the company's leverage ratio to almost nine times. But instead of listening to the steady stream of bankers that paraded through his office, bent on getting the Mediacom chairman to increase debt and acquire even more systems, Commisso decided to focus on deleveraging the company. Mediacom now is leveraged at about 6.3 times.
“I kicked them out of the room,” Commisso said of those bankers. “Today, having $600 million [of unused bank lines], do you know what the treasure of having that is in an environment like this where you can't go out and raise capital at a reasonable cost?”
Commisso's business savvy may sometimes be overshadowed by his strong personality, but he has steered Mediacom through an environment that many others have attempted and failed. Companies like Classic Communications (which went bankrupt in 2002) and TCA Cable (which was purchased by Cox Communications in 1999 for $4,000 per subscriber and sold to Cebridge Connections in 2005 for about $2,500 per customer) have all tried to make a go of small cable markets and failed.
Commisso turns modest when confronted with those stats, adding that his business philosophy is simple — treat others like you would wish to be treated.
“It comes from my father and mother, especially my father who was highly principled, who had a great sense of right and wrong and who was never afraid to speak his mind when he saw something wrong,” Commisso said.
Born in Calabria, Italy, Commisso came to America when he was 12. While going to grad school at Columbia for his MBA — he already had an undergraduate degree in industrial engineering from the university — he worked nights as a supervisor at a Pfizer Pharmaceuticals plant in Brooklyn,
As an undergrad, Commisso was co-captain of the soccer team and participated in student government.
Commisso entered the banking sector after graduation. He got his first job at Chase Manhattan Bank in 1976 and moved to the communications and entertainment group in 1978, where he first began lending to cable companies, working under Thomas Riefenhesier, now a Mediacom director. He later moved to the Royal Bank of Canada, where he started its media lending operations in the U.S. From there, Commisso became chief financial officer for Alan Gerry's Cablevision Industries — staying at that company until its sale in 1995 to Time Warner. It was at that time that Commisso developed his plan to start Mediacom and in March 1996 bought his first system, a small operation in Ridgecrest, Calif.
To his cable counterparts, Commisso not only runs a good business, he has stepped into industry leadership roles when the circumstances warranted it.
“Rocco is a very unique individual,” said Suddenlink Communications CEO Jerry Kent. “He combines a great sense of humor, a sharp business mind, and a great ability to focus on what's important. That's what makes him an industry leader.”
That strategy has also allowed Commisso to focus on his business, which despite a few rough years — he had a very public dispute with Sinclair Broadcasting Group over retransmission consent fees in Iowa in 2006, which has since been resolved — seems to be back on track. Although the Sinclair battle resulted in the loss of thousands of subscribers, Mediacom appears to be winning them back: in the fourth quarter, revenue rose 8.3% to $360.2 million and adjusted operating income before interest, depreciation and amortization rose 8.4% to $129.6 million.
The operator also managed to improve basic subscriber losses in the period — 6,000 compared versus 7,000 in 2007 — and grew digital customers by 19,000 in the period. High-speed Internet subscribers grew by 11,000, while phone customers increased by 9,000 customers. While avoiding specific guidance, the company expects to grow revenue and cash flow despite the tough economy in 2009. One financial metric that will see a big increase is free cash flow — cash flow after interest payments and taxes are made — which should rise to about $1 per share in 2009, versus less than 10 cents per share in 2008.
Commisso has always been a conservative player, even his largest acquisition worked out to about $2,600 per subscriber in an era when other companies were paying as much as $4,000 per customer for similarly rural markets. In metropolitan markets, deals were being made for as much as $6,000 per subscriber during that time. That frugal strategy has also helped Mediacom weather uncertain economic times.
“To this day I have never had a year where our employment base has gone down,” Commisso said, adding that in the past seven years Mediacom has added more than 900 people.
While fiercely loyal to his people — many of his executives have been with him since he started the company in 1995 — Commisso has also stepped out into the forefront to take a leadership role for the industry on several controversial issues.
For example, it was Mediacom that filed papers with the Federal Communications Commission in 2003 asking for permission to put ESPN on a separate sports tier in an effort to offset the 20% annual rate increase the sports network was forcing every operator to pay. That touched off a battle that later drew in Cox Communications and led to ESPN reducing rates. Commisso was also at the forefront in battles against the Big Ten Network, Sinclair Broadcasting Group and others.
Kent, who was involved in similar battles over high-priced sports programming and retransmission consent with Suddenlink and its predecessor Cebridge Communications, said that Commisso's demeanor during the early stages of those disputes was critical.
“He never hesitates to say what he thinks,” Kent said. “In fact, his ability to attack potentially divisive issues without offending anyone really sets him apart.”
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