Former TWC Exec Rutledge Resurfaces at Cablevision

Former Time Warner Cable executive Tom Rutledge, one of the casualties in a major management shakeup at that MSO in October, resurfaced last week as president of Cablevision Systems Corp.'s New York Metropolitan Area.

Rutledge's appointment comes at a time when Cablevision is scrambling to roll out advanced services — its digital cable offering, iO: Interactive Optimum, was launched on Sept. 28 — and the former Time Warner Cable executive's hiring was looked on favorably by analysts.

"Anytime anybody brings in somebody with senior management experience, you can't help but say that it's a positive development," Salomon Smith Barney Inc. analyst Niraj Gupta said. "The company probably could use a little help in terms of management depth."

Rutledge will report to Cablevision CEO James Dolan, who had been overseeing the New York operation, as well as running Cablevision's other properties.

"Tom joins Cablevision at a crucial time," Dolan said in a statement. "With the recent launch of iO, the success of Optimum Online and new services and products on the horizon, Tom's experience in broadband operations and the integration of services will play a key role in our developing digital strategy."

Cablevision has been without a New York head since February, when former president of the New York area Joseph Azznara became chief operating officer of a new wired and wireless phone unit. Azznara retired in October.

Rutledge had been with Time Warner Cable for 24 years, most recently as president of the 12.7-million subscriber operation. Rutledge resigned in October after sweeping management changes at the company. He was replaced by former Comcast Corp. president Tom Baxter.

Although there was some speculation that Rutledge left the MSO because he butted heads with Time Warner Cable chairman Glenn Britt, Rutledge denied any friction between the two.

"I left because I wanted to leave," Rutledge said. "I thought I would have more interesting opportunities going forward if I did and that has turned out to be the case. I enjoyed very much my time at Time Warner Cable."

In his new job, Rutledge will have a little more autonomy than at TWC. Among Rutledge's responsibilities will be Cablevision's much-touted digital rollout, as well as its high-speed data and telephony offerings.

"I have responsibility for the whole cable company," Rutledge said. "Although it's a smaller company [than Time Warner Cable], that's a step up."

Rutledge said that one of his top priorities will be Cablevision's digital cable rollout.

Cablevision came late to the digital party — after several delays it launched iO to 550,000 homes last fall. The company expected to have about 40,000 digital subscribers by the end of 2001.

Most observers said the delays were due to the complexity of the digital offering — Cablevision is using a new digital set-top box from Sony Corp., and features of the service include electronic mail and other interactive capabilities.

Rutledge would not address any speculation regarding service problems — his first official day on the job is this Monday (Jan. 7) — but said that the product rollout is moving ahead.

"Cablevision has the most advanced digital product rolled out anywhere," Rutledge said. "Going forward from Jan. 7 when I start, I expect to roll out [digital] successfully."

Back in June, Cablevision chairman Charles Dolan assumed the oversight of branding, packaging and marketing strategies for the rollout. Although it appears that Rutledge will take over that responsibility in his new position, some observers see Dolan continuing to play an active role.

Rutledge's hiring, coupled with recent layoffs at Cablevision, have also started some industry pundits speculating the MSO could be the next domino to fall in a consolidation wave that might follow Comcast Corp.'s pending $72 billion acquisition of AT&T Broadband.

Cablevision has been a favorite among acquisition handicappers for the past few years. Because of its strategic position — it has 3 million subscribers in the lucrative New York Metropolitan area — one of the most logical candidates to acquire Cablevision is AOL Time Warner Inc., which has about 1 million subscribers in Manhattan.

Rutledge declined to comment, citing the company's policy not to comment on speculation.

While most analysts believe that consolidation will begin to heat up, they add that Cablevision has been a reluctant seller in the past.

"When you see consolidation cycles beginning, you don't want to be the last guy to sell," said Banc of America Securities LLC cable analyst Doug Shapiro. "But a lot of people approach this with the question, 'Who's the best fit?' when it should be 'Who's for sale?' That's really the more important analysis: Who's more likely to sell? All indications from the Dolan family are that they are reluctant sellers."

Adding to the speculation was Cablevision's announcement late last month that it would lay off about 600 workers. The layoffs are the first in recent memory by an MSO other than AT&T Broadband, which let go about 900 workers in February 2001.

Although Cablevision would not give details as to where the layoffs will occur, it did say that the likely targets would be corporate, administrative and infrastructure functions across its business units. The company said it did not expect consumer, telecommunications, customer relations and field service operations to be affected.

Most observers took that to mean that the layoffs will mainly be in Cablevision's Lightpath business telephony division, its movie theater operations and its The Wiz electronics retail stores.

Bear Stearns & Co. Inc. cable analyst Ray Katz said that the industry should not read too much into the layoffs.

"Sometimes a cigar is just a cigar," Katz said.