What incumbent cable providers see as a source of serious competition, former AT&T Media Services regional VP Carter sees as an opportunity. Beginning with a July 2001 deal to represent local advertising sales for Midwestern cable provider Wide Open West, ViaMedia has expanded to encompass rep deals for RCN Corp., SureWest Communications and four other competitive cable operators. Today, the 190-employee firm, based in Lexington, Kent., manages advertising sales for cable companies reaching 1.6 million households.
What was the “aha!” moment that launched this company?
In the early days of Wide Open West, prior to their acquisition of Americast, they needed representation, and they contacted my partner. We looked at the whole business plan and determined it’s a space where we could succeed, because these folks were busy building cable plant, focusing their attention on customer acquisition and retention, and the rollout of new technology products. We thought if we could develop a first-class ad sales representation company and meet their expectations from a partner perspective, and go above industry standards in operations and sales revenue, we’d have a definite shot. We launched our company with that agreement.
Why haven’t these companies opted to build their own ad sales operations?
[It’s] very costly. To direct a significant portion of your energy toward a portion of your business that will represent at most 5 to 10 percent of your EBITDA may not be the best use of your resources, if you can achieve that by partnering with a company that becomes a partner with you as opposed to a representative for you. We view ourselves as an extension of their company.
When you talk about industry standards, you’re looking at what metrics in addition to EBITDA contribution?
Actually, we can’t control our percentage of EBITDA contribution because we can’t control what’s going on in the other side of the business. But the biggest metric is how much revenue are we driving on a per-subscriber basis, and how much growth are we having compared to the remainder of the industry.
And how are you performing thus far?
I’d say we’re approaching industry standard revenue per subscriber. But keep in mind the incumbents have almost a 20-year head start in developing the customer base, so we’ve made great strides in the last five years in approaching that. And in some markets, we’re way over.
The mainstream local cable advertising industry grew at just 3.5% in the first quarter. You would have been fired 10 years ago for that kind of number, right?
You certainly would have. But keep in mind national is slow. And national is a big driver. We still maintain feet on both sides--the large regional/national and the local side of the business. There’s been a movement in the industry to go to more of a large advertiser focus. And of course when those budgets get cut you have very little leverage, being a true grassroots marketer. You’re at the mercy of the agency community, the corporate marketing community. If cable’s not on the plan, what are you going to do?
How do you view the distinction between an “incumbent” cable operator and a “competitive” cable provider?
I think we’ve changed a bit of the paradigm, or are trying to, in the idea that a competitive cable operate operates any differently than an “incumbent.” There’s no such thing in my opinion as an incumbent. In certain ZIP codes we’re the majority cable player. So are we the incumbent and are they the competitor?
You were in
recently meeting with media buyers. What’s your elevator pitch?
It’s an education process. But most of those people on Madison Ave. or Michigan Ave. have a strong national sales focus. The pitch is that cable’s one universe. ESPN is one universe; HGTV is one universe. Take Manhattan, for example. If HGTV is a great product for 319 E. 22nd St., it’s a great product for 320 E. 22nd St., which may be our building.
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