John W. Waller III

Founder and chairman, Waller Capital

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For John Waller III, founder and chairman of Waller Capital, the cable business has always been about relationships.

In the 35 years since forming Waller Capital, a New York-based boutique investment bank focused on the cable, telecom and internet industries in 1982, Waller has overseen more than $80 billion in transactions. He has had his hand in some of the biggest deals in the industry.

Waller got his first taste of the cable industry in 1978 when, after serving in the finance department of media giant Time Inc., he moved over to a marketing job at its then-fledgling premium channel, Home Box Office.

“They didn’t want to hire me at HBO in marketing because they thought I was a bean counter,” Waller said. “I was coming from the financial area and [with] my horn-rimmed glasses, they thought I was an accountant or something. I said ‘No, no, I’ll be good at sales.’ ”

At the time, HBO hired more MBAs than any other company in the country, and the most coveted jobs there were with large accounts, like Cox Enterprises, Tele-Communications Inc. and the like. Waller said HBO management didn’t think he was ready for the big time, so they decided to give him responsibility for about 300 smaller “mom and pop” cable operators in Ohio, Pennsylvania and West Virginia.

“Well, those ‘mom and pops’ were guys like [Century Communications founder] Leonard Tow, [CableVision Industries founder] Alan Gerry and [Comcast founder] Ralph Roberts,” Waller said. “I got to know them early.”

While at HBO, Waller said he observed that it was becoming more commonplace for customers to buy two premium services — HBO and Showtime — which essentially showed the same movies, but at different times. The term hadn’t been coined yet, but it turned out to be an early instance of time-shifting, something that has steered the business from multiplex channels to DVRs to the over-the-top providers of today.

“My vision was to buy these little mom-and-pop cable systems and add two or three pay services, which nobody ever thought to do,” Waller said. “I found some companies I thought I could buy, but I couldn’t raise the money. Then a friend of mine who was a banker said, ‘Why don’t you just broker them?’ ”

Waller was unfamiliar with the term at the time, but his friend explained it as taking a fee for helping companies find buyers.

“Well, I could do that, because I knew everybody,” Waller said. He soon noticed that while deal brokers existed — Bill Daniels pioneered the concept with his Denver-based Daniels & Associates — the field appeared to be open in New York. And while others took a more sales-focused approach, Waller thought he would focus more on investment banking.

“This was the ’80s, when junk-bond financing was coming on strong and all this private equity was coming in, so it really required more sophisticated financial advice,” he said.

Waller’s first deal was with TCI founder Bob Magness for a small cable company in Texas. His next was with Steve Simmons, who had just started Simmons Communications and was looking to buy systems in the Delaware-Maryland area. Waller represented the seller.

Simmons remembered the former HBO executive with the long contact list.

“He knows everyone,” Simmons said of Waller. “Through his network, he has been able to create a very good business for himself and his colleagues brokering properties. And he’s a very nice person. He’s a fun guy to be with. I really congratulate him on the honor.”

More than 30 years later, Simmons still counts Waller as a friend and colleague. Waller Capital represented the seller again when Simmons’s new company, RCN — now part of private-equity group TPG — bought Wave Broadband for $2.4 billion in May.

“It’s been a pretty amazing run,” Simmons said.

Waller, like other deal brokers in the cable business, grew substantially through the consolidation wave in the late 1990s and early 2000s. But when the M&A market began to dry up, he diversified.

Now, Waller Capital has clients in telecom, fiber, communications infrastructure, wireless, broadcasting, information technology, digital media and advanced advertising, as well as cable.

Waller said the company began to focus on the digital sector several years ago, at the behest of some of its clients. Since then Waller has done several deals in the sector, ranging from helping to secure financing for digital media companies like OMGPOP, online gaming company Spil Games and mobile digital media company fingerprint, to representing YouTube multichannel network Big Frame in its sale to Awesomeness TV.

While there is still some room left in the cable M&A space at least for the next two or three years — Altice USA is repeatedly mentioned as a future buyer of cable systems — Waller said many operators are realizing that they need to expand their focus.

“Now they are big enough and smart enough to know they had better pay attention to some of these digital media companies, because that’s the future,” Waller said, adding that additional opportunities reside in fiber, telecom and core infrastructure businesses as well.

Waller said he is slightly amazed at the level of growth that is still ingrained in the cable industry, 35 years later.

“The cable industry has just been an amazing place,” Waller said. “I tell my kids, try to find an industry you really like and hopefully one that is growing. There’s been nothing like it.”