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Cablevision's New Visionaries

Time Warner vets tackle the restructured company 5/02/2004 08:00:00 PM Eastern

It's not often that outsiders rise so high and so fast at Cablevision Systems. Now the company has two ex-Time Warner Cable executives in pivotal positions.

Cablevision is promoting Tom Rutledge, president of its cable division, to the post of chief operating officer just two years after he moved over from Time Warner Cable.

And to fill his old slot, the MSO tapped John Bickham, former president of Time Warner's Southern division.

The shuffle is a result of the planned spinoff of Cablevision's Voom DBS service and Rainbow Media operations.

Chairman Charles Dolan is a believer in Voom, a satellite service focused on delivering high-definition-TV channels. But because investors aren't so sure a third DBS competitor can survive, they demanded that Cablevision's systems be protected from startup losses. So Dolan is spinning off Voom into a separate publicly traded company.

As a result, Dolan is leaving Cablevision to become chairman of Voom, and he's taking Rainbow networks like AMC with him for financial support while Voom grows. The new company will be called Rainbow Media.

With dad at Rainbow, that leaves son James Dolan at the helm as president of Cablevision. The younger Dolan is bringing Rutledge up for support.

On the Rainbow side, another Dolan son—Tom—will become CEO, the company said Friday. Tom Dolan's background is primarily in computer systems. He's currently chief information officer of Cablevision.

B&C talked with Rutledge and Bickham, and here's how they see their new roles:

This move seems to reflect how Cablevision is reorienting itself to become pretty much solely a cable operator.

Rutledge: Yes, it does. It's bringing solidity to the new company—we are going to be a new company with the spinoff of Voom and Rainbow. We're putting together a team to run the new business. I've been involved in the cable business for the last couple of years; this is an expansion of my responsibilities. Jim Dolan has asked me to run more of the company. This is a good opportunity for me.

We really have two strategies. One is a large, sophisticated network. The other is a geographic strategy, focusing on the metropolitan New York.

John, how do you expect Cablevision to differ from Time Warner Cable? They definitely have different cultures.

Bickham: They're in the same business. The offer the same products. The biggest difference is the size of the system in an individual [designated market area]. For Time Warner, 500,000-1 million subscribers are a lot in an individual market. Here you have a company that's three times as large in one market. That creates some unique opportunities.

But fundamentally, they're similar. They're both in highly competitive markets. The unique thing is Cablevision is growing very rapidly. Digital is growing well. The Optimum Online business is one of the best in the country.

The telephone rollout creates some unique opportunities. Cablevision has rolled it out in its entire footprint.

Joe, is telephone something you need to keep financial growth going? Or is it an add-on?

Rutledge: I think it's a core product. Every consumer has phone service. It's very attractive.

But how do you look at the base business? Plain, old vanilla cable isn't really growing.

Rutledge: I think plain, old vanilla cable and digital cable are the same product. And we're rapidly increasing digital penetration. I think it's important that we retain a superior competitive posture in our core video product and that the business grows.

We think we can grow it because we're superior to satellite in terms of channel capacity, HD channel capacity, interactive television capability, VOD.

As much as high-speed access has been a key driver of financial health over the last few years, and as much as voice could be a massive product, the video business is still our single biggest source of revenue and I think it's still a source of upside.

What's the biggest task?

Rutledge: Execution. We have invested a lot of money in the superior platform. We can be a better product in every single category we compete in. That ultimately means we have to be better in terms of execution.

In the last few years, we've focused on getting the upgrade done. Going forward, we need to focus on continued execution and continued development of the products.

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