Roger Keating is the point person for the biggest overhaul of cable television ever seen in Los Angeles: Time Warner Inc.’s $17.6 billion acquisition of Adelphia Communications Corp.’s assets. As part of the complex deal, Time Warner Cable will take over the neighborhoods being serviced by Comcast Corp. Time Warner Cable now faces the challenge of meeting its pledge to improve customer service while serving practically the entire city of Los Angeles and 1.6 million customers throughout the region. Before the deal can close, it still must pass muster with the Federal Communications Commission, which is considering a request from DirecTV Group Inc. to block it on antitrust grounds.
Question: So how long will it be before Comcast and Adelphia customers notice they have a new cable provider?
Answer:
We won’t be shy, we’ll make our presence known. Through this transaction, we’ll pick up a lot of facilities, and our first focus will be on things customers will notice. Certainly, our vans will be branded and all our personnel have new uniforms. We’ll be purchasing ad time to talk about our products, in newspaper, radio and TV. Time Warner has only served a portion of L.A. and it’s never been economic to do that before.
Q: Will viewers notice anything different?
A:
The biggest thing they’ll notice is that we’ll be in the phone business, so they’ll see ads in the media for our three-way bundle of video, phone and Internet, which we’ll be promoting heavily. When you turn on your TV, there will be some programming changes, some additional channels, and some channel moves. It’s too early to say what specifically. The Adelphia and Comcast names will no longer appear on your bill. The menu guide will have at the minimum branding changes, but they’ll likely have more features.
Q: So what are you are doing to prepare for the change?
A:
We’re doing a lot of planning in the background, without having to interact with Adelphia and Comcast. We’re figuring out how to describe and package and sell all our different tiers and products. Adelphia has one analog tier and two digital tiers, and we have analog plus four digital tiers. We’re doing a lot of meetings with city council members, city franchise managers and communities.
Q: What’s going on in these meetings?
A:
The franchise transfer process is not perfunctory. It opens up the process to other issues, so in some cases, a city or county might invite public comment, they may revisit the fee structure. By nature it’s a political process, times 170 franchises. But the franchise transfer is like assuming an existing contract. There are some very clear rules about how they can be transferred.
Q: What about layoffs?
A:
All of the front line personnel either operating the phones or working on the plant will get hired. I wouldn’t want to make sweeping statements about layoffs. But even after we pick up the people from Adelphia and Comcast, we’ll be adding new services so we’ll be growing our total employee base.
Q: Do you plan to raise rates?
A:
We’re looking at pricing locally as we figure out how to package and sell our products. It would be inappropriate to coordinate pricing before the deal closes. We don’t want to have three different sets of prices. We don’t know if they’ll go up or down. For the lowest-priced basic cable package, it’s regulated by most communities, so that makes it hard for us to raise prices.
Q: Will Time Warner be petitioning to have the market deregulated the way other cable companies have done because of the growing level of satellite subscriptions?
A:
We have petitioned for “effective competition” (becoming deregulated by proving that satellite TV subscriptions are above a certain percentage of the community) in some areas but not in others over the last few years. There are 170 franchises here, and we look on a case-by-case basis to see what the satellite penetration is.
Q: Adelphia has had a reputation of being a technological laggard. Have you found this to be true?
A:
Until we actually take possession of the assets, we really won’t know how big of an effort it will be to remediate the plant. But we will grow to more than 5,000 strong when we pick up the assets of Adelphia and Comcast. So there’s a lot of people out there in the field in trucks working the lines who will be able to direct us to in the process of remediating the plant. This is not rocket science.
Q: Can you be more specific?
A:
We measure signal levels, strength, stability and other factors at various points along the physical distribution plant. One of the first things we’ll do when we pick up these assets is an exhaustive scrub to understand where the plant performs well and where it falls short. And where it falls short, we’ll repair and upgrade the plant. We know that there hasn’t been the level of service and quality that customers have come to expect.
Q: If it’s not rocket science, what went wrong at Adelphia?
A:
This may sound strange, but I’m not altogether sure. I am not and was not inside, so I’d hesitate to speculate on what went wrong. I do know what one has to do to make it right.
Q: There are fears Time Warner will become too powerful in this area.
A:
The customers are the beneficiaries of us having more resources. Offering more local news channels or on-demand local programming has huge fixed costs. We couldn’t do it if we have 20 percent of the market, but we can if have 80 percent of the market.
Q: Do you have an example?
A:
We were the first cable company in the country to distribute an L.A.-based startup called Si TV early this year, a network that targets English-speaking Hispanic culture. We started distributing ImaginAsian TV this month, real-time and on-demand, that offers programming in six Asian languages. Having more resources also means that we can offer media from segments that are big in L.A. but underrepresented in the media, such as holistic and Eastern arts. We offer on-demand content from Oasis, which is based in L.A., with programming on things like yoga.
Q: What about new services?
A:
We’ll have more video-on-demand, not just for (movies), but for TV programming. Satellite, our main competitor, doesn’t have the ability to offer on-demand services because of the way their technology works. You’ll be able to get these products separately, so you can get unbundled services. If you get them together, it will bring significant savings.
Q: What about public access?
A:
Public access won’t be changed with this transaction. Whatever public access is embedded in the franchise agreement, we’ll be bound to honor.
Q: How did you get into the cable business?
A:
No one thinks they’ll end up being the cable guy. After college, I went into strategy consulting for five or six years in Washington, D.C. And when I got tired of it, I asked myself which one company I enjoyed working with the most out of 20 or so companies. And it was the cable company, Comcast. They hired me to run their cable properties in Western Florida. It was when Comcast was just emerging as a large cable company.
Q: Is there any crossover between cable and industrial engineering?
A:
A lot of disciplines from industrial engineering are coming into play at cable companies. You use a lot of statistical quality control. We have a very similar process to make sure that orders for requests are being managed properly in our operations so that things get done on time.
Q: But the cable industry has a reputation for having the worst service around.
A:
We talked to a customer a couple of years ago who had a bad experience, and we had to come back a second time for service. The customer said, “You really should apologize.” We thought about that. So now anytime something breaks down and we have to send out a truck again, we apologize. That led to a program where we send a box of cookies every time there’s a repeat service call.
Q: Do you often send out boxes of cookies?
A:
We do. We have 350,000 customers, so we do have to return to a home sometimes. It might not have been our fault, but that doesn’t really matter to the customer.
*Roger Keating
Title:
Division President
Organization:
Time Warner Cable, Los Angeles
Born:
Berkeley, 1961
Education:
B.S., industrial engineering, University of Notre Dame; M.B.A., Stanford University
Career Turning Point:
Doing a ride-along with a cable truck and visiting customer homes
Most Admired Person:
Wife
Hobbies:
L.A. city life, surfing
Personal:
Lives in Los Angeles, married, expecting first child
