We couldn’t be prouder of our leader, Pat Esser, who is named as the first Executive of the Year by Multichannel News in this week’s issue. The caption on the caricature of Pat says it best, “Recognized for outstanding leadership and corporate management, the Executive of the Year demonstrates that success in the marketplace is achieved by putting customer satisfaction front and center and that by focusing on customer service, a company also serves its employees, investors and the overall industry.”

Pat is prone to describing himself as one of the luckiest guys in cable, but we all know that the “luck” is the sum of opportunity and preparation. While Pat entered the industry as an average communications graduate from the University of Northern Iowa, he has consistently positioned himself to meet opportunity (like when he packed up all of his belongings into the back of his car to try and get a job with Cox in Virginia). His preparedness is second to none. As detailed in the story, Pat spent his first 60 days as president interviewing Cox employees to talk about what they expected of him and the company. Pat understands that listening is an essential ingredient in leading.

Perhaps the best thing about Pat is that, at work, he’s just another member of the team with a contagious excitement for the possibilities ahead.

Last week, Cox Communications signed a letter of intent to exchange our 25% stake in Discovery Communications for the stock of a company that owns the Travel Channel business, Discovery’s Antenna Audio business and cash. We thought this would be the perfect time to start a new feature on Digital Straight Talk called Five (or so) Tough Questions For…. The first person in the hot seat is Cox’s President, Pat Esser.

1. Pat, Cox is a cable distributor. Why in the world are you interested in owning and operating a cable network like Travel Channel?

Yes, Cox is a cable distributor, and distribution will remain our core business. But I’m always interested in opportunities that can make our business even stronger. We’ve been very pleased with our interest in Discovery, but it's a financial asset that doesn’t hit our bottom line. Converting it into an operating asset like Travel Channel on our balance sheet that will generate revenue and cash flow is a good move for Cox. But beyond that, Travel Channel is a phenomenal brand with powerful content that I’m confident can be leveraged in multiple ways across the businesses and services of Cox Communications and our parent company, Cox Enterprises. That would include our wireless service, as well as newspapers and broadcast stations. There seem to be unlimited opportunities to make the most of Travel’s amazing content. I’m extremely impressed by Pat Younge (general manager of Travel Channel) and his team. My plan is to provide them all of the support they need from me and my team to continuing growing the Travel Channel brand, and to let them do their jobs.

Pat Esser
President, Cox Communications

It took a little while to decompress following the overwhelming spectacle of CES, but with the benefit of a couple of days of calm, here’s some reflection on the highlights and themes that resonated with me during and after last week’s show:

 For me CES began, surreally, in Barry Manilow’s green room at the Las Vegas Hilton Theater, site of the “Pipelines Power” session. The area is adorned with seemingly hundreds of photos of the star with other stars, which provided some light escapism and mood-calming before we were ushered onto the stage and into the spotlight before a large crowd wanting to hear how cable, telco and satellite execs view convergence. As I stated then, as service providers, we must deliver the benefits of convergence minus the “hassle factor” for our customers. Throughout the week, as I viewed thousands of gizmos, gadgets and random awe-inspiring products—most of which likely will never make it to market—I was even more convinced that while consumers may welcome “wow,” above all they just want it to work. It won’t matter how amazing these converged products are if they don’t interact properly.

David Zaslav’s ascension to President and CEO of Discovery Communications is getting a lot of attention today. He’s the second NBC executive to exit this week, following TV group President and COO Randy Falco’s move to AOL. At Discovery, Zaslav will work for Founder and Chairman John S. Hendricks, whom Zaslav calls a mentor and credits for helping him join the cable industry in the ’80s. Discovery board member Pat Esser, President of Cox Communications, one of Discovery’s owners, said of Zaslav: “His unique understanding of strategic development, programming and operations will absolutely be a huge asset to Discovery’s continued success and long-range outlook.” A sampling of today’s media coverage about Zaslav: The New York Times, The Washington Post, Multichannel News, Broadcasting & Cable.

Over the past several years, cable companies have made the transition to multi-service providers of more than just cable—a journey that started for Cox Communications with the launch of high speed Internet in 1996 and digital telephone in 1997. Cox has led the industry in “bundling” services. Yesterday, Cox announced that 57% of its nearly 6 million residential customers subscribe to more than one service—a 16% increase in bundled customers over the past year. But reflecting the ongoing transition away from just cable, Cox also has made a concerted effort recently to ensure a “line into every home” and pursue business out of every home passed by its network, even if that home has no interest in cable. Yesterday Cox announced success with that strategy, reporting an industry-leading number of non-video customers (432,000 of them) who choose Cox for high speed Internet and/or telephone, but not cable. Cox President Pat Esser described the rationale of Cox's "line in every home" strategy this way: “Our world is changing, and we needed to change our marketing strategies too.” Even so, Cox also saw strong video growth in the third quarter, growing basic cable subscriptions by 1.6%. Click here for Multichannel News' coverage of Cox's announcement.

Cox Communications President Pat Esser’s headlining of the UBS conference call yesterday raised some eyebrows in the industry. The headline of a Multichannel News article, “Cox Holds Call; Not Going Public,” answered a question apparently on the minds of many investors when they saw Esser would be featured in securities firm’s periodic “Frontline” series of conference calls. Cox going public again? No, Esser emphasized. His reason for accepting analyst Aryeh Bourkoff’s invitation to participate in the conference call: “We haven’t done one of these in two years, but I thought so much was going on in the business and so many questions were being asked of us, this is a good way to get answers out into the market to do that.” Esser added, “We think that our success over the last decade, and particularly over the last couple of years, proves the power of our network and offerings, and validates the business strategy we’ve been following for more than a decade. So, even though we’re private, we think our recent results are a model for what Cable can achieve.”

In other coverage of Esser's address, the satellite industry’s SkyREPORT took note of Cox’s success in signing up former satellite TV customers in an article entitled “Cable Poaching Satellite Subs Like 1-2-3.” And CableFAX Daily opined that Cable’s publicly traded companies should be grateful to Esser:

An unexpected drop in wholesale prices undoubtedly helped drive cable operator stocks higher Tues—but MSOs might also want to send a thank-you note to Cox pres Pat Esser. Despite heading a private company, Esser held a conference call Tues with UBS analyst Aryeh Bourkoff to tout subscriber metrics and the power of the bundle.

The number of customers ditching satellite TV and choosing Cable has nearly doubled in the past two years, at least for Cox Communications. Company President Pat Esser will deliver that nugget in a teleconference today sponsored by UBS analyst Aryeh Bourkoff. This year, Esser will report, 11% of the company’s basic-cable connects are former satellite customers, up from 6% in 2004. The defecting satellite customers are big buyers of Cox’s full three-product bundle of cable, phone and high-speed Internet, with 40% of them choosing the triple play. Speaking of the bundle, Esser notes that delivering multiple products has greatly reduced Cox’s own customer defections. Cox’s bundled customers are 41% less likely to churn than single-product customers. Esser notes that Cox is America’s leading bundler, given that the company has delivered multiple services for a full decade, a distinction reinforced by the number of customers the company is taking away from both satellite and telephone companies.