French's Mission: Stem TCI's Sub Slide .................................
multichannel.com
By CHARLES PAIKERT
When Tom French took a top marketing job at Tele-Communications Inc. in July, he didn't expect a lot of long lunch hours and short days.
Moving from the satellite industry to senior vice president of corporate marketing at TCI, French found himself facing a laundry list of problems: heavy turnover; low morale; the loss of premium subscribers, as well as basic customers; and a lingering conflict between proponents of a centralized approach and a regional approach to marketing.
Over the past tumultuous year, TCI's marketing department has seen sharp budget cutbacks and widespread personnel layoffs; executive-suite conflict regarding marketing strategy; and the loss of more than 260,000 subscribers for the first nine months of 1997.
The good news for French, industry observers said, can be summed up in two words: Leo Hindery. Although French reports to TCI Communications Inc. chief operating officer Marvin Jones, he was hired by and has the solid backing of Leo J. Hindery Jr., who took over as TCI's president and COO in February.
What's more, in sharp contrast to previous TCI reigns, Hindery has voiced strong support for marketing, making it a point to hire back many of the marketing people who were let go last year and pledging to increase the MSO's marketing budget by as much as $100 million through the second half of the year.
Both Hindery and Jones believe that customer growth and revenue are as important to TCI as cash flow is, making marketing less vulnerable to cuts, but also putting more pressure on the department to produce its numbers.
The 38-year-old French said he hears the message loud and clear.
"My mandate is to gets subs. Leo was very clear that that is the right thing to do. It's a philosophical change to become more customer-focused, and we feel that we can get our numbers up by acquiring new subscribers or retaining existing ones."
DBS LINKS KEY
Industry experts think that French is getting off on the right foot.
"The No. 1 issue that TCI faces is customer loyalty," said Denver-based consultant Dean Erickson, of Media Management Services, "and the fact that they got someone from the direct-broadcast satellite industry is very encouraging."
French moved to Denver and replaced Camille Jayne as TCI's marketing chief after a two-year stint as vice president and director of marketing at U.S. Satellite Broadcasting and a brief tenure at short-lived satellite venture American Sky Broadcasting Inc.
Howard Horowitz, a New York-based cable consultant, whose annual "State of Cable" report with Steve Liebmann has chronicled cable operators' competitive battles with DBS providers, agreed that French's DBS background will help.
"TCI's marketing challenge is serving their best customers," he said. "That's where they're vulnerable. French is an interesting hire. If he brings over a competitive philosophy in competing for premium customers, it will serve him well, but if he reverts to the old, 'We're the only game in town,' he will fail."
French said his two years at USSB will, in fact, serve him well.
"We did an enormous amount of customer research that made me aware of what customers wanted from TV," he said.
He said he also learned that while "the phenomena of satellite TV is a wonderful thing, it is truly not for everybody until they improve it."
Specifically, French believes that cable has been "given a reprieve" to exploit a window of opportunity resulting from DBS' inability to provide local programming and to inexpensively service more than one set.
"If we can get in all of the rooms in the house with a digital offering and an on-screen guide first, we win," he said.
FRENCH'S GAME PLAN
In fact, TCI is gearing up for a number of digital launches next year, and French said the MSO will market the new product with "two plans of attack" -- a soft launch and a hard launch.
When local headends are initially activated for digital service, he said, TCI will offer its best customers a "special deal" for a limited time. French said he expects these premium subscribers to include many so-called early adopters, who will provide a "great take rate."
The hard launch, French continued, will "open the floodgates" and spread the word among a larger base of customers. One of the most important considerations for this phase of the plan, he said, would be making sure that systems double the number of available installers.
When digital is ready, French is convinced, TCI "will have more demand than we can handle. It will not be a problem to sell this."
Analog television, however, remains a more pressing marketing concern. French said he wants to keep and add subscribers by offering them added value in the form of loyalty programs, simplified pricing and targeted packages.
In the fourth quarter, TCI has introduced loyalty programs such as offering subscribers coupons from The Nature Store as part of a co-promotion with the retailer's parent company, Discovery Communications Inc. (which TCI is an equity partner in); and giving customers one night free at a hotel and a free pizza for buying premium or pay-per-view services.
TCI is also simplifying its pricing packages. Expanded basic will cost $30 per month, including Disney Channel and Encore; an upgraded $50 level will include a pay channel, the Starz package and a free converter box; and a deluxe $70 tier includes all of TCI's available television programming.
INSIDE TCI
Many people in the cable industry believe that French's biggest challenge is not so much the strategy and tactics of marketing TCI products, but, rather, dealing with internal issues, such as budget commitments, morale and the structure and direction of the department.
"The problem at TCI is less finding a great marketer," said Larchmont, N.Y.-based consultant Marshall Cohen, "and more getting a commitment to marketing."
French insisted that Hindery and Jones really are serious about supporting marketing, and that they have "increased marketing expenditures considerably."
But some longtime TCI observers wondered why the much-vaunted changes haven't been more evident to date. French replied, "A lot of things needed to be done," and they will be in place this month.
High on the list of conflict resolutions was whether TCI's marketing should be centralized or regionalized. French said he's adopted Hindery's vision that decentralization works best for a cable operator, in contrast to "the former regime," which advocated greater centralization.
French said Hindery sees an MSO as a "composite of local companies, each with their own channel lineups and special relationships with their local communities."
He added that his experience as a brand manager with liquor distiller Hiram Walker taught him that "taste is highly regional," and that regional focus "set me up for what I'm doing now."
While Denver will provide strategy and support to regions and local systems, French said, "There's no way that one ivory tower can dictate what's going to happen in Poughkeepsie [N.Y.] ... It's a tough gig to control 425 systems."
Nonetheless, years of less-than-resounding support, floundering leadership, massive layoffs, sudden shifts in executive suites and high turnover have taken their toll on TCI's marketing rank and file.
Bill Mitchell, senior vice president of TCI's Atlantic region, described the company's marketing department as, at the very least, "overextended."
French said marketing lacked "leadership and teamwork," and he conceded that there were "hotbeds where turnover was hideous."
While he contended that things have turned around, he admitted that the troops in the field still had to be convinced.
"It's like postwar," he said. "The dust is starting to blow away, and the survivors, who have seen a lot come and go, are waiting to be shown."
Mitchell said TCI's field marketers are "far more positive now. The evolution that they're seeing is far more encouraging. The company has largely come to grips with the fact that analog marketing is best configured at the regional level, and that one size does not fit all."
French's strengths, Mitchell said, include "being brought in by Marvin and Leo," and "a great set of ears."
The new marketing man's greatest challenge, Mitchell added, "is obvious: He has to turn around the slide in customers." |
