Cox’s Jim Robbins has taken the lead once again—this time in the battle with networks over programming costs. By Mavis Scanlon Cox, the fourth-largest cable operator, has earned kudos from both inside and outside the cable industry for its product offerings. PC Magazine readers gave Cox’s cable modem service an A+ in a reader survey last fall, and consumer ratings company J.D. Power and Associates gave Cox’s phone service top-notch ratings in the seven categories it measures. Analysts tout the company’s customer service and bundling strategy, which have helped retain subscribers while keeping satellite penetration to a minimum in Cox markets. Cox president and CEO Jim Robbins led the company in its pioneering efforts to offer telephony service—Cox is now the 12th-largest domestic phone company—and is now out in front of the industry with his stance on programming costs, in particular, sports programming license fees: He says they are simply too high. CableWORLD caught up with Robbins in late January for a telephone question-and-answer session. CW: What’s the status of Cox’s negotiations with ESPN—do you expect a deal soon or will the bargaining go down to the wire?
Robbins: All I can tell you is that we continue to meet. I’m not going to go beyond that—I am not going to characterize the meetings. CW: How important is ESPN to Cox subscribers?
Robbins: ESPN is an important channel. There are a number of channels that are important. But this is a fight about value for our customers, and we’re just trying to ensure that they are getting value for what they are paying. CW: What about ESPN’s other properties—ESPN2, ESPN Classic, ESPN Deportes, HD and Broadband?
Robbins: They each have their place. I can’t tell you that one is more important than the other. We have certain services that if you take the affiliate fee and the advertising and the viewership—some stack up very well and some are out of balance. ESPN has been one that’s been out of balance. CW: Has the rancor between ESPN and Cox died down in recent months?
Robbins: In recent weeks the public rancor has been more contained. CW: Who are your closest advisers in the negotiations?
Robbins: Bob Wilson, VP of programming, Pat Esser, EVP and COO, Jimmy Hayes, our CFO, Ellen East, VP of communications and public affairs, and Jim Hatcher, SVP legal and regulatory affairs. My team is my chief adviser on this. CW: What are the chances you’ll be playing golf with ESPN’s George Bodenheimer and Sean Bratches this spring?
Robbins: That would be a nice prospect if we can get this stuff taken care of. I’d invite them to my place. CW: What are the pros and cons of a flat-fee rate structure for sports programming license fees?
Robbins: I’m a fan of flat fee—for all programming services. I think it makes sense. I also would tell you that in the case of broadcasting, somewhere along the spectrum here it seems that ratings-based affiliate fees make sense. CW: Would that upend that world of affiliate negotiations?
Robbins: Some networks track quite closely, and others are out of balance. It would upend those that are out of balance. You get decent ratings, decent affiliate fees and decent advertising support—that’s the sweet spot of what we’re looking for. CW: Does your recent agreement with Fox Sports Net signal that Cox is no longer pressing for sports tiers?
Robbins: No. I’ve been on record as saying that if a service exceeds $1 at wholesale, then the two parties should ask themselves, is it better for the public if that service were to be placed on a tier. With FSN, we were able to solve our differences within the framework of that discussion. CW: Charter made some noise a few months ago about high fees for Cox’s regional sports networks.
Robbins: We have a rate card—in the particular situation you are referring to—that embraces carriage on expanded basic up to a tier; it depends on the penetration. CW: If VoIP were regulated as a telecom service, would Cox offer the same discount to customers as it does now?
Robbins: I don’t know. I think VoIP should not be regulated as a telephone service. I think it’s a new line of business that is absolutely in its infancy. I subscribe to FCC chairman Michael Powell’s notion that you don’t want to kill this thing from a regulatory standpoint before it’s even off the ground. CW: Does the industry’s current push into telephony—specifically VoIP—as the next wave of growth after 2005 validate Cox’s bundling strategy?
Robbins: I don’t think I’m a good judge of that question. I don’t want to brag about it. If others want to give us credit, that’s fine. CW: What has Cox learned by waiting to deploy VoIP?
Robbins: We’ve learned a lot. One, how to market it; two, how to position it; three, how to execute it; four, we’ve worked out some bugs in the system. There are 28 flavors of VoIP product—we happen to have a product, which is end-to-end, in Cox’s control except where calls are dumped to the public switch network. We have the backbone, we have the back office, we are not dependent on anyone’s service. If you are offering a full-scale service, you want to make sure it works right, and works right the first time. CW: When will Cox begin to transition customers in markets such as Orange County, Omaha and Phoenix to VoIP from the current circuit-switched technology?
Robbins: We haven’t crossed that bridge. I’m not sure if it makes sense for us to do that. CW: At the Smith Barney investor conference in January, you listed several resolutions for 2004. What is your top priority?
Robbins: The top priority is to operate the business well, and finish the job on programming costs. The third resolution may have been to successfully roll out VoIP. CW: At the same conference, you said that since Cox rolled out VoIP in Roanoke in December, there hadn’t been one service call. How many customers have signed up in Roanoke?
Robbins: We have not given any public pronouncements on customer numbers, so I will not give you that. I would be amazed if we haven’t had a service call so far. I know we had a little glitch last week. CW: Will Cox high-speed Internet service be rated A+ by PC Magazine readers again this year?
Robbins: Why not? We should. I hope we do. CW: What worries you most about your satellite competition?
Robbins: What worries me more than anything is that we, for some reason, let down our execution guard and don’t do a good job executing the three-product bundle. We have the best opportunity to continue to take market share by offering three products and variations on the products. That’s our huge advantage—it just takes good execution and good customer service.

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