Bill Bresnan – A Life in Cable
BILL BRESNAN’S STRENGTHS as a cable operator and, perhaps, his measure as a man were most evident during a three-year stretch when he had no products, no services and no customers. From 2000, when he had sold the company he founded (and its nearly 700,000 customers) to Microsoft billionaire Paul Allen, to 2003, when he purchased roughly 300,000 customers from Comcast, Bresnan came to work every day. But he didn’t come alone. Every day, twenty members of his management team came with him. And of the twenty people Bresnan asked to stay on when he sold his business, none refused. None took their money and ran. Or bought a yacht and sailed the world. Or wrote a tell-all book about the dark side of cable.
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A short time later, nearby Rochester began accepting proposals for its cable franchise. Bresnan, who by then had gained a reputation as one of the few people in the state who really knew cable, was asked to submit a proposal on behalf of his company. It was accepted and at 25-years old, Bresnan was named the company’s chief engineer. When the three systems owned by the company Bresnan was working for were sold in 1965, the man who bought the Rochester system saw in its young engineer greatness and asked him to stay on as his VP of engineering. That man, Jack Kent Cooke, maverick owner of such jeweled franchises as the Washington Redskins and Los Angeles Lakers, would prove to be one of the most important people in Bill Bresnan’s life. “The Squire” had a remarkable ability to read people and an intuitive sense of business. Much like Bresnan, he was largely self-taught, and much like Bresnan valued such human characteristics as loyalty, integrity and hard work. He also shared with Bresnan a savant-like ability to recognize under-valued and over-valued properties, and when to move on either.
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TAKING THE REINS
When Cooke merged his Los Angeles-based company with H&B American in 1968, he named 34-year-old Bill Bresnan its president. H&B brought to the Cooke empire a network of “classic” cable systems; systems in rural areas with little over-the-air reception, offering steady and predictable cash flow, but little growth potential. They were systems much like those Bresnan first helped build in Minnesota, with customers similar to the people he knew back in Minnesota. Two years later, Cooke entered into an agreement with Irving Berlin Kahn, a visionary who invented the teleprompter, conceived pay per view, and saw the potential of cable in urban areas. Unfortunately, Kahn, the nephew of the famous songwriter, was also a ruthless and unscrupulous negotiator, and in the words of Bresnan, “a nasty man.” Bresnan’s instincts told him the merger with Kahn’s TelePromTer was wrong and urged Cooke to walk away from the deal. But for one of the few times in his life, Cooke lowered his head and ventured blindly into an agreement, in the process ceding to Kahn voting rights to all Cooke stock.
The deal turned out to be a disaster. Within a few months Kahn was indicted for bribery and perjury, and it took more than a year in court for Cooke to reclaim his voting rights. By that time, the industry had been tarnished beyond recognition, and its ability to raise capital throttled. For almost two years, all available resources of the company were being marshaled by Kahn for his defense, leaving Bresnan to do business with finance companies, which were charging him five points over an already bloated prime rate. The experience nearly drove Bresnan out of the business, but he stayed out of loyalty to Cooke. A few years earlier he had expressed to Cooke the desire to start his own company, but Cooke had urged him to stay on just a few more years. Those years, while trying, may have been the most educational of Bresnan’s life, if only for what they taught him about finance and the importance of cash.
Fortunately for Cooke, Bresnan’s leadership and operational strengths were such that by the time he agreed to sell TelePrompTer to Westinghouse in 1981 (which would, in turn, form Group W Cable) the company’s stock had risen from a Kahn-induced low of $3 to more than $36 a share. For three years Bresnan acted as CEO of Group W, but all the while continued to harbor plans for his own company. Bill Bresnan knew engineering, he understood operations and he had an intuitive sense about people – especially people in those “secondary and tertiary markets” outside the nation’s urban centers. He knew that with those three strengths, he could create a company of classic systems whose steady cash flow and technical superiority would serve as a model for operators everywhere.
Finally, a year before actually leaving Group W, Bresnan made public his intentions. He then sat back with a yellow legal pad and fielded offers from potential partners. He had three pages filled before getting a call from one of his oldest friends in the industry, Dr John Malone of TCI. With cash from Malone and TCI founder Bob Magness, Bresnan launched Bresnan Communications. His first purchase was the system serving Michigan’s rural Upper Peninsula, an operation that fit the Bresnan profile to the very last detail. “We were comfortable in that environment,” he would say later. “We knew we could build value in those type of systems, and do it quickly.”
SELLING HIGH
For the next fifteen years Bresnan continued to grow its customer base, while emerging as, perhaps, the most technically advanced mid-size operator in the industry. Because of its founder’s background, Bresnan Communications was the only MSO whose CEO knew more about technology than anyone else in the company. For that reason, Bresnan was among the first operators in the country to deploy fiber, launch digital and offer high-speed data. He also built and maintained a number of virtual private networks for IBM and the Mayo Clinic. This technical expertise not only generated additional revenue, it caught the eye of a very well-funded suitor.
In the late 1990’s Microsoft cofounder Paul Allen was busily acquiring cable systems, hoping to realize his dream of a “wired world” that married rich content with broadband capability. Due in part to Allen’s feeding frenzy, as well as the Internet craze, cable values began to soar, topping out at just less than $5,000 per subscriber. At the time, Bresnan was considering taking his company public. However, when Allen, wearing his Charter Communications hat, came knocking with $3.1 billion dollars in hand, Bresnan shifted gears. He had worked out a deal early in 1999 with AT&T and an equity player, the Blackstone Group, on a new partnership.
The deal said that if Blackstone reaped a high return on its money, Bresnan’s equity share would increase accordingly. Within three months Blackstone’s $136 million became $720 million and Bresnan’s piece of the company shot through the roof. Though he didn’t want to lose his company, he knew full well there was equity participation by 70 members of his staff of roughly 1,500 employees. As Bresnan told the Minneapolis-based business magazine Connect late last year: “I couldn’t not do (the deal). But I wasn’t doing it for me. It wasn’t going to change my lifestyle. But for 70 key employees – many of whom were friends – it would change theirs. As a result of the deal we made over 30 new millionaires. I feel very good about that.”
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A YEAR OF LOSS
The deal closed early in February, 2000, but what should have been a year of triumph, joy and relaxation became a nightmare for Bill Bresnan. First, he sold a company he really didn’t want to sell. And although he retained the rights to the name, he was forced to say goodbye to hundreds of loyal employees he considered family. Then, in that same month, his mother died. The woman who had worked as a seamstress to support her family following the tragic death of her young husband, played a major role in shaping her son’s work ethic and sense of family. Six months later, in August, Bob Brooks, the godfather of engineers throughout the industry and a mentor and confidant to Bresnan, also passed away.
But those deaths only served as table setters to a passing that would stagger Bill Bresnan like a punch to the stomach. In October 2000, just nine months after her husband closed the biggest deal of his life, Barbara Bresnan died. Bill’s wife and best friend for more than 43 years, it was Barbara who convinced Bill to move west and join Jack Kent Cooke, and it was Barbara who picked up stakes and went with him; it was Barbara who raised the couple’s children while Bill was building up his company; and it was Barbara who in 1999 found and decorated the Bresnan’s dream home on the shore of Long Island Sound, the one with extra rooms for the grandkids when they came to visit. “It’s hard to explain, but Barbara’s loss has left a huge gap in my life,” Bresnan says. “There’s just a big empty hole there. Now, when I go home it’s just me and the dog, you know?” And though Bresnan admits that emptiness may be one reason he’s been so unwilling, or perhaps unable to slow down, he promises to start doing so. He even told his staff at his 70th birthday party in December that he would start to take Fridays off. However, the jury is very much out on whether or not that will happen.
As of April he had yet to take a single Friday off, and the interview for this article took place at 5:00 pm in Bresnan’s office – on a Friday afternoon.
PERFECT TIMING
In 2003, when he chose to come back into the cable business, Bill Bresnan once again exhibited what The Financial Times called an “enviable” sense of timing. Within a year of selling his company to Allen for somewhere in the neighborhood of $4,500 per customer, he watched as Charter’s stock lost 95% of its value. Then two years later, when negotiating to purchase small systems with roughly 300,000 customers in the Northern Rockies from AT&T Broadband, Comcast launched its successful takeover of the seller. The deal was put on ice for a year. But in that year cable values dropped, and Bresnan was able to buy the exact same systems for $2,100 per customer – or $25 million less than he would have had to pay the year prior.
Gus Chimos, a young analyst who does financial planning for Bresnan, and who helped him kick the tires of different business opportunities over the last four years, says his boss’ reentry into cable might just have been a forgone conclusion. “Bill has always had a comfort level in recurring revenue,” Chimos says. “He has always wanted to own the pipe.” And Maureen Huff, who manages public affairs and communications for Bresnan, adds, “Deep down in our hearts, we knew this is where we’d end up. There’s no getting around it. Bill loves the cable business.
