Cable's Strategic Philanthropy

It is said that charity begins at home, and no adage better describes cable’s philanthropic efforts.

Cable’s favorite charities have always been community-based initiatives to improve education, encourage diversity and eliminate illiteracy and poverty. This community focus dates back to cable’s early days, when it was called CATV (community antenna television) and was a collection of independent mom-and-pop-owned services in remote areas whose sole purpose was to catch and amplify signals from broadcast stations and distribute them to local subscribers who would otherwise be deprived of television.

Decades later much has changed, but cable’s giving still reflect its roots in thousands of local communities.

Worthy as these causes are, contributing to them also keeps cable companies — from MSOs to small local systems — connected to their communities in ways that usually have a positive influence on revenue and profit. Yet it seems cable operators and programmers increasingly are shaping their giving patterns to reflect their branding strategies in a trend known in the charitable community as strategic philanthropy. "The various MSOs determine where their money goes based on the image in which they’d like to be portrayed," says Rob Stoddard, NCTA’s SVP, communications and public affairs.

"Philanthropies have been motivated by altruistic reasons throughout the years, but people are figuring out that it makes sense to give time, money and other things of value to causes that make sense from a strategic point of view," says David Pierce, NCTA’s senior director, public affairs, and executive director of The Cable Hope Fund.

A New Calculation of Cable Giving

While this strategy seems logical, its figures continue to be hard to quantify. Last March, as cable prepared for the annual Cable Positive Dinner, CableWorld reported that the industry lacked hard data about its philanthropic giving (CableWorld, 3/6/06). The situation has changed little since then, says Steve Jones, executive director of the Cable Television Public Affairs Association, which last year released the only compilation of the industry’s philanthropic efforts, culled from 2004 data, which said cable operators contributed $876 million of the industry’s $1.36 billion in charitable work that year (see chart, next page). But there’s some good news, particularly with cable competing for subscribers: CTPAA is conducting a new survey to measure the industry’s giving in 2006. It will release the results later this year.

The adage about charity beginning at home quoted at the top of this story may make more sense than ever. Jones notes that during the years when cable systems were preoccupied with getting cities and towns to renew their franchises, "being a good neighbor in the community made it easier to get renewals." Today, with cable facing challenges from DBS and the telcos, the business benefits of giving may be less straightforward, even though more is at stake. That’s why local efforts can pay direct dividends.

Local Still Reigns

For example, operators can mount community events that they can "leverage with their marketing, advertising and sales departments," says Jones. They can get "local vendors involved, maybe by [persuading them to] take booth space, and also to purchase ads on the cable system. There may be some quantifiable pieces there."

Kimberly Thomas, manager of community relations, Cox Communications, notes her company’s individual operators often hold events at local Boys and Girls Clubs, where "kiosks display some of our services, and parents who may not know about the products that Cox offers are able to see them and try them. We hope this will result in more RGUs for the company."

Time Warner Cable VP, public affairs, Bonnie Hathaway agrees that good community relations foster good business. "Particularly in a competitive environment, what you stand for as a company is as important as what you produce," she says. "More and more consumers are as conscious of the philanthropic efforts of companies as of their products."

In this sense, the cable industry is keeping up with other businesses that are "tracking the current trend in giving, which is to give in very smart ways that are aligned with your markets," says Pierce of The Cable Hope Fund. "Sometimes it’s out-and-out altruistic philanthropy, sometimes it’s more strategic in terms of trying to advance the brand. Philanthropy can dovetail nicely with the corporate culture."

"Being a good corporate citizen is good for the bottom line," says Kaitz Foundation executive director David M. Porter. "When our individual companies provide community support, enhance diversity and develop leadership skills, it ultimately influences the bottom line in a positive way."

Time Warner Tracks Giving

Despite the lack of a hard figure for cable giving, some MSOs track the monetary value of their philanthropic activities. Time Warner Cable has developed software to accurately calculate the company’s philanthropic efforts across all its 27 divisions located in 33 states.

The tabulations are based on reports from division presidents, each of whom is charged with setting a local budget for philanthropic efforts. Hathaway reports that in 2006 the company contributed a total of just more than $155 million to charitable causes. It does not break the split between cash and in-kind donations, but Hathaway notes that "a good portion" of that figure "is in-kind, including things like PSAs, Cable in the Classroom, service to schools and other complementary service donations."

For Time Warner Cable, education is one of the keys to its giving. "Education is part of our DNA in terms of what works for us as a philanthropy effort," Hathaway says. She cites Time Warner Cable’s National Teacher Awards program, now in its 18th year, which annually honors 15 teachers from coast to coast, presenting each of them with $2,000 in cash and $3,000 for school technology, and the company’s Time to Read literacy mentoring program, which tutors 33,000 participants at 550 locations nationwide. (The latter, started in 1985 by Time Warner, was taken over by the cable unit last year.)

Although Time Warner Cable supports those two programs nationally, much of the organization’s charitable work is conducted through its operators. "We push our philanthropy out to our divisions," Hathaway says, "because our division presidents and our public affairs people in each of the areas have a much better handle on the issues of importance to their particular community, or their constituents within the community. We don’t dictate anything from here."

Cox’s Centralized Giving

A similar slant toward education prevails at Cox Communications. "We focus our giving around youth and education because education is the economic foundation of every community," says Cox’s Thomas. "You can build upon that. Most of our employees have kids, and they value that."

Cox’s approach is more centralized than Time Warner’s, with the general direction set at the top. "We try to have a model here at corporate and get the markets to follow behind it," says Thomas. "We give back based on our business plan. We have a lot of organizations that approach us for funding, and we turn many of them down. When we create the business plan for the year we try to give back according to those goals."

Cox’s contributions to charitable causes total more than $100 million annually, Thomas says, including cash and in-kind donations. Like Time Warner Cable, the company does not publicly break out that number.

The Comcast Foundation, another player in MSO philanthropy, declined to be interviewed for this article. However, it too is slanted toward education. "We’re most excited by literacy, volunteerism, and youth leadership programs," its literature says. It also says since 1999 Comcast Foundation has distributed in excess of $30 million to support programs implemented in local Comcast communities. The foundation also made a lead donation of $1 million to the recent $10 million Chairman’s Campaign of The Cable Center (CableWorld, 1/8/07).