Changing Tunes In Music City USA

BY STACI D. KRAMER Nashville has moved far past the loopy, droopy country music capital portrayed in Robert Altman’s classic film of the same name. Just as country music has evolved over time — think Shania Twain instead of Loretta Lynn — so has “Music City USA.” Today’s Nashville boasts of its NFL Tennessee Titans and NHL Nashville Predators. Opryland has made way for Opry Mills, a retail-entertainment-dining complex, although the Grand Ole Opry and the Country Music Hall of Fame are doing just fine. At the same time, Nashville has moved up the list of preferred places to live and is a hot spot for corporate relocations; Dell, Saturn and Nissan all have a stake in the region. The cost of living may be below average, but the lifestyle is not. This is the Nashville that serves as hub for Comcast Cable’s Tennessee operations. Comcast’s Nashville arm, with its 316,000 subscribers, is the state’s largest cable system, fitting for the state’s largest MSO. Nashville encompasses an eight-county metro area. Driving I24 southeast toward Chattanooga offers a clear view of the growth, with new subdivisions popping up for commuters while towns like Murfreesboro pick up the trappings of cities. “You hardly know where Murfreesboro ends and Nashville begins,” says Peggy Owen, EVP and management partner, the Buntin Group. Comcast’s Nashville system stretches far beyond the city. To the north, it steps over the Kentucky border into Ft. Campbell; to the south, it almost runs into Georgia. It includes two of the country’s fastest-growing counties, Rutherford and Williamson. As for the demographics, “the makeup of Nashville skews a little older,” explains Dave Carter, Comcast GM of ad sales in Nashville and VP of the South Central area. “Not Pittsburgh old, not Naples-Ft. Meyers old. It’s very white collar. You have the music industry, the financial industry, Saturn, Nissan.” Nashville also has the highest income of the state’s four major cities and an increasing Hispanic population. The area’s sprawling nature makes an advertising interconnect even more important than it might be in other systems. Just two years ago a media buyer trying to reach the whole area might have had to deal with as many as 18 different cable systems. Comcast’s ownership of the city’s largest system — Charter Communications owns roughly one-third of the market — has its roots in AT&T Broadband’s acquisition of part of InterMedia Partners in 1999. The system was then supposed to go to Comcast as part of a deal that took more than 18 months to conclude. The InterMedia name was retained in Nashville with Comcast officially taking over in May 2001. Comcast kept a close eye on Nashville during the period between the InterMedia sale to AT&T Broadband and its own acquisition. Richard Rehme, director of business operations, jokes that the system had more Comcast representatives visit than AT&T. “They knew they were kind of baby-sitting,” says Rehme, who recalls hearing Comcast Cable president Steve Burke say, “I’ve been to Nashville three times and don’t even own the system.” In some respects Nashville provides a template for Comcast’s current integration of AT&T’s systems: upgrade facilities, invest in customer service, revamp marketing strategy and match programming to local interest. The system’s margins got an almost instant boost from contracts that switched from AT&T to Comcast, says Rehme. Today Nashville fits in with Comcast’s average margin of 41%. When Comcast raised rates an average 5.6% last fall, not only were CSRs equipped with the answers for concerned customers, Comcast conducted what director of marketing Lillian Graham calls a “ground-level gut campaign” internally to give everyone the right ammunition. “We all get the call. We all get put on the spot. If the call center can explain why and the receptionist can’t, we have lost the customer.” Comcast’s post-merger game of musical executive chairs left a gap in Nashville when GM Gene Shatlock was transferred to the Southern division in Atlanta as regional VP of marketing and customer care. Cable veteran Virgil Caudill, Shatlock’s successor, actually came out of retirement to join Comcast late last year, lured by former Continental boss John Ridall, president of Comcast’s Southern division. At first, Caudill was nonplussed by the suggestion of Nashville as his next residence. “I said, ‘Where?’ I didn’t realize Nashville was the 30th largest DMA. I had an image of the country music capital.” All it took was a brief visit, dinner with Shatlock and a look at the system’s potential to elicit a yes. In retrospect, says Caudill, “it was easy.” What Caudill didn’t know until he made that visit was that former colleague Dave Sanders also was being interviewed for a job in Nashville. Sanders, who took the job of director of technical operations, lists autonomy, the spirit of Comcast and a sense that people in the company are very well rounded as appealing. “There’s just an atmosphere of family in a large system. That’s a huge draw for me,” he says. Shatlock’s job was to make Nashville into a Comcast system. Caudill’s mission is to continue the growth Comcast experienced during that first 18 months while improving customer service even more. “I’m going to try to grow digital by almost 21% and online by almost 23%,” says Caudill. Those goals are based on 2002 estimates of 43% growth in digital and almost 47% in online. Steve Crist, who worked with Ridall, Caudill and Sanders in Dayton, joined InterMedia as regional call center manager in July 2000. Comcast’s arrival switched Nashville from a system in waiting to one able to spend on improvements. “All the things people would find pretty standard in a call center just weren’t here,” recalls Crist. Changes cost more than $1.5 million. Two call centers were combined into one handling all Comcast products instead of dealing with video and high-speed access separately, and staffing was increased. Skill sets shifted, too, as Comcast moved customer service toward a service and sales model. Pulling everyone in the same direction became a priority. The result: 30-second call rates improved from 40% to 50% to the 80% range. Crist isn’t finished. “Everyone here would really like to see us become a world-class service provider. We want to be the provider of choice in Nashville. We’re deeply competitive with the dish in this market. We’d love to be able to look at ourselves and say we won the battle.” He adds, “People’s expectations are going to rise, and we want to rise with them.” Basic churn runs about 3% a month. Comcast launched a retention team last month hoping to make a serious dent in disconnects. “The goal for our retention team at a minimum is to retain 50% of disconnects. It’s all about basic net adds. Call centers can always sell more subs,” says Crist. “The best way for us to impact that number is to retain customers.” The whiteboard in his office is divided between the qualities of soft skills and physical skills, part of his ongoing work with the 17 supervisors and two managers who work with the 220 Nashville customer service reps. “We’re having a dialogue with everyone on our staff that these are our expectations,” Crist says. “We’re going to manage our business using soft skills. If evaluations, monitoring and time sheets are the extent of your interest this isn’t the place for you. If they’re weaving those soft skills into their everyday physical skills I think we become an employer of choice. Coming to work shouldn’t be something that stands in the way of what you want to do.” In Caudill, he has a GM who reads off the same page. He wants the reps to be on time, happy, well informed and educated. The goal is one-time resolution and a call answered quickly. “You can do that in a mechanical process, but there also has to be an excitement in your voice. You have to understand what it means when we add that customer.” When Caudill left the business, high-speed data was just coming into its own as a product. He returned as Comcast was launching HDTV in Nashville in late November. “The demand for HD technology is huge. The market is just primed for it,” says Graham. “I would bank that the high-definition technology is going to be an extreme home run not just for Comcast but for every MSO that launches it.” “There’s some new technology out there, but the basics of the business are the same. It’s still the cable business. You still have to add subscribers one at a time,” says Caudill. “It still goes back to people and service.” Caudill describes Nashville as “at least three years ahead of the curve” of the system he subscribed to in Ohio. “About a week before I came down here I actually got a digital package for the first time. I still was not able to get high-speed there.” The technology isn’t all that’s changed. His first meeting with Dave Carter was a vivid reminder of the shift in advertising’s importance. “I can remember back when we did insertion on two channels, and if we could get a nickel a sub a month we thought we found a gold mine. Things are a little different today.” Comcast runs the advertising interconnect that pulls the Nashville area together; it launched May 1, 2001, serving 539,000 Comcast and Charter homes. Says Carter, “I can sell you something you want that’s going to fit your needs. If you’re a McDonald’s, I can sell you the interconnect on a broadcast competitive cost per point. If you’re a car dealer in an outlying community I can sell you specific zones where your potential customer will be.” Comcast offers 12 major zones. Carter estimates the breakdown to run about 40% national/regional predominantly sold at a CPP with the remaining 60% local direct zone. The average buy for a zone is about $2,500 a month. The cost per point of the market is down significantly since 2000, when a prime time point was worth about $200, to about $140 to $150 in 2002. Carter sees some improvement coming in 2003 but says initial buys don’t look much higher. “Nashville never sees extreme lifts. It’s a very consistent market. The only thing I can see from a competitive standpoint is there’s been a lot of management change at the broadcast stations.” Broadcast isn’t the only competition. “The newspaper [The Tennessean] in this market is stronger than the broadcasters combined.” Still, says Carter, “we’ve increased our share.” Major ad buyers like Peggy Owen and Charla Fogle, VP and media director for Bohan, concur. Five years ago 10 cents out of every dollar Fogle spent might have gone to cable; now, she says, that’s “maybe a good 30 to 40 cents.” Her major clients include the tourism board for Pigeon Forge and the northeast Tennessee community that is home to Dollywood. Cable was 5% to 10% of Owen’s budget for a campaign compared to 20% to 25% today. “It’s become more important because cable has become more important to the people watching it.” Both appreciate the ability to drill down to the audience. “Nashville is like a lot of markets in that it is very diverse demographically, socioeconomically,” says Owen. “It’s such a large commuter community. One of the real beauties of cable is that it allows us to be more selective with networks and programming that allows us to better target that diversity.” They also stress Comcast’s service. “The one thing that has enhanced or improved under Comcast is the arsenal of data and information they have available for us,” says Owen. Fogle appreciates the ability to reach all of Comcast’s Tennessee markets through one representative. She also likes Comcast’s auto-fill program, which puts her clients’ ads in a queue to fill unsold time. A purchase of 600 spots for the Frist Center for the Visual Arts ballooned into 1,600. Wrestling, the NFL, Trading Spaces, The Osbournes and the sitcom block of Friends & Co. on TBS are among the most popular shows. Comcast tweaked the programming lineup within weeks of taking over. The first addition was Comcast Sports Southeast, a regional sports network with replays of University of Tennessee and University of Georgia football in addition to the live high school football game of the week. Next up was the Food Network. Other additions included Great American Country and Comcast’s own Outdoor Life Network. Pay-per-view and single-sport subscription packages are a small revenue stream with wrestling, college football and Nascar among the most popular. Marketing options are as varied as the communities served. A recent promotion offered a special CD free with sign-up for Hispanic viewers. Says Graham, “our priority for 2003 is to really put our heels in the ground and communicate to our customers that we have the best deal going, that the best choice is a cable choice and not a dish choice.” According to Scarborough Research, Nashville area residents are less likely to take a premium channel with their basic and expanded cable subscriptions. Conversely they’re more likely to own a satellite dish. Comcast places DBS penetration at 13% to 14%. Says Caudill, “I can’t offer them NFL as a package, but I can offer Comcast Sports Southeast — that’s the one product we have that the dish people don’t.” He can also offer five HD channels (ABC, CBS, HBO East/West, Showtime) and expects to add another broadcaster, possibly two, within the next three to six months. “We will have more HD product than the dish guys,” says Caudill. “Our HD product is more reliable than over the air. We clearly have an advantage in those areas, and we have to capitalize.” Caudill, who came out of retirement to join Comcast late last year, most recently was VP of customer services, Midwest region, Media One. The 20-year cable veteran spent most of his career with Continental Cablevision. His says his biggest challenge in 2003 will be to meet subscriber growth and cash flow objectives. Caudill’s favorite quote: “The man who views the world at 50 the same as he did at 20 just wasted 30 years of his life.”
— Muhammad Ali Sanders also joined Comcast late last year, moving to Nashville from Dayton where he was director of field operations for Time Warner. He got his cable start as an installer/technician in 1978 with Continental Cablevision in Ohio and was a manager in Cleveland from 1981 through 1995. He then went to Dayton as technical manager for Continental and its successor Media One. Rehme joined the Nashville system in 1997 when it was owned and operated by InterMedia and stayed on board through the sales to AT&T Broadband and Comcast. A graduate of Texas A&M University with an M.B.A. from the University of Texas in Arlington, he started his business career with Andersen Consulting. Rehme joined the Nashville system in 1997 when it was owned and operated by InterMedia and stayed on board through the sales to AT&T Broadband and Comcast. A graduate of Texas A&M University with an M.B.A. from the University of Texas in Arlington, he started his business career with Andersen Consulting. Graham moved to Nashville a year ago after a stint as regional marketing director for the Southern division supporting Florida and Tennessee. She joined Comcast in 1997 as marketing manager. A graduate of Rutgers University, Graham’s career began with Wometco/GCTV, which later became Media One. Responsible for launching the Marketlink Nashville interconnect in May 2001, Carter has been with the system for six years. His greatest challenge now is growing the business aggressively. Crist moved to Nashville as regional call center manager for Middle Tennessee with InterMedia. He started his cable career in 1991 as an intern in the corporate affairs department of Continental Cablevision in Dayton. After his graduation from the University of Dayton in 1992, Crist worked in the rebuild department and soon became marketing coordinator, then marketing manager. He moved to the operations side in 1996 as call center manager. EMPLOYEES: 750 MILES OF PLANT: 9,189 HOMES PASSED: Approximately 503,000 PERCENT UPGRADED: 98.2% BASIC SUBS: 316,000 BASIC RATE: $39.95 DIGITAL CUSTOMERS: 68,000 DIGITAL RATES: $15.95 HSD RATES: $39.95 (w/cable), $49.95 (w/o cable) ISPS OFFERED: Comcast, Juno, Netzero HDTV: Launched Nov. 2002 (five channels: ABC, CBS, HBO East/West, Showtime) TELEPHONY: Not yet launched AD INSERTIONS: Available on 48 channels SOURCE: COMCAST Comparison of Comcast subscribers in Nashville to the top 75 market average.