Remember “Andre the Giant”? Andre Rene Roussimoff, aside from being a famous wrestler, the 7-foot-plus Frenchman was best known for his brief acting career, especially in the movie Princess Bride. He died prematurely because of the condition that made him so physically large. His growth hormones never stopped pumping.


I mention Andre because we are now watching the stock markets crash around the world based on the “credit crunch,” and the “subprime housing market” problems that have beset us. The “giants” of the market run-up, Countrywide, Citibank, Merrill Lynch, and so on, the companies that became huge in part because of the artificial pumping up of the market based on bad decisions and easy money, are now being decimated. Most will survive. Some may not. But they will certainly no longer be the out-sized players they once were.


There is a lesson here. From my point of view, it has to do with what seems to me an obvious false notion: that it’s good to continually grow at an ever-faster pace.


That’s what public companies are currently expected to do. They’re supposed to report “double digit” increases all the time. They’re expected to meet or exceed the projections of the stock analysts each quarter. They are, in other words, supposed to constantly grow. The “market” seems to have missed the fact that very often, giants die first.


Giants have other problems as well. They tend to get so big, and so strong, that they sometimes misuse their power. They do things they shouldn’t, often in the quest to keep growing and get even more powerful. Or more likely they do it because there’s a demand that they keep growing and if they do not, the market punishes them.


That, I think, is what has caused the current market collapse, and it’s also what has badly dis-served the cable industry. The stock traders have put such pressure on companies to continue to produce double digit growth that they have lost sight of the true nature of many businesses. Greed has destroyed good judgment.


Let’s get back to basics. Cable companies have built an infrastructure that no one else currently has, and no one else is building. Let’s not forget that our phone company competitors freely admit they have no intention of “building out” their new fiber lines to all customers. They are what we used to call “cherry pickers.” That may be a good business for them, depending on the true cost of their plants, but they never intend to fully compete with cable.


Our other major competitor, DBS, does compete nationwide, but only for one of our service offerings: video delivery. Their platform, excellent for video delivery, cannot effectively provide Internet access or voice service.


But what is also true is that there is a saturation point in each of the markets we compete in. Video is essentially a “mature” market today. Hence we will not see the massive growth of the early years since most folks are already getting their video through a multichannel video delivery service.


Similarly, the folks who have computers at home are already hooked up to some form of wireline data provider. Voice is still new, for cable, and there are numerical gains to be made, but again… not at the pace of years past.


Is this bad? I don’t think so. We should consolidate our gains, operate responsibly, improve our customer services, and be good, solid, long-term players. Look what’s happening. Don’t just blindly follow Wall Street demands. Giants die first.

The Daily

Subscribe

FCC Seeks Comment on NAB NextGen Petition

The FCC Media Bureau is seeking comment on NAB’s petition regarding the treatment of multicast streams under the NexGen TV local simulcasting rules.

Read the Full Issue
The Skinny is delivered on Tuesday and focuses on the cable profession. You'll stay in the know on the headlines, topics and special issues you value most. Sign Up