Meet the MSO: Bresnan Communications

That sound you didn’t hear last summer was a seismic shift in the power structure at Bresnan Communications. After 21 years of leading the company bearing his name, Bill Bresnan handed over the keys to his longtime lieutenant, Jeff DeMond, who is now the company’s president. Bresnan is still chairman and CEO, but much of the responsibility for the day-to-day operations falls to DeMond, a former CPA who is also Bresnan’s CFO. Even though the change was announced publicly and it impacted one of the most well-respected MSOs in the industry, it barely made a ripple of news. One could speculate that with a private company such as Bresnan, such news is never earthshaking because it is never accompanied by a litany of opinions from outspoken high-end investors. It’s also usually not accompanied by the speculation of market analysts or quantifiable performance standards like revenue, cash flow or profits and losses. The passing of the torch was only slightly more noticeable within the company. "Bill and Jeff have been working as a team for years, and while there was a title change very little else has changed," said Terry St. Marie, SVP of operations. "Bill’s still very involved in the direction of this company and Jeff had been performing many of the duties of president all along." For his part, Bresnan said he named DeMond president because he trusted him to execute his long-range goal, which is to stay ahead of the competition through a combination of great service and technological superiority, regardless of the size of the market. "A long time ago, Jack Kent Cooke taught me to surround myself with good people, and for over 20 years Jeff has been my right-hand man and an essential part of this company," said Bresnan. While calling Bresnan a mentor, DeMond jokes that one of the things he’s always failed miserably at is getting rid of responsibilities when taking on more. Public affairs manager Maureen Huff said Bresnan’s faith in DeMond was poignantly evident in 2005 when the time came to offer nominations for CableFAX‘s list of the top 100 most influential people in cable. Bresnan himself filled out the form nominating DeMond, appending it with two full pages of accolades. The Back Story By now most industry insiders know the story of Bill Bresnan. The trade school-educated Bresnan was repairing radios in his hometown of Mankato, Minn., when he stumbled into cable in 1958 by accident. He soon found he had a talent for both the technology and the business. At 25 he designed and built his first cable system, which was acquired by Jack Kent Cooke, the brilliant entrepreneur and legendary former owner of the Washington Redskins. "The Squire" took Bresnan under his wing, and his prot�g� eventually became president of Teleprompter, the largest MSO in the country. Bresnan started Bresnan Communications in 1984, sold it to Charter in 1999 and got back into cable in 2003 when he purchased some scattered systems in Montana, Wyoming and northern Colorado from Comcast, which had just acquired them from AT&T Broadband. The systems were undervalued, in part because they did not fit into Comcast’s enormous footprint, but mostly because they had fallen into disrepair under a succession of owners, including TCI. What many don’t know about Bresnan is that when he sold his company to Charter, his brand name was not part of the deal. He retained more than just the company name: He kept the core of his management team, continuing to pay them as he and DeMond did due diligence on new opportunities. Ironically, the best opportunity turned out to be cable. In the four years since selling to Charter, MSO revenue-generating potential had exploded, thanks to services like digital television, IP telephony and, particularly, high-speed data. Given the level of institutional knowledge Bresnan and his team already had in cable, combined with the fat margins high-speed data provided and the relatively low penetration of the systems Comcast wanted to unload, the path was clear. Following a round of meetings with private investors Providence Equity, Quadrangle Group and TD Capital Communications, and after successful negotiations with Comcast, a deal was struck and Bresnan Communications II was born. Bresnan’s Boon: High-Speed Today Bresnan is a company which, despite its relatively small size (according to NCTA it is the 13th largest MSO, with roughly 290,000 subscribers) and the relatively small markets in which it operates, offers a full complement of state-of-the-art digital products, including telephone. The company’s Triple Play video, voice and data bundled product has been responsible for improving everything from cash flow to churn (down from 3.4% prior to launch to 2% today). According to Lenny Higgins, SVP of advanced services, one of the major benefactors of Bresnan’s Triple Play has been the company’s high-speed data service. In 2005 alone the company added 30,000 HSD customers, a gain of roughly 50%. And while in other parts of the country DSL providers are attacking the incumbent MSO with prices around $20, Bresnan is charging $42.95 a month for Bresnan Online. The rollout of cutting-edge products has been a goal for the senior management team ever since Bresnan reopened for business. That also was the goal of Bresnan I, which in 1995 launched a high-speed data service in Michigan’s sparsely populated Upper Peninsula. "It was always part of Bresnan’s heritage that they operated in these secondary and tertiary markets. They’ve always been a sweet spot for us," says Steve Brookstein, EVP of operations. Overall, the present incarnation of Bresnan looks and operates much like Bresnan I. Bill Bresnan himself offers a very simple explanation for that: "This is not a real complicated business. You give people great customer service and you keep pace with the technology." Unlike many MSOs, Bresnan’s footprint is largely confined to one region; the Western Great Plains and Northern Rockies (including the Billings, Mont., and Cheyenne, Wyo., markets). For that reason, the business of the MSO and its local operations are often interchangeable. The MSO is largely defined by its massive, new regional operations center in Billings. The center is home to 150 CSRs and over 300 employees, and functions as a training site in addition to being the company’s home base. According to St. Marie, the company has realized that only through the efforts of a well-trained customer care staff would the company be able to compete with aggressive DBS marketing and win back defectors. Bresnan’s training extends beyond its customer service agents. In 2005, the company launched technical field training for its new telephone service. The company’s certification program focuses on telephone service and also covers what Brookstein calls "refresher components" on video, data, product knowledge, packaging and pricing. The net result is not only manifesting itself in the numbers (28% of the 20,000 Bresnan telephone customers had not been video subscribers for at least six months before taking phone service; 96% of customers are taking at least two services; 73% are taking all three), but as St. Marie said the difference can be felt just by walking through the center. "It doesn’t take long to see the difference that a week or 10 days’ worth of training makes in the performance of people on the phones or in the field. We’ve always been big believers in training, but now more so than ever." The Future DeMond says the company will continue to develop its core video business, tapping into the sizable DBS market and cable defectors in its markets. It will also continue to roll out and aggressively market its phone service, and hopes to have it available to over 90% of homes passed by the end of 2006. In addition, the company recently hired the same sales staff that helped make Bresnan I’s commercial services business profitable in hopes of duplicating that success. As for Bill Bresnan, he pledges to finally keep a vow he made two years ago and take Fridays off. He’s also promised himself he would devote more time to industry affairs, including dabbling in public policy and continuing to work with the Emma Bowen Foundation. In addition, he’s been named chair of the C-SPAN executive committee. Bresnan Communications By the Numbers Employees: 900-plus
Coaxial plant miles: 8,600
Homes passed: 596,000
Basic customers: 290,000
Digital customers: 121,000
High-speed customers: 91,000
Phone customers: 20,000
Percent upgraded: 95% Source: Bresnan Communications