Rockin' on the Outskirts of Cleveland
BY ANTHONY CRUPI Perhaps no figure was more emblematic of postwar Cleveland than Lou Boudreau. For 13 years, the Indians shortstop was Cleveland. In 1948, the year the Tribe won its last World Series championship, Boudreau hit a career high .355, drove in 106 runs and garnered the American League MVP title. What’s more, he managed the club, even though owner Bill Veeck had wanted to fire the “kid skipper” when he bought the team two years earlier. Like the city that cheered him on throughout the better part of his 15-year career — Veeck finally succeeded in trading the popular player/manager in 1951 to the Boston Red Sox — Boudreau was tough, industrious, slower than molasses and not exactly what anyone might call the epitome of style and grace. As such, he was a perfect fit for Cleveland. While the Indians stood on top of the baseball world, the Forest City was the nation’s sixth-largest metropolitan area, its industries booming, its port prosperous, its future limitless. Or so it would seem. By all accounts 1948 was Cleveland’s last bask in the sunshine. A scant 21 years later, the city had slipped to 12th on the list of top U.S. cities. In June of 1969, the Cuyahoga River, the crooked tributary that flows through Cleveland’s center, burst into flames when a spark ignited an oily film on the water’s surface. And while the blaze caused very little property damage, it devastated the city, prodding late-night comedians and Laugh-In guests to deem a once- proud municipality the “Mistake by the Lake.” The rest of the story is predictable enough and can be punctuated by the socioeconomic argot that helped explain away so many Rust Belt cities of the era: white flight, urban decay, civil unrest. In the final reckoning, Cleveland went bust, defaulting on its debts in 1978, declaring bankruptcy in 1987. The final kick in the ribs came late in the early 1990s, when Tonight Show head writer Jimmy Brogan suggested to newish host Jay Leno a gag that the lantern-jawed huckster would beat into the ground. “Here’s a new motto for Cleveland,” Leno would crack. “You gotta live somewhere.” But the city refused to go down without a fight and today stands as a case study for how a dying town can turn its fortunes around. The population exodus subsided; the number of Fortune 500 companies with headquarters there has increased by 50% since 1986; and the city is now a tourist attraction. The Rock and Roll Hall of Fame alone lures about half a million people per year. Standard & Poor’s, which had suspended the city’s bond rating after its bankruptcy, today gives Cleveland an “A” rating. The spirit of civic virtue and heady economic growth spurs the day-to-day operations of Cox Communications’ Cleveland system. Although Adelphia Communications is the area’s primary cable provider, handling about 650,000 of the approximately 1.1 million cable homes in the DMA, Cox holds its own in the suburbs to the south and west of the city center. It’s a relatively small operation, serving about 75,000 customers in a ring of ten bedroom communities. Still, the management team holding down the fort in the Parma, Ohio, headquarters insists this works in their favor. “Because we’re in a unique position within the DMA, we can drive our business through a more direct approach,” says Laura Morabito, director of marketing for Cox Cleveland. “We have a sales group in our call center, but we also rely on our people in the field to offer customer upgrades.” Bumping customers up the evolutionary chain to advanced digital services is a tactic that most operators use to keep satellite at bay, but that threat isn’t as substantial in Cox’s Cleveland market. “We don’t have to worry so much about churn,” Morabito says. “We serve a very suburban area, mostly single family homes outside of the commerce center. We don’t see the kind of turnover you’d have in a city center or a college market.” Of course, no one at Cox wholly discounts DBS. While cable penetration in the DMA is high (81%, compared to the national top 50 market average of 69%, according to Scarborough Research), the percentage of homes receiving satellite service is just over 13%, slightly below the top 50 market average of 15%. Troy Walker, director of customer care for the system, says his team has to “be mindful of these guys,” referring to both the dishheads and overbuilder WideOpenWest. Walker sees the encroachment of other providers as a challenge to raise the cable bar higher. “We are a very mature market, and to keep things fresh we have to find new and creative ways to offer advanced services to existing customers,” he says. “It’s not about attracting new ones.” The most popular new options for Cox Cleveland customers have been an advanced digital video package and the introduction of high-speed data services (in Cox parlance, HIS, or high-speed Internet). Although Cox doesn’t divulge the number of HIS customers it serves in any individual market, the MSO added 135,650 modem customers in 2002 alone, up 59% year-over-year, giving it a total of 1.4 million. Scarborough Research data shows that a mere 6% of the overall Cleveland DMA has embraced HSD service. Cox Cleveland has taken its HIS campaign directly to the local retailer, Morabito says. Since launching the service in April 2002, Cox has offered its modems and self-connection installation kit at area computer outlets and at chains such as Best Buy and Circuit City. These relationships were developed at the corporate level. According to Tim Yanda, director of network operations, the modems for sale under the aegis of Cox Cleveland are Toshiba products. Cox also offers a line of Scientific-Atlanta-compatible digital set-top boxes, in accordance with its S-A-friendly platform. The retail sales model is an S-A 3100HD box, which handles the system’s nascent hi-def offering, while the lease model is a Pioneer Voyager 3510. The S-A box can be purchased at an outfit called Wellman & Griffith, in the Fairview Park area, for $499. “We’ve been reasonably successful offering modems and boxes to our customers through third-party retailers,” Yanda says. “It’s a unique perspective, one that we think gives our customers a certain flexibility you don’t always see in the lease-only model.” The system’s single head-end plant is an HFC network based on the Cox design platform, Yanda says. Although it is capable of offering both standard- and high-definition video, along with HSD and standard analog, the plant is not designed to provide telephony services. “The facility is capable of supporting any future service that can be offered,” Yanda says. “But we’re committed to a program of prudent capital spending. We’re not going to overspend unless we see a need for a new product offering.” Nor does the system offer video-on-demand. “VOD is not in our near-term plans,” Yanda says. “We’d rather do what we do now rather than add something to the mix as a distraction.” Adelphia became the first cable operator in the region to offer VOD when it launched a four-channel offering back in October. Throughout the free trial phase that began in 2001, Adelphia’s VOD and SVOD services generated wide interest — 35,000 customers of a possible 50,000 Cleveland-area subs used the service — which obviated the need to go forward with a full offering. Should the time arise to offer a new twist to Cox’s plain vanilla digital service, Yanda says his team can make things happen in a snap. “We have the sufficient capacity to expand quickly without any heavy upgrades,” he says. “We can bring in a rack of equipment, roll it in and start routing right away. There’s a real plug-and-play thinking to our plant.” Although Adelphia remains the leading provider of cable in the area, Cox Cleveland VP/GM Kevin Haynes doesn’t see the neighboring MSO as a competitor. “I don’t know if I’d characterize our relationship as such,” Haynes says. “They have their area, we have ours, and we don’t overlap.” In fact, Adelphia is a partner of sorts. As the director of advertising for Adelphia Media Services’ Cleveland/Erie zone, Nancy Fry handles Cox’s media buys. “When Adelphia purchased Cablevision in Cleveland in 2000, we took over ad sales business for Cox,” Fry explains. “We sell to 18 different zones in the DMA, and because Cox is in the heart of Cuyahoga County, they’re included in our buys.” Fry says the majority of Cox buys are from local car dealerships. “It’s a little scary because as the car business goes, so does our revenue,” Fry says. On average, a 6 a.m.-to-midnight rotator costs about $20 per spot, while a prime-time rotator goes for around $45. A 30-second spot in fixed programming averages out to $60 a pop. Once CableLink’s local interconnect is fully hardwired — Fry says a launch is set for April 1 — the Cleveland MSOs will be able to buy 96% of all cable homes within the DMA from a single contact point. This should allow for an expansion in Cox’s ad roster, and will bring in accounts that wouldn’t have bitten under a disjointed multistop configuration. For example, before the operational link-up was soft-wired in the Cleveland DMA in June 2001, media buyers seeking cable time had to draw up over 30 separate contracts to cover the entire DMA. The interconnect launch should guarantee that the ads sold in the Cox Cleveland service area will reach their intended targets. In conjunction with SeaChange International and Visible World, CableLink Interconnects will roll out the “IntelliSpot” ad insertion/targeting system, which has the capability to automatically assemble multiple variations of a commercial and simultaneously deliver them to diverse geographic zones across TV markets. Presently, CableLink inserts local ads on 24 cable networks in the Cleveland DMA. In terms of promoting the system, nothing helps flog a product quite like an association with the local nine. Lou Boudreau may be long gone, but Cleveland remains faithful to its Indians, which routinely sell out home games at Jacobs Field. (According to Scarborough Research, people in the DMA are more than twice as interested in baseball than the average for residents of the country’s other top 75 markets.) Those that can’t score tickets to the game watch feverishly from home: Tribe telecasts generally rack up 30-plus household shares in local prime time. And the only place they can turn to is Fox Sports, which means for baseball fans, it’s coax or nothing. This spring, Cox Cleveland will roll out a joint promotion with the Indians, marking the first time both teams have worked together in any capacity. Morabito couldn’t go into much detail about the promo (“it’s still in the planning stages”), but she did say that a ticket giveaway would be part of the package, along with some kind of testimonial from a member of the 2003 squad. The tickets to the Jake should be hotly contested — Cleveland set the Major League record of 455 consecutive home sellouts — more than twice the previous mark set in the 1990s by the Colorado Rockies. As for the people served by Cox Cleveland, Walker says that customer satisfaction levels are “consistently at the top of the service rankings in the Cox family as a whole.” He attributes this to the hard work of the system’s 125 employees. “We have a very low attrition rate,” he says. “We’ve lost one employee out of the entire call center in 2002.” Walker speaks of such things as “employee empowerment,” teamwork and taking “a soft approach” to collections. Haynes stresses the system’s commitment to “localism,” of making education a part of the company’s outreach effort, of “investing back in the community.” This kinder, gentler approach to the cable business defines Cox’s public profile in the area and reflects back on the city it serves. Cleveland, it seems, has had the last laugh. EMPLOYEES: 125 MILES OF PLANT: 800 HOMES PASSED: 98,000 PERCENT UPGRADED: 55% BANDWIDTH CAPACITY: 750 MHz BASIC SUBS: 75,000 BASIC RATE: $8.30 for 12 channels STANDARD RATE: $36.75 for 79 channels CABLE MODEM CUSTOMERS: N/A CABLE MODEM RATES: $44.95/month (plus $15/month modem rental fee) DIGITAL CUSTOMERS: N/A DIGITAL RATES: Packages start at $50.38/month AD INSERTIONS: 24 channels SOURCE: COX Haynes was promoted to his current position in May 2001. He oversees all day-to-day operations of the Cleveland system, or as he puts it, “I help to provide the people who work here with the tools and resources they need to produce.” A 24-year veteran of Cox Cleveland, Haynes served as director of customer operations from 1992 to 2001. Previously, he served in a variety of plant operations, construction and customer service management roles. He sits on the board of the Ohio Cable Telecommunications Association. A veteran of Cox Cleveland, Yanda started his cable career in the system’s construction department in 1981 and worked his way through various engineering and operations positions. His accomplishments include running the first fiber deployment in 1989, two separate system upgrades and the construction of a new head-end facility. Yanda has also been a key figure in developing Cox Cleveland’s HSI and HDTV service. He has overall responsibility for the entire network construction engineering and head-end/IT infrastructure. Walker joined Cox Cleveland in June 2002 after 12 years of call center management in various Fortune 500 customer service departments in and around Cincinnati. He is responsible for overseeing billing, collections and technical support operations, as well as the local sales/service center. Walker began his career with General Electric’s finance division; from there he did stints in the respective national call centers of Matrixx Marketing (now Convergys), Avon and FedEx. Morabito has been with Cox Cleveland system for over ten years. She oversees the development and implementation of marketing and sales strategies for the system’s video and data services. A native of Cleveland, Morabito returned to the area after years of advertising agency experience in Los Angeles. Her last position in L.A. was advertising manager for KCBS-TV. Comparison of the Cleveland demographic market area to the top 75 market average.