Sachs’ Legacy: Keeping the Regulators Out and the Programmers In

In July 1999, when Robert Sachs started as the president and CEO of the National Cable & Telecommunications Association, he had a simple mandate: Keep the regulators’ noses out of cable’s business. Sachs, who departs his post later this spring, has earned nearly unanimous accolades for achieving that goal. He has established one of the most sought-after legacies among D.C. lobbyists: He oversaw one of the longest periods of regulatory stability in cable’s history. "It may seem ironic to mark a person’s legacy by what didn’t happen, but perhaps Robert’s greatest legacy is that no new onerous regulation or legislation was imposed on the industry on his watch, demonstrating Robert’s substantive understanding of the industry and his keen ability to navigate politics," says Cox CEO Jim Robbins. Sachs’ five-plus years on Mass. Ave. was marked by no regulations. No programmer defections. No cloak-and-dagger intrigue. It’s not to say there wasn’t potential for something. Just two years ago, some were warning about a "perfect storm" brewing that would lead to a harsh reregulation for the industry. With President Bush seeking reelection, corporate scandals tarnishing cable’s image on Capitol Hill and MSOs raising rates, some worried that the conditions of 2003 mirrored the ones of 1991, when cable was hindered with strict rate regulations. Throw in ESPN and Cox’s carriage battle (argued within earshot of Congress) and the industry’s shrinking conventions, and it looked to some like cable was about to implode. Nothing happened. Some in the industry feared that the indecency debates and broadcaster demands for digital multicasting would hamper cable. Nothing happened. Others were concerned that new business, like high-speed data and cable phone, would be subject to onerous legislation. Still, nothing happened. And most of the industry executives I contacted said that Sachs’ work ethic and consensus-building skills are the reasons why. "Our primary goal for the past five years can be summarized in two words—regulatory stability," says Comcast chairman and CEO Brian Roberts. "Robert succeeded in keeping the industry focused on this objective. We achieved most, if not all, of our business goals, and despite many pressures, Robert was able to keep us together as an industry when it counted. He is a steady and focused leader who helped us forever change for the better, and begin the process of the new digital world." Sachs has his detractors. Who could forget Multichannel News’ description of him as a multiple-personality-suffering "Sybil"? Some see Sachs as standoffish and not aggressive enough. They describe him as being fortunate to have his term coincide with a deregulatory shift in Washington, D.C. Even a staunch Democrat like Sachs will find supporters in today’s Washington, with its deregulatory agenda. But for every complaint about Sachs, there are several cable executives who hold him in the highest regard. Steve Effros, a cable consultant and friend of Sachs, has described the NCTA president as the right guy at the right time for the industry. He is not Decker Anstrom, one of NCTA’s most popular chairmen, who has some of the best people skills in the industry. Anstrom’s tenure is remembered for leading cable out of the regulatory abyss, forging the 1996 Telecommunications Act and rebuilding cable’s image with regulators. Nor is he Jim Mooney, considered by many to be the most disastrous NCTA president of the modern era. It was on Mooney’s watch that cable was saddled with the 1992 Cable Television Consumer Protection and Competition Act. "Robert has done a terrific job of successfully steering the NCTA through a period in which it has faced a number of thorny and complex policy issues," Time Warner Cable CEO Glenn Britt says. "He has managed to keep a sometimes fractious group of cable operators and programmers together by keeping the focus on the major issues that unite us rather than the smaller issues that cause friction." Showtime chairman Matt Blank also hailed Sachs for his ability to keep operators and programmers working together. "He was particularly effective in galvanizing the industry on the issues of a la carte, tiering and indecency," he says. Sachs also will be remembered for his role in working with the consumer electronics industry, negotiating a one-way plug-and-play agreement with a group that has historically frosty relationships with cable. In fact, Sachs calls his failure to find common ground with the National Association of Broadcasters one of the disappointments of his tenure—even though he helped cut deals with public broadcasters. "Those strengthened relationships will serve our companies well in the future," Anstrom says. While Sachs’ detractors only would agree to speak off the record, he has strong on-the-record support from the industry’s highest-profile executives, who applaud his ability to keep regulators out and programmers in. "He has a great ability to build strong coalitions between cable operators and programmers for the common cause of our industry," says A&E TV Networks president and CEO Nick Davatzes. "He is also a skilled policy expert who has a keen understanding of the issues facing our industry, and he masterfully represented us working closely with the FCC and Congress." Charter CEO Carl Vogel agrees. "Robert’s tireless support and thoughtful approach in representing our industry to Washington regulators is something we all should be thankful for. Also, Robert’s sense of fairness, his constant attention to inclusiveness for all his members and personal integrity are qualities we should all strive to maintain." Following is an expanded version of the interview with NCTA president and CEO Robert Sachs that appeared in the print version of this issue. CableWORLD: What’s been your biggest accomplishment over the past five and a half years? Robert Sachs: I feel very good about the fact we were able to create a regulatory environment that enabled companies to invest and the industry to gain 20 million high-speed Internet customers in the period. I feel good about the fact that we maintained the deregulatory environment for our basic video services that the industry achieved in 1996 and that we’ve been able to launch new services like VOD or high-definition television without government regulation. NCTA functions as a team. I’ve been lucky to be the quarterback of that team. What we accomplished over this period is the result of a group effort. That group includes the staff here, the Washington office of different companies who are NCTA members and our board members’ active participation. CW: What about NCTA-specific accomplishments? Sachs: It really falls into three facets. One is what we accomplished in the public policy. Second is what we accomplished as a business. And the third is what we accomplished within the industry. All three need to be a concern for the new head of NCTA. CW: Start with policy. Sachs: We established a deregulatory environment with broadband services. The FCC ruling several years ago that cable modem service can be viewed as an interstate information service, which is lightly regulated, is a key ruling. The FCC decision this past fall that voice over IP services should be regulated, if at all, at the federal level—not by 50 separate agencies—would be enormously helpful to the aggressive deployment of voice services. It’s creating environments like this that lets businesses flourish, which I take pride in. CW: Business? Sachs: We have 20 million high-speed Internet customers, and growing. We have 25 million digital cable and 10 million cable telephony. That together is more than 50 million new revenue units that this business has added over the last five or six years. That’s enormously important because this industry has made a major capital investment that’s premised on being able to drive new revenue from new services. CW: And industry? Sachs: We have a diverse membership: We have operators, programmers, equipment suppliers. Over the past five and a half years, we’ve kept the group fully intact. Even though in this period, there have been some hard-fought negotiations between operators and programmers, at the end of the day, companies resolved those differences and the industry has worked very well together on the public policy agenda. CW: Other accomplishments? Sachs: The other thing that we tend to take for granted because it gets done without any fanfare, but which I take a lot of pride in, is bringing things like Cable in the Classroom and more recently the Kaitz Foundation under NCTA’s administrative umbrella. While our central mission is public policy advocacy, we recognize that those entities and organizations are important to the industry and that NCTA is great place to house them and ensure them of continued strong support from our member companies. CW: What has surprised you about the NCTA president job? Sachs: I didn’t expect that it would be all-consuming, and it really is an all-consuming job if you are going to do it right. Your first priority is representing the industry before Congress, the FCC and the administration. So you have to be out of the office a lot and interacting with FCC commissioners and bureau chiefs and members of the Commerce and Judiciary Committees and leadership and NTIA and, occasionally, the Federal Trade Commission and other agencies. It’s important to be responsive to your board. It’s important to maintain regular liaisons with the heads of Washington offices. We use outside consultants. We have seven departments. It’s not unreasonable for the heads of each of those departments to want an hour of my time during the course of a week to keep me abreast of what’s going on. If you add up all of these demands and needs, they consume most of the waking hours during the course of a week. If you take pride in what you do and the results are important, you need to focus that amount of energy to it. CW: How did you do it from Boston? Sachs: I commute from Boston to Washington each week. I usually take the 7 a.m. flight down on Monday and the 4:30 p.m. or 5:30 p.m. flight back on Friday. The fact that Caroline is in Boston most of the time has freed me up to spend most of the time here on industry matters. There’s nobody to say: "Why don’t you get back in bed." (laughs). CW: How would you describe your style? Sachs: Hands on. CW: Does that mean micromanaging? Sachs: I think that’s a fair characterization. I’m a type A, or type A+, personality (laughs). I had the same work ethic at Continental. If you talk to Rob Stoddard, for instance, who I worked with closely at Continental and then at NCTA, I’m sure he’ll confirm that I have not changed work style. CW: One of your accomplishments certainly has been in building the bridge with the Consumer Electronics Association. Sachs: Effective public policy advocacy includes resolving issues before they become legislative matters or are the subject of rulemaking. We were well served when we struck the plug-and-play agreement. The industry recognized that it was the first step toward a two-way agreement. Relationships between our companies and CE companies and CE retailers came out of that. A couple of months ago Samsung signed an agreement with CableLabs. This is well ahead of an industrywide agreement, but they can get a jump on producing two-way cable-ready TVs. There are now retail relationships between major MSOs and Best Buy, Circuit City and other retailers. We broke the ice by talking to manufacturers and retailers. That’s the real benefit. CW: Why has it been difficult to find common ground with broadcasters? Sachs: One of my disappointments is that we also sat down about two years ago with major broadcast station groups to see whether digital carriage issues—which had been out there for some time and are still out there—could be resolved between the industries. We brought together half a dozen MSO CEOs and Eddie Fritts and David Donovan brought together an equal number of station group heads. We were unable to advance those talks. Our group was certainly willing to have those conversations. But it was difficult on the broadcast side for them to even achieve unity within their group. We continue to have a positive set of conversations with public television entities. There are more than 100 public television stations with a digital signal or signals that are now carried on cable systems in virtually every one of the top 100 markets in addition to their analog signals. You have to step back and say, "They don’t have retransmission consent. They don’t have market power. Then what is it?" The answer is that they can articulate their programming plan; they have a quality product. And they’re open to working together. CW: What’s gone wrong with NAB? Sachs: On a personal level, I’ve had a very good relationship with Eddie Fritts. I think he’s a gentleman, and we’ve always been able to pick up the phone and have an offline conversation. He has a very big challenge in uniting all parts of his membership because they have radio and television. They had the broadcast networks at one point as part of their station groups. They have large station groups. They have small station groups. It’s a pretty fractured group. He’s done a very good job of holding it together to the extent he’s been able to. But it’s a major challenge. CW: What advice have you given the board in terms of the qualities it should look for in a new NCTA president? Sachs: It’s very important for the person in this job to continue to unify this industry. Our success is dependent on all parts of the industry working in tandem. Obviously, the job involves advocacy and strategy and political relationships and regulatory relationships, so the person in this job should have good experience in all those areas. It’s also desirable for the person to have knowledge of our business. We deal with a myriad of issues. No one person coming into this job is going to have command of all of them. CW: The Republican leadership has been pushing industries to hire Republican lobbyists. Have they made contact with NCTA about its opening? Sachs: I have not had any overtures or contacts from anybody, and I can’t speak for anybody else. CW: What are the five most critical areas that the new person will have to focus on in this job? Sachs: It’s going to be busy from the get-go this year. One: The digital television issues that we worked on for the past several years are likely to take form in legislation on the House side early this year. Two: Sen. [Ted] Stevens announced plans to begin a review of the 1996 Telecommunications Act. Three: We have the Brand X case, which is pending at the Supreme Court. Arguments are scheduled for late March and we anticipate a decision before the end of June. While I personally am optimistic about the outcome of that case, it is prudent to have contingency plans. Four: We have ongoing negotiations with the consumer electronics industry to reach agreements on the two-way plug-and-play agreement. Five: Then there’s the little matter of the convention, the party we’re going to have in San Francisco in April. It all depends on what the timing is with the decision, but I would expect that my successor would be in place by that time. CW: How concerned should your successor be about potential defections from programmers? Sachs: I’ve been part of this industry for 25 years, and I think that question has been on the table for at least the last 15. It has never materialized because the people who run the companies that make up our board and membership recognize that they have so much more in common at stake that they would be doing a disservice to their own company to allow the industry to fracture. With that said, it’s important for the head of NCTA to play a mediating role from time to time. It’s inappropriate for NCTA to take sides in business negotiations. But there’s a lot of opportunity here to try to bring people together. CW: Is two-way plug-and-play as bogged down as it appears to be? Sachs: It’s a complex negotiation. It involves more than just consumer electronics manufacturers and cable operators. The FCC said, when it adopted the rules based on the one-way agreement, that as these discussions move forward, they hope that the parties include others that have interest in the subject matter. That includes everyone from DirecTV and EchoStar to MPAA and Microsoft to Intel, TiVo and others. During the course of the past 12 months, there have been some 40 meetings between the parties—some large group meetings, some sub-group meetings, some bilateral conversations. Because of the multi-party nature of it, it’s more challenging than the one-way agreement was. Even there, it’s not as if there’s a singular cable viewpoint and a singular consumer electronics viewpoint. There were 14 CE companies involved in those negotiations and probably eight or 10 MSOs. Within each industry, consensus has to be achieved. There are legitimate differences of opinion when it comes to technology and business strategy and practices. The parties on all sides—CE, cable and the others—have given incredibly of their time and resources in these discussions. It’s a hardworking group of people engaged in these negotiations. CW: Do you have a personal timetable for when you expect this to go through? Sachs: I’d love to say that it would come to fruition on my watch. As we sit here today, I expect the board to come to a decision in the near future. CW: What is cable today, in 2005? Sachs: Cable is a different business than it was even five years ago. It’s certainly much different than it was during the almost 20 years that I worked for Continental. The one-way video business is no longer a cable business. There’s high-speed Internet, video on demand, high-definition television, digital phone service and hundreds of channels of programming. It’s a central part for people to take a triple-play package of video and data and voice services. It fulfills a lot of consumer needs. CW: It sounds like you could be describing Verizon in a couple of years. Will Verizon become a member of NCTA? Sachs: Today, Verizon is essentially in the telephone business and offers DSL. They made announcements about what they are planning to do with respect to video, but this is not the first time that a Bell company has announced plans to get into video, so we’ll see how that unfolds over the next two years. I remember when Ray Smith, Verizon CEO Ivan Seidenberg’s predecessor, was CEO of Bell Atlantic and planned about a decade ago that the phone companies were going to capture 50% of the video market by the year 2000, but that did not occur. CW: He was going to take it with video dial tone, as I remember. Sachs: It was video dial tone. The phone companies had several ways they could enter the video business, but none of those ever materialized. CW: Do you remember your first day on the job? Sachs: I remember the second day better than the first. That’s when there was a personnel issue. It was a serious issue that required consultation with our HR people, outside counsel expert in personnel matter. It was something that needed to be addressed immediately. That set the agenda for that day, and it was resolved quickly and satisfactorily. At Continental, I led departments of 20 people and dotted-line relationships with lots of our people. Here, suddenly, it was a 100-person organization, and I had the ultimate responsibility for that organization. I quickly discovered that the buck didn’t stop until my office. CW: When you told the board that you were resigning, I’m sure you got a lot of well-wishes. Was there anything that stuck out? Sachs: I had lots of e-mails and calls from the board, which always makes one feel good that you have the respect of those you work with. In that time period, I also heard from a number of people who are competitors and adversaries outside the organization: communications attorneys or members of Congress or FCC commissioners. When I came back to Washington in 1999, there were a lot of new relationships formed. It has been gratifying that even though we may have disagreements with other industries, there’s a respect for the job done here that some of them—many of them, actually—took the time to say. CW: MSTV certainly was complimentary. Sachs: They were kind enough to give me an HD antenna as a gift. I could not have thought of a better gift because it certainly makes the point that there’s no need for digital must-carry if their antennas work so well. Also, a number of the employees here I’ve grown close with over time. These are relationships that you have for the rest of your life. They are not ones that run concurrent with the job. CW: Your time here seems to be defined by the lack of real regulation. Sachs: Over this period, which started with the 1996 Act under Decker Anstrom, we’ve continued a period now for eight or nine years where we have not had new regulation imposed on the industry, and we’ve been able push deregulation for new services that we’ve introduced. That has played an important role in the companies’ decision to invest and given the success that we’ve enjoyed in rolling out new services. This has been a period of regulatory stability and I would expect that this industry continues to make good on its commitment to rolling out new services. One of the things that’s happening in this time period is that our businesses became a lot more competitive. When I started in cable, we were the only game in town. We were the only video game in town. That continued with over-the-air broadcasting. There were 2 million large C-band dishes primarily in rural America. Direct broadcast satellite, smaller 18-inch dishes, didn’t really come into being until the mid-1990s. It was a very different business. It was a period of rapid growth. Today, we face fierce competition from DirecTV and EchoStar, the phone companies announcing aggressive plans to get into the video business. We have not just the phone companies, but power companies and others offering phone service. Every one of the businesses we’re in is highly competitive. It follows that where markets are working better that there’s less need for government regulation. That said, there’s always somebody who’s advocating some form of regulation, so it’s important to be vigilant and fend against that. CW: Is this where I mention Gene Kimmelman’s name? Sachs: I’ve known Gene for a very long time. CW: Let’s talk about the new guy or gal. I won’t ask you who it’s going to be… Sachs: It’s fine to ask, but the board hasn’t come to a decision yet. CW: I know cable issues generally aren’t partisan issues. But it sure seems like it’s better to be a Republican in this town these days than a Democrat. Sachs: We worked closely with Sen. Ernest Hollings (D-SC) and Sen. Daniel Inouye (D-HI). We worked closely with Sen. Ted Stevens (R-AK) and Sen. Conrad Burns (R-MT). At the FCC, we work with all five commissioners. Obviously, we’re sensitive to the political environment, but at the end of the day the decision should be to hire the best-qualified person for the job. CW: Certainly your darkest days had to come in the middle of the Cox-ESPN battle, where each company seemed to be taking their argument to Congress. Sachs: I talked regularly to George Bodenheimer and Jim Robbins in that time period. I also talked with people who worked for them. That was an intense period. The advice I gave both—and it wasn’t always heeded—was not to come to Washington to resolve your business issues. In the end, they did what they felt was right for their company and their customers. At the same time, to their credit, Jim and George [both members of NCTA’s board], checked their different issues at the door of our board meetings and worked together on other matters that are of importance to the industry. I’ve had 25 board meetings during my tenure, and I can think of one or two that got pretty heated. This group is very good about getting up to the line and not going over it. CW: I used to love to get Jerry Kent to rail against programmers when he was the chairman of the National Show. Sachs: I don’t think we ever worry about having wallflowers on the board who are unwilling to speak their mind. CW: How jealous are you that your successor comes in with Ted Stevens heading up the Commerce Committee instead of John McCain? Sachs: Congress is made up of 535 members. John McCain is going to continue to be an active force on communications issues without being chairman of the full committee. Our industry has enjoyed a good working relationship with Sen. Stevens. That’s why my successor will be fortunate, as I have been, in that in the communications arena. We’ve had a great group of congressmen and senators that have been in leadership positions, particularly in the Commerce Committees, who know a lot about our business; know a number of people in our industry—gotten to know them over time; and who are open to ideas and who we’re able to work with. And that’s on the Republican and Democratic side. It doesn’t matter if we’re talking about Rep. Joe Barton (R-TX) or Rep. John Dingell (D-MI) or Ted Stevens or Daniel Inouye, we’re fortunate to have a good group of legislators. CW: When you gave your list of items the new NCTA head has to work on, you did not mention indecency. Was that just an election year issue? Sachs: No. The issues that we worked on last year involving a la carte pricing will be with us this year as well. The fact that the FCC did a comprehensive study on a la carte, and that they reached the conclusion that the General Accounting Office reached raises the bar for those who advocate that government micromanage our business, and the satellite business for that matter, and impose some form of a la carte marketing on the industry as a matter of federal law. The fact that Congress did not enact legislation to increase the fines that the FCC could assess broadcasters for indecent programming means that issue—in a more generic sense—is going to be out there as the Congress gets under way this year. Had Congress enacted a law in this area, it would be less likely that they would take up the issue again. All it takes is the next instance to set that off. CW: It doesn’t seem to take as much to create that firestorm these days. Sachs: There’s a higher sensitivity. I’m proud of our industry’s response. As far as cable’s concerned, by taking some proactive measures, we’ve helped advance our own cause. Following the Super Bowl, we had several board-level discussions which resulted in a commitment by operators to provide free blocking devices to customers that requested it. The industry—operators and programmers together—funded and implemented a public education program. We’ve had PSAs run on cable systems and cable networks, informing parents about the tools that are available to them to block unwanted programming. These responses by this industry will help it as this issue recurs in the future. And it’s sure to. The first congressional hearing that I ever worked on as a junior House staffer in 1975 was kidvid: children’s television. The three broadcast networks were the target. There really weren’t cable channels. Here we are, 30 years later, and the issue is still out there. If anything, what the concerns were three decades ago would seem tame compared to what’s available today. CW: You also haven’t talked a lot about VoIP legislation today. Sachs: The focus will be really on the commission. It has an ongoing proceeding. As we did last year, my successor will work with Rep. Chip Pickering (R-MS) and Sen. John Sununu (R-NH) and others on this. But there’s a lot the FCC can still do. They may obviate the need for congressional action. That’s where the focus will be. CW: It sounds like VoIP isn’t so much a hot potato for you right now, with legislation appearing to head where you want it to go. Sachs: There will be changes in the makeup of the FCC. Based on public statements the commissioners have made, there certainly seems to be a predisposition on the part of the majority of today’s commission to treat VoIP services rightly with respect to regulation; certainly with respect to economic regulation. There are issues such as universal service which need to be resolved more fully by the commission. But as to economic regulation, it’s unlikely that the FCC would seek to regulate this new telecom competitor. The hot potato issue was the jurisdictional issue. The commission addressed that last fall. We and others—it’s not just cable providers who are offering VoIP services—faced a state PUC public service commission that was beginning to assert jurisdiction here. Unless the FCC acted, we probably would have seen more activity on the part of some states. And the commission recognized that it was an interstate service. CW: Thanks for your time, Robert. As a final question, what do you plan to do on your first vacation day? Sachs: My first vacation day is before I finish up at NCTA. I’m not planning an extended vacation. I might take a long weekend. I plan to have offices at Pilot House in Boston, where the Continental group for many years had offices. I’m going to be more active in a number of organizations on whose boards I serve. I suspect all that together will add up to full time. I look forward to taking some time, but I have no vacation plans. Part of it, frankly, is that my commitment here is somewhat open-ended, and one doesn’t make plans when one doesn’t know when one is finishing the job. CW: Do you have Opening Day tickets yet? Sachs: No, I don’t have Opening Day tickets. One thing I’ve learned in my years in the cable business is that there are lots places that can give you lots of choices of tickets. Two days after our interview, Robert Sachs sent the following e-mail: John—In reflecting on our interview, there were a couple of other things I should have mentioned: 1. In talking about the importance of maintaining a stable regulatory environment for cable: One of the other by-products of this environment is that it has continued to allow continued investment in new and diverse cable programming. Not only have we seen the number of cable networks mushroom to more than 350, but cable networks have quickly become the leaders in providing HDTV. There are now 15 to 20 cable networks who are programming in HD most or all of the time. Not surprisingly, cable’s continued investment in quality programming has led to a quantum shift in viewership. No longer do most Americans turn to the broadcast networks for their TV viewing. 2. In answer to your question about "my darkest day": I tend to be a pretty positive person, so most of my days are bright, and each [is] a new beginning. This is not to say that there are not difficult moments as there are with most jobs. The "darkest day" for me was September 11, 2001. I was in Midtown Manhattan, scheduled to speak at a NAMIC conference, when news of the terrible events at the Twin Towers and Pentagon started to filter in…I quickly left the hotel to call my office to find out what more I could learn. Cell phone service in the city was terrible so I walked uptown to Insight’s offices where the phones still worked and I watched the horror of that day unfold…I wanted to get home to Boston but I also had a hundred employees in Washington. And by then, two years into the job, the staff at NCTA had become "my family" too. So, the next morning I got on the first train I could to D.C….Seeing smoke still rise from the Pentagon, as I had seen the plume of smoke hang over lower Manhattan, brought home the enormity of this tragedy. I was glad to be able to be able to get back to NCTA, to be able to chat with those employees who had come into work. Later that week, I took a seven hour train back to Boston, as I would on weekends for the next six weeks with Reagan National Airport being closed. As I look back on the past 5 1/2 years, 9/ll was clearly the darkest day, and one I pray we never see again. Thanks.