Once again, The American Cable Association (ACA) and the National Cable Television Cooperative (NCTC), which represent many independent cable operators, will meet in Kansas City at the end of July for the Independent Show. This is an especially noteworthy event for the NCTC as they celebrate their 30th anniversary. There are a significant number of small cable companies in the United States and many go back to the founding of the cable industry. Service Electric in Pennsylvania is considered the first successful cable business in the country and still remains a family-run small business serving the needs of its customers. They are among the many independent cable operators who will be at the show to discuss the state of the cable industry. The one thing they all have in common is their reliance on NCTC to control their costs of equipment and programming, which was the reason the organization formed in 1984.
The emergence of satellite technology and cable programming were the key factors that started the Second Generation of Cable. The cable operators entered into agreements with each individual cable programmer for content they would show on their system. The cable operators were highly motivated to reduce their costs, the cable programmers wanted to maximize their revenue and the negotiations proved profitable for both. For years, the largest cable operators asked for and received volume discounts, which was standard practice between the cable operators and technology vendors. In effect, this meant a system with 500,000 subscribers would pay considerably less per subscriber for programming, than a system with 50,000 subscribers. This encouraged consolidation among cable operators who, for simple economic reasons, started buying smaller cable operators to reap the benefits of lower operating costs.
Many of these family owned businesses did not want to sell their systems to the larger operators, choosing instead to remain independent. They understood the economics and discussed ways they could compete for programming on an equal basis with the larger operators. In 1984, a group of operators in the Mid America Cable Association (serving Kansas, Oklahoma, Nebraska and Missouri) met to discuss a cooperative to negotiate deals on behalf of its members to acquire cable programming and technology. The group asked Mike Pandzik, a former HBO executive from Kansas City, to run the new venture. Pandzik agreed and the group immediately assessed potential legal issues they might encounter. Once they were satisfied, they formally incorporated in 1985.
Pandzik had an uphill battle. Although the technology vendors were willing, the programmers did not appreciate any effort to reduce their revenue through the cooperative. Their experience revealed that as the cable operators got bigger, they would demand more of a discount. They saw NCTC heading in the same direction and many programmers resisted, especially Pandzik’s former employer, HBO. The Weather Channel was the first to sign an agreement as they expanded across the nation, but larger entities such as ESPN and Disney initially resisted any deal with the cooperative. HBO came around 10 years later when NCTC signed up Showtime and Encore. By 2000, NCTC had 900 members serving more than ten million subscribers. Pandzik succeeded through sheer determination and patience. He saved customers millions of dollars by the time he retired in 2005. Jeff Abbas served as its next leader until 2011.
Rich Fickle is the current President and CEO who runs the NCTC from their headquarters in Lenexa, KS, where they represent 950 independent cable organizations. Programming costs remain one of the largest expenses for the independent cable operator–equipment and service costs are high on the list. The independent cable operator provides broadband services to many small communities across America and remains true to the entrepreneurial and innovative spirit that built the cable industry. Congratulations to everyone associated with the NCTC. Thanks for 30 years of dedicated service to the independent cable community.
(Larry Satkowiak is president and CEO of The Cable Center, the nonprofit educational arm of the cable industry. The Center preserves cable’s enduring contributions to society, strengthens relationships between cable and academia and unites the industry around the advancement of exceptional customer service. www.cablecenter.org)