For purposes of this entry, I'd like to focus on the comments attributed to Greg Kohl, director of research of the Communications Workers of America (the CWA represents thousands of workers at BellSouth and other Regional Bell Operating Companies). The title of his presentation was "A Look at the Economics of the Cable Industry."
Well, it's an eye-opener!
Among the many relevant points Mr. Kohl makes (according to Digital Democracy's Digital Destiny Campaign report on the event) are these: the average cable customer is valued at $3,820 per subscriber; that operating cash flow margins (that's what you and I would call profits based on system operation) run between 29 and 40 percent; and that cable prices have been increasing at five times the inflation rate over the last several years.
All this says is that the cable system business is very lucrative, based solely on the subscriber base revenues. But, there's more.
Mr. Kohl also declared that cable advertising revenue out-grew the cost of buying programming by $2.6 billion between 1996 and 2000. So, wonder what that cat fight about ESPN programming costs a few months ago was all about? Multi-billion dollar conglomerates fighting over your wallets?
But, the slide that drives home just how lucrative the cable business is came in slide 16 of Kohl's PowerPoint presentation (I'll paste in a link below).
The slide is headlined: "Nine of the World's Richest People Got Their Fortunes from Cable." Let's work down the list for the benefit of those who will not be making the trip to the page:
- Ted Turner -- TimeWarner, TBS, others -- $2.3 Billion.
- Barbara Cox Anthony -- Cox -- $11 Billion.
- Anne Cox Chambers -- Cox -- $11 Billion.
- Harold FitzGerald Lenfest -- Lenfest Cable -- $825 Million.
- John Malone -- TCI, other cable TV -- $1.9 Billion.
- Alan Gerry -- Cable TV -- $1.1 Billlion.
- Amon Barr Hostetter, Jr. -- MediaOne, others -- $2.1 Billion.
- Charles Francis Dolan -- Cablevision -- $1.4 Billion.
- Brian Roberts -- Comcast -- $625 million.
Viewed in this context, the fear, uncertainty and doubt that is the core of the Cox/BellSouth campaign against the LUS fiber to the premises project is almost comical. What they don't want -- particularly Cox -- is for anyone to get their hands on the gold that's in them bills!
No wonder Cox Enterprises, Inc., is willing to cough up $7.9 Billion to by the 38 percent of Cox Communications the company does not own!
Here's the URL for the Kohl slide presentation: