In a letter to Cox execs last week, President Patrick Esser wrote that the MSO needs to do a better job unifying its operations by eliminating redundant functions. "The organizational changes are part of an ongoing evolution of our business to ensure Cox remains competitive, efficient and effective in serving our customers," the MSO said in a statement to Light Reading Cable after our inquiry about Esser's letter. Cox, in its statement, predicts the impact of the reorg "will be invisible to our customers and the communities we serve."
Cox isn't the first major U.S. MSO that's identified the need to become more nimble and competitive by centralizing functions and operations. Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC) have been reducing their operating divisions in recent years, as well. (See Time Warner Cable to Shut Down Nat'l Division and Comcast Trims Another Division .)
Cox became privately held in 2004 and does not release financial information, so it's difficult to gauge the overall impact of restructuring on its business. Being private has enabled Cox to embark on some network and new service initiatives that might have been questioned by investors.
Its decision to upgrade plant to 1GHz, enabling Cox to bulk up its HD lineup and create a new Advanced TV Plus tier that reportedly will rely on MPEG-4, has been well-received. However, its quest to own and run a 3G wireless network -- and the expenses that strategy has incurred -- have come under much more scrutiny. (See Cox Makes 1 GHz Moves .)
Cox recently scuttled plans to build its own 3G network and eventually migrate to Long Term Evolution (LTE). It has since decided to move forward by running its own service exclusively on the Sprint Corp. (NYSE: S) network. Following this week's launch in Santa Barbara and San Diego, Cox's wireless service is on pace to be available to half the MSO's footprint by the end of 2011. (See Cox: We're Not Selling Our Spectrum, Cox May Tear Down Wireless Network, Cox Chucks Wireless Network Plan and Cox Wireless Clears California .)
In a separate document, Cox has outlined an array of organization changes it will implement. The plans, as you'll see, do not get specific about layoffs:
By the end of 2011, Cox plans to integrate its wireless and technology teams under the leadership of former Clearwire LLC (Nasdaq: CLWR) exec Kevin Hart. Hart joined Cox as EVP and CTO in April. Wireless marketing, including retail, will also be folded into the primary marketing team under Chief Marketing Officer Mark Greatrex. Wireless customer care will also transition to SVP of Customer Operations Kimberly Edmonds. (See Clearwire's Old CIO Becomes Cox's New CTO .)
During the fourth quarter, Cox notes that it will push a project called "nGO" (next-generation operations) forward by moving the reporting structure of its regional system operations centers (SOCs) to the Hart-led technology team in Atlanta.
Starting in the first quarter of 2012, Cox will centralize the revenue responsibility of marketing and sales, but will keep teams on the ground in all of Cox's localized regions. Greatrex will head up the marketing leg, and Cox will look to add an SVP of sales reporting to COO Leo Brennan, with recruiting for that slot to start in the fourth quarter of 2011.
Cox Business, a unit that breached $1 billion in annual revenues for the first time in 2011, and Cox Media, the operator's ad sales unit, will also be centralized, with Cox Business reporting into SVP Phil Meeks, and Cox Media reporting to SVP Bill Farina. (See Cox Business to Break $1B Barrier .)
Cox intends to shrink from nine systems to seven by consolidating its Arizona and Las Vegas systems and combining its Louisiana and Florida/Georgia properties. Cox, led by SVP of Field Operations Jill Campbell and Cox general managers, will formulate that plan in late 2012. That will be "followed by operational and personnel changes as necessary," Cox said.
Cox began consolidating systems and operations several years ago. Among its bigger moves, in 2006 it sold systems serving about 940,000 subs in parts of North Carolina, California, and much what used to be called Middle America Cox (portions of Texas, Louisiana and Arkansas) to Cequal Communications, the company that operates Suddenlink Communications . Cox did the deal to help it focus on its remaining, more tightly clustered cable systems.
— Jeff Baumgartner, Site Editor, Light Reading Cable