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Cable Execs Are Minting Money

Light Reading
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Light Reading
8/18/2015
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It's good to be in cable. Really, really good. With total compensation packages often far outstripping their telecom counterpoints, cable providers and cable media executives brought home the bacon in 2014… and apparently it was dipped in gold and crusted in jewels.

Executive Compensation - Cable and Media
Source: Securities and Exchange Commission
Source: Securities and Exchange Commission

Topping the list of best-paid executives in the business, Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK) CEO David Zaslav earned a whopping $156 million last year, reflecting a new contract signed in January of 2014 that ties Zaslav to the company through the end of the decade. According to filing with the SEC, the astounding compensation number "shows a large one-time equity award to drive immediate shareholder alignment and encourage long-term ownership of stock."

Zaslav's continuing compensation is heavily based on how well the company performs, which may not bode well for 2015's payout. Discovery's stock dropped precipitously a year ago as the company repeatedly revised its earnings estimates downward, and it hasn't recovered since. The stock price is now at levels last seen in late 2009, and cable networks as a whole are facing an uncertain future thanks to increased cord-cutting. (See What DirecTV's Big Sub Loss Means .)

Meanwhile, Discovery wasn't the only company giving generously to its top executive last year. Liberty Global Inc. (Nasdaq: LBTY), the largest cable operator in Europe, handed out $112 million to CEO Michael Fries in 2014. The company believed the payout was deserved, citing a year of strong performance including overall subscriber growth, and the smallest video subscriber losses since 2006.

Zaslav and Fries were the only two executives on the cable list to earn more than $100 million last year, with the rest of the executives earning more modest annual sums averaging roughly between $30 million and $40 million. Subtracting the board chairmen on the list and focusing only on those gentlemen with CEO in their titles -- and yes, all of the CEOs are men -- the average compensation total for 2014 was $39.81 million. Further subtracting the two outliers, Zaslav and Fries, from that list, the average dropped to $29.81 million.

Among other notable payouts, Time Warner Cable Inc. (NYSE: TWC) CEO Rob Marcus earned $34.62 million in 2014. That sounds pretty good, but it's well under half of what he would have netted if the deal with Comcast had been approved. Marcus' golden parachute package in the case of Comcast Corp. (Nasdaq: CMCSA, CMCSK) acquiring TWC amounted to nearly $80 million. Rotten luck, right? Not to worry, though -- if Charter Communications Inc. can succeed in a buyout where Comcast failed, Marcus may have an even bigger payday ahead. (See TWC Execs' Prize? A Cool $135M.)

One other pair of salaries worth noting -- Dish Network LLC (Nasdaq: DISH)'s Charlie Ergen earned only $1.69 million last year, a paltry amount compared to many of his contemporaries. However, Ergen was only acting as Chairman of the Board in 2014, while Dish CEO Joseph Clayton earned $13.29 million. Now that Ergen has resumed his role as CEO, he's sure to be due for a fatter check in 2015.

We've included some additional details on executive compensation below, separating out cable operator executives from media executives. We also included Netflix Inc. (Nasdaq: NFLX) on the list just to show where the leading OTT upstart nets out. All figures are sourced from corporate SEC filings.

Table 1: Media Company Executive Compensation

Executive Company Basic salary ($) Total compensation ($)
John Malone, Chairman Liberty Media $1,326 $733,451
Sumner Redstone, Executive Chairman CBS Corp. $1.76 M $10.83 M
Sumner Redstone, Executive Chairman Viacom $1.94 M $13.20 M
Rupert Murdoch, CEO 21st Century Fox $7.1 M $29.25 M
Jeff Bewkes, Chairman & CEO Time Warner Inc. $2.00 M $32.90 M
Steve Burke, President & CEO NBC Universal $2.65 M $33.91 M
Greg Maffei, President & CEO Liberty Media $1.06 M $41.44 M
Philippe Dauman, President & CEO Viacom $3.87 M $44.33 M
Robert Iger, Chairman & CEO Walt Disney Corp. $2.50 M $46.50 M
Leslie Moonves, President & CEO CBS Corp. $3.51 M $57.18 M
David Zaslav, President & CEO Discovery Communication $3.00 M $156.08 M
Source: SEC

Table 2: Cable Company Executive Compensation

Executive Company Basic salary ($) Total compensation ($)
Charlie Ergen, Chairman Dish Network $900,000 $1.69 M
Reed Hastings, CEO Netflix $2.96 M $11.10 M
Joseph Clayton, President & CEO Dish Network $1.00 M $13.79 M
James Dolan, CEO Cablevisions Systems $1.66 M $15.35 M
Michael White, CEO DirecTV $1.70 M $15.82 M
Tom Rutledge, President & CEO Charter Communications $2.00 M $16.10 M
Neil Smit, President & CEO Comcast Cable $1.57 M $23.12 M
Brian Roberts, Chairman & CEO Comcast Corp. $2.86 M $32.96 M
Rob Marcus, Chairman & CEO Time Warner Cable $1.50 M $34.62 M
Michael Fries, President & CEO Liberty Global $1.87 M $112.18 M
Source: SEC

— The Staff, Light Reading

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Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
8/21/2015 | 11:14:44 PM
Hastings
On the one hand, it's inspiring to see upstarts like Netflix founder Reed Hastings on the list -- the "American Dream" and all that -- and beating out old-media tycoons like Sumner Redstone.

On the other hand, it's more depressing than inspiring when I think about the boneheaded way Netflix has been run the past few years.
AccountE01682
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AccountE01682,
User Rank: Light Beer
8/18/2015 | 10:33:07 AM
CEO Compensation or Industry Success?
There are huge differences between the media companies that provide content and the cable companies that deliver content and internet access to viewers. I'm not sure comparing Discovery, CBS or Fox to Time Warner or Suddenlink makes sense.

Also, looking at your own charts one can see that the majority of these executives' compensation comes not from their base salary, but from their incentive compensation. Take David Zaslav for example, sure $156 Million is a lot of money ($3M Salary, $153M Incentives), but when you consider he grew Discovery from $6B to $30B, $156M is a small price to pay for that kind of growth.

Interesting read overall, but I see it more as a comentary on the success of the Media and Cable industries as a whole.
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