Interview Date: July 30, 2018
Interviewer: Lela Cocoros
Audio Only
Abstract
Robert Gessner describes the history of his cable system, MCTV (Massillon Cable TV), from its founding until the late 1980s–the original owners, the slow and steady growth, acquisition of the first earth station, and the first satellite signals. Katherine Gessner talks about her own start with MCTV. Robert then describes his father’s philosophy for success, and how that influenced him. He goes on to note the influences from colleagues in the independent industry who are involved with NCTC and ACA, and believed strongly in ethics and their local communities. Both Katherine and Robert give examples of how the industry is unique and collaborative. They report on the demographics of their subscriber base, and the main challenge for their company is economic development within their community, and the challenge of building a larger customer base. Katherine notes the current offerings of services to customers, including over-the-top, streaming, and smart home services. She hopes that new technologies will let them offer content in new and different ways. Robert then comments on the division between operators and what they focus on as services to their customers. He states the critical importance of offering the best customer service policy and offerings as well as making clear that’s what their company intends to do. In response to a question about the legacy of the industry, Katherine answers that it is her belief it is due to the technology of the C5 connector cable. (Category 5 refers to a cable connector that can carry Ethernet data as well as telephone and video.) She states that the Facebook and Apple entrepreneurs essentially stand on the shoulders of the original cable TV entrepreneurs. Robert talks about the building of the Internet, cable’s role and how the advent of charging for premium movie channels provided the resources and incentive to become an Internet platform. As well, he addresses the issue of customers’ dissatisfaction with paying for cable, but compares that to what happens in the technology industry. Katherine then comments on how cable systems treat failure, and how the industry collaborates to solve the problems.
Robert describes a particularly distressing issue involving the Fox News network. They both conclude with thoughts about what it is like to work in a family business, and how issues get resolved, including succession.
Interview Transcript
LELA COCOROS: Hi, I’m Lela Cocoros and today is July 30, 2018. I’m at the Disneyland Hotel during the Independent Cable Show. Today we are sitting down with Bob Gessner, who’s President of MCTV, and his daughter, Katherine Gessner, who is Director of Strategic Planning and Policy for MCTV. Good afternoon, thank you for joining us.
BOB GESSNER: Thanks for having us.
KATHERINE GESSNER: Thanks for having us.
COCOROS: So let’s start a little bit with the history of your career in the cable industry, Bob. And just a little bit of the history of MCTV.
BOB GESSNER: Sure. MCTV was started—it was called Massillon Cable TV when it was first started in 1965, 1966, by my mother, Susan, and my father, Richard, in my mother’s hometown of Massillon, Ohio. It really was predominantly owned by my parents and 100 or so local investors, little bits and pieces. Built the system in the city, organic growth through the 60s into the late 70s, growing at maybe 1,000 customers a year, but slow and steady growth. In 1978-79, my father finally said, “Hey, I’m going to buy one of those satellite things.” They bought their first 5-meter earth station. I’ll never forget; my wife and I had just moved from Minneapolis to Detroit and closed on our first house in October of 1978. I called my parents to say, “Congratulate us. We bought our first house.” And my father said, “Great. How fast can you sell it? Come home. I want you to start work at the cable company.” And I had told him when I was still in early college years that someday I would like to come back and work in the family business, but obviously in the late 70s, there really wasn’t much to do unless you wanted to climb poles. So starting in early 1979, I came home. We had our first computer system, started computerized billing, had our first earth station to launch our first non-broadcast signals. So starting in 1979, that was my sort of marketing role and over time, we just kept pace with the rest of the industry, purchased one other system. Once you get into the 90s, the whole world changes.
COCOROS: And also, even just in the 70s, those late 70s, that’s when ESPN launched and that was when CNN launched and MTV in 1981. So you were really probably right at that wave, ready to ride it.
BOB GESSNER: Actually, the first three signals we added, first three satellite signals were HBO, WTBS, and UPI slow-scan news, which was literally just—
COCOROS: Text, right?
BOB GESSNER: Picture-scanning across, very slow scan, with a caption below it. That was huge, you know. Obviously from there through the 80s, we followed the industry by launching lots of networks, first adding set-top boxes and then addressable set-top boxes and two-way addressable set-top boxes. And we fought the battles on programming and you have a big basic tier, a small basic tier. We’ve kept pace. I describe us as a “tweener.” I think I probably did that in 2011 as well. We’re the largest of the small, or the smallest of the large, which gives us some, I think, some really good advantages. I think we’ve capitalized on those.
COCOROS: Great. Katherine, what about you? How did you get into the business, the family business?
KATHERINE GESSNER: Well, it was somewhat the same, but pretty different, too, I think like my dad I was always interested in the business, so it was sort of a natural progression for me. He did it a little bit differently, inviting me back to work for the company, in that I had a five-year plan. So after college, I was working in a totally different industry and he said, “If you want to come back, you’ve got to go get your MBA, and then go work somewhere else for a couple years. Then you can come back after you sort of earned your credentials, earned your chops somewhere else.” So I did that. I moved to Denver, I got my MBA from the Daniels College of Business at the University of Denver. I stayed out there for a couple years working, and then came back in 2013. So I’ve been back about five years. It’s been great ever since.
COCOROS: So you’ve enjoyed it.
KATHERINE GESSNER: Yes, it’s a lot of fun.
COCOROS: I’m glad to hear it.
So tell me a little bit about just the people in the industry who’ve influenced you, both of you. Bob, we’ll start with you.
BOB GESSNER: Well, obviously my father was a very big influence in terms of ethics—being an honest, ethical person and business person. Also a great influence on the local community front, to be a contributing member of our community. But also, sort of the philosophy of success. He really believed in a quality of life; that was important. And getting bigger just to be bigger wasn’t going to improve your quality of life if you’re the person that’s flying off to these little tiny systems all around the country. That wasn’t his idea of a quality of life. So that was a big influence.
I have to say I think I was influenced quite a bit by my contemporaries, probably going back twenty-plus years ago, when I started to become involved with the NCTC [National Cable Television Cooperative] and the ACA [American Cable Association]. Because that’s when I really started to have a lot more exposure to the rest of the independent industry.
We are in Ohio. We went through the consolidation of the industry pretty early. And Time Warner basically owns the whole state. So there are very few other systems to interact with. But once I became involved more with the NCTC and the ACA, I started to meet people like the Gleasons and Ben Hooks and Mike Pandzik and Matt Polka. And again, I saw a lot of the same things: people who were highly ethical, very dedicated to their jobs with a real community attitude.
COCOROS: Katherine, you graduated from the Daniels College of Business, so that’s one of our great pioneers, but is there anybody who you’ve kind of learned about or learned from at this point?
KATHERINE GESSNER: There are so many people in the industry and it’s such a friendly and welcoming industry, which is pretty unique. Our sales and marketing director came from the agency world and she was flabbergasted when I said, “Hey, we’re going to go to this CTAM [Cable & Telecommunications Association for Marketing] event and share all this information.” She said, “What? We would never do that anywhere else.” So I think its such a cool industry. I think everybody that I’ve worked with in the industry is just so helpful and welcoming. I interned at WOW! for a short time when I was in grad school and working with Colleen [Abdoulah] and Cathy Kuo and all the folks there. They were just so amazing and just on it with customer service and customer experience, and were so welcoming to me and really helped me learn about that culture. That’s been huge, but really, it’s any industry event, I think, influences you and people you meet and the people you talk to. It’s really one big family.
BOB GESSNER: I think one of the largest influences—and I sort of count myself among those influencers—is this group that started twelve years ago or more. I was on the NCTC board. We’d have our quarterly meetings and a couple times a year, we’d meet in Kansas City, always at the same hotel, and it was the same group sitting down in this little Japanese restaurant before the meeting every year. And as we got to know each other and share our experiences, we all said, “This is probably the most productive event of the whole year.” And eventually we formalized that and since then, we’ve probably met 25 times. We meet twice a year. We have NDAs and non-competes and we share information about everything: our finances, our operations, our marketing, our HR, sort of our philosophy and our goals and so forth. That’s probably been one of the biggest influences on how all of us conduct our business. We visit one another, and it’s really helped a lot of us to improve our businesses. One example is one of my employees started a little company called “SubscriberWise,” which is an analytics-based credit qualification service. We knew that it worked for us. And we proved it in our group meetings by saying, “Take a look at our bad debt. If everybody is at 2%, we’re at .2%.” And pretty quickly, everybody’s using that service. And everybody benefited from it. We do the same things with other metrics and ways to improve our business, whether it’s customer service or human relations or employee relations or marketing. It’s amazing. I don’t think you’d find that in any other industry.
COCOROS: No, I don’t think you would.
BOB GESSNER: But then again, none of us compete directly with the other. We organize the group so there’s never any overlap, so there’s never any question about price-fixing or collusion or market formations.
COCOROS: Interesting, really interesting.
BOB GESSNER: It’s a great group.
COCOROS: It’s like a best-kept secret. That’s terrific. And Katherine, I know you were, you’ve been participating in the C5 [Cable Center Customer Centric Consortium] at the Cable Center.
KATHERINE GESSNER: We do that, and we’re also members of CTAM, so we participate in the Cable Mover program as well. It’s interesting because those groups are similar in that we’re all sharing information, but it’s amazing with a midsize group, the amount of trust that has developed over the years, that there’s no posturing or, “oh, we can’t talk about this,” or anything like that. Everyone’s really open, which I think is so different than any of the other groups.
COCOROS: So how would either or you describe the difference between serving a small community and kind of a larger market, and what are the challenges and opportunities that you face?
BOB GESSNER: Never having done that, it’s hard to compare. But from seeing people in a small company, I think one of the biggest differences is a lack of—Katherine doesn’t like this too much—but sort of a lack of formal planning. We’re trying to change that as our organization has grown larger, but we’re still very much little if any budgeting, and if somebody has a good idea, we ask, “Do we have enough money to do that? Sure. Let’s go. And if it doesn’t work, we’ll try
something else.” I don’t think you find that in the larger corporate structure where everything goes up four or five levels and comes back four or five levels and it’s not your idea anymore, but you’re still responsible for doing it for half the price.
COCOROS: Very well said. So what are some of the challenges you’re facing these days?
KATHERINE GESSNER: In terms of our customer base and the communities we serve, it’s an older demographic, and lower on the income scale. They’re a little more economically depressed than large urban areas. So it’s really tough to get them to buy more or even sign up for service because it’s so expensive. So we really do struggle there a little bit. I think, too, we’re sort of landlocked in that we’re surrounded by Spectrum, so we can’t necessarily expand as easily as some of the larger companies, or companies operating in urban areas. They have that natural expansion within because they’re building more apartments, or they’re just edging out. We can’t do that, so we’re somewhat limited from that respect.
BOB GESSNER: I was going to say the same thing. That’s probably our greatest challenge right now. It’s economic development within our communities. And I don’t think it’s unique to us. I mentioned this at our ACA board meeting yesterday. Most of our member companies are smaller, a little distant, and ours may be different in that we were heavily manufacturing—we were heavy industry, steel production and all those manufacturing jobs are gone. And they went to China. OK, that’s fine. But I look toward the future now and see that we’re starting to lose our retail economy as well. It’s going online. If the people in our community aren’t able to work in retail, where are they going to work? How are they going to have the money to buy things online? The same thing is sort of threatening with the service economy. It’s going from a service economy to a sharing economy. And again, not as much money. So where are young people looking to live, work and play? It’s in the centers of technology or education or government or so forth, and that’s not us. So what happens to the small and midsize operators in general when suddenly there’s no manufacturing economy or service economy and no retail economy. It’s going to be a difficult challenge, so as I look at my retirement, I’m becoming much more active in economic development and trying to find ways to attract industry and commerce to our community, so we can build a customer base.
COCOROS: Makes sense. Makes a lot of sense.
So where do you think the industry in terms of kind of where it’s headed, and how the smaller cable operators fit into that picture?
KATHERINE GESSNER: That’s a tough question. Definitely Internet is the future for any size operator, but it’s also figuring out to provide more services to the customer through that pipe. Be it over-the-top services, streaming services, smart home services—it’s just trying to figure out how to do that and be the pipe into the home that lets the customer get what they want as opposed to shoving products down their throat. So I think on the programming side, I think we’re just riding the wave and hopefully there are a lot of new technologies out there that will let us offer content in new and different ways to customers.
BOB GESSNER: I think one of the challenges we have as we face a future with different television is keeping our customers. And I’ve made this comment to a couple other people. You see this big difference between—among operators. At one end of the spectrum are people who say, “I absolutely positively must have this robust, complete television lineup.” And others who say, “If it goes away, I don’t care.” How can we be so different? And as I’ve looked at it, I’ve reached the theory that an MVPD’s [multichannel video programming distributor] interest in television is directly related to their competitor’s broadband quality. So that somebody who says that they absolutely positively must have a robust TV platform has a strong Internet competitor. And if they do something to screw up their television service, the customer is going to take their TV and their Internet and go to somebody else and you’ve lost them all. At the other end of the spectrum, if you don’t have an Internet competitor with a good product, your television service goes away; it goes to DirecTV. But you still have the broadband customer.
So we’ve got that difference there and what we feel about television depends on where you are in that spectrum. But in general, I think the small and midsize cable operators that I know and work with well have found that as long as you continue, as we saw in the sessions today—I don’t know if you had the opportunity to see them—some really great advice there about broadband and systems in general. If you keep making the investment, kind of regardless of the size, as long as you are the best provider with the best pipe and the best customer service quality, you’re going to continue to prosper. At least that’s our hope; that’s what we’re planning to do.
COCOROS: And that personalized connection you have with your customers becomes all the more important.
BOB GESSNER: Correct.
COCOROS: So what do you think the enduring legacy of the cable system, cable industry, will be? Just kind of looking ahead a little bit.
KATHERINE GESSNER: I’ll probably be stealing it from the Cable Center, but someone was just talking about it. I think it was C5. That if you look at the cable industry now, the people that really started it are a bunch of old guys. So people look at the industry and say, “Oh, it’s all these old guys. They’re boring. We’ve over them. We like Mark Zuckerberg, we like Steve Jobs, we like all these cool young kids that wear hoodies to work every day.” It’s because of the old cable cowboys that this new group has risen up, and I think if we can tell that story, that is the connection, that is the legacy of the industry that without it, we wouldn’t have Facebook or iPhones or any of the technology that we have today.
COCOROS: That’s a good point.
BOB GESSNER: The platform being built is a remarkable story. You think about the first systems, they were built by men who owned the local appliance store and they wanted to sell televisions. The Walson family. “I need an antenna at my appliance store, so I can sell televisions instead of just radios.” And I like to think the legacy of the cable industry will be being recognized for constant innovation and that sort of scrappy inventiveness that just makes stuff work. You try something, it didn’t work, OK, let’s try something else. And it is very, I guess, Ayn Rand in that whole concept of “Atlas Shrugged.” You know, that entrepreneurs will always keep working to overcome adversity. That’s the small cable industry. Whether we do it with our own money or private equity, we just keep going.
It’s interesting. I’ve said this to other people before, that I think—what’s interesting is that the legacy of the content industry is that the profits from the content industry built the Internet, because the cable industry could not have built the Internet in the 70s because we were charging six dollars a month for service. It was only the advent of that $40 and $50 and $60 bundle and premium movie channels that gave us the profits and the incentive really to build a two-way plant that then DOCSIS [Data Over Cable Service Interface Specification] could capitalize on and become an Internet platform.
COCOROS: That whole entrepreneurial “let’s try this and see if it works” type of mentality is really analogous to the Silicon Valley and kind of what is happening with all the startups these days. And every major city seems to be focused on “let’s get a tech hub going,” if there isn’t one already.
BOB GESSNER: And the difference is I’ll say we’ve been vilified because we want people to pay for it. Whereas the tech industry has found a different way to make people pay for it, and that’s by using and selling their data in ways they don’t realize. They’re paying for it through higher prices or greater purchasing or, I guess, intrusion into their lives when it comes to their privacy.
COCOROS: Very good point.
KATHERINE GESSNER: And I think, too, the difference too when you look at Silicon Valley as opposed to the cable industry, we may try something that failed miserably, and then another operator reaches out to us and says, “Hey, you guys were just doing X. How did it work? What happened?” Wherein in other industries, and especially in the tech industry, that’s not going to happen.
COCOROS: No.
KATHERINE GESSNER: Ten companies are going to try and fail at the same thing where this is such a collaborative industry that two companies may fail and the third will learn from that and succeed.
COCOROS: Bob, do you have any stories about the, just in your career, that are particularly important to you, funny, learning moments—
BOB GESSNER: There are a lot…
COCOROS: I’m sure there are a lot…
KATHERINE GESSNER: You should ask our employees first. Have them enter their favorite Bob story.
BOB GESSNER: The ones I probably remember the most are the ones that were more painful. And it was classic battles with people like Fox, where they shut off—we had been carrying Fox News on a tier and we were required to move it to basic. We didn’t do it fast enough and they weren’t going to pay me my marketing dollars. So without any warning, they shut us off.
COCOROS: Oh, my gosh.
BOB GESSNER: And they wouldn’t even tell our headend technician that they had shut us off. So we thought there was some satellite problem. That was probably a two-week battle. And I think I really irritated Roger Ailes. Not that I’d ever met him, but in taking a jab at them. Somebody asked me, from the trade press, “What’s been the response by your customers?” And I downplayed it by saying, “You know, it really hasn’t been that difficult. I’m not sure that many people were watching.” Roger Ailes, I heard later, was really angry about that, and said, “We’re going to show them.” They were taking out full-page ads in the local newspaper and somebody called me—the paper screwed up, and they called me to approve the ad. And I said, “That’s not my ad. You’ll have to get somebody else to approve it, but I will buy an ad, full-page, opposite theirs every time it runs. Theirs is black, mine is white.” We battled like that for weeks at a time. I know it bothered them because I actually figured out who their VP of communications was, and I gave my customers their FAX, at that time, I gave them the FAX number, I gave them the phone number. I said, “Have them call Fox and tell them to turn them back on.” And they actually had to hire four people to answer their phones from the response we generated. That was quite an interesting time.
COCOROS: Getting a lot of calls from Ohio.
KATHERINE GESSNER: It’s impressive that you found the information without the Internet.
BOB GESSNER: That’s right. That was back in the, it was probably the early 90s that we did that.
But there are so many just wonderful people in our industry that do so many sorts of courageous and interesting things, that I’m not sure I would even know where to start about a favorite story.
It’s very interesting; I’ll tell you about how small the industry is. This may be my most favorite story. My father started in 1960. He was working at a TV station in New York and he was working for Paul Harron, Sr. Paul Harron was the boss, and my father got franchises for him, which led to the franchise in Massillon. They parted ways and off we went. It was sometime in the early 90s that I was visiting a system up in New England and a young man came up to me and said, “Hi, we should know each other.” I said, “Sorry—I’ve never seen you before.” And he said, “My name is Jim Bruder. Paul Harron was my grandfather.” We’d come back together after all these years and we were working together and of course, Jim and I have been friends ever since. We’ve served on boards together. It just shows how wonderful the industry can be. That was fifty years ago that Dad and his grandfather worked together and now Jim and I have the opportunity to work together as well.
COCOROS: That’s wonderful.
BOB GESSNER: It’s very gratifying. Great friendships there.
COCOROS: So speaking of families, what’s it like to work with family members? I have never done it myself. There are so many examples in the cable industry, right, that obviously it works pretty well with several families, yours included, it looks like. What are the dynamics?
KATHERINE GESSNER: It can go really badly or it can go really well. I think our family is really lucky that it’s gone well. There’s a fine line when you’re working with family between your work life and your personal life, so it’s being able to find that separation. But also understand that we’re probably going to talk about work at some point on Christmas and somebody’s going to probably ask me if I want to come over for dinner on Sunday night while I’m at work. So it’s finding that balance and understanding that. And it’s also not letting the family dynamics bleed into the work environment and sort of bringing employees into that because you want your employees to see you as a united front. That can be kind of weird. But I think for us it’s worked pretty well.
COCOROS: Sure looks like it.
BOB GESSNER: I’ve started watching “Succession” on HBO.
COCOROS: Oh, yes.
BOB GESSNER: Which is obviously fictional but boy, you see the completely dysfunctional fighting families. And I know that exists in the cable industry. I give my mother a lot of credit and I’ll say, she is every bit as much—deserves every bit as much credit for starting the company and making it work as my father. Because she is an absolute super-hero. And I wish she were here to engage in this as well. She really set the rules when I first came back to Massillon in April of 1979. She sat my father and me down and she said, “I know you two are going to work together, but I just want to make sure that you continue to have the good father-son relationship you have now and you’re not going to fight about things.” And that really set the tone. I have to say that throughout my entire career working with my father, we never really had—I’m sure we disagreed—but we never had a disagreement where we got upset with each other and so forth. There were plenty of times when he would say, “Because I said so, that’s why” or “Because it’s mine and I say so.” But that’s where you learn the boundaries and the limits. And it was his company, and that’s the way he wanted to do it, so that’s what you do.
But Katherine’s right. You have to sort of find your way through and set those boundaries. I would say that probably the biggest advantage of a family business that works is that you have complete faith that the people you’re working with are working in the best interests of the company or the family. And you don’t have to worry about ulterior motives—this is a non-family person, are they trying to start their own business, or whatever. With family, if it’s working well, you know you can trust them, and it cuts through a lot of crap.
KATHERINE GESSNER: It helps us too that we have a very small family, and there aren’t a lot of—when my grandpa started it, it was he and my grandmother, there were three children and now there are three grandchildren. So there aren’t lots of cousins or lots of family members out there that are saying, “Oh, well, I want a cut,” or “I want to work here with my art degree that has nothing to do with the industry.” So I think we’re really lucky in that respect that we’ve done a good job of making sure expectations are set for family members that want to work in the company, and you don’t have those competing interests.
BOB GESSNER: Back in, gosh, I think it was in the 90s, I was fortunate enough to have a great professor at Case Western Reserve, who was teaching an executive course and really worked on family business succession planning and so forth. And there really are some best practices,not for cable but for any family business, that you have to follow; those best practices in terms of succession and hiring and so forth. And if you follow those, it’s going to work a lot better. That informed a lot of the agreement that Katherine and I had with how she was going to come to work for the company, and what’s going to happen when I retire, and she takes over, leading her generation and so forth. It’s not a formula, but it’s certainly a good set of best practices.
COCOROS: Well, that sounds really like great advice.
BOB GESSNER: It is. But it’s so hard, though. What if you had a child who really wasn’t cutting it, but they say, “I really want to work here, and I really want to take care of the family business?” How do you tell them, “I’m sorry.” You know, it’s tough, it’s really hard. But it’s for the better interests of the family or the better interests of the company, and you have to think about all those employees and you think about your community members and the good that you do. I feel very fortunate that I haven’t had to say it to Katherine, yet.
COCOROS: Something tells me you won’t have to.
BOB GESSNER: I don’t think so.
KATHERINE GESSNER: I hope not.
BOB GESSNER: Nope.
COCOROS: Well, thank you very much for your time. Is there anything else you’d like to add or just looking forward to the future?
KATHERINE GESSNER: Yes, just trying to take it one day at a time, one step at a time.
BOB GESSNER: I’m looking forward to Katherine taking over in less than a year and sort of finding a new role in the community and in the family. The more I give her to do, the more comfortable I am with giving her more. I’m very pleased with the change in generations, and I’m really pleased for two reasons. One, because the family business, I think, is going to continue very successfully. I’m also really pleased that she can start to take more of a leadership role in an industry that has traditionally been male-dominated. And I think she’ll do a great job as hopefully an industry leader to show the way for other young women.
COCOROS: Wonderful. Thank you both for joining us.
KATHERINE GESSNER: Thank you.
BOB GESSNER: Thank you.
