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Showdown in Bristol County

There are only two major north-south roads that run through Bristol County, R.I., a couple of peninsulas that extend into Narragansett Bay between Providence and Newport. Route 114 traverses through Barrington, the county's most prosperous town; Route 136, which cuts through the old manufacturing and industrial zones, is lined with a hodgepodge of strip malls, small businesses and residences.

Anyone who has ever strung cable - or who's followed the multiyear saga of Cox Communications' overbuild of Full Channel TV - would immediately take note of the telephone poles that march along the sides of Route 136. The indelible stamp of Cox's overbuild of the local cable operator is strung on these poles, some of which had to be reinforced in order to hold the weight of the wires.

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The lowest line or two always belong to the phone company, in this case Verizon. Above that are the aerial lines of Full Channel's plant, which was rebuilt starting in 2000 to accommodate digital video and high-speed data. Strung directly above Full Channel's wires is Cox's new plant's line, installed in 2001.

The MSO's top-tier position on all those Bristol County telephone poles is not without significance - or conflict. Just one year after it started offering service here, Cox has already netted 3,100 video customers while Full Channel has lost 1,400. At this rate, things could get bad for Full Channel in a hurry.

That's where the conflict comes in. And make no mistake, there is plenty of that.

For Cox, the fourth-largest MSO with a virtual lock on the state, moving into Bristol County furthers its business plan to have a contiguous system throughout all of Rhode Island; for John Donofrio, Full Channel's founder and president, the overbuild may be his worst nightmare come true. Tensions have risen to such levels here that people on both sides have resorted to flinging charges of sabotage. Both Donofrio and his system manager, Mike Davis, say their wires have been cut and their circuit breakers broken. A pair of Cox contractors working on lines in the town of Warren relate mysterious stories of downed Cox cable plant.

Not quite the warm-hearted splendor one might expect from the likes of this otherwise bucolic New England locale.

Donofrio could have avoided all this. In late 1999, Cox CEO Jim Robbins approached him about buying the cable system he'd launched in 1984. The two met twice by Donofrio's account, the first time over lunch at a Providence restaurant, where Robbins sought to gauge Donofrio's interest. He was indeed drawn to selling his small company to the much larger one, or at least seeing what price it might fetch, and so the two men left the eatery agreeing to talk further. Donofrio also agreed to provide Robbins with a financial breakdown of his company so that Robbins could bone up on Full Channel's operations and begin thinking about a price. The next time the two men met was over dinner in Palm Beach. Robbins, says Donofrio, having gone over Full Channel's financials, spoke of how poorly the system was operating.

"He gave me a lot of negative reasons why he shouldn't pay a market value," Donofrio recalls.

It was at this point that Donofrio brought in a broker at CEA to handle the negotiations for him. However, a full year after that first lunch meeting in Providence, Cox still hadn't budged from its original offer. Neither side will divulge what the offer was, though press reports have pegged it (perhaps too generously) at $2,000 per subscriber, or roughly $24 million.

Not only did Donofrio refuse to sell his then 12,000-subscriber system, he upgraded it, eventually spending some $6 million to do so. After Cox's New England division decided to forge ahead in the county on its own, Donofrio went on a crusade to stop Cox in its tracks. He charged the MSO with skirting local cable laws, urged regulators to investigate its compliance with state rules, filed a couple of lawsuits and publicly derided the bigger company by painting it as the fat cat interloper bent on crushing an established local business. This despite the fact that both Cox and Full Channel were among the state's nine original cable franchisees.

He also may have gone out of his way to antagonize Robbins. In a handwritten letter faxed to Cox's CEO, dated Oct. 3, 2000, Donofrio promised to "ask potentially embarrassing questions during the discovery process" as Cox sought regulatory approval to operate in Bristol County. He ended by urging Robbins to contact him if Cox had "any desire to revisit or rejuvenate our purchase/sales discussions."

But at that point, it appears, Robbins had had enough, and on Oct. 9, he wrote back to Donofrio. Robbins wrote of being "disappointed" in Donofrio's letter, particularly "its tenor and the thinly veiled threat to retaliate against Cox for not purchasing Full Channel." Robbins also made quite clear his intentions in Bristol County, stating that "a build out makes good sense" for Cox. "Therefore," he added, "we plan to continue with efforts to seek a license to serve those areas."

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Showdown in Bristol County

Cable World, March 10, 2003

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