Iron Mike

Cable World,  Oct 10, 2005  

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Mike Pandzik took NCTC from his Kansas kitchen to cable powerhouse. As he steps down, the no-nonsense leader lays out priorities for his successor and predicts the co-op can double its sales volume in 5-10 years.

By John P. Ourand

Mike Pandzik awoke one morning in early August to find that for the first time in 20 years he had nowhere to go, having retired as president of the NCTC. But he's still close enough to the co-op to have strong feelings about its future.

As founding president of the National Cable TV Co-op, Mike Pandzik has been the group's face from the moment it launched in 1985 to this past Aug. 3, when he left his post. Executives inside and outside of the NCTC give Pandzik all the credit for growing it into a small-operator powerhouse that represents more subscribers than any MSO other than Comcast.

With more than 1,100 operators, representing 14 million subscribers, NCTC enables even the co-op's smallest members to get the same volume discounts on programming and equipment as their larger MSO cousins.

Of course, it wasn't easy. There was a time when just about everyone associated with the co-op thought the idea wouldn't work. Hired from HBO in 1985, Pandzik was unable to convince HBO--or other networks--to deal with small operators collectively. And it was tough to convince operators--beyond the original 12--to support the group.

NCTC hit bottom in the summer of 1986--just a year after Pandzik launched the co-op from his Kansas kitchen. Though he'd cut deals with several smaller networks, like The Weather Channel and the Christian Broadcasting Network, the co-op's bank account had dwindled from $145,000 to almost nothing. The problem was that Pandzik had to wait several months before money started flowing in from those initial programming deals.

That's when Pandzik went to the board and asked for a one-time assessment to save the co-op. The 12 member companies agreed to pitch in $1,200 to $1,500 each --a move that effectively saved the NCTC.

"That was the last time I ever had to go back to the board for more money," Pandzik says. "We've never had dues in almost 21 years. It's the closest thing to perpetual motion you'll ever see. You pay a one-time initiation fee to join and that's all you'll ever pay."

That didn't mean NCTC was out of the woods. It still wasn't able to convince bigger networks, like HBO and Showtime, to deal with the co-op. They preferred to deal with small operators individually rather than a bigger entity that could demand cheaper rates.

NCTC muddled through until it was able to get a clause inserted in the 1992 Cable Act that persuaded network groups to begin dealing with Pandzik's group. The clause effectively said that programmers could not unfairly negotiate with cable operators. Behind the scenes, several politicians twisted enough arms to get programmer holdouts to deal with the co-op.

Now sporting the size--if not the negotiating power--of the second- largest MSO, NCTC has support from operators and programmers. Small operators, in particular, are able to cut deals on programming and, now, equipment that they'd never be able to get on their own.

And programmers, for the most part, treat NCTC like a big MSO. Though some networks still don't deal with the co-op (such as Lifetime and USA), most other programmers offer NCTC discounts similar to bigger MSOs. It's not a coincidence that NCTC members pay the same rate for ESPN as Cox.

A few weeks after stepping down as NCTC president, Pandzik spoke with CableWORLD about his career and the co-op's future.

CW: What should be the top priorities for your replacement?

Mike Pandzik: The new person needs to continue to work with the American Cable Association and try and get retransmission consent fixed. He or she needs to keep trying to find lower-cost solutions so the smallest cable systems can become fully digital. Third, he or she should figure out a way to do video on demand across the breadth of the co-op.

The last big challenge is to take another shot at trying to figure out if regional master head-ends can work. The co-op represents about 8,000 cable systems in all 50 states and every U.S. territory. Almost every one of them has its own head-end. When you buy gasoline, they don't have a refinery out the back door. Why does every cable system have to have its own discrete head-end?

CW: Has there been any traction on this?

Pandzik: The head-end guys hate this kind of talk. Why not set up 12 or 15 or 20 master regional head-ends geographically spread out across the country that carry every service in that area? You could open up this whole area of advertising and sell it almost by ZIP code.

CW: How do you see the co-op evolving in the next five or 10 years?

Pandzik: The co-op is probably as big as it's going to get. It can probably double the sales volume with the business it's already got over the next five or 10 years if every member buys everything it needs for its systems through the co-op. A good example of possible growth is with motor vehicles. Our members are probably buying between 5,000 to 8,000 trucks per year. If you can figure out which buttons to push to get every member to buy their trucks through the co-op, you'd be one of the biggest buyers in the country. You can get prices down at the bottom. The phone companies haven't bought trucks locally in 40 or 50 years.