Who needs the markets anyway?

The Cox family demonstrated today a power that few others in the telecom and cable industries have in the face of Wall Street demands. They offered to buy their company back (See story in Top News).

It helps that the controlling stake in Cox Communications is owned by the 23rd richest family in the world according to Forbes magazine. It's not like the descendants of Alexander Graham Bell are in a position to snap back the outstanding shares of AT&T and every other company descended from it when they take a beating on Wall Street. And perhaps that's for the best. Media companies are starting to revert back to their old baronial ways, having decided infusion of investment dollars that came with a stock ticker might not have been worth the trouble.

At least the Cox family has the good sense and decency to acknowledge it has to own the entirety of a company before it can do what it pleases with it. Look at Adelphia. The Rigas family can't even wait to buy back their outstanding shares to start running their companies like they still owned them outright. And the largest cable company Comcast is still firmly in the hands of its founding family, despite its ownership stake having been heavily diluted over the years.

It's unlikely that this kind of buyback will become a pattern. Some MSOs like Time Warner have become so thoroughly merged and meshed with other companies that there is no original owner to hand the company back to. But if it does continue, it can't be good be for the industry. The cable companies were able to expand, innovate and eventually compete with the telecom industry largely because of the investment of public dollars. Going private seems to indicate that the industry is reverting back to its old habits of running their companies like private fiefdoms and jealously guarding over their franchises.

Contact me at Kfitchard@primediabusiness.com