Media Critic

Veteran deal maker Leo Hindery says it's time to rethink the consolidation of the media and telecom industries.

As a key finance and operating executive in the telecommunications and media industries, Leo Hindery Jr. has worked for some of the most prominent CEOs in the country, including John Malone and Michael Armstrong. In fact, Hindery is as responsible as any kingpin for the consolidation that has taken place in media and telecom. No small thanks to the deals he helped execute, the two businesses are now often considered one.

But convergence has raised serious political and economic issues. Congress is now debating whether to reverse the Federal Communications Commission’s recent decision to allow further concentration of broadcast, radio, and print media ownership. Meanwhile, deregulation — which Hindery ardently championed in the 1990s — has encouraged overbuilding of fiber-optic networks and other infrastructure meant to carry content that shows no sign of materializing. One of the prime contributors to the capacity glut was Global Crossing Ltd., where Hindery served as CEO for seven months, in 2000.

Hindery lays much of the blame for the glut at the feet of lawmakers and the FCC for failing to anticipate such an outcome. But he also points a finger at management — for making rash deals without a strategic vision, and executing the deals badly.

Nowhere was the latter more apparent than in AT&T’s 2000 acquisition of MediaOne, a cable TV operator in key markets such as Atlanta, Boston, and Los Angeles. As CEO of AT&T Broadband, the company’s cable business (which has since been sold to Comcast), Hindery had much to do with that deal. And he has much to say about it today, both in his recent book about notable deal makers, The Biggest Game of All (Free Press, 2003), and in an interview he gave in May to Ronald Fink, deputy editor of CFO, at Hindery’s office in Manhattan’s Chrysler Building.

Hindery’s views of that transaction, and on the overall climate for telecom and media, help put into perspective certain challenges facing finance executives today in any industry. Indeed, the same short-term thinking that plagues many media and telecom combinations has diminished the viability of all sorts of companies. In Hindery’s view, the fundamental problem lies in a compensation system that encourages deal making for its own sake. But he says tactical mistakes have also fouled up many transactions.

Today, at 55, Hindery remains active in the deal-making game, as chairman and CEO of the Yankees Entertainment & Sports (YES) Network. He recently completed long negotiations with Cablevision to carry Yankee games in the New York City area, demonstrating his ability to work with arguably the toughest CEO of them all — George Steinbrenner.

What do you think of the FCC’s decision to lift existing limits on further consolidation in the media industry?

In this environment, you need more regulation than we have today, not less. When we had hundreds of cable companies and programming was scattered all over the country and markets were shared among multiple companies, nobody could really get too out of control. But now you have a world where, from a cable perspective, each of the core markets in the United States is wholly owned by a single operator. Five years ago there were nine operators in the Bay Area; today there’s one.

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