George Bell has only been in his new position as president
of Excite@Home for about a week, but he already has some big ideas for the broadband
cable-modem service provider.
Excite@Home is the new corporate entity resulting from the
$6.7 billion merger between Internet portal Excite Inc. and @Home Networks. Bell had been
president of Excite for about three years; his experience includes a 10-year stint as a
writer and producer of television documentaries and six years as senior vice president at
Times Mirror Corp. While at Times Mirror, Bell also helped to launch the Outdoor Life
Network, a cable channel available to 10 million viewers.
So Bell isn't necessarily a cable outsider as he takes up
the day-to-day operations for the largest cable-modem service in the country. And he has
no intentions of sitting back and maintaining the status quo.
Bell has a three-part plan for Excite@Home: Growing the
Excite narrowband Internet service; boosting @Home's current subscriber base, and focusing
on new programming opportunities for @Home's @Media service.
Bell sees the Excite narrowband service, with more than 28
million regular users nationwide, as a key component of Excite@Home. And he plans to use
the narrowband network as a vehicle to drive increased subscriptions to the broadband
@Home service.
"What we're starting to do is develop direct-marketing
campaigns to use targeted e-mail to a subset of those 28 million registered Excite users
that happen to live in areas of the country where the cable operators partnered to @Home
have already built out the capacity to take @Home into their node," Bell said.
"We're starting to see the emergence of very large scale Web-based direct marketing
efforts, where the value of a user of Excite is being leveraged to create more qualified
and efficient ways of finding targeted subscribers to the @Home service. There's a huge
piece of synergy under way on a direct marketing sense."
EXCITE BRINGS EYEBALLS
Excite's narrowband service was seen by many analysts as a
key component of the @Home merger, mainly because the 28 million Excite users were seen as
potential @Home subscribers. And though the company could see a huge boost in subscribers,
there is also the potential that @Home could be biting off more than it can chew. However,
Bell says the company is taking great pains to target only users that are in areas where
the @Home service is currently available.
And though a rush of users could potentially slow down a
shared cable network, Bell said that is no longer a concern.
Past problems with sub-dialup download speeds in selected
markets were mainly caused by customers abusing the service, he said. And a deal the
company made in January with AT&T Corp. to create a nationwide Internet Protocol
backbone network should give Excite@Home more than enough capacity to handle many more
users.
The company will need that capacity. Bell and colleagues
have set a goal of reaching 1 million subscribers by the end of the year, or more than
doubling the current @Home subscriber base of 460,000 in North America. Bell said @Home is
well on track to meet that milestone.
Stephens Inc. analyst John Corcoran said the decision to
target existing Excite customers was expected and is a logical way to rapidly grow
Excite@Home's customer base.
"[Objectives] No. 1 and No. 2 are different flavors of
the same thing," Corcoran said. "The strategy has been to grow the distribution
footprint as quickly as possible and as large as possible. They have the information on
[Excite users], they know where they live, why not let [users] know they're coming on
stream so they can bargain up? It makes great sense and it shows the upside benefit to the
Excite acquisition -- accelerate broadband growth by selectively targeting narrowband
users."
ADDING BROADBAND CUSTOMERS
Bell said that growing the broadband base -- No. 2 on his
list -- is also a priority.
"In the merger we've been able to find some additional
dollars and additional focus in consumer marketing and direct marketing to assist in
growth of installations to the @Home residential business," Bell said. "So we've
got that underway. Dean Gilbert, who's been running all the @Home subscriber and cable
relationships around here for the last couple of years, continues to do that, and has been
given more ammo in terms of cash and assets from the company to make sure we meet and
exceed our subscriber target expectations."
Last but not least on Bell's things-to-do list is working
to bolster the company's dormant media product, called @Media.
"We're thinking through how the product, the media
product @Home used to offer called @Media, what does it do in a company that is now
together with Excite?" Bell said. "What is that start page for the @Home service
going to look like? That is something that we have our programming teams thinking through
and we've put all our programming folks in one group, too. So there's a head of
programming that is the head of programming for both our narrowband and broadband services
and we will have a lot more to say about that over with some articulation next couple of
months."
Corcoran said the @Media service could be a lucrative one
for Excite@Home.
"The content perspective is important so @Home does
not allow itself to become a commodity," Corcoran said. "Five years from now,
high-speed access alone will be a commodity and probably not a great business to be in.
But it could be a great business if the company has add-ons that are not commodities that
get people to want to use that service and come back to that service.
CONTENT IS KEY
Corcoran added: "@Media clearly is one of the
front-runners there. As broadband gains acceptance, people are going to want to do a lot
more with it than simply getting to Yahoo.com and getting to sports and news sites more
quickly."
Things like multi-player games need the ability to allow
multiple users to access the service from the same place at the same time.
"Their bread and butter is in rich media,"
Corcoran said. "Although people don't look at it as much of a revenue generator for
the company, @Media could be a few years from now he real differentiating factor, the
content side of the equation, for @Home. Ironically, @Media was sort of the step child of
@Home from the perspective of some investors."
Goldman Sachs & Co. Inc. cable analyst Lou Kerner
agreed that bolstering @Media could help Excite@Home in the long term.
"It's all about beefing up customers and beefing up
personal relationships," Kerner said. "@Home is building an on-ramp for people
to get on the Internet. The endgame is to keep people once they get on."
While there will be some changes for the new Excite@Home,
Bell said the company is striving to make them as seamless as possible, particularly in
the branding of the product. Bell said that the service's start page would be branded as
Excite, to take advantage of its more widely known name. But he added that as Excite's
users transfer to broadband, the changes the user sees would be negligible.
"You've got a lot of people that use [Excite] --
more than 80 million page views per day and more than 28 million registered users now
-- and we want to make it very easy for people to build their personal profile in
narrowband, but transfer it to broadband if they subscribe to the @Home service,"
Bell said. "We want to make a minimum number of changes in the brand and the
navigation that they see, so people feel comfortable in moving from one environment to
another. So you will see the Excite brand become the content or media brand of the @Home
access business."
Bell said he envisions the new structure to be like a
funnel, with the top, or widest end being the Excite narrowband business and the narrow
end being the @Home broadband access segment.
"Over time the top of the funnel should stay nice and
wide, but the bottom of the funnel really produces a higher margin climb for us because
we're really participating in the access revenue of that consumer and the media revenue of
that consumer through the Excite broadband start page," Bell said. "What we're
hoping is that over time we're moving more and more of our users into what is now the
narrow end of the funnel, because at the narrow end of the funnel we participate in more
diversified revenue and very nice margin."
SIGNING UP NEW AFFILIATES
But to exploit the full potential of the "bottom of
the funnel," Bell and Excite@Home are going to have to expand their existing markets
and enter new ones. And that means convincing cable operators not only to speed up their
upgrade plans, but also to sign on with Excite@Home.
Bell said he sees no problem on the operator front.
"Cable operators have plenty of incentives for reasons
that relate to their own businesses to get aggressive about the upgrades," Bell said.
"The dominant force is not going to be Excite@Home, it's probably going to be
capitalism."
Although he has only met with a few operators so far, Bell
hopes that he will not be considered an outsider to the industry.
Kerner, the Goldman Sachs analyst, said it really wouldn't
make a difference whether or not Bell is perceived as an outsider. As head of day-to-day
operations, Bell most likely won't have to deal directly with cable operators much anyway.
And besides, Excite@Home still has Jermoluk, who has been dealing closely with operators
for years and will continue to do so.
"They have a 'Mr. Inside' and a Mr. Outside'
management team," Kerner said.
Bell added that his strong track record in running a public
company -- Excite's revenue has grown more than 500-fold since 1994, from $293,000 in 1994
to $154 million in 1998 -- should help make up for any lack of cable operations
experience.
"I have a pretty strong operating history running a
public company," Bell said. "Companies are looking for more and more operational
strength to grow the business."
He added that in his past life with Times Mirror and
Excite, Bell has met with cable operators like former Tele-Communications Inc. chairman
and current chairman of Liberty Media Inc., John Malone, and Comcast Corp. president Brian
Roberts.
"A lot of the relationships aren't new to me, but I
have a different role to play in those relationships," Bell said. "I'm not a new
face. I do have a background in both programming and business side of their world, so the
language they speak and the way in which they do business is not new to me."
Bell spent his early career as a writer and producer of
documentaries -- he has four national Emmy Awards under his belt -- spending at least 100
nights a year "in tents in Third World countries chasing animals or going down rivers
or climbing up mountains," he said. And while that life was good for a bachelor, Bell
decided that it was time to look for a more stable form of employment, joining Times
Mirror in 1990. In 1995, Bell planned and orchestrated the launch of the Outdoor Life
Network.
Bell won't be on the job alone. He plans to work closely
with Excite@Home chairman and CEO Thomas Jermoluk. Bell said he has known Jermoluk for
several years, but only really began to know the former @Home Networks president when they
began negotiating to merge with Excite.
And though Bell said the two men differ in their management
styles, their objectives are the same: growing Excite@Home into the premiere high-speed
Internet company.
"I think we're different managers, I think our styles
are different, and I also think that's fine," Bell said. "I have found my
working relationship with Tom has been very good, because our styles of how we want to get
stuff done is very similar: We're very straightforward, leave the ego aside, get to the
point. How we operate day-to-day, I think we differ at that, but I think at a higher level
our objectives for the business merged really well."
