Rocco Commisso darts around his office, gnawing a stick of nicotine gum and playing show-and-tell. “Look at the rates,” he says, holding up a plaque celebrating a $2.4 billion financing round from 2001, his cable firm’s largest ever. Up next are some personal keepsakes: a picture with fellow billionaire Charles Dolan, a golden telescope to take in views of the Catskill Mountains, a signed photo of Pelé, the Brazilian footballer. Every few minutes Commisso calls out to his assistant as if this tour is taking place against his will. “Jen, this guy wants to see all of my personal stuff!” he yells. Then he scans the room for another prize to trot out.
Forgive him the braggadocio. Commisso, 68, has risen farther than nearly anyone in America. The son of a penniless carpenter, he immigrated from Italy at age 12 unable to speak a word of English. A quirky talent for playing the accordion got him into Catholic school, the first step on a prosperous path that included stops at Columbia University and the Royal Bank of Canada before he founded his cable company, Mediacom, in 1995.
Mediacom focused on buying cable assets in rural areas, where prices were low and competition scant. The firm has increased its top line every year since its founding; revenue neared $1.9 billion in 2017. Commisso owns the company outright, and its value constitutes virtually his entire fortune. Thanks to a white-hot mergers-and-acquisitions market, the business is worth an estimated $4.3 billion—and Commisso, who makes his debut on Forbes ‘ Billionaires list this year, seems ready to cash out.
READ MORE: Forbes Billionaires: Meet The Richest People On The Planet
He founded Mediacom at a time of industry upheaval, when new federal regulations, which both restricted prices and increased competition, were scaring small cable operators into selling. As others jumped ship, he leveraged about $3 million—most of his small fortune—to start buying the cheapest cable lines available, concentrating on secondary markets in states like Iowa and Georgia. Even his offices are far off the beaten path: Mediacom HQ is in Chester, New York, a verdant speck of 12,000 people, 25 minutes from West Point.
Loading...
Commisso is as much a financier as he is a cable guy—he has an M.B.A. from Columbia and spent nine years as CFO of Cablevision Industries. Mediacom’s rapid growth was enabled by arbitraging differing perceptions of cable assets in the debt and equity markets. Banks, reassured by the sector’s predictable cash flows, were willing to lend at reasonable rates even as investors, spooked by regulation, were willing to sell cheaply. In his first five years in business, Commisso made more than 20 acquisitions. Mediacom at one point accumulated $3 billion in debt, over eight times operating cash flow.
Commisso admits he borrowed to the precipice of insolvency, but he stayed afloat by keeping an eagle eye on costs and by meticulously managing his debt. “You know, we watch the store,” he says.
But now the core business is changing. The broadband generation is increasingly cutting the cord and relying on online services like Hulu, Netflix and Amazon Prime Video to entertain themselves. Over the past ten years, the number of subscribers to Mediacom’s television offerings has plummeted 38% to 821,000. This is a faster rate of decline than the 3% the industry as a whole has suffered.
Mediacom’s woes in television are fueled, in part, by its success in broadband. Commisso has aggressively invested in tech upgrades; customers in places like Cecil, Georgia, enjoy Internet speeds on par with those in Seattle and San Francisco. Mediacom’s broadband subscriber base has increased 84% over the last decade, far outpacing the industry average of 54%—and many customers are using their lightning-fast connections to watch TV and movies online.
Hence the temptation for Commisso to cash out soon. In his mind, there is little left to prove. “In the history of Italian immigration, in the business world, I don’t think there’s another one like me in the last 100 years,” he says.
ROCCO COMMISSO GREW UP in Calabria, Italy, as the country reeled from its defeat in World War II. “We were losers,” he says. “Just like the Americans coming back from Vietnam, we came back as losers.” Commisso’s father, Giuseppe, served in North Africa during the war and was captured in 1942 by the British. He spent the remainder of the war in a POW camp in Kenya. When he returned home, work was scarce.
In 1956, Giuseppe sailed to the United States to start anew. “What a great country, America,” Rocco says. “Prisoners of war got preferential treatment to come here.” Rocco, meanwhile, stayed back in Italy with his mother and two sisters. In 1962, when he was 12, they joined his older brother and father in Baden, Pennsylvania, 10 miles from Joe Namath’s hometown. The family moved to the Bronx the following year.
From the outset, New York City brought good luck. Just after Commisso arrived, he spotted an ad for a talent competition. He entered as a solo accordion act and won, which led to a gig playing intermission music at the Wakefield Theatre on East 233rd Street in the Bronx. More important, it drew the attention of the Wakefield’s manager, who wrote a letter to a local Catholic school, Mount Saint Michael Academy, and got Commisso admitted without an entrance exam, which he had arrived too late to take. “I ended up being the only kid that ever got in without taking the test,” he says.
Commisso is now one of the largest benefactors of Mount Saint Michael. But back then he could barely afford to pay his own way. As a teenager he worked long hours at his brother’s diner to come up with the $300 annual tuition.
When college application time rolled around, Commisso again relied on a favor. His gym teacher called the soccer coach at Columbia University and told him about a promising student with good grades. Within a month, Commisso, who hadn’t even played soccer in high school, was accepted to the prestigious college with a full scholarship.
A natural athlete, Commisso had shown a knack for the sport in Italy under starkly different conditions: on cement, with a ball made of rags. That training somehow translated to the Ivy League turf. By his senior year he was co-captain of the varsity squad and was invited to try out for the 1972 Olympic team. The trials went terribly. Commisso arrived out of shape, with the lung strength of a smoker; the other players ran laps around him. Still, his legacy remains strong at Columbia, which named its soccer stadium for him in 2013, in recognition of the millions of dollars he has donated to the university.
After graduating in 1971, Commisso found work at a Pfizer plant in Brooklyn, a job he kept even after beginning an M.B.A. program at Columbia in 1974. Each day he rose at 7 a.m., attended class, then headed to the plant. At midnight, when his shift ended, he spent two hours on the subway getting home to the Bronx.
Commisso graduated with one of Columbia’s top honors, the Business School Service Award, and a plan to go into investment banking. But no offers came in. “There was discrimination,” he says. “I’ll never forget the guy from Kuhn Loeb telling me, ‘Rocco, you know what your problem is? You’re neither Jewish nor Irish. The Italians haven’t arrived on Wall Street.'”
So Commisso took a commercial banking job at Chase Manhattan Bank (now part of JPMorgan Chase). He later moved on to the Royal Bank of Canada, where he led lending to media and communications businesses. “I got attracted in banking to these types of guys and ladies,” he says. “We used to call them ‘the cowboys.’ The cable cowboys. Because they dressed differently than everybody, they talked differently than everybody—and they were entrepreneurs.”
In 1986 Commisso left banking to join one such cowboy—Alan Gerry, the founder of Cablevision—in Liberty, New York, a 50-minute drive from Mediacom’s headquarters. Commisso spent almost a decade as Gerry’s finance chief. “He’s one of the brightest guys I’ve ever known,” says Gerry, now 89 years old.
After the new regulations hit the industry in 1992, Gerry opted out, selling Cablevision to Time Warner for more than $3 billion in 1996. Commisso hated that decision. “This is a phenomenal time to buy as opposed to sell,” he recalls thinking. “And to prove it, I’m going to start my own company.”
Commisso poses at Mediacom HQ (Franco Vogt for Forbes)
COMMISSO’S OPTIMISM WAS NOT shared by his peers. That disparity only widened in 1996 when an additional batch of regulations brought new competition from telecom firms, like SBC Communications and Ameritech, that had previously been barred from the cable television space. “The fear was that the phone companies would enter the cable business and, with their stronger balance sheets and brand names, crush the cable companies,” says Craig Moffett, co-founder of the equity research firm MoffettNathanson.
That anxiety made it possible for Commisso to buy cable assets on the cheap, and he went all in. He bought his first network of cable lines, in rural Ridgecrest, California, for $18.8 million in 1996, using a loan from his old friends at Chase Manhattan.
The risk was extreme, and to outsiders Commisso might have seemed a loose cannon. He can be brash and domineering, his Calabrian accent amplifying heated bursts of profanity. But the banks trusted his background in finance.
After Ridgecrest, Commisso went on an acquisition spree, borrowing millions—then hundreds of millions—to buy up cable systems in Arizona, Delaware, Florida, Missouri, North Carolina, Mississippi and Alabama. He closed nine purchases in his first three years. “[I] was viewed as just a crazy buyer who’d buy anything that was for sale,” he says.
Commisso then invested heavily in infrastructure. To date he has spent $2.5 billion upgrading his networks, which has deterred other operators from entering his territory. Historically, Mediacom has instead fought for subscribers against satellite-television firms such as DirecTV. Phone companies, despite the early panic, never posed much of a menace.
By the end of the 1990s, gloomy forecasts for the sector had softened. Commisso seized on that and, with perfect timing, took Mediacom public on Nasdaq at a $2.5 billion valuation in February 2000, just weeks before the dot-com collapse. In all, he raised $380 million to pay down debt, and his Class B shares allowed him to retain majority voting control. “Nobody could kick me out,” he says.
The following July, Mediacom made its largest acquisition ever. After AT&T became strapped for cash, it put some of its cable assets on the market. Commisso snatched up properties in Georgia, Iowa and Missouri for $2.2 billion.
READ MORE: Richard Branson – The Shy Billionaire In Space
By late 2002, company debt had exploded to $3 billion. The banks wouldn’t lend another dime, and Commisso was forced to end his buying binge. “What saved us was not doing the next deal,” he says. “It was a great decision to buy when we did. It was an even better decision to stop when we did.”
Through shrewd balance-sheet management and frequent refinancing, Mediacom never missed a loan payment, allowing it to stay afloat until 2009, when it finally began producing enough cash to start paying down the principal debt.
Still, stockholders were not impressed. Mediacom’s share price fell nearly 80% in the decade following its IPO. By 2010, Commisso decided he’d had enough of the public markets. He moved to buy the company outright.
After tense negotiations and a shareholder lawsuit, he acquired the business in March 2011 for roughly $600 million, a 64% premium. Borrowing against the company’s assets, he became its sole owner.
Again, his timing could not have been better.
SINCE COMMISSO TOOK Mediacom private, the company’s value has skyrocketed sevenfold. The question now is when Commisso will lock in his gains and walk away.
The company is an attractive acquisition prospect for larger firms like Altice, which has scooped up several operators in the last several years, driving up valuations across the industry. Mediacom is the dominant broadband provider in much of its territory, and its new gigabit-speed service is on par with the fastest in the country. “For a large portion of their footprint, they’ve got a clear product advantage over their competitors,” says James Ratcliffe, managing director at Evercore ISI.
Commisso is coy about plans to sell but admits he’s taken multiple meetings with investment bankers in the past year. A man who made his fortune on the basis of good timing, he seems to concede that his work is largely finished. “Unless I’m here on earth just to become the biggest, the biggest, the biggest buffoon, I’m very happy with what we have accomplished,” he says. “I’m not Warren Buffett. I’m very content.” – Written by ,
Loading...