Cable One’s Might bumped to executive chairman, Laulis to CEO as surging MSO faces uncertain future

Cable One installer
Image: Cable One

With its stock price surging but its long-term prospects for continued growth and independence questionable, Cable One announced a major management shift.

Julie Laulis
Longtime CEO Thomas Might, who spearheaded the Phoenix MSO’s strategic downsizing and movement to prioritize residential and business broadband over TV and phone services, is being bumped up to the role of executive chairman.

Stepping into the CEO role will be Julie Laulis, a 17-year Cable One veteran, who moves up from the positions of president and COO.

The market responded favorably to the move, with Cable One stock up over 8% as of midday trading. The MSO, which was spun off from Graham Holdings (formerly the Washington Post Company) last year, has been on a tear lately with its stock price up over 7% since mid-November 2015 and currently trading at around $613 a share. 

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“I look forward to continuing to serve Cable One in the role of executive chairman, where I will focus more fully on strategy and business development, while continuing to lead our distinguished Board,” Might said in a statement. “I am proud after nearly 24 years as CEO to pass that baton to Julie, whose leadership, vision, energy and commitment to Cable One, our associates and our customers make her the natural choice to successfully take on this new role.”

Added Cable One board director Tom Gayner: “The board is very pleased to have such a capable, experienced and talented successor like Julie ready to lead Cable One, providing a seamless transition as the company executes its unique strategy to drive growth for the benefit of our investors, associates and customers.”

Might once again presented the Cable One business model to investors last week at UBS’ annual media and telecom conference, showcasing the MSO’s focus on operational efficiency and its de-emphasis on what it has deemed lower-margin business, video and phone. 

Notably, he pointed out, Cable One’s adjusted EBITDA minus capex for went up 28.2% year-over-year in the third quarter.

Cable One does have at least one notable critic in MoffettNathanson media analyst Craig Moffett, who has doubted the mid-sized cable company’s ability to sustain EBITDA growth, given the slow growth of its residential broadband subscriber base. Moffett thinks a lot of the performance is surface-based and attributable to rate increases.

“Obviously, Cable One’s premium valuation has nothing whatsoever to do with fundamentals,” Moffett told investors after Cable One’s third-quarter earnings report in early November.

In the bigger picture, the analyst has wondered if the investor exuberance over Cable One has more to do with investors hoping that Altice USA will buy the company. 

“But at some point, Altice is bidding against itself,” Moffett added. “There is no synergy target, no radical cost reduction surgery, no strategic re-alignment that makes Cable One’s share price (that 70 percent multiple premium to Comcast) make sense.”