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Five Questions

Joseph E. Gibbs
Former President, The Golf Channel

In 1991, Joe Gibbs had an idea to create a 24/7 cable golf channel. At that time, as its co-founder, he was helping Crowley Cellular Telecommunications become the largest private cellular operator in the United States with assets valued at more than $300 million prior to its sale in 1994. In 1995, Gibbs' concept became a reality when The Golf Channel was launched in January 1995.

Shortly before retiring as President of The Golf Channel, Gibbs spoke with Golf Press Association publisher Alex Miceli about his dream and how it grew to where it is today, with more than 31 million subscribers worldwide.

Q.: Has your dream become a reality in regards to The Golf Channel, are you happy to see where it is today? Are you happy to leave it to someone else to be able to continue to carry on with what you started?

A.: Well, I think the answer to all of that is yes. I am very happy where the channel is today. It has been a dream. First thought of the idea in the spring of 1991, did research in the summer of 1991, and actually approached Arnold [Palmer] with the idea in October of 1991. Formed a company in November of 1991 and started working on a business plan in December. So it has been 10 years since I really started working on it earnestly. It has been everything that I conceptualized and dreamt about as I worked on the business plan with IMG. I worked with them for five or six months on the business plan as we laid out all the programs that we thought that could be on and what the viewership would like to see in the news. It's exactly what is there today -- with just very small change over the years.

It is where I had hoped to get it. It is very profitable. We've got a very sound company with over 300 employees and people here that have been trained and working with us for seven years in some cases, one employee for 10. It is exactly what I had hoped for and dreamt for, and I am very comfortable with the management team that we have been fortunate enough to put in place. I am very comfortable with the process, and I am very comfortable with moving on and letting other people take over.

Q.: At the beginning, any kind of company is difficult to get off the ground. I think The Golf Channel maybe even went through two kinds of starts before the second one took. Where do you believe you turned the corner, because the original plan was to have it as a subscription model that to some extent didn't pan out exactly as you wanted to, so then it ended up being changed with the cable companies. Is that where you believed you might have turned the corner or was it someplace else?

A.: There were probably several corners that we turned over the years. But that particular one you have to go back and look at what the circumstances were. When we were putting together the business plan and looking for funding, the cable industry had been regulated by the government. What that meant was that all their basic channels, they could only raise a certain percentage a year based on what the government allowed them to ... kind of like a utility. And the only unregulated revenue streams came from pay services. So as I got six of the top 11 cable companies behind me to launch this channel, they were all involved with that decision -- should we be basic, should we be pay. It was, you know, decided that a pay service was the way to go because all the basic services were regulated.

As we went into the summer of 1994, as we were building out our facilities, those regulations were changed by the government. So now you had a deregulated industry. So the basic service that's operating, been operating, they could now raise the rates as they felt the market would allow. Now they had additional incentive to try and sell a la carte pay services. They would much rather bundle several services together and sell them as one package. So it was decided by the board -- even though the regulations had changed several months before we actually went on the air -- to go ahead with the original plan and see how it worked. And at the very first board meeting that we launched in January 1995, I said we have been now talking to cable operators and we're not getting the reception we had hoped for because now things have changed. In March, I came back to another board meeting and I said I will be back to you in June with a new business plan to switch to basic and we did that.

In June the board approved it, in September we went to basic. That was only seven months after we had launched. So the decision was a sound decision under the old regulations. We tested it under the new regulations and that didn't work, so that's why we went to basic. So it was one of the significant things that we did over time, but there were others as well.

Q.: Can you talk about those?

A.: Well, funding obviously is very key in there -- probably four or five very significant events over a period from 1992 to 1996 where there were critical times that we had to have money to go forward. In each of those -- stories unto themselves -- the latest, the last one, was Fox putting in $50 million in the summer of 1996 for a third of the company, which aggregated to $150 million. And then even our existing cable operators at that time, Comcast, Continental, no one else -- they didn't want to put up anymore money. So they got Fox to do it, gave them a third of the company for it. Comcast five years later in the summer of 2001 bought that 33 percent, which had been diluted down to 30 back from Fox. Fox put in $50 million and Comcast bought it back for $365 million.

Q.: Looking at the channel today, if you could have done one thing differently to move the channel along, what would that have been?

A.: Well, I don't know that it -- that I could have done it differently, and I don't know that it necessarily would have moved the channel along, but if you reword that question a little bit and say 'If there is one thing that you would have done differently, what would it have been?' I would have tried harder for Arnold and I to have held on to more of the stock in the beginning so that we could have stayed in control of the channel long-term.

When we only had a minority position and Comcast got control by buying out the other stockholders, then the whole situation was different for us obviously. It's a great company. It's going to be a great company for a long time, and I guess if I had been able somehow to continue to own a majority of it long-term, I'd still be here the day I die just a wonderful company, it's a great bunch of people to be around.

Q.: Looking forward, since obviously you were the first one to do this in the golf arena, a multi-part question is A, is it possible for someone else to come in and start a similar channel today? Is that a possibility because of the amount of channels there are out there? And then B, where do you see The Golf Channel, let's say, ten years from now?

A.: I think anybody can start one. I don't think they would be successful and I think the reason for that is that there is only a certain amount of tournaments played in the world. I don't think you could have a successful Golf Channel without a pretty large percentage of your programming in tournaments. If you just try to do nothing but instruction or news or interviews, it probably would be a less compelling product than ours, which has 35 percent of its programming being live tournaments. So if somebody tried to start as a competitor, they would not be able to get those tournaments because there aren't any that somebody doesn't own, Either we or ESPN or USA or the networks, Fox, own everything of any significance. So I don't think -- plus you know, getting the cable operators to put you on might be very difficult. I mean it was difficult for us, but if they already have one of these why do they need two, why not put something on like food network or Home and Garden or something different.

So I think you would have a very difficult time getting the product put together and I think you would have a very difficult time getting the people, operation and industry support. I think because of that, there is very little chance that another channel would come on.

I think 10 years from now The Golf Channel will be equivalent to an ESPN. They will be distributed in 65, 75 million homes. We're already international in Canada and Japan. That will be added to greatly. I think if we want to grow other areas, if Comcast chooses to franchise the name into whatever it may be, hotels, golf courses, training facilities, whatever in golf that they want to branch out into, I think that they will have the menu here to do it with and I think the name is a great name, it's trademarked. I think there's tremendous upside for this company for the next 10 years and I think the talent is here to get it there.