In 1975, buying a cable company didn’t look like a smart investment. The industry faced a construction slowdown, regulatory barriers and other hurdles. Many believed cable TV had little future. CommScope, then a small product line within Superior Cable, reflected those challenges. The business generated about $10 million in annual sales, was losing about $500,000 a year and had become the last remaining division after Superior sold off its other businesses. Continental Telephone, Superior’s parent company, even considered liquidating it.
Over the previous 2½ years, Frank Drendel had helped liquidate Superior Cable’s businesses until only CommScope remained. By then, he was struggling financially himself. A previous investment tied to Time Warner stock had gone badly, leaving him without a job and owing money to the bank. Still, when no buyer emerged for CommScope, Frank began looking for a way to buy it.
He and Chief Financial Officer Jearld Leonhardt estimated they’d need $5 million. They believed they could borrow about $4 million against the company’s assets, leaving another $1 million to raise from investors.
Frank turned to local businesspeople who knew him. George Hutton committed $150,000, giving Frank an early investor as he worked to raise the $1 million in equity. Other local investors joined the effort. Large banks turned him down, but Great Northwestern Bank in North Wilkesboro, N.C., helped put the financing together.
A higher bid
After months of raising capital, Frank and his investors had the financing to make an offer. Then the group that had bought Superior Cable made a competing bid for CommScope.
The group’s offer was $600,000 better than Frank’s. According to Frank, the group wanted the manufacturing plant for a twisted-pair operation and planned to get out of the coaxial cable business. Frank had already stretched his financing as far as it would go and couldn’t raise another $600,000.
Frank told Continental executives Charles Wohlstetter and Jim Napier to take the better offer. Continental was a public company, and he believed they owed it to their shareholders to accept the best deal. Frank assumed his chance to buy CommScope was over.
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An unlikely offer
Charles and Jim had another idea. Frank recalled them offering to carry a note for “$600,000 and a dollar,” telling him, “’You’ve always been straight with us.’”
The words had particular meaning for Frank. His father had taught him that the only way to survive in business was to tell the truth, and Frank followed that advice in his dealings with Continental. Now that reputation helped him close the gap. With Continental financing the difference, Frank could beat the competing bid, and the other bidder withdrew.
Frank recalled a “great celebration.” On Aug. 16, 1976, Frank and Jearld became the owners of CommScope, responsible for a small company in Hickory, N.C., and its 123 employees.
Proving the Decision Was Right
Buying CommScope was only the beginning. Frank and Jearld now had 123 employees depending on them to keep the company running.
The company’s finances were tight from the beginning, with Frank and Jearld borrowing against their personal credit cards. By Frank’s account, CommScope went from losing about $500,000 in 1975 to generating $13 million in sales and making $1 million in 1976.
Once the company had enough cash, Frank wanted Continental’s note gone.
“If we don’t pay that note off the moment we have enough cash, we’re making a mistake,” he recalled.
Frank and Jearld went to Atlanta and paid the note early. Jim took them to lunch and told them, ‘”We honestly never thought you guys would get this thing to work. We’re proud of you,’” Frank said.
Paying off the note didn’t mean the hard years were over. Frank recalled that the cable industry was only beginning to recover. By 1978, Frank was serving on the National Cable Television Association board’s pole attachment committee. He later labeled the effort “to save the cable industry” the hardest work of his career.
Celebrating 50 Years of CommScope
This article is part of a special series marking CommScope’s 50th anniversary. Throughout the year, we’ll look back at the people, milestones and defining moments that helped build the company, along with the legacy that continues to guide it today.
