Interview Date: Monday February 05, 1990
Interview Location: Westwood, CA USA
Interviewer: Robert Allen
Collection: Penn State Collection
Note: Audio Only
ALLEN: Good morning. Today is Monday, the 5th day of February, 1990. We're in the office of Burt Harris, at 10920 Wilshire Boulevard in Westwood, California and we're going to be talking about Mr. Harris and his career in the cable industry. So, good morning!
HARRIS: Good morning.
ALLEN: Where we want to begin this whole activity is back in St. Paul, Minnesota. Something about your parents, the life that you lived while you were growing up in St. Paul.
HARRIS: I was born August 21, 1922 in St. Paul. My father's name was Nathan Harris.. He was born in New York City and moved to St. Paul when he was about eight years old. My mother's name was Esther Roberts. She was born in Minneapolis. My mother and father met in the Twin Cities there when they were teenagers. My father lived on the west side of St. Paul, and my mother lived in north Minneapolis which in those days was a long streetcar ride. I guess probably two hours. How my father did that I'm not too sure. He went to school in St. Paul, graduated from Mechanic Arts High School. My mother went to North High School.
My father was one of seven children, raised on the west side of St. Paul. He was the third son of my grandparents who were both born in Volkovysk, Byelorussia, what would now be part of the Soviet Union. They immigrated to the United States in 1888 and settled ten years later in St. Paul where one of my grandfather's brothers had come earlier from New York when someone told him to go west. He went west to Minneapolis. I can't remember what my grandfather ever did for a living, very little, I'm sure.
My father, after graduating high school, went to work for his brother, Bill who had started a woolen jobbing company. They bought bolts of goods from weavers, manufacturers of woolen goods from around the world. Then they would cut them up and sell them to tailors who made men's clothing. In those days there were no ready-made suits, so tailors always made your suits. My father became a woolen salesman, and travelled mostly in the western part of the United States. He did that for over fifty years.
ALLEN: So he was gone from home quite a lot.
HARRIS: Correct. He was gone from home quite a lot. He used to take trains, of course, in the early days and eventually went to driving, when cars became easier in the '30s, more in the '40s.
My mother was the third of four children born to her parents. Her parents came from Russia also. My maternal grandfather came from Kamenets Podolsk in the Ukraine and my grandmother came from Smolensk in Russia.
ALLEN: Did you know all four of your grandparents?
HARRIS: Yes, I knew all of my grandparents. I knew none of my great‑grandparents. My great‑grandfather on my father's side died the year I was born, I was named after him. His name was Benjamin Isaac and my name became Burt Irving. He died in his 90s. Interestingly, my great-grandparents had eleven children. My great-grandmother came to this country, not once but twice. She came over with a bunch of her children then went back to Russia and took her husband and almost all of the rest of the family back to this country. I never knew him obviously and I never knew of my great-grandparents.
I don't even know why or how my mother's father and mother came to Minneapolis, but they did. My mother's father was the original commuter. He had two general stores in North Dakota--Wales and Langdon. His wife wouldn't live in a small town so she lived in Minneapolis, and he commuted back and forth. That was in the late 1800s, early 1900s.
ALLEN: Rode the Great Northern.
HARRIS: Rode the Great Northern and the Northern Pacific. My grandmother was kind of a socialist. She was a friend of Emma Goldman's who used to come to stay in Minneapolis at her house, many, many years ago. We had big families in those days as everybody did. Everybody in the family knew each other.
I was born in 1922. I had an older brother, Bob, who was two and a half years older than I am. In 1922, when I was born, my mother and father built a cottage at White Bear Lake, about eighteen miles from St. Paul. Minnesota as you know, has a jillion lakes and my father had an uncle who lived at White Bear Lake. My father and mother decided to buy a lot and put up a house. In those days, the whole house and lot didn't cost over two or three thousand dollars. They built that when I was born and every year from June through August we used to spend the summer at White Bear Lake. In 1924, they built a house in St. Paul on Montrose Place which was very close to the Mississippi River, about two blocks. The river generally separates St. Paul and Minneapolis. I was raised in St. Paul in those two homes.
ALLEN: Your brother is the only sibling.
HARRIS: No. My mother was told that she could not have children. So for six years she didn't have children and then four of them popped out very quickly every two years. So my brother came first. My brother's name is Bob‑‑Robert. Then I came along. Then we had a third brother who died as an infant, only several days old. Then finally my sister Helen came along, two years after that. We were all raised in St. Paul, all went to school there‑‑right through college. Then as families, we started moving around.
ALLEN: You had nine aunts and uncles, siblings of your parents. Were they still in the Twin Cities?
HARRIS: Yes, my mother had two sisters and a brother that lived in Minneapolis and my father lost one sister when she was very young and the others‑‑five brothers and sisters‑‑all lived in St. Paul. They all had children. So in those early days as we were growing up we saw lots of cousins, and I mentioned that my grandfather had ten brothers and sisters. His great‑grandfather had six and some of them were there too. We had a very large family to say the least and they were all over the place. We kind of counted them, a lot of people don't count their family, but second, third, fourth cousins, twice removed, didn't matter. We had them. When you had a place at the lake, particularly, you could easily wake up on the weekend to find dozens of family all around the place. So we were surrounded by lots of family.
The Twin Cities, St. Paul and Minneapolis, are relatively small. We are Jewish, and we seemed to know almost everybody. There was I guess one reformed synagogue in each town and one conservative, and there may have been one orthodox synagogue. You get to know many people between the country clubs‑‑each had one country club‑‑and the synagogues and the schools.
As a matter of fact I remember we lived in the mid‑way district of St. Paul, and there were two grade schools. There was one high school that covered the whole area. It had 3000 students.
St. Paul was the smaller of the two cities. There probably were 800,000 people in the two cities, 300,000 in St. Paul and about 500,000 in Minneapolis. Some of our family was successful in business and others struggled to make a living. We had a number of very successful people in the family. My uncle's woolens business did very well. My father's first cousin started a company called B.W. HARRIS:, which was Zero King sportswear. They were successful for over fifty years. I remember having a great uncle manufacturing coats and they were very successful. There are a number of successful people in the family who also hired a lot of the family as they always do.
I started Longfellow Grade School which was about ten or twelve blocks from our house. I used to walk to and from school.
ALLEN: And in those days they had winter. Real winter.
HARRIS: My kids are always saying, we know, dad, you got up and you walked through 20 below zero in the snow and everything else, but, in fact, it was true. I remember waking up and listening to the radio or maybe a crystal set. To try to hear that it was 20 below zero so they'd close the school, then we wouldn't have to walk to school. My brother, my sister and I all went to Longfellow.
I remember we were visiting a few years ago, and my children were there. They had remembered that I told them the school had built a big addition to the Longfellow School. They wanted to see the school and the addition. We went into the addition which was supposedly large. It was nothing but a one room addition, which in my memory was very, very big. Of course, when you're little, everything is big.
Then in St. Paul they built a junior high school. In those days they had a junior high school that was seventh, eighth, and ninth grade. Although the Longfellow went from kindergarten through eight. Normally high school started at nine. When they built the junior high school, they moved the ninth grade from the high school to the junior high school. I remember when my brother got into the seventh grade. He left and went to the junior high school. I did the same thing.
From a schooling standpoint, I used to walk, and finally I remember I bought a used bicycle from one of the kids in the neighborhood for six dollars, and then rode to junior high school.
We had a bunch of kids in the neighborhood. There were children practically in every house on Montrose, and it's interesting when I think about those kids. They were almost all older than I was. They were mostly my brother's age. He used to see more of them. I didn't see my friends because they didn't live right around the neighborhood. The neighborhood was an upscale neighborhood, I guess you would call it. Nice houses although, again, I thought it was a big house. When my kids went back there to see the big house, it was very, very small.
ALLEN: I think over the years, houses shrink.
HARRIS: Houses must shrink. They really laughed though when they saw the house, the size of it, because it was a very small house. As a matter of fact I remember my father said that they bought the lot and built the house for $11,000 which was a lot of money in those days. Then I remember we added on to it. It was a three bedroom house, originally. It really was small. We added a fourth bedroom onto the house and enlarged it slightly. I remember that cost $3,000 dollars--$14,000 invested in the house at that time. There were some larger houses in the neighborhood. As I think back on it, some of the people who lived there and some of what's happened to all those people, it's an interesting world. Not much really happened other than going to school in St. Paul in Longfellow and then in the summer going out to White Bear Lake and growing older.
ALLEN: Were you entrepreneurial as a youth?
HARRIS: No, I really was not. My brother was a worker. He got a job anytime he could get a job, and he went to work. I never did, I just loafed. I never really worked in the summer. Even as we got a lot older, into high school, I never really did any work. I sold football tickets, I remember, in high school. If I could sell ten tickets, I could get a free one and go to the football game. Other than that I really didn't do much. My brother, as I say, did everything. He would sell anything he could find. Always working and always doing something. He met his wife in high school, and I think she was about the only girl he ever went out with. When he wanted to go out he needed some money. When I was in grade school, I think I got maybe a quarter a week. We came home for lunch. In high school we didn't come home for lunch, and we had to buy lunch. My allowances then may have been a dollar a week.
ALLEN: You had to have some source of income. You bought that used bicycle.
HARRIS: I don't know how I did that. I'm sure my father paid for it. I didn't buy it. I sold Liberty magazines and I sold Colliers. I did that. Never had a paper route. In fact, my wife always laughs at me. I still have the Brownies and the Greenies that I was saving up to get something. They're still home, so I do remember selling magazines. Liberty was a nickel and the Saturday Evening Post was a nickel. American was fifteen cents, that was an expensive magazine and Ladies Home Journal was a dime. I did that for a few years, but that's about all I can remember.
I inherited selling magazines from my brother. He sold magazines first, and then I kind of picked it up.
My father travelled a lot. My father was really a very straightforward, hardworking man who raised his family, always made a good living. Always made sure we had whatever we needed. Interesting as you look back, I never felt I ever needed anything or ever wanted anything I didn't get. Even during the Depression we never really felt the Depression as I saw it. My mother was a very strong, independent woman. Particularly with my father out of town. She raised us, more than my father. She took after her father.
My mother loved to have a drink. She loved to gamble. She played cards all her life. She played mah‑jongg I remember in her early years, and then she played poker all her life. She had what I used to call "the League of Nations." They were about ten women whose husbands mostly travelled, and the women used to play cards a lot. They were from every nationality you could imagine.
I learned to play poker early in life, and I've often said that one of the things that was very important to my business career was learning to play poker. In just more recent years, I decided I learned a tremendous amount in playing poker, as to how it related to business. You learn how to understand how people think. You learn how to bluff. You learn how to take chances. How to take risks. I learned much more really than I can imagine out of playing poker.
I left Longfellow grade school and started Maria Sanford Junior High School, which was about a mile from our house. I used to ride a bicycle there-- seventh, eighth, and ninth grades. I was treasurer of the class in the ninth.
I broke a lot of bones when I was a kid, now that I think about it. We used to flood the backyard of one of the kid's in the neighborhood and make a skating rink. We used to play hockey and whatever in those days. My ankles were never any good. I never could stand up on them. I do remember playing hockey with the kids one day and putting the puck between my legs and someone swung at the puck and it hit my ankle. I went home with a broken ankle. I was probably eight years old in those days. It seems like yesterday.
I remember playing football when I was 12. We were playing at Macalester College. Macalester is a small but highly rated college in St. Paul. To think about it, we had a lot of colleges there. Hamlin was there, Macalester, St. Olaf, St. Thomas. My brother‑in‑law went to St. Thomas.
ALLEN: You started to mention how you broke your leg.
HARRIS: I was playing football at Macalester with a bunch of kids, no equipment or padding, of course. I broke my thigh, my femur, and was taken to Children's Hospital. We had a pediatrician. Well in those days, they weren't pediatricians, they were doctors, but we had a doctor who really was marvelous because my brother had polio in the early days, and our doctor cured him of that. I remember I lay there for months with weights hanging on this leg. My wife laughs at me when I said he really healed me, and I grew back another leg. My wife always laughs because whenever I go in to have a pair of pants made, they say do you know your hip is two inches higher on one side than on the other. So she said, he really cured you. Anyway, I remember that happening, and I fell back a half a grade in school and most of my friends went ahead a half a grade.
In those days you could start school in the middle of the year, which many of us did. So they went ahead, and I went behind. I became a year behind most of my friends in school. They all left junior high school and went to Central High School a year ahead of me.
I used to have a lot of fun in those days. I started in September of '37. High school was about three miles from where we lived, and I used to hitchhike to school every day. That's where my money came from. I was given car fare allowance to go to school and instead of using that I hitchhiked to school, I saved that and that's what I used.
ALLEN: The fare at that point was a nickel?
HARRIS: It was a nickel or a dime. We used to buy tokens, come to think about it, and they were like seven cents. There must have been a tax in Minnesota, because they also had mils. We had aluminum mils that we used to pay for. It was hard to believe they were 100 to a penny. I can't believe anything would be that cheap, but it was. I probably got twenty cents a day, or a dollar a week to take the streetcar. Instead of taking the streetcar I'd hitchhike back and forth. All the other kids seemed to do it. Just walk over to the corner, and it was nothing to hitchhike to school. I never thought that there was anything to fear in those days. Our front doors were always open, we never had any problems. I guess in all the years that I hitchhiked to Central, I never had a problem that I could think of.
ALLEN: Most of your friends went on to high school.
HARRIS: They were a year ahead of me in high school.
ALLEN: At that point there were still a lot of people dropping out.
HARRIS: Not much. It's interesting as I think about it, it seemed to me that everybody automatically went to high school. It's funny, my memory of those days, I don't remember many people dropping out of high school. It's interesting because at Central High School at that time, there were very few Blacks that were in our high school. I say that because today the school is totally Black. I remember only having maybe one Black friend in school that I can remember, and he was in one of the clubs.
I took piano lessons when I was about seven years old. I took lessons for about a year, and then I quit because my hand wouldn't reach an octave. The teacher said to come back when I could reach an octave. I never went back to those lessons in classics. I played piano all my life but I should have gone back.
I remember when I was in junior high school I bought a saxophone. The next thing I knew they put me in the band, the junior high school orchestra. I said, "But I don't even know how to play the instrument." They said, "That's all right. You've got to come in with your saxophone." They probably put me out before the year was over because I could not play the scale. That's all I ever remember with that saxophone.
ALLEN: Did you take lessons?
HARRIS: Sure I took lessons, but I don't ever remember doing anything but playing the scale. I don't even remember doing that.
I do remember I was in chorus in junior high school. I remember they took a bunch of us, about ten of us, to form the common chorus of the St. Paul Civic Light Opera Association. They were presenting "Carmen" and they asked us to be the children's chorus. I remember that because they had our picture on the front page of the St. Paul Pioneer Press, a picture of all of us kids. I must have been about thirteen, something like that. In those days, you think a lot about that when you're a kid. Once before I had my picture on the front page of the paper, when we lived in White Bear Lake. There was an amusement park about three blocks away, so as kids we always used to go to the amusement park. There were always picnics. The grocers had a picnic, or someone had a picnic. Someone would give us a badge so we would go on all the rides. I remember standing around once, and one Shriner pinned a badge on me, and they took his picture. I was on the front page of the paper the next day. I wasn't even supposed to be at the picnic, but there I was. So I figure that was twice now that they put my picture in the paper. Not much else happened in junior high school.
High school, I was always a good student, but I never really studied well. Which is unfortunate. All of the grades came easy. I was gifted with a better than average brain and some good genes so learning came very easy. I always got fairly good grades in high school, with no studying at all. As I say, that's too bad. I was in the Chess Club and the Stamp Club when I was in high school. I used to collect stamps. Not very well, but I collected them. I think those were probably all the clubs. I never was athletically inclined.
ALLEN: Your political career ended after your junior high school?
HARRIS: I never followed up on that calling. That was the end of my political career in high school. I was always gregarious, so I knew a lot of people, but never really got active in politics at all.
ALLEN: At some point girls came into your life.
HARRIS: There were a couple of clubs. I joined a club called the ABC Club, which used to meet every week about three miles from our house. There were two boys clubs as I remember that I was interested in. I joined that one and, of course, the clubs didn't do much other than have a little athletics. We'd play some touch football and whatever, and we'd have a wiener roast about every three or four months. That's about when you first started dating.
When you were thirteen you knew the girls were around, but you couldn't drive an automobile in those days. I always tried to have an older friend who could drive, or your brother when he could take the car and drive.
We had family autos, cars as far back as I can remember. I do remember a 1940 Chevrolet. Before that, Buicks. Buicks more than anything else as I recall.
I remember it was very cold in the winters. We had an unheated single garage in the back of the house and getting those cars started in the middle of the winter was really something. Even driving. It's interesting, when we lived at the lake, we'd drive out in June and drive back in August. I never came in during three months, even though it was only eighteen miles. It was an all day event when you had to drive out to the lake, eighteen miles, really shocking to think about that.
I remember when I was a youngster, everybody would go out to get a crystal set. Get a little crystal, play around with it and what not. Listen through those ear phones. My parents had a radio, a great big speaker and the ear phones.
I met my wife, Shirley, when I was fifteen and she was thirteen.
ALLEN: She was living in Minneapolis.
HARRIS: Yes, but this was on the Fourth of July, in 1937, as a matter of fact. We were out at White Bear Lake, and I was with a friend of mine who also lived there. He was older; I was fifteen, he was sixteen. He could drive. He said I understand there is a pretty girl about a mile away visiting. He had a convertible La Salle. I'll never forget that. It was a great car, with a rumble seat. We got into the car and drove over to meet the girl. We knew the people who lived there. My wife's folks were visiting from Minneapolis. We went in, and I met Shirley. Then I remember that same day, we decided to drive over to another lake, to Bald Eagle, just for the drive. I remember she got in the front seat because my friend was very good looking, and it was his car. I got in the rumble seat which was fine. As a matter of fact, I remember having a nickel skyrocket which I held onto for dear life. I went to shoot it off I remember at Bald Eagle. It just fizzled and went right into the lake.
Shirley doesn't remember me probably, having met her when she was thirteen. Then I remember about six months later at St. Thomas Academy in St. Paul where Shirley's brother attended. We were over there watching some kind of marching ceremony. There was Shirley and her mother and father in the stands, and I remember seeing her then. She was probably fourteen by that time.
I think the first time I ever had a date with Shirley she was probably fifteen. Her father never would let her go out. I was seventeen. I was still in high school. We used to go out a lot. Those clubs used to go out to the weenie roasts, as we used to call them.
High school really was a lot of fun. Particularly my last year as a senior because all my friends were already at the University of Minnesota. The University of Minnesota is in Minneapolis. It's really a city college, although it is a huge university.
ALLEN: It wasn't very far from where you were living?
HARRIS: It was three miles from where we lived.
ALLEN: Closer than high school.
HARRIS: It was really about the same. It was one of the biggest universities in the United States on one campus at that time. Columbia University I think was a little bigger and the campuses of the University of California, which were numerous, together, were a little bigger. The University of Minnesota was very big.
I remember when I was younger, my first cousin, my uncle's oldest son, took a liking to me. I don't know why, but at least I got to know him. He was twelve years older than I was, but I remember he was a graduate of Yale University. I guess I was just starting high school or maybe before that, and he encouraged me to think of going to Yale in those days. As a matter of fact, he wasn't that much older, he always seemed older. He offered to pay my tuition, and lend me the money to go to Yale if I wanted to go. It seemed to me that I was a junior in high school, and I contacted Harvard, Stanford, Yale, and one other university. At that time, the cost of going to school was $1,000 a year as I remember. Tuition and everything included.
I graduated high school in 1940, and I guess I just automatically decided I was going to go to the University of Minnesota. It was much less money, and I just didn't think the other colleges were that important or that I should get into debt and borrow money.
My parents never motivated any of us education‑ wise. We just kind of automatically thought we'd go to school, and that was it. We never really thought much about it. I never was motivated nor was my brother to get a good education.
ALLEN: Your parents, did they have college degrees?
HARRIS: No, they just graduated high school. My father went to work, as I said, when he graduated high school. They never really gave it too much thought. They expected us to go to school. I know they always expected us to get passing grades. That's all I looked for. I never looked for high grades, and they never did either, as long as we didn't cause any problems; went through school, got our grades, they were comfortable. Which is, in a way, unfortunate. If you're motivated you do a lot better. I graduated high school in 1940 and decided to go to the University of Minnesota where I started in the fall of 1940. At that time there were three Jewish fraternities in the University of Minnesota. They all start rushing you for a fraternity, of course. I had friends in all of them. I decide to pledge Sigma Alpha Mu.
My brother went to college for only one year and then quit in order to get married and go to work. I remember he went to work for Neisner Brothers variety stores making seven dollars a week.
He got married in 1940, the year I graduated high school. His life was moving on much, much quicker than mine. He had his first child in 1943. So in 1940 when I graduated high school and was ready to go to college, he was already being married.
ALLEN: Were you still dating your wife at that point?
HARRIS: Yes, I was dating my wife along with everybody else. We never went so‑called steady. When we dated in those days, you go to a movie, you go to a wiener roast. Of course, when I joined the fraternity then there were always the fraternity parties. She was two years younger and she went to Washburn High School in Minneapolis. Before I could drive, I would occasionally take a streetcar to Minneapolis, but usually somebody else would drive. I dated Shirley on and off in those days.
After I pledged the fraternity at the university, I decided I wanted to be an accountant and went to science‑literature‑arts college. For some reason I decided to join the ROTC which is the Reserve Officer Training Corps. I guess I knew some people who had also joined. Shirley's brother was in the ROTC and a number of other people I knew.
I do remember when I was in high school, most everybody worked. As I said, I didn't work. I do remember one time I worked selling shoes one Saturday. I think I earned three dollars. That night I played poker and I lost six dollars. I decided either to give up poker or work, so I gave up work. I never worked again. I decided that was it.
ALLEN: You lived at home. You didn't live in a fraternity.
HARRIS: Yes. Again, I hitchhiked to school everyday to save the carfare money. That was my car allowance. My father used to pay my fraternity bill which was ten dollars a month, which included lunch. Lunch was twenty-five cents a day and that would pay the lunch and the dues whatever they were.
The first time I ever really did go to work was in the summer of 1940, between high school and college. My cousin, Irving Harris, offered me a job. He was in the small loans business. He offered me a job for the summer at a quarter an hour and forty hours a week, was ten dollars a week. I worked there for ten weeks and made $100. That was the $100 I used to join the fraternity as I remember. My father paid the dues. I used to eat lunch at the fraternity house everyday, and it was really a ball. I always had a great time at the university. That was in '40‑'41.
End of Tape 1, Side A
ALLEN: What did you do over that summer between your freshman and sophomore years?
HARRIS: I went to summer school. Those were great, great times, because really I did nothing. Went to summer school, took a few courses which were easy. I was in the business school at the University of Minnesota by then so the courses were mostly economics and accounting and money and banking and whatnot. I never was any good at English. I was always good at figures, mathematics, trigonometry and, as a matter of fact, now that I think back I was taking advanced algebra that first year.
We'd go to the beach all summer. It was just all play. It was a terrific time of life, really when you're eighteen years old, no burdens and no worries and money never seemed to be an important thing in those days. You never spent much money. A dollar was a lot of money. I never remember anything I ever wanted that I didn't get. But I never wanted anything.
ALLEN: By this time you were driving a car.
HARRIS: Oh sure, I was borrowing my mother's car; I didn't have my own car. I could borrow my mother's car when I wanted it. It's really hard to realize or remember those winters. I remember coming home one New Year's Eve and the car literally ground to a halt about six blocks from our house, and I'd walk home. Just absolutely stop running. I thought for sure the whole engine was gone. Then the next day all the garages were busy hauling the cars and towing them. They towed it away and thawed it out, and the car was still ok. The belts would just literally freeze up. They'd get so tight that they wouldn't go and you couldn't make your engines run.
ALLEN: You were a two-car family then. Your father had a car...
HARRIS: My father had a car in those days. He travelled in a car and my mother had a car at home. So we were a two-car family.
I remember that when we would have a friend who would have car, we'd all chip in a dime. For thirty or forty cents you could fill a tank with gasoline. And then we'd drive the whole time. We went on dates. We'd always pay for the gasoline. Whoever drove would collect from the other people. When I say collect it might have been a dime or fifteen cents that was part of the cost of going out.
In those days, money was really hard to come by. Nobody really thought about it. I remember saying if I could ever make $100 a week for the rest of my life, how happy I would really be. I remember years later my wife saying that I think it was at Sarah Lawrence or one of the colleges they always told the women, the girls, they should not ever marry anybody that made less than fifty dollars a week. Otherwise they couldn't maintain their standard of living that they were used to. I know I set my sights at $100. I thought $100 a week. Boy, that was $5,000 a year for the rest of your life. You'd be on easy street without question. Those are the thoughts you run through. Of course, the war broke out in December of '41 and we stayed right on in school, because we were in the Reserve Corps waiting to get our degrees.
I was hoping to graduate in 1944. At the end of 1942, the Army decided they could no longer honor their commitment to us to be able to stay in school. They called our whole class. The whole ROTC was put into the Army as privates. I was, needless to say, very upset, because here I wasn't going to get my degree nor my commission. We were called into service at Fort Snelling. Actually by the time we went in, it was about February or March of 1943.
ALLEN: You at that point had about two years of college finished, what with your summer school and everything.
HARRIS: I had actually almost three years of college credits already in. There were about fifty or sixty of us in the ROTC that went in as privates. We eventually were shipped down to Camp Wallace in Texas for boot training.
After about three or four months of boot training, we were assigned to an ASTP--Army Special Training Program. It was a form of training in the Army. We first went up to Grinnell College in Iowa for about a month or two. Then after that we were sent to the University of Minnesota, and we studied there for about three months. That was additional credit toward my degree.
ALLEN: What were you studying?
HARRIS: I took chemistry and trigonometry. They just seemed to be regular courses. I lived on the campus of the University of Minnesota in a fraternity house. They had taken over all of the fraternity houses and dorms. There was a large contingent teaching Japanese at that time at the University of Minnesota. We were there for about three months and then they assigned us to Officer Training Corps at Camp Davis, North Carolina.
ALLEN: You were still with many of the people which you had been with in Minnesota.
HARRIS: Right. Still with that same group of ROTC people. Some of us went into the next to the last and some of us went into the last class. The Army was fading out anti‑aircraft. We were shooting down too many of our airplanes, as we were told. I was in OTC for about four or five months at Camp Davis. I don't know how it happened, but the next thing I know I did get a telegram from my soon‑to‑be father‑in‑law telling me that he and his wife would let me marry his daughter. I don't remember asking her as a matter of fact. But I guess I must have done that.
I received my second lieutenant's commission in May of 1944, the 18th of May. The Army had asked us where we want to be assigned. I asked for the southwestern part of the United States although they hadn't shipped anybody there in six months. Lo and behold, they shipped a whole bunch of us to Camp Hahn, California and my soon‑to‑be father‑in‑law said there was an apartment opening up in the complex where he lived. He said he thought he could rent it for me, just in case we got out there. I thought he was kind of crazy.
ALLEN: He was living out there at that time.
HARRIS: I should have said my father‑in‑law had a heart attack in about 1941. He was forty-five or forty-six years old at the time. He had a heart attack and decided to close his business. He and his wife drove to St. Louis where his wife was from. They didn't know if they wanted to move to Florida or to California. They turned right and went to California. So he was living in Los Angeles at the time.
Sure enough, I was assigned to Camp Hahn. So on my way, I went to St. Paul and got married. We had a ten day leave to get to California.
My folks had planned the wedding, and we were married in our home in St. Paul on the 21st of May, 1944. My brother was in the Navy, so he never came to the wedding. He was stationed in San Diego at that time. My sister was there and my wife's brother, who had a leave from the Air Force. We had lots of family. There must have been 400 or 500 people, by the time they had got done parading through the house.
ALLEN: What had your wife done after she graduated from high school?
HARRIS: My wife graduated from high school and entered the University of Minnesota. She started in 1942. I guess that's just when her parents decided to leave and go to Los Angeles. She prevailed on them to stay at the University of Minnesota. Whether that was because of me or not, I don't know. She lived in her sorority house while she was there. Then I went in the Army and she stayed at the sorority house. She lived there until we were married. Then she dropped out of school.
When we were married we drove to California. My best man had a car, and I had gasoline stamps, so between the two of us, we drove to California. It's quite a trip, because every time we would stop, they wouldn't let us in anywhere without a marriage certificate. The two of us would stay in one place and he would stay another. I remember driving through Reno, Nevada on a Sunday, and we decided to gamble a little. We lost everything we had but five dollars which Shirley had squirreled away. I remember we needed that money to get across the toll bridge going into San Francisco. At that time, my brother had been transferred by the Navy to San Francisco, and I knew I could borrow some money if I found him.
We came to California; and we moved into the apartment that my father‑in‑law had rented. Shirley stayed there, and I went out to Camp Hahn. Then the Army shipped me to Camp Irwin which is in the middle of the Mojave Desert. I was on overseas orders at that time. Right at that time they did away with the anti‑aircraft group, and we were all put into the infantry. So I got orders back to Fort Benning, Georgia. I went out to Fort Benning and Shirley followed me.
It's hard to believe it, but at that time I was twenty-one and Shirley was nineteen and you think about why her parents worried. I always thought we were full grown. Now, when I think about my kids at that age, I think, "My God!" Running around during the war at nineteen years old and the Army bases and everything. It's really shocking. Taking airplanes, you get bumped off all over.
HARRIS: I was on overseas orders for the third time in 1945 and in taking the physical they picked up an extra beat in my heart, which I didn't know I had. They put me in Oliver General, which was the hospital right in Augusta. It was getting close to the end of the war, and the Army decided to put me on reserve status. So all of a sudden I was out of the Army.
I spent the next two or three months, trying to figure out what to do with myself. Whether to go back to school or not. I figured I could get my degree in about four months.
I now had to figure out what to do, as I had a number of alternatives. My father asked me to come to work in their woolen business because neither of my uncle's two children were in the business and my brother who was in the Navy was not going to go back into the business. My cousin, Neison, offered me a job in the Toni Company which he had started and my cousin, Irving, offered me a job if I came to California, or I could go back to school. So I was pretty fortunate. I had a lot of opportunities.
ALLEN: Was this before the G.I. Bill was in place? You were out before the end of the war?
HARRIS: I don't know. I went to the University of Minnesota. It cost $55 a quarter to go there. When you think about that it was about $160 a year plus books. That was the whole cost of a college education. So money really wasn't too important. My father was willing to pay my tuition for me while I went back, and we could live with them at home, if we wanted to do that. I decided I would go to California and get a job in California. I decided I was going to drive to California and maybe get a job with my cousin. At least look at it. So Shirley and I got in the car and started driving.
We drove through Fort Worth and Dallas on our way to California. My cousin, Irving, asked me to look up his ex‑roommate from Yale University who was a lawyer in Fort Worth at the time. I looked him up. He and some friends of his had just bought a commercial bakery in Dallas. He offered me a job. I said, "Well, what would I do?" They said, "Don't worry. You'll find yourself something to do." He said how much do you want to get paid? I said pay me $254 a month. Of course, I forgot that the Army gave me a few other things. I decided to take a job in that bakery business.
We stayed in Dallas for almost three years. It was interesting because we built a large baking company competing with National Biscuit and Sunshine in those days. I guess I ended up after a year, running a bakery with 400 employees and what not and I was 24 or 25 years old.
ALLEN: But you had such a rich background in the baking business.
HARRIS: Right. I found out that I could do it if I'd use a little common sense. I stayed in that for about a year and a half and then the business was sold to Weston Biscuit. Weston is a large world‑wide baking company and the whole business was sold. I was kind of out on the street and didn't know what to do. I decided I was going to distribute the merchandise which I did for about a year and a half. Then I found out that there was only one profit in manufacturing and distributing. Without the manufacturing, the distributing just wasn't sufficient to make a living. So this was now in '47 and I decided to close up that business, and I didn't know what to do, again.
ALLEN: What were the functions that you had in the baking company?
HARRIS: I started out doing nothing. I asked, what do I do? I was in the office. I started keeping records, doing a little accounting and inventory work and whatnot. Pretty soon I was out working with employees and telling them what to make and how to distribute and how to compete and how to sell. I did everything but marketing, actually. We did total manufacturing. We started with buying raw materials. I did the buying. Did some hiring and some pricing and before I knew it, it was really just a great experience.
In later years I realized that all businesses are practically the same. Although I knew nothing about the baking business‑‑we had professional bakers‑‑I knew that if we buy flour, and sugar and whatever the ingredients we had to buy, they would make finished goods. I got involved with creative packaging and wrapping. We were the first company that put cookies into cellophane bags. In those days National Sunshine used boxes or caddies. You'd go into a store and you'd get a pound of this and a pound of that.
They said, "You can't put them into cellophane because as soon as there's a broken cookie, nobody will buy it." In fact, when we used to put them out, our competitors would pick up a pack of cookies and say, "Aren't these nice," and then squeeze it a little, breaking the cookies. But nevertheless we kept at it, and, of course, the whole industry then changed. We had the two people that were partners in that business work for Weston and they knew the national market. They came out of Sunshine.
My cousin, Irving, invested in the business at that time. I should say that he left California shortly afterward and joined his brother in the Toni Company. My brother got out of the Navy and then he went back into the Toni Company and the Toni Company became hugely successful very quickly. In 1947, just about the time I was leaving the baking business they sold the Toni Company to the Gillette Company. In those days they ended up with like twenty-some million dollars which was a huge amount of money. Then they stayed with the company and kept on running it.
ALLEN: But you did not get involved in the marketing of the baking business?
HARRIS: I never got involved with marketing. I probably should have, but never did. I never got involved with the advertising or the promotion. So I was really totally in the manufacturing end of the business.
ALLEN: When the business was sold then you got into distribution?
HARRIS: Yes, then I got into distribution for the first time. I remember, George Weston asked me if I'd stay with their company and run their businesses. I was kind of flattered, I was only twenty-five and I said no, I really wasn't interested in that. I got into my own distribution with trucks and everything else. But it was funny, I don't think I invested more than $5,000, which I borrowed from my uncle, and eventually I paid him back without interest. I had a number of investors. I think we put $10,000 into it. When I closed it down, I gave everybody back their money including my uncle.
ALLEN: What was the distribution business? What were you distributing?
HARRIS: We distributed cookies to grocery stores. I took the line from the Weston Biscuit company and, I had a bunch of other cookie companies from around the country. I had a fleet of trucks and we distributed the cookies to supermarkets and grocery stores.
ALLEN: In the Dallas‑Fort Worth area?
HARRIS: Really in Dallas and Fort Worth and outside of that. We had a branch in New Orleans, a branch in Austin and one in Houston, Texas, so it was really a kind of a two or three state business. We had trucks all over with salesmen.
ALLEN: The name of the company was?
HARRIS: Harris Foods. It used to be the Lone Star Biscuit Company, and then I changed it to HARRIS: Foods. I was just saying to my wife last night, that when I look back on my life, it's remarkable the way it went. Decisions that were made. Obviously I must have steered it a little, but most of these decisions, like not getting out of the Army and then you're put out of the Army. That's how most of my life has gone. I have been very, very fortunate and very lucky with the things that have happened. I could have ended up in the baking business, all my life. Or I could have ended up living in Dallas. I could have been doing all these things. You wonder, how is it, that you really didn't do that. It isn't because I had my mind made up to do things, most of it was luck.
ALLEN: It has been said that if you have a choice between skill and luck, take luck.
HARRIS: You bet. Luck plays an important part, but I really look back on some of these forks in the road, and how I ended up on what apparently was a right fork.
ALLEN: Why did you decide to close the distribution?
HARRIS: I couldn't make enough money in it. You needed the manufacturing, which seemed to be an important part of the profit. You could only make a little in the distribution business. You couldn't make enough where you could make a good business out of it. It's funny that I decided that because there are certainly those who have done well. If someone said that I had to stay in that business, I probably would have had to expand the lines. But I could have been a huge food distributing company. I wouldn't have just stayed in cookies. That isn't enough.
I looked at a number of businesses in Texas and didn't know what to do. I packed up. By this time, we had a daughter, who was born in 1946, in Dallas, Janie. We packed Janie up and Shirley and I went back to Minnesota to see what we wanted to do. This was now 1947. Again here were my same choices. I had the security blanket of my father and my uncle's woolen business which was still there.
ALLEN: Still getting smaller probably.
HARRIS: Still getting smaller, but they said would you like to come to work here. Now I was offered another job in the Toni Company again, being pushed, particularly by my cousin, Irving Harris, who was back with his brother, Neison, and my brother. I didn't want to compete with my brother.
ALLEN: What kind of a job were they offering you with the Toni Company? Do you remember?
HARRIS: The first time I was offered a job, I remember my cousin, Nelson, said, "Burt, how would you like to run the plant up in Toronto?" I remember saying, "Toronto, Canada? I don't want to go up north in that cold country." That was the worse thing in the world. I remember he said, "Burt, have you ever looked at a map? I think Toronto is south of St. Paul." So I'll never forget that. I didn't want to go to Canada.
It so happened right at that time, my Uncle Bill had a financial investment with two St. Paul and Minneapolis contractors. He had invested with the Steenberg Construction Company and the Ashback Construction Company. They were building part of the All‑American Canal in California, which worked out as a good investment. They then had just gotten a Bureau of Reclamation contract, to build part of the Friant-Kern Canal which runs from Fresno to Bakersfield. Having had an accounting background, particularly, they asked me if I wanted a job to come out to California to set up the books and the office of that company ‑ it was a joint venture. California kind of intrigued me. They said I could live in Los Angeles. The company was up in Visalia, about 150 miles north of Los Angeles. I'd go up there two or three times a week and kind of watch it. It was about a two or three year job. So I decided that's what I was going to do. So Janie and Shirley and I packed up and came to Los Angeles. I went up to Visalia and set up that company. I realized it was too big to really drive back and forth so I decided to move to Visalia. So for the next two and a half years I was in the construction business. Again I found that mixing concrete wasn't much different than mixing dough. I started doing the purchasing and the union negotiations and doing everything. The Ashbacks and Steenbergs had some big families at that time. Steenbergs were Danish and the Ashbacks were German and they didn't get along too well. Yet they did a lot of business together. They had a lot of uncles, cousins, and whatnot, and they were all there. That turned out to be a very successful construction job. I stayed in that business for about two and a half years. The middle of '48 to about 1950. It was a year and a half. It was a very interesting business. When we completed that job, I was through with that business. I was again out of a job. Now that was 1950. I was twenty-eight years old, and I didn't know again what to do and so I went again back to St. Paul. Again staying with my parents and here we were again in the same dilemma.
ALLEN: Were you moving a houseful of furniture back and forth every time?
HARRIS: In Dallas, I shipped it out to California. When we were in California I guess I left it in storage because we didn't know what we were going to do. We sold most of it. I went back to St. Paul again, and here I was for the third time in three years or four years, not knowing what to do. The same opportunities were there. My father again with the woolen business and the Toni Company was there and I didn't really want to do any one of those. But I didn't know what I wanted to do. I was just looking at everything.
Right at that time, it's interesting to note that the man named Don Nathanson appeared in my life. Don Nathanson was a marvelous advertising executive. Don was about eight years older than I was. I never knew Don except through the Toni Company contacts. When I was looking and didn't know what to do and talked to Don, Don said, "Burt, you ought to go in the television business."
ALLEN: This was early 1950?
HARRIS: This was early 1950. I didn't know anything about the television business. I had no idea what he was talking about.
ALLEN: Around the Twin Cities he was talking about broadcast, not cable television.
HARRIS: Correct. Broadcast. He said I ought to go in the television business. I didn't know anything about television.
ALLEN: Were KSTP and WCCO on?
HARRIS: Oh, yes. The Hubbards had KSTP radio. No TV yet.
HARRIS: It was the end of 1950, and I had a call from Don Nathanson saying Burt come with me we're going down to Phoenix to see about a television station. There was one station in Phoenix, KPHO-TV, and a friend of Don's owned it. He was getting married and we were invited to the wedding. Rex Shep was the owner. I flew down with Don. That was my first experience with a television station. We looked at that television station. They wanted $300,000 for the station. It was losing $10,000 a month. My cousin, Irving, was the only one who had any money. I remember Irving as one of the most conservative people I ever met in my life. Ultra‑ultra‑successful businessman, but also an ultra‑conservative man. I remember we called him and said we need $300,000 and we're going to buy a television station. Everybody said, "Oh, don't buy it. There's going to be three more television stations here. You're not going to have a network." It's going to be this and that and the other thing. I've known Irving all my life. If you give a little conservative thought to him, he needs pushing. We called him up and we said, "What do you think?" He said, "Well, I guess we shouldn't buy it." So we didn't buy it. And it was bought by a fellow named Bill Small from Tucson. A year later he sold it for $1,800,000. In those days that was a lot of money, I said, "My God, $300,000 for a television station." Don kept saying, "You should go in the television business." I didn't know how, what, where, or when.
End of Tape 1, Side B
ALLEN: This is Tape 2, and the date is Monday, February 5, 1990 and we're talking to Burt Harris. Burt you decided not to make millions buying the television station in Phoenix.
HARRIS: Right. Or even a dollar I guess.
ALLEN: I want to make one correction on here just so we don't forget it and that it is on the timing of when you left California to go back to St. Paul was in mid‑1950 rather than early 1950.
HARRIS: Right. Actually it was late summer when we got back to St. Paul. Now it was just two or three months later when we flew down to Phoenix. Now we're at the end of 1950 and still in a dilemma as to what to do with my life at that time.
ALLEN: People were talking television to you.
HARRIS: Yes, my friend Don Nathanson was talking television and my father was still talking the woolen business and my cousins were talking the Toni Company and I didn't know what I wanted to do other than make a living, and I wanted to get into some kind of business I would guess.
My father again encouraged me to stay in the woolen business and I just wasn't quite prepared to do that. Yet, I didn't know what I wanted to do. I decided I was going to go back out to California to look for a month or two for something else before I made a decision. If I couldn't find something, I said I would go back probably into the woolen business. I should have said, now at this time, we had a son who was born in California. He was born in 1949, while we were in the construction business. So he was now a year old.
ALLEN: His name is?
HARRIS: Burt, Jr. Who goes under the name of Buzz. Now we had two children and no job and no income.
ALLEN: One thing that seems apparent to me is a very patient wife.
HARRIS: My wife just kind of went along, I guess. You're right, I never thought about that, but I guess she was patient. We had two children and no job and I said I'm going to go to California. My wife said, "Not without me, you're not." And so we decided to get in the car and drive to California, which we did. We drove to California and decided to rent an apartment on Wilshire Boulevard about two blocks from here, as a matter of fact. I think it was $125 a month for a furnished apartment with one bedroom and two kids. Then I said I was going to look around.
I had a conversation with my cousin Irving, who made me quite an interesting offer. He offered to pay me a salary of $10,000 a year to look around for a business. If I found one, he would finance it, and we would be 50‑50 partners, which was a pretty good offer. He said he always wanted to be in business with me. I felt that he knew if I ever got into business I'd be successful, and he'd like to be my partner in business.
ALLEN: Did you remember at this time, your goal of $100 a week?
HARRIS: Yes, I guess I did. I was doing pretty well. I was getting $200 and not working. I spent the better part of about a year and a half looking at businesses of all kinds. I looked at every kind imaginable that came along. People would lead me to them. I talked to a number of banks, I talked to brokers. At one time I almost decided to become a broker. Also I looked at a number of oil businesses. The attorney that I worked with in Fort Worth was an oil lawyer. He was encouraging me to get into the oil business. He had a number of clients, and I went back to Texas and looked at a lot of places. So I really spent a year and a half doing a lot of looking at a lot of different businesses, surprisingly still not finding anything.
All this time, my friend Don Nathanson, was pushing me to get into the television business. I was looking at the television business, and I thought it was really very interesting. I got interested in the cable business at that time as well. I was really thinking of pay television. Pay in terms of people would pay to see something they couldn't otherwise see. I wasn't really looking at whether it was cable or how it was delivered, but I was interested in pay television. At that time there was a freeze on television stations. There were 108 television stations in the country. The FCC had frozen the issuing of new licenses.
ALLEN: This was mid‑'52?
HARRIS: At about the end of 1951, I had been looking at San Diego. I thought San Diego would be an ideal television market. I was trying to get a television station there. There were only two grants. Both of them had been granted in San Diego. My friend, Don Nathanson, called me and said if I wanted to put a station into San Diego, he thought I could do it through Mexico, by putting a station in Tijuana. The person to talk with was in Mexico City. I should fly down to Mexico City to talk to a man named Ray Hamilton. The big broker in the broadcast business was Blackburn Hamilton in those days. He said Ray Hamilton had a deal in Mexico City, and that I should fly down to talk with him. I did that.
I flew down to meet Ray, and Ray told me if I wanted to get involved in San Diego, the place to start was with these people, Romulo O'Farrill. He said they had a television station that just started in Matamoros, Mexico, which is across the border from Brownsville. There was no television station serving the Rio Grande Valley of the United States. This was across the border and was going to serve the Rio Grande Valley. It was half owned by San Antonio people and half owned by the O'Farrills, who owned the Novemdos newspapers and the News in Mexico City, and they were affiliated with the Azcarragas who were the monopolistic media people of Mexico. I call them monopolistic because they had a monopoly on all the television, radio and theaters in Mexico.
I flew down, met Ray, met Señor O'Farrill on the basis that we would buy the San Antonio people's interest. There was a promoter involved in the middle of it, by the way. We would buy the San Antonio interest and become their partners and they would move into San Diego as well.
I remember they flew me in their airplane down to Acapulco which I'd never visited. They took me out to the presidential yacht, and I met President Aleman. President Aleman introduced me to Adolpho Ruiz Cortines. I remember his saying, "This is going to be the next president of Mexico." I remember saying to Ray later, "How does he know he's going to be the next president?" That was 1951.
ALLEN: Late '51, early '52.
HARRIS: Early '52. I was 29 years old, and I was rather impressed. In any event I decided it was a good idea so I borrowed some money from my cousin, Irving, and all of a sudden I was a general manager of the XELD-TV television in Matamoros. I didn't know anything about television, but here I was the general manager. This was a television station built across the border in a town with no electricity, no telephone. If you're familiar with Mexico, their border is not on the border. Their official border is 22 km inside the border. They have the border, but that's why you can go into Mexico without any passport. But to go inside Mexico you had to go 22 km. So the station was built 22 and a half km inside the border.
Here we were operating, and we were affiliated with ABC, NBC, and CBS. I bet the networks don't know today that they had foreign affiliates, but they did. They must have known it though. I had to hire a sales manager, chief engineer, whatnot. That was in 1952, thirty‑eight years ago.
ALLEN: Did you live in Brownsville?
HARRIS: No, I commuted. I went back to Brownsville about three or four days a week from Los Angeles. Suddenly there was a television station, but again, mixing sounds and mixing concrete, mixing dough-- all the same. A few innuendos, but I have a knack of being able to understand this type of thing. It really wasn't any different. Running a business is just normal, I guess. I remember being the president of my high school club, and I was the head of the fraternity at the University of Minnesota. I always seemed to generate up to wanting to do things. If you're willing to do things, someone's glad to give you the ball. So go ahead and run.
That lasted only about four months because, as I recall, the promoter got in the middle of it. There was some problem with the San Antonio people, and they wouldn't do certain things. It had nothing to do with the Mexican group. It had to do with the San Antonio people. They wanted to do something different than they originally agreed upon, and we weren't willing to do that. The O'Farrills said, "Well, we'll find somebody else." I said, "Okay." So I quit. Over the years, those contacts with the Azcaragas and the O'Farrills were important enough that I have them today, and I'm utilizing them in our local television station in Los Angeles. It's just a coincidence that we're back in business together.
That was in 1952, and I had a taste of television, so much so that I really was interested in it. Don Nathanson was still pressing me that I ought to do some things in television. So I started looking to see how we could get into the television business.
A friend of mine here in Los Angeles, Paul Ziffren, called me up and said, "Burt, would you be interested in a television station in Honolulu?" I said, "I would guess so." He said "Well, I would want you to meet the man that is running it, and he can make the deal for you." So I looked up this man whose name was George Bowles. He was running Channel 5 in Honolulu, the NBC affiliate. I went down to his hotel. Here was George, a magnificent promoter.
ALLEN: This was here in Los Angeles?
HARRIS: George had this television station in Honolulu, and we wanted to buy it. I don't remember the price. It was like a million and some dollars, and I became very interested in it. The next thing I knew I flew to Honolulu with George. The station was owned by the people who owned Dole Pineapple. The president of the company had had a heart attack. His brother was president of Dole Pineapple as I recall and they wanted to sell the station and get out of it. George had been running it. George was not a good operator.
I met with George and I met with the owners. The conclusion was that we reached an agreement to buy the station. Thirty percent down and the balance on a note. George said they'd draw papers and send them to me and we'd have a deal.
I came back to Los Angeles and several weeks went by, and I didn't hear anything. I tried to get a hold of George and couldn't get him. I called the brother of the Dole Pineapple man and asked him where the papers where. He said, "We wouldn't sell the station without cash." This was a Friday in late 1952 or early 1953. I think it was January of '53. As a matter of fact our daughter Melissa was born in 1953 and my wife couldn't go with me to Honolulu. Shirley stayed in Los Angeles, so I went over there, and the owner said they wouldn't sell it for anything but cash. I said, "Well, George Bowles hadn't told me this." He said, "Well, forget George. I'm the guy you have to deal with and we'd only take cash and we need to make the deal right away." I said, "How long will you give me?" He said, "How long do you need?" I said, "How about Tuesday morning?" He said, "Okay, that's fine." So on Saturday I tried to get a hold of my cousin, Irving, and friend Don Nathanson both of whom were out of the country and by the time I reached Irving and talked to him on the phone, he agreed to put up the money to buy the station. I called the man in Hawaii on Tuesday morning and told him we're ready to go. There was kind of dead silence on the telephone and he said, "I'm sorry to tell you we made a deal last night with Honolulu Advertiser. We sold it to them." I said, "I thought we had a deal until Tuesday morning." He said, "Well, we never really thought that you would do it, so we sold it last night." That was the first of many, many deals that we made in my lifetime that were never made. I learned a lot.
About a month or so later I had a call from a man named Mack McConkie who I had met when I was in Honolulu. I met this man who was selling wrestling films to the television station. He called me up and said, "What are you doing?" I said, "Nothing." He said, "Why don't you come over here? I want to show you what I am doing." He was an actor's agent from Kansas City really. He showed me what he did, which was to take wrestling films and sell them to television stations around the country. He said, "You know, you should be in this business, not me. It's a very easy business. They need programming. Why don't you buy the business from me?" I said, "That sounds like a good idea. I'm tired of loafing, I've really got to find a business here." I called my cousin, Irving, and asked him if he'd lend me the money. He said, "Yes," and the next thing I knew I bought that business.
ALLEN: What was the business called?
HARRIS: At that time there was no business. He had his own business but I just bought his inventory of wrestling films and I, for the first time, formed Harriscope. This was in the beginning of 1953. I called it Harriscope, Inc. I formed the company and bought the wrestling matches. My cousin, Irving Harris, said, "I want to be your partner." Then Don Nathanson said, "I want to be part of it too." Don owned 20 percent, I owned 40 percent and Irving owned 40 percent. Irving put up all the money. I bought the wrestling films, and I inherited a contract to produce wrestling films which I knew nothing about. Saturday night I was out at the arena with a cameraman telling wrestlers to stand up and lie down and shooting the films. Then it was movieolas, all this stuff making wrestling films. I knew nothing about it at all, but again this was just another business.
That was really my entry into the television business. I would make one hour films, and I had my name on the screen, "Produced and Directed by Burt Harris." I remember I inherited some films, produced some films and bought some more. Producing was a good business, but it was a sporadic business. When you produce, you're producing. Then while you're not producing ‑‑nothing. I said, "You know this is ridiculous. At least I'm going to distribute my own stuff." I started distributing my own programs. I started producing some horse races and I started producing some boxing films and getting other films to distribute from people. I decided to distribute because distributing at least was a business. It went on all the time. That business was doing fine.
In 1953, the NAB (National Association of Broadcasters) had its convention here in Los Angeles at the Biltmore Hotel. I joined the NAB as an associate member and went to exhibit. There were maybe five people exhibiting at the NAB television convention at that time. I was one; Dave Wolper was one; Ziv from Cleveland was another one. TPA (Television Programs of America) was also there. I took a room at the Biltmore and showed my wrestling films.
Those were all the TV distributors. That's all that was being sold to television. Television had been around but there really wasn't much of anything to sell. I produced and distributed those films in '53, '54, '55.
In addition to that, in 1953, Don Nathanson was doing some other things for NBC and the Toni Company. He asked me if I would do the executive work on a series that was on NBC called "So This is Hollywood" which was produced over here at the Roach studio. I became the production executive for a television series on NBC. It lasted only twenty-six weeks, unfortunately. It didn't last very long. I thought it was going to be "I Love Lucy" but it wasn't.
At the same time I really was interested and I kept being interested in television broadcasting and in cable television. I remember looking into a company that was called International Comprovision. International Comprovision was offering closed circuit television in Needles, California and in Cedar City, Utah. They were a closed-circuit cable system that didn't import anything. They originated everything.
ALLEN: What kind of business was it then?
HARRIS: They were a closed-circuit cable system with no importation.
ALLEN: It originated everything right there.
HARRIS: It originated everything and they were affiliated with the ABC and NBC network. They were affiliated with NBC. They were affiliated with ABC. They used to pay five dollars a program, and they'd get the programs on kinescopes or film, and they'd originate them in the studio. There was no television in those cities.
ALLEN: No broadcast television?
HARRIS: No broadcast television.
ALLEN: So they wired up the community.
HARRIS: I thought that had to be a good business. Even though they weren't importing anything. In time I figured they could import. I was looking to buy that business. I went up to Cedar City and looked at it and was very interested in buying the business or joining them. I decided to go up to Miles City to look at that installation as well. It was just being built. I was on Western Airlines and hopped along. One of the hops landed in Casper, Wyoming. I got off in Casper, Wyoming and I looked around and I said, "What do they have for television?" Someone said, "There is no television." A cable system, but no television. I said, "Gee, we ought to put a television station here. I think that's what I'll do."
I went up to Miles City, and I looked at that, came back and we never did buy International Comprovision. It had a lot of problems because it was only origination and they really were struggling. I came back and I talked to a man named Dick Silberman who was with KOHV Electronics of San Diego about Casper. He said he had some engineering for Casper already done. He'd sell it to me for $1000 if I would buy their equipment to put into the station. I said, "That's a good deal. Let's do it." I also talked to a friend of mine named Bob Berger who had a company called Standard Television. They distributed programming to television stations. He said he'd like to come into that television station if we're going to do it. His father would put up the money. We agreed we'd put a company together. We'll own 60 percent and his father will own 40 percent. We came back to Los Angeles and filed for our construction permit in Casper. We got a permit from the FCC.
ALLEN: So at that point the freeze had been lifted.
HARRIS: The freeze had been lifted. This was 1953, or '54. I went back and we put the television station on the air in two rooms in the Townsend Hotel. They were about the size of this room. We put the transmitter in one room and a camera and a projector in the next room and that was our television station. And turned it on.
Looking back now, going into Casper was both a plus and a minus. It was a minus because it got us started in little television stations instead of big ones. To that degree it probably hurt us. On the other hand, it put us in business, because who knows, maybe we would have never gotten in the business. Here we were in Casper, Wyoming, and I had to move out of the hotel so we rented a garage to put the studio in. I remember going across the street from the garage to the insurance company. The insurance company was Daniels and Company--Bill Daniels. I walked in, here was Bill. I introduced myself and up the street was his partner, Gene Schneider. They owned the cable system in Casper, Wyoming. That's where they got started. It was very interesting. Bill was very friendly. My associate, Bob Berger, hated the cable business. He just hated it because they were our enemy.
The cable company was providing service to probably 30 or 40 percent of the people in Casper, providing services from Salt Lake City. We were trying to come on the air. We had no live television in those days. Bob said "The minute we come on the air, boy, they're out of business. No more cable company." I remember saying, "Bob, you're out of your mind. You only think that's going to happen." He thought they would dry up and blow away the minute we turned the television station on the air. Of course, that didn't happen at all.
I got to know Bill and got to know Gene. Don Hathaway came on the air about five months later. Here were two television stations in a little town that couldn't support one.
ALLEN: How big was Casper?
HARRIS: 45,000 people. Both television stations were losing about $10,000 a month--both in serious trouble.
ALLEN: And Bill still had the cable system.
HARRIS: Bill and Gene had the cable business that was doing all right. Now we had to decide what to do. Do we quit and go home with our tail between our legs or do we try to fight it out and hope that Don will quit. That went on for about a year. Bill Daniels was going to build a television station in Farmington, New Mexico. I talked to Bill and said, "Would you like to buy some television equipment?" He said, "Why?" I said, "Well, maybe I can buy Don's business." We'll buy his radio station and the television station, he'll quit, you'll take the television equipment to Farmington. Now at least he'll be out of town. That's what happened.
Don told me afterward that if I had waited thirty days he'd have quit without us buying him out. We bought him out. He quit and we now at least were able to get to the station to where it would break even. That was like 1955, '56. We stayed there for two or three years without doing any growth in broadcasting or cable and just ran the radio and television station. I, meanwhile, was still producing and distributing television films as well.
ALLEN: You were still living in Los Angeles.
HARRIS: I never moved out of Los Angeles all of those years.
ALLEN: Getting to Casper was not exactly easy.
HARRIS: Well, it was a commute. After we barely turned it on the air, my associate, Bob Berger, moved there because he just decided that it had to be run. He literally moved up there.
ALLEN: Do you recall any other situations at that time where broadcast overbuilt the existing cable. Usually it was the other way around, wasn't it?
HARRIS: I'm sure it happened in many places because many times cable started where there was no television and then eventually one TV station went in. Originally the feeling was that cable could only be where there was no TV. I remember a number of places when someone said, "Do you think cable will work here, there's a television station here?" I said, "Well, it might work if there's one TV station. Might work." But, you know, it eventually went into two, went into three, then went into twenty.
In 1957, I think, I decided to buy a television station in Great Falls, Montana from what I think was the largest cable company in the country, H&B American. They were headquartered here in Los Angeles, run by a man named David Bright. David had a reputation of being a difficult man, someone difficult to deal with. David and his two associates, Ernie Scanlon and Dan O'Shea owned the Great Falls television station. I remember talking to David about buying the television station from him, which we did. Then we had two TV stations. We kept running those till about 1960. Great Falls was losing money and Casper was about breaking. Even so it was really kind of a struggle.
In 1960 as I recall I was going through Chicago and I stopped to talk to my cousin Irving. He had told me that he just made an investment in a magnetic tape company in Los Angeles. He asked me to look at it when I got back here. I looked at it. It was a syndicate that really had bought it. I looked at the company and six months later I was president of that company. We were competing with 3M in manufacturing magnetic tape.
ALLEN: What was the name of the company?
HARRIS: Greentree Electronics. So I spent about six years, in addition to the broadcast business in also trying to develop that company--running a magnetic tape manufacturing company, which we sold to Bell and Howell in about 1966. They ran it for two years and went broke, went out of business. 3M was just so tough. We were just lucky. I took that company which was losing money and I built it into a profitable business. We did very well.
ALLEN: Were you still running the syndication of the wrestling films and other properties?
HARRIS: Yes, but I wasn't producing anymore. We were just syndicating.
ALLEN: Living off the back list?
HARRIS: Yes. When someone would come into the company and say, "What are these films here?" I'd say, "Well, we eat off of that."
Let's see there was another business we had too. Back in the '50s we also bought a business that had the exclusive patents on the Mobius Loop cartridge that radio stations use for all of their commercials. And we were in the background music business, called Mood Master. This was really a failure because Muzak was a much better way to provide background music, rather than cartridges. Cartridges are the same music over and over again and it didn't really work well.
In 1963 we bought a television station in Bakersfield--KBAK-TV. That was a UHF market. There was no cable in that market either.
ALLEN: That just about wraps up this tape. Good place to break.
End of Tape 2, Side A
ALLEN: We're looking at Monday afternoon, the 5th of February, 1990. I'm continuing our discussion with Burt Harris in his office in Los Angeles.
HARRIS: Now we're in 1965. We had just lost out on buying the interest in TelePrompTer. At the same time that I was running Greentree Electronics and Harriscope. I also was president of the company called Metrolonics which was a metrology measurement company in Burbank.
ALLEN: What is metrology?
HARRIS: It's the study of linear measurements and lengths-- metrology. God only knows what I was doing in that business. We were a testing laboratory for measuring lengths, weights, densities, and whatnot for the war surplus company. Electronic measurement became a huge business which I got into later on as a director. The linear business we sold to a company that was owned by the Rockefeller brothers. Whatever happened to it? It just got consolidated into a lot of other things. That took some of my time. It really was a left handed thing.
Right about that time in 1965 I had a call from a man named Leon Papernow who was president of H&B American. H&B American was, I believe, the largest operating cable company in the country. Leon called and asked me if we would be interested in buying their Palm Springs cable company, which was serving about 14,000 subscribers. He told me they needed a very fast deal but they were willing to sell it if we wanted to buy it. I said, "Yes, we would buy it." He said we also had to buy Flagstaff, Arizona along with it--for about $5,200,000--in cash. I said we would buy it. Just like that. He told me to come over the next morning to meet with David Bright who was chairman of the company (the same David Bright who sold me his Great Falls TV station several years earlier). I was asked to bring along a check for $100,000, and we'd sign the deal. So the next morning I quickly made a few phone calls to my associates Irving Harris and Don Nathanson. Told them what I wanted to do. They said okay.
The next morning I was over at H&B's office with a check for $100,000, gave it to David Bright and David said, "I can't sell it to you today." I said, "Really, why not?" He said, "Well, I sold it last night to Jack Kent Cooke." I said, "You did what?" (It sounded like Honolulu all over again.) He said, "Well, I was at the Bistro for dinner and Jack Cooke heard I was going to sell it. He came over and we signed a deal on a napkin to sell him the Palm Springs cable company." So I said, "Well, thank you anyway." David said, "No, I'm going to sell it to you. But I can't sell it to you now." He said, "I didn't sell Flagstaff to Jack Kent Cooke, I sold him Dubuque, Iowa with it." He said, "I'll call you in a few weeks." I said, "Okay."
Sometime later I asked Leon Papernow why David was willing to sell what I thought was his best property. He said, "Well H&B stock was selling at four dollars and he thought if he could sell the Palm Springs system at what was I think about $410 a subscriber, that he could value the whole company at $410 a subscriber. Then all of the stock would be worth eight dollars a share. So that's why he was going to sell the Palm Springs system.
I didn't hear anything for about three weeks. Then I got a call from David Bright again saying, "Now I'm ready to sell you the business." I said, "How come?" He said, "Well, on the napkin we said that if we didn't have a definitive contract signed in three weeks, the deal was off. It's now been three weeks and there is no definitive contract, so I'll sell it to you." To make a long story short, we bought that business. That was in 1965. So we then took on the cable systems in Palm Springs and Flagstaff at the time.
Shortly after that I was interested in putting a cable system into Bakersfield. At that time you could own both cable and broadcasting in the same town. There was a new type of antenna that seemed like you would be able to pick up signals from over the mountain. So we could pick up TV stations from Los Angeles and bring them into Bakersfield. While we were looking at that, I remember a man named Lee Druckman who owned the San Diego cable system, called me and said, "Burt, how would you like to have me as your partner in Bakersfield in the cable system? You own 80 percent and we'll own 20 percent. I remember saying, "No, Lee I don't think I'll do that." We own a television station there, Time, Inc. owns a television station there, Lincoln Deller who was a friend of mine, owns a television station there. I want to put everybody together and we'll get the cable system. So to make a long story short, we put the three TV stations together and forty businessmen, including the ex‑mayor, and made a proposal.
Lee Druckman meanwhile decided to apply against us. One councilman made a motion to give the franchise to Lee Druckman and he got it all. I'll never forget that. I said, "Boy that's politics for you."
Then we decided to apply for the franchise outside the city. The city was small. It was surrounded by county. The county had about one and one half as many people as the city. So we went after that and the upshot of it was, we did get our franchise, and we built that cable system probably sometime in the late '60s.
ALLEN: Did you have the other two stations involved?
HARRIS: Oh yes. That was the first cable business that Time Inc. ever was involved in. We kind of taught them the cable business. At least as our partners.
ALLEN: Were you directly involved in managing of the building of that system?
HARRIS: Yes, we built it and we managed it, lock, stock and barrel. Did it from day to day. The Palm Springs and Flagstaff cable operations as well. I was involved in everything we ever did with those.
Sometime around then as I remember it, I decided I wanted to file for the city of Los Angeles. I filed for a franchise and very shortly after, two other companies filed for franchises. Skiatron, Matty Fox's company and International TeleMeter, which was Paramount Pictures. They wanted to do pay television. All three filed at the same time. They kind of carried me along as a little company, so I wasn't much in the limelight while they were really in the limelight. To make a long story short, the city granted three awards, gave all three of us city‑wide franchises. All the motion picture companies said that if the pay TV people went forward with their plans, they would file suit against them at the FCC. It was a threat on some basis. Lo and behold, after big long fights, International TeleMeter and Skiatron withdrew, leaving me all alone with the whole city.
I didn't know what to do with it. I sat for about a year and I remember having a call from Councilman Timberlake and he said, "Burt, what do you want to do with this franchise for the city?" I thought for a long time, about ten seconds, and I said, "Why don't you send me back my $500 filing fee and take it back?" And they did. So I gave up the whole city of Los Angeles for the $500 filing fee. It wasn't very long after that, we were out bidding millions of dollars, for a piece of this city. Again, it shows that I'm not that smart.
ALLEN: What was the reason you were willing to give it up so easily?
HARRIS: No thought. I didn't know what to do with it. It was very early. I didn't know what you could do. There were no satellites, you couldn't import anything. The feeling was that if you built a cable system in the city, what are you going to offer. Who is going to pay for what? It so happens, it wasn't two years later when Pat Weaver, ex‑president of NBC, came in to put in pay television. He had to go through the telephone company. Had we had the franchise, I think, at that time, he could have used the franchise for wiring instead of going through the phone company. He went through eighteen million dollars, and they were in Chapter 11 very shortly. At that time pay television is something that could have been done. That's the reason Paramount wanted it. They didn't want cable television.
I was thinking actually of doing some commercializing, connecting companies within the city, using the cable franchise as the way to do it. I really didn't think about it. It wasn't that it was imminent. Had I just sat with it, did nothing‑‑nobody would have thrown me out‑‑I could have probably hung in for a long, long time. But sometimes you're not that smart.
ALLEN: But you had some thought in mind, when you filed.
HARRIS: Oh sure. I always knew that there was a future. It was just one of those quick things that you should never say yes or no so fast, because it doesn't pay. And other times in my life when things have come along and I realized it, I didn't have to make a quick decision. That took some experience and learning. That was one of the few times that I really didn't use a lot of good judgment, or good sense. Who knows what could have happened or would have happened. There was the whole city of Los Angeles at my beck and call. I wasn't smart enough to know it at those times.
ALLEN: So at that point you had Palm Springs and Flagstaff and Bakersfield, the two television stations.
HARRIS: Three TV stations--Casper, Great Falls and Bakersfield. We had Bakersfield at that time. We also had 30 percent of the CBS affiliate in Albuquerque. That was about in the '60s. The late '60s.
ALLEN: You still had Casper and Great Falls?
HARRIS: Still had Casper and Great Falls. I'm trying to figure when we took on the Billings television station. That must have been 1967. Something like that. Then we had some radio stations. We had a radio station in Pomona, we had a radio station in Long Beach, we had a radio station in Casper. We had a radio station in Great Falls. I think that was it.
ALLEN: Were these properties you purchased or built?
HARRIS: We built the radio stations in Long Beach and Pomona and we bought the stations in Great Falls and in Billings. While I was doing all this I was still president of Greentree Electronics, which was the magnetic tape company. So we were still manufacturing, and we were still in the background music business. We had all these different businesses going. Each thing was kind of growing on its own.
It must have been about 1969 when I was contacted by Hornblower Weeks to ask me if we might consider merging our cable systems with Cypress Communications. Cypress Communications was the first cable company that had stock offered to the public. That company, surprisingly, was headed by Leon Papernow, the same man that was in H&B when we bought Palm Springs years before. It was owned partially by the public, partially by Leon and Randy Tucker, partially by Hornblower Weeks and partially by the Coles of Cleveland. They were Cole industries.
ALLEN: Were they Cole Publishing?
HARRIS: No, it was not Cole Publishing.
ALLEN: Is this the same Randy Tucker who was with Milt Shapp originally?
HARRIS: There are two Randy Tuckers. I'm not sure which Randy Tucker that was. Randy and Leon had founded that company and put it together. I remember Leon telling me that he worked for Milt Shapp years ago.
We investigated the opportunity, and we tried to our companies together as I remember. They almost fit but it didn't quite do it. I then heard that United Utilities, a large telephone company headquartered in Kansas City, was interested in selling their cable systems. Ralph Hembry was the president. I flew to Kansas City. They had 55,000 subscribers. The price was eleven million dollars.
ALLEN: Where were these?
HARRIS: Mostly in the Kansas City area. They also had a contract to manage systems in Raleigh, Greensboro, and Charlotte, North Carolina. They had to have a deal by the end of the year, and this was December, so they needed someone to work in a hurry. I made a deal with Ralph Hembry and we made a deal to buy those systems for eleven million dollars. I wasn't sure where I was going to get the eleven million dollars. Generally, when we made deals, I never knew where I was going to get the money, but I always knew that Irving Harris had the money. If he said, "Go ahead," I knew we'd always find the money. We never borrowed from banks. We always just put up our own money.
The importance of that transaction was that it gave us 55,000 more subscribers right away, plus 20,000‑‑I don't know 10 or 20,000‑‑we also picked up. Suddenly we had a rather large number of subscribers. And that was because we bought them at really a low multiple. We paid something like $220 a subscriber. That combined with all our others, combined with Cypress made it a fit.
By the end of 1970, we were able to close a deal with Cypress merging the two companies. We backed into the control of Cypress Communication, which was then the fourth largest cable company in the country. I don't remember what we had, 130,000 or 140,000 subscribers. Something like that. I became the head of Cypress. Leon became the vice president of the company, Randy Tucker returned, and we went into the building right across the street from here. We closed the offices of Cypress which were down in Santa Monica, and we were off and running. I remember Berlin, New Hampshire was part of it. We had something in Ohio and Pennsylvania and Louisiana and Mississippi. We really had systems all over. I think we were in forty communities at that time. As I said, we were the fourth largest cable company. TCI may have been bigger. H&B American, Jack Kent Cooke maybe.
In all those times we did a lot of running around looking for franchises in Dallas, Dayton, New Orleans and other large cities. We were really out going. We had a great team with Cypress. We had a terrific group of people. Frank Drendel, who left Continental to come in with us; Jerry Green; Harvey Simpson, was our inside controller; John Calvetti; Marc Nathanson was Director of Marketing, and others. They were really a great bunch of guys. We really thought we ran the company well, and it was doing well.
In 1972, we were approached by a number of companies, including Viacom. The upshot of it was we merged with Warner, which had just purchased TIC from Al Stern and his company. A few months before, Warner had decided that they wanted to get the cable business. They had just closed on TIC. They also bought Continental Telephone cable systems right after they bought Cypress. We closed the deal in September of 1972, less than two years after we merged with Cypress.
ALLEN: During the time that Cypress was put together did you get any major franchises added to the collection? Did you acquire any more existing systems?
HARRIS: We acquired systems. The last one we acquired was in Canton, Ohio. That put us at 180,000 subscribers when we finally merged. We built in Oshkosh, Wisconsin, we got a franchise there that we built. We were working all over the country on new franchises. Major cities were a question at that time. We were asking ourselves at the time, do we want them or don't we want them. We had visions‑‑all the companies had visions‑‑that the big cities were eventually going to be where it was at. There was activity going on in most of the big cities but almost none were granted.
We were a very active company at the time at Cypress. We had a good reputation, we had a lot of things going. And Cypress's stock, when it first came out was 7 1/4. We had a secondary at about 7 1/4 or 7 1/2. It was up to about 27 by the time we merged with Warner. We were offered $27 a share as I recall by Warner, in cash. We decided we would go ahead and sell it. Looking back, it wasn't so smart.
Warner was having an underwriting just for us. Their stock was $40 a share. As I recall we got a half of a Warner share for each Cypress share, so they must have given us $20 in their stock. And a few weeks before the underwriting and the closing, I remember my cousin, Irving, calling me and telling me he decided he was going to take the stock instead of the cash. And I said, "Well, if it's good enough for you, it's good enough for me." He said, "Well, you know, Burt, stocks go up and down." I said, "Well, if it goes down to 30 it won't bother me." So I took the stock and one year later, 1973, the stock was 6 5/8 from 40. I think I would have committed suicide if we had sold our broadcast business with it because all the people who we had given stock options to in the company were all under water, including me. I remember it must have been a year later, I had options on maybe 50,000 shares. I went into New York to see Marty Payson who is with the Office of the President of Warner today. Marty is the general counsel of the company, and I went to see him because I wanted to exercise those options which were still valid. Still below the market value. I remember I had lunch with Marty and after I was done Marty said, "Burt, I hate to tell you this but you can't exercise the options on just some of the stock. You have to do all or nothing." And we all were under water. I remember saying that was an expensive lunch, and I'm glad he told me after lunch, because I wouldn't have enjoyed it.
That was the second time that I had not exercised options. When we sold the company, if I had sold the stock I would have made a lot of money. Instead I held those options as a lot of other people did and the stock went from 40 to 6 5/8. We had many people who had exercised options and not sold them. So the stock was really way under water. This was 1972.
Warner offered me the presidency of Warner which was the second largest cable company in the country at that time, if I would move to New York. I wasn't about to leave California. Al Stern, who was the head of TIC, stayed on as president and I stayed in Los Angeles as vice‑chairman of Warner Cable. I was on salary and I really did very little for Warner Cable. I ran my broadcast business. I went into board meetings every three months and they really asked me nothing. Al who was running the company ran it and didn't really need my assistance. Cypress had eighteen executives and I remember Jerry Greene saying to me at the time, "Burt, a year from now, there will only be half of us around." It happens in mergers. I said, "Oh no, not this group." A year later there were two people out of the eighteen that were still with Warner. Partially because it moved to New York and some people wouldn't move to New York and partially just because it was Al's company. He ran it until Gus Hauser became the head of it. Gus came into Warner from Western Union.
I didn't want to go to New York. I had really thought that Warner was going to let me run our end and Al Stern would run their end. Eventually we'd put them together and they'd keep everybody. In hindsight it still seems to me to make a lot of sense. But they didn't. They closed Cypress' offices and that was it.
I stayed with them for one year. During that time, I really did nothing. The only thing I did for Warner was that I went to Japan in February of 1972 to help them in their negotiations with Pioneer Electronics. Warner had an arrangement with Pioneer who was going to manufacture some equipment for Warner. Other than that, I practically did absolutely nothing. I felt really I was being paid for doing nothing, and I just wasn't comfortable with it. Had they asked me something, I would have probably still been there. But they didn't ask me anything.
About a year later, 1973, the end of the year, I was approached by Solomon Brothers. They asked me if we would have any interest in merging all of our broadcasting interests with Time Inc. who at that time, owned cable systems in the northern part of San Diego. Plus they had Manhattan Cable. They wanted to know if we wanted to put them together. They said that if we would put them together, Time Inc. would own a third, we would own a third, and they'd sell a third to the public. Time Inc. did not want to be in a controlling position in the cable business. They had their broadcasting business. They didn't want to get out of cable entirely. But it just made some sense for them. I was very interested in it. We got very close to a deal, and then they wanted to put Manhattan into it. I didn't want Manhattan which was losing a lot of money. So we ended up not doing it. Time Inc. sold their cable business to ATC, which they eventually bought back at a higher price.
ALLEN: Could we go back for just a minute to while you are thinking about it?
ALLEN: Were you actively involved in the day to day management of the cable operations?
HARRIS: Oh, yes. Absolutely. In every phase of it. I was really hands on in the cable business. Everything from active working in the franchising, setting rates, working with cities on what we did, marketing how we got subscribers.
ALLEN: Let's look at a little bit of that then. From the equipment standpoint where were you buying equipment in order to build the new franchises, starting with Bakersfield, and so on?
HARRIS: Well, that's kind of interesting. In Bakersfield, they did have that antenna. First we bought a Canadian antenna. It was about 100 feet long. It was a huge complex that somehow could gather signals over the mountain. It took signals right from over it. I'm trying to think of what the devil that was called. It wasn't a Benton. I don't remember what that was, but that was a very specialized antenna.
ALLEN: Were there many of them around?
HARRIS: No, very, very few. First it took a mountain in between and the antenna had to be big enough that it gathered all those signals. We brought nine channels from Los Angeles, over the mountain, picked them up right there off the air, and brought them into the cable system there. When I think back on the original cable stuff‑‑really, early, early cable‑‑with the open wires that were in Needles and Cedar City. Just open wires and amplifiers. They weren't special amplifiers, they were just regular amplifiers in those days. It cost about $1500‑$1800 a mile to install. We were charging three dollars a month in those days.
ALLEN: What was the hook-on fee?
HARRIS: Well, it started out at $100. We would get back everything for $100, so you really had no investment. I don't remember when it was when we all realized that if you got rid of the hook‑on fee, what we had was the blade in the razor. That was worth something so that you could practically speaking, give the hook‑ups away. We gave away the installations in due time, to anybody who would hook up. We went through all of the phases of hooking up everybody. If you remember in Akron when Al Stern went into Akron, Ohio, they hooked up everybody. It really was a terrible losing proposition that they hooked up everybody because the people didn't stay on.
ALLEN: That was the 24 channel system. Parallel 12s.
HARRIS: Yes. When you mentioned other franchises at Cypress, we got the Columbus system where Warner put the QUBE system, that was the Cypress system. We had that when we were working in Dayton as well.
The biggest franchise we probably put together was in Columbus. We were going to double wire, which they did for QUBE. Those were the times we had meetings trying to figure out what to do. I remember a board meeting at Cypress when I was discussing with the board about spending two million dollars on a franchise application. After a half hour of discussion I finally said, "We're going to spend the two million dollars and remember, "You pay your money and you take your chances." I remember my cousin, Irving, saying, "You're absolutely right, Burt, I also want you to remember that a fool and his money are soon parted." You can come up with a saying any time you want to.
We were very active in those franchises. My mind doesn't bring back all of them. The Columbus one was really difficult. We bought out the Rayhalls who held the franchise. The Warner merger came right after that. Right after Warner bought us out, they took Columbus and decided to test QUBE. I'm sure it was a big loser for many, many years. Whether it was important and significant to their getting franchises in other major cities is hard to say. But I remember when we got Columbus, we really were deciding should we put in a second wire for $800 a mile or wait until we needed it, and then it will cost us $1,600 a mile. We bought Jerrold equipment which was all over the place at the time and Entron equipment. There were so many potential services that we were talking about, and we were considering could two-way come in. This was when the first two-way conversations were starting. The little system in McLean, Virginia was a two-way system that had been installed. I went there to look at the system to see what they were doing. There was really a lot of discussion. People really didn't know whether two-way was really going to be important in the future.
ALLEN: What were they doing in McLean as far as two-way?
HARRIS: They were trying to prove that it worked. They had 100 houses, literally, hooked up, as I recall. They would pass out questions, and you could push buttons on the box and respond back. That system was in place. I don't think they ever really did anything with it. It was economically unsound. It's much like using some of the frequencies in broadcasting on the vertical interval. No one really has ever figured out a way of economically making it work. It works mechanically. Nobody has been able to figure out something that people are willing to pay for.
As I look back, the cable business was nothing more than a transmission system. I never really believed that it would be a program service. I always said it was just a transmission system and that's it. I said, "We are really just carrying the broadcaster's signals to areas they can't get to." I never really believed that the programming would be important.
There was a time when we had our television station in Chicago, and I went to Ted Turner. Ted had about three million subscribers on CNN and I remember saying, "Ted, how about affiliating with us in Chicago? We'll give you more homes immediately than you've got in the whole cable industry. And you'll have 100 percent of the market to sell advertising." At that time ESPN was paying the cable operator a nickel a subscriber to be carried. And if you recall in the broadcasting business, the networks shared the revenue by paying the broadcast stations. I really thought here was a way for Ted to get 100 percent instead of 50 percent. What I didn't realize was that if you could get the cable systems to pay you and be on half of them and had half the advertising as well, that's a better deal than I was proposing. I don't know if Ted realized that or not but anyway we never made a deal. I always thought if they (the cable companies) are going to start paying us, then that was the way it should be. As it's turned out, of course, the cable companies are paying the program people. It's hard to believe that the industry has provided an avenue or is providing television that allows for narrowcasting. If you have access to all of these homes, then you can do narrowcasting as long as the public is subsidizing it. That's what is really happening. The public in its rates, are paying the cable companies by subscribing. The cable companies in turn are paying the programmers a subsidy and that's allowing the programs to be there. Advertising alone couldn't or would not probably support all of these services, but the public is paying for it. It's a marvelous way for it to happen.
ALLEN: What has evolved is a modified form of pay TV along with advertising?
HARRIS: It's all pay TV. Years ago I tried to get the industry to stop using that word. I think I was chairman of the NCTA at that time, when I said pay television is a terrible name to hang on this industry. I tried to get them to call it subscription television. It was too late. Everybody called it pay television, because everything is paid. There's no difference between your paying for one channel or your paying for fifty channels. You're paying. Where is the difference between paying and non‑paying? To this day, the industry thinks of pay as those individual channels or pay-per-view, where, in fact, you're paying a subscriber fee by the month, the same way.
As I think about it, historically speaking, I've touched an awful lot of various communication industries, over my history. I've been in broadcast television. We had both UHF and VHF. We've been in small markets and big markets. We've been in cable television.
HARRIS: Program syndication, program production--MDS. We had an MDS system in Puerto Rico. STV, we had both in Chicago and Los Angeles. I've not been into pay-per-view. But really they're all different parts of this same business.
In those early days of getting subscribers, we would go door to door to get subscribers. We did this when we first went into Puerto Rico. I guess I haven't come to Puerto Rico, yet. But the marketing in those early days was knocking on doors and getting people to subscribe. Giving away of turkeys and God knows what, was the same marketing that we basically use today.
ALLEN: Okay and we're right about at the end of another side of tape. So we'll take a break for just a minute.
End of Tape 2, Side B
ALLEN: We're on Tuesday the 6th day of February, 1990, starting the second day of recording with Burt Harris in his office in Westwood. Burt, as we finished up yesterday we started to talk a little bit about Puerto Rico and the experience down there. Then after we finished the recording we talked a little bit about it. It might be very interesting to try to do a complete case history on the Puerto Rico experience starting with when you finished at Warner's and some of the owners came to you and said, "Would you help us out?" And you said, "I don't want to."
HARRIS: Right. Well, why don't I just run through Puerto Rico as a case history. Greater San Juan, Puerto Rico consists really of five cities. There are approximately a million people in 250,000 to 300,000 homes. Somewhat typical of urban markets, it had a high density of homes per mile. It was served by five off‑air television signals, all in Spanish. It was a Spanish market. One of the stations was educational, or a PBS affiliate, and the other four are commercial stations. The antennas came from several directions so there were some off‑air signal problems. The market had a low economic base. But it, like many other markets, offered some opportunity.
The original franchise holders and operator decided that the market could develop a sufficient number of subscribers to operate profitably because subscribers would like to get some better reception. Some of them would like to hear some English. Some would like to see some more news and maybe some additional sports. Although they were not anticipating importing any signals, they felt they could operate what was really a closed circuit television system on a profitable basis. So that's what they began to do. They arranged for their financing. By the end of almost two years they had developed about 5,000 subscribers...
ALLEN: Could we put a time frame on where we are?
HARRIS: Yes, they began in 1972. By the end of 1973, a little less than two years of actual operation, they had wired a high density area and developed 5,000 subscribers. Each was paying about five dollars a month. They were offering three channels of closed circuit television which included running movies, some recent sports events from Madison Square Garden, some cartoons and live news. Most of the 5,000 subscribers were not paying their monthly bills at the time. By the end of 1973 the company continued to be insolvent, which was not unusual for cable systems in the process of being developed. But the loans were in default and that's when they asked whether I would come in and take over the management of the company. I did this really almost as a favor in hindsight.
HARRIS: The principals of the company that provided the equity funding were Ray Stark, a successful motion picture producer in Hollywood, and Ed Pauley, who was the head of Pauley Oil Company--probably more known for Pauley Pavilion at UCLA than anything else. They had put up a little over a million dollars as the equity money. Pittsburgh National Bank and Home Life Insurance provided the loans to the company. A man named Leonard Krane was the principal who put the whole deal together. He and his associate George Brownstein, who was the chief engineer and sometimes general manager. This is when I was asked to come in.
ALLEN: Who brought you into the deal?
HARRIS: Home Life Insurance basically asked me if I would come in. The late Jim Straley was the man who really contacted me. Along with Leonard Krane. I had known Leonard Krane who was trying to get into the cable business at one time. Puerto Rico was really Leonard's second deal with me. He also asked me because he knew he was in trouble with the lenders, and he had hoped that I could help save the company for them.
When I came in and examined it, I learned a number of things, particularly errors that were made in putting it together. The opportunity was there. However, first the company was totally under financed and way over leveraged. Eighty‑five percent of the funds were borrowed at high interest rates and the company could not really succeed on that basis. That was the company itself.
The other problems were that the monthly rate of five dollars was too low. The daily practices of the company and not enforcing disconnect, encouraged people not to pay their bills, because if you learned that your neighbor didn't pay, and it wasn't disconnected, why should you pay it? The operation wasn't as sound as it should be.
Also, there was no signal importation. The only importation really available was in the Virgin Islands. There was a CBS station in St. Thomas and an ABC station in St. Croix. They couldn't be imported because one of the major owners of the company was also an owner of one of the television stations in San Juan. Under the Federal Communications Commission's rules, the cable could not import those signals because of the cross ownership. So the company had severe problems all the way through.
I alerted everybody to that and told them I did not think it could succeed on that same basis. Nevertheless, the lenders continued to provide capital and during 1974, I expanded the company, doubling the subscribers to 10,000. I also made sure they were all paying on time. But even so, there was no way for the company to succeed under the way it was set up financially at that time. Either it had to be reorganized or it had to be closed.
By the beginning of 1975, the original investors asked the company to put in the Chapter 11 for reorganization. Without going through all of the detail, the company was reorganized. I reorganized it in such a way that by bringing in new equity capital‑‑mostly mine‑‑restructuring the debt, raising the rates from five dollars to nine dollars per month, and changing the ownership so that the owner that created the problem with the Federal Communications Commission bowed out of the company, we had a chance. We were able to import the signals from St. Croix and St. Thomas, and we changed the system from a closed circuit cable system to a conventional cable system. That turned the company totally around. I knew that it would be successful in time, the same as any other cable system on mainland.
I pointed out to the owners that I felt the company would be successful in time with sufficient capital. Also, that the company would then be converted from a partnership to a corporation which would cause the original owners to recapture all their losses for tax purposes. With that information the owners decided to bow out. They preferred to recapture their taxes immediately and get out of the company, rather than continue to remain with the company. Harris Cable at that time, became the principal owner of the company and the company then set off to develop on a standard basis.
The system was helped by satellite reception which was in effect in 1978 in Puerto Rico. Although we were on the very edge of the satellite footprint, we were able to pick up the early satellite signals of the time. Then the system developed like all of the others. By 1986 we had 108,000 paying subscribers and a very, very successful cable business. The original theories of the promoters, or the original franchise people were correct. The mistakes they made were in the funding of the company because all cable companies lose money as they get started. In addition to funds, the company needed some basics which included how to run the company on a day to day basis--what to import and what to offer the cable subscribers? How much you had to charge in order to be profitable over a period of time? So it was one of the very few cable companies in the country that lost money for the lenders. Home Life Insurance Company and Pittsburgh National Bank lost about two and a half million dollars.
I will say that when I reorganized the company I offered the company to the lenders and told them that if they would put up the equity capital, I would continue to run it and in due time, they'd get all their money back along with their interest. Neither the insurance company nor the bank wanted to be in that kind of a position. The continued loans by the lenders, along with our equity capital, made it possible to further build the system. The lenders had confidence in the system and in the new management, and it proved to be right. I was always sorry the lenders lost their original money on their decision. The facts are it did turn out exactly as I had anticipated. Much greater, as a matter of fact. I never really thought we'd have over thirty or forty thousand subscribers, much less over one hundred thousand.
ALLEN: Did you end up wiring the entire metropolitan area of San Juan or the entire island?
HARRIS: We only wired the five cities that comprise greater San Juan. By the time we decided ourselves that cable was going to be successful on the island, Puerto Rico's Public Service Commission decided that they would only give one franchise to each company. Therefore as the other markets in Caguas, Macaques, and Ponce and whatnot were developed, they gave each to a different company. That was in 1986 or '87. They have now gone away from that and they've allowed a number of the companies to combine. Now there are probably ten or fifteen cable companies on the whole island.
I'm not as sure about the degree of success in the other outlying areas because rural Puerto Rico still is Spanish speaking. San Juan is much more English.
I think in just looking at that market, what makes that a successful cable business, is the sports events. You don't really have to know English to enjoy them, even though most of the people from Puerto Rico are bilingual to some degree. They were starved for sports. By bringing in all of the sports from the mainland, they could watch them without having to know English. I think that is the principal reason for the success.
I will say that our cable company was the most dominant factor in providing English to the people of Puerto Rico. Most of the people think of Puerto Rico and they think of New York Puerto Ricans. The facts are that most of the people who went to New York were the poorer, uneducated Puerto Ricans. Puerto Rico itself is a marvelous Commonwealth. Although the economy supposedly is in a lot of trouble, it does really very, very well. There is a split between those who want to become the 51st state and those that want to be independent. Most of the people probably feel that what they presently have as a commonwealth under the United States is the best of all worlds. They get help from all ends. There are more people coming back to Puerto Rico today than leaving. So it's a fine developing area.
ALLEN: How much time did you have to spend in Puerto Rico during the early days?
HARRIS: I was probably in Puerto Rico every other month for at least five years. I would go down for three or four days at a time. We had a half a dozen managers at that time. Each manager would last a couple of years. As a matter of fact, I remember the first manager I installed. I decided I would hire a Puerto Rican that I felt I could teach the cable business to rather than hiring someone from the United States and teaching them Puerto Rican. I hired a former general manager of the Coca Cola company, Umberto Cuevas. Umberto stayed with me a year and then he left to go to work with the government, which I was very comfortable with. What I found out was that although Umberto spoke good English, most of the people‑‑even though they spoke two languages‑‑did not really understand my innuendos. When I would tell him things that I thought we had to do in the cable business, he always said yes. But I most often found out later that he really didn't understand me. It was too difficult. When he left, from then on, every manager I hired was brought down from the States. The managers who were there while I was there included Leonard Krane, Umberto Cuevas, Bill Sinkunas, Everett Kochheiser, and John Cardenas. John stayed the longest. He was there about six years. He was followed by the current manager, Pat Laide who came out of Arthur Young & Company.
We had a lot of different managers, but I was very close to the operations. I had a hand in what went on every channel, how we wired, what we did, everything. I was there at the hearings. We had many, many hearings before the Public Service Commission that had to do with rates, service, the franchise operation, and particularly for the several years that the company was under Chapter 11.
We had some marvelous employees. Most of our employees were there a long time. At the height of our construction I think we had over 600 employees. Most of them stayed with us for a long time because jobs are not easy to find. We had two unions that we had to deal with and the unions are very strong in Puerto Rico. We never had a strike that I recall, but we always had union problems. We had to talk and meet with the people. We had an office union and a technical union. So I had all of the complications and problems that you find in any kind of a business and yet as I say the business survived well and went well. Not withstanding all of the problems with good attention to it and good management, we built a very, very strong business.
ALLEN: Did you have any problem with pole rights?
HARRIS: The normal problems, getting on to the poles. The poles in Puerto Rico often look like Christmas trees. First the poles couldn't fall. They had so many lines going in every direction that it was just not possible for them to fall. The latter half of the construction was almost all underground and we had to cut the streets. We did some construction ourselves but we generally hired independent contractors. They knew how to deal with the city better than we did. How they handled their politics and the inspection, I don't know. We had to literally cut through the concrete of the streets and bury the lines and hook up the homes.
There were an enormous number of hotels because of the resort area and high-rises. If you've ever been to San Juan, you'll see an enormous number of high-rise condominiums and we wired many, many of them. There was a lot of illegal activity that went along with it. People would have their own routes of their own customers using our lines. We had to constantly go out, particularly to all the condominiums, and disconnect all the illegals that were attached and put them on our system.
In late 1984, we decided to put in an addressable system. One of the early addressable systems. We used Oak equipment. It was not the most secure. Unfortunately when we started building that cable system, we put in a thirty-six channel system. We used Oak equipment when we started installing the addressable system which was just before Oak came up with a more secure system. We were not in a position to change. The two systems were not compatible. Therefore, we used the older Oak system.
In '84 as I mentioned, we went to addressable. We spent probably five million dollars on addressable equipment which eliminated a great deal of the illegals. Nevertheless there were plenty of illegals as there are all over. That was one of our ongoing services.
The marketing in Puerto Rico was entirely different because we actually went up and down the streets with loudspeakers telling people to come out and see what cable was all about. But it was really a marvelous undertaking. We did everything that we could think of creatively. If we decided to do something, we just went out and did it. If we wanted to put something on, because someone called up and said, "Why don't you put this on the cable?" we would do it.
There was a plus and minus in the power system in Puerto Rico. The power in Puerto Rico goes out almost everyday, somewhere. In a way it helped us because whenever there was an interruption of the cable service, people blamed the power company, not us. We had to have standby generators all the time to keep our service running.
We did a hub installation so we had headends in five different locations. Eventually we had four different satellite dishes on the nearby mountain. It was just a marvelous system, and it provided a great, great service for the people of Puerto Rico.
ALLEN: Were the five headends redundant or where they all separate?
HARRIS: They were all separate, each one kind of worked as a hub.
ALLEN: You might have four on and one off, or three on and two off.
HARRIS: Well, most of them were on almost all the time. Fortunately we avoided severe weather problems. This last year as you know there was a severe hurricane which I understand tore down about 25 percent of the entire system which is half of the overhead wires.
I found that people paid their bills. Everybody said, "Puerto Rico? Well, you'll never collect your money." All of our customers paid the same as they did on our systems on the mainland. It was really a marvelous system and the people were just terrific to work with.
ALLEN: Earlier you told the story of a woman who called and wanted to expand her system?
HARRIS: A woman called and wanted HBO service, and we found she wasn't a regular subscriber. When we checked further, we found that she had been getting service for a number of years. There was somebody in a Volkswagen with his insignia on his door. He had his own route of serving several hundred subscribers. He was going out collecting three or four dollars a month or five dollars a month from each subscriber. If they were disconnected by our company this guy would come right out and reconnect them. I don't know how many of those were going on, but it was quite a business.
ALLEN: Is that pretty common in all of cable?
HARRIS: I don't think it's common for people to have someone out running their own routes but there's no question there is a lot of illegal activity everywhere.
There's a funny thing about cable. Even my friends in Los Angeles seem to brag that they can get free cable service. The cable service installers sometimes are the worst offenders. They will go out and if you slip them some extra money, they'll connect up all these other services and pocket the money. So the cable company employees are one source of the problem. Other times people move into a new house, and they find it's already connected. Often we would send out our installer to disconnect, and we'd find that we had people who were malingerers. They would take their list of disconnects, and they would come back and say they disconnected them and never did disconnect them. So there are all kind of things that cable companies do. Now, of course, with an addressable system, you literally can disconnect right from the home office. We had a lot of learning to do in that system as in all others.
The original mistakes which we corrected in that particular system, proved that the premise was right. It just took a lot of time, money and management which is the name of the game in any business at any time. It worked out well. Needless to say, I was extremely fortunate in hindsight in having taken it on. I was fortunate to have found the opportunity to invest in the business itself once I learned about it. It developed to a much, much greater degree than I ever thought would happen. Greater than everybody that was involved including the original owners who kept a small piece after the reorganization. They all made a great deal of money on it. It was a good case study in terms of it being relatively typical. It had all of the things that cable companies needed in terms of construction, in terms of marketing, in terms of service, in terms of importation programming, and what it provided. Now, instead of five television stations, there are I think ten. The market is way overbuilt as a television market. Three or four of those stations are in Chapter 11 because they can't quite make it and yet the cable company is doing extremely well, and to this day it continues to grow.
ALLEN: At the time you were doing this, you also then were developing Harris Cable Corp.
HARRIS: Having left Warner, Harris Cable in addition to Puerto Rico, took on four properties. The Puerto Rico property which I mentioned. I was also involved in the building of a cable system in the suburbs of Rochester, New York. We had thirteen franchises there that we developed into a cable system and another twelve or thirteen municipalities in and around Hickory, North Carolina. I really wasn't out trying to build a much larger company. I was involved in helping my former partner, Don Nathanson, who got me into television in the first place. I eventually started him into a separate cable company, which today is Falcon Cable. Don started with a very small system here in Los Angeles. Don and I then built some cable systems up in northern California together.
Don's son, Marc left TelePrompTer to come back and take charge of Falcon. Marc has built all of the different Falcon companies into one of the larger MSOs today. I'm on the Advisory Board of Directors of a number of Marc's companies.
I continued to run our television stations along the line. We built a television station in Chicago, Channel 44, which we still operate. I bought KWHY TV, Channel 22, in Los Angeles which we still operate. So I was still running cable companies and television stations on a day to day basis.
I was still very active in the National Cable Television Association and served on many committees. I served as chairman of the NCTA and was active in the SCCA, which is the Southern California Cable Association. Then I belonged to all of the various associations including the NAB.
I once ran for the board of the NAB before I was on the NCTA Board. I don't remember what year that was. I used to love to play cards. We had a group that used to play poker particularly at the NBC suite when they let us in those early years. I remember leaving a poker game the night before the voting of the NAB about 3:00 in the morning. I told all my friends to be sure to get out and vote. And the next day was the voting, and I found that I lost by two votes. When I went back to the poker game I found that it had never broken up. It continued right on through and none of my good friends had ever gone to vote. I was very embarrassed and saddened and said that I would never run again for the Board seat even though people told me that it's not unlikely to lose the first year. They told me I should run again the next year. I never ran again for the NAB Board, but decided I would run for the NCTA Board. I wonder had I been active in the NAB would I have really steered more into the broadcasting rather than to cable. That's another one of those forks in the road that sometimes you don't have much control over.
ALLEN: If the poker game had broken up on time or in time?
HARRIS: Who knows what might have happened? I guess I should mention in 1979, or maybe it was the beginning of 1980, there was a company formed by four of the motion picture companies and Getty Oil. 20th Century Fox, MCA, Columbia Pictures, Paramount and Getty Oil decided that they were going to form a program network that would mostly use their own movies, and it would compete with Home Box Office and Showtime. They formed that company at the end of 1979. The motion picture companies did not have a good rapport with the cable industry. The cable industry looked upon those companies as holding back product and wanting more money from the cable industry. So they were kind of at odds. They called that company Premiere.
They were looking for a chief executive to run it. The company was run by a board of directors. Each of the companies had two members of their company on the board of directors. The directors included Rich Frank and Mel Harris from Paramount. Larry Hilford from Columbia. John Dolgen from Columbia. Tom Wertheimer and Bob Hadl from MCA and Stu Evey and Dan Burke from Getty. Steve Roberts and Larry Harris from 20th. Many of those people, of course, are extremely active today. Tom Wertheimer is a very important executive of MCA today. John Dolgen left Columbia after Coca Cola and heads up 20th Century Fox as a television operation or production operation. Rich Frank is a major executive at Disney today. Mel Harris is the president at Paramount. So they were not the number one people from each of the companies, but they were the twos and threes.
They were looking for a chief executive, but with their poor rapport with the cable people, they didn't know what to do. Apparently somebody suggested my name to them, and I remember I had a call from a friend of mine who was a producer at Paramount who I used to play golf with. He called me in Chicago and asked me if I had heard of Premiere and I said I had. He asked me if I would be interested in talking to them about the possibility of becoming the chief executive officer. I remember I really laughed at him and said, "Are you kidding? I wouldn't give up my own business to go work for somebody else." Nevertheless when I got back to Los Angeles my ego was massaged enough and peaked enough that I thought I ought to at least talk to them. And I did. I met with Stu Evey and there was an executive search firm headed by Bob Fell that was also involved at that time looking for somebody.
I had a good reputation fortunately in the cable industry and a name that they thought would get them further ahead very quickly with the cable operators, if I was willing to take this position.
To make a long story short, I asked if they would let me be a partner, and of course, they wouldn't let me do that. They said in effect they would treat me as a partner which was encouraging. My businesses were well organized and well run and I had talked to my associates at the time and they had no objection if I wanted to do it. I felt that if I took that job on, my own company would suffer only in growth, not in operation. I felt I had efficient people operating the company that it could continue to operate soundly. I just wouldn't be acquiring or growing as Harris Cable if I did that.
I decided to do it and took on the job as Chairman and Chief Executive Officer. At the same time, it was recommended that I consider hiring Chris Derick as the president and COO of the company. Chris had been the CEO of Viacom and had just resigned. Chris had become president and COO of Premiere. Chris did come into it. We spent the next six months talking to all of the attorneys to ask them about the rumors that the anti‑trust problem would doom us because the companies were proposing to give all of their motion pictures to Premiere and keep them exclusively for nine months. All of the attorneys told me that they felt that yes we may eventually be attacked by the anti‑trust people but by that time the company would have been off and running and we wouldn't have any problems. So we began to fill the company, hiring people and moving forward as strongly as possible to launch the service on January 1, 1981.
Sure enough as we got down to the time, an injunction was sought by the Justice Department against the company on anti‑trust grounds. We went to New York where we had six of the biggest law firms in the country. Each of the companies had one law firm and Premiere had its own. We went to court with about fifty lawyers of ours, I remember. I'll never forget that. I've never been involved in that kind of lawsuit. To make a long story short, the injunction was in fact, put in place. We appealed it. Even during the appeal the owners of the company said that we should go forward full blast. I remember they said, "If we get stopped, we want them to have to stop a speeding passenger train not a slow freight train.
During this period, I went to Washington and talked with the Assistant Attorney General about the problem. It seemed to me that if we were prepared to make some changes we could have probably made it. In hindsight, if we had waited another four months until President Reagan's administration came in I think we wouldn't have been stopped. But the companies did not want to do that. And we lost the appeal and with the loss of the appeal, the companies decided to just throw in the towel.
I remember meeting with the head of Gulf and Western which owned Paramount at the time. Charlie Bludhorn‑‑he's not living anymore‑‑told me that it would never work. He felt that these companies would never get along together. He said there's no chance of these four companies ever getting along together. In addition, the companies were having problems. It wasn't much after that when Columbia was sold to Coca Cola. 20th was sold and Getty was sold. But it was an absolutely fascinating opportunity. As I say, it massaged my ego.
When I finally settled everybody's contract and everybody went home, I remember calling the board and saying, "I'm turning over what's left to Getty to watch it." As it turned out we spent about $14 million in a few months time. Because of the sale of one transponder, which we sold for eleven million dollars, and the other transponder that the company had put together in the short period of time, no money was really lost by any of those companies. I was happy to see this.
I just went back to my own company which was still there and felt I was somewhat fortunate. My own company was starting to suffer, and not only because of management I guess. You tend to think that everything goes along, but it was suffering to some degree even with my own managers because Premiere had agreed that I could spend 20 percent of my time on my own business‑‑80 percent on theirs. Of course, what I ended up doing was spending 100 percent on theirs and whatever extra time I could find, was on my own. It was really one of those interesting experiences in life. I was flattered, of course, that they said I'm the man that ought to do it. The challenge was superb. It wasn't really the money and I didn't resent the time. I really was flattered that here was a great challenge of building a new business. I had built a number of businesses in my lifetime and here was going to be a good one.
Of course, the thought of all these motion picture companies which I always put on pedestals, was a bit overwhelming. They believed in me which gave me access to those companies and to their people. The people I revered, that I've put way up on top. Suddenly these are the same people I was doing business with.
ALLEN: A long way from producing wrestling shows.
HARRIS: A long way from producing wrestling shows. That's true. That was the experience with Premiere.
ALLEN: Harris Cable was building systems from scratch, but you weren't buying existing systems.
HARRIS: That's correct. These systems were all built from scratch. That meant going in and getting the franchise from the municipality, determining the kind of system to build, what equipment to use, and how to market it. Every cable market is a little different. There are no two alike. Because you have to decide what the air signals should be. I guess ultimately, maybe they are all the same. Ultimately those people who get their signals from off air broadcasts, would like to expand their reception in terms of quality and quantity. Particularly quantity.
There's an insatiable appetite for the number of signals that people like to get. Whether they watch them all or not, the idea that they can get them is probably more important than what they do get. They may only watch one, two, three, or five signals out of fifty, but they have the other fifty available and they're all on the dial. Many people do watch something different.
In narrowcasting, the person that wants to watch the one channel that provides something that someone else doesn't, keeps people subscribing. Once they have cable, it is unlikely that they disconnect. First of all their antenna is gone. That's another serious problem. Once they have cable, and they're used to it, you just don't give it up. It's just a better form of providing more programming.
ALLEN: I'd like to go back to something you talked about earlier, when you went about getting those thirteen franchises in the Rochester, New York area did you have a strategy for securing franchises? How did you approach the municipalities?
HARRIS: Most often of course, a group of Council people were aware of cable, although I must say that going back historically, they really were totally unaware of what cable television was. The strategy normally was to point out that the residents of the city would be given something additional that they did not have, so they were securing something for their constituents with something that they really wanted. Most of these cities saw cable as an opportunity to gain some fees for their coffers. All cities look for ways of getting some extra money. So immediately when you offer the city two, three or five percent of your revenue, they suddenly see a revenue stream that they didn't otherwise have. So they were eager to really bring in a cable system.
Some of them however, were far, far more demanding than others. Often in getting a franchise, you had to make promises, which I found that were not appropriate for people going into business but politically speaking you had to do it.
End of Tape 3, Side A
ALLEN: One more question, Burt, on the technical side. Did your company do anything from an engineering standpoint that was adopted by the industry as you went along or were you pretty much buying engineering from other companies?
HARRIS: I don't think so. I don't think we ever did anything from the engineering side. Many years ago the industry used to hold the California Show, which turned into the Western Show, at the Del Coronado Hotel. I think it started in the early '60s, probably when Walter Kaitz used to head it with his wife, Idell and their children. Boy, there were just a half a dozen exhibitors. Jerrold was the prime exhibitor at all of those conventions. There never was a convention dinner that wasn't a Jerrold dinner. Jerrold always had the dinner and everybody went to it. That was it.
ALLEN: Were you a charter member of the California Association?
HARRIS: No, I'm sure I was not. Although I was active in the California Association, it was never to the degree of the National. I got involved in the National in 1970. I never really got active in the National before that. I got interested in 1970, went on the board of the NCTA about that same time, became the head of the NCTA in 1976. I ran for the chairmanship in '74. That was a very interesting time because I remember I was asked if I would run for chairman in 1976 and somebody else was running.
HARRIS: Yes, '74. It was only about two weeks before the voting. I didn't have a long campaign, but I remember we went through that whole thing, and it was really knock down, drag out, with a lot of vote counting. The night before the vote, I remember my supporters added it all up, and they said I won by one vote. The next day was the election and I lost by one vote.
ALLEN: Who won?
HARRIS: Bruce Lovett. Then Rex Bradley, and then I was elected in 1976. Robert Schmidt was the president of the NCTA at the time.
In my term the Copyright Bill was passed. Actually the ACE awards were started the year I was chairman. They weren't called ACE awards. HBO had decided to give Bette Midler the award for the best program of the year which was really the forerunner of the ACE awards. The next year they started the ACE awards.
ALLEN: What was it that motivated you to get active in 1970 with NCTA? Was there an issue that was strong?
HARRIS: No, not at all. The NCTA Board tried to encourage Cypress to join the NCTA. We hadn't joined. Bill Bresnan was the chairman at that time. Anyway, Cypress joined, and it was just an ego trip I guess. If you're going to be involved, get active. You almost had to show the flag if you were a public company. You had to show that your company was important, that it was in the forefront. We really had to get involved in the National scope. You get caught up in what you're really doing. There wasn't really anything that I would say that I had to do. It wasn't that I wasn't interested. I was vitally interested in what was happening. In all of the legislation and all of the lobbying and everything that had to get done. I remember, when I was chairman and lobbying in Washington that year, I was so dejected at seeing the way government made the laws. I remember I was talking to Don Anderson who was with the NCTA at the time and Don reminded me by saying, "Burt, there's a saying around Washington that says 'He who likes the law, or sausage, should not watch it being made'." I never forgot that, because it really was something. I was active and served on lots of committees. When I finished the six years on the Board, I figured that was enough.
ALLEN: What were the issues that you were lobbying?
HARRIS: We had the Copyright Bill, of course, which had been pending for six years. Copyright was very critical. The question of rate regulation was really important. All of the cable companies were bogged down in rate regulation. As you know in the cable industry, in order to get a rate increase, you really had to go through a big turmoil in every city. You had to do all of your politicking. Even when you got it all done, by the time you did it, it often took you so long you should have raised it a lot more. In addition the cities were asking fees, and they were asking for a lot of things, which the industry really felt was wrong. They were asking cable companies to give access channels, government channels, and do a certain amount of programming.
I was totally adverse to cable companies doing origination. I felt it was something that was costly and totally unimportant. It didn't mean much to the city. The broadcasters were doing it anyway. I said to do some local production that nobody looked at was really a sin. I was always against it. I also always looked at the cable business as a public utility. Most of my friends said, "For God's sakes, don't ever say that because then the next thing you know we'll be into rate regulation and the most you'll be able to make is 10%." I used to say, "If I can make 10% every year, I'll be very happy." So the question of calling it a public utility is something the industry didn't want.
What we wanted was to get the regulation away from the cities, so that we weren't forced to do all of the extraneous things which I didn't think had a lot to do with the cable business and yet could keep the cable business as a solid business.
I always thought cable was an arm of the broadcaster. The broadcasters and cable companies used to fight back and forth. Over half of the cable companies were owned by broadcasters. Yet, the broadcaster generally would never say anything. They hung back. They were very, very quiet. So the cable operators alone had to do it.
I guess the reason I wanted to be chairman was to prove that a broadcaster could head the cable industry. Most of the cable operators thought I was a broadcaster and most of the broadcasters thought I was a cable operator. That was just the way they were. I just wanted to prove that it would work. I think it worked well.
Dick Wiley was the chairman of the FCC at the time. Several times he said publicly that if I told him something, he could believe it because he knew I was both a broadcaster and a cable operator. Therefore, I think I made more brownie points for the cable industry by being both a broadcaster and a cable operator because I could really speak from both sides of it.
The argument between the broadcaster and the cable operators for years went on and on and on. We owned the cable system and the television station in Bakersfield. We ran the cable system. We had the management contract. Although the managers of the TV stations and the cable system walking down the street may have competed, beyond that, I never found it a problem. They'd fight each other where it was important to fight. I never thought the cable operators hurt the broadcasters as much as they have claimed. I really believe that cable was recirculating broadcast signals. That was their job.
ALLEN: It wasn't until program origination that they became a major factor?
HARRIS: Until satellites came. When satellites came along and allowed systems to carry "programs," not just stations, then a huge difference developed. The broadcasters were fairly fat from making a lot of money, and they really let cable run away. They also let independent stations develop. Of all the things the networks should have been in, one is CNN. They'd sit at the affiliate meetings and say, Ted Turner could never do that. He's not going be successful. He can't afford it. They really were too fat. I remember the president of our broadcast group, Jack Rosenthal saying, "Listen to these guys. It's actually ridiculous." Of course they really let them run away. They just got too fat and happy.
Going back to your technical question. We really didn't do anything of great innovation. The companies whether they were AMECO or Oak or Jerrold or whoever, they were just constantly trying to upgrade their electronics. The same thing with the cable manufacturers themselves. I remember when Frank Drendel‑‑who used to be my vice‑president when we sold and merged into Warner‑‑decided he would go back to work for Continental and Comm/Scope who manufactured cable. I remember when he decided he wanted to buy Comm/Scope, and he had it almost put together. He asked us if we'd come in with him. I never liked hardware businesses. I didn't go in with him and he always laughs at me and says that a $100,000 investment is worth $5 million or $10 million now. Because he eventually built it up very well. Frank has done extremely well with that business.
ALLEN: What about from a marketing standpoint? Did you consider that you were pushing out in the marketing area?
HARRIS: I think we were innovative. I think we did a lot of things. We did tiering, which a lot of people didn't do. We did a lot of creative marketing things in terms of how do you get new subscribers and what you do. Although I suppose most companies were innovative when they really went out. But we were like a founder. We really went out to do our own thing as most cable companies did. You could pick up something from somebody else.
There were marketing companies. We used them like everybody else. They'd come in and do big pitches. I don't think there was anything that we didn't try to get the subscribers. That included hooking them up and free hookups and whatnot. I don't think we were any more innovative necessarily than any other cable company. Nor do I think we were less innovative. We were aggressive. I think we always said that we thought that 80 percent of the homes would eventually have cable. What we really had to learn was that most homes have poor broadcast signals. The cable industry had a slogan that said we gave better signals than broadcasters which was untrue. I always said we only gave a better signal when you didn't get a good signal. That was the truth. You didn't really have to snow the people when you were going to get a franchise. The facts are that when you received a good broadcast signal it was the best. All that a cable operator could do is maintain that by amplifying it.
But the other facts were that probably 85 percent of the subscribers got less than a good signal, either with man-made interference or natural obstacles. So if you gave a subscriber a good cable signal it was probably better than they normally received, because most people did not get a clear signal. So to that degree we had a chance of giving them something.
I said before that originally we thought that cable would only work where there was no television. Then we got into the one TV station markets. I remember thinking very hard when we went into two station markets. It's likely that Bakersfield was the first three station city in the country wired for cable. When we wired Bakersfield we were taking a huge chance everybody said because there were three TV stations serving Bakersfield. What do they need more for?
Of course, we brought in nine from Los Angeles, three which were repeat. ABC, NBC, and CBS were repeated because they were already there. And six independents. We used to take surveys all the time. My board used to say, survey this and survey that. My own feeling was just a gut feeling of whether something would work or wouldn't work. You could go out and survey whether a cable system would work and ask would you buy it or won't you buy it. Everybody tells you yes, we'll buy it. It gives you some backup but you really need to have the gut feeling of whether it would work.
Did you want to talk more about Technology?
ALLEN: A couple more marketing things first. When you first got into the cable business there was still a high hook‑on fee. The hundred dollars or so charge. How did you rationalize internally within the company and to yourself to go to the low fee?
HARRIS: Well first, you needed the money. Most of the cable operators didn't have any money. They had to charge the $100. We were using our broadcasting cash to get into the cable business. We just looked at it as a logical business and said, let's get the subscribers. We'll invest the money to get them on. That's really what it came down to. We got down to $19 for a connection and when we'd have a "special" that if you'd subscribe, we wouldn't even charge that. We recognized early on, if we could afford to invest in a subscriber, we'd get it back. I think it was mostly business judgment and having the cash, that was very important in order to be able to do that.
In Palm Springs, for example, that was a resort- type town. We sold annual contracts in Palm Springs. Written contracts and they paid for nine months and didn't pay for three months because the summer we said was free. It was like nine dollars a month for nine months and free for three. Which averaged around seven dollars a month. Subscribers literally signed a one year contract in order to do that.
We learned a lot of new things in Palm Springs. We had more hotels in Palm Springs than probably any other cable market. We had to have special deals for hotels. Then we had to come up and tie them to occupancy. Should they pay for all the rooms when we wired the hotel or should they pay for just rooms when they were occupied. We did a lot of innovative things in Palm Springs that eventually we used in other places. Every city had some hotels. Nothing like Palm Springs.
In Puerto Rico a lot of what we did I had learned years back when we were in Lake Arrowhead. Whenever you go into a place that was very seasonal you had to do something different. I did some work in Lake George, New York in cable systems. That was '76. We did do a lot of marketing innovation.
When we went to conventions we heard other people's ideas, but the one thing about those, was that they were early hands on ideas that we had to test. You went to listen and to see. Almost always it was our own innovative hands on of standing around and seeing how did we get subscribers.
Some cable companies weren't really active. I remember when we owned the Flagstaff, Arizona system. Statistically we were serving more subscribers than there were homes. We had 101% of the homes hooked up. That just can't be. There was not a television station in town, and the homes were all on the system. Our manager used to be just a public relations man. He would just go around talking to the Rotary Clubs in the city and making sure the city council was happy because everybody in town was hooked up. We didn't have any marketing problems. All we had to do was try to get our rates raised. We had no origination, we just imported signal. That was it. We had nothing off a satellite in those days. So we just brought in Phoenix and that was it. That was an easy, easy business. In the other places where we really had to be a little thoughtful and figure how do you get subscribers. How do you work the homes. As I say, I don't think that we were any more innovative than anybody else. Maybe I'd like to think so, but I doubt it.
ALLEN: Who were some of the other cable companies that you thought were being innovative instead of just sitting there waiting for things to happen?
HARRIS: Well, of course, you had American which was Jack Kent Cooke. You had H&B. This was before Warner tried to be very unique. By the time 1970 came along, the bigger companies were really trying to push into it. Time Inc. was in the business. ATC and Warner and Storer, and there were more of the larger companies who tried to run businesses much more than a Mom and Pop type of operation. There were a lot of the original founder people, Bill Daniels, Gene Schneider, Ed Allen, Amos Hostetter, George Barco. They were all "from the beginning" people. They were out in the street, doing what they really had to do. Whether they were any more successful than anybody else, I don't know.
I mentioned that I was a believer in pay television almost before I got into cable. The man that ran my cable business, our cable systems while we were in both broadcasting cable, was Geoffrey Nathanson. When we merged with Cypress, Geoffrey left to start a company called Optical Systems, which was one of the first pay television stations in the country. He manufactured his own box. His company operated in San Diego and Santa Barbara with Cox. Cox was big in those days as they are today. He was starting the same time Chuck Dolan and Jerry Levin were starting with HBO. Of course, Jerry and Chuck sold out to Time Inc. and Geoffrey eventually went out of business. He had put too much money into hardware to try to make it work.
Funny, I remember when STV was coming along, in the late '60s. Ike Blonder of Blonder-Tongue and Sol Segal of Globe had developed decoder boxes. I went back to see their equipment. They had $400 or $500 addressable boxes. HBO had started offering programs on the monthly fee. I remember saying to Ike and Sol, "You're not going to be in this business because it's already started by the month. It should be pay-per-view, but it's not. As long as HBO started that way, you've got to come off with a $100 box that does it by the month. Not a $500 box that does it by the play. Otherwise you won't last." Eventually they had to get around to do that. I was originally frustrated with HBO because pay television as I had envisioned it was supposed to be the theater in the home. I had originally thought that pay television would be just taking the same thing that's in the theater and putting it in the home. I thought they could get day and date. We had envisioned that we were going to run a double feature three nights a week. Then we'd change the bill and go three more nights. That's what pay television was. The plus of it for the consumer was that you didn't have to go out of your home. You didn't have to get a baby sitter. You could get the same exact thing at home that you got in the theater and pay the same thing, only it would be a little less because instead of one person, maybe one admission for five dollars you'd have four people watching it. That's what I thought.
When HBO came along and they started their reruns, it really aggravated me because I said, "All you've done is made a television channel out of it that is uninterrupted by commercials. But it's just a television channel of new or old movies and you're selling it by the month. That is not the way to do it. You really ought to do it the other way. Of course, they could not get day and date from the stations, so I don't know whether they were right or wrong. At least they made a big business out of it. Now they're going back to pay-per-view again.
Originally when it was getting started, many of the small cable companies wouldn't put in HBO. And it was interesting. We said, "You'll make more money." I remembered that when it came up at the NCTA and we said, "Look here is a way to make more money. Put in HBO." Many, many cable companies were set. They were satisfied. They weren't worried about it. They didn't know much about the technical aspect of it. They were saying, "Is it going to work," and "you have to put another box in and everything else?" But it was not easy for HBO to come in and say, "Hey, here's a way that you're going to make a lot more money." Geoff Nathanson was the first person to get new movies from the movie companies. The movie companies would not give the programming to the cable companies. You may or may not remember, Palm Springs was the first pay movie system. Paramount went into Palm Springs and put a pay cable system in. And it didn't work. They sold the system to Carl Lesserman. Carl sold it to H&B. H&B sold it to us. It was originally a pay system. The original pay system had started in Texas, and failed. It failed because they didn't have "new" movies. They had "old" movies. Geoff was one of the first people to get the movie companies to get newer movies. As I recall Gordon Stulberg, who headed 20th Century Fox and Lew Wasserman at MCA were the first who finally gave Optical Systems some newer movies. And HBO got some of them, too. That's what it took. The original ones didn't have product. They didn't fail because of the idea. They failed because of the product availability.
ALLEN: They failed because they had the right idea at the wrong time.
HARRIS: Wrong time, exactly.
ALLEN: Did you as an MSO buy into HBO right in the beginning?
HARRIS: We signed on very early to HBO as I recall. I knew the Time Inc. people very well. I knew Jerry Levin. We made a deal with HBO in Rochester, New York. I built Rochester in ... well that's part of the next story. We came on with HBO as I recall, very early on.
ALLEN: When did that start?
HARRIS: Well, it must have been about 1970 or 1971 when it first started. That's when they first started getting into some systems. It wasn't of real importance probably until '75 or '76. When I left Warner in '73, I mentioned that I had been approached by Time Inc. and that fell apart. After that I was approached by Salomon Brothers. They again asked me if I would build a new cable company. They said they would give me $40 million to build a new cable company. I asked a few people because it didn't sound right. They said, "Well, if Salomon Brothers says it, they're going to do it." So I went to them and I asked them what they wanted from me. They said, "We'd like you to get a good management team and that's all." I said, "You don't want any cable systems?" They said, "No--no cable systems." So I put a team together that consisted of Chuck Trimble, he was going to be the operations manager. He was the ex‑president of H&B American. Marc Nathanson who is now the head of Falcon Communication, was the vice president of marketing. Jerry Greene who was my former financial head, was the head of finance. So the four of us were the team. We started out doing a "dog and pony" show, around the end of 1972. We were calling on insurance companies and banks to raise the $40 million. We did that for a few months.
You might recall that in '73, the market started heading down badly. We were out calling on these people and Salomon Brothers kept saying, "Well, we've got $2 million here, $6 million there, and I kept saying I don't hear any money. They once said to me, "Listen, Burt, you know the cable business, but we know the finance business. You just do your thing. We'll raise you the money, don't worry about it." So we kept going out on those calls. Every time I kept saying I don't hear anything at all. I don't know what's going on. Finally after three or four months, they said, "Burt, do you think you could get a deal. Maybe we need a deal." I said, "Well, I'll see what I can do." In a matter of weeks, I had made a deal to buy Walter Annenberg's properties in Lebanon, Pennsylvania and Binghamton, New York for seven and a half million dollars. He had to have the purchase closed by May for tax reasons. Salomon came down and said, "Don't worry about the money; we're putting up the money for this deal. We'll buy it and that's it."
I remember I gave Annenberg $250,000 of earnest money of my own, and we went back on the road. We had to close by the 25th of May and April was moving along. Salomon said, "We have this much and this much" and I kept saying, "I don't see any money." We kept getting closer and closer. It was about two or three weeks before we had to close. I finally sat down with Salomon Brothers and I said, "Listen, no more games. We have to close this deal in two or three more weeks. Where's the money?" And they got back to me and said, "We don't have any money." I guess we don't know the venture capital business." I said, "I'm sure sorry you're learning on me."
I was dumb, I should have just bought the cable systems. I didn't buy them. In fact, the First National Bank of Chicago called me and said, "Listen, Burt, I know you've got a problem with that deal. You need seven and a half million dollars. We'll give it to you." I said, "That's not enough. That'll buy them, but it won't run them. We better just kill this deal." So we never got the approval from New York State. I got my money back and that was the end of Salomon. I remember I went back to them and I said, "Listen, I have a $20,000 legal bill from buying the Annenberg property, how about your paying half of it?" They said, "No, we're not paying anything." Two or three of the Salomon Brothers people called me and said, "Burt you've got to sue them, you can't let them do this." I said, "No, I don't normally sue anybody." That was the end of it.
We broke up the company and Marc Nathanson and Jerry Greene went to work at TelePrompTer as vice presidents and Chuck Trimble went to work for the California School District. If you remember in '73, everything was just falling apart. And meanwhile I had been on the outside, and I looked at some franchises in Rochester, New York. Frank Drendel had asked me if I was interested in a franchise in Hickory, North Carolina where he lived. I went back to Warner, and I said, "Look our deal is totally dead. I can get these deals. Would you like them for Warner? Because I'm still being paid by you, if you want them you can have them." They looked at them and, as I say everything was down. They said, "We don't want to touch them." Then I just sat down and said, "That's crazy. These are going to be good businesses." So I said, "I'm going take them myself." I then took on Rochester and set up a company there with local people, and I took on Hickory and set up a company there. That was STV in '73. That brings me to Puerto Rico in 1973 when the banks called me and said they were having their problems and I ran down there and I looked at that I also offered that to Warner. I said, "I can make that deal too" and they didn't want to. That's when I decided to take on Rochester and Hickory and manage Puerto Rico so we did that as well. Those were all just hands on businesses.
ALLEN: So you built Hickory and suburban Rochester, but in Puerto Rico you took over an existing then operation.
HARRIS: Practically. Puerto Rico had 100 miles of plant when I took it over. When we sold it, we had over 1,500 miles of plant. We had 5,000 subscribers when we started. When we sold it we had 108,000 subscribers. So Puerto Rico, although when I arrived there was something in place, we practically built it by hand, mile by mile. When I went to Hickory, Frank said, "Burt, I think I can get a franchise. I live there." George Hutton who was the largest shareholder of Centel lived there. His father owned the Hickory telephone company which merged in and formed Centel‑‑Jim Bowman at Superior Cable which owned Comm/Scope‑‑lived there also. So they were our partners. I went to Hickory and there were only fifty homes to a mile. I said, "Where are the houses?" Then you kind of spread the bushes and say, "There's one. There's one back here." Frank said, "I'm not sure you can build a cable system here." So I said, "Let me see the television signals." There was a local television station in Hickory but it was a religious station. So I said, "Where do you get your television signals?" George said, "We get them from Charlotte, Bristol and from Greensville. So I said, "Let me see what the signals look like?" They showed us Charlotte and the signal looked very good. I said, "Let me see CBS." All of a sudden he said, "Ok," he pushed the button and it went click, click. I said, "What's happening?" He said, "Every house in Hickory has a rotor. Wait just a second." In about thirty seconds there it was. A very good signal. So I said, "The television signals are pretty good here." We can see two ABCs, two CBSs, and three NBCs. I said, "We're going to build a cable system here." They said, "Why?" I said, "Because people aren't going to be willing to wait thirty seconds to get another channel. It may take us a while." Frank always felt he didn't want to promote me into it. Anyway, we built that cable system right from scratch, and it took us about eight years. It became a fine, fine cable system. I'm sorry we sold it I must say. The system has 25,000 subscribers now. We built a brand new building before we sold it which is really a marvelous building. It's a marvelous town. We had two different managers, but it we started absolutely from scratch.
End of Tape 3, Side B
ALLEN: When you were negotiating franchises in the Rochester area did you work with all thirteen municipalities at one time or was it one at a time?
HARRIS: No. As a matter of fact, I got into Rochester because the original five franchises‑‑not the city of Rochester‑‑were already in hand by a group of Rochesterians. And I made an agreement and became partners of those local people. This was not uncommon. Very often you use local people. You use their political influence to help get the franchise. There is normally even to this day, one franchise granted in a community, although there really could be more. Almost all grant one franchise. Therefore to get the franchise if there was competition, local people were involved in the ownership of the system. They often got the franchise. So originally, on the first five franchises we used our local people. Then we got the other eight or nine franchises using their help and our own strategy. We knew what we had to do and what we would have to promise.
As far as the city of Rochester is concerned, we felt we would be able to get the franchise, as well. I mentioned earlier when we got to the Bakersfield franchise and that there were politics involved in that. In the city of Rochester, we decided to bid for the city itself. It turned out that we were the only bidder, and we still didn't get the franchise. Now that's hard to believe. We used our local people and unfortunately these local people lived in the suburbs. They probably had as many enemies in the city politics as they had friends. We were leery in those days of about how to fund the franchise, and I was always leery about telling cities something that was too much promotion. I would try to tell them the truth and sometimes you tell them the truth that if you don't have all your funding together, but you'll get it or whatever, and they are leery. We were the only bidder. The city didn't give us the franchise. They received a letter at that time from ATC saying that they would like to bid if they reopened the bidding. Sure enough the city reopened the bidding and ATC got the franchise.
I'll never forget that. I thought you never really know when you do your politicking. We did a lot of work on the Rochester franchise, worked with their consultants we talked to the people and told them what we would do and the cities often give you some direction. The fees they want, how many channels they want you to put on, what they want you to do for free in terms of government access, community access, school educational access, how much local origination they want to do. Some of the cities get very, very greedy. It probably is what led to the Cable Act in Congress that finally took even the rate regulation away from the city. If the city had a certain number of television stations, a certain amount of television service, you could elect to pay the city a higher fee and then work with the federal government. The Federal Communications Commission took control of the regulation.
Almost all the cable companies moved into that direction because the cities became very, very greedy. Every time you were seeking a franchise, you had to study it carefully, understand it, know the politics of the city, and know who your competitors were and what they were going to promise. You just really had to do your homework to get that franchise. Then when you got it, you had to go out and do what you said you were going to do.
Very often, cable companies promised anything to get the franchise. Then by the time they built the system they didn't do what they promised. Particularly in the early days. Recognizing that many of the city council people would be changed so even the people they promised were no longer there. They could get the franchise because there were only so many franchises. The industry recognized that once they were issued and gone, there were no more franchises. Therefore, if there'll only be one in a city, get the franchise then do what you had to do later. So the cities were leery of a lot of the cable companies and rightfully so. The cable companies also were leery of the cities.
It is easy to look back in hindsight and say how great the cable industry was. But without satellite reception the cable industry would never have developed to the degree of today. Of course, if you look at it philosophically, if there were enough frequencies originally so that there could be as many television stations around today you may have not have the cable industry. Certainly to the degree that it is today. You find in South America and some other countries where cable has been slow to come along, that there are other forms of broadcast‑‑subscription television, satellite direct home broadcast, which may in fact, eventually stifle the final growth of cable television in some of those countries.
ALLEN: The Rochester build was in the mid‑late '70s.
HARRIS: Correct. It was in the '70s.
ALLEN: What did you promise then in the way of a service at that time?
HARRIS: At that time we promised them a 36 channel service, not a 50 channel service. We gave them access channels which some of them used and some didn't use. We filled the channels. We had a system that took character generated information and divided it up. We put sports scores on one channel, and we put the weather on another channel. We put local Rochester stories on another. All the channels got filled up with this data which probably few if any people ever watched. But we filled the channels. We had the local television stations and all we could import off of the satellite. We also imported by microwave signals from New York City. New York City was a long microwave hop.
The people in Rochester had at that time four television signals locally, ABC, NBC, CBS and PBS. Eventually they had two independent stations as well. But we brought in the sports from New York City which was important to the local people. We also brought in whatever satellite service we could bring in time, of course. Now, you can fill up fifty channels with signals off the air, but there weren't that many in the early '70s. Each time a new satellite service began they would offer us a free signal. There were many religious channels that came on. We took just about everything that was available that we could put on from the satellite service. In Rochester, and in many, many other large cities, there are some very onerous suburban communities.
In Los Angeles, I know that Beverly Hills is a very difficult market. We had one, the city of Brighton. I think it only had 800 homes, but they had a cable television committee, and it was as difficult dealing with them as it was with New York City. They thought they were New York City, I think. This happens in many markets, where a very small affluent community becomes difficult because no matter what you import, it's not enough. Most of them would like their own channel. They picture themselves as having their own television station and doing all this local origination. Unfortunately they like the cable companies to do it for them. That's just like running a whole television station for a few homes. Fortunately, this has waned.
In the early years of cable television, particularly in the big cities, the demands for local origination at the expense of the cable company were enormous. We had to combat that over and over and over again. It was the reason we had to keep our politics clean and our public relations very, very strong. It took the FCC to keep the politics away as much as possible from the local cable systems.
Of course, the people expected the cable system to provide service like the telephone company. The cable company wasn't giving the level of service of the telephone company. First it didn't have the equipment. The industry hadn't been sophisticated in developing equipment. The cable system didn't charge as much so it couldn't afford to do the service. It couldn't connect and disconnect to keep the signals constant. If an amplifier would go out so that your signal would go out, particularly in the middle of a Super Bowl game or something, you can imagine the frustration. The cable company did not have somebody out there in two seconds to put the new amplifier in or a new tube or whatever.
The cable industry has grown enormously over the last 40 years. Most people don't really realize it, but cable started almost instantaneously with the first television stations because of the service it was providing. But today, it still isn't fully completed. It has grown to a point that it is now almost accepted as a public utility. It isn't really an absolute in terms of requirement. But practically speaking, if you take down your antenna, and you put in cable and then you give up cable and you don't have your antenna, you have lost television. I would say television is indeed a public utility service.
ALLEN: Did you have any interesting experiences with community access channels on your systems as contrasted to the government and education?
HARRIS: Not really. I always remembered New York City. They had a community access channel and the city really wouldn't let the cable company do anything about it. Anybody could program and they had some, what you might call soft pornography. They had everything. The cable would get complaints, but the cable company had absolutely nothing to do with it. The city said that's our channel and we'll do with it what we please. We never really had much of that.
In Hickory I know we had a local channel that we did just marvelously well with local sports events like kid's baseball. We sold advertising and we ran almost a local television station. I always envisioned in a major city like San Juan, or New York, or Rochester, that when it got big enough, there would be little difference in running a television station and a local cable channel. It's just a question if it's transmitted over the air and the size of your universe.
This past year when we sold the Rochester cable system to Time Inc. which owned the city system, they started what they call a local television station on the cable system. The only difference is that they serve 60 percent of the homes whereas a local independent station would serve 100 percent of the homes, practically speaking. They serve less so their universe was less. But the fact is they also could operate cheaper because they don't have a transmitter to service and to operate. For all practical purposes people at home see the same thing. Time is getting a lot of heat from the broadcast industry saying that operating the local television station is inappropriate or whatever because suddenly they are selling advertising on an absolute even basis. I planned on doing that in Puerto Rico before we sold the system. I always felt you could offer a local television station because it's the same. They are all identical.
The access that we offered we never really had any problems. People would come in, mostly with video tapes. We would provide studio space or whatever. Those people who wanted to come in and offer live access attracted the audiences that were extremely small. People seemed to think that everybody wanted to see what you're going to do, if you're going to run a home movie or whatever you had planned.
We often offered access to the schools but the schools didn't use it. That was true even with our television stations. We would beg most of the schools to produce a half hour once a week, or once a month and give them the time, but it was very, very difficult to get them involved. It's too costly in terms of time and money. It's time consuming. Neither the schools nor the government generally took advantage, to this day, of the opportunity afforded by a cable company who gives them channel space and tells them to utilize it. C‑SPAN, of course, started doing that.
City councils have the same problem. If you're going to put their meetings on the air, most of the time, the audience is going to be very small. If they are a whole channel, if you divided the value of your cable system, giving equal value to every channel, because for all practical purposes each channel is an integral part of it, you'd be putting certainly a very high value on a very low audience.
Nevertheless, together it all provides something. We never had many problems. It, too, is part of the innovation of management. Again, it's the challenge and the excitement of saying here is the most powerful medium, television, and that you can reach into people's homes.
I find it kind of a dichotomy. The Federal Communications Commission does not allow you to own two television signals in the same market. Yet, you can own fifty cable channels and program them the same way. I've never really understood why the FCC hasn't done away with that. The reason I suppose is that the airwaves belong to the public, and there's only so much frequency. Therefore, they felt that you should only have access to one frequency, which makes sense. But on the other hand, if you're worrying about control of the public which is what they say the reason basically is, a cable company can talk with 50 different voices. That's perfectly legal today.
ALLEN: As you look back now on the years and the cycles that you've gone through in the cable industry, what has been the role of the FCC at various times in terms of both positive and negative influence on your own cable companies as well as the cable industry totally?
HARRIS: Well, originally of course, the FCC had very little input because the franchises were granted by the communities. As I recall the reason you needed a franchise, was you crossed public streets and alleys. If you wanted to go on to private property, you didn't need a franchise. If you had a way of getting across streets and alleys, you didn't need the franchise. Therefore, it was the municipality's responsibility. The FCC only came into the picture when microwaves licenses to be used or when you needed frequency to do things in the cable system whether it was to microwave or satellite receive or whatever. So the FCC was really in the background rather than in the foreground of the early days of cable.
I didn't see that the FCC did a lot of hindering in the early parts of the years. In fact, in the early parts of the development of the industry I thought the FCC was generally cooperative. The cable industry, of course, did a marvelous job of lobbying to try to get what it needed through the Congress and through the FCC. I never really found that there was a great deal of opposition that hindered us.
It's easy to look back and think the cable industry was an absolute. It really wasn't. The FCC came into play greatly because of the opposition from the broadcasting industry. It had to do with nonduplication and syndicated exclusivity rules. The broadcasters were constantly trying to hold down the cable growth. That's probably where most of the lobbying came in.
The cable industry did a much better job of lobbying than the broadcasters. As I mentioned, much of the cable industry, probably half of it, was owned by broadcasters. But they were quiet. They really didn't want to disturb their broadcasting friends, so they really didn't make as much noise as they could. The Commission meanwhile, the FCC, was trying to handle it as best they could. The cable industry did a better job in lobbying the Congress and lobbying the FCC about not stifling the growth of cable.
ALLEN: That's interesting because the cable industry at this point was populated heavily by very small operations.
HARRIS: They were all in the rural areas. The broadcasting industry was in the big markets and weren't being disturbed. The big cities which were the bulk of the broadcasting industry didn't really see the cable industry as much more than a rural operation. The small broadcasters were the complainers and the big ones tried to pacify them.
When the broadcasters talked about the cable industry which was going to hurt the broadcast industry, I don't really think the big ones‑‑none of the big broadcasters‑‑saw the cable industry as much of a threat, at least in big cities. So they gave their tacit support to the little guys but they really weren't out there hard hitting with the FCC.
Some of the networks were. As I mentioned ABC really did a big job of trying to oppose. NBC was in the cable business in a small but a real way in the United States, and CBS had a huge investment in Canada. Until CBS had to divest of that ownership, they were possibly the largest cable operator in the United States operating anywhere in the world. The broadcasters let the cable industry move ahead. I think, therefore, the FCC really ended up favoring the cable industry.
I really tried to play down the middle of the road because we had both broadcasting and cable interests and in some areas in the same cities. We had a television station in Billings, Montana along with part of the ownership along with TCI of the cable system. In Bakersfield we were in the cable business as well as the broadcasting side. I thought they both could be live and both could operate profitably doing their own thing.
Even though the FCC may have gone overboard in deregulation that has occurred since the beginning of 1987, particularly regarding the rates, I think the FCC is going to get more active again. Probably the legislature is going to force the FCC to take other steps to go back and re‑regulate some of the things that they did in the past.
ALLEN: So in your perception the FCC was really a positive force in the development of cable.
HARRIS: Yes, I think so. It took a lot of pushing by the NCTA but I think the FCC really was a very positive action on the development of the cable industry to date.
ALLEN: Let's go back to Harris Cable. We've kind of started there and digressed a bit. Through the mid‑late '70s and on into the early '80s, you were heavily involved with the development of Harris Cable.
HARRIS: Yes, although I was as much broadcast‑involved as I was in cable. I probably had a much greater investment posture in broadcasting, but it didn't take as much of my attention. Television broadcasting was pretty standard, and it ran the gamut. It didn't take my personal attention like the cable business did. The cable businesses, because we were really growing, really took my day to day attention.
In Harris Cable, both in the organizations that treated it, the programming aspects of doing it, the satellite aspects that went along with it, and the literally wiring up and getting subscribers day by day, took probably 80% of my time. I guess 20 percent of my time had to go to the attention of the broadcast business.
ALLEN: You began to sell off some of the Harris Cable properties in the early '80s.
HARRIS: Well, we did sell Rochester in '83, or '84.
ALLEN: And Puerto Rico?
HARRIS: We decided in 1985 and in early 1986 that we would liquidate most of all of our companies. It was kind of a hard decision but it came about because of a number of factors. I had partners in all of these different ventures, minority partners generally who for years had never taken any money out of the business. And as many of them said, "Well, we'd rather have our money at this stage of our life, than double it ten years from now."
In addition the capital gains tax came to an end at the end of '86. Therefore, we felt that if we were going to do any liquidating, the time to do it was during 1986.
I myself looked at it, and recognized that I have some enormous estate problems coming up. I had always kept almost all of my assets working in my own businesses. I never really had much of an outside investment portfolio. I recognized at that time that I was 64, not 34, which I thought I was every time I'd look in a mirror. Some of my friends started dying, and I started talking to my estate planners. I realized that things are going to a close one day. I decided it was better for me to liquidate most of our things while I was alive rather than leaving my wife or estate to have to deal with partners. Nor did I want to deal with my associates' beneficiaries. I felt that the ideal time to sell was at that time.
By the end of 1986, we disposed of all except one of our radio stations, all of our television properties‑‑except our Chicago and Los Angeles stations‑‑and all of our cable systems. That was the end of my cable career in terms of day to day handling. I have stayed on the Falcon Communications Advisory Boards and have a lot of investments in the cable industry through public companies. I have a sizable investment in a small cable system on the Isle of Jersey off the coast of France.
ALLEN: How did you get involved in the cable system on the Isle of Jersey?
HARRIS: Well, a classmate of a young cousin of mine in a generation lower than me, moved to England a number of years ago and his present wife is a resident of St. Helier, Jersey. So Peter has a home in Jersey. Peter decided that he would like to buy the small cable system in St. Helier. He asked if I would like to become an investor active with him in that cable system and become a director. I said okay. I did some bidding on some franchises with Peter in England this past year.
ALLEN: So you really cycled through the business and now you're in the third time.
HARRIS: Yes, I guess you just can't help that. You just keep going back into these areas. To some degree I'm semi‑retired although I am very active in the two television stations. Also I've gotten very active in investments because suddenly I found an enormous amount of liquid assets that have to be employed.
ALLEN: Your decision in 1986 was not in any way a statement about your confidence in the future of the cable industry, it was just a desire to put your own financial house in order.
HARRIS: Exactly. I strongly believe that the cable industry for the next ten years is very, very solid. I don't see anything on the horizon that's going to materially impact it. I think that there will be a strong development in DBS coming down the line and many, many people along with having their cable connection and their VCR, will have a dish as well that will pick up some satellites. But the cable industry, as I see it, performs a great service for television. As long as you have that wire into the home, I don't see anything causing cable to have much of a crisis over the next ten years.
I do think fortunately or unfortunately that a lot of the cable industry has become a financial business today rather than a cable business. The buying and selling of cable systems and the funding of them has become a business itself. In many of the cable buys, I think the companies are going to be in trouble. They're not going to be able to fund them the way they should. But the cable systems are not going to go away. They're going to be there if some of the companies have to reorganize or whatever they have to do. That's not the cable industry, that's the financial portion.
The rates are constantly going to increase 4 or 5 percent a year or whatever inflation rises. It will become automatic.
There will be some other program services, I think, offered, but not to the degree of the past ten years. I don't see a huge growth in new program services. In fact there might even be some that go out because I'm not sure that the subsidies will be there when these cable companies flatten out, and many of them have.
Now the owners are looking for ways of making more money, like a telephone company. Other than raising rates, they are going to have to look at their whole operation and decide do they need all fifty channels. If a channel costs them $50,000 or $100,000 a year to carry, and it doesn't have a great deal of audience, they're going to look at saying should they drop that channel or should they continue to carry it. That's not an easy decision, but there could come a time when some channels disappear because they just aren't attractive enough to enough people.
I think the cable industry is extremely sound. It's, as I said, much like a public utility that's going to be around for many, many years. It's a very sound, solid investment I believe for the owners of the companies.
ALLEN: Cable began as a way of getting a television broadcast station signal in an inaccessible area.
ALLEN: The next real movement in it was to bring in signals that were not broadcast, but closed circuit signals.
ALLEN: Do you see a third service or a set of services coming in that will augment the revenue that will be needed beyond these two services to keep the cable operator profitable?
HARRIS: I really don't. There are things like pay per view with the different structuring of subscribers. We've talked for many years about cable systems providing other things like power monitoring for utility companies and other things like that, but they haven't come along. Certainly it's possible for a two-way cable which has also been talked about for years. The technology really hasn't done it, nor have the economics.
Certainly tying cable to computers could, somewhere down the line, get on stream using the cable system. It's complicated because I perceived telephone companies moving into fiber optics. Once the telephone companies have fiber optics in place, they of course can offer the same video service that the cable company can. Those politics are going to play hot and heavy for a long time.
Can a telephone company do it or not do it? I've never been fearful of the telephone companies. Maybe that's being naive. If they would have come in they could have driven us out of business. I tend to think that the telephone companies who no longer have been able to do much expansion because the telephone is everywhere, will probably buy the cable companies. Maybe then combined into one wire, if you wish, one fiber optic wire will be all the services mixed together. Will that happen? I don't know. I tend to believe it will happen to some degree.
So then the answer to your question, "Is cable literally providing these services or who is providing them?" The question is can a cable provide more service? Whether it's telephone's fiber optics line, or a cable line. I do believe so, and I think it will come through the computer. It's just a matter of who owns them. There could also be overwiring, and if some of the areas of the cable company are not doing their job, some mavericks can overbuild, and eventually that leads to mergers again. It's a little bit of "green mail," I guess if you want to call it that. Of forcing them to come up to par.
ALLEN: Could the telephone company be considered to be overbuilding a cable system if they go in with a fiber optic line and not buy the cable system, but just begin to offer additional services?
HARRIS: Well, today the law is that a telephone company can't offer cable service in the same community it offers telephone service. So telephone company A can go into area B and telephone company B can go into area A and literally go into that business, as I see it. So you might see not overbuilding but certainly competitive services down the line. That's probably the biggest potential threat to the industry.
If you talk about the industry--if you talk about somebody providing the service to somebody--if you talk about who owns it, that's a different political arena. I tend to think that the whole industry will grow. The question is, "Who owns it?" and how the competition is there. That's another whole field. But I think there will be more service in the home through wires no matter who offers it down the line. And as I say, mostly it will probably be based on a computer, some two way system using a computer. The basic principle of offering the program will be pretty standard for ten years, I think.
ALLEN: You mentioned earlier that you think some of the channels that are filling up a 50 channel system, now may not survive. What then does DBS have to offer if there isn't enough programming to fill 50 channels of cable?
HARRIS: Nothing. I've had that discussion with Stanley Hubbard of Hubbard Communication, who is planning a full DBS service. I said, "You know, just because the technology is there, doesn't mean you've got something." But the public and a lot of the cable people overlooked it in the early days. The public doesn't care how it gets a signal. Whether it gets it by broadcast channel, by VCR, by cable television, or by DBS. All they know is they want to turn on the television set, pay the money if they have to and get the programming.
In Japan they've been selling 50,000 little flat dishes a month. If a DBS system is in effect, in other words, the satellites are offering programs and if you have a dish you can get a signal. Then if the Super Bowl were put on DBS as the distribution method to get to the home, instead of broadcast signal or cable signal, and sufficient time were there, hundreds of thousands, millions of dishes, would be installed to get the Super Bowl. Therefore it's just a question of the program being available.
There could be the time that ABC, NBC, and CBS no longer use affiliates. They're up on the satellite, and they feed the networks right to the home. Why do they need the affiliate at all? How you get from point A to point B is another question. They would only do that if the whole country were universally available, and that doesn't happen because of time zones. If it ever were the fact that 90 percent of the homes had a dish on them, and they could be reached on a cable system, I guarantee that in the back rooms of the networks, somebody's going to sit down and say, "Why should we have to pay our affiliates? Let's just go up on the satellite and do this."
It may never happen, just because of the logistics. But the answer to your question is, if something is put on one type of distribution system that somebody wants to see and they can see it for a reasonable installation, they're going to buy it.
For example, you could put on an MMDS service. If you took eight channels, like Stanley Hubbard has, and you offered somebody eight channels including an AB switch so you'd get all your local channels, plus you can get CNN, ESPN, HBO, Showtime, and a couple of other channels for ten dollars instead of twenty dollars, people will buy it. They'll say, I don't need the 50. I never watch them anyway.
Most people wouldn't give up their cable. I must say, emotionally, once you have these fifty, even if you don't watch them, it's a very tough thing to do to give them up.
If you put MMDS in South America, and or you put it in before cable is built, cable won't come along. Because if you can give them eight channels, there may be 50 up there, and someone will package them in groups of eight. Take this one or they might give them a menu. In fact, there is someone who is saying let's just make everything available and put a price on every channel. I often thought the most logical way is to put a price on every channel and each customer takes what they want.
That's not good for the cable industry. The cable industry wants to sell as much as they can sell in a bulk package. But from a logistics standpoint, if you said, this one costs ten cents, and this one costs ten dollars, and this one's a quarter, you want to see an ABC station ‑ that's fifty cents. I remember once saying to Leonard Goldenson, maybe if you put ABC on the cable, people would pay ten or twenty dollars a month just to see ABC. Maybe you'd make more money than you are the other way. I remember his saying, "Do you really think so?" I said, "Yes, I really think so."
That was right at the time that ABC had tested the system that they offered during the night. They ran movies at night, scrambled, and you had a decoder and a VCR that taped it. You could see the movie at your own time. It seemed like such a terrible idea to me. I think ABC lost $30 million on the test. You find every so often someone going off on a deep end of doing something that just doesn't seem logical. Maybe if it works, you look back and say, "Well, I guess they were smarter than I was."
The long answer to your question is, that if you put some kind of programming through that distribution system that is not available somewhere else, and somebody wants it, they will start buying the service.
If you can put enough programming on to get enough people to view it, you then have a business. It becomes an alternative distribution means to VHF and UHF broadcasting, cable television, C‑Band, MMDS, VCR recorders, etc. Those are all just different ways of getting the signal into your set. Today many of them are sound businesses. Some of them are struggling.
ALLEN: And at some point in time there will be so many that they won't all survive.
HARRIS: No, well they won't. MDS never did make it. And MMDS, what they call wireless cable is trying to make it. There is no question that some of these services might not survive. Certainly a lot of newspapers have folded over fifty years.
End of Tape 4, Side A