Interview Date: October 19, 1990
Interviewer: Kathleen Pavelko
Collection: Penn State Collection
Note: Audio Only
PAVELKO: All right, here we are for real. The beginning of the interview. Could you start with your full name including your middle name and where and when you were born.
STEVANUS: I'm Claude Miller Stevanus. I was born in the vicinity of Sugarcreek, Ohio on July 31, 1913.
PAVELKO: Were you educated in the Sugarcreek schools? Tell me a bit about your education.
STEVANUS: I attended Sugarcreek-Shanesville High School. They were two little towns adjacent. Graduated from that high school in 1931 and then I attended a two-year business college in Canton, Ohio and have a two-year degree in business administration.
PAVELKO: Did you have service in the war?
STEVANUS: No, I did not.
PAVELKO: You graduated from high school in 1931. Did you go immediately to work or did you go straight on to your two-year degree?
STEVANUS: I went to work the following spring and in the fall of '31 I went to the business school.
PAVELKO: And why did you go on to business school?
STEVANUS: As you know, I'm sure, that was in the heart of the great Hoover Depression and we lived on a farm. There wasn't a lot of money for continuing education and business school was within our financial means so I selected that rather than a four-year college.
PAVELKO: Perhaps your family was better off than some to be able to send you even to a two-year institution.
STEVANUS: That's right. Farming was the pits at that point, but my father--all through our farm life--was a rural mail carrier, so he fared better than a lot of people that either didn't have jobs or good paying jobs, so he agreed. Tuition at the business school was $1 a day. I lived on between five and ten dollars a week for board and room and we could afford that.
PAVELKO: Tell me about the family farm.
STEVANUS: The family farm was in an area--in the part of Ohio--where there were a lot of small-sized farms. We had a dairy farm. Our farm was about 125 acres, which would be a relatively small farm operation compared to farms of today, but we made a decent living even from the farm, along with the income from the mail route. I think we milked about 30 cows and hauled milk to the Swiss cheese factory, of which there were a number in that area. It was a Swiss community and there were a lot of Swiss descent families.
PAVELKO: Is your family Swiss by descent?
STEVANUS: No, it's actually German descent and Pennsylvania Dutch background on both sides of the family. My father was from Somerset County, Pennsylvania and my mother was from Ohio.
PAVELKO: At what point was the farm established near Springcreek?
STEVANUS: We lived on several farms and the one where we lived the longest, we moved to when I was a freshman in high school, in 1927.
PAVELKO: Does your family still farm?
STEVANUS: No, my parents are both gone. Because of the bitter days on the farm during the Depression I wanted no part of farming. I have one brother and he didn't want to farm either. We had rented the farm so we had a sale and moved to town.
PAVELKO: Tell me about your brother and what he did and does now.
STEVANUS: My brother is six years younger than I.
PAVELKO: His name is?
STEVANUS: His name is Edgar. He got married right out of school, had three children and then was drafted into the Navy because of his age. He had no exemption. He spent three or four years in the Navy. When he got out of there he had various jobs and then got the postmaster job at Sugarcreek which he had for twenty-five years, and then retired from there.
PAVELKO: And still lives in Sugarcreek?
STEVANUS: Still lives in Sugarcreek.
PAVELKO: Does your brother have children and do you have children?
STEVANUS: My brother had three children before he went to the Navy, had another one while he was in the Navy and I have two grown, married children and four grandchildren.
PAVELKO: Your children's names are?
STEVANUS: My children's names are Claudia and Timothy. A girl and a boy, of course.
PAVELKO: Do your children continue to live in the Sugarcreek area?
STEVANUS: I might tell you that nobody ever leaves the Sugarcreek area unless they leave right out of college or whatever. Many people that do leave come back to Sugarcreek to spend their declining days. Yes, they both live in the Sugarcreek area. I don't know if you want to know at this point but the way that I got into cable was that we had a hardware store where I went to work during the Depression, after business school, for my father-in-law. That hardware store has always been in the family. We got into cable because of selling television. My son-in-law now runs that hardware store. My son runs another hardware store in a town twelve miles away and they both live within easy driving distance of me. What I do in retirement is do the accounting for these two stores on my personal computer.
But to expound on this Sugarcreek area, my son graduated from Ohio University with a degree in radio and television broadcasting. One of our cable systems had a rather complete local origination studio. He came to work for us and was in charge of that studio. He's a very good sports announcer. But as time went on he got disenchanted with management after I retired and he did not want to leave that area. There were two small radio stations in the area, so he decided if I can't be in broadcasting I'd like to go into business. So we bought this hardware store and he has run it for the last ten years. He doesn't live in Sugarcreek but very near.
PAVELKO: Let's go back then to your first connections with cable. Tell me about your wife and your father-in-law and that hardware business.
STEVANUS: When I got out of business school I had one job for a short time in a local flour manufacturing plant. That job fizzled out because of somebody who had the job before me who was in ownership and came back in. So there were no jobs. I always like to elaborate on this by saying that Milt Shapp, whom you know very well, when he graduated from Case-Western Tech with a degree in electrical engineering, told me several times that he drove a coal truck hauling coal from New Philadelphia to Cleveland. This gives everybody an idea of how work was at that point because here was a man who was an electrical engineer. I married my wife soon after high school and in desperation I took a job in her father's hardware store which was a small, dirty, dinky, country hardware store. I went to work for him and I had a pretty miserable five or six years there until I was able to prevail on him to enlarge the hardware store. From there on I sort of ran the store. In the late '40s we started selling television sets.
In those early days, the television stations had been limited to very low power, even the VHF stations. We were sixty-five miles from the transmitters at Cleveland. We were in the hills and as the signals were very weak in those days, we struggled putting up the large antennas on top of rooftops and so on. Naturally, when I found out about the concept of cable television--when we would install a television antenna somewhere in a high area, there would be pretty good signals--we knew that the signals were there. As everybody that started cable here in Pennsylvania around these towns knew, if you could bring that signal down, why you had something to sell. I investigated that and even though we lived in a town with only about four or five hundred homes, we decided that we could make a viable situation out of it by spreading the risk among several people. So I got ten other people and we each put in a thousand dollars and built this little cable system.
PAVELKO: And it was called?
STEVANUS: This is interesting probably because it was called Tower Antennas Incorporated. The way it got its name was that we put our antennas up on a city water standpipe, therefore, "Tower Antennas Incorporated." That was the name of the company for many years.
PAVELKO: In what year was it created?
STEVANUS: In 1952.
PAVELKO: What was your father-in-law's name and your wife's name?
STEVANUS: My father-in-law was R.D. Burger and my wife's name was Mary. Of course, I married into the job.
PAVELKO: Well, you married into the hardware business. The cable business was your own idea, I gather.
STEVANUS: The cable business was my own idea. After we started the cable in Sugarcreek--the technician that we had was one of our investors, a man by the name of Carl Tucker--we decided that this was a very interesting business. We saw, even back in those years, money was being made in the business. We decided we wanted to find larger markets, which there were some around, and I got to be a good friend of Lee Zemnick, a Jerrold Electronics distributor.
STEVANUS: Lee Zemnick ran our Jerrold distributorship in Cleveland and that's where we bought our equipment. So I went to Lee and said find us a place to start up a cable system in a bigger community. They came down to do signal tests in Coshocton, Ohio, which was about twenty-five miles from Sugarcreek. We participated in the signal survey and we had a really good record with Jerrold so far, as we followed their operating advice. You probably have known about the engineering agreements that they had in those early days, which I have always felt was a wonderful thing for somebody wanting to start in the cable business because you rubbed elbows with their field engineers. They took you into Philadelphia, where they had schools which we attended and you got off on the right foot.
PAVELKO: In addition to providing engineering services, did Jerrold also provide funding to get systems started?
STEVANUS: As you probably know, they had some joint ventures in places like Williamsport, Pennsylvania and so on. That so far as I know was what they did. Of course, Ben Conroy's system in Uvalde was one of these. I don't think they provided funding there, but they found Uvalde for the Conroys. They found places where people could invest money and sold them on the idea that money could be made. Certainly, I always had a very warm spot in my heart for Jerrold.
PAVELKO: When you decided to expand to the system beyond Sugarcreek, what were the first additional systems that you added?
STEVANUS: Coshocton was the first one. I'm sure you also know about the $125 to hook on. I don't know if anybody has related to you the fact that somebody came up with the idea that you don't pay income tax on this $125. Have you ever heard this?
PAVELKO: No, tell me about it.
STEVANUS: Okay. I think maybe some accountant at NCTA came up with the idea. Through the years--and I think this is still true--the electric companies would build lines through the country to serve a few people. They were allowed to list the line charges as a contribution in aid of construction. And when the people would pay them an excessive amount of money to get their electricity, they would treat it as a contribution in aid of construction; therefore, the money for the plant was not depreciable because they had already had their deduction for it. But if you sold one hundred cable connections for $125 a piece, that gave you a nice chunk of working capital. So in the cable industry, a lot of us used that for enough years that by the time it went through the tax courts and everything, they decided that, no that doesn't apply to cable. By that time we had had the advantage of it in those early years. Now they were beyond the statute of limitations. So we were able to build, in those early years, a lot of plant without a lot of contributed capital. In Coshocton, which now has about 7,000 subscribers--2,500 or 3,000 subscribers at $125 a piece had no income tax, so that provided a nice chunk of working capital.
PAVELKO: Do you remember when you first heard about this thing called cable television, or master antenna, or whatever it was called in your area at the time in the late '40s?
STEVANUS: As a Philco television dealer back there in probably 1950, a couple of us attended a dealer meeting in Akron, Ohio. I got to talking to a man who had the story about how you do this. You string this cable. I knew about signals being good on the hills. You erect these antennas, run cable down, charge people $125--you charge them $3.50 a month or whatever you want to charge--and this liquidates itself in a year or two. It sounded good to me. So it happened that a man I knew who was a parts distributor, took a job with Jerrold. When I knew him and I knew he had hooked up with Jerrold--I called him and he came down and gave us the story. I had a little trouble convincing people to invest money but Paul Snyder--who is with me this week and who came to work for us for about twelve years--with the Tower Company, TCPI--his father is the one that I always quote because he said, "Gee, I like television." We gave free service, which at that time was $42 a year. He says, "I'll invest $1,000 to get good television."
Anyway, that's how I learned about it and because we were struggling with the rooftop antennas and it was an opportunity to sell more televisions and have more satisfied customers, we decided that we wanted to do this. It didn't seem to be an opportunity to make a lot of money in that small a town, but we went into it. An interesting thing, we had only about seven miles of plant to wire this little town. We had one of our investors who worked for the electric company and a young boy who lived in town--I suppose he was no more than 21, and worked also for the telephone company--do all the line construction. But this young boy, and I don't remember what we paid him, but we wanted him to take stock. Stock would do him no good, he wanted money. Twenty years later I would run into him maybe at a bar, and he had been drinking a beer, and then he would start in about how dumb he was, how we offered him stock in that company, and how well the company had done and I was too damn dumb, but I didn't want any stock. I always remembered that.
PAVELKO: What kind of people did you get to take a chance on investing in that young company?
STEVANUS: There was one other TV dealer in town and he went along. There were several other people that we knew had money to invest, like Paul Snyder's father, who was a Ford dealer. He was one of them that readily went along just because he wanted good service for himself. I don't think any of them really invested because they figured it was something that would pan out to make a lot of money. The Ohio Power man, Bill Ray, who helped construct the system, had a man walk by one evening while he was up on the pole. By that time people in this small town all knew what we were doing. They didn't understand it, but they knew what we were doing. This guy walked by and he said, "Who do you think is going to hook onto that after you get it done?" This Bill Ray said, "I don't know but there's about ten of us who are going to have damn good television." So little things like that... The investors were kind of a diversified group. A lot of people turned us down. We didn't get the first ten people we asked. But we got the $10,000.
PAVELKO: The two investors who were also employed by Ohio Power and by the telephone company, did they get permission, work with their companies, in order to get them to agree to carry the cable on their poles?
STEVANUS: No, I worked all that out. We were not the first one in Ohio for this particular electric company. We did not use telephone company poles. The electric company owned most of the poles in town. I knew the man at the power company, which was a division of American Electric Power Company out of New York, and I knew the man that had negotiated the first contract. I had quite a chat with him. He said when they got the first application they went to the phone company that they always had a working agreement with, Ohio Bell Telephone, and said "Is this something you should be doing? We've had experience with wired radio and we want no part of it." You remember how they got interested in the ensuing years. They had a chance. The power company probably never would have given any pole agreements if the phone company had said, "Yes, we are interested. We should be doing that." Later they got interested. Anyway we had the pole contract.
It was very difficult to get a pole contract because you needed a performance bond. Insurance companies did not want to grant performance bonds based on a strictly cash guarantee. They felt that okay, so we'll put $50,000 in some stuff that's up on our poles. If you fold up, there's nothing there you can sell except maybe some scrap copper and so on. So it was very difficult. Usually your directors had to personally go on these performance bonds, so it was very difficult. Just like the banks were so hard to deal with in the early years, and that was the reason. You didn't really have assets that anybody could reclaim if you folded up. It looked like a hair brained scheme.
PAVELKO: How did you then get it done if that was the case?
STEVANUS: To get the bonding, we personally went on bonds in the early years. We finally found a bonding company after about the third system that we built. We went to the home office of the insurance company and sat down and really explained what this was all about and that it was really just a contribution to the insurance company, we felt, because we weren't going to fail. We were confident and we were able to convince them. So we found an insurance company that would write these bonds, but I think they still tried to get us on them personally. Some cities and some utilities required a million dollar bond. I think ours were usually $50,000 bonds, or something like that, in the smaller locations.
PAVELKO: Has Tower Antenna's relationship with the power company continued to be a positive one over the years?
STEVANUS: Yes, the relationship was always very good. We had some relationships with the phone companies in the bigger places that weren't so good because of the fact that they kept raising the pole rental rates. At the time it was resolved, maybe you have caught up with the fact, the FCC finally stepped in and worked out a formula of what they could charge. Actually, our pole rental rates had started out at let's say, $2.50 and went to $4 and $5 dollars. Those were cranked back in recent years to $2 or $3 dollars. We had trouble with the phone company because of that. At one point, we refused to sign a new agreement that raised the rate--I think this was Ohio Bell--to raise the rate to $4.50 or $5. They were at a point where we had received a final letter telling us to sign this by a certain date or we will cut you off the poles. They never did, of course. They had enough problems of their own with the public not to participate in one that they would create by cutting us off the poles.
PAVELKO: And no doubt they were depending upon the revenue as well.
STEVANUS: That's right. We always claimed that this was windfall revenue. We figured that the number of poles that we were using at $4 a pole was not too bad. It may have been windfall but it was just revenue from the little space we used on the poles. Nobody wanted another set of poles. We could not set poles. We never had permission to set poles in the city. The city did not want another set of poles, so you deal with these people, which they did. But they were arrogant.
PAVELKO: Was the four dollar fee an annual fee or for the life of a contract?
STEVANUS: Four dollars a year per pole.
PAVELKO: Very dear.
STEVANUS: Yes, well that was one of the big pieces of overhead in those days.
PAVELKO: Let's pick up the history of Tower Antennas again. It started in Sugarcreek and went to Coshocton. Where else did it go and give me some idea of when this is happening.
STEVANUS: Coshocton, then was 1953, the year after we started in '52. From then on until 1956 we did no expansion. We always had Jerrold telling us where there were possibilities. They came in with Beaver Falls, Pennsylvania. We went over there and conducted signal tests. Now, Beaver Falls was only a couple stones throw from Pittsburgh and they were getting pretty good signals. But Beaver Falls is down in a hollow and there were people there that, even with the proximity to Pittsburgh and Steubenville, Ohio which on the hill provided excellent signals, we took the risk and built the system in Beaver Falls. It was the first place that we had some trepidation about risk because of the local signal and it was very slow growing there. I'm not sure that we were the first people to try to distribute more than five channels. We used a jerry-rigged system that we had talked about with the engineers and so we used a five-channel, low-band amplifier for channels 2, 3, 4, 5 and 6 and then we used a strip amplifier that Jerrold had developed. By using non-adjacent channels we were able to distribute channels 7, 9, 11, and 13. Lo and behold we had a nine channel system, which helped to sell it.
It still went very slowly. That system required a lot of maintenance because of these high band strip amplifiers, I think each strip had seven or nine tubes, and so you had all of the maintenance that you had in the early three-channel systems that also had many tubes in them. We operated that, I suppose, for four or five years before an all- channel amplifier became available. We were pioneers in that respect in Beaver Falls. Then from Beaver Falls we came back to Ohio. About eight miles up the road in one direction and twenty miles down the road in another direction another man had built a couple of cable systems and we bought those two systems. It was in Cambridge, Ohio and Newcomerstown, Ohio. I think the next system we built probably was down in the southeast corner of Ohio in Ironton, Ohio, which was in the extreme southeast corner.
PAVELKO: And in what year?
STEVANUS: That would have been in the early '60s, probably about '63. Meanwhile, we did all of this just out of our cash flow. We may have borrowed a little money when we built Beaver Falls, but other than that...
The partners that I had, the early investors, were very conservative individuals. I think it was when we built Beaver Falls we borrowed maybe $15,000 or $20,000. The worst one was the local banker who was one of our original investors and he kept bugging me, when are we going to get this loan paid off. Leveraged financing was just not in his vocabulary. So I was very conservative to try to find places that we could handle out of our cash flow.
Up to probably '63 or '64, I'm not sure of the year, we had done it all with our own cash flow. At that point we approached, somebody from the Ohio Company, which was an investment banking firm in Columbus, Ohio, and we did a small public financing. I had attended conventions from '53 on and I picked a lot of brains and talked to a lot of people including always the Jerrold people. Going public was the thing, or "who do you know" to get more financing. The banks were still very lukewarm on financing such a wild thing as cable. So we had a small public offering, as I recall, it was $200,000 worth of stock we sold and $200,000 in debentures. So we had $400,000. That's when we built the systems in southeastern Ohio, right after that. I guess that would have been '64, '65 along there. That was our growth up to the time that we were still Tower Antennas. You want me to continue with the growth?
PAVELKO: Yes. Tell me more about what happened to Tower Antennas.
STEVANUS: Okay. When we built Beaver Falls we had a Jerrold sales engineer by the name of Raymond Leporati who got interested in our company. In talking with him he was interested in leaving Jerrold and getting into cable, so we hired him. He had become very knowledgeable about cable while he was with Jerrold so we hired him as our manager in Beaver Falls. He spent about two years there building the system in Beaver Falls. After he was there for a couple more years--he lived in Cleveland--he did not want to leave Cleveland so he talked us into letting him start a sales business in Cleveland, selling closed circuit equipment. At that time schools were being wired for educational television. In the business you're in you must have known or know now that there was such a thing as MPATI.
PAVELKO: I don't know that.
STEVANUS: The airplane studios flying over Indiana, broadcasting educational television, you never heard of that?
PAVELKO: I never heard of it.
STEVANUS: That was in the air before there were stations. This was a DC-6, I think, that went up every day for so many hours and broadcast. I forget what their altitude was but it was over Indianapolis I believe. Back in Ohio on the rooftops of schools you could get a really good signal. Two channels, they broadcast on two frequencies. MPATI--Midwest Program for Airborne Television Instruction. We wired a lot of schools. Even down in our area that was one of the things that we did to make a little more profit. Ray set up a business in Cleveland selling this equipment. So we put in a translator to rebroadcast the MPATI signals to one large school system up there. We put in a, I don't know what the gigahertz was at that time. We broadcast and each school would pick up these signals.
PAVELKO: Real time broadcast.
PAVELKO: When you say wire the schools do you mean wire the schools internally?
STEVANUS: Wire the schools for classroom receivers.
PAVELKO: So lots of individual classrooms within each school would have been wired.
STEVANUS: That's right. Instead of one receiver in certain classrooms. In the meantime some of them started videotaping some of the programs so they could distribute to the classrooms. In Coshocton, Ohio they built a new high school in our early years there in the '60s we equipped the studio. This was a wonderful public service and all we paid for was the studio. From the headend we broadcast the educational stations of Columbus and they put in a bank of videotape recorders. It must have not been in the '60s because of the videotape recorder... it must have been in the early '70s, I suppose.
Yes, we did a lot of work with ETV for the schools at that time. Of course, Pennsylvania was already doing quite a bit at that point too. I remember I was on an NCTA educational television committee with George Barco and so on. I think that, as you probably found out, the cable industry has always shown a lot of interest in ETV.
But anyway with the sales business that was part of our expansion, we generated some more cash and with this public offering we built some more systems. Then we had a man from the investment banking firm on our board of directors. He was quite a gung ho guy and because with that small a public offering, as you might know, your stock doesn't perform all that well because the market is too small. He left the investment banking firm and joined a diversified financial services group in Cleveland called Citizens Financial Corporation. They had a savings and loan, they had a full service bank in Newark, Ohio. They had a couple other things. So he talked us into the idea that it would be a great thing for us to merge with them, a stock exchange, and they were on AMEX. So against the better judgment of my cohorts, I talked them into the fact that now that we've gone public, of course we split our stock down about 60-1 because the book value of our stock before we went public was much too high to sell in public, so we split it down to $10 share. Then I think the stock exchange was we got four of their shares for three of ours. The stock went on the market for $10 and by the time we merged with them their stock was like $20, which made our stock worth $20 also or more and just going along great. Anyway, they helped us then because we had access to financing. We made a number of acquisitions.
You asked about the name. While we had the sales business in Cleveland, we had always thought as time went on, that antennas was a dirty word as far as a cable company was concerned. Antennas were all right for the cable company but we wanted that out of there, so we got our name changed to Tower Communications Inc. and it was that way up until the end--till the time that we threw in with CPI. In the meantime with mergers and so on, we acquired a lot of subscribers, a lot of other systems. There was one in our county, the county seat in Tuscarawas County where Sugarcreek is, called New Philadelphia. New Philadelphia and Dover together had one system and they had about 14,000 subscribers so when we merged with them that kicked us up pretty good. We were one of the early systems. We never used coupon billing. We always billed with a monthly postcard. We did this with an addressograph and so on. When we got about 10 or 12,000 subscribers this became quite cumbersome.
So we went to IBM, what can you give us for about $500 a month? So they worked out in the early days of data processing, you remember the punch cards? They fitted us up with a tab card system, one of their oldest forms of automation, and we billed with these cards and they said that this would be good until we reach 10 or 12,000 subscribers. I think we had about eight or nine at the time. Well, when we merged with New Philadelphia, bingo - we had 15,000 subscribers. Our tab card system got to be pretty cumbersome. It took three cards per month that they wanted to mail out for people to send back to process the payment and so on. So we upgraded the computer at that point. That merger with New Philadelphia was a big increase for us.
PAVELKO: How many subs did you have at the time that Tower Antenna became Tower Communications?
STEVANUS: That was before New Philadelphia--I think it was-- so we would have had in the vicinity of 8-10,000 probably.
PAVELKO: When did Tower Antenna become Tower Communications?
STEVANUS: It would have been probably in the mid '60s.
PAVELKO: Looking ahead just for a moment, but we'll go back, in what year was Tower Communications sold to CPI?
STEVANUS: That was in '71. See, we merged with the Citizens Financial Corporation and...
PAVELKO: In what year?
STEVANUS: That was '67, I think. I knew Ben Conroy and Jack Crosby from my associations with NCTA and so on, and once they formed CPI and they were looking for acquisitions--I recommended to Citizens Financial and Dick Johnston, who is the guy that came from the investment banking firm--I recommended to them that if they wanted to expand our cable operations I would introduce them to the CPI people. At the San Francisco convention in 1970 or '71, I got them together and they worked out a deal where they would trade Telecommunications stock, I guess, for CPI stock, or whatever, I forgot just what the ramifications were. But, I was real happy because as far as I was concerned these were some of the best people in the cable industry--the CPI people.
PAVELKO: What was your position with Tower Communications at the time of the stock trade with CPI?
STEVANUS: Well, we had about five corporations and I was president. When we'd start a new system, there was always a new corporation. I was president of Tower Communications, always had been. When we merged with Citizens Financial I continued to be president of Tower, which then was a wholly owned sub of...
PAVELKO: Citizens Financial.
STEVANUS: Citizens Financial. I was on the CFC Board and when they did the deal with CPI, Paul and I were on the CPI board. Austin, Texas had a region of cable systems. About the time they made the merger with us they also acquired TeleSystems which I'm sure is in somebody else's oral history. So they had a region in Philadelphia, Al Bloom was the regional manager there. I was the regional manager of all of our systems, I think by that time we had thirteen or fourteen systems, two in Pennsylvania and so on. I was a regional manager. The regional office was in Coshocton. Even after we were with CPI, the regional office was in Coshocton. They looked at us for a lot of things that we were doing much better and much more efficiently than they were, such as, they were coupon billing. I don't know if you've run into coupon billing or not. You send out coupon books and people tear out coupons, it's kind of like a finance company payment. At one point they told me we're all going to coupon billing. They tried to show me how much money we would save and I went to some of their bigger systems that were coupon billing and I checked out the number of delinquents they had. They said, we want to keep our monthly billing. We never could sell them on letting us do their computer billing, but eventually they had a computer and they started monthly billing.
PAVELKO: Your argument was that you got a greater return despite the cost of the monthly billing.
STEVANUS: People got a bill, and postcards at that time, what were postcards twenty years ago?
PAVELKO: Seven cents, perhaps?
STEVANUS: Something like that. We had a good follow-up system and our delinquency was just very small. The other thing that we had it was about the time that direct selling was just sort of coming into being. Up to that time in the early years you just advertised on the radio and the newspaper and so on, "Come and get it, this is great." I probably should bring in a lot of our direct mail pieces and so on.
End Tape 1, Side A
PAVELKO: Where were we before we stopped the machine?
STEVANUS: We had covered selling the company and where we went next, you had asked about CPI, I told you about our being on their board.
PAVELKO: We were talking about dates, actually. The transfer of stock from Tower Communications to CPI occurred in the early '70s, 1971.
STEVANUS: That's right.
PAVELKO: You were telling me that at the time of that transfer you were put on the CPI board and were president of some of the wholly owned subsidiaries.
STEVANUS: I was regional manager of the division that included the Ohio Systems; Weirton, West Virginia; Beaver Falls, Pennsylvania. After we were with CPI, I guess we made additional acquisitions. We acquired Ashland, Kentucky; Hopkinsville, Kentucky; Washington, Pennsylvania, then. Those were all in my region. Lafayette, Indiana was in my region for whatever reason. We had a good chief technician in our division, John McDowell, who is still with Times Mirror. They moved the regional office after I retired in '77. They moved the regional office to Newark, Ohio, which is a bigger city. That was the last system we built. We worked for about ten years on the franchise in Newark and had it three times and for various reasons, if you are interested, I'll relate them. It's kind of an interesting story. But my last accomplishment was finally getting that franchise and building Newark. It was maybe one-third built when I retired. But after I retired, they hired--through a head-hunting organization--an MBA to replace me. He lasted a little over a year. They moved the regional office to Newark. They couldn't ask this guy to move to Coshocton, Ohio. I might want to scratch that one when I go through.
Anyway, that was the end of my career. Up to that time I was the regional manager for our region. This may not appear in anybody's oral history, but CPI had a rather tough time financially for a while. My region was providing the funds out of our cash flow for operations because they were building some large market systems that had not become mature enough to supply cash. They had a microwave company that was a disaster. Up to the time that I left, we were sending them a lot of money from our division, which they appreciated. We had mature systems, anywhere from 60-80 percent penetration, you know, no longer selling service for $3.50 a month. It was mostly from $5 to $7.50.
PAVELKO: I'd like to pick up a little bit with exactly what your role in Tower Antennas, Tower Communications and CPI was as the president of those subsidiaries early on, and as a board member. What were the management, accounting, or other specialties that you pursued?
STEVANUS: Okay, I wore a lot of hats. I was always very active. I had an accounting background from business school and I was reasonably intelligent. I grasped and I kept up with the cable operations through my association with NCTA and picked a lot of brains when I had the occasion, particularly at NCTA and I would know somebody who was doing something. I was pretty much involved in all phases of our operations. Obviously I couldn't visit these systems regularly and keep track of them, but I had people that did. I pretty much laid out the advertising program. I designed a lot of our mail pieces and I required daily reports to come in from all the systems. We did all the billing for all the systems. So I was able to pretty much keep a finger on everything that was happening. I was given credit for just running good operations and the CPI people recognized that even before we merged. Do you know Greg Liptak?
STEVANUS: Okay, Greg was with CPI and he visited up there quite a bit. He was interested in our advertising program. I had reports of our mailings and the results therefrom and so on. As I say they respected our expertise in operating cable systems. I really felt that at that time and I may scratch this that they were rather primitive in some of their operations. Certainly Ben had had successful operations and Jack in Del Rio and so on but for the most part before we got in bed with them we got in Jack's plane and toured the Texas systems. Texas is big, as you know, and so for a day and a half we flew around Texas. We stopped and visited their cable systems. While a lot of them had done a good job, penetration-wise, they just didn't compare to our operations. Lafayette, Indiana, as an example, and that was the Leiberman system, Al Bloom was in charge of it, when we took that over they had 22,000 subscribers and they had six, seven girls in that office. We operated systems with 3,000 subscribers with one girl in the office. Larger than that, I think we cut two girls out of that office after we took over partly because of the billing that we did as they were using a computer service out of somewhere. But we operated very efficiently.
PAVELKO: I'm going to ask you to back up and tell me about the Lafayette system again.
STEVANUS: Okay. The Lafayette system which serves Lafayette and West Lafayette--Purdue University--doesn't really serve... Purdue has their own system. Anyway, they were operating that and they had a gal who was an ex-Marine sergeant and she was supposed to be in charge of this office. The manager was a guy who retired after we had it about a year and he was probably age 65. He was a scratch golfer and spent a lot of time on the golf course and not that much time managing his system. So they had good technical help and everything. Al Bloom would probably never admit this, but we upgraded that system operational-wise quite a bit after we took over. We made it much more efficient. The young manager that we put in there, who happened to be from Uvalde--Ben came up with him--fired the Marine sergeant and after he fired her, he found so many things that never got done that were on her desk. She wasn't capable or qualified to handle these bills. That was then the biggest system that we had under our management. We sent our technician in there and upgraded their billing system and everything and we really felt that we had made a vast improvement in that system. Like I say, CPI people--Ben, Bill and so on--recognized that in acquiring us, they had acquired some pretty good expertise in operating cable systems.
PAVELKO: I'm very interested in the direct mail efforts that you undertook early on, when direct mail was still a primitive science, if you will. What I'd like to know is why you did direct mail as opposed to or in addition to other forms of advertising and also how your marketing approach changed over time. What worked with customers when you started and what worked with customers later on?
STEVANUS: Okay, example. When you were getting $125 for a connection and once you didn't have to depend on that for capital, we'd offer $100 for an antenna. We'd make a mailing. Very early, we made an addressograph plate list of everybody in the system. As they became subscribers, we'd take their plate out of this file and out of the potential file and put them over here in a customer file. We always had a file that was pretty active of non-subscribers. That's when we started the direct mail. We had the capability of running labels and we were doing this for all the systems, always.
PAVELKO: The potential subscriber list then reflected all of the homes passed by your cable.
STEVANUS: That's right.
PAVELKO: This strikes me as a very innovative notion. Not many cable operators were doing this I would guess.
STEVANUS: I would think they didn't have the capability. One of the things we did, as soon as we'd go into a town, whether we went in to wire it or whether we acquired it, we would make up this mailing list. We would take the city directory and the maps to know where we were and we would make the address file. We had the capability because of our addressograph, which was very early. We had the capability of addressing that many. I suppose we were mailing--the most that I can remember that we were mailing to non-subscribers while we were still direct mailing--was probably a mailing of, and these were all small communities, a mailing of a five, six thousand pieces of mail. I had a printer that I worked very closely with. You're familiar with the digital printing capabilities. They didn't have that in those days so I'd find things to paste up and they'd set the type for me and so on. I designed a lot of these mail pieces. We'd come with gimmicks like George Washington. We'd make a mailing you know, "Celebrate Washington's Birthday. Cable hook-up for twenty-two cents." It was a $10 hook-up, you know, because we found out very early that there was going to be a limit of the people that would pay $125, even though to put up a tower in Coshocton, Ohio and buy a booster, and so on, they might spend $200 and still not get good reception. They would still make do with that antenna if they had to pay $125. So we started a rental plan. Now you can choose. You can pay $10 and $5.50 a month. Or you can pay $125 and $3.50 a month. For a while, it was about 50-50. We were very happy if they took the $10 thing because it was $24 a year more income. That went on and on. That caused a problem later on when we decided that you have had ten years of this $3.50 a month, that's it. We're raising your rate to $5.50 a month. They said, "Hey we helped you get started. We put you in business." They would sign an agreement and it never said in there that they would have that forever. But they went to city council. We thought eventually these people would die off, but they didn't die off fast enough. So we finally decided to raise their rates, especially when we went to the city.
Some of the other things that were interesting, when we went into a town. Usually in those days, you were welcome with open arms. A very interesting thing, to me, is the fact that all of the systems we built, we never paid the city a nickel. We never went in and told the city, we'll give you five percent of the gross or anything like that. To this day, I think that those systems still are not paying the cities because we had good enough relations, locally, and we normally didn't have trouble with franchise renewals until recent years when it came to rate increases. But some of the cities that we acquired like Lafayette, Indiana were paying the cities. So we had some that did. Now a part of getting a franchise was offering the city a rake-off. There was usually no problem on up through the '50s. People were anxious to get cable service. In Ironton, Ohio, I remember the night that the franchise was granted. We had a lady in there that was affiliated with a parochial school and she wanted educational television and she wanted the cable. These councilmen deliberated and they finally went into Executive Session and they called me in and discussed it a little more. She got up in front of that council--they were trying to decide how much they were going to charge us--and she said, "You gentlemen ought to be ashamed of yourself. There are a lot of people that would like cable television and we need it here and you want to charge them for coming in here."
After this Executive Session, they came up and granted us a franchise at no fee. But later, as you probably have heard, it was a battle to get franchises in some places because they were usually contested. It was in the early days that they were not contested. The thing I'd like to tell you about Newark before we get done is that it was never fun to go before City Council, either for a rate increase or for franchise, originally. It was not a part of the work that I enjoyed. But I did about everything else. Our chief technician would always discuss things with me. I'd ask him, can we do this. Fortunately, we always had very capable technical help. We went from--in the older systems--the original three channels to five channels and then twelve channels and then all- band. Today, most of them have been rebuilt. We went through the evolution as you might know, in 1952 to present day. They're still rebuilding systems and upgrading.
This, again, I'll scratch if it's on the tape, but the Times Mirror, having taken over, the public relations thing in my opinion, is just terrible. They have taken the New Philadelphia - Dover System, which has around 18,000 - 20,000 subscribers and a population of almost the whole county, there are some other little towns also connected, they've taken that, they've taken Coshocton, and they've taken Cambridge. They've taken those three cities, they call them a cluster now instead of a district or region, they've put one manager who lives in Newark, Ohio, he has an office in Coshocton, no manager in Dover and Philadelphia and so on. No manager in Cambridge. They sent them all packing. The cities resent this. There is nobody they can go to. It's terrible.
PAVELKO: Tell me about Newark, Ohio.
STEVANUS: Newark, Ohio, okay. Probably, early '60s, Newark, Ohio, we felt was the one city left in Ohio where we could bring in good signals, including ETV. Nothing else gets in there really good. We knew that you could bring in better signals. We went in. There was a powerful group locally that owned the radio, television station, and the newspaper. We went in and went to council. We sold them on the idea of cable. Had it through two meetings of council. The local group stepped in and said, we don't want this. So we didn't get it. About five or six years later, we were now with Citizens Financial, and a guy by the name of Dick Johnston, the guy that had been with the investment banking group, lived in Granville, which is adjacent to Newark. He said, I know these fellows real well. We can get a franchise but we have to allow these local people to participate. He made a deal with them that they would own eighty percent of the system and we'd own twenty percent and we'd furnish all the money.
The CPI people just screamed when they found this out because, in the meantime, they became involved and they knew about this. Well, we held off building this system because we didn't want to build it until distant signals could be used because it was a tough sell. Meanwhile, I don't remember what the number of years were, but the franchise expired because we didn't build it. So, politics had changed in the town. We went into the local council with our local buddies and tried to get an extension. The council didn't want them involved so they refused to extend it. We were very happy about it. City council said, "You come back as Tower and we'll give you a franchise. So we went back in and made up a proposal with a rate of $4.95 a month. There was another local group, at that time, quite prominent people, who went in and bid $4.50. They gave the franchise to us. The local group screamed and told the people, the council gave this to the highest bidder. They got it on the ballot in the fall and they got it voted out. What do we do now? I went to Archer Taylor, I knew Malarkey-Taylor through the years, and asked him for advice. Why don't you get the city to get a consulting firm to write a franchise and then we'll write it so that there will be no shenanigans. It won't be based on what the monthly fee is. It will be based on this and this and this. So we did that. There was no other bidder. We were it. However, on the day that this was due, at 4:00 p.m. one weekday afternoon, we were about thirty miles from Newark, we worked all day. We had everybody in the office typing to finish this up to get it to Newark. We got to Newark at 4:10 p.m. in the afternoon and the city solicitor and the newspaper was there. We were the only applicant. But we were ten minutes late. The city solicitor said, "As far as I'm concerned, that would be alright, but the newspaper is here. We don't want to give these local people a chance to say, hey you didn't go by the rules." So they rejected it. We went back several weeks later, they set a new deadline. We finally got the Newark franchise. We started to build it in '76. It's been very successful. We've wired Newark, Granville, and a couple of other adjacent communities. I think they have 23,000 - 24,000 subs at this point. That was my last achievement. I was so happy about that.
PAVELKO: You've mentioned several times, the value that you felt from your relationship and membership in NCTA. Did you, over the years, hold office in NCTA or the Ohio Association?
STEVANUS: I was a part of helping to start the Ohio Association. Two of my people were presidents, Paul Snyder was one through the years. At NCTA, I finished an unexpired term, part of a year, in Ben's year. I finished an unexpired term.
PAVELKO: As? The position was?
STEVANUS: As director of NCTA. Then I served a full three- year term. Then I served another term as treasurer, which was pretty much of a figurehead, honorary position, so that I could stay in there the extra year. So I was in there four and a partial year. At that time the board was twenty-five people. We turned over a third of them every year. In those four years, I rubbed elbows with a lot of people. I did have a lot of discussions over dinner and drinks and this kind of thing.
PAVELKO: You retired in 1977. What have you been doing since your retirement?
STEVANUS: We have, as I mentioned, these two hardware stores. I bought a personal computer. I do some writing. I'm a tremendous basketball nut. I have written a basketball history from the time it started in our school in the early 1900's, 1912 I believe. So, I use my word processor quite a bit. I bought some general ledger programs and I do the accounting for both stores, payroll, and so on. I've always been pretty heavily involved in photography. I spend some time with my photography and just plain enjoying things. I still get a couple of trade magazines and I keep, roughly, in touch with the cable industry. But, I have nothing to do with it any more. It's Times Mirror. They have let a lot of my people go because of their consolidating offices. There are still some people that worked with us in the systems that are still there. I go around occasionally and touch base. I have enjoyed those twenty-five years. It's such a great business. Interesting business. I was glad to have been a part of it.
PAVELKO: I can imagine that when you came out of a two-year business school and went into the hardware business, that you could not have imagined where you would end up.
STEVANUS: No. I was telling Paul when we were riding in here, that I have often wondered, I know I would not have been content to sit there in that hardware store the rest of my life. Had I not got sidetracked into cable, what kind of a turn my life might have taken. But after, I got into that, it was just fascinating. My business school background certainly came in good stead. In the early years, I hired one girl in Coshocton. Other than the tax returns at the end of the year, I taught her the bookkeeping, and we did everything. I finally hired an accountant a couple of years later and then a house accountant. I'm sure that the hardware business didn't hurt me, except I was pretty miserable for a while in that little one- room hardware store. My talents were wasted.
PAVELKO: Let me take this opportunity to ask if there are some stories or anecdotes that you'd like to relate or if there are areas that I haven't asked you about that you would like to talk about.
STEVANUS: Well there were some interesting things. Coshocton has always been an example of a town that really wanted a cable system. There wasn't much problem with the city but there was a problem with a couple of local TV dealers. We experienced this different places. They were selling antennas and they had all the reasons in the world why cable should not come to Coshocton. But after we were in there, there were some council meetings where I was called in to face some disgruntled antenna users. One guy came in one night and said he had good reception. There was no good reception in Coshocton, really. He had good reception until we put those big antennas on the hill. Now we were sucking all of the signals out of the air and now he had lousy reception!
In those days, our signal levels were similar, maybe a little higher than they run between amplifiers now. As I recall, a million microvolts were a volt. So this guy said, how much signal do you have in those lines. He wanted me to say a hundred thousand microvolts. Then he was going to say, well you're hurting my reception. So I said we have a tenth of a volt, we had a hundred thousand microvolts. A tenth of a volt. That sounded like a minimal amount of signal. But we did radiate a lot in those days with the conductors and things that they had. There was a lot more leakage. I don't know if you're familiar with the fact that the FCC right now has made great restrictions. Everybody has to check with probe antennas for leakage in their cable and certify that they're clean. Sometimes the FCC comes in and checks. Those were the kinds of opposition we had. There were some amusing incidents like that. Another one that I always recall was that people were always looking to get free service.
One time there was a self-made minister of some off-breed religion. He worked in a double house. We were serving one side of the house. This fellow went around the side of the house and stuck a pin through the jacket of the cable and ran a piece of twin lead around into the other side of the house. The boys came in and they were bound that they were going to put a sign on there, "Thou shalt not steal." Naturally, I didn't allow them to do that. Another time, we always went into the basements when we could ground on a water pipe instead of driving a ground rod outside. Well in going into this basement, the other side of the house basement they had access to a terminal block that we had in the basement. So a technician went in and he found this piece of twin lead hooked to this terminal and up through the floor. He didn't go up to see where it went but he grabbed this twin lead and pulled it down, and BOOM. Apparently he had pulled the television set off the stand. It fell on the floor. He said everything was quiet up there. He doesn't know, but he put him out of business.
As I say, particularly in apartment buildings and so on, they'd stick pins in the jacket. It still goes on today to some degree. But they'd try to steal signals. We expected that. If we neglected to disconnect them, they'd never come in and the next guy would move in and he'd have free service. I had a guy one time, in Sugarcreek of all places, came in and said, "I moved into this house two years ago and I've been getting free service because it was never disconnected. Now I don't think you should charge me for that but I'm willing to start paying from now on." But he didn't want to pay our $10 connection charge. He wanted to be paid for being honest and coming in and telling us.
PAVELKO: Well you get to deal with the public.
STEVANUS: A part of the enjoyment of the whole business is dealing with the public. I always said that if everybody was like a small handful of customers, you couldn't stand it. But on the other hand, if everybody was like the majority it wouldn't be interesting because it would get dull. So I always enjoyed the variety of customers, which you have in any business, even in the retail business or anything.
PAVELKO: That small handful, that's the source of all the good stories.
STEVANUS: That's right. The good stories and the interesting things that happen. I used to have a considerable temper. If I was unjustly accused to something, I couldn't handle that very well. One time Ohio Bell was right across the street from us in Coshocton. The manager was in there and I asked him to come back and we sat down. I said, "What do you do?" and I told him about my problem. The guy comes in and he's irate and blah, blah, blah. He says, "The first thing I do is get him to sit down. It's much more difficult to be angry and to pop off if you make a guy sit down." I did that and I found that it did help. But usually if a guy came in and ranted and raved about something that was either not our fault or that I felt he was unjustly accusing us of, I'd come right back at him. I'd cool down after a bit, but it was not a good thing to do, public relations wise.
PAVELKO: Another technique that I have found useful is that when someone is speaking very loudly at you because they're upset, the thing to do is to speak very, very softly, slowly, and placidly, and they eventually come down to your level. It's hard to be angry when you're speaking softly.
STEVANUS: But, you have to specifically think about that before you take off on him. That was my problem early on. I learned a lot through the years. I had irate customers, and employees, too. I never had much employee trouble, but you're bound to have it with the number of employees we had.
I told you about Lafayette, Indiana. I had this young guy that came from Uvalde. CPI had trained him. They were going to use him in some franchises they had in the St. Louis area. When the older man was ready to retire in Lafayette, Ben called up and said, "We have this guy, Dave Spangler, that we think is going to be an excellent man. I'd like to send him to you. You talk with him and see if you might want him to fill that place out there." Well, it was our biggest system and I certainly wanted a good man. I said, "Well, I'll talk to this guy."
He impressed me right away and we put him in Lafayette. The men out there were union. The first system that we ever had that was union. But a pretty good contingent of workers and they were union, but the girls were not. I told you we got it down to, I think, four girls. One night Dave Spangler called me at about 6:00 p.m. and said, "I think I'm in trouble." He said, "One of the girls in the office had been pressured by the men that they ought to be union and tried to tell them all the advantages. After work--there was a coffee shop--they went over there and they had a union meeting. So when they came back, the two that were responsible, I fired them." I said, "Yeah, you're in trouble, Dave." These girls were off four or five months. CPI had a New York attorney that was a labor specialist. We called him in and conferred and he confirmed the fact that Dave was in the wrong. But, by the time it all got straightened out, we had to take the two girls back and we had to pay them for that length of time and so on.
Jim Loker in Washington, Pennsylvania, had a policy that everybody had to live in town, or at least every man had to take his turn, not only the chief technician and so on. They decided this was unjust and a couple of them lived in Uniontown, which is twenty-five miles from Washington. So they went to the Teamsters in Pittsburgh and said they wanted to join. We called the guy in from New York and he came in and negotiated with the Teamsters. I think there were five men only, involved in the group. But we informed them immediately that one of the things that was not negotiable was whether they didn't had to live in town. They had to live in town if they wanted to work there. So they didn't get that. And the rate that they got was maybe just a little bit higher, but with their union dues and everything...
In the meantime, during this year, the manager got rid of the two guys. Well, the one guy went to work for the Uniontown cable company and the other guy quit. So, at the end of the year, they voted the union out. I've always been very anti-union, and I'll squash that too, probably. But it's the truth. We always treated the men well. CPI established good pension plans and insurance policies and everything. We never had any real labor trouble. All the phone companies and electrical people were union and they knew we weren't union but they worked alongside of us and treated us well.
PAVELKO: Tell me about New Philadelphia.
STEVANUS: In New Philadelphia, which is the county seat of the county in which we started in Sugarcreek. Just about the time we started, they decided to have cable television. I don't remember what their connection was in finding out about it. They decided that anybody that bought $500 worth of stock would get a free $125 hook-up and free service for life. Instead of trying to educate themselves by going to Jerrold's school, which almost everybody did that started because it was a very good way to find out about things, and so on, they went out and got seventy-five or a hundred people to pay in $500 and they built this system. They did not have a good technician. They ran the lines down into town and had a public showing. Then they ran into trouble. They had trouble keeping good signal quality and they grew very slowly.
In the meantime, we started. I think, even in our little town, we surpassed them in number of subscribers. They did not have a field strength meter, which is a tool you absolutely have to have. Jerrold had built one much like the one here in the Museum. They built it into a television set. You couldn't buy a good field strength meter. We bought one of those. It cost $500, even as small as we were. They borrowed it. Because they progressed so slowly, they ran out of capital. They wanted to keep stringing cable so they sold some more memberships.
At the time we merged with them, they had a hundred sixty-some people getting free service all these years. One of the first things we did was to notify all these people they'd have to start paying their monthly fees. This was a different company now. Some of them screamed. I have their secretary's record book at home and it makes extremely interesting reading because here they had a board of directors made of about fifteen guys and they were all substantial businessmen in New Philadelphia. None of them knew anything about the cable business, or even about electronics. Some of the decisions they made and some of the things they kicked around were really ludicrous. The difference between the way we started and the way they started was the fact that we made a point to do what Jerrold said and to learn about the operational system. We had a pretty good technician. We started right and we never had the troubles that they had because they didn't listen to anybody. They just stumbled along. Jerrold had not developed automatic gain control for a system, at that point. By the time we put our headend in, they did have. But New Philadelphia didn't. So everybody had a key to the headend and at night as the temperature changed, the signal always varied in the cable by the way the temperature changed. Whoever noticed this first would go to the headend and change the gain in the amplifier until the cross modulation would go away. The next day, in the warmth of the day, they'd go down in the snow and crank the gain up again. It was a good lesson in how not to run a cable system.
This engineering agreement that Jerrold had, they finally got into a lawsuit about it as it being illegal. It provided a restriction of you buying even a connector from anybody else except them. We didn't want to anyway, so it didn't bother me. But you paid them $5 for every new hook-up you made and twenty-five cents a month. For this, twice a year they would send an engineer in and balance out your system, check it out and see whether it was all right. A lot of people started screaming and just quit paying. We finally bought out the agreement too, but during that time all these guys that came in were all really good technical people. As I said, I would pick their brains and our technicians would work with them and we learned about the technical operations of the system. Some people terminated--bought out--those agreements real quick because they didn't want to pay Jerrold. I think that's one of the best things Jerrold ever did as far as educating people. I think it was responsible for the fact that they always were the leading manufacturer in the field.
End of Tape 1, Side B