Interview Date: February 6, 2019
Interview Location: Denver, CO USA
Interviewer: Stewart Schley
Collection: Cable Center Hauser Oral History Project
STEWART SCHLEY: Greetings. Thank you for pressing play on this edition of The Cable Center’s Hauser Oral History series. This is a true story. In the go-go years of the cable industry in the modern era as a trade journalist, one of the great sources of information, erudition, illumination, and always a funny story was Lou Borrelli, whose history we will talk about momentarily. I happen to have said Lou Borrelli in the chair with me today, and it is my privilege to be able to interview you.
LOU BORRELLI: And it’s great to see you again, Stewart.
SCHLEY: Thank so much. I mentioned it’s surprising that you haven’t done this yet because your history with and around the industry is really rich, and you were at epicenter of a lot of the big momentous events that occurred. So we’ll riff about that stuff a little bit.
SCHLEY: But before we do so, take me back to your life as a kid. Where did you grow up, and what were you like?
BORRELLI: So I grew up in New Rochelle, New York. I spent a lot of my time in sports activities, primarily swimming. So my thing was being a competitive swimmer from the time I was five, and it sort of framed my time and my routine. My teen years, I was a swim coach, a head life guard,ran a beach club. It’s how I put myself through school. But we had a large Italian family in the neighborhood. My mother’s side of the family had a commercial, Italian bread bakery and so a lot of aunts and uncles worked in the bakery, and it was great. I mean, as an only child, I had a large family because I had like 18 first cousins that lived in a four-block radius. It was a lot of fun.
SCHLEY: Were you a television kid? Did you watch TV as a kid?
BORRELLI: I watched TV, although I was more into music, and I was fascinated with radio, fascinated. I mean, I grew up listening to WNEW-FM, the epic, classic rock station when Mel Karmazin was the manager, and he had Scott Muni, he had Dennis Elsas, and he had Pete Fornatale. A lot of the personalities by the way that are on satellite radio today were the people that I grew up listening and it gave me... I was in love with radio at that point.
SCHLEY: Yeah, and that extended. You attended SUNY Oswego, part of the state university system in New York. I think your early concentration was radio, right?
BORRELLI: Yeah. Well, when I got there. I had started working in radio in high school, the local station in New Rochelle, WVOX. When I went to Oswego, they had a student radio station as well as an NPR affiliate on campus, so we had two stations on campus, and I signed up to work there. I eventually became the manager my senior year. But for me because there was no television like there is today, student television, it was all about radio for the most part.
SCHLEY: What was the magic of radio as a medium to you?
BORRELLI: Well, I felt like you could tell your story through music, because remember back then, it was a lot of free-form formatting. There was not a lot of, you know, “Here’s your playlist and you have to --”
BORRELLI: Yeah. So it allowed your personality to come through, and you could -- we had a lot of callers. We did shows with call-in requests and such, but I felt like music allowed you tell your story. So for me, it was a lot of Lou Reed. It was a lot of Springsteen, who back then was just emerging.
SCHLEY: And you would make the call, right, as the DJ or the host?
BORRELLI: Right, yeah.
SCHLEY: What you could play --
BORRELLI: We had a huge wall of vinyl, you know the library. You just go and pick out records and play. It was awesome.
SCHLEY: If that was your focus early on, how did cable television find you and how did you find cable television?
BORRELLI: Totally by accident. Totally by accident. So back in -- this would be in 1976, ’77, TelePrompTer was the franchise holder in the city of Oswego. They had a 12-channel system of which they were committed to fill 8 channels. They only had seven, and the city was about to revoke their franchise, so they came to the college and offered us a full-time channel to program in order to meet that requirement. The broadcast curriculum people put together a group of students to essentially produce and distribute local programming. So we were doing conversation with the president. We’re doing food co-op reports. We were doing a lot of soft public affairs, and we did sports, hockey, basketball, swimming. That was sort of my introduction into, “Okay, this could actually be something that might be a regular routine.” At the time, UA-Columbia was franchising my home area in Southern Westchester. I graduated, I came back, there was, -- they were still franchising, so there was no job. But I went and met with them, and they’re like, “Well, come back in a year, kid, and maybe it’ll work out.” So the irony is I actually went back to Oswego. I got hired as a temporary faculty for instructional TV, produced and directed shows, taught some classes, but I supervised that group of interns that were my friends who were still there --
SCHLEY: And they were still doing their chance --
BORRELLI: They were still there. So we took it up a notch, did a lot more sports, a lot more... I wouldn’t call it hard news, but it wasn’t the soft, PR stuff we were doing. And so when I got out of there, I had all this experience. UA was ready to activate, and so I became the first local programming manager for UA in Westchester.
SCHLEY: So did you begin to understand what cable was about, the fact that it could expand the capacity of television in local markets?
BORRELLI: Well, here’s the thing. Growing up in Westchester and watching the local news, I remember when Channel 4 wouldn’t leave the borough of Manhattan. I mean, it was a big story for them to get to the Bronx or to go out to Queens. So we were, in effect, creating these local type of microcenters where, yes, you could have a Westchester-wide network, but we also had individual access channels for every community that we served. Part of my job was creating this Westchester-based network of shows that would be attractive to everyone that was a subscriber, but also, I was training citizens in each market to do their own public and educational access. So it was a very strong -- it was a very strong community connection that I think was underrated, right?
SCHLEY: Right, I agree.
BORRELLI: People did it because it was a promise, right? We all had to make these promises to get these franchises back in the day, but I think it cemented the business, to be honest.
SCHLEY: Right, that localism element in particular. What was going on in cable? You mentioned the TelePrompTer 12-channel system for UA-Columbia?
BORRELLI: UA-Columbia was --
SCHLEY: What was the state-of-the-art back then?
BORRELLI: So we were a dual-trunk, dual-feeder system, and we had 35 channels. It was two-way active, but there wasn’t the two-way connection yet. In other words, we would feed programming and we would do things, but there wasn’t like -- it wasn’t a QUBE or anything like that. But the interesting thing is we had maybe 14 or 15 off-airs between the U's and the V’s. The only satellite channels that we had at that time when we launched were HBO and TBS. We had WGN via microwave from Chicago. We had WSBK microwave from Boston, and we had the Garden, which we were the cofounders of. After that, it was just a bunch of data channels split. And then over time, satellite channels would launch. I mean, I started in cable in ’78. There was no MTV, there was no ESPN. I remember the launch day of CNN like yesterday, you know? We were in a mode where we were first competing to build systems, which we did.
SCHLEY: Right. To get franchises?
BORRELLI: To get franchises and build them out. And then we’re trying to effectively move the business forward. There was a very big... There was an ebb and flow of regulatory issues through the ’80s where we probably didn’t make the best editorial decisions, I mean, honestly. I remember going to city councils asking for a dollar, hoping to get 50 cents. When the rules changed where there was a formula approach where you add certain channels, a certain number of channels, you get a certain money, all of a sudden now, you had guys that -- we didn’t do this, I don’t think. But there were people who would say, “Oh, you mean, I could add six shopping channels and get paid all this money, and I get the revenue from the shopping?” So I think to be fair, that’s how we ended up with these fat bundles with a lack of, say, consumer choice because it was an economics-driven industry at that point.
SCHLEY: But you did see -- as these channels you mentioned started to come around, you did see consumers embrace this new family of television choices?
BORRELLI: Oh, absolutely, but I think -- and this is all hindsight and that’s why it’s -- you know?
SCHLEY: That’s why we’re here.
BORRELLI: That’s why we’re here. To me, we could have done a better job of managing the inventory in order to avoid some of the issues that came later. That’s my perspective. I mean, look, we were launching channels almost every month not necessarily because people wanted them, but they were getting a lot of hype. It was about fulfilling our promise, and we were continually investing in capital, we were expanding channels, all of that stuff.
SCHLEY: Because isn’t it, the core premise of cable I think then and now was more, right? More choice, more options for consumers?
BORRELLI: True, except I believe as the consumers became a bit more educated and a bit facile with technology, they came to understand that they had other choices. If you’re paying for a package of channels, but your kids are growing up in the VHS era, and so they’re just watching the things that they want to watch, and they’re buying just the tape that they want to put in cassette machine. You, sort of, translate to, well, why can’t I just buy the channels that I want?
SCHLEY: I see.
BORRELLI: Now you and I both know that there’s an enormous amount business relationships and contracts and rights agreements that prevent that from happening. And to this day, taking Humpty Dumpty apart and putting him back together, there are billions of dollars on either side of that wall.
SCHLEY: But it’s interesting, you saw the prelude to today way back in the era of VHS cassettes and linear cable distribution?
BORRELLI: You could see -- It’s interesting. I don’t believe, and I could debate this, but I don’t believe the consumer demand or want is much different today than it was back then.
SCHLEY: I totally agree.
BORRELLI: The difference is we have the technology to deliver.
SCHLEY: To fulfill it?
SCHLEY: Yes, it’s almost like we’re getting into a more natural evolution of the intersection of demand and availability. At some point, it’s interesting to me that you started in this programming realm early on in your career. But we all knew you -- we being the journalists and hangers-on who covered the cable industry -- kind of as an operations expert. What happened?
BORRELLI: My first boss is a wonderful man named Ira Birnbaum. He was the manager of UA Westchester, and for three years, I was having fun. I was creating TV programming. I had intern relationships with colleges all over the tristate, so I had 40, 50 interns a semester being my crew. I had only two or three paid stuff. Well, Ira came into me toward the end of the third year, and he says, “Look, --” He called me Louie, only one of two people in my life that call me Louie. The other was my mother. He said, “Louie, I know you’re having a lot of fun, but you work in a department that only spends money. If you want to have a career, you should work in the department that makes money.”
SCHLEY: He was the GM?
BORRELLI: He was the GM of the system. There was an opening in the regional office to be the assistant to the eastern vice president of operations, of a man named Earl Quam, and so I went to work for Earl. And back -- this is pre-PC, so I learned how to budget and operate cable television systems with a number-2 pencil, green bar paper, 10-key with a tape.
SCHLEY: You literally have cells devoted to subscriber rates times subscribers and the whole accounts?
BORRELLI: Everything and -- added across, added down. Earl was a meticulous engineer who elevated. As you know in the old days, the engineers elevated, right?
BORRELLI: And that’s how I learned the cable business.
SCHLEY: What did you learn about the cable business that was insightful or...?
BORRELLI: Well, here is what I learned. That it is far more intricate than most people gave us credit for. There’s a lot of moving parts. The most important thing I learned is that it’s not that hard if you’re current. The word that we used was current. Current means when the phone rings, you answer. When it’s time to send the bills out, you send them out. When it’s time to collect, you collect. When you’re making appointments, you show up on time, you finish on time. If you can keep the business in a current state, then the execution part becomes more routinized. It becomes a routine where you don’t necessarily have some of the issues of, okay, we’ve got a backlog, oh, we can’t get you for two weeks.
SCHLEY: We didn’t make appointments?
BORRELLI: Exactly. That was one nugget from Earl that I thought, “Okay, I get this,” right?
BORRELLI: But I was fortunate. I mean, I was surrounded by legends. People in my career, my first six, seven years if there’s a Mount Rushmore, they’re on it. Bob Rosencrans was the founder of UA, wrote the first check for C-SPAN. He gave Bob Johnson free satellite time on the weekends to start BET, created Madison Square Garden Network. Calliope was the first kid’s show that we then developed into USA Network.
SCHLEY: That’s right.
BORRELLI: And I’m standing there with Kay Koplovitz and Bob Rosencrans, and Bill Koplovitz, and I’m 23, 24 years old, so I’m a sponge. What I learned was that it’s okay to be tough, but fairness wins, and you never take the last nickel off the table. You never -- you can have a tough negotiation, but if you walk away with everything, eventually you’re going to lose.
SCHLEY: So even then you appreciated this sort of budding symbiosis between the programming guys and the operations guys?
BORRELLI: Well, because I saw it, and of course, being in the Westchester system and then in that region, at the regional office with networks launching, we were getting more attention than we deserved, primarily because the guys who worked Madison Avenue and in the media all lived in our systems. And so if you --
SCHLEY: It’s interesting --
BORRELLI: -- wanted to get your network noticed, you needed to launch on UA in Westchester or UA in northern New Jersey --
SCHLEY: Because literally the decision makers --
BORRELLI: Because they literally --
SCHLEY: -- lived there?
BORRELLI: Yeah, exactly.
SCHLEY: I want to ask you about a fateful moment in your life when you met a character called Jeff Marcus. Tell us who Jeff is, but tell us how you first had an encounter.
BORRELLI: So Jeff is an interesting fellow. He was an entrepreneur from day one. Jeff tells the story that he started in cable because his roommate at the time he was in Berkeley. His roommate was selling cable door-to-door, I think, for Jack Goddard’s dad if I’m not mistaken.
SCHLEY: This is California?
BORRELLI: In California. And Jeff was driving a municipal garbage truck. So Jeff was getting up at 4:00 in the morning, picking up trash, getting back at 2:00 or 3:00 in the afternoon. His roommate was going out at 4:00 selling cable for four hours, and he was making like three times the money that Jeff was. So they started a contract marketing and installation business. So Jeff had that type of career, went through operations. He started a brokerage firm with Rick Michaels called CEA. At the time that we met, he had a -- what was a TCI partnership called Marcus Communications. I had been through the entire evolution of UA-Columbia, which was UA, Rogers UA, UA G.E., UACC. There was all that going on and so that was the first eight years of my career. I had moved from the local system to regional and then I was responsible really for everything that was new. I did all the programming agreements. I was responsible for ads sales, pay-per-view, new business development. We had a cable guide company that published a magazine. I had all that with UA. At the point when TCI was taking over UA, finally because they had made a partial investment and then a complete investment, there was some talk of me moving to Denver and doing some of the work that Peter Barton and John Sie were doing, and I wasn’t really interested in moving. I was newly married and trying to get our life together in Westchester. So Bob Rosencrans said to me, “Well, there’s this guy named Jeff Marcus. He’s got a small company. He’s based in Greenwich, Connecticut, and I think maybe you would be a good fit for him.” So Bob calls Jeff, gives him my spiel, and literally, like 10 minutes later, the phone rings and Jeff says, “Bob Rosencrans called and said I should meet you, and I do whatever Bob Rosencrans tells me.” Again, when you think about the people that I had met and how they influenced me, and for Bob to do that for me, I mean it was great. And so Jeff and I met and...
SCHLEY: Where did you meet?
BORRELLI: We had a lunch in a sandwich shop in Greenwich, and for the next 12 months, we ate once a month, but it wasn’t just with Jeff. It would be with Cindy who eventually became my partner and ran our HR. It was with Stanley who was his... I mean I met with everybody --
SCHLEY: So were you working for him?
BORRELLI: No, I was still working at UA trying to find a job, and so through all this, we ate for almost a year before he hired me.
SCHLEY: Okay. You ate your way into a relationship?
BORRELLI: We did. We did. And so I joined him as the director of operations for Marcus Communications. We were about a hundred and thirty-five thousand customers at that time, primarily in Wisconsin, Minnesota, and a large system in Greensburg, Pennsylvania. Shortly after I went to work for him, he made the decision that the company was relocating to Dallas, Texas, and we all went. I mean, we had a home office of eight people. He says, “We’re all going,” and we all went. Half of us -- well, most of us just toughed it out. I mean I stayed for the whole thing. A couple of the others decided Texas wasn’t for them. And that’s when we merged Marcus Communications with WTCI to form WestMarc. That was a public company that then was liquidated back within TCI. I actually moved to Denver for 11 months, ’88 to ’89, to manage the group that I had for WestMarc, and then they transitioned the liquidation.
SCHLEY: How, Lou, were you guys making the economics work, to grow a company? You said a hundred and thirty-five thousand to start, became a succession of big companies?
BORRELLI: So the premise of doing the WestMarc merger -- WTCI was a microwave company that had just bought TelEvents. TelEvents was Carl Williams’ company in Northern California. They had about a hundred and ten, a hundred and twenty thousand customers. We were a cable company of about a hundred and fifty by then. So the idea was you do a merger. A publicly traded microwave company was probably a three, three and a half times multiple. A publicly traded cable company was more like a five times --
SCHLEY: Of revenue or cash flow?
BORRELLI: I think it was EBITDA. But the point was if you put the companies together, now it’s a cable company with microwave assets as opposed to a microwave company with cable assets. And so that -- and then we used that as an acquisition vehicle. When it was finally folded into TCI, there were probably 600,000 customers.
SCHLEY: Okay. So you got pretty sizable pretty quick.
BORRELLI: We got sizable. It was folded back into the mother ship and then I returned to Dallas, and that’s when Jeff and I formed a partnership with Goldman Sachs that became Marcus Cable.
SCHLEY: Okay, okay, and that was really the vault into the big time?
BORRELLI: That was the big run, yeah.
SCHLEY: What was fun about this odyssey as you’re bopping around to cities and working for this guy you had lunched with for a year?
BORRELLI: Well, Jeff and I had a great relationship. He won’t mind me saying this. He’s about eight years older than me so it was almost older brother, younger brother. And he had impeccable skills in terms of finance and deal making, and yet, he was... What I learned from him was that every person matters. In the old days when the company was small, he knew everybody’s name, he knew their birthdays, he knew their kids, which is not uncommon if you think about the entrepreneurs that you’ve covered in our industry. That was a common thread.
BORRELLI: That it was a very personal, connected relationship with employees as well as with communities, and so... And we had a way of doing things. I mean, we had this ability to effectively run businesses, enable people, and empower people to do the right thing at the right time, which is really the only strategy we ever had. And so when we would look at these other assets, these other companies, it was more about, okay, who here is doing what is right and who has the capability to do more? And then if we were to turn this into something that looks more like, say, this adjoining system over here, what do you we think we get out of it? Our whole talent, I believe, was being able to put disparate groups together, have them exceed their own expectations, and reward them for it.
SCHLEY: Because geographically you had properties in a bunch of scattered places, right?
BORRELLI: I love to tell people, we owned every cable system in Wisconsin that wasn’t called Madison, Milwaukee, or Green Bay.
SCHLEY: (laughs) That was the epicenter of the concentration?
BORRELLI: In Minnesota, we had every cable system that wasn’t called Minneapolis, Saint Paul, or Duluth.
SCHLEY: I want to go back because you said something really interesting about the concept of currency and staying on task. That philosophy or management ethos stayed with you as you grew the company?
BORRELLI: Absolutely. We took -- if you think about Marcus Cable, it essentially went from ’89-ish to ’98. In that time period, we did roughly a dozen acquisitions, some very large. So we were doing deals roughly every six to nine months. In order for us to effectively assimilate and integrate and not lose time in achieving peak performance, we had to come up with a methodology to indoctrinate people. And so --
SCHLEY: The Marcus way.
BORRELLI: So the Marcus way. And so what we did was we actually employed an outside firm that helped us crystallize that. This was a group that was -- it’s very interesting. They came out of the nuclear energy field because there you had to have critical tolerances. There was no room for error right?
SCHLEY: Right, I get it.
BORRELLI: Otherwise, really bad things happen. But they were able to crystallize for us things that became important touchstones. We had our management team trained and then we actually employed trainers. And so once we did one or two cycles with these guys on the outside, we did it ourselves. It was a way to leapfrog the sort of the mating period, if you will, and get people on board quickly. It also helped us identify talent.
SCHLEY: Did your GMs report up into you? Is that how you worked?
BORRELLI: As we grew, we had regional or divisional VPs that reported to me. So when the company was fully formed -- I mean really the story of Marcus Cable is started with 15,000 customers and 35 employees. When we sold it, we had 1,300,000 customers and like 2500 employees.
SCHLEY: Who bought your company?
BORRELLI: Paul Allen.
SCHLEY: Okay, and that was when? That was --
BORRELLI: Nineteen ninety-eight. It closed in April of ’98.
SCHLEY: Was it bittersweet to part with a company you’d helped to build?
BORRELLI: Well, it wasn’t bittersweet. What happened afterwards was a little bit bittersweet. But the -- I mean look, we were a partnership with the preeminent bank in the world, Goldman Sachs. They stayed in the deal eight years. Their normal was three to five, but we were doing quite well.
BORRELLI: So at some point, there was going to be an exit.
SCHLEY: Yeah. You knew that.
BORRELLI: To be honest, we were probably a couple of weeks away from selling to Comcast at which point, we would’ve all been done because they’re a cable company the assets, we’re gone.
BORRELLI: Paul comes in at the last minute, makes a deal, and he had basically asked us all to stay. So we signed agreements, and basically, we were going to be for north and South America or whatever the region was, we were going to be his investment vehicle. So for six months, more or less, I’m, sort of, hanging out with Paul Allen, and we’re looking at different things, and he was an interesting fellow, a very nice man. Many people did not see the side of him that we did --
SCHLEY: I bet.
BORRELLI: -- because while he was passionate about technology, his real love is sports and music. We must have spent more time talking sports and music. But anyhow, one thing leads to another. August of that year, he’s had meetings with my friends at St. Louis, at Charter. They were about to IPO. He made a preemptive bid, and they did exactly what I would’ve done, which is, “Well, if you want us this badly, we want the company to be called Charter. We want the management in St. Louis, and your friends in Dallas, sayonara.” And so it was disappointing, but this is the way I explained it to my people. So the company was always going to be sold, and by the way, we had about a hundred and fifty people that had equity in the company.
SCHLEY: Yeah. You --
BORRELLI: We shared a lot of equity. So if we sold it to Comcast, you get paid once. We sold to Paul, he bought us out. He paid us to stay, and then because he was violating the agreement, he paid us to leave, so we got paid three times.
SCHLEY: Okay. So that sounds like a better multiple.
BORRELLI: I did not -- I held no grudges. I was, “Look, I want a smooth transition. There were a lot of these employees that were going to Charter. I wanted to make sure it went well for them,” and they did. They treated them well.
SCHLEY: Did you intuit at any point when you were a 25-year-old kid working for local origination television that you were going to become, I mean, really a formidably wealthy, successful person?
BORRELLI: Never. I’ve exceeded every expectation for myself, and I kept raising them as I went along. But you know what it -- and this is why I say I’ve been fortunate, and this industry has been fortunate to a lot of people. We were riding a wave, we were meeting a need. We had great, smart, creative minds who were entering the industry because they could see the promise. I mean look, once I got there, and I was in it a while, I looked around and go, “Oh, yeah, this is where I want to be.” There were people that came in a little bit behind me who made it their mission to be where I was.
SCHLEY: Because they saw --
BORRELLI: Because they saw it. And some of my best -- well, almost all of my best friends were friends that I made in the industry.
SCHLEY: You had what, I think, is one of the most interesting segues, second act if you will, after the sale of your company, which involved America Online. Can you just kind of describe what that was about.
BORRELLI: So post-closing of AOL-Time Warner, I was approached to come in and put together a team that they had loosely defined as their broadband group. Obviously, the mission of AOL at that point in time was to figure out how to transform 34 million people paying $19 a month for dial-up service.
SCHLEY: Dial-up internet service.
BORRELLI: Dial-up internet service. To transition them to “always-on” which is what everybody used the term back then, “always-on broadband.” We assembled a small group of people, some cable friends that came on board, and we started work. What I found interesting was they felt the need to hire a cable guy for the AOL side when they had just acquired a company that owned Time Warner Cable.
SCHLEY: Big companies.
BORRELLI: So that was the first inkling that maybe this wasn’t going to turn out well because there was a lot of mistrust. I think that to be fair, if we all remember how the deal came together, there were the two guys at the top. They had conversations, they agreed to a construct, they brought in a small team below them, but it really wasn’t vetted in a way.
BORRELLI: And you can argue whether one got the better of the deal than the other, whether it should have been valued that high. I mean, there’s a lot of things. Books have been written literally, you could read them all, most of them are true. But what I think didn’t happen was they didn’t take it down to the execution layer of management, which in that company is thousands of people, and say, “Look, this is what we need to have happen, and if it goes well, here’s what your stock price looks like, your 401(k), or whatever.” Execution-wise, it was us versus them almost all the time.
SCHLEY: Where the rubber met the road, what was your job? You were trying to convince cable companies to ally with America Online?
BORRELLI: Well, my first job was to convince AOL the right way to go, which they’ve soundly rejected.
SCHLEY: What was the right way to go?
BORRELLI: The right way to go -- and I believe this has been proven -- was to forget about becoming the provider of service end-to-end to the cable consumer, but to become the HBO of the internet. Worry about the content, worry about the applications, worry about all the stuff that AOL does that nobody else can do. We had meetings where they would say, “Well, you know, when the truck pulls up to the home to buy AOL broadband, you put the AOL sign, magnet sign, on the truck, and the guy changes his shirt.”
SCHLEY: This is a beautiful parable.
BORRELLI: And I said, “Okay, so it’s Fort Worth, Texas, it’s August, it’s 115 degrees. You’re going to ask a cable guy that has just gone through a crawl space for two hours doing the prior installation. He’s going to come out on the street, take off his messy shirt to put on a new shirt so that he can go to the next job?
SCHLEY: That story’s so exemplifies the impossibility of melding these two organizations, right?
BORRELLI: Well, you know what, it didn’t have to be that way. But when you had a group of people who had built something from nothing -- they were all wildly successful -- it’s hard to tell them that they’re really not seeing it clearly.
SCHLEY: Your vision is really interesting -- the HBO of broadband. Why would that have made sense?
BORRELLI: Because it would have been an add-on. In other words, you know, trying to position AOL as the provider of service, as opposed to the content provider. That was the big difference because you had Roadrunner, okay. So AOL powered by Roadrunner would have been perfectly fine. It’s a Roadrunner account, it’s provided by Time Warner Cable, and you just buy AOL services on top of it, which they had. They already had that. It was called Bring Your Own --
SCHLEY: -- or Bring Your Own Connection.
BORRELLI: They wanted to own it all and it was --
SCHLEY: But it took an operations guy to realize this, I think, from up high.
BORRELLI: Well, but here’s the thing, the Time Warner guys knew this, but they didn’t trust them, you know? One of the toughest days of my like life was when I walked in after I got hired. I walk into Joe Collin’s office, and he just shook his head. He goes, “I’m so disappointed in you. How could you work for them?”
SCHLEY: No, because they were the other guys. They were the other guys.
BORRELLI: Yes. Well, it was awesome.
SCHLEY: So, was it frustrating overall just the experience? It was --
BORRELLI: It was frustrating --
SCHLEY: -- a three-year run for you?
BORRELLI: I was there for four years, and as I tell people, the allure of working for the world’s largest media company, yeah, checked that box off, couldn’t say no. This is what I found out. If you’re the world’s largest, it doesn’t mean you’re the smartest, it doesn’t mean you’re the most efficient, it doesn’t mean you’re the best. It means that you’re just big. While I still admire and respect and I have a lot of friends on both sides, it was a bad mix, and I think it was because leadership did not do what needed to be done to get it off on the right foot.
SCHLEY: Nevertheless, you saw -- I think you intuited changes in media distribution and the structure of the industry that would then go on to inform some of your endeavors going forward. What did you see happening that was revolutionary in media at that time?
BORRELLI: Well, when I was at AOL, one of the things that we did do that I thought was successful with the help of the guys at AOL Music, we started creating content, on-demand content and library content primarily in music. We were doing live shows from Webster Hall in New York. I think it was every Monday night because back then CDs and albums or cassettes would drop on Tuesdays. New music drops on Tuesdays, so we would do shows on Monday nights and then we would have advance buying, you’d have all of the integration. I think the thing that AOL did best was you could have content and then the frame around the content, you could buy tickets or you could buy the T-shirts. You could join the fan club or you could interact. To me that was a format that was really platform agnostic. It didn’t matter how it was delivered. It was the connection and the engagement.
SCHLEY: Okay. That mattered?
BORRELLI: That it was deep engagement, yes.
SCHLEY: But the concept you’re talking about, were they distributed over the internet?
BORRELLI: Yes. Yeah, they were done live and with --
SCHLEY: Streamed --
BORRELLI: -- a library, and I think -- I can’t remember what Comcast called it, but we actually developed the first like on-demand music channel for Comcast. That was really an outgrowth of that AOL Music platform.
SCHLEY: So you saw this transformation from linear media to on-demand, at large, that was what was going on?
BORRELLI: Yeah. No, I think it -- again, technology was advancing, so we could start fulfilling the promise that we couldn’t deliver previously.
SCHLEY: And that’s kind of what you were talking about when you made your allusion to the VHS cassette early on. Now, we could do it.
BORRELLI: Exactly, right.
SCHLEY: Now we could do it. What --? You could have retired to be honest, I mean, around that time. You chose not to.
BORRELLI: Actually, I did and then I didn’t.
SCHLEY: What has your journey been since, and what’s been fun or satisfying about it?
BORRELLI: Well, I think the most fun was after I left AOL, I became the CEO of NEP Broadcasting.
SCHLEY: NEP Broadcasting.
BORRELLI: NEP Broadcasting is something that back then was more of a domestic-focused company. But we had what was roughly an 85 percent market share of all live primetime sports and 100 percent market share of live primetime entertainment.
SCHLEY: Into the production side or...?
BORRELLI: We are the guys with the big trucks that show up with the -- we were the technical partners to every network and show producer on the planet. Monday Night Football, Saturday Night Football, NASCAR, all you golf you see on TV, most of the NBA, most of the Major League Baseball. And then on the entertainment side, Oscars, Emmys, GRAMMYs, Golden Globes. So for four years, I ran that business. We had a similar company in the UK, and it was at the time when the format was moving from standard definition to high-def, and so... It was interesting because a lot of our clients were friends and acquaintances from cable, so I became ESPN’s largest partner. We worked for Fox, for CBS, for NBC. My attitude was simple, we’re the Hard Rock, “We love all and serve all.” So rights would change hands, but the technology and the guys... You know, our secret weapon were the people who actually had been in this business forever who kept coming back to us for the deals, but it was great. Everybody thought, “Oh, you get to go to all these fun events, you get these tickets.” I said, “No, no, I get a plastic lanyard with my picture on it that gets me into the parking lots where the trucks are parked --
SCHLEY: Where the truck is.
BORRELLI: That’s right. The only perk I had -- I was talking about this over the weekend because it’s Super Bowl. Because NEP’s done like the last 30 Super Bowls. My favorite of Super Bowl week was I’d arrive on Tuesday, schmooze with the clients, take my guys out to dinner on Wednesday. Thursday night, best night of the week, halftime rehearsals.
SCHLEY: Oh, my gosh --
BORRELLI: And they run through the halftime show two times.
BORRELLI: And it’s rehearsals, so you’re on the fields, you’re on the stage. So here’s my four halftime shows.
SCHLEY: Yes, tell me.
BORRELLI: Not in particular order, Springsteen, Stones, Aerosmith, Prince.
SCHLEY: So Prince was legendary because of the rain.
BORRELLI: Yes. But here’s the thing. So my best story is I’m on stage for the Stones, and they’re running through their set.
SCHLEY: Where was that Super Bowl?
BORRELLI: I don’t remember the location. I just remember I was there, and you have the different headsets and squawk box. So they run through the set, and the set was supposed to run, I think, 12:30 and ran 12:54. The director, legendary Louis J. Horvitz, he does the Oscars, he does the GRAMMYs, he’s big time. You hear him squawking in the headset, “Hey, somebody, tell Mick, we were 25 seconds over. Ask him what lyrics he’s going to cut or trim,” and I’m on stage.
SCHLEY: How did that go?
BORRELLI: And Mick looks at me, and he goes, “Can he hear me?” I said, “He can hear me if I push this button,” and he goes, “Push the button.” He goes, “Louis, I’ll cut off your--” put in whatever you want to say -- “before I cut any of my lyrics. Let’s do it again.” And they did it again, 12:30 on the nose.
SCHLEY: Great story, great. What did you bring to that business? You must have been in heaven because you’re a music guy.
BORRELLI: Music guy, and I started in production. It was very simple. NEP was a holding company with four distinct verticals. They had the truck business, which they were number one in. They had the New York City studio business, which we’re number one in. We did The Daily Show, Colbert, Maury Povich, People’s Court, shows like that. We had a rock-and-roll touring company that did the screens for Clapton and big acts. I’m sort of drawing a blank here but it was rock-and-roll touring, video-screen presentation. We did the Stones tours, and then we had this UK business that basically did all the soccer that you see on TV in the US.
BORRELLI: Yeah, we did that. But they were independent, and they were calling on similar clients, so you could have -- in a given week if you were the ESPN, you’d have a guy from NEP Supershooters come in, you’d have a guy from the studio come, and so there was no coordination. So what they hired me was to take this holding company and convert it into an operating entity, so basically what I had done in cable.
BORRELLI: So we turned it into an operating entity, we put in a whole new account management system, we put in a lot of measurements so that... In that business, you’re all about utilization. When I showed up, they would measure it. If a truck worked once in a week, that was your work for the week. By the time I left, we counted the utilization of every camera, every replay system. Because this stuff was all fungible, and especially where it went from standard def to high-def, that became a world format. So now I could take equipment from the UK and bring it to America.
SCHLEY: So you get more use out of what your resources were?
BORRELLI: You know back then, I remember this number. We were renting $5 million a year worth of equipment from two outside vendors. By the time I left, the rentals were under a million because we’re renting from ourselves. Today, they own both rental companies because they’ve expanded. No, it was a lot of fun.
SCHLEY: You remarked, it was interesting, that your cable heritage did carry through in some regards the relationships with networks and --
BORRELLI: And people --
SCHLEY: -- people you knew?
BORRELLI: I mean, I met Dave Zaslav when he was Tom Rogers’ like Jimmy Olsen at NBC. Right?
BORRELLI: I knew George Bodenheimer on his first affiliate gig in Arlington, Texas.
SCHLEY: The former ESPN president?
BORRELLI: Yeah. I mean, I grew up with people who became presidents and heads of networks and studios.
SCHLEY: Because this is an ongoing theme with people at this table. The relationships are interesting in this business, and they’re critical.
BORRELLI: And they’re everlasting. You know last night we had dinner. I have not seen David Van Valkenburg in probably 20 years. It was like yesterday, “What are you doing? How are you?” And you know --
SCHLEY: That’s too cool.
BORRELLI: -- one of the legends in our business. But that’s just the way it is. You run into people and then you run into people that worked for people and say, “Oh, I heard all about you.” I’m like, “Oh, really? Okay.” But people matter and we were all --. Look, we were all, early on, we were all making it up as we went along. There was no road map. We were forging new ground. But we were smart enough to realize -- I think most of us -- that you could not do it alone and that the relationships on both sides of the table matter. I think they still do, but that has been lost in sort of the aggregate consolidation on either side.
SCHLEY: Do you perceive that there’s more tension between the content community and the distribution community than there used to be or...? How do you see that yin and yang playing out?
BORRELLI: I think there’s tension but I think it’s coming more from the consumer side because they are becoming much more demanding. You have these new interlopers such as Netflix and other ways for people to spend their time and their money, and that’s creating more tension. You’ve got a declining video customer base. You’ve got more rapidly declining video margins, and you have this app-based mentality where, “Okay, I’m just going to buy a couple of apps, and I’m going to get what I need.” Now the god’s honest truth is, that if you look at the essential channels and how they’re lining up in their various constituencies, by the time you buy the internet connection that you really need --
SCHLEY: Your broadband connection --
BORRELLI: -- and then you’re going to buy the apps you want or need, the price almost gets to the bundle. Almost.
SCHLEY: But, Lou, is price really the arbiter, or are there other considerations beyond?
BORRELLI: Well, I think price gets the headline. But I do think that control, selection, and convenience to me is what drives it. You want to be able to watch what you want when you want on whatever device you want.
SCHLEY: If you’re starting anew in the cable industry today, I mean what would you do? How would you attack this connection?
BORRELLI: Well, I think you have to go where people are headed. I don’t think you have to go where you’ve been. That was sage advice that Gerry Laybourne gave me just a couple of months ago when I was talking to her about my reentry. She’s like, “Lou, go where everybody’s headed.” She’s like Yoda, right?
SCHLEY: (laughs) Gerry Laybourne used to be the head of Nickelodeon, right?
BORRELLI: Yeah. She developed Nickelodeon and later Oxygen, so she’s two for two. I think being in the video business is very difficult as a cable operator these days. The margins are really thin. If you’re able to put together a semblance of a package of services where the connectivity matters then I think that’s a much more predictable, dependable revenue stream. I would not be offended by customers buying apps that I could facilitate. What I would do is try to figure out how to make my alignment with those content companies provide a better experience. I have some ideas for that, but I would rather not share because --
SCHLEY: Just I can’t resist to bring back the AOL-Time Warner analogy that you advanced early on. It’s not that dissimilar.
BORRELLI: Actually, it’s identical. Because to me the... We were told this was bad, right? There was a time when the term “dumb pipe” was thrown around the business and nobody wants to be a dumb pipe.
SCHLEY: Nobody wants to be a dumb pipe.
BORRELLI: Let me tell you, I used to say if I had a toll booth and I got to collect the toll, I was less offended. But I understand why that’s -- you know, you just become a utility.
SCHLEY: But economically, it’s not a bad business decision.
BORRELLI: Well, economically today, that’s where we’re headed. Now, I think it’s generational. I don’t think the sky is falling today, but you have to ask yourself this question. For the kids -- and I use the term kids loosely. For me, a kid is anywhere from 20 to 40 --
SCHLEY: Yeah, right there.
BORRELLI: -- thirty-five. But their habits, the way that they run their lives, the whole transactional life and world that they live in, they don’t think TVs are essential. They’re perfectly happy with their laptop or their phone. So I think that you have to be cognizant of what’s the one thing that keeps that continuity, and it’s the connectivity. So the connectivity has to be rock solid.
SCHLEY: It’s the piece. It’s the big piece.
BORRELLI: And then you can build on it from there. Now, do you want to build a linear option for those people that want it? Well sure, but it’s not going to be robust.
SCHLEY: It’s not going to be what it was.
BORRELLI: And it’s certainly not going to be price competitive. But for some, people would be okay with that, and that’s okay. But I think having the app-based video is probably something to explore. We did a little bit of this when I was in Jamaica this past year. It’s an interesting concept because in a region where the economies are really razor thin and people have little discretionary income, to see how they manage their money and their time, kind of gives you a window into on a bigger scale how that might work.
SCHLEY: What’s coming maybe down the road. You’ve been involved in endeavors that had ranged from telecommunications in the Caribbean and other markets too and at some advanced advertising work. How do you make your decisions about what you’re going to do? What are the characteristics of a business or an opportunity at a large scale that are attractive?
BORRELLI: Okay. I’m going to talk to the camera now because this is really important.
SCHLEY: Okay, pay attention, everyone.
BORRELLI: No. At this stage of my life, I want to be involved in something where I can contribute. I believe my experience and my experiences give me a pretty wide swathe.
BORRELLI: But look, I went through the glass-tower, private-aircraft phase of my life. It was called the ’80s and ’90s. It was really cool. But at this point, I see the pendulum swinging back where a lot of these early-stage media or technology companies are realizing that some of what they’re doing is really nothing new. It’s like the sequel to -- the third or fourth sequel to a movie. I can come in, I believe, and add some wisdom and some value. My legacy is pretty simple. I’ve put together world-class management teams that have executed well. I’ve returned a lot for my investors. But more important to me, it’s the connection where I feel like I’m adding more value than I’m getting. I’ve always been that way because I go back to -- I remember Bob [Rosencrans]. Bob was all about making everybody feel like they got more than they deserved.
SCHLEY: Well, I love the story you talk to -- you told about the early boss who said “Lou or Louie, you’re working for the part of the company that spends money; let’s get you into the part of the company that adds value,” right?
SCHLEY: And the rest is history I guess.
BORRELLI: Yeah, absolutely.
SCHLEY: That’s where it’s gone. You’ve mentioned a few -- actually, a number of people who’ve been really influential in your career. Is there anyone else that rises up in prominence that maybe, kind of, changed the course of your life or your view toward management or business?
BORRELLI: Sure. Ted Rogers to this day was the most impressive executive. And the Rogers--UA marriage was not -- it was not a love fest. It was a result of a competitive bidding for stock. We were a public company. We literally had come to an agreement to be sold to Dow Jones and Knight-Ridder, think about that if that had happened.
SCHLEY: The publishers, yeah.
BORRELLI: And the UA guys were not wanting to sell, and they literally found the Rogers people over a weekend and launched a competitive bid the following Monday.
BORRELLI: It was crazy. So Rogers went out. I remember going to a meeting in Toronto, the first gathering of the management of UA with the management of Rogers. We went to a Japanese restaurant where you took your -- I remember this vividly. You had to take your shoes off, you’re sitting on pillows. And Ted went around in the room and spoke to everybody, three minutes, five minutes introducing himself, blah, blah, blah. The conversation was light, the food was good, the sake was flowing, everything was great. We’re going to meet the next morning in the boardroom in Rogers’ headquarters, which was in this beautiful tower overlooking the city. One of these central-casting boardrooms, right?
BORRELLI: Massive table, windows all around.
SCHLEY: I can see it.
BORRELLI: And there was assigned seating, and in front of... So I’m sitting at my Lou Borrelli seat, and there’s a booklet. I open it up, and it is a summary of the conversation that we had, the highlights --
SCHLEY: With Ted Rogers?
BORRELLI: -- with follow-up questions.
SCHLEY: Holy majoly. Okay, he wins.
BORRELLI: Everybody had one.
SCHLEY: That’s amazing.
BORRELLI: And I asked him. I said, “How do you do this?” He says, “Well, I have 24-hour secretarial support. I went home, and I spoke into my Dictaphone or whatever, which was at the office.” He dialed it in, so it’s like a big voicemail, and a woman translates it while he takes his sleep. He wakes up, the fax comes in with everything. He edits it, sends it back. She does it again, and by the time we showed up --
SCHLEY: So the attention to detail --
BORRELLI: His attention to detail, his ability to connect and engage --
SCHLEY: On a human level --
BORRELLI: -- on a human level with a dozen people he had never met. Come on.
SCHLEY: No, okay. I have nothing. I have no retort. I also wanted to ask you about a part of your life that’s been important, which is giving back to the university that spawned your career.
BORRELLI: Oh, yeah.
SCHLEY: Can you talk about what you’ve done with SUNY Oswego?
BORRELLI: Sure. So yes, I am a proud graduate of SUNY Oswego who is a basically there a lot of influential people that come out of there that not many know about. The writer Ken Auletta, Al Roker who was my friend and who’s America’s meteorologist. Actually, we probably have dozens of meteorologists throughout the country. The guy who runs the hurricane center came out of Oswego.
SCHLEY: Spawned from Oswego?
BORRELLI: Yes. And also some sports celebrities, Steve Levy, Linda Cohn from ESPN, and a bunch of play-by-play people. So, anyhow, when the college was doing their first capital campaign in the history of the school, this school has been around a hundred and sixty years or something. This around 15 years ago, and they come to people who have had some success. Of course, we sold our company, and they knew I had a couple of shekels, and they said, “Well, we’re trying to do this campaign. You could put your name on the women’s locker room or the concession.” I said, “No, no, I want to start a program,” and so we created what was then called, embarrassingly, the Louis A. Borrelli Jr. Media Summit. My objective was a couple of things: One, I wanted to bring world-class people from the industry to campus to interact directly with students. It was my way of thumbing the nose at my friends down the road at Syracuse who do a lot of events in the city for their alums but at the time weren’t doing much on campus. They since are, and I’d like to take some credit for that.
SCHLEY: Why not?
BORRELLI: So it was that, plus I wanted it to be a student-run event. So the long story short. It’s one day in October every year. We bring people in from all walks of life. The topics are picked by the students. There is a committee of roughly 30 kids. It’s a full-time commitment for them. They start -- as soon as the summit in October is over, we start selection process for the new group that starts in February. We do research from the attendees as to what they like, what they didn’t like, what topics are timely. And then once we pick what I call the umbrella topic because it gets honed in once you get your commitments. We then come up lists who would we like to appear and how would we like it to happen. In the 15 years that we’ve done this, we’ve had Ben Bradlee, we’ve had Miles Brand when he was running the NCAA, we had Gerry Laybourne. We’ve had Shelley Palmer. We’ve had Jack Myers, we’ve had Steve Levy and Linda Cohn, and we’ve had Charlie Rose, and we’ve had Connie Schultz, and we’ve had a whole range of topics and of people. So for the morning of that day, they are all meeting in small classes or small student settings, one-on-one with students. We have luncheon middle of the day and then in the afternoon is the big show. Ninety minutes in the theater, roughly 450 people in the theater, another hundred or two in the spillover rooms. It’s moderated with four or five panelists for about an hour and then 30 minutes Q&A and it’s the students... So here’s the other thing. I only let students sit in the front rows. The faculty didn’t want me to go over this. It’s like, “Okay, if you’re a student, you could a seat here. If you’re an old person, you sit in the back.”
SCHLEY: More power to you.
BORRELLI: And then we have this interaction and then at the end of the day, we have our graduates of the last decade, gold, come that are on a career path that is consistent with their study. They meet with students about how they got their first job, what’s it like, “Okay, you’ve got to get an apartment in New York, how do you go about doing that.”
SCHLEY: Really vital life stuff and career stuff.
BORRELLI: We’ve been doing this -- this will be year number 15 in October.
SCHLEY: It’s tremendous.
BORRELLI: It’s awesome.
SCHLEY: And I’m glad you name-dropped a little because the pedigree of your people that you have, what a benefit for those college kids. Yeah. Well, I want to -- this hour went by really fast.
BORRELLI: Wow. We’re done. Can you believe this? We are done.
SCHLEY: I want to -- we could go on but --
BORRELLI: No, this is fabulous.
SCHLEY: For sharing some of your stories and insights, I can’t thank you enough. I’ve truly enjoyed chatting with you --
BORRELLI: Oh, this is great.
SCHLEY: -- and riffing a little bit about life, and we will look forward to seeing the second act of Lou Borrelli, maybe the third, I’m not sure.
BORRELLI: Right. You never know.
SCHLEY: It sounds like it’s kind of right around the corner.
SCHLEY: So I hope you have enjoyed this edition of The Cable Center’s Hauser Oral History series. For The Cable Center with Lou Borrelli, I’m Stewart Schley.
END OF INTERVIEW