Interview Date: July 26, 2017
Interview Location: Denver, Colorado USA
Interviewer: Stewart Schley
Collection: Cable Center Oral History
SCHLEY: Well, greetings and welcome to The Cable Center’s oral history series. I’m Stewart Schley. I have the privilege to be talking to a person I think of as kind of the Zelig or Forrest Gump of the cable industry. Bill Futera has sort of done it all, over a 35 year span. I get to talk about some of his observations about cable, some of the people in it, and the contributions that you made. So, welcome.
FUTERA: Well, thank you, very much. It’s a pleasure to be here. And I run, run, run, just like Forrest Gump.
SCHLEY: OK. (laughs) It’s good to know. And it’s not an inapt analogy, because you really have worked in so many different disciplines, with so many different companies. Let’s do this. Let’s run through the roster of companies you’ve worked for. Do you want to just give it a whirl?
FUTERA: Sure. I started my cable career in 1981, working for American Television and Communications, which was Time Inc.’s cable company that they had purchased from Monty Rifkin. And then I transitioned out of that company to a company called Event Television, of which ATC owned 20% -- of. And Trygve Myhren was really the leader of trying to get a consortium of cable operators to do pay-per-view, which is what we did. And then I moved on to New York. My wife and I moved to New York City, to launch a 24 hour, seven-day-a-week pay-per-view channel, which started, which we launched, as Home Premier Television. And our owners were ATC, Cox, Continental, TeleCable, and New Channels, or Newhouse, at the time. And I left there to come back to Denver, to work for United Artists Entertainment. And after that, when TCI and John Malone, who owned half of United Artists Entertainment, ate the rest of it, I had a number of options but one of my options was to move to Syracuse and work for the Newhouse family and Bob Miron. And of all the choices that I had, it was the one that I really wanted to make. And no regrets. It’s been a great ride. And so I’ve been with Newhouse, I was with Newhouse until I retired. We had a number of things and transactions that occurred. We did a partnership with Time Warner, in 1995, Time Warner Cable. They actually managed the assets of the partnership. And then AOL kind of came in. And the Newhouses had the option to restructure the partnership. And I won’t say AOL was everything of why they did but one of the reasons behind restructuring. And then we launched Bright House, after we restructured the partnership.
SCHLEY: I was going to say you went from A to B. You started your career in cable with ATC and ended with Bright House -- working out of Florida, were you? Or were you...?
FUTERA: No, I was in Syracuse. Our corporate offices were in Syracuse. But we had no cable systems in the Syracuse area. The Newhouse family and Bob Miron always felt that you keep corporate away from the operations, to really let the people run the day-to-day operations. So about two million of our two million and a half customers at Bright House were in Florida. And then we had some other locations that we operated in.
SCHLEY: Bill, take me back. American Television and Communications was popularly known as ATC. But you had a different derivation of that acronym. Was it...?
FUTERA: So I started at ATC just several months after Glenn Britt left New York, at Time Inc. And he’d kind of grown up in cable, at Manhattan Cable Television. And they brought him in as CFO. And the company had spent so much capital, over half of their capital budget, in just a little over a quarter. So ATC was also known as All That Capital.
SCHLEY: All That Capital. But it wasn’t unique. This is a point of time, if you take us back, where the industry was building furiously and it required enormous amounts of investment.
FUTERA: Well, if you think about the fact that ATC was a Time Inc. company and Time Inc. was a publicly traded company... If you look at all the other large cable companies at the time, which -- whether it was Cox, whether it was Continental, whether it was TCI, all of those -- Newhouse -- they all were private companies. So they really had a good feel for the business. As a publicly traded company, you have your shareholders and the Street to be concerned about. So when you put together a budget... And the analysts for Time Inc., which was really a publishing company... All of a sudden, all this capital is being spent, beyond what was to be spent. Then it gets the attention not only of the asset managers at the public company Time Inc., but also the Street and the analysts and the shareholders. So they were alarmed by it. But as you said, those who were in the business knew that, the faster you built and the more capital you spent, the sooner you would be able to get subscribers and positive cash flow coming into your business.
SCHLEY: But the difference between putting ink on paper and putting out Sports Illustrated and Time magazine and digging trenches and stringing and lashing cable was immense, from a financial posture.
FUTERA: Well and again, there were cultural differences between the two. And if you read the history of ESPN, which is -- there’s a great book about that, the culture between a cable television network and broadcast television, when those cultures don’t mesh and there’s not a real understanding of sort of the financial principles of those businesses, then you can run into some conflict.
SCHLEY: What did you do at ATC?
FUTERA: So I was hired at ATC to help them take their accounting systems and their statistical tracking systems and take them either from a manual process or from an antiquated automated process and put them on an IBM mainframe and work with the MIS or IT department. And I represented the user group. So I was working with the finance and accounting folks there.
SCHLEY: How did billing work, before this transformation?
FUTERA: Well, our business was very simple, when I first came in. And before pay television, the coupon books that people use for mortgage payments -- and, again, that’s probably pretty antiquated today, or for car payments, we -- billing was we send you a book and you make your 12 payments, and then we’ll send you a new one with the rate increase. And then, all of a sudden, HBO launches and Showtime launches and now we’ve got different price points. And now, all of a sudden, billing becomes more difficult. And then it just got more difficult when you start to do pay-per-view events. And then you have different tiers and so on and so forth. So the back office and billing, which is really not talked about a lot, you know, has been such a critical piece of our business, as we grew. And Tom Rutledge used to say one of the reasons why he advanced in his career is he made sure he was never at a location that going through a billing conversion.
SCHLEY: (laughs) Tom Rutledge, now the CEO of Charter. Why was it so hard? Other industries did billing. And what made cable challenging?
FUTERA: Well, again, because we were evolving from coupon books into multiple price points, into then an interactive piece... The other thing is other companies, like retail... You go into a store, you buy something, and you have physical inventory you grab. So our inventory was our services. So we had to provision those services. And initially, we used to throw everything that we had out and then trapped HBO, if you didn’t buy it.
SCHLEY: It in sort of a negative way.
FUTERA: It was a negative way of --
SCHLEY: Controlling the signal -
FUTERA: -- being able to provide the services to our customers. And as it became more complicated and we needed to have addressable boxes for pay-per-view. And really, being able to authorize the business today and the complexity of our billing systems today is immense. It’s immense. But it grew out of a very simple business. And we found -- although we didn’t like it very much, we found that having third-party vendors, who could focus 100% of their time on developing billing systems -- that that’s the way we went. And today the cable industry continues to rely on third-party vendors to assist them in their billing.
SCHLEY: It sounds hard and, to be honest, to me, it doesn’t sound that fun to orchestrate that transformation. What made it kind of compelling, from your own personal standpoint?
FUTERA: Well, I wasn’t involved as directly on the billing side. I was more on the accounting, finance, budgeting side and tracking statistics, at ATC. We used to have a fax machine and every one of the cable systems would fax in their statistics.
SCHLEY: For the month or...?
FUTERA: For the week. They liked to track weekly how we were doing, in all of these cable systems, like La Grande, Oregon, and Parsons, Kansas.
SCHLEY: How many subscribers you had added or...?
FUTERA: Yes, along with how many pay customers we had. So that’s how we were tracking the business, at the time.
SCHLEY: What else, at ATC, were you involved in, that was important to you?
FUTERA: Well, so one of the other things I was -- got involved in -- which was new-business development. And one of things that I really just so much enjoyed but also have a great appreciation for is how the cable industry found opportunities to grow its business besides having the dumb pipe. So one of the businesses that the programmers provided us an opportunity to get into was the ad-sales business, media sales, local ad sales, being able to insert on cable networks. And they were hoping, by giving us that financial opportunity, that we’d be willing to pay subscription, which... For their services --
SCHLEY: And that’s...
FUTERA: -- which was also coming in vogue in the early mid-’80s. So on the advertising sales side... And I mentioned Tom Rutledge. The first time I met Tom, he was running the Albany system for ATC. And we actually were running trials. So what made that business very difficult is we needed trafficking software and billing software, for multiple networks. There was a company here in Denver, called Columbine Systems, and they were one of the largest providers of back office trafficking and billing, for broadcasters.
SCHLEY: The over-the-air television industry.
FUTERA: Over-the-air television. But you only needed to bill and track for one channel. So we worked with Columbine Systems, to figure out a way, technically, to use their system to be able to bill and traffic for multiple networks.
SCHLEY: Was the early business you would -- you would insert advertising on up to four channels? Is that how it started?
FUTERA: Four. And then it grew from there. We actually had an executive, who I won’t -- I won’t say who it was but he sat in a meeting and said, “I don’t know why we’re going to spend money chasing these advertising dollars,” you know, “We’re in the subscription business. This is really not who we are”
SCHLEY: That’s forward thinking. (laughs)
FUTERA: “And we should maybe -- maybe we shouldn’t.” But as we all know, it’s become a very, very important part of our business, especially in political years.
SCHLEY: I actually track it. And today it’s almost a $6 billion category and one of the big four revenue sources for the cable industry. You started out in a very humble way and kind of grew it from there.
FUTERA: Absolutely. One of the other things that it introduced to cable, back then, is it was really the first time, other than competing for franchises, that we actually had to compete for dollars. So we’re in the local markets, competing for advertising dollars. With radio and television stations. And we all know that, companies that advertise, they have limited advertising budgets, you know? Anheuser-Busch, during the 1990s, when all these internet companies or startups were coming out... They were going to get all their money from advertising. And if you’re Anheuser-Busch, you basically had to have every family, including infants and all their kids, drink about three cases a week, to make your numbers. So advertising became very important to us. But we had to compete. And I like the idea that that was sort of when we first started to compete with other companies for dollars.
SCHLEY: A legendary figure I used to work for, Paul Kagan, used to call cable a parlay business, meaning you could layer these other revenue-producing ideas and businesses on top of the core, which was the distribution of programming over the wire. Advertising is, I think, is a good example of that. And so was pay-per-view. So how...? You were there! You helped create this category.
FUTERA: So event television was formed by five companies. It was ATC, Group W Cable, which ended up going through a transaction with Comcast, Century, and ATC and TCI -- so they weren’t going to stay a partner -- Warner Amex, who actually... If you think about Warner Amex, they and Rogers, through Zenith -- and Warner Amex, through QUBE, were the companies that were really doing pay-per-view, on a two-way basis. Because they had two-way plant. So Warner Amex was also a partner. And TCI was a partner. And then we also had Caesars World. And they were interested from an event point of view, coming up with events and distributing events. And Trygve and others said, “You know, gee, we ought to do a pay-per-view network, that includes movies,” so you aren’t renting transponders only for a few hours and so on -- and you could build the business. And at the time, the studios had Request Television, run by Jeff Reiss. And their financial model was... The studios could not own an entity that distributed movies on a pay-per-view basis. So this was sort of a timeshare condominium approach. Jeff would go out and he would lease transponder space. And then each studio had its share of time slots, in which they would go ahead and run the movies. And then the financial model was the studios would negotiate directly with the cable companies, one-on-one, for...
SCHLEY: Was this to avoid any antitrust considerations?