Interview Date: Wednesday August 01, 2001
Interviewer: Jim Keller
Program: Hauser Project
Raymond E. Joslin, former president and group head of Hearst Entertainment & Syndication and senior vice president and member of the board of directors of Hearst Corporation, died on Friday, August 2, 2013 in Greenwich, Conn. The cause was stomach cancer. He was 76.
KELLER: This is the Video History of Raymond E. Joslin, President of the Hearst Entertainment and Syndication Division of the Hearst Corporation. He is also Senior Vice President and a director of the parent Hearst Corporation. Ray is a pioneer. He's been involved in the industry for almost as long as the industry has been around. He has a great background. He's also a Cable Pioneer, and I want everyone to realize that this history is funded by a grant from the Gustave Hauser Foundation and is part of the Oral and Video History Program of the National Cable Television Center and Museum. Ray, give us a little bit about your background, prior to the time you got involved in the media business.
JOSLIN: Well, I was born in Massachusetts and grew up in Rhode Island and went to college in Connecticut. At that time and at my age, I thought Syracuse was in the mid-west. Little did I know that later I would know exactly where Syracuse and many other places were. I got out of Trinity College in 1958 and went to work for Jones and Laughlin Steel Corporation. J & L, at that time, was the third largest steel producer in the world. This was well before foreign competition really began in that business. I had been selected, kind of as a guinea pig, to find out whether or not a brand new sales trainee out of two years of training, both in the mills and taking metallurgical courses and working as an inside sales correspondent in Indianapolis, could in fact, take on a position of responsibility. So I was selected and given a territory that, at that point in time, did about $40 million in gross billings per year, primarily with some of the OEM manufacturers, automobile manufacturers and parts that go into automobiles, and was stationed in Findlay, Ohio. I ran into my next door neighbor Irv Grousbeck. Irv Grousbeck and Amos Hostetter were, in fact, the founders of Continental Cablevision. I began to talk with them about cable and over a period of time, and beginning on Sept. 1, 1967, I joined that company. There were only five of us at the time, Irv, Amos, me, an accountant and a secretary as we began our first venture in Fostoria, Ohio. Irv and Bud and I sat at the Green Mill Country Club one August afternoon in 1967, and shook hands as partners in this new venture. Of course, everyone that I knew, including my mother, thought that I was absolutely nuts. I mean, why should someone my age who has a good job with a major company, a company car, a retirement program and whatever, why should I be so foolish as to give all that up and go into this business that no one knew anything about at that time. So we began.... It's a very interesting story, I think, that the listeners or readers would be interested in. Irv and Bud really conceived the idea of Continental Cablevision at the Harvard Business School and spent many evenings in Boston in their apartments drawing 35 or 50-mile circles around the television stations in New England, the thought being, at that point in time, ...
KELLER: A difficult job.
JOSLIN: Yes, right... that any community that had three or more television stations available off air with a roof-top antenna, was not a candidate for cable television. So when you draw a 50-mile radius around Boston and Springfield and Providence and New Have and Hartford and New York and Philadelphia, you quickly find out that there was no territory in the east, the northeast, for cable television. Of course, Pennsylvania had already been, or was being developed by the Rigas' and the Barcos and whomever else, were engaged in the retransmission concept of providing mountain or rural communities with television that they couldn't receive without a tower and wires carried throughout the community. Almost in desperation, they decided upon Ohio and capitalized the company with $2,000. Irv Grousbeck flew to Cleveland Hopkins Airport, rented a car and went to Mansfield, Ohio and essentially pretended, and you couldn't get away with this today – you'd wind up in jail, that he and his wife were going to be moving to Mansfield and that his wife was a television addict and could he please come in to 50 homes and look at the television reception that they were receiving with a rooftop antenna. He was allowed to do so. Remember, this is back in an earlier time. He concluded that Mansfield was not a cable television town and, of course, the Horvaths and the newspaper there built a huge and very successful cable system later. He then drove to Lima, Ohio, and he ran into a couple of interesting people - Bruff [George E.] Hamilton who was the owner of the Lima television station, WIMA, channel 35 and [George] Quatman, I can't remember his first name, who owned a private telephone company in Lima. He realized he was up against Cox. Cox had already contacted Hamilton and Quatman, made them partners, and they had an application well in progress in Lima. He then drove north about 30 miles to Findlay and ran into the same crowd. The Cox people were there and so, almost in desperation, on his way back to Cleveland Hopkins Airport, he drove into Fostoria, Ohio. Now Fostoria, at the time, had a population of 7,500, let alone 7,500 television households. Over a period of time, he made an application on behalf of Continental. They were successful in getting the Fostoria franchise and then adjacent to that, probably 15 miles away, was Tiffin. So the first two systems were then built with a tower in between, a 500' tower, at Bascom, Ohio. So that was the beginning of the company. The first office of the company was an abandoned hardware store on Main Street in Fostoria, Ohio. You might imagine what that was. We can all picture it. It's an empty store with a 30' frontage on Main Street and probably 60' – 70' in depth. At the back of that empty store, we had a counter, and we had two offices. Our customers, as few as they may have been, walked the 65' through nothingness to this rather stark, and not terribly professional kind of a business environment.
KELLER: Why didn't you put the counter up front?
JOSLIN: Well, that's a good question. The offices were back there and there were only five of us. We all had our own assigned tasks. We worked hard, negotiated a deal, interestingly with Cox, ...
KELLER: This was prior to the time that you joined the company?
JOSLIN: No, this was after I joined the company. I joined on Sept. 1, 1967 and this would have been right at that time. We negotiated a deal with Cox with respect to the Findlay system. Cox was convinced, and Bill Pitney was then the new general manager, that Findlay would top out with about 5,000 to 6,000 subscribers. So we entered into an agreement with them whereby we bought 50% of the system and had the right to acquire the other 50% when the Findlay system passed, I want to say, 6,000 or 7,000 subscribers. Which we did.
KELLER: Passed homes or subscribers?
JOSLIN: Subscribers. Within a year to a year and a half we were over 10,000 subscribers. That little cluster of systems really began, or were the beginnings, of Continental Cablevision which went on to be the third largest cable company in the industry.
KELLER: And you were president of the Ohio operation.
JOSLIN: Of the Ohio operation. Shortly after, probably in 1968, Irv left to move to Quincy, Illinois to establish a nucleus there, franchised the Quincy, Illinois franchise and Keeokuk, Iowa. Bud, as we called him then, now Amos Hostetter, moved to Boston and established what were on Lewis Wharf, the romantic office facilities that were built on a wharf that actually slanted. I mean, something would roll down your desk because of the slant and the condition of this old, old, old wharf that had the pilot house. As a matter of fact, Thayer, Janet Thayer, who was Amos's secretary assistant for many years, could literally lean out the window and talk to the lobster fishermen as they were docking their boats. They'd throw up lobsters, up through the open window, into the office. It was a very romantic place. We then commenced franchising throughout the state of Ohio. We had a very interesting and dedicated group of people. I think we won some 30 franchises without losing one. The one we lost was to you.
JOSLIN: Describe the circumstances under which you took that franchise away from us?
KELLER: We had a better proposal.
JOSLIN: It was Delaware, Ohio, which is not a huge metropolis at all. It's a town mostly of Ohio Wesleyan University and many retired people, about 30 miles north and west of Columbus. We had been there. We had convinced the council, the city council, that we were the right company for the franchise. In Ohio, under Ohio law, a franchise has to have three readings. We had had two of those three readings when Doug Dittrick, who was then the president of ATC...
KELLER: He was Vice President, Operations.
JOSLIN: ... Vice President of Operations for whom you worked at the time. His mother lived in Delaware, Ohio. She called the city council, and she said, "How dare you give this franchise to anyone other than my son and his company." So in you waltz, the following week, with a proposal. They suspended the readings, the third reading of our franchise, and you then got the franchise because of Doug's mother.
KELLER: That's right. That's right.
JOSLIN: And so I think that was the ...
KELLER: That's how franchises were won in those days.
JOSLIN: Exactly. That's how. That was our first loss. We had an interesting regime and some interesting people who came through Findlay, Ohio, people who are now in the business, and are well-recognized. Clearly, Bob Classen who went on to become president of Comcast for a period of time, worked with us in Findlay. Jim Robbins who is the president of Cox....
KELLER: I'm doing Jim next week.
JOSLIN: Are you?
KELLER: Yes – looking forward to it.
JOSLIN: Barry Lemieux who founded, with Steve Dodge, American Cablevision which was later acquired by Continental - he was my Fairborn, Ohio manager; even Jeff Marcus, who today is so well-known. His fledgling company called Mar-Kitt, Marcus and Ben Ketay, which was a door-to-door sales activity, conducted our door-to-door activity in Findlay, Ohio. People like Tom Willett who was very effective in marketing and creating new marketing ideas for the industry; several other people. And we had an interesting regime. We really, I think, were one of the first to develop the multi-media franchise approach where we'd actually use both film and a bank of Kodak slide projectors, synchronized with music, to show the wonders of cable television from Gorgeous George live from Chicago, the wrestling .... And it was quite effective.
KELLER: Did you have a studio there at that time for film chain and other things necessary?
JOSLIN: Well, we did that. Findlay had, and was really a pioneer.... Continental always took very seriously its local obligations. We always told our managers that we want you to live on the cable system in the town. We want you to be part of the little league if you have kids, attend church or synagogue or whatever, become an integral part of the community. Clearly, when you had to go for a renewal of a franchise or then for a rate increase, if you were integrally involved in the community, you were going to your neighbors rather than to strangers for this kind of approval.
KELLER: That was the philosophy of the telephone companies back in those days – you were involved in everything.
JOSLIN: Exactly. Exactly. So we created a service called CTV3. We bought a brand new RV, and we equipped it as a floating control room. It had film chain. It had tape machines. It had a full broadcast control room. We proceeded to tape, and did some live, high school football games, basketball games. We created children's programming called "Just Imagine" which won several awards at the NCTA at that point in time, before they were called ACES. We did city council meetings. We did the election returns. It was a very, for it's time and place, reasonably sophisticated mini-television station.
KELLER: You were the first one to use a mobile man, I believe.
JOSLIN: Yes. I think we were. I think we were. And then later, when I went out to California in 1972, we did the same thing out there. We called it CTV5 and, in that case, had a similar van equipped. We'd do the University of the Pacific football games, city council, much of the same kind of diet. We bought films with Leo Horty at Buckeye Cablevision in Toledo, and we'd bus those films up and down I-25 on the greyhound bus. We telecast such great classic films as "Casablanca". It was pretty elementary, but it was very effective.
KELLER: We all went through those days.
JOSLIN: We had an interesting regimen...
KELLER: I'd like to go, just a little bit to Continental had a little bit of different philosophy of their management where they were decentralized almost entirely. Each of the local managers was, pretty much, autonomous. Was that correct?
JOSLIN: Yes. The philosophy of the company was that, with the exception of finance, that what we were doing was essentially a regional activity. This follows from what I mentioned earlier about being part of the community. But essentially, each of the regional or general managers or system managers were very autonomous with regard to the marketing, the advertising, the promotion, the pricing in their particular community, and were held totally responsible for their P&L. So the reward was very entrepreneurial.
KELLER: Base your own budgets.... Did you make your own budgets and then do it with the company?
JOSLIN: Your own budgets and then submit them, every year, to the company for approval. Your reward was not only your compensation, which was reasonable but modest at that time. The real reward was the stock grants and options that people were given over a period of time. Just a week and a half ago, finally, all the Continental shareholders who moved into MediaOne stock were then exchanged for AT&T stock, some after a 35-year holding period. That's been quite substantial for those who really contributed to the efforts of the growth of the company.
KELLER: Did you ever try to determine what the basis for you stock would be if you ever sold it?
JOSLIN: 0. I mean, really, I'd call it a dollar, but it's somewhere between 0 and $1.
KELLER: I had the same problem with the Time, Inc. stock – never knew what the basis was.
JOSLIN: Yes, exactly. So there was a regimen really created there among these very, very talented people. We all had our jobs, either as a manager of a system or whatever. But at about 5:00, 4:00 in the afternoon, we would pack up two station wagons in Findlay and then when the van was available, it too. And we'd drive for two hours down to the Dayton area. Monday night was Fairborn, Tuesday night was Xenia, Wednesday night was West Carolton, Thursday night was Kettering or whatever else. This went on for a period of probably 4-5 years. You just don't walk into a city council and say, "I'd like a cable franchise." I mean, city councils, at that time especially in these smaller communities, knew everything there was to know about 30' wide of asphalt by 2" thick by 1 ½ miles long. But they knew absolutely nothing about cable television. So they would always place our item last on the agenda. I always insisted that we sit there for the entire meeting. So we'd get to the meeting, which normally began at 7:00 or 7:30 or whatever. We'd be taping it because we had the van there which was wonderful. It was amazing to see how city council people would, all of a sudden, come to the meeting in a tie and a jacket.
KELLER: Mind their manners.
JOSLIN: Mind their manners and whatever else. And so it was impressive, and it was ego-appealing as well. We'd sit there sometimes till 10:00 before our item would come up. And that would go on for 1 ½ hours, and by the time we packed our stuff up and headed back up for the 2 hour drive back to Findlay, it was 11:30 and we'd get back home at 1:00 am or later. The next morning we'd go back and be on the job doing whatever our job was, day job if you will, by 8:30 or 9:00. The next afternoon at 4:00, we'd pack up the same things and go to the next town. It was very interesting, and it was very rewarding. As I say, I think we franchised probably 35 – 40 communities in that manner.
KELLER: How many subscribers did they end up with in Ohio?
JOSLIN: End up with in Ohio – oh, boy. I don't know the answer to that question. Clearly, I think when they were sold to MediaOne, Continental had just under 5,000,000 subscribers, about that. I have no idea. Of course I was with Continental from 1967 to 1979 or thereabouts, so while I was a shareholder, and I constantly got reports, I don't know exactly. I do know one thing. I did this because I had to give a speech on this subject – it amazed me but in 1965 there were only 2,000,000 cable subscribers in the United States. Unbelievable. I didn't realize that the industry was that tiny, that small at that time.
KELLER: There wasn't a public company until '69. Was Continental before that?
JOSLIN: Continental was never public.
KELLER: That's right.
JOSLIN: Always private. Never public.
KELLER: That's right. There was not a public company until 1969 when H&B American ...
JOSLIN: H&B. I was going to say H&B American.
KELLER: ... and ATC – they both went at the same time.
JOSLIN: Yes. The philosophy of Continental was there are only three reasons why anyone would want to be public. One is in order to get investment capital to expand and build your business. That was never a problem for Continental. Continental had outstanding relationships with all of the banks. One thing that was engraved in our brains and bodies was that we will never fail a commitment to the bank. We will never fail to meet our projections that we have given to the bank in support of the money that they were able to loan us.
KELLER: Were each of your operations, as an example – yours in Ohio, were they financed individually or financed through the corporation?
JOSLIN: Generally, because of the way the company grew, they were individual. At one point in time, all that existed were three little system sin Ohio. All of a sudden, Keeokuk, Iowa and Quincy, Illinois and East St. Louis and whatever, were acquired at different times, the franchises or the acquisition of someone else's system. Generally speaking, and perhaps toward the end (by end I mean the 15 years that Continental went on after I had left), I'm sure there was a lot of consolidation of debt. That would only make sense.
KELLER: Did they use some of their other systems to guarantee the loans for the Ohio operation or after that, the Ohio operation to guarantee the loans of other places?
JOSLIN: Generally speaking, our objective, and we were very successful at it, was to use the assets for which the loan was obtained, as the security against the loan. That may have changed, as I say, in later years where, in fact, loans were consolidated and whatever. Clearly, Continental was a healthy and wonderfully cash-generating company. It did not want to go public because the bank was your best partner. If you did your business right, and you achieved your objectives, you could pay off the bank and he went away. A partner doesn't go away. Okay? Another reason why Continental felt it should not be public is that no one was interested in cashing in. Continental, amazingly, set a track of owning a property as if was going to own it for the next 250 year. It did very little horse-trading that went on in the business. Certainly, perhaps, beginning in the 80's when the consolidation and the clustering began in the industry, just for economies of scale – and that is that cable operators traded systems that could give them cluster in their area and by the same token give another cable operator a greater number of subscribers in a cluster in another area.
KELLER: That didn't really get moving until mid-80's, I would think.
JOSLIN: Yes, exactly. And so I think we prided ourselves in, at least through 1980, of never having sold a cable system. I think that was a wonderful track record. I think that people believed the credibility of the company. We had then been in business for, call it 15 years or thereabouts, and where others had traded systems or sold systems or entrepreneurs had sold systems to companies that were getting larger, we had never engaged in that. And I think that was good, and again, I think, led to the credibility of Continental in the investment banking and lending community.
KELLER: When did you start buying systems as opposed to building them?
JOSLIN: We bought, when I was in Ohio in 1968 or 1969, we bought the Jackson, Michigan system, and we bought the Holland, Michigan system.
KELLER: North of Toledo.
JOSLIN: Yes. Those were reasonably major acquisitions for a company our size at that point in time. Later, of course, into the 80's and 90's they bought systems all over the country from different operators and ...
KELLER: I understand that.
JOSLIN: ... consolidated them. Those are the two I recall. For the most part, we built our systems. We built them from scratch. The right way to do it to maximize your investment is not pay a premium for someone else's problems. You can create enough of your own problems.
KELLER: Like a used car.
JOSLIN: But at least you get the premium if, in fact, there's going to be a day such as the MediaOne acquisition or the AT&T acquisition where, having done that, has been very rewarding to the investors in this company.
KELLER: Then you left Ohio and went to California with Continental?
JOSLIN: Yes. We started in 1967 trying to obtain the franchise for the City of Stockton and San Joaquin County surrounding Stockton. Stockton was located about 65 miles due east of San Francisco, maybe 40 or 45 miles south of Sacramento. It's in the Great San Joaquin Valley. We began in 1967 in an attempt to get those franchises.
KELLER: It's a big city.
JOSLIN: It was. It was our major construction of the time, no question about it. And we, over a period of thee years or four years, we were able to get the doughnut – namely the county, San Joaquin County. But the hole of the doughnut, located square in the center, was Stockton, and we didn't have that franchise. You couldn't efficiently build the doughnut without having the hole as well. So we made a concerted effort, and in early 1972, we got the City of Stockton franchise. I wanted to, and volunteered to go, head up that project plus other franchising on the west coast. On Sept. 10, 1972, I packed my bags and left Findlay. My wife and young family at that time, moved to Stockton, California. At that point in time, Chuck Younger, who had been with the company in Quincy, Illinois, then moved to Findlay and then essentially took over Continental Cablevision of Ohio. The San Joaquin and Stockton system was interesting. It was one of three systems that were being built simultaneously that were presumably state-of-the-art.
KELLER: This was '68?
JOSLIN: This was '72. We were dual cable, bi-directional. [Austin] "Shorty" Coryell at ATC in Orlando, was doing it at the same time we were, as was Al Gilliland in San Jose. The whole concept was, well if one cable can carry x number of signals - and hopefully an unlimited number of signals in the future when some box or another would finally be developed - if one cable worked, two cables were better. But it really was an engineering challenge because to string double cable up on the telephone poles required a whole new set of cable ...
KELLER: Reels and tools.
JOSLIN: ... reels and tools. We convinced Pacific Gas and Electric Company, who owned the power poles in Stockton, that instead of mounting the amplifies up on the cable, which was generally the case – maybe 2' – 3' from the pole – that we would bring the dual cable down the pole to about 9' off the ground and we'd mount this double amplifier which was pretty substantial ...
KELLER: You were using SKL at the time, weren't you?
JOSLIN: No. We were using EIE, which later became RCA.
KELLER: Okay. I wasn't aware of that. I thought with the Boston connection you may have been using ...
JOSLIN: No. EIE, which was later RCA. And we built, I want to say – hope I'm not too far off – probably 1,200 miles of dual cable in the city of Stockton bi-directional. The logic there was, now with the development of two-way amplifiers, that you could pass a signal not only in forward direction to a subscriber's home, but you could take a signal from a subscriber's home back to a central location. Unfortunately, the engineering of it was perfect in the forward direction. The maintenance of the reverse half was nuts. But it was the best that we knew how to do at that point in time. We had a unique problem in Stockton. Under the FCC's Report in Order, where there were 22 or 23 television stations from Sacramento and San Francisco that put what we call a grade B or better signal over Stockton – meaning that with a reasonable sized rooftop antenna, you could get 23 channels. The only channels that we were allowed to carry were the Sacramento stations.
KELLER: I remember that very well. New England and California were ...
JOSLIN: Exactly. And it was a severe marketing challenge because we were, in essence, providing, for a fee, less than what people could get off their rooftop antennas for free. It highlighted even more than the CPTV activities where we were doing local high school and college sports and local programming and city council meetings .... Clearly, the cost of that was far greater than the benefit, without question. That system languished for quite some time.
KELLER: All big market systems at that time were languishing.
KELLER: Some in Orlando, some of the others that I was involved in.
JOSLIN: Yes. They were the first, if you want to call them, metropolitan markets. Stockton was a sizable city. Stockton and San Joaquin County were probably 500,000 – 600,000 people or whatever. For cable, at that point in time, cable hadn't really become very urban. It was now becoming suburban, having been essentially a retransmission and rural service in its early beginnings.
KELLER: When were you able to bring in some of the San Francisco signals. I'm sure they were desirable. They were out in the valley.
JOSLIN: They were. We argued the foreign language thing because there were foreign language stations that shouldn't be denied to this community that had Spanish speaking viewers. I think finally.... I forget exactly when that happened. I think it was in the late 70's or maybe early 80's - it might have been '78 or '79 - when finally the copyright bill was passed. You then had a distant local signal concept where you filled out a form and you computed what your copyright payment was for your distant signals. In effect, the concept then, was that we weren't stealing the signal. In fact, we were paying the copyright tribunal.
KELLER: Only to a point though. You could only carry so many of them that the copyright was limited.
JOSLIN: Yes, right. Exactly.
KELLER: It was a difficult time for the industry.
JOSLIN: The other thing that happened – I had almost a battle royale with someone you know but I won't mention him. Anyone who's watching knows, probably, who I'm talking about. It was at a Cable Pioneer cocktail party or dinner a few years back. I walked up to this fellow who founded and was no longer, the owner of a top 10 cable television firm. And I said to him, "Isn't it great how the cable operators and the cable programmers have worked so well together to build this wonderful business," keeping in mind that cable programming began in the late 70's, early 80's. He turned to me, and he said, "That's ridiculous. You programmers owe your entire existence to the cable operator." I said, "Wait a minute. If I remember my history right, I think that there were in 1975, probably on the order of 25,000,000 cable subscribers around the country. Here it is 1997 or whatever, and there's 65,000,000 cable subscribers. I have to believe that exclusive programming that was created in the late 70's and 80's and now 90's has a large impact upon attracting those subscribers."
KELLER: There's no doubt about it. The major market systems didn't go until HBO came on the satellite.
JOSLIN: Yes, exactly. And so my cable brethren, whom I've known and loved for 30+ years do tend to take that position because it's a convenient position to take when they beat up now on the programmers in terms of our fees, our subscriber fees. It was a real challenge, but clearly in Stockton, something interesting happened, as well. I believe that the Cable Hall of Fame should really include Jeff Nathanson.
JOSLIN: Jeff Nathanson was the founder of Channel 100, which in effect, was the first pay television service. I can remember, on behalf of Continental, going around and visiting with Henry Harris and with Doug Dittrick, then senior members if not presidents of their companies, and saying, "I think we ought to form a consortium or company to develop pay television." And they said, "No. Here's this guy, Jeff Nathanson who's willing to come to your community, spend the money - the marketing money and administrative money - and spend the money on the boxes that go into our subscriber's homes and he'll give you a percentage off the top of the revenue. Why should we do that?" I said, "We should do it because we have the opportunity to really develop that business for ourselves." So Jeff came to Stockton. It may have been one of his very first, I think, systems. He established his own offices in offices that we rented to him in our facilities. He engaged his own administrative and billing staff, his own sales staff, his own inventory of boxes, and we were in the pay television business.
KELLER: Was it a multiple channel box? I don't remember that operation too well.
JOSLIN: It was a single channel box.
KELLER: Was it in conjunction with your converter or didn't you have converters at that time?
JOSLIN: We had converters. It was in conjunction with our converter, yes. The other guy out there that was developing this was Dorry Sherry, from Hollywood. He had a card concept whereby you'd buy a debit card, I guess, through the mail ...
KELLER: And then Sylvester came in there and blew the whole thing up by losing it in California then after that. He should never, never, never have lost that. Never.
JOSLIN: Clearly, Stockton was very much of a pioneer system, both technologically, I think in terms of the challenge of the marketplace of wanting to provide our subscribers with everything that was unique and private – namely the cable networks.
KELLER: Out of necessity, too, wasn't it?
KELLER: Not only by desire but out of necessity.
JOSLIN: Absolutely. We had to have something to sell. We had to overcome the marketplace problem is what we had to do. So those were essentially where I was with Continental. I spent, I guess, 1967 – 1980 with Continental. I got very enthused about the advent of another side of this great business and that is the software, the programming side.
KELLER: Before you do that though, you were president of the California Association in 1981?
JOSLIN: '81. Yes.
KELLER: That was an interesting time for the California Association.
JOSLIN: Yes, it was.
KELLER: Do you remember any of those things?
JOSLIN: Do I remember! Clearly, the California Association was, and I think still is, the largest state or regional association in the country.
KELLER: And the most active.
JOSLIN: I think I was president for two years, I'm not sure. '81 for sure, but I think it may have to '82. Right at that point in time, we were attempting to pass through the state legislature AB699. AB699 was essentially a deregulation bill. We had a litany of horror stories in California where the city of San Diego and other cities just ignored the cable operators' application for a rate increase, just wouldn't even consider it. I believe San Diego is a good case in point. If I remember correctly, I think they probably, over a 4 or 5 year period, had submitted maybe 4-5 requests to the city council for review of the cable rate.
KELLER: We were operating ports in San Diego at the time. I remember it very well.
JOSLIN: And they just ignored it. So there were some real bad experiences with respect to local regulation of cable television.
KELLER: Pete Wilson, I think, was city attorney in San Diego at that time.
JOSLIN: I think you're right.
KELLER: He went on to become governor. He was tough.
JOSLIN: Yes. And we had Jerry Brown as the governor and Gray Davis was the secretary of state. The association with such great leadership, not only Spencer Kaitz but people like Gail Oldfather and John Goddard and there was a whole nucleus of us who really saw the emergency of the situation and also saw the opportunity.
KELLER: Jacoby was part of that group too.
JOSLIN: Gene Jacoby, Gene Cook, Ed Allen from Western Cable. I don't want to miss anyone. If I miss somebody it's just not intentional.
KELLER: Was Lee Druckman involved at that time?
JOSLIN: He was involved. Drendel was on the board. We had both manufacturers and operators on the board. Spencer was really ... his famous "call to arms".... We could summon 30 – 35 senior members of cable management in their companies to Sacramento on a 24-hours basis. We marched the halls. And we lobbied in the finest sense of lobbying. The California Association passed the first deregulation measure ever enacted by a state legislature, and it paved the way for deregulation that took place nationally in 1984. So it was a wonderful effort of a group of people that were smart, dedicated, willing to spend the time and effort, roll up your sleeves, be good lobbyists on behalf of their industry. We did establish the foundation, which I became vice chair of, which was the Foundation for Local Origination. It was for public service programming. The Foundation for Public Service Programming where the cable operators agreed to pay $.50 per subscriber per year into this foundation which would then equip pro bono groups in communities across the state of California with equipment and the ability to be able to put their message on cable.
KELLER: Masterful. Because that was really a big burden for cable companies – made the promise to provide all this equipment and at that time it wasn't used.
JOSLIN: Right, right. It also fixed ...
KELLER: Harry Butcher. I was trying to think – that's the name I was trying to think of from Santa Barbara. He was very much involved and of course he had the political connections to do an awful lot of that.
JOSLIN: We knew all the assembly men and senators, the important ones, almost by first name. We were that close to them during that period. It was very intensive, like two year period.
KELLER: Willy Brown headed the house didn't he?
JOSLIN: He was the majority leader. Gwen Moore who was so instrumental in helping us, and I still see Gwen today. As a matter of fact, we used to have, when I moved to New York and was living in Westport, Connecticut .... For three or four years in the early 80's, we would have the entire California group come to Westport for Bruce Young who was an assemblyman from Newark, California for the first, second, third and fourth annual Bruce Young seafood and lobster fest or whatever. We had Senator Alquist and May, his wife, who was very helpful to us, Bruce Young, Gwen Moore. We even got, at that point in time, .... Was it Jerry still then or had he been followed by whomever else? They consecrated a state of California flag and designated our house as the temporary consulate to Connecticut from California. So there was really a knitting of relationships of people. This was not so much business as it was relationship amongst ourselves and amongst the senators and assemblymen who really were supportive of our position. This really led to, and I suppose you're going to get to this as well, the Walter Kaitz Foundation.
KELLER: Yes, I was going to.
JOSLIN: It was the same relationship. We all loved Walter.
KELLER: Did indeed.
JOSLIN: I arrived in California, as I mentioned, in 1972.
KELLER: I was on the board in '67 or '68.
JOSLIN: Were you?
JOSLIN: And at the time Amos Hostetter wasn't terribly popular with the California Cable Television Association because of his position on pole attachment rights. He, being the great mediator and spokesperson that Amos is – I mean he has represented our industry so articulately over the last 30 years. I think he has been very instrumental in that arena for part of our success.
KELLER: No doubt about it.
JOSLIN: But the point is, the California Association was in the midst of a big court case with, again, Pacific Gas and Electric over pole attachment agreements. The industry had been used to $2 a year. California was already charging $5 a year and they wanted $10 a year. There was no basis fact because it didn't create any additional costs for PG&E. It's just they knew we needed them and wanted us to pay them. So I arrived in California and stayed a little persona non grata for about a year or so because of the differing opinion that Hostetter had at the NCTA - and I think Hostetter may have been chairman of the National Cable Television Association some time in that period – and the California Association's position on pole attachment agreements.
KELLER: Which was?
JOSLIN: Which was "we're not going to pay anything. We're going to get rid of this. It's not a question of $1, $5, or $10. We're going to get rid of it." That was their approach. Walter was so gracious. He knew that I was kind of in the middle. He welcomed me, as he did everybody, with open arms, sat me down and said, "Now, Ray, we want you to be part of CCTA but this is how you going about doing it." He took me by the hand and really led me into that group. When he died, which was Christmas or early January of 1989, ...
KELLER: That's what it was.
JOSLIN: ... in Dorthea's kitchen, his widow's kitchen, Doug Dittrick, John Goddard, Amos Hostetter, uh, ...
KELLER: Ed Allen, wasn't he?
JOSLIN: Ed Allen may have been there, certainly Chris Derick, several of us.
KELLER: I think Don Anderson was part of ...
JOSLIN: Don Anderson absolutely was there. We were in the kitchen. We decided on the day of his death that we would create the Walter Kaitz Foundation to memorialize Walter and his contribution and his great interest in wanting to bring minorities, now we call people of color, into our industry.
KELLER: And women.
JOSLIN: And women. Del Henry and I – keep in mind this is right about it's '89, uh, '79. It's '79. Del Henry and I are thinking about forming a company ...
KELLER: Walter died in '79, or was it '89? I thought it was '79.
JOSLIN: '79. I was a decade ahead.
KELLER: At this age that's very easy.
JOSLIN: Exactly. Well, why I know that is because in 1980, I joined the Hearst Corporation and it happened right then, just before I arrived here. Del Henry and I were considering putting a company together to develop cable television systems. I had formed Joslin Communications Corp., had franchised a couple of systems in California which I subsequently sold to Continental when I came here. Del and I wrote the first check.
KELLER: Was there any conflict of interest for you in being able to do that as an employee of Continental?
JOSLIN: I had, by that time, severed my relationship with them. I left in 1979 so I clearly formed my own company and was going to go out and do it on my own. Back in the kitchen of Dorthea's and Walter's house, I wrote the first check, $1,000 made out to the Walter Kaitz Foundation, $500 of which would be paid for by Del and $500 of which would be paid for by me as our investment in starting all this. Clearly, it got off to it's first start right on the day of his death. Paul Maxwell was there also.
KELLER: That's right. He would have been there.
JOSLIN: Paul and I, who are close friends and I love him dearly, .... I've watched him start all these different informational things.
KELLER: And he's still doing them.
JOSLIN: He's wonderful. He's wonderful. And I know he and Edie quite well. He and I had a big disagreement because we were charter members of the board of trustees of the Walter Kaitz Foundation. We decided that we should have an event. Paul's ideas was to have a dinner in Denver and one in Los Angeles and one in Washington and one New York and one in Chicago. And I said, "No, have one dinner and have it in New York." He said, "New York? People aren't going to go to New York." I said, "Everyone that is anyone comes to New York to talk to their bankers, to talk with their then cable programming affiliates, and whatever else. Build it and they will come." And lo and behold, the dinner was started here, and I want to say it's probably 1984, 1985. I think we're on our 12th or 13th annual, which has become the single, largest event, I think, in the cable industry, other than the conventions.
KELLER: How much money do you raise now, roughly, by that dinner?
JOSLIN: They will, it's considerable. It had to be put to work. That's the important thing. I think there's no question that they raise close to $1 million or $1 million plus each and every year. I think there's no other place in the city of New York that's large enough to house it other than the Hilton. I think that we are approaching the 2,000 person mark. I don't think there's another dinner in the city of New York that's as large.
KELLER: The last one I was at, I was at the Waldorf. I remember that.
JOSLIN: The last one?
KELLER: The last one I at. Yes, I haven't been around.
JOSLIN: Right. Exactly. Well they had to move to the Hilton because the Waldorf was not big enough. And I'm so happy to say that over the years, the Walter Kaitz Foundation has placed, in our industry, about 400 people in a senior, more senior management positions. Back when I was in California working with Bob Dabney at Peralta Junior College, we started a program for training minority installers and pole climbers and customer service reps, and that worked very well. But the Walter Kaitz Foundation really goes out and looks for outstanding peoples of color who have been successful in some arena of business or education. Either they have their law degree or their MBA or they've worked for 2 years or 3 years and have somewhat of a distinguished short career doing something else or they've worked for a company and they've gone up the ladder. These candidates are all in their 30's. Very rarely are they younger than 30, maybe 28. But they're in their 30's, generally speaking.
KELLER: Great source of management capability for us.
JOSLIN: In they come, not at a senior, senior level but at a level of responsibility where, over time, they then can become members of the senior most management of these companies.
KELLER: Right. I'm trying to think of what year I was on the selection committee. Gee, it was a long time ago though. What year was Hostetter chairman, do you remember?
JOSLIN: I want to say it was probably in the early years. I want to say maybe '85.
KELLER: '84, '85, right. Yes. We hired four or five people in in that year. They were absolutely great. Absolutely great.
JOSLIN: What it does, the whole purpose of it, is to get into the senior most management's minds in our industry, the thought of color, of how we serve our subscribers.... I mean, clearly, demographically the cable industry serves all walks of life. It just makes a lot more sense that if your company's policy and understanding is driven by people of color who are in senior management, that you're going to serve your customers more effectively.
KELLER: We, at that time, just before that time, were severely criticized in Washington for the lack of representation of minorities and women. I think this went a long way toward helping alleviate that problem.
JOSLIN: The first dinner, now that I'm recalling it, was the fall of 1984. Why I say that is Ralph Baruch and I were the co-chairs of that first dinner. I had had a terrible accident the week before the dinner where I nearly lost my right leg. I was bound and determined to get out of the hospital and get there. Of course, it's a black tie affair. I had on top my formal shirt and bow tie and shawl-collared black top. Then I purchased a pair of jeans because my right leg was in a cast from my toes to my crotch.
KELLER: I remember it very well.
JOSLIN: I slit the jeans up the side so the cast would fit in and came in, still perspiring from the infection. I was perspiring like a stuck pig. I'll never forget – my wife, who was not used to me being in a wheelchair with my leg sticking straight out, rammed my leg right into one of the stairs, and I said something that I shouldn't have said. I think I surprised a lot of people with what I said and I apologized for it later, or course. But, it's a wonderful, wonderful foundation. I think it has room to become more effective, more efficient. I think that ...
KELLER: How many interns are they getting each year now, do you know?
JOSLIN: It varies. The pressure's clearly on that we believe that there should be more than 50 each year. I think in recent years it's been plus or minus 10 of 50 total.
KELLER: In the early days there weren't that many.
Tape 1, Side B
KELLER: Ray, when we finished on that first tape, we were talking about the early development and the development of the Walter Kaitz Foundation of which you were one of the founding members and are still on the board.
KELLER: You're a board-for-life member of that foundation, the great work that the foundation has done in involving talented people of color and women for executive positions within the cable industry. Would that be correct?
JOSLIN: Absolutely. That's the ultimate purpose of the foundation, as I said earlier.
KELLER: You say you're doing about 50 a year.
JOSLIN: Something like that.
KELLER: And you're placing all of them at this time.
JOSLIN: I think there are about 50 fellows, and I think the placement rate is quite high. Again, you run into a little bit of a problem because it's a national program. There may be a position available in Knoxville, Tennessee and the person who's living in Portland, Oregon may not want to live in Knoxville, Tennessee. So you do run into those obvious problems when you're trying to place people on a national basis.
KELLER: I found that there was a great idea within the minds of these young people if they wanted to get into television programming as opposed to getting into the nuts and bolts operation of the industry. I used to look for people who were looking to be within management to put in as system managers as the original position. Is this still the case with the association?
JOSLIN: No. As a matter of fact, I was very instrumental in bringing the programming community into the Walter Kaitz Foundation. Initially it was primarily for cable operators looking for senior managers or managers of cable systems, accountants, lawyers, whatever. Clearly, as the engineering side of the industry progressed, we first broadened it to the engineering community. Then as the programming industry began to blossom, programmers were brought in. I would say, today (I don't think I'd be far off) that maybe 50% of the fellows are now actually in the programming side of the business. So it's clearly intended to serve all aspects of the business. Currently we're talking about whether the phone companies should be involved in the Walter Kaitz Foundation. There are some pros and cons and some feelings one way and/or the other. But you have to look at it ...
KELLER: I don't think you can make a distinction between telephony and cable.
JOSLIN: Absolutely. They are now part of our industry or we are part of their industry, one or the other. So I think that will be resolved in the months ahead.
KELLER: Do the telephone companies, say AT&T, want to participate?
JOSLIN: I think so. I think so.
KELLER: I would think that MediaOne was participating being...
JOSLIN: Oh, sure. Absolutely.
KELLER: ... that it was a telephone company owned system. What years did the Kaitz Foundation really, really get off the ground? Do you remember that?
JOSLIN: Really get off the ground? I would say probably in terms of both getting the funds to be able to operate and beginning to place fellows, has to be the mid-80's. With the advent of the annual dinner that provided the funding, I think early on, we were not as happy as we might have been, given the fact that there were five to ten placements a year. We just felt that was not fulfilling the mission. Since that time it's been stepped up considerably.
KELLER: I can remember those discussions so vividly. When you left California .... Or is there anything else -before we get started on that - is there anything else that you can think of that was significant in your stay in California for Continental?
JOSLIN: Well, I think we've covered it fairly well. We did franchise some other communities in California and clearly became a citizen, a corporate citizen of that state. Continental went on later to make acquisitions in the Los Angeles area and other areas in the state of California. My leaving was at an appropriate time, and I decided I wanted to pursue the other side of the business – either from an entrepreneurial stand-point or from a programming stand-point.
KELLER: How did you get hooked up with the Hearst Corporation? And as a corollary to that, how did the Hearst Corporation get involved, or have the idea of getting involved, in cable television?
JOSLIN: If I can go back just for a brief moment. Back in the mid-70's, Jerry Levin and I used to meet with some degree of regularity. We had created what was, at one time, the 3rd largest pay service called Cineview. HBO wanted to acquire Cineview and ultimately did and renamed it Cinemax. Jerry was pondering .... This is pre-satellite when HBO was a terrestrial service in the greater New York area delivering sporting events and some movies by microwave transmission into parts of New York State and the greater New York area. He wanted our Stockton system to be the first affiliate on the west coast. Interestingly, this is again before the satellite, and he and I used to sit and argue as to whether or not in Stockton, California the customers there would want the New York Rangers tape-delayed-5-days to watch and be interested in hockey when there was no hockey team west of the Mississippi at that point in time. This was long before the Los Angeles Kings came into existence. So we'd go back and forth. He kind of really turned me on to what was developing. What happened in the last 5 years, 1975 – 1980, USA went on the air, TBS went on the air as a super station, ESPN went on the air in 1988 or 1989. So clearly, there was another side of the business that was virginal, that was brand new, that was something that was going to be exciting, I thought. Back when I was younger, I had spent some time in summer stock and was on the radio, interestingly, animating the comics when I was 12 years old. I used to do a teenage show in Providence on Saturday morning, sports interviews and things of that nature. So I had a little bit of that side of me in me. How I came to Hearst was two-fold. One was that Dick Munro, who later became the co-CEO of Time Warner and was the CEO of Time, Inc. before the merger, and I were on the NCTA legislative committee in 1966 and 1967. He had the New England and New York and New Jersey area, and I had Ohio and Michigan and Illinois and Kentucky or whatever. We would meet in Washington every two months for a day or two and we would walk the halls. Back then, we weren't talking about issues. We were just talking about what cable television was. No one knew. One of the great meetings we had was with Senator Steven Young from the state of Ohio who, at that time, was quite old. He was in his 80's. We would walk in and try to talk to the senator about cable television, and his pet subject was postal rates. We'd get five minutes, and he'd get twenty minutes talking about postal rates. But that showed you, again with 2,000,000 subscribers, we were just a fly speck on the back of an elephant in terms of an industry. But I got to know Dick. And then, over the years, when I'd come to New York once or twice a year for whatever, I'd always give him a call and we'd have lunch or dinner or spend some time in his office. He lived in New Canaan, Connecticut, as did the CEO of this company, Frank Bennack. One day at the New Canaan Country Club, Frank said to Dick, "Dick, Time Inc. is in the cable television business. We'd like to be in as well. Who do I talk to?" First name out of Dick's mouth was 'Ray Joslin.' Coincidentally, Frank Bennack happened to know John Saeman at Daniels & Associates. He placed a call to Denver to John and said, "You're a big broker. You know all the players in the industry. We want to be in the cable business. Who shall I call?" John Saeman says, "Ray Joslin." So three weeks later, I was in New York talking about it, and two month later I was looking for a place to live in the city of New York. So that's how all that came about.
KELLER: Did they want to get into the cable operating systems or just in the programming side?
JOSLIN: There were three missions that I was charged to pursue. I joined the company on May 1, 1980 so it's just been 20 years. One, was to acquire and develop cable television systems. That I knew how to do. I'd been doing it for 15 years or whatever. Two, was to take Hearst magazines into television. And three, was to develop a strategy and a business plan for what we called electronic publishing. There's a print company with electronics on its way, this is 1980 now, keep in mind. How could we, as a print-based company, really become prepared to deal with this?
KELLER: Did you find it difficult – corporate culture and getting into the print business?
JOSLIN: Well, what was interesting – I arrived on May 1, 1980 with an office 4x5. I had hired an assistant. We had no phone calls. We had no mail. We had no business. So it was a great opportunity to start one, make one up as you go along. I went out in the first month and talked to various corporate officers and group heads. Hearst is broken up into six different, now six different, groups - clearly, the Newspaper Group which is how this company started 112 years ago and today owns 16 or 18 newspapers around the country. Magazines is the largest monthly producer of magazines in the world – Good Housekeeping, Town & Country, Cosmopolitan, Popular Mechanics, on and on and on, House Beautiful – quite a stable, especially in the woman's field. At that time, the Radio and Television division had three television stations and the Books Group, which published books. Since then, obviously, we've added what we call the Entertainment and Syndication group, which is my group. And we also have added Hearst Interactive Media, which has been developing, for the past seven years, investments, dot.com activities. It owns majority equity in woman.com. That's headed up by the former FCC Chairman Al Sikes. What I was to do was: 1) go out find, buy and build cable systems, 2) take the magazines into television, and 3) develop a strategy and business plan for electronic publishing. The first month I went out and talked to Frank Snyder, who at that point was the head of the Broadcast Group. He told me he hated cable. Cable was the enemy. Frank was on the board of directors and also on the board of trustees of the trust that owns this company. I said, "Wow. Okay." That wasn't what I wanted to hear. Then I went to the general counsel, Harvey Lipton. He said, "Ray, I don't own a television set. I'm never going to own a television set. Don't even talk to me about it." I'm saying to myself, "Wait a minute. What have I done?"
KELLER: Different cultures.
JOSLIN: Yes. "Have I made a good decision here in my career?" What was very interesting, and I think very seminal, is that very, very quickly, I came to the conclusion - very short period of time, matter of weeks – that Hearst, on its own locomotion would never take the magazines into television. It was not its mind-set. It's a print-based company while television stations are a form of television. Television stations don't create very much programming except new and public affairs – hardly entertainment or other forms of programming such as a network would. So I learned four very important facts: one was that Hearst and ABC had been essentially partners since 1957 when WTAE, a Hearst-owned station in Pittsburgh, went on the air as an ABC affiliate. The three television stations, at that point in time, were all ABC affiliates; that Hearst and ABC did not compete in any way unless you want to assume that Prairie Farmer, the ABC magazine at the time, competed with Cosmopolitan magazine, which was ridiculous; thirdly, in increasing order of importance, that Frank Bennack and Leonard Goldenson were very good friends. Leonard then was the founder of ABC and then the chairman of ABC; and fourthly, and most importantly, that they both supported enthusiastically and ran the United Cerebral Palsy campaign nationally. Hearst and ABC have donated so much money and time and effort to that effort which is winning. There's hope on the horizon for a cure for cerebral palsy. So I, joining on May 1st I think, my calendar shows that on June 6, I went to Frank for a meeting and I said that I had heard that ABC was thinking about doing the same thing that we're thinking about doing and suggested that he might call his friend, Leonard Goldenson, which he did. Leonard said, "Yes, we are. We've just appointed a guy by the name of Herb Granath to head that effort.
KELLER: Hollywood Granath?
JOSLIN: No, no. He's at ABC. He was on the phone this morning when we were waiting. So within three weeks, Herb and I were having lunch for the first time and meeting. In late December, early January, we formed Hearst-ABC Video Services. Out of it came the Arts Network, the Alpha Repertory Television Service and the Daytime Network. What's interesting about it, if you want to talk about great trust and fiber and relationship, clearly from Leonard Goldenson all the way through ABC and this corporation, there all these wonderful relationships. Herb and I and the lawyers sat for six months trying to hack out a partnership agreement. We got down to the blank on the first page – "what's the name of this company going to be." So I'm on the telephone, and he's on the telephone in his office. I said, "Herb, I'll tell you what. I'll flip a coin. If it's heads, it's Hearst-ABC Video Services. If it's tails, its ABC-Hearst Video Services." I flipped the coin and I said, "It's heads." So that's why it's Hearst-ABC Video Services. But we launched the following April, April 15th or 13th or whatever, the Arts Network which was the Alpha Repertory Television Service which ultimately evolved into, when we acquired the Entertainment Network and brought NBC in as a partner, ...
KELLER: You purpose, though, was to provide programming for television, is that correct?
KELLER: Television stations.
JOSLIN: Cable networks.
KELLER: Cable networks, okay.
JOSLIN: And the ARTS Network was a three-hour evening service that was on the tail end of Nickelodeon. Herb and I went over to Jack Schneider. Jack is former president of CBS television, at the time was working for Drew at Warner Amex, former secretary of HED. We went over to talk to Jack and asked if we could lease space on the back end of Nickelodeon. Nickelodeon, at that point in time, was a day-time service. The assumption was that kids went to bed at 7:00 or 8:00 at night. Perfect for us. Nickelodeon kids' programming, ARTS programming following that at 9:00 at night or 8:00 at night made perfect sense. So Jack made the following proposal. He said, "I'll tell you what. I'll give you a three-year deal. First year, I won't charge you anything for the transponder, second year I'll charge you $1,000,000, third year I'll charge you $2,000,000." We said, "Yeah," and we shook hands and we had a deal. Over time, over the three years, we knew we had to go back to Jack and try to renegotiate this deal. I'm thinking and Herb is thinking, "Fourth year $3,000,000, fifth year $4,000,000, sixth year $5,000,000."
KELLER: You weren't getting that kind of revenue were you?
JOSLIN: No. Jack says, "First year $10,000,000, second year $12,000,000, third year ...." Best thing that ever happened to us. It forced us to get really serious about what we were doing. We had to go out and commission our own satellite and create our own life as the ARTS Network. If you remember Arthur Taylor, at the same time had developed a network called the Entertainment Network, which was intended to be a $10 a month pay service of Pavarotti doing La Boheme live from Lincoln Center. And I believe, well I know that case 'cause I know what was on the balance sheet – went through like $80,000,000 in less than a year - and it became apparent that his partner, who was really Rockefeller Center, which at that point was the real estate people for NBC, the RCA group. So we negotiated a deal with them whereby we would create the ARTS & Entertainment Network and that we would bring them in as minority partners, that they had an agreement with the BBC that we needed badly because clearly we needed that programming as a fledgling network. We spent the better part of a year, because the BBC.... We would have taken the 4" document and thrown it in the waste paper basket – Arthur Taylor's document - because it dealt with an entirely different approach to the service than the one we were proposing. So we spent a year going line-by-line through this document both here and in London. The greatest compliment that I think I've gotten in my professional career came at the end of that. Herb Granath, executive officer of ABC which has a relationship with the BBC, and Herb Schlosser, the former president of NBC, and I were the three guys who had to negotiate this deal. So by prior arrangement, I was to become the bad guy. In other words, Hearst not being in the television network business as we negotiated these points, the two Herbs kind of wanted to be the good guys and I'd play the bad guy role. You've done that many times.
JOSLIN: And so we'd do this for a year. And we're over in London for the signing and the cocktail party and the dinner and the whole nine yards, and I do play that role as the bad guy all the way through this year of negotiations. A fellow by the name of Michael Checkland, who later went on to be director general of the ABC which was the number one job ...
KELLER: When you say the 'bad guy' – the devil's advocate between these two guys, is that right?
JOSLIN: Yes. Exactly. In other words, in any negotiation there are lots of points that you're not going to agree on, and I would argue strongly in behalf of the two Herbs. But I'd be the one who'd be taking it on the chin. Okay? And we'd make headway in that respect.
KELLER: So that they could go back to their people and ...
JOSLIN: And not damage their relationship with the BBC. So we're standing at the cocktail party, and I'm between Herb Schlosser on one side and Herb Granath on the other side. Michael Checkland, who was the lead negotiator for the BBC comes up to us and he raises a toast. He said, "To the thorn between two sweet Herbs." I like that. I'll take that.
KELLER: You'll take that too. I agree.
JOSLIN: So then the ARTS Network was reformatted, relaunched in 1984 as the Arts & Entertainment Network and it later became A&E because Arts & Entertainment was – like you don't say 'National Broadcasting Company', you say 'NBC'. Today it's one of the premier networks in cable television with about 70,000,000+ subscribers. We've spun out of that, of course, The History Channel, which has been an instant success. We surprised ourselves because in the early 80's when we were developing these networks, it was a lot slower than, interestingly, when we launched the History Channel. The History Channel, in three years, broke even.
KELLER: It's a great, great benefit.
JOSLIN: And it says what it is. Nick Davatzes, who is the CEO whom I know quite well, kind of tongue in cheek says, "The reason that it's so successful is that they found out that 85% of all the cable managers in the country were history majors in college."
KELLER: I was one of them.
JOSLIN: Okay. Since then, of course, we've launched the Biography Channel, which is a digital channel. We're now in 35 countries...
KELLER: Is that separate ownership from the History Channel or is it part of it?
JOSLIN: It's all under what we call A&E Networks.
JOSLIN: So it's Hearst and ABC own 75%, NBC owns 25% and that is of A&E, of the History Channel, of the Biography Channel, of the History Channel International which is now in 35 countries around the world in partnership with the local television and/or other entities in those countries, and now the International History Channel as opposed to the History Channel International. The History Channel International is a service in foreign countries. The International History Channel is a new service here in the United States that deals with international history.
KELLER: Interesting to note – you can tell me why – you were in partnership with ABC and NBC but not CBS. CBS was the first one involved in cable television. Any reason for that?
JOSLIN: I think because of the cultural mesh between Hearst and ABC for one thing. Clearly, I've described the relationships that existed. And it just happened. It was easy to happen. People wanted to make it happen. No question that CBS Cable that launched in 1980 or whatever, I think was the finest cable service ...
KELLER: I'm talking about on the operating side though – that CBS was involved in the operating side back in the '60's.
JOSLIN: Well, they were with Blackhawk Cable.
KELLER: They had part of the operation in Vancouver and Canada big, San Francisco operation.
JOSLIN: Well, yes and no.
KELLER: Well, you're absolutely right because they wouldn't brag about it.
JOSLIN: Ralph Baruch, .... CBS was the largest cable owner in North America at one point in time, cable systems.
JOSLIN: And they kept their systems in Canada, and they spun off Viacom – Ralph Baruch.
KELLER: They bought Teleview.
KELLER: Which was then became, I think, Viacom after that – Goddards.
JOSLIN: Right, the Goddards, exactly. The cable system interests in the United States were owned by Viacom, which was spun off separate from CBS.
JOSLIN: Because you couldn't cross ownership. You couldn't own television network and cable systems at the same time.
KELLER: They had a minority interest in San Francisco at that time and were providing all of the capital. That was in the '60's though when this happened.
JOSLIN: But clearly, on the programming side, they launched in 1980 CBS Cable which was the best quality programming for a new launch. The problem - and one of the things that even to this day with our now 20-year relationship with ABC, comes up every once in awhile but came up more frequently early on – and that is broadcasters don't understand that distribution is an integral part of the success of the network. Broadcasters say, "Okay, if I produce a great program, immediately it's out there for 100,000,000 homes to watch." Whereas in cable, obviously, we've got to work with the cable operators on a company-by-company, sometimes system-by-system, basis and negotiate an agreement for carryage of that programming. You can have the best programming in the world and if no one can see it, who cares. So that's what befell CBS Cable. I can remember going out to Long Beach, the Queen Mary with the full CBS orchestra and Sarah Vaughn aboard the old Queen Mary I guess it is, and having the launch of CBS Cable. It was a lot of money spent very fast on programming but with no distribution. That is key, obviously, to where we've come. On the other side of it, we launched in 1982, what was known as (or Hearst-ABC Video Services did) –launched Daytime. Daytime was a 4-hour service, essentially taking the Hearst magazines into television. I mean we did "A View from Cosmo" with Helen Gurley Brown. We did "A Better Way" with John Mack Carter who's the editor and chief, or was at that time, of Good Housekeeping. We did things like Esquire's "About Men for Women" – a whole host of magazine-related programs that were on in the afternoon from 2:00 until 5:00.
KELLER: You indicated that two of your commissions were to get into the cable system business and to bring the magazines into television. You accomplished both of those by providing cable programming, is that correct?
JOSLIN: Yes. Well, not really. I'll come back to mission one. It's just that maybe this happened a year or two, what I'm telling you now, before our cable systems acquisitions. But we then launched Daytime and coincidentally also in 1984 reformatted it, relaunched it as Lifetime Television. Hearst-ABC Video Services owned 66 2/3 of the equity. Viacom owned 33 1/3 %. In 1989 or 1990, Hearst-ABC Video Services bought the one-third from Viacom. So today, Lifetime is owned 50-50 by Hearst-ABC.
KELLER: And you run it together?
JOSLIN: Yes. We hire.... It's decentralized. There's a president and a staff of 400 people that, in fact, run it.
KELLER: But the board is comprised equally of ...
JOSLIN: Yes, of Hearst and ABC. Exactly. Herb Granath and I have, since 1980, co-chaired the board, one of us taking Lifetime for one year while the other has A&E for that same year and then switching off at the end of that year to the opposite way. So we operate that way.
KELLER: Involved with that, how were you able to make a deal with John Malone at TCI?
JOSLIN: Well, that's interesting.
KELLER: I don't want to get into the details because TCI would not like to have that disclosed.
JOSLIN: No, I cried a lot. I got down on my knees. I slalomed or whatever that's called. I did everything I could. As a matter of fact, I went out to .... And John was very instrumental in getting us clearance on TCI for A&E. I think he saw its real value. It's been a good relationship in that respect. I think, likewise, keep in mind now this is the early '80's - this is 1981 or 1982....
KELLER: He was demanding a piece of the action?
JOSLIN: That wasn't the case at all at that point in time. No. Clearly, cable operators, of which you and I are two of them, saw the real dilemma in the late '70's and early '80's where we couldn't sell our cable service because we had nothing to put on or very little to put on. No longer was it a retransmission service as it was in the rural areas. It was now urban where people got television with a coat hanger hanging out the window. So the cable industry needed product such as A&E and Lifetime. It was only later where then spectrum space and box space became a problem and cable operators are now selling space on their systems. So Lifetime went on to 75,000,000 subscribers as the 5th largest network. Throughout this year, it has been rated either #2 or #3 in the Neilsen ratings, 2nd only to USA and that's because every night USA has wrestling on. But they're not going to have it much longer because that deal has fallen apart.
KELLER: You also got ESPN, right?
JOSLIN: We also have ESPN. We bought 20% of ESPN kind of as a result of our purchase, development and sale of cable systems. We started in 1982 or 1983 acquiring cable systems, and we bought some from Group W in the south bay area of San Francisco. We looked at 100 different opportunities at that point in time, from Cablecom General to ...
KELLER: Difficult to get the board to agree on which cable systems to buy?
JOSLIN: What it was, I mean, clearly Hearst is a software company. It's not a hardware company. Early on there was this continual thought by a lot of people in this building that cable systems was a fad, a passing thing.
KELLER: Typical broadcast mentality.
JOSLIN: Typical broadcasting, absolutely. Absolutely. No fault to them. And, frankly, what they did is they gave me the license to go out and buy cable systems but in a modest way, with the thought that we're going to own 500,000 subscribers at one point in time. We never did because the investment of the networks was very substantial for the size of this company at that time. How many places on the roulette wheel do you want to be covering at one time with what kind of money? Clearly, we showed that we knew what we were doing in the cable network business. We did demonstrate in the cable systems business where we bought those systems. We developed them, put a sizable investment into them and new equipment and personnel and management and customer service procedures and doubled the size of the systems that we owned from 1983 to 1989, 1988. I finally went to Frank because, by that time, the multiples of cash flow, valuation of cable systems let alone the per subscriber fee which should tie together, .... I mean, the per subscriber costs of acquisition were going north of $2,500 a subscriber. We had purchased them at $1,000 a subscriber. So I said to Frank, "We've either got to make a decision either to ante up to get to 500,000 subscribers - because as a small guy, we're not going to have any leverage at all either with suppliers of programming or equipment or whatever else – or sell."
KELLER: You recognized that very early on.
JOSLIN: Yes. So we made the decision to sell. Leo Hindery, who went on to be CEO of TCI and very successful in the business – this was his first acquisition for InterMedia Partners. Leo and I negotiated that deal and concluded it in early 1989. It provided us with a tremendous return on our investment, which then allowed us to take those monies and invest them in the 20% of ESPN, which had become available. R. J. R. Nabisco wanted to sell its 20%. ABC, which I think for years after, wished they had bought it themselves because they own the other 80%. We bought it, and it's been a tremendously successful investment and network for us. ESPN today has 28 networks around the world – I mean around the world! It's a huge – it's the largest sports service and information service in the world, besides the four networks here which are ESPN, ESPN2, ESPN News, and Classic Sports. There's networks in Asia, in China, a huge facility in Singapore that uplinks five or six networks out of Singapore to all of those Asian and Eastern Bloc countries, South America, Europe. It's a tremendously successful service, and we're just glad to be a part of that.
KELLER: When you were looking at and trying to make the decision between being in the operating cable system business and the programming business, was the cash flow of the cable division bigger than that of the programming side?
JOSLIN: Oh, yes. Of course. Because the economics of cable systems are such that it does generate cash flow. The beauty is your depreciation. That is that you pay taxes on net profits after depreciation. With a capital intensive industry like cable, you have huge gobs of depreciation which allows you to then take the cash flow, which are not profits.... And when you think about that for a minute, that kind of accounting is very foreign to this company.
KELLER: Oh yes. Yes.
JOSLIN: The question is that you can't spend profits. You can spend cash. So you've got to generate cash flow.
KELLER: It took Time, Inc. a long time before they recognized that that was the case and their EBIDTA, I think they call it, earnings ...
JOSLIN: So it was a real lesson in learning that we all had to go through - how to balance this portfolio of cable systems investment and now cable networks investment. We subsequently, in the programming arena, were now very international, aside from the History Channel International that I mentioned. Hearst is a partner with the Cisneros Group in Venezuela in a service called Locomotion, which is an animated service in South America and in Spain and Portugal. We just launched, in February, the Cosmopolitan TV in Spain and Portugal and intend to expand that to other places around the world. We're clearly invested in Brazil - TVA is one of the two major cable companies down there. We've been invested with them for the last 5 years, both in programming, ala HBO, ala ESPN Brazil, and cable systems and MMDS services.
KELLER: Are you required, by your agreement with ABC, to get them involved in anything that you become involved in in the programming ...?
KELLER: So you can go out and do your own thing.
JOSLIN: Yes, exactly.
KELLER: So can they?
JOSLIN: Yes, they have. They went out and bought an interest in E!. They've just launched the Soap Network. Both of us are free to do that.
KELLER: So if you found another opportunity, would you offer a piece of it to ABC before you took it on yourself?
JOSLIN: Might - depending upon the circumstances - depending on where it was, what it was. It's no longer ABC. It's now Disney which is a different culture and company altogether. I make no comment one way or the other on that ...
KELLER: I've had an earful of that in Peter Barton's interview.
JOSLIN: Just to say – different. It's different. So they are our partners now. Actually, I've been sharing - the last several years since the Disney acquisition - co-chairing the Lifetime side of all these business with Gerry Laybourne first for about 2 ½ years when she was at Disney, before she formed Oxygen, and most recently with Ann Sweeney who is the president of Disney Cable. But we're looking for, we're very inquisitive .... We're looking for other international and domestic opportunities in the programming business. The third charge, electronic publishing, really doesn't have too much meaning for this purpose here, but suffice it to say we took a company that we bought for $85,000 in 1980 and took it to a $60,000,000 revenue and substantial pre-tax profit. I volunteered, 1 ½ years ago, to move this over to the Hearst Business Media Group simply because Hearst had sold off its book publishing. It had a collection of business media enterprises that were very electronic - the Crash Estimator where you go into a garage and they'd punch in the thing and your front fender is damaged, and it prints out what the estimate is and you walk away immediately with the estimate. Well, I moved that over to them about 1½ years ago which was the right place to go. So essentially today, we are in, my group is in, three different businesses. We're in the cable network business. We're in the television programming production business. And we're in the distribution business.
KELLER: You run the television stations then?
JOSLIN: No. No. That's Hearst Argyle today. We own Hearst Entertainment Productions which is located in Los Angeles, and we'll produce anywhere from 12 – 15 movies a year, made-for-television movies, not theatrical movies. We do some of those for ABC, CBS and NBC. We do them for ZDF, then Germany and the Canadian Broadcasting Company. We do a lot of the Lifetime movies – the movies that you see on Lifetime on a regular basis. We also produce what we call "first run syndication." That is, once a week, half hour or one hour programs, "Barbara Smith with Style," "Popular Mechanics for Kids," "House Beautiful," a whole host of those kinds of programs. We produce some animation because also in my group is a company called King Features Syndicate, which is the only company that existed when we put this group together. King Features is now about 95 years old. It's the largest syndicator of comic strips and features in the world. I have serious meetings about Betty Boop and Popeye and Beetle Bailey and Blondie – serious meetings. And of course, it not only distributes comic strips to 4,000+ newspapers around the world, but also is involved in merchandising and licensing. What you saw when you walked in to the lobby, that cow, was officially given to me last week. We are the international merchandisers and licensers for the Cow Parade, which you may have heard something about.
KELLER: Oh, Chicago. I saw it big when I was in Chicago.
JOSLIN: Yes. 600 of them in the City of New York right now. We had to have our own in our office lobby. Then on the television side of it, as well, we distribute this programming both domestically and around the world. We have output deals with ZDF in Germany and with TF1 in France. So we sell the movies and our library products.
KELLER: You handle that yourself rather than going through a distribution company?
JOSLIN: Right. We have both a domestic distribution company for film and television programming and an international distribution company.
KELLER: But is the majority of your business within cable systems right now as opposed selling to broadcasting networks?
JOSLIN: Both. We sell to cable networks around the world because there are many cable networks now, as you know, satellite networks, in Europe in particular and other countries. We sell to all the cable networks here from Encore to HBO to Showtime and whatever.
KELLER: Have you ever put up your own satellite or do you have your own satellite now or are you still leasing time in space?
JOSLIN: No. We .... Everyone leases. You don't own a satellite. It's expensive to own, but it's not that expensive to lease. That's a science.
KELLER: Echo Star is doing it.
JOSLIN: I know. But there are very few people that own ..... ESPN, I think, has 25 satellites. They don't own a one of them. They lease them. We're not in the hardware, geoscopic space.
KELLER: Think of all the offers ever time a rocket goes up.
JOSLIN: Exactly. So this little group that didn't exist in 1980, is now the largest profit producer for this corporation and will be shortly the largest revenue producer. We're exceeded only by the magazines that have a higher revenue but don't quite have the margins that we have. I've been a very fortunate guy. I get up every morning and think about the last 35 years of my career. I've always been enthusiastic about going to work. I love what I do. I've been very lucky to be on two sides of this wonderful new industry – new in our lifetime – both on the hardware side for about 15 years and now on the software side or the programming side for another 20.
KELLER: As a programmer and a distributor, what do you think of the advent of the telephone companies coming into the business? Is it going to be more difficult to work with these companies?
JOSLIN: I guess it depends on what you're selling. I think, as a program supplier today, that where we are with the networks we have, .... Fortunately, we got into the business at the right time. All of the networks that we own, or the major brands that we own, are in the top 10 cable networks that exist today both in ratings and billings and subscriber coverage and so forth. I don't see AT&T being any different than the cable operators were in terms of negotiating carriage rates and wanting to provide alternative services to their subscribers. In one respect, the very reason that the phone companies are now involved in this business, is to provide a bouquet of services into the home. The old one-wire concept – it's coming about, not legislatively as I think the phone company would like to have years ago achieved. But it's coming about economically where the phone company is going to be the one wire into the house with a panoply of all sorts of digital video, all sorts of unimagined services, I think, as we move forward through this new century.
KELLER: In listening to [C. Michael] Armstrong in Chicago at the convention two years ago, it was interesting what his foresight is in developing that company. I just hope he can do it.
KELLER: We talked earlier about you owning AT&T stock, and I've always viewed it as a little old lady's whole stock because they needed those ...
JOSLIN: Well, that wouldn't be bad if it was that.
KELLER: It's not that anymore though.
JOSLIN: The question becomes, and I, just because of the evolution of Continental stock to USWest to MediaOne and now the final acquisition of MediaOne by AT&T, do become a AT&T shareholder. Given the rest of my portfolio, it wouldn't bother me if AT&T were a little old lady's stock that paid you a nice dividend every year, didn't go up, didn't go down. My question is, I don't know whether I can say that going forward.
KELLER: I don't think so because I think Armstrong has already said that he is going to take a lot of that money that went into dividends to develop his cable networks or whatever they're calling them now. That's going to be very difficult for him to do, I think. Anyhow, I wish him well. How do you see the future developing from the programming side?
JOSLIN: I think that there will be a continued proliferation of new concepts in programming. On the other hand, .... and we get to see them all here, not only in one permutation but maybe four or five times over the last 20 years, someone says, "Ah, this is the latest thing since sliced bread." I think the major genres of cable network programming have been taken. There's probably not going to be 5 more sport services. There's probably not going to be 3 more news services. There's probably not going to be and so on and so on. Movie services are different enough. While they are movies, they are different movies, old ones, new ones, whatever. I think that the model for new cable network is already drastically changed. We're no longer looking at launching a network. I think the last of which to do that was the History Channel because it was a niche that had not yet been captured. It got the imagination of everyone. It is what it is. But I think that some of the news services have to look at economic models that are not 80,000,000 subscribers but 20,000,000 because that's what, if you're lucky, you'll be able to get carriage. Then the question becomes, who pays whom. This whole issue here of .... Early on the cable programming industry had it right. The broadcasters pay the affiliates a percentage of their ...
KELLER: Which they wish they never had started, believe me.
JOSLIN: And they're trying desperately to get out from underneath that. But in our business, we started it right – that is that cable networks have been blessed with two revenue streams: both a subscription revenue stream, if you will, in terms of fees that the cable operator pays each and every programmer, and advertising fees based upon the qualitative basis or depth and quality of the programming - the ratings. Those have provided wonderful funds for providing even better programming. You look at early ARTS Network programming and you look at A&E today, Biography, the qualitative and quantitative differences are so substantial. That means that a lot of those monies have put back into good, quality programming. Smaller programmers or new ideas are having ... I mean, Oxygen is having a devil of a time to get off the ground and they want $.19 a subscriber. When you've got [Rupert] Murdoch running around paying $10 a head to get on, to create the Fox Network, it's kind of hard to launch a cable network looking for two revenue streams. So I think the models of networks – there will be new networks and some will fall by the wayside because not everybody can succeed in this business – but the new model, I think, will be a lot more conservative.
KELLER: Do you see the broadcasting network companies, CBS, NBC, ABC, getting more involved with programming services in the future?
JOSLIN: With cable programming services? They could buy, I guess. In terms of creating, clearly Disney is up to its ankles in cable programming networks, no question about it. NBC has done an amazing job. Tom Rogers, while he was there, I think did a super job of getting NBC's mind focused on being in the cable programming business - CNBC and MSNBC – and getting a network like NBC to make it's top-drawer talent available on something other than the base network. All those news people work hard at CNBC and MSNBC. CBS has now come into the programming business through Viacom. That is an interesting balance. What's happened here is that there was a time when the FCC had rules called the Fin/Syn rules, Financial Interest and Syndication Rules. These rules forbid a network such as NBC, CBS, ABC from owning, airing and syndicating it's own programming because it would have been restraint of trade. With the proliferation of all the competition now from all different sources over the last 25 years anyway, the FCC rescinded Fin/Syn so that networks now can do all three of those things. Exactly what we predicted, not alone I might add, would happen has happened. That is, the studios are buying the distributors. So Disney, the studio, the producer, bought the distributor ABC. Viacom, the producer, the studio, has bought CBS. NBC is still on its own essentially. But that's the trend in television where the vertical integration will become even more in the programming business, producing business.
KELLER: That's very interesting because there's a direct conflict there because movie companies can't own theaters today. They haven't been able to since the mid-'60's. And yet, everything else is coming around now. Interesting aspect of this whole thing. How do you want to wrap this up?
JOSLIN: I thank you very much for your time. This has been interesting, as we said during the break. It's been a wonderful .... We've know each other for several years and it's a wonderful walk down memory lane to conjure up some of these great stories and feelings about this business and about the zeal of the people, the uniqueness of the people in this business.
KELLER: I hope this continues also as more wired companies and telephone telephony get involved in this whole thing. We may lose that great desire that those of us who were early on did all kinds of things.
JOSLIN: It's not an entrepreneurial business anymore.
KELLER: No it's not. It's a paper shuffling business. This biography, this history of Raymond E. Joslin is produced for the National Cable Television Center and Museum through a grant by the Gustave Hauser Foundation. Your interviewer: Jim Keller. Thanks, Ray.
JOSLIN: Thank you.
KELLER: Enjoyed it.