Interview Date: Thursday August 13, 1987
Interview Location: Washington, DC
Interviewer: Max Paglin
Collection: Penn State Collection
Note: Audio Only
PAGLIN: Good morning, I'm in the offices of Jay Ricks at Hogan and Hartson law firm in Washington, D.C. and this is August 13, 1987 and we're doing an oral history of the cable television pioneers. The interview today will be conducted with Jay E. Ricks, who is a partner in the law firm of Hogan and Hartson. I am Max D. Paglin, and I am the Executive Director of the Golden Jubilee Commission on Telecommunications. This oral history of cable television pioneers project is being conducted also in conjunction with Penn State and the Cable Television Pioneers National Cable Television Museum. This is our first interview, and Jay, you will recall the materials that I sent you giving a background of the project itself and the outline of what I thought we would be able to discuss. So if it's alright with you this morning, what I'd like to do is go through your early personal history, you know, your place of birth, when you were born, your parents, your family, your youth, and the location of where you lived, your education, law school, your early adulthood and military service and anything of this type. Why don't we just start, start telling me where and when you were born, and something about your family and then I think I'll guide you along.
RICKS: Well, Max, my family had its roots in Washington, D.C., which is a little unusual for most people that you know who live in the city, typically come from someplace else. I was born in Washington in 1932, my mother and father lived in northeast Washington at the time, my dad at that time was in the Marine Corps, this was during the Depression. He was a flyer and had an ambition to be in aviation all of his life. Shortly after I was born he became an airline pilot, we moved around a good deal as he worked his way up through the airline, but we came back to the Washington area in 1941, then living in Arlington County, Virginia.
I attended the public school system in Arlington, and was involved in sports and other activities in Washington Lee High School in Arlington, Virginia. It was then the only high school in northern Virginia other than George Washington in Alexandria. They were the two principal high schools and had quite a rivalry.
PAGLIN: I remember we lived in Arlington in 1943, our first apartment was in Arlington in 1943.
RICKS: Well, it's a nice community. Then I attended the University of Maryland out in College Park, and pursued a business curriculum out there, graduated with a BS in Business Administration in February 1956. I was commissioned in the Air Force at that time, but my commission in the Air Force did not take effect until June of 1956 so I went to work in the interim for the C & P telephone company in Maryland in their management program and worked there for six months until I was duty stationed, duty time. Got married in June of 1956.
PAGLIN: Wait a minute, let me interrupt you. You say you got your commission, did you seek a commission in the Air Force?
RICKS: I was in ROTC in college. During that period Max, it was during the Korean War, unless you were in an ROTC program you were likely to get drafted out of college. It was the only way to finish college, and I was kind of half‑way thinking about an Air Force career at the time anyway.
PAGLIN: To follow your father's footsteps.
RICKS: Yes, as my brother had in the Navy, he became a Navy pilot.
PAGLIN: Did this depend upon funding scholarship and the like?
RICKS: No. You got a commission upon completion of your college, plus your courses you took in ROTC plus summer camp.
PAGLIN: Back up one second if I may and I'll just be filling in. You mentioned sports, you know, what kind of sports, was that scholarships, was that letters?
RICKS: I played football at Washington Lee and lettered there I think 3 years and I also was in track. I was a shot putter in track and field events, and won the Virginia State Championship in 1951.
PAGLIN: In shot put?
PAGLIN: What weight?
RICKS: 12 lb. shot put.
PAGLIN: The reason I ask is that I'm an old track man myself, except I was 60 yard dash; that was the limit of mine. So, you were the Virginia State Champion?
RICKS: That's correct.
PAGLIN: Did you continue it in college?
RICKS: I threw the javelin in college. I wasn't heavy enough to throw the 16 lb. shot, so I....
PAGLIN: Is that college level?
RICKS: Yes. So I switched to javelin, and participated. Maryland was then in the Southern Conference rather than as it is now, the Atlantic Coast Conference. It was then the Southern Conference and I participated in a number of meets for Maryland, and lettered in track.
PAGLIN: You got your letter at Maryland.
PAGLIN: So now, coming back again, so you worked those six months for C & P in the management phase in June of 52?
RICKS: No, up until June of 56.
PAGLIN: June of 56, excuse me, and then you went into the Air Force.
RICKS: Then I got married down in Berlin, Maryland immediately before the Air Force. My wife Debbie's family is from Berlin, and we were married...
PAGLIN: What was her maiden name?
PAGLIN: Berlin, Maryland?
RICKS: Berlin, Maryland.
PAGLIN: Where did you meet her?
RICKS: At Washington Lee High School, earlier she lived in Arlington as well.
PAGLIN: So this was the high school sweetheart?
RICKS: This was the high school sweetheart.
PAGLIN: Typical American, the style. So you married before you went into the service?
RICKS: Yes, and we were married in Berlin on June 4, 1956, and our honeymoon was driving to Lackland Air Force Base from Berlin. Lackland, San Antonio, Texas, and that is pre‑flight. I showed up pre‑flight toward the end of June, I think it was around the 20th or so of June '56, and began the pre‑flight course there. During an exercise with an obstacle course, I badly dislocated my shoulder, and it was so torn up I got washed out of flight school on medical, but I was able to continue to serve in the Air Force and was thereafter assigned to intercept control school at Tindle Air Force Base in Panama City, Florida. At Tindle Air Force Base I was assigned to Japan and I served....
PAGLIN: Before you get up to that Jay, let me back up a little bit. Pre‑flight being what, just physical type exercises, basic training, what?
RICKS: Well you went to some ground school, it was a lot of physical activities, there were a lot of physical examinations, plus we had some ground school, and really preparing you to be an officer as much as anything else.
PAGLIN: So it didn't have to with an accident in flight or anything.
RICKS: No, I was doing an obstacle course, and hand over hand on a tower, and my shoulder gave way and I fell 15 feet or so, and landed on it again, and it was pretty well torn up, and they didn't feel that it would ever be tight enough again and to avoid having it happen in a flight situation, so they disqualified me from flight...
PAGLIN: This was when, the same year?
RICKS: This was in probably July of 1956.
PAGLIN: So it was shortly after you arrived there?
RICKS: Oh yes, it was shortly after I arrived there.
PAGLIN: So they put you on ground then...
RICKS: To radar control school, and completed radar control school, got an assignment to Japan, and arrived in Japan in December of 1956, and was assigned to a remote Air Force base, and had a rather interesting experience there. The Air Force base was located on the west side of the main island of Japan, Honshu, and the headquarters was located at Niigata Japan, which was an alternative site for the atom bomb, in the event that the weather had been bad at Hiroshima. So the people there had a rather peculiar attitude toward Americans, knowing that they had been an alternative site for the atomic bomb.
PAGLIN: How did they find out, was that it just became public information...
RICKS: Yes, it became public knowledge, and then I was assigned to...
PAGLIN: How long were you there?
RICKS: Well I was there for a relatively short period of time because then I was assigned to a base in a place called Komatsu, Japan, which was a lovely area down in what they called the "hot spring" portion of Japan. It had been an old Japanese training base, and when I arrived, there was only one other officer at the base, and he was the base commander, and the day after I arrived he rotated back to the United States and I found myself in charge as the second lieutenant.
PAGLIN: I was going to say, what was your rank at the time?
RICKS: I was a second lieutenant with about 6 months of experience, and I found myself base commander.
PAGLIN: And what was the size of the base personnel?
RICKS: Well we had 65 U.S. personnel and about 65 Japanese Defense Force.
PAGLIN: Oh, they had Japanese on the base?
RICKS: Yes, they were civilians assisting in the logistics of the base. It was an early warning radar base and so that was quite an experience, and since there was housing available, I was able to have Debbie join me and we had a very pleasant experience.
PAGLIN: And that was about also '56?
RICKS: That was now in '57. I came back in 1958 from Japan and was assigned to a little radar base up in Williams Bay, Wisconsin, which was another lovely spot, north of Milwaukee, and I was there for the remainder of my Air Force career which ended in 1959, and I had then applied to several law schools and elected to go to Georgetown.
PAGLIN: What rank were you at the end of your career?
RICKS: First lieutenant. Well, at the end of my career I was a captain, but during my active duty I was a first lieutenant.
PAGLIN: I see. So in other words, this period, 1959, you were a first lieutenant.
RICKS: Then we came back to the Washington area, and I enrolled at Georgetown University law center, and during my stay, we were living again in Arlington County, Debbie was working at the Pentagon to support us. After completion of my second year, I worked as a summer clerk at Hogan and Hartson...
PAGLIN: Oh, so your association with Hogan and Hartson began in law school?
PAGLIN: And that was what year would you say?
RICKS: That would have been 1961, I guess.
PAGLIN: 61. Started with Hogan and Hartson. What area were you working in as a clerk?
RICKS: Principally litigation, and I like litigation and I decided that that was the area that I would probably specialize in, and I was working on some interesting cases that a summer clerk can look forward to, doing that kind of work again. After graduation...
PAGLIN: Who were you working with at the time?
RICKS: Well I worked for Jack Arness, who is still a senior partner here at the firm. I worked for Paul Connolly, who later left the firm to join Ed Williams' firm, which is now Lane, Williams and Connolly. He died about five years ago.
PAGLIN: Did you run into...1961, Ed Holtz was there, wasn't he?
RICKS: Ed Holtz was here, Duke Patrick, Lester Cohen, Howard Roycroft.
PAGLIN: Is Duke Patrick still here? I know Lester was, but...
RICKS: Oh yes, Duke had been a senior lawyer in communications and he had been the former general counsel of the radio commission.
PAGLIN: Right, I remember well and he was also counsel for United Paramount Theaters in the Paramount merger case which Fred Ford and I had a principal hand in and I that's where I guess I first saw Duke. In fact, later on when I became chief of litigation at F.C.C., I think I argued a case or two against him in the court of appeals.
RICKS: Well the firm's communications practice was one of the earliest in Washington. Frank Hogan of course, started practicing right around the turn of the century.
PAGLIN: I didn't know him. Duke Patrick was the first of the old school that I knew of.
RICKS: And Frank Hogan was the great trial lawyer of his day, and then after developing a very successful litigation practice, he decided to bring in some people who had administrative expertise. He brought in Patrick and Duke Ider, and they started a radio communications practice. We were the first of its type, and by the time I joined the firm as an associate in 1962, the firm had the traditional Washington practice plus a communications group of about 5, 6 lawyers, and they were doing the traditional radio and television licensing enforcement‑type work...
PAGLIN: By that time Ed Holtz was already...I think Ed came over about 60.
RICKS: Ed joined some of the ex parte case, he then joined us after the death of a partner here by the name of Parker Hancock.
PAGLIN: Oh, I knew Parker Hancock when he was with the Commission (FCC).
RICKS: Ed came in more or less to take his place.
PAGLIN: Right, he was a very close friend of Fred Ford.
RICKS: Right, and when I joined the firm I was particularly interested in litigation and began to work in litigation practice. But the communications group had several appellate cases that they needed the briefs to be written and so I was assigned to write a couple of briefs, and it gave me kind of a qualification that was attractive to the communications group so they broke me in. I wasn't particularly happy about it, but I was a good scout.
PAGLIN: But you didn't know then what you know now, right?
RICKS: That's right, they said they wanted me and I said okay.
PAGLIN: What were some of the early cases that you helped write briefs on?
RICKS: Well, two I remember, one involved an interference with the New York Times station in New York.
PAGLIN: That was WQXR.
RICKS: Well, it could have been, it was one of the offshoots of that. This one the artline [???] was Gross Co, and it was a licensing of the radio station in New England which allegedly interfered with the "unprotected" service contour of the music station.
PAGLIN: Yeah, that was WQXR, the New York Times station.
RICKS: QXR, and so I worked on that brief in which we represented the licensing of the other station, and another one I worked on was one of the stations growing out of the ex parte matters, Biscayne Television which had gotten Channel 7.
PAGLIN: I know that very well, and I'd tried the case at the Commission and then also had the questionable pleasure of ??? by that time I was chief of litigation, and I had argued those cases in the Court of Appeals.
RICKS: Those are the two I remembered most vividly working on and, at the same time, as I said I was working on litigation as well which I enjoyed, and I continued to try and keep a hand in both camps. The communications practice as I said, was principally representing existing radio and television stations in licensing and that sort of thing and I did not find that to be as exciting work as some of the litigation opportunities.
Then around 1963 or 64, I got introduced to some of the cable television legal work. I cannot remember the first cases that were involved but I would imagine that the outgrowth was an existing client getting interested in getting a cable franchise in their own service area. The history of most of the broadcasters of that day, or many of them, many of our clients, they started out as newspaper companies, saw radio coming along and they were fearful that it was going to be an economic threat to their newspapers, so they obtained an AM radio license. Then they saw FM coming along, and were fearful that that would replace AM so they got the FM license. Then along came television and they were convinced that that would become a means for distributing newspapers so they all got television licenses, and then when cable came along they figured that was going to wipe out television so they'd better get the cable franchises. So I was the new boy on the block to find out what this new technology was all about, and that's how I first got into it.
PAGLIN: And that was in the early 60's.
RICKS: That was 1963, I believe.
PAGLIN: Who were some of the clients that were represented at the time?
RICKS: Well, the ones that got into cable very early were Heron Communications out in Utica, New York. The owner Gordon Gray was the CEO of Heron, and he was a visionary and saw that cable was going to be a very good business without regard to what it did to your existing stations. The Steinman stations in Lancaster, Claire and McCollough were interested. AVCO had some interest in looking at cable and did some joint ventures in it and did a little work there. Then in 1964, I believe it was, Jack Kent Cooke approached the firm. He had had an unhappy experience with a radio revocation case on the West Coast in the Los Angeles area, and decided that he would go into cable television.
PAGLIN: Can we back up a little bit?
PAGLIN: In the early days, did you deal directly with people like Gordon Gray, and Claire McCollough?
RICKS: Oh yeah, sure.
PAGLIN: Tell me a little about your interaction with them in terms of their, of course as a lawyer, but your recollection of what their attitudes, interests, observations, foresight in terms of the future of cable, because uniquely, they were not the Mom and Pop operators that started out say in Kalispell, Montana. They were the established broadcasters, and yet, as you say, you begin to indicate that they had a vision that this was another one of the upcoming facets of the whole communications complex. Tell me a little about, say start with was Gordon Gray, one of the early ones?
RICKS: Gordon Gray was one of the early ones and because the station was located in Utica, New York, in an area that was relatively underserved by off‑air TV broadcasting, particularly because of the mountainous terrain. He began to see pockets of people in the outer fringes of the coverage area of WKTV up there and became interested in it, principally as what effect did it have on his broadcast station, physically could it be something that is likely to have some kind of economic impact. Then, I think, he began to appreciate that it was simply, a good business, and while it may or may not have an economic impact on the existing station, it certainly was a business that on its own, would be attractive from an investing point of view. So we chatted about it, and chatted about the how do you get into the business, what is it the city gives you and why do you go to the city and what do you get from them.
PAGLIN: This was the early 60's, 63?
RICKS: Yes, 63, 64.
PAGLIN: I want to just interrupt without losing your train of thought. Would it be fair to say that as far as Gordon Gray was concerned, either initially or as he began to learn that his attitude was a little different than what has been recorded as the usual attitude of the broadcasters to CATV and that is you know, they're a dead threat to me and I've got to get rid of these guys no matter what, [???] that was not his attitude.
RICKS: Well the broadcast attitude toward cable was very ambivalent. I think that as in any new technology that could supplant your principal service or could at least have an adverse impact on it, it was one of what you might call "antagonism", and the antagonism was reflected in several ways. One was as happened with Gordon Gray, get into the business and that way as they had previously as many newspaper companies had gotten in, used the same strategy that has proven highly successful in the past.
PAGLIN: If you can't fight em', join em'.
RICKS: Exactly. But a number of broadcasters, and particularly those that were members of the Association of Maximum Telecasters, AMST...
PAGLIN: AMST, yeah, right.
RICKS: AMST, took a very, very bitterly antagonistic view of "let's kill this new technology in the cradle." And of course it created problems for law firms who were representing the broadcasters, because you might have one client who'd decided to get into the business and one client who'd decided to kill it forever.
PAGLIN: That do create a problem, huh?
RICKS: So it was a continuing problem. The clients followed what they thought was a good and sufficient strategy for their own interests, but they frequently brought problems to lawyers. So in many instances we had clients for many years who we could no longer represent, so it was a kind of sad situation. So in any event...
PAGLIN: Did you have to tell them that "we've got a conflict and we'll have to send you somewhere else?"
RICKS: Oh sure, sure, on many occasions.
PAGLIN: Was that extensive?
RICKS: Oh yes, very extensive.
PAGLIN: Probably lost some good clients that way.
RICKS: Certainly did.
PAGLIN: So what you're telling me, Jay, is that in those instances where somebody like Gordon Gray, decided that if the Commission would permit, and at that time they did, for them to get into cable and in a different area...
RICKS: No, that would be in their own area.
PAGLIN: In their own area, but not in the same city.
RICKS: Yes they could.
PAGLIN: They did? In those days?
RICKS: Yes, absolutely, that regulation didn't come in until 68 or 69.
PAGLIN: That's true, you're right, I kind of forgot, it was a long time ago. So they got into their own areas.
RICKS: They were perfectly free to get into their own areas.
PAGLIN: So the attitude of the firm was that you would help those clients that wanted to get into cable and still continue their broadcast operation.
PAGLIN: And as far as the times when there was a conflict, and how would that conflict arise then?
RICKS: Well, it might well be that one client would seek to get a cable system in another client's area, and another client would wish to resist him, and so then you had to battle it out on both sides. Our early cable practice, the first couple of instances where existing clients who were getting into the business and were getting into it in a defensive way, they were only interested in it in their own service area.
Then with our new representation of Jack Kent Cooke, we were representing someone who was getting into cable because he thought it was a good business. Cooke had an unhappy experience with the FCC and a radio station which he had funded, was owned by his brother, had its license revoked. So, after casting about a bit, he decided that cable television looked like a good business, and I began representing him, going around the country buying cable systems.
PAGLIN: You were working directly with him, in the early sixties and actually going around and helping him, advising him in purchasing cable systems.
RICKS: Yes. Well he was working with a broker...
PAGLIN: Who was that?
RICKS: He was working with Monty Rifkin who was then a broker for Bill Daniels, and Jack had a high regard for Monty Rifkin.
PAGLIN: That's right.
RICKS: And Monty would then present to Jack the financial projection of the potential cable purchase and Jack thought it was a good opportunity and he would execute a letter of intent. Sometimes it was no more than two or three lines on a yellow sheet with the owner, and then I would go out and try to close the deal.
PAGLIN: These were existing systems?
RICKS: Yes, and these included Morgantown, West Virginia, Fairmont, West Virginia, Clarksburg, West Virginia, systems that were being acquired at that time were about seven times cash flow and translating about $300.00 per subscriber. I never will forget one instance when these were fairly...
PAGLIN: Small systems...
RICKS: No they were big systems; these were fairly large systems, yeah, these were some of the larger existing systems around.
PAGLIN: Yeah, well Morgantown...you were saying you could remember what?
RICKS: That the purchases were well publicized and the prices that Jack was paying were well publicized, and Ken Cox, then an FCC commissioner, told a reporter that Cooke would go broke because he was paying too much for cable television systems. I don't know why Ken thought he was particularly qualified to make that judgment but it apparently did not dissuade him from making it. As Cooke put together a large company, I became really heavily involved with the day to day legal problems. This was really the first experience with dealing with every facet of cable, from the dealings with the cities, dealing with acquisitions and sales.
PAGLIN: So you were saying, as the time went on, you became more heavily involved in the day to day problems of the running of this corporation. Now did you at any time become Jack Kent Cooke's personal counsel, or was it just for these purposes?
RICKS: No, although I have remained very close to Jack through the years, and have continued to counsel him on a number of areas, but it's been principally in the communications area.
PAGLIN: Now, were there occasions when Cooke was interested in going for a franchise or was it mostly existing systems that he was after?
RICKS: Almost all were existing systems that he acquired.
PAGLIN: And tell me a little more about, we're talking about the early days here, in a sense this is what this project is about, without impinging upon confidentiality of attorney client relations. Again, we're trying to draw a picture here of how it was with these early systems and how they got developed and so on. What were the nature of some of the problems that you would find, as a lawyer?
RICKS: The principal problems were the inability of cable systems to give enough service to the public under FCC regulations. The FCC regulations were restrictive as to the introduction of new distant signals, and also severe restrictions on the carriage of signals that duplicated programming of a closer television station. These regulations were so pervasive that they dominated the operation of the cable system and this period during the middle 60's, late 60's...
PAGLIN: This was the time of the FCC's Second Report and Order.
RICKS: Yes, so most of the legal work that was done was trying to accommodate to FCC regulations and trying to find some way to change it, either through litigation or regulation, or through rule making. So that was a big area, but then of course, just getting authorizations for the microwave facilities, one might be in order to introduce new services, dealing with some of the common carriers that were bringing in the distant signals, and transaction work in the sale of systems.
If you were looking at the development of cable television, the first big inhibiting circumstance on the economics of cable after the truly‑Clask??? markets were built and were observed was FCC regulation, that was the big problem in the late 60's. That's where most of the Washington lawyering occurred.
PAGLIN: Did you get involved in the early litigation in some instances? I'm thinking, of course, of Midwest Video and before, Black Hills in Helena, Montana. What were [???] besides your work on the acquisition of systems with Jack Kent Cooke, did you get involved on the federal level in terms of appearances before the FCC in those early days or litigation. I don't know if any appellant litigation was going on at the time before Midwest Video, and if so, what was the nature of it?
RICKS: One of the principal concerns of the industry in addition to the FCC was in the area of telephone relations. The telephone companies in the late 60's were beginning to make aggressive moves against the cable industry. United Telephone and General Telephone had elected to enter the business through affiliates. The Bell System companies, while unable to enter the business because of the 1956 anti‑trust consent agreement, were exacting larger and larger pieces of the action through their pole attachment premise.
We got very active in that area of the practice and brought what I believe was one of the first and most significant cases that demonstrated the danger to a independent industry of the telephone involvement. That one was a case called Telecable vs. General Telephone in Bloomington, Illinois. I forget the actual date but I think it was in the late 60's. The case demonstrated that there was an inevitable incentive of a local telephone company to conduct itself in such a way as to favor its sister corporation in the franchising and selection of a cable television company. The FCC, after the evidentiary hearing in that case...
PAGLIN: This is before the FCC...
RICKS: Yes, the FCC issued a cease and desist order against General Telephone, requiring it to, in effect, cease and desist with the operation of that system, the consequence of which was that it sold the system to Telecable at cost.
PAGLIN: Who was Telecable?
RICKS: Landmark Communications.
PAGLIN: So the phone company sold the system back to Landmark?
RICKS: Yes, and out of the decision came an understanding or a realization with the FCC of the inherent dangers of the telephone company being in cable operations within its own service area. Shortly after that case was decided, the FCC adopted rules of general application, including prohibiting telephone companies from being in the cable television business.
PAGLIN: This was through a rule making?
RICKS: Yes, but the rule making was really an outgrowth of the Bloomington case and other cases like it. We were very much involved in those activities. We also had a case challenging FCC regulation of cable which we brought in the third circuit on behalf of Telesystems Corporation. That case was being coordinated with NCTA, the National Cable Television Association, in other challenges including the Midwest Video for the Supreme Court. I can't remember whether the case was actually argued to the court or not. My recollection is that the case was dismissed because of the fear that we would have a decision that was not as favorable as we hoped to get out of the Supreme Court in the Midwest Video case. It wasn't Midwest Video, it was Southwestern Cable.
PAGLIN: Oh this was the Southwestern case, before Midwest Video came up.
RICKS: This was the case that was challenging the FCC's jurisdiction to regulate cable as ancillary to broadcasting. So the argument that was being made to the court by us and by Southwestern Cable was that the Communications Act did not confer jurisdiction on the FCC to regulate cable as it was seeking to do; it's simply ancillary to broadcasting. Of course, as history proved, the Supreme Court confirmed the FCC's jurisdiction under the ancillary to broadcasting concept.
Our practice continued to grow in the cable area; we were representing a number of companies that were engaged principally in cable television as well as a number of companies that I described in the beginning who came into it principally for defensive reasons. Some of the more significant events that I can remember, and I'm sure I'll forget most, but some of them I can remember. We represented the entire industry in an effort to try to get the FCC to assert jurisdiction over the regulation of utility companies probation [???] of pole attachments. This was a very very important economic factor for the industry because the utilities were exacting a monopolistic profit, according to our view, and it was an ever increasing amount of money that was being charged and it was creating a severe threat to the profits of the industry.
After a lengthy rule making investigation, the FCC around 1973, declined to assert jurisdiction and then we turned to Congress and drafted a bill for Congress' consideration. That bill was introduced by Lionel Van Deerlin, the chairman of the House of Communications Sub‑committee...
PAGLIN: From San Diego.
RICKS: From San Diego, and it was adopted by the Congress and signed by the president.
PAGLIN: There was an amendment to the Act...
RICKS: There was an amendment to the Communications Act directing the FCC to regulate it.
PAGLIN: And that was Title II, wasn't it?
RICKS: It was under common carriers.
PAGLIN: Yeah, Title II.
RICKS: Interestingly, the law was upheld in a case which we handled before the D.C. Circuit called Monongahela Power vs. the FCC. The FCC began routinely to regulate pole attachment rates. Many of our clients received many many millions of dollars back in refunds. One interesting story, that I get a kick out of, is that we had a case for the West Virginia Cable Association???, if only Bill Turner, who was one of the cable pioneers who was president of that association...
PAGLIN: You said a case before them?
RICKS: Yes, we had a case before it on behalf of the West Virginia cable operators against the power company serving West Virginia, a very very large utility. We won rebates in the case and the West Virginia cable operators, most of whom were entitled to rebates, received checks from the power company which made them very happy. Bill Turner did not, and so I called the utility company lawyer to ask them why Bill Turner of Welch, West Virginia, had not gotten a rebate check. They checked their records and called back and said that was because Bill had refused to pay any rates at all for several years. I called Bill and told him that you only get a rebate if you've paid. In any event...
PAGLIN: And what jurisdiction was that, a local, West Virginia court?
RICKS: That was, again, before the FCC. But interestingly, in recent history, the U.S. Court of Appeals for their own West Virginia circuit declared that the bill that we'd written back in 1976 would constitute an unconstitutional taking under the Fifth Amendment and that was the case of Florida Power Company vs. the FCC. We were rather shocked by that decision because it seemed to us that the regulations were similar to other efforts of government to subject monopolies to utility‑type regulation, but then we had the case declaring our bill unconstitutional.
PAGLIN: And you'd participated in the Florida case?
RICKS: The firm had, yes, I had not personally.
PAGLIN: No, I mean as Amicus or what, who represented...
RICKS: No, we represented the party in interest group, W Cable, was the real party in interest, that was our client. We were retained to bring the case to the Supreme Court and, as history will record, the Supreme Court's last session determined that the law was unconstitutional and would not involve unlawful taking. We're back where we started, we've got our bill intact and all is right for the world. Other significant...
PAGLIN: Let me go back, can we go back a minute?
PAGLIN: In the telco power line... in the pole attachment situations, was there also litigation against some of the principals like GTE and AT&T, did you also have to litigate against them in these circumstances?
RICKS: In the pole attachment area, the telephone companies bitterly resisted either FCC jurisdiction or legislation giving the FCC jurisdiction to regulate. Once the legislation passed, they did not appeal it, as did the electric utilities. They did not seek to argue that the law was either unconstitutional or in some way beyond the FCC's authority, but they did resist the regulation by the FCC in a number of cases and I suspect that we handled more of those cases than perhaps anyone else and I think it goes for our experience in the field. We had cases with United, General, AT&T, all the Bell System companies over the years, and it continued to happen.
I had mentioned earlier that the earliest threat to cable was FCC regulation which inhibited the number of signals that you could carry. The subsequent threat was from the utility companies in their ability to exact a monopolistic profit produced by the poles, the conduits, and that was largely dealt with by the passage of the bill, the Pole Attachment Act. The FCC's concerns about signal carriage and impact on broadcasters was largely dealt with in the 1972 Report and Order which allowed some distant signal introduction bought with the understanding of the industry in a consensus agreement that there would be copyright revisions. So the next kind of big phase in the cable legal development was the imposition of copyright legislation in 1976.
The next big concern of the industry was really with the cities. The cities of this time were franchising; The frenzy was in full gear, and cable systems were promising exaggerated commitments, and the cities were exacting whatever they could get in that very game, and then many many cable operators found themselves in distress over the obligations that they had made it into.
PAGLIN: I want to develop that in a separate section. Can I back up again a little bit?
RICKS: Sure, sure.
PAGLIN: In terms of the early clients, I take it that you had met at the time, again, this being cable television pioneers, you mentioned Monroe Rifkin. Who were some of the other cable pioneers with whom you dealt and what were some of your impressions of them? For example, you met I guess, Bill Daniels...
RICKS: Yes, I never represented Bill, but I met Bill at the 1964 convention, I think it was 64, at the Bellevue Stratford Hotel in Philadelphia, Bill took the entire convention out to dinner or something but other than meeting him in both that social context and the fact that his company was the broker for many of the deals that we accomplished. I didn't have an opportunity to work with Bill, but people that I did work with as clients that were some pioneers included Fred Liebermann with his partnership with Jack Crosby in what was then called Telesystems Corporation. They had a unique relationship, Fred operating out of Philadelphia, Jack out of Boston...
PAGLIN: This was Jack Crosby, right?
RICKS: Jack Crosby. Most of their deals were done with a handshake or simply orally over the telephone. They were different as two people could be and yet were a very successful and compatible partnership. That was quite interesting dealing with them because they recognized at one of the earliest stages in the game that the way to make money in cable was to acquire asset value in a group of systems, sell them, and then do the same thing again. They acquired the systems that were put into a company called Telesystems and then those systems that were fully depreciated they put into another company, and then had started another company. Telesystems was sold ultimately to Cox Cablevision, and became part of the Cox cable family of systems. Then they started C.P.I., Microwave, Communications Property Inc., in which they assembled a significant number of systems and they sold that to the Times Mirror Company. Those, incidentally, are the original systems of the Times Mirror. By this time, they had a young executive by the name of Bob Hughes who was operating Communications Property Inc. and when that was sold, Bob Hughes became both the CEO and a major stockholder of Prime Cable. By this time, Fred Lieberman was no longer active in the company that Jack Crosby remained as director and a stockholder. Prime has continued in the business up to the present day and is a very successful company in acquiring, selling. I mentioned earlier about Jack Cook. He's one of the early ones in the business. Jack started American Cable‑vision which had over 100,000 subscribers which was a big company in those days.
PAGLIN: That was around 196...
RICKS: In the late 60's. He started in '64. In '68 he had a large company. That was merged into H & B American.
PAGLIN: I remember that.
RICKS: H & B was merged into TelePrompTer, a part of that transaction, Irving Kahn obtained from Jack Cooke, a voting trust agreement, giving Kahn a right to vote, which Cooke stopped. Cooke had more stock in TelePrompTer than did Irving. A similar agreement had been obtained by Irving Kahn from Hughes Aircraft which owned cable systems. Irving Kahn had a voting trust to vote the Hughes stock as well. At that point, Cooke was no longer active in the management of the company and I was now no longer his lawyer. Other people, and I'll come back to the rest of the story, that we were working with in those days were Al Stern, who had started a company called T.V.C., Televisions Communications Inc.
PAGLIN: Out of Philadelphia?
RICKS: No, New York. Al Stern came from a very wealthy family. A family I believe that had its roots in Sears Roebuck and many other things as well. T.V.C. was acquired by Warner and became the basis of Warner Communications.
PAGLIN: Did Al still stay with them?
RICKS: Al stayed with them for a short period of time and was replaced by Gus Hauser. Interestingly, and this is a bit of irony, Al had been a visionary of cable, recognizing that cable could develop in major urban areas. Al undertook to obtain a franchise in Akron, Ohio which at that time was probably the largest community and the most urbanized community to obtain a franchise and the community with the most off‑the‑air television reception of anyone that really sought to develop cable systems.
PAGLIN: They'd be picking up Cleveland.
RICKS: Off the air service. Al built the very modern so-called state-of-the-art cable system in Akron, Ohio. It was losing a lot of money. As many urban systems continue in some instances to lose money. But the powers that be in Warner were concerned about the money that was being lost in the cable division, and principally Akron. So they brought in Gus Hauser as a pragmatic executive who had experience in utility, to stem the losses of this type of operation to get them back into the more traditional cable operation. Of course, later in his career, Gus experienced exactly the same circumstance when he got Warner involved in QUBE technology.
PAGLIN: Where was this again, the first QUBE system was where?
RICKS: Columbus, Ohio. I'm just trying to think of the other people who went back. I think those were the principals, Al Stern, Jack Crosby, Fred Lieberman, and of course Cooke. We had dealings with a lot of people such as Monty Rifkin, Alan Harmon, who were brokers, with Bill Daniels. Those were the people we were dealing with.
PAGLIN: By this time, Cooke's systems were worth well up into the millions.
RICKS: Yes, and as I say he had not sold them. He had converted them into stock and even stock in TelePrompTer. Then came the Johnstown incident in which Irving Kahn was convicted of having bribed council members in Johnstown, Pennsylvania in order to obtain a renewal of the franchise on the TelePrompTer system there. Irving Kahn's defense was that he was extorted by the council members that unless he paid them cash they would give the franchise to someone else. One of the early incidents that gave rise to the Cable Policy Act of '84, Kahn was under indictment and Cooke was appalled that this had happened to a company in which he was a stockholder. So he and Hughes sought to break the voting trust agreements with Kahn. The New York court had that under advisement when Kahn capitulated and gave up control of the company to Cooke.
End of Tape 1, Side A
RICKS: I was neither representing Cooke nor TelePrompTer. The reason we were not representing Cooke in that situation was because we also represented Howard Hughes. We didn't know what position Mr. Hughes was going to take regarding the interest he had in TelePrompTer.
PAGLIN: This was Howard Hughes, right?
RICKS: Yes, so in order to avoid any problems we stayed on the sidelines during that struggle. Once the Hughes interests decided that they would side with Cooke and displace Irving Kahn, we were free to come back in and Jack Cooke asked if we would undertake and represent TelePrompTer. Principally he asked us to try to prevent a loss of the license, the FCC license, that was involved in the Johnstown, Pennsylvania cable system. The FCC being aware of the bribery by Kahn, decided that it would take the same type of action against the Cable Television Certificate of Compliance, that the FCC would have taken if it had been a broadcast license. The broadcasters all had sought to bribe the FCC, for example, for a renewal of license.
PAGLIN: Which was revocation.
RICKS: Which was revocation, of course.
PAGLIN: Was it designated for hearing?
RICKS: It was designated for hearing and we argued to the FCC that the Certificate of Compliance was intended not as an original license by the FCC but as a confirmation that there had been a licensing process at the local level in which due process was followed. Clearly, due process had not been followed in the proceeding which Irving Kahn bribed council members. But at our request, the city of Johnstown, Pennsylvania once again reviewed the qualifications of TelePrompTer to be its franchisee. After reviewing the qualifications, notwithstanding the bribery, and realizing those who were responsible for the bribing had been removed from the company and new management had come in, the city of Johnstown, Pennsylvania decided it would reaffirm and issue a new license to TelePrompTer to be its cable operator. We took that new evidence back to the FCC and told them they were now obliged to issue a certificate of compliance because the subsequent proceeding by the city of Johnstown was in all respect due process. We invited the commissioners to attend the hearings in Johnstown which they declined to do. At the oral argument before the FCC, Dan Ohlbaum was arguing for the FCC, in fact the prosecution arm of the FCC, the companies right to operate in Johnstown had to be revoked as a punishment to the company, even though the company had removed Kahn's involvement and all others involved. I argued that the Commission was without authority to take such action because its licensing was not original licensing but was really a confirmation of local licensing and they could not substitute their judgment for that of the city of Johnstown, PA. I remembered when Glen Robinson who as an FCC commissioner, responding to my argument that never in a blue eyed world would he go along with that theory. Plus I realized that I did not have his vote. In any event, the Commission voted to revoke TelePrompTers right to operate in the city of Johnstown, Pennsylvania. We appealed to the D.C. Circuit and the D.C. Circuit held that the FCC had no jurisdiction to take the action that it had taken and directed the FCC to issue a Certificate of Compliance. That was a most satisfying result and Cooke thereafter...
PAGLIN: Before we get to that, can I digress for just a second? One of the objectives that we have also in this entire project is the documentary aspect. On a thing like this, you may be the only one who has a copy of briefs and maybe even a transcript of your argument. Certainly the Commission's decision and then the briefs before the court. If copies of those could be made available for the archives of the Museum I think they'd be of great interest. You might want to make a note of that.
RICKS: I will.
PAGLIN: It is the only case that I can remember in all the years I was with the Commission that this particular issue arose.
RICKS: I think it was too. I think it was very interesting legal proposition in which commentators were divided all over why as to the extent of the FCC's jurisdiction.
PAGLIN: The articles that were written pro and con after that were voluminous.
RICKS: We argued essentially that the FCC had to follow its own rules. Its rules provided that if the cities were following due process, it was the end of it as far as the FCC was concerned. They couldn't go against these rules, simply because they didn't like the city. The Court of Appeals had no trouble with that.
PAGLIN: The Commission didn't take it up on cert did they?
RICKS: No, they didn't.
PAGLIN: They just dropped it.
RICKS: They just licked their wounds and went away.
PAGLIN: What was the date around now? '68 or '69?
PAGLIN: I was already back at FCC as Executive Director. You went on to say...
RICKS: Cooke then became the CEO, Chairman of the Board at TelePrompTer. He brought in Governor Shaffer??? to be the new president. TelePrompTer got caught up into the same franchising frenzy that other cable's systems did in the early 70's, seeking franchises in major markets. Really, not enough programming to attract subscribers to that system at that time. No satellite delivery service, of course, and they were just seeking to sell local and distant tele signals, so the company as did many other cable companies in the early seventies, was on the brink of bankruptcy. Cooke realizing that, came back and took direct control of the company himself.
PAGLIN: That was about when?
RICKS: That was probably '75 or so. He stayed in New York City for about a year, getting the company back on its feet. Then he brought in Russell Karp as the chief executive and he remained the chief executive until the company was sold to Group W. I believe around 1981 or so. It had grown to be the largest company in the business.
PAGLIN: So he's out of it now completely.
RICKS: He is out of TelePrompTer and Group W completely. He sold out entirely in 1981 but he came back in in 1987 and brought with McCaw [???] in North Carolina and now we've got about a half million subscribers.
PAGLIN: He can't stay away can he? Football is not enough for him.
RICKS: Apparently, he's paying a lot more than $300 a sub nowadays.
PAGLIN: $300 a sub, still makes me laugh, you know. In the old days. One other thing on this particular area of federal regulatory response. Did you also in your experience have occasion to participate on behalf of clients in the congressional hearings. In other words, at the congressional level? What was your participation, on behalf of whom and what issues?
RICKS: We represented NCTA in the congressional hearings on the pole attachment bill which I believe passed in 1974. We were very actively involved in that. We drafted the bill, we drafted most of the hearing, most of the testimony on behalf of the cable industry. We testified, we were deeply involved. Then the next major piece of legislation was the copyright bill of 1976 and TelePrompTer's president was one of the principal negotiators of that bill on behalf of the cable television industry. So we were deeply involved in preparing background material, supporting material for the Copyright Act.
PAGLIN: In the early days, when you first, or at least the firm and you would say, in the mid 60's as you would probably have recalled, there was a movement afoot to give the industry some legitimacy. At least there were schools of thought that it would behoove the industry to attain a level of legitimacy by being licensed. You remember there was an entire thrust there at the time in bills and I remember even when I was with Fred Ford, there were bills to license cable. Were you involved in some of that?
RICKS: Our clients, and I can't remember exactly who, but our clients generally opposed that legislation, and I remember that Senator Pastore was very deeply involved in that.
RICKS: On behalf of the Senate Telecommunications Subcommittee. But our clients generally felt that the bills were not good bills, so we did not support it, and we didn't really lobby against, because we were not in support of that legislation.
PAGLIN: Did you get involved in the situation? There was a flip flop there which was quite embarrassing and in fact, as I remember, infuriating to Pastore. That is to say, as I remember, one wing of the industry had gotten Pastore on their side and other senators, I think was it Monroney or Mansfield? Then someone else had, I don't know whether it was Monroe or somebody got the idea, maybe it was Milt Shapp, who got the idea that "wait a minute, this is the wrong thing to do." And started a grass roots effort to turn it around. Were you involved in that?
RICKS: I was an observer of that action. In fact, I was at an NCTA board meeting when the flop was beginning to manifest itself.
PAGLIN: Tell me what happened because I've heard about it.
RICKS: Well, it was very embarrassing for Fred Ford and whoever was in leadership in the industry because they had thought they had the troops behind them. They had made representations to Senator Pastore they could deliver the support of the industry and it turned out they couldn't. There was an unpleasant experience in it as they tried to find out really, how to maintain credibility in Washington, if they could not stick with positions that they thought were acceptable to a wide range of the industry.
At that time, the real power in the industry was not focused in an organized way through the National Association. There was really, depending on the issue, who cared enough to really work on it. There were people like Bill Daniels who were very influential, Alex Demmer [???], people like Milt Shapp very influential in Pennsylvania. There were people in Texas who had a fair degree of influence. The industry tended to be a Southwestern industry, a Pennsylvania industry and a Denver industry.
PAGLIN: A force in the organization, as it were.
RICKS: Then there were just a whole slew of very small operators who only cared about maintaining the economics of their own system. They didn't care if the industry grew in the major markets at all.
PAGLIN: The so-called Mom and Pop organizations.
RICKS: Then there were visionaries such as Bill Daniels and Milt Shapp and later people like Chuck Dollman, Bob (T.C.I.)....
RICKS: Magness. And others, Bruce Merrill, who realized that the real future of the industry was being able to provide a service that would be attractive in major markets. It already had good off the air television service. So there was a friction between those two types of people. What I might call the visionaries, were quite willing to make compromises if it meant getting more signals and less FCC restrictions that would permit development of larger markets. Those who had systems that were going quite well in the classical areas were not willing to make those compromises. I think that was the kind of a division in the industry.
PAGLIN: Were they concerned that licensing under FCC regulations would militate against development or bring more problems?
RICKS: They just didn't want FCC licensing.
PAGLIN: In other words, get the government off my back, to use a coined phrase.
RICKS: Yes. But there were others who had legitimate views that you shouldn't allow the FCC to license under a direct licensing scheme without some guidance in the statute as to what they could do and couldn't do. There was the feeling that the FCC licensing was influenced greatly by the broadcasting industry. That the regulations would be suffocating to the industry. There were people of good motives who were very anxious to see the industry grow who also felt that the particular legislation being proposed was not good legislation. This occurred again in '72, the whole consensus was over copyrights, distant signal carriage. Again, it was a division between the traditionalists in the industry who were quite happy to maintain the economics of their own classical systems, against those who were anxious to see the in service development in major markets.
PAGLIN: Who were some of the, to use your term, visionaries, people like Bill Daniels, Milt Shapp, some others of that kind. And who would be among the traditionalists, would you say?
RICKS: Oh, I would say George Barco would be a very good example. There are others.
PAGLIN: George Morrell.
PAGLIN: Except he was in between.
RICKS: Probably John Walson.
PAGLIN: From the Pennsylvania industry.
RICKS: The Pennsylvania group and also some in the southeast, I can't remember all the people. Those who owned and operated classical cable systems who were involved in the ownership with the management directly and were not acquisitive in the sense of trying to put together large companies. Particularly, they were not publicly traded companies. The companies that were publicly traded really needed to get out from under the perception that the industry was only a backwoods, rural type industry.
PAGLIN: Like CATV Community Antenna.
RICKS: Yes. They desperately needed to bring it into the 20th Century to make it look like a modern communications business, in order to get the public to buy stock and banks to loan the money and manufacturers to develop the new state of the art equipment. That was the kind of a vision that occurred in virtually every compromise legislation that came about.
PAGLIN: It's interesting to hear you put it that way, particularly, and naturally you'll develop it later on when we get down to the last sections, but this was not so much a legal issue as it was an industry issue. That is to say, the views of certain people in the industry as to where the industry was going.
RICKS: Well, the industry had legal problems. The solution to a legal problem was usually a compromise that affected the business. It affected the business typically in a higher operating expense, but perhaps a greater flexibility to grow.
PAGLIN: Can you give an example?
RICKS: Well, with pole attachment legislation. Of course, the problem was the utilities were interested in exacting rates, and the compromise was that the FCC was going to be given the authority to regulate those rates. The bill did not say the rate would be $2.00 and there were a lot of people who felt it had to be specific in the legislation. It had to limit the FCC's ability to set a rate that was fair in the FCC's mind. There was a raging debate over this. Some people said no, I can't trust the FCC Rates have got to be in the statute. Well, that would have been probably an unlawful taking.
PAGLIN: You wouldn't have been able to do that.
RICKS: In any event, that was a good example. Another one was the copyright. Of course, the industry had won two copyright cases saying that there was no copyright liability.
RICKS: Fortnightly and the TelePrompTer and CBS. Dean Birch (Chairman of the FCC) made it very clear to the industry that they would never get distant signals unless they agreed to pay copyright. A lot of the people in the smaller markets said we don't need any more distant signals, we've got enough, all you need distant signals for is the major markets. Of course, that's where the distant signals restriction was at that time was in the major markets. The small system owners said why should we pay copyright in order to allow you to build New York City, Philadelphia, wherever. That was a very, very big debate and finally was broken by a compromise which of course, added a copyright expense. The compromise with the cities in 1984. The industry was concerned that the cities would continue to exact concessions or even extortion as they had done in the Johnstown case, as a price for renewal of franchise, unless there was legislation. The price for getting that was another compromise in which the industry had to allow access support payments, a 5% franchise.
PAGLIN: You'll get to that in the next section on municipalities.
RICKS: So a legal problem and its solution involved using a compromise. Getting the main objective but ending up having to pay a price for it.
PAGLIN: Do you see that throughout this until maybe very, very recently, you had these two elements in the industry that had come from different backgrounds and had different motivations and consequently there was this internal ferment that was going on about how you approach these problems? I can remember too, that in '64, going to the conventions, meetings, State associations and you always had the people who I used to call Mom and Pop operations and the other people like Daniels and Shapp and people like that who foresaw that this was one part of a larger telecommunications complex. Apparently it has remained that way over the years. Isn't it a fact that we still have a great number of "small systems"?
RICKS: We still have a number of small systems but more and more frequently they are beginning to be owned by larger companies. There are still a lot of individually owned systems by numbers, but if you added them all together the subscribers, there would probably be only about 5% of the total subscribers. There has been another very interesting parallel of the development of the industry is what is now Continental Cable Vision. I believe they are the third largest company in the business. It is an interesting contrast to some of the other companies. Continental was started by Amos Hostetter and Irv Grousbeck, Harvard Business School graduates who were working as investment bankers and had seen projections for cable television systems. They thought to themselves that this looked like a pretty good business and they went out in the late 60's to Ohio and bought some small cable systems in Ashley, managed them and operated them. Got some private investors to put more capital into the company and built it up with people who had an M.B.A. type of background in education, rather than people who knew the industry from having worked in it before. They developed an extremely successful company which has grown steadily and has recently surpassed a million subscribers and is certainly by far the largest closely held company in the business.
PAGLIN: That's interesting. Well, would this be a good place to stop?
PAGLIN: This again is very, very valuable because it is giving us an insight from a lawyer's point of view. I haven't seen the transcript on Strat Smith but we do have a transcript on Henry Geller's participation in the early days which when it's published will I think, amuse and interest, and surprise a lot of people. I'll just digress for a second to say that one of the objectives of the initial oral history project was what I call the three legs of the stool. My project proposal was to get initially, an "inventor" which was Marty Malarkey to begin with anyway, an entrepreneur (Bill Daniels) and a regulator (Henry Geller) and two or three of them have been published anyway without restriction. Henry's will be. To hear the same story being told temporally wise, being told by these three different points of view is what we are seeking. Now here today we have the beginning of a totally different approach by a big law firm counsel who was in at the very beginning. It's going to be invaluable. Thank you again for our first session and would it be suitable and convenient to set another time?
RICKS: Sometime in early September.
PAGLIN: Thank you again very much and I'll see you again very soon.
End of Tape 1, Side B
PAGLIN: This is December 3, 1987, and we are in the offices of Jay Ricks of the law firm of Hogan and Hartson. This is the second taping session for the Oral Histories Program of Cable Television Pioneers, being conducted by the Golden Jubilee Commission and the Pennsylvania State University and the National Cable Television Museum. Good morning, Jay.
RICKS: Good morning, Max.
PAGLIN: What I'd like to do is talk with you today on your recollections of your interaction with some of the other cable pioneers. You will recall you told us of your meeting and working with Jack Kent Cooke and with Bill Daniels, Milt Shapp, and George Barco and some of the others. So I'd like first, and I'll give you kind of an outline of where we're going to go, to talk about some of the other pioneers, about whom you have some recollection and also your impressions, candid or otherwise, of some of the FCC Commissioners or FCC staff , in terms of their attitudes on cable television in the early days, and perhaps the same kind of thing with regard to some of the members of the Congress and Congressional committee staff.
Then what I'd like to do, toward the concluding sections of our interview, would be for you to give your overall assessment of the early years of cable and what you think of their impact on the opportunities and the problems of the industry today. Next, some of your predictions about the future role of cable in the development of telecommunications as a whole and finally your views on the future course of cable technology and what you see as to the need, if any, for any federal and or local regulation of the cable industry in the years ahead.
RICKS: All right.
PAGLIN: So, starting back about what your recollections are of some of the other cable pioneers that you came into contact with.
RICKS: Well, of course, I may have mentioned one of my early legal assignments was to assist the cable industry in the developing conflict with the utility industry over the use of pole plant and conduit. Ben Conroy was the chairman of the NCTA utility relations committee and so I worked closely with Ben. George Barco was on that committee. We fought some of the early battles, had lengthy negotiations with representatives of the Bell system, seeking some accommodations, some compromises on the issue. That issue became so important to the cable industry, apparently especially important in the telephone industry, that we weren't able to settle it. The matter escalated into litigation, both before the FCC, then later legislation before Congress, and I recall that Amos Hostetter, succeeded Ben Conroy. So I ended up working first with Ben and then later with Hostetter. Finally achieving the statute that directed the FCC to regulate the area of conflict. From time to time I can recall there was an occasion when we worked with probably most of the people who were in the industry, Gene Schneider, Bruce Merrill.
PAGLIN: Bruce, at one time, also had an NCTA connection.
PAGLIN: That was at the time when Fred Ford came in as president. It was about '65.
RICKS: Correct. Fred Lieberman. Jack Crosby. Jack was also one of the early chairmen of NCTA.
PAGLIN: How did you generally find their attitude at the time, let's say, as contrasted with the more sophisticated attitude today? Remember in those days, and as you recall I worked with Fred Ford when he came in. There was kind of a prevalence amongst people, particularly out in Midwest and the west, they were the so-called Mom and Pop industry. There was the singular sense of individual opportunism and using the phrase of today, "They didn't want the government on their backs." A lot of them couldn't understand the need for at least some regulation. What was your impression of these things?
RICKS: You make a good observation. The Mom and Pop operators, the small operators, and some of them were not so small by today's standards. They were sitting on some very valuable property. The people who had cable systems in classical cable markets. That is, markets that could not get television reception without the aid of cable, wanted to be left alone by the government, by everyone else. They wanted the ability to serve their subscribers and to make the money and to, if necessary, sell out at some point and take their money and live happily ever after. Then there were those in the industry, probably best characterized by Bill Daniels, and some of the people who were starting to get involved in publicly owned companies that wanted cable to have a future beyond the classical markets. They knew that was going to create a conflict with some of the vested interests, such as the broadcast interests, and others, but principally the broadcast interests. I guess the program owner interest, the copyright owner interest and that eventually was going to require compromise. It was going to involve government regulation and so they had a much more expansive view of where the industry might go and they acknowledged that it was going to have ramifications and that they would have to deal with those. In hindsight it was amazing that the two groups were able to coexist in the association and in the industry and socially, professionally and in many other ways they did. It was really an obvious and open conflict between the two objectives.
PAGLIN: I remember there used to be some really knock‑down, drag out fights during the board meetings.
RICKS: The group that was represented in effect by the small classical system operators wanted to have a "We don't want to build in big cities", "We don't want to take on the television industry, Let's fight 'em in the streets, in the beaches , in the hedgerows, and we'll never surrender to any form of government regulation, and we'll never compromise".
PAGLIN: Yes, I remember it well. The George Barco's and the like.
RICKS: George was a very articulate representative of that group.
PAGLIN: And George Morrell.
RICKS: That's right. As typically happens, the visionaries prevail in that type of debate and the industry moved in the direction that required compromise, required some accommodations of the other technologies.
PAGLIN: Who were you representing at that time?
RICKS: Because these things were always changing, some of the companies we represented at the time were companies that themselves were in somewhat of a transition. Jack Crosby, Fred Lieberman had started communications properties which had gotten a franchise in Louisville, Kentucky.
PAGLIN: Were they together at the time?
RICKS: Yes. They found that under the FCC regulations they couldn't build it. Couldn't get any service with the '72 rules. While they had been small system operators they had to recognize that a lot of rules of the game were being dictated in Washington and they had to start dealing with those. Then we represented in that time, Continental Cablevision, which at the time was a company composed principally of classical cable systems.
PAGLIN: Who owned it then?
RICKS: The same group who owns it now. Amos Hostetter was one of the principal owners, Irv Grousbeck who is now no longer with the company, were the co‑founders along with some private investors. We continued to represent Jack Cooke who by that time had put his interest in TelePrompTer. TelePrompTer being a publicly traded company was interested in the industry not being characterized as just a small town industry, but one that had a future.
PAGLIN: Even though at the time TelePrompTer had started in the very, very small towns out west.
RICKS: Sure, but Irving Kahn knew that you could never impress Wall Street by only being a small town operator. Then some of the cable systems that we represented at that time were those that were owned by media companies that had evolved as you well know, Max, from newspapers to radio to television to cable television. That included the Steinman interest out of Lancaster. The Shears Communications out of South Bend.
PAGLIN: Who was that?
RICKS: Franklin Shears, the South Bend Tribune. Gordon Gray up in Utica, New York. The Journal Company in Milwaukee. These were a lot of the old newspaper broadcast clients in this firm who recognized that there was simply one new technology on the horizon and they ought to be in it.
PAGLIN: That was about in the early 70's, wasn't it?
RICKS: Yes, late 60's, early 70's.
PAGLIN: Who then was president of the NCTA and some of the leading members of the board?
RICKS: Well, they had after Fred Ford it was Don Tavernor [???].
PAGLIN: Fred left in '69.
RICKS: I cannot remember precisely.
PAGLIN: I think it was '69.
RICKS: Don Tavernor??? and then David Foster.
PAGLIN: I didn't know him.
RICKS: Neither of them had any background in cable television. Tavernor had been involved in public television and I think he was selected because he was a forceful speaker and they thought a good representative. The industry recognized that they needed a representative in Washington, most importantly. Then, Foster had, I believe, an association background, not in cable. Because neither of those two had a strong background in cable, staff members such as Bruce Lovett, Gary Christiansen, and others had a fairly significant influence on the policy of the association.
PAGLIN: Also, Wally Briscoe.
RICKS: I would say the board members who were very influential in those days would be Monty Rifkin.
PAGLIN: Al Stern.
RICKS: Al Stern, very much so.
PAGLIN: Bruce Merrill.
RICKS: Bruce Merrill. Bill Daniels.
PAGLIN: Bill, by that time, had gotten involved in sports. But he was still quite effective.
RICKS: John Saeman was active in NCTA. Hostetter, Rex Bradley who was in Telecable Corporation.
PAGLIN: I didn't know him. Storer had not yet gotten involved with this.
RICKS: No, they were just getting in, in the early 70's.
PAGLIN: What is your recollection, Jay, about what the NCTA board's attitude at this time was about the Commission and the Congress because this was pre‑'72 rules, but it was on the borderline.
RICKS: Until the rules that were imposed that absolutely froze the importation of distant signals, I think the attitude of the NCTA board was very much confrontational. They didn't want to work with them, they wanted to fight them. The Commission really shut down expansion of cable with the rules that were adopted in 1969. So there was a three year period when many companies in the industry were technically bankrupt because they had sought to build some markets where they could not get enough product to sell service. That included virtually every publicly traded company in the industry, was on its back. Since at this time there was really no cable network programming, no movie programming, no original programming available for cable, the importation of distant signals was the only thing you could offer a subscriber.
PAGLIN: This was, in effect, the prohibition of importation of distant signals into the big city. Which as you would explain, I'm sure, were the only economically viable method of being able to institute a system in a big city.
RICKS: Since at this time, there were really no cable network programming, no movie programming, in fact, original programming available for cable, the importation of distant signals was the only thing you could offer a subscriber.
PAGLIN: The satellite had not come down the road yet. This was '69.
RICKS: The industry leaders realized that the FCC had them in a very vulnerable position and that they had to make some accommodation. There were various people on the Commission, like Ken Cox who was extremely antagonistic toward the cable television industry. Principally because Ken was a regulator of the broadcast industry and he wanted to regulate the industry, but he didn't want the industry's economic ability to be in any way to be adversely affected by new technology he could not regulate. So he wanted to impose very stringent economic regulation on cable to keep it to the so-called classical role of supplemental broadcasting and not importing distant broadcasting. Certainly, of his close associates in that endeavor would be Henry Geller, Martin Levy.
PAGLIN: Who were also in that same school, you would say.
RICKS: Then there were people such as Rosel Hyde, Chairman of the FCC, who were simply not strong in their philosophy and tried to seek consensus. Then Dean Birch came on the scene as the new FCC chairman.
PAGLIN: That would have been 1970.
RICKS: Yes. When Birch came on the scene, he took a look at the situation, realized it was crying out for a solution, and he made the solution copyright. Agree to copyright liability, for importation of distant signals and we'll take off the restriction. It was a fascinating debate within the industry. Going back to our earlier conversation, Max, about the classical versus the new trend in big cities, the people who had cable systems such as George Barco and others in small markets saw no reason to pay copyright and they won two Supreme Court cases and they didn't have to pay copyright, why should they agree?
PAGLIN: It was the Fortnightly case, you mean?
RICKS: Simply to hype somebody's stock and let somebody go in New York. It was a raging debate and it came down to a board meeting that was held in Washington and by a fairly wide majority, the board voted to accept the consensus that Dean Birch was pushing.
PAGLIN: This was when?
RICKS: This would have been close to '72, probably '71 that this occurred. Then the consensus was reached that the industry would agree to copyright liability in return for freeing up distant signals. Birch carried through on that promise. The '72 rules were then adopted which really allowed the industry to go forward. The Congressional side at that time, like Senator Pastore from Rhode Island, was the strongest personality that the industry had to deal with. His trusted sidekick, Nick Zapple, and there was always... One rarely heard from the Senator directly, one usually heard from an intermediary, "the senator wants you to do something".
PAGLIN: How well I know. Even at the Commission at that time. Nick used to come in and say, "The Senator wants so and so."
RICKS: Whether the Senator wanted those things or Nick wanted those things.
PAGLIN: Actually the only time you would hear from a senator was at a hearing. Nick could not feed him too much then. Do you remember that?
RICKS: Yes. In any event, the industry would try to jump when the senator wanted something because of the inability to get together on legislation, the word around town was the Senator was mad at the industry because they reneged on their promise of comprehensive legislation. I think it was probably a bum rap but that was the big rumor. The cable industry was not effectively represented in Congress, mostly because no one knew how to do it. No one had really any experience in grass roots lobbying. The industry had never really sought to galvanize the grass roots potential. The industry didn't know how to deal with lobbyists. They didn't know who was really effective. They didn't know what educational lobbying was about. They didn't know if you threw money over the transom or what you did.
PAGLIN: The only instance that you probably recall is a kind of a one on one. If one of the operators had a beef against whatever, he would get his Congressman or his Senator to write to the FCC but that was the extent of it. Is that correct?
RICKS: That's right. The industry slowly became educated and more sophisticated as you expect, as in fact it grew and required more effective representation. We obtained it, both in the association and in the people who became lobbyists, etc. So that by the time we were seeking, for example, to get the pole attachment bill through in the early 70's, which was before the Lionel Van Deerlin House Committee. The industry had hired Bob Schmidt as the new president. Bob was very sophisticated in dealing with Congress. He brought in Tom Wheeler who was one of the real summit politicians.
PAGLIN: You wouldn't want to make a pun like Wheeler ‑ Dealer.
RICKS: No. He was really quite good. Very enthusiastic, very well informed, and had boundless energy. All the other characteristics one needs is boundless energy. We just pounded on doors and sold our case on its merits. Arguing that we weren't seeking favors, we weren't seeking to take money from anybody. All we were seeking was a fair hearing. And that the utilities were seeking to impose monopoly rates on us without giving us the opportunity to have our case heard by any forum. Every Congressman that we talked to felt that was wrong. That if we were up against a monopoly, you ought to have a place where you can go and have your case heard. So they gave us the legislation and that was the first time the industry had ever gotten through a bill that was specifically directed at the cable television industry. It was a real milestone because it demonstrated the clout that the industry has if it focuses its energies and if it has a legitimate story to tell.
PAGLIN: That is in contrast to,[???] do you recall, it may have been a little before your time, the efforts at the time when Fred Ford came in a little later, trying to get cable legislation and, as you say, the legislation was good but they simply didn't have the clout at the time.
RICKS: They didn't know how to do it. The Schmidt ‑ Wheeler era really brought in the sophistication of legislative lobbying. Then the industry was required to carry through on its promise of copyright legislation and that was an enormous undertaking in which negotiations were held with money, principally Russell Karp, the CEO OF TelePrompTer, and a committee of others in the cable television industry. Then having reached the consensus that they did, they actually wrote the legislation, took it up on the hill and they got it through. That was Section 1‑11 of the Copyright Bill.
PAGLIN: Who was it on the broadcasting side?
RICKS: The broadcasters really weren't involved directly in that.
PAGLIN: So it was the producers.
RICKS: It was the copyright owners, principally Jack Valenti from MPAA. And a committee of NCTA
PAGLIN: The actual day of the copyright legislation was in '70...
PAGLIN: That's an interesting story. Going back now, that closes an era, wouldn't you say? As just kind of a footnote, to the early days, of discussion about copyright. I can recall when I was with Fred Ford as his counsel, and the first meeting in 1965 at the CATV convention in Philadelphia. Part of his speech and part of the discussions, was an attempt with some of the members of the industry who we tried (Irv Kahn and others) to persuade, members of the board and the industry, that copyright was coming. There was, as you recall, that hard phrase "the pirates". We tried to convince them, "No, no you're not pirates, but after all as far as those others are concerned, you're taking something that they think belongs to them. This is the time to sit down with them and negotiate." But no, you couldn't sell it for I don't know what.
RICKS: Well, you never sell it without getting something in return. That's what Dean Birch did. He created an incentive to...
PAGLIN: Of course, the development had not broadened yet the early 70's, middle 60's. Some of the members of the industry already saw that this was an issue that was going to come. It was on the horizon. But you couldn't get the others to listen.
Going back, you've told us some of your impressions. What about some of the other FCC commissioners who were kind of on the fence and helped before Birch came?
End of Tape 2, Side A
PAGLIN: I'm sorry Jay, we had to change tapes. You were beginning to telling me a little about some of the other commissioners during this time.
RICKS: Commissioner Robert E. Lee, long time Republican Commissioner, was dedicated to the development of UHF television and simply was unwilling to accept the obvious fact that UHF had a severe technical disadvantage, vis-a-vis, VHF. Being unwilling to accept that fact, he was unable to accept the fact that cable corrected that technical deficiency. Therefore, he looked at cable as something that was going to compete with UHF for the few dollars that were left after the VHF stations took the lion's share of it. I thought he was dead wrong and I think that maybe toward the end of his career he may have realized it, but in the early days, he usually lined up with Ken Cox in seeking to discourage the development of cable.
I have a recollection of the cable industry seeking to soften Lee up to show him the error of his ways. I invited him out to the Western Cable Convention and we were walking through the convention, looking at some of the hardware displays and there was a television set, set up with an equipment display that was a character generator so you could have little alpha‑numeric images on the TV screen, and Bob stopped and in his horror said, "That's origination!" That was?
RICKS: Absolutely the worst thing in the world that anybody could do and it was right next to obscenity and indecent language. He really was dedicated to trying to stop that. He saw that as a development inimical to the health of UHF.
PAGLIN: A real threat.
RICKS: Yes. Just as kind of a humorous aside to that. Later, he and I went up to Portland to another small convention where we were both going to speak and arrived late in the evening in Portland and around the piano with Fred Ford singing Irish songs till the wee hours. In the morning both of us felt kind of lousy from our party the night before. Although I didn't know he did too. I looked under the hotel directory and they had a masseuse there. I thought a sauna and a massage would get me healthy enough that I can't speak at the luncheon we were having. So I went down and made an appointment. I was in the midst of having a relaxing massage and the door opened, there was a little bell on the door that made it ring. The door opened and a woman says, "Is that you Mr. Lee". He had realized that he had to get well too. In any event, the other commissioners that I recall, it was a strange group, included Nick Johnson.
PAGLIN: You mean when he came on the bench.
RICKS: Nick Johnson on the FCC though he was not with us on this trip.
PAGLIN: Nick Johnson came in around the end of 1966.
RICKS: Nick, in my opinion, was a demagogue who was simply usually seeking controversy and he never had any philosophy that was predictable as to where he would come out on a regulatory issue. He just happened to be where he could make the most publicity out of what he said. I didn't have a lot of respect for him as a regulator. I really don't have a recollection of others on the Commission during that time.
PAGLIN: Was Loevinger still there?
RICKS: Yes, Lee was there as a matter of fact.
PAGLIN: He joined Hogan of Hartson when, I forgot.
RICKS: I forget when he joined us. In his decisions he had been a judge and he decided cases very much like a judge would decide them, on the facts and the law. That was an advantage typically to the cases that I was involved with then, because it was mainly an emotional prejudice or emotional bias that was hurting cable and not facts. No one had ever been able to prove that cable hurt broadcasting.
PAGLIN: By early studies.
RICKS: It was all intuitive. Loevinger, as I recall, was really quite good. When Dick Wiley got on the Commission, Dick was very anxious to seek compromise and consensus among the groups, so he was helpful in trying to bring about...
PAGLIN: That was also about 1970....
RICKS: He was a Nixon appointee.
PAGLIN: He came on as General Counsel in 1970 with Dean Birch and then became a Commissioner, I think in '72, from there. That was about the size of it.
Now if we can move along to some overall assessments of some things that I mentioned in my early indication of where we would go today. I think you have already spoken in terms of how you felt the early years of cable television had a kind of an impact on the later developments, that is to say about the copyright problems and the distant signal importation. Are there any other thoughts that you would have with respect to, say, an overall assessment of the early years and their impact on both the opportunities and the problems of cable today.
RICKS: Well, I don't think that anyone saw the entire simple big picture. Maybe people like Bill Daniels had a better idea than most. No one really saw the marriage of satellite technology, the enormous appetite of the American people for variety of programming, the success of Home Box Office, the entry of some big players who filled a very essential role. There were many who were pretty darn close to seeing it all. I think that the industry, once the copyright thing was resolved and the satellite distribution system came into place, it became wild for a period of time. It grew perhaps, faster than anyone had anticipated. Now it appears to me, Max, that the industry having recently passed the 50% mark, which is probably the tipping...
PAGLIN: Penetration, you mean.
RICKS: Is probably the tipping point in that the industry will now go from a 50% saturation up to a 60% and then maybe even a 70% of all U.S. homes. It will become the principal way that people get video entertainment. I think that advertising will become an increasingly significant part of the cable revenue picture. The next technology.
PAGLIN: Before you go to that, may I ask you a question? When did advertising become such a significant element in the industry itself? When did you see, as a leading figure in terms of legal representation, advertising becoming a significant factor? There was a time when it was prohibited, nobody would even talk about it.
RICKS: Cable advertising has only in the last five years become significant and because the typical advertiser is looking for an outlet that shows up as a measured service on Arbitron and Nielsen, very few cable services were able to reach a level that would give them a national measured audience. They simply weren't able to sell it. People simply didn't understand a service such as the Weather Channel that may only have 100,000 viewers in any fifteen minute period. It may over the course of the 24 hour period, have 5 million viewers and those viewers may only be there for five minutes. So if you're advertising and circulating through that five minute period you have a chance to be seen by a million people but never at the same time. The advertisers have been slow to accept that. They would much prefer to be certain that they are seen on the Cosby Show by 15 million people.
PAGLIN: That being because of...
RICKS: Because the measurement service says there are 15 million people watching Cosby.
PAGLIN: And it's something they grew up with as a criterion.
RICKS: It's just that that's a way of accepted measurement. So cable has had to fight ingrained habits in the advertising world and it has been, in my opinion, only in the last two years that they are being to get anything approaching comparable prices for delivering the same 1000 eyeballs to an advertiser. That's going to grow dramatically as cable gets more popular programming, particularly because there are fewer commercial interruptions on cable. I think that they eventually will be able to show that it is an effective medium of advertising. I see that as probably the biggest development that will grow out of achieving the more than 50% penetration in the homes.
PAGLIN: That gets us into your predictions, as it were, for the future role of cable. Carrying that along, in terms of the development of cable's role in the overall complex of telecommunications, its other features, what are some of your thoughts about its future role.
RICKS: I think the most important additional feature that cable needs is the ability to cater to the subscriber who wants to watch something at a particular time. I'm really talking about being a technological equivalent of a video cassette store. So that the person who would otherwise go out and get a movie at a video store, will feel that cable television is a comparable equivalent. Which means that cable will probably have to develop some means of accessing a library.
PAGLIN: Explain that a little more for future researchers who are going to be looking at this tape. You're talking in terms of what is called interactive, but a two way form of communication.
RICKS: Not necessarily. You could do it by telephone. However you activate it.
PAGLIN: In any event it is two ways.
RICKS: It is a two way system, but principally it is a system that can access a library of material as distinguished from the current system which simply sends everything down the pike that is being shown at a particular time.
PAGLIN: The viewer is a passive participant.
RICKS: The viewer switches through that menu and takes what's there. Maybe through fiber optics or something, the menu could be so vast that there are so many choices coming down the pike, hundreds of choices all the time, and all you do is flip through it and access the one you want, so that you don't need what you might call a switching system. Simply, you are able to pick from what's there and the menu is so vast, it will be likely to accommodate anyone's tastes at any particular time.
PAGLIN: At any particular time. That refers then to the other thing you were mentioning, that is to say, if there is a system of active accessing, then the viewers' convenience of the time of viewing would be a critical factor, would it not?
RICKS: Yes, but if you look at it this way, today if you look in the newspaper at the popular films that are being shown today...
PAGLIN: On cable?
RICKS: No, available in theaters. There are probably six or eight films that are showing. If you were to be giving the movie companies their theatrical release and then say, all those movies will come out of the window at the same time and be available for some type of a pay‑per‑view release and you had all six or eight of them on channels, on a cable system, and every two hours, they were staggered in such a way that one was starting every fifteen minutes. Then you probably would be giving viewers enough convenience of time and choice so that no one would feel it necessary to go down to a video cassette store and rent one of those movies.
PAGLIN: This would be on a twenty four hour basis?
RICKS: Sure. Why not? It doesn't cost anymore to do it on a twenty four hour basis. Then if somebody wanted to, they could tape it and play it when it was more convenient. The typical cable system now has a single pay‑per‑view channel and that is not equivalent to what the video cassette store sees. I think eight to ten channels would be. Or a channel, that as I say, would access a library. That's what I think is the next significant step that cable has to take to make the service more convenient.
PAGLIN: They actually have the technology now?
RICKS: Well, as I say, fiber optics probably would give you such a vast spectrum that you could accommodate it within that spectrum. Then it may be that even coaxial cable would do it with proper amplification. I'm not sure about that. I think it can be done under today's technology, it just has to be done in a way that's economical. I still, Max, am somewhat of a skeptic about the use of cable for many of the blue skies of what you might really call telecommunications services.
PAGLIN: I was just about to ask that.
RICKS: Clearly the system works very well as a multiple address system to get information from a single spot out to all of the addressee locations or any addressee location back to it. It is not designed and currently does not work well as a switched network in which one addressee could talk to another. I continue to believe that the telephone company is in better condition for that type of service than cable because of the design of the plant. I don't see that as a being a big revenue source for cable, at least in the foreseeable future.
PAGLIN: Do you see any other role for cable in other fields, such as being explored now by some of the systems, such as power utility, load management or paging, for which technologically they have the ability. You don't see that as a factor?
RICKS: No I don't. I think that in competition with the telephone industry and competition with other telecommunications providers, I think that cable is not well designed or suited for that particular role. Others will disagree with that, but that's my idea.
PAGLIN: That's why I asked it because there are others who have, as you say, blue sky visions. If you remember a few years ago, that blue sky became very, very gray. So basically you see it as a means of mass entertainment, mass information.
RICKS: Yes. And it is really a marvelous job. The emergence of C‑SPAN and its ability to allow people to actually see the drama unfold of a legislative hearing is having an enormous impact on the public.
PAGLIN: On its democratic process. C‑SPAN is popular?
RICKS: It is popular among a much larger segment of the population, I think, than anyone realizes.
PAGLIN: What are we talking about quantitatively?
RICKS: I don't have any idea. As I travel around and talk to people, I find that instead of watching soap operas, a lot of people are watching C‑SPAN during the day and finding that it is very fascinating. I think that group is increasing all the time. When you think about having people really looking at government, continually like that, the impact is going to be enormous.
PAGLIN: I've run into things where it surprises a lot of people, that the American people at least, are so fascinated with the processes of government. The hustlers, the hucksters always said you've got to sell them soap and that's all. I take the example of my wife. We don't have cable yet. We're a District of Columbia resident. When the Congressional hearings come on, she tells me in advance that we're going to have tuna fish for dinner because she is stuck to that set all day long and is absolutely fascinated by it.
RICKS: I guess I would close my remarks or you can ask me anything more you want, Max, but I would make this observation. Cable has succeeded beyond the wildest dreams of most of its proponents. It has won legal regulatory and legislative battles beyond anyone's reasonable expectations. It is achieving financial success that is probably beyond the expectation of most prudent investors. It has not suffered in the last ten years, at least, any really significant setbacks. The horizon has probably only one significant threat and that's the telephone industry. The telephone industry is salivating over the prospect of getting into video entertainment as a means to help underwrite the cost of the stolen [???] fiber optic development.[???] They know that if they are able to achieve that goal, it will be impossible, from a practical point of view, for any regulatory agency to determine whether the telephone subscriber or cable television subscriber is subsidizing the cost of the fiber optics.
PAGLIN: You say it would be impossible?
RICKS: Impossible to do. It would be practically impossible. I don't think any regulatory agency in the world could handle that problem. They now have a situation in which N.T.I.A. sought to ask the Commission, the FCC to declare that telephone companies can provide information services, contrary to Judge Green's order. The FCC is in the process, I'm sure, of seeking to tell Congress that it should remove the prohibition by telephone companies of providing cable service. It's going to be a difficult period for cable to weather because these forces are coming together and fighting very hard to remove those restrictions.
I continue to believe that Judge Green was absolutely correct in his original decision which forbids telephone companies from getting into content. I think it's a good decision. I think they should remain as a common carrier. They are building many cable systems, as you know, as common carriers. That's their proper role, for the telephone company. But I think our society has done very well without having the local telephone monopoly get into the media business. We'll have to see when that one comes out and it's a very significant issue to the future of cable.
PAGLIN: It's interesting that you should put it that way because it brings us back some sixty years. You weren't around, but you remember the history. Back when broadcasting first started, telephone companies were there and it was all theirs. Then as later, in my opinion, the telephone companies were so afraid of the anti‑trust aspect of the accusation of monopoly. If you remember, they backed away from broadcasting.
RICKS: I remember the history even better than that, Max. They had reason to be afraid of the anti‑trust. AT&T owned a broadcast station and AT&T refused to interconnect its facilities so that other stations could, in effect, engage in network programming.
PAGLIN: And this was in the 20's.
RICKS: Very early 20's, that's right. It was the most blatant, brazen misuse of a monopoly, a common carrier facility that one could imagine, using the monopoly common carrier facility in order to prevent a competitor from broadcasting a program in competition with your own station. The government wisely, in my opinion, decided that common carriers have natural monopoly characteristics. We will regulate them in order to protect the public interests but society is better off if we have media providers as unregulated information providers. That's all that Judge Greene is seeking to accomplish in 1987.
PAGLIN: You know the old French expression, "Plus ce change, plus ce le memes chose". "The more things change the more they remain the same." Here we are, sixty years later and it appears that, although in a quantitatively enormous dimension, what you're saying in effect, is that the principle is the same as it was in the early 20's. The telephone industry is suddenly realizing what there is available.
RICKS: There are commissioners and government representatives who perceive nothing inappropriate with having one company control the one wiring in the home, because there are such wonderful economies of scale. Monopoly has a wonderful economy of scale. They are rarely realized because a monopolist has a different view about it. We have many, many people who have not remembered their history.
PAGLIN: That's the point exactly. Would you be willing then to speculate that it won't be long, perhaps, before those who ignore history will suffer the mistakes of history.
RICKS: History is bound to repeat it.
PAGLIN: I'm glad to hear you say this because I personally felt the same way, having been around some forty‑five years in this business. I see this coming and I'm horrified that they don't realize the lessons of history. To take a totally unregulation. This is not, in my view, the place where that kind of economic theory works for the benefit of the public.
RICKS: It's not regulation's structure.
PAGLIN: That's right.
RICKS: Judge Greene has a structure that seems to be working very well.
PAGLIN: What you're saying, Jay, is that you see the next big fight, in terms of the overall competitive complex, of the industry finding itself in the kind of competitive struggle which you describe.
RICKS: Yes, I think all of the other obstacles or problems or challenges, or whatever you want to call them, are minor skirmishes that do not have any fundamental impact on the future of the industry. I think that the telephone conflict is major league and is fundamental.
PAGLIN: Would you guess that, as in the past, that the only solution might very well be legislative?
RICKS: Well, there is legislation and it would have to be changed in order to really allow...
PAGLIN: When I say legislation I mean, a legislative solution to the problem. Is that what you see?
RICKS: As I say, there is currently legislation that is a solution to the problem from the cable point of view. The telephone industry would have to get that legislation changed.
PAGLIN: You are referring to particular legislation.
RICKS: Yes. The Cable Policy Act of 1984 kept the telephone companies from providing cable service within their own areas. Even that statute is not sufficient by itself, because that statute would probably allow some aggressive joint ventures in which someone other than the telephone company was the nominal provider, and that the telephone company was a joint venture. Judge Greene's decision put some flesh on that and keeps the telephone company pretty much in the role of a common carrier and not as an entrepreneur who is going to take the lion's share of the revenues and give the provider only ministerial roles. It is both a legislative situation and a legal one.
PAGLIN: For the future. Did the cable industry, as an industry, see the problems that you are now articulating in terms of the divestiture of AT&T and Judge Greene's early decision to modify the Final Judgment, and all that?
RICKS: Yes. The cable industry participated in that, and I think was partially the reason for being successful in getting the information prohibition against the Bell companies. Without that, it could be a different situation today?
PAGLIN: The interesting thing is that there wasn't that kind of trade publicity as to the other end of cable ‑‑ as to the role that cable was playing in the early proceedings that ended up in the MFJ (Modified Final Judgment).
RICKS: Cable cooperated in giving several of the so‑called case histories of any type of conduct by an industry. The cable history was given. When they came to the point of their proffer of evidence...
PAGLIN: This was during the trial?
RICKS: Yes. The government decided that they did not need the cable industries in order to achieve what their goal, was which was a structural separation of the local Bell companies from the long distance carriers and the separation of Western Electric. In effect, the competitor.... The cable television industry was represented before Judge Greene in the Tunney Act hearings in MFJ. In fact, I appeared on behalf of the cable television industry. We were selected as one of the representative spokespeople. Going to those hearings, I think there were 10 selected out of the many, many who had sought to intervene. We argued very strongly for prohibition on information by both the Bell operating companies and a restriction on AT&T. We won both. I have to say with candor that we were not the only ones. The A.N.P.A. was certainly an effective advocate in that position.
PAGLIN: The American Newspaper's Publishers Association.
RICKS: Yes. Then in the most recent modification. We have been very active in keeping the modification as narrow as Judge Greene intends it to be. In which the typical loophole is opened up and the telephone company seems to widen that loophole. The cable industry has been very mindful of the telephone threat, it's been very active in certain systems.
PAGLIN: In the petitions for waivers, has the cable industry been formally served in all those pleadings?
RICKS: Yes. We are a party intervener.
PAGLIN: So when the RBOC's, the regional Bell companies file these petitions for waivers, with regard to marketing services, information services and all, the cable industry is served. Are you lead counsel on it?
PAGLIN: So you get served and then respond.
PAGLIN: So that's the way you keep a handle on it.
PAGLIN: This is really very interesting that it hasn't been raised before in the discussions we had with others about these particular views. That's what makes the oral history so much more valuable, that your views of the future in terms of cable revolved about a situation that really originated back in the 50's. That was the problem with the telephone companies.
RICKS: The telephone companies just blew it. They didn't think that cable was going to amount to anything.
PAGLIN: That's right. That's why I think in certain circles they thought that the telephone company, except for the problems I mentioned, blew it when broadcasting started. As you say, there were situations when they overreached themselves in the very beginning and they probably backed themselves into a corner and couldn't do anything about it. They would have been the logical ones at the time. Now, do you have there any other "pearls of wisdom"?
RICKS: No, I think you have found them all.
PAGLIN: This is really, really very fascinating. I might say again, my thanks on behalf of the Golden Jubilee Commission and the Cable Pioneers, particularly Penn State and the National Cable Television Museum. As you know, when these oral histories are put together they will be available in the archives of the Jubilee Commission and of Penn State and particularly the National Cable Television Museum.
RICKS: Well, Max, I am flattered that you have honored me by seeking to learn what my experience has been in the cable industry.
PAGLIN: If it makes you feel any better for the day, I want you to know that from a number of sources, I was advised that you must get to Jay RICKS: because he's got a lot of stories to tell. Again I want to thank you.
RICKS: Thank you.
End of Tape 2, Side B