Interview Date: Friday June 02, 1989
Interview Location: Bala Cynwyd, PA
Interviewer: David Phillips
Collection: Penn State Collection
Note: Audio Only
PHILLIPS: This is interview session No. l with former Governor Milton J. Shapp on June 12, 1986. Location is Governor Shapp's office in Bala Cynwyd, Pennsylvania. I am David L. Phillips.
SHAPP: Why don't you just lead me in.
PHILLIPS: Sure, I will. I've already put an introduction on the tape, so we can start out and just to warm up if you could talk a little about your childhood, and growing up, and how it led you into cable television.
SHAPP: Well, I was born and raised in Cleveland. Early on when I was about eight or nine or ten years old, I got involved in ham radio. I was not a ham but there was a very close friend of mine, or I should say our family, who had a remarkable ham radio set and lived on Lake Shore Drive outside of Cleveland. About once a month I'd go out there and spend the day. I was a kid at that time maybe ll, l2 years old. Oh glory, and that got me, of course, involved in electronics and as I grew I got more deeply involved in radio and so when I graduated from high school, I decided I was going to study electrical engineering. At that time Case Institute in Cleveland Case School became Case School of Applied Science and now Case Western Reserve University. Case had a very fine electrical engineering course and so I enrolled at Case and became an electrical engineer. I graduated in 1933 so that gives you the segment of the time.
My first job was during the depression, the bottom of the depression, '33, my first job after I graduated as an electrical engineer and all that stuff was driving a coal truck. And I was very glad to have that and I was able to clear a dollar and half a day driving the coal truck and working seven days a week. I did make $9‑l0, sometimes with an extra trip here and there made $12‑13 bucks a week. Those were depression years.
PHILLIPS: You were not married at that time?
SHAPP: No. I heard one day while I was still in this truck driving job of mine, I heard there was a small company in Cleveland called "The Radiart Corporation", that's R‑A‑D‑I‑A‑R‑T. They were manufacturing a product called a vibrator, which was the heart of an auto radio power supply in the early days. And I heard that they were looking for some technical people to go out in the field and work with the auto radio service. Sell them on the idea that when an auto radio set came in their shop where the vibrator was worn out, in other ways made, say inoperative, sell them a radio or replacement vibrator. That was my first job after I got out of college that was associated in any way, shape, or form with my training. Eventually, I moved up the ladder at Radiart.
PHILLIPS: What year was that that you went over there?
SHAPP: I graduated in May '33 and we're talking August, September of '33. These vibrators had a short life and so the company very quickly got into the replacement field, selling vibrators to fit the Motorola set, the Philcos, the RCA auto radio sets and so on. They had a complete line of replacement vibrators and Radiart very quickly built a national sales force to sell the vibrators. Philco was making vibrators for their sets but their vibrator could only be used, for physical reasons, in a Philco set. Motorola had a similar problem. And Majestic and RCA, none of these manufacturers could sell a vibrator that would plug into any other sets. So Radiart was the first one to build a complete line of replacement vibrators. I went all over the country calling on the RCA distributors, the Motorola distributors, all of them, and the parts distributors. When I got into a city, I made arrangements whereby I would conduct an evening session on auto radio servicing, of course, stressing radio vibrators.
Through this activity I got all over the country and helped establish Radiart's distributors in many places. Within a year's time, after I got out of engineering school, it was about a year and half, I was probably as well known in the radio parts industry as anybody.
I'd been conducting these auto radio service sessions around the country, and Radiart was very much pleased with my performance and what I was doing. After about maybe two, two and a half years of constantly going all around the country, I probably knew more radio parts distributors and particularly auto radio, than anybody else. I wasn't married at the time.
PHILLIPS: Did you drive?
SHAPP: Oh, yes. I had my car and some special test equipment that I had built and carried with me so I could conduct these schools for auto radio servicing.
About this time a friend of mine in Cleveland who was a manufacturer's representative selling parts and components for radios, including auto radios, came to me and we decided to expand, take on other lines besides radio. Within a period of about three or four years after I graduated from college I had, along with Neal Bear, one of the largest manufacturer's representative organizations in the Midwestern area. Through contacts we made in California and Texas and New England and so on, we had a group of manufacturer's reps. Neal and myself were handling various lines of equipment and a friend of mine who was a manufacturer's rep in New England needed another line to fill in something and I represented a company in that field, I'd help him, he'd help me, so I'd say about 1936, right in the middle of the depression, I had one of the most prosperous radio parts representative business in the country.
PHILLIPS: What was the name of your partner?
SHAPP: Neal Bear, B‑E‑A‑R.
PHILLIPS: B‑E‑A‑R just like it sounds.
SHAPP: Yes, yes. Neal eventually pulled out of the arrangements that we had and he took over Ohio, Michigan and more of the Midwest area. I in turn moved east and took over those areas. Just about that time Radiart decided to open a Philadelphia office to sell their vibrators to Philco and RCA and Emerson up in New York for their set manufacture. And they offered me the job as being eastern sales manager for the company. So I started traveling from Boston down to Richmond and the entire area. It was just post depression. I was making more money than I ever thought I would make in my lifetime.
PHILLIPS: This is when you moved to Philadelphia?
SHAPP: Yes. Well, I started to make pretty good money when I was working out of Cleveland. I moved to Philadelphia in '36 maybe off a year or so. And I'd start taking on other lines of transformers and condensers. I didn't handle tubes but handled wire and soldering irons, and you name it, and I had about four or five men working with me, one covering New York City for me and another so and so. I was building my own thing. And I had no complaints. Not the way my business was going.
But there was a guy named Hitler that was starting to make some noises, so I turned over my manufacturer's rep business to my salesman and I went into the Signal Corp and was overseas for about 42 months, something like that, three and a half years. Then I came back and now had to start all over again.
But I had all these contacts. I mean it sounds like a very difficult thing, it wasn't. I'd known these people, the war had made a lot of the radio parts distributors wealthy, and salesmen all over the place knew me. So when I wanted to restart my business, in a matter of 90 days, I did because of the contacts I had and also their desire to help me because I was now coming back after the war, and I had helped them and so on and so forth. And I started a rep business all over again, but not at the bottom. I was once again starting to make headway financially. I'll skip ahead now and see when television was busting out around '48, I guess. Quite naturally, I just expanded my operation, not just radio, auto radio, and our home radios and ham radios, which I was also selling, but I got into TV, and antennas among other things. By this time I now had about five or six salesmen on the road, in territories, and financially doing quite well. In the early 50s, see the exact date I got on here, in the summer of 1950. I will give you this, that'll give you the flavor of the whole thing.
PHILLIPS: All right, I have a copy of this.
(See Chapter 12 for Gov. Shapp's perspective of CATV development)
SHAPP: I started Jerrold Electronics Corporation, I took my middle name. My attorney asked me what I wanted to call the company. He said let's call it Jerrold Electronics. So he spelled it G‑E‑R‑A‑L‑D. And I said it's Jerrold and so on and went on to explain it was my middle name and we might as well use that because I've always been in the middle anyway.
PHILLIPS: Now you started the company in 1950?
SHAPP: No. I started the company in 48.
PHILLIPS: All right. 1950 was when you started spreading out?
(See Chapter 21, "Jerrold Goes Public", for later developments)
SHAPP: And I also at this time introduced two other people who were quite important to me, one was Don Kirk and the other was a man named Ken Simons. They joined me on a consulting basis because I was now starting to design boosters and setting up the manufacture. Boosters in the early days of television, you know, any fringe area within 12‑15 miles you had difficulty with the antennas. Well, these boosters were for individual TV sets. And they had set variable tuners on them, they were not fixed. I mean you could go from channel 2 to channel 13 on the boosters.
SHAPP: So that 3, 6, l0 in Philadelphia you'd buy the standard booster and for channel 3 you would just turn it to channel 3 and it had a fine tuner on it the same as 6 the same with 10. We didn't bother with the educational stations in those days, because nobody was listening to them any ways.
SHAPP: So we started selling these boosters, I use the word by the zillions, but it wasn't quite that good. We still did all right. We became the leading manufacturer for these individual home boosters. You put the booster on top of the television set. You are familiar with that.
PHILLIPS: I think, yes.
SHAPP: Then I heard of some guys up‑state who had a crazy notion to build a community antenna system.
PHILLIPS: Before we get into that let me go back, in your book you talk about MUL‑TV equipment
SHAPP: Yes, MUL‑TV
PHILLIPS: What is that?
SHAPP: That was a forerunner.
PHILLIPS: This is the step up from individual sets and these would be feeding apartment houses or something like that?
SHAPP: No, a MUL‑TV was a preamplifier that you would connect between the antenna and the set.
PHILLIPS: Oh, is this the same thing you've been calling a booster?
(Editors note: MUL‑TV was the amplifier system used in store and apartment house distribution systems.)
SHAPP: Yes, yes. Basically the same thing.
PHILLIPS: All right.
SHAPP: By this time we had several improved versions of the original thing.
Now there always has been this discussion of who had the first cable television system, and there was Johnny Walson and Bob Tarlton. I have always said here there was enough glory for both of them. They were both early pioneers, they had successful systems and this is true, they were the first two and I can tell you that because I supplied the equipment to both of them.
PHILLIPS: You're convinced that Pennsylvania was first over Oregon.
SHAPP: Oh sure. That's Parson's deal you're talking about.
SHAPP: All he had was an open wire and he could run it two, three, four miles. Then this ran into all kinds of problems with open wire circuitry, I mean open wire leads. And he also had a very difficult time in the community. Of course, you had this line on the antenna site into the community. And then he was using open wire in the community. Well that's all right you can deliver a signal, but it's not commercial.
PHILLIPS: Okay, when you say open wire, can you describe it.
SHAPP: Yes, two wires running parallel, twinlead, only his was a forerunner of it and it was spaced a little wider apart, and every time it rained they had problems with it and so on.
The first commercial systems were those that used coaxial cable. And that's where RCA was involved, they had coaxial cable, the rest of the system was junk in those days. That was the luckiest thing I had. We had RCA in the business to give credence to the business itself. Philco in the business to give credence to the industry itself. But Jerrold was really the only one who had any equipment to work! (Laughter)
PHILLIPS: Did coaxial cable come about as a result of cable television or what other use might it have been put to earlier?
SHAPP: Oh, the Navy was using coaxial cable, and let's see it was R.G. 11U that was being used. And there was a company in New York, I can't think of the name right now (could it be Times Wire and Cable) but before we are through with this session it will pop into my mind, they manufactured coaxial cable; it was larger than what we eventually got to use. There were no fittings, see that was one of the other problems, with this cable. Nobody was making any fittings and so we designed a line of fittings to go with the cable and we were the first one out with fittings.
Well, that was a six months advantage in the market. RCA had some fittings, but they were very poorly designed. Philco made some fittings of their own, but we were the first one to bring out a line of fittings that were matched, where you had proper impendence matching on it. We didn't have leakage from our fittings. This was now in the post World War II days and there had been a lot of coaxial cable manufactured towards the end of the war, but the standards were military. It was stuff that came on to the market at the end of the war in surplus sales deals and so on. Most of the cable in the early days were odd sizes. And there were no fittings. Several manufactures tried to make fittings to go with this military equipment. That period from say I can't get the range but in that early 50s period was one of entrepreneurship, trying to match the cables. You had the ban on a lot of equipment of this sort because of the war. So it was a crazy period and to a certain extent I guess I could say we lucked out. I had good engineers.
PHILLIPS: You are talking about these problems of these fittings in early 1950. What are some of the other technical problems that the industry was facing during that period of growth?
SHAPP: Well, the amplifiers themselves. The first product that Jerrold made was an individual home booster. There were two types, one was a fixed tuned thing if there is only one or two channels in the area at that time you would put this right up on the bottom of the antennas at the antenna line and feed into that down into the set. But the cable we had varied all over the place, I mean we had no standards because it was all surplus. And so you'd install a system and if you got good quality out of it it was a matter of luck as much as anything else. Also the input impedances on the sets in those early days wobbled all over the place, particularly if they were using open lead feeding down their antenna. Comes the rain and then the impedance can be anything and they'd wrap it around the pole and then we had installation problems. So with our cable systems where we went to coax, we eliminated that problem. We designed some special 300-ohm to 70.
PHILLIPS: Seventy‑five is what you are using now.
SHAPP: Yes, matching transformers, and got out of that problem. It was fun. The engineers really enjoyed themselves because everyday there were new problems for them to work on.
PHILLIPS: And their solutions could very well be the first solution for these problems.
SHAPP: Generally speaking when it came to cable that was true. At Jerrold we had, I'd say, we had by far the best engineering staff. That's one thing I've said many, many times. A small company in a fast moving industry can run rings around the big companies because, while their engineers and their sales department are sitting around talking about what the problems are, we are out in the field solving them. We had sometimes only three or four weeks or at times three or four months where we could design the stuff and bring it out. Also, as head of the company I had direct contacts with what our sales and engineering departments and manufacturing departments were doing, we were able to move ahead. Now, RCA and Philco had good engineers, they had good production people, they had good sales people, but they didn't have them melded together in a flow where one person on high says now ok here's A, B, C, D, and E and this is what we'll do, go ahead. So while they are sitting around at the board tables or at the engineering room meeting discussing the things, we were out in the field doing it. That was probably the most key advantage that we had a Jerrold.
PHILLIPS: Another one of the problems in the early days, and it continues to be a problem in some areas, is the access to utility poles in order to string the cables. Talk a little about that.
SHAPP: Yes. We didn't have too much trouble. In the beginning, of course, nobody expected we'd get on the poles. But AT&T made a horrible mistake. They thought, as did almost everybody else in the industry at that time and I had some doubts myself that maybe they were right, that just as soon as the ban on new stations was lifted there'd be so many new channels coming on the air that there would be no need for cable TV. You are going to have channels all over the place and it would be television broadcasting in all these communities that didn't have it. So cable TV was just one of these temporary things. In fact, the story, as I got it second hand on the use of poles, was that after a year or two cable TV will not be necessary. These new stations will be on the air and people will be receiving them and they're not going to pay $100, $75, $38, depending on the systems operation charges for a connection and then another $3.50 to $7 a month again to see what they can receive off the air. And this is what I have written in here, so you can have a footnote.
In fact, I helped sell the idea to AT&T. Cable TV, you feel, is not going to last, but for the next year or two in all these communities where they could put these systems in, we need your poles. We'll have an agreement and we'll post a bond that when the cable system is no longer required in the community at our cost we will take this cable and amplifiers off your poles. They're protected. We put the bond up and everything else. That I think was probably the most logical answer to this question. Now, there were other technical things that you had involved in it, but basically it was a fact that there was a general feeling that just as soon as the FCC lifted the quarantine or whatever you want to call it, remember they had made a mistake in the original allocations for it, and just as soon as they corrected that you wouldn't cable television and they got the bond and they got the money. They got everything. We'd have to pay to take it off, let us get on the poles, why not?
PHILLIPS: One of the very early cable systems that was built and designed commercially was the one in Williamsport that I think you had a hand in. Tell us a little about how that got started and how it developed.
SHAPP: Well, that's a very important system for financial reasons. Are you familiar with the financial background?
PHILLIPS: I'm not.
SHAPP: Ok. The Williamsport system opened up the money market for cable operators. I had gone to New York. It was about '52, '53, ‑‑I think we put that system in about '53. I had gone to New York and met with a number of the banking houses up there to try to get some financing for these systems. And I told them what we'd do and I gave them some brochures and I gave the run down of connection rates being achieved in the various systems and so on. My purpose was not merely just to install a system for Joe Blow or XYZ corporation, but I wanted the money to put in the system for Jerrold. So we not only manufactured the equipment and installed it, but we owned the system or at least a percentage of it and operated the system and have a continued interest in it. So finally I got J. H. Whitney Company in New York. Are you familiar with Jock Whitney?
SHAPP: And I sold him on the idea of financing cable television systems. So our job at Jerrold was to get the franchise. First we sat down with the Whitney people and went over 40, 50 communities. They boiled it down. They would only go about 7, 8, 9, 10 systems. They boiled it down to the ones and getting franchises in those days was a heck of a lot easier than it is now. We had a perfect batting record of the first 8 or 10 systems. They put up the money for it and we formed an individual company in each community. Whitney, I think it was 50%, and Fox‑Wells had about 10‑12%, and I came out of that, Jerrold, we had somewhere around 40‑35% of the system. So we not only got paid for all our efforts, paid for all of the equipment, but now also had a financial interest in the systems.
PHILLIPS: Was Williamsport the first one of those?
SHAPP: Williamsport was the first one that we wired. We got a bunch of franchises in maybe a period of four to six months, and Fox‑Wells joined with Whitney, they are another financial group. Now for the first time we had money to use. It wasn't our money, but it was a beautiful deal. Whitney would pay all cost for putting in the system. We got, I had the record here so the figure I'm giving you we can check, I think it was around 1/3 or 30‑35%. They paid all costs to Jerrold for the labor and all costs for equipment and engineering and we got back about 25‑30 maybe 33%, it's in my records I can give you the exact figure. So here I was getting cash from Whitney and Fox‑Wells with the 32‑30% ownership in the system, charging them our regular rates for engineering and for construction and the whole works. For several years, I guess we put in about 8 or 10 systems with Whitney under these conditions. It was a beautiful deal for Jerrold. That was the financial base that enabled Jerrold to go forward.
PHILLIPS: Was there a gentleman name Schneider involved in all of this?
(Editors note: The question was to introduce Ray V. Schneider who was the first manager of the Williamsport Jerrold system. See interview with Schneider in The Barco Library.)
SHAPP: Oh, yes. Gene Schneider, I think it was. Schneider was retained by Whitney to be their representative in these deals.
PHILLIPS: Was he a financial person to start with?
SHAPP: No, no, he was a technical guy and may have gotten into financial stuff.
PHILLIPS: I just wondered because of the connection with Whitney.
SHAPP: Schneider was really a high tech guy. He carried Jerrold's tales of woe over to Whitney and carried Whitney's tales of woe.
PHILLIPS: Now, he moved on into the cable industry, didn't he?
SHAPP: Oh, yes. A very capable guy. I haven't heard from him or about him for years.
PHILLIPS: He's another one who is being interviewed for the museum that's how I happened to know his name.
When you are involved in supplying and in selling the cable business, is that what lead to the anti‑trust suit that faced Jerrold later on?
SHAPP: Well, no, stupidity is what led to that. TV Digest one day listed all the cable television systems that were then going under constructions and operating in the United States. And they listed the supplier of the equipment, they also listed the engineering.
PHILLIPS: This would have been about what year?
SHAPP: Mid 50s, maybe '54,'55, '56, somewhere in there. It's in my records. There was an article that listed all of the cable television listings, I think it was '53, that were in operation.
End of Tape 1, Side A
PHILLIPS: We were talking about the TV Digest article that listed all of the cable systems and the suppliers and so forth that lead to your anti‑trust suit. (Note: See also Chapter 22.)
SHAPP: Well, TV Digest printed a report listing the cable operators, cable systems then in operation, I believe in '53 and the suppliers of equipment. I look at this report and go down the list of cable system in the country: Jerrold, Jerrold, Jerrold, Jerrold, Jerrold, RCA, Jerrold, Jerrold, Jerrold, Jerrold, Entron, Jerrold, Jerrold, Jerrold, Jerrold... And 76% of the cable system in this article are Jerrold. Well, I wasn't in sales for as many years as I had been to come to the conclusion that this wasn't natural to bang loose. I ran full page ads in maybe half dozen or more of the trade press: "Jerrold sells and installs more than three times as many cable systems than all of its major competitors combined", asterisk, see TV Digest such and such. If I've got 76% of the systems, the rest of the industry has 24, so I've got more than three times as many. A few days after this issue, it hits the press, I mean it comes out, I got a call from my attorney. He says, "Milt, I just saw your ad in TV Digest. Are you crazy?" I said, "Well, I've got all the facts."
He says, "That's not what I'm talking about. Do you want to be sued for anti‑trust?" I said, "What?" He says, "Yea, you are telling everybody in the world that you dominate an industry." I said, "Alex, who are our major competitors RCA, Philco, and Paramount Pictures." Those were the three at that time and a couple others. And I said, "They are all enormous companies. We're in business for a few years time, we started with $500 bucks and where in the hell are we? How can we be sued for anti‑trust?" He says, "Very simple. You have told everybody in the world that you are in violation of the Federal law of anti‑trust." Well, that wasn't bad enough. But we lost the case. The Federal government actually took us into court and we lost the case. I don't remember what the penalty was. It wasn't much of a penalty except that having an anti‑trust decision against us limited the activities that we could get into because per‑se we were now known as an anti‑trust violator. So it had serious implications for the company. It took me quite a while to grasp what the heck we had done on this thing. I thought, very frankly, it was a badge of honor. If we could go into this starting with $500 and now about four or five years later, we're challenging RCA, Philco and all these other companies and be sued for anti‑trust, I couldn't believe it. But we lost the case.
PHILLIPS: How do you control yourself, how do you make sure you don't have a dominant market share? That must be any interesting experience.
SHAPP: Let me put it this way; I don't think anybody under normal circumstances would have gotten into the trouble I did. But there's another side of it that I've written already for my autobiography. (Note ‑ Chapter 22) Since 1949 all the way through to the end of my two terms of office as Governor of Pennsylvania, I was under constant investigation by the FBI and it went back to some very early periods. ??? It had nothing to do with cable television or anything of that sort, but I tangled with the FBI. And once you tangle with the FBI, you've got a lot of years of problems because they have all the money and all the personnel in the world to investigate any company. And here we were a small company. They decided to blackball us and so even with that advertising if it had not been for the previous, by the way it had nothing to do with cable television or anything, but we were investigated. So finally I had to settle them and I was very much concerned because I didn't know whether I was going to go after broadcast licenses or not in the future. But if you have an anti‑trust record and files
PHILLIPS: That stops it?
SHAPP: It makes it exceedingly difficult.
PHILLIPS: A character reference type of thing?
SHAPP: Yes, just a more or less one of the leading indicators, you might say, that this is not a desirable company to be in the broadcasting business. Looking back on it now, it turned out to be a positive event. After this happened, everybody in the electronics business throughout the nation knew who Jerrold was. The individual investors really didn't give a damn. Joe Blow wanted to put a system in Podunk, they drew up a projection of the cost and the projection of the rate of return and everything like that and so on and if it looked favorable. Joe Blow didn't care about that anti‑trust thing. What he was interested in was I invested 1/4 of a million dollars, I got my money back in 2 1/2 years and I own a cable system that's going to be making money for me. It did not affect our sales. Fact of the matter, it gave us [Jerrold] prestige in many locations if we were big enough to be sought after by the Feds.
PHILLIPS: Did you have to divest anything? Break up anything at all?
PHILLIPS: That leads to national affairs and I think of the early days of the National Cable Television Association (NCTA) and the Pennsylvania Association. I know you had some involvement in the NCTA in the early years. Can you talk a bit about how that developed and the competition with some of the equipment people as well as the buyers who were involved then?
SHAPP: Well, let me talk a bit about the service agreement, which was always a constant troublemaker, latent or active.
PHILLIPS: I don't think we talked about that. I think that's in the chapter and you might just mention a thing or two about it.
(Note: See Chapters 12 and 22)
SHAPP: Early in the cable business we were starting to sell systems, I realized that we had to have some engineering control over Jerrold systems. Cable was a new industry. There was no test equipment. We built the first piece of test equipment for it. There were no trained technical people to go up the poles and adjust the amplifiers, things of this sort. So I recognized very early that if we are going to be successful, now competing against RCA, Philco, and Paramount Pictures with this little tiny red blob over here, and if we are going to be successful, we have to have field backup. But how do you pay for it?
So I set the plan whereby we would not sell equipment per se. We would engineer a complete system and either sell all of the equipment with a supervised installation or we would take the complete package and install it for the customer. We also realized that this was a new industry and that we could see with the short time we'd been involved how fast it was moving that there would be numerous changes made. Well, we started with three channels, then went to five, then went to seven, and then we went to thirteen. I remember when we went to seven channels. There was no doubt in our mind that was all we were ever going to need. I mean who wants more than seven? You got the three or four networks and you got some independent stations in the area. Joe Blow, Philus Green, it didn't make any difference. They were going to be saturated with television particularly if they can only get one station now or nothing now. So when we started bringing these systems in with a lot more channels, we had to have a lot closer supervision of the systems. Also we knew the rate of obsolescence was going to be tremendous because you start with three, now you go five, now you go seven, and now you go thirteen. So we had to have some working arrangement and some financial arrangement with these system operators so that the systems using Jerrold equipment worked. Entron would sell you equipment and you might be able to get a five-channel system going but that was all you could do. RCA was selling seven channel systems. They had a deal with Marty Malarkey. We had to have some kind of an arrangement whereby we controlled all technical aspects of the installation from the very beginning when the maps where drawn till the system was installed and checked out.
We had a school for training the technical personnel for the cable system operators. This was the major contribution that Jerrold made, but we had started the company with $500 only a few years before and the part I'm talking to you now about was a lot of money.
PHILLIPS: Did the service agreement extend beyond the completion of the installation of the system?
SHAPP: Oh, yes, that went for five years, but there was another thing in it. They started with three channels, we guaranteed if they ever get to five, which we thought would be all that anybody would, three was all you needed anyways, ABC, CBS, NBC, everybody knew that only three channels was necessary. Then we went to five. Then we went to thirteen. That's all you are going to need. It dropped to twelve because of some harmonic problems between one of the lower frequencies and the upper frequencies. I forget all of the technical details of that but there were thirteen. Why, that's more than anybody is ever going to need.
So we had this service agreement. We would engineer the system, lay it out, and then supervise installation or we'd contract for the entire installation. We let that up to the system operator and generally speaking it was better for us and for them to take the complete package. You are familiar with that service agreement I think I mentioned it before where we got $5 a connection and $.25 a month per subscriber.
PHILLIPS: What did you provide for that?
SHAPP: We provided against obsolescence. If their systems were in trouble, our field engineers were on their way. And the most important thing was, as new equipment was developed, we would replace the original equipment you had installed at no extra cost. The $5 per connection and the $.25 a month per subscriber would cover the cost of this.
PHILLIPS: Is it fair to say that this gave you kind of a cash cushion also, so that your field engineers could keep up‑to‑date with the new equipment?
SHAPP: Oh, yes. See Jerrold's field engineering strength was one of the major plus's we had. We trained our people. We ran the schools. See, that was another thing about it, we had schools going continuously. I think it was every three months we had a week of school and any of our customers could send their people at no charge to the school. Of course, they were paying the service agreement. So, all these things that we worked out, later proved to be used against us in the anti‑trust. They were things that were necessary for this industry to survive.
PHILLIPS: I know you had mentioned the TV Digest article and your ad and you dominated the industry, but that's not enough is it for anti‑trust, you need something like this service agreement that locks your customers in? Were there other factors that led to the Feds coming in?
SHAPP: Yes, if you took all of these things and put them together, it wasn't like starting a new company and it wasn't like you want to put in an audio system in a factory and you want 250 horns or other speakers, that's routine stuff. But we were out there on the exploration fringe on this stuff. It started at ground zero. There was no test equipment, period. When we started in the cable television industry, we had to develop the test equipment as we went along. Thank God we had Ken Simons and Don Kirk and Hank Arbiter. Our test equipment was Ken Simons' almost all the way through. Don was the one who developed our amplifiers and most of the other stuff.
PHILLIPS: Was the fact that you owned some systems yourself another element in the antitrust suit?
SHAPP: Yes, but that came later as far as the government was concerned because we weren't forcing anybody. You see, we had more customers than we could shake the proverbial stick at, because we were making the only system that worked. The only reason it worked was because we had all these other arrangements on the service agreement, supervision of the installation, modernization of the equipment, it's the only reason Jerrold got such a lead on everybody else. It had nothing really to do with any provision of the anti‑trust except I pulled a blunder one time and made a public statement about it. (Short break)
PHILLIPS: We were talking about the anti‑trust case and you had thought of some other details about it and maybe we can pick that up at this time. What did it come down to when the judge made his decision?
SHAPP: Politics. In 1960, I got deeply involved in the Kennedy campaign. In fact, I resigned my position temporarily as president of Jerrold and spent most of my time during that campaign working for Kennedy. In that same period, the anti‑trust case was heard before Judge Van Deusen. This was in late October, 1960. And the judge said, now this is an exact quote, "It is content to say that while Jerrold has satisfied this court that the service agreement policy was reasonable in its inception, it has failed to satisfy us that it remains reasonable throughout the period of its use." This was just a crutch for the judge to get off the hook on this whole thing because the entire period in which we used this agreement was only '51‑'53, mid '51‑'53, so you are talking 2 1/2 years we had this. And he says that it was reasonable in its inception, but he wasn't satisfied that it remained reasonable throughout its use. Well, there was only a 2 1/2 year period of this thing. It's pretty hard, even if you got some rather thin straws, to work up anything. But anyhow, it drew a lot of confusion among the anti‑trust attorneys. Just as an aside, I would get calls, maybe 15‑20 calls in the next few years, from attorneys involved in an anti‑trust action. One had heard about the Jerrold case. He called me to say he's just been reading up on this case. "We're representing another client at an anti‑trust case and we are confused by the judges decision on this thing."
PHILLIPS: You did appeal that to the Supreme Court, I believe?
SHAPP: Yes, but they took no action, which was the same as them approving, letting the lower decision stand. But even so, though that is the final decision, if you go around to attorneys who specialize in anti‑trust, they will still tell you they don't understand the judge's ruling on it.
PHILLIPS: And this was the only element that he could use up holding the case against you?
PHILLIPS: Interesting. Well, let's move on from that to your involvement in state and nation cable affairs. I'm thinking now of the National Cable Television Association. I don't remember when that actually got established, (Editor's Note: 1967) but you were active in it for a while, were you not?
SHAPP: I was active for defensive reasons. There were two major groups in the cable industry. One was Jerrold, and you already have all the information about our policies and sales, and the other, I might say, let me quote "The Marty Malarkey group."
PHILLIPS: Maybe you ought to explain, define that a little more if you could.
SHAPP: Yes. Well, Marty Malarkey was a TV dealer in Pottsville, Pennsylvania. A few months after we started cable systems around, he made a deal with RCA to become the RCA installer and dealer, whatever you want to call it, of RCA cable systems. So we became direct competitors. At the time the RCA equipment, oh I would say, was five times as large and probably seven or eight times as heavy as the Jerrold equipment that went on the poles. This was one of the disadvantages. Their cost was a little higher.
We refused to sell any equipment per se. You came into Jerrold and you want to put in a system and you've got the franchise for Podunk or any other, our terms are we'll sell you the equipment, here are the prices and our service agreement and we will engineer the system and that's part of the engineering package and so on and so forth and if you don't sign that agreement with us, we are sorry we are just not going to be able to do business.
There was a real justification for this for the simple reason that it was a new industry, there were a lot a fly‑by‑nights getting into the industry because it looked like one of these things where you can invest $100 at 8:00 in the morning and at 7:30 at night you could have $300‑400 that you've siphoned off from somebody. There were a lot of, I wouldn't say shady characters, but a lot of fast operators. I was in it for the long haul, and I was very selective in the customers we were going to sell and they were selective when they chose us.
Into this whole period came the service agreement, which became a bone of contention of the industry. Our position was very simple. It's new. The equipment we're making now will be obsolete a year from now, maybe two years from now at the latest. We don't know all the problems we're going to face. We are going to have to learn a lot of things out in the field by getting our fingers burnt along with our customer's. So we had this service agreement that gave us so much a subscriber and so much a month from the operator.
PHILLIPS: Marty Malarkey was selling equipment then as opposed to doing the installation and that sort of thing?
SHAPP: Well, we were selling equipment, but he was also selling a system and RCA would put the system in. So he went beyond just selling RCA amplifiers, because he didn't have any major technical expertise in this. I might say RCA didn't either. That was one of the things that helped us a lot. They had the equipment that was much larger and heavier than the Jerrold equipment going up on a pole. And AT&T did not like this.
PHILLIPS: Now, Malarkey apparently got involved with the National Cable Television Association in some way? You said you got involved defensively.
SHAPP: Yes. Well, it got interesting. He became the sales representative for RCA nationally and so now this association that he formed...
PHILLIPS: Oh, he was one of the founders?
SHAPP: Oh, yes. He was one of the founders of the NCTA. I don't know if that was the same initials at that time, they may have changed the thing, but he was one of the founders of the national organization. His purpose in setting it up was to put more money into his pocketbook. I have no objection to that, if it was for a legitimate reason. But when he tries to use us as a doormat to kick around in order to achieve his goal, well, let's just say I was reluctant to accept his terms. What happened is that Marty started, became the national sales representative for RCA in cable television and put the first system in up in Pottsville. RCA installed it for him and this became the major, in fact it was for a while the only RCA system that was operating. There was one up in New England that he put in, it was over in Vermont. He had an RCA system he put up in there and a few others.
As for competition, Entron was at the other end of the scale. They were selling systems based on price. Their amplifiers were not the quality that either RCA or Jerrold was manufacturing.
PHILLIPS: How did Malarkey use the Association to make money?
SHAPP: Well, he used it first by setting up an anti‑Jerrold faction in the industry. He would go around even to our customers who had signed the contract and start telling them how nuts they were to continue to pay us the $5 a subscriber and $.25 a month. He agitated throughout the industry against this service agreement. From his standpoint, I can understand why. The service agreement we had was the main attraction. Joe Blow, and Pete Smith, and Emily Brown were getting into an industry they knew nothing about, except that it looked like it was a moneymaker, but they had no technical experience. They might have a television serviceman in their organization, but they knew nothing about the business. Marty was smart. He got RCA, which was a good name in the industry, behind him. The only problem that RCA had was that their equipment was obsolete before it was made in comparison to Jerrold.
PHILLIPS: Now you got involved in the Association eventually?
PHILLIPS: George Barco was one of your allies, as I understand it.
SHAPP: Yes. I got involved in the thing primarily to defend Jerrold because it became very clear that the NCTA was set up to be an anti‑Jerrold organization. Since Marty was RCA's representative in these things, it became RCA versus Jerrold. I mean in the early days of the NCTA, it was just RCA versus Jerrold.
PHILLIPS: The members were actually cable operators?
SHAPP: Either cable operators or people who were becoming cable operators.
PHILLIPS: And the equipment manufacturers and distributors were they involved also generally?
SHAPP: Well, you have Entron. Entron was formed by some former engineers from Jerrold who broke off and started their own company. They were very capable guys. As I said to people who bought an Entron system after we had lost the sale, I said at least you are dealing with people who have been trained right.
PHILLIPS: What was your role in the National Association (NCTA)?
SHAPP: I sat in.
PHILLIPS: Did you serve on the Board of Directors or as an officer or anything?
SHAPP: No, they didn't want me there and if they'd asked me, I'd have turned it down because the whole purpose in the initial days of the cable industry, the whole purpose was an anti‑Jerrold move. Some of the Jerrold operators were miffed because they were paying us the $5 plus the $.25. Every day they got a phone call or a letter, or a visit from somebody on how nuts they were to do this. Why should they pay all that when they can buy Entron equipment or what have you. In those early days politically, it was Jerrold against most of the operators of other systems. When people bought a Jerrold system, they were satisfied and once they realized how much easier it was to install and service a Jerrold system compared to RCA or Entron or any of these others, they became friends of ours.
PHILLPS A little while ago when we had the tape shut off, you talked about your alter‑ego at Jerrold and maybe we ought to spend a few minutes talking about Zal Garfield. (Editor's Note: See also Chapter 24)
SHAPP: Sure. You used the word alter‑ego and that's exactly what Zal was, from the very beginning when he joined. We were a small company. We were just getting into cable TV. Our major business at that time had been selling boosters and we were starting into the apartment house business wiring up for master antenna systems. Jerrold, like "June", was busting out all over. We had designed the proverbial better mousetrap. A lot of rats were coming to visit us that's the best way to describe what things were like. We were a small company. We started with $500 cash and we were now growing very rapidly into an important niche in the television industry. The policies that I set, on the basis that we just couldn't sell equipment even if they paid us cash for it, didn't mean that the system was going to work. We had to train people. Somebody had to pay the cost of that and they didn't want to pay for that cost, things of this sort.
PHILLIPS: So, now Garfield's role in this?
SHAPP: Zal Garfield came into the Jerrold picture rather early. He became my alter‑ego, you put it that way. Everybody at Jerrold knew that when Zal spoke he spoke for me. There were a few times when people at Jerrold tried to get around something that Zal had wanted, you know these internal politics and so on, but very seldom or never a worker should say if either Zal or I knew about it. He, Zal, to a great extent was responsible for bringing order into this fast growing company. We would double in size in 90 or 100 days. We would be bringing people in who were trained engineers, but knew nothing about cable or nothing about pole line contracts and things of this sort. Trying to get people into the organization was a problem. Zal was the one who organized internally.
PHILLIPS: You spent most of your time on the technical side?
SHAPP: No, we had a guy named Don Kirk, I think I mentioned his name to you before.
PHILLIPS: Yes, you did.
SHAPP: Don was our top engineer. Then there was Caywood Cooley. Cay was our field engineer. He had been head of television service for Philco. He wandered over to Jerrold one day. We were in Philadelphia, they were in Philadelphia. He heard about what we were doing out there with cable systems and he wanted to take a look at it. Well, he came and took a look and became our chief field engineer.
PHILLIPS: Well, now how did you and Mr. Garfield divide duties generally then?
SHAPP: We worked as a team. Everybody at Jerrold knew that Zal spoke for me and he was the only one at Jerrold who could speak for me other than myself, of course. But Zal was a detailist and he put order into the operation. He went into the purchasing department and got them squared away. You have to take a look at the scene, we are a new company. We started with $500. We are going into an industry against RCA, Philco and Paramount Pictures. We've never had any real experience either manufacturing or installing the systems or in training personnel. And yet, I realized we couldn't just do what RCA was doing or Entron was doing, or the other companies. We could sell equipment, but I could just see all of our equipment coming back. I mean install it wrong or you have a short somewhere or zip. The one thing I spent most of my time on without earning a nickel was how we could develop a program out in the field, working with all these untrained people whose main interest is really to make a buck. My interest was to make a buck, too, but I didn't want to make a buck on a basis where a Jerrold system didn't perform the way it should perform. And that I think was the basic difference between Jerrold and RCA. Of course, RCA is a field organization anyway. We would sit down and analyze our problems and come up with solutions. Then we'd come up with financial solution that enabled us to deal with the technical solution.
PHILLIPS: Governor, I think we are going to take a little break here. Let me change the tape.
End of Tape 1, Side B
SHAPP: We moved into a vacuum where we were designing the equipment but we couldn't make the equipment because we didn't have certain things. Then we couldn't test the equipment. We had to develop our own test equipment and one thing after another was....
PHILLIPS: You manufactured the test equipment yourself?
SHAPP: Oh, yes.
PHILLIPS: Did you then manufacture it and sell it to the industry?
SHAPP: Oh, sure. This was one of the things that was a backbone because the other test equipment on the market was for the birds. We wanted to have a minimum of 4 1/2 megacycles for the bandwidth and there were no sweeps on the market to do this. We had to develop that. We had to modify a bunch of oscilloscopes to change the amplifiers... We'd buy a bunch of Hewlett‑Packard equipment and we'd take the guts out and rebuild it on the inside because Hewlett‑Packard wasn't designed for this purpose. It was the best equipment on the market, but it wasn't for us. Without that you had nothing. So we filled the vacuum everywhere in the early days of cable TV.
PHILLIPS: Governor, I'd like to jump a head a little now up to the time when you where Governor and the potential kinds of conflicts that you faced at that time. I don't think you got into any real conflicts of interest, but there was the potential there, because of your background and also because those were active days for cable legislation. Just talk about that area and the problems, the potential conflict of interest.
SHAPP: Well, as soon as I became Governor I was getting out. In fact in one of my early press conferences, I announced that Muriel (his wife) and I had sold all of our interest in Jerrold to avoid any conflicts in interest. So right from the very beginning after I was elected Governor, I sold out my interest in Jerrold. I recognized that politically it would be a noose around my neck. If it was an ordinary business where I was making amplifiers, audio amplifiers, or some other product like that it wouldn't make any difference. But 90% of Jerrold's stuff was involved with politics. We had to go after franchises around the country. We were constantly fighting the broadcasters because the broadcasters' WXYZ was the only station in the area and that station had the exclusive around Podunk and Podunk Heights. We came in and want to bring seven channels all of a sudden into Podunk Junction. That's politics. So right after I was elected, it was necessary for me to divest myself.
PHILLIPS: But even so, during your term of office there was a lot of debate at least in the legislature about cable laws and legislation and that sort of thing. Did you get caught in a box in any way? Did you feel like that?
SHAPP: Oh, I was the target. That was a political maneuver by the Republicans, particularly the Republican Senators in Harrisburg. They were very happy to find any information that could make somebody dissatisfied with what I was doing. They had hearings up there on cable and they were even threatening to have hearings on some of the things that happened in cable television, oh, four or five years before that may have involved me. When you are in politics, particularly at the level I was operating in, you are exposed to anything. Particularly having been so active in cable TV in Pennsylvania, I was just an open target for them. They spent many months shooting their arrows. I don't know of any that really landed. (Laughter)
PHILLIPS: Now this period was 1970 to 1978?
SHAPP: Yes, well, '71 to '79.
PHILLIPS: Was there anything else during your term as Governor that would be of interest to the cable television industry that you can think of?
SHAPP: Oh, yes, there was a real positive thing. Because the cable industry was going through one fight after another as you know with the Congress, with the courts, and so on, and me being a governor, but now not involved actively in cable television, I became a powerful force. I made myself available to cable operators where I thought that they were just playing the usual games that I had faced in previous years. I went out to testify in behalf of the cable operators in different parts of the country. Testifying as a Governor and as one of the founders of cable television enable me to put some wallop into this thing. I felt good about it because a lot of these operators had been customers of mine before I got into politics and they were now just tangled up. See, the FCC messed up the whole cable television thing. I mean, they didn't understand it and they were representing the viewpoint of the broadcasters at all times.
PHILLIPS: You are speaking in terms of the regulations that were to take effect in '72, which finally got tossed out by the courts?
SHAPP: In the courts, yes. Well, they were obviously unconstitutional. (Laughs) I wrote a letter to Strat Smith when I was in office. I'll have to see if I can dig it up in which I said that I wonder if they'll throw as many arrows, shoot as many arrows at me, now that I'm Governor as they did when I was in the cable television business or vice versa will they shoot as many at me because I was in the cable television business.
PHILLIPS: Just for the record you might identify Strat.
SHAPP: Well, Strat Smith was one of the early attorneys in Washington who handled or represented cable operators or would‑be cable operators and so on.
PHILLIPS: He was an FCC attorney?
SHAPP: He had been an FCC attorney. And he was one of the most knowledgeable guys in Washington. Fortunately, he was retained by us at Jerrold and then he was retained by a lot of other cable operators.
PHILLIPS: As the systems got bigger and about the time those FCC regulations stimulated it, the public access, educational access provisions, that sort of thing, a lot of cable operators or people who are trying to get franchises have made a lot of extravagant promises about service that they would supply and that sort of thing. Do you recall when that got started and how that got rolling?
(Editor's Note: See Chapter 25 for early Congressional activity involving Lyndon Johnson and others.)
SHAPP: From the beginning. Let's take the days when we had three channel systems. That's all you need. ABC, CBS, NBC. And they said if there was ever a need for more why we can give you five, we can give you up to twelve maybe beyond that. They'd say, oh, I didn't promise, and I said you probably did. My attorneys in those early days were very much concerned about some of the promises I made to the community.
PHILLIPS: Ok, I thought that maybe that was something new. But it did get more intense as you got into more channels.
SHAPP: Oh, sure.
PHILLIPS: And as the FCC talked about these public access things, that led people to other extremes, I think.
SHAPP: Well, at that time we could see five channels. Technically, it was no problem with five channels. It was very easy. Then we could see in another year, we could see twelve channels very easily. The trick was to be able to put channels side‑by‑side in a wide band amplifier. That was the trick. And again Ken Simons and Don Kirk worked that out. There were other broadband amplifiers, but those broadband amplifiers that came out ahead of Jerrold had feeding from one channel to another. Don Kirk and Ken Simons had worked on the bandwidth and band edges and so on, so that we could put the channels in there and then control the peaks so that it wouldn't cause any modulation interference.
PHILLIPS: Governor, I think you mentioned to me that later on Jerrold got into pay TV, which in a sense is a kind of competitor to cable, I suppose. How did you get into that and was that a wise direction to go?
(Editor's Note: See also Chapter 24.)
Yes, it was the right direction to go, but we never got very far in it. I can't recall what happened at this time on that. We developed an amplifier. It was Don Kirk and Ken Simons again. We called our "PBPB" system, Program By Program Billing. We developed this and we worked out in, oh, what was the name of that theater owner, out in the mid west. We put the first movies on pay television. Henry Griffin. Does the name mean anything to you?
PHILLIPS: No, I'm sorry. Henry Griffin?
SHAPP: Put it down because Henry Griffin operated out of Oklahoma. He had a chain of theatres in Oklahoma and he put a cable system in one of those communities out there. Bartlesville, OK. Then he came to us and he wanted to wire communities and put on first run movies. He was the biggest theatre operator, one of the biggest in the southwest, but the biggest one in Oklahoma. He made his deals with the movie producers and so on, and was all set to go down there. I'm trying to remember now exactly what happened. I'm sure Zal will, because he was the one doing most of the negotiating on this. But we were all set to go and put pay TV in on the systems and I just don't know what happened now. I'll contact Zal. Zal's living in San Francisco now. We've maintained a good relationship right on through, so I can get on the phone with Zal and discuss it. He put together the first pay TV programs with Henry Griffin.
PHILLIPS: His system was an early version of the pay‑per‑view as they're called now?
PHILLIPS: Governor, I've come to the end of my list of topics. What have we not touched on?
SHAPP: Oh, all the evil effects of cable TV. (laughter)
PHILLIPS: Such as?
SHAPP: Such as money, which is the root of all evils. There is a guy you might want to contact. Cay Cooley. Does that name mean anything to you?
PHILLIPS: You've talked about him as your engineer.
SHAPP: Yes, you might want to talk to Cay about the whole pay TV thing because he was the guy at Jerrold who organized all the backup engineering. He lives near Philadelphia. Cay was head of our field engineering and an extremely capable guy. I don't remember in all the years I was at Jerrold any problem that Kay couldn't analyze and then come up with at least one, two, or three different types of ways of handling it. Just a perfect engineer.
PHILLIPS: At this point, we seem to have reached kind of an intermission, maybe we can take a break for lunch and then maybe you'll think of something that we need to talk about afterwards.
SHAPP: Well, all right. We can talk about how I don't think pay TV is here to stay at all. I don't think television is here to stay.
SHAPP: One of the wildest stories in which I was involved in the early days of cable television involved Phil Hamblin. Phil was from the Seattle area and became the manager of Jerrold Northwest. ??? I'll get the exact date for you and so on. He covered that area putting in about 34, 35 hours/day. Phil also was a prankster and he not only played pranks on others, but had some played on him.
On one occasion Phil was out one night doing some signal chasing, sitting up on top of a mountain with his field strength meter and a few other gadgets. He had been out there for several hours when suddenly he heard some rustling in the bushes, and lo‑and‑behold a group of about 12 or 15 masked men appeared from all 360 degrees around him. It seems there had been some cattle rustling out in the area and the rustlers were using two-way radio. Seeing Phil there with electronic equipment and not known to any of these local men who were part of the posse, they were ready to string him up. I got a phone call in Merion, maybe it was around midnight Saturday about seven or eight o'clock out there. I get a call and Phil Hamblin was on the other end of the line. "Milt, Milt" "Phil, why are you calling me at this late hour?" "Milt, I've got an emergency, please, no joking around, no kidding around. You've got to be serious." Well, Phil had never been serious on anything, but I knew he was a good practical joker and I figured I was in for another one, but somehow he convinced me that this was a little different. I don't know.... something in his voice. And what it was, as I said he had been up there on top of this mountain, reading signals, had all his equipment there, and he had a jeep with a generator for running his equipment, of course, when lo‑and‑behold from all around him came these masked men. A lot of cattle had been disappearing in the area and they knew that perpetrators of these thefts had two-way radio. Seeing Phil up there with his field strength meter and everything else, they suspected he was one of the rustlers. They were going to string him up right on the spot. Somehow Phil was able to convince them to please place a call to Mr. Shapp, his employer in Philadelphia and I'm to give them all the details. Well, I got this phone call and to me it sounded like some big hoax was being played on me. And I heard Phil saying, "Milt, please, don't play any games. This is for real. I'm not kidding. I'll let you talk to these guys. Do something, they are going to hang me."
PHILLIPS: You were able to convince them, I guess?
SHAPP: After a little while, I realized that this was not a practical joke being played on me; they may be playing a practical joke on him. I gave them all the information. But this was, I think, one of the wildest stories I have.
PHILLIPS: You mentioned to me, what sounded kind of wild to me, not directly involved in the cable industry, but the incident that involved Ronald Merit and the little contest you had at Jerrold. Why don't you just tell a couple sentences about that?
SHAPP: Let me get my notes on that one. I'm sure I have it in my file, rather than going off the cuff on that. In '54, I think, Jerrold applied for a franchise in Dubuque, Iowa and no sooner had we applied for this franchise then a group of local citizens, prominent attorneys, prominent businessman, decided that they wanted to have the cable system and so they filed for it with all kinds of threats to me. Editor's Note: See also Chapter 20.)
PHILLIPS: That was Dubuque, Iowa?
SHAPP: Yes. That was '54, I think. This local group was going to go after the franchise, but there was nobody in that local group who had any experience whatsoever in cable. But after all they were the banker, the shopkeepers, and so on, and they wanted no part of us.
By law in Iowa, the awarding of any exclusive franchise by a local government has to be ratified by a vote of the citizens. We filed for our franchise and a local group of citizens filed. When city council met, despite all of the preponderance of evidence that we knew more about cable then they did, the franchise was awarded to the local group.
But now I had the privilege of filing against them at public election. Everybody thought I was kidding. What the hell, I was going to go out there as Jerrold Electronics Corporation in Philadelphia on a campaign? So I got into the election and these people, there was a whole group of people out there who were very angry about the situation. The local group knew nothing at all about cable, knew nothing at all about running a system. Even after they filed they still didn't know. They had hired a guy who was feeding them some stuff. So I put together another local group of businessmen to back the Jerrold system. We had an election. We won and beat the president of a bank and others.
Then the next thing was that they filed suit against us, our end of it. If you want details, I've got it all written down. (See Chapter 20) They tried to block us from going ahead. We had to bring a microwave in and everything else, the microwave would come down from the mountain. And finally after the election, I won the election against this local group by 4 1/2 to 1. It turned out that they didn't have any technical people with them, they knew nothing about this, and so on and so forth. They just antagonized a large percentage of the local people. I won it 4 1/2 to 1. And then they turned around the next thing was that it had to be approved by the people. So we ran another election. And in the period of about three months time, I won two elections out there, and was named Man of the Year for Dubuque. (laughter) It's just a classic situation. That was my first winning election.
PHILLIPS: That got you interested in politics?
SHAPP: No, but cable TV did. That was quite a thing to take on the all the important people, some of the members of city council involved in this thing, too. I have a treasure of incidents in the cable industry.
End of Tape 2, Side A