Interview Date: December 1989
Interviewer: E. Stratford Smith
Collection: Penn State Collection
Note: Audio Only
First tape of interview is missing.
SMITH: This is Tape 2, Side A of the oral histories interview with Zal Garfield. Zal, when we had to stop to turn the tape over, I think you were just completing an anecdote about you and Milt being in a railroad diner with a three and a half million dollar check in Milt's pocket and not enough money to pay your way out.
GARFIELD: That was an amusing kind of episode. Lots of them.
SMITH: Do you recall, as a result of our reminiscing here, any other particular instances of raising money to finance the Jerrold operation, the purchase of systems that might be worthwhile putting on the record? Even though they're just anecdotal, I'd like to hear them.
GARFIELD: A very significant one was when we made a deal with Loeb‑Rhodes which was another investment banking house and Jack Wrather. They bought equity in Jerrold at that point. We had in effect, a partnership with that guy in which they were significant stockholders. Milt continued to be the major stockholder, but they were significant stockholders. Jack and (Milt?) and that was kind of a rocky relationship.
We acquired a good deal of cash and used it for the growth of the company in acquisitions of various kinds. We bought an antenna company called Takeco in upstate New York. We bought an instrument company. We bought Harman Kardon at one point. If you wanted to talk about mistakes, that acquisition, I regard as one of my classic mistakes. It was the Harman Kardon purchase.
SMITH: For the record would you indicate what the Harman Kardon business was?
GARFIELD: The Harman Kardon business was a stereo business. They manufactured stereo equipment, and very good stereo equipment. They had the line called Citation which was a really high quality line.
The Harman Kardon line itself was a mid‑bracket line. It was good heavy‑duty journeyman equipment, but no great shakes. The Fisher Co. and various others had more refined stereo, but it was a good company.
As I mentioned to you at lunch, one of the thoughts that I had in mind, was that I had great respect for the management capacities and the shrewdness, the abilities of Sidney Harman, who was the founder and president of that company at the time of the acquisition. I thought that we would be doing a wise thing to get into retail distribution products that would be distributed directly to the public, and get familiar with that kind of merchandising and marketing which we only knew through cable companies and had limited knowledge of. That company, we had no business acquiring. Sidney, we did have business acquiring. It was a good acquisition. Again, if I were as good a psychologist then as I hope I am now, we would have not put Sidney Harman and Milt Shapp into the same box, because that was an oil and water mix and it didn't work. There was nothing about that acquisition that really worked. It was one of the things that we acquired in that period of time and it was an error.
SMITH: In raising that money, you mentioned Loeb‑Rhodes. Just for the record and for a researcher, what that company was involved in and what they did.
GARFIELD: Investment banking. They were in partnership with Jack Wrather. Jack was in the business of acquiring. He was a pretty shrewd guy. His wealth came out of the ground in Texas. He was an oil multi, multi millionaire. As I gather his father had been a successful wildcatter in Texas. Jack went out to Hollywood, married a not quite top level movie star by the name of Bonita Granville. Bunny is what he called her. He went out there and his idea of what he wanted to do, is that he wanted to acquire. He believed the United States was heading into a period of unbelievable affluence. He wanted to invest heavily in businesses that were recreational in character.
He bought things like Lionel Trains. I think he bought Evinrude, the motorboat manufacturers. He bought the television series "Lassie" the television series "Lone Ranger" and they were enormously profitable. Every time they ran a series through of the "Lone Ranger" that he had purchased, by the time he got through, from the beginning to the end, it was a whole new generation of kids ready to look at it again. And "Lassie" was the same.
He was very successful. Loeb‑Rhodes, sort of rode along with Jack. Jack made most of the decisions. I remember John Loeb inviting Milt and me or Sidney and me, I forget, to a luncheon. John Loeb was the old generation of the courtly investment banker. I remember him saying, "And you Milton, my dear Milton, sit here, and you my dear Zal, sit here." He sat us down in his private dining room, and we were served by white‑gloved waiters and that usual kind of thing, just the three of us. The whole thing was just for John and his selected guests.
He was an interesting man. He had a young nephew that was working with him, whose name I can't remember. He was the exact opposite of John. He was anything but courtly. He was difficult. But they didn't have very much to do with us really. Jack, assigned a man named Bill Quinlan to us, and Bill worked with us for a year or so. I don't remember how that thing finally evolved. I think we may have bought them back out.
SMITH: I believe that Milt's draft autobiography indicates that you are correct in that recollection.
GARFIELD: That's what I thought happened because it was not a satisfactory marriage. It didn't work well. Our thoughts about that were one, of course, to acquire the money and the second was to acquire the intimate relationship with a bottomless pit of wealth in the form of Loeb‑Rhodes for expansion purposes. Had it worked out well, it would have been fine. That could have happened, that was not a mistake, that was a good decision, it just didn't work.
Jack died some years ago. He was one of the kitchen cabinet of Ronald Reagan when Reagan was governor of California and I think he was still alive when Reagan became president.
SMITH: I think he was too, in that first term anyway.
GARFIELD: Jack had a terrible temper. It was just awful. If he wanted something and he couldn't have it, he would throw a tantrum, literally, throw a tantrum. He had a lawyer, a very, very capable man who's name I can't remember, can you?
SMITH: Yes. Monty Livingston.
GARFIELD: Monty Livingston, exactly. Monty was sort of Jack's keeper. He tried his best to keep him under control, but it was very hard and he couldn't always be successful. If Jack didn't get his way, he would just literally throw a tantrum and he'd get flecks of foam and his face would become all mottled. It was pretty tough stuff to deal with. Milt wouldn't deal with it at all. That became another one of my legacies while it lasted.
SMITH: Normally the interviewer is not supposed to tell anecdotes, but this one is so apropos exactly of what you're talking about that I'll take a paragraph on the tape and recite it because it may be of some interest.
When I practiced law in Washington, the Welch Mott and Morgan law firm represented Jack Wrather and one of his partners in filing applications for construction permits for television broadcast stations. As a principal in the company, Jack was required, in connection with one hearing, to come to Washington and appear as a witness. He bought Bonita with him and I happened to be the one who put Jack on the stand to ask the questions on direct examination that had to go into his financing, because the FCC demanded to know the basis of your ability to finance the stations you wanted to build. Bonita, sat directly behind me and just behind the counsel table and she was in a constant state of agitation all of the time with her fingers clinched.
She'd come up and whisper in my ear from time to time, something intended to guide me. The whole point of it was that she was mortally afraid that Jack was going to lose his temper and tell the lawyer who was cross‑examining him where he could go. I had known about that somewhat ungovernable temper, but he did not lose his cool in that hearing.
GARFIELD: I'm glad he didn't. That relationship, I had occasion to be in touch with it very lightly socially, maybe on two or three occasions, and it impressed me as a very tender relationship. He would never leave her without kissing her and saying I love you. It was just routine and it wasn't routine in the sense of being perfunctory. It was very tender.
Jack was not the most likeable fellow in all the world although he was fine when he wasn't angry. He was O.K. but he was very self‑preoccupied. He didn't range widely in terms of interest stimulation or interest in other people or that sort of thing. But that relationship is something that to the best of my knowledge, and I didn't see a great bit of it, was a very tender and sweet relationship which tends to suggest, among the most unappealing of people, there are sides that are very nice. Jack did have that quality.
I remember on one occasion, and I don't even remember how or what. He went so berserk that Monty was just overwhelmingly upset and he called me later at some point and in effect apologized and said I hope you will forgive that. That's just what he does sometimes and don't take it too seriously and so forth. I said to myself, for a man of such quality as this guy Livingston had, what a role to be cast in. That, by the way, was one of the wonderful things about Milt. In the many years of our association, and they went way beyond Jerrold as you know, they extended into politics and so forth. On no single occasion....
I would get upset with Milt from time to time because he would do some things that I felt were inappropriate, but Milt never asked me to do, nor was I ever called upon to do, nor was I ever put into the position of feeling humiliated by reason of the man that I was associated with. I didn't agree always and I might have been upset, but he was a man of real quality. Anybody working with Milt Shapp would never have to do anything that was shady or dishonest or even walk the edge. He was a very straight guy. He never would do a thing like Jack would have no hesitation about doing, which is to hang one of his own people up to dry in public in front of lots of other people. Milt simply would never do a thing like that. It sort of gives an opportunity to comment on that side of Milt's personality.
This business that you talk about of him being so generous about what was probably a pretty good ad, it was no stroke of genius, it was no great shakes. He was always appreciative of what other people did. That was one of Milt's great qualities. He knew how to put around him the people who could do what he wanted done, and what he needed to be done, particularly when they were close in. He could recognize his own deficiency. If there's one thing that coming into 15, 20 million dollars and the acquisition of wealth that came along with the public issue on Milt's part in terms of the value of the stock that he retained...if there is one thing that it did on the negative side, I think it did something of what I have observed great wealth, and I've had the opportunity, though I never acquired it myself, nor ever particularly wanted it, I've had the opportunity to see other people acquire great wealth.
I think that in our culture, which values people so much on the basis of money, even down to language like where do you work, that kind of thing, what do you do, is what you do for money. That kind of thing. I think that the acquisition of wealth gave Milt a little bit of the feeling of maybe being a Renaissance Man, an "I can do anything" kind of feeling. But it never lasted long with Milt. Milt was always a man quite capable of looking himself in the eye, and that's not easy to do. Seeing his own deficit and working with it, and surrounding himself with people that would be helpful to us. He was real good at that. He won a tremendous loyalty from the people around him, including myself.
SMITH: I'll ask you to comment on another perception that I am familiar with because of my early activity in the industry being in contact with a lot of people as the NCTA's General Counsel and Executive Director, that you and Milt were in contact with. So, I will state the proposition that there were a lot of people who thought that your position with Jerrold was to go out and bat somebody over the head if they needed it, or to go out and make demands for the most that you could reasonably make, or maybe unreasonably make, on behalf of Jerrold. Then if you overstepped it, it was Milt's job to come back and say, no we didn't mean that. This appears in two or three oral histories as a concept of the relationship between you and Milt. Would you like to comment on it?
GARFIELD: The way many people described it Strat, was that I was Milt's hatchet man. I never liked that very much, not wanting to be a hatchet man at all, and certainly, Milt never really pushed such a role on me. That would not be a fair statement about it. I think that in business terms, if we use terms like aggressive and assertive, I was probably somewhat more aggressive than Milt. Many of the things that people would assume that Milt sent me out to do, I sent myself out to do. When I would err, it would probably be on the side of going a little bit overboard on demand or on expectation or on asking for something that was inappropriate and Milt had many, many, many, he also had his share of people that didn't care for him. But he also had his share of many, many, many good friends in the business and surrounding the business. He was pretty good at smoothing ruffled feathers.
I believe then, that the observation externally perceived, was correct. But I believe that just as from time to time, I had the opportunity to correct some things that Milt did, Milt would, from time to time correct things that I did that were not appropriate, and he had the skill to do it.
SMITH: Let's use as an example of one of those things, something that you were remarking about off the record this morning. There was a situation that arose in Key West, Florida with Mr. John Spottswood with whom the Jerrold Co. was in partnership in a very early cable system in Key West. You had some participation in that after Milt had made a deal. Would you like to state that for the record?
GARFIELD: Whatever that deal was, and I don't really remember at what stage the deal took place, what ultimately wound up, Milt was very casual with money. We'd come in to the end of the year...I'm departing now. This is sort of an apostrophe or a parenthesis. We would come to the end of our year, and our accounting firm, which at that time was Ralph Fratkin would come in to give us a report on what our year‑end looked like. Milt would fall asleep. That's how interested he was in the money. If he didn't fall asleep, he surely would be creating a new product or something. He just wasn't particularly interested in money. Money to him was a tool kind of like a band saw to a carpenter. It was a tool that was readily available and if you broke one band saw, you just got another one. That was Milt's attitude toward money.
In the case of John Spottswood and Key West, what happened was that Milt went down very shortly after we had completed our first public offering and we were now a public company. He made a deal with John that left a quarter of a million dollars or there abouts. I really should not state that sum because I'm really not quite sure of it, but it was a sizeable sum in those days. He left that, in effect, on the table. It was money that anybody could look at and see. Milt's attitude is epitomized by what he would say when I pointed a thing like that out to him. Milt's statement would be we'll have it back in six months. I would say yeah, we'll have it back in six months, but it's our money. Why should we have to get back our own money when the fair equitable deal was so and so?
So he left a sum of money on the table and I was concerned about it because we were now a public company and we were now going to be subject to scrutiny. Neither one of us had any real knowledge of running a public company and we didn't know what would be involved or what government agencies or stockholders or whatever would do. We were neophytes in that field and I was anxious about it. I showed Milt that a really fair deal would say that that was our money and he said that's right. Then he said would you get it back. He sent me back down to John and of course that made me very popular with John at the time. I don't know whether you want on the tape the story about the Thanksgiving dinner or not.
SMITH: I think that would be a nice story to get John in the history.
GARFIELD: O.K. John was furious with me. He was really furious with me. He said, "I made a deal with your boss in effect and a deal is a deal." I said, "Yeah, that's true, John. You did make a deal with him, but it's not a contracted deal yet. We discovered a flaw in it. It's up to you, You can either call the whole deal off or you can agree that this sum of money belongs to us."
He ultimately agreed and I said to him at that time, "John, it's cold turkey. You either do this or the deal is off, because we cannot afford to take this to our stockholders in its present form." I leaned heavily on that at the time. John, ultimately knowing that it was a wonderful deal for him and that, relatively speaking, while it was a sizeable sum of money at that time, it was trivial compared to what that system had to go. He made the deal and later on, my wife and I were down in Key West on holiday and John invited us to Thanksgiving dinner at his very beautiful Victorian home and we were all sitting around the festive board and the turkey came in, a beautiful turkey, and I received a very special plate with a cover on it. When I took the cover off, it was all ice cubes with several turkey wings, and John told me, "Here's your cold turkey back." It was fun. It was a joke and we all enjoyed it.
The interesting thing about that kind of thing, one of the things I learned in business that I've never forgotten is, if you play it straight down the middle, if you don't play games, if you're honest and straightforward, people might not always like what you're doing, but they will respect you and ultimately you will develop the "like" if you're straight. John and I are a good example of that. We were very different people with very different interests and very different backgrounds, but we came to like each other and at a later stage when Milt was in politics, I remember calling John to solicit a contribution to Milt's election campaign and John said to me, "How much do you want?" I mentioned what I thought was an extravagant number and it was in the mail to us the next day. John had his generous side too.
SMITH: Yes he did. I knew him very well. Let's go to the antitrust suit. Let's go back before the antitrust suit. A moment ago you used the phrase to the effect that some people didn't like you and I'm not speaking of you personally, I'm speaking of Jerrold, and that takes me back to the contracts that Jerrold was asking operators to enter into with them in the very early days which, for the want of a better term at the moment, I simply will describe as a tie‑in, meaning that certain commitments were required of an operator in certain types of contracts that Jerrold wanted to enter into with them. Would you describe those contracts and some of the background thinking that initiated that?
GARFIELD: I'm not sure that I will describe this with a great deal of accuracy because it's a little vague in my mind, but in effect, what the contract was was that the operating cable system would pay to Jerrold I believe for a period of about five years. It was either three or five years. Do you happen to know?
SMITH: I think it was five.
GARFIELD: I think it was five too. For five years, they would pay us twenty five cents per connection per month. In exchange for that, we would provide them with engineering facilities as needed. Milt developed that concept and I believe that he initially developed it on a very sound basis that this was a new business. The equipment was new. It was being tried in its particular application very early on. There were many, many problems with cascading amplifiers and all of the things that were involved, and protecting the system from illegal entry. There were all kinds of things that were involved. The operators needed this kind of on‑going engineering. His feeling and mine, in this connection, was that we didn't want any failures. We wanted every system, if humanly possible, to be very successful. We knew we were in a new and speculative business and if we were to keep on acquiring, attracting responsible capital into the business, it was going to have to be successful, because it was that new.
That was Milt's concept with reference to the practice. I think it's fair to say that after it got underway and systems were growing by leaps and bounds, we were collecting a great deal more money than was necessary in order for us to supply those services. It was a profitable kind of deal, the contract. We didn't know that at the time. We didn't know that it was going to be that way at the time. We felt up to, I hesitate to say this, because I think that we probably knew before RCA and Philco. Who filed that antitrust suit? I forget who filed the suit against us. I think it was either Philco or RCA.
SMITH: There was one operator generated suit, but it may not be the same one, but it was an antitrust suit.
GARFIELD: In any case, before the suit was filed, I think we knew that the service was there. It was available, it was useful but not nearly so much so as it had been in the very beginning. It wasn't nearly as necessary at that stage as it was when we first began, but it was a good deal. We had made the deal and it seemed fair enough to see it through. I think that was pretty much Milt's feeling and mine.
SMITH: Did you inherit the job of going out and selling that to prospective purchasers?
GARFIELD: There was no real problem with it. We did not have any significant problem in selling what we call the service agreement. That term just came to my mind. I know that's what we called it. It was the service agreement and our position on it was simply that you need it. This was practically a completely "no hurt" way to do it, just add a quarter onto your monthly fee. Big deal, nobody's going to buy or not buy on the basis of a quarter. It wasn't hard to sell. It was not difficult to sell. There began to be beefing about it because our manufacturing competitors began to stir that up. Of course, once you say to somebody, what are you paying those fellows for, what are they doing for you, what did they do for you lately? It's not hard to stir up resentment and the resentment was stirred up and there was a lot of noise about it.
At that point it became difficult. I really can't say this. I think I would like to think that my memory said that I urged it to be dropped, but I don't know that I did. I know that I had some reservations about it as we went on, and we didn't need it, but it was a good deal.
SMITH: Do you know whether Milt consulted with counsel in advance before adopting the service agreements?
GARFIELD: I don't know, Strat, but I kind of doubt it. I think that probably any contract that we wrote went across our lawyers' desk, but I don't think any issue of antitrust even crossed our minds at that time. Nor do I recall any statement about that from any legal counsel. I don't think there was any.
SMITH: The reason for my asking the question is because of Milt's concern and his recitation in one of the statements he made in his interview was that one of his big mistakes in the business was in taking advantage of an article out of Television Digest that said he had approximately sixty four percent of the business in the cable industry and his attorney called him up and gave him a Dutch Uncle lecture for doing that. It occurred to me that antitrust grounds is the danger of it. It occurred to me with respect to the service agreement, I wondered why the same counsel had not warned him in advance that this could come up. There was nothing original about that kind of contract. It was new in the cable industry.
GARFIELD: Everything was new in the cable industry. I don't know that they didn't, Strat, but I never heard about it. Usually, if a significant policy issue of that kind occurred, I would have heard about it and would have had a chance to input to it. Until such time as that suit was filed, however it emanated, from somewhere in the northwest maybe?
GARFIELD: From up until the time that that suit was initiated, it never even occurred to us to be concerned about it. That leads me to think that we were never counseled about it and made any kind of a judgement about it. Maybe we did because from the time that suit was filed, after it became apparent that it was something to take seriously and that we couldn't play with it, Milt and our counsel, Is Packel got involved with that. Milt devoted almost full‑time to defending himself and to getting involved with some very bitter feelings about the presiding judge in the matter, all kinds of difficult stuff.
He left me to run the store, and that's what I did. I had very little contact with that defense because there was really nothing for me to do with it. Milt was there and he and Packel were in consultation all the time about the case, and we were running a business and we had a business to run, and that's what I did. I really don't have a great deal more to contribute about that situation except that which is publicly known which is mainly, that we lost. My memory of the loss was that in effect, obviously we were not going to have the service agreement any longer and our wrists got slapped. I don't recall there being anything particularly punitive in the judges' decision. Do you remember the decision?
SMITH: I do have familiarity with it. I don't think there was anything punitive. I do not believe there was a fine. My recollection was that the judge found the service agreement was reasonably necessary at the time that it was instituted, but that it was not necessary at the time of his decision. Milt used to go around every opportunity he had to make a speech and point out that the decision was made three years after the first service agreement, so that it was very difficult to see where the judge drew the line as to when it was unnecessary and when it was necessary.
GARFIELD: I don't know how the judge drew that line, but I would say that retrospectively looking at it, my inclination would be to kind of agree, that at some point it was no longer necessary. But how the hell could a judge do that, and how could we? Some systems undoubtedly did need it. What I think was amiss about it was that as you put it in describing it as a tie‑in, it was required. It was not optional. It was required. That was where it hit the fan.
SMITH: Had it been an optional thing, I don't think there ever would have been a problem. Again, I'm going to put a statement on the record based on my personal experience to see if it suggests something that might help us close this subject with you because there are a couple of loose ends.
I was the Washington D.C. counsel for Jerrold at the time that action was filed. I have the clearest recollection in the world of Milt calling me on the phone and saying that two FBI agents just walked in the door and they want to open my files, what should I do. Without telling you that I clearly recollect everything that we discussed on the phone because he said they were right in there sitting across the desk from him. I think my advice to him was: You may as well let them see it because they're going to get it anyway.
That takes me back to a recollection of having received copies of a telegram from a cable man out in the state of Montana. These telegrams were addressed to the United States Department of Justice and were very inexpertly drafted if my memory serves me. They described what they alleged to be anti‑competitive activities on the part of Jerrold and asked for an investigation of Jerrold under the antitrust laws. The man who sent that telegraph was an engineer named J. Norman Penwell.
GARFIELD: I remember that name.
SMITH: He was a former associate of Archer Taylor whose name you may also remember. He's a very respected man in the industry. I never could understand how a simple telegram like that to the Department of Justice could actually tip off a suit like that. Subsequently, I've seen in some of Milt's statements and his autobiography, he has indicated that he had been harassed by the FBI for a number of years, on a basis that had nothing to do with the cable television industry. He didn't specifically identify what that harassment was. Up until after the suit was over, and even when he was governor, he said the FBI was harassing him. Do you have any familiarity with this at all?
GARFIELD: I really don't. I can speculate about it, Strat, but the only thing I can conceive of was that Milt was a liberal kind of a guy. This was a part of the McCarthy Era. He did hire people like myself and then there were others who were involved in left of center type of activity like the Wallace campaign and that sort of thing. I'm trying to remember the name of one particular guy. I can't remember it, who was out at the lab. He was quite openly left in his orientation. The only speculative thing that I could offer, maybe because my own history entangled with Henry Wallace and Curtis MacDougall, pretty respectable people, and Glen Taylor who was a Senator in the United States and who ran with Wallace as vice‑presidential candidate, but that whole area was attacked as red‑tinged at the very least.
It may be that Milt's generosity that I was referring to earlier and simply saying that he was satisfied that a man had competency and a man was honest, man or woman, that he would hire them if he had a need for them, and that he wasn't going to be dictated to by whatever the politics were. That's the only speculation I can offer, maybe because I was such a person who was involved with Wallace and so forth. Maybe for that reason, he chose not to impose that on me. That would have been embarrassing to me and difficult to me and so forth. That's the only speculation I can think of on the basis of which Milt might have been harassed by the FBI. I know of nothing else that could conceivably have had that effect.
SMITH: The only interest that I would see in it in terms of the cable industry for example, whether there was something going on within the FBI and therefore the Department of Justice, where they were looking for any excuse they could find in order to bring an action against Shapp.
End of Tape 2, Side A
SMITH: This is Side B of Tape 2 of the oral histories interview with Dr. Zal GARFIELD: at his office in San Francisco. Zal when the tape ran out before, you were mentioning Dick Thornburgh as a U.S. attorney, I think you said in Pittsburgh at the time Mr. Shapp was governor.
GARFIELD: Thornburgh at that time was raising all kinds of questions and I don't even remember the content of those, but they're public record and easily ascertained. I don't think that had anything to do with earlier harassment of Milt. When Milt was elected, Strat, he announced his various cabinet appointments. One of them was myself. I was appointed to the post of executive assistant to the governor which was pretty much the same job I had before. Milt had said he just wanted me for the election campaign and after that I could go back to being a psychologist. He did have a tendency to change his mind about things like that and said I had to help him get the administration shoved off, that we worked well as a team together for such a purpose. I accepted that as an honor.
That was, as I understand Pennsylvania hierarchy, the chief cabinet officer. At that time, my history with the Progressive Party became a matter of public note and the question of my integrity and loyalty was raised and questioned. Of course, this was long gone history at that time. But, nonetheless, it was real history and it had existed. As I recall it, I was asked whether I was or had been, or however they put those things in those days, Communist, and I said no. The newspaper man, interestingly seemed to have been kind of outraged at the whole topic coming up. That was the end of it. It was a one day story and it was public, so in a sense, that was harassment carried over from Milt's liberal inclinations in terms of his hirings.
Milt was never anything in the Progressive Party beyond support of Henry Wallace at one point, and not for very long at that. That existed, those are the only things that I can think of that would have this kind of FBI harassment type of implication. The FBI, to my knowledge, never did anything about that nor did they ever question Milt or anybody that I know of in that period of time. I don't know of anything else to really say to you about that. I don't think it played a terribly big part in Milt's life, and I don't know that whatever Thornburgh was raising with Milt had anything to do with that. In fact, I'm pretty sure it didn't. It had more to do with what was going on in the administration. We were dealing with a number of big issues like the use of float by various banks of money, interest that belonged to the people of Pennsylvania, that sort of thing. It wouldn't have made us very popular in some circles.
SMITH: It's probably not fair to ask you as a psychologist, whether there's a possibility that Milt was experiencing a little paranoia when he said he was being harassed during his two terms as governor by the FBI.
GARFIELD: The only comment that I could really make in response to that is an I don't know comment, but I would add to that that in all the years that Milt and I were very close, which extends over a long period of time, maybe twenty years or more, I never knew Milt to be unduly suspicious or mistrustful, paranoid, if you will. I never experienced that quality in him. On the contrary, Milt's tendency was to be disingenuous.
SMITH: To me it was curious that he made those references and said they went right through his second term of governor and talked about some continuing thing going over many years.
GARFIELD: Did you ask him?
SMITH: I did not do the interview. It was done by Mr. Phillips. I was just curious whether you could fill that in. I don't think Milt would be in a position today if we could question him, to want to talk about it.
GARFIELD: I don't think he could. I doubt that he could.
SMITH: You've talked off and on about Jerrold's going into cable system ownership and operations as distinguished from the manufacturing business. Were you a primary influence in the decision to go into ownership?
GARFIELD: I wouldn't say primary, but I would say an influence. Milt started that. The contact with J.H. Whitney and Company was one of, if not the initial step, in that direction taken by Milt prior to my advent on the scene, not consummated as I recall it, but the contact made and the interest developed. Certainly, I was heartily in favor of it. I felt that it was very clear that there was a lot more money to be made operating cable systems than selling equipment to cable systems. Therefore, I endorsed it. We had the skills, we had the know‑how, by all means let's do it. It was a major motivator on my part in terms of the interest and the acquisition of capital via a public offering. To be able to do that more freely and to have the money with which to do it.
SMITH: Did it create any problems for Jerrold in terms of competitive relationships with operators who might be seeking the same franchise that Jerrold would be seeking?
GARFIELD: We were very, very careful with that and attempted never to touch in to any community where there was already an existing interest on the part of anybody. We attempted to be very careful with that. I regarded that, frankly as more threatening. I never even thought about the service agreement from that point of view until it hit the top and the action was taken by the department, but the idea of hitting into competition with our own customers was something I thought we really had to watch out for and did.
SMITH: Were there ever any efforts in connection with the service agreement to use it as leverage to obtain an equity interest in the cable system?
GARFIELD: Absolutely not. I had absolutely no knowledge of that, and if I had, I would have put it down instantly. But I don't think anybody ever did that.
SMITH: I don't want the question to imply that I have some knowledge that that happened, because I do not. The thought just occurred to me as a question to ask it.
Jerrold had in the early days, a number of competitors, even though I think the figure was sixty‑four percent of the systems were Jerrold systems.
GARFIELD: A larger figure sticks in my mind, but you may be right.
SMITH: It may be larger, I will check the record and we'll correct it if it's in error, but Mr. Packel had warned Milt that this was unfortunate publicity.
GARFIELD: As a lawyer, let me ask you, Strat. This is unusual too, for the interviewee to ask the interviewer a question, but my feeling about that was that we had ample competition. We had competition from the big fellows, RCA and Philco. We had competition from ENTRON. We had competition from SKL. I forget now. This is history long‑gone, but we had plenty of competition and it came up very early on. Certainly, when I came aboard, we were competing. Marty Malarkey and RCA, etc.
It seems to me that the question is not how successful a company is in terms of being able to get a lion's share of the market because it's got the better product, it's got the better sales force. It's there first, or whatever. The question is whether there is free and fair competition and whether competitors are as open to go after the business as we were and to the best of my knowledge, they always were. Am I mistaken in terms of thinking about that from an antitrust point‑of‑view?
SMITH: No, that in fact was Milt's question, even if it was hindsight that he put on the record in his interview. He pointed out the fact that Philco was a competitor and that RCA was a competitor and, in effect, wanted to know what was wrong with having the better product. That becomes a fair question to ask in a situation like that. Apparently, Packel felt very strong about it. In terms of eliminating the potential for an action based on that, Packel's advice was probably sound. It's the type that I would give as a lawyer. I would concede that it would be very difficult for an entrepreneur who is driving ahead with his business not to take advantage of the fact that he got more customers than the competition. It does raise the question.
GARFIELD: I can see how it would raise the question, but I can't see...I guess Milt and I see eye to eye on this as we did on many things...what having the lion's share of the business has to do with any improper behavior including antitrust behavior. I remember Is Packel was one of two attorneys who were our original law firm that they later joined a firm called Fox Rothchild in Philadelphia where Alex Sitisky, the other one, still is. You undoubtedly knew Alex.
SMITH: I remember that name.
GARFIELD: Alex was actually much more active as our general counsel than was Is. The two of them were two carry‑overs from a firm called Pfizer Guliland Satinsky and Packel. That's what the original firm was. I can remember, I worked with Alex a lot more than I worked with Is because Alex was our counsel on a day‑to‑day basis in a GC role. I can remember saying to Alex, "So far as I'm concerned, Alex, I really don't want lawyers with me when I'm negotiating. I want to negotiate, and I regard the law essentially as the accumulated fears of generations of lawyers. That's fine, and that's O.K. and maybe as a lawyer that gives you a little twitch but it always gave Alex a little twitch.
SMITH: It doesn't bother me.
GARFIELD: I think it's true and what I said to Alex is that I will negotiate the deal. I will never take through a significant deal without it running by you. I want you to tell me what the risks are and how to reduce and then eliminate the risks to the maximum extent. Then I will take the responsibility after you've told me as to whether I want to take the risk or not, whatever risk there is, that's my job. It's your job to tell me what the risk is.
We always worked that way and never had any difficulty to the best of my knowledge other than this antitrust suit around the service agreement that was significant.
We had problems when we floated that public issue that I mentioned to you. The day before, or just a very few days before it was supposed to come out and had been approved by the FCC, the FCC pulled the string on it because Van Alstine Knoll had done something with reference to the red herring in terms of selling prior to the time the stock was out. It was something like that, I don't remember exactly what it was, but we had spent a lot of that money. Theoretically, we had committed a lot of it and we would have been in a terrible spot if that deal had been held up. Because that conversation on the train was not for fun. We had done a great number of things because we knew our deal was made.
We went down to the FCC and got out from under, but I don't see that as being our responsibility. That was the responsibility of our investment bankers that did something amiss that I'm not even sure what it was. The FCC recognized that and responded to it by withdrawing the hold order and allowing the issue to go through but doing something with Van Alstine Knoll at that time.
Those two events are the only two events that I can think of off‑hand, unless perhaps you can think of some others where we got into any kind of significant legal hassle.
SMITH: There is one which doesn't have a basis similar to the ones we've been talking about, the antitrust and the service agreement. There was a suit brought against Jerrold by one of its competitors, the ENTRON Corp., for a patent infringement relating to the so‑called pressure taps. ENTRON claimed to have devised or invented the pressure tap and gotten the first patent on it. In fact, Hank Diambra, the company president, claims that that was the first patent ever granted specifically for a cable television component. Later on, Jerrold had a version of the pressure tap that is alleged to have been had by Hank Diambra. There was a somewhat lengthy suit on that. Are you familiar with that one?
GARFIELD: It comes vaguely to my mind. The feeling...and nothing more than a feeling...is that it may have gone on and probably did if you know that it did, at length, but that we never took it seriously. I never can recall being the least bit anxious about it. You probably know that Hank Diambra and his partner, whose name I can't remember now, was really the bright, creative, technical mind in that business. I forget his name.
SMITH: It was a foreign name. It will occur to me in a minute.
GARFIELD: He was a nice guy, whose name I can't remember. I think he is now dead.
SMITH: He is, I think.
GARFIELD: Diambra was a difficult man. He was a very difficult man. He had once been an employee of Jerrold. I think both of them had. The idea that we infringed a patent doesn't stick with me. I never took any such thing as that seriously. I don't recall a suit, but I'm sure the suit existed as you described.
SMITH: My memory is not clear at the moment on the outcome, but we have some information from Diambra's oral history. I'll photocopy it and send it to you and see if it refreshes a recollection at all.
GARFIELD: I would simply say that I have no idea of what Diambra said in his oral history, but if it was a suit, that's a matter of public record and I would suggest that it be checked as to what happened with it.
I know that in the years that I was with Jerrold, there was never anything serious that came about that way. There was never anything that we had to change equipment or we had to do something different, or we had any substantial fine of any kind. I don't recall anything like that. I don't think it existed.
SMITH: I'll check that so the record won't be confused on it. We'll get it in.
There is another instance that I have a recollection of that is in the same vein and I would like to inquire whether you have any background knowledge or recollection of it. There was a time when Milt came to me and I'm sure, to his other lawyers and said that he had purchased for $500 some patent with respect to a device, perhaps an amplifier or a principal that was absolutely essential in order to conduct the activity of the cable television operation. He was proposing, and I'll be very careful, and we'll correct the record on this so I'm not attributing things to him that he didn't say.
My recollection is that he was proposing to set up some kind of a system to require anybody who went into the cable television system to get a license from Jerrold because of this patent. Do you have any knowledge of that at all?
GARFIELD: It's like many things, Strat, it stirs some vague, vague thought, but no, I really don't. I can't identify it. I think off‑the‑record, and I don't think Milt would mind or would have minded at any point for me to say that he was an endless cornucopia of ideas, great ideas. It sort of reminds me of a salesman. Salesmen in general are the biggest patsies for bright ideas of any cut through the population I think that one can make. That's because they're always selling things, so that when something comes in their direction to buy, they tend to be open to it.
Milt was, I think, maybe a little bit in that direction and he had all kinds of thoughts and ideas. As we became more successful, what I do recall is that we had an endless line of people coming to us with great ideas that, "boy this one is worth one hundred million dollars," and all of this kind of thing. This is the greatest thing that there has ever been in the business and in some other business. We were constantly being bombarded with great ideas that either were patented or were patentable or what have you. I don't recall in the years of my tenure at Jerrold ever having any of these ideas that came to us from anywhere except our own laboratory, that we found worthy of significant pursuit.
I can remember myself pursuing two or three such things, just at a level of their practicality because I certainly was not competent to look at them from the point‑of‑view from how good an idea technically they were, but how they would apply to the marketplace and that kind of thing. Sometimes, on occasion, at Milt's request, looking at that kind of thing, I don't recall ever having any product come our way from any source except our own lab that we found worthy of pursuing, not a single time. Our own lab or the lab perhaps, one or another of the companies that we acquired as time went on.
SMITH: My recollection in the case at this instance is that nothing ever came of it. I think there is a record that will show Milt was talking about it, and I'll try to dig that out. It might stimulate something.
I recall my own reaction which is not relevant to this tape. My own reaction was that it was a bunch of nonsense. Even if it were a valid patent, there wasn't any way that he was going to be able to get it out and enforce it without doing himself more harm than good. That was my own reaction at the time.
GARFIELD: I think you encountered one of those fifteen or twenty ideas that Milt was sparked with every week.
SMITH: He was a marvelous generator of ideas, and basic good ones, too.
GARFIELD: He had a far better number, an absolute number of good ideas in a few years, than most people have in a lifetime. His mind was ingenious and creative. He had the quality that we know in psychology is true and that is that the essence of genius is that ability to take a series of separate and sometimes apparently unrelated parts and synthesize them into something useful‑‑idea, conceptually, product. Milt had that. His mind was afloat, it was free. He was not bound by conventional limits of any kind. He thought freely and creatively.
SMITH: There's one other incident of this type that I picked up in my review that I told you about, getting ready to talk to you, that I had completely forgotten. At one time, he was discussing an antenna, a television receiving antenna that I believe had been developed by somebody at Jerrold which you would put on the floor of the attic and make it completely unnecessary to have any more television antennas period. That was the way it was being promoted. It was discussed enough that apparently it got to the trade commission in an advertising violation matter of some kind. And my recollection again was that it was dropped by Jerrold and never heard of again. Do you have any recollection of that? You probably won't, it was after your time.
GARFIELD: Maybe. Although, after my time, there was not a heck of a lot of time that Milt himself spent, and at the level of coming up with new products, that sort of thing, when I left, Sidney Harman took over, I think as president of the company. Then they got into their struggle and Milt bought Sidney out, finally, of the stock that Sidney had acquired as a result of us acquiring Harman Kardon. Then Milt sold Harman Kardon back to him and just parenthetically I brokered that deal, which was kind of fun.
Then I think, Bob Beisswenger wheeled into place at about that time. At this period of time, Milt's interest was strongly shifting into the direction of his political interest. I doubt that at that point, although it's surely possible things would be coming across Milt's horizon, I'm sure. It doesn't seem very likely that he would have gotten that involved in a product. His mind was so focused in another direction, but it's possible.
SMITH: I picked that up again in one of those early issues of the NCTA Weekly Bulletin, and I will find it when I get back and xerox it and send it off and see if...
GARFIELD: Any one of these things could maybe stimulate thoughts in my mind.
SMITH: They're only relevant to show the background of the people that came in and built the cable television industry. Whatever the problem was, they tried to find a way to solve it. They were ingenious. Anything to survive. Who knew whether the industry was going to survive or not. I think they are relevant as part of perhaps an anecdotal story.
There are a couple of other major items that I wanted to get into with you Zal. We'll start them and if we don't finish, one day we'll get back together.
GARFIELD: No later than the spring. Patty and I avoid trips east in the winter, but no later than the early spring. We're going to my fiftieth reunion at the little school that I told you about and we will surely be in Pennsylvania.
SMITH: Do you happen to know what month that is?
GARFIELD: It's May.
SMITH: In April is the semi‑annual board of the Cable Television Center and if there had been a coincidence in time, it would have been nice to have you come over, because you know a lot of the people who will be there.
GARFIELD: I know all that you have mentioned so far. I certainly know you and Ben Conroy and Yolanda. Is Yolanda still on the board?
SMITH: Yes, Yolanda is still on the board. George, as I told you died just a few days ago. Bob Tarlton is no longer on the board but Joe Gans is. He's a Pennsylvania operator of the same time.
GARFIELD: I remember Joe Gans.
SMITH: I don't know if you know Glenn Jones who is the head of Jones Intercable, a very successful major MSO, now. If there were that coincidence, I think you would enjoy being there.
GARFIELD: I would.
SMITH: This subject is one that I hope we can stimulate your recollection on, because the major players in the game are no longer available to us. That's Bartlesville. Bartlesville, as you know, was the first actual pay‑television that was ever conducted. Jerrold, I think the record will show, and I will ask you to confirm it, Jerrold was very, very active in the pay‑television concept and had a particular philosophy of pay‑television that you personally espoused in several debates and that Milt did in any number of speeches he made.
Since I don't like to state the facts, I'd like to get them from you if I can. I believe this was in 1956 and '57 that the pay TV thing boiled up to its hottest in the early days of the industry. Is that correct to your recollection?
GARFIELD: It would certainly be in that category of time.
SMITH: Do you recall who the principal proponents of pay‑television in the television industry were at the time?
GARFIELD: That's a tough one. Of course, we were one, and in terms of what we espoused, which I would have great difficulty coming back up with, other than the fact that Don Kirk created our pay TV device. He invented it. He was a very ingenious guy, and a very difficult guy. Kirk tangled with Milt. Milt never wanted to tangle with him about something that had to do with pay‑off or something or other. But Kirk created this device and the last I heard of Kirk, he was down in Florida working for Phil Hamlin who was our northwest manager for Jerrold. He was Jerrold‑Northwest. Kirk could undoubtedly give you the basis on which that device existed.
There were others in the field all right.
SMITH: Skyatron, Telemeter, and Zenith.
GARFIELD: Zenith in particular strikes a bell. Did you say ENTRON?
SMITH: No. Skyatron and Telemeter. They were proponents of broadcast subscription television systems. So you recall the un‑do‑it‑yourself kit?
GARFIELD: I recall the term. I'm very vague on this stuff. I would be speculating, Strat, and that wouldn't be of value to you, Strat. I just don't remember.
SMITH: The thing for me to do is to send you the materials that I ran into that might refresh your recollection.
GARFIELD: I remember endless articles in the trade press at that time espousing this system and that system. I think probably we had some, espousing our own system. Our system apparently had enough quality. I can't come up now with what that was, but it apparently had enough going for it so that it was a commodity that was able to sell to the movie industry which was where I did most of my work in this area. Then as I recall it, we collaborated with Henry Griffin on the Bartlesville deal, is that correct?
SMITH: That's correct.
GARFIELD: He had the only motion picture outlets in Bartlesville, so that foreclosed the problem of us competing with the motion picture operator, since Henry was the only one in the field.
SMITH: He was practically the only one in the state I believe.
GARFIELD: That was the main reason I think Bartlesville was selected for the experiment. As I recall, the experiment was limited in time. It was just for a certain period of time. Is that also correct?
SMITH: That's correct. I think it was three years.
GARFIELD: I can't recall the time. I think that Larry Boggs and I did most of the work in putting that thing together with the emphasis on Larry, if I recall correctly. Is that also correct?
SMITH: That could very well be the proper emphasis. Milt credits you with significant work in trying to negotiate product and I believe we go back to our earlier conversation of today. His reference was to something you did with Columbia Pictures. Does that refresh you enough to give us some of the background on that?
GARFIELD: Not a heck of a lot Strat, except that it's accurate. I know that it's accurate. I worked with this fellow Abe Schneider that I mentioned to you, who I think was executive V.P. and in effect, hands on manager for Columbia pictures at that time in New York, which was corporate headquarters. I also worked with Ralph Cone(???) whom I also mentioned to you, who was the son of one of the two founders of Columbia Pictures, Jack and Harry. He was Jack's son. He was the head of Screen Gems which was Columbia's outlet to the television industry. They developed products. They had all kinds of show that they sold to television.
I remember Patty Page in particular, had a very popular show. Patty Page was a singer, as I recall. I met her at one point which is why she sticks in my mind. We had a number of shows, very successful shows in the early days of television. Again, as I mentioned, I don't think we put this on tape, before, that Ralph died unhappily early. He was really a very fine man, a very good man. He just remarried and married a lovely woman named Doris from one of their advertising agencies, and he had a heart attack and died. He died at the same time that it was publicly announced that Screen Gems had earned more money than its parent, Columbia Pictures, if you separated Screen Gems out from Columbia Pictures. We worked together, Ralph and Abe Schneider were the two main forces.
As I recall it, they ultimately agreed to and did release first‑run products to Bartlesville, to the pay TV experiment in Bartlesville. I think, as I recall it, that the basis was that they would have first opportunity to participate if we went ahead with pay TV operations which of course we did not, at that time.
SMITH: Can you recall having had discussions with other motion picture producers or distributors?
GARFIELD: Producers in particular. I went out to the coast and on a number of occasions, met with all of these people that I mentioned to you before, with Universal, MGM and Paramount are the three that come to my mind beyond Columbia. I met with heads of studios or companies. I'm not really quite sure which. I think I met with Larry O'Brien in New York, that was MGM. I think I met with Balaban who was really virtually retired at that point, of Paramount and Dave Lipton was promotion head for Universal. I don't think I ever met with the head of Universal whoever that was, nor with United Artists, who I wanted to meet with and never did. Those are the people that I met with, they were all interested, but we never got off the ground with it beyond feeling that we had a good product. Something happened, I don't know if it was the FCC pulling the string on this. Do you know what happened with pay TV back then.
SMITH: This goes back thirty years. No, The FCC didn't pull the string on it. The FCC receives applications from those three that I mentioned before, Skyatron, Zenith with its Phonevision system, which used the phone lines to call in to get the thing going, and International Telemeter. They wanted the FCC to authorize experimental broadcast subscription television operations.
You yourself wrote a letter to the Chairman of the FCC and I think you also testified before the Senate Interstate and Foreign Commerce Committee of the United States Senate, urging them to grant those applications, the theory being Milt's theory, I'm telling you now, what you said in a number of debates that you had with a guy named Archie Mayor. Do you remember him?
GARFIELD: No. Who was he with?
SMITH: We will re‑edit this to get the information properly into the record. The un‑do‑it‑yourself kit was Milt's term for the device that Don Kirk allegedly invented that could unscramble any broadcast within a half‑hour or something.
SMITH: In April of 1956, Zal testified before the Interstate and Foreign Commerce Committee on Cable Theater saying the only practical way for pay‑to‑see‑television was by cable and suggested that the committee urge the FCC to grab the applications of those three proponents on the theory that they would fall on their nuts and that Jerrold would be able to prove that only cable would work for pay TV. Archie Mayor was vice‑president of the National Television Film Council. You debated him in New York City in a debate in which he referred to cable systems as pirates, thieves, and tainted virgins.
GARFIELD: Tainted virgins? That seems like a paradox.
SMITH: It does. It's almost an oxymoron. The tainted virgins is that we were such heroes to some people but we were really stealing product and, therefore,
we're not as virginal as we claim to be.
End of Tape 2, Side B
SMITH: This is Side A of Tape 3 of the interview with Dr. Garfield. Zal, we've been off‑the‑record for awhile reminiscing, but you made a statement just a moment ago. We were talking about very interesting people that you had had the opportunity to meet when you were associated with Jerrold and you mentioned Henry Griffing as one. As Henry was possibly the principal instigator in the Bartlesville pay TV system, I would appreciate it if you could recall for us some of the experiences you might have had with Henry, for example, did he go with you to any of the motion picture people to try to obtain product for the Bartlesville pay TV experiment?
GARFIELD: No, Strat, to the best of my memory, he never did anything like that. But I remember him saying, and very likely did agree to write letters to anyone that I wanted or to talk to anyone that I wanted on the phone, giving his whole‑hearted blessing to doing this and saying that he felt that as a motion picture operator and as an operator of theaters being in the forefront of this development, as a theater operator and one who presents the entertainment in the community, it would be to our advantage as motion picture operators to be in the forefront of this effort and we should cooperate with it. It would be to our economic advantage and make sense as purveyors of entertainment to do this. I remember him saying that kind of thing.
Henry had the kind of mind that was not that dissimilar to the one I've been describing as Milt's. By the way, if we put in our kind of gossip time, the comment that I made about Milt's extraordinary raw courage and guts in terms of leading this industry in many, many ways through the ten or twelve years that I was associated with him in the business. I would like it to be on the tape because I really think it's one of the things that should historically be a part of this business. A lot of the guys who were sometimes very critical of Milt, and who didn't like Milt and didn't like his tactics or this and that, were the beneficiaries of the fact that he is the one who would have the guts to spearhead. He was a real David and Goliath kind of guy, whether he was dealing with the FCC or dealing with Lyndon Johnson. Remember the Lyndon Johnson ‑ George Morrell axis?
SMITH: I certainly do.
GARFIELD: Milt was a very gutsy guy and he could get away with a lot of things because he was so heartless and unpretentious. He didn't come off as some arrogant big shot. He came off as a very simple direct fellow, but some of the things he did were damned near incredible in terms of the gut it took to do it. Any way, I wanted to say that.
Coming back to Henry, Henry was a very bright man. Henry was a rather arrogant man. He had a streak of real arrogance in him. He was also a very perceptive man. This was that McCarthy Era that I talked about that was going on. Henry took his two children and sent them to the Soviet Union one summer to spend the summer. Did you know that?
SMITH: Yes I did know it.
GARFIELD: That's remarkable. How many men in industry would have done that in that era. He sent them to the Soviet Union, he sent them to Africa. He was really an extraordinary man in terms of the breadth of his thinking and feeling about what's going on in the world and what we need to know about in order to be effective as representatives of our country in the world. A really unusual man in that respect. That kind of foresight is what I think made him, to the best of my knowledge, the only motion picture operator in the United States who was willing to do what he did. Do you know of any others?
SMITH: No, no I don't. Was it not a fact, Zal, that Henry Griffing put up, I believe the figure was $300,000 the cost of building the Bartlesville system, knowing that it would only stay in business I think for three years? I believe three years was the period.
GARFIELD: I think there was a thought that it would be a cable system thereafter, and was it, do you know?
SMITH: I can't answer that question specifically. I believe the thought was there, and it probably was.
GARFIELD: I think that you're quite right. I don't think that we put up the money. We were the only two participants in it. We may have made a contribution of profit or something of that sort, and just done the job for cost. In fact, I have kind of a tag‑end memory that says we did do that.
In the Bartlesville thing, we didn't make any money. We were after proving our system, not seeking to make a profit from it. I think in terms of cash, I think you're right. I think Henry put the money up.
SMITH: That is my recollection. He is the one that wanted the test. Henry Griffing, for example once sent me out to the Pacific Northwest to talk to a vice‑president of General Telephone company who I knew on a very intimate basis, to see whether it might not be feasible to work out a system using telephone facilities or at least a comparable system for pay TV, comparable to direct distant dialing where you dialed in for your program and the equipment automatically identifies you and billed you at the end of the month for the programs that you had watched.
GARFIELD: Wasn't that pretty close to phonevision?
SMITH: Except phonevision wasn't for automatic billing and dialing. I think, in fact, the concept of using equipment comparable to direct‑distant dialing and billing and so on, was an idea that I suggested to Henry and he was intrigued by it. I mentioned the man I knew and he said, "Go out and see him and talk to him." The only thing that happened on that was that the vice‑president said of course it could be done, and it is being done today of course. It was an idea for which there still was no cable television pay industry that could support the research and development that would be necessary to do it. The idea died at that time, but it's done now.
GARFIELD: My only significant connection that is not historical in character with the business is that I'm a subscriber to Viacom which is a company that services San Francisco and they're doing that right now. You can call in and be billed as a result of your call.
Henry was thirty years ahead of his time when he had that idea. What kept it from coming to fruition, do you know?
SMITH: Only the fact that the motion picture industry and the program producers had not agreed to provide product for pay TV beyond the limited Bartlesville experience. In order to develop that equipment, you had to have a substantial pay TV industry to support it. That just didn't exist at the time. The record shows that Bartlesville was closed down because there was a limit on the time that they could get the product. There was no significant pay TV activity of any kind any place in the country, with the possible exception of a few not too satisfactory experiences with broadcast stations. It's only been the last five years that there has been enough of a subscriber base and enough penetration for pay TV to really get into this more exotic equipment that makes it possible to press a button which tells the computer at he headend that you want this particular program and it sees to it that it's fed to you and that you're billed for it at the end of the month.
GARFIELD: My memory of Bartlesville is that it essentially proved its point, that it was a feasible way to run pay TV. Do you have that kind of memory of Bartlesville?
SMITH: I think what it proved, and this is something that I have read recently, again in preparation for talking to you. What it proved was the concept of a special channel or channels on which you would get programs for which you paid cash as distinguished from a subscription to a cable system would work. It wasn't pay‑per‑program. They had no way to do that. All they did was you subscribed for the month and you've got all the movies, and everybody on the system got them all. The system as I recall, at that time, did not include off‑the‑air reception. It was solely a facility for pay TV. They didn't want it off‑the‑air. They wanted to see if pay TV would ride on its own.
GARFIELD: I'm trying to think in my own mind why I let that thing die. There was no reason that we couldn't carry it forward. The technology, while it didn't exist at the moment, there was nothing that esoteric about that technology that couldn't have been developed, not as refined as perhaps today, but economically functional, no reason that I could think of whatever that that couldn't have been done.
SMITH: It could have been done on a simple basis as some of the pay TV operations are done today. That's simply a channel dedicated to the movies on the system with a filter in it, that blocks the channel from going into the home that doesn't subscribe to it.
GARFIELD: I'm trying to remember why the bright guy that I like to think I used to be, didn't follow through with that, having gone that far.
SMITH: I think Bartlesville was in 1957. If we are right that it was limited to a three year task, and we'll have to check that for the record, it would have been in 1960 and you were still with Jerrold for two years after that.
GARFIELD: That's right. Interesting point. When was Henry killed?
SMITH: Not too long after, Zal. But it was after the S.2653, legislative debacle in Washington. That, I think, was 1965. Again, since we're putting a date on the record, I must check it and make sure it was the right date.
Henry was intimately involved with Milt in the turn‑around of the industry in support of S.2653. He was my client at the time, as was Milt. I think it was only two or three years after that that he and his entire family were killed in that airplane accident.
GARFIELD: Was it West Virginia or Pennsylvania?
SMITH: I think it was more likely Pennsylvania. You may be thinking of a man by the name of Larry Pey who was killed in his private plane in West Virginia flying back from a Washington convention. I think Henry had taken off from New York City with his wife and two kids. I have a feeling it was New Jersey. We'll have to check it.
GARFIELD: Wonder where he would have hit a hill in New Jersey?
SMITH: Henry had no business...Larry Boggs will say it and any flyer will tell you...at the time of his experience as a pilot, because he was just learning. He was new to it. He had no business taking his family up under those circumstances. It might have been a little bit of that arrogance that you're talking about. Supreme confidence in his own ability, which he did have.
GARFIELD: The reason I asked about when Henry lost his life was I wonder why we didn't get together and figure out a way to take that thing further. I think that we could have co‑opted the motion picture business. I think the motion picture business was really running scared, looking for ways to get in on the ground, recognizing that they had missed the boat with television and if they had been real smart they could have gotten into television, because they were the ones with visual entertainment know‑how, and perhaps beaten the radio broadcast industry out in terms of getting a ground floor position in television. I think they recognized that they had missed the boat on going for that. I think they were running scared at that time.
SMITH: I wish we knew where the old Vumore files are. You know that was his company. With Henry gone and Larry Boggs gone, I don't know anybody but the general people, namely yourself and possibly Caywood, and Milt of course, who were involved with that. Milt got in, and he just backed that thing lock, stock and barrel. He wanted it to support and prove his view that pay television would work on cable but it wouldn't work on broadcasting.
GARFIELD: If you get in touch with Cay, and he seems to have enough recall so that it's worthwhile working with him, maybe we could arrange to meet in the spring, when I come east. There's no real reason why I couldn't come east before that except I don't particularly want to. It might be worthwhile to get together with you and Cay and me and talk about this and see what he's got and what we might be able to get a hold of, because those business records must be somewhere. I don't know what happened. Of course, his whole family was wiped out. I don't know what would have happened to it, but it could be worth looking for it, if the Museum and Center has the wherewithal to spend a little bit of money to try to find it, because that would be interesting.
I'm just thinking to myself that that just doesn't make sense. What did I get involved with that would have been more interesting to pursue than that in those intervening years, because I don't think that I stayed real close to Bartlesville during that whole experiment if it did run three years. My memory, by the way, says that the term was shorter than that.
SMITH: It might have been. We'll have to correct the record.
GARFIELD: Right. You'll want to check that out. I don't think I stayed real close to it after it got underway and the point was basically demonstrated. I'm trying to remember what I got involved with that was more important to me at that time. I was not as dedicated a person as Milt was, single mindedly developing everything that he could see and do. I was very committed to this business and very interested and spent most of my own waking days, because at that time, my family situation was such that I was very into my children, but I was more pushing in the direction of the business. I'm just trying to think where I went and what I did at that point other than just the expansion of the business. I'm afraid that I might have used poor judgement in terms of going after other kinds of acquisitions rather than focusing on that.
We did do a fair amount of acquisitioning in that period of time, both in cable systems and other manufacturing entities. We bought a test equipment company, we bought Takeco. We bought Harman Kardon. I have a memory of one or two others, but I don't remember just what they were. That may have been what happened.
SMITH: To me, the whole operation should be very significant in the history of the cable television industry, because it was the first honest‑to‑God effort by somebody to get in and find out whether there would be a future market for subscription television which was the term they were using in those days, on cable systems. It was Henry with his $300,000 if that figure was correct and Milt with his cable theater concept. The two of them together. Do you know how they ever met? Do you have any background information on how they got together?
GARFIELD: Somewhere stuck in my memory traces, I'm sure I do because I was very much a part of that whole thing, but I don't immediately remember. Somehow Larry Boggs comes to my mind.
SMITH: Probably because Larry went out and bought the equipment for their systems.
GARFIELD: I met Larry and I liked Larry. Larry and I related to each other very warmly. Hypothetically, and it is pure hypothesis, it makes sense that discovering that Larry's boss was a motion picture operator, Milt and I at that point, having been involved in developing the pay TV concept, I having been given a stocking‑horse role in that by Milt that I would have gotten all of us together at some point to develop that. That makes sense that Larry and I would have done that.
SMITH: Whatever the mechanism, the getting together took place. I'm curious because I ask the questions to get leads as to how we can get a more complete Bartlesville record in the Cable Television Center.
Your idea of trying to get you and Caywood together at the same time is an excellent one in my opinion because you can stimulate each other's memory by specific things that you will remember took place. My questions in this area have, of necessity of you today, been very general because I wasn't close enough to be specific.
GARFIELD: Cay very likely was. Cay and I had a real nice relationship too, through all my years at Jerrold. That could be a good meeting.
SMITH: We used to call him the albino Chinaman.
GARFIELD: He was very, very fair. He was a nice guy. I was talking to somebody about him just recently and he has remained married to Isabel, his very attractive wife, all these years. He had one son, and I think that was it. I don't know where he is now, do you?
SMITH: I don't either. I think that we could probably locate him though.
GARFIELD: Probably. He may be retired by now. Cay was certainly not significantly younger than I at that time. If he wasn't then I guess he's not now. I joined Jerrold in '51 or '52.
SMITH: You left in '62. You said you'd been there for ten or twelve years. So that takes you back into the very early '50s.
GARFIELD: And in the very early '50s, I was thirty two. If we go to '51. I was born in '19 so that would have been thirty two. Cay was not much younger than that so he may very well be retired.
SMITH: He could be. I think I can track him down through the Society of Cable Television Engineers. They are quite an active group. A very good group. I can't imagine that they wouldn't know where Caywood was. A man by the name of Bill Riker is the president and executive director of that group. I'll check it out with Bill.
GARFIELD: You're going from here down south somewhere?
SMITH: No, I'm going to Anaheim. The so‑called Western Show that the California Association puts on. It's the second biggest cable gathering of the year. The NCTA is first, but this is a big one. I'm going to do another oral history down there, at least the beginning of one, with Ed Allen. I wonder if you remember Ed.
GARFIELD: I remember that name. Identify him for me.
SMITH: I think he came out of Minnesota. He used to, I believe, be associated with Frank Thompson. He worked with Frank for a while. Then I believe that he went with Jack Kent Cooke and moved from Cooke to Western Communications, which was a California based group that became a moderate sized MSO. The San Francisco Chronicle I believe was the newspaper that put the money into that. Ed ran it for them. The facts I'll correct from within if I'm mistaken on it. I don't want the record to be too messed up here.
Ed, about four years ago, was the national chairman for the NCTA.
GARFIELD: Was he?
SMITH: Yes, and very well liked.
GARFIELD: It occurs to me. Remember that at one point, what we did at Jerrold was we pulled back to a very large extent particularly with reference to the cable TV business, we pulled back from the use of ordinary manufacturers' reps and we set up various divisions of Jerrold with managers. I think we had Jerrold of Pittsburgh and Jerrold Northwest and Jerrold of California and Jerrold of Texas and Southwest Jerrold. We had about a half dozen of these set‑ups. What I think we did was connected in part to the service agreement. We set up managers of these divisions and we set up engineering facilities that could service the area that they covered and at the same time do the marketing in that same area. We felt that the nature of the business was such that it needed this kind of local expression of our company rather than just manufacturing reps selling equipment.
Those men would be very useful people maybe for you to contact because they would be in touch with these evolvements locally and much closer in touch than I or even Milt at that time. In fact, more than Milt by far because Milt was already pulling away a bit in those latter years.
Guys like Phil Hamlin out in the northwest who was not one of my favorite people but who was a very knowledgeable and bright man and who is today very active in the electronics business. And Fred Liebermann out in western Pennsylvania and Ohio. The one that comes to my mind is a fellow named Jordan Byer who didn't last very long in California, but he was at one time our man in California and put me in touch with this lady Marty Sullivan. He did that after I told him that you had been in touch with me and wanted this oral history. Jordy might be one that you might want to give a ring to while you're out in this neck of the woods and talk to and see if he has anything to add.
SMITH: Do you have a telephone number?
SMITH: I might get that then and I will call him.
GARFIELD: He'd be pleased to hear from you. He knows about this situation because I told him and Marty. Marty is John Sullivan's widow who gave us this stuff. There was another guy down in Texas.
SMITH: Johnny Campbell by any chance?
GARFIELD: Johnny Campbell was the manager of the Dubuque system. He came out of Dubuque. I don't know where he went after that.
SMITH: I didn't know that. He became a manufacturer in his own right, if it's the same Campbell. It's not the same Campbell. I know the one you're talking about.
GARFIELD: I don't know the one that you're talking about. I don't think. The John Campbell I knew was the guy we leaned on very heavily in that Dubuque campaign which was quite a campaign and then he became the manager. I think he did go on from there to become something in the industry. I don't know quite what.
SMITH: I can almost picture him for some reason or another.
GARFIELD: He was a nice looking fellow. He wore glasses, closely cropped hair. He was average size.
SMITH: He'd be a different man from the John Campbell in Texas that I'm thinking of who's quite heavy set.
GARFIELD: I'm trying to remember the name of the guy who was our manager down there. The one that I think of was not a particularly appetizing fellow. We had to get rid of him finally.
Those guys could be useful because they were in touch with operators on a day‑to‑day basis, and were really something of the heartbeat of the business. Have you done anything with Fred Liebermann?
SMITH: No, but it isn't that I haven't thought of Fred. I think you know Fred well enough to know that he is a very difficult man to nail down. I really haven't tried to nail him down yet, but I've got to do it because obviously he was a powerful figure in the industry. He was a sales manager with Jerrold at one time.
GARFIELD: He was the manager of Jerrold Pittsburgh. He was very involved in our whole sales program. He began as a field engineer and went from there. When we were ready to sell, I think our Montpelier system up in Vermont, I think we sold it to Fred and Fred, who's family had some money finally backed him and started him in the cable business on his own at that point. Then he became a fairly significant operator.
SMITH: If you recall, he partnered with Jack Crosby from Texas.
GARFIELD: I remember Jack.
SMITH: The two of them seemed such an odd couple to get together, but they put together Communications Properties Inc., ultimately and then sold it to the (?) Group. Fred came out in an extraordinarily comfortable position.
GARFIELD: I think so. Fred made several abortive attempts to get a franchise for Philadelphia and never did succeed with that. Did Comcast get a piece of that?
SMITH: Yes they did.
GARFIELD: I thought they did.
SMITH: They're building it. They're actually building it.
GARFIELD: That's a system that ought to be built. Some things crossed my mind as you were talking about that. I remember that whole operation up in New England. Do you remember when our guy Bill Miller crashed into a mountainside? He didn't crash in, he was on a plane that crashed in.
SMITH: I remember that. Bill escaped that time.
GARFIELD: He did. He died a few years later of another one of those massive heart attacks.
There's a funny story about that. We had an operator manager up there. You may remember or you may know that Berlin, which was the town that he was headed toward, Berlin is a French speaking town right on the Canadian border. There's much more French spoken in Berlin than English. It's a strange sort of thing when you consider the town is named Berlin really. Bill speaks a pretty good French.
We were negotiating for the acquisition for that company or that franchise, or whatever at that time, and Bill was negotiating for us. This guy who later became our manager and some farmer, that's what it was, on whose property we wanted to put our antenna, our headend was negotiating the price for occupying the space on his farm. He was talking to this guy in French, the guy who later became our manager and the man was talking back and forth with him. At one point, Bill just broke in with an observation in perfect French and broke them off completely. They knew then, that he knew everything that they had said about the negotiations. We did acquire that system.
Ralph Fratkin finally bought that system. It was one of the things that Milt and I permitted him to do because he bought me out of that system. I had a piece of that system at one point which is one of the things‑‑as I tell many of my patients when they talk about the price of an hour of therapy‑‑that the only reason I can afford to be a psychologist, because I was once in the cable television business. That's damned close to being true.
That was an interesting development up there. Several systems and each one of these systems, we had other people involved with us. Either they were local people or they were other people, but we would then, after we got some money, we would own the lion's share of the system and the local people would have participation. That was true in Montpelier. It was true in Berlin. I think it was true in Dubuque. I think we had some local people involved there, along with Helene Curtis that put up the money for that one. There were so many others.
SMITH: Let's go back to the group of systems that Jerrold built in association with J.H. Whitney and Fox Wells and Goldman‑Sachs. Those systems were eventually sold. Do you know who they were sold to?
GARFIELD: No, I don't remember. What I'm trying to remember now, I guess we sold our interest. The way that we can identify that is by remembering, did I at that time acquire something as a result of my minority position in the systems. I seem to recall that I did. That was when Randy Tucker went with those folks. I think we had the Williamsport System. There was a system in West Virginia.
SMITH: Either Bluefield or Clarksburg or both, as a matter of fact.
GARFIELD: I think maybe both. Bluefield in particular rings a bell.
SMITH: Clarksburg I'm certain was one of them, because Sandford Randolph often talks about J.H. Whitney.
GARFIELD: I don't remember how those deals went and who did what to whom, except that I think Jerrold sold its interest at that time. I think that we both did. I think both sides did, sold it to some third party.
SMITH: Could it possibly have been H&B American?
GARFIELD: That was the David Bright thing? No. He moved in a westward direction with another one of our guys, a guy named Leon Pappernow who was at that time in charge of if not all then a significant number of our cable systems and was according to Byer, notably unpopular with our systems managers. This comes via John Sullivan, that he was very tough‑minded. I never thought about him or saw him that way which is an interesting comment on what's the perspective that you're looking at a man. If you're looking at man like this, it's very different than if you're looking at man like this. Of course, I was running things, and Leon was in a sense among the many people that were working for me, so I never had any problem with Leon at all. I always though of him as a really nice guy.
Marty was telling me that he came into Ukiah, which was one of our systems up north here. He came into Ukiah one time for just a routine inspection system, but he didn't come in announcing that he was coming in, he came in two days ahead of time, into the airport, unannounced. He was obviously on some kind of espionage mission to see what the local management was doing. John was a very responsible manager, this John Sullivan. He was a very good manager. He did a very good job. He happened to be at the airport when the plane with Leon Pappernow came in. He looked at this guy who was very different in his garb and everything else. The way he came off the plane he said, "I bet that's Leon Pappernow." According to Marty, and this may be one of those apocryphal stories, he went up to this guy and he said, "Aren't you Leon Pappernow?" Leon was very startled and he said, said yes. Then he said, "Well I'm John Sullivan your manager, and blew his cover completely at that point."
He went with David Bright. David Bright as I recall it, looked at the wheels within wheels. I think David Bright was friendly with Jack Wrather. I think out in Beverly Hills, David was a very wealthy guy who made a bunch of money somehow or other in Illinois and then moved out to Beverly Hills and had a great art collection. He became an art collector. Jack had a pretty good art collection. They met and they were friendly with each other and that may be the way that interest came into being on Jack's part. I'm not sure of that, but it may be. David moved out here and he acquired properties out here with Leon. He was never back east. And he died. He is also not alive, you and I may be the only survivors around here. Everybody we're talking about seems to be dead. I hope a lot of them are still alive. I don't know where Leon is. Leon would be able to say about operations, because he was very interested. He began with a small television station in San Diego.
SMITH: That's correct.
GARFIELD: He made his way across country looking at cable systems and came into our office one day and said to me, I want to go to work for you guys. He was pretty bright. He knew what he was doing and he knew what he wanted to accomplish and he accomplished it. He got into this industry which is what he wanted to do. I don't know where he went. At one point I heard something about him being in South America, but I don't know that that's so at all.
SMITH: I have the recollection that he and his wife went traveling for a couple of years after I think they either sold that television station in San Diego or it might have been after H&B American sold out.
GARFIELD: I know that they did after they sold the television station. He and Felicia, his wife‑‑a very nice person I thought‑‑made their way across country by automobile and wound up in Philadelphia with us. They spent a good long period of time making their way across country and looking at the cable business at that time.
SMITH: I knew Leon and he was regarded by many people in this manner that John Sullivan described to you. I didn't have any personal experiences with him that ever caused me to dislike him. Those that I did have were just in and out of the office or a telephone call about something in the industry. He did have that reputation.
GARFIELD: I knew nothing of it until a few weeks ago when I met this woman Marty Sullivan. She talked about it and Byer joined right in. He was very antagonistic early on.
SMITH: I've completely lost track of Leon. I haven't heard his name in a long, long time.
GARFIELD: What else do we want to talk about? Have we run out of some gas.
SMITH: I think we've run out some gas, but we haven't run out of material.
End of Tape 3, Side A