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Tonya Adams

Tonya Adams

Interview Date: November 29, 2017
Interview Location: New York, NY USA
Interviewer: Seth Arenstein
Collection: Cable Center Oral History Program


Seth Arenstein: Hi, I'm Seth Arenstein for the Hauser Oral History Project for the Cable Center. We’re here in New York City. It's the end of November, 2017. We’re here with Tonya Adams from Comcast. I want to get your title correct here. It is “Executive Director Business Services Reliability Engineering, Comcast Cable.” Can you get that all on your business card?

Tonya Adams: I do. I abbreviate it.

Arenstein: There’s got to be an abbreviation for that, right? Internal.

Adams: Yes.

Arenstein: And we’re joking about that, but as I look at that title, there couldn’t be a more responsible or more important job on the engineering side than business reliability. But we’ll get to that. So welcome, Tonya.

Adams: Thank you, Seth. It's great to be here.

Arenstein: Tell me where were you born and where did you grow up?

Adams: I was born in Chicago, Illinois, outside of Chicago. From there I migrated. I went to high school, of course, graduated, went to the University of Dayton, where I received my Bachelor of Arts in communication management. And I really didn’t know what I wanted to do exactly when I was in college. I wanted to be an FCC attorney. But unfortunately, I took ill while I was in school, so I had to readjust. And after graduation, I took a year off, and I decided to go back to grad school where I have a Master’s of Science in information systems.

Arenstein: And that was where? What school was that?

Adams: De Paul University in Chicago.

Arenstein: In Chicago. So you stayed in Chicago.

Adams: I stayed in Chicago for grad school and then Dayton, Ohio, for undergrad.

Arenstein: And pretty soon after that, you were at Comcast. But there were a couple of years in between. What did you do in those years in between?

Adams: In between, I worked for a company called Braun Technology Company. They were an IT startup consulting company, and I started out as an intern and my old boss, Bill, is the one who opened the door as a female in IT for me while I was an intern, and hired me full time. I stayed with Braun for about two years, and then I went to work for Lucent as an engineer when Lucent was popular in the 5ESS world.

Arenstein: Right. So, this was all in the Chicago area?

Adams: Correct.

Arenstein: OK. How did you find your way to Comcast, which wasn’t that long? Two years, right? Two or three years.

Adams: Yes. I started Comcast in 2001. It was ironic because my best friend, Pat, and I, back then, “Sex and the City” was a popular TV show. So we had the vision that we were going to be the “Sex and the City” Samanthas and the Carries, and we were going to move to the East Coast and we were going to take over the world. So back then, monster.com was the hot job website. We started applying for jobs and Roger Williams interviewed me for an engineering position at Comcast, and that is how I ended up on the East Coast.

Arenstein: OK. And what was Comcast like in 2001?

Adams: 2001, it was called Comcast Business Communications. And we were a smaller child company to the parent company, Comcast. And at that time, that was when the cable industry was trying to move into the small-medium businesses, offering different types of SONET, ATM technology. And at that time, it was a very hard industry to break into because of course, we’re cable, and people only saw Comcast as a cable company. I was very fortunate with Roger again a male giving me an opportunity because you know, back in the early 2000s, it was very unheard of for females to be in the engineering industry. And once again the doors of opportunities opened up for me, and I was very blessed for that.

Arenstein: And that to me—I guess we’re getting ahead of ourselves here, but that’s been a theme of your career, to take care of people, to take care of women specifically who want to get into technology, who want to get into the cable business. I know that’s been a big part of your career.

Adams: It’s who I am, it's ingrained in me, and I wouldn’t be the person I am today if I didn’t believe in giving back because someone opened up that door, and as we continue to grow our careers, it's important that we always remember to give back and never forget where we came from.

Arenstein: Right. So you were at Comcast in 2001. What was your next step?

Adams: After I left the network engineering, I was in operations. I helped build a lot of the systems in the Midwest because that was my territory. And from there I moved to Comcast Digital Voice. That is at the time where a lot of the cable industries were trying to launch a phone service, so we became competitors to your local Verizons and AT&T. I was one of the engineers to build the first system that launched in the Midwest and the Chicago region, and the Midwest was my territory. So Chicago, Indiana, you name it, I was part of that. As time went on, I learned how to do a lot of the coding myself. And what happened was, because I was able to make a lot of the configuration changes and at the time was known as the BTS and the Safari—those were the gateways to supply the voice services. We got to a point where we didn’t really need the vendors as much to do the plans for us. And due to the success of that, I also launched Comcast Business Digital Voice, where now we were offering phone services to businesses, and I also was part of one of the first launches for the business side of Comcast Digital Voice.

Arenstein: So tell me, I know you were on the engineering side, on the operations side, but I'm sure this impacted your business or your career and your life, your professional life. As you said, people thought of Comcast or thought of the cable industry as providing cable. Now we want to give you your telephone service, too. What was that like? Initially was there some, you know, curiosity and hesitancy, I would have to say, on the public’s part?

Adams: Absolutely. I think more than anything what made us successful is the curiosity because we came in very competitive with our competitors. But also you know you think about how technology has evolved, what better way to have all of your services combined where you only paying one company per month for everything that your household uses. And it's great being a part of Comcast. I'm a champion of Comcast. So when we launched the Digital Voice, I started telling all my friends and family about it. “You have to buy this. It's the next best thing! It's better than having a home phone.” So of course, everyone was like, “Oh, you're such a great salesperson.” Because I'm selling for the company I work for. But if I didn’t believe in what I do, I wouldn’t continue to do it. I believed in the product that we were launching. Just like any other new technology, you're going to have some hiccups, but I was confident we had the correct engineers, we have a great team at Comcast where no matter what the hurdle was, we were going to overcome it. Because failure was not an option.

Arenstein: What was the climate like in terms of being a woman in kind of an engineering area? Were there a lot of women in that sector at the time when you were starting to launch Voice?

Adams: Absolutely not. It was very challenging. There were many days, honestly, that I felt like maybe I needed to find a new career path. But it was through my family, my friends, my faith in God that I was not going to give up. I was going to be the first and pave the way. There were a lot of women working on the project, but most of them were in project management. They were not in the engineering space. And honestly, it was tough working with my male counterparts, especially because many of them saw me as someone who was fresh out of school, they had been in the cable industry most of their lives so when you come in with new ideas, they're not always received the way that you would hope that people would receive them.

Arenstein: Very diplomatically put, I must say. When did you notice that changing?

Adams: The change as far as—

Arenstein: As male acceptance of you.

Adams: I think it took a couple years, but because of my personality, the one thing that I always make it my mission: whenever I meet someone or someone that I don’t particularly get along with, and we have a difference of opinion, I make sure that I sit next to that person instead of sitting across. I have conversations, and what really helped me, I got to know the men that I worked with. I started asking about their families. What were they interested in? And most of them were very surprised to find out that I was an avid, an advocate for football. I love football. I am a die-hard Dallas Cowboys fan.

Arenstein: I'm sorry to hear that, by the way. (laughs)

Adams: Once they saw that I loved football, we started to realize we had more things in common than not. And I just made myself one of the guys. It was hard at times, and often times my friends would tease me. “Tonya, you’re becoming just like a man. You don’t have any feelings anymore.” And I was like, “That’s not true.” But when you're in a male-dominated environment, you have to find ways to interact, to do what's best for the business, and to continue to move the projects forward. Because it doesn’t matter how I feel, or how anyone else feels, I always tell people, and even my team, “’QTIP.’ Quit taking it personal. This is a business and we have things to do so let's move forward. Put the personal differences aside because at the end of the day, we all want to be successful in everything that we do.”

Arenstein: You know, my next question was going to be how do you mentor people, because I am sure you're a mentor.

Adams: Yes.

Arenstein: I think you just gave me a great tip there: QTIP. What a great—

Adams: Yes, QTIP. It was something that I learned in one of my leadership classes. As a matter of fact, it was Dale Carnegie. It was called QTIP. “Quit Taking It Personal,” because often times you may get a different Tonya in the next ten minutes. It doesn’t mean that I disrespect you or I don’t value your opinion, but sometimes the stresses of the job and you're trying to be there for everyone, you can't take things personal. Because if you do, it will eat you up on the inside. And one of the things I tell my mentees all the time, as my mentors have mentored me: when you're in the business where technology is always changing, there's a lot of pressure. There's a lot of stress that comes with that, but it's how you learn to manage your time and learn how to maneuver around the obstacles. Nothing is going to be perfect; nothing is always going to be successful the very first time you try to launch it. But if you keep the end goal in mind, you're always going to be successful.

Arenstein: Now the other thing that I noticed is that you said that if you don’t get along with a person initially, you personally attack that—not attack—you sit right next to them, you go after the problem forcefully and strategically. Is that something else you tell your mentees?

Adams: Absolutely. When you come to work, we all have different personalities. Some people are introverts, some people are extroverts. You have to learn how to manage the people that you're communicating with. The one thing as I've been going up the ladder in the corporate industry, I used to always hear people say, you know, “Manage, lead others like you want to be led.” No, that’s not good advice. You treat people the way they want to be treated because I may want to be treated totally different. Everyone doesn’t want to be treated the same way that Tonya wants to be treated. So when you get to know people, you now understand how to communicate and how to interact with them because you know how they want to be treated.

Arenstein: You mentioned Dale Carnegie. What other outside forces or influences or courses were things that you read or people that you followed? Did you take along the way as you went up the ladder, because I bet you have all kinds of things that you have been looking at outside of the office to improve you as a person and as a professional?

Adams: Yes. So I have a lot of friends and a lot of them are vice-presidents, CEOs of different companies. I solicit constructive feedback. There are times where people were kind of hesitant to tell me the constructive feedback that Tonya needed to hear, but how would I ever improve if I don’t get the constructive feedback that I need? So I'm a big fan of always seeking feedback. I've taken a lot of different leadership courses. I'm very thankful to Comcast because they’ve been a big part of where I am today and the courses that I've taken. And I've been part of Fundamentals of Leadership; it's called “FOL” within Comcast. I was one of the founders with Tony Werner and John Schanz as the champions for Toastmasters. I was the—

Arenstein: We’re going to get to that. We’re going to get to that.

Adams: And then I've been very fortunate just reading books based on recommendations, and the mentors I've had inside and outside of Comcast. So for me every day that I come to work, I must always learn. The day that I stop learning, I am not doing my job.

Arenstein: Now, Comcast University, is that part of all this?

Adams: Yes, so Comcast University under Martha Soehren, who you guys have had the pleasure of interviewing—she's a wonderful person—she's over that. And because of everything that Martha and Dave Cohen and Brian Roberts do for the company as a whole, that is why we are so fortunate to have the classes. And the biggest one, I think, of all the classes that I've taken, is the Betsy Magness Leadership Institute. That was the best class that Comcast could have ever sponsored for me to attend.

Arenstein: Tell us a little bit about what the Betsy Magness Institute is. Tell us about the program, it was in 2016, I believe, right? And that’s what, the 34th class?

Adams: Class 34, that is correct.

Arenstein: So, Betsy Magness. If I don’t know what that is, tell me what that is.

Adams: Betsy Magness is a nine-month program. It runs from September to May, and during those nine months, you have the opportunity of going to various places. It is a high potential leadership course where you get to interact with all different type of women from all over the United States in various industries to learn how to network. It is the class that will make you cry because you get to learn so much about the real you. You get networking. But the most important thing with Betsy Magness is just the learning. The things that they taught us are just invaluable. And anyone who has the opportunity to take the class, I would strongly recommend it. After taking that class, so many people saw such a major change in who Tonya was, and my leadership abilities after taking this class.

Arenstein: Give me an example of something that changed for you as a result of Betsy Magness.

Adams: The biggest thing—Betsy is big believers, you have to be fit to be a leader. As part of the Betsy Magness program, they challenged us, the very first class. So the class challenged themselves to go vegan for thirty days. We made it to thirty days and after thirty days, we said we would do it until the holidays. And this time, it was 26 of us in the class. Two people in the class are already vegan, but the whole class got on the bandwagon and we were all vegan. So when we graduated in May, more than half of us were still vegan.

Arenstein: Wow.

Adams: Yes. It's life-changing. But it also helped me to start focusing on Tonya. I give so much of Tonya to others, being the leader, working in operations, being there for my family, my friends, that sometimes you forget about yourself. And it's hard to balance that work life. But Betsy has taught me how to take time for Tonya. And it's OK to say no. I doesn’t mean that you're being rude or disrespectful. Sometimes you just need time for yourself. And I have learned to take time for Tonya.

Arenstein: Good. Let’s dive back into the timeline here.

Adams: OK.

Arenstein: Let’s say we are at 2010, when you become a manage for business network operations at Comcast Cable. Tell me about the transition there going from sort of business back to cable. Although you're still with business networks. What was that like? What was that move like?

Adams: I was excited when the opportunity presented itself for me to come and lead and go back into operations. But I will tell you it was a life-changing career move for me. What I mean by life-changing—for several years, I had been out of the operations environment. And now to move back into operations, managing a 24x7 team, and at the time, so that call was just taking off. So it was a new product, it required a lot of time, and we had teams that were trying to learn. They had become stagnant in their roles. The morale was a little low and when I first got there, it was definitely a male-dominated environment. And of course, anytime you have a new leader come in, there's a lot of hesitation, especially when you're making big changes to move the vision forward. I recall having people that I worked with when I first started with Comcast, still in their role. And now knowing that I was going to be their new leader, some of them were very accepting of it, and others were a little hesitant and wanted to know, how did she get here? It was challenging because now I had to figure out and get to know 26 people on the team. And this goes back to what I said of not being treated the way I wanted to be treated, but how they wanted to be treated. And one of the things I did when I first came in, I said, “Everyone starts off with an ‘A’ with me.” And prior to taking that position, I didn’t allow anyone to feed any negative energy or information to me about what the team was like, what I was walking into. I walked in with an open mind, everyone had an A, and it's just like being in school. The teacher will see who’s the brightest on the team. And that is what happened.

I gave everyone to represent themselves to see what they knew, and from there, I knew the next move I had to make to grow that business and that team.

Arenstein: And shortly thereafter, you got to be the Toastmaster’s Club president, the Xfinity Communicators’ Toastmasters Club president. What is that?

Adams: Toastmasters is a public speaking organization. Toastmasters was at corporate headquarters for Comcast, and we were commuting from the New Jersey office down to the Philadelphia office to be a part of Toastmasters. The one thing that people fail to realize when you're communicating, we have a lot of “crutch” words that oftentimes people don’t even realize it. People use a lot of “ums” and “ahs” and “so’s” and things that we call crutch words when they're looking for their next thought. Toastmasters helps engineers, especially people like myself and others; we’re so used to speaking in acronyms in our language because that’s what we do all day long. But not everyone understands what we do and they don’t understand the acronyms, but most importantly, as you continue to go up the corporate ladder or just interacting with customers, your family, your friends, we all need to become better communicators. And that was one of the reasons why I champion and went to John Schanz and Tony Werner to be our executive sponsors because it was something I firmly believed in and I thought would benefit everyone in the company. And they were our executive sponsors and today that chapter still exists.

Arenstein: Let me ask you. Just talking about communications and combining that with engineering, which you obviously have done. When you're hiring now, are you looking for an engineering background more than a communications background? Or are you looking for somebody who has both?

Adams: I look for someone who has both. The team that I lead right now, we only touch high-profile customers. And of course, we have a knock-to-knock relationship and therefore we’re on the phone with our customers, we’re working in their network, we need to be great communicators because there are times where's there’s outages, we’re on conference bridges where executives may join the customers, the executives may join, we need to show up every day and be good communicators so no matter who we’re speaking to, if there was a five-year old or a sixty-year old, we can all understand what's happening and what we’re working on. So they must have both to be part of the team.

Arenstein: How many people did you get involved in the Toastmasters Club?

Adams: When we first started, we started with about 28 people in the New Jersey location. From there it has steadily grown so right now I think the last number I got for Toastmasters, they were almost at 50, which is great, because it is truly a commitment, but it is a commitment in yourself. And there are several members on my team who hold office positions in there and they love it. They have been in competitions with Toastmasters, because with Toastmasters, it's an international organization. They have competitions, you do speeches and that is one of the reasons I credit Toastmasters for helping me be a better communicator.

Arenstein: Wow. Tell me, we've been talking about communicators, we've been talking about buzzwords and things, and you said we shouldn’t use them. What makes a good communicator? Let’s define what makes a good communicator.

Adams: I think being a good communicator is when you show up as your authentic self at all times. Don’t try to pretend to be something that you're not. Don’t try to speak a certain way because you think it's the right thing to do. Because when you're trying to imitate something that you're not, you're going to fail at it. You can't be successful if you're not going to be your authentic self.

Arenstein: OK. Message received. You got into the NAMIC [National Association for Multi-ethnicity in Communications] Leadership Seminar Program. Tell us what that was about. That was in 2013.

Adams: Yes, I was fortunate to have the opportunity to apply for the NAMIC Leadership Program. And the first time I didn’t get in. And I will tell you I was devastated. Because it was like, “Me? Why didn’t I get in?” But I understood, and everything happens for a reason. I would not have been able to receive what was being taught to me when I first applied. When I was accepted two years later, I was more equipped and I was better prepared to receive the training. The beauty about NAMIC, it's multi-ethnicity. It doesn’t matter the color of your skin. You were there because you were a high potential or someone who your company perceived as having a great future. The networking that had been the speakers that they brought in was just dynamic. But also that was the first time I ever did a 360 to learn about my personality and what others thought about me. It was very humbling when you get the results.

Arenstein: Sure. And what did you do with that 360? Tell us a few of the things that you learned if you want to do that—

Adams: Absolutely.

Arenstein: How did you react to that?

Adams: When I first got the 360, I was heartbroken. I went to my mentors, I went to my leader, Charlotte Field at the time, and I said, “I don’t understand. I worked so hard.” The biggest thing that stood out were people told me they were intimidated by me because most of the time when I speak, they said, I was very crass or I was sharp. But my passion sometimes is taken that way because I'm so passionate about what I do. When I set forth to do something, I want to make sure that it's done and excellent. I want to make sure it's done correctly. So when you're attacking things, I'm passionate. So I went, “No!” So that was the hardest thing. But I will say on top of that when I talk about the humbling experience, I brought in all the supervisors and managers that were underneath me and I shared those results with them. That was very hard, and it took a lot of humiliation on my part to share such critical results that were so personal to Tonya. But it was helpful because they opened up and said, “We think you're a great leader and yes, sometimes you do come off a little rough.” And that’s when the little light bulb went off as part of that leadership program. I'm great at what I do. But if I can't communicate to get my message across, then what's the point? Exactly.

Arenstein: Wow. What was the mood in the room when you brought in your people who report to you and told them that that’s what you were going to talk about, about your 360?

Adams: Initially they didn’t know. So what I did was I took them to Cracker Barrel. You know, you always feed people first. (laughs)

Arenstein: Good philosophy.

Adams: I just wanted to share the results. They're a big part of why I'm leading the team, and I wanted to share the feedback because of course, they had to take a survey as well and provide feedback. And they were very open and honest. Initially they were scared. “Why is the boss lady taking us out to eat during work time? Why are we doing this?” But I said, “No one’s in trouble. This is just me wanting to know how you guys really feel to help me be a better leader because we have a very important business that we must make successful. And I can't do it by myself. We are a team.” And their opinion was very important to me because I value what they did day in and day out as well as, “If I can't be a good leader, then I can't lead the people that are under me.”

Arenstein: Now we’re talking about NAMIC, we talked about Betsy Magness. You’ve been at Comcast your entire career.

Adams: Yes.

Arenstein: I mean, other than a couple of years at the beginning there. You really haven’t been in other industries, but then you look at NAMIC, you look at Betsy Magness, which are fabulous things that are part of the cable industry. But you have friends in other industries. Do they tell you or do you know of other industries that do things like this for diversity and for leadership and things like that?

Adams: I have friends in other industries. They do have a few internal diversity, but none of the friends that I have, they never talk about their company investing back in them. And when people will say, “What keeps you at Comcast?” “Because they invest in their employees.” If I didn’t love what I did at Comcast, I would have left a long time ago. We truly have a family-oriented environment, we have owners who truly care about their employees and I think the biggest thing for me is that fact that they give back so much. Because I am a big advocate for community service. The things that Comcast does for communities around the world is just, I've never heard of any other company doing the things that Comcast does.

Arenstein: Now how do you get involved with that, and how does your team get involved with those kinds of community affairs efforts?

Adams: So the biggest thing that everyone is aware of is Comcast Cares Day. We every year, the team and I, we get together to figure out where is a central location where we all can go. And we go as a team. Now because we are 24x7, my entire team, of course, cannot leave, but we have “no-sew” blanket activities where they can sit at their desks and put together blankets where we donate them to the hospitals. We have blood drives to give back. So there's a way that everyone on the team can participate. And over the years I've also been a big champion of Comcast Cares, where I had the opportunity to lead one of the projects at the recreation center from start to finish working with our community investment team.

Arenstein: OK. Tell me about, I know Comcast provides broadband in urban areas at a reduced rate or maybe even free. I don’t know the specifics. Are you involved in that in any way?

Adams: So that’s the Comcast Internet Essentials, and this goes back to me saying why I love working for Comcast. When you look around today, technology is our future. Without Internet, without a computer, basically kids, students, you name it, we can't exist almost. And the fact that a company is willing to give so much back to others who are less fortunate because they had been very fortunate to be successful in this industry, that speaks volumes. Because I know people personally who benefit from Comcast Internet Essentials.

Arenstein: OK. So now here we are, you’ve been through Betsy Magness, you're now in your present position—as we said at the beginning, you're the executive director for Business Services Reliability Engineering at Comcast Cable. I think I know what that means and it sounds to me like a very important job. Because you lose your television reception—OK, it comes back on a few minutes later perhaps. But when a business loses its telephone or voice or anything, any kind of communication for an hour or so, it could be a disaster. So being in charge of something like that, it's got to be a lot of pressure. Tell me about that.

Adams: It is a lot of pressure. Today, I have four teams under my leadership. Two teams are located in Denver, Colorado, and the other two are in Mt. Laurel, New Jersey. With the exception of my Denver team, they're on call 24/7, but my Mt. Laurel team, we’re in the office 24/7. So including the holidays, we are working when others are out enjoying time with their families and friends. It is a lot of pressure, but I think if I was doing something different, I wouldn’t know what to do with myself. Every day there's different network challenges, whether it's a software bug, a fiber cut, and now with the teams that I lead, we’re also responsible for managing NBC Universal Broadcast Video. That is, of course we’re the same company, but a lot of their TV stations run over our IP network. Now imagine, when you're watching TV, and you have a black screen or frozen video, there's a lot of pressure to get that up, quick, fast and in a hurry. And just in your daily lives. Because although I work for Comcast, if I get frozen video while I'm watching “The Voice,” for instance, I'm having a heart attack because I’m like, wait, it’s “The Voice,” I want to see that! And it doesn’t come without challenges, I will tell you. Some days are very good days. And then there are other days where I may be up for two or three days without any sleep because the outages were just that bad. And when you have outages at that magnitude, you have to have post-mortems. You have to talk about what happened. What could we have done better. Is this FCC reportable?

There are a lot of things but the biggest challenge, and I will say for me, is making sure that I am always calm with my team. Leaders have to remember: your team feeds off of you. When my team knows that I'm having a bad day, it impacts them. And we have a division president and one thing he always says is, “Your employees should never know you're having a bad day.” And I appreciate that. Because now being in the position that I am today and watching my leaders over the years, your employees cannot know that you're having a bad day because it sets the tone for everyone else for the rest of the day.

Arenstein: Talk to me about technology. Your career has been about technology but it has also been about communicating about technology and with technology. But let's just go right on to the tech side here. What fascinates you about technology and cable technology. In the next five years, what do you think we’re going to be doing that we’re not doing today? And what are you particularly excited about?

Adams: I am particularly excited that Comcast has just announced we’re moving into the software-defined wide area network. It's called “SD-WAN,” [software-defined wide-area network] where you can connect any device around the world. I'm very excited about that next opportunity. It's the next big thing in the industry. Cloud computing, artificial intelligence, and the fact that you had a cable company that is now moving into a technology company is just amazing. And I've been very fortunate because all the new technology that Comcast has put out to our consumers, I've had the opportunity to be part of that changing environment. So I'm excited about the next five years for the company, the industry and technology as a whole because our future is so bright. I'm looking forward to the day I can buy a car where I can be like the Jetsons, and I really don’t have to drive, but I can just sit and let the car drive me sometimes.

Arenstein: OK. When you started out—we've gone through your career in forty minutes, which is amazing. It took you twenty years to do it, but we did it here in forty minutes. Seriously, when you started out at Comcast in 2001, did you have any idea that this was going to be your home for sixteen years?

Adams: Absolutely not. I figured I would be like everyone else as a female, not being able to find a place I could truly call home. Honestly, I only thought I would be at Comcast three to five years, and I would be looking for the next company to go to, because we just talked about how hard it is for females. And the struggle—the struggle was real. I tell anybody, especially as we’re mentoring young females today and trying to get women in engineering, you cannot not talk about the struggles. The struggles are what got us here. And they need to understand, just because you set out to do something and you fail, it doesn’t mean you won't succeed. If we don’t talk about the struggles, then what good is it to only talk about the good because life is not all about the good. It comes with the ups and the downs.

Arenstein: So I'm a young woman and I come to you and say, “Tonya, I want to get into the technology field. I want to get into a company like Comcast. What do you tell me? Is it a good place to go? Is it a good field for women? Is it still challenging for a young woman right out of maybe getting a Master’s in Science? Is it still a male-dominated area?”

Adams: It's still male-dominated, of course, but it has drastically improved. Are we where we need to be? Absolutely not. And we were talking about this several weeks ago when the new survey came out, and I think it said by 2026—if I remember correctly, don’t quote me on the year—but it was like fifteen years out. It would take—and only 1% of females would make the same amount of money as their male counterparts. As a female, that is beyond frustrating and I will tell you when I read that, I was angry. Because I am working just as hard as my male counterpart. I have the same educational background if not more than my male counterpart. So what is it going to take for companies to start opening their eyes to start valuing the women? I'm not saying that they don’t today. It’s better, and if any young lady comes to me, I'm going to tell them: “Do not let men distract you from what you want to do. Only you can set the goal and set your career as to where you want it to go. And then once you know what you want to do, you take control of your career by seeking out the mentors.” And one of the things ironically is, several years ago, my bishop told us, “If you have a boss and you want that office, you go in that office and you tell God that one day you're going to be sitting there.” And that is some of the things that I had incorporated in my career. Ironically, as we talked about Charlotte and we talked about John Schanz, who was also a great mentor to me. When I first moved to the Bishops gate office, Charlotte used to sit in the office that I now occupy. And I went in there and I said, “One day I'm going to be here.” And whenever I would go talk to John, I would say, “OK, John, I'm going to be in this corner office with the glass…” So I was speaking it and because of who Tonya is and because I know where I want my career to go, I know what I need to do to get there. And I tell any young lady who is passionate, “Don’t give up on your dreams. It's hard, but keep encouraging yourself. No one is going to do it for you. You will have people that will encourage you and there is going to be people that bring you down. But up here, mentally, you have to know that you are breaking barriers. And you can be the first to do something different.”

Arenstein: Fair enough. Fair enough.

You’ve talked about a lot of people in the past forty or so minutes. Are there any mentors or any people who you want to mention who have been particular influences for you?

Adams: So I've had a lot of mentors. But I think, when I look back on all the mentors, Charlotte Field will be by far someone that I know that anytime Tonya needs her, she can reach out to her. The advice she's given me and our relationship when she was at Comcast was very special. Because as an SVP, a female, sitting at the top over hundreds of people, she was someone I looked up to because it gave me hope that while I'm struggling and I'm fighting everyday with my male counterparts, there is still hope that one day I too will be an SVP because she has broken boundaries. And her story is phenomenal. She shared those things with me. Her humility; she’s so humble in her upbringing and how she got to where she is today. As I continue to go up that corporate ladder, I’ll always remember the conversations I had with her and I can never try to be something that I'm not, and that I can never forget where I came from. Because I then would become a leader that no one wants to report to.

Arenstein: Agreed. Your legacy. Let’s talk about your legacy. I know you have a visual aid here. You can pick it up because we can zoom in on it. And show it to the—

Adams: This is my legacy.

Arenstein: So explain to us what that is and why that’s your legacy.

Adams: This right here, when I was in Betsy, we had to do a vision board. And through all the rewards I have received, and all my speeches, my communication, I always tell people that one day I am going to be a CEO. But the one thing that I'm most passionate about when I leave here, this industry or this earth, I don’t want people to remember Tonya for what she did for the cable industry. I want people to remember Tonya because of how she gave back and helped others. And when you look at the Forbes—because I will be on Forbes one day—it talks about the world’s top 25 greatest leaders with my name. And my motto has been: being the voice for others while inspiring everyone I come in contact with. Often times, especially as a female, when new females are entering the industry, they don’t have a voice. I can't sit and be silent and watch things happen to them, without speaking up for them and giving them the confidence that their voice does matter. So I want to be known for that person that spoke up for those who didn’t feel comfortable or thought they had a voice, but also because I inspired so many through all of the community service activities that I've done in my lifetime.

Arenstein: Speaking of community service, there is an organization that I know that it's a big part of your life, and we haven’t talked about it yet. That’s the “Daughters of Destiny.”

Adams: Yes.

Arenstein: Why don’t you tell us what that is and what your role in that is.

Adams: The Daughters of Destiny is a nonprofit organization founded by Cheryl Marion. That is an organization that gives back to women who are less fortunate, whether they're homeless, they’ve been displaced out of the work environment, they're struggling. But also it's Biblically-based because we’re very rooted in our spirituality. Every year, we have a women’s prayer brunch and the proceeds from that we give back into our holiday hope campaign. We volunteer at the Ronald McDonald House, where we go and feed the families that are staying there because their kids are sick, of course. We also, at Christmastime, we give back; we donate to families who are less fortunate. We pray for them. And on this particular organization, I am the treasurer on the nonprofit for the board of directors.

Arenstein: So we were talking about your legacy, and there's another item here that I really don’t want to forget. In 2016, you were honored with the Candace Corporate Trailblazer Award from the National Coalition of 100 Black Women in the South Jersey chapter. Tell us about that nice award. Tell us about that—congratulations, first. Tell us about that and what went into that, and I know that ties into your sorority as well.

Adams: So the Candace Corporate Trailblazer Award was afforded to me. The South Jersey chapter of 100 Black Women, they did a STEM event for 6th through 8th graders. They bussed in about 100 young girls, and they had women from all different areas of science, technology, engineering and math. And I was one of the presenters and I talked about information security. Of course, we touched upon Facebook and Instagram and all the different avenues of social media, and why it's so important, the dos and the don’ts of when you're posting. I also told them that you have to realize that while it seems fine now, as you get older, that can never be erased and employers look at that. You want to make sure that you're carrying yourself, you're being savvy because there are predators out there. And based on that, and the responses from the parents, one of the chapter members of the National Coalition of Black Women, she nominated me for that award and I was honored with that award last year in March because of what I did for that organization.

As far as my sorority, I am a member of Alpha Kappa Alpha Sorority, Incorporated, and I belong to the Upsilon Delta Omega chapter. And also, as part of the legacy, our supreme president that’s over the entire sorority itself, has a target and that target is named, “A.S.C.E.N.D..” And that program is a youth enrichment program where we partner with local high schools, and we not only teach them about how to fill out a college education, we partner with the United Nations, we bring them to New York where they have the opportunity to visit the United Nations. But the most important part of that program is the fact that we’re teaching those students about STEM, and how that is our future.

Oftentimes, when you talk about STEM, students don’t realize that when they're playing on their phone and they're playing with the apps, that’s about STEM. You're in engineering, and when you kind of let the light bulb go off for them, it's amazing and it's also a thing to see the children’s faces when you talk about, “You really can do this because you know how to fix it when there’s a bug; you know what you need to do to go in and get it to work again.” So these are the things this program instills in the students in the high school to help them as they are preparing for the next phase of their life, which is college.

Arenstein: Tonya, this has been a pleasure. It's so nice to finally meet you.

Adams: Yes, thank you.

Arenstein: And go through your career. And I have no doubt that one day I am going to pick up Forbes and see you on the cover and I can say to my friends, “She told me this back in 2017, and it's on video.”

Adams: Exactly.

Arenstein: So thank you so much.

Adams: Thank you, Seth, it was an honor to be here.

Arenstein: My pleasure.

END OF INTERVIEW

 

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  BACK TO ORAL HISTORIES

Colleen Abdoulah

Colleen Abdoulah 2014

Interview Date: Tuesday December 9, 2014
Interview Location: Denver, CO USA
Interviewer: Jana Henthorn
Collection: The Cable Center Oral History Program

Henthorn:  I’m Jana Henthorn and we’re here today taping Colleen Abdoulah’s oral history. Colleen is the chair of the board of WOW Internet Cable and Phone, and the former CEO of WOW. This is part of the Hauser Oral and Video History Program at the Cable Center and it’s December 9, 2014.

Colleen Abdoulah:   Hi, Jana.

Henthorn:   Hi. You grew up in Canada and you worked in your father’s restaurant at a very early age. And I'm sure that somehow shaped your experiences. Can you talk about that?

Abdoulah:   It was a small town in Western Canada, Saskatchewan, and Dad was of Lebanese background. And his family struggled with some prejudice. They used to have rocks thrown at their home, saying “Go back on your camel,” and it was really a tough upbringing for them. He was determined that the way you gained respect was you did well. You worked really hard. You took nothing from anyone. You helped other people and that’s the way you gained respect. So my father at a very young age—I think his first job was six. By eleven, he had the biggest paper route in town. And by nineteen, he had got some loans, opened the first drive-in in Western Canada. Just got an old boxcar, gutted it and all his friends and my mom and her friends got on roller skates and they would take the hamburgers out to the car and it became a big hit. From there he just built a restaurant business. He had four or five restaurants at one given time.

So all of us kids—there were five of us—we all had to work from the time we looked old enough. Not that we were legal, but then we looked old enough. And for girls, as you know, that’s around twelve. So I've been working since I was twelve. And what struck me about the way my parents operated and how they managed relationships, was very unique in that if you look at the restaurant business, it’s hard to keep people. I grew up with waiters and waitresses and when I went off to college, came back, they were still there. You know, my sisters got married, they were still there. He had people working for them for twenty years and it was always, I think, because of three basic principles. One is that my parents felt that you never treat somebody like you're better than them. They should never treat you like that. Everybody is equal, no matter how much money you have or success you have, it doesn’t make you better than the next person.

The second thing I noticed is that they would share the wealth. If the businesses did well, everybody received an extra bonus. If a family got in trouble, people gathered together to help them. Lastly, I think it’s about knowing what you don’t know. My dad, you know there were a lot of aspects in the business he wasn’t that great in, but he knew it and he knew what he was good at and he hired the best of people that would complement his skills. So even though that was never said to me literally, it’s what I observed. So when I went off to work. I thought those were sort of the principles I would see modeled.

Henthorn:   Now before those first jobs, you went to college. How did you decide where to go to college?

Abdoulah:   I didn’t know what I was good at. I really wasn’t good at anything. I was just average at everything I did.

Henthorn:   That’s hard to believe.

Abdoulah:   It’s true. I remember at dinner one night, my sister’s now husband—they were dating at the time—said, “You're really good at talking. Why don’t you do something that has to do with talking?” And I thought, “Well, I want to be Barbara Walters. So I’ll go to journalism school, I’ll go to broadcasting school.” There was a great school in Calgary, Alberta, Mount Royal University. So I went there and after about a year of journalism school, I realized I was just a so-so writer. I just didn’t like what I felt to be the intrusiveness of reporting. So I stopped that, went into broadcasting for a little while, realized how hard it was going to be to work your way up. You don’t just get a job looking cute on TV and reporting, you have to go out and slog it through a lot of small markets throughout Canada and I didn’t want to do that. So I ended up in public relations quite by accident and got my first job in Calgary at the largest PR firm in Western Canada at the time.

Henthorn:   Then how long was it until you transitioned into the cable industry? How long before you got into television? Possibly not Barbara Walters.

Abdoulah:   No, darn it. Now that she’s retired, there’s a slot there. I was in advertising in Calgary for about three years. Then I got a job offer to go to an ad agency in Cincinnati, Ohio. So it took it, thinking, oh, it’ll be a couple of years stint, it will be fun. I remembered in grade three having to go to a speech therapist because they said I spoke like an American. That was brutal in Canada. Because you see, in Canada, you say your vowels…

Henthorn:   You're making me cry laughing already.

Abdoulah:   You say your T’s. You know in America, you guys say “Beddy.” No, it's “Bett-ee.” So I had to learn how to enunciate my vowels and my T’s and everything so when I got this chance to go to the States, I thought, “Well, they said I spoke like an American, I might as well for a couple years and just have some fun and come home.” So I was around twenty-three years old. And I was in the ad business for about a year. And oh my gosh, I felt sort of like Dorothy, you know, from Kansas, this small time girl…

Henthorn:   Dorothy is from Calgary.

Abdoulah:  Dorothy from Calgary. It was just very different. It was faster-paced, it was more competitive, it was wilder. Everybody was sort of doing drugs and sleeping with each other and sleeping with the clients and I had clients who wanted to sleep with me and it was like, oh, my God, I got to go home. So I quit, first thing I've ever really quit and I was getting ready to leave when I got a call from a gentleman from Taft Broadcasting. It was a big broadcasting company, the largest at the time in Cincinnati. One of my clients, prior to leaving, was Warner Cable, which then became Warner AMEX and then Time Warner. They had become a client of mine in the fall of that year and they were coming up on a franchise renewal. They hadn’t met a lot of their franchise requirements. They wanted us to put this PR campaign together that would assuage the franchises and get people to sign up before year-end because they were missing their numbers. So I went on a crash course of cable. There was a fabulous man who ran their call center and marketing group and he just took me under his wing and I went on truck rolls, I went door-to-door selling. I listened to phone calls. I just got immersed in the industry. It’s right when that research came out with the “truck chasers.” Do you remember that research?

Henthorn:   I sure do.

Abdoulah:   It was like the first research done on how people were chasing the cable truck—they wanted it so much. So that’s right about when this was. I learned quite a bit about the industry. I wrote their marketing plan to meet their objectives. We met the objectives and it was a very successful effort. This gentleman from Taft had a friend over at Warner AMEX. Anyway, he read the plan. He contacted me and said, “Do you know of a company called TCI?” I said, “No.” He said, “It’s the largest cable company and we as broadcasters, went to them and said, ‘We want to learn about your industry, you can learn about ours, why don’t we partner on some cable systems?’” And that was the first partnership that TCI got involved in. There were many, right, that we know about but that was the first. There were about 200,000 subscribers involved in Michigan and New England area. So this gentleman said to me, “We need to somebody to go down to the main system in Cape Cod, Massachusetts. We’re losing customers, there's problems. TCI’s been running it but we’d like to go in and see what’s happening. Would you do a five-week consulting gig for us?”

I thought, “Well, why not?” So I delayed the U-Haul and told my parents I wasn’t coming home. I went out to Cape Cod not knowing, really, what I was going to do. I’d never been a consultant. So I just landed and met the general manager and it was at the time when midband converters were being rolled out. You know the ones with the wire and even the remote had a wire…oh, my God. And they had spent no money explaining to customers what this box was, what this midband converter was, what these new channels were and why they were going to get charged more. So people were literally driving past the office and throwing the midband converters out the window, saying, “Take your converter and shove it!” I mean, it was not a happy time at the cable system.

Henthorn:   This is quite an opportunity for an enterprising marketing person.

Abdoulah:   That’s how I looked at it. So what do you do when you don’t know anything? You talk to the people who are doing the work everyday, right? So for the first two to three weeks of my five weeks I just met every person in the cable system. Every call rep, every technician, the data center people and interviewed them and asked them, what’s going on and what could we be doing differently? I put that all into a marketing plan, presented it to the board of directors and one of my recommendations was, “You don’t have the right marketing sales guy. He’s not doing what he needs to do, he should go and here’s what you should do instead.” And I presented, they thanked me, I was getting my bag, and I was leaving the cable system and one of them came running out and said, “Hey, listen, we’ve fired blah-blah-blah marketing guy and we’d like to offer you the job.”

Immediately, being a girl, I felt bad that I had hurt somebody else and someone’s career and I was like, no, I didn’t mean that. Because I really didn’t intend that at all. But they said, “We've done it and we’d like to hire you. Will you do it?”

So again, called my parents and said, “I’m staying, I don’t know for how long. It probably won't be very long but I’ll be in Cape Cod.” And fifteen years later, I was still at TCI. So that was my entrée into the cable business. I worked as the marketing director for TCI-Taft Cablevision. It moved to Grand Rapids, then it moved to Cincinnati, and in 1989, Dr. Malone was buying up a lot of the partnerships and making them 100% ownership. He bought up TCI-Taft and I thought I was out of the industry at that point. I got an opportunity to come to Denver with another partnership called WestMarc, which lasted about a year. But I came to Denver to be the vice-president of marketing for WestMarc. That’s when I met Larry Romwell and a bunch of the guys at corporate. When that partnership was dissolved and going to be wholly owned, again I thought, “Now it's time to leave.” But Dr. Malone came to one of the vice-presidents of operation, Rich Fickle—whom we all know—and said, “Look, I've bought some satellite entities in the C-band business and I don’t want to be the railroad with the airlines. I want to know what’s going on in this space so I want you to consolidate them and move them to Denver. And manage them at a reasonable loss until we know what’s going to happen with satellite.”

So Rich came to me and said, “What are you going to do?” I said I wasn’t sure, I was looking, maybe going back home. And he said, “Why don’t you come and do this with me? This should be interesting.” A lot of the entities were in Seattle. We went to Seattle for about nine months, got them consolidated and moved them to Denver, and that entity was called Netlink. Rich eventually moved on to corporate and to Liberty and I became vice-president general manager of that. Sharon Wilson was there for a short period of time when TCI bought United Artists. She came to Netlink to replace Rich for just a short period. She did something very instrumental for me in that she said, “I'm only going to be here for awhile. I'm going to be going to corporate so you should take my place.” I did the typical “Ohh, I'm not ready, I can't do this and I'm not good at this.” And she was just like, BS. You're going to do it. I said, “No, I don’t even have my Master’s.” Everybody we were hiring back then had their Master’s degree.

The next day I came to my office and there was a whole stack of books and enrollment forms from DU, their Executive MBA program. She said, “Go today. Sign up here. We’ll pay for it; you're going.”

Henthorn:  Wonderful, wonderful.

Abdoulah:   Wasn’t that great? I was mad at her at the time but I'm glad I did it. And I got my Executive MBA through DU. It was a great experience, really tough. Because in that two-year time period, she left, I did become general manager and vice-president of Netlink and it was tough to be promoted, to be running an organization for the first time while I'm going to school. But the good news was you had an opportunity instead of writing a thesis, you could write a business plan for something. So I wrote mine on Primestar, the business plan for Primestar. And I worked on that till Barry Marshall and Brendan Clouston came to TCI corporate and I got a call from Barry, saying, “You know, we’re launching this network called Starz. We don’t have a marketing department in corporate and will you come and help with that?”

Henthorn:   Let me ask you something about that marketing. So you started up the first marketing at corporate and how have you seen that the whole aspect around marketing change, from the early days until today? So let’s take a quick digression and talk about…

Abdoulah:  No, absolutely. I think that’s a great question. Because back then, I mean it was still a fairly monopolistic environment, right? Satellite was a not a going concern yet. So marketing was sort of a misnomer. They didn’t even have it at an $8 billion company at the time. There was no marketing department. So when I came in it was—because Barry Marshall came from the West Division so he understood promotions and marketing, that you needed to be doing that to increase revenues, etc., and maintain low churn. To his credit, he said, “We need to get better at this. And we need to care about customer service. Oh, by the way, we’ve got this network we have to launch and there's no one around to orchestrate it.”

So I think this was a major catalyst for the position—that we needed to do that. I think it was sort of a necessary evil in the beginning. Kind of like lawyers and HR was considered in the olden days. You had to have them. But they’ve all obviously been raised in credibility and importance. So back then it really was tough because talk about retention, money for retention, you got laughed out of a budget meeting for that. Where were customers going to go? I even had one executive say that to me, “Abdoulah, why do you want money for retention? Where are they going to go?”

So it was tough in those days. But the Netlink experience was great because I had to get immersed in operations. I had to understand all elements of operation. When you got into marketing—you remember this—in the old days, you had to understand the billing system because there were so many constraints. You had to understand what a trap was and what the different security configurations were in each system. Because TCI consolidated by buying, right? There wasn’t a lot of standardization. There were so many systems with different architecture, different security, different vendors that you had to know the difference between them. So that if you were going to launch a new promotion or launch a new initiative, could it be executed? Right?

Henthorn:   So you wore a lot of different hats at TCI. And that sounds like it created a lot of opportunity.

Abdoulah:   I loved those days. I remember at one point in time, I did interview with Time Warner and I couldn’t believe how professional and structured everything was because at TCI, bless our hearts, we used to get criticized we were a bunch of cowboys, right? At one level that was true. There wasn’t a lot of process and procedure and that did cause probably some conflicts and some waste of money and energy because different people were doing the same things because it wasn’t as organized as it could have been. But on the positive side, you didn’t have to accomplish this to do this. You didn’t have to have this title to do that. You didn’t have to be in this department to go to that department. It was just free and open and whoever took initiative and whoever worked hard and…

Henthorn:   And whoever raised their hand and said, “Let me try this.”

Abdoulah:   Right. You could do anything. I was never very shy or soft-spoken about stuff. I usually gave my opinion about things and I was willing to work hard. And I wasn’t married and I didn’t have children at the time so I was able to be there and to take initiative on things. So I got to do a lot of different things.

Henthorn:   I have a copy of an article here from Multichannel News, December 7, 1992. John Malone there, and he’s saying, in ’92 saying, “TCI will be completely digital in two years.” This is a big deal.

Abdoulah:   It was.

Henthorn:   Do you want to tell me a little bit—you're so great at telling stories. Can you tell me a little bit of the back story of what happened behind the scenes for you?

Abdoulah:   When he did that first, everybody in the external world was like, well, it’s John Malone, so they listened. They knew it probably had some credibility because it came from him and he was such a visionary. But a lot of people were questioning it. Like what’s he talking about? Hundreds of channels? I mean, we have plenty now, which was around in what, the 58 channels and a lot of them weren’t very good…

Henthorn:   330 [MHz] system. So even fewer.

Abdoulah:   Exactly. Even fewer than that, right? Twenty to fifty maybe we had at the time. So to talk about hundreds of channels. There wasn’t the content for that; people couldn’t get their arms around—who would even view all those channels. I mean, it was sort of seen as a bizarre thing but it got a lot of attention. It got a lot of attraction. Because obviously that meant a lot to vendors, all the people who were going to help create that new world got excited.

So two years later, we’re not close to launching anything. Because I mean this was right—the industry was creating this. It was being invented from nothing. So there were a lot of people involved. CableLabs, all the TCI engineers, all the vendor engineers were involved. Years were passing just trying to get the business rules. Everybody, to their defense, was trying to think of everything that this box should be able to do, everything that customers might want in the future. And you know you just can't do that. You’ve got to at some point just cut if off and say, this will be it at launch and then we’ll add to the software and we’ll do upgrades. So by 1997, we’re all working on it and at that point, we had a major shift in our leadership and Barry and Brendan and most of the senior people left. Leo Hindery came in as CEO and Marvin Jones as COO. Because I was working on the teams as the marketing person, working on the digital launch in that capacity, I was not heading it all up at the time but I remember Leo walking into my office and I was intimidated. He had just started and a lot of people had been terminated so I didn’t know what to expect when he walked in, but he said, “Abdoulah! You're involved in that digital launch.” I’m like, “Yes sir.” And he’s like, “I'm going out and I'm going to announce that we won't only have it launched this year, we’ll have a million customers by year-end.” And if my recollection serves me, that was like February of 1997. I was like, “OK, Leo. I was pretty nervous about this because I just got a report from outside consultants that we’re about eighteen months away from launch.”

And he said, “Bleep-bleep the consultants. Get it done.” And he announced it a couple days later and so it was all hands on deck and to everybody’s credit, everybody just rallied around that objective. So to Leo’s credit, he knew how to get it done because he put a stake in the ground. And by having that stake in the ground, everybody rallied and we launched it on a shoestring with tape, a shoestring with tape, and our customers—boy, what they tolerated. I went out in the field, I felt such empathy for our people because we were talking six, seven, eight-hour installs to get this in a home and to get the box activated and it was brutal but we got a million customers by year-end.

Henthorn:   Wow, that’s great. Now during this TCI period you also adopted your daughter, Alex.

Abdoulah:   Yes. That was big.

Henthorn:   Really big transformation, big change.

Abdoulah:   And I really love and appreciate Marvin Jones, who has a whole herd of kids himself and now grandkids and great-grandkids, because he was very supportive at the time. I was a single parent, I was doing a lot of nonprofit work in the foster care system, social services and just how broken that process was. It was in a board meeting that I had heard—I started every board meeting with a case study. I had the on-staff lawyers tell us about one to two different cases so that as a board, we would always remember who our customer was and why we were serving this organization. And in this particular meeting they were talking about if children weren’t adopted out of the foster care system by five, maybe six, when they’re still kind of cute, they would get overlooked and they would be stuck in the system till they were eighteen and emancipated out. At which point at the rate of 40% to 60% ended up in prostitution or in jail because they just didn’t have a chance, right? So I make some statement like, “Jeez, people should adopt these older kids. You know, they deserve to be loved. They deserve a home and a family as well.” And one of the staff members took me to task and said, “Well, you could.” And I remember driving home that day thinking, “Well, I meant somebody. I didn’t mean me.” And then I just prayed about it, Jana, for about three weeks. So I made the phone call to an adoption group who did social services adoptions. It was a separate independent group and they told me about my daughter’s case. She was eleven. She was looking for a single mother, no other kids, just wanted a mom. If she didn’t get one soon, she was going to run away from the foster home she was in. She had been in a couple bad situations. Matter of fact she’d had a lot of really awful situations occur to her in her first eleven years of her life.

So I met her and ten days later she was living with me and a year later, the adoption was final. And she’s twenty-eight now and has a little boy, my grandson, Max, and thank God, she’s doing pretty well.

Henthorn:   That’s wonderful.

Abdoulah:   From a work standpoint, you're right, you sort of had to adapt. I was used to being there ten, twelve hours a day. I remember many nights the security guard would come up and say, “Dear, you should go home.” So I couldn’t do that anymore. I had to leave. Matter of fact, a funny story—I’d had her about three days and I didn’t have a nanny yet. I had the privilege, unlike many single mothers, to be able to afford a nanny, but I hadn’t found one yet and so I remember being in a meeting and my assistant comes in and goes, “Colleen, can I interject?” I said, “Not now.” She’s like, “It’s Alex’s school.” I’m like, “Really? I wonder if she’s OK?” I go running to the phone and they’re like, “Are you picking her up?” It was like 4:30 and I was supposed to pick her up at 3:30 but I totally forgot I had a kid. I had to go get her from school so I picked her up and that was a tough night because she felt like I had abandoned her like everybody else had in her life. So I was never late to pick her up or take her to school after that and then the nanny came about six weeks later. But those first few weeks of being a single mother gave me such an appreciation for what women and men who are single parents have to go through. It is not easy, especially if you have a demanding job. And a culture that demanded a lot of time, right?

Henthorn:   You ultimately decided to leave TCI and take some time off and when I was thinking about our interview today, I thought, there is really only one question I had to ask you, Colleen, and that is, what are you passionate about? And then I could sit back and say nothing. But at this point, let me ask you that because you did a lot of interesting things during this time when you were kind of out of the industry but not really. You want to talk about what you were doing? It was about 1999 to 2002.

Abdoulah:   Right. And when I left TCI, it was AT&T Broadband. We had been bought and I lasted or survived about a year. I realized I wasn’t a big corporate gal. Some people might laugh at that and say, well, TCI was large. We were large, but we didn’t act it.

Henthorn:   Chair of the board.

Abdoulah:   We just didn’t act like a large company. And that’s what I loved about TCI, but once it became AT&T Broadband and you were traveling back and forth to Jersey a lot, it just didn’t feel right anymore. So I left in October, 1999, and my plan was to just let the nanny go and be a mom for awhile. I had saved up and again, had been privileged and blessed that I had enough financial security. I could take some time off. So for awhile I was just being mom and then I would get some phone calls from friends who had also left or gone to different places asking if I would come in and either do strategic planning with them or coaching of them or of certain individuals. I got enough of those requests that I thought I should look at it seriously. I called a friend here in town that had done some coaching for me of some of the executives that had reported to me and I respected her and her process. So I asked if she would tutor me and I paid for it. But I went and learned under Cathy Sunshine is her name, and eventually after working with her, learning from her, she asked me to join her firm as a coach. So I did leadership coaching for about two years. I was fascinated; one of her tools was geneology where you would map the executive’s family history as far back as the person knew. So you’d usually go to grandparents. Then their parents and their generation. And you learned a lot about the patterns of thought and behaviors and myths of the family that we as individuals take from our family system.

I was so fascinated by that technique that I went and studied at the Family Institute where a lot of MSWs get their Master’s of Social Work and I took a few classes there and I just really enjoyed that and was doing that when I got a call from the same gentleman who got me involved with TCI-Taft. We had remained friends and we had remained in contact throughout my TCI years and he was now in private equity. They had backed a gentleman who had a plan for a company called “Wide Open West” and they felt that things weren’t going as well as they could and that maybe I could come in as his chief operating officer. So I met with my predecessor and realized that he was a great man, smart, smarter than me in a lot of ways but that we wouldn’t really—the chemistry and the way I would sort of run things would be so different. So I got back to my friend and said, “No, but I do think you need someone in that role for this investment to be successful.” About two or three phone calls later, and a change in the business model, they decided to not build. The original plan was to be the overbuilder of the West and hence the name, “Wide Open West.” They were going to start here in Denver. It was going to be their flagship system and then they were going to get franchises and build out throughout the western states.

Well, 2000 hit and we all know what happened, right? And that didn’t get corrected. Everybody thought it would be done by that fall but as we know, the market didn’t bounce back until ’04-’05. So right in the middle of all this building and everything, the market crashed. They ran out of money and the private equity groups that owned Wide Open West at the time decided to buy some properties. So they bought the four Ameritech properties that were built by Ameritech in ‘96 and ‘97. They bought them in December of ’01. They were built for $1.2 billion. Ameritech—phone companies build things to last and they built some great plant. They built them to compete, they built them to be Internet and digital with all the bells and whistles and so they got a great deal. They bought it for about $208 million in ’01. So my predecessor and team were managing that for about eight, nine months. Then things weren’t quite where they needed to be so I came in in August of ’02.

Henthorn:   That’s quite a switch for you to go from being a cable person to what at that time an overbuilder…I would say the dark side. Over to the dark side.

Abdoulah:  Exactly. People said that to me. People said, “What are you doing, Colleen? That’s not a career builder. You don’t want to be a competitor to the incumbents and there hasn’t been a successful overbuilder. That’s not a really lucrative space. You should re-consider.”

Henthorn:   What was your thought process on that?

Abdoulah:   I was so enamored with the idea of being a leader of an organization. I was always what—second, third, fourth, fifth. I was always in leadership roles for—I wasn’t always—but I had been in leadership roles for quite some time, but I had never been in that first position where you could shape something to be the way you envisioned it to be. When I said to you early on at the beginning of our interview, what I noticed in my father’s environment and that I thought that’s what I would experience when I went to corporate. Well, it certainly wasn’t. What I experienced was a lot of top-down hierarchical sort of cultures, very male-dominated cultures, not a lot of women in leadership and really a focus on business saying, “I don’t care how you get there. Just get there. Make that number.” And everything was around making that bottom line number. People weren’t treated properly and process and procedure wasn’t reviewed and it just wasn’t to me the right focus. I always wanted to be somewhere where we valued the “how.” Because I feel that “how” matters in life. How we’re friends. How I engage with you. That matters. And so I was so excited about having an opportunity to go into a situation which was a turnaround situation and we had some really tough financial goals to meet within one quarter. We had to make more EBITDA in one quarter than they had made in the first nine months.

So it was not an easy task. That scared me for sure. I didn’t have all the answers. But I did what I did when I went into cable. I just went and spoke to all 600 employees at the time and said, “Here’s what you’ve got in me. Here’s what I think I'm good at. Here’s what I think I can do for this company and here’s where I need your help.” And I hired incredibly great people who were smarter than me in a lot of areas and so I just didn’t listen to the voices about an overbuilder, about a turnaround situation. I didn’t think about what I feared. I thought about what I was excited about and passionate about, which was creating an environment where people would flourish and love to be there and do their best. Because when we do our best, the results are the best we can generate, right?

The story around that when I first got hired, I guess it was August. I had to go to an investor meeting in October. And one of the first questions I got asked—I was the only female CEO of a portfolio company. I was a first time CEO. And I think my title at the time was “President COO.” So when I got asked the first question, which was, “What are your plans for WOW?” I said, quite naturally, “Basically when someone leaves WOW for whatever reason, they’ll say they’re a better person for having been there.” And you should see a roomful of financial analysts, what their reaction was to that quite soft intangible answer was just like the body language screamed like, “What the –? Heck.” So right away, I said, “Let me explain myself, why I say that.” And then I put the numbers to it, that “this is where we are today and if everybody rallies and is passionate and feels accountability and responsibility for our performance, we’ll get there. We’ll be successful.” Sure enough, we were. We had eight, nine, ten straight years of overachieving our budget. Today it’s a billion two revenue company with over 3300 employees and so the growth came.

Henthorn:   So you’ve talked about how you wanted to create a different culture at WOW. Talk to me about how you achieved that. What’s the process that you go about to create that culture?

Abdoulah:   It’s a great question. It’s never about one person. While I was maybe leading the initiative, it was everybody at WOW embracing it, especially from a leadership perspective because all leaders have to model it, embrace it so that those that they serve will also model it. It starts with a mindset, Jana. If you as a leader think, “I deserve what I've got, I worked hard to get here, people are going to listen to what I say. They’re there to serve me.” If that’s your mindset, if that’s your value, then creating the kind of culture we have at WOW won't happen. So you have to start with a definition of leadership that talks about serving others. For me, leadership is simply serving others in a way that brings out their best and the best in you. That’s what a leader does, to me. And so if you start with that premise, you're there as leaders to serve others so that they can serve the end customer who pays for all your salaries, by the way. Then you truly have your priorities straight. There’s an internal customer in an organization and there’s an external. And the internal customer is most important. So in forming a culture that cares about the people and cares about their performance, that’s where you start. You define your team members, your employees as customers. And you create—what we have is called the internal service structure. And you literally map every function in the organization to one another. Who serves whom in order to serve the end customer.

And in our organization—that will look a little different in every industry or every company, right? But for our organization, that place, the call center and the field, is the primary customer inside our organization. Because everybody—from engineering, marketing, finance, HR, the knock, dispatch—everybody who’s involved is supporting serving one another in order to serve them so that they can serve the end customer. And when you have that kind of structure in your organization and you have a set of values that you just don’t put on a poster, you have to operationalize those values, meaning you hire based on them, you recruit and orient and train and develop based on those values. You base part of their merit and bonus increase on how they model those values, you promote based on them and you terminate based on somebody purposely violating them. If you do all that, have a set of values, operationalize them, have a service structure that defines “we’re all there to serve one another,” then you will have a culture that is based on being good to one another, putting people in the right place doing the right things, holding them accountable. It's the thing about corporate and business today, isn’t it? Or maybe always, not just today. People are not held accountable enough in a productive motivating way, not in an intimidating way, but in a motivating way. I think that’s what is lacking in a lot of corporate environments. From the top all the way through the organization is a lack of accountability and ownership and passion for the goals. You know, “I own this. I’m a technician, I'm a warehouse manager and I'm a general manager.” Whatever you are, you're as passionate about meeting those goals as the next guy. That’s the kind of environment we wanted to create at WOW and I believe we have. It’s because, like I said, everybody rallied together.

Now when you try to say, how can you condense that, Colleen, into something that is easy to understand. We brought in an artist from Alchemy and we told them about our culture and we described it and they experienced it and we asked people within our organization if you had to come up with a metaphor about how we operate on this internal structure, what would it be? And we came up with something that sort of looks like Woodstock. It’s like a concert. So you have the call center and the field guys onstage performing. You have the engineers and the knock and dispatch all doing the lighting and the sound. You’ve got HR worrying about the talent. And you’ve got marketing selling the tickets. It’s a really cool illustration that everybody’s got up throughout the organization—this poster of the concert that represents the banner as the WOW service structure and how we operate. It’s a beautiful thing to experience. It's not perfect; we have our ups and downs as a company like every organization but overall, when we have scored, our happiness quotient is in the high 90s. So it works.

Henthorn:   That’s great. What’s the happiness quotient?

Abdoulah:   It’s where you evaluate four or five key areas of the culture: from engagement to accountability to strategic importance. The survey we used depicts five different areas that evaluates the effectiveness, the productivity, the engagement of your people. And as a result of it, how happy are they in that environment. And it's about EQ. we do a lot of work with our leadership on emotional quotient because we've come to realize as research has shown that it's not just about IQ, the best leaders—the  leaders who get the best performance—are those with the higher EQ than an IQ. So that’s something people really need to pay attention to: it's not just what you know, it’s how you show up, how you implement what you know, it's how you engage with others that is really, really important. We at WOW have not promoted, not hired people who are brilliant at a particular thing that we might need, a particular skill, but they weren’t able to sort of engage and work within that cultural environment of serving others. We've passed them over because you’ve got to have both.

Henthorn:   So that’s really a great explanation of a company culture that you wanted to build at WOW. And that you did build at WOW. During this time you were also the chair of ACA [American Cable Association] and one of the momentous things that happened during that time was that you testified before Congress on the Comcast merger [with NBC Universal]. So what was that like?

Abdoulah:   It was a little nerve-racking.

Henthorn:   I believe you were testifying right after Brian Roberts or—

Abdoulah:   No, I was at the table with him. It was the first hearing, the House hearing, then we went to two Senate hearings right after that. So we did three in one day.

What I loved about it—ACA is a really, I think, first class organization and they were very clear about the message. We were not about to try to stop or criticize the merger itself because we knew it was beyond us. The FCC, all the groups that need to approve it, would likely approve it. So our position was what is it about that merger, that new company, that could be detrimental to the small, medium-size operators and could we try to get conditions placed on the merger that we knew pretty much was going to be approved. So that helped to be going into it because a lot of the other people sitting at the table were people against. Consumer groups and other groups that were against the merger and took that strong position. I was able to take what I thought was to be a very fair, reasonable position and with a really equitable specific ask that framed the message which basically said, “Look, it’s probably going to get approved so we’re not asking you to not, but when it does, here are some things we want you to be aware of in our marketplace. And that can be really difficult, competing against a company that is so vertically and horizontally integrated and the power that they’re going to have. So please consider that and consider the following conditions.” And I thought it was a reasonable message.

So your question about what it was like. It was a little nerve-racking because the personal ego side of you says, “Oh, my God, what if I screw up and they ask me a question that I should absolutely know and I don’t know. Or they ask me a question, I should be very articulate about it and I'm not. You know, if was just a lot of ego insecurity that was running through my head as I was walking down the corridor and you saw all the cameras and people. The room was so crowded, people were standing. You had to stand outside the room with the doors open so they could hear because there wasn’t enough room for all the people who wanted to be at the hearing.

So that in itself can be intimidating. And then I walk in the room and Brian Roberts says, “And you are—?”

I’m like, “Colleen Abdoulah…”

“We’ve never met, have we?”

And I said, “No.”

And he said, “This is my father.” [Ralph Roberts] So I shook his father’s hand and his father sat directly behind me and Brian was beside me. So it was quite intimidating at first. Then I just took a breath and thought, “I know this industry well. I've been in it a long time. I know I know it better than most of the Congressmen that are going to be asking—and women—who are going to be asking questions.” I had met a lot of them in advance. Before a hearing you do go and try to meet; for about a week before I was on the Hill, trying to meet most of the people that were going to be at the hearings, the Representatives and Senators. I had met some of them so that gave you some comfort. I hadn’t met all of them but some of them. So I got through it pretty well.

Henthorn:   I watched it on television, Colleen, and you were cool as a cucumber. And you looked—

Abdoulah:   I looked—my heart was beating. And that’s the other thing is, I'm on the board of C-SPAN now but at the time, I was so caught up with what I needed to say and they have this big clock that gives you your five minutes. Well, none of the Congressmen stick to their five minutes. They all go over. When it comes to the panel, the first two went over. Roberts went over a little bit, NBC went over a little bit. So I'm determined to stick to my five minutes and watching the clock and trying to do eye contact with the Congressmen. And I completely forgot there was a camera because the C-SPAN cameras are sort of hidden in the bottom—so I completely forgot about it, which was great. Because then I wasn’t thinking camera and TV, which would have made my insecurities go wild. But I was in the restroom in between the House and the Senate and a woman walked in and said, “I just watched you. That was great.” I’m like, “Watched me?” And then I realized I had been on TV. At that point it was over, it so I was OK.

Henthorn:   That’s great. We could refer that back to your Barbara Walters—that was your moment there.

In terms of regulatory issues, so there you were testifying about a huge merger between a cable company and a network. Who would have “thunk” that back when you started in the industry? Can you talk about the contrast regarding regulatory issues in the beginning of your career with today?

Abdoulah:   I think what I've learned through the ACA is that—I've had the opportunity to work with a few lawyers who represented the cable industry back prior to the Cable Act in 1992 and the Communications Act of 1996. And I've heard some great stories from those folks because today the cable industry does a great job of being on the Hill, of respecting the relationships with the various compliance groups and oversight organizations and spends the time and money on it. I think that’s important.

Back in the 90s, back then, I mean we were building and growing and the industry was just killing it and spending a lot of money doing it. I think the leaders of TCI and other organizations, that’s what they were focused on. “We’re getting it done. We’re making the investment. We’re putting this country on the map. We’re doing what it takes. And you guys in Washington, we don’t have time for you.” Sure enough, what happened? Consumers’ voices were heard in ’92…

Henthorn:   The Act of ’92.

Abdoulah:   Right. The Act of ’92. And then that didn’t cure all ills and Congress again got involved in 1996 and said, “Whoa, whoa, whoa. This still isn’t working. We need more competition.” Which I think was a good move and phone [companies] could now get into our business and we could get into their business and we all know what happened then. VOIP and a lot of other wonderful things came to be and the triple play was born.

Henthorn:   So in terms of contrast, let’s stick with that theme and talk about relationships between the multisystem operators—the MSOs—and programmers.

Abdoulah:  I miss that. I miss the old days when we were operators and they were programmers. And we were partners, we were strategic partners. The fun that we had with programmers, you remember. I mean, the HBO strategy meetings we used to have. And new product launches. When new networks would come in, there was all the excitement around launching it and all the “tchotchkes” and all the promotions. I mean, it was fun. We were helping them build their business and they were building ours and yeah, I think cable held a little too much of a stick. We hammered the programmers for either no fees or very minimal fees for a long time. And when that leverage shifted, two things occurred, I think. The leverage shifted where now they have the eyeballs, they’ve got the brand recognition. They’ve got the viewership. They started to sort of give it back to us and say, “Remember those negotiations? Now we’re going to tell you how much you're going to pay.” And then the consolidations. So between the leverage shifting and the consolidation of media companies to the top five we experience today, it's become so adversarial and it isn’t about growing each other’s businesses. It isn’t about a strategic partnership. It's about direct costs that are hurting a lot of, in my case, in my area of the world, small and medium-size operators who can't negotiate the lowest rates. Because if somebody says to you, “Give me what I want or you’re going to lose tens of millions of customers,” you’ve got the attention of the programmer. If you're someone that has 100,000 subs or 5,000 customers or even 500,000 to 1,000,000 customers, it's not enough for a programmer to care today.

The gap between the large, medium and small is kind of like our economy. The middle-income households are going away. The middle-sized operators are going away. It's because of consolidation. You have some still in the middle and then you’ve got the rest of us.

Henthorn:   Comment if you care to on everything that’s going on today with over-the-top, where networks are going direct to the consumers. Where do you see that going?

Abdoulah:   I wish I was smart enough to say where it's all going to land. I can say what I feel about it right now and what I felt about it a couple of years ago when you could see it coming. Change is inevitable. I think when business models are forced into a change, that’s not always a bad thing. I think it's better when industry players are able to anticipate it and make the changes, I think it's better for the industry and for organizations. But I get it. Programmers aren’t going to change this business model until they absolutely have to, right? And it's not going to come from pressure from operators. It's going to come from where it is today: the consumer. And the consumer is saying, “I want you guys to be agnostic about where I get my content. And what content I get. Just make sure I can get it.” So as an operator looking at how can we be an aggregator of that experience, how can we be a little more video-agnostic, so to speak? Content-agnostic. And just make sure that the customer in the home gets what they need. And it’s a smooth integration for them. Whether they want to watch it on their iPad or their TV or their computer.

Henthorn:   I know that giving back to the community is important to you. And you are very socially involved. You’ve been involved with many local organizations, national organizations, both inside the industry and outside. Could you talk about your not-for-profit work?

Abdoulah:   I think it's important for those of us—I mean, I've often said this, I don’t know why I wasn’t born a poor African child. Or born in Juarez. Or pick it, in poverty here in the States. I don’t know why I wasn’t born into that kind of family but I wasn’t. I've been given privilege my whole life. So I just feel all of us who have had the ability to have an education, to have food on the table, to have clothes, to have the basics in life—we owe it to those who don’t, that for no fault of their own, were born into difficult circumstances and are hard for them to get out of. So I think it's really important just philosophically from a life value standpoint, Jana, that we should all give back of our time, our talents, our gifts and if possible, our money. And if possible all of those things. So for me, I have focused over the years on children. Since my twenties, when I started working, I started those sponsorships. They were ten dollars back then, then fifteen dollars and twenty dollars, so I've always sponsored children in distant countries. I've also gotten involved with women and children in the States as well.

But across the world I think that women together have to do a better job of coming together and supporting women. Nothing against men. It's a truth that you help a man, you’ve helped an individual. You help a woman, you’ve helped a community. Statistics show that, that when women get educated, when women start businesses, when women can work when they weren’t able to, they not only take care of their families, they take care of those around them. So the whole community, the whole ecosystem benefits from that. That’s where a lot of my nonprofit work goes. To abused children through the social services system, women and children in poverty and a lot of microlending activity that I think is really important that I love doing because that way you're just giving and giving them a chance to create something. So that’s why I do what I do in volunteering. I could do a lot more. I need to do more than what I'm doing and I plan to. And as I age is something I’d like to focus on. I live in Wash Park and there’s a program called—forgetting what it's called right now—something “Help,” where you adopt an elderly person in Wash Park and you just help them. You help them go get groceries, you take them to a movie, whatever.  I want to do that now that I'm not traveling as much. Because the elderly and children, they’re on both ends of the spectrum when they shouldn’t be. They’re oftentimes the forgotten ones. We have more children living in poverty in our country today than ever before. More children are going hungry in the United States today than ever before. More elderly are being housed and warehoused in places that don’t honor the fact that they're not all the same. A person who has completely lost their mind versus one that just needs medical help—they're all in the same place. We just don’t honor our elderly and honor our children the way we need to. So that s what I'm passionate about.

Henthorn:   I see that. And you personally, Colleen, have won a lot of awards. I can tick a bunch off for you and for WOW. Wonder Woman, J.D. Power, Cable Pioneer just last year. Congratulations on that. When I was doing my research for this interview and talking to people, there are so many people, Colleen, who have been inspired by you. Just the stories are endless and so let me ask this as our closing question. How do you do that, Colleen? How do you inspire people?

Abdoulah:   I don’t focus on that. I think I just love people. I love the relationships of my family and my friends and my business associates who have become friends. Because you know, you come in the world bare-ass and alone and that’s how you're going to leave. So the awards or the accolades or the material wealth of the world doesn’t matter. It's really how and who I've touched and how I've engaged with people and how they’ve touched me. And what we've gained from being in each others’ presence. That’s what I think really matters. If that’s inspiring, great.

Henthorn:   It clearly is, it clearly is.

Abdoulah:   Thank you. It's what I care about.

Henthorn:   It shows, Colleen. Thanks for being part of the industry and thanks for doing this oral history with the Cable Center.

Abdoulah:   Thank you for having me. It was an honor.

Henthorn:   It’s our honor.

END OF INTERVIEW

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Susan Adams

Susan Adams

Interview Date: June 21, 1999
Interview Location: Unknown
Interviewer: Unknown
Collection: WICT 20th Anniversary Collection


INTERVIEWER: State your name.

ADAMS: Susan Adams.

INTERVIEWER: Spell your name.

ADAMS: S-U-S-A-N. A-D-A-M-S.

INTERVIEWER: Company and title.

ADAMS: Cox Communications. Area Manager on Customer Operations. Phoenix, Arizona.

INTERVIEWER: How did you initially become involved in the cable business?

ADAMS: I was working in a very specialized area of accounting with six staff in management and had a relocation from Texas to Arizona with my family. And with all the capital intensive growth in the cable industry, it was a natural match of my skills. So that's where it started. In finance.

INTERVIEWER: At the time your career in cable began, what was the most striking thing about the industry?

ADAMS: I think the newness of the industry. It was a technology that was just developing. It was becoming widespread across the United States in communities. There was a lot of franchising activity. So it was just the fact that it was such a new and growing industry.

INTERVIEWER: Do you think the newness of the industry offered more opportunities for women?

ADAMS: I think that there have been a lot of opportunities for women in the industry, but there could be quite a bit more opportunity for women. In certain segments of the industry, women have achieved quite a bit. Public relations, human resources, marketing in particular. However, women in operations, which is the segment of the industry that I've spent the 13 years in the cable industry, I don't see as much opportunity for advancement for women in that area. It's growing, certainly. But we still have a lot more that we can accomplish.

INTERVIEWER: How do you think that end of the industry can encourage more women to begin their careers there?

ADAMS: Well, it's not just a recruitment issue. It's a lot like diversity in that regard. It's also a development issue. And there comes a point in an organization where you just don't see the diversity of women in positions in operations. So, it's a long process. It's not something that's changed overnight. But certainly the awareness that WICT and others have helped provide in this area is helping us move forward.

ADAMS: Well, it's not just a recruitment issue. It's a lot like diversity in that regard. It's also a development issue. And there comes a point in an organization where you just don't see the diversity of women in positions in operations. So, it's a long process. It's not something that's changed overnight. But certainly the awareness that WICT and others have helped provide in this area is helping us move forward.

INTERVIEWER: What do you think have been the key elements of your personal success?

ADAMS: I think I've relied heavily on my ability to see opportunity and act on it. Certainly, participation in the Betsy Magness Leadership Institute and being one of the fellows in the charter class really allowed me to focus on my leadership style and that's helped me immensely as I've tackled new projects involving change in my companies and in the industry. And I think the other main component is that I've had the opportunity to work for two outstanding companies in this industry. The Washington Post Cable Division Cable One and Cox Communications.

INTERVIEWER: What would you say is your greatest professional achievement?

ADAMS: Two come to mind. One achievement has been the people I have been a mentor to and have had the opportunity to work with and develop and seeing them reach their potential quite seriously and look at their achievement. I think the other one, too, has been my involvement in WICT and the trust others put in a leader of WICT in all of its programs.

INTERVIEWER: Can you talk about how you approach mentorship? I mean, what sort of advice do you give young people in the industry?

ADAMS: I think I try to focus on things that I learned in my career. Focusing on seeing opportunity. Taking advantage of it. Being ready when it's your turn. Something I learned on the golf course, interestingly enough. But, I've applied a lot to operations in this industry. And I think it's to be flexible and try to approach change without fear.

INTERVIEWER: Did you have any role models in your career that hold a special meaning for you?

ADAMS: Several. I had the pleasure to work for a gentleman with Cable One for over ten years. And he was an incredible mentor to me. But I also have existing peers who are mentors. Jill Campbell, Vice President and General Manager of the Cox System in Los Vegas is someone who has recently come to be a mentor in my career and has provided me great insight on her very special style of leadership.

INTERVIEWER: Obviously, there have been rapid changes in the business. How do you see the industry developing in the next five to ten years?

ADAMS: I see us having a period of change for quite some time in the next five to ten years. I see our products becoming defined as we invest more heavily in the Internet businesses and the telephone businesses. I see distinctions between products perhaps merging with Internet and telephony, different devices being used in the customer's home to receive video voice and data. Transitions between digital e-commerce and Internet businesses. So, I see the products defining themselves, but I also see them perhaps coming together at some point in time based on the technologies deployed. As I said, I see us going through quite a bit of change. And I see the need for education with a rapid technological change in the industry being very important to allow us to move forward.

INTERVIEWER: Are you satisfied with the progress that women have made in the industry?

ADAMS: I am pleased that we have made progress. If we have to ask that question, then I'm not satisfied with the progress. As I think I mentioned when I spoke about operations, there is still a lot to do in some areas. I think the changes in the industry; the new start-up companies will provide more opportunities for women. But I think we are looking probably at more change, more movement between companies, less tenure with companies than we've enjoyed in the past.

INTERVIEWER: Do you think that parity will be achieved within the next ten or fifteen years?

ADAMS: I definitely think it's possible. If we focus on parity in the work place, all different types of culture and diversity within a work place, and focus not just on recruitment, but also internal development, building the awareness, I think, is the key to moving that forward. We have a generation of people perhaps who still need to be educated in that area. And when we have cycled through that generation, so to speak, then I think it will no longer be an issue and we will be onto other missions.

INTERVIEWER: Right now there's a lot of talk in the early '90s about this glass ceiling. Do you believe there ever was a glass ceiling? And if so, does it still exist?

ADAMS: I look at the glass ceiling a little bit differently. From my perspective, I think 20 years ago, there were a lot of barriers. A lot of different barriers for women. I don't think nearly as many of those barriers exist today. So, in that regard, we've made substantial progress. I think the barriers are different depending on the individual and what issues they faced and what segment of the industry that they've been working in. I would like to see more of those barriers removed in the future. I think that we've made progress, but there's still a scarcity of positions, very senior positions in companies that are held by women. And it is not just a recruitment issue. This type of situation is cured, I think, with awareness and recruitment efforts and development efforts. The women that are in these positions need to be developed. And have the skills, as well as the environment, in which they can proceed.

INTERVIEWER: You're an operator and there are fewer women on the operation end of the cable industry. Has being a woman in this section of the industry been a detriment or an enhancement to your career?

ADAMS: Oh, I think it's definitely been an enhancement. I love operations in this industry and I think women bring some unique skills to operations. I think they're very good at it where they have the opportunity to do so and people will think of them as good operations and line management individuals. I think they bring consensus building skills for the most part, a flexibility, a responsiveness to change. Boy, I hope that there'll be more of us in the future.

INTERVIEWER: Do you think your management style has evolved over the last 13 years?

ADAMS: Oh, absolutely. Partly by learning from others, is one way my management style has changed. Definitely through my participation in the Betsy Magness Leadership Institute. It's given me a whole new group of women to share experiences with and help me hone in on my leadership style.

INTERVIEWER: Do you think that women have been adequately recognized for the contributions they've made for the industry.

ADAMS: No, actually, I don't think that there's been enough recognition for women in the development of this industry. I think WICT celebrating its 20th anniversary is going to help us immensely with that. And we have some new programs going forward to recognize the achievement for women in the industry. I think that will help with the awareness issues for women in this industry immensely.

INTERVIEWER: I'd like to ask you now about your tenure as president. And you know, your presidency coincides with WICT's 20th anniversary. Does this have any special meaning for you?

ADAMS: Well, what a privilege and what an exciting time. I'm six months at this point into my presidency this year. And it's always very humbling to look back at the organization 20 years ago. But it's also very exciting to look forward to the future and what our industry will be like 20 years from now.

INTERVIEWER: How do you see WICT evolving in the next few years?

ADAMS: Well, I think one of the challenges we've had with WICT this year and in the last couple of years is to constantly evolve in making sure we know what the needs of our members are. So, I see us having to continually keep mindful of what our members need. What will enhance women's issues in the industry? And then fulfill that need in member programs, benefiting our members and benefiting the industry as a whole.

INTERVIEWER: How did you initially become involved in WICT?

ADAMS: A good friend of mine in the cable and telecommunications industry told me I needed to be a member. She told me to join. And she had always been a source of excellent advice, so I did. And it was only after that, that I came to see the real benefit of this organization.

INTERVIEWER: How has WICT contributed to your personal and your professional growth?

ADAMS: I have certainly met a lot of women that I have learned from in my involvement with the program. But I definitely have benefited from the participation in the program myself, including the Betsy Magness Leadership Institute.

INTERVIEWER: Did you have any sense, when you were part of that first class, that this was some significant moment in WICT's history?

ADAMS: Oh, absolutely. Because the benefit of the program was incredible. And immediately at the end of the program, we were all concerned about the program being over after one year. I kind of bridged that by becoming very involved with the future development of the program. And it's been one of my great passions.

INTERVIEWER: Have you seen the program changing at all?

ADAMS: To some extent. The focus is still the same in terms of helping women refine their leadership style. But the module and the needs of the women have changed. And so, therefore, some of the programming elements have changed.

INTERVIEWER: How specifically do you think women's needs have changed in the industry over the last ten to fifteen years?

ADAMS: I think we've been able to focus on some basic issues for women in the industry and isolate them and are embarking on research with the foundation to address issues in terms of gender communications and other topics. So, I think that's a telling sign. That we are able to isolate some of those issues. So, that's progress there.

INTERVIEWER: I know a lot of young people entering the industry today are concerned about balancing their professional and their personal life. Do you have any advice?

ADAMS: Well, I won't say that I've been the role model in that area. But a couple of things I try to practice all the time. I have three children. Thirteen, eight and four. I try to involve my children in the organization and any type of work that I'm doing. I always try to make sure--and this is one of my two pieces of advice--I always try to make sure that I'm there for the important things. Someone told me when my oldest child was in pre-school that they remember that you were there for this particular Christmas program. And they do. They remember it for a long time and talk about that. So, I make sure I'm there for the signature events, so to speak. In addition to spending other time with my family. The other thing that I do is I use technology to its fullest extent. Whether I've been on leave of absence after the birth of a child, I've made sure I've had the tools at home to be able to respond when it was warranted so I didn't have the additional stress of having to run to Kinko's to send a fax or use a computer or something else. And I think having the technology readily available to facilitate those types of things has helped keep it manageable.

INTERVIEWER: Do you think the industry has become increasingly more receptive to work life issues in the last ten years?

ADAMS: I think there's a much greater awareness and there are certainly some companies that have been recognized for their work in that area. I think we'll see more of it as the technology advances to be of great benefit to working families.

INTERVIEWER: How do you see WICT influencing the industry at large?

ADAMS: I think WICT does that in two ways. One is we've been very successful at building awareness around women's issues and translating that into benefit for the companies in this industry. So we're benefiting not only our members, but also the companies in the industry. I think the other area where we have been of great support to the industry is the research that we've done on the women's issues which has helped support the awareness initiatives.

INTERVIEWER: Well, I know you've only been president for six months, but is there anything that you've been particularly proud of, maybe, during your time on the board or as president? Is there a particular memorable event from your year as president or from your experience on the board?

ADAMS: Well, certainly, celebrating the 20th anniversary is quite an exciting thing to do. I think I've been most proud of the work I've done to continue developing the Betsy Magness Leadership Institute with the board. And I think the participation in the strategic planning because, you know, it's kept the organization viable and of greater benefit to members.

INTERVIEWER: Could you speak to the diversity initiative?

ADAMS: Well, I see the diversity initiative having some very similar qualities or issues as women's issues. And again, I think that the key to that is building awareness for the issues, providing resources, research, and information on successful programs in other companies. Being the collector of all that information and the organization that chronicles all that for others to use. And I see a great opportunity for WICT to focus in its programs on developing women and giving them additional skills to help them achieve their goals.

INTERVIEWER: And how do you think WICT has influenced the industry at large?

ADAMS: I think WICT has influenced the industry at large in many different ways on a lot of issues. From work force 2000 to work life initiatives to gender communications to other future research projects. We contemplate the awareness we felt in the industry has been a key factor in the success women have and the relative ease in which they have been able to achieve it. It certainly would have been a much harder route to achieve and much more difficult for women to advance were these things not in place.

INTERVIEWER: And how do you see WICT as different from other professional associations?

ADAMS: I think there's a tendency for people to compare WICT to other associations in our industry. And many of them are very different. They're either trade associations with a lobbying interest or they are specialized in terms of marketing in the industry. But WICT's role is very unique in terms of being an association which addresses women's issues and their opportunities for advancement.

INTERVIEWER: Okay. Is there anything that I haven't asked you that you would like to add about your experience with WICT or the industry?

ADAMS: I've enjoyed my experience with WICT. I've found that the more I contribute, the more I benefit in return. So, it's been a great partnership. And I've been appreciative of the opportunity to be so involved with WICT. And I look forward to doing that in the future. I am looking 20 years ahead and looking back on where we are now.

INTERVIEWER: Great. Thank you.

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  BACK TO ORAL HISTORIES

James F. Ackerman

James F. Ackerman

Interview Date: Wednesday December 4, 2002
Interview Location: Indianapolis, IN USA
Interviewer: Jim Keller
Collection: Hauser Collection

* Jim Ackerman, age 88, of Carmel, Indiana passed away Saturday, March 2, 2013 with his loving wife of 65 years, Lois, and their children at his side.

KELLER: This is the oral history of James F. "Jim" Ackerman, currently president of Cardinal Ventures in Indianapolis, Indiana, but for our purposes he was executive vice-president of Indianapolis Morris Plan and Economy Financing in the early days of cable television and in fact would be one of the prime movers in the early days of financing cable operators. The date is December 4, 2000. Your interviewer is Jim Keller. Jim, give us a little bit about your background before you finally made the first cable loan.

ACKERMAN: Well, I started out going to Purdue University in 1941, got called into the Army and was in the artillery. I got out of the Army in 1946, started to work at Indianapolis Morris Plan in 1946 as a collector in consumer loan operation and I was there, except for getting called back for the Korean War during 1950-1952, and in 1958 we made our first loan to the cable television industry.

KELLER: Would I be correct in calling the Morris Plan and Economy Financing a relatively small consumer banking organization?

ACKERMAN: It was small compared to big banks but it was certainly the largest Morris Plan in the country. Economy Finance started out as a small loan company and eventually became bigger whereby we had some 40 offices and they in turn bought Morris Plan – they were all owned by one family – and Morris Plan became a subsidiary of Economy Finance. Economy Finance was a finance company that financed consumer loans, small loans, industrial loans, made loans that went through to cable television systems around the country, also had...

KELLER: Don't go beyond this. You were one of the first to finance cable television operations, is that correct?

ACKERMAN: I think that's probably correct. At that time, cable systems were financed usually by the manufacturers or maybe their loans by the manufacturer were discounted at banks but no one made the loans individually to cable operators until we started to in 1958.

KELLER: What was interesting is that you started without taking on equity or warrants whereas the Jerrold Corporation, which at that time was the largest manufacturer and provider of equipment, was taking an interest in the systems that they financed.

ACKERMAN: That is correct.

KELLER: Did you have a difficult time convincing your people, your board, your bosses at that time, that cable television was a good deal, and how did you convince them?


ACKERMAN: I don't think I had to convince them. As I said, it was a family owned operation and Bill Daniels, who we all thought of as father of the industry, came in and sold us on getting into the cable television industry as a lender. This is 1958 and we made our first loan, then, to Bruce Merrill out in Arizona. As I recall, the loan was either $300,000 or $350,000, which was a lot of money in those days for cable systems because cable systems were then valued at somewhere between $200 - $300 a subscriber. We figured out a way to make the loans at that time when no banks were making loans directly to the industry unless they were completely collateralized with something else besides cable.

KELLER: Well, oftentimes a small-town operator knew the local banker and he was able to get at least an initial loan from the local banker. Did you ever take one of those banks out?

ACKERMAN: I don't recall the banks doing that, really. There weren't that many.

KELLER: Jack Crosby had one; Dean DeBull had one in Barstow. A couple of other people had one.

ACKERMAN: There were very few, though.

KELLER: Yeah, very few and they had substantial assets backing them up also. They had been collateralized.

ACKERMAN: That's right. When we got into the business, we figured out that by taking, not equity, but taking an assignment of the city franchise, assignment of the pole attachment agreements, and assignment of the stock of the company we could then control... if the company went sour we would be able to take over the company without any problems because all we'd have to do is go back to the city council or whoever awarded the franchise and get their permission.

KELLER: Did this ever happen?

ACKERMAN: In our experience, no.

KELLER: Did you ever have a bad loan?

ACKERMAN: Not really. We had some weak ones, but we never had any bad loans. Not in cable television.

KELLER: That's been the history, though, of the business?

ACKERMAN: That's been the history of the business for all these years, up until recently.

KELLER: Up until very recently. When you made your first loan to Bruce Merrill, did you make it to Ameco as the cable operator?

ACKERMAN: No, just strictly to Bruce Merrill's cable company. Ameco was the manufacturing company, but we did not make any loans to the manufacturing company.

KELLER: Do you recall what the terms were then?

ACKERMAN: As I recall, we lent the money on what we called a 6% discount rate over a period of 5-7 years. The 6% discount rate was equal to somewhere between 13 and 14 percent simple. Later on, probably after we'd been in the business a couple of years, we then started loaning money at 6% simple or maybe prime rate plus 3. So our rates were, depending on the prime rate, somewhere between 10 and 14 percent.

KELLER: In the early days?

ACKERMAN: In those days.

KELLER: You financed many companies, including – we'll go into detail on some of them – TCI, Bob Magness and John Malone; TCA, Bob Rodgers down in Texas; Jim Palmer of CCOR operations. How big of loans did you make to these companies? Let's take them one at a time. How about TCI?

ACKERMAN: Well, at that time we didn't make any direct loans to TCI. We were making direct loans to Bob Magness before TCI was really started. As I recall, those loans were somewhere in the neighborhood of $200,000 to $400,000. We loaned money to someone like Carl Williams. In those days, in the early '70s, mid-70s, probably no one of us made more than $400,000 or $500,000. Later on the industry got bigger and when pay TV came in the amount of what a subscriber was worth went from $300 to $1,200 to $1,500 and so forth, so that of course caused the loans to become much higher.

KELLER: And your loans were generally, in the early days, for seven years?

ACKERMAN: Usually five to seven years. One of the biggest loans we made was as a co-partner with the bank here in Indianapolis to Telesis. As I recall at that time we had $500,000 in that loan. That was one of the biggest loans we had.

KELLER: Dick Shively, who was a television operator.

ACKERMAN: Dick Shively was the chief operating officer of Telesis and the fellow that built the Kentucky superhighway was the biggest owner of Telesis at that time. He was out of Evansville, Indiana.

KELLER: How long did you stay in the Telesis loan?

ACKERMAN: We partnered in the Telesis loan for two or three years until such time as they wanted more and more money and we thought it was relatively weak. The Teamsters union came in and took over the loans of both the bank and ourself.

KELLER: So they took you out?

ACKERMAN: They took us out and eventually Equitable Life Insurance Company took over that loan.

KELLER: So then the Teamsters got out entirely?

ACKERMAN: Right.

KELLER: I didn't realize it had gone through that many... You had an early deal also with... well, let's go on to TCI with Bob Magness. You loaned money to the systems in Wyoming and Montana, is that correct?

ACKERMAN: Yes, it was individual loans. In other words, this was before TCI became a reality and before John Malone joined the company. Later on, after I left Morris Plan and Economy Finance, I started a company and merged with E.G. Becker Investment Banking House in Chicago and we formed Becker Communications and we also had a corporate finance area in Becker whereby we arranged a 70 million dollar loan for TCI, which was one of the first insurance company loans to the industry.

KELLER: And you brokered that deal, is that correct?

ACKERMAN: Yes, we got a commission for handling it.

KELLER: What year was that?

ACKERMAN: As I recall that was probably around 1976. It was probably the year after John Malone joined the company.

KELLER: So it is post-Malone then.

ACKERMAN: Yeah.

KELLER: You never loaned any money to TCI prior to Malone coming there?

ACKERMAN: No, we never loaned any money to TCI at all. We loaned it to Magness before it became TCI and we arranged long term financing to TCI. '71 was one of the first of many loans that we arranged for them.

KELLER: And that was, again, after John Malone came in.

ACKERMAN: That was after John Malone joined them.

KELLER: And that gave you a little more confidence in the company and of course the other lenders also.

ACKERMAN: Well, I don't feel we had confidence necessarily in the company. We had confidence in the industry and that's what we looked at always.

KELLER: And you did that really from the first day.

ACKERMAN: That's right.

KELLER: You had confidence in an industry that was just getting started when no one else did.

ACKERMAN: We were lucky! We were in the right place at the right time.

KELLER: You were probably one of the best early developers of cable television. You weren't an early operator, but you sure financed a lot of early operators. You subsequently came in as an operator, didn't you?

ACKERMAN: Individually I started our first franchise here in Indiana in 1973 and built that company up to where we had 21 franchises here in Indiana and had seven offices. So there would be no conflict of interest we had an arrangement with Becker that I could operate in Indiana and no place else, so it was a separate business that I had on the side.

KELLER: So you stayed as a direct officer or direct lender in... as Becker at that time, is that correct?

ACKERMAN: That was Becker after 1971.

KELLER: What happened to Economy?

ACKERMAN: Economy later on became First Smart Financial and was sold to a company in Buffalo, New York, and this was after I left the company, six months after I left the company.

KELLER: And the Morris Plan the same way?

ACKERMAN: Same way.

KELLER: They went together?

ACKERMAN: That's right.

KELLER: You also had deals with TCA.

ACKERMAN: We started out with Bob Rodgers and at that time I was with Becker and we arranged financing through Fidelity Bank in Philadelphia. Becker actually had a small loan to TCA, and then later on we took TCA public as a public company and I served on the board of directors on that company from once we took them public up until three years ago when they sold out to Cox.

KELLER: So you stayed on the board then all that time?

ACKERMAN: I stayed on the board all that time.

KELLER: It was a good experience, I would assume.

ACKERMAN: A wonderful experience.

KELLER: Those are great guys down there. How about Jim Palmer and CCOR?

ACKERMAN: Jim Palmer and I became friends over the years and eventually he wanted to go public so we took that company public, CCOR public, and later on we did a secondary issue of stock form and this was when I was first with Becker and later on with Merrill Lynch because Becker sold out to Merrill Lynch.

KELLER: Oh, Becker sold to Merrill Lynch and you stayed with Merrill Lynch then?

ACKERMAN: I was with Merrill Lynch for a couple of years.

KELLER: Did they do any cable deals?

ACKERMAN: Only to arrange corporate finance, and then took companies public and arranged loans and so forth.

KELLER: Did you take any other cable companies public at that time?

ACKERMAN: All told we took five companies public.

KELLER: Can you remember who they were?

ACKERMAN: They were Shopper's Charge Service for one, out of Tampa, Florida...

KELLER: Did that become Home Shopping Network?

ACKERMAN: Yeah, that was Home Shopping Network. And then we took TCA public; we took Palmer public; off-hand I can't think of the other two. There were five of them that we took public.

KELLER: You didn't turn down too many deals over the years; in fact you made a whole lot more deals than ever before. Are you making any cable deals today?

ACKERMAN: The venture cable company we have is invested in a small cable system in Germany; we're invested in a distributing company out of New York City. Those are the two deals we have in venture capital at this point.

KELLER: You said at one time you had loaned money to Gene Schneider and United. Have you done anything with him since he's been in Europe?

ACKERMAN: No, we have not. Going back with Gene Schneider, when he was connected with cable systems in Illinois we financed them. We also financed at the same time Jack Crosby and Ben Conroy and Fred Leiberman.

KELLER: They all came together at one time.

ACKERMAN: I could say that probably up through the mid-80s we had either financed or loaned money to or arranged money for or took public one out of every three cable systems in the country.

KELLER: One out of every three?

ACKERMAN: One out of every three.

KELLER: 33%, that's amazing. And you may have had investments in some of the others then, too?

ACKERMAN: Probably, I can't recall offhand.

KELLER: When did you start taking warrants in cable systems?

ACKERMAN: Morris Plan and Economy never did. They were strictly lenders. When we started Becker Communications at that point we started taking warrants whereby we had anywhere from 10 to 20 per cent interest in the company if we exercised the warrants.

KELLER: Over about a seven year period?

ACKERMAN: Over a seven year period we had what we called a "put in call" where we could put the warrants back to them at a specified price or they could call on us after seven years at a specified price.

KELLER: So you always did set a price upfront?

ACKERMAN: Yeah, the prices were upfront. They knew what it was. It was in relation to cash-flow, is the way it was priced.

KELLER: Now, when you say in relationship to cash-flow there were times when systems were selling for anywhere from five up to 20 times cash-flow. Do you recall the time period that those...?

ACKERMAN: Usually as I recall a private company would sell from anywhere from seven to ten times cash-flow, a public company would sell around five times cash flow. The private companies sold for more than the public companies would.

KELLER: That's because there was more interest in buying them, right?

ACKERMAN: There was more interest in buying them, you're right. I can't say that always happened that way because there were other times that extenuating circumstances came about that led to a change in those formulas.

KELLER: In the early '90s, I know, they were going sometimes as high as 20 times cash-flow.

ACKERMAN: Very possible. When I sold our company, Cardinal Communications, in '93 we sold out at around $2,300 a subscriber which at that point in time was the highest price paid for a cable system. We had 87,000 subscribers here in Indiana, and I can also remember though back previously many years before that, way before we joined Becker, we had a cable system in Florida and that was sold for about $400 a subscriber, so how much it increased. Then, of course, in recent years some of the big deals that we've read in the papers, cable systems have sold for $4,000 or $5,000 a subscriber. Just recently, as I recall, a merger with AT&T and Comcast you can actually figure out that based upon what's happened they sold out for about $2,400 a subscriber.

KELLER: But again, in those early days when you were selling for $500 a subscriber, still you were getting a cash-flow of maybe $30 a year. $5 a month is what it was and you say 50% cash-flow, so you were getting about $30 a year per subscriber, so 10 times that would have been $300. The multiples, I don't think of cash-flow today, which if they're getting an average of $60 a subscriber per month, not per year, and the cash-flow is anywhere from 35% to 40% now.

ACKERMAN: In some companies maybe, but that's pretty high, though.

KELLER: I think it is pretty high, but depending on what their programming costs are and that's the big thing.

ACKERMAN: That's the biggest problem today is the programming costs.

KELLER: Exactly right. Did you sustain a relationship with Bill Daniels over the years?

ACKERMAN: Oh, I always was friendly with Bill Daniels. In fact, there's a funny story that Bill called me and he wanted to come to the 500 mile race.

KELLER: Is that when he had a car in?

ACKERMAN: This was before he had a car in, and he came to the race and it was impossible to get hotel reservations in those days here, and so he stayed at our house and he brought with him a fellow by the name of... oh boy, I can't think of him off-hand, but he was the astronaut that landed on the moon.

KELLER: P. Conrad.

ACKERMAN: Yes, P. Conrad. So P. Conrad and his wife, Bill Daniels and his girlfriend stayed at our house for the race. The following year Bill wanted to get a car in the race and we loaned him money to help put the car in the race. That was not a cable loan; that was a personal loan. So, we've had relations with Bill all the way up until he passed away.

KELLER: Did you ever lend any money to any of his ventures?

ACKERMAN: Off-hand, no, I can't say that we did other than the race.

KELLER: But none of his joint ventures or limited partnerships. Other than Bill, what other long-term sustaining financial relationships have you had within the industry?

ACKERMAN: We've had long-term relationships with Bob Hughes...

KELLER: Premier?

ACKERMAN: We've worked with him when they bought Buffalo. We've had long-term relationships with a number of the different, at that time, private entrepreneurs who eventually went public. We did business with Malone until 1978 at Indianapolis Cablevision.

KELLER: Tell me about that Indianapolis Cablevision deal. That was a rather complicated and long-term situation, wasn't it?

ACKERMAN: Well, Telesis originally had the franchises for the outside city of Indianapolis.

KELLER: Did the city council divide the city up in areas?

ACKERMAN: Well, it wasn't city council then. That was the days before you had Ginagov here in Indianapolis.

KELLER: City and county?

ACKERMAN: A city and a county. We were able to form a company, limited partnership, with five general partners and 20-30 limited partners and we bought the franchise for something like $25,000 because before that big cities had come up bringing distant signals so franchises weren't worth much. Then when the franchises started being able to bring in distant signals either through microwave or satellites then we could start to build the big cities and Indianapolis Cablevision was able to build the outside city.

KELLER: Generally the county, then? Outside the city limits.

ACKERMAN: Yeah, and Warner got the franchise for the inside city. In other words, we had the donut and they had the hole.

KELLER: Was that Ross who was head of Warner at that time?

ACKERMAN: I can't remember.

KELLER: Before the merger with Time, Inc.?

ACKERMAN: It was... what's his name? Who had Columbus, Ohio?

KELLER: Did they promise the two-way system?

ACKERMAN: They were talking about that. They never put it in, but they talked about it.

KELLER: I remember what a pain that was. It never worked, anyhow.

ACKERMAN: Anyway, we built that franchise, started in 1978.

KELLER: You had satellite signals at that time.

ACKERMAN: Not quite. Later on, about a year later we did.

KELLER: Okay, because HBO was up.

ACKERMAN: We knew it was coming. Channel 19 or 17 out of Atlanta, Georgia was one of the distant signals – Ted Turner.

KELLER: Chicago?

ACKERMAN: We brought in, what was that, Channel 9 out of Chicago? Then there were the three local television stations plus Bloomington, Indiana made four. We started out maybe 12 signals here and eventually built it up more. We sold the company in 1983-84 to Comcast. Comcast owns it today. The inside city is still owned by Time Warner, plus Time Warner also had some small franchises in some of the small towns around Indianapolis.

KELLER: I'm surprised with the existing relationship between Time Warner and Comcast that there wouldn't have been some kind of a deal made to consolidate those.

ACKERMAN: Well, they tried to do that and it didn't work out. A year and a half ago they said they were going to do it and then something blew up and it didn't happen so they're still separate. Right here in Indianapolis in my office we're on Comcast, my home's in Carmel and we're on Time Warner.

KELLER: Who was the most interesting character that you've dealt with over the years?

ACKERMAN: Probably the most interesting character is probably Peter Gilbert. Peter Gilbert came to us, I can't remember the exact year, but came to Becker Communications and we loaned money to his company called Petra at that time, which is out on Long Island. What was so interesting about him was that he always had a backup. If something went wrong, he always had a backup plan that he could handle it. He built that company up on Long Island to quite sizable and then sold out and bought the franchise for Buffalo. Actually he bought out two companies in Buffalo. One was on the outskirts of Buffalo and one was Buffalo city itself. He bought those two that had been built and were not operating successfully and put them together. It was one company and later on that was sold to Bob Hughes's company and then later on that was sold to Adelphia. As I said, for anything he always had a backup way to do something. He was one of the first ones to take HBO by microwave a long, long distance. He took it from New York City out to Buffalo, going out at night with flashlights and going on top of the hills to see where the microwave station should be from all the way from New York. No one else had quite done things that way. Unfortunately, Peter passed away a number of years after that from cancer.

KELLER: Didn't they sell the systems then to Cablevision?

ACKERMAN: Well, Buffalo was sold to Hughes first.

KELLER: Yes, I know. I'm talking about the Long Island systems.

ACKERMAN: I can't remember. I know we had a 10 or 15 per cent interest in both those Long Island systems and the Buffalo system.

KELLER: Did you ever have any real or major concerns about the validity of some of the loans that you've made over the years? Any scares? Let's put it that way.

ACKERMAN: Well, we had a couple that were borderline that we asked the owners to sell out. One we got pretty close to the courthouse steps but never went to the courthouse. In fact, talked the individual into selling out and we continued the financing of the operation and came out okay.

KELLER: Was it because they were not legitimate operators, they weren't good operators?

ACKERMAN: Probably a case of a few friends who were going to work whereby they start out with a small company and start building it, maybe build it too fast and got beyond their abilities to handle it. It was not a question of the industry or a question of the franchise, more a question of just management.

KELLER: How many of those deals did you have?

ACKERMAN: Not more than a couple. Very few.

KELLER: At one time you had, I think, probably a questionable situation with TCI, didn't you?

ACKERMAN: TCI? No.

KELLER: Prior to Malone? You said you did have some money or did not have some money in it?

ACKERMAN: Well, we had a case with Carl Williams where Carl had systems in Colorado that the distant signals started coming in whereby he couldn't compete. He was questioning whether he'd be able to continue to make his payments and when we talked to him he said, "Well, if I had microwave where I could bring in the distant signals I could solve the problem." So we said, "How much money do you need?" He told us and so we gave him extra money and he made that into a real good system.

KELLER: That was about '64-'65?

ACKERMAN: Right in that neighborhood.

KELLER: I remember that. We're talking about Salida. Competition was with a translator that they had there, and not over the air signals or anything else like that. It was a translator that was causing the problem.

ACKERMAN: One of the interesting things in the cable television industry is that there were very few cases where there was duplication franchises in one area. I remember a cable system in Huntsville, Alabama where a second franchise was awarded, so both systems had problems making it. We were lending to one of them and we finally talked the two parties into merging and that solved the problem.

KELLER: But they weren't overbuilt. They served a different section of the city, didn't they?

ACKERMAN: That's right. They were in different parts of the city.

KELLER: Did you ever have a situation in which you were dealing with a system that was overbuilt?

ACKERMAN: There was an overbuild situation in Pennsylvania. I think it was in Scranton. I can't remember exactly, but there was an overbuild there and neither one of them were making it and they finally put it together and merged.

KELLER: That's usually the history with that.

ACKERMAN: That was one of the beauties of the business. You could lend money, let's say to a real estate operation where they put up a hotel and somebody else put up a hotel across the street, or you'd lend money to a department store and somebody else put up a department store across the street, but in cable television it didn't work that way and that was one of the beauties of the business.

KELLER: What do you think about the competition from satellite delivered signals today?

ACKERMAN: I think there's a good worry there. A major cable operator today has to find other ways to bring in more income rather than just through the selling of cable signals. That's why you're seeing companies like Comcast and so forth trying to do more in the telephony and internet and so forth.

KELLER: AOL Time Warner, the same way. The bigger companies.

ACKERMAN: As I say, when you've got competition it's entirely different. When you've got Direct TV over the air, now they're able to bring in the city signals where before they couldn't, it makes a different competitor than we had before.

KELLER: Would you have any compunction against financing a satellite operator?

ACKERMAN: That actually came after we got out of the business.

KELLER: I know, but if you had the opportunity do you think you would?

ACKERMAN: I would think it would depend upon the operator who had the franchise for the city as to how good they were to be able to compete against the...

KELLER: They don't require franchises.

ACKERMAN: Satellite doesn't require them, but if you have the city franchise and you say, "Okay, do you want to finance that?" how good of operators are they? Would they be able to compete long-term wise with the satellite system?

KELLER: Jim, at one time you were a cable operator also in Indiana. How did you get involved in that?

ACKERMAN: We started out beginning with the period from the time I left Morris Plan Economy, we were actually able to form Becker Communications. At that time I was able to get a franchise along with Harold Ewen and Gail Oldfather in the city of Conesto, Indiana. So we started out with that cable system.

KELLER: How large a community is that?

ACKERMAN: Well, Collinsville is a town around 25,000 people. We got that franchise and then we were able to get a franchise for Seymour, Indiana.

KELLER: You built those?

ACKERMAN: We built those and later on we built New Albany, Indiana and built Monticello. We ended up with 21 franchises with seven offices. Columbus, Indiana... Many of us operators who were near those towns allowed us to expand the operation.

KELLER: Who acquired the franchise? Who played the political game?

ACKERMAN: Myron Patterson, who was our chief operating officer and I was chief executive officer, between the two of us we bought the other franchises and Myron operated the systems and he always used to say that I didn't know how to screw in a light bulb, but he couldn't read a financial statement. So, the two of us made a pretty good team. Myron did a wonderful job. When we sold out in 1993...

KELLER: What year did you get in?

ACKERMAN: We started in '71 or '72. '71, I guess, is when we got the first franchise.

KELLER: But you started out in classic markets.

ACKERMAN: Right, they were all classic markets until we got to New Albany, New Albany being a bigger city. In fact, we bought Corydon, which is a suburb of New Albany which at that time was owned by our present governor of Indiana. So we bought that cable system from him. Interestingly enough, that cable system didn't have poles. They put the lines up through trees.

KELLER: Oh, they didn't build their own system?

ACKERMAN: They actually ran the lines from one tree to another tree, so we had to rebuild the system after we bought it, but that was quite a successful operation that we had. When we sold out we had 87,000 subscribers. So, that was one facet of my operation in cable. Another facet was that when we started Becker Communications, actually, before that, when I was with Morris Plan Economy, Gail Oldfather... the first was Harold Ewen ran the cable television department and then that later was succeeded by Gail Oldfather.

KELLER: I knew Gail when he was here.

ACKERMAN: Both of them did a wonderful job. Gail later went to work for Carl Williams and Harold went to work for a banking company in New York City doing the same thing Becker Communication was and it was primarily owned by Malarkey and Taylor, and didn't work out so Harold came to work for us at Becker Communication in Chicago. He moved to Chicago. Later on, Harold went to work for Rick Michaels.

KELLER: I want to go into that. You then joined CEA...

ACKERMAN: After Becker sold out to Drexel Burnham and Merrill Lynch, Harold got Rick to bring me on board...

KELLER: Rick Michaels, by the way, of Community Equity Associates.

ACKERMAN: Right, and I was vice chairman of the board of that company for a couple of years. At the same time...

KELLER: Did you ever see Rick?

ACKERMAN: Oh, I saw Rick quite often.

KELLER: I thought he was usually in his airplane going over to somewhere else.

ACKERMAN: Vice chairman of the board means once a month down in Tampa. At the same time, I was with Merrill Lynch in the corporate finance department around cable television. I was more or less the cable guru. Anything that came through Merrill Lynch I was involved in, such as arranging loans with insurance companies and taking the companies I mentioned public, with a fellow by the name of David Wicks. David Wicks now is with Cablevision in the arc city. All these men are brilliant guys – Gail and Harold and David. So I had a wonderful experience working with them.

KELLER: You always hired people smarter than you so you didn't have to do the work.

ACKERMAN: Now I didn't say I didn't do the work; I just had people smarter working for me whereby they could do the grunt work and I could just sort of oversee. They did the detail work... well, I did all the detail work, too, initially, but they did the heavy work. Because at the same time I was involved in other things besides just cable television – minor compared to cable television. But these people – Myron Patterson and Harold and Gail and David all were wonderful people to work with and we got a lot done that way.

KELLER: Gail was here at the time; he lived in Indianapolis.

ACKERMAN: Gail was here. He started, as did Harold, at Morris Plan and they worked their way up whereby they were vice-presidents and ran their different divisions. Harold ran cable television one year and went over and ran commercial financing and accounts receivable financing division.

KELLER: Gail is an accountant, isn't he?

ACKERMAN: Yes and no. Gail worked his way up from Oregon, took over from Harold and then took over the cable television operation itself under me so that there was continuity there. Harold, Gail and I usually went to all the cable television conventions. I think I missed two cable conventions from the time we started in '58 until '93. Otherwise I was at every national cable television convention. I served on the board of the National Cable Television Association for three or four years and so did Harold after me.

KELLER: You served on the board from when?

ACKERMAN: I can't remember what years it was, but I remember Malone was on the board and so was Hostetter. Hostetter is another one we financed.

KELLER: In Ohio?

ACKERMAN: In Michigan.

KELLER: Michigan? Monroe and that area up there?

ACKERMAN: Jackson, Michigan and some other town. This was when he was still in partnership with his teacher at Harvard Business School. I can't remember his name. So that was another one we financed. We also arranged long-term financing for him when we were with Becker. A very shrewd businessman.

KELLER: If you were asked, and I'm going to ask you, what the total sum of the loans that you made over the years to cable television, would you have any general idea of how much it would be?

ACKERMAN: I have no idea.


KELLER: One hundred million, two hundred million, five hundred million...?

ACKERMAN: I have no idea. I've never added it up because it started out with $300,000-$350,000 loan and then we arranged financing for large sums, corporate financing. I don't how you'd put them all together.

KELLER: Well, they're two separate things. One was direct loans and the others you brokered. How much would you say in your direct loans that you made as Economy and Morris Plan?

ACKERMAN: I'd have to guess 40 or 50 million maybe, because in those days they were small loans. We had small individual companies until we went to Becker and started doing corporate finance.

KELLER: You shouldn't downplay that because that was the lifeblood of the industry and I think you pumped an awful lot of blood into the industry.

ACKERMAN: They were private entrepreneurs. I mean it wasn't the big corporations like they are today. For example, Bob Rodgers was financed early before he became a public company. We arranged a loan for him, as I recall, with Fidelity Bank in Philadelphia. We actually did a direct loan with him to buy out a company down in Louisiana. Both in that company and then when we took them public I served on the board. They in turn sold out to Cox about three years ago. So, those were big money at that time, became big money.

KELLER: Have you ever done any business with offshore banks or with the Canadian banks?

ACKERMAN: No. We tried to do some business in Canada.

KELLER: With Toronto Dominion?

ACKERMAN: No, with Ted Rogers. I can't recall if we actually... I think we probably made a loan when I was with Merrill Lynch with him, but I'm not sure. I can't remember, but outside of that we did nothing offshore or anything like that. When we had Cardinal Communications, our own company, we had loans with the bank in Baltimore because of my relationship with a fellow that used to be with Citibank in New York where we had a loan, Morris Plan had a loan, but then when he went into the cable television business he had moved to the bank in Baltimore and they in turn had a bank in Ireland, and so Cardinal was borrowing money from the bank in Baltimore and Ireland and here in Indianapolis.

KELLER: How did you keep track of this?

ACKERMAN: We dealt with the banks on a partnership basis. In other words, you had one bank that you did all the business with and they in turn refer everything to the other two banks, for example.

KELLER: They never got you interested in any of those offshore properties?

ACKERMAN: No.

KELLER: You said today you had an investment in something, do you not?

ACKERMAN: Yes, in Cardinal Ventures we have an investment in Europe and an investment in New York City.

KELLER: In cable?

ACKERMAN: In cable.

KELLER: Who is your investor that you're invested with in New York City?

ACKERMAN: A fellow by the name of Acker is the president of the company. It's a distributing company.

KELLER: Oh, a distributing company.

ACKERMAN: Of cable products. The second largest in the country.

KELLER: Not George Acker, is it?

ACKERMAN: No, no, he's out in California. I know George real well because anytime we had a movie I always sat next to him because of names.

KELLER: You never loaned to any other distributing companies or manufacturing companies?

ACKERMAN: Well, as I say, we took CCOR public, which was Jim Palmer's company, but as far as lending Jim money we didn't actually lend money to him. I think Jim referred business to us once in a while when they had a client come in to buy their product and wanted financing. Jim would refer them to us to handle it.

KELLER: How many of those deals did you make?

ACKERMAN: I have no idea.

KELLER: That was straight equipment financing, though, wasn't it?

ACKERMAN: A customer would come to Jim wanting him to build a system using CCOR products and didn't have the money arranged yet, so we would get into it at that point and make the loan.

KELLER: Well, you've had your fingers and your hands and your toes and your whole body in all aspects of the business since 1958.

ACKERMAN: That's right.

KELLER: And are continuing to do it.

ACKERMAN: As I say, it's a fun business. I'm not sure it's that much fun today. What's happened in the banking field, or rather in the stock market field whereby they said, well, here are these companies that have always run on a cash flow basis, maybe they should run under a net income basis which makes a different thing out of it entirely. That's why cable stocks are taking a beating, just because of that.

KELLER: John Malone has always said, "I would rather pay interest than taxes." I don't know how many times he's said that.

ACKERMAN: That's right, and the thing is that on capital expenditures for example, companies handle them different ways and the animus, if you work for the big brokerage houses, are trying to get a uniform way and it's sort of difficult.

KELLER: Yes, it is. Some will capitalize their drop material, some won't; some will claim a portion of it, some won't. They handle multiple buildings differently in the capital investment.

ACKERMAN: That's right. I know here at Cardinal Communications we only use capital expenditures on new product, new ideas. The expense of hooking up a customer, that was an operating expense as far as we were concerned.

KELLER: Yeah, generally that was considered unless you needed it to put some more capital expense when you bought a company.

ACKERMAN: I don't think that was quite the way to do it.

KELLER: How about franchising? How did you amortize franchises?

ACKERMAN: In those days a franchise didn't cost you that much, not unless you were buying a company because then you'd have the goodwill factor.

KELLER: It wasn't a goodwill or did you put as much as you could on the franchises or the customer service gifts or whatever. We all did it. If we paid x number of dollars for it and we could only justify x minus something, nothing would go below because you couldn't get any better without a goodwill.

ACKERMAN: They changed that practice now. Some of these companies are writing off goodwill now completely and hitting the bottom line in the stock market, but the analysts are saying, "Okay, it's a onetime shot and it shouldn't affect it in the future."

KELLER: What else do we want to talk about? Some other people in the business that you'd like to...?

ACKERMAN: Well, as I say, we did business with so many different people in the industry. There were few we didn't do business with – people who had their own muscle with family financing or very profitable at doing what they did, a good example is Comcast. We called on Ralph Roberts and Julian Brodsky and Dan Aaron many, many times but never could get their business and they did a good job of financing their own operation. That was one of the few big companies we didn't do business with.

KELLER: Julian is a genius when it comes to financing.

ACKERMAN: Julian and I were really good friends. It wasn't a case of not knowing each other or anything like that. We appeared on panels together, for example, but they knew exactly what they wanted and they were able to get what they wanted in the way of financing. Once a company got big and got their own internal financing area, then it was hard for us to crack that because it was basically operators in the individual systems that we did arrange quite a bit of long-term financing, but it's still the banks...

KELLER: You gave the basis of the financing.

ACKERMAN: But what happened was the big brokerage firms such as Solomon Brothers and J.P. Morgan and so forth, they got into the business of arranging the long-term financing so it changes the industry because of all the consolidation that went on.

KELLER: Did you ever get involved in that tangled situation with Storer Broadcasting?

ACKERMAN: With what?

KELLER: Storer Broadcasting?

ACKERMAN: No, I don't think we ever did anything with Storer.

KELLER: That was a mess for a long time.

ACKERMAN: As I say, there were quite a few big ones we didn't get with, but smaller operators...

KELLER: Well, you were the lifeblood, as we said before, of these small operators. Pull out your crystal ball – where is the industry going to go?

ACKERMAN: Well, I think the industry is going to... it's interesting what's happening right now. For example, high-definition television. The sets aren't selling that much and they're selling at tremendous prices because not enough of the TV stations have gone to high-definition, though now they're saying they have to. The FCC is saying they should. As a consequence, prices today on television sets are coming down. I just had to put in a television set for my wife – she has this macular degeneration – she couldn't see a screen such as I have there on my desk and so we bought a plasma, which is a four inch to eight inch screen and big – 52 inches across, not diagonal, 52 inches across – where now she can sit in a chair ten feet away and see it where before she had to sit right on top. Those sets start around as much as $15,000 and they're coming down now so that they're going to be cheaper and cheaper and cheaper as more and more people start buying them. Also, it's going to be real interesting to see what happens with your broadband communications as to whether we're going to use our television sets for internet as opposed to a separate computer. I know a number of my friends go on the internet through their television set. Is that going to increase? Who knows exactly? The big companies are having to find other ways to sell product other than just the programming, especially if you bought a cable system for $4,000 a subscriber, how are you going to get enough revenue to justify that cost? So that means they have to get into other areas. When I was with TCA we just started to go into telephoning. In College Station, Texas, for example, a university town, they sold a package for $75 a month whereby they could have their long distance on cable, in other words their telephone, cable products, pay products all in a package, and the students were buying it like mad.

KELLER: Did they go into one central instrument though? Sooner or later we're going to have to come up with that one separate instrument.

ACKERMAN: Right, that's what we did. They had a box maybe on top of the television set. You'd take students that had a small set in their room and they'd have a cable box to use for the other things. I think the big cable systems like Time Warner, which is AOL now, and Comcast, which are the two biggest, are going to have to do more and more to find ways to increase their monthly payment. I thought up until the recent merger of Comcast with AT&T that probably Cox was the most diversified in other products of any of the major cable systems. They had originally gone into big cities and bought, in Las Vegas for example, they had other cities like Omaha and New Orleans and so forth, and they were selling telephone and so forth. I think that's going to be more and more in order to compete with Direct TV, over-the-air TV, in other words. It's going to be real interesting to see who really comes out on top.

KELLER: I see the day when the so-called cable operator is going to give away the television signals and make their revenue on these other services.

ACKERMAN: It's very possible although I hadn't thought about it that way because I think a lot has to do with the younger people. Us older people are not as aware of how we can use broadband more. My daughter, she uses internet all the time. She's chatting with people in New Zealand, Australia and so forth around the world. I wouldn't even know how to begin to do it.

KELLER: The high-speed internet connection from cable systems is working out quite well. I know we have it in our home. Tell me, where did you think that Michael Armstrong of AT&T made his mistake, if he did?

ACKERMAN: I can't say.

KELLER: Okay, I thought maybe you would speculate on that.

ACKERMAN: First of all, I think John Malone did a masterful job of selling TCI to them.

KELLER: I think that's pretty well accepted.

ACKERMAN: I don't think that AT&T really knew exactly what they were getting.

KELLER: I think that's true, too.

ACKERMAN: So as a consequence we know that the condition of those cable systems couldn't compare to let's say the condition of Comcast or Cox and so forth. The same way with Charter; Charter's been buying older systems and haven't brought them up to date like Comcast has done and so forth.

KELLER: Well, Carl Vogel's a good operator. He'll do all right with Charter.

ACKERMAN: But it's a case of what do you pay for and what do you get and how much are you going to put into them, and are you going to be able to take enough of these new things to make it worthwhile for the customer and spend a hundred dollars a month or more.

KELLER: Before we wrap this up, anything else you want to bring up, Jim?

ACKERMAN: No, I think we've covered the field pretty well. As I say, I think it's an industry that we were lucky to get into at the right time and were able to do pretty well in it. The industry today is entirely different. We entered it in 1958 and now it's a big corporation business and it's not a private entrepreneur business. I don't know how many private entrepreneurs there are left in the industry. Very few. And yet I can remember fellows like Alan Gerry who ran an operation really big and sold out. You take all of these different fellows that were private entrepreneurs and started out with one little cable system and built it up to a large size and then have sold out or merged. There's not many left of the private entrepreneur so you're looking at a different industry as far as analyzing it, as far as financing of it and so forth.

KELLER: Well, Jim, you have been really the lifeblood of the industry in the very early days and without Economy Financing and the Morris Plan and Jim Ackerman, the industry would have had a greater struggle than it did at the time.

ACKERMAN: Well, somebody else would have come along probably and done the same thing.

KELLER: But you were the one that did it and you were the first to come in with the underlying financing for cable television systems, and I know the industry greatly appreciates it. This has been the oral history of James F. "Jim" Ackerman, former executive vice-president of Indianapolis based Economy Financing and the Indianapolis Morris Plan. The date again is December 4, 2002. We are in the offices of Cardinal Ventures in Indianapolis, Indiana. Your interviewer is Jim Keller. Thanks, Jim, I really appreciate it. It's been fun.

ACKERMAN: Thank you, Jim.

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Bill Adler

Bill-Adler

Interview Date: Thursday November 22, 2001
Interview Location: Pittsburgh, PA USA
Interviewer: Jim Keller
Collection: Hauser Collection

 KELLER:  This is the oral history of M. William Adler of Weston, West Virginia and in my opinion the most sophisticated person to ever have come from in West Virginia.  Bill is one of the original cable television pioneers. Has been in the past a consultant to the industry and a consultant to many of the large companies that have come in. The date is November 22, 2001. We are at the Hyatt Regency in Pittsburg, Pennsylvania. Your interviewer is Jim Keller.  This is history is sponsored by a grant from the Gustav Hauser Foundation and is part of the oral history program of the National Cable Television Center and Museum. Bill tell us a little bit about your history prior to the time you got into cable television.

ADLER:  I guess I answer by saying I saw television for the first time while I was in college in Princeton, NJ.  That would probably be ’47 or ’48. I’m not sure exactly what year it was. Not long I suppose after the New York and Philadelphia area stations started broadcasting. And I was a member of the Tower Club at Princeton and as there were many other clubs of that nature, we all had TV sets and usually after dinner in the evening, I would be downstairs with two or three friends watching programs like Kukla, Fran and Ollie and the Camel News Caravan which I remember quite well.

KELLER:  Milton Berle.

ADLER:  Then I came home to Weston, West Virginia which was back in the mountains of West Virginia. Far removed as far as I could tell from any television reception. My family had a department store. My father had died and I was playing a small role in its management and had concluded that we couldn’t make a great deal of money only in Weston and we ought to think about some branch stores. And the town that I picked, at least first investigated, was the town called Richwood, West Virginia. Further south and east of Weston. I had a good friend down there and he was looking for a store location for me and one day he called and said he had found one and would I come down. Which I did. While I was there looking over the store location, he said “By the way, have you seen our television here?”  And I said, “Television? In Richwood?”  He said “Yes.”  He said that it’s a cable system. They have coaxial cable and they bring it in the town on that and he said “Let me show you.”  So I went along with him to the cable company in fact and saw this absolutely incredibly perfect black and white picture coming from Huntington, West Virginia.  A hundred miles away.

KELLER:  Who owned the system?

ADLER:  The system was owned by Carl Gainer.  Carl Gainer was in the oil/gasoline business and this was something of a sideline for him. But he started the system, it was coaxial cable. I think his system dated from about the middle of ’51, maybe early ’52, something like that. And I didn’t meet Carl on that occasion but I was astounded by his TV and what particularly intrigued me was that a friend of mine at home had been in dental school in Baltimore and gotten married and had TV in Baltimore. Came home and brought his TV set with him and just a few days before I met the distributor in Richwood, I had helped him put an antenna on the roof of the apartment house where he lived. And this was between Christmas and New Year’s and on New Year’s Day he was hoping to pull in a bowl game. Well his apartment was quite close to a high hill. There was no reception from that direction but we maybe apparently did get a glimpse, a glimpse of an exceedingly small, mostly a frame I think of a picture out of the Pittsburgh channel. It happened to be a day -- those were peculiar days when TV signals would bounce into places where they weren’t supposed to go due to atmospheric conditions. And other people in the community who had little systems of 8 or 10 people on an open wire system with an antenna on top of the hill, they saw practically perfect picture that day. One of the few times they did. So anyway, I went back home and I told my friend Jim – I’m going back to Richwood and you’re going with me. I’ll wait until your afternoon off and I’m going to show you TV.  So we went back to Richwood. In fact almost gave up the idea at that point of having a branch store. We talked only about television and gee, this is incredible, marvelous. Let’s go back to Weston and let’s do it for ourselves. We weren’t thinking about doing it commercially.

KELLER:  Were you selling television sets in your store at the time?

ADLER:  Oh no, we didn’t sell television sets. Others did.  One of the reasons, I think by the way that something that contributed probably to cable television in small rural isolated towns was the fact RCA insisted that its dealers of radios and other products must stock TV sets also. Even though the store owner would say we can’t sell a TV set. There’s no reception here. Well you take some TV sets or you lose your franchise. And so they did take a few sets and then they looked for some way to sell them.  And of course, as you well know, in places like – I think particularly in Lansford, Pennsylvania where Bob Tarlton had a store, an RCA dealer…

KELLER:  Pottsville.

ADLER:  And they sold TVs by putting an antenna on top of the hill and running an open line down the hill to a set. And the industry was born. Although at that point it wasn’t coaxial cable, it was open wire system.

KELLER:  I think Marty put it in. Marty Malarkey put it in with coaxial system, didn’t he?

ADLER:  I would have thought the, well if Marty came later than Bob, which I think he did, he would have done coaxial cable, yes.

KELLER: He had the same story. He was trying to sell television sets.

ADLER:  Yeah. I’m sure if he followed Bob, it would have been cable. And Milt Shapp really is the father of the cable industry. It was he who was selling boosters, as they were called and other electronic stuff at the time and all of sudden he’s getting all these orders from that part of Pennsylvania, Lansford and so forth.  Why are they using all these little boosters and he drove up and he met Tarlton and Tarlton showed him what was going on. But he also showed him that because they were still using the open wire that there was terrible interference. At almost every hillside system was radiating signals to the other systems and the pictures were filled with ghosts.  But Milt said “Well, you should use coaxial cable. It’s shielded. It prevents the radiation. It prevents the ghost that you’ve got.”  And in due time, Tarlton put his system back together again with coaxial cable. I think that was really the birth of cable television and Milt Shapp was the guy who thought of it and then began to manufacture the equipment. The amplifiers and the all the peripheral stuff.  I call him and I think most people who were in the business at that time would call Milt Shapp the Father of Cable TV.

KELLER:  If there’s any question about it.  You related a story that somewhat astounded me that had to do with Milt going in to talk to the telephone company, AT&T at the time, in New York. This was some years later after the origination of cable. But he – tell the story.

ADLER:  Well, the telephone company was wise enough to see that coaxial cable, which it had invented -- Ma Bell had invented coaxial cable in the middle ‘30s as I remember -- but they knew that its capacity of full communications was vastly greater than the ordinary telephone wire into the home and they could foresee the possibility of competition developing by cable companies. Competition to them. That they could offer numbers of telephone circuits on one coaxial cable which the phone company could not do with its ordinary pair of wires. However, Milt sold AT&T on the thought that cable is here today and gone tomorrow. This is early. Relevantly few stations in the country and the FCC had stopped granting licenses while they mulled over creating UHF.  The expectation that once UHF came into play and even more VHF stations were licensed there would be no need for cable. People would get service on their rooftop antennas only. Who would pay for something when you could get it free? He sold AT&T on that. They bought it. They thought well that makes sense to us.

KELLER:  Do you remember what year this was?

ADLER:  I don’t know what I know the year but I would think that it would have to be around 1951.

KELLER:  It was after the war though.

ADLER: Oh it was after the war, sure and but Milt went into New York to the AT&T headquarters and he made the argument and he finally convinced enough people at AT&T – okay, let’s let it happen.  It’s good public relations also. We’re cooperating and helping people get television reception. 

KELLER:  The point being he used the poles to…

ADLER:  Of course, it was having to attach the cable to the poles. I left that part out didn’t I?  And it went from there.  Well, as it turned out – at that time the maximum number of channels that the amplifiers the industry had was 3.  You could transmit 3 channels. They were all lowband. You could put a signal on Channel 2 and on Channel 4 and Channel 5 or 6. There was separation between 4 and 5 in the frequency spectrum.  So you could pick 4, 5 or 6.  They were selling the 3-channel amplifier. Now some towns didn’t even have 3 channels they could put on but that was the beginning. It got the Jerrold Corporation going and then their own engineers began to develop the amplifiers and began to learn things that even Western Electric didn’t know. As a matter of fact, interestingly enough, after Jerrold Corporation was well launched and was selling this stuff and was doing miraculous things with television frequencies, that a lot of very bright engineers thought were impossible to do but they were doing it. And they impressed engineers at Western Electric enough, that Western Electric actually made an attempt to buy Jerrold Corporation from Milt Shapp but he didn’t sell. But they could see that “Hmm, this thing does work.”  Now in due time as cable companies began to proliferate and more stations came on the air and yet cable continued to exist, the phone company got nervous about this and then began really to clamp down and make it difficult to get pole attachment contracts.

KELLER: Let’s go back to 1953 now when you’re starting the system in Weston.

ADLER:  Well, it took us about 6 or 8 months from the time we made the decision to do it, to get the system actually operating on air.

KELLER:  Had the funds available or had to borrow?

ADLER:  Well, we borrowed money. We had some money but we had enough credit to go to the bank and get some money. 

KELLER:  What bank?

ADLER:  A local bank. That used an on a demand note that we borrowed money and I think our initial capital was $42,500 in total.   There were 3 of us who were stockholders. Each of us had a third I think. And we got the thing going. There was a great deal of doubt in the minds of many people in our community that this was a feasible thing and silly thing to do in fact.  Well, we had our first actual for sale signals available on January 1, 1954. It’d been a year ago, about a year since I’d first seen the cable service in Richwood. We managed to get it into one beer garden, where they got a substantial number of people in there that day to see the service fixtures and one guy said “These guys are going to make a fortune.”  That’s the honest truth. We were glad to hear that. I don’t think we thought so at the time but there was at least one guy who was watching this picture. We did have 3 channels on. One was really perfect, Channel 7 from Pittsburgh and to get Channel 7 on the lowband we had a converter. That was the equipment that would put it down on; I think we put it on Channel 4 actually on the system.  From then it progressed and were able to have, we got 5 channel. Jerrold was able to perfect 5 channel amplifiers.

KELLER:  Where did you get the signals?  Pittsburgh definitely but they only had...

ADLER:  Well Pittsburgh, I think our original signals were Channel 2 Pittsburgh, Channel 7 Wheeling, and I think Channel 6 Johnstown.  It could have been Channel 3 Huntington, I’m not certain of that.

KELLER:  Those were the two networks?  There were three networks at the time, ABC…

ADLER:  We had no ABC. There was Dupont or Dumont, rather Dumont.  Dumont was Channel 2 Pittsburgh at that time and Wheeling was NBC and Huntington was NBC. I think it may have been -- I’m not sure that we had a CBS signal. I’m pretty sure that Johnstown was also NBC. So I think we only had two networks to offer and there was a great problem with the low channels. Channel 2, reception from Channel 2 was subject to electrical interference and co-channel.  We were 100 air miles away from those transmitters.

KELLER:  Did you get all of these signals off the same hill?

ADLER:  Got them off the same hill. We found the right hill. It was the hardest days’ work I ever did in my life physically. It was climbing this hill to do the testing originally. Carrying an automobile battery, a converter, and a field strength meter, and a Channel 2 yagi antenna. When we got to the top of the hill the antenna was collapsed. We got to the top of the hill and there was a ridge actually we were going to follow and check different points on this ridge and so we set up the yagi antenna and as you know, the elements are what 8-9 feet across. The biggest of the antennas…

KELLER:  Channel 2.

ADLER:  Channel 2. The first spot we checked the signal was very poor. Found practically nothing. This was Simpson field strength meter. I don’t think Jerrold or people like that were making them yet but at least if you had a signal the needle would show some activity.  The first spot signal was practically not measured. So it wouldn’t work.  It had to have at least 100 microvolts it was said and probably the first place was 25 or 30. So we started back up along the ridge. Well, it was too much work to dismantle the antenna.

KELLER:  Where did you learn that you needed 100 microvolts?

ADLER:  Well, that’s what [garbled]. I mean there were a few people doing these things. I mean maybe an individual here or there who had a little antenna of his own he built on above his house. He learned. I don’t know. We learned anyway that 100 microvolts was the absolute minimum for a relatively clear picture. So we didn’t have 100 microvolts the first time. We didn’t collapse the antenna instead we were carrying back through the woods like this you know and dodged the trees until we got to the next spot and set it up and no that wasn’t satisfactory. We kept on going but actually did find on that trip a spot, the highest point on this ridge, 1640 ft. above sea level where we had 100 microvolts, probably out of Pittsburgh.  Wheeling wasn’t on the air by the way. This was January of 1953 we were doing this.  A bright blue day. Relatively cold but also one of the shorter days of the year and we got caught up there in the dark. We didn’t think about taking a flashlight along with us so we struggled to get off of that hill and down through the woods carrying this stuff, falling and tumbling and rolling. Got home about 8 o’clock that night. His wife was frantic. My mother was frantic about what had happened to us but we did make it and that turned out to be the antenna site. And it’s still the antenna site for the system.

KELLER:  Were you able to buy the site at that time?

ADLER:  Well, no. We leased the site and the people who owned it we gave them free service in return. I think they still get free service from the company that owns it today.

KELLER:  When did you sell it?

ADLER:  We sold in 1981, no 1982. 

KELLER:  So you ran it for almost 20 years?

ADLER:  Well no, close to 30. Close to 30 years. By the time we sold it of course the system had satellite channels. I think we were probably offering in the neighborhood of 20 channels by the time we sold it. Today, they are up to – that was 18 years ago or 19 – I think now we’re up to about 70 channels on that system. We don’t but the owners do today.

KELLER:  And you sold it to TCI, is that correct?

ADLER:  Sold it to TCI.

KELLER:  You also built other systems around the area.

ADLER:  We also built systems in [interference] West Virginia and Summersville, West Virginia. That is to say my original partners. Summersville we brought another person into that and then several of us in the cable company, in the cable business like Sandford Randolph and Bert Cousins and Gordon Fuqua and some of the Jerrold people. We built systems in Covington and towards Virginia.

KELLER:  Those were getting bigger and bigger towns.

ADLER:  Those were getting bigger towns and I must mention about a problem we had at Covington and Clifton Ford. They’re in Allegheny County which borders on West Virginia. Exceedingly high steep hills that are almost nothing but rock. The trees do manage to grow out of and Jerrold was a partner with us in that particular venture and we almost gave up in the fact we didn’t see how we were going to be able to dig holes on those hillsides to set poles to bring the cable down.  And we solved the problem by simply putting the cable in steel conduit pipe. Very rigid stuff and laid it on the ground. We didn’t try to set poles because it was just too rocky. So I would do that. Probably the only one of the systems in the country that was constructed that way.

KELLER:  Did you have franchises in these areas or did you have permits of some kind, what was…?

ADLER:   We always had franchises. In the case of Weston, I think another person had come around before we got into the business. I hadn’t even heard of the business I think when this fellow came to town and tried to get a franchise but the city council had some suspicion or was dubious about it.

KELLER:  This was Weston?  After you had already built the system?

ADLER:  No, no I mean this was before we had got into the business. A few months before another fellow who had gotten into the business in the southern part of the state had come in looking for a franchise but the council was dubious about it and didn’t give him one, thank God. Turned out to be a great friend later on.

KELLER:  But you knew the people in city council?

ADLER:  I knew the people in city council. We had no problem getting a franchise at all and most instances city councils were very cooperative and we had no problem at that time getting a contract from telephone company, C&T which was a subsidiary of AT&T.  And the power company. The power company was delighted to give us contracts because we were going to add to their load. People were going to be watching TV a great deal and that meant business for them on the sale of electricity.

KELLER:  Did they both have pole lines?

ADLER:  They shared pole lines. Some poles were actually owned by the phone company, some actually owned by the power company and of course, we took communication space just above the telephone cable. A foot or so above. We had change out some number of poles to get the space that was required for our…

KELLER:  Rebuilt the telephone company plants?

ADLER:  Sometimes we did.

KELLER:  Now how many subscribers did you finally end up with when you sold?

ADLER:  I think in our systems of the ones in Lewis, Braxton and Nicholas counties we had about, you know I’m not quite sure now, I think around 3500 customers.

KELLER:  3500?

ADLER:  Yeah, something like that.

KELLER:  Then you went into Covington and some of the others?

ADLER:  Well Covington and Clifton Forge was a different corporation all together. Different owners and we sold that as well to Jerrold in fact. And all of us made some money out of that particular system in the sale and then later on, I forgot to say, in Charleston, West Virginia. I was one of 13 stockholders there. In fact, I was involved in that company as the expert in cable TV. 

KELLER:  Who were the others involved?  The non-experts?

ADLER:  Oh gosh, the former governor was one of our stockholders, supplier of electronic equipment. In fact, Jerrold Electronics always sold its equipment directly to the user except in one case, in the state of West Virginia, they did sell to a wholesaler of equipment because the wholesaler got out and hustled and sold us our equipment and through the owners of that company we were actually stockholders in the Charleston system.

KELLER:  Well, you never were partners with Jerrold except for Covington where you were partners with Jerrold?

ADLER:  They owned 50% and I think 7 or 8 of us owned the other 50% of Covington.

KELLER:  Was that the nefarious hijacking by the Jerrold Corporation at that time some the other people told me the stories of where you couldn’t use their equipment unless they had a piece of the action?

ADLER:  No, no. It wasn’t that kind of relationship at all. They saw the possibility of making money down there. We had the franchise and we didn’t have as much capital as we thought we needed and they were willing to come in with 50%.  It was a very happy relationship.

KELLER:  I know some people did not have a happy relationship in the early days with Jerrold. Forced their way into the various operations.

ADLER:  I really wasn’t aware of that.

KELLER:  Ben Conroy was a perfect example of that. How did you form the… why did you find the need for an association?

ADLER:  Good question. In 1955, a school teacher member of the West Virginia legislature introduced legislation to make cable television a public utility. Regulated as such. It would be regulated by the public service commission. Now that fellow did that because the guy who owned the cable system in his community refused to extend his line a mile out just to serve this particular fellow. So this guy’s asking for an investment of say $4,000 on the part of the cable company which he happily paid them about $3.50 a month to get cable service. Naturally they refused and he decided he’d get even by as a member of the legislature by trying to get us regulated. He failed. It’s a long story about that but well maybe not that long of a story. We descended on Charleston, the state capitol and we heard… as a matter of fact I’m the guy who got a phone call because one of my partners father was a senator and the telephone company guy, lobbyist for the phone company came to my friend’s father and said “Are you aware and doesn’t your son have some interest in cable TV?”  The senator said “Well, yes he does.”  He said “Are you aware or is he aware that there is a bill before the legislature?”  This was on Friday. He says “It’s up for a second reading on Monday.”  The senator said “No, I’m not aware and I don’t know whether my son is or not.”  So this being Friday came home for the weekend and he called me and said “Bill…”  Eddie [Spunk?] that was the name of the lobbyist for the phone company and he said “There’s a bill in the legislature to regulate cable TV as a public utility and it’s up for second reading on Monday. You guys are going to have to get busy.”  Well, I got on the telephone. Of course I knew several of the other cable operators at this point, most of them and we rushed off to Charleston to do a little lobbying over the weekend and the man who later became the governor of West Virginia was in the minority leader, Cecil Underwood, he was a good friend of Sandford Randolph and Ralph Scheffler and he said “Here’s what you do. You go see the speaker of the house and the majority leader and tell what you problem is. Tell them that this is premature. Make all the arguments that you can.” And incidentally we didn’t have a good argument.

KELLER:  I was going to ask what the argument was.

ADLER:  Well, you know that’s an odd thing. It never occurred to us that we would be faced with this kind of thing so we hadn’t really thought through if you like the philosophy of business but Strat Smith, who was then counsel to NCTA, we got in touch with him. He came up to Charleston. So he gave us what arguments there were. He said “Well, first of all it’s an entertainment business you’re in. You’re not in it.  If cable TV was in operation and went out of business, who gets hurt except you.”  He said “It’s not a matter of life or death to anybody like the telephone service or electricity or water is. They’re public utilities. You’re not for that reason.”  He said “You’re not a monopoly. There are plenty of other sources of entertainment in your community. You’ve got movie theaters and other things. So you’re not monopolizing the entertainment business.”  And I forget 2 or 3 other things that he, arguments that he said.  But as I said none of us had thought of these things until we were floundering around a little bit answering the criticisms we were getting. I by the way was delegated to take the school teacher, whose name was Calloway, out to dinner Sunday night. And I hadn’t heard the arguments. And during dinner Mr. Calloway said “Well, Mr. Adler, you’re attached to poles on public property, aren’t you? Just like utilities are.”  So yeah, we clearly are. “You send out a monthly bill just like the telephone company and the power company do, right?” I said “You’re right about that” and he said “And you’re the only one. You’re the only cable company in town. You’ve got a monopoly on the cable service.”  Yeah, well you’re right about that.  I had no answer to his criticisms. I said going to the antennas is like climbing the [garbled] is the hardest work I ever did. Well, that was the most miserable life of my life. In fact I was so – I had lost the case for us. It was my fault --  feeling about it. Well the other boys were back working the politicians and getting the problem solved and but this guy, you know, put it over on me and I thought because of that I’d lost the whole thing for my friend and myself. But on Monday it came up for second reading and one of the members, this was in the house, hadn’t gotten to the senate yet – one of the members of the house said, stood up and said “I move to strike the enacting clause.”  Well, the enacting clause was what makes the legislation authentic and it was not unanimously passed that amendment but at least he won the thing and over the years after that about every two years when the legislature – then it met every two years now it meets every year – somebody would have an argument to make or a bitch to resolve by trying to get the cable company.  Cable was never regulated in West Virginia until about oh gosh, let me think here about 1992 or something like that.

KELLER:  And it is regulated now as a…?

ADLER:  Well, the regulation amounts to overseeing the quality of service that’s as far as it goes. Nobody tells you how much money you can make or anything like that and it came about because there was small operators who were rendering poor service and you know getting lots of complaints from their customers and weren’t being resolved and the politicians listened to that as they should have and the regulation was put into effect. 

KELLER:  But they’re not regulated by the public utilities commission?

ADLER: No. They oversaw the regulation so far as it went but it only went as I said for quality of service.

KELLER:  So that was the formation of the West Virginia Association?

ADLER:  As a result of that we saw that we needed to be organized and within a few months we had organized and yes, the West Virginia Cable or Community Antenna Television Association as we, well whatever it was called. Something like that.

KELLER:  You became involved in more widespread association didn’t you? The Mid-Atlantic Association?

ADLER:  Well, the Mid-Atlantic…well, West Virginia and California, Pennsylvania certainly particularly, some of the Oregon, some of New England, they were the founders of the cable television. The mountainous hilly areas of those states and West Virginia, almost every town in West Virginia had cable TV because of the terrain and the necessity of having cable TV for reception. So we kind of dominated the early years of the industry in so far as membership on the board of directors of the NCTA and because the other states like Maryland and Virginia didn’t have as many operators. They kind of joined us and we became the Mid-Atlantic Cable TV Association. I don’t even know if that still is the case, it may still be something like that.

KELLER: I don’t know the regional associations seemed to fall apart because the specifics of each individual state became different and the state association became stronger and stronger and the regional associations kind of went away. How long did you serve in the…first of all were you on the board of the Mid-Atlantic Association?

ADLER:  Well, I was at one time or another. I would have been president or chairman whatever the case may have been. I can’t remember how long and for how many years and for how many terms I may have served. I certainly rotated membership on that. I would have been on it probably half of the years of its existence.

KELLER:  Stabbing a senator in the back, it did occur in 1960 did it not?  Tell me about that.

ADLER:  It did. Well, I can’t recall very well…

KELLER:  Senator Pastore wasn’t it?

ADLER:  Senator Pastore of Rhode Island as I remember wanted to place us specifically under copyright, I guess that’s what the argument was at the time and there were members of the board of directors who thought well probably we should. Pastore is a powerful man in the senate.

KELLER:  Communications Committee chairman wasn’t it?

ADLER:  I think that’s correct and we can’t alienate this man. We have enough fights with other people to fight. Fight with Congress is pretty much a no-no. And the bill was number 2653. I’ll never forget the number. And when it came up for a vote, it was defeated. We had mustered enough support amongst our own senators and congressmen. I guess senators in that case. I mean you know in West Virginia, everybody had cable TV and we say to our subscribers “You don’t want to pay more for services than you’re already are and if this legislation is passed you’re going to have to pay more money.”

KELLER:  Didn’t the Association make an agreement with Pastore that they would support him?

ADLER:  I do not recall that specifically. There may have been some sort of agreement. I’ve forgotten that.  But I do remember very well as I was in the gallery as many of us were when the vote was taken and Senator Pastore stood and he looked up at us and shook his finger and he said “You’ll regret to your dying day what you’ve done today”  or something to that effect. As a matter of fact, we didn’t. That is to say he didn’t proceed to do anything that I’m aware of the hurt the industry but I don’t recall, there certainly had been negotiations with Senator Pastore and maybe there had been an agreement on the part of the negotiation committee that we would do such and such.

KELLER:  As I recall, I could be wrong…I was very, very new in the industry at the time. As I recall, we would agree not to fight his proposed legislation. We would not be opposed to it or not be formally opposed to it or openly opposed to it but as it turned out the association was. It took an active opposition to his bill.

ADLER:  They did. There was a lot of debate about it. As I say I think Milt Shapp was probably one of those who was adamant that we should not accept this agreement with Pastore. As I remember Milt was…

KELLER:  There was an agreement with Pastore.

ADLER:  I think you’re probably correct. I just have forgotten that. You know it’s too long ago. Too long ago. Forty one years or so.

KELLER:  So that, but the copyright issue went from early on even in 1954 as you pointed out until it was finally settled in what…early 1990s was it? When was it finally settled?

ADLER: I think earlier than that.

KELLER: No, it was under the 1984 Act. Wasn’t it?

ADLER: I don’t really recall. I was out of cable business in 1984. No, I think,  we were paying copyright long before I got out of the business.

KELLER: I think it was codified but I don’t remember more about it. We’ll have to go into that [garbled].

ADLER:  I got out of the business maybe we’d been paying copyright a few years before that.

KELLER:  What other issues were before the Association at that time?

ADLER:  The telephone company, AT&T, was an issue over a long period of time. It had more to do I think with what pole rentals should be than no contracting with cable companies. Only one telephone company held up for all the years, never to grant cable TV a license to use the poles and that was in Connecticut. And Connecticut was the only state for many, many years that didn’t have cable TV because there was no way, well cable companies didn’t want to go out and set their own poles, so there was no cable there.   But, there was long term negotiations with AT&T and I believe, it I’m not mistaken, at that time they were over what the pole rental should be.

KELLER: Prior to that, also they wanted to prohibit our companies from getting on the poles and offered them a lease back at that time.

ADLER: Was that the case. I really…

KELLER:  That was in the 60s.

ADLER:  Bud Hofstetter was chairman of the committee. I remember that very well and whoever else was on it. I was never personally involved in those negotiations, so my knowledge is limited.

KELLER:  If I recall, correct me again if I’m wrong, if you can remember, it was codified I think in the Cable Act of 1984? 

ADLER:  I don’t know.

KELLER:  I think so when they finally determined that the telephone company did not have a right to prohibit us from the use of the pole. They even set the pole attachment fees at that time. I’m not sure of the time but there was finally some kind of legislation that prohibited the telephone company from putting it to us.

ADLER:  The telephone company always underestimated the power of the cable TV industry even when it was relatively small because we had the public on our side and we won some numbers of battles here and there because of public relations and the phone company wanted always to maintain good public relations and it created problems for cable company that was not really for public relations. So that was one that we had. It didn’t mean that they didn’t fight behind the doors about this or that. But the power companies incidentally finally came around to asking what we considered exorbitant fees for pole attachments and I recall very well myself in West Virginia, and maybe a few other guys and negotiating with an attorney for the power company that serviced that area and saying to him “We’re not going to pay these fees.”  “Oh yes you are. They’re our poles and you’re going to pay them.”  We went to the FCC and the FCC said to the power companies you cannot charge more than x dollars per pole.

KELLER:  I remember that and I remember the formula.

ADLER:  And that’s shocked the power companies pretty badly because their position was the FCC has no control over us but by gosh, the FCC – we have control over the communication space on the poles and they’re communicators and we’re telling you, you don’t charge more than whatever the price was.

KELLER:  And finally the telephone companies were finally required to, I think,  accept the same fees?

ADLER:  I guess so, yeah.

KELLER:   1984 was not correct. It was a time before that because I was with United Utilities at that time and the telephone company and they were getting into the business and I advised them not to try to build systems in their own exchange areas because sooner or later there were going to be problems. They disregarded that and said that they wanted to stick with their own areas, their own franchise areas were and of course they were finally forced out of business but that was in 1966. So the telephone companies were forced out of their…prior to 66, 67 or somewhere around that.

ADLER:  I had my own little fight with the telephone company over a different kind of an issue which is maybe worth repeating and telling this story.  I always looked upon our system as an asset of sorts.

KELLER:  I guess so.

ADLER:  And with multiple channels, some of which weren’t being used and to me that was a waste of an asset. What can we do with the channel that’s not being used that’s beneficial to the public and beneficial to ourselves?  We had a volunteer fire department in our town and as the vast majority of places in this country have volunteer fire departments but we were also getting into the news business. Providing local news via cable and it would be helpful to us to be able to know what’s happening and where fires are. We wanted to cover that story and that sort of thing. Well on FM --  we had some FM frequencies that weren’t being used and it occurred to me that if we that if we could put a microphone in the fire department and volunteer firemen had good old receivers in their own homes, FM receivers always tuned to this one particular frequency, they could hear announcements being made. This was before two-way radios are as common as they are today as of course now cell phones.  We agreed to wire a fireman’s home, if he didn’t already have cable, we’d put cable in there for that particular purpose and in face, we even sold them the radio. We bought Zenith radios and sold them to the firemen at cost.  And then it went a little further than that. There was an engineer with the phone company that said “Well, we can do better than that. We can put, I think he said a condenser on the line or something where the call comes into the fire department, this condenser makes the telephone line think that it’s ready for a call and not already off the hook if you like.  Try to explain it that way. He said “And then that actual call and the caller making the call to the fire department, you can his call on your system.”  You hear the phone ring, a buzzing sound, and you hear the conversation between the caller and the fire department. Immediately as it’s happening. So that’s even better. It’s instantaneous information. If you’ve got a volunteer fireman who lives nearby where the fire’s occurring or some other emergency, you can get out and get there quicker than if he has to run to the fire department to find out where it is. So, we did that. This is the way the system worked and the firemen loved it and we did too. I was going to say it helped us cover the news.  The manager came to town.

KELLER:  Telephone company manager?

ADLER:  Telephone company manager. He took a dim view of this. We were violating the wiretap laws. This is a private conversation that’s coming into the fire department and we’re broadcasting that conversation to every fireman and good Lord knows a number of people who weren’t firemen. Also to their radios and so they could find out what’s going on. Well we argued that we weren’t and we kept the thing going. I came into Washington and I met with the guy who was head of the common carrier of Europe. His name I do not remember and I told him the story of what we were doing and he said it sounds fabulous to me. Put it on paper and send it and I’ll see to it that the phone company lets you continue doing this. Well, and I never got it on paper to him and the phone company backed away and we continued to render that service. I don’t know that many other cable companies in the country did it but I let people know about it. What a wonderful public service it was and it really was.

KELLER:  First time I’ve heard about it.

ADLER:  Yeah, it was great but essentially we eventually won the battle.

KELLER:  Why did you go into the programming business?

ADLER:  I’m not sure what year that would have been.

KELLER:  Because in a system that small that would have been very difficult for you, wouldn’t it?

ADLER:  Well, what we did – first of all we bought a Telemation weather thing and on either end of the weather instruments you had two slots – one you could do slides on and the other you could put a card in and put information on the card if you wanted to. And we started doing that putting information on the cards.

KELLER:  Fill up a channel.

ADLER:  Just to provide a news service if you like but of a very, very limited nature. How much you could get on a what 6 by 8 sized card or something like that and I bought it special. I had an IBM Selectric typewriter and I bought an orator thing which gave you a slightly bigger print, readable at home on the TV.  Then in talking to television people, what was the fellow’s name who owned Telemation?

KELLER:  I can’t recall it.

ADLER:  He was one heck of a good guy.

KELLER:  He really was. I can picture him but I can’t recall his name right now.

ADLER:  Well, I said to him…

KELLER:  Salt Lake City.

ADLER:  Salt Lake City.  I think they had already put a character generator on, I’m mean they offered a character generator to you. I’m not sure, I think that was being done before I took the idea.  I wanted to do the local news with a character generator and with his cooperation he developed the thing maybe a little bit further and we had that on the weather channel. The news ran as a not a crawl --  that’s whatever you call it across the screen. Nice big white letters on black with what the news was. I’m mean this could be 15 minute news cast. It’s like what is on today, CNN and the rest of them. We did it twice a day except weekends on Saturdays and Sundays, it was once a day but…

KELLER:  You had somebody reading the news though?

ADLER:  No, once in a while we did and I’ll explain that. If the system broke down we also had background music and we would take a one of those, I can’t remember the name of it, a tape cartridge. You remember the earliest ones that came out that you stick in the car thing, well we had those that could be put into this thing and if the print thing broke down, once in a while it did, then I would actually record the news in audio and play it that way.  It repeated over and over again. But Telemation further improved on the character generator and we bought a second one. To make it work to start with we had to use paper tape and we would cut a tape, type on the typewriter or on the computer board and would cut the symbols for every letter and the thing would run through the reader and the letters would appear on the screen. Well, gee a 15 minute news thing, the tape might be a 150 feet long and how in the world do you keep it from tangling?  The tape was about an inch wide so we made a box, a tall box like thing that had an open slot at the top, just slightly wider than the tape. The thing worked wonderfully, the tape would feed back into the box and wind around and around and feedback out again and go back. The darn thing worked great. It was marvelous but then Telemation came out with an all electronic one which solved the tape problem. It worked better too. They had to, supposedly you had to press the button every time to make it repeat itself, so we just wedged the button so it was on. Then one of the guys put a switch on, so when we started it…it was wonderful, it was wonderful. We were the daily newspaper. We had weekly newspapers, print but we were the daily newspaper for western West Virginia.

KELLER:  Where did you get the information?  Where did you get the news?  Where did you find it? How did you find it?

ADLER:  One thing we always did, we employed people. We tried to employ people with multiple talents so if somebody was sick, another guy could step in place or the girls. We had two girls in the office and we had a guy who was selling advertising for us, a little bit of advertising. We didn’t put too much on. Didn’t want to clutter it up, to tell you the truth, with a lot of advertising. At maximum two advertisements per day could appear on this tape and two girls and this guy and myself took turn about doing the news. One of the office girls would put it on a noontime and that would be the evening edition and then maybe the same girl depending on what would come in or one of the others, I was in again at nighttime and starting around 8:00 we’d gather the news and get on the phone and cover the news. Find out what’s happening and of course people cooperated with us. They’d bring the news in to us. So we didn’t have to go and get it all. We’d cover a fire or something that happened.

KELLER:  Did you do weddings and engagements?

ADLER:  We didn’t put those things on but certainly everybody’s birthday appeared and who wanted on that day and all obituaries were on. Complete obituaries ran and as I said we’d run a couple of ads and if we sold that many. It was a marvelous service. People – I’ve been out of business now for 21 years, I guess it is, 19 years, and people still say to me “By golly, it’s a shame you don’t still have that service on the cable. It was wonderful.”  And it really was wonderful. A marvelous service to provide. We sold the advertising. We had let’s say 3,000 customers in Weston at the time and we charged a penny a customer, $30 for your ad. But the ad was repeated, every 15 minutes since we were 24 hours so the guy got a good buy. People didn’t hesitate to pay $30 for it. Somebody asked me one time, we covered the local news – what do you mean by local?  I said if President Nixon shot, we would not report it unless he got shot in Lewis County. (Laughter)

KELLER:  That’s local.

ADLER:  And that’s the fact of it. We didn’t cover national. One day when I was not there, my partner, it was the day that Agnew resigned; he insisted that that be put on. That was contrary to what I would have done because we covered the local news but as a matter of fact it did run on the cable.

KELLER:  He was from Maryland, that wasn’t too far. (Laughter)

ADLER:  That did run off of the thing but that’s the only time I believe we ever ran anything on there that wasn’t strictly Lewis County or Lewis County involved.

KELLER:  Tell the story of the first satellite receiver that you saw, if you could.

ADLER:  I was chairman of the board in 1969 and 1970, NCTA board and I was in Washington or else I was invited to come over. I mean I was in Washington as chairman every once in a while, but I think this could have been a special trip that Wally Briscoe – Wally was as you know the, I’ll call him the chief operating officer of NCTA. He wanted me to go with him. He had been invited and he thought I as chairman should go with him. The highway from Washington was now the road between Washington and Frederick. I think the designation as I-270 or I- 170 or something like that, whatever. To a concern however you’d describe it and it was to see a satellite. A complete built satellite that could be launched and would provide satellite…

KELLER:  The actual satellite itself?

ADLER:  The actual satellite was there in this room and it looked like something out of science fiction to me. I mean it had all kinds of gadgets and it was peculiarly shaped as they are I suppose most of them and different kinds of instruments that are on this part of it and that part of it.  About the size overall I recall it of an old Volkswagen.

KELLER:  With this, did they have a method of launching?

ADLER:  I don’t know that this company did. This company and I wish I could remember the name of it; it really was a pretty well-known name seemed to me but for some reason…

KELLER:  Was it Raytheon?

ADLER:  Wasn’t Raytheon, no, I just cannot recall the name of that company. Anyway they were telling Wally and me that the satellite could be used to transmit television pictures to cable companies.  Now I didn’t understand the techniques of this thing, I’m embarrassed to say. I don’t know why it just didn't penetrate my mind as to really what the significance of this was but we already had HBO operating. The microwave.  So HBO could be put on the satellite and so forth and it was. I may have been among the very first people in the cable industry who saw this thing and stupidly didn’t, as I said appreciate the enormous significance of it. I mean it revolutionized as you well know cable TV service. 

KELLER:  But that didn’t come until about 5 years later.

ADLER:  Yeah, it took a while but there it was and I’ve always been somewhat embarrassed at my stupidity I guess, I’ll say failing to appreciate it.

KELLER:  Well, many other people didn’t see it either.

ADLER:  Well, maybe not, yeah.

KELLER:  At that time satellites were pretty ethereal. No one really knew what they could or couldn’t do and what it was.

ADLER:  I think Wally Briscoe did appreciate it but maybe he’d been exposed it to the thing a little longer and had more conversations with somebody. It just for some reason was beyond me. As a matter of fact, in our own cable companies we were sometime later, I mean HBO was on satellite and other things had been around, ESPN three or four years at least before we ever got around to putting on our system.

KELLER:  Wasn’t it originally the satellites regulated and they were only going to allow two, one Comsat and the other with the telephone company and that were two satellites were all they were going to permit initially?

ADLER:  I don’t recall that.

KELLER:  Okay because I remember Comsat. They owned one and I think Hughes Aircraft was going to put up another one and it was something…

ADLER:  Hughes may have been the name of the company.

KELLER:  May very well have been. I think they were a California company.

ADLER:  Well, I think they had an installation up there. I may be wrong about that. For some reason it rings a bell.

KELLER:  Who in your opinion would you say had the most influence on you during your career in cable television?

ADLER:  Oh gee whiz.  Well, the very first name that hits me is Sandford Randolph. Sandford was in the insurance business in Clarksburg, West Virginia when the Fortnightly Corporation, that was the name of the company that was sued on copyright, hired him as manager and Sandford was a was just a great manager. It didn’t make a difference what the problem was, Sandford could find a way to solve. He had a wonderfully warm personality. He taught most of us in West Virginia. He was in business a few weeks or a few months in some cases ahead of the rest of us and had solved some of the problems that we were going to run into and he was just magnanimous in his friendship to us and always concerned. We weren’t competitors so we knew anything he knew, any problems he had and worked out, we had the same things.

KELLER: Generally the case throughout the history of the industry.

ADLER:  That’s perfectly true. So I think Sandford absolutely is the first name that comes to me.  Gordon Fuqua was just another great, great friend and we, I think Sandford, Gordon and I and others got in the business together and one venture we built systems in Covington and Clifton Forge, Virginia. Just one fabulous guy. Well, I tell a little story. I said I was in the store business and continued to be in the store business for a while after we got into cable TV and I told Gordon, I said “Next time I’m go to New York I’m going to buy my wife a mink stole but would you be interested in getting one for your wife? Of course you’ll get it wholesale.” He said, “That’s great. That’s fine. That’s a great idea.”  So we each got, I bought the stoles in the market and sent Gordon’s to him. Which he gave to his wife and a few months later a fellow named Bob Jernigan?  You remember Bob Jernigan?   From down in Mississippi, he and I, I was flying to New York at that time I was consulting, flying into New York, to work with one of my clients.

KELLER:  I want to go a little bit into that when you get finished with this story.

ADLER:  Yeah, I want to… Jernigan happened to be on the same flight with me. We were both coming into New York together and saw each other and sat beside each other. I said “What are you doing in New York?”  “Well, I’m doing such and such.  I’m going to see Gordon Fuqua” and I said “You’re going to see Gordon Fuqua?”  I said let’s have a little fun here. I told him the story about getting the stoles. When you see Gordon you say “Gordon, you know Bill Adler?”  “Oh, yes, I know Bill Adler.”  “Well, the son of a bitch, he got a stole for my wife and the hair all fell out.” (Laughter) Jernigan said “I’ll do it. I’ll do it.”  So he sees Gordon the next day or two and he says, you know Bill Adler, yeah, all the hair fell out and Gordon said “That’s not the Bill Adler I know.”  Well, you know of course when I learned that, I felt terribly embarrassed. That’s what kind of a good friend Gordon was. He wasn’t about to believe that I would have sold Bob Jernigan or anyone else a stole that the hair would fall out of. 

KELLER:  How long were you in the consulting business?

ADLER:  Nine years. From 1962 to let’s see, 1971 I guess. Something like that. I forget exactly, something like that.

KELLER:  I do know that you were a consultant to General Electric when Doug Dittrick was doing a study concerning cable television and General Electric getting in to it. What other companies did you consult with?

ADLER:  IT&T. I did a lot of work for IT&T. Now most of my work for IT&T was because they had a subsidiary that loaned money to phone companies and they began loaning money to cable TV companies. You know people who wanted to get in the business. So, some phone companies in that case too and MGM, Reader’s Digest, several newspapers, some city councils would hire me to evaluate the proposals that had been made to them, that sort of thing. Those were some of the businesses that served.

KELLER:  Did you ever know a guy by the name of Jim Ackerman, who was with a finance company out of Indianapolis?

ADLER:  I knew Jim solely…

KELLER:  Economy financing is what it was.

ADLER:  I knew Jim, you know, at conventions. I really didn’t know him well. We knew each other by name and shake hands and say hi, good to see you and that’s about it.

KELLER:  He helped an awful lot of people when they couldn’t get financing in the very early days I know that.

ADLER:  I wasn’t aware of that.

KELLER:  Without him, probably many people would not have been in the business and he did a great job and trying to think, he had an assistant, a partner who has been in the business ever since and I can’t remember his name anymore. Shows what happens when you get older.

ADLER:  Time Life was another client. Time Life Broadcasting was a client of mine. I tried to help them get some franchise in I think was California.

KELLER:  I consulted with them in Rochester, New York before they… of course, Time then bought ATC and I was with them at that time so I did have an involvement with Time.

ADLER:  GE only got into cable on a very limited scale right in the Schenectady, Albany area and then Doug left them and started his own, of course, it’s been very successful.

KELLER:  Doug left him to come to ATC when Monty Rifkin offered him a job just before I joined and then he went out and formed his own company after he had sold his company to the Tribune Company in Chicago and I interviewed Doug last week and he wanted you to remember him and fondly so.

ADLER:  He’s a terrific guy.  I worked for Reader’s Digest; they were thinking of creating a satellite service and just needed to know all about the cable business and needed me as a kind of a primer to read.

KELLER:  I think I did an  evaluation for them one time. Elmer Metz and Doug Jarvis were in the consulting business also as I recall and they had Reader’s Digest as their client and I did some work for them at that time. So it’s amazing how these things all come together over the years.

ADLER:  Reminds me of a favorite thing of mine about the industry and the people who were in it and the various people I worked for. I recall thinking at one convention that we all had our badges on and who we were with but I said the badge should say “was with and will be with” because the turnover and change from one employer to another to another was extraordinary.

KELLER:  Isn’t that true. You remember fondly some of the Jerrold, Milt Shapp’s company sales engineers they were called at that time, anything specific did they do for you or for anybody that you knew?

ADLER: Well, Fred Lieberman and Elmer Metz both were at Weston at least one time and I think maybe 2 or 3 occasions when we were getting going and you know providing us with engineering help. Our engineers who were – mostly our engineers never had any experience with TV. They were good with radios and they were ham operators and that sort of thing so they did need a great deal of training. You know how you set up the antennas and how you balance out the amplifiers and how you read signals and so forth. So Fred, maybe Fred was there. Seem to me that he and Elmer in an engineering capacity maybe Fred wasn’t but he certainly was in Weston. Lee Zemnick was in Weston a time or two for one thing or another. Those are the only ones that I can think of at the moment. I knew Caywood Cooley fairly well.

KELLER:  Kip Fletcher finally went to Weston.

ADLER:  Kip was in Weston on more than one occasion. I had forgotten about Kip.

KELLER:  Because he was our chief engineer at Daniels way back when and those guys I think were yeomen in the development of cable television.

ADLER:  Yeah, they really were. I don’t know whether I said or not that I think maybe did I not say earlier that Jerrold by and large worked directly with cable operators but in  the case of West Virginia they had a distributor of Jerrold equipment, Mountain Electronics and the only one of that nature that they worked with at all. Otherwise it was all strictly Jerrold and the buyer.

KELLER:  You mentioned something else in our pre-interview that you remembered Jerrold having a broadband amplifier very early on, 1953 or 54 you said when we first…

ADLER:  The original amplifiers we bought from Jerrold, I guess the trunk amplifiers were the strip type. You have a strip for Channel 2, a strip for Channel 4, a strip for Channel 5 or 6 but they also had one for the theaters out on the line that the number was DB26.

KELLER:  Line extenders.

ADLER:  I guess a line extender. DB26.  Now that was a broadband amplifier. It amplified the entire spectrum from 2 through 6 but the trunk ones were per channel only.

KELLER:  Yes, I remember that. I didn’t remember a broadband trunk amplifier as early as what…

ADLER:  Not the trunk, no. It was only on the outlying legs of the thing that they worked fine.

KELLER:  When did go transistor?

ADLER:  Oh boy.  We went transistor, I don’t know what year to tell you the truth, honestly I don’t.

KELLER:  Did you use the AMECO transistor originally or did you wait for Jerrold to come around?

ADLER:  We had a little bit of AMECO equipment and one little amplifier in particular was about the length of the two rolls of toilet paper seems to me and not much bigger in diameter and I remember that thing put in the line and that amplifier worked and it worked and it worked and it worked and it worked, it never failed in my experience. It was a marvelous little amplifier and when we built Charleston, West Virginia, I was involved in that system. That was an AMECO system. We brought Archer Taylor in to do the evaluation of the bids we had on it and we all agreed that AMECO could do and do it well and it was the best thing we had dollar and cents wise.

KELLER:  Were they the only ones who had transistorized amplifiers then?

ADLER:  Oh no, I think probably almost everybody did at that time. That would, let me see, that was around 1972, I think that we built Charleston.

KELLER:  Jimmy Palmer had one a little bit later didn’t he?

ADLER:  I don’t think I ever had any C-COR equipment in our system.  Jim and I were friends but just never happened to have bought any of his stuff but we did buy that AMECO. By and large our stuff was Jerrold and we bought Times Wire was our cable supplier. Well, most of the time, then later Superior was doing our stuff when we got the aluminum jacketed cable. That was bought from Superior and Regal for the drop wire.  Good old Arthur Baum.  That reminds me when…

KELLER:  Everyone has an Arthur Baum story.

ADLER:  Well when we were doing the hoax. Conroy wrote to Arthur and he spelt his name Bomb. But what he did was he only sent the second page of the letter. He left the first page out of the thing and the second page, I forget what it was, it had to do with somebody who was trying to buy something that Arthur had. He was very anxious to buy something from Arthur but he wouldn’t make it clear in this paragraph, you know and poor Arthur, he’s trying to fathom who this was and when we got together in, the guy had a name on the thing  and we got together in Boston, I ran into Arthur in the lobby of the hotel about time we were registering and said “Oh by the way Arthur, so and so saw this guy’s name, he’s at such and such hotel and he’s locking for you.”  Oh we were mean as hell.

KELLER:  You were. You guys were bad.

ADLER:  Oh,  we were bad.  We were bad. 

KELLER: But Arthur was a unique character.

ADLER:  Yes, he was.

KELLER:  I regret that I didn’t have the opportunity to interview him.

ADLER:  Arthur had his salesman that I always claimed had died and they simply preserved his sales pitch because every time he called you on the telephone the wording he used was identical. “How’s the weather down there?”  He’d start out “How’s the weather there?” and then more spiel. I think he did read from a script.  (Laughter)  Again, I can’t remember what the fellow’s name was that we bought a lot of his wire though.

KELLER:  And his two sons, Bob and Ted.

ADLER:  Gosh, yes.

KELLER: Arthur was a fixture in the industry and immortal in the industry for a lot of years.

ADLER:  You know, he was absolutely sweet guy.

KELLER:  Yes, he was.

ADLER:  And we took advantage of his good nature I’m afraid.

KELLER:  You think so?

ADLER:  Well, I mean I’m saying that Conroy and I at least to some extent. 

KELLER:  He was a hustler.

ADLER:  Oh gosh yes.  Absolutely so.

KELLER:  And he got in the cable business through manufacturing hula hoops. You probably knew that.

ADLER:  No I didn’t. No I didn’t know that.

KELLER: His original business was manufacturing hula hoops and when the fad ran out, he had all these extruding machines and he had to do something with them.

ADLER:  No I had no idea.

KELLER:  Then he went in the amplifier business.

ADLER:  I think there are still drop lines in West Virginia that got Regal wire.

KELLER:  Viking was his company.

ADLER:  Viking, well Regal was the original name. Then it became Viking. I had forgotten that.

KELLER:  Anything else you what to add before we wrap this thing up Bill?

ADLER:  Gosh, I’m not sure. I think we were talking here, while we were  not on camera, it’s a joy to be engaged in the business as the owner or the operator or as an employee. It was fun to be in the business and I don’t think that anyone in the cable business can say it wasn’t fun or isn’t fun if they are still in it and so many ways, it’s a joy. In our early years of cable, people would stop you on the street and say “Thank you.’ They’re paying you $3.50 a month for service but they’d say Thank you. The people in it, Good Lord, to think of the wonderful, wonderful, wonderful people to work with. Frank Thompson and George Barco and of course, I’ve already named Sandford and Gordon. There wasn’t a single one of them, Larry….

KELLER:  Flint?

ADLER:  Boggs, Larry Boggs and [Laurie] Calhoun, down in Key West, John Spottswood. Good heavens above.

KELLER:  Ran the Florida Association for years.

ADLER:  The Schneider brothers, Bill Daniels, just go on and on and on.

KELLER:  Bill used to say that…

ADLER:  Al [Jay] Rickey, Al Kozminski.

KELLER:  We had formidable enemies, the telephone companies didn’t like us, the power companies didn’t like us, broadcasting didn’t like us, the FCC didn’t like us. The only people who liked us were our customer.

ADLER:  Yup.

KELLER:  I remember him saying that and it’s true and you’re absolutely right about the joy of having been in the business all these years. I couldn’t imagine being in anything else and having as much fun as we had in developing the industry over the past forty years.

ADLER:  My partner,  Martin Sweeney, his main business had been appliance store and also a funeral director. Martin didn’t mind getting up at 6:00 in the morning or 5:00 in the morning if there was something to be done. I wasn’t that kind. I was a late sleeper but I didn’t mind staying up until 2:00 in the morning to do something or get it done. We worked extremely well together. He had his talents and I had mine and we had a very wonderful relationship.

KELLER:  On that note, I think we will end this Bill. This has been the oral history of M. William Adler of Weston, West Virginia and I’m amazed after all these years and everything he’s been through, he still resides in the small community of Weston, West Virginia. Even after going to Princeton and being in New York and Washington, he still today lives in Weston, West Virginia. Again, this oral history was brought to you through a grant by the Gustav Hauser Foundation and it’s a part of the oral history program of the National Cable Television Center and Museum.  The date is November 27, 2001. Your interviewer was Jim Keller. Thanks very much Bill. We appreciate it. It’s been fun.

ADLER:  Jim it’s been great to see you again and to talk about old times.  Wonderful old times.

KELLER: Thanks guys. 












 

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Chris Albrecht

albrectChris5

Interview Date: Wednesday October 22, 2003
Interview Location: New York, NY USA
Interviewer: John Higgins
Collection: Hauser Collection

HIGGINS: We're here with Chris Albrecht, Chairman and CEO of Home Box Office, which is a network which changed cable television in its earliest days and is working to change television as a whole in its later days. Chris, now you started out in this business... you were Carrot Top.

ALBRECHT: Back when I had hair.

HIGGINS: You were a prop comic. You were the lowest form of...

ALBRECHT: Of humanity.

HIGGINS: ...stand up comic, weren't you?

ALBRECHT: I was not only a prop comic, but I was a member of a prop comic team. So if there's anything lower than a prop comic, it's a prop comic team. I had to have somebody to carry the suitcase.

HIGGINS: Were you carrying the suitcase or were you...?

ALBRECHT: It depended on what night. One guy carried the suitcase, the other guy had to go and buy the jar of Vaseline and the banana from the convenience store – for two different sketches, but still an odd pair of things to have to buy together.

HIGGINS: A bad combination. That's the embarrassing thing to get in the checkout line.

ALBRECHT: Exactly.

HIGGINS: You were with Bob Zmuda?

ALBRECHT: Bob Zmuda, yes, who later became Andy Kaufmann's guru and was a character in Man on the Moon and is currently out there playing Tony Clifton, keeping Tony Clifton alive.

HIGGINS: What year was this and where was this?

ALBRECHT: 1973 and 1974, maybe into '75, I'm not exactly sure. I try and block out those years.

HIGGINS: What was the good shtick? What was the great gag?

ALBRECHT: We did a lot of commercial parodies, movie parodies, song parodies; we were pretty big on parody.

HIGGINS: Like? Give us a good one?

ALBRECHT: Oh, there was this commercial that was on at the time about a hair replacement center and the guy would come out and say, "Hard to believe I'm bald?" So we did this thing where I would sit on Zmuda's lap and he had his arms between me and he said, "Hard to believe I'm dead? I know it is." It was just a... I guess you had to be there, John.

HIGGINS: Did it get 'em rockin'?

ALBRECHT: It got 'em rockin'. We, actually, were probably the only act to ever get thrown off stage at the Tripple Inn for obscenity, or as it's called, 'Ye Olde Tripple Inn'.

HIGGINS: Ye Olde Tripple Inn, yes. Oh, I've been there. They don't have comedy there anymore.

ALBRECHT: They don't? Well, there's a reason for it.

HIGGINS: So the big act broke up.

ALBRECHT: The big act broke up. We played in a bunch of different places and it was very hard to make money as a comedian then because there really wasn't a club circuit and in making money one of the things that we did was bartend and wait tables and help build an off-Broadway dinner theater on 56th Street that was called the Little Hippodrome and the guy that had put that together was a guy called Dick Skanga, who was a big general manager of Broadway shows and so when Bud Freeman who ran the Improvisation nightclub in New York wanted to go away on vacation for three weeks, he asked me if I'd manage the club for him. I needed the money and so I managed the club and I ended up running the club, becoming a partner in the club and moving on from there. So, having to make money is what kind of broke up the act, but Zmuda became a bartender at the Improv, so I never forgot my friends.

HIGGINS: Is he a bartender here today?

ALBRECHT: No, he's not.

HIGGINS: So how did you go from waiter to manager? Was it just they could trust you with the keys and that made you manager?

ALBRECHT: I was never a waiter at the Improv, but because I had done so many things at this other place, the Little Hippodrome, and because Bud Freeman, who owned the Improv respected this guy Dick Skanga, who was a smart guy and up until he built this dinner theater a pretty good businessman, I think Bud thought that I was maybe somebody who could be trusted more than the noodle heads that normally hung out in the bar.

HIGGINS: You've never struck me particularly as a stand up comic. You don't have a very zany demeanor. You actually kind of look more like one of the guys in The Sopranos.

ALBRECHT: Well, back then...

HIGGINS: That's because the suits are good.

ALBRECHT: ... I had a lot of hair and a mustache, and I was never particularly zany, but what Zmuda and I thought at the time was – actually it was Zmuda that brought me to the Improv and it was his idea that we put together an act – we were both pursuing acting careers and at that time stand up comedy was becoming an interesting entrée into acting. Freddy Prinze had just gotten a series coming out of the Improv, Jimmy Walker, Gabe Kaplan, so this was a new road to acting, fame and stardom and money. It was a good way to showcase ourselves and separate ourselves from the hundreds or thousands of other out of work actors that were trying to get auditions and get into showcases and getting agents and things like that. So, it was actually a means to an end. The end for me was never "I'm going to be on The Tonight Show," although that would have been fun had it happened, but we were far away from that.

HIGGINS: So how did you graduate from the Improv? You were also... did you go to LA to run Catch?

ALBRECHT: No, I actually went to LA to run the Improv when Bud Freeman opened the club in Las Vegas in '78. The club in LA wasn't doing too great and he asked me to come out and run the club because he didn't have anybody else to leave it to and the club in New York was running great by then. So I went out to LA in 1978 for about four months to run the club out there where I met a lot of the people who actually influenced my career, in particular a man named Jack Rollins and Charles Joffey. Actually, I met Jack in New York but Charles Joffey and Larry Bresner, Buddy Moore are guys who at that time were handling Billy Crystal and Robert Klein and Tony Bennett and Letterman.

HIGGINS: These guys are all managers, right?

ALBRECHT: Yeah, they're all managers. And Robin, and Mork, I think, was just coming on the air about that time, Robin Williams. So, I met them out there and it really introduced me more to Hollywood and to the next road of my career. When I was the Improv in New York I also became a new talent consultant for ABC and met a lot of the executives certainly from the East Coast, but also the executives from the West Coast would come in and I would set up showcases for them of new talent either for development or for casting.

HIGGINS: So what did that mean? That you were picking comics that you thought that they should see and you would build a showcase for them?

ALBRECHT: Exactly, and I did that for probably about a year. That was in New York and then when I went out to LA and I came back to New York with this knowledge and taste for LA, Bud Freeman and his wife had gotten divorced, she moved back to New York to become my partner in the club, I figured it was time for me to move on. I actually wanted to join the Rollins Joffey firm, but they picked somebody who had more experience than I did and Joffey said to me, "You need to be an agent. You learn everything being an agent." ICM, which was his agency, the agency that represented him and represented Woody Allen... they also represented Woody Allen, I should say, and they had just won the Academy Award for Annie Hall, they said, "You should go work at ICM and help find the next great slew of comedy talent for them." So I met with ICM here in New York and then I met with ICM in LA because they said they job has to be in LA. They offered me a job and I sold out my share of the Improv and moved to LA in January 1980 to make $40,000 a year.

HIGGINS: Which wasn't... I mean, I remember what I was making in 1980 and it wasn't that good.

ALBRECHT: Well, I'm older than you, number one, and I was making more running the Improv, but that was the beginning of the change for me. That was when I really changed into the current stream, I guess, that I'm in, but the things that I learned at the Improv and a lot of the relationships that I made there, including a very important one which was the woman that ran ABC development here in New York was a woman named Bridget Potter and she's the one that later actually brought me to HBO.

HIGGINS: So when you're looking at a comic, what do you see in the good ones and the bad ones? How were you picking the ones that you thought were good?

ALBRECHT: Well, there were basically two different main areas. One was someone that had a real point of view in their comedy, and that person would be the person that would usually make me laugh more and might be a great writer, for instance; and then the person who was a great performer, and might not be such a great writer but they could sell their material.

HIGGINS: So, who were the great writers that you saw from that time?

ALBRECHT: Well, Larry David. Larry was a guy who we couldn't put on in front of a big audience because he would drive people out of their seats, and my job as manger of the Improv was to keep people in their seats long enough to get as many comics on stage as possible, to sell as many drinks as possible and keep the club open 'til as close to 4:00 AM as possible because we were in business to...

HIGGINS: How did he drive people out of their seats?

ALBRECHT: His act just didn't work and he lost patience with himself very quickly. Larry was famous for going up on stage and saying a couple of jokes, realize it wasn't going anywhere, say something insulting to the audience, throwing his mike down, literally on the stage, and walking off. It's pretty hard to follow that; it's pretty hard to get the room back up from that.

HIGGINS: Larry David was the force behind Seinfeld and then Curb Your Enthusiasm on HBO many years later.

ALBRECHT: Right. Yes.

HIGGINS: So did he just go then and be a writer and stay off stage?

ALBRECHT: Actually he didn't. He went and he got a job on Friday's, which was the ABC Saturday Night Live rip-off and I think one of the reasons he got that job was because the woman who ended up marrying one of the producers was an agent for William Morris here in New York and loved Larry and gave Larry the chance to be seen for that because he ordinarily wouldn't have been seen for that, or if he would have been seen for it just type wise he wouldn't have been probably considered. But he just... if you appreciated comedy, you appreciated Larry. On the other side of the coin, you had a guy, for instance let's say Joe Piscopo, who was a terrific performer and wasn't really much of a writer. His act was much simpler but he could sell anything.

HIGGINS: Lots of impressions.

ALBRECHT: And you'd put Joe on stage to be an emcee to keep the crowd up and to be able to get as many different acts on stage as possible because he was just so personable. But a lot of the people that I worked with at the Improv, in New York and in LA, became my clients when I became an agent at ICM.

HIGGINS: Did they not have agents and you went and grabbed them, or you got them to switch?

ALBRECHT: Some people had agents. I also started to manage a couple of people in New York at the Improv before I left.

HIGGINS: Who were those?

ALBRECHT: One was Joe Piscopo, another was a guy named John DeBellis, who became a writer. I don't remember who else. I had a big client list at ICM when I started to sign comedians and those people included Jim Carrey and Dana Carvey, Billy Crystal, Paul Rodriguez, Keenan Ivory Wayans, Sandra Bernhardt, Jenny Jones, a talented kid named Paul Provenza, if I didn't say Piscopo, Piscopo. I don't know – there were a lot of people that ended up doing good.

HIGGINS: And these are people that you're not trying to get them on the road, you're not trying to book them on the road – that's their manager's job – you're trying to get them into movies, get scripts they can produce...

ALBRECHT: Exactly. My job description was finding the next Robin Williams. So, that's what I was trying to do. And also trying to represent writers who were... the great thing about a comedian is that they're actually viable in many different areas; they're writers, they're performers, they can go on the road, they can create albums. There are lots of different revenue streams and if you get lucky and one becomes a star, the chances of them becoming a bigger star than someone who is solely an actor are pretty good because they can cross over.

HIGGINS: Now, how did you like being an agent?

ALBRECHT: You know, I didn't like being an agent. I don't like to argue about money, even though I end up having to do it a lot. I didn't like being an agent primarily because it was so hard to deal with the disappointment. These were people who I really believe in, who I fought for, who I could identify with. Maybe I was a couple of years older than them, maybe I was the same age as them, and I'd known them for awhile and understood their struggles. Let's say you have six people testing for pilots – well, if they didn't get it they were of course extremely disappointed. If none of them got it I got disappointed six times, and it was hard for me to deal with their disappointment because they looked to me as a person who was going to make them feel better or certainly help them, and my own disappointment, and then I learned a tremendous amount at this agency, ICM. Being an agent at a large agency is, I think, one of the best... I know it's the best place to learn how show business works. It was a great educational process but it's also a very high pressure place where you've got to go to work and make something happen every day. It doesn't matter who you talk to on the phone, it doesn't matter who you had lunch with – if you didn't make a deal, if you didn't book something that was going to bring in revenue, or sign a client who someone else could book that was going to bring in revenue, then you had a bad day.

HIGGINS: There are no small successes or failures; there are only big successes and failures in that game, it seems like.

ALBRECHT: Well, you can add up a lot of small successes, but that's a pretty hard way to make a living.

HIGGINS: So agents to me are either screamers or they're smooth. Were you smooth, and did you walk in the door that smooth or did you have to work at it?

ALBRECHT: No, I think I wore my heart on my sleeve pretty much back then. I was pretty...

HIGGINS: Earnest?

ALBRECHT: I was certainly earnest and I was very passionate about the things that I believed in, and so I might have been a good salesman. People say I'm a good sales... I guess I'm thought to be really good in a room trying to sell something. I don't know if I was back then, but as I think back I realize I must have been pretty raw.

HIGGINS: Naïve?

ALBRECHT: Maybe naïve in the sense that you're a little bit more idealistic when you first start out then you are later, and an agency can beat the idealism out of you pretty easily because it's not a...

HIGGINS: Well, one of the problems of being too passionate for your clients is your not necessarily realistic enough about the business prospects.

ALBRECHT: Yeah, I think you can not be realistic about the business prospects, but also you just put so much effort, it's just draining because you put so much effort and energy into it, and there's so much – like I said – disappointment or obstacles or whatever that it's very hard to get beyond the disappointment, and also, for me, coming from the Improv where I got to sit and talk comedy a lot, you're job ends at making the deal as an agent and that wasn't a particularly satisfying thing for me because I was excluded from a lot of things that I had actually come to feel that I had a point of view on.

HIGGINS: So you'd broker the deal and have no involvement in the creative process of what the show or movie...Okay.

ALBRECHT: Yeah, it's over, it's on to the next deal, and you'd better hope that everybody else does their job well.

HIGGINS: What were your successes in that period? What do you think your successes were in terms of deals?

ALBRECHT: As an agent?

HIGGINS: Yeah.

ALBRECHT: Oh, well, I think just the people that I signed – Jim Carrey and Dana – at that time it seemed like it was going to be a big deal. Jim Carrey had this big NBC... he had a 13 on the air commitment show that he did with Alan Burns called the Duck Factory, which most people won't remember. I actually saw a movie two nights ago that Jim did with Lauren Hutton called One Bitten where he played a high school kid that was chased by this vampire. Paul Rodriguez – we made a deal with Normal Lear for Normal Lear's return to television for him to create AK Pablo and it was a movie deal, a series deal, it was an album deal. I mean those were big deals at the time. AK Pablo went on the air and ended up going off the air in six or eight episodes, but those were pretty big things. Getting Piscopo and a girl named Gail Mathius on Saturday Night Live was a big thing. I was responsible, even though I didn't represent Eddie Murphy on a day to day basis, because of his relationship with Piscopo I was able to put together the team that actually brought Eddie into the agency and Eddie became a big client, obviously, not just from Saturday Night Live, but once Hildy Gottlieb, who was then going out with Walter Hill who was about to direct a movie that was written for Pryor called 48 Hours that Pryor didn't do and Hildy brought the tapes literally home to show Walter "this is the kid you've got to use," so there were a lot of good things that happened but I didn't have the hundred million dollar movie.

HIGGINS: That's when you graduated to HBO?

ALBRECHT: Yes, sometime in maybe '83 or '84, Bridget Potter asked me if I would come back to New York to do the specials job at HBO. We would be selling a lot of things to HBO at the time. HBO was doing a lot of comedy specials back then so I was responsible for being involved in making those deals, and then in '85 I realized that my days as being an agent were numbered. There had been a management change at ICM, I wasn't really happy there and...

HIGGINS: Did you think you were not productive enough for them to keep you, or you just didn't like it.

ALBRECHT: No, I think they would have kept me, I just knew it wasn't for me. There was a chance to go off and work with Second City and start a management company and I was thinking about that and at the same time I had interviewed for the job for HBO but I knew I wasn't their first choice.

HIGGINS: Who was?

ALBRECHT: I'm not really sure. Maybe Stu Bloomberg, who was at ABC at the time. And then I got a call when I was actually in Canada that they wanted me for the job and I got kind of their final offer, which was pretty much what I was making at ICM anyway, maybe a little bit more at the time. I'd graduated from $40,000.

HIGGINS: So it was more than $40,000?

ALBRECHT: It was more than $40,000; I'd graduated from $40,000 by that time. I'd been at ICM for 5 ½ years by then, and I just decided to take the HBO job. I remember Jim Weide, who is now the chairman of William Morris and was one of my associates back then saying to me, "This is not going to be a happy move for you. This is not going to be good." And I said, "Well, you might be right, but I'm doing it."

HIGGINS: Why did you do it?

ALBRECHT: I needed a change. What HBO wanted me to do at that time was because I had a lot of comedy contacts and they were doing a lot of comedy specials they wanted to reinvigorate that part of their business and Showtime was starting to really gain some traction on them. They had hired a guy named Stu Smiley who also used to work for Rollins Joffey out in LA, and if they didn't have the Shandling Show on then they had Gallagher and Howie Mandel and they were a real competition for HBO in terms of who was the best comedy network. I think they looked to me as someone who could help them, certainly on the West Coast because HBO is a New York based company, and the programming offices of Showtime were in LA, so it was just to try to shore up that important part of HBO's programming.

HIGGINS: So what was your view of what HBO was at that time?

ALBRECHT: HBO was this cable company that showed movies and did the occasional original programming. I didn't know much more about what was on HBO, and there wasn't much more on HBO then than the comedy specials, and so when I got here and started to get involved a little bit I realized that what Michael Fuchs, who was the chairman, what his vision for HBO was, was that HBO was an occasional use medium where you needed to have a couple of things on, a couple of movies, maybe a comedy special, maybe a music special, boxing, you know, a couple of things a month just so that the subscriber would think that there was enough to subscribe the next month. That was before... there really wasn't much basic cable or anything and HBO had made these big movie deals and there was some financial pressure on HBO.

HIGGINS: You came in right after the big, giant almost flame-out financial crisis.

ALBRECHT: I came out right in the middle of the flame-out financial crisis. We were in what we used to refer to as 'the tunnel'.

HIGGINS: Explain what 'the tunnel' was all about.

ALBRECHT: The tunnel was just we were in this tunnel where there was no money, there was crunch on the earnings, there were movie deals that were made that the way the formulas were made of how much license fee we had to pay based on certain box office things without caps and everything, I don't remember exactly, but for instance Ghost Busters, I think, cost like 35 million dollars or whatever it was.

HIGGINS: And everybody was expecting it was going to cost ten.

ALBRECHT: Right, so it was one of those times when there was not a lot of money to invest in anything. Original programming was kind of an afterthought. We used to have programming meetings where people in programming – who were also the head of marketing, but they were also in programming, they'll be unnamed – would make the argument that if you took, I don't know, the 35 million dollars or 40 million dollars, whatever it was that we spent on original programming, 35 million dollars I think it was at the time, that if you took that 35 million dollars and you spent it on marketing that the company would actually make more money than if you spent it on programming. And the only reason that original programming existed was because Michael Fuchs believed that HBO had something to offer there; he believed that there were talented programmers at HBO; he enjoyed being involved in that, and it was really there just because he wanted it to be there. No one could point to any real business reason... okay, it distinguished us maybe a little bit from the other guys, but they had original programming too, and in certain cases they had original programming that was maybe better thought of than we had.

HIGGINS: Describe what kind of original programming was on at that time.

ALBRECHT: Well, it was comedy specials; it was an occasional music special.

HIGGINS: Like George Carlin stand up.

ALBRECHT: Carlin, Billy – I think we did a Billy special – Robin had been on, Klein, Joan Rivers...

HIGGINS: So it was once every month, once every two months there would be a stand up?

ALBRECHT: Yeah, once every two months; like a few a year – certainly not one a month.

HIGGINS: And they're great because they're cheap.

ALBRECHT: They were cheap, yes. We had done three episodes of a show called The Hitchhiker, which was a pretty good show and used a lot of directors and was, I think, a better show than – well, maybe the first three weren't great, but we did a couple of seasons where we really used the...

HIGGINS: It was sort of Twilight Zone-ish.

ALBRECHT: Yes, more sexual certainly than the Twilight Zone of the '50s was. Kind of the log line, for us internally, of The Hitchhiker was, "meet a Stranger, have sex with him and die." That was pretty much... but it was interesting, it was...

HIGGINS: It was the '80s, it was happening a lot.

ALBRECHT: So, then we had Not Necessarily the News on, which was this topical news show that used clips. It was a takeoff on a British show called Not the 9 o'clock New.

HIGGINS: Precursor of The Daily Show.

ALBRECHT: Exactly. And that was pretty much what we had on the air original programming-wise. My first big thing when I came here, because I came in June '85, was the Comic Relief event, which was in March '86.

HIGGINS: Whose idea was that?

ALBRECHT: Bob Zmuda's. See? My old comedy partner came back to haunt me. Actually, Bob Zmuda came to me and said, "You know, the comics should do the same thing that Live Aid did. We should get together an event and we should raise money to send to the people who are suffering in Africa." I said, "Well, that's kind of interesting." I went home and I talked to my wife who knew Zmuda and we had all kind of grown up together, and she said, "You know, I think people would be more receptive to an idea that was kind of close to home." So we then looked for a charity, an idea that we could rally around, and the homeless problem was just building awareness then. In March '86 we did the first Comic Relief event at the Universal Amphitheater. It was one of those magic nights where everything just turned out... we were amazed. We did this live show, the phones started ringing, people were actually donating money, HBO had never done anything like this before. We had opened up the signal and made it available to cable operators so that people who didn't even have HBO could see it and we had had such struggles to try to put it on. I learned so much in that process; it was so volatile and we were reinventing the wheel.

HIGGINS: Where were you staging this?

ALBRECHT: Well, it was at the Universal Amphitheater, but we were just trying to pull it together for months and trying to figure out who the right hosts were, and originally we were shooting for maybe Eddie Murphy or Bill Cosby, and we ended up with Billy, Robin and Whoopi, who were friends of mine and old clients of mine and friends of HBO's. They all had had specials on HBO. After we picked Whoopi she got nominated for the Academy Award for The Color Purple, so we got lucky in that there was a lot of attention on her, but I remember after the show was over sitting on the stage, exhausted, just thinking, oh my God, I can't believe we pulled this off. Michael Fuchs came up to me, he looked at me and he shook my hand and he said, "Very well done." And I got a rush that you don't get from being an agent or that you don't get from... I mean, live television, first of all, is pretty exciting, doing something like that was pretty exciting. So that was the first thing that I kind of championed on my own. We were doing First and Ten, which was this football show that O.J. Simpson ended up starring in that we had just done the pilot for that we were producing, so I was getting a chance to learn a lot about production, learn a lot about development, in a pretty protected environment because nobody was really paying attention.

HIGGINS: This is kind of a good segue. Producing stand up comic events is one thing, and fairly limited in television, so what did you learn from doing the stand up events, or shows, when later you were doing dramatic series? What did you learn from those days?

ALBRECHT: Well, first of all, there were two guys, there were actually a couple people that worked at HBO that worked for me because I came in as the head of original programming on the West Coast, but they had experience working at networks and working for production companies. So I actually learned a lot from them. I learned a lot, actually, from working on the little films of The Hitchhiker and watching rough cuts and things like that. I think what I got from the Comic Relief event for myself was some credibility as an executive. That this was the first thing that I had done that really attracted a lot of attention, it was something that only HBO could do, it was very special. So it gave me maybe a little bit more confidence and reignited my showman desires, but the actual learning about storytelling and that, for me, I learned a lot from those guys that I worked with about production, but in college I was a dramatic literature major, and basically my job in school was read all the great plays ever written. You do that and you learn a lot about story, a lot about story structure, a lot about the complexities of great story telling and how things work on a lot of different levels. You also realize there are basically only a few different stories that just get told the same way over and over again, just with different costumes and slightly different configurations, but ultimately there's something very resonant to the human experience that's within all of those great plays. That's why they've sustained for such a long time. So it was a combination of that, then this knowledge that I gained, then I think just realizing, oh, hey, this network can actually do things. Comic Relief gave us a jolt of we can garner attention, we can break out of the box a little bit, no pun intended.

HIGGINS: So what followed Comic Relief for you?

ALBRECHT: What followed Comic Relief was Comic Relief II, but I think over the next year or so what we decided to do was... oh, actually, I guess what followed Comic Relief was we also had this other great little channel called Cinemax and we used to do the Cinemax Comedy Experiment, which was a lot of fun to work with young comedy talent. It didn't really mean anything on Cinemax, but it was fun to do and we would give them $150,000 – I mean we didn't pay them $150,000, that's how much they had to do the show for – and developed out of that was an idea. John Landis brought us the rights to all these clips from these '50s television shows that were somewhat obscure, all these anthology shows. The idea was to do a clip show that John Candy was going to host. But Bill Sanders who was working for me at the time and bringing in a lot of writers to pitch ideas of how to frame this came to me and said, "You know, the best idea isn't a clip show, per se. There are these two young writers that came in and they have an idea of doing a situation comedy that uses the clips as images, as thoughts in the guy's head." So we developed three different ideas, that being one of them, and the one that stood out was the show that then might have been called Dream On, I'm not even sure it was called Dream On. The writers were Marta Kaufman and David Crane, and we had those other show on Cinemax called The History of White People in America, which Martin Mull did and there was a producer who worked on those shows named Kevin Bright and Kevin Bright had done a Harry Shearer special for us, I think a Paul Schaffer special for us, so we put Kevin into the John Landis – because John Landis had never done television and it was all at Universal – so Kevin Bright, John Landis, Marta and David did Dream On, made the pilot, we put it on the air, but again, it was a pretty haphazard thing. We put it on the air because we almost had nothing else to do, so there wasn't really a lot of thought behind the strategy, but that was a show that not only did we all learn a lot about, but got a different kind of critical attention than things we had done before.

HIGGINS: Creatively it was a big signpost for the network.

ALBRECHT: It was the beginning of a signpost. Certainly the Larry Sanders Show became a big signpost for the network, but Dream On was the predecessor to that and also the first idea that we could do a comedy series that wasn't a variety show that had regular characters. The thought was we can't compete with broadcast networks because that's their staple, so why even do that because you can get all that stuff on a broadcast network. Again, you can still make the argument that HBO shouldn't have spent their money doing that, but by the grace of Michael Fuchs we actually put that show on the air.

HIGGINS: Well, and it was a pretty odd show. It wasn't a three camera show...

ALBRECHT: Right, it was a pretty odd show, and it was more sexual and there was nudity and it took advantage of some of the lack of standards and practices that HBO has... broadcasting's practices.

HIGGINS: So go on from there. Where did you go after that?

ALBRECHT: Well, after Dream On I don't remember exactly, but the Larry Sanders Show, Michael was somewhere in Florida, I think, with Gary who had come off the Showtime show and we had actually made a bid for the Showtime show at one point and lost out to Showtime because we would have done a pilot and Showtime gave Gary a series, and Michael, I think, always regretted losing out to that because he really liked Gary. Gary pitched this idea to Michael and Michael came back and said, "We're doing it." We at that time were holding off doing everything. We were like we're not really doing anything, maybe we'll develop some things, we'll do a pilot here, a pilot there...

HIGGINS: Why were you holding off?

ALBRECHT: Because we didn't think Michael really wanted to do anything and we were very careful with the money and there wasn't very much money and we wanted to make the right decision and here Michael came back and said, "We're doing the Larry Sanders Show, 13 episodes, Gary Shandling," and we were like, "Well, okay." I was kind of skeptical and we had a meeting with Gary where he pitched out the whole thing and he seemed to know exactly what he wanted to do and Michael certainly turned out to be right because the show went on the air and became, for us, a real source of pride because many people considered it one of the best comedies on television, although in the Cable Ace awards it always lost out to Black Adder. The Larry Sanders Show never won a Cable Ace award for best comedy series.

HIGGINS: Never? Even the Black Adder went off the air?

ALBRECHT: Maybe when the Black Adder went off the air. We'll have to check that because I know this is for posterity and I don't want to put the wrong thing in the vault.

HIGGINS: So when you first got the pitch for Larry Sanders...

ALBRECHT: I never got the pitch for Larry Sanders. I listened to Gary's take on it after Michael had already bought the show.

HIGGINS: Okay, so when you first heard what the idea was for the first time, which was...

ALBRECHT: Backstage at a talk show.

HIGGINS: Backstage at a talk show. Backstage of The Tonight Show, David Letterman, whatever. So what was your reaction?

ALBRECHT: My reaction was that Gary had a great take on it; it certainly wasn't going to be, I didn't think, a big audience show.

HIGGINS: Which it never really was.

ALBRECHT: Which it never really was, but I didn't know Gary that well. Gary wasn't one of the guys that I knew well from the clubs. He was an LA based guy and he actually made his career up as a writer first and then got into stand up. So I didn't have a lot of working experience with Gary, but he was one of those guys that is really a consummate comedy artist in that he really had a point of view, he really knew what he wanted to do and he put good people around him, he had great support with his managers Brad Graham and Bernie Berlstein and they made sure that he had enough money, the made a good deal for them over at Sony because HBO's license fee was very small at the time and they got a pretty good advance against the backend from Sony.

HIGGINS: What kind of license were you paying at that time?

ALBRECHT: A few hundred thousand dollars.

HIGGINS: An episode?

ALBRECHT: Yeah.

HIGGINS: And Gary's every bit as neurotic as is his persona.

ALBRECHT: I wouldn't say neurotic. I would say Gary is a worrier, he is a perfectionist, he's never satisfied and he's a half empty guy instead of a half full guy, so if that makes him neurotic, but many of us, certainly in show business, are half empty people because if you're satisfied then I think you're finished.

HIGGINS: So you're not an optimist at heart?

ALBRECHT: No, probably not. Probably not an optimist at heart.

HIGGINS: Are you less of an optimist now that you're in charge than you were?

ALBRECHT: The more successful I get the less optimist I get.

HIGGINS: Because of the more responsibility you have?

ALBRECHT: Yeah, and because there's only one place to go.

HIGGINS: So, are you now the kind of executive that you hated when you were an agent?

ALBRECHT: I would never get in a room to talk to anybody like me when I was an agent.

HIGGINS: You wouldn't get that far?

ALBRECHT: I wouldn't get that far. Once in a while I would. That's not true, I got in to see the heads of networks towards the end of my career.

HIGGINS: I asked this question of John Billock recently – now that he's a cable operator does he do all the things that he hated cable operators doing when he was at HBO?

ALBRECHT: I actually think I'm not the kind of executive... hopefully as a programmer I'm not the kind of executive I would have resented as an agent. I'm not sure as a CEO. It's very hard because there are so many people in show business that have dreams of wanting to do things and a lot of people I've known for a long time, people that either were successful and they're having hard times or people that have never been successful and they look at you as someone who can help fulfill their dreams, and it's hard to say no to somebody that has a dream, especially if you like the person and know what it's like to have a dream. So instead of hearing no a lot, I actually have to say no a lot.

HIGGINS: Not as fun.

ALBRECHT: Just as bad.

HIGGINS: Now at this time, in the early '90s, HBO was very much emphasizing movies, original movies.

ALBRECHT: Yes, what we called HBO Pictures at that time was again something that Michael Fuchs wanted to do. We were doing a few movies a year, six movies or so, and there was some real tension that was being brought to HBO from those movies and it changed, I think, what people thought... it reinvented the TV movie. It reinvented the movie for television, and it was, again, a big source of pride for Michael. It was somewhat his little playground, but it was great because Michael was one of these patrons for HBO. None of this stuff necessarily made any business sense. In Michael's head it made business sense, you couldn't point to anything on paper but because he just wanted HBO to be in this creative business there were these executives that got these opportunities to do things like Mandela and the Sanders Show and Comic Relief and things like that.

HIGGINS: But movies wasn't your thing.

ALBRECHT: Movies was not my thing, and theatrical movies were still the big staple of HBO programming and when Showtime started to buy some studios exclusively it also made HBO have to buy studios exclusively, so it also for the first time it split.

HIGGINS: For most of the '80s you all shared movie packages.

ALBRECHT: We shared movies, yes.

HIGGINS: Universal movies might be on both networks, Paramount movies...

ALBRECHT: Which was a great advantage to HBO because you only needed actually one network and you could get all the movies.

HIGGINS: And HBO being a larger network had...

ALBRECHT: Had more money to market, right.

HIGGINS: ...had more money to market, could spread the cost over a greater subscriber base.

ALBRECHT: Right, and that's one of the reasons why Showtime spent a little bit more time on their original programming because it differentiated themselves, but it's hard to make original programming such an asset that it becomes worth paying for, and to this day, with as much original programming as we have now and with as much success as we've had, the staple of the network are still uncut, uninterrupted big Hollywood movies.

HIGGINS: Despite home video and DVD?

ALBRECHT: Despite Sopranos, despite home video and DVD, despite everything.

HIGGINS: When you're doing a show – I'll keep it shows instead of movies – when you're doing a show for HBO, how are you looking at this differently than a broadcast network executive at NBC or ABC?

ALBRECHT: Well, originally it had to be something that couldn't be seen on a network and then I decided that's kind of narrow. What it really needed to be was something that wouldn't be on a network.

HIGGINS: What do you mean by couldn't.

ALBRECHT: Well, couldn't would be it's too violent, it's too sexual, it's too foul language, and that takes you in the wrong places. Something that wouldn't be on a network because they wouldn't do something, to me, is something that has a point of view because broadcast networks they try and please a very large audience all at the same time, and if you have a point of view which means you have an opinion about something, basically, you have a take on something, if you have a take on something it might differ from the take somebody else has on something and then you might upset certain people. I think the idea of broadcast television is to try to not upset anybody. So to me, the major factor of what's different with an HBO series, or anything that's on HBO – a movie even, because I think that certainly our films differ from broadcast network films in that way and to a great extent our films differ from the theatrical films that are being made today because they have a point of view, and that's the thing that we try and start with, is working with a writer or director or whatever that's got a point of view about something.

HIGGINS: Give me an example. What's a point of view that would differ then? Let's say, take something good, let's not take the Kelly Ripa sitcom on ABC, but what's the difference between the good product on broadcasting and a good product on HBO in terms of a point of view?

ALBRECHT: I think CSI is a really great well-made show, but it's a procedural show that is examining and portraying kind of exactly what's like to do a certain thing. Obviously it's not exactly like that because it's television, but you're trying to get people to believe that it's exactly like that and it's a representation of a world. Sopranos, for instance, is to me a show about a man who's searching for the meaning of his own life. He's got kids; he's inherited a business from his dad; he's got a mom, he's trying to figure out what that relationship is and get out from all the mom stuff that we all have, whether you're a man or whether you're a woman, but certainly most men have it; he's got the pressures of his business; he's got his two teenage kids; he's suffering from a depression, kind of a "is this all there is" stuff; he's got all that anxiety. Like I said, he's searching for the meaning of his own life. The only difference between Tony Soprano and every guy that I know is that he's the don of New Jersey. Now if he was a plumber you probably wouldn't watch the show, but the human core of the show is something that's really relatable, and that's really what The Sopranos is about. Everything else is based around that. The analysis part of the show, the therapy part of the show is a way to explore that key issue. So you've started with that key issue and you've wrapped everything else around it, so to me you end up with a very rich, complex drama. CSI, you take this thing that you're trying to portray and then you try and portray it as best and excitingly and as interestingly as possible. I think both excellent TV shows, just one the perfect show for CBS, one the perfect show for HBO.

HIGGINS: Did you take the pitch for The Sopranos?

ALBRECHT: Um hmm.

HIGGINS: So when he came to you for that show, what was your reaction? First of all, what was the two sentence pitch?

ALBRECHT: Well, it was a little bit more than a two sentence pitch because David actually developed that show at Fox and then had rewritten the script after it was passed on at Fox. So, he pitched us the show – I don't remember exactly what the two second pitch was – but it was a little bit like what I laid out to you, which was he's a guy, he's this, he's that, and I remember when David left he said, "Here's the script. I think there may be a little bit too much of the therapy stuff." So I went home and read the script and a couple of people that I worked with read the script, and I thought that the therapy stuff was brilliant and such an interesting way... a device that illuminated so much of what the show was really about that I said to David, "If anything I would do more therapy stuff. Keep the therapy stuff. Don't do less." And we decided to make the pilot and we were looking for a director and David wanted to direct it and I was against that idea, and then Brad Gray said, "Let him come in and tell you what his take is on it. Just listen to him." And he came in and he saw the show so clearly that I knew we'd never find anybody that had that vision, and the rest is history.

HIGGINS: HBO likes to portray itself as a very creative friendly network, as a network that tries not to put as many obstacles in front of a producer and director as the broadcast networks do. But you put your fingers in a lot of stuff in the process of a show. I can't remember if it was Six Feet Under where you sent them back for a lot of rewrites?

ALBRECHT: We didn't send them back for a lot of rewrites, we asked them to rewrite the end, yeah.

HIGGINS: So how do you approach a creative type?

ALBRECHT: Well, to me, the most important meetings where you have the most give and take are the first meetings because that's where you're establishing what the show is really about, the point of view of the show, the vision, everything, and if you agree on that and everybody is setting out to accomplish the same thing then what you have is a really terrific guideline or standard by which to judge every decision that you have to make moving forward. So whether it's a rewrite on a script, or a casting decision, or a director decision, or a set decision, or a location decision, or anything, about cuts in the episode, editing the episode, you can look and say does it best serve what we set out to do? What you – the creative person – told us and we all agreed you wanted to do, does it best serve that? Well, if it does then it's probably a pretty good decision, if it doesn't then let's talk about it because either you're changing this, we're not seeing it the same way, or there's something really not quite right there. As you move forward in the process, what I think we try to do is just keep everybody focused on what we've agreed to and provide them with the resources and the best support to get that done. It doesn't mean that we don't have opinions; it doesn't mean that we don't have disagreements. The fifth episode of The Sopranos, I was adamant that Tony Soprano couldn't kill the guy that he ends up killing...

HIGGINS: Where he takes his daughter up to college?

ALBRECHT: Right. I said, "David, you're wrong. The audience is just getting used to this guy. You're going to kill the show; it's too early; you haven't earned it. The audience won't go with you." David said, "If he doesn't kill this guy than the show is full of baloney and I don't want to do a show that's full of baloney. This guy in that situation would do that." So we compromised a little bit where we made him a little bit of a worse... you saw him actually try to set Tony up also. You realized that he was still a skunk. It wasn't like he was a guy who had tattled and now he was just some family friendly human being. He was still a pretty bad guy. And so we added that, we added that scene. David wrote that scene and shot it and we put it in and I felt better about it, but of course it went on to become the episode that won the Emmy that everybody talked about.

HIGGINS: And it's also the episode that sparked another topic, or a topic that's always been part of HBO, which is the different standards – lower standards, lack of standards?

ALBRECHT: Well, I wouldn't say lower or lack of standards. I think that what we have is...

HIGGINS: This was an episode where you saw a close up shot of Tony Soprano garroting this guy from behind and you get to see both their faces as this guy gets strangled and drops dead. And this is the episode where Bob Wright sent out a hundred copies...

ALBRECHT: No, that's not the episode actually. That episode was a couple of years later when Joe Pantoleone's character beat the stripper to death. That was the episode where Bob Wright tried to screw us.

HIGGINS: So as you present more violent things on television and you decide to present them... for years HBO was able to say, "Well, it's just the movies we buy from Hollywood. If they're violent, hey, that's what we've got to buy." You're presenting very graphic violence – or fairly graphic violence, not as graphic as Quentin Tarantino – what are doing to television? Is that good for television? Is it good for television viewers?

ALBRECHT: Well, we never would say to somebody make something more violent. If you're doing a show about a mob boss in New Jersey in the year 2000, this is a violent character living in a violent world and part of the point of view about the show is we all have this stuff in us. I think instead of trying to tame down and make something seem okay... one of the interesting things about violence, and for all the talk about violence in The Sopranos, there's not really that much violence in The Sopranos. That's the episode everybody points to; we're about to make the 65th episode of The Sopranos and they talk about that moment, so...

HIGGINS: Well, the big complaint of the 4th season was, oh boy, would they stop talking? Will they kill somebody already?

ALBRECHT: Right – will they kill somebody already, I know! Again, what we're trying to do is do the thing that's going to best illustrate what it is that we're setting out to do, and that was an extremely powerful moment that left many people in the audience numb from that experience, which I think that emotional connection is something that's an important part of television because it is not just entertainment – I mean it is entertainment – but at the same time, hopefully, there's something else that's going on and this was part of our saga. For us to say to David, "You know what, David? Don't do that. She's such a nice girl." That would have been the same thing as me saying Tony shouldn't kill the guy. But we've never said to anybody put more violence in, put more nudity in, put more foul language in. We look at it as a freedom... we're not beholden to advertisers because of our business structure, and at the same time, I guess, we haven't suffered some of the same pressures that broadcast networks have suffered from local stations in certain areas where they don't want certain programs to be seen in their area. But the biggest difference between HBO and everything else is that the first thing is you have to make the choice to have cable television in your home, the second thing is you have to make the choice to have HBO in your home. We put up all sorts of advisories before the show and someone has to make the decision to turn the show on, put it in a place where somebody... if an adult's watching it, we assume that the adult has the wherewithal to make that decision themselves, and we think that it's the same choice that you make in any other form of entertainment that you can bring into your home now – a movie, a whatever – but for us it's all about what's the best execution of the idea.

HIGGINS: Okay, so you can say it's justifiable, and I don't necessarily disagree. Is it good? Is it a good thing for violence to be depicted so much in entertainment?

ALBRECHT: You know, I don't myself go to movies that have a tremendous amount of violence that is about the good guys killing the bad guys or the bad guys killing the good guys and there are a lot of shoot ups and a lot of blood and body, body, body, body, body, body. I don't look at the things that are on... I mean there was a lot more violence in Band of Brothers than there is in The Sopranos, but what we set out to do was to try to capture the true experience of the foot soldier in World War II. So to do that, the audience of 2003, or 2001 when we put the show on the air, is not the same audience as the audience in 1950. You've got to create the experience for the people that are going to be watching. I don't have a judgment as to whether it's good or bad that there's violence. I don't play violent videogames, my kids don't play videogames, so I don't have a lot of experience with it, but I think that good work, whether it's in a book, in a real artistic work, has real value and we try and do good artistic work.

HIGGINS: What do you do with your kids' TV viewing?

ALBRECHT: My kids didn't watch a lot of TV growing up and they watch very little TV now. They watch mostly movies. I showed my 20 year old daughter the other night, we sat down and watched The Searchers with John Wayne, maybe the best western ever made, and that's what they watch. My older daughters also watched all of the Sex and the City episodes and loved Six Feet Under.

HIGGINS: How old were they when Sex and the City went on?

ALBRECHT: Ummm, when Sex and the City first went on the air she was probably 16, probably 15.

HIGGINS: What kind of limits did you put on when they were 8, 9, 10.

ALBRECHT: I didn't have to put on... they didn't really watch television. They went to bed at 8:30.

HIGGINS: You're raising bad HBO customers, is that what you're telling me?

ALBRECHT: They went to bed at 8:30. I didn't have too many restrictions.

HIGGINS: Sex and the City, was that developed elsewhere or was that pitched to you?

ALBRECHT: That was pitched to me.

HIGGINS: So, is Sex and the City about the sex? If The Sopranos isn't about the mob, what is Sex and the City about?

ALBRECHT: I mean, to me what Sex and the City is about, and again, the point of view for that show was in the columns that Candace Bushnell wrote, but the point of view of that show is 40 years after the feminist movement, you know, the real volatile feminist movement of the '60s, are women actually any better off and isn't the emotional dilemma for women still pretty much the same, and what about the fact that there are all these terrific women who at one time would have been called old maids who now are just successful career girls and may not be married. Is that success or is that failure as a woman, and I think it was an issue that certainly resonated with so many women across the country because it is still a central issue, I think, of what do women really want in their lives and what's really possible? I guess you can have it all, but can you have it all at the same time?

HIGGINS: Does that show have to be graphic to work? It's been cut up to syndicate on broadcast.

ALBRECHT: It's about to be, yeah.

HIGGINS: Would it work without being so explicit?

ALBRECHT: Yeah, the shows work great without being explicit, yeah.

HIGGINS: So what does HBO become? Right now you've produced a couple of series at a time that you're airing one night a week. You also have a lot of not so high quality material that nobody ever seems to talk about running late at night.

ALBRECHT: One man's opinion.

HIGGINS: Real Sex. What does HBO become? Does HBO become a more conventional network, originals several nights a week?

ALBRECHT: I think the real vision for HBO is to try to maintain the Sunday night strategy with really high quality original programming, stuff that's distinctive, stuff that strengthens the HBO brand, stuff that makes us really worth paying for. So it's the best movies, the best original programming, the best theatrical movies, the best boxing – it's that combination because there are a variety of customers out there and different things matter to them. It's probably a combination of all those elements – documentaries, some family, everything. We do some of the best documentaries on television and since the cable business is a mature business and the pay television business is one that is at the end of the price food chain – you've to spend an awful lot of money before you even get a chance to buy HBO – the real task, I think, for HBO is to continue to diversify as an entertainment and as a media company and find new sources of revenue. You mentioned syndication of Sex and the City, DVD and home video business, we have an international business, we have this small theatrical film business that we've started. We got really lucky with a film two years ago called My Big Fat Greek Wedding, but we need to find ways to not only grow our revenue and our profits, but take the HBO brand and expand it off of our main business which has been this pay television network and into other areas of the entertainment business, either in theaters, home entertainment, new technologies, whatever.

HIGGINS: So is the programming approach to give them just enough to keep them buying? Because one of the great things about HBO is that penetration wise about the same percentage of multi-channel video subscribers buy HBO as they did five years ago, ten years ago, and the churn rate hasn't dropped in years. It's still the same.

ALBRECHT: No, we're hoping that HBO on demand, which is our SVOD service, is going to be something that will, as the cable operator hopes, slow down or reduce the churn rate because that would be a way for us to increase the penetration. We have to churn over so many subscribers...

HIGGINS: Sort of retain your existing subscribers.

ALBRECHT: Right, but the idea isn't to give them just enough, the idea is that we want to be in business twelve months out of the year, we're spending hundreds of millions of dollars on the theatrical movies, we spend close to a billion dollars in a couple of years, that'll be up to close to a billion dollars a year, we spend hundreds of millions of dollars on our original programming, we spend a ton of money on marketing, so the idea is to try to maintain that quality, but at the same time we're a division in a very big media company – the largest media company in the world – and we have to increase our profits. So the pay television business is growing at 5% a year and the profits of HBO are growing at 12% a year. So we have to find ways to make up that difference while continuing to make the same amount of money that we're making in our base business because unlike when I was an agent, or just the head of programming, this is really about running a business.

HIGGINS: Great. We appreciate your time.

ALBRECHT: Thanks John.

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BACK TO ORAL HISTORIES

Edward Allen

Edward Allen

Interview Date: Wednesday, December 13, 1989
Interview Location: Anaheim, CA USA
Interviewer: E. Stratford Smith
Collection: Penn State Collection
Note: Audio Only

SMITH: This is Tape 1 of Side A of the oral history of Ed Allen, a cable television Pioneer. It is December 13, 1989. This oral history is being recorded at the Anaheim Hilton Hotel in Anaheim, California at the time of the 25th Annual Western Cable Show. Approximately 9,800 people are expected to be in attendance. The oral history is being recorded as part of the oral histories program of the National Cable Television Center and Museum which has been established at the Pennsylvania State University. The interviewer is E. Stratford Smith, Professor of Cable Communications and Director of the Oral Histories Program of the Cable Television Center. Ed, I only know you by Ed Allen. Would you give us your full name?

ALLEN: The full name is Edward McDowell Allen. Edward M. Allen, E.M. Allen, Ed Allen. Like Bill Daniels, I guess, I'm known throughout the industry as Ed, rather than anything else.

SMITH: Perhaps like Bob Magness, he's known as Bob and not Robert.

ALLEN: Or Stratford Smith who is known as Strat.

SMITH: Ed, the first portion of our questioning will be with respect to your personal background. Do you mind telling us when and where you were born?

ALLEN: I was born in Winona, Minnesota in 1924. So I turned 65 last month. I grew up in Winona, spent the first 41 years of my life in Winona, got my college education in Winona, married a Winona girl, conceived my four children in Winona, and it wasn't until I was about 41 that I left Winona for California.

SMITH: Let's get a little bit more information about those happenings in Winona. Did you have brothers and sisters?

ALLEN: I have one younger brother who still lives in Minnesota.

SMITH: Your parents ‑ would you give us a little bit about their background, their nationality? Were they native borns or immigrants, whatever?

ALLEN: Well, they're native borns. I guess Allen is an English ‑ Scotch ‑ Irish ‑ Welsh ordinary name. My dad was a flour miller. He was the vice president and general manager, ultimately, of a flour mill in Winona. He had started out there as an office boy and telegrapher and for a guy who only had an eighth grade education; he did pretty well in terms of ultimately running the flour mill. My mother came from Ohio to Winona as a widow and my dad was the town's eligible bachelor at age 42 and they were introduced to each other and were married in Winona.

SMITH: What was your father's given name?

ALLEN: Frank. And my younger brother's name is Frank. I remember one interesting thing there. His actual name was Francis, but he was known as Frank and the first time he ever applied for a passport he needed a birth certificate and they couldn't find him in the courthouse records. Because of the name Francis, he had been registered in the courthouse as a girl. But his name was Frank J. (Frank Joseph) Allen.

SMITH: What was your mother's maiden name and her given name?

ALLEN: Her name was Marjorie and her maiden name was McDowell. The American composer, Edward McDowell, which is where my name comes from, was a part of that family. She had been married in Ohio to a man named Ade; and George Ade, the American author, was a piece of that family. Her husband died of pneumonia and that's why, when she moved to Minnesota, she was known as the Widow Ade, back in those days. They tell one other interesting story, Strat, about my mother and dad. Things were rather formal back then and, apparently, my dad never referred to my mother as anything other than Mrs. Ade until the day he proposed and I guess it must have gone something like, "Mrs. Ade, will you marry me?" "Yes Frank." "Thank you, Marjorie." Things were a little more formal back then.

SMITH: Ed, tell us something about your boyhood. Your special interests and activities and your early school activities ‑ sports, whatever, that occupied your time as a very young man.

ALLEN: Well, the day I was born I was enrolled in a military school. I wound up going to a military school, but not the one that I had originally been enrolled in. My dad's boss at the flour mill was very much associated with a military academy in Faribault, Minnesota, known as Shattuck Academy. He gave the swimming trophy there. Unknown to my dad, he enrolled me at Shattuck the day I was born and then told my dad about it. So my dad had actually been talking to me about military school ever since I was old enough to understand what one was. I didn't go to Shattuck but I did wind up spending my four high school years at a military academy in Wisconsin. It was Northwestern Military and Naval Academy at Lake Geneva, Wisconsin.

I had my grade school education in Winona and Junior High School education in Winona and then, at age 14, I went to this military academy and wound up as a class officer and company commander. I only weighed about 115 pounds or so at the time. I was pretty skinny because I was almost 6 feet tall, I suppose, at that time. I was something of an athlete in most sports ‑ football, baseball, not much basketball, gymnastics, parallel bars, hockey goalie. Now I seem to get my exercise by signing my name a lot. I've drifted away from being any kind of an athlete.

SMITH: How odd that you were about six feet tall and basketball wasn't one of your particular sports?

ALLEN: I really didn't care for basketball. One interesting sidelight there, this was a very strict military school and the colonel who ran it did not permit anyone to chew gum, ever. He thought that was bad training. Well, the basketball team wanted to chew gum to keep saliva running in their mouths while they were playing basketball. He wouldn't permit that but he would allow them to chew rubber bands and we had a lot of rubber bands swallowed, I'll tell you.

SMITH: He kind of stretched things, didn't he?

ALLEN: World War II broke out in my senior year at this military school. We had four years of R.O.T.C. training and infantry training. So I was 17 when I graduated from high school and enrolled at Carleton College in Northfield, Minnesota for the fall of 1942. Pearl Harbor had happened in December of '41. So I was halfway through my senior year there. My dad was on the draft board in Winona and I was determined that he wasn't going to be allowed to draft me. I thought with all of this infantry training, all of the R.O.T.C. training that I had, that it would be like shooting fish in a barrel to get into Officer Training School. I was naive to think they wanted 18 year old second lieutenants at the time. Anyhow, I enlisted halfway through that first year of college in the infantry. It didn't take very long for me to determine that they really didn't want second lieutenants that young leading the troops. Rather than spend the rest of my war years in the infantry, I switched to aviation cadet training in what was then the U.S. Army Air Corps. They didn't have an Air Force at the time. I wound up with four years in the U.S. Army Air Corps as a navigator on a B‑17.

SMITH: Did you see active service?

ALLEN: Yes, I was in the Pacific theater, mainly on Okinawa, but the only B‑17s that were in the Pacific Theater, because they were using B‑29s as their bombers at the time, were the general's private airplanes and the air‑sea rescue planes, and that's what I was in. We carried a life boat that was suspended from the bottom of the B‑17 that you dropped by parachute to fliers that were down in the water. We had, in addition to the B‑17 with the lifeboats, the flying boats that were known as Catalinas that could land on the water. We had helicopters and we had crashboats which were speedboats that could go out into the harbor and pick up downed fliers. I spent about a year, year and a half, on Okinawa. They stripped all the guns out of our planes because they had to carry so much other equipment, and we never fired a shot at anybody, because we didn't have anything to fire. Our function was to try to pick up downed fliers.

SMITH: Do you recall any specific incident in your rescue activity that stands out in your memory?

ALLEN: There really isn't. The war ended just a few months after I got to Okinawa, but I was there another year. I remember we killed more people in our squadron accidentally, after the war was over, than we did while the war was actually on. Mainly through jeep accidents. People were bored being on Okinawa, they might drink too much, and they'd drive off the road. There is no specific rescue incident or anything because the war had come to an end so quickly after I got over there.

SMITH: What year were you discharged?

ALLEN: The war ended in '45, I was discharged in '46. That's when I got married, as fast as I could, when I got back to Winona.

SMITH: That was going to be my next question, take you back to Winona and ask you to tell us about your marriage, how you met your wife. Please give us a little background in that area.

ALLEN: In the summer between my graduation from military school and on my way to Carleton, my parents thought that I should learn some secretarial skills like shorthand and typing, which they thought would be helpful as a part of my college education. So I went to a summer school where they taught shorthand and typing, and that's where I met Pat who would become my wife. She was in the summer of her year between her junior and senior years in high school. So I was 17, she was 16 at the time. Things clicked from that very first time. I had to fend off a lot of other boyfriends that she had, but then I went into the Army so fast, like in January of '43. It would have been in the middle of her senior year in high school. Then, spending four years in the army, we didn't have much of a courtship. We had to do it all by letter, from different bases in the United States or overseas. We were just hanging in until the war was over because we knew we wanted to be married as soon as I got back to the United States.

She was going to the Art Institute in Chicago, as a student, so I decided I would go to school in Chicago so I could be with her. I had an idea at that time that I wanted to be a doctor. So I was checking out the Illinois schools for pre‑med courses and one of the first things I found out is that the Illinois schools were not very excited about accepting an out‑of‑state student. They had so many Illinois veterans returning and they needed the space in their schools. I couldn't get into any of the schools in Chicago as a pre‑med student. After spending several weeks trying, I remember one day I met Pat after one of her classes at the Art Institute and she was holding her apartment key in her hands. She said, "I'm turning this in this afternoon. We're going home and getting married." She had dropped out of school, knowing I wanted to be married so badly, and she withdrew from the school and then I enrolled in college in Winona.

SMITH: What year was that, Ed, that you got married?

ALLEN: We were married in November of '46. I got out of the Army in '46, tried to get into the school in September of '46, found I couldn't and we were married then in November of '46.

SMITH: When you enrolled in school after getting married, did you say what school you enrolled in?

ALLEN: I enrolled in St. Mary's College in Winona which is a Catholic college although I am a Protestant. I picked it because they had a reputation of having a very good pre‑med course. The story at that time was they had never had a student who completed their pre‑med course and was accepted to medical school that didn't make it through medical school. Of course, not everybody was accepted for medical school. I rather quickly found that I really wasn't much of a candidate to be much of a doctor anymore. I had the first semester of chemistry at Carleton College in the fall of 1942 and they put me into the second semester of chemistry at St. Mary's college in the winter‑spring of '46‑'47. In the intervening four years, I couldn't remember the first semester of chemistry. Something had gotten lost in the translation on Okinawa. So it didn't take me very long to switch from a pre‑med course to a business course and that's what I ultimately graduated in. B.S.S. degree, a Bachelor of Social Studies. That was their equivalent of a business degree. I graduated in 1950. Being married and with children coming along, I was in a hurry to get out of college.

I think in a lot of cases today, you find the professional student who doesn't think of college as a four year exercise; it's five, six and seven years. At that time, the average age of the freshman class was 22, not 17 or 18, because they were all returning from the war. A lot of them were married and they just wanted out into the real world, so they would attend summer school, just trying to speed up the process. I did that. I completed four years of college in three and a half years.

SMITH: Did you have to work to support your family?

ALLEN: Well, we had the G.I. Bill at that time. I think as I remember it paid $100 a month, if you were married and $500 a year in tuition. It was amazing how many schools had tuition of exactly $500 at that time. They had a lot of flying schools that had $500 tuition. They had, of all things, a chicken sexing school with a $500 tuition.

SMITH: Chicken sexing?

ALLEN: Yeah, I guess it's only important to other chickens to know whether it's a rooster or a hen but it was a way of examining these baby chicks and determining whether they were hens that could lay eggs or roosters that could produce other chicks. That tuition was $500, I remember. Dancing schools were $500. I got some help. I worked summers and I got some help during the school year from my parents. I couldn't work and go to school at the same time because I was carrying such a class load there just wasn't any place for it.

SMITH: You mentioned that when you graduated you had children on the way?

ALLEN: I think we probably had two by the time I graduated.

SMITH: What were the children's names?

ALLEN: Well, to run through all four of them, I have two girls and two boys. In a superlative piece of engineering, I alternated them as girl‑boy‑girl‑boy. I remember the only argument my wife and I ever really had was whether we would have the girl first or the boy first. We had agreed on alternating them, we had agreed on two and two. She wanted a boy first, as she said, so when the daughter who came behind couldn't find a date for the senior prom, she would have an older brother who could take her to the senior prom.

SMITH: The older brother would like that.

ALLEN: I wanted the girl first because I wanted a built in baby sitter faster and, as I am in charge of the X and Y chromosomes, we did it my way and we had the girl first. Tracy is the oldest. She and her family now live in Steamboat Springs, Colorado and they have produced two grandchildren for me. The next in line was my son, Steve, who is in the cable television industry, the Chief Engineer of a cable system in Roseville, California. Then came my daughter, Paige, who lives with her husband down in the San Diego area. The youngest is my son, Dick, who is a dentist in California. Among the four of those children, they have produced five grandchildren for me so far. I'm not sure they are through yet.

SMITH: Ed, only for the sake of having a complete record, am I correct in my understanding that Patty died several years ago?

ALLEN: Yes, in 1976. She had cancer. When they diagnosed it, at that time our youngest child was still in junior high school. She determined that some way or another she was going to live at least to see him through high school. And she did. She hung in there another five years with cancer. She died in 1976.

SMITH: And you have remarried?

ALLEN: Yes. I remarried, finally, four years later. That's kind of an interesting story because the girl I married has been in the cable television industry as long as I have. When I had my cable system in Winona, her husband was my Chief Engineer. When they decided to get married, and she was very young at the time, I suppose, 18, 19, something like that, she and Gary, my Chief Engineer, decided they were going to get married by a Justice of the Peace. My wife, Pat, said, "No, you're not. You're getting married in a church." So we arranged for our minister to perform the ceremony in a side chapel in our church and there were just five people at the wedding ‑ the minister, the bride and groom and Pat as the Maid of Honor and myself as the Best Man. When I left Winona, Gary took my place as the manager of the cable system in Winona and then, ultimately, moved to Reno to run the cable system there and then, subsequently, got out of the cable business and went into real estate.

Their marriage, while they were living in Reno, fell apart. But over the years, Geri and her husband had been in touch with us through Christmas cards. About four years after Pat died, I happened to get a telephone call from Geri. She told me she was in the midst of a divorce and was selling some furniture, as part of the divorce settlement. She was in San Francisco, which is only thirty minutes away from my home, so I invited her to come and see me, and sometime after that we decided to get married. At any rate, she entered the cable television business in 1958 at the same time I did. I guess she's a Pioneer too.

SMITH: That logically takes us back to a good point to get into your cable career. But just before I do that, let me ask you what your employment activities were between graduation and your first exposure to cable.

ALLEN: Okay. I started out working for my wife's dad who was in the business of manufacturing and selling farm silos. The company was called Madison Silo Company. I started out in the plant manufacturing the cement staves that go into these silos and that's what I would do during the summer months when I was going to school. Then I also worked erecting silos, which is some of the toughest physical labor I have ever done in my life. In a lot of cases the cement doors to the silos that I was trying to throw around weighed more than I did. It was brutal physical work, but then, after I graduated and was available to work full time, I began selling the silos and I had a sales area down in Iowa in the area called New Hampton. That's when I first learned that on‑the‑road salesmen don't spend much time at home. I would leave very early from Minnesota on Monday morning, I mean like 4:00 in the morning, something like that. Drive down to my sales area in Iowa and then try to be home by late Friday night. Sometimes I would make it by Saturday morning. With a relatively new marriage and a couple of small kids, this is not the best way to start out when you are gone all the time. After I had been doing that for a while, and other than that I liked the sales process, I discovered I really wasn't that enamored with the silo business, as such. I really didn't know much about farming for one thing.

SMITH: Easier to make them than sell them?

ALLEN: Yes it was. One problem there is that the farmers you would talk to would expect you to know something about farming and about silage and feeding cows. I was kind of green in that area. Then I went to work for my dad in the flour mill, again as a salesman. I never seemed to get a sales area close to my home, because, while I continued to live in Winona, my sales area was Louisville, Kentucky. That's a little far removed. I would sell flour to bakeries. That was my job there. I also knew some Spanish and they had a small amount of international trade and because of my knowledge of rather rudimentary Spanish, I did some of the work in the flour sales to the Spanish speaking countries. I really wasn't happy doing that, either. I guess I felt, in both cases, working for my father‑in‑law and then for my father, that these were kind of sinecure jobs. I got the job because of who my dad was, rather than who I was.

Ultimately, I was offered a job as a radio time salesman at a radio station in Winona, under the sales manager. That's when I found my niche. It was still selling, but I absolutely loved the radio business. The sales manager and I got to be known as Mutt and Jeff and if we went in to sell somebody and double teamed him, there's no way he was going to say "no." We were a very good sales team together.

SMITH: Who was Mutt and who was Jeff?

ALLEN: I don't remember. They also called us the Gold Dust Twins. There's one story I remember and I swear it's true. We walked into a guy's office who was selling real estate and when he saw us coming he ducked under his desk. We pulled him out from under his desk and sat him down and sold him. We were pretty fair country radio salesman, I guess. After about two years as a time salesman for a radio station, the general manager of the station left to go to Johnson City, Tennessee and they needed somebody to run the station. The owner of the station, who was also the publisher of the newspaper in town, reached down and grabbed me and wanted me to be the general manager of the station. He offered me an opportunity to buy a 10% interest in the station. Obviously, I was intrigued with the concept of running a station, but also of having an ownership opportunity in the station. I told him I would do it if he would also offer 10% to my friend who was the sales manager, which he did. It started out as an 80‑10‑10 partnership. We subsequently each bought 10% more, so it became a 60‑20‑20 partnership and then, ultimately, the publisher‑owner of the station sold out the whole thing to my partner and me and it wound up as a 50‑50, Sub‑S corporation. There were only two stockholders in it ‑ my partner and myself.

ALLEN: Those were the three positions I had prior to getting into the cable industry and it was the involvement in the radio station that led directly to my involvement in the cable television industry.

SMITH: My recollection from some conversation I recently had is that you still have an ownership interest in that station. Is that right?

ALLEN: I did until about three years ago. I was involved in radio from 1952, that is when I started as a time salesman, until about 1986. I think it was about three years ago that my partner and I sold our interest. He was three or four years older than I am, so he hit 65 before I did. It was at that time that we decided we would sell the station and an interesting thing happened there. We sold the station to a young man whom we had originally hired years before as a radio announcer. He had gone on into station ownership in Wisconsin and then subsequently came back to the station he used to work at as a radio announcer and became the owner.

SMITH: How did your involvement in the radio station introduce you to, in those days, could we call it CATV ‑ Community Antenna Television?

ALLEN: That's all they called it at that time. I belonged to a service club in Winona called the Exchange Club. I was attending one of our luncheon meetings one day and a friend of mine who was a lawyer in Winona introduced me to two of his guests who were lawyers from a city in Minnesota called Mankato. They had gotten a cable television franchise for Winona. There hadn't been a lot of publicity about it in the paper. I didn't really even know what cable television was ‑ CATV, at the time. They had a franchise to build a cable system in Winona, but their source of money was going to be some money out of Minneapolis. As I remember, it was Kimberly‑Clark paper money. They owned and operated the cable system in Mankato.

SMITH: These two lawyers.

ALLEN: Yes. That's kind of interesting. They were the lawyers who represented their client who was the guy who had the original cable franchise for Mankato. Except he kind of bellied up, or left town, or something, and all of this equipment started arriving at the law office and they didn't know what to do with it. So they decided that they would go ahead and build the cable system and they set up a cable construction company. In addition to owning the cable system, they were contractors who could build a cable system and they built the cable system in Mankato. Anyway to go ahead, the availability of the money out of Minneapolis depended on their ability to deliver Minneapolis television signals with some clarity to Winona and that was more than a hundred miles away. At that time we were not allowed to use microwave. There was no legal provision for it. It meant that you had to put a very tall tower on the tallest possible hill you could find and try to peek over the horizon to grab these signals on a line‑of‑sight basis with enough signal strength so you could deliver it without a lot of snow in it.

They had hired an engineer who was the Chief Engineer of WCCO‑TV in Minneapolis to be the engineering advisor to determine whether these pictures were good enough to sell.

SMITH: These two lawyers?

ALLEN: That's right. If this engineer didn't like the pictures, the fellow that had the money wasn't going to turn the money loose. So they wanted to test for those pictures. They had gone to the 60% owner of the radio station, the publisher of the newspaper, and asked for permission to hang test antennas on our radio tower in order to try to bring in these pictures. We had a 400 foot self‑supporting tower on top of a 600 foot hill so that we were 1,000 feet above the city. Well, the publisher's first reaction was, "I don't think so. This somehow might be competitive, I've got a nice thing going here, why rile things up? No, you can't use the tower." Well, when my lawyer friend introduced me to these two fellows, and they told me that story, I said, "Let me see what I can do as the manager of the station." I said I'd go talk to the 60% owner, because we could only get about two and a half channels of television in town. We could get La Crosse, Wisconsin and Rochester, Minnesota. And an occasional "sort of" picture out of Eau Claire, Wisconsin. I had rather recently gotten a television set and I was kind of enamored with it and I thought it would be a nice thing for the city if we had more than two and a half television stations available. In fact, two of the stations were duplicating network stations, so we really had two of the three networks and no educational, no independent signals and I just thought it would be nice if we could do this.

I went back and talked to the publisher and persuaded him that it would not be competitive and it would be a fine service to the city if they had a cable television system in town. No problem. So I went back and told them they could use our tower for test purposes. They hung these gigantic antennas up on our tower. It was a good thing it was a heavy, self‑supported tower. They ran cables down the side of the tower and into our control room. That's where they had their monitoring equipment. It was one of these things where they have this moving scroll of paper and a pen which recorded signal strengths, kind of like a lie detector thing.

One thing that I had forgotten, Strat, is that when I gave them permission to hang the antennas on the tower the radio station was going through its annual proof of performance tests at the time and I had completely forgotten about the fact that this was going to distort all of the figures, all the engineering figures, on our proof of performance. In fact, every time the wind slapped one of those cables against the side of the tower, it pinned the needles over on the V.U. meters. At any rate, they ran their tests, they recorded all the information. Then they had this engineer come down from WCCO‑TV in Minneapolis to examine the test results and he said, "You'll never be able to sell those pictures. They aren't good enough. People will not pay money to get signals as weak as these from Minneapolis. You don't have a business." These guys were pretty discouraged at the time because they had just lost all of their money in Minneapolis. I said, "Well, let me see if I can find some money" because I didn't think the pictures were that bad. I had seen them on a television monitor rather than on a scrolling pen and at least it was something more than we got before, not good, but not totally impossible. I thought there might be a business there so I said, "Let me see if I can find you some money."

I knew everybody in Winona because I had lived there since birth, so I went to a friend of mine who was the president of one of the three local banks. I had worked as a bank messenger at that bank during the summer months when I was 14, 15, and 16. I got 25 cents an hour and never got a raise in three years. That tells you what kind of a bank messenger I was, I guess.

SMITH: Or what kind of a bank you worked for?

ALLEN: I talked to him about the concept. I really knew very little about CATV except that it was a way to hang wires on poles and kind of like a master antenna on an apartment house. You wire up a whole city and you can get some more television pictures than you can get normally off the air. That bank was associated with one of the biggest companies in town called the J.R. Watkins Company. They were manufacturers of spices, liniments, and ointments. At that time, it was a very big door‑to‑door operation ‑ bigger than Avon. Well, the chairman of the board of the Watkins Company was also the chairman of the board of the bank. They owned that bank. So my banker friend went to the chairman of the board of the J.R. Watkins Company, a fellow named Bud King, and proposed the idea to him. He was kind of intrigued with the concept but, again, didn't know much about it. So they said, "Let's send Ed to Washington, D.C. because there is a cable television convention going on at the Mayflower Hotel in Washington. Ed seems to be the only one who knows what a piece of cable looks like or what this business is and we'll let him go there and sound it out."

So, I went to Washington. I remember meeting a fellow named Doug Dancer. Remember Doug?

SMITH: Yes, from Naples, Florida, correct?

ALLEN: Doug was just getting into the business at the same time and he was there also investigating the business for some other people who had some money. We were kind of leading each other around in the dark, trying to find out what this industry was.

When I got back to report to these people, I remember telling them that the only problem that I could see that the industry had at that time was how to keep the money that they were making without having to give it all to the Internal Revenue Service. It seemed to be a profitable business. It seemed to be a business that people liked. They were willing to subscribe. It's one that I thought they ought to get into.

So they decided that they would put up the money to build the system and they would use these people from Mankato, but not as the franchisee. We would become the franchisee. We would use their construction company to build a cable television system. They would make their profit as a contractor to build the system and we would be the operators of the system. They did make money building the system because they took the profits from the construction of that system, ultimately, and built a cable system in New Ulm, Minnesota. I'm sure you know these lawyers.

SMITH: I was going to ask you their names. I'm sure I do.

ALLEN: Bob Regan. And Cliff Kroon.

SMITH: I'm going to interrupt you on account of the red lights flashing. We'll turn the tape over and keep right on going.

ALLEN: All right.

End of Tape 1, Side A

SMITH: This is Side B of Tape 1 of the oral history interview with Ed Allen. Ed, you were naming the two lawyers that you had referred to that were involved with your initial activity in cable television. Would you like to proceed from that point?

ALLEN: As I said, it's Bob Regan, Robert Regan, and H. Clifton Kroon. He was known as Cliff. They had a third partner too, a Ken McHugo. Ken was not a lawyer. He was the guy who was the brains behind the contracting company, because he used to build power lines. So he knew about pole erection for electrical power lines. So he was the guiding light, and the estimator, and the purchaser, and whatever, of this contracting company that built cable systems while Cliff and Bob had their own law practice. I know Cliff and Bob are members of the Pioneers. I know Bob is, I think Cliff is.

SMITH: Yes.

ALLEN: And I think McHugo might have been, but Mac is dead now. I don't know whether Mac was ever a Pioneer or not. At any rate, we did go ahead. It was in 1958 and they built the cable system for us in Winona. We put up a 600 foot tower on a 600 foot hill to try to peek over the horizon and try to get these Minneapolis signals. At that time there were a couple of other cable systems in Minnesota. One was the Mankato system that they built. There was one at Brainerd, Minnesota. Another fellow we both know, Frank Thompson, was associated with the Brainerd system. The system in Rochester, Minnesota, was either built or in the process of being built at the same time. That's where Bill Bresnan was the Chief Engineer. He subsequently wound up heading up TelePrompTer for Jack Kent Cooke and has been a National Chairman of the NTCA and is a Pioneer.

We had just barely come out of the stage of five channel technology. You perhaps have interviewed Pioneers that built one channel and two channel cable systems, I'll bet. We had just come out of a channel 2‑6 era, the five channel era and for the first time could build systems with as many as twelve channels, although there weren't twelve somethings in the air to pick up. I remember my first cable system, even with everything we could pick up from Minneapolis and the local signals, delivered only eight signals even though we had the capacity for twelve. That was kind of interesting in that, at that time, there was only one manufacturer of twelve channel equipment. That was the Spencer‑Kennedy Laboratories group out of Boston, Massachusetts. Bill Headley, who is also a Pioneer, was vice president of sales and salesman number one out of a sales staff of one.

Bill had a great story to tell. They got an entree into the Midwest and particularly into Minnesota, which was unusual because Jerrold was much the biggest manufacturer at the time. But Jerrold didn't have broad band equipment. They had the low band 2‑6 equipment. So Bill would go into a prospective client and say, "You want five channels or do you want more than five channels?" The fellow would say, "Can I get more than five channels?" and he would say, "Yes, you can if you buy from me, but only if you buy from me." So S.K.L. (Spencer‑Kennedy Laboratories) as they called it at that time had, for a short period of time, kind of a lock on twelve channel equipment. It didn't take the other manufacturers very long to come along with their own versions of twelve channel equipment. That was also tubed equipment at that time. That's before we had transistors, which meant that every amplifier in the line had to be mounted on a pole, rather than suspending it in mid‑span, because there had to be a power line from that amplifier running up the pole to the electrical power source.

As you know, we can now send the electric power right through the cable. We can put the amplifiers wherever we want to. We mounted these amplifiers in great big steel boxes that were mounted on these poles. There had to be a fusing system in each box and these were the old threaded fuses like you had in your home. You screwed them in.

I remember when we had lightning storms in Winona (we had a lot of them in the Midwest) and they would knock out the cable because of the power surges. One time I got so frustrated I gave my engineers a handful of pennies and said to go out and put a penny behind every one of those fuses because I don't want them to blow anymore. It helped a lot in terms of the continuity of service but we also destroyed a few amplifiers in the process. At any rate, we built the system in Winona and we're off and running in my first experience in the cable industry.

SMITH: How were the signals on the 600 foot tower compared to the 400 tower? Were they better?

ALLEN: Yes, but marginally, Strat. Enough so that the people enjoyed what they were seeing. We had very good pictures for these three local channels, but the five channels that we were bringing out of Minneapolis ‑ that was the three networks, one educational and one independent, would vary. It was at least 100 miles straight line that we were trying to pull these signals. The people understood that. We were down in a valley and were used to getting only a couple of signals. They thought literally it was a miracle that we could deliver eight channels. I remember we charged $5 a month, mainly because we didn't know what else to charge. As people would come in to pay their bills each month, they would lay that $5 down on the counter and they'd say, "That's the best $5 I spend every month."

It was interesting, though, to watch the attitude change because what started out as a literal miracle to these people, ultimately became old hat and they began to expect more than we could really deliver. They would become, then, critical of the pictures from Minneapolis. It was no longer the miracle. They wondered, "Why do I have to pay money each month for what people in other cities get for free?" Our industry has always been a success because the people like what we're doing. Bill Daniels has a great phrase that he uses and that is that "It isn't just Wall Street that likes us, it's Main Street also." That's very true and the success story of our business is that while the people may grouse on occasion, whether it be a snippy CSR that answers the telephone or . . .

SMITH: Customer service representative.

ALLEN: ...or a failed appointment at the house, or a rate increase that they think is excessive, whatever it might be, underneath it all, they really think we give tremendous value for what we do and they like what we do.

SMITH: Do you remember any specific entertaining incidents with your subscribers relative to complaints?

ALLEN: I can think of one and I'm sure this has happened to other cable operators. When we first began building the system, one of the first things you do is you put up a steel strand messenger wire from pole to pole to pole. Nothing but a steel wire. Then you lash your cable ‑ the coaxial cable ‑ to this messenger strand. As we were out putting up this steel strand, we began getting complaints, registered at City Hall, that the strand was sucking all the television signals out of the air and that people who had rooftop antennas were not getting as good reception as they used to as soon as that strand went past their house. That's idiocy of a very high order, but people believed it.

You'll find as we go through this process that we're going through that I am not an engineer. The commonest engineering term that we use is db, standing for decibels, and for more than 30 years now, db's, to me, have always been dollar bills. I don't pretend to understand the technical aspects of our business. I'm sure there are probably a lot of other anecdotes that relate to our subscribers but I can't recall them right now. I'm sure they're out there. Everybody's got things that have happened with their subscribers.

SMITH: Did you personally have any ownership interest, Ed, in that Winona system?

ALLEN: Yes. We subsequently built the cable system in La Cross, Wisconsin and I had an ownership in that also. The original split of the three of us ‑ this is the chairman of the board of the Watkins Company, the president of the bank, and myself, was 75‑15‑10 and I had 15 percent of the business. The bank president had 10 and the principal money source behind it, the chairman of the board of the Watkins company, had a 75 percent interest. We ran the penetration up rather rapidly, as you would expect in a town that didn't have much television reception, to over 65‑70%. Now I think the penetration after all these years is in the 90% range. You don't see an antenna in town. One of the very first promotions we ran, I remember, and it's as old as the cable industry, is the antenna take‑down promotion. That's kind of interesting.

SMITH: Could you elaborate on that a little bit?

ALLEN: We would perform as a service of taking down these antennas on the roofs, and keeping them, so we could destroy them in exchange for the normal installation charge. It was a free installation if you would turn in your antenna. A lot of the people wanted to get rid of these antennas because they were ugly. We ran a campaign in which we vilified the antennas. We called them "bird perches," and I had two classic photographs that we ran in our newspaper ads. One showed about eight birds sitting on an antenna. The other showed an antenna snapped in half and lying on the roof. The combination of those two things persuaded a lot of people that they really should get these antennas off the roof. They were ugly. They were dangerous. They could damage the roof and whatever.

I remember parking a flat bed truck out in front of our office and it was so big I think I had to plug three or four parking meters to find a space to park it. I had a big sign made for the side of the truck which was stacked about six feet high with the antennas we had taken down. The sign said, "Another load of bird perches headed for the dump." That was a very successful promotion.

SMITH: Ed, let me interrupt you a minute on that and ask you if you would think that someplace in your files, you might have those old photographs and any newspaper articles or advertisements related to your antenna take‑down promotion. The Museum would just love to have them if you were prepared to release them.

ALLEN: Sure. I don't think I have any. At one time I had a few souvenirs including some of the promotional literature we used. I don't believe I have anymore, but if I do I'll sure send them on to the Museum.

SMITH: Pamela Czapla, the head of our information center, would love to have them if you could find them.

ALLEN: The antenna take down promotion just triggered off another thought. Did you ever hear the story of our i mouse promotion?

SMITH: No, I did not.

ALLEN: It got written up and got quite a little bit of publicity. "i" standing for Irving. Irving mouse. i. mouse was a mythical creation of ours. He was the night manager of our cable television system. The gimmick we used is that he would type memos to me at night which we would then run as newspaper ads, subsequently. He was so small that he couldn't stand on the capital shift key and hit another key at the same time, so everything he typed came out in lower case. Then he would sign them i. mouse, Irving mouse. We created a whole cast of characters. The next door neighbor's cat was one of them, who was constantly harassing him. It was a soft sell. He would occasionally talk about the services we had. Mostly it was almost like a comic strip. Irving got to be a very popular character in town.

We decided that we ought to allow the children in town to talk to Irving. I had one girl in the office who could squeak when she talked and at that time answering machines had just barely come on the market. We got an answering machine. She would put a message on the answering machine (which we would change every day) so the children in town could call up and talk to i. mouse. We drove the phone company nuts because we overloaded the phone lines. People would come from out of town and their host in town would say, "Have you ever talked to a mouse?" and people would be calling up this mouse. Then people wanted to see i. mouse and so I remember going over to the Mayo Clinic in Rochester and in their medical laboratories I found a beautiful white rat (because I felt the mouse was too small for people to see). This one was a beauty. It was a beautiful rat. So I put him in, of all things, a glass aquarium in our front window. I didn't realize that the sun coming in that window and the odor from the shavings in this glass aquarium that didn't have very good air circulation, could create such a powerful stench that it could almost drive us out of the office.

i. mouse finally got to be such a problem (because he was too successful) that we decided we had to somehow stop this promotion. We announced to the world that i. mouse was being promoted from our Winona cable system to our La Crosse system and he was going to be the night manager at La Crosse, which was a bigger cable system. We were going to have a going away party for i. mouse. This was in the summer. So I rented the high school auditorium which had 1,500 seats and we brought a children's television personality into town. He did a show on WCCO‑TV in Minneapolis and he brought his "Our Gang" comedy films along. We had a golden retriever puppy that we gave away as a door prize and everybody who came to the affair got a numbered button that had a caricature of i. mouse on it. We filled the auditorium with 1,500 people for a going away party for a mouse. They had just painted the floor of this auditorium and between the suckers and the balloons that they blew up, and then popped, and ground into the suckers on the newly painted floor, I had to pay to have the floor painted all over again. We ultimately got rid of i. mouse and put that promotion to bed. As a soft sell public relations thing I think it probably was the best thing that I have ever done. It was a lot of fun to do for a while until it got out of hand.

SMITH: Was it an effective subscription getter?

ALLEN: Yes, I think so. It wasn't designed to do that. But it made us good corporate citizens in town and created a friendly feeling toward us. I think it was helpful. It constantly kept our name in mind before the people. One thing I learned in terms of newspaper advertising, some of the best advertising you can do is in the form of printed letters. In this case they were memos of i. mouse. He would write this memo to me. We would have the newspaper take a photograph of the letter and then, using that engraving, print that letter in the paper. Well the typewriter type is so different from newspaper type that it just literally jumps off the page at you. Everybody likes to read somebody else's mail. You've had people come into your office and you've got a letter on your desk and they'll try to read it upside down even from across the desk. So they were reading somebody else's mail in a typeface that was not typical of what is normally in the newspaper. It turned out to be very effective newspaper advertising.

SMITH: Was i. mouse a success in his promotions?

ALLEN: Yes. It did get away from us, but just as we could use i. mouse on the answering machine and on the telephone, it would lend itself to radio commercials. So we would have i. mouse on the radio also. We had i. mouse's memos in the newspapers. So it was a totally accidental but coordinated advertising program that we built.

SMITH: One more question about i. mouse. Where did the name Irving come from?

ALLEN: I don't know. I think I actually got the idea, including the lower case concept, from a brochure that somebody put out. It might have even been Pitney‑Bowes postage meters. I don't know, but it was a little brochure on how to do direct mail. The concept was not media, like newspapers and radio, but a single direct mailing piece done in lower case type. They might even have used the name i. mouse, I don't remember for sure. The concept was not original with me. The embellishments, I guess, were.

SMITH: What other cable systems, if any, were you involved in before the move to California, which we'll get into. You're satisfied that we've completed the Winona background?

ALLEN: Well, we built the Winona system in 1958 and in 1960, two years later, we decided that we wanted to apply for and hopefully get the franchise to build a cable system in La Crosse, Wisconsin. That's 30 miles and roughly 30 minutes away. This was a competitive hearing and the first one we'd been involved in because we kind of inherited the Winona franchise. It was my first exposure to the political process at the local level of trying to get a franchise. We ultimately did get a franchise in a competitive situation for La Crosse, Wisconsin. There we built a 660 foot tower. We were that much farther away from Minneapolis and still trying to get these signals. We had a very high penetration in Winona. But we had a real difficulty in getting that kind of a penetration in La Crosse. I think one of the reasons was that there was a television station right in La Crosse. At least that station had superlative pictures. They also got good reception from Rochester and Eau Claire, Wisconsin. So the picture quality was better than what had previously been available in Winona. There was also outright opposition to us from the local television station. They considered us competitive and they didn't want their market fractionalized.

I remember being in an FCC hearing in Washington with your colleague, and at that time, associate ‑ Tom Shack, who was my lawyer. We were trying to build a microwave to improve the picture quality (once microwave had been allowed). You may remember the case by the name of Mississippi Valley Microwave. It was a case of our winning some battles, but losing the war. We didn't ever get the authorization to build this microwave because of the opposition of the local television station in La Crosse. I remember introducing a trade magazine ad that the local station had run about the size of the audience that it received through its transmitter and a big tall tower. I was trying to point out that they were talking about how many hundred thousands of people they reach and this little microwave system serving just a few thousand people was not going to be of any economic impact. I remember the Law Judge, at that time they called them Hearing Examiners, ruling that the introduction of this advertisement was not proper. He would not allow it in evidence because it was what he called, "Puffery without regard to the truth, thereof", apparently inferring that you can say whatever you want to in an advertisement (there were no "truth in advertising statues" at that time).

What got me off on that tangent? We had a problem with penetration because of the opposition of the television station in La Crosse. We did well, ultimately, but not as fast and not as high as we had done in Winona. There's an interesting story there, Strat. In Winona, I had every motel hooked up. So the traveling salesman, as he came to town, would get eight television pictures. In La Crosse, they had a motel owner's association and they all got together and said, "Look, if one of us puts it in, then we've all got to put it in and it's going to cost some money. So let's none of us put cable in. We'll just give people the three channels that they can get off the air." I tried and tried and tried to break into the tight motel association and get some cable in the motels and I just wasn't able to do it. Finally, one of the motels got sold to a new owner. I got to the new owner before the motel association got to him. You may remember at that time, the NCTA had illuminated signs you could hang outside a motel that said "Cable TV." They were going out of the sign business and they had just one of these signs left. I told this new owner, "If you allow me to install cable in your motel, I will give you a beautiful illuminated sign that says 'Cable TV' so that all the passing transients will know that this motel is wired for cable TV." He thought that was pretty neat. He allowed me to come in. I bought the one remaining sign that the NCTA had, gave it to him and we mounted it.

The highway going through La Crosse was a single north‑south highway. I bought 24 sheet billboard posters on that highway on each end of the city ‑ going and coming. It said, "La Crosse is a cable television city. Look for this sign at your motel." There was only one motel in town that had this sign. The upshot was that all the other motels had to go out and fabricate their own signs that looked exactly like this one and they all had to sign up for cable television service and I ultimately got them all. But I had to blackmail them into doing it.

SMITH: I suspect that was a better way of getting them than filing an anti‑trust suit for a combination in restraint of competition.

ALLEN: I guess I was so young then and knew so little about the law that that idea never dawned on me; and I wasn't smart enough to ask a lawyer.

SMITH: That was a pretty dangerous tactic. Very interesting story. Would you say that sort of thing was typical of the early days of the industry?

ALLEN: Yes, I think so, Strat. We were an entrepreneurial industry at that time. We were creative at that time. The money players hadn't moved in at that time. The M.B.A.'s from Wharton were not in control of the industry at that time. Yes, I think you thought of every creative idea you could. You had to overcome a very natural resistance of people having to pay for what better situated people got for free. Even though they loved the service and were willing to pay, there is an ingrained resistance. In a lot of cases we didn't get these people until their antenna fell down. But once the antenna fell down, they went to cable rather than put up another antenna. But you may have to wait a long time.

SMITH: Did you ever pray for windstorms?

ALLEN: I became much more conscious of telephone poles once I got into this business, than I ever had been before. I also used to love thunderstorms. We have some real cracky‑doodlers in Minnesota. I really got to where I didn't care for thunderstorms anymore because the lightning would knock our cable system out and just raise havoc with our subscribers. I guess, in one instance, I wanted windstorms to take down antennas, but I sure didn't want any lightning to come along with it.

SMITH: Were there any other systems besides Winona and La Crosse that you participated in?

ALLEN: Not until I moved to California.

SMITH: Before we go to California, Ed, let me ask you whether you were involved in any state or regional trade associations for the community antenna or cable industry as it became known, while you were still in Minnesota.

ALLEN: Yes. We formed the North Central CATV Association while I was in Minnesota and I was the first president of that association. I remember we formed it in a motel room in Rochester.

SMITH: By "we" who do you mean?

ALLEN: Regan, Croon, Frank Thompson, some of the other old timers. We sat around in this motel room, actually a bedroom, if I remember. We passed the hat and everybody threw five dollars into the hat, the purpose of which was to buy one box of stationery that was to have nobody's name on it because we were going to pass it around from president to president that identified us as being the North Central CATV Association. We picked the states that were going to be in this. North Dakota didn't have any cable systems at the time, but we picked North Dakota as one of them. So it was North Dakota, South Dakota, Minnesota, Iowa, Wisconsin, and the upper peninsula of Michigan, but not the full state of Michigan because they had a cable association of their own. The Michigan fellows in the North Central Association, again the names known to you, were Jim Klungness and Chuck Henry. They preferred to be associated with the Minnesota based group rather than the Michigan based group. I was the first president of that association.

SMITH: You've identified the background of Cliff Kroon and Bob Regan. You mentioned Frank Thompson, who is a good friend of both of us. Would you identify him a little bit more explicitly for the sake of this record.

ALLEN: Well, Frank is one of the shooting pistols of the cable industry. At one time he used to be a school teacher. This was up in the Brainerd, Minnesota area which is a tourist area. That's the Paul Bunyan and his famous Blue Ox area. Frank left the teaching profession and built the cable system in Brainerd, Minnesota. I think Frank probably was the first cable operator in Minnesota. I think he predated Regan and Kroon. Frank held very strong opinions on everything. He became a power in the national industry way before anybody else did from Minnesota. I know at one time he was a Vice Chairman of the NCTA. Wouldn't back down to anybody for any reason. I remember the first year I went on the NCTA Board. The election process was such that the Board did not elect officers from among itself as it does now. There was a slate of officers proposed by a nominating committee. In 1970 they had proposed a slate and someone, and I don't remember who it was, had been nominated as Secretary.

Some people decided that I should run for Secretary. I'd never been on the National Board before. I had no experience as a director and my wife, Patty, was ill at the time with this cancer, and I could not attend. The convention, which was being held in Chicago, is where this election was going to take place. Frank Thompson got up and made a speech on my behalf to the group assembled as to why I should be the new Secretary. It was stuff like, "Ed's a good old boy like I am. If you like me, you'll like Ed." That type of thing. It was sufficiently persuasive so I got elected as the National Secretary in '70 which put me on the Executive Committee and I'd never even been on the Board. I had no Board experience and, ultimately, I had to fly to Chicago to have my picture taken along with the rest of the newly elected Board, and my wife and I went up and back in one day to get it done. Frank was responsible, through that speech, for my becoming involved in the national level back in 1970.

SMITH: We have an oral history in progress on Frank and I wanted to draw the connection.

ALLEN: I can predict that's going to be a hilarious history.

SMITH: It is. Ed, what were the motivations for starting this North Central Association? Were there any particular problems that you guys had to face up there that you needed to work on jointly.

ALLEN: We were beginning to get snapped at around the edges by the state of Minnesota and we had heard that other states were beginning to look at the concept of state regulation. It never really got off to a flying start in the Midwest under a Public Utilities Commission concept, although Minnesota ultimately did have a state Cable Commission which subsequently disbanded. The state regulation of cable really was more of a phenomenon of the northeast but it never really got started in the Midwest. I think we felt that we needed a unified presence before the state legislatures to try to fend off state regulation. I think that was probably the impetus. Probably there were some national problems. I don't remember in 1960, or whenever it was, just what they might have been. We just felt we needed a cohesive local voice as opposed to only a federal voice, a national voice.

SMITH: Did you have any recollections of any specific appearances before state legislative committees or investigating bodies?

ALLEN: I remember appearing before what was a Railroad and Warehouse Commission. That was their equivalent of what would now be a Public Utilities Commission. And also some committees of the state legislature who were looking at cable issues, yes, that happened at that time. Nowhere near as much as the involvement in California which came several years later. I remember doing that, Strat.

SMTIH You were the first president of that Association. How long did that term last?

ALLEN: I think it was one year and I think either Regan, Kroon, or Thompson stepped in behind me. I don't remember for sure. There weren't many of us in cable. When you've named those four names, plus a fellow named Joe Poire, (he was involved in the Rochester cable system) you've named about all the cable operators who were in Minnesota at the time.

SMITH: Let's go to the California development, then. What occasioned your leaving Winona and moving off to California?

ALLEN: We built the cable system in 1958. In about the 1963‑64 era, the principal owner of the cable system in Winona felt that it had matured as much as it could. We had a very high penetration. Perhaps this was the time to sell the cable system. Jack Kent Cooke had just gotten into the cable business at the time. We had been exploring the concept, in addition to possibly selling, of getting bigger by buying something. We looked at 5 cable systems with the idea of possibly purchasing them. They were owned by Narragansett Capital. I know Barstow, California was one of them. There was one up in Maine. They were scattered all over the area. We ultimately didn't buy those, but Jack Kent Cooke did buy those five cable systems. Those were the very first five cable systems that Jack ever owned. He then approached us, through Bill Daniels, to find out if we would be willing to sell our two cable systems in Winona and La Crosse. We ultimately did sell them to Jack Cooke, so they became the sixth and seventh cable systems that Jack owned.

The next one, of all things, was Rochester, Minnesota, where I acted as the intermediary between Jack and the owners of the Rochester cable system. I'm not sure Bill Daniels ever forgave me because there was no brokerage commission involved in that transaction. That became the eighth system that Jack owned. Bill Daniels gets a lot of credit for bringing Jack Cooke into the cable industry. He had been a Canadian citizen, an interesting, fascinating guy. He had a private bill passed and signed by President Eisenhower to make him an American citizen rather than a Canadian citizen. He moved down to Southern California with the idea that he was going to enter into the newspaper business and the cable business in the United States and he had two sons, Ralph and John. Ralph was going to be in charge of the newspaper business and John was going to be in charge of the cable end of the business.

SMITH: Ed, I'll have to interrupt you, I've got the flashing light again.

ALLEN: All right. We'll pick it up at Ralph and John.

End of Tape 1, Side B

SMITH: This is Tape 2, Side A of the oral history interview with Ed Allen. When we ran out of tape, you were identifying the two sons of Jack Kent Cooke. Is this the Jack Kent Cooke who is also well known as the owner of the Washington Redskins professional football team?

ALLEN: That's the man. To show how things that go around, come around, I sold him those two systems in 1964 and this year, in 1989, when he decided to get out of the cable business, our company bought a whole bunch of systems from Jack. So that which goes around, comes around.

Anyway, he had the two sons, Ralph and John. He was going to get into newspapers, which he had in Canada along with Lord Thompson of Fleet, and cable television. It was Bill Daniels who suggested the name of his then new company. Jack said something like: "Bill, what should I call this cable company?" Bill said, "Why don't you pick something modest like American Cablevision." So he called his first company American Cablevision. He parlayed that into H&B American; parlayed that into TelePrompTer and then, ultimately, that was sold to Group W. This was at the very beginning stages of Jack's original cable career. He rather quickly found that it was a lot tougher to buy newspapers. I don't know if he owned any newspapers until his relatively recent purchase of a newspaper in Los Angeles and, subsequently, of all things, in Steamboat Springs, Colorado where my daughter is. I know he has the newspaper there.

For a long time he was not involved in newspaper ownership, so his son, Ralph, had an advertising agency that handled the advertising in‑house for TelePrompTer. He sent Johnny Cooke to me to learn something about the cable business. John spent some time with me in Winona and then I put him into our La Crosse cable system. He was the manager of the La Crosse cable system for a while.

SMITH: This would have been before you sold to Jack.

ALLEN: No, after we sold to him. In '64 is when we sold.

SMITH: Were you still managing the systems then after they were sold?

ALLEN: Yes, for a year. In the sale, in addition to some cash down, there was some paper for five years. I didn't know Jack Cooke at all. So I told our investors, the bank president and the chairman of this other company, that I would stay with the company at least for a while to make sure that this was a good operation that could come through on the paper that was owed. Of course, they were and they did. I stayed with the original companies from '64 when we sold to Jack Cooke until about October or November of '65, which is when I moved to California. At that point I had no more association with these two cable systems.

The genesis of the move to California goes back to the equipment manufacturer I told you about, Spencer‑Kennedy Laboratories in Boston. I had the Winona and La Crosse cable systems literally running like a Swiss watch. They didn't seem to require a lot of my time. I was still young enough at the time, 40, where I was still something of a charger, I wanted a bigger challenge. It didn't seem to be with the two systems that I had originally built, more particularly after they had been sold to someone and I had no equity position in them. Spencer‑Kennedy Laboratories got in touch with me. Donald Spencer, another Pioneer, asked me if I would be interested in being, in essence, the operations manager for five cable systems that were owned by Spencer‑Kennedy Laboratories. One was in Illinois. Again, Strat, I've forgotten where they all were but one was in Lafayette, California which is one of the outskirts of San Francisco ‑ it's in the San Francisco Bay Area.

After some thought and knowing that I had spent all of my life in Minnesota and, more particularly, in Winona (I'd never been out of Winona), I decided I would make a leap of faith and travel a couple of thousand miles away and see if I could replicate in California and these other communities what we had in Winona. I packed up my family in the fall of 1965, having sold to Cooke in '64 and moved everybody out to California. One thing that was kind of interesting, I went out there in like October of '65. My family couldn't join me until the school break in Minnesota which would be like in January, early February, I suppose. So I lived as a bachelor out there for a while. My eldest daughter, Tracy, the one who is in Steamboat Springs, was in her senior year in high school. This can be kind of a trauma for a girl to move 2,000 miles in the middle of her senior year. As it turned out, in Winona they had not yet taken the pictures for the class yearbook. In California they had already taken the pictures by the time she arrived so she did not wind up in either yearbook. As you can imagine, she couldn't wait to get back to Minnesota where all of her friends were so, after she graduated from high school in Lafayette, California, she headed right back to Hamlin University in St. Paul to begin her college education.

I also remember the day the family moved out from Minnesota to California. It was 30 below zero in Minnesota when they left; and when I met them at the San Francisco airport it was 70 degrees. So that's a hundred degree temperature swing in one day that they had to go through. In getting to the Minneapolis airport, their car had skidded off the road on ice, and they had to get shoved out of a ditch. They arrived in California and it's all beautiful sunshine and nice warm weather.

SMITH: That helped a little bit.

ALLEN: I hope so. We became acclimated to California real quick. After 40 years in Minnesota, I guess the two things I miss the most were the 40 year accumulation of friends because I found that in California people are much more private. It's more difficult to make friends than it was in Minnesota where everybody was so open and you grew up with them. In Minnesota, one backyard runs right into the next backyard. In California, everything is fenced in so you get a little piece of privacy. I miss my friends and I miss the boat I had on the Mississippi River, but I sure don't miss the snow and ice. It's nice to live in California. At any rate, I moved to Lafayette. That was the headquarters for me in running those other four cable systems, a total of five cable systems. That was in the fall of '65. In early '67, about a year and a half later, the Chronicle Publishing Company got hold of me. They are the publishers of the San Francisco Chronicle. They also had KRON‑TV as a television station in San Francisco, the NBC affiliate.

Meanwhile, the Lafayette cable system and the other systems owned by Spencer‑Kennedy Laboratories were sold as a group to create ATC. This is when Monty Rifkin was heading up ATC and there were several properties that came in all at one time.

SMITH: American Television and Communications.

ALLEN: Right. In Denver. Number two in the country. The SKL systems had been sold and I wasn't at all sure that I again wanted to be under an absentee ownership, as was the case with Jack Cooke ‑ he was in Beverly Hills, California at the time. In this instance, the ownership control was going to be in Denver. The Chronicle approached me to start their cable company, which ultimately became Western Communications, Inc. I was amenable to the idea because it would give me the opportunity‑‑while I wouldn't have any ownership interest, since the Chronicle was a family held operation‑‑to start from scratch a brand new cable company and put it together my way, based on what I had learned over the prior years. So I went to work for the Chronicle and spent the next 21 years running Western Communications as the cable television arm of the Chronicle Publishing Company.

SMITH: Tell us the details about the systems you acquired, how you went about it, any special or interesting experiences you had in building that group.

ALLEN: The concept of entering cable on behalf of the Chronicle originated with two people. One was Charles Thieriot. It's a French name. You'd think it would be pronounced "Theerio" but the family pronounces it "Terriot." Charlie Thieriot was the publisher of the San Francisco Chronicle. The Chronicle, in turn, was the owner of KRON‑TV, Chronicle Broadcasting Company. At that time, they also had an FM station. KRON‑TV was the only television station they owned. They since have added two more television stations, one in Wichita and one in Omaha, to their stable of television stations. A man named Harold See was the president of Chronicle Broadcasting and I think Harold was the one who persuaded Charlie Thieriot that the Chronicle ought to get into the cable television business, particularly in the area of dominant influence of the newspaper and the television station. Probably for competitive reasons. I think they thought that "If we don't do it, somebody else is going to do it. We would rather do it so that, as we have the other media, we'd also have cable."

Not knowing anything about the cable industry, Harold See and one other man on his staff, literally just the two of them, began trying to franchise cable systems in the immediate San Francisco Bay Area. At that time, the cross ownership rules were not in place. They were only modestly successful. They purchased a franchise for a little tiny area. It had no subscribers and it had not yet been built. They were successful at about the time I came on board in getting a franchise for the city of South San Francisco and they got a franchise for the city of Concord, California. That, literally, was all they were able to do in terms of franchising. Then, subsequently, the cross ownership rules came into effect so that they could not secure new cable systems within the Grade B contour of the television station they owned. They could be grandfathered as to what they had, but they could not enlarge.

SMITH: The cross ownership of the rules of the Federal Communications Commission?

ALLEN: Right. So after that point we stopped franchising completely. Very frankly, I was upset, deeply upset, by the franchising processes that were going on. This is before the so‑called franchising wars of the late 70's and the early 80's where so much was given away by so many to so few. I still didn't like the franchising process that was going on at that time. We decided, very deliberately, that we would purchase cable systems. We did purchase a series of cable systems primarily in California. In fact, at the time I left 21 years later, we had seven or eight cable systems and all but one were in California. That one was in Las Cruces, New Mexico. Las Cruces stands for The Crosses. And, for a long time, the cable systems we had were all in Northern California. We hadn't yet dipped a toe down below the Monterey Peninsula. . .the Carmel/Monterey complex. We were very parochial in our thinking.

I remember when we were in the process of buying the Monterey cable system from the original owners. At the same time we were looking at Honolulu and Toledo, Ohio. I remember Charlie Thieriot saying Toledo was too far east. But Honolulu was not too far west. As it turned out, we didn't take either one of them. We bought the Monterey system. We were really western oriented and California oriented in the process. At the time I left the company, in my abortive attempt to retire in 1988, we had about 260,000 subscribers. They were in about seven, maybe eight, cable systems because we had dipped down into Southern California at that time. They were all big systems. The smallest system we had was 15,000 subscribers. We had two of them that were in the 60,000 subscriber range, so the bracket was 15,000 to 60,000.

SMITH: Could you identify them, specifically, Ed?

ALLEN: Let's see if I can remember them. We started out in the Bay Area with the South San Francisco and Concord cable systems. In some cases the identification is where the headquarters office is. We added in other surrounding entities. Like, in Concord, we also had the system in Clayton, but it was run out of the Concord office. The next thing we bought was Chico, California, I believe, and that had adjuncts to it of the little towns of Corning, Orland and Willows, fed by microwave from the Chico system. We put together a series of purchases in what we called Monterey Peninsula TV Cable. It started out with the Carmel/Monterey/Pebble Beach system. Again owned by a former Pioneer, help me, Jerry (Gerard) ...

SMITH: Henderson.

ALLEN: Jerry Henderson. Jerry is the one who started a company, of all things, called Alarm Corporation because somebody had stolen something out of his house in Carmel and he decided he wasn't going to permit that and he was going to set up an alarm company. It was the alarm company that got parlayed into the cable business. Through a series of buys on the Monterey Peninsula, we literally locked up all of the Central Peninsula: 60,000 subscribers. All of the towns around Carmel and Monterey, Pacific Grove, Salinas ‑ all became a piece of the property. We did our one little foray outside the state of California when we bought a cable system in Las Cruces, New Mexico. Again from someone you may know, I. E. "Irish" Shahan.

SMITH: I'm glad you named him because some of us a few days ago were trying to remember his name and we couldn't do it.

ALLEN: I think Irish still lives in Las Cruces. Just before I left the company in March of '88, we bought a rather major complex in Ventura County in Southern California. I don't know whether I missed any or not, but that's essentially the properties. We were about the fortieth largest cable company. There's a far cry between number forty and number one. Five million and 250,000.

I think my friends thought that, owning the Carmel/Monterey system (which is a two hour drive from my office) I would spend every weekend on the Monterey Peninsula or Pebble Beach.

SMITH: I would have.

ALLEN: Well, I got down there about twice a year and that was usually to put out a fire of one kind of another. They were good properties with very good people running them. We had a very highly decentralized operation. Now a lot of the cable companies are coming to that, but every one of our companies, our cable systems, was a separate corporation. We didn't have any general managers. Each cable company was run by its own president who was a resident of the town. We would try to treat him like a president and the city council would treat him like a president. We gave assistance from the corporate office, which was a very small corporate office, in such things as franchise renewal negotiations, lobbying at the state or federal level, legal work that we would handle, and then of course, budgeting. Once the budgeting process was done (which was worked out with the local president) he signed off on it. That was his company. As long as he was within the budget constraints, he had the authority to run it. It's the kind of thing I would love to see replicated more. It's a good way to run it.

Our corporate offices started out in San Francisco. When I first joined the Chronicle organization, of all things, I had two rooms in a hotel, cattycorner from the Chronicle Publishing Company plant ‑ the newspaper plant. At that time, the television station, KRON‑TV, occupied the first floor of the building that the newspaper was in. They had run out of space for all of the television people so they took over a whole floor of this old hotel that was cattycorner from the Chronicle. Along with a bunch of displaced television people, their engineering staff and some of their programming staff, my secretary and I were the only two people in the whole company when we started.

As I say, we had two adjoining bedrooms in this hotel. We had planks on the bathtubs so we could stack paper on them. The conventional hotel lighting had been replaced with fluorescent lights. I enjoy telling people that my first secretary and I shared adjoining bedrooms in a hotel in San Francisco. Ultimately, they built a beautiful television building and moved the television station out of the lower floor of the publishing building into its new television facility. Again my secretary and I, at that point, were still the only two people in our organization, with a part time accountant from the Chronicle accounting staff doing our accounting for us. We had two offices in this new KRON‑TV television building. They ultimately began to expand the KRON‑TV facility. They needed more room for their news department. They needed more room for the accounting department. They were looking at the space that I had and decided they needed it.

I was living in Walnut Creek and had been commuting to San Francisco. That's when I said, "Why are my offices in San Francisco? I can do this anywhere. Why don't I do this in Walnut Creek?" So, ultimately, instead of trying to find replacement space in San Francisco, I created the Western Communications offices in Walnut Creek. We were in two different locations over the years in Walnut Creek but all the rest of the time that I was with the company the headquarters was in Walnut Creek. At the maximum, our staff (other than the accounting department and when I created a full blown accounting department of about a dozen people I didn't depend on the Chronicle anymore) consisted of myself, four executives, three secretaries and four middle management people. So that's 12 people. That (plus our accounting department) was our full corporate staff for running the 40th largest cable company in the United States. That's what you can do when you have very good people at the local level. You get a good system president, you give him a good chief engineer, you give him a good marketer, and you give him a good office manager then stay off his back and let him run it.

SMITH: It worked.

ALLEN: Yes.

SMITH: You had referred to your aborted retirement. What caused you to retire from Western Communications?

ALLEN: Well, I was 63 at the time and I guess I just got to thinking that I had spent enough years working, had enough money, and I had a bunch of young chargers coming behind me that were brilliant people. Maybe it was the time for the old man to step aside and let the next generation move in. I found that the industry had changed a lot. It was moving maybe even faster than I could keep up with. I used to get to the office at 6:00, 6:30 in the morning, because in a lot of cases I would be talking to Washington. This was particularly true when I was the National Chairman. If I waited until 9:00, everybody in Washington had just gone to lunch. So I would use those early hours to read the trade press, voraciously, trying to stay up with all the changes that were taking place, technological changes, programming changes, philosophical changes, concept changes. The industry was really moving rapidly and I felt that maybe it takes a younger person who can adjust more rapidly than I was able to adjust.

It reminds me of when I was taking Aviation Cadet training several wars ago, World War II. The first day we were in this one class, the instructor said, "Let me tell you, we're going to throw this information at you so fast and in such volume that if you drop your pencil and bend over to pick it up, you're going to be irretrievably behind." And that's kind of the way I felt about how our industry was changing. So much was happening that maybe it took a more facile mind than mine to stay with it. I was too much in the tradition of the old line cable operator. At any rate, I guess I felt mainly, Strat, that it was time to get out of the way and let some younger people play with it. I had enough money. I was just going to play with my grandchildren and relax for a while.

SMITH: The Chronicle didn't sell. They still own Western Communications, do they?

ALLEN: Yes, they're still in business and getting larger. They had the same staff that was there when I was there. The same key people in all the same key slots. To my knowledge, they have no plans to sell. I was there 21 years and they've now been in the business 23 years. I think that qualifies them as an old line established cable operator. And they're doing well. It's a fine operation.

SMITH: Where are their headquarters now?

ALLEN: Just about two months ago they moved into San Francisco. So it's gone from San Francisco to Walnut Creek and back to San Francisco. But the owning family lives in San Francisco and so I think they felt that they would, now that I was gone and I was the one who had insisted that it be in Walnut Creek, pull it back into San Francisco. They are now in the Rincon Center area in San Francisco, but that's brand new.

SMITH: You had an illustrious career both in California in the California Association as well as nationally and with the NCTA and I'm going to want to go into that in quite some detail with you but I think logically maybe the best progression is to find out why you're back in the cable television business now and how did that happen?

ALLEN: As I tell my friends, I retired for four weeks and then retired from retirement. An associate of mine named Leo Hindery had been the chief financial officer of the Chronicle for about the last three years that I was associated with the Chronicle. That was his first exposure to cable television. He comes from a financial background. He had been with different financial institutions. He's a young man. He was about 39 or 40, 38 maybe, when he was working for the Chronicle. He conceived of the idea of creating a new kind of cable company which would be a vehicle for institutions who had formerly been just lenders to the cable television industry to become equity owners in the cable television industry. So he conceived of the idea of creating what we now call InterMedia Partners. He approached me during my period of retirement (actually before that) with the idea that maybe I would join him in this venture because, while he knew how to put together a company from the financial side, he did not have the cable credentials that would persuade these people to part with their money as equity players, unless they felt that there was someone else associated with the company who knew something about the cable television business. He asked me to join him as one of three general partners. Leo is the managing general partner. He's in our San Francisco office and his responsibility is to make the deals and to find the financing, in essence. My responsibility was to assist in raising the money on the basis of credentials, reputation, experience, but then, having done that, to be responsible for the operation of the various cable properties.

The purpose of this partnership was to raise money to purchase cable television properties and hopefully purchase a newspaper. We haven't found any newspapers yet. We have found and closed on some cable television properties. The two of us then tapped a third man who was my Washington communications attorney. A young man, also now in his early 40's, named Dave Rozzelle. Dave had been my communications attorney in Washington for ten or twelve years. He was with the firm of Fletcher, Heald, and Hildreth. A fine firm. A small firm but I think very highly thought of by the Commission. Their filings carried some real weight. Dave was a full partner in his law firm. In fact, he was the managing partner of the firm in that he handled the business aspects of the firm in addition to being their principle cable practitioner. We persuaded Dave to leave the law firm and move his family to Walnut Creek, which he has done and, while I'm not sure, he may be the only partner that ever left that firm voluntarily. I think they might have had some partners that died or retired voluntarily, like Bob Heald, but I think it was rare, within that firm, that someone who was a full partner in the firm would leave the practice of law to go into what I call POCO. You've heard of POTS (Plain Old Telephone Service), well POCO is Plain Old Cable Operations.

But he moved to Walnut Creek, bought a home there, moved his family out there. We are now in the process of finalizing the acquisition of some cable properties that we contracted for. The intent is that Dave will take over the cable operations. He's a brilliant administrator. He's also spent 10‑12 years in the cable law business, so he's not unknowledgeable at all about cable. I intend, starting next year, to back away from active involvement in operations and to pass the torch to Dave.

So anyway, we are up and running. We have three transactions that we have signed paper on. We're in the process of transferring all the franchises, and by January of 1990, we should have closed on the transactions and that will make us almost as big, overnight, as Western Communications was when I left it. We'll have about 240,000 subscribers, instantaneously. I think when we had started the company we kind of envisioned a gradual growth. We knew the size of the systems we wanted. We wanted to replicate Wescomm (Western Communications) so systems in the 15‑80,000 range was what we were most comfortable with. But some major properties came on the market and we were successful in purchasing these properties. But it gave us an awful lot of subscribers in one big hurry. That's not without its problems when you've got 100 franchises that have to be transferred before you can get up and running.

SMITH: 100 franchises. That's quite a few.

ALLEN: We're dealing, really, with three separate transactions. We had previously purchased one small cable system. It falls below my 15,000 subscriber threshold. This is in Hawaii. It's about an 8,000 subscriber system. I think that's kind of a fun property. Maybe that's where we'll hold the partnership meetings.

SMITH: I'll have to go out and check it out.

ALLEN: Yeah. The other two principle acquisitions were the Hearst properties at the south end of the San Francisco Bay. Hearst decided they were going to get out of the cable television business and that's about 60,000 subscribers. The other is the Jack Kent Cooke properties. This is where I said it all comes full circle. Jack decided that he was going to get out of the cable television business also. This is the second time for Jack in the cable business after he got out of TelePrompTer. He had made a running charge to become a major player in the business and it didn't really materialize the way he envisioned it. He got to a certain point and it kind of stalled. He ultimately decided that if he couldn't get bigger, he didn't want to play. So our company, InterMedia, with Leo as the principle negotiator, put together a consortium of about six companies to purchase Jack Cooke's properties. They were big. They had about 700,000 subscribers. It was so big that no one entity wanted to buy all of it. More particularly, there were certain specific geographic areas that Jack had and they seemed to fit certain companies better than other companies. So, while we made a joint bid for the whole thing, we had decided ahead of time how the properties were going to be carved up. The total bid was about a billion and a half dollars. Our portion of it, I suppose, is about 400 million dollars for the Cooke properties that we're lifting out of the package. So, between Cooke and Hearst and the little Hawaiian property, literally overnight, we've made a financial commitment in excess of a half a billion dollars. It's enough to give you a trauma on occasion, particularly when the bottom fell out of the junk bond market and we had to restructure the financing. We have now closed InterMedia Partners I, as we now call it, and Leo will be creating additional InterMedia Partners, II, maybe III, maybe IV, with additional cable properties and maybe a newspaper if we can find it.

SMITH: These are limited partnerships?

ALLEN: It's a California Limited Partnership. The interesting thing about it, Strat, was the original concept, a brilliant concept, that Leo had and that was to go to the lenders in the industry and give them the opportunity to become equity owners in the industry they're lending to. So this is not the kind of a partnership like Heritage or Jones Intercable has created where they sell $5,000 interests to rich dentists. We only have about a dozen limited partners. Nobody is in for less than $5 million dollars. But they are names you would recognize. The only partner we have which is not a financial institution is TCI. We sought them out‑‑they didn't come to us. We felt that it would give us a significant advantage it we could use the TCI program rates and the TCI purchasing power‑‑something we wouldn't have by ourselves. We asked them to join us. The rest of our limited partners are all financial institutions. It's kind of a Who's Who. Bank of New York, Bank of America, the Mellon Bank, of all things Sumitomo Corporation. I think this may be the first Japanese money in the American cable industry. This is the parent‑parent‑parent, Sumitomo. This isn't the bank. This is the guy sitting on top who owns the bank.

So, Traveler's Insurance, Chrysler Pension, these are all significant players. They all have a piece of the equity and they have committed to be a long term player and that means 10‑12 years. It's not going to be a franchise flipping thing like some of the money players (who I really have no time for)‑‑the asset players who have become involved. At some point, as institutional investors, they want the opportunity to make their profit but they are going to have to wait ten to twelve years. That doesn't bother pension funds, for example. Pension funds are historically long term players. At any rate, then we went back to the same people, our equity partners, and said now put your lending hat on. We want to borrow some money from you.

SMITH: I'll have to hold you again for the flashing red light. This is fascinating.

End of Tape 2, Side A

SMITH: This is Side B, Tape 2, of the oral histories interview with Ed Allen. Ed, would you continue with your discussion of the partners in the new company, InterMedia Partners, in which you are a general partner?

ALLEN: Sure. I might say, Strat, we have a partnership philosophy not discussing our partnership or its affairs with anybody unless it comes from the managing general partner. We speak with one voice. This is kind of special because this is not media exposure, so I'm delighted to tell you about this concept knowing that it's going to wind up in the historical archives of Penn State rather than being splashed all across the trades.

SMITH: This is staying right where it is until you release it.

ALLEN: Okay. I was at the point where we then went back to our equity partners and said, "Now we want you to become lenders and loan us some money." That was an interesting experience because (I didn't know, but I'm sure Leo as the managing partner knew) the equity interests in a bank and the lending interests in a bank are totally different. They are sometimes on different floors. I sometimes think they don't talk to each other. Having these people as equity partners was not that helpful in terms of cutting a more favorable deal than we might have gotten otherwise from the lenders. They handled us just as they would any other entity. I think there's no doubt that they would talk to the equity people who would say, "Hey, these are good people. Yes, you should be involved with them as a lender," but it didn't make the lending turns any better than they would have been.

SMITH: Is it a matter of a possible conflict of interests?

ALLEN: There are days when I think they deliberately bend over backwards to avoid that by making it tougher‑‑I just don't know. When we started out to raise the money, we put out a prospectus. This is a private partnership, as opposed to one with more than 100 partners. It has to be, otherwise you're into a public partnership, this is a private partnership. We said that we wanted to raise $100 million dollars in equity. If we didn't raise at least 80 million we wouldn't go on with it, but if it was successful, and we raised more than $100 million, we would saw it off at $150 million. Well, we raised the $100 million. We actually raised $101 million in equity. Our thinking at that time was, "OK, now that we have, in pocket, $100 million, we can take that to the lending institutions and probably borrow three times that much to create our pool for system acquisitions." Another $300 million would give us $400 million to go out and acquire cable systems.

We hadn't envisioned that something the size of Cooke would come along and, by the time we closed the transaction (closed is wrong, because that won't close until January), by the time we arrived at agreement, we had signed contracts with Cooke and Hearst and Hawaii. We were up over $500 million and we had a pool of $400 million. So we went back to these same institutional lenders that had come in before in the blind, not knowing which cable properties we had, and said, "Hey, we want to raise the equity portion from $100 million to $150 million, what we had talked about before."

Now they knew what the properties were and they were not working in the blind and so we are just closing out what will be now $150 million in equity and that will close the fund. But, borrowing three times that is another $450 million which gives us $600 million to buy $537 million worth of cable systems and have some working cash. At that point, InterMedia Partners I is a done deal. It's closed. Now we have to operate it.

The thing that we think is going to make it go, is what we call a triad‑‑three things that really are of equal importance. It's almost like trying to decide which is the more important of the legs on a three legged milking stool. First, is to buy it right. You don't give away the store, just because you want to be in the cable business and get some properties. The second thing is to finance it right and then the third thing is for ten years to operate it right. We think that we have struck good deals, fair deals, with the sellers of these properties. We think that the financing is good financing, solid financing. It's not junk bonds. It is with big institutions. Bank of New York is the lead in this, for example. We think we have the experience to operate it, along with the advantage of having the TCI program rates and equipment purchase rates, which we wouldn't have otherwise with our 250,000 subscribers.

The operations team is a lot deeper than just me. While it's a very small team, it is, essentially (with one exception) people who were with me at Western Communications. When I left Western Communications and decided to come into this company, the only person I asked to join me was my secretary of some eight years. And she knows she runs the company, I can't do without her. I did specifically ask her to come with me and she agreed to it. There have been three other executives from Western Communications who voluntarily followed me. In the process of their joining us, I made certain that they told the people at Western Communications that I had not approached them and had not asked them to join me. I didn't want to be accused of raiding my old company. The principal marketer for Western Communications is now our marketer. The man who was a Chief Engineer of our Concord Cable System, which is a major cable system, and then ultimately switched over to the operations side and became the president of two of our cable companies at Western Communications, our very smallest and our very largest, joined me. He's what I call a two‑fer, in that we're getting some engineering talent and some operations talent.

The controller at Western Communications joined me as our controller, as our cable controller, and he's the one who will be creating our new accounting department for our new operation. The only key person on our staff who is not from Western Communications is a man who just joined us in December of '89, as our quintessential engineering guru. Normally, you would say he's a corporate engineer, except we're in a partnership, not a corporation. That's why I'm stumbling around, but he will be on the partnership staff as the principal engineer. He was formerly the Chief Engineer of a major cable system, the one in San Jose, California, and won the NCTA Engineering Award a couple of years ago as the top engineer in the industry. So we have put together, we think, a top notch operations staff which will be in charge of the operations of these cable systems, the third leg of the three legged triad, for the next ten years. Also, the key people at the systems that we bought are good people and they are staying with us. So, there is a continuity involved, between the former owners and the new owners. We think once we have paid for these systems, next month, we will have in place an operations staff that will adopt a lot of the same philosophies that I have had in the past, a lot of the same operational techniques that we used at Western Communications and we'll just transplant them into the InterMedia operation.

SMITH: That is a very interesting story and also, to me, the entry into your organization of TCI is interesting. Did you have any particular problem in persuading them to join you?

ALLEN: No. If you look at TCI's relatively recent history, they have been interested in making investments in other entities whether they be cable systems or programming entities. They're involved in Black Entertainment Television as a programmer. They also are involved in Bresnan Communications as a cable operator. No, it wasn't difficult. I've known the principal players at TCI for a long time. John Malone and I have been on the NCTA Board together for a lot of years.

SMITH: Let's go to another aspect of your career, Ed, which I'll say is very illustrious. You have been a very active statesman in the cable television industry, on behalf of the California Cable Television Association and the National Cable Television Association. Let's start with California. Give us some of your background and your activities in that Association, the offices you held, the committees you've been on, the problems you've helped resolve. You do the talking and I'll do the listening.

ALLEN: I moved to California in '65. The first Western Show that I ever attended, and we're taping this at the Western Show in Anaheim (we expect 9,800 people), was in San Diego. We used a part of one hotel in Hotel Circle and the exhibitors displayed on the sidewalk on the tops of card tables. That's how small the California Association was. I got involved through Walter Kaitz in the California Association affairs, because he heard I had been involved in the North Central Association. One of the first things that we were involved with was lobbying in Sacramento to try to keep out from under the clutches of the California Public Utilities Commission. Every year bills would be introduced to declare us to be a utility and, therefore, subject to the jurisdiction of the California Public Utilities Commission and every year we would have to go up to the state legislature and argue that we were not, in fact, a public utility and therefore did not fall under the PUC.

We were armed with a California Supreme Court Case involving the cable system in Martinez, California, which specifically declared that, under California law, we were not a public utility. In order to permit the PUC to get their arms around us, they had to change the California law and that's why we would be arguing at the legislative level against changes in the law that would permit the Supreme Court to come to a different decision that, in fact, we were a public utility.

SMITH: Would you permit me to tell you that I tried that case and argued it before the California Supreme Court?

ALLEN: HA! You're the hero then.

SMITH: The National Cable Television Association financed the case and I was its General Counsel at the time. We tried the case, I think, in Walnut Creek before the California Supreme Court Case was argued. Then the Commission Hearing Examiner issued a decision that cable was a public utility under California law. We argued that decision before the California Supreme Court and they unanimously reversed the Commission ‑ all nine justices.

ALLEN: Well, the California industry owes you a debt of gratitude then because, for about the first three or four years I was in California, this type of legislation would be introduced every year and we would be up in Sacramento arguing it every year. It now has not been introduced for more than a dozen years, so that original Supreme Court ruling is holding up beautifully in California. It was through the lobbying efforts in Sacramento on the Public Utilities Commission issue that I became involved in the California Association. First, as a director and then as the treasurer for a couple of years, I think it was. That took me up to about 1970 because I came out to California in 1965 and it was in 1970 that I was first elected to the NCTA Board. I have not been involved since 1970 in the Board of the California Association. Although, as a courtesy to me as a National Director, they include me in on all of their Board meetings and I get all of the Board literature and whatever. I'm kind of an ex officio Board member, but I don't vote in the California Association.

For the last several years I have been the Chairman of the State Legislation Committee. This goes to my lobbying involvement in both Washington and in Sacramento. At the California Board meetings, those of us who are on the National Board, John Goddard, for example, the immediate past chairman of the NCTA, are asked to be kind of liaison between the state Association and the national Association. We try to give them input into the industry problems as we see it from the Washington perspective in the hope that it might be of some assistance to them or, more particularly, that they can be of assistance to us, because it's a very effective lobbying organization.

I think there's no doubt that the California Association is the premier state association in the country and, in terms of its efficiency, I think it pushes the national Association pretty well. It's professionally staffed, it knows how to work the politicians, it is a significant voice because there are so many cable subscribers in California, probably a disproportionately loud voice because people in California like cable. I don't know just what the figures are but, to be illustrative, if we had 10% of the population, we've probably got 15% of the cable subscribers, something like that.

My involvement with California since my involvement with the national in 1970 has been one of essentially political lobbying in Sacramento as a part of this State Legislative Committee; and then the interface between the two trade associations.

SMITH: In addition to the public utility problem, which you say no bill has been introduced in quite some time, what have been some of the principal issues that the California Association had to handle before the state legislature that you might have been active in?

ALLEN: I can think of two of them, Strat. You'll remember when the Congress passed the Federal Pole Act, Cable Pole Act. It was in '77, somewhere in that area, we successfully passed legislation in. . . (I'm trying to remember if it was legislation or just working with the PUC) we got the Public Utilities Commission of California to accept the federal pole formula. So, as pole disputes, pole rental disputes, might arise in California, we had in place a mechanism with an acceptable formula to resolve these disputes. That was done by the California Association. I think the other principal thing we did was to establish the concept of rate deregulation for the whole state of California before it ever became a part of the Cable Act. It was tied to the cable industry's willingness to be involved in programming at the local level. If we would do certain things, to foster the concept of local programming through the access concept, we would then be free to set our own rates in the state of California.

SMITH: That was a negotiated proposition with legislators, legislative committees?

ALLEN: Yeah, then it had to be written into law. There's a piece of state law called Section 53066. This is the bedrock piece of cable legislation in all of California. This became an amendment to 53066 and, in fact, those provisions sunsetted with the passage of the Cable Act of 1984 when we got federal deregulation. But until that happened and national rate deregulation kicked in on January 1 of '89 the cable systems in California had, for several years, the opportunity, if you met certain criteria, to set their own rates and it worked. In fact, as we were lobbying the Cable Act, I suggested and we did, in fact, use language out of the California Act as a piece of the Cable Act because it had been tested and we knew that it worked. It was helpful when we were dealing, for example, with Senator Wilson. He was familiar with the California legislation and he became a work horse for us on the Cable Act. We also, as a part of the rate deregulation concept in California, created a Foundation which was a creature of the legislature for the funding of local programming ‑ local access programming. The cable operator had to contribute, it was either 30 cents or 50 cents a subscriber a year, to this Foundation. It, in turn, gave grants from these funds to the communities that were working with the access concept. It might be a private individual producer that has an idea for a program. It might be a City Council that needed some lights for its Council Chambers in order to televise its City Council meetings. The Foundation became a rather significant funding mechanism through the contributions made by the cable television operators.

With the passage of the Cable Act and the sunsetting of this California law, there was no more support for this Foundation and the Foundation now has dispersed all of the funds and has gone out of business. A significant piece of its funding, its remaining funds, was given to an attorney you probably know, Tracy Weston. Tracy was formerly a Washington communications attorney but is now with the Annenberg School down in Southern California. It was Tracy Weston and one of his graduate students who just recently put out a voluminous report on the concept of what we call the California Channel. It's the California version of C‑SPAN. It points out that California probably has one of the most minimal coverages of the state legislature of any state in the United States. Russia has better coverage of their Politbureau than the California legislature does of its own functions and it's a multibillion dollar operation that they are running up there.

At any rate, a lot of the remaining funds of this Foundation were granted to Tracy and the Annenberg School to come up with the concept of the California Channel. We wanted to call it Cal‑SPAN, and we may still be able to do it but, of all things, we found that there is some guy out there that had a calcium supplement and had the name Cal‑Span tied up. I think for a nominal payment of $100 we're going to be able to get the name released. That was truly significant state legislation ‑ to put through a state rate deregulation bill at the time we did it. The lobbying on that bill was probably as intense and lasted almost as long as it did on the Cable Act.

SMITH: Who was principally responsible for directing that lobbying?

ALLEN: Two people, really. One was Spencer Kaitz, who is the son of the late Walter Kaitz. Walter was the founder of the California Cable Television Association and Spencer, ever since he was a young kid, has been on the periphery of the Association. He then went to law school, graduated, and became General Counsel to the Association under his dad. When his dad died, Spencer took over as the paid president of the association. The other is a man named Dennis Mangers. Dennis is our principal and registered Sacramento lobbyist and a former member of the California Assembly. That's what we call the House of Representatives. It's the other side of the Senate. Dennis is a consummate political practitioner. While his focus has been on Sacramento, I think he could be on the NCTA staff and do a superlative job, he is that good. As a former member of the Assembly, he knows how the game is played. He knows all the players and the California Association has an office in Sacramento with only two people in it, Dennis Mangers and his secretary. The California Association has a separate office in Piedmont, California. Those two people, Spencer Kaitz and Dennis Mangers, were the organizers of the lobbying. The individual cable operators, just as we did at the national level, would come in and get briefed and they were the ones who walked the halls and knocked on the doors and made political contributions back in the District, and whatever, to accomplish what these two people as the generals set out for us to do.

SMITH: I ask the question specifically to get you to identify Walter, mainly, and then Spencer, because the two Kaitz's are absolute legends in the industry, particularly in California. Walter, more than Spencer, I guess, nationally.

ALLEN: The third Kaitz, Walter's first wife, died.

SMITH: Idel.

ALLEN: The NCTA has their highest national award to go to a woman called the Idel Kaitz Award. It is now the Distinguished Vanguard Award in the memory of Idel Kaitz. I remember when that award was first created. It was my privilege to present it to the first recipient ‑ this was Yolanda Barco. And I did it on behalf, really, of the Kaitz family. Walter's second wife, and now widow, is Dorothea Kaitz. She is considered very much a part of the California cable industry in the Kaitz family tradition as Walter, Idel, and Spencer are. She is Mrs. Cable in the state of California right now. A lovely, lovely woman.

SMITH: I did not know that part of it. I also presented the Idel Kaitz Award. I think it was the second time it was presented, but I'm not certain, and that was to Polly Dunn.

ALLEN: You and I have been following each other around for a lot of years.

SMITH: Again, and this is not necessarily part of this interview, we had intended to try to get started on an oral history, to get the Kaitz's properly represented in the archives of Penn State and an oral history of Spencer is being recorded here today. Marlowe Froke is doing the interview.

ALLEN: Spencer has won an award for the state Association and whatever we call that award. Walter has won that same award in the past. He may have been the first one to win it. Two national awards are named after husband and wife and it's a legendary family in California. I don't know whether you knew it or not, but Spencer had a heart attack, not too long ago. I think it was in Reno.

SMITH: I heard it from you, Ed, when you and I were setting up this interview.

ALLEN: I know he's back at work full time now, but it took a while. They didn't have to do any surgery, and he and his wife took off and went to Europe. I don't know whether it was a cruise or something relaxing like that. While he was getting his feet under him, Dennis Mangers, who I mentioned before, was kind of the interim acting president. But Spencer is back under full steam now. He certainly should be interviewed by the Museum. It's a dynasty. They're not very many in the cable industry, but that's a dynasty.

SMITH: You may be correct now in saying that the California Association is possibly the finest or most effective of the state regional associations. The California Association, through Walter Kaitz's activity in those early days was, as you well know, of inestimable value to the NCTA in connection with national legislation. The influence that the California Association had in Washington has been tremendous. This is part of the history.

ALLEN: Walter taught us all a lot about lobbying. Originally, he was the principal lobbyist in Sacramento for the state employees association. He had a little tiny office, and then he took on as a second client, the embryo California cable industry. He represented the state employees and the cable industry. As the cable industry affairs became more and more complicated and more time consuming, he had to drop the state employees and that's when he became exclusively involved in the California Cable Television Association. Another man whom you know, Harold Farrow, an attorney in California and one who has had some significant prominence in certain cable cases was associated with Walter and I don't know whether Walter was in Harold's office. I'm more inclined to think that Harold had office space with Walter in the Association office. At one time Harold, literally, was the only outside counsel that the California Association used, if they needed outside counsel, if it was something that Walt, as an attorney, couldn't handle, or Spencer as General Counsel. Subsequently, of course, Harold went on to bigger and better things with his own good sized law firm. Sol Schildhause and Mayor Lionel Wilson of Oakland are a part of the firm, although I don't think Mayor Wilson is active anymore in the firm. At any rate, they went their separate ways. That was about the time the California Association began staffing up with someone other than a Kaitz. We had Walter Kaitz heading it. Spencer Kaitz was the General Counsel and Idel Kaitz as the Officer Manager with Spencer's sisters thrown in for free when we had meetings like this where they would be the gofers and run around and put badges on people and make up the badges. We got the whole Kaitz family when we hired Walter.

SMITH: We diverted a little bit from your career mentioning the Kaitz family's relationship to the California Association. We are at the end of the tape.

End of Tape 2, Side B

SMITH: This is Tape 3, Side A, of the oral histories interview with Ed Allen. At the time the tape ran out, I think we completed your discussion of your activities with the California Cable Television Association. I would like now to move on to your activity with the National Cable Television Association as a Director for many years, culminating, not too long ago, in your being elected the National Chairman. Please start at the beginning of your service with NCTA.

ALLEN: I guess my first involvement, Strat, would go back to about 1960. At that time I was a two year veteran of the cable industry. The NCTA sponsored a management seminar of some kind or another at the University of Wisconsin at Madison. The concept was to pair a cable operator with a member of the faculty so that, on these different issues, the faculty member would lay out the theory, marketing, for example, and the cable operator would follow behind him and try to apply what the faculty member said to the real world of cable marketing. That was an interesting experience, for a young guy. I might have been 36, something like that. And a two year veteran knows it all. I was trying to pontificate my expertise and wisdom with that little bit of background. I'm not sure if it was one of the smarter things I did. I remember there was a bunch of fellows from Canada who attended. I'm trying to remember the name of one of them. Bud something, he died as a young man. Bud Shepard. These Canadians were attending this seminar and they would come to class in tweed jackets and leather patches on the elbows and smoke pipes and never open their mouths during the class.

So we were telling everybody how to run a successful cable operation. We got to know these fellows after class when we'd go to the neighborhood tavern and have a beer together and we'd get these guys from Canada to open up. I remember I had about five thousand subscribers at the time and I was talking to Bud Shepard and I said, "How many subscribers do you have?" He said, "Oh I think it's around 60,000." They had these monumentally large cable systems in Canada. Much bigger than anything we ever had in this country. They were light years ahead of us in terms of knowing how to handle these big urban systems. For example, they would join the local builders association so that, as apartment buildings were being built, they were a part of the association and would know about it as soon as it hit the drawing boards so that they could arrange to get into the buildings and do the internal wiring. A simple concept like that never dawned on us in the United States. I had an off and on relationship with the NCTA, as I suppose lots of operators did between 1960 and 1970. When they would put out the alarms, you'd come running to Washington to do what you had to do. 1960, you'll remember, is the year we shot down Senator Pastore, in our wisdom. That's an interesting story we might want to put on the tape or maybe somebody else has.

We had an opportunity to have our own Cable Act, ala 1984, as far back as 1960. The NCTA didn't have much of a lobbying staff at the time, but we had the concept of wanting to be a part of the Communications Act in our own right, rather than being ancillary to broadcasting. So we hired an outside lobbyist, a professional gun to do our lobbying for us. I don't remember his name but he was good. He knew all the calls to make and which buttons to push and what have you.

SMITH: I'll remember his name in a minute.

ALLEN: Unfortunately, we destroyed him in the process. We had a bill that, as I remember, Pastore was managing. We had amendments ready to add to the bill from Senator Fullbright and then, if the bill got out of control and we didn't like it, we had arrangements to kill it in the House. This thing was on track, no problems associated with it. One day I'm sitting at my desk in Winona, two years in the business, and I get a telegram from Washington. That was before the days of mailgrams, when telegrams looked like telegrams. That yellow piece of paper got my attention. I was urged to come to Washington. It was absolutely imperative that we stop this bill in its tracks. I was flattered that, after just two years in the business, they would ask me to Washington. I didn't know that they had sent out about six hundred other similar telegrams. It was a group, including Governor Milt Shapp who, at that time, was still with Jerrold, who had decided that they didn't want this legislation. They felt the status quo was better than having federal legislation relating to the cable industry.

We came to Washington. It was up for debate and vote in the Senate. We spent two days walking the halls of the Senate doing an absolute reversal over what we had told these Senators before. We were now saying, "Don't vote for this bill." Two weeks ago we were telling you that you should vote for it. We absolutely destroyed the credibility of this lobbyist. The Congress does not like to be double crossed. There is no doubt, particularly with regard to Senator Pastore, that we doubled crossed the man. I remember the debate as it went on in the Senate. I was up in the Senate gallery. Senator Pastore, who is a physically small man, was down on the floor and I remember him looking up at the gallery and I'll swear he looked right at me. He waved his finger right at me and he said, "You will rue the day you did this to me." I'll never forget those words. And we did. It took us another 17 years before we could get our first piece of cable legislation passed and that was the pole bill. We absolutely double crossed the Congress. I guess, in our political naiveté back that far, we didn't know that you don't do that to United States Senators.

It's interesting to speculate, knowing how helpful the Cable Act of '84 has been to our industry. Just suppose we had our own Cable Act 24 years before that. Where would this industry be today if we had been a part of the Communications Act twenty four years sooner?

SMITH: The bill was S.2653, do you recall that now?

ALLEN: I recall that now and we licked it by one vote.

SMITH: By one vote. The man that Senator Pastore was pointing his finger at was me.

ALLEN: Maybe you were sitting next to me.

SMITH: I was General Counsel of the NCTA at the time. I had made all the promises that the industry would support the bill.

ALLEN: Isn't that an accurate characterization that we absolutely double crossed the Congress?

SMITH: An absolutely literal characterization of it. You've got your basic facts, exactly in line. It was also Governor Shapp (of course, he wasn't Governor then) who decided that he was going to turn the industry around, almost single handedly, and did. We defeated the bill by one vote and, as you said, we never got anything in the Congress again for 17 years. That was a very traumatic experience for a lot of us.

ALLEN: My first real involvement with the NCTA on the national scene, as I already recounted, was in 1970. As a result of a speech by Frank Thompson, I was elected as the National Secretary which meant that, with no prior experience, all of a sudden I was on the Board of Directors of the NCTA. As an officer, I was on the Executive Committee of the NCTA. With the exception of two years, I've been on the Board every year since 1970, so that's 17 of the last 19 years. In about seven of those years, seven of 17, I'd been on the Executive Committee‑‑two years as the National Secretary ‑ in '70 and I guess it was in '76‑‑three years appointed by the Chairman, again as the National Chairman, and then as the Immediate Past Chairman.

Just as an aside, the Executive Committee can either be a very powerful Committee or it can be a not very important Committee. Depending on how the Chairman runs his Chairmanship. There are some Chairmen who like to run the Association through the Executive Committee rather than involving the full Board. When I was the Chairman, there was so much going on (we were working the Cable Act at the time) that I didn't want to put that kind of power in the hands of the Executive Committee. So I insisted on working through the full Board which meant we had more Board meetings than we would normally have. But there's no doubt that the Executive Committee is the power behind the Board and can make a lot of commitments on behalf of the Board that are fully enforceable through their posture as the Executive Committee.

I guess other than being on either the Board or the Executive Committee, my next real national involvement came with the passage of the Copyright Act in '76. You will remember (I think Fred Ford might have been the NCTA President about that time) that there was a strong feeling that because we had a Supreme Court ruling that said we didn't owe any copyright fees under the 1909 Act... That was another piece of your work, wasn't it? The Fortnightly case, wasn't it?

SMITH: Yes, it was. I did not do it by myself. A New York and Washington law firm, Cleary, Gotleib, Stern and Hamilton, and mine, Smith & Pepper, together handled the case.

ALLEN: There was some thinking that, because it had been ruled that we didn't owe any copyright fees under the language of the 1909 Act, the status quo was just fine. We shouldn't change it. I remember Fred Ford or somebody coined the phrase, "Why buy two tickets to the same performance?" It was the rallying cry. That was also the time when CATA, another trade association, was formed of the smaller operators who felt they didn't have to and, therefore, did not want to pay copyright fees and we should do nothing to upset the existing Supreme Court ruling that would require them to pay some copyright fees. I was on the other side of that issue. I felt that the Copyright Act of 1909 was out of date. It never envisioned the cable television industry. It didn't envision juke boxes. It didn't envision Xerox copiers. That Act was, in fact, going to be changed to recognize some of the newer technologies that didn't exist at the time the Act was written and it was my thinking that if, with some certainty, it is going to be changed we better have some input into those changes.

So I was on the side of the issue that said, "Let's write a new Copyright Act and include the cable television industry in the Act, under the Compulsory License concept, so we can't be accused of being parasites that are taking the broadcasters' signals and reselling them for a profit, under terms and conditions that are acceptable to the industry, rather than wait for something that might be imposed on the industry." You'll remember all of the discussions we had with the broadcast people and the Hollywood people and the Jack Valenti's of the world and we ultimately arrived at the Copyright Act of 1976. It's an extremely complicated subject. I think, as a first try out of the gate, it perhaps was not bad legislation. In fact, probably pretty good legislation. The problems we ran into, as you know, were in the enforcement of the Act through the Copyright Tribunal. We had five inexpert people who were designated as political appointee‑Copyright Commissioners.

SMITH: Would you interrupt your narrative for the sake of the record to explain what the Copyright Tribunal was and is?

ALLEN: That was the entity that was to collect the copyright fees. There's a distinction that's made between the Copyright Tribunal and the Copyright Office. The Copyright Office was part of the Library of Congress, as I remember. Its function was to collect the copyright fees paid by the cable systems under some rules they devised (that's where we ran into the problem) and then be responsible for the equitable disbursement of these fees, back to the copyright holders. That's a whole story in itself‑‑you begin to get Hollywood and the broadcasters and the television stations versus the radio stations and the public broadcasters against the commercial broadcasters, trying to decide what is an equitable portion of this pie that is to be allocated back to them. As it was originally established, there were literally ten people in the Copyright Tribunal. Five Commissioners and five private secretaries. There was no General Counsel. There was no Economist. These five inexpert people, who knew nothing about property rights, were responsible for creating the rules and regulations under which these monies were collected. They created a whole bunch of anomalies that exist to this day. For example, we were required to pay copyright fees on programs that we weren't even showing. This comes about under their ruling where they said if you are carrying a program ‑ they had two six month reporting periods ‑ on the first day of the reporting period, even though you dropped the program on the next day, you had to pay fees for the full reporting period. So, if the reporting period is a half a year, 180 days, and you carried the program one day and dropped it, you still paid copyright fees for another 179 days, even though you were not showing the program.

I don't think that's what the Congress intended, but that was what the Copyright Tribunal came out with in their rules. Another thing that they did is to require us to pay copyright fees on programs where we had already paid the copyright fees. This goes to our carriage of the satellite signals, cable satellite signals, where, in the fee we pay for Cable News Network or ESPN or MTV, the copyright fees are included in that fee. However, because it was on a tier of services that included some broadcast signals, you had to pay copyright revenue on the total revenue from that tier. There was a mix of broadcast signals and satellite signals, so, because you paid on the total revenue from that tier, you were paying copyright fees a second time on something you had already paid for. At any rate, those are some of the anomalies that these inexpert people created. We were successful, to tie this in a knot, in getting a new Copyright Act written. The language of the Act, as a first effort, probably isn't bad. At least it hasn't been modified, the language hasn't been. The rules have been but the language still sits there pretty much as it was in 1976. But we have run into some real copyright problems and anomalies created by the people administering the Act. Someday they'll revisit that Act and try to straighten that out. Until they do, the cable industry is saddled with payments that I don't think they should be making.

SMITH: Did the cable industry gain anything by that legislation?

ALLEN: Yes, legitimacy. Before, we had been considered as people who were taking somebody else's product, not paying anything for it, and reselling it for a profit. By paying copyright fees for the distant signals we brought in, I think it gave us legitimacy. It at least spiked one of the arguments the broadcasters were using against us in the Congress, that we were this parasite that was taking their programming and reselling it and they weren't getting anything for it.

SMITH: Was there a trade off of some kind to get a license to receive those distant signals in exchange for the agreement to pay a copyright fee?

ALLEN: Strat, I'm sure there was. This goes to all the preliminary discussions that we had with Valenti and the broadcasters. I've got to tell you that my memory now, going back that far, isn't that good to be able to put my finger on just what we gave up in order to get what we got. Maybe you can fill me in.

SMITH: I just wanted to get the term on the record of the "compulsory license" that is pretty much a growing issue in the industry today too. I think that compulsory license required the copyright owners to grant a license and, in effect, Congress granted the license to receive those distant signals and then the operators were required to pay into the Copyright Tribunal the fee for that license that they distributed as you described.

ALLEN: Yes, what the license actually did is give us a blanket right to carry local signals without copyright fees. The local signals were licensed to a community. It's the same community we serve. This would truly be a two tickets to the same performance type of thing. But in order to have the blanket license to carry the local signals, we had to agree to pay for the distant signals. We pay nothing for the local signals that we carry, but the funds we pay for the distant signals is what goes into the Copyright Tribunal pot. There was a lot of political maneuvering, as you might imagine. Letters of intent. To this day, Jack Valenti can quote chapter and verse on some of those. He and I have tangled on occasion. He's a fun guy to debate with. He's a master orator and I've enjoyed debates with Jack. At any rate, we got it done in '76 and I think it did lend some legitimacy to our industry.

I'm about to move ahead to '77, when we got the Pole Attachment Bill passed. So often, the legislation that we've been able to develop, and there hasn't been that much through the Federal Congress, has been to correct abuses that exist. It's kind of been a case of "if it ain't broke, don't fix it." These were some areas where it was broken and we had to fix it. We found that the utilities, because they owned these poles, were rapacious in what they wanted to charge for these poles. They still are in terms of what they want to charge for conduit and that's why the cable industry doesn't use the telephone company conduit. You can't believe the rates they want to charge for occupying their conduit. We managed to get a law passed which put some sense of reason into the pole rates that the utilities were permitted to charge. They had to be based on some kind of a cost justification, rather than just feeling the cable operator's wallet.

I remember one case in California where we had to take a power utility to court. They were going to raise the pole attachment fee rates in one year from $2.50 a pole to $12.50 a pole. It wasn't until we went to court with all kinds of anti‑trust threatening noises that we stopped that. We got to a negotiated rate concept (that I had mentioned before) that we now have under the California PUC. Some of these utilities looked at us only as a source of revenue which they wanted to maximize without regard to the social implications of what they might be doing or what their costs might be.

I guess, then, after that '77 Pole Attachment Act, the next big thing was the Cable Act. In the intervening years, I'd been involved in a lot of NCTA committees, usually the upper level committees, the Regulatory Policy Committee, Telco Policy Committee, etc. So even if I were not on the Executive Committee, at least I had an opportunity for some input on some of the ideas I had through the committee involvements. NCTA honored me in, I think '78, with what at that time was called the Larry Boggs Award. It's now the Distinguished Vanguard Award. I remember I received that Award in New Orleans in '78. Now they let the recipient know that he's getting the Award, that's true of all the Awards. At that time, they didn't. This came as an absolute and total surprise to me. I remember they had a table assigned to me right next to the speaker's rostrum and I didn't know why my table was this close to the speaker's rostrum. When I found out where it was, I thought this is a chance to make some brownie points with some members of Congress and the Copyright Tribunal Commissioners, by giving them a good seat to see this show.

I was going around inviting people to sit at my table and the NCTA had someone following me around cancelling the invitations to sit at this table because they had secretly arranged for my family and my secretary to be flown out to sit at the table. It wasn't until I walked into this gigantic ballroom and here are my four children and my secretary and my partner from my radio station in Winona and one woman Copyright Commissioner, who still hadn't had her seat pre‑empted, all sitting at the table. I still didn't tumble as to what was happening. Finally, it dawned on me that I'm going to get the award, it was a very nice thing to have happen. I'm glad my family could be with me.

This brings us up to, I guess, my election as the Chairman in '84. I don't know whether you are ready to jump into that.

SMITH: We can jump around as it occurs to you. If you want to reorganize it, we can.

ALLEN: I don't know of anything of significance that anybody would be interested in until that. That was an interesting experience. The election process was interesting because I was not the Vice Chairman of the NCTA. I was not an officer, I was just a Director. The NCTA does not always go through the chairs so that the Vice Chairman succeeds to the Chairman. More often than not, they do. In this year, the Vice Chairman was a good friend of mine, Gus Hauser, who had headed up the Warner operation. The Columbus Qube interactive experiment was one of the big pieces of that operation. That had significance because it was the first major attempt by a cable operator to involve himself in two‑way interactive cable. As it turned out, it didn't work. In fact, they are, right now, in the process of removing all of the old Qube equipment from Columbus.

I remember we wondered at the time if this exotic concept would work, if there was a demand for it. You could call up and, for 35 cents, get a guitar lesson, this kind of thing. They would show a football game and they'd give you the scenario of its third and eight on your own twenty‑four yard line. The logical play to call with two and a half minutes left is a pass, an end run, or off tackle. What should the quarterback call? You had a little box in your house and you'd push buttons and pretty soon it would come up on the screen that 68 percent of the people think you should throw a forward pass. But it turned out there just wasn't that kind of a demand for these interactive concepts. We referred to it at the time as Gus's "turn in the barrel" because a lot of us had been involved in trying to get something other than just more and better television pictures off the ground. I think we learned something in the process. I think we learned that our business is still more and better television pictures than the exotic peripherals on the outside.

At any rate, the election was scheduled and there was a group of NCTA directors that thought, with the divisions that existed on the Board with regard to the Cable Act that we had been working on for three years and there were some very significant divisions on the Board, plus the business track record of Gus's Qube operation and the obvious problems that were happening with that operation, that maybe someone other than Gus, or really, more specifically, maybe I, as a guy who had been around for 25 years, might be able to be a more cohesive force in trying to pull together what really were three very distinct camps on the NCTA Board in terms of a consensus behind the effort on the Cable Act.

Bill Strange and Clive Runnels out of Texas, people I now refer to as my Texas Mafia, contacted me and asked if I would run for Chairman in competition to Gus. It's very rare, really, that there is a competitive race. I told them I would run but that I wouldn't campaign for it. I would not call a single Director and ask for a vote, but if the Directors wanted me and it should happen, then I would serve. The upshot of it was that I was elected. This was at a time when Tom Wheeler had just announced that he was leaving the NCTA to go into his own business. He was the president of the NCTA and Jim Mooney, who was Tom's Number Two man, had just been selected as the new paid president of the NCTA. So, as we are coming to the denouement of a three year effort to pass the Cable Act, all of a sudden you had a brand new Chairman and you had a brand new President. The new paid President concept was not that important because Jim had been the architect of the political effort for the last three years. While Tom was out front as the big tall guy with the charisma, it was Jim, as the general behind the scenes, who was directing the political effort. All the change meant was, you had a short guy out in front, rather than a tall guy out in front. The same guy was directing it.

As history is written about that Cable Act, full credit has to go to Jim Mooney for being the architect of the strategy involved and then, right up to literally the very last day, holding everything together so that when the Senator Metzenbaums of the world and the Ralph Naders of the world intrude in the 24th hour, we still could hold the Act together, and get it passed and that's what Jim did. My job, coming in as the new Chairman, was to try to give Jim a tool that he needed and that was a truly significant and impressive consensus of the National Board behind the Cable Act. Early on that didn't exist. We were divided into three separate camps. I was very prominent in the third camp, that's the one that wanted the Cable Act. But once I became the Chairman, I had to play it straight down the middle and not be the vocal advocate that I had been before. I could lobby and I did lobby with the Directors behind the scenes. However, as I was conducting the Board meetings, I had to play it fair so that all elements could get their concerns out.

There were three different camps, Strat. One, and it reminded me of 1960 when Milt Shapp decided the status quo was better than federal legislation, was a group of Directors that didn't want any legislation by the Congress or action by the FCC. They were perfectly happy with the status quo. They had no problems in their towns. They didn't want anything that would upset the apple cart. It was kind of a narrow view because while they didn't have problems in their towns, there were lots of problems in lots of other towns. This goes to the curing of these municipal abuses, particularly in the areas of rate regulation, where the City Councils were afraid to grant rate increases because it was a political issue (and they didn't want to get tarred with that) and franchise renewals. There were abuses in the franchise renewal area, so that, if you had been in town for 20 years and had done a great job, you had no assurances that, at the end of twenty years, they wouldn't give the franchise to the mayor's son‑in‑law. That's what the Act was designed to prevent.

The first group was the status quoer's, if I can call them that. There was a rather significant second group that, while they wanted some changes, didn't want those changes to come from the Congress. They wanted the changes to come from the FCC. This is what I call the "quick fix" group in that they felt that, (I think at that time there were seven Commissioners) if they could persuade four of them to buy the concept of FCC action, to think a certain way, we could get it done faster, could get the kind of protections that we needed. I objected to that concept as being a quick fix because Commissioners change. They are political appointees in the first place. As administrations change, Commissioners change. If they get an opportunity to go into private practice, they do. There is no continuity that you can depend on for continuing votes. There's a constant state of flux among the Commissioners themselves.

That's why my position was, rather than go for the short term fix, what we really need is a long term solution and that can only come from legislation by the Congress. You write it in the law, because that is much more difficult to change. It doesn't mean it's impossible. We may see some change in the next year or the year after that. But that law's been on the books now for five years. I was pushing for the concept of a Cable Act, passed by the Congress, as a part of the Communications Act of 1934, that would give us a legitimate position, not as ancillary to broadcasting, but as an entity in our own right, with our own Section of the Communications Act.

As we were winding down the lobbying effort and getting it close to floor action, these were the three groups that had to thrash this thing out at the Board level. I think, in the prior years, there had been some thinking that the Board was kind of a rubber stamp for the NCTA staff. The staff would devise the policy, bring it to the Board, and the Board, rather than debating the policy or discussing alternatives, would say, "These are the professionals, they must know what they are doing" and they would approve it. I decided no more rubber stamp concept. I happened to agree with what the staff was proposing, but I was going to force that Board to debate it and come to a consensus. For a while that was difficult to do. The guys hadn't been used to having the Chairman literally insist that, before a vote is taken, all sides of the issue have to be laid out on the table and debated and discussed and argued and examined.

I remember when the debate would start to wind down, I'd throw out a question. Sometimes I'd play devil's advocate, trying not to ever indicate my own position but trying to keep the flow going. There were other times when the discussion flowed too well. At that time, I was still smoking and I had a great big Zippo lighter that I carried with me. I put a lot of dents in that lighter by pounding on the rostrum, trying to gain quiet and peace in the room.

Ultimately, we did get it all aired. We had multiple votes as we went along but they were kind of "sense of the board" votes. I wasn't ready to put it to a formal vote, a vote that we could release to the press. I think that, at that time, we had about 35 guys on the Board. We had many special meetings in Washington. Normally the Board meets four times a year including one meeting at the NCTA convention. So there are normally three other meetings. We had lots of meetings during this period. We had lots of meetings of the Executive Committee during this period. I waited until I almost couldn't wait any longer because it was getting ready to move on the floor. I waited until I felt we had the consensus that Jim needed as a tool. When we finally took the vote (and I was In Europe), we got everybody but two. Out of 35 people. So Jim was then able to go to the Hill and say an overwhelming preponderance (I wish he could have said a unanimous) of the Board is solidly behind the passage of the Cable Act. That was a tool that was helpful to him because they knew we were not a splintered industry.

SMITH: Remember where you are, I've got to turn the tape over.

ALLEN: Okay.

End of Tape 3, Side A

SMITH: This is Side B of Tape 3, of the oral history interview with Ed Allen. Ed, you were just saying just before we turned the tape that you were able to give Jim Mooney the preponderance vote that he needed on the NCTA Board to go to Congress on the Cable Policy Act.

ALLEN: Well, it ultimately came up for a vote and, in the last few days, the opponents of the bill pulled in their allies like Senator Metzenbaum, Ralph Nader intruded himself into the process and Jim had to hold this thing together. Jim was the one who had been the principal negotiator with the cities during this thing. You may remember that we had struck deals with the National League of Cities on two different occasions, with its negotiating committee. But the rank and file cities overturned, in both cases, what their negotiating committee had agreed to. We kept having to go back to the negotiating table but we ultimately arrived at an agreement with both the National League of Cities and with the Conference of Mayors, which includes the largest cities in the United States. The League of Cities covers everybody. The Conference of Mayors covers principally the larger cities. We managed to hold that coalition together even in the face of an attack by Senator Metzenbaum. There are days when I think he doesn't like anything or anybody that has to do with business. He wasn't just singling out the cable television industry.

I think, as I remember, in both Houses it passed by a voice vote and I almost missed it. I had a television set in my office in Walnut Creek hooked to C‑SPAN by means of a satellite on the roof of my office because there was no cable in the office park. While the tape was off, we were discussing whether, in the negotiating process to arrive at the language of the Cable Act, all the parties knew exactly what they were doing in terms of the writing of the actual language because some of it is kind of obtuse and obscure. I think I would agree, Strat, that some of the language is obtuse. But, from the cable industry standpoint, in at least some instances, that's deliberate. We didn't want precise definitions in some areas so we would have some room for maneuvering. For example, there's a term of ours called, "engineered at the headend." You ask even the people involved in writing that language what they meant by "engineered at the headend" and you will not get a precise answer. This has to do with channel capacity. Does that mean the number of modulators that are at the headend? Or the capacity even though the programming is not being presented because you are not using the full capacity?

Deliberately obtuse, I think, in the case of the city negotiators, and I don't mean to say this to put them down. I guess I really mean it as a compliment to the cable negotiators. I don't think the city negotiators were as expert as they should be about the cable television industry. Again, it goes to Jim Mooney and his staff. Chuck Walsh, who is a Washington attorney whom we both know and love, was Jim's right arm in writing the actual language. Chuck gets a lot of credit for the language. I guess he, also, if it's obtuse, has to take some of the credit for making it obtuse. It was a delicate, delicate piece of language construction down almost to arguing about the placement of commas, but from the cable industry's standpoint very deliberate. There's an interesting term of art that comes out of that Act and I don't think our cable industry has yet fully focused on it. The underlying theme of the Act charges both the city and the franchisee to know and understand and respond, to what are known as the "cable related needs and interests of the community."

To my mind, as I have negotiated with cities, the needs and interests are not what an appointed Cable Administrator says they are. That doesn't sample the needs and interests of the community. It is not what a majority of four on a seven person City Council says it is, even though they have been elected to represent the people. Or, as we more particularly have in California, a majority of three on a five person Council.

The way to determine the cable related needs and interests of the community is to ask the subscribers who are paying for it. As I have negotiated franchise renewals, I have adopted the position that I will give my subscribers anything and everything they ask for, as long as, at the same time, they tell me they'll pay for it. It's very interesting that, if you're talking to community activists in the area of local access programming, they have a concept of what they need to do their work and what the degree of their interest is in that. If you talk to educators, they have a concept of how they could use television better for education and the level of interest that they have‑‑as long as school funds don't have to be used to finance it. When you take those same needs and interests to the subscribers who have to pay for it because, except for a little advertising, the cable system's only source of revenue is the subscriber, you get a different reaction. You ask, "Do you want to support two color studios, three color cameras and two mobile vans for the local access group? It'll cost an extra dollar a month on your bill. Do you want 54 channels instead of 35 channels or are 35 channels enough, based on what you're paying now, because 54 channels would add $2.50 a month to your bill to pay for the rebuild." All of a sudden the level of interest diminishes. Interest goes inversely to the amount of the bill is what I'm trying to say.

So the needs and interests of the community is a term of art that I think the industry should be relying on more and more and more as they deal with their municipal officials. I think, in a lot of cases, and for purely political reasons, we have agreed to do things in a community that our subscribers don't want and have no interest in but have to pay for. The Cable Act gives us an opportunity to relate our business decisions to a federal law which charges us to know the needs and interests of our communities.

I started to tell you that when the voting was going on and this was a voice vote and I was watching it on C‑SPAN, I turned my back on the TV set. I was standing behind my desk, I turned my back to the television set, I picked up the telephone and I was going to call a man over at the Chronicle to say, "Hey, the vote is taking place right now." By the time I turned around, they had voted. I missed the denouement of the three year effort because it happened so fast by a voice vote. After the Act passed, Broadcasting Magazine, which I consider to be the premier trade publication of the communications industry, ran a very fine editorial congratulating the cable industry on the passage of the Cable Act and on the superlative job of lobbying that had been done. But they raised a question; now that you have these newfound freedoms, now that you are out from under the political thumb of the City Council (with regard to rate regulation and the renewal of your franchise) are you going to accept the responsibilities that come along with these freedoms?

I wrote back to Broadcasting in my capacity as the Chairman and they were kind enough to publish my response and, in essence, I said, "Yes, we recognize that there are responsibilities that go along with this Act and we are responsible people and we will respond responsibly." I said that the entrepreneurial spirit which created our industry had almost been smothered by the heavy regulatory hand of some 20,000 individual municipalities, each with its own cable policy, and that the fire in the belly that we had originally had almost been smothered. But, with the passage of this Cable Act, the industry was born again. We can now recreate the entrepreneurial effort but we would do it in a responsible manner. I think a part of that prediction came true. I think we did create a new and almost smothered entrepreneurial effort. You can see it in the program services that have been created, in efforts to provide more services, always, to our subscribers, in efforts to improve our subscriber service. But we have fallen short in some instances.

I'm disappointed in our industry. I'm disappointed in some people and in some companies in our industry because I don't think they've been responsible. This has to do with the two areas of excessive rate increases and shoddy customer service. Maybe they go together because they're both impacting the operating statement of the cable company. The first thing that happened was that we had some new players move into the industry. The financial players. The asset players. The franchise flippers, as I call them. Those who announce, up front, "We're only going to be in this business for five years. We're creating limited partnerships, but, in five years, we will take our money and run." Once they get the franchise, they raise the rates as high as they can, they decrease the expenses as much as they can, they pump the cash flow as hard as they can, and they leave the pieces behind for the next owner to pick up. Meanwhile, they have made some money.

I can't fault just these new players because there are some existing old line cable companies that, in some instances, have done the same thing. I think, in the case of customer service, their focus had been on getting new franchises when they went through the franchising frenzy that we had. In the process, customer service fell by the wayside ‑ they didn't have time to look at it.

I think, in some cases, they refinanced and the lenders to the industry have written such onerous lending covenants that the size and the frequency of rate increases is now being dictated by the lenders to the industry rather than by the cable operator himself. I think, in many cases, it forces either an excessive rate increase or a too frequent rate increase on a community with monstrously bad political repercussions. It is something that is necessary because your lenders require it. I'm sorry to see that happen. As I went around in the two subsequent years as Chairman, I tried to caution the industry in literally every speech I made. After me it was Tryg Myhren. Jim Cownie did it, as a successor to Tryg. John Goddard of Viacom did it. So has Bob Miron of Newhouse, the current NCTA Chairman. They've all said exactly the right things. Be moderate in your rate increases. Be better at your customer service. But the industry, to a great extent, did not heed four years worth of warnings. That's why we have the political problems that we have in Washington. We are going to lose some of the freedoms that we have under the Cable Act. It's not going to be fatal, it's still going to be a good industry. It's still going to be a good Act. However, we brought this on ourselves, in a lot of cases.

There's an old saying that the cuckoo is the only bird that fouls its own nest. I've got to say that I think we have some cuckoos in our industry which, over the last four years, have fouled our nest and the Congress is not going to tolerate it. We're getting hit with a bum rap on the rate increase issue. I've just recently had an opportunity to deal with 100 different franchises as a part of the franchise transfer process we're going through and not one of those cities has brought up the issue of excessive rates. They do have a problem with customer service. As they write new franchise agreements or transfer agreements, they're writing in consumer protections, fines, penalties. In some cases they get down to where they want to micro‑manage your company, like you shall answer the telephone within 30 seconds. This kind of thing. The concern is more on shoddy customer service than it is on excessive rate increases. Where we get the heavy discussion of rate increases is not from the consumer, as a general rule. Some of it, sure. Letters to Congress, yes, there's been some. But the general consumer really thinks that he gets good value for his cable television dollar. Where we hear it is from the politicians who have a personal and political ax to grind. They want a political issue.

Mayor Volgy of Tucson, one of the properties that we will be getting from the Jack Kent Cooke transaction, is the Chairman of the Telecommunications Committee of both the National League of Cities and the Conference of Mayors. He doesn't want to be just the Mayor of Tucson. He wants to go to Washington. He is very vocal on a populist issue which is cable television service‑‑that thing you have to pay for every month that some other people don't have to pay for. In the Cooke transaction, the other properties that we will be involved with happen to be in Tennessee. That's Senator Gore. Senator Gore has eyes on being President of the United States. He had a populist issue involving backyard satellite dishes which gave him a constituency of about two million backyard dish homes. He now wants a constituency of 50 million cable television homes. So he has jumped off of the satellite issue to the cable issue because he has got something out in front of him that he wants to get done. They say "all politics is local" and I believe that; but, unfortunately, so much law is made on the basis of local anecdote rather than national policy.

The Congress, including friends of our industry, are hearing from City Council people, from subscribers, on shoddy service and, in some cases, admittedly excessive rate increases. It has happened. They have enough local anecdotes so that if we get reregulated, it's going to be because we've been anecdoted to death by these stories that drift up from the local level. It's like getting nibbled to death by a thousand guppies. How do you stop it? I think the industry will self police itself, starting like about now. They should have started four years ago. If you look at rates right now, while the rates spiked in 1987 and '88 when we were permitted, for the first time, to adjust the rates, they spiked because they had been held so artificially low for some many years, by the political considerations of these City Councils. In 1989 to date, and the figures are out through the first ten or eleven months, rate increases in 1989 are only half of the increase in the Consumer Price Index. That spike is gone and we are now down to the more typical ongoing level of increases that we had before the Act. But that two year spike did happen and we're going to have to pay the price for it.

SMITH: What do you think that price will be?

ALLEN: They say that there are really two choices‑‑the cable industry must have some competition or must have some regulation. It can't be an "unregulated monopoly" and I have another whole spiel I can go through on why we're not a monopoly. When they talk about competition, what they are really talking about is the telephone company being permitted to come into "our industry." They're not really talking about multi‑point distribution systems‑‑MMDS, or backyard satellite dishes. They're really talking about the telephone company. I think it is possible, maybe even probable, that, in the future, but not yet, the telephone company will be allowed to provide cable television service (what we call Telco TV) outside of its own service area. But not within its own service area. An example of that trying to go on right now is Pacific Telephone (which has telephone interests in just California and Nevada) being involved in the Chicago cable franchise. Judge Greene has not granted the waiver yet, so we don't know, really, but that would be the case of a telephone company being involved in cable operations outside of its own service area. That doesn't offend me too much, Strat. I find it kind of difficult to find the logic behind saying it's all right for Centel telephone in Illinois to be in the cable business outside of its service area, but a regional Bell Company cannot be in the cable business, even outside its own service area. It just doesn't seem to make any sense.

The reason there is a proscription against the regional Bell Companies being involved is that there is a multi‑year history of predatory anti‑competitive practices. As Judge Greene has said, the opportunity for that kind of mischief is even greater now than it was back in '82, when the AT&T divestiture took place. If they can set up the proper protections so that the telephone company cannot use its telephone service profits where it does have a monopoly to subsidize their cable operation, fine. Then I see no reason to continue to object to their being involved. I don't think they can set them up. And nobody else does except some economists and accountants at the FCC. They have already set up some safeguards, as a part of the Computer III hearings, that they think will provide the necessary safeguards to prevent cross‑subsidization in the computer industry and that these same safeguards can be picked up and translated en masse to the cable/telephone industry.

There's no proof that that works. The General Accounting Office says it won't work. Judge Greene says it won't work. Our industry certainly says it won't work. I don't know whether they can set up those kinds of protections. If the phone company wants to get into the cable business, they should do it with shareholder money. They shouldn't do it with telephone consumer money. Make their shareholders take the risk. Make the shareholders pay for it. The opportunities for cross‑subsidization, the hidden transfer of funds and or expenses from the monopoly telephone side to the unregulated cable side are rife with possibilities for mischief. It could lead to predatory pricing.

Another thing, most of the telephone people that I've talked to talk about telephone being a source of competition to the cable industry. They don't plan to come in and compete with the existing cable operator. They want to buy him. So you still have only one cable operator in town, it's just a bigger company than the one that was there before, but it hasn't created any competition. There's a lot of sentiment on the Hill in Washington, that if a phone company is to come in, they have to come in as a second entity and create competition. They can't come in as the only entity, by buying out the guy who is already in there, because then you could truly have one wire into the home, rather than two wires. So, one side of the coin is the need to create competition. The alternative to that, then, is the need to reestablish some regulation. I think we might wind up, ultimately, not in the near term, I don't think next year, maybe the year after that, with a combination of some re‑regulation and some telco involvement in our industry, outside its own service area. I think we are going to have to face the fact that we are going to have to expect some form of re‑regulation to take place. It becomes a question of what form is that going to take. How onerous is it going to be? How badly have we fouled our nest, in terms of the Congressional reaction?

I think that becomes a factor of who controls the legislative process. If you've got someone like Senator Gore or Senator Danforth or Representative Boucher controlling that process, I think our industry is in deep, deep trouble. If you have someone like Senator Inouye of Hawaii, who is a more reasonable man, who would apply only that amount of re‑regulation necessary to correct a problem (rather than to punish an industry) then I think you have a different approach to it. Looking at the more moderate approach, I think there are some things that the cable industry can agree to, which are a reduction in the freedoms that we have now, but serve to cure a problem that exists and that should be cured. For example, I have no time at all for the so‑called franchise flippers. I think there ought to be a requirement, as there used to be in the broadcast industry, where you must hold the property for a certain period of time. That doesn't necessarily have to mean three years or five years as a time certain before you can divest yourself of a property because there may be very good reasons why you have to divest of a property, maybe it's to settle an estate or whatever it might be. But there can be a waiver process where you show good cause as to why it should be something less than this holding period.

Or you might have to pay a penalty in the form of taxes on a transfer that takes place sooner than the law says it should. What you are trying to do here is to avoid the multiple, multiple sales of cable systems at ever higher prices which require ever greater leverage, which require ever bigger bank loans, which require more interest payments, which require raised subscriber rates, in order to service the bank debt. I think the industry would support a holding period before such transfers could take place.

I have a little bit of a philosophical problem with the idea of size caps on any one entity in our industry, but there's all kinds of precedent for such a thing. We have it in the broadcasting industry. No one entity can own more than 25% of the viewers in the United States, something like that. I remember back in the earliest days I was on the Board, that would be in 1970, '71, the FCC had an inquiry out on how big should any cable operator be allowed to be. Should there be geographical limitations if all of his subscribers are in Washington or in Oregon ‑ is that a bad type of thing? That inquiry never went anywhere, because it was pointed out that the television networks, through their then five owned and operated television stations reached more viewers' eyeballs than the biggest cable operator ever thought of.

SMITH: Even in one setting.

ALLEN: Yes, true. This has only recently resurfaced as an issue because there are some entities, TCI being foremost, that are getting to be of a significant size. They have some concern that it might pose a problem. There's no demonstration that it has. There's no evidence that TCI has abused its size. Some of the programmers will argue differently when it comes to the muscle they apply to program rates, but that's part of the free enterprise system, too. The Danforth bill would require a divestiture if you have more than 15% of the subscribers in the country. That affects only TCI so that's aimed right down TCI's throat. They've got about 22%. But it doesn't significantly bother the John Malone's of the world, if they have to divest some of these subscribers. TCI has already created about five sub companies, regional TCI's, if you will. They could instantly break into five companies, no one of which exceeds the limit, and keep their cotton pickin' fingers off in terms of oversight from Denver. That's what CBS did when it spun off Viacom. At one time they used to own Viacom. They just gave it away to the CBS stockholders. I think we might be looking at a subscriber cap as to size.

The biggest thing, probably, we will have to look at is their attempts to re‑establish rate regulation. Rate regulation, right now, exists only in those communities where there is not "effective competition," which has been defined as the presence of three television broadcast signals in the community. The reason that definition was adopted was because the NCTA commissioned a study to determine what, in the real world, constituted effective competition and this study came to the conclusion that if three or more television signals exist there is competition for the eyeballs in the community from off‑air television signals. That study was the only hard evidence ever presented to the FCC when it was trying to come up with its definition of effective competition. So it adopted the three signals as the definition of effective competition. Everybody else had a different number of signals, like every local signal.

In the county I live in there are 22 local signals, must carry signals, under the old must carry rules. Naturally, if you deregulate about 97% of all the cities in the United States, the cities will object to losing the turf that they had before. So they're looking for a new standard of effective competition. It's my understanding that yesterday the Commission (the 12th of December) issued a Notice of Inquiry about the cable study that they're charged by the Cable Act to come up with and report, I think, in October of '90; although Chairman Sykes said the Commission is going to get it done by June or July, it's going to be a summer report. Two things that were left out of that Notice of Inquiry, as I understand it, are Telco entry and effective competition definition. They will be the subjects of separate hearings.

I think there might be some changes in the standard of effective competition as long as there's some hard evidence. You can't do it on the basis of no information. Well, that's not true, you can. As a political compromise, you can. You can do whatever you want to as a political compromise. But if there is some evidence that three is the wrong standard, maybe it should be four. Maybe it should be five. But there should be some evidence that helps you define what is the threshold level at which you can say competition exists. The thing that is disturbing is that some of the bills that have been introduced, like Senator Danforth's, for example, want to define effective competition not on the basis of the number of signals that can be watched in the community but whether there is another actual multi‑channel delivery system that can go in head to head competition with a local cable system. That means another cable system. That means a telephone company, that means MMDS systems. Something that delivers multiple channels and can engage in head to head competition.

That, effectively, would re‑regulate the entire industry because nobody in his right mind wants to put a second cable system into a town where there is an established cable operator. We've got some of that going on down in Florida with Florida Power and Light, but it's a greenmail operation and it isn't a big thing. Nobody in their right mind would build a second cable system. A competitive multi‑channel provider doesn't have the program sources it wants to have. They may get those someday, but it still doesn't have as many channels for as low a price as the cable operator does. It just is not going to be, it's the nature of the beast, there is not going to be an alternative delivery system that is multi‑channel and if there isn't, then these guys say there's no effective competition, therefore we're going to regulate your rates. That's what I'm afraid of. I don't think that will happen. I think if we do get a new definition of effective competition it will be a change in the number of signals, rather than shifting to this concept of having another provider. There's an outside chance for 1990, but that's the second year of the two year congressional session and it's an election year. I think you can get up a pretty good head of steam in the Senate in 1990, but I don't think the House is going to be prepared to act in 1990. Once you start a new two year Congressional session in 1991, you've got two years in which to work on this legislation. I think some form of re‑regulation is likely to come out of the Congress in the '91‑'92 session.

End of Tape 3, Side B

SMITH: This is Tape 4, Side A of the oral histories interview with Ed Allen. Ed, when we ran out of tape I think you were in the process of summarizing your beliefs about possible future legislative activity and its impact upon the cable industry. I believe you had expressed the opinion that the industry might wind up by 1991 with some re‑regulation. Would you complete your thoughts on that subject?

ALLEN: Well, two comments. The industry has a superlative lobbying organization, political organization in Washington. I think it is generally recognized as the best among the communications organizations in Washington. One Senator or Representative said the National Association of Broadcasters couldn't lobby their way out of a wet paper bag. We do better than that. So I think that if we wanted an all out nuclear war approach, we could forestall this re‑regulation for a time but I don't think we could win that war. I think that discretion being the better part of valor, we would decide, as the Mafia used to say, "...not to hit the mattresses and call for all out war." We will try to be as cooperative as we can, particularly if the effort is headed by a responsible person, such as Senator Inouye. I think it would be all out war if Senator Danforth tried to move his bill in its present form. I don't see any opportunity for that to happen. That's so draconian it could kill the industry.

I think though that, assuming we get some re‑ regulation, you have to characterize it as a giving up of some freedoms that we presently have. That's not necessarily bad for the industry. The new regulation will come to cure abuses that exist and that's good. It doesn't diminish our industry as a viable industry, as a successful industry, as a premier communications industry. It just says, you can't do some of the things you've been doing, you must be more socially responsible. You must have a social conscience on what you're doing.

I don't like to see government regulation, literally, in any form. I happen to be somewhat Adam Smithian in my approach in that I believe that the best regulator is the market. If you abuse the market, then you've got to expect that there's going to be some corrective action and I'm hopeful that corrective action will be helpful to the industry. We'll get rid of some of the abuse that presently exists and make us a stronger industry.

SMITH: Ed, I believe, correct me if I'm mistaken, you served two terms as the National Chairman, did you not?

ALLEN: That's right. They changed the by‑laws a few years ago to permit the Chairman to succeed himself. That's the only officer that can succeed. The other officers can move on to other officerships, but the normal progression is that you go from Chairman to Immediate Past Chairman. It's not unheard of in the past. I've heard people say it's unprecedented in my two years as Chairman and that's not that case. In the very early years of the NCTA there were men who were Chairman for more than one year. Not too far ahead of me, in the first year when this change in the by‑laws was made, Doug Dietrich served two consecutive years as the Chairman, so, even in the recent past, it's not that unusual. The Vice Chairman in my first year as the Chairman was Tryg Myhren, who we mentioned before, and at that time, Tryg was the Chairman of the Board at ATC (American Television and Communications). ATC/ Time, Inc. was going through some executive shuffling and re‑organization and so Tryg's right arm, Joe Collins, who was the president of ATC, had been lifted out of that position by Time, Inc. and brought over into their HBO operation. Subsequently, another shift took him back to ATC and, in fact, is running ATC, in Tryg's place. But, in the year when Tryg was scheduled to be Chairman, his own company had enough new organizational problems so he just felt that he wouldn't have the proper time to devote to both the NCTA and his company. I agreed, as kind of a holding action, to take the Chairmanship for another year, with the idea that, at the end of that year, Tryg would have the ATC organization the way he wanted it and then could, in fact, devote the amount of time that's required to be the National Chairman. I did it, not because I wanted to be Chairman for another year, because the travel can be killing, especially when you're on the West Coast and most of the action takes place on the East Coast. A lot of cross‑country flights. But I have such a high regard for Tryg as an industry statesman, I wanted to be sure he had the opportunity to follow in behind me as the Chairman so he could continue some of the concepts I'd tried to put forth.

Yes, I was Chairman for two years, but the second year was kind of a holding action for Tryg. But it gave me the opportunity to spend another year on the rubber chicken circuit trying to exhort my friends to be responsible under the Cable Act, which is the way I spent that year.

SMITH: We talked a good deal about the Cable Act and the compromise procedure, negotiation procedure that resulted in the Act. During your two terms as the National Chairman, were there other legislative developments or special battles that had to be fought on behalf of the industry that you would like to comment on?

ALLEN: Well, they would all pale by comparison to the Cable Act. There probably were other issues, not legislative issues, there wasn't any other legislation, but I'm sure that there were FCC issues. I'm sure there were P.U.C. issues, there were state regulation issues that the NCTA had to be involved in. On a scale of one to ten, in terms of its importance to the cable industry, I'd rate the Cable Act as an 11. There is nothing in the 41 year history of our industry, really, that has the magnitude of the importance of the Cable Act. I think, just ahead of the passage of the Cable Act, systems might have been valued at about $1,000 a subscriber. Five years later we're now approaching $3,000 a subscriber. A price of $2,000 is considered a cheap price today. I remember being on the rubber chicken circuit and telling people, like about six months after the Act passed, that your system today is worth double what it was six months ago. It turns out that was not a bad estimate.

So, in terms of the contribution it has made to the success of the industry, the value that's in it for the individual investors in the industry, in terms of allowing the cable industry to conduct its own business affairs, in terms of putting some stability into the industry with some assurance of renewal, it's been a winner. In eliminating the local political process as much as possible and substituting business common sense, I don't think there's anything that approaches the Cable Act in terms of the contribution that it has made to the industry.

SMITH: How has the public benefited as a result of the Cable Act?

ALLEN: You'll get an argument there from some regulators and, I suppose, some members of the public‑‑those who feel that the industry is obsessed with making money because of the new freedoms it has, that it has improperly raised rates or deliberately delivered shoddy service. You always have those kinds of arguments surfacing, even back in the days when City Councils could regulate the rates and I would go before a City Council with a rate increase request. If there were more than four people in the audience who were there to object about it, I would be very surprised. The basic underlying subscriber base is not critical of what the Act has produced. Specifically, what the Act has produced for the consumer is much better programming, a greater diversity, a higher quality of programming. I don't know whether I mentioned before that when I was talking about my Canadian friends back in the very early 60's, they said five channels is all anybody needs. The three networks, an independent, and an educational station. People can't use any more television than that. Well, that was so wrong. While we know that people tend to focus on about eight or nine channels, do 90% of their watching on eight or nine channels, you almost can't give the people too much in the way of diversity. If you have enough channel capacity and there is a group of left handed widget watchers in your town, you can devote a channel to the left handed widget watchers and they're going to watch widgets on their channel.

Because we have been able to increase our rates to the market level, you have to start with the premise that they were artificially depressed below the market level ‑ the basic service rates, not the pay rates. The pay rates, I think, we drove too high. But, because we have been able to raise the basic rates to properly reflect the price/value relationship that our subscribers give to it, we have taken in more money. The program suppliers have charged us more for their programming and they have used that money that we give them to go out and buy better programming. So now we have NBA basketball that Turner just signed at $275 million. We have the ESPN pro‑football package that didn't exist before. We have new channels that keep surfacing all the time. I thought that every conceivable programming idea had been created that could be. Now we're looking at one comedy channel on the air and a second comedy channel coming along. Willy Nelson and some associates are putting together a cowboy channel. There's going to be a science fiction channel which might be very popular if the material that runs is like Star Wars or 2001. We're developing regional sports networks that didn't exist before.

In California we are working on the concept of the California Channel ‑ a California C‑SPAN. There is no end to the diversity of programming we can deliver. The programming has to be good programming. It can't just be talking heads. That's the problem with the local access programming. These kids have a desire to play producer, but the program that comes out is boring! It's just talking heads. It takes money to produce good programming and the Cable Act has enabled us to provide the programmers with the money so we get better programming.

SMITH: Would the re‑imposition of rate regulation destroy that development or at least significantly retard the development of new programming services, and better ones?

ALLEN: Yes, it would. That's particularly true if rate regulation reverts to the most local level so the municipalities, once again, can say: "We can't do anything about the power rates, we can't do anything about the phone rates, but we can sure do something about the cable rates." So they don't allow necessary rate increases. If rate regulation is re‑established, but at the federal level, as was done in the Cable Act, where they allowed for five percent annual rate increases even before the de‑regulation kicked in, as a matter of federal law it could be acceptable. Or if they set up a formula where you can increase your rates based on some index. I suppose it's the Consumer Price Index that they would pick. Although I would argue that the price of a head of lettuce really has very little to do with operating a cable company.

Maybe it's the Consumer Price Index plus the increased program costs that are passed on. That's the cap ‑ the most you can raise it. I'd worry if it ever gets down to rate regulation, again, at the most local level. These politicians are terrified of the possible reaction of our subscribers, so they prefer to take a duck, or carve the baby, or say no, or give you the average of the cable systems around you, or something that doesn't relate at all to your actual cost of doing business. We'd be hurt if that were re‑established and the programming would be hurt.

SMITH: You made a comment back several tapes ago, Ed, that I made a note on and wanted to take you back to. You said that you had had a lot of interesting debates with Jack Valenti who I believe is the President of the Motion Picture Producers Association of America, is that correct?

ALLEN: Yes, the MPAA.

SMITH: Could you tell us a little bit about the issues and perhaps some of the more interesting personal experiences you had in debating against Jack on behalf of the cable industry with him representing the motion picture producers?

ALLEN: I'd better clarify something. These have not been one on one public debates. They've been an exchange of correspondence type of thing, or informal discussion type of thing. He and I would show up at the same events, maybe on different panels, and it seemed that people would try to get us in the same room, at any rate, so that we would talk to each other. This was primarily on the issues surrounding copyright, because I was a part of the process, as was Jack, in the cable/broadcast/motion picture compromises, letters of agreement that evolved prior to the passage of the '76 Copyright Act. We would have discussions about what we meant in the language that we evolved in these letters of agreement, for example. My charge has always been that Jack interprets history after the fact without regard to what the facts might have been. I remember one specific area where we got into a pretty good discussion. I was laying out my concern that the Congress never intended that we pay copyright for programming we never delivered. I went through that exercise before where you carry the station for one day, drop it the next day and still have to pay for another 179 days.

Of course, it's Jack's position that that's exactly what the Congress intended because Jack had expressed a concern about what he called cherry picking and he they didn't want the cable operator cherry picking selective programs from the broadcast stations. He would have to pay for the entire program schedule, not just what he lifted up. That is true, but that never got down to 179 consecutive days of non‑carriage as being a reason why you should pay copyright fees.

Jack is an articulate spokesman. He can be a little histrionic, loves to coin a clever phrase that makes a good sound bite. But I have been known, on occasion, to maybe not coin a phrase as clever as his, but to create a sound bite. I think that's why people tried to throw us together on occasions, to see how much we could wound each other.

SMITH: My recollection is that you had made some public statements about the re‑imposition of the Syndex rules. Since you lived through the first Syndex rules as an operator, and now are looking at a re‑imposition of the rules, I'd like to ask you to express your general opinion about them, and then be as specific as you would like. Was it not you that made an address entitled Syndex Revisited?

ALLEN: Might have been, Strat. At one point, in one of the NCTA Board meetings I was one of two, and that's all, who voted to appeal the Syndex rules. The rest of the Board didn't want to appeal them. They knew CATA was going to appeal them. Jack Cole, on behalf of his clients, was, but I felt the NCTA Board took a duck on the issue of appealing. We're the biggest trade association representing the cable industry in the country and if not us, who? Do you pass it off to a CATA or a private client of Jack Cole's? I believe in the concept of the broadcaster having a right to exclusivity, if he's paid for it. Just as I believe, on the other hand, that the cable industry has an equal right to have exclusivity for the programming it creates and pays for. That's where Senator Gore and I would have a problem. I think some of the programming that has been created by and for the cable industry should be the property of the cable television industry. It should not necessarily, by government fiat, be forced to be made available to satellite earth stations or MMDS or whatever. I think we should have that right if the broadcasters are to have that right. But I think you also have to balance that with the damage that the Syndex concept can do to both the subscriber‑viewer and, also, to the broadcasting industry. I think they both stand to be hurt.

There's a big difference between Son of Syndex that we have now and original Syndex, particularly in terms of the notification procedures that are required. Under the original Syndex rules, if a broadcaster wanted to invoke his right of Syndex, they had to give notice to the cable operator which included, among other things, the television station against which they wanted protection, the day, the time that the program is going to run, the program series title, etc.

In many instances they had to provide the name of the individual episode. There are so many "I Love Lucy" packages. You can't just put down, "I Love Lucy." You've got to put down, "I Love Lucy ‑ package 14/episode 8," whatever it might be. That enabled the cable operator, with some precision (after he'd done an investigation and determined that it's accurate), to know exactly what has to be deleted so he can pre‑program all the program switchers that are necessary. Under the new Syndex rules, the obligation to search out which stations are to be deleted and which programs and at what time falls on the cable operator, not on the requesting broadcaster. So the broadcaster can turn in a notice that says, "I have exclusive Syndex rights to 'Arsenio Hall', a late night talk show. I am exercising those rights. Here is a copy of my contract to prove that I have exclusive rights." At that point the cable operator doesn't know which other stations are carrying "Arsenio Hall", or what time they are carrying it. Is it at 10:30 at night? Is it at 11:30 at night?

Perhaps a better example than that, because that's a live show, is any syndicated show where the outside station can put it on at any time it wants to during the 24 hour broadcast schedule. It could be at three in the morning, could be at three in the afternoon. The cable operator doesn't know what time it's going to be programmed. That's why, in the last Board vote (where I was one of two and the other was a very small independent operator who has been through Syndex One as I have), I voted that it should be appealed only because of my concern about the operators' inability to comply with the Syndex requirements on the basis of the notice requirements as they exist. I wouldn't have as big a problem with the Syndex concept (notice concept) if it reverted back to Syndex One and the broadcaster requesting the protection was required to give you the notice that he was required to give before. I think the broadcaster stands to be hurt too in that right now a lot of broadcasters are being carried on a lot of cable television systems outside their market area. If the programming becomes Swiss cheese, and there are estimates, in some cases, that thirty percent of the programming is going to have to be blacked out, then the cable operator is going to say I cannot afford to carry this channel any longer.

The programming is so badly butchered that he's sitting here with these big blank periods. He cannot afford to buy programming to fill those periods. It doesn't satisfy the subscriber for him to put up a sign saying "don't blame me, it's the local broadcaster who forced this hole to appear in your programming." They'll just say, starting with the next copyright period, "I'm going to drop that programming." In the process they have dropped some sports and that hurts the subscriber.

SMITH: I have to turn the tape over again.

End of Tape 4, Side A

SMITH: This is Side B of Tape 4 of the oral histories interview with Ed Allen. Ed, would you please continue with the remarks you were making concerning the harmful effect of Syndex on the local broadcasters.

ALLEN: Strat, you remember there is an old concept a guy we both know, Henry Geller, came up with years ago, called retransmission consent. I think in the old history of retransmission consent, there was only one cable television system in the United States that was ever able to secure the necessary retransmission consent from a local station. This was only after a monumental effort on his part because the local station doesn't own the rights to grant that consent. The only thing the local station owns rights to are its locally produced programs and of all things, it's own locally produced in‑house commercials. But, if it's a network station, it does not own the rights to that network programming so the affiliate cannot tell the cable system, "Yes, it's all right for you to carry the NBC programming. You've got to go to NBC to get that permission. The same thing is true with the syndicated programs. The local station that has bought a package of syndicated programs does not have the legal right to pass off to a cable operator consent to watch that programming. That consent is owned by the owners of the syndicated programming and they're going to want to be paid for it.

Hollywood types are kind of voracious for money and you can bet they are not going to give it away for free. While the concept of retransmission consent sounds almost logical, in the real world it doesn't exist because the rights don't exist. We're going to see that surfacing again in that the NAB with a prod from CBS, has just recently come up with a concept where they want cable television systems to pay the local station for the right to carry that station.

That would mean nuclear war if they tried to get very far on that concept. That is a serious concept that's been floated originally by CBS. The National Association of Broadcasters has appointed a committee to examine it as to its validity. It is going to be discussed by the broadcasters at their next meeting in January. That really could trigger a nuclear war if the broadcasters tried to charge us. At some point along the line the cable operator is likely to say, "The heck with it. Subscribers, put up an antenna. We'll even help you. We are only going to carry cable exclusive satellite signals. That's all we'll charge you for. We're not going to pay the broadcaster for the privilege of carrying his signal. We are not going to pay copyright fees for distant signals. We are only going to carry non‑broadcast satellite cable signals." It becomes a question, then, whether that is an attractive enough service for people to continue to buy cable service. It would be interesting to find out.

If they don't have an alternative, you could wind up with the people watching the local stations by means of rabbit ears, if they can get them, refusing to put up a rooftop antenna and then depending on the satellite services, including the superstations, for their television programming. They would get some commercial broadcast programming, they would still get their sports, WGN to bring them the Cubs, WTBS would bring them the Braves, but they would lose their local broadcast service under that concept.

SMITH: Do you have an opinion at this stage, Ed, whether the cable industry could survive economically as an attractive industry without local and distant signals, excepting the superstations which are quite dependent these days on cable?

ALLEN: Well, the superstations are taking steps to make themselves "Syndex‑proof," as they call it. So there won't be blackouts on the superstations because they are buying national rights. Or the common carrier, the microwave service, is arranging for its own substitute programming so, if there is a blackout on the superstation they are carrying, there is an alternative piece of programming. I think in the beginning, Strat, it would hurt, but as long as people have a source of local news, from some other source, then it becomes a very real question of whether they then need a local television station to deliver that news. In the San Francisco market area where I come from, there are several independent UHF television stations that don't program one minute of news during a broadcast week. Their function is to grind out movies which you can get from other source.

Initially, unless a substitute can be created, there would be a shortage of local news available. I happen to be on the Board of educational television station KQED, that's Channel 9, in San Francisco.

We have a very interesting concept that we're in the process of developing in that KQED, in addition to Channel 9, has a second television station, educational television station Channel 32, which isn't being fully utilized. It has a short broadcast day from five in the afternoon until midnight. We are working with a commercial television station, KRON‑TV, the NBC Channel 4 affiliate in San Francisco, where a commercial television station and an educational television station are going to join forces to create a new entity which will be known as the Bay News Center, which is going to be a 24 hour per day local news operation. It's like Turner's Headline News, except it's going to be local news. It will program over the educational television station, without commercials, because it's an education television station. There will be programmed into that programming, public service announcements and station program announcements. That same programming will be fed by microwave to the cable systems in the Bay Area. They can sell advertising in it. The Bay News Center can sell advertising in it.

You have then created another news entity like Headline News except it's a regional news entity. That would fill the void, meet the need, for the local development of a news service, but it doesn't come over a broadcasting station. Sports could be more difficult, but there's an answer also to sports. They're creating now, all over, regional sports networks. Here in Southern California, they have one called Prime Ticket. In the Bay Area there is a sports network, I've forgotten exactly the name of it, but there is a regional sports network. The baseball Giants in San Francisco have their own program called Giantsvision which, for a fee, gives you the Giants home games. So there is a way even to fill the sports void. I've got to be very careful how I say this, but the Communications Act of '34 has, as its major underlying premise, the concept of the validity of localism.

I question whether "localism" isn't a myth, whether, in fact, the viewers in the market want that many local television stations that don't ever program any news, that don't ever program any sports. They can get "I Love Lucy" from a San Francisco independent station or they can get "I Love Lucy" from an Atlanta Superstation. It doesn't make any difference to them. They do need availability of sports, availability of news, but I'm not at all sure that you can find a justifying rationale that says that, even if there are 15 independent television stations in the market and two thirds of them don't do any local programming, you can still sustain localism as the rationale for the Communications Act.

SMITH: I'll make a comment, Ed, on that only because I have some background and because I want to encourage your conversation. I think it is a fact that the FCC has, for most practical purposes, abandoned the concept of localism. They do not now require regular television stations to show X percentages of sports, entertainment, talk shows, like they used to.

ALLEN: They don't do community ascertainments anymore.

SMITH: And they do not require community ascertainment any more. I would think, with the exception of news, which creates its own problem, that there really is no requirement any longer that radio and television stations program original, locally produced programs.

ALLEN: That's true. That's what the Commission says. They don't say it very loud or very publicly because the Congress, on the other hand, still believes that the rationale for the very existence of the Communications Act is the concept of localism. It goes to the scarcity of the spectrum and, therefore, the best use of that spectrum and they say that best use is the provision of local programming. You don't ever look at what's on the channel and determine is it, in fact, local? Or is it just grinding out movies or religious programs? Home Shopping Network owns a whole series of television stations, UHF stations, all over the country. The only thing on them is 24 hour per day selling of products. No news, no sports, no religion, no talk shows, no nothing. That's a local station? Where cable gets caught up in it, and I know the industry wants to ultimately resolve this must‑carry issue, is that you must carry the local television stations. But if the local television station isn't programming locally, I don't see why we have to carry it. It might be there is something on the satellite that is of more value.

I happen to be a big fan of C‑SPAN. I've been deeply involved in C‑SPAN since it started. We have a problem on the carriage of C‑SPAN II. It's a channel capacity problem. We've got good carriage of C‑SPAN I. C‑SPAN II came along several years later; it's the United States Senate. I wish I could say that the coverage was as great as on C‑SPAN I, but it isn't because of the channel capacity problem some of the cable systems have. It's not a cost factor because the cable system gets it free. If he's paid for C‑SPAN I, he gets C‑SPAN II for free. So, if we could throw off the air a local station that does nothing but sell products 24 hours a day, we might be able to find a slot to put C‑SPAN II on so the people could see the United States Senate in action.

SMITH: I want to come back to C‑SPAN, Ed. Your discussion is suggesting a line of questions that I think are appropriate right now.

ALLEN: Let me say one thing, Strat. I am not advocating this concept of dropping all the local signals, say "put up an antenna" and delivering only satellite cable services. I'm not advocating that. That would rattle too many cages, including public policy questions in the Congress. I'm not prepared to take on that battle. However, the longer the broadcasters try to abuse us, the closer we're getting to that kind of a concept, I think.

SMITH: In pursuing that line of questioning, I certainly don't want this transcript to suggest that you were. Your remark about turning the programming into Swiss cheese with so many holes in the channels that it's not worth carrying them anymore seems worth following up. The fact that the local stations are really not local stations anymore and, at the same time, being required to support the idea that exclusive rights need to be recognized, it does begin to suggest that perhaps cable television may be forced to become a medium wholly independent of the broadcast industry. That's an implication of the trend in the events and, if you will recall, I'd asked you the question if you thought the industry could survive that way.

ALLEN: I ducked and weaved, I guess.

SMITH: You were a little ambivalent but you didn't ignore the question. There's another aspect of this. Is there not a cable system, I think it's on Long Island, that's decided if this syndicated exclusivity is the way to go, it's going to go out there and buy the programs itself and program a local channel just as if it were a television station?

ALLEN: Yes, that's an ATC system in, I think, Rochester, New York.

SMITH: Well, I missed with the Long Island then.

ALLEN: They had a local origination operation as a lot of cable systems do. They decided that, in essence, they were going to turn that operation into a television station, by going out and buying the same kind of programming that a television station can buy. I think, in every instance, the programming that they bought was first offered to the local television broadcaster and the local broadcaster turned it down. He wouldn't pay the necessary fees. Now the broadcaster is livid because, having turned it down, the cable system came in behind him and said, "I'll pay the fees, I want to program this." They are now out selling advertising on what is a significant piece of programming. It's not just local origination talking heads anymore, it is syndicated programming. Half‑hour and one‑hour programs, off‑network. While the broadcasters, particularly the independent broadcasters, as evidenced by INTV, the in trade association, are absolutely livid about this. The local independent station that turned down the programming doesn't think this is a competitive threat to it. The FCC, in the person of Chairman Al Sykes, says this is exactly what we think the cable industry should be doing. It should be providing more diversity of better programming. That's exactly what they are doing. It's a question of whose competitive ox gets gored, I guess.

SMITH: Is there any reason in your mind why that system in Rochester shouldn't go out and bid against the local station for available syndicated program, rather than waiting?

ALLEN: I give them absolutely every right to enter the market and compete head to head for local programming. That's what the cable networks are doing.

There is some concern about the shifting of sports from broadcast TV to cable TV. That's another straw man that's been set up. Because, even with the sports programming that is now available on cable, exclusively, that's an add‑on to the broadcast sports. And the broadcast sports are at an all time high. It has not taken anything away from broadcast sports. It has just added on and given the sports fan even more programming. In those instances, cable goes out and goes head to head with the networks and they may or may not get the programming. There are all kinds of rights, the National Football League rights, for example. ESPN has a small package of games that they carry at 5:00 on Sunday nights. Those are new games, they are not taking games away from the networks. The same thing is going to be true of the Olympic rights. The broadcast networks pay buckets of money for these but then they lay off some of the costs to the cable industry for the more secondary sports.

At some point, maybe we'll be able to bid on our own for these rights. I don't think the cable system, in the case of Rochester, has any obligation at all to wait until it's been offered to someone and turned down before they step up to the plate and say, "I'll show it." I think they should be able to go right in, in the first instance and, of course, the syndicators, the owners of the programs, would love that. It's another player, another competitor in the market. Whether it's a good business deal or not is another thing. I don't know. With the limited coverage that a cable system local origination signal has, compared to the multi‑county coverage a broadcast signal has, I don't know whether it's a good advertising deal or not.

SMITH: Concerning these various developments, would you think that the broadcast industry may be in the process of digging its own grave?

ALLEN: To a degree, I would. While we have tried to caution our brethren in the broadcast industry, they tend not to listen. We've tried to tell them that, if Syndex goes through, a lot of them are going to be chopped off of cable systems. They won't believe it until it happens. We've tried to tell them, in the case of retransmission consent, that they don't have the legal right to grant this consent. They don't understand that. The audience is diminishing every year. The network audience is being picked up by independent broadcasters and by cable. At one time, the three networks could easily account for 90% of all the viewing in prime time. Maybe kind of split 30‑30‑30. Now, in cable homes that have pay services available to them, the network share is in the 50‑60% range. That's a dramatic loss.

SMITH: I think it's at 60, but it continues down every year.

ALLEN: You can wish that the good old days were back, but they aren't coming back. It behooves the broadcaster to try to figure out some answers other than what he's doing right now. I think the independents are on the right track. They're plowing money into programming and doing a better job of programming, even with the proliferation of independents, a lot more of them now than there have ever been. They are trying to counter program, be creative in their programming, buy better programming. Certainly the cable networks are doing the same thing. Every once in a while, you hit a remarkable idea in cable. One of them was Home Shopping Network, for example. I don't know how long that phenomena is going to continue with the number that exist, but I think there is a significant number of people who prefer to do their shopping from home with the telephone rather than going out and fighting the crowds. I think there is a place for that.

Not many people would have said there is a place for a 24 hour documentary channel. One of the most popular channels we have right now is the Discovery Channel. You try to tell some broadcasters, even educational broadcasters (and I say that as a Director of an educational television station), that you could make a success out of a 24 hours a day documentary channel and they'd say you're crazy. But we know it works. I think the broadcasters are hurting themselves by being intransigent. Maybe I should say it this way: I think the broadcasters trade associations, and maybe this is true with cable too, sometimes get out ahead of their membership in terms of rhetoric and they foment problems (maybe to justify their existence) when, out in the field, the problem isn't there. I remember one time, representing the NCTA, I went to a meeting of the Board of Directors of the INTV, independent broadcasters. That was when the issue of channel positioning had first arisen. I went there with the idea of talking about must‑carry. They shifted it to channel positioning. You get two or three red‑hots, as we call them, on that Board, who are livid about the fact that their television stations were moved. In some cases, they've got a legitimate complaint. Any cable operator that moves a television station during a sweep period is doing a real disservice to that television station.

One of the problems is that the cable operator doesn't even know what a sweep period is. If the broadcaster and the cable operator had sat down to lunch over the years and talked to each other, the cable operator would know the damage he could cause by moving the station at that time. At any rate, the average member of that Board of Directors was very nice to me. But, some of the red‑hots and the professional staff were trying to foment a massive argument. That's why I say, sometimes I think the problem is with the trade associations. Maybe that's true of our own industry, too. I don't know.

SMITH: In a recent lecture that Wendell Bailey, the Vice President for Science and Technology of the NCTA delivered at Penn State as the first lecture of the Donald Levenson lecture series that was endowed by a gift from Mr. Levenson's widow, Mr. Bailey responded to a question from the audience that in five years there wouldn't be any more television broadcast stations. Along the same vein, and something that might be taken more seriously but I won't characterize either remark, Al Warren, the publisher of the TV Digest who has been reporting on the cable industry since its very beginning, was also a guest lecturer at Penn State recently, and he quoted an interview that he had with Frank Stanton at the time when Stanton retired as president of CBS. Al said he asked Stanton, "Where do you think things are going?" Al quotes Stanton as saying, "Al, it's all going to be on cable in ten years." We are at the end of the tape again.

End of Tape 4, Side B

SMITH: This is Tape 5, Side A of the oral histories interview with Ed Allen, in progress at the Anaheim Hilton Hotel in Anaheim, California on December 13, 1989. Ed, will you respond or comment with respect the prediction of Frank Stanton of CBS and the comment of Wendell Bailey of the NCTA about the future of television broadcasting?

ALLEN: As a cable operator, I'd like to think they are right, but I don't think they are right. I think television broadcasting will continue to exist. This kind of a concept, that everything will be on cable, is the concept that was advanced in the book, "The Wired Nation". Remember when that came out a few years ago? The thesis behind it really makes some sense. It runs something like this. The electromagnetic spectrum, the radio spectrum, which is used by the broadcasting industry, radio and television, is a finite national resource. And, by the laws of physics, it is fixed. It extends from A to B and you can't create more usable spectrum. So you must make the most and best use of this finite resource, just as much as you would clean air and clean water or gold or oil or any other resource.

Right now there's a feeling that we are wasting a lot of this resource. If you tune across your radio dial and it runs from 550 to 1500 or whatever the numbers are (on the AM dial), depending on where you are in the country, you can get 30, 40, 50 different radio stations. One television station takes up more spectrum space than the entire AM radio dial. It delivers just one picture. Essentially, it is entertainment. There is some information, some education, but, essentially, it is an entertainment use. In the VHF band, you've got 12 of these hunks, each one bigger than the entire radio band. Then when you go to the UHF spectrum, 14 to 83, you've got, I'm not going to try to do the math, but much more in the way of these clunks of space that are being devoted to entertainment, essentially.

Meanwhile, we have other uses for that spectrum. We're shooting rockets to the moon and we need telemetery information coming back. We have a crushing need for two‑way communications, business communications, taxi cab, fire, police, just multiple, multiple uses for this very finite piece of spectrum. The cable industry doesn't use any spectrum. It doesn't have a transmitter. It creates its own spectrum and we have found ways where we can stretch it beyond that which the broadcaster can. So if you were to remove all of the broadcast services from over‑the‑air transmitter/tower transmission and put it on cable, you would release a tremendous amount of this spectrum space for other uses that might be socially more desirable. That's the argument behind transferring everything to cable. Having said this, I don't think, in the real world, it's going to happen. There are big areas of the country, the so‑called white areas, where cable does not have any service.

That was the genesis years ago of the 50,000 watt radio station, to fill in the white areas with a night time signal so that people would have a broadcast service available to them. Nationally, now, about 40% of the people who can get cable don't use cable, maybe it's an economic reason. There has to be some way of supplying television programming to the people who can't afford cable, to people who live in the rural areas. More particularly, even with the tremendously expensive costs of television advertising, it probably still is the best deliverer of a mass audience that exists. It's better than newspapers, much larger than radio. Better than magazines.

Cable networks can't come close to what a national broadcast network can deliver. So I think there is always going to be a place for commercial broadcasting, educational broadcasting. It may exist in a different form. It may have to modify what it does to allow for the competitive realities of what is out there. I don't see television going away and everything winding up on cable in my lifetime.

SMITH: I think perhaps we can leave that subject now. I would like to go back to another subject that you mentioned, that you indicated a great deal of interest in, and that is C‑SPAN.

ALLEN: You get me started on C‑SPAN and I can talk for days on that.

SMITH: Well, we only have one day, but I'd like you to tell us about your own background in C‑SPAN, and its development. What part did you play in it?

ALLEN: C‑SPAN began in 1979 so it's celebrating its 10th anniversary this year. The concept was Brian Lamb's. He had been a Washington editor/reporter for Cablevision Magazine. The publisher of Cablevision, once Brian came up with this idea, told him to go try it to see if he could sell it. They kept him on the payroll while he developed this concept and talked to the cable television industry. He managed to get, I don't know, 10, 15, 20 cable operators, and I was one of them, to come up with some seed money and they pulled together $400,000 to get it launched. When C‑SPAN started I think it had three employees. It's only programming at that time was the floor programming from the House of Representatives.

We have to go back to how did that start. The House of Representatives, at one time, had, as an internal communication system, only audio from the House floor or the committee chambers or whatever. They call them squawk boxes. But if the Representative sitting in his office wanted to know what was happening on the floor, he could only hear it. He couldn't see it. The House decided that they were going to come in to the modern era by installing cameras and wiring the House of Representatives so that the members of the House could watch the floor proceedings in their own office. There were big discussions ‑ when C‑SPAN was first getting started, C‑SPAN's concept was to take the House feed, as we call it, and run it up to a satellite and then deliver it out to the outside world through cable systems ‑ over who should control those cameras. Should they be employees of the House of Representatives or should they be the private entrepreneurs like C‑SPAN, or the networks on a rotating basis? The House decided they wanted to control the cameras.

In a way, I don't blame them. I don't know if it's hurt the coverage or not, but that way you don't see a guy sleeping at his desk or reading the newspaper during the debate, or whatever. It puts the House forward in the best possible light but you're still getting the debate. That's the important thing. At that time then, when C‑SPAN began, if the House of Representatives was in session and televising, C‑SPAN was on the air. But if they weren't, the screen was blank. The only programming we had was the House of Representatives. As we began to grow and as the cable industry embraced the concept and as the cable industry became the supporter of the concept through subscriber fees, we could get more cameras, get more people, we could get more remote crews organized to go out and do committee hearings. We worked out a tie‑in with the Close Up Foundation which is a group which brings high school students to Washington to watch their government in action. We began televising the speeches from the National Press Club. We wound up where the House of Representatives first‑run, live programming is now only about 10% of the total C‑SPAN programming. I think we have something like five different remote crews that can be sent out every day so we can cover five different committee sessions, everyday.

We operate now as a 24 hour network, where before, and as I used to refer to daytime radio stations as the stations that run down at sundown, if we didn't have the House feed, we didn't have any programming.

There was lots of debate in the House, on whether C‑SPAN should be allowed to carry this programming or should it be only an internal service of the House of Representatives for the Representatives use in their offices. The same old arguments were presented that surface so many times. The Congressman will showboat. They've got big egos. Speeches will get longer. There will be more speeches. They will be more concerned about wearing the red power necktie than about what they are saying. None of this materialized, but they were all reasons put forth as to why we should not exist as the visitor's gallery of the House of Representatives to the entire country through the cable system.

I think, in some cases, members of the Congress were uncomfortable with television. They didn't know how to present themselves on television. They thought they would come across poorly on television and it might affect their chances of being re‑elected or something like that. Again, none of that has happened. When we spent several years trying to get into the Senate, the same arguments were raised again about the long speeches and the frequent speeches and the playing to the audience and abusing the process to get themselves elected, and none of that has happened. It could have been predicted based on our House experience. The rules are all different in the Senate. In the House of Representatives, if you want to address the House, you walk down into what is known as the Well, that's the area right at the bottom of all the seats, you turn around and you face your colleagues. You are up front talking to them and you're under a time constraint established by the Chair.

In the Senate, the Senators speak from their desks and they kind of wander around the room when they are talking. There are no time constraints. A filibuster can go on for days if they want it to. So the Senators were really very concerned about how television might change the "traditions" of the Senate.

I remember testifying before Senator Mathias when we were trying to get the right to televise the Senate and he was expressing these concerns about the Senate traditions. I had to concede the tradition did exist. They call it the world's greatest deliberative body or the world's most exclusive club. However, I cautioned the Senator not to confuse tradition with habit because in a lot of cases they do it that way just because that's the way they've always done it, without regard as to whether it's the best way to do it. Since we've begun televising the Senate, there have been some changes. They do speak using a microphone which they hang on the breast pocket of their jacket. They can only wander around as far as their microphone cord allows them to wander. They have made some cosmetic changes to the Senate.

Some of the Senators who were in the back of the room didn't like the mustard yellow wall behind them because they didn't think it showed them off to the best advantage. The cameras in the Senate are mounted in such a way that they shoot down. They're underneath the balcony and they shoot down on the Senators. Those who have bald heads don't much care for that kind of a camera angle. But that's been a success too.

My own involvement has been not only being one of the original founders, along with a lot of other people, but then having been a Director every year for the last ten years. And on the Executive Committee every year, for I suppose, eight or nine years. I'm not sure I was on the Executive Committee in the first year it was formed. The Executive Committee is that body which runs the affairs of the company, the network, in between the meetings of the Board, just as it does at the NCTA. I was also privileged to be the Chairman of C‑SPAN, again for two years. I seem to do things in two year cycles.

SMITH: What years were those?

ALLEN: That was '82‑'84. It was the two years immediately preceding when I became the NCTA Chairman. I was the third C‑SPAN Chairman. I have two more years to serve on the C‑SPAN Board, as I have two years left on the NCTA Board. I think, again, it's time (at age 65, 66, 67) to step aside and let some of the younger executives take these positions. I plan to do that. I will finish out these two terms, but then I do plan to step aside and let some of the new blood play in the same playpen I've been playing in for these many years. I'm so proud of C‑SPAN, Strat. Broadcasting Magazine once described C‑SPAN as the "crown jewel of the cable television industry." It is that. It was conceived by the industry, the godfather being Brian Lamb. It is funded by the cable industry, it is carried by the cable industry into 30 million homes for which the industry pays C‑SPAN for the privilege. It is the world's greatest on‑going civics lesson that has ever happened. Other countries are just beginning now to catch up with what we're doing.

The Canadian Parliament has an excellent system of televising its proceedings, as does Australia. Russia just very recently started televising the Politbureau meetings. They did one meeting and then changed their mind, but I think they might be back televising them now under the glasnost concept.

The House of Lords in London has had sporadic television for several years. After much, much debate, the House of Commons just began televising their proceedings in November, just last month. And C‑SPAN is carrying that. They're picking it up off a satellite and delivering it to the cable systems in the United States. Compared to the United States, there is such a paucity of television in England with only four television stations in the whole country; BBC 1, BBC 2, and two commercial stations. They cannot devote the time to showing the proceedings of the House of Commons that C‑SPAN can in this country. No television station in this country would be willing to spend 24 hours televising the United States Congress. It takes a special network to do it. As a result, it is very possible that the C‑SPAN viewers in the United States could see more of the English House of Commons than the people in England because we have the vehicle with which to carry it.

There are times when, very frankly, some of the C‑SPAN programming can be boring! Like watching paint dry. I have also seen some of the highest drama that is possible to see on C‑SPAN. I remember one instance and I'm sure as a Washingtonian you'll remember it. There were two members of the House of Representatives who were censured by the House for their sexual activities involving boys and other men. They got caught in a restroom in a park or something like that. These men were forced to walk down into the Well of the House and stand with their heads bowed facing the Speaker, so you only saw them from the back, while the Speaker laid this formal censure on them. That's drama when you see something like that happen.

One of the interesting things that's going to come out of our televising the House of Commons is the procedure they have where the Prime Minister, Margaret Thatcher, has to come to the House of Commons twice a week, on Tuesdays and Thursdays, and, for 15 minutes each time, subject herself to questions asked by the members of the House of Commons. The closest equivalent to that would be if President Bush were required to show up in the House of Representatives so that these Congressmen could fire ad lib questions at him. Not press conferences, these are elected Congressmen that would be asking the questions. It's interesting because they have a long history in the House of Commons of very raucous question and answer periods. They yell and they holler and they say, "Sit down, you're crazy, you're an old bag, shut up," you know. That kind of thing. We're just beginning to get an exposure to the kind of give and take that takes place in the Mother of Parliaments, the House of Commons. It's going to be an interesting experience for the cable industry.

C‑SPAN has a very big tie in, with the educational process. We have a whole program called "C‑SPAN in the Classroom." And I'm sure you've read about the Cable Alliance for Education, which is a consortium of major cable operators and major programmers who have programming that lends itself to educational use in the classroom and certainly C‑SPAN is a big piece of that.

SMITH: At The Cable Center, we hope to one day be allowed to participate in it.

ALLEN: That would be great. That is one of the better public relations concepts, the Alliance for Education, that the cable industry has come up with. The only one that exceeds it is C‑SPAN. It's had a ten year head start. It's an amazing organization in that the average age of the employees has got to be in the very early 30's, maybe late 20's. There is only one man that is over 50; Brian Lamb is in his 40's. All of his senior lieutenants, his vice‑presidents are in their 30's. It's a young crew. But it's a dedicated crew. They could make much more money somewhere else, but they like what they are doing. They feel they are contributing something by doing what they are doing.

One of the big things, the reason that it is a success, I think, is that the C‑SPAN air personalities who are on the air on the telephone call‑in shows ‑ they do three one hour live call in shows a day, five days a week never identify themselves. There will be a crawl at the bottom that will give their name, but they never say, "Hi, I'm so and so from C‑SPAN." As they are doing the interviews, they never inject their own opinion. They will ask questions to draw out further answers from the person being interviewed but they try to get the caller to come in to do the questioning, rather than them doing the questioning.

I think one thing that people like is that whether it be the House of Representatives or a committee hearing or, of all things, the national political conventions, we cover gavel to gavel. It's always gavel to gavel, start to finish coverage with never an intrusion by a C‑SPAN staffer to tell you what you're watching. I think people tend to doubt the network anchors who have this instant analysis after a presidential speech. Very often you're dealing with what I call a $25 haircut and a five cent mind. We don't do that at C‑SPAN. We do not do interpretive analysis. We allow the viewer to do his own analysis. It's a cinema verite approach. This is what's happening. Just watch it. That's what's made it the success it is.

SMITH: I mentioned earlier in our interview today, Ed, the appearance of Brian Lamb at Penn State talking to some communication school students. I had an opportunity, driving him to the airport, to discuss C‑SPAN just a little bit with him, and he mentioned something to me that quite surprised me at the time. That was this. On that day, before he had flown up to State College, he had conducted an hour‑long talk show in the early morning and had received three calls from West Germany which surprised and impressed me. I would like to ask you to comment upon what you might see as the potential for the combination cable/satellite industry impact on international relations.

ALLEN: It's not as big a question as you might think, because it's happening right now.

End of Tape 5, Side A

SMITH: This is Side B, of Tape 5 of the oral history interview with Ed Allen at the Anaheim Hilton on December 13, 1989. Ed, I asked you to comment on the possible international implications of the combination of satellite/cable transmission based somewhat on an experience in C‑SPAN.

ALLEN: That global process has started already and, again, Brian Lamb is the big global thinker. He was the one who conceived of this concept. Last year, I think in '88, it might have been in '89, was the first time that C‑SPAN went to London and they spent a week in London. They talked to what would be the equivalent of our Secretary of State. He showed up on C‑SPAN in London. It's almost an unheard of opportunity for him to get his thinking across outside of the British Isles. The mechanics exist for C‑SPAN to originate live programming from London, put it on a satellite and deliver it into the United States. Then to homes by cable system. That's when they discovered, for the first time, that there are a lot of satellite viewers in England and Western Europe that can see the programming. Not only that which originates from within Europe but also the American programming on our satellites can be relayed to Europe via another satellite and picked up in the European countries. So we have had telephone call‑in shows where we have to dedicate a line to foreign telephone calls.

SMITH: By we, you mean...

ALLEN: C‑SPAN, yes. We would exclude the residents of the United States from using that line because we are trying to get as much opinion as we can from all over. That's an interesting thing, by the way. The telephone calls that come into C‑SPAN during the shows we do, are paid for, every one of them, by the caller. We don't use 800 numbers so the caller has to be sufficiently interested to spend his own nickel to call in and talk to the C‑SPAN audience. As American cable network programming expands, first in Europe and then in Eastern Europe, and then in Russia, there is going to be this opportunity for two way exchange, assuming the telephone service is good enough, and sometimes in Russia and in some of the Eastern European countries it isn't that good. But a two way exchange of at least audio doesn't have to be very exotic. The two way exchange of video information is a very expensive operation, but it isn't that expensive to have a telephone call from Gdansk coming into the United States.

In Europe, right now, CNN has a headquarters in London. Bob Ross, who used to be with the NCTA, heads it up. Bill Roed heads up MTV Europe, also headquartered in London. One thing MTV Europe is doing is putting American rock music, of all places, into the Eastern European countries ‑ communist controlled countries ‑ where there's a big demand for rock music for some reason. CNN has just announced that they are now authorized to deliver the CNN signal into Moscow into the hotels and the next step is to deliver it into the homes of the Muscovites. So we're opening up a window of American news and public affairs programming going out in that direction. There is no reason why, with the new freedoms that are developing, somebody can't pick up the telephone and call back and talk to the C‑SPAN interviewers in Washington. It has happened, as Brian demonstrated when he talked to you about the number of telephone calls he received from West Germany. It's a global opportunity, limited only by your own imagination, as to what we can do with this.

SMITH: Can we expect over the years, in your opinion, Ed, to see it operate in the reverse? That is, the programs originating in Russia, other countries, or anyplace in the world, then being beamed by satellite to the United States, distributed on cable systems in this country and thus opening the door to talk programs in both directions?

ALLEN: Sure. I believe that absolutely. It depends on the type of programming as to whether for example, it would be appropriate for C‑SPAN, that's a public affairs network. But the Politbureau, absolutely. Right now, as I say, we're carrying the House of Lords, the House of Commons. Next year they'll be doing the French Chamber of Deputies. We're already doing the Canadian Parliament. So this material is up there, not on American satellites but on other satellites, like the Canadian satellite called ANIK. But there is no reason why live programming of an entertainment nature can't be picked up off of these satellites and presented simultaneously in the United States. We have a lot of European programming that comes to us by tape. The Italian network, RAI, does a lot of programming here. It's headquarters are in New York, but you see it all by tape.

You know, maybe someday we'll have an International Channel and people can pick and choose the programs of that channel from a dozen different satellites. The same satellite that feeds Japan does not feed London, you know. So you've got to have a way to relay this programming from one bird to the next to get into this country. That's certainly possible. The world is shrinking. Cable is a big piece of how it's shrinking.

One other thing, cable is just beginning to start in Western Europe and, in a lot of cases, there's a lot of government involvement in it. Post Office Department or whatever. I read the other day that the Polish government granted a franchise for all of Poland to one entity. That's a big franchise, the whole country at one time. As cable begins to proliferate in the European countries, you don't have to depend on the guy having a backyard satellite dish to pick this up. Then entrepreneurs will rise to the fore as they did in this country to become the networks that can deliver this kind of programming to cable systems. They don't have to depend on the satellite dish. Then it will be the cable subscriber who's picking up his telephone to call back, rather than the dish viewer who is picking up the telephone. It's enough to boggle the mind, the opportunities that are out there.

SMITH: I had shut the tape off a moment or two to have a private discussion with you and in the course of that discussion you mentioned other activities that you have been involved in in your career as a cable television executive. I think they would be quite appropriate for you to review. Would you like to discuss some of those matters you were just mentioning?

ALLEN: Well, the cable industry has been good to me and to most other people in the industry. So I think we have an obligation to try to give back something of ourselves to the industry that has been so good to us. That was why I would take on two years of the National Chairmanship and travel around the country and not see my family for periods because it's a necessary giveback. I've been involved in some other things where, while they're allied to the cable industry, they are not business oriented and designed to make a dollar for the person participating in it. I'm thinking of two things in particular. The cable industry for the last four years, maybe five years, has become a national sponsor of the Jerry Lewis Labor Day Telethon. Jerry's Kids. This is the Muscular Dystrophy Telethon and, under the leadership of Sandy Freeman of Comcast, we have persuaded nearly all of the cable operators to participate in the Jerry Lewis Telethon with such things as offering a free installation of the cable service if you make a donation to the Jerry Lewis Telethon. We have raised millions of dollars (and it isn't generally known) in just five years.

I think last year, by itself, it was something like two million dollars that we presented to the Jerry Lewis Telethon. It makes me wonder just how much more we could do if the entire cable industry were involved in this effort. It's not a thing that has a national sanction from the NCTA or from CATA. But this Cable/Muscular Dystrophy Advisory Board (which I'm part of) has just, one on one, tried to persuade the cable operators that they should be involved in this every Labor Day. Where they have been involved, it's selfishly been a very good promotional tool for the cable industry to get new subscribers. The emotional appeal of helping Jerry's Kids sometimes reaches people that a conventional 99 cent Day Sale or something else doesn't reach.

We have made such a significant contribution in just a short period of time that we are just as much a major national sponsor as is 7‑11 Stores or the postal clerks who have been involved for so many years. We could do a lot more than we are doing and, I think, make a significant social contribution by tying into the muscular dystrophy effort.

Another area I've been involved in since the beginning and I can't tell you with any certainty when that started is the Walter Kaitz Foundation. We spent some time talking about Walter and his family. Spencer Kaitz, his son, and his sisters and Dorothea Kaitz have set up the Walter Kaitz Foundation in California although it is now national in scope. The purpose of it is to provide executive training in the cable industry for minorities. Walter had a very deep interest in trying to assist minorities to find a place in the cable television industry. This is not entry level training that these people get. We've had people who are law school graduates.

SMITH: We had to interrupt the recording for a minute. You were beginning to discuss the Walter Kaitz Foundation and its purpose and objectives. If you would, I'd like you to continue with that.

ALLEN: The Walter Kaitz Foundation is not designed for entry level training of these minorities. We've had people who were law school graduates who decided to make a career shift. We've had people who already have master's degrees, but want to move into the cable industry from whatever industry they are in right now. It's a fellowship program and the screening process is very elaborate. They put out calls for applicants. They probably get two or three hundred applicants. In terms of their ability to place them with cable companies, that means that they've got to screen them down to 15 or 20. They go through a screening process very similar to what the White House does for the White House Fellows, or what the Coro Foundation does for the Coro Fellows. These people are known as Fellows. They are Fellows of the Walter Kaitz Foundation. They are placed out with individual cable companies or cable networks because some of them have an interest in the software side of our business.

They spend nine or ten months with that sponsoring company. That company is under no obligation to continue to employ them or to fund them after these ten months. But what typically happens is if the guy likes the cable industry or the woman likes the cable industry, and wants to stay in it, very possibly they're going to stay with their sponsor. The sponsor will find a place for them, either in the corporate headquarters or out at the system level or something. These are some very brilliant people.

When I was at Western Communications, we took on one of the Walter Kaitz Fellows and she wound up as a marketing director in one of our cable television systems after ten months or so of training, as a kind of a cub intern type. But it's executive training, it's not entry level at all.

SMITH: What did you say your formal or official relationship is with the Kaitz Foundation?

ALLEN: I'm a Trustee. They have, instead of a Board of Directors, a Board of Trustees and I'm one of the originals and still am a member of the Board of Trustees of the Walter Kaitz Foundation.

SMITH: You were telling me, while the tape was shut off, that you were an unexpected and reluctant speaker at the first Foundation dinner. Would you like to relate that experience for the record?

ALLEN: Let me see if I could repeat it, Strat. The principal fund raising activity that the Walter Kaitz Foundation has each year is a black tie dinner held in New York City. That's why I say this program is now national, it's no longer confined to California. I think usually at the Waldorf. And it has become a major cable industry event of the year in New York. In fact, in this last year, the week of the Walter Kaitz Dinner, because there were going to be so many cable executives in town for the dinner, became kind of a Cable Week in New York City. The NCTA held one of its Board meetings in New York City so that people could attend both the Kaitz Dinner and the NCTA Board meeting. The other allied cable groups also held meetings in conjunction with the Kaitz Dinner in New York. So, it's a major, major affair. I think they've had the dinners for five, six, seven years, something like that. They have grown monstrously.

The last dinner they had, I know over a thousand people attended. It might have been as many as 1,500. I think tickets are like $250 each. So the proceeds after they pay for the dinner ‑ and it's a very nice dinner ‑ go to fund the Foundation. I think they raised about a half a million dollars from the last dinner.

I was recounting the time that I became inadvertently the speaker at the first Walter Kaitz Dinner where they didn't have 1,000 or 500 or 400. I think they might have had 200 people or something like that there. The scheduled speaker was to be Ray Joslin of the Hearst organization. And I was in Europe, so I hadn't planned to attend the meeting at all. Just before the dinner, Ray was involved in a very serious accident. As I remember, he was riding a sit down tractor type power mower and I think it tipped over backwards on him or something. But it badly damaged one leg. In fact, he was in therapy and on crutches for several years after that happened. Happily, he's doing well now. But Ray knew that he could not give the featured speech that night and somehow he tracked me down at my hotel in Europe. I don't remember the country I was in, but I remember talking to him from a pay phone in the lobby of this hotel and every time I tried to give him a reason why I couldn't do this ‑ because the dinner was going to be on the night that I arrived back on a trans‑Atlantic airplane flight from Europe ‑ he had an answer. I'd try to say, "Ray, I'm going to have a ten hour flight under my belt and lots of jet lag and I can't go through the hassle at the airport and get to the Waldorf and give a speech." He said, "Yes you can. We'll have a limousine waiting for you at the airport so you don't have to go through a lot of hassle." I said, "Ray, it's a black tie dinner and I don't have a tuxedo with me." He said, "No problem, we'll rent a tuxedo and we'll have it in your hotel room." I said, "I don't have a hotel room and I know it is sold out." He said, "We can always find you a hotel room. We'll talk to the management."

Ultimately, I arrived at Kennedy. There was a limousine there. They took me directly to the Waldorf. I went up to the room. There's a tuxedo laid out on the bed. I got into the tuxedo, turned right around and went downstairs because everybody had already gathered and with no opportunity for any kind of preparation I had to get up and give about a thirty minute speech.

This was the very first Walter Kaitz Dinner and it was fortunate that I knew the Kaitz family as well as I did, Walter, his wife and all the children. I spent the time talking about the Kaitz family and how appropriate it was that a Foundation be created to honor Walter Kaitz on an issue that was of such importance to Walter, creating the opportunity for minorities to involve themselves in executive positions in the cable industry. But that was a long day I'll tell you, after a trans‑Atlantic flight and then having to stay up until twelve or 1:00 in the morning giving a speech. Happily, they have had better speech talent since then.

SMITH: I'm not sure that can be, Ed. We've had a long day, too, and I've glanced over my notes a few minutes ago and the transcribers of this tape are going to be happy that I've run out of questions. Do you have any other thoughts of activities involving your personal career, bearing in mind that in another year here or two, when you decide that you are honest to gosh going to retire, I'm going to be back and make you comment on what you have predicted here. Is there something more that might wind this up?

ALLEN: Let me throw one other thing out. This goes to maybe someday you might be back to see how good my crystal ball is today in relation to something that might happen five years from now. Let me comment a little bit on the phenomenon of the upcoming HDTV. That stands for high definition television, which is coming down the pike slowly but inexorably. I think I have kind of a different position than a lot of my colleagues in the industry do. It'll be interesting to see if, five to ten years from now ‑ this will be the second half of the 1990's ‑ what I say comes true, or what some of the other people in the industry say comes true. You have to go back to when the present American television system was devised which must have been 40 years ago.

SMITH: It predated cable, or course, and cable is 41 years old. It was before World War II, a few stations were operating. You could take it back into the mid‑30's.

ALLEN: I remember seeing something at the Chicago World's Fair, like in '38. Anyway, the American television industry developed a system called NTSC. It is the system of technical standards by which American television is presented to the American public. There are other systems than that. For example, in Europe they have the PAL system. NTSC was a compromise system from the very beginning, but it was color compatible. As we moved into color, we could deliver color programming to people who had only black and white television sets. They would see it in black and white but it was compatible, at any rate. In terms of picture clarity, it isn't the world's best television system. This goes to the number of lines (as we call it) that appear on the television screen. The more lines, the greater the definition. The European PAL system has more lines and, therefore, a better picture than we have. The Japanese, about 20 years ago, decided, "Ok, we have taken the American television market away from the United States." Literally every television set used in the United States, except for some Zeniths, is now manufactured off shore in China, Japan, Taiwan. All are manufactured to the NTSC standard so they said the next opportunity for them to create business in the United States is to develop a new television set that makes the NTSC set obsolete. It's got to be a better set. But it means, then, that every television set in the United States has to be replaced. So they began working on the concept of HDTV or High Definition Television.

The Japanese HDTV system, as I have seen it demonstrated, delivers pictures of a quality like 35 mm film would be in a motion picture theater. It is certainly of a better quality than NTSC. The projections are that high definition television a la the Japanese style, although there are several other styles of high definition television, will begin to appear on the scene in the early 1990's, like 1993, 1994. First will be the high definition VCR machines. Then there will be high definition tapes which means you will be able to play a tape with better definition than what you can see off your television screen, off of a broadcast or off of a cable. At some point down the line, as a transitional thing, and as people's television sets wear out, they are going to want to replace those sets with the new high definition sets. There is also thinking in Washington that if this is going to happen, this is maybe the one remaining opportunity for the American electronics industry, which gave away its television set manufacturing capability years ago, to get back into it and create new jobs in a new technology by developing high definition television in this country.

SMITH: It's time.

End of Tape 5, Side B

SMITH: This is Tape 6, Side A of the oral history of Ed Allen being recorded at the Anaheim Hilton on December 13, 1989. Ed, you were commenting on the matter of high definition television and some thoughts you have with respect to its development.

ALLEN: As I was saying, there is some thinking, particularly in Washington, that this is an opportunity to rejuvenate the American electronics industry by having it get itself involved in building, selling and servicing these high definition television sets. I have a problem with the concept of this ultra‑high definition television set because I don't think enough studies have been done as to whether the consumer wants it. I remember when we talked about the needs and interests of the cable television industry, I'm not sure enough study has been done to determine whether the consumer needs, or is even interested in, the concept of high definition television. The first reaction would be, why wouldn't they be? If it's a better picture, why wouldn't they want to watch it. Well, the initial television sets are going to be in the range of $4,000.

SMITH: That's one reason.

ALLEN: They will certainly come down in price, there's no doubt about it. The Japanese version of the high definition television set is not compatible with the NTSC television sets that exist in every home in the United States. So we're going to have to keep an NTSC system going while people make up their mind as to whether, in fact, they want to have high definition television. You're going to have two parallel systems. What are the television stations going to do? Are they going to program two different signals, one NTSC and one in high definition? As I have seen the demonstrations of high definition television, you can see a difference in the picture quality when you get to very large television sets. By that I mean forty inches or larger. When the sets are smaller ‑ the set that's in the typical home ‑ there really isn't that much of a difference between the NTSC picture and the high definition picture. It's only when this picture gets expanded that you begin to see the flaws in the NTSC picture that are not present in the high definition picture.

Most housewives that I know don't want a six foot television set sitting on the floor in their living room. So the next step that comes along then is the flat wall television set but that's years down the pike. If you could have a television set of literally any size you want with all of the electronics in the frame that goes around the tube, which might be only four inches thick, and hang it on the wall, that problem will be resolved. That's years away from development. Even then, if you have a six foot or eight foot screen hanging on your wall, a lot of people are going to find that they can't back away enough to take it all in.

There's an alternative to this high definition television that is so inexpensive that I think it makes more sense. We can do things to the NTSC picture that we're not doing right now to make it a better picture. This is called ATV. Advanced TV. I just have a feeling that the consumer, who has not been asked, might very well say he likes the idea of an ATV set. It's compatible with everything he's doing now, there are no changes in the programming required, but it will be a better picture than he is getting right now. He will wait until his present television set wears out and then get an ATV set. But I don't believe he needs this high definition set that costs so much and I think we may find that the American consumer is going to be perfectly happy with an improved television picture over what he gets right now. We aren't going to have to make this quantum leap to the Japanese version of high definition television. I don't see it as being the savior of the American electronics industry. I'm not sure we should even try.

It's like when they invented the car. Should somebody try to go out and save the buggy whip manufacturers because they are hurting? I think maybe the American techno‑industry could better concentrate its efforts on the supercollider's or the smart computer or something like that rather than trying to go head to head with the offshore manufacturers of television sets. I don't see HDTV as taking off and then being the be all and the end all of the future television reception in this country, if we can develop an improved and advanced NTSC system and I think we can. End of speech about HDTV.

SMITH: When you made your comment about the large screen hanging on the wall and the housewife not being able to back away far enough, I wondered if you were going to suggest as an alternative to put the screen outdoors, like a drive‑in theater.

ALLEN: Or have the housewife stand outdoors.

SMITH: I have been reading about the same thing you were talking about. Is it the Foroudja system that some manufacturer and some MSOs are backing?

ALLEN: Yes, it's a pet of TCI. John Sie, at TCI, is pushing the Foroudja system. I think they may be here in Anaheim demonstrating it. One thing I forgot to mention. This again is something we should keep in mind about high definition. I'm trying to do this without being technical. The NTSC signal, the ordinary broadcast signal takes up a hunk of the spectrum we talk about which is six megahertz wide. High definition television cannot, today, be compressed down into six megahertz. It either requires nine megahertz or perhaps as much as 12 megahertz. What this really means then is that it takes a channel and a half or two channels in order to deliver this picture. That's why it is incompatible with the America broadcasting system. They can't do more than deliver a six megahertz signal. The broadcasters don't have the capacity to deliver a channel and a half or two channels. That's why there is a place, perhaps, for the cable industry to be the primary deliverer of HDTV signals if it ever comes to pass. We create our own spectrum, so we can create nine consecutive megahertz of space or 12 megahertz of space and deliver an HDTV signal that the broadcaster can't deliver.

I don't know whether that will happen or not. But, technically, we have a significant advantage over the broadcaster in our ability to deliver this signal. I just don't know whether there's going to the consumer demand for it and, to my mind, there has not been enough consumer testing to know. For example, the HDTV picture has a different aspect ratio, we call it. The conventional television picture is almost square. The HDTV picture is wider than it is high. It is like a movie theater screen, the proportions are the same as what you are used to seeing in a movie theater. That lends itself to sports, for example, that play left to right, like football. It doesn't do anything for a tennis match where you are looking at it on end, or a baseball game. Basketball and football that are left to right type sports, fine. It doesn't do anything for horse racing. While they are running you are trained just on the horses up in front. You don't have to see what's happening all over the race track, as you do in the case of football.

I just don't know whether there is going to be the demand for it, but it may very well be that the cable industry has a leg up in terms of its ability to deliver true high definition television that the broadcast industry of the United States doesn't have. Not every broadcast station, by any means, even if they were to figure out a way to do it, would want to involve itself in all of the costs associated with high definition television. Certain services like the movie services, Home Box Office, are big pushers of HDTV. Sure, they show movies, first run movies or close to first run movies. They want to present those with 35 mm clarity if they can. But the local broadcaster who is doing the 11:00 p.m. news with his anchor person and sports person and weather person, really doesn't need high definition television to put on a news broadcast.

I think you are going to find that even on a cable system, if we have to carry it, there may be six or eight high definition services that we carry. The rest of them will be ordinary broadcast services because the services just would not spend the money to go to a high definition format.

SMITH: A lot of unanswered questions out there.

ALLEN: Strat, you've seen the changes that have come along in the years that you have been in the business. I would confidently predict that in the next ten years there is going to be more change in the cable industry than in the last forty years. We aren't going to be able to sit here tonight and speculate on what those changes will be. We just know with certainty that they are out there and the industry in the year 2000 is going to look a lot different than it does in the year 1990.

SMITH: There's a big difference between the strip amplifier handling one channel, which dates back to the late 1940's, and the maximum band width now. What is it?

ALLEN: They're going to be showing equipment here (at the Western Show) that will deliver 100 channels. This is the first year and I think it may still be prototype but it's here. We cannot tell the people, adequately, what's on 30 channels. There is no good way. TV Guide doesn't do it. Our electronic program services don't do it. The Sunday supplement doesn't do it. We're going to turn this nation, once everybody has a remote control device in their hands, into channel flippers and they're going to stop at whatever catches their eye at the moment, because there isn't a good way to tell people what's on 100 channels.

SMITH: It takes you back to the days when it was common to say, "Who needs more than three channels, there are only three networks? All right, let's add an independent, a public broadcast station, so we'll make it five channels. How could anybody use any more?" What was lost sight of is the fact that there were many people who wanted to watch types of programs that weren't available because there weren't any channels to put them on. That accounts for the growth I suppose today, and the enlarged variety of program services that cable has made possible. Can we absorb 100 or 150 channels or should we start adding those channels together and make high definition television channels out of them?

ALLEN: I don't happen to think we need more than 35 channels. I think the 35 channel system is the absolute optimum system in terms of the cable system operators' ability to keep them clean. In terms of providing enough channels so everybody has significant diversity, the next step is the stretch 35, then 42 channels, then 54 channels, then 70 channels, then 100 channels. At some point it becomes ridiculous. People not only don't need, I don't think they want that kind of diversity. The whole concept of narrow casting, as they call it, envisions that if there are ten people out there who want a certain kind of service, if you've got the capacity and they're willing to pay for it, you ought to be able to deliver it to them. Well, we're not a library. We don't have to have every book that's been published to give to the people.

SMITH: Well, do you have any thoughts on other cable related matters, Ed?

ALLEN: I'm about talked out. I have nothing profound.

SMITH: It's been a very pleasant interview and it's almost 5:00 p.m. We started almost exactly at 9:00 a.m. and we didn't stop yet for lunch.

ALLEN: We skipped lunch?

SMITH: So it's been quite a day. I want to thank you very much, Ed. You've been most cooperative and you've given me, personally, an opportunity to explore what it would be like if we can carry out this thought I have for making the oral history program not just a program of Pioneers, but a continuing record of the current industry. The people who are in it today and the people who will be in it tomorrow ‑ tracking the industry, so to speak.

SMITH: Ed, tell us briefly about the family you acquired when you remarried.

ALLEN: They're important. I have two stepdaughters and, through one of them, I've added to my total of grandchildren by three.

SMITH: That's very important.

ALLEN: That makes eight. My wife, Geri, has two spectacularly beautiful daughters, Lynne and Holly, who are now my stepdaughters. Lynne is the married daughter. She lives in Reno, Nevada and her husband is in the cement end of the construction business. Cement finishing, foundation pouring, that type of thing. She and her husband have three children, two boys and a girl, who are very close to me and to Geri, their grandmother. Lynne, I don't believe, went on for any formal education, after high school. I think it's probably just as well she didn't because she is absolutely superlative mother material and there aren't that many of them out there anymore. They all seem to be career minded or something. She spends full time taking care of her husband and three children and the home and I like to see that. I think in this day of somewhat militant feminism, and I don't mean to put down those women who are career minded, it's nice to have someone who thinks so much of the family process that they're willing to devote 100% of their time to being a wife and mother.

The younger daughter, Holly, I think will be 26 in just a few days, the end of December. She is a student at the University of London in a specialized school which has the acronym of SOAS. That stands for the School of Oriental and African Studies. She had two years of college training in California at St. Mary's College. You might remember I went to a St. Mary's College in Minnesota. This is a St. Mary's College in Moraga, California. She had about two years there then, for her junior year, through a program set up by the college, she went to London and attended the London School of Economics which is also a part of the University of London.

I think it was in that year that she developed this interest in law and so, rather than going ahead with an economics education, a business education, she decided that she wanted to get into law. The School of Oriental and African Studies is a part of the University of London but it grants its own law degree. So she will be finishing this year, after a three year course which grants an LL.B. degree.

At that point, then, she has a law degree and has to decide what she's going to do with this English law degree. She can't practice in England because you must be a solicitor or barrister, as they call it, and that takes another year. I don't think she would ever intend to practice in London. They kid her already about her American accent although when she comes home I kid her about the British accent that she has developed. I would hope that she would decide that she wants to go to work for some multi‑national company, perhaps on the West Coast, that does business in Japan or China or Taiwan or something like that. In the law course that she is taking, she is studying Chinese law, she studies Japanese law, she studies international law. I would hope that when she completes her education which hopefully will be this summer, she would be in this country working for a multi‑national.

After this, I will have financed six bachelor degrees, one dental education and one law education, so I'm about ready to close the pocketbook on education. That's it.

SMITH: Okay. Thank you very much again.

End of Tape 6, Side A

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BACK TO ORAL HISTORIES

Don Anderson

andersonDonald5

Interview Date: May 30, 2000
Interview Location: New York, NY USA
Interviewer: Gerry Yutkin
Collection: Hauser Collection

YUTKIN: Hi. I'm Gerry Yutkin. This oral and video history is made possible by the Hauser Foundation Oral and Video History Project of the National Cable Television Center and Museum based in Denver, Colorado. We're here with Don Anderson in New York. We're taping this at the end of May in the year of 2000. Don is one of the pioneers in the industry, so thank you for being with us. You have a long story to tell. Tell us about how you have gotten into the business. You were with Time Warner for 23 years. You're now with Diva and you started in the business...?

ANDERSON: 1972.

YUTKIN: ... when it was before the satellite. You are from California.

ANDERSON: Native from Los Angeles, California.

YUTKIN: Now you're a New Yorker.

ANDERSON: Yes. I love New York.

YUTKIN: You do?

ANDERSON: Yes.

YUTKIN: You've been here how long?

ANDERSON: This time 16 years. I came here in the early days, the beginning of HBO. I moved up from Washington D.C.

YUTKIN: How did you get into the first job that you had with NCTA?

ANDERSON: I had a small business in California called the Audio Video Communications – recording studios and tape manufacturing companies. You remember the days of the 8-track. I still have one of the first 8-tracks ever made. I had a small office in Washington, DC and I staffed it with an individual by the name of Ted Ledbetter. I used to sneak into town every now and then and, instead of Ted marketing audio/video, he was laying out strand maps for cable. Ted was an African-American who had an early interest in the industry, and I found myself looking over his shoulders and becoming interested myself.

YUTKIN: Well, you didn't start strand-mapping did you?

ANDERSON: No, not at all. Ted's significance to me, in addition to working with me, was that he was a member of an organization called Black's For Soul in Television – BEST. BEST was headed by a gentleman by the name of Bill Wright and also had working with him a gentleman by the name of Charles Tate. BEST was the organization that persuaded John Pastore, a senator who had oversight responsibility of the FCC, to name the first black commissioner to the FCC. That was Ben Hooks. That set a domino in motion in that the NCTA and the cable industry were lobbying aggressively to get some onerous rules and conditions removed. They wanted to show that they were in step with the changing times and actively sought to recruit an African-American to come on the staff. I was one of 200 applicants, and I got the job.

YUTKIN: As far as experience was concerned, you just had the ...

ANDERSON: ... tenacity, you know, and aggressiveness. I, through Ted and in association with him over a couple of years, began to see the future of cable as more than what cable was at the time. It had 3-4 million subscribers then, 99% of which were in rural areas. The top 20 markets were frozen. There was a very small presence in the more affluent areas of Los Angeles, New York, south Philadelphia. I think those were the only three major markets that had cable in 1972. But when one looks through the eyes of BEST and others, they could see that cable someday would move into the urban markets. That was very appealing to me.

YUTKIN: But that was such a long time in the future. If I look forward five years from now, that seems like a long time, but 28 years ago seems like yesterday. How did you know?

ANDERSON: I had a strong feeling. You know cable has the best technology and what it had the potential of offering would not be limited to a few channels and a reception service. I certainly knew when cable broke out of those shackles ... Knowing that cable is a bottoms-up industry in that you have to go door-to-door and knowing that you have to really have your presence felt by every citizen of the community to be successful, many of the issues that I was dealing with even in those days, lack of minority presence on television, lack of minority presence in front of or behind the camera, I knew that the natural process would begin to open some doors. So I was attracted to that.

YUTKIN: Wasn't it about that time, I think in '72, that the White House office of telecommunications was really kind of carrying the ball? I think, right around then, they started making some inroads into re-evaluating satellite as a possible source of distribution.

ANDERSON: We used to call Clay Whitehead "Captain Video".

YUTKIN: Oh really?

ANDERSON: He was a futurist certainly. I certainly didn't hear of satellite as a potential for cable until many years later, probably not until I joined HBO.

YUTKIN: And when was that?

ANDERSON: I joined HBO in 1974.

YUTKIN: And that was when it was bicycling tapes ...

ANDERSON: No. What distinguished HBO from all the other operations that were up in those days, and there were others.... HBO did not invent, or Chuck Dolan did not invent the idea of subscription television or movies over TV. That came from the brains of many other individual people – like Dory Sherry, former chairman of MGM. You had Channel 100 bicycling tapes. What distinguished HBO in its beginning is that it was the first real time delivery of programming from a studio to a cable headend. It was also differentiated in that it was more than movies. It was the first subscription offering. HBO's concept of original programming began when it first began to deliver programming.

YUTKIN: I didn't realize that. When did it actually start?

ANDERSON: HBO started its first broadcast in Wilkes-Barre, Pennsylvania in 1972 and delivered from its studio in New York the terrestrial microwave to the headend in Wilksbury.

YUTKIN: Was Chuck Dolan involved at that time?

ANDERSON: No. By that time, Jerry Levin .... The history of Chuck's involvement was going back to the days when he had the franchise in Manhattan.

YUTKIN: Sterling, Manhattan.

ANDERSON: Manhattan Cable. HBO's original name was the Sterling Manhattan Network. Now when Gerry Levin, who was working with Chuck in those days and through a complicated swap of franchises between Time Inc., which owned the Suffolk franchise and Chuck owned Manhattan, they traded Suffolk for Manhattan and Sterling Manhattan Network came along with that transfer. Gerry Levin renamed Sterling Manhattan Network to Home Box Office in 1972.

YUTKIN: That was when the first one went to Wilkes-Barre. I didn't realize that. Now, the concept certainly was good and new, but would you say that the satellite method of distribution really kind of made it more of the institution it's become now?

ANDERSON: Oh, no question. Our business model in those days was to feed the programming over terrestrial microwave to as many cable headends as we could in the northeast corridor. And that's exactly what we did. I was dispatched, early on, to California because they had a microwave network there, to see if you could implement the same strategy in that location – in other words, have an origination facility, put the content on microwave, and get it to the headends there. The economics of doing that were prohibitive. The opportunity, by that time, had certainly grown significantly. Remember, by now we're starting to franchise again. There were more franchises being awarded around the country. Urban markets were beginning to be unleashed. So it was Gerry Levin who conceived the idea, several years later – 1974, that Gerry saw the potential and need for satellite. In late '74, he convinced the powers to be at Time Inc., Dick Munro in particular, to give the company the necessary funding to take it on to satellite. And that happened in 1975.

YUTKIN: And I gather that that was quite a sell that he had to do.

ANDERSON: It really was. HBO was a struggling entity. If you go back to what cable was in 1972, cable was distant signals. A big system had 13 channels. A handful of those were locally transmitted channels. The rest were distant signals imported. There was really no other real offering on cable that made it attractive outside of an area that could not get signals without cable. The critical decision to move cable or HBO into satellite became significant in that it opened the door for not only an economic delivery of television programming to every headend in the country, but it also became the pace setter that led to other program offerings coming up on satellite as well.

YUTKIN: Did they ever bicycle tapes?

ANDERSON: No.

YUTKIN: Then I was misinformed. That's good. We're clearing one misconception in the industry. So '75 was the first time that it went up, and you were already in Los Angeles at that time?

ANDERSON: Well, in 1972 I was on the staff at NCTA. A gentleman by the name of Barry Zorthein was Time Inc.'s representative on the NCTA board.

YUTKIN: Why were they even represented at that time if they ...

ANDERSON: They owned Manhattan Cable. And they had a minority interest in Monty Rifkin's company, American Television and Communications.

YUTKIN: ATC, my old alum. So they had somebody on.

ANDERSON: Yes. Barry and I became friends through our association at the NCTA. He was actually chairman of the Legislative Committee and I was one of the staff people involved in that effort. He, after about 1 ½ years, came to me and said, "Would you be interested in coming to a company like Time Inc.?" I said, "Yes, maybe."

YUTKIN: Very conservatively.

ANDERSON: I had my eye on HBO but certainly didn't think that that would be a company I'd come to. It was very small. Gerry hadn't staffed up yet.

YUTKIN: Time was a pretty conservative company at that time.

ANDERSON: Yes. But I did a little homework on Time. It was very conservative, no doubt about it. And of the opportunities I had to go to work for companies in the cable industry from the NCTA - which was my intention because I didn't want to be a full-time lobbyist - it was an entry point. It was an opportunity to meet the top of the industry, get familiar with the issues affecting the industry, and sit back and wait until the right opportunity came along. And it did. I'm not as entrepreneurial as some of the people in the cable industry, but I consider myself an intrepreneur and saw that a company like Time Inc., with a development project like HBO, has a culture of rewarding success, was committed we think, to the development of this industry, and that appealed to me. So a couple of months later, I came aboard.

YUTKIN: Let me just get an idea of what the NCTA was doing at that time. Do you remember, in general as a staff individual, what were you doing? And how big was the staff?

ANDERSON: Probably ten executives, of which I was one, and a support staff of maybe another ten – and that may be a high number. It may have been 10-15 total. The industry was wrestling with copyright issues. There were sports blackout issues. There was access to content issues, a major stranglehold on cable's growth. Then there was the freeze on the top 20 television markets. The broadcasters were extremely powerful in those days and certainly out-lobbied the cable industry;. One of my jobs on the NCTA staff was to take over the Political Action Committee. I came to Washington with a political sensitivity, if you will. It was almost a dormant activity. It never raised any real money. I remember the first NCTA I went to in Chicago, I hired some Playboy models, draped them in banners, and paraded them throughout the convention floor – very attractive women – asking for solicitations to the Political Action Committee. I think half of the donors didn't know what they were giving to. They may have had other expectations.

YUTKIN: But they gave anyway.

ANDERSON: And we raised significant monies in those days. And we would make small contributions to key members of Congress, Senate, with those funds. We'd raise awareness that way. Plus we discovered while on the staff there, that we had another resource. Cable, in those days, had local origination channels. I was part of the team that was instrumental in lobbying to get the first recording studios in the House established. Sony made contributions of equipment. So members of Congress would come into the House studio, record a message for their constituents, and we would play them free on our cable systems around the country.

YUTKIN: So that was the beginning ...

ANDERSON: We had something quite significant, something the broadcasters could never do.

YUTKIN: So that really kind of led to the idea of C-SPAN.

ANDERSON: C-SPAN was an outgrowth of that, absolutely. Brian Lamb is an old friend and was watching that development very carefully.

YUTKIN: An interview was done with him as part of the Hauser project that we're doing today.

ANDERSON: In fact, Wally Briscoe was the key person involved in spearheading the development of the facilities in the House. He managed the state and regional associations for the NCTA. I give him a lot of credit for that. There was another gentleman there on the staff also named Don Andersson. Don's last name was spelled with two "S's", and I was "s-o-n". I became his "half-s brother".

YUTKIN: Oh!

ANDERSON: Don was very well-known throughout the industry. It was quite interesting to see how the synergy that spread because of the association of his name. Whenever we'd travel together, I'd get his phone calls, he'd get my mail. I'd go to state association meetings and they'd expect the other "Don Andersson". He's blond, blue-eyed, and I'm African-American. So my fame traveled so much so that I became a running joke in the industry.

YUTKIN: So you did go out to the states too?

ANDERSON: All over the country. I traveled in the NCTA. I got to know the heads of most of the associations.

YUTKIN: But in those days the associations weren't nearly what they are now. They were very, very small.

ANDERSON: Absolutely. But much to cable's credit, since it was locally regulated as well, ... Remember there were three tiers of regulation affecting cable: federal, state, and local. If anything the state associations, to some degree, were stronger than the national association early on. The strongest association was the California Cable TV Association headed by Walter Kaitz. He was a legend in this industry. I think, to this day, that association has never lost a battle, as it relates to cable, in that state.

YUTKIN: Before we go back to Time Inc., tell us about Walter Kaitz.

ANDERSON: Walter was significant. Remember my coming into the industry was a big deal at that time. There were no African-Americans here. Ben Hooks was on the FCC, cable was still rural. There were no minorities being elected to city government at that time, and a very minor presence in Washington. Ed Brooke, an African-American, was the Senator from Massachusetts. Yvonne Burke, then Yvonne Bratheway, joined a handful of Blacks in the House. [Note: The first black woman elected to the House was Shirley Chisholm, elected in 1968.]

YUTKIN: In spite of the civil rights movement in the 60's.

ANDERSON: Yes. But you know, those were seeds that take a long time to germinate. That's really the case. But I remember being on the staff, with some apprehension. It was a big deal to have a Black there. I knew that my colleagues on the staff were nervous about what role I would play, how militant I really was. They really didn't know how militant I was.

YUTKIN: Those were the days when you didn't know.

ANDERSON: During that time, I remember one afternoon getting a call from Walter. Simply put, "I'm Walter Kaitz." He had a deep, gravelly voice. He was an Irish Catholic from Boston and certainly understood discrimination and racism in his own right, which he told me about many other times. He reached out and said, "I'm glad you're there. If there's ever anything I can do, let me know." It was just simple and straightforward.

YUTKIN: And you worked with him?

ANDERSON: Worked with him. We put together legislative conferences. We used to bring cable operators from the state of California in, and from other states all over the country. We'd bring them in for legislative conferences. We'd brief them. We'd train them. We'd walk them into their member's offices on the Hill. It was an interesting time. There were a lot of shy cable operators, if you can believe that.

YUTKIN: Sure. Now you're on the foundation for them.

ANDERSON: Well, unfortunately, Walter passed and his children ...

YUTKIN: Spencer.

ANDERSON: Spencer. I knew the family well, the entire family. One afternoon Spencer approached me with the concept that he wanted to create a foundation in the name of his father. Because of his father's beliefs, he felt that a foundation that championed diversity in the industry would be appropriate. So he called a group of us together. I happened to be one of them. John Goddard, who was then president of Viacom Cable, Ray Joslin who is now with Hearst Entertainment, Paul Maxwell – we were the catalysts that began the organization.

YUTKIN: And when was that?

ANDERSON: 18 years ago.

YUTKIN: Early '80s.

ANDERSON: Early '80s – yes. I, by then, had offices in San Francisco. They would use my offices, my conference room as the plotting place to create the concept of the foundation, the first programs. I sort of patterned some of my thinking around the White House Fellowship Program. I had a cousin who was a White House Fellow. I was very close to his goings on in that organization, and I thought it was a very fine example of something we could do. From my perspective, some of the programs that we initiated and strategies came out of my understanding of the White House Fellowship Program.

YUTKIN: And now the Kaitz Foundation is almost an institution in the industry.

ANDERSON: It is an institution.

YUTKIN: Probably one of the biggest fund raisers every year.

ANDERSON: Its significance is that its Board of Trustees – and I had the pleasure of being chairman one year – is made up of the leadership of the cable industry. That group, very informally in the beginning, began to initiate programs that would say they would be proactive in their outreach to minorities and women and begin to bring them into the industry. We recruited very strong people. We recruited lawyers, MBAs, individuals who had significant careers under their belt, who wanted to make a transition into cable. Now leaping ahead, certainly cable is being moved into the urban markets and minorities are now sitting on city councils and you have an organization like BET in its early development. Minorities could begin to identify with the industry in ways that they never could before.

YUTKIN: You said, and I agree with you, that the leaders of the industry have been strong supporters of the Kaitz Foundation and the Kaitz Fellowships and bringing people into their various companies and then they've gone on. At this point we're seeing a major consolidation in the industry. Fewer and fewer – and the entrepreneurs are getting older, retiring, finding different interests, finding other things to do, and they're being taken over by larger companies. Do you think that that is going to continue in terms of the support for Kaitz Foundation type programs?

ANDERSON: I don't want to be controversial in what I'm going to say. All things are relevant. When I say that the industry supported bringing minorities and women in, that's a true statement. But changing cultures is a long-term process. Yes, there is consolidation. But if you look at the industry as I do, subdivided, 85% of the cable subscribers are now under the control of 5 companies. Of those 5, most are still family-owned companies that are run by the originating founders. You take Time Warner and AT&T out of the picture, you have Cablevision, Cox, Adelphia, Comcast. Those are all family owned and run businesses. Yes, there's been a lot of hiring and inclusion of minorities at the bottom level. But if you walk through those corporate offices, there's still great opportunity. There are no minorities, very few women on boards in the cable industry. Noted there are a few exceptions. The senior management ranks are predominately white male. So there's still some way to go. I'm a person that sees the glass half full. I keep score. I know when there was none of that going on in the industry. My positive attitude is reinforced every day because I see the numbers growing. You go to an NCTA or a California Western Show and you see diversity in action at every corner of that convention floor. If I would identify a target today, it's at the board and senior management level. And the foundation is trying to address that while its still knitting to the needs of bringing the minorities into the middle ranks and entry levels as well.

YUTKIN: Don, let's go back to your beginnings with HBO – 1974 – just before the satellite. You knew Gerry Levin.

ANDERSON: Gerry actually recruited me. I was at an NCTA board meeting in La Costa. By now, Barry Zorthein had sort of planted the seed with Gerry that I'd be interested. Gerry approached me at that board meeting and asked me if I'd consider coming aboard. I did a month later.

YUTKIN: What was his position at that time.

ANDERSON: Gerry was president of this little company called Home Box Office. He had a staff of 27 people. He was just beginning to pull the team together that would be responsible for launching HBO.

YUTKIN: Any other minorities?

ANDERSON: No.

YUTKIN: You were the first?

ANDERSON: I was the first.

YUTKIN: And Time Inc. at that time, probably did not have too many minorities.

ANDERSON: I later found out when I became a vice president at HBO that I was the first African-American to become a vice president at Time Inc.

YUTKIN: That company has really evolved.

ANDERSON: Yes, yes. But again, it was a very favorable environment. It may have had a conservative past, and there were pockets of conservatism still in the company. I never once felt any real resistance to my presence there. In fact, they were quite aggressive in recruiting me and bringing me in. It was a big deal there as well.

YUTKIN: Did you know any of the people outside of the HBO organization, Highschool or ...?

ANDERSON: No. But I got to know them because of the uniqueness of my presence. I took advantage of that opportunity just like I did at the NCTA. I got to know every board member extremely well and the leadership of the cable industry all over the country. When I came aboard I met Dick Munro. I made a point to get to know Andrew Highschool, Jim Shepley who was president of Time Inc. at the time, and just about all the senior management. I didn't know until later, that those relationships wouldn't be significant for the things I wanted to advocate inside HBO. But yes, I did get to know them.

YUTKIN: Was Henry Luce already gone?

ANDERSON: Yes, he had left.

YUTKIN: So you came on board. What were the first things that you were doing for HBO? You went to Wilkes-Barre, right?

ANDERSON: Yes. I got a Factbook in one hand and a map of Pennsylvania and southern Jersey in the other hand. I began to plot the location of cable system headends with a line of sight to a microwave.

YUTKIN: Existing cable system headends.

ANDERSON: Absolutely. In other words, if we had a 99% probability that our signal could be seen from some tower at cable's headend tower, then we would dispatch one of our engineers to do some field tests to measure signal strength. Then I'd go knocking on the operator's door saying, "Look, we can get a signal here. Would you be interested?"

YUTKIN: You had to go get the towers though first?

ANDERSON: Well, the towers existed, fortunately. And the microwave signal was there. We just had to negotiate with Eastern Microwave, the biggest carrier in those days, access to one of their channels that would allow us to send the signal down there.

YUTKIN: So you really had a ...

ANDERSON: It was one system at a time, one system at a time.

YUTKIN: How many did you have, say within your first year or so? Any idea?

ANDERSON: It's hard to answer that. But if you look at cable in those days, they weren't marketing anything but just the signals. There weren't any marketing executives inside cable companies in those days. Selling was done by door-to-door salesmen who were on contract. They would come into towns, blitz the town, promise the moon, and then leave. Now HBO comes along as the first real consumer product available on cable as an optional service that you had to pay $5 - $8 a month extra for and has no sales force and no marketing people inside the cable universe to position that product. So often HBO would be introduced on a system following a free preview of a few days. We'd maybe get a 10% response from the cable subscribers who would want to take it. All the contact with those subscribers was done by these contract sales people. So often, we would have penetration of 10% – 15% of cable. Within the first month, over-promised as it was, they would drop. They would discontinue the service.

YUTKIN: That's when we developed "churn," right?

ANDERSON: The churn began. It was caused by over-promising. It was caused by, for the first time ever, unedited movies into the home, no commercial breaks. There was a resistance to this.

YUTKIN: And there was a resistance from the theater owners too.

ANDERSON: We were lobbied at every corner. I used to go before the Catholic Archdiocese often to explain the fact that we had decided to show these unedited movies at 8:00 PM or later.

YUTKIN: Any specific stories on that or should we just ...?

ANDERSON: Well, you can imagine it was tough. We used to have major launch events. The cable system would do major promotions about HBO coming, "movies in the home, unedited, no commercials." We'd try to stage it so that a major feature was on at the time the "launch event" took place. And we had these count-downs. By now we're on the satellite and that's a big deal as well. So you have new technology coming into the home bringing in this new form of television viewing. Often, unfortunately, our programmers based in New York had different ideas of what would be relevant programming in such a delicate environment. I can recall standing at the podium with the mayor, a councilmen, religious leaders, and the switch gets thrown. And all of a sudden this movie comes up with this racy, sexy scene. You talk about doing some tap-dancing - often radio interviews the next day had many subscribers calling. In 1974, we had a milestone at Time Inc. which HBO had to meet. We had to have 30,000 on the network by year-end.

YUTKIN: By a certain date?

ANDERSON: By December 31, 1974. If we did not reach that 30,000, then Time Inc. wasn't going to continue to fund it. HBO, at that time, was not a wholly owned subsidiary of Time Inc. It was still sort of a little experimental development project. So we did achieve our 30,000 subscribers, barely.

YUTKIN: By how many? Do you remember?

ANDERSON: Well, remember, what we didn't say was that half of them were going to leave in the first 30 days. We made that date. It was after that that Gerry was able to convince the management to go to the next step, satellite.

YUTKIN: And put it up on satellite.

ANDERSON: But it was a very hectic time. On one hand you have a parent who's nervous about this. You have community groups up in arms about unrated or unedited movies in the home, and unedited language.

YUTKIN: By the time I got in the industry in 1978 – I was recruited out of school by ATC – they had a pretty good format for launching HBO and terrific cooperation with the programmer and the cable operator. What would happen is – we would have a week of free HBO that was available, set up a bank, a large bank, of telephone operators. We'd call them and say, "It's on now. It's free." The response was terrific. It was a great deal to set up. You had to train people for really just a weeks worth of work. I was involved with several of them, one of which I went down to Charlotte, North Carolina and we were sitting there training the temporary salespeople.

ANDERSON: You remind me of a great story.

YUTKIN: I'm almost done. All of a sudden one of these temporary phones ring next to me. I picked it up and it was Nielsen – it was one of the rating services, and I think it was Nielsen. They said, "What are you watching?" I said, "Well, I'm watching HBO right now!" It was right before it launched, but I was watching HBO. You never know whatever happened to that. Tell us your story. I'm sure it's better.

ANDERSON: No. That's a fascinating story. I could go off on that. It wasn't until many years later that Nielsen ever paid attention to what HBO was doing or anything on cable, but that's history. North Carolina will always stand out in my mind. First of all, we're now on satellite. We now can pursue customers in any part of the country because we now have the basis of delivering a signal.

YUTKIN: And the cable operators saw that as an opportunity for them, too, so you really didn't have to go do the kind of selling that you had done a year before.

ANDERSON: Well, at least it was a proven concept, and there was enough attention paid to the value of satellite delivery. But of course, earth stations, in those days, cost over $100,000. Then you had to get a frequency clearance. Then you had to deal with local environmental issues, in some cases paint the earth station. It was a hard sell. It wasn't until much later that the smaller, 3-meter dish came out. That made it economical. But my exposure to operators all over the country, from my NCTA days, made it very hard to combine me to a territory. I knew operators all over the country. One such operator that operated the system in North Carolina – that system was owned by the Gray family, Gordon Gray, a famous family in Wake Forest, with Duke connections. I told my colleagues in New York that I was going to go down and talk to this family and see if I could convince them to take HBO. They said, "You've got to be crazy. That's the south. How do you feel about going down there and selling this stuff?" I said, "Well, we'll see." So I went down, got the sale. One of the senior members of the Gray family decided to take me over to R. J. Reynolds, which they owned, and let me see the operation. In those days I had an Afro, out to here. Many people used to call me Charlie Pride. Wherever I went in the south and Midwest, they would stop and mistake me for Charlie Pride. They just knew I was Charlie Pride, operating in some sort of disguise. I'm now with the chairman of R. J. Reynolds being toured through the plant. If you've ever been in a manufacturing plant where they're making 20 million cigarettes a second, there's a hum. All these machines, everywhere you go, just humming at a certain pitch and frequency. All of a sudden as we were walking around, I could hear it begin to get quiet. People stopped talking, the machine pitch began to wane a little bit, to the point where things began to move at a snail's pace. Turns out everybody there thought that I was Charlie. The foreman of the plant came up to me and said, "Mr. Pride," of course nervous with their chairman standing there, "please forgive us, but are you Mr. Pride?" I said, "Nope." Within seconds, everything was back to where it was.

YUTKIN: Well, maybe you should have said, "Yes," and then they would have ...

ANDERSON: Well, eventually I did. It got so bad wherever I went, it became a big joke inside HBO. I was at a Super Bowl in Miami. HBO had a group of operators that it took there. Flash bulbs were going off in my face. People would tap me on the shoulder and turn me around and take a picture. "Please, Mr. Pride, can I have your autograph?" So one day I just started signing "C. Pride" and sort of walked away from it.

YUTKIN: Was that the Raleigh area, the Raleigh franchise?

ANDERSON: Yes.

YUTKIN: That was an ATC franchise, later on anyway.

ANDERSON: Greensboro. It was Greensboro. That's North Carolina.

YUTKIN: Yes.

ANDERSON: I can't remember the exact system name, unfortunately, but it was certainly in North Carolina.

YUTKIN: I know ATC had a lot of ...

ANDERSON: ATC was quite active in that area. In fact, ATC's beginnings came from what were called telephone lease-backs. The telephone company in that area had the franchise and leased them back to ATC.

YUTKIN: So by now, the satellite's up.

ANDERSON: The satellite's up.

YUTKIN: And we're to the late 70's. It took awhile for it to be launched in systems in other parts of the country.

ANDERSON: We started something. It was a good strategy on HBO's part, and Gerry Levin saw it before I was hired, early on, we talked about regionalization. The parochial nature of the industry was such that there was a lot of distrust of this ivory tower, New York corporation Time Inc. So I had convinced HBO's management to open up regional offices. Having done that, I was sent out to San Francisco.

YUTKIN: Weren't you in Los Angeles?

ANDERSON: I was in San Francisco first. It was the regional headquarters. Then I opened up Los Angeles three years later. Then I opened up an office in Denver and ran those three offices from Los Angeles.

YUTKIN: So you traveled around a lot.

ANDERSON: Tons.

YUTKIN: A lot of traveling.

ANDERSON: Alaska – we had HBO in Alaska.

YUTKIN: When was that?

ANDERSON: 1980. It was an interesting thing. Alascom and Americom were the satellite common carriers in Alaska. But the two didn't get along in Alaska. There was an operator named Victor Nacarado who characterized the entrepreneurial spirit of the cable operator in that state. They owned systems in Cordova and Valdez, Alaska. A 10-meter dish was being delivered to Alascom. It fell off a truck and was damaged. Victor saw it, picked it up on a fire sale price, installed it, and started bringing in HBO on his dish at a time when there still wasn't regulatory clearance to bring that signal into that market. He forced his way through.

YUTKIN: And did he get in trouble?

ANDERSON: No. He just made it happen. He made it happen. "Don't tell me I can't do it," he would say. I used to travel to Hawaii as well... guilt-ridden.

YUTKIN: Why is that?

ANDERSON: Such a lovely place.

YUTKIN: Oh, somebody had to do it, right?

ANDERSON: Somebody had to do it.

YUTKIN: How long did this period go when you were doing all this traveling before you came back to New York?

ANDERSON: Until 1984 when I returned to New York. In late '83, Bob Johnson, founder of BET, began to talk to us about needing some help in getting BET established. At that time, BET had about 4 million subscribers. They were on the air about 4 hours a day. They had John Malone at TCI involved, Taft Broadcasting was involved as a partner. In 1980, Frank Biondi, Tony Cox and Michael Fuchs were the three presidents running HBO. We had a troika set up there. Michael was president of the programming, Frank Biondi was president of network operations, and Tony Cox was president of the affiliate operations and marketing side of the company. I reported into Tony's organization. I had convinced Tony and Frank that this was something worth doing. I really wanted to be the one to do it. By now, I had sort of earned my reputation inside the company. I was a vice president. I had gotten to know senior management at Time Inc. The BET investment became something that I championed.

YUTKIN: Got involved, went along with it.

ANDERSON: That's when I came back to New York.

YUTKIN: But you were still with Time Inc. but just looking after the Time Inc. interests?

ANDERSON: Yes. It became a model for some other investments we made in minority businesses. It was the first on-balance sheet investment Time Inc. had made in a minority owned business. Let me back up and say that Time Inc. had a history of supporting minority ventures. They were instrumental in helping Essence Magazine launch. They were supportive in a black radio network. Until BET, most was pro bono. They loaned office space. They loaned materials and other resources to these ventures. BET became the first on-balance sheet investment and had to be approved by the board. I managed the investment, plus I took over all of the marketing and network distribution for BET. At that time, BET was on the air 4 hours a day. It was mostly a news and information service. I had to convince Bob Johnson to air music videos. We gave BET transponder space on a satellite transponder that we owned at HBO. We needed to fill that time with good programming. HBO loaned me to BET. My being there was a guarantee, or a hedge, against failure.

YUTKIN: And Frank Biondi and Tony Cox – were they also on loan or was it kind of a board kind of a ...

ANDERSON: No. I became a senior vice president of HBO, reported in to the organization as any other executive. The BET was a project investment of HBO.

YUTKIN: Okay.

ANDERSON: I had a small staff. Over a four-year period we took them from 4 million subscribers to 24 million subscribers and break-even.

YUTKIN: Was it difficult to get the operators to carry BET at the beginning?

ANDERSON: Sure. Very.

YUTKIN: In those days, the urban areas were not franchised. They were just beginning to get developed.

ANDERSON: They were just beginning. But see, BET, in part, was there because in the urban market, for the first time, you had blacks as mayors, blacks on city councils, and cable operators were trying to convince them to award them a franchise. The question was finally being raised, "what programming do you have for the special interest that we represent in the minority communities?" In Pittsburgh, Philadelphia and all the other key markets, you have significant minority population.

YUTKIN: You're right. That was the franchising days of the late 70's, early 80's. So you were in the right place at the right time too.

ANDERSON: I considered BET a must-carry in the urban markets. Even though you had to pitch and sell hard.

YUTKIN: Not legally must-carry?

ANDERSON: Not legally must-carry, but if you're going to be a viable operator in an urban market, you had to have ethnic programming.

YUTKIN: Absolutely.

ANDERSON: I focused my attention on other markets - Knoxville, Tennessee, Nashville, Memphis – smaller markets but with large minority populations. Black populations from 30% - 50%, know that African Americans watch 50% more television than non-blacks.

YUTKIN: Really?

ANDERSON: Absolutely. And that's been confirmed by Nielsen and other studies that track them. It was a natural sell. So when you deliver the 'heavy user', the most significant group in terms of use of the product, the person who's going to be coined the 'truck chaser', which was truly the case. I'm a marketer, and I've spent a lot of time in ethnic marketing. Once you identify the heavy user in any category, whether it's beer or soft drinks, or hair products. In television and entertainment-related products, the African American index is above the general population. So there was the selling of and the telling of that story. The goodwill adding BET brought to the community was a plus. In most communities, operators were having problems with the local citizens over the lack of employment opportunities. Adding BET became a vent, if you will, and a positive thing for cable operators to do.

YUTKIN: During those franchising days, cable really presented an opportunity to promise everyone everything.

ANDERSON: Yes. Oversell.

YUTKIN: Oversell – what do you mean? On the programming end, would you condemn the operators for that?

ANDERSON: No, no, no. It was all of us in the business. All of us in the business oversold.

YUTKIN: Over-promise, oversold.

ANDERSON: Over-promise. Remember what the film industry was. In a good year, there were probably 150 – 200 new releases each year versus 500-600 today.

YUTKIN: It seems like 150 a weekend.

ANDERSON: There weren't enough new movies. We offered "original programming" from the beginning. HBO also had sports offerings early on, something to take the attention and focus off the few movies. Movies were clearly the major appeal, then and today, for any pay television service or subscription service. But it was oversold in those days. Cable operators who weren't sophisticated in selling ancillary products oversold.

YUTKIN: And especially during the franchising process.

ANDERSON: Oh very much so, very much so. Fortunately, five years later, Ted Turner came up on the satellite. A short time later other satellite-delivered program service began to become available, and that's when the promise of cable happened.

YUTKIN: You know Ted Turner.

ANDERSON: I got to know Ted Turner through a colleague on the NCTA staff. I didn't know him well at that time. I certainly knew of him. He would come into the office a lot.

YUTKIN: Not when you were at NCTA?

ANDERSON: When I was at the NCTA in 1972. We had a person on staff also named Don Andersson. Note the two s's in his name.

YUTKIN: The double "s".

ANDERSON: Don was a statistical genius. Don had committed to memory the microwave path of every microwave common carrier in the country. He knew where they were in every market. It was all up here.

YUTKIN: That's amazing.

ANDERSON: He, in collaboration with Ted, began to convince Ted to put his WTBS signal on microwave in the southeast and create a regional network. It was Don Andersson, who eventually left the NCTA to work for Ted.

YUTKIN: Where is he now?

ANDERSON: You know, I don't know. I know he worked for Ted for years.

YUTKIN: Maybe he'll see this and give you a call.

ANDERSON: Maybe one of his family members will. I hope so. But he was the guy. He was the guy I credit for having helped Ted the most.

YUTKIN: And that was up in the late 70's.

ANDERSON: That was the mid-70's ...

YUTKIN: ... that it went up ...

ANDERSON: ... that was the early 70's. TBS went up on the satellite in 1975. I'm talking about before satellite – a terrestrially-fed regional network. It was Don Andersson who did it.

YUTKIN: But Superstation became the phrase ...

ANDERSON: ... when he got on the satellite.

YUTKIN: At that time, WGN was also ...

ANDERSON: WGN came a little bit later and never gained the prominence that WTBS did.

YUTKIN: Well, WTBS had Ted Turner, who was a real personality. This is not to say WGN didn't have good people, but Ted's ...

ANDERSON: Certainly. It's a fine company.

YUTKIN: ... charismatic personality who did a lot for the industry and himself.

ANDERSON: Well, Ted's in a league of his own when it comes to his genius. Let's give credit where credit's due. There was no one in this industry quite like Ted in the time frame we're talking about.

YUTKIN: The right person, the right place, the right time with the right insights.

ANDERSON: And tenacity. Fearless. Creative. The Chicken Noodle Network – remember that? Who wants 24-hour news? You've got to be nuts! Nobody wants to watch news 24 hours. But if you're a cable system which needs to differentiate its offering, which needs to give franchise authorities and consumers the feeling of choice and opportunity to see a variety of things, what a brilliant idea.

YUTKIN: ...and with the spectrum. So even though, when we were selling it to franchising authorities, "Oh well some day you'll have just an all-opera channel" for those few people who want opera.

ANDERSON: I remember your old boss, Monty Rifkin, tried to hire me to come work for ATC and get involved in the franchising. One of the things that bothered me about that was being the one out there over-promising.

YUTKIN: Let's continue that. You turned Monty down. Why did you do that? You didn't want to over-promise? Was it a negative reason or a positive reason or both?

ANDERSON: I think both. Monty's offer came to me early on in my career with cable. I was at the NCTA for two years and completing one term of Congress was my goal. Monty took a liking to me and vice versa. I liked Monty a lot. I said, "First of all, it's too early to do this." The second reason, I wasn't sure why. I later discovered it was a feeling of being exploited to some degree. That began to bother me. Certainly there was an attraction to me again because blacks were on city councils and becoming mayors of cities. I didn't want to be the 'token black' to be sent in and convince the city councilmen that they should do this. Having said that, I was very influential with many of these people. I had good relationships with blacks on these city councils. Tom Bradley got elected as the first black mayor of Los Angeles. Two days later I took him to the Western Cable Show in Anaheim as my guest (at the time he was the hottest person in the country), to a private meeting with the heads of most of the MSOs to spend 30 minutes with them about his vision of how Los Angeles would be franchised. I did those things off the record. I didn't ever want to be the person in front of the group or be identified as that person. The last reason was that there was a lot of over-promising going on there. My Judeo-Christian background kind of gave me problems with that.

YUTKIN: We used to like the phrase, "When it's economically and technologically feasible."

ANDERSON: Yes.

YUTKIN: But that was the cable operators' stand-point.

ANDERSON: Yes. That's when you were finally saying, "We can't do it now." In those franchises, the game was 'promise the world, get the franchise, and then go in for franchise renegotiations. Then six months to a year after you got the franchise say "When it's technologically feasible, we will do what we promised."

YUTKIN: And economically. Now '78 was the Cube experiment in Columbus. That was a great idea but it didn't ...

ANDERSON: It turned out to be a very effective franchising tool. I know some of the people who worked on Qube. We at HBO were selling some of the programming to them on a pay-per-view basis to see how it worked.

YUTKIN: Gus Hauser, who is the benefactor of the Oral and Video History Project under which we're taping now.

ANDERSON: Those are the people who, when they knew from a technological point of view, that Qube was not ever going to be viable in the short-term... It, however, became a very effective vehicle to use in the franchising discussion.

YUTKIN: Because someday it would be.

ANDERSON: It would be. Absolutely. It wouldn't be called Qube. It would be called Video-On-Demand, and it would be offered by companies like DIVA and C-Change. It would be part of a digital platform. A lot of things have happened. It would be on a 750 MHz plant.

YUTKIN: At one point, I remember someone at ATC saying that 330 is all you're ever going to need.

ANDERSON: 330?

YUTKIN: 330 MHz.

ANDERSON: Okay.

YUTKIN: And the people, I think in those days, were still doing surveys that people were only watching 6-7 channels even though they had 35.

ANDERSON: They're building 850 MHz now.

YUTKIN: Do you think that's necessary?

ANDERSON: Absolutely! On that digital platform, eventually ... I believe those, like John Sie, who say, "Analog's going to be passé. It's going to be all digital." How long it takes may be 5 – 10 years. But companies now are on that expanded bandwidth, adding a variety of services. VOD (Video-On-Demand) happens to be one application on the digital platform. Then you add telephony. Then you add high-speed modems. All of those applications eat up spectrum. So in an 850 MHz system, you're just about 100% used up, particularly now that you have not 100 channels, but you have 200-channel systems. So, yes, and it's going to go beyond 850.

YUTKIN: You think so?

ANDERSON: Oh, I know so.

YUTKIN: We were bidding dual plant even in the early 80's.

ANDERSON: Well, Qube was operating in a lot of places on a dual plant with a return path.

YUTKIN: And that's going to be fulfilled. Do you think that the direction is telephony or Internet. Of the two, which one do you think is ...

ANDERSON: I think it's just interactive television, and I think it's convergence. I think it's the bringing together of all of the applications, because for the first time, you'll have that entertainment center where true convergence takes place. But you'll program the bedroom, the family room, the kids room with other offerings as well. Digital and the digital spectrum is what makes that possible.

YUTKIN: Now you were with Time and then Time Warner until about mid-90's. In '96 you left, retired?

ANDERSON: Yes. I had always had this thing in my mind that 20 years and 55 would be a wonderful time to do something else.

YUTKIN: That's wonderful.

ANDERSON: I had a wonderful experience after the merger. I worked for Marty Payson who was Vice-Chairman of Time Warner during that time Steve Ross was still alive. When Steve left, that activity was disbanded. Marty left the company, and I finished off my career once again working for Gerry as his senior advisor. During that time, I began to set my sights toward some international activity. There was an opportunity, when Nelson Mandela was released from prison, to be a part of a blue ribbon group of African Americans invited to South Africa and sit across the table with him. So I did that. That trip, and many trips later, led to Time Warner's co-ownership of the first commercial broadcast license to be granted in South Africa.

YUTKIN: Oh, I didn't know that.

ANDERSON: So I capped my career by going over there with Ron Brown, the late Commerce Secretary, on a trade mission. But that's what made Time Warner and Time Inc. so special. I did a lot of fun things there. BET was fun. Being a part of the team that launched HBO was fun. Convincing and being a part of the involvement by Time Inc. in launching Emerge Magazine was great. Emerge was the first news monthly targeting African-Americans. That group asked me to publish it. So again, without leaving Time Warner, I was able to be publisher and president of that company. That magazine has lasted over 10 years.

YUTKIN: Did you have any failures, anything that was less successful that you worked on? Did you ever work on the Guide?

ANDERSON: No.

YUTKIN: You didn't work on the Guide?

ANDERSON: No. In fact, those of us at HBO who thought we knew the cable industry a lot better than the publishers did, were always amazed at why the selling of that guide was not given to HBO. No, I guess my only failure is that I always wanted to be president of a network.

YUTKIN: You and Ted Turner, right?

ANDERSON: Well, you know, just.... There's big Ted and there's little Ted. I've always been a little Ted.

YUTKIN: Okay, so then you retired. You're not one to sit around.

ANDERSON: Well, I retired. I have a home in the Hamptons, something I always wanted to do. I was building that home and spending a lot of time out there, thought I'd pursue other interests. I had stopped attending Kaitz dinners.

YUTKIN: Really? Why?

ANDERSON: Just because I thought it was time to move on. I happened to come back in to New York for a Kaitz dinner and while there I ran into a gentleman that I knew in the early days. He was at Showtime, and of course I was at HBO. His name is Dave Hanson. Dave said, "Don, what are you doing?" I said, "I'm retiring." He said, "Oh no you're not. We've got this thing called Diva. We need you." Three months later, I was with DIVA.

YUTKIN: Tell us about DIVA.

ANDERSON: DIVA is the brainchild of a gentleman by the name of Paul Cook. Paul is an MIT graduate scientist, a chemist, who was chairman of SRI, the old Stanford Research Institute. He was also chairman of the Sarnoff Laboratories in Princeton. Inside the Sarnoff Laboratories, they were developing a video server. It was a monstrosity of a thing now in retrospect, but it was designed to do video streaming. Paul had a knack for looking at businesses. He had already started two Fortune 300 companies, Raychem and CellNet. He was a gentleman, at the time, in his mid-70s, lot of energy, brain still functioned very well. He could run circles around people many times younger than him. He spun it out. He got the rights to the technology and put a team together and launched DIVA. Now DIVA's deployed on the digital platform in eight markets throughout the country and is poised as the leader in the United States.

YUTKIN: Poised for dynamic growth, we used to say in the franchising.

ANDERSON: One would hope so. Unfortunately, the NASDAQ crashed also. It hasn't affected DIVA, but we'll see.

YUTKIN: They say, we're talking in May, 2000 and this is for more historical purposes. So we'll see what....

ANDERSON: DIVA has a good future ahead of it. It has now done strategic alliances with many major players in the industry.

YUTKIN: Such as? Can you talk about that?

ANDERSON: I'm cautious. We're in our quiet period now. But there's doing distributions deals with cable operators – Charter Communications headed by Paul Allen, one of the Microsoft co-founders – has now completed the largest agreement with a VOD company in the history of this country. It's starting to get its footprint out there, just like the early days of HBO. You struggle at first. HBO would go months in between new system deals. Then I remember we would turn on 100 a month. Can you imagine going from one or two in three months to over 100 a month. Well, VOD deployment on the digital platform in this country is going to get accelerated at that same pace, and DIVA is in a position to be right at the head of that.

YUTKIN: So you think it has the growth opportunity that cable had, or the equivalent that cable had 25 years ago?

ANDERSON: Digital applications, the new paradigm going forward is convergence. You're bringing in new players. You have technologists from the Silicon Valley now integrating into the cable industry. You have many individuals implementing strategic relationships with cable – Microsoft, Cisco, you name it. They're now developing strategic relationships with the cable industry. It's broadband. It's a new technology. It's a new business with new products and services. The beauty of these oral histories is before the industry evolves beyond anything that you and I might recognize, that we can record and preserve some of the history of what it was. What it was is one thing. What it's going to be is quite exciting. It was very exciting in the past for me personally. It's taken me beyond my wildest expectations.

YUTKIN: And you didn't start out with a lot of the advantages. You told me that from Los Angeles, you ... Well, tell me as much as you want to about that.

ANDERSON: I was born in Los Angeles. My grandfather was a Baptist minister from Texas who was an evangelistic minister, moved from city to city, preached in storefront churches.

YUTKIN: And in those days, segregation was ...

ANDERSON: He opened a little church, the first African American church in Orange County. My family moved from Los Angeles during the Second World War. My father went off to the war. My mother took four kids, of which I'm the youngest, to be close to the grandparents in Orange County. They happened to be the second or third black family in Orange County at that time. Again, growing up in Orange County turned out to be a plus for me. I believed in integration, got very much involved in people outside my own culture. You had no choice. But it was a good experience for me. My mother ended up raising four children alone. She was a maid, a housekeeper. I remember her making $30 a week. So I learned to do things on my own from the time I was 10 years old. I didn't discover until I was in college that I had dyslexia. I graduated from high school a year early because I took certain courses. I am dyslexic; I couldn't keep the pace, and eventually dropped out of college.

YUTKIN: And that was when nobody knew anything about it or was quiet. To be black and to be poor or relatively poor, that must be a shock. What did you do?

ANDERSON: The college thing was one experience. The only thing I'd say about college in the '50s if you're dyslexic is that no one understood it, and they didn't have special programs for dyslexics as they do now. It wasn't a matter of not being smart. It was a matter of running the race as fast as everybody in the class.

YUTKIN: But that was confused between not being smart, in those days, wasn't it?

ANDERSON: I guess over time, I looked at the positive side.

YUTKIN: How so?

ANDERSON: I never quite remember anybody thinking I was stupid. And I really don't. I learned to maneuver around before I knew what it was. You can overcome it in many ways by focus, tenacity, determination. All of those things do that. My father was not a presence in our home, but my father was a presence in terms of what he was trying to do. He was a civil rights activist going back to the 40's. He was part of that A. Phillip Randolf's team that organized the Dining Car Waiters of America, Pullman Workers of America. He was active in unions in California, and he moved in to towns that had real segregation and racism. Las Vegas, in those days, was like that. He became the first Equal Right Commissioner for the state of Nevada. He was the one that opened up employment on the Strip and got laws passed that allowed blacks to gamble on the Strip or go see other black performers. They couldn't do it in those days. My stepmother became the first black principal in the state of Nevada, and still to this day is a principal of a school in Las Vegas. So that was his legacy. But that legacy ...

YUTKIN: That's quite a legacy.

ANDERSON: ...translated back to me. I remember seeing photographs of him with Harry Truman or Pat Brown, the governor of California.

YUTKIN: Your father?

ANDERSON: Yes. But those become bridges. Those become motivational connections outside of my immediate surroundings. And that's what he represented to me. So I consider myself lucky and blessed that, while this immediate environment may have been difficult, I looked past that.

YUTKIN: Would you say that you experienced discrimination but you were somehow able to...

ANDERSON: Yes. I dealt with it in Orange County.

YUTKIN: ... or you didn't realize it maybe?

ANDERSON: No, no. I was never naïve. Remember with a father like mine, you know that discrimination is there. I was down in Selma. I did a lot of things. I marched for open housing in Los Angeles. By then I was working inside TRW and Hughes and Northrop.

YUTKIN: But that was unusual.

ANDERSON: Sure.

YUTKIN: That was really unusual in those days.

ANDERSON: My mother, bless her heart, was the housekeeper for the vice president of Northrup. When I was leaving school, I had enough technical skill under my belt and desire to be a draftsman. She talked to Stan Worth, vice president of Northrup, about me and "could he arrange an interview and help him get a job?" I got my first job as a draftsman.

YUTKIN: How old were you?

ANDERSON: 18. I graduated early from high school so I was 18, 19 and got my first job. I eventually became head of the group. I was an Engineering Designer – tenacity and focus.

YUTKIN: Without the degree.

ANDERSON: Without the degree.

YUTKIN: Was that a problem?

ANDERSON: I think it was a big problem for me because I was always intimidated by people, not intimidated by smart people, but people particularly in the black community. Having a college degree was a big deal! It was the ticket out. So I sort of had a minor inferiority complex about not being as well equipped as some of my friends. But that never stopped me. Nor did I ever hide the fact that I didn't have a degree. I never talked about it, but I never lied on a resume either.

YUTKIN: I don't think that's unique to black experience...

ANDERSON: Oh, I'm sure it's not.

YUTKIN: ... in the cable industry.

ANDERSON: Cable – you're absolutely right. Take it beyond that – most of the early operators in cable ...

YUTKIN: ... were manager techs who did not have a degree.

ANDERSON: They owned appliance stores, things like that.

YUTKIN: My sense, at least from my standpoint, was that it was more of a problem for them than for the people they were hiring.

ANDERSON: It didn't stop Gerry Levin from hiring me. It didn't stop me from doing a lot of things.

YUTKIN: Smart guy.

ANDERSON: He saw something in me.

YUTKIN: So you were a hard worker.

ANDERSON: I didn't invent this, but one key to success is to choose a field that you're good at, stay focused and take reasonable risks. That's really what I've done. I've reinvented myself many times. When I see a stone wall, I don't crash myself against it. I figure out a way around it. Sometimes the way around it is to reinvent yourself and do something different.

YUTKIN: That's tough. So you've really benefited from the times that are changing. No matter what you would have done, say 50 years ago, it wouldn't have been ...

ANDERSON: It turns out I was born 50 years ago.

YUTKIN: I mean 50 years before that, so 100 years from now. So things are getting better.

ANDERSON: Yes, they are. I'm old enough. I'm sixty. I'm old enough to keep score. I know what it was like when I was born. I've been on the front of some of the change.

YUTKIN: What do you tell the younger ones? What do you tell the kids that are so angry?

ANDERSON: There are two messages. I tell the kids who came out of Harvard something different than what I'd tell the kids who come out of Harlem. Kids who come out of Harvard without understanding that they're a link in a chain and the battle isn't over, that they're standing on others' shoulders and they're the link to the next so they have to always be aware of the responsibility and the need and the opportunity to take gains to the next level. The kids in Harlem or "Harlem, USA" if you will, need to be motivated and see positive examples from those that they can identify with. It's part of the reason I've been such a champion and advocate of media change, whether it's television or magazines. I remember when there was only one magazine that showed positive images of blacks in this country and that was Ebony. I remember when there were very few, if any, blacks ever on television and when Nat King Cole couldn't stay on because he couldn't get a sponsor. I know that the best way to motivate kids, because of my own experience, is be connected to positive experiences. Today we have athletes and businessmen. We have blacks who are on boards, and CEOs of Fortune 500 companies. The good news is that most of those blacks have a sensibility and a consciousness about the need to give something back. So they're going to schools. They're reaching out to these kids. They're providing motivation. And today you can turn on the television or watch a movie, go to the theater or see a magazine on the newsstand and you see positive imagery.

YUTKIN: How do you react to the really sad situation of Gerry Levin's son who was trying to do that kind of thing? Did you know him?

ANDERSON: I had met all of Gerry's kids and only a couple did I get to know well. I did not know Jonathan well. Jonathan was from Gerry's first marriage, and I was closer to the kids from the second marriage.

YUTKIN: But he was doing exactly that.

ANDERSON: The reaction was strictly a personal feeling I had toward Gerry. He was devastated by that. I remember I was flying to San Francisco, got off the plane, and heard that that happened. The first thing I did when I got there was call his assistant who was with him from the first day we worked together. I said I have to get my condolences into Gerry ASAP. She took the message in. But it was a personal reaction.

YUTKIN: He had been teaching in an inner city school and I guess one of his students....

ANDERSON: I didn't feel guilty. I didn't feel any sense of guilt or responsibility as an African-American to the issues that are affecting African-Americans around the country. I'm not responsible for all of it – any more than every white should feel guilty or feel bad about Columbine or all the other things that go on.

YUTKIN: Sure, sure.

ANDERSON: The fact that this kid was willing to go into an inner city and work is really part of his dad's legacy. His dad was colorblind. Gerry is a person who sees the world – and that's the environment and the culture that his kids understand and relate to. It's going to take a lot of Jonathan Levins who are willing to go into communities, to begin to really turn the situation around. If we talk about the kid in Harlem who moves out because he's motivated, or the kid who graduates from Harvard or any other leading university or any university, what's left are kids that have deeper problems. Some of those problems, whether it's drugs or growing up in an environment where all they see is crime and lack of respect for gender or age or authority, that's the core of the issue – and that's going to take some doing and special talents from people like Jonathan Levin who are willing to reach out and catch them at that age. That's very important.

YUTKIN: And let me add people like Don Anderson who's been blessed and determined and successful. I think you've got a long career ahead of you, especially if you keep remaking yourself. It looks like it's been a very interesting few years with the cable industry.

ANDERSON: Yes, it has, beyond my wildest dreams and expectations. The next reinvention is yet ahead.

YUTKIN: That's true. We're very happy that you have been part of the industry and very happy that you took the time to meet with us to talk about the past from a very, very unique standpoint. Thank you very much for being with us.

ANDERSON: Well, thanks for the opportunity to do that.

YUTKIN: We appreciate it. And we appreciate the Hauser Foundation for funding the Oral History Project.

ANDERSON: I was so pleased to see Gus's name connected with this.

YUTKIN: Thank you.

ANDERSON: Thank you.

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BACK TO ORAL HISTORIES

Decker Anstrom

anstromDecker5

Interview Date: Friday September 29, 2000
Interview Location: Atlanta, GA
Interviewer: Tom Southwick
Collection: Hauser Collection

SOUTHWICK: It's September 29, 2000. I'm Tom Southwick and this is part of the Oral History Program of the National Cable Television Center and Museum. We're here at the offices of the Weather Channel in Atlanta, Georgia, with the Weather Channel President and CEO Decker Anstrom. Decker, if you would, can you tell us little bit about your family background, you parents, where they came from. Is Anstrom a Scandinavian name?

ANSTROM: It's a Swedish name from my father's side. His parents came from Sweden during World War I. My grandfather came to avoid the Swedish draft for World War I and settled in upper North Dakota during that part of the opening of the century. My father grew up in North Dakota. My mother was a southerner and grew up in the south primarily. Both of them were teachers so I grew up in an environment in which books mattered a lot and school mattered a lot. Ironically in terms of my later career, we never had a television at home when I grew up, partly because of their view that books were the right thing and television wasn't.

SOUTHWICK: Where and when were you born?

ANSTROM: I was born August 2, 1950 in Conway, South Carolina. Shortly after that we moved to Denver for a couple of years and then to the little town of Lander, Wyoming, up in the middle of the Rockies. I lived later in Oregon and northern Minnesota and North Dakota. My dad had a penchant for organizing teacher unions wherever he was. He always taught in small towns. The general cycle was that he would come in his first year to teach and pledge not to get involved in terms of arguing at the school board about what teachers should be paid. At the end of that year, he'd get involved in organizing a union. The second year he was there would always be the building year. The third year there would be a culmination of getting things worked out and then it was time to move on to the next community. So we moved about every two or three years, never by plan. In terms of the politics of local school boards, it was always best to move on to the next community at that point.

SOUTHWICK: What did your parents teach?

ANSTROM: My father taught math and science. My mother taught English.

SOUTHWICK: At what level?

ANSTROM: Both in high school. My mother was more of a frustrated English teacher, I think though, in that she didn't understand why high school freshmen didn't instinctively understand the beauty of Shakespeare. I think she would have been a little more comfortable teaching in a college environment.

SOUTHWICK: Did you have brothers and sisters?

ANSTROM: One sister who is 11 years younger than I am. She is now a bilingual education expert at George Washington University in Washington, D.C.

SOUTHWICK: What kind of interests did you have as a child or young man growing up?

ANSTROM: They pretty much revolved around sports and politics, I guess. Anything that was round, I was interested in. Fortunately, growing up in small towns in the upper Midwest and the west, the talent pool was smaller by definition so I had the ability to play baseball and football and basketball and all the other sports. Baseball was my particular passion. My best summer, I think, was the year I was about 12. I was right on the cusp of eligibility for different leagues so I could play sort of an advanced little league in the morning. I could play Babe Ruth baseball in the afternoon. And I was good enough to play on the American Legion team at night. So I could play baseball all day, seven days a week. That was the best summer of my life, I think.

SOUTHWICK: Every kid's dream.

ANSTROM: Right. Because of my parents, we had an active interest in politics and public affairs, public life. My father's hero in life was Adlai Stevenson. We always talked politics around the dinner table, whether it was national, state, or local. So I always had an interest in politics and public affairs as well.

SOUTHWICK: Were you active in some of the campaigns as a high schooler?

ANSTROM: A little bit. I'm sure I carried around my leaflets for the Democratic Party in whatever community we lived in. It probably wasn't until I got into college later that I got directly involved in politics.

SOUTHWICK: Where did you go to college?

ANSTROM: I went to college at Macalester College in St. Paul, Minnesota. I had a wonderful experience there for four years and then attended graduate school for one year at Princeton. I then took what was going to be a part-time job in Washington just for a year or two and then I'd go back and finish my graduate degree. I never made it back after coming to Washington.

SOUTHWICK: That was the Woodrow Wilson School?

ANSTROM: Right.

SOUTHWICK: Bob Johnson was there wasn't he?

ANSTROM: Yes he was. I didn't know Bob. I think he was there a year or two before I was.

SOUTHWICK: What did you major in in college?

ANSTROM: I majored in American Studies. It was a combination of political science and history and English. In the time of the late 60's, early 70's it was a self-designed major at the time. I primarily focused on American history, which, out of all my academic interests, was the passion I had most.

SOUTHWICK: Did you have a sense at that time of what you wanted to do or what direction you wanted to go?

ANSTROM: I was always interested in politics and public affairs. Probably through college, I always assumed I'd get involved in elected politics at some point. I was very involved in student government politics and worked in various campaigns in Minnesota while I was in college. The idea I think I had, probably vaguely at least, was I'd come to Washington for a couple of years, then I'd go back to North Dakota and run for governor or something. It took about 1 ½ years in Washington to figure out that people who were involved directly in elected office gave up an awfully lot of their private life, and I wasn't prepared to do that. But that was the original idea – to get involved in elected politics at some point.

SOUTHWICK: Outside of your family, were there teachers or others who particularly influenced you either growing up or later on in college?

ANSTROM: There were several. It's interesting. I never had my mother as a teacher. She did not teach when my sister was young so I missed having her as a teacher. But again, being in small high schools across the Midwest, ... my high school graduating class was 24 so it was hard to miss having my father as a teacher because he was the math teacher and you took math from him. He was an extraordinarily gifted teacher and had a joy of learning that I got a little bit of, not enough of probably. He really was the best teacher I ever had. He was a wonderful role model for me in terms of really understanding the joy of taking on a difficult assignment and figuring out how to solve it, just for the joy of it. I think, as I look back on all the teachers I had, he was the one who was really, truly the best. Plus, he was demanding. He always kept looking for a way to give me a B, and I never gave him that satisfaction in six years of teaching me. He was a lot tougher on me, as he should have been, in terms of the classroom. I had some remarkable elementary school teachers. I can remember Mrs. Patch who was my 5th grade teacher in Lander, Wyoming, who really opened up the world of reading in a way beyond just the way my parents had. She also had the happy coincidence of being the wife of the high school basketball coach so that was a good relationship for me in terms of getting a little special insight into what was going on with the high school basketball team. In college I had some wonderful teachers. My advisor for my Honor's paper and program at Macalester was an American History professor, Jim Stuart, who was an expert in the pre-Civil War south and the Abolitionist Movement. He really, again, was full of excitement about learning and insight into American politics and history. Probably the person who had the most influence, other than my parents, was a man named Arthur Flemming, the president of Macalester College when I was there. He had served in the Eisenhower cabinet, had actually been in Franklin Roosevelt's Civil Service Commission. I was privileged to get to know him. Again, it was a small college campus. It was the 60's and 70's. I had been president of the student body at Macalester. It was a time when student presidents and college presidents got to know each other pretty well. We developed a very close relationship. He later went to Washington, headed all the aging programs in the 70's as well as chaired the U.S. Commission on Civil Rights. He's the one who brought me to Washington to work as his assistant after I'd been at Princeton for a year. He was an extraordinarily powerful influence on my life. If you look back and sort of ask the question, "Who's been a mentor?" Dr. Flemming certainly was for me. He really taught me a lot about how politics and public policy worked. But more importantly, he taught me how important values are, not just in sort of your work life, but how your personal values influence everything you're involved in, and how one can stay true to those values as one makes the necessary compromises that we all have to make in our business and professional lives. He actually ended up officiating at the marriage of my wife and I at a later point. I met her at the old Department of Health, Education, and Welfare when I was working for him.

SOUTHWICK: Wonderful. So how did you come to Washington? Did he call you?

ANSTROM: He called me and asked me to come down and see if I'd like to spend just part-time working as his assistant. I was in full-time graduate school at the time, but I commuted back and forth between Princeton and Washington twice a week. After a year he said, "Why don't you come down and work full-time?" I thought, "What a great insight into Washington in terms of working with someone like him on issues that I care a lot about." Again I had this notion, "Should I go back to graduate school after a couple of years?" But I never made it back.

SOUTHWICK: There's still a chance.

ANSTROM: I couldn't get accepted now. I look at our children, and I'm glad I'm not competing against them right now. I think it would probably not be a good environment for me to go compete against the new generation of young people in graduate schools.

SOUTHWICK: What was your first job with Dr. Flemming?

ANSTROM: My first job was to work as his assistant in his role as U.S. Commissioner on Aging which had responsibility for leading really the establishment of a whole set of new social programs designed to focus on lower income, older Americans that grew out of legislation that was passed in the early 1970's. It was a time in which America was sort of discovering the idea that our population was aging and that there were a number of people who were struggling in terms of income and nutrition and other areas. The fellow you had an association with, Senator Kennedy, was very much involved in the leadership of a number of programs that were authorized, interestingly during the Nixon administration. One of the things people forget is that the Nixon administration, on domestic policy, was actually, if not liberal, at least pretty progressive in terms of their support for a lot of new domestic spending. So it was a time to come in and help work with him on shaping those programs and laying out the rules and how they'd be governed and administered and all that. It was a very exciting time.

SOUTHWICK: Was this a permanent agency or something set up for a brief period of time?

ANSTROM: Yes, it was a permanent agency. It still exists. It's now called the Administration on Aging, which is part of what's now the Department of Health and Human Services, but at the time was the Department of Health, Education, and Welfare. He was a presidential appointee, confirmed by the Senate in that position in terms of administering those programs - interesting, in terms of having been the Secretary of HEW and then coming back in in a sub-cabinet post in HEW. But again, he was very committed to public service and an opportunity to really get these programs off the ground and get them shaped. About that same time, he also became the chairman of the U.S. Commission on Civil Rights. While I never worked directly for him in that post, because of my relationship as his executive assistant, I got some real exposure into the civil rights issues he was dealing with. In particular, I can remember going up to Boston for a series of hearings the Commission on Civil Rights was holding in the early 1970's on school desegregation, feeling the tension in that community. I went into the Federal Building escorted by federal marshals with Dr. Flemming and others because of the tensions in Boston around bussing at that time.


SOUTHWICK: And you were still in your early 20's right?


ANSTROM: Very early 20's, right. So I had the privilege of working with Dr. Flemming through 1976, and then Jimmy Carter was elected president with a pledge to reorganize the federal government. They went about setting up a team in what's known as the Office of Management and Budget out of the White House to look at how to redeem a number of the promises "candidate Carter" had made, among them creating a Department of Education, taking the "E" out of HEW. So they looked for people who had been working in the government who knew something about how the government operated and could be part of this team. I somehow got identified and was recruited to go work on that team at OMB for two years. I primarily worked on the creation of the Department of Education both in the development of the plan and then lobbying it with the Congress. It was quite an extraordinary political experience.

SOUTHWICK: Did you have an office in the White House or in the old Executive Office Building?

ANSTROM: In that job, I was off in the "new" Executive Office Building, which is across the street from the White House. Then after the Department of Education legislation was passed, I was recruited to come over and work in the White House, in the "old" EOB in the White House complex, in the Office of Presidential Personnel, which is the office that recruits all the presidential appointees. I particularly worked on recruiting the secretary and the other senior appointees for the first Department of Education and then on other assignments as well. There I had, at about age 28 I guess, one of these offices in the old Executive Office Building that had ceilings about 14' high and that all kinds of people had undoubtedly occupied before. I pinch myself now that, in many ways at that age, it was probably the most remarkable job one could ever have. I can remember walking out of the old Executive Office Building at night, watching the flag fly over the White House and thinking, "Boy, am I lucky coming from Drayton, North Dakota, to be here working on some of the issues that I was." That was a great experience.

SOUTHWICK: In terms of lobbying the Congress, what did that teach you, that experience – in terms of how you go about lobbying, how you try to influence legislation?

ANSTROM: It's interesting. Of course you know a little bit about this as well. I never took a course in it. I think I had learned a lot working with Dr. Flemming on the aging programs. But I learned a couple of things. One was the need for constant communication, the notion of no surprises. Congress is a very busy place and there are a lot of things that go on. One certain thing that will upset, I think appropriately, any member of Congress or staff person is if there's a surprise about what your position is or what you're thinking about or what you're going to do or propose. The notion of constant communication was one thing I certainly learned. I did burn up a lot of the proverbial shoe leather along with the team I was part of in communicating what we were thinking about in terms of what should be in the Department of Education, what its impact would be on other departments and agencies, what our vision was for the department. I don't think there's ever any substitute for that in terms of constant communication. I think, also, listening well was part of that. In the end, the Congress does dispose of what the Executive Branch recommends. Some administrations do better than others at this. Being able to listen carefully to the advice you get is important. Sometimes it's advice you don't want to have, but it's important to get that in terms of shaping something that actually can pass as opposed to trying to ram something through the Congress. I learned that. I think I also learned the importance of coalitions. We worked very hard from the White House on this legislation to create the Department of Education, for example, to have allies in the education community, in the public administration community, in the press and elsewhere. Members of Congress are influenced in lots of ways. While administrations, if they do their job, can have an influence on Congress, being able to have friends and allies in the effected constituencies and in the media and elsewhere is also important. I spent a lot of my time working on cultivating and building those relationships as well.

SOUTHWICK: And you were a Democrat? Dr. Flemming was a Republican so that notion of reaching across the aisle was....

ANSTROM: Absolutely. It was also a time in Washington that was heated. Of course, it was a time just after the Nixon impeachment, the reform candidate coming in, and the Republicans reeling in many ways after all of that, so there were still some pretty sharp partisan feelings. Yet I look back on it compared to the Washington we see today, and there were real giants in the Congress at that time who reached across party lines. They socialized with each other. They took an interest in what was happening with their children and their families. They spent some private time with each other getting to know each other in a way that allowed more of a bipartisan approach to legislation. Some of this is probably old fogeyism now looking back 20 – 25 years ago about how it "used to be" in the Congress. But I think there was something fundamentally different then than the way it is today. Now the typical member of Congress is in Washington 2 ½ days a week and is out raising money in their district the rest of the time. One, there isn't even the time to build those relationships; and two, the partisan walls have gotten awfully high. There's very little of that communication across party aisles as there was in the late 70's, mid 80's.

SOUTHWICK: Jimmy Carter was not reelected.

ANSTROM: Right.

SOUTHWICK: Where did that leave you?

ANSTROM: Well, sitting in the old Executive Office Building, knowing that I was going to be looking for a job. There was a little irony in that in that sometimes when I'm working on a project that I wonder, "Why am I spending my time on this," I do use this one experience that I had at that time as a balance – "Well, I could have been doing that." For the last three months of the Carter administration, starting at about Labor Day through the election, I was given an assignment to develop the briefing book that would be handed to President Carter the day after he was reelected on how to staff and reorganize his administration. It was a beautiful briefing book. I still have it in my attic at home. I worked really hard, night and day, seven days a week, lots of consultations with senior staff and others. We had a set of personnel recommendations and moves and people we wanted to bring into the government that would be handed by the Chief of Staff to the president the morning after he was reelected. So that was an exercise that I probably learned a lot, but it didn't pay any dividends. January 20, 1981 came and went, and I ended up moving to a consulting firm that was associated with a law firm that had a very prominent member, Walter Mondale, who had just joined them. I worked in the consulting firm. There was just two or three of us, actually beginning to build some business and to work with people who wanted interpretation about Washington; then as a pro bono effort, beginning to work literally weeks after President Reagan took office, on getting Walter Mondale elected president in 1984.

SOUTHWICK: You had worked closely with him in the White House?

ANSTROM: I worked a little bit with him. I certainly knew about him and his people from my days in Minnesota. I knew his senior staff people very well, and I had worked very closely with them during the Carter administration. There were actually three of us: a fellow named Jim Johnson who ultimately became chairman of Fannie Mae and who was president of this company and who was the chairman of Mondale's campaign, Dick Holbrooke who had been an assistant secretary in the state department; and I was the young kid designed to get a lot of work done in terms of what the consulting firm was doing. I handled a lot of the domestic social policy work in the early phases of the Mondale campaign.

SOUTHWICK: What was your impression of Vice President Mondale?

ANSTROM: I have great affection for him. He is a man of great integrity, had a real view about the role of government in our society, cared passionately about issues I care a lot about including looking out for those less fortunate in our society including the value of education in our society. He was extraordinarily well-informed, intelligent man with a real sense of the world and the country. Again, I was very privileged to be part of his campaign. I wish we had done a little better. We did carry Minnesota by 15,000 votes, but that was it. That was a long election night as well, watching the Reagan landslide of 1984. But it was a great experience for me. I still see he and his wife, Joan, whom I'm both very fond of. They're really great people. In the end, I was proud of that campaign. We obviously lost. History will record that President Reagan with an 8.5% increase in gross national product in 1984, probably deserved to be reelected. But, you know, he cared enough to stand for something in that campaign and deliberately made a point of standing for something in that campaign. It was important to do, and again, I was proud to be part of it.

SOUTHWICK: Did you travel with him or were you in Washington?

ANSTROM: Not really. A couple of times I did some traveling with him selectively. One of my portfolios was the education portfolio that also involved getting the endorsements of the National Education Association and the American Federation of Teachers. So on some of those trips I would travel, but I was mostly Washington-based.

SOUTHWICK: So there you were, again, election night, 1984, once again without a job.

ANSTROM: Actually I still had a job because we had a consulting firm that still existed. We really went about building more of that. During the early years of the 80's as we were also working on the campaign, we had attracted several blue chip clients including Lehman Brothers that became Shearson Lehman Brothers and also Goldman Sachs. We did a lot of work with them on their mergers and acquisitions activities, their arbitrage activities and other things where some insight into what was happening in a regulatory agency or the Congress was very important. So I did a lot of work with those two investment banks. We also had a series of corporate clients who had various public policy and other related interests in Washington. Then I also had a portfolio of a non-profit organizations like the National Education Association, the American Association of Retired Persons, and others, where I'd work with them more on organizational issues – how to build a grass roots presence in certain communities or how to organize their public policy research functions more. That was less lucrative but also a fun part of the business. I really dived into that full time beginning after the '84 campaign.

SOUTHWICK: And the firm's name?

ANSTROM: Public Strategies was the name of the firm. We founded it in '81. Actually, it subsequently turned over into several other hands now and is being run by a great guy, Joe O'Neill, who at one point was Senator Benson's chief of staff and really just an extraordinary guy.

SOUTHWICK: And you stayed with them for how long?

ANSTROM: Till the end of 1987. Then I got a call from a very close friend out of the Carter administration and the Mondale campaign, Bert Carp. Bert had worked for Senator Mondale on the Hill, had been the deputy policy director in the Carter administration, had gone to a law firm in Washington and then had gone to NCTA in 1984 with Jim Mooney. He was leaving NCTA at the end of 1987 to set up Ted Turner's Washington office. Bert called me. We had stayed in close touch. We were good friends through this period of time. He called one day and said, "You know, I'm going to be leaving NCTA, been talking to Jim Mooney (who I did not know) about somebody who might become the executive vice president of NCTA and would you be interested in coming over and meeting Jim?" It sort of struck me as the right thing to do. I had not worked in communications much. I was a cable subscriber. That was good. And I liked cable television.

SOUTHWICK: Although you'd not had a television set when you were growing up.

ANSTROM: I made up for it with a vengeance after I left home. So I went over and saw Jim and after meeting with him several times, he offered me a job to come to NCTA then.

SOUTHWICK: You had not known him when he worked for Brademas on the Hill?

ANSTROM: No. I worked with Brademas and some of the other Brademas people but I hadn't known Jim. Jim was a legend in the Brademas because he was a political strategist for John and was a guy who clearly had a lot of clout, not only with John Brademas but also in the House Democratic caucus. But I had not worked directly with Jim. I had worked with some of the committee and sub-committee people who handled the policy issues rather than the broader politics, which Jim handled for John Brademas.

SOUTHWICK: And your position at NCTA was executive vice president?

ANSTROM: My title was executive vice president, sort of a deputy to Jim.

SOUTHWICK: And how did you divide the duties? What were your responsibilities?

ANSTROM: It was always an ebb and flow, but there were a couple of things. I had, sort of, overall administrative day-to-day duties in terms of the budget, the hiring and related things, keeping the house in order. That was one part of it. Another part of it was working closely to coordinate the various things that were going on so that our public affairs and our government relations and our grass roots activities were coordinated. I worked closely with our government relations team and really, sort of the in-house part of our grass roots work in the cable industry in making sure that if we needed to get Congressman Schlobotnik's vote, that the right cable operators were visiting Congressman Schlobotnik in terms of impressing on him the importance of being associated with the cable industry's position on some things. So there was a lot of that. Then the first thing that Jim gave me to work on, that I spent a lot of time on, was beginning to build a strategy and execute a strategy to defeat the telephone company's interest of getting into the cable industry. I spent a lot of time on that. So those were the broad responsibilities. One of the more interesting assignments I got from Jim early on was to help staff a group to create CableLabs. Jim had a real vision, along with Dick Leghorn, about the need to have an R&D capacity in the industry. Jim talked to John Malone in 1988 asking if this was the time to get started. John said he thought it was. Jim asked me to work with him in terms of pulling people together and creating a committee and went to work on developing the outline of CableLabs. That was a fun assignment. There were other assignments, as need be, as part of that job description as well.

SOUTHWICK: What was it that attracted you, in terms of the cable industry or the NCTA? Why did you make the decision to go there?

ANSTROM: Bert had talked very expansively about Jim and about NCTA and about the role it played in the industry. Bert was a good friend, and somebody I really trusted. Bert's view was coming out of the 1984 deregulation of the industry and the explosive growth going on – that this was going to be a really interesting time. Little did I know how interesting.

SOUTHWICK: You said it was an interesting time in the history of the cable industry. How so?

ANSTROM: Well, of course, what happened is I sometimes felt like the fellow who walks with a cloud over his head. I came out of the consulting business. My two major clients were Shearson Lehmann Brothers and Goldman Sachs. There was a stock crash of October, 1987. I came into NCTA, again at a time where there was obviously a lot of growth, a lot of expansion, a lot of innovation in the cable industry. But at the same time, in early 1988, Senator Jack Danforth introduced a bill to reregulate the cable industry, and of course we went through the 4-year death march that led to the 1992 Cable Act. In terms of the public policy environment, working with the cable industry in Washington at that time, it was an extraordinarily intense time. It was a little different than probably I would have expected coming in. But Bert had laid out, very clearly, the role that NCTA played and the excitement that one could have in a new, growing industry like cable. And Jim was somebody who – one was immediately impressed at his intelligence, his insight about the industry, his love for the industry, the opportunities to make a difference from a platform like NCTA. I had the opportunity of working with someone with a lot of intelligence, a lot of integrity. That mattered to me a lot as well. And of course, NCTA had a wonderful reputation in Washington as well - I checked with friends – in terms of being a trade association that represented its industry well and with a lot of integrity and directness and candor. That all appealed to me. And the fact that I was just to be able to learn a lot. Having done different things, a chance to basically get an on-the-job education at NCTA in a reasonably senior role in an industry that clearly was right on the cutting edge not only of technology but also of entertainment, struck me as a great perch in terms of learning some new things. All those things went into my decision to go there. Despite some pretty bleak moments in 1992, I was glad I did.

SOUTHWICK: Was NCTA structured differently or positioned differently somehow? How do you compare it to other trade organizations that existed in Washington? There are hundreds of them, right?

ANSTROM: The principal difference about NCTA then and still now, is the direct involvement of the CEOs of the companies. I think that is NCTA's unique, on-going strength. The board isn't a group of the vice presidents for government relations of all the different companies or senior vice president for the subsidiary of some part of a company.

SOUTHWICK: Which is more typically ...

ANSTROM: ... which is more typical of most trade associations. The notion that you have, not just in a pro forma sense but in a real sense, the CEOs on the board, participating in the association, coming to the meetings, being at the table. They're the decision makers. So you really get an exchange of views, and you can make a decision at that table about what you need to do. The CEOs also support the association in terms of resources, cooperation of their companies, all the other things that need to happen. That's been the most important thing about NCTA's enduring strength. The other thing, I think, is that the industry has generally been supportive of NCTA as well. Obviously a lot of that comes from the CEOs involvement. I think NCTA has played an important role of leadership in the industry as well as supporting the industry's companies. I think that really has been what's, in large part, differentiated NCTA is that CEO involvement in the industry support.

SOUTHWICK: Talk a little bit about, if you will, your impressions of the board members, either collectively or individually, as you got to know them. This must have been a different experience. Were they sophisticated politically? Did they understand how the process worked, for example? You said they were very involved.

ANSTROM: It obviously varied from CEO to CEO. One thing that was interesting to me right away was that they all had an appreciation for the importance of politics. My sense was that a lot of that came out of their experience of local franchising. While they may not have known a lot about how Washington worked, you didn't have the challenge that you had probably in other industries about why does Washington matter, why does politics matter? Clearly, everyone around that table typically, at that time in the late 80's, had had personal experience in local franchising issues so that they knew that politics mattered. And of course, they had just come out of the 1984 Act in which they saw how Congress could have a direct and substantial impact on the future of their business. In that sense, there was a lot of appreciation for politics. There were also a lot of people in the industry who were genuinely interested in politics. Some of them were actively involved with various presidential campaigns. Some had run for office – like Glenn Jones. Others spent time with their local and state elected officials. This was not universal, but I was struck by the number of CEOs who personally had been involved in or were supporting people who were involved with politics. Different levels of sophistication existed obviously. Like any group of businessmen, there's always, in particular, a lack of appreciation for what really in the end motivates a member of Congress. I think there's an overestimation about the impact of money and an under-appreciation for the importance of constituents and consumer satisfaction with what you're doing in your business. In the interest of protecting people, I won't name people in this interview, but there are any number of people in the industry during my experience with NCTA who said, "How could that SOB vote against us? I wrote him a check for $1,000."

SOUTHWICK: Meaning a campaign contribution.

ANSTROM: Right. Always a legal campaign contribution. I want to be sure we're clear on the record here. But you know, and I know, ... in a sense, campaign contributions, are like a turnstile token. It gets you in the office to make your case, but there are a lot of other things then that a member of Congress is going to weigh in terms of how he does something. I think there's probably some lack of sophistication there. And I think in some ways, the industry – in the late 80's and early 90's in particular - was a little over-confident because of their success in 1984, and I think did not fully appreciate how important it was to have happy local officials and happy customers. It was one thing to be the plucky underdog in 1983 and 1984, and members of Congress would overlook some customer service problems or some other things because Congress genuinely wants to help the underdog get a chance to compete in American business. By 1990, the cable industry wasn't the underdog anymore. I think people in the industry missed that dynamic.

SOUTHWICK: As I recall, the '84 act had a rate deregulation provision that kicked in about three years after the act was passed. So it must have been right about the time that you came to the NCTA that rate regulation ended.

ANSTROM: Right.

SOUTHWICK: What happened then?

ANSTROM: All hell broke lose, clearly. It's the only way to describe it. I remember sitting there in 1988, having just finished reviewing an Arthur Andersen survey, funded by NCTA, of what was happening with cable rate increases. We were looking at double digit cable increases all over the country. Those persisted through '88 and '89 and '90. Again at one level, they were fully understandable, fully justified in terms of the pent up investment that was made by the cable industry, the dramatic expansion and channel capacity, the second generation of all the cable networks that were launched, the improvement in the existing cable networks. This wasn't by and large (there were some instances), price gouging. This was reflecting the improved quality of what people were being offered, and consumers were obviously responding to it in terms of people subscribing to cable, taking extra packages, second set hook-ups, and all the rest. Consumers liked the product. But there was a disconnect, I think, in terms of the industry's ability to explain the relationship between the price being charged and the value being delivered. I think that, frankly, that price/value equation is one the cable industry still hasn't really solved in terms of communicating to consumers. But in the late 80's, clearly all hell broke lose in terms of city councilmen getting calls about cable rates going up. That was then compounded by the customer service problems that the industry faced. I actually think, in retrospect, and I'd be interested as the industry reflects on this over time whether others agree with it, we could have survived one or the other, but not both. I think it was the double kiss of death of both the price increases and lots and lots of situations of poor customer service. In the end, Tom, as one looks at what happened in 1992 finally, I have often joked that what happened to the industry then in Congress was "death by anecdote", that every member of Congress either had a personal experience or something in their family where they had a bad experience with the cable industry.

SOUTHWICK: Were there particular ones that hit particular key members of Congress particularly hard that you can recall?

ANSTROM: Well I can remember several quite distinctly in terms of the impact in Washington. Certainly the price increases in Hawaii had an enormous impact on Senator Inouye who had been a staunch supporter of the cable industry, who believed in deregulation, who wanted the cable industry to compete, who is one of the most fair-minded, principled men in the Congress. But it goes back to "don't surprise people". When prices jumped in Honolulu, and he hadn't been told, and his constituents were unhappy, we committed the worst offense you again with any member of Congress – which is that we surprised a friend. So that certainly was one. The story has been told many times - and others can probably tell it better than me, but we felt the impact as did Jim and others in Washington – of the increases in western Tennessee by the Pompadour systems. These were not systems that were being rebuilt. These were not systems that had any new programming. This was price gouging with 15% - 20% price increases at a time when Al Gore was clearly wanting to promote additional competition to the cable industry from satellite. It was an absolutely responsible public policy on Gore's part. He wasn't part of the regular anti-cable gang. He wanted to promote competition, not to regulate cable. And yet, in his own back yard, in dozens of communities, the prices went up in ways that nobody could defend. So those are two that I remember quite vividly: Hawaii and western Tennessee.

SOUTHWICK: How did you personally hear about the reaction to this? Were people on the Hill telling you this?

ANSTROM: It didn't take long to get translated in terms of calls from the Hill. They probably didn't land on my desk directly. Usually the first spear was thrown directly at Jim, I think, or one of our lobbyists. It didn't take long for people to let us know how unhappy they were about it.

SOUTHWICK: What did the NCTA do to try ... Let me ask you a couple of quick questions about the NCTA. When you came in, how big was it? Roughly what was the budget and how many people were employed there?

ANSTROM: That's a good question. I would guess roughly about 75 people, probably a budget of $15 million, something like that. That would be my guess.

SOUTHWICK: And most of that came from dues or from the trade show or both?

ANSTROM: Most of it then and now comes from dues. The trade show has a very small incremental addition to the overall revenue for the trade association. Most of it is dues. And the dues are roughly 80% cable operator, 20% cable network. The ratio was probably a little higher, operator to network, at that time because of course the networks were still in their early stages. But now it's about 80-20. It might have been 85-15 in the early 90's.

SOUTHWICK: You mentioned that one of your first tasks was the issue of telephone companies and whether they would get involved in cable. How did that play out, particularly against this background of the rate increases and so forth?

ANSTROM: Well, of course, what happened was that the phone companies were very smart about seeing the opportunity to make the case that what cable needs in competition. I can remember Jim and Cynthia Bromfield, who at the time was the vice president for research at NCTA, and me spending lots of time working on trying to develop analyses to combat what the telephone companies did. They very quickly started issuing reports on a regular basis to the Congress, about all the price increases of cable companies. We were put in the defensive posture then of saying, "No, it really wasn't a 12% increase in Murphyville, Tennessee; it was only 8%. And no, the national average increase wasn't 15%. It was only 10%." Of course, every time we had that debate, we lost more ground. And the phone companies were very smart and very aggressive on that. So they seized the rate increases as a way of making the case to allow them to come in and compete with the cable industry. Of course that prohibition was one that went back some number of years on the basis that you didn't want someone with monopoly power, particularly over facilities that the telephone companies had, to be able to move into adjacent businesses and leverage that monopoly power.

SOUTHWICK: Did they want to own cable systems or try and offer cable over their own wires or both?

ANSTROM: Both. They clearly had in mind buying cable systems in regions, but particularly they also wanted to build cable systems and compete with the cable companies. They had a broader agenda. They were trying to figure out how to hood wink the telephone regulators into allowing them higher phone rates or better depreciation provisions in terms of their telephone business. Of course they came upon the nice idea that if we, as a telephone company were going to create competition to cable, then of course you'd want to give us more flexibility in our core telephone business to build out the facilities to compete with cable. So that was their economic game plan.

SOUTHWICK: So they were pushing for legislation to allow them to do that.

ANSTROM: Right.

SOUTHWICK: At the same time, there were a host of others folks who were pushing for legislation to impede cable in one way or another – the backyard dish people, the broadcasters, the Motion Picture Association of America. I assume they seized upon these rate increases as a justification.

ANSTROM: Absolutely. I have sort of this mental picture, Tom, of that period starting.... particularly once the rates started to go up and the controversy began and Senator Danforth put in his first bill, I guess it was really '89. Once that process started, I had this image that you see on certain unnamed cable networks (it's not the Weather Channel) of the elk out on the tundra that has been wounded, and the wolves begin to circle, and they start biting different parts of the wounded elk. We were the wounded elk, and the wolves began to come. One big wolf was the phone companies who had their agenda. Another big wolf was the broadcasters who wanted "must carry" and retransmission consent. Another big wolf was the motion picture industry who had a set of issues in terms of vertical integration by the cable companies. Another big wolf were the cities that wanted to revisit some of the franchising issues and local programming and related issues. Another big wolf was the electronic consumer companies who had some issues about set-top boxes available in their retail market-place. It became a wish list. In the end, when the cable industry made the decision not to negotiate but to defeat legislation in the '91-'92 Congress, the congressional proponents of the cable regulation did what any congressional leader does at that point which is if Group A comes in and says, "I'll support your bill if you'll put another title on that gives me what I need." It just got stacked up and before long there were a lot of very big locomotives pulling this cable bill across the tracks.

SOUTHWICK: Senator Metzenbaum held hearings in the Senate as well.

ANSTROM: Right.

SOUTHWICK: There was a change in leadership in the House also in the mid-80s. Tim Wirth, who had been the chairman of the House Telecommunications Sub-Committee, moved to the Senate and a new chairman came in.

ANSTROM: Right, Ed Markey from Massachusetts and obviously a critic of the industry. It's interesting watching the evolution of some of these guys. Markey is a good example of that. Markey was a defender and a proponent of the 1984 Cable Act deregulating the cable industry. I think he wanted to see competition to the local broadcasters. He believed in more voices, more opportunities for consumers to get information, but I think he felt hoodwinked a little bit, probably, in terms of what happened in the late 80's on prices and customer service. His answer was both to regulate the industry and to create competition. Obviously he became one of the industry's harshest critics and led the effort to re-regulate the industry in 1991-92. He was very effective. There's not a better insider in the House, even in his minority role today. He knows how to get votes and how to cast an argument, how to use the press, how to work across the aisle if he needs to. He was a very talented leader of the regulate cable efforts in '91 – '92.

SOUTHWICK: As the anecdotes piled up and as the momentum moved towards legislation, hearings were held. How did the NCTA develop its strategy and how did that strategy change over the period of '87 – '90?

ANSTROM: I think initially what we tried to do in the '89-'90 period was to really try to do two things. Internally, obviously, we tried to counsel the industry to be careful and to slow down some of the price increases, to pay more attention in terms of communicating with consumers and local officials and the media and others about what was happening and how we were providing better value. So there was that part in terms of the internal communication. That obviously had some success but not enough. The second part of it was to make the public case in Washington that whatever short-term issues were going on in terms of price increases, that this was to be expected in an industry in which prices that had been artificially depressed for years, that this was a short-term phenomenon, and that the prices reflected the increased value the consumers were getting. A lot of people took the time to listen to that argument, and I think we had a credible argument to make. People saw it in their own living rooms which was the other thing. Suddenly, looking at the major move of pro football to ESPN and TNT, and what some of the entertainment networks were beginning to do, the growth of CNN as the place to turn to for breaking news. There were lots of things happening that validated the idea ...

SOUTHWICK: C-SPAN brought these politicians home.

ANSTROM: Absolutely – in everyone's living room. But I think there was a lot to validate the idea that the investments that the cable industry was making, while it was being reflected in retail prices, was also producing value. So we tried to make that case. It became pretty apparent as we moved into 1990, that that case was not going to stick though. The effort at that point was to see if we could work out a compromise with the Congress that would give up some of what had been gained in 1984 but not go to the core of the business. There were two competing issues here, as you know. One was the rate regulation issue. The other was the rather extraordinary idea that the Congress would mandate that cable programming had to be made available to any distributor, the so-called program access provisions. The industry was trying to balance those two, and the judgment was made that the industry could accept some price regulation as long as it maintained the ability to control its own product. People forget how close that came to passing in 1990 in terms of a compromise with the Congress. The bill actually cleared the House committees, cleared the House. It started to move through the Senate and again we just didn't make the final compromise. That happened for a couple of reasons. One is that people like Senator Metzenbaum wanted more than the industry could agree to, particularly on the program-access issues. Also, the industry itself started to fracture a little bit. This is a very entrepreneurial industry. It's an industry that really, like any industry I suspect, would rather not have government bureaucrats telling us how to run it. We'd like to run it as business people in the marketplace. There were clearly some voices in the industry in 1990 saying, "We don't want this bill. We don't want partial regulation." So when the effort to shape a compromise in 1990 fell apart, the question in 1991 was: would the industry come back and try to compromise with the Congress again or we would try to just beat any legislation.

SOUTHWICK: It was a fairly dramatic series of actions, weren't there, at the very end of the Congress in 1990 involving Senator Wirth? Can you tell us your view of that? I know Jim Mooney was still head of the NCTA and calling the shots mostly, but how did that unfold?

ANSTROM: Well, Jim really made an extraordinary effort to reach out to Senator Wirth and Senator Gore to see if there could be a compromise on the program-access provisions. Again, people sort of now look back on the '92 Act and how bad it was on rate regulation. Even in 1990 with the issues that were out there, there was more focus on the program-access and pro-competition issues than there was on the rate regulation. People weren't punitive yet in terms of the rate raise. So there was a reasonable bill that passed in the House, a different kind of bill in the Senate – but one that we could have worked with. The issue was could Senator Wirth and Senator Gore come to some conclusion on program-access. Senator Gore obviously wanted to promote satellite competition to cable and understood that program-access was important to the satellite industry.

SOUTHWICK: This gave the direct broadcast satellite people the right to transmit ESPN, HBO and other cable programs.

ANSTROM: Any cable programs, exactly, which clearly they viewed as essential in terms of being able to have a product that consumers would want to buy and they could compete with cable. Exactly. There was a several week-long negotiation between Senator Gore and Senator Wirth on that provision that in the end came awfully close. But Senator Metzenbaum put his nose in at the last minute over the issues of whether this would cover regional sports networks, and the deal couldn't be put together.

SOUTHWICK: And Senator Wirth ended up filibustering, didn't he on the very last day of the session?

ANSTROM: Yes. Then there was an effort in which Senator Wirth along with Senator Wallup from Wyoming, I believe, and several others were involved in basically talking the bill down at the end. Actually, it was one of the great debates. It's somewhere in the C-SPAN archives. You really don't think of the floor of the Congress anymore as a place where people really get out and have a debate. People walk out with their talking points and their pre-prepared slides and boards and all that. But very seldom do members of Congress have enough confidence to get out on the floor and actually have a debate. I remember now, and I've actually seen it a couple of years ago again, the debate between Gore and Wirth on the Senate floor that went on for almost two hours. It was really quite an extraordinary debate in terms of two very smart men, very passionate views, very well-informed with their arguments well-marshaled. It was sort of like the old Senate. You had two smart people out and there weren't staff handing them notes or anything. They were going at it.

SOUTHWICK: Two Harvard guys.

ANSTROM: That's right.

SOUTHWICK: Two Democrats from swing states.

ANSTROM: Absolutely, absolutely. But it was a remarkable debate in terms of a very... again, you sort of think about it at the time.... That debate was a reinforcement for me about how important cable television was. At one level, you sort of step back. I think all of us, from time to time, as these cable wars in the late 80's and late '90's were being fought in Washington: we have a depressed economy; we have an energy crisis still facing the country; we've got instability internationally; we have health care problems; and we're debating cable rates? But I think what that debate in particular, the passion that was brought to it, the breadth of that debate on the Senate floor, should have reminded all of us in the cable industry that we were dealing with something that wasn't just a utility. We were talking about that screen that's on in every living room in the country seven hours a day, and people cared passionately about it. That debate probably, to take a whole day on the Senate floor, was pretty extraordinary in that regard.

SOUTHWICK: So the effort to compromise failed. The cable industry blocked the bill at the end of the session. Where did that leave things after the election in 1990 and a new Congress coming in?

ANSTROM: It left the new Congress in a position of coming right back and saying, "We want to take this issue up again." And of course, in the meantime there hadn't been much that really changed in the external environment. We were still having problems with price increases. All those wolves were out there circling the elk with their own agendas. They hadn't been fulfilled yet. We still had customer service problems in the industry, although for the first time in 1990, the industry had adopted, with Jim's leadership and Bob Miron and John Goddard really playing significant roles in this, setting some customer service standards that every cable company signed up to. That was really the first step in the industry - beginning to rationalize how it delivered services and recognizing that there were certain standards that every company really should try to meet. It was a little "too little, too late" probably by that point. So in 1991, the Congress came back. Senator Hollings and Senator Inouye and Congressman Markey basically said, "Do you want to pick up on this bill and try to work it out or not?" By that point, the Bush White House had sort of focused on this issue, in part on its own and in part because, I suspect, some people in the cable industry who didn't want to make a deal and said, "Wait a minute. This is economic regulation of the communications industry." And they communicated in no uncertain terms to NCTA and other cable companies, "You can't have it both ways." That is, you can't go out and start negotiating with the Democrats on the Hill on a compromise bill and then if it gets out of hand, assume that we're going to veto the bill. So if you want to go for a kill-the-bill strategy, we'll be there for you. But that means we don't want to see you up negotiating a bill on the Hill." This, if you were the Bush administration, was the right call, I think. It put the cable industry in a very excruciating position. In the end, the judgment was made to try to defeat the bill. It looked like a pretty good decision in 1991. Then the Persian Gulf War came along. President Bush's popularity rating was at 90%. His reelection looks assured. Democrats were being careful not to cross the President because of a whole string of bills that he had vetoed and sustained successfully.

SOUTHWICK: Bush had a very close, personal relationship particularly with Bill Daniels, I think.

ANSTROM: A very close relationship with Bill Daniels, in particular, which went back – as I understand the lore at least on this – to the '88 campaign. At a very critical moment in candidate Bush's candidacy, Bill organized some very well-placed support for him with some of his friends out of pro football, if I recall, in terms of some significant fund raising for the President. And of course they had a relationship coming out of Denver and the west. President Bush clearly had a philosophy opposing economic regulations. So none of this is surprising for the Bush administration, which had really promoted deregulation and competition. So that was the bet the industry made in 1991.

SOUTHWICK: You had a popular president coming out of the Persian Gulf War. The effort in '91 – '92 really hung on political prospects of President Bush. What happened to those?

ANSTROM: Two things. One is, it hung on our ability to convince the Democrats not to support the overall smorgasbord of things that had been lined up. And there were several efforts to change the bill. There was a very vigorous vote on the Senate floor on an alternative that was offered by Senator Kerry from Massachusetts and Senator Packwood from Oregon that would have had some rate regulation but did not have the retransmission consent, must-carry load and had a more moderate form of program access in it. That amendment actually got a fair number of votes in terms of the Senate floor debate. So there were some efforts to try to head off - notwithstanding the sort of delicate position the industry was in in terms of don't negotiate in order to preserve the veto threat - to try to find some more moderate alternatives. In the end, those really failed. I think the reason for that was that the industry really couldn't fully engage in a process of saying, "If you pass that more moderate alternative, we could support it," because we really couldn't say that given the Bush White House. And that was the exquisite torture chamber we were in as we went through on this. So in the end, this came down to the final scene on the House floor shortly before they adjourned in 1992 on the veto override vote with members of Congress literally running to the microphone saying, "Here's a chance to show the country what we really think about President Bush and the need for a new administration." Of course there had been a statement out of Little Rock from Clinton supporting the vote to override the veto.

SOUTHWICK: So it became part of the presidential ...

ANSTROM: It was part of the presidential election ...

SOUTHWICK: ... and Gore was the vice presidential nominee.

ANSTROM: Absolutely. Absolutely. And I think, as we went through the vote counting on this in a more calm moment, not in the last moments before Congress adjourned right before the election, the Bush administration working with the industry would have had a chance to sustain the veto on the House floor. It came very close in the Senate. I'm sure you've heard these stories, but in the Senate as we counted the votes, we were really one vote short in terms of the votes needed to sustain the veto in the Senate.

SOUTHWICK: And the way the process works is that the president vetoes the bill, and then in order to override the veto, you have to get two-thirds majority in both the House and the Senate?

ANSTROM: Right. We came very close in the Senate.

SOUTHWICK: So all you needed was 37 votes in the Senate.

ANSTROM: 37 votes in the Senate. There was a block of eight votes, including some Republicans who were up for election. If we could get all eight, they would all vote together to join the other people who were prepared to sustain the veto. But we could never quite get the eight put together. The person in particular who fell off the wagon was Senator D'Amato from New York who had made a personal commitment to the Dolans and John Tatta that he would be there. Up for reelection in 1992, he just decided that commitment didn't mean anything. There were some other tantalizingly close votes like that. But it came that close, actually. In retrospect, it sort of looks like a landslide. Again, the Senate vote, in particular, was a very close call. And I think the House one would have been an opportunity to sustain a veto if you weren't voting one week before the Congress was adjourning to go out for a presidential election. It obviously didn't, and the bill became law. In retrospect, I shudder to think what 1993 would have been like if the industry had sustained a veto. The Clinton/Gore administration comes in, Ed Markey welcomes us again with, "Do you want to negotiate or ...?" It would not have been a pretty sight to do this a third time. The third time, all holds barred would have been disastrous. We would have been absolutely stripped naked, I think, if there had been a third time through this. As painful as the '92 Act would have been, I can't imagine what the '93 Act would have looked like.

SOUTHWICK: Let me ask you about Senator, then Vice President Gore. Did this go beyond just politics. It almost seemed at times as if he had a personal vengeance against the cable industry, and I think some cable operators really felt that.

ANSTROM: I don't know, Tom. I should probably add a little disclaimer. I'm for Vice President Gore in terms of this election. I have a lot of respect for him. I think he would make a great president if he's elected this year. I don't agree with him on everything, but I think he understands the communications industry and telecommunications extraordinarily well. He has great insight into these policy issues. Having said that, looking back on the '91-'92 period in particular, I think some of it was personal. But again remember what happened. Right in the middle of a debate about program access for the satellite industry - which again I think there's a respectable view on either side of that issue. This wasn't a punitive view he was taking that if the satellite industry is going to be able to compete, they need access to programming. It's a dramatic step for the government to take to, in effect appropriate property and say, "You're going to have to sell it to somebody else." But it's not an irrational or indefensible position he took. Right in the middle of that debate, he's embarrassed in his own state. I think he does what any political official does at that point – he makes sure that's not going to happen again.

SOUTHWICK: And these are the rate increases.

ANSTROM: Right – the rate increases including his home town – 15% - 20%. So I think to that extent it may have been personal. I think the other thing is he's obviously extraordinarily competitive like most elected officials. I think once he got into this debate, he wasn't going to lose it. He certainly brings a focus to any legislative issue he's ever been involved in. Of course you only have to watch him as vice president or his campaign now – this is a very competitive man who wants to win any fight he gets involved in. I don't think that's personal in that sense. But I understand how the industry felt about it. There are, in the course of any debate, certain arguments made that were probably tougher than they need to be or broader than they need to be in terms of condemnation. The unfortunate comment about the "cable cosa nostra" and that sort of thing was inappropriate. So I understand the feelings. I had some of them as that debate was going through. I suspect if you look at any hotly contested legislative debate, you're going to see that.

SOUTHWICK: In the course of the debate over what became the Cable Act of '92, how did your role at the NCTA change? And subsequent to that, after '92?

ANSTROM: It didn't really change during that period through '92. I was sort of the inside guy, helping to coordinate the efforts we were working on. I worked on a lot of the vote counting, again linking what we were learning off the Hill to what we were then trying to do in terms of grass roots. So that was really my basic role throughout that time. After the '92 Act of course, the whole scene shifted to the FCC and how they would implement the legislation. We again were tantalizing close at several points to having a more benign interpretation of the '92 Act than ultimately emerged, but in the end, you had rules coming out in the fall of 1993 that imposed a 10% price cut on the industry along with obviously nearly 20 titles to the 1992 Cable Act. So there were many, many rule makings that were going on, but the rate proceeding was obviously the most critical. I worked a lot with Jim and the legal department and others in terms of trying to marshal the best cases we could to minimize the impact the rules had at the FCC.

SOUTHWICK: And it was about that time that Jim decided to leave?

ANSTROM: Right. In the summer of '93, I think Jim looked around. One of the things, of course, that had begun to happen during the 1990 debate on cable, and that became exacerbated during the '91-92 debate and certainly after the debate, was that the industry had become very fractured. We had tensions between big companies and small companies, operators and programmers, vertically integrated and non-vertically integrated companies. The industry had gone through what was really a 3 – 4 year very bloody, disruptive, public whipping by the Congress of the United States. It was not very conducive for industry unity, especially when you lose at the end of it. I think it was a very difficult situation by the summer of 1993.

SOUTHWICK: Let me ask you about, if I can interrupt you, the Program Access Rules, in particular, divided the industry. Is that fair to say?

ANSTROM: Yes.

SOUTHWICK: The programmers had a really kind of different viewpoint.

ANSTROM: It's interesting. From the operator's perspective, their view has been and continues to be, again not unrealistically, I think, "Look, we in effect invested in these programming companies." And it is a pretty extraordinary history when you write the history of cable programming, that people like John Malone said, "Look, I don't even really know what that work's going to look like on the air. But I'll say to John Hendricks, 'I'm prepared to support you. I'll write a contract guaranteeing license fees for something I haven't even seen yet because I believe in you and what you're going to be able to do. We'll grow this network together.'" And obviously that happened in terms of all the arrangements between cable operators and programmers. Together we built quite an amazing business that has really changed America I think. So I think the operators looked to that and said, "Well, we had a role in creating these networks. We should have a role in deciding whether they should be available to our competitors or not." From a programmer's perspective, of course, you really want to be in front of every person through every device you can be. So the notion that the law might enable you to have your programming in front of everybody appealed to some programmers, clearly. What the programmers didn't buy into, of course, was the idea not only that the government will require me now to sell my programming to the DBS industry but it's also going to regulate the price, terms and conditions of how I do that. So even the programmers who quietly were for program access never really liked the other part of it, which was the wholesale price regulation element of it. But that clearly divided the operators and the programmers, and it created a lot of tension inside NCTA because the NCTA position was to oppose program access.

SOUTHWICK: So these were the kinds of splits that really created big tension headaches for Jim Mooney.

ANSTROM: Absolutely. And you also had people who really wanted to compromise on rate regulation and people who wanted no accommodation with the government at all. The industry had gone through precisely that debate in 1984, as you've written, and previous times, so it's not new. But you had all those tensions. I think you also had tensions between people who would had behaved reasonably and responsibly, if you will, on prices and those who hadn't. I still feel that when I look at a Dick Roberts at TeleCable or a Bob Miron at Advanced Newhouse Systems, who really were careful about their price increases and who listened to the quiet jawboning that Jim constantly practiced of "be careful with your prices, take care of your communities, communicate what you're doing," they had prices that ended up being significantly lower than operators who priced very aggressively. Yet when rate regulation came, everybody got cut 10%. So there were lots of tensions and bad feelings there as well.

SOUTHWICK: And when Jim left, what was your situation?

ANSTROM: I was ready to leave. I'd been through the same process that Jim had, not as directly. I don't think anybody can understand the difficulty that Jim had with this job. Our industry will go through a lot of different versions of our history, but I hope, ultimately, when the history is written, that Jim's key role in leading our industry is fully appreciated. It's clear to me, as I learn the history, that there wouldn't have been a 1984 Act, that really was the "Magna Carta" for cable, without Jim Mooney's leadership and his legislative skills. If the industry had listened to Jim more carefully from '85 – '90, the picture might have been a little different. He almost pulled off a miracle in 1990 in terms of negotiating a compromise and I think, if some companies hadn't undermined him in the Senate in the end, we would have had a bill in 1990. In '91 – '92, he was the trooper who went out and made the case and, again, came tantalizingly close to getting a veto sustained. Minimum, he bought eight years of unregulated activity for the industry, which if one looks back, really gave birth to the modern cable industry. But that's a long time and a lot of pounding publicly and privately, a lot of wear and tear. By 1993, Jim had a wonderful wife and new son. Life's too short. I remember talking with Jim that summer of '93 about how he wanted to spend his life. Jimmy was young and clearly going to be the apple of his Dad's eye. I think the notion, when you're young and can do something else with your life, it's time to move on. And he made that decision. And I really had made that decision as well. I really wanted to move on and do something else. I was hoping maybe to do something with one of the media companies because I really had become fascinated by this business and thought it would be fun to try to translate what I'd learned in Washington, both at NCTA and earlier working with my investment banking clients in the real world outside Washington. I started talking to people about doing some different things. Amazingly, there were even some people interested. So a Search Committee was set up, the summer of 1993, to find a successor for Jim. I informed them that I did not want to be considered as a candidate. That was a very genuine view on my part. My wife and I began to prepare to leave Washington when somebody was picked to run NCTA. Then in about October, I got a call from Dick Roberts, chairman of the NCTA Board. Bob Miron was heading the Search Committee. Dick said, "Don't go anywhere."

SOUTHWICK: You were the acting president at that time.

ANSTROM: I was the acting president at that period of time. He said, "Don't go anywhere because we're going to want to talk with you." I said, "Well, let me think about it." As the process went on for a few more weeks, I ended up talking with Dick and Bob and then several of the Search Committee members came in and had breakfast with me, and they made an offer I couldn't say no to in December. So I became president, full-time, in January, 1994.

SOUTHWICK: What were some of the first things you really had to work on?

ANSTROM: There were a couple of things that had to be done. One, we were still, of course, in the middle of all the FCC proceedings that were going badly for us. One of the first things that happened in February, 1994 is that Reed Hundt came in as the new FCC Chairman. He was Al Gore's friend and determined to carry out the Democratic agenda and he cut rates another 7%. This followed on the heels of some actions in the late fall of '93 in which the 10% rate cut had gone in but because of some anomalies in the FCC rules, we had cable operators who actually raised their rates in that period. I will never forget a meeting in December 1993, in which Ed Markey called me into one of his offices in one of the House annexes. Pam Turner and Lois Richerson from the NCTA staff were with me. I think we all walked out of that meeting having never had a meeting like that with a member of Congress.

SOUTHWICK: How so?

ANSTROM: He sat there for 1 ½ hours – this was on the heels of a cartoon that had run in the Boston Globe the week before that had something to say about cable rates. It showed Ed Markey tied up in red tape and Washington bureaucracy and made him look foolish as cable rates increased. He pounded, literally, pounded a table to the point that the phone was jumping off it, basically saying that was never going to happen again, that if he had to kill the cable industry, he would do it, that he had been personally embarrassed, and that either the industry was going to figure out that they were going to abide by the law, both in terms of letter and spirit, or there was going to be more medicine administered.

SOUTHWICK: Wow.

ANSTROM: I will never forget that. That was as strong.... I had the good sense to listen and not try to talk during that meeting. So really the first mission that I felt I had and that the industry had, was to communicate to the Congress that we got it - that we understood that we had misbehaved, that there were problems with our rates and our customer service, and that we understood that, and that we had to go fix that. I think that was absolutely the most important thing to do. So we set out about trying to communicate to the Congress a new message, which was "We understand why you passed the act. We're not up here trying to re-debate that Act, and we're going to start a process of rehabilitating our industry, and we want to hear from you what we need to do." It was a listening process. Privately, clearly what we had to do was first of all, reunify the industry so that we could speak with one voice again. Then we needed to get the industry focused on fixing the things that had to be fixed. The first thing was clearly customer service. Next, due to the second round of Hundt's rate reduction, cable prices went down by the government's 7% cut. The next piece of this was to begin to rebuild relationships with members of Congress and with the media and with local officials. So it was an external role of mea culpa and a private role of reunifying the industry and beginning to fix the problems that people had identified.

SOUTHWICK: Had you made this clear to the NCTA Board that this was something you would want to do before you took the job?

ANSTROM: Yes, and they were ready. These are very smart, talented people. When you're hit across the forehead with a two-by-four, I think people sort of understood. Of course the values of the companies had plummeted. A number of people were making decisions to sell their companies at that point, given the rate regulation scheme. I think for people who cared about the industry and wanted to have a future in the industry, it didn't take much persuasion, I think, to understand, "We have to rebuild our relationships with the policy makers. That's the first order of business."

SOUTHWICK: Talk a little, if you will, about Reed Hundt. What was he like in terms of dealing with him? Did he understand the business?

ANSTROM: Not initially I don't think. He was very difficult to deal with initially. I remember the first time I asked to come see him. He had an assistant who had also been a congressional staffer during the period who worked on the Democratic side, had been part of the effort to regulate the cable industry, and who had come away from the '92 experience feeling that we weren't particularly friendly or helpful so therefore why be helpful to us.

SOUTHWICK: Who was that?

ANSTROM: Her name will come to me in a minute. Anyway, I remember my first meeting with Reed Hundt was, after having asked for this meeting for several weeks, they decided that they would take all the people in the cable industry who'd been asking to see Hundt. There were about seven of us who went in. We were given one-half hour the day before Christmas Eve at about 6:00 p.m. to come in and talk to him. It was basically like, "Fine. I'll have a meeting with you, but I really don't want to have a dialogue. I don't want a relationship. I'm working with the consumer groups and the Congress, and we'll fix the cable industry." So that wasn't a great start. If you look at it, he'd been told very clearly by members of Congress, particularly in the wake of what had happened after the 10% cut and prices going up, "We expect you to not have this happen again." I'm sure he probably had a comparable meeting with Ed Markey that I did. I never asked Reed this later but the phone probably jumped on Ed's desk a little when Reed came in to meet him too. So we got off to a pretty rocky start. Of course, the first step was this further 7% cut which rocked Wall Street. It clearly bit deep into the muscle of the industry at that point. But as time went on, I think he began to appreciate that there was something about that second wire into the home. More broadly, like the vice president, he was interested in promoting competition. We were able to open up a dialogue which was really sort of a next step of the rehabilitation process – to begin to paint a vision about why Congress should care about rehabilitating its relationship with the cable industry, why would it matter in terms of consumers, in particular the question of competition to the phone companies and new media and local telephone service and things none of us could even foresee at the time. These things began to be discussed in 1994. That was really the opportunity we had with Hundt at that point, I think, was to say, "Look, there is a vision out here of a new cable industry with a second wire into the home to compete with the telephone companies, that can do more in terms of interactive services, that can really bring to life this new telecommunications revolution that you and the vice president are interested in. And the first thing you have to do is get your heel off of our throat so that we can invest." And he began to engage in listening. He spent a lot of time. I remember one night he invited Brian Roberts to come down for dinner, just the two of them, at his home in Washington. He started to travel to visit with some cable executives. He and I began to spend some time, and he began to listen some. Then he opened up a dialogue with us coming out of the NCTA convention in 1994 in which he had a process in which he liberalized the rate regulation rules then in the early fall of 1994 that then allowed people to begin to add channels and raise rates and begin to work our way out of this. One of the key meetings at that time, in fact, was a dinner (that he refers to briefly in the book that he wrote earlier this year) at the New Orleans NCTA convention in 1994 that I arranged during which he listened quite carefully. Again, he's a very smart man. There was Reed and his confidant, Blair Levin, me, John Hendricks, Amos Hostetter, and then Steve Rattner and Gerald Hassel from Bank of New York. We had a dinner conversation that probably went 3-4 hours in which we talked about why it was important to get some flexibility in our core business so we could raise the capital to invest and here's what we were going to build if we could do it. Amos and John were very articulate in terms of painting the vision about what could be built. Steve and Gerald were very factual and very persuasive about what the investment community needed in terms of the industry being able to do that. Reed, to his credit, listened and engaged, challenged, had a good debate. But that dinner and the dialogue that went after that really was the start of the process of changing what happened at the FCC.

SOUTHWICK: There was kind of some critical decisions in terms of the industry at that time as it became clear that there would be another effort by Congress to rewrite the Telecommunications Act.

ANSTROM: Right.

SOUTHWICK: Can you tell me a little bit about how that process evolved and how the industry decided what its role in that would be?

ANSTROM: Two things happened in 1994 that I think were very significant. First was that Congress was beginning to revisit the Telecommunications Act really because of the classic tension between the long distance companies and the Bell operating companies. The Bell operating companies had a long-standing desire to get into long distance, and the long distance companies desired to keep them out obviously. So there was legislation to look at that that was considered during 1994. We put our toe into the water on that debate. None of the issues about dealing with our core business were dealt with at all, but we came to the table, and it gave us an opening to come back to members of Congress. I can remember distinctly a meeting I had with Jack Danforth, at which I went in and said, "Look, I know you have no reason to trust our industry. I know you have bad feelings in terms of the debate we've just gone through on cable regulation. I'm here to tell you this is a new day and we want to work with you on crafting a telecommunications bill because we believe, ultimately, that we're going to be telephone providers too. We want to work constructively with you on that." It surprised people. But we were able to reengage, in a constructive way, about how we could move forward in that process. The second thing that happened then, privately, was at an NCTA Executive Committee retreat in the late summer of 1993. The CEOs of the largest 7-8 companies meet every summer or early fall and talk about 1 ½ days about the bigger picture, public policy: where do we want to go, what kind of agenda should we be working on. It then gets brought back to the board. But we get some "big picture" pieces in place that we can then work from, in terms of the details, during the year. I put on the table the proposal that we should abandon our opposition to telephone company entry into cable. The Executive Committee agreed that that was the right decision to take. We then proceeded to have a dialogue throughout the industry in 1994 to really build a consensus.

SOUTHWICK: Why was that a good position to take?

ANSTROM: A couple of reasons. One is it went to proving we had listened and learned from the 1992 experience. The telephone companies obviously wanted to be in a position to enter the cable industry and offer more competition in cable. It's a very compelling argument and ultimately, as competition was beginning to come into the local telephone business, hard to argue that they shouldn't be able to diversify. So in terms of having a good argument... My view about working with Congress is that if your argument is weak, you'd better find a new argument. In the end, substance does matter in Washington. So we were really in an increasingly indefensible position and one that we weren't going to be able to sustain. Rather than trying to defend it forever, as we had during the re-regulation debate, let's move our position. It had the happy coincidences of also then enabling us to open up some issues that we wanted to: if there's going to be additional competition to the cable industry from the telephone companies, then we should be able to have some additional flexibility in our core business in terms of some deregulation and some other things. The only rationale for regulating us is that we're a monopoly. Well, we're getting competition. We shouldn't be regulated. That ultimately became a key element of the Telecommunications Act of 1996, which became law in January 1996, and I believe, formed the blueprint for the reinvention of the cable industry, as we moved beyond analog television.

SOUTHWICK: Which did what?

ANSTROM: Well, for cable it did several things that were absolutely critical. First of all, it deregulated the industry, with a three-year trigger from enactment in 1996 to fully deregulating the industry in 1999.

SOUTHWICK: In terms of rates?

ANSTROM: In terms of rates. This, of course, stabilized the investment climate at that point. It enabled cable operators to lay out business plans with investment in which they could show the bankers that they would be able to get a return. That was absolutely critical. The second thing it did was to open up the local telephone business to competition and really gave cable sort of a "most favored position" in that. And finally, it largely -although we're obviously still seeing some of this debated in litigation going on around "open access" – deregulated the cable industry's provision of high speed internet services. All those things were incorporated in the 1996 Act. If you look at that, it's really the blueprint for the new cable industry.

SOUTHWICK: Were there implementation features of that act that had to be worked with you as passed?

ANSTROM: It was passed in January 1996. There were many, many FCC rule makings and some litigation going on, but there's a very intensive period after the enactment of the act. The cable rate deregulation provisions were pretty straight-forward, but there were some nuances there - obviously a good deal of rule making around the terms of getting into the telephone business, and of course the on-going debate over forced access and whether the '96 Act really gives the FCC the authority and rationale to regulate cable's provision of high-speed internet services. We've been four years at this and nothing has happened yet. I still believe the '96 Act ultimately will prove to give the cable industry protection on that regard as well.

SOUTHWICK: You made efforts to reach out to Congress, which you talked about. But you also, it seemed to me, made efforts to reach out to the industry itself. I can remember you at small state trade associations, which probably no NCTA president had ever attended before. Was that a conscious effort on your part and what was the reasoning behind it?

ANSTROM: Absolutely. Coming back to where we found ourselves in late '93 – early '94, one of the very highest priorities for me was to reunify our industry. One of the ways to do that, obviously, is to take a lot of time to be out listening to people, to be available to people. There probably is not a state or regional association meeting I didn't go to. I spent a lot of time going and visiting cable companies in terms of visiting with senior executives or going to meetings of general managers or whatever. I wanted to show the flag and communicate the message of what we were trying to achieve and secondly to listen and make sure that what we were doing in Washington was related to what was important to the businesses. I took that as a very high priority in terms of really trying to build lots of relationships inside the industry and to reunify our industry so that in Washington we could speak with one voice. As you know, if a trade association is going to be effective in Washington, when I sit down with a member of Congress and say, "The cable industry can agree to this," that member of Congress then needs to know that that means something and that he or she is not going to hear two days later from the lobbyists for one of our companies, "Well, Decker told you that but our company has sort of a slightly different point of view." One of the things that was very gratifying during the '96 Act is that we were able to speak with one voice. It was much more effective in terms of our ability to negotiate successfully in the '96 Act.

SOUTHWICK: The small operators did form their own organization. How did you react to that?

ANSTROM: I was very comfortable with them. I've always been comfortable with the idea that there are lots of different constituencies in the cable industry and that they have their own specialized needs and their own particular agendas, whether it was committees or groups inside the NCTA or CTAM or the small operators groups or whatever. The fact that people are prepared to spend time and energy to get connected to the policy process, to spend time with the media, to tell our story – anyone who's willing to spend time to do that – I really don't care a lot how they're organized. What I would worry about.... And again part of the outreach that I spent a lot of time on was that we try, as much as possible, privately to understand what each other's agendas are, not to contradict one another unless we absolutely have to and where possible to work together so that one plus one is three. I think largely we were able to do that. There were some issues with the small cable operators involving programmers willingness to deal with a Co-op so that they could get more preferred programming rates that were legitimate issues. I was able to work very successfully with Mike Pandzik and others in terms of encouraging some programming companies to deal with the Co-op that reduced some of their need to come to Washington to look for legislative relief on that. That was time well spent. A lot of what I did, Tom, in the end when there were industry disputes – and I think it's an important role for NCTA – is to try to keep people focused on the fact that if we have business disputes inside the cable industry, it's much better to resolve them privately than to bring them to Washington. No matter how attractive it may seem sometimes to bring a business dispute to Washington, it never turns out the way you want it to. If operators think the programmers charge too much, bringing that issue to Washington isn't going to turn out the way the operators want it to. Or if the programmers are worried about a gate-keeper role that the operators have, believe me it will never turn out the way the programmers want it. It's much better to try to work these things out privately. I think largely we were pretty successful in that.

SOUTHWICK: The programmers, at one point, were talking about having their own organization.

ANSTROM: When I became president in early '94, that discussion was still actively underway again as the fallout of the debate around the '92 Act, given those operator/programmer tensions. I'll always be grateful to Tony Cox, chairman of ShowTime and chair of the Satellite Network Committee in NCTA, who stood up and said, "Decker and I have worked with each other. He has said to me that he's going to reach out and involve programmers more in NCTA, he's going to listen to us, he's going to give us a platform. Let's give him a chance." I'll never forget what Tony did.

SOUTHWICK: Was the NCTA Board restructured in some way or was this just informal?

ANSTROM: We added a few more programmers to the board, and the rest of it was informal. Frankly, it was as simple as going to New York regularly to meet with people, to take people's phone calls, to be available. The other thing we did – and we were very direct – I remember meeting with Frank Biondi when he was at Viacom. We went up to see Frank with Tony and others and to say, "Look, if Viacom has a deep disagreement about something NCTA is going to do, then NCTA won't take a position on that issue. Viacom has as much right to affect NCTA's ability to take a position on issues as TCI does."

SOUTHWICK: And you could make that promise?

ANSTROM: I made it – and I was able to hold it. The good news is, we never reached a position with Viacom where that became an issue. But I felt I could make that promise because in the end, I didn't think we'd ever get to that position. But if we did, again, we can't, from NCTA's perspective, ignore companies' major interests. The notion that big companies with huge assets at stake are going to participate in NCTA and then be overruled by people - why would any of us participate in an organization like that? So I thought it was a fair thing to do and the operators were comfortable with that. We talked about that very thoroughly. I was very fortunate in that first year to have Dick Roberts as Chairman of NCTA. He, by nature, is a listener and a healer and someone who brings people together. I also had the support of Bob Miron who has always been a great counselor to me and others, Tony who was very involved in terms of trying to heal some of these rifts, and the major operating companies who were also enormously successful in terms of really pulling together on this. They could have gone on their own as well and they didn't.

SOUTHWICK: You did something else that was very unusual – and that is, you brought somebody who was a cable operator into Washington. How did that decision come about?

ANSTROM: Bringing June Travis to NCTA was the smartest thing I ever did. I had known June who had been on the NCTA Board when I worked at NCTA. I had come to watch how well she moved in and out of all the different constituencies of the cable industry, a person without her own agenda who worked well with the big operators because she had been part of one once. She worked well with the small operators because she was one. She worked well with the programmers because she had always dealt fairly with them as president of Rifkin. She dealt well with the suppliers because that's just the kind of person she was. She had an uncommon amount of insight into our business, enormous integrity, great common sense, great people skills. What NCTA I thought had always lacked was somebody who had run a business and who could bring that perspective into the things that we did. So when we were crafting something on legislation or making a case to the FCC or talking to the press, that person could say, "You know, that's really not exactly the way it works," or "the cable operator's going to look at this a little differently or we should think about it this way." She was very effective in that regard. She was also a great leader and role model for our staff. The unheralded role she really played was the back channel relationships that she had as we were trying to pull this industry together. June could get on the phone late at night, find somebody, and say, "Wait a minute. We really need you to reconsider that price increase you're considering," or "We need you to sign up for this on-time customer service guarantee," – all the ways. Because of the kind of person June is, she could make all that come together. She was really my partner in every single thing we did at NCTA. It was that business experience and the trust and confidence that people had in June that, to the extent NCTA was successful during the period of time that June and I were both there, June really gets more of the credit. She really was the person that if an operator was unhappy that we were jawboning about not doing something, about prices, or that you have to be part of this on-time guarantee, they could sort of grind their teeth about Decker, the politician. But they couldn't grind them about June who was saying, "I know you know how to do that and you know it's the right thing to do." June played a particularly critical role in several major initiatives, including the development of the industry's on-time customer service guarantee program, and the industry's commitment in 1996 to bring high speed Internet access to every school free-of-charge. She rounded up the industry support for both, and she built a lasting sound relationship between NCTA and CableLabs.

SOUTHWICK: Do you think every cable operator should come to Washington for a little while?

ANSTROM: That would be a great action. I'd love to see more... Frankly, I'd love to see more people in the industry come in and out of NCTA because I think it's a great learning experience for them, and I think it makes NCTA much stronger. I think having someone with the business insight and perspective that June had was really effective. You asked earlier about what it is that made NCTA different among trade associations. I think, when I look at NCTA in the '90's as opposed to the phone companies, the phone companies burned up enormous political capital in Washington on getting into the cable industry. They had sort of a broad, economic perspective about why they wanted to do that. We're now sitting here in the year 2000 and virtually none of them are offering cable service. I've always thought that what happened was that there was a disconnect between the Washington lobbyists and strategists (who saw this as a good political thing, and by the way, if we can get this bill passed, we get a higher bonus this year in terms of whatever we're doing) and the business decision-makers in the telephone companies. You think of all the political capital they burned up on that. I'm really pleased that when I go back and look at what we did in the 1996 Act, the Telecommunications Act, everything we did in that Act was tightly focused on what did the business need. There were a lot of other rabbits we could have chased in the '96 Act, but we didn't because we were very focused on what matters to the businesses – and June played an absolutely essential role in making sure that happened.

SOUTHWICK: How did your decision, then, come about to leave? You had, I assume in the back of your mind, the same desire you'd had before.

ANSTROM: As we discussed, I had decided in the summer of 1993 that it was time to leave. After the 1996 Act passed, I really viewed that I needed to stay with the industry through the deregulation date of March 1999. If I could sort of see us through that period of time, my job would had been done and it was time to have somebody else with some fresh ideas and a new perspective on how you take cable to the next level in Washington to come in. So, once we got past that deregulation date that had been set in the '96 Act, that was time for me to go look for something else. You're right. I sort of made that decision in '93 and had deferred it and had a great experience at NCTA and loved the opportunity to be part of what got accomplished. But by that point I was ready. The phone rang one day, and it was my friend Dubby Wynne who is the CEO of Landmark. He said that he and his friend, Dick Roberts, they'd since sold TeleCable - Landmark had, wanted to come have dinner with me.

SOUTHWICK: Dick was where at that point?

ANSTROM: Dick was on the Landmark board, retired but on the board. One thing led to another, and I've been at the Weather Channel one year.

SOUTHWICK: What intrigued you about the Weather Channel other than your relationship with Dick Roberts and Dubby Wynne?

ANSTROM: There were a couple of things. I wanted to work in an environment where obviously I have a lot to learn coming out of the experience I've had about how to run a business. So being in an environment with people I trusted, people I respected, people I knew I could learn a lot from, people who had values that really mattered was the most important thing to me. Dubby, a dear friend and colleague for 10 years and also on the NCTA Board, and Dick both met that criteria. As I learned more about Landmark, it was really the kind of company I wanted to be part of. Secondly, the notion of that we were private was very attractive to me, having watched cable companies who've gone public (there are some great cable companies out there and it was a right decision in terms of raising capital). But the ability to not be preoccupied with the stock price every 12 minutes and to have to run your business based on what you're going to say on the next quarterly report, to be able to think longer term, to make longer term strategy, planning and business decisions appealed to me. Finally, the Weather Channel really was perfect for me as I began to think about it. Having worked a lot at creating this policy framework in the '96 Act that was really premised on competition and new media platforms, where better to be than at the Weather Channel, where we've built this wonderful brand, in partnership with our cable operator colleagues. Now we take that brand and this product - weather information is perfectly suited for that – to the Internet, to digital cable, to wireless internet, to all of these new technologies that are out there. So the opportunities have helped play a part in that effort and that was really attractive as well.

SOUTHWICK: And you've been here a little over a year?

ANSTROM: A little over a year.

SOUTHWICK: What kinds of things are you doing to change this company?

ANSTROM: We're working really hard in terms of building weather.com, our weather Internet business, which is one of the 25 leading web sites in the world, 300,000,000 page views a month, 14,000,000 unique visitors, preferred relationships in terms of being the weather provider for AOL, Yahoo, others. So we're really building a great Internet business. We've moved quickly out and in one year have snared the weather flag for each of the wireless internet platforms – Verizon, AT&T, Nokia, palm pilots across the board. We're beginning to build a really interesting 24-hour-a day business called "Weather Scan Local" by the Weather Channel, perfectly suited for cable operators, digital cable needs. We're building interactive television programming as the weather provider now for DirectTV's interactive television launch, AT&T's interactive television launch, Source Media, AOL TV. So we're moving out across that. We're never looking back, Tom. We're building a radio syndication business, branded the Weather Channel. It's in many of the major markets in the country. So there's a lot of development in addition to improving the analog cable network. There have been a number of changes in the past year. We've got a great leadership team here and we think there's a lot we can continue to do to make the Weather Channel what it is – one of the most respected and valued brands by consumers – that cable operators have to offer. That's been fun as well.

SOUTHWICK: International expansion has been on there.

ANSTROM: We're also moving internationally. We have two networks in Latin America. I think particularly with our interactive and Internet business, we have lots of opportunities that we're exploring very vigorously now in terms of moving internationally.

SOUTHWICK: The only other thing I can think of, in terms of your tenure at the NCTA that we didn't touch on was there was a programmer who was chairman of NCTA during your time as president.

ANSTROM: A fellow down the street here.

SOUTHWICK: Yes, one of your neighbors.

ANSTROM: Exactly. Ted Turner was a great chairman to work with. Again, that was one of the changes that happened with the full support of the board. We had programmers who chaired several NCTA conventions as well. Ted was a great chairman to work with, very focused, very supportive of what we were trying to do, always available. He was a great chairman. If we had a message we wanted to get out to the public, simply letting the media know that Ted Turner was available for a conference call – boy, people would be there. Ted was great. He couldn't have been more supportive. He chaired the convention that was really, I think, the symbolic healing point for the cable industry – the 1996 NCTA in Los Angeles. The featured speaker was Vice President Al Gore who came and made peace with the cable industry. The next day the featured speaker was FCC Chairman Reed Hundt who also publicly made peace with the cable industry. That was about as close to getting the circle closed as one could get. And Ted played a big role in making all that happen.

SOUTHWICK: Terrific. Anything else you wanted to touch on that we didn't hit?

ANSTROM: I think, for me really, being at NCTA for more than 10 years was just an enormous privilege. I had an opportunity to really work with and learn from the remarkable people who have built this industry. I'll leave someone out if I start naming them all so I won't start down that road. This really is an extraordinary American story about the cable industry and people from all different backgrounds, all different experiences, who risk everything to build this business. If you think about the impact that we've had, in terms of changing the way people learn, the way they communicate, what we've done in the schools, what we've done with C-SPAN, it's truly extraordinary. You look at where this industry is today and what we can do in the next decade with the next generation of leadership that's moving through the industry, it's really extraordinary.

SOUTHWICK: Great. Thank you very much.

ANSTROM: Thank you.

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BACK TO ORAL HISTORIES

William Arnold

William Arnold

Interview Date: Thursday June 15, 1990
Interviewer: Kathleen Pavelko
Interview Location: Unknown
Collection: Penn State Collection
Note: Audio Only

PAVELKO: My name is Kathleen Pavelko and today is June 15, 1990. We are conducting this oral history with Mr. William David Arnold for the National Cable Television Center and Museum's Oral History Program.

It might be useful to start with simply some personal details, some family background, if that's all right.

ARNOLD: Ok. I was born on January 9, 1935 in Amarillo, Texas. At that time my mother and father were living in the panhandle, probably seven or eight years. They had both come from Missouri. I don't know if whether at my birth my father was working, I guess he probably was working for Mobil Oil Company, only it was the old Magnolia Petroleum Company at that time. Then they moved very shortly after I was born to Oklahoma City and then from there to Waco and then to Houston and then to Dallas where my mother lives today. My father has been dead seven or eight years now.

PAVELKO: Your parent's names are. . .

ARNOLD: W.H. Arnold ‑ William Harold and Virginia Lee. I have a sister that's six years younger than I am named Linda Lee Arnold. She's married. She's Mrs. Jack Norton and then in terms of myself I'm married to Mary Margaret Miller Arnold, who was a Dallas girl. She was born on June 12, 1935 also. We have two children ‑ a boy, 26, named William Wade Arnold and a daughter, 23, named Ellen Shannon Arnold. The boy's married and has no children. The daughter is getting married August 18th of this year. That's kind of the extent of the family other than my sister. There are no other sisters or brothers, living or dead. My mother had one brother who passed away many years ago. My father had one sister and two brothers. His sister and only one brother are still alive.

PAVELKO: Tell me about the ethnic heritage.

ARNOLD: What little bit I know about it. There was French and German on both my mother and father's side. I don't know, I've never been one to go back and find out so I don't have any idea whether French or German was predominant. My mother's maiden name was Rensch. Then another family name on her side was French. Now that you ask, I don't have any idea what my grandmother's maiden name would have been on my father's side. I'm sure I've heard, I just don't remember. My father's father was dead by the time I was born so I never knew him. I only knew the grandmother on my father's side and I knew the grandmother and grandfather on my mother's side.

PAVELKO: What was your father's work in oil?

ARNOLD: He was general credit manager for Magnolia Petroleum for most of the years that I remember and I suspect had been in the credit department for Magnolia, probably most of the time. Back in those days, I don't think it's true now, credit was a part of the marketing department, so he could have very well been in various aspects of marketing and eventually came to credit. But from the time I had my earliest recollection of what he did for a living, is probably when we lived in Waco and he was the credit manager for Magnolia at that time. At the time he retired about 1964 or 1965, he was general credit manager for Magnolia which at that time Magnolia still operated as a company separate from the Saconey Vacuum or what is known as Mobil Oil today.

PAVELKO: Did you grow up in Dallas?

ARNOLD: No, Houston is home to me. I lived in Amarillo about six months and I lived in Oklahoma City about seven years. Lived in Waco about five years. Then we moved to Houston when I began the sixth grade. I went to junior high and high school in Houston, so Houston has always been home to me because that's where the bulk of my friends that I made, that you make in junior high and high school, live and that's where I lived the longest. So I always think of Houston as being home in that sense. I had never lived in Dallas. My wife had grown up and gone all through school in Dallas and her parents lived here until they retired and moved to the hill country.

PAVELKO: Where did you go on to college?

ARNOLD: I went two years to Baylor and I spent twenty months in the U.S. Navy as an enlistee and I came out of school and I went back to the University of Texas. I went back to the University of Texas simply because when I went in the service there was a G.I. Bill of Rights and during the period of time that I was in the service they had taken the G.I. Bill away and then given everybody Social Security. I already had Social Security so you had to go back to school where it was affordable to go to school and going to a state university was the only place that you could do that.

PAVELKO: Let's back up and talk a bit more in detail. In what year did you go to Baylor?

ARNOLD: Well, I graduated from Lamar High School in Houston in 1953 and I went to Baylor in the fall of '53 for the freshman and sophomore years. I was in the ROTC at that time but I wore glasses then and it was evident that the ROTC would not continue on with me because the unit was an air ROTC unit. So because of eyesight I was not going to be allowed to continue and that meant that when I dropped out I was going to be eligible for the draft. Indeed I did drop out, so I did a little investigating and found out that I had a good chance for my draft number to come up. So knowing that, I kind of accelerated the number because for three months in the fall of 1955 the Navy was short of personnel, so when the Army drafted, they drafted in excess of what their own needs were. So I was fortunate enough; it was just the draw of the cards. I was fortunate enough to be drafted and I ended up being in the Navy and I spent all of the twenty months in San Diego. I went in as a seaman and when I came out twenty months later I was a third class personnel man and I was on an attack troop transport called the USS HENRICO. HENRICO is named after a county in Virginia. I spent all of my tour on the West Coast with the exception of about eight weeks that we spent in Hawaii on maneuvers with the Third Marine Division.

PAVELKO: Were you married at that point?

ARNOLD: No, I didn't get married until June of 1959 after I had come back. When I got out of the Navy, I came back to Texas and went to school and was continuing on for a graduate degree and got married during that period of time. I never finished the graduate degree because I got kind of tired of doing the graduate degree. I had gotten married and was working, and so subsequently never finished it up. My undergraduate degree from the University of Texas was a degree in accounting.

PAVELKO: Did you pursue accounting in part because of your father's work?

ARNOLD: No, I think I probably pursued accounting simply because when I was in high school I didn't have any idea about what I thought I might like to do and I took a battery of aptitude tests which indicated accounting might be of interest.

PAVELKO: Counselors?

ARNOLD: Counselors, I suppose maybe. People who would put you through a battery of tests and so forth. So I took that battery of tests as did numerous other folks like that and one of the things that they said was that you would be proficient in some skills and not in others. One of the ones that it appeared that I had some degree of efficiency in and interest would have been in dealing with numbers. I just wanted an education. I thought perhaps that going to the business school was what I wanted to do and you had to have a major and that's how the accounting major came about. I've used it quite a bit in my business life, but I never had any intention of becoming a Certified Public Accountant or pursuing accounting as a profession in the sense of an auditor or accountant or a tax person.

PAVELKO: I heard at some point that one of your early jobs was as a toy salesman.

ARNOLD: Yes, when I was going to school at the University of Texas in graduate school, and had decided that I thought perhaps I needed to be finding more gainful employment and perhaps becoming employed on a full time basis, the fellow who I banked with at the Old Austin National Bank happened to be a director in a small company. It seems that during this period of time that I decided I was going to look more seriously for a full-time job, I had applied for a job at Texas Capital which was a small business investment corporation company. Those were known in those days as SBICs. The fellow I banked with was representing the SBIC on the board of several companies whom they had lent money to. One of the companies was a company in Houston called Gulf Toyhouse Inc. So when I mentioned to him that I was interested in getting a job on a full-time basis and going to work, he indicated to me that there might be a job available in Houston. So I went out and visited with the fellow who was the majority stockholder in the company, a gentleman by the name of Melvin Ward. Indeed, I ended up taking the job.

So in the summer of 1961, I went to Houston and went to work for Gulf Toyhouse and what Gulf Toyhouse did was -- if you know what a rack jobber is -- Gulf Toyhouse was a rack jobber of small bagged toys. It was under a franchise label from a company in St. Paul, Minnesota who bought the bulk of toys that were used, put header labels on and bagged them, and was called World Toyhouse. They had distributors, of which Gulf Toy was one, only the distributors were wholly owned by the people who ran them. The area that they served was Houston, over to Beaumont, Port Arthur, and over as far as Crowley, Louisiana and up I guess into the Lufkin‑Tyler area in East Texas and a little short of Dallas because that was in another distributor's territory.

The average price of the toy was thirty-nine cents and you would buy toys in large quantities. You might buy one hundred forty-four gross of some item such as Slinkys, Hula Hoops, and Silly Putty.

PAVELKO: When you say they're bagged, are they in small bags and then attached to labels of some kind?

ARNOLD: Right. They have a hook, they have a hole that's drilled through the header label and you just attach them much like ladies would probably pick hosiery off of a metal rack where they are hanging on pegs around those racks. Generally the rack was either circular in size or was oblong and flat in size and it would have a rack on the top that held box toys such as AMT models that kids would put together. Yo‑yo's. We used to sell an awful lot of yo‑yo's. The distributorship that I worked for was large and the man who owned it did a lot of buying himself so he would buy a lot of goods from the Orient. He would bring them in and they would already be bagged and we would put our own header labels on the bag.

PAVELKO: What was your job?

ARNOLD: I was the comptroller for him and managed the warehouse and took care of the office and so forth. There were really three people at the time I went down there. There was the owner who was the buyer and the merchandiser. There was a fellow who was the sales manager and then there was the partner who was doing what I was doing. The reason they came looking for somebody like myself was that the other two people had become displeased with the fellow whose place I took. They had bought him out and he had gone on his way, so I picked up managing the warehouse, the bagging operations, being responsible for inventory and in general doing all of the numbers work of any kind that was related to it.

PAVELKO: This was the early '60s. Did you have children of your own at this point surrounded by toys?

ARNOLD: No, I went to work at the toy company in 1961 and in 1963, our son Wade was born in Houston and then we moved back to Austin in late 1964. The same people, Texas Capital Corporation, also had money advanced to a convenience drive‑in chain in Austin and they were having trouble with the folks in terms of financial reporting and inventory control and so forth. So I got asked if I would like to move back to Austin. I went home to tell my wife Mary that we had been given an opportunity to move back to Austin. Her response was, "When do I need to have my bags packed?" because she had never been very happy to leave Austin to begin with to go to Houston.

So we moved back in late '64 and I had a similar kind of job with Town and Country food stores in Austin until about the early part of 1966, at which point in time Texas Capital Corporation had been a lender to Jack Crosby and Fred Lieberman who had been in the cable business for a number of years. At that time they owned West Texas Microwave which was a terrestrial microwave common carrier that began at Aledo, south of Forth Worth and carried broadcast signals out into west Texas. Texas Capital had been a primary lender to them for the construction of that system. It also had become interested in their activities in the cable business. Crosby, the Schneider brothers ‑ Gene and Richard - Tubby Flynn, Dr. Raymond Hedges, Ben Conroy and his father, had kind of come together at the instigation of Jack Crosby to see whether or not they might form one of the first MSOs that came together. There were other MSOs in place at that time. The predecessor to Group W was there, but this was one of the earlier ones that was formed by several people coming together. Texas Capital was instrumental in that because they already had a lending and a financial relationship with Crosby and Lieberman. It so happens at the time that this was getting put together, Bob Hughes who is the president of Prime today, happened to be one of Texas Capital's investment banking officers at that time. That's where he had come to know Jack Crosby and Fred Lieberman.

PAVELKO: What were Crosby and Lieberman's goals in creating GenCoE?

ARNOLD: I would suspect that Crosby, because he is a consummate deal maker, viewed this as being another deal. Lieberman had little or no interest at this time because none of his cable systems were involved in GenCoE initially. The cable systems that were involved were Abilene and Sweetwater, in which Jack had a major interest and Fred had a very minor interest. Then there was Del Rio, which Jack owned himself; Uvalde, which Ben and his father owned; Dr. Hedges and Glenn Flynn owned Tyler and Jacksonville, Texas. The Schneider brothers owned a group of companies called Wentronics, Inc. and that group of companies was comprised of Casper, Wyoming; Moab, Utah; Gallup, New Mexico; Perryton, Texas; and a half interest in Grand Junction, Colorado. I think at that point in time they had a shared interest in the potential franchise for Albuquerque, New Mexico and if I'm not mistaken their partner or their potential partner in that venture would have been Jack Kent Cooke. Wentronics also had a half interest in cable systems on the eastern shore of Maryland. The other partner was Al Carolla. Al Carolla had been in the business a number of years and he and the Schneider brothers had known each other in Wyoming. It's kind of interesting to note, if it hadn't been noted before, that both the Schneider brothers grew up in deep south Texas and went to the University of Texas.

PAVELKO: What is the meaning behind the name GenCoE and its unusual spelling?

ARNOLD: Well, we got ready to get started and everybody, once the deal got done and it looked like they were going to go forward... In fact, I then left Town and Country food store because Texas Capital was going to be the primary subordinate lender to put together this cable company. Chase Manhattan Bank, perhaps Pittsburgh National Bank, I don't recall back that far, was going to be the primary bank lender and Texas Capital was going to be the subordinate lender, I think to the tune of about $2 million. Another one of the lenders at that time was Home Life Insurance Company in New York. So Texas Capital had indicated to the group that indeed they were going to have to have an office from which the various systems were either run or at least financial information and so forth came through some central location.

Texas Capital had insisted, based on prior history of other operations and so forth, that indeed the office needed to be located either in Austin or up in Georgetown where their office was. So, in the early part of 1966, I was asked if I would like to leave the Town and Country food store folks and go to work for what was a non‑existent company at that time. They were very well along in getting the deal put together, but it wasn't finished.

So I left the convenience food store folks and for about three or four months I traveled thirty miles up to Georgetown every day. I occupied a little office up there and began to just work on getting acquainted with the industry and getting acquainted with the people. I was finding out what sort of operations each of them had and what one would need to do to kind of bring them together in a loose manner so that they had some cohesiveness, not in terms of operations, but in terms of financial reporting and creating reporting vehicles and tracks and so forth.

PAVELKO: And GenCoE means?

ARNOLD: During this whole period of time there was a lot of conversation about what GenCoE was. GenCoE turned out to be General Communications and Entertainment Company, Inc. Except that was too long. So I don't remember whose idea it was or how, but General Communications and Entertainment Company, Inc. became GenCoE, Inc. which was an acronym of that name.

PAVELKO: At the point that you were invited to leave Town and Country foods and come over to what was going to be GenCoE, did you know anything about cable television?

ARNOLD: No, I didn't know anything at all. I had heard a little bit about it, but what you would cursorily hear perhaps in the newspaper or something like that, but I knew nothing about it.

PAVELKO: I'd like to know a little bit more about the players in this. Tell me a bit about Jack Crosby.

ARNOLD: Jack Crosby was born and raised in Del Rio, Texas. His father, who is now dead, was a big, huge bull of a man and was very gregarious, a very friendly guy. His mother was a very petite, very quiet lady. His father had played football and baseball at Baylor University. At the time I first met Jack, his father was a Texaco consignee in Del Rio and I think Jack had been born and raised in Del Rio. Jack had gone to the University of Texas and had always been a very active alumnus of U.T. Jack had owned a hardware store in Del Rio. He had owned a bowling alley in Del Rio. The family owns a substantial amount of ranch land down there so he had run cattle and done other things. He had an interest at one time--if not a controlling interest--in the Coca Cola bottling operation in Del Rio. I don't know what had prompted him to get in the cable business, but he had gotten in the cable business as I recall, sometime in the early 1950s. Del Rio was probably built a year or so before the Uvalde system was built.

At that time the signals were taken off air in Del Rio off of a five hundred foot tower because it's one hundred twenty-five air miles to San Antonio where the closest off-air television stations were. Then Jack and Ben got involved because Ben had decided when the Navy put him ashore that he didn't intend to be a shore-bound sailor. He was going to be on board ship or not in the Navy at all. So when the Navy put him ashore, very shortly after that, he retired from the Navy. Ben's father and Milt Shapp of Jerrold days had been friends and Shapp had somehow or another mentioned to his father that there was this new-fangled business that if they were looking for something to do, they ought to do it.

At that time, Jerrold had the franchise for Uvalde, Texas, so Ben and his father apparently came down and looked around and Ben decided that is what he would like to do. He came down and it was Ben and his father, his sister, and his brother who were all shareholders in the system. Only Ben ran the system and moved down there. He and Jack got involved because by then it had become evident that one might transport signals via microwave and have a better picture.

So my recollection of that was that besides being close to each other, about seventy miles apart, they had then developed an interest as to whether or not it might be to both of their advantages to create a microwave company and deliver the signals from San Antonio via microwave, and they ultimately did do that. The company was called Southwest Texas Microwave and Jack built that system. It came out from San Antonio, went to Hondo, down to Uvalde, past Bracketville, over to Del Rio and then in subsequent years it turned north and went up as far north as Sonora and Eldorado.

PAVELKO: Microwave would seem to be well suited to most of Texas as a line-of-sight system.

ARNOLD: Right. You're going to be able to go probably the maximum twenty-five, thirty, maybe a little bit more in miles.

PAVELKO: At what point did you meet Jack and Ben?

ARNOLD: I had met Jack probably in the early part of 1966, because he was in and out of Texas Capital's offices and I had made his acquaintance. I guess maybe in April or May of 1966, kind of preparatory to being brought on full time, I had already been working a while on this and it was then time to, so to speak, introduce me around to some of the other principals to see if they would be amenable to having me employed to do the accounting function. Sometime in the spring of that year, I made a trip to Uvalde and met Ben and visited with him a while and went on to Del Rio and met and sat down and visited with Jack for a while.

Sometime subsequent to that--I don't remember if I went to Casper or whether the Schneiders were in Texas--I met Gene and Richard Schneider. It was not quite of the same importance to meet Flynn and Hedges because Flynn and Hedges were investors in the Tyler and Jacksonville system but they were kind of absentee in the sense that a fellow named John Mankin, Sr. had been managing that system for them from its inception. They were just not that involved in the business and did not intend to be involved going forward with GenCoE other than as passive investors, whereas the Schneider Brothers-- Ben and Jack--intended to be very actively involved in the cable business that was going on.

PAVELKO: The John Mankin, Sr., you just mentioned, is he the same gentleman whom you've succeeded at the Texas Cable TV Association?

ARNOLD: Right. John Mankin, Sr. was a delightful fellow. He's now dead. His widow Chloe is still alive. He was managing the Grapette bottling company in Tyler, when somehow or another--and if I've heard I've forgotten--Dr. Raymond Hedges and Glenn Flynn decided that they ought to build a cable system in Tyler. I believe Tyler claims to be the third system that was built in Texas in early 1953. For whatever reason they came to Johnny, Sr. to ask him whether he would or he wouldn't like to be in the cable business and run that operation for them. He did indeed do that.

In 1959, he, Ben Conroy and two or three other people were instrumental in becoming co‑founders of the Texas Cable TV Association. Flynn and Hedges were very kind to let Johnny manage the limited affairs at that time of the association out of the Tyler cable office. So Johnny became its first and only executive secretary until he retired in 1982, at which point in time I got offered the job and left the operating side of the industry and went to work for the association.

PAVELKO: We will get to that at some point. Let me ask you to cast your mind back to 1966 and you're making a transition from Town and Country to a business whose operation was unfamiliar to you. What were your feelings about entering the business? Did you have a sense of entering a business that was in for an enormous growth spurt? What sort of things were in your mind?

ARNOLD: I don't think you thought about it being a business that was going to grow enormously, it was just a business that was very, very interesting. When you stopped and thought about here was television service and if you had lived as I had for several years in Austin or in Houston there were television stations present, although not that much when I was in junior high and high school. At the time I got to college, there were television stations in most of the major cities and thanks to Lyndon Johnson, there was one in Austin early on. So it was kind of interesting to think about that out here in Del Rio, Texas once you realize that the television didn't follow the curve of the earth that the only way they received television was by virtue of bringing that signal in off of tall towers.

So it was very interesting in that sense because if you think about Texas with large, flat areas of great distance, where there are hills and very rugged countryside, the only way television was going to come was via this particular mechanism at that time. Obviously there are now different ways ‑ MDS and DBS and any number of other ways you might receive it.

At that time it was a very interesting concept and it was kind of like being on the cutting edge of a new industry, maybe not necessarily from a technical standpoint, but on the cutting edge of something that was new and innovative. Being in that business was not unlike what I had done before. Gulf Toyhouse had been something that was a retail type business; I guess you should say not retail but wholesale. It was a wholesale type business in that you sold to the grocery store, but you weren't really so much concerned about the grocery store as your customer, you were concerned about Mr. and Mrs. Shopper as your customer, so you were kind of in the retail business. The same was true with Town and Country food store; you were in the business where you were selling to the general public, though I guess this was not considerably different because indeed you were selling a product to the general public. Many of the things that would have occurred in the grocery operation and in the bag toy operation had some resemblance to the cable operation. You did not have the inventory problems that you had in the other two businesses, but other than that there was not a great deal of dissimilarities in the businesses.

PAVELKO: You touched very briefly on the capitalization of GenCoE and the banks involved in providing the funding necessary to get it off the ground. What were GenCoE's original plans for the use of those funds?

ARNOLD: Part of the monies that were derived from putting together the systems that we mentioned earlier went back to the folks who had contributed to their systems. So it was a way of the initial investors cashing out partially and yet being able to continue to be involved with the entities in the systems they had and to build a bigger complex from which to do business. It may have been some vehicle for estate planning because you held stock in an entity that was more easily disposed of or that you might ultimately take public or would find somebody that would be interested in buying from. I think that back at that period of time probably, Jack, being a deal maker and so forth, perceived that indeed if you could create an entity and it began to get big that you could begin to go out and buy other systems which indeed did happen. Very shortly after GenCoE was finished being put together there were several other purchases that were made.

PAVELKO: You talked about spending the first three or four months getting familiar with the business, getting acquainted with it. How did you do that?

ARNOLD: Oh, I guess after you spent time pouring over the documents and the information already gathered and the vast amount of paperwork that had been gathered for the lenders, Texas Capital, you began to know a little bit about this business. Home Life did not know, I don't think, as much about the business at that time. The Chase Manhattan Bank, if my memory serves me correct, did not know quite that much although they had been a lender in the business. You did reading about understanding what the industry was about at that time, so you could speak the language or talk the lingo and at least understand what was happening. Then I began to spend some time out in the field, after I had made my initial go around and had gotten the blessing of the principals that were going to be involved and they were satisfied with me at that point in time. It had already been pre‑determined that the office was going to be opened up in Austin because Texas Capital had insisted upon that as part of their participation as a lender.

Then after that I spent considerable time out in the field. Maybe a week at a time in different locations becoming acquainted with the people who were at those locations. Just kind of understanding how they did business so that when you went in and attempted to ask them to do things differently or at least to comport to some sort of mode of operation that would allow for reporting and so forth that you didn't impose any more burden on them than was absolutely necessary. Then you made the transition for each one of them which had been essentially an individual operation or in the case in Wentronics, three or four of them.

I spent some time in Del Rio and probably by June of 1966 I had gone to spend, I suspect, a week in Casper, Wyoming. Casper was the headquarters for the Schneider brothers. They both lived in Casper at that time. In fact, Richard still lives in Casper and Gene lives in Denver. But I had gone to Casper to stay a week to kind of see what was going on and if my memory serves me right, I went about the seventh or eighth of June or something like that and I didn't come home until July 4th. It came the end of the first week and we weren't near through and I would call home and tell my wife, "Well I think I'll stay another week and I'll be home at the end of the next week." It just kept on going like that. I made probably two or three trips back to Casper at that point in time because they had already begun to centralize their operations so it was a matter of kind of transferring and changing that reporting structure around. I went to Moab. It was probably several months or approaching a year before I ever went to Gallup and it was probably a year and a half after the operation was put together before I ever went to Perryton, Texas.

PAVELKO: Were there special challenges involved in putting together an MSO that crossed state lines at that early stage?

ARNOLD: No, not really. I don't think there were any business considerations that were unusual for cable at that point in time. The Second Report and Order had been issued in April of 1966 that addressed some of the regulatory aspects that the Federal Communications Commission was attempting to impose on the cable industry. I guess their primary concern could be characterized that they were afraid the cable industry might put the broadcast industry out of business. And so it had been made very clear at that point in time that you could not import distant signals in the major markets or into large cities. I don't think they were called major markets at that time. You were kind of restricted to being a business in the rural areas simply by virtue of what had happened as a result of the Commission's regulations. But I don't recall anything that was unusual in terms of operating across state lines.

The rules and regulations that related to delivery of many of the off-air signals to the rural areas were via common carrier microwave and that was driven by whatever the FCC said to you.

PAVELKO: In those days, how were systems built? How was the financing raised? What were the rate structures like? What was it like to be an operator in the mid 1960s?

ARNOLD: I guess I didn't see any systems built until about 1969, but like in the mid '60s I can remember listening to Ben and Jack and others talk, and generally what happened was that the person who had the idea, had external financing from somebody who understood the business. Probably an example of that is Ben Conroy and his father and Milt Shapp. Jerrold understood the business, wanted to sell the product, didn't mind advancing some money to underwrite that. Benjamin and his father became convinced that it appeared to be a reasonable business deal so they didn't mind putting some of their own money in. Then to some extent the balance of the financing for the system came from the fact that back in those days an installation fee could have been anywhere in the neighborhood of $100‑$150 per home. To have service installed today you think about $5, $10, $15, $20 installation fee that's many times waived as part of a promotion. In those days they didn't do that. Maybe you paid $125 for the installation and the service was $5 a month, so you looked at the installation as being a substantial investment, a substantial payback of the investment that you made to put the plant in place.

In terms of rates, I don't think we saw any rate increases to speak of or I didn't see any from about 1965 or 1966 until maybe 1972 or 1973. The rates were essentially controlled by the cities. The business had continued to grow within the areas and so you were not approaching a point where you were saturated and so you continued to derive greater revenues every year by hooking up additional customers. I guess maybe it wasn't until the early '70s, until people said, well you can kind of see from where we are now to the end of the houses that we can serve and costs are creeping up, bringing additional services. We now begin to need to talk about rate increases. So then you went back and did battles with cities at that time seeking rate increases and those increases were probably in the magnitude of twenty-five and fifty cents. It was not until '70, maybe '71 that you began to go around the cities and seek rate increases.

PAVELKO: At what point did the relationship between installation fee and monthly charges reverse itself to the situation we find now, with smaller waived installation charges and more substantial monthly service fees?

ARNOLD: I imagine by the middle '60s it had begun to do that because I don't ever remember any place where we collected $125. I imagine our installation fees were in the $15‑$25 range.

End of Tape 1, Side A

ARNOLD: ... We're, again, in fairly rural communities. So by the time you got to the mid 1960s, Del Rio was ten years old. Uvalde was more than ten years old. Casper, Perryton, Gallup were all more than ten years old, so you had moved up to a fairly substantial subscriber base. But keep in mind you had done that because you had, probably in most instances, been outside the availability of any off-air television signal of any kind. So as TV had become more widely recognized and had gained popularity and as sets were sold, people had become subscribers.

PAVELKO: The parallels between Pennsylvania and Texas are very interesting as early developers of cable television for in some cases, similar reasons, although dissimilar topography.

ARNOLD: Well, that's right. The topography influenced it, but just as the great distances in Texas from one fairly major urban area that could support a television station in that time to lesser areas made it difficult. By the same token, that was flatland that made that difference. When you got to Pennsylvania you had a very compact state but you had a very mountainous state, very high hills, so signals still didn't move around easily. Or you would find a community around the backside of the hill from where the station was. It was topography that drove the animal, although in one instance it was bumps and the other it was flat.

PAVELKO: At what point did GenCoE get sold to Livingston Oil?

ARNOLD: Probably in 1967, I think. It may have gotten finished up in late '67. Livingston Oil Company, I'm not quite sure how the connection got made or I don't recall, but Livingston Oil Company at that time was based in Tulsa, Oklahoma. Its president was a fellow named Wayne Swearingen and if I'm not mistaken his brother at that time was president of Standard Oil of Ohio or one of the larger major oil companies. The principal stockholder in Livingston at that time was Baron Von Thyssen-Borassema -- he owned control by virtue of owning seven or eight percent of the stock or a very small number. I don't know what had prompted Livingston to do this, other than perhaps they had some cash flow from oil royalties that were not producing earnings and they wanted to get into a little bit flashier business or whatever. Somehow or another Livingston came courting. The principals at that time were primarily Gene, Richard, Ben, and Jack. After much negotiation GenCoE, which had grown by virtue of acquisitions of other systems but I don't remember if at that point in time we had built anything yet. GenCoE had grown and Livingston acquired GenCoE in return for cash and if I'm not mistaken an issuance of preference stock. One of the things that Livingston did was to say that they didn't know anything about the operation of the cable business so it was their intention to leave the operation of the cable facility in Austin. They just wanted to learn and they wanted to grow. It probably wasn't six or eight months until all of a sudden Livingston had decided that really what they needed to do was to move the cable operation to Tulsa.

At that point in time, relationships had already become a little strained between the old GenCoE folks and the LVO folks so I had no intention of moving to Tulsa. What I did was box up the office, took a couple of the girls who worked for me, and we moved everything to Tulsa, Oklahoma. I guess I lived in Tulsa about two months at the hotel. The girls traveled back and forth every other weekend to come home. Livingston had no office for the operation up there so we literally set up shop and assisted them in hiring people to run it. When that was completed we came back home.

When that happened Jack and Ben then suggested to the Livingston folks that they felt that since this arrangement hadn't worked out, and that perhaps Livingston had been somewhat at fault for it not having worked out, that as far as they were concerned they thought that Livingston should sell back to them Del Rio and Uvalde. Now the Schneider brothers were not asked to move to Tulsa or do anything at that juncture. They subsequently did move but the people who had been asked to move were Jack and Ben because Jack was still the deal maker and Ben was in essence the operations manager for the group of companies. So after long and arduous negotiations, Livingston agreed to sell back to Ben and Jack, Del Rio and Uvalde. That was the beginning of Communications Properties, Inc.

The initial shareholders at Communications Properties, Inc. were Jack Crosby, Bob Hughes, Ben Conroy and myself. We bought Del Rio and Uvalde back on a promissory note with the understanding that we were going to put together a very small company and take it public and from the proceeds of the public underwriting we would pay Livingston Oil back. In the meantime the system at Kerrville had come on the market. It was owned by a gentleman named J.D. Brance. He owned seventy percent of it. I've forgotten the name of the man who owned thirty percent of it. He was a real estate man. Mr. Brance had been the retired chairman of Fort Worth Steel Company. Lived in the hill country and had bought the system. In fact, Kerrville may have been the second system built in the state or at least certainly in the top ten of the first ten systems built in the state. Mr. Brance was getting up in age and so we were able to negotiate a contract with Mr. Brance. So Communications Properties, Inc. got started and finally went public in May of 1969 with three systems ‑ Kerrville, Del Rio and Uvalde. At which point in time the Schneider brothers--Gene in particular--became the operating officers for the LVO properties. He moved to Tulsa and lived there a number of years. LVO continued to expand and build properties. Then LVO spun off the cable properties to its shareholders. That became the genesis of the company that was called United Cable Television. United Cable Television today is part of United Artists and that has come about by the recent merger of United Artists, United Cable Television and the Daniels Cable Properties.

PAVELKO: When you joined Crosby, Conroy and Hughes as one of the principals in CPI, was this your first entry in being an equity member?

ARNOLD: Yes, the first time I owned any equity. And the first time that Bob would have owned any equity. Of course, Jack and Ben would have been equity owners by virtue of Uvalde, and Jack by virtue of sole ownership of Del Rio.

PAVELKO: What was your operating role when the changeover from GenCoE to CPI occurred?

ARNOLD: I continued in the same posture I had been before which was kind of the primary numbers person, the internal numbers person. As treasurer of the company I was not responsible for raising external funds or capital accumulation, but was primarily responsible for the internal financial reporting and administration of the company. That continued until about 1974 or '75 at which point in time the CPI group of companies had grown substantially. There were four operating regions and Ben was the Operating VP for all four regions and he also took care of one of those regions directly himself. I had an occasion to move over and take over the region that Ben had been operating as a region by himself.

By that point in time, CPI had bought some of the systems that Jack and Fred had owned. I will refer to them as the "second set" of systems because Jack and Fred had sold the first set of systems to Cox Broadcasting probably in the very early '70s, but they had not sold all of them. The systems that we acquired were Lafayette, Indiana; Williamsport, Pennsylvania; Midland, Texas; and part of Philadelphia, Pennsylvania.

You asked earlier and I didn't answer you about systems being built. I guess the first systems where I was involved in construction were the Abilene and Sweetwater systems which GenCoE had. A funny story comes to mind. There's a person who's been in the business in this part of the world forever. His name is Glenn Scallorn. He was Jack's manager in Del Rio. He still lives in Del Rio and manages the system today. He had been an old coach who had come to work for Crosby and he was going to Abilene probably three days a week to oversee things. There were others of us who were out there a couple of days a week. At that time Glenn smoked big old black cigars. He loved to eat fried chicken. It was always a dire test of your strength to determine who was going to have to spend the night with Glenn in the hotel room that we kept permanently rented because Glenn's idea of a big evening was when work was over was to buy a little beer, order greasy chicken into the room, and he'd sit around in his underwear and watch TV and smoke those cigars. So by the time midnight came, you smelled like greasy chicken and black cigar smoke. It was always a test about who was going to have to stay with Scallorn in that room.

PAVELKO: What's Scallorn doing now?

ARNOLD: Scallorn is the manager, still today, of the Del Rio system and as an added responsibility manages and oversees the Uvalde system. He's owned systems of his own. He had been in Del Rio as a coach. That's where Jack first knew him. He had gone to college at Trinity University in San Antonio. He went up to Eastland, Texas and was a coach in Eastland and apparently Jack was getting to where he was doing bigger and better things and more active and so he got in touch with Glenn and convinced him to come back to Del Rio and become the manager of the Del Rio cable system. Glenn's been back there ever since.

PAVELKO: Still play football?

ARNOLD: No, he doesn't play football. He plays a little bit of golf. He's been around in this industry since probably 1961 or 1962.

PAVELKO: When did CPI get sold to Times Mirror?

ARNOLD: In January of '79, probably, it became final. It had been under negotiation, due diligence trips had been taken probably since summer of '78. But the offer to the shareholders to make the exchange was dated January 5th and had an expiration date of January 29, 1979.

PAVELKO: How did you feel about that process?

ARNOLD: I think I probably felt like we shouldn't have been selling. I guess it's kind of interesting to look back in the early part of '79 when CPI was sold to Times Mirror and the sale price was $17 a share. By the end of that year, United Cable which was one of our predecessor groups was worth in the neighborhood of $30‑$35 a share and it was about comparable to us in size. So I think there were a lot of people who felt like we probably sold out too early in terms of what the value was. That's hindsight and that's always 20‑20, so it's kind of hard to tell. I don't think in the long run that being sold to Times Mirror is certainly not something I was enamored of because I just, as a personal matter, had never been very interested in working for a large company. I certainly was never terribly enamored of being a part of a large company.

PAVELKO: But you made the initial transition?

ARNOLD: Oh yeah, I made the transition and stayed with Times Mirror until 1982 at which time I had begun to look around to find something else to do, because it had become evident to me or at least I thought that Times Mirror would probably be consolidating some more again and changing so there would not be a regional operations center in Austin. I had no interest in moving away from Austin so it meant that either they were going to move it or abolish it all together. Either one of which would have meant some difference so I had begun to give some consideration about what I was going to do at that point in time.

PAVELKO: Let's talk about that decade at Times Mirror and what was happening in the business in those ten years. You had a perspective from a much smaller company, much smaller MSO at that point. You're embarking on a decade's service with a very large firm at a time of a lot of change in the cable industry. What was it like from '72 to '82?

ARNOLD: Keep in mind that you were still CPI in 1972, so when the Third Report and Order came in 1972, and this was kind of a watershed, I suppose, you might say for the industry because all of a sudden, the Commission had somewhat reversed itself. You had activity at the Supreme Court about copyright. You had certain other things that were happening. All of a sudden the Commission was suggesting that maybe the broadcast industry wasn't going to disappear as a result of the cable industry being in business. They had relaxed their rule about the importation of distant signals into major markets. So you began to see a shift in activity. You began to see more activity in areas that were either major markets themselves or part of major markets. For example, we had the franchises in Marshall and Gladewater and we did not build those franchises until after 1972 simply because they were in an area where you could not import a distant signal from Dallas into that market under the existing rules. Once that was changed, we built Marshall and Gladewater and imported signals via microwave from Dallas only going east this time. Interestingly we transported those signals over a microwave system that Glenn Flynn and Dr. Hedges owned called East Texas Microwave. The East Texas Microwave signal interestingly enough came from Dallas to Tyler. It went from Tyler on to Marshall, Gladewater, back up to Texarkana and all the way up to Little Rock, Arkansas.

PAVELKO: An enormous plant.

ARNOLD: And delivered independent television station signals and PBS signals from Dallas out through that area. Back about that time another interesting little anecdote I suppose is that we bought and built Texarkana. CPI did. We found out about Texarkana because there were three little systems north of Abilene and Sweetwater called Anson, Hamlin, and Rotan. And then there were three little systems above that called Stamford, Haskel, and Munday. The Stamford, Haskell, and Munday systems were built and they had been put up for sale. The seller, interestingly enough, was Mesa Petroleum Company and T. Boone Pickens. Jay O'Neil and myself and Glenn Scallorn, and I think there were eight or ten people had decided that we would buy the Stamford, Haskell and Munday systems individually for ourselves. They already had management in place and people to operate them. In the process of negotiating to buy those systems we found out that Mesa Petroleum company had the franchise for Texarkana, Texas and Texarkana, Arkansas and they didn't know what to do with it.

So Ben and I went back, when I came back with that information to us corporately as CPI and said if we've got any interest we might be able to acquire the Texarkana franchise. Then Ben and I went back up and visited with Boone Pickens and subsequently we bought one half of the Texarkana franchise from Mesa with Mesa retaining a half. About a year or so after when we got ready to build Texarkana and Mesa was going to have to come up with their part of the money, they weren't real sure they wanted to do that just as they hadn't been sure they wanted to continue in the business. So we bought the other half of Texarkana from Mesa Petroleum. But the original holder of the Texarkana franchise in an unbuilt stage had been Mesa Petroleum. It's always kind of interesting. I remind my wife from time to time when she has derogatory things perhaps to say about Boone Pickens that Ben and I had met him and visited with him and she never remembers that and she'd never believe that we had ever done that.

PAVELKO: I gather that your wife is an active political figure.

ARNOLD: I'm not sure that I'd describe her as a political figure. I would describe her as a volunteer. She was a Plan II graduate at the University of Texas, which is an honors undergraduate program. She went on and got a masters degree in government from the University of Texas. She spent eight or nine months in London as an occasional student at the London School of Political Science in economics. From the first day we've been married she's always been a volunteer and I guess she describes her job as being able to do volunteer work for the city of Austin. She is generally a very liberal-oriented lady. Very environmentally concerned. She spent, I believe, seven years on the parks board. She spent five years on the planning commission of which four of those years she was chairman of the Commission. She's now in the Water and Waste Water Commission. I guess a couple of feathers in her cap is that the University of Texas owns some land upon which one of the municipal golf courses in town sits. On two different occasions in the last twenty years, she's done battle to keep the university from taking that land away and developing it. I suspect that she would probably consider that to be one of the real feathers in her cap. She's never had any interest in running for political office. I guess that's why I say she's not politically inclined, although doing the kind of volunteer work she does is very politically involved. She has no interest in subsequently holding an elected office.

PAVELKO: Do you share her liberal inclinations?

ARNOLD: No, she and I don't get along very well politically. Probably the very first year that we ever didn't cancel each other's vote out at the presidential ballot box was the year that I got her to agree to vote with me for the guy from Illinois. The reason I got her to do that was he needed a certain number of votes to be able to receive his funds from the federal electoral commission.

PAVELKO: Anderson?

ARNOLD: Yes, Anderson. I convinced her that we both needed to vote for Anderson so he'd get his money because we were going to go vote and cancel each other out.

PAVELKO: Has this provided some spice and leavening in the relationship?

ARNOLD: Oh yes. Very much so.

PAVELKO: '79 ‑ '82 then was your time with Times Mirror.

ARNOLD: Right. I should go back a little bit and interrupt you. Probably about 1974, the industry really was beginning to take rate increases very seriously. So at the tail end of my tenure as treasurer, we needed somebody that would go on the road full time doing nothing but rate work for the CPI systems. So a new treasurer was hired for CPI. I spent the next three years, probably, gone ninety percent of the time to all of the systems that we had in the country, doing nothing but rate work. I guess part of the reason why I was reasonably well suited for that was I had a good knowledge of the systems. I had an accounting background so I was able to talk from a financial standpoint, do the preparation and so forth. I guess for the next three years I was gone substantially ninety percent of the time doing nothing but rate work. No point in bringing this history and not looking is there? Don't tell me this is one of the years that we didn't... My God, I bet it was. May have been one of the years that we didn't list all the systems and where they were in the annual report. There's a picture of Fred Lieberman, it's one of the few times that you'd ever see him with a tie on. There were probably 35 or 40 systems around.

One of the groups of systems that had come when we acquired Lieberman and Crosby's second set of systems from the old TeleSystems Corp group had been what's been referred to as the Pioneer Valley Systems in Massachusetts. So there was Amherst, Greenfield, a number of systems up in that area. There was state control in Massachusetts as well as in Connecticut and so for rate matters you appeared before the state agencies to plead cases and do things. In fact, I can think of a little anecdote of sorts.

Jim Stilwell and I of TeleSystems were in Amherst, Massachusetts one evening at a rate hearing and we were cold as hell. It was pretty late in the evening and the hearing had been going on and on. There was also some conversation about subsequent renewal of the franchise. That wasn't happening then, but they were having a conversation about that. The room was pretty warm and everybody in the room was bundled up and the room was beginning to have a real odor of people in it. Stilwell was talking and explaining about two-way transmission. Somewhere towards the end of the evening, some lady that had been pretty vocal that had boots on, got up in front of the audience and said, well, by God, she didn't want two-way transmission because she didn't want anybody watching her undress in her bedroom, and I can remember from the back of the room, came, "And I can't imagine anybody would want to watch her undress."

PAVELKO: Tell me a little bit more about the rate work. In what ways did you assist and advise the system, perhaps moderate their initial goals or attempt for a rate increase?

ARNOLD: You didn't necessarily moderate their initial goals because in those days, if you stop and think about it, not many managers had ever gone and gotten rate increases. So that was about the last thing they ever wanted to do was go and talk to cities about rate increases.

PAVELKO: So this is coming from the corporate...

ARNOLD: This is a top down sort of situation in which you were beginning to say, "We need to do something about increased revenues to cover the costs. No longer is continually putting on more subs going to do it. We now have to do other things." So it was a matter of a corporate decision in which you would sit down with systems and say, you know, this is what the situation looks like to us. You certainly went to the system manager for counseling, guidance and feel about the local situation, and then you sat down and this was one of the things that I spent a lot of time doing. You would then sit down with him and then perhaps play with two or three different varieties of rate increases to see which one might best suit your circumstances. See which one you thought the cities might best be amenable to. Try and determine how much the cities were going to whack on you in terms of regulatory lying and bantering and horse trading to try and determine where you would want to be. You generally then went and put your presentation on. Very, very seldom did you ever get even an affirmative or a negative vote on the first evening. So that meant in many of these communities you might return time and time again before you ever succeeded in getting that particular rate proposal acted upon.

We owned Springfield, Illinois at that time. Springfield was a difficult town from a political standpoint because Springfield's local government comprised five commissioners and they were five commissioners based on the form of government that occurred after the flood in Galveston in 1906. In order to cope with the flood in 1906 which killed 10,000 or 12,000 people, the city switched to a commissioner form of government so that there was somebody in charge of the police department, somebody in charge of the water, somebody in charge of administration, so on and so forth. For some reason, Springfield had adopted that form of government, subsequent to that. So you were up there dealing with each of five departments who came together as a council, but it was really difficult because it wasn't a council from the standpoint of it being an administration who came forward and made some proposal to the council. You went around and pleaded your case to each one of them. I imagine on the first rate increase in Springfield, I probably made eight or ten trips to that community before we finally got it done.

I used to go up into the New England area and I might stay three or four weeks up there. I'd go up on Monday and I'd come back to Washington, D.C. on a Friday, rather than come all the way home because I just had to be back on Monday again. I found a hotel that had a washing machine and a dryer where you wash your underwear and your socks. I would spend the weekend running around in Washington and then go back up into the Hartford Pioneer Valley and other systems.

It was in Greenfield, Massachusetts one evening where we were in a rate hearing, that may have been the second time I had been there. We were pleading the case and talking about the numbers and so forth. Some fellow in the back of the room stood up and said, "It doesn't make any difference what those numbers say. You can't trust that son‑of‑a‑bitch because he talks funny."

PAVELKO: Wasn't listening to himself, was he?

ARNOLD: I guess not. We all got a big chuckle out of that. You really ran into some unusual situations and you ran into council people who had absolutely no understanding of financial matters of any kind. You ran into some councils who were very bright and understood financial matters very well.

PAVELKO: It must have been a difficult time in terms of your personal life.

ARNOLD: Oh no. I was very lucky in that regard. Mary is an only child. Her father was an engineer. For a large part of his life, he worked for a company that built power plants and bridges and so for a large part of her life when she was young and growing up, her father might very well have been away from home, ten, twelve, fifteen days at a time on job sites in his capacity as the engineer for the company. So she was always very good about that. This was not something that was foreign to her and it was not unusual in her scheme of things for people to be gone. She's very resourceful so she got along fine by herself and it was not a problem. Which was very fortunate because there are marital relationships in which if you were gone three or four weeks at a time, they wouldn't last very long.

PAVELKO: Let's talk a bit about your very first relationships with Texas Cable TV Association. I'm not talking about as president, but early on.

ARNOLD: I had kind of left the numbers side and was doing rate work and had hoped to come to the operation side and did indeed get the operations part of the business as mentioned earlier. When that happened there was more of a reason for me to be a little more involved in association matters. You began to go to the trade shows and do things. Ben had always been a very big supporter of the association. I began to get involved in association work doing things as a director and on the various committees and myself and another fellow, named Jake Landrum who's been in the business for absolutely ever, began to give John Mankin, Sr. a little bit of help with the trade show because even by then, John was getting a little up in years. Didn't travel as well anymore. Had a little bit of problem with glaucoma and so forth. So we began to do more of the leg work and things that needed to be done away from Tyler.

I guess I had become fairly active in the association by 1975 or 1976.

PAVELKO: In which official capacities did you serve?

ARNOLD: I was a director on two different occasions for a couple of years and I was an officer one year. Then for a while Jake was associated with our company and if I'm not mistaken, the year that Jake became associated with our company he was an officer and I was a director. The association didn't provide for there being two people from one company so I dropped out as a director so that Jake could continue on, although I continued to be involved with the trade show and doing other things.

I guess that harkens back to another set of circumstances when the office was in Tyler. Whenever there was a matter of a legislative need or the occasion for somebody to perhaps go listen to a committee hearing or do a little work of a political or legislative nature and thank goodness we never had a lot in those days, because there were Ben and I in Austin, Jay O'Neil was in Austin, Jake Landrum was in Austin, all with different companies at that time. We generally then would get a call from Johnny saying, "Dick Craig (association counsel) says that something's up and you may need to testify or somebody that understands what it is needs to go and sit and listen."

By 1977 the NCTA had brought their trade show to Dallas several times causing a conflict with ourselves. We had initially met in April all the time and NCTA moved to April and we moved from April back to February. Of course, the weather was kind of miserable. There was one year during the trade show that a horrible ice storm hit Dallas. There was room for fifty-five, ten foot by ten foot booths in that building. All of the rolling stock was displayed out in the parking area, they'd rope off the parking area. That particular year we were meeting on Wednesday through Friday if I'm not mistaken. In any event, the ice storm came the evening before the show opened. And no one ever got out to look at any of the rolling equipment because it had become literally frozen to the ground. The show was over on Friday and some of those folks didn't go home until the following Tuesday or Wednesday and that was because it took that long for the ground to thaw so that ditch witches and other pieces of equipment like that could be moved off. We then decided that between the weather and the NCTA coming to Dallas that we ought to look for another place to go. You have to keep in mind HBO had gone on the air in 1976 with their pay service and so people were saying there's a reason now why you can move into the metropolitan areas because you have pay programming. So there was quite a growth in equipment, programming services and we were beginning to end each of the show years with ten, fifteen, twenty people who wanted space and we couldn't give it to them. So Jake and I looked around and we ended up moving the show to San Antonio and the first year was in 1979. So we finished up in Dallas at the Marriott in '78 and had a show in San Antonio in '79 and the show's been down there ever since.

As we did that, Jake and I became more and more active in tending to the show because Johnny, Sr.'s health was beginning to deteriorate by then. He was beginning to have a little trouble with cancer of the colon and his eyesight was getting worse. He loved to continue to do the phone work and he'd take the orders and do those things you can do sitting in the office. But he was not able to do the things that were necessary to do away from the office.

End of Tape 1, Side B

PAVELKO: Let's see. We were talking about your role with NCTA and you said that although you had not been a director you served on one of their committees?

ARNOLD: I served on an accounting committee for a couple of years and then again I had involvement with those folks in the sense that often NCTA comes to state associations to ask for grassroots lobbying help and so forth. By the time the mid '70s came around, Johnny was unable to travel and do those things. And because Benjamin and the folks were not opposed, then I, along with others who were willing to do that, were beginning to be involved by virtue of making grassroots trips and doing other things from a lobbying standpoint. Having had knowledge of and some working relationship although not direct with a number of folks from NCTA. . .gosh, if I could think of the names. This doesn't go back a long ways but Bob Wheeler, Robert Schmidt who were past paid presidents of the association are people who I knew well. A couple of the general counsels for the association were people I knew well, Wally Briscoe, who Benjamin may have mentioned. He was a fairly close friend whom I had met by virtue of being involved in NCTA. I guess I first met Strat Smith simply because he and Ben were friends but he was involved with doing things with NCTA from time to time and represented the association as counsel.

PAVELKO: Let's talk about the transition then to Texas Cable TV Association. You had been working to assist Mankin in those roles that he was not able to fulfill. When did you make the official move?

ARNOLD: I was president of the association in 1981. And in late '80, Johnny had indicated to the membership, to the board that he felt like he needed to retire and what he'd like to do is finish up the year '81, health permitting, and then he'd retire at the end of that period of time. It had always been said that whenever Johnny retired, they would move the association office to Austin where it made more sense for it to be. But they wouldn't do it as long as Johnny wanted to run the association.

PAVELKO: It was where at that point in time?

ARNOLD: Tyler. We sat down and did a little calculating and figured that we needed to have a full-time person; Johnny had continued to be part-time. We needed to have an office. Perhaps we needed to have a little more presence than we'd had as political matters were heating up and just in an attempt to provide more services or at least ones the membership might want. So we put together an estimate of what a budget would look like for a year with a full-time person on. It became very obvious very quickly that we weren't going to do it on a half a cent a subscriber a month and so we then decided we needed to advise the membership that indeed the dues would have to increase to a penny a subscriber a month, but it wouldn't be until January 1, of '82 before that happened, so that they'd know ahead of time.

So then we got about the business of actively looking for someone to fill that position. I talked to two or three people. I'm sure others talked to people about it. I guess maybe at the board meeting in May or June of '81 I was asked whether or not I would consider taking that job. I said, "Yes, I would consider taking that job," because by then I had determined that indeed Times Mirror was not going to be much longer in the Austin area by virtue of moving the office or just discontinuing the office. Either one of which were not going to be satisfactory as far as my own personal circumstance was concerned. Yes, I'd be very interested in taking the job, but that I thought they ought to think about that a little bit. I wanted them to be sure that they weren't just looking for an easy out so that the job was filled.

August or September came and I told him yes I'd be interested in doing it and so the board said that's what they wanted to do. So I then told the Times Mirror people that I was going to leave and I'd like to leave at the end of the year because I was still doing some rate work for them. Plus, part of the remuneration that regional managers, which was what I was at that time, Times Mirror had a bonus arrangement and I wanted to see through to the end of the year so that I could get the bonus. They were kind enough to say that would be just fine. I worked through to the end of December 1981 and went to work for the association in 1982. Johnny continued through the trade show of that year and then literally quit going to the office or doing anything by April as his health was rapidly deteriorating and he passed away in May of '84.

PAVELKO: When you came on board in 1982 it was as executive secretary?

ARNOLD: Yes.

PAVELKO: Can you tell me a little bit about the structure of the association?

ARNOLD: The association--and this is probably true for all of them in the country--has as members the systems, not individuals. Then you have associate members and the associate members are people who provide goods and services to the industry. I think that's true for every association in the country. So you have system membership and associate membership. There are some systems who may indeed have membership with respect to extraordinary membership or recognition of somebody who has provided a service to the industry. Association has a board of directors and in our particular case there are two associate members on the board and nine elected directors and then those eleven elected directors, nine plus two, they then select three officers and those officers, by virtue of being selected officers, become directors of the association. There is a chairman, a vice‑chairman, a secretary‑treasurer, nine system member directors, and two associate member directors.

PAVELKO: What about the staff structure at Texas Cable TV?

ARNOLD: There's myself, a lady named Miriam Morgan who has worked with Ben and I off and on since 1968 or '69. Another young lady named Darleen Koenig who came to work for, I guess, GenCoE, in about 1970 or 1971. Then we have recently taken on, on a contract basis, a lady who's assisting the association and doing public affairs work and other things. We're kind of experimenting to see if there's a place where the association can provide some public relations assistance to the membership.

PAVELKO: If I can go back and ask you to recount for me, the founding of this association. I know that was before your involvement.

ARNOLD: I am told and having read that in late '57 or '58, and maybe before then, there had been a period of time when apparently the Texas Association of Broadcasters had indicated some interest in having the cable folks become some type of classification of membership. As I think Benjamin says, "We got invited and uninvited on two occasions." In any event, by '57‑'58, there was enough interested people like Ben, Jack Crosby, John Campbell, Hershel Tyler, and the Threadgill family, that they felt like they ought to have an association. So they had an initial meeting at a hotel in Mineral Wells. They met there and they formed and then they had the subsequent meeting, an organizational meeting perhaps, in Dallas and that would have been in early 1959. Johnny Mankin Sr. was the first executive secretary. Benjamin was the first president of the association for two years running.

Then they began to solicit members from around the state. It grew over a period of time as people became aware that membership was available. There has fortunately never been a tremendous amount of activity at the State House that galvanizes people to come together to protect themselves. There has always been a very few people who have kept an eye on what was happening and managed to keep everybody's chestnuts out of the fire or tend the matters in that sense. Perhaps the association might have formed earlier had cable been the focal point of a lot of statutory activity. Today the association represents somewhere between eighty-five and ninety percent of the subscriber base in the state. There's one fairly large group of systems that are not members and then there are probably fifty to one hundred very small entities that aren't members, who may not know we exist or just presume it really isn't worth their while to belong.

PAVELKO: How many system members now?

ARNOLD: Kind of depends upon how you talk about it. There are, to give you an example, over eleven hundred incorporated communities in the state of Texas. Probably eight hundred plus of those communities have cable facilities in them. There are a number of cable facilities in unincorporated areas. In terms of physical cable systems, there are probably somewhere in the plus or minus six hundred physical systems. That's because like in Austin where I live there's one physical system, but there are ten or eleven incorporated communities which that system serves. When you boil that down further and talk about ownership entities, there's probably in the neighborhood of two hundred ownership entities.

PAVELKO: I knew it wasn't a simple question.

ARNOLD: About two hundred fifty associate members also.

PAVELKO: How would you list and rank the main activities of the association?

ARNOLD: I don't know whether you could rank them. I guess you could put them out and, depending upon who looked at them, you could rank them. I suppose at the top is the group putting on the trade show, simply because the trade show has been around now for thirty years. And so it has a history of its own. It's been a fairly well recognized trade show for a state and regional show. When the show moved from Dallas to Austin it became a profitable operation on a continuing basis. It had not been profitable in the past or very marginally profitable, simply because there's not much you could do with fifty-five ten by ten booths and the industry was not that large. When we moved to San Antonio, the show grew very quickly from fifty-five booths to probably one hundred eighty or one hundred ninety and the following year, oh, two hundred fifty or two hundred seventy-five and then got as high as four hundred ten booths one year. Now it's settled out to where it's about three hundred fifty - three hundred seventy-five ten by tens and one hundred seventy or one hundred eighty exhibitors. We spent a lot of time working on the show.

PAVELKO: What is it officially called?

ARNOLD: We call it the Texas Show. I don't know that you could say it had an official name. It had always been referred to kind of as the Texas Show and I guess in the early '80s we kept referring to... We talk about the association sponsors it. We now refer to it as the Texas Show with the last two digits of the year in which it's occurring. The one that's upcoming is Texas Show '91.

PAVELKO: And it is held in what month?

ARNOLD: February. In San Antonio.

PAVELKO: Give me some idea of the scale of the association ‑ annual operating budget, revenues in and out, something like that.

ARNOLD: The annual revenue including the net show revenues, dues, interest income are probably in the magnitude of $500,000 ‑ $700,000 a year. And we generally use up most of that money. From year to year we may have a small excess depending upon how well the show did.

I guess another thing we attempt to do is we attempt to do is to be as active as possible in causing members to make lobby trips to Washington and try to be present in Austin. We generally try to pay for a large part if not all of those trips so that you're only asking that person to give of his time because you're assuming that they're really making the trip on behalf of the industry. They're not making the trip necessarily just to lobby on a matter that only relates to their system. So that's one of the ways you can help. The large expanse of the state makes it kind of difficult to do some of those things. You also serve as a clearinghouse for ideas and information.

Another one of the things we're proud of is we've been active in pole rate negotiations for many, many years and that precedes my having been there. I was active before because I was active on the system side. We've established negotiations with Bell, Texas Utilities and others where we've been able to at least hammer out an understanding about how the pole rate calculations are done. In some instances we have been able to negotiate on behalf of the industry.

PAVELKO: On the lobbying side, are there some special challenges involved when you're lobbying a biennial legislature?

ARNOLD: I don't think there are any unusual challenges. In our case if I were over there on my own and only representing the association it would be pretty difficult, in my opinion, because if you don't have an issue or you're not opposing a piece of legislation and if you aren't sponsoring a piece of legislation then it's pretty hard to drop around all the time because if you haven't got something you want stopped or something you want done, they really don't want you over there bothering them. You may be a nice guy and you may spend a lot of money entertaining them, but if there isn't some reason for you to be around, it's pretty difficult.

I guess that's one of the more difficult aspects of a biennial situation is that it comes and goes and you don't even have the opportunity to just have casually been around in the off years.

If there are not things going on in the off year that affect you or if you don't have a big interest in items that directly affect you, then it doesn't make much sense to be over there and be seen because people wonder why you're there.

PAVELKO: When is the next session scheduled?

ARNOLD: The next regular session starts in January of '91.

PAVELKO: They'll meet consecutively for one hundred twenty days.

ARNOLD: Yes, I think it's a little more than one hundred twenty days. It's from the second Wednesday in January to the last day of the month of May.

PAVELKO: Then committees continue to meet after this...

ARNOLD: Committees meet in the interim and they do study work and this year, for example, they had six special sessions. That's been because they could not agree on reform for workman's compensation insurance and they could not agree on reform to meet the court order mandated change in school financing. That's not to say that they won't meet again in special session over other matters later on.

PAVELKO: Special sessions are called only when there's a topic to be addressed or can they be general special sessions?

ARNOLD: No, they are not general. Special sessions are called and the governor outlines what the call is and outlines what the topics are to be discussed.

PAVELKO: You mentioned that one of your roles is to encourage and to fund the grassroots lobbying efforts of your members both in Austin and in Washington. I've read that you consider that an important activity for cable operators to engage in. Tell me a little bit about why you think it's important and why you sometimes perhaps have difficulty making the case for that to be done.

ARNOLD: Well, I think as the industry has changed you've seen changes in the operators. So if you would use Ben as an example, if you harken back to when Ben was in Uvalde as an owner and an operator and equity person he got to know people in the community. He became acquainted and you certainly went to some trouble to become acquainted with legislators from the state and perhaps even from the national level. As cable systems have changed hands over the years and larger companies have grown out of those, you've seen those people who had the political contacts move on and you have not found new managers that come in being encouraged to have those political contacts. Or they may indeed be encouraged to have those political contacts, but those contacts don't happen overnight. It may take four or five or six years unless you happen to be the guy's next door neighbor for you to develop a close relationship with a legislator, particularly at the state level.

So what has happened is that some of the close contact that you've had from a legislative standpoint has begun to slip away as ownership has changed because as new people come in they may anticipate only staying two or three years before they move on or are promoted away or do other things. One case that comes to mind is a fellow named Tom Creighton. Creighton had been in the cable business early on with John Campbell and Bob Magness. And he then was a state representative and state senator so when he didn't seek re-election, you lost a contact. As cable operators sold and moved on, you found that you had less and less direct contact through operators with either state legislators or national legislators. So I guess it's important that operators try and make those acquaintances. Obviously one way to do that is by causing them to lobby. Another way is causing them to make the effort if they live in the elected officials' hometown to at least get to know him so that perhaps when you call they might know who they are or might at least return the phone call.

That's become more difficult to do as corporate people so often these days say don't worry about politics, we'll take care of politics at other than the city level. State politics are just there in the middle. They don't even think about who ought to be doing that. That's one reason why state associations feel like that's a void or a place they need to fill. System managers probably are not paying much attention, worrying about what's happening in Austin. So it becomes the role of the association to at least worry about what happens in the state.

Of course, constituent contact is through the membership in the state, not necessarily through corporate. But those guys (the elected officials) still feel good when beautiful, young ladies like yourself come to call on them as constituents and tell them what they think needs to be done for them.

PAVELKO: Does the association play a professional development role for its members or perhaps for some of its members?

ARNOLD: Not in the direct sense. I think part of that reason is the sheer geography of the state makes it very difficult to do things. We can't prove this, but I think we have concluded that it's pretty difficult to hold a meeting and get everybody to come to that meeting because of the sheer size of the state. If you were to do professional development sort of things, you'd have to hold a dog and pony show and do it in four or five areas of the state and have somebody to manage and tend to it. We, not unlike other states, try and support the various professional organizations as much as we can, both financially and through good words and deeds and efforts. SCTE, CTAM, CAB, any of those. CAB's probably not, but CTAM, and SCTE are professional organizations where an individual joins and belongs. So to the extent that you can assist either through your good offices or through financial, you try and do things that would assist them.

SCTE has, the last couple of years, had a two or three-day training session in Texas. We try and help them get the word out and we'll hold a little happy hour cocktail sort of thing in the evening. We would do the same sort of thing with CTAM.

PAVELKO: It might also include duplicating corporate professional developments as well.

ARNOLD: Yes, that's a very big problem. I didn't even think to mention that. It also becomes very hard to do because you never can tell whether you are duplicating corporate and therefore you're being totally ineffective. Or whether you are not conducting and or doing something that corporate doesn't presume that there's very much need for so therefore there is not much encouragement given to the system. So it fails and falls under its own weight, because there is not enough interest generated.

PAVELKO: What is your assessment of the image of cable television with the general public in 1990?

ARNOLD: Oh, I think the general public has an image of cable that's not too terribly bad. Notwithstanding that cable's image, per se, is probably tarnished somewhat, but I think I would hasten to add that that may be more perception than reality. We've become a large industry. We've become very successful. As much as I think one would say you may use the telephone a few minutes every day. You use the television a few hours every day, so when the television isn't working, in your mind, it's a bigger problem than if the phone isn't working because of your perception of what you're using. That would not be necessarily true if you were talking about a person who was running a business and office. If the phone wasn't working, he's upset and he really doesn't care whether or not the TV works. But in terms of the people whom we appeal to with our service the general residential person, when the television isn't working it's a problem ‑ or they think they have a problem. So it becomes perception somewhat.

I think the public thinks that the services are good. I think there is some bitching about price, but there's always bitching about price. There are, obviously as I referred to, renegades--or bad apples--or people who have taken advantage of the situation in our industry and who are charging prices in excess of those that they would be reasonably accountable for. But I don't think, by and large, that's a large part of the industry. I guess I think the industry has not done a very good job of telling its story. Had we done a better job of telling our story and moving forward we might not be having quite as many problems as we're having today, but again that's kind of hindsight so that's real easy to make that observation.

PAVELKO: If you were asked, or if you feel it important to offer advice, what do you tell cable operators about telling the story?

ARNOLD: Well, we don't get asked very often but when we get a chance to tell them I think what we try and say to them is that if you're doing good things, you need to tell somebody because most of the time other people are not going to tell folks about good things you are doing. If you're doing unusual things, you need to tell people that you're doing unusual things so that people become aware. I guess an example of this--and it doesn't relate to Texas--is a story I heard in Seattle about a year ago. There are two systems in Seattle ‑ one in the north and one in the south, if my memory serves me right. One of those two systems each of their customer service operators has the names of four or five or more shut‑ins who are their personal responsibility. If not daily, at least every other day or third day, they call that shut‑in to find out how they're doing to see if everything is all right, to be some contact with the outer world. Apparently that's very much appreciated by shut‑ins. But nobody knows this is being done.

You have to tell the story over and over. It takes a while for those sorts of good deeds to be recognized and so you can't go and do one good deed and think that ought to last me for the whole year. I think there are a lot of operators involved in their communities, but they don't get around to telling the story very well. That may be because they don't have a press person on staff. Maybe corporate isn't doing a very good job of assisting them in whatever matter is necessary to get that story out. There may be any number of reasons. I don't think we've told the story very well. I think if indeed you thought people were really unhappy with you, price is serious. But if price were an absolute fall down then I think you would find people beginning to voice their displeasure by not taking the service. Yet cable is continuing to increase its penetration in the homes every year.

PAVELKO: What's cable penetration in Texas now?

ARNOLD: Probably between sixty and sixty-five percent. Probably not very much different from the national norm. Fifteen years ago it would have been much longer but because there were only rural systems that were fairly well penetrated. You had not built the major cities, but now all the major cities in Texas have been built and so indeed you would probably see a situation in Texas that is not unlike the norm for the nation.

PAVELKO: I think the national penetration is either fifty-four or fifty-five percent.

ARNOLD: Yes, and it kind of depends on whether you are talking about TV households or homes passed, but both of those numbers are not very far apart in that sense.

PAVELKO: You mentioned the association's role in negotiating statewide agreements and also simply to play a good office's role in negotiations with both the power company and with Southwestern Bell. Tell me a little bit more about those activities.

ARNOLD: Well, those activities, I guess, from the association's standpoint got started in the late '70s after the pole attachment act was passed and various companies began to do battle with utility companies over the rates that were being charged. At that time CPI brought suit against General Telephone in Del Rio and in Texarkana. I think the first complaint at the Commission was brought against by CPI, we were also responsible for the first complaint that was brought against the Southwestern Electric Power Company. There had already been a complaint brought against Bell by the Amarillo system and the Beaumont, Port Arthur, and Galveston systems. There had been a ruling handed down that was only applicable to the complainer. So if you were not a complainer you didn't get the benefit of the ruling.

Over the years, we (the Texarkana system) has been a party to two or three complaints against SWEPCO and we were a party to at least two complaints against General Telephone. I and a couple of others went to Bell in probably 1978 or 1979 and said to them we were going to use our good offices to cause as many association members as possible to file a complaint so that as many people as possible would get the benefit of the rate reduction.

After a rather trying period we finally ran into somebody who was willing to sit down and visit with us and so we were able to facilitate the first instance where Southwestern Bell offered a sale to all pole attachments that was uniform throughout Texas and was one that the association could come forward and say we have negotiated with them and while we cannot bind you, the number that they are offering you is fair, reasonable, and is the best we can do. We've been able to continue to do that. Of course this was always within the context of the guidelines of the pole attachment formula but there's always room for argument in there. That's where you are able to facilitate and to determine whether they were or they weren't doing, or whether you had some question about the manner in which they calculated. That has continued forward all these years with Bell although they aren't really happy about that. And then the last couple of years, we have helped in the sense that Bell, in producing and putting out the first go around of numbers has, unfortunately, made mistakes in both of those years that we were able to draw to their attention in both instances and they resulted in lower rates for operators in Texas.

PAVELKO: Do you have a sense that that kind of activity on behalf of the membership is appreciated that they look to the association?

ARNOLD: This is probably a terrible thing to say but I think no, it's not appreciated. They probably don't even stop to think about it. I rather doubt it. Surely, there are some who do but those would be people who would be interested in the association as an operating entity and who pay some attention. The others probably wouldn't even think about whether we had or hadn't been involved. That's probably kind of a good case of telling the operator that if he doesn't tell his story good enough that's probably a case of where we don't get out often enough and remind the members that we were instrumental in perhaps saving some money for them or doing some things that they benefitted from.

PAVELKO: Fair enough. I have a few more small questions, but let me ask you what some of the areas are that we haven't covered that you would like to address.

ARNOLD: These are just little anecdotal stories that I had to tell that I had thought of so I don't know where they fit in all of this in terms of being in any sort of order.

PAVELKO: I have found that when you ask somebody to be anecdotal, they go completely cold on you, so I've chosen not to do that. On the other hand I was told that I would have no trouble in getting you to be anecdotal so if there's something you haven't gotten around to, go ahead.

ARNOLD: Tower Antennas had been acquired by a savings and loan in Cleveland called Citizens Savings and Loan. Citizens then apparently after a couple of years was either looking to enlarge their base or to do something with it. So CPI acquired Tower Antennas from Citizens Savings and Loan except it ended up being a reverse acquisition because what happened when you were all done, Citizens Savings and Loan ended up having a majority ownership in the CPI group at that time. That continued on for a while until the Citizens Savings and Loan people got in serious financial shape. In order to solve their problem, Fred Lieberman and Jack, to some extent, bought most of the stock that they had. So Fred became a major shareholder in CPI, by virtue of buying the CPA stock held by Citizens.

End of Tape 2, Side A

ARNOLD: Claude Stevanus continued to be responsible for those systems, and I think one of the interesting things is that you make some marvelous friendships in this business, or at least I have, and those friendships have continued through the years. Two years ago we kind of had a reunion, like a bunch of young schoolgirls and Ben Conroy and myself met Claude Stevanus and Paul Snyder and Jim Stilwell and Al Bloom in St. Louis and spent the weekend just running around and giggling and laughing and having the best time and telling old stories about each other and bringing each other up to date about all the things that happened. You hasten back and think about those and there have been some really beautiful friendships and good old friends that were made. Claude was one of them.

Another one of the stories that we tell about Coshocton is that Coshocton not being very big didn't have lots of places to eat. Claude Stevanus always used to say that they had the very best stuffed mangoes at the YWCA. The YWCA was a couple blocks in back of the office. At noontime every week, older ladies in town cook lunch at the YWCA and that's where people came to eat for a dollar or two a plate. Claude always talked about, "My God, the Y had marvelous stuffed mangoes." I used to say to him, "Claude, I don't understand." He'd say, "Oh yeah, they're stuffed with hamburger meat and spices and things." I'd say, "Claude, not mangoes. Mangoes are fruit." Claude assured me that mangoes were not fruit and so we went over one day and sure enough on the day they had stuffed mangoes. What Claude knew as a mango was a stuffed green bell pepper. Claude is about twenty years older than I am and all his life, Claude had known a green bell pepper had always been called a stuffed mango. So to have a little fun with him we got some canned mangoes out of the Texas valley and sent them to him. So there was always a big laugh whenever Claude talked about having stuffed mangoes. He'd eaten stuffed mangoes all his life and it had been a green bell pepper that had been stuffed and baked, but to him that was a mango.

PAVELKO: What kind of ethnic background is Stevanus, I wonder?

ARNOLD: That's interesting. I guess I never thought about that.

PAVELKO: I'm trying to figure out why he wouldn't know a stuffed pepper when he saw one, if he's eastern European.

ARNOLD: He wasn't the only one. That is what it said on the blackboard, "Stuffed Mangoes". You came in, they had fried chicken, and black‑eyed peas or meatloaf or whatever. There it was written in longhand, "Stuffed Mangoes". Then there was the time that we were in Coshocton and I guess Ben was there and I was there and Paul was there. There must have been about fifteen or twenty of us. We were eating in one of the two places downtown. It was a pretty nice day and we were kind of sitting in the back room and we said to the lady waiting the table, could we look at the wine list. She said she didn't understand what we were talking about and we said could we look at the wine list to see what kind of wine they had. She said, "Yeah, just a minute." She guessed so, so the minute she came back, she had the little small pads like you see diners use. They're about as big as a notepad that you take the order on. She had written down on that pad sheet that they had "Mogen-David" wine, and one other kind of sweet wine. And she said, "Here's the wine list." So we always laughed about that. Laughing at it, I said, "Could I get up and go back and look?" She said, "Yeah, I'll take you over there." She was pretty exasperated with us by then. So we went over and there was a bunch of wine laying behind the bar and there was Mogen-David and two or three other like Thunderbird or Mad Dog 20‑20, or something standing up, obviously wine that was selling. There was some wine laying over that was kind of dusty and dirty and lo and behold it was about a half dozen bottles of a very nice Bordeaux wine, but they didn't know what it was, so they didn't bother to sell it to anybody. We drank it all that night.

PAVELKO: They probably figured it was old and out of date.

ARNOLD: I think you're right. In fact, your saying that makes me think I believe the lady said to us, something about you don't want to drink that wine because it's pretty old. I think that's right. I had forgotten that. You don't want to drink that wine, Sonny, that's the way she was referring to us, you don't want to drink that wine, Sonny, because it's pretty old.

PAVELKO: My husband and I are lovers of wine and we've had several similar experiences from places around the country.

ARNOLD: It's just wild, isn't it. Then another place, Claude lived up in Sugar Creek and the Amish make marvelous Swiss Cheese. He often would bring to Coshocton when we would leave to go home, a wheel or a half a wheel of cheese and we would bring it home on the plane. I remember that was back when they were first maybe beginning to do some airport inspection. I used to carry a half a wheel of cheese home in a box. They'd ask you what was in the box because it was heavy and I used to always tell them I was carrying home a sewing machine.

PAVELKO: And they didn't look.

ARNOLD: They didn't look. It was heavy and you'd just say it was a sewing machine in there. Usually it was a box from the hardware store that Claude had brought it in. On a couple of occasions, you'd go up to Claude's house for supper and you'd go by the little wine place and see the big heads of cheese floating around and the Brie and sampling and tasting. It's just the best cheese in the world. Absolutely the best cheese in the world.

PAVELKO: You learned a lot about the country because of the kind of travelling you've done?

ARNOLD: A little bit about limited places. One of the things about the travelling was that I've enjoyed Washington considerably when I used to go up to the New England states and didn't come home on the weekends, because it didn't make sense. I'd come back on Friday night and spend all day Saturday and Sunday running around Washington with my list of places I wanted to go. That's been delightful and I've gotten to see a lot of Washington that I would have never seen because of that.

I can remember in Casper that first trip that we were up there the Schneider brothers saved everything. In fact, Mrs. Schneider, their mother who had been widowed a number of years worked in the office. Her name was Gladys and she was a marvelous lady. She saved everything. They never threw anything away. So a fellow that was an assistant manager in the Casper office at that time, named Wendell Owen, who is now the regional manager for United Cable in the Baton Rouge area. I met him when we first went up there and he was kind of just showing me around and showing me where things are and telling me how they did things. He and I spent a whole weekend that first month I was there filling a pickup and taking it out to the dump and dumping stuff, we made many trips.

PAVELKO: On behalf of the Cable Museum, I'm appalled.

ARNOLD: Well, I can assure you that what we were dumping back at that time, was kind of interesting. They had had a fight as had a number of other states had a fight as to whether cable service was subject to an entertainment tax. So there were all sorts of stubs and records and things that had been saved. The matter had long ago died and gone away. Yet nobody had gone in and thrown any of this away. They would have old work orders and things that were ten and fifteen years ago well past the statute of limitations, either federal or otherwise. They just had rooms of them filled up. We just spent the whole weekend, all day, two different days, we'd just load them up and take them out and dump them. It's amazing how you can save things that you don't need like that.

PAVELKO: All of these are small components in a very large mosaic.

ARNOLD: Yes. Years and years ago Ken Gunter and the United Artists people had collected many of the first taps and other passive devices. I think y'all have that. I don't know what shape it's in. It was brought to the Texas Show and put on display in probably 1974 or 1975. I think it's now being donated and going up there to y'all.

PAVELKO: There's a fairly large body of very early technical equipment that the Museum has from a variety of various ends. Of course, if you're ga‑ga about coax you can see a lot of kinds of coax.

ARNOLD: That's right. You know, in travelling, I've been to Rumford, Maine on one occasion, and that was just for a day I flew up from Philadelphia on a rate matter. It happened to be when the trees were turning. That was gorgeous. I've never been there any other time when the trees were turning up in that part of the world. So that was interesting. I've been in Hartford when we were building the Hartford system and we were sitting through the hearings trying to determine who would be awarded which franchises. You would go and sit for five days and maybe do nothing, but you never could be away from the hearings because you never could tell whether somebody's testimony in the hearing would have some bearing on something you were going to say, so you went and spent five days listening to people testify at length. Then you'd go off and you'd come back and you'd go on again. So you got to see a little bit of Hartford, and again you made friends with some folks up there. I've been to Boston several times because you went to Boston to do rate work before the Massachusetts Cable Commission.

PAVELKO: You're a Texan, born and raised, and essentially have lived here all your life.

ARNOLD: The only time I've lived outside of Texas was when I was in the Navy and I lived in San Diego.

PAVELKO: I assume, in part, because of your wife's commitment to Austin.

ARNOLD: Oh, absolutely.

PAVELKO: Do you travel a lot now?

ARNOLD: Yes, I still travel some. It runs in spurts and it kind of depends on what's going on. We go to Washington to do lobbying. I've been to Atlanta to the National Show. Next Monday I'm going to go to Oklahoma City and meet with four or five of my counterparts who want to sit down and talk a little bit about where the phone companies are coming from and going to right now, where we have a common interest in terms of Southwestern Bell Telephone. I attempt to be active with a group that kind of loosely calls themselves the "Cable Television Tax Professionals". They're tax managers of major MSOs, or anybody for that matter who wants to come and those are folks who do not only income taxes, but do state and property taxes. I know a little bit about that sort of thing, so I have some interest in going and trying to help so I attend those meetings. I've been to CTAM once or twice, though it kind of runs in spurts. It may run, again, in spurts.

You may be asked to speak before a Rotary or Kiwanis or maybe once or twice in a very short period of time, and then you may hear from no one for years. Then it may perk up again and do things. Sometimes you travel on behalf of pole line negotiations because you're certainly not going to get the utilities to come see you. During the Cable Policy Act activities, we probably took two or three different groups of twenty or twenty-five people to Washington over the course of a couple of years. Then made numerous trips there on your own to lobby or to call on people. I don't travel like I did when you were on the operating side, but you still seem to travel. Sometimes you don't go any place at all for a while and other times you're gone a lot.

PAVELKO: What do you see as your career plans now?

ARNOLD: I don't think I've got any career plans. I'm fifty-six years old. We're not going to move away from Austin, so I suppose as long as I'm doing a decent job for the Association, and they are glad to have me, then that is exactly where I'd like to be. Unless I discover something or something happens, I'm not looking to go out and do something else.

I enjoy what I'm doing. It's kind of interesting. I don't think there are many people who get to leave an industry that they really enjoy, and I really enjoy the industry, from the operating side and get to move over to another industry, namely the Association industry, but be able to represent the industry that you think you know a little bit about. So you haven't lost your friends and you haven't lost your contacts, so it's not like that you left the business of newspaper or broadcasting and gone into ditch digging or left the welding business to go into launching satellites for NASA, and that you left all of the people you knew behind and had never any reason to see or visit with them...

PAVELKO: Quite the opposite actually. You've not only not lost contacts you've, I guess, considerably expanded.

ARNOLD: Sure, you've expanded because as you've done that you're seeing more people, so you met people that maybe you knew by name, or you met people that you've heard of, or you just met people that were interesting and so forth. So your realm of acquaintances has grown and it's been nice and the fact that I have a background and a history in cable makes it easier to do for me.

PAVELKO: Let's look ahead for the moment to the point when you decide that you are going to retire. How do you think you'll assess your contributions to the industry at that point? What do you think your most important contributions will have been?

ARNOLD: I suppose if you talk about some things I've done, you would say I've probably been as active or more active than most in terms of pole rate negotiations and have knowledge about those things. To some extent, they are aware that you have knowledge about what you are talking about, so maybe it makes it a little easier to do. I guess the other thing is that a person who has been around a while has a continuity and if that continuity can rub off on other people who come behind you, you can share your experiences and stories and assist them in meeting people that you know, that will help them go on. Maybe your ability to have continuity is the most you can do if you haven't contributed something that's unique and unusual in a big way.

PAVELKO: I would guess you would serve as a point of continuity not only as an individual, but certainly through the Association.

ARNOLD: I think, sure.

PAVELKO: And by making the Association a vital organization.

ARNOLD: From that standpoint, the Association has always been a vital group. It just hasn't had as much visibility, but that's because that's the way you wanted it. We always had a low visibility intentionally. We didn't want to be seen or heard as an industry. That has changed to the extent that you can cause the Association to do things and hopefully things that are right from the standpoint of where the industry's going or right from the standpoint of the system operators where you can be helpful to them and not necessarily a hindrance or an aggravation or counter-productive to what corporate is saying to them. Then you're being helpful to them and you're creating, hopefully, some continuity and maybe you're causing them to be a little more interested in becoming acquainted with and knowledgeable with elected officials and other people outside themselves that maybe some of the problems we have now, we wouldn't have had them had it been ten or fifteen years ago. The people who would have been managers would have been managing those systems for ten or twelve years. Would have known a lot of those people and some of this consternation might not have happened.

A lot of rate increases have not been handled well in current times. You've seen a lot of rate increases where you've opened up the envelope with your bill that month and there was the rate increase in it. It made you angry and I don't know whether you can say gee, that was the manager's fault or you can say corporate made him do that or what. Common sense tells you that, even in hindsight, that wasn't a very bright way to do that. You might have saved yourself a lot of grief but somehow or other somebody didn't think of it. Maybe the manager thought of it and tried to tell corporate that that's not what needed to be done. Corporate wasn't paying attention to him, because they had a plan and the plan is that in March this is supposed to happen. It doesn't make any difference what else is happening in March, this is supposed to happen in March so you do it in March. Notwithstanding, somebody says, March isn't a very good month. Nobody's paying any attention to it.

PAVELKO: That kind of short-sighted activity hurts the industry.

ARNOLD: You put people out in the field to try to tell you what's going on in the community and hope they know. It's not true with all of them, probably a very few of them, but then when the guy or gal who you've put out there to tell you what's going on tells you, and you don't pay any attention to it, then it's kind of like the proverbial, "I hired the lawyer, but I'm going to tell him how I want the case tried." You shouldn't have ever bothered to hire him in the first place, because they're not even paying attention to him. It's not going to do you any good.

PAVELKO: There's some more of those anecdotes.

ARNOLD: Oh yeah. I'll tell you some more stories if you want. There was a, he is now dead. In fact, he was a heart transplant. A very dear friend of all of us. His name was Dale Mathis. We first met Dale Mathis, knew of Dale Mathis, I guess, even in the mid '70s. He was quite a cable guy and had an incredibly fertile mind about engineering things and gadgets and gimmicks and so forth. I guess I first met him when he did contract work for West Texas Microwave when I first got involved within the cable business in '66. Lived in Colorado City, Texas. I guess he had lived there all his life. He was involved with several systems out there and we, in the CPI days, bought those systems. We referred to them as The Seven Systems. There were seven of them and he was involved with one of them. He was kind of a heavy-set, jocular guy and he always ran around with an unlit cigar in his mouth chewing on it. Anyway there were two five-hundred-foot towers in Colorado City, lashed together at the top in an H frame. It so happened that they ultimately were used where the microwave path from Dallas came to Colorado City and went south on to El Paso and went north from Colorado City on to Amarillo and up into Kansas with Dallas signals. Anyway, he ran the system there and this was back in the days when you had syndex, must‑carry and other things.

He always got tired of running out to the tower to switch and do things and so he created a little switching system at the tower so that he could call up on the telephone and could switch the signals at the tower to accommodate whatever needed to be done from his house. Somehow or another we found out what the secret phone number at the tower was. So on those evenings when we'd get to drinking and cutting up late at night, we'd always wait till 10:30 or 11:00 and we would call the Colorado City tower from wherever we were in the country and just change the channels. We just drove him nuts. I think he knew we were doing it but he couldn't be sure and he had no idea how we'd gotten the number and I don't know whether one of us told or what. But he'd just say let's call Dale and there would be a race for the phone to call. Hell, you didn't want to talk to Dale. You'd call the tower, do whatever was necessary and you knew the channel had changed in Colorado City.

PAVELKO: What did you change it to?

ARNOLD: Just another channel. He changed his signaling technique after he'd found out that we had the number.

PAVELKO: Probably changed his phone number too.

ARNOLD: Oh, he still could laugh at it. He passed away about a year ago after having had one of the first heart transplants under a unique system here at Baylor Medical in Dallas. He lived about seven or eight months after that and then an infection took his life. I was a pallbearer at the funeral and afterwards we went to his house. It is amazing and again this is something that the Museum needs to do and I think that it has been mentioned to his widow, but I don't know whether she would think about it again or not. He had two structures that were like garages that had been added on to the house that were just full of old cable equipment and things that he had made or done. There are two key rings hanging on a hook back there that are as big around as this plate your toast is on, which for those of you who can't see is about eight inches in diameter, and he used to carry those keys around because those were keys to all of the pass gates and the pastures where the microwave towers were. There must be 250‑300 keys on those two rings.

PAVELKO: Rattling as he walked.

ARNOLD: He could find the key he wanted immediately on those rings as you moved into those pastures to work on those remote microwave sites. My wife likes to tell a story about, I guess, one of the Seven Systems which was a Junction that is about 250‑300 miles from Austin. That must have been in the early '70s, maybe '72, '73. There had been a very, very hard freeze in that area. It was coming up on New Year's and ball games and so forth. All of those signals were being brought in via Southwest Texas Microwave from San Antonio. Lo and behold, sure enough, what you didn't want to happen, happened. That was mainly a number of the poles that carried power to the headend loaded down with ice and the poles broke off on the ground. She loves to tell the story that on New Year's Eve about 9:00 p.m., I went and borrowed a fellow's pickup and we had already located a gas generator because there wasn't one to be had out there. I left about 10:30 or 11:00 at night and drove until about four in the morning. We got there with a gas generator and we drove over to a small community about fifteen or twenty miles from the headend site on New Year's Day and I got the guy who sold propane out of bed. He was still drunk as a skunk from a party the night before. He took us out to the yard and we loaded up a tank of propane and brought it back and got the gas generator started in time for the bowl games to be shown on Sunday. Mary always refers to that as the, "Mail Must Get Through" story.

Then when you were talking about travelling, one of the most interesting places that I went is Moab, Utah. If you've ever been to Moab, it's a pretty place. It's carved out of nowhere. I don't know whether it has changed now, but when you come in to land, the landing strip's literally carved out of the side of the mountain and because of the way that the winds blow and the plane lands, even though the plane would be going down the runway, the axis of the plane is turned about ten degrees to the perpendicular of the runway, simply because of the winds. So you landed as if you were landing sideways. You always looked out the window and thought that any second that wing is going to touch that rock wall over there.

Ed Drake, which is another name that may or may not be on your list, was the manager in Utah for the Schneider brothers at that time and then went on to be involved with United Cablevision. I'm not sure what he's doing in the business today. He and his wife managed that system out there for them. You were talking about microwave. In Utah there are cable television districts, tax districts. The microwave site that fed Moab, Utah with one of the distant signals from Salt Lake City was on top of a mountain that was one hundred twenty-five miles away. So it gives you some idea of the elevation of the mountain as it looked down into Moab to be one hundred twenty-five miles away on a line of sight.

But it was interesting. The Drakes knew a couple, a man and his wife, who ran a restaurant. That restaurant was about fifty miles out in the desert through four or five pass gates, snuggled up against the bottom of an old mountain. You had to call and tell them you wanted to come and then see if they were willing to invite you. They had three house trailers that were pushed together and they lived in one of them. One was a kitchen and the other was the restaurant. The food was just out of this world. They were just the most interesting people in this world to talk to.

PAVELKO: Food is important to you, I gather.

ARNOLD: I love to cook. I do all the cooking at my house.

PAVELKO: Marlowe and Marliene both mentioned the dinner at your house.

ARNOLD: Yes, it was at Benjamin's. Benjamin and I just got together and did the cooking.

PAVELKO: In fact, Marlowe remembers quite distinctly the Sazerac cocktail.

ARNOLD: Has he learned how to spell that word yet?

PAVELKO: Well, he wrote it down, but I don't know if he spelled it correctly.

ARNOLD: I don't think he did because he wrote a thank you note and I don't think he had it spelled right. I don't know whether Benjamin sent him home with any Pernod bitters or not. You have to make it with Pernod bitters.

PAVELKO: He said that Ben had looked high and low for just the right stuff in order to make it.

ARNOLD: Well, then he probably found him some Pernod bitters.

PAVELKO: What do you like to cook?

ARNOLD: Oh, I don't have anything special that I like to do, Kathleen. I just enjoy cooking. There may be a half dozen things that I can do kind of from scratch without looking. I've probably got a collection of forty or fifty cookbooks that I use randomly so you may just go through cookbooks and sit down just looking at things until you think, gee that looks kind of interesting. If that's interesting let's see how many other variations there are of that. Then often the family and/or people who come to eat say, "Boy, this is good!" You tell them that's right and you'll never eat it again because there were two or three cookbooks out and that's a little bit of everything. You don't pay any attention. That's just the way it got fixed and it will never get fixed like that again.

PAVELKO: My husband gets very frustrated with me that way because frequently I'll make something that he really enjoys and I'll never be able to reproduce it.

ARNOLD: Got on my little list here, something else that's kind of interesting. In the early years in the business, pole attachment bonds were very difficult to get because insurance underwriters didn't understand what those bonds were about.

PAVELKO: What were they about?

ARNOLD: Well, they were a guarantee that if indeed you didn't pay the pole rental fee that there was money in the hands of the utility company with which to remove the attachments you'd make to their poles. They still exist today. Unfortunately, they have not gone away. Those kinds of bonds were very difficult when utility companies began to ask for them because underwriters didn't understand what they were and because there was no experience, nobody knew how to rate the risk. As you began to build bigger and bigger markets, the demands for bigger and bigger bonds came along.

And I was involved at that time with a fellow who is now dead, named Ben Doherty, Sr. He had been selling fire and casualty coverage to the industry for a number of years. He was able to cause underwriters to understand a little bit better about those things, and to package the bonds in such a manner that they became a little bit easier for operators to get. That always kind of sticks in my mind because that was a real problem then and it still is today. The underwriter may give you the bond, but he may charge you a very inordinate premium for the bond because he doesn't understand what the risk is and because he can't look back and see if any of those have defaulted. There's never been an occasion to my knowledge where the bonds have been called to either pay to remove this facility or to pay for the rent. He was able to develop a technique that allowed the underwriter to do a better job or to find insurance companies to whom he could explain the risks.

He was also one of the first people, although I'm sure not the first, who were able to help operators in finding coverage for cable plant, because again people didn't understand the risk. By doing it under an inland marine type of coverage where the risk wasn't regulated by underwriting rules of regulatory authorities, but under inland marine or aviation policies where the underwriters truly assessed the risk themselves, again, this was kind of an innovative thing. Probably that's gone by the wayside today in a sense that the people have learned a great deal since then.

Back in that time, it was very difficult to get bonds. Even in the mid '60s and '70s, as you begin to build plants and began to do business perhaps, with larger utility companies or in bigger markets, they wanted bigger bonds that could really provide problems. Often the bonding company then wanted a surety from someone. You not only gave them the bond, you bought the bond from the insurance company, but the insurance company wanted a guarantee from you that you would pay. Which meant a letter of credit or a surety or a compensating balance of some kind so if the bond was several hundred thousand dollars, that it was just the same as if you were putting it up. If you couldn't find a company that understood, that would either take your guarantee or would take a surety from you or would take some sort of promise and understand that indeed it was probably never going to be called on.

PAVELKO: As the technology changes and we move from coax to fiber and the equipment at headends changes and so on, it occurs to me that the opportunities for innovative approaches like the ones you just described continue to be present.

ARNOLD: They probably do. Maybe the field of insurance makes it easy to think about. I think you're going to continue to be innovative. One of the things that's coming about now that's bringing some consternation to the industry is that the utilities phone and electric are beginning to say if you put fiber on these poles and you're not using fiber for cable television purposes, then we think that the attachment rate for a non‑cable use of fiber should be considerably different that the attachment rates for the same kind of fiber for cable use. I don't know that there is a way that you can be innovative but you've got those same sort of confrontations with the utility companies over fiber, particularly where one and or both, think that maybe being in the data business, two-way is something they'd like to be in someday.

PAVELKO: It's a huge area of future concern.

ARNOLD: It's just incredible.

PAVELKO: Are you looking forward to playing a role in that?

ARNOLD: Oh yeah, if I'm around long enough it'll be fun. It's always fun to do battle with the utility companies over the pole attachment thing. Pole attachments are big deals to them and they generally play hard ball for the most part about those, although generally the people you're visiting with, probably don't understand very much about the plant or they don't bring the people along who do understand about the plant, so you're dealing with the lawyers or the number crunchers and the plant engineer, whether it be electric or telephone is the guy that may or may not be brought to these meetings, but he is not included very much. Generally what you end up with is, in my impression, a lawyer sitting down and saying, "Well, we've agreed to write a tough old contract here and we're just going to say that we can't do these things and we go on about our business." I think pole line disputes are going to stay around and they're going to stay around particularly in light of the fact that if indeed you're putting fiber up, you might ultimately use it for two way. Then, depending upon who is going to want in that business, they are not going to be real happy about having to make space available to you on a pole to put up a potential competing type of service.

PAVELKO: Are there other areas we need to address?

ARNOLD: Not that I can think of. I'm sure that some will come to mind.

End of Tape 2, Side B

PAVELKO: I thought I'd start today by asking you to give me a case study, if you will, in a couple of areas. To pick an example of each one of these areas. Let's start with the pole attachment negotiation. It might be useful to explain this process, to take one piece of negotiation, one incident and explain what's involved, how you approach the situation and exactly how the interaction, both with the utility company and with the cable operators involved, would have worked.

ARNOLD: Pole attachments became a problem I guess you might say from the very beginning of cable systems because telephone companies in particular were not interested in having cable operators attached to their facilities. So there had always been some degree of confrontation over the years about that. It continued to grow and become an evermore demanding sort of issue before the FCC and other bodies.

In 1978, I believe, that date may not be right, there was passed a federal pole attachment statute that indeed assured cable operators the right to attach to utility poles. I suppose it might be said that there had never been any legislation or case law that had ever prevented them from attaching to poles. It had been more a question of at what price. So the federal pole statute delineated to some extent that indeed they had a right to attach to poles and that because there had been serious disagreements about what price was that there became a federal pole attachment formula that you went through.

The formulas are essentially the same but because the chart of accounts for electric utility companies and the chart of accounts for telephone companies are somewhat different, the formula delineated those particular accounts in their respective charts of accounts that would be contained in the formula. One of the major stumbling blocks over the years had been the amount of space on a pole that cable should be responsible for paying for. It was known as its space, in the sense that you were already on a joint-use pole, so you were talking about a shared occupancy. Therefore, when you got ready to share the costs of the pole, it was a matter of trying to determine what portion of that pole should be allocated to you.

Once the statute was done, then negotiations became a little different because notwithstanding that utility companies, phone or electric power, didn't just race to change, if you filed a complaint then they had to respond to the complaint. The statute and the Commission, who was responsible for overseeing the statute, operated on the assumption that if a complaint was filed then they made some effort to see if the parties could not negotiate the disagreement between themselves. Then if they couldn't the Commission would undertake to mediate the dispute and come back with the finding based on the facts that comported presumably with the formula as to what an appropriate rate was and a refund from the time the complaint had been filed-- if indeed there was to be a refund--until the complaint was settled.

I guess, in the very late '70s and early '80s, as people began to file those complaints, one of the things that occurred was the complaint was only applicable to the person who was filing the complaint and the utility company. The utility company had absolutely no obligation to extend whatever finding arose from that complaint proceeding to any other entity. So folks like our association and or companies, then began to go to Southwestern Bells or Houston Lighting and Powers or Texas Electric service companies--large utility companies who covered a wide area--and attempt to find someone with whom to negotiate. That was always very difficult to do because you would be referred to the plant engineer, perhaps with the electric utility company as being the person who had pole line plant as his responsibility. He would tell you, yes, he had pole line plant as his responsibility but determining the numbers for pole attachment fees he had absolutely nothing to do with, was not familiar with perhaps the statute. Knew what safety precautions he was interested in, knew what sort of engineering standards he was going to impose such as some utility companies required that if you attach to their poles you must separately anchor your plant. Others do not require that you separately anchor. They may require that you anchor your plant by stranding to their anchors and not to separate anchors, and things of those nature. So you would move from the engineer around until you found somebody who would admit that they maybe knew where to start ‑ probably weren't responsible for, but knew where to start.

So companies would go forward much as the Texas Association did with Southwestern Bell for example. In late '79 or early '80, we approached Bell and said we realize that they had already been the loser of a complaint proceeding that involved Amarillo, Beaumont, Port Arthur, and I think Galveston. We were prepared to encourage as many other operators as possible to file a proceeding against them. In those days the proceedings did not get consolidated until you literally got to the hearing level at which point, if indeed, hundreds of complaints had been filed against Bell Telephone. As they matriculated up to the Commission, the Commission at some point in time would consolidate that hearing because the facts were the same. Bell's financial information was not different for City X as compared to City Y unless the phone company could demonstrate that the cable operator was doing something differently or unless they could demonstrate that their plant configuration was different than the assumptions that were underlying for the operation of the formula.

So in that particular instance we hunted around and finally found someone in St. Louis who could sit down and visit with us. He was an attorney on the Bell staff. His name was Lynch and I think his first name was Jim. I'm not positive now, but his last name was Lynch. He was familiar with the law and could understand the law and could understand the process and so we were able to sit down with him over a period of time and negotiate out an agreement that applied to Bell Telephone poles in the state of Texas, for example. And that Bell would make that offer available to all pole attachment holders in the state, not just to those who might have been joining us in talking to him about it. They reluctantly agreed to continue to visit with us on that basis, so they have continued to do that.

The pole attachment statute also had a sunset clause and about a year before the sunset clause became effective, which would have been about 1981 or 1982 maybe, the NCTA in the waning days of Congress, got someone to amend a piece of legislation that removed the sunset clause. Nobody realized it until it was too late. So the statute is on there in a permanent fashion now.

Subsequently, the Commission has held hearings and new rule makings and they afforded state associations a greater role in complaint proceedings. It used to be that state associations had no standing as far as the Commission was concerned to be a party to the complaint. The Commission's new rules now acknowledge that state associations have been active in negotiating pole attachment rates or bringing parties together or representing the cable industry at least as a single individual rather than hundreds of operators coming to deal with one utility company. So associations now have standing and can indeed initiate complaints on their own, although I don't know that many of them have.

So I suppose that threat, if you will, coupled with some just practice that occurred has been that you proceed to sit down with say Bell Telephone, for example, and you take a look at the information that they bring to you. You attempt to determine to the best of your ability whether or not that information appears to be correct. One of the things that you're unable to do is you really have no way to verify whether or not the information that Bell is submitting to you is accurate, whether it has been properly classified or not.

A good example of that sort of thing again, is in the context of something that has happened Southwestern Bell, for example, has been chastised by the FCC for improperly allocating a million and a half dollars of lobbying expense to overturn the modified final judgment in the process of the allocation of that expense. That expense should have remained in the corporate part of the accounting process to be borne solely by the shareholders. That was a minuscule portion of the expenses they had. They had no effect, but that again just goes to point out, at least in the opinion of the cable operator, that Bell is continually cross‑subsidizing operations between regulated and non‑regulated or improperly allocating expenses so that the rate payer bears that portion.

Bell took the position in about 1982 or 1983 that as they went forward they would calculate the pole attachment fees for each of the states based on information contained for that particular state. One of the problems with that is that none of that information is public in terms of individually, on a state basis, unless you happen to have a tariff proceeding or a rate proceeding or something by where you could go through and look at the file, because generally each of the states will accept from Bell their Form M report to the FCC which is a combined report for all of the states that are operating.

One of the things that I did for the states that were involved with Southwestern Bell was to gather up all of the information from the states and at least spread it out so that you could determine whether it footed and cross‑footed and whether it appeared that the information for each of the states came together to equal the total for all states in question. And then we have been able to be successful in pointing out places where Bell, in the process of attempting to calculate the rate, has misused the formula or has interpreted it incorrectly. So on a couple of occasions we've been able to secure changes in a proposed rate as a result of being able to scrutinize them.

I guess a recent example is--I still don't quite understand how it happened--when we did the pole rate for the year 1989 with Bell, Bell had made a mathematical error, a computation error. We had a very difficult time in getting them to admit that they had made a computational error, but when they finally did admit it the rates for each of the states were less anywhere from fifteen to twenty cents a pole. In the process, it was interesting that the rate for the state of Arkansas was still substantially above the prior year's rate. In visiting with the fellow from Arkansas, I encouraged them to complain a little bit to Bell about that. They did and he has recently indicated back to me that by virtue of their raising questions with Bell about that rate and why it appeared to be out of order, Bell has admitted that indeed the rate had been miscalculated. About the only thing that you can assume without knowing the facts are that, contained within the expense portion of the functions for the state of Arkansas were some items that did not belong there as compared to other years. Only by virtue of our encouraging those folks to do that, did they stay on it. They ended up with about a sixty-five or seventy cent per pole reduction from what the rate was to the other. So those are kind of examples about how you monitor or look at.

We've been involved in another situation where Southwestern Electric Public Service Company in Shreveport, whom we had filed against in the late '70s when I was at CPI, were very antagonistic and had continued to tell us that they didn't understand why the Federal Communications Commission had anything to do with an electric utility because they were under the federal electric regulatory folks and so forth and they had unlimited amounts of money. They would fight this matter. I think that probably had a lot to do with their plant engineer, a crusty old guy who was really not interested in doing anything where cable was concerned. We had many battles with him. Two or three at the Commission level and in each of the instances we prevailed and they lost. There has been another recent complaint proceeding that was about five or six years old. As a result of that proceeding, they had gotten to a point where they thought they had reconciled the numbers to some extent but unfortunately the lawyers representing the four or five companies complaining and the lawyers for SWEPCO, had gotten cross‑wise. So the Arkansas Association and the Texas Association were able to meet outside of the context of those meetings with those folks and try and address the concerns that SWEPCO had about some changes that they wanted made.

The pole attachment agreement and the associations were able to do some sampling of member systems to see whether or not those changes would present a problem. Upon determining that they wouldn't, provided that an appropriate period of time was given to make the changes, then we were instrumental in then concluding those negotiations which had already arrived at a negotiated rate for the year in question. SWEPCO, having a new plant engineer, was now interested in not having to deal with these problems. They were amenable to a five-year rate, provided that they could get some of their concerns settled with changes in the contract.

This is the place where the associations could respectively come and represent the membership. You couldn't bind the membership, but you could sample, visit with, talk to, circulate, drafts of the information that would have been difficult for SWEPCO to perhaps have done, because not everybody who was a pole attachment owner was a member of the complaint process. So again they were only being forced to deal with the four or five companies that were complaining and really had no way to tell how other companies would have felt about changes that they were proposing. That's a case where the associations can come forward and be of some service in kind of negotiating some settlements. That's been true of others.

That same thing was true with Texas Utilities company. They used to have three wholly owned operating subsidiaries. Two of them were pretty easy to get along with. One of them was very difficult to get along with. They folded those subsidiaries into the company so they became operating divisions and were no longer companies separate and apart from themselves. So that meant that instead of relying on the financial data of each of the individual companies, you now had to rely on the financial data of the entire group of companies which meant that you were dealing to some extent with a different set of folks. So in recent years, in dealing with them, we've been able to do some of the same things. Take a look at their calculations, suggest where perhaps they have made errors in the calculations or have interpreted the data incorrectly. About a year ago, we were able to secure a five-year agreement for them that looks like it's probably a fair agreement for both parties. And at least it would afford the cable operator, to the extent he is concerned about that, a known quantity in terms of what future pole attachment rates are going to be for a period of time.

That agreement, as well as the agreement with SWEPCO, required that in the year preceding the year in which the rate expires, each of the utility companies would offer to come forward and I think it's safe to say, might have obligated themselves to come forward and begin a series of negotiations so that indeed you did not have a surprise number for the first pole rate of the first year proceeding the anniversary of the other rate.

PAVELKO: How significant, as we look ahead, are pole attachment negotiations and pole attachment agreements as the trend is more and more not to hang stuff on poles but to bury it or to deliver it in some other way?

ARNOLD: Well, it's important, but it's not so much important from the standpoint of burying it. It's much more expensive to bury plant, direct burial, which means you bury in your own conduit, but also the maintenance expense is somewhat less. When you do direct burial, then you are really not concerned with any attachment fee of any kind because you have a presumed right to use the right of way, and as such you have a right to bury. The place where going underground could become expensive to you is in very heavily populated and constructed areas wherein you would be forced to go in Bell conduit, "if there were conduit available." Conduit space rents on a per foot basis and so it is not unusual for, in this part of the country, I think the rate in Dallas is in the neighborhood of fifty cents a foot a year.

So what that means is that if you have plant and Bell conduit in the downtown area, you're paying about $250 a mile for the use of conduit space. Had you been on the surface and assuming there were an average of forty poles per mile, that probably wouldn't be true downtown, and your Bell rate, presently to attach to a pole is $2.25, then your comparison of $250 to being the conduit would be compared to 40 x 2, or something less than 100, in the neighborhood of $80 to attach aerial facilities. So it becomes considerably more expensive if indeed you've been in conduit. But it doesn't become more expensive if you've removed your facility from the poles and directly buried it.

Another confrontation that is brewing now is with the advent of fiber optics. Bell Systems as well as electric utility companies are saying to cable operators, we have leased you space for cable attachments. In our opinion, we think the federal pole attachment law only applies to you where you're "delivering cable service" and should you not be delivering cable service, then we do not think the federal pole attachment formula is applicable. Therefore we're going to seek a pole attachment rate that is not within the scope of the federal pole formula. There is such a dispute going on right now in Dallas, between Texas Utilities and their subsidiary Dallas Power and Light and TCI in which Texas Utilities have refused to allow the local cable operator to attach any additional fiber plant to the poles. The operator is attempting to build fiber links between his sub‑headends and to make his AML become the backup to the fiber, rather than the primary use. The electric utility is preventing an attachment of fiber to any poles, because they're contending that fiber attachments are to be priced at a different rate, because they do not intend to be in the business of monitoring what the cable operator might be doing or not doing with the fiber. Therefore, they would assume that he's doing other than non‑cable uses. If I'm not mistaken, the rate that has been proposed is a rate that could very well reach the magnitude in excess of $100 per pole per year for fiber attachments.

Southwestern Bell Telephone is also making noises about doing the same thing. From the perspective of the cable operator, you presume that what you're seeing there is a concern about a cable operator becoming a competitor with phone and/or electric utility for data transmission service or other two-way types of communications perhaps other than voice.

PAVELKO: As opposed to a legitimate concern about additional costs associated with maintaining fiber attachments.

ARNOLD: Yes, it is hard to perceive that they have additional costs. Although much of the argument over many of the years was that when you put another person on your pole plant facility, that increased the costs markedly. It certainly does increase the costs, I presume, for everybody, because it's a little bit harder to work around two sets of strand on a pole than it would be around one set of strand on a pole. But there has never been much agreement between the two industries that indeed it is anywhere near the magnitude of expense that either Bell or the utilities would contend that it was.

PAVELKO: While we're on the subject of telcos, let me ask you a philosophy and future question about the relationship between the cable industry and the telcos. You mentioned that you are going to Oklahoma, I think you said, to meet with some colleagues, your opposite members in some other states to talk about what the telcos are up to these days. What are the telcos up to these days?

ARNOLD: Well the telco is kind of the topic of conversation, or one of the several major topics of conversation of the cable industry today. The telephone industry's interest in having the telco/cable cross ownership restrictions removed as relates to the Bell operating companies meaning the seven companies that were divested from AT&T, under Judge Green's modified final judgment ‑ those companies are precluded from being in the cable television service ‑ period. Until such time as the modified final judgment would be amended or until a statute in the form of legislation was passed that would obviate that ruling.

With respect to other telephone companies, General Telephone, Continental, United, anybody else that's other than a Bell company, under the Cable Policy Act of 1984 which codified a ruling that the FCC had in place for fifteen or twenty years or more, those phone companies are able to be in the cable television business in any area other than their own service area. So General Telephone, for example, here in Texas, I guess their largest exchange area would be San Angelo. If they wish to be in the cable television business in Austin, Texas, there's absolutely nothing preventing them today from being in the cable business in Austin, Texas.

Interesting to note, you don't see General Telephone out building cable plants in other areas. They would like to build cable plants in those areas where they already have existing telephone plant which is certainly understandable, but then the problem becomes how do you prevent General Telephone from cross‑subsidizing their telephone operation and the cable operation. I think it's been proven over and over again that indeed telephone companies and many of their problems for fifty years or so, have resulted in legal questions being raised about them. Just as the breakup was and several of the consent degrees of past years have had to do with phone company's propensity to engage in anti‑competitive behavior because of the position that they had with respect to their core business: telephone companies.

So that is a very large question today. The phone companies would like very much to be in the cable business because they view that as a way to, in my opinion, turn around and say to regulatory authorities at the state level, that indeed we have to accelerate the depreciation of the present copper plant in order to recover the cost of that plant so that we can turn around and put fiber optics in. Of course, the cable industry contends today that there is nothing the telephone plant cannot do, except deliver full motion video. So that while the phone company is saying we can bring you all these goodies if we're only allowed to have fiber optic plant, it's the cable industry's contention that many of the goodies that the phone company is saying they can bring you if there's fiber optics can be brought to you today over copper plant provided they wanted to do it. I think the fact of the matter is they don't want to do that. They want to be able to be the person that has fiber to the home or fiber to the pedestal and they want to be allowed to be in the business of delivering video. So you're beginning to see an ever increasing confrontation between the groups in that regard as in reflected and proposed legislation right now. As is reflected by activity.

I think it's interesting to keep in mind that prior to 1972 when the Third Report and Order codified that one could not own cable systems in the same service area, where they owned radio, TV, telephone companies, newspaper media and others without exemptions, that prior to '72, General Telephone owned fifty or sixty cable systems around the country. They were forced to divest those systems as a result of the 1972 ruling. Here's somebody who has been in the business before and was never happy about being made to get out of the business. It's kind of interesting, at least to me, that in wanting back in the business, you don't find them wanting back in the business, apparently in a non‑service area. They'd like to be back in the business, but they'd like to be back in the business in their service area.

PAVELKO: How do you assess the mood of Congress? The mood of the general public as regards changing the current regulations which would forbid telcos from being involved in providing data transmission and video service. It would seem to me that there is a substantial body of opinion which supports the telco approach.

ARNOLD: I would tend to agree with the latter part of your statement that there is a substantial body of opinion. I don't think the body of opinion is the majority yet. I think the body of opinion that supports that change supports it because they think that the cable industry is in dire need of some form of competition and that, correctly or incorrectly, that form of competition is going to cause prices to decrease dramatically and so therefore they are in favor of competition. The phone companies have done a very good job currently of saying, oh, you've got this problem with another industry that needs competition and they are, in my opinion, bringing themselves to the fray by saying gee, we reluctantly would be glad to help you people with this competition problem you have and we will be glad to be the people that will provide that competition. In order for us to do that, you've got to let us remove the restrictions of the modified final judgment if we're a Bell Telephone company and you've got to amend the cable policy act to let us be able to provide cable service in our own service area.

I think if those folks who believe that if they took a serious look at and really became a student, if you will, of the manner in which telephone companies have operated over the years, they probably wouldn't do that. It's kind of ancient history, but Florida and Texas for many, many years were the last two states of any size that did not have a public utility or a public service commission. Texas ended up about fifteen or eighteen years ago with a public service commission solely because Bell Telephone got caught having three sets of books so to speak. They had a set of books that they used for tax and reporting purposes. They had a set of books that they used for property tax purposes and they had a set of books that they showed city governments in terms of how well they were doing or how not well they were doing. In that particular situation there was also two or three mysterious deaths in the form of suicide and other events. As a result of that rather ugly episode, if you will, the state of Texas decided that they better have a public utility commissioner who could oversee what the phone company was doing.

So while that's not very convincing to a lot of people that, in my own mind, is an example of a situation of a phone company being unable to handle a situation where it is very easy to be anti‑competitive in nature. It just isn't their nature to not do that. It is, in my opinion, their nature to be very anti‑competitive in that situation and to be very sure of themselves in the sense that they are positive that the way they've done it is the correct way and that they are right.

I guess, that would harken back to our comment earlier about the pole rates in Arkansas. When we got finished again for the rates in '89, we had corrected two sets of mathematical errors before they got the rates right, and then, of course, suggested to the Arkansas folks that their numbers still didn't look right. There just couldn't have been that kind of dramatic increase in a couple of the expense accounts that were used to calculate the pole rates. Sure enough, upon going back to Bell, Bell admits that yes, those numbers weren't right and need to be adjusted. Those adjustments would have never been made had the cable operator not pressed Bell to do that. While that number is significant to the cable operator, that gross number is the number Bell rounds off when they report numbers, so it does not become a significant number to them at all.

PAVELKO: But it is a significant number ultimately to the individual cable subscriber because whatever costs the cable operator is bearing will be passed through to the consumer.

ARNOLD: I think it is safe to say that if indeed you think Bell is going to do a job better than the cable operator ought to do the job, I would suggest to you that you either need to go to downtown Dallas and look at the multitudes of headquarters people that are here that have nothing to do with the daily operation of the phone system in the field necessarily in making it function or that you go to St. Louis and look at corporate headquarters for Southwestern Bell in St. Louis, and look at the literally hundreds of thousands of people up there and you think, how is Bell ever going to separate who is doing which of those chores. You can rest assured that probably a large part of the expense of the unregulated subsidiary at some point in time is going to get funneled over to the regulated side because indeed they are going to be guaranteed an opportunity, so to speak, to recoup those costs.

PAVELKO: Are there any other areas you'd like to touch on, vis-à-vis the telcos?

ARNOLD: I guess, most cable people are kind of anti‑telco and I'm kind of anti‑telco in that sense. I think telcos and cable could probably coexist but it would certainly take a monumental change on the part of both groups to do that. It's interesting to note that in England and western Europe, for example, where I think five of the seven Bell operating companies have cable franchises in England, that in many of those instances they are partnered with existing cable companies from the United States for the expertise they want. They bring an expertise to it because in England a cable operator is able to also provide telephone service to the potential customer.

It's kind of interesting to note that under that set of circumstances cable on telephone seem to be able to exist with each other side by side. They haven't built any cable plant that's all fiber direct to the home. They have built cable plant that's been fiber and coax in a hybrid situation which is kind of contrary to the statements that they continue to make to folks in the United States which is you got to let us in the fiber business so that we can do X and Y, when indeed really when they're building cable plant in other areas, they're building cable plant just like the cable operator in this country is building cable plant. They may be building a fiber trunk and a fiber distribution system to the pedestal and then they're taking coax from the pedestal to the house.

PAVELKO: I was reviewing some of CPI's annual reports and wanted to pursue with you a little bit, CPI's brief foray into the broadcasting end of the business with the purchase of KFJZ-AM and KWXI-FM and the Texas State Network. Why did you get into it and then why did you, relatively quickly, get out of it?

ARNOLD: CPI did a couple of things like that and I think it was like any other company at that time. As you were growing in the cable business, you were looking at other areas that might either be compatible or in which you would have an interest. Again, you must keep in mind that Jack Crosby was a very prominent shareholder and Jack does enjoy and does thrive on making deals and looking at business combinations and arrangements. What appeared to be a very advantageous purchase of a fairly substantial radio property came to the market. It was decided that there conceivably might be some synergism perhaps, in doing that. Jack had been in the radio broadcast business before so that it was not completely strange to him.

Several of us had invested in a small radio station in south Texas for several years as passive investors, so again being in the radio broadcast business was not something that was not absolutely totally new. So we proceeded with the Fort Worth stations, and purchased them and went along for a while. They had management in place but as we moved along, as things began to continually change in the cable industry and demands for money to build plant and equipment came along and other things occurred, and the manager of the station, if my memory serves me correctly, then opted to retire, then it left you without management in place, so you came about to look at that as, not necessarily being the thing you wanted to do.

I think during that period of time, also, other broadcast properties that might have been available began to escalate rather rapidly in price, probably as much as cable systems had done. So it did not appear to be as lucrative a proposed business operation as it had been when you bought the Fort Worth stations because stations begin to increase in price a little bit.

We got in another business in a similar way. We had CPI Microwave, which was a data transmission link from Dallas to Austin, San Antonio and down in the valley and from Austin over to Houston. And again, we built that thinking there was synergism, I think, and again it was something similar to what businesses we had been in before. While it was different it was still microwave. We were familiar with West Texas Microwave in southwest Texas. The Tower Antenna Systems had a microwave subsidiary that served systems up in that area. So we thought here was a way to get in the business, except it consumed far greater quantities of capital, I think, in order to get up and running than we had anticipated that it would. Again, at another juncture, because the capital demands of that business had taken into account with the additional capital demands that were being made for cable properties, for expansion of new builds, we sold the microwave business to Western Union after several years of operating them.

PAVELKO: To whom were the broadcasting entities sold?

ARNOLD: That's interesting; I hadn't thought about that. Let me look, out of curiosity. I think it's going to be in that prospectus stuff.

PAVELKO: The announcement that they were going to be sold.

ARNOLD: We're in '76. I bet you this doesn't say. Isn't that strange? Boy, I don't remember at all. Well, we ought to at least mention that we disposed of it.

PAVELKO: As a neophyte in reading corporate annual reports, I'm amused...

ARNOLD: About the lack of information.

PAVELKO: That, but the casualness with which you refer to divesting of a business which might have an annual revenue of several million.

ARNOLD: It would be like for a lady having breast cancer or having a small carcinoma and you just kind of off-handedly mention that you think you might have a lump in your breast. Then in the following annual report you make no mention of whether the breast had to be removed or whether you died.

PAVELKO: Exactly.

ARNOLD: Then you think, that must have been serious. Good serious or bad serious. But nobody ever got to hear the final installment. It's incredible. You're exactly right.

PAVELKO: Let me ask you about the stations that you bought. Tell me a little bit about them.

End of Tape 3, Side A

ARNOLD: The station in south Texas, was barely profitable for us while we owned it individually. We subsequently sold it simply because there appeared to be some interest in people that were willing to buy it. It was reaching a point in time where additional capital investment was going to have to be made. None of the seven or eight people that were involved were particularly interested in coming up with additional capital. The fellow who had been managing the station was anxious to move on and do other things. It appeared to make good sense to dispose of it rather than necessarily end up with a station for which you didn't have a manager in place and had to worry about directly.

So KRIO was sold at a profit and from time to time I still hear from the fellow that used to manage that station. I think he's up in Tennessee or Kentucky someplace now. He always had a cigar in his mouth and he was always a very jovial and very friendly and laughing guy. My recollection is most of the people you met at the Fort Worth radio station were very friendly, very jovial, very outgoing people. I guess when you're out selling time and in that kind of business, you can't be but otherwise.

PAVELKO: Yes, that's true. Broadcasting tends to be a jovial, congenial, glad‑handing kind of business.

ARNOLD: That's right.

PAVELKO: I have really just one question left. That is that I would like you to tell me about Ben Conroy.

ARNOLD: Ben is a person that I met when I first went into the business. Ben has been my mentor in the cable business for the twenty plus years I've been in the business. Ben and his family have very fortunately become very close friends of Mary's and mine and so what started out as a business relationship has traversed over the years into continuing to being a business relationship of sorts, notwithstanding that Ben's retired now, but has moved into a close personal relationship. Ben has six girls and one boy and as you can imagine with the oldest child, Kate, who now lives in San Antonio and is married and has three children, she's thirty-four. So if indeed, I've known Ben twenty-two or twenty-three years, Kate as the oldest at age fourteen, I've known all the children since they were young and were around the house a lot.

Ben and Toni are very unusual and interesting people. Ben's brother is married to Toni's sister. The brother and the sister have eight children and live in California. Ben's father, who was in the cable business with him, was a very interesting man. While Ben is as tall as I am and a large guy ‑ Ben's father was a short fellow, kind of like a bantam rooster, who had apparently done very well for himself in numerous business ventures, one of which I think was wholesale furniture manufacturing. I had always known him as a retired gentleman. Apparently had a very acute sense of investments. Over the period of time, both during his working life and then in his retirement, he had done very well with investments he made. In fact, he tended to the money for several spinster and or widow lady friends of he and Mrs. Conroy's. Ben's mother is still alive and lives in California, near the brother and his wife.

But Ben's been a very interesting fellow to know and to be close friends with. He graduated from the Naval Academy, stayed in the Navy until such a point in time as they told him that he was going to have to come ashore and so he decided that the Navy he knew was the Navy at sea, not the Navy at shore. It was at that juncture that kind of put him in the cable business. He is an excellent gardener. He right now keeps about 2/3 of an acre of ground under cultivation at his office in South Austin, keeps probably 1/4 an acre of ground under cultivation around the house. With all sorts of fruits and vegetables, much to the delight of his friends because you continued to be, as you get into the growing season and the produce begins to be more than the family can eat, of course, these days without there being all of the children and their friends around, that's a greater number rather than a lesser number. Just a couple of weeks ago, we were recipients of fresh plums and peaches and we have tomatoes. Four or five kinds of fresh lettuce. Corn from time to time. A little bit of okra, sometimes eggplant. To give you an idea, a couple of years ago, he had a bumper potato crop and so we had potatoes nearly all during the growing season that were very good.

Ben's got an incredible mind and an incredible amount of intelligence and it goes across a number of areas. An example is Ben at a very early age became an aficionado of blues and ragtime music. As I understand that story, they lived in New York at that time and his father used to take him down to Basin Street East when he was ten, eleven, twelve and thirteen and spend the evening with him, while Ben listened to the old greats play piano and while he was immersed in this music, this has continued with him today. He is a marvelous boogie piano player although he likes the rags better, he is a marvelous boogie piano player.

I guess one of the anecdotes that I didn't think to tell before was in 1971 or 1972, I went to the National Trade Show (NCTA) in Chicago. That show started on a Sunday and was over on a Wednesday. Ben was at that show. Ben said to me on Wednesday, why don't you and I go to St. Louis to the St. Louis Ragtime Festival. It's kind of interesting to note as an aside that this is the first year in twenty-seven years that the St. Louis Ragtime Festival is not being held. That was about the fifth year of the festival and Ben said, you like the music. Ben had been to festival one and two, but had not been back to any of the succeeding festivals. So Ben and I went to St. Louis on Thursday morning I guess and stayed there Thursday, Friday, Saturday and came home on Sunday.

The interesting part about that was that during that period of time, we had been looking at another house to move to and I had been over once to look at the house but had not paid much attention to it. Mary wanted to move, that was fine with me, so when Ben and I got home on Sunday, I had to call from the airport to find out where we lived, because Mary had moved from the house we were in to the new house and I didn't have the slightest idea where it was. I had no idea what the street address was. Her mother and father had helped her move during this period of time. Her explanation to her parents had been, Bill was out of town with Ben on a business trip and couldn't get back. Ben and I went to every festival after that with the exception of one year, up until this year. This is another example of through people you meet people.

Ben and I met and made numerous good and gracious friendships that were music people who Ben's much more closely acquainted with because of his knowledge of music. When people ask me, what do I do with music I say, well all of you people play and there have to be listeners or y'all wouldn't play. So the talent I bring, if any, is I come as a very interested listener.

Ben's a good cook. He is a wine connoisseur-‑loves good wines. Has a lot of knowledge about good wines. He's just really a regular all-around person and a very interesting person to know and to be acquainted with. He has a lot of opinions on different things. He's been a very strong ally of the industry for all the years that he's been involved in. I guess it's interesting to note, he was the NCTA's tenth chairman, to give you some idea of the influence that he had in the industry. He was instrumental in getting the Texas Association formed up and has been very instrumental in work with the Museum. He has that sense of history which is, I suppose, as I remarked earlier, part of the reason for the oral histories because of his interest in oral histories that are done at the Naval Institute.

I guess there are a lot of stories one might think to tell about him. None of them seem to come to mind right now. He certainly been a very dear friend. He's a very vibrant fellow. You certainly wouldn't look at him and know he's sixty-six years old. You'd think maybe he was in his mid fifties. I think a lot of that credit goes where the mind stays busy and the hands stay busy and there's always something to do. He retired shortly after the CPI‑Times Mirror merger got done because it was evident they were going to move corporate headquarters to California and he had no interest in moving away from Austin.

In fact, after that event occurred he didn't have an office to stay in, and the regional office that I was responsible for which was responsible at that point in time for about 100,000 subscribers in Texas, Arkansas and Illinois. We had an office in Austin, only away from the downtown area and so he came out and used some space in the regional office that we had, and this is kind of an example of his dry wit.

This may be one of the things we can't publish when it comes to it, we had a young lady in the office named Jeannie and Jeannie had been typing one day continually from morning until well after lunch time on some project that we were undertaking that had really been intense. Of course, Ben always had the tendency to intimidate people because he always appeared to be stern. He had a funny sense of humor and he had a way with making people think he was being stern when he was really laughing at you on the inside. He likes to play practical jokes a little bit and things of that nature. Jeannie had been at the typewriter for five, or six or seven hours, and I had stepped out and I was rubbing Jeannie's neck and back and we were talking about the job that was being done and Ben walked out of the office which happened to be adjacent to where her typewriter was and came around and stood in front of her desk. She looked up and her eyes got big and she said, "Yes, Mr. Conroy, may I help you?" He looked down at her with this kind of stern look on his face and said, "I'm in charge of front rubbing and you just let me know when you're ready," and with that he turned around on his heel and walked back into the office and Jeannie just wanted to die. We tell that story all the time. I still see Jeannie in the grocery store every once in a while. She still continues to ask about how Ben is. That's just kind of a sense of how he likes to play practical jokes and do things in a kind of serious, jovial mood. Mixing the two up.

PAVELKO: Wonderful stories. That completes my list of questions.

ARNOLD: Very good. It's been a pleasure to do, my dear.

PAVELKO: Thank you, sir.

End of Tape 3, Side B