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Lou Borrelli

Lou Borrelli 2019

Interview Date: February 6, 2019
Interview Location: Denver, CO USA
Interviewer: Stewart Schley
Collection: Cable Center Hauser Oral History Project

STEWART SCHLEY: Greetings. Thank you for pressing play on this edition of The Cable Center’s Hauser Oral History series. This is a true story. In the go-go years of the cable industry in the modern era as a trade journalist, one of the great sources of information, erudition, illumination, and always a funny story was Lou Borrelli, whose history we will talk about momentarily. I happen to have said Lou Borrelli in the chair with me today, and it is my privilege to be able to interview you.
LOU BORRELLI: And it’s great to see you again, Stewart.
SCHLEY: Thank so much. I mentioned it’s surprising that you haven’t done this yet because your history with and around the industry is really rich, and you were at epicenter of a lot of the big momentous events that occurred. So we’ll riff about that stuff a little bit.
BORRELLI: Sure.
SCHLEY: But before we do so, take me back to your life as a kid. Where did you grow up, and what were you like?
BORRELLI: So I grew up in New Rochelle, New York. I spent a lot of my time in sports activities, primarily swimming. So my thing was being a competitive swimmer from the time I was five, and it sort of framed my time and my routine. My teen years, I was a swim coach, a head life guard,ran a beach club. It’s how I put myself through school. But we had a large Italian family in the neighborhood. My mother’s side of the family had a commercial, Italian bread bakery and so a lot of aunts and uncles worked in the bakery, and it was great. I mean, as an only child, I had a large family because I had like 18 first cousins that lived in a four-block radius. It was a lot of fun.
SCHLEY: Were you a television kid? Did you watch TV as a kid?
BORRELLI: I watched TV, although I was more into music, and I was fascinated with radio, fascinated. I mean, I grew up listening to WNEW-FM, the epic, classic rock station when Mel Karmazin was the manager, and he had Scott Muni, he had Dennis Elsas, and he had Pete Fornatale. A lot of the personalities by the way that are on satellite radio today were the people that I grew up listening and it gave me... I was in love with radio at that point.
SCHLEY: Yeah, and that extended. You attended SUNY Oswego, part of the state university system in New York. I think your early concentration was radio, right?
BORRELLI: Yeah. Well, when I got there. I had started working in radio in high school, the local station in New Rochelle, WVOX. When I went to Oswego, they had a student radio station as well as an NPR affiliate on campus, so we had two stations on campus, and I signed up to work there. I eventually became the manager my senior year. But for me because there was no television like there is today, student television, it was all about radio for the most part.
SCHLEY: What was the magic of radio as a medium to you?
BORRELLI: Well, I felt like you could tell your story through music, because remember back then, it was a lot of free-form formatting. There was not a lot of, you know, “Here’s your playlist and you have to --”
SCHLEY: Preprogrammed.
BORRELLI: Yeah. So it allowed your personality to come through, and you could -- we had a lot of callers. We did shows with call-in requests and such, but I felt like music allowed you tell your story. So for me, it was a lot of Lou Reed. It was a lot of Springsteen, who back then was just emerging.
SCHLEY: And you would make the call, right, as the DJ or the host?
BORRELLI: Right, yeah.
SCHLEY: What you could play --
BORRELLI: We had a huge wall of vinyl, you know the library. You just go and pick out records and play. It was awesome.
SCHLEY: If that was your focus early on, how did cable television find you and how did you find cable television?
BORRELLI: Totally by accident. Totally by accident. So back in -- this would be in 1976, ’77, TelePrompTer was the franchise holder in the city of Oswego. They had a 12-channel system of which they were committed to fill 8 channels. They only had seven, and the city was about to revoke their franchise, so they came to the college and offered us a full-time channel to program in order to meet that requirement. The broadcast curriculum people put together a group of students to essentially produce and distribute local programming. So we were doing conversation with the president. We’re doing food co-op reports. We were doing a lot of soft public affairs, and we did sports, hockey, basketball, swimming. That was sort of my introduction into, “Okay, this could actually be something that might be a regular routine.” At the time, UA-Columbia was franchising my home area in Southern Westchester. I graduated, I came back, there was, -- they were still franchising, so there was no job. But I went and met with them, and they’re like, “Well, come back in a year, kid, and maybe it’ll work out.” So the irony is I actually went back to Oswego. I got hired as a temporary faculty for instructional TV, produced and directed shows, taught some classes, but I supervised that group of interns that were my friends who were still there --
SCHLEY: And they were still doing their chance --
BORRELLI: They were still there. So we took it up a notch, did a lot more sports, a lot more... I wouldn’t call it hard news, but it wasn’t the soft, PR stuff we were doing. And so when I got out of there, I had all this experience. UA was ready to activate, and so I became the first local programming manager for UA in Westchester.
SCHLEY: So did you begin to understand what cable was about, the fact that it could expand the capacity of television in local markets?
BORRELLI: Well, here’s the thing. Growing up in Westchester and watching the local news, I remember when Channel 4 wouldn’t leave the borough of Manhattan. I mean, it was a big story for them to get to the Bronx or to go out to Queens. So we were, in effect, creating these local type of microcenters where, yes, you could have a Westchester-wide network, but we also had individual access channels for every community that we served. Part of my job was creating this Westchester-based network of shows that would be attractive to everyone that was a subscriber, but also, I was training citizens in each market to do their own public and educational access. So it was a very strong -- it was a very strong community connection that I think was underrated, right?
SCHLEY: Right, I agree.
BORRELLI: People did it because it was a promise, right? We all had to make these promises to get these franchises back in the day, but I think it cemented the business, to be honest.
SCHLEY: Right, that localism element in particular. What was going on in cable? You mentioned the TelePrompTer 12-channel system for UA-Columbia?
BORRELLI: UA-Columbia was --
SCHLEY: What was the state-of-the-art back then?
BORRELLI: So we were a dual-trunk, dual-feeder system, and we had 35 channels. It was two-way active, but there wasn’t the two-way connection yet. In other words, we would feed programming and we would do things, but there wasn’t like -- it wasn’t a QUBE or anything like that. But the interesting thing is we had maybe 14 or 15 off-airs between the U's and the V’s. The only satellite channels that we had at that time when we launched were HBO and TBS. We had WGN via microwave from Chicago. We had WSBK microwave from Boston, and we had the Garden, which we were the cofounders of. After that, it was just a bunch of data channels split. And then over time, satellite channels would launch. I mean, I started in cable in ’78. There was no MTV, there was no ESPN. I remember the launch day of CNN like yesterday, you know? We were in a mode where we were first competing to build systems, which we did.
SCHLEY: Right. To get franchises?
BORRELLI: To get franchises and build them out. And then we’re trying to effectively move the business forward. There was a very big... There was an ebb and flow of regulatory issues through the ’80s where we probably didn’t make the best editorial decisions, I mean, honestly. I remember going to city councils asking for a dollar, hoping to get 50 cents. When the rules changed where there was a formula approach where you add certain channels, a certain number of channels, you get a certain money, all of a sudden now, you had guys that -- we didn’t do this, I don’t think. But there were people who would say, “Oh, you mean, I could add six shopping channels and get paid all this money, and I get the revenue from the shopping?” So I think to be fair, that’s how we ended up with these fat bundles with a lack of, say, consumer choice because it was an economics-driven industry at that point.
SCHLEY: But you did see -- as these channels you mentioned started to come around, you did see consumers embrace this new family of television choices?
BORRELLI: Oh, absolutely, but I think -- and this is all hindsight and that’s why it’s -- you know?
SCHLEY: That’s why we’re here.
BORRELLI: That’s why we’re here. To me, we could have done a better job of managing the inventory in order to avoid some of the issues that came later. That’s my perspective. I mean, look, we were launching channels almost every month not necessarily because people wanted them, but they were getting a lot of hype. It was about fulfilling our promise, and we were continually investing in capital, we were expanding channels, all of that stuff.
SCHLEY: Because isn’t it, the core premise of cable I think then and now was more, right? More choice, more options for consumers?
BORRELLI: True, except I believe as the consumers became a bit more educated and a bit facile with technology, they came to understand that they had other choices. If you’re paying for a package of channels, but your kids are growing up in the VHS era, and so they’re just watching the things that they want to watch, and they’re buying just the tape that they want to put in cassette machine. You, sort of, translate to, well, why can’t I just buy the channels that I want?
SCHLEY: I see.
BORRELLI: Now you and I both know that there’s an enormous amount business relationships and contracts and rights agreements that prevent that from happening. And to this day, taking Humpty Dumpty apart and putting him back together, there are billions of dollars on either side of that wall.
SCHLEY: But it’s interesting, you saw the prelude to today way back in the era of VHS cassettes and linear cable distribution?
BORRELLI: You could see -- It’s interesting. I don’t believe, and I could debate this, but I don’t believe the consumer demand or want is much different today than it was back then.
SCHLEY: I totally agree.
BORRELLI: The difference is we have the technology to deliver.
SCHLEY: To fulfill it?
BORRELLI: Yes.
SCHLEY: Yes, it’s almost like we’re getting into a more natural evolution of the intersection of demand and availability. At some point, it’s interesting to me that you started in this programming realm early on in your career. But we all knew you -- we being the journalists and hangers-on who covered the cable industry -- kind of as an operations expert. What happened?
BORRELLI: My first boss is a wonderful man named Ira Birnbaum. He was the manager of UA Westchester, and for three years, I was having fun. I was creating TV programming. I had intern relationships with colleges all over the tristate, so I had 40, 50 interns a semester being my crew. I had only two or three paid stuff. Well, Ira came into me toward the end of the third year, and he says, “Look, --” He called me Louie, only one of two people in my life that call me Louie. The other was my mother. He said, “Louie, I know you’re having a lot of fun, but you work in a department that only spends money. If you want to have a career, you should work in the department that makes money.”
SCHLEY: He was the GM?
BORRELLI: He was the GM of the system. There was an opening in the regional office to be the assistant to the eastern vice president of operations, of a man named Earl Quam, and so I went to work for Earl. And back -- this is pre-PC, so I learned how to budget and operate cable television systems with a number-2 pencil, green bar paper, 10-key with a tape.
SCHLEY: You literally have cells devoted to subscriber rates times subscribers and the whole accounts?
BORRELLI: Everything and -- added across, added down. Earl was a meticulous engineer who elevated. As you know in the old days, the engineers elevated, right?
SCHLEY: Right.
BORRELLI: And that’s how I learned the cable business.
SCHLEY: What did you learn about the cable business that was insightful or...?
BORRELLI: Well, here is what I learned. That it is far more intricate than most people gave us credit for. There’s a lot of moving parts. The most important thing I learned is that it’s not that hard if you’re current. The word that we used was current. Current means when the phone rings, you answer. When it’s time to send the bills out, you send them out. When it’s time to collect, you collect. When you’re making appointments, you show up on time, you finish on time. If you can keep the business in a current state, then the execution part becomes more routinized. It becomes a routine where you don’t necessarily have some of the issues of, okay, we’ve got a backlog, oh, we can’t get you for two weeks.
SCHLEY: We didn’t make appointments?
BORRELLI: Exactly. That was one nugget from Earl that I thought, “Okay, I get this,” right?
SCHLEY: Yeah.
BORRELLI: But I was fortunate. I mean, I was surrounded by legends. People in my career, my first six, seven years if there’s a Mount Rushmore, they’re on it. Bob Rosencrans was the founder of UA, wrote the first check for C-SPAN. He gave Bob Johnson free satellite time on the weekends to start BET, created Madison Square Garden Network. Calliope was the first kid’s show that we then developed into USA Network.
SCHLEY: That’s right.
BORRELLI: And I’m standing there with Kay Koplovitz and Bob Rosencrans, and Bill Koplovitz, and I’m 23, 24 years old, so I’m a sponge. What I learned was that it’s okay to be tough, but fairness wins, and you never take the last nickel off the table. You never -- you can have a tough negotiation, but if you walk away with everything, eventually you’re going to lose.
SCHLEY: So even then you appreciated this sort of budding symbiosis between the programming guys and the operations guys?
BORRELLI: Well, because I saw it, and of course, being in the Westchester system and then in that region, at the regional office with networks launching, we were getting more attention than we deserved, primarily because the guys who worked Madison Avenue and in the media all lived in our systems. And so if you --
SCHLEY: It’s interesting --
BORRELLI: -- wanted to get your network noticed, you needed to launch on UA in Westchester or UA in northern New Jersey --
SCHLEY: Because literally the decision makers --
BORRELLI: Because they literally --
SCHLEY: -- lived there?
BORRELLI: Yeah, exactly.
SCHLEY: I want to ask you about a fateful moment in your life when you met a character called Jeff Marcus. Tell us who Jeff is, but tell us how you first had an encounter.
BORRELLI: So Jeff is an interesting fellow. He was an entrepreneur from day one. Jeff tells the story that he started in cable because his roommate at the time he was in Berkeley. His roommate was selling cable door-to-door, I think, for Jack Goddard’s dad if I’m not mistaken.
SCHLEY: This is California?
BORRELLI: In California. And Jeff was driving a municipal garbage truck. So Jeff was getting up at 4:00 in the morning, picking up trash, getting back at 2:00 or 3:00 in the afternoon. His roommate was going out at 4:00 selling cable for four hours, and he was making like three times the money that Jeff was. So they started a contract marketing and installation business. So Jeff had that type of career, went through operations. He started a brokerage firm with Rick Michaels called CEA. At the time that we met, he had a -- what was a TCI partnership called Marcus Communications. I had been through the entire evolution of UA-Columbia, which was UA, Rogers UA, UA G.E., UACC. There was all that going on and so that was the first eight years of my career. I had moved from the local system to regional and then I was responsible really for everything that was new. I did all the programming agreements. I was responsible for ads sales, pay-per-view, new business development. We had a cable guide company that published a magazine. I had all that with UA. At the point when TCI was taking over UA, finally because they had made a partial investment and then a complete investment, there was some talk of me moving to Denver and doing some of the work that Peter Barton and John Sie were doing, and I wasn’t really interested in moving. I was newly married and trying to get our life together in Westchester. So Bob Rosencrans said to me, “Well, there’s this guy named Jeff Marcus. He’s got a small company. He’s based in Greenwich, Connecticut, and I think maybe you would be a good fit for him.” So Bob calls Jeff, gives him my spiel, and literally, like 10 minutes later, the phone rings and Jeff says, “Bob Rosencrans called and said I should meet you, and I do whatever Bob Rosencrans tells me.” Again, when you think about the people that I had met and how they influenced me, and for Bob to do that for me, I mean it was great. And so Jeff and I met and...
SCHLEY: Where did you meet?
BORRELLI: We had a lunch in a sandwich shop in Greenwich, and for the next 12 months, we ate once a month, but it wasn’t just with Jeff. It would be with Cindy who eventually became my partner and ran our HR. It was with Stanley who was his... I mean I met with everybody --
SCHLEY: So were you working for him?
BORRELLI: No, I was still working at UA trying to find a job, and so through all this, we ate for almost a year before he hired me.
SCHLEY: Okay. You ate your way into a relationship?
BORRELLI: We did. We did. And so I joined him as the director of operations for Marcus Communications. We were about a hundred and thirty-five thousand customers at that time, primarily in Wisconsin, Minnesota, and a large system in Greensburg, Pennsylvania. Shortly after I went to work for him, he made the decision that the company was relocating to Dallas, Texas, and we all went. I mean, we had a home office of eight people. He says, “We’re all going,” and we all went. Half of us -- well, most of us just toughed it out. I mean I stayed for the whole thing. A couple of the others decided Texas wasn’t for them. And that’s when we merged Marcus Communications with WTCI to form WestMarc. That was a public company that then was liquidated back within TCI. I actually moved to Denver for 11 months, ’88 to ’89, to manage the group that I had for WestMarc, and then they transitioned the liquidation.
SCHLEY: How, Lou, were you guys making the economics work, to grow a company? You said a hundred and thirty-five thousand to start, became a succession of big companies?
BORRELLI: So the premise of doing the WestMarc merger -- WTCI was a microwave company that had just bought TelEvents. TelEvents was Carl Williams’ company in Northern California. They had about a hundred and ten, a hundred and twenty thousand customers. We were a cable company of about a hundred and fifty by then. So the idea was you do a merger. A publicly traded microwave company was probably a three, three and a half times multiple. A publicly traded cable company was more like a five times --
SCHLEY: Of revenue or cash flow?
BORRELLI: I think it was EBITDA. But the point was if you put the companies together, now it’s a cable company with microwave assets as opposed to a microwave company with cable assets. And so that -- and then we used that as an acquisition vehicle. When it was finally folded into TCI, there were probably 600,000 customers.
SCHLEY: Okay. So you got pretty sizable pretty quick.
BORRELLI: We got sizable. It was folded back into the mother ship and then I returned to Dallas, and that’s when Jeff and I formed a partnership with Goldman Sachs that became Marcus Cable.
SCHLEY: Okay, okay, and that was really the vault into the big time?
BORRELLI: That was the big run, yeah.
SCHLEY: What was fun about this odyssey as you’re bopping around to cities and working for this guy you had lunched with for a year?
BORRELLI: Well, Jeff and I had a great relationship. He won’t mind me saying this. He’s about eight years older than me so it was almost older brother, younger brother. And he had impeccable skills in terms of finance and deal making, and yet, he was... What I learned from him was that every person matters. In the old days when the company was small, he knew everybody’s name, he knew their birthdays, he knew their kids, which is not uncommon if you think about the entrepreneurs that you’ve covered in our industry. That was a common thread.
SCHLEY: True.
BORRELLI: That it was a very personal, connected relationship with employees as well as with communities, and so... And we had a way of doing things. I mean, we had this ability to effectively run businesses, enable people, and empower people to do the right thing at the right time, which is really the only strategy we ever had. And so when we would look at these other assets, these other companies, it was more about, okay, who here is doing what is right and who has the capability to do more? And then if we were to turn this into something that looks more like, say, this adjoining system over here, what do you we think we get out of it? Our whole talent, I believe, was being able to put disparate groups together, have them exceed their own expectations, and reward them for it.
SCHLEY: Because geographically you had properties in a bunch of scattered places, right?
BORRELLI: I love to tell people, we owned every cable system in Wisconsin that wasn’t called Madison, Milwaukee, or Green Bay.
SCHLEY: (laughs) That was the epicenter of the concentration?
BORRELLI: In Minnesota, we had every cable system that wasn’t called Minneapolis, Saint Paul, or Duluth.
SCHLEY: I want to go back because you said something really interesting about the concept of currency and staying on task. That philosophy or management ethos stayed with you as you grew the company?
BORRELLI: Absolutely. We took -- if you think about Marcus Cable, it essentially went from ’89-ish to ’98. In that time period, we did roughly a dozen acquisitions, some very large. So we were doing deals roughly every six to nine months. In order for us to effectively assimilate and integrate and not lose time in achieving peak performance, we had to come up with a methodology to indoctrinate people. And so --
SCHLEY: The Marcus way.
BORRELLI: So the Marcus way. And so what we did was we actually employed an outside firm that helped us crystallize that. This was a group that was -- it’s very interesting. They came out of the nuclear energy field because there you had to have critical tolerances. There was no room for error right?
SCHLEY: Right, I get it.
BORRELLI: Otherwise, really bad things happen. But they were able to crystallize for us things that became important touchstones. We had our management team trained and then we actually employed trainers. And so once we did one or two cycles with these guys on the outside, we did it ourselves. It was a way to leapfrog the sort of the mating period, if you will, and get people on board quickly. It also helped us identify talent.
SCHLEY: Did your GMs report up into you? Is that how you worked?
BORRELLI: As we grew, we had regional or divisional VPs that reported to me. So when the company was fully formed -- I mean really the story of Marcus Cable is started with 15,000 customers and 35 employees. When we sold it, we had 1,300,000 customers and like 2500 employees.
SCHLEY: Who bought your company?
BORRELLI: Paul Allen.
SCHLEY: Okay, and that was when? That was --
BORRELLI: Nineteen ninety-eight. It closed in April of ’98.
SCHLEY: Was it bittersweet to part with a company you’d helped to build?
BORRELLI: Well, it wasn’t bittersweet. What happened afterwards was a little bit bittersweet. But the -- I mean look, we were a partnership with the preeminent bank in the world, Goldman Sachs. They stayed in the deal eight years. Their normal was three to five, but we were doing quite well.
SCHLEY: Okay.
BORRELLI: So at some point, there was going to be an exit.
SCHLEY: Yeah. You knew that.
BORRELLI: To be honest, we were probably a couple of weeks away from selling to Comcast at which point, we would’ve all been done because they’re a cable company the assets, we’re gone.
SCHLEY: Sure.
BORRELLI: Paul comes in at the last minute, makes a deal, and he had basically asked us all to stay. So we signed agreements, and basically, we were going to be for north and South America or whatever the region was, we were going to be his investment vehicle. So for six months, more or less, I’m, sort of, hanging out with Paul Allen, and we’re looking at different things, and he was an interesting fellow, a very nice man. Many people did not see the side of him that we did --
SCHLEY: I bet.
BORRELLI: -- because while he was passionate about technology, his real love is sports and music. We must have spent more time talking sports and music. But anyhow, one thing leads to another. August of that year, he’s had meetings with my friends at St. Louis, at Charter. They were about to IPO. He made a preemptive bid, and they did exactly what I would’ve done, which is, “Well, if you want us this badly, we want the company to be called Charter. We want the management in St. Louis, and your friends in Dallas, sayonara.” And so it was disappointing, but this is the way I explained it to my people. So the company was always going to be sold, and by the way, we had about a hundred and fifty people that had equity in the company.
SCHLEY: Yeah. You --
BORRELLI: We shared a lot of equity. So if we sold it to Comcast, you get paid once. We sold to Paul, he bought us out. He paid us to stay, and then because he was violating the agreement, he paid us to leave, so we got paid three times.
SCHLEY: Okay. So that sounds like a better multiple.
BORRELLI: I did not -- I held no grudges. I was, “Look, I want a smooth transition. There were a lot of these employees that were going to Charter. I wanted to make sure it went well for them,” and they did. They treated them well.
SCHLEY: Did you intuit at any point when you were a 25-year-old kid working for local origination television that you were going to become, I mean, really a formidably wealthy, successful person?
BORRELLI: Never. I’ve exceeded every expectation for myself, and I kept raising them as I went along. But you know what it -- and this is why I say I’ve been fortunate, and this industry has been fortunate to a lot of people. We were riding a wave, we were meeting a need. We had great, smart, creative minds who were entering the industry because they could see the promise. I mean look, once I got there, and I was in it a while, I looked around and go, “Oh, yeah, this is where I want to be.” There were people that came in a little bit behind me who made it their mission to be where I was.
SCHLEY: Because they saw --
BORRELLI: Because they saw it. And some of my best -- well, almost all of my best friends were friends that I made in the industry.
SCHLEY: You had what, I think, is one of the most interesting segues, second act if you will, after the sale of your company, which involved America Online. Can you just kind of describe what that was about.
BORRELLI: So post-closing of AOL-Time Warner, I was approached to come in and put together a team that they had loosely defined as their broadband group. Obviously, the mission of AOL at that point in time was to figure out how to transform 34 million people paying $19 a month for dial-up service.
SCHLEY: Dial-up internet service.
BORRELLI: Dial-up internet service. To transition them to “always-on” which is what everybody used the term back then, “always-on broadband.” We assembled a small group of people, some cable friends that came on board, and we started work. What I found interesting was they felt the need to hire a cable guy for the AOL side when they had just acquired a company that owned Time Warner Cable.
SCHLEY: Big companies.
BORRELLI: So that was the first inkling that maybe this wasn’t going to turn out well because there was a lot of mistrust. I think that to be fair, if we all remember how the deal came together, there were the two guys at the top. They had conversations, they agreed to a construct, they brought in a small team below them, but it really wasn’t vetted in a way.
SCHLEY: Throughout.
BORRELLI: And you can argue whether one got the better of the deal than the other, whether it should have been valued that high. I mean, there’s a lot of things. Books have been written literally, you could read them all, most of them are true. But what I think didn’t happen was they didn’t take it down to the execution layer of management, which in that company is thousands of people, and say, “Look, this is what we need to have happen, and if it goes well, here’s what your stock price looks like, your 401(k), or whatever.” Execution-wise, it was us versus them almost all the time.
SCHLEY: Where the rubber met the road, what was your job? You were trying to convince cable companies to ally with America Online?
BORRELLI: Well, my first job was to convince AOL the right way to go, which they’ve soundly rejected.
SCHLEY: What was the right way to go?
BORRELLI: The right way to go -- and I believe this has been proven -- was to forget about becoming the provider of service end-to-end to the cable consumer, but to become the HBO of the internet. Worry about the content, worry about the applications, worry about all the stuff that AOL does that nobody else can do. We had meetings where they would say, “Well, you know, when the truck pulls up to the home to buy AOL broadband, you put the AOL sign, magnet sign, on the truck, and the guy changes his shirt.”
SCHLEY: This is a beautiful parable.
BORRELLI: Right?
BORRELLI: And I said, “Okay, so it’s Fort Worth, Texas, it’s August, it’s 115 degrees. You’re going to ask a cable guy that has just gone through a crawl space for two hours doing the prior installation. He’s going to come out on the street, take off his messy shirt to put on a new shirt so that he can go to the next job?
SCHLEY: That story’s so exemplifies the impossibility of melding these two organizations, right?
BORRELLI: Well, you know what, it didn’t have to be that way. But when you had a group of people who had built something from nothing -- they were all wildly successful -- it’s hard to tell them that they’re really not seeing it clearly.
SCHLEY: Your vision is really interesting -- the HBO of broadband. Why would that have made sense?
BORRELLI: Because it would have been an add-on. In other words, you know, trying to position AOL as the provider of service, as opposed to the content provider. That was the big difference because you had Roadrunner, okay. So AOL powered by Roadrunner would have been perfectly fine. It’s a Roadrunner account, it’s provided by Time Warner Cable, and you just buy AOL services on top of it, which they had. They already had that. It was called Bring Your Own --
SCHLEY: -- or Bring Your Own Connection.
BORRELLI: Exactly.
SCHLEY: BYOC.
BORRELLI: They wanted to own it all and it was --
SCHLEY: But it took an operations guy to realize this, I think, from up high.
BORRELLI: Well, but here’s the thing, the Time Warner guys knew this, but they didn’t trust them, you know? One of the toughest days of my like life was when I walked in after I got hired. I walk into Joe Collin’s office, and he just shook his head. He goes, “I’m so disappointed in you. How could you work for them?”
SCHLEY: No, because they were the other guys. They were the other guys.
BORRELLI: Yes. Well, it was awesome.
SCHLEY: So, was it frustrating overall just the experience? It was --
BORRELLI: It was frustrating --
SCHLEY: -- a three-year run for you?
BORRELLI: I was there for four years, and as I tell people, the allure of working for the world’s largest media company, yeah, checked that box off, couldn’t say no. This is what I found out. If you’re the world’s largest, it doesn’t mean you’re the smartest, it doesn’t mean you’re the most efficient, it doesn’t mean you’re the best. It means that you’re just big. While I still admire and respect and I have a lot of friends on both sides, it was a bad mix, and I think it was because leadership did not do what needed to be done to get it off on the right foot.
SCHLEY: Nevertheless, you saw -- I think you intuited changes in media distribution and the structure of the industry that would then go on to inform some of your endeavors going forward. What did you see happening that was revolutionary in media at that time?
BORRELLI: Well, when I was at AOL, one of the things that we did do that I thought was successful with the help of the guys at AOL Music, we started creating content, on-demand content and library content primarily in music. We were doing live shows from Webster Hall in New York. I think it was every Monday night because back then CDs and albums or cassettes would drop on Tuesdays. New music drops on Tuesdays, so we would do shows on Monday nights and then we would have advance buying, you’d have all of the integration. I think the thing that AOL did best was you could have content and then the frame around the content, you could buy tickets or you could buy the T-shirts. You could join the fan club or you could interact. To me that was a format that was really platform agnostic. It didn’t matter how it was delivered. It was the connection and the engagement.
SCHLEY: Okay. That mattered?
BORRELLI: That it was deep engagement, yes.
SCHLEY: But the concept you’re talking about, were they distributed over the internet?
BORRELLI: Yes. Yeah, they were done live and with --
SCHLEY: Streamed --
BORRELLI: -- a library, and I think -- I can’t remember what Comcast called it, but we actually developed the first like on-demand music channel for Comcast. That was really an outgrowth of that AOL Music platform.
SCHLEY: So you saw this transformation from linear media to on-demand, at large, that was what was going on?
BORRELLI: Yeah. No, I think it -- again, technology was advancing, so we could start fulfilling the promise that we couldn’t deliver previously.
SCHLEY: And that’s kind of what you were talking about when you made your allusion to the VHS cassette early on. Now, we could do it.
BORRELLI: Exactly, right.
SCHLEY: Now we could do it. What --? You could have retired to be honest, I mean, around that time. You chose not to.
BORRELLI: Actually, I did and then I didn’t.
SCHLEY: What has your journey been since, and what’s been fun or satisfying about it?
BORRELLI: Well, I think the most fun was after I left AOL, I became the CEO of NEP Broadcasting.
SCHLEY: NEP Broadcasting.
BORRELLI: NEP Broadcasting is something that back then was more of a domestic-focused company. But we had what was roughly an 85 percent market share of all live primetime sports and 100 percent market share of live primetime entertainment.
SCHLEY: Into the production side or...?
BORRELLI: We are the guys with the big trucks that show up with the -- we were the technical partners to every network and show producer on the planet. Monday Night Football, Saturday Night Football, NASCAR, all you golf you see on TV, most of the NBA, most of the Major League Baseball. And then on the entertainment side, Oscars, Emmys, GRAMMYs, Golden Globes. So for four years, I ran that business. We had a similar company in the UK, and it was at the time when the format was moving from standard definition to high-def, and so... It was interesting because a lot of our clients were friends and acquaintances from cable, so I became ESPN’s largest partner. We worked for Fox, for CBS, for NBC. My attitude was simple, we’re the Hard Rock, “We love all and serve all.” So rights would change hands, but the technology and the guys... You know, our secret weapon were the people who actually had been in this business forever who kept coming back to us for the deals, but it was great. Everybody thought, “Oh, you get to go to all these fun events, you get these tickets.” I said, “No, no, I get a plastic lanyard with my picture on it that gets me into the parking lots where the trucks are parked --
SCHLEY: Where the truck is.
BORRELLI: That’s right. The only perk I had -- I was talking about this over the weekend because it’s Super Bowl. Because NEP’s done like the last 30 Super Bowls. My favorite of Super Bowl week was I’d arrive on Tuesday, schmooze with the clients, take my guys out to dinner on Wednesday. Thursday night, best night of the week, halftime rehearsals.
SCHLEY: Oh, my gosh --
BORRELLI: And they run through the halftime show two times.
SCHLEY: Really?
BORRELLI: And it’s rehearsals, so you’re on the fields, you’re on the stage. So here’s my four halftime shows.
SCHLEY: Yes, tell me.
BORRELLI: Not in particular order, Springsteen, Stones, Aerosmith, Prince.
SCHLEY: So Prince was legendary because of the rain.
BORRELLI: Yes. But here’s the thing. So my best story is I’m on stage for the Stones, and they’re running through their set.
SCHLEY: Where was that Super Bowl?
BORRELLI: I don’t remember the location. I just remember I was there, and you have the different headsets and squawk box. So they run through the set, and the set was supposed to run, I think, 12:30 and ran 12:54. The director, legendary Louis J. Horvitz, he does the Oscars, he does the GRAMMYs, he’s big time. You hear him squawking in the headset, “Hey, somebody, tell Mick, we were 25 seconds over. Ask him what lyrics he’s going to cut or trim,” and I’m on stage.
SCHLEY: How did that go?
BORRELLI: And Mick looks at me, and he goes, “Can he hear me?” I said, “He can hear me if I push this button,” and he goes, “Push the button.” He goes, “Louis, I’ll cut off your--” put in whatever you want to say -- “before I cut any of my lyrics. Let’s do it again.” And they did it again, 12:30 on the nose.
SCHLEY: Great story, great. What did you bring to that business? You must have been in heaven because you’re a music guy.
BORRELLI: Music guy, and I started in production. It was very simple. NEP was a holding company with four distinct verticals. They had the truck business, which they were number one in. They had the New York City studio business, which we’re number one in. We did The Daily Show, Colbert, Maury Povich, People’s Court, shows like that. We had a rock-and-roll touring company that did the screens for Clapton and big acts. I’m sort of drawing a blank here but it was rock-and-roll touring, video-screen presentation. We did the Stones tours, and then we had this UK business that basically did all the soccer that you see on TV in the US.
SCHLEY: Produced?
BORRELLI: Yeah, we did that. But they were independent, and they were calling on similar clients, so you could have -- in a given week if you were the ESPN, you’d have a guy from NEP Supershooters come in, you’d have a guy from the studio come, and so there was no coordination. So what they hired me was to take this holding company and convert it into an operating entity, so basically what I had done in cable.
SCHLEY: Exactly.
BORRELLI: So we turned it into an operating entity, we put in a whole new account management system, we put in a lot of measurements so that... In that business, you’re all about utilization. When I showed up, they would measure it. If a truck worked once in a week, that was your work for the week. By the time I left, we counted the utilization of every camera, every replay system. Because this stuff was all fungible, and especially where it went from standard def to high-def, that became a world format. So now I could take equipment from the UK and bring it to America.
SCHLEY: So you get more use out of what your resources were?
BORRELLI: You know back then, I remember this number. We were renting $5 million a year worth of equipment from two outside vendors. By the time I left, the rentals were under a million because we’re renting from ourselves. Today, they own both rental companies because they’ve expanded. No, it was a lot of fun.
SCHLEY: You remarked, it was interesting, that your cable heritage did carry through in some regards the relationships with networks and --
BORRELLI: And people --
SCHLEY: -- people you knew?
BORRELLI: I mean, I met Dave Zaslav when he was Tom Rogers’ like Jimmy Olsen at NBC. Right?
SCHLEY: Wow.
BORRELLI: I knew George Bodenheimer on his first affiliate gig in Arlington, Texas.
SCHLEY: The former ESPN president?
BORRELLI: Yeah. I mean, I grew up with people who became presidents and heads of networks and studios.
SCHLEY: Because this is an ongoing theme with people at this table. The relationships are interesting in this business, and they’re critical.
BORRELLI: And they’re everlasting. You know last night we had dinner. I have not seen David Van Valkenburg in probably 20 years. It was like yesterday, “What are you doing? How are you?” And you know --
SCHLEY: That’s too cool.
BORRELLI: -- one of the legends in our business. But that’s just the way it is. You run into people and then you run into people that worked for people and say, “Oh, I heard all about you.” I’m like, “Oh, really? Okay.” But people matter and we were all --. Look, we were all, early on, we were all making it up as we went along. There was no road map. We were forging new ground. But we were smart enough to realize -- I think most of us -- that you could not do it alone and that the relationships on both sides of the table matter. I think they still do, but that has been lost in sort of the aggregate consolidation on either side.
SCHLEY: Do you perceive that there’s more tension between the content community and the distribution community than there used to be or...? How do you see that yin and yang playing out?
BORRELLI: I think there’s tension but I think it’s coming more from the consumer side because they are becoming much more demanding. You have these new interlopers such as Netflix and other ways for people to spend their time and their money, and that’s creating more tension. You’ve got a declining video customer base. You’ve got more rapidly declining video margins, and you have this app-based mentality where, “Okay, I’m just going to buy a couple of apps, and I’m going to get what I need.” Now the god’s honest truth is, that if you look at the essential channels and how they’re lining up in their various constituencies, by the time you buy the internet connection that you really need --
SCHLEY: Your broadband connection --
BORRELLI: -- and then you’re going to buy the apps you want or need, the price almost gets to the bundle. Almost.
SCHLEY: But, Lou, is price really the arbiter, or are there other considerations beyond?
BORRELLI: Well, I think price gets the headline. But I do think that control, selection, and convenience to me is what drives it. You want to be able to watch what you want when you want on whatever device you want.
SCHLEY: If you’re starting anew in the cable industry today, I mean what would you do? How would you attack this connection?
BORRELLI: Well, I think you have to go where people are headed. I don’t think you have to go where you’ve been. That was sage advice that Gerry Laybourne gave me just a couple of months ago when I was talking to her about my reentry. She’s like, “Lou, go where everybody’s headed.” She’s like Yoda, right?
SCHLEY: (laughs) Gerry Laybourne used to be the head of Nickelodeon, right?
BORRELLI: Yeah. She developed Nickelodeon and later Oxygen, so she’s two for two. I think being in the video business is very difficult as a cable operator these days. The margins are really thin. If you’re able to put together a semblance of a package of services where the connectivity matters then I think that’s a much more predictable, dependable revenue stream. I would not be offended by customers buying apps that I could facilitate. What I would do is try to figure out how to make my alignment with those content companies provide a better experience. I have some ideas for that, but I would rather not share because --
SCHLEY: Just I can’t resist to bring back the AOL-Time Warner analogy that you advanced early on. It’s not that dissimilar.
BORRELLI: Actually, it’s identical. Because to me the... We were told this was bad, right? There was a time when the term “dumb pipe” was thrown around the business and nobody wants to be a dumb pipe.
SCHLEY: Nobody wants to be a dumb pipe.
BORRELLI: Let me tell you, I used to say if I had a toll booth and I got to collect the toll, I was less offended. But I understand why that’s -- you know, you just become a utility.
SCHLEY: But economically, it’s not a bad business decision.
BORRELLI: Well, economically today, that’s where we’re headed. Now, I think it’s generational. I don’t think the sky is falling today, but you have to ask yourself this question. For the kids -- and I use the term kids loosely. For me, a kid is anywhere from 20 to 40 --
SCHLEY: Yeah, right there.
BORRELLI: -- thirty-five. But their habits, the way that they run their lives, the whole transactional life and world that they live in, they don’t think TVs are essential. They’re perfectly happy with their laptop or their phone. So I think that you have to be cognizant of what’s the one thing that keeps that continuity, and it’s the connectivity. So the connectivity has to be rock solid.
SCHLEY: It’s the piece. It’s the big piece.
BORRELLI: And then you can build on it from there. Now, do you want to build a linear option for those people that want it? Well sure, but it’s not going to be robust.
SCHLEY: It’s not going to be what it was.
BORRELLI: And it’s certainly not going to be price competitive. But for some, people would be okay with that, and that’s okay. But I think having the app-based video is probably something to explore. We did a little bit of this when I was in Jamaica this past year. It’s an interesting concept because in a region where the economies are really razor thin and people have little discretionary income, to see how they manage their money and their time, kind of gives you a window into on a bigger scale how that might work.
SCHLEY: What’s coming maybe down the road. You’ve been involved in endeavors that had ranged from telecommunications in the Caribbean and other markets too and at some advanced advertising work. How do you make your decisions about what you’re going to do? What are the characteristics of a business or an opportunity at a large scale that are attractive?
BORRELLI: Okay. I’m going to talk to the camera now because this is really important.
SCHLEY: Okay, pay attention, everyone.
BORRELLI: No. At this stage of my life, I want to be involved in something where I can contribute. I believe my experience and my experiences give me a pretty wide swathe.
SCHLEY: Definitely.
BORRELLI: But look, I went through the glass-tower, private-aircraft phase of my life. It was called the ’80s and ’90s. It was really cool. But at this point, I see the pendulum swinging back where a lot of these early-stage media or technology companies are realizing that some of what they’re doing is really nothing new. It’s like the sequel to -- the third or fourth sequel to a movie. I can come in, I believe, and add some wisdom and some value. My legacy is pretty simple. I’ve put together world-class management teams that have executed well. I’ve returned a lot for my investors. But more important to me, it’s the connection where I feel like I’m adding more value than I’m getting. I’ve always been that way because I go back to -- I remember Bob [Rosencrans]. Bob was all about making everybody feel like they got more than they deserved.
SCHLEY: Well, I love the story you talk to -- you told about the early boss who said “Lou or Louie, you’re working for the part of the company that spends money; let’s get you into the part of the company that adds value,” right?
BORRELLI: Mm-hmm.
SCHLEY: And the rest is history I guess.
BORRELLI: Yeah, absolutely.
SCHLEY: That’s where it’s gone. You’ve mentioned a few -- actually, a number of people who’ve been really influential in your career. Is there anyone else that rises up in prominence that maybe, kind of, changed the course of your life or your view toward management or business?
BORRELLI: Sure. Ted Rogers to this day was the most impressive executive. And the Rogers--UA marriage was not -- it was not a love fest. It was a result of a competitive bidding for stock. We were a public company. We literally had come to an agreement to be sold to Dow Jones and Knight-Ridder, think about that if that had happened.
SCHLEY: The publishers, yeah.
BORRELLI: And the UA guys were not wanting to sell, and they literally found the Rogers people over a weekend and launched a competitive bid the following Monday.
SCHLEY: Wow.
BORRELLI: It was crazy. So Rogers went out. I remember going to a meeting in Toronto, the first gathering of the management of UA with the management of Rogers. We went to a Japanese restaurant where you took your -- I remember this vividly. You had to take your shoes off, you’re sitting on pillows. And Ted went around in the room and spoke to everybody, three minutes, five minutes introducing himself, blah, blah, blah. The conversation was light, the food was good, the sake was flowing, everything was great. We’re going to meet the next morning in the boardroom in Rogers’ headquarters, which was in this beautiful tower overlooking the city. One of these central-casting boardrooms, right?
SCHLEY: Yeah.
BORRELLI: Massive table, windows all around.
SCHLEY: I can see it.
BORRELLI: And there was assigned seating, and in front of... So I’m sitting at my Lou Borrelli seat, and there’s a booklet. I open it up, and it is a summary of the conversation that we had, the highlights --
SCHLEY: With Ted Rogers?
BORRELLI: -- with follow-up questions.
SCHLEY: Holy majoly. Okay, he wins.
BORRELLI: Everybody had one.
SCHLEY: That’s amazing.
BORRELLI: And I asked him. I said, “How do you do this?” He says, “Well, I have 24-hour secretarial support. I went home, and I spoke into my Dictaphone or whatever, which was at the office.” He dialed it in, so it’s like a big voicemail, and a woman translates it while he takes his sleep. He wakes up, the fax comes in with everything. He edits it, sends it back. She does it again, and by the time we showed up --
SCHLEY: So the attention to detail --
BORRELLI: His attention to detail, his ability to connect and engage --
SCHLEY: On a human level --
BORRELLI: -- on a human level with a dozen people he had never met. Come on.
SCHLEY: No, okay. I have nothing. I have no retort. I also wanted to ask you about a part of your life that’s been important, which is giving back to the university that spawned your career.
BORRELLI: Oh, yeah.
SCHLEY: Can you talk about what you’ve done with SUNY Oswego?
BORRELLI: Sure. So yes, I am a proud graduate of SUNY Oswego who is a basically there a lot of influential people that come out of there that not many know about. The writer Ken Auletta, Al Roker who was my friend and who’s America’s meteorologist. Actually, we probably have dozens of meteorologists throughout the country. The guy who runs the hurricane center came out of Oswego.
SCHLEY: Spawned from Oswego?
BORRELLI: Yes. And also some sports celebrities, Steve Levy, Linda Cohn from ESPN, and a bunch of play-by-play people. So, anyhow, when the college was doing their first capital campaign in the history of the school, this school has been around a hundred and sixty years or something. This around 15 years ago, and they come to people who have had some success. Of course, we sold our company, and they knew I had a couple of shekels, and they said, “Well, we’re trying to do this campaign. You could put your name on the women’s locker room or the concession.” I said, “No, no, I want to start a program,” and so we created what was then called, embarrassingly, the Louis A. Borrelli Jr. Media Summit. My objective was a couple of things: One, I wanted to bring world-class people from the industry to campus to interact directly with students. It was my way of thumbing the nose at my friends down the road at Syracuse who do a lot of events in the city for their alums but at the time weren’t doing much on campus. They since are, and I’d like to take some credit for that.
SCHLEY: Why not?
BORRELLI: So it was that, plus I wanted it to be a student-run event. So the long story short. It’s one day in October every year. We bring people in from all walks of life. The topics are picked by the students. There is a committee of roughly 30 kids. It’s a full-time commitment for them. They start -- as soon as the summit in October is over, we start selection process for the new group that starts in February. We do research from the attendees as to what they like, what they didn’t like, what topics are timely. And then once we pick what I call the umbrella topic because it gets honed in once you get your commitments. We then come up lists who would we like to appear and how would we like it to happen. In the 15 years that we’ve done this, we’ve had Ben Bradlee, we’ve had Miles Brand when he was running the NCAA, we had Gerry Laybourne. We’ve had Shelley Palmer. We’ve had Jack Myers, we’ve had Steve Levy and Linda Cohn, and we’ve had Charlie Rose, and we’ve had Connie Schultz, and we’ve had a whole range of topics and of people. So for the morning of that day, they are all meeting in small classes or small student settings, one-on-one with students. We have luncheon middle of the day and then in the afternoon is the big show. Ninety minutes in the theater, roughly 450 people in the theater, another hundred or two in the spillover rooms. It’s moderated with four or five panelists for about an hour and then 30 minutes Q&A and it’s the students... So here’s the other thing. I only let students sit in the front rows. The faculty didn’t want me to go over this. It’s like, “Okay, if you’re a student, you could a seat here. If you’re an old person, you sit in the back.”
SCHLEY: More power to you.
BORRELLI: And then we have this interaction and then at the end of the day, we have our graduates of the last decade, gold, come that are on a career path that is consistent with their study. They meet with students about how they got their first job, what’s it like, “Okay, you’ve got to get an apartment in New York, how do you go about doing that.”
SCHLEY: Really vital life stuff and career stuff.
BORRELLI: We’ve been doing this -- this will be year number 15 in October.
SCHLEY: It’s tremendous.
BORRELLI: It’s awesome.
SCHLEY: And I’m glad you name-dropped a little because the pedigree of your people that you have, what a benefit for those college kids. Yeah. Well, I want to -- this hour went by really fast.
BORRELLI: Wow. We’re done. Can you believe this? We are done.
SCHLEY: I want to -- we could go on but --
BORRELLI: No, this is fabulous.
SCHLEY: For sharing some of your stories and insights, I can’t thank you enough. I’ve truly enjoyed chatting with you --
BORRELLI: Oh, this is great.
SCHLEY: -- and riffing a little bit about life, and we will look forward to seeing the second act of Lou Borrelli, maybe the third, I’m not sure.
BORRELLI: Right. You never know.
SCHLEY: It sounds like it’s kind of right around the corner.
BORRELLI: Yep.
SCHLEY: So I hope you have enjoyed this edition of The Cable Center’s Hauser Oral History series. For The Cable Center with Lou Borrelli, I’m Stewart Schley.
END OF INTERVIEW

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Dick Beard

Dick Beard in 2018

Interview Date: July 30, 2018
Interview Location
: Anaheim, CA USA
Interviewer: Lela Cocoros
Collection: Cable Center Oral History Program

Cocoros: Hello. I'm Lela Cocoros and it's July 30, 2018, and we are at the Independent Cable Show in Anaheim, California. And I'm here today with Dick Beard, who is operations director for Ervin Cable Construction. Dick, how are you?

Beard: I'm doing well, thank you for having me.

Cocoros: OK, so let's start with how you got into cable. What was the story behind that?

Beard: In 1972, I was just out of school. It was a trade school, and I could not find a job. So I was living with parents, and our neighbor across the street was a chief technician for a small cable system in my hometown. That was a system owned by Sammons Communications. So that summer I spent digging ditches and poking holes under 360 trailer park pads to put cable TV in. And I was there for about six months and then went from my active duty training for the Illinois National Guard, and upon return from that in 1973, I went to work for Continental Cablevision in Quincy, Illinois. I was with Continental that portion of time until 1985. During that time, I progressed from installer to technician. Then I get involved on the engineering and construction side and started building small towns throughout Illinois.

Cocoros: So this was in the early 70s that it started, and then through 1985, did you say?

Beard: Through 1985. So I started out with amplifiers that were tube type, so when you serviced the amplifiers in those days, you looked like the TV repairman with your little box of tubes. And you would climb up the pole and replace them until you found one that worked. No earth stations, of course. My first system had six channels. Eventually built a town called Lincoln, Illinois, and we were on a United Video tower and that’s how WGN got to be a superstation; they microwaved their signals all over Illinois. So that particular system had the local channels plus United Video out of Chicago. Big Cub town, so we had a great penetration there.

Cocoros: I heard somewhere that you are a big Cubs fan.

Beard: I am a huge Cubs fan, yes, I am, although I have had St. Louis Cardinals season tickets for 32 years.

Cocoros: Oh, my goodness.

Beard: But I am a Cubs fan.

Cocoros: Great, great. Well, they do play each other a lot.

Beard: They are playing each other as of yesterday…

Cocoros: Well, from there, what prompted you to go to your next stop, which I think is Millennium?

Beard: There were a couple of stops. In 1985, I started my own company, called Broadband Engineering Technologies, or Brentech. This was right as fiber was starting to kind of hit its period of development. It was multimode fiber and they were using it mostly for interconnection. So I was working for Continental, and I had been transferred down to St. Louis, so I was one of the first employees in St. Louis. So we franchised the St. Louis market and built a number of towns there. And I was involved in local origination. We had our own local channel, which was huge in those days. That was what kind of differentiated us from being able to just get things off air. That is, you could watch your kids play grade school Little League and that type of thing.

So in 1985, a manufacturer approached me and asked me if I was happy with what I was doing, and would I want to start a construction company, and build systems they were getting the contracts for. I bid a job for the state of Missouri, wiring all of their buildings in Jefferson City. I thought I was bidding as a subcontractor to the manufacturer and ended up winning it as the prime. I am a guy who has never owned a business and has nobody working for me suddenly has a contract with the state of Missouri. That led to probably one of the most interesting times of my life because very early on, I got hooked up with a defense contractor. And I was the construction side of their projects and at that point, coaxial cable and broadband were very big, for instance, in the automobile industry. Ross Perot and his EDS company worked for General Motors, and they were wiring coaxial networks in all the car factories to automate the manufacturing. So in the course of the five years I owned the company, I worked for two automobile manufacturers. I had a contract where I wired every dorm room at West Point Military Academy. I put a video monitoring system along the St. Lawrence Seaway. It's things I never would have dreamed I ever would have seen, let alone did. And after five years, I became more of a manager and less of an engineer, and with a whole lot of employees. I ended up selling the company to a construction company that I went to work for, U.S. Cable. And shortly after that, I was re-approached by Continental and went back to work for them for a few more years.

I worked in St. Louis, Missouri, for a few years, and then transferred to Chicago, where I was in charge of a 5,000-mile upgrade. That was probably the busiest time in my life. Multiple employees, 5,000 miles in three years. But, like I say, Continental, I would still be working for them if they were still here. They were one of the best companies that anybody that worked for them had ever worked for. My wife was from St. Louis, became somewhat homesick for St. Louis, and I was approached by a good friend of mine, who was starting a new cable operation,

Millennium Digital Media and asked if I would be interested in working with them. So I interviewed with them, I took the job and basically, we acquired systems around the country. Our headquarters were in St. Louis and our systems were in Washington state, Michigan and Maryland. So there was nothing centralized about our operation. There are a tremendous number of people in the industry who continued on to very lucrative jobs out of the Millennium family. Steve Weed, Steve Friedman, myself, Steven Cochran, who was the CEO. We were all Millennium alumni together, and then branched out to our own different ways.

Cocoros: It looks like St. Louis really was a hub for a while for cable operations.

Beard: It was, and at the time that we started the franchising—it was franchising wars. There were eight different companies that ended up with franchises in St. Louis. And it was a new experience for everybody. We would go in to city councils and we would be promising bandwidth that the manufacturers didn’t have equipment to do yet. This is where some companies would actually build side-by-side cable systems. Instead of a 300 megahertz system, they would have two of them side-by-side. They’d have 600 megahertz of bandwidth and you had a little A/B switch that you would switch back and forth in your house, depending on what channels you wanted to get. And just as how things kind of have changed through the years, when a company like Scientific Atlanta or Jerrold or Motorola would bid on your construction project, they would actually design the entire project for free, and give you the maps as part of their bid. You know, nowadays, you pay engineering, you pay make-ready and all that. That was all part of the original bid back them.

Cocoros: Amazing.

Beard: So they would design the entire thing, give you a finished product so you would end up with four different designs for your system using each individual company’s electronics, and then you picked the one that made the most sense and was the most reasonable.

Cocoros: So, you were kind of promising everything to the—

Beard: To the franchises to the cities to win it—

Cocoros: …then they had to promise you and provide you all these things before they actually—

Beard: But everybody was doing it. So the manufacturers were scrambling because everybody was doing it. Everybody was overpromising what they were going to have, and you know the things you gave them. We gave, in St. Louis for instance and a number of towns, we gave what we called our institutional network. So you built an entirely separate cable system with the amplifiers and power supplies and everything that connected nothing but schools, public buildings, and that type of thing. To be honest, the majority of those systems never got activated because you never ran out of bandwidth on your normal system that you couldn’t handle it.

Cocoros: But that was what was required.

Beard: That was what was required.

Cocoros: Indeed. So from Millennium, which I guess was then sold eventually?

Beard: Millennium was sold. What happened and how I ended up in my present career path of construction was that a very good friend of mine, Bill Mullen and his wife—Bill was my best friend, I was the executor of his estate—he was president of U.S. Cable, which I worked for several years before. And U.S. Cable had sold to Orius, which at that time, there were companies that were consolidating all the construction companies in the country. So Orius, for instance, bought about 20 or 25 smaller construction companies, and they were trying to build these one-shop construction companies that could do everything for you and work across the country. There were several. There was Argus, there was MasTec, which is still around. There is a company called Dycom, which is my parent company. There was Orius. While I was at Millennium, Bill and his wife were killed in a plane crash. And they were kind of in a transition. He was the last president of U.S. Cable at that time and they were kind of in a transition. With the kids’ estates and everything being tied up with the company, depending on the success of the company, they came to me and asked me if I would come and assist with that transition. So I left the operator side, and became a contractor, and was the last president of U.S. Cable before Orius disbanded it and merged it into their operation. From there, it's been construction pretty much ever since.

Orius, we worked across the country, we were one of many companies. My opinion was there were some mistakes that were made, and one of them was that when Orius bought a company like ours, they paid off the owners and the owners went away. Then they would change the name of the company to Orius. Well, you lose two things. You lose your name recognition, and your reputation you built up, and you basically lose the brain trust of every one of these companies that knows what they do, how they do it, where the customers are and that. So Orius went through a few years, they kept getting leaner and leaner and eventually they were going into bankruptcy and at that time—the bad thing about a bankruptcy is some people make out, a lot of your subcontractors and employees and that don’t, and so at that time, I decided that I needed to find something else. I went to a good friend of mine, Gary Ervin, who owned Ervin Cable Construction. He and two of his brothers had started years before. They had also sold out to a consolidator, Dycom Industries. But Dycom was much smarter. They sold 15 years ago, I believe, and all three brothers still work for the company. They have the same name and the nice thing about Dycom is, as long as you're successful and making money, they don’t bother you. If you stop making money—

Cocoros: You'll get a knock on the door.

Beard: —they bother you. But we've been very successful in what we do. So I went to Gary and I had a short period of a non-compete that I had to fill out and went to work for Gary. Worked for them for five years. Did a number of projects. They had been very successful at that time, but the problem at that time is that we had a number of kind of next generation people to fill corporate roles. Ervin Cable is located in Sturgis, Kentucky, which is a very, very small town in northwest Kentucky. And I always like to tell the story that if you're not working for Ervin Cable, you're working for the Casey’s or the gas station. We kind of got to the point that as the leadership was changing, there were too many people. And I lived in St. Louis. And Gary and I kind of came to an agreement that I would find something else to do if he would keep me on until I was able to find something so I didn’t lose health insurance from them. So I went from corporate management to running some projects in the field, which was, that was like throwing me back 20 years in my career. I loved doing it, I knew I couldn’t do it forever because I was overqualified. Through Gary, I made contact with a former Ervin manager who worked for a company called Perfect Vision. And Perfect Vision was a unique company because they were one of two major suppliers to DirecTV. But the owner of the company—it was privately owned—wanted to get into cable television. And so myself and a gentleman named Eric Sittloh, who came from Belden, we were kind of the two leads that were kind of starting this process. And it was basically, it was Chinese-manufactured drop cable and headend cables that we were trying to sell into the states against companies like CommScope and Times Fiber and that. The price point was very good, but that is a tall hill to climb when you're trying to sell drop cable made in China against people who had been in the business for 30 years. The concept that the management had trouble with was it doesn’t matter how cheap your cable is or how inexpensive your cable is, nobody is going to bet their career on saving a few dimes someplace when it needs to last 25 years. But it was a great group of people, and I was with them for about four years. Then Ervin came back to me and knocked on my door and asked me if I would consider coming back. Their business was growing, and they needed a person in St. Louis as opposed to Sturgis so I didn’t have to travel. So I came back at the regional level in my current job as operations director and have been very successful at that ever since.

Cocoros: Excellent. Let's move along and talk a little bit about your SCTE [Society of Cable Telecommunications Engineers] and ACA [American Cable Association] involvement. Your association—you're very active in both associations.

Beard: The thing about the cable industry, I always joke, that once you get in, you can't get out. And it really becomes a family. Very early on, before I came to St. Louis in the late 70s, I was going to SCTE meetings with one of the good friends of mine, Tom Jokerst. We worked together several times in our careers. Tom introduced me to the SCTE, and when we went to St. Louis, of course, the franchising was just starting, so there was no cable television there. Tom and myself and several people from the other companies all started a meeting group. And that meeting group and now chapter is still going strong. So I was on the board there for many years, served as president for a number of years. When I went to Chicago, I was on the Greater Chicago board of directors. I'm currently on the Gateway Chapter in St. Louis and the Five Rivers Chapter in Bloomington, Illinois. The thing about the SCTE and I've been very involved for many years, know the national people, but always been involved in nothing higher than the local level. I’ve had many talks with the corporate people. There is really two SCTEs. And it's not a bad thing, but the national SCTE is standards and it's white papers and it's courses and it's that. And it brings a level of order to all these different chapters. But the chapters I'm involved with—and I'm sure all of them are—your real goal is training local technicians and local installers who don’t have the ability to go to the shows, don’t have the ability to go to the schools and that. I’ve always said that when I started with no college, I advanced to senior vice-president of Millennium, running their entire operations. There are engineers in St. Louis working for Spectrum that were warehousemen for me in the early 80s. So I can look across my years and look at people I hired in entry level positions and they are all in very high spots right now. And it's still that way. You can hire on with cable television, and if you have a good chapter that’s training you, you can work your way up through their certifications and everything and become very much whatever you want to be. You can be an engineer, you can be a manager, and that ability is in very few industries these days. It still has that ability to where you can move from entry level up through the ranks and you work hard and do the right things and are willing to learn and put the time in.

So we do a lot of training. Our Gateway Chapter—most chapters do about training every other month. At Gateway, we have a vendor day in May, we take November, December off. We have training in two different cities every month besides that. So we are doing that would be 18 training sessions a year is what we try to get in. We normally get in about 12. But you know, the ability to get to these guys early and bring in the industry experts in, whether it's meters or whether it's drop cable, or whether it's data and that type of thing, that opportunity wouldn’t be there. And these days as companies have cut back, they don’t have the internal training that they used to have. So it's really the only place these guys get this. And I personally put on what I call a “Cable 101.” It's kind of a throwback. These days, to me, the large cable companies, you hire a person to do a certain job, and that person is kind of given a meter and if the green light comes on, you call this guy, and if the yellow light comes on, you call this guy, and if the red light comes on, you do this. You don’t really get an overall concept of how the system works. You're either a fiber splicer or you're construction—

Cocoros: It's much more specialized.

Beard: It's very, very specialized. And it's interesting because where you see that is in the SCTE Cable Games, where you have seven or eight stations that will be drops and coax and fiber and troubleshooting. You’ll have eight teams from a large company like Spectrum and you'll have one team from a small independent operator. And that independent operator will always win. Because their people do everything as opposed to—they have to. So what I do with the Cable 101 is I take all the new employees from Spectrum and—Gateway is about 90% Spectrum—and about once a year, I give them a course. It's really a throwback. So I go back to the six-channel cable system days and kind of walk them through coax and then earth stations and then satellites and forward return and data and compression, and really spend time going through all the mechanics. And I've always said, one of the most unique pieces in the cable television plant is the coaxial cable that’s in the ground. Because some of that coaxial cable has been out there 30 years, and it's still plugging away. And people think of it as the most simple part of the system, but through the years, it has just sat there like the backbone and it just keeps plugging away with fiber to the node and that. You still have the drops and the distribution coax. It's been there for 30 years.

So I really enjoy the SCTE. I've been very successful. Again it's just a smaller family within the family. About fifteen years ago, they came to me and asked me to be an associate member of the ACA. And I knew about the ACA because a number of people who had worked for me—Steve Weed, Steve Friedman, Steven Cochran—these guys had all been involved in it before we bought the companies they were working for. So I knew kind of about it. And I agreed. And I tell you, it has been one of the most rewarding things of my career, because you're representing a great group of people, it's small and midsize cable operators. They are a real throwback to what it was like when I went to work in Jacksonville, Illinois, in 1972. They're still connected to their communities, they are connected to local politicians, they’re hiring local people to work for them. The people stay there. And so just to get involved in that and through the years with the re-transmission consent, and the lobbying in Washington. Like I said, Matt Polka and his staff and the board are some of the best people I've met in the industry. And everybody’s doing things for the right reason. No board member is in it for themselves. When you talk to members of the ACA, nobody really takes selfish interest of them above others. It's really like what’s good for one is good for all. Like I said, I think that we are making a huge difference. I think Washington is very interested in what rural communities have to say. Other than the people whose only constituents are in large cities, people who have St. Louis, they're very interested in what the rural people around St. Louis have to say. It's just kind of a common denominator in Washington that always piques the interest. How does it affect rural? How does it affect farmers? And so…

Cocoros: Exactly, exactly. Is there anybody you haven’t mentioned that kind of influenced you throughout your career?

Beard: There's a few. When I was first hired, I was hired by an engineer at that time in Quincy called Dick Ashpole. And Dick Ashpole has been a cable legend for years. At times, I worked with people who went on and I learned a lot from them afterwards. Bill Schleyer and I worked together and Ron Cooper in the Continental days. And Tom Jokerst, I mentioned. My boss for many years was Jim Wand, who was the vice-president there in St. Louis. And you just continued learning. Wendell Woody was a great friend of mine before he passed away. If you go back and people who've been in cable for 40 years, they’ll always remember a guy named Len Ecker. And Len Ecker, he went around and gave training sessions, he gave two days of training and I mean, he would spend the first two hours on a piece of coax cable explaining how it worked. Then he would put that into the system and explain every piece part of that system to you. And like I said, people who knew him will never forget his training sessions. People like Matt Polka are just visionaries in what they do. Probably the only other one would be Roy Boylan. He was an engineer in Chicago for a long time with Continental.

Cocoros: That’s great. Anything else you want to share, any story you want to share?

Beard: Like I said, you are sitting there working every day and then people will, you'll start talking about stories and just getting back to the old days, you know, we never had bucket trucks. And when I give these Cable 101s, I tell people how we used to place poles. And you basically, dug the hole for the pole and one side of it, you slanted at an angle and you would put the end of the pole into that slant. And then you would life the pole up and you would put a guy on the front of the truck and he would hold that pole above his head and you'd slowly start driving the truck forward. And he would have to kind of bounce the pole as he went down. These are small poles; these aren’t the 80-footers. But just for drop poles. I tell people that story and they just can't believe it. That’s how we used to set poles.

Some of the places I got to work, like I said, West Point, and the Kennedy Space Center. I did work in Washington, DC, for a year; I had my own company. I went to New Orleans after Katrina. We flew our first group in two days after the storm and landed when they were still trying to figure out what had happened and what was going on. And we ended up, Ervin ended up spending about six months there total, working for Charter. Just a massive mobilization of manpower and equipment. And just going through—I said, it was an adventure for three days, and then it was just a pain in the rear for the next six months because it was hot, and it was muggy and there was no—you know, you lived in tents, you lived in trailers you hauled down, there were no stores, you were hauling in gas. But just to see everybody coming together like they did, across all, first responders and utilities and that was pretty amazing. But it was pretty amazing. But like I said, it's been a lifetime of memories. The most rewarding thing of this has been the people. It has been seeing people that you hire and when we went to St. Louis, there was no trained cable people in St. Louis. So probably out of the first ten people I hired for Continental in the town of Belleville, Illinois, which is near St. Louis, I mean, one of them was a bank teller, I had a couple of carpenters, I had a couple people who had just had odd jobs. And this became our labor force. Three of those people are still in engineering, management levels, in different—

Cocoros: People tend to stay in the industry once they jump in.


Beard: I don’t think you can get out. You get in and you can't get out. But again, advancement is always there. My success is completely based on the people I had working for me. I was talking to somebody last night. I've always been identified as an engineer. I know very little about engineering, but I hired the right people. And I always said, a good manager at a certain level. I said I was akin to the orchestra leader who played no instrument but knew what the music was supposed to sound like so you know how to get each part out of each instrument. And that’s basically—sometimes I think I lived my whole career on a bluff because I really don’t know that much about engineering. But my mother and father taught me to treat people right and to just use common sense. It is amazing how far that will get you in life, just those two things. And you can learn the rest of it.

Cocoros: Well, thank you very much, Dick. It’s great. Thank you for sharing it.

Beard: Thank you.

END OF INTERVIEW

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Aryeh Bourkoff

Aryeh Bourkoff

Interviewer: Stewart Schley
Interview Date: December 11, 2017
Interview Location: Denver, Colorado, USA
Collection: Cable Center Oral History Project

Schley: Greetings, and welcome to the Cable Center’s Oral History series. I am Stewart Schley, it is December of 2017, and I am privileged to be in the presence of a dealmaker extraordinaire, whose imprint can be seen in many of the major defining transactions of late in and around the cable industry. Aryeh Bourkoff runs LionTree Advisors. We used to see his name a lot quoted in the press as an analyst and a deal-side guy for UBS. Suffice it to say he has been sort of at the center of the center over the years as M&A transactions have reshaped this industry. So, Aryeh, thanks for joining us today.

Bourkoff: Thank you very much for having me, and it's an honor to be here in Denver at the Cable Center. I've been an admirer of the Cable Center for many years, my whole career, since its formation. Obviously, I know many of the inhabitants that are really in the spirit of the walls.

Schley: Surrounding us.

Bourkoff: Surrounding us. So, it's a real honor for me to have made it to this seat, and I'm grateful for you to take the time to interview us.

Schley: I wanted to know where your life began to intersect with cable television, how that came to be in the first place.

Bourkoff: I go back to 1995, when I left the University of California and made it to New York, for the first time in my life. New York City. And I tried to get a job on Wall Street—because I figured, I didn’t really have any discernible or defining skills, so I had to find someone who would train me and pay me at the same time, which I thought was a good bargain for me. I didn’t really have anything to offer, and they were going to train me and also compensate me for it. And I thought Wall Street would be a great place to train, and I looked hard to find a job. Frankly, it took me three or four months to find a job. I did everything except for maybe put resumes in windshield wipers in Manhattan. I finally landed a position at Smith Barney with a gentleman named Alan Ginsberg—not the poet, B-E-R-G—and he ran the research group, the high yield bond research group at Smith Barney, the junk bond group. This is after Drexel had folded and people had been dispersed. He said, “If you don’t mind, I'm going to ask you, Aryeh, to support me in the research endeavors as the head of the group.” I said, “That sounds great. What do you focus on exactly?” He said, “I focus on cable, media, technology, food and restaurants.” I said, “I don’t know anything you just said, but I like to eat, so I'm game.” That’s how it started. I was very fortunate to fall into the industry from day one for my career.

Schley: This was ’95-ish?

Bourkoff: 1995, yes.

Schley: And what was going on in the industry at the time, what were sort of the characteristics of cable?

Bourkoff: It was a time of a somber moment actually in the industry because re-regulation had happened in 1994, when the FCC had put some caps on pricing. In fact, that’s really what was the ultimate killer of the Bell Atlantic-TCI merger, which never ended up coming to fruition because this regulation came in the middle of it. And so, what happened was the industry was trying to rebound again from that moment and if you recall, Microsoft ended up putting an investment into Comcast in 1997 that was the impetus for rebound of cable valuation. And Brian Roberts orchestrated that deal—I think he was only about 35 or 36 years old. And I was covering the Comcast bonds. They were BB rated bonds. I met Brian when he was a young man there (he still is a young man). That was the moment of kind of a resurgence at that point in time. There was also a technology that was emerging around that time called wireless cable, which was the codeword for the MMDS spectrum. Wireless cable, I thought, was an oxymoron.

Schley: Cable without the cable.

Bourkoff: Cable without the cable. But it was Bell Atlantic and NYNEX owned the CAI Wireless and Harlem Wireless and they were doing a bunch of deals we were involved with at Smith Barney. So, it was quite interesting to merge.

Schley: When you first began to examine the industry, though, what characteristics did you find appealing, from an investment standpoint?

Bourkoff: I loved looking at the cable industry from day one because I remember saying to my friends and ultimately my wife, it had everything. The cable industry has and has always had everything to really chew on. It has technology. It has capital structure, coupled with debt. It has entrepreneurial owners and operators. It has regulation to be considered. It has competition. And really it has innovation at every turn. In spite of that, there is always a wall of worry around the industry—it's imminently going to crumble and come down. And therefore, you actually have to find a grounding force, which I always looked at as being cash flow, the value. But you really had a lot of volatility above everything else. It had everything.

Schley: It's sort of puzzling or ironic to me in that really it was one of the most stable and predictable generators of cash anywhere, right? It had that utility aspect to it.

Bourkoff: Correct.

Schley: Is that fair?

Bourkoff: Cable has always been very stable. Customers by and large pay their bills and at least the revenue line was easier to predict back then because it was a video, single product industry. And you look at the subscriber growth, and you look at how much they were going to pay for it per month, which we call the ARPU, and you can calculate the revenue stream. And I actually remember my first projection model, which was for Marcus Cable. And I did the projection model and then they reported a quarter, and I was right. I got very close. I said, “Well, I may be pretty good at this thing.”

Schley: You can do this.

Bourkoff: And I really felt gratified. I remember calling Jeff Marcus and Tom McMillan over there, and I said, “I got it close to where you were.” I was really proud of myself. Where it becomes more complicated is when you get into the capital expenditure cycle, because you have to constantly upgrade the networks, and when you get into innovating the revenue line beyond just one business. Broadband came into being and telephone came into being, and many other applications now are on the existing pipe. And then it became actually much more competitive over time. So it got more complex over time.

Schley: Did you ever share that sentiment of impending doom for the industry, or were you kind of a bull on cable most of your analyst career?

Bourkoff: I’ve been a perpetual optimist with respect to the industry. Mostly because of experience and seeing a cash flow stream that was rock solid, by and large. When you have a cash flow stream that is rock solid, you can do things with it. You can leverage it to create better returns. You can invest it into creating different services. And at the same time, the entrepreneurial nature of the industry was always front and center. So, you had this feeling of growth at all turns; that people were—they had almost ants in their pants. Nothing was going to be satisfying in the status quo. And so, things were always moving, which I always thought would be very appealing.

Schley: I was going to allude to that because you mentioned it earlier: the entrepreneurial quality. As you traveled and analyzed the business, you started to meet people, I'm sure, some of the captains of industry…beyond that entrepreneurial spirit, were there shared characteristics or what was the vibe in the industry to you then?

Bourkoff: I'm very fortunate because in the 20-plus years that I've been around the industry, I feel like the number one factor that I can attribute to my success, in my own way (in my own humble way, because I was in the middle of these deals or the middle of covering industries. I wasn’t really, until starting LionTree, an entrepreneur in my own right)—but the number one thing that I attribute the success to was learning and being around the entrepreneurs at every turn.

It is unique in this industry, among any industry, to see this kind of thought process in motion all the time around you. I remember actually a story when I was at Smith Barney, the first bond deal I ever worked on was a bond deal for a company called United International Holdings, Australia. The Australia division of what is now Liberty Global was called United International Holdings. I remember going up to the top floor and sitting in a meeting with my boss and meeting a CEO of that business named Mike Fries. And I just listened in awe at how he was describing the Australian cable business, and I think he was also in his early to mid-thirties at the time. And I walked back to my desk and I remember saying out loud, “This guy is going places.” I learned a lot in that meeting, and it was nothing of what I would have expected. And to this day we are great friends.

Schley: Mike is now the CEO of Liberty Global and it's a very successful international company.

Bourkoff: Correct.

Schley: Just pepper the conversation with a couple of other names who really sort of stood out to you in that early introduction to the industry. Who were some of the stars?

Bourkoff: Well, all of them were stars. My first transaction I ever worked on – even as a research analyst – where I had to go down and do due diligence, was in Gwinnett County, Georgia, with a guy named Monty Rifkin. Rifkin Cable Associates ended up getting subsumed, now part of Charter Communications. But then I worked with Jerry Kent when he was running Charter Communications, and then Suddenlink. I always found him to be a phenomenal operator and a great individual. Working with Brian Roberts, both as a research analyst when he was attempting to buy Disney and helping to understand where the stock was going to go and what the limitations of that deal were. And then as a banker, advising Brian and Comcast successfully during the NBC merger. And watching the second bite of the apple and talking to him about the investor reaction to that, and how to position his story appropriately, not just the fundamentals. And many, many more. There’s obviously Dr. John Malone, who I actually just left having lunch with earlier today here in Denver and has been a mentor of mine and a mentor to many, frankly. I'm not alone there. But I got to see him up close and personal in the resurgence of his interest in cable. Not only in the U.S., but when he’s been doing deals in Europe. And how he approaches that. These are great conversations.

But cable, cable content, cable channels—all across the board I find entrepreneurs that I'm lucky to be around every single day.

Schley: If I'm correct, you made this sort of change in the progression from research side to a deal side. Can you just talk about how that happened?

Bourkoff: I’ve always found in my career that if you have the ability to have a specialty, which I was lucky to jump into or fall into from day one in media and technology in cable and telecomm, then—stick with that specialty and learn about the fundamentals of business and about the people, and create more cumulative value over time. That was a great luxury: to keep with one industry. Because I had that, I felt very comfortable with taking risks in other parts of my career. So, I started off in the high-yield bond market, but then I went to equity research, covered the stocks of the industry, and still actually covered the bonds. And I think covering the whole capital structure I thought was a differentiator. Especially around 2002 when I started doing it and saying, “This is how the equity should trade. This is how the bonds should trade.” And then going to companies like Fidelity and Wellington and investors around the world and saying, “I'm not going to have two meetings. Let’s have the fixed income and the equity investors in the same room and let’s just really tackle the value of the company, and I may point out some disconnections between the two of you, but that will be helpful for all of us." I remember having those kinds of conversations over time.

And then I felt like covering the stocks became very public in terms of having conversations with CEOs and then having to translate and give my views to investors about what—reports, ERISA reports, etc. And I felt like there was a great moment to go private. Around 2006-2007, UBS asked me if I would come over to the investment banking side and really advise or help to advise the CEOs of business privately. And that’s when I started to become a banker, or a dealmaker. But the way I approached it, I wanted it to be different than normal banking partially because they had been doing it for a lot longer than I had, and if I wanted to come in, I had to start with what I already knew.

Schley: Right.

Bourkoff: And my first meeting was with Brian Roberts. I went down to Philadelphia. I remember thinking, if I went into Brian and said, “This asset’s for sale”—I think at the time it was the Weather Channel. “This is for sale. Do you want to buy it?” He would say, “Yes” or “No” and that would be the end of the meeting, and I would be judged as a normal investment banker. That wasn’t a wise strategy. So, I went in instead and said, “Brian, let me talk about what I know and what I think you really care about, which is your stock price. That is the value creation determinant of your business.” And every CEO, no matter how much they tell you they never look at their stock price, they look at their stock price. If I had a stock price tracking me I would look at it probably every second, even though I try to make decisions that are based on the long term. So, I said to Brian, “Your stock is here. We both know it should be much higher over here.” The way you get from point A to point B, I think, encompasses everything from the way you talk to your investors, to the assets you own, to your strategy, to your capital structure. And that created a much more holistic, fulsome conversation (privately) that set up a lot of different dynamics and ultimately led him to advising on the NBC merger. And I sort of approached it as a relationship, which I thought was logical, that over time, we’re together as partners in trying to get the best value investment banking. The banking advice should lead to better investments for you and the companies. And I was in service to the industry in that way.

Schley: That led to some protection of differentiation of you as a financial advisor from, as you described, the broader spectrum of bankers.

I wanted to ask you about—that’s a good segue—vertical integration at large. I guess you have been a proponent in the right mix of enhancing asset value by playing across the fence, if you will. NBC—maybe the signature deal is Comcast/NBC, but can you talk about why that made sense, and why it made sense in a particular moment of time?

Bourkoff: It’s a great question. Vertical integration has been a quandary to tackle for the industry for a long time. Because, in some cases, it makes sense, and in other cases, it does not. And ultimately, you have to be judging these transactions on the long-term value creation that comes to fruition over time. I always felt that it was much more important for a company to be independent and scaling in its core business of content distribution, distribution, than to be vertical per se. However, Comcast/NBC was an example of a vertical deal, and as an example, it has worked beautifully. I think the reason why that deal has worked so well is great management. NBC, under the auspices of Brian Roberts and Steve Burke in particular, has performed so much better than it was before. I'm not sure if it necessarily was due to any synergy between the distribution and content. In fact, the night before we announced the deal, Brian called me and said, “Look, Aryeh, you’ve been on the other side in the research community before now, and I have the benefit of having you on my side privately before we announce the deal. Can I ask you a question?” I said, “Of course.” And he said, “What’s the first question I am going to get tomorrow morning?” And I said, “OK, the first question you’re going to get tomorrow morning has nothing to do with this deal.”

Schley: What was it going to be?

Bourkoff: And he said, “What do you think it is?” And I said, “The first question will be from the investors, with some element of trepidation: “What does the NBC transaction mean for your love for the cable business?” And he said, “Well, I would say that we love the cable business and we’ve been in a lot of deals in cable, but for now on, we really think there’s more opportunity in content, and that’s why we’re doing this deal.” I said, “There’s a risk that your stock is going to go down based on that answer, because remember that every single investor on that call today or tomorrow are your cable investors. And you need to speak to them as cable investors, not NBC investors.”

Schley: Nice.

Bourkoff: And my answer would be, “If it’s true, nothing has changed. Your love for cable exists just the same today as it did yesterday. And lock that thesis. And then look at NBC opportunistically beyond that.”

Schley: Is that the way it was for him?

Bourkoff: And he got it. He marketed that deal truthfully, based on that thesis and in that way, which is: you lock your core and you grow from there. Then saying: we’re strategically complete, we’re not looking for anything else, which removes the overhang on “what else are you looking for.” The stock went up beautifully in the next few weeks. I think it’s not really a stock subset; he’s built an amazing company. I think that it’s really a good, symbolic way to think about the industry overall, because the cable industry, as it’s grown with its customers into new products and services, has never abandoned its base. It sounds like a political statement. But in reality, we are not going to leave the video business to get the broadband. We are going to lock the base of video and still be there for you, and improve that service while we innovate new services. Locking your base and not abandoning your base is a hallmark of the cable industry in my mind.

Schley: And you can either name names or not, but maybe you haven’t seen that similar approach prevail in other examples of vertical integration, or have you? Has it been a basic way to frame those deals?

Bourkoff: Go back to a deal we were not involved with, AOL Time Warner, one of these notorious transactions of our time: top of the cycle, and the Internet is going to come and save the content industry. It worked out the opposite. It worked out where the content company was preserving its value, and the Internet company in the form of AOL, at that time, after the transaction, started to erode its value. And if you look back on that deal announcement, there were billions of dollars of synergies that were promised between the two companies. If you juxtapose that announcement with Comcast-NBC, which happened after that, there were virtually zero synergies advertised. It was basically: we want to diversify, and we can operate these businesses effectively. That’s it.

I think that when you do a vertical deal, it makes sense if you are defensive—meaning, if a content company needs a big brother, so to speak, that makes sense. But if you want to be offensive about what a vertical deal looks like, you need a narrative that makes sense. What is different about this combined company in service to the customer, consumer-friendly, that did not exist before or separately? If it’s just diversification, like in the AT&T-Time Warner deal, which is obviously pending and being fought by the regulators—then it’s basically saying we’re diversifying a wireless business, a DirectTV business, with a content business (HBO, Warner Brothers and Turner), and we’re putting it all together because I think it’s a more diversified platform. Well, if you’re an investor—Wellington, Fidelity, Capital—you'll say: I can diversify, thank you very much. I can buy a content company, I can buy an intruder. I don’t pay my managers, or judge them based on diversification. I judge them based on creating value and performance. So, you need a narrative for the consumer. Amazon Whole Foods is a good example of the new technology. Amazon buys Whole Foods; Amazon is not necessarily the most beloved company in Washington, DC, these days. But that deal was announced and approved in 90 days. Why? We are going to give the consumer lower-priced products: cheaper avocados, everyone likes it. Makes sense. Diversified.

Schley: That said, I want to re-emphasize you did also say that management acumen was a big driver of value in the Comcast-NBC arrangement, and always is, I guess.

Bourkoff: That is a great point. Management acumen deserves a lot of leeway when they’re doing deals. Investors that have seen a CEO and a management team deliver over time and deliver outstanding high performance should get leeway in the ability to manage other businesses or adjacent businesses—

Schley: Because they’re good.

Bourkoff: Correct. Especially if it’s in their existing business sector. A content company with a content company, a distributor with a distributor. If a company has a strong manager then veers outside—either geographically or in other segments like a conglomerate strategy—then an investor over time may be a little more suspect and say, can you really manage that business just because you can manage your core business? So I think it depends how far afield you get.

Schley: I wanted to talk to you about current threats, but maybe in this context: can you think of a moment in the past where it has seemed like the cable industry has faced a competitive threat? Whether it's DirectTV, or the DVR, or—I don’t know—and responded in an intelligent, ultimately successful way? Is there an example of that that comes to mind? Where the cable industry has successfully reacted to a new market condition?

Bourkoff: Yes. Always. I think cable has seen new technologies emerge that could have disrupted the industry at every turn. And has learned from those disruptive forces to address and nimbly create those on their own. The DVR is a good example. TiVo created the DVR, right? The cable industry quickly adopted it and integrated it within the product to the consumer. The same can be said for products like video on demand. Remember companies like Diva, that were created for video on demand…third parties. Ultimately the cable industry did that. The biggest exception I would say to that is Netflix.

Schley: I was just going to get to that, so go with it.

Bourkoff: Netflix, if you really boil it down at its core, was what we all grew up with, with the cable industry, which was pay-per-view. And pay-per-view was a library that could be available in many different places that didn’t necessarily have a great graphic. And Netflix came along and had posters instead of text, and had a library that was easily digestible with a great brand, and it created a global marketplace where the consumer base that is a channel, that is outside of the cable industry and the cable ecosystem. The cable industry still has not exactly responded to that, but they will. Because the cable industry has the consumer and they will create a direct to consumer model at some point; they have to, especially given the relationship with the content providers.

Schley: Because it all seems to come down to—I won’t use the word “owns;” nobody owns a consumer relationship—but who has a billing relationship with a customer. That’s an essential ingredient, right?

Bourkoff: Correct. I think that was a hallmark of the industry and it continues to be a hallmark of the cable industry, which is, “Never give up the customer.” Never give up on the customer and never give up control of the customer. Juxtapose that with the telecomm industry. We grew up with Bell Atlantic, NYNEX, now Verizon or AT&T—all the predecessor companies.

Schley: Mountain Bell.

Bourkoff: Correct. And we used to buy, growing up, an AT&T phone, or a Bell Atlantic phone or a Verizon phone. Now we don’t. Now we buy an iPhone. Or we buy an Android phone. Apple or Google. The telecomm companies gave up control of the consumer to the technology platform, and therefore became a backhaul network provider. And now, they’re trying to regain control of the consumer through new applications or getting into content or other things. But that was a blunder in my mind. The cable industry never lost the consumer.

Schley: OK. Here’s my worry, and I’ll tell it to you anecdotally and you can talk about the industry implications. Yesterday, I finally launched Amazon Prime on my Apple TV platform. It's finally available for Apple TV. And I'm showing it off to my wife. They’ve got some good original programming, “Transparent” and some others. And she looks at it. And she says to me, “How much is that going to cost us?” And I said, “It’s free.” So free is a tough business model to compete with, isn’t it? What do you make of that?

Bourkoff: You make it up in volume, they say, right? [laughter] But there’s something to be said for that. The technology platforms have an unrivaled global customer base. The Googles, the Apples, the Amazons, the Netflixs, the Facebooks. They service billions of people around the world. The cable industry, for all of its might and all of its innovation, still has a regional, sometimes national—maybe more in Europe—but even in the U.S.., it's a regional customer base. Moreover, the technology platforms are very efficient customer platforms. You use Amazon, you use Google, do you ever call them? Never.

Schley: No.

Bourkoff: When you use cable, the cable industry has invested in customer service. That’s viewed as a cost or “friction” service. When you call the customer, or the customer calls you, they’re usually complaining—we probably have to edit the language sometimes, right? Imagine if that were converted to a sales proposition, actually an opportunity to increase consumer attention. Or imagine if you never need to call the service providers at all because it's so easy to use. I think that the cable industry has a very local business still, and is very consumer-oriented, very customer-centric partially because they have this ongoing interaction, for better or for worse, with their consumers. Google and Amazon do not. So to answer your question, they have a volume base of customers that all different products and services can be sold through and you can make money in many different ways given that volume.

Schley: So you're saying that’s a resource and an asset, the customer infrastructure, if you will.

Bourkoff: For the cable industry?

Schley: Yes.

Bourkoff: It has been a source of friction. But it has been converted in a large respect. I mean, Comcast does not get enough credit for building a great operating company. The customer service, when we all first started in the industry, it was at the bottom of the barrel. It was the airlines and the cable industry—

Schley: I remember.

Bourkoff: —competing for last place. You don’t want to be there. And then I think the competition helped out because DirectTV and to some extent DISH, were much better at customer service. And the cable industry really improved. And then I think there was organic innovation about how to create streaming services like X1 or Spectrum, or how to create the DVR, or other products and services, and that’s the innovation I'm talking about: to constantly be nimble, and bob and weave with the customer to improve the service offerings. And I think Comcast and Charter—by the way, Charter is still integrating the mergers—have become a lot more than just a series of acquisitions. They’ve become a customer service company that I think everyone’s proud of today.

Schley: Should we worry about erosion of the video subscription category from the posture of the cable industry?

Bourkoff: I think we should worry about the alignment between the spend on content, and the customer take rate of the video. Meaning, Netflix spends approximately $7 billion a year on content. And every quarter, every year, their customers go up around the globe. The cable industry spends probably $50 to 70 billion a year on content. Ten times what Netflix spends. And their customers are choppy, sometimes go down every quarter, every year. That’s not alignment. The reason for that is, the model is shifting to the consumer model directly. So, the cable industry will have to re-orient the video business to be a direct to consumer model. To do that effectively, they’ll need a national platform in my mind, and effectively they’ll need a different relationship with the content companies that will be much more of a partnership to get to the consumer. And that I think will be the next evolution of the video business.

Schley: Can you detail what you mean by a national platform?

Bourkoff: Comcast and Charter working together to reach the consumer. AT&T has a national platform with Direct TV. Verizon doesn’t yet have one. But I think the cable industry needs a national platform to truly use content effectively and to truly reach the consumer in a competitive way. Mike Fries and Liberty Global have those features in Europe. One of their distinguishing features in Europe is that they are national providers, not regional providers. In the Netherlands there is a national player and that’s Mike at Liberty Global. Same with Germany. There may be competition, but they’re not playing regions, they’re playing national.

Schley: Border to border. Talk about again your decision to form LionTree. What compelled you to kind of take that plunge, if you will?

Bourkoff: It did feel like a plunge at the beginning, but thankfully it worked out. When I was at UBS, I had a great experience, a great partnership. I really was moving, as I said, in my career, trying different things. But ultimately, working for a big bank was limiting in some ways. And I found during the financial crisis an opportunity to get back to the basics of banking or advisory, which meant relationship-driven. And I really felt that after now twenty years of doing it, the relationships would be there for me and I would be there for them. And I thought that was a lot to hang my hat on to start a company.

And two, the basics of banking, going kind of old-school merchant banking—the old British model of merchant banking, sitting at the same side of the table as your relationship, plotting for the future together.

Schley: I never knew what that term meant. Merchant banking. Now I know.

Bourkoff: And then juxtapose that factor of nostalgia of going back to the basics with a very forward-looking approach in the industries that we’re focusing on, media and technology, because things are changing and were changing so quickly. I loved that paradox. Go back, go forward. And that moment in time created itself, and LionTree was born out of the financial crisis. And in an industry that I thought could use focus on just this industry. So, LionTree is a merchant bank in a very traditional sense, but only focused on the media, technology, telecomm industries globally. And so we started in June of 2012. And the number one differentiated thesis for me was to focus on the large transactions. Because usually a lot of these firms exist and they're small, they're nimble, but they focus on the emerging companies, the emerging technology, the smaller deals. It's still very important because they're growing, but I like the dynamics of the strategic shifts—

Schley: I can tell by the list.

Bourkoff: And luckily that worked. We, over the last 5½ years, 6 years, have done over $350 billion of transactions. The first deal we did—actually the first three deals were cable deals. The first one was a cable deal with Liberty Global and Searchlight in Puerto Rico. That was a smaller transaction. The second deal was for Jerry Kent and Suddenlink, selling it to a private equity firm for $9 billion, which was at that time the largest leveraged buyout of the year. And then we subsequently sold that to Altice, Patrick Drahi. And the third deal was for John Malone and Mike Fries, advising Liberty Global on buying Virgin – Richard Branson, in the UK – which was a 24 billion Sterling transaction. And those deals were privately done, never leaked. We pride ourselves on being discreet. And I always say that the 24 billion Sterling transaction for Liberty Global with Virgin gets the award of being the largest transaction for the smallest amount of square footage. Because at the time we were in a small office space. But it's really a relationship and the idea flow that allowed us to work with these great entrepreneurs and to do those deals. And one deal begets another. So the story is that on the plane from New York to Denver, to go and approve the Virgin deal in the Liberty Global boardroom, John asked me if I would fly with him.

Schley: John Malone?

Bourkoff: John Malone. And I said, of course. And I have found in my career that plane time with John is extraordinary. Because you have time to go deep, to go broad, to discuss technologies, to discuss deals, and it's one of the best experiences of my life frankly. And on that plane ride I asked John, “What is it about this Virgin deal and getting back into the cable industry that’s exciting you?” And he talked about broadband and delivery. I said, “Do those same rules apply to the U.S. as Europe?” He said, “Absolutely. What could we do in the U.S.?” And the day before, I had been thinking about Time Warner Cable – Glenn Britt and Rob Marcus running it – being a good candidate to buy Charter Communications, which at that time was owned largely by private equity. They had to own it through the re-structuring. Apollo, Oaktree, Crestview. And they owned about a third of the company and controlled the board or had influence over the board. And the day before, Glenn Britt and Rob Marcus said to me, “I don’t think Time Warner Cable wants to be the consolidator, so we’re not going to do that Charter deal.” So, on this plane ride with John, it was fresh in my mind. And I said, “In the U.S. actually I think there’s one that’s interesting for you.” He said, “Which one?” I said, “Charter. In the same way that Rupert Murdoch owns 35% or 40% of Sky, BSkyB, and still has say over the board, you could own a third of the company and have the same dynamic with Charter, and in fact, the private equity holders have made a lot of money already in the stock and they're willing to sell it, in my mind.” And he said, “How quickly can you do this?” I said, “I don’t think it will take that long, frankly, because they want to sell.” And as soon as I got off the plane, Greg Maffei, the CEO of Liberty, called me and said, “I heard about your conversation with John. Let's go.” And you know, a few weeks later, we did the transaction at $95.5 per share, which John invested. And the stock today is $350, approaching $400 per share.

Schley: Can I ask you how do you maintain confidentiality during a big picture deal like that, and is it any different in the cable industry than any other sector? Culturally, how do you impose that kind of discipline?

Bourkoff: Well, first the firm that we operate, LionTree, has as part of its culture from day one to be discreet. So there are no committees where you are involving other people that are not involved in the transaction, like there would be in a big bank. Not to say the big banks are indiscreet, but we know everyone that’s working on the transaction, and there aren’t traders or managers or other people that don’t have exposure to the relationship and feel some personal loyalty all the way through.

Schley: That’s key, I think.

Bourkoff: You don’t want to disappoint your friends, you don’t want to violate confidentiality. And you want to have the deal be announced on your own terms and have it be successful, obviously—there’s a logical argument. When you start a company, you have the ability to put logic in place as the rule, and not try to fight for it. So I think that has a lot to do with it. It's the kind of people you have, the kind of people you hire, but it all goes back to the alignment with the relationship and the entrepreneur. We’re entrepreneurs, we’re entrepreneurial, they're entrepreneurial, you're all trying to get to the right place, which is to create value. And you don’t want to disappoint people that you know personally. And that’s where I've been fortunate to grow up in the industry and hopefully continue on for a long time.

Schley: But I think that’s a neat story about the ability of someone like Liberty to turn quickly, to make a deal happen and to be able to make phone calls that set something in motion pretty quickly and pretty privately.

Bourkoff: Correct. Being nimble is important. Seeing opportunities out of chaotic moments or experiences is very important and differentiates this industry from bureaucratic companies that are around for a long time.

Schley: I wanted to touch on, if I could, two more areas since we have you. One is, you talked about—you're so familiar with Liberty Global and their ability to begin a quad-play kind of offering that includes a wireless component. And we’re sort of trying to catch up a little bit in the U.S. Do you like what you see happening there, in terms of an economic model around quad-play?

Bourkoff: Quad-play refers to having video, voice in the form of hardline telephone, data, and mobile, all together. I think the company that has done the best in my career has been Rogers Communication up in Canada. You had Rogers put that in place and execute it phenomenally well.

Schley: That’s a good point.

Bourkoff: I have not seen it executed to that degree anywhere else in the world. But every market is different. I think Liberty Global with their acquisitions and strategies in Belgium, for example, are at the forefront in trying that strategy out. There's a tremendous amount of synergy when you bring a mobile company together with a cable company. But I think every market is different and has to be really shared infrastructure and demonstrating an ability to lower the churn to the customer while increasing the take rate and ultimately being able to raise prices more effectively than before. In the U.S., now there are other ways to get at mobile. There's an MVNO strategy and a lot of the companies here are approaching it that way, with an MVNO partnering with, say, a Verizon or a Sprint versus owning the wireless platforms themselves, which is inherently competitive.

Schley: Rogers has done a good job of achieving those exact sort of approaches and metrics that you just described.

Bourkoff: Correct.

Schley: In Canada.

Bourkoff: Correct.

Schley: And then just would love to do the question everybody always poses: do you see more consolidation occurring within a three-year timeframe, for instance, on domestic cable?

Bourkoff: Yes. I think the M&A cycle overall for the economy has been very robust and strong. We’re eight or nine years into a bull market. And the M&A valuations are historically at high levels. So you could see headwinds for the overall M&A landscape because values are high, prices are high, multiples are high. But the media industry, the cable industry, I think, will buck that trend and will continue strongly in a consolidation cycle because there still is a lot of fragmentation. There needs to be more scale among content providers. And the distributors, as I mentioned before, have to go national and ultimately global. You’ve never yet seen a global communications company

Schley: That’s an interesting point.

Bourkoff: And I think you will in the future. And then when you get to that point, then you’ll see real vertical integration which is content distribution across a global customer base. I think the other reason for it is these businesses are going through a lot of transition, particularly the content industry. And when businesses go through transition, it's hard to do it in a public market lens. Everyone’s judging every turn and it's hard to transition. So the best way to do it is tucked underneath bigger platforms sometimes. I think that will be a key part of the consolidation strategy as well, both in the U.S. and globally—Europe and Latin America, potentially Asia in the future, although it's a different kind of market there. The impediments to those deals will be regulatory and potentially rising interest rates. We have had a great environment for low interest rates and leverage capacity and almost limitless cash out there.

Schley: You can do a lot of things.

Bourkoff: You can do a lot of things, exactly. But I think rates will eventually come up again and that will be a sobering factor, and the regulatory jurisdictions are unpredictable right now. So having more diversification around regulatory regimes will be important.

Schley: This is a hot and sensitive subject, so you address it at will. But do you see new business opportunities occurring should the change in Internet regulation in the U.S. that’s being contemplated today, indeed be the law of the land?

Bourkoff: You mean with net neutrality?

Schley: I do.

Bourkoff: Rolling back net neutrality, in my mind, is effectively putting the confidence back in the marketplace versus the state, so to speak, or the government to regulate it. Which basically is an endorsement of this entrepreneurial industry to self-regulate. Because it is competitive. As I mentioned, the technology platform, with the cable platform, with the wireless platform, and you have satellite; so there are many products and services the consumer wants to get to. And they have many ways to get there. Do you want to get a Roku device in your home? Or do you want to have a DVR from the cable industry in your home? Or do you want to have an Alexa/Amazon product in your home? How you get there really depends on innovation and technology and getting to the consumer. The industry can’t afford therefore to block content that a consumer wants, because they’ll get burned. Imagine in a very straightforward way and a very historical way: if a cable company wanted to drop ESPN, even if ESPN is maturing in some way, it would be almost impossible to do it because the subscriber loss they would suffer would be so dramatic that it would be a value-eroding exercise. Why would they lose subscribers? Because of competition. It's the same argument.

Schley: Comcast wants innovation to occur around these broadband IP networks because ultimately, it's good for business. Is that fair?

Bourkoff: Correct.

Schley: What haven’t we talked about that you think is important to convey, either looking forward at where cable is going from an investment posture or kind of tracking where we feel wide open? That’s sort of an open-ended last question.

Bourkoff: I am very forward-looking in the way that we do deals and try to position the industry as best we can for unlocking value or strategic alignment. At the same time, I love that I have been around this industry for a few decades already, a couple of decades, and have seen a lot of these deals basically take shape based on a longer-term narrative. And that appreciation and that richness is why I love coming to work every single day and love focusing on this industry. So, when you see Brian Roberts and John Malone having Comcast and Charter collaborating on wireless strategies, you know that that relationship has taken a lot of different turns. I've seen it happen at different moments in time. And having that collaboration for the benefit of industry leadership is so exciting, especially when you know the history behind it. And the mutual respect they have for each other is so great to see.

Schley: I love you referencing history and its importance because those of us who have grown up in and around cable—you almost have this presumption that other industries operate the same way. The retail industry or the banking industry or the transportation industry, it's really not so, right? There are some unique qualities…

Bourkoff: And I always, when I talk to our team or train our bankers, I try to make a point of “past is prologue.” So, when you look at these new trends and you think about the world changing and we’re going to live forever, or our kids are going to be immortal and we’re going to have robots, as many as humans, and artificial intelligence. And I said, “Let's just go back to how innovation started in the cable industry because that took a long time to materialize to where it is today.” And that was new technology all the way through.

Steve Jobs famously said that the definition of media is content distributed through technology. Technology used to be a newspaper, or a book. Or a broadcast station. Now technology can be—

Schley: A radio station.

Bourkoff: Amazon. It could be something different. But fundamentally boil down what the application is, and you re-define it for our age. And I think that provides a lot of context and a framework for approaching value, deals, advice. And ultimately the relationships are the most important thing because all these companies are run by a human being who has everything on the line with every decision he or she makes. And to appreciate that – as an advisor, as a dealmaker, as a writer, as an observer – is demanded, is warranted, because these are more complicated companies than ever before. And they have to grow to have value creation at their disposal. You could have a great company; if they stay the same, then the stock goes down. So it's hard to grow these companies.

Schley: Your point that past is prologue, there can be no better justification for this entire oral history series than that theme. So, Aryeh, thank you so much for taking your time to share your thoughts and—

Bourkoff: My pleasure.

Schley: I greatly appreciate it. For the Cable Center, I'm Stewart Schley.

END OF INTERVIEW

 

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Matt Blank

matt blank 2017

Interview Date: November 30, 2017
Interviewer: Seth Arenstein
Interview location: New York, NY
Collection: Cable Center Hauser Oral History Project

Seth Arenstein: Hi, I’m Seth Arenstein. I’m here for the Cable Center’s Hauser Oral History Project. It’s November 30, 2017, we’re in New York City, and we’re here with the chairman of Showtime Networks, Matt Blank. Matt, thanks for coming in.

Matt Blank: Thank you. It’s nice to be here.

Arenstein: It’s great to have you.

Blank: Again, actually.

Arenstein: Right, right, this is part two. Right, that’s very good. The last time Matt did an oral history with the Cable Center was in 1999.

Blank: Well, fortunately, not much has happened since then, so this is great.

Arenstein: (laughs) All right. So, let’s start right around 1999, 2000. You’re getting a Vanguard Award for programming from NCTA and there’s a show in 2000 that debuts on Showtime called Queer as Folk. Tell us about how that pitch came in and why that show?

Blank: You know, it was a -- look, it was a very dramatic show. It was a dramatic thing for Showtime to be doing. Very controversial, very controversial. I remember, when we premiered it, we were actually worried about local obscenity prosecutions around the country. We had an 800 number that our affiliates could call if they had a legal issue in their market or their system, and we actually had first amendment lawyers around the country that we had contacted that could, in fact, provide the service if there was an issue. And surprisingly, there wasn’t. Maybe not surprisingly; maybe the country was moving along faster than we thought. I think the show would seem rather tame --

Arenstein: Today, absolutely.

Blank: -- by today’s standards. In fact, in the show, in the very first episode, a young man had his first gay sexual experience in the first five minutes of the show, and, you know, I certainly think of myself as fairly enlightened, but I said, “Wow, this is going to be an issue.” And it was embraced. It was embraced, and I think it was embraced by a lot of the cable operators and distributors that we thought might not embrace it, or might raise their voices in concern. And I’m not saying there wasn’t any concern, but I think people did the right thing, and I think that was important. It was important for Showtime, it was important for our business, and I think it was important socially, at a time where you didn’t see many things like this. So, we’re very proud of having done that. And followed not too long -- a couple years later, by The L Word, which we have just announced that we’re potentially bringing back, shortly. So, we’ll see how that goes.

Arenstein: How far back -- I mean, how many years later was The L Word? Do you recall?

Blank: I think it was about two years later, three years later. And, again, I think Queer as Folk paved the way for that; it had a lot of fans, and we’re sort of excited about the potential of bringing it back.

Arenstein: OK. Why bring back an old show? What’s the reasoning there?

Blank: You know, I think we just think that some of that cast would be interesting to revisit and to kind of see where they are, and see how we might do that show in 2018 versus how we did it, you know, 15 years back or whenever.

Arenstein: Yes, because I agree with you. I mean, Queer as Folk, if we just think about it today, yes, it is so tame.

Blank: Yes.

Arenstein: I mean, you’d say, “What controversy?”

Blank: It really was, but I remember -- you know, look, all of us, in jobs like this, even if you’re not on a premium network, which certainly has had different borders in terms of content than others have had. I would certainly say that there’s things I’ve worried about over the years. And maybe rightfully so, in some cases. Generally, not worth worrying about, but I was very worried about that. I wasn’t just worried about the overall response to it; I was worried about the local response in a lot of very conservative places around the country that Showtime found its way to, and still finds its way to.

Arenstein: Right. Let’s talk about another event that happened early in the 2000s, and that’s Bob Greenblatt joining you.

Blank: Bob joined us, I think, in 2003. And, you know, Bob and his successor, David Nevins, who’s now CEO, literally, over the past 14 years, 15 years -- they’ve been behind the voice of Showtime. And Bob’s arrival coincided with a strategic shift in the company from, I’d say, an economically disadvantaged environment for Showtime, to that point in time where Showtime was actually generating enough revenue and bottom line performance that we could start investing heavily in original series. And we had been, prior to that, really just doing a lot of movies of the week type of programming, with a few exceptions. And the first two shows Bob put on the air were Weeds and Dexter. And Weeds and Dexter, I think, provided the foundation for the Showtime brand that you see today. They were unique shows -- subject matter was unique -- and I think they were important creatively in a couple of ways. First of all, there is a Showtime lead character that is sort of a dysfunctional, highly disruptive, subversive sort of character that lives very close to the edge of responsible behavior, or, in some cases, way over. And that, in itself, is not necessarily that unique, but getting audiences to root for a Miami forensics cop who is a serial killer but only kills people who deserve to die, or a suburban housewife who starts selling pot to the neighbors to pay the mortgage after her husband dies suddenly, and, in successive seasons, gets far deeper into the underworld of that culture. But if you look to today in the shows that are the big hits on Showtime, whether it’s a Homeland, or a Billions, or a Ray Donovan, these lead characters all have a great heritage in Dexter and in Weeds.

And I think that’s been important to the Showtime brand, and the types of characters we’ve created, and the shows we’ve created. And I think that subversive nature of those lead characters reflects, in some way, to a brand that has a certain amount of subversiveness to us in terms of the programming choices we make and what people come to us for. And I always remember giving a quote, and I was -- I think I was on the CBS morning show, the second year or third year of Homeland, and those folks were all big fans of the show, and they asked about Carrie Matheson. And I said, “Well, you know, the unique thing about her character is that the CIA agent is really far more subversive a character than the terrorist is, in terms of the way she lives.” So, that was a very important period for us, back in the early part of the last decade, getting those shows on the air, and for the first time, really -- and I’ll use my words as an old brand guy and marketing guy -- where we really established a voice for Showtime. And I think, today, it’s a highly recognizable voice to our diverse users.

Arenstein: I did want to talk, though, about those, because I still remember those movies of the week that you produced, I thought -- as I recall, at a prodigious rate.

Blank: We did. I think, you know, one year in the late ’90s, I think we made 35 movies. And we made them about important subject matter. We won our first Golden Globe for a film called Dirty Pictures, which was about the Mapplethorpe obscenity trials in Cincinnati -- the Art Institute of Cincinnati -- starring Jimmy Woods. And some of them were quite good. Strategically, at that point in time, with limited resources, I think we believed that the trouble with those movies, for us, was that they came, and they went. Whereas the ability to have content like Homeland or Shameless on Showtime today, going into their eighth and ninth seasons, and creating a continuity of want with our audience, it’s really a better way for us to go.

Arenstein: There’s still one that I remember called Varian’s War. Do you remember that one?

Blank: Varian’s War --

Arenstein: Fabulous film.

Blank: -- was about Varian -- I forget his last name --

Arenstein: Fry. Wasn’t it Varian Fry?

Blank: -- Varian Fry, who helped get Jews out of France during the occupied period, just sneaking them over the border, basically. And there were people, like Chagall -- people in the artistic community. And I remember that one as one of the more -- Bill Hurt, I believe.

Arenstein: Bill Hurt, exactly.

Blank: Yes, William Hurt. I’m surprised I remember it, but I did. That was a good film.

Arenstein: Yes, a very good film.

Blank: It was an important film, yes.

Arenstein: Yes.

Blank: We’re very proud of a lot of that content. It’s amazing. I was somewhere in the world in the past couple of years, and, you know, going through that just graveyard of channels that you see in a hotel somewhere in Europe, or South America, or something, and I come across some movie. I said, “This looks familiar,” and it was some Showtime movie of the week from, like, 1996. And I said, you know, “Look, things live on. It’s great.”

Arenstein: There was another series, though, early on, about a Latin -- a Latino family.

Blank: Resurrection Boulevard. We actually produced with Paramount, our sister company at the time, when we were part of Viacom. A great disappointment in the sense that I think it was a terrific, terrific series, and we could not get an audience for it. And, look, that’s the complaint of anybody who makes television series or movies. As many great television series and great movies never get an audience as series that do. But, look, I think part of that was just the challenges of the Hispanic audience, where what the Mexican audience will watch versus the Caribbean, Dominican, or -- I don’t know what the politically correct way of describing the different parts of the Latino audience are, but it was hard to appeal to everyone. And that’s one of the shows I have some regrets over from that period of time, just because I think it was really well done and could have been a much greater performer for us, and it just wasn’t.

Arenstein: On the other hand, it would seem to me that that’s something to be proud of, because going in that direction was --

Blank: Yes. We put a great emphasis on diversity, and that was, you know, one of the shows that we put front and center against that effort.

Arenstein: Yes, I remember it well. OK. So, then, let’s move on to something like Dexter.

Blank: Sure.

Arenstein: How does that pitch come in, you know, when you see -- when it gets to you? Take us behind the scenes.

Blank: Well, that one, if I remember correctly, was based on a book, and I believe it was a producer by the name of Sara Colleton, who Bob Greenblatt had worked with at Fox, and she had optioned the book and brought it in with a couple of other really -- John Goldwyn and a few others who produced that show for us. And we loved the script, and we loved Michael C. Hall. And that was the first big show that we ever owned. So, very important from the business standpoint to Showtime. Today, we own Billions; we own Ray Donovan; we own The Affair. Most things that we commit to today we own at least a piece of it. It might be a small piece, but a piece of it. And that’s become a very important part of the overall economics of Showtime; we have, you know, many hundreds of millions of dollars in ancillary revenue, from nothing a few years ago. And Dexter was the first big show that we actually owned outright, and it continues to generate substantial revenue for us around the world and continues to play on the network. So, that was critically important.

Arenstein: Now, when you are looking at a pitch-- or when you did -- I don’t know if you still do -- but when you’re looking at a show, potentially, to run a show, are you looking at factors like, “Oh, yes, it’ll work in the United States, but not sure about outside the United States”?

Blank: Well, I think a little of both. I think one of the things that has changed dramatically is that, with the creation of all these streaming services around the world -- not domestically, but around the world -- their demand for content has increased exponentially. When I say “their” -- meaning the various players around the world. So, there are certainly shows, half-hours, that, a decade ago, half a dozen years ago, you would say, “OK, this is a great show, but it’s not going to play anywhere else, or we’re not going to get much money for it around the world.” The voracious appetite of these streaming services around the world have created an environment -- as well as the deals that we make -- that we pretty much put through everything that we produce. I think the first thing we think about is our base business: will this be a great show for our Showtime subscribers? You know, tie goes to the show that we own and that we think may work well in other markets and have lives after Showtime elsewhere, but, you know, our first priority is to put great programming on Showtime.

Arenstein: OK. You know, I wanted to get back to one other thing. You mentioned sort of the lead character giving a brand to Showtime.

Blank: Yes.

Arenstein: Was that a conscious decision, or did it just develop after?

Blank: I think it evolved, and I think that one of the things that’s great today -- when I went out and hired David Nevins to be our president of programming with the hope that he would end up running the company when it was time for me to move on -- and David’s just been fantastic -- but one of the reasons I hired David was, I thought his taste was consistent with some of the things that we had been doing, and that he could kind of bring this to the next level, which he did. Which he did. So, I don’t know if, consciously, we put on a piece of paper that these are the things, but I think, you know, for me, in the old days, when I sat down and talked to the press or I sat down and talked to an affiliate, I would get asked the question, “What’s Showtime? What is the brand?” And that’s a question you get when it isn’t obvious to somebody. I never get that question anymore. I never -- if I do, once every several years, I’m tempted to say, “Have you ever watched Showtime?” And I think our company--, everybody in the company has a kind of communal sense of who we are and the type of things we do. And it’s not just in the scripted programming, but I think The Circus is a good example, taking a very different take on political programming than you were seeing out there. And I think the reason it was successful was because it wasn’t a talking head answering a question about tax reform or about foreign policy, but rather kind of getting to the other side of that candidate and what their lives are like in that sphere of a presidential campaign. Our documentaries: David Nevins always used the term “culture changing people or subject matter.” And it might be in a very narrow part of the universe, but that individual or that subject matter has a real cultural impact in there. That’s the reason why these music docs work so well. You know, music is such a part of our culture, and when these things come along, we love them. So, the brand development has been so critical over this period of time.

Arenstein: There was a documentary -- I believe it was last summer -- about the CIA that you did. Fabulous.

Blank: In the Company of Spies?

Arenstein: Yes, something with a company, yes.

Blank: In the Company of Spies. Again, we had tremendous access, and I actually think that’s a case where, because we had been doing Homeland, that this sort of came to us and was a terrific kind of partner to that show from a whole different point of view. And one of the fun things in Homeland is, that cast -- in fact, a whole bunch of us -- have gotten to go down to the CIA, sit with the most senior people in the CIA from all the directorates, and really hear what they thought about Homeland. And they loved it.

Arenstein: OK, good. Good. Let me just ask you: I mean, you know, you look at your career, you look at this timeline, and the long run you’ve had at Showtime -- and I say that admiringly. So --

Blank: Not everybody would.

Arenstein: No, I understand that, but I’m saying, to last that long. I mean, that’s -- this is a business where people come and go very quickly. In the old days, when you first started at Showtime, to now, tell me, in terms of the culture, tell me in terms of your leadership: have things changed?

Blank: Well, you know, I think things have changed dramatically. First, just the success of the business: my first year there, I think Showtime made 30-some-odd million dollars in profits, most of it non-recurring -- which means the profits were from settlements of lawsuits or one-time events, literally -- to a company that makes in excess of a billion dollars a year now. And I think the culture is a part of that -- big part of it. It was never a leadership culture, and you can’t just go in and change that if you’re not a leader. You can’t say to the company, you know, “We’re fantastic, we’re wonderful, but, yes, we’re a distant second to HBO. We don’t make any money, and we got a long way to go in the programming front.” So, I think it’s a gradual process. It’s getting people to believe in the content, believe in the brand, while those of us who run the company make sure that we secure the type of business relationships necessary to generate the revenue and begin a period of growth. So, I would say it was like turning an aircraft carrier or a tanker. It took a while. It took a while. And, you know, one of the things that I remember when I got to Showtime from HBO at the beginning of 1988, almost 30 years ago. There was a party a month or two later to celebrate that we had 10 million subs. Over the following 18 months we had two more 10-million-subscriber parties because we kept falling back below 10 million, so we’d get 10 million subscribers again, say, “Well, let’s have another party.” But, you know, from that period -- the mid ’90s, late ’90s -- on, we’ve had really steady growth in our subscribers. We’re somewhere in the area of 24, 25 million subs now, and the attendant revenue growth that goes with that which has allowed us to really direct the lion’s share of our efforts to developing great content and marketing that content, which is, to us, the most important thing we do.

Arenstein: OK. And just tell me, in terms of pressure -- you know, the bar being raised higher, and higher, and higher -- does that get to you, you feel?

Blank: No. You know, look, I think it’s one of the realities of business. These jobs are not easy to come by, and you’re going to come by them or stay in them by having a certain level of success that you exceed each year. It gets harder and harder; it’s very, very difficult now for any number of reasons. But, you know, I think that we’ve had tremendous leadership in the company -- very self-motivated group. A key thing was turning the corporate culture from a culture of kind of nobody caring about it to being a winner, and we like being winners. And I always used to say to the group that the objective is not to survive, the objective is to prevail. Nobody wants to go home from their job and say, “Well, we survived another week.” I think an awful lot of people do, not at Showtime, but in -- probably more people in the American economy today go home every night and say, “Well, I survived that one.” But that’s not what you build the hopes and dreams of a great career on. You want to prevail; you want to be successful; you want to do things that are important, that people remember. And we’ve been really lucky to have a group of people at Showtime who were able to make that happen.

Arenstein: And when did you feel that Showtime went from a culture of “Eh, we’ll just be a distant second to HBO” to a winning culture? When did that happen?

Blank: You know, I think it started in the middle, early part of the last decade. We started to have some shows on the air that were working. The industry was still growing at a very dramatic rate; we took advantage of that. We had the ability to go into our affiliates in a renegotiation and say, “Showtime is important. You now need Showtime. You’ve got to have it. We need to be treated fairly within the economic structure of what you do.” So, it’s all those things together, and it’s a gradual thing, but it’s great to have the opportunity to see the company where it was and to see it today.

Arenstein: Sure. Was there a particular time when you -- you know, was there a show, was there an award, that you said, “OK, we’ve turned the corner”?

Blank: I think the tipping point was Homeland. I think David Nevins had been on the job, literally, full-time, for a couple of weeks, and he called me up, and he said, “There’s a script I want you to read, and you got to read it really quickly.” And we read it, and we all loved it. And David had worked with these producers; he’d worked on 24 when he was at Fox. And we just thought that show was right for the time. Great writers, great show-runners, ultimately, a great cast. And, you know, we won the Emmy for that show. We won the Golden Globe and we won the Emmy. We won the Best Writing, we won actor awards. And I sort of felt, sitting there, having sat through an awful lot of awards shows over the years, that people took notice, and people were going to remember that Homeland was on Showtime, which was important, and that people would want to work at Showtime based on that. So, I think, you know, people say awards are really not that important, and I don’t know that they are that important with consumers per se, but I think they can be very important to the company, to the creative community that you work in, and to your ability to attract -- and I don’t think it’s so bad for people to watch the Emmys, and for Homeland to win, and for people to get up and recognize Showtime. So, that was great.

Arenstein: You know, I do want to make one point, though, and I want to talk about leadership. And I don’t know if you remember this, but when Bob Greenblatt left, I wrote a column about how Showtime had grown and improved tremendously.

Blank: I think I do remember that.

Arenstein: And this was kind of in the early days of email, and one day, I’m looking at my computer, and I have an email from Matt Blank. And I was like, “Wow, whoa, what is this?” And it was just a little note saying, “Thank you for that column. It was really nice. It was well done, and you told a really good story very well.” And I never forgot that.

Blank: I’m glad to hear that. That’s nice.

Arenstein: So, I asked -- I give you that little prelude because --

Blank: Thank you.

Arenstein: -- I am thinking that a person who does that -- what kind of leader is that person? Is that the type of leader you are?

Blank: Well, I always like to recognize--. You know, over the years, I can think of only one time in my tenure -- 20 years or so as CEO -- where I called somebody up about a bad article. I was always just, “Well, it’ll be gone tomorrow. They’re not going to change it; they’re not going to retract it.” I’m sure our PR people did, or I’m sure others did, and said, “What are you talking about? Why would you do that?” But, you know, look, I’m always pleased when I read something nice, if somebody says something nice, and I’m, you know, grateful that they took the time to actually do that. So, thank you again.

Arenstein: My pleasure. And, of course, I thought -- when I first saw that, I thought, “Oh, my God. What did I do?”

Blank: Yes, “What’s he mad about?” (laughs)

Arenstein: “What did I do wrong? What is he mad” -- but it was a nice article. And then I remember that you and I emailed a little bit because I complemented another series that you had started with David Steinberg, interviewing comedians about comedians.

Blank: Yes, David is fabulous.

Arenstein: Donald Rickles, and Seinfeld on Rickles --

Blank: No, he’s a fabulously interesting guy, raised, you know, as a fairly religious Jew in a small town in Canada, like, in Saskatchewan or one of those provinces I can’t pronounce properly. And he’s had an amazing career as a stand-up comic. I think he holds the record for most appearances on Carson. He wrote for Carson’s Oscar when Carson used to host the Oscars. He directed, I think, Seinfeld’s, I believe. He’s still a director. And he’s so well-liked that when he brought that in, we did it for, I guess, three seasons, had a great experience with him. I run into David quite a bit and he’s a wonderful guy.

Arenstein: It was. Anyway, so, I just wanted to say that that was a nice thing, and --

Blank: Great.

Arenstein: -- I think that, probably, that’s the way you lead a company, too.

Blank: Well, we -- you know, we have a very open company. Our executives are all very open -- open-door policy. And, you know, what’s amazing to me now, when we do big corporate events or anything, to see how young the company is. It makes me really feel old when I get in the elevator in the morning, that’s for sure.

Arenstein: Talking about company events: I mean, some of the Showtime parties at NTCA were just so creative and clever.

Blank: Yes, we’ve had fun over the years. I’m going to miss those; definitely going to miss those. And, you know, we’ve been fortunate, because we’ve worked with a lot of great talent who are always willing to step up, and do things with us, and do things with the company. And, look, we’re in the midst of sea changes in this business, and I think it’s important for the company to be well liked and respected in our various communities we do business with. I’m still close to an awful lot of our major distributors, people I’ve known forever. I think the respect that David Nevins and his team have in the creative community is up there with any company in the business, and I think that’s meaningful. I think that’s meaningful, and in some ways, it’s a lost art, as the economics change. And, you know, look, the way I kind of describe the business, it went from a distribution business -- you know, frankly, back in the ’80s, into the ’90s, if you had a good deal with Comcast or you had a good deal with Time Warner Cable, or whomever, you could find a way to be packaged and kind of survive. And I think that world changed a lot over the past 15 years or so, where, yes, all that was important, but ultimately, it was about brand and content. And now, ironically, we’re going back to a world where it’s brand and content, but it’s distribution, because with all the over-the-top players, distribution is changing so much. So, now, we spend an awful lot of our time talking about our new distributors and how our direct-to-consumer business works. And the next phase for us is really data science, because, for the first time, we get -- sort of amazing, after all these years, but for the first time, we get a great deal of data about how our customers came to subscribe, what and how they’re watching. Are they binging? How much time do they spend between episodes? What are they watching? When their favorite series is over, what are they doing? Are they going off? Are they coming back on? That, and the obvious household data, really changed the way we schedule, the way we program -- we need a lot more content -- and certainly, the way we market. So, having that foundation of that brand and that content is so critical to now taking advantage of these new distribution environments, as well as the new types of data and information we can glean from these new distribution environments to help us program and market the service better. So, in some ways, it’s come full circle, and in some ways, it’s all new -- every day is new.

Arenstein: Yes, but, I mean, it’s -- when you’re saying that, you definitely sound like the marketer that you are --

Blank: (laughs) I can’t get away from it.

Arenstein: -- wanting to know more and more about the customer --

Blank: Yes.

Arenstein: -- and now you’re able to.

Blank: Frankly, that was always -- you know, I always joke. I would go on Bloomberg, or go on CNBC, and I’d say, “Gee, we have a great business. We have 22 million subscribers,” or, “we have 18” -- whenever. And I remember when I went on to talk about our over-the-top launch. Two and a half years ago, I went on Squawk Box and I said, “I really wasn’t truthful with you guys over the years. I come on the show; I’d say, ‘We have 20 million subscribers. It’s a great business.’” I said, “Comcast had those subscribers. DirecTV had those subscribers. Now, we have subscribers, which means that we can run our business very, very differently, and that’s a tremendous advantage from the marketing standpoint.” So, it’s fun. I’m jealous of those who’ll get to do it for the next 20 years.

Arenstein: So, what are you going to do with all the spare time? You told us before the taping that you’re not going into the office every day any more.

Blank: No. You know, look, I’m not the type of guy to retire. At the very least side of things, I’ve got a bunch of not-for-profit things I’m involved in and can spend more time on, and I’ve been involved with some Broadway stuff and can spend some time. And then, at the other extreme, I have a bunch of folks in the investment community who are buying companies, or own companies, and have said, “Can you help us out?” And I think my answer to that is yes, if it’s not competitive with Showtime, and if it allows me to have a little more control over my time and life so that I’m not a 24/7-type guy. And, you know, there’s an opportunity to do some new and fun things, and I’m looking forward to that, and I’m looking forward to keeping in close touch with Showtime, because that’s like a family to me, and I think they will continue to do great.

Arenstein: Yes. You know, Matt, I wanted to mention -- I know you won’t do it, but I will. I was always impressed by, quietly, how well you -- or how much you did, philanthropically. And I know you didn’t want to get headlines about that, and it was written about a little bit, but it was kept under the radar, pretty much, and I think that was your choice, but I think it needs to be talked about, because it’s important. I know it’s important to you; it must be. What are some of the causes that you’ve looked at over the years?

Blank: You know, I think the main thing for me -- I’ve been involved with an organization called the Harlem Children’s Zone for over 20 years now, and it’s an organization that, in the period of time that I’ve been involved with them, have gone from serving 600 or 800 kids in Central Harlem -- and families -- to 15,000 kids in Central Harlem, with a couple of charter schools, massive programs, many hundreds of millions of dollars of endowment from nothing. And that’s an organization I’ve been fortunate enough to get Showtime involved with. It was led, for most of these years, by a truly inspirational leader by the name of Geoff Canada who’s had tremendous national recognition for what he’s done for children. Geoff’s actually just sort of stepped up there, also, in a little less of the day-to-day and a little more time spending time with kids, which he used to do. And, you know, I feel great that it’s been embraced by Showtime. I think a bunch of Showtime employees are up there this week wrapping Christmas gifts for the kids. So, you know, look, it’s important. It’s important in terms of the communities we live in and the life we get to live in a place like New York. And it’s important, you know, from a business standpoint, in terms of the culture of the company. And it’s hard to have healthy businesses, healthy companies, without healthy countries, and I think that’s important to all companies, and I’ve just been very lucky to associate with them. I’ve done a bunch of other things in the arts, but I think they’re the organization that’s been most important to me.

Arenstein: I remember, also, if my memory serves, you were very important with Cable Positive when it was around.

Blank: Yes, I got involved with Cable Positive sort of early on, and, you know, the Cable Positive story was an interesting story. It was an organization that the industry got behind at a period of time where, I think, AIDS information was critical in this country. And then, I guess, the belief was that it had served its purpose in one way, shape, or form, but I’m very proud of what they did over that decade or so, that that organization was active in the industry. And I actually think it had a major impact on the companies in the industry.

Arenstein: I do too. What are you proudest of, when you look back on your very long and successful career, Matt?

Blank: You know, I think the obvious thing is that -- I remember, when I left HBO in the beginning of 1988, everybody was like, “What? How could you do that?” And I remember getting to Showtime on my first day, and went to a couple of meetings, and I said, “Oh, my God, what have I done?” But, you know, I think it’s a -- I had this great opportunity early in my career, at HBO. I went there when I was 25 years old, and my first two years there, I went to 40 states, I think, and I got to see the beginnings of a business at a really grassroots level. And that’s an experience that not a lot of people get to do, and it changes you as a businessperson if you get to live through that -- both the struggles and the successes of that. I think, for Showtime -- you know, I think I’m proud of the fact that we were a company that was not widely respected, and today, is extremely well respected, and has a first-class organization of great leaders, great managers, great people. And the fact that, with David Nevins taking over now, we are all on the same page in the company about the strategy for the future and what will breed the next generation of success for that company. And that will always have just a very special place for me.

Arenstein: If I turn on the set -- well, we probably won’t even have to turn on sets 10 years from now.

Blank: No, just say, “Turn on.”

Arenstein: “Turn on Showtime.”

Blank: “Turn on Showtime.”

Arenstein: What am I going to see in about 5 or 10 years on Showtime?

Blank: You know, I don’t know. I think -- one thing I think, for certain: you’re going to see a lot more content, because I think the nature of the competition, and the nature of a business where someone doesn’t have to call a cable operator and say, “I want to disconnect Showtime,” or have somebody come and pick up a converter, or bring a box, or -- you know? I think that it will be a much purer consumer experience. And it will also be a more challenging experience for us, in many ways, because it’s very easy to just go online and click, and OK, Showtime is gone. So, “Oh, now I just watched my Shameless for this season, and, you know, I’ll watch Billions and Homeland next year when they’re showing.” So, I think we want to make sure that we bridge our subscriber universe so that, you know, it will not be Homeland ends and Billions comes on. As you’ve probably noticed, shows start -- we used to have four seasons. Now, we got a lot more, because new shows start in the middle of another anchor show season, and we try to bridge those audiences. We’re learning a lot more about who’s watching which shows, and that allows us to program differently, but it means we also have to have more content there. And so, you know, I always say to our various groups that we do a lot of important things in the company, but nothing is more important than the viewer experience. When they turn the network on, how much is there for them? And that’s whether you’re watching it on your iPhone, or you’re watching it on your 75-inch TV, if you’re watching it direct from Showtime, or you’re watching through Xfinity at Comcast, or Spectrum’s platforms. The consumer experience is critical, and ultimately, people are there for the content, and we’ve got to give them what they want.

Arenstein: Sure. Finally, cable’s legacy: what’s a big story about cable that the general public probably doesn’t know?

Blank: Well, you know, I think that that’s a good question. I mean, I always thought that one of the unfortunate things about the cable industry was, this industry was shepherded by some of the great entrepreneurs of the twentieth century. When you read about Bob Magness, you read about Alan Gerry, you know, up in Liberty, New York -- I have a friend who was raised in Liberty, New York, and he said that when he was a little kid, his first TV, Mr. Gerry used to come over, because he had a TV store; he’d put the tubes in. And, you know, Alan Gerry built this big company that he ultimately sold to Time Warner. And I think that, you know, if you go back to the beginnings, the great entrepreneurs in this business never got the same credit as other great entrepreneurs, because people were so fundamentally unhappy with cable service. And that created a cloud over the industry for so long.

Then let’s come to the other end, today. I don’t think a lot of consumers are really aware of the technological innovations that Comcast is doing with Xfinity, or Charter is doing with Spectrum, and what that experience through cable will be like in the years to come. And, you know, it’s so important to us, when -- one of the things we’ve seen has been -- one of the good effects of our over-the-top and direct-to-consumer -- developing those services -- is that, when you go on the Showtime app on your iPhone, or if you get it through Roku or whomever -- others -- Amazon, Hulu -- you’ve got 1,600, 1,800 hours of content right there, on demand, in your hand. And a few years ago, that wasn’t the experience on a lot of our linear distributors, where you, literally -- we had, as recently as two years ago, we had affiliates-- and I think it’s probably still happening. I shouldn’t even say that. In some places, say, you’re getting 40 hours a month. So, that is an unacceptable comparison. You cannot sit on your sofa and go to Showtime On Demand and get 40 hours, and pick up your iPad, buying it from another provider, and you’ve got 1,600 or 1,800 hours of on-demand content. So, that has forced the industry into a certain amount of consumer interface equilibrium, and I think that’s critical. I think that’s critical. And, you know, they always say, any business competition forces you to be better, and there’s a lot of ways to be better, and I think the consumer experience from the legacy providers is getting better and better, as well as the broadband speeds, and all of the other things that you can do. And not that that’s not true with Amazon, or not true with Apple, or Hulu, or whomever. It’s just that I think you’re going to see more of a balance in the future. Ultimately, you shouldn’t -- who you are getting that from shouldn’t be a factor. You know, I mean, if you go to Walgreens and you buy a tube of toothpaste, that Walgreens experience shouldn’t carry over to you’re standing in front of the mirror, brushing your teeth at night and thinking about Walgreens. You want people thinking about your brand and who you are. And I think, ultimately, we want all of our distributors, including ourselves, to be providing a better level of consumer interface and consumer experience than users were historically used to.

Arenstein: I think of you as a creative guy, but also, you’re a businessman. You have a Wharton degree, there, so you’re a legitimate business guy. How do you see yourself? Are you a business guy, or a creative guy, or a mixture of both?

Blank: I think a little of both. I’ve always loved the content. I mean, I was the kid, growing up, who, you know, I would sneak back in the living room and watch television. I wanted to work in television or film when I got out of Wharton, couldn’t get a job, worked in packaged goods, financial services for a couple of years, and ended up at HBO. But one of the things I enjoy about my job is, I get to cover all of it. I’m not the guy who chooses the programs. I’m not the guy who takes the pitches. But I’ve been fortunate to have great executives that I talk to every day, and have had the opportunity to express my opinions, and to be a great advocate for the brand, and a great advocate for the shows we’re making. But, you know, I feel pretty comfortable putting a suit on and doing an investor meeting for CBS, or I feel pretty comfortable, you know, in a T-shirt and jeans, going and hanging out with a lot of our people on the creative side. So, I try not to define myself, but I feel pretty good about being able to -- after all these years, being able to cross a lot of different parts of the company.

Arenstein: OK. And talk about your personal legacy, if you would.

Blank: Well, I’d like to think it’s the strength of the brand, and more importantly, what a great group of people we have at Showtime, and the fact that we are an important player out there. You know, for the past decade or so, we’ve been part of CBS Corporation, and I can remember my very first meeting -- budget, strategic, or planning meeting with CBS -- and Leslie Moonves, who’s been a tremendous supporter of Showtime, said to me, “Matt, doesn’t it bother you that HBO was so successful, and you guys are still so far beyond?” And I said, “You know, what bothers me is that you’re the first one that ever asked me that question, of all the bosses I’ve had. And the answer is yes, it bothers us every single day, and we can’t control what they do, but I think we’re at a takeoff point now where we can control what we’re doing, and we’re going to be much more successful in competing with them.” And, you know, I think that was sort of the start. We were on our way, then -- the start of the new Showtime today. But the legacy is that we think we’re competitive with any brands out there, in terms of the importance of the programming that we are creating and doing, and that we can compete. And, I think an important part of anybody’s legacy who’s leaving a position that’s like this is, “How well can your company do when you leave -- not when you were here, but when you leave?” Because if, tomorrow, the bottom falls out, you didn’t do a very good job of preparing the company for the future. So, I feel good about that.

Arenstein: Matt, you have a persona. Let’s put it that way. You have a persona in the industry of being not only a nice person and a very thoughtful person, but a very funny person, a humorous person, an articulate person. I remember a number of jokes. I remember when we honored you at Cablefax, and, you know, we had a few honorees, and we had a few events where we honor people, and you said something like, when you picked up the award, “What happened? You didn’t -- you’ve gone through all the list of executives and got to me?” It was something like that. It was much better than that.

Blank: I always felt that had to be the case, if I was being honored or speaking at something.

Arenstein: Right. (laughs)

Blank: Who’d you ask first?

Arenstein: Exactly. So, how do you prepare for a speech? How do you think about these things?

Blank: You know, I really never prepare very much. Look, I like to have a good time. I think a sense of humor is important. I think, sometimes, we take ourselves too seriously. And for me, it’s just fun. You know, the irony is that I remember a point in my career, probably pre-Showtime, at HBO, where my boss said to me, “you really have to--,” I had spoken to a group of affiliates, he said, “You won’t be successful if you don’t learn to speak in public better.” And I was always scared to death of it, and I think, at some point, I did it so much that I just got used to it. And everybody’s different. I think my nightmare is a big, prepared speech or remarks, and my usual modus operandi is, I’ll put some thoughts together for something, but in the moments before I go up to speak, I scribble a few things on a little note card, and I get up and try to be spontaneous. But mostly, I just like to have fun.

Arenstein: Matt, thank you so much. It’s been a lot of fun.

Blank: Thank you.

END OF INTERVIEW

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  BACK TO ORAL HISTORIES

Ed Breen

Ed Breen 2017

Interviewer: Stewart Schley
Interview Date: December 11, 2017
Interview Location: Denver, CO USA
Collection: Hauser Collection

Stewart Schley: Greetings and welcome to a next episode of the Cable Center’s oral history series. This is a really special interview and it's a really special day. This is December 11, 2017. The Cable Center christens and opens the Edward D. Breen Technical Archives later this evening, which is a managed collection of some of the key and critical technologies that helped build this industry over time. Speaking of which, we have to talk about that. Edward D. Breen himself is no less than one of the most revered and best known corporate executives on the global stage, the CEO of DowDuPont. He previously ran and resurrected Tyco International, but for our purposes, he was the face of General Instrument for a long period of time, a run in which the industry was utterly transformed, partly because of the work Ed and his team did. So thank you for being with us.

Ed Breen: It’s great to be with you, Stewart.

Schley: This is awesome. I love to start at the start because it's always interesting to me how people got into this crazy world that was cable television at the time. How did you?

Breen: You know, I graduated college and was going to get married at 21. So my wife pretty much was, go out and get a job. I wanted to go for MBA. She said, “You better go get a job so we can get on with this.” And I interviewed. I had two job offers. One from IBM and one from Jerrold Electronics. I remember this because it was probably the luckiest thing I ever did, starting my career. I ended up picking Jerold Electronics and all of my friends, my family, were, “How could you possibly not take the IBM job?” And I said to them, I remember it to this day, when I went to interview, I said, “It was a like beehive around that place.” I didn’t even know what they were doing, but it was people yelling down the hallways and I said, “It just seemed exciting.” And boy, was it.

Schley: What was your education background going up to that moment?

Breen: So that was also interesting. I graduated a semester early because I wanted to get a jump on things. So I went to Grove City College for 3½ years, got a business and economics degree.

Schley: And then you had heard of IBM, probably hadn’t heard of Jerrold.

Breen: That’s correct.

Schley: I don’t know how much research you had done, but thus history was made. You were a marketing assistant, I think, when you started.

Breen: Yes, so I got hired in as a marketing assistant for the set-top box division, which was really just starting at the time. Back then, it was just old push button converter boxes. I didn’t really know what it was when I started because cable was still just in the small towns of Pennsylvania, a little bit out in the West. No one really knew it at the time.

Schley: What was the state of the industry? How would you characterize it? Twelve-channel systems or less?

Breen: About twelve channels and we were expanding just during those years, like in the late 70s, early 80s, to add channels. There was no remote control back then. I remember one of our set-top boxes, there was a big wire that went under your rug so you had a little device sitting next to your couch.

Schley: Did you ever worry you'd made the wrong decision?

Breen: No, I didn’t. I was in the company just months and I ended up loving it. We were working six days a week, we worked all day Saturdays. The company was growing like a weed, which is always exciting. So there was always something to raise your hand and volunteer for.

Schley: And just to kind of set the market stage, Ed, the primary product was the converter box, right? It was the set-top?

Breen: Well, the whole company was the outdoor equipment, the amplifiers, the taps, and all that. We were the biggest at that. And the set-top box business. But the outdoor equipment was a way bigger division at the time because the set-tops were just starting.

Schley: Were you calling on customers? Did you have exposure to the buying community?

Breen: Because of the job I was in, I was the key interface with the whole sales force. So really quickly, I got to know all the salespeople and they were just a bunch of great characters. They basically built the industry. They were the first generation salespeople, so that was fun. And what happened is I was in the company about a little less than two years and because all our salespeople were kind of in their 50s, they were entering their 60s, it was that first generation kind of getting close to retirement. The company was worried about, what are we going to do? And they said, let's try a couple of the young guys in the company or gals and see if they can make it. And we don’t even want engineers. Let's put them in and see how they do. So I quickly volunteered for it.

Schley: And this is sales?

Breen: Yes.

Schley: Were you good at it?

Breen: I think I was pretty good at it. I started doing that when I was 23, and that’s what really got me excited about the industry. I got a little bit lucky. I ended up working for a great gentleman who spent his whole career in the industry, John Deekman. He was the district manager for the Northeast. They gave me the state of Pennsylvania and New Jersey, which could not have been better because that’s where—

Schley: The heartbeat of cable.

Breen: Literally where it started. So I started calling on all the people that started the first cable systems.

Schley: So tell me, what was a day like? What did you actually do. 8 to 5, or 9 to 5? Were you on the road?

Breen: I was on the road 90% of the time. And traveled the whole state. I would leave Monday, come back Friday night. And I was also fortunate because two of my larger customers were Gerry Lenfest, who became a great personal friend to this day. And the Roberts family of Comcast, because they were in Pennsylvania. They became two of my friends and great accounts.

Schley: You were well-placed. But it was an industry—share with our audience—that was not compartmentalized or consolidated. It was very diffused…

Breen: Every town was a different owner. Some entrepreneur got found and a lot of times it was the Jerrold Electronics salesperson that would go to a town and try to find someone to actually do it.

Schley: No kidding.

Breen: Oh, yes.

Schley: To obtain the franchise?

Breen: Yes. Get the franchise and—

Schley: You're kind of building your own business that way.

Breen: Correct.

Schley: You caught the eye of somebody or multiple people. You just kind of take us through the job and your career progression at GI.

Breen: So I was in sales for I think six years and then the company, the people around it at the time, Frank Hickey and a few others, said, “Look. If you want to progress in the company, then you’ll look like you’ve got to have a great opportunity. If you want to, you’ve got to come back in and get into management.” So I ended up taking over vice-president of sales, I think, in like 1986.

Schley: Of the converter group?

Breen: Of the converter group, yes, which obviously I knew that inside and out at that point in time. I came in, did that for a couple of years and then, the big thing for me was they said, “All right, go back and be a head of global sales for the company.” Then I did that for quite a few years.

Schley: I wasn’t joking on the introduction. You're known and revered as a management savant. I mean, you’ve taken companies in really difficult situations and made them whole again. But when you first had that first marketing job and you had reports—I mean that first management job, you had people reporting to you—was it unnerving, were you good at it, natural at it?

Breen: At that point it just seemed natural. I knew everyone in the company. Maybe the thing that was a little unnatural, I was young to be in that spot so that most everyone that worked for me was older than I was. But on the other hand, we all respected each other so much. I just kind of eased into it, I thought.

Schley: Jerrold internally was sort of a flat organization, would you say? Was there a lot of hierarchical structure?

Breen: Very flat.

Schley: You saw the big boss from time to time?

Breen: All the time.

Schley: The governor? [Milton Shapp]

Breen: It was nice because—I considered it a small company at the time. I'm doing $300-400 million a year in business. So everyone knew everyone. The head of the company knew who you were, you were in a lot of meetings with them. So it was fortunate for me because it really, I think, helped me develop at a young age because I was hanging around a lot of smart business people. Because I went into sales at such a young age, by the time I was 30, I knew everyone in the industry and just watching them do deals and all was, I thought, was just really invaluable for me.

Schley: You're seeing, it was just literally growing up in front of you. Were you a technologist?

Breen: No.

Schley: What was your relationship to the—

Breen: I was a business background, but I knew if I was going to be successful in the industry, I needed to learn the technology, so I spent a lot of time really studying it hard. You know, the set-top boxes I knew inside and out. I was pretty much an expert. But I didn’t know all the outdoor equipment and how a system was built. So I had to spend a lot of time learning that, talking to the engineers, but it was fun.

Schley: It’s interesting. I never quite understood the interplay between technology development and what happened on the consumer-facing side of the business. Over time, the amplifiers could spurt out more signals, and the boxes could receive and tune more signals. There was almost a virtuous cycle, right?

Breen: You know, what was fascinating about it, I think, is one of the great secrets of the industry. I have heard John Malone say this many times. Our network, the cable network, never obsoleted. It always evolved and transformed, and we expanded on it. Where a few were a phone system with twisted-pair cables, it became obsolete. But because of the way we architected the cable systems, when fiber optics came along, all of a sudden we could start putting fiber into the network a little bit deeper and the rest would still stay coaxial cable. Then the set-top boxes came and kept adding more channels. So it was a nice evolution where nothing kind of got obsoleted, you just kept going along expanding for the consumer.

Schley: You ran global sales then in the mid-90s, I guess?

Breen: In the late 80s, early 90s.

Schley: What made Jerrold/General Instrument successful? You had competitors. It wasn’t a “gimme” market.

Breen: No, it wasn’t, but I would say we were very entrepreneurial. We moved fast. Our R&D machine was second to none. And we had an aggressive sales team that wanted to win. And it was a fascinating start to my career, such a winning culture in the company. Like, we’re going to win this deal, we’re going to win every deal, we’re going to be the biggest and the best. And the company just always had that attitude. It was great.

Schley: Where did it come from, the attitude?

Breen: Great background. John Malone was there and ran Jerrold. So there’s one of the key individuals right there. But we always had a leadership that wanted to be first. And we did deals. One of the best deals, and I think, the transformative deal the company did, was buying VideoCipher, which became the company that developed all the digital technology for General Instrument.

Schley: So set the stage in terms of what you saw happening in the market in the early 90s. DirectTV goes up in 1994, they're raining down lots of digital channels on America. It's a pretty compelling product. How did that influence the direction of the cable industry and your company?

Breen: We were working on digital technology at our VideoCipher division since the late 80s. And I think it was around ’92 or so, we went to John Malone and to some of the other operators. But John was the key person at the time. I said, “Look. We can develop this digital technology for the cable system. But it's going to take some years.” And probably there were many delays from when it was supposed to happen, but eventually we got to the point where—the key was we had the digital technology, which was the compression technology, but we were also the experts at encryption technology. And you had to secure the signal so it couldn’t be stolen. We married the two together and came out with the digital set-top box. We made our first deliveries in 1997. So the satellite industry did have a few-year jump, which was a real competitive issue at the time.

Schley: It was, and before we talk about that transformational deal on the digital boxes, can you go back to VideoCipher and tell me what that company did and why you were attracted to it as an acquisition target?

Breen: So they were part of M/A-Com, and there were a few great things that came along with that deal. One was the VideoCipher division. Also what came along with that was CommScope and what also came along with that was my dear friend, Frank Drendel.

Schley: Ok, CommScope…

Breen: CommScope was the largest coaxial cable manufacturer for the industry, and probably had two-thirds of the volume in the whole business.

Schley: Why did VideoCipher exist at that time? What was the market for it?

Breen: They were working on HDTV or on high-definition TV technology. But what they did is they secured all the big C-band satellites they used to deliver, and they had a virtual monopoly of that business. It was the VideoCipher technology. So they were very deep in encryption and all those types of technologies, which then morphed into let’s try to create a digital set-top platform for the cable industry.

Schley: You may remind us there was a period of time during which if you had a big C-band satellite in your backyard, you kind of had free rein to television, right?

Breen: You did, you did.

Schley: VideoCipher solved that.

Breen: That’s correct.

Schley: They solved that. Let’s talk then about the cable industry’s—I'll call it a catch-up or an equalization play for digital video. Operators like John Malone needed a lot of boxes in order to transform their consumer base to a digital platform. And that meant a lot of money would have to be outlaid. How did they solve the problem?

Breen: It was interesting for General Instrument and it was fascinating because we were the largest analog supplier to the industry. And we probably had 60% market share of the set-top boxes, and it was a very profitable business. We had to win the digital business or GI would have been a small portion of what it used to be. I mean, the company would have been over.

Schley: It was clear this is where—

Breen: It was clear the world was going there and it was clear we had to get there, and every major company and technology thought they were going to get it. Sony thought they were going to win, Microsoft thought they’d win, Cisco thought they were going to win. And here was the two embedded analog companies, Scientific Atlanta and General Instrument saying, we've got to get there first. What we did, General Instrument got there first and got the technology done and demonstrated it to the industry. The dilemma was at the time the box cost us about $400 to make it. And the industry said, we can't afford that. That was the dilemma we found ourselves in at the time.

Schley: What was the price point for a state-of-the-art analog converter around that era?

Breen: $100.

Schley: It was a big leap forward.

Breen: It was a big leap.

Schley: What did you do?

Breen: What we did is really fascinating. I had a lot of conversations with John Malone. I knew we needed it, we needed to roll it out in a big way in the industry, but they couldn’t because of that price point. So our big argument was, look, we need massive volume so we can really run these things like Chiclets down our production lines.

Schley: Bring your costs…

Breen: Bring our costs way down, and then over time would also cost-reduce the box with our engineers. But it's going to take us time. But I need big volumes, and that’s how we started talking about, look, if we can get the industry together to make a big purchase, then I could offer the boxes at a lower price point. And so long conversations with Dr. Malone turned into why don’t we do a deal where for every box that an MSO cable operator, bought, we would give them warrants or stock in General Instrument. And our thinking was, first of all that would be motivating for everyone to get going, but we assumed if we had big volumes, the stock price of General Instrument would go up significantly. And Wall Street would help pay for the upgrade. So that was the deal we constructed.

Schley: And if I understand correctly, the deal that the good doctor [Malone] negotiated prevailed across the entire industry.

Breen: Yes, it was so great because after months of negotiating a contract with TCI, and many other people were involved in it, we then structured this warrant deal. The way—I won't bore you with all the nuances—you had to sign every cable operator up at the same day so the warrants were done right from an accounting standpoint with the SEC. So we had one week where we did the deal with John, and then we said, we've got to go get every other cable operator to go along. So the argument was, it never happened in the industry, for everyone knew John would have the best deal because he was the largest cable operator by far. And we said we’ll just give everyone the same deal. John agreed with it. That’s what really motivated medium-size cable operators and all, like, wow, I would never get a deal like this and plus I'm going to get ownership in GI and hopefully the stock does well. So we took one week. I remember two nights in a row I slept in Ted Forsman’s office because he wanted to be updated.

Schley: He was your investor.

Breen: He was our large shareholder. So Frank Drendel and I hooked up together and pretty much visited every cable operator. We were on the phone day and night, negotiating the deals. Now they were easy because we said we can't change anything. It's the Malone contract. So that made it easy from that perspective. But we got to the end of the week, we signed everyone up on the same day. We kept it totally quiet. Nobody knew what was going on because we didn’t want the stock price to run up on rumors, or it wouldn’t have been as good a deal. So nobody leaked it, nobody had a clue that we had done this deal.

Schley: Was it a Friday…?

Breen: It was. I forget if it was Monday we announced it or a Friday, but we announced a 15-million-unit order. It was $4.5 billion, which at the time was humongous. Our company wasn’t near that size and it was literally enough volume for a few years. But the key was, it wasn’t just the 15 million. You knew once you were in a town or a city, it was your technology. They had to continue to buy your technology. So as the person who sold it, we just wanted to get our headend and our technology everywhere, and then we had a franchise for the next twenty years.

Schley: What happened to the warrants for the new investors you had?

Breen: The conclusion of it was that the stock went up literally about 800% over just a few-year period, and we ended up selling GI to Motorola for $18 billion. And they all had the warrants and people could cash out at different times. But literally when you do the math, you reverse the math. Wall Street paid for the whole digital upgrade for the industry. It was really something.

Schley: How did you and Malone come up with the inspiration in the first place?

Breen: So the conversation was, boy, we’d like to own some stock in the company. And we also, when we did the digital deal, said to John, we should own the Headend in the Sky, the big facility outside of Denver. Because the cable industry’s not going to trust that you are going to control all the programming down to their cable system. If you remember—

Schley: TCI.

Breen: Yes. The small operators, which was most of the country, couldn’t afford the digital headends. They were really expensive. So what John did, which was brilliant, he built this Headend in the Sky, it was called, and he could just deliver the signals very cheaply to a cheap headend that we developed. The Headend in the Sky was all GI technology also. We built it so we knew it inside and out. We were like, not only would we do this deal, but you sell us the Headend in the Sky. We will then go sell all the cable operators the boxes.

Schley: It's an early incarnation of cloud computing sort of, in a way, and it worked.

Breen: Yes.

Schley: How did that financial transaction change everything? How did it change the industry?

Breen: I mean, look, I think fiber optics was transformative, but I don’t know another deal in all the years I was in the industry that was more transformative. It just took overnight the industry to 500 cable channels. And it wasn’t just delivering video. You could now see the evolution was now going to bring broadband high-speed Internet. It was right on the heels, it was the same technology.

Schley: You were sending bits down the pipe.

Breen: Correct. It was the technology that really made this industry what it is today.

Schley: You mentioned an individual called Frank Drendel, who was part of your acquisition of M/A-Com, or VideoCipher.

Breen: Correct.

Schley: Why was Frank instrumental or important or influential…?

Breen: Well, first of all, Frank’s bigger than life and he is one of the founders of the cable industry. He founded his company with $10,000. And Frank coming in to GI was the best thing that ever happened to me because he knew of me, but we had never met each other. But he always heard about me in sales. And I had always heard about him. I looked up to him, but I never had met him. When he joined the company, he kind of took me under his wing and said, “You're going places.” And I'm like, “OK, I’ll listen to that.” To this day we’re still best friends and I consider him my mentor.

Schley: You know, I hate to put people on the spot, but in addition to Frank, maybe Dr. Malone, are there a small handful of people who were disproportionately influential in your cable industry career?

Breen: Yes. When I was in my early 20s, a gentleman from Williamsport, PA, John Roskowski, he took me under his wing, and he built cable systems. So I sold him a lot of technology that he would then go build cable systems all over. And he was very instrumental then. But I would say, obviously, Dr. Malone, Frank. I would clearly say Ted Forsman had a big influence on me for a few years, very key years in there, because he owned the company for about ten years, and was influential in ownership in the company. And I would also put the founders of Comcast, Dan Aaron, Julian [Brodsky] and Ralph [Roberts] and certainly Brian [Roberts]. That would be my group.

Schley: Using the Roberts family maybe as an example, what was the attitude, the culture, how would you express what the cable industry was like to be in and to work in and to have even personal relationships in?

Breen: That’s what made it so great. I never thought of leaving through all those years. I was in the industry 24 years. And we literally were friends with each other. It was that close-knit. And the cable operators really didn’t compete with each other. They did a little bit, trying to get franchises, but you know, you're in your own territories. And everyone was friendly with each other. So it was just a fun industry to work in. Honestly, I never considered it a job. We were building an industry. And it was fun to be part of building something and you could see—you know, I started in 1978 and there weren’t many believers. And I'm not sure I was a believer. But you could start to see, oh, my gosh. There's something huge here and it's happening in front of us. We were in the middle of it.

Schley: Do you ever allow yourself to think about how the IBM choice would have changed your …?

Breen: I've never forgotten…

Schley: Nothing against IBM.

Breen: No. I would have never had the career I had and the excitement I had and the friends I have.

Schley: Can you take us up to the acquisition of General Instrument by Motorola, how that came about and why that came about?

Breen: This was when Frank Drendel again became very important in my career. He called me up one day and said, “Ed, I was just at a Nextel board meeting, and there was a gentleman by the name of Keith Bane on the board.” And Keith was the number two or three at Motorola. “And he said, “Frank, I've got to confide something in you. We’re seriously looking at buying Scientific Atlanta.” And Frank said, “Why would you do that when the best company is General Instrument. Have you even talked to them?” He said, “No, we haven’t talked to them. We've been talking to the other guys.” Frank said, “You have to meet Ed Breen. Just give him one day and you really need to talk to him. Even if you still want to go do another deal. You'd be making a mistake not talking.” And he said, “We will be ready to meet you at any time.” We got a call the next day. They said, “Can you come up Sunday to Chicago?”

Schley: Motorola headquarters.

Breen: Yes. “We want you to come on the weekend so nobody sees you here.” We went into a basement in a car and we snuck up. And Frank went with me, by the way, to the meeting and we presented for about four hours.

Schley: To the board?

Breen: The whole senior management of the company.

Schley: And how did it go?

Breen: Great. We were negotiating literally starting the next week. We very quickly had a deal done.

Schley: I didn’t understand at the outset. This was a new category for Motorola, right? A participation they hadn’t had in an industry. I think some of us regarded them as a consumer facing CE electronics brand. How would you describe the interest and what was the appeal?

Breen: Well, the appeal for them was they were making cable modems. They were one of the original vendors. And they saw the potential of what was happening. So they thought, wow, this is a new big opportunity. And they were good at that type of technology also. So that was their interest level, and then obviously they were studying it. So we were just starting to ship cable modems also. We had already done the digital set-top box. On the heels of that, the DOCSIS standard got set. Half the intellectual property was out of General Instrument on the DOCSIS platform. So we started making cable modems and that started going through the roof.

Schley: Was there a general belief in that there would be this convergence of the two platforms…of Internet and…?

Breen: Internet—at the time you could see the evolution. The set-top box came, then the cable modem for Internet and then you knew telephony was coming. That was the quick evolution over a few-year period.

Schley: And you stayed aboard, correct, with Motorola?

Breen: I did.

Schley: Why?

Breen: Well, so my commitment was, I'll stay at least a year because I loved General Instrument and they were all my friends. And we did so much together and I wanted it to go well. That was really my motivation. I didn’t necessarily want to sell the company, but for $18 billion, you do the right thing for your shareholders.

Schley: It wasn’t for sale necessarily.

Breen: Right. No. So that was my commitment. Motorola started having issues during my first year there, and they asked me if I would then be president of the company and help out. And get things righted.

Schley: You know your company was so intertwined with the cable industry’s fate and fortune and we started to see competition from other telecommunications providers. Telcos, we had the satellite guys in the sky. Did you ever feel like you were at risk with your position, being so wedded to that industry?

Breen: No we didn’t, but it was an awkward feeling because when the telephone guys said they were going to get into the business, we were there and we were winning huge contracts with them.

Schley: With the telcos?

Breen: Oh, yes.

Schley: For a different version of a converter box.

Breen: Basically the same. And you felt very conflicted, because all your friends were the cable guys, and here they are coming to compete, but in the world that’s evolving like that, you had to sell to everybody. So it was a little bit nerve-racking because we didn’t know the phone guys well. On the other hand, they didn’t have much of an option. They had to talk to the incumbents because we had all the technology.

Schley: And the scale.

Breen: Then we got to know them.

Schley: Ted Turner once told me, he said, when satellite TV came in, “You know, Stewart,” he said, I can't do his drawl, of course, “we’re a television programmer, we’ll sell to anybody.” You have to adjust to the market.

Breen: And so did the cable operators where all the programming gets sold.

Schley: Did you have relationships between your company, a technology company, and the programming community—I am just curious—in the cable industry?

Breen: We had a close relationship with the programmers because we sold all the DigiCipher technology, that carried all their signals securely. So HBO was a large customer of ours—they all are. Turner.

Schley: You're enabling them. And then your exit from Motorola came when, and what were the circumstances?

Breen: So I was there for two years and quite frankly, at that point, thought I would stay for a really long time when I was president. But it was interesting, the Tyco opportunity came along—

Schley: You're charitable to call it an opportunity.

Breen: Yes, and I just got really intrigued by it. It was a huge company. They had 250,000 employees. It looked like it was in real big trouble, potentially go bankrupt. And I liked a lot of the businesses they were in. I studied it a lot. So I thought, you know what? This is really, could be something real interesting.

Schley: What is instructive about that experience? I know that you really changed out the entire senior management or a good portion thereof. You changed a lot of the board pretty quickly. Hard decisions, I'm presuming.

Breen: Look, there were six or seven agencies investigating us, including the DOJ. And we were threatened that we were going to be indicted as a company my first week there. So I just made—sometimes you just have to sit back and say, “What do I need to really do here?” And I said, “I've got to get rid of the whole board and I've got to get rid of the whole senior management team.” Because every meeting I would go to with the SEC, the DOJ, the New York Attorney General, they were all like, “It’s a dirty company. There’s too many people that were in on the in.” So I made the decision my first month after they hired me, I went to the board and I said, “You all need to step down if we are going to save this company.” That turned into a three-month battle with lawyers involved, and eventually they all stepped down. And now the management team, I got rid of about 290 out of literally 300 during my first eight months there.

Schley: You are a very personable human being and you seem like a nice guy, but you had to be tough, right…?

Breen: You had no choice. I mean sometimes you have to do what you have to do it. It was interesting; when we made the announcement with the board, and when we made that announcement, I also announced a couple new board members that were very prestigious, well-known executives. And, all of a sudden, everyone started backing off. Just like, OK, it really is a different company. Ed’s running it, the board’s going to be different. He's brought in people from GE, Honeywell, and this is truly a different company. And it really helped me get over the issues.

Schley: You know, I've always been intrigued. I can ask you this because you're an expert, you can tell me, having worked in the cable business and then gone to two industries with very different competitive dynamics, Tyco and DowDuPont. Really intensive competition among multiple providers. Did it feel different structurally moving from the cable industry to kind of a free-for-all sort of marketing environment?

Breen: You know, the difference was when I at General Instrument, I was the head salesperson even though I was the CEO. And I knew all the customers and they knew what they needed. I was very close to them. When you go to a company like Tyco or DowDuPont, there's thousands of customers everywhere. You touch so many industries that you don’t have the intimacy with the customer base. That was the big difference. But I'm always asked, how can you run so many different kinds of companies? You know, a chemical company, a multi-conglomerate, a technology company. Your management style’s the same no matter where you go. You have a management systems-style the way you do things. I really think most people could run multiple kinds of companies.

Schley: What was terribly tremendously fun about cable? You're in your run. I mean, beyond the financial rewards, being a CEO, and the prestige. What was fun about it?

Breen: It was a family. It was just a family atmosphere. You never would think your customers are your friends, your best friends, but after we would do a deal or meet, we always went out to dinner together and carried on and had a great time. That’s very special.

Schley: Is legacy important to you? I mean, we’re about to open up the Ed Breen Technical Archives.

Breen: When I was asked about the archives, what I really liked about it was the technology people in the industry had a lot to do with what happened. And you know I'm very proud of what all the cable operators did. I mean, they were the ones who put their money on the line and risked their net worths. They were great entrepreneurs. But really there were so many great technology people that really enabled it to happen, and that makes me proud to look back at that. I just feel great that I was part of it. It’s fun building an industry and look where it is today.

Schley: Did you ever have a moment or two of reflection where you thought, I've kind of done what I need to do as a businessperson, and go hit the golf course? You have not chosen easy successive projects.

Breen: So I had that feeling right after Tyco. I did ten full years running it. It was great. We made six companies out of it. They all did well, and I thought, OK. Let’s go hit the golf course, as you say, and about a year into it, I'm like, this isn’t that fun.

Schley: Interesting.

Breen: Here I am back again.

Schley: No kidding. What, when you look at the future of the cable industry, and you know people and you're friends with a lot of people in it, do you have any counsel or advice or thoughts about where it should be headed—it's a very changed environment, both for video and for telecom services. But you know, if you were back at the helm of a company of the stature of GI in the day, what would you be looking at investing in, or pursuit?

Breen: Look, I think the cable industry is in as good a spot now as it's ever been. But the landscape’s changing quickly. The one thing I love about the cable industry is people know how to move and change course. And it's always been what's great about it. I'm so lucky now because I've been on the Comcast board for many, many years now, so I'm very involved still in the industry from a very big player. Just to watch what's going on. Just in the last three years, the cable operators have deployed Wi-Fi hotspots all over the country. Now we’re into the mobile phone business. Who would have ever thought? And you tie mobile together with Wi-Fi hotspots and you’ve got a competitive advantage, done right. And who would have thought that five, seven years ago?

Schley: Someone once—Paul Kagan, you remember, he called the cable industry a “great parlay industry” because of what you just described. Does that analogy make sense to you? You can sort of fit one business on top of the other.

Breen: You can.

Schley: Play the game that way?

Breen: I think we’re still at the cusp of great things.

Schley: What haven’t we addressed that you’d care to impart or talk about as it relates to your time and influence in cable?

Breen: I don’t know. Can you think of anything? You covered it pretty good in that…

Schley: Here’s my thought; that you had this perch, this seat, at the helm of the biggest technology supplier, that you could see everything happening. And I think it's an unusual vantage point to, like you said, watch an industry grow up in front of you.

Breen: It was fascinating. But you know, it was so different. I hate to say this because I'm probably considered a professional manager now, but there was no professional management. It was entrepreneurs that wanted to build. And that’s what made it so fascinating. And every year you knew that they were literally putting their neck on the line. They were living shoestring to shoestring, raising money, and I learned so much from that because you can't go in any industry; I couldn’t have taken a job at IBM and ever learned or saw anything like that. It was an incredible thing to know.

Schley: I had the chance to have an interview with Julian Brodsky a month or so ago here. He said, “You know, we never met a cable system we didn’t want.” That’s what he said. And I can't remember who was the more risk-averse guy—was it Dan Aaron, I'm not sure.

Breen: I would say probably Dan; certainly not Ralph. Ralph would have liked every cable system he could have gotten. But probably not everyone figured that out either. John Malone figured it out: get everything you can get your hands on. There was only five or six at the time that figured it out and started to try to consolidate the industry.

Schley: And that was the game.

Breen: That was the game. And it was the right thing to do. And very fascinating that, led by TCI, after everyone kind of gobbled up everything, what was fascinating is they said, you know, this isn’t put together quite right, because we've got systems in California here. And then the industry started to do a rationalization, start swapping systems, which I thought was brilliant.

Schley: That patchwork quality was always—well, Malone has said, “It was the one albatross we couldn’t get around for a long time.” Because he's a scale guy, he wants scaling. He couldn’t get it with the quilt.

This has been great. Thank you for—congratulations—

Breen: You're easy. You're a good interviewer.

Schley: Congratulations on the archives. One of the top ten interviews from the oral history series. I'm privileged to have conducted it. For the Cable Center, I'm Stewart Schley.

END OF INTERVIEW

 

 

 

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Nomi Bergman

Nomi Bergman

Interview Date: December 3, 2015
Interview Location: New York City, NY USA
Interviewer: Seth Arenstein
Collection: Cable Center Oral and Video History Collection

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 December 3, 2015, and I'm joined by Bright House’s Nomi Bergman. Nomi, it's so much fun to be here with you today because we've known each other a long time. I reported about you many, many years ago, and you were so good to me. You're so good to the press. You have such a great reputation in this industry. There’s not a person who has said a bad word about you. And the thing is you are so respected in so many different ways: your technological prowess, your being a woman in technology. The volunteering and mentoring you have done. It's going to be very difficult to get all this in in one hour! But we will try. So welcome. It’s great to have you here.

Bergman: Thank you so much, Seth. Thanks for those kind words. It’s very kind of you, very nice.

Arenstein: It's true, though.

Bergman: Thank you.

Arenstein: I mean as a reporter, you certainly know the people in the industry, you find out who is helpful and who’s cooperative and who’s a go-to. And as far as I’m concerned, as a member of the trade press, it was always you in terms of so many of the things we just said.

Let’s talk a little bit about your childhood, because I know that was a fun part of your life, and where you grew up, your relationship with your dad and your brother. Where did it all start? Where were you born?

Bergman: I was born in Birmingham, Alabama. That helped during my years in Charlotte because I could count as a Southerner. They only care about where you were born. I was born in Birmingham, Alabama. My father worked for a TV and radio station at the time. Then we moved to St. Louis, and then to Syracuse. So I really grew up in Syracuse.

Arenstein: You grew up in Syracuse.

Bergman: I did. It's been a really special place to grow up. It's a town where you can really raise a family with a very nice quality of life. Of course I've now moved back to Syracuse so I've gotten a feeling of what it's like as a parent as well and it is a really wonderful community.

Arenstein: You went to high school in Syracuse?

Bergman: Yes.

Arenstein: Then to college; where did you go?

Bergman: I did. And actually one funny thing about the high school—I went to Jamesville-Dewitt High School and there are so many, believe it or not, cable executives who went to Jamesville-Dewitt High School. Obviously my brother and myself. Also, John Keib of Time Warner Cable. Mike Munley, also of Time Warner Cable, Brian Goldberg and David Zagin of A&E. I think there are some others, too. When I told the superintendent the school was a breeding ground for cable professionals, she was not impressed.

I went to college at University of Rochester. I loved it there. I always say it was probably the second best decision of my life, with the best being my husband, selecting my husband. I really loved my time at Rochester. It's a really wonderful, warm, supportive environment and it gave me a great opportunity to learn and take risks and I'm always forever grateful to University of Rochester.

Arenstein: What did you study at Rochester?

Bergman: I thought I was going to be a math major. I loved math in high school. I was on the math team. That was the only team I was ever on. Actually that’s worth a side story which is that I was always teased by my brother for only being on the math team. He would ask me if the number on the back of my shirt was the square root of 3. That was painful. So I loved math and I thought I would be a math major but I ended up studying statistics and economics.

Arenstein: So your first job out of college was where?

Bergman: I worked at Arthur Andersen in their consulting division in Stamford, Connecticut. It was a lot of fun. It was a great place to work, great training ground, a wonderful people. There I learned much about a robust work ethic. I remember my very first day on the job, nobody left as it became the dinner hour and as it became eight, nine, ten at night—everyone was still there. So I stayed and I think…I got my work ethic from my family, but also from Arthur Andersen.

Arenstein: So what time did they end up leaving? Ten or eleven o’clock at night?

Bergman: It was around ten or eleven at night.

Arenstein: Did this happen every night or just the first day?

Bergman: It did. It did. They were very dedicated. That was a project where we were writing a payroll system for IBM. Then probably the largest project I worked on at Arthur Andersen was a project to help UPS to be able to ship internationally. So we designed and wrote the systems to do that. It was very exciting. It was exciting to work side by side with the people of UPS who are really proud employees and owners of their company.

Arenstein: Now a good friend of yours, Peter Stern, once said about you was that you were “swaddled” in HFC [hybrid fiber coaxial] cable, I think. But I'm not sure that’s true. I think it's apocryphal. But how did you get into the cable industry? How did you first get in?
Bergman: You know, I did grow up hearing about cable always so I really—Peter’s comment is very endearing. But I was very determined to have to work outside my family’s business, so I did work at Arthur Andersen. A cousin of mine, Mark Newhouse, who was general manager of the New York Star-Ledger at the time, was overseeing a small group of consultants called the “Systems Group,” within the Newhouse companies. And what that group did is it provided a mechanism to share learning experiences about the newer investments and systems. So every time I would see Mark, he would tease me and ask me why I wasn’t working at the Systems Group. He asked me to come and spend a day with him at the Systems Group to learn more about it. I was very intrigued and I loved my cousin and loved spending time with him. As time wore on, at one point he faced a shortage. He lost two key employees. So he turned up the pressure on me to come and work at the Systems Group. I did make that change. I went to the Systems Group and then my father began to give the Systems Group more cable work. So I was at the Systems Group doing work for the newspapers and magazines and as time went on, more and more the cable companies.

My work with the cable companies grew over time with the Systems Group. It grew to a point where I realized I had a decision to make—whether I wanted to work fulltime on a very large project that was emerging for the cable companies; it was a billing conversion. It was really whether I wanted to dedicate myself to this billing conversion or stay at the Systems Group. I ended up dedicating myself to a billing conversion for a couple of years.

Arenstein: The thing about your career as I look at it—and I know we've talked about it, too—is that you're like a lifelong learner. You just love to learn about things in different settings. What were some of the first things you learned about the cable system growing up in your household? Your father said something very interesting that I read. He said, “People don’t want to watch 500 channels. They just want to watch one channel.” Now he said this—at least in our notes—a good six or seven years ago. Is that still the case?

Bergman: He did say that. He might even have said it well before then. I think he might have said that ten or fifteen years ago. He said that a long time ago and he, as we all now see, he was so right; that people don’t really care about the volume of channels. They really care about—I think he said, “People want to watch what they want to watch when they want to watch it.” And really that’s how our technologies have now evolved is to fulfill that dream. I think he was very right.

Arenstein: And he said this before the digital era; you're right. He said this in the analog era.

Bergman: Yes.

Arenstein: So what was it like growing up in that household where, as Peter Stern said, you were swaddled in HFC cable.

Bergman: Right, right. I could tell so many stories about that but maybe one I would share about my father. One story that I learned about him that I've always maintained throughout my business career was that he’s very good about when he hears a good idea, if he hears you say a good idea, he will remember that and he’ll keep asking you about it until you’ve taken care of it. So as a kid, you can imagine if I said, “Maybe I’ll try such and such.” He would ask me about it all the time until I did it. He’s like that in business, too. If somebody has a good idea, he's like a steel trap door. He's going to make sure that that idea happens. So he really is all about execution and making things happen and not forgetting a good idea. So I do feel like I've learned that from him and I admire that in my father. Now I can watch him do it and smile. But sometimes as a kid it was…

Arenstein: Not as much fun. I can understand it. Let me ask you this; I have to ask this. Now that you are running Bright House, is there any time when you're sitting there and you're looking at your desk or you're looking at a problem and you go, “Gee, I wonder what my father would say about this.” And you’d get on the phone and call…do you do that? Do you call Dad to find out, to get his advice?

Bergman: Right. You know, my father really has removed himself from the day to day operation of Bright House. And so we don’t call him about day to day advice from Bright House. But I would say with that, it's more that I think, what would my father do? I can hear his voice so clearly in my mind. I think I often think about what would he do and then I try to stay true to that. So that’s probably more impactful than if we call him all the time. But we do talk all the time and we probably often talk more about our kids and our life. He's very interested in making sure that our kids have a good start in life.

Arenstein: So he’s a good grandfather.

Bergman: He loves being a grandfather. He does.

Arenstein: I'm sure he does. Tell us about your family. You're married and you have children. What are their ages? What are their names? What do they do? What do they like to do?

Bergman: That’s very nice, Seth. So I have a husband, Neal Bergman, and I would say about Neil, he’s been my—other than of course my family and extended family—he's been my greatest cheerleader. He's always a supporter and I think that that’s really allowed me to have quite a robust career. He’s always wanting me to do more and push myself further and he's always proud of me. He’s just really a true, true cheerleader for me and really believes in me. I would say that’s been such a key part of my success has been his steadfast support. I am so grateful to him.

We have three daughters. The oldest is Rebecca, who’s 23 and Dori, who just turned 20, and Allie, who's 15. So we have one at home right now—Allie, who's a sophomore in high school. They're all so wonderful, and incredibly different from one another. Certainly it's the best part of my life, raising three wonderful daughters.

Arenstein: OK, let's transition from thinking about them and thinking of the kind of world they are looking at today and the opportunities there are for women in technology, in fields that twenty or thirty years ago were not for women, as they would have said, probably. You were a trailblazer there. You were one of the first. What was it like? What kind of hurdles did you have to overcome as a woman to be accepted in the technology field?

Bergman: That’s a very interesting question. Maybe I would start with a story. There was a time when I had gone back to work at the cable company and my father asked me to assemble the two technology leaders of at each of our three cable companies at the time: NewChannels, Vision and Metrovision. This is when we were all making decisions about investments in HFC. When we install fiber, how deep should we install the fiber and what size nodes should we build? He asked me to assemble the technology leaders at the three companies to make that decision. It was very clear to me that I was working with some unbelievable talent and I'm sure they were looking at me and wondering, “Why are you pulling together this meeting?” And I think that’s in part because I was a woman; also in part because I was young and less experienced than they were. That was also rare for me. I would say I was rarely put in a situation like that. Usually I was working on the ground floor, but this was a special project and a significant investment for our company. I learned something at that meeting that I've taken with me forever, which was that the expectations of me were so low in a meeting like that, right? You had these talented engineers who didn’t think I understood anything—not that I did. But they had very low expectations for my contributions to this effort. And I think just by being a good listener, by being an avid learner, I could add value to the discussion. I think instead of kind of going in with a chip on my shoulder—like why do they have such low expectations of me and I'm going to prove differently than them—by going in more with an open mind and an open heart to learn from them and to work hard, I think I was able to add value and I think that then their feelings for me changed. So I think that’s advice I've learned is that when you're a female walking into a situation like that, when the expectations of you might be low, I think if you realize then—if we instead think about that, if the expectations are so low, it's so easy to jump over the hurdle and to impress people and to do a good job. I think you change your heart; you change the self-talk in your own head and you do a better job with it.

Arenstein: Obviously you learned a lot of these lessons and you loved to learn, you love to teach—I know you're teaching at the college level now and we’ll talk about that later. Compare your getting into the industry, your being in the technology field to today, 2015. I don’t know what your daughters are doing in terms of profession but if they wanted to be in a technological field, what is it like compared to the days when you were starting?

Bergman: That’s very interesting. Well, I think now, especially at the technology companies, there's a real drive and hunger to improve the numbers. So I think that the chances of entering—if you have interest in technology—are wonderful. And I think that’s great. I think getting in is fine. The hard part is will you stay and how will you feel about it each and every day. If you're working in a largely all-male environment, do you have the kinds of role models and mentors and colleagues around you who will help you learn how to manage your life, and how to manage working in this environment. So I think that we still have a ways to go with that in finding both men and women who will support women as they figure this out. If you do want to have a family, how can you manage a family. How can you manage taking good care of yourself and eating well? Or how do you manage participating in meetings. I think sometimes for a woman to participate and share a suggestion is different than a man so how do you figure all of that out and so I'm hopeful that the more that the numbers change, the more that people will find others who will be supportive of them.

Arenstein: But you say you're hopeful. I know it's not just hope because you have been—that’s how we first met. You were working, you were on the ground floor of things like Tech It Out and WICT [Women in Cable Telecommunications] and worrying with Yvette [Kanouff]. That’s how we first met. You and Yvette were almost it when we would think about women in technology, you were it.
Talk about those days and some of the things you did and some of the things you're still doing today and how far do we have to go?

Bergman: Right. Well, thank you. It's true; Yvette is one of my dearest friends and somebody I admire so, so much. She's got a deep desire and fire in her belly to make a difference here, to help change this. I agree with her. I don’t know if I can match her fire and her—but I share her commitment. And we've pulled together female leaders throughout the industry to try to create support for women who want it, who want to get started or who want to grow or who want to evolve their careers. I think it's wonderful and I think it's just what we need. We need more of it. We need more people like Yvette out there who are just absolutely convincing and willing to talk with anyone about it.
Arenstein: She's one of the—again, for a press person, she's fabulous. Any panel that she's on you can see the sparks flying out of her brain, she's so smart.

Bergman: She is wonderful. She also has some great stories about what it is like to be a female technology vetter. They are very motivating for people to hear and she's willing to share them.

Arenstein: All right, so now that we’re talking about some of your interests I don’t think there’s a board you haven’t served on. WICT and the Cable Center and NAMIC [National Association for Multi-ethnicity in Communications]. And I know this is not just a sideline for you; you're very dedicated to these things. This is very important to you. Tell us about some of the work you’ve been doing on these boards and why you do it.

Bergman: As you well know, our industry is so special in that we have been able to really work together to grow the industry together. In the earlier days it was really only the cable industry that believed in itself to help it grow this way. So many of these wonderful industry organizations were started to try to help us to continue to differentiate ourselves by advancing women or by advancing minorities and I think it's terrific. So it gives me great joy and pleasure and also I learn so much from being involved with all those organizations to help them advance their causes. It's one of the things that really differentiates our industry.

Arenstein: I agree. And you know, I just found out doing the research that you were in the first Betsy Magness [Leadership Institute] class and Jana Henthorn, who’s going to be the Cable Center’s first female president—after thirty years, it's about time—was in that class with you. I didn’t realize that. Tell us about the first Betsy Magness class—where was it held and what sorts of things did you do?

Bergman: It was a great experience and we were in the first class together. It was very clear to me being in that class with Jana that she was such a natural leader. She has such a genuine but gentle approach about her and she's so bright. Our class would look to her as we were figuring things out that we would work on together as a class.
The Betsy Magness program is terrific. There are many things about, from what I can tell, about the program today that’s the same as the program then such as the program was very affiliated with the Center for Creative Leadership in Greensboro. So we started our program there and then we met at other places within the US as the year went on.
Arenstein: Right.

Bergman: The class is terrific. You learn so much about yourself. It gave me great and better awareness about myself. So then I think by having better awareness, you can control those levers more and have a better impact. Then I think the best part is that you’ve met other people in the class that you could look to for advice over the years. Advice and support. So certainly Jana was a key one for me.

Arenstein: Because I read in the research one of the things that you said was when you walked into that Betsy Magness class at the beginning, you had never been in a room with all women business leaders and it was your first time. You remarked about that.

Bergman: Yes. That is exactly true. That is very special. Just to even learn that there are other women who are trying to wrestle with the same things you are; it was so exciting to be able to talk to them about that. It was fantastic.

Arenstein: So let's get back to your story. We’ll go back to the timeline. You were at Bright House at this point. Talk about digital phone service. I know that’s one of the things you wanted to mention.
Bergman: Digital phone: so launching digital phone from Bright House was very exciting because I think, of all the launches, of all the things we launched, by launching phone and by launching it successfully, we really proved to ourselves and to all of our employees that we could have a rock solid network and to be able to deliver a service that people depend on so critically like phone. So that was an especially exciting launch. I think now we all think of it as simple and an application on our network, but I think it was a real turning point for cable companies. Because I think as we completed that and as we evolved through it, we then had great belief in our network. We weren’t just about providing entertainment services but we were also about something as carrier-class and as critical as phone.

Arenstein: Very serious.

Bergman: It was great, it was great for our employees.

Arenstein: I mean today for better or worse, we see that phone service and phone records and intelligence, it's very serious stuff.
Bergman: Yes, exactly.

Arenstein: And cable’s involved in it. Talk about the Women’s Leadership Council at Bright House. I know a number of companies have women’s leadership councils. What was your role there and what does it do? What does the Women’s Leadership Council do at Bright House?

Bergman: That’s a nice question. When we first started Bright House, so when we emerged out of Time Warner, one of the things that we did was I got together with all the other women in our company who had previously done the Betsy Magness program. We talked about what could we do that could have broader impact than just sending one of our teammates to Betsy Magness each year. So we came up with this idea together to kind of have almost like a mini-Betsy Magness for our midlevel employees and emerging leaders within the company. So we started that. It's a yearlong program, the employees are also assigned a mentor during the program and I spend a day with the women in the program each year and it's so much fun. It's a great program and we've noticed that quite a large percentage of the women who’ve done the program have been later promoted within our company. So I think that gave us confidence that we’re doing something right there.

Arenstein: Talk about mentoring, both being a mentor and being mentored. Who were some of your mentors and talk about mentoring, that you mentor people now. Talk about your mentors first. We’ve talked about your dad. We’ll talk about your brother, too, a little bit.

Bergman: I’ve had so many mentors in the industry, people certainly like my father or brother. I guess when I think about mentors, I think first about all the people I've worked beside. I think that I've learned the most from them—people who are willing to give me feedback, with whom I can have good honest discussion and debate and make decisions with and learn from together. So I do feel like over the years many of the colleagues right beside me, whether it's in my company or at companies like Time Warner Cable have been wonderful mentors to me. An example of that is you mentioned Peter Stern before. Peter Stern gave me quite a gift, I remember, maybe a year or two ago, where he gave me some feedback from watching me in meetings and discussions over many years. He gave me a set of feedback that I really cherish. And I think that took a lot of courage. I'll be always grateful to him for that.

Arenstein: And I know you felt very strongly about Glenn Britt as well at Time Warner Cable. What was it like interacting with Glenn?

Bergman: Glenn was a wonderful man. He was one of our industry’s very best CEOs. He had a wonderful aptitude for understanding technology and finance and just an incredible breadth. One of my favorite stories about Glenn that—I think about this quite often in these days as well—was a reflection he made in a meeting as our deal with Sprint—that Pivot deal, which was quite—I don’t even know what to say about it, but it was quite a journey. He made a wonderful reflection about it. He said the reason that that deal did not work, that our work with Pivot did not work, is because we were not married enough. We would have to get more married in order for that to work. I think he was just spot on with that. And I look today that whenever there are partnerships or business relationships or even personal relationships, if you're all in, if you're fully committed, something magical happens. Whereas if you're holding back and not giving—which is what happened in that Sprint deal—we were all nervous about the deal, so we were all holding back. We weren’t making the new partnership brilliant. We were all holding something back in case it didn’t work. So that’s just what happened.

I think he was so right. And actually our TWEAN partnership is a great example of being more married. We are all completely committed to that partnership and we've made great things happen and it's because people are willing to take the risk and be all in.

Arenstein: What about running Bright House? This is sort of, what year was this? This was 2007. President, Bright House Networks. Did you ever think that was going to happen?

Bergman: Right, right. I probably didn’t. I probably wasn’t thinking about that. I really largely probably just go to work every day, try to do a good job, take care of our customers, take care of our employees, and I don’t probably always have my eye on the next step. I probably am thinking more about doing a really great job with what's in front of me at that time.

Arenstein: Should we talk a little bit about Steve Miron and stories around the breakfast table and spewing grape juice…?

Bergman: Yes, I was telling you about that. So working with a sibling. Working with a sibling is very different, right?

Arenstein: Sure.

Bergman: I think of all relationships, the sibling relationship is the most unique because whether it's your parents who you want to try to impress or show gratitude to, or whether it's your spouse who’s similarly—you know, there’s always something there that you want to be on, on good behavior. But a sibling relationship—you're stuck together for life. There’s no changing it, no matter what you do, you are going to be siblings. So I think it makes for the setting of a very unique relationship. One of the things that happens is you don’t sugarcoat anything. We’re all willing to tell our siblings anything and say it just like it is. We would never be careful with our words with a sibling, right? I think that’s just the nature of the relationship.

But I know I was telling you a story about juice which is that my brother as a kid was always—and he still is—just so, so funny. I was always laughing at things he would do. And he knew it. He knew he could get me to belly-laugh pretty easily. So he would wait for just the perfect moment when we were at dinner or something like that when my mouth was full of juice and he would make me laugh and it would go everywhere. So I think that tells you a lot about our relationship that he’s kind of watching for just the right moment to get my goat.

Arenstein: As you discuss sibling relationships, I think you have a great relationship with your brother. I mean, there are, let's face it, there are a lot of siblings who don’t talk to each other, who are very guarded with their words. You are lucky; you have a relationship where that’s not the case.

Bergman: Right. I realize I am lucky. I think Bright House has been lucky, too, because if you can do it, if you can have a good relationship like that between siblings, it's incredibly healthy for the company because to have two leaders who are willing to say anything to each other, to have healthy debate but yet to respect each other, it sets the ground for a very healthy company. The healthiest of companies out there today have safe environments where people can debate and work through conflict. There’s nothing like a sibling relationship to be part of that foundation if you can do it. I agree it can be tricky.
There are times where we disagree and generally we’ll agree to disagree and we’ll make our decision about which way we are going to go. And then often we then make a bet to look back later and see who was right or who was wrong. I lost a pretty expensive bet to my brother a few years ago and we were betting kind of about the impact on digital to the industry; how will the impact of things like web usage and whatnot affect the industry’s bottom line. So we made a bet and I lost. We even doubled it down at one point. I lost. So he wanted me to pay up the bet so I brought in cash. I brought my payment in in cash and he did not want cash. He wanted a check he could frame so that everybody could see that I lost the bet.

Arenstein: You losing a bet on digital, that’s news. That’s kind of news here because I would have thought you would have been…

Bergman: I would have won.

Arenstein: You would have won that one.

Bergman: It was more just that I thought things would happen faster than they did. Probably if I had a couple more years on my bet then I would have been right.

Arenstein: I like to ask people who were very, very involved in technology early on. Was there a moment where you saw something or some product or some technology that you went, “Wow! That’s amazing.”

Bergman: Certainly the Internet. Certainly that. I can remember the earliest days of when I realized that we could provide more than just entertainment. That was so exciting to me. That was a very exciting time. I was actually a Time Warner Cable employee at the time and I so wanted to be in the middle of it. I was at Time Warner Cable in Charlotte and I saw this happening and as Time Warner Cable started to hire Road Runner general managers, actually I said to my husband that I wanted to apply for one of those roles. It would have caused us to move and he said, “Won't that eventually come to Charlotte? Can't we wait for it here?” So we did do that. And I think that was one of the most exciting times. But I think as a technologist, going back to the digital bet, or even something like Road Runner and the Internet, I think as a technologist, the more time you think about technology, the more you think it's already here. I do spend a lot of time reading about technology, I love it. As you read about it, you think of it as already here and so that’s why I would probably be somebody who would have a tendency to think it's going to have a sooner impact than it actually does. And certainly timing is just as important as the right technology. We've all seen so many failed businesses that might be the right technical idea but not the right timing.

Arenstein: So when you look out at the horizon today at the very end of 2015 as we are now, what technology excites you?

Bergman: So, so many do, so many technologies do. For our industry or just in general?

Arenstein: Generally and for the industry.

Bergman: Generally for the industry. I think all the things that—this is probably really nerdy, but all the things that are happening right now with programmable networks and software-defined networking and network function virtualization, all of those I think are so, so exciting. And what’s happening with 5G. Because I think it really will redefine the products and services we have and most of all it will bring robust capabilities to everyone. As we look at our country now, I just heard a comment about Hillary Clinton in the news this morning wanting to make sure Internet access was available to everyone and certainly President Obama has said the same thing. The more that many of these new technologies happen, the more that that will fuel dreams like that, of helping to bring those products and services at a very robust level to everyone. Those are exciting and I think there are wonderful advances in wireless and in satellite technology that also all look terrific.

Arenstein: I know one of the things you're doing now and I think there's a funny story involved in this, too, is college teaching. What do you teach, where do you do it? And tell us the funny story.

Bergman: I’ve had the honor of giving guest lectures at Syracuse University and at the University of Rochester largely on topics to do with information policy or business regulation, the intersection between business regulation and technology. I would say all the courses have to do with kind of that general genre and this year, over this summer, one of the professors at Syracuse, with whom I've been associated with, got saddled with a much larger class load. So he called me up to see if I could help with some more of the classes. So I've joined him as an adjunct professor teaching half of one of his courses. It's been a lot of fun, it's great fun to see the students and learn their questions and thoughts. It takes me out of kind of my everyday business and the way maybe I'm already too programmed to think about something and it forces me to think about it differently. So it's very helpful.

Arenstein: Are your students aware of what you do during the day?

Bergman: I think so but I'm not positive…

Arenstein: They're very lucky to have the head of a cable company. I mean, one of the things that you disclosed when we were on the phone was that you love to learn, you love to take on new things but one of the things you do is you take on too much. If I were a professor, I would never ask the head of a cable company to come in and in her spare time, lecture. There’s not much spare time in your day. Where do you find the time to do all this?

Bergman: That’s very nice. The class is at night and I am only able to make it to half of the classes so that’s how I fit it in. But I would say just generally for me it's not always about time but it's about having the energy and I'm a big believer in that if you take good care of yourself, you can increase your energy level. It's a muscle just like a muscle of going out for a run. If you're constantly stressing that muscle of how much energy you have or use, then giving it a chance to replenish, then you have more the next day. So I try to take good care of myself and I think that gives me more capacity than I had years ago. It helps me to increase my capacity.
It's fun. I think it's important to have fun. It's important to do something fun like that.

Arenstein: And it must be fun when you lecture at your alma mater.

Bergman: Yes. That was really special. That was.

Arenstein: Let’s see, are there other things we want to talk about? I mean there's so much here.

Bergman: There’s one other point about teaching. I think that probably the funniest thing that I've ever taught is I was a ski instructor. A little bit in high school and then during the years I was at Arthur Andersen, and in my earlier years at the Systems Group, until I got married. When we got married, my husband said, “That’s it.”

Arenstein: Really.

Bergman: I used to go to Stratton Mountain in Vermont. I had a commitment to them that I had to be there every other weekend and one of the holiday weeks to teach skiing. I love to ski so it was great fun because I got to ski but it actually was a very humbling experience because when somebody hires you, especially for a private lesson, I think it's a very humbling experience to know that in their minds they paid a lot for the lesson, they want to get their money’s worth, and there you are and can you fulfill what they're hoping for. It was very humbling experience. It was fun, I learned a lot, I definitely improved my skiing. Anything you teach, you break down and learn so much more yourself.

Arenstein: I teach trumpet and I feel the same way.

Bergman: It makes you a better trumpet player. Yeah, exactly. It's amazing.

Arenstein: Nomi, you were telling me something about “likes before concerns.” What’s that all about?

Bergman: So “likes before concerns” is—I had the pleasure of working on a project with the good folks at Alliant Consulting, Toni Malanaphy-Sorg and Rick Murdock. They taught me many wonderful what they say are ground rules to successful meetings and successful leadership, and I love them all, but the one that I say to myself every single day to this point is this, a lesson they taught me about likes before concerns. It sounds obvious at first but when you really stop and think about it and use it often, you see that it's not at all natural. What their suggestion is that if you always share your likes before your concerns, the other person then sees you as on their side. And so they more readily embrace whatever it is that you're suggesting. What that looks like is: say my—what that looks like on the personal side, but it works really, really well in business, too, it's very effective in business. On the personal side if my daughter comes up to me and says, “Hey, would you look at my school paper?” If I immediately make just a bunch of red marks and give it back to her, she is going to be very defensive, right? And will she ask me again? Maybe not. From the other side, if I read her paper and get excited about what she wrote and the points she was trying to make and then I say, “Hey, could I share a few suggestions with you?” Then she sees me as on her side and she embraces my suggestions. And she’ll come back. And the same thing happens in business. It's incredible how rarely you see it. When you're in a meeting and somebody shares an idea, another person immediately jumps in with what won't work about it or how we could do it differently. If instead that person shared what they liked about it first and then shared the suggestions, just like this school paper story, people would feel differently about each other. So anyhow, if I have a good reputation in the industry, it's probably because of “likes before concerns.”

Arenstein: OK. There were a couple of other things I wanted to ask you. You were tutored in expressing your ideas very succinctly. How did you learn how to do that?

Bergman: I think this happened very unknowingly by my brother. I think it's one of the kind of benefits that I’ve derived from working with my brother is if I'm trying to share a technical concept with him—which happens pretty often, maybe we’re talking about a capital investment we want to make. I know I need to explain it very succinctly to him. He likes information very succinctly, very top down, as so many people do. I think through my own trial and error of many, many years of not explaining things well, I've now learned how to express especially very technical concepts very simply, very succinctly. So unknowingly that’s a big gift my brother gave me.

Arenstein: I know that you’ve learned so much and you’ve admired so many of the people in Washington where I'm based. People like Kyle McSlarrow and Decker Anstrom at NCTA and Bill Check over there. Barbara York who runs the conventions every year and does such a great job. And Michael Powell, of course, who's there now. Then Bonita Fitzgerald Mosley and Maria Brennan at WICT. You are a big fan of all them.

Bergman: Yes, oh, I am. All of those leaders that you mentioned. And so many more have done so much for our industry and I'm forever grateful to them both for what they’ve done for our industry and also for what they’ve done for me as well. I've learned a great deal from all of them. Those are all phenomenal leaders. We’re a very fortunate industry to have a great organization, in NCTA, WICT and certainly others, too, like SCTE [Society of Cable Telecommunications Engineers].

Arenstein: Nomi, there's something you said back in 2004 that I want you to talk about today here in 2015, eleven years later. You said this in Multichannel News: “With all of these potential new services, our most significant challenge is maintaining our competitive edge, being true to our industry’s longstanding entrepreneurial spirit, staying nimble and reacting more quickly to market changes and viewers’ needs than our competitors.” So we always talk about the latest and greatest and everything changing. You said that in 2004. I think you could have said that right now and it would have been as true then as it is today.

Bergman: Right, right. I still do believe that statement. I think we have to be very careful as an industry that we never get too comfortable with ourselves—that we’re always kind of thinking about how we can do better. Even if it does mean cannibalizing part of what we’re accustomed to doing. One of my very favorite books I've ever read was The Innovator’s Dilemma by Clayton Christensen. To me, the quote you read plays into that. Clayton Christensen talks about how, especially in a time like we have now, that you can have so much innovation and disruption nipping at the heels. That if you're not careful, if as a large company you're just iterating and making small improvements, you're going to miss these significant changes happening along your heels. So I think it's really important that we don’t get too comfortable and that we’re always thinking about really what it is our customers most want. And we have to be willing to—as we were when we were first founded kind of by a bunch of cowboys—to reinvent ourselves. Even if it means harming our current model. I think we have to be willing to do that.

Arenstein: The next thing I want to talk about is the trophy shelf in your house. It must be huge. Pardon me, but I have to read all these things here. In 2004, the Women in Technology Award, SCTE. Multichannel News, “Wonder Woman,” in 2005. CED’s Person of the Year in 2008. 2009, NCTA Distinguished Vanguard Award for Leadership. 2011--what happened in 2010, you didn’t do anything?--WICT, Woman of the Year. Gosh, we’re not the only ones who admire you, Nomi. This is quite a resume.
I know you're kind of a shy person. You don’t like to be in the spotlight so it's very nice that you did this for us today, but these groups mean a lot to you, I know that. These awards probably mean a lot to you. How do you deal with this kind of adulation, being kind of a modest person?

Bergman: That’s very sweet. I'm certainly honored to have won those awards, but to me life is really all about when you're brushing your teeth at the end of the night, and you're looking at yourself in the mirror, like how do you feel about yourself at that moment? Do you feel content with yourself? Did you treat others well? How do you feel about how you handled the day? So I judge myself much more on that than on any award or new role or something like that. To me, feeling good about myself and how I treated others that day is the most important thing to me and certainly I can't say every single night I feel good about it, but I try to learn from my mistakes and move on swiftly, not beat myself up about them. I try to learn from it. If I needed to apologize to somebody, I do that and then move on. But I think life is so much about how we treat each other. The things I'm the proudest of are when somebody comes up to you and says, “Thank you for doing that for me.” Or “You were helpful to me.” Or “I learned something.” Or you supported me.” Those are the things that you feel the most proud of, right? Times like that.

Arenstein: Well, we can have a time like that right here because I still remember as a young reporter coming up and talking with you one time and you were so down to earth, so nice, so easy to talk to. And this was a long time ago. We were both a lot younger, but now I look older and you look the same. How did that happen? Anyway, we won't talk about that.
Let’s get on to a little bit more serious thing. Cable’s legacy. What’s cable’s legacy and when people come to the Cable Center, what are they going to learn about the cable industry that they might not have known before?

Bergman: That’s very interesting. When I think about the cable industry, I do think back to that entrepreneurial spirit. To be willing to completely change the model for how television is delivered and received and then to build what the cable industry built and then to take advantage then of that superhighway and deliver even more with it and to foster to the kind of innovation that was fostered. I think it's probably one of the greatest American success stories. It's so exciting to think about how American, and really international, life has changed as a result of the ideas of people in the cable industry. So I think it has a really, really wonderful history. I think it's being repeated today with what’s happened with the Internet. It's a very similar story and a really wonderful story. In front of it, the cable industry does still have challenges that with our success has come dissatisfaction on the part of customers with our rates or with choice. So I think that we need to work together to make sure we're listening to those customers and that we're evolving our products and services to make sure that they deliver just that. Because certainly customers are willing to pay for good service, good products. When we look today at what customers are paying for their iPhone or what they're buying on Amazon, you see that customers, if they're excited about the products and services, customers are willing to pay for them. I think the opportunities ahead of us are enormous. Our industry has made terrific investments in its infrastructure and its technology and in its people so I think we're very well-positioned to ride this next wave.

Arenstein: Tell me about your relationship with employees. I think your father had a very big influence on how you deal with employees. I think you felt that if you take care of your employees, they’ll take care of you. Is that how you manage today?

Bergman: Definitely. My brother and I both learned that from my father. He always had a steadfast commitment to taking care of employees and customers, but that if you took care of your employees, then they would take care of your customers and of the company. And he showed us that through his actions. I remember that my father would always have small group meetings with employees and he would always treat their input as sacred. That if employees in a meeting like that made a suggestion, or said, “Hey, I could really use a tool for such-and-such to make my job better,” my father treated that kind of input as sacred and he took that—that followup I mentioned to you before, you know, when there's an idea, it goes into his repertoire, which is steel-clad and you can be sure it will happen. My father treated employee feedback like that, with that same kind of commitment and so we've tried to do the same and I'm sure we could always do better but there's nothing more important in our company than taking care of our employees and giving them a great place to work. We hope that they're having as much fun working at Bright House as we are and so we try to create a fun environment that takes care of our customers.

Arenstein: And the community. I know the way that Bright House serves its community is important to you because you do it so well. I remember writing and I'm blanking on the name but it is a science and technology kind of competition that you all started maybe a summer or two ago that ends up on a television show and brings people, I believe, from the whole state of Florida, if I'm not mistaken, or several states. So let's talk about that. Let me get a better question there.

The one other thing I wanted to touch on with you is the community and how you serve the community and how you're part of the community. You're a local company; you're in the community. Talk to us about the importance of community at Bright House.

Bergman: Our communities are very, very important to us. Actually, right now we have—over the past couple of years we’ve had a branding campaign in Bright House called “Hello, Friend.” What that branding campaign was all about was that if we could see our customers as friends, and not by customers, wouldn’t that change everything? It follows this line that if you had a friend in our community and they had a question or problem with their cable service, you know that if you called me, I would take care of that. So that’s the premise of this concept which was, why can't we treat all of our customers that way? Why can't every customer feel like they're a friend and we would do anything for them? So we rolled out that campaign internally within our company first to give employees a chance to think about how they would want to embrace that. Then we rolled it out in the community. We did all kinds of neat things in each community to kind of show the community that we're committed to being a friend to the community. Our communities are very important to us. It really means everything. What we've built in the community is really about a local investment in the community so it's everything to us to keep a good relationship with the community. And how the community feels about us as a company and if we're a good citizen of the community, a good supporter of it; it means everything to us.

Arenstein: I would say, not surprisingly, a thrust of Bright House’s community relations is focused on children and youth and education. It doesn’t surprise me knowing you. Talk a little bit about the education thrust and the youth thrust that you have at Bright House.

Bergman: We did recently have a kind of neat STEM competition that was sort of a “Shark Tank”-like thing where we had a competition and one of the students who won, we've partnered him with somebody in the community who can help him bring the idea to fruition and we've stayed in touch with it and done what we can to help as well. So those are just great, great stories.

Arenstein: Well, Nomi, thank you so much. This has been a pleasure. I know we've only touched the tip of the iceberg but I think we've gotten some good things today and learned a lot more about you and it's been fun.

Bergman: Thank you, thank you so much. And thank you for all you’ve done for our industry. We're really grateful.

Arenstein: My pleasure.

END OF INTERVIEW

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Sean Bratches

Interview Date: December 3, 2014
Interview Location: New York City, NY USA
Interviewer: Seth Arenstein
Collection: The Cable Center Collection

sbratches

SETH ARENSTEIN: All right, this is Seth Arenstein. It is December 3, 2014. We're here for The Cable Center's Oral History Project. We're here with Sean Bratches, the EVP of Sales and Marketing at ESPN. And Sean, you know, I say that title and I don't think it really covers much of what you do. I mean, for the industry, at least, you're the face of ESPN and have been for a long time. How did it all start for you? You came to ESPN in the late '80s. What was ESPN like then? How many employees did it have?

SEAN BRATCHES: Now, we had about 300 employees. And we had this idea that had some momentum. And we've often referred to it as the little engine that could.

ARENSTEIN: Right.

BRATCHES: I think one of the things that has stayed true all these years is that from a cultural standpoint, we always felt that we were the challenger, that regardless of where we were in the marketplace. And I think, you know, part of our DNA is to continue that Bristol, hard-charging, innovative culture that permeates the company today. But in some respects, I think that, you know, in the late '80s I joined the corner store, and now I work for a Walmart. But as I said, the culture really hasn't changed. And if something falls off the aisle today and, you know, in Aisle 317, anybody will pick it up and put it back perfectly. And people really care.

ARENSTEIN: How do you do that? How do you keep the small company feel at a company now that has how many employees?

BRATCHES: We have 7,000 employees around the world. And one of the things that I think is really central to our continued success is, I would say, the absence of proximity of Bristol to not only New York, but also to our corporate parent in Burbank, Walt Disney Company. And we have this environment up there. And we have a lot of people that have actually been there from the beginning or almost the beginning. You know, I've been there almost 26, 27 years, and I feel like a new kid. But what we have, Seth, is we have these culture carriers. And as we bring new people on-board, they step into this jet stream of culture that perpetuates what we have. And it's been really central to everything, all the successes that we have, and really the mindset of the company, yesterday, today, and we're really focused on doing that tomorrow. And one of the things that we've done to that end is we've brought in a consultancy group to try to capture what it is that has made the company successful. So as those individuals that, you know, what we call culture carriers, start leaving the company, those pillars, that understanding, remains in some format.

ARENSTEIN: You know, it's interesting that you say that because the few times I've been up to Bristol, I've felt that. I felt the kind of a small group atmosphere, and I thought that was really a lot due to Bristol, you're right, the bucolic setting, far away from -- not far from New York in geography, but far away in atmosphere. And then also George Bodenheimer, I think, really epitomized that. He was a CEO that would just come right up to you and say, "Hello, how are your kids?" Always knew my name. I don't know how he did that.

BRATCHES: Come on, you're a legend in the business.

ARENSTEIN: Yeah, but I mean, this was years ago.

BRATCHES: We even know how to spell it. So, but I mean, George was, you know, he was the point of the bayonet as it relates to the culture at ESPN. And he was individual that hired me initially and I've worked for George virtually my entire career. And he epitomized the culture that we have, the kind of work hard, don't take credit, share credit, innovate, do business with integrity, do business in an honest fashion. And you know, that has permeated virtually everything that we've done. And I think George's influence on our business and the people at ESPN actually preceded his elevation to the presidency when he was in my role and previously. So, he is a sweetheart of a guy and, you know, when you say ESPN, you automatically think George Bodenheimer.

ARENSTEIN: Right. Tell me about some of the other culture carriers. I can think of people who were there at the beginning in the trailers. Maybe somebody like Bob Ley, somebody like Chris Berman? Chris LaPlaca has been there almost since day one as an intern, I think. [Mike Fulter?]?

BRATCHES: Chris is still an intern. No, Chris is certainly one of our culture carriers. We've got guys that, like Chuck Pagano, who's actually retiring in February.

ARENSTEIN: Yes, if I had known that. Oh, God.

BRATCHES: Who has been actually instrumental.

ARENSTEIN: Yes.

BRATCHES: He was a consultant for the company before the company even launched. And you know, if Bristol was a crime scene, Chuck would be implicated. His fingerprints are everywhere. And Christine Driessen. And you've got guys like Mo Davenport and John Wildhack, Murray Williamson. So there's a lot of them, surprisingly. And ESPN, and I really give a lot of credit to the brand, the genre in which we toil, but also this word we're using a lot here is culture, is to people staying. And there is opportunity, there is, you know, we are a growing company.

ARENSTEIN: Right. Talk a little bit about, you know, we talked about ESPN and we think of sports or the public thinks of sports, but a lot of us in the business think of technology and moving ahead. And a lot of that had to do with Chuck. Talk a little bit about HD. Talk about, well, 3D if you want, phones, radio, everything.

BRATCHES: So, a pretty open-ended question.

ARENSTEIN: Well, but you seemed to be ahead and you seemed to make your bets early in the game, and it's worked.

BRATCHES: Yeah, I think, our mission statement, you know, we've evolved it over the years but, in terms of the exact words. But when you get down to brass tacks, our mission statement is today what it's been for a while, and it's just to serve sports fans. And we keep that really simple. And when we do our company surveys, the majority of our employee base actually can recite the mission statement verbatim. And I put those numbers up to almost any company in any mission statement. And so we are really solely focused, and obviously there are shareholder value and revenue creation. But on serving sports fans, we have these fans and we have this belief, this true belief that permeates the company that if we are serving sports fans and we are doing a better job tomorrow than we did today, everything's going to work itself out. And so when you look at new technologies, Seth, we want to be there first, right? And that's really part of the brand expectation of sports fans across the country and across the world. And so whether it's HD, whether it's 3D, whether it's wireless, whether it's, you know, the upcoming 20th anniversary of ESPN, dot-com Prodigy net, you know, to kind of go back, it's really, it's critical for us to be there. And it's also really important for our partners on I'd say the technology side, the platform side, to have us there. Because the credibility that ESPN has in its brand and the loyalty and the authority and the personality, it's a great handshake with the sports fan in terms of their trying to introduce their platforms and grow them. And if you have a trusted, reliable brand like ESPN in the vanguard in that, not only does it convey positively to us, but it also accelerates the deployment and the acceptance of that platform, whether it's HD, whether it's 3D, whether it's wireless, new networks.

ARENSTEIN: Right, right.

BRATCHES: And I'll tell you an interesting story that was seminal for me in the life span of my career and the importance of brands. We were going to launch our second network in the early '90s. And we were talking to ourselves about what's going to be on it. We have to differentiate it from ESPN, so it's going to be a younger, cooler, hipper, wilder, you know, ESPN. And what are we going to call this thing? So, we decided we were going to call it Sport TV. And it was the proverbial, you know, everybody got a paper envelope full of airplane tickets and we'll see you in three weeks. And we went out and we hit all our distributors. And everyone was enamored with the idea of more content to continue to drive this business. But to the person, they stood on their desks and said, "If you're going to do this and I’m going to take it, you'd better well call it ESPN." And so it was a really seminal learning for us, the power of the brand and the ESPN name. So everything that we've done since has led with ESPN. And that network turned out to be ESPN2. And we've got kind of a really cornucopia of assets that are branded ESPN. And it's that brand that's really kind of helped accelerate not only our product growth, but our customers.

ARENSTEIN: Sure. Sean, a lot of your career has been being a road warrior. You've traveled a great deal. I guess you do some international travel now, now that ESPN is international. James Brown sat here yesterday and called you the Professor of Sales. So would you give us a quick seminar on how you educate your staff? What you tell them, what you did tell them, what you tell them now, has it changed?

BRATCHES: Well, if he's called me the Professor of Sales, I'm going to call James Brown the hardest working man in cable.

ARENSTEIN: Oh, come on.

BRATCHES: So James is a dear friend and a colleague for many, many years. But I think as it relates to my vision as to the company and to growth and to the sales proposition is that we are always looking to lead. We are looking forward to platforms and doing things that are innovative, that are unique, like ESPN3, which is the first and really the only and the most successful subscription television service on the broadband platform. And so, we look constantly for new opportunities to serve fans, new platforms for which to exploit. And we also look for leverage-able opportunities. So where we can take our brand, our content, and drive the best business value for our company, for our shareholders, both at the Walt Disney Company and Hearst. And then I think from a process standpoint, it's very important to me that we approach the marketplace with honesty, with dignity, with ethical superiority, and look people in the eye when we do business. If there's ever a tough message to be delivered, we're not picking up the phone or sending an email or a text, we're going to look people in the eye. And I recall that while this was a difficult time for many, when we were adjusting our rates at 20 percent a year for six years in a row, George Bodenheimer, David Preschlack and I would get on planes and deliver that message every year. And while it was very difficult for us, and put us in a position of explaining our point of view, and gave our partners the opportunity to express their point of view directly to us. And we thought that was very important. So, you know, and we feel good about that and I think that that's perpetuated itself and extended itself to what we do today.

ARENSTEIN: So, sales is, and what you're saying is, sales is personality, it's relationships?

BRATCHES: It's a lot of things.

ARENSTEIN: It's a lot of things, but it's those, too?

BRATCHES: To me, and to us, that's very important.

ARENSTEIN: OK. Let's talk a little bit about where cable is today, where it might go tomorrow. We see a couple of weeks ago, HBO coming out and saying, well, we don't really know what they said, but it sounded like they said we don't need cable operators any more, or for a section of our business.

BRATCHES: I'm not sure that that's what Time-Warner said. I think Time-Warner was on the back side of a proposed take-over. I think there's pressure at that company to continue to innovate and grow, like there are for all publicly-traded companies and ostensibly private companies. So, while there are uncertainties in terms of where they are going to go, I think that they are ultimately going to continue to partner with the incumbent distributors and hopefully figure out ways to target the 12.5 million broadband-only homes in the United States in partnership with the incumbency. So, from ESPN's perspective, we are extremely committed. And I say to the Walt Disney Company's perspective, we are extremely committed to the incumbent business and our partnerships, our affiliates. At the same time, while our partners and our affiliates are investing in new businesses such as broadband and wireless, we are looking to take advantage of those platforms and help us grow our business and help them grow their business by creating new products, new business models and, kind of, new, I guess, marketplaces of time, for consumers to ingest our brands and our content to the benefit of all parties. And we will continue to do that.

ARENSTEIN: You know, when television first burst onto the scene, I guess, in the late '40s, early '50s, the headlines were that radio will die as a result. Radio is dead. And here we are in 2014, radio is far from dead. But we're getting headlines, we're getting even reputable magazines saying when cable dies, you should do X, Y and Z. What do you think when you see things like that?

BRATCHES: It's not a zero sum game. And actually, we don't call it radio at ESPN any more, we actually call it audio. Because people are consuming it through that terrestrial radio, through satellite radio, through podcasts, through streaming. And it's a very big business. And interesting enough, it's the second largest touch point for the ESPN brand to fans behind television is our audio business.

ARENSTEIN: Interesting.

BRATCHES: So, very important. But we took the position very early on. As I mentioned, we launched ESPN2 in the early '90s, and there was a lot of concern in the company about what the implications would be to ESPN. We ultimately decided, and I think importantly and accurately, is that it was the right decision to cannibalize ourselves as opposed to let somebody else do it. And we had the same discussion when we launched ESPN News. What is the implication to SportsCenter going to be, our flagship brand?

ARENSTEIN: Right.

BRATCHES: You know, just subterranean to ESPN. Then we launched ESPN3, you know, what's going to happen to ESPN, you know, video on ESPN.com?

ARENSTEIN: Right.

BRATCHES: So, what we found in virtually every single case is that the high water mark continued to go up. And collectively, not only did ESPN grow in audience, and not only did SportsCenter's ratings grow, and ESPN.com grow, but these other assets that we introduced them to the marketplace also grew. And we better served sports fans. And I think that from a kind of a cultural DNA standpoint at ESPN, we want to do that. We want to be out front. And we're fearless in our attack of our own businesses to better serve fans and to be competitive in a very competitive marketplace.

ARENSTEIN: You know, Sean, you wear so many hats at ESPN, at Disney, but you wear a tremendously large hat in the industry. You've worked with CTAM, you work with diversity organizations, you are often put out, you know, put forward as a spokesman for cable. You've certainly had enough to do at ESPN. Why did you find that your industry work, your sort of industry spokesman role was important to you? You've done it so many years, you've done it well. You clearly thought this was important. Why did you do this?

BRATCHES: Yeah, I spend an appropriate amount of time. I'm on the Ad Council Board and Executive Committee. I'm on the Women in Cable Board and Executive Committee. The former chairman of CTAM. I'm on the board of the T. Howard Foundation and of The Cable Center. Cable in the Classroom, I was there. And I think the industry has given so much to me and so much to the people at ESPN that when I have an opportunity to give back and, you know, I think it just seems like the right thing to do. But at the same time, while I can help these organizations and help drive their very worthy causes, there's also value coming back to ESPN through that process. And the T. Howard Foundation, as an example, its mission is to hire minority internships in the communications business, some of our most senior people at the company, Rosalind Durant, as an example, is a former T. Howard Intern.

ARENSTEIN: Yes, right.

BRATCHES: The programs that Women in Cable, the Betsy Magness Leadership Program and the potpourri of things that Maria Brennan and her great team are doing there, have made people at ESPN better. So, it's really important that I think from the broadest sense, that people involve themselves in organizations that can make the industry better and shine.

ARENSTEIN: You know, I think since we've mentioned James Brown a few times, he told us the story yesterday in this very room, in this chair, about how a young man was hired by you. James Brown.

BRATCHES: Yes, I remember.

ARENSTEIN: And then James hired a lot of the people who are still on your team?

BRATCHES: And I was actually asked by the company by George, I think it was in the '90s, in the early '90s, to put together a business strategy for video dial tone. Is that what it's called?

ARENSTEIN: Video dial tone?

BRATCHES: It was the telcos entry where they were going to lease capacity to third parties.

ARENSTEIN: Yeah, OK.

BRATCHES: And I went to a seminar put on by, I think, it was NYNEX, Ray Bell. And I sat next to J.B. and, you know, he was there at the time. And that was probably 20 years ago.

ARENSTEIN: So, you may be one of the best plugged-in people in cable in terms of talking with operators, talking with MSOs. What are they saying, what are their concerns at this point at almost the end of 2014? Again, you know, you've said it's not a zero sum game. Cable’s not going away, but clearly, there are concerns. What are they concerned about? What are they saying to you?

BRATCHES: Well, I think one of the concerns has always been the cost of content. And I think when you kind of take a step back, you know, if you're in the bread-making business, you're giving the flour seller a hard time about their cost, or if you're making tires, you know, who sells you rubber. And it goes on to every single business. So, this is not a unique phenomenon that plays out in our business. One of the disappointing things to me about our business is that we actually, parts of our business tends to elevate that to our customers. So for years and years, we justified retail price increases on the cable side by adding cable networks. And then when capacity constraints and margins kind of suggested, they ended up adjusting their rates, but they blamed the programmers for the cost going up, which in my opinion, and I've been on the stump for 20 years, is that we should be talking about the value of our product and not the cost of product or the business machinations that kind of go into delivering it. I don't think when Ford Motor Company sells its F-150 pickup truck, they're going to talk about the cost of the new titanium they're putting in it. They're going to talk about the value, you know, the lightness of it and the benefit to gas mileage, and the longevity and the rigidity, or whatever the term is that they use in the auto business. So I think that's been a big miss. And I think it's something that's educated the consumers about the business side of our business. It's brought Washington into our business, you know, unduly.

ARENSTEIN: Right.

BRATCHES: So that's, obviously, you know, one of the components. But outside of that is that our customers, our distribution partners, are continuing to evolve their business from being cable operators into really being technology companies, and in the vanguard of what's next for society, for consumers, for fans. And as they continue to invest in their physical plan, as they figure out ways to exploit the incumbent plan to do other things, they are looking for new products and services from partners with brands, to help leverage those investments or those evolutions to drive new businesses. And to continue to drive their stock price, to continue to drive value, and to their shareholders and, ultimately, to their subscribers.

ARENSTEIN: Right.

BRATCHES: So, we're constantly talking about how we continue to innovate our product portfolio. The massive swath of rights that we've bought that we can exploit in many ways, to better serve them and hence subscribers. So it's a great time to be in the business. It's intellectually challenging and I'm really excited about it.

ARENSTEIN: So speaking about intellect, where did you go to college?

BRATCHES: I was recruited to play both hockey and lacrosse at the Rochester Institute of Technology.

ARENSTEIN: All right.

BRATCHES: And I'm actually in the Sports Hall of Fame there for lacrosse.

ARENSTEIN: Really? Oh, OK.

BRATCHES: So, I couldn't be more prouder or excited about that. It happened a number of years ago.

ARENSTEIN: And you were born where?

BRATCHES: I was born in Berlin, Germany.

ARENSTEIN: Right.

BRATCHES: Nine months before the wall went up. So, a very interesting time. I still have a lot of family in Berlin. One of my cousins came over and ran the New York Marathon, Natasha, and Susanna just had dinner with my son, Jack, who's actually studying in Europe this semester. So, it's, you know, one of the beauties about the world in which we live, and digital and with email and What's App and texting, you can stay in close contact with people no matter where they are.

ARENSTEIN: The world is a lot smaller now.

BRATCHES: It sure is.

ARENSTEIN: So, was coming to ESPN your first job out of college?

BRATCHES: No, my first job out of college was selling advertising time on the broadcast side of the business. And it's something I always wanted to do. My father passed away when he was very young, and my cousin had married a gentleman who worked for CBS and was the national sales manager for WBBM television in Chicago, Dave Connolly, a really neat guy, an individual I looked up to. And notwithstanding the fact that he had married one of my cousins, had a great house in Rye, drove a BMW, belonged to the Westchester Country Club, I said, "You know, this is something I could probably do." So, as I got out of school, he helped me get into the business, made a few contacts, and I had a number of opportunities. And then after three years, I was just a fan of ESPN. And, you know, I watched it all the time. And I knocked on their door and I tried to get into the ad sales side of the business. I got along famously with the guy who was running it, Jack Bonanni, but there was nothing going on. And he said, "Let me introduce you, take you down the hall and introduce you to this kid who just was promoted to Vice President of the Eastern region." And so he walks me into George Bodenheimer's office. And that was almost 27 years ago. It was a quite fascinating time.

ARENSTEIN: You know, the story that I like to talk about with George Bodenheimer, and he tells it so well, and actually, not Jim, I'm trying to think, Dick Vitale tells it, that when he first met George, George's job was driving him to and from the airport. And I think, and working in the mail room, I believe.

BRATCHES: Right.

ARENSTEIN: And I think that kind of humble beginning was something that George kept going on at ESPN. And I think it exists today because, I mean, even Chris Berman, the first time I met Chris at ESPN, I remember him saying to me, "Thank you for coming up to Bristol." And then we did an event with him and the next few weeks later, I get a handwritten note. I said what is this? It's from Chris Berman saying thank you for hosting me in Washington.

BRATCHES: Well, truth be told, Chris still doesn't use email, so he sends a lot of handwritten notes. But that is the culture. And there are so many great stories about people at ESPN that started from the beginning. I'll give you one.

ARENSTEIN: Give us one, yeah, please.

BRATCHES: David Preschlack, who was an intern for me in college, went back to school. And I ended up getting him a job. I ended up calling the head of the mail room. And I said, "Ken, I don't have anything going on right now. Can you hire this kid? Give me six months, I'll figure something out." And in six months, I hired David into the Affiliate Sales and Marketing Group. And now he's running it. Not only for ESPN, but for the entire Walt Disney Company. So, he came up, you know, dirt under this fingers, and he embodies the true culture of ESPN.

ARENSTEIN: Let's talk a little bit about the diversity of ESPN in the sense that, at least the time I was there, they took us into a small studio, and we watched a SportsCenter being taped in Spanish or some language. I don't remember which, but it was a two-guy, it looked like SportsCenter, it felt like SportsCenter, but it was going to Europe. ESPN's a global brand now. Do you get involved in the global business and what has that meant for your career?

BRATCHES: Yeah, well, Russell Wolff runs our international business. And so, he is principally the kind of purveyor of that. But we're a very matrixed organization. And there's a number of individuals that work for me, Lori LeBas, Artie Bulgrin, as an example, who actually run their businesses on a global basis. So, it's a little bit of a patchwork in terms of our businesses around the world. You know, in some instances, we own and operate networks fully and those territories look and feel very much like ESPN in the States. In other areas such as Canada, we have equity positions because the government regulations prescribe full foreign ownership. We have partnerships. And then in some cases we just, you know, we bicycle tapes around, so to speak. So it's, we do call ourselves the worldwide leader.

ARENSTEIN: Right.

BRATCHES: And it's nice to go around the world and be able to consumer the ESPN brand and see SportsCenter in other territories, but displayed in a way that makes sense for that particular region.

ARENSTEIN: And do you get involved in the international business, if at all or, personally?

BRATCHES: Not a lot. Not a lot, on the periphery.

ARENSTEIN: OK. You know, it's kind of early to talk about a legacy for Sean Bratches because, you know, there are going to be many, many more years of good things and wonderful things for you. But if you had to take a snapshot now, what would you like somebody to say about Sean Bratches 20 years from now?

BRATCHES: I'd like them to say that he represented his company's interest well, with an eye towards partnership, with an eye towards integrity, at a high degree of ethics and honesty, in terms of dealing. Someone who was a problem-solver and who kind of figured out ways through certain difficult circumstances in productive means for both parties. And I think most of all is that someone who had really an impact on the culture of ESPN. You know, the people and the culture of the company, because that's the most important thing, to me.

ARENSTEIN: You know, Sean, you have been in cable almost since the beginning of sort of modern cable. What are some of the stories from the industry or about the industry that you would like the public to know? If people go to The Cable Center and look around, what would you like them to take away from cable's story?

BRATCHES: I think cable has been a fulcrum to knit together not only the country, but the world in terms of breaking news, education, entertainment, sports, in a way that was never possible before. And I happened to grow up in a pre-cable world where there was three or four broadcast television stations. And, you know, it wasn't fun to be sick when I was kid because there was nothing to watch. And I think I would have been sick at school a lot more, had I grown up in this day and age. But it's, you know, the impact that we've had on society has been tremendous. The job creation that the industry has created has been absolutely extraordinary. The economics that the business has afforded the country and also local communities has been really, really impactful. And in many respects, the investment in technology and growth has bettered the American population.

ARENSTEIN: Right.

BRATCHES: And I think, you know, you look back to the days of Mellon and Carnegie and Morgan, while the riches they had were extraordinary, the typical American actually has a higher quality of life today than they did. And our business is part of that.

ARENSTEIN: Speaking about that sort of philanthropic thing, I know ESPN has always been involved in communities and philanthropic issues and initiatives. What are a few that you are most proud of?

BRATCHES: I think the hallmark for us is the Jimmy V. Foundation.

ARENSTEIN: OK.

BRATCHES: And he made, when I was there the SB's at the Paramount Theater, you know, a couple blocks from where we're sitting today, when Valvano made that impassioned speech. You know, don't give up. Don't ever give up. And Steve Bornstein, our president at the time, and Jimmy created this foundation. And we've put our shoulder collectively behind it at virtually every, very turn. We actually had 20 employees that ran and raised money for the Jimmy V. in the marathon here in New York in early November and raised a lot of money. So, the fact that the Jimmy V. Foundation is fully funded, that every dollar that's donated, 100 percent goes to finding a cure for cancer, is certainly in kind of the Hall of Fame of ESPN's philanthropic efforts.

ARENSTEIN: And, but you know, there have been a couple other ones that I would like you to talk about. You know, ESPN has never shied away from televising women's sports and some sort of small sports like fishing and bass fishing. I know that's close to your heart. Was that your influence, was that somebody else, or it's just, as you said, the maxim of ESPN is to serve the sports fan wherever he or she is. And some of those sports fans are women, some of them are bass fisherman, is that more of it? Or was there somebody in the company who said, hey, you know, maybe you, said, "Come on, bass fishing is great?"

BRATCHES: I think it was, while I'd love to take credit, it wasn't me. It was more of a necessity of finding content to fill, you know, at first 24, then 48, and then expanding with the number of networks that we have. So, we were looking for content, particularly in the nascent years.

ARENSTEIN: Right.

BRATCHES: Today, we do a lot to serve women, to serve Latinos, to serve African American audiences. And not many people realize this, but 50 percent of ESPN's audience is female. It's just that the males spend disproportionately more time sitting on the couch and watching.

ARENSTEIN: Right.

BRATCHES: But we have a large women's audience. We have an enterprise at the company called ESPN-W that is targeted specifically to elevating women's sports, issues for women in sports, and which is doing quite well. We have done a much better job in the last few years of getting representative talent on our air that reflects the American society. And we feel that while ESPN Deportes is our lead Hispanic network, we actually feel that the bigger opportunity for us in the Hispanic space is to serve them better on ESPN and ESPN2 and ESPN-U and the SEC Network, etcetera. And we're doing that by, you know, when we display their Latino name and it has an accent, we're putting it on. And we're putting more people on that are Latinos that can actually interview athletes in their native tongue, which is really important. And that creates better television, better access, better avidity, from the constituency, this wonderful quilt that we call America.

ARENSTEIN: Right. Let's look ahead. What is ESPN going to look like five years from now, 10 years from now?

BRATCHES: I don't know the answer to that. And I'm not sure anyone does. But we're going to figure it out. We are a community of inquisitive, innovative, thoughtful people at the company that are always looking for what's next. And the great thing about ESPN is that these kind of seminal ideas that change the fabric of the company or the direction of the company don't necessarily come from management, they could come from a production assistant, or an account executive. And there's very little barrier to entry, to from idea, to execution. You know, I often call Norby Williamson or John Wildhack when I see something on SportsCenter that was remarkable. And I say, "You know, that was great. How'd that come about?" He goes, "Oh, you know, one of our PAs," which are a euphemism for a college graduate.

ARENSTEIN: Yes.

BRATCHES: You know, came up with this at 10:00 this morning. And, bam, we had it on the 6:00 show. So that's just part of how we operate our business. And there's not a lot of ego at the company. And we try to have a pack light, travel fast mentality, and it's worked so far anyway.

ARENSTEIN: So, you know, just a personal observation here. You are at ESPN for many, many years, and you're, when I think of you, I always think hard-charging, energetic. At a time when most people are kind of slowing down, you're still hard charging. How do you do that?

BRATCHES: (Laughs) Well, nothing illegal.

ARENSTEIN: OK, all right.

BRATCHES: But, listen, I've got a lot of energy. I've never had a cup of coffee in my life, although people accuse me often of drinking way too much of it. You know, I guess I stay in shape, you know, physically, and actively. I'm still jumping out of helicopters with my skis on, and doing things I probably shouldn't be doing. But at the same time, intellectually, I'm incredibly curious. I read. I'm a voracious reader, and not only of things in our business, but in other businesses, that foster ideas. And I just think that we are in an era of incredible growth and it's so exciting to be working here. And I think you have to continue to change to be good. I mean, Oscar Wilde once said that those who stop getting better, stop being good. And I have that actually, that quote in two of my offices.

ARENSTEIN: On a sort of a more serious note, what do you see as some of the hurdles in the business today? Not necessarily ESPN's business, but as an industry, what things would you say cable has to do better to survive and grow?

BRATCHES: We have the hill right now. We own the hill. And yes, there's a lot of insurgents that come up and are attracting press releases and they're aggregating consumers, subscribers, fans, however you want, in many respects, nowhere near as profitably as the incumbency. And I think, you know, Netflix versus HBO is a great example. I'd much rather run HBO than Netflix based on the economics and what I see to be the future.

ARENSTEIN: Sure.

BRATCHES: So I think they have to be careful. But I think companies continue to have to evolve. And to maintain that position on the hill, I think we've got to involve to be much more technologically oriented. And I mean that on the content side, as well as the conduit side. And I love to see what Brian Roberts and Steve Burke and Neil Smit are doing in Comcast. Mike Abgelakis is, you know, they're building a new building. They're going to put 3,000 programmers in. And I think that is neat. And I think that's really smart. And I think it sends a big message, not only to the marketplace, but to the incumbent employees. So, I think, you know, evolving to be more technology companies, as opposed to what, you know, I've always thought of ESPN as not being a technology company per se, but we are a company that exploits technology to better serve sports fans. And that's starting to change. You know, we're bringing in guys like Ryan Spoon and Aaron LaBerge, and others, who are really starting to develop technologies that we own and that will foster growth in our business.

ARENSTEIN: Can you expand a little bit on that? What sort of technologies are you talking about?

BRATCHES: I'm talking about technologies that we can utilize on our screens to better demonstrate what's happening, like on the first and 10, like, is an example. But things that draft off of that, that make our brand stronger, differentiate us from our competitive set. And also give us very saleable sponsorship elements and features for the advertising community. And also, what we're doing with our new ESPN.com being a responsive design and product with a lot more personalization that we own. We're building a platform for a transactional product, which will be announced. It's been announced, the formal name will be announced in the next couple months. I'm not going to break any big news here, Seth.

ARENSTEIN: OK, all right. We tried, we tried.

BRATCHES: So, you know, we're actually building the platform for that. So it's we continue to evolve. We're principally a content company, but we're evolving into something more.

ARENSTEIN: You know, one thing you didn't mention about all your product roster, when I take my phone out in the morning and I put on my ESPN.com app, one of the things I normally do is I press one button and I can hear Mike and Mike in the morning on the radio, which I find extremely convenient.

BRATCHES: ESPN audio?

ARENSTEIN: Yeah, exactly, on the audio, excuse me.

BRATCHES: Mobile is a huge part of our current business. And it's going to be a much bigger part of our future. As technology continues to evolve, creating opportunities for our fans to engage with our brands in more meaningful ways that exploit the technological prowess of the individual screens which are all different. And we feel, and I think statistics have supported this, is that it's not cannibalizing the core. The digital experience is actually driving people back to the linear.

ARENSTEIN: Right.

BRATCHES: And you can look at everything from, and I'll state the obvious, it's fantasy.

ARENSTEIN: Right.

BRATCHES: You've got more people in fantasy. We're generating an incredible amount of revenue of it. But it's also driving people back to watch the games. To find out how their players are doing.

ARENSTEIN: Sure.

BRATCHES: And my own experience, I drafted Peyton Manning in one of my leagues a couple years ago and it turns out that he got hurt and he was out for the entire year.

ARENSTEIN: Right.

BRATCHES: So I went to the waivers and I picked up Stafford. And I end up watching Detroit Lion games because I had Stafford. And I didn't do that well that year in my fantasy draft. But in any event, it forced me to change my behavior.

ARENSTEIN: Speaking about behavior, and I think we have time for one more question, does it concern you that a lot of young people, millennials, have never paid for cable, I mean, they've had it in their parents' house. And unfortunately, sometimes when they leave their parents' house, they get their parents' password or whatever, and they get cable perhaps illegally. And not that they don't know it's wrong what they're doing, they just think, well, everybody else is doing it, you do it. You think about NBA basketball. I mean, technically by the rule book, you're not allowed to touch another player. But if they officiate it that way, all you'd have is a foul shooting contest. So there it's within the lines, there are different sort of standards of behavior. It seems like a standard of behavior is, oh, yeah, let's get cable under the table. Does that bother you? And what do you see about when these people get older, when these millennials get to be 40 and 50, are they going to still be doing that?

BRATCHES: I think it's certainly something that we're paying attention to, we're cognizant of, that we study, with rigor. And we're seeing what you're describing. We feel that it's too early to draw any definitive conclusions. There's certainly smoke. What we're trying to do is we're trying to create products like Watch, so there is a connectivity to the incumbent subscription and people can consume our content when they want, where they want, on whatever device that they want. We've also been very focused, Seth, on aggregating as many rights exclusively on ESPN, off-broadcast. And you look at this coming year, the entirety of the U.S. Open Tennis will be ESPN. No more on CBS. The last couple of years, all the British Open, all of Wimbledon, all on ESPN. The college football playoff, where do you have to go to see it? ESPN.

ARENSTEIN: OK.

BRATCHES: So, there's a long list of content that we're aggregating. We're also looking to expand our off-channel marketing to reach the casual fan, if you will. Two things drive ratings for us, right, it's the number of people that come, and the amount of time that they spend. And if you can influence either one, that helps. And it's also getting off-channel with promoting our products reinforces the value proposition of cable. And sports I think is unique in that it's extraordinarily perishable.

ARENSTEIN: Yes.

BRATCHES: Extraordinarily perishable. So, we don't have downstream revenue opportunities for the vast majority of our content. And no one wants to watch the Jet-Miami game which was on ESPN Monday night.

ARENSTEIN: I really don't want to watch it, no.

BRATCHES: Again.

ARENSTEIN: I watched it once, that was enough, yes.

BRATCHES: They don't want, you know, there's no value the next morning.

ARENSTEIN: No.

BRATCHES: Right, there's this kind of abundance of statistics and clips and highlights that you'll watch for a short period of time, but there's nothing. So, almost 99 percent of ESPN's content is viewed live.

ARENSTEIN: Right.

BRATCHES: Live, not DVR. And the preponderance of the small percentage that is DVR'd is really PTI [Pardon the Interruption] and Around the Horn. And it's consumed that night when people get home.

ARENSTEIN: Right.

BRATCHES: So, we don't really have a strong C3 play in the advertising parlance. And we feel pretty good that ESPN is the glue that's holding the cable proposition together. And we'll continue to do that. And you're going to see some people may be coming in late. You're going to see some people accessing content in different ways. But when you get down to brass tacks, the cable bundle is the most valuable entertainment option that you can get in America on virtually any metric. And we feel good about the future.

ARENSTEIN: Unfortunately, there is a network, one of your networks, that will show the Jets in Miami, in the Super Bowl in Super Bowl III that I've watched six times. It ends the same way, too. I just don't understand that.

BRATCHES: Anyway, a classic.

ARENSTEIN: Yes. Sean, thanks so much. This was fun.

BRATCHES: I appreciate spending the time.

ARENSTEIN: OK, yeah.

END OF INTERVIEW

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  BACK TO ORAL HISTORIES

Bill Beaty

BeatyBill2014KC

Interview Date: July 28, 2014
Interview Location
: Kansas City, MO
Interviewer: Stewart Schley
Collection: Cable Center Oral History Program

Schley: It's Stewart Schley for the Cable Center's Oral History Series. We're on the 36th floor of the Sheraton Crown Center in Kansas City and coincident with the Independent Show, July 28, 2014. Joining us today is Bill Beaty, who's the Executive Vice President of Cable TV for Comporium. Bill, thanks for joining us.

Beaty: It's a pleasure being here and we appreciate the Cable Center inviting us to be on and share some of our legacy of Comporium.

Schley: It's an interesting company story and I think yours is an interesting personal story, so I think we'll dive right into it. For those who don't know, who is Comporium and what is the legacy and history of the company?

Beaty: Comporium is 120 years old and we were founded in Rock Hill in 1894 as a telephone company. E. L. Barnes and his wife bought the company in 1912 and remarkably, the Barnes family has owned the company for nearly 100, I guess 102 years now. That in itself is just remarkable. Currently, our CEO is Bryant Barnes, and he is the great-grandson of E. L. Barnes. So he's the fourth generation CEO in our company today, and we actually have some fifth-generation Barnes's that have very responsible positions in the company today. So that really works well to keep the company moving forward.

There's so many things to talk about, but we're here talking for the Cable Center and the legacy of what we call cable TV, which today is more and more referred to as video. But we got into cable TV in the mid-Sixties and primarily there were three people who were really the force behind getting that cable TV subsidiary founded. That was Frank S. Barnes, Jr., John Barnes, Sr., and E. L. Barnes. Their dad, Frank S. Barnes, Sr., was surely one who helped them get it going and get started. The way we got into it, Fritz Hollings was governor of South Carolina in the early Sixties and the South Carolina ETV was being developed around the state so Governor Hollings was looking for some really good telephone people at the time that were very knowledgeable and were forethinking to help move this along. So as a company we got involved in that, helping to set up the infrastructure for ETV in South Carolina. Then, as cable TV began to rear its head around the country, we formed a company. I say "we"—it was Frank, John, Ed Barnes formed the company in 1965, and we had our first cable TV subscriber in 1967. We've sort of gone on from there.

Schley: What's ETV stand for?

Beaty: Educational Television. Even today, South Carolina has one of the most advanced educational television networks, so we take some pride in helping get that started, too.

Schley: Familiarize me and our viewers, Bill, with the geography and topology of the South Carolina marketplace that you serve and why maybe cable TV made sense at that time.

Beaty: Way back, the Bell Company up in Charlotte would not come down into rural Rock Hill. So there were three local businessmen that actually started the company. But like I said, the Barnes's bought the company in 1912 and have owned it continuously since. From what I understand, around the country the Bell Companies would go into the most dense areas, the cities, and build those out because that's where the profit was. And it was up to these local entrepreneurs to put together what became known as the independent telephone companies. And today, we have independent cable operators. Sort of the same thing with the cable television. There was a company operating in Charlotte and they were not down in our territory. So forward-thinking folks, the Barnes's—Frank S. Barnes was the first president of the cable subsidiary and then John, his brother, was the second president. And today Bryant is the president of the entire Comporium.

The way I got involved with it was my dad owned the local radio station in Rock Hill. So the Barnes's were, I think, naturally looking for someone with some media experience on the broadcast side and fortunately for myself and my family, he was invited to invest in the company, which he did. So the company grew. I came to Comporium in 1974. I think we had around 400 customers, we had nine channels, and there were three NBC's, two CBS's, three ABC's, ETV, PBS station. We had our own weather channel and really the broadcast reception was fairly good—it was excellent from Charlotte. So naturally cable television was a tough go for many, many years, and I'll give credit again to the Barnes's because they hung in there with it, brought it along, stood behind it, and then I was fortunate enough to become employed by the company. I will just say this: getting into the cable business the way I did was the way just so many people did back then. We knocked on doors, door to door, selling cable TV. We'd go out and get the camera, tape the city council meeting and by then it was Senator Hollings, when he came to Rock Hill, Senator Thurmond, we'd get our camera out and tape it. It was fun, really the go-go days.

Schley: First of all I want to ask you what kind of radio station your father ran.

Beaty: It was an AM radio station.

Schley: News, mostly news?

Beaty: Still there, WRHI, and the two principal owners do a tremendous job. And it's local, and I'm really proud of those guys for the way they're doing it. Allan Miller and Manning Kimmel, they do a wonderful job in Rock Hill. We can get into it later, but I'll just try to move it along here. We got our first satellite in 1980 and that just changed everything. We had the Christian Broadcasting Network, we had WTCG—which has really changed to WTBS and now it's TBS. And then about a year later we brought in HBO. And then really everything changed.

Schley: Because before that, because you alluded to this, you were in a market where TV was pretty good.

Beaty: You could really get good reception.

Schley: When you knocked on doors, what were you selling?

Beaty: We were selling the fact you didn't need an antenna, you didn't need a rotor antenna, and all those sort of things. And that was $5.95 and we'd sell, I think it was like $1.00 for an extension. It wasn't easy to sell. But you just kept after it and kept after it and we'd tape a Christmas parade or tape something interesting in the community and then we started doing city council meetings. In fact, the mayor at the time—very strong mayor and the main artery through Rock Hill is called Dave Lyle Boulevard—but even that show became known as the "Gong Show," because he controlled city council meetings and he just "Gonged."

Schley: Time's up.

Beaty: Time's up. So we worked on that but again everything changed when we started bringing in satellite television.

Schley: When that happened, when that programming transformation occurred, what were you doing? What was your job then?

Beaty: At that time I had become general manager of the company. We set up the company a little differently than a lot of folks did. We were operating on waivers, rural waivers, because at the time, telephone companies couldn't get into cable, cable couldn't get into telephone. But we were successful getting waivers because of the rural area we served, primarily York and Lancaster Counties, some parts of Chester County. So we tried to operate the two companies separately. I was the general manager. It was a real growth period because people wanted cable TV. They wanted those lines extended. So then we were in a situation where it became even more capital-intensive because it was a matter of getting the cable TV out.

John Barnes, Jr., a close associate of mine and he's a cousin of Bryant Barnes—he is an EVP of the company and a very forward-thinking person. Bryant is too. In fact, Bryant—just to include this—he was able to bring a network of companies together into a holding company. Our name was Rock Hill Telephone Company, Rock Hill Cable TV, Lancaster Telephone and all. We came up with a name (I didn't, some smart folks did): "Communications Emporium."

Schley: "Comporium."

Beaty: You put it together and you get Comporium. But John came in and started working with me in the cable TV, and we worked together for fifteen years and that was really the tremendous growth period. Very capital-intensive, getting our lines out and then a lot of boxes, a lot of set-top boxes. We were early into pay-per-view, two-way, as it was. One of the things we did that I think is significant: we did start a program called CN2. We still do it today; it's a 30-minute newscast. And it's significant because Rock Hill is in South Carolina, even though we're twenty miles below Charlotte. If you're in Charlotte, North Carolina, you say "Carolina," you're talking about Chapel Hill. If you're in Rock Hill and you say Carolina, you're talking about South Carolina. A lot of Clemson people don't even want to know about South Carolina in that respect...

So we built this 30-minute show and we did it the Ted Turner way, like headline news, thirty minutes and it worked. It brought the community closer together, it helped to bring local news to the community because in Charlotte it was always shoot-em-up. That along with the satellite television gave us the ability to sell cable television. And we did. And we got that penetration up pretty high. In the early Nineties, by the mid-Nineties, I guess is when the Direct TV and the Dish started rearing their head. They were all digital.

Sometime I think in 2005 or 2006, our penetration numbers of homes passed peaked. But then as we got into the early 2000's, like January, 2000, we introduced our first two-way high speed Internet customer.

Schley: Let me take you back for a moment. So, I understand the company relations because you talked about getting these waivers that allowed a telephone company to offer cable TV service. Were you delivering the signals for cable off a different set of plant entirely than the telephone network?

Beaty: It was totally different because the telephone company operates on twisted pair. And we had coaxial cable from day one. It's not just moving the cables out and burying them under the ground, you had upgrades like with the bandwidth capacities you get from 330 to 450 to 550 to 750. Today, we have most of our system built to one Gigahertz. Which is what you need. But that was a tremendous growth area. Of course in 1996, with the Communications Act, that put down all the barriers where the cable people could go into. Voice and the telephone companies could get into cable. So things really started to change then and like I said, our company is essentially a broadband company today.

We still have a real solid voice base but it's not highly penetrated as it once was. But our Internet service—we keep thinking maybe it's going to start peaking—but it hasn't. I think what we're finding is that as people use more data, they want more speed. Then, as they get more speed, they use more data and so then you can begin to sell them up to a higher speed at a higher price. So that business we believe still has a lot of really true growth potential.

Schley: Where did you start with Internet? When you guys first introduced high speed Internet service, what was high speed? Do you remember? It wasn't what it is today.

Beaty: No, no, no. Now we're talking about 300 megabits, 500 megabits. It was 15K, something like that. Just dial-up. Tremendously slow but at the time that was a good thing because that's what we knew.

Schley: If I can fast forward, you guys put out a press release recently, maybe last month or this month, about the introduction of Gigabit per second Internet service.

Beaty: Gigabit service; we call it Zipstream. It's introduced today. Here we are in the summer of 2014 and five business parks this September are going to be initiated and 125 residential developments around Rock Hill, Fort Mill and Tega Cay. This is a major, major milestone for not just Comporium, certainly Comporium, but really the industry. And people say, "Why would you need that much bandwidth?" We think the amount of bandwidth that is going to be needed in the future is almost insatiable. Let me see if I can explain it this way. There are certain things we really believe in the future. Data, switching, transport, intellectual property and storage. You take those five things. You bring them together and what you're talking about is a connected world. We call it the Internet of Things. If you talk to Cisco or any of these companies, they are predicting that there are going to be billions and billions of these connected devices. Monitors in your heart, your blood pressure, on your refrigerator. And today, just to tell you how much we've invested in this thinking—because we do believe this is the future—we've invested in a company called iControl. iControl is a software platform that powers the Comcast Xfinity Home, the Time Warner Intelligent Home, Cox, Rogers, Brighthouse.

We as a company have been in security for twenty years in traditional, but one of our engineers back in 2008 came across a company and it was originally UControl and they merged with iControl and today it's iControl but we got real interested in that because that was operating on the broadband network, not twisted pair. You can push so much information. This thing has just come together so fast because you think about it—the iPhone came out around 2008. The iPad came around five years ago. So you take this increased bandwidth and speed and you combine that with the mobility of these smart devices. Then it's with you all the time.

We think that is the future. The video business is changing. That's almost an understatement. Linear video will be here for a long time. And HD particularly, for a lot of sports people are going to want that. But you can get all sorts of videos stream today over that same broadband pipe. It's data, it's all data, whether it's voice or video or email or whatever it is—it's all data delivered over that pipe. And the consumers want choice. The model we have is essentially broken because you've got nine companies that control 95% of all the programming in the country and the price of all that bundled programming is becoming unaffordable. Why I'm saying this is the importance of the infrastructure for the cable TV industry—that we call the cable TV industry—is really more of a broadband industry today. This Internet offering is the future. Then what operates off of it—I think cable operators are going to have a tremendous future, not just with the transport, but you're going to have the customer relationship—for example, selling security, monitoring and automation in the home. You can get your iPhone out, look at cameras in your house, turn the temperature up and down, put the security on and off, turn lights on and off. That's just the very beginning.

On the other hand, we've invested in a company called Immedion. We're the primary owners of Immedion. We've got today four data centers. One in North Carolina, and three in South Carolina. That's storage. The Cloud. You combine all that together. The infrastructure that all these cable companies have around the country is just going to be very, very valuable and more and more valuable.

Schley: You've talked about it, I think, almost as analogous to the building of the railway system.

Beaty: Early on the rivers were the mode of commerce and the railroads—Rock Hill was founded in 1852 when the railroad came through and there was a big old rock. One of the folks said, "That's a big rock." So they put up the post office there and they called it Rock Hill.

Schley: Why not?

Beaty: So the railroads did everything, but today this infrastructure that is being built out by cable companies—not just in big cities, but even in rural areas all across the country. I read the other day where, I think it was Mediacom or one of the companies was doing a deal with John Deere. No, it wasn't Mediacom, it was a small company, it was Eagle. One of our independent cable operators is Eagle. They're doing a deal with John Deere. And John Deere is a tractor company. But why they want to do a deal to transport data—because they want to tie together all these farmers in the Midwest that they service tractors for, that they sell tractors to, and all that sort of thing. But it's all that coming together.

We're real bullish about our future. Now the margin—talking about video again here—the margin on video today is not very much. I mean...it's almost like we're a tax collector. We're collecting the tax and sending it to the programmers who are the collectors. We get a little margin on it. We're making some money on our equipment...we're using the Moxi gateway and that's a leap forward. But the margin on the video business is not what it was. Now the question will be what's the future for that? I don't know that anybody really knows. But we do know and we're really strong believers in the fact that this infrastructure we built—and they were moving up to 1 Gigabit—is the future. All that connectedness is going to make life easier. Because you're going to be connected. And when you're talking about M2M, it's like machine-to-machine and what that means is you're not manually doing something to make something happen. It's just a lot of it's programmed to tell one machine what to do based on—say the temperature outside. The humidity would dictate what the temperature is set on inside your house. I know that sounds really out there but that's where we are today.

Schley: You talk about these futuristic—I shouldn't even call them futuristic applications. But the things you can do now and it's such a contrast to where the business was when you and the Barnes family made those original investments. I want to break down a couple of subjects with you. One is the launch of the original programming and news channel. I don't want to obscure that because that was, I think, a bold and creative thing for you guys to do. To me it speaks to what cable uniquely could do at that time. What was the thinking behind that?

Beaty: I mentioned this earlier. Living in South Carolina, we gravitate toward Columbia, because that's the state capitol. Charlotte, the TV stations up there, they're all first-class TV stations but what you get at night would be the shoot-em-ups and a lot of what's happening with the high schools in Charlotte. What you find is that you really are watching for the live weather. Back twenty years ago, I remember there was a survey taken in some of the upper part of South Carolina, and a lot of people said, "Who is your U.S Senator?" As many people at least in the upper counties thought that a couple of North Carolina senators were our senators.

Schley: That's probably all they heard about.

Beaty: That's what they heard. So there was no Internet in 1992. Ted Turner had really come on strong with CNN and he started Headline News, which is thirty minutes. So the board felt like this was something we could do that would be of benefit to the community; really and truly give back to the community. I mean, it's not all altruistic here, but the point is, it was something you couldn't get off a TV station. But it did enrich the lives of our folks and the citizenry because they were getting information that they wouldn't get off television. You have to understand at that time radio is good and all, and newspapers are newspapers. But even in the early Nineties, more and more and more people were getting their news via television. So that's what we did.

What that meant was you begin to develop a staff, you begin to sell more advertising, you do these things and one thing leads to another. We still do it today. Obviously leaps and bounds, quality-wise, compared to what it was then.

Schley: But you did, even from day one, a half hour a day news show?

Beaty: We do a half hour. And it wasn't easy.

Schley: No.

Beaty: I'll give John Barnes, Jr., credit. He was the one that really threw his heart and soul into getting this thing going. He'd be down there—in fact, sometimes he'd be down there 6:30 in the morning. We tried a morning show one time and different things. What we found out though was if you want to do something really good, you need to focus on that one thing. So we threw all our resources into that thirty-minute program. But you'd have ten minutes, nine minutes of commercials. And you do different things like that.

Schley: But it's a testament, Bill, to the localism, right? To the local aspect of cable, which really continues to influence how the industry—you know there's a lot of telecommunications providers. Not that many have the localism and the footprint and the service staff cable has.

Beaty: I think it speaks to Comporium because the Barnes's have always given back to the community and Bryant and John today are doing the same thing. We'll talk about the Knowledge Park in just a minute. So that in a sense is a way of giving back again to the community because it was giving them something they just didn't have. But again we wanted that as a way for people to sign up for cable. Because once you put your children on TV, playing Little League baseball or something, they do want to watch it.

Schley: It's community programming in a sense. Can you give us an idea in any metric that's comfortable for you of the size of Comporium? I mean, how many communities or customers?

Beaty: Without just getting into all the numbers, we serve primarily two counties below Charlotte, York and Lancaster. Then we serve an area of North Carolina outside of Asheville called Brevard and we serve about five or six counties outside of Columbia. Then we have a company that we're part owners in down around the coast in Charleston outside of Berkeley County, in Moncks Corner. I think the genesis of these were ...a lot like telephone companies, primarily owned by families, and when the Comporium/Barnes family saw an opportunity to come in and assist somebody—if the family wanted to exit the business—you know, if everything worked out, then that's the way we got into these areas.

Just to be clear, we are a very much diversified company today. We partner with AT&T in our area up around Rock Hill, we partner with Verizon in Charleston to provide wireless service. We own an Immedion Data Center. We've invested in, I mentioned iControl; there's another company we've invested in called Zubie. And there are other companies that we've invested in that look to the future with this Internet of Things that we so strongly believe in. I believe that's what differentiates companies that are successful and move ahead from those that frankly don't.

Schley: I was going to say, and I don't know your company well, don't get me wrong, but the multigenerational story seems to be one in which there was a willingness to take risks and to continue investing as the world around you changed. That's exemplified—I want to talk about iControl for little bit because you guys are uniquely positioned to talk about security and cable's progression in that. You used to offer—or maybe you still do—residential security service that I will call—this is not meant to be disparaging—the old school style of security.

Beaty: You're right, you're right.

Schley: So where did you start and where have you come to now with security?

Beaty: I think I mentioned this briefly. We got in the security business, maybe it was 20-25 years ago. We did a good job.

Schley: Alarm service?

Beaty: Traditional security—alarm. To do that you really have to be sharp because you've got to have a monitoring station with people 24/7, monitoring any alerts that come in to be forwarded to the police station, the fire department, all those kind of things. And you gain an experience and a knowledge base that you grow. Now what happened, I guess, ten years ago, a lot of the primarily independent telephone companies in the Southeast and now really all over the country, came to Comporium and said, "Well, you're in it. Can you help us get in it?" So we said, "That would be a good idea." So we set up a wholesale company that would sell to small and midsize, mainly small, telephone companies in this traditional security.

And so we gained that expertise and built our monitoring stations up and all the things and the knowledge that goes with it. It was in the spring of 2008 that one of our engineers, maybe a couple of engineers, were out at the Cable Show in LA and that's when they came across this company called UControl. UControl hit up our man named Jim Johnson; they were developing a technology, a security monitoring and automation platform that would operate on a broadband network because the broadband network would give you such an ability to deliver so much information where a twisted pair wouldn't. Several of our folks were really interested in that. I know Bryant and John were real interested in that so we made some early investments in UControl. As it turned out, some of the larger cable companies, one or two large—one in particular, Comcast Ventures, they invested in iControl and also ADT invested in iControl. So without getting into too much detail, one technology—iControl used what they call a Z-Wave wireless technology and UControl used the ZigBee and I won't get too deep in that. But the point was is that they were both sort of competing, possibly for the same market so some of the principals in these companies came together and the two companies merged in December of 2010. That was a great thing because what it did is it put the staff that took all the intellectual property and the patents and all and combined them together and then it enabled what we think is a better platform from the UControl side to be marketed to the broadband companies, the cable TV companies. It allowed the iControl to be monitored to serve all the security companies—one of the largest, of course, is ADT Pulse. But as you've mentioned, you've got Time Warner Intelligent Home, Comcast Xfinity. Of course, they're merging. So that is the de facto platform for the broadband industry.

Schley: In your company's case, did security start as a telephone side product—

Beaty: Yes.

Schley: Is it now a broadband side product?

Beaty: It started as a telephone side project because it uses twisted pair. But it was actually a separate company. I think at one time we had sixteen or seventeen separate companies and Bryant Barnes, our CEO, that was a huge major task that he accomplished over these last seven or eight years bringing these companies together. That was not an easy thing to do. But it has been completed and that has been a huge benefit from the standpoint of what we can do as far as investments.

So what we did is we saw that as a future of where we could grow our business. Then there's another company called Zubie that's headquartered in Charleston. That deals with a connected car. They're developing the technology. Then there's some other companies. I don't want to go through the list of them but we are investing in a good many other companies that we feel like have a lot of potential. But they're all in this neighborhood of what we call the Internet of Things.

Schley: Connected world.

Beaty: Connected world. We really feel strongly about that.

Schley: I wanted to talk to you about two other subjects in a little more detail. The first is video and it's so interesting to me that today companies like yours started out—well, you didn't start out but you became a cable TV company in the Sixties and now, as you talk about margins earlier and pressures on video, is the day going to come when Comporium and perhaps in terms of your outlook, the industry at large, no longer depends so much on video as a revenue source? Where's that going?

Beaty: Not to be too bold, I would say today, our dependence on video is tremendously lessened from what it was five years ago, certainly ten years ago absolutely. Twenty years ago. I think the answer is yes. I believe a lot of companies—I say a lot of companies—there are about 900 independent cable TV operators in the country. There's a good possibility that 300-400 of them may just get out of the video business and actually just get out of the video business and tell their customers to go to DirectTV or Dish and that gives them more bandwidth to use for high speed Internet and perhaps voice. What I'm trying to get at is there's probably about a 14-15% margin on the video product.

Schley: Today.

Beaty: Today. That's all. And everyday that margin is shrinking. For example just this month we see where Fox, Rupert Murdoch, may make a play for Time Warner Media. You think about that—I was mentioning nine companies earlier that own 95% of the market—now you'd be taking about eight owning 95% of the market. There's an unsettled feeling in the whole industry because you've got Comcast buying Time Warner; besides, you've got AT&T buying DirectTV—because AT&T with their U-verse, is tremendously capital-intensive. This would give them an ability to put a footprint across the whole United States for video and concentrate on their high speed Internet product. And then this thing with Fox and Time Warner Media to me, I mean a lot of the industry folks think that may be a sort of a kneejerk, maybe too hard, but a reaction to the fact that these other companies get so much bigger. So it's all about leverage. It's about leverage. And today the content owners have the leverage. The content has been king for a long time. The one area we do believe that there's just got to be some changes in and that is the rules and regulations that govern how broadcast stations and cable companies negotiate for carriage. It's called retransmission. That's another whole story.

As I said earlier, a lot of us believe that the linear will be around for a long time in HD and what will drive it will be live sports. But the price of a bundle of services is getting today almost out of reach for a lot of Americans. And that's a tragedy because these big media companies—they're public companies on Wall Street and every quarter they kind of come out with these earnings and they've got to up their—and the key thing about this, overall the MVPD market is flat and slightly down as we've seen some cord-cutters. So if they have fewer paying subscribers, what are they going to do with the rate? Then if these bigger distributors get even bigger, where do you think they're going to look for money? From the smaller cable operators. It's going to be an interesting time.

Schley: Your conversation about what's going on in the video business and the marketplace as large—very telling. But as a cable guy, as a guy who's grown up in cable, Is it dismaying, is it disheartening, is it ironic, what's happening now, or is it just a progression...

Beaty: Stewart, that is a really good question. Bryant not long ago said, "Bill, you really love video,." And I said, "That's right." Video is changing. Again, let me put it to you this way. Consumers today are watching more hours of video content than ever before. Many of the producers will tell you that people that own the content, they'll say this is the golden age of television. You get AMC with "Mad Men." You name all these networks that come out with big hits...

Schley: Sure. "Walking Dead."

Beaty: So video is not going to go away. How it's distributed, priced, bundled—I'll give you an example. We have eight contracts that represent 85 channels. The eight program companies that have 85 channels. That's where things have really gotten off because the consumer, to pay $100 and they watch eight channels, what we believe is going to happen is that first off, the consumer is going to really ultimately decide how they get their television. You've heard this—it's almost cliché. It's going to be on-demand, anywhere, any device. How it's priced, is it bundled, does that mean some a la carte—all those kind of things, and it's going to be an evolution. I don't think anybody right now really knows how it will evolve. In fact it may not ever really—I mean, nothing ever really stays the same. If there's one thing that's constant, that is change. And so it will probably keep changing.

Schley: So video margins are declining and there's pressure on that side of the business. And maybe the fundamental relationships may change with your company and programmers and others. But I'm so captivated by what you talked about: the Internet of Things market, from this standpoint. Because we read a lot, hear a lot about that, companies like Cisco are all over the Internet. How does a cable/broadband company participate in this growing sector of the economy, this Internet of Things environment?

Beaty: We spent billions of dollars building the infrastructure. Most of it that really is out there today that has the capacity, the speed, is fiber. And it has been built out to cross this entire country. It's being upgraded all the time. All of that has to be transported. What we have as I said earlier is going to be extremely valuable. Even the mobility—there's a lot of wireless out there. But even that has to come down and be in the fiber infrastructure and transported even before it maybe goes out in the area. So the demand and the capacity to transport all of that is going to just increase exponentially. Now at the same time you're going to have to—I've heard that several cable companies even recently, just as we've done, who've gotten into the data center business because you're going to have to store it. For example, the iControl platform software, we store that software at Immedion. We can leverage that and sell wholesale in security by iControl platform's security monitoring automation to the rest of the industry. That's revenue. Then these big wireless companies, they have to have backhaul to transport that and that takes capacity on this infrastructure. And it's just on and on and on, but what I was trying to get at is this connectedness with all these devices being connected; all that information has to be moved around. And that's where these—we call them cable operators, but really they're broadband companies. We're broadband companies. And that is really where our future is going to be. We think it's going to be really good.

Schley: It's funny because there's this steady exorcism of the word "cable" in all the companies. You guys did it long ago. It's not Comporium Cable necessarily.
It's just Comporium, right?

Beaty: Comporium Communications.

Schley: You're a broadband company. More data, more demand is good for you as long as you own the pipe.

Beaty: That's it. We don't have any intention of not continuing to upgrade our infrastructure.

Schley: Understood.

Beaty: What I'm trying to get at is the business customers in our region, in Charlotte, we're growing. Let me touch on this just to give you an example. The city of Rock Hill has been struggling with the redevelopment of our downtown. Five or six years ago, Bryant, John, some others from Comporium met with the mayor and some of the city officials, and started exploring ways we could help redevelop the central part of Rock Hill. As a consequence of that, we have in fact built a 50,000 square foot office building not too far from where our headquarters is. We can look at it. It was an old dilapidated terrible-looking parking lot near where our headquarters—in fact across the street from our headquarters building, we're turning that into—working with the city—into a beautiful downtown park with a geyser of water scooting up in the air and everything. It's going to be an attraction. We're also working on a hotel. Now that's strictly from a commercial standpoint and also maybe three or four or five years down the road, an arts center down there. That will transform that whole part of downtown in Rock Hill. That's important but getting back to where this Gigabit, this Zipstream technology comes in, is we're working with Winthrop University in Rock Hill, York Technical College, the city of Rock Hill and developing what we call a Knowledge Park. We had an old textile mill which at one time employed 5,000 people in Rock Hill, even as late as the mid-Sixties. The building's been vacant for twenty years. It takes up all this acreage right adjacent to a beautiful college campus, Winthrop University. So that for the most part has been taken out. We're going to be redeveloping that area but redeveloping with the idea that we want to bring in technology-based companies that would take advantage of Zipstream. And what we're finding out is working with Clemson University, is that there is a real appetite for these type of companies to come in and they really sort of feed on themselves. It builds. We call it Knowledge Park. It's been a beautiful thing because it's just an amazing thing when you bring together the private sector with the public sector and they're both working together and pulling together. It's just terrific with what you can get done. Not that we didn't work with our local cities and counties before but we did. But just in the last four or five years, Bryant Barnes working with our mayor, Doug Echols, working together to bring about Downtown East with our park, our office building, hotel. Then at the other end of Rock Hill, Knowledge Park.

We've also helped set up in a building called the Citizens' Building, what we call the Incubator. Right now there are about ten companies are actually in there and they are just very much startups but two or three of them are getting ready to move out because they've grown. So we think that helps the community from an economic development standpoint. We know it does.

Schley: And the Zipstream. The connectivity is very much a part of that development effort.

Beaty: Absolutely a part of that. And it's only going to grow. I believe the cable industry today is more upbeat than really it was four, five, six years ago. The rates were going up five or six years—now, they're just completely out of sight. Believe it or not as these major programs begin to see their numbers begin to drop subscriber-wise—we're seeing it in video. But we're growing the Internet business and as I said earlier, we think there's really a future to not just grow it in terms of numbers of subscribers by selling higher speeds and more data—it kind of goes together. We haven't gotten any usage-based pricing where it's a meter like electricity, but it could be. One day we may be looking at it from the standpoint, "Well, if you buy a higher speed, you get more capacity." You know what I'm saying? But that's still out there.

Schley: On that upbeat note about rising data demand and the ongoing modernization of like I said, a multigenerational family company. Bill, we really appreciate you taking time to talk to us. From Kansas City on behalf of the Cable Center, I'm Stewart Schley.

END OF INTERVIEW

 

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George Barco

George Barco

Interview Date: March 26, 1992
Interviewer: Marlowe Froke
Collection: Hauser Collection

George Barco was frustrated. The former deputy attorney general for Pennsylvania had come to New York for one of his favorite pursuits: continuing education. The Practicing Law Institute sessions had, as usual, been fine, but now, back at his hotel, he'd settled in for a little TV only to find the set in his room didn't work. Barco called the hotel's management and ended up getting a primer on its master antenna system. "He was fascinated," recalls daughter and fellow attorney Yolanda, who'd accompanied her father on the trip to do a little shopping. "He wondered if the same kind of system could bring TV to a town like Meadville." Like many towns in Pennsylvania, Meadville, where the Barcos lived, was surrounded by mountains that obstructed the TV signals reaching in from nearby cities. Barco, who was then the solicitor of the Meadville School District, went home and pursued his idea in his spare time, approaching RCA about its master antenna technology. RCA referred him to Milton Shapp, whose Jerrold Electronics built community antenna systems and manufactured the equipment that went into them.

The two met in 1952 and soon after, Barco formed Meadville Master Antenna Inc. (MMA), hiring Jerrold to provide equipment for the three-channel system. MMA was an instant hit. "There was more joy, when people saw those three channels for the first time in downtown Meadville, than for any of the successive improvements we made to the system over the years," Yolanda Barco recalls. The Barco family ran the Meadville system for decades, but George's contributions to cable wouldn't come only from his background as an operator. They'd also come from his practice of the law and his love for education. As general counsel of the Pennsylvania Cable Television Association and a leader in both that group and the National Cable Television Association, Barco would have a profound impact on the governmental and industry policies that sprang up to govern the way cable television did business. Born of immigrant parents in 1907, Barco attended Allegheny College in Meadville and earned his law degree from the University of Pittsburgh. After serving as assistant district attorney and then deputy attorney general of Pennsylvania, he opened the firm of Barco and Barco, establishing a private practice with Yolanda. Meanwhile, MMA thrived, capturing 3,000 subscribers within its first two years. Not long after that, it reached 9,000 homes, ranking among the larger systems in the U.S. Even as he worked to expand the system, however, Barco realized that the nascent community antenna industry already faced more than its share of legal and policy tangles.

In 1956, his son-in-law, Jim Duratz, took over managing the system so the Barcos could tend to their law practice and broader industry concerns. The 1950s and 1960s were years of opportunity for acquiring and expanding cable systems, but Barco refrained from adding to his holdings. He served as legal counsel to the PCTA and several cable operators and wanted to avoid ever having a conflict of interest, or even the appearance of one, with a client. Of the many legal battles fought and won during this time, four stand out as basic cornerstones for cable development and Barco played a critical role in each. The first involved establishing cable's right to have its plant in the public right of way. The second, telephone pole attachment, loomed during cable's early years, as phone companies insisted on restrictive contracts and exhorbitant fees in exchange for access to their poles. Barco successfully challenged a number of utility companies before the Pennsylvania Public Utility Commission, which decided not to limit or foreclose cable's access to poles. Another early issue for cable operators lay in the Internal Revenue Service's attempt to levy an 8-percent excise tax on subscriber fees. With Barco's help, a Meadville subscriber sued the government on grounds that the tax was illegal. Barco, working with the NCTA, relied on the master antenna concept, arguing that subscriber fees paid were not for equipment or wire service and therefore weren't subject to an excise tax. He won his case and the government refunded $25 million to cable operators through an expedited procedure developed by the Barcos with the IRS. "George refunded every penny of his share of the refund to his subscribers," recalls fellow cable pioneer Robert Tarlton. "That's the kind of man he was." Barco's most dramatic victory occurred in the NCTA board room in 1962, after the association had lost a pair of lawsuits over the question of whether cable should pay copyright fees in order to retransmit TV programming. Fearing another loss, board members felt it was hopeless to pursue the issue further. Barco disagreed. A member of the board himself, he argued vehemently that cable, which received programming on its community antennas and then shared it among households, was not a transmitter of programming and therefore not legally subject to copyright fees. Barco promised to negotiate a fixed fee with attorneys representing the NCTA in order to hold down costs for the appeal. Finally, the board voted to pursue the case.

The Supreme Court agreed to hear cable's case and, in a stunning decision, reversed the lower courts and issued an opinion in the industry's favor. Years later, Congress would legislate that cable would have to pay copyright fees through a compulsory license, but the industry would enter that battle on a much stronger footing than it would have, had it not won the Supreme Court case. "We were in a much better position to negotiate because the law was on our side," Yolanda Barco recalls. As he helped fight cable's legal battles, Barco kept his eye on MMA, insisting it upgrade its technology periodically to improve its offerings. "He didn't know much about the technology used in a cable system, but as a viewer, he always wanted more service," Yolanda recalls, "and nothing was too good for MMA customers." In 1963, MMA became the first cable system in the U.S. to utilize aluminum sheath cable, permitting 12 channel capacity. The system added its own local weather channel, training a camera on gauges mounted on a roof. In 1967, it launched a local origination channel still in operation today, making it what many believe is the longest continually running LO channel in the U.S. Another motivation behind George Barco's steadily expanding system lay in his love of education. In 1979, he and nine partners founded what is now the Pennsylvania Cable Network, a non-profit network that began delivering public affairs and educational programming, including college courses for credit, on a statewide basis. It took three years of research to get Pennarama, as the network was called at the time, off the ground. As a faculty member and administrator at Penn State, Marlowe Froke, now president of The National Cable Television Center and Museum, worked with Barco to create a partnership between the cable industry and the university for delivery of programming 24 hours a day. "George believed that cable's role in the long-term future would really rest with education and community service," Froke recalls. He influenced me a great deal." In another effort at furthering cable's involvement with education, Barco co-founded The Cable Center and Museum, now at Denver. Bill Cologie, president of the PCTA, sees a connection between Barco's vision of using cable to distribute education and the government's recent efforts to encourage development of an information superhighway. "What the federal government is trying to do today, George and his friends were trying to do 20 years ago," he says.

A passionate believer in community service, Barco inspired his colleagues, who called him "Mr. Integrity." "He had high standards and he fought for them," recalls John Rigas, founder, chairman and CEO of Adelphia Communications. "You may not have agreed with him on something, and that was okay, but you knew you had a fight on your hands. He'd never let go." Froke adds: "He believed in the social good that could come from cable. He was the conscience of his industry." Barco's influence lives on every time a Pennsylvania college student registers for an on-air course and also through the Barco-Duratz Foundation, a philanthropy established to fund educational projects. It has made substantial contributions to literacy projects throughout the state of Pennsylvania and has helped a number of colleges and universities participate in the Pennsylvania State Network. At a 1975 awards banquet of the PCTA, Milton Shapp, then Governor of Pennsylvania, hailed Barco as "an untiring and effective advocate of cable's right to exist, grow and develop." Bill Daniels, a fellow cable pioneer and founder of media brokerage and investment bank Daniels & Associates, remembers Barco as a winning general in cable's early battles against powerful competing interests. "Most of the early pioneers in cable were salesmen or engineers," he explains. "When the phone companies, broadcasters, governments and theater owners started gunning for us, none of us had their legal expertise. That's why George Barco was the right man at the right time." Mr. Barco successfully opposed efforts which continued for some 20 years to impose state public utility regulation on the industry and he conducted extensive negotiations and litigation with the objective of limiting the authority of municipalities to regulate cable tv to the exercise of polic powers for safety and convenience in the use of public right of way.

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Yolanda Barco

BarcoYolanda

Interview Date: October 31, 1990
Interviewers: Pennsylvania State University student (name not available); E. Stratford Smith; Michael McKinley
Collection: Penn State Collection

STUDENT: Thank you for taking time out of your afternoon to join us, here with E. Stratford Smith who is also going to ask some questions this afternoon, and also one of our Club advisors, Professor Michael McKinley. Once again, thanks for joining us this afternoon. My first question is—I understand that you became involved in the cable industry with your father. What exactly got you to really get into it?

BARCO: My father was the one who started the interest, and he is unusual among cable people, rather he was, because his interest was mainly because he was interested in having cable television come to the community, so that he could see television. And the whole interest was on the part, as you might say, of a consumer, which he was in this particular instance, to get television available in his own home. That's what started us. And of course I supported his effort. Later, our interest became much broader and much more related to the industry, rather than the original interest that got us into it.

STUDENT: Obviously, first and foremost a lawyer, can you give me some examples of some of the litigation that you participated in regarding the cable industry, things that you got involved in as a lawyer?

BARCO: Yes, I can tell you that, but let me say that I have to tell you, as Strat Smith, who is listening understands, my father and I worked as a team. While we were both lawyers, and have been lawyers all of these years, since 1952, I also have interests directly as a cable operator. I was general manager of the system which we started here from 1953 to 1959 and actually was involved in the day-to-day operation. Throughout our involvement in MMA at Meadville, I was directly involved in the day-to-day of the business. However, I was also involved in the legal aspects. My father was mainly involved in legal aspects. Now, to answer your question, I worked with my father during the period when he was the General Counsel of Pennsylvania Cable Television Association, and he was General Counsel from 1955 to about 1979 or '80. Our primary efforts in the beginning years were to establish the right to be in the rights-of-way of the municipalities at all. Much of this was done by negotiation and by efforts to persuade people from time to time. At the very beginning, the question was whether you were going to be allowed to be in public rights-of-way at all and whether telephone companies and utility companies would allow you to get on the poles. Now, let me just lead through. On the telephone issues, my father as General Counsel and I assisting him, just worked in many, many ways trying to get better terms on a negotiated basis. Then, we were involved in several suits between the Public Utility Commission; the first one as to the question of jurisdiction over cable as a public utility. This was in Pennsylvania. And there were several times at which this issue came up in one form or another. One of these times, we were of the opinion that this was really instigated by the telephone companies in order to have us be regulated by the agency, that they had such strong involvements in being able to affect the decision. So, to repeat then, we had these issues on public utility regulation. Then, there were a series of cases involving the regulatory rights of municipalities over cable television. Second class townships especially and we had favorable results in a number of these cases. But there was a case of Scotdale against National Cable Television Corporation where it went to the Supreme Court of Pennsylvania, and in which it was decided that the municipality had authority to regulate. My father and I always were of the opinion that municipalities did not have the right to regulate cable television, but the adversary was not only the municipalities but also the cable television industry that preferred this form as against others. Then, related to that, was my participation in 1972 and '73 on the division of regulatory authority as between the federal, state and local government in which I took an opinion that was different from the industry, and from the report that was filed with the FCC, I again took the position that the industry should not be regulated at the local level, that it should be regulated only by the FCC. This was against industry position, but in effect, in time it became, I think, the position that the FCC took, in the sense that it withdrew from its requirements related to local governmental regulation. We took an excise tax case involving one of our people here at the same time that Strat Smith's firm was involved in a parallel case involving the excise tax and we took several cases on the non-duplication rules. There were three of them in which we were involved. Probably the most important thing we ever did was on the copyright issue in which my father was responsible for the industry, I don't say solely responsible, but certainly was a foremost speaker in favor of our litigating the issue of whether or not we were subject to copyright under the original act and then we did an awful lot of work in the negotiations that followed over the years ending in the mid 1970's when the Copyright Act was finally adopted. We did an awful lot of work in attempting to influence the way in which that Act was finally passed. I may have forgotten one or two things, I frankly didn't expect you to get into the legal side of this thing, I have to tell you.

SMITH: I'd like to take you back a bit to the franchising and regulatory problems locally. Did you and your father apply for the franchise in Meadville? Or did you take the position at the outset that they didn't have the authority to grant them?

BARCO: We always took the position they had the authority to grant, we didn't call it a franchise, we called it a permit to use the rights-of way. We always felt that the municipalities had the right in the exercise of police power to make certain that our location did not interfere with public travel or safety or property safety. But, we felt that there was no franchise, in a sense that there an authority to control your business, to regulate your business or to involve anything having to do with what I used to call the "bundle of rights" that we needed to operate. And we needed more than permission to be in the rights-of-way. The franchise, in our view, had to encompass the total kinds of permits that one would need to operate. Dad did, early on, arrange to get a permit. Then when there was a case decided in Pennsylvania which stated that all permissions to use the rights-of-way had to be by ordinance, and this had only been by resolution, he then arranged to get a twenty-year permit to use the rights-of-way and this was done by ordinance. Then in 1985 we went back and asked for a franchise, and termed it as such because at that time the Cable Policy Act of 1984 had been adopted and was in effect. In fact, I think we were one of the first to have to go forward under that, which we did because our franchise was terminating in a year or two.

SMITH: At the time, did you see the question of home rule having anything to do with the authority that municipalities or townships might have with respect to regulating cable?

BARCO: It never has been either in Meadville or in the other areas a significant factor, because when the Supreme Court of Pennsylvania decided, they decided that the police power by implication gave the other power as well. Now, you should be interested to know... this is not in the decided cases... but the Supreme Court case was decided and there was a dissenting opinion, but it was decided by a person who had been appointed to the Supreme Court by Milton Shapp. His name escapes me now but he was Milt's lawyer for many years and a close personal acquaintance of Milt.

SMITH: That would have been Isadore Pachel?

BARCO: That's right. As you know, Milt was liberal and Pachel was liberal. We were told by the Supreme Court, one or two members afterwards, informally, after the opinion, that they all deferred to the opinion of this man or to his views because they knew that he knew a great deal about cable and had been associated with Milt. So this decision was really decided by this man who I would say did not have very much depth. I think the decision is a poor one, it's decided on policy considerations rather than on the law. I will say also, returning to your question, that home rule had no relationship with the decision, it was a decision that in the Commonwealth Court had to do with the fact that they considered the arrangement, which was an ordinance, to be a contractual undertaking, and that ordinance, in that case had provided for rate regulation. So they reasoned in the Commonwealth Court that there was a contractual under- taking without regard to authority the company would be bound by it. On appeal, it was decided that the implication from the police power of rights had with it the authority also to generally regulate the operation. And then, there were policy considerations like you had to control a company that has no competitive pressures on it and there was that kind of language that was the additional support for this decision. Home rule has not taken part in any of these decisions in Pennsylvania.

SMITH: If that decision of Judge Pachel went so far as to use the police power to justify rate regulation, I would say that was carrying it pretty far. Was that the impact of the decision?

BARCO: Yes it was, and he did carry it very far. But you see, one of the problems, and we saw this again and again as lawyers, in attempting to deal with the regulation of cable television, and one reason that I personally was in favor of the FCC, is that the knee-jerk reaction of the man on the street, is that it looks like a public utility, acts like a public utility, it must be a public utility and somebody has to regulate it. The more information that they would learn over time, the opinions would change. This, for example is what happened at the FCC. The FCC at the beginning apparently believed that we needed to be regulated as to rates. Partly because of the industry position, it seemed that there had to be some regulation. The first reaction of the FCC was that we had to be regulated as to rates. Over time, they simply saw that this wasn't the way to do it. And we had similar reactions, often, in other ways. If you could keep the local governments being the same people time after time it would not be so bad either but they were constantly changing. I would say that unfortunately, the Court that decided these regulatory matters in Pennsylvania...We won a lot of cases, we won four or five cases, that's not a lot, but we won a lot of cases on second class townships not having regulation which involved basically the same law. But when you went to the Supreme Court or to the Commonwealth Court their political philosophy would come up first, rather than the law, as such. That was my reaction or my belief. Yes, that's exactly what Pachel decided. There is language in there that goes beyond just rate regulations. It talks about controlling the operation generally because of its being essentially a monopoly. That was the finding. There are no facts here, this is a pure question of law. The background, feelings, ideas and even experience with cable television as a subscriber, played a part in these decisions.

STUDENT: A lot of us think of cable television systems not providing local programming to the community, but the system that you operated along with your father was different. Could you explain how?

BARCO: I'm going to have to start with the law again, although I didn't plan to. When the Second Report and Order came out in 1966 there were noises in it to the effect that perhaps cable would not be allowed to originate. I've often said that was one of the few things the FCC did to allow or to encourage cable to progress because when we heard in Meadville we might not be allowed to do this, we thought we should immediately start doing it. So that was the start of it. And in September of '66 we hired a person who spent until June of the following year deciding how to do it. Now in those days they didn't have the equipment developed. There were very few signals that had been originated and passed on cable, there were a lot of things that had to be learned. We started then in June of 1967 and we cable-cast on a regularly scheduled basis. Now we didn't do this as a lot of companies did, occasionally, we had a schedule. We started out with a locally originated religious program, we're talking about local churches, we're not talking about the kind of ministries of the air, we're talking about community churches that had programs on regularly, we're talking about public affairs programming. We started cable-casting gavel-to-gavel the city council, the school board, early on. We had a lot of special programming, programming that we produced ourselves—game shows and shows that were wrapped around films that we purchased and other things. We did this consistently and on a program schedule that was established in advance and made available down through all of the years. After we withdrew from operational responsibility of this system which we did in 1987, the successors continued the gavel-to-gavel coverage and the special events coverage but they did not produce other programming as we had done all those years. We are still doing gavel-to-gavel coverage, much like the C-Span type of thing, setting the camera on important meetings from beginning to end. They cover a number of municipal subdivisions. And again, they're done consistently, every meeting, week after week after week, which is what you have to do. You cannot do this kind of thing occasionally.

SMITH: Can you comment on an article I read relative to the FCC's handling of the 1st Amendment during the first 40 year period of its history. I had to come to the conclusion that it wasn't that the FCC was against the 1st Amendment, it just didn't know what it is.

BARCO: One of things that I always felt was extremely interesting about my father was that he always viewed cable mostly, in terms of Constitutional law. In the beginning, 1952, '53, there wasn't a great deal of track. There wasn't a track on anything. There wasn't a track on the technology, there wasn't a track on the financing, there wasn't a track on the law. It's amazing how much support he got for what we wanted to do, just from the Constitution and a general practitioner's idea of the Constitution. Interestingly, I think that the industry used the 1st Amendment to rescue it, and I think appropriately so. I think they had good grounds. But they used this to rescue themselves from the position that they had backed themselves into. You would have to have attended the meetings that I did on the federal, state and local advisory committee to the FCC that was established after the 1972 Cable Television Rules, to hear the industry espouse the view that we should be regulated by what they said is the "most local level of government." And they pushed for that, pushed for that, pushed for that. You remember the excesses of the cable franchising that went on in that period. Then they had to get out of it or not survive. Then the 1st Amendment came to the rescue. The 1st Amendment helped them to extricate themselves from the regulatory morass that they had played a big part in getting involved in.

SMITH: It certainly did that. There are going to be any number of continuing cases until the 1st Amendment issue gets back up to the Supreme Court again, possibly in the Preferred case and we still don't know how far it's going to go. I think it just fascinating going back to the FCC and their attitudes about it, to consider that, as you said, in the Second Report and Order, they fiddled around with the idea that cable systems should not be allowed to originate programming, and the a few years later, turned around and ordered them to do it. That kind of suggests to me a rather confused understanding of the 1st Amendment, if they were even thinking about it at the time.

BARCO: I don't think they were thinking about it at all, but my father was. When we went in 1969, after we'd been operating for several years, and built this building, which you saw, particularly with the cable-casting in mind when we opened it and dedicated it, we invited Ken Cox to come down and see what we were doing. Now this was before they adopted those other rules, requiring.. He was impressed with the kinds of programs that were being provided, and I think he saw that this was quite different. I don't like to think that that's what made him decide that it ought to happen. He was very impressed with what he saw here, and thought it was a very good service for the people.

STUDENT: I'm going to ask a question about educational TV. You were instrumental in the start of Pennarama. Why did you start Pennarama, and what exactly do you think its role will be in the future?

BARCO: We, of course, started Pennarama long before the present vogue, and you know that cable has been trendy, like culture generally is. Today the talk is about education and cable. But, again, I have to refer to my father who said to Marlowe Froke many times, that he believed that when the final chapter is written on cable television, its most important contribution will have been to education. That's what he said fifteen years ago, before this happened. It is complicated to tell you exactly how this started, but I just want you to know that it started primarily because of my father's long-time interest in education, unrelated to television. He has always been doing something important in education, all of his life. He had a lot of basic views, let me tell you one or two or them because they're important. He felt that education was not only important for the obvious realization of what human beings can have under the democratic form of government, that is what makes you equal in the end. But he also believed that education was absolutely essential to the system working. When the literacy problem became such an extreme thing, ten to twelve years ago, he became alarmed that when the population became illiterate and uninformed or uneducated, unknowledgeable, that the system would break down. We cannot have a democracy without an informed, educated population. So it was his interest in the law and in the system and in government that was also involved in this other business. He was also interested in people advancing themselves, but that was secondary. So, he had a lot of things going all the time, he had a lot of connections with people in state government. He had represented the Department of Public Education in state government, and they came up to him when they knew he was in television, (this was in 1972 or '73) because they knew him well, and said "George, don't you think, could we have channels of television available only for education." And they wanted multi-channels. So he was chairman of an educational committee at the state level here in cable, Pennsylvania association, and they started exploring ways of doing this. There were a series of meetings over several years. There's some history here that's very interesting, that we don't have time to talk about today, but in the end a group of 12 cable companies, some large, some small, TCI, the largest in the world is one of them, and the smallest is a system of 600-800 subscribers, Times-Mirror is one. Mostly, the leadership came from independent pioneers in Pennsylvania. They decided to undertake the responsibility of inter-connecting cable television systems for the distribution of one channel of television which would be dedicated to education. That started in 1979. There was a partnership between the cable television industry on one hand and institutions of higher learning on the other hand to do this. Cable was supposed to provide the distribution system which we did. Penn State was the one to manage participation by the other institutions of higher learning. We've come a long way. But I would say that our expectations were that we would be a lot farther along than we are. I don't want to concentrate on where we'd like to be.

We have come a long way. We have provided 24-hour educational opportunities. But we need to do a great deal more. To answer your question, as to where we're going to be, I believe that we have got a revitalization, a re-direction. We have some questions of determining exactly what our role would be in this interconnection. It took a year or two to get that worked out. I think we came to realization which my father never thought was necessary, but we must do it; great deal more on promoting. One must sell education, just as one must sell the entertainment programs. We haven't done that, and we're going to do that. I think that it is extremely important and while we have enlarged the kind of education that is being provided, the important emphasis is on continuing education, continuing adult education. I think there is more and more understanding that we have to give attention to this in a variety of ways. I believe television will end up being the most effective and do-able way of doing this. This whole issue of continuing education is just beginning to be recognized as being something that we have to structure and make available, and do a lot better than we've done it. And cable television can play a very important part, and I think Pennarama will be some very important leadership in this area. Let me make another point. Another important thing about Pennarama is that it is not nationally involved. There were several things that I'm concerned about in cable television today. One of them is, the focus is all on national programming. The local origination, which was of great interest in the period I mentioned, there's still some interest, but it isn't where it ought to be. I think cable television's next area of development has to be to get into some state and regional kind of expression. I don't think it's good to have everything coming from one place, or from a national focus only. The country depends on all of the things that happen at the state and regional level as well.

STUDENT: Another form of education, I would imagine is the Cable Television Center and Museum. That was another thing which you helped to create.

BARCO: It was my father again, who was one of the founders there, yes, that's true. That ties in with his interest in education. He was never interested in it as a place to keep the history, although he was interested in the history. It was the learning part of it that interested him.

STUDENT: What's your view today of the Museum as it continues to grow. What hopes do you have for the Museum for the future, for people to come see how cable got started. Many people really don't really have the true historical knowledge of cable as they might of broadcasting.

BARCO: I think that the Center and Museum is very important for a variety of reasons. I think that cable developed as a do-it yourself kind of thing, and there are a lot of reasons why the Center is important in its relationship with an institution of higher learning. I think is critical to the industry's well-being and to the industry's development. Up until almost ten years ago, most of the people learned about cable on the job. We really need, in my view, to be connected, for the people who are coming into our industry and to the people who are in our industry and to a broader world of learning about technology and the relationship of our technology to other technologies. Most important of all, I hope that with a greater breadth of understanding, this has become industry-wide, but also the people within the industry will establish exactly what our place is in the telecommunications order of things. I think one of the problems that cable has is that it has not established its identity and role. I have a very definite idea as to where we are and where we should be, but I don't think the industry has ever thought about itself enough, and one of the very good things about being associated is that people interested in cable will begin to enable us to position ourselves, to understand better what we are and where we should be in the order of things. Now that's one aspect and of course there are a lot of other wonderful things that can come out of this. I originally had hoped that there might be some development in the technology itself that would come out of this association. I now think that will probably be more related to what is happening at NCTA with its Cable Labs. But I still think the industry needs to understand itself and I think a relationship with an institution of higher learning like Penn State, which has a lot of great resources in technology and in communications and telecommunications can help us do that.

SMITH: I wanted to go back to the comment that you made right at the beginning when you said a motivation for your starting the cable system, which in those days was straight-out a community antenna system...incidentally is that why the name of the company was Meadville Master Antenna, that it was looked upon as a community antenna?

BARCO: It was even before the community antenna. The master antenna was the antenna which was used on hotels and other apartment buildings. Then it became the community antenna when it moved to take care of a community. We did not have the benefit of that language concept when we started and we simply thought of it as a master antenna for everybody there.
SMITH: I'm fascinated that you said that a motivating factor was your father's desire to see television. Knowing what a wonderful community-minded man he was, that it would have been much broader in that he would have seen it as an opportunity to provide a community service.

BARCO: Oh, no, no...first of all, before I was out of law school, he and I and sometimes my sister, would spend a week in New York City. He was attending the Practicing Law Institute which was a continuing education service available to lawyers. He would go there, and I went to a class that interested me and he would attend a class, and my sister would shop during the day. At the end of our day he would save two hours a day for television, in his room. When he got there, it wasn't there and the second day, it wasn't working. He was very irritated because he wanted to see it and he had paid to see it. I was mildly interested and one day when I came back from my class and went to his room he was in the room with four or five people and he had absolutely made a nuisance of himself and insisted on seeing whoever it was who was responsible for the television in the hotel. The RCA people came to explain the master antenna system. He said "If you can do this for a hotel, can you do it for a town?" They said "We're working on that." That's how it started. For the first two or three years, my father bought first -lass from Jerrold and put a lot of money into this system, much more than people really did in those days. People did take shortcuts, but we didn't take any shortcuts, and he had paid a lot. He always identified with the subscribers. If someone called our home...in those days of cable you'd have breakdowns...someone would say "George, my television is off." Dad would say "Well I am having the same problem you're having, and I'm very upset about this. You spend thousands of dollars to get something done right, and you can't get the television when you want it. Now, you hold on. I'll see to this. We're going to get our television reception here. I'm going to do whatever is required." He always had that referent. He was never an entrepreneur, he was a viewer. He always wanted more signals. When we had only a three channel system we sent out a survey and said which channels of these do you prefer? And somebody wrote back and said "All twelve!" I brought this to the meeting and started laughing and said "This fella doesn't understand, he wants twelve." And Dad said "I agree with him 100%, we should have twelve. I want twelve." And that's the way it was. Here, he always viewed things as a subscriber. And he looked at television and liked television and was always checking programming. When we put on MTV, he was looking at Cyndi Lauper, stomping across the stage, he said "Come in here and look at this. This isn't sex, it isn't violence, what is it?" But he looked at everything. He would concentrate on the news, on sports, and in the earlier days he did like the dramatic presentations, but it was sports and news. In the afternoons, the noise of the television used to bother my mother, to her it was noise. So he had earphones. He read while he looked at television, he did both at the same time. He was a great reader too, he didn't stop reading. But he thought it was a tremendous information source. He liked to look at people on the television, public figures. He would come out with ideas on their personalities and insights based on watching them on television. He would have ideas on Anwar Sadat, he had a lot of ideas about him as a man, just looking at him and hearing him speak. He felt that television was fantastic. Fantastic. He marveled at it, always.

MCKINLEY: You talked about your father using cable television as a great resource for information. What are your thoughts about cable television being used in the classroom?
BARCO: I think it's a very good resource. I don't think that enough use has been made of it for education. The problem, from my experience at Pennarama is that the educational establishment has not undertaken what it needs to utilize it. This is another subject that maybe we can talk about another time. Educators are all tied to the conventional classroom and you have to have an institutional change to do it. Why I think Pennarama is so very important is that it is institution related. The other initiatives that are taking place like the Alliance for Education are mainly media things, they are not educationally based, with people who are in the business or in the profession of teaching others. The answer is yes, it's in the classroom, and educators at all levels are going to have to start figuring out how it should be done and using it. I don't think they've come to grips with it at all. It is just a resource. It has to be coordinated and integrated into an overall thing. A video should be a component of all the resources like books, like other things. I don't want to do away with the printed word, but video is important to education, should be used.

MCKINLEY: I have one more question, and that's regarding policy issues. Are there any particular issues that the students in broadcast cable or in the mass media should be aware of or should be following to get a better perspective on the cable industry ...where it is today, where it's going tomorrow?

BARCO: That is a very broad and very difficult question. I have to quote my father again. One of the important policy issues that he thought schools or institutions of higher learning should be dealing with a great deal more than they have been, involving not only cable television, but television and mass media, was the matter of ethics. He felt that there had to be a lot more attention being given to what are basic ethics that should govern people in a free society where you have a free press and you have mass media. What are the guides, what are the standards of behavior of people who are out influencing people with the powerful television media. He felt that not enough attention was being given to this in the school. I know he was hoping that in the School of Communications here at Penn State and at other places that this would be something that would be developed. He thought that was a central policy issue involving all of media that was not being addressed. As far as cable television is concerned, I think there are a lot of policy issues facing cable television today that are not identified and not dealt with. One of cable's problems over the years has been its tendency to deal with things on the basis of expediency instead of rationally developing a concept and deciding where do we stand. The most recent policy question on this indicated program exclusivity. The industry more and more has a tendency to take whatever has to be taken, figuring that somehow it will work out of it. I believe that there are 1st Amendment issues. I think there are also basic conceptual issues of what the status of cable is with relation to pictures or signals they receive off the air. I think all of these basic issues have been completely muddled up because the industry has simply decided to take the shortest, easiest, cheapest and dirtiest way of growing and getting there. I would say that many of them are simply not addressed, not looked at and not dealt with. I believe a basic issue facing the cable television industry also is what its position is in telecommunications and whether it is founded in telecommunications or in communications. This comes back to that issue of identity. I think that there are policy issues having to do with the role that cable appropriately is carrying out, both in communications policy terms and in 1st Amendment terms, that the industry chooses not to address, but I think is dealing with them just in the most expedient way because it works and they are successful enough doing it that way that they haven't had to. I think it's unfortunate.

MCKINLEY: Do you think that by the industry ignoring some of these issues that you've just mentioned, that it's for this reason that federal legislators have been brought into the game as far as...

BARCO: You're talking to a person who is an old time cable operator. There may be a paranoia here. I frankly do not believe that the regulatory furor today was caused by anything more than the outgrowth of the competitive confrontation that is developing between cable and telephone. I do not think that the public-at-large has been involved or concerned with substantial issues that have given risen to any of these things. I think that regulatory problems have been an outgrowth of strategies that have been developed mostly on the telephone side of things, because of the confrontation that is developing between cable and telephony again. We've been at this point at earlier times in our history. I do believe that some of cable's problems relate to its national orientation instead of to local orientation that it talked about so much in the 70's. While I don't think there should be regulation at that level, I think that the industry would have been better served to be more sensitive to local and state issues and involvement instead of everything being nationally dealt with. Those are just reactions. I cannot give you chapter and verse to support it, but that's my view. If you will look at complaints about cable from a subscriber's viewpoint...this has been also true over the years. We used to say in the earlier days "Nobody likes cable but sub-scribers." I don't understand where the groundswell or support has really come for the regulation. It is kind of a press-developed business. You ask the person in the street if they're well-satisfied, and they're not complaining. I think the service is good and consistent. I don't know where this has come from, really.

STUDENT: I think we've taken up enough of your time this afternoon. I really appreciate the answers. You've given me a lot of insight into your part in the history of cable.

BARCO: Thank you very much. I really appreciate the opportunity of talking to all of you.

STUDENT: We appreciate the chance to be able to listen to you. Once again, I'd like to thank you.

 

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Barry Babcock

babcockBarry5

Interview Location: Denver, CO USA
Interviewer: Craig Kuhl
Interview Date: Wednesday April 21, 2004
Collection: Hauser Collection

Craig Kuhl: On behalf of The Cable Center we'd like to welcome Barry Babcock here. Barry is a part of the oral history series here at The Cable Center and I'd like to introduce Barry. Barry has been an integral part of the cable community for well past 25 years now, co-founder of Charter Communications and a fan of the cable industry for years. Today we're going to go back in time with Barry and have him explain to us in detail some of his early days with the cable industry and even before that. So, Barry, welcome to The Cable Center. It's great to have you here.

BABCOCK: Thank you.

KUHL: Barry, let me start from the beginning. You were inspired early on, I know, in your educational days and your college days and high school days and even before, growing up in Minneapolis. Why don't you just walk us through some of those early days and maybe some of the moment in times that maybe inspired you to join the cable industry and become such an integral part of that industry?

BABCOCK: Okay. I think it's fair to say that it was a very circuitous road to the cable industry. If there were a couple of themes maybe that influenced my direction, the first was from an old Yogi Berra saying, "When you come to a fork in the road take it." By that I mean I just had a number of opportunities along the way and as we all do you have to decide whether you're going to go in this direction, that direction, and I always seemed to have made the right choice, so that was good. The other thing is that I've had a number of opportunities in my life to manage people, to work with people and that really stood me in good stead as I got into the cable business and into the management and as we went from company to company I had the experience that really helped me a lot.

I was born in Minneapolis, but I did not grow up in Minneapolis. I grew up in Oklahoma City. My family moved to Oklahoma City when I was very young and we grew up in a lower middle class neighborhood. We didn't have a lot of money. My dad was literally a traveling salesman. I went to grade school, had a great time. I just remember having a good childhood. I've often said I didn't know that I was poor until I went to junior high school because everyone in my grade school lived in the same neighborhood, so when I went to junior high school that's when I figured out I was a little bit... I didn't have quite as much money as everybody else. That was okay; it didn't bother me. At an early age I got involved in politics and that's one thing that I've stayed involved with my whole life. When I was in 7th or 8th grade, I was the school representative for Richard Nixon and somebody else was the representative for Kennedy – so this was in '60 – and we had an election. So we made speeches and so on, and I won that election. So even though Kennedy won the big one, I won the one at my school. But I was always interested in politics and just the political process. I would say in high school the thing that maybe helped me the most was that I got involved in an activity which was the stage crew. It was a lot of fun for me. I wasn't an actor or anything but I enjoyed being behind the scenes, which is also sort of a theme in my life. I've never been one to be in the spotlight. I've always enjoyed being behind the scenes. My junior and senior year there I was the stage manager and that meant that I had a lot of kids working for me and a lots of projects and it was just a great experience. I learned a lot about dealing with people and dealing with faculty.

When I left high school – you know, nowadays my kids have college counselors and they take all these tests and whatever. When I left high school there was only one place that I was going to go to school and that was the University of Oklahoma. I had a scholarship there and I couldn't afford to go anyplace else anyway, but I was happy to go to OU and had a great four years there. I got involved in student politics at OU. Ultimately I was president of the student body, but it was another great experience for me to work with lots of people. I was secretary general of the model UN and that was kind of getting involved in some of the political stuff, maybe more on an international basis. So again, I really enjoyed working with people. At the same time, I majored in geology. When I went to school, when I went to OU, I had no idea what I was going to major in. I had none, whatsoever. But I needed a job and so I went to, I don't know, the employment office at the school and I said, "I need a job," and they said, "Well, we have these three jobs available," and I picked the one that seemed the more interesting to me and it happened to be in the geology department. So I went to work in the geology department and then I got kind of interested in that and they asked me in the summer of my freshman year if I wanted to go out to the geology field camp, which is here in Colorado just outside Canon City, and that sounded like a lot of fun. So I went out there. My job was to wash pots and pans and clean up the cabins, which I did. I had a great time. They let me go on the field trips with them, and that's what really got my interest in geology. From there I had a wonderful four years majoring in geology. It was a subject that I liked, that I was interested in. I didn't know what I was going to do with it, I just knew that it was a way to graduate from school with a bachelor of science and I enjoyed it. So that's what I did. I was in ROTC because that was another way for me to pay for my education and at the time – and I graduated in 1969 – so at the time I had a four year commitment in the Navy, which was of course in the middle of the Vietnam War, and I was home ported in San Diego. So I had a four year stint in the Navy, went to Vietnam three times. It was a great experience for me; I loved it. To think about a young man coming out of the Navy after four years, and I had 150 people that reported to me, and at the age of 22 I was the boss of a lot of people and a lot of problems came up that you had to deal with. I had to deal with crusty old chiefs and young seamen that got themselves in trouble and so on. So again, I had a tremendous opportunity to learn, to grow as a manager, to grow in dealing with people, and it was a wonderful experience. At the end of that period of time I'd decided that I wanted to go to law school. I didn't really connect geology and law school. I just felt that law school was where I wanted to go because I thought it would prepare me for whatever I was going to do.

KUHL: At this point in time did you have aspirations to be an attorney in some form or another?

BABCOCK: I had friends that had told me that you should either get an MBA or go to law school, one of the two, as good preparation for business and so on. I think one of the biggest mistakes I ever made was that OU had a joint program where you could get an MBA and a law degree and I didn't do that. I just did the law degree part. But there's an interesting story about that. First of all, when I was in the Navy, the commanding officer of my ship called me in his office and he said, "We really want you to stay. The Navy's got a program where we'll send you to law school, we'll pay all your expenses, but it's a two for one deal. So you got to law school for three years, then your commitment is six years after that, but we'll pay for it all, you'll get lieutenant's pay when you're not in school." I did the math quickly, that would have been a 13 year total commitment in the Navy, which is too close to 20 to get out. So the question was was I going to make a career in the Navy and the answer was no. I didn't want to do that. I enjoyed the Navy tremendously and I learned a lot, it was just a great time in my life, but I recognized that most of the career people that I worked with in the Navy were people who were comfortable in an environment where all the decisions were made for them. While that was all right for me, I really wanted to be at a place where I make my own decisions and where I can decide my future and not have it decided by somebody else. So it took me three seconds to tell my captain that I was not going to stay in the Navy. But then what happened, I went home – it was in the summer, and I went home and stayed a few days with my parents and my plan was that I was going to go to Colorado and be a ski bum. I figured I'd gone to college, I'd been in the Navy for four years; it was time to take a year off, relax, have some fun, learn to ski, probably wait tables somewhere because I waited tables when I was in law school – well, that's coming up, I haven't done that yet. Anyway, I stopped in Norman on the way to Colorado and visited some friends of mine, some college friends of mine that I hadn't seen in a while. We were sitting around that night and my friend said, "Well, what are you going to do?" I said, "I'm going to be a ski bum. I'm going to Colorado, learn to ski." He said, "You know, I just read an article and it said that every year you put off getting your education on the front end is a year less earnings on the back end." So in effect you give away a lot of money because you're giving away a year where you're earning a lot of money at the end of your career. I hadn't thought about that.

KUHL: Interesting concept.

BABCOCK: I said, "Well, you know..." Law school had already started, as a matter of fact. They had a two week kind of preschool for all the students, just a kind of introduction to law. It wasn't really part of the school but it had already started. So I said, "You know, I haven't even applied." And so he said, "Why don't you apply and see if you can get in? They know you over there." I was fairly well known on the campus, so he said, "Try it out." So I went to the law school, the dean of the law school, and I said, "I haven't applied," I had taken the LSAT that was a requirement to get in, but I hadn't applied and I said, "If I applied will you accept me?" They said, "Well, law school's already started, but if you can get your application in by tomorrow we'll accept you in law school." So that was a challenge for me because it was a rather long application and required three references from faculty. So I went home and I just decided to take the challenge because I just thought it would be fun to do. So I went home and I wrote three references for me and I took them to the professors that were friends of mine and I said, "You sign this one, you sign this one, you sign this one," and I took them all into the office the next day and I was in law school. So I never made it to Colorado, I never made it being a ski bum, and I'm not a very good skier today.

KUHL: Yeah, I was going to ask you, did you ever learn how to ski?

BABCOCK: I can ski. I can get down to the bottom of the hill, but that's about it. So I went into law school. At first I thought, well, I'll put the geology degree and the law degree together, I'll come out and I'll be some sort of an oil company lawyer or something like that. I didn't know, but I could kind of see where it might make sense. But I still needed money. I was on the GI bill then, but I still needed some money and so I wanted to work as an intern because I wanted to start learning the business of being a lawyer. A friend of mine knew somebody at the City of Oklahoma City in the law department and said they had intern programs there, maybe you should go apply for one. That kind of interested me because again, it was kind of back to the politics and government and so on, which had always been an interest to me. So I said, "What the heck, I'll go apply for a job there." I'd applied at some other places to, but I said I'd apply there and I did and I got the job. So I started out and I worked in the summer as an intern at the city of Oklahoma City and went to law school during the year, summer interns in Oklahoma City. In the meantime, one of my good friends from college had become the campaign manager for Jim Inhofe who was running for governor of Oklahoma, a Republican running for governor. He's now a Senator from Oklahoma, but back then he ran for governor and I got involved in that campaign and I was sort of like the assistant campaign manager. I had a good time. I took a semester off of law school to do it, but it was a lot of fun and I, again, learned a lot about politics and whatever. We lost the race. I went back to law school and finished up. As I said, he's now a Senator from Oklahoma so it worked out well for him ultimately. But it was another good learning experience for me. At the end of my law school time, I was offered a job with the City of Oklahoma City as assistant city attorney and I was comfortable there and I really wanted to do that, but people asked me, "What are you going to do with your geology degree?" And I'd had a couple of job offers to go to work for oilmen at a company and so on. I guess the short answer was I really thought I was interested in this Oklahoma City job. It was fun for me and I always sort of just went with my gut and that decision, which ultimately got me into the cable business, was a decision that just for me felt right. It was something I wanted to do and it seemed like it would be fun to do. So I went to work for the City of Oklahoma City. A kind of long story short – I was head of the planning and zoning department for the city and the mayor asked me if I would head up a staff committee to bring cable to Oklahoma City. This was back in the mid-70s and it was during the franchising war days, and because I was an attorney and because at the time the FCC was regulating cable to a fair degree they felt like they needed to have an attorney who had this thing up because there was a lot of legal details that were involved in franchises. So, I took on that task which turned out to be a very important thing for me to do. I soon figured out that we needed to have a consultant help us to get the franchise in Oklahoma City and I ended up hiring Bob Brooks, who at the time... Bob was one of the early cable pioneers. Bob had been and was a good friend of Bill Bresnan and Bill Daniels and lots of other people that were the early pioneers. Bob was running a consulting business in St. Louis. The name of his company was Telecom Engineering. We went through the franchising process; I met a lot of these guys that now are kind of my heroes in the cable business, I met them in Oklahoma City because they all came down wanting to get the franchise. Ultimately the franchise was awarded to Cox and they still have that franchise today, so I think it turned out to be a good decision for the city. But at the end of this process Bob asked me if I wanted to join his consulting company because he consulted with cities around the country. He needed an attorney on his staff and he wanted someone who understood the municipal side of things and had some experience working for city governments. So it seemed like a good fit to me, but here was a big crossroads in my life because here I was an attorney, and I should go back and say in law school I met my wife and we got married and we'd only been married about a year when we got this offer from Bob to go to St. Louis. While it was a consulting job it was really not a lawyer job. I had a legal background and I was going to use that knowledge and so on, but it wasn't being a lawyer in a law firm or working for some governmental entity, it was just helping out in a consulting business. So it was a tough decision for me to make. I didn't know what to do. I'd just been a lawyer for three or four years and I enjoyed it. I did think the practice of law was somewhat boring for me. It had moments of excitement and even terror when you're in the courtroom or whatever, but there was so much that was pretty mundane and just wasn't very interesting. So I was motivated to kind of look for something else to do. Unfortunately, though, my wife thought she'd married an attorney so this was a tough thing for her to deal with. I got to talking to some of my friends, my attorney friends, in Oklahoma City and I said, "What would you do if you had this opportunity?" and I think to a man they all said, "You know, you ought to take this opportunity because to the extent that we've made money," each one of them said, "to the extent I've made money, it hasn't been practicing law. It's been getting involved in side deals, business deals, real estate deals and so on, really businesses where the action is. So you've got this opportunity, you should take it." To my wife's credit she said, "If that's what you want to do, that's what we'll do," and it involved moving to St. Louis, so we did that. I went to work for Bob and at the time the company, even though he was running a consulting company, he had a couple of small franchises on the side, and there were some people in the company that were helping Bob to run these cable systems. One was Columbia, Missouri and the other was St. Charles, Missouri. This was back before satellites and you were just taking the over-the-air signal either off the antenna or you were microwaving it, in the case of Columbia, across the state and that's all you were providing, really, was just off-air signals. There wasn't much else at the time. But our primary business was consulting with cities and we did that for two or three years and had a good time, but we also did some international consulting. I spent some time in Chile and it was a lot of fun. I really enjoyed that. Cable was just starting out as a business. Most people didn't even know what it was, nobody knew if it was going to be a success or not, so it was not a situation where I felt like I was getting into a business that was a hugely successful, fast-growing, new industry. I thought it had potential and I could see that things were moving. TBS, which wasn't TBS at the time, Ted Turner's station in Atlanta (WTCG), he had gone up on the satellite, HBO had gone up on the satellite so technology was starting to kick in. Bob had just bought an earth station for Columbia and back in those days you had to register the earth station with the FCC, you had to get a license and all that stuff. It was a 10-meter dish, which is a huge dish, and it cost $100,000, which was a huge amount of money back then. But Bob believed in technology, he was an engineer himself and so that kind of was the start of the cable business. The satellite made a huge difference because for the first time we started getting some programming available other than the off-the-air stuff and that's what really made cable kick in. In any event, my first kind of business experience with the cable industry, other than this consulting part, was that the company we were working for, Telecom Engineering, headquartered in St. Louis and had a couple of cable systems, we were approached by TelePrompTer. Russell Carp was the chairman, Bill Bresnan was the president at the time. I knew Bill from Oklahoma City; Bob had known Bill for many years, they were friends and had worked in Minnesota together. They came to us and they said, "We want to try to get some franchises in the St. Louis area," it was kind of an interesting place because besides the city of St. Louis there were about 90 communities in the immediate area around St. Louis so there was a lot of franchising to be done, and so Bill and Bob were already old buddies and we had the meeting. "Would you all help us franchise?" And the reason that they asked us to help was a lot of the companies would come into town and would hire a local politician or they'd hire some person who was well known in the community and it was sort of like a "rent-a-citizen", that's what they used to call it. Well, TelePrompTer didn't want to do "rent-a-citizen" but they wanted us to be involved because we were local and we were in the cable business so it seemed like a good fit. The other reason is because Irving Kahn had recently gotten out of jail and they felt like it was a liability, that people would not trust TelePrompTer and that in these highly competitive franchise battles TelePrompTer needed something else. So that's why they came to us and said would you do this. So we agreed to do it and I immediately started my new career of getting franchises in the St. Louis area.

KUHL: Barry, we are back to your new career now and moving towards your days with Charter Communications and relationship with Bill Bresnan and a number of other cable pioneers such as yourself. Why don't you walk us through now this new career that is opening up for you in your pre-Charter days and some of the mindset, the mentality that you had during those pre-Charter days, which must have been pretty scary, pretty risky, but why don't you take us through that?

BABCOCK: Well, it was scary and it was risky. In fact, the company that I went to work for got into a serious financial bind because if you recall back in the early '80s interest rates were very high and they had a loan on these cable systems that was five over prime, and at one point in time prime got to 16, they were paying 21% annual. It wasn't going to work. They couldn't make it work so they were forced to sell these cable systems and they ended up selling them to TelePrompTer. So here we were, it was in 1982... well, let me back up and say that I really had a great time franchising in the St. Louis area and some other places, too. I learned a lot, I met a lot of people who went on to be executives in the industry who were kind of young like I was at the time, but in 1982 the company that I was working for sold, and the cable properties went over to TelePrompTer. So the cable division of this company, we were looking for something to do and Bob was our leader. He was a very charismatic guy and had a very forceful personality, kind of a man's man type person and people warmed up to him very easily. So, Bob took Jim Allen, Charlie Morrison and myself from the now sold company and the four of us put what money we had – my wife and I actually borrowed $20,000 to put into this company so we'd have some equity in the company, and we didn't have any money, but we borrowed the money, we put it in and basically all of our net worth plus some was in this company. We formed the company; it was called Cencom Cable Associates. I would say the most important thing about the company was that it was a startup. We had some relationships, but not really much in the way of banking relationships and so on from our previous company. So it really was a true startup. The only place we could get money was from a venture capital company, which happened to be here in Denver. It was called the Centennial Fund with Steve Alstead and Jack Tankersly, and they made the initial investment in Cencom Cable Associates. Bob put together a board which included Bill Bresnan and Frank Drendel. Frank was an old friend of Bob's, this was back in '82. I was senior vice-president and general counsel of this company. There were only four of us so we were all basically doing everything, but Jim was the numbers guy, Charlie was the engineering guy and I was kind of the legal guy, but we all did everything. It was a good learning experience for me because I dealt with all the contracts and all the insurance and ultimately the franchises and bank loans and everything. It was a good way to learn the business. It was a sink or swim type thing. So we started Cencom Cable Associates, we had no subscribers, we gradually started making little tiny acquisitions – 1,200 subs here, 400 subs here – and that was a very interesting time. The tax laws were such that up until 1985 we decided to go with a funding vehicle which was a limited partnership vehicle, which was a great tax shelter. So you went around and we had some people help us, investment banking houses – small regional houses, not the big guys because they wouldn't even pay attention to us – but we had a lot of regional guys help us raise money. Back in those days we didn't have much on the balance sheet, in fact we had very little on the balance sheet. It was tough to borrow money. Interest rates were still very high, and so we had to use this vehicle to raise money to buy systems. So what we would do is we'd go out and we'd find a system or a group of systems, get a contract to buy it and then we'd have to go sell these limited partnerships. We were out there competing with Glenn Jones who was selling all of his own limited partnerships, sold it in a little different way, but we'd always be running into those guys around the country. I guess the point of this is that every time we did one of these deals, if we didn't do it we were out of business. So here I was involved in a business where I had everything that I owned in this business plus some, and every time we went out to do a deal if we didn't raise this money we were bankrupt. We had to do the next deal to keep going. That's the way it was back then. I will never forget: it was our first big acquisition where we were going to use this limited partner vehicle and in those days you sold the limited partnerships and then you closed on the acquisition and you closed on the partnership at the same time because when you closed on the partnership that's when the partners sent the money in and then that's the money we would use to buy the cable properties. So we were in Washington D.C. closing on a number of properties in the Carolinas and it was our first big acquisition. It was a very important acquisition for us. So we're closing and in order to fund you not only had to close the limited partnership but you had to file the papers in the state in which the partnership was created. In this case it was South Carolina. This sounds complicated but there was a certain procedure you had to follow. So we're in the process of closing, everyone's really nervous because you don't close you're out of business, we get a call from our local attorney in South Carolina that I had hired and the attorney said, "You won't believe this, but I can't file the papers." We had to close that day. If it went just one day then the limited partnership deal fell apart because the commitments were only through that day. I said, "What do you mean you can't file the papers?" It was like a Wednesday or something. He said, "Well, the secretary of state's office is on holiday today." I said, "What do you mean? What holiday?" "Well, it's Jefferson Davis's birthday. Every state office in South Carolina gets to choose when they take a holiday and the secretary of state chose Jefferson Davis's birthday and he's not in his office. Neither is anybody else. I didn't know about it. I'm sorry. It didn't occur to me that he would do this." So I don't know if Apollo 13 had happened or not, but basically what I said to him was, "You know what? Failure is not an option here. We don't have an option to wait. You have to file these papers today." He said, "Well, I'll tell you what. There's one thing I can do. I'll try to find him and if I find him I can file the papers with him because that's perfectly legal." So again, long story short, he was on a golf course, my attorney caught him on the 9th hole, filed the papers with him, he signed them as having received the papers. He called me back and said the papers have been filed and we closed that deal, but it was a very tough, nervous time and we did this again two more times where you had to file... since it was a tax deal we ended up closing these things – not the first one, but the next two – we closed them on December 31st. You had to close them by the end of the year. That brought its own problems because trying to get things done New Year's Eve day was always a big problem and we had some major problems, and I won't go into it. We always got them closed but it was very tense.

KUHL: So it sounds like this is almost sort of like you're gaining that experience and almost like this right of passage now to kind of transition and take that next step to Charter. Is that kind of what you were thinking about at this point in time?

BABCOCK: Well, it was in the sense that while we were the management team, we didn't have a big chunk of the company. Between the Centennial Fund and then a company out of New York – I'll think of the name in a minute – we had basically sold most of the equity of the company just to get deals done and we ended up at the end of the day only having about a 25% share of the company, and the reason that's important is because the executives of Cencom, we all knew that at some point in time we wanted to own our own company and we wanted to have a situation where we controlled our own destiny. So that was always out there and we knew at some point in time we all had this yearning to do that, but now we were in the middle of Cencom and we were still struggling with these financial situations. We finally did a deal and we bought some cable properties from Group W. We bought a lot of properties in the St. Louis area, and this was the first deal that was so big that the management fees from the properties would carry us forward and we didn't have to do a next deal. It was the deal that made Cencom. So, we continued to grow the company. In 1986 I made a trip to Denver to meet with John Malone and the reason that I met with John is that we wanted to see if we could cut a deal with TCI to provide programming discounts for us because the programming costs were just eating us alive. I'll never forget, I walked into John's office and I'd never met him. I knew of him; he wasn't quite as famous back then as he later became, but everybody knew who John was and TCI was the biggest cable company. When I walked into his office John had a sports shirt on – I was coat and tie and he had a sports shirt on and a pair of slacks – and we sat down, we talked about what we needed to have happen and it was a pretty easy deal to construct. They had done similar deals with other companies. John wanted to put Larry Carlton on our board and that was fine with us. We expected that. But when I went back to St. Louis I said, "You know what? If John Malone doesn't have to wear a coat and tie, why do I have to wear a coat and tie?" So I started sort of a trend in our company where we didn't wear coats and ties until the bankers showed up, or the investment bankers, and we all put our coat and tie on. Ultimately we didn't even do that. So that was my one inspiration from John. Larry Carlton came on our board and was a fantastic board member and TCI was a fantastic partner for us. They never bothered us. They had a bad reputation; they had a reputation of kind of being a bully in the industry, but to us they were wonderful. We got the discounts we needed, they never said a word to us. At one point in time, John said to me because I said something to him, "I really appreciate the fact that you guys don't meddle in our business," and he said, "Why would I meddle in your business? You can run cable better than I can run cable, so why would I do that?" And I thought that was a valid comment and I appreciated it, so we had a good partnership. But part of the deal with TCI was we had what was called a shotgun buy-sell, which meant that at the end of five years, which was 1991, either Cencom or TCI could put a price on the table and the other person would say whether they were a buyer or a seller. We agreed to that. On the surface it seems like that's a pretty fair way to do it. If you want to sell you put a price on the table and you hope it's low enough the other guy will buy and so on, and you sort of know what's going on. But underneath it wasn't such a good deal and we knew it wasn't because they had all the leverage. TCI had all the money. They could put a price on the table that we knew we couldn't meet and then they could end up buying the company. So we decided, or the investors... TCI owned about a quarter of the company, our other investors, Centennial Fund and the other one was Charterhouse owned about half the company, and management owned the other quarter. While Charterhouse, Centennial Fund and the management didn't want to get into a situation where we were going to have to sell to TCI because we didn't think we'd get value for our money. So we went out looking for a buyer. Ultimately what we did was we ended up having an agreement to sell to Crown Media, which was headed up by Jim Hoak at the time and was owned by Hallmark Cards. Hallmark had decided to get into the cable business because they had a whole lot of cash and they needed some tax shelter. That was their incentive, and they went out and hired Jim who'd just sold Heritage and Jim was looking for something to do and they hired Jim to run this Crown Media. So we cut a deal with them; we sold the company to Crown Media. It was a good price. We didn't want to sell but we felt like we had to. We didn't have control of the situation. But a couple of things came out of that that I think are important. One is that we had developed a relationship and were managing some partners for a company called Gaylord Entertainment, which was owned by the Gaylord family out of Oklahoma City. They needed to buy some cable companies and we had done a deal with them. They had come in not at Charter's level, but at the underlying deal level as an equity player, and we had developed a really nice relationship with them and they were just great partners. The management team of Cencom had a contract with Gaylord to manage these properties and it was like a personal contract. It wasn't part of the assets that were being sold to Crown Media. Crown Media, though, would not buy Cencom unless they got the management of these Gaylord properties. So the management team said, "Well, okay, if you want to do that you have to pay the management team because we have the contracts with Gaylord." And Gaylord was backing us up on that. Gaylord said, "Our deal is with these guys." Crown said, "We're not going to pay you," and we knew we were kind of in a box. We went to our investors and we said, "We think we should get something of value for these contracts because it's obviously valuable to Crown." Charterhouse was the only one that stepped up to the plate and said, "We agree. We will give you x number of dollars because we think it's worth it and we'll do that even if the other investors don't step up to the plate." That was a very crucial thing that happened because first of all, it sealed our loyalty and our relationship to Charterhouse, and we had some bad feelings for some of the other guys because we felt like it wasn't fair. The other thing that happened was that Crown had signed a contract with us as the management team and part of the contract was that we would not move from St. Louis and that we'd continue to manage all the Cencom properties even though it was under Hoak's management because it was sort of looked at as a joint venture. Ultimately, Crown decided, or Jim Hoak decided that he didn't want to keep the Cencom headquarters in St. Louis; he wanted to move them to Dallas. It was a breach of contract. So that was the catalyst that eventually got the management team, which at the time was Jerry Kent, Howard Wood and Barry Babcock, to say we're no longer bound by this contract, you're breaking it. We're going to go off and start our own company. The deal that we cut with them was we would release them of any liability for violating the contract, which they did. In return we wanted their programming discounts because they were a pretty large company. We wanted their programming discounts for our new company.

KUHL: Which ultimately became Charter.

BABCOCK: Ultimately became Charter. This was in 1992. So we broke off from Cencom. Most of the employees were moved to Dallas, some of them didn't move, but we resolved that we would never again be in a situation where we'd lose control of our company and that if it meant we had to stay a small company, we'd stay a small company but we would not lose control. That was the genesis of Charter Communications. The name came from Charterhouse, even though Charterhouse's investment terms would not allow them to invest as a partner of Charter, they were there to invest in our underlying deals. We already had good banking relationships this time around. Everybody knew us. Toronto Dominion was our lead bank. We were set up to go. Most importantly, Gaylord came in, too, the parent company. It was just an unbelievable relationship there. They literally came to us and said, "Here's five million dollars to get started. Make us a lot of money." There were no strings attached at all. There were no management provisions, there were no buyout provisions, just here's the money, you guys do what you know what to do. It was an unbelievable start for us given how we'd started Cencom. I should say, by the way, at Cencom, we formed that company in '82. In '83 Jerry Kent came on board as a vice-president of finance or something, and Howard Wood came on board in 1987 when Bob Brooks became ill, had a heart attack, had some other health problems. Howard came on and took over Bob's day to day operations as chairman of the board. So that was the nucleus. Howard, Jerry and I were the executives of Cencom. Now we broke off and formed Charter Communications in 1993. We had no customers, no subscribers. It was just three of us and a secretary that we had hired that used to work for Howard. We had a little office, 1800 square feet. We had a copy machine, coffee pot. My wife and I literally went to Sam's discount store and bought some desks and furnished the office. But we were on our own, we were independent, we had the programming discounts, we were set up and we started looking for properties to buy. At the time, I had become involved in industry affairs. I was always kind of the outside guy for the company and I remember that I was on the board of CATA – Community Antenna Television Association, which was later Cable and Telecommunications. They changed the acronym but it stayed CATA. But anyway, I was on the CATA board and I remember at the time we started Charter I'd occasionally sit on some panel or something and people would say introduce yourself, who you are, what company, how many subscribers you have. For almost 18 months we didn't have any subscribers, so I remember sitting at a Texas show on some panel and saying, "I'm currently in between subscribers, but we're going to get there. We're going to get subscribers." Ultimately we cut our first deal. It was with the McDonald brothers of the southwest. They lived in Birmingham, Alabama, but they had a lot of systems around, about 100,000 subscribers. It was a bittersweet deal because the reason that they were going to sell was that one of the brothers was dying of cancer and they wanted to liquidate the properties and disperse the proceeds before he died, or at least in preparation for his death. This was a very strange time. This was after cable re-reged one and two. The FCC had just taken 17% off the top revenue for the cable companies and it was a time when none of the sellers knew what to ask and none of the buyers knew what to offer. Nobody knew what anything was worth. Nobody knew what the impact of the cable regulations were going to be. It was a very, very tough time. It turned out to be a great time for us because we were opportunists and when there were situations that came up where people for whatever reason had to sell we were there. We had the backing of our bankers and our investors, so we went ahead with this deal and we cut a deal with the McDonald brothers. I'll never forget – I was sitting in the conference room, we were finishing up details, going over it, and the secretary stuck her head in the door and said that Allen had just died, literally while we were having this meeting Allen had died, and that was the end of that meeting. Also, the second re-regulation hit almost at the same time and we went back to McDonald – we went back to Bill now – and we said, "Bill...

KUHL: This was Bill?

BABCOCK: Bill McDonald. We went back to Bill and said, "Bill, this cable re-regulation thing has changed everything. We can't stay with our original deal, and that's very tough for us to say, but it is definitely a change of circumstances." He understood and he agreed that we had to make some changes in the way that we structured the deal. I think ultimately we didn't change the purchase price but we changed some ways that they were being paid. Ultimately we closed that deal – that was our first deal, we had about 100,000 subs – and Charter was on its way.

KUHL: Barry, there's certainly some new opportunities arising for you and Charter as you launch Charter Communications. Why don't you walk us through that and we'll take it from there.

BABCOCK: You know there are lots of stories about the various acquisitions and the people we acquired from. A lot of interesting stories, but I guess there's one story that I do want to highlight because it had a lot of significance to our company, and that was that after we had bought the McDonald properties and a couple of other smaller properties Crown Media... I've got to go back and retell this story a little bit. When we sold Cencom to Crown Media, we sold it at what we thought was a very good price, and Crown Media went off and we left and formed Charter and we went on our way and they went on their way. The Cencom properties came up for sale because Crown Media, about three years into Charter's existence, decided to sell all their cable properties. They were getting out. What happened was that Hallmark had lost their nerve, and the reason Hallmark lost their nerve is because they were having trouble with their core business, which was the greeting cards business and their company was owned 1/3 by employees and the employees were saying to Hallmark executives "Why are you putting all this money in cable when the core business is suffering?" And so it was a decision they made – I'm sure it was sort of a relatively easy decision for them to make – to sell the properties including all the Cencom properties that had been purchased. At the time, we had approached Crown – remember, we were the ones that sold to them – and said, "Would you allow us to bid in this process for the Cencom properties?" and the answer was "No, you're not invited," because there was some bad blood there. We said okay and we went on about our business. Well, what happened was that one by one the bidders fell off and the biggest bidder, TCI, Bob Lewis had cut a deal with Crown to buy all these properties but it was subject to John Malone's approval and for whatever reason John said I don't want to do the deal. So at the end of the day there was nobody to buy the Cencom properties except Charter. And so Charter raised our hand again and we said, "Guys, our money is just as green as everybody else's. If you're going to sell these properties and you don't have anybody else to sell them to, why don't you sell them to us?" Long story short, they ended up selling us the properties for less than they paid us and we got all the properties that were our properties, we knew them, we knew most of the managers that were still there. It was the idea acquisition for Charter. It made the company; it put us on a firm footing. It was almost half a million subscribers at the time and it was just a deal that was made in heaven for us. So the old saying, "Sometimes it's better to be lucky than good" we were definitely lucky there. But the other saying is "The harder I work the luckier I get" and we had worked that deal very hard and ultimately all the hard work we'd put into it paid off.

KUHL: And it's paid off for six million subscribers now at Charter? Through acquisitions you've added beginning in '93 and moved it forward from there.

BABCOCK: Right, we did. To kind of finish up the Charter story, we made more acquisitions, all the time management kept control. We had investors that came in. In addition to Charterhouse, we had another investment banking house in New York called Kelso and Kelso was a major investor in Charter, and we continued to make investments along with Kelso and Charterhouse and our banking friends and we continued to grow the company. Things were going well. As I said, management had complete control. We always structured our investment arrangements around the principal that if we do what we say we're going to do then we get x amount of money. Now if we don't do what we say we're going to do then you have the ability to come in and in effect take more of the equity, but we always felt if we could create a situation where we could bet on ourselves that we were fine with that. And so in Charter we always bet on ourselves and we always did well. We managed the companies very well and ultimately ended up making a lot of money for our investors and for ourselves and for our employees. In 1999, it may have been '98, Paul Allen decided to get into the cable business and Bill Savoy came to Charter. At the time we were trying to buy some properties in Minneapolis-St. Paul, and we were dealing with a company that was going to invest in this deal and we'd made an agreement with them we wouldn't take on any other investments until we'd finished this deal. That was the time that Paul Allen came to us, and so we said, "Sorry, but we're not able to talk to you and we're not able to sell Charter and we don't want to anyway," so there just wasn't much to be said for that. He went around the country and talked with lots of other people and ultimately ended up buying Marcus Communications from Jeff Marcus, and in the meantime, our deal in Minneapolis fell through. We didn't get it even though we worked very hard on that deal, but we didn't get the deal. It was probably the best thing that ever happened to us because we were now free and about his time when Paul bought the properties from Jeff he didn't have a management team in cable and he assumed, and in fact he discussed with Jeff that Jeff and his company would be Paul's management team and they'd try to build a cable company from that foundation. Literally the day that they signed the contract to buy the cable properties, Jeff announced to Paul that he was leaving. Paul was very upset about this and wasn't quite sure what to do about it. Ultimately he came to Charter and said, "You know what? I wanted you guys to be my management team first time anyway. Now Jeff has left. Would you consider selling Charter to me and you guys stay on as the management team?" We said, "It's an interesting thought, but we really prefer to stay on our own and we are, in fact, preparing to do an initial public offering for Charter," and we had been. We'd been working with investment bankers in New York for quite a while working up this IPO. He said, "Would you do one thing for me? Before you decided to take the company public, would you give me one shot at buying your company?" We said, "Well, what we'll do is when we come up with the price for the IPO and when we come up with a value for our company, we'll come back to you and give you a shot at it." A sort of right of first refusal. So, we continued down the road doing the initial public offering. We got all the documents together and the red herring and all that stuff, and we got our investors – Kelso, Charterhouse – in the room the day that the investment bankers were coming in to bid on the IPO and each banker would come in and say, "Well, this is what we think you're worth and this is what price we think you should go out at, and this is how we're going to sell your shares." It's their time to sell to you, and we had three different banks do that and it was a good competition and the price that they were suggesting that we would be valued at was a pretty high price. So we were all feeling pretty good about it. We said to our investors, "Okay, now we've got the value established for the company. Paul wants a shot at the company and we've said that we'll go back to Paul one time." We said to our investors, "We need to break for lunch and while we're at lunch, you need to decide what number it would take for you to sell this company to Paul rather than take the company public, and each of you come back after lunch and we'll talk about it and see if there's a number we can agree on." But we also said, "we" being management said, "There are eight points that in our opinion are non-negotiable if we do sell this thing to Paul, and so in addition to naming the price, we want your agreement that you will support us on these management points which are non-financial points on the acquisition with Paul." So we broke for lunch, came back, everybody basically came up with a number that they thought was sort of ridiculously high and that if they got they would think was great, and so we came up with a number that basically was about 15 times cash flow at the time. They also agreed that they would support management in the eight points that we had, and the points were we wanted to continue our stock option program for our employees; we wanted to make sure that the headquarters stayed in St. Louis, remember we'd had that problem once before; we wanted to make sure that we had full authority to hire and fire and continue on as we had been even though Paul was going to be the new owner; and there were some other points that were sort of along those lines. So our investors said, "This is the price at which we would sell to Paul and we agree that we'll support you on these eight points that you have." So we said, "Thank you very much," we called up the investment banking houses who were waiting to find out who was going to win this beauty contest and we said, "We'll let you know tomorrow," and we all got on our plane going back to St. Louis. We called up Bill Savoy – we were in the plane and we called him up – we said, "Bill, here's the price and there are eight points that you have to agree to," and he said, "Okay, what's the price?" I think we said it was 4.6 billion dollars, which worked out to 15 times. He said, "What are the points?" We read down the list of the points. This conversation lasted approximately two minutes, Bill said, "We'll buy it." We said, "Okay." We didn't really think they'd do that, but they did. We said, "Okay, but we want the contract signed in ten days," and this was a big acquisition and it meant that all the attorneys and accountants had to show up in St. Louis literally the next day and stay there for ten days and do all the due diligence and everything to get it done in ten days, but we said, "If it's not done in ten days, the deal's off." I guess the interesting thing I would say about it, there came a point in the negotiations when Paul and Bill tried to chip away on some of the eight points and we said, "They're non-negotiable, we said that when we went in." These eight points were important to us, so they went to our investors and they said, "Are you guys supporting these? These are non-economic points. Why do you care?" And to their credit they said, "We committed to stay with the management and we will stay with them and if you don't go along with these points we're not going to do this deal." So, they said, "Okay." And the deal was done. It was a fabulous deal for the investors. It was the most return on investment that any one of them had ever made in any deal. The management team made a lot of money, but to the point that you'd made earlier, we'd risked a lot of money. We'd risked everything, basically. Gaylord, our friends who'd started us out with the five million dollars no strings attached made a huge amount of money on their investment. The only thing I'll say about Gaylord – I sort of want to regress for a minute – when we first met them they were looking for a management team and actually they had basically decided, they said, to go with Comcast and Brian Roberts and that cast of characters, and Comcast was a very good management company, but we hit it off and the chemistry was just right. Gaylord liked us and we liked them, but the one point I wanted to make is that the deal we made with Gaylord, which was back in 1988 and this Charter sale was in 1999, so it was over a long period of time, the deal we made which was a 400 million dollar deal at that time was literally done on a yellow legal pad – all the points of the deal. As we went through the negotiating, all the purchase contracts, the management agreements and everything, the lawyers kept trying to chip away at the deal, both sides. "We want this, and we want this..." Gaylord for their part and Charter for our part, well at the time it was Cencom, we said, "Go back to the piece of paper. If it's not on that paper, it's not the deal." That was the relationship we had with Gaylord and that's the relationship that carried all the way through Charter and it paid off very handsomely for them and for everybody else. The one thing I'll say that I'm probably most proud of is that our philosophy at Charter was... we had a number of guiding principals. One of them was that customer service was number one. Another one was that in terms of corporate culture, there was nothing more important than integrity and we had a corporate culture statement and it listed ten things on it. One was integrity and one was that family and God were the first priorities and the company was below that. One was work hard, play hard. We had a very distinct culture and we had a reputation around the industry. It was a good reputation. People knew that if you did a deal with Charter they wouldn't screw you; we might be tough but we were honest and did what we said we'd do. One of the guiding principals was that we wanted the employees to be owners of the company. We insisted every time an investor came in or made an investment on one of our deals, we always said to them, "One of the things you have to agree to is set aside 10% of the equity for the employees," and they always agreed to do that. All right, so when we ended up selling Charter – and it was a tough thing for us to do because we were losing control for the first time, but at least this time we knew that we were losing it. We felt like we had created a situation that protected the employees and so on. Out of that sale, 52 of our executives became millionaires, over 100 people had over $100,000, and every employee in the company – and there were over 3,000 employees – my two partners and myself contributed 15 million dollars into a fund which meant that every employee in the company got a $5,000 check. Just from the customer service to the installer, whoever it was, anybody who worked for us got $5,000 as a bonus for this sale, and everybody kept their job. Things went on, just under new ownership. That's something that I'm very proud of. There have been a lot of cable sales over the years. Some owners have been as generous as we were, I think. Bill Daniels has always been my role model for being generous with his employees and I think that Bill had an important influence on us when we decided early on that employees were important and that sharing equity was important. I think Bill should get credit for that, but there have been quite a few guys who didn't share the wealth and I've always regretted that they didn't see the error of their ways because I think it probably even hurt them financially to some extent.

KUHL: Well, Barry, I think that's a good segue into your... You retired shortly thereafter, after Paul purchased the company and it led to an endowment here at The Cable Center. Why don't we talk briefly about your endowment here, the purpose of it and what its mission is.

BABCOCK: At the time that we sold, obviously I made a good bit of money and I wanted to give some of it back, and there were a number of contributions that were made to some charities and so on, but I thought it was important to create an endowment at The Cable Center that dealt with the relationships between cable companies and municipalities. I consider myself somewhat of an expert in that area and I had always been pretty skilled at dealing with municipal officials and dealing with issues that came up, which occur all the time. There are a lot of problems that arise between cable companies and cities and I felt that The Cable Center was a fantastic place to create an endowment that would find ways to bring cable company officials and city officials together to find common ground, to work on issues, to solve problems in a sort of academic, objective environment, a sort of third-party neutral environment where everybody could trust everybody and get some things done. Now we're still working on exactly how we're going to structure that, but the endowment's here to support that and I think that The Cable Center believes strongly in the idea and we'll just have to wait and see how it all comes out.

KUHL: Well, Barry, it's been a real pleasure. I think we can wrap this up now. Where do you go from here? I know you have a couple of youngsters.

BABCOCK: I do, and people always ask me "What do you do?" I'm happy to be retired. I have a 7th grader and a 9th grader, so that keeps me busy. I literally drive them to school, pick them up after school. I'm involved in a number of charities, but one of the charities I'm involved in is I'm on the board of their school and it's a working board. I spend a lot of time there working with that school. I love to fish, I love to play golf and travel. My wife and I travel a lot, with the kids too, when they can get away from school. So we're very busy. We have plenty to do. We have a place in Florida we visit. We like to take vacations around the world, so we're enjoying life and I guess the one thing I would say about all that is that as I was growing up in the business world I heard so many senior executives say that they wished they spent more time with their kids and wished they'd had more time to spend with their kids when they were building their careers. Well, I have that time and I appreciate the fact that I have that time, and I think my kids appreciate the fact that I'm spending the time, along with my wife, with the kids now. So it's a great situation and I'm very happy. Life's good.

KUHL: That's great. Well, Barry, it's been a real pleasure having you participate in the oral history series here at The Cable Center, and I think you probably took the right road off that fork, it sounds like. That's my favorite saying, too, of Yogi's. Anyway, Barry thank you so much for participating.

BABCOCK: You bet. I enjoyed it.

 

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Bridget Baker

Bridget Baker

Interview Date: Monday August 23, 2004
Interview Location
: Denver, CO
Interviewer: KC Neel
Collection: Legacy Collection

NEEL: We are here today with Bridget Baker. She is the senior vice-president of cable distribution for NBC Universal. My name is KC Neel and we're here on behalf of The Cable Center to talk about CNBC. Bridget, before we get into the CNBC aspect of all this, I'd kind of like to talk about you a little bit and how you got into the cable business. You have a very interesting history coming from the legislative side of the House, and I'm wondering what made you choose to come to the private sector and what made you choose cable?

BAKER: I think for me, by the time I had spent about four years on Capital Hill, almost five, I had a pretty good sense of what a few more years on Capital Hill would be like and was pretty clear I wanted to work in the private sector. I looked at industries where I thought women had achieved some success beyond sort of the middle management level. So I ruled out banking, insurance, retail, and some of the more traditional, I think, older established industries and was intrigued with what I thought telecommunications represented at the time, which really for me was not cable television. It was more satellite delivery of information because growing up in Alaska I knew all of our... literally telephone communications and everything were satellite delivered. So companies like Rockwell International, Comsat, MCI, AT&T, they were doing what I thought telecommunications was, and then a fluke happened where I got a chance to come directly into the cable industry with a company called the Fashion Channel and I just took the opportunity.

NEEL: How did you end up at CNBC? How did that transition go?

BAKER: That was also a transition because the Fashion Channel started and was this really exciting... it really was a very exciting concept for cable, which really was sort of a video catalog and the garment industry in New York City was ecstatic about this idea. People like Liz Claibourne and Pierre Cardin and all these designers of the '80s, this idea that they could have a video venue as opposed to a print catalog or a round rack in a department store. So everyone was very excited about this, but it was still cable shopping and so we thought we just had this fantastic idea and about ten minutes into it we had lost 19 million dollars and TCI at the time bought the assets of the Fashion Channel and I pretty much decided I was going back to Capital Hill. Life works in funny ways and I got a phone call from two people that were at NBC corporate development and they said, "We're starting a cable channel and your name has come up as someone who can sort of hit the ground and run. How would you like to come try this?" And of course I said, "You guys are insane. There's no way that they're going to launch a broadcast owned and operated cable channel. There is no open channel capacity west of the Mississippi River, so what do you think you're possibly doing?" They said, "We're Fed Exing you a plane ticket. Come talk to us now." And that was in 1988.

NEEL: And here you are. What did NBC think they could bring to the table? Obviously they were a broadcast network; obviously the relationship between the cable operators and broadcasters was anything but friendly. How did they think that they could make this work and what did they think they could bring to the table that could entice cable operators to really ever even be interested in talking to them?

BAKER: I think NBC's perspective was that they... it was really, looking back in hindsight, some of it was trial and error and some of it was a conviction that was smart on their part, which was they were the dominant broadcaster, they saw every year broadcast viewership declining and they said where are these viewers going? They're going to cable television. Then we're going to cable television. And they sort of stood back and said, "What do we do and what do we do well? Where is there an opportunity for us?" I think that they looked at the news and information specifically because that's something that we dominated in with The Today Show, Nightly News with Tom Brokaw, our Washington reports with Tim Russert, it was definitely an area that we excelled and they thought news – and financial news is where we ended up slivering off – but they had a conviction that they could come to the party with a very high quality product and it would succeed and we were right.

NEEL: Yet wasn't there a lot of pushback? What were the challenges in getting cable operators to talk to them? When you said, "Hi, I'm Bridget Baker. I'm from NBC..."

BAKER: Well, two things. One is in the early days we distanced a lot from NBC. I mean, it was right in our name – CNBC – but we called ourselves Consumer News and Business Channel. Now they knew we were funded by NBC, but nothing that we used in the presentation to the cable industry had the peacock on it, for instance. We didn't ever talk about NBC as our owner and backer. We called ourselves Consumer News and Business Channel and we were coming out to start a cable channel. The pushback was extreme, in part also because we were going directly competitive, head to head with an existing service called Financial News Network and up until 1988, '89 that had never ever happened in the cable industry. So we were sort of breaking the brotherhood code a little bit in bringing a directly competitive product to cable. They all said, "Why should I do this? I have a financial news service. It may not be the slickest, best financial news service, but I have it, it works fine for my customers and for me. I don't have any interest in giving NBC any bandwidth on this cable lineup." So it was not easy going, and looking back trying to remember all of the tough battles I'm sure I could tell a half a dozen stories of some brutal ones, but my mind leaps to when FNN started going into bankruptcy and when we bought those assets, that was kind of a definite marker for our future success is when they disappeared of their own problems and we acquired their assets.

NEEL: What compelled NBC to want FNN to begin with? If it was a bankrupt company, what was it that compelled them to want that asset as badly as you wanted it because obviously they fought very hard for it with Westinghouse and Dow Jones?

BAKER: Well, again, some of this, when you go back in time, General Electric had just purchased NBC from RCA very shortly before the cable division started and GE had a mantra then and it's a mantra now that you're a leader in your business. You're number one or you're number two or you're out. So, definitely from the strategic business objective, it wasn't an option for NBC not to pursue FNN because we could eliminate our only competitor if they really were a serious competitor and we would be the business leader and that's what we wanted to do. So I think it was a marker in some many ways for us – internally with NBC going to GE someone had to sign the check that said, "Okay," – and it was Jack Welch – "you can spent 160 million dollars on this bankrupt asset." And I think it was such a marker internally for us with the broadcast affiliates because then Bob Wright, our chairman, had to take all sorts of questions about "Wait a minute! 160 million dollars of real capital is going to what? Cable? Excuse me, we have these pilots we're going to do out in Hollywood. The broadcast affiliates want this and the Super Bowl is coming." NBC at the time was in the NFL, the NBA, major league baseball – we were dominant, so it definitely was a huge mountain. We climbed and sort of went over as a company together when we bought that, but I don't think it was an option to not get it. There's a story that's told – I wasn't in the meeting – but I know that when they had to go up to Fairfield, Connecticut and meet with Jack Welch and the people there, the story is that Jack Welch sort of backed up at one point and said, "Wait a minute. Is business news real? Is it a business?" And people like Tom Rodgers and my boss, David Zaslav, and a few other people had to basically explain that we thought it was. We thought it was a real business. But he asked exactly the question you're sort of asking – if it was bankrupt and CNBC wasn't making any money, FNN was on the block, was this a real business? And we said, "Yes." I don't know if we knew for sure. We believed.

NEEL: Was that a pivotal moment for CNBC because obviously you went from 18 million subscribers to almost 40, is that right?

BAKER: It was about 30, 32, yeah. Yeah, it was. Some of our distribution overlapped and some didn't, so we persevered in getting the distribution incrementally that we needed and also a lot of FNN's distribution was part time because the truth is they were pretty much a data service that ended at about 4:00 o'clock in the afternoon and then they had infomercials and this service called Teleshop, which was a shopping service primetime and on the weekends. So we had a lot of work to do that went on for many years following the acquisition to get those systems to put what was now CNBC on full-time, but we gained an incremental 17 million homes and got rid of our competitor, so I think that was a definitely a marker for CNBC.

NEEL: Did cable operators react positively to that or were they angry?

BAKER: Well, I would say that some operators were very positive. We took the very best talent we could from FNN, and Sue Herera, Bill Griffeth, Ron Insana all came with us, and so that was a salve for the industry. They knew those guys and the first day we switched on there was Sue Herera and Ron Insana, those were the faces they knew, but there was a lot of growing we did because for instance when we launched day one we had one ticker. They really wanted two tickers. The ticker was the thing back then. It's so hard to go back in time. This is before the internet and cell phones, but this ticker which was fifteen minutes delayed – still is – was huge and they wanted both, the New York Stock Exchange and the American Stock Exchange, and they needed both. The advantage we had in many ways is we were such a dominant broadcasting organization that anything they told us we could change instantly and they did. Cox was one of our earliest customers on launch day and they gave us this feedback. We instantly changed it. So the operators, I wouldn't describe them as angry. I think they were a little suspect; I think they had had a couple years of us out there. They sort of knew what we were trying to do, but I think they saw that we were in it for the long haul. I think it came across that if we were going to invest this kind of money and take this asset and really try to play with it against competitors that wanted it like Dow Jones and Westinghouse and Ted Turner, who wanted it desperately, that we were really in the game.

NEEL: Now, did your relationship with Senator Stevens, having worked with him on Capital Hill, how did that help CNBC because Ted did want FNN at one point, did he not?

BAKER: Yes, he did, and his board... there's a very little known story that I will share with you. His board, which was really headed by John Malone at the time, voted him down for the first time ever when he went up to the board to ask for the backing to buy FNN. By the time bankruptcy court came the people in there were NBC/GE, Westinghouse and Dow Jones, so Ted wasn't in there for that part of it because his board had said, "No, don't go after this asset." One reason they said no is because of a dinner that was in Denver. Senator Stevens had been invited out to a dinner that was a fundraiser for his political action committee and I had been very shortly off his staff, maybe two years, and someone from his staff called and said, "Hey, we're doing this fundraiser in the cable industry. You're in the cable industry, aren't you? Why don't you come out to this thing?" So I remember calling Tom Rodgers at the time and Caroline Vanderlip at my company and saying, "Would we do something like this? It's some amount of contribution, maybe $1,000," and not missing a beat, of course, back at 30 Rockefeller, they quickly thought oh my gosh! Bridget's going there, she worked for Stevens for 4 1/ 2 years and Turner's board is getting ready to vote on this backing for him to come up and try to buy FNN, which we don't want to have happen.

NEEL: Was he there chairman...?

BAKER: He had run for the leadership position against Bob Dole and lost, so he had lost a committee chairmanship at the time and I think it was energy, but it could have been commerce. Anyway, they called me on the phone, Bob Wright and Tom Rodgers, and they said, "You know, you're going to be at this dinner and this could be very important to our company." It was the experience of Bob and Tom on the phone and sort of saying here are the issues that we're looking at and here is why we don't feel it's in the best interests for Turner to have all these information sources into the home and Stevens is going to talk to his board, and these are really some concerns. We don't think Washington's going to agree to this even if he tries to buy it. They're brilliant men and they were great strategists, so I listened to this and I still have the notes from this phone call. I'm sitting in my apartment and on little yellow Post-its furiously trying to write everything they're telling me. I had only been at NBC a little while and the next day I get on this plane and there's Senator Stevens, and he's known me since I was 17 or 18 years old. "Oh, Bridget! How are you?" And we got on the plane and he said, "Well, how are things going? How's it going in the private sector? What's it like at NBC?" I said, "Well, it's really exciting but Turner's going to try and buy FNN," and I launch into this whole thing and the story goes that he landed, we all landed in Denver, and he went to the fundraiser, which we all attended and then he had a private dinner with the board. I would have loved to have been a fly on the wall; no one knows for sure exactly what was said, but for the first time ever in Turner's business practice, his board voted him down on something he wanted to do and they voted against giving him the backing to by FNN. So that's the little told story about the success of Bridget lobbying her former boss for the benefit of NBC.

NEEL: Was that the only time that that ever happened or did they call upon your relationship again?

BAKER: That was it. That was it.

NEEL: Well, I guess it was the smart one to pull if you were going to pull it. How did the other networks relate to NBC getting into the cable business? Because at the time the cable business was very parochial. Ted was one of them and all of the sudden there were outsiders wanting to get into the business. How did they react to that?

BAKER: The cable operators?

NEEL: Well, the cable networks, too?

BAKER: Oh, the other cable networks.

NEEL: Um hmm, because here you were vying for real estate on the dial and you're an outsider and you're a broadcaster...

BAKER: I don't remember as much from other cable networks, but Ted Turner was just fantastic. Topical of today with the Athens Olympics going on, it's like what they're saying about Michael Phelps – he's making everyone better. The thing about having Turner as a competitor in those days was he just was so colorful. Every time he could get a quote with a microphone there he would launch in on NBC and how we were taking the food out of his kids' mouths, and how could we think of going into the cable news business? This was his area; this was what he had done. Having him as a competitor made everybody better and more on their toes, and he fiercely wanted to compete with us. So I remember him specifically. I don't remember that we had a lot of pushback from other basic entities like an A&E or a Discovery. I think everyone kept their eyes on us a little bit, but we really had narrowed at the time – I mean, today is certainly a different story – but at the time we were just going to do this financial news service in '88, '89, '90.

NEEL: Because it seemed to me that the cable operators were so reticent, is that what created the $3 per sub incentive, the cash incentive? Because it seems to me that you guys were the first ones to offer cash as a launch incentive. I know it's become kind of common place now and bigger numbers than what you offered, but at the time that was pretty revolutionary, and yet people still didn't buy in on it either.

BAKER: Right, it was... what I recall about the time was that the deregulation or re-regulation at the time had occurred. What I remember is the going forward rules. That was what the big obsession was that they could launch these new services and there was this opportunity for us to get in there and once you were on, historically, it was very tough for an operator just to take you off, so we really wanted to get in there. So we created this $3 incentive, what we called the subscriber incentive plan, and systems could take this money sort of as a launch fee or a marketing fee and use it. In exchange, they committed to carry CNBC for at least five years, I think it was, and then they would also commit percentages of their base. If they were an MSO that controlled 2 million subscribers, and there were a dozen or so of those at the time, they would commit 98% of that 2 million subscribers and they would get this chunk of money. But the challenge was most operators didn't want to do that. They didn't have the capacity necessarily to commit to the benchmarks and there definitely was a feeling of why am I helping NBC? You have to remember that with cable a lot of the very successful networks had started because cable operators had invested in them – C-SPAN and Turner's networks, Discovery Channel, BET – they had supported all these services so they were very invested, personally, financially, in every way, and they didn't see us as someone that they should be helping necessarily. They resisted and resented, probably, that they had to keep Channel 4 on their basic lineup. They would have liked it if they didn't carry any broadcasters and they just had cable networks, which we all got to live through with retransmission consent in 1993, but I do think we were pioneering in this concept of getting their attention at least with the $3 and being willing to invest in the carriage that way. Years later it became that $10 and Rupert Murdoch really changed the game with the whole FX... he came out there with the $10 and $12 and that really changed the game a lot, way more than the $3 acquisition plan did for us.

NEEL: As did retransmission consent. How did that help CNBC move forward? Did NBC use that as a leverage for CNBC?

BAKER: Actually retransmission consent was the leverage for MSNBC, not CNBC as much. It was that retransmission consent for us was the creation... in exchange for the value of NBC Channel 4, the operators committed to support a basic network that we called America's Talking, and that launched in July of 1994. About a year into that – it's again, remembering the time, Bill Gates was just becoming this phenomenon and Microsoft was this phenomenon and the internet was exploding or beginning to explode and there was definitely a contingency at GE and NBC, Tom Brokaw I remember being very much in front of this, and he was a friend of Bill Gates. He would talk to Jack Welch and Bob and everybody and say we've got to be in with these Microsoft people, they're just doing a lot, and America's Talking wasn't going anywhere, really. I don't know if I should say that, but it really wasn't. In terms of viewership and distribution, we were struggling. So the idea was we went into this joint venture with Microsoft and we turned America's Talking into MSNBC. But it was retransmission consent that gave us the foundation to do that.

NEEL: For that network, not necessarily CNBC.

BAKER: Right. In renegotiating all of our distribution contracts we certainly got the commitment to keep CNBC on and not deleted and continue to roll it out if they could, but it was really the birth of MSNBC that was the give-me, if you want to call it that, for the retransmission consent.

NEEL: Did the NBC brass have realistic expectations about CNBC and where it was going to be at its launch, at specific points, or did the fact that they were the leading broadcast network and they were the leaders in all of these things, I seem to recall that they just sort of assumed that of course everybody's going to take us, why would they not?

BAKER: Yes, a certain what they used to call the "broadcast arrogance".

NEEL: Yes.

BAKER: That definitely existed, and it's hard now, again, to go back because of how successful the cable division has been inside NBC and you wonder which came first. If they hadn't had this sort of arrogance and this believability that they could do this would we be where we are today? But if you just look at CNBC and maybe even just MSNBC before the acquisitions that have happened in the last two or three years, they definitely had high expectations – because their business that they understood was the broadcast business, and that's a little bit of throw it on the antenna and everybody's out there to see it, and that just isn't the cable business – so this idea that in some respects you're going to a wholesaler who's then retailing your product, just the struggles internally for them understanding that... I mean certainly Bob Wright and David Zaslav and Tom, they got this, but it's like I say, the certain markers that we had like when we bought FNN. It was sort of like, well... and it's funny, you know – then we would get actually a huge deal done. Like, oh my gosh, we're going to go on every Times Mirror system and the response at NBC would sort of be like, "Well, of course, because CNBC's the best cable network out there." It's always about the programming when you work for a broadcaster, but I would say that the arrogance... I mean, getting the $3 deal, for instance, approved as just an incentive to go to the industry was huge for us that we would lay the money down like that. It's interesting with cable – as much as they resented us I think also they're a little bit watching it as "These guys are real. They haven't walked out yet. They're still on the playing field. They seem to keep investing; they seem to keep trying to tweak the product to make it better. They seem to do what they say they're going to do." And that helped us. That helped us in the long run.

NEEL: CNBC's success seems to rely on several different constituencies, more so than some other networks. You've got the business community, you've got the Wall Street people, you've got cable operators, you've got the networks themselves, your parent company, things like that. How do you satisfy all those constituencies and how has that changed over the years?

BAKER: I would say something that helped us – and you hit on it, it reminded me – is there was a time, and I would say it was in the early '90s, maybe mid '90s, when suddenly every time I went to visit a cable operator CNBC was on, and that was very vivid for someone who had been doing this for as long as I had because that was never the case and really, in many respects, the senior management to CEO level that I would be calling on didn't necessarily have the TV on anyway, but there definitely came a time when CNBC was what they were watching. When you say how has it changed, I think part of it for us was just the timing of the go-go '90s. We had this thing up and going and then it all happened. Silicon Valley happened, all of the internet boom happened. You went from a time where no one talked about Wall Street or their stock or their retirement to I couldn't get in a taxicab in New York City without the driver, if he knew he was taking me to 30 Rock he said, "Do you work for CNBC? I just did a buy/sell on a trade." And you'd be thinking, "I'm in a taxicab in New York City!" I mean everyone talked about their personal finances and that was not the case when we started this network. So some of it, I think, was the timing of just hitting it and having everyone become sort of like this is for the layperson. Wall Street historically was this stuffy white male, Rockefeller, the captains of industry of America and that was it, and then it's the cabdrivers in Manhattan talking about their personal stocks. So we definitely hit a wave that we got to benefit from and we were right there covering it and bringing all this to the masses. I would argue that we struggled a lot and maybe still with our primetime, which has always been a big challenge for us. How that's changed is when we started out we tried to do this consumer news angle, which was everything from, oh my god, what was his name? David Horowitz! This consumer reporter from NBC standing in the grocery store saying, "Milk has gone up 54 cents," and doing literally consumer news, what we thought it was, to having the political angle that I think we have more now, where we had Geraldo Rivera, Chris Matthews, we've done more the political primetime issues of television. But I would say that was the arc. The business world and financial became much, much more mainstream, so even though we started out covering Wall Street it became this kind of financial network for the masses, which went to the customers and helped the cable operators, and the business press and Wall Street and the internet boom just helped it tremendously.

NEEL: How do you think CNBC changed the way companies deal with the press? The financial world has always been somewhat parochial – you had the Wall Street Journal, you had the New York Times business section and if there happened to be something on the news it was maybe one or two stories. How has CNBC changed the way companies deal with their news, their issues, the things that they may or may not want to talk about?

BAKER: I don't know that I'm the best person probably to answer this, but I would say that I've watched it over time so I know that it's happened and I remember that our news anchors, even before the Maria Bartiromos, but when Sue and Bill Griffeth and Ron were all there, a lot of what gave their reporting and their ability to talk about business so much traction was they had real relationships with these people and people would call them and say... they really, really understood what they were doing and it was a passion of theirs. I think that's why they're all still there. This is really what gets them going. There could be people who love sports, they love movies, but these guys love the business of business and that came through always on the screen. So I think a couple things happened: one is I think CEOs were comfortable with them. They knew them. They had these relationships and I remember the first times cable operators were interviewed as captains of their industry. I remember when Rocco Commisso got on and Jim Robbins and these guys were interviewed by CNBC. When we started in cable, all those companies were privately held. They were not publicly traded corporations. None of them! Maybe Times Mirror, but now...

NEEL: And TCI.

BAKER: Yeah, and I guess TCI, but not Cox, we could go through a list of 15 of them that were all privately held. Adelphia certainly was. Anyway, and then they all went public in the '90s. So they had this kind of one of their own and they all wanted to be on CNBC and be interviewed for their successes and if you take cable out of it among industries in general that was part of it. I think Sue and Ron – and I keep referring to them, there's plenty more now that do this for us and they're very, very good at it, but those were sort of the three originals that came from FNN that had been doing financial news for a while, and in some cases they relocated to New York when we bought FNN, and being right there and having NBC be a very blue chip, prestigious place anyway in Manhattan really helped them. They just had it and it was a very reputable... I think being owned by GE probably helped us. There's also an interesting story, when the New York Stock Exchange turned 100 years old, they asked Jack Welch to come down and ring the bell, which is something we've always covered, the opening of the market, and I think from a distance some people thought, "Oh, well, of course they're inviting Jack Welch. I mean GE owns NBC and NBC owns CNBC," but that wasn't the reason. The reason was because 100 years later, GE was the only company that still traded on the New York Stock Exchange that had traded on day one 100 years earlier, and so he was invited to ring the bell. That's a testament to sort of the blue chip quality of what we brought to the table. Again, a lot of these cable networks had started the garage of we're starting this, it's a good idea, how are we going to do it? You know, like TV in the Senate was hugely a new concept, but there was a lot of polish and a lot of experience in programming quality at NBC and that came through right away to the cable side and people saw that. But yeah, that's how he was invited to ring the bell.

NEEL: You mentioned that CNBC got to ride the wave of the consumer obsession with finance, but after 9/11 people's thoughts and the things that were important to them shifted again and they've tended to shift back away from finance. I know that's kind of affected some of your ratings a little bit. How do you adjust to that? How do you work around that? How do you get people to make sure that they watch you, that what you do continues to be relevant to them?

BAKER: Well, it's hard. You could argue in some respects that news on every level is a commodity today. There's just no proprietary avenue. With the internet and websites, and we have a number of competitors today with Bloomberg and I think Turner still has his CNNfn out there on some tiers, you could argue that that challenge can never be met almost because it is such a commodity. Then on the other hand, you can say that because we have been around now, we've lived through the decade of the '90s, we reference all that stuff, we do ourselves have a very robust CNBC.com website that a lot of people access, but I think we're always looking at ways to sort of expand. For the last couple of years, the president of CNBC, Pamela Thomas Graham, has hosted in Washington DC a three-day seminar where she invites certain people and our anchors come down and it's gotten a lot of good feedback where people say, "We're in this world, so let's share this knowledge and let's look at trends. Where are we going?" They get the captains of industry and people that own investment companies from all over the United States come and attend this conference. So I think we're always looking for ways to sort of keep the brand alive, but it's a challenge. There's no question that the post-9/11 world is not turning on CNBC, although another NBC show got a big punch in the arm, which was Friends on Channel 4, on NBC regular. They wanted something familiar, they wanted something that felt like home, but our ratings did do a big slide after that. I think, again, sort of revamping the primetime and seeing how that goes... but I think the tried and true investment people still do go. They want to watch Squawk Box. They want to see the early morning show with Joe Kernan. They do have people they want to hear this news from. There's no question about it. We talked about it recently about the Olympics. You can watch an unmonitored feed of the games or you can watch it with Katie and Matt and Tom and Brian, everybody talking about what's happening and giving you context, and it's just 10 times better to watch it with context. Bob Costas and can say, "Oh this was his fifth one and this is what he did before..." People want the guide and I think our network still provides that for a lot of viewers. We're the guide. We're getting you through the trenches on it.

NEEL: How has technology and the adoption of technology by the masses – internet, cell phones, things like that – how has that affected CNBC? Has it been a help, has it been a hindrance, is it something that everybody is still trying to get their hands on? I can recall CNBC being one of the first, wasn't it one of the first to be able to do the cell phone thing?

BAKER: You mean get something like the beep on the stock or whatever through your cell phone?

NEEL: Yes.

BAKER: We did. I was going to say, it's hard to know if it's a help or a hindrance. Two things I would say – one is the expectation of the viewer for the data has risen exponentially from ten years ago. Again, it's just back to that, if it's a commodity, if they can get it anywhere do they want it from us? So that puts a big challenge on us. Secondarily I would say that we are a cable network first and a lot of our cable operating partners don't want to see us do deals with telephone companies or wireless companies. So we sort of stand back a lot from just doing any deal that might surface out there. For instance, we don't stream on the internet and we never will stream on the internet. Well, I should never say never, but it's a video service, so we're probably going to offer it as a video surface. Microsoft would love to stream MSNBC on the internet, but our cable operators buy this product and sell it to the viewer and it's going to be offered as a cable channel. I think we do a balancing act a lot of the time.

NEEL: Do the cable operators want a broadband product that they can sell? Is that something that is starting to crop up a little bit? With the amount of money that they make and the margins that they get from their broadband service it's becoming more profitable for them to push that product than it is over their video product. So could that change over time? Is that something that you see... could it be sort of like the evolution of adding another stream? You've got the affiliate broadcast thing, you've got the cable thing...

BAKER: What I would say from what I hear the most is that they are interested in again, I would say something almost proprietary for them is attractive. So if you're a Comcast high-speed customer and you could go on Comcast.net and maybe from our show on Bravo, Queer Eye for the Straight Guy, you could see some outtakes and you could only see that if you were a Comcast.net subscriber, they seem interested in that. It's very much today, I would argue from what I hear, a lot about exclusive product against satellite.

NEEL: Just like the way it was in the early days before the exclusivity rules, which is something that NBC fought against the cable operators for to begin with. Is that something that NBC thinks it could possibly work into its... Do you see that as an advantage for you and for your networks?

BAKER: I think for us we try to be a little bit... we call it Switzerland. We used to call Turner Switzerland. We used to say he's Switzerland. He can do no wrong. They love him, they'll do anything for him. But now we always say he's Time Warner, which is a little different and we always remind everybody, you're giving all that money to Time Warner? Other operators, I mean, and we always just sort of gently remind them that's a Time Warner company now. So we say that now. We try very hard to be Switzerland. In other words, to just withhold content from the satellite industry we cannot do, and to withhold certain things from cable and try to do it exclusively satellite that would just never work. We have to try to be Switzerland, and the world's change. I think the big operating companies, they get this now. Again, they're publicly traded; they have all these challenges. At the same time, they have stiff competition with satellite, but satellite is now owned by Murdoch and Charlie Ergan, and Dolan is in satellite now. So it's all mixed up and we have to just try to be playing the game. We're really in the business of content development and distribution and that's the game we have to stay in.

NEEL: Regardless of the distribution network.

BAKER: Right, right.

NEEL: Have the challenges in selling CNBC changed over the years? I imagine that obviously the early challenges were just getting cable operators to feel comfortable with dealing with a broadcaster. What are the challenges today as you go out and you're trying to secure distribution of that network in this environment?

BAKER: Today our challenges relate much more to the operators, and I just touched on this, with their competitive business that they're in now. They are much more, I don't want to use the word sophisticated necessarily, but just much, much more strategically focused on their bandwidth capacity. So they get into discussions with us about things like ratings and how we're doing and do we deserve 6 megahertz of capacity if that's what we have. With as many networks as we now come to the table with, I would say the challenge with CNBC is simply under the glare of the light when I big distributor, whether it's cable or satellite, says, "Well, look at these ratings" or this is how much you cost me every month. I don't think in experience those would be real... they wouldn't drop CNBC over something like that, but to sort of lay those down as a starting point of discussion will impact us on anything else we're trying to do like distribute now USA Network or Sci Fi or Bravo or Telemundo. They sort of can hold this card and say, "Well, how are you really doing and how are you so much better?" But CNBC is so established for us. MSNBC might be a little more vulnerable in that discussion definitely than CNBC would be.

NEEL: In the early days, NBC was the bad guy because it was a broadcaster. Now all the broadcasters are in the cable business, in fact, they are all the large conglomerate cable network providers. With the acquisition of Universal, you get locked into that group, which is not always used in a very complimentary fashion. So here you are, you're back in the bad guy seat again potentially. How do you react to that, how do you sidestep that, and did you learn anything the first time that's allowing you to perhaps avoid some of the landmines that some of the other cable networks conglomerates are finding themselves in a little bit?

BAKER: One thing that may help us is we still have the same people having the conversation – people like me and my boss, David Zaslav. Fifteen years later we're still there. So it actually helps us, I think, in a lot of ways, and many times we're talking to the same people. They might be in different positions but they're still in the industry and they're still the programming/acquisition executives and they're the people we talk to. So we love to say, for instance, that yes, we're a broadcaster but we're not anything like the bad boys over at ESPN and Disney and ABC, or my God – who could even try to do business with Rupert Murdoch? The guy's a wild man! So in the world we still, even with the Universal acquisition, are small. We really are. News Corp is huge, Viacom's big, Time Warner's huge, Disney's huge. We're very profitable, but if you just look at straight size and asset value, we're not as big as the big guys so we're trying to use that to our advantage today.

NEEL: So it's paying to actually be the little guy, the little big guy.

BAKER: The little guy among the bigger guys. I have to say too, I think the industry has given us credit for something we said we would do that we've done, which is we always said that we would reinvest our money onto the screen, that we would put the best programming that we could put on the screen up there, and I remember when MSNBC launched a lot of the operators were in pure disbelieve, and of course all of our competitors... well, they were in disbelief about the fact that we would put NBC talent like Jane Pauley and Matt Lauer and Katie Couric and Tom Brokaw and Brian Williams on this network, and our competitors just took that to the... "Oh, of course they're going to do it for two months, but they'll never do it long-term," and we did and we still do. So there have been things in our history that we have built an enormous amount of integrity where we have done exactly what we've said we're going to do, and that is another thing that today puts us in a very good position against our competition, if you want to look at these big, very integrated companies, we sit well in that group among those other institutions for a lot of things that we've said we would do that we've done.

NEEL: Are there things... there are rumblings in Capital Hill about how the small cable guys are trying to break up the programming contracts and split them up and there's the whole retransmission consent, they want to get rid of all of that kind of stuff. There's a lot on the horizon regulatorily that could affect companies like NBC. What are you guys doing in that arena and how do you view what the cable operators are trying to do there, and even if the big guys aren't down there walking with the troops with little Matt Polka with the ACA, they're cheering them on in the background, so how do you deal with that? What do you see on the horizon? There have been a lot of regulatory things – the '92 Act, the '96 Act, those kinds of things, how have they all affected NBC and CNBC and what do you see going forward in Washington that could affect the way you guys do business? Is it looking good? Is it looking kind of uncertain?

BAKER: I think it looks good. I think the horizon looks very good. I think another thing for us is our size is actually so new to us if you look at it from really the acquisition splurge, I always call it that we went on a shopping spree. Jeff Amelt became the chairman of GE and we've done these acquisitions. Telemundo was the first, then Bravo was the second and now Universal. So we've grown exponentially very quickly. If you think of '92 and '96 and some of those, we simply were just CNBC and by '94 we were MSNBC and were sort of a stand alone operation. We made an investment in Shop NBC somewhere along the way before 2000, so the idea of the bundling and the a la carte and all those things – I think that's what you're referring to – there's the decency and indecency rules and all that. In some respects we have an easier time perception-wise on Capital Hill because the NAB isn't as powerful as it was a decade ago and NCTA is, and we've been a part of that since we started in 1988. I think we're fine. I don't know that all those things would impact us. If you look at a Murdoch for instance, or a Time Warner, they're in the business of having a distribution outlet as well as the content development, and although we have GE behind us that is in a myriad number of businesses, at NBC we're in content development. So we're not trying to do the distribution end of the content, so I think in some ways we're sort of free, freer than others are.

NEEL: Sure. CNBC began in '89 with 6 million subscribers, today has over 200 million worldwide. What do you attribute to that growth? Was there a pivotal event that you can pin it to? That's a phenomenal amount of growth in a short – relatively speaking, big picture kind of thing – amount of time.

BAKER: It's hard for me sometimes when I think about it. It's true, and I try to think is there one thing? I don't think there's one thing. I think there really isn't one thing. It was probably launching when we launched, buying FNN when we bought FNN, the internet boom coming and going, and we did a joint venture with Dow Jones, which got us our international CNBC Asia and CNB Europe and that's part of that subscriber count that you have in there. It's a good network. I can remember little programming tweaks that I could tell you about like when we first decided we were going to do top of the hour general news updates, which was just a huge thing, in part because of Turner's possible reaction or Time Warner's possible reaction because it was seen as so directly competitive to CNN, or actually more Headline News. And then we did it and a lot of our viewers that might have gone away to see what was going on on Headline News stayed with us to watch. So there's been programming tweaks along the way that we've done. I think if you had to try to just synthesize it to a couple things... doing live programming is an interesting venue because you can make the changes. It's not a business where we acquired content way out in advance, a year in advance, and then it didn't air until a year in the future and it was focused on marketing campaigns to get viewers. We were live, and I guess mainly a lot of things have happened. I mean, I remember when Brian Williams launched, he was the anchor when we launched MSNBC and it was the plane that blew up, the one right outside of JFK. I want to say the Scottish, but I don't remember now if that's what it was. It was July of 1994 and news services always in spike news events get really big ratings hits. But we had sort of an in in Europe because we had a network over there called Super Channel and then CNBC Europe came there and CNBC Asia, and they're just very high quality. And we have CNBC World now. The digital service that we run... Direct TV and Echo Star have it, but we have it mostly digitally on cable systems and it's what the operators I remember from 12 years ago begging us to do, which is 24-hour business, no primetime programming, and that's what this service is, CNBC World. So it's the Nikkei Stock Exchange, we do updates from Germany, we have these live reporters everywhere and it's 24/7 all business news, and it's a fantastic product. It's not seen by as many people, maybe 20 million. It might be actually more than that now, maybe 24 million.

NEEL: If it's something that they wanted, why aren't they taking it?

BAKER: The operators right now?

NEEL: Um-hmm.

BAKER: Well, it's funny. It came out as a digital service and what a lot of the operators had done digitally is they had put Bloomberg and CNNfn up there. So they were sort of like well, why take a third financial service? I already have CNBC, then I have these other things. Why do I need this? That's been part of it, and again, it's just getting people to see it. Once they view it they just say... If you compare how CNBC World looked on day one as compared to CNBC on day one, it's just dramatic for the better. But they're taking it. They're rolling it out. We'll get there. It's fine. It's a great product.

NEEL: We kind of went into this a little bit, but how is CNBC really... It seems to me that the world of financial business has changed so dramatically – the way people view it, the way they absorb it, the way it's disseminated, and it seems to me that CNBC is the reason for a lot of that, in looking backwards. Going forward, how is that going to change?

BAKER: In terms of how people process their information?

NEEL: You guys had an enormous impact on the way financial news is reported and absorbed and disseminated. Companies were never very open, and if they were, it was something that they fed the Wall Street Journal and that was it. But now, again, as you said, you've got people scrambling to try to get on to tell their story. What's next for CNBC and are there other ways that CNBC, and not maybe perhaps intentionally, but are there ways that CBNC and the way it's doing what it's doing and what it does, will that continue to change the way people receive and how information is disseminate? Does it forever change?

BAKER: Well, I think it's forever changed. I don't know how much more we can change it going forward in terms of how we disseminate the information. Between the internet and the reporting that we do and the way they package... I can remember conversations when they said, "All these people in America have mutual funds through their 401Ks, so let's start talking about that." Those were really big leaps. To our guys that were in Ft. Lee, New Jersey at the time, it was sort of a day of doing business but they were huge in terms of having a video outlet that someone could actually hear, "Oh, this is what the mutual fund investor is saying," and then the guy from Vanguard comes on and says, "Well, this is why we're doing this because diversification is good and going to Japan makes a lot of sense." Someone could be sitting in their living room in Dubuque, Iowa and just go, "Oh my gosh! That makes so much sense." And then they would sort of get it, and then they would watch more CNBC. So I don't know if disseminating the information will change that much more. I think that they expectation of a lot of the viewers for how quickly they get the data has changed a lot and I think that's something we have to really stay on top of, is getting it out there fast and making sure that they're getting what we think our viewers want to hear. But, yeah, it definitely has become a scramble among the Wall Street world where if you've done a CNBC live interview you've arrived.

NEEL: Who'd have thunk?

BAKER: Right, twelve years ago, first of all, they were all like anything that's in New Jersey can't have anything to do with finance because it would be on Wall Street. That was part of it – we were not in Manhattan. I remember the days when they couldn't even get people to get in the black car to come out to Ft. Lee, New Jersey, and now they're all...

NEEL: Why did you do Ft. Lee instead of be down on Wall Street?

BAKER: If I remember correctly it was union related. Actually we had a live anchor on Wall Street. We were the first to ever do that, you know, "from the floor of...". That's the Maria Bartiromo beat that she made so popular, but it was having the facilities and we were just in this building in Ft. Lee, New Jersey where we had the cameras set up and we'd have to bring people out there for interviews if they wanted to go on the air, and that was just considered, "Oh my God, Ft. Lee, New Jersey!" And I remember, and I could be wrong, but I think it was union related of why we set it up there as opposed to 30 Rock, but we always had a live person on the floor of the New York Stock Exchange. I think it was New York first. Yeah, New York first because we did NASDAQ and American, but it was New York first.

NEEL: You guys had great cameras on the World Trade Center. I watched CNBC because they had the straight shot.

BAKER: We were right there, yeah, we were right there.

NEEL: Let's go back to you a little bit. What's it like to be... the cable industry has always been a very male-oriented, the programming side of the house is a little less so, but the cable industry is a very male-oriented, very clubby group, and here you are, you're a woman in a company that is very male-oriented and male-driven, and yet you have done extremely well. What's it like to be a woman in this industry and how has it changed from 1988 to today?

BAKER: Well, it's changed a lot. When I think back, I think at the end of the '80s, early '90s, some of the cable pioneers truly were sort of exiting the business and I can see that much more clearly today than I could when I was in it. But if you figure that the first cable system was being built in 1958, by 1992 a lot of these guys had sort of run their course and they were starting to sell their companies, a lot of the smaller guys. There was some consolidation starting among the bigger companies. Companies were going public, which a lot of these guys didn't want to do, and the technology was changing so dramatically that investing in rebuilds and doing some of the things that required going to Wall Street, trying to get money to get financing to rebuild your system, they just weren't interested in doing it. I remember when Viacom sold their system. Viacom used to have a million subscribers. They owned Seattle, Dayton, Memphis, and they sold them.

NEEL: I think San Francisco.

BAKER: Yeah, they had San Francisco, and they sold it. So people were starting to make the decisions – I'm an operator/I'm a programmer sort of thing. So it's changed a lot because I remember the early days definitely having a lot of the engineering types that were sort of like, "What's a nice, pretty girl like you doing in a place like this," some of that kind of conversation happening. You go into it with all the ideals of this is it, I'm in my big job, and I'm going to do this, I'm going to work for NBC – there was definitely a lot of that. And the way they used to do it, you'd fly out to Walnut Creek, California and you'd sit down with a guy and he wanted to go out for a steak and a scotch and you'd give him a t-shirt and he'd launch your channel. That's the way it was happening when I got in. We changed it a lot, actually, because we came in with a very business approach and a much more legalistic approach. The thing that we understood, I think, early on is we couldn't be vulnerable. We couldn't wake up one morning and have someone just decide "Oh, I don't want to carry that anymore, I'm just going to drop that thing," because the asset value was and remains the locked in distribution. When all these networks started trading hands and people bought them up – Viacom bought BET and Fox bought Family Channel – when all that happened the asset value of these things has always been in the distribution. So that was something NBC understood very early on, so we came in with – I remember – these 16-17 page contracts and the guys who had carried FNN or something just kind of looked at us like, "What is this, Bridget? I'm not going to read that thing! I'll put you on tomorrow. It's no problem." That's really how it was, very sort of Wild West, but also just, "It's fine, I'll put you on." It was changing just as I got in to being a lot more corporate and a lot more, I keep using the word legalistic, but I remember some early things. I remember USA Network being dropped by Jones.

NEEL: Very big deal.

BAKER: Huge! They lost every single one of those subscribers overnight and it was over a million subscribers. Those things went long and far in my organization. I mean, that was just never going to happen at NBC. The way it's changed – and I've used these anecdotes inside my company – is so many ways. You used to meet with the guy who had built the system – this was all the same guy – laid the wire, drove the truck, did the billing, came in the office periodically, went out and tested the satellite. He was the same guy. Today I don't hardly have a phone call where I don't have three lawyers on the line. I'm talking to a lawyer and their outside lawyers. It's just a very different... and it's not anymore that same guy. The guy I'm talking to is a white collar lawyer. He's never rolled a truck, he hasn't been out and tested a satellite. In the early days we used to train the installers. We'd go to a cable system and we would have an early morning training to talk about what CNBC is to the installers. I mean, that just doesn't happen anymore. We still train local ad sales executives and we do customer service trainings if the operators ask for it, but it was so much more of a collegial kind of family feeling place and now it's just a much more corporate, Wall Street kind of place.

NEEL: What would you say is your most rewarding moment in your career?

BAKER: Oh man, that is such a hard one. You know, I've had some great times. I remember when CNBC flipped the switch, 3:00 in the morning. I had already been there a year before we launched the thing so it was finally going to launch and I remember it was 3:00 in the morning in California and we flipped the switch and there was Bob Wright welcoming everybody to CNBC. Those things are like they're yesterday practically. But then I can also remember closing big deals, like the first round of retransmission consent when we got all these subscribers locked up and all the deals had to be done by October 3rd and for a month we were on the phone until 3:00 in the morning every night faxing documents and getting that done. And then the first time I went to the Olympics in Barcelona. I've had some great... I don't think I can do one.

NEEL: No? If someone was coming into the industry today, particularly a woman, since that's our perspective, but not even that, what kind of advice would you give? Say somebody like you in 1988 was coming in... you came in for a 90 day gig and you're here 15 years later. So, what kind of advice would you give somebody if they're coming into the industry today? What they need to do to be able to do what you've done 15 years later and thrive, survive, excel?

BAKER: It's probably different at different companies, but I think there are some standard things, especially – well, not especially, but also for women, but also just young people. It changes when you get a little bit older and you get a few wrinkles in your face, for women you get married, you have a couple kids. The tone of everything comes down to a little bit more reasonable, sort of operative level, but I think one thing is I'm not sure it's going to move as fast, and I've told this to some young people in my organization because the industry was in such a high-growth mode that just getting in at that time and staying with it, sort of in spite of yourself you can go along the train track with everybody else. Today it's a much more... There certainly were places, I always thought of HBO as one of those places where compared to a start-up, basic cable network where you had to get in and cover a whole geographic territory and you had to run out there and do all this stuff, HBO was already way corporate by the late '80s. They were completely established. If you got a job in an entry level position there, you had a very small little region because you were really more of a marketer of a product line because HBO is on every single cable system, it's just a matter of who is buying it, and that wasn't the basic cable business model. You had to just get on the cable system, so you're doing ten times more traveling and running all around. It's probably not going to move as fast as it did for someone like me who started when the industry was still in such a high-growth mode, but if I think of the things that have helped – in our organization a lot of the things that are valued are sort of the never take no for an answer, have you thought about every single thing that can happen, knowing your business and knowing the customer is a huge thing at NBC and also GE, I think, where you really have to get out and know it, and a lot of times you have to do it without a lot of guidance. What I find myself getting younger people comfortable with is you've got to go try and if you make a million mistakes that's not a crime here. We don't want you to make the same mistake a lot of times, but you have to go make some. What they tend to do a little bit more now, I notice with a lot of younger people is they're so much more cautious. I'll say, "Well, just call that guy up and blah, blah, blah." And they're, "Well, what should I say when I say that, and what should I do when I do this?" Sometimes you've just got to go and do it on the fly and see what happens because that's how you learn. That's what I would tell someone is you can't be afraid to make a mistake, and some of it you just have to learn on the job. Me telling you in the office isn't going to cut it because I don't know what the client is going to say. You've got to go out there and try and have that conversation and see what happens. So I would say that. Obviously the easy things are the work ethic. If I even started... Someone once told me they took a photograph of every hotel they had ever stayed in and I thought if I had a photograph for every hotel I had ever stayed in, I would be terrified to look at that album.

NEEL: Did they have them in an album on the table or something?

BAKER: Yeah! And here was when I went to visit Cable One and Post Newsweek in Modesto, California. First of all, I would never even want to see some of the hotels I stayed in back then. I always say I stayed in every Ramada Inn and every... I guess that's another thing I see, too. What happens with a lot of people now is they see cable as the entertainment business. That isn't how I saw it when I came in, at all. Again, I was coming in thinking this is the private sector, let me just try this non-governmental start-up and see what happens. Now people look at it today as it's the entertainment business. These are huge media conglomerates, international, and so they all think it's about glitz and glam.

NEEL: Well, we're in the middle of a movie studio.

BAKER: That's exactly right! It's just changed. They want to go to all the fun... like the Latin Billboard Awards that Telemundo has, or I'm sure the Emmys, it's all about that, and that isn't how this business started. This business was so C&D County, there's the old guy that I told you drove the truck, laid the wire, he's living in Casper, Wyoming, he's never even been to LA or New York, he has no interest in going to LA or New York. That's how it started. So maybe that's a piece of advice for someone, too.

NEEL: What would you like your legacy to be?

BAKER: Oh, man! In the industry, or...?

NEEL: Yeah.

BAKER: Okay, I've spent no time thinking about that one.

NEEL: How about CNBC's legacy? What would you like to see CNBC's legacy be?

BAKER: Well, I actually got a little glimpse of it because at our ten year anniversary – I've been based on the West Coast for a long time and that's not where we're headquartered, as you know, so I've always been a little bit of that falling between the cracks out here because I was sort of the only cable person out here. I mean, NBC Entertainment has always been here, but at our ten year anniversary, they hosted a big party in New York and Jack Welch came, and Bob, of course, but it was GE and NBC and they hosted it at this big restaurant. How I heard about it was I was going back there already for something and they said, "Oh, there's an anniversary party, so the night before you can go to this party." Whatever. So I walk in there and there's a huge photograph of my face along with I think it was 27 other people. There were either 28 or us or 23 of us, and it had a big heading that said, "The Originals" and there we all were. Sue Herera was in there and Ron Insana and Dave Zaslav and Deborah Hall from finance – there we were. And I thought what is going on? No one had told me. They all knew, all the people in New York knew what was going on because they had heard through emails or whatever, I don't remember, but I had no idea. So we get there and they call us each up on stage and they gave us this Tiffany plaque and I remember Jack saying, "I'm just so proud of you," we were all standing there, you know, and he said, "You just plowed and got through it and it was never easy and you built this thing and this is what keeps America going," and I remember thinking "Oh my God, this is so cool! Where's my mom? Where's my husband? How come I didn't know about this?" But that would be it, I think, is just we started it and we succeeded, and it was a lot of hard work and a lot of luck and a lot of this and a lot of that, but being part of the team that was sort of there that had the vision, or thought we had the vision, and believed we could do it and we did it, that would be it.

NEEL: What was it like... watching television in Alaska is a whole different ballgame than watching television in almost any other place in the country and probably a little more like it is, not the volume or the amount, but a little bit probably more like it is today for a lot of people. Like I'm a satellite subscriber – I probably shouldn't say that but it's because I don't have cable.

BAKER: Well, you're pretty far out, too, isn't that why?

NEEL: I am, I'm out in the middle of... I'm a no cable person so that's my option. What was it like to watch – did you only have a couple of things to watch? So you're favorite shows couldn't have been... there wasn't a lot to choose from.

BAKER: No, I remember this very well. The expression of bicycling tapes? They would bicycle tapes from Seattle. So I grew up in southeast Alaska, in Juneau, a very small town, and at 9:00 the TV would come on, I think it was KCAU, and then at 9:00 PM it would go off. What we used to call snow on the screen, it would just say, "And we're signing off, KCAU Juneau Alaska" and it would go to snow at 9:00 at night. So we had very little television. I remember the Brady Bunch occasionally, and it was not network specific, obviously. They picked a few shows here and there, they bicycled the tapes up and we would view them. So I remember the Brady Bunch being on once in a while. There was this bizarre soap opera at the time called Dark Shadows.

NEEL: Oooh, I remember that! Barnaby!

BAKER: Barnaby Collins! And Angelique. I remember! Dark Shadows was a big deal for me. But I don't remember us having... well, maybe they weren't even around then but we didn't have any of the children's, like Sesame Street, we didn't have any of that stuff, and it was all delayed, very delayed programming, but there wasn't even a movie theater in my town, so TV and media was... It's funny, you know, because then fast forward all these years and I got into cable and I was in Seattle at a company called Rock Associates, run by a guy named Gordon Rock, and he had bought a lot of the cable systems in Alaska like Valdez and Haines. He didn't own Juneau, it was owned by Jack Kent Cooke, and he didn't own Anchorage or Fairbanks, but all these outlying communities and he also had out of Denver – was it called Netlink? It was called Netlink. So he took the Denver broadcaster, which happened to be NBC and shot it up to Alaska, so what you had going on is in Alaska, a state with no professional sports at all, these absolutely rabid Denver Bronco fans and they would charter these Alaska Airline jets down to Denver to see these games. No one outside of Alaska would ever have understood this. The plane would stop in Seattle and all these Bronco fans would get off and of course everyone in the Seattle airport is like what is going on? But for those of us who lived there, we knew. It was the only TV they got. It was the only football game they ever saw, so they were just these crazy Bronco fans. So TV up there was not a big part of my life at all. People talk about, oh, didn't you watch this? I never knew about any of those shows. In DC I never even owned a TV the whole time I lived on the Hill.

NEEL: So isn't it ironic that you're in the TV business and one of the people that has been one of the most pivotal in making it what it is today.

BAKER: It's funny because I find this with so many executives in cable and television who don't watch very much TV and we get in discussions with them and it's kind of like, well, have you watched it or have you seen it lately. You have to really... that's why we still show tapes. It seems like maybe an outdated practice, and a lot of times now we have a DVD in a computer, but we still show tapes because a lot of people don't watch the content and a lot of people who are in the position of buying this programming aren't that familiar with a lot of the shows.

NEEL: So do you find that people don't have it on their TVs in the daytime as much as they used to when it was the go-go... I've got to watch the ticker?

BAKER: Well, CNBC is still on a lot, but now we're in these other areas, so Bravo, for instance, they might have a very outdated view of Bravo, or Sci Fi, I'm finding out, a very outdated view of what that network is. So you have to really do a sort of job of describing what it is, and I understand it. The proliferation of cable channels has not been in equal measure to the proliferation of how much people watch. People still watch, I mean, all the research still says 12 or maybe 15 different networks, and so even if you talk to a satellite subscriber, they tend to weed out what they don't watch and they're still flipping between the favorites and that's always under 30 channels and then people are watching 50% of those, so it's hard to break through the clutter. Aside from the Olympic for us, which is a whole separate programming package in essence, is the Bravo show last year of Queer Eye for the Straight Guy. That was such a wonderful experience because you can work your whole career and never witness one of these situations where this show that we didn't really know just became this huge breakout hit. I remember when we were saying, "Wow! It's not the number one show on Bravo, it's the number one show on cable," as in The Osbournes and South Park and all the stuff that Viacom always has, you know? That was a great experience for us?

NEEL: Do you think CNBC can ever have one of those? Is it a network that can create one of those?

BAKER: I don't know. I would say yes, we have all the things in place to make that happen, but it's still a world, I think, that we live in that cable operators buy niche programming and they want you to really stay with your niche. We got a little bit of that last summer with Bravo because they don't want you going out of what they think Bravo is supposed to be and they don't want you going out of what they think Sci Fi's supposed to be, and they certainly don't want CNBC to have Will and Grace on, so I don't know that we'll ever have kind of a mass marketed... What was fun about the Bravo experience is you wouldn't think that was a mass market show that turned into one because it was really a makeover show and in this sort of bubble of reality programming success it just happened to pop right out there, but we say CNBC is reality all the time, every day.

NEEL: Has that helped you guys? The whole reality show thing, the whole idea of people not wanting to really watch scripted programs anymore?

BAKER: I don't know that it's helped CNBC, but I think of the whole Donald Trump, The Apprentice, our success with Queer Eye, which we put on NBC. That had never happened before either where we took a cable show and put it on NBC, in my experience. We hadn't done that before. So that was a new kind of thing to experience, too, although we've run The Apprentice on CNBC in primetime and we got great ratings on that too, and that sort of fit. I would say the cable operators over the years, the biggest pushback they've probably had for us on the programming content primetime, if you want to call it a problem that we've had, is they've always wanted us to do shows more like – and we've talked about this for years – but like a Martha Stewart, let's say. That you're just sort of tracking how did she get there, and then she was CEO and how did she fall, and what's the story. Or I remember when Michael Jordan was... let's just do a show, Michael Jordan, what does he spend all his money on? Do these money type shows that fit into the niche but weren't exactly tracking the market. But in large part, too, you've got to look at what NBC has already and we have this ability to do sort of crossover news issues on television, and that made a lot of sense for us.

NEEL: We touched a little bit on CNBC World and obviously you are all around the world and if you're covering the markets 24/7 how has that affected the markets? Do people watch the Nikkei at 4:00 AM and then go and make trading decisions based on that? That really makes the world a very small place and in an environment where it has never really been too much, how has CNBC affected all of that?

BAKER: Well, I do know, to answer your specific question, people do get up and watch it because the minute we launched in New York on Time Warner's digital service we got all of this great feedback. Now you could argue that the biggest population of financial viewers are in the biggest metropolitan centers and that's true because that's where all the people are, but that's not to say that the guy living retired in Santa Barbara, Scottsdale, La Jolla or Libby, Montana is not just as interest in that information because it empowers people. If they can watch it for themselves and hear what that person says, they go to make a decision based on that. I think because of the history that we have with CNBC and the success we had, we shouldn't underestimate also that the people who originally went over to build the cable systems in Europe, not the satellite systems, but the cable systems were mostly American cable operators. So they had a familiarity with our product and I remember specifically out of Denver United Global Communication, UIH... UGC was the parent and United International Holdings and they started building out London and Malta and they had franchises everywhere. Well, they already know about CNBC, they knew about our product, so there's a familiarity and they take it with them and then we expose it to that audience, and then shortly thereafter we were launching CNBC Europe and there was a familiarity there. So it opened up literally on a sort of stair step program where we were covering the markets but mostly we were covering America, and then with CNBC World we got the opportunity to cover globally the markets. So the volume that trades in the States is, of course, enormous, but everyone over there is watching America too and it made a lot of Americans start watching internationally for themselves. I think it has made the world a very small place. When you have these brands and these logos and they sort of travel internationally... I will never forget the first time I was in an airport and somebody recognized the CNBC bag. I mean, this was a long time ago, but I'd been carrying the thing for five years but no one knew what CNBC was. You have to remember there was something called CBN, which was Christian Broadcast Network which today is Family Channel; there was the CBC, which was Canadian Broadcast Communications, but all the northern states the outlay the Canadian border could all get that over the antenna; there was of course CNN. So no one knew what CNBC was. Then I remember the time that some guy... it wasn't in New York, it must have been Denver or Atlanta, said, "You work for CNBC? Oh my gosh, do you know about...." That's when it started. That's when the trend kind of started of it all came down to the masses and the impact meant that this stuff was tangible for everybody. It wasn't any more in the rarified air of the guys who worked on Wall Street and their investment advisors.

NEEL: Does the guy in Dusseldorf, Germany or the gal in Finlandia, are they watching the American stock businesses? Is that what they want to hear or is that what they want to watch? Or do they want to know more about the Euros, and do the Americans want to know about those foreign markets as much? Is there an equal tradeoff there?

BAKER: The idea for CNBC World is for American to be able to see the international, so that's definitely where we cover and they talk about. Deutsch Bank came out with this today, or the Tokyo offices of Toyota International did this today. They're definitely talking about their issues countrywide. Having the Euro, also we lived through that. So that changed everything, too, in Europe whereas before there was a lot going on between the drachma and the... and now it's the Euro. So we've watched that whole thing get covered. Those are the sorts of things that CNBC's been teed up to witness firsthand and broadcast all over the world and we've just sort of been there. That's a little bit the timing that I talked about earlier where we started and then living through the '90s and having all of this come down the mutual fund 401K level where everyone is interested on some level to what's happening, and the impact CNBC has had in expanding that market globally.

NEEL: Let's talk a little bit about The Cable Center. Why and how is what we're doing here in providing an oral history of CNBC and your views of the world as you've seen it in the 15 years you've been doing this, why is that important? Why should people pay attention?

BAKER: You know what? It's so funny because I bet a year has not gone by that I've been in the cable business where I've said when am I going to write the book? I've got to stop and I've got to write the book about what's happening here because no one is going to remember how it started because now it's all been gobbled up. These are all these huge multinational corporations and no one's going to remember that it was because Glenn Jones and J.C. Sparkman and Barry Marshall and John Malone and Bob Magness and Craig McCaw and Gerry Lenfest and all these old guys, Fred Nichols, all of them, what they were doing because people who don't know the cable business just think it was all TV. They don't track that it was this D County rural business that started because you were living out in the middle of nowhere and you couldn't get any broadcast reception so the guy that ran the local hardware store said, "I don't know, I'll just put up a big old antenna and maybe we can sit in the hardware store," because he was selling TVs too, along with vacuum cleaners and sewing machines he did have some televisions, so he invited his cousin over and his uncle and they sat and watched the football game. Then he said, "I bet I can figure this out. Let me get some coaxial cable and I'll just run this down to your house so next Sunday you can just watch it in your own living room," and that is literally how the business started. So you had these amazing entrepreneurs, these colorful guys who weren't out of the big cities, it wasn't a metro business, it was not a slick media operation. It was sort of an engineering hardware, D County business. They used to call it CATV, and it stood for Community Antenna Television. That just tells you right there. Community Antenna. So the guy at the hardware store would put up the big antenna, invite all his family over and they'd watch it in the hardware store. That is how it started. The fact that these guys became billionaires in the span of 20 years – I don't know when else that's happened in American business. Maybe in oil and gas, but there hasn't been another time, and now because of the consolidation and the way it's sort of gotten gobbled up, if you don't have a Cable Center, you don't have a place to deposit all of this... it's almost folklore of how it happened and no one would believe it! The stories, it's like truth is stranger than fiction. Some of this stuff is outrageous. How they started and what they did. They used to pay off the franchise guys in the city and they'd fight with everybody about getting it, then they'd dig up all the streets and everybody was like what is happening? I remember a time when they said why would New York be the last build, or Sacramento I remember was one of the last what we used to call new builds, meaning the city was just finishing getting built. It would be like how can it not be in Los Angeles or Sacramento? Because in those towns people live there and buses go by and you had to rip up paved streets to lay the coaxial, whereas out in Casper it was just like "Oh, there's a telephone pole. Let's just run this thing right across the pole and drop it down over there at Aunt Nellie's and she can watch the football game." Sports was always driving. Isn't it always the truth that sports is always driving it. You've got to get those stories down because so many of those guys have exited the business now. When I got in a lot of them were still around and they'd go to the state cable shows. I remember Washington had one and Idaho had one and Texas had one... You'd go once a year and they would give these keynote addresses and they'd tell... Ted Turner's stories... these guys had stories you cannot believe. Glenn Jones – "So I drove my Volkswagen van in a blizzard and 20 below zero, but I had to get out there to the headend and I had to check the satellite and then it came through and boom! I got the picture and my 22 subscribers were happy." No one would believe it. No one would believe it. That's why you have to have The Cable Center and get these oral histories. I would say there's one other point, too, about The Cable Center repository for history, archival information, and that is that in networks like mine that started 15 years we had shows... it was all a trial and error experimental time, so we have these programs that The Cable Center is archiving and taking copies of and preserving that are today a little embarrassing for those of us to watch, but it shows the evolution of how we went from being this really small little operation in Ft. Lee, New Jersey not quite sure what Consumer and Business Channel was, but we thought it might be a little bit of this show, Steals and Deals, and a little bit of David Horowitz in the grocery store, and a little bit of Ken and Daria Dolan, Smart Money, telling everyone how to save and save for college and invest in their 401Ks, and we weren't sure but we thought that was the case, and that's all gone in time unless there's someone there in the form of a museum like The Cable Center or someplace where they're preserving that and you can see the evolution of where CNBC started and where it ended up today.

NEEL: Well, thank you very much for your time. We really appreciate it. Thank you.

BAKER: You're welcome. Thank you.

 

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David Baldwin

David Baldwin

Interview Date: Thursday December 06, 2007
Interviewer: Steve Nelson
Collection: Cable Mavericks Collection

Part One of Two

Part Two of Two

Part Two of Two

NELSON: Hello, I'm Steve Nelson for the Oral and Video History Program of The Cable Center. Today is December 6th, 2007 and my guest is Dave Baldwin, Executive Vice-President of Program Planning for HBO. Dave, you describe yourself as a poor boy from Pennsylvania. Tell us about growing up.

BALDWIN: Well, I'm a poor boy from Pennsylvania trying to get by in the big city. I grew up actually in a very small town. We had three gas stations, three bars and one grocery store, but it was an idyllic childhood. It was one of those Saturday Evening Post kind of realities where you could go anywhere, do anything, as long as your home for supper. It was safe, we would roam the hills, we'd be out on our bicycles, pick-up baseball games – it was really a wonderful way to grow up.

NELSON: And what time period is this?

BALDWIN: This was... I'm a child of the '50s.

NELSON: Okay, okay, as am I. But what about TV at that time? You had three bars but what did you have for TV? I bet you didn't even have three channels!

BALDWIN: We had color bars, actually. We had one station that we could get clearly that was the VHF station out of Binghamton, NY just up over the state line, and it was one of those creatures that came about during the '40s and '50s, it was a tri-affiliate so we would cherry pick shows from CBS, NBC and ABC. Whatever they felt like programming is what they put on.

NELSON: Was this the best of, or maybe the not so best of?

BALDWIN: It was I guess whatever they thought they could sell and get the most money for their airtime. It was just the way I grew up and as I met friends in the '60s in college that had come from other communities they were talking about shows that I'd never even been aware of because they weren't offered. I thought we had everything, you know? But, interestingly, in the early '60s at the beginning of cable television, our community, because it was so isolated by the hills, it was down in a valley, we were actually serviced by cable pretty early. A guy, typical story, ran a TV shop in town and to sell more TVs he went up to the top of the tallest mountain around town, put up an antenna, strung wire all the way back into town and went door to door selling cable and therefore more televisions. So I was introduced to cable real early.

NELSON: And this was before you went off to college?

BALDWIN: This is actually... no. My parents didn't want to get it, they were perfectly happy. My father had spent a lot of time erecting this massive, like 50-foot antenna on top of the house.

NELSON: To get one channel.

BALDWIN: To get one channel, and it had guy wires attached to all four corners so it would be stable in the wind, and then the next step was of course he had a UHF antenna that he put onto the mast so now he could get the stations out of Scranton/Wilkes-Barre which was south of us but over a lot of hills. So he was all set up. Free is free, and he liked the way that he was getting it free and he saw no reason to pay this guy $4.95 a month to get the same stations which is essentially all that he was offering, just the same stations.

NELSON: Do you recall who this guy was or where he wound up being? Because there were so many guys that started in the hills and valley of places like Pennsylvania and went on to fame and fortune.

BALDWIN: I think he started and ended there. I think as a lot of these moms-and pops grew up he did what a lot of them did and sold out to the next biggest guy. I think right now they're serviced by Blue Ridge Communications.

NELSON: Okay, So you went to college, which was where?

BALDWIN: Penn State.

NELSON: At Penn State, okay, and people are talking about TV shows you'd never heard of – do you remember what any of them were?

BALDWIN: No, just that I was missing part of my backgrounds and history, I was missing part of popular culture, but fortunately it was the '60s and we were reinventing popular culture anyway, so it mattered less.

NELSON: And what were you doing in college? What was your area of study?

BALDWIN: In college... I actually went to college in my freshman.... I changed quite a few things along the way. I went to college thinking that I would become a chemist. I had a great chemistry teacher in high school and I did great on my chem boards, and I actually, whatever that word is, I jumped over the initial chemistry and went right into the second class. At the end of my freshman year when I found out that chemistry was really math in disguise and I was not that good in math, I decided, you know what? There's a war going on. I was not really keen on the idea of joining this war because I was brought up Methodist, I believe in thou shalt not kill, and actually all the teachings of the church, and I was shocked when the church started backing the war and it was like let me see if I can get these two ideas and get them together here. I said if I had to pick one which one do I do. I said let's go back to the original text here, thou shalt not kill and war is bad, so I parted ways there and so I needed a way to get out of going to Vietnam because there was a draft.

NELSON: I remember it well.

BALDWIN: At the time one of the professions you could choose, and I think it was morally right, if you were to be a school teacher then you were exempt from the draft. So the rest of my time at Penn State I spent as an elementary education major and looking forward to going out into the world and becoming a teacher, and then senior year 1970, '69-'70, we had the first of the draft lotteries. That was an interesting experience.

NELSON: Did you get a high number or a low number?

BALDWIN: I had a low number and let's just leave it there. I had a low number and I did not go to war.

NELSON: Okay, well, we're not going to probe into that. So what did you do, though?

BALDWIN: I actually came to New York. I had met a wonderful woman working together at a summer camp in Pennsylvania. She was from Brooklyn, there were certainly jobs in the New York City public schools, I applied. I started out teaching 3rd grade at PS 150 on Sackman Street in Brownsville-Ocean Hill, Brooklyn.

NELSON: So you've gone from small town in Pennsylvania, State College which is out there, as you know...

BALDWIN: Happy Valley!

NELSON: And now all of the sudden you're in Brooklyn?

BALDWIN: Um-hmm.

NELSON: This is culture shock, no?

BALDWIN: This is big time culture shock, but you know, a welcomed change because as you remember, Steve, the '60s were all about change. Everything was evolving or there was a revolution around every corner. 1969 is a year just taken in general. Every week, every month, something happened in 1969 that was the first of its kind. There's a man on the moon, people are being assassinated, everything was changing. So for me it was just like this is life.

NELSON: Go with the flow, right? As we used to say.

BALDWIN: Dive in, learn some new things, get yourself involved with other cultures. I had a diverse class of 65% black kids and 35% Hispanic, and then this white kid who grew up in the hills of Pennsylvania, this was quite a learning experience, let me tell you. It was a challenge but it was something that you felt good about because you were giving something back. But I won't kid you, it was not the easiest job I've ever had.

NELSON: Yeah, I wouldn't think so. Where were you living at the time?

BALDWIN: I lived in Brooklyn, a great old neighborhood called Park Slope that had just started to be gentrified and rows and rows of fabulous turn-of-the-century townhouses.

NELSON: You could actually get into Park Slope then, right?

BALDWIN: You could very easily get into Park Slope. Two doors up from where I found my first one-bedroom apartment was a project that Brooklyn Union Gas had actually done, renovating a brownstone to tell people, "Look, this is great housing stock here. If you just put a little bit of money into it, and we'll help you, we can revive an entire neighborhood," because it was left kind of fallow during the white flight of the '50s when everything was going on east of here on Long Island. All of the families, because "Oh my God, there's a black family that moved onto the block," were running out of the city.

NELSON: "We're out of here," right?

BALDWIN: And we're out of here. And then there was the banks doing redlining for financing. It was a pretty nasty period and so in the end, in the '60s, you ended up with really terrific housing that people needed, and then over the next two or three decades it's now to the point where I can't afford to live there.

NELSON: For people who don't know Park Slope, it's one of the most desirable places in Brooklyn, or in New York for that matter.

BALDWIN: It's well served by a subway into Manhattan, an island apart.

NELSON: Okay, so now you're a teacher. How long did that go on?

BALDWIN: It went on for seven years during which time I went to Queens College, got a Master's Degree in Library Science, specialty in Children's Literature, which was a lot of fun, and I became a school librarian first at a school down the street from where I was, took over that library program, and it was the era – I don't know if people will remember the Johnson years, but there were ESEA Title Grants that would go out to a lo of the schools in the nation. It was a time when the federal government really did support education. It wasn't just lip service; there were bucks. And we had in our district enough money if we pooled our resources to really develop first-class libraries in the elementary schools, and one of the things that we did was go out and buy as many films from Zagreb Studio, from the Canadian Film Board. These were very exciting new kinds of films that had no dialogue. They were telling stories just with pictures or with animation, and for kids that were really far behind in their reading skills, this was a great avenue into it because they did watch TV and they could form stories and they could tell stories. Here you get them in and then you have them watch an eight minute, ten minute film and tell you the story and write it down, and then give it back to them and said, "You just told me this. Let's see if we can read that now. Read your story. I'll help you." Listening centers – it was a time when reel to reel audio tape was transitioning into cassette tape and it was relatively inexpensive. What we would do is put together listening centers with a tape, eight of the same books around the table, and you'd start the tape and they would follow along. They would see the words, hear the words, and be guided. I had an assistant making sure that everyone's still on track, and it was fabulous. I was having the best experience in just three years of my teaching career running a library.

NELSON: So is this kind of broadening your view from the library guy, which is typically a very print thing, now you've got this whole audio-visual component going on, I'm suspecting here that this somehow led you in a new direction, so tell us how that came about.

BALDWIN: The tangents started at Queens College, actually. I had a great professor who was involved with a project called Art Doc. We were here in the greatest city in the world for art. Soho had just exploded and the big galleries downtown had room to show some of the most exciting art and so they were here. At the same time, Sony had developed its first black-and-white reel to reel portable video recorder. This is 1971-72.

NELSON: I remember it well because that's where I got started.

BALDWIN: There you have it. So as part of my education for being a librarian I signed up for this, it was a volunteer course, it took place Saturdays, we would meet at – I can't remember the luncheonette. I mean, Soho now has completely changed; it's all fashion and haute couture and stores mixed in with the galleries. Back then there was, I think it was called the Whistle Stop, where all the tradesmen, all of the workers that were still there – there were a few factories still left but most of them had gone – have coffee, go over to one of the galleries, either Meizel or somebody else, set up and have the artist come in – this was before opening hours – talk about his work, we'd capture it on video and then we'd go back to Queens and mix the audio and the video, dub it, and send it out to maybe 120 schools nationwide that had art programs, wanted to hear and see what's going on, but couldn't afford to send their students to New York City.

NELSON: So were these like half-hour programs or 10 minute...?

BALDWIN: Ran a half-hour to an hour, depending on how loquacious the artist would be, and some are very and some are not.

NELSON: Right, not very verbal.

BALDWIN: Yeah, sometimes their expression is on the canvas, but it really got me into... those experiences from librarianship, interestingly, and some of the books we were reading at the time about the transition of information technology, because librarians saw the future coming in terms of how information would be stored, how information would be shared, because it's their business, has been for a long time, and they saw the technological revolution that was coming with getting away from movable type, certainly, into computer generated text that could be easily printed and cheaply printed, and then even beyond that where you didn't even need a book, which is where we are today.

NELSON: So you picked up some of these production skills or were you working with somebody that did that?

BALDWIN: Rudimentary. I'm still not good...

NELSON: Well, at that time, all that was very rudimentary, especially working with the little reel to reel tapes and that Portapack.

BALDWIN: Uh-huh, and we had two decks and trying to get a clean cut on play and record and the switching, and it was like patience, patience, I think.

NELSON: Not exactly like the editing process today.

BALDWIN: Not an exact science.

NELSON: But did this kind of whet your appetite in any way for this whole experience for getting into something else? I'm still trying to find out how you made this leap.

BALDWIN: Ah, the dramatic moment?

NELSON: Yeah, the moment, right, right.

BALDWIN: The dramatic moment was in 1976, in the fall of '76. ESEA funding from Washington had pretty much dried up. The New York City public schools were going through an enormous change because of that, and the body of teachers they could afford was shrinking, and every year for '71, '72, '73, every year you'd come back and unless you were there in the system for eight, ten years there was always a question whether you had enough seniority to continue to be employed by the school. I had passed under the limbo stick two or three years in a row, but this particular year came back and "Sorry, we have to let you go."

NELSON: This was after how many years?

BALDWIN: This was after setting up, three years of this wonderful library program, getting to know every child in the school, where their buttons were, and just finally saying, all right, I've gotten up to the top of the hill and let's enjoy the view here for awhile. The idea that I wouldn't be able to stay there hurt, but then they said, "But we have good news. There is a library position open to you over in Bed-Stuy." "All right, fine. It's a do-over." I go over there and meet the principal and see the library, and it was everything that I had just set up. It was fabulous. However, to make room for me, they had to let go their favorite librarian who the kids loved, and another young person like myself. We were all in our mid-20s.

NELSON: Yeah, yeah, the budgetary triage here.

BALDWIN: Triage, and you know what? It was just an untenable situation. As hard as I tried, month after month, getting involved with the teachers, getting involved with the students, it was like "God, I just got over three or four years of work and now I've got to go into it one more time." And then one morning in April I kind of woke up, drove to work, got to school, looked around and said, "You know what? I cannot do this any more. There's got to be a better life. I don't want to be miserable, I want to do something that is rewarding and makes me happy."

NELSON: And also where you don't come in and they say well, thanks for the great job but no thanks.

BALDWIN: So I basically went down to the front desk and said, "I'm going home."

NELSON: You just walked in and said I'm outta here?

BALDWIN: "Will you be back?" "Eh, probably not." "This week?" "No, pretty much I'm outta here."

NELSON: So this really is this incredible turning point.

BALDWIN: This was the turning point that I think people who are unhappy in their job either get to or they don't, and fortunately I got to that and said, "You know what? I've put an investment in education, I've put an investment in this, but it's not payback. I need more out of life." So I just jumped and for the summer went out and had a blast, played tennis, bicycled through Brooklyn down to Coney Island, it was just fabulous fun and then my wife at the time reminded me, you know, you do need to get a job.

NELSON: Oh, that.

BALDWIN: So then I started the typical process of networking and meeting people and at that point exploring what am I going to do, where am I going to go? I know nothing! I'm a teacher! They're in short demand now.

NELSON: And you're looking for something else anyway, really.

BALDWIN: Yeah, but I started out looking for library positions because that's where it was and I went down to a private school outside of Philadelphia, told them my background – "Well, what have you done?" "Well, I've worked in some pretty tough neighborhoods in Brooklyn," and this is an old world, all boys, and I think all Protestant white boy, school. They didn't quite know what to make of me because I still had my '60s hippie hair and my wide watch band. I was of the moment. And so after a couple more interviews with library positions I started looking at what else is there in the world. My ex-wife and another woman were teaching at a private school here in New York together and she said, "You know, Dave's looking for work," and the other woman said, "Well, you know, my husband, he's in TV. Boy, he loves it. He really loves it." "Really? Would he be willing to talk to Dave?" "Sure, just call him up and come into the office. What could it hurt?" So I did. I called him and the fellow's name was Lee Deboer, who sooner or later you'll get his oral history, he was there early. He was working at a rep firm called TeleRep which was run by another pioneer, Al Masini, who basically changed the whole landscape of syndication television and how time sales was done. This was a first class outfit. They handled all A-list stations nationwide and they were just a Storm Trooper mentality.

NELSON: So why would they look at you? This was a real high-end...

BALDWIN: Well, because Lee was running one of the research groups and just because he was asked I sat with him, talked to him about stuff, and I said, "You know, where do you start out here in this field? I'm not trained." So he introduced me, or gave me the names of four or five research directors in the business and I called them up and arranged for an interview, and at one they had an open position and I remember the dialogue. I said, "I'm really not trained or qualified," and he said, "Well, don't worry about that. Nobody is. They come out of college, they don't know what they're doing. We train them on the job." I said, "Well, look at it this way – I know Library of Congress, I know Dewey Decimal. What have you got? Nielsen? It's all numbers; I'll figure it out." So I was coming into the field, actually, I was 28 years old at the time, I was older than the typical introductory research analyst at a rep house. They usually come right out of undergraduate and go right to work crunching numbers because it's all on paper, you looked at Nielsen books, eye strain was a big problem. You would run endless amounts of numbers to do estimates for your sales people who would then go out and make calls on Madison Avenue to sell the airtime. It was a great game, got involved totally in reading all about television because it was foreign. The business of television, I never thought behind it.

NELSON: What did you know? You hardly even watched television in your earlier days!

BALDWIN: Exactly, exactly. Someone... I'm trying to remember the author – a very influential book someone just passed along to me, it's called The Business Behind the Box, which is I think great reading for anyone that's going into commercial television. This is going back to the basics of how do we make our money, and so I kind of understood it from there, started reading the trades, it was kind of like taking my own college education...

NELSON: And you knew how to do that.

BALDWIN: Ingesting information, and a year and a half later I'd been promoted, I was a manager and I had staff working for me.

NELSON: What was the name of this place you were working at?

BALDWIN: This was a place called HR Television which now is...

NELSON: Get that on the record.

BALDWIN: Yes, on the record. Wonderful, innovative people. Now the company's called SelTel, clever, S-E-L-T-E-L, get it? Sell Tel? So their big thrust when they purchased HR was that they were going to computerize the business, take it away from paper and change everything. Transition avail sheets and transition posting – all of that stuff, and they made a really good run at it. Unfortunately they were a long list rep; they didn't really have the power in the industry to have people follow them. They had to wait until everyone else, CATS and the rest of the folks, kind of grew up around the concept. But it was a great place to start. You certainly learned how to be creative with numbers, put together a pretty good... and back then we did one-sheeters to give to the salesmen and they were clever little things that you'd want to focus on, either a demo victory or an increase in the time period and then you'd put a little graphic on it and give it to the salesmen so they could drop it off.

NELSON: Something to latch on to other than numbers.

BALDWIN: Yeah, something to latch on to the primary concept. That was the creative side of the job, but otherwise it was crunching numbers.

NELSON: I'm getting the impression that the crunching numbers probably over the long run maybe that didn't sit that well with you.

BALDWIN: It was okay but I didn't want to live my life doing this on a calculator. So a year and a half later, it was summer, late summer/early fall, mid-fall of 1978 – this same fellow, Lee Deboer, had moved from TeleRep, had been hired by Home Box Office to start their real research efforts because up until '77 they basically had no research effort to speak of. They had a fellow by the name of Les Dorney who had come down from Time, Inc. He used to be the research director of Life Magazine, and of course Life was in a downward spiral at that time, they had to let a lot of people go, but Les was a lifer that was sent down, as many, by the way, of the executives that started HBO were actually sent down from Time, Inc. to keep its eye on this new business that these kids are starting up, "We don't know much about it."

NELSON: Time, Inc. didn't really know what to do with, perhaps.

BALDWIN: Exactly, but they did have some executives, both young and seasoned executives that they would send down and populate the executive ranks of HBO at the time. So Lee was given a budget because they were looking forward to 1978 where it was projected we would turn our first dollar profit. This is a business that started in '72 and was running six years under water, and it's amazing to think about that sort of business startup today, something that had that much capital investment to go that long without making a dollar for your parent corporation. Doesn't happen that often.

NELSON: That would be shut down quickly.

BALDWIN: That would be shut down, I don't know if it would make it past year three. But there was money and so Lee went out and hired a few folks and the research group was formed at HBO. One of those jobs was mine because I came over and essentially I had to meet two or three layers of management, it seemed to be a good fit, and all that I'd been reading about in the trades since I started working in television for 18 months was how fast cable was growing, how fast satellite-delivered television was growing, and that the king of the hill, of course, was Home Box Office. It was the hottest, fastest brand in America in terms of growth and was something that a lot of people really wanted.

NELSON: So this was from your standpoint what a great place to land.

BALDWIN: This is my dream! No more ads...

NELSON: Get rid of that part of it, right?

BALDWIN: No more fabrication of lies, damn lies, and statistics. What a unique experience! I had 25 stations at HR, here's one station I can know everything about, and oh, by the way, management is only interested in finding out the truth.

NELSON: This is shocking!

BALDWIN: What are they watching, what do they think of the product? Just figure it out, tell us where to go, what to do. You are the eyes of the corporation and the ears. Get the information and we will change it in whatever direction you say. How can you turn down a job like that where you've gone from being the low man on the totem pole to now you're right up there with the executives in the top echelon having dialogue about what's going on.

NELSON: So they really were driven by trying to really understand what their viewer or what the consumer wanted as opposed to fudging that a little bit because you're trying to push advertising.

BALDWIN: From the outset because it didn't sell advertising. It was driven by the consumer dollar. The whole goal was to try to figure out how to make it stick. Once you're in the home how to keep them subscribing, what was it about the experience that they liked, and from the outset we didn't show things just once a week. The paradigm turned on its head. Commercial television that we all grew up with up until that point, the Sullivan Show was on Sunday night and you'd wait until that night; Twilight Zone was on Friday night, you'd wait until that night for that show, and you'd watch it through the season and then the summer rerun season would come back. They'd show the 26 back episodes all over again and then you'd start the new season. But HBO because of the nature of the programming, you've paid your money, if I just showed Saturday Night Fever one time on Sunday night at 8:00 and not again until six, nine months later, well, that would be a pretty... remember, VCRs didn't exist when we started. There was no way to capture it. So our paradigm was no, they've paid for product, give them opportunity to use it.

NELSON: This is a kind of rudimentary time-shifting in a sense. You can find it at other points in the day and the week.

BALDWIN: Exactly right. So we would set up one of the initial pieces of research, once we got set up with diaries and we worked with Nielsen and we started keeping real time period information, was how do you optimize a flight – this is kind of like ad grad school level – how do you optimize a flight of a show, not a 30-second spot, to reach as many demos and increase the cume audience as high as you can without getting to a point where the majority of audiences are now looking at it as an annoying repeat. What are the nights, what are the times, what are the demos you're going for, and it was great fun to figure that stuff out.

NELSON: But nobody had really programmed that way before so you had no models...

BALDWIN: No, didn't have to, didn't have to!

NELSON: So you have no models of looking and saying this is how you do it, you run them x number of times, and you do a Monday and a Thursday and a Sunday night and whatever. So you were really inventing this whole process of repeats.

BALDWIN: Well, certainly the folks before me were the inventors.

NELSON: That was underway when you got there.

BALDWIN: It was underway. Ours was to tweak it. They only had a limited amount of inventory and they had to fill up a lot of time, which is another interesting thing, when I joined the company in 1978 we would sign on in the afternoon at 5:30 or 6:00 and sign off at 1:00 in the morning.

NELSON: That was it.

BALDWIN: There were very few 24-hour stations. If you think back to the '70s, most broadcast television said goodnight after the late movie and came back on in the morning. So we felt no urgency to get there until... capitalism and competition are always good. There was a channel called the Star Channel and from its inception over at Warner AMEX they were a 24-hour movie service which put pressure on us. They ended up actually owned by the folks that owned Showtime, and that was their wedge into the pay industry because HBO had the lion's share and Showtime and The Movie Channel wanted to come in and see if they could grab some of that business share away from us and one was we're a full-time 24-hour service.

NELSON: And was that available on cable, Star?

BALDWIN: Yeah. But that morphed into The Movie Channel rather early.

NELSON: You talked about working with senior management when you got to HBO. Who was the senior management at the time? Tell us about some of the people and personalities.

BALDWIN: Oh, wow! Jerry Levin, who we all know the history at this point, Jerry Levin was Chairman, CEO of HBO at the time. His head of programming was a fellow by the name of Austin Furst, who was there at HBO during my tenure in research and then went off to form the company called Vestron which was one of the initial movers in the home video market. He was so successful at capturing rights for movies because he knew what the game was. Austin was a brilliant, brilliant man – still is – and went out and captured an awful lot of rights and sold an awful lot of cassettes at very expensive prices into that burgeoning market of home video in the early '80s, so much so that he actually produced a couple movies, the most famous of which was Dirty Dancing, but that was the end of his movie making career. He was a better businessman than a mogul. Working for Austin was Jay Walkingshaw. I think Jay was one of those bright folks that you found in Time, Inc. back then where they would go out and they would just sweep the college campuses and they'd hire the best and the brightest. So he was a very, very sharp businessman. And Lee Deboer, of course, the head of research was absolutely one of the best researchers I've ever met from then 'til now, just a steel trap mind, totally logical and he would go for the logical conclusion and if he didn't have enough information he'd know it and go back and find it. At that point, let's see, who did we have? Arnold Huberman, a name that probably is not mentioned too many times, was running our film acquisition department.

NELSON: And that must have been important because movies were such a big piece of HBO at the time.

BALDWIN: Were and still is a big foundation of premium television. But he transitioned out after two or three years after I was there, and I think '81, '82 we brought this executive in called Steve Shaffer who then solidified HBO's film buying with Michael Fuchs who had come in and taken over the programming department. Between Michael and Steve they kind of figured out that the real long-term future of the business was not in buying slate movies – which was when you'd go and here are the movies that they've released last year, we need all 15 and here's the price, and you'd do that over and over every year – but to go to a studio and say, "Look, I know you're going to make 15-18 films over the next five years. I'll take every one. Create the formula, you'll be covered, we'll be covered and we know that we'll have a movie inventory." Those were the two guys that kind of figured out long before the guys at the studios did because we were incremental to their business at the time. Their business at the time was still in theaters and their big dollars were coming from the broadcasters and there was no video window. So we just added a few dollars on top of the purse.

NELSON: But your window did get inserted in that?

BALDWIN: This is the genius of the fathers of HBO, I can't claim any credit for this, but our window came before broadcast window and before it got chopped up, all the naughty bits cut out and all of the commercial black inserted. So that was an advantage for us and they were happy to do that because at the time we were only 2, 3, 4 million subscribers which in contrast to the rest of the country wasn't going to hurt their broadcast sales too much. But once that pattern was set it was very difficult for them to back off of it. They actually tried to invent their own HBO. Four studios got together and said, "No, no, we didn't mean to do that. HBO is a middleman, too much power, too much leverage. You've now got 8 million, 9 million subscribers. We want to start our own service." And it was a very famous court case and we prevailed because basically the evidence showed that they were trying to exclude us, keep us from doing business and actually putting us out of business by starting up a business. They would feed their own movies to them early and then give it to us used.

NELSON: A little self-serving restrictive trade there.

BALDWIN: So they couldn't do premium television but they did come back in spades when the VCR was invented. They figured all right, this window I've got to put in front of HBO. So that was a beginning of the sequential distribution model that is now an enormous sequence of things and it's being played with back and forth. Even guys like Netflix now are into the mix for acquiring exclusive, first premiere rights off theatrical.

NELSON: You mentioned the VCR. Talk about that and what kind of impact that had at HBO when that started in the early '80s really proliferating in the marketplace.

BALDWIN: Well, it was a serious threat to our business obviously because it was pretty easy in those days to start a little mom-and-pop video store and people were getting into that business, 7-11s and the like. Instead of buying HBO, and at the time I think our prices were probably like $7.95, $8.95 a month, you could go in and rent a movie for $1.99 a night. Maybe you only want to watch two or three movies so the dollar economics in terms of the guy that only watches movies was like, well, why don't I just get a VCR and watch the movies I want before they get on HBO. So that really was a disadvantage that of course we turned into an advantage, which was all right, how do you beat that? Well, you buy more material and you present more material that they can't rent. So that's when Michael Fuchs basically said, "You know, we've got to make our own movies." He went out and formed HBO Pictures and we were making 6-8 movies a year with top talent. Remember Between Friends? We got Elizabeth Taylor in 1982 to make that.

NELSON: Now how did you... you probably weren't directly involved in that but that's such a seminal moment because HBO became so known for being able to attract all kinds of talent in front of the camera, behind the camera, that you just wouldn't think of as working for some TV network, and cheaper than...

BALDWIN: It was hard because the vernacular for actors and actresses at the time was that a television movie was a far lesser platform than a theatrical and many of them just didn't do TV movies because TV movies, traditionally, were disease of the week. They were designed for females 18-49. It was either disease of the week where someone in the family got sick and someone had to prevail and doctors and medicine and hugs and kisses and tears and roll credits.

NELSON: Very formula.

BALDWIN: Yeah, or they were woman in jeopardy which was the other formula. Somebody's a stalked or somebody's outside the window – whatever it was – and they were pretty much churn them out, grind them out movie of the week. In fact they were called MOWs, Movie of the week. Michael said "We're going to make them differently. We're going to fund it differently. We're not going to obviously put commercials in them and they can have real solid interesting stories." That started the run. We had already established ourselves with original programming with On Location, the standup series, and SRO, Standing Room Only, which was our music series, and throughout the period of '76 through '81 or '82, we were funding one a month of a comedian and a music show which was the underpinning, really, of HBO's entertainment original programming, which was exclusive, ours, couldn't see it anywhere else on HBO. And that meant a lot: for the people that liked movies but wanted more there was On Location and SRO, and then of course Inside the NFL which is now 31 years old was up and running back then in the football season, we had a baseball series called Race for the Pennant which did the same thing for baseball as Inside the NFL did for football. And then under Dave Meister and Seth Abraham we started the boxing program at HBO which was picking up again some rejects from commercial television. They were getting out of the boxing business so we jumped in and said, "You know what? Prize fighting is for us," and reinvented the coverage of the sport and became one of those other attributes that you could now, along with the movies and the comedy and the music and the sports, you could get live boxing on HBO, and reinvented the whole thing. Remember Gillette Presents on Friday night? It's a perfect sport! Three minutes of action, two 30-second commercials and back to the action, and that was how they made a lot of money. We didn't have commercials.

NELSON: So what do you do between rounds?

BALDWIN: We go in the corner, we get tight on the boxer, we get tight on the trainer, we listen to the dialogue, we listen to what the trainer is telling the boxer, and do some analysis and then do a little bit of highlight and then back to the ring.

NELSON: And so for the sports fan you're seeing something in a completely different way.

BALDWIN: That you'd never seen before. No one can have seats that close and can actually listen so that really put us on the map. During the '80s it was really one of those golden periods of boxing.

NELSON: Let me ask you, where are you at this point? Are you still doing your research, or you've moved up somehow or other in the organization?

BALDWIN: I spent 3 ½ years doing research, from when I got there in December of '78, and then a position that I knew I wanted after doing all this research on what people watch, when they watch it, how they watch, I wanted to not be the provider of information, I wanted to be the recipient and the decision-maker and the best job I could ever imagine since all the way back in repping was to be a scheduler because I could see the flow of audience and I could see how back in local television if you could stack your early fringe with the right programs that captured demos and flowed them, you're in the catbird seat. You can control two hours of television if you can put the right things there and get the right demos, and in HBO I figured, wow, what a great game because it's not so much audience flow but it's this great intricate puzzle of how to optimize the viewership, so I wanted that job desperately. Ruth Beltran, who had that job, made the decision that she would go back to business school and get her MBA, and I heard that and there were skid marks outside my office. I went to see Mack Perriman who was in charge of program scheduling operations at the time, and I basically said, "Mack, I want this job."

NELSON: And this wasn't even posted yet, I assume.

BALDWIN: No, it wasn't posted. He and I had worked together, and Ruth and I had worked together. But Mack was very old school about such things as hiring and interviewing and all that stuff. As close as we were, he put me through the formal interview, the luncheon interview, we even had a dinner interview.

NELSON: Like you'd never been around this place before.

BALDWIN: Do you know who I am? Do you know what I've been feeding you?

NELSON: Let me introduce myself, right?

BALDWIN: I said, "Mack, there is nobody on the planet that's more qualified for this. Come on! Hire me!" And he did, and I got the job running scheduling for HBO and Cinemax.

NELSON: Now I want to talk about scheduling because this is something a lot of people don't really know a lot about sometimes or focus on, and you've used an interesting metaphor so allow me to repeat it for you – you've used the word puzzle before and it is a puzzle, and people of course familiar with a crossword puzzle which has a series of white spaces where you fill things in and little black boxes that tell you, okay, one across is going to be five letters so think in those terms – you've used the metaphor of the diagramless crossword puzzle which some people may not know but you look at this puzzle, there's no black squares, it's all white so you don't know whether one across is three letters or six letters. So you're really starting with this blank slate and trying to create this complicated series of what goes where.

BALDWIN: I've used that analogy before because every month of programming, at least back then, was composed of different movies. You didn't have a lot of series back in the '80s or '90s, and even today we don't have a lot of series programming that takes a regular spot every week. So we're left with 24/7 across the primary channel and then six other plexes on HBO, eight channels of Cinemax, where you have a certain number of anchors. We anchor our movie on Saturday night. At least that's the two letter answer on a diagramless where you say okay, it's either "an" or "on". I've got a movie there, so that's what I'm going to start with and then you start filling out the rest of it. All right, if I start it there I'm going to put my movie through a time tested rotation, Saturday to Tuesday and then the following Sunday because I know that's the broadest sweep, research again, that I can possibly capture with demography. And then I'll fill it in a couple of other places depending on its MPAA, depending on its genre, whatever fits. The rest of it is unanchored and kind of the diagramless puzzle comes in again. Boxing, given that we know that they are boxing, where they're boxing and when they're boxing, which is often not firmed up until we've already published the schedules, unfortunately, and then we have to republish the schedules, but boxing is a Saturday night event for us. As it evolved, series generally are a Sunday night event, and those are the four or five anchor positions and then everything else has to be put in rotation across the main service and then decide how many other channels am I going to play this on and what time periods. I never played the game. That's the problem with the rap on Dave Baldwin. When I came into the scheduling department I was at a director level and the managers actually did the scheduling. I came from research, my job was to oversee and to prompt them into next levels of expertise. So interestingly, although I've run this thing for 25 years or more, I never scheduled a thing.

NELSON: So you're like the guy that manages the baseball team and never played baseball.

BALDWIN: Exactly right, but you know what? I went out for several days – because what we do with our schedulers is allow them to stay home with all the data, all the research so that they don't have to take calls, they don't have to engage in conversation, they don't have to do anything except focus on this puzzle and make sure it fits because you're trying to fit odd pieces. They're not all 30s and 60s and two hours. Movies these days either run 87 minutes or 2 hours and ten minutes or 2 hours and 18 minutes, and if you have a rather regular schedule for some of the stuff and if you have an irregular time period for the other stuff, sometimes you have to do the puzzle two or three times in order to make the pieces fit. So on their first day of scheduling they're allowed to stay home and focus on it, then they turn it back over to the rest of the team and then they massage it and the process is an iterative one. Back in the time when they were doing that, when I moved over in '81, there were no computers. They had huge pieces of paper, calendars and a couple of dozen No. 2 pencils.

NELSON: And a lot of erasers.

BALDWIN: Gum erasers, yeah. The little stubby eraser was not going to do it, so they had gum erasers and literally a shopping bag full of information on how new movies had played before and they went about doing the puzzle on a calendar with show after show after show. I knew enough to say, you know what, I don't type and I don't want to do that, but I'll manage the process.

NELSON: So you say, that's a good job, or we'll approve that, okay, that's July, we'll take it!

BALDWIN: But more importantly what it taught me right away, and I learned some of this from teaching, from research, and now going into scheduling, motivating and managing are really what you get paid for. If you can do that, if you can manage well, life is good because it's all about the people. I knew right away that Amy and Doug Lee – Amy still works for me, by the way.

NELSON: Amy?

BALDWIN: Feldman. She's the Senior VP of HBO Scheduling and Administration now, been with me since day one. Doug Lee who was there running Cinemax has had a great career. He's at MGM now managing all of their digital initiatives, their channel that they just launched in HD, and I had drinks with him just the other night. This is family. These people kept me straight, kept me on top of things, loyal, and all I had to do was put the right tools in their hand and reward at the right time and it was like, yeah, I like this management stuff. It's kind of like teaching except I don't think either one of them are going to steal their lunch money and there was no fighting on the playground.

NELSON: Well, you make it sound like this isn't really work but of course it is.

BALDWIN: Well, it's work, but you know what? It's honest work and it's fun work and it's the kind of work that I started to enjoy right away, managing people and processes, and then being a translator, taking all that they were doing and then going out to the floor and out to the executive suite and kind of selling the ideas, selling what we're doing, explaining the strategies, the tactics and the like. In essence I found a career that was very teacher like but a lot better money.

NELSON: For sure. Now you mentioned in terms of the scheduling that you had certain anchor things you could plug in there and I just want to focus on a couple of those. The Saturday night movie – that became a signature. How did that come about?

BALDWIN: Not until 1991, interestingly.

NELSON: So until then the movies were much more amorphous, they go here, it goes there?

BALDWIN: Well, you have to know that one of the games that I learned when I came into television that I'd never learned before was backgammon. Backgammon, if you're just going to play for fun is an okay game, you're moving pieces around. If you're playing for money and playing with the cube there's an awful lot of strategies and tactics, and sometimes the more complicated you make it the other guy across the table can't quite keep up with the four moves ahead that you have to play in the point counting. I took that to HBO, that gaming mentality, and throughout the '80s we really gamed it out to... it was a summer month, the hut levels were higher later, we'd move our movies to 9:00 starts instead of 8:00 starts. We pretty much abandoned... we played a lot of our movies with Sunday starts, Wednesday and then Saturday plays, but as the television environment shifted we would sometimes premiere them on Saturdays because the Sunday competition from the networks was killer in-season, in the fall and the winter. So we started migrating some of our movies over to Saturday and of course as soon as rerun season would begin again we'd move it back to Sunday. So while we were trying to finesse according to demography and all those skill sets that we had and all that, the consumer was totally baffled. They had no idea when movies were starting, where to look for them, what the hell is going on and that confusion started being fed back to us in the marketing research. So Amy Feldman came to me one day and she said, "Dave, I've been thinking. What's the worst that can happen if we take all of our new movies and we just anchor them in one spot, Saturdays at 8:00, that's our spot. Wouldn't that be easier for everybody?" This great light bulb when off over everyone's head – well, of course it would! What's the downside? So we invented the HBO Saturday night guarantee, got the marketing folks involved in it and they actually spent in the first year an ungodly amount of money. Remember, this is 1991; they spent 18 million dollars in off-channel advertising about the HBO Saturday night guarantee movie.

NELSON: Just to say, Saturday at 8:00, you be there.

BALDWIN: It was a guarantee and we hung in there through hell or high water, and I had big fights with the guys that were running HBO pictures because "No, I can't possibly play this film at 8:00, it's too early!" "It's not too early for a theatrical. Why is your film so precious? It's going on at 8:00." So it actually changed the nature of our business and a lot of the strategies because a year or two later, after we had established that beach head, we then went to multiplexing and in the world of multiplexing you needed at least some signposts of where things are because now you have an awful lot of programs. There's no system that a consumer can understand our schedules other than do you have what I want right now. So we persisted with the Saturday until we got to the late '90s and then Sundays with series was pretty much along the same lines. Chris Albrecht and I had been talking about where we put our series because you remember before that, in the mid-90s, The Larry Sanders Show, that wasn't a Sunday show, it wasn't a Saturday show. Larry Sanders was a Wednesday show. We had other series that would be a Monday series. And we looked at the opportunities that presented themselves after we launched The Sopranos and after we launched Sex and the City that we could string together probably 26 to 30 weeks by co-oping the Sunday time period and just running a new episode all the time, and we knew we had another series called Six Feet Under coming in. So it was the first time when it became evident that we could with different series own a time period, something that had never been done before. Again, kind of looked at the network schedules which had shifted away from series forms, and all the networks in the late '90s were getting into long-forms again. They were back to buying movies, making movies, and they were really fading in terms of putting their best series on Sunday nights because they wanted their good series mid-week, Thursday particularly because that's a great advertising night because it's the springboard to cars and movies and shopping.

NELSON: Advertisers love Thursdays.

BALDWIN: Yes, they love it.

NELSON: And you couldn't care less about the advertising side.

BALDWIN: Exactly. So Chris said let's just try to own Sunday.

NELSON: So this came from Chris?

BALDWIN: Yeah, he was, although a programmer, he was probably my best boss when it came to tactical scheduling even though he didn't grow up in the discipline. He was a comedian, a nightclub owner, an agent. I would sit with him and he would come up with these fabulous ideas. I'd say, "How did you come up with that? I'm embarrassed that I didn't come up with that! You pay me to do that!"

NELSON: "Can I take credit for it?"

BALDWIN: And I did, I did. Chris, if you're watching, genius! So that's where we are pretty much today. We're right now in a stage where this whole information technology thing is exploding, we firmly believe that there is purpose to having some established anchors, not too many because the consumer's inundated and you can't ask them to remember too many things, and we don't. Just remember our movies are on Saturday and our series on Sunday. Good, we're done. Everything else I can play multiple times on multiplex, I can put on HBO On-Demand, or you can use your DVR and just set up and record the series and capture it yourself.

NELSON: Which is a lot easier than the VCRs which were in a way your enemy back then because programming them... I mean, there were efforts to say, "Use your VCR. You can see this movie that's on at 3:00 in the morning and record it," but of course we know that people were largely baffled by that.

BALDWIN: I remember those efforts. I think that was one of the Showtime ideas, but the fact was at the time most of America had a VCR on top of their television blinking 12:00, 12:00, 12:00. They didn't know how to set the clock, they certainly didn't know how to use a splitter and put it into the VCR and into the television, so whatever they taped had to show up on the television, and nobody was smart enough when they set it up to tell them about the splitter.

NELSON: The DVR obviously changed that. But before we leave Sunday night, not that we ever leave Sunday night at HBO, I just wanted to go back to that for a second. Was it really first Sex and the City and then The Sopranos? You had a strategy but you had to have the programming that would make that work.

BALDWIN: Yes, we had to have the programming that worked and the first thing was to make sure that we had a sequencing of these shows coming in. We didn't go for 52 weeks right out of the block but we did use, interestingly back then, the idea of reruns to lead into first runs. So if we were in the 3rd season, let's say, of Sex and the City I could use last season's 12 episode doubled down for an hour in six weeks to lead up to it. So you'd fill in between seasons until we got to the full inventory phase of '99-2000 where it was just hell's a popping. We had the three S's – Six Feet Under, Sex and the City and Sopranos that are sequenced out and you could just sense the flow going through the whole year and you transition from one hit to another hit to another hit. It was fun.

NELSON: And why 9:00 instead of 8:00? Primetime typically starts at 8:00 but you always picked that 9:00 Sunday night. It seemed to be the fulcrum point.

BALDWIN: There were many, many reasons. Tactically, in the fall you never get to a clean 8:00 because of the overruns from football which CBS loves because that pushes 60 Minutes and if CBS can push 60 Minutes that means they can feed their next show and their next show and their next show. So that's a phenomenon that will never stop. And you have the sense that a lot of our shows were adult in nature and meant for grownups and parents, and by 9:00 at least if they weren't in bed, the young'uns were at least out of the room where mommy and daddy were going to watch TV, and the demography shifts, it gets younger. The earlier hours, 6:00-8:00 really dominated by the 50+ demos. As you get later in primetime, 9:00-10:00, you start seeing more of the 18-34s come on the scene and be available, and a lot of our shows, obviously, had great appeal for 18-34s.

NELSON: Now you just mentioned sort of avoiding the power of 60 Minutes which has always been a powerhouse on the schedule. When you're doing that scheduling, how much are you concerned about what the broadcast networks are doing, what other cable guys are doing, or are you just saying we're HBO, it's not TV and we're going to do what we're going to do?

BALDWIN: It's about 50/50. We're aware of what's there, but we also know that anytime I premiere a show in a time period, depending on the series or the movie, that's really no more than 20% of its overall viewership and so I'm not going to get really excited because we're not selling airtime, we're not in the ratings battle even though most of the media writers still think we're in a ratings battle. It's not about time period ratings or premiere ratings; it's about how you close the show. In a parallel universe, theatricals, they like to open big but they sure do like to ring the bell six weeks down the line where they stay big and they end up with 100 million dollar picture. For HBO, we know which ones have the potential of starting big, but we also know which ones you need to help along with on-demand offerings and the fact that Nielsen now can measure DVR playback, and we tally all those now and start staying, "No, our goal is total audience," which interestingly was where I walked in the door in 1978. Before technology ever started we did research with an 8 ½ by 14 document that was folded over and it was all of the lists of all the programs on the first page that we aired, and we sent this out to consumers and asked, "What do you watch?" Check. "How much did you like it? Excellent, good, fair, poor?" Check. And so all we were caring about was the cume from day one. We didn't ask them "When did you watch it?" Just "Did you see it and what did you think of it?" We did that for originals, the documentaries, the sports and everything and invented a formula. This was, again, going back to Les Dorney, who I mentioned three hours ago, who was a researcher that came down and kind of brought marketing research, satisfied usage, as a concept into HBO because it was a product, it wasn't TV. And so we monitored TSS, Total Subscriber Satisfaction, very carefully by show, by the number of shows, all of that was part of our analysis before we got in bed with Nielsen and time period research. So in a sense, 30 years later after I walked in the door to a company that cared about total audience and satisfaction, through all of the journey we're back to a company that cares about total audience and satisfaction.

NELSON: You haven't gotten very far, have you?

BALDWIN: No! I feel like I'm coming around past the grandstand, waving, "All right, are we ready for another lap?"

NELSON: One of the things that these days figures into total audience is the on-demand side. Now how does that play into your scheduling strategy?

BALDWIN: Now that we've gotten fairly good distribution, and it took awhile for cable to grow its digital base to get us there, but we're now in, I think we're in around 13 million cable homes that have HBO On-Demand. This is out of our total 18 million or so cable base, and the rest of our subscribers are satellite, which can't enjoy the technology yet, and other units. But I mean, that's a pretty good percentage of homes that have HBO On-Demand available and because of that what we do now is on occasion we will premiere a series on On-Demand six days earlier before we get to our linear premiere on HBO on Sunday night. Two reasons: one, because it's going back to the nature of HBO is a special product, we don't sell advertising so we don't care about that number whatever it is, and it's fun to watch something that no one else gets yet or that you can watch on your own time. So we do a lot of that and we're going to do The Wire upcoming in January that way again this season except we talked to David Simon and since this is the last season and the finale we all decided, you know, let's not put the finale on there, on On-Demand, let's let everybody show up on time or watch it later. But it is a big part of our usage, it adds a significant amount of usage to every show, every movie, and it also enables us to use rights that we don't have for linear anymore. Back when we got into the business of being a media company and sold Sopranos rights and Sex and the City rights to basic cable, we held back On-Demand and broadband digital. We sold them linear only. So one of the things that HBO On-Demand does for us is give today's subscribers an opportunity to view the classics and the evergreens, because we always have a number of episodes up there of these great series as well as the complete inventory of things that are on the air now. So it's really a morphed product; it's not just like HBO linear at all. It's separately programmed, my folks spend an awful lot of time thinking through what's the right menu selections, what's the right category, sub-categories for the click downs, all that stuff. But it's been a terrific experience because at the outset, when this was being discussed in the late '90s when it didn't exist yet, the joke was, "When we get On-Demand, Dave you're out of business! Nobody's going to need a scheduler anymore." Not so fast, my friend. They will need someone that decides the menus and the selections and how deep, and also another game that we play is that the cable operators still give every provider a certain number of hours on server and it's like favored nations, everyone kind of gets the same number of hours so we're restricted. We can't put our entire inventory up there that we have in a month so we have to be selective about what those menus look like.

NELSON: Those are sort of like playing under the salary cap in terms of you have so much to work with so you have to maximize the value of it.

BALDWIN: Right, and HBO is a Steinbrenner team.

NELSON: (LAUGHTER) Nice position.

BALDWIN: Yeah, we've got the All-Stars. We'll let them figure out what they're going to do over at Showtime and Starz, but it's a darn good product. It has high satisfaction among the users. Our issue right now is still getting people that are not tech savvy to understand that it's different than VOD, that when you go to HBO On-Demand there's no charge, there's no specific charge, it's a buffet. Eat as much as you want, we don't care. You've paid for it in your linear subscription, this is value-added for you, and as a consequence what you see in the demography of On-Demand differing from linear is that it's a younger base, and knowing that you really can think about, all right, if it's a younger base I'm really going to hit it with Flight of the Conchords, shows that the younger demos want, maybe leave them there a little bit longer. But then you're always trying to entice the older demography to come in and try it.

NELSON: So you're still, you personally, are still in business because how you use this and what you put on there, given the limited capacity you have to play with, is still a significant thing, and I want to ask you one more thing about that because some of your shows, even though your concern is cumulative viewing there is still a sense of appointment-like, you're just going to be there in front of that TV set at 8:59 on Sunday. Now when you release this stuff on On-Demand is there any way that you can see that in fact – because at some point it goes on the server, so there's a point in time – is there any way that people are primed for that, waiting for that, jump on it, or is that just much more of a level consumption?

BALDWIN: Depends on the show, depends on whether it has an established audience.

NELSON: Well, take a big show and established audience, are you saying that...

BALDWIN: So let's take Big Love, for example. Big Love is a show that we don't premiere on On-Demand because we're still trying to develop that notion of it's Sunday, it's 9:00, it's Big Love, in-season. When it gets a certain amount of legs to it maybe we will but it's always a show by show thing. I like having some shows that maintain this signpost anchoring, and then other shows that probably have less overall big show impact on a premiere but have overall growth potential because they're not the kind of things where you need to get in right away, or in the case of The Wire, for example, sometimes because David Simon's dialogue is so accurate and authentic street dialogue that our viewers go back and watch it again. That was the case with Deadwood. David Milch, I mean his dialogue, it was Shakespearian Western.

NELSON: Right, nobody ever heard that before. With a lot of swear words in between, right?

BALDWIN: Some of the soliloquies were just magnificent but your head would spin, where did that come from? And people would go back either on DVR or On-Demand and watch it again and say, oh, that's what it was.

NELSON: So actually that really does enhance the consumer value and satisfaction because they get this opportunity to go check, even something they've seen already they like to go check it out again.

BALDWIN: We said early on, a DVR or HBO On-Demand are actually superchargers for an HBO subscription because we're agnostic, where they watch it, how they watch it, how many times they watch it. We're very serious about the fact that they pay us for the product and anything that allows them to feel good about the value for cost is the business we want to be in. So if we buy great movies, we make great movies, we do series, sports, whatever, as they did back in the '70s when they said we're going to rotate these around, if they paid for it they have an opportunity. We now have even greater opportunities to get to the consumer or to have the consumer get to us, particularly in a world where you've got 200 basics, a lot of television out there. You still have to have a home that has a distinct feel, that has a brand image, and has a tonality of the kind that's carried HBO all these years.

NELSON: Now in terms of you just talked about more places that people can see things, we're moving into an era here where again we're seeing shifts due to the technology where at one point on-demand seems so new, now it's really part of the landscape. Now we're looking at programming moving onto other much more, let's say, unconventional platforms in terms of because they've got small screens and things like that, how are you looking at that as a way to extend your programming, or are you not?

BALDWIN: Good question.

NELSON: Because everyone is kind of buffaloed by this, aren't they?

BALDWIN: Not buffaloed, I'm pondering how much I give away now versus how much is tactical. We acknowledge the shift. One of the things that concerns us a great deal is digital rights management because one of the shifts is place shifting. It's not so much time shifting anymore; in the home and on the television that pretty much is yesterday's game. We figured out that game. Today's game is place shifting to a laptop, to a remote player via Slingbox and other technologies where you can be somewhere else and move the stuff maybe into areas where we're not even licensed to exhibit it. So the rights management of most of the new technology is of primary concern to us, making sure our product's secured. We're not selling advertising so we're in a different game than broadcasters who are now throwing everything against the wall and seeing if it sticks. They have played every experiment they can possibly play and they're still playing more about how to get their shows to the public – imbed the advertising, don't imbed the advertising, charge a buck 99 on iTunes – every model they can go through is to their benefit because their end game is selling ads and amassing the maximum number of eyeballs as a following enables them to fill the mission of their business statement. For us, letting more people into the tent to watch it who are not paying for it is against our primary business. So we have got to be more introspective, more cautious. For two years people were saying I can't believe you and Apple can't do a deal. Two great companies, two great brands, you've got terrific shows – why aren't you guys on iTunes? Everybody else is! For us that's not a good business right now because we still have home video, we still sell DVDs and if you look at a buck 99 per episode, with their business model the only way they do business is if you premiere it the day after or make it available the day after, and for us I've only done 20% of my business on that episode and now I'm out there selling it to everybody? I've still got 80% of my audience I need to find in the next two or three weeks.

NELSON: So you'd be undercutting yourself.

BALDWIN: I'm undercutting myself two ways, audience potential and then to the extent that we sell DVDs that pricing is much higher than a buck 99 an episode. So that doesn't work for us quite. In other areas of the digital initiatives, we're a long-form company. Movies are long-form, our originals have been long form, 30s and 60s. What seems to be happening on the internet right now with MySpace, YouTube, on and on and on, is that the vernacular is short-form, 3-6 minutes pieces.

NELSON: And free.

BALDWIN: And free, with maybe an ad left or right, whatever. But that's not our vernacular. We don't have programmers, writers, people that are focusing on the short-form as an entertainment experience. I'm sure that the next time that you and I sit down when I've been here in the business 60 years we'll probably be there, but somewhere along the line, I think, it's fair to say that all of us in entertainment have to look at short-form programming as the next wave – how we make it, how we make it distinctive, how we make it worth paying for are the keys to our success, not just in reach.

NELSON: Now just to wrap up here, if you're looking back on your career which obviously is still going forward...

BALDWIN: I hope so because I've got a hell of a mortgage!

NELSON: What do you look at or what would you point to as your legacy – I hate to use that word, it sounds like we're getting ready to put you six feet under – or what you would consider your greatest accomplishment? What have you contributed to this business?

BALDWIN: Ah, God, now it's time to pat myself on the back, is that it?

NELSON: Yes, we had to get to that. Generally.

BALDWIN: It's not me, it's all my people.

NELSON: But I mean as a collective.

BALDWIN: I think when I do pack it in and leave, the primary legacy I will leave behind at HBO is something that was taught to me in my first few months when I got there. I had the advantage of having two or three first-class mentors and because they were from Time, Inc., because they were from the gray flannel suit era of Time, Inc. and they were old school, but because we are collectively in that building, that corporation, still pretty old school in terms of how we manage and how we run our businesses, most of the lessons learned were how to conduct yourself in the company. Learn from the old, teach to the young. Your mission is to figure it out, and then try to impart that wisdom to the folks that work for you so that they can be better and smarter and do more things than you could because they have a couple more years that they're going to learn. Second, is big principle, the group generally out-performs the individual. You have a lot of folks coming into business today that are coming out hot from grad school, want the corner office, they want to accelerate rapidly, and this is no different than it was 30 years ago, but they haven't learned to play on a team yet and when you can impart that to your team to say, look, there are no knives going into anybody's back here. It's not tennis singles, this is football, and even the women understand. It's a team effort, you do one thing, you do another thing, you do another thing, collectively we're going to advance what it is that we do a lot faster than if you try to stand up and be a solo act and claim your brilliance and your ideas and then disavow anybody else's. So those lessons of how you pull together and motivate a team... I will say, I mentioned Les Dorney before, I had another really good mentor who was the controller at the time and his name was Bob Becker. His unofficial title was the out of controller. He's a drinking man, was at the time, and some of the biggest lessons I learned about business, about the company, and about how to manage people were at 1:00 or 2:00 in the morning, standing at a bar and just listening to the wisdom of someone that was ten years older, had been in the company for awhile and had experienced how you succeed. The other one, Les Dorney who came down, the biggest thing he taught me was you know, you don't have to paper the company with memos and tell them how smart you are and have it four pages deep. One a month maximum, maybe one every two months, shortlist, people that really are interested and put it on one page because they don't have time to read your bullshit.

NELSON: So after all this, Dave, I guess that you're still the school teacher at heart in terms of how you approach the business and how you approach your people.

BALDWIN: Pretty much, because you have to at least believe that they want to excel. You have to believe that they want to succeed and what I do is just take away the barriers, put the tools in their hands, and put the spotlight of attention on them. If they do something great, fine. But that instills over the years. I can sit in my office and if anything goes wrong, and we have to operate in our business scheduling and then the law of operations which we have to be accurate within a few seconds everyday. There is no error on the broadcast logs, otherwise things screw up. So you operate at that high level of accuracy, someone is going to be human, someone's going to screw up, but what you instill in them is take ownership and come in, "I screwed up," or "I wanted you to hear this first: this happened, I'm taking steps to fixing it and hopefully this won't happen again," or it's just pure human error. That's the kind of spirit you get if you pay attention and manage and it makes life easy. One of the things I did when I got out of teaching is I said I'm never going to wake up in the morning and lie in bed thinking is there a grandmother that hasn't died yet, is there an illness that I haven't had yet, is there any excuse I can use to call in sick? And it was that bad towards the end. So now, basic rule of thumb, is that basic principle, if you wake up in the morning and it's just getting out of bed and saying, "Jeez, I've got this to do today," and you're going through your routines and you never once think that you're not going to work or don't want to, stay in that job.

NELSON: Well, I've really enjoyed this seminar and learned a lot from you. Thanks very much.

BALDWIN: My pleasure, Steve. Good luck with the project.

NELSON: And good luck to you.

NELSON: Hello, I'm Steve Nelson for the Oral and Video History Program of The Cable Center. Today is December 6th, 2007 and my guest is Dave Baldwin, Executive Vice-President of Program Planning for HBO. Dave, you describe yourself as a poor boy from Pennsylvania. Tell us about growing up.

BALDWIN: Well, I'm a poor boy from Pennsylvania trying to get by in the big city. I grew up actually in a very small town. We had three gas stations, three bars and one grocery store, but it was an idyllic childhood. It was one of those Saturday Evening Post kind of realities where you could go anywhere, do anything, as long as your home for supper. It was safe, we would roam the hills, we'd be out on our bicycles, pick-up baseball games – it was really a wonderful way to grow up.

NELSON: And what time period is this?

BALDWIN: This was... I'm a child of the '50s.

NELSON: Okay, okay, as am I. But what about TV at that time? You had three bars but what did you have for TV? I bet you didn't even have three channels!

BALDWIN: We had color bars, actually. We had one station that we could get clearly that was the VHF station out of Binghamton, NY just up over the state line, and it was one of those creatures that came about during the '40s and '50s, it was a tri-affiliate so we would cherry pick shows from CBS, NBC and ABC. Whatever they felt like programming is what they put on.

NELSON: Was this the best of, or maybe the not so best of?

BALDWIN: It was I guess whatever they thought they could sell and get the most money for their airtime. It was just the way I grew up and as I met friends in the '60s in college that had come from other communities they were talking about shows that I'd never even been aware of because they weren't offered. I thought we had everything, you know? But, interestingly, in the early '60s at the beginning of cable television, our community, because it was so isolated by the hills, it was down in a valley, we were actually serviced by cable pretty early. A guy, typical story, ran a TV shop in town and to sell more TVs he went up to the top of the tallest mountain around town, put up an antenna, strung wire all the way back into town and went door to door selling cable and therefore more televisions. So I was introduced to cable real early.

NELSON: And this was before you went off to college?

BALDWIN: This is actually... no. My parents didn't want to get it, they were perfectly happy. My father had spent a lot of time erecting this massive, like 50-foot antenna on top of the house.

NELSON: To get one channel.

BALDWIN: To get one channel, and it had guy wires attached to all four corners so it would be stable in the wind, and then the next step was of course he had a UHF antenna that he put onto the mast so now he could get the stations out of Scranton/Wilkes-Barre which was south of us but over a lot of hills. So he was all set up. Free is free, and he liked the way that he was getting it free and he saw no reason to pay this guy $4.95 a month to get the same stations which is essentially all that he was offering, just the same stations.

NELSON: Do you recall who this guy was or where he wound up being? Because there were so many guys that started in the hills and valley of places like Pennsylvania and went on to fame and fortune.

BALDWIN: I think he started and ended there. I think as a lot of these moms-and pops grew up he did what a lot of them did and sold out to the next biggest guy. I think right now they're serviced by Blue Ridge Communications.

NELSON: Okay, So you went to college, which was where?

BALDWIN: Penn State.

NELSON: At Penn State, okay, and people are talking about TV shows you'd never heard of – do you remember what any of them were?

BALDWIN: No, just that I was missing part of my backgrounds and history, I was missing part of popular culture, but fortunately it was the '60s and we were reinventing popular culture anyway, so it mattered less.

NELSON: And what were you doing in college? What was your area of study?

BALDWIN: In college... I actually went to college in my freshman.... I changed quite a few things along the way. I went to college thinking that I would become a chemist. I had a great chemistry teacher in high school and I did great on my chem boards, and I actually, whatever that word is, I jumped over the initial chemistry and went right into the second class. At the end of my freshman year when I found out that chemistry was really math in disguise and I was not that good in math, I decided, you know what? There's a war going on. I was not really keen on the idea of joining this war because I was brought up Methodist, I believe in thou shalt not kill, and actually all the teachings of the church, and I was shocked when the church started backing the war and it was like let me see if I can get these two ideas and get them together here. I said if I had to pick one which one do I do. I said let's go back to the original text here, thou shalt not kill and war is bad, so I parted ways there and so I needed a way to get out of going to Vietnam because there was a draft.

NELSON: I remember it well.

BALDWIN: At the time one of the professions you could choose, and I think it was morally right, if you were to be a school teacher then you were exempt from the draft. So the rest of my time at Penn State I spent as an elementary education major and looking forward to going out into the world and becoming a teacher, and then senior year 1970, '69-'70, we had the first of the draft lotteries. That was an interesting experience.

NELSON: Did you get a high number or a low number?

BALDWIN: I had a low number and let's just leave it there. I had a low number and I did not go to war.

NELSON: Okay, well, we're not going to probe into that. So what did you do, though?

BALDWIN: I actually came to New York. I had met a wonderful woman working together at a summer camp in Pennsylvania. She was from Brooklyn, there were certainly jobs in the New York City public schools, I applied. I started out teaching 3rd grade at PS 150 on Sackman Street in Brownsville-Ocean Hill, Brooklyn.

NELSON: So you've gone from small town in Pennsylvania, State College which is out there, as you know...

BALDWIN: Happy Valley!

NELSON: And now all of the sudden you're in Brooklyn?

BALDWIN: Um-hmm.

NELSON: This is culture shock, no?

BALDWIN: This is big time culture shock, but you know, a welcomed change because as you remember, Steve, the '60s were all about change. Everything was evolving or there was a revolution around every corner. 1969 is a year just taken in general. Every week, every month, something happened in 1969 that was the first of its kind. There's a man on the moon, people are being assassinated, everything was changing. So for me it was just like this is life.

NELSON: Go with the flow, right? As we used to say.

BALDWIN: Dive in, learn some new things, get yourself involved with other cultures. I had a diverse class of 65% black kids and 35% Hispanic, and then this white kid who grew up in the hills of Pennsylvania, this was quite a learning experience, let me tell you. It was a challenge but it was something that you felt good about because you were giving something back. But I won't kid you, it was not the easiest job I've ever had.

NELSON: Yeah, I wouldn't think so. Where were you living at the time?

BALDWIN: I lived in Brooklyn, a great old neighborhood called Park Slope that had just started to be gentrified and rows and rows of fabulous turn-of-the-century townhouses.

NELSON: You could actually get into Park Slope then, right?

BALDWIN: You could very easily get into Park Slope. Two doors up from where I found my first one-bedroom apartment was a project that Brooklyn Union Gas had actually done, renovating a brownstone to tell people, "Look, this is great housing stock here. If you just put a little bit of money into it, and we'll help you, we can revive an entire neighborhood," because it was left kind of fallow during the white flight of the '50s when everything was going on east of here on Long Island. All of the families, because "Oh my God, there's a black family that moved onto the block," were running out of the city.

NELSON: "We're out of here," right?

BALDWIN: And we're out of here. And then there was the banks doing redlining for financing. It was a pretty nasty period and so in the end, in the '60s, you ended up with really terrific housing that people needed, and then over the next two or three decades it's now to the point where I can't afford to live there.

NELSON: For people who don't know Park Slope, it's one of the most desirable places in Brooklyn, or in New York for that matter.

BALDWIN: It's well served by a subway into Manhattan, an island apart.

NELSON: Okay, so now you're a teacher. How long did that go on?

BALDWIN: It went on for seven years during which time I went to Queens College, got a Master's Degree in Library Science, specialty in Children's Literature, which was a lot of fun, and I became a school librarian first at a school down the street from where I was, took over that library program, and it was the era – I don't know if people will remember the Johnson years, but there were ESEA Title Grants that would go out to a lo of the schools in the nation. It was a time when the federal government really did support education. It wasn't just lip service; there were bucks. And we had in our district enough money if we pooled our resources to really develop first-class libraries in the elementary schools, and one of the things that we did was go out and buy as many films from Zagreb Studio, from the Canadian Film Board. These were very exciting new kinds of films that had no dialogue. They were telling stories just with pictures or with animation, and for kids that were really far behind in their reading skills, this was a great avenue into it because they did watch TV and they could form stories and they could tell stories. Here you get them in and then you have them watch an eight minute, ten minute film and tell you the story and write it down, and then give it back to them and said, "You just told me this. Let's see if we can read that now. Read your story. I'll help you." Listening centers – it was a time when reel to reel audio tape was transitioning into cassette tape and it was relatively inexpensive. What we would do is put together listening centers with a tape, eight of the same books around the table, and you'd start the tape and they would follow along. They would see the words, hear the words, and be guided. I had an assistant making sure that everyone's still on track, and it was fabulous. I was having the best experience in just three years of my teaching career running a library.

NELSON: So is this kind of broadening your view from the library guy, which is typically a very print thing, now you've got this whole audio-visual component going on, I'm suspecting here that this somehow led you in a new direction, so tell us how that came about.

BALDWIN: The tangents started at Queens College, actually. I had a great professor who was involved with a project called Art Doc. We were here in the greatest city in the world for art. Soho had just exploded and the big galleries downtown had room to show some of the most exciting art and so they were here. At the same time, Sony had developed its first black-and-white reel to reel portable video recorder. This is 1971-72.

NELSON: I remember it well because that's where I got started.

BALDWIN: There you have it. So as part of my education for being a librarian I signed up for this, it was a volunteer course, it took place Saturdays, we would meet at – I can't remember the luncheonette. I mean, Soho now has completely changed; it's all fashion and haute couture and stores mixed in with the galleries. Back then there was, I think it was called the Whistle Stop, where all the tradesmen, all of the workers that were still there – there were a few factories still left but most of them had gone – have coffee, go over to one of the galleries, either Meizel or somebody else, set up and have the artist come in – this was before opening hours – talk about his work, we'd capture it on video and then we'd go back to Queens and mix the audio and the video, dub it, and send it out to maybe 120 schools nationwide that had art programs, wanted to hear and see what's going on, but couldn't afford to send their students to New York City.

NELSON: So were these like half-hour programs or 10 minute...?

BALDWIN: Ran a half-hour to an hour, depending on how loquacious the artist would be, and some are very and some are not.

NELSON: Right, not very verbal.

BALDWIN: Yeah, sometimes their expression is on the canvas, but it really got me into... those experiences from librarianship, interestingly, and some of the books we were reading at the time about the transition of information technology, because librarians saw the future coming in terms of how information would be stored, how information would be shared, because it's their business, has been for a long time, and they saw the technological revolution that was coming with getting away from movable type, certainly, into computer generated text that could be easily printed and cheaply printed, and then even beyond that where you didn't even need a book, which is where we are today.

NELSON: So you picked up some of these production skills or were you working with somebody that did that?

BALDWIN: Rudimentary. I'm still not good...

NELSON: Well, at that time, all that was very rudimentary, especially working with the little reel to reel tapes and that Portapack.

BALDWIN: Uh-huh, and we had two decks and trying to get a clean cut on play and record and the switching, and it was like patience, patience, I think.

NELSON: Not exactly like the editing process today.

BALDWIN: Not an exact science.

NELSON: But did this kind of whet your appetite in any way for this whole experience for getting into something else? I'm still trying to find out how you made this leap.

BALDWIN: Ah, the dramatic moment?

NELSON: Yeah, the moment, right, right.

BALDWIN: The dramatic moment was in 1976, in the fall of '76. ESEA funding from Washington had pretty much dried up. The New York City public schools were going through an enormous change because of that, and the body of teachers they could afford was shrinking, and every year for '71, '72, '73, every year you'd come back and unless you were there in the system for eight, ten years there was always a question whether you had enough seniority to continue to be employed by the school. I had passed under the limbo stick two or three years in a row, but this particular year came back and "Sorry, we have to let you go."

NELSON: This was after how many years?

BALDWIN: This was after setting up, three years of this wonderful library program, getting to know every child in the school, where their buttons were, and just finally saying, all right, I've gotten up to the top of the hill and let's enjoy the view here for awhile. The idea that I wouldn't be able to stay there hurt, but then they said, "But we have good news. There is a library position open to you over in Bed-Stuy." "All right, fine. It's a do-over." I go over there and meet the principal and see the library, and it was everything that I had just set up. It was fabulous. However, to make room for me, they had to let go their favorite librarian who the kids loved, and another young person like myself. We were all in our mid-20s.

NELSON: Yeah, yeah, the budgetary triage here.

BALDWIN: Triage, and you know what? It was just an untenable situation. As hard as I tried, month after month, getting involved with the teachers, getting involved with the students, it was like "God, I just got over three or four years of work and now I've got to go into it one more time." And then one morning in April I kind of woke up, drove to work, got to school, looked around and said, "You know what? I cannot do this any more. There's got to be a better life. I don't want to be miserable, I want to do something that is rewarding and makes me happy."

NELSON: And also where you don't come in and they say well, thanks for the great job but no thanks.

BALDWIN: So I basically went down to the front desk and said, "I'm going home."

NELSON: You just walked in and said I'm outta here?

BALDWIN: "Will you be back?" "Eh, probably not." "This week?" "No, pretty much I'm outta here."

NELSON: So this really is this incredible turning point.

BALDWIN: This was the turning point that I think people who are unhappy in their job either get to or they don't, and fortunately I got to that and said, "You know what? I've put an investment in education, I've put an investment in this, but it's not payback. I need more out of life." So I just jumped and for the summer went out and had a blast, played tennis, bicycled through Brooklyn down to Coney Island, it was just fabulous fun and then my wife at the time reminded me, you know, you do need to get a job.

NELSON: Oh, that.

BALDWIN: So then I started the typical process of networking and meeting people and at that point exploring what am I going to do, where am I going to go? I know nothing! I'm a teacher! They're in short demand now.

NELSON: And you're looking for something else anyway, really.

BALDWIN: Yeah, but I started out looking for library positions because that's where it was and I went down to a private school outside of Philadelphia, told them my background – "Well, what have you done?" "Well, I've worked in some pretty tough neighborhoods in Brooklyn," and this is an old world, all boys, and I think all Protestant white boy, school. They didn't quite know what to make of me because I still had my '60s hippie hair and my wide watch band. I was of the moment. And so after a couple more interviews with library positions I started looking at what else is there in the world. My ex-wife and another woman were teaching at a private school here in New York together and she said, "You know, Dave's looking for work," and the other woman said, "Well, you know, my husband, he's in TV. Boy, he loves it. He really loves it." "Really? Would he be willing to talk to Dave?" "Sure, just call him up and come into the office. What could it hurt?" So I did. I called him and the fellow's name was Lee Deboer, who sooner or later you'll get his oral history, he was there early. He was working at a rep firm called TeleRep which was run by another pioneer, Al Masini, who basically changed the whole landscape of syndication television and how time sales was done. This was a first class outfit. They handled all A-list stations nationwide and they were just a Storm Trooper mentality.

NELSON: So why would they look at you? This was a real high-end...

BALDWIN: Well, because Lee was running one of the research groups and just because he was asked I sat with him, talked to him about stuff, and I said, "You know, where do you start out here in this field? I'm not trained." So he introduced me, or gave me the names of four or five research directors in the business and I called them up and arranged for an interview, and at one they had an open position and I remember the dialogue. I said, "I'm really not trained or qualified," and he said, "Well, don't worry about that. Nobody is. They come out of college, they don't know what they're doing. We train them on the job." I said, "Well, look at it this way – I know Library of Congress, I know Dewey Decimal. What have you got? Nielsen? It's all numbers; I'll figure it out." So I was coming into the field, actually, I was 28 years old at the time, I was older than the typical introductory research analyst at a rep house. They usually come right out of undergraduate and go right to work crunching numbers because it's all on paper, you looked at Nielsen books, eye strain was a big problem. You would run endless amounts of numbers to do estimates for your sales people who would then go out and make calls on Madison Avenue to sell the airtime. It was a great game, got involved totally in reading all about television because it was foreign. The business of television, I never thought behind it.

NELSON: What did you know? You hardly even watched television in your earlier days!

BALDWIN: Exactly, exactly. Someone... I'm trying to remember the author – a very influential book someone just passed along to me, it's called The Business Behind the Box, which is I think great reading for anyone that's going into commercial television. This is going back to the basics of how do we make our money, and so I kind of understood it from there, started reading the trades, it was kind of like taking my own college education...

NELSON: And you knew how to do that.

BALDWIN: Ingesting information, and a year and a half later I'd been promoted, I was a manager and I had staff working for me.

NELSON: What was the name of this place you were working at?

BALDWIN: This was a place called HR Television which now is...

NELSON: Get that on the record.

BALDWIN: Yes, on the record. Wonderful, innovative people. Now the company's called SelTel, clever, S-E-L-T-E-L, get it? Sell Tel? So their big thrust when they purchased HR was that they were going to computerize the business, take it away from paper and change everything. Transition avail sheets and transition posting – all of that stuff, and they made a really good run at it. Unfortunately they were a long list rep; they didn't really have the power in the industry to have people follow them. They had to wait until everyone else, CATS and the rest of the folks, kind of grew up around the concept. But it was a great place to start. You certainly learned how to be creative with numbers, put together a pretty good... and back then we did one-sheeters to give to the salesmen and they were clever little things that you'd want to focus on, either a demo victory or an increase in the time period and then you'd put a little graphic on it and give it to the salesmen so they could drop it off.

NELSON: Something to latch on to other than numbers.

BALDWIN: Yeah, something to latch on to the primary concept. That was the creative side of the job, but otherwise it was crunching numbers.

NELSON: I'm getting the impression that the crunching numbers probably over the long run maybe that didn't sit that well with you.

BALDWIN: It was okay but I didn't want to live my life doing this on a calculator. So a year and a half later, it was summer, late summer/early fall, mid-fall of 1978 – this same fellow, Lee Deboer, had moved from TeleRep, had been hired by Home Box Office to start their real research efforts because up until '77 they basically had no research effort to speak of. They had a fellow by the name of Les Dorney who had come down from Time, Inc. He used to be the research director of Life Magazine, and of course Life was in a downward spiral at that time, they had to let a lot of people go, but Les was a lifer that was sent down, as many, by the way, of the executives that started HBO were actually sent down from Time, Inc. to keep its eye on this new business that these kids are starting up, "We don't know much about it."

NELSON: Time, Inc. didn't really know what to do with, perhaps.

BALDWIN: Exactly, but they did have some executives, both young and seasoned executives that they would send down and populate the executive ranks of HBO at the time. So Lee was given a budget because they were looking forward to 1978 where it was projected we would turn our first dollar profit. This is a business that started in '72 and was running six years under water, and it's amazing to think about that sort of business startup today, something that had that much capital investment to go that long without making a dollar for your parent corporation. Doesn't happen that often.

NELSON: That would be shut down quickly.

BALDWIN: That would be shut down, I don't know if it would make it past year three. But there was money and so Lee went out and hired a few folks and the research group was formed at HBO. One of those jobs was mine because I came over and essentially I had to meet two or three layers of management, it seemed to be a good fit, and all that I'd been reading about in the trades since I started working in television for 18 months was how fast cable was growing, how fast satellite-delivered television was growing, and that the king of the hill, of course, was Home Box Office. It was the hottest, fastest brand in America in terms of growth and was something that a lot of people really wanted.

NELSON: So this was from your standpoint what a great place to land.

BALDWIN: This is my dream! No more ads...

NELSON: Get rid of that part of it, right?

BALDWIN: No more fabrication of lies, damn lies, and statistics. What a unique experience! I had 25 stations at HR, here's one station I can know everything about, and oh, by the way, management is only interested in finding out the truth.

NELSON: This is shocking!

BALDWIN: What are they watching, what do they think of the product? Just figure it out, tell us where to go, what to do. You are the eyes of the corporation and the ears. Get the information and we will change it in whatever direction you say. How can you turn down a job like that where you've gone from being the low man on the totem pole to now you're right up there with the executives in the top echelon having dialogue about what's going on.

NELSON: So they really were driven by trying to really understand what their viewer or what the consumer wanted as opposed to fudging that a little bit because you're trying to push advertising.

BALDWIN: From the outset because it didn't sell advertising. It was driven by the consumer dollar. The whole goal was to try to figure out how to make it stick. Once you're in the home how to keep them subscribing, what was it about the experience that they liked, and from the outset we didn't show things just once a week. The paradigm turned on its head. Commercial television that we all grew up with up until that point, the Sullivan Show was on Sunday night and you'd wait until that night; Twilight Zone was on Friday night, you'd wait until that night for that show, and you'd watch it through the season and then the summer rerun season would come back. They'd show the 26 back episodes all over again and then you'd start the new season. But HBO because of the nature of the programming, you've paid your money, if I just showed Saturday Night Fever one time on Sunday night at 8:00 and not again until six, nine months later, well, that would be a pretty... remember, VCRs didn't exist when we started. There was no way to capture it. So our paradigm was no, they've paid for product, give them opportunity to use it.

NELSON: This is a kind of rudimentary time-shifting in a sense. You can find it at other points in the day and the week.

BALDWIN: Exactly right. So we would set up one of the initial pieces of research, once we got set up with diaries and we worked with Nielsen and we started keeping real time period information, was how do you optimize a flight – this is kind of like ad grad school level – how do you optimize a flight of a show, not a 30-second spot, to reach as many demos and increase the cume audience as high as you can without getting to a point where the majority of audiences are now looking at it as an annoying repeat. What are the nights, what are the times, what are the demos you're going for, and it was great fun to figure that stuff out.

NELSON: But nobody had really programmed that way before so you had no models...

BALDWIN: No, didn't have to, didn't have to!

NELSON: So you have no models of looking and saying this is how you do it, you run them x number of times, and you do a Monday and a Thursday and a Sunday night and whatever. So you were really inventing this whole process of repeats.

BALDWIN: Well, certainly the folks before me were the inventors.

NELSON: That was underway when you got there.

BALDWIN: It was underway. Ours was to tweak it. They only had a limited amount of inventory and they had to fill up a lot of time, which is another interesting thing, when I joined the company in 1978 we would sign on in the afternoon at 5:30 or 6:00 and sign off at 1:00 in the morning.

NELSON: That was it.

BALDWIN: There were very few 24-hour stations. If you think back to the '70s, most broadcast television said goodnight after the late movie and came back on in the morning. So we felt no urgency to get there until... capitalism and competition are always good. There was a channel called the Star Channel and from its inception over at Warner AMEX they were a 24-hour movie service which put pressure on us. They ended up actually owned by the folks that owned Showtime, and that was their wedge into the pay industry because HBO had the lion's share and Showtime and The Movie Channel wanted to come in and see if they could grab some of that business share away from us and one was we're a full-time 24-hour service.

NELSON: And was that available on cable, Star?

BALDWIN: Yeah. But that morphed into The Movie Channel rather early.

NELSON: You talked about working with senior management when you got to HBO. Who was the senior management at the time? Tell us about some of the people and personalities.

BALDWIN: Oh, wow! Jerry Levin, who we all know the history at this point, Jerry Levin was Chairman, CEO of HBO at the time. His head of programming was a fellow by the name of Austin Furst, who was there at HBO during my tenure in research and then went off to form the company called Vestron which was one of the initial movers in the home video market. He was so successful at capturing rights for movies because he knew what the game was. Austin was a brilliant, brilliant man – still is – and went out and captured an awful lot of rights and sold an awful lot of cassettes at very expensive prices into that burgeoning market of home video in the early '80s, so much so that he actually produced a couple movies, the most famous of which was Dirty Dancing, but that was the end of his movie making career. He was a better businessman than a mogul. Working for Austin was Jay Walkingshaw. I think Jay was one of those bright folks that you found in Time, Inc. back then where they would go out and they would just sweep the college campuses and they'd hire the best and the brightest. So he was a very, very sharp businessman. And Lee Deboer, of course, the head of research was absolutely one of the best researchers I've ever met from then 'til now, just a steel trap mind, totally logical and he would go for the logical conclusion and if he didn't have enough information he'd know it and go back and find it. At that point, let's see, who did we have? Arnold Huberman, a name that probably is not mentioned too many times, was running our film acquisition department.

NELSON: And that must have been important because movies were such a big piece of HBO at the time.

BALDWIN: Were and still is a big foundation of premium television. But he transitioned out after two or three years after I was there, and I think '81, '82 we brought this executive in called Steve Shaffer who then solidified HBO's film buying with Michael Fuchs who had come in and taken over the programming department. Between Michael and Steve they kind of figured out that the real long-term future of the business was not in buying slate movies – which was when you'd go and here are the movies that they've released last year, we need all 15 and here's the price, and you'd do that over and over every year – but to go to a studio and say, "Look, I know you're going to make 15-18 films over the next five years. I'll take every one. Create the formula, you'll be covered, we'll be covered and we know that we'll have a movie inventory." Those were the two guys that kind of figured out long before the guys at the studios did because we were incremental to their business at the time. Their business at the time was still in theaters and their big dollars were coming from the broadcasters and there was no video window. So we just added a few dollars on top of the purse.

NELSON: But your window did get inserted in that?

BALDWIN: This is the genius of the fathers of HBO, I can't claim any credit for this, but our window came before broadcast window and before it got chopped up, all the naughty bits cut out and all of the commercial black inserted. So that was an advantage for us and they were happy to do that because at the time we were only 2, 3, 4 million subscribers which in contrast to the rest of the country wasn't going to hurt their broadcast sales too much. But once that pattern was set it was very difficult for them to back off of it. They actually tried to invent their own HBO. Four studios got together and said, "No, no, we didn't mean to do that. HBO is a middleman, too much power, too much leverage. You've now got 8 million, 9 million subscribers. We want to start our own service." And it was a very famous court case and we prevailed because basically the evidence showed that they were trying to exclude us, keep us from doing business and actually putting us out of business by starting up a business. They would feed their own movies to them early and then give it to us used.

NELSON: A little self-serving restrictive trade there.

BALDWIN: So they couldn't do premium television but they did come back in spades when the VCR was invented. They figured all right, this window I've got to put in front of HBO. So that was a beginning of the sequential distribution model that is now an enormous sequence of things and it's being played with back and forth. Even guys like Netflix now are into the mix for acquiring exclusive, first premiere rights off theatrical.

NELSON: You mentioned the VCR. Talk about that and what kind of impact that had at HBO when that started in the early '80s really proliferating in the marketplace.

BALDWIN: Well, it was a serious threat to our business obviously because it was pretty easy in those days to start a little mom-and-pop video store and people were getting into that business, 7-11s and the like. Instead of buying HBO, and at the time I think our prices were probably like $7.95, $8.95 a month, you could go in and rent a movie for $1.99 a night. Maybe you only want to watch two or three movies so the dollar economics in terms of the guy that only watches movies was like, well, why don't I just get a VCR and watch the movies I want before they get on HBO. So that really was a disadvantage that of course we turned into an advantage, which was all right, how do you beat that? Well, you buy more material and you present more material that they can't rent. So that's when Michael Fuchs basically said, "You know, we've got to make our own movies." He went out and formed HBO Pictures and we were making 6-8 movies a year with top talent. Remember Between Friends? We got Elizabeth Taylor in 1982 to make that.

NELSON: Now how did you... you probably weren't directly involved in that but that's such a seminal moment because HBO became so known for being able to attract all kinds of talent in front of the camera, behind the camera, that you just wouldn't think of as working for some TV network, and cheaper than...

BALDWIN: It was hard because the vernacular for actors and actresses at the time was that a television movie was a far lesser platform than a theatrical and many of them just didn't do TV movies because TV movies, traditionally, were disease of the week. They were designed for females 18-49. It was either disease of the week where someone in the family got sick and someone had to prevail and doctors and medicine and hugs and kisses and tears and roll credits.

NELSON: Very formula.

BALDWIN: Yeah, or they were woman in jeopardy which was the other formula. Somebody's a stalked or somebody's outside the window – whatever it was – and they were pretty much churn them out, grind them out movie of the week. In fact they were called MOWs, Movie of the week. Michael said "We're going to make them differently. We're going to fund it differently. We're not going to obviously put commercials in them and they can have real solid interesting stories." That started the run. We had already established ourselves with original programming with On Location, the standup series, and SRO, Standing Room Only, which was our music series, and throughout the period of '76 through '81 or '82, we were funding one a month of a comedian and a music show which was the underpinning, really, of HBO's entertainment original programming, which was exclusive, ours, couldn't see it anywhere else on HBO. And that meant a lot: for the people that liked movies but wanted more there was On Location and SRO, and then of course Inside the NFL which is now 31 years old was up and running back then in the football season, we had a baseball series called Race for the Pennant which did the same thing for baseball as Inside the NFL did for football. And then under Dave Meister and Seth Abraham we started the boxing program at HBO which was picking up again some rejects from commercial television. They were getting out of the boxing business so we jumped in and said, "You know what? Prize fighting is for us," and reinvented the coverage of the sport and became one of those other attributes that you could now, along with the movies and the comedy and the music and the sports, you could get live boxing on HBO, and reinvented the whole thing. Remember Gillette Presents on Friday night? It's a perfect sport! Three minutes of action, two 30-second commercials and back to the action, and that was how they made a lot of money. We didn't have commercials.

NELSON: So what do you do between rounds?

BALDWIN: We go in the corner, we get tight on the boxer, we get tight on the trainer, we listen to the dialogue, we listen to what the trainer is telling the boxer, and do some analysis and then do a little bit of highlight and then back to the ring.

NELSON: And so for the sports fan you're seeing something in a completely different way.

BALDWIN: That you'd never seen before. No one can have seats that close and can actually listen so that really put us on the map. During the '80s it was really one of those golden periods of boxing.

NELSON: Let me ask you, where are you at this point? Are you still doing your research, or you've moved up somehow or other in the organization?

BALDWIN: I spent 3 ½ years doing research, from when I got there in December of '78, and then a position that I knew I wanted after doing all this research on what people watch, when they watch it, how they watch, I wanted to not be the provider of information, I wanted to be the recipient and the decision-maker and the best job I could ever imagine since all the way back in repping was to be a scheduler because I could see the flow of audience and I could see how back in local television if you could stack your early fringe with the right programs that captured demos and flowed them, you're in the catbird seat. You can control two hours of television if you can put the right things there and get the right demos, and in HBO I figured, wow, what a great game because it's not so much audience flow but it's this great intricate puzzle of how to optimize the viewership, so I wanted that job desperately. Ruth Beltran, who had that job, made the decision that she would go back to business school and get her MBA, and I heard that and there were skid marks outside my office. I went to see Mack Perriman who was in charge of program scheduling operations at the time, and I basically said, "Mack, I want this job."

NELSON: And this wasn't even posted yet, I assume.

BALDWIN: No, it wasn't posted. He and I had worked together, and Ruth and I had worked together. But Mack was very old school about such things as hiring and interviewing and all that stuff. As close as we were, he put me through the formal interview, the luncheon interview, we even had a dinner interview.

NELSON: Like you'd never been around this place before.

BALDWIN: Do you know who I am? Do you know what I've been feeding you?

NELSON: Let me introduce myself, right?

BALDWIN: I said, "Mack, there is nobody on the planet that's more qualified for this. Come on! Hire me!" And he did, and I got the job running scheduling for HBO and Cinemax.

NELSON: Now I want to talk about scheduling because this is something a lot of people don't really know a lot about sometimes or focus on, and you've used an interesting metaphor so allow me to repeat it for you – you've used the word puzzle before and it is a puzzle, and people of course familiar with a crossword puzzle which has a series of white spaces where you fill things in and little black boxes that tell you, okay, one across is going to be five letters so think in those terms – you've used the metaphor of the diagramless crossword puzzle which some people may not know but you look at this puzzle, there's no black squares, it's all white so you don't know whether one across is three letters or six letters. So you're really starting with this blank slate and trying to create this complicated series of what goes where.

BALDWIN: I've used that analogy before because every month of programming, at least back then, was composed of different movies. You didn't have a lot of series back in the '80s or '90s, and even today we don't have a lot of series programming that takes a regular spot every week. So we're left with 24/7 across the primary channel and then six other plexes on HBO, eight channels of Cinemax, where you have a certain number of anchors. We anchor our movie on Saturday night. At least that's the two letter answer on a diagramless where you say okay, it's either "an" or "on". I've got a movie there, so that's what I'm going to start with and then you start filling out the rest of it. All right, if I start it there I'm going to put my movie through a time tested rotation, Saturday to Tuesday and then the following Sunday because I know that's the broadest sweep, research again, that I can possibly capture with demography. And then I'll fill it in a couple of other places depending on its MPAA, depending on its genre, whatever fits. The rest of it is unanchored and kind of the diagramless puzzle comes in again. Boxing, given that we know that they are boxing, where they're boxing and when they're boxing, which is often not firmed up until we've already published the schedules, unfortunately, and then we have to republish the schedules, but boxing is a Saturday night event for us. As it evolved, series generally are a Sunday night event, and those are the four or five anchor positions and then everything else has to be put in rotation across the main service and then decide how many other channels am I going to play this on and what time periods. I never played the game. That's the problem with the rap on Dave Baldwin. When I came into the scheduling department I was at a director level and the managers actually did the scheduling. I came from research, my job was to oversee and to prompt them into next levels of expertise. So interestingly, although I've run this thing for 25 years or more, I never scheduled a thing.

NELSON: So you're like the guy that manages the baseball team and never played baseball.

BALDWIN: Exactly right, but you know what? I went out for several days – because what we do with our schedulers is allow them to stay home with all the data, all the research so that they don't have to take calls, they don't have to engage in conversation, they don't have to do anything except focus on this puzzle and make sure it fits because you're trying to fit odd pieces. They're not all 30s and 60s and two hours. Movies these days either run 87 minutes or 2 hours and ten minutes or 2 hours and 18 minutes, and if you have a rather regular schedule for some of the stuff and if you have an irregular time period for the other stuff, sometimes you have to do the puzzle two or three times in order to make the pieces fit. So on their first day of scheduling they're allowed to stay home and focus on it, then they turn it back over to the rest of the team and then they massage it and the process is an iterative one. Back in the time when they were doing that, when I moved over in '81, there were no computers. They had huge pieces of paper, calendars and a couple of dozen No. 2 pencils.

NELSON: And a lot of erasers.

BALDWIN: Gum erasers, yeah. The little stubby eraser was not going to do it, so they had gum erasers and literally a shopping bag full of information on how new movies had played before and they went about doing the puzzle on a calendar with show after show after show. I knew enough to say, you know what, I don't type and I don't want to do that, but I'll manage the process.

NELSON: So you say, that's a good job, or we'll approve that, okay, that's July, we'll take it!

BALDWIN: But more importantly what it taught me right away, and I learned some of this from teaching, from research, and now going into scheduling, motivating and managing are really what you get paid for. If you can do that, if you can manage well, life is good because it's all about the people. I knew right away that Amy and Doug Lee – Amy still works for me, by the way.

NELSON: Amy?

BALDWIN: Feldman. She's the Senior VP of HBO Scheduling and Administration now, been with me since day one. Doug Lee who was there running Cinemax has had a great career. He's at MGM now managing all of their digital initiatives, their channel that they just launched in HD, and I had drinks with him just the other night. This is family. These people kept me straight, kept me on top of things, loyal, and all I had to do was put the right tools in their hand and reward at the right time and it was like, yeah, I like this management stuff. It's kind of like teaching except I don't think either one of them are going to steal their lunch money and there was no fighting on the playground.

NELSON: Well, you make it sound like this isn't really work but of course it is.

BALDWIN: Well, it's work, but you know what? It's honest work and it's fun work and it's the kind of work that I started to enjoy right away, managing people and processes, and then being a translator, taking all that they were doing and then going out to the floor and out to the executive suite and kind of selling the ideas, selling what we're doing, explaining the strategies, the tactics and the like. In essence I found a career that was very teacher like but a lot better money.

NELSON: For sure. Now you mentioned in terms of the scheduling that you had certain anchor things you could plug in there and I just want to focus on a couple of those. The Saturday night movie – that became a signature. How did that come about?

BALDWIN: Not until 1991, interestingly.

NELSON: So until then the movies were much more amorphous, they go here, it goes there?

BALDWIN: Well, you have to know that one of the games that I learned when I came into television that I'd never learned before was backgammon. Backgammon, if you're just going to play for fun is an okay game, you're moving pieces around. If you're playing for money and playing with the cube there's an awful lot of strategies and tactics, and sometimes the more complicated you make it the other guy across the table can't quite keep up with the four moves ahead that you have to play in the point counting. I took that to HBO, that gaming mentality, and throughout the '80s we really gamed it out to... it was a summer month, the hut levels were higher later, we'd move our movies to 9:00 starts instead of 8:00 starts. We pretty much abandoned... we played a lot of our movies with Sunday starts, Wednesday and then Saturday plays, but as the television environment shifted we would sometimes premiere them on Saturdays because the Sunday competition from the networks was killer in-season, in the fall and the winter. So we started migrating some of our movies over to Saturday and of course as soon as rerun season would begin again we'd move it back to Sunday. So while we were trying to finesse according to demography and all those skill sets that we had and all that, the consumer was totally baffled. They had no idea when movies were starting, where to look for them, what the hell is going on and that confusion started being fed back to us in the marketing research. So Amy Feldman came to me one day and she said, "Dave, I've been thinking. What's the worst that can happen if we take all of our new movies and we just anchor them in one spot, Saturdays at 8:00, that's our spot. Wouldn't that be easier for everybody?" This great light bulb when off over everyone's head – well, of course it would! What's the downside? So we invented the HBO Saturday night guarantee, got the marketing folks involved in it and they actually spent in the first year an ungodly amount of money. Remember, this is 1991; they spent 18 million dollars in off-channel advertising about the HBO Saturday night guarantee movie.

NELSON: Just to say, Saturday at 8:00, you be there.

BALDWIN: It was a guarantee and we hung in there through hell or high water, and I had big fights with the guys that were running HBO pictures because "No, I can't possibly play this film at 8:00, it's too early!" "It's not too early for a theatrical. Why is your film so precious? It's going on at 8:00." So it actually changed the nature of our business and a lot of the strategies because a year or two later, after we had established that beach head, we then went to multiplexing and in the world of multiplexing you needed at least some signposts of where things are because now you have an awful lot of programs. There's no system that a consumer can understand our schedules other than do you have what I want right now. So we persisted with the Saturday until we got to the late '90s and then Sundays with series was pretty much along the same lines. Chris Albrecht and I had been talking about where we put our series because you remember before that, in the mid-90s, The Larry Sanders Show, that wasn't a Sunday show, it wasn't a Saturday show. Larry Sanders was a Wednesday show. We had other series that would be a Monday series. And we looked at the opportunities that presented themselves after we launched The Sopranos and after we launched Sex and the City that we could string together probably 26 to 30 weeks by co-oping the Sunday time period and just running a new episode all the time, and we knew we had another series called Six Feet Under coming in. So it was the first time when it became evident that we could with different series own a time period, something that had never been done before. Again, kind of looked at the network schedules which had shifted away from series forms, and all the networks in the late '90s were getting into long-forms again. They were back to buying movies, making movies, and they were really fading in terms of putting their best series on Sunday nights because they wanted their good series mid-week, Thursday particularly because that's a great advertising night because it's the springboard to cars and movies and shopping.

NELSON: Advertisers love Thursdays.

BALDWIN: Yes, they love it.

NELSON: And you couldn't care less about the advertising side.

BALDWIN: Exactly. So Chris said let's just try to own Sunday.

NELSON: So this came from Chris?

BALDWIN: Yeah, he was, although a programmer, he was probably my best boss when it came to tactical scheduling even though he didn't grow up in the discipline. He was a comedian, a nightclub owner, an agent. I would sit with him and he would come up with these fabulous ideas. I'd say, "How did you come up with that? I'm embarrassed that I didn't come up with that! You pay me to do that!"

NELSON: "Can I take credit for it?"

BALDWIN: And I did, I did. Chris, if you're watching, genius! So that's where we are pretty much today. We're right now in a stage where this whole information technology thing is exploding, we firmly believe that there is purpose to having some established anchors, not too many because the consumer's inundated and you can't ask them to remember too many things, and we don't. Just remember our movies are on Saturday and our series on Sunday. Good, we're done. Everything else I can play multiple times on multiplex, I can put on HBO On-Demand, or you can use your DVR and just set up and record the series and capture it yourself.

NELSON: Which is a lot easier than the VCRs which were in a way your enemy back then because programming them... I mean, there were efforts to say, "Use your VCR. You can see this movie that's on at 3:00 in the morning and record it," but of course we know that people were largely baffled by that.

BALDWIN: I remember those efforts. I think that was one of the Showtime ideas, but the fact was at the time most of America had a VCR on top of their television blinking 12:00, 12:00, 12:00. They didn't know how to set the clock, they certainly didn't know how to use a splitter and put it into the VCR and into the television, so whatever they taped had to show up on the television, and nobody was smart enough when they set it up to tell them about the splitter.

NELSON: The DVR obviously changed that. But before we leave Sunday night, not that we ever leave Sunday night at HBO, I just wanted to go back to that for a second. Was it really first Sex and the City and then The Sopranos? You had a strategy but you had to have the programming that would make that work.

BALDWIN: Yes, we had to have the programming that worked and the first thing was to make sure that we had a sequencing of these shows coming in. We didn't go for 52 weeks right out of the block but we did use, interestingly back then, the idea of reruns to lead into first runs. So if we were in the 3rd season, let's say, of Sex and the City I could use last season's 12 episode doubled down for an hour in six weeks to lead up to it. So you'd fill in between seasons until we got to the full inventory phase of '99-2000 where it was just hell's a popping. We had the three S's – Six Feet Under, Sex and the City and Sopranos that are sequenced out and you could just sense the flow going through the whole year and you transition from one hit to another hit to another hit. It was fun.

NELSON: And why 9:00 instead of 8:00? Primetime typically starts at 8:00 but you always picked that 9:00 Sunday night. It seemed to be the fulcrum point.

BALDWIN: There were many, many reasons. Tactically, in the fall you never get to a clean 8:00 because of the overruns from football which CBS loves because that pushes 60 Minutes and if CBS can push 60 Minutes that means they can feed their next show and their next show and their next show. So that's a phenomenon that will never stop. And you have the sense that a lot of our shows were adult in nature and meant for grownups and parents, and by 9:00 at least if they weren't in bed, the young'uns were at least out of the room where mommy and daddy were going to watch TV, and the demography shifts, it gets younger. The earlier hours, 6:00-8:00 really dominated by the 50+ demos. As you get later in primetime, 9:00-10:00, you start seeing more of the 18-34s come on the scene and be available, and a lot of our shows, obviously, had great appeal for 18-34s.

NELSON: Now you just mentioned sort of avoiding the power of 60 Minutes which has always been a powerhouse on the schedule. When you're doing that scheduling, how much are you concerned about what the broadcast networks are doing, what other cable guys are doing, or are you just saying we're HBO, it's not TV and we're going to do what we're going to do?

BALDWIN: It's about 50/50. We're aware of what's there, but we also know that anytime I premiere a show in a time period, depending on the series or the movie, that's really no more than 20% of its overall viewership and so I'm not going to get really excited because we're not selling airtime, we're not in the ratings battle even though most of the media writers still think we're in a ratings battle. It's not about time period ratings or premiere ratings; it's about how you close the show. In a parallel universe, theatricals, they like to open big but they sure do like to ring the bell six weeks down the line where they stay big and they end up with 100 million dollar picture. For HBO, we know which ones have the potential of starting big, but we also know which ones you need to help along with on-demand offerings and the fact that Nielsen now can measure DVR playback, and we tally all those now and start staying, "No, our goal is total audience," which interestingly was where I walked in the door in 1978. Before technology ever started we did research with an 8 ½ by 14 document that was folded over and it was all of the lists of all the programs on the first page that we aired, and we sent this out to consumers and asked, "What do you watch?" Check. "How much did you like it? Excellent, good, fair, poor?" Check. And so all we were caring about was the cume from day one. We didn't ask them "When did you watch it?" Just "Did you see it and what did you think of it?" We did that for originals, the documentaries, the sports and everything and invented a formula. This was, again, going back to Les Dorney, who I mentioned three hours ago, who was a researcher that came down and kind of brought marketing research, satisfied usage, as a concept into HBO because it was a product, it wasn't TV. And so we monitored TSS, Total Subscriber Satisfaction, very carefully by show, by the number of shows, all of that was part of our analysis before we got in bed with Nielsen and time period research. So in a sense, 30 years later after I walked in the door to a company that cared about total audience and satisfaction, through all of the journey we're back to a company that cares about total audience and satisfaction.

NELSON: You haven't gotten very far, have you?

BALDWIN: No! I feel like I'm coming around past the grandstand, waving, "All right, are we ready for another lap?"

NELSON: One of the things that these days figures into total audience is the on-demand side. Now how does that play into your scheduling strategy?

BALDWIN: Now that we've gotten fairly good distribution, and it took awhile for cable to grow its digital base to get us there, but we're now in, I think we're in around 13 million cable homes that have HBO On-Demand. This is out of our total 18 million or so cable base, and the rest of our subscribers are satellite, which can't enjoy the technology yet, and other units. But I mean, that's a pretty good percentage of homes that have HBO On-Demand available and because of that what we do now is on occasion we will premiere a series on On-Demand six days earlier before we get to our linear premiere on HBO on Sunday night. Two reasons: one, because it's going back to the nature of HBO is a special product, we don't sell advertising so we don't care about that number whatever it is, and it's fun to watch something that no one else gets yet or that you can watch on your own time. So we do a lot of that and we're going to do The Wire upcoming in January that way again this season except we talked to David Simon and since this is the last season and the finale we all decided, you know, let's not put the finale on there, on On-Demand, let's let everybody show up on time or watch it later. But it is a big part of our usage, it adds a significant amount of usage to every show, every movie, and it also enables us to use rights that we don't have for linear anymore. Back when we got into the business of being a media company and sold Sopranos rights and Sex and the City rights to basic cable, we held back On-Demand and broadband digital. We sold them linear only. So one of the things that HBO On-Demand does for us is give today's subscribers an opportunity to view the classics and the evergreens, because we always have a number of episodes up there of these great series as well as the complete inventory of things that are on the air now. So it's really a morphed product; it's not just like HBO linear at all. It's separately programmed, my folks spend an awful lot of time thinking through what's the right menu selections, what's the right category, sub-categories for the click downs, all that stuff. But it's been a terrific experience because at the outset, when this was being discussed in the late '90s when it didn't exist yet, the joke was, "When we get On-Demand, Dave you're out of business! Nobody's going to need a scheduler anymore." Not so fast, my friend. They will need someone that decides the menus and the selections and how deep, and also another game that we play is that the cable operators still give every provider a certain number of hours on server and it's like favored nations, everyone kind of gets the same number of hours so we're restricted. We can't put our entire inventory up there that we have in a month so we have to be selective about what those menus look like.

NELSON: Those are sort of like playing under the salary cap in terms of you have so much to work with so you have to maximize the value of it.

BALDWIN: Right, and HBO is a Steinbrenner team.

NELSON: (LAUGHTER) Nice position.

BALDWIN: Yeah, we've got the All-Stars. We'll let them figure out what they're going to do over at Showtime and Starz, but it's a darn good product. It has high satisfaction among the users. Our issue right now is still getting people that are not tech savvy to understand that it's different than VOD, that when you go to HBO On-Demand there's no charge, there's no specific charge, it's a buffet. Eat as much as you want, we don't care. You've paid for it in your linear subscription, this is value-added for you, and as a consequence what you see in the demography of On-Demand differing from linear is that it's a younger base, and knowing that you really can think about, all right, if it's a younger base I'm really going to hit it with Flight of the Conchords, shows that the younger demos want, maybe leave them there a little bit longer. But then you're always trying to entice the older demography to come in and try it.

NELSON: So you're still, you personally, are still in business because how you use this and what you put on there, given the limited capacity you have to play with, is still a significant thing, and I want to ask you one more thing about that because some of your shows, even though your concern is cumulative viewing there is still a sense of appointment-like, you're just going to be there in front of that TV set at 8:59 on Sunday. Now when you release this stuff on On-Demand is there any way that you can see that in fact – because at some point it goes on the server, so there's a point in time – is there any way that people are primed for that, waiting for that, jump on it, or is that just much more of a level consumption?

BALDWIN: Depends on the show, depends on whether it has an established audience.

NELSON: Well, take a big show and established audience, are you saying that...

BALDWIN: So let's take Big Love, for example. Big Love is a show that we don't premiere on On-Demand because we're still trying to develop that notion of it's Sunday, it's 9:00, it's Big Love, in-season. When it gets a certain amount of legs to it maybe we will but it's always a show by show thing. I like having some shows that maintain this signpost anchoring, and then other shows that probably have less overall big show impact on a premiere but have overall growth potential because they're not the kind of things where you need to get in right away, or in the case of The Wire, for example, sometimes because David Simon's dialogue is so accurate and authentic street dialogue that our viewers go back and watch it again. That was the case with Deadwood. David Milch, I mean his dialogue, it was Shakespearian Western.

NELSON: Right, nobody ever heard that before. With a lot of swear words in between, right?

BALDWIN: Some of the soliloquies were just magnificent but your head would spin, where did that come from? And people would go back either on DVR or On-Demand and watch it again and say, oh, that's what it was.

NELSON: So actually that really does enhance the consumer value and satisfaction because they get this opportunity to go check, even something they've seen already they like to go check it out again.

BALDWIN: We said early on, a DVR or HBO On-Demand are actually superchargers for an HBO subscription because we're agnostic, where they watch it, how they watch it, how many times they watch it. We're very serious about the fact that they pay us for the product and anything that allows them to feel good about the value for cost is the business we want to be in. So if we buy great movies, we make great movies, we do series, sports, whatever, as they did back in the '70s when they said we're going to rotate these around, if they paid for it they have an opportunity. We now have even greater opportunities to get to the consumer or to have the consumer get to us, particularly in a world where you've got 200 basics, a lot of television out there. You still have to have a home that has a distinct feel, that has a brand image, and has a tonality of the kind that's carried HBO all these years.

NELSON: Now in terms of you just talked about more places that people can see things, we're moving into an era here where again we're seeing shifts due to the technology where at one point on-demand seems so new, now it's really part of the landscape. Now we're looking at programming moving onto other much more, let's say, unconventional platforms in terms of because they've got small screens and things like that, how are you looking at that as a way to extend your programming, or are you not?

BALDWIN: Good question.

NELSON: Because everyone is kind of buffaloed by this, aren't they?

BALDWIN: Not buffaloed, I'm pondering how much I give away now versus how much is tactical. We acknowledge the shift. One of the things that concerns us a great deal is digital rights management because one of the shifts is place shifting. It's not so much time shifting anymore; in the home and on the television that pretty much is yesterday's game. We figured out that game. Today's game is place shifting to a laptop, to a remote player via Slingbox and other technologies where you can be somewhere else and move the stuff maybe into areas where we're not even licensed to exhibit it. So the rights management of most of the new technology is of primary concern to us, making sure our product's secured. We're not selling advertising so we're in a different game than broadcasters who are now throwing everything against the wall and seeing if it sticks. They have played every experiment they can possibly play and they're still playing more about how to get their shows to the public – imbed the advertising, don't imbed the advertising, charge a buck 99 on iTunes – every model they can go through is to their benefit because their end game is selling ads and amassing the maximum number of eyeballs as a following enables them to fill the mission of their business statement. For us, letting more people into the tent to watch it who are not paying for it is against our primary business. So we have got to be more introspective, more cautious. For two years people were saying I can't believe you and Apple can't do a deal. Two great companies, two great brands, you've got terrific shows – why aren't you guys on iTunes? Everybody else is! For us that's not a good business right now because we still have home video, we still sell DVDs and if you look at a buck 99 per episode, with their business model the only way they do business is if you premiere it the day after or make it available the day after, and for us I've only done 20% of my business on that episode and now I'm out there selling it to everybody? I've still got 80% of my audience I need to find in the next two or three weeks.

NELSON: So you'd be undercutting yourself.

BALDWIN: I'm undercutting myself two ways, audience potential and then to the extent that we sell DVDs that pricing is much higher than a buck 99 an episode. So that doesn't work for us quite. In other areas of the digital initiatives, we're a long-form company. Movies are long-form, our originals have been long form, 30s and 60s. What seems to be happening on the internet right now with MySpace, YouTube, on and on and on, is that the vernacular is short-form, 3-6 minutes pieces.

NELSON: And free.

BALDWIN: And free, with maybe an ad left or right, whatever. But that's not our vernacular. We don't have programmers, writers, people that are focusing on the short-form as an entertainment experience. I'm sure that the next time that you and I sit down when I've been here in the business 60 years we'll probably be there, but somewhere along the line, I think, it's fair to say that all of us in entertainment have to look at short-form programming as the next wave – how we make it, how we make it distinctive, how we make it worth paying for are the keys to our success, not just in reach.

NELSON: Now just to wrap up here, if you're looking back on your career which obviously is still going forward...

BALDWIN: I hope so because I've got a hell of a mortgage!

NELSON: What do you look at or what would you point to as your legacy – I hate to use that word, it sounds like we're getting ready to put you six feet under – or what you would consider your greatest accomplishment? What have you contributed to this business?

BALDWIN: Ah, God, now it's time to pat myself on the back, is that it?

NELSON: Yes, we had to get to that. Generally.

BALDWIN: It's not me, it's all my people.

NELSON: But I mean as a collective.

BALDWIN: I think when I do pack it in and leave, the primary legacy I will leave behind at HBO is something that was taught to me in my first few months when I got there. I had the advantage of having two or three first-class mentors and because they were from Time, Inc., because they were from the gray flannel suit era of Time, Inc. and they were old school, but because we are collectively in that building, that corporation, still pretty old school in terms of how we manage and how we run our businesses, most of the lessons learned were how to conduct yourself in the company. Learn from the old, teach to the young. Your mission is to figure it out, and then try to impart that wisdom to the folks that work for you so that they can be better and smarter and do more things than you could because they have a couple more years that they're going to learn. Second, is big principle, the group generally out-performs the individual. You have a lot of folks coming into business today that are coming out hot from grad school, want the corner office, they want to accelerate rapidly, and this is no different than it was 30 years ago, but they haven't learned to play on a team yet and when you can impart that to your team to say, look, there are no knives going into anybody's back here. It's not tennis singles, this is football, and even the women understand. It's a team effort, you do one thing, you do another thing, you do another thing, collectively we're going to advance what it is that we do a lot faster than if you try to stand up and be a solo act and claim your brilliance and your ideas and then disavow anybody else's. So those lessons of how you pull together and motivate a team... I will say, I mentioned Les Dorney before, I had another really good mentor who was the controller at the time and his name was Bob Becker. His unofficial title was the out of controller. He's a drinking man, was at the time, and some of the biggest lessons I learned about business, about the company, and about how to manage people were at 1:00 or 2:00 in the morning, standing at a bar and just listening to the wisdom of someone that was ten years older, had been in the company for awhile and had experienced how you succeed. The other one, Les Dorney who came down, the biggest thing he taught me was you know, you don't have to paper the company with memos and tell them how smart you are and have it four pages deep. One a month maximum, maybe one every two months, shortlist, people that really are interested and put it on one page because they don't have time to read your bullshit.

NELSON: So after all this, Dave, I guess that you're still the school teacher at heart in terms of how you approach the business and how you approach your people.

BALDWIN: Pretty much, because you have to at least believe that they want to excel. You have to believe that they want to succeed and what I do is just take away the barriers, put the tools in their hands, and put the spotlight of attention on them. If they do something great, fine. But that instills over the years. I can sit in my office and if anything goes wrong, and we have to operate in our business scheduling and then the law of operations which we have to be accurate within a few seconds everyday. There is no error on the broadcast logs, otherwise things screw up. So you operate at that high level of accuracy, someone is going to be human, someone's going to screw up, but what you instill in them is take ownership and come in, "I screwed up," or "I wanted you to hear this first: this happened, I'm taking steps to fixing it and hopefully this won't happen again," or it's just pure human error. That's the kind of spirit you get if you pay attention and manage and it makes life easy. One of the things I did when I got out of teaching is I said I'm never going to wake up in the morning and lie in bed thinking is there a grandmother that hasn't died yet, is there an illness that I haven't had yet, is there any excuse I can use to call in sick? And it was that bad towards the end. So now, basic rule of thumb, is that basic principle, if you wake up in the morning and it's just getting out of bed and saying, "Jeez, I've got this to do today," and you're going through your routines and you never once think that you're not going to work or don't want to, stay in that job.

NELSON: Well, I've really enjoyed this seminar and learned a lot from you. Thanks very much.

BALDWIN: My pleasure, Steve. Good luck with the project.

NELSON: And good luck to you.

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  BACK TO ORAL HISTORIES

Peter Barton

Peter Barton

Interview Date: Tuesday March 23, 1999
Interview Location: Denver, CO
Interviewer: Jim Keller
Collection: Hauser Collection

KELLER: This is the video history of Peter Barton and it is made possible by a grant from the Gustave Hauser Foundation as part of the oral history program of The National Cable Television Center and Museum. Peter Barton is a cable programmer, extraordinary dealer maker, a catalyst in every respect and to a lot of people, a great visionary in the area of cable programming. He's been involved in the business since approximately 1980 or 1981 and has made a major, major impact on the development of cable programming throughout the entire industry. The interviewer is Jim Keller. Peter, to get us started, would you please give us a little bit of your background prior to the time you joined TCI in 1981?

BARTON: Well, gosh, I'm not sure I can do this and have it PG rated but I'll try. Immediately prior to joining TCI, I was busy trying to launder my career. I went to the Harvard Business School on the theory that it would mask the fact that the prior eight or nine years I'd spent in the government. The prior nine years I was in the Hugh L. Carey administration in New York State. I ran a bunch of campaigns, national and local campaigns, in addition to that. I ran 14 state agencies for the governor including, mostly the commerce and revenue agencies. The "I Love New York" campaign was one of my creatures. Everything from the National Guard to the Driver's License Department of Motor Vehicles, these were all my agencies. Prior to that, I was working for Common Cause in Washington DC and there are many other priors, including being a professional skier. I was an exhibition skier for a few years and a croupier at a casino in Las Vegas, I mean Lake Tahoe.

KELLER: What happened from Common Cause to TCI and Liberty? It will be interesting to see how that transition was made.

BARTON: Well, so there I was in government and I was about 30 years old and I was still unmarried, which was very distressful to my grandmother. She was positive that it was all over for me and that I would never amount to anything, because you don't make much money in government. But I liked public service and I made my self a pledge at that point that I would leave public service and go make some money so that I could get back in to public service and money is an instrumental component of being useful in public service because it gives you enough financial independence that you are by definition incorruptible. You cannot be influenced to do something that's not right for fear of losing your job. So there I was in the Carey administration and I asked the governor if he'd write me a recommendation. I only knew about one business school, so we applied to Harvard, he and I, and I went there mostly because I figured if I went there people would think on the other side that I was a businessman. I only had one item in my resumes: Harvard Business School. That was hard. It was a tough couple of years because I was way older than the next group of kids. I was 30-31 and everybody else was 23-24 and the technological difference between them and me was amazing. I went to Harvard with a slide rule. I was really good with the slide rule. I mean, we did the city bailout and the New York State bailout with slide rules. These other guys had the 12 C's and computers and were very conversant with it. That technological difference made me relatively uncompetitive and it taught me a lot. It taught me about not getting out of sync with technology and the evolution of technology. I worked doubly hard at a school where you have to work pretty hard just not to flunk out because I had to catch up. Anyway, I was done and my Harvard Business School sweetheart and I decided, this was a woman I'd met at school and we were pre-ordained to get married, so we decided we'd look for jobs in three different markets. We liked the markets just because of geography. She liked Boston, she was from Boston. I liked Denver because the mountains have always been my spiritual home and we both liked San Francisco. Unfortunately, she didn't like New York, which would have been a useful place for me to get a job, having just come out of it. As it worked out, we went and job-hunted in three different markets. It wasn't easy for me because the types of people the recruiters at Harvard wanted to hire were not the likes of me. They were looking for quants and droids and creatures who would sit in investment banks and consultancies and intermediate – not make anything, not do anything and just run numbers.

KELLER: You were more of an entrepreneur than the rest of them?

BARTON: By a long shot. So I had to invent a way to find a job. I ended up doing the largest direct mail campaign of my life where I went to the business school library, which is a very adequate library and I made a list of the 235 people in this country who are really interesting to work for. The only people I would work for were people who I felt were smarter than me and they were in businesses that I thought would go someplace. Among the 235 were people like John Malone, who was at that point a footnote in a blurb that was in the nth magazine about yo-yo's that think that they can make money in the cable industry. But I found his name and he was one of the 235 people and I wrote all these people the same letter. Because I had become technologically proficient at that time, I had realized that the word processor was yet another contrivance of the devil. You could write one letter to 235 people, but by using global changing and so forth, you could make it appear to be a personal letter. As it was, my direct market campaign was very successful. I got about 106 responses back. The big factor in this, the famous factor, that people talk about all the time is that I offered to work for free for 90 days.

KELLER: To all 235?

BARTON: Everybody. I said, you don't know me, I don't know you. I might not like working for you. You might not think I'm worth a damn. At the end of 90 days, I'll work for nothing – you can decide if you want to fire me and I'll decide if I want to fire you. That's my business proposition. In the meantime, I betcha I can prove to you that I'm worthwhile.

KELLER: 90 days is quite a short time.

BARTON: Well, I had no money. I was completely broke! 90 days on spec was a lot and if I blew out of a job, I'd have to go start over again someplace else. So this wasn't easy and it was a huge investment on my part. Well, anyway 106 people sent me back, you know, "I'd be interested in talking to you" and then began probably the three most interesting months of my life where these people would send their private jets to Logan Airport to pick up this impoverished kid – I needed to get them to give me the cab fares and things to get to Logan because I honestly didn't have a penny because the school wouldn't give me any loans or anything because I was too developed economically they thought – and I visited with 80 or 90 of the most interesting people in commerce in the United States. One of them was Malone and the other was this character, Bob Magness, who is no longer with us and I'm sorry he's not because I really wish you could interview him.

KELLER: I'd have like very much to. He's on audiotape for the library, but not on videotape.

BARTON: Well, I have some video, which I did, which I think I gave to the library so you do have some now, but not enough. If you can imagine this interview, I'm still really trying to find the right place and also trying to get some job offers and I went in to visit this company that had really no office to speak of. It was kind of an office warehouse in what's now the Tech Center which is well-developed real estate now, but at the time it was just a cow field and this office didn't look like much more than a cowpie in the field and there it was. My interview with John Malone was on day 1, just go sit in his office and listen to what he did. He had a few meetings, some of which were notorious. Actually one was with a person who is currently in prison and it was very interesting to see the traffic going through his office and how he responded to it, then at the end of the day we kind of had our interview at about 5:30 or 6:00 at night. We had a cocktail and sat around his desk and talked about the business and I liked John and I thought he was an interesting guy and at the end, I said, so, what's next? Do you want to do this? He says, "No, I want you to meet Bob, my partner, Bob. My boss." I'll say for the record: to his dying day, Bob Magness was John Malone's boss.

KELLER: I don't think there's any doubt about that.

BARTON: Some people missed that. So, the next day, I'm to meet this guy Bob Magness and I'm suitably and appropriately nervous and obsequious and I go into his office. I had a 3:00 flight and I couldn't miss it because I couldn't afford the 4:00 flight and Bob didn't even want to get together until like 10:15. So, I'm wondering what I'm going to do – I'm on Eastern Time, I was up at 5:00 in the morning anyway. I had time to kill and I drove around. I love, just love the foothills. I went out to the foothills and did a little climb and came back out and there was Bob and he was particularly intrigued by the fact that I was thrilled with agri-business. The reason I was, was one of my first jobs in the Carey administration was deputy commissioner of agriculture. So I knew all about equine infectious anemia and things like that and that's what Bob wanted to talk about. So that went on until about noon when he said, let's go have lunch. I'm looking at my watch, three o'clock, how long does it take to get to the airport? Oh, don't worry about the airport. Okay, well we'll go have lunch and we went to Bob's place and he ordered one double martini for both of us. Okay, I figured this was just the macho thing and two, three... I was in pretty good shape. You know, I'd just come out of New York State politics and I could hold my own even with three double martinis, but we hadn't started the interview yet. We go back to the office and I'm looking at my watch and it's quarter of two. I'm wondering if there's going to be an interview at all or if I'm going to make the flight. So Bob reaches down into his desk and he pulls out a cigar and I die a little bit, because I'm allergic to cigars. I'm thinking, oh God, he's got me on alcohol and he's going to pull out a cigar and he's going to do a "Colombo" thing on me. He's going to ask me this one question and I'm going to blow it. So he pulls out the cigar, and I wasn't too far off, instead of lighting the cigar, he put it in his mouth and he bit off an inch of it and started chewing it. He goes, "So, Pete, why do you want to come work in the cable industry?" I had a pretty good reason and then two or three more questions and he's still chewing the cigar. I am just focused on the fact that this man is chewing the end of a cigar. Then he asks me the big question which is, so, how much money do you want, or I don't remember what the big question was, and he swallows this stuff in his mouth and I think, wow! This is a tough guy! This is tough. This is about as tough as a human being can be! (Laughter) I don't know, it made me very insecure. I wondered if I could this tough but I liked it. I liked this guy. So I said, I want to come work for you guys, I want to work with you guys and I like the business and I told him why, you know, I liked the tax leverage in it. I loved the fact that the government was creating all kinds of barriers.

KELLER: Had you done some homework and some background in the cable business to find out a little bit about it? Enough to talk about it?

BARTON: Yes! I mean, it was a big deal because I was looking for a job in Denver, just in case my fiancé wanted to move out there and this looked like one of the best prospects. I mean, the other prospect was Celestial Seasonings, where everyone was running around in muu muus and hand filling bags of tea and licking them and then there was ATC... There were different, but this one looked like the kind of place where I would enjoy working, so I wanted this to work out. Anyway, to make a long story short, I made the plane and got back. I got 12 job offers out of my direct marketing campaign from people I wanted to work with and only one was from Denver and then my affiance, whatever, my fiancée decided if it's not Boston, it's not San Francisco, let it be Denver. We'll move to Denver. So there I was. I wrote or called back to Malone and said, I want to take you up on my offer. I want to come work there and I'll do the 90 day thing and he goes, okay, or something like that, see you then. That was it. I finished school, school ended, and I rented a Ryder truck that was big enough where I could actually put my car in, a small Porsche convertible that I'd build, and all my furniture and then I drove out to Colorado. It occurred to me, I was in Iowa and Malone loves to tell this story, I called up, I stopped at a pay phone and I called Malone and said, you're still expecting me, right? And he says, who are you? And thus began an 18 year relationship. Oh yeah, oh yeah, you. Yeah sure, fine, come. By the way, I forgot to tell you, I'm leaving for five weeks tomorrow, so I won't see you until I get back, but you can sit at my desk and just do the papers that come in and take care of the work there. Click. So I get to TCI and I sit in Malone's office for five weeks and try to make myself generally useful. We were buying little teeny cable operations at the time, so guys like Don Fisher and John Draper and the people who were there started teaching me the ropes and the cookie cutter formula. That's how I ended up at TCI.

KELLER: What was your first job at TCI?

BARTON: I was the executive – get this, well first of all I was a 90-day wonder. After that I was the executive assistant to the president.

KELLER: Had Dave Schultz already departed at that point?

BARTON: No, he was in departing.

KELLER: In departing? Didn't he also share that title at one time?

BARTON: I think so. It was a little awkward, but Dave wanted to go and run a cable system and I think, didn't he go from there to Chicago?

KELLER: I don't know. I lost track of him.

BARTON: Well, anyway, he wanted out of the corporate scene and he moved on and I became the sole executive assistant, which transmogrified itself into a vice presidency in a few months. There I was at this little tiny company with a windowless office, deprived of the sun and waiting for my fiancée to move out and she never did. One of the first jobs I had was to count the number of subscribers we had and then lie about them. (Laughter) Well, to the banks we had to have a lot of suppliers. To the program suppliers we had to have very few, but we wanted to look like we had the most.

KELLER: And you also wanted to know how many you had sometimes?

BARTON: Well, detail.

KELLER: It was an average between the two. (Laughter)

BARTON: Our billing systems were so bad. To be quite honest with you, even though that was one of my jobs, we never knew the answer. We never knew. It was like trying to count chickens. You get a pretty good idea, but they move around while you're counting them.

KELLER: Well, at that time, no one really had a definition of what a subscriber was, either. How was a multiple-unit high rise building counted?

BARTON: It was very difficult.

KELLER: We all went through that same thing. Except when you tried to buy them, then you had to try to define how much you were going to pay for a subscriber.

BARTON: Correct, and then you go into all the nitty gritty, but you still didn't know what the hell you were really doing or what you were buying. Remember, you were just buying passings at that time, franchises. So it helped to have just one person doing it because at least I could never be wrong. It's like the person that has two watches, you know, you never know what time it is. Well as the sole proprietor of this information, we steadily climbed from a million subs at the time to 12 or 14 million at the one point. We paid for about 400,000 at the time to the program suppliers and then we just went on a buying binge. There weren't many people then, there were four of five executives, and John was always really, variously, the strategist and the quarterback. Certainly in all strategy he was calling the plays. We had these weekly meetings that were called our staff meetings and we'd sit around Monday mornings and they went from 8 or 8:30 in the morning until noon every Monday morning. They were a combination of a pain in the neck because you had so much to do and you hated to spend the time on Monday morning in a staff meeting, and at the same time, the most interesting classroom for the development of cable. It was there that Malone would sit around and think out loud. He thinks out loud. He hears himself talking, he hears how that sounds – does it make sense? He hears what the feedback is, he hears what other people contribute and he iterates toward strategy and decisions in that kind of a format and forum. So we would make policy and make strategy.

KELLER: Who were some of the other people involved in those meetings?

BARTON: Don Fisher, John Draper, J.C. Sparkman, and then variously, less permanent members.

KELLER: But that was the nucleus at that point?

BARTON: Yes. Me, Blair was in and out for awhile. It got bigger and smaller depending on... I can't even remember why it got bigger and smaller, but it was good because we focused on a strategy that everyone understood, which was we've got to get big.

KELLER: Would Bob sit in on those meetings?

BARTON: Occasionally, but not often.

KELLER: You were going on about how you set the strategy for getting bigger?

BARTON: That was all about looking at the characteristics of what this industry is and could be and saying, well gosh, you could be awfully successful in this business if you could buy equipment and programming and management – by management, I mean productivity per employee and per customer – by achieving scale economics. It was one of those businesses that was scalable. To test it we started buying systems. We bought at least a system, a company, every four days and they weren't all cookie cutters as you just pointed out. You go and you buy some of them that are just newly received franchises and the franchise is this thick. So you know there's a lot of "gotcha's" in there and the guy who's selling it to you either doesn't know that he got got or knows and he ain't going to tell you and he's built three or four homes and he wants to sell it and he's going to sell it to you on a per passing basis and he's already screwed up what he's built. It was hard to be awfully formulaic about it. On the other hand, you couldn't do that kind of velocity of transactions without coming up with a relatively sophisticated formula, which we did. I think for at least four or five years we were hitting that pace – one company closed every four days.

KELLER: Where were you getting financing for these acquisitions?

BARTON: Well, you used the same dollar over and over again, basically. Every dollar we would put into somebody's pocket we'd pull back out and just borrow it for a moment to buy the next transaction so we could buy that cash flow so that we could get him his dollar back and leverage the thing up. But at the time the banks were giving you 6, sometimes even more, times cash flow and you were buying these things at 8 times.

KELLER: This was in '81 through about '85?

BARTON: Yes. It'd pay 8 to 10 times - well it was still at the 8. Sometimes you'd buy them for 7 sometimes you'd buy them for 9 and you could get the equity from the previous acquisition you had just made, sometimes. But you could also pick up a multiple or a multiple and a half, day one, just by applying some of these scale factors to the asset. So in a sense, it was a bootstrap acquisition theory where you'd keep rolling debt, keep accumulating debt. We were joking earlier before the cameras turned on, we well learn the tired axiom that there are two kinds of debt in this world: the kind that you intend to pay back and the kind that you don't. If you owe the bank enough money, you owe them. So our theory and our strategy was to keep laying debt into our friends banks and the banks that were friendly to us and keep getting them more and more tied to us. The stock wasn't very much help. It was meandering and the industry hadn't really developed very much at that point, other than it was beginning to consolidate as all fragmented businesses do. So that was early in the strategy. I haven't let you ask me a question in about 20 minutes.

KELLER: You're doing fine.

BARTON: So the strategy in place meant that Malone would restlessly think about, well, what's next? He is about the truest intellectual I know. He is always unwilling to accept any status quo or any conventional wisdom. He's always exploring challenges. We invented ways of doing business that were strategic in terms of what kinds of capital decisions we'd make. In the meantime, J.C. Sparkman was developing the technology of acquiring and assimilating one company every four days and making it work as a relatively cohesive nationwide operation. No small feat and something that J.C. has not been given enough credit for accomplishing. But I know that's hard to do. In more recent times, I've acquired a number of companies and I keep thinking about how well J.C. did that. So he was always wringing a little bit more efficiency out of the creature. We were always trying to wring a little bit more efficiency out of our purchasing unit. Then, somewhere in the '84, '85 timeline, another on of those sit around in John's office, which was one of the only two offices that had a window, that's why I'd go over there and sit.

(Transition in videotape)

KELLER: This is the second 30-minute Beta videotape. Peter, about the time we ended that last tape we were talking about the developmental stage of TCI in acquiring companies. You said they were doing about one every four or five days, at that point, or roughly one a week. J.C. Sparkman was integrating the operations at that point, folding one into the other and developing procedures to go along with that. What were you doing then? Making the deals?

BARTON: Yes, I was doing a lot of deals and I was also one of the only people there with any sort of patience for politics, and maybe any skill in politics. Politics wasn't widely appreciated or respected in that cast of characters, which meant, I was the only guy with any alacrity to go out and deal with the cities. Remember, they were doing their franchising at the time. In addition to that, we also had had some guy working for us who was kind of, at best I would say that he was a loose cannon. He had gotten us into a number of franchise situations that were frankly uneconomic by making promises that were either economically unwise to keep...

KELLER: Or impossible to do.

BARTON: Or impossible to do, or just plain stupid. So, besides my little running around the country and looking at these systems and looking at passings, remember, you had to drive around – we'd do something called the windshield tour. So we'd go to this little town someplace, and God knows where it is, but it sure wasn't close to an airport and you'd have driven all night to get to this little town and you only have four days to do this deal, so you had to kind of look at it and do the deal and then, jeez, I've got to be over in Pittsburgh tomorrow to deal with this other franchise issue. So, I was doing a lot of working out the franchises, mostly fixing them. I didn't really get into too many new franchises but we had at one point 22 applications in of which we made the decision to stop bidding right before it ended and we lost maybe 18 or 19 of those 22, because it would have been economically imprudent to win them. I don't want to name names but...

KELLER: I know what they are. I've been involved in most of them.

BARTON: So you know that whole story, the people watching this of course don't, so you can explain it to them later. That was full employment. That was 7 or 8 day a week employment, 24 hours a day. Lots of rental cars, lots of snowstorm driving, lots of that kind of stuff. Interestingly, our strategy with losing the franchises paid off because of the 18 or 19 that we lost, we bought 16 of them for less than 50 cents on the dollar when they all failed. So, believe it or not, it takes a lot of work to actually lose a franchise. When we ended up buying them back, they were so bad that you'd have to re-negotiate them. So, I said, Barton, at least you can put up with those turkeys, and I'd go in... Like the Chicago franchise had to be re-negotiated because we ended up buying three of the five. I think we owned one and we bought two of the others. Three of the five pieces of Chicago, but the franchise was ridiculously uneconomic and it took me nine months besides doing everything else to re-negotiate that franchise. Including getting a bill passed that made it illegal for any elected official or a representative of any elected official, or anybody tangentially associated with a relative of a representative of an affiliate of an elected official to talk to me without one of two people who were designated as witnesses present.

KELLER: You knew Chicago politics all right.

BARTON: This was tough. But at the end of the day, we got a great franchise out of Chicago and it and Pittsburgh really turned the company tactically.

KELLER: You won Pittsburgh outright though, didn't you?

BARTON: No, we bought that through Lewis when he was offloading it from Warner-Amex.

KELLER: I thought you won that, but apparently I was wrong.

BARTON: We paid 93 million dollars for it, which was a bargain and then dealt with Brother Amenecker. Now the funny thing about that was it was...

KELLER: Brother Amenecker was the communications officer for the city of Pittsburgh at that time. He negotiated the franchise and franchise deals and stayed on top of those to make sure the companies complied.

BARTON: Correct, and he was a big devotee of the cube system and two way interactivity and the all important, to him, second cable line, which was impossible to maintain with the technology of the time and completely uneconomic. The funny thing, I mean, they're all funny stories about these things, and we could go on about it, but the thing that killed the second cable and two way interactivity in Pittsburgh, was me standing up at the city council meeting – and by the way, John Sie finished this negotiation, he came in around that same time – but what I told everybody was, looking at Brother Amenecker, saying I'm sure that Brother doesn't want you this, but did you know that the little speaker inside your television set that's in your bedroom – that speaker is also a microphone. And what we could do with this two way, and we don't want to do this, we could compromise every bedroom in Pittsburgh and is that what we want? That was the end of two way cable and let that be a lesson to all those people that are still out there trying to make two way cable work. It's not necessary. Customers didn't want it. Interactivity is a great thing but the industry a long, long time ago started veering of course, not interpreting correctly what customers really wanted out of cable television - which is a few really good programming services that they can't get anywhere else. Not millions and millions of programming of which a third of them stink. Less is more with cable.

KELLER: A great segue into the next section of this interview – the programming aspect of your career.

BARTON: So there we were. We were sitting around. I started saying in the last tape, it was one of those sunset conversations in John Malone's office, probably a cocktail in hand and we were talking about, I wonder how we wring the last nickel out of programming. You know, we ought to own the programming. We make the market for it and wouldn't it be interesting, and then John immediately took off on this whole strategy of yes, wouldn't it be interesting if indeed we owned the same percentage, or more, of the programming service that we represented in the industry. We don't need to own it all and we certainly don't want to manage it because - I'll get into that strategy later.

KELLER: That was a conscious decision not to manage it but to own pieces of it?

BARTON: The theory was, why not own - because we had the leverage to own - why not insist on owning a piece of programming service and not only pay the programmer for the purchase of that, which will help the programmer, but will also be less price sensitive to what we pay the programmer because it will be us. We're paying ourselves. Now one of the other problems that this was solving at the time was my less is more problem, which is there really wasn't a lot of great programming to sell. We laughed. We called it the hookers' lament. How are we going to get customers to pay for something they can already get for free and at the time, the free was off their television and cable was now expanding into areas where off-air television was widely available, easily available. It had left its genesis, its roots where it was providing off-air programming to people who couldn't get it because of the rural nature of where they lived or because they were blocked by hills or trees.

KELLER: Yes, it had come into the major markets by this time.

BARTON: So we needed some good programming to sell and the programmers were terrible price constrained. Cost constraints. It's very expensive to do programming, and it's real hard to start a programming service with just a few cents per subscriber and your advertising hasn't built up yet. So we figured we could prime the pump by giving them a lot more money than they were asking for and thereby build our offer so that as we walked down the street, heading cable, that more people would say, yeah, I want that because you have – we didn't have them yet – but you have this brand and that brand and this other brand and I've got to see them. Just the way people want to see ESPN or Fox Sports now. Cable has evolved into the definition of television. It used to be that the three networks were television. Cable was something else. Oh, you have cable! Well, now if you don't have cable, you don't have television and the reason for that is that by and large, the substantial value of cable is the stuff you can't get off the air. So we were thinking about how to prime the pump and how to be price indifferent and I can't really remember whether the horse led the cart or the cart led the horse but again it went into the Malone staff meeting intellectual Rubik's cube deal and it was very interesting to me. So I stayed very much involved in the programming and thinking about programming because in my heart, I'm a programmer. Fortunately, there aren't many programmers in the cable industry, so I had very little competition. That's always good for me because it makes me look good. So, we thought about it and thought about it and we'd already made an investment in a guy named Bob Johnson's little idea.

KELLER: Black Educational Television.

BARTON: Black Entertainment Television. But that would have been a better name, given us more panache and we'd been flirting with other small investments but this became a conscious decision. Let's go out and acquire interest in these programming services and let's get two things out of it. Let's prime their pumps so they can put a lot more great programming on the screen earlier, and then let's buy for TCI optics on what the programming will cost and essentially in real dollar terms, reduce programming costs way out in the future. So when a programmer would come to me and say, and they're meek at this time, they're very meek. Gee, I sure wish, maybe, you could please see your way to please carry us just a little bit. We only want two cents, three cents subscribing... We'd say, to hell with that. How much is your programming service worth? They'd go, 10 million dollars – the numbers weren't big at the time. We said, all right, we'll buy 25% of it for two and a half million dollars and I'm going to give you 12 cents a sub, but I want 12 cents a sub flat for 15 years. It didn't take very long for them to think about and go okay!

KELLER: You hadn't made any capital investment into the service at that time?

BARTON: The two and a half million.

KELLER: So you did put something into it.

BARTON: Well you didn't always have to put that in right away, you could put that in maybe as a loan against your affiliate fees – there are a hundred ways of skinning every cat but the point is that we found the raw nerves but there was a catch. The catch was we had to put our money on the screen. You couldn't just put it in your pocket or squander it. It had to go on the screen.

KELLER: That is in the form of program costs. Upgrading your programming.

BARTON: Yes. Buy better programming and that was relatively successful so we started taking positions in a half a dozen companies.

KELLER: Name some of those that you took, if you can remember.

BARTON: The problem I'm going to have talking about programming with you is a lot of these deals are still subject to confidentiality agreements.

KELLER: I understand.

BARTON: The confidentiality agreement is one of those default mechanisms where if you breach it, it cancels the entire deal, which at the outset was a lot of leverage for TCI because the programmer didn't want to lose the distribution but at this point in time, where TCI is paying a fraction of what everybody else is paying, the programmer would love to have a breach! And I don't know who is going to look at this tape, but suffice to say that some of the programming services that were in the Liberty portfolio were acquired, the interests were acquired at that point.

KELLER: I don't want to know how much, just some of the names of some.

BARTON: Yes, that's what I'm avoiding telling you.

KELLER: You can't even tell me that. It's not public knowledge then.

BARTON: It might be, but I make a living out of discretion still. It's not that important. You could look at the Liberty portfolio because there are only two times when this happened. It happened before I went to Cable Value Network and after when I was running programming for TCI.

KELLER: Tell me how you got into cable marketing of goods.

BARTON: So, there we were thinking maybe we're going to do cable programming and my load on buying services, buying systems, was still heavy as ever and there were less franchises to do so I could spend more time on programming. One guy came in, the very, at that time, famous and infamous Erwin Jacobs. Erwin had this razzle dazzle idea - there was this thing home shopping, he said, I own this thing called COMB and we could turn it into a big programming service. I've got all the stuff you need to make it happen. I have buyers. I have warehouses. I have an order processing system. I have.... I have everything. Come up and see us. Please come up and see us. So some February day, John and I fly up to Minneapolis - God, Minneapolis, it stinks – and we land and Ted Dykel who is Jacob's partner picks us up in his Rolls Royce. He drives us to this little warehouse and sure enough they're selling COMB products which are essentially closeouts for guys. Tools, generators, guy stuff – stuff you'd find in a hardware store. Mail order – relatively inexpensive because it's closeout purchases and Ted had come into this business prior from selling live green monkeys by direct mail.

KELLER: Ted?

BARTON: Dykel. Most of which died in transit and then he married into the Fingerhut family and now he was a direct marketer. So we go and look at this operation and we didn't know enough to say no so it looked alright to us and yeah, we could probably get into the home shopping business and Pete, why don't you go see if we can make this happen. This was one of those things that... (tape ends)

END OF TAPE 1, SIDE A

START OF TAPE 1, SIDE B

BARTON: ...kinds of examples, you make investments and they work out and you make investments and they don't work out and the ones that don't work out you need to make work out, so you need to have some skill as a programmer and as a manager just in case. Even though what you're trying to do is have everybody else manage all this stuff so you don't have to worry about it. By May, I was running - they had no idea how to get distribution, how to get people signed up and I figured, well okay, what I'll do is I will go and get subscribers signed up, we'll find a manager and they'll run it. They'll take care of it. This had become now almost my full time job getting distribution for this thing because it was very hard at that point to get people to sign up.

KELLER: How much did TCI own of that operation?

BARTON: At the end of the day, TCI owned maybe 18 or 20 percent.

KELLER: But you were effectively managing it?

BARTON: Well, at that time it was a 50/50 venture. We invented this thing - this was the first equity participation deal for affiliations. So I ran around the country introducing the concept of carry it, you get equity and you'll get money. You'll get money from selling goods. How much money? Well, we'll pick 5%. I hope that's right, you do a model but you really have no idea. 5% was 100% of your profits but I figured it looked like a 10% pre-tax business. God be with us, we'll do a 5% deal, and we'll split it with you guys. That was probably the first very successful affiliation grab in the history of cable. I was fairly confident about it and Dykel and Jacobs weren't but I was confident enough where I bet Dykel his stupid Rolls Royce that by September I would have more than 5 million subs on which is where we planned a launch. He said, are you sure? I mean, you'd have to buy me another, this is a very famous Rolls Royce. I said, Ted, I'll bet you. So we invented this equity thing and I went around the country and I pitched it and at the time, 53 other people said they were in the home shopping business. We made the big mistake – and I'm going to get to this because this is a lesson – my lesson was we announced it before we had it done. People knew what I was doing so they copied it and it created a huge amount of traffic in the rest of the marketplace. So I would show up at a place, I remember going to Pilot House when Continental had their headquarters there. They were having - what I called the killer C's had gotten together at that point, which was Comcast, Continental and Cox and they were bidding as a group. They had Roy Spear from Home Shopping at 11:00, me at 11:30 and they had fifteen guys before and fifteen guys after and I had to make a pitch why they should go with our shopping service. It was very demeaning. On the other hand, it's how commerce gets done and it's the last time I'll ever make that mistake of coming out early. So we did our equity deal. We all ended up with a very dramatic moment where I got enough people to say they'll do it but they don't want a different deal than anybody else. So I got to be sure, so we invented the Most Favorite Nations clause. If you're in the cable business, these are very famous bits of technology, the equity and the MFN. Everyone said, well, with the Most Favorite Nations, you're pretty clever and you're going to figure out a way around it and I had to do something because we had to launch in September, so I took the calculated risk at one of these shows, the NCTA show. I can't remember where it was but it was in late May. I had a breakfast meeting in my hotel room where all the MSO heads came and I was going to present to them on the spot a one deal for everybody deal, but if they wanted to sign it they had to sign it within an hour. It would be identical to everybody else's. After that they were on their own. Now this could have gone very badly or it could have gone very well. To make a long story short, we ended up with really all the subs that QVC has now, which is most of the industry, 40 or 50 million subs signed up that morning. I went up and picked up the Rolls Royce about a week later and then thinking I'm done – it's like walking away from the craps table, the dealer always has to clear their hands to show the mirrors that there's no money in their hands or chips – I thought I was able to just walk away from this thing and go back to Denver and keep doing this. Well, it turned out that we really didn't have a really good order capture system and we didn't have any stuff that we bought to sell on TV and how are we going to do this on TV? We have this idiot running it who we don't even think he's very good so I ended up going to live in Minneapolis and we launched on September 1st still using their order capture system, which was a batch processing system run by big, big blue boxes. The first day we had sold so much that we had to shut the computer off to process the batch at 8:00 at night and the orders were still coming in, so we were taking it by hand. The overnight wasn't done until 10:00 the next morning. So we were taking orders from 8:00 to 10:00 by hand that we had to then put in when the computer turned back on and then carry all the other stuff... Obviously a batch processing system was not going to work. So in flight, I was lucky to be pretty smart about it for the wrong reasons. I figured I would time the rollout so that everyone didn't launch all at the same time so we started out maybe 5 million subs on day one and every two weeks another 2 or 3 million subs would be rolled out. In other words, they'd flip the switch in their headends and CVN would come on the air. So between these waves of new customers, we had to fix the computers. I brought in Arthur Anderson and we ended up having to buy 90's or whatever the hell those big IBM's were called. Every single thing at COMB that we had thought was a useful back office turned out to be useless and not only useless, an encumbrance because it was in the way. That was about the worst stress time in my life because in flight we were now taking orders at the rate... I had predicted this could be maybe a 50 million-dollar business and less than 30 days into the business it was running at the rate of 250 million dollars and we only had infrastructure and goods for 50 million. So we were literally sending guys down the street to K-Mart and to Target to buy goods to put on the air so we'd have something different and new to sell. Of course we didn't make any money on any of that and trying to quickly learn how to buy in sufficient quantities and building a warehouse that could handle those quantities. Whew! So many things to do. We went from about 30 or 40 employees at launch date to 4,600 employees a year later and all new equipment, all new infrastructure, all new warehouse, all new everything and that was almost done as a little boy.

KELLER: (Laughter) Gave you a lot of experience though.

BARTON: Yeah, it taught me I never want to run anything again.

KELLER: We're going to wrap up the second tape now.

(Transition in videotape)

KELLER: Peter, when we ended the last tape, you had just completed the turn around of the Home Shopping Service out of Minneapolis. Then as I understand it, you came back to Denver and took on more programming chores at TCI?

BARTON: Well, yes. There's a little interval between those two things. The Shopping Network was a big success about 2 ½ years after. It was running at the rate of about a billion dollars a year in sales, 4,600 employees and I was looking for a graceful exit because I didn't want to continue running this, A. B, being in Minneapolis is, God forbid somebody should ever say to you, you only have two weeks to live, but if you want it to seem like forever, go to Minneapolis. It's just the worst. So I wanted to get out of Minneapolis and the only elegant way of doing that was to essentially merge CVN out of existence and we merged it into QVC. I went back to TCI after that to go run programming. John Sie had just finished running programming, I took over and...

KELLER: Now, had John Sie at that point formed Encore?

BARTON: He was just quitting running the programming department to form this wild hair program called Encore. STARS wasn't even in the picture yet, but Encore made a lot of sense and John Sie had a lot of foresight about where the world was going in pay television. And yes, indeed, the world could use an Encore and he had a good strategic plan, which we can talk about later if you want. So as he was leaving his seat as the purchasing agent for programming at TCI and I was coming back, it was logical that I pay my penance for having made a lot of money and had a good time in Minneapolis and go into programming. That was a huge job because what we did at that point was we essentially rewrote the technology of the relationships between TCI and all of its program suppliers. What we did was we essentially converted every basic programming service relationship from a short-term deal. The state of the art at that point had been one and two or three year deals that renew and then at the end of three years you have no idea what you're going to pay and what the deal is going to be.

KELLER: But didn't you say that many of the deals that TCI had made were upfront with a 15 year set amount?

BARTON: A few of them were. The ones we had bought into.

(Interruption for readjustment for videotaping)

KELLER: So you were back redoing all of the programming content of the TCI contracts?

BARTON: Right.

KELLER: That's where we left it off when we were interrupted a bit.

BARTON: And you just asked me whether or not we hadn't had a lot of long-term arrangements.

KELLER: Yes.

BARTON: I'll just pick up so the editor will know that I'm answering the question that we left off at which is actually very few of the deals were long-term at that point. The ones we had equity investments in at that point had long-term affiliation deals attached to it but that was still a handful. I went after all the rest of them. In particular, we looked for programming services that could very well make us vulnerable to very large increases in the future and focused on those first. The number one on my list, the first deal I dealt with was Nickelodeon. We were deathly afraid of Nickelodeon. At the time it was still a start up but it looked to me like Nickelodeon could become one of the most powerful programming services on the air and the power that I'm talking about is a franchise with the consumer, not with us. Which meant that a new paradigm was developing and we were enabling it, not only allowing it, but enabling it, by giving distribution to a good programming network we took ourselves out of the control position, it got popular with the consumers and when it was time to renew that programming service, they could charge whatever they wanted practically. Because if we said no and we lost the right to carry that service, we'd have a lot of very unhappy customers which was relatively untenable and became extremely untenable when satellite technology actually became manifest. So, our idea was to pick off the ones that would give us the biggest vulnerability first and do very long-term deals with them.

KELLER: Would those include equity also?

BARTON: Not necessarily. For example, when we did the deal with Nickelodeon, it was a three in one deal – it was an MTV, VH-1 and Nickelodeon deal – and there was no interest, zero interest, on MTV's part to have us be in equity. So that was fine, we just wanted to have a very long-term deal, which that deal is still in effect and it still has many more years to run that we did back, I think, in 1989. And then we went down the list. Along the way, a very shattering event got us focused on sports. Paramount, at that point, was the owner of the MSG network.

KELLER: Madison Square Garden?

BARTON: Madison Square Garden, and Art Baron was representing Paramount at that point. He came down to tell us, he wanted to just meet with John and myself, a very private meeting but he had just bought the 10 year rights to the Yankees for an extraordinary sum. I can't remember if it was 500 million dollars, or something, and he just wanted to let us know that he intended for us to pay for it. His rates, which at the time were ranging... Sports is paid for less and less, the farther you get away from the arena, the less you pay for regional sports. So the range that we paid for Madison Square Garden was something like 5 cents to 40 cents within all the TCI systems and he just wanted to let us know that the rates were going up to a dollar and he'd like to get a deal from us within an hour and here's the one that will catch. One of your managers has been caught on tape conspiring with some of the other managers to boycott this price increase. What would you like us to do about that? Well, that's not a great situation to be in if you're a negotiator and we went to work on that and we ended up with a deal where our price range was something like 10 cents going to 65 cents and then everything shifted to a maximum of 98 cents before we could unbundle. That's where we invented unbundling in that particular deal under duress in 4 hours before Art had to catch a plane back.

KELLER: How many systems were you carrying the Yankees on?

BARTON: Lots, because we had TKR systems in northern Jersey and then a bunch of upstate New York systems and maybe a Connecticut system or two. I know we had one outside Westchester and ????

KELLER: How many total subscribers did TCI have at the time we're talking about right now?

BARTON: On the order of 10 million, maybe.

KELLER: Enough to give a pretty good swat.

BARTON: Well, no, it wouldn't have affected all 10 million subscribers. It would have effected just the ones in the metropolitan area, which might have been 800,000 subscribers, but that changed the economics of those systems dramatically and it was a major eye opener. It wasn't very many moments after Art had left that we sat down and decided, you know what? We're not going to let anybody do this to us in sports again because reckless intermediation in sports is only going to hurt us. We're going to be the intermediaries. So I got out the checkbook and we started a regional sports business, which was another one of these things like CBN. It was just hundreds and hundreds of thousands of miles, in steerage by the way, we wouldn't fly first class at TCI and we didn't have a plane at the time, and so it was hundreds of thousands of miles of running around the country inventing, creating, putting together and buying regional sports networks. We ended up with 14 or 15 of them after this massive flurry of activity and we called that Prime Sports and it became a substantial investment, but I'll come back to that because I digress. So we were trying to pick off programming services one by one to get long-term affiliation deals so that we would lock in the scale economic advantage that we had built up by having this many subs into the future. Hopefully our scale would continue to build because we'd have more and more of a delta between what we pay and what everyone else pays as time went on. So we negotiated hard for that and in some cases we took equity, in other cases we didn't. The balance of the equity investments we had in the initial Liberty came from that era. John Sie had done a few sorts of equity deals, maybe one or two equity deals, while he was doing it. So maybe there's a couple there. He did a deal with CNBC where it wasn't equity but we have a percentage of their profits, for example. It was a lot or work. It was a huge undertaking but at the end of it, around 1990, the end of 1990, so it was about 18 months, we had long-term deals with everybody or we had installed ourselves as intermediaries in every single business that could possible effect us with the exception of ESPN. We had built a hedge in the pay business by starting Encore and then STARS was about to come along which gave us pricing power in the pay area.

KELLER: Had you been talking to Turner up to this point?

BARTON: About?

KELLER: About the possibility of some equity in what he was doing?

BARTON: No, actually we owned 26% or 24%, I think it was 26%, of Turner as a result of, I think the 1986 or '87 deal that Malone did to bail him out.

KELLER: That's what I wanted to get to.

BARTON: Well, I was gone. I was up at CVN during that but John went in and basically, Ted had hawked himself beyond the top of his nose. Ted was comfortable with the water level right below his nostrils, but when the waves and the chops started and the water level rose about another inch or two... had it not been for John Malone, CNN would have been called the KNN, the Kekorian News Network because he single handedly organized a cable equity bailout. Cable and fusion of equity into Turner to essentially save it for cable and Time Warner and TCI stepped up for the most and Continental was a third, I think. Some other people had dribbles in there but not a lot. So by that time, TCI had a substantial equity position in the Turner products. Then in the fall of 1990, I remember describing this to somebody else; I was sitting on a Saturday morning, in John Malone's poolhouse, fetid poolhouse. It was too hot and it was closed and it was too chloriny and it was hard to sit in there but it was quiet and we could talk. I had done the research preparation for this meeting, which was research to get a list of every one of the miscellaneous assets that TCI had in its portfolio and let's talk about that. So I took it over to the pool house and we had, from years and years of buying stuff, we had years and years of, oh yeah, this is what the company owns and what the hell, let's just take it. I mean, at one point we were the largest shareholders of Resorts, International because one of the cable companies we bought was the largest shareholder in Resorts. So there were buildings and cars and little pieces of cable systems. You know, we had pieces of US Cable, pieces of Lenfest, a very long list of stuff and pieces of programming services and what could we do with all that. Do you think, since the markets not giving us any value for this, if you were to take all that stuff and toss it in the rubbish, the stock price of TCI wouldn't have changed a bit. So you come to the conclusion, well the markets not giving us any value for it, let's sweep it all up, let's clean out the attic and basement and let's see if we can't organize a separate little company here and take it public and see whether or not we can't manifest value for these dogs and cats one way or another. That was the beginning of the Liberty Corporation. At that time it was called, wisely, cleverly, New Co.

(Laughter)

KELLER: New Company.

BARTON: So, New Co. took form while we were doing, it was my Saturday, Sunday job while we were still hurrying to get programming deals done before anyone really caught on to what we were doing or could resist it or whatever we were afraid of. We were hurrying to start sports businesses. We were hurrying to start other new businesses. We wanted to now own cable equities so if somebody wanted to start a second channel, well we'll help them start it. We'd like to own it and we'll help you with distribution and we'll help you with this and we also have something to say about what the service ought to look like and how it ought to capitalize itself.

KELLER: Didn't somebody sic the Justice Department on you sometime along the formation of these companies?

BARTON: I don't think there was a period in the second half of my life at TCI where I wasn't in deposition or about to be in deposition for something. And interestingly, we were never even reprimanded for our behavior. Most of this was politically motivated by either our detractors, or at the time, don't forget, the cable legislation was going on and Al Gore was busy trying to get a lot of personal political capital out creating a populist, anti-cable sentiment. The ultimate manifestation of that was to stand up on the senate floor and call John Malone the Darth Vader of communications, which John did not refute or deny and it was great for Al and history has proven what a genius he's been at steering communications policy, which is to say, I'll be quite clear, he's been very, very wrong about his public policy in communications. Anyway, during that whole time, TCI became a convenient villain, so it was convenient to sic the Justice Department on us or the Federal Trade Commission and as you may know, every time you do a deal of any size that's more than 15 million dollars, without getting into all... There's a rule called the Hart, Scott, Rodina Law which says that a deal of any substantial size that's not a partnership has to be reviewed prior to consummation by either the Department of Justice or the Federal Trade Commission. So every single time we did a deal, it got reviewed by the anti-trust people, which was convenient for the politicians because they'd scream and yell, well, you should take a harder look at that. It got to the point where I would show up for my depositions and there would be on the wall in the conference room at whichever agency I was at, you know computer printout paper, this thick but 40 feet long, with all the acquisitions and all the holds and tele holds and equity and things and my name at the top with all the tentacles. They had done a lot of homework, but nothing we did, not one thing, was ever ultimately killed because we had run into a fundamental anti-trust problem. Some things we just withdrew. We were going to buy ShowTime at one point, and then they sat on it so long, refusing to make a decision that the deal just got... A deal is like a fish. If it's out of water too long it starts to smell. You have to do a deal when it's fresh and after 18 or 20 months of sitting on it, the ShowTime deal stopped making any sense and we withdrew. Ultimately they approved it. Of course, the next time we wanted to do it they had to go through the whole process again. So with very few exceptions, and there were some exceptions, they asked us for consense and thises and that's, we never really ran into any anti-trust issues. But we were busy. We were accumulating any time a programming service was for sale, or even wasn't for sale, I was out running around trying to buy it. We had gotten very aggressive as TCI to try and acquire things and we bought – the FNM was for sale at one point. Unfortunately we did that through Turner and unfortunately we didn't buy it because of the politics of the Turner board, but we bought the Appalachian Network and put that into Discovery as a contribution, which Discovery ended up turning into The Learning Channel. One by one we built up what has become a massive portfolio.

KELLER: Now as we're looking at these various pieces, some of them were obviously more profitable than others, would you just put the profitable ones into Liberty and discard the others?

BARTON: Well that was not Liberty. I haven't even gotten to that.

KELLER: Well, whatever the company was – New Co. You're still talking about New Co.

BARTON: But still, there was no form. New Co. turned into Liberty and Liberty was formed on March 30, 1991.

KELLER: You said you were accumulating all of these assets...

BARTON: That was in TCI.

KELLER: ...and bits and pieces and trying to pull them together to make some sense or to make some value out of what you had.

BARTON: I'm talking about two concurrent events. We had all these assets and I was trying to hodge podge them together so that we could maybe form a company, but at the same time, simultaneously, we were very aggressively now trying to acquire programming assets.

KELLER Well, I want to focus on those bits and pieces that you were talking about. As you would combine those into whatever corporate entity it was, or whatever your plan was to combine those, was it to put all of them in or only those that were profitable and discard the others?

BARTON: Well, no. We couldn't be that cute about it. In order to have a reasonable story, we had to take all the wheat and all the chaff and make it into one pile. I don't recall, we might have left a few things out, but the problem is if you left them out and they were clearly dogs, then the question is as a TCI shareholder why shouldn't I feel like you've taken advantage of me, Liberty, and sue you. So to do the right thing, to be solemnonic about it, we took the better and the worse and put them all together. Now, the genius of Liberty is not mine. The genius of Liberty was the structure, was the conception of it and that was vintage, 100% Malone. That was my post graduate course in financial engineering. It was all unique, all original and obviously, all very smart.

KELLER: And doable.

BARTON: Well, it was barely doable. I mean, we had to ask the SEC to consider forms of equity that were entirely original and we had to do a lot of educating and to this day, there are still a lot of people who, and this has of course been litigated now and thrown out, who claim that it was intentionally done in a way that was so complicated that we would bamboozle investors and to not invest it somehow. And all of that is poppycock. The problem was it was just so complicated to comply with all the federal reporting requirements that we ended up with a prospectus that was this thick and I recall that we had an analysts meeting before we went public, days or weeks prior all of which has been the subject of a great, great many depositions, and John and I stood up and we tried to explain Liberty to a packed house of analysts.

(Transition in videotape)

END OF TAPE 1, SIDE B

START OF TAPE 2, SIDE A

KELLER: Where were we?

BARTON: We were just at the dramatic analyst presentation several days prior to the launch of Liberty. This had to be sometime in March of '91 and we had this prospectus that was this thick and so we stood up and we tried in very simple terms to explain Liberty, which was a relatively simple concept. It just didn't write that way once you complied with all the SEC requirements for reporting. We went out of our way, John and I, to say, well look, forget what you read. There's only this many pages that matter. I think we even said which pages. Read those, the rest of this stuff is not important. We went on and we tried to explain as simply – in fact there's tapes of this – the whole concept of Liberty and I thought this was going to be a gangbuster success. Now we had it organized where if a lot of people participated, in other words a participation right, then Malone invented this see preferred which was a rubber joint. It would get very small if a lot of people came in, and it would be very large if very few people subscribed and we explained all that. We encouraged people to make their choice and their participation rights and so forth and then it was over. I explained what all the assets were; John explained all the tax elements. It was really very, very clever. And he was explaining his cleverness. So I went to the back door and as everybody walked out, all the major analysts, I asked 23 of the top analysts are you participating or not are you recommending or not? 21 said no. I was astounded. It was jaw dropping to me and I was wondering how in the world they had come to that conclusion and I honestly had a personal panic because I was committing my heart and soul and life to this neat little gadget and 21 out of 23 of the smart people in the world were telling me it was a dog.

KELLER: They didn't turn out to be too smart, though.

BARTON: Well, it just goes to show you should listen to your internal soul. So I had this identity crisis, I mentioned this to John. I don't know whether he emoted or not. I just couldn't believe my ears. I few days later it goes public and it didn't do much. We didn't expect it to do much. And then I had this theory that we ought to just go underground because we had this enormous portfolio of junk. Some good pieces, some... but a lot of things that weren't great pieces, including sports which was hemorrhaging and little tiny bits of cable systems that no one had ever heard of before. Some of them were hemorrhaging and some weren't and I wanted to get it organized so that we could create value by making this into a rational group of assets that would make each other more valuable sometime. So the first, and probably most intelligent decision we made early on in Liberty was I went and begged Marvin Jones to come out of retirement. Remember Marvin? He had just been cast free by the merger of UA, I guess, to United. I met him at the Glenmore Country Club, which is something he belongs to – I don't go there, it's too hoity-toity for me – and we had a couple of pops and I plead with him to come back and be the portfolio manager for this cable company, turn them into something. Marvin came back and he's a one-man operation. Not that Liberty had a lot of people, I mean, we had 14 people and that included all the secretaries and all the accounting people and every single thing you need to have a public company in terms of jobs and Vivian Carr who had 46 hats on. She was head of PR and head of financial reporting and head of investor relations, head of everything else. And Marvin had one office but he was in charge of the entire cable portfolio.

KELLER: That's separate from the programming entity?

BARTON: Right. He was just doing the cable stuff, which was about maybe 40 or 50 percent of the value of our portfolio at the time. A year later, Marvin was running the third largest MSO in the country and his revenues per sub were the highest in the industry and his cash flow per sub was the highest in the industry and we began to realize that what we were really good at was managing this very strange, weird group of people that are true entrepreneurs. We are really a temple for entrepreneurs. We can provide them with financing and some scale economics because we could buy for them, aggregate them and buy them for scale, but we also knew how to leave them alone. We also knew how to just talk to them a little bit saying, you could be a little smarter if you did this and this and this. Marvin had a beautiful demeanor about him. He looks like a drill sergeant and he looks like your worst nightmare at boot camp, but he's got a heart of gold and he knows what the hell he's doing with cable. He really knows his stuff and he turned that little group of investments quietly, unassumingly into the best running entity, aggregation of entities, entity.

KELLER: Did you pull them to TCI?

BARTON: Well that was later. So that was going well and it didn't require much supervision on my part. I wasn't that keen on cable. I was very happy to have them do it. I wen to a lot of the meetings and talked there and I went to all of their quarterly meetings and so forth. Said no to stupid capital and said yes to under capitalization and all that stuff, but he did a great job. On the programming side, we had a high degree of urgency to continue the acquisition binge that we had been on with TCI. Buy as many programs and services as we could, buying as well as we could but buying anyway because my theory and John's theory was that these things haven't even begun to peak in terms of their value. Why? Because the dual revenue strength programming business is only going to succeed at a factorial level of growth. Why? Because it will raise its rates – if it's good, it will have enough pricing power because it has brand monopoly. I'm saying with the cable operators. And if it's good it will have pricing power with advertisers. Dual revenue strength and pricing power associated with branding make these things ever green. So we led the way in some acquisitions paying too much for things that ended up in retrospect being awfully cheap. We also encouraged all the programming services that we were involved with to clone themselves. Not just once, but x number of times. Let's start a second brand, you know. Family Channel, we need a second channel. Discovery - John Hendricks took this to heart. John now has, I'm going to guess 8 or 10 services, not even including all of his international brands. Little old Discovery is worth maybe 6 or 7 or 8 billion dollars today. We encouraged a lot of that rapacious behavior. We encouraged rate increases. We encouraged as friendly a deal as we could do at TCI, but as far as everyone else is concerned, get as much as you can. TCI basically paid pretty much what everyone else paid because usually there were other interests in each partnership and they wanted to be sure they got as much as they could out of TCI. But those were arms length deals. TCI became our absolute most difficult affiliate, which was ironic. But nevertheless, they were our biggest customer.

KELLER: Whom were you dealing with at TCI?

BARTON: The guy who succeeded me, I put him in, Jake Palmer, and John didn't want to intermediate because it was a tracking stock, well it wasn't a tracking stock, it was a separate company at that point. So it was good old-fashioned fistfights with TCI, just like everybody else had. TCI at that point substantially lost its way in terms of how to build volume, so it compounded the difficulties. In the meantime, Liberty was sailing right through these PrimeStar consent decrees because it was a separate entity. We signed our own consent but it was substantially better than everybody else's. The legislation came and forced us to have to deal with competitors to cable, which was wonderful leverage for us because until then, everybody wanted exclusive deals and if you were dealing in New York City, you only got to charge as much as Time Warner would pay. But once there was satellite and a few other competitors you could establish new rate cards and establish new Favorite Nations levels and so forth, so the whole things started ratcheting up. In about November of the following year, we had our first analysts meeting. Since there were very few people following us, because not may analysts bought in, we had a couple of - we had Gordy Crawford, Mario Gavelli and a couple other people who were the only ones following us and who cared and so we just treated them like friends of the family. We'd have board meetings and we'd invite our analysts to the board meetings and ask them to help us figure out - what else can we do here? Could we get a piece of A&E by doing this and doing that? Triangulating in this way, we became famous for doing very, very, very complicated deals. Not because we like complication but because we were capable of doing it and the reason we were capable of doing it is we had a shop that we'd do - during the first six years of Liberty we did a deal every 10 days. A deal every 10 days! To put that in perspective, most big companies do a deal in a year, maybe 2 deals, but we had the skill and the alacrity in this group of guys and women that we could sit down at a table and do a deal. The decision making process was very unbinding. If somebody was at a meeting, they could call me or they could call John, but they could get an answer right there on the spot whereas other companies would have to go back and have a meeting and this and that. We would get deals done – lots of overnights. So we were accumulating and merging and rationalizing this portfolio and we wouldn't talk to anybody. When people would call and they weren't friends of the family, we'd say, oh we'll have that analysts meeting and we'll talk to you about it later. Well, when? Well I don't know but I'll call you - and we'd just push it all off. That's very important. That was a key component to our success was the willingness and ability to operate under cloak of darkness so that you didn't have a lot of people trying to emulate our strategy. It gave us the opportunity to be the first at the table in a lot of deals. That was okay with me. I don't seek publicity. It's not important to me for some reason. In fact, I eschew it. I actually hired at my own expense for almost the whole time at Liberty, a PR person to keep me out of the press but that goes into my own set of craziness. So I was very happy. I called myself the second banana. I was happy to let Malone be the front guy, the top guy and the person everybody writes about and it freed me up to basically operate. I could get off a plane or walk into an office building and nobody would really know or care whereas if John walked into an office building, somebody would notice. Then our first analyst meeting – we get to it. I really didn't know what to expect. It was at some hotel in New York and I told him to get, Vivian was setting this up, and I told him to get not too big a room. Maybe for two hundred people, set up two hundred chairs, but I didn't think that many people would come to this thing. The stock had been coming up a little but... It was on a Tuesday, I remember because it was one of these things where I wanted John to sort of make an appearance and he had to leave because he had to go to his Tuesday thing at work, so we show up at the ballroom and I think it was an 8:45 start or something. Early for New York and people were bitching about that and we can't even get into the ballroom. It's not only SRO, there are people pissed off out in the hallway trying to just get their nose in so they can see what's going on. I was stunned. I just couldn't believe it. So John did his little opener and then he left and we did a two or three hour analyst meeting where we just basically explained item by item by item what we had in the portfolio and why we had done this merger with that, what we had gotten out of it. The fairly boring recitation of facts because I didn't want to hype the stock, I just wanted to do my duty to tell shareholders if they were interested, here's what we're doing. Well the stock just went straight up. On that day we created four or five hundred million dollars in market value for the company and it never looked back and unfortunately from that day on, we began to be hounded by hundreds of people who wanted inside scoop or strategy or I'm going to write a report. It would be interesting for people who want to follow Liberty just to go back and read the analyst reports. They'll give you a sense of, a timbre, an understanding of what the tonality was like through the evolution of Liberty. We very, very, very carefully managed our appearances, managed the mood by either appearing or not appearing, by being available or not available. By splitting the stock or not splitting the stock, creating a dividend and a device through the preferred. We spent a lot of time developing and managing what I have thought of as a closed end mutual fund. It was very, very focused and we were very, very good at what we did. A lot of people tried to liken us to Berkshire Hathaway because in fact one or two of my annual reports reads like one of Warren Buffet's, although I don't pretend to be anywhere near as eloquent as he. Our theory of making money was very similar to the Berkshire one but the big difference was, we were very focused. We were in the business of creating software assets in television programming and entrepreneur driven cable assets and we were highly nurturing of entrepreneurs to run all these things. In fact, in one of the speeches I was giving at the time was the speech that I called the power of will. The headlines of which are if you give a good entrepreneur a bad idea he will will it to succeed or she will. He will force it by sheer force of will to succeed. So what we did was we nurtured those kinds of people and one of my admonitions to these people was if you're going to make a mistake, make it with your foot on the accelerator and we'll back you. If you're going to drive with your foot on the brake and the accelerator, you're not for us. And if backing means we'll put some more money into we'll do it, if it means we're not getting our 30 or 40 percent compound growth rate, we'll fix that. We were very good at helping these people without interfering with them and I don't thing any one of them ever complained about our interference. I think that's true. When you interview them you'll find out.

KELLER: You carried this over also into the cable operation of TCI with some of the companies that they've invested in on the same basis?

BARTON: Well, Leo basically was one of our portfolio companies.

KELLER: Bill Bresnan, Lenfest and some of the others.

BARTON: Right. So Leo basically came in and adopted the Liberty style when he sort of disassembled the centralized operating nonsense that TCI had evolved into and we just got real good at what we did. I considered myself the curator of programming assets. There aren't many people in the world that are actually any good at programming and I think I'm one of them. But I didn't want to do the daily stuff in the programming because that would limit the authority of the entrepreneur and destabilize that. So my involvement, our involvement, would be at the level of what the voice of the new startup should be. What the mood of it should be.

KELLER: Are voice and mood synonymous?

BARTON: No, no. A voice is an attitude. To give you an example, Discovery has a voice that is distinctly different than BET. Fox Sports has an attitude that is completely different from The Family Channel or Faith in Values. The trick was to find a place where we could create a unique software experience that would appeal to the unique audience because as I said 35 tapes ago, the theory is less is more. Give people a few really good programming services that they really want and they're going to buy cable. They're going to demand that you be carried on cable or that your service be carried by the cable operator. If you can get an audience, then you will have the power, the brand power, to raise both sets of rates: your affiliate fees and your advertising rates and then you will become successful.

KELLER: You now have put both the cable assets and the program assets into Liberty as a separate company. Now you folded that back into TCI at one time, is that right?

BARTON: Okay, well then there were the dark days of the Bell Atlantic negotiations. Liberty had already been well established. It had essentially de-feased itself out of most of its more pernicious debt. It was flying high. Every day was a day to break out the mimosa, it seemed. As sort of a ritual, every New Year's Eve, whatever the last day of work was just before the New Year's break, was always a half day. John would come over and we'd sit and drink mimosas and celebrate the fact that our stock had just eked up to the highest it's been in the whole year. It was wonderful, it's king of the world stuff. Then TCI got into the Bell Atlantic negotiations and it became practical for Liberty to be part of that transaction so we contemplated a merger back into TCI and we kind of looked at other options for Liberty and TCI was going to pay us the most. Then the theory was going to be that it would be, I can't remember if the tracking stock was even in our head at that point, but the theory was going to be it was going to be the programming arm of the giant Bell thing. It was going to be the Bell Atlantic-TCI merger. Those were unpleasant days.

KELLER: When that fell through then you pulled it back out again?

BARTON: No, actually when that fell through we were already mostly done with the re-acquisition of Liberty into TCI and we finished it.

KELLER: We're going to have to break right here now for another tape.

BARTON: You're kidding!

KELLER: No, it's going fast.

(transition in videotape)

KELLER: Beginning of tape 5. Please continue.

BARTON: All right, so where were we?

KELLER: We were on the reforming of the public company.

BARTON: So now Liberty had become a creature of TCI.

KELLER: That was after the breakup of the Bell Atlantic deal?

BARTON: Yes. We did some clever things. Part of the reason for rejoining TCI was to trade back all of our cable assets for their programming assets. At the time they owned Turner and Discovery and a couple other things, like Faith in Values, and this gave us a tax-free way of swapping value for value and having Liberty become a pure programming play. So it wasn't all just serendipity.

KELLER: No, I never thought that. Now I see both the reason why it was merged back in and now the reason why it's come back out again, because you had to get those cable systems back into TCI where you wanted them.

BARTON: And from Liberty's point of view, we wanted the Turner stuff. Again, it was one of those things where it just made good business sense at the time to do it. So we did it and we got the benefit of the taxes and sort of one more rationalization. Then Liberty became a tracking stock and everyone is wringing their hands. All these analysts and shareholders, gosh, what's a tracking stock. So we spent an inordinate amount of time telling them not to worry about it. That it's just like Liberty used to be except because it's a tracking stock, we can consolidate for tax purposes, which is very helpful because we don't have any tax basis and they have gazillions of dollars in ???? and we were able to kind of reconfigure the company. And if we make a real big mistake, i.e. like STARS could be, we've got the mothership's balance behind us. So you needn't be too worried about it.

KELLER: Also to take the loss if there was to be such a situation.

BARTON: Correctamento. So there was a lot of elegance to the tracking stock. Again, this was another Malone brainstorm, not mine.

KELLER: Had it ever been done in the business?

BARTON: I doubt it. Not this way. Maybe it had but this was all invention. For me to come up with tracking stock would be like that gorilla with the typewriter. Maybe it will tell you four score and seven years ago, blah, blah, and blah. But that was pretty advanced calculus. It was pretty simple, once he explained it to me I got it right away, but that took a lot of genius to figure that one out. So we became a tracking stock and we re-emerged and the stock kept going up. Occasionally it would stall because of various silly, non-substantive reasons but we were in business to make our shareholder unconscionably wealthy and that's what we got up every morning to do. Around the first of the year in 1997, the velocity of growth and the creative part of Liberty, the velocity of creativity, began to slow down some. And I had reached a milestone in my life, which was I'd outlived my father in terms of years. It looked to me like the closed end mutual fund was ever green at this point and it could be just as well run by somebody other than myself and I could go deploy my skills as an inventor and entrepreneur and an unday fair with less restriction because I wanted to get out of television. I had the best possible job you could have in television, but I'd done everything I could do in television, that I wanted to do. So I waited until the very right moment which struck me as being April 1st and I announced my resignation and installed Don Bennett as my successor and talked to John and John was a gent about it. I went off on my own merry way. Subsequently, John and I remain very close personal friends as we were before and I still have a lot of friends in the industry, obviously still at Liberty as well. But I'm on to other things. I've been doing a lot of things on the Internet, a lot of things that are very high tech.

KELLER: Before we get into that, and I do want to get into your vision of the future, you make everything sound as if it was somewhat difficult but generally speaking pretty easy to get things accomplished in the overall picture. Were there ever any major bumps in the road as you moved down through this program?

BARTON: There were some bumps. Of course there were major bumps in the road. There were probably a million bumps in the road and you have to be like one of those, remember those windup dolls that run along and then they hit a wall and then they just find another direction to go. Look at Fox Sports, for example. There was a situation that we started, I think I mentioned 20 tapes ago, we started as a defensive business. A business to keep third parties from recklessly intermediating on our behalf and transferring huge amounts of wealth from us to team owners. The problem with businesses that just start out as defensive businesses is that people forget about that pretty quick.

KELLER: Once it changes hands, you'll go on the offense.

BARTON: By about the second board meeting everybody was saying, so Pete, where is the profit model for this? And you know these things were losing lots of money. So it wasn't until we had about 350 million dollars invested in sports that I finally got it turned around. And I can tell you there were many, many sleepless nights, very many unhappy phone calls from my shareholders about sports before that. Not that I needed that to motivate me, but there wasn't an obvious model. In the meantime, ESPN had been sold to Michael Eisner and he was not as easily bluffed as the predecessors were about what we were about to become so he went on the offense against us to make life very, very difficult for us. So I had to find another model. I had to find a way of making sports have leverage so it could raise its rates and not get creamed by ESPN in the purchasing part of this business. What they would do is they would go out and they would bid against us on everything because they had a broadcast network and a cable outlet. They would buy everything. We'd go in to buy basketball and we'd bid 300 million dollars for the cable basketball rights and ESPN would come in and bid 500 million for cable and broadcast, or 700 million. We couldn't compete. So I decided we needed a broadcast partner and I went on the hunt and I tried really hard to get the CBS guys to get it but they were so stupid. I went after them for three or four years. This is during the Tisch regime and then after that, the other Michael Jordan. These guys just didn't get it and the pressure was unbelievable at that point because sports had become giant and it was starting to weigh down on the Liberty equity and we had negative earnings. We then went to Fox and chased Carey and Rupert and got it just like that. It was a matter of months and we merged Prime Sports into Fox and we created Fox Sports with a whole new attitude and a whole new set of ways of looking at games and became a huge success. We not only got our 350 million dollars back, prior to that actually because we'd turned this thing into positive cash flow, we got our 350 million dollars back twice out of positive cash flow and then we merged it in with Fox and got a billion two from Fox for that, kept half of it and now Liberty still owns half of the business that's worth 3 or 4 billion dollars. So that was a big success, but it was not without a lot of anguish or angst. I went to Turner and asked him if he wanted to be our partner in hopes that we could somehow fabricate a... but I don't want to leave you with the impression that this or any of these other deals are without angst. To get deals done with the Rainbow people was a whole career of its own. A lot of pain in each one of these things.

KELLER: You never dealt with Disney though as such?

BARTON: Only as an adversary. I like Michael personally. We're good friends – Michael Eisner, but they don't have partners, they don't take partners, they don't do partners, they just do aggressive.

KELLER: They don't take prisoners either.

BARTON: Correct. So if you're going to play in the leagues that they play in, you've got to play just as hard. We've had probably 20 head to heads with Disney and we've probably come out 17 of the 20. Even this little Faith in Values was one of these businesses that I inherited from TCI. That was a deal where somebody had made a partnership between TCI and this coalition of ecumenical chieftains and I'm not kidding. There were about 50 of them. The head of the Greek Orthodox Church, the head of Trinity church, 7 rabbis, 5 monsignors. It was an amazing thing for me to go to a meeting like that. The first meeting I went to I had to tell them, the deal that they cut with you where TCI is going to just blanket underwrite all the losses of this business forever is no longer available because there's a new sheriff in town and I don't have that kind of money. This thing's losing 20 million dollars a year and we have two choices. We can either turn it into something that is business worthy or we can shut it down, but I'm not paying anymore. The invectives that were hurled at me, not blessings, they were not blessings. It was several very, very, very stressful meetings later where they finally said, okay we get it. Let's do this, we'll be partners. So we reconstructed the partnership and it's subsequently been reconstructed one more time where they've gone from being a controlling shareholder to, I think a 1/3 shareholder, and we got Hallmark in for writing programmer and all of the sudden the ratings are going through the ceiling and it's got pretty good distribution. But it was months of misery and pain and negotiating and having to travel from one church to another to have private meetings and private audiences with these people and not in confessionals. Being called the anti-Christ. It was horrible but now these are some of my best friends.

KELLER: You're making them money now.

BARTON: Well, see, what they needed and they didn't get it, they want to deliver a message and they have legitimate messages that they would like to share with people but somebody's got to watch!

KELLER: That's fair.

BARTON: If you don't have any distribution and whatever distribution you have nobody's watching it because all the programming on both sides of it is unwatchable, it's the tree falling in the woods. And this took awhile and it was very painful and every single partnership, probably, that I can think of has at least one or two stories like this where, you know, you just had to go through some soul searching to find a model, to find a way of doing it.

KELLER: Peter, there are untold stories yet to be put on tape about your adventures in the programming end of cable and I do want to come back at another time to get into some of these stories, but right now I think we'd better wrap it up. We've been here for an awful long time.

BARTON: Okay, well I appreciate talking to you.

KELLER: As always, there is a commercial. This has been made possible by a grant from the Gustave Hauser Foundation as part of the oral history program of The National Cable Television Center and Museum. The interview was conducted at the TCI studios on March 23, 1999 in Denver, Colorado. The interview was Jim Keller. Thanks, Pete.

BARTON: You bet. See you, Jim.

 

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Ralph Baruch

Ralph Baruch

Interview Date: Saturday November 20, 1990
Interview Location: New York, NY
Interviewer: Robert Allen
Collection: Penn State Collection
Note: Audio Only

Ralph M. Baruch, the founder, first president and chief executive officer of Viacom passed away on March 3, 2016. He was 92. Baruch transformed Viacom from a small cable and syndication company into a communications and entertainment giant and was inducted into The Cable Hall of Fame in 2006 for his contributions to the industry.

 Ralph Baruch, Who Shaped Viacom’s Rise, Dies  — New York Times

ALLEN: Good Morning. Today is the 20th day of November, 1990 and we are in the office of Ralph Baruch in New York City. We are going to be talking about his life and his life in the cable industry. And first of all, on behalf of the National Cable Television Center and Museum, thank you very much for allowing this interview to be set up and for being so patient with the problems that I had getting here today.

BARUCH: That's life in the big city, I suppose.

ALLEN: What we would like to do is to start at the beginning; where you were born, something about your parents, their names and any siblings you may have-- the early years of your life.

BARUCH: All right. I was born in 1923 in Frankfurt, Germany, at the height of the inflation. And I found myself later in life playing with million, ten million, hundred million and billion mark currency which I found in an urn on top of the fireplace in my parents' house. The year of 1923 was the year my grandfather died. My childhood was spent in Germany.

ALLEN: In Frankfurt?

BARUCH: In Frankfurt. My father was an attorney who was born in Alsace Lorraine and Dad spoke--he was very proud of that--nine languages plus Latin and Greek, which most people don't consider languages anymore. My mother was a German--of German origin--and came from Munich. Her maiden name was Gunzenhauser. Her mother's name was Shulein. The Shuleins came from Munich. Apparently, my great-grandfather became an orphan at an early age and began carting beer for the brewery to make a living. In his early '30s, he became a general manager and eventually owned the Lowenbrau brewery in Munich.

ALLEN: This is the grandfather on your mother's side?

BARUCH: On my mother's side. On my father's side, they all came from the Rhine. I just visited with an aunt of mine, my father's sister, who on September 29, 1990, celebrated her 107th birthday. She brought out a picture of my great grandfather, Jacob Baruch, who apparently had eleven children. So my grandfather was one of eleven. He died in 1923-- the year I was born.

Apparently, my father was a very fervent Jew when it came to defending his beliefs. He was not a very religious Jew, but a rabbi who apparently had not known my grandfather, said the prayers over the grave when he died. My mother was highly pregnant, and my father told me the story of him being very sad because his father had just died. The rabbi who spoke didn't know him and said, "In the '60s he went to defend his country, and again in 1870 the war between Prussia and France, and that's where he caught the germ of the illness that takes him away from us today," which was fifty-three years later. My father said despite being so sad, he had to nudge his mother, and they both had to laugh despite this very sad occasion.

I had an older brother, who was two and half years older than I was. In my early youth, I began to understand--or not understand, really--why my brother was taken on trips, etc., while I was sort of fawned off with the nanny to the country where she came from. One year, when I was very young, I got scarlet fever--which in Europe at that time was a very dangerous disease--while my parents were away at the seashore in Belgium. And this aunt of mine, who I saw recently again, took me in and I nearly died, as I am told. I remember vaguely that I was playing in a basin with very hot water because they put some toy fish in there. On doctors orders I had to keep my hands in the water because my kidneys weren't functioning well anymore, and they had made punctures to get the water out of my limbs. My teeth were also affected, and eventually they became very brown in the front. That's why I had them capped later because they looked awful--they looked very bad. But my brother was really the favored child. When I went to school and came home one day from kindergarten, I guess it was, or first grade, and I said to my parents, "Today we really let her have it." They said, "What do you mean?" I said, "All the boys got together and we beat up our teacher." There must have been twenty or twenty-five of us who ganged up on her. So I was not a very obedient child, I guess.

ALLEN: Is this why, as you alluded to earlier, that you weren't taken on the trips?

BARUCH: No. I think later on in life I came to understand why my father favored my brother. He was the one that got most of the education, etc., in life. And one has to live with that and I've lived with it fairly well. But, as I look back on it, even my father, later on when he was dying, asked my wife-- the woman who is my wife now, "Has he forgiven me?" She assured him that I had.

So we grew up in Frankfurt and had a very good life. I had a nanny, and we had a cook, and we lived very well.

ALLEN: What kind of law did your father practice?

BARUCH: Mostly international law in The Hague, and before the International Court of Law which was established in The Hague, because his languages came in handy there. Of course he spoke fluent French.

ALLEN: How did it come about that he spoke so many languages?

BARUCH: Well, he was born in Alsace Lorraine so French was one of his natural languages, as was German, of course. And he always had an aptitude to learn languages. He studied in Heidelberg for two years and Oxford for two years. In Heidelberg he laid the foundation, I guess, of what was later going to trouble him a great deal with the Germans and enamored him with the French, which I will get into a little later on. But, in early life, we traveled along the Rhine many times and he pointed out, (a) where the students had too much to drink or (b) where he fought duels. He told me that as a young man in Heidelberg before the first World War he fought seventeen saber duels and three pistol duels for only one reason: anti-Semitism. In those days, a Jewish student in pre-World War I Germany could not attend just any university. He had to belong to a fraternity and the Jewish fraternity was the only one that would accept him. They had a very distinguishing little cap and a ribbon, and of course everybody knew that that was a Jewish fraternity. So the other students would insult them and he said the only way to answer them was to hit them, whereupon they would seek to maintain their honor. The only way to maintain their honor was to have a saber duel. Later on, when he died, my wife was astonished to see all the scars on his body and on his head from all these adventures.

But I also was shown the graves of some of my ancestors, which my father traced back quite a ways, which I'll get into in a moment. I was taken to Worms, Germany, where I saw some of the graves of ancestors of my grandmother, my father's mother, whose name was Maas. I remember graves dating back to the early 18th century in the cemetery in Worms. That made quite an impression on me as a child. Anyhow, so we lived fairly well and ...

ALLEN: What was school like in Germany in the late 1920s?

BARUCH: My school was the Von Trapp School, which no longer exists, I'm told. It was a good school; later on we learned well. We worked very hard, and discipline was fairly stringent. In those days, corporal punishment was not prohibited. But around 1931-32, the anti-Semitism began. I remember that in 1932--I must have been nine years old--I was on the way home from school when I was attacked by about eight or ten Hitler Youth. I was really beaten up and I got a knife scar right below my knee--it's still there today-- where they beat me up. As a young child, you don't understand what's going on. But my dad, again, tried to explain this to me, but it was very difficult for me to understand.

In 1933, Hitler came to power. Now, that got my father into trouble because in 1932, he was a Social Democrat by conviction, and every time the Social Democrats had some case or other where they needed a lawyer and didn't want to pay anybody, they called him and said, "Bernie, you got to do me a favor. You got to take this case." So he took the case. In this case in 1932, the defendant was in court in the brown Nazi uniform, which was illegal; it was not lawful. He began to insult my father anti-Semitically, with the proper gestures, and my dad looked at the judge and the judge laughed. So my father, in typical fashion, went over and hit this fellow in uniform. The fellow sued him and it was thrown out of court in every instance. But when Hitler came to power in 1933, they arrested him within a couple of days. I remember the Gestapo coming to my home on a Sunday afternoon--or no it was Sunday morning--and arresting him. They put him into what they called "protective custody," which meant that they arrested him for his own protection because they claimed that they were concerned about what people might do to Jewish intellectuals in Germany. At the same time, I was forced about a week or two before that to leave school and go to a strictly Jewish school.

ALLEN: What impact did all of this have on your brother who was still in school?

BARUCH: Well he had to go to the same school that I went to, a Jewish school. Already, Jewish children were no longer allowed to go to an all-around school. We went to this Jewish school and it was very strange for us, quite unusual. My father, in protective custody, was pretty badly beaten up. They knocked some of his teeth out, and really went after him--he was fairly well-known in the town. When they were through beating him up, he was thrown into a very large cell with some of his compatriots and colleagues--lawyers, doctors--who were friends of his. He was very active in the opera and other things. Those were the kinds of people we had as friends at the house on New Year's Eve and other occasions. There was a Professor Sinzheimer, I remember, who was quite a scholar and he asked my dad, "How will all this end?" Dad said, "It can only end in one way and that's war." They were all terribly astonished. Don't forget it had only been fifteen years or so- -fourteen years--since the last war was over with. This had been such a devastating war that my father was drafted into--he hated the Germans--but he lived in Germany as a matter of convenience. He really didn't like them, but he was drafted into the German army because he came from Alsace Lorraine, which was then German. He was wounded three times, finally made a judge in the military court, which was very unusual for any Jew to become an officer in the first World War.

The first of April 1933, was the first day that the Jewish shops in Frankfurt had an SS man in a brown uniform planted in front of every Jewish shop. They discouraged anyone from going in. They had painted "Jew" in big white letters on all the windows of every Jewish shop. That was the first boycott of any Jewish business. That was the day they tried my father in court. The charge was attempted murder. I remember the band going around the courthouse and anybody who had ever lost a case against him anywhere was there saying, "We're going to get you this time," etc. They gave him three years in jail for attempted murder. That was the sentence.

ALLEN: And the attempted murder was the incident in court...

BARUCH: Yes, when he struck this fellow because he insulted him. My dad, who was familiar with the procedure, appealed the conviction--in those days you could still appeal, I guess--but they wouldn't let him out of jail. He, knowing some of the people in the jail from previous experience, bribed his way out. He got home early in the morning and he and my brother left Frankfurt in a car owned by a Doctor Carow, who was a very, very close friend. He got some money--my mother had gotten some money out of the bank--and the money was put into the tires of the car that he drove to Saarbrucken, which was then neutral. The Saarland, by the Treaty of Versailles, was considered neutral territory. I was awakened by my mother and my nanny--I was then, I guess nine, I had not turned ten yet--and told that we were going on a trip. My mother and I took the train, not to attract attention that a whole family was leaving. We arrived in Saarbrucken where we stayed at the house of a friend for a while. Then we went to Strasbourg and eventually we ended up in Paris. By this time, we had exhausted a lot of our funds, because you could only get so much out of the bank. We went to the French Committees which dealt with refugees. We were put up in the Hotel E'Correll--Rue E'Correll--which is one of the streets in Momacht, which have stairs on them. It was a fairly miserable life for me. I had just come from a very nice, comfortable life, I remember that, to a country where I didn't speak the language, to a certain amount of poverty, I might even say.

We were given coupons to pay for food in restaurants. I remember going to one of these restaurants with this coupon, and we really couldn't afford much lemonade, which was sort of a carbonated lemon-type drink. You couldn't drink the water in Paris, so we had to get some lemonade. They served some lamb with white beans. I didn't like white beans, but my brother ate them. You had to eat them very quickly because otherwise the fat would coagulate and the whole thing would be inedible. I stuffed myself and my pockets with bread--I remember that very well. The food was awful.

Then it began to get warmer since we arrived in Paris in June of '33 and my dad tried to reestablish his credibility. Pending that, it had gotten warmer and I remember very well that we were so hot in that hotel room--my brother and I--that we slept on sort of a fire escape. I remember a scene at night, the Sac O'Couer being lit up-- you could see it from our hotel. The area was not a great area, looking back on it now. But when you're ten you don't realize that so much.

ALLEN: Were there a lot of German refugees in Paris at that time?

BARUCH: There were some. Not too many. It was the beginning of the refugee flow. Some said, "You were lucky you got out early." I said, "Not that lucky--we went through enough." Well, the first item on the agenda was for my brother and me to learn French. So in June we were both put into a French boarding school, which was an absolute disaster. My brother spoke French a little, I suppose--he was two and half years older, as I mentioned. I didn't speak any. For me I just sat there not knowing what was going on. Then, of course, I was picked on again because I didn't speak the language. So I was taken out of that school and my father decided that I should learn how to speak French. He found a tutor in the Quartiletown (the Latin Quarter). I was told that every morning from 8:30 until 3:30 in the afternoon I was going to study French. The intent was to have me go to school with a new school year starting in October in France. I dutifully went to that very nice young woman in the Latin Quarter every day taking the subway, which in those days was not very dangerous. It was right near the Baroque St. Michel. I had a sandwich for lunch and came back at 3:30 and she gave me two or three hours of homework. Then my father insisted that I should also continue my piano lessons which I really revolted at and objected violently and refused.

ALLEN: Music was not your favorite thing at that point?

BARUCH: At that point, no. I had taken piano lessons and I suppose I had a pretty good ear because the piano teacher came back to my parents and said, "He's a very talented student. He learns very quickly to play the pieces and he plays them by ear after two or three times playing the music. Unfortunately, what he plays by ear sounds very nice, but has absolutely no relationship to what's printed in the music." And so I was admonished ...

ALLEN: You were going to be a composer rather than a performer.

BARUCH: I suppose so. But I was trying to play what was up on the music--it was boring to read that music. It's interesting that last March in my sixty-seventh year--sixty-sixth year I guess--I started taking piano lessons again.

So anyhow, I studied French that summer. Then we moved to a furnished apartment in Passe, which wasn't too bad. At least it was an apartment and it wasn't too far from the school. I was asked to look at schools and we finally decided I should go to the lycee. That was one of the reasons we moved to Passy. I was enrolled in the Lycee Jean St. Salle, which is on Rue La Pointe??? in Paris. I must say that was a very good experience for me. I had some difficulty in the beginning with my language, but when you're ten--I had just in August become ten--it's very easy and one learns the language fairly quickly, especially if you have a fairly good ear. You learn very well. I must say that the first years were somewhat more difficult, but I must also say that I'm appalled at American education comparing it to the French education I received because it was so well-rounded. It was an all- encompassing education going from what we called geography--which they now call political science--to arithmetic to algebra to geometry to languages. I did not take a foreign language until later because I had been struggling with my French.

We went to school Monday through Wednesday, Thursday we had off, and we went Friday and half a day on Saturday. Every Saturday around 11:30 our French teacher played us some music and explained some of the music and the background of these composers on records. There was an old gentleman named Weile--and it's strange that I still remember the name-- because I became quite fond of him.

In the meantime my dad set himself up in a law office on the Avenue L'Operod Number 10. I recently went back to look at the building and I guess it still has the old-fashioned water pump driven elevator that was there at that time. He established a partnership with a Mr. Lang. We began to resume a halfway normal life. In Germany, we had adopted a student. We did this every year-- adopt a poor student who we would support through his University studies. One of them had moved to Paris also. We saw him a lot. While I can't remember his name, I remember that I was absolutely distraught because a couple of years after we arrived there he died of leukemia. He was a very young man. My aunt's husband (my father's sister's husband) also died while we were there and that distressed me very much as a young man.

My mother became active again teaching refugees French. We resumed a fairly normal life. We built up new friends, and in school I acquired or made some friends that stayed with me for quite some time. One was a fellow named Jack Alfreicht, who was a refugee as well. His father was the producer in Germany of the Three Penny Opera and had also produced the Three Penny Opera in Paris. My dad represented quite a few film producers in his legal practice and had some, as I mentioned, as his clients. He also knew Kurt Weile well. That's how I met Jack (whose original name was Wolfgang but he changed it to Jack) and a fellow named Herschfield and a fellow named Jonas and the four of us were fairly good friends.

ALLEN: Did many of your family follow you out of Germany?

BARUCH: No, my father's sister--my aunt--stayed there for a while and took in my grandmother. Her son was an American citizen. She had been married before--this was her second marriage. Her first husband died and then her second husband died while we were in Paris. She had a son who was her second husband's son (when she got remarried) and his name was Richard Kirshbaum, and he stayed an American citizen while his father, my aunt's husband, became a naturalized German and lived in Germany. My aunt also had a daughter from her first marriage, who still lives today with her here in New York. My cousin is 82 as I said and my aunt is 107. So, they stayed there and in 1936 my cousin and his stepmother decided that they should go to America since he was an American. Why should they stay in Germany where they really were not wanted? So my grandmother, given the choice of going to America or staying with us, came to Paris. After my father left very hurriedly, as previously outlined, the Nazis gave my grandmother, who was then in her seventies, a very hard time. The Gestapo called her down and questioned her several times. Why is she living with an American? What happened to the spy here, (my father)?, etc. After a while that became too much of a burden and we decided that she would come and live with us.

ALLEN: Was it difficult for her to leave ...

BARUCH: No. Since her son was in Paris it was easier for her to get out but she could only take the equivalent of ten marks, which was nothing. That bought a nice meal at that time. That's all the money she could take with her; some personal items, some jewelry, but nothing else. My father's library was very extensive. That was one of his great pleasures. He had a lot of first editions. Editions of the Corpus Juris Civilis, the first edition of the Civil Code, and some other things. I remember them sitting there on very large shelves in our home. They were stored by a friend of my dad's in Germany and eventually shipped to us because they were books and what could they object to books? Then they were sent to someone else and then taken over by my dad. The china and some other things we left to my nanny who would play a part in my later life. Her name was Regine. She got some of our china; anything she wanted she could pick from what was left because we couldn't bring it over to France. In the meantime, we moved to a larger apartment and my grandmother, of course, stayed with us then. My life became pretty well settled. I started going out quite a bit. We played sports. A normal youth's life.

ALLEN: The French were more receptive to the Jews?

BARUCH: Yes.

ALLEN: Your father stopped fighting duels ...

BARUCH: Oh, yes. First of all, that was illegal in France, which it was in Germany, too. He became older, a little more settled I suppose. The French, yes, the French were more receptive toward the Jews and refugees. Although, the French had a history of anti-Semitism, as you know, going back to the Dreyfus affair, but in those days I didn't notice it. My dad may have, but if so it wasn't brought out. To go to school we bought bicycles and had a marvelous time taking bicycle tours and other things.

In 1934 or 1935--I was then 11 or 12--my dad decided maybe I should join the Boy Scouts. So I joined the French-Jewish Boy Scouts and I was taken on trips and it was very nice. My adventures there were quite interesting. We camped in the south of France at one time. I remember sitting on a rock, looking at the water and the waves of the Mediterranean and being very, very homesick (I was an 11 or 12 year old) as one is apt to be. We slept in tents, of course, three or four of us. I remember it being very cold and all we had was a little tarpaulin under our sleeping blankets (there were no sleeping bags or anything and no cots, of course). We had to take turns getting up in the morning and making coffee. I remember taking my turn one morning and it was pouring rain and there was a little type of roof over the fire, which I was supposed to get started. I couldn't get the darn fire started and no matter what I did the fire wouldn't start. Finally, I took a half or a pound of butter and when I had a little bit of a flame I threw it on the fire and of course set the trees on fire. That didn't go over very well.

ALLEN: Cost you some demerits in scouting?

BARUCH: I suppose so. They didn't get that upset. I guess I wasn't a conformist then and never have been one. These bicycles trips we went on were a lot of fun. My brother developed a fantastic knowledge of mathematics--and I might even say was a mathematical genius. We used to play games and people gave him five or six-figure numbers, two of them, and say, "Multiply one by the other." He would think a little bit and then gave them the results. Being not that well-versed in math, this impressed me enormously. But he was also a very strange brother. He used to sit at dinner time and his eyes went sort of out in the distance and he was dreaming. The French had a contest every year for high school students in math and I know he won the top prize in his high school--our lycee--which is not quite the equivalent of high school; it goes further than high school. He then placed very highly in both the regional and national contest to the point where the French came to him and said, "Look, we want you eventually to go either to the Ecole Polytechnic, which is a very special university where all the civil officers, etc., go or to our Sancerre which is the military school. We will make sure you get in."

Then in early '36, on the way home from school, my brother's bike went in front of a car and brushed the car hood. He fell off the bike between the sidewalk and the gutter. He broke the neck of his femur. I was in school still when it happened and the next day or two days later I was taken to visit my brother in the Hospital Boucicaut. I remember coming in to this enormous ward (there were no private rooms to speak of, French medicine was not the most advanced in those days) and hearing my brother scream at the top of his lungs. They had apparently set the leg and he had a cast practically up to his neck, his upper chest. But something was digging in his back, something in his cast. So a day or two later they had to remove that and reset it. He stayed in the hospital for quite a while. They took X-rays some time later and found out that the leg had not been set properly. So they operated on him and put a pin into his leg and shortly thereafter he came home. We slept together in a room, and he was sort of hobbling around on his crutches. One night he called out--and I remember that very well because I was a young man at that time--not yet 13 or may have just become 13--and I turned the light on and he had vomited blood all over the place. Of course, everything was mobilized and back to the hospital ... No, not back to the hospital yet. He stayed home and I remember they rigged up a blood transfusion with my father giving blood while the blood was being pumped into my brother. I've never seen anything like it. It was all done at our house. He didn't feel well, he never felt well. To make a long story short, he was put back in the hospital and about eight and half or nine months after the accident he died of a general infection. He died shortly after his 16th birthday. He was born in '20, I was born in '23-- two and half years difference.

While he was back in the hospital I was in England attending a Boy Scout camp. We toured--five or six of us--the Isle of White in England. That was quite an experience, too, because I was the youngest--I was 12 or 13 (it was July or August)--and all the other fellows were 16 and 17. They decided to walk and I sort of followed way behind and had blisters on my feet. We didn't eat very well and they ran out of money. I remember being on the Isle of White late one night and we had just eaten some raw eggs (punched holes on each side) and we were looking for a place to pitch our tent. We couldn't find any spot that was even so finally we found one and dutifully dug our trenches in case it rained so that we wouldn't get too wet. This I remember very well. It had just become daylight and there was a man standing in the middle of our tent in a black suit, black tie and a derby and he had a big long mustache. He was screaming in English (which I didn't understand a word of) and shaking our tent and screaming his head off because apparently we had planted ourselves on the green of a golf course and had dug these trenches.

ALLEN: Scouting wasn't quite then what it is today!

BARUCH: No. You have never seen people fold a tent up so fast and get out of there as quickly as we could.

My brother died in September. My mother's birthday was September 17 and my father's birthday was September 30 and my brother was buried on my aunt's birthday, September 29. I'm standing at this grave, throwing dirt on this wooden casket, and that's something that stays with you, I guess, as a child or young man. I had just become 13 in August and I didn't know what to get my father for his birthday because he was obviously ... To lose a child must be one of the worst experiences anyone goes through ever. We had it happen to a friend of ours who lost a daughter at 23 and it's now ten years later and they're still not over it. I guess you never get over these things. I'm here as a 13 year old when my brother died and getting ready to buy my father a birthday present. I didn't have that much money so I went to a photographer--we really didn't have very many good pictures of my brother-- and I took a passport picture and I said, "Can you enlarge it?" He says, "Oh, that's very complicated, we have to make a negative ..." and he explained all this to me and in those days that was very expensive. Then I got him a frame and presented it to him for his birthday. I got a reaction which to this day I cannot understand--he ran after me to beat me up. The reasons why are beyond me.

End of Tape 1, Side A

BARUCH: So we continued our life and it became difficult for me living with my parents who had just lost a child. But being young, I didn't really understand the impact of my brother's death except I knew that my Bar Mitzvah, which was customary in Jewish circles, was postponed. My brother had had a lovely ceremony, and it was made a big occasion. It's funny how one still resents that decades later. Mine was postponed for a year, until I was 14, because my dad said we were in mourning. And then it was done very, very modestly. I remember very well that I was absolutely astonished when I was sent to take Hebrew lessons with a Rabbi. My dad, never having been crazy about Rabbis, brought me to this Rabbi of a reformed synagogue (Rue Copernique, I guess it was, in Paris). I took lessons and I remember they were on a Saturday morning when Jews aren't to travel and shouldn't do anything. The Rabbi opened the door and stood in the open door with a cigarette in his mouth, smoking, and that I found very unusual.

ALLEN: What kind of a student were you?

BARUCH: Oh, I was in the top, I would say 5 or 10 percent of my class. I was never number one. I didn't want to be number one. But the lycee also was very strict. Except in French. I did become number one or number two in French, strangely enough. We had a math teacher that was very, very good. His name was LeBetre. But he was crazy. He was a communist. He gave everybody nicknames and since Baruch Spinoza was a very well-known philosopher he called me Spinoza. He had nicknames for everybody.

I remember this math teacher who sat us in the order of our achievement in class. If you were number one you sat in the front in the first seat and if you were the last, if you were 28th, you sat in the last seat in the last row. He didn't like to deal with the ones who were beyond ten or so. He sat them in the back and once in a while he'd turn to the back and say, "You down there! What's your name?" He couldn't even remember their names. "Do you know this? Get up! Do you know the answer? Of course not. Sit down and go back to sleep." He didn't want to deal with them. When we had exams--and they were always very voluminous examinations of fifteen to twenty pages--we were given this three or four times a year. The one who was number one had to copy it once, and the one who was the second had to copy it twice, and whoever was 28th had to copy it twenty-eight times. This was besides your regular work. Was he a Math teacher? No, he was an English teacher. I'm sorry. I'm mixed up. I forgot the "S" on the third person singular in English, you know, I take, he takes, I forgot the "s." I had to copy 2,000 times, "The third person of the singular in English takes an "s." I've never forgotten it. So I was pretty good. I was second, or third or fourth in English--always in that area, except in art. In art I was usually last. I was accepted by my art teacher except once I was next to last and the son- of-a-gun sent my report card home with the notation, "He's making progress."

We had a lot of incidents in school, particularly in primary school. Once, I remember going home from school for lunch and I found a beret on the ground. Well, I was late and it was pouring, and I went home and my mother gave me lunch. My dad once in a while came home but he had lunch and then had a nap or read in his library, which I will describe later, when we moved to a house. On the way back from home to school, I had a problem. In Paris, where they had trees there were usually gratings around the trees. But they had removed one and I tried to avoid somebody, slipped on the mud and fell right into the mud. I didn't know what to do, and I had this beret in my pocket. I went home and changed because I was covered with mud. I was late for school and the teacher said, "Where is the beret you picked up?" She had apparently observed me picking up a beret. I said, "I'm sorry, I left it at home." She said, "You didn't leave it home!" She accused me of being a thief in front of the entire class. When I came home I was dissolved. My father came home and asked, "What happened?" He, being a lawyer who had also done a lot of criminal cases, was incensed. He took me to school the next morning and we saw the principal with the long beard and, to make a long story short, that teacher had to apologize to me because I brought the beret back. Why would I steal a beret when I could buy one or tell my parents I needed a beret and they would buy it for me? She had to apologize in front of the whole class. Well to say that I was not the teacher's pet in that class is making an understatement. She gave me a very difficult time, but eventually I quit her too.

ALLEN: In France, what age group would encompass primary school?

BARUCH: I suppose the first four years are considered the primary, so until I was about ten or eleven I was the primary. Then I went to secondary school. I remember there being a little kiosk in the middle of the schoolyard and you could buy refreshments or whatever you wanted to buy. I remember the kids fighting and beating each other up to get first up front to this. But school was very intense and I thought, very, very good. I advanced quite quickly.

ALLEN: But you were ten when you came from ...

BARUCH: Yes. So until I was about 12. I really don't recall the exact division. In 1936, the year my brother died, the reports my dad got from Germany were very disturbing. He had kept some relationships. In 1938 or 1939, he told me that in 1936 he went to one of the ministries (whether it was the Navy, I don't recall) and he said he had information that the Germans were manufacturing airplanes which could be converted to bombers within twenty-four hours. The Versailles Treaty prohibited that very distinctly. On top of which, the Germans had gone back into the Rhineland in 1936 and nobody made a move. In 1937, I guess, there were the first problems with Czechoslovakia. I remember going to school (I was 14 or 15) reading Le Monde and other newspapers and being looked at on the subway because I was a young kid. But I was always interested in politics. With my background, I always was particularly interested in the developments.

I went to the theater a lot with friends. At that point, motion pictures. I remember when the Disney picture premiered in Paris. We went to that. When I was 15, my grandmother's brother was in England and his name was Maas. I was asked by my dad to get some culture and some refinement in England. So I was shipped off to England to my grandmother's brother, who was an older man with a housekeeper. He was an importer of coffee. He later died of an infection in his nose. Again, there being no antibiotics-- same problem with my brother--and he died. Before he died I was sent to him to get some culture. He said to his housekeeper, "Will you please have someone unpack his clothes? Did you bring your smoking jacket... your tuxedo?" I said, "I don't have any, Uncle." This was terrible. He said, "You don't have any! Call the tailor. Have him measured for one right away!" So I was measured for a tuxedo, and then he says, "Do you carve?" I said, "Do I what?" He says, "Well, do you carve? Meals and meat and so on!" I said, "No. Either my dad or somebody in the kitchen does that." "Well," he said, "when we go out in my clubs the youngest at the table has to carve, that's a tradition. And you're going to be the youngest." So I had to learn to carve everything. Turkey, what have you. I found that absolutely distasteful and boring, the whole thing.

ALLEN: It was culture, though?

BARUCH: It was culture, though. Absolutely. At least what they considered culture.

ALLEN: At this point you spoke French, German and English?

BARUCH: I spoke some English. I had learned English in school. I must tell you that with foreign language instruction in Europe you end up speaking the language. I find, except with one of my children who studied in Europe, when my children took a foreign language they, and most of their compatriots, do not speak the language! They can write some. But speaking is zero. And to me, I can't understand that. At this point, yes, I did speak some English.

Well, my trip didn't last too long, it was about a month or so and I came back and my dad was quite pleased. I held my knife and fork in the proper way now, etc., and to him that was very important. If I held my hand too far down on the blade with the knife or even touched the blade side of the knife, he would say, "If you want to eat like a pig go and eat with the help in the kitchen." We by then lived in a house in Neuilly and my life was very nice.

When I was 15, however, the Czechoslovakian problem came up and finally Munich occurred. I was appalled, because I went to one of my friend's house, and peace had been declared by Dalladier and Chamberlain. Chamberlain came back to England and said, "Peace in our time," and waved the agreement with Hitler and Dalladier and Mussolini, etc. At my friend's house they were celebrating. I had read the papers and I was absolutely astonished because here we were disposing of Czechoslovakia, and Czechoslovakia wasn't even there at the signing of the agreement! I said, "What are you celebrating?!" I remembered going to his house and seeing dozens of bottles of champagne in the bathtub with ice. And they were really celebrating, a big party. And I said, "What are you celebrating?! This is the beginning of the end! It's outrageous! We've just sold out a country!" I was laughed at.

Between '38 and '39 I remember my dad being visited by a Mr. Cerf. It was a very mysterious conversation as I remember. Whenever I walked into the room all of a sudden everything became quiet. By then I had, at 16, thought of going to the Sorbonne.

ALLEN: That would be the equivalent of ...

BARUCH: ... of the University. The second year of the University, really. I was a little bit ahead of myself. Even though my dad said, "While we had the student, this one's going to be the merchant. He's going to go into some trade." Well, as I learned later Mr. Cerf was a member of the D'Airzen Bureau, the counter-espionage. They were interested in my dad because, obviously, he spoke German as a German. He had a scar on his head, and he looked somewhat German. They wanted him to get involved as a volunteer.

ALLEN: To go back into Germany?

BARUCH: Yes. And he didn't want to at that point. Well, in 1939, the war broke out when Hitler invaded Poland after he had annexed Czechoslovakia anyway and did not keep that agreement. My dad told me, "I'm going to help them. I volunteered to go into Germany to recruit spies." No pay, of course. I found that absolutely foolish. I mean, here was a man in his fifties volunteering to go behind the lines on a false passport through Switzerland to help the French, whom I began to question their patriotism. I felt the French, if it really came to it, didn't want to fight. That whoever they were most comfortable with, that's where they wanted to live. Anti-Semitism was also rampant. So, anyway, there's dad and now I'm 16 and a special law was passed that those 16 or older could drive. So I immediately took my driver's test and insisted that I must have a car. In that, I was fairly American then already. They bought me a car.

ALLEN: What kind of a car?

BARUCH: I got a Hispano Suiza, a sports car which I enjoyed and my girlfriends enjoyed, too. Maybe I was a little bit precocious, but I'm not going to get into that detail of my life, I don't think that's appropriate.

ALLEN: Was it French built?

BARUCH: Yes, it was a sports car which is treasured now. But I'll just give you one illustration. A year before that some friends of mine, a little bit older, decided they were going to go to a house of ill repute, which were very elegant in those days in France. And being too young, I was thrown out. But I remember the place very, very well and I had to wait on the street until their task was completed. A friend of mine took us to Annecy, where his mother, a fairly well-known actress, had a country place on the lake in the French Alps. I became very enamored with her and it was a lovely summer I spent there. I was a very young man. I had a lovely time, just a grand time.

I remember New Year's Eve, 1939, the four of us... no, at that point there was just three of us. I don't know what happened to Herschfielder. There was Jonas and Alfriecht and I. We decided we were going to get dressed up and go out. Now bear in mind, it's war time. Blackout in Paris. Everybody is at war, but it's not really a war: nothing is happening. Except my father's going to Germany, back and forth. So New Year's Eve we decided we're going to get all dressed up in our tuxedos and we're going to have dinner in the Latin Quarter in a Chinese restaurant and we'll see what happens after that. In the Chinese restaurant we met a man, also in a tuxedo, who we started talking to. He was playing music in one of the most well-known night clubs in Paris. We decided at ten or ten-thirty we'd go there. Well, I'll make a long story short. At two or whatever time in the morning--by that time we'd had quite a bit to drink--we are walking up and down the Boulevard St. Michel in the Latin Quarter, singing German (in German) drinking songs. That was not something to be recommended in Paris during the war. But, everybody was laughing--nobody took us too seriously. We were young men. Then dad came back once, and he was very unhappy and finally I got out of him that a couple of his people were caught with his name.

ALLEN: Did that end his career as a spy?

BARUCH: No. He went right on. He just changed his name, I guess. In a moment you'll hear why. If I go into too much detail just tell me. Now, I guess life just went on. Some rationing began. In September, I think it was, war broke out September 1st. The 2nd or 3rd of September we had our first air raid.

ALLEN: This was 1930 ...

BARUCH: ... nine. We dutifully we went to our basement. And of course, nothing happened. A few minutes later the all-clear sounded, so up we go again. This happened a couple of more times. After a while you don't even go to the basement anymore. Some rationing began, not too serious. The French didn't take the whole war too seriously. They thought they were very secure behind the Maginot Line. Everybody has written about that. So I'm not going to get into that detail. On May 10, 1940, my dad is in Germany again and the Germans invade Holland and Belgium. My dad comes back through Switzerland. Later on in May the news did not sound good to me. I'm now nearly 17. I would have been 17 in August of 1940. You hear stories about spies getting caught, and their families getting caught and executed with an axe. The Germans were particularly cruel in that area. They made them lie down face up watching the axe come down. I mean, the stories you heard were horrible. I must tell you, I was scared to death. My dad, a complete and absolute optimist, said France will not lose that war, etc. etc. In late May, the government left Paris and went to Bordeaux. Still he wouldn't leave. And I said, "Hey! We've got to go. Especially you because you're endangering all of us. But you're in danger, too." He was not very practical. This was a very difficult concept to bring across to him because he was a little bit of a tyrant and he knew it very well. He knew everything very well. So when he said, "We won't lose the war," that meant we're not going to lose that war.

ALLEN: And you at 17 didn't know better.

BARUCH: Well, I knew something was going on that wasn't very favorable.

ALLEN: At least in his view you didn't.

BARUCH: That's right. And I can't remember the exact date but it was now either late May or early June of 1940 and I will never, never forget it. All of a sudden (it was a nice day), it began to rain ashes. That story has never been told anywhere that I've read and I've read quite a bit about it. I mean little pieces of ash coming down in enormous quantities!

ALLEN: Out of a clear sky?

BARUCH: Yes! And I said, "What is that? Are the Germans throwing something at us here, what's going on?" I remember listening to the radio that night and they claimed that the Germans had attempted to cross the Seine much further northwest of Paris. They never told us whether they did or not. But in the meantime, Dunkirk had occurred, and they were very busy with that. I put two and two together in my mind, and the next morning I told my dad, "Dad, I bet you these were smoke screens that they had put up to cross the Seine and had drifted back to Paris. For some reason, they came down all over the place." I said, "I don't know what you're going to do, but in a day or two if this goes on I'm leaving." Well, he hesitated more. It is now maybe June 4th or 5th. I can research the exact date. But when you're that young you don't keep a diary. I wish I had now, of course. Well, finally I said, "I don't know about you. I'm going." Stupidly enough, we had not gotten gasoline.

By that time you couldn't get gas anywhere in Paris. I went to the Gare de Lion. That's the railroad station serving the South area. I couldn't count, but there were, in my estimation, tens of thousands of people if not hundreds of thousands lined up trying to get out of Paris. I knew we weren't going to get out. I was desperate. I didn't know how we were going to do this. We had my grandmother. She was 82 by now. I remember going to a friend's house--I had seen something there. In one of his yards, he had a pushcart. There was nobody around, there was kind of a concierge gatekeeper type person. I said, "Can I buy this?" He said, "Ah, you can have it."

I remember taking that pushcart to our house and on the way people approached me asking, "Will you sell the pushcart?" I began to realize, this is becoming a commodity, a valuable thing. To make a long story short, we loaded the pushcart with a couple of suitcases and put in some silver, jewelry, money--that's the one thing we did have. I told my dad earlier, "Go to the bank, get some money," because I remembered the experience from Germany. I had no desire to be that poor again. We sat my grandmother on the pushcart. She protested: "That's ridiculous! I'm not going to sit on a pushcart!" I pulled the pushcart and my father pushed a little bit and my mother followed along and that's how we left Paris.

ALLEN: How big a vehicle was this?

BARUCH: Oh, it wasn't very big. It had small wheels which were about four or five feet in diameter. There was room for two suitcases and a couple of other little things. It wasn't very big. And we went out to Park du Versailles. Don't ask me why, but I began to remember that the subway had just been extended going south. And I said, "Hey! Maybe I can get this thing on the subway." It was an elevated line and sure enough, somehow, we got it onto this subway going south and caught a train which took us about twenty or twenty-five miles south. That would have taken us a couple of days! I suppose, looking back on it, that may have saved our lives. We got off and we walked.

ALLEN: Was that the end of the line?

BARUCH: That was the end of the line.

ALLEN: Was that as crowded as the other rail facility?

BARUCH: Yes. It is hard to describe. Cars which crawled along. Horse-drawn vehicles. Baby carriages loaded with baggage. Pushcarts. All kinds of vehicles. Bicycles were loaded up. I mean, thousands and thousands of people. This is where I got my first introduction to the French peasants. They were selling water on the side of the road. Drinking water. Which you can get, you know, in their houses. But they were selling it. Not offering it. Selling it. And the first night I found a barn with straw and said, "We're going to spend the night here." And slowly, I could tell, I sort of became the leader. My father was crushed because this whole thing of guessing wrong, doing wrong, getting his family into this kind of predicament. I guess, looking back, he felt some kind of guilt. We had a little bit of food with us. The next morning I went to the farmer and I said, "Can I have some hot milk or something for my grandmother and some bread?" And he sold us these things at outrageous prices.

We resumed our march until we got to a place called Dourdan. There was a railroad station. My father and I went to the railroad station. Now, you might think these are weird stories but they are not made up. I remember us standing on this railroad station with a little platform on each side of the tracks. The tracks were a little elevated and there was a bridge a little further down so they were still a little bit elevated. But there were two men in raincoats--identical raincoats--signaling each other by hand. I couldn't understand what they were doing. But fifteen minutes later German bombers appeared and began to bomb. I ran back to where we had left the pushcart, my mother and my grandmother. My father followed as much as he could. I pushed my grandmother under a truck, because I figured at least they wouldn't hit her with the bullets directly. She's protesting, "What are you doing?" She doesn't know what is going on. She's protesting! Loudly! We go back to the station when the bombing was over and it was a mess. People hurt, killed, shot. It was terrible.

We went back to the station and heard that a train of refugees from Belgium is coming down. We unload the pushcart, which was taking a terrible chance, and we go to the station. Sure enough, one of those cattle cars--you know where they put cattle in--comes in and stops and we just get on it. It's full of Belgian refugees. We had a little food but not much. And this train starts to move.

ALLEN: You were able to take all of your possessions?

BARUCH: Whatever we had, yes. But they had set aside a little corner, and had made a little sheet, that was their toilet. They punched a hole in the floor, I guess, or something. But I remember we were on this all day, the afternoon, and all night. During the night my grandmother must have had a stroke or something--one does not forget this--and started talking in German. She was German, I mean, after all. I've got to tell you, we were scared they were going to lynch us. We went through burning towns and ended up south of Tours. Three of these trains, with maybe a 1,000 or 1,500 people on each train, pulled up and the engines were disconnected and off they went. They left three of these trains in an open field.

ALLEN: How far south of Paris were you at that time?

BARUCH: At that time it must have been about a hundred miles, maybe a little more. I could measure where Tours is. Well, I remember people making coffee and heating pots and dumping handkerchiefs full of coffee into this water. I said, "I don't want to be part of this." I spied a bunch of soldiers down the road a half a mile.

ALLEN: French soldiers?

BARUCH: French soldiers. I said, "Let's go over there, dad." Fortunately for us, my dad could identify his role with the D'Airzen Bureau. He had his I.D. with him. He explained to these soldiers that his family was endangered and why we had to get south. They said, "Well, we're taking off in an hour. We're transporting airplane engines," which were on these trucks with the propellers on them. "We're taking them south." We got loaded onto this, my grandmother sat next to one of the drivers, my mother and father on each side. There was a little room where the engines were. They put me on top. That's how we left this place. We thought we were very, very lucky. It was hot. It was very, very hot. Every time we stopped the soldier would hand me a little wine to drink. I was on this propeller which moved a little bit. I nearly fell off a couple of times. I got sleepy because I wasn't used to that much wine. But I didn't fall off. We got to Orleans. I don't remember where we slept in Orleans, maybe we didn't sleep there at all. There was no way of getting out of Orleans.

ALLEN: How much farther had you progressed?

BARUCH: About another hundred miles. And again, the place was full of refugees. I saw a bus with a driver. "Where are you going?" "Going south," he said. I asked, "Will you take us?" "No, I'm not going to take anybody," was his answer. So my dad convinced him to sell the bus. We bought a bus and about ten or fifteen of us got on this bus and we went South to Bordeaux, which was quite a distance.

ALLEN: The bus was full of fuel, I gather?

BARUCH: I gather. I take it yeah, because we got there. Well, we're in Bordeaux now, where the government is. Things are getting worse. We read the papers now, and things are getting much worse in France. No place to stay. So we slept in the railroad station two nights, on the floor, with an 82 year old woman. Finally, the third night, we got a room somewhere...a furnished room. All of us piled into this room when the Germans bombed Bordeaux. It was fierce bombing. They really tried to intimidate the government to surrender. The next day, we took a train to Bayonne, which is on the Spanish border, figuring we could get into Spain. The Spanish border was closed. My dad went to the Prefectude du Police, the police station. They told him that an armistice was about to be signed which would turn over control of a strip of the coast to the Germans. They would not occupy all of France. So if we went further inland, we'd get out of the German area.

We hired a car and went inland. At three o'clock in the morning we were awakened--the Germans were coming. We hadn't gone far enough inland. Again, they were on our heels. We were running away. We got inside the Pyrenees to a place called Accous. Two days later, in Acous, we were given a house. The Basque people were wonderful to us. They distributed unoccupied houses, etc., and we got one with an attached outhouse. You know, it wasn't out there, it was attached to the house practically. I got dysentery.

ALLEN: You got dysentery?

BARUCH: Dysentery. It was terrible. It was cold at night because it was in the mountains. We had to stay there until I recovered. I hated fish as a child already. When my mother tried to feed me fish, I wouldn't eat it. The mere smell of fish made me ill, fish stores, etc. Once when I was very young, they tried to talk me into eating fish by telling me it was chicken. I wouldn't touch chicken for years. But that was my first experience, after I started eating something.

A soldier--there were soldiers all over the place and they weren't going anywhere; they weren't reporting to their units, they were just hanging around--had gone fishing and brought a trout home and gave me a trout. It was the first solid food I'd eaten in days, and I ate that and slowly recovered. Then the question was, do we go to Lyon, do we go to Marseilles, where do we go? Well, we went to Lyon.

ALLEN: Before you go on, what happened to the bus?

BARUCH: It was left in Bordeaux. I have no idea. We couldn't sell the bus, you couldn't do anything with it. We just left it.

ALLEN: Just disappeared?

BARUCH: Just disappeared. Well, we took the train to Lyon and in Montpellier my father had to be taken off the train with enormous gallstone pains or whatever pains they were. We had to stay in a hotel for a couple of days and we resumed our trip. We ended up in Lyon. Well, Lyon was full of German soldiers. Why, I don't know. But it was crawling with Germans. We had no intentions of staying there so we took the train to Marseilles and found a furnished apartment in an outlying area of Marseilles. We wired my aunt-- my father's sister, whose son was an American in New York--that we were in Marseilles because we were sure they were concerned with what happened to us. It was a walk up apartment, which meant my grandmother was caught there. She couldn't walk five flights very often. But we were lucky to have it.

The food shortages began. I stood in line for, I don't know how many hours, to get a bar of chocolate. Coffee was ersatz. Replacement coffee was awful. But we learned that my aunt had gone to an organization, which was then called the Emergency Rescue Committee. They had convinced Mrs. Roosevelt to convince the State Department to give out 500 visitor visas to endangered intellectuals who were caught in France.

ALLEN: Before we get into that, do you have an idea how long you traveled from the time you left Paris to the time you reached Marseilles?

BARUCH: Oh yes, we left Paris about the 6th or 7th of June, approximately three days ahead of the Germans and we arrived in Marseilles in late September.

ALLEN: So it was a two and half month journey?

BARUCH: Yes. Maybe the middle of September. About a couple of months, a little more. We went to the American Consulate to inquire about visas. First my dad and I. We took the trolley and it's way out of town. It was gorgeous: a little park, and the gates, of course, and there was a road leading up to a villa way up on top of the hill. They were also very, very nice. Well, apparently, we obtained four of these visas through my aunt. You know how it is when you're a refugee, you sort of get together with refugees in the cafes. What do you have to do? You have nothing to do.

My grandmother insisted I should go to work because I'm 17 years old and it's no life for a 17 year old to be bumming around not doing anything. Well, fortunately my father said, "Look, he's not going to work here, that's ridiculous." But, when we got those four visas, we were assured we were going to get them, the other refugees said, "You're only going to be visitors, they're going to throw you out. Who knows what awaits you in America, etc., and how are you going to get there?" I wasn't one of those. I convinced my dad that I'd rather be in America not knowing what happens to me, because they're not going to ship us back, rather than be here and be caught by the Germans and get my head cut off. He agreed. There was a family named Brumberger who we knew from Paris, would you believe it or not, they took the train and went back.

ALLEN: Did you ever find out what happened to them?

BARUCH: We inquired and we believe they were arrested and shipped off to the extermination camps. Finally one day, we're ready to get these visas, and now it's the transporting of my grandmother that's the problem. We get to the consulate gates and we see this big, long row of people. "How are we going to get there?" We started walking. I said, "Look, take your time and if necessary I'll carry you up." "No, you will not carry me!" A very proud lady, not very tall. With that, an American limousine pulls up, sees the old lady, you know, struggling. It was the American consul. He says, "Can I give the ladies a ride, at least?" He has enough room for the ladies. And my mother and my grandmother were given a ride to the consulate. Which impressed me, as a young man, enormously. I mean, here we were, we were nobodies. Who was this man giving us a ride in his big car? We got the visa, and the question was how do we get out? Through Spain and Portugal, that was the only way to get out. We had no passports. Who knew how we were going to go anywhere?

ALLEN: I think we'll have to stop there, we're just about out of tape.

End of Tape 1, Side B

BARUCH: We obtained from the American government what they call identification papers, a very imposing- looking document with all the visas stamped on the back. The one thing we could not apply for was a French exit visa because that was the Vichy government and they were keeping very close track of who was applying and who they wanted to be able to leave. We went back to the International Rescue Committee and they gave us some advice as to how we ought to do this. A fellow named Darien Fry was very helpful in that area. So we set out in a rented a car and went part of the way and then we found a guide in a place in the mountains. He said that we would assemble around ten or eleven o'clock that night.

ALLEN: These are the mountains between Spain and France?

BARUCH: The Pyrenees. Yes. We met him at ten o'clock and he guided us and finally I had to carry my grandmother because she was 82 years old. We got over the border and then went down the mountain, a big hill. We approached a little village called Figueras in Spain. This was on the Spanish border. We avoided the French border because we did not have an exit visa, which was none of the Spain's business. All they needed was the Spanish visa but for not having it we were promptly arrested and put in jail. My father, through a device, trying to pay for a phone call to get transportation, bribed his way and our way out. We immediately got into a taxi and went to the nearest railroad station. We took a train to Barcelona, and then to Madrid, and then took a night train from Madrid to Lisbon where we had relatives.

ALLEN: You had been able to put together enough financial resources to be able to cover all of these travel expenses?

BARUCH: That's right. The only thing we had was money. We arrived in Lisbon where my dad had some relatives because that's where my family originally had come from in the 15th century. Mr. Azancort, who is a lawyer, and his wife, greeted us in their home and for the first time in many weeks--I remember that very well--I had white bread and butter ...

ALLEN: Do you remember the date that you arrived in Lisbon?

BARUCH: It must have been late September, 1940. We got into a little pension, where we were made more than welcome. We visited our relatives in LoPorto. Their name was Baroshbasto, a bastardized name of mine. We met with them and I met their daughter. She was the same age as I was, a very attractive person. So they brought their daughter down, and I didn't speak a word of Portuguese and she didn't speak a word of English but we got along very, very well.

We booked passage on a Greek ship to come to New York in October, and that was just about the time the Germans invaded Greece. So that ship went back to Greece. Then we spent more time in Lisbon, which was very, very nice. Finally, through some help from a lawyer--a cousin of my dad's who represented the United States' Lines, among others of his clients--we got passage on a Portuguese ship called the Nyssa, which was meant to carry maybe 200 to 300 passengers. We bought an inside cabin for four: my mother, my grandmother, my father and I. We paid, in 1940, $450 each. They had emptied out the cargo holds and put down cots to get on more passengers. There were over 1,100 people on this boat. It took us ten and a half days to cross. I don't think I ate very much because most of the food was horrible, terrible. Three days out of New York the automatic steering broke and they had to steer the boat by hand to New York. But we docked in Hoboken and were met by my aunt and her son. This was my aunt who had gotten us help in getting the visas.

We were put up in a place called Congress House. The American Jewish Congress had taken up some brownstones in the west '60s and was sort of a commune. Every day somebody had to do the cooking, somebody the cleaning, etc. We stayed there for a while. By that time our money was pretty well gone. I don't know what we spent, but we spent a great deal of money. We were able to share an apartment at 601 West 178th with another family. He had been a cattle dealer in Europe. They were a terrible family. My father and I and my family really suffered.

My grandmother stayed with my aunt, and we had this little apartment. I applied for permission to work. In those days visitors did apply for permission to work before they went to work--that doesn't seem to be customary any more. The permission was granted. In the meantime my dad developed an ulcer from all these problems. He was put in the hospital. My mother developed a heart condition from which she died a very few years later, in her late forties. Dad was put in the Mount Sinai Hospital. I got permission to work and found a job in a shoe factory as a shipping clerk. I was paid thirty-five cents an hour, and sustained my two parents on that. But in order to make a little more money, I got myself a job on weekends at the Apollo Theater here on 42nd Street as an usher. For those two days, I got $2.67 total. So, on the sixteen, seventeen dollars, we tried to make due. Then dad, when he got out of the hospital, got himself a job with the War Department. My mother worked in a garment factory. So the three of us lived ...

ALLEN: How long did you stay in this apartment?

BARUCH: Oh, about two months. Then we got a furnished apartment on West 93rd Street. I met a doctor's daughter who had heard about us from our nanny. The nanny I had eventually worked for that doctor in Germany, cleaning his office. We became very, very close--young kids falling in love, I guess. By then I had graduated to a different shoe factory in Brooklyn, where I was the only non-Sicilian working in that factory. Which wasn't easy, either.

ALLEN: How old were you at this time?

BARUCH: At that time I was 19.

ALLEN: And your English?

BARUCH: Improved. I didn't speak it too well when I got here, but obviously I had to make due and I had to learn. So one day we decided that since both of our parents knew each other and there was no way they were going to let us get married, we went to a different state, got married and went back and said, "Look at the big news! We're married!" Well, all hell broke loose. We took a little furnished room somewhere. Then, as kids go, she became pregnant. We couldn't find an apartment --the war had broken out. I had tried to enlist because I felt very strongly that I ought to do something. I was rejected twice because I have a punctured ear drum from a serious ear condition when I was very, very young. In those days, there were no antibiotics or anything. So the whole inside of my ear is apparently a problem. Then she became pregnant. Our child was born seven weeks prematurely.

ALLEN: And when was this?

BARUCH: This was 1944. Again, we couldn't stay where we were and we couldn't find an apartment so we moved in with my in-laws. My father-in-law was a doctor, and he had his practice on West End Avenue in the same apartment. We were told we had to keep our child quiet. It was very difficult. Well, finally we found an apartment on Morningside Drive, near Columbia University. It wasn't a great area, but it wasn't too bad. But to help things we took in a boarder. A gentleman from South Africa, I remember that. We did some homework pasting feathers on a ribbon. I don't know what they were used for.

At that time I had become a recording engineer. I had always wanted to get into communications so a friend of mine who had worked at NBC had become a recording engineer and he gave me a book to read. From that book, I learned enough to get myself a job at Bost Records. They were at that time on West 57th Street, I think it was 29 West 57th, and from there I graduated to another job at Empire Broadcasting which is also in recording, basically. They called themselves broadcasting but they weren't in broadcasting. They really took advantage of us in that place.

Local 1212 of the ICW approached the place to find out if we wanted to join the union. I was one--I must admit--of the leaders to get the union in there. I also was assigned a lot of studio work because I have a fairly good ear and mixing mics and so on was, to me, quite natural. Among other things, I recorded Jan August, a pianist who came in. He was hired by a fellow named Gwirtz, Irving Gwirtz, at scale, to do a recording. I remember very well we sat until three or four in the morning doing one side "Bob-A-Loo" and the other side "Mis-A-Loo" which later sold millions of records and this poor pianist only got scale. Diamond Records, Mr. Gwirtz, made a lot of money.

ALLEN: What was your citizenship status at this time?

BARUCH: That's a very good point. We had applied for naturalization, but since we were visitors you could only apply for naturalization if you were a resident. So the United States' government, during the war, arranged for us to take a one day trip to Montreal. That way we were given immigration visas. Then we applied for citizenship, and having been married to an American citizen, I was granted citizenship about '46, '47, or '48. Which, for me, was a great deal of pride. I was very happy when I got my citizenship papers.

Then, having been a recording engineer for a while, when the Union came in our salary position improved considerably. But, obviously, the company did not take too kindly towards what we had done.

I was working the night shift once from four to midnight when I got a call at about eleven-thirty from WMCA in New York. One of the people wanted me to record something from 12:30 to 1 a.m. I told him, unfortunately, we close at midnight, and he said, "Look. I'll pay anything you want for this. Just make sure you get it." I said, "All right, but you're going to be charged overtime." I made out my work sheet and circled in big letters, "Overtime - 12 to 1 a.m." The next day he came in to pick up his recording. These were acetate recordings in those days. There was no tape or anything. He left an envelope for me. At the same time, in order to make a little money, I was writing articles for a technical magazine and asked for permission to do that. I got verbal permission to do that and never thought of getting it in writing.

I remember very well interviewing Peter Goldmark because it was rumored he was coming up with the LP record, which Frank Stanton told me a very cute story later on about. But, I interviewed Peter Goldmark and I was very impressed and wrote up the story.

Well, this gentleman picked up his record the next day and left an envelope with ten dollars in it as a tip. The next day I was called into the office by the owner and he said, "You have been bribed and you have written articles without our permission." I said, "That's absolutely outrageous!" Because I had gotten the permission of the chief engineer. Fred Deyager was his name. And number two, I did not get bribed, I was left a tip which was quite customary in those days. The company must have billed this man for my time, because I had circled this in very big letters on my work sheet. He says, "Well, I'm sorry. I will not accept that. We want you to resign." I said, "I have no reason to resign. I will not resign." The next morning I got a registered letter firing me. I went to the Union but since this being a very small shop, the business manager, Charles Korain, said, "Well, you know, this is really not worth fighting about. Why don't you get yourself another job?" I was absolutely outraged. I said that was not the end of it, I was going before the board. I went before the board and their decision was the same. I took it to an open membership meeting and I was shouted down with, "Aww, shut up! Sit down!" from the back of the room and I couldn't speak. I lost that job.

ALLEN: And lost some of your enthusiasm about unions.

BARUCH: You're not kidding. Later on in life, that memory stayed with me as I will mention to you later. So, they sent me a withdrawal card. I sent that withdrawal card back and I said if I should ever need that union to get a job that'll be a hot day in July. Finally, I ended up getting a job with an organization called ASCAP, which was a music licensing organization licensing radio stations in those days. It was privately owned by a couple named Heinecke, and the Heineckes ran a very tight shop. I was hired to sell their transcription library to radio stations, and later on, became a trouble- shooter for stations that the field force could not convince to sign an ASCAP license.

ALLEN: What kind of a time frame are we talking about at this point?

BARUCH: We're now talking 1940 ... the end of '47. I was quite successful in selling their transcription library and also licensing stations. I remember very well that we had a problem licensing the Westinghouse radio stations. I was called in. I was 25 years old in 1948--it may have been a little bit later but that's about the timeframe. I was told to go down to Washington, D.C., to see Mr. Walter Benoit. He was a gentleman in his sixties who was head of Westinghouse Broadcasting. They owned quite a few radio stations throughout the country (some large ones). I was to try to negotiate a license. I must admit I was scared to death, but I didn't let on.

I met Mr. Benoit and we sat down and negotiated all morning with considerable noise at times. Then he said, "Well, it's time for lunch." I said, "When would you like me to come back?" And he said, "What do you mean?" I said, "Well, you just said, you know, it's lunchtime." He said, "Well, you're a very nice fellow, let's have lunch. The fact that we disagree on this is not a personal thing." I learned a very good lesson with this. That you don't have to translate business differences to a personal level. So, we spent a very pleasant lunch and went back after lunch and yelled at each other again. But I ended up signing up these stations.

Then I was sent out to the NAB convention. I think it was the '48 convention in Chicago. I paid my own expenses, out of a per diem kind of thing. I had to drive to Chicago in my little '49 Chevrolet. Must have been '48, '49. I know it was a '49 Chevrolet so it must have been '49, maybe even '50. When I finished the convention, I found a note, saying, would I please go to some place in Indiana? I went to Indiana, I found another note saying, would I please go to Steubenville, Ohio? To make a long story short, they kept me on the road for seven weeks.

ALLEN: Without ever allowing you to come home?

BARUCH: Without ever allowing me to come home. They had a field force that was doing this, but they were paid differently. I had to pay my own car out of all this. I felt quite pressed. I had, by then, two children. I know that I went back and Mrs. Heineke was not in the office. She was in her summer home in the Catskills. I drove up there to see her, asked to see her, and I explained my problem to her. She said, "Well, I think the best thing for you to do is to resign." And I said, "I agree with you completely." She thought I was bluffing. When I answered that, she realized she was going to lose a good person. She said, "Well, let's sit down and let's talk about it." At that point, I knew that I had won my case but I wasn't going to work for these people long term. Also, they are an organization that is not very well-liked in the industry. I heard all the time, "What's a nice fellow like you doing working for an organization like that?" So, I decided to look for a different job. I really didn't know what to do. I read about the AAAA.

ALLEN: Did you resign? Or did you look for another job?

BARUCH: No. I stayed on, I looked for a job. I had heard about the four A's, The American Association of Advertising Agencies giving an aptitude test. I took this aptitude test. I think it cost $300 in those days, it was a whole day's test. The results came out and said basically I should be in marketing, in sales. I always thought I ought to be a producer or director, you know, that's very glamorous. As a matter of fact I and a fellow that had been at NBC while I was in the recording business did a pilot for a radio soap opera about a soldier coming home. It didn't go anywhere.

One day, I was walking on Broadway in the nineties, and walked by a television store, an appliance store. They were also selling television sets and there was a set in the window with this big glass front which enlarged the picture. I saw about fifteen, twenty or thirty people--I don't know how many, but it was pretty jammed--watching wrestling. I came back three or four hours later, walked by that store, and there were about ten people standing there watching a test pattern! I said to myself, "My God! This must be some business if people watch test patterns!" I mean it stays the same--they stood there watching that stupid test pattern! To them, this was a fascination. And I said that's a business maybe I should look into.

Through a friend of mine, I was told that Channel 5, the DuMont Television Network, may be looking for a salesman. So I saw Mr. Bashan, Jack Bashan, (a lovely man), who said, "Yes, we're looking for salespeople. We have, locally for example, a hundred spots for sale. We have four salesmen now, we're trying to find a fifth one. If you sell twenty of these spots, here's your commission." I think it was something like 1 percent, and the spots were selling for $500, that means you'd make $100 commission a week. "And you'd do very well and we'd pay your salary so you should do extremely well."

ALLEN: Let me see, you said they sold for $500 and 1 percent commission?

BARUCH: No. The spots were selling for $500 and I would get 1 percent commission. That's $5.00 a spot.

ALLEN: And twenty of them would be $100.

BARUCH: A hundred dollars. Well, I was hired for seventy-five dollars a week selling spots. But I thought this is an industry with a future and I should be in it. I met the general sales manager of the network, a fellow named Theodore Bergman, Ted Bergman. I still keep in touch with Ted, he's in California. I went out and tried to sell. Well, what I didn't know is that there was such a thing as ratings, and Channel 5 didn't have any. They were an independent station. Their transmitter wasn't even on the Empire State Building at the time. If you walked down Madison Avenue to 53rd Street, at 515 Madison Avenue, you'll see an antenna sticking up and that was their transmitter. So the signal wasn't very good, the programming wasn't very good. I had a very tough winter of 1950.

ALLEN: What were they programming at that time?

BARUCH: Oh, in the morning they were programming talk shows, shopping shows. They had some good network programming: "Rocking King," "Cavalcade of Stars" with Jackie Gleason as a matter of fact. Coca-Cola had a Sheriff Dickson on at six o'clock. We had "Magic Cottage," a children's show, and of course at seven o'clock, the big DuMont Network piece de resistance was Monday through Friday, "Captain Video," which Ted Bergman had sold to General Foods. It was really a great experience in many ways.

The only problem was there was one salesman, Larry Wynn, who had the big agencies assigned to him. These were (as I recall) J. Walter Thompson, BBD&O, Hewitt Ogilvy, it was called at that time; every major agency was held by this guy. He couldn't afford to leave his desk because the phone would ring with inquiries or spot buys. When a spot became available, you had to notify sales management. Either Jack Bashan or Ted Bergman would come into this big room on the second floor, which we occupied, right above the marquee on 53rd Street and announce, "This and this spot is available." Larry Wynn would act as if he were on the phone and would say, "Sold!" You know, raising his hand. And everybody knew he knew when it was canceled and he had gone to another client and already sold it. So the best spots never became available to anybody. I made my feelings known. If I go into too much detail, tell me.

The only agency that was halfway decent was Benton & Bowles. I got a call from Mary McKenna when I was supervising time buyers. She said, "Best Foods is looking for a program on Sunday afternoons. We want to put all kinds of products in." I eventually made the sale to her of Sunday Matinee. We hired Rex Marshall as an announcer and we put on movies. There's a lot of stories connected with that; I'll spare you all the details. But that was my first big sale.

Then Larry Wynn was made sales manager and some of the agencies became available, which helped a little bit. On the other hand, he hired Janet Tyler, his lady friend, and she became the weather girl. He was pushing those sales very hard, or those of that weather show--for obvious reasons. Also, you must remember, in those days DuMont owned the only television station in Pittsburgh, WDTV. Mary McKenna from Benton & Bowles said, "Ralph, I know that I have to buy spots in either New York or Washington to work on something, in order to clear the Red Buttons Show into Pittsburgh. The client needs the Pittsburgh market." I said, "Mary, I don't want anything to do with the fact that you have to buy something in New York in order to get your show cleared in Pittsburgh." She said, "Well, who do I talk to?" I said, "You talk to the sales manager, Larry Wynn." Well I was called into the sales office one day and I was told, "I'm going to give you an order. Benton and Bowles (General Foods) ordered the weather girl show, five days a week, fifty-two weeks firm." We all know how that sale came about. But I was happy to make the commission.

One day I get a phone call from Mary McKenna asking whether Janet Tyler will do live commercials for that show. I asked Larry Wynn, who was sitting there, "Larry, will Janet do live commercials?" He says, "Who is it?" I said, "Mary McKenna." He says, "Oh sure." I said to Mary, "Yes, Mary, she'll do live commercials." Mary said, "What's the charge? I said, "What's the charge, Larry?" Larry said, "Who is it?" I said, "Remember, General Foods." "Oh," he says, "no charge." I said, "Mary, no charge." She said, "Thank you!"

Several weeks went by, and I get a call from Tom McDermott, who was head of Benton & Bowles--later on he went to RCA--recently died. He asked me, "Who is this broad, Janet Tyler?" I said, "Why do you ask?" He said, "Well, she keeps calling me, she wants more money!" I said, "You mean talent is calling the agency? Let me handle it, Tom." So I went to Larry Wynn. I said what is this? Well, he said, "Yes, she really needs more money." I said, "But remember we had this talk?" Well by then, DuMont had hired someone to run the owned stations, a fellow named Dick Jones that came from Storer Broadcasting. Dick drank too much. He probably got into trouble at Storer, I do not know the circumstances, but anyway we were asked to appear at Benton & Bowles. I remember the meeting--it was Dick Jones, Larry Wynn, and I. They had Mr. Holbre, who was then handling the General Foods account. The Account Executive, the Account Time Buying Supervisor, Mary McKenna, and her Time Buyer and so on. She asked me to relay what had happened buying this show. I relayed it, and fortunately Dick Jones got up and said, "Look, there's no reason for this meeting." He turned to Larry Wynn and says, "I don't want any more of those meetings." But it was a strange time to work in this shop.

I remember one time I sat down with Ted Steele, who was the account executive or account supervisor for a beer out of Cleveland, Carling Beer, and with Ted Bergman who was my boss at that time. I said, "I have an idea to sell ten second spots where we have on the bottom of the slide the latest news headline and the weather forecast." "Oh," he says, "I think that's a marvelous idea. How would you handle it?" I said, "Well, we'll have a recording of the Carling jingle: "Hey Mabel, Black Label," that was their beer. "We'll play that with the weather and the news, and somebody will read it." "Oh," he says, "how will you do it?" I said "We'll have a Tel-op machine," that's a card you type on it, "and we'll project it." "Oh," he says, "that's great." I said, "But you have to buy seventy spots a week fifty-two weeks firm." He said, "Well, let me see what I can do." He went to Cleveland and came back and said, "I can't get you seventy spots a week but I can get you fifty, thirty-nine weeks firm." That was the biggest ten second campaign ever sold in the city of New York. I was delighted. I went up to the program department and saw a fellow named Les Aries, who later became manager of a television station in Buffalo, and Al Hollander in the program department, and I outlined my sale. And I see strange faces. I said, "What's the matter?" He said, "How are you going to do it?" I said, "We'll have a Tel-op machine." Well, it turns out DuMont, the flagship station WABD Channel 5 in New York, didn't have a Tel-op machine. I wasn't going to lose that sale so I didn't know what to do. I finally got some advice and I marched up and down Madison Avenue and found the Vari Type company, and they had a miniature typewriter. I found that if you type the headlines with a miniature typewriter on a piece of red cellophane, and you stuck that over a slide, it worked. And that's how I made my sale.

Another time, there was a fellow named John Cusera who was Supervising Time Buyer, Supervising Media Buyer, at the BBD&O company. The BBD&O company had Philip Morris cigarettes, sponsoring the Yankees on Channel 5. I knew that Channel 5 was doing something that was not in the agency's interests. I really had a tough time, and I didn't know what to do. I was loyal to DuMont, on the other hand, they were really not doing the right thing. So I took my courage in two hands and I called Mr. Cusera. You called him Mr. Cusera. I said, "Mr. Cusera, I want to come and see you. I have a problem." I outlined my problem to him, and I said, "You know, if this gets out, I'm fired. On the other hand, it's not right." And he says, "I've had this a few times. Let me tell you something: nobody will ever know about it. Thank you and I appreciate it." But from then on in, any time the BBD&O Agency had a campaign I got at least my fair share of the billing, and he never disclosed anything; a fine gentleman. I got to know a lot of very, very nice people.

ALLEN: How long were you with DuMont?

BARUCH: I was with DuMont for four years. I met some marvelous people there; they had quite a staff. Many of them moved on to bigger and better things down the line, but they were pioneers really. Ted Bergman and many others went on to big jobs in the industry. In 1953--three and a half years after I started with DuMont--the Los Angeles Times, a fellow named Peter Robeck came to me and said the Los Angeles Times had the television station KTTV in Los Angeles and they need programming. They're going to buy rights and produce, and they're going to sell the product, and wouldn't I like to work for them? He seduced me into joining them. We did extremely well.

ALLEN: Did that mean moving to Los Angeles?

BARUCH: Nope. I was in the New York office. And we did so well that the two partners in the business, Norman Chandler was one, and I can't remember the name of the other fellow except that I was out to his house once in Los Angeles. They manufactured small diesel engines and were making lots of money. He was an alcoholic--that was well known. One time we had a party at his house and he insulted me anti-Semitically. I did not take kindly to that and told him off. But they carted him off and brought him home or to another place, I don't know, they took him away. At the same time, while we were so successful the two partners started having problems with each other. Obviously the Los Angeles Times was a very dignified operation. I met Mr. Chandler in the Los Angeles Times penthouse where he gave a little reception at one time for all of us. But they sold the company to a fellow named George Bagnol. One day I see Mr. Bagnol coming in, I'm talking about late 1953, early 1954 ...

ALLEN: So you were with the Los Angeles Times. How long?

BARUCH: It was called Consolidated Television Film Sales. I was there about eight months when they sold the company. I saw this fellow coming in wearing checkered pants with an open shirt and a big chain with a medallion on it. I took one look at this guy and I knew I was not going to work for him. But he didn't know what to do. He said he needed somebody in New York. And I said, "Well, I'm not going to do it full time for you." Well, we agreed on a consulting deal.

Then through somebody else named Charles Wick, who was an agent for Francis Langford and others, he called me and he says, "I've got a television show: "Fabian of Scotland Yard." It's an English show. I don't know what to do with that show, what would I do with it?" I said, "Well, I can help you but I can't do it full time." After all, I was looking for a job. I said, "But I'll do it half time for you." So I did the two consulting jobs and was paid by both, (fairly well, as a matter of fact). I was making a $1,000 a day, and in those days that was a fortune. But I was also looking for a job.

Well, I must tell you that Charlie Wick went on to bigger things and our paths crossed down the line much later. He eventually became head of the United States Information Agency under the Reagan Administration. He asked me to become head of his Video Communications Committee, private industry committee. But I didn't know it then. In April of 1954 I was interviewed for a job with CBS films by a fellow named Bill Edwards. He hired me with a guarantee of $200 a week, calling on television stations selling programming in eastern Pennsylvania and part of New England. Well, what I didn't know was that Bill, who was a very nice guy, was, at one time a Methodist minister. There was a revolt at Channel 2 in Los Angeles where six to eight people came into his boss' office and said, "Either he goes or we all go collectively." So he was shipped out to New York to become head of CBS films. I left the Los Angeles Times and the successive company Bagnol to join CBS. I was very happy to have joined CBS. I was indoctrinated by some of the other salesmen to what the expense accounts are like, and so on. I became fairly successful.

ALLEN: What were some of the products that you had in the line-up.

BARUCH: Oh, we had Gene Autry. Later on we had Annie Oakley and the Range Rider. There wasn't anything great. A couple of Art Linkletter shows, "Art Linkletter and the Kids," I think it was called, and some concerts. It wasn't much. I called on a station in Scranton, Pennsylvania, UHF. There were reports in the files of my predecessor saying there is no market here. Well, it turns out that he hadn't visited that market in two years. And eventually I was sold out in Scranton and did very well.

A few years later after I was fairly successful, I was asked to become Eastern Sales Manager. It actually was Eastern Sales Supervisor, they called it. I shared that job with a fellow named Jim Victory. The head of the organization, Leslie Harris, who was really a very nice man but a blowhard, would come to us from McCann Ericson, resigned. Bill Edwards eventually resigned. I got on the phone and I called a fellow named Tom Moore, who was our representative on the West Coast and was very successful because there was no network interconnection, and he sold "Annie Oakley" to Carnation. He was doing extremely well. I said, "Tom, you've got to come East because if you don't take over that job somebody else will. I hear, Norman Walt, who was sales manager of Channel 2 may come over." Norm was a very difficult man. He said to me, "Ralph," in his Southern accent, "I don't want to come East. I'm very happy here." Well, he eventually took the job.

End of Tape 2, Side A

BARUCH: Sam Diggs became head of the operation of CBS Films. Sam let Mr. Harris go and started taking over. The first thing he did was produce a show called "Robert Herridge Theater," which was quite an egghead type of production on tape. But Sam thought that with his success of "Sunrise Semester" at Channel 2 in conjunction with New York University, which had a lot of attention, he was going to carry that over into the film business. We tried to advise him against it, but he did it.

In the meantime, I also sold "Whirlybirds" to Continental Oil. "Whirlybirds" had originally been a Desi-Lu pilot for CBS. The CBS Television Network didn't know what to do with it and gave it to us to see what we could do with it. Well, I had my contacts: Benton & Bowles, Chuck Shugart, and Jack Philips who were the supervisor and executive, respectively, on the account. I showed them the show and I told them about some of the promotions that we could do and some of the merchandizing that could be tied in. Tom Moore had become sales manager (coming in from Los Angeles). So they took the show down to Houston to the client to show it to him. The day after they left, Tom Moore got a call from a CBS network that they wanted the show back. It was Thanksgiving weekend, and he said, "Well, I can't give it back to you because Benton and Bowles has taken it down to their client in Houston. They are the agency for Continental Oil and they're submitting it to their client." "Well, if that deal falls through we're going to get the show back." Well, they came back with an order for about sixty or eighty markets for "Whirlybirds." So CBS did not get the show back but what we didn't tell management was that it was only alternate weeks and that we had to fill in the alternate weeks which of course we did. I did very, very well. I bought a house in Queens. In the meantime ...

ALLEN: At this point you had two children?

BARUCH: At that point I had three children.

ALLEN: Three children. And their ages were ...

BARUCH: That was, let's see, 1957, so one was born in '44 the other one was born in '48 and the next was born in '51. So, I had a few of these accounts. Then we did a show that Tom wanted to do about the Civil War, which was an adventure series called "The Gray Ghost." We sold that fairly successfully. We had sold the reruns of "Navy Log" which was our production. But in the meantime, a fellow came on the scene named Robert Lewine to do network pilots. It was now 1959, and my fourth child was born in 1958. Bob Lewine was making network pilots and I said, "Bob, I would like to have a cup of coffee with you at Schrafts," across the street from 45 Madison Avenue. We had a cup of coffee, and he was complaining about the frustration of making network pilots. I said, "Didn't you think about this when you took the job?" He said, "What do you mean?" I said, "Bob, you can't win. Let me illustrate. You make a network pilot. You have to show it to CBS first. Mike Dann and Jim Albright look at it and they'll either hate it and say it's a piece of junk, or they'll like it. If they like it, you're in even more trouble because now they'll say, 'Why didn't we make that, why did it have to be that little subsidiary that made it?' So if they like it, they'll put it on the air. If they put it on the air they're not going to give you very good time spots because it wasn't their show; but if by some miracle the show succeeds they'll hate you even more. On the other hand, if they don't like it, you go to another network, NBC or ABC. Well, they know darn well CBS has looked at it, so they either don't like it--in which case Albright and Dann still laugh at you--or they'll put it on. Now the decision tree again folds in two areas. It flops, and then you look stupid and Albright and Dann look brilliant because they didn't want it. But, much worse, let's suppose it succeeds, and beats the pants off the CBS network! They'll hate you up and down the entire building! So you can't win this!" He says, "Oh my God, I never thought about it." And six months later, he had left to go to CBS programming on the West Coast. A lovely person, incidentally.

I was made head of International, and the very first thing I was asked to do was go out with Bill Lodge and his wife to Australia because new stations were coming on the air and I wanted to see what CBS should be doing.

ALLEN: How big was International at the time you were made head?

BARUCH: It was an absolute mess! We had a fellow in France, Jean-Paul Blangeau representing us who had sold "The Whistler," one of our productions, to theatrical exhibitors, which of course we didn't have the rights to do. Our man in Central America was in jail. In Canada, we had Spence-Caldwell representing us who was just about to start a network. In Australia, we were only doing business with Frank Packer and the Channel 9 stations. We had never sold any show to anyone else. There was no competition, really. And in Japan, we had an agent that was collecting an outlandish fee, the Sakhia Company.

ALLEN: What made it attractive for you to leave CBS Films to go to International?

BARUCH: Well, I didn't really leave CBS Films. It was the International branch of CBS Films.

ALLEN: So leave domestic to go to International?

BARUCH: Right. Well, Sam Days got me in there and beat me over the head time and time again. That was the pattern at CBS. You were made an executive of some kind. While you made very good money--in those days I was making fifty to sixty thousand dollars a year--he offered me a much lower salary to be head of International, director of international sales. But if there's enough pressure exercised, and you had quite a few other benefits, if you want to make a career at CBS that was the pattern.

I must also tell you an anecdote. Six months after I joined CBS, while we talk about salaries and other things, I got a call from my former boss at the Los Angeles Times, Peter Roebeck. He wanted to know if I would please meet with him and Tom O'Neil, head of RKO, in Mr. O'Neil's apartment at the Lombardi Hotel. We met on a Sunday afternoon, and Mr. O'Neil wanted me to join them because he's going to start a syndication operation and they're going to buy the Bank of America pictures, as they were called, to syndicate them in the county. And at that time, I was making maybe ten, twelve thousand dollars a year. But there was something about CBS; they were the Tiffany. We all felt that we were very proud to work there.

O'Neil ended up, at the end of this Sunday afternoon, offering me three times what I was making at CBS and couldn't understand why I would not accept it. I tried to explain to him that one does not leave CBS after six months. Your reputation is at stake. I wasn't going to be a drifter. I had been working for DuMont, and then the Los Angeles Times for very brief periods, and I wanted a solid career. So, in 1959 I became head of International. I was sent out with Bill Lodge and his wife, Billie, to see what was going on.

ALLEN: Who was Bill Lodge?

BARUCH: Bill Lodge, at that time, was a Vice-President of Affiliate Relations and Engineering. A very tough, bright individual. He had had some problems with his wife that I wasn't aware of, but he was a very pleasant travelling companion. He and I disagreed on what CBS should be doing. I maintained that CBS should buy television stations to the extent allowed by the law in Australia, and he didn't think that the smaller stations were anything worthwhile. I had offered our news and public affairs shows to Frank Packer; to the Australian Broadcasting Commission; and to the Channel 7 group, Henderson's operations. We had only done business with Frank Packer. I had asked for a reaction and Frank said, "Let me talk to you about it at some point," and gave me his reaction. The ABC--Australian Broadcasting Commission--the government network, sent me a wire back agreeing to the terms I wanted and Henderson didn't answer at all. So, I sold them to ABC before I went to Australia and Packer raised holy hell.

Our first call was on Frank Packer. Bill and I went in to see Frank Packer and he keeps us waiting a while. He walks in, and says, "Well," (he didn't say hello or anything) "have I got it or haven't I?" I said, "Have you got what?" He says, "The news and public affairs package." I said, "No, you haven't." He said, "Well, there's nothing else to talk about." I said, "Okay," and I took my hat and my coat. Bill Lodge stood there, mouth open. He couldn't understand what was going on here; I mean after all, we traveled all this distance and in those days that was a tough flight.

We took one of the first jets. They had been in operation a week. You used to travel to San Francisco, Honolulu, Fiji, Sidney. It was like a twenty-five, twenty-six hour trip if you went all the way through. I said, "Well, you just said there's nothing else to talk about so I'm leaving." He grabbed my sleeve and he said, "Sit down!" We got very angry at each other. Well, Bill couldn't understand that.

Then we visited with Charles Moses who was head of the ABC. His lunches were very well known. We drank and drank and drank to the point where after lunch, Mr. Moses--later on to be called Sir Charles Moses--was on all fours looking for a bottle of wine he had hidden somewhere and he couldn't remember where. Well we got back to the hotel about 4:00 or 4:30 and I went straight to bed. Bill went back to the states with his wife. I felt I should really explore Australia. I went to Tasmania to see a new station which was being built there by Eric McCray and I also went to Perth. I was the first American television company representative to ever visit Perth. Jim Cruthers, now Sir James Cruthers, showed me where TVW was going to be built, etc. I built a very good relationship with the Australians. I arrived back in September.

On October 9th of that year, I had to go to a cocktail party given by some Japanese television people. I got a phone call from my oldest daughter that, "Mommy is very sick, you better get home right away." I got home about 7:30, and my wife was in absolute agony. I finally found out she was pregnant which I didn't know about. She was in the early stages, but being a doctor's daughter and having studied pre-med herself, she didn't think she needed a doctor. I called her doctor, her gynecologist, and she was put into Cue Gardens Hospital at 9 o'clock. She apparently had an ectopic pregnancy which had burst open; peritonitis had set in. To make a long story short, I put her in the hospital at 9:00 p.m.; at 3:30, 4:00 in the morning she had died. This, I think was the beginning of some of the worst years of my life. I was left with a one year old, an eight year old, an eleven year old and a fifteen year old. Overnight, I was a widower.

ALLEN: Your wife was in her late thirties at that time?

BARUCH: Early thirties. She was thirty-four. She was born in '25, and died before her thirty-fifth birthday. We had a nurse for the little one for a while. I convinced the nurse to stay on and we had a cleaning lady and I extended her hours. I started looking around for a housekeeper and found one in Switzerland. I brought her over she sort of ran the house because I had to travel a great deal since I was head of International. I practically went broke because I had to hire help for weekends and everything. It was a mess.

But I developed the International organization. In Canada, I told Spence Caldwell he couldn't stay distributing our shows because he was going to have a network and there was a conflict of interest. How could we sell to the CBC if he started the CTV network? He didn't like it at all. He said that one of his people, Ken Page, could represent us. I met with Ken on a lake in New Hampshire in a boat so that he couldn't run away. I made a deal with him for distribution. Ken said, "Well, I like the three year deal but I would like one more season." I gave him three and a half years which really was four seasons.

In Central America and Latin America we had all of our shows in South America sold to a fellow named Gore Mestray. Gore was a partner of CBS in television stations in Argentina, Venezuela and in Peru. He had made a sweetheart of a deal with CBS, which was very advantageous to him and very disadvantageous to us, but I was again ordered to make the deal. I tried to improve the deal and he went to my boss, my bosses boss, Merle Jones, who was head of CBS Stations Division at that time, and said he could live with that deal. The reason he signed the deal, even though he went to Harvard and so on, was because his English wasn't good enough to understand really what he had signed. I had to change the deal. So I cleaned up the operation.

In Europe, we set up our own representation. We had to do it out of Zurich, Switzerland, because all of CBS International's business was funneled through Switzerland for tax reasons. In Australia, we opened an office and, in 1961, I hired a fellow named Bill Wells. In Japan I hired the head of the Sakhia Company's television section, Mr. Koryaki Takahashi, to be head of CBS Japan, as we called it. I felt Mr. Takahashi, who was well-suited for this and had been a classmate of the Emperor's, and was an older gentleman. In Japan it is very essential to have that kind of representation.

Finally, I went to my boss and said, "I cannot run this operation any more. When I'm in New York, I can't travel and when I'm in New York I must work sixteen, eighteen hours a day. I can't continue doing this." I finally hired, as one of my assistants, Willard Block, who was one of our junior salesmen. I had asked him to find me somebody because his wife was in personnel work. One day he was home describing this job to his wife and she said, "Well, who have you found?" He says, "I haven't found anybody for Ralph." And she said, "I think you ought to apply for the job." Which he did. Then of course I gave him a very hard time but I eventually hired him. At least I had somebody else to travel.

The first time he went to Japan, he called me from Japan and he said, "I have a very awkward situation. I've been here four weeks and today, the Tokyo Broadcasting System," which was our closest affiliate, "said that the answer to our proposal is 'No.'" He asked me, "What should I do?" I said, "Well, you have to tell the Japanese that you're prepared to stay another month to get this worked out." He started screaming, "I've been here four weeks!" I said, "Look, the Japanese know our psyche. They know we want to go home. I didn't ask you to stay. I said you should tell them you're prepared to stay. Because CBS' answer to that is 'Unacceptable.'" And he said, "What the hell does that mean?" I said, "Just tell them their answer is unacceptable to CBS and you're prepared to stay another month to get it worked out." He told them that the next day. Three days later the deal was signed and wrapped up and delivered. But you have to know your foreign clients very well.

ALLEN: How did you develop this sensitivity to the different cultures?

BARUCH: Going there, knowing a little about it. I, of course, lived in Europe for a while. Why I was made head of International I never knew except that I spoke one or two languages and they thought that was a good thing for me to do. It was really very, very difficult.

ALLEN: Who were your major competitors from the U.S. in the international market?

BARUCH: Well, obviously the studios: MCA, 20th Century Fox, and of course NBC, and to some extent ABC. But neither NBC nor ABC were as strong because they didn't have as much product. I had many meetings with the CBS network people about product. The edict finally came down from Jim Albright that if they didn't get distribution rights to a program, the program didn't go on the air. And so, every show that went on CBS we got distribution rights. As recently as last Friday, Bob Daly, who used to be head of Business Affairs, confirmed this. He said, "We just took the rights," because the producer had no place else to go.

ALLEN: Was this both domestic and international rights?

BARUCH: Yes. Then, of course, the monkey business started between divisions where the network division overcharged me because they made a profit on everything--prints, reels, advertising. I guess that was customary. But we got the rights to every show.

Then Frank Packer formed a cartel in Australia. I heard that he had a signed agreement that assigned programs to each of the three participants in television in Australia. Together they decided what prices they were going to pay. I also heard that possibly a fourth station was going to go on the air. With the advice of our office, I sneaked in through New Zealand because every day Frank Packer got a manifest of all the passengers that were coming in on Pan Am and on Quantas from America. So I sneaked in from New Zealand. I flew straight through practically and I was picked up at the airport at seven o'clock. Bill Wells told me we had nothing on until noon. At noon we met with Len Major who was representing a fourth station that was going to go on the air, financed by a Reg Anset, of Anset ANA Airlines out of Melbourne. We met from noon until 1 a.m.

The next morning, we left on a seven-thirty flight to Melbourne. I was warned ahead of time if Reg Anset puts a cigarette box on the table don't talk anymore because that's the recording device. He doesn't smoke. We met with Reg Anset and he wanted to buy every new show we had and every show that was on. Well, I didn't want to put all of our eggs in one basket again so I sold him some new shows and then he said, "Well, I'll pay you X dollars for the renewal of Gunsmoke." I said, "Well, I have to give Frank Packer the opportunity to renew that show because he now has it on the air."

Bill and I started thinking about how do we tell Packer I'm in town? Well we had heard that his head of programs, Bruce Gingel, who now runs morning television in England, was at the Chevron Hilton Hotel--that's where I stayed. So I planted myself on a bench right in front of the elevator. I knew he had to come out and he did. He saw me and was completely taken back and said, "What are you doing here?" I acted very surprised that he saw me there. Well, I finally called Packer, and I said, "Frank, I would like you to renew "Gunsmoke" at this and this price." And he used an obscenity and hung up on me. So I sold the renewal of "Gunsmoke" to Reg Anset and I told Packer that "Gunsmoke" was no longer available. Finally, I think a light came on and I was asked by Rupert Henderson, Packer's competitor but part of the cartel, to have lunch with him. I was so terribly upset about everything that was going on because they do business in Australia like the robber barons did business in this country a hundred years ago.

I was in Packer's office once when they had a strike at the newspaper. He called his two sons in, both of them enormous--and Frank was amateur boxing heavyweight champion of Australia at one time, and couldn't hear too well because his hearing was boxed up--and told them, "Go down there and beat the pickets up." Which they promptly did. And of course the competing newspaper took pictures of that, published it on page one, "Publisher's Sons in Brawl."

While all this was going on I called New York and before I did I looked outside my room and here's a fellow at the end of the corridor at one o'clock in the morning with something attached to my wall! I called downstairs and I said, "There's a man sitting there!" Of course, the night manager must have been paid off because he says, "Well, is he bothering you?" I said, "No, but I find that unusual." "Well, I'm sorry sir, there's nothing I can do about it." I had to call New York so I turned on the television--there was no sound, there was a rushing noise--I put the blanket over my head and that's how I called New York. I mean, it was unbelievable! We were followed.

Merle Jones said, "I just got a telegram from Frank Packer complaining about the pricing you want to charge for "Gunsmoke" which, compared to England, is much higher, etc. What should I answer?" I said, "Why don't you just answer: Our representative is in Australia. Why don't you talk to him?" Well, he didn't want to do that and gave him a long explanation. To make a long story short, apparently it got out and Rupert Henderson said, "Let's have lunch." I went to Epping, where his headquarters were, and Mr. Henderson, who in those days was in his seventies, had a very crackly voice. He said, "Look, Mr. Baruch, I can remember very well what you've said. You've accomplished what you wanted. Can I give you some advice?" And he gave me the advice, "Why don't you just go home." I thought that was very good advice and I went home. Eventually the cartel dissolved.

In the meantime, we had problems in Europe and I had Michael Burke there. In the beginning when I became head of International, Mike and I did not get along very well. I went to England and he, knowing I was coming, went out of town. He was going to show me. He put me in a dump of hotel with a light bulb hanging down and a bathroom two doors down the hall. But Michael was asked to come back to New York to head up an Acquisition and Diversification Program. I appointed Bob Mayo. Bob's wife couldn't take Europe--she was there three or four years. She was a real provincial American. She claimed she couldn't find shoes in Europe, and my wife told her, "Why don't you have them made in Italy? You go to Italy all the time." I mean this was a dream job for anybody. Well, they left.

I had promised Ken Page when I set up our own operation there that I would give him a first crack at Europe. I moved him over. We had moved our office in the meantime to Zug, Switzerland, which was a different canton, for tax reasons again. So I moved Ken to Switzerland. He came back to me a year later and said, "Pat, his wife, cannot live in Switzerland." I rearranged our entire legal shenanigans and moved him to London to head up all of Europe.

One day we're sitting there going through our budget and Willard Block hands me--after he got his profit sharing--a copy of the letter he had sent to me (I didn't get the original yet) resigning. He had hired Howard Carshan, who was CBS News in Europe, to be his assistant. We all had dinner together and I thought I had convinced him to stay. We had dinner at Prinier's. I remember that because we found a mouse or a rat running along one of the wall sconces. Columbia Pictures, one of the people I had worked with, Larry Hillford, had offered Ken a job and apparently they talked again during the night because the next morning, Ken says, "Look, I've thought about this, what we said last night, but we shook hands. I'm not sure I want to take this job." I said, "You're entirely right." I turned to Howard Carshan and I said, "Congratulations, you're the new head of CBS Europe."

In 1963, I was remarried to a lovely lady that I met while looking for a nursery school for my youngest child. She had no children to play with in the area and I thought she ought to play with some young children. I visited all these schools, and all these directors of these schools gave me this nonsense about the psychological development of the child being very important.

ALLEN: At this point you were living in Queens?

BARUCH: Yes. I was living in Queens. Actually, it was Holliswood, which was part of the Queens borough. We had a lovely, English Tudor house, three stories high--an enormous place--it was lovely. But I now had to find a school and they gave me this nonsense about the psychological development of the child. All I wanted was for her to play with some children her own age. I went to this school and talked to the director. I started with, "What about the psychological development?", just to draw them out. The director said, "Oh, that's nonsense. All you want is to have her play with some children of her own age." I thought, anyone that honest one ought to marry.

ALLEN: (Laughter) Did you consult her about it?

BARUCH: Oh yes. I consulted her. She was so taken aback when she saw me she couldn't remember the names of half the people in her school and everybody was introduced as Mr. or Mrs. Smith--which I found a little bit unusual.

My father was still alive. My mother had died and he remarried, much later, to a lovely lady. But there was a problem because Jean was Episcopalian.

ALLEN: Jean was ...

BARUCH: The lady I eventually married. Of course, I am Jewish--not very religious but more tradition oriented. I think if I had married a non-Jew, none of my family would have ever talked to me again. Not that I cared, and my children would have used that--especially under these circumstances, as a tool--it would have created a lot of problems. Well, I went on a trip--I remember that very well--in '62. We made the trip around the world with our representative, Bill Wells and we ended up in Singapore. Now, this is quite a few years ago. We gave a dinner for the people from Radio Singapore and then the next day they said, "We must show you our Singapore."

We had lunch in one of their restaurants in a little room where they set a platter of noodles right on the table and everybody picked up the noodles with their hand. The next morning, Bill Wells says, "Ralph, I don't feel well and I'm going to see a doctor." I said, "Well, I can't, I have an appointment at the Embassy--I've got to go." I went, I couldn't eat lunch. I came back to the hotel and I remember crawling to the phone and saying, "Bill, I feel terrible--please help me, please help me!" That's the last thing I remember. Bill came into my room and found me lying on the floor bleeding from the rear end--very sick. He called a doctor and the next morning I woke up and I saw this man sitting next to my bed. He said, "Well, we had quite a time with you." I said, "What happened?" He said, "You had close to 106 degree temperature. We had eight or ten blankets on you and the whole bed was shaking. I suspect you contracted a form of typhoid, paratyphoid. Your associate told us about your dinner. There is a carrier somewhere in that area and I can't find him." Well, I was very sick but I wasn't going to go in a hospital because on the way in from the airport, we looked at the hospital-- for some reason, I don't know why--I said, "Bill, remind me not to get sick here." Because it looked awful. All I wanted to do is get home.

Well, I got a telegram from CBS, would I please visit with the head of Call Israel, who was the communications head in Israel, and also visit with a person in the prime minister's office. CBS wanted very badly to do a consulting agreement with Israel on the setting up of television. Well, we dragged our way to Hong Kong, where I recovered a little bit, and from then on in I only drank beer because beer has to be boiled. We ended up in Beirut, visiting this station. You couldn't go from Beirut to Israel, so we had to go to Cypress. I wasn't feeling very well in Cypress. By the time I got back to Tel Aviv I was sick and I called a doctor. He was a German-Jewish refugee and I'll never forget it. I felt awful, nauseous, and everything was turning. I remember this man sitting there and telling me, "What you need is some chicken soup." That was about the last thing I needed or wanted.

I dragged myself into Jerusalem to see this gentleman in the Prime Minister's office. I didn't feel well and he kept me waiting an hour. He finally comes in, very brusque, "Well, what do you want?" I gave him my card. "CBS. Well, what do you want?" And I said, "Well, I want to find out the status of television." And he launched a tirade against television, and the country, and CBS. I didn't know what hit me. I said, "Look. I can walk out the same door I just came in. I was asked to do this," etc. Well, I read the next day in the Jerusalem Post that the gentleman, whose name was Teddy Kolich, who is now mayor of Jerusalem and has been for many years, had just gone through a debate in the Parliament, the Knesset, about television in Israel and was voted down overwhelmingly. With this defeat sticking in his crow, he comes into the office and here's this smart cookie from New York wanting to know about television in Israel.

Well, I went on to Frankfurt and I got sick in Frankfurt again, and I finally get a flight back to New York.

ALLEN: Did you get to do any deal with Israel?

BARUCH: No. CBS did eventually, yes. Joe Stern and others worked on it. If we told them to do it black they did it white and if we told them to do it white they did it black. I had a lot of problems there, which I'll get into later.

But, I flew back into New York and I was so sick. The plane ahead of us at Kennedy crashes and we're diverted to Philadelphia. Of course, Philadelphia in those days, didn't have customs or anything. Nobody was ready for this flight coming in from overseas. So finally, they unload all the bags and I find one of my bags was torn, I have more problems. Finally, they put us back on the plane, the plane goes to the runway, it was fogged in. We come back and we're put on a bus. In the meantime, my wife-to-be knows I'm landing, she hears a plane has just crashed, everything is cut off. She can't get to the airport, she doesn't know what's going on. Well, finally she finds I'm not on that plane, I was on the plane behind it, and we're going to be brought in by bus. She said I got off that bus looking like a ghost. She took me to her apartment and called her doctor. I couldn't go home. He helps me with some belladonna and I finally go home. I had some suits made in Hong Kong which was stupid because I'd lost about twelve or fourteen pounds with this sickness. Anyway, that stayed with me for about ten years. Every time at Thanksgiving, around Thanksgiving time, I got pretty sick.

At the same time she tells me, "Well, you know, I've become Jewish." I said, "You have?" She says, "Yes!" I said, "Where?" "Oh, Temple Emmanuel." I said, "Temple Emmanuel!? That's reformed. That's not really being Jewish!" She didn't know the difference between reformed, conservative, orthodox--she knew nothing about any of this. She said, "Well, what do I do?" I said, "Well, I'll tell you what. I know the head of the Board of Rabbis, Rabbi Moskowitz. Why don't you go there?" Well, he took her in for some lessons. He came back and said, "She doesn't need any lessons. I will marry you." And with that I announced to the family and the others we're going to get married. On June 9, 1963, we were married.

ALLEN: At that time, your youngest child was what age?

BARUCH: My youngest was ... let's see, '63 ... she was born in '58, so she was five.

ALLEN: And your wife's experience with children up until that time had been in the nursery school?

BARUCH: Nursery school and her major in college was childhood psychology. So, she was pretty adept at this. She's done a very good job.

CBS thought they'd be very nice to me and they were. On our honeymoon, among other things, we went first to Paris and then I was asked to attend the EBU General Assembly--the European Broadcasting Union General Assembly--in Stockholm. The Europeans, when they have these conventions, treat themselves very, very well. We were a non-voting member--we were an associate member--and couldn't vote. There was a big dinner in the Stockholm town hall with maybe 600 to 800 people sitting at very long tables. They served reindeer, and the head of Yugoslav television, Mr. Yapichek, told her how to scull.

The next day we had a meeting and the same gentleman got up and suggested that the associate members dues be increased by 200 percent. Next to me sits Sir Charles Moses, the head of the Australian Broadcasting Commission, and his face got all red because he is also an associate member. I said, "Charlie, who goes first, you or me?" He said, "Let me go first." And he went first. Then I chimed in and I said, "You know, I don't understand this because it's going to hit the Americans particularly and why should we pay 200 percent more and not have the right to vote?" He said, "Why would the Americans pay so much? Because you have the money." And I said, "You know, that reminds me many, many years ago we had a bank robber named Willie Sutton. He was asked once, 'Why do you rob banks?' He said, 'I rob banks because that's where the money is!'" Well, they voted for this and we were stuck. But it also gave me an idea of how influential the BBC was really in Europe. When they set the date for the next meeting, he couldn't make it and three times they asked him to change it and finally they did--just because one person couldn't make it. We got back, and really had a marvelous trip.

Then the following year--and this happened three times--we took a trip to Europe and Sam Diggs called me back every time from my vacation. The last time he did that he called me back and he said that now I must come back because we want to make a pitch because CBS had just formed a motion picture division to make movies. I must make a presentation. I said, "Sam! I'm in London! You know we have no business being in distribution. We know nothing about movie distribution!" "I want you back here, and please, tonight." I said, "Tonight! Are you kidding? It's eleven o'clock here and I'm here with three children. We have planned a seven week trip to Europe!" Well, two days later we're all on the plane and I said, "What about the cost?" He said, "I'll take care of everything." We're on the plane, kids crying, the whole thing.

I sat on my rear end for a month making my pitch to CBS people who were taking over the motion picture area. Jim Victory had to make a pitch for domestic distribution, which was nonsense, and they'd already made a deal somewhere else. I met with a guy, and I said, "What we ought to do is sell the rights to each country." I knew this wasn't going to work. Then I submitted my expense account for that trip and they didn't take care of everything, which was not typical--they never did that, but he refused to pay for this. And on top of that I got stuck with a lot of money for this trip.

ALLEN: I think we're going to need to stop right here and change tapes.

BARUCH: Okay, when do you want to have lunch?

End of Tape 2, Side B

ALLEN: This is December 19, 1990, and this is Side A of Tape 3 with Ralph Baruch.

BARUCH: Business was booming. It was successful. In 1964, two of our children were going to school in the city.

ALLEN: How did the motion picture, the feature film thing, resolve? We didn't resolve that.

BARUCH: Oh. I'm sorry. Yes. We never got the distribution. They made a deal with General Cinema, I guess they were called, or somebody else. Anyway, they said that we must give up the name CBS Films because they're going to call themselves CBS Films. So I said, "That's going to be a very expensive undertaking." I know this comes back to the intercompany monkey business. We had to change all of our copyrights worldwide, change our stationery worldwide, and all the other things, thousands of things that have to be done. It must have cost a couple of million dollars for these changes. A few weeks later, a fellow named Gordon Stoolberg, who headed up the film operation, decided he can't use CBS Films because he didn't want to be connected with CBS so they called it "Cinema Center Films." So the entire exercise was a waste but by then we had called ourselves "CBS Enterprises," and so we stayed with that.

In 1964, we moved into the city, sold the house, and with the proceeds bought an apartment on Gracie Square in the city, where I've lived ever since. Business was very good and progressed. I enlarged; hired Larry Hillford, in addition to Willard Block, to help in the international executive area. Generally, I had a good life. Except that we heard rumblings in the mid-'60s about the Federal Communications Commission, particularly one person, making it a crusade to get the networks out of the syndication business. A fellow named Ashbrook Bryant had been very active and really wanted to get that done.

In 1967, Sam Diggs left CBS Films to be the number two person at CBS Radio. I was named Vice-President and General Manager of CBS Enterprises. Which meant I had domestic and international under my responsibility. Again, developing very nicely and doing well.

ALLEN: Was CBS Enterprises involved in any other business at that time?

BARUCH: Yes. We had merchandising and licensing of all CBS shows. We had a division called "Tarrytoons," which was making cartoons. As a matter of fact, when CBS thought of building their own building, Black Rock, we at "Tarrytoons" had a parking lot in New Rochelle and on these premises they built a small replica of the building to see what the facing would look like. Well, in 1968, Frank Stanton asked me to make some recommendations about what should happen if CBS had to get out of the syndication business. What would I recommend they do with that business? Basically, my conclusions were either sell it, spin it off, or close it. My idea of a spin-off was completely different in terms of what they later did. And I just went on with my business. But I had to keep things together because people were very insecure already.

In 1969, things began to get a little more serious about the FCC. They came out with a ruling that the networks cannot be in cable and should not be in syndicating. I had several run-ins with the people concerned at CBS and their outside lawyers. Particularly, Tim Dyke, of the Cutler firm in Washington, and Sally Katsan, an associate of his, and Judge Rifkin, who I believe was a judge who was associated with the firm. I got thrown out of a meeting because I argued too strongly.

CBS was so strong that they got 50 percent ownership in programs, which they weren't even distributing. I said, "You know, you'll never get any money out of this." Because the motion picture companies short-changed them all the time. "Why don't you give that up and tell the FCC, 'We will no longer take any position in programs which we don't distribute.'" I went to see a General Counsel of CBS who pointedly told me he had only one client and that was the CBS Television Network. That made it very clear to me.

Well, I knew the handwriting was on the wall, and in the summer of 1970-- about June or July of 1970--I got a call from Frank Stanton, would I please come and see him again? Frank and I had established a good relationship. I had organized, in the years proceeding, an international meeting where we brought everybody in from all over the country and asked him to speak. Frank had a habit when he spoke or he showed tapes or films that he had everything in duplicate. Well, this was the last function at the Savoy Plaza Hotel which was at 375 Park Avenue where Bristol Meyers has its building now. But that was the last function in that hotel. They had a microphone. I remember Frank Stanton grabbing the microphone and with that, a bunch of smoke went up in the air and I said, "Oh my God! I'd electrocuted him!" I didn't electrocute him, but we didn't have any sound.

Another time, I had a big sales meeting at the Bergenstauf in Switzerland, and Merle Jones came. Merle, in those days, had all his hair. I don't know if you've ever met Merle. He was a little bit like you, a gray haired gentleman, a little slimmer. He could have acted as a model for a business executive. Six foot two, very smart, somewhat provincial. I took a trip around the world with him. He and his wife. If you want me to tell you about that later I will, but it was unbelievable. But, Merle came and we said we're all going for a swim. He said, "Well, I didn't bring a swimsuit." These are the kinds of stories that evolved around this industry and this business; in those days CBS was a lot of fun! We said, "So, we'll get you one." It must have been a little big because he jumped in the pool and promptly lost his trunks. He's fishing around, which is very difficult, trying to put a pair of trunks back on himself before he gets out of the pool. He's a very conservative person. Well, he finally got it on, and we said, "Well, we'll have dinner tonight. We'll all meet in the bar at six o'clock." We all got there a little bit early because we knew. He comes in, looks at the bar, and his face turned ashen. Because the entire back end of the bar was a glass wall overlooking the bottom of the pool.

We played a lot of games. When we moved into the new building, all of the art had to be approved by the art committee. Willard Block had some antique maps of Japan. He heard somebody wouldn't approve the maps. I called Lou Dorfsman, who was head of art, and I said, "Lou, please do me a favor. Look at the maps and please approve them." He looked at the maps, and he says, "We'll have them reframed. They're gorgeous. But the framing is terrible." I said, "Okay, now give me a piece of your stationery." I wrote, for Lou Dorfsman, a letter to Willard who was in Japan telling him why we couldn't accept those maps. I said they're really old maps, and this is a brand new, forward-looking building. If you got yourself some up-to-date maps we'll be very happy to approve them. Well, Willard thought that letter had something fishy about it. He had worked in the OSS during the war. He came back to New York and found out it was a phony. He didn't say anything. He goes to my boss and says, "I have a four page letter here I want to send to Frank Stanton." Everybody was in on the joke except Frank Stanton. My boss says, "You can't do that." He went to Merle Jones, my boss's boss, and said, "I want to send this letter to Frank Stanton." Merle, who had half glasses, looked over his head, and said, "You don't want to do that." He said, "Of course not. But I have good reason to believe you're in on the plot." Merle raised both his hands, and said, "Okay, I give up. What do you want me to do?" He says, "I want you to call Ralph's boss and say you just got this letter from Stanton, for comments, would you please comment?" Which he did. I got mad. But they wouldn't let me off the hook for three days. These are the kind of games we played.

Every morning I came in, my desk was pushed back and I couldn't get around it so I pushed it forward three inches and every morning I came in it was pushed back. Frank Stanton had hired a lady to take care of all the plants, a Japanese lady, and when I moved into the office somebody had sent me a plant with a congratulations on it, you know, a note. And one day I said, "Would you mind giving that other plant some water, too?" She said, "That's not CBS' plant." This is the kind of thing that was going on.

ALLEN: At this point, was Enterprises involved in cable at all?

BARUCH: No. Not at all. We were part of the same division, which was the stations division, headed by Merle Jones, who also had responsibility for cable.

ALLEN: But you were pretty well oblivious to the cable business.

BARUCH: I wasn't oblivious to it, we tried to do some business with cable.

ALLEN: With any success?

BARUCH: No. And, as a matter of fact, when the FCC came out with their ruling that any system over 3,500 subscribers had to do local programming, we had a local program concept. CBS owned some cable systems which we had bought from a fellow named Homer Bergram in the State of Washington where John Goddard came from. He said, "Well, go out and talk to Homer and see if you can sell it." We went out to Seattle and we met with Homer, and Homer said he'll be happy to get these systems. What I didn't know is they had an incentive program whereby he got more stock if it became more profitable. But he said, "I won't pay for it." So if I gave it to him free, he'd be happy to put it on. Which I didn't think it was a very good business to be in.

ALLEN: It's hard to recover production costs.

BARUCH: That's right. It's very difficult. Anyway, so I'm submitting my plan and two years later, in the middle of 1970, Frank Stanton asked me to come in, and he greets me with the words, "I've spent many a sleepless night on the reports you've prepared." Well, when you have a lot of dealings with somebody, for a minute, I couldn't remember what he was talking about. He has a mind like a computer, still today. Finally, it dawned on me. He says, "We are going to spin off cable and your business into a new company." I said, "I see. And who will head up this company?" was my question. He says, "Clark George. Do you know Clark?" I admitted, yes, that I knew Clark whose nickname at CBS was Chief Crazy Horse. He says, "Jack Schneider is going to be in charge of the whole spin off." Jack was Executive Vice-President. We want you to head up all the program sales side and so on, the same thing I was doing. I asked him a few questions, particularly about the movies from the Cinema Center Films area, where we going to get those, etc. He lied a little bit. I asked a few more questions and he lied a little bit more and told me some other nice things and then I said, "Well, I'd like to think about it." I started getting up. He said, "Where are you going?" I said, "Well, I just said, I'd like to think about it." He pointed to my chair and he says, "Please, take all the time you need." And he says, "I'd like to bring in Clark George." I said, "Sure." He brought in Clark George and we chatted a little bit, and on the way out I said to Clark, "Well, I guess we ought to get together." He says, "Oh! Absolutely not! We should not be seen together for the next few months." And I found that quite strange.

Well, it was announced that this was going to be spun off and that Merle Jones was going to be the chairman and Clark George was going to be president and CEO, and I was going to head up the Enterprise division as president of that division, and that Richard Forson, who had been associate general counsel for CBS, was going to head up the cable business. Jim Lehy, who was assistant controller, was going to be the chief financial officer. And Paul Sternback, who was the lawyer for CBS Radio in the law department at CBS, was going to be general counsel. We owned a majority of a cable system in San Francisco together with Gene Iacopi and his father. CBS was going to do a forced merger--because they owned the majority of those shares--into a new subsidiary, which would dilute Mr. Iacopi, and he wouldn't get that much money for it. Well, Mr. Iacopi and his lawyers, very smart, objected to the spin off saying this is not really a spin off because CBS people still own the shares. A lot of the CBS directors will have shares. The chairman is a person who is with CBS--yes he's retired but he has a deferred compensation plan, a pension plan--this is still a part of CBS!

In the meantime, Chief Crazy Horse submitted our first budgets for the year 1971 and I submitted my budget. I'm also a director of this new company- to-be, and a lot of other people that Stanton knows were going to be directors (I'll get into that in a moment). Clark George used to come into the office in the morning at 6:30, 7:00. I used to come in at 8:00, 8:15 and I'd have eight, ten slips under the door. "RNB do this. Signed CDG." "Have you thought about that?" A clipping. "Have you read this?" Of course I had! His door would be closed for three or four days, you wouldn't see him. Then, his wife had to have back surgery--spinal surgery--and he said that's no time for a husband to be around. He went on a safari to visit all of our cable systems on the west coast. I told my wife, "Why don't you visit Judy in the hospital?" She went to see Judy and Judy complained about her life with Clark. Jean said, "They never go anywhere. He gets up at four-thirty, five o'clock in the morning, sure, to be in the office early, so they have to go to bed and they never do anything." I said, "Jean, don't ... I mean, stay away from that." Jean comes in the office and he sees her, opens the door, sees her, closes the door again. A few minutes later comes out with a typed buck slip, hands it to her and closes the door. It said: "To Jean Baruch, From Clark George. Thank you for being so kind to Judy when she was in the hospital." I mean, a real strange character. Well, December 31, 1970, arrives and the FCC, at the Iacopis' request, an hour before the spin-off refused to make the spin-off effective until this is all cleared up. Clark George literally punched a hole in the wall. It was a plaster wall, but punched a hole with his fist. Life became very difficult with Clark George, and finally, one day, I get a call from Stanton--would I please come in? He says Clark George has resigned. There sits Forsling. There sits Sternback. There sits Lehy and myself. He says, "What do I do?" "Well," I said, "I guess it's up to you." I believe it was February 28, 1971.

In the meantime, I want to come back to that budget problem. Everybody submitted their budget. I submitted mine. My earnings were up a little bit. But the earnings of the rest of the group were way down. We would have our earnings, a pro forma basis, for the company would have gone way, way down. I said, "Well, better luck next time, next year." Which was a sort of CBS tradition. You did the best you could. I said, "Wait a minute!" He said, "What's the matter?" I said, "Wait a minute! You can't accept that!" He says, "What do you mean? What should I ... " I said, "You have to tell other divisions, including mine, to raise the earnings so that we can come out. You know we're going to have shareholders, they're going to question this, we're a brand new company!" He hired somebody from CBS Spot Sales to be in charge of advertising and PR, and he had a plan whereby he was going to a buy a one page ad at spin-off time in the top fifty newspapers in the country. I said to Clark, "Do you know what that costs? We're going to be a $20 million company! With 43,000 shareholders!" Because of the spin-off, for every seven shares of CBS you got one share of Viacom, as it was then called. He says, "I don't care, we've got to do this." Who would have cared in Chicago about this spin-off?

Well, February 28, he resigns. In the meantime, Merle Jones had to get off the board, furious. He was going to sue the FCC. The whole thing had to be cleaned up. So they established a trust of all the CBS directors' shares, and all the senior executives, and Stanton picks for the Board, Jeeb Halloby, from Pan Am, on whose Board Frank Stanton served; George Herrar, of the Rockefeller Foundation, President of the Rockefeller Foundation, on whose board Frank Stanton served; a fellow named Richard Shawl? (Dick had come in to be interviewed as CFO of CBS and had made such an impression on them that they thought he'd make a good board member); Jack White, of the Cooper Union, on whose board Frank Stanton served and he was very interested in the Cooper Union. We picked Berly Pattee, one of our lawyers, this new company's lawyers in San Francisco, a marvelous man and this was basically the Board of Directors. Plus Jim Lehy. When the changes were made Jim Lehy had to get off the board. I stayed on, Forsling stayed on, and Clark George stayed on. Then Clark George resigned. We get together in Stanton's office and I said, "Well, it's more or less up to you now. Who do you want to appoint it? It should be one of us." He says, "Well, that's what they tell me." I said, "I guess the ball's in your court."

CBS always did things on weekends, things of that nature. We reconvened, I think it was Sunday, March 1st, or February 28th, it was just about that time, Sunday at noon in his office. He extends his hand and says, "Congratulations, Ralph, you're going to be the next CEO of Viacom." We didn't have a name yet "... of the company." I want Dick Forsling, who was head of the cable division, to be Chairman. I said, "Frank, that isn't going to work. The Chairman of the Board cannot be the head of a division." He says, "You make it work." We had offices at 375 Park. We'd already moved out of CBS. One of the first things I found in the office of Clark George, which I now was occupying, was that he had already installed in his private men's room, Italian tile and put carpeting over it. He had ordered furniture from Knoll associates worth $60,000. Which, in those days, was a lot of money. One of the first things I did, I called Knoll and said, "It's all canceled." After long negotiations I accepted one piece, namely this desk, from Knoll, and I've kept my desk. I fired the head of PR and Advertising because I wasn't going to buy fifty one-page ads. But I then got into the spin-off. I was forced in December to sign the distribution agreement that CBS had drafted. Clark George had refused to sign it. It was a mess, because we didn't get tax credits ... I mean, in a way CBS did not treat us very well.

Then we had our first shareholders meeting. We had to have a shareholders' meeting. I'd never run a shareholders' meeting. So I asked the General Counsel, "Who is our outside law firm?" And he said, "Well, it's a new firm, founded by Bill Green, who had been the lawyer for CBS." I met with him and was not very impressed. It was a three man law firm. Well, we were getting ready for the annual meeting. I didn't want to make too many changes. The lawyers say, "Look, you're going to have a lot of people there but don't worry because the proxies are in your back pocket. You hold the proxies. So the nicer you can be the better impression you will make." We had a meeting with analysts when Clark George was there and it was a disaster. Clark refused to answer most of the questions, and it was a