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Leo Hindery

Leo Hindery Jr.

Interview Date: December 1, 2016
Interview Location: New York City, NY USA
Interviewer: Seth Arenstein
Collection: Hauser Collection

SETH ARENSTEIN: Hi, I’m Seth Arenstein here for the Hauser Oral History Project, for The Cable Center. It’s December 1st, 2016. We are in New York City and we’re here with Leo Hindery, who is the former chairman and president and CEO of TCI. Did I get that right?

LEO HINDERY: Never chairman.

ARENSTEIN: Never chairman, sorry.

HINDERY: Just president and CEO.

ARENSTEIN: President and CEO of TCI. And he’s now Managing Partner of InterMedia Partners, but those are just your titles. I mean, just -- they’re great titles. But Leo is an author. He’s a humanist. He’s an activist, he’s a philanthropist. He’s one of the cable legends and we are so, so honored to have you here and this is part two of your oral history. Part one ended in 2001, so we’re so happy that you’re here, Leo.

HINDERY: A little more gray hair, Seth.

ARENSTEIN: (laughs) But you have hair. I mean, I’ll take any color hair.

HINDERY: Well, it’s nice to be back and it’s particularly a privilege, as I said to some of your associates, that it’s part of the Hauser Initiative. Gus is also one of the great ones of this industry, and for those of us who are privileged to have our histories recorded, we owe a debt of gratitude certainly to Gus and Rita.

ARENSTEIN: Well, I have to tell you, Leo, we’ve been doing some other histories the last three days here and your name has come up so many times, so it’s great to have you in this chair.

HINDERY: Well, thank you.

ARENSTEIN: Sure, yeah. One of the first questions that The Cable Center wanted me to ask you about actually goes back, pre-dates the -- pre-dates your first, or the ending of your first oral history. They wanted me to ask about the Summer of Love in 1997 and specifically how it relates to the current media industry and consolidation.

HINDERY: The “Summer of Love” was a coined phrase, Seth. It took a life of its own and has become somewhat of a seminal part of our history. This wonderful industry created in 1948 for 30 years just re-transmitted bad broadcast signals, and then in ’78 we went through that phase where we began to introduce programming that was aligned specifically with our systems. But what we forgot to do was look to the future. We woke up in the ’90s and we had started to wire well most of the United States. The franchise wars were over. And yet we owned, disparately and with little market aggregation, our respective cable systems. We shared markets. There was only a handful, literally only a handful, of wholly-owned markets in the United States. Yet we were confronting a competitive environment into the future where there was going to be the satellites which have nationwide footprints; the public utilities which have regionally ubiquitous footprints, or the phone companies which have similar regional footprints.

The Summer of Love was an effort on my part, after I became president of TCI, to change the ownership of many of the industry systems, and in the course of about 24 months -- it was a long summer! – two-thirds of the cable systems in America changed hands. At the end of the day, only five markets in the entire United States were still shared with other operators. And that completely changed our competitive profile. It made us more efficient by a factor. It made us much more customer and consumer responsive. It put us in a position to introduce the new technologies that we knew we had to, but in the fractured environment we couldn’t have afforded.

My premise coming in at the invitation of John [Malone] to help him out at TCI was to make certain that all of our industry’s boats lifted at the same time. Those of us who had distribution platforms should improve our capabilities and our values. The programmers should have this same privilege as should the people who lent us the money and supplied us with hardware. None of this was possible without changing the market environment.

The Summer of Love became very, very important, and as we sit here in 2016, Seththe cable industry is now wholly-owned in nearly every market with the best technology. We have access to the entirety of the market. And as a consequence, we’re very efficient and very customer-responsive – and it all started back there in the period of 1997-1999.

ARENSTEIN: However, and based on your, on what I’m reading in your book, It Takes a CEO, and we’ll talk about your two books, that also brings responsibility. It also brings a situation where a cable operator or maybe just a -- we call it a media company, now owns the production and owns the programming, owns up and down the chain and can have a lot of influence on public opinion and I know that’s something that you talk about in your book.

HINDERY: Well, I digress for a minute because some of that premise is actually not correct. Being a monopolist is a privilege and it’s not an opportunity without responsibility.

And what we found too often in the industry is that we had a degree of arrogance. We were the only cable operator in a given franchise, and we often acted too arrogantly. And the fact that we were the only operator didn’t give us a particular license to abuse customers.

I had thought for a long time that we had several obligations. We had to live in our communities respectfully. We had to look like our communities. We had to have women and people of color and gays and lesbians throughout our companies, and however our society looked, that’s how our companies needed to look at every level, from management at the very top to the entry level. We also had a responsibility because we were the only cable operator in the market to be about customer service first and foremost. We were not allowed to be arrogant in our pricing. And we were not allowed to be arrogant in the quality of our customer service. .

Added to this, starting in 1978 when the industry largely stopped being able to sell cable subscriptions only to people who had bad television reception and we had introduced ESPN and CNN and HBO in the same 24-month period, at the top of our industry we became vertically-integrated. Those of us at the top in distribution owned some content, and those who were very large in content ownership owned some distribution.

That era is now largely over, and we have pretty much cleaved the distribution community from the content community. But in those decades when we owned both at the top, I agree with you.

I think our third responsibility – beyond living well in our communities and beyond delivering premium quality customer service – was to assure that our content was similarly respectful of all of society.

One of the things I’m proud of is that when we finished that era, we had programming for people of color, we had programming for the faith community, and we had more programming for women, having been very derelict in that single area for a long time.

Our bundle suddenly looked more like society as a whole, and I’m very proud of that as I had something to do with parts of that.

I have said to your colleagues at the Center several times, “Don’t remember us for what we did, as much as remember us for how we did it – and if at the end of the day we walked gracefully through the industry and we left society at large better served and more fully served, then be proud of that. But also be proud of the fact that, hopefully, you’ve integrated your companies with more women, with more people of color and with more gays and lesbians, all in proportion to our society.
ARENSTEIN: Let’s talk about your books, because a lot of the ideas that you just voiced are parts of your books or in your two books, “The Biggest Game of All” and “It Takes a CEO, It’s Time to Lead with Integrity, both of which we have right here. Why don’t you walk us through The Biggest Game of All or some of the main arguments of that and then go into It Takes a CEO. Why did you write these books?
HINDERY: I wrote the first book, “The Biggest Game of All”, because the industry had gone through a decade of monumental transactions. When John [Malone] and I had the privilege of handing TCI over to AT&T, that was at that time the biggest media merger ever, but there had been countless others below it and around it. And one of the aspects of the industry that’s always intrigued me and gratified me is that it’s always been dominated by bigger-than-life people – and I thought it would be helpful to the following generation to understand how Rupert Murdoch and John Malone and Sumner Redstone and Brian Roberts and Leo Hindery approached the transaction side of deal-making. And since historically some mistakes had been made, I also tried to point out where I thought they had occurred. Of course, there were some enormous successes, and I especially tried to point those out.

I wrote that first book mostly for the classroom, so to speak. I didn’t write it so that John and Rupert and Sumner and Barry Diller and I could pick it up and read about the deals we had done. I wrote it more so that the youth generation in our industry could appreciate how we got to where we were and how they could emulate the best of us and avoid the actions of the worst of us.

The second book was actually born the day I got out of Business School at Stanford in 1971. My first boss was one of the genuine captains of industry, and he introduced me to other genuine captains of industry – he also gave me two pieces of advice in my very first few weeks.

He was the chairman and CEO of what at the time was the world’s largest natural resource company, and I was his assistant, fresh out of the Business School at Stanford. I had no role models growing up, and I had left home in difficult circumstances from time to time. What he said to me was, “Always have your career be pushed up from the bottom, even though as CEO I can pull you up anytime I want. But I want to know that the women and men around you and below you want you to succeed as much as I do.”

I thought that we’d lost a lot of what prompted this advice, and that
we’d elevated, as time progressed, CEOs to gods. In fact, CEOs are just employees, just managers, no more or less important than other employees, although we have certain unique skills for sure.

For example, while there had been a massive turnaround at TCI, I didn’t do it alone. Women and men that I had the privilege of working with did it. And I felt that at TCI we had also been able to successfully inculcate the “push-up perspective” into our company values. Both of these results added to my interest in writing the second book.

The other piece of advice that I learned from the amazing individual who was my first boss was his sense of concurrent responsibility. That is that as you rise to the top of an organization, your responsibility is far more than to just the shareholders – it’s concurrently to your employees, to your customers, and to your communities, which responsibility we in the cable industry know firsthand. And, if your company is large, then you have responsibility also to the nation.

I thought at the time that we’d also lost quite a bit of this concurrent sense of responsibility in the country – and I still think so.

As a consequence of these failings, we sit here in the year 2016, Seth, with more income inequality than at any time in our nation since the Great Depression. 1927, 1928 and 1929 – that three-year period – was the last time we had this degree of income inequality. We also sit here in the year 2016 with women on average earning 77 cents on the dollar for the same employment that a man has.

None of this is satisfactory to me, and so the second book was written for the whole of business, including for the women and men who already have the privilege of running companies and for the women and men who aspire to run them.

I’m actually prouder of the second book, as it’s got some rules of conduct and behavior that I hope survive. The first book dated itself after a while, but I think in its moment some of our younger people got something out of it.

ARENSTEIN: Leo, let me just go back to your mentor you just mentioned. You didn’t mention his name. Do you want to put that on the record?

HINDERY: He was something special. His name was Edmund Littlefield, and as I said, he was the chairman and CEO of the largest national resource company in the world. He was also on the boards of Pan Am, Chrysler, GE and Wells Fargo, and he was chairman of the Business Roundtable.

Ed was a god in American industry, and nearly coinciding with his national business leadership and with my own employment with Ed in June of 1971 was a September 1970 article by Milton Friedman called “Shareholder Primacy” in the New York Times Magazine. In it, Friedman said that the only responsibility of business is to maximize the wealth of shareholders.

Ed and Reginald Jones from General Electric Company – Reg was on our board and Ed was on the GE board, and I had the privilege of interfacing with both of them regularly – said, “This is just not right.” And to their eternal credit, for about a decade they poo-pooed the declaration made by Milton Friedman, and they very successfully got most of corporate America to buy into the concurrent multiple responsibility perspective.

However, when President Reagan came in and initiated what’s called “trickle-down economics”, it manifested itself in business as shareholder primacy. This was another motivation for writing my second book. But I didn’t invent this issue, rather I just followed up on it.

Ed Littlefield and Reginald Jones were the architects and the dreamers, and it was a great privilege of mine coming right out of graduate school to work for Ed and indirectly for Reg.

ARENSTEIN: Now today, 2016, are you optimistic by what you see? For example, we see studies, one after the other it seems, that millennials choose companies, choose the brands that they buy in part and a larger part now, by the values the companies hold and by the corporate social responsibility that they embed in their companies. Does this give you any feel-- does this give you a reason to be more optimistic?
HINDERY: I don’t like generalizing around generations, millennials being one of them. I think there are some very informed young people who wear their values on their sleeves and I’m proud of that for this nation. But I think we’re very materialistic as a society and that we’ve partitioned ourselves between the haves and the have-nots, and so I’m very proud of every young woman or man who has values and lives them vocally and publicly.

But I think we’ve lived too long with the legacy of trickle-down. When half the nation’s income resides in the top three percent of wage earners, I don’t think that’s offensive, I think it’s sinful. When a woman can have a job, the exact same job as a man and make 77 cents on the dollar to the man, I think that’s sinful. And if you’re a woman of color, you’re probably making 60 cents to the dollar, and I think that’s sinful.

I worry about companies that haven’t heeded the advice of Ed Littlefield and Reginald Jones. When CEOs make hundreds of times what their average employee makes, that’s sinful. It’s just a job. Ed and Reg thought that something around 20 times your average employee’s earnings was a good ratio. JP Morgan at the beginning of the last century thought the same, exactly. And Peter Drucker, at the end of that same century, used that same number.

Well, the average today is 435 times. The average public company chief executive in America makes 435 times what his or her average employee makes, and that’s not just wrong, it’s also sinful.

And it imbues such anger in me that if I were younger, I wouldn’t be sitting talking to you, instead I’d be on the ramparts.

I can’t believe that we tolerate real unemployment rates that approach 11 percent. Tomorrow we’re going to do another official jobs report, and it will be about 4.9 percent officially, but if I count all the women and men who are un- and under-employed, it’s about 11 percent. That’s also sinful.

It’s sinful, as I said, that three percent of wage earners earn half the nation’s income. And for all kinds of historic reasons in my own life, I’m especially distressed that 51 years after we first addressed the issue of wage inequality for women, when the equivalent number, Seth, was 72 cents on the dollar, here in 2016it’s still only 77 cents on the dollar.

We just tried to elect a woman president and she didn’t win, in part because of misogyny, and that’s wrong. I don’t want to fully get into the election because that’s not fair, but these pervasive impositions on the middle class, on the American dream, continue to be very disturbing to me.

ARENSTEIN: So I guess the next question though, Leo, is what is to be done? What can business do? What can a CEO, a thoughtful CEO do? Or is that not part of the remit of a CEO? Is that for the political arena to deal with?

HINDERY: No, the CEO responsibility is absolute – Ed and Reg were correct in that it’s a pervasive demand. Don’t ever come and tell me that that’s not your obligation. I will take it hard. As long as we have unlimited money in politics, as long as we retard the vote in this country, as long as we have an anachronistic electoral college, it’s hard to do those things, but that doesn’t mean that they’re not your mandate. The mandate is clear. There’s no equivocation on my part of Ed [Littlefield’s] and Reginald Jones’s perspective.

ARENSTEIN: Okay. So what are some of the things that you’ve done over the years that address these issues? I know you’ve done a whole bunch of things. You’ve been in many different federations and associations, gifts to various -- you have causes, Seattle University, etc. What are some of the things that you’ve done?

HINDERY: Well, I started with nothing. I’ve been very blessed, but I’m very honest about the fact that I was white, male and smart and that gave me tremendous advantages back in the ’50s and the ’60s. Society is not as fair today as it was then.

I’ve always tried to give back more than I took out. I don’t want to die with any wealth. I’ve tried to be very philanthropic. But I’ve also tried to be very political. I’ve never asked for anything politically. But I think that contributions which advance in politics women and men who share the values I have is no less philanthropy than giving to an educational institution or a health agency or a school in need. So about 70 percent of what I give is pure philanthropy and about 30 percent of what I give is to make sure there are women and men in Congress and in governorships and in city councils who share my concern about income inequality and wage inequality.

ARENSTEIN: So sort of back to my point, or one of my earlier questions, are you optimistic? Can things change?

HINDERY: No, I’m not particularly optimistic. I’m very saddened by the state we’re in. I thought we missed some opportunities in the Obama administration because of the contretemps between the two houses of Congress and the president – we didn’t accomplish as much as we should have. In the old days when you didn’t accomplish something, you just waited until you could. Now when you fail to accomplish good things, the hole gets deeper. It doesn’t stay unfilled; it actually digs itself deeper, and it gets harder and harder to fix it.

I’m very concerned about the next Supreme Court. We have a vacancy to fill, and we have as many as four vacancies to fill in the first term of this next administration. They need to be women and men committed to civil rights – and while I can elaborate on what I would like the court to do, I can very succinctly say they need to be committed to civil rights.

Whether you’re of color, whether you’re a woman, whether you’re gay, whether you believe in the health and safety of your children, whether you believe in healthcare for all, it’s all just about “civil rights”.

I’m of an age where I was involved in the Civil Rights Movement in the ’60s, and I recall vividly that for every bit of anger in the ’60s there was equal or more optimism. There wasn’t a woman or man of color, there wasn’t a gay or lesbian, and there wasn’t an environmentalist who didn’t think that by 1975 their concerns wouldn’t have been addressed.

I proudly live in New York City now, and in 1967, in the five Boroughs, unemployment among African American males 18 and over was 17 percent, and because of that we had several years of civil disturbance, here in New York and in Los Angeles, Detroit and Chicago. Today that number equally calculated is 50 percent – one out of two African American males over the age of 18 in New York is unemployed.

That’s just wrong, and I’m angry. I hope that other people get angry, and while I’m not ever condoning violence of any sort, I think we have to tell this government and this country that we’re tired of this and that it’s time to re-energize as we did in the ’60s and address some of these wrongs.
ARENSTEIN: So Leo, one of the things -- I’m a sports fan. I want to know what was going on with the YES Network and the jobs there that, I don’t know, as an outsider, seemed to me to be a sort of a left-hand turn of, didn’t think that Leo Hindery would be running a sports network in New York, but tell me why I’m wrong.
HINDERY: I didn’t so much run the YES Network as I created it, as there was a vacuum here in the biggest city in the country around regional sports networks. When John and I were together at TCI we lived off of the legacy of Bill Daniels, who deserves most of the credit for starting the concept of regional sports networks. Under our stewardship we grew it dramatically and ultimately sold them to Fox, Rupert Murdoch. For a variety of historic reasons, not altogether good reasons, New York was left out of that mix – whether it was the Mets or the Yankees, they were both carried on broadcast signals, and there was not an opportunity for a full season of coverage, which is the predicate of a regional sports network, whether it be coverage of a basketball team or of a baseball team.

Through a shared friend I got to know George Steinbrenner, and I thought that I could overcome the challenges here in New York and in doing so make it clear that those of us in the industry who own distribution should never use that distribution to retard other people’s programming.

One of the things I’m proudest of is that when I went to TCI to help out John, I can honestly say that no programmer in America was ill-treated or mistreated while I ran TCI. If you had a great programming idea, our door was open.

We had in the past a history of favoring stuff we had an economic interest in or which a friend of ours had an economic interest in, and that was wrong. It had left us short of women’s programming, for example, and it had left us short of faith, ethnic and orientation programming – in essence, the whole gamut. In part because of this I wanted to test out at YES whether some players in our industrystill practiced programmer discrimination.

So we launched YES, and Cablevision immediately said “no” because it owned its own sports networks. That was just wrong, and I felt we needed to prove that the industry could comfortably prosper being vertically-integrated, but it would be derelict if it ever used parts of its vertical integration to retard the success of others. If you had good programming, it should be carried.

Now I’m back as Managing Partner of InterMedia Partners which I first created out of whole cloth in January of 1988 and wherein we had a series of private equity funds devoted to cable.

When Bob Magness passed in late 1996 and John so generously asked me to come aboard at TCI, we merged InterMedia into TCI so that I could do both, and then after YES I resurrected InterMedia. It’s still, Seth, a private equity fund that invests in cable-related assets.

ARENSTEIN: And some of the things that you’ve done at InterMedia, can you talk about some of those? Some channels and programming, things like that?

HINDERY: Well, on all sorts of levels, both intellectual and emotional, we remain committed to serving the entirety of the audience. So our orientation has been pieces of programming that serve the niches of our society and “niche” doesn’t mean small, it just means ‘not necessarily white’. And so we’ve done Hispanic, African American, faith and sports programming, and we’ve have enjoyed every part of it.

I hope people think we brought value to these communities, since it’s highly important that we not, in the next evolutionary phase of our industry, default to the least common denominator among us. Every woman or man wakes up in the morning seeing themselves by their gender, their ethnicity, their faith, their vocation, their avocation and their orientation – that’s who they are.

And if they wake up one morning and this industry has evolved to mostly just sex and violence and common, generalized programming, I’ll be highly disappointed. In fact, I’ll be profoundly disappointed.

One of the things I’m somewhat remembered for is that I killed mixed martial arts when I was at TCI. I hated it then and I hate it today. [So called] extreme fighting is a sin and it’s a blot on our society. And by being the CEO of TCI, we had enough throw weight that I could tell the rest of the industry, we’re not carrying it. We’re just not carrying this. This is a travesty, and an insult to humanity. Ruleless fighting, I just can’t believe we should have it.

But then I left TCI and AT&T, and extreme fighting migrated almost instantly to pay-per-view and now I can find it on general broadcast television. I can go home tonight and watch on broadcast television a man or a woman beating another man or a woman until they holler “uncle,” with no significant restrictions on their behavior , even blood flowing.

But I can also go home tonight and watch general entertainment that trivializes young women and makes them sex objects, shows like The Bachelor with the gall of a young man choosing a woman as if she’s something on a shelf, and so we don’t do that sort of stuff. We also don’t do movies and we don’t do general programming. We like serving the niches of society based on again those five factors.
ARENSTEIN: Rob Kennedy was here yesterday and he was talking about C-SPAN and creation of C-SPAN and where it is today and he mentioned you, I think more than once. You want to talk about the importance of C-SPAN? And what your role has been with that.
HINDERY: A handful of weeks ago we went to a memorial service, those of us who live in New York, of Bob Rosencrans, and I was moved to tears. Brian Lamb gave a eulogy for our beloved Bob Rosencrans and Amos Hostetter wasn’t there, but he should have been only because C-SPAN was the creation of Bob, Amos, and Brian. It’s probably the most democratic thing we’ve ever done in our society, and we let Americans of all ages look at their Congress, real time. I didn’t do anything special – I was just chairman for quite a while.

All I did was perpetuate the legacy of Bob and Amos and Brian, although I was in a position that I could help force the creation of C-SPAN 2 and the creation of things like Booknotes and speeches by non-political people as part of the programming agenda. We also made sure that Brian had the resources to grow C-SPAN.

But I think all of this comes back to the comment of a bit ago. If you, as a CEO, really do think your responsibility is to your communities and to your nation, concurrently with your shareholders, well then when Bob and Amos and Briancreate something for their communities and their nation like C-SPAN, that is invaluable.

It was easy for me to later step into their shoes because all I was doing was living my own dream, which calls for an orientation at the top of companies to the nation and to their communities.

Bill Clinton says he became president of the United States because he watched C-SPAN as a poor kid in Arkansas growing up. And I think if you talk to [Senator] Cory Booker you’ll hear the same thing, or to [Senator] Kirsten Gillibrand or to some of the other up and comers in American politics who grew committed to it because of C-SPAN.

However, is C-SPAN going to survive the mini bundles, the a la carte environment, that’s seemingly every bit of conversations today? I don’t know. I worry that it might not. Who’s going to pay for it? Does C-SPAN fit in anybody’s mini bundle?

And if it’s not there, it’s obviously not going to be watched, while the beauty of the bundle is that it’s there now. You may not watch it, but if you want to, you can. We have to be very careful now, as we impinge on the bundle and move toward OTT or over the top, that we still serve all of society: intellectually, emotionally, racially, ethnicity-wise, gender-wise, orientation-wise and faith-wise. And if we aren’t, we won’t like this place.

ARENSTEIN: Good point. You talked about -- you’ve mentioned John Malone a number of times. You’ve mentioned, I guess Bob Rosencrans, Amos Hostetter -- Bill Bresnan is a name that a lot of people like to talk about. Did you work a lot with Bill? And what are your remembrances of him? I mean, talk about integrity, there was a CEO with great integrity.

HINDERY: Profound integrity. You know, all of the people you’ve named are special individuals: Amos Hostetter, Bob Rosencrans, Gus Hauser and Bill Bresnan.

ARENSTEIN: We mentioned Bob Magness as well.

HINDERY: Bill Bresnan lived for his children’s adulation, as I’ve tried to. All I ever wanted in my career was for people to say, “Wow, kind of special and done with grace.”

I use the word “grace” a lot, and I used it in the book a lot. Bill Bresnan was full of grace. He could go to a franchise hearing in the Iron Range, snowing outside, and he could look those people in the eye and know that his primary responsibility was to serve them honestly and well. And he would go home and he could know that he had lived with grace. Gus [Hauser] is the same way. And again, as I said at the onset, it’s a privilege sitting here being interviewed for something that Gus Hauser sponsored – I mean that’s just emotionally tough to swallow.

Bob Rosencrans, Amos Hostetter and John [Malone], the greatest intellect and visionary that will ever walk through any industry. And of course Bill Daniels.

I remember when John invited me to come aboard, I made two flights. I flew to the little town in California where Bill [Daniels] was living, and I said, “Should I do this?” – and then I flew to San Francisco and I saw Ed Littlefield, and I said, “Should I do this?” And if either one of them had said “no”, then I wouldn’t have done it.

I dedicated my first book to Ed and to Bill because they were like fathers to me. And John is like my older brother. These three relationships really transcend my time in the industry. And over time [Bill] Bresnan, who we talked about, and Gus Hauser have moved into very special places in my heart.

I love Gus Hauser, as I loved Bill Bresnan. Sadly I wasn’t well physically when Bill passed, but God, I loved Bill Bresnan.
ARENSTEIN: I think one of the -- if you’d allow me, one of the things that got me so excited about this today was, I worked with Paul Maxwell for many, many years at CableFAX. And all these people that you talk about Paul was always telling me about and of course, he talked about you all the time and he made them very real, but one of the lessons that I took from Paul and I’ll always be in debt to him, was that you can use journalism and media as you all use cable to give back. And the things that we did with Cable Positive and all those charitable things that the cable industry did in diversity, that was a lesson that Paul taught me and I always thank him for it.
HINDERY: Oh, I think it was not the third estate. The collegial years were just magical. The analysts, the journalists, the lenders, the programmers, the distributors and the suppliers – God but we loved each other. The good thing of being a monopoly is we were never forced to be highly competitive, one to the other. So while I didn’t like some of the behaviors we adopted as monopolists, I was grateful for the collegial result.

My great story of the beloved Paul Maxwell is that when I took over TCI for John I had had a very bad accident -- my arm was just a complete wreck and it had this metal contraption on the outside of my skin, and in the pictures of the day I was announced as coming in, I’m wearing a short-sleeved white shirt and a vest sweater. Over time I got rid of the short-sleeved shirts and the vest sweater, but my corporate background was such that I wore suits and it really freaked out TCI for a while.

Suddenly the wonderful people who worked for me, both the women and men, began dressing more formally because they thought I would approve that, which I did.

But Paul finally came in one day and he said, “This isn't working for me,” and I said, “So what does that mean?” And he said, “It’s just not working for me. This is a western, Denver company, and you’re no cowboy. You work for the Cable Cowboy John [Malone] and Bob [Magness] was a cowboy, and you’re just no cowboy.”

I said, “Well, what if I buy a ranch?” He said, “That’s not good enough,” although later I did buy a ranch, but for Paul that wasn’t good enough. So one Sunday he picked me up early and took me to his boot maker and he made me buy -- and they weren’t cheap -- five different sets of cowboy boots, since Paul would only take comfort in the fact that if I was now running TCI for John I at least had on cowboy boots with my suits.

But I still wore the white shirts and the ties, and the only reason, Seth, that I have a blue shirt on today is that I was also a pretty good car racer.

ARENSTEIN: I remember that.

HINDERY: And when I won the 24 hours of Le Mans [in 2005 as a driver], the protocol is that you get a tattoo on your back, celebrating your win, but it shows through white shirts. And since my beloved wife says, “No way on the white shirts,” I now wear blue shirts. But for a while there, it was Paul Maxwell’s cowboy boots plus my white shirts and my ties.

ARENSTEIN: Well, it’s funny, the first time I saw Paul Maxwell not wearing cowboy boots, I didn’t know who he was.

HINDERY: Well, TSA and air travel have really screwed up old Paul because they make you take off --

ARENSTEIN: Take off your shoes, yeah.

HINDERY: Take your boots off and that’s hard on a cowboy. You want to die with them on, not take them off for the TSA guy.

ARENSTEIN: Leo, we like to ask a legacy question. What do you want your legacy to be? What do you want people to say Leo Hindery stood for? People who work for you, what do you want them to say?

HINDERY: For me, it goes back to those first weeks out of grad school, a hundred years ago. I hope when I look back that I was in fact pushed up, and that I deserved to be pushed up. That I was fair to my employees in every sense, although I wasn’t their best friend since that’s not a prerogative chief executives have.

You’re not supposed to be their best friend, even though you want to be – you are, however, supposed to be their mentor, and you’re supposed to provide for them fairly and treat them fairly. I hope people will say that I did.

I also hope that people will say that I never lost my commitment to balance in society, whether it be political or industry-wise.

I’m going to close this by saying I’m sitting here today because I’m alleged to have had some success in this industry, and I’m not denying that. It’s been fun and I think I have had some success.

But there are thousands of women and men who deserve the credit. There were 25 people at TCI – I was number 26 – to whom I give all the credit in the world for that turnaround. They did it; I didn’t do it. I just guided them.

They’re too numerous to name today, but when I was invited into the Cable Hall of Fame a few years ago I did use that speech to name them all, and they know who they are. They deserve it – the accolade – because they embraced the same sense of fairness that I tried to imbue.

And so I hope that’s my legacy – that I was fair, that I was pushed up and not pulled up, and that I respected the diversity of society and tried to give back to it as much as I took out.

END OF INTERVIEW

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Howard Horowitz

Howard Horowitz 2019

Interview Date: December 2, 2016
Interview Location: New York City, NY USA
Interviewer: Seth Arenstein
Collection: Penn State Collection

 

 

ARENSTEIN: Hi, I’m Seth Arenstein. I’m here for the Hauser Oral History Project for The Cable Center. It’s December 2, 2016. We’re here in New York City, and I’m joined by -- I think one of the great research minds in the business. Howard Horowitz who is the president of Horowitz Research. It’s a new name.

HOROWITZ: Yes, it’s a new name.

ARENSTEIN: Yes. Okay. Welcome, Howard. Great to have you here.

HOROWITZ: Thank you. Thanks for having me. It’s an honor.

ARENSTEIN: Let’s start at the beginning. Where were you born and what do you remember about elementary school?

HOROWITZ: Oh. Good question. I was born in Monticello, New York.

ARENSTEIN: Monticello, New York.

HOROWITZ: Yes. Went to a small elementary school. Actually, a religious school at the time. A Jewish religious school. Went to high school. Public high school in Monticello. I have to say, particularly in our context, a memory of that childhood is Alan Gerry who was the owner of the small television shop on Broadway in Monticello. He also had one in Liberty, and he was our television guy. And school was great. Town was great. Known as the Borscht Belt. So we have that.

ARENSTEIN: Right, right, right. The Catskills. Yes.

HOROWITZ: Atmosphere.

ARENSTEIN: Yeah, there was a race track there somewhere I think.

HOROWITZ: There still is a race track there. Now a Racino as you might expect. Times are not terrific for the area up there these days. But when I was growing up, it was at the height of the tourist era of the Catskills. So that also connects me to the entertainment arena as we know it, now that you’re making me tie all these pieces together.

ARENSTEIN: Okay. Did you do any summer work as a youth in the Catskills at the resorts or anything?

HOROWITZ: Did a lot of summer work as a counselor at day camps in the area. Worked at the racetrack in valet parking. Worked at Kutscher’s Hotel as a caddy on the golf course.

ARENSTEIN: Here we go.

HOROWITZ: Did the typical things you might expect in that area. My father was also born in Monticello and his father came there from Europe in 1918. Connected through the meat business to the tourist trade. My father was not. He was an engineer. Maybe relevant to our conversation as well. –He also graduated from NYU and spent most of his career at Stewart Air Force Base where he was the base engineer for about 20 years until they closed it.

ARENSTEIN: I guess you’re a legacy at NYU.

HOROWITZ: Legacy at NYU. That’s correct.

ARENSTEIN: So you went to undergraduate and graduate. What did you study at NYU?

HOROWITZ: At NYU, I actually started out in the engineering school. Switched over in the -- as you might imagine, in the ’60s, in that era, to liberal arts education and got my degree in Psychology from undergraduate school. Went onto graduate school to get a degree in Political Science.

ARENSTEIN: How does one go from Psychology to Political science? That’s an interesting combination, but it sounds slightly unusual.

HOROWITZ: Psychology, I would have to say, was a degree of convenience -- having experienced a lot of different subject areas at that time -- was very involved in politics. It was the era of the antiwar movement. While my undergraduate career went by without finding a real focus, I ultimately got a degree in psychology. I left school with a focused interest in Political Science and politics.

ARENSTEIN: What was your first professional job out of school?

HOROWITZ: My first professional job was at a school called the Clear View School in Dobbs Ferry, New York. And it was a school for emotionally disturbed and special needs children. I had left graduate school ready for a job. Spent too much time in school. What was I qualified to do? Well, whatever its focus or lack of focus, I had a degree in Psychology. Put that on my resume. Applied for the job and got it. I was an assistant teacher and then a teacher over the course of three years.

ARENSTEIN: You know, it’s funny. We’ve had a lot of people interview this week, and teaching has come up all the time. People love it, and they all say they benefited or their careers have benefited by being a teacher. What about you? Do you feel the same way?

HOROWITZ: Oh, absolutely. Especially, carried over not so much the particular field but to management of a business. Empathy. Understanding where the person is coming from, especially in an unequal relationship. Need to be conscious of their position. Their needs.

ARENSTEIN: And what did you do after your teaching days were over? What did you do after that?

HOROWITZ: Actually, I went to work for a political consulting firm called Dresner, Morris, & Tortorello. That transition was opportunistic. I was teaching with a woman who was married to an owner of this firm. And in the course of conversations, I had expressed an interest, and I had known her husband since knowing her at the school and he said, “Well, why don’t you come work for me? See what you think.” So that transition from teaching to consulting, to business, sort of.

ARENSTEIN: And what did you do at that consulting firm?

HOROWITZ: I was an analyst. Mostly or obviously, as you can imagine, working on political campaigns. Many of which were interesting. I worked on Bill Clinton’s Arkansas governor campaign in the late ’70s. Worked with Moynihan in New York. Zell Miller in Georgia, although, his politics have gotten away from me in more recent years. So these old-line, famous, Congress people. And these were -- as you can see -- by these names, this was a Democrat-oriented polling firm.

ARENSTEIN: So you were doing that, and as we were talking before the taping, you jumped out on your own pretty fast. You were a young guy. You were still in your twenties, I would guess. Late twenties?

HOROWITZ: Well, I was 34. Not that I do the math when I jumped on my own, but --

ARENSTEIN: Well, you were 34? Okay. My math isn’t that good.

HOROWITZ: -- there’s a missing important piece --

ARENSTEIN: Go ahead. What do you want to talk about?

HOROWITZ: -- between Dresner, Morris, & Tortorello and my own company. And it actually is the start of my career in the cable business. As you know, political consulting companies are connected to the media. They buy media. Some of them actually buy the media themselves, but there’s an intimate connection with political polling and media. So that media connection was formed and actually became a part of what I did, because cable television, at the time, was a political issue involving rights of way, and Hollywood, and various entrenched interests that were not happy to see this upstart industry make its way from a rural America that enabled them to make money as opposed to taking some of the money themselves. So and throughout my career there, I was an analyst looking at data and numbers and the issue of subscription television and broadcast rights and Hollywood rights. Many of the issues we’re still looking at today were included in that work from the position I was in. All of a sudden, I got a call from a head hunter saying we’re working for a client who’s looking for people who have experience in researching subscription television. And we understand that you do. I can’t really recall -- maybe, I asked him how they knew that, but that was their secret way of --

ARENSTEIN: They didn’t find your profile on LinkedIn. We know that, right?

HOROWITZ: That’s where they earned their money. Maybe, they earned it even more then than they do now, -- so, I was discovered, so to speak. I interviewed at Arthur D. Little, the big Boston consulting firm who had cable television on their strategic list. And their retirement plan had just invested $40 million with Amos Hostetter. I was part of that. I was recruited into that whole investment strategy by Arthur D. Little. They hired me to develop business and accounts in the cable television and media business about new forms of television. I went on to form -- pretty much immediately formed -- the Cable Video Research Center. I was headquartered here in Penn Plaza. They set me up reporting to Opinion Research Corporation -- a subsidiary out of Princeton. My office was called Cable Video Research Center. Made up out of whole cloth.

ARENSTEIN: And approximately what year was that?

HOROWITZ: This is 1982.

ARENSTEIN: 1982.

HOROWITZ: Exactly, actually, the year. I don’t know if I could tell you the month, but the year was ’82.

ARENSTEIN: Okay. 1982. What was cable television like at that point?

HOROWITZ: Cable television was about new services. Single channel services like HBO and Showtime. It was about new conversations about moving from a reception service, a dumb pipe -- to becoming a programmed service. So that whole relationship with programmers was forming: We have a wire and we can distribute your content. Using the public right of way a little bit differently there is a potential new business here. The issues brought to me had to do with whether the consumer was on board with that.

ARENSTEIN: Was going to be interested in that?

HOROWITZ: It was all prospective. There were no real subscribers. There were HBO subscribers. It was the beginnings of the program cable business. Did some research on consumers subscribing to HBO. Actually, did a lot of work on guides at the time; the HBO small guides and the bigger guides. What was the name of our big guide provider? TVSM?

ARENSTEIN: Something like that. Yeah.

HOROWITZ: Out of West Chester, PA (home of TVSM).

ARENSTEIN: But here where we’re sitting here in New York City, cable at that point was still “I need cable, because I can’t get a good signal from my television.” Correct?

HOROWITZ: Right. And a lot of my business was still in the rural, reception markets who were now selling discretionary products like HBO and delivering guides to HBO and guides to these more limited distribution networks.

ARENSTEIN: What would you typically -- well, I know you’re not an HBO spokesman or anything, but what would you find on HBO in those days mostly?

HOROWITZ: By that time, it was a pretty robust movie service. It had gotten away from square dancing. Pretty robust. Movie service and multiple multi-pay service started coming into being that time. All of these ventures were h hampered by lack of addressability and what was a pretty primitive way in which these services were delivered.

ARENSTEIN: All right. So you’re sitting at Arthur D. Little right here at Penn Plaza. And you’re looking at this service that, for the most part, I’m getting it because I live in Manhattan here and the buildings are blocking the signal, basically, of broadcasters. So where do you go from there? You look at a sort of a nascent industry that some people are saying, “Oh, if I could put my own programs on there, we could make some money.” Those are the types of questions that are on the table at that point?

HOROWITZ: Yes. They start it. MTV’s of the world. ESPN of the world. A&E’s of the world. How is this going to unfold and what are consumers interested in? . For my first year, business was pretty brisk. Everybody was happy. I was happy. Company was happy. I developed some good clients. I’m serving quite a bit of America. Not the heartland, but not the heart of urban America or suburban America yet. I got my big break in 1983.

ARENSTEIN: And what was your big break?

HOROWITZ: I got invited to go visit the NCTA by Char Beales at the time who was head of research and other things, I think. But this involved research. She had me in, and Tom Wheeler was her boss and Char said, “Howard, we need to do some research on urban suburban areas of the United States.” Our members are about to invest heavily in this. Wall Street has some questions. Programmers have some questions. Questions about the relationship between content and subscription. We need to bring the consumer into this picture. And we want you to do a research project.” It was a project that was very important to the industry, and I took advantage of being in the right place at the right time. I took advantage of the fact that not too many other people were studying television as a subscription, consumer product at the time.

ARENSTEIN: Because, let’s face it. At this point, it’s a pretty -- as I said, it’s a nascent business.

HOROWITZ: Television is an eyeballs business. My form of research is not exactly common at the time. There was some of my form of research out there for the broadcasters, pretty much restricted to local broadcasters. It was restricted to developing their news program where there is competition in consumer choice in the market. But other than that, it was a strange application of the research skills of traditional market research. That is because nobody just bought television; everybody just watched television. The question -- a little bit from hindsight, but really the question that I was asked to answer boiled down to: Who will pay for television when television is free? That was the question of the hour, at the time. An interesting part of the story of this is research is that I left the meeting with Char emptyhanded.

ARENSTEIN: You left NCTA?

HOROWITZ: Yes, left that meeting emptyhanded, as did Char. We got all through discussing this major, major study for the billions about to be invested. I ask, What’s the budget.” Char says, “Well, about $30,000.” I said, “Char, I can’t touch this for $30,000.” I don’t think I can touch this for less than $200,000. We’re not even close. She says, “Well, that’s what we’re spending.” So there went whatever thoughts or dreams I had of the seriousness of wanting to talk to consumers and understand a whole new business. I went home, thought about it, and literally slept on it. This was a big invite. I didn’t want to be negative. I’ve always been a realistic and honest with my clients. I woke up. I literally woke up in the morning and said, “We can do this.” I called Char back and said, “Char, we can do it.” “How are we going to do it?” she said, “Well, if you’re with me on this, we’re going to create a private good for each of your individual members and leave with a public benefit. So, if we can identify together a bunch of your members who are about to build these markets. Let’s do a research project in each of their, respective, markets and put a price on it that they have to pay. They will pay, because they’re going to get the research on that market. And if we put together a collection of these, the collection will be the residual that the NCTA gets for cross-market information. In the end, we actually put together 14 cable systems. 14 areas about to be built. One or two of them, I think, were already around. But in any case, there were 14 participants. I believe each one was getting a $13,000 bill.

ARENSTEIN: There’s your $200,000 there.

HOROWITZ: And then, the NCTA got that. The NCTA Segmentation Study, which turned out to be, by every measure, a seminal work in the business. Really part of the launch of program cable television. Basically, you can say, well, NCTA wanted the hypothesis that people will pay for television when it’s free. The research did show that. But from hindsight, I can be forgiven that connection -- because, it turned out to be pretty prescient. It was not false information. It was a real assessment.

ARENSTEIN: Right. But again, I guess we should say at this time, the nation -- the country -- what percent of the country had cable at this point? Had cable systems, would you say?

HOROWITZ: Oh goodness. 30 percent.

ARENSTEIN: Thirty percent. Okay.

HOROWITZ: Not even, but that’s the number I recall either then or soon after.

ARENSTEIN: That’s a small percentage. Relatively small percentage. Okay. So you’ve done this study for Arthur Little.

HOROWITZ: While I was working at Opinion Research Corporation, I did this study. It was presented to the executive board. Caught quite a lot of headwind; it was controversial. A lot of the programmers objected. Especially, the old broadcasters. The first tomatoes thrown at the study were thrown in, I think, Amelia Island, wherever it was, Florida “I can’t believe the study said that documentaries are going to be successful. Documentaries have never been successful in the television business. We really have trouble believing this study,” was the gist of the skepticism. I spoke to the challenge and talked about the data that showed that it’s a different business model; it’s not the broadcaster business model. We’re not -- no longer -- talking strictly majority rule numbers. There are segments in the market –for which this type of content, e.g., documentaries, will be important. Etcetera, etcetera. That was the tone of the conversation. On the other hand, I – and Char – had our heroes and supporters in this important drama. Bob Miron and Ralph Roberts I recall quite fondly were stand out and stand up supporters. I am guessing, just guessing, they had the kind of change and opportunity in mind that our research, in turn, stood out and supported.

ARENSTEIN: And these principles still apply today?

HOROWITZ: Yeah. About a week later, after that meeting, I was in Allen & Company’s offices. They called me and asked, “Would you come meet with us?” They asked, “Do you really stand by what you said about documentaries?” I said, “Yes, I do. It’s one of the top performers in this new structure of --” “Oh, thank you very much.” Then, went home. They didn’t invite me to invest with them, but then they put their money in Discovery.

ARENSTEIN: Yeah, that’s what I was going to say. Entertainment and discovery communicates.

HOROWITZ: That history is part of the business, and there were a lot of those conversations following that study. I don’t know if they were convinced by my data, but the investment happened. The banks opened up. Cable industry in the late ‘80s built the systems that we now enjoy.

ARENSTEIN: Sort of paved the way for the Internet too if you want to put it that way.

HOROWITZ: Absolutely. –Some call it disruptive, but it’s really a straight line. Almost linear line from there through addressability, and then through satellite. And then we’ve got to get through digital. We end up in this sequence to the Internet.

ARENSTEIN: All right. So when does your company -- when does the Horowitz company start? Not too long after this, I guess.

HOROWITZ: Not too long after ’83. This was ’83. Horowitz Associates Inc. at the time, opened its doors on July 7, 1985. And it really grew out of my relationships to several people in the business. Having been there and working closely with my clients. There were no research departments or anything, so I had a very intimate relationship. I wasn’t working with the research manager. I was commissioned basically from the top to work with them. And then, I said, “I’m thinking about starting my own company.” Had those conversations, about leaving Arthur D. Little. I’m sort of catching the entrepreneurial spirit.

ARENSTEIN: Must’ve rubbed off from some of the cable people you met.

HOROWITZ: I think so. A couple of my clients encouraged me to do that. Made no explicit promises or anything. Basically, said, “We work with you a lot. We expect we would continue to work with you. You might want to think about it. That’s who we are if you want to be that way as well.” And included in that group was Bill Bresnan and Margaret Richebourg. Included in that group was Ron Dorchester from Prime Cable. A couple other marketing people. Marshall Cohen from MTV Networks at the time. I said, “I’m going to do it.” And the rest is my history.

ARENSTEIN: Right, right. But let me just ask you one question in here. Again, maybe we’re beating a dead horse, but did you get people saying -- not in the cable market. This very small market at this point. Did you get people outside the business saying, “Howard, what are you doing? What is this subscription television? Why are you starting a company to research about that? It doesn’t -- it’s too small.”

HOROWITZ: I didn’t really get that. I guess I was too insular. Part of my story that you’re getting at nicely is I was never really part of the research business. I was always part of the cable business. I came out of political polling straight into this research for the cable business. And it was actually a smart move. It was scary for me, but it was a smart move. I was young. It was a smart move, because of what had occurred after the NCTA Segmentation Study. So, I had these cable system operators as my clients-- but now all the programmers wanted to talk to me, because I had supported their business models in this whole period making the connection between content and cable. There was no other research out there.

ARENSTEIN: I understood, but let me bust a bubble just a little bit here. When you say all the programmers, you could’ve probably fit them into this room here, right?

HOROWITZ: That was --

ARENSTEIN: No, I just want to add perspective.

HOROWITZ: No, it is perspective, but I -- from 30 years of hindsight, can say this upfront. I already had success in a business, and it was an entrepreneurial situation I was put in anyway. They said, “Open an office and create this business for us.” I created it for them. So then it became very compelling. So create it for yourself.

ARENSTEIN: All right. So that’s in ’85, you said. Well, Howard, things don’t last forever, but your firm has. At least up to now, it has.

HOROWITZ: That has been the reaction instead of the opposite of what you said before. The reaction now has been, “Boy, it’s been a long time.”

ARENSTEIN: No, but, I mean, in this business where things change so quickly, anything that even lasts for five to 10 years -- a television show -- a series that lasts 10 years, it’s really hard to name some. It’s very hard to name them. But you’ve been around for a while, and you’re still going strong. So great. Congratulations. How did things look in ’85? How many people did you have on staff in the beginning?

HOROWITZ: In ’85, on my own, only had one person on my staff. She had her own career in the business. Her name was Grace Ascolese who went on to work for CTAM and is now, actually, has her own consulting company. She was the only employee and we located the offices at a typing service. So we had an office and a typing service -- was how we started the company back in ’85.

ARENSTEIN: And it was here in Manhattan?

HOROWITZ: No, it was in Mamaroneck, New York.

ARENSTEIN: Mamaroneck. Sure. Okay.

HOROWITZ: Actually, it was sort of good family planning at the time. When I located the office, I said, oh, I am now in the cable business, sort of like Bill Daniels. I spend more time going to the airport than I do in Manhattan. So that two hours a day commute, I actually need if I’m going to spend some time with my family. I actually need that time working. I located the office up there close to where I lived. I lived in Westchester all this time. And that two hours a day, I think, was an important gain. It’s a lot actually. So that’s where we were located.

ARENSTEIN: So let’s break a little bit and tell me about your family.

HOROWITZ: Well, I’m married to Alisse Waterston who is Professor of Anthropology at John Jay College CUNY. Alisse Waterston is also currently the President of the American Anthropological Association. The current President. She’s got another year on her term. She was involved in the business in the ‘90s. We’ll probably get to that. We, together, have three wonderful children all which have grown and out of the home. Quite successful on their own. Matthew is her son. He’s actually in the television production business. He does sessions like this in other contexts, of course. And my son, Dan, who is actually a stylist in the production business. Goes back and forth between New York and LA. And our daughter, Leah, who is our daughter together, who is a Williams graduate. Now, three years out of school, is working at an art gallery called Luhring Augustine in Chelsea and has launched her own successful career.

ARENSTEIN: Excellent. All right, so let’s get back to your story. You’ve got this new company in Mamaroneck. You have one person working for you at that point. How do you grow? What are you doing at that point, and did the people who said they would come in and work with you, did they do it?

HOROWITZ: They did. They did. At that time, we’re now forgetting with all the ownership changes -- at the time, it was Warner Brothers or Time Warner or MTV -- The Movie Channel -- were clients. As was Prime Cable. Mainstays. Group W was important client at the time. A&E quickly became a client. I guess those were the important ones in the beginning. But basically, I have to say that everybody in the business was my client. Really was. Not that they didn’t use other researchers, but they used us as well. Again, we were in a very isolated environment. Nobody else was doing it. It wasn’t big business. I travelled around the country meeting with clients, creating projects. We create surveys. I had freelancers, gradually added one or two staff people at a time. So into the ’90s, we had carried six or eight people. Into the 2000s, we’d grown a little bit more to eight to ten people. Now, we’re 15 to 18 people. So not huge, but --

ARENSTEIN: Good size. Are you still at Mamaroneck?

HOROWITZ: No. We’re in New Rochelle. We quickly moved. Did graduate from the one-room -- not schoolhouse, but the one-room type place to modest offices in Larchmont, which is the town I lived in. That office took care of six to eight people for a long, long time. In fact, it took care of us until four years ago now, we found bigger space in New Rochelle. That’s where we’ve been for the last four years.

ARENSTEIN: And how would you -- I mean, this is a hard question, because it takes a lot of time in it, but how would you characterize your research back then and today? How has it changed? And how is it -- it must be completely different, because the industry is completely different.

HOROWITZ: It has changed. So we’re in the business of -- we talked about longevity -- the business of questions. So each time with technological advances, a lot of questions. So that was good for our business. The nature of the questions changed as well. In the beginning, like the NCTA study, our research was mostly quantitative surveys. Telephone or customer service -- surveys developed at the time in the late ’80s. Early ’90s. Also, related to politics were the franchise wars and franchise commitments. It was one of the major commitments by the people who awarded the franchises about serving customers, and you need to keep track of that. It was a big part of the business. It’s also a numbers game in terms of how many people are interested in a vertical music service or a sports service from the content side. And it was a big “how many” game, because programmers were selling the operators who had the subscribers. As we move further along, it became more nuanced and more qualitative. It wasn’t just selling in and getting carriage. Now, it’s actually understanding how to carry customers. With the introduction of addressability -- cable sales and marketing became more nuanced, as well. It became a real marketing game. So our research added qualitative elements to our focus groups and other forms of one-on-one in-depth interviewing. We became more skilled in those areas and hired more people in those areas and added that to our work for clients.

ARENSTEIN: As the business takes off and the business grows, what about your role? Is your role -- does the managerial part increase as the analysis part and the real research part decreases? What do you do? How do you do that or do you balance that?

HOROWITZ: I balance it. A lot of hands-on research for me until very recently. I would say a good demarcation of that was in the downturn that we all suffered through in 2008 -- 2009. Cost me several good employees at the time. And we came back from that very strongly and very quickly. And my two key people had matured -- one who handles research operations and the other -- Adriana Waterston, the account facing woman and Nuria Riera, my research director, became more accomplished. I’ve stepped back more into financial managerial role. But before then, I was very involved. I actually prided myself on pretty much reading everything that left the company. I guess I’ll say in a positive way, I’m glad that I can no longer do that. So my role has changed, and I’m actually looking forward to transition the business to Nuria and Adriana. I’m very interested.

ARENSTEIN: Okay. Can we break some news here or not?

HOROWITZ: No, we can’t break any news, but you can break the next that it will happen in the next six months.

ARENSTEIN: So what about social media? Do you track that as well?

HOROWITZ: We track social media as far as how our consumers are involved. As you know, we not only do custom work. For the past 20 years, we were doing syndicated work where we study consumers on our own, that is, commission our own research and sell those reports to the industry. And social media’s become a big part of our results in so far as its impact on the television video viewing experience and purchase? And, of course, there are negative aspects in terms of time and attention and where the advertising dollars go. Then, there are positive aspects as a new vehicle of promotion and search and discovery, etcetera. So we do track it. In that way, social media companies are not directly our clients about how to grow that particular business or do social media, but we study it as it impacts our clients. It’s this weird interesting position we are in now, especially for the purposes of this conversation. We work with traditional -- now, they’re traditional -- cable operations and cable networks. And we’ve maintained that same core clientele. They look to us from the consumer point of view to understand the new business of digital internet access, etcetera. As opposed to working for those on the disruptive side looking to get a piece of the cable business we are working with our traditional clients to learn a new business to defend their own turf and to take advantage of new opportunities. The same thing for social media. We’re working for our clients to understand it to turn it to advantage and also to understand it strategically.

ARENSTEIN: Howard, I want to talk about -- as a journalist, of course I’ve benefited by your work, and you’ve been very helpful and Adriana’s been great as well. But I know one of the things that you pride yourself on, and you should, and something that I worked on many times with you was research about multicultural marketing and urban marketing and things like that. Which, I know is something near and dear to your heart. Why don’t you talk about some of the things that you did there and why cable has such a great record in this?

HOROWITZ: Well, first, thank you for asking about that. It’s a major element of our business. And it is a growth area for the business. You ask how our business has changed. A good answer now would’ve been a focus on multicultural research. And when doing multicultural, it is more nuanced and less about majorities, but about qualitative aspects of life and culture. The change it came about in a very quantitative kind of way, as it should be. Quantitative research indicated a sound business basis for understanding these markets beyond numbers The woman, I mentioned a little earlier as my wife is an anthropologist; she worked at the firm at the time. She was actually in transition; she was actually getting her PhD at the time. She was transitioning from teaching to a different career as a qualitative researcher, but working with our data. Might have even been customer service data or whatever we were researching at the time. I think it was on a large market like Chicago or Boston or New York. I don’t remember which. And she brought the data into the office and said, “Do your clients know that African American, Hispanic, and Asian audiences are you best customers?” I said, “You know, I don’t really think they know that.” There are a lot of issues of where they want to build out in their franchises. There are some issues now with the cities now and how they’re going to build these franchises. And these neighborhoods might even be being avoided. So this is very interesting data. We ought to pursue this. So she pursued it. This is in the early to mid ‘90s. And we took it to our clients. Met quite a bit of resistance actually. The demographics aren’t there. This is a subscription business. Sounds nice, but this was a business. We thought the business was really here and that the demographics they were looking at were not what they should be looking at. In fact, one of the ways we finally got traction was convincing some of our clients that they are looking at demographics one way, but actually, these demographics is what makes your products so compelling. This is close to home, at home. It’s their television. It is entertainment people can afford. Won’t have to travel to. It’s really quite well priced. You ought to think about it a little differently. But we did that for -- struggled with it for --four or five years. Actually, it wasn’t really a growth sector at all at the time. Alisse, in her inimitable style, said this is about educating our clients. She formulated a study called State of Broad Band Urban Markets. And we were advised, by the way, that “urban” may not be the best marketing term for this product if it were going to sell. . In any case, that struggle became history with the publication of the 2000 census. So the census was sort of our marketing wings, being talked about by all the pundits in all marketing spheres. They were writing about the 2000 census and what it shows about the future of America. All of a sudden, we became popular again for understanding these markets. And we’ve built our business around the notion that multicultural America is America. If you have to think in terms of “them” -- can you tell us something about “them”? you’re off on the wrong track. If you can start to internalize that it’s about us and about our whole business in general, then we’re talking a growth market. And that’s been an important element of our research and philosophy going forward.

ARENSTEIN: Let me just add one thing. You modestly said you struggled with it, but you were vocal about it for so long. You were one of the only voices out there. I mean, just personally when I would write about diversity week, we would always come to you. Yeah, it was a struggle for a long time. You’re right. You’re right.

HOROWITZ: Yeah, it was. We liked it as a good cause, also. We were advocates as well. We felt like advocates. But ultimately, it really s is good business.

ARENSTEIN: It’s good business. Exactly. You know, I want to talk about a couple of other things. You said earlier in the interview in the oral history that you kind of drank the cable Kool-Aid. You became not a researcher or an analyst. You were part of the cable industry. Indeed, that’s how everybody thinks about you, Howard. One of the things that’s very important to you and is a very important industry activity is SkiTAM -- tell us about your involvement with that. Are you a skier?

HOROWITZ: I am. I am a skier.

ARENSTEIN: Okay. Coming from that part of New York, I would say, yeah, why not?

HOROWITZ: I am a skier. We were not early in the SkiTAM game. It was one of those events that belonged to the big tech engineering firms and programmers. And as we -- I forget exactly where we started with SkiTAM. Many, many years. Ten years, maybe, at least. Actually, probably longer. Probably closer to 15 years. It’s difficult to think in terms of so many years and date myself. In any case, we did get involved and went to SkiTAM. Probably thought of it as a good networking event. Clients were there and we got taken by the cause

ARENSTEIN: You got swept up.

HOROWITZ: Got swept up by SkiTAM and became heavily involved in SkiTAM where we do the research for them -- we’re the official research company of SkiTAM. It’s part of our sponsorship. And we’ve also taken SkiTAM on the road and now work in Lake Placid with the Empire State games with their adaptive program. So it’s become a big part of our lives as well as supporting SkiTAM. As far as an industry story is concerned, it’s a great, great story. The way we really got involved is we showed up with our team at the opening reception, and John Kreamelmeyer, who was the Nordic development coach at the time, was our athlete. There weren’t enough athletes to go around, and we were assigned an older gentleman, a wonderful guy. We met him and, as it were, we invited him out to dinner with us, which was customary for sponsoring teams. Then, he said, “Could I bring Andy Sole, one of my athletes?” And Andy came to dinner; he had lost both legs in a -- what do you call it? I forget the initial. IED or whatever it’s supposed to be.

ARENSTEIN: Oh, improvised explosive device. Yeah. IED.

HOROWITZ: In Afghanistan. Lost both his legs. He was standing upright on his prosthetics; he came to dinner. And we heard his story. And at that point, I had asked John, “So what’s happening in Lake Placid, the big Olympic venue, as far as adaptive sports is concerned?” He said, “Nothing that I know of.” I said, “Well, that’s really unfortunate. It really should be different. So that was our inspiration to bring it back east. So we don’t have SkiTAM, but Adaptive Spirit does support our efforts. The current name for SkiTAM, the founding organization, is Adaptive Spirit. They fund us up at Lake Placid every February. Everybody’s welcome if they want to come view the games. [REFERRING TO EARLY QUESTION FROM SETH ABOUT “MEN IN SHORTS”). So the men and shorts story is actually an important story for the business. And that was the start for the CTAM Research Conference, which became a big part of CTAM. So there were a small group of us researchers at the time, mostly from the programmers who were worried about Nielson numbers and measurement. Sometimes, they had those numbers, and sometimes they didn’t. I had my company. I actually don’t remember any competing companies being there at the time. It was basically an industry event. And basically, CTAM research started out as a boondoggle for a few -- maybe five-- guys in shorts who showed up at the McCormick Ranch in Scottsdale, Arizona. We were going to exchange notes about research. We did that. We had a good time around the pool. Went out to dinner. Did that for a couple of years, and what started as a conference for introverted men-in-shorts turned it into an extroverted kind of major CTAM conference over the years. And that’s been part of the history of CTAM and NCTA until recently. Important changes, which we might get to.

ARENSTEIN: Okay. Howard, it sounds like you’ve met everybody, known everybody in the industry. Are a few of them standout as mentors, as guides to you that you want to mention in your oral history?

HOROWITZ: Ron Dorchester -- Mark Greenburg who worked for him at the time -- were major mentors as far as learning the business and learning about cable operators and what they’re concerned about. Understanding the impact of cap ex and addressability on marketing and what budgets were all about. So that was a major element in understanding the cable operations business. Also, Bill Bresnan and his team, Margaret Richebourg in her day -- that whole team -- were very instrumental in learning that part of the business as well. Also, Pete Gatseos who was a researcher for ATC then TCI. At the time, he was an important mentor on business and research needs. Then, on the programming side, I mentioned Marshall Cohen who was actually a colleague at Dresden, Morris, & Tortorello. We both went over to the cable business, me indirectly, in different ways. And who else on the programming side? Sean Bratches and Artie Bulgrin at ESPN. Important connections and mentors on that side of it. Dan Davids, Ted Yorio at A&E at the time were important colleagues. And of course I have to recall Bob Miron– and Ralph Roberts back at the very beginning without whose support at the time my career in the business may never have taken off.

ARENSTEIN: Sure. And you mentioned Char.

HOROWITZ: Oh, Char Beales. Of course. Of course. I mentioned her earlier, so she won’t accuse me later of having forgotten her in this. For the record, Char, first, and then Bob Miron and Ralph Roberts were crucial supporters at just the right moment in cable history.

ARENSTEIN: No, no. I know you’re a Cable Pioneer. What’s it like to be a Cable Pioneer? At a relatively young age, I would say, too.

HOROWITZ: Two reactions to Cable Pioneer. First of all, it was a great feeling to be a Cable Pioneer in having been selected. And the whole application process -- the whole -- similar to this, having laid out as history for the -- so, it’s quite a gratifying experience. Then, the other reaction was the one of -- well, I guess I’ve now outdated myself.

ARENSTEIN: Well, I don’t think so, but -- as I said, you’re kind of a young Cable Pioneer at that point, right?

HOROWITZ: No, well, I was young. I think one of the reasons I’m considered a pioneer is because it brought the research function to the cable industry and stuck with it through all these years of the business of programmed cable television, addressability and the satellite era. The broadband era, the transition to digital era and now, the internet television era. So that sort of makes me a pioneer. I’ll tell you the other similar experience, which is actually more recent. This summer, I finished my 46th peak of the Adirondacks. I did it this past summer with another good friend and cable colleague, Nomi Bergman. I’m now a 46er. There are 46 high peaks of the Adirondacks. Those folks from the Rockies will forgive me. We have 46 peaks that are over 4,000 feet. (laughs) I’ve done all 46, and I had the same exact feeling when I reached the peak of the 46th.

ARENSTEIN: Oh wow. As being a Cable Pioneer?

HOROWITZ: Cable Pioneer.

ARENSTEIN: Oh wow. Was Les Read by there? Was he there to announce you coming into the 46th peak?

HOROWITZ: He wasn’t there.

ARENSTEIN: No, he wasn’t there? Well --

HOROWITZ: I should tell Les, so I could maybe tell the story at the next Pioneers’ dinner. And when are we going to have that? Have to think about that.

ARENSTEIN: Okay. Howard, let’s talk about some legacy questions. I mean, I’m dying to ask you. You’ve been through all these different transitions in cable. Can you put on your prognosticator’s hat and tell us what we’re going to be doing in five years in terms of cable or are we going to be -- are we still going to have linear television? Are we going to be able to watch just about everything and really make it TV everywhere? Are we going to watch everything on our phones and -- what are we going to be doing?

HOROWITZ: Well, we’ll not be watching everything on our phones. Nobody does that now, as much as the leading-edge data makes us worry about watching on the phones. A mandate for us all and for my clients –is that we need to deliver our content and services to those devices. So the future is on all of these devices, and the future, though, for the big screen, fixed-based television is also extremely bright. I think we’ve all gone through this millennial stage, which has as much to do with delayed family formation and delayed household and real estate formation, which cable businesses depend on. And we’re about to come out of that. The human race continues, and millennials do form their own families, their own careers, their own fixed-based lifestyles. And our mandate is to make sure we understand all the new digital control habits that they have learned in the course of their ten-year hiatus that they’re going to expect to bring to their fixed-base, larger screen experience. And if we successfully do that, we remain in a growth business. And of course, the at-home failures at the time become, of course, the lead up to a huge opportunity to a place that we really want to be. At-home will probably go down as a success story as opposed to a failure now that the cable business is in the broadband delivery business. Nothing more crucial to the world in general and to the US economy and to all economies within the US. I think the big secret to delivering the American dream to multicultural America going forward is on this broadband pipeline, to put it in sort of the shortest terms I can put it.

ARENSTEIN: I don’t think there’s anybody better placed to talk about cable’s legacy. What’s cable’s legacy?

HOROWITZ: Goodness. So many aspects to it. I’ll start with some fundamentals of cable’s legacy before leaping to what I think is cable’s ultimate legacy. Before taking this leap, I want to say that cable’s legacy lies in entrepreneurship, in being a technology and method of delivering television that, on the one hand, is considered to have, in its day, disrupted the entire business of television, and, on the other, that generated astronomical growth for the whole business of television. It’s a paradox that may be about to repeat itself as we now enter, I think, a whole new era, a new golden age of television. Video takes up more of our day and video is a more important part of our life. And underneath all that, underneath entrepreneurship, is choice in television. So many networks and so much delivery of content. It’s all part of the cable business’s legacy. Now, I think I can say the next thing, take that leap referred to earlier. The cable folks have actually transformed themselves into a different world, a different business. Looking back, now, we can say that cable’s real legacy is as a transitional technology. It was sort of the manual delivery of TV everywhere. TV all the time. 200 channels. I can find what I want to watch in some vertical sense -- music, sports, movies, documentaries, etcetera -- in a very primitive kind of way. By flipping channels. The new era is simply that we no longer have to do that. We now have random access to the content. We are now in a great stage of figuring out how to monetize all that access, how to control all that access and choice. Is there opportunity in consumer control, or is it just a challenge and a problem and bad for business? Of course, I take the attitude, and I think I have the evidence, that it’s a growth opportunity, and that it will be a growth opportunity going forward. So looking back, a lot of people are approaching me and asking, “Are we the cable business anymore? Should we be the cable business anymore? Are we the Cable Center anymore?” These questions sound sinister. Actually, we can be proud of these questions because it’s all the legacy of the cable business and the entrepreneurs that built it. Those pipes are still delivering everything, everywhere in better, more convenient ways.

ARENSTEIN: Howard, we talked about that big break you had with NCTA and Char. Can you delve into that study a little bit more?

HOROWITZ: Seth, I’m glad you came back to that. I wanted to talk about the Truck Chasers.

ARENSTEIN: Now, what are the Truck Chasers?

HOROWITZ: I think the Truck Chasers may actually define my legacy, for better or worse. The b NCTA Segmentation Study was built around discovering the segments of America that were interested in potentially new content delivered over the cable wires. So if we have sports and movies and drama and documentaries and all the different types of content, there are going to be different segments around each. So how did the data fall? It sort of fell out on a continuum. At one end of the continuum was those people who were most interested. And they had certain demographics, certain characteristics, and certain content they were interested in. On the other end of the spectrum, which the cable industry wasn’t much interested in, were the people who weren’t interested in anything. Three networks were even too much for this group of folks. Then, there were the folks in the middle who had different nuanced issues that they were most interested in. So because it was the first research, and we were taking this to Wall Street and to the public, we labeled each of these segments. We labeled the least interested as the “No Thank You” segment. You’ve probably never heard of the “No Thank You” segment

ARENSTEIN: No.

HOROWITZ: Okay. I actually forget the name of the second to last segment myself. The third segment in terms of numbers, we call the “Entertain Me” segment. These were the folks interested in premium. Their key interest was in movies. And there were some sports fans in that group, but their key interest was movies. A limited, but valuable vertical they were third, because they were limited in the breadth of their interest. And the next highest we called the “Basic Buts”.

ARENSTEIN: Is that two T’s or one?

HOROWITZ: No. One T. “Basic But” with three letters. It wasn’t a very creative name. Didn’t get any traction either. They were interested in a lot of different documentaries and different basic type cable channels. Not that interested in paying for movies. You’ve got to pay for movies. We tried to be realistic in the study. It wasn’t like you could be interested in movies and they were going to be free. It was going to be in some price range. So these folks were not interested in paying those kind of dollars for television. Then, there were the people who were interested in everything. We want more. We called them the “Truck Chasers.” By our measures, we figured they would literally chase the cable truck down the street if it arrived to deliver all this content. Of course, the industry loved the name. It was a great one-word summary. And conference after conference, speech after speech through the late ’90s. I think I could probably find this as late as 1998. People referring to the Truck Chasers. Fifteen years later.

ARENSTEIN: So that’s your legacy.

HOROWITZ: That’s my legacy with regard to programmed cable television -- the Truck Chasers. That legacy carried us through addressability and the real ability to bring this content to market. We were all hamstrung until 1988, because you couldn’t really market to the masses, because it would cost you too much to service them. But once you could flip a switch to deliver, then the era of programmed cable, and marketed programmed cable came to be.

ARENSTEIN: You know, we’re hearing all these stories now about fake news and fake research. Somebody dubbed this era the post-truth era. Facts don’t matter anymore. As a researcher and as a -- I guess I could call you a political junkie. How does that make you feel?

HOROWITZ: It’s highly disturbing. This notion of truth is very difficult. Obviously, it’s going to be an important issue going forward. I will say, being in the media business and looking at truth, first of all, it’s in our television business as well as online. And there are no controls over it. We’re a free speech society. I think in the current era the model of the fourth estate has been breached. We have a system that is very difficult when our media or spokespeople are partisan spokespeople and not journalistic observers and critics of the system. Whatever the earlier criticisms of limited news being controlled by a few big outlets, l there was still this concept of the fourth estate. I probably take an unpopular view in business circles. I think we need to look to Canada and Europe for examples. And even Australia. I bring up Australia only because some of this comes from there – The kind of journalism I am talking about that has been harmful to our system has come from Britain and Australia. But why is it that it works there and does not work here? It’s because they have the BBC, and they have Canadian Broadcasting Company. And we, of course, have PBS. PBS has nowhere near the level of support, power and attention of these national broadcast outlets, but we do have a model by which standards can be set to avoid what we’re facing now. What we are facing in the news business is the incessant assault of bad money that is driving good money out of the marketplace. So we need good money that just can’t be driven out. PBS needs to be a part of our constitution; it needs to be a public source of information with no other interest but to try to achieve the truth. I personally think that that public media would set a standard that would enable the free market to thrive without being a race to the bottom. . You can try and lie all you want, but it’s not going to be so easy to do that. That is my take on the both the problem and the prospect with regard to “fake” news.

ARENSTEIN: Okay. Thank you so much. This has been fun, I’ve really enjoyed it.

HOROWITZ: Thank you. So did I

END OF INTERVIEW

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Ed Holleran

Ed Holleran

Interview Date: July 29, 2014
Interview Location: Kansas City, MO USA
Interviewer: Stewart Schley
Collection: Hauser Collection

Schley:  Hey, guys, it’s Stewart Schley for the Cable Center’s Oral History series. We’re in Kansas City today, July 29, 2014. We’re to talk for the next hour with Ed Holleran, who is the president and CEO of Atlantic Broadband, based in Quincy, Massachusetts. But he wasn’t always the president and CEO of Atlantic Broadband, so an interesting and rich career history to talk about. Ed, thanks for being here with us today.

Holleran:  Nice to be here, Stewart, thank you.

Schley:  I want to talk about your entry into cable and kind of what led to it and the educational background that you brought to the industry. So why don’t you just tell us how you took this path into this business?

Holleran:  OK. The first thing I’ll tell you is that I didn’t get into it until I was about to turn thirty-five. I kind of spent my twenties doing a number of miscellaneous things from substitute teaching to city government to working in education, higher administration, and I got a couple of Master’s degrees on the way, both from Harvard—one in the School of Education—and then an MBA from Harvard Business School. I went through that program and learned a lot and I needed it because I didn’t come from any background that gave me any orientation towards business. I grew up in a working class project area of Cambridge and the role models professionally were teachers and cops and firefighters and priests. So I wasn’t going to be any of those and I fortunately went to college and found my way eventually to Harvard Business School. Then I wanted to get into business. I didn’t know what I wanted to do so to cut through, I worked in the admissions office in Harvard Business School for two years after I graduated there. I saw what some of my friends were doing.

Then I very much wanted to get into business. I’d never been in; I was thirty-three years old. I spent one year, jumped into a $4 million importer and distributor of auto parts. I learned a few things from there that really mattered in my next step. So I kind of  cut my teeth in business pretty late in life but then we were undercapitalized and ran into trouble and then I really conducted the first real job search of my life and I was in Boston. I wanted to stay in Boston. I discovered cable TV actually through going to the Baker Library for the first time and doing the traditional thinking about it, what kind of industries were around. And then I—what would fit me? I actually came across cable TV, which was pretty new in the Boston area then. It had only been in the suburbs and not very many. Time Warner had some in Somerville and Medford, but the city of Boston didn’t even have cable television then. There were actually three companies that I discovered were headquartered in Boston: Continental Cablevision, American Cablesytems and Adams-Russell, if you remember that name from way back when.

Schley:  Adams-Russell, yes.

Holleran:  Interestingly enough, in the search of trying to figure out how I would get to them, a telemarketer who worked for me in the auto parts business, his dad was the president of Adams-Russell. I actually never met with him because in the meantime, I saw an ad in the newspaper: American Cable Systems looking for a general manager for the cable system in the town of Arlington, Mass., right next to Cambridge, 6,000 subscriber system. But it did have a general manager position, which, if you go to Harvard Business School, you’re taught to want to be a general manager, a P&L responsibility, line operations. I responded to an ad. I’d done enough research to know that out of all the jobs found, only 4% were found through an ad in a newspaper—

Schley:  This was one of them.

Holleran:  This was one of them that turned out to be the one that led to getting a job.

Schley:  What in your research pre-dating that ad—what intrigued you about cable? Because it was a pretty young industry and there wasn’t that much programming on at the time.

Holleran:  What I found was that there were certain dimensions of the cable business when I looked at it. One, again, I was looking for that P&L responsibility and at that time in cable—because it was still relatively new—HBO had just gone on the satellite and it was starting to add programming and grow—it was certainly new around Boston. You could get a job then as a general manager with that P&L responsibility for a very small system. 6,000 subs, it had about $4 million in revenue, but the job was the full breadth of budgets and technology and marketing and service ops and engineering. Believe me, I’m a generalist; I’m not an accountant, I’m not steeped in marketing, but I was actually looking for that kind of generalist role. I saw that the cable industry at that point in that time had these kinds of jobs, that you could actually go in and get that kind of responsibility which I had could learn was the way to build yourself and grow in business, running a business.

Schley:  What did they pay a general manager of a 6,000 subscriber system in the day?

Holleran:  The salary was $34,000, 15% bonus and a car and very importantly, a financial stake, equity. It was a private company, venture backed and if I can—part of my search, I actually had the—now here’s a guy who by my own understanding of where I was, was about to turn thirty-five. Most people at that age had had—because I knew them, I was with them in business school—by the time they were thirty-five, they  had like five to ten years of functional and/or industry experience they were leveraging and building on. I was still expecting someone to buy my futures, buy my generics, hardly proven buy my own sense of leadership. I’m smart, good communication, interpersonal skills and hire me into a job like that. So what I wanted—and I really had for the first time set up criteria that I was looking for and I wanted P&L responsibility, I wanted a growth company because I knew I couldn’t afford to have another short stint career-wise. I might have said, oh, I’ve done two years in city government, a year teaching, a year graduate school, a couple of years admissions but you know, I was getting a little long in the tooth, like I said, for this to be somebody wanting to give you a real job.

The foreign car parts company was undercapitalized so in addition to wanting a company that would have growth (which I looked at cable and they were beginning to really grow), I wanted it to be well-capitalized. I didn’t want the company to fall  out from under me. I didn’t want to have to change and be looking again because I’d  gotten into a situation that wasn’t capitalized. I also wanted someone I could learn from and you don’t ask somebody to be your mentor, but I wanted to be in a company where I worked for someone that I could, by observing, could really learn a lot. And Steve Dodge was that guy.

Schley:  Tell us about the company for those who don’t remember American Cablesystems and about its founder, Steve Dodge.

Holleran:  Steve was only a couple of years older than me. He had come out of Yale, been in the Navy, went to work for Bank Boston. As Steve describes it, as I got to know him in interviewing with him, he was going around head of lending for the media, telecomm and entertainment and going around the country telling all these communities how great Amos Hostetter and Irv Grosbeck were and that the bank was backing them. As he says, he looked at the trail to become CEO of the bank and decided, “I don’t want to do that, I should go and do what these guys are doing. I’m giving them money, let me figure this out.” And so Steve started American Cablesystems  with some acquisitions in 1978, like in West Virginia and New York, and then decided to start building the company franchise around Boston and it became a darling of the industry, very well-regarded. Broke into the top twenty biggest companies with about a half million customers and like I said, I found an ad in the paper. I would have gone to knock on his door, but before that I found an ad.

Again, you’ve heard my background now. God knows why; he got 200 resumes, he picked ten people to interview and I was one of them. I wouldn’t have guessed that but I was selling my futures.

Schley:  Suddenly you’re immersed in this job, you do have P&L responsibility, you’re running marketing, engineering, everything. What was it like? What was the job like?

Holleran:  It was great. I’ll tell you this. I told my wife that I’m really working late these nights because it’s budget season and it will ramp down a bit. Thirty-two years later, that’s not the case. It was terrific because just the breadth. If you like the variety of things you could be involved in, and for whatever reasons, do it. My own growing up and background in organizations, I felt I had leadership and I felt I had judgment. Not the smartest guy in the room but I’m really good, I think, at listening and synthesizing and figuring things out with the help of a good team. So this is the kind of job that, you know, you kind of directed and worked withthe department heads in those areas and the corporate group and I’d never done it before. I took to it.

The other thing I was looking for—I never cared about auto parts, couldn’t relate to them so I wanted a product or service that I could—I was going to be working all the time. I didn’t want it to feel like work. I wanted it to be what I wanted to do and I had an interest in so it was pretty simple. TV and ESPN and MTV—what’s better? You know the saying about if you love your work and enjoy it, it doesn’t feel like work. So work has its challenges and the subject matter and the interest and then just the variety of the work was really interesting.

Schley:  What was the channel capacity or output of that system at the time?

Holleran:  A 450 megaherz system. So 52 channels. Analog.

Schley:  And did you fill them all or were you looking for more channels, were you looking for content?

Holleran:  We were putting out a lot of programming. I mean, the Weather Channel. You’re  putting on stuff that was new. MTV. And of course, what are you going to do with all those channels? But who needs more?

Schley:  52 seems like a lot.

Holleran:  It did. Coming out of a world of three or five.

Schley:  

Holleran:  
Schley:  

Holleran:  

Schley:   

Holleran:  

Schley:   So you’re delivering 52 channels and you’re adding new programming. What was the rate you guys charged for basic cable service?

Holleran:  $7.35.

Schley:  Why $7.35?

Holleran:  It would have been a buck or two higher, but as part of the franchising effort, it was common to offer a rate freeze for the initial two years. And this system was just about one year in when I came into it and so it was still under that freeze. I just happened to remember it.

Schley:  And this was sort of a crown jewel system for the company, right?

Holleran:  Yes. For American, it was their first win in Massachusetts. They saw it as a showcase system and also each entity—in this case, a cable system—was funded on its own with no recourse financially to the parent. But at the same time, the bank was very interested, as was Steve Dodge, in this really doing well. What was going on here was that they were missing their numbers in the suburban market by a lot and so Steve hired me to come in and turn it around.

Schley:  And you did.

Holleran:  I’ll have to tell you though. I remember this, Stewart: I had gotten a sense of the situation. There had been a manager there but it didn’t work out. They had some issues. All right, I understand. I’m coming in to do this, but three weeks after he hired me, I’m in his office in Boston for a meeting and he says, “You’ve got the sorriest-ass system in the company.”

Schley:  (Laughter) Oh.

Holleran:  And it’s important that we fix it. The banks are really looking at this because we’re missing our numbers. I was like, OK. I understood their problem but I didn’t understand that it was that. It was my first time running something. So the sales manager had been a salesperson, not a manager at all so I quickly changed out that person. I had to make some changes like that to get the right people and they had to finish building out the network of MDUs  in the city. There were some things that hadn’t been done right.

Schley:  So the penetration was lagging; the subscriber numbers were lagging.

Holleran:  The penetration was lagging, the pay to basic was really lagging because in those early days you pretty easily sold the triple play of HBO, Cinemax and Showtime. Plus basic for $29.95 a month. They considered Arlington the crown jewel but they had started building in Quincy, Mass. They were getting like 280% pay to basic. Arlington was at like 100%.

Schley:  When you think about the difference between $7.00 and $30.00, the pay TV triple play as you describe was really a huge economic propellant for the cable industry in those days, right?

Holleran:  You mean selling the pay services to get up to $30.00. The logic of that this was great value for the money to have uncut movie channels in your home for $30.00 a month, you could entertain the family a lot. So it was a great, great value.

Schley:  How long did you run that system and then what did you do next and kind of what lessons did you learn that you carried forth?

Holleran:  I ran the system for two years then moved into kind of a holding pattern in the regional office in New England in a marketing role, but primarily I had already started franchising in the city of Cambridge as part of my responsibilities. But we didn’t know if we’d win that and so this was a place to move me along, advance me, give me actually more time to do franchising. I guess the things that I learned—I learned that I really liked the business; I still saw the things that I thought were there when I wanted to get into the industry in terms of you could take this model and replicate it to another community and replicate it to another part of the country. There was a lot of growth here. So I was feeling very good about that aspect.

There’s a lot of serendipity, though, in winning a franchise or not. When I look back, I feel very fortunate that Steve wanted to go for that franchise and that we won it and then I got the job then to go in and build it and run the operation and because of the way it had to be financed with limited partnerships and off the regular balance sheet, I actually had financial and operating responsibility for a bunch of other systems that they put into this limited partnership. Franchises they had already won in Newburyport, Mass., and surrounding communities and had acquired in Marlboro, Mass. They put it into one financial entity. So I got the breadth of experience of building an urban cable system, startup, selling the limited partner units with the bankers, and what I tell my kids, the best thing someone can give you is a job and you’re getting paid to learn.

Schley:  It’s like you’re running your own company in many respects. Talk about, for those who don’t know, what was franchising? When you refer to franchising, what are you talking about?

Holleran:  I’m talking about a number of cable systems would file applications to bid to get the license to operate in that city. In those days, I mean, it was never an exclusive franchise, but de facto it was, because the economics of just selling TV really and the capital required to build your own network, it simply didn’t permit any other entrant to come in. That changed in time with some overbuilders because now you could sell TV, Internet, phone…

Schley:  More revenue sources, right?

Holleran:  It goes from $30.00 a month to $100.00 a month and so you can afford to take a piece of the market and share it and succeed. The fundamental economics—it was very important, those were the franchise wars. Cambridge was an exception because it was an urban market, a lot of people didn’t like that, they were getting used to people in suburban communities wanting to pay for TV because they used to get it off-air. But instead of having half a dozen companies bidding, someone like Continental, Adams-Russell and so forth, a bunch of others—in Cambridge, there were a limited number of bidders.

Schley:  Who were you competing against in Cambridge?

Holleran:  Well, actually Cablevision, Chuck Dolan’s company. Now this was 1984 going into 1985. They had, since I had gotten into the business in 1982, come along and won the franchise for Boston and so they were competing and we were there and then two other smaller companies were competing also.

Schley:  And the idea was—I know you had to submit a large physical proposal. You were basically trying to win the favor of this to impress the city leaders that you’re the right company.

Holleran:  Correct.

Schley:  For the job. How did you guys do that?

Holleran:  I give a lot of credit to Steve Dodge. You know, it’s a reputation thing and he had a little bit of success already. There’s a great part of it, Stewart, that I think illustrates for me. And this was a case where the city also was very professionally run. I don’t want to say Boston wasn’t, but believe me, Cambridge was. It had a city manager form of government, so you had a manager running it. He was subject to some politics but he really was responsible for running it. I think in the case of Cambridge, what illustrates it is they put out an RFP, a proposed RFP, with all kind of requirements that you’d expect. You know, 3%, public access, another percent, municipal access. Those kinds of things. It’s the cost of doing business and that’s fine. But one of the things they put in there was just unacceptable to us and to Steve, which was even though there was 90% aerial plant in the city, they wanted us or any bidder to agree to build the entire network underground. So there was a hearing for this and the other companies went in and said, yes, we’ll do that.

Schley:  Really.

Holleran:  Yes. It made no economic sense. And Steve Dodge, I can still see him standing there and they asked him the question and he said, “No, we won’t do that. In fact, if you keep that as a requirement, we’ll simply withdraw. We won’t bid.”

Schley:  Did it seem like a deal breaker at the time, that that was putting you out of the mix?

Holleran:  I didn’t think so only because I had worked for the city manager. It wasn’t because I’d worked for him, it was because he was smart and I knew he had good judgment and he understood economics. Because what I said about credibility, he looked at Steve Dodge and I think he saw a guy who was sincere, knew his numbers and told you the truth.

Schley: The city manager didn’t want a distressed company running out of money or running out of capital after two years.

Holleran:  Exactly. But you would be surprised how many would just say, yes, because they think they’re getting all these things and make a mistake. So in fact, I honestly never worried. I told Steve, I said, “Not because the city manager told me, but I just know him. He’s not going to keep that in the proposal.”

Schley:  How did the city ultimately announce its award? Was it pomp and circumstance or a simple—how did they do it?

Holleran:  Yes, it was. It was a big deal in those days so there was a signing, a photo-op, press, the whole thing of signing the license and awarding it and then we had to hurry up and build it. We had to get a waiver from the license required from the state to build before we had the franchise because going back to the financing of this, the limited partnership, you could get accelerated  depreciation for that portion of your investment if you spent it before the end of 1985. I mean, it was just a whirlwind of learning and growth. Dealing with the state, getting a waiver, starting construction before you had a franchise, getting enough of that spent so that you could factor that into your returns and get the benefit of that. It’s an education, and to get the opportunity to do that in an industry that turned out to be great was just a wonderful fortunate thing for me.

Schley:  So you guys won and you built the cable system. Was it a dual cable system or do you remember the…

Holleran:  It actually was because we had a dedicated separate I-Net that Cambridge required. Not the best use of capital but if you wanted to win it and you funded certain access things. It was a very expensive build because even though it was only 10% underground, it was Harvard Square and taking up bricks and marking them and putting them back the same way.

Schley:  You’ve got historical issues.

Holleran:  Historical stuff and—I wouldn’t do it today in my company but Steve Dodge gave me the checkbook and now we were incented through the limited partnership deal; that if we kept the spending for building the system and the wiring of the MDU under $15 million, we got a percentage of that money and we’d pay overages, not just to the current but to the lenders. So it was a very interesting financial aspect to this thing as well. Again, I had a checkbook. I was writing a quarter million dollar checks to the construction company, one signature.

Schley:  Talk about P&L responsibility.

Holleran:  Because if you paid them early, you’d get a discount. And the math worked in terms of cash flow, it really worked. At the end of that first six months of building, when you think back to pre-computers virtually or just getting them in those days, I had my admin tracking every vendor and every amount on the green bar spreadsheet manually. At the end of the year closing, a few accountants came down from corporate and said, you’re way over  budget, you spent this money that…no, you could ask me, you could call me up at two in the afternoon on a Wednesday and I could tell you to the penny what we had spent. I said, “You guys are wrong. I don’t know where or why but you’re wrong. This is the truth here, these are the facts.” It caused them to have to go back. They had double-paid because a vendor used two different names when they sent the invoice. They had overpaid, double-paid, to the tune of, I don’t know, $600,000-$700,000. And we clarified that because an assistant kept the numbers for me.

Schley:  Did you come in under your $15 million?

Holleran:  We did, we did.

Schley:  Nice. American Cablesystems  put together a number of properties, as you said. Ultimately Steve sold the company to…

Holleran:  Continental Cablevision.

Schley:  I don’t remember the date of that. Do you remember?

Holleran:  They closed March 1, 1988.

Schley:  So what did that mean for you?

Holleran:  There was a lot of sadness in American on that day honestly. We couldn’t have been sold to a better company. I’ll come back to that. But we were really—it’s egotistical a bit but we were really the fair-haired child and well-liked and respected by all the cable community.

Schley:  And the finance and banking community too?

Holleran:  And the programming and everything else. Steve created a special culture and Dave Keefe and I—we’ll get to that later—really the thing we’re most proud of is how we created that same kind of culture at Atlantic Broadband. You know, Steve said, “Take care of your employees; they’ll take care of customers and that will take care of business.” Every manager has to live that and what I found in those days— you listen, you respect people, it’s a meritocracy of ideas. There were no politics. It was just everybody felt they could contribute to their greatest ability and when you walk in that room for a meeting, titles didn’t matter, you just figured out what to do working together. I can only tell you, Stewart, that these many years later and having then gone and started to build a company myself that frankly it was in that image. The kind of response I get from people in the company and others who have gotten to know us just reinforces that so much. I forget what the question was, but I really learned that at American…

Schley:  I liked the quote that you attributed to Steve, which is take care of your employees, they’ll take care of your customers and that will take care of business. Is that how it went?

Holleran:  Very true.

Schley:  So Continental kept you aboard obviously.

Holleran:  Continental, yes, they kept me aboard. It was also great because I’ve lived in Boston my entire life. I didn’t want to move and the other half—that’s pretty rare to do in the cable industry, let alone in Boston. So Continental was there, they hired us. Amos has got a great company. We fit like silk on silk. They were more mature. I end up telling my managers because they would think, “All these rules…” I said, “Look, guys. That’s who we’d be if we were one-and-a-half million customers rather than half a million. You’ve got to mature and grow into this. It’s fine, it’s OK, you need these controls.” We were known for having a great time swinging for the fences, young. Continental was a little more seasoned but the same kind of values—because I think Amos did the same thing. The other part of it was hire good people and let them run things. Steve clearly did that with me. I mean, clearly let me run things.

Schley:  It was at Continental, or the Continental-MediaOne succession, I guess, where you were instrumental in rolling out what became a transformational product for the cable industry, which was high speed Internet. We invite you just to talk a little bit about that experience.

Holleran:  Again, I would start by saying just like Cambridge, we won that, how fortunate I was. I didn’t even know what the Internet was, honestly. I didn’t know TCP/IP from…thank God engineers need management. I said to my wife that honestly, we had some of the wunderkinds of the Internet on the network side, but you had to make a business out of this. They really needed someone of a general manager nature to set this up as a business unit. So everything from the business plan through installation rollout and build and so forth—there are many people responsible for the success of this. You know the old saying, “Orphan is a failure and success has many fathers.” And it’s true. I couldn’t do it alone, but I can tell you honestly I was the guy with the X on my back for the P&L responsibility for building this organization and getting the product out and so forth. I didn’t know anything about it but I learned quickly. We were in that same wave independently but in 1996, we launched, commercial launch of the residential service in that year. The same kind of window as TCI @Home, Time Warner’s Road Runner, were all around that ’95-96 when this started occurring. It was breathtaking and a great opportunity for me personally because that became sort of the future of the business.

Schley:  Where was the first Continental cable modem subscriber?

Holleran:  Needham, Mass.

Schley:  Needham, Mass. This was ’96, ’95?

Holleran:  This was ’96. September, 1996.

Schley:  Do you remember what you charged for Internet service?

Holleran:  I do. I’ll tell you a little story in a second about that. We charged—now we’re going out to the early adopters—we charged $49.95 if you took it a la carte. If you took it with video, which most did, it was $39.95.

Schley:  OK.

Holleran:  We did everything in figuring this out. I attended a focus group about the product and service and so then I came out from behind the curtain at the end and talked to the people and they asked questions. One of them said to me, “What are you going to charge for this?” Now these were the early adopters who were willing to pay $100 because they wanted the speed, they knew about it. And we were only going to be skimming that but we knew. The plan was to penetrate this market, but we didn’t have a perfect fully defined release 1.0 if you will. This person asked me, and I looked at him and said, “You’re going to tell me. I mean, I can pick a number but you’re going to decide to buy it or not. In truth you’re going to tell me what this is worth and what I can charge for it.” So we wound up at $39.95, but back to what I was saying earlier about the way Amos ran the company and Steve Dodge, this was a huge new—and in hindsight—tremendous growth of the business. To the point I was the guy with the X on my back. So I  had worked for Bill Schleyer when Continental first bought us. He was running New England and I reported in to him. Then he…became EVP and president. So I’m down at the Pilot House and there’s all this stuff going on about this. I see Bill in the corridor and he said, “Hey, how’s it going? What are you going to charge?” I said, “Well, we’re going to charge $39.95.” “OK, great.”

Schley:  There’s not a lot riding on this decision, right?

Holleran:  No, right. We didn’t have consultants. We did our homework. We weren’t just throwing darts, but in terms of—when you think about it, the decision process and who decides and who’s accountable—the CTO was involved in this, and this guy here. And Bill says to me, “Ed, what are you going to charge?” I said, “Bill, $39.95, and here’s the three reasons why.” And he says, “Great.”

Schley:  For context, Ed, do you remember what American Online had charged for Internet service at the time? I don’t.

Holleran:  Yes. $9.95.

Schley:  So you’re considerably higher than that…

Holleran:  And they had content.

Schley:  The whole bundled package.

Holleran:  We didn’t even to the point of release 1.0, we weren’t going to be AOL. We weren’t going to create a walled garden with content. Our greatest value to the customer was the speed. And the speed was 1.5 megabits. But that was the equivalent of a T1 that the phone company was selling to businesses for anywhere between $800 and $1500 a month, depending on your distance. And here we were providing a T1 into a resident’s home for $39 a month. The people who got it and understood it—it was a no-brainer.

Schley:  Were you guys concerned about—once you understood the demand levels—the scalability and the ability to just support this product?

Holleran:  We walked before we ran. I mean, we started out in Needham and we actually went to the more affluent suburbs around Boston first because we knew there would be more demand and affordability for this. But we knew AOL was penetrating lower income and this should be a product, but we watched carefully as we went to Woburn, Mass., which doesn’t have the same income and others. We were really data-driven, but we tracked each community by community as we rolled it out and the penetration ramp in each one and saw how that went. And the curve of that, even as we saw the lower income ones come along, it might be a little bit behind but no, the police and firefighters were buying this, too. One of the biggest questions at the time, kind of behind your question, was a lot of people thought the dumb cable guys are never going to do this right. How can they do this? They can’t even do TV. And data has got to be so much harder.
There were a lot of talented engineers and ops people and you have to provide a good service and the network worked and the installation. So we learned how to do it. We partnered with BB&N, Bolt, Beranek and Newman, which was an early pioneer in the Arpanet. They were headquartered in Boston. We actually partnered with them to get started with them being our help desk.

Schley:  Interesting.

Holleran:  Because we didn’t have that expertise in-house. So then we had to build that in-house and we did. It scaled nicely and we went from zero customers to 2500 in that first, starting in September to the end of the year. And then we hit 40,000 a year later. On that first part, a very interesting story here is that US West MediaOne—we had started planning for this in January of ’96. We went through all that launch of the first customer in September. In November, US West MediaOne bought Continental. By the next summer of ‘97, they were pulling the headquarters back to Denver. But when they came in ’97 at that point in time, we were just starting to launch it. Because we launched a couple months later. They were very concerned then. They didn’t think we were ramping up fast enough because they had seen some softness somewhere. So I found myself doing a pitch to the top five people at Continental: Amos, Bill, Nancy the treasurer, Ron Cooper, and the top four or five people from MediaOne. All in the same room. Chuck Lillis, Doug Holmes, Rick Post. And I essentially pulled a plan together in a couple of weeks and said, “It’s not funded, but you give me…” I’m trying to remember and actually this was ’97 when they just came in. At that point we were trying to do it nationally and I said…it’s hard to remember all the particulars now, but the short of it, Stewart, was: “OK, guys, here’s the plan. You’ve got to give me $5 million and we’re at 2000 subs today. We’ll be at 23,000 at the end of the year.”

Schley:  Geez.

Holleran:  And they looked around. I was kind of feeling like, oh. And they said, OK.

Schley:  Really.

Holleran:  Because we started marketing then and we did it. We made the number.

Schley:  A little detail question, but in the early days of cable modem service rollouts, as we used to call it, how long did it take an installer to get a customer connected?

Holleran:  The very first installs would take half a day or longer because there was all kind of internal wiring and making things work. So you came down the curve, though, and to the point not just only today but pretty quickly you got that down to under two hours and then an hour.

Schley:  How did Atlantic Broadband come about?

Holleran:  One answer is necessity is the mother of invention. So career-wise, I had stayed with MediaOne just for about two years because as I said, they bought Continental in the fall of ’96. By ’97, they moved the corporate office to Denver. But  they kept the high-speed data business in Boston.

Schley:  I remember that. That’s great.

Holleran:  At that time. For one year they kept it in Boston; it wasn’t because of me. We were in the midst of this rollout and ramp-up and all that. They did it because of a couple things. One is the engineers at that time could say, “I’m going to work wherever I want. I don’t have to go to Denver.” And two, they were just entering this joint venture with Time Warner for Road Runner. In that context, they kept the job there, I kept running it, delivered great. A year later my job went to Denver and I said I’m not going. They said, “Come to Denver.” And I said, “No.”
I knew there wasn’t going to be a “there there” very long. They weren’t interested in staying in the business. Good luck to them, they made a lot of money, flipped it. But it wasn’t for me to move my whole family, wife and five kids to Denver and see how all their lives settle out there. So I stayed in Boston and needed to figure out what I would do in Boston to keep my life there. The very first part of it, I rolled into a rented executive consulting with Road Runner down in Virginia, heading up on a contract basis the commercial high-speed data services but that wasn’t enough. I was getting a salary but I wanted equity so through Dave Keefe—the guy I started Atlantic Broadband with, whom I met my first day interviewing at, after I met Steve Dodge, at American Cablesystems — we had become good friends. He’d traveled all over the world. He introduced me to a private equity firm in Boston and I started  an overbuild company. Didn’t get fully funded because the telecomm blackhole for debt in the summer of 2000. A number of overbuilders started in late ’99 and in 2000. So what looked like a real failure if you would in some respect was for me personally a lot of growth. I got to be the CEO, the lead guy raising money, pitching to the investment community, putting a team together. It gave me more confidence and then we had to wind that down and the year after that, Dave was around, we got together and it was the proverbial honest-to-God over breakfast in Bickford’s. “What do you want to do?” “ I don’t know, what do you want to do?”
“I don’t want to work for a big company.”  
“Neither do I. Why don’t we try doing this ourselves?”
And the short of it is we then had Daniels represent us. We went around talking to all the equity firms in Boston and New York and Chicago, Madison and Dearborn, and we connected, thinking chemistry with Abry Partners in Boston. They backed us—they wanted to work with us, we chased some deals and very fortunately because there  wasn’t much deal flow, we landed a pretty big one. $765 million acquisition of systems from Charter. That formed the basis of Atlantic Broadband.

Schley:  Those systems were where?

Holleran:  They were in western Pennsylvania, Johnstown, and Altoona, Miami Beach, eastern Maryland, Eastern Shore.

Schley:  Were there competitors for those properties that you bid against?

Holleran:  Bidding for the acquisition? Yes.

Schley:  What was your game plan? What was going to make you be able to do better with these properties than the previous owner?

Holleran:  A couple things. One is that the way the whole private equity model works is you can really focus on an under-managed part of a company or a company. In this case—look, it’s hard to run a big company. Charter had acquired a lot, they hadn’t done the integration, they had balance sheet woes. I mean, how do you get the 10-1 debt equity, debt to cash flow in cable. You don’t need to but they got themselves in a bad position so they were trying to sell assets to illustrate the value of these systems.
So the business model really was based on broadband. Between the equity guys and ourselves, we thought there was lot of growth in broadband. We thought video would continue to decline for the operator but a huge opportunity in broadband. And that was the simple thesis and there were other companies bidding and we fortunately won.

Schley:  So you bought that whole group of properties in one fell transaction? That put you on the map as a company.

Holleran:  Yes, Atlantic Broadband.

Schley:  Where are you guys today in terms of size or presence?

Holleran:  We’re the thirteenth largest MSO in the U.S. We’ve got close to 300,000 customers including businesses. Close to $400 million in revenue. So we’re big enough to really attract a strong team, but we’re still flat and have this culture I talked about earlier. And we did, coming up on two years this November, we sold and we were bought by Cogeco up in Canada. So a strategic bought us, they kept the management team here. We’re a wholly-owned U.S. subsidiary. They want us to run it. We kind of rolled into this situation with them. It was a good exit on the private equity side but sometimes be careful what you ask for. We thought we’d get bought by another private equity firm and folks were really excited about that. But we look back now and think in many ways, this was the best outcome. Comcast didn’t buy us and get rid of a lot of people, all those   600 employees out in the field and the call centers and all—a Canadian company bought us and we can stay whole, continue to grow, provide that continuing life and opportunity and growth for our employees.

Schley:  Speaking of growth, Ed, what are the services or products or implementations that are going to drive your business forward?

Holleran:  There’s really three things and a couple of them have been going on but they will continue to be. The first is residential broadband. That has been the backbone of the growth. We continue to take market share and grow that business. Commercial data and phone for all the MSOs. It’s about a third of our EBITDA growth in dollars now and has been for the past few years. That’s growing to 40% and higher just as the years go by. That’s strictly commercial. And then the third is really for us; I mentioned earlier we’ve gone with TiVO and we think TiVO provides us table stakes, parity, the user interface. A great experience for customers to find what they want. So as this future evolves, I think with that kind of gateway in the home and support, that last mile network, user support, allowing people to get all the content they want. It kind of comes in all kinds of different packages and ways, some through the traditional video but people are going to be consuming it from all different sources but we think the future on this network with that kind of interface will also continue to have us grow value in the business side. But the video per se is flat in terms of revenue growth.

Schley:  It’s interesting to hear you tell your story in that although the product mix has changed and the technology has changed, it seems like the lessons you learned from Steve Dodge are very much alive. Two companies later, at Atlantic Broadband.

Holleran:  You know, it’s a team, it’s people and I can tell you, people choose to come to Atlantic and we’re  attracting people now from some of the big operators and programmers and they come because two things. One, they can have an impact here and they have real responsibility to have an impact that can affect the business. It’s flat; they’re part of the senior team. It’s not like things are compartmentalized. They need to be in a bigger company. So we attract people who want to have that impact and we’ve been very fortunate and I couldn’t be prouder when people say, “You’ve got a great team.”

Schley:  Ed, thanks. President and CEO of Atlantic Broadband. Thanks so much for spending some time with us and talking about your odyssey in cable. Appreciate it very much. For the Cable Center’s Oral History series, thanks for watching. I’m Stewart Schley.

END OF INTERVIEW

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Robert Hughes

Robert Hughes

Interview Date: Friday January 21, 2000
Interview Location: Austin, TX
Interviewer: Jim Keller
Collection: Hauser Collection



Robert Hughes, the former CEO of Prime Cable and a pioneer in the cable television industry, died Feb. 28, 2017. He was 81 years old. Read More at Multichannel News ➢

KELLER: This is the oral history of Robert W. Hughes, founder of Prime Cable Corporation, chairman of Prime II Investments and Managing Director of Prime New Ventures. This oral history is being funded by a grant from The Gustave Hauser Foundation and is part of the oral history program of The Cable Television Center and Museum. We are doing this interview in the offices of Prime in Austin, Texas. The date is January 21, 2000. Your interviewer is Jim Keller. Bob, tell us a little bit about your history prior to the time that you got into cable television.

HUGHES: Jim, I'm originally an Okie. I was born in a small town in Oklahoma and went to school at the University of Oklahoma. I played baseball while I was in college. In fact, I went to school on a baseball scholarship, which is part of how I ended up down here in Austin because I had pleasant memories of Austin from when we used to come down here and play baseball against the University of Texas.

KELLER: Second baseman?

HUGHES: Infield, you're close. Shortstop. So I graduated from Oklahoma and worked three years for an oil company, Conoco, and I basically decided one thing during that three year tenure; that was that I did not want to work for a big company and that's probably the motivation that sent me off to Harvard Business School to get a master's in business administration. My degree from Oklahoma had been in chemical engineering. So having finished up at Harvard in 1962, I wanted to go with a small company; I decided I wanted to get into the financial side of business and wanted to get into something where I could use my technical background along with my MBA. I came down to Texas knocking on doors, and ended up by chance finding a venture capital company in Austin, Texas that was looking for somebody with just my background. They didn't have to convince me to come to Austin because I still had those pleasant memories about coming down here and playing baseball.

KELLER: Was that the Texas Capital Corporation?

HUGHES: Yes. So I moved to Austin in 1962 and started learning the venture capital business. The second year that I was at Texas Capital, a couple of guys walked in named Jack Crosby and Fred Lieberman, whose biggest claims to fame at that point was that they had debt right here to their eyeballs like all the other guys in the cable business. They badly needed to refinance their debt as well as to get some additional money to build the rest of the properties, or franchises, that they'd picked up around the country. We'd never heard of cable TV at our venture capital company. The guy who was the head of our group, a gentleman named Grogan Lord said, "Hughes, I want you to become the expert on cable TV." I literally went out and spent six months with Fred and Jack; I went out to all their cable properties, read everything I could about cable television. I came back and recommended that we should refinance all the debt that Crosby and Lieberman had, and provide additional money for expansion.

KELLER: How did you reach that conclusion? At that time, the banks and most of the venture capital companies didn't want any part of cable.

HUGHES: Well, you're right. The banks didn't want anything to do with cable and there were very few venture firms that did. In fact, to my knowledge, the only other venture firm back at that time who was doing anything with cable was Narragansett Capital.

KELLER: Narragansett Capital. ATC?

HUGHES: Yes, in fact I remember, I did talk to somebody at Narragansett in the course of doing this research because they had already started doing a bit of cable investing.

KELLER: Probably Al Hartman, if I remember right.

HUGHES: That is correct, it was Hartman. So you're right, there were no banks. Actually, somewhat miraculously, we put together a financing package for Crosby and Lieberman where we put up some venture capital and we got Chase Manhattan Bank to put up a little bit of bank money, but it wasn't done easily. As you said, the banks were very skeptical about cable, but we put up enough money on the balance sheet subordinated to them whereby they felt somewhat comfortable.

KELLER: So you got a bit of mezzanine financing at one point?

HUGHES: Right, and that was actually consummated in '63. One interesting side light there that kind of gave a little insight on the financing world in those days: I still remember when we went to the closing, Chase Manhattan Bank apologized to us because they were going to have to charge 6% interest. Keep in mind, the prime interest rate in those days was 3 ½, but I remember they changed the deal at the last minute and said, "We're going to have to charge 6%; this is a risky loan." So that shows you somewhat how things have changed. So that financing experience was my first introduction to cable.

KELLER: How long did it take then to get Chase Manhattan out of there, about two years?

HUGHES: I don't remember.

KELLER: It probably wasn't very long.

HUGHES: I don't remember, but that started my knowledge curve in cable television. Two years later, Jack Crosby showed up at our doors once again and, we still had the other investment on the books; it was doing well.

KELLER: Did he find you because you both lived here in Austin?

HUGHES: No, Jack didn't live in Austin in those days. He lived in Del Rio, Texas, and one of the systems that was in the package that he brought to us was Del Rio, Texas along with some other systems in Texas; Lieberman's properties which were primarily in the East, which at that time included Burlington, Vermont and a couple of other towns up in the New England area; then the rest of the money went to give them money to build Macon and Warner Robbins in Georgia, Peru and Wabash, Indiana, Rutland, Vermont and North Adams and Williamstown in Massachusetts.

KELLER: After that then they kept selling them back and forth to each other for a while, didn't they?

HUGHES: Well, Crosby holds the all time worlds' record on Del Rio. I think he originally financed it with some goat ranchers out in Del Rio, Texas.

KELLER: I interviewed Jack.

HUGHES: Okay, then he probably told you that story. He bought out the goat ranchers, and that was the first transaction. Then he sold it in the deal when he Lieberman put all their systems together. Then, I'm going to lead into a story where we bought Del Rio back out of that deal two years later, in '65. Crosby, who always was working on another deal, came in with a master plan that everybody in cable TV told him couldn't be done; that was to consolidate the cable operations that were Jack's personal deals, which were Del Rio, Ranger, Cisco, Eastland, and Eagle Pass – all in Texas. Then the plan was to get Gene Schneider's properties in Casper, Gallup, and Moab; Glenn Flynn's system in Tyler, and Ben Conroy's system in Uvalde. Crosby said, "Look, we want to try to put all of these properties together in a new company, some of us want to draw some cash out, and then we want to merge all of these to form a new company." You can imagine with all those strong personalities trying to form a company. We actually worked on that deal all of 1965 to put that company together, and it was called General Communications and Entertainment, i.e. Gen Coe.

KELLER: They sold that to an oil company in Tulsa, didn't they?

HUGHES: Right. It went under the acronym of Gen Coe and Crosby was chairman. I can't remember whether Gene Schneider or Ben Conroy was president at the time. Two years later, this would have been about 1967-68, Livingston Oil Company out of Tulsa showed up.

KELLER: Livingston, that was the name of the company?

HUGHES: Yes, Livingston Oil Company, a New York Stock Exchange Company, decided they wanted to get into cable TV and they came to Austin and negotiated a deal to merge, in a stock deal, Gen Coe into Livingston Oil. One little side story, I'll back up for a second to reflect. When we put together the Gen Coe deal, of course I got to know all that cast of characters mentioned previously. I'd never met some of these people before and I remember one of the most memorable events. I was a thirty-year-old kid at the time, a few years out of graduate school, and we got into some very tense times during these negotiations because obviously there were evaluation issues, etc. I never will forget one incident involving one industry icon, who I'll name in a minute. One very late night evening at a law firm, one block away from where we sit, the lawyer who was doing all the framing of this deal was a young man named Sander Shapiro, who did a lot of legal work for us in those days. In one of the very tense negotiations, Gene Schneider, who has a little bit of a temper, in one of these meetings resorted to a slide rule as a weapon. You remember, back in those days we had those 12-inch slide rules used for calculations - there weren't any computers in those days. Gene got so mad that he was up out of his chair with this slide rule in his hand, and had it poised over this lawyer's head. Of course, Gene is six inches taller than I am, and I still remember grabbing Gene's arm and saying, "Gene, now wait a minute, settle down. We're going to get this resolved." But I thought he was going to crease this lawyer's head with his 12-inch slide rule. I've kidded Gene about this several times over the years.

KELLER: This lawyer was representing you?

HUGHES: Well, he was representing the whole group and of course, I'm just there representing the venture group that's going to put up a lot of money in the deal, so I was simply an intermediary trying to help make it happen. It was a tense moment which we got past and put the new company together.

KELLER: As an aside, Livingston Oil was one of the first, in fact it may have been the first, big public company to get into cable television. May have been, I'm not absolutely sure of that.

HUGHES: I think you're right because there really weren't any public cable companies at that point, and that was part of the motivation for them in doing this deal. They thought with Crosby and these other people involved they had the nucleus of a company that they could go out and acquire other cable properties with a publicly traded stock. Now it's interesting what happened, and it happened very quickly – the best way I know to describe it is a clash of corporate cultures. It's what led me ultimately to getting into cable TV. The Gen Coe division, operating within Livingston, got the franchise for Midland, Texas, which Jack Crosby had been working on for two years. They took the proposal to the board of Livingston, which was controlled by oil people, and the board sent it off to their analysts to analyze the rate of return on this investment. The analyst came back to the board after several weeks and said, "This doesn't meet our criteria for rate of return." Of course all these cable guys in Gen Coe looked at the board and said, "What does this mean?" The board said, "We're sorry but we're not going to build Midland, Texas." Of course Crosby had been working for two years on Midland and Jack told the board very nicely, "I'm out of here if we can't do Midland." Keep in mind, that as part of the Gen Coe deal, Jack was chairman of the board.

KELLER: Of Livingston Oil?

HUGHES: Of Livingston, yes. Jack told them very nicely when they made that decision, "I'm out of here and I am going to resign as chairman of the board." Jack did in early 1968, and that's when he came to me. I was still in the venture capital company, and Jack said, "I'm going to go start a new cable company on my own. I have no people, and I'd like you to come with me and be the financial guy." The other part of the deal he had struck with Livingston when he resigned as chairman was that they would let him have the Midland franchise to build since he was the guy who had worked on it for two years. So when Jack and I made the plans to formulate what became Communications Properties in early 1968, we had one asset and that was Midland. Ben Conroy, who of course had been with Gen Coe had also become a little disenchanted with the Livingston people, said, "Look, I'd like to come over and be with you guys and start this new company." I knew Bill Arnold because Bill had been the chief financial officer for a little toy company that we had financed in the venture company I worked for. I said, "Hey, I know this guy that can be the chief financial officer." I still remember the name of Bill's company - it was Gulf Toy House and Bill Arnold was the financial guy. So we went and got Bill, and Jack and Ben came over from LVO. That's how I got into cable, and was the start of Communications Properties, which Jack, Ben, Bill, and I built into the 7th largest company in cable over the next decade.

KELLER: But the Schneiders never did; they finally broke it off.

HUGHES: The Schneiders stayed, and that's how Gene was elevated to be the president of the cable division of LVO. Then later, that was spun out to Livingston's shareholders as LVO. LVO Cable was, in essence, the company Crosby put together as Gen Coe, which Gene Schneider got to take charge of.

KELLER: I don't remember.

HUGHES: Gene got spun off into a separate company of his own, LVO Cable and that's what later became United Cable. Most cable people don't remember the origin of United. The sequence would be Jack Crosby – Gen Coe – Livingston Oil – LVO Cable – United Cable.

KELLER: So now you and Jack and Ben Conroy have Midland.

HUGHES: That's right. That was our first asset.

KELLER: Your venture capital company had financed that?

HUGHES: Our venture capital company had financed the Gen Coe operation, so we had ended up with Livingston Oil stock. They weren't in our new deal at all. We had to start from ground zero. Jack was the president, I was the vice-president of finance, Ben was the vice-president of operations and Bill Arnold was our treasurer. We were the four guys, and we had just the Midland franchise. Now that's where we did the next Del Rio transaction.

KELLER: Tell us about that.

HUGHES: Of course, it was then still a Livingston Oil asset, so we went to LVO and negotiated a deal to buy back Del Rio and Uvalde, which of course had been Ben Conroy's system. We named our new company Communications Properties. So at that point in time it was the third time that Crosby had bought back Del Rio, and this had all been done in a period of six years.

KELLER: Lieberman at this point was where?

HUGHES: Lieberman was not involved in that transaction. He still had, at that point, the properties that our venture capital company had helped Jack and him refinance back in 1963. Jack still had an equity interest in that company but Fred was running it. That was a company called Telesystems Corporation. So Jack still had his equity interest in that company when in August, 1968 we together our new company, Communications Properties.

KELLER: Now that you've got Communications Properties along with Jack and Ben and Bill Arnold, where did you go next?

HUGHES: Well, we went out to start to try to build a cable company.

KELLER: You had to go find financing then, didn't you?

HUGHES: Those were tough days to get financing.

KELLER: Late '60's?

HUGHES: I'm sorry?

KELLER: Late '60's? Early '70's?

HUGHES: Well, it was '68, and as we moved into '69, I'll tell you an interesting story that involved an individual that you know. We started out and picked up a few systems; we bought Kerrville, Texas and we bought some other little properties out in west Texas. But we wanted to do something bigger in another state. Our first major acquisition was the system in Springfield, Illinois, which we bought from Dick Leghorn in 1969. This is where there is an interesting story involving another individual in our industry who you once worked for. I'd gone down and spent three days with Dick Leghorn negotiating the acquisition of Springfield, and we shook hands late one night on a deal. Of course, we didn't have a clue as to how we were going to finance it. We were like all the others; we were going to figure that out later but somehow we convinced Leghorn that we could handle it. The next day, we had a meeting that had been scheduled for many months with one Mr. Monty Rifkin. Monty was coming to Austin, and of course, we wanted to talk to Monte about putting our two companies together because Monty was starting to grow his new company by acquisition just as we were. This was late '69, after we had become a public company in May '69.

KELLER: ATC was just starting to roll then, yes.

HUGHES: We thought we'd have a visit with Monty, and see if maybe there was some way we could put the two companies together. The funny incident occurred when I met Monty at the Austin airport. We're walking through the airport just kind of having a general conversation; what are you doing, what are you working on, etc. and I just kind of casually mentioned to Monty, "We just did another acquisition last night. We shook hands to buy the cable system in Springfield, Illinois." Monty stopped dead in his tracks, wheeled around at me, and said, "That is impossible. I've been working on that deal for six months." I didn't know what to say! I said, "Monty, I didn't know you'd been working on it. There was no mention of that. Dick Leghorn and I shook hands on a deal last night." Monte did not say a word. He turned around, went to the bank of pay telephones at the Austin airport, and he was on the phone for probably 45 minutes. He came back, didn't say a word, but I can tell you he was not in a good mood the rest of the day. He had called his lawyers in Boston, I believe it was Ropes and Gray.

KELLER: In Boston was it, or Providence?

HUGHES: I don't know.

KELLER: Maybe, because it was Narragansett I think, wasn't it?

HUGHES: I never have forgotten that incident, because I had no idea Monty was working on this property, and when I told him that, I can still see him stopping dead in his tracks, looking at me and saying, "No way."

KELLER: You had met Monty through your work with Bill Daniels or with the Daniels organization?

HUGHES: I think I'd only met Monty once and that was at a cable convention. I had started going to cable conventions in the mid-'60's when I was in venture capital. In fact, I don't remember exactly which convention, the Denver convention maybe in the '60's...

KELLER: '66, I believe.

HUGHES: That was my first convention.

KELLER: No, '65. I'm sorry, '65.

HUGHES: Somewhere along in there I had met Monty. So I only knew him in that context. So anyway, in answer to your story, we started building a major company when we financed Springfield and got it bought.

KELLER: Where did you go for the financing? Now you had both Midland – or Midland was already done, so Midland was throwing out cash at that point.

HUGHES: Yes, it was tough. I remember we ended up getting some financing from Teachers Life Insurance, which was one of the few lenders back at that point in time. There was a gentleman named Jim Straley, who did some cable deals back then in the late '60's, and on into the early '70's and he was a visionary. Probably a lot of people at his old insurance company thought he was crazy, but he made us a couple of loans that made him look like a genius with the equity incentives he was able to negotiate. We had gone public in the spring of 1969, taken public by a small company called New York Securities. That is where we got the equity money to finalize not only the Kerrville transaction but also Springfield.

KELLER: There were three companies, I think, that went public in '69. CPI was one of them, I know.

HUGHES: ATC. Didn't ATC...?

KELLER: ATC was either '69 or '70 and then the company out of LA that bought the Jerrold properties, I can't remember the name of it, I should.

HUGHES: You mean Burt Harris' company, Cypress?

KELLER: No, before that. I just can't remember. At that time, Jerrold was required to divest. They had to sell their properties. As you remember, the Justice Department walked in on them at that point. They sold it to...

HUGHES: Was that H & B?

KELLER: H & B American, yes.

HUGHES: I think that's right. I think the only three public companies were CPI, ATC, and H & B.

HUGHES: It was a struggle building companies in those days, and that sort of led us to the next plateau, or hurdle. We figured out we couldn't really put together any more cash acquisitions because none of the banks wanted to lend much money to cable. Jack and I, jokingly, back in those days talked about how we probably had more free lunches on Wall Street than anybody in the industry, and gotten thrown out on the streets immediately thereafter because Wall Street did not think cable was an industry that was going to be around very long. We had no net income, which they didn't understand. So, in the 1970-71 timeframe, we merged the properties that Claude Stevanus had up in Ohio called Tower Antennas into Communications Properties, which roughly doubled our size, made us the largest cable operator in Ohio. Claude had a very nice package of subscribers, and that all of a sudden enabled us to become a more major player in the industry. We thought that deal would open up some more avenues of finance, but it didn't. You remember those days in cable; they were tough years. Again, because we couldn't really raise any money to buy anything, we did another merger, and that was to merge Fred Lieberman's Telesystems package into CPI in 1973. Those were the properties that Crosby and Lieberman had put together in the early '60's, which had grown very nicely. All those new systems they had built a decade earlier had matured into properties with significant cash flow.

KELLER: Just as an aside here, so that people put this in perspective, these were virtually what we now call classic systems, where you needed additional television signals to be able to make a system function and pay out.

HUGHES: Absolutely.

KELLER: It was not any of the big size markets at this time in the development of the industry. That came at a later time.

HUGHES: Right. Well, our first introduction to that was when we merged Fred Lieberman's package into CPI. He already had picked up the first franchise in Philadelphia, which was to build the area in South Philadelphia, south of Center City, all the way down to where the airport is now. He had started construction on that in 1974, so that was our first step into a major market property. Meanwhile, Fred was continuing to do franchise work and picked up probably half a dozen other suburban Philadelphia franchises as well as probably another half a dozen over on the New Jersey side of the river. As a side note, with the tight money crunch of 1974-76, we never could put together the money to build those systems. The New Jersey properties later became the nucleus of the New York Times cable package that Irving Kahn, at one time owned. But they were the original franchises that were picked up in the Philly area by Fred Lieberman back in the very early '70's.

KELLER: Was the South Philadelphia area sheltered from the television transmitters at all?

HUGHES: Not really, but if you recall there were a few microwave systems around in those days and we could microwave in some signals from New York, which gave them some New York programming, but it was a tough, tough road. I think we only got 35% penetration. Fortunately the density was huge at over 200 homes per mile of plant. These were some of the row house areas in South Philly, and it did manage to get into a cash flow positive situation, but it was not a great property.

KELLER: That has always been my contention, at least in the major markets. It's not how many homes or what percentage of those homes you have per mile, but how many customers you have per mile that makes a system go.

HUGHES: Exactly, exactly.

KELLER: It was better than 80% in some of the other systems.

HUGHES: Right. So it did work.

KELLER: CPI had just merged, or bought, the Fred Lieberman properties including South Philadelphia, which was your first inroads into a major market. How long did it take that to get off the ground? You gave some interesting statistics just before we started again. You had 250 homes per mile of cable, so you had a 35% saturation?

HUGHES: Yes.

KELLER: The measure used to be, if you had 100 homes per mile and you got 60% penetration, you were in pretty good shape. Well, here with 250, if you got 30% penetration, you have the same thing.

HUGHES: That's right, and that's why I say it became cash flow positive. Now the problem was we didn't really have the money to go wire the rest of Philadelphia.

KELLER: Was that all overhead construction or was part of that underground?

HUGHES: It was all overhead. It was attached on those buildings.

KELLER: On the buildings but not on the poles, great.

HUGHES: Well, most of it was on the buildings. If you go back to that old South Philly area today, it still looks about the same, there aren't many poles. So it was kind of a unique area.

KELLER: Like London. So then your construction costs weren't that much greater than building in, say, Midland, Texas?

HUGHES: You know I can't remember exactly.

KELLER: Well, I'm just saying, if that was the case and you didn't have a lot of underground or urban area underground construction.

HUGHES: Not at that point, no.

KELLER: So what happened after you got Philadelphia going?

HUGHES: Probably the next significant thing in my career was after we put the Telesystems package together with Prime, our Board chose me, in 1974, to take over as president of Communications Properties. Things were still tough on the financial side of cable. You remember those days, and I can give an illustration as to how tough things were. I remember this one very well, and Bill Arnold and I still laugh about this one today, although we didn't laugh about it at the time, I became president in April of '74, and it was nine days later that Bill walked in my office one Friday afternoon and said, "Bob, we cannot meet the payroll next week." That was my introduction to being president and I said, "Bill, what happened?" He said, "I don't know what happened. I'm just telling you a week and a half from now we can't meet the payroll."

KELLER: How many employees did you have then?

HUGHES: Oh golly, I don't know.

KELLER: Roughly.

HUGHES: I don't know, we must have had 150 or so. What happened in the next week is that Crosby and I had to scramble to one of the local banks here in Austin, Texas, in fact it's a block away from where we sit, and we both had to sign some notes and borrow the money to meet the payroll. That will show you how dark things were in the early '70's. So I became president of CPI at that point. That's also the same year I went on the NCTA board for the first time.

KELLER: In '72?

HUGHES: It was '74.

KELLER: Just prior to the satellite transmission era?

HUGHES: Probably two years prior to that. We continued to build CPI as best we could, and moved more into franchising. You recall those days, we were all a little more adept at picking up franchises in those days than we were building systems. I remember in that timeframe, '74-'76, we got the franchise for Louisville. Again, we didn't have a clue as to how we were going to finance it, but we got the franchise. We then spent several years trying to hang onto it, which we did. We picked up several other franchises. We managed to pick up the franchises in Hartford, Connecticut and Meriden, Connecticut with the Rubicoff brothers as our partners. They had been involved politically in getting those franchises, and they owned 20% of it. We owned the other 80%, and again we had the challenge there as to how do you come up with the money to do it.

KELLER: Hartford was one of those difficult cross signal markets between Boston and New York and all the signals coming in at one time.

HUGHES: Right.

KELLER: As I recall, and I'm a little vague on it, was a specific case that the FCC looked at in trying to determine what signals any system could use, as I remember.

HUGHES: That's right. Up and down that eastern seaboard they had that problem, and I really can't remember now exactly how the FCC resolved it. I do remember back in 1975, Fred Lieberman and I had a meeting with Henry Harris, who was then President of Cox Cable. We were getting concerned that we would not be able to come up with the money to build the Hartford area – we had the entire Hartford metro area, Hartford, East Hartford, and all the suburban areas adjacent thereto, so it was a big market. We offered Henry the chance to buy our 80% piece of the unbuilt franchise. As I recall, the number we threw out to him was $300 a home for the franchise, and Henry absolutely almost had apoplexy to think that we could have the gall to ask for that price. He turned it down! Of course, a few years later that would have looked like a gift from us to Cox, but at that time it was unheard of to pay $300 per home passed just to get a franchise. Henry and I both remember that meeting.

KELLER: How did you finance Hartford?

HUGHES: We ended up somehow massaging it - that is the only word I know to use – until roughly the '76 timeframe after the satellites had been launched. You will recall at that point in time the banks all of the sudden started looking at cable a little more kindly. It wasn't anything overnight. But we ended up doing Hartford with some kind of a combination bank and insurance company financing. I think we got John Hancock and Connecticut Mutual Life Insurance, who of course were up in that geographical area, to fund a loan that enabled us to get those properties built. In fact, as a sidelight, at Connecticut Mutual one day I remember an interesting experience where one of the guys in the lending group was quite negative about our project. I remember him telling me, "Well, I know you guys are talking about taking some of this money and building West Hartford," which of course is where all the insurance companies are located, and he said, "but I can tell you, I'm totally satisfied with my television. I can pick up the Boston signals, and I can pick up some New York signals." He let me know in no uncertain terms not to count on him as a customer.

KELLER: I don't know how many times I heard that over the years.

HUGHES: Well, you can imagine who the first phone call was from when we became operational. When we got it down his street, I get a phone call here in Austin, Texas from this guy saying, "I've got to get hooked up to cable." I said, "Wait a minute, you told me in your office not to count on you being a subscriber, and now you're begging me to be one of the first subscribers." He said, "Well, I've changed my mind." I thought to myself – isn't cable TV a great business!

KELLER: Bob, I want you to recall, right about this period when we were starting to put pay television on the systems and we were starting to incorporate it into our pro formas into our financial statements or pro formas for the banks, do you remember any of the banks that said initially we won't permit you to use the income from pay television and then eventually then they allowed you to use a quarter of it and then a half of it. Is my memory correct on that?

HUGHES: Oh, your memory is absolutely correct and a lot of the banks at that point in time, who had been long time supporters of cable became very squeamish about the whole industry. The most notable in my mind was the Bank of New York and they were one of our lead banks. They weren't the only lead, thank goodness, or we might not even be sitting here today. We had a very infamous bank meeting in Pittsburgh, Pennsylvania in late '75, as I recall, in which all our lenders called us together. Fred Lieberman and I both went, knowing it was going to be a critical meeting. It turned out to be much more critical than we thought it. All 5 of our banks were there and the Bank of New York opened the meeting by saying, we want to be taken out of this credit. I looked at them and said, "Guys, that's wonderful that you want to be taken out, but we don't have a clue as to how we're going to take you out unless one of these other banks sitting around this table wants to take you out." They said, "You're not hearing us right. We want to be taken out, and we want to be taken out right away, no matter what it takes." I did something that just was a spur of the moment decision. I literally had some keys in my pocket, which were my car keys, a key to the office, and probably a key to my house back here in Austin. We were sitting in their big conference room, and I just threw them in the middle of the table, and watched them slide all the way down to the end. I got up and started folding my papers, Lieberman started folding his and we said, "Guys, that's the key to the door and if you want to go down and take over the company, you've got it." As we started walking out we got to the door, and they said, "Wait a minute, we want you guys to sit outside in the lobby and we want to have a meeting of us banks." Four and a half hours later, Lieberman and I were still sitting outside. By then it was 2:00 in the afternoon, and we sent word in via one of the secretaries to tell them that we're leaving to go catch an airplane. She went in, and when she came back out, she said, "No, they need fifteen more minutes." So in fifteen minutes one of them appeared and they said, "We want you to come back in the room." It turned out that the other banks had all stepped up and agreed to take out Bank of New York. So it was not a friendly day, but it was a day I won't ever forget because I didn't know what was going to happen to our company, which we had spent 7 years building.

KELLER: They got back in, but I bet they regretted getting out of that deal.

HUGHES: Well, that was the interesting thing. Within a year, after the satellite launches, Bank of New York was on the phone first, and then followed it up with a trip to Austin begging to get back into our credit facility. We never let them in. By that time, Citicorp had emerged as being very interested in our credit, and came into our credit with the other banks. We just told Bank of New York very nicely, "Guys, you were in it once. You're not going to get back in again."

KELLER: Have you ever used any of their money since?

HUGHES: No, but it wasn't out of spite, we just never did. Actually, Citicorp, before we sold the company in the later '70's, ended up becoming our lead bank and really was a great bank for us.

KELLER: Did you ever get any Canadian money in any of your operations?

HUGHES: Not in Communications Properties. In fact, at that point in my life, I never knew that Canadian banks were lenders.

KELLER: The Bank of Montreal was pretty big, at least in the Canadian operations. I just wondered whether you had or not. Any of your own money?

HUGHES: No. Our primary banks were First National of Dallas, Union Commerce Bank, Provident, and Pittsburgh National. Pittsburgh was our co-lead bank, thank goodness. If Bank of New York had been our lead, we'd have been in deep trouble. By the way, the Pittsburgh bank stuck with us and they were a major cable lender. They stuck with the cable industry through all the tough times and then when things got good, for whatever reason, their bank decided to get out of cable. It was one of the worst moves that any major bank ever made because they were could have made a fortunate over the next 5-8 years. They were one of the few banks that lent to cable in that '72-'77 timeframe, and then they got out at just the wrong time.

KELLER: They had the opportunity after that to have gone in a big way.

HUGHES: Yes, they missed a lot.

KELLER: Then, after you're developing these, were you building in South Philadelphia now too, at the same time?

HUGHES: Well, we were continuing to build, but not in South Philly. We'd really pretty well built that out. We then started an area called Upper Darby. It's one of the western suburbs of Philly and along with Coshocton, we started building in a number of those western suburbs. We never did figure out how to put the money together to do those franchises on the east bank of the Delaware River, as mentioned we actually ended up giving those franchises back to the cities in the late '70's.

KELLER: Comcast got in it, and I think the Philadelphia Bulletin got in with Comcast, didn't they, and did the rest of Philadelphia?

HUGHES: I can't remember the different chain of events. Actually, many got refranchised. We literally gave them back.

KELLER: What induced the Times Mirror Company to get into cable television and specifically to buy your company?

HUGHES: I think the decision for them to get into cable was prompted by a new CEO, whose name was Bob Eburru, who took over the company, and decided that they needed to expand further into cable. They had some properties out on Long Island already, out in the Hamptons area.

HUGHES: Eburru saw cable as a way to further expand his company. Fred Lieberman was our largest shareholder in Communications Properties by that time. When he had merged Telesystems he had become the largest shareholder. As I recall, he owned about a third of the company, more than Crosby or any of the rest of us. By that time, cable was really starting to come out of the doldrums, thanks to the satellite, to Turner's TNN channel, and the different programming offerings that we had. So Fred, in '79, saw a chance to take, what in his mind, was a lot of money off the table. He decided he wanted to sell, and so it was sort of a confluence of events. Jack Crosby, who was our second largest shareholder was not opposed to it. Times Mirror came along, represented by a young broker named Rick Michaels, and they ended up making us a cash offer for the company that we accepted. At that point in time, we were the sixth largest cable company in the world and the transaction was the biggest transaction that had ever been done in cable, at that point. It wasn't very big – $135 million as I recall.

KELLER: Not in today's terms, but in those days.

HUGHES: It was big then.

KELLER: And then some of your employees or most of your employees went with Times Mirror, because they didn't have any operating people, did they?

HUGHES: Well, that's correct. Really all of the key management team that had been put together in the '70's with the exception of Ben Conroy, Bill Arnold, Jack Crosby, and me all went to Times Mirror.

KELLER: And then some of them came back after the turnover?

HUGHES: To a few of these guys, when they left, I said, "Guys, I'm going to start another cable company and if I can get it going I'm going to be back to try to get you in a few years." That was Ron Dorchester, Dan Pike, and Jerry Lindauer.

KELLER: Now, at the time that you sold to Times Mirror, it was '78, you were chairman.

HUGHES: '79.

KELLER: '79. You were chairman of the NCTA at that time, weren't you?

HUGHES: Yes, so it was kind of an awkward situation for me, but I was not one of the major shareholders. I was president of CPI from '74 until the time of its sale. I was really the professional management guy, and I had enough stock whereby I made my first real money of my life when we sold it. But if it had been my vote, I wouldn't have voted to sell it because I could see a great future for cable. I really saw the future just opening up because it looked like we were going to be able to finance new builds and acquisitions for the first time in history.

KELLER: Here you'd gone through all the tough times and now better times were coming.

HUGHES: One thing I'd like to back up to just a moment if I could, just to make sure we get it on tape, are a couple of things during the time I was chairman.

KELLER: Good, I was going to ask that next.

HUGHES: Okay. Let's focus on that. During the year that I was chairman, there were two principle issues – the negotiations at the FCC regarding pole attachment agreements where the phone companies and the power companies had been trying to raise our pole rental rates to exorbitant levels; and secondly, the attempts by some members of Congress to initiate a re-write of the Communications Act of 1934.

KELLER: Or not let us on the poles at all.

HUGHES: Right, or not let us on at all. Negotiations with utility companies had already been ongoing in the first four or five months of my administration, and there was a lot of great work by our whole industry. It was one of the first times we got the cable industry to descend on Washington en masse, to lobby the FCC and that's how we resolved the pole attachment agreement. The FCC asked us to devise a formula on very short notice. I recall it was delivered at midnight to the FCC. They accepted our formula, which was a big step forward, as you will recall, for our whole industry. It lifted a large dark cloud, which had been hanging over our industry.

KELLER: Very much so.

HUGHES: So that's one thing that we're proud we got done in that '78-'79 timeframe of my administration.

KELLER: Was Ben Conroy your chairman of the utilities relations committee at that time?

HUGHES: You know, I think he might have been.

KELLER: I think he was, too.

HUGHES: And by the way, I'm glad you mentioned that, because there's an interesting bit of trivia here. When I became chairman we had three guys in the same company, Communications Properties, that had all been chairman of NCTA: Jack Crosby, Ben Conroy and myself. That is the only time that had ever occurred.

KELLER: Then you had a fourth one come up after that.

HUGHES: That's right. Later we had another one, a fourth one, Jerry Lindauer. But to go ahead and finish my chairman chores, the other significant occurring was the proposed rewrite of the 1934 Act. The reason I want to talk about this is because there's a humorous story involved. Lionel Van Deerlin, was the head of the House Sub-Committee on Communications. You will remember, there were hearings that went on for months and months and months. A significant event for our industry occurred that displayed our entrepreneurship, but also showed our technological naiveté. The key hearing where cable was to have their day before Van Deerlin's committee happened in July, 1978. In fact, in my office there's a picture on my wall of me testifying on behalf of the industry. But the significant part about that day was that the highlight for our industry was going to be to demonstrate to Congress what this marvelous satellite technology could do. We had installed out in the front of the legislative halls this giant ten-foot diameter satellite dish, which you'll recall we had to use in those days.

KELLER: A hundred thousand dollars worth, too.

HUGHES: Yes, a huge dish, and we had that thing pointed to the heavens to be able to display the programming we could deliver. Our technicians had been working for two days to get this all rigged up, and Bob Schmidt, who was then the president of NCTA, and I met Congressman Van Deerlin early that morning because we wanted to give him the tour and show him all the electronics in the satellite dish. This was set up where this was going to be integral part of our presentation to Congress. The script that had been put together for me to present to the committee was going to be tied in with this marvelous visual demonstration coming in off the satellite, bringing in Ted Turner's signal from Atlanta, HBO, and other satellite channels. So we took Van Deerlin through his whole tour and went back into the hall for our presentation. I'm sitting there giving my spiel and we come to the crucial point where our wonderful video demonstration is going to occur, and you can guess what happened. There is no signal. Somebody's kicked a wire on the floor and there is no picture on any of the many TV screens all around the room. Nothing but darkness.

KELLER: I've never heard that story before.

HUGHES: Well, it was not a happy moment and I'm up there on the podium, right? I'm giving the presentation. We had to just keep right on going. We didn't even pause and fortunately before I finished, the TV's all lit up and we had these pictures coming in. But it was a tense moment there for a while. In hindsight, it was funny but that this was going to be our glorious day when we showed Congress the technology. No one in Congress had ever seen pictures coming in from a satellite in those days, so that was big for all these Congressman. It was a significant event in which I had the honor to participate.

KELLER: I had never heard that. It is interesting. Anything else that you can remember as your term as chairman while you were on the board?

HUGHES: I guess the only other thing I remember from the board was my mentor. We all remember our mentors, and one of the guys who was always a mentor to me was Burt Harris. Burt had been on the board for a long time and was great for our fledgling industry.

KELLER: One of the great gentleman of the world.

HUGHES: A great gentleman, and he was always so nice to me. If I had a problem, I'd call Burt and bounce it off him. So that's one of my fond memories and I'll always be very indebted to Burt for his help.

KELLER: Any un-fond memories?

HUGHES: No, it was fun being on the board. I got to know Bill Bresnan a lot better because Bill and I had a few issues on which we disagreed, but we always disagreed agreeably and we're still good friends today. I respect him tremendously. I have very pleasant memories of the board back in those days.

KELLER: You just did one more year after that when you stayed on the executive committee, is that correct?

HUGHES: That's correct. I'm glad you brought that up because it sort of defines a turning point in my life. By that time I'd already founded Prime Cable. We'd started making some acquisitions, started growing, and when I set up Prime I decided I didn't want to run a public company again. I had not liked being in a public company, which CPI was. So I decided to stay private and have an institutional group of financiers.

KELLER: Stay private.

HUGHES: Yes. Then the other thing I decided was that I really wanted to have a different lifestyle in that I wanted to have a professional management team, some really strong guys to surround myself with, and have really more of a team effort as opposed to a company that was say, Bob HUGHES:' company. So it was a personal decision on my part and that's really when I went out to Times Mirror Corp. and brought back Jerry Lindauer. Jerry had been a long time friend of mine going back to the '60's. I had convinced him to come with the cable industry when he retired from the Marines in '77, when he had a lot of other good job opportunities on the table. So Jerry was a guy that I'd known for a long time, he'd gone with Times Mirror, and I got him to come back back with me in Prime. Shortly thereafter, I got Ron Dorchester to come back as our VP of operations, and I got Dan Pike to come back as our VP of engineering. I put together the team that was going to build Prime into the '80's, and made Jerry our "out front" guy. He took over all the political side of it, the NCTA board, which I never was that fond of, and Ron took over the management of our cable properties.

KELLER: How big did you build Prime into?

HUGHES: In Prime, by design we were a different type of cable operator in that we had a niche. I think it was a different approach than any of the other cable operators. We looked for properties that were somehow broken and needed fixing. I mean we literally went out and tried to find the cable systems that had been built incorrectly, marketed incorrectly, mismanaged in some way and that was our mission.

KELLER: Bob, you were just starting to put together your management team for Prime, which included Dorchester, Lindauer and Pike. Where did you go after that, after you put it together? You said you had a unique concept and that was to buy properties that were broken.

HUGHES: Right. So once we got our management team in place, we started down that path. Our first significant acquisition in that regard was Atlanta, Georgia.

KELLER: That was broken!

HUGHES: It was broken badly and that deal was brought to us by Drexel-Burnham who had helped the Canadian guys who owned the franchise finance that system and it was, as you said, a "broken" property. So working with Drexel, we engineered a deal where Drexel raised the equity money that was required and we bought Atlanta. It was done in a syndicated partnership transaction in '84. We had previously, a couple of years before, bought all the Buffalo suburbs from Peter Gilbert and we had also bought all of Dick Loftus's properties across the Hudson River from New York – all those beautiful towns, Hoboken, Weehawken, Union City, and West New York. But Atlanta was our first real move into the big leagues in a big market that had a lot of subscribers but no cash flow. So we were able to take that property, start it growing, and I give Ron Dorchester and his team a huge pat on the back for that. That was the first time that we could really show the financial community that we knew how to make major markets work. If you recall, in the early '80's, a lot of people were struggling with major markets and this was a case where we took over and within a year we had it cleaned up and flowing cash.

KELLER: Most of it had been built, though, by that time?

HUGHES: A lot of it still had to be built.

KELLER: Would you say a lot of it was built or had to be built?

HUGHES: Probably three-fourths of it was built, the other fourth had to be built.

KELLER: As I remember, part of the problem was they'd spent so much more money in construction than probably should have been spent on it, as one of many problems it had.

HUGHES: Absolutely. Additionally, it had way too many people. It was just a poorly managed cable property, but our people were able to move quickly to repair the damage. Within 24 months there, '84-'86, we had Atlanta growing both subscribers and cash flow at double-digit growth rates. It was a great success. It was at that point that the Times Mirror Corporation did us the biggest favor that anybody has ever done for anybody in the cable business because they woke up one morning and they decided that Las Vegas, in which they owned 60%, was not going to be a good cable market. What a break for us!

KELLER: There was a lot of infighting there, wasn't there, between the various people?

HUGHES: I don't know all the – you mean between the partners?

KELLER: Yes, Greenspan was involved in that wasn't he?

HUGHES: The Greenspun family. They were the owners of the Las Vegas Sun and were partners with Times Mirror. There could have been some infighting there, but there were some basic engineering and equipment problems with the cable system. The picture quality was horrible in the subscribers' homes, which obviously caused a lot of problems and because of that they couldn't market it properly. They had a terrific churn going on. Times Mirror just decided that it wasn't ever going to be a good system so the Greenspuns set out to find another partner. Fortunately for us, Jerry Lindauer had come back with us about two years before from Times Mirror. He found out what was happening and it really came down between TCI and Prime as to who was going to get this deal. The Greenspuns wanted it to be with the company they thought they could work with the easiest. I still remember meeting with Brian Greenspun and his father for the first time in Hawaii – that's not a bad place to go. I met them during Christmas holidays where we met in the lobby of the hotel. We somehow hit it off immediately and in fact, to this day, Brian Greenspun and I are still very close friends. His father, Hank, a wonderful man, was the one who picked Prime as the guys that they wanted to do business with and then of course we had to negotiate with Times Mirror. We were able to buy Times Mirror out of Las Vegas in 1986 when it had 60,000 subscribers. When we sold it last year, in 1998, to Cox, it had 310,000. We paid $85 million for the property and sold it for $3.1 billion. Thank you, Times Mirror!

KELLER: The way that place is growing right now...

HUGHES: Well, it just turned out to be a fortunate event for us. It dropped in our lap just through a fortuitous set of circumstances.

KELLER: Prime still is private, though? You didn't go public with it?

HUGHES: Still private. By 1986 we had enough partners – actually had a Belgian partner that had come in with us in '85 that to this day are still partners with us in almost everything we do. They were just one of a group of investors that we could count on all the way from the mid-'80's on through the mid-'90's. Fortunately we were able to generate great returns on capital for our group of investors.

KELLER: So you go back to your venture capital experience again in putting these people together!

HUGHES: That's right. That's an area I've been comfortable with because that's where I learned the industry – in the financial side. So by 1987, with Atlanta and with Las Vegas, we really had a great private company. We never aspired to be one of the big guys; we would fix the problems, get them to a certain point, and when we thought it was the opportune time to sell for the benefit of our investors, we would sell them at a premium. That's what we did with Atlanta in 1989 when we sold to the Robert Bass Group. That's probably where Prime was different from most other cable operators. Most other operators kept getting bigger and bigger and bigger. We never had that game plan and we would normally hold properties five to eight years. When we thought it had maximized the return for our equity holders we would sell it. Had we just kept growing the company as the public companies did, we would have grown to over 2 million subscribers by the early '90's.

KELLER: That sounds like the Crosby philosophy too.

HUGHES: Well, I guess maybe I learned that a little bit from Crosby.

KELLER: He emphasized that ability.

HUGHES: Crosby carries it to another level than I do. I kid Jack about that to this day. I stopped in his office two days ago and I said, "Jack, do you still have five new deals in your briefcase like you did in the '60's?" He said, "Yep."

KELLER: That man's amazing. So you've sold Atlanta, now you're building Las Vegas and you're building it up from 60,000 to 300,000.

HUGHES: Right, and then in 1989 we bought Anchorage, Alaska from Chris Cohen and so we continued to build Prime until the FCC changed the industry rules in 1992. Our last acquisition was in 1990 when we bought the Group W properties in Chicago. If you recall, TCI got half of Chicago, Group W got the other half. Group W had a tough time with theirs. Chicago is a tough market, but we turned it into a cash flow machine, which we still have today.

KELLER: You're not operating it, though, are you? Or are you still operating it?

HUGHES: Yes, we're still operating it. We still own and operate that half of Chicago, which is the northern half, and AT&T is the southern half.

KELLER: From where – Fullerton through Evanston? I'm familiar with Chicago, that's why...

HUGHES: We go from the loop all the way west out to O'Hare airport and then we go a little bit south of O'Hare. The franchise area goes north until you run out of the city limits area. It's a very heavy ethnic section.

KELLER: Very, with Rogers Park.

HUGHES: A lot of Italian, with also a very large Polish population.

KELLER: I lived in Rogers Park when I was going to school, that's why I know it. So you're still operating there.

HUGHES: Yes.

KELLER: I went to Loyola University and that was right in where you are.

HUGHES: Then you know that area. There are some tough demographics, but generally it's a decent cable area. It was probably one of our tougher major markets to conquer.

KELLER: Just dealing with Chicago politicians would be enough. So you're still operating that but you said right now you're divesting Prime of all their cable properties.

HUGHES: That's right. In fact, right now we have the Chicago property under contract to sell to Comcast along with one other property that I'd like to discuss. I mentioned the last property we bought was Chicago. There was, however, one exception, which fell in our lap several years later, which was a direct result of the FCC rule change of 1992. I want to tell you how that evolved. We made a decision, when cable got re-regulated in 1992, that set us apart from the other major cable operators. That decision was that we decided we were going to take an arm of our company and become a consulting group for other companies that might be looking to get into the video business. We set up an entity called Prime One. Some of our cable brethren started calling me on the phone – Jim Robbins, Brian Roberts, and others saying, "HUGHES:, you've become a turncoat. You're consulting for these big phone companies." And we were, but as I told Brian and Jim, "Look, guys, I know this looks a little strange, but others are going to get in the cable business and they're going to turn to somebody for some help and we are a different company than the rest of you. You are all big public companies and we're kind of a smaller, entrepreneurial group." Honestly we thought that some crumbs might fall off the table from working with these big phone companies where we could have some real attractive investment opportunities. That crumb fell off the table in 1996 when Southwestern Bell, who had bought Gus Hauser's Montgomery County, Maryland system in '93, shortly after re-reg, and paid Gus a very large number, woke up one morning and decided they didn't like the video business. We had been managing the system for them under a contract. I still remember the day the chairman of the board called me and said, "Bob, we're going to get out of the video business. We want to sell Montgomery County, Maryland. We know you guys. Do you want to buy it?" And I said, "Yeah." Because I figured that they would want to get out of it pretty quickly. We were right and although we paid a fair price, we liked the price. That's the other property we're now, three years later, selling to Comcast and making a lot of money for our partners. It certainly justified our 1993 decision to do some consulting work for the big RBOC's.

KELLER: Comcast bought Ann Arundle County from Jones so they've got that whole corridor now.

HUGHES: Yes, that's a natural for them because Comcast now really has the whole area from Baltimore to Washington D.C. once they close on our Montgomery County property. They will close in the next six months. They're buying that along with Chicago.

KELLER: They've also got the Jones properties in the northwest suburbs of Chicago, too. So that fits in also.

HUGHES: That's correct and my guess is that somehow there'll be something done with AT&T because AT&T, of course, now has the rest of Chicago. So there will probably be some kind of a swap that'll take place there.

KELLER: You were using your management team then to consult for the telephone companies, is that correct?

HUGHES: Yes, we took three or four of our people who came out of the marketing and operations side of Prime since we weren't really actively buying cable properties anymore. Mark Greenburg was the primary fellow who headed that up. Mark had been our VP of marketing for many years and he became President of that division of our company called Prime One. It became a very profitable entity for us.

KELLER: You didn't have any investment, did you, really?

HUGHES: We had no investment. We were able to just take some of our people and do a lot of work for Bell South, SBC, Southern New England Tel, and other Bell companies as they looked at cable.

KELLER: Did you get involved with the TCI-Bell Atlantic potential merger?

HUGHES: No, we didn't.

KELLER: There are a lot of stories of why that fell apart and I'm not sure anybody really knows except the two principles themselves.

HUGHES: That's right. I don't know all the nuances there.

KELLER: So you're getting out of the cable business now with Chicago and Montgomery County on the table. Are you going to do anything in cable?

HUGHES: We don't have any plans to do anything in cable. Again, being an entrepreneurial group that's always tried to adjust to what's going on, four years ago we decided to set up a telecommunications venture capital arm. I guess I wanted to go full circle. I started out in the venture business, got in the cable business for thirty years and now back in venture again. Our fund makes telecommunications related investments.

KELLER: Defined as?

HUGHES: Defined, very broadly, as anything in the telecommunications niche. Anything that's occurring in the world of convergence between telephony, cable, and Internet. We do not intend to do any cable television deals. In fact, we made that commitment to our institutional investors who put up the money.

KELLER: Programming content?

HUGHES: Programming type content. Our primary investment in that regard being a company in the health business, a company called healthanswers.com that we think you're going to hear a lot about in the next few years.

KELLER: Has it gone public yet?

HUGHES: Not yet.

KELLER: What is your reaction to the Time Warner-AOL merger?

HUGHES: Well, that's a hard one to figure.

KELLER: This, of course, is going into the future from here.

HUGHES: I know Jerry Levin well and I've considered him to be one of the more creative guys in the media world. He was on one of my committees back when I was chairman in the '70's so I've known him a long time. I think there has to be some synergy between the delivery medium and the content side. AOL has over 20 million subscribers who want that content. Jerry and his people are looking at what is going to become a huge future business. It is what they call video streaming on the Internet and I don't think anybody knows how this is going to play itself out. But it could be huge.

KELLER: You're betting on health.com, aren't you?

HUGHES: Well, that's right. And I know Wall Street's having a hard time figuring out that space.

KELLER: How about the AT&T-TCI deal?

HUGHES: I think AT&T is going to have more problems absorbing TCI than they thought they were going to have. The cost of the upgrade on the TCI plants is going to exceed what they thought it was going to be. And the deployment of telephony is going to be harder than what they think it's going to be. Our engineers have always had great reservations about our ability to deploy telephony, especially because of a lot of the powering issues involved. I don't know. It's going to be an interesting next several years, Jim, to see where all this plays out.

KELLER: I think that's probably true. It's a different business than what we started out in, there's no question in my mind about that.

HUGHES: Fortunately, you and I are both getting a little older. We'll be able to sit on the sidelines and observe. We won't have to worry about it.

KELLER: And say, I used to be... I don't think I'd want to get back into it right now, quite frankly. You have already said that you're Prime Venture Two, isn't that what you're calling your company now?

HUGHES: Prime New Ventures is what we call it.

KELLER: Prime New Ventures, is going to get into these esoteric, and that's probably a bad word, but these different types of programming services, which would be carried on potentially more than one media. It could be either over telephony or it could be over a cable system or it could be satellite or whatever.

HUGHES: Exactly.

KELLER: That's what you're looking forward to in the future?

HUGHES: Right. We're looking, we're even involved in some wireless delivery to the home using some different kinds of technology just to kind of see how that plays out. We're working with a little company here in Austin that's hoping to deploy a high speed Internet access directly into the home and, we're working with some different technologies. Some could be complementary to cable as we know it today, but in other cases they could be competitive to cable.

KELLER: There's got to be a time, with even as little knowledge as I have of the technicalities, where one phone can have the same number in your home, in your car, in your pocket, wherever it may be.

HUGHES: Well, that's definitely going to come.

KELLER: There will be no need to have these separate instruments and separate numbers and all this kind of stuff.

HUGHES: That's right. If you look at the young people in America today, most of them do all their communications with a wireless phone.

KELLER: Including driving.

HUGHES: Yeah.

LAUGHTER

KELLER: Bob, I would like to wrap this up now because I think we've covered about everything that we could, unless you have anything you want to add.

HUGHES: Jim, the only thing I want to add is that I you and I and a lot of other friends have been very fortunate to be involved in one of the greatest industries of all time. We've had a lot of challenges, but it's been a lot of fun and I think we've delivered a service that's good for America. Along the way we've had our detractors, but I can't imagine anybody today living in their home without having multiple video choices, we've had a role in making that happen.

KELLER: All I'm going to do is say amen to that. This oral history of Robert W. Hughes is part of the oral history program of The National Cable Television Center and Museum and thanks to The Gustave Hauser Foundation for providing the funds for doing it. Bob, thank you very much. It was really a pleasure.

HUGHES: Thank you.

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Ron Hranac

hranacRon5

Interview Date: 2002
Interview Location: Denver, CO
Interviewer: Rex Porter
Collection: Hauser Collection

PORTER: I'm Rex Porter. We are at The Cable Center for the Barco Library to interview cable pioneer, Mr. Ron Hranac. Welcome, Ron.

HRANAC: Hi, Rex.

PORTER: To begin our session today, could you give us a little about your background, your early years of your life, growing up and going to school, and so forth?

HRANAC: Sure. I hail from northern Idaho, a little town called Lewiston. It's in the panhandle of the state, and I was born and mostly raised there. I say mostly because our family moved around quite a lot while I was growing up, but that always seemed to be the home base to which we returned through the various moves and years. To think back, I think I attended 12 different schools in 12 years, from first grade through high school. So that made things a little bit challenging as far as learning and making friends and all, but I seemed to adapt pretty well to that. The idea of an interest in cable kind of got its start there, too, because that's where I started in the cable industry was in my hometown. I'll come back to that in just a bit. But I'm married, I have a lovely wife, Denise, that many in the industry know. She's attended quite a few of SCTE's Cable Tech Expos, and a few other industry shows over the years, and particularly at Expo has helped out in the membership booths and whatnot over the years, and has come to know a lot of our respective colleagues in the industry. Three kids – they're all grown and gone. I've got three grandkids, as well. My oldest is a customer service person with Merrill Lynch in Jacksonville, Florida, and he's got three kids. In fact, this week our oldest grandson is visiting with us, and later this week my wife and I are going to fly down to Florida. I've got some business meetings down there next week, but we're sneaking down a couple days early and are going to go see the kids and the other grandkids. We've got a brand new one that was just born a couple months ago. Haven't seen him yet, only pictures. So we're looking forward to that piece. As I said, I was born and raised in Lewiston, Idaho, and I'm the oldest of five kids. I still have three sisters who live in the Lewiston area, my mom is still there, my brother is in Modesto, California, and all of my siblings have kids that are pretty much grown and gone. I think my youngest sister still has some kids at home, but the rest of them are pretty much grown and gone, and several of them are grandparents as well. Oh, gosh, an interest in where we are today. I say "we", you, me, the technical side of the cable industry. I think it probably goes back to some inspiration from my grandfather, my mother's father. Grandpa Charlie, as we called him, was an interesting character. He finished the 8th grade and that was the extent of his education, but he had a 192 IQ, a brilliant man. His love of life was horticulture, although that wasn't his professional life. He did have an orchard for quite a few years, though, but in later years got into some other lines of work. But horticulture was always his favorite interest. When he was in his mid-30s, he came down with adult polio and the doctors told him he'd never walk again. He said the hell I won't and he proved the doctors wrong, but at that same time he had been doing quite a bit of interesting work in the area of horticulture. In addition to the usual grafting and cross-pollination and things like that, he was experimenting with what could today be described as a type of genetic research. He was using a chemical called cultizene to kill back the buds on plants, and then at the junction where the dead cells and the live cells kind of came together was the place where mutations took place, and he was able to come up with quite a few new species and varieties of plants. Shortly after he contracted polio, and this must have been in probably around 1940, or so, maybe the late 1930s, he entered some of the plants he'd developed into an international competition with the help of the University of Idaho in Moscow, and he took first, second, and third place, and understand, this was a worldwide competition. I've got one of the medals at home. He was always, probably for me, my biggest inspiration in the area of learning. I remember as a youth sitting down and talking with him about abstract things like the theory of relativity and other things that six year-old, ten year-old kids probably had no clue about, and yet he and I sat down and talked about these things over the years, and he was always an inspiration to I think improve myself, and as I got older I continued to do that, to improve myself and self-teach in a lot of areas. I don't know if that was directly as a result of the influence of my grandfather, but I was an avid reader and remain so today. I picked up an interest in electronics, oh, I don't know, probably somewhere around age seven or eight. I just had a fascination with looking inside the chassis of a vacuum tube radio and wondering what it was and how it worked, and had an interest in taking things apart and putting them back together, and most of the time there weren't any parts left over and things worked. When I was about, gosh, it must have been 6th grade, I think it was about 6th grade, I modified some walkie-talkies, some little cheapie western auto walkie-talkies that I picked up from a friend, modified those to transmit over a longer distance because I wanted to talk to a friend a little bit farther way than the range of the radios. Then in junior high school, I decided I wanted a telephone in my bedroom. My parents said, no, you're not having this. So I built one. I think I was in about 8th grade at the time. So that sort of things just perpetuated the interest in electronics. When I was a senior in high school, I had an opportunity to get involved in the cable industry. Now at the time, I sort of knew what cable was, but I didn't have an intimate knowledge of it.

PORTER: Was this right out of high school?

HRANAC: This was actually while I was a senior in high school. My aunt told me that her next door neighbor had told her that her son, who at the time worked for the cable company, was leaving and that the cable company was getting ready to hire his replacement. So she put in a good word for me, and I went down and talked to a fellow named Bill Rashka, who at that time ran TelePrompTer's local origination studio and the cable system there in Lewiston, and interviewed for him, and of course it worked out very well because his mother – it was either his mother or his aunt, I think it was his mother – also knew my aunt. So it was kind of a who-you-know, and I happened to be in the right place at the right time and was hired as a camera operator in local origination while in high school. I decided to stick with TelePrompTer and made a career out of it. What was kind of ironic about that was my first awareness of cable was actually in the late 1950s when as a youngster I remember that we had some family friends that had something called cable. I had really no clue what it was except we didn't have it and we could get Captain Kangaroo on Saturday mornings from the local Channel 3, and that was it. But the kids of the family friends could get Captain Kangaroo five days a week because they had this thing called cable. I remember seeing big metal boxes on the cross arms on utility poles, but I didn't really at the time know what they were. Well, a number of years later I went to work in that very same cable system, and I think that was probably a fortunate experience because several of the people that I worked with there had been with that cable system since it was built in the early 1950s. They were very, very good teachers. They were willing to share their knowledge, and I think in many regards that was an inspiration to me to share what I've learned over the years. I've been a speaker at a large number of SCTE seminars and conferences and conventions – NCTA, Western Cable Show, overseas conventions and conferences, and even company training events and so on, and have written for magazines and whatnot. To me, that's always provided an opportunity to give back to the industry.

PORTER: Let's go back to that senior year. You were doing camera work in local origination. How much local origination did Lewiston do at that time?

HRANAC: It was interesting, the Lewiston system at the time, this was in the early 1970s, was a 12-channel cable system and they brought in the three network stations from Spokane, Washington about 100 miles to the north of Lewiston, they brought in a PBS station from either Moscow, Idaho or Pullman, Washington, I don't recall which; the local Channel 3 in Lewiston; they imported a Channel 11 from Seattle by a microwave; and then they had a number of local origination channels. There was an Associated Press news feed, but it was a character generator type channel; they had a weather scan, the old desktop telemation weather scan that had the weather dials across the thing and the camera... well, actually it was the mirror that rotated back and forth, the camera was stationary, but it looked like the camera was swinging back and forth across these dials that showed local weather. They also had a message wheel. All these were on different channels so the AP was on one channel, the weather was on one channel, and then they had the message wheel on yet another channel, and that particular channel was where the LO programming done. So there was a studio and the studio had a local newscast every day. They did the usual things, city council meetings and sports, local stockcar racing, that sort of thing, interviews with politicians and dignitaries that happened to come through town. So it was a lot of fun, but the message wheel was kind of neat. That was about a 3-foot diameter Ferris Wheel looking contraption that had holders in it for the 3x5 index cards.

PORTER: With slots.

HRANAC: Yeah, slots around the circumference of this thing with a TV camera in the middle. So this wheel would rotate a notch and you could see an index card with a classified ad, or a picture for a local business, or some public service announcement. And then I think we did probably 3 or 4 hours of LO programming in the evenings, and then of course the videotaping and whatnot in the daytime.

PORTER: And all the time in high school you were doing LO.

HRANAC: I was doing the LO work. I went from camera operator to video technician and after a couple of years I became program director and took over my boss's job. He moved on to some other things in the company so I took over running the entire local origination operation, and did that from high school on.

PORTER: So at what point did you actually go out in the field, away from the local origination and into the...

HRANAC: Well, that was kind of an interesting experience because at the time that I worked in local origination, the crew at that system was pretty much a long-term crew. Most of those guys had been there for years and years so there was really no movement or a lot of opportunity to get involved in the outside plant, but in '74, I think it was, TelePrompTer corporate shut down local origination operations all over the country except in a handful of locations where it was required to be kept up and running by franchise. Unfortunately, the system in Lewiston was not one of those so I found myself without a job although I went to work immediately for a radio station in Moscow, Idaho that decided it wanted to get into the local origination studio business. So I worked there for a year and built up a local origination operation that provided kind of a leaseback, if you will, of the program content to the local cable company. I stayed there for about a year, but it was a bit of a commute. So I got a phone call from Bill Rashka, the same guy who had hired me back in 1972 and he said, "We've got an opening for an installer tech." And I jumped all over that and that was my move from the local origination and video side of the world to the outside plant.

PORTER: Was Dee Miller the manager?

HRANAC: Dee Miller was the manager of the cable system. At the time, Bill Rashka worked for him. Dee Miller, about that time, I think shortly after I came back to the Lewiston system and started working the outside plant... Dee left, he didn't leave TelePrompTer, but he moved to, I think, Oakland, and took a regional manager's position or something, and had moved up within TelePrompTer, and Bill Rashka, if I recall correctly, became either an interim general manager or a permanent general manager, I can't recall which now. But Bill had continued to move up in the company as well, and I worked my way up through the ranks learning to climb utility poles and learned a little bit about outside plant construction.

PORTER: You didn't have any bucket trucks back then, did you?

HRANAC: I think we had two bucket trucks, and those belonged to the maintenance techs. Of course I was an installer tech so I had a van and a span ladder on the roof, and a pair of hooks in the back and a climbing belt, and learned to climb poles the old-fashioned way. One of the guys who had been there since the 1950s took me out. To this day I could drive you to the pole that I learned to climb on. It was next to the hospital and on one side was the hospital, on the other side was about a 200-foot drop from one part of town to the other part of town, and I don't know if he picked that intentionally to just kind of try to build up confidence in a somewhat scary situation, but I'll never forget the location of that pole. He took me there and said, "All right, we're just going to get the hooks on, climb up a little bit, two or three feet, go around the pole a couple times and that's it." And he kept bringing me back every day and we'd keep going a little bit higher and a little bit higher until I was able to get to the top of the pole on my own. I think I rode around with the other techs and installers for a good three months before they let me loose on my own. So I had a good opportunity to get the dirt under my fingernails, if you will, doing pretty much everything – installation work, service calls, helping after-hours on standby, getting in the ditches and putting pipe together in joint trenches, doing pole transfers – all the usual outside stuff, and then finally I was let loose on my own to go out and do installations and service calls.

PORTER: How long before you became the chief technician, or what was your next move? Most have gone from installer to line technician, they got some headend work in.

HRANAC: Well, I was one of those who were notorious for taking instruction manuals and things home because I had, and still to this day, have an insatiable curiosity about how things work, and that's probably the engineering in me, always want to know how things work. So I was always taking instruction manuals home and reading things. When the district engineers or the division engineer would come to town to do certain things, I'd be down there on my own time just watching over their shoulder, asking questions, and helping out and learning what I could. I think I'd been working in the Lewiston system another couple years after coming back from the LO side and an opportunity came up in TelePrompTer's Richland, Washington system for, they called it an electronics technician, but it was a bench tech and the position included doing bench repair and maintaining microwave equipment, headend equipment, that sort of thing. So I thought that would be a good opportunity because the person that I would be replacing was retiring after 20 years with the company. The guys I worked with in Lewiston weren't going anywhere, they were sticking with their job, so there was really no opportunity to move up within the Lewiston system. So that was a good place to get a foundation in the basics of cable.

PORTER: Now you already had your ham operators...

HRANAC: No, well, let's see. Yeah, I think I had my ham ticket by then because I'd had the interest in electronics and picked up my ham license somewhere along the road about that same time. So that seemed to be kind of just a natural fit with the electronics experience. But I moved to Richland, Washington and it was kind of funny – Dee Miller said, "Well, you can go there but you have to pay your own move, we're not going to pay for any of that, you're pretty much on your own." Well, fortunately Richland, Washington was 100 miles to the west of Lewiston so that was...

PORTER: Did he not want to lose you?

HRANAC: Well, I don't know if it was so much that. Dee was a penny pincher. I think he had a notorious reputation for that. A good manager but a penny pincher. But he said this is a good opportunity for you to move up, it's just that you're going to have to pack your stuff in the back of a pick-up truck or whatever and make it over to Richland on your own, which I did and I spent a year or so in Richland as a bench tech and picked up a lot more experience, particularly in the microwave side because the Lewiston system did have microwave and I kind of watched over the shoulders when the AML system was being installed, but didn't get a lot of opportunity to do hands-on because they had a really, just the nicest guy, a bench tech there that took care of the microwave and he let me tag along and learn a lot from him.

PORTER: Did you get a radio telephone license?

HRANAC: I did. When I was in high school, the high school that I attended had an FM radio station, and I think at the time was the only high school in the state of Idaho that had a licensed FM radio station. In those days, the FCC required at least a 3rd class license, so I think when I was probably 15, 16 years old or something I had already picked up a 3rd class license and moved on from there and picked up a 2nd class license. I don't remember if I picked up the 2nd class license before I left Lewiston or after I arrived in Richland because in order to work on the microwave gear you needed the 2nd phone. So I probably picked up the 2nd phone either right before going over or right after getting there. I think I drove up to Spokane, Washington to take the test at the FCC office and I remember being pretty proud about acing the 2nd phone test.

PORTER: Did you think about taking the 1st?

HRANAC: Well, I did, and that came along while I was still in Richland. A guy I worked with there, Ted Axtell and I drove down to Portland to attend an SCTE regional engineering conference. This was in the days when Judy Behr was still the executive VP of the society, so Ted and I drove down together from Richland to Portland, which was just a few hour drive, but both of us came down with just vicious food poisoning, and I think I stayed at his house in Kennewick that night before and had dinner with him and his family, and he and I got up in the morning, basically at dark, and took off for Portland and probably 50 or 60 miles outside of Portland we were just doubling over in the car with cramps and horrible pain and stopping at the gas stations on the way, and by the time we got to the SCTE conference it was trips to the bathroom about every 30 minutes and we were in vicious pain. And yet in all this, we snuck away from the SCTE conference for enough time to go to the FCC office in Portland and take our FCC license test and we both passed. I walked away with a 1st class radio telephone license ticket, but just had vicious food poisoning for a couple days, and we never did figure out where it came from because nobody else in his family came down with it and we all at the same food for dinner, so we don't know what happened, but that was pretty brutal.

PORTER: So now you're over in... you've left Richland.

HRANAC: Well, I'm still in Richland at that point, but the chief tech in TelePrompTer's Walla Walla system called up and said that he had been contacted by a headhunter who was looking for a system engineer, kind of the chief tech type position, in a place called Clear Lake, California. Well, about that time I was going through a divorce and thinking, well, maybe it's a good opportunity to look at this and kind of move away and get away from a painful situation at the time. So instead of calling the headhunter, I called the cable system where the job opening was and got this answering machine. So I left a message on the answering machine and said, "Hi, my name is Ron Hranac. I understand you've got a system engineer position. I'm interested in talking to you about it. Here's my phone number," and I think probably within an hour I got a telephone call at home from Ron Schimdt who at the time was the manager of the Jones Intercable system in Clear Lake, California.

PORTER: And this is about the '80s?

HRANAC: This was 19... it would have been late '78, maybe early '79, somewhere right in there.

PORTER: Because I came out to Clear Lake, I remember coming out to Clear Lake.

HRANAC: Yeah, I remember you coming out to Clear Lake, too, but I talked to Ron for probably a good hour, hour and a half. For the first half hour he described the job position and the responsibilities and asked questions about my background and so on, and then the last half hour or so of his conversation was, as he put it, the Chamber of Commerce sales pitch for Lake County, California. He said, "I'll tell you what, I'll send you an airplane ticket, you fly down here on a weekend so you don't interfere with work. We'll talk about the job, look around, I'll make you an offer if it looks like there's a good fit, and you can make a decision. If you decide not to then consider it a free weekend in California, an expense paid weekend in California. If you decide to do it, we'll pay for your move down here, we'll give you a raise and so on." So I flew down there and had dinner with Ron and his wife, and he took me all over the cable system. I got to meet some of the folks there that we hooked up with on the weekend, and just had a wonderful time. I remember him taking me back to the airport in Sacramento and thinking this looks like a pretty good opportunity to move up. As fate would have it, that turned out to probably be one of my best career moves ever, and it was a difficult decision to leave TelePrompTer because at the time I enjoyed very much what I was doing and had a lot of good friends at TelePrompTer and they were making all kinds of counteroffers to try to keep me there. But I went ahead and left and went to work for Jones down in Clear Lake and haven't looked back since.

PORTER: Did you know who Jones Intercable was really, then, when you took the job?

HRANAC: No, because TelePrompTer at the time was the cable industry's biggest MSO. I remember while working in the Lewiston system when TelePrompTer celebrated reaching its one millionth subscriber mark, and we kind of joked around amongst ourselves, the other Texan's dollars, now how in the heck did they pick the millionth subscriber? How do they know that we didn't hook up the millionth subscriber at 9:02 this morning? How come it was somebody in New York? Whoever it was got a, I think, a free TV and probably free cable service for a year or something.

PORTER: And Jeff Marcus got his beard shaved off on stage.

HRANAC: That was quite the deal! I remember when I heard about this opportunity with Jones, I did a little bit of research, I said, "What Jones Intercable? I've never heard of it," and did some research and bound that, well, okay, they're a public company. They seem to be up and coming and they're growing fairly quickly, and from what I could tell had a pretty good positive reputation in the industry. And that turned out to be a really, really good move because up 'til that point, I think I'd been working more on establishing the foundation in the technical side of the cable industry with understanding the video side from the local origination, being a bench tech and repairing equipment and pieces and parts as an installer technician, climbing poles, learning to sweep plant, do microwave repair and maintenance. So, all those things formed a good foundation. In fact, the Lewiston system was a great foundation builder because I was there when that system installed a 10-meter satellite antenna to receive one of the first pay services. This was shortly after Home Box Office had launched in the mid-70s, well, TelePrompTer embarked on a pretty aggressive nation-wide program to install the big 10-meter dishes, which at that time were what the FCC required just for the reception of a satellite. So we picked up this fledgling program service called Showtime. We all thought "Showtime! Who on earth is going to pay extra money to get one channel?" and we all thought it was just this ludicrous idea. Of course little did we know, but I remember...

PORTER: Was it 24-hour a day service?

HRANAC: I don't remember if... I can't remember if Showtime was 24-hours a day then or not. I do know that we put it on Channel 7, the channel that we had our local origination on with the message wheel and stuff, and we took that off, and we had to go around and install traps in the system. Remember the Vitech cable traps? We installed those everywhere in the system before launching a channel. That was an interesting experience in itself. I remember after the concrete was poured for the foundation for this satellite dish, and the dish was put in, they couldn't get it to point at the satellite. The surveyor had made a mistake on his pointing angles, and the foundation and the foundation hardware that was set in the concrete while the concrete was being poured had been set at the wrong angle, so the dish couldn't... you couldn't reach the dish. I don't think they had to tear the thing out but I think the surveyor ended up having to cough up a pretty big bill to have, I believe it was Scientific-Atlanta, come out and do some custom work on the support structure for this thing to modify it to allow it to receive the signals.

PORTER: Up to this point, and even your move to Clear Lake, had all of your involvement with the SCTE been just involvement in the local chapter? Because later on we'll get into how important your role with the SCTE has been over the years.

HRANAC: When I joined SCTE, I was still working in TelePrompTer's Richland, WA system, and at the time there was no chapter that I was aware of, but TelePrompTer was very supportive of training and self-improvement amongst its employees. I remember they brought the likes of Len Ecker in for TelePrompTer-only seminars and such, but they were very supportive of involvement in SCTE at the time, which I thought was pretty impressive, particularly since I wasn't – at least at that time – in any kind of technical management position. I was still the electronics technician, the bench tech. So for me, my early involvement in SCTE was attending some of the regional conferences, and my first one was the one in Portland with the food poisoning and sneaking off to get the first-class license. In 1980 I went to, I think shortly after I joined Jones I went to an SCTE regional conference in Hawaii, which is where I first met Jim Chiddix and Richard Covell and some of the other folks that I consider long-time friends in the industry. I stayed in Clear Lake about four years, and went from system engineer to regional engineer to western division engineer, and continued to move up in the company and take on more and more responsibility.

PORTER: How many systems were you in control of as the western region?

HRANAC: Well, I think as the regional engineer I was in control of some systems in California and Oregon, and as the company continued to acquire more properties Utah was added to the mix, Colorado, Wyoming... I think New Mexico fell under the central division at the time. It was all the systems that Jones had properties in in the western part of the U.S.

PORTER: So you'd been promoted but staying in Clear Lake.

HRANAC: Well, I stayed in Clear Lake and was spending quite a bit of time traveling. So driving from Clear Lake out to Sacramento and catching a flight there and flying to Denver or Southern California, or in the case of Oregon I used to just drive up to the systems in Oregon. They were Myrtle Creek and Canyonville in the southern part of the state near Grant's Pass and Lowesville, but the others I would fly to. St. George, Utah was one of the properties that I recall, and the company had some systems in Colorado as well as some systems in Wyoming. Later they picked up some systems in Hawaii, and I don't recall if that fell under the jurisdiction of the western division, but because they had microwave, one of my other tasks was to do nation-wide microwave path engineering and microwave transmitter maintenance and such. So I got to go to places like Hawaii to do annual maintenance on microwave relay equipment that had been set up to import stations from Honolulu on Maui and then transport it over to the big island. So I have some very fond memories from that. After having been in Clear Lake for about four years my boss, Ron Schimdt, the one who'd hired me at Jones, probably about a year before had moved on to Denver to the corporate headquarters, had been promoted, and he put me in kind of an interesting experiment – that was where I made the decision in my career to stay on the engineering side of things. He said, "Tell you what. You're still the western division engineer, but I'm going to give you the responsibilities of being kind of the assistant manager in the cable system, so just handle that part of it," and I did that for probably about six months and I absolutely hated it.

PORTER: Didn't like the operations?

HRANAC: I could not stand the operations side of the business. I realized at that time that I was a technology person and that's where I wanted to stay. So I told him so, and he said, "Okay, fine. You've tried it, you gave it a whirl. I respect your decision." So I stayed in the engineering side and moved to Denver to a position, I think it was corporate engineer at the time, because I was working in the company's corporate engineering department and got pretty heavily involved in the company's acquisition efforts because we used to put together what we called SWAT teams of various engineers to go out and look at potential acquisitions, and that was a fun, fun time in about the mid-1980s when Jones was very, very aggressive in acquiring other cable operators and cable systems so it meant a lot of time on the road and looking at a lot of cable systems and meeting a lot of folks in the industry.

PORTER: Now who headed up engineering at Jones at that time?

HRANAC: When I first moved to Denver, I think Roger Seefelt was the only corporate engineer and I believe it was either right before or right after I got there Al Kernis came in as director of engineering and then later was elevated to vice-president of engineering. So I think when I moved to Denver in '83, I think it was '83 when Denise and I moved to Denver, I think Al had already joined the company by that point so he was heading up the engineering department and was building up the staff. One of my jobs in addition to what I was already doing with microwave technology and helping other engineers, getting involved in training and so on, was to put together a test and evaluation lab. So that opportunity seemed to fit nicely with what Glenn Jones was doing with his move from the Denver Tech Center down to the south end of the metro area when he built a new corporate headquarters. He wanted a showcase cable system inside the building so one of my tasks was to put together at that time a 52 or 54 channel headend on the first floor below the main floor, so it had this real nice showcase headend with the glass windows and so on, and then in the room right behind that I put together an evaluation lab and that's where we did formal product testing of the various pieces and parts that were available from the industry. I'd been doing some of that up to that time. I'd been doing a little bit of it out in Clear Lake, and then when I moved to Denver I took over an office in one of the buildings and started to put together some test equipment there, but it just ran out of room real fast.

PORTER: He was already doing long-distance learning at that time, wasn't he?

HRANAC: I think this was before the beginning of Mind Extension University. Shortly after he'd built the test and evaluation lab – and the Mind Extension University might have happened at about the same time – but he started a satellite service, a shopping channel called Sky Merchant. We built a studio next to the room where the lab was and next to where the headend was, and he brought talent in and hired local talent to run, I think 24-hours a day, selling merchandise just like Home Shopping Network and QVC and the others that were springing up in popularity at the time. So he had that part, and then he, I think about that time, started the Mind Extension University project.

PORTER: When he did the selling over cable, was it just local or...?

HRANAC: Oh, no, this went out by satellite. We had put in a microwave link from the Jones corporate building to the Denver uplink located in Morrison, Colorado, and that microwave link transported the video and audio from this studio to the satellite uplink and this was carried on satellite.

PORTER: Now was it sold to MSOs other than...

HRANAC: Well, initially I think it saw activity mostly in the Jones systems and then they made an effort to sell it to other cable operators, and I don't recall how many other cable operators subscribed to the service because it was a revenue sharing arrangement like all of the shopping services were at the time.

PORTER: How long was it that Kernis was there before Kernis left and Luft came in?

HRANAC: Al was with Jones about five years, and then Bob Luft came in, came in from United Artists Cable. I think Bob stayed with Jones, well, he was there when I left in 1990. So Bob was probably there a good five or six years at least. A good guy to work for! Bob was always kind of the visionary guy. He wasn't the day-to-day engineer, but more the visionary, a lot like Glenn Jones, just really kind of a blue sky thinking, outside the box, looking way, way down the road at new technologies and new ideas. Bob relied on his engineering staff to handle the day-to-day engineering things for the company. The company was a very, very centralized structure even though it had its divisions and regions, engineering was centralized, purchasing was centralized, they had of course corporate accounting and legal and the other thing, so those were all centralized functions that came through the corporate office, and Bob put together some real good programs that brought purchasing in very close alliance with the engineering department so that the company created an improved products list and products were tested and evaluated in the company lab. A lot of the results were shared with systems. We tested this particular type of jacket for instance, and found it to be very flammable. So don't use this type of material for a jacket because of the danger of the thing catching on fire if you're doing some work out in the field with a torch or something.

PORTER: What caused you to leave Jones?

HRANAC: That was a pretty tough decision. Paul Levine and Paul Maxwell had been pestering me for probably a good year or so prior to the time that I left Jones, and they'd been bugging me saying, "We need an editor who's an engineer," because up 'til that point I think I'd been writing for the magazine, for Communications Technology magazine, for about five years. They kept bugging me and saying, "Oh, come on, we need an engineer for an editor." "Yeah, yeah, yeah, yeah," so it was always one of those kinds of conversations, but they finally got serious about it and approached me, sat me down at lunch in a restaurant one day and said, "We're serious. We would like to have you join us," and they made a really good offer. I literally agonized over that; it was a very painful decision. I came to you, I talked to you and asked what you thought of the idea of moving, and I talked to a couple other folks and walked into Bob Luft's office and closed the door. I think I had typed out a letter of resignation and said, "Bob, I got a good opportunity to leave," and he looked at this letter and read it, and all the color went out of his face. The guy looked like he was going to cry. He was clearly pretty disappointed and he said, "Well, would you entertain a counter-offer," and I said, "No, I don't want to get into the back and forth or playing the game," so I left on good terms. He said, "I'm really sorry to see you go. The door will always be open if you want to come back," and I felt pretty good about a comment like that coming from Bob.

PORTER: Before we get any further on that point, had you held any offices at the national level at the SCTE up to this point?

HRANAC: I had. In 1984, somewhere in there give or take a year, Sally Kinsman was Region Two director, and she moved to Seattle to be closer to family.

PORTER: Away from Denver?

HRANAC: Away from Denver. Up until that time I'd been pretty active in the local SCTE chapter, indeed I was one of the co-founders of the Rocky Mountain chapter. Sally approached me and said, "I have to leave, which means I have to give up my position on the board. Would you consider running for the board?" I said, "Well, yeah, I'll throw my hat in the ring," and I felt what chance am I going to have because as it turned out... I think Al Kernis was still with the company and Al's name was on the ballot, and Jim Chiddix had just moved from Oceanic in Hawaii and set up shop in Denver. Well, fortunately, neither of them was real well-known at the local chapter level or within region two because they hadn't been going to the meetings and whatnot, and speaking. So I won the election. I think it surprised them a little bit, but it surprised me a lot because I thought how on earth could I win an election against the likes of a Jim Chiddix or an Al Kernis? So I became Region Two director of SCTE and stayed on the board for six years, ran a full three terms.

PORTER: While you were with the Rocky Mountain group, I think it's really important that it be documented so that down the line everybody understands, the Cable Games is a very popular event nationwide, and certainly at the Expo. It's helped, with great success, at the vendor appreciation days, but you guys actually... it was your baby.

HRANAC: I think the Rocky Mountain chapter would certainly like to put a feather in its cap and say it's the creator of that, but I do recall that Paul Levine was very active in putting that together because I think he approached the chapter about that, or we had worked together on something, but I think Paul had a role in it, too.

PORTER: Who knew the different aspects, meter reading and splicing? Paul, not being an engineer wouldn't know...

HRANAC: Well, no, he wouldn't know that piece, but Paul is the consummate salesman and marketer, always had ideas about, well, what about having some kind of a cable games, and I think it was kind of like a jeopardy idea and the idea really took off. Well, you can see where it is today! The thing is a national event that's held at Cable Tech Expo and Vendor's Days, and a lot of the chapters.

PORTER: Do you remember the first one?

HRANAC: No, unfortunately I don't. I really don't.

PORTER: I wish we had a tape of it.

HRANAC: I wish we had a tape of the thing. That was so doggone long ago. But that was a lot of fun. While I was Region Two director and still at Jones at this time, and the company, like TelePrompTer before was extremely supportive of involvement in SCTE and training and so on. I had the opportunity to serve as secretary of the SCTE and also president. At that time the title of president...

PORTER: Still while at Jones?

HRANAC: Still while at Jones. The title of president at SCTE at that time was what we now call the chairman of the board. So I was a president of the SCTE probably back in the late '80s, and enjoyed the daylights out of that, and took a couple of years off after having served six years as Region Two director and then came back and ran for an at large position and just finished serving my sixth year on the board. So I'm off the board again, but got twelve years of service as a director on the board.

PORTER: You came off, and then Luft became president.

HRANAC: Well, no, actually Luft was president before me. By that time Bob was with Jones, and he was on the board, I think as an at large director, and I was on the board as a Region Two director. His term as president was up and I think maybe a week before the board meeting he said, "Hey, Ron, why don't you run for president? I'll support you." And I thought, well, that would be kind of fun. So I think Denise had access to one of these little button making machines through the school where she taught. So I borrowed this thing and I made some election campaign buttons with my picture in it and a little thing around it that said, "Vote for Ron Hranac for President" or something, and made a dozen or so of these things and took them to the board meeting and announced that I was throwing my hat in the ring and started passing out these little campaign buttons that had my picture in the thing. I was elected president of SCTE. So that worked out quite well. And I talk about Jones Intercable support of my involvement in SCTE, one of the other things that happened during that time while I was with Jones was the introduction of the BCTE program. Early on, I'll say early on, I think in the early '80s, the FCC had made the decision that it wanted to get out of the technical certification process because up until that time the FCC rules required that engineers in broadcast stations and technicians who worked on microwave equipment, two-way radios and that sort of thing, had to have an FCC license, either a second-class or first-class license, depending on the type of facility. The FCC made the decision it wanted to let the technical certification of employees fall into the hands of the private sector. So it told the private sector develop your own certification programs, and SCTE created its program called the BCTE – the Broadband Communications Technician and Broadband Communications Engineer program. I remember going, I think it was the Cable Tech Expo in Washington D.C. was where they introduced the very first exam in that program, and it was the category-4 distribution systems. Bruce Cater, one of my co-workers at Jones, and I had been studying for this and we got the list of the reference materials and we came into the exam room with this big box of books and magazines and reference manuals – all the things that were listed. We had collected all the stuff. Well, we took the test and it turned out I only needed to look in one of the Jerrold pocket guides for a microvolt to DBMV conversion. That was it. That was the only thing I needed to look up. I thought, well, that test wasn't that hard – it was challenging, but to me it wasn't that difficult. So over the next couple years when the exam opportunities would come up, I would take the tests. I had taken, I think six of the tests and they required seven to get fully certified. I think it was the Eastern... it was either a National Show or the Eastern Show in Atlanta where SCTE was introducing the seventh exam in the certification program. That was all that was needed to get certification complete. I thought, that would be kind of nice. I caught wind that I was one of two people in the country that was one exam away from full certification. So I approached Bob Luft, I said, "Bob, I got a good opportunity to go out and complete the exam for category-7 and get the full certification thing done," and I said, "Oh, and by the way, there's a reasonable chance that I could be the first person to be certified." I said, "It's my understanding there may be one other person that is in the same position I am, and that person probably will show up in Atlanta as well." I had no idea who it was, and to this day I don't know who it was. So Bob said, "Okay, go ahead and go out there and take the test. We'll see how you do." We really didn't give it much thought, and I took the test and turned it in and found out a few weeks later that I had passed the test and the other piece of good news, and this was probably even more exciting, was that I had become the very first person in the cable industry to be certified, or complete the certification program.

PORTER: Let me ask you a question about the BCTE program. When we had to have a first or second class license, that license was an official license from a government agency, and so managers and CEOs and owners recognized that as being an important document. We much have made some kind of agreement or worked with the FCC to make this transition. Why do you think that we didn't say to the FCC, "We still want that FCC stamp on this BCTE certification program, because the managers in the cable systems don't seem to look at that certificate, that BCTE completion certificate with the same awe and reverence that they did an FCC first or second class license?" Do you think we made a mistake?

HRANAC: I don't know if we could have gotten the FCC to endorse that. My suspicion is that the FCC probably would have said, well, yeah, we'd love to, but this is a private sector effort, the Society of Broadcast Engineers has developed their own certification program for the broadcast, radio and TV community. The cable industry is doing this through SCTE. The National Association of, what was it? The NARTE – Radio and Telecommunications Engineers – was doing so for two-way radio and microwave. And I think the FCC's position, at least as I understand it, was, look, this is a private sector effort. We've got respective rules that apply to the technical performance of your facility or equipment. You have to make sure you meet those rules. How you do it is your business, not ours. We're getting out of the technical certification business. So, I think it would have been probably a good thing if the FCC could have said, all right, we've reviewed the process or your program, we've reviewed the questions and that sort of thing, and we think this is a good replacement for the FCC license, but my guess is because they were a government agency they couldn't endorse a private sector initiative.

PORTER: Do you think maybe we might have gotten somebody from say the Cable Bureau? John Wong, or...

HRANAC: I don't know. Of course in hindsight it would have been nice to have done something like that, to have approached the government and maybe gone through Congress or something and said, look, the FCC has told us we have to create these programs. Why can't we get some kind of an endorsement of the program, or a sticker that says this meets some minimum requirement? That would have been probably a good thing to do at the time, but unfortunately we didn't, and has it been good or bad, I don't know because when the FCC said we don't require a license anymore and if you want to have the private sector certify people or qualify them technically, how you do it is your business. If you want to do it as an exam, that's fine. If you want to do it with something else, that's fine. But I agree, I think it would have been nice to have some kind of an official endorsement.

PORTER: It's always kind of stuck in my craw because I really appreciate the benefits of the BCTE program for the installers and I don't believe that the executive side of the business, the ownership side, I think they may see it as a detriment because it costs a little money to get to be certified.

HRANAC: And I think that really depends on the company. Jones Intercable was very supportive of my involvement and other people's support as well. I remember when I came back from having taken the last test and when the news came out that I was the first person certified, Glenn Jones personally congratulated me, and I remember getting a nice little bonus for that and a raise for that, so the company was very supportive of that sort of thing at the time. I remember while being on the SCTE board of directors one of the things that we tried to do was get the executives at the MSO level to endorse the BCTE program, and we did get some endorsement from some people like Glenn Jones and a few others, but a lot of them didn't know what it was, they didn't understand it, didn't appreciate its value. So I think in that regard the program, while it's been very good, and I think it's been good for the industry and it's been good for the careers of a lot of people, the program probably didn't go as far as it could have because we simply didn't have the support of senior management. Now, today the Society has moved in a bit of a different direction. When Bill Riker left SCTE a few years ago, the board had to make a pretty tough decision. Do we hire another engineer? Do we put maybe an emphasis on the marketing background? Because one of the biggest things that we always faced was how the heck do we market the Society to...

PORTER: And run the business.

HRANAC: Well, not so much run the business piece. I don't think that was a real big concern. I think the bigger concern was how do we market the Society to other organizations and to the MSOs because we can market it to engineers. They know what SCTE is, and the engineers support it, the chief techs support it, the VPs of engineering support it – they know what it is. But the operations people didn't really understand SCTE, and when we hired John Clarke that was a real shift in the paradigm of the Society at the time, and I think it was a good move because...

PORTER: Well, we did it also to keep us from getting into financial situations that had been the history of the SCTE.

HRANAC: Well, there were a variety of reasons, that's true. But the marketing piece, and John's marketing background was certainly a big factor in deciding to hire him, and I think looking back on that it was a good decision because he's done an outstanding job of marketing SCTE to the MSO corporate operations community. He's done an outstanding job of marketing SCTE to CableLabs, to the standards organizations, and all of these different things. So I think we're seeing now that SCTE has gained a lot more stature in both the engineering and the operations community over the last few years, and you can't just say that all of that's due to the fact that we hired somebody with a marketing background. That's clearly one big piece, but the other piece of that, of course, is the Society's mission statement, certification training and standards. The certification program continued to move along and evolve over the years, training became more of a number one core effort through the local chapters all the way up through what SCTE was doing at national conferences. But certification is probably the one that helped us the most in that regard, at least in relation to the mission statement because SCTE is now the cable industry's only ANSI recognized standard setting body, period. We're it. That's what we do. We have close affiliations with ITU, with ANSI, with ETSI in Europe, and I think that's proven to be a very, very good thing because now more and more folks realize that it's SCTE that takes a specification such as DOCSIS from CableLabs and turns that specification into a standard through ANSI or ITU. So that sort of thing has really helped SCTE as well, so maybe in the future I think that we're going to see that the operations side, now that it is getting a better understanding of what SCTE is and does, probably will put a little bit more credibility on the value of certification. At least, that's my hope.

PORTER: I sort of drew you away from your historical movement there because I think there are only two people in the whole industry who ever held the president, as we would call it back then, we don't call it today, chairman of the board, that position. I think you and Tom Polis are the only two people who ever held that two different times. If I'm wrong you can correct me.

HRANAC: I don't think Tom held an office after that.

PORTER: He had two.

HRANAC: I think he had two terms as president early on before I came on the board...

PORTER: But I think you and he are the only two that ever did that.

HRANAC: But I was president while I served as Region Two director, then as I said, took a couple years off the board and then came back as an at large director. When the board rearranged the structure of the board and changed the titles of the officers and then changed the name of the CEO at SCTE headquarters, then I became the first chairman of the board. So that was kind of a fun feather in the cap, if you will, to be the SCTE's first chairman of the board.

PORTER: So you had this meeting with Paul Maxwell and Paul Levine.

HRANAC: This would have been late '89 or maybe real early 1990 when they made a serious offer to move me from the engineering side, if you will, to becoming the editor of Communications Technology magazine, and I had been doing freelance writing for the magazine since 1985 so had established a good relationship, and they felt that that would be, I think, a good move to have an engineer at the helm of the editorial side of the magazine. So I made that very agonizing decision. Earlier I mentioned that when I resigned Bob Luft had expressed some great disappointment and the poor guy looked like he was going to cry, but I left on good terms and went to work for Paul and Paul as vice-president of editorial. I worked there... I think I joined them in, it must have been about February or thereabouts of 1990, and had been there about five months working with Wayne Lazly and Tony Barnett and a number of other folks, just really wonderful people, and I got a phone call from a guy named Rusty Pickard. He said, "My name's Rusty Pickard," he'd worked at ATC prior to that, he said, "I'm with a company called Coaxial International. We're looking for a vice-president of engineering."

PORTER: Now this is a local Denver-based company?

HRANAC: This is a Denver-based company, and I'd heard about them because I knew someone else who had held that position and had worked there before, but I wasn't real familiar with them. Ross McPherson owned the company, and Ross had been around the industry for a long time, but he and Rusty had this little consulting company called Coaxial International. And I was having a ball with the magazine, working with Paul and enjoying that side of the business and getting to know the publication side quite a bit better. It was one of those things where I said, I just went to work here five-six months ago. How on earth can I make a decision to leave? I considered myself a pretty stable person. I was with TelePrompTer, I think for seven years.

PORTER: And you were enjoying the writing.

HRANAC: Yeah, and I enjoyed the writing, and I'd spent close to 11 years with Jones. I didn't want to get a reputation of jumping ship for the next best opportunity that came along. I went in and talked to Paul and said, "Paul, I've got a real tough situation here. Rusty and Ross over at Coaxial International have made me an offer that's real tough to say no to, and an opportunity to do a lot of international travel and do engineering things." I said, "I'd like to do that but I like the involvement with the magazine." And after I told him about the job, he said, "You're right. That's a job you can hardly say no to," he said, "Let's think about this for a couple days and figure out a way where you can continue to kind of do both." So we got together a couple days later and he says, "Take the job. Tell you what, we'll call you senior technical editor and we'll give you a computer and x amount of dollars per month. You continue to help us out with the technical editing and write a column and write the articles. So do that piece of it, and do this great opportunity with Coaxial International." So I did. Another very agonizing decision because I felt just guilty as hell walking up to Paul after having been there just five or six months, and saying Paul, this opportunity came along. But he was very, very supportive, and to this day I continue to enjoy a very, very good relationship with now PBI Media, but at that time it was TransMedia who were the folks who published Communications Technology, and still write for them and do technical editing, and serve on their editorial advisory board and help with technical edits and all. So I have that piece of it, and Cisco Systems, my current employer, is very, very supportive of that relationship as well.

PORTER: Let's go back to Coaxial, though. Coaxial International – you must have been primarily doing a lot of international cable design, network design.

HRANAC: Well, Coaxial International was a spin-off company of Coaxial Analysts. Coaxial Analysts is one of the cable industry's biggest mapping and design firms, and Ross spun-off this company called Coaxial International because he kept getting more and more inquiries from overseas on initially the mapping design kind of thing, but more inquiries in the areas of consulting type work, of helping people set up operations, do evaluations of cable systems, help establish design specs and evaluate technologies. So it looked like a good opportunity for him, and I think he'd had the company in operation for probably a couple years before I joined them. I had done some international travel with Jones up to that point, and a little bit with the magazine, as well as a lot of domestic travel, and I talked to Denise about this opportunity and I said the travel is probably going to hit 50%, mostly overseas, and indeed for the next nine years it was about 80% overseas kind of work, and maybe 20% domestic work, and I was probably on the road a good half the time, but that worked out well because she got to go with me during the summer when she wasn't teaching school. I did a lot of international travel and had a chance to meet a lot of folks and make some great friends and work with cable operators on five continents, and during that time I racked up over a million miles on United Airlines and got the little card that says million mile flier. The service didn't get any better, but I got this nice little card that says million mile flier. I did that for nine years and right at the end of my time with Coaxial – and that was a fun company because it was a small, close-knit company and we just absolutely had a ball – but the international marketplace had started to decline. This was about... it must have been '99? '98, '99 when overseas marketplaces just really nosedived, and things were getting a little bit tough in the international consulting space. Well, about that time, Ron Pitcock approached me, and he had started a company called High-Speed Access and he was providing cable modem access to tier two and tier three cable operators, the small mom-and-pop cable systems that didn't have an alliance with a Road Runner or an At Home, and that looked like a good opportunity because he was bringing in a lot of big name people from the industry and putting together this company, and was going to do an IPO. This was kind of the peak of the internet boom and all, so I thought there's a good opportunity here, and so I left Coaxial and went to work for Ron as vice-president of RF engineering, and then VP of engineering for their international operations and spent about a year there. That was about the time that the whole internet thing just kind of imploded. I guess being in the right place or the right time or something, but Mark Millett at Cisco Systems had been bugging me a little bit and saying, you know, we could use a good RF guy like you at Cisco, and as the dotcom collapse occurred, I jumped ship and went to work for Cisco and have been there since. That proved to be a good move because all the things you hear about Cisco being one of the best companies in the world to work for is absolutely true. The culture there, the work environment there is incredible. I have never... I've enjoyed every place I've ever worked and have never had any regrets, but I have to say that everything I've heard about Cisco is absolutely true. It's a fantastic place to work and they let you kind of do your own thing, do a lot of travel both domestic and international, but that seems to fit because I've done that forever. They've supported my involvement in SCTE, support my relationship with the magazine.

PORTER: What would be a normal thing that you do when you travel for Cisco? Who would you call on?

HRANAC: Well, it really depends. I work in the company's cable business unit and have an opportunity to interface with production engineers or design engineers at Cisco's corporate facility in San Jose, for instance, working with them on new product development. For instance, providing ideas about architecture of a product or even, I call it "from the field" kind of comments of well, you should put the connector over here. A cable person's not going to like having the connecters on this side of the box. You want to put them over here. So providing that kind of input. I've been very, very heavily involved in the training side of things, both internally, training other Cisco engineers about cable and cable technology, products, and whatnot. I'm doing the same thing with customers. I get involved trouble-shooting customer problems, going out to a customer location overseas or domestically and helping to sort through problems, from my perspective usually cable network problems because we've got data experts in the company that handle the software side or the equipment side, but I handle more on the RF side, and of course the involvement in SCTE and the other things. So it's one of those jobs that you can basically sit down and kind of write your own job description and just go do it and have a ball.

PORTER: When were you inducted into the Cable Pioneers? Do you remember the year?

HRANAC: 1997, I was inducted into the Cable Pioneers.

PORTER: And prior to that you were an SCTE fellow. There's not many of those.

HRANAC: Right. No, there's probably no more than six or ten fellows. I was the first person to become a fellow member in SCTE, the first person to be certified in the BCTE program, first chairman of the board.

PORTER: You're the only U.S. SCTE member, I think that's a fellow at the U.K. SCTE, is that true?

HRANAC: I think there are three people who are honorary fellows of the British SCTE. The honorary fellow is the highest level of membership in the British SCTE, and I was the first American to be elected an honorary fellow in the British SCTE. Bill Riker was the second, and I think Sruki Switzer was number 3.

PORTER: You're also involved heavily with the development of international chapters, the Japanese... I know you're...

HRANAC: Yes, I'm chairman of SCTE's international liaison sub-committee, and the international liaison sub-committee works with organizations and individuals overseas who want to put together, and chapter's not necessarily the right word, but an affiliated group that has a relationship with SCTE. So we've got all the processes and rules and procedures in place for that and we've got some great relationships with some organizations overseas. We've established formal relationships with the British SCTE, and that was one of the things I really enjoyed. Tom Hall just passed away, but he had been secretary of the British SCTE since about 1946 or 1947, so a long, long time industry pioneer but in the late '80s I got involved in establishing a formal relationship between the U.S. SCTE and the British SCTE because up until that time there really hadn't been any kind of relationship, so I got involved in helping to build bridges, if you will, between the two societies. I continue to be involved on the international front as chairman of SCTE's international liaison sub-committee, and that's been a lot of fun because it fits in nicely with the travel that I do and it's provided a good opportunity to maintain relationships with the folks that I've known over the past several years.

PORTER: Are you involved very much with the South American... down in Buenos Aires?

HRANAC: This year I'm working with the group to evaluate submitted papers for one of the conventions in South America, and then of course have kind of a, I'll call it a sideline affiliation if you will, through the international liaison sub-committee in working closely with the headquarters staff to maintain these relationships.

PORTER: You've seen a lot of changes. You've seen us go from a ragtag group of SCTE members because back in the early '70s we certainly were. We were just a bunch of engineers that were trying to put together an organization, and we didn't have any money, and I think attending this year's show, the Expo, we sort of showed that that was the show that was in the limelight of the industry.

HRANAC: No question. The attendance now that... last year, our attendance was up about 5% from the previous year, and that in a year when other shows were flat or down, mostly down. This year we anticipated that because of the really big, big drops in attendance at the National Show and the Western Cable Show that we would probably get hit pretty hard, and we got hit a little bit, but nowhere near what anybody thought. I think our attendance was down about 10%, that was it, and that blew everybody away. So while we're seeing some national tradeshows see attendance down 50% from two or three years ago, SCTE is basically the same as two years ago, just slightly below last year. So I think that speaks volumes about how valuable the industry considers SCTE to be as a resource, not just the Society but the events that it sponsors – Cable Tech Expo, Conference on Emerging Technologies. Attendance at all those shows has been very, very good despite the economy, despite the downturn of attendance at other shows. So I think that's a pretty darn good feather in the Society's cap to maintain that sort of momentum given everything else that's going on.

PORTER: Before we close this out, there's three items as an old RF engineer, I'd just to ask you, when you first saw these three things, can you remember what your first impression or what your thought was? And the first one is fiber optics.

HRANAC: I remember, yes, my first exposure to fiber optics, thinking pretty impressive stuff, a little bit of doubt as to whether or not it would really work, but I think history has shown that that was one of the big technical evolutions. The first technical evolution that I saw, of course, was satellite.

PORTER: Well, I was going to come to that.

HRANAC: But, yeah, fiber. I think I was probably like a lot of people – it's kind of neat thing, it's a neat technology if they can make it work. There was some reluctance, is it really going to work, and I remember hearing when the cable industry in the late '80s said we want to do 40 channels of analog video on a piece of fiber, and the companies that made the lasers, the semi-conductor lasers, said you guys are crazy. Lasers are inherently single-ended devices. The distortions are going to kill you. It'll never work. Well, we as an industry said we think it will, and guess what? We were right.

PORTER: Somehow, we figured.

HRANAC: Yeah, and we were right about that. So I think that was clearly a big technical revolution for the industry, and yeah, time proved us correct. But I remember going to AT&T's facilities in Murray Hill, New Jersey where they actually manufactured the semi-conductor wafers and then did the testing and so on, and this was a few years after the cable industry had embraced fiber and we proved that the technology worked just fine. AT&T, this was the semi-conductor division, was making lasers and optimizing them for cable use. They had a big matrix multi-carrier generator and a Hewlett-Packard spectrum analyzer with automated test routines set up, and they were going in and optimizing bias and other parameters on these individual lasers to perform well with multiple TV channels. So they literally had taken the technology that companies like that were reluctant to even think would work and said, okay, we're making this stuff now just for you guys, for you the cable operators. So, big success.

PORTER: You kind of touched on the satellite, the advent of satellite. Can you give us some idea, were you involved in trying to pick up the first, to line that first dish?

HRANAC: I was more the spectator because I think when the TelePrompTer system I worked in up in Idaho put the 10-meter dish in I was probably an installer at the time. So the installers weren't out there, other than to go out and look to see what was going on – they let us gape at this thing, this 30-foot diameter satellite dish to pick up one channel. To me, now the idea of putting this big antenna in was fascinating, I thought that was neat. And the satellite receiver, and they had a microwave link that went from where the TVRO was installed up to the headend. I thought that part of it was neat. My reluctance wasn't the technology of satellite. My reluctance was who in the heck was going to pay, I don't remember what it was back then, 5, 6, 7 dollars extra a month to get one channel. I thought, well, we'll be lucky if we see 10% penetration in this thing called Showtime or HBO or whatever it turned out to be. Well, of course the technology worked fine and customers loved the stuff, and we know where we are today with that now. We've got HBOs and Showtimes that have what they call multi-plexes with multiple flavors of HBO and Showtime and all the others. And of course satellite technology revolutionized the industry, too.

PORTER: Now I'll come to the last item. We had always had RF going across cable, and everybody understood how to do that, analog. The first time that you heard that somebody wanted to take a modem and send data, not necessarily even from a home computer, just the idea of putting data over a cable system – can you remember? – you must have stood there and said...

HRANAC: Well, no, to me cable was an electronic pipe, and I steal that term from Glenn Jones because he always called cable networks the big pipe or electronic pipe, and I agreed with that. I thought, look, whatever we can put inside this pipe is really irrelevant. If we can make the pipe big enough we can carry anything we want. I did some data transmission tests in 1984, '83 or '84, when I was at Jones because at the time Jones had become the first cable company in the world to deploy feed forward 400 megahertz amplifiers in the trunk and feeder. Those were Century 3 amps and at the time we raised the question at Jones corporate headquarters will these delay lines and the phase inversion circuits inside the feed forward amplifier have any impact on data transmission? Because Jones had a... oh, gosh, I can't remember the name of the company now, but they had a separate company that was involved in the data side of things, they made data technology, not for cable but there was some talk about maybe somehow porting that over to the cable side of the world. We all kind of went, well, I don't know how this stuff's going to play on a cable network, particularly through feed forward. So I did some tests in a single-ended system, a push-pull system, and a feed forward system, and got a modem from... I can't remember the name of the company now, but it was a T-1 transmitter that hooked up to the cable network and transmitted the T-1 signal and did bit air rate measurements on all these systems, and I did a whole bunch of video measurements, particularly as they related to phase and so on to see if there was any impact on both the video performance and data performance, and found no, it worked fine. The bigger thing was in one of the cable systems, it was an older plant that had a lot of loose connections and stuff – intermittent connections impacted bit-air rate, but no big deal. So I wrote a paper and presented it at the 1984 NCTA convention on the effects of high-speed data, or the effects of single-ended, push-pull and feed forward electronics on high-speed data.

PORTER: When's the first time you envisioned private homes...

HRANAC: Well, it certainly wasn't then because as I recall that T-1 modem that could just transmit a 1 ½ megabit signal was horribly expensive. It was like six or ten thousand dollars. Well, okay, that will be used maybe to provide service to a bank or something. That's not going to be used in the residential marketplace, and it wasn't until probably the early to mid 1990s when some of the proprietary technologies started to come out that it really made a lot of sense to get into the residential marketplace with data, and even then the technology was pretty pricey, but again, when you put data on a cable network you're really putting analog on a cable network because you have to take the digital data and convert it to an analog RF signal. Okay, fine, we'll put that on a cable network and it passes right through the network just fine.

PORTER: Ron, it's been a pleasure doing this interview with you. I want to thank you. I hope you've enjoyed it, and I'm sure that the Barco Library will enjoy having the history of Ron Hranac. Thank you very much.

HRANAC: It's been a pleasure, Rex. Thanks.

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Amos Hostetter

Amos B. Hostetter

Interview Date: 1999
Interview Location: Boston, MA
Interviewer: Steve Nelson
Collection: Hauser Collection

NELSON: Amos, thanks for agreeing to participate in the oral and video history program of The Cable Center. I just want to start the discussion by going back into the very early stages of your career. Tell us how you got started in business.

HOSTETTER: Well, I graduated from college in '58 and worked for a year in New York before going to Harvard Business School and I got out of the Business School in '61 and not unlike a lot of kids that age, decided that I didn't want to go to work for Proctor & Gamble or General Motors or whatever. I wanted to do something on my own. As a launching pad to do that I went to work for a small business investment company called Cambridge Capital, which is the functional equivalent, in the '60s, of today's venture capital firms. And one of the very first deals that came through the door that they asked me to work on was a deal that Bill Daniels was brokering and it was Al Ricci's cable system in Keene, New Hampshire. It was a $550,000 purchase and Bill had another group that could do $500,000 of it but they had a limit; they couldn't go beyond $500,000, which was Royal Little's SBIC in Providence, so they were looking for another $50,000.

NELSON: Scrambling around for $50,000.

HOSTETTER: Scrambling for $50,000. Well, that was a big number in those days.

NELSON: Yeah, very different.

HOSTETTER: And since no one in the group knew anything about the cable business they assigned this new kid who'd come in to do the research on it and I went and visited – it was interesting, it was principally family offices that had invested in it at that point. One of them was the Whitney office in New York, Jock Whitney's office, and the other was the Starwood office, which is the direct descendents of Julius Rosenwald, who founded Sears Roebuck and both of them had been major owners for quite a period of time. Actually, Starwood was the genesis for TVC, which was Al Stern's company. He is a Rosenwald descendent. So, after spending a month or so researching this, I recommended to our board that they do this deal and they said, "Fine, you sit on the board." So I have the opportunity to meet frequently with Bill over the course of the next six months and very quickly I decided I'd been on the wrong side of this deal, that I wanted to be on the operator side, not the financing side. So in association with a guy who was then working at the Harvard Business School, Irv Grousbeck, who had been a college fraternity brother, he and I got a set of topographical maps and drew circles around all the TV stations trying to figure out where the holes were.

NELSON: Without coverage at that time, right?

HOSTETTER: Right. And in our great wisdom we decided that the nearest place to Boston, which is where we then both were that needed a cable system was Mansfield, Ohio and we went out to Mansfield – I'm trying to think, was it...? No, Mansfield was our second choice, our first choice was Lima, Ohio and we got into Lima and found that Cox newspapers, which was a Dayton based company then, in conjunction with the one local broadcaster in Lima were just applying for the franchise and we said we weren't likely to succeed on that. So we went to Mansfield and in our wisdom decided there was too much free TV in Mansfield. Well, since then there's been a system built there that is probably 85% penetrated. It's been a roaring success. So we then went up the road, the third place we went was Findlay where again Cox was active and the guy who was doing franchising for Cox at that point said, "You guys stay out of my way here in Findlay and I won't bother you up in Tiffin and Fostoria," which were two towns a little further up the road. So we went up there and got our first franchises essentially unopposed. I think if we'd had any opposition we never would have gotten them because the total balance sheet of the company at that point was $3,000. We had to each put up $1,500 to get the thing started. So that was 1963 when we got those franchises, summer of '61, and turnkeyed the systems with AMECO, Bruce Merrill's company then in Phoenix and turned them on after too long a wait, actually, in January of '65. During the period that we had waited, one of the radio stations, the one in Tiffin, which actually was the original station of Malwright Broadcasting, which you may remember as a contemporary broadcaster, that was Milton Maltz and Bob Wright was Malwright Broadcasting. They had WTTF in Tiffin. They came back from the NAB show in the summer of '64 having heard a presentation on cable television and decided they ought to do it and in one night at the city council they got a franchise, which was a duplicate for ours, or essentially an overbuild, and they felt we didn't have the money, which was not a bad assessment on their part. So they started to build and we started to build; it was one of the very first overbuilds.

NELSON: Who's overbuilding whom at this point?

HOSTETTER: Well, our franchise proceeded theirs but they felt that nothing was going to happen so they came out of the box charging and we ended up having to buy them out, which cost us about a quarter of the capital which we had raised to build the systems and were it not for the fact that the systems were initially very receptive to the service, we would never have had enough money to finish the project. But we got those up and operating by June of '65 and then went to some of the neighboring towns in Ohio and then in '67 Irv moved out to Quincy, Illinois, which was the town his wife was from and in conjunction with the broadcaster and newspaper operator out there, we got the Quincy systems and started a cluster there in western Illinois.

NELSON: Speaking of clusters, how big was the Ohio group before you started branching out?

HOSTETTER: Those first two properties were 10,000 homes passed and I remember in the original prospectus, we rather ambitiously said, "If we're successful here we'd like to grow the company and maybe someday have 20,000 subscribers." So after the Illinois complex, we then got a franchise with a radio broadcaster in Stockton, California and almost simultaneously with the newspaper in Concord, New Hampshire got the franchise there and then where we were based really didn't matter because we were going to have to travel a lot. So in 1968 we both came back to Boston and have been here ever since.

NELSON: How did you get the California franchise? That seems like a pretty leap. From Ohio to Illinois is one thing.

HOSTETTER: Through a good friend of mine we were introduced to a guy who owned one of the radio stations in Stockton, who had just done a recall on the mayor and was a very influential guy politically, he was Mr. Clean and he was the right guy at that moment in history to be associated with in Stockton. Mort Loftus was his name. So he was our partner there and Ray Joslin had come to work with us in '68 and we asked him to go out there and he ran our California operation. Chuck Younger, who was working for the phone company in Quincy, we hired to run the systems in Illinois and Lyle Neiskern, who we had hired from Newhouse ran our Ohio properties and at that point a guy by the name of Peter Kendrick ran the New Hampshire stuff.

NELSON: So you basically had a little New England foothold, Midwest, California.

HOSTETTER: Right.

NELSON: And all those got built up substantially over the years, obviously.

HOSTETTER: Right.

NELSON: How about some of the other places that you got an early foothold in?

HOSTETTER: Well, we were early believers in clustering and also felt we could increase our franchising effectiveness if we focused, so we focused on the Boston market; Richmond, Virginia; Chicago; St. Louis; and Stockton, which actually Stockton, after we acquired American, which was 1984, we got their very large Los Angeles complex and then we bought out a local group that had owned Jacksonville. So that became another one of our markets and then as part of the American acquisition from Steve Dodge, he had that cluster in Pompano Beach, that major south Florida presence.

NELSON: Then that was the basic outline?

HOSTETTER: That was the outline of the company.

NELSON: Right, but let's just go back to '68. You come back to Boston and now you're really getting kind of knee deep in this stuff. The Ohio venture was done and you started picking up a couple systems but now, okay, we're going to consolidate and we have a national company. How did that effect your operations at that point?

HOSTETTER: Well, we had early on decided that we wanted to cluster not only for the operating effectiveness but also because it meant we could put really good people if we had enough mass in a particular area so we became a very early proponent of decentralized management and tried to hire the very best people to run these essentially as local businesses and what we did from Boston was finance them. The company was basically built on bank borrowing so we managed all the financing and oversaw the franchising and were involved in the franchising in the Boston area, but interestingly the people in the field were doing their own. They didn't need help from us. I mean, Younger was doing it in Ohio and a guy named Bill Clancy was doing it for us in Chicago. So we were simultaneously... I think at one point I figured out we were working on something like 80 franchises simultaneously and of course the competitor in each market would say, "Look at this list of things that we know, that is public record, they filed. How could they possibly finance this if they get them." To which we could only say, "We have fulfilled every promise we've ever made and there are no disappointed cities out there. We think we have the capacity to do it."

NELSON: Do you think you lost any because of that argument?

HOSTETTER: I'm sure we lost some but it's interesting – there are a number of companies that were built not based on franchising. For example, TCI is almost exclusively acquisitions and we were the reverse, largely because we didn't have enough capital to buy. We were much better off if we could get the permit and build them, which was a cheaper way of getting in and I think we had a record of, I think we got four out of every five we applied for. We did a lot better than even money.

NELSON: How about some of the ones that you were involved with more personally, locally? Any stories about some of those experiences?

HOSTETTER: Well, the dominant one was when we came back in the late '60s we had an office on the second floor of this building you'll see out the window here, which is called the Towboat Building on the end of Lewis Wharf and it was a ramshackle site even then. It's since been condemned and it's all boarded up but in terms of meeting with the city officials from the Midwest, we'd always volunteer to meet them at the airport. "Oh, we don't want to inconvenience you. You don't need to come into town. We'll get out to the airport and pick you up and take you to some of our systems around the Boston area." Which was fine, but we couldn't take them to the home office. So finally, in 1971 or '72 we said, "Look, this just doesn't work. We're going to have to move to a higher rent district." And as you can see we came 200 feet back and got into an historic building that showed a little better.

NELSON: Although, in those days, knowing Boston, the waterfront wasn't what it is today. So it may have been an improvement over the previous but...

HOSTETTER: Right, we went from $3 a square foot space to $8 a square foot space. It still was not the high rent district.

NELSON: Yeah, but that was still pretty good money in those days for this area. So you've actually, this is an historic building, you've actually developed that over the years, but this has been your base then, for... let's see, what's my arithmetic here?

HOSTETTER: 25, 28 years, no, more. Darn near 30.

NELSON: So most of the history of the company has just happened within these four walls.

HOSTETTER: Well, we started in this building with half of the third floor; we shared it with another tenant. Over time we expanded to take all of it, then we bought it, and then we built the building that is back there, which tripled the floor space here.

NELSON: So, let's continue our narrative. You've moved in here... how big is the company at that point, roughly?

HOSTETTER: When I came back to Boston it was no more than 40,000 subscribers. We had a lot building and a lot of franchises in process, but I think on the 10th anniversary of the company we were still under 200,000.

NELSON: And what year was that?

HOSTETTER: Well, the 10th anniversary would be mid-'70s.

NELSON: Okay. Because mid-'70s is obviously a very critical point in the whole history of the cable business. This is basically delivering reception up until now. What happened with your business with the advent of satellite delivery at that point?

HOSTETTER: Well, of course, Jerry with HBO was the original service up on the satellite and it changed, I mean, it made these urban markets we were applying in make sense, whereas previously they had been a very questionable proposition. The cable industry became more than a reception service; it became a source of programming, which dramatically changed the economic equation. Pretty exciting times.

NELSON: Did that spur you on to more acquisitions at that point because you could see that you had a very different business than you started out with.

HOSTETTER: Well, again, we did not have the capital base to be doing much buying. We didn't have a public security, which John did, which was the basis of a lot of his acquisitions, and we didn't have the cash. So, no, we stuck pretty close to our knitting until probably the mid-'80s when the franchising was virtually all done and I think the only franchise we got after '82 or '83 would have been St. Paul, Minnesota and that one only because they'd had two or three unsuccessful franchise processes and it was one of the last ones granted but then it was clear that we weren't going to be able to grow unless we did it by acquisitions. So we acquired American Cable Systems, Steve Dodge's company.

NELSON: Talk about that company somewhat.

HOSTETTER: Steve was one of our bankers at The First National Bank of Boston and watched this whole thing develop, probably not unlike the way Bill Daniels sort of opened my eyes about the cable business and Steve was a lender to Marc Nathanson and us and virtually all of the major companies and one day he called up and he said, "You know, I've decided I don't want to be on this side of the table anymore, I want to be on the other side." And he was our toughest competition here in greater Boston for all the suburban franchises. I mean, he beat us as often as we beat him and then it became quite obvious that to consolidate this market we really should be together and in '85 he called me up and said, "I want to meet you for lunch." We went out to a place in Beverly and had lunch and he said, "I don't know whether you'll be surprised or not," Steve was then on the NCTA board and on the executive committee with me, which I had done, I think I first went on the NCTA board in '68 and had been on it non-stop since then, I hadn't been off until two years ago, which is later in the story, and he said, "I'm going to sell the company," and he said, "I will auction it if I don't get an offer that I think is fair, but I'm going to give you the chance to buy it and pre-empt an auction." And I said, "Well, what price do you think is fair?" And he said, "$45 a share." And I said, "Well, give me all your data and give me a couple days." And I went back and it looked to me like a $35 stock, not a $45 stock and I went back and said to him, "Look, Steve, I can't get to $45. I want to buy this company. It's strategically perfect for us, but I'm not going to get to $45." He said, "Well, to tell you the truth, I didn't think you would. He said, "Can you get to $41?" I said, "I can get to $41."

NELSON: You knew going in there that you were prepared to move up from the $35, even if it was a stretch.

HOSTETTER: Right. Strategically it was so important for us. We couldn't not do it, but it was a very big price for cable at the time. I think we were talking $2,200-$2,300 a subscriber and it grew us about a quarter. I think we were at roughly a million and a half and he was half a million, so that acquisition put us at 2 million, so that grew us a third, really. And then after that the other two major acquisitions we did were McLatchey newspapers, which got us Fresno and a number of properties in California and then the Jacksonville purchase from the Petrie interest down there.

NELSON: What was the time period around those?

HOSTETTER: These are mid to late '80s and after that we just built out and grew the properties that we had. That got us close to something like three and a half million subscribers before we eventually sold the company to US West.

NELSON: And out of that three and a half million, the Boston area was your major cluster. How big was that?

HOSTETTER: Close to a million.

NELSON: Close to a million. So when you added American Cable, that basically more or less doubled your size in this market.

HOSTETTER: Well, they had a big presence in Los Angeles too and their Florida properties.

NELSON: Right, so that was part of it. Right. You mentioned being involved with NCTA and from a fairly early stage. Can you go back in our narrative and kind of think of your first involvement with NCTA, how you got involved with that and kind of where you went with it?

HOSTETTER: Well, when we built the systems in Ohio, there were 18 cable systems in Ohio and most of them were owned by Tower Antenna Services, a guy named Claude Stevanus, who operated mostly in southeastern Ohio and something came up, there was a legislative issue in Ohio and a number of us began to talk and say we really need some sort of trade association to work on these issues in Columbus. So we had a meeting at a motel in Columbus and Mr. Stevanus was there and he said, "Okay, I think we should organize a state association." And I said, "I think you're right." I think at this point I'm 26 or 27, it's 1966 and he said, "Fine, let's organize it and you be the first president." I said, "No, no, no." We had then maybe 3,000 subscribers and he had 50,000. He said, "No, I don't have the time to do this; I want you to do it." Well, the guy who ran his company was a guy by the name of Claude Squires. Claude? Paul Squires, Claude Squires. And I said, "Well, he's the logical guy to do this." And he looked at me and said, "No, young man, you're going to do this."

NELSON: He was insistent.

HOSTETTER: So I was drafted into involuntary servitude with the Ohio association and then it was a pretty logical transition, what we were doing in Ohio, there were many parallels going on in other states and I ran for the NCTA board in I guess '67 or '68 and was elected and never left. I mean, it was clear that an awful lot of what was going to happen in cable was going to be collective issues.

NELSON: Who was on the board at the time?

HOSTETTER: Well, Fred Ford, as president, who was a former FCC commissioner, and the board was Martin Malarkey and Bill and Bill Adler, I think may have been chairman at that point, George Barco, Irving Kahn, all of the original pioneers, Polly Dunn. It was an interesting crowd and plenty of heated debates. The enemy then, I can remember Ben Conroy giving the keynote address when he was elected chairman, which was probably '70, was a tirade against Storer Broadcasting and Terry Lee, who, while they also owned cable systems were pushing a lot of broadcaster side of the issues and the friction then was broadcaster/cable. It then became, arguably Valenti became enemy #1 when it became studios/cable and now of course the issues are much more focused on telephone companies.

NELSON: Which it was way, way back with the pole attachment rights in the early days.

HOSTETTER: Right.

NELSON: So it's kind of come full cycle in a sense. But that's true, cable always seemed to have some big enemy out there. There was always somebody that was after it.

HOSTETTER: We were always the little guy. There was some big guy beating up on us. But in those days it was clearly the broadcasters and interestingly several of the major owners also had broadcasting interests and how that dynamic played out was never easy.

NELSON: And I assume they were primarily looking after their broadcast interests first.

HOSTETTER: Cable was a very secondary interest for quite awhile with a number of these owners.

NELSON: Now you're somebody that's always been, particularly from the standpoint of NCTA industry representation, somebody that's spent a lot of time on the Hill and has been viewed as somebody who's been a very good spokesman for the industry. How did you get involved in that political side of it because it seems like in the Ohio case you were sort of pushed kicking and screaming into it, so to speak.

HOSTETTER: Well, the national scene was not much different. It was clearly time away from Tiffin, Ohio or franchising in Boston or things I would rather have been doing but you know, it eventually comes down to if not me then who? And whether it was Bob Schmidt or Tom Wheeler or Jim Mooney, when you get called and they say, "We need you to come down and testify on such and such," my first response was always why can't this, this, and this guy do it and frequently they had excuses.

NELSON: Why did they call you the first time out? Do you remember your first episode in going on the Hill?

HOSTETTER: You know, I'm not sure if I remember my first one, but I remember an early one. Torbert McDonald preceded Lionel Van Deerlin who preceded Tim Wirth who preceded Eddie Markey in terms of chairing the House communications sub-committee and Torby McDonald was a Massachusetts congressman, so I think part of it may have been that geography.

NELSON: Talk to the local guy.

HOSTETTER: It may have been that I was a fresh face that occasionally put a period at the end of a sentence.

NELSON: So you went to see Torby...

HOSTETTER: Right.

NELSON: ...and do you recollect anything from that meeting?

HOSTETTER: No, it was a hearing. I'm trying to think when Tim entered the Congress. I was in the Army with Tim Wirth and we had totally lost track of each other and I walked into my very early hearings and Tim, when we were in the Army, we were enlisted men, we were PFCs out at Army Intelligence in Fort Devins and we had both come out of – he had come out of Harvard College and I had come out of the Business School at the same time when in this class that probably had a couple million dollars worth of higher education that had been paid for because what you could do was you could look at the calendar when you were joining in those days, this was not wartime America, you were trying to get the shortest term of duty that you could and the Army, if you are scheduled to get out by January 20th, the Army has what they call Operation Santa Claus so they let you out the 20th of December so you can be home for Christmas. So if you backed up from that and figured out what day you needed to volunteer, there was a date in July when Tim coming out of Harvard College, me coming out of Harvard Business School, a whole bunch of guys out of Harvard Law School all went down to their local headquarters and volunteered.

NELSON: Already thinking ahead toward Christmas of the year after.

HOSTETTER: We had exactly five months of active duty and we were assigned to Fort Devins and we were bored to tears, I mean, there wasn't enough to keep us busy so we finally went to the commanding officer and said, "Look, there are 18 of us. If we pull KP for the entire base for the next..." whatever number of months we had until we were out, "will you let us organize it the way we want to organize it and the people who are not needed can have full-time passes," which let you go off the base, it's an A-1 pass. The commander looked at us somewhat skeptically and said, "Okay." Well, we got it to the point where four guys could do the whole thing. I mean, it was an incredibly long day but that's all it took. There were 18 of us, we worked one day on three days off and Wirth was part of that. They had automatic potato peelers; you'd put potatoes in and it was sort of an abrasive ring that ran around that would peel off, essentially sand off, the peel. Well, we were all doing so many things that frequently a bag of potatoes would be pored in to be skinned and they'd come out about the size of a marble. So I showed up at this hearing and I hadn't seen Tim in, I don't know, ten or twelve years, whatever it had been since we were out of the Army. I sit down at the witness table and I look up and there's the chairman and someone and I keep going off to the extreme side and there, the most junior Congressman from Colorado, I look up and it's Tim Wirth. Before the hearing starts he holds up his hand and he says, "Mr. Chairman, I would like to read into the record the outstanding military history of the next witness who is about to speak," and made up this total fabrication of my wartime record, which of course I never ratted on him or vice a versa.

NELSON: So that sort of set the stage for a triumph in your first appearance on the Hill, given that you came in as a military hero.

HOSTETTER: He became a great ally, principally because of Denver, which was his home area and the strength of cable out there, but at least a little bit because we were old buddies from the service.

NELSON: And that commanding officer let you Harvard guys, oddly enough, do this?

HOSTETTER: Three days off, one day on.

NELSON: So, aside from your involvement with NCTA, one of the other things you've always been very involved with has been C-SPAN. Can you talk a little bit about how you became involved with that?

HOSTETTER: Well, Bobby Rosencrans and Rex Bradley, actually, who gets less attention on this than he should, who was then the CEO of Landmark, were guys... Brian was going around, Brian was then with the trades in Washington, writing with Cablevision Magazine, or one of the early trades having come out of the Nixon OTP, which he doesn't generally publicize. But he was there with Clay Whitehead and Nino Scalia, who was the general counsel in Washington.

NELSON: Yes, we got this in his video history.

HOSTETTER: Oh, did you? Good.

NELSON: So, it's now on the record. His Republican roots.

HOSTETTER: But he had this concept that I'm not sure many of us really grasped about taking the House feed and putting it out on the satellite and having it available for every cable system on a no charge or modest charge basis. Henry Goldberg and Bob Rosencrans and Rex came to see me about this idea, interestingly, the first time not with Brian. There was enough of a buzz of a public service component to it that although I certainly didn't grasp it in the scope that it is today, but it seemed like a good idea and it was a way that we could differentiate ourselves in terms of product available on the systems and it seemed that it was a pro-social sort of undertaking. So I guess there were 20 of us that committed $250,000 to this, which was a lot of money at that time.

NELSON: And for something you weren't expecting a financial return on by any means.

HOSTETTER: Right. And that was the seed capital that got it going and it has blossomed far beyond my wildest imagination. I mean, it is... Brian does everything that he can do to deflect any credit for C-SPAN to other people; there's no deflecting it. C-SPAN is a product of his vision and his execution. I mean, it's unusual to find someone with the combination that he's got. He was the visionary to have thought of it but then they way he has managed and administered it; I mean, others would have required 4 times the budget to accomplish what he has accomplished. He's just a terrific manager and very, very cost conscious and has created an important national treasure really. This service is something we all should be immensely proud of.

NELSON: Public service, you mentioned that that was something that appealed to you about it, that it was a public service, public spirited kind of activity. Was that something that you were looking for or was that something just in your own kind of personal philosophy that you felt strongly about at the time or did just the involvement with C-SPAN kind of help reinforce that?

HOSTETTER: Well, I think the cable industry had and has, always had, an image problem. There's some sense that the way you get these franchises at the local level is an ultimately political process and I think the perception is that it frequently gets dirty. Frankly, in my knowledge, and I think I've been part of over a thousand applications for municipal franchises, I can count on one hand the ones that I suspect of any sort of foul play. So that's an aside except to say I think there's a general perception that there's a sort of dark side to the business.

NELSON: An under the table component.

HOSTETTER: Right. And I think we have to work to dispel that. We also have got to work to dispel the image of money oriented outside interests coming into the community that are sucking the money out of the community and sending it back to Denver or New York or Boston or whatever, and I think we have issues about answering the phone and the standard of service that we're delivering. So I think for many it could come from just basic self-interest. I mean, we've got to make the extra effort to set a standard for this business that people look up to and here was a terrific opportunity to do it. In my case, I also came from a background of a very tough educational environment with an honor system and an honor code and I was an altar boy as a kid, so I came into this thing with there's more to business than making money. Nick Johnson, who was an FCC commissioner in the middle '70s once said to me, "You've got an incredible opportunity," and I said, "Why?" He said, "You're in one of the few businesses I know of where you can do good and do well at the same time." And I think it's absolutely true. I think the companies that have set a standard of service and performance and contribution to their communities have in fact been the companies that have financially done the best. I would certainly argue that that was Continental's objectives in its years in business and today I would look at Cox and say, here's a company who really does it right and it doesn't hurt them financially at all. What goes around comes around and they get dividends on their pro-social investments.

NELSON: Well, I think one of the greatest dividends of cable is pro-social investments and another thing you're closely associated with, of course, is Cable in the Classroom. Talk about the genesis of that.

HOSTETTER: Well again, the real credit there should go to Robert Sachs and Burt Karp, who were respectively with Continental and with Turner when Widdell came to market with Channel One.

NELSON: Channel One, right.

HOSTETTER: There was a real sense – I mean, Peggy Charron, who was here, and you may know as Action for Children's Television, was outraged that schools were going - in order to get some satellite reception equipment - were going to, as part of their school day, sit kids down and have them watch commercials and that just offended her every sense. Well, Robert and Burt sort of resonated to that and said, "Well, gee, haven't we got the same sort of resources in terms of pre-existing programming and a distribution capability. How do we package this into something that's constructive?" So Robert came to me early on and said, "Burt and I have been talking and CNN would be potentially interested in this. How would you react?" And I said, "It sounds like a homerun to me. Let's go." Ted and J.C. Sparkman and Glenn Jones and I all agreed to be in Washington at the National Press Club to make an announcement about launching this and at that point, the decision on with or without advertising hadn't even been made and Ted's in the elevator, literally riding up – it was a conference in the National Press Club and I think it's on the 8th floor – we get in the elevator on the ground floor and Ted said, "Okay, now what is it we're going to do here? I understand that you're going to distribute our programming, but what about my ads?" Somebody mentioned Widdell and Ted said, "Well, yeah, I guess we could cut the ads out, couldn't we? Since it's after hours." So he walks out of the elevator and holds a press conference at which he announces this extraordinary thing, that he's going to do this on an ad free basis, which if you'd asked him when he walked in the building on the ground floor, he had no idea.

NELSON: When it was in on the ground floor, that wasn't the case.

HOSTETTER: Right.

NELSON: But that's, I guess in a way, very much Ted, the ability to just kind of roll with it.

HOSTETTER: As I understand his pledge to the UN Foundation, it's very similar. He was coming up in the elevator and he asked someone, "What's the largest philanthropic gift that's ever been given?" And someone said, "Well, it's less than a billion dollars."

NELSON: There was the number, right away. And you've obviously stayed very closely involved with that through your career with Cable in the Classroom. It's not merely getting it started, but you've been associated with it.

HOSTETTER: Well, we were blessed with the first executive director, Bobby Kamil, who was just a human dynamo and I think badgered and cajoled virtually universal coverage for it. So the ability for the industry to talk about, on a national basis, that they were making thousands of dollars of commercial free programming available in the schools, wiring the schools without charge, I think it had real impact and I think is having, if you read some of the teacher responses today, I think is contributing significantly to the whole educational process.

NELSON: And of course led into beyond providing video in the schools, now the whole issue is the on-line access. But let me pick up back in your corporate narrative and we'd sort of taken you up through your acquisitions and you touched on this before, and that was when the company got sold. Now I sat in this room, literally, 3 ½ years ago, interviewing you on this subject and we had a remote hook-up with – you may remember this – with Chuck Lillis at US West, talking about what your expectations were for this merger. It obviously didn't quite work out that way.

HOSTETTER: Well, it still will. It just is requiring some change of personalities.

NELSON: What happened at that point? Obviously there were nos about the move of the people from the Pilot House here, which was your nerve center and we know long-term operations headquarters. Any comment on that?

HOSTETTER: I think it was a tragedy, both for the people and also for the company's ability to execute. I mean, they just gutted the real talent; of the 140 people here, fewer than 10 were willing to move and most of those, once they got out there decided they didn't like the environment and went elsewhere. So, what had been a very vital, effective management team and set of relationships among people just was vaporized. It was a great loss, but they owned the company at that point and had every right to make whatever mistakes they wanted to make.

NELSON: But I know you've been quoted as, I guess I could characterize it as being angry about it. It sounds like part of it was because of what it did to the people that you felt responsible for, your colleagues.

HOSTETTER: Well, I was never quoted. I've done a very good job of staying off the record on it. I think others may have speculated that I was angry and upset but I've never confirmed that. It's a reasonable supposition but...

NELSON: But not denying? Have we skirted around this?

HOSTETTER: I think they made a very bad mistake and I think it was a bad mistake in terms of human resource management. These were the best – the reason they had bought the company was it was the best management group in the business and I think they totally miscalculated whether these people would move, but I think to that extent trying to understand it as I have, hundreds of nights lying awake, how they could have made such a miscalculation, I think there's a different mindset in the telephone industry. I mean, if you go to work, or went to work, say 15 years ago, for US West, you would expect, if you were progressing, that you would be transferred from Seattle to another job in Phoenix and a year and a half later to somewhere else and this was how your career would advance, was through a lot of moves. I think if you think about the senior level people who were making this decision, almost all of them had had five or six locations that they had lived and the in the cable business it wasn't that way and certainly for the Continental group, I never, ever asked anyone – I mean, I might describe an opportunity to someone and say, "We need such and such a position filled in Jacksonville and if you went there, here's the outline of the deal," but never said, "Go." I think particularly the group here, many of them had become very involved in their community, that was sort of the culture of the company, that not only do you have a job and a profession, but you have a community that you should be actively engaged with. People like Robert Sachs, who now is NCTA president and I think is the best government relations guy in the business, had his own personal health scare with cancer, had gone on the board of the Dana Farber and what he was doing at the Dana Farber was every bit as important to him as his career development and when they say, "You're going to move to Denver, Robert," he says, "Oh, no I'm not, guess again."

NELSON: And people should know, Dana Farber is a major hospital, cancer research facility.

HOSTETTER: It is probably the premier, cutting edge facility working on cancer. So Robert was very involved there. David Fellows, probably the best technology guy in the business, had just built a house; one of his kids was very sick and was dependent on the care he was getting at Children's Hospital here and there was no way David was going to go. Bill Schleyer had three kids who were day students at Exeter Academy in New Hampshire and he is commuting to Boston from there, but there is no comparable school for those kids in Denver. I mean, it just was – they could have gone through name by name these incredibly talented people who would respond negatively to a decision to move.

NELSON: I think also, just as another Boston person, although adopted, not by birth, is that there also is just a lot of people here want to be here, they want to stay here. I think it is sort of part of the local culture.

HOSTETTER: Well, I don't mean to speak ill of Denver, I think a lot of people who are there want to be there and the skiing is important to them and lots of other things in Denver, but I think the mindset of "in our business you move to succeed" was a telephone company mindset that was not present in this group of Continental people and they just, they got it wrong. I said to Lillis at the last moment, I said, "Do you realize how many people you're going to lose?" And he said, "Well, I hope you're wrong." No one's ever quick enough to have that second line in these little dialogues, but as I thought about it after the fact, the right answer was, one something like this you don't hope. You ought to find out before you decide.

NELSON: Well, let's kind of come up to sort of the present time, speaking of telephone companies. Your position currently at AT&T Broadband and Internet Services is non-executive chairman. I think out in the industry some people are a little confused as to exactly what that is and what it means. So here's an opportunity to kind of describe what it is and your role.

HOSTETTER: The way it was presented to me is a little different than it has turned out, but I think there are some reasons for that and I don't think that will continue. The concept of a non-executive chairman is a very European concept and it is a director who takes a little additional responsibility for the operations of the company, acts as a sounding board to the CEO, tries to be an ally and handmaiden for the CEO and help them, particularly with their board relations and that felt very comfortable to me vis-à-vis Leo, who was at that point the CEO of the cable operation. As a result of his departure, I'm a little more involved than that and probably a little more involved than I would like to be but I'm hoping that by late winter or early spring, as the succession has been worked out there that I can get back to being a supercharged director.

NELSON: And is it just that in terms of actually being more involved in day to day operations kind of like been there, done that and you were kind of on the other side of it personally?

HOSTETTER: The company really now should stay in Denver and I think will stay in Denver and there also is a Basking Ridge component to it, so it's more travel than I want to do and I mean I guess I have moments of frustration with if I'm going to spend this much time why am I not running this company, but then I control that instinct and realize that it's a little more important to me at this point to get to all the soccer games than it is to be a CEO again.

NELSON: And how about in terms of the people now involved with that, personnel issues, that's always something to be concerned about. Just in, say, looking at the old TCI people, the old Media One people are all going to be part of one company. Are they going to get merged, married together, how is that going to work out?

HOSTETTER: It's even more complicated than that in that that company is going to be an AT&T company.

NELSON: My next question.

HOSTETTER: So it's a three-way assimilation and I think we need to take what's best of each of them and try and build on that but it definitely is not... the resultant company will not be AT&T, it won't be TCI, and it won't be Media One and it definitely won't be Continental, but I think we're in the process of trying to put in place a new persona for this combined entity and there's some incredibly talented people that are there and we've just got to find a way to organize that and realize their capability.

NELSON: Is there any kind of timetable for the TCI/Media One operations? They're just kind of down the street from each other almost and yet in separate worlds.

HOSTETTER: Well, with Leo moving it's still - who knows when someone's looking at this 30 years from now if they've got the timetable right. We're a month now, or six weeks post Leo's resignation, which was a terribly destabilizing thing, but I think Dan Somers is the right guy to be the CEO going forward. I think that no longer is a temporary assignment, that's a permanent assignment and should be thought of that way. He's Mike Armstrong's closest ally and I think that bodes extremely well for them getting the attention and the resources they need to execute. But the execution now, in a company that passes 30 or 35% of the U.S. households is gigantic. The resources that it will take to turn these distribution systems and the service capability into a multi-line product is immense and we just have got to commit ourselves to do it.

NELSON: Do you think that part of Somers' strength is just his whole financial background because of the scale of pulling this off and allocating resources to it?

HOSTETTER: Yeah, I mean, there's no question that without AT&T's balance sheet and without his financial training, this job can't get done but I think the capabilities are there to do it but we've got to get on with doing it and I'm eager to get the Media One thing closed so we can start calling the shots in there.

NELSON: And does he have some issues in terms of dealing with the cable culture, which as you pointed out, is different from the AT&T culture?

HOSTETTER: Well, I think there's a learning thing to go on on both sides and I'm optimistic that that will work out. The AT&T people sort of look at me and shake their heads and say, "This is a cabal; what's going on here?" And I look at them and say, "These are all important companies and important people and you'd better spend the face time with them to work out some relationships." But I'm convinced it's a learning thing and as soon as they spend enough time together, all this friction will go away.

NELSON: Well, let's just turn a little bit to the world in which cable's operating now, which is about to take a change from a competitive standpoint because the local to local issue on behalf of the satellite people seems to have been resolved so that cable will now face a multi-channel provider who's going to be able to deliver local TV signals. How does that change the burden on cable in this competitive environment?

HOSTETTER: Well, I think, a number of us have been saying for five years that we've got to ramp up the service capability and marketing know-how in this industry because it is going to be a competitive world and it has been and certainly the local adds another arrow on the quiver but a number of our systems in the Midwest have been facing Ameritech, a number of them here in the Northeast have been facing RCN. The satellite, even without local service, has been a real competitor. I mean, the multi-channel universe is changed. It's no longer a monopoly or even a duopoly service. There are a lot of people out there who can do it. Many of the apartment buildings in areas like our Florida complex have faced serious master antenna television competition, so we've got to get very good at anticipating and responding to customer needs. We've got to package and price in ways that are responsive to their interests. There is, I think, a potential silver bullet in this telephone packaging, all distance voice, video and data, I think can be a killer, but we've got to complete the plant, we've got to get the service capability in place, we've got to get the – in many cases we are crippled by insufficient billing service capability. We yet don't have a product that will handle three and four lines of service, so that software has got to be developed and to get any efficiencies out of these operations a lot of the next generation solutions have got to be software. You can't do it with a CSR manually trying to manage all of this information.

NELSON: But you really see the bundling of these services being a critical factor in the market place – the voice, video and data?

HOSTETTER: Absolutely. I think Armstrong has been absolutely right strategically. From the day he started at AT&T he looked ahead and said, "Long distance is going to be a commodity. Lots of people are going to offer it, it's going to be very price competitive, and this is not a business that I can get very excited about. What do I do, what's the alternate franchise that I've built?" And I think he decided, what I want to build is the ability to offer the consumer or businesses a full-service solution to all of their communications needs – voice, video, data – and I think that strategically is the answer for AT&T going forward and they're committed to it.

NELSON: Looking at that voice side of it, does that tend to stay more Basking Ridge-centric as opposed to Englewood-centric?

HOSTETTER: No, I think this new company that is developed is not going to be any of the old ones, it's going to be some new amalgam and what they are fabulous at – I mean, frankly, since the separation, they've run a virtual business. They don't deliver on any of these services; they don't have real customer interface, they're not rolling trucks, but they're pros at coming up with packages like digital one rate and at marketing them, at preparing the advertising copy and knowing what sub-segments of the market are reached by what messages. So if you can graft the scale of that marketing capability onto each of these local markets that we're operating in and the capacity now to roll the trucks and make the connects and go around the Arbucks, who have been AT&T's biggest bane. Their ability to execute on a direction from AT&T, they will do everything they can to mess up the order. So I think now the capability is there to put all off these components together and really build a very powerful franchise.

NELSON: How about the high-speed access side of it? Obviously, this whole quote unquote open-access issue is bedeviling the industry. Even one of your long time franchises, Cambridge, Mass, they've denied the franchise transfer. How do you see that playing out?

HOSTETTER: The United Socialist Republic of Cambridge?

(Laughter)

NELSON: Well, that's Cambridge. Anybody who knows Cambridge could actually almost divorce that from the cable industry except you have Portland, you have a whole bunch of places that have kind of come down the same side of that issue.

HOSTETTER: Well, just for the record, I think four or five of them out of a thousand have come down there, so it's not... They're the outliers, not the center on this. And I have every confidence that reason will come back to this process. You cannot have the sort of cacophony of local voices, each having a different scheme of how cable ought to provide access or be regulated or what reasonable rates are. The prospect of each municipality, county, and township deciding what is fair and reasonable terms is preposterous. The reason we have a federal structure at all – this goes back to Marbury vs. Madison – in terms of some coherence on national policy. So, I have no doubt we will get there. I got so excited about that I forgot your question.

NELSON: The point is, just looking at open-access. Even assuming we get to a national policy, is there some scenario that you see that the cable plant does perhaps gradually get opened up?

HOSTETTER: Absolutely. I think Armstrong... there's no equivocation on this. He has said in the post-2002, when these agreements that I didn't make, but I acquired when I acquired TCI, when those expire I am going to be available to all carriers, I mean all portals, as a distribution platform and I view the role of this company as in the distribution business, not in the content business. So I think if today he could free himself of those exclusive contracts he'd do it.

NELSON: So what that says is that there really is a strong economic model, aside from existing contracts, but there's an economic model where the cable broadband platform becomes a carrier for a whole bunch of folks.

HOSTETTER: I'd like your opening screen to come up with an AT&T logo on it and twelve buttons, which are direct access to AOL or Yahoo or Excite or whoever's content you want to go after. That's my formulation for the right way for this to work.

NELSON: Actually, I think that really kind of wraps it up. Let me ask you one last question. In this environment, cable is no longer the little guy; they're a big guy and how do you see cable's role today as a public citizen?

HOSTETTER: Well, I hope we not only continue to carry the banners we've been carrying, but build some more. I think we are uniquely positioned as we were to further C-SPAN and public understanding of the way its government works. C-SPAN 2 and some of the product that they develop, which is more commentary than simply observation, I think it's been a wonderful service. I think Cable in the Classroom is something that has to be nurtured and continued, particularly in this era of high-speed data. I think we as distributors have got to identify those areas where it just is not only good business but good corporate citizenship to make these facilities available at a cost or no cost basis because they're too important not to be there and if we leave it to schools on their own to pay for these services, they won't happen. I think if for no other reason than better equipping our future workforce – as I start to think about what are the human resource requirements of this AT&T going forward, I mean we can't find enough technology empowered people to do the job we've got to do, so let's go right back to the beginning and start kids moving the mouse around the screen at 8 years old so they're comfortable with this as adults.

NELSON: One just last little thing: what is it you've done in this business that you kind of would like most to be remembered by, thought of, characterized by?

HOSTETTER: I think Continental Cablevision and its culture were very, very special things and I take real pride in having assembled the people who made that work. I didn't create it. I may have empowered it, but it was hundreds and hundreds of very, very competent, committed people who said, "Hey, it's important for us to get satisfaction from our job that's more than our paycheck. That we feel good about what we're doing and we feel that we're contributing something." And that was the company's culture and that I'm proud to have been part of.

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Edward Horowitz

Edward Horowitz

Interview Date: Wednesday November 19, 1986
Interview Location: Unknown USA
Interviewer: Robert Dudley
Collection: Penn State Collection
Note: Audio Only

DUDLEY: This is an interview with Edward D. Horowitz, Senior Vice President, Technology and Operations, Home Box Office, Inc. The oral history interview is conducted for the National Cable Television Center and Museum located on the Penn State campus at University Park. The recording date is November 19, 1986.

Mr. Horowitz, would you give us a bit about your background, your parents, your peers, your schooling, your degrees.

HOROWITZ: Sure. My parents are both immigrants to the United States; my mother came from Austria and my father from Poland in 1943. I was, therefore, a first generation American, with an older sister as well as a younger one. I went through the New York City public school system from kindergarten on up through high school where I attended Brooklyn Technical High School, graduated there in 1965 and went to C.C.N.Y., City College, School of Engineering from 1965 and graduated in 1970 after taking about six months off to join the National Guard and do my basic training. From 1977 to 1979 I was asked by Time, Inc., to attend a master's degree program for executives at Columbia University Business School, and I was in the graduating class of 1979. Married June 6, 1970; still married, same family. Have two boys, David, 7, and Michael, 3. Wife's name is Susan.

DUDLEY: Could you give us a bit more information about what you did before you got into Time, Inc., what other kinds of cable or electronic type positions you were involved with.

HOROWITZ: When I graduated from City College in 1970 as an electrical engineer, that was a time when the aerospace industry had gone from boom to bust. The jobs that I had hoped to apply for, once I graduated in aerospace, no longer existed. However, I had the opportunity in the summer of 1969 to work for TelePrompTer as part of their summer intern program, doing sales work, direct to the consumer sales activities, in addition to learning a little bit about the business. Once I graduated, I was really intrigued by the opportunity that seemed to lie in this new field called cable television, and was intrigued to find that people were willing to pay for television to begin with because my internship was with TelePrompTer in Manhattan, which is, obviously, an urban area, and there's lots of good quality off‑air reception. I couldn't understand why people were willing to pay for television. Here was a company that was trying to change peoples' television habits. I was really intrigued by the business, and they offered me a position in the engineering area upon graduation.

I stayed at TelePrompTer, Manhattan, for about three years, where I worked on some of the, at that time, state of the art microwave equipment. Really, one of the first specialties I developed was in microwave technology, specifically on the Thetacom AML microwave system. Thetacom was a joint venture between TelePrompTer and Hughes Aircraft. Hughes still has that today in its product line. In fact, I just saw an ad; they have 100 thousand channels of AM microwave around the country. But the first system, the prototype, was really designed and placed into operation in Manhattan. It was my job to see that the product, the pre‑production model was tested and installed properly.

DUDLEY: At that time TelePrompTer was sort of on the leading edge of technology, were they not?

HOROWITZ: Exactly. Between Hub Schlafly in the engineering area and Irving Kahn in pure business, TelePrompTer was clearly the lead company not only in cable in general, but specifically in technology. In fact, Hub was one of the first visionaries, if you will, to see the promise of satellite television. He commissioned Scientific Atlanta and one or two other companies whose names escape me, to develop a 10‑meter dish that could be demonstrated around the country in the early '70s.

DUDLEY: I'm sure you've heard the story about Irving Kahn, too, that he always stood with his feet planted firmly 100 feet above the ground.

Were your avocational or your vocational interests toward electronics as you were growing up?

HOROWITZ: Yes. I'd always had an interest in electronics or electrical engineering. Really, it's from building a Heath Kit radio. I never was much of a ham operator. I'd just go out and build this Heath Kit; that's how I used to build transistor radios and things like that. Built a television set once.

DUDLEY: The challenge to move from an engineering background into the business end of it was instigated by your employer. Was that rather unusual at that time?

HOROWITZ: As I said, I worked for TelePrompTer for about three years, three and a half years. Then I went for a short period of time to a start‑up cable company in New Jersey, which I was involved not only in the design of the cable system in a suburban environment, but also in the franchising process as well.

I really had a good basis of knowledge of how to go out and get a franchise, which is how to deal with the politics, how to design a system that works. Once it's installed how do you properly market and sell that system to the consumer? I've kind of done it all. I've climbed poles; I've gone down sewers; I've knocked on doors; I've run service calls; and I've managed a cable plant. And that kind of broad base of knowledge of the very specific cable industry, to me, indicated that I was lacking something.

HBO in 1974 was a very, very new company. I'd been there for two to three years when they invited me to go to this Columbia program. It was not usual for them to take a technically‑based person and put them into this business environment. In fact, Time, Inc., is not a very technology‑oriented company. In fact, they don't really recognize just how much their livelihood depends on the innovative uses of technology. Historically, they haven't depended on it.

DUDLEY: Why, then, did Time, Inc., conceive of the idea of HBO?

HOROWITZ: HBO was a means...try to think of a good answer to that. Time, Inc., owned cable properties, owned broadcast stations as well, and sold off the broadcast interests and most of its cable properties, but couldn't sell one cable system in Manhattan. They had a franchise for lower Manhattan. It was viewed to be an albatross because no cable had successfully penetrated urban areas; it was losing a lot of money.

The genius of Chuck Dolan and the president of Time, Inc., a guy named Jim Shepley at the time, basically said, in order to make this cable system work, we have to get more revenue per household than we are getting now and we don't want to invest a lot more capital in it. How can we do that? What kind of service can we offer? One of the first offerings was the Nick and Ranger home games, direct from Madison Square Gardens. They were offered exclusively to cable subscribers in the Manhattan area to begin with and later on in the greater New York metropolitan area. The concept of delivering some proprietary programming into the house was really the driving force behind the sports services and then, ultimately, the pay services.

DUDLEY: It was a programming thrust to increase revenue from an existing system?

HOROWITZ: Without additional capital. That's correct.

DUDLEY: I'm curious about why you started in with Service Electric in Wilkes‑Barre, Pennsylvania?

HOROWITZ: John Walson is the pioneer‑‑now, there's some controversy whether John Walson or Bob Tarlton, but we think that John Walson is number one, and we wanted to demonstrate as we took this product outside the captive environment in Manhattan to the cable industry that we could get a pioneer, one of the stalwarts, the pillars of the industry, to accept this concept. The pioneer that John is really shone through at the time.

DUDLEY: So it had a lot to do with connecting up with somebody who had already made a name for himself in the cable industry?

HOROWITZ: Yes, and to whom people looked at and said, "There's a man who is not easily convinced of new things. If he can make it work, then there's good reason to believe that others can make it work as well."

DUDLEY: So you tested on the cable system in Wilkes‑Barre, Pennsylvania?

HOROWITZ: Yeah.

DUDLEY: How did you distribute, then? How did you build system connections and subscribers?

HOROWITZ: The original concept of HBO was really that HBO was going to be a regional service that would be delivered to cable systems in kind of the northeast corridor. We were using terrestrial microwave links to get from our origination center in Manhattan through New York State, down going west from Albany through New York State and down into Pennsylvania, ultimately somehow it was routed through Philadelphia. I don't remember the exact routing. But we may have an old Eastern Microwave map that we can send out here.

The concept of bicycling tapes was very expensive, A, for the tape; B, for the origination in cable systems. And most cable systems weren't large enough to support an origination center with manpower that goes along with that. So someone said, "Since bicycling tapes was so expensive, then we needed to rely on a central origination center. And we need to have the efficiencies and economics that come along with regionalization." The interconnect between one cable system and the other was this Eastern Microwave system. That's how we started HBO.

DUDLEY: Pay cable. Pay‑per‑view cable. Basic cable. Would you give us your definitions of those because I'm sure we're going to touch on them as we go through the rest of the conversation?

HOROWITZ: All right. Pay cable is a monthly subscription service in which the consumer is paying a monthly subscription fee for a channel of programming that has been pre‑packaged for him. There's one fee to watch one month of that channel.

Pay‑per‑view is when the consumer is given the choice on a program‑by‑program basis as to whether he wants to watch that program or not. If he chooses to watch, he pays for that program on an individual basis.

Basic cable is essentially an antenna service that cable came into existence for. That is, to receive the local off‑air signals, to some extent some distance signals, package them as a multiple channel offering, transmit that down the cable, and offer that multiple channel offering to the consumer for a fee.

Tiering is the division of these multiple channel offerings into various levels of packaging. For example, one may have a local off‑the‑air tier, which is composed of all the stations that are located in a general vicinity of the cable system that are picked up off the air and sold for $6 a month. There may be a tier on top of that composed of advertiser supported, satellite‑delivered services, such as ESPN, MTV, TBS, USA Network. They'd be sold for an additional fee.

Subscription television, or pay TV, is one channel, a la HBO, Showtime, Movie Channel, Playboy, or Disney, that's sold on a monthly subscription basis. And then pay‑per‑view is, obviously, a single event per fee.

DUDLEY: I'm going to say at this point that we would reference listeners to the lecture tape because it has a very good description of the technical system used to originate and distribute. But just for this tape, could you walk us through that from your origination point in New York through the reception in the home?

HOROWITZ: We have an origination center where literally all of our movies, sporting events, or pre‑packaged sporting events, and special programs are loaded on to tape machines and played down one right after the other. The feed is constructed in Hauppauge, Long Island, at our broadcast center. At that same facility we have a ground‑to‑space uplink antenna that allows us to communicate directly to the satellite from the origination center. All of our channel feeds, and HBO has got two feeds; it's got an east coast feed and a west coast feed, time‑zone sensitive, as does Cinemax, as does USA Network. The signals are then beamed up to the satellite, which is essentially an amplifier in the sky. That's all it is. It's a tube. Put a signal in from the ground; it amplifies it; turns it back, re‑transmits it back to earth.

The satellites we're using for our primary cable distribution are RCA, SatCom 3R, Hughes Galaxy 1, and now RCA KU1. HBO is in the process through a joint venture we created with RCA to build a satellite designated RCA K3. The joint venture's name is Crimson Satellite Associates. That's the next generation.

The signals, then, are re‑broadcast by satellite to the ground where an earth station is placed that can pick up, that can physically see the line of sight between ground to space. Signals are then picked up, combined in the headend processing room at the cable system with other signals that are received by satellite or off‑the‑air, multiplexed together, and sent down the main cable trunk lines to get to the street closest to the consumer, then down through subsidiary feeder lines directly to the consumer's home.

DUDLEY: Today you used a graphic that drew a comparison between the hotel, the cable system, and the home as receiving sites. This was related to scrambling. I want to talk a bit about the television‑receive‑only dishes at homes and scrambling.

HOROWITZ: The original concept of scrambling is to protect the rights of our program suppliers, as well as to add a little more control to our own delivery service as related to our own affiliates. Prior to scrambling, we essentially had no control as to whether a person could watch us or not. If he had not been authorized by us to sell our programming, he could still pick it up.

If a person or cable operator didn't pay his bill, we had no way of shutting him down. We essentially did not have control over our own signal destiny. One reason to scramble was to get that control. The scrambling system is addressable to individual decoder units, so that if a cable operator who has HBO in his service offering to the consumer, does not pay us our bill, we now can shut him down.

Our receivables have gone from 90 days to under 50 as a result of this. We picked up about 250 additional Cinemax affiliates, cable companies that had been testing Cinemax on their own and without letting us know that. And, more significantly, 600,000 hotel rooms.

DUDLEY: Much of the trade and general press seems to have addressed the scrambling issue related to the backyard dish owners, but you are saying that by protecting your product, you are also able to pick up additional revenue from your traditional clients.

HOROWITZ: That's right. When we first started looking at scrambling it was really in 1981. When I first started the concept was May of 1981, about a year after I got to my present job. At that time there were only about 200 thousand earth stations in consumer backyards. It looked like it was going to grow but it was nothing on the order of the million and a half that are presently installed. I saw that as a potential threat to our business. But the basic premise and the original funding was received by the company for the protection of the program rights of our suppliers and our ability to regain control of our signal destiny. It took three years to develop the system and finally roll it out. During the course of that three years, the backyard dish market was growing very, very rapidly. By the time we actually flipped the switch to turn on the scrambling system, there was about 1.5 million backyard dishes installed. We then said, "All right. Here are people that have had the longest preview in history of HBO. If anyone is going to buy our programming, it's them. Particularly if they watched often and they like it. Let's not ignore them. And let's see if we can harness the technology." Which is what we are doing.

DUDLEY: Could we talk more about the cost to a backyard‑dish owner, and then I don't think we need to dwell on this too much longer. The dish owner made his own decision to buy a dish.

HOROWITZ: That's correct. He tended to make a three to five thousand dollar decision to buy his dish.

DUDLEY: The cable viewer pays an installation fee and then pays a monthly fee. Is it a correct analogy, then, to say that about the only difference between the TVRO owner is that they've got to buy the decoder and they'll pay a monthly fee the same way as a cable viewer would?

HOROWITZ: We're really in the very early stages of the direct‑to‑the‑consumer‑by‑satellite business, so right now, if you recall, in the very early days of cable, if a consumer wanted cable, he had to pay for running that cable to his house and a very hefty installation fee. So if you want an analogy, in the 1950s if you wanted cable, you paid $115 or $120 or more for the right to pay five dollars a month. Now, you add inflation and all those things on top of the 1950 cost versus 1980, and I suspect you would find the investment is very similar. The backyard dish person has paid three thousand for his dish for the right to pay HBO for its monthly product.

DUDLEY: Again, we'll reference the lecture tape that has a very good visual presentation about the organization of HBO within Time. Would you take a few minutes to sketch that out for us as far as the program services within HBO and some of the joint ventures that you have?

HOROWITZ: HBO has three, 100 percent owned services. One is called Home Box Office, that's HBO Service, Inc. We have Cinemax, which is another pay subscription service. And we are test marketing a third subscription pay service called Festival that is geared toward an older audience and kind of a tryer/rejector of HBO and Cinemax. HBO and Cinemax does have broad appeal programming but it does contain R‑rated product and there's some objection by a percentage of consumers to the language and the nudity. Festival is designed not so much to be subscribed to by the HBO and Cinemax customer, but, rather, by the customer who does not have any pay services.

We have a one‑third interest in two advertiser supported services. One broad based called USA Network, where our partners are Paramount and Universal Studios, and one‑third interest in Black Entertainment Television, which is a more narrow casting advertiser supported service, where our partners are TeleCommunications, Inc., and Taft Broadcasting.

DUDLEY: Advertiser‑supported services, then, compare to commercial broadcasters because somebody else, the advertiser, is paying the bill. What's your obligation to the pay viewer? Do you have to pay more attention to the wants of that individual?

HOROWITZ: Yeah. I think one of the beauties about pay television that we enjoy versus the normal commercial broadcaster is that we have a very close relationship with our consumer; he speaks to us month‑by‑month, in that if he doesn't like what he has seen in the previous month, he does not pay his bill. It's almost like a perfect survey because we have to survey 100 percent of our customer base every month in order to collect. Unlike the commercial networks, in which they sample 1,700 homes and there are trends to indicate what programs make it or don't, the basis on which a program is left on a network is as much left up to the advertiser as it is up to the consumer. In our case, it's the consumer speaking directly to us.

DUDLEY: That's kind of an on/off situation. If they don't pay the bill, they get cut off. What other kind of audience research do you do to find out what an unserved audience wants and why that subscriber may have stopped paying for the service?

HOROWITZ: One of the realizations that we came to three years ago is that we really are in the package goods business, in that just like a soap manufacturer, the keys are shelf space and filling the need of what the consumer perceives for a particular product. Sometimes you can fill the need by re‑packaging.

If you look at HBO, Cinemax, and Festival, the baseline product is the same; it's kind of the edges that are different. HBO has sports; Cinemax has more avant‑garde programming. Max Headroom is trendy; it's alive; it's funky; it's not a broadbased appeal service that may appeal to 19 million Americans. Festival is the same baseline movies, however, there's no R‑rated product in there. The specials, you won't find a Robin Williams special or a Redd Foxx special on Festival; you will find Bette Midler, you will find Barbra Streisand. So taking a packaged goods approach, we are going out and saying, "What else, consumer, do you want?"

We're constantly going out to the consumer base and saying, "What do you want us to do to improve the services we have? Or is there something we are not doing that you would like us to put together?" What the consumer has said quite vocally is, at least a large portion has said, is, "We like the movies. We don't like the nudity and we don't like the language. Give us a product without it." And that's what we have done.

DUDLEY: Do you do that kind of testing through the cable systems or do you do it by going directly to the consumer market?

HOROWITZ: To ascertain the need for the creation of a product, we do that directly with the consumer. Once we determine that there is a desire that the consumer has, we can construct product that we think will fit the desire of the consumer. And it's a product that has to last for years, unlike magazines. Some of these topical magazines come out every couple of months; we are on 24 hours a day, seven days a week. It's one thing to have a concept. It's another thing to have enough staying power to last for a few years. We do all our testing of the product by the cable system to the consumer, and in partnership with the cable operator.

DUDLEY: Continuing with programming. Could you talk with us now about rearrangement of tiers? Clustering programs? Changing where various services appear on the VHF and the UHF dial?

HOROWITZ: January 1, 1987, is a watershed day for the cable industry. It's the first day that their rates are totally de‑regulated as the result of the 1984 Cable Act. In anticipation of, I'll say, raising rates because it's literally based on raising rates to the consumer, a lot of cable systems have been standardizing their tiers and clustering programs in their general offering to the consumer. If you look at the business and how it has evolved over the last few years under a regulated environment for cable rates, you will note that there are a certain percentage of subscribers who have a basic tier, maybe just off‑air. There's another percentage who have the basic tier plus the satellite tier. And then there's a third percentage that may have pay. In order to reduce your overall cost of running the system, what cable operators are going to be doing starting in January is probably cutting back the number of specialized tiers‑‑choices that the consumer has. In essence, develop a more uniform offering. So, the enhanced satellite tier may go away. Everybody's basic rate will go up. Everybody will get the satellite tier. I don't think there will be any programming taken away from anyone. But, instead, everybody will almost be forced to take more. I think that's what's going to happen.

Now, this other concept of taking channels and moving them around the dial. Taking channel 2, for example, CBS is on channel 2 in New York, and putting it up on channel 13 on the cable plant, I think is a mistake. CBS on channel 2 has spent millions of dollars creating in the consumer mind, that if they tune into channel 2, they can watch CBS. I really can't figure out the reason why any cable operator would fly in the face of what the broadcaster has attempted to do in creating a franchise between himself and the consumer. And I think it's a mistake.

DUDLEY: Clustering seems to be an argument made by cable systems for doing this: you try to put your arts and entertainment type programming, your movie type programming, together on adjacent channels. What's your personal opinion of that?

HOROWITZ: I think they almost want to drop in pay service in between two popular off‑air channels so that when the consumer flips through his dial, at least he's going to flip through HBO in order to get channel 2 or channel 4. If HBO's on channel 3, he'll go from CBS on 2, HBO on 3, to NBC on 4. I think that's going to cause more confusion to the consumer than a benefit. It's my belief that if a programmer has programming that is worthy of watching, the consumer will find it. If the cable operator does his job of being a good marketing company to the consumer, then he will create that franchise and make him aware that the product is on the cable system. Forcing the consumer through juggling and technology to watch programs is not going to endear the consumer to the cable operator.

DUDLEY: Again, with programming. Would you talk about the various kinds of windows, shared production costs, and marketing strategies that HBO has followed with developing new products?

HOROWITZ: Windows. Better define window. A window is, very simply, a period of time‑‑and I'll create the definition by an example. When a movie is created, it goes through a series of release cycles into different market segments, each portion of the cycle into a specific market segment called a window. So, for example, a movie is produced and released to the theater, it plays there exclusively. It's called a theatrical release; a theatrical period; a theatrical window.

Following the theatrical release, typically, today, is a VCR window wherein that movie, while it may continue to play in the theaters, is also now available to the consumer on video tape so that we can rent it in the video store.

Following the VCR window is the pay window, the subscription window in which, and that typically is 12 months after a picture has arrived in the theater for the first play, it goes to pay. There's probably a six‑ to 12‑month window when that product is available, sometimes in the theater, generally still in the VCR market, but now as part of a pay service as well. Following pay, the product may also go back into the theater for re‑release or it may go back into the VCR market for VCR release, again re‑release. That is not generally the rule. It's for blockbuster. "Return of the Jedi" is one example of that. "Star Wars" another. Really A‑rated, heavyweight movies.

Following the pay window, we have the broadcast window where the product is now available for transmission by one of the three major network stations. Following the broadcast release cycle, sometimes it comes back through pay. More typically it goes down into syndication in which it is available, generally, for playing on independent TV stations around the country, market by market as opposed to a network‑wide distribution. That's windows.

Now, overlaying these windows, it all sounds very nice and cut and dried but, there's a constant juggling in the negotiating process between the broadcaster, the pay programmers, and VCR distribution entities as to whose window comes first and how long should that window last. Then you add on to that a new technology, and I'll call pay‑per‑view, for the moment, a new technology‑‑that says when does pay‑per‑view get their window for display? Does it occur day and date with theatrical release? In other words, does it occur the same day, the same date the movie first hits the theater? Or is it day and date with the VCR market? Or is it day and date with pay? In the case of pay‑per‑view, obviously, it being day and date with pay TV doesn't serve much of a benefit, so pay‑per‑view tends to be available day and date with the VCR market.

DUDLEY: Talk a bit about VCR, which appeared to be the enemy, and now it appears that being cable friendly or VCR friendly is the name of the game.

HOROWITZ: VCR is still the enemy. VCR offers more choice and flexibility to the consumer in the home rather than just flipping through the channels and allowing him to tune in to HBO or other programming of the moment. It's not quite as big an enemy as we thought it would be though. Probably 60 percent of VCR use is for timeshifting programming. Another 20 percent is for watching movies that he may have produced at home. The last 20 percent is for rentals. And this, obviously, varies from home to home. The rental phenomenon, six months after the consumer gets his VCR, peaks out.

Whereas in the first six months, the consumer might be going out and renting six movies a month, we find out that after the honeymoon period he is sick and tired of going to the VCR store, finding the title not there or forgetting to bring back the tape and having to pay for another day. And he goes back into the more traditional viewing habit. The VCR, then, serves to function really as a timeshifter. VCR penetrations are going up, growing, will continue to grow.

There is, obviously, a percentage of the market that does not feel they need to subscribe to pay TV because they have another place to go to get their movies. They don't want to watch 80 movies a month. They just want to watch two. And that last segment, which is, obviously, the most profitable segment, the last customer coming on is the most profitable customer, is harder to get.

DUDLEY: Let's jump on to technology. Where are we going with technology in cable TV or in telecommunications, particularly video?

HOROWITZ: Cable went through a channel‑expansion mode in the 80s, and I think that 55‑channel capability is really state of the art today. I think that's enough. The challenge that the cable operators face today is the ability to broadcast stereo down his cable system, and he has got to be able to broadcast stereo.

The other phenomenon he has to watch out for is that the consumer devices being placed in the home are not very friendly to the way he, the cable operator, has chosen to secure his programming on the cable band. As a result, if you have a signal that's scrambled on a cable, and the consumer has a VCR, it's very hard for the consumer to watch two scrambled pictures simultaneously. In other words, tape one while watching another. In order to do that, he has to have two boxes, doubling the cost to the cable operator of the capital that goes into the house, typically without increasing the consumer's cost a lot. Maybe it's another outlet for a buck or two more, but it certainly doesn't cover the cost of the decoder.

I think one challenge the cable industry has is to become more consumer friendly. The NCTA engineering committee and the EIA have been working for three years to come up with a standard interface plug that would go on the back of new TV sets. I applaud the effort. I think it's a little bit too late. There are unbelievably installed base TV sets out there today. It takes 30 years to change out an installed base, really. Number two, not every manufacturer has signed up to put that little plug on the back of the set.

So, I think the challenge that the cable operator has, is to see if he can't come up with an off‑premise security. Off‑premise doesn't necessarily have to be out of the house, but kind of take the security away from the back of the set. Allow the programs to be fed into the households secured, but once they get in the house, decode it altogether. To some extent, I think if we take a look at what AT&T, The Bell Companies, have done, we can learn a lot. They are responsible for getting the signal inside the house. The consumer is responsible for picking it up on the inside of the house and putting it on wiring in his house and having his own telephone. The cable operator should demand from manufacturers' security systems, a system that would allow them to decapitalize the investment they have in the house, recognizing that the consumer has so many different devices.

To some extent, and I'm getting back to a question you raised earlier, the standardization of tiering, that is, reducing the number of tiers that are available in a cable system, for instance, raising everybody's rates, taking one uniform tier across the cable system will provide a good basis by which you can now put this equipment in the house. Decapitalize the sophisticated equipment that was necessary to support those different tiers. You can remove that equipment, and simplify signal delivery.

DUDLEY: So, that the different arrangement of tiering as well as the off‑premises decoder and scrambling, might be able to increase the subscription base because the multiple family dwelling, for instance, doesn't have to have a decoder in every unit. High transient areas, I would say, frequently don't want to invest in a decoder. The cable operator has an investment to consider also, the tenant changing. Will he get his decoder back?

HOROWITZ: That's true. I think, in addition, the cable operator has to look at the ways that he wires his plant. Traditionally, obviously, it has been trunk and feeder.

End of Tape 1, Side A

Editors Note: There is a brief gap here because the interview started before the tape leader on Side B had passed the head. Mr. Horowitz has made a statement about the design of a telephone switching system and how that might be related to cable systems.

DUDLEY: Would you explain that?

HOROWITZ: Switched star is where you have, essentially, point to point communication. I call you up. My voice goes through a switching center, goes down a line that is dedicated to you. The cable system utilizes a point to mass distribution architecture, which has a head end. And I'm not suggesting that we need to change the architecture of the basic cable system overnight. I think one place where one can test the concept is in a multiple‑dwelling unit. For example, you are correct in saying that the turnover in apartment houses is significantly higher than in private homes. Quite often the last thing that gets packed in the box when the consumer moves out is the cable converter. Away it goes, and there is, obviously, no forwarding address.

I think that if one would design the in‑house distribution inside an apartment house to be on switched star basis, in other words, each apartment is individually addressed first from a central location and has a dedicated wire going to it, one can accomplish two things. One, is you decapitalize your investment in the apartment. And, two is you can attach to any number of devices that that person has in his apartment. That's in its most simple form, but there is no reason why you couldn't add a little bit of intelligence. Have some multiplexing, if you will, of apartments one to another. Have a little bit of intelligence as an A/B switch, if you will, inside the apartment so you don't have to run one wire to each apartment.

DUDLEY: I'd like to jump ahead and have you follow up on installation, particularly as it relates to the training of people who are involved in system design, and technical installation for the local cable company. It used to be that you'd run the RG 59 into the home, hook it up to a 300 ohm connection, and hook it up on the back of a TV set. Obviously, that's not the case now and will not be the case in the future.

HOROWITZ: I think it's going to be the case in the near future. I think systems that have been built in urban areas have to be a lot tighter to the overall maintenance and the manner in which an installation is put in. I may be missing the point of the question a bit here.

DUDLEY: One of the biggest concerns that people who are operating cable systems now are telling us about their technical installers is that they are not up‑to‑date on how you connect the VCR, the video disc, the addressable system; what is stereo doing to the system; what if you have multiple sets?

HOROWITZ: OK. There is a challenge. The cable industry has a challenge. An enormous challenge. And it's in two areas. One is the technical sophistication of the installer, which I think is the initial question. And the other is the consumer representative, which we can talk about if you like.

The technical installer used to be able to go into the house, cut out the twin lead that was in the house, replace it with a piece of coax, zap on a matching transformer, and leave. The only thing he was attaching was a TV set. That was in the early days. Right up until 1975.

When pay TV came along, there was a need to have some kind of security inside the system, on the system. And that took the form of external traps on the pole, whether it be a positive trap or a negative trap. Or a scrambled signal on the system itself; that meant you needed to have a converter, converter/decoder. Made the installation a little more critical because in addition to having good quality signal coming in to the decoder, you had two more connectors to depend upon. One coming out of the decoder and one coming into the TV set.

Particularly, the early versions of those units were rather sensitive to the incoming signal level, which meant that your plant maintenance had to be improved significantly. So you now have an improvement in plant maintenance that was necessary. You have a more sophisticated delivery system into the house.

Along comes the VCR. And along comes remote control. The consumer goes out to the TV store and buys a $500 TV set where the last $100 was for remote control. He brings the TV set in the house. The first thing the cable operator tells him is he can't use his $100 remote control he just bought. So he's pretty ticked off. The cable installer, who is the one who generally delivers the message that he can't use his remote control, has to be consumer friendly. So, now, he's not only the installer but he has to be a customer representative. Traditionally he is not. He has to be trained. Couple that with the VCR, and you have now a couple of remote controls plus sometimes the cable converter had a remote control. You've got three remote controls in the house. Each device having to be linked one to the other. There's really no standard way of linking a decoder installation with all kinds of VCR installations, with all kinds of TV sets.

So, I think, if anything has to happen, it has to be a training of the technicians. They have to be almost a designer, a custom designer. Saying, "OK, I recognize there are different devices in the house. Let me design the system so that it will work well." And it's an incompatible system to start with.

DUDLEY: Some of the members of our education and training committee of the Museum have indicated that the cable industry has not met what should be its obligation for years: to become very active in the development of new products and in the development of new technology. That it's been pretty much left up to the equipment manufacturers. Do you have a point of view about that?

HOROWITZ: I blame the equipment manufacturers as much as I blame the cable operators. In fact, I blame the equipment manufacturers more than I blame the cable operators. There's no one cable operator, even today, and TCI is a major player in this business, that is large enough, that if they bought a single piece of equipment ...how many units can it buy? Three million. If they bought a box for every TCI subscriber, that's 3 million, maybe 4 million units.

That sounds like a lot in our small industry, but when the manufacturer looks at developing a new converter, what is he looking at in terms of his market opportunity? He's looking at an installed base of 40 million subscribers, and he's hoping to get 10 or 15 million boxes sold into the universe. Jerrold is number one, I think they have a 50 percent share. And I think Jerrold is saying to itself, "Hey, I have a leverage. I have a power. I can design the box. And I don't really care what John Malone says or not. There's no one else in the business who's developing anything much more sophisticated than I do, and he doesn't have significant market power. I could not get the John Malone order and still get a very good business." That's the attitude I see.

I believe there has to be a marriage between ‑‑ again, I'm going back to the AT&T scenario, Bell operating companies scenario; I think there has to be a device developed that is very high security, that can be sold to the consumer just like a TV set is sold, and that the level of sophistication necessary to basically develop a box that doesn't work unless it is authorized, requires cooperation to the extent that the industry has never done before. That cooperation is, for example, the industry, to accept a universal addressing scheme, the universal data access scheme, so that when a consumer goes out and he buys this piece of equipment and brings it into the home in city A and then moves to city B, the piece of equipment will still work. Just like his TV set will.

I see no movement by either the cable operators or the manufacturers to do this. As a result, you've got cable unfriendly installations.

DUDLEY: If you were addressing a group of young people about what they should do as part of their educational process to function well in the telecommunications industries, what kinds of things would you tell them about? Type of education to take, the mix of courses, social conscience, ethics? What would you tell them about internships?

HOROWITZ: To survive in the telecommunications field, one needs to have a technical baseline of information. So you have to at least take some courses that familiarize you with the jargon and how a particular box works. You don't have to know what goes on inside the black box. You don't have to know that an amplifier has 18 transistors and three power amplifiers. All you need to know is that you put a signal in here, and something happens on the outside. I think there is a level of technical understanding that is fundamental for the student to have in order to understand the basic concept of how the technology of a particular distribution system works. That's one piece.

Second is, particularly in telecommunications, there should be an understanding of the regulatory environment. Who regulates your business? What happened in their decisions of late. For example, the HBO decision in 1977 or '76, landmark decision by the Supreme Court that said movies of more than three years or less than ten years are now available for sale on tape. Understanding that there were restrictions on the product in the past. Understanding the first sale doctrine, the first amendment implications on cross ownership on distance signal carriage and copyright. All those dynamics come into play when you try to understand how this business works and who regulates what. So I think the second area is regulation.

Third is dealing with the customer, on various levels. Cable or telecommunications is a service business. Not a manufacturing business. As such, marketing is extremely important. The cable industry needs to escalate its sophistication in marketing almost to infinity. It really is so fundamentally lacking in its sophistication of marketing. A person who comes to the industry with an understanding of the concepts of technology and the concepts of the regulatory environment and a super education in marketing is going to have it made, in my opinion.

Followed by just a basic business understanding. How do you run an efficient shop? How do you create an organization that provides good responsive service to the consumer that's being done efficiently? So there's office administration and good economics and controls applied. Within that office administration, there's organizational skills, there are financial skills required in running a day‑to‑day operation. How do you keep cost control, basically?

DUDLEY: What about labor negotiations and affirmative action?

HOROWITZ: I don't think our industry is unique in the need to pay attention to those two areas. Typically, we are a non‑unionized industry. I know there are some organizations that are unionized. I think that if you pay attention to administration and to managerial philosophy, you treat people fairly, you'll be treated fairly. If you have that basic philosophy of life, then I don't think you will be dealing with an organized situation. And I don't see there being much of a movement, particularly now with the kind of swing of the pendulum away from organized labor forces. I don't see that as being an issue in the near future.

Affirmative action. There's no question that this is an industry where affirmative action is one of the lowest priorities that the industry has paid attention to. Interestingly enough, the cable industry does not have many women or minorities, in the cable operator industry. Programmers, on the other hand, have done a lot better job. HBO is 53 percent women, and in minorities, I think we are 26‑27 percent women. We represented a newer field. I think the cable operator has to pay attention to this issue. He has not done a very good job to date. I don't think you can manage a better cable system by paying attention to minorities. There's been no one putting a premium on it. I think that they will do just enough to stay out of being regulated, quite frankly.

DUDLEY: What's needed for continuing professional education? For those people already out there, either having been there for years or having newly arrived in the industry who maybe don't have all the kinds of skills that are needed. Do you have any preferences, any advice for them?

HOROWITZ: For those that have been there a while, I think that they need to go to school on how other communications systems work. I think that no one has a really good understanding of the power of computers. Look to computerization, not just to the administration of the systems, but the architecture of the systems, signal processing. I also think that we should look at the other fields of telecommunications and at their architecture. We've talked already about switched star versus trunk.

An area I've mentioned a few times this afternoon is marketing. If there is anyone who has got to go back to school, it's the cable operator as to how to market. Package‑good marketing. Now, for a person who is thinking of switching fields from another service industry, essentially if he takes a few courses that are geared toward understanding the concept of how the system works from point A to point B, couple that with the marketing aspect of it. Probably that's all it will take. Not a lot. Cable is not a very complicated business. It is not as unique as we might like to believe it is. It's basically very simple. Provide good quality product at a reasonable price, answer the phone when it rings, and be polite to the customer. And you'll be the most successful cable operator in the country.

DUDLEY: Tell me about internships. Are they important to HBO? Is it something that every student who plans to work in the industry should have before they leave college?

HOROWITZ: I think that having an opportunity to dabble in an industry without having any accountability or responsibility is a wonderful concept. HBO has, typically, a summer intern program for graduate students. We don't typically just have undergraduate students in the intern program. We've got somewhere between 15 and 20 students each summer who come in on an internship basis. About half of those students are invited to stay once they graduate from graduate school. And about half of them do stay. We find that they stay for two to three years. It's a good first job. And then they leave and go and pursue another career.

So I think that's kind of a downside of giving a person his first job. The upside of giving a person his first job is that you know they've had an opportunity to look at you, and you have looked at them. And there's a decent marriage to be made. The downside is they, typically, go off and look to a two‑year job or for something else to do.

I think the number of internships available relative to the number of students seeking them is very small. They are very, very hard to get. It would be great if you can get it. But if you don't get it, don't ignore the field.

DUDLEY: What are your comments about must‑carry? The FCC someday is going to put something in print.

HOROWITZ: This is not one of my strengths, to tell you the truth. I have an opinion on must‑carry. I think the consumer, if there is an economic reason to have a program on there, it's because the consumer wants to see it, it should be on the system.

An issue I see coming up is a home shopping service, we'll use HSN as an example. Home Shopping Network has bought UHF stations around the country. Should they be carried on the cable system that doesn't want to carry HSN; they want to carry COMB as their shopping service category. I don't know.

DUDLEY: Are there any other areas that we've not touched on that you're particularly interested in talking about?

HOROWITZ: We haven't talked about High Definition. And we haven't talked about the fact that there is an opportunity for total system bypass by off‑shore companies. Japan, Inc., France, Inc., if you will. I just think the cable industry should take a look at its architecture, recognize that with the introduction of origination device in the house called the VCR and a continuing move to get more and more of these out there with greater and greater sophistication, that he is going to have to grow in quality and sophistication to compete with that new origination device in the house.

Whether that is a hi‑fi VCR that's competing with his monaural delivered audio coming in his cable system and which should be stereo. That's today's challenge. Tomorrow's challenge might be that the origination device in the house might be high definition quality capable, and the cable system might not be capable of passing high definition delivered signal. I think that's a challenge.

DUDLEY: We're talking about a technology that is not compatible in most ways with the current system configurations?

HOROWITZ: That's right. The technology would not be compatible with over‑the‑air transmission because its scan is limited. It's not compatible with most cable systems because it tends to be greater than 6 megahertz, in terms of its band width requirement. But one thing that I think people are misjudging is people saying no one will buy a high definition TV set to watch just high definition movies. High definition TV set has to be backward compatible. To date, no one has thought about this backward compatible issue. If you take a look at the design of a TV set today, the new generation of TV sets have a digital processing video front end that is capable of being software controlled.

Japan, Inc., has taken a global view of how a TV set should look. It says, "We want to make one TV set which has a programmable front end so it can play a SECAM, and NTSC, and PAL, or whatever the Russian standard is, without any modification other than you've got to make sure you put the plug in the right voltage." You can take that same digital processing technology that can work on the 11 standards around the world on TV and say, OK, if you see an incoming high definition TV picture from the source, any source, I submit that source will be a VCR in the house, you switch into a different aspect ratio mode. So you'll have a set in the house and then you'll have a different aspect ratio that may have a black bar in the left and the right when it gets the picture off the air. But when it gets the picture off the VCR that's high definition, it'll switch into the broad three by five aspect ratio. Cable operators have got to be able to compete with that. Not tomorrow. Not the day after tomorrow. But I'd say by the mid‑90s.

Also we haven't talked about the Telephone Company. Or fiber optics.

DUDLEY: There's an interesting thing. It's interesting to me that a system like State College, for instance, would go through a complete system re‑build, up to 36 channels, and I don't think there's one foot of fiber optics in that system.

HOROWITZ: Well, if you go to a switched star system configuration, the perfect vehicle and this is, actually, perfect for cable too; is a fiber because what today's fibers are capable of doing is running 15 miles sometimes, good quality fiber, without any amplification. If you look at an average cable system, I think that the typical modern systems don't go more than 15‑17 amps deep.

DUDLEY: That's not that far.

HOROWITZ: What's that? Eight, nine miles? So you say, "Well, if maybe instead of putting out a new coaxial cable, we just run a bundle of fibers to the house, one fiber there we have several hundred multiplexing signals; just run one fiber to each house, we could get rid of all amplification in the street and just have one major amplifier at the head end." You don't have any cross‑talk problems. Eliminate all your intermark problems. Don't have any radiation problems. Get it to the house, you need a terminal in the house. Got to be low cost, secure. The security is capable with fiber.

Who's going to develop that? Well, the traditional suppliers that we talked about before don't have an interest in developing it. Someone who's not in the business today will develop that. The fiber industry is going through an enormous wrenching right now. The growth curve they've experienced in the last five years, of 30 percent a year, is over. They are going to be looking at new places to grow. New places to grow could be cable, as easily as it could be Telco running fiber to the home. So I think if cable operators would just test somewhere how fiber could be used compatibly with this new cable system or with re‑building a cable system, I think he might be surprised at how good the quality result is. We know where the competition is. You have Southern Bell. It's building a 1,300‑home test fiber project in the Orlando, Florida area. Cable is trying to get into that same project. What is Telco delivering? Voice, data, video over one fiber to that house. I think that could be a threat.

DUDLEY: Do you want to talk more about the telephone companies?

HOROWITZ: I think the phone companies will be in our business before we know it. The only thing that stands in the way of the phone companies being in our business, or not being in our business is regulation. The phone companies have been lobbying since the day after they were broken up to get out from under all the rules that they agreed to at the point of breakup. First step will be moving jurisdiction away from Judge Green and putting it into a regulatory agency where they have had years of time to lobby. Namely the FCC. Telco and broadcasting communities are very, very powerful within the FCC and can influence what happens there. Ten years to them is one day. In the history of cable, it's like forever. With a phone company if it takes one year, two years, five years, ten years, it doesn't matter. They'll nibble away at the regulation.

DUDLEY: When you were talking about cable not having friends in Washington, I guess you're also saying that telephone companies do.

HOROWITZ: Yes, I think phone companies do.

DUDLEY: For the coming few years, when they start on that ten‑year project, they have the friendship. They've got the contacts. And the capitalization.

HOROWITZ: They certainly have the capitalization. The telephone companies can always say to the regulatory constituencies, "If you let us go into this new business, we will lower rates." When was the last time a cable operator went into a new business and lowered his rates?

DUDLEY: Good point to stop. Thank you very much Mr. Horowitz.

HOROWITZ: My pleasure.

End of Tape 1, Side B

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Ben Hooks

Ben Hooks

Interview Date: Friday April 26, 2002
Interview Location: Denver, CO
Interviewer: Jim Keller
Collection: Hauser Collection

KELLER: This is the oral history of Bennett "Ben" W. Hooks, Jr., partner and CEO of Buford Cable Television, Inc., or Buford Television, Inc.?

HOOKS: Buford Media Group.

KELLER: Buford Media Group of Tyler, Texas, thanks Ben. Ben is a cable television pioneer and serves on many boards, most of which we will discuss in this interview. The date is April 26, 2002. We're at The Cable Center in Denver, Colorado. Ben, tell us a little bit about your background before you got into cable.

HOOKS: I come from a military family. My grandfather was a Naval Academy graduate, served in the military for his career. My father was a Naval Academy graduate. My father was killed when I was 8 years old; he was a test pilot and died in active duty. We settled in a town called Coronado, California. My sister... at that time, I was 8, my sister was 3 months. My mother is still living there and has remained a widow ever since. I grew up sailing. Coronado is a great place to learn how to sail and I stayed with that all my life. After graduating from high school I went to the Palm Spring/Palm Desert area. The first year I attended College of the Desert, it's a junior college.

KELLER: Didn't want the Academy, huh?

HOOKS: Didn't want the Academy, which that was a challenge in my family because that seemed to be the way of life that everybody understood, so I kind of broke away from the trend. I really couldn't find my way. After about a year I just needed to buckle down and feel myself and go to work, and I walked into the cable company, which was then Cachella Valley Television.

KELLER: Owned by whom?

HOOKS: Owned by Palmer Broadcasting.

KELLER: Out of Des Moines.

HOOKS: I was thinking... yeah, I guess they were.

KELLER: Dr. Palmer, a chiropractor owned it.

HOOKS: Yeah, and they owned properties in Florida, that's correct. But walked in off the street and needed a job. The office was in Palm Desert, California. They hired me.

KELLER: To do what?

HOOKS: To do just about anything. I was officially an installer, but I found out installers dug ditches, they climbed poles, they put up cable, they did construction, and they did a little bit of everything. That was an experience because here I spent most of my childhood in an area that the temperature ranged – what? – about ten or twenty degrees a year and I found out what it was really like to be hot in the summer. I have to say that was probably one of the driving forces to work my way out of the technical line of work.

KELLER: How did you get from Coronado down to the desert – from the ocean to the desert?

HOOKS: You know, I can't really remember. I just seemed like a neat place to go. Palm Springs sounded exciting. I'd say at that age I wasn't a very responsible individual. I didn't know what I wanted to do and so I thought I'll knock around in school for a year and see how it goes, and really just played that year. I can't say I was accomplishing much at all in my life, but I'd learned I had to feed myself, I had to have some responsibility, so that's really all that started me. Bill Daniels had a management contract with Palmer at that time, so I've always considered myself working for Daniels because they were the group that hired me. Some of my first experiences that I remember as I developed and grew in the business and became a technician was the experience I had in working with open wire, which is an experience. It basically was a technology that you could deliver signal down but it radiated as much signal out as it did allow signal to come in, but when you looked at those days in the Palm Desert area, there was absolutely no television available.

KELLER: What year was this?

HOOKS: 19... let's see, I started in September of 1967. The signal that you picked up was off the mountain range. In other words, Palm Springs and Palm Desert and all that was down in the valley and off the mountaintops we picked up the San Diego and LA stations.

KELLER: Any kind of image at all was a television picture to people in the valley.

HOOKS: That's right, that's right. There was nothing local so we had, I guess we had about 12 channels of microwave, basically, that was picked up off the hill off of antennas and then shot down the valley to several headends.

KELLER: They were picking up the LA signals, was that it?

HOOKS: LA and San Diego. Cachella Valley Television served the communities – I probably won't remember all of them – but everything from Rancho Mirage, Cathedral City, Palm Desert, La Quinta, Indio, Cachella, Indian Wells, all those communities – kind of south of Palm Springs all the way down. It was an interesting time. I remember as techs you kind of worked day and night just keeping the signal going down that cable plant. In those days, like I said, I experienced the use of open wire, some tube equipment...

KELLER: Were you still maintaining open wire or were you replacing it at that time?

HOOKS: You know, when I left, or Daniels had transferred me out, right at the end of '71, beginning of '72... yeah, I think right at the first of '72, we were still maintaining a lot of open wire up in La Quinta and that area. That was an experience. Actually, open wire worked quite well on the low band, or 2-6, but channels 7-12 were an experience. It reminded me you could literally go a mile down open wire and channels 2-6 never lost any signal hardly, but 7-12 would disappear.

KELLER: Unless a cow got in the way or something else.

HOOKS: That's right. Well, you know, I get to thinking about that, some of my favorite times is a customer would call and have bad pictures and of course you always had electrical interference, it picked up anything, but every once in a while you'd get really snowy pictures and you'd look out the window of the house and you'd see all these birds all over the wire. Well, you'd get up and chase the birds all off and make sure the picture was all right and then you got out of there as quick as you could.

KELLER: Before the birds came back down.

HOOKS: But we did everything from water poles to get better grounding where you wouldn't have so much electrical interference. I remember wherever you went through trees, if there was ever a wind storm, open wire was too basic copper wires that had little spacers between them holding them apart.

KELLER: Insulators between them. If you were experiencing all that, and by this time coaxial cable was in general use throughout the country, why weren't you replacing it?

HOOKS: Well, it was. It was being replaced, but I think when I look back on those days, some of what we were replacing was kind of the old... was it 204? It reminded me of a large drop cable for distribution, and that kind of cable was in the more dense areas of the systems at that time and just the focus at that time was to replace that cable first. Where the open wire was was obviously in the less dense populated areas, so it was just a matter of timing, but I had operated a portion of that until I left in, like I said, 1972.

KELLER: And you were on the technical side?

HOOKS: When I left in '72, I was their technical supervisor at that point. You know, another thing that was interesting then, and I guess we could check it, but as I understood it – and that was about '68 or '69 – Daniels prided that facility as having the first full-blown color studio in operation in the industry.

KELLER: I seem to remember that's probably true.

HOOKS: And it was quite a facility.

KELLER: In '67?

HOOKS: I was thinking it might have been '68 that that was up and running.

KELLER: It could have been. There were many other studios, but whether they were all full color, I'm not sure.

HOOKS: And it served probably 50% of the subscriber base at that time. You know, and really that system in its day, that group of systems – it was really three of them – was a pretty large cluster of systems for the day. I bet there was 20,000 subs.

KELLER: Is that what you had? 20,000?

HOOKS: I think approximately, yeah, it was 20,000 subscribers, which was pretty good size.

KELLER: A very good size in the mid-60s, yes. How long did you stay? You said until '71-'72?

HOOKS: Yeah, I think I left right at the beginning of '72 so I'd been there about five years. What happened is Daniels' contractual arrangements had expired and upper management left probably five-six months before I did.

KELLER: This was '68?

HOOKS: No, this would have been in '71 they left, and at that time Bill had put together the funding to buy Waco, Texas, Temple and Belton Texas and then – upper management had left – called me and said, "Would you stay with us and come with us?" So there was probably a four to six month gap, I can't remember.

KELLER: Who was the manager in Palm Desert and Palm Springs?

HOOKS: Keith Bircham.

KELLER: Keith Bircham – he followed me in Barstow.

HOOKS: Yeah, and he stayed with Daniels, I'm going to say until around '80?

KELLER: Hmm, I don't know about that, but I don't know. I lost track of him.

HOOKS: But anyway, they called me and wanted me to be in charge of rebuilding Waco and I said, "Okay," so my wife of about... well, she would have been about 4-5 months pregnant and myself, we all got in the car and drove to Texas, which I thought we'd never get there, especially when we hit Texas and El Paso, and actually I was only in Waco probably 8-9 months and during that time I started rebuilding the systems, primarily the trunks, and these systems were bought from AMECO – and those that might remember AMECO, Bruce Merrill – bought those systems from him. The trunks really needed rebuilding and I started replacing them with Cascade, a company out of Canada.

KELLER: Canada, right. Vancouver.

HOOKS: And probably the most exciting part of that, and I'm sure others had used that application, but we completely activated the return portion of the system and the purpose of activating that was to put in status monitoring, and there was a measurement device at our headend, which was where our office was as well, and it would measure the... give you an active level of what that amplifier was doing – anywhere from it wasn't functioning to it was off some. Well, what we quickly found out... the best experience we had was the day I activated it and the worst experience we had was trying to keep it going.

KELLER: It never did work.

HOOKS: No, it never did work very well, but it worked one day, maybe a week.

KELLER: That's more than it worked in San Francisco.

HOOKS: And then you were working more on that than you were the rest of the plant. But about nine months later, Daniels asked me to go – I guess I was the plant manager or chief tech – asked me to go to the Killeen, Texas area that served Copper's Cove, Harker Heights, that area, which is where Ft. Hood – you know, one of the largest military bases in the world – is, in the free world, anyway. They asked me to go there and that was bought... I was trying to think of that earlier this morning – it was bought from a local telephone company and I cannot for the life of me remember the name of it, but what a mess! That truly was the biggest mess I got involved with. The telephone company had literally run distribution down one side of the street in a back easement and the people on the other side of the street would have a drop just hundreds of feet long.

KELLER: Crossing the street?

HOOKS: Crossing the street, going everywhere you can think of to serve these people, and it was common knowledge that if you were one near a trunk you got pretty good pictures, or if you were on the right side of the street you got pretty good pictures. The rest of the folks, if they did elect to subscribe, were happy to have audio because that's about all you could get. Anyway, I was asked to go down there...

KELLER: And where was this again?

HOOKS: This is in Killeen, Texas.

KELLER: Killeen, okay.

HOOKS: K-I-L-L-E-E-N. Yeah, Killeen, Texas. But it was one of those things you couldn't do anything but make things better and we just got anything we could to put up just to get an adequate signal around. It was get cable from anywhere, we got used equipment from Waco from the rebuild, got just anything we could get our hands on to get this operation up and running, and it was amazing within... and I was there 8-9 months... within that 8 or 9 months we were just heroes in that community. We actually got signal throughout the system. I mean, it might have been ten line extenders in a row, but we really had amplification all the way through and we were at that time really considered heroes. And then in '73, about mid-'73, Daniels wanted to send me to their Temple and Belton systems and manage those.

KELLER: So you've become almost a permanent Texas by this time, huh?

HOOKS: By now, yeah, you're right. I became a Texas transplant. So in 1973 I must have been 26, I guess, 25, 26 years old. I started managing the system...

KELLER: This is where you made the transition into management, is that right?

HOOKS: Management, yes. In fact, I took it from the advice of an engineer that had been with Daniels forever, and his name was Jenkins, and he just said, "Ben, you've done a great job but I just think you're going to excel more in management. I think you ought to consider it and I know the guys are going to talk to you." It was Chuck Jenkins, that's right, and I'd worked for him all those years. I followed him from Palm Desert to Waco to Killeen to... and he was really their corporate engineer, but I basically worked for him all that time. So I took the step with the understanding that if I couldn't make it they'd let me have my old job back. So they said no problem, so anyway, I jumped into it and I quickly found out that the real key to being good at management is realizing everybody knows more than you do about what's going on and to create a team environment, really praise the folks and work with folks. So it was my first experience with really realizing that your accomplishments are based on the people that are around you than so much what you did yourself. So, it was a great learning experience, and I was there from '73 to somewhere around the end of '79, so about six years. During that time we had a lot of great experiences. I remember we started Channel 12 Theater, which was we bought various old, classic movies, westerns, all that, and around the clock on Channel 12 off of ¾ inch machines we ran Channel 12 Theater and did it ourselves, no commercial interruptions. It was kind of our first form, although it was part of the basic package, it was kind of the first step to kind of a premium service that we didn't charge extra for, although it sure helped on raising our basic rates. Then we went, and I'm thinking this must have been mid-70s, we went to what we called Showcase 1 & 2, which was our first step into pay television, and there again, Daniels corporate offices would buy the rights to various programs and then via tapes we showed two levels of pay service, one a little more R-rated, one more G-rated. I remember there was a Tocom box, a two-channel Tocom box and we'd send that signal and use this two-channel Tocom box. I would say those were the major things that we did then. Then in... that would have been '79, they asked me to plan on going to Ann Arbor, Michigan.

KELLER: Had you become involved in the Texas Association while you were down there?

HOOKS: No, I had not. I was very involved with the local community. A couple of things Bill always prided himself in was one, building beautiful offices, cable offices, because he thought that was a great statement, which it was, so I was there when they built beautiful cable offices, which Time Warner has that same office to this day in Temple. And Bill loved his people to get very involved in community activities. So that was part of my career, I was involved in the Chamber and all the local functions of the community, as well as, that was a period of time I think I mentioned to you earlier, my sailing career never stopped and during that jaunt...

KELLER: Not many places to sail in west Texas, though, is there?

HOOKS: Well, you know what? People forget that Texas I think has more manmade lakes than any state in the United States, so there are a lot of lakes. So you just adapt from going out on the ocean to lakes and I was actively racing during that period of time and I'd won the national championships twice, and I don't know if I mentioned to you, the first time I won Bill's all excited because Bill, you know, had a real passion for sports. And the second year I lost, and Bill apparently didn't understand that and wanted to understand why that was to be, so he soon found out from an associate of mine that really to win that kind of an event you have to have a new set of sails and here my set of sails were last year's but in that kind of competition you've really got to replace them and based on my budget I just couldn't go and replace a set of sails. So obviously Bill Daniels put a fix to that and I had a beautiful set of sails. All I can remember, that was the one race I really didn't enjoy because all I thought was if I lose this race Bill will fire me. Fortunately I won it hands down and it was a big event. It's probably the first and only national championship in this area.

KELLER: Where was it held?

HOOKS: This was actually in Belton, a little community off of Temple on Lake Belton, and it was a big event for the city, which Bill really loved. I was on the front page of the newspaper five days in a row during the whole event, not that a national championship in one design, racing, is that big a deal, but in Temple, Texas it really was, and the reason we got to have it there as a tradition, I had already won a couple of years before that and as a winner you get to select as the host where that new spot might be, so we did it right there. Let's see, from there Daniels got involved in acquiring Ann Arbor, Michigan, which that system was in bankruptcy. I don't know how many at that point had actually fallen into bankruptcy, but it was truly...

KELLER: Few, but some did.

HOOKS: That was one of them that was in bankruptcy. It took a while... that was in '79 and they asked would I consider it and I said, "Sure." In this business I thought I'd already been in one spot long enough, I need to move on and it sounded like a great opportunity and I said, "Great." Well, through the process, like any bankruptcy, it kept being delayed, being delayed, being delayed, and by that time I had trained a replacement for me, in fact, Keith Bircham's son who was still with Daniels, and Bill said, "Well, can we use Ben on some special projects?" And that's when Bill got the idea and the vision of building the markets around Carlsbad, California. So anyway, they said then, "Will you go out for six months (or whatever it is) in California and help us out there?" So my job out there was to figure out – and I worked with Chuck Jenkins who was still there as well – how to put together an interconnect microwave system to pull all those communities in and around Carlsbad...

KELLER: Tie them together?

HOOKS: Tie them together on a microwave system. I spent that six months or so doing that and as far as I know today a lot of that is still in operation. I'm sure some of it's been replaced with fiber today, but that was my job there. So then I moved, and it was funny, I left my family in Temple but then they didn't like living there alone so we moved them out to California during that six months. By then I had a daughter and a son, they were just little kids, and I'll never forget, we rented furniture, we rented everything, but they stayed with me in the Carlsbad area for about six months. So by then I could move on to Ann Arbor and my experience there was amazing.

KELLER: Now what year are we talking now?

HOOKS: Okay, we're just hitting the beginning of 1980. So, I'm on my way to Ann Arbor and I'll never forget it – I'd never been north of the line of Texas, that's for sure, and it was funny, going across country we had a travel trailer so we thought well we'll spend a few days getting there and we took the 7 route and we saw friends through Temple and then the last day all we did was drive north. I'll never forget, we got in there that night and I got out, and this was I guess January, and I thought how can any place be as cold as this place? What am I doing here? How do you even work here? But I'll never forget, we walked back in the travel trailer and everything had frozen except what was in the refrigerator. That was the only thing that wasn't frozen. But that was that experience. Ann Arbor was an exciting event. It was another one of those examples and I think I was getting a history of if it's bad enough put Ben in it because he thrives in that kind of environment.

KELLER: You were the manager up there, then?

HOOKS: I was the manager up there as well. I think at the time they had about 20,000 subscribers. I proceeded to... in fact, it was a union shop as well, which I don't think there were many cable systems that were union.

KELLER: There were a few but there were not very many.

HOOKS: During – not my whole term there, but during the term of the ownership it decertified and went back the other way, but I immediately went in there and we had serious problems with the way the operation was running. Obviously it had gone through bankruptcy and it had been short of funding so it needed a lot of correction. One of the first things we did, it had one of the most...

KELLER: Who bought that Ann Arbor system? Bill was operating it, I know, but who bought it?

HOOKS: It was Ossie Scripps Howard that put up the money. That's right, Scripps. I'll never forget the pay service... I couldn't believe it. I mean it literally was X-rated, one of the channels was literally – and they were running on tapes – it was literally X-rates programming, which was totally unacceptable by our standards at that time, so we immediately revamped, went to our Showcase 1 & 2 format, and immediately started bringing in... because it was just all still off-air programming out of Canada...

KELLER: Detroit?

HOOKS: Detroit, yeah, the Lansing area and all that. So we immediately started bringing in satellite programming by then, expanding the line-up.

KELLER: You went to your two locally programmed movie channels, but why didn't you come up with HBO at that time or one of the other ones?

HOOKS: At that time, the profitability of what we were doing, and we felt our results were just as good, was better. But that didn't last long. We introduced and probably within a year or two then did convert.

KELLER: Because in the '80s that was at least five years after HBO had come on board and Showtime was on and everything.

HOOKS: That's right. We were still priding ourselves on being our own provider of pay services, and actually we did quite a good job.

KELLER: Who was running the operation at Daniels?

HOOKS: Well, Keith Bircham was the vice-president of operations who reported to John Saeman, I think... yes, that's right. Tom Johnson was the marketing vice-president, so between those two they were...

KELLER: Tom had been there a long time; he was there when I was there.

HOOKS: Well, I had stayed... I wasn't very long there either, maybe six-nine months. In fact, I added it up, within a year's period of time I had moved my family from Tyler to California, from California to Ann Arbor, and then from Ann Arbor back to Denver in one years.

KELLER: So, you're not in Tyler yet, though. You said Tyler.

HOOKS: I mean, excuse me, Temple, I'm sorry, you're right. So I'd moved from Temple to California, California to Michigan, Michigan now going back to Denver.

KELLER: So you're leaving from Ann Arbor coming back to Denver. That's the corporate office.

HOOKS: At that point I had accepted the responsibility of vice-president of operations.

KELLER: Replacing Keith?

HOOKS: No, actually what had happened, Keith had retired temporarily, and then I think later he did another jaunt with an investment, but he'd left the company and Tom Johnson took his spot. Tom called me, and I'm trying to remember Tom's title, but it was probably executive vice-president of operations, and Tom had called me to work with him and become the vice-president of operations. Daniels also during that time had been acquiring a number of systems because... I guess I skipped a little here. In approximately 1980, the closing of the properties that Bill Daniels had under his wing, which was Temple, you know, the Waco-Killeen properties, and Lincoln, Nebraska properties – 100,000 customers – he had sold to Metrovision.

KELLER: He had owned these? These were Bill's?

HOOKS: Bill had owned those, right.

KELLER: Now that didn't happen very often because Bill usually managed other people's properties up until the time that they were able to do it themselves.

HOOKS: Good point, that's right, and he owned those.

KELLER: Then he owned some of them on his own and these were part of that that he sold, then, in the mid-80s? Is that right?

HOOKS: Really, I think, it was right around the first of '80 when the closing finally happened. It started in '79, actually, when I was going on my way to Ann Arbor.

KELLER: Were these limited partnerships? Act 1, Act 2?

HOOKS: No, no, this was before that. Those came later. And that was part of, I think, why Keith earned some money and there was a number of people that did retire at that point. So that kind of caused the change. Also, it started the development of Act 1, Act 2, so they were forming a number of partnerships with invested dollars and started buying systems around the country. So we weren't from more of a concentration of systems to more spread out around the country from coast to coast as far as it went. Typically, ten to twenty thousand sub cable systems is what they were. So I just immediately had responsibilities on all these systems of overseeing them from basically coast to coast, and that was the latter part of '80 that I arrived there, and I spent until the latter part of '84, maybe October '84, so I lived in the Denver area, in fact out at Columbine, for that period of time, and really my job had been as we bought them to get them on their feet, get them running, and as we expanded the growth got to the point that I was just traveling coast to coast every week and we brought another associate, a good old friend of mine, Wendell Owen, who had earlier work for Daniels in Killeen. In fact, he ran the Killeen systems later, managed those through the sale, and anyway, he came on board to help me and then we split the properties up. Wendell is the type that typically took them after me and really tweaked them. I always seemed to fit more into the frenzy of things when you just had to get them working, and so we became quite a team, and during those four years Tom Johnson left as well, and this became my connection with the Buford family. Jerry Buford who had been with Bill for some years took over that executive vice-president slot.

KELLER: He had been on the brokerage side though, wasn't he?

HOOKS: But on the brokerage and development side, yes. And so he came over to the operating side and I started working directly for Jerry.

KELLER: Now his family at that time did own a television station, didn't they?

HOOKS: In fact, since I would say the '50s, maybe late '40s, they owned the Tyler ABC and a sister station in Lufkin and actually the two signals overlapped. One was channel 7, one was channel 9. They also got in cable in Southbend, Indiana in the mid-70s. They had a cable system.

KELLER: I thought Jerry brought them into cable.

HOOKS: Yes, and in fact, I think that grew to around 50,000 subscribers. But anyway, and I'd known Jerry for years, but that's where I officially started working for him directly. Anyway, they continued to buy systems and then there was another change in management...

KELLER: The Daniels group continued to buy systems?

HOOKS: Right, in these partnership forms. Then there continued to be, as they grew more, more management structural changes. Jerry stepped down and Bill Kingry stepped in. Anyway, at that point in time, as close as I was with Jerry I just got to know that his two brothers were starting to focus, re-focus their energies on possibly selling their commitments in broadcasting and focus entirely on cable. Anyway, Jerry talked to me and I said, "You know, that just sounds like a great challenge for me." I had a wonderful... I always say the most wonderful thing... not many people that worked for as fine as companies as I did. I mean, who would you rather work for than Bill Daniels, and then the Buford family was wonderful. So I'm very fortunate compared to most people, but I just saw it was a good time to change. I had gained tremendous knowledge with Daniels and it looked like an opportunity that I could take that knowledge and go to the next step. It's not like I ever planned what I wanted to do next. There are all these people now, here's my vision and what I'm going to do. I never did that, but I always found myself that I had to take on the next challenge or I'd typically get bored. I saw those challenges slowing down and it just looked like a good time to change. So I departed end of '84, went to work directly for Bob, who was the chairman, Bob Buford, and Jerry's twin brother, Jeff Buford, and they both owned at the time 50% equal shares of... At one time, all three of them owned 1/3, 1/3 and 1/3, but Jerry...

KELLER: But they never owned the Tyler system, though?

HOOKS: Never owned the Tyler system.

KELLER: But you had your headquarters in Tyler.

HOOKS: Had their headquarters in Tyler because of the TV station, and of course they grew up in that town and they were a pretty prominent family in Tyler. So, of course, I went there end of '84 and they... at that time they had sold the Southbend, Indiana properties, and I'm going to guess around '82, '83, and they had about 20,000 subs now in Broward County, Florida and they had about 3,500 subs in some communities just on the eastern suburbs of Dallas.

KELLER: 3,500?

HOOKS: 3,500, just a small little system. Bought that from Storer. That happened about the time I came in. Anyway, my job was to oversee those and quickly I started getting more involved on how can we expand and grow, where's the opportunity. Well, at that time we were getting about '85, '86-ish, and based on Bob and Jeff's tolerance for risk, the prices seemed too high. Believe it or not, I found a...

KELLER: The prices to buy?

HOOKS: To buy were too high. The returns were too risky to them, but they did want to get in the cable business. Anyway, I started taking my time on evaluating where a niche might be in the business and to my surprise at that time there was a large number of communities, very large, that were not served by cable. Now, they were a smaller group. At the end of the day when you finished building them they'd be anywhere from a couple hundred subscribers to maybe up to a thousand when you were done, but they were everywhere. So I introduced a business plan to Bob and Jeff on how we might start building cable and before you knew it, this would have been... well, let me back up a little bit. In '86 I was developing this plan, but in '86 as I was developing this business plan to get started I found a couple key systems we could buy that were reasonably priced and in fact the first group was in Cabot, Arkansas, which is 30-some hundred subs to a few thousand subs, so we got a base started and that's when I started seeing all these towns that weren't built and developed a business plan of why don't we build all these systems. Well, before you knew it, by '88 – we started doing it a little bit at a time – but by '88 the prices just kept getting higher and higher that we really got engaged. Between '88 and '90, we built – this little company built – between 6 and 7 thousand miles of plant in nine states, and it was quite a program. We were a company of about 25 people building all this plant. We look back and we say, "What in the world ever made us think we could do this?" We did it. What we quickly found out is to put that much money out in plant with no subs backing it up, it was a little strenuous because subscribers never come on as quick as an entrepreneur expects them to, so you had a tremendous outlay of capital in hopes of a lot of subscribers coming on, which they did but it did seem like it went slower than it should, so it was quite stressful, but we succeeded. And then early in the '90s, the group of us including myself said, "You know, we're spread out too much." The small system example is working but we really need to be more tightly clustered, and at that time we had about 80,000 subscribers, maybe 85,000 in the early '90s, and we realized that the best clustering we had is where we started, which was in the Arkansas and east Texas areas, is actually where we started, and that it would probably be, from an economic standpoint, a better opportunity to expand those markets. Actually we were nine states – we were in the Arkansas, southern Missouri, eastern Texas and parts of Louisiana, and then we were on the east coast about another 30,000 subs over five states, really spread out. So we proceeded to figure out how we could sell those. We were successful in doing that and in fact, the same year we sold that we bought, now prices were getting better, we bought approximately that many systems in the market of the Arkansas and all that darn near as fast as we sold, so it was almost a little glitch. By the end of that process, which I'm going to say is in '92, we were now just concentrated in those four states in the central part of the country. Once we did that we still argued that we were really inefficient and our service people weren't responsive the way they should be to customer demands. We were the first company to start testing and developing the use of a technology that Qual Comm designed for the trucking industry, which basically was satellite tracking system that they designed for the trucking industry to track where their trucks were and when they were going to arrive and their destination, all that. Well, we started playing with the technology, found that it was very robust, it was darn near bullet proof, worked really well, but it certainly didn't have the software support that it needed for an industry like ours, so in all our remote offices we started installing it and then developing the software, and of course when we got done what was unique about it is that literally when you took a service call it would literally download right to the serviceman's truck, so at the end of the day when you looked at a serviceman, you knew where he was, where he was going, where he had been, how much work you sent to him, how much he completed and how much more he had to do. Well, this continued to tell me, from an administrative standpoint, the important of consolidating administrative functions. Now, we had to be very careful because there was a balance between customers' needs, meaning there are physical requirements that customers had needs for and there were things that they didn't need a physical requirement. In other words, you still had to have management there, you had to have eye-to-eye contact, and customers, not only customers, but city councilmen, all your customers, it was things you physically had to have a relationship with, which were service people, which were management, those types of things were important to maintain, but it didn't matter whether you were calling across the street or into another state as far as placing an order, if you were efficient enough to communicate back to your people in the field. Well, we quickly realized this solved that problem. So then we proceeded – and this would have started in about, I'm going to guess we're around '94 – in developing the strategy of building a call center.

KELLER: What kind of a capital outlay did this Qual Comm system take?

HOOKS: The Qual Comm system then was about... that's an interesting question. Qual Comm then, because this really blew a lot of people away, took about $4,000 a service truck, had an average life of about 20 years so it could be moved from truck to truck. The software application as far as computer hardware wasn't much. The writing of the software took quite a bit, but that fits in the pool of the whole call center, eventually, really. Really it was the truck investment. What we had...

KELLER: That's the receiver and transmitter in the truck?

HOOKS: In the truck. Early on a lot of people asked the question, "How did you justify it?" and it was amazing. When we started looking at our service people, when we were sending dispatch work to them we were sending it to fax machines at homes and headends and it was real inefficient and we were using pagers because we couldn't even get connection on mobile radios to most of these service people; they were too remote. So it was very inefficient getting to these guys and they'd find out if they had an outage they might not know it for hours, or you'd give them a page and they'd have to drive a long way just to get all the information, and it was really poor. We found out our windshield time was horrible. Well, we determined that $4,000, we actually had a payback in just over a year on that equipment just on getting more work efficiency. In fact, we added an hour – between and hour and two hours a day – of work being accomplished over what we were doing just drive time.

KELLER: So you were able to quantify that.

HOOKS: Right, and it was amazing – a serviceman, when he'd go home at night his truck and equipment would remain in a sleep mode, so in the middle of the night his next day's assignment would be downloaded into his truck and when he came out of his house, turned on the truck – anytime the truck was turned on or off – it would immediately poll back to the office saying, "Okay, he's gone to work." Well, instead of even going into an office, wasting 30 minutes or whatever, having coffee and getting your work, his work just came right up in front of him. So we immediately improved the efficiencies.

KELLER: And you knew when he turned that truck off, too.

HOOKS: Yeah, every time he turned the truck on or off it would poll right where he was. Now, you could always interrupt that to find where he was, but it automatically did that. So, yeah, you had a pretty good... in fact, we you used to stop and say, "We know more where our people are and what they're doing than you did in a standard classic cable system."

KELLER: Oh, no doubt about that. I have no doubt about that at all.

HOOKS: It was really amazing. So that really grew us into the call center, and in that case we wanted it to be close to our management people in Tyler. We actually built the call center in Tyler; we owned 20-some acres at that time.

KELLER: You didn't need that much room did you, for a call center?

HOOKS: No, we really didn't. Now at this time, because we'd bought a lot more systems, so '94-'95, probably '94, we were now at about 130,000 subscribers, I'm guessing.

KELLER: Well, you had to have at least 100-plus thousands of dollars invested the Qual Comm system now.

HOOKS: We had a lot! Well, take 130 vehicles times $4,000 a truck. It was a couple hundred thousand dollars, yeah. So we said, "All right, we're going to take advantage of this." My biggest problem prior to getting the call center started was developing a software application that would work to our needs, and really your Cable Datas and those kind of groups, CSG, those kinds of groups, really entertained themselves to the needs of the big operators. Well, they didn't have needs that we had. They didn't interface with satellite communications networks. I think we had 500 franchises then and probably 500 different rates. We were really a complicated system and we really needed a software package that was developed that was done in a simplistic way that was online active and the whole bit.

KELLER: You could pull your reports then, from that too? Hard copy reports from it?

HOOKS: Oh, everything! And we didn't want to be online, and that's all we could afford at that point would have been Cable Datas and that sort of thing, so we really wanted to be an in-house billing system or management information system. So it finally pushed us out of the country to Canada to a company called RR Enterprises who developed, and actually put in-house in our call center after we got it built, their chief analyst that continued for several years to develop the software to meet our needs, and it really was a facility back in those days. When you took the telephone, you took the satellite communications system, and you took the management information and billing system, it was all integrated together. So it was just remarkable for that day, and in fact we got a lot of attention. After we opened it, I think in '96, because of requests and people wanting to tour the facility, we agreed to host an executive retreat, so to speak, and invite the top 50 – maybe not the top two, but pretty much the top CEOs of the industry to come in and view this.

KELLER: This was before TCI developed their central communications system – I'll put it that way – in Denver.

HOOKS: Yeah, I really think it was. You know, there was talk about it, but I think we were one of the first to really develop it. Now I won't say we were, but we were certainly one of the first to develop a facility like that, and I know the only one that I think was using the full application of a satellite communication network in a facility that was integrated with it as well.

KELLER: What did it cost you, do you remember, per subscriber to run that thing?

HOOKS: Well, that's what was interesting – our costs came down. I really don't remember, but here's what was amazing when we did this: when you think of us in multiple offices, we really struggled. Telemarketing's always been a big deal – well, door-to-door is always number one – but telemarketing's always been a big piece of our business, whether we're calling to follow up on an install we did, or making sure they understand the product, or selling products, it has always been a big part of our business. It was a disaster to farm that out in these little systems because, first of all, if I gave them big enough numbers they'd say, "Wait a minute – there's 500 communities, they've all got different rates and there's a few hundred in each community?" So either the rates were really high or they were inefficient and they couldn't really help us much. Well, call centers allowed us to do that in-house. In fact, in our call center we designed a classroom, we hired a teacher and when we'd hire a CSR they'd have to go through a three week program even before they could get out on the floor and they'd have to pass tests. So think about this, in the mid-90s that was quite a step, and here we were rural operators where there was no way I could afford those kinds of things on multiple offices, but by consolidating and concentrating...

KELLER: That was going to be my next question – did each office have a remote central location?

HOOKS: When we started each office was pretty much independent of itself and it had very little... there was no economies of scale to use, so we were limited on what you could accomplish.

KELLER: Could the local manager query the system for the data for his own operation?

HOOKS: For his own operation, right. Now, the trick was we actually expanded – and this is what's interesting – we went from... we were in four states with really two managers, two regional managers. When we consolidated we kept the two regional managers and added eight area managers, all right? So the trick was by making ourselves more efficient in the administrative functions of the business, it actually gave us the ability to turn around and add more management talent in the field. So what we were doing was not consolidating... lots of times I think the industry has gotten confused as they consolidate – they consolidate management, they consolidate... you know, everything tracks the office. Well, in the structure of our facility, there was not system manager in the office. It was designed to serve area managers and regional managers...

KELLER: So one guy had a number of systems that he was responsible for.

HOOKS: Right and the call center was a service to him or her, and so it was a little different. In fact, it puzzled a lot of people – "Well, what do you mean? In your call center your regional manager's not there?" "No, they're out in the field. That's where we need them; that's where their talent is." So what I would say is that was probably our biggest challenge. It's kind of like there's a standard way of running cable systems and that's quite a mindset that they've developed over the years, the whole industry, even our people, that all of the sudden you've got to look at this different. This is a service, this does not make management decisions, it's there to serve you and it's going to have extreme efficiencies. So that was the concept of it. We got recognized in the industry, I think it was in '96 or '97.

KELLER: You won an award for it, didn't you?

HOOKS: Yeah, they gave us the technology of the year award. I don't know – I think it was just everything that fit.

KELLER: Technology innovator award, wasn't it?

HOOKS: Yeah, I think that's what it was. But we really did have a lot of pride in that, and of course by today's standards I don't know that there's anything that unique about it.

KELLER: Are you still operating it?

HOOKS: No, we sold Buford Television – back then that was Buford Television, as you earlier introduced me working for, and that was Buford Television. We sold it in July of '99 to Classic Communications. In some respects it was funny. I wasn't done yet.

KELLER: Now you had become a partner in it by this time, which was unusual itself for the Bufords, wasn't it?

HOOKS: Very. In, let's see, it would have been five years before '99, so in about '94, the very beginning of '94, they formed a partnership and at that point it was just Bob and Jeff and the partnership was expanded to six folks. So there were four key folks that joined in that had really developed the business that we sold at that point. Bob had moved to Dallas a couple of years before that; Jeff did not play an active management role. In fact, between Jeff and Bob, we pretty much met them one day a month as you would a board meeting, and I think to accommodate what we were doing and the responsibilities we had, yes, they formed a partnership. So we really grew and developed the company from '94.

KELLER: Who were the other partners?

HOOKS: The other one was Ron Martin, who was very active in the National Cable Television Co-op; the other two are partners with us today in Buford Media, which was our financial officer Tom Seal and the other one's are chief operating officer, Kay Montigold. So today in Buford Media there are actually now four partners – there's one of the Burfords, Jeff Buford; myself; Kay Montigold; and Tom Seal.

KELLER: And you're out now scouting for systems again, is that correct?

HOOKS: We're out scouting for systems again. I believe that the opportunity is greater than it's ever been in rural remote systems. A lot of people look puzzled by that. I think there's been a paradigm shift. It's hard to operate, and I'd be concerned about operating 3-4 hundred subscriber cable systems. You've got to buy tight enough clusters that you can interconnect them with fiber. There is no question that every time a new technology comes out that it's always too expensive for the smaller systems.

KELLER: That's always the case.

HOOKS: It's always the case, but it's not different than when the first satellite dish came out in it was $100,000, and what's the dish today? $1,500? It's the same phenomenon that's gone on forever and the poor little guy has got to be very creative and patient, but sooner or later the technology costs come down, but because technology changes and moves so quickly it is becoming more and more important to have tighter clusters where you can interconnect them to have larger headends. It's harder to wait, is what I'm saying.

KELLER: Ben, we've taken a jaunt through your, by this time, almost 30 years in the cable television business. Now I want to take just a little bit of a twist in this business. You've been involved in and chairman of, and president of, various associations within the industry. Do you want to go back and recount those associations and what you've done in them or what has been accomplished?

HOOKS: You know, it's funny, as we developed and succeeded at Buford Television in operating in rural and smaller markets, and as always the political arena has been something that the industry has had to struggle with and work with, but it became apparent that we really didn't have a spokesman or a spokesperson or group that was organized properly to speak on the behalf of smaller rural operators.

KELLER: By this time, though, you had CATA?

HOOKS: We had CATA and NCTA, but what you saw as the smaller guys that started the business expanded and grew their concentration, and consequently those organizations, started focusing more on the larger markets. That was more of the issue. Not that their passion wasn't toward us, it was just the order of the day is what's most important today to deal with. CATA, which I did serve on the board a number of years...

KELLER: Cable Antenna Television Association.

HOOKS: Cable Antenna Television Association and I always got them mixed up as they changed their name. I think it became Cable... I forget, but they later changed their name to something like Communications, but anyway... CATA did, through Steve Effros, focus more so on the smaller operators, but there was no question it was more funded by the big operators at the time. It was a wonderful opportunity for me to participate on that board – in fact, that's one of the first boards I joined – because it really did give me an avenue to understand the focuses of the big operator, and yet there was a platform to talk about the issues of the small operators, and Steve Effros was always passionate to everybody's needs, and so it was a good forum for that. NCTA to this day I have a wonderful passion for them, while I have not been a member I communicate a lot with them and I just say the order of the day is not focused enough for me. But in '93, with the development of the Communications Act, it got real scary because all the rule of the land was being focused on what it related to on the big operators.

KELLER: This was the '94 Cable Act, right?

HOOKS: Right, and it became scary because through the regulation requirements, paperwork, you literally... I mean, a small operator couldn't even function in that environment and frankly, we didn't have the political problems in general that the larger operators did. And frankly, it's just because it's easier to deal and focus your time towards the requirements of smaller communities. We were more closely involved with our communities, but we had a serious problem and you couldn't expect NCTA, while they support you and work with you, to get up and say how do we rewrite the law of the land where it doesn't annihilate you guys. So, in May of '93, because really the Act came out in '93...

KELLER: Yeah, it came out before it became effective.

HOOKS: Before it became effective, yeah. In May of '93, the Small Cable Business Association was formed and the official elected board members – until then anybody who wanted to be a board member was until May of '94, I was elected as an executive board member then, and the purpose of the Small Cable Business Association was to introduce to the Senate and the House the real concerns we had with the writing of the bill and how that would impact us, which was really, really scary. Through that process, and in fact – I'm trying to remember, I testified before the House... I'm trying to remember... you know, it's terrible, I can't remember the exact dates, but I did testify. Jack Fields was out of Texas, so that was a good reason why I testified before the House on the effects of the bill and what had to be reconsidered and changed in that bill to allow us to survive.

KELLER: Did you get any alleviation?

HOOKS: We sure did. The way it ended up was that 1) they defined what the small systems were. I'm going for memory, but it was companies that weren't larger than I think it was 250,000 subscribers, something like that; didn't have a headend bigger than 50,000 customers; those types of things, and didn't exceed certain revenues as I recall.

KELLER: That had been written into one of the earlier cable acts, too. It may have been dropped out of '94, but I think it was in some of the earlier ones where they defined a small cable operation.

HOOKS: Right, and then the final version, the one in '96, or wait a minute, I guess it was '94...

KELLER: '94.

HOOKS: But anyway, the final version ended up defining who we were and it exempted us from the regulation requirements of the big operators, which was essential, it really was. Even complying with the regulation requirements you would have been forced into various tiering requirements, that sort of thing, that just was totally impractical for our business. So it really was... I think without the Small Cable Business Association I don't know where we would have been today if that hadn't happened. It was really a fun group to be involved with. It's kind of like it's your worst hour, it gets everybody's attention. So, everybody – I don't care how small a company they were – would come to Washington and march the halls of Congress, and whether it was Cowboy Cable or whether it was Buford Television, we call marched the halls to tell them what our concerns were, and that's pretty effective lobbying technique.

KELLER: You were also a member of the Texas Association at this time, or were you not?

HOOKS: No, I was not at that point. And in fact, if you watch history, I think the next step, two years later, I was the second elected... the first chairman was David Kinley, and then when I became chairman, my main function and purpose was to stabilize SCBA into an organization that had an executive group because at that point it was all volunteer, and you knew while all the energy was there, sooner or later it wouldn't hold together. So that's when we brought, under my reign, brought in Matt Polka, who is still there today as the president and CEO of the organization and we really stabilized it and grew from there with the staff and the whole bit. Now during my term, and those were two-year terms, so I would have probably stepped in around '95, and during that period of time my next – so I was still on the board of CATA – and I was asked to serve on the board of Cable Labs.

KELLER: Because of your engineering background?

(LAUGHTER)

HOOKS: Yeah, climbing poles! It was funny, I've always spoken... they've always had a small operators conference every year up in Vail or Keystone, it's always up there every year, and my motto when I spoke was that I don't know that we analyzed things like the big operators because we really can't, we just have kind of a Nike attitude – "Just Do It" – so I knew how to do that, so I'd always talk about just what we're doing. All I knew is it works, guys, and here's what we're doing. Well, so I joined Cable Labs as a board member and I always pride myself as being probably the least technically inclined guy on the board, but I do think I have some business savvy and some common sense and that's what I think I deliver to Cable Labs and the smaller operators that are a member of Cable Labs. But also during that period then before I got on the Texas board, during that period TCI asked me if I would serve on the advisory board of the development of HITS, and remember HITS...

KELLER: Which is an acronym for?

HOOKS: HITS – Headend in the Sky. HITS, the idea of HITS, came out of Cable Labs, actually from a guy by the name of Mike Pool, who was with Douglas Communications, that said, "There's got to be a way to deliver more efficiently a product to the small headends that can't afford to put all this equipment in at their headends." Well, I can't say exactly how it all developed, but certainly TCI jumped on it, developed HITS, and asked me and several other companies to participate on the advisory board. I was involved... actually our company was involved for a number of years all the way through the introduction of it, but at different phases I included different people. On the initial phase I was on the relationships – how that would work with the development of HITS to where it could interface with operators and how would you draw up contracts and that sort of thing. I introduced Kay Montigold and she served on the advisory board, and then when we got to the marketing phase I introduced Ron Martin to the advisory board. But to make a long story short, we had developed the call center now, so we were the first company outside of TCI with the ability to interface directly with the HITS center and consequently we were the first company not affiliated with TCI to launch HITS. Here's another opportunity – I get to do something right off the bat where everybody was a little skeptical, "Is this really going to work?", and we just took the Nike attitude and said, well, it sounds like a great idea, let's just do it. You know, what's kind of funny, a small operator really is in the better position to try wild, crazy things because we can go into a community and say, "Guess what? There's a new technology, it's a little crazy, we're going to have some problems, but would you like to be the first town for us to introduce this new idea?" And so you could introduce it with a different approach to where the community felt involved, and if you had problems they thought that was great because they got to participate in them, so it was easy for us to do those things. So, we introduced HITS at that time, and we were very proud of that and our relationship with TCI was wonderful. So anyway, I did want to mention that. And then, really, we actually sold Buford Television July of '99 and that was to Classic Communications, and for the first time in my life I wasn't involved with a customer and we kind of laugh... I was, I guess, retired for 30 days. I don't like to say I was out of the business, but I was retired, I guess, for 30 days. Jeff Buford had kept ownership of the office that corporate had maintained itself in in the old Buford Television days and kept that office, so I kept an office there and would go to work and read the Wall Street Journal cover to cover, and one day I called my wife, one afternoon and I said, "Do you want to go to a matinee?" and she said, "This isn't working, is it Ben?" And I said, "No." And it was so funny because I always dreamed of just sailing around the world and all of the sudden when you got the chance I thought do I want to get up every day and sail, every day of my life, and I went "No." And it made me realize – it was great – how much I loved the business and the industry and how much I believe in the niche I've been doing, so of course when that happened I had to step down off of boards. So about 30 days later we said, "We've got to do something." So, lo and behold, there was a new development that was coming up near us in Tyler and I said, "Why don't we play around with that and just hook it up and put in a little cable system," so we started. By then Johnny Mankin called me from the Texas board and he said, "What in the world are you doing?"

KELLER: Johnny Sr.?

HOOKS: Jr. This would be about 2000, I'm guessing. Johnny Mankin calls me and he says, "You need to serve on the board." I said, "Johnny, I don't have any subs yet. Now I'm going to have some pretty soon here in the next few months." He said, "We'd really like to have your involvement in the Texas board." And at that point, our involvement in Texas and other state associations were by regional managers that worked for me, so we've always been involved in the Texas Association, but not me so directly. I was involved more on the national scope of things, but I've always had a wonderful passion, as almost anybody does, for the Texas Association. So, I thought, well, I've got plenty of time on my hands, I'll do this. I'll never forget, when I was elected to the board I had, I think it was two customers, and our CFO, as a joke, because we had to be a member in good standing, sent in, I think it was two cents, sent in two cents, which Bill Arnold immediately made clear that Ben's in good standing, we've got his two pennies. And of course, why couldn't we send in a dollar, you know!

LAUGHTER

KELLER: It was better that way.

HOOKS: Yeah, it was better that way. So I got ribbed about that a little bit, but joined the Texas Association, its boards, served about a year then became secretary or treasurer, actually, and really because of opportunity going forward I found that I couldn't stay actively involved the way I do. If I'm going to be on a board, I like to make a difference and I'm just getting spread too thin because between all the boards I'm on now, which you take now SCBA, which changed its name to American Cable Association, and you take Cable Labs and you take the National Cable Television Co-op, which I also joined a couple of years ago, that's really...

KELLER: And well you should have. I think any small operator should be a part of that.

HOOKS: Right. So I've got to always say I've only got so much time, how do I allocate it, and I think where I serve the industry best is more on a national basis. So really I'm involved on a national basis on technology, on the political arena, and on the programming side, which really if you think about it, are the key important issues as it relates separately for small rural operators. So I'm focused there.

KELLER: Now what did you do to win the Johnny Mankin Award?

HOOKS: Well, that's a good question.

KELLER: Which, by the way, is the top award of the Texas Cable Television Association for service to the industry in the state.

HOOKS: It was funny, when I was first called by Steve Lowe, who is the current chairman at that time of the association, I said, "Well, you know, I've been involved," not knowing exactly the criteria behind it other than that it's a wonderful award, my response was, "I've been involved more on a national level, I feel a little awkward to accept something as it relates to my contributions to Texas." Well, of course Steve immediately said, "But your company," and in fact Steve, at one time, represented our company on the board because he used to work for me, Steve Lowe, and he served on the board, and he says, "Well, 1) the company's always supported, and you have in the past, the Texas Association and their activities, and 2) it does look at the individual as a whole and what their contributions are to the industry." So, for whatever reason they selected me. It's one of the finest honors, certainly, I've received. It was funny – I thought about that morning before receiving it, and after receiving it I wanted to spend a few minutes thanking folks, but as I first said when we first opened, all these accomplishments were really done by people that I was fortunate enough surround myself with, and it's a humbling experience because you really realize that without all the support of folks, whether it was Daniels, whether it was Bufords, whether it was friends, family... I think of my wife, I mentioned dragging her and the family across country three times in one year. There's a lot of commitment by a lot of folks that believed in me and stuck with me and all the associates, it really was a humbling experience to get such an award.

KELLER: Well, management is fertilizing the flowers and getting rid of the weeds, pure and simple. So you learned that in a hurry, huh?

HOOKS: Learned that in a hurry. So there's no questions, it's one of the finer awards I've gotten and I'm very proud of that.

KELLER: What is your association with and what is the World Net Literacy Foundation?

HOOKS: You're talking about Net Library? World Net Library?

KELLER: It said literacy, but maybe it is the library.

HOOKS: I think you're referring... well, I served on a board here...

KELLER: World Net Literacy Foundation.

HOOKS: Hmmm.

KELLER: That's what it says. I've got bad information, huh?

HOOKS: Yeah, I think that's some bad information, I'm sorry.

KELLER: Well, correct it.

HOOKS: Well, I did serve on a board here for a short period of time of an organization called.... it was called Net Library, as I recall. In fact, with Beverly O'Brien, and maybe that was the official name of it. I did serve for a period of time, not long, on a really unique technology where this organization was digitizing books in a compressed digital form.

KELLER: Didn't work.

HOOKS: A great idea, and of course, you know me, anything that's exciting I had to get involved. Beverly O'Brien calls me and says, "Ben, what do you think?" And then immediately I got them involved, and Beverly involved, on if you can do that how its application can be used in schools. Unfortunately it's a great idea, maybe before its time and the follow through wasn't there, and as you know, that was probably the worst time is when Beverly left The Center, and the best time when she came back, and as she came back I left the board position at Net Library. But that was an interesting experience, yes.

KELLER: Ben, I think we're going to wrap this thing up. We've just about run out of time and words. Not you – but I've run out of words. This has been the oral history of Ben W. Hooks, Jr. Now you can say preeminent entrepreneur in the cable television industry who is still the CEO of Buford Media, Inc. Ben, thanks very much for participating. I enjoyed it.

HOOKS: Thank you, Jim. You bet.

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Douglas Holloway

Douglas Holloway

Interview Date: Tuesday December 04, 2007
Collection: Hauser Collection

VAN ORMER: Hello, today is Tuesday, December 4th, 2007. I am here interviewing Douglas V. Holloway, President of Cable Investments for NBC Universal for The Cable Center's Oral and Video History Program. Welcome, Doug.

HOLLOWAY: Thank you.

VAN ORMER: One thing that really comes across as I've read about you and talked to people about you is you're universally respected and admired in the industry and I was just wondering if you could tell me in your formative years what maybe shaped or molded your personality in that aspect the most and who were some of your early mentors?

HOLLOWAY: Well, I'm originally from Pittsburgh, Pennsylvania and if you know anything about Pittsburgh is they're pretty salt of the earth people and I grew up at a time in Pittsburgh when Pittsburgh was in its heyday. From my parents I really received a lot of spirituality as well as being a credible person. My father used to always say, "Your word is your bond." You've got to really stand up for what you believe and be a very righteous person. Treat people the way you want to be treated, a lot of really core values that I carried over into business and I think it's really served me very well.

VAN ORMER: And your educational background – can you tell us a little bit about what you studied and why you studied the courses that you did?

HOLLOWAY: Well, educationally I'm really kind of a mixed bag. I'm from the inner-city of Pittsburgh, a community called Homewood. In 1964, I was part of the early busing of black youth into white neighborhoods for educational purposes and integration of schools. It was a very difficult in the United States and in my community not unlike many of the other communities around the country and I was given a lot of values of education. My parents really stressed the fact that it was important to get a very strong education. Even my grandmother who lived with us at that time – my grandmother was basically illiterate. She grew up in the 1800s, so she valued education extremely highly. So I was given all those reasons to really pursue an educational background. It was funny because I originally wanted to be an entertainer and I was very heavily influenced by the entertainers of the day – Harry Belafonte, Sammy Davis, Jr., Bill Cosby, Dick Gregory, Sidney Poitier. I studied acting, I studied dancing, tap dancing, and I did a lot of acting. I studied at the Pittsburgh Playhouse all throughout my formative educational years, and when it was time to go to college, my parents basically said, "It's all well and good for you to be an entertainer or an actor, but we really think you should have something more stable to fall back on." So I decided that what I wanted to do was to go into television and I would study television, but as it turned out I got a five year scholarship to Northeastern University in Boston and it was for journalism, and so I decided to go into journalism originally. Right after I was accepted into Northeaster, I found out about this school, a small school in Boston that really had a television program and it was called Emerson College, but by then I had already agreed to go to Northeastern. So since it was in Boston I figured that at a later date I could transfer, and so I went to Northeastern and studied journalism for two years and it was a very, I think, good, solid education, really honed my writing and proved to be beneficial to me later on. After my second year at Northeastern I transferred to Emerson College where I really pursued my television desires. Originally I wanted to go into being a director and a producer and so I studied that. That's what my basic undergraduate degree is, a mass communications with a specialization in television production. Being an actor and studying acting, I worked well with talent and really got to understand the talent process and how television worked and I really became fanatical about it, became a first-class licensed engineer and a camera operator, and I decided I was going to do everything I could in television, I was going to make that my career. As I was approaching graduation, I met a man in Boston. We did volunteer work actually, working for the Boston Black Reparatory Company, which was a local theater company and he was at Harvard getting his MBA – his name was Peter Bionow. I didn't know anything about an MBA at the time and so I decided I wanted to go on to grad school and I was going to go into grad school pursuing my television creative activities, but Peter said, "You should think about an MBA." He was in the MBA/JD program. I spent a lot of time talking with him and researching what an MBA was because I didn't know at the time, and I never will forget, I came back to my counselor at school and he said, "Well, you know, we really haven't had many people go on from our school to get MBAs so I can't really help you very much." At the time I also had a part-time job as a news writer for WEEI Boston, the O&O CBS radio station in Boston. It was an all news station and I was a news writer so I had to write the news for the local newscasts that were done. The general manager there was a gentleman by the name of Gene Lothery and he was a black man. He was young, I would say at that time he was in his early to mid 30s, and I ran into him in the hall one day and I had no idea that this guy was the general manager and somebody said, "Yeah, he's the general manager." I said, "Who is this man?" I went up to him and I said, "I would like some career advice. I work for your station here and I would really like for you to help me out in formulating my career because I want to be in television in the communications business, and I want to work in New York, and I want to work for a big company." So he said, "Sure." I was a college student, I was I guess 20 years old at the time. He said, "Sign up with my secretary and get an appointment to see me." I week or two later I did and I went in to see him when I got off my shift and he sat me down and he said, "You know, you need a plan. You've got to have a plan. You need a 20 year plan." So I went back and I was talking to my counselor thinking what I was going to do and talking to friends of mine I start writing down notes about what I really wanted to do. Did I really want to be a director? Did I really want to go to grad school? What I wanted to do long-term. Where I wanted to be in 20 years. At 20 years old it's a pretty foreign concept to think where you're going to be in 20 years, but I did and I formulated a plan, which was my 20 year plan. This mind you is probably in 1975. I graduated college – early – in 1975. I was in the class of 1976. I decided I would get an MBA and my long-term plan in 20 years was to be president of a television company, a major television network or company. Now mind you, for a black man from the inner-city at that time it was pretty far-fetched and when I shared it with friends of mine they thought I had really gone off the deep end, and probably I had. But I decided that's what I wanted to do and one of the things Gene told me was I should in fact be very specific about the plan, what jobs I would have, what companies, where I would work, for how long, and as long as a stayed with that plan it would keep me on track. So I decided to go get my MBA and I had really one choice that I wanted to attend and that was Columbia. It was my first choice and one of I think three that I applied to. I never will forget, I applied to Columbia and I figured that because of the school I was coming from, Emerson, which was a small college, wasn't a feeder school to any Ivy League universities and certainly not to MBA programs, that I needed to increase my probability of getting accepted by coming and meeting and having an interview with admissions. If I told them my story and they could see me and hear what I wanted to do with my MBA that they would give me a shot. I was a decent student. The first two years of college I was a C student, but the latter years I made the dean's list and graduated cum laude. I never will forget – I put on my polyester blue suit, it was the only suit I owned which was my graduation suit from high school, and I traveled to New York, went to Columbia for the first time, went to the interview...

VAN ORMER: Was that your first visit to New York?

HOLLOWAY: No, it wasn't my first visit to New York but it was my first visit to the campus of Columbia. Actually, my first visit to New York was the weekend before my parents dropped me off at college, and I kid my mother about this story all the time because I was 18 years old, I had never been away from home by myself at all. We drove to New York for the weekend prior to them taking me to Boston, we spent the weekend in a hotel and visited some of my father's relatives in Harlem and we toured the city. The asked me what I wanted to do, we're here in New York, we're three days in New York – so the first thing I did was I took them to the movies to see Super Fly, which they didn't really appreciate but nonetheless we did. Then two days later we ended up in Boston. This is true story – my parents had never been to Boston before, they moved me into my dorm, I had to go check in to the bursar's office and do all the registering, and the next morning we had breakfast and they dropped me off in front my dorm and they drove away. They said, "Here's $200, we'll see you for Thanksgiving." And that was the start of my college education. But this was not my first time to New York. So I go to this interview and I meet a woman who originally was from Pittsburgh, she was originally from my neighborhood, and she said, "I can't believe you're here. There's this connection with you." She grew up a block away from where I grew up and her family had moved away in the flight of the '60s out of our neighborhood. She said, "You deserve a chance. You deserve a real shot to reach your dream." Having been bused and all I'd had to go through being a kid that was bused in the '60s and '70s and all that went on because I was in Boston during the whole busing issues in Boston and the things that were going on in the universities in Boston at that time. She said, "I'm going to give you a shot."

VAN ORMER: That's remarkable!

HOLLOWAY: That's exactly what she said.

VAN ORMER: And she was in admissions at Columbia?

HOLLOWAY: She was in admissions at Columbia and for the life of me I don't remember her name, but she gave me a chance and I went to Columbia that next fall and became an honor roll student and graduated – took marketing and finance courses, and graduated near the top of my class and at that point I decided that I was going to execute my 20 year plan. My first job out of Columbia was at General Foods and I decided I was going to go into marketing. Well, I had two primary goals to get a job that first year out of Columbia and one was to work, ironically, at NBC and get into their associates program and as luck would have it, the day that I was to have my final interview and get my offer, supposedly, from NBC the major snowstorm of 1978 hit. I never will forget calling and calling NBC trying to get the people on the phone, the whole city was shut down and I was so intent on not losing this job opportunity I walked in the snow from Columbia to Rockefeller Center, showed up and was told by the security guards that the company is closed down today except for essential personnel, there's no one here, and I'm sorry but you have to go home. I never got another chance at the interview. For whatever reason I got lost in the shuffle, never got my job offer, but my fallback position was to go to work at a marketing company and go into product management because I felt that when I wrote my plan that if I could spend several years in a major consumer goods company that I would learn general management, I would learn sales, I would have a lot of credibility behind me in terms of being a sophisticated marketer or businessman and I could transfer that into the television business later.

VAN ORMER: So your 20 year plan still entailed the television aspect?

HOLLOWAY: Yes, it was a sideline to go into marketing and then go into the television business. And so I went to work for General Foods. I was one of their top draft picks that year and got a choice of assignments, which I chose Shake 'N Bake because they were a big television advertiser at the time, it was one of their key brands in the main meal division, and I went there and I worked for two years and went through their training program and as it happened one of my best friends from college, from Emerson, who was also from Boston, we had gone to Columbia together, I encouraged him to go and he ended up getting a journalism degree and an MBA from the journalism program at Columbia, jointly. He had gone to CBS and gone into their training program in finance and after two years they were building a strategic planning group. He called me up and said, "Doug, we've got some jobs open here at CBS in the financial planning area and it's strategic planning and it's going to be the hotbed future career opportunity in the television business because we're going to figure out where the future of television goes and how to get there." So I went for the interview and I ended up getting the job. It was a small group of four people at the time and everybody had to pick straws basically, or choose areas of expertise that they would delve into, so you become an expert in something. Because I was the new guy I got something that no one else wanted, essentially, which was cable television and satellite distribution of television signals. So I became the cable television expert and also an expert in satellite distribution, so I knew everything about it and at the time the CBS network was being distributed via landlines, telco lines and we weren't in on the satellite, so I helped create the plan that eventually moved CBS to satellite distribution. I also did a lot on the production facilities side, which was the milk factory now on 57th Street, the expansion into kind of what it is today, a state-of-the-art... I did all the financial analysis back then. I became an expert in cable programming. There were only a couple networks just getting started, and this is now circa 1979, '80, and one of those ideas that was being circulated around CBS was CBS Cable. Charlotte Schiff-Jones, who was a producer and a big name in entertainment and television for a long time, had the idea of creating an arts channel and sold the idea to Bill Paley. They incubated it in the stations division and because I was the network person, I was involved in that as well and it was interesting because part of my job... we used to write the strategic plan, the long-term strategic plan, for the network and we used to write speeches for Gene Jankowski who was the group president of CBS Television and Jim Rosenfield who was the president of the television network in those days. We used to talk about the fact that cable was not going to be a long-term threat to the broadcasting business and that it was never going to be really an ad supported vehicle and cable networks would never really amount to anything. But Paley believed in it so he green lit CBS Cable, which was a 24-hour arts channel, but high arts. As a matter of fact, the host wore a tuxedo and it was ballet and jazz and symphonic music and Broadway productions and it was really the fine arts. We had a huge budget for original programming because a lot of this programming didn't exist outside of the PBS universe and so we produced probably 60% of our programming in the first year. What happened was the way in which I ended up at CBS Cable was they were putting together their management team – Charlotte Schiff-Jones was VP of marketing, there was a guy by the name of Bob Mariano who was an ex-Qube-er, he worked for Warner at Qube in Columbus and was one of that early team that did interactive television with cable. Interestingly enough, I didn't really know much about cable. I had never seen a cable system except my junior year in college one of my uncles moved outside the city of Pittsburgh into a small town called Meness and he was an officer in the police force, I think he was a captain or a sergeant. We went to his house for Christmas dinner and he had cable. He had, I never will forget, a push-button remote and he had about ten channels. That's the first time and only time I had ever experienced cable first-hand.

VAN ORMER: Do you remember what some of the channels were that he was getting at the time?

HOLLOWAY: They were all broadcast channels and he had HBO and that was pretty much it.

VAN ORMER: Were you fairly intrigued with it when you saw it for the first time at your uncle's?

HOLLOWAY: I was fascinated by it. It was foreign concept to pay for television, number one. And number two, to have this remote box that you pushed buttons to change the channel – that was totally new. But the interesting thing that I was really fascinated by was that he had more than three channels and in Pittsburgh all we had were three channels. I think he had about ten in total but they were channels from other cities. I think they had a channel with just the weather dial on it and another channel that had a crawl on it, so there really wasn't much programming on it other than HBO and maybe one other entertainment channel of some sort.

VAN ORMER: So as a long-time aficionado of just television as an industry, when you first started to get into this cable project at CBS were you right away certain that cable was going to become what it was or was that a progression over your time there?

HOLLOWAY: It was a progression. I thought it had some merit. It's funny because I used to have to write documents that talked about cable not being much of anything but just kind of pass-through technology, but I always thought there was something more there and while I was doing that job CNN was announced by Ted Turner and CBS Television Network was known as the Tiffany network at that time and we were the most highly acclaimed news organization in the country. So we really thought it was very humorous that Ted Turner was launching a 24-hour news channel and we just said there isn't that much to talk about, and who is he, by the way? So it was an interesting time, and ESPN also announced its launch and we studied those programs very closely, those networks very closely, and the whole economic model is different because ESPN initially came out paying and I believe CNN initially was free, and so the model for CBS Cable was going to be an ad supported model because that was the business that CBS knew and we did not think at that time that we could get cable operators to pay money for channels. And so as it turned out, I really didn't want to go work for CBS Cable; as part of my long-term plan I wanted to go pursue my career in the area of sales, and so I wanted to go into advertising sales and I wanted to work at the CBS Television Network in advertising sales. So I had focused really all my career efforts moving into the ad sales business but because I was coming out of finance I ran into a lot of opposition. It didn't really matter even though I had been professionally trained in selling by General Foods, it was just a very closed shop and very difficult to get in. I had a friend that I met while I was at Columbia. He was the program director – his name was Dennis Waters – he was a program director for the jazz station here in New York in the late '70s. When I was at Columbia there was a tenured professor who I became very friendly with who was very into jazz by the name of Morris Holbrook, and Morris and I created a predictable research model using psychographics to predict your preference in artists and kind of music and we sold that idea to the local jazz station and it helped change their programming around for the better. Dennis's good friend who started out in radio with him was a guy by the name of Bob Pittman, and the rest is history with Bob Pittman, right? So I had gotten to know Bob Pittman because Dennis used to sponsor seminars about new technology coming, whether it was radio or television, and often I would be one of his guest speakers to talk about cable television. I got to know Bob Pittman because Bob Pittman was there talking about an idea and the creation of a new product that he had because he moved on from WNBC radio, and as a matter of fact Dennis and I joined forces with this professor to create a research firm, and we sold research to Bob Pittman. So I got to know Bob Pittman because he used that research to program his radio station. He moved from there over to WASEK (Warner Amex Satellite Entertainment Company) which was just being formed and he became, I believe, program director for the Star Channel which was the predecessor to The Movie Channel. When he was there he would attend these seminars and we would talk to anyone that was interested that would pay money about what was on the horizon for television. His big thing at that time was this music channel, little did we know. As we all now know, it turned out to be MTV. Well, Bob Pittman also knew this man Bob Mariano who was putting together the original sales force for CBS Cable, the affiliate sales force, and so Dennis Waters told me, "Why don't you go talk to this guy? I hear he's hiring, I know you want to get into sales. This could be a way for you to get into sales." So I went and I called Bob Pittman and I said "Bob, you know this guy Bob Mariano," because they had connections through WASEK, he said, "Yeah." I said, "Would you give him a call, tell him that I'm interested in potentially working for CBS Cable in the sales area and I'm having a tough time getting into sales and that's the next step of my career plan." So as far as I know he called him, I got an interview with Bob Mariano and ended up getting a job with CBS Cable as part of the start-up affiliate relations department as they were pulling it all together. On that team were some other notables. Bob Mariano had assembled a team of our initial salespeople that included Mark Rosenthal and Nora Ryan. Mark went on to be Chief Operating Officer of MTV later in his career, and Nora Ryan went on to be president of Rainbow Programming Services under Josh Sapan for a number of their networks and also, I think, Voom. I got hired into that group, there were four of us, and we covered the entire country and our job was to go out and sell CBS Cable, this fine arts channel, to the cable industry. I was given a territory of about 25 states beginning with Ohio west to California and the cut-off was Bakersfield and everything north above that line. I call it my trains, planes and automobile days because basically what we would do is go out on the road for two or three weeks at a time, fly into a central location, whether it was Chicago or Denver, and then you would travel using that as a hub. I would travel throughout the West, generally, throughout the Mid-West, the Pacific Northwest and basically fly and drive my way across the country over a two week or three week period going from mom-and-pop cable system to the next, to the regional offices of then TCI or ATC, and selling cable.

VAN ORMER: So what was the reaction from some of these Midwestern, more rural mom-and-pop cable owned companies to this high-end arts and entertainment channel?

HOLLOWAY: It was interesting. The bigger reaction was to me because here I was a young black man coming from New York, coming from CBS to Wauwatosa, Wisconsin or wherever, selling a programming concept that was foreign, and there were only a handful of cable salespeople in those days and so first they had to get over me, who I was coming in, and then we got into the programming. These were a lot of small mom-and-pop cable systems. You did have bigger MSOs, but you have to remember the MSOs were all under a million subscribers so they were still small businesses and it was a difficult sale but mind you, it was a free sale. We did not charge for CBS Cable so they had to just put in the equipment, but the bigger issue initially was the satellite dish. Many cable systems didn't have satellite dishes, or if they did have a satellite dish it was already dedicated and that was before the multiple feed horn of the satellite dish. So you had to have basically a dish dedicated to a network and it was a very expensive proposition. So that was the bigger issue of do I install a dish, do I have a dish, do I install another dish, what satellite are you on, and then we got down to the fact that it was free and the concept of the channel and the like. Ironically, though, after the first six months of being really out there pounding the pavement we had a lot of success. We were one of the fastest growing channels. We launched around the same time as MTV and MTV took off like a rocket and our channel did as well. In the '81, '82 time period a lot of cable channels were launched. You had Alpha/Beta Network which was the predecessor to A&E. You had Cable Health Network. You had CBS Cable, MTV, The Movie Channel, Showtime had already launched by then, but a lot of channels were out there being launched and so there was a lot of activity. It was kind of the frenzy that we saw a few years ago with the internet where companies were just popping up overnight and cable systems were being franchised in the larger cities and the rural areas were expanding rapidly. Suburbanization was in a high growth mode. So there was a lot going on and so we had a huge job.

VAN ORMER: So what ultimately brought down CBS Cable ventures?

HOLLOWAY: A number of things brought down CBS Cable. The first was that it did not have the internal support of the senior management at CBS in the television side. They had it reporting up... and I learned a very valuable lesson where you don't put new ventures in often established business's reporting structure because we had a lot of handcuffs in terms of our inability to get things done. For example, if you wanted to advertise on CBS Cable it was a minimum 1 million dollar buy. You couldn't just come in and buy several spots for several hundred thousand dollars, even. You had to make a huge, major commitment so that was a big hurdle and they refused to let that go. They overspent on our programming budget. There was no such thing, really, in terms of off-net syndication that we could buy so they decided that they would produce a lot of programming and the repeat factor of the programming was not what it should have been. They should have repeated a lot more programming. And then we overspent to wow the cable operator. As a matter of fact, we had parties that are still memorable to a number of people in the cable business. We had a huge party on the Queen Mary at the end of 1980 at the Western Show. We had probably the biggest party in the cable business, or the most memorable party in the cable business, which was the party in the desert, the Desert Oasis, which was in 1981 at the NCTA convention in Las Vegas where we literally turned several acres of desert near Wayne Newton's ranch into an oasis complete with kind of a nomadic village complete with live animals and the party was in multiple states. I mean, it was a 300 hundred thousand dollar party in 1981, so you can only imagine. We had all of these props and it was transportation to and from, and it was an unbelievable party. We had a huge launch party at the public library on 42nd Street. Everything we did was grandiose and you just can't run a start-up business that way.

VAN ORMER: So it was really more the infrastructure of a secure, money-making business running something as opposed to the more stringent structure it really needed as opposed to people not being supportive of the cable venture at CBS or was there some of that as well?

HOLLOWAY: There was that as well. One of the things I think management in the television side of the business wanted to make a statement that television on cable was not a sustainable business by advertising. In the late stages of the venture we actually did try to convert our distribution, which was about 3 million, from free to pay at a charge of like 3 cents a sub, but by then the hit was put in and they had pulled the plug on the venture. And we lost about 20 million dollars in 18 months which in those days was a lot of money.

VAN ORMER: So CBS Cable shut down and where did you find yourself?

HOLLOWAY: Well, interestingly enough, Jim Rosenfield, who was president of the network, and I really had a fairly close relationship and Jim wanted me to come back to the network in a financial or sales capacity but by then I had really gotten the cable bug. I never will forget, I had a meeting with Jim Rosenfield, who was president of the television network, in his private dining room and he's like, "Doug, you know, if you want to come back to the network we would welcome you with open arms and there are a number of career opportunities for you here. We'd really like to have you," because I used to write speeches for Jim, and I said, "You know, Jim, thank you but no thanks. I think I want to pursue the cable business. I really have it in my blood. CBS really is not going to move in that direction and I want to go out and get another job in the cable business. I love it." And I'd made a lot of friends in cable because I travelled so much and it was just an exciting time in an exciting business, and we felt like we were really doing something and we were creating a new career path. The affiliate relations business was a brand new business because it was done very differently than affiliate relations for the television networks, and we were really selling and we were making things. Coming from New York we were kind of the drum, if you will, the communications link to the rest of the country because you've got to remember, there were no cell phones, there were no faxes. Information traveled fairly slowly out to the hinterland parts of the country with respect to what was going on in the industry and the business and so it was great. I wanted to continue to be a part of that. So I went and found out – I believe it was a headhunter who called me and said, "Time, Inc. needs someone like you. They're putting together a new affiliate relations group to start a magazine." I said, "Oh, great!" "And it's going to be a video product of sorts and it's never been done before." So they were going to create a new product that had never been done before and I decided I was going to take a shot with this new product. I had done new ventures now, I'd done strategic planning. At General Foods one of the things I did was help launch Oven Fry which was the biggest product introduction for General Foods at that time, so doing new things, building things, really had gotten into my blood. So I ended up taking a job as part of the startup group to put the plan together for TV Cable Week, which turned out to be another failed venture ultimately, but it was a revolutionary venture in that we created something that had never been done before which was a weekly cable specific guide with broadcast listings. I was the top salesperson, as it turned out, there and worked with a lot of great people and it was just a fun time. We lost though 38 million dollars in 18 months and Time, Inc. ultimately shut it down. There was a lot of political jockeying between the magazine group at that point within Time, Inc., video was coming into its own, and then you had ATC which were the cable systems. There was an internal struggle within Time, Inc. to have this new cable product report in to either HBO or ATC, and as it turned out the magazine group was the stronger group at that point and they ended up getting the report in structured through them and I think the cable group never let them forget it. So ATC was the most difficult sale we had and as a result since we could not sell ATC systems, although we did sell a few – I sold Mile Hi Cable, which was a new build at that time in Denver and being run by Fred Dressler who is a noted Time Warner Cable person – but we had very few ATC systems which ultimately became Time Warner systems. As a matter of fact, one of the bigger deals that we did was I sold the General Electric cable systems and we had broad distribution within that group of cable systems.

VAN ORMER: So that publication lasted how long?

HOLLOWAY: That publication lasted 18 months. I think we did about 10 different issues, customized issues, and it was such a communications story at the time that Chris Byron ended up writing the book the Fanciest Dive, which is about the whole history of that magazine, its rise and fall within Time, Inc. and all the players within Time, Inc. jockeying and everything that went about that transpired in that whole process. One of the great things about it is the fact that we created a new computer system. Not we, but the management team created a computer system which took up an entire floor of a huge office building in White Plains, New York, and I'm sure the computing power of that computer could now be housed in a laptop, but that's the kind of power you needed at that point in time, in 1982, to create a customized, system-specific guide.

VAN ORMER: Amazing to think about that today.

HOLLOWAY: It truly is.

VAN ORMER: So you had a couple of short-lived but valuable learning experiences with CBS Cable and then with TV Cable Week, and when that shut down... How did you meet Kay Koplovitz and how did you get into your long career at USA Networks?

HOLLOWAY: Well, I had met Kay Koplovitz at some cable event, had been introduced to her by my boss from CBS Cable, Charlotte Schiff-Jones, but we really didn't know each other. I'd just met her in passing. At the time, in the middle of 1983 when it was announced that TV Cable Week was shutting down, Time, Inc. owned 1/3 share of USA Network, which was a network that was at that time about 4-5 years old but only 2 ½-3 years old in its current incarnation of USA Network because the original network was called the Madison Square Garden Sports Network. It was an all sports network that Kay Koplovitz had founded under UA Columbia. She worked for UA Columbia, Bob Rosencrans, and they had created this network called Madison Square Garden Sports and that network morphed in 1980, or '81, I believe it was, that network morphed into the USA Network and so there was another Madison Square Garden sports network and then USA Network became a sports and entertainment network. As it so happened, USA Network in 1983 was owned by Time, Inc., Paramount Pictures and Universal Pictures, and so at that point in time of USA's history, HBO was handling all of the affiliate relations for USA Network and there had been, I think, some discontent by the two movie studios about what was going on in terms of how USA was being represented. It was losing money, it had about 12 million subscribers, 10-12 million subscribers, a number of those were part-time, and they had a deal that was free for 10 years in many cases, I believe. At that point, I had now become friends with Don Anderson, Patrick Mellon, Nate Garner, Stan Thomas, all black major players in the cable business. Stan and Don Anderson were executives at HBO; they were both vice-presidents, and they had become my mentors. Nate Garner had worked for ATC. Patrick Mellon had worked for TeleCable at the time. Out of this group, actually, earlier in our career we started, among other people, NAMIC – the National Association of Minorities in Cable – to further the careers as well as the entrepreneur opportunities in cable franchises with black executives and black entrepreneurs. So I had become very tight with them and Stan Thomas and Don Anderson came to me and said, "Look, Doug, we really would like for you to stay within the Time, Inc. family. We have a job for you here at HBO in affiliate relations. You'll be a fast-tracker here, you'll be great." And the personnel department came to me from Time, Inc. and said, "Look, Doug, we like your work. We think you're a great executive. We would like for you to stay within Time but we have another opportunity which we want to open up to you because we're ready to start an affiliate relations department for USA Network, a stand alone department because it's currently being handled by HBO, and so we want you to meet Kay Koplovitz." And so I said, "Great!" I never will forget, I came to her office at 1230 6th Avenue and we had a meeting and we had several meetings after that, and she said, "We're going to start this affiliate relations department, we want you to play a pivotal role of starting this department and really pushing our business to the next stage of its development because we're losing money and we need to break even, and affiliate relations is the cornerstone of our future." And so I decided, and I never will forget, I went and had a conversation with Stan and Don and I said, "Guys, I love you and I know if I come to HBO it's a great opportunity and HBO is the industry leader (in 1983), but I'm going to take my chances at another start-up of sorts. I get to be the start-up guy here. I've built affiliate relations departments before; I know how to do this. I'm in a small company, I can really kind of set my own course and I'm being hired by the founder and president." And they said, "Godspeed and good luck." And so I accepted the job as Director of Affiliate Relations for USA Network and I never will forget, Kay Koplovitz said, "Well, you know, our offices right now are in New Jersey – Glen Rock, New Jersey." My whole career had been spent on 6th Avenue except for the time at General Foods, so I was accustomed to very nice corporate surroundings and she had a very nice office but there was no one else there, maybe a secretary and one or two other people in the office on 6th Avenue. She said, "We're going to be moving you into New York next year or sometime soon, but right now we're in New Jersey so you're going to have to bear with us." So I said, "Okay." She said, "Report to work at this date," and it was December 13th, so my anniversary's coming up very soon, in two weeks, and she said, "Here's the address in Glen Rock, New Jersey." And so I drive out to New Jersey the 13th of December and I'm riding up and down this road looking for the address and I can't seem to find it, so much so that I am now late. What she didn't tell me was it was a bank building. It was like in a little strip mall.

VAN ORMER: You didn't even have your own building!

HOLLOWAY: No, it was a bank! The offices were upstairs in a bank. I don't even remember the name of the bank, to be quite... It was a regional, local bank in New Jersey, in Glen Rock, New Jersey, and there were a bunch of people huddled up in little offices. I went to report to the chief administrative officer there, and he also oversaw personnel, and he said, "Well, Doug, you know we are going to be moving our offices but right now we want you to take this desk in front of our head producer," a guy by the name of Jim Drake, who ran our sports department, and it was a desk outside of his office and in the corner were a bunch of boxes, maybe four or five boxes, with contracts in them, no alphabetical filing or anything, just boxes with contracts, and they said, "Here's your business." From that we built a distribution department and the rest is history about USA Network in terms of it being a multi-billion dollar business and having complete full distribution. But it was a great time, those early days. And then they hired a gentleman by the name of Gil Fasio, who came in as Vice-President of the department about six months into my tenure there and together we built that business. He left after four years and in 1987 I took over as head of that business and brought it to where it was when NBC purchased it in 2004.

VAN ORMER: So at USA there were programming networks popping up all over the place. How did USA Network differentiate themselves from the pack?

HOLLOWAY: Well, the thing that we identified early on was we thought that if we could build the local advertising business for the cable networks and USA would take the lead on that then we could have a reason for the cable operators to buy us because in the early '80s and mid '80s there weren't a lot of channel availabilities on cable systems and a lot of channels were trying to get on at that time. The local cable advertising business was a fledgling business. A lot of cable systems didn't sell any advertising at all and those that did didn't sell a lot of it, and so what I decided at USA was that we would make our mark being the premier local advertiser supported network. So we invested in research, we put together kits, we created a department to go out and train and sell the inventory for the cable systems and that really enabled us to differentiate ourselves and we created a model that showed where a cable system could sell our advertising and offset the fees that we were charging. There was a major push in the late '80s by all the cable networks to increase the revenue generated from affiliate relations because programming costs were escalating so rapidly that we couldn't generate enough advertising on a national basis to support the model. So we decided that if we could show where they can make money off of us locally and we would support that with marketing programs as well then we would have an inside track to get greater distribution, to be more of a benefit to the cable operator and get much closer in terms of their business. So I spent those early years at USA crisscrossing the country, learning the local cable business in a way that I hadn't learned it before and really putting forward new programs that created the local advertising business in support of what we were trying to do because we were under a lot of pressure to have better programming, more programming, fewer repeats, higher quality programming, and eventually move into original programming. And that's where we also, from a programmatical standpoint, really tried to make our mark. USA Network was the first network to produce original movies, the first basic cable network. We were the first network to produce original dramatic series, and we were the first network to buy big, off-network syndicated shows like Miami Vice and Air Wolf. As a matter of fact, Air Wolf was the first show that was an original production of sorts. We bought the original Air Wolf and then to cut costs we used the action sequences that were produced for the original series on CBS of the helicopter and then we just shot new specific footage of the characters interacting and then any time there's an action sequence they would bring out the library footage from the original series and so we were able to have a new continuing series at a fraction of the cost of what the original was. So that really kind of created a lot of momentum, one to get our advertising rates up, and two to really boost our affiliate revenue.

VAN ORMER: At what point was there a decision made to branch out and launch some other networks under the USA Network umbrella like the Sci-Fi Channel?

HOLLOWAY: Well, from the very beginning we wanted to launch networks. Well, not from the very beginning, but by the time we became profitable in the late '80s, when I had taken over the affiliate relations department in '87, we were then profitable, we were looking to launch networks. We had a network that we wanted to launch that was action/adventure. We looked at buying the Nostalgia Channel, we looked at starting a sports network, we looked at any number of businesses but could never get anything green lit from the movie studios. We even looked at and were very close to buying the Hanna Barbera library when Ted Turner stepped in and bought it. We felt that we had a large kids business at that time and we felt that moving into a 24 hour kids' channel was a major opportunity. We even were getting ready to get into the financial news business. We had a deal with Dow Jones to buy Financial News Network and in the 11th hour the movie studios pulled the plug on our deal. We had a terms sheet and everything and we would have created our version of CNBC, but as it turned out they bought Financial News Network instead and the rest is history with respect to that. But we saw a need to move into new cable networks and in 1987 when Ted Turner launched TNT that need was driven home in ways that we had no idea whatever transpired, and that was Ted had gotten Glenn Jones, who owned Jones Intercable, to agree to drop USA Network on the date of the launch of TNT and as it turned out that was a major milestone in, I think, network and cable operator relations and probably changed things not for the better that had a very long-term impact because that feud went on for almost two years and involved a lot of the same people that are still around in the business today. I was really at the forefront of that and it all really began when TNT announced that they were going to do one price for all cable networks. Let me go back. It all began when TNT announced that they were going to have one price for all cable systems regardless of size and there was a lot of back and forth in the cable business because there were huge discounts on the rate cards of the cable networks based on size. They were all volume based discounts. It was good news/bad news for USA. Strategically we decided that we were going to use that announcement because they were targeting their network directly at USA Network and we were the industry leader in basic cable at that time. What we decided to do was to collapse the discounts on our rate card but we had a huge increase which was unheard of at that particular time, which were two five cent rate increases over two years. Glenn Jones got together with Ted Turner from what we understand and agreed to drop USA Network based on our rate increase notification and then carry TNT. It set off a huge war which changed the way contracts were written since then for cable networks because what happened was he dropped us in 1.3 million homes and then we went into a local combative mode where we talked to local political figures, we got local community groups to support our efforts – newspapers, radio, anyone that we could at that time to support getting USA reinstated. They actually kept us off for the better part of 2 years until we negotiated a settlement. We filed suit, we tried to get a court injunction against them of which we were unsuccessful, and Carl Vogel and myself and Steve Brenner, our general counsel at the time, negotiated over several months a settlement which enabled USA to be reinstated.

VAN ORMER: So there were also a lot of partners involved in USA Networks, one of which was Time, Inc., and in '86 they sold out. Can you describe the impact that had on the progression of the network's development?

HOLLOWAY: Well, Time, Inc. was unhappy with its movie studio partners, Universal and Paramount. They were fairly difficult partners. Time, Inc. wanted to grow the business in ways that the other two didn't. In some respects the studios used USA Network to offload a lot of syndicated programming and movies and Time, Inc. wanted to move more aggressively into original programming and grow the business in a much bigger way because they had tremendous success with HBO and that company. They were moving aggressively into cable system operations; they wanted to own other cable networks, basic cable networks, but were restricted by the covenants of the deal of the movie studios, of the partnerships. So they couldn't own another basic cable network outside of that partnership and the partnership was not allowing USA to expand into other networks. So they felt that they were better off selling out. I believe the valuation in '86 was for 46 million dollars. But once they sold off it really set, I think, a lot of things in motion for the company. Ultimately, Paramount sold out but those companies each went through their own set of transitions because Paramount was purchased by Viacom and then Universal, which was owned by MCA sold to Matsushita and Matsushita ultimately sold Universal to Seagram's and so we were going through a lot of management tugging and pulling and finally by 1991 I identified and we had conversations with Mitch Rubenstein, who had created the concept of the Sci-Fi Channel, and part of what I was doing in those days was also looking for new channels to buy or to start and the Sci-Fi Channel had been out in the marketplace for a concept for about a year and a half or so, and Mitch Rubenstein was a small cable operator and television and radio station operator out of Florida and he came up with the concept of the Sci-Fi Channel based on going through a bookstore and seeing what the largest selection of books... what genre those were and they were sci-fi. So he teamed up with some people and created the Sci-Fi concept and we ended up buying that concept. We were able to sell the studios on the concept because finally they realized that a lot of network's concepts had come and gone, a lot had been successful or were in the process of being successful that we had wanted to do and there were the development of the network groups – the Turner group and the Time, Inc. group and you had the Warner Amex group. They were all gaining shelf space and leverage in the industry and we were not gaining, although we were one of the larger networks stand alone, and we felt that we really needed another brand. The thing that they liked about Sci Fi was that they had sci-fi libraries. As a matter of fact, Universal has probably the largest sci-fi libraries of movies and series, and Paramount had a substantial number of titles as well, so that provided them with an opportunity to repurpose a lot of their library product. So we launched the Sci Fi Channel in 1992 and it was a very aggressive launch. It was actually during the freeze imposed by the government on cable system launches and networks being launched, and it was a very difficult time. As a matter of fact, in the first 18 months we had almost no growth and we were very close to being shut down because the Cable Act and the investigation into the cable business by the government put a freeze on pricing and rate increases and made it very difficult to get a cable network launched on a cable system. It was around the same time that Direct TV was preparing to launch, and it was really Direct TV's launching that basically saved our business because the studios were in favor of shutting the network down because they didn't see an end to the freeze and we were off our growth projections because of what was going on in the marketplace. I did one of the first basic cable deals with Direct TV. A good friend of mine had worked there, Keno Thomas, and I made a deal. I said, "Keno, you can use me to get other cable networks to sign," because everyone was afraid to sign up with Direct TV because of any backlash they would get from cable operators about distribution or deals being done, and I said, "Look, you can use me secretly to say you have a deal with USA Network and you can use me publicly if you get HBO and ESPN and a Turner network signed up, then you can come out with a major press release, but until then you can just quietly whisper in people's ear that you've get USA in your pocket, and if you do that then we can get the Sci Fi Channel launched and both of us can have a win/win situation." And so that's kind of what happened and so they used us and we got distribution of Sci Fi and when the cable operator saw Direct TV beginning to grow and Sci Fi being everywhere that they were... the freeze on distribution was lifted by the government and the rate increase moratorium was lifted, and then cable systems were able to put networks on and Sci Fi became one of the fastest growing networks through the '90s as a result.

VAN ORMER: And then of course after the freeze was lifted in the late '90s there was a lot of consolidation that started happening and USA Network was not immune to that. Vivendi Universal acquired USA Network assets in 2001 and then two years later, of course, NBC and Vivendi Universal merged. What direct impact did that have in your career at USA and how did that affect the network?

HOLLOWAY: Well, you know, it actually dates back to 1997 or late 1996. I was then at USA and a funny story... I was interviewing to leave USA Network to become president of distribution for the Home Shopping Network which had been recently purchased by Barry Diller. Right at that same time Viacom decided they wanted out of the USA partnership because they wanted to expand more aggressively into other basic cable network and they were prohibited from owning networks outside of the partnership. And so by now Universal had been sold to Seagram's and Edgar Bronfman who was friends with Barry Diller had gone to Barry and they cut a deal that if he got control of USA Network he would then sell the television assets to Universal which would include USA to Barry Diller. Barry Diller had decided that he wanted to get aggressively back into the entertainment business. So Viacom cut the deal with Seagram's in late '96 and then in '97 Seagram's cut a deal with Barry Diller's company which was then Home Shopping Network to sell him the domestic television assets of Universal which included USA Network and the Sci Fi Channel. Barry bought them and he renamed his company USA Networks, Inc., and then at that point in time I took control of distribution for the Home Shopping Network, and that was the irony of it was that I was at the time getting an offer from Barry to be head of his distribution and he ends up buying the company so I ended up working for him anyway. I took over distribution for Home Shopping Network and the thing that Barry had envisioned for his company was that we also owned 12 Silver King stations, which were about 40% of the distribution of Home Shopping Network, and he wanted to uncouple that distribution so that he could create hyper-local TV stations around the country in the 12 markets and unleash the value of those stations. And so I was given the task, working with John Miller who was then head of the TV station group, working with John and others to create a strategy that would remove HSN distribution from the TV stations and allow John and his group to go program the TV stations, and then we had to resell HSN into the local cable systems that carried the retransmission of those TV stations. So it was a 3 ½ year process, roughly, that it took us to redo the distribution for Home Shopping Network all the while continuing to grow USA and Sci Fi. So it had a huge impact because it was a monster of a task to get accomplished, which was to resell everywhere we had distribution for Home Shopping Network in 40% of our homes, and ultimately we accomplished that and then Barry sold those 12 stations to Telemundo, and then along the way we purchased from the CBC, the Canadian Broadcasting Corporation, we purchased Trio, which was a fledgling network, and News World International, which was a domestic and international news service.

VAN ORMER: So it really expanded a lot, and then of course... Where in the timeframe did NBC enter the picture and the merger?

HOLLOWAY: Well, that all took place between 1997 and 2001, I believe, and then Barry Diller ended up selling all of his television assets with the exception of... well, he sold the Universal television assets with the exception of now Home Shopping Network, he sold them to Vivendi. Jean-Marie Messier, master of the world! But he kept a position in the company and Jean-Marie, as you know, had this huge international conglomerate which was Vivendi, which they renamed or named Vivendi, and loaded that company up with debt. We almost went bankrupt in 2002 but the French government and French banking system bailed him out because it was an international embarrassment and Vivendi decided... they brought in a new CEO after about a year, Jean-Marie was booted out, and then they sold it – ultimately they had a Dutch auction and ultimately sold the company to NBC in 2004. Along the way, I think probably the biggest impact on me professionally was the fact that all of the people that I had started with at USA Network were gone. They were all casualties. Kay Koplovitz left in 1997 and Steve Brenner, our general counsel and ultimately became president of the network, left around 2000, and all of the executives that I had worked so closely with for the better part of 15-20 years were all being moved out. Between '97 and 2004, our company was just a revolving door of executives.

VAN ORMER: Well, how did you so successfully navigate those waters and why? Why did you stay on during such a turbulent time?

HOLLOWAY: You know, I don't have a good answer for you as to how I was able to stay on. I really put my nose down to the grindstone. I decided that I was going to be totally versatile and flexible with each new change in management and I was going to continue to do the best job I possibly could and work as hard as I could and be smart about it, and just try to bend with the wind and read as many of the tea leaves of the corporate politics, which in those years were quite substantial, and to get through it, take one day at a time.

VAN ORMER: Well, you did well and then here you are, finding yourself at NBC, kind of full circle from your grand 20-year plan to work for a television network.

HOLLOWAY: Well, kind of going back to that 20-year plan – if you recall, my 20-year plan was to be president of a major television company in 20 years and I got my presidency when I was 43, actually it was 22 ½ years it took me to do that, and the interesting part of it was I did stay on track. I did track all along the way and I did do all the things that I had set out to do.

VAN ORMER: Were you ever tempted to veer off of your plan?

HOLLOWAY: Many times, many times. There were periods at CBS Television Network where I had really difficult bosses and some very difficult assignments and politically I was out of step and was very close to leaving or abandoning the plan. From the period of '97 to 2004 when Barry came in and bought the company and we had just a complete turmoil of executives and many executives just wanted to make me road kill that came through and I just fought and stood my ground and tried to continue to deliver exceptional results, which I was able to do – never missed a budget, always exceeded plan, always did what I said I was going to do, and so those were really difficult times because there were a lot of people that didn't know me, I was the only black in the executive suite, a lot of people by then had heard about me, I had a reputation in the industry, I was a very visible figure. In the early '90s, I believe it was '91 or '92, Kay Koplovitz and I set off on a strategy to also help make USA have a bigger presence in the industry and part of that strategy was for me 1) to be chairman of NAMIC and she was very supportive of that, to address the whole diversity issue in the cable business, and 2) was for me to become very involved in CTAM, getting involved on the board, become an officer, and that was around the same time that Char Beales had rescued CTAM. She came into CTAM in the early '90s and CTAM was almost bankrupt and she was brought in to really resuscitate it and change its mission and whatnot, and I joined the board not a few years after that, but I got involved in the local chapters and the goal that Kay and I had kind of established and the strategy was that I would, because of my profile in the industry from a business perspective running USA Network's distribution and being involved in the executive committee because I sat on the executive board for 17 years at USA running the entire company with her and others – Steve Brenner, and our head of programming, David Kennon, and others – but was to have more of an impact. We were trying to bring about industry change that would benefit us as opposed to hurt us because we were a stand alone company and we had a fledgling network by then, which was the Sci Fi Channel, but we really wanted to play a bigger role at the table, and so she was on the NCTA board and I would attend NCTA board meetings and gather intelligence kind of sitting around the back of the room, and then I would become active in CTAM which ultimately led to me being the longest tenured board member in the history of CTAM. I served longer than anyone else and also was a chairman of CTAM. Under my guidance as chairman of CTAM, we created the CTAM Foundation which established the CTAM educational program that we now have at Harvard, which has trained hundreds of executives. It began at Northwestern University and we moved it to the Harvard Business School a number of years ago. Those were major things to have an impact on and things that we were proud of, and ultimately it did help the network because there was a time when I was running distribution that there wasn't anything that went on, whether it was political in Washington – I did a lot of lobbying for a number of major cable initiatives in Washington and state offices, state houses around the country – we had a positive impact on our business and I think also on the industry.

VAN ORMER: Well, you're still very active in the industry and I don't want to suggest that you aren't still making contributions in the future, but from your vantage point right now what would you say your professional legacy has been to the industry or what do you envision it being when your career is done?

HOLLOWAY: I'd like to think my legacy was to be one of the pioneers in the affiliate relations business, helping to establish these networks, these cable networks and the health of the cable systems, and now cable representing at least 50% of the profits of NBC and cable networks representing a lion's share of television viewership, and then also helping to bring diversity to the executive ranks of these major media companies which now run the cable business, and a survivor. Friends of mine call me the Mohican because I have survived longer than pretty much anybody else in my side of the business.

VAN ORMER: Today we sat with Douglas Holloway and learned of his career. His interview will be available as part of The Cable Center's Oral and Video History collection and can viewed on the website, www.cablecenter.org. Douglas, thank you very much for your time today.

HOLLOWAY: Thank you.

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Leo Hoarty

Leo Hoarty

Interviewer: Jim Keller
Collection: Hauser Collection

KELLER: This is the oral history of Joseph "Leo" Hoarty, generally known in the industry as Leo Hoarty, the retired president of the Hoarty Corporation and Hoarty Management Company, an extraordinary entrepreneur, an innovative entrepreneur, the past general manager of one of the early major market cable television systems in Toledo, Ohio, Buckeye Cablevision, and a host of other innovative experience in operations throughout his career in the business. Leo, what did you do before you go into cable television?

HOARTY: Well, I started out as manager of chambers of commerce in two resorts.

KELLER: Where?

HOARTY: St. Augustine, Florida and Daytona Beach area, and in Virginia Beach, Virginia, but I left that work and decided to start Virginia Beach's first AM radio station.

KELLER: That was your own operation?

HOARTY: Yes, with a few partners.

KELLER: Did you apply for the license?

HOARTY: We applied for a license, WBOF, and went into business. Later we picked up a defunct FM station in Norfolk and a radio station in Newburn, and we sold those very successfully and I found myself in the tractor business by mistake and I got out of that and I read in the paper that Cox Broadcasting and Henry Kaiser were going to come together and build a cable TV amplification factory. I didn't know much about cable.

KELLER: Before you get into that, were you a native Virginian?

HOARTY: No, I'm from Baltimore, Maryland, but lived there 14 years.

KELLER: What was your educational background?

HOARTY: Came out of the Navy in World War II, went to Stetson University, didn't stay too long, didn't finish, married and went to work in the chamber of commerce field. Later, I went to William and Mary night school and did a little short course at UNC in Chapel Hill.

KELLER: So then, after you formed this radio station, how long did you operate it before you sold it?

HOARTY: I was operating eight years, and then we sold it and I was in the tractor business a short period and I read in the paper that Cox and Kaiser were going to build this factory for cable amplifiers. I thought I was very qualified for that job as president of that company so I went down to Atlanta and applied and spoke to Leonard Reinsch. He said, "Leo, I have good news for you. You're not going to get that job. We've already hired a president who probably won't last a year. You know how big corporations in partnership fight, but I've got just the man you want to see. Go down the hall and see John Campbell. He's heading up our new cable TV department and if you pass the test we've got a major project for you. Go see John and come back."

KELLER: Now, John – was he the original employee of Cox Cablevision or was he still in Cox Broadcasting?

HOARTY: I think he was the original manager of the cable division which they had just formed.

KELLER: Before John Gwin, before Henry Harris, before all of those people.

HOARTY: That's right. They had purchased a couple small mom and pop cable systems on the west coast. A fellow named Davenport owned them...

KELLER: Lou Davenport.

HOARTY: And he went to work for Cox, and they purchased a small system somewhere in lower middle Pennsylvania. So, after going to lunch with Campbell and with their treasurer, I went back down the hall to see Mr. Reinsch and he said, "We're going to build a great..." and then he started telling me about this magnificent cable system they're going to build in Toledo, Ohio.

KELLER: Was he talking about Atlanta also at that time, about building...? I think they had a franchise at that time for Atlanta, didn't they?

HOARTY: He didn't discuss that with me. They were interested in Atlanta. Atlanta was where they were headquartered and they had a beautiful white mansion. But he wanted to tell me how great this opportunity in Toledo was. I didn't know where Toledo was at the time. Finally I got the job to go to Toledo and start the system.

KELLER: Now, before that Cox had talked to the Bloch family, the owners of the Toledo Blade, about building a system in Toledo, is that correct?

HOARTY: Yes. The Blade Company and Cox met because the Blade Company sold them a television station or license in Pittsburgh, which was a very well-performing operation and so Cox went back and said, "Here's something we're interested in," and the two got together to build Buckeye.

KELLER: The Toledo Blade got the franchise in Toledo as a protective measure, is that correct? They wanted to protect their market from other communications sources – was that their primary motivation?

HOARTY: I'd say it was two-fold. They wanted to protect their newspaper, which was a very valuable property and a very respected property, and also they wanted to get into this new line of communications.

KELLER: Why didn't they go into broadcasting such as Cox did?

HOARTY: They had some broadcast interests which they had sold.

KELLER: Who were some of the principles involved in the Toledo Blade decision to get into the business?

HOARTY: I think Wayne Current, who was the vice-president of Buckeye, and John Willey, the president.

KELLER: Buckeye or the Toledo Blade Company?

HOARTY: John Willey was the president of the Toledo Blade Company and managed the newspaper, which was then a morning and evening paper. Wayne Current was his vice-president and assistant. They both became officers of Buckeye Cablevision. I think they were the main forces in bringing the Blade into the cable business and they were the negotiators, they certainly were the liaison with Cox.

KELLER: When you became associated with the now Toledo Blade/Cox, I'll call it joint venture for lack of a better term, what was the status of the franchise? Had they been awarded...?

HOARTY: They were awarded the franchise and we were instructed to get it built and underway as soon as possible.

KELLER: ASAP, right now. This was what year?

HOARTY: 1965.

KELLER: You made a statement earlier that you felt that the Toledo market was the first major market built... what was your terminology?

HOARTY: Where you didn't really need cable. You had good off-the-air signals, reasonably.

KELLER: From Detroit, and they had two stations in Toledo at the time. Some parts of Toledo could receive most of the Detroit and the Windsor Canadian channels, is that right?

HOARTY: Channel 9 of Windsor and Channel 50 came into being, it only touched a little part of northern Toledo, but we had reasonably good off-the-air signal. At that time San Diego was thriving as a cable system, probably the first really successful one in America, but it was pumping in seven or eight channels from the LA area. Cox had the idea that we could improve the Toledo reception with microwave signals, and they had a plan to put a microwave chain across America. They called it a T-bone. It would go down the central United States and across the northern part.

KELLER: Coming through Toledo, right?

HOARTY: Right, and they wanted to bring in some distant signals, and at that time we thought we could bring in a lot of distant signals but later the FCC said you can only bring in two.

KELLER: At one point none, during the freeze. Could you carry the Detroit signals?

HOARTY: We had to fight for it.

KELLER: Tell me why.

HOARTY: Well, for one thing, Storer Broadcasting was suing and interfering and filing against us...

KELLER: Why Storer?

HOARTY: They had a station there.

KELLER: In?

HOARTY: In Toledo.

KELLER: In Toledo, and they wanted to keep out the network station.

HOARTY: Right.

KELLER: But they were a cherry picker, weren't they? Was that WSPD?

HOARTY: I think they were. I think they were, yes.

KELLER: So they were cherry picking from all three networks, then.

HOARTY: I believe so, but I'm not sure of that.

KELLER: I'm not either, and I don't remember that. So they wanted to prohibit any of the Detroit network stations coming into Toledo.

HOARTY: Yes. In fact, I asked John Campbell, he said there were a lot of applicants for my job, and I asked him, "Why did you pick me?" He said, "You said the right thing." I said, "What did I say?" In answer to a question I told him that I thought cable TV, which I knew nothing about, looked like a big threat to the networks and he said, "You're right. It is a big threat to the networks," and it turned out that way.

KELLER: But had Storer applied for a franchise in Toledo also at that time or was it later?

HOARTY: I can't remember that. There was a battle going on, yes. Lamb interests were battling for...

KELLER: Lamb was from Detroit, right? Or Michigan someplace.

HOARTY: Michigan. There was a major battle going on for franchise, which the Blade won.

KELLER: Obviously. Both of them sued, didn't they? Both the Lamb interests and Storer sued?

HOARTY: Yes.

KELLER: On what basis?

HOARTY: I can't recall that. I really can't. Everything in the book.

KELLER: Consolidation of all communications and information in the market?

HOARTY: I don't recall the details, but I can assure you, all sides had major law firms and we spent an awful lot of time as witnesses being called on for depositions and such.

KELLER: Was it tried in Toledo?

HOARTY: Most of the time, yes. Sometimes in Cleveland.

KELLER: That's when it was appealed?

HOARTY: I think the Blade did win out. I know they did. They won out, I just can't recall... There were so many... At one time I remember there were 13 filings against us, 13 different sets of lawyers and 13 sets of charges. It was quite a battle.

KELLER: Against Buckeye Cablevision and the Toledo Blade, or the Blade...?

HOARTY: The Blade and Cox, yeah, all three.

KELLER: Oh, yes, Cox also in there. So when all of this was ironed out, were you building while all this was going on?

HOARTY: Yes. I was a low level person in this battle.

KELLER: You were the general manager.

HOARTY: I was the general manager. I was busy trying to figure out what to do. When I was first hired I asked John Campbell, "Would you give me an operational book of some sort. You know I don't have any background in cable." He said, "That's okay. We don't have one either. You're going to write one. I'll tell you what you can do, go see these people," and he gave me a list of people. He said, "Here's some systems. Jump in your car and go visit them. Take pictures, make notes, pick up some things. There are some smart guys in this business," and he named two or three guys in Pennsylvania, Maryland, West Virginia...

KELLER: Do you remember any of the names or any of the systems that you visited?

HOARTY: I remember visiting near Cumberland, Maryland. I went to the system that Cox had in Pennsylvania. I can't recall right off the bat all the people I visited. I was meeting them for the first time and some of them I never met again. They were just people that he sent me to see to learn what I could about the cable industry. He was interested, John was interested in my broadcast background and marketing ability and management ability, and he said, "You'll learn about cable." But the truth is, the industry was very small. Cox had less than 30,000 subscribers in all of their systems combined.

KELLER: And this was what year?

HOARTY: 1965.

KELLER: Yeah, that's probably right. New York was starting to operate, San Francisco was starting to operate. You visited with Irving Kahn at one time, didn't you?

HOARTY: He told my boss, "When you come to the convention, I want to see Leo and discuss the problem we're having with apartment house complexes," and we were being bombarded with demands for payoffs by apartment house complexes. They didn't want to let us in with the cable and yet they had a lot of renters that were asking for cable TV services, or we were trying to sell and install.

KELLER: Had you ever talked to the utility companies, the telephone company or the power company, about using their easements to get into those places?

HOARTY: To tell you the truth, that's how we really did it. In the early days, we went into what is called a leaseback. We were probably the first major market leaseback.

KELLER: I want to discuss that.

HOARTY: A leaseback is where the telephone company supplies the transport of a signal and we lease from them.

KELLER: All the way to the set.

HOARTY: From the headend to the drop.

KELLER: Just to the drop, not to the outside of the house?

HOARTY: Right, just to the drop, and then we would make the drop and install in the house.

KELLER: How many miles of leaseback system did you have in Toledo?

HOARTY: Well, the overall plan, I remember, was 430 miles in the beginning, and by the way, John Campbell insisted I walk that 430 miles with the telephone company because he said, "If you leave it to them, we'll have more poles leased than we need. I want you to walk it with a telephone company man and pick out the poles you need." First I had to find out how I do that, but once I did I was to walk it out and once we walked it out we'd sign off on it and Ohio Bell would build it. The leaseback portion... I have to explain something that happened. Our headend was seven miles away from our system, so the leaseback portion was at least seven miles before we had the first customer, and we found that wasn't very good. So we had to find a new headend within the system and transfer everything and try not to interrupt service and forsake or give up the old headend. This was not the Blade's fault, this was a Cox problem. They picked the first headend. So that was a big problem. But in the beginning, I'd say that we went maybe 100 miles of leaseback before the Blade Company bought out the leaseback and decided to build their own and run their own cable system, which was a very wise idea.

KELLER: Oh, yes. What were some of the major problems you had with dealing with the telephone company on the leaseback?

HOARTY: Well, I wasn't the only one that didn't know anything about cable. Nobody at the Bell Company knew about cable and oftentimes our little office manager lady would figure out from the telephone calls where the troubles were and call Bell and tell them to go fix it.

KELLER: And they'd do it when they got around to it.

HOARTY: That was part of the problem. They had a heavy union problem in addition to not knowing much about the industry, and they wanted to learn. They wanted it to be right, but the performance was rather slow and it was not an important thing. They whole cable TV operations was so small, so tiny compared to the overall Bell operation that it was hard to get attention.

KELLER: Now, when you started to build your own system, did you interconnect that to the leaseback system or at that time had you bought out the telephone company?

HOARTY: By that time we had bought it out.

KELLER: All of this is going on while the lawsuits are still pending in Toledo, is that correct?

HOARTY: Oh, yeah. We had hearings and lawsuits for some time before they were all settled.

KELLER: What was Lamb's part in this whole thing? They felt that they should have been awarded a franchise, that there was discrimination against them? Do you remember any of that?

HOARTY: I can't recall that.

KELLER: It was a long, long battle.

HOARTY: It was a bitter battle, I know that.

KELLER: It was never fought out in the newspaper though, as I recall.

HOARTY: No.

KELLER: I can't even remember a mention. The reason I'm saying that is I'm from Toledo, so I remember this era and I don't ever remember... well, '66 I was already gone at that time, but I don't remember anything every being published about this.

HOARTY: The newspaper kept arms length from the cable. In other words, we didn't advertise in the Toledo Blade for a long, long time. It was many years before Buckeye was being promoted by the newspaper. It was on its own. I guess there was some fear of somebody pointing a finger and saying...

KELLER: You continued to build and you started originally building a dual cable system, is that correct? And how many channels did you carry on each one? 13 on each one?

HOARTY: We started out with one cable but then our consultant recommended a dual cable. Personally I hated dual cable because I realized the problems we had with one, we'd have more with two. People would be confused with the switches, the lady of the house wouldn't like two black cables coming in her room. So we switched to white and tan cable color for the inside and we did our best to hide it so it was not obtrusive or invading or ugly. Later on, they switched back to single cable because converters became very, very good, but in the early days they weren't.

KELLER: How many channels were you carrying on the dual cable system? 12 on each cable?

HOARTY: I think 12 on each cable.

KELLER: What were you carrying on those? As you said before, there wasn't that much to carry.

HOARTY: They weren't all filled at first. But we did originate our own channel. We had local origination. We had a camera crew and staff that went out and made films of the zoo, the churches, the school activities.

KELLER: You did it on film, huh?

HOARTY: We did it on film and later it switched to tape, but we were doing it the hard way. We also rented some films directly from Hollywood and ran all night movies. In the early days they were very poor films. They were expensive and poor films because Hollywood wouldn't release anything that was good.

KELLER: Some of your other innovations, and other systems were doing those things but never 24-hours a day, you also had a 24-hour maintenance program or service calls on a 24-hour basis?

HOARTY: I don't remember when, but sometime after we passed 10,000-12,000 subscribers and we knew we were in an industrial city that had a second shift, we knew that because we had such a wonderful response on our all night movie channel, people liked it. Sometime about then I had the idea that we should have a 24-hour service crew. The union fought it tooth and toenail.

KELLER: Why?

HOARTY: I don't know. I never really understood the union...

KELLER: Which union?

HOARTY: We had the Communication Workers of America. They voted in union when we started. We only had three installers but they voted union.

KELLER: That's a union town.

HOARTY: I did my best to talk them out of it but I didn't succeed. I said, "Why don't you try me out? Test me. See if I'm going to be a terrible manager before you resort to union, start paying dues," and they didn't see the logic of that. I thought they had a wonderful chance to test me for six months or a year and see how we treated them. I knew we would treat them well. But anyway, the union objected to the 24-hour thing.

KELLER: Were your studio people union also? Your camera operators, were they union people also, your studio people?

HOARTY: No, no, just the installers and the servicemen.

KELLER: You're talking about the union objecting to your 24-hour maintenance program or service calls?

HOARTY: Right. They were objecting to that. They also didn't like it when we put on women as techs and installers which was something we did, we were probably the first in the industry because I remember we had some magazine that wrote us up, had a picture of one of our girls climbing a pole.

KELLER: How many of the percentage of your trouble calls did you get after say 10:00 at night?

HOARTY: It was a small percentage. I don't mean that it was heavy duty, but I felt that we were... well, first of all, we were scheduled to be a 40,000 subscriber system. That was our goal and we were maybe 12 or 15, 10 or 12, I don't remember. But I could see that the sooner I could get this underway and have good service around the clock, the better our reputation would be and the more customers we'd keep and the less we'd lose. Churn was a very serious problem. Not as bad for Toledo as some places like California, but it was a serious problem and we had to make up for those people who disconnected or moved.

KELLER: Now parenthetically, and I think the viewers should be aware, that all of this was before there were any satellite delivered signals in the market, before HBO came on the air or on satellite in '74-'75. So you were doing all of this and you still reached a 52% penetration prior to putting on satellite signals?

HOARTY: Yes. We did everything. We had bingo games, in addition to the all night movies. We even had a fish tank on camera; we had a camera that scanned all the weather instruments so that people could look and see what the weather is.

KELLER: Did you have a ticker tape?

HOARTY: No, we didn't use that right away but we did later. We did everything we could think of to make the service... well, I'll tell you how far we went. We had FM radio, we added that, and then I came up with a suggestion to our chief engineer, "Can you put shortwave on? I'd like to put shortwave radio on in addition to the FM." He said, "Sure." After tinkering around he built a system for us and we put all the favorite shortwave stations on, including two, which I later found out, I wasn't allowed to put on. I put on Voice of America because I personally could tune into it and like it, and put on BBC and put on Radio Moscow. Now this was back in the days when...

KELLER: Where were you getting the signal?

HOARTY: We rigged up antennas to pick them up.

KELLER: Shortwave antennas.

HOARTY: I later found out that I wasn't allowed to do it. I don't think they still do it, but somebody pointed out to me that it was absolutely illegal to put those two on. The strange thing about that, no one ever mentioned to me – I just put it on, Radio Moscow, I thought I'd get some reaction – no one ever mentioned it until I was talking to somebody at the FCC.

KELLER: Leo, I want to start from there in the next set of questions, and I want to get into how you continued to develop the system in the eight years you were there. Leo, as you were developing the Toledo market, you also then expanded outside of the city limits into the surrounding suburbs and you went after the franchises there. How did you handle that?

HOARTY: Well, it seemed like all my evenings were taken up going to city council meetings with the attorney to either explain what we were going to offer in a bid for the franchise, or explaining why we hadn't started construction after being granted the franchise.

KELLER: And how did you answer that question? Although you were constructing...

HOARTY: Very carefully. First of all, it does take some time to study a community and to walk out the poles, to lay it out, to get the materials, to get the construction underway...

KELLER: Well, in effect you were constructing, you were doing pre-construction work.

HOARTY: So we used pre-construction activity, reported on that very honestly, and reassured them that we would start the operation as soon as possible. Meanwhile, we had to keep building Toledo and there was pressure on there to do adjacent communities or sections.

KELLER: There were? Who was pressuring you to do that? Were there other applicants in say Maumee or Sylvania...?

HOARTY: There were potential and other applicants, of course, but within the city of Toledo, we had pressure from neighborhoods, "When are you going to get to us?" So we were trying to get to them as soon as we could, meanwhile train the staff and upgrade the service within the existing system, and we did a fair job of that. Service was a very important thing. We had some problems, though. The leaseback was a major problem because we were knocked off the air a lot by the phone company and without a signal we couldn't do anything.

KELLER: How were you knocked off the air?

HOARTY: Well, for one thing, in the winter time we had bad weather. Then sometimes a pole would get knocked down by an automobile.

KELLER: But they wouldn't cut you off, the phone company wouldn't cut you off?

HOARTY: No, no, I meant they would have disrupted service and they were slow getting to it. They thought getting there the same evening was very good and we thought it should be the same ten minutes. We had a difference of opinion. The other problem we had was computers were brand new, computer building was brand new and Cox was brand new in doing it.

KELLER: So Cox was still managing it. You were still reporting to them?

HOARTY: Cox was doing our billing. The billing was being done in Atlanta, it didn't work. So then we switched and got a local computer company to do our billing and once we straightened out billing and once we got off the leaseback, then we could get rolling because those are two major problems.

KELLER: The problem was that if the system had an amplifier go out or started to vibrate or something like that, you'd call the telephone company, you would not get immediate service.

HOARTY: Would not.

KELLER: I can see that. Their cultural attitude was, well, so you don't have phone service for awhile. So what?

HOARTY: Also, their idea of a good, clean signal wasn't good. They would put up with snow and interference on a signal that our customer wouldn't appreciate.

KELLER: They didn't have any video technicians, did they? Or any electronic technicians?

HOARTY: No, they were learning, just as, really, we were.

KELLER: I don't know of any leaseback situation that has ever worked.

HOARTY: I don't either.

KELLER: And fortunately very few operators ever leased a telephone company plant, only under very dire circumstances did they do so when they had to do it for competitive reasons or for whatever, and there was a time, as you remember, when the telephone companies wouldn't allow us on the poles.

HOARTY: That's right. What amazes me is that the telephone company wound up owning so much of the cable industry and now is trying to sell it back.

KELLER: You're talking about AT&T now. Did you have any problems with getting any of the franchises in the surrounding areas?

HOARTY: I don't think so. I can't recall any because Buckeye was really a very good system. For its day it was about as good as you could get, and I don't recall any problem on the franchise.

KELLER: What did you say to them when they said, "If you get the franchise today, I want the system built tomorrow?"

HOARTY: I repeated all the true stories of how long it took to lay it out, to design it, to construct it, to hire people, train people, and get service going. It does take some time. Although Buckeye started out rather quickly, I didn't come to work in Toledo until about November 1st and we were on the air by March 31st.

KELLER: Of what year?

HOARTY: '65. And we were on the air, as they said, or we were active serving customers, and we had to serve, I think it was 50 customers by midnight March 31st in order to comply with some FCC ruling, but we did it.

KELLER: I don't remember what that would have been.

HOARTY: I don't remember what that was either, except we had an absolute deadline and meeting it was critical.

KELLER: I'd like to look into that sometime a little bit further. Now, did any of the suburbs give you any problems?

HOARTY: I can't recall. I really can't recall any except complaints about when are you going to start.

KELLER: And they all wanted to be next, huh?

HOARTY: Yes.

KELLER: What if you were on the east side of Toledo and Sylvania wanted service next? How did you tell them you'd do that? You'd have to build all the way through to get to them?

HOARTY: The company handled those high level discussions. I really wasn't in on all of that. The attorneys for the company, the offices of the company handled those negotiations I'm sure more than I did. I was more or less the operating manager reporting, answering questions, but I certainly was not the politician in charge.

KELLER: That was because it was the Blade ran everything. You were there until '73?

HOARTY: '74.

KELLER: '74, so had you built a satellite receiver dish before you left?

HOARTY: No, we didn't get into that. We had some pay TV services, but they were the kind that brought tapes and that sort of thing.

KELLER: Bicycled the tapes around.

HOARTY: Bicycled the tapes.

KELLER: Did you take the HBO service at that time?

HOARTY: No, that came a little later.

KELLER: HBO had a revolving service at one time, too.

HOARTY: They had a tape cycling service, too.

KELLER: Then they went microwave throughout parts of Pennsylvania, upstate New York and so on before they went on satellite. Your system in Buckeye didn't receive HBO until after it went on the satellite, is that correct?

HOARTY: I think that's correct. Buckeye is now a very big system. I think it's over 150,000 subscribers. I'm not up to date on that. I've been out of cable for eight years, by the way. I was there for the first 30,000 subscribers. They made great advances after I left. I'm proud of the planning we did, which made for a big system but a lot of that came after I left.

KELLER: What kind of amplifiers were you using in the system?

HOARTY: Oak, I think. Oak, Jerrold, maybe. I know for sure Jerrold. I remember Mr. Malone was selling for them at one time, now one of the famous names in...

KELLER: He was president of Jerrold Corporation. How many channels were the maximum number that you carried while you were in the Toledo system?

HOARTY: I think it was under 24.

KELLER: Twelve on each cable?

HOARTY: Yeah, but we had a few blanks for lack of product.

KELLER: When you went to a single cable then, and of course converters had come in by that time, I would think, how many did you carry then? Just the twelve or were your amplifiers capable of going higher than that?

HOARTY: Most of the conversion came after I left, but it took some time to do that. I really don't have a schedule of how they built out but they built up as the industry did, as the converters became more and more useful and reliable and more and more services came in, they built up to as many as anybody had.

KELLER: While you were at Buckeye you also became associated with industry associations, the Ohio Association, the Mid-Atlantic or Great Lakes Association, and you were also on the board of the NCTA for at least one term if not more, is that correct?

HOARTY: Yes, I belonged to the OCTA, the Ohio Cable Television Association, and rose to be president, and then I got elected on the NCTA board. The only part about that that I was very proud of, at the time I was the first NCTA board member that was elected by his peers, that is the systems of that region, and that was a new idea that NCTA came out with. I wasn't a big-time owner of a cable system. I was really a small fry. In fact, I wonder why you had me on this program.

KELLER: Well, I think that will become obvious as we go on.

HOARTY: I enjoyed being on that board for a few years and one of the nice things I remember was voting for the introduction of C-SPAN and Brian Lamb. In fact, I was envious of him. I thought, wow, what an idea! I still think he's the best person...

KELLER: Why did he come to the NCTA?

HOARTY: He was looking for a sponsor.

KELLER: He didn't find it at NCTA.

HOARTY: At first. But he did down the road, and I'm happy to say that I voted for him. It was a great idea. It was a fantastic idea and he's developed it into something... I don't know what we'd do without it in the industry.

KELLER: Do you remember anything else of major importance that went through the board while you were on it?

HOARTY: Yes. At the time we had a ban on pay TV. Pay TV was locked up, Hollywood was hanging on to its movies and deathly afraid of cable. NCTA for some reason politically didn't want to do what I wanted to do, which was to publish some letters to the President, Nixon, asking him to free up pay TV. It was a crying shame that the movies were being withheld for selfish reasons from cable and cable needed the movies to fill in the gaps that we spoke of earlier. So I borrowed $15,000 personally and I ran a letter to President Nixon in the Wall Street Journal and the New York Times and some magazines and I got maybe 100 cable companies and individuals in the United States to sign the letter and chip in to help me pay back the $15,000 loan.

KELLER: Now, when you say free up pay television, did you mean for the broadcasters to free up their product, or for the FCC to allow you to carry a pay television operation?

HOARTY: Both. We wanted Hollywood to let go of the films, we wanted the FCC to relax the rules so we could carry it. NCTA wanted that. In fact, after I finished this, and I think it was a successful campaign, John Gwin personally gave me...

KELLER: John Gwin was with Cox at the time, right?

HOARTY: Yes, and he was our chairman...

KELLER: He was chairman of the NCTA?

HOARTY: Right, and he congratulated me and the board on this little project and thought it was very successful. A funny thing happened. At the time I published this letter and it was all over the place in 48 hours, the actual letter I never mailed. There was a personal reason – I was ticked off at the Vietnam War, I was ticked off at President Nixon, I was not a Republican to start with, I was a Democrat, and I just didn't mail the letter. I published the letter but I didn't mail it. Later, at a dinner party in Washington, one of the NCTA officers introduced me to a White House person, a lower level White House person, who said, "Leo, I had a question I want to ask you. Remember that letter?" I said, "Yeah, I do." He said, "We never could find the letter. What happened to the letter?" I said, "If I told you, you wouldn't believe it." He said, "How about if I guess." I said, "Okay." He said, "We analyzed it because we had to give an answer and we analyzed that you never mailed the letter." I said, "You're absolutely correct." But it shows you how smart they are. They figured it out.

KELLER: Were you discussing copyright on the board at that time? Whether or not the industry should pay copyright?

HOARTY: Oh, yeah. That was a big issue, that was a big issue. So was rate regulation.

KELLER: Let's stay one at a time. I want to get on rate regulation, but let's stay on copyright. At that time there was a battle going on, we'd already been told that we were not liable to pay copyright payments to the broadcasters. That had already been determined by the Supreme Court however, and tell me whether or not I'm correct in this assumption, the movie producers would not let their product go, nor would some of the other program producers of television let their product go, until they were paid copyright. So it's my theory, and I think a lot of people agree with me, that without copyright we probably never would have gotten as far as we did into the multitude of programming that we were able to achieve.

HOARTY: I agree with you. I was amazed at how it came out. I thought we were going to be stuck with a much higher copyright fee than we did. I think I was the same was most of the industry – I was very amazed. I thought they really had us on that one, but it worked out.

KELLER: Well, the copyright tribunal and the single payment into the tribunal who then distributed it made it a whole lot easier. I think. Would you agree with that?

HOARTY: I agree. Yes.

KELLER: Now, the rate regulation, go into that.

HOARTY: Well, let me talk about rates. I differ with the industry in general. I thought we always charged too much. I said it before, I've said it at NCTA meetings. In fact, I once gave a little talk and I had a pretty good audience, about 500 showed up for this, and I said, "Would you pay me $50 cash, right now, if I promised to pay you back $5 a month for the rest of my life?" And a couple hands were raised, and one guy said, "Well, do I have to stay alive for 20..." I said, "It doesn't matter whether you die or not, you are theoretically a customer. When you move, someone will move in. If you sell the house, somebody will buy it. Would you pay me $50 for a promise of $5 a month for the rest of my life?" And a lot of hands went up. I said, "I think that we overcharge as an industry." We were charging $5 a month at Buckeye. Later they raised it and I didn't like that, but they raised it.

KELLER: For?

HOARTY: For our general service, yes. When I look back on it... Well, my argument then was we could do a better job of attracting customers, and one of the things of course I did and everybody else did – free installs. Free installs for basic cable, free installs for extra outlets. Just last week, I have a friend – I'm talking about this month – I have a friend who told me that he was offered $200 cash if he'd come back on Sprint, his telephone service. Evidently they found out it was worth it to get him back because he'd pay that back in 3 or 4 or 5 months. I notice the automobile industry has a cash back thing. But at the time I felt we were charging too much and that we should pay more attention to lower rates and more incentives to come on cable. Free service – I advocated giving a month free, maybe a month and a half free, and it worked in some cases. I later got to test those ideas out elsewhere and we didn't do that at Buckeye.

KELLER: You didn't? You didn't do any of those programs?

HOARTY: Well, I did some, but we never gave upfront prizes or anything like that. We did give free installs.

KELLER: How about pre-wiring homes in new subdivisions?

HOARTY: Yes, we did some of that. Yes, we did. That was something we like to do.

KELLER: What were your other innovative marketing ideas that you used?

HOARTY: Well, let me look at a couple of notes here. Most of the ideas were to improve service. We did a lot of door-to-door canvassing, of course, and we did a lot of direct mail. I didn't like telephoning, I still don't. I hate to receive those calls, and I'm no different... I think most people hate them. But we had to do them. We had to do some of it. The key, though, is good service, keeping that customer on. If you can reduce the churn, the disconnects in your system, you've got it made. If you've got reasonable service, you're going to keep customers. Most people are reasonable. They'll stay on a three-hour outage if it's an ice storm and everything's knocked out, they understand that. But they don't understand it if it happens during the World Series game or a New Year's Day football game. I think the main thing we did was service in producing sales.

KELLER: You felt that was primarily the reason you did so well? 52% penetration at that time in that market was extraordinary.

HOARTY: It was good, yes it was. I'm very proud of that. What is the industry at today? I'm eight years behind.

KELLER: The industry is 60-65% overall.

HOARTY: Considering the satellite competition that's not bad.

KELLER: That is declining a bit at the present time, but not substantially. Most companies are weathering the competition of the satellite company. I think there's a place for both and there will always be a service there, but cable has become, and I think you'll agree with me on this, cable has become more than just a movie delivery service or a broadcast station delivery service, it's become a communications method, a method of distributing internet and high-speed transmission and so on. These are things that cannot very well be done by satellite. They can be done but not on the basis or the extent they can be done on a wired system. I think you would agree with that.

HOARTY: One of the things we did – I know this will sound very, very impossible – but we sent a hand-written letter to every prospect in our system one year. I think the year was '69, it may have been '70, and it took me a year to do it, but I did them by hand, and it was very effective.

KELLER: You wrote out an individual letter...?

HOARTY: I made it into a valentine. I figured a woman would open it if it looked like a valentine, and if the husband got to the mail first, he'd want to know who sent the valentine. So my theme was we love you and we want to get involved and so forth, but the outside of it was strictly a valentine, and it did work. That was one new idea we had.

KELLER: Did you ever hire a marketing company to assist you?

HOARTY: I did, and I'm trying to think of the name of the company. It was out of San Francisco. I can't recall...

KELLER: Marc Van Loucks?

HOARTY: Someone associated with him, yes. A lady, and I'm very embarrassed I can't remember the name.

KELLER: Lisa, she used to work for Mark, I can't remember her last name. She came out of the Van Loucks organization. Jeff Marcus was...

HOARTY: Yes, that's right. That's who it was. You nailed it. Of course you know as much about this as I do. You've been in it just as long, haven't you?

KELLER: I think so. Let's say that you had everything pretty well established going in Ohio, in Toledo – why did you leave Buckeye and what did you do when you did?

HOARTY: Oh boy, that's a good question. Well, number one, I wasn't very smart and I stayed there too long. I really should have been in business for myself and that's what I eventually did. Phil Church who was another Ohio cable operator, several years before I left Buckeye he said, "Leo, you should quit and we should go after some franchises and start a cable system." I had seven children, a good number of them were in high school and college by that time and I was a little reluctant to get started. But I was in business before I went to work for Buckeye and I really should have done that earlier. Anyway, in 1974, I had an offer I thought I couldn't refuse although it wasn't very smart of me and I moved to San Jose and took over as maybe their 25th or 26th manager.

KELLER: Al Gilliland's system?

HOARTY: Mr. Al Gilliland, yeah. He had a big problem. He was trying to raise something like 8 million dollars and he had a deadline – he had to get his customer count from I think it was from 41,000 to 52,000 subscribers and we had nine months to do it. It was a do or die thing, and he had to have that loan and it was based on the growth being there. So I went out there and we did achieve it. I didn't get the bonus I expected and that was the last time I ever worked for a cable company because from that moment on I went in business for myself.

KELLER: Tell me a little bit about the San Jose market. How did that differ from Toledo?

HOARTY: Oh, it was a fantastic market. It was a very big, sprawling system. I can't remember the mileage now but it was two or three times Toledo. It had a terrible churn, like 4 or 5 percent a month or something. It was high, it was very high. So the first thing we had to do was stop the churn because it ate up almost all that you could do in selling and connecting. They had a backlog. I made a list up for Mr. Gilliland on a pad like this and it took about five or six pages, just items, that had to be corrected and he didn't like it, and I don't blame him. I presented that to him on the first meeting that we had...

KELLER: But he knew something had to be done.

HOARTY: Oh, yes, he did. Yeah.

KELLER: He didn't like the fact that you showed him what had to be done, even though you were hired to do that.

HOARTY: He did not like it. Another thing he didn't like, he didn't like my being on the NCTA board and he said if you want to stay here, you've got to get off the board. So I had to resign from the board.

KELLER: Why was that?

HOARTY: He didn't want to pay the dues, he didn't like it. He later became a board member and I think he got to like NCTA and became one of the leaders of NCTA.

KELLER: And how long did you stay at San Jose?

HOARTY: Just a year.

KELLER: Just a year there.

HOARTY: When I achieved this goal, it was goodbye Charlie.

KELLER: And as you said, that was the last job you took in the industry.

HOARTY: Yeah, I did not want to work for a cable company. The cable industry's been very good to me but that...

KELLER: We're going to get into how you developed your own company and how you did it and where you did it in the next segment. Leo, after you spent about a year in San Jose and in nine months increased the system from roughly 41,000 to 52,000+ subscribers and you told us that that was your last job and you made a termination at that time – that was the last time you were going to work for a company or corporation – what did you do then?

HOARTY: I listened to the advice of my old friend, Phil Church, and went in business for myself, and I found a company called Cable Communications Consultants.

KELLER: That rings a bell.

HOARTY: It rings a bell because you had a company by the same name. I went to work as a contractor for an old friend, Ray Joslin, who was then managing Sacramento, California.

KELLER: For Continental?

HOARTY: For Continental. I met Ray when he was managing the Findlay, Ohio cable system. By the way, he was the president of OCTA right before me.

KELLER: That's the Ohio Cable Television Association?

HOARTY: Right. And I tried to hire Ray Joslin one day and I didn't succeed. I wish I had because he's a brilliant man. Later on we did other business, but right now...

KELLER: Excuse me. Ray Joslin is currently the president of the Hearst Corporation cable operations.

HOARTY: The last I contacted him he was, but he may have started his own business.

KELLER: As of the last time I talked to him, because I did his oral history, so that's just parenthetically who Ray is.

HOARTY: So Ray said, "Okay, I have a problem. Leo, would you come to Sacramento and train my sales manager and kind of reorganize my sales department and start a little sales campaign?" And I did that for a few months as a contractor, and then I popped around California doing cable audits...

KELLER: Subscriber audits.

HOARTY: Subscriber audits, marketing, hired some installers, rented some trucks, did some installs, servicing. I started a little company that grew rather well and I started doing jobs all over the country. One time I got a contract with Rollins – they had wired up two-thirds of Delaware and they needed a campaign...

KELLER: In Dover?

HOARTY: They were all around, about two-thirds of the state was Rollins Cable at one time, and Dover was one but there were quite a few others. That contract alone grossed me about a million and a half dollars before I was finished. It went over a several year period. I did rather well in that business. Then I had the idea that I wanted to really listen to Phil Church's advice and go after franchises and I began...

KELLER: The year, '73-'74?

HOARTY: This was '75, '76, right. So I began applying for franchises but I didn't have any money. Although I was paid well as a manager with seven children and college and all that, I didn't have much money. I had less than $5,000. But I had built the business up a little bit and I was doing all right. So I had the idea of going to some of my old broadcast contacts and seeing if I can raise some money. I went to Blackhawk Broadcasting, a Midwest firm that was doing rather well in radio, but they hadn't gone into cable and I talked them into letting me borrow their P&L sheet to show to franchise authorities and made a deal with them that we would start up a company, go after franchises, I would have 20%, they would have 80% which was kind of standard in those days, and they said, "Sure." So they let me borrow their P&L statements and gave me a nice letter and I went off by myself applying for franchises.

KELLER: Where?

HOARTY: Mainly, at the time, in Illinois, Michigan, Indiana and that was about it. But I had no more than gotten started than they called up and said, "Leo, the deal's off." I said, "Why? What did I do wrong?" They said, "Well, we couldn't tell you at the time but we've been negotiating and we've been bought out by a big insurance company and we told them about your project," at that time I was in Lake Forest, Illinois, "and they said they want nothing to do with the Chicago mob, so the deal's off. Cancel our participation." So I had to go back to the various city councils that I'd applied to and tell them that I didn't have my sponsor but I would soon replace them. That cost me several franchise applications, you can imagine. I then turned to a famous name in the industry, Bill Daniels, and I told him I needed his help, I wanted to find a company that would replace Blackhawk as my partner. He agreed. My goal was to go after a very famous company, a broadcast company, Capital Cities, which was founded by Lowell Thomas and headed at that time by Tom Murphy. We met with Mr. Murphy, talked him into agreeing to this deal. Bill Daniels vouched for me as far as knowing the business and a person of character, and it turned out that they did replace my former partners and we went back to the city councils and we did win a few of them although we lost a few. That was the beginning of what was called Omnicom – I had two companies, one called Omnicom of Illinois and one called Omnicom of Michigan. In Illinois we won Highwood, we won Highland Park, Deerfield franchises.

KELLER: Highland Park is a high-end suburb of Chicago.

HOARTY: High-end, very high-end. It turned out to be a very difficult system.

KELLER: All underground, isn't it?

HOARTY: All underground, a very demanding, very upper-scale income people, and it was a very tough one. It was one that Cap Cities was almost sorry they got into. It was a difficult one. It was successful as a business but it was a pain. A lot more time had to be poured into it, a lot more time, money, than normal.

KELLER: And the number of homes per mile would be so small.

HOARTY: Oh, it wasn't the greatest. It was good but it wasn't the greatest. In Michigan we went after Plymouth, Michigan – that was the first franchise we won – and then Canton, Canton Township, Plymouth Township, Belleville, Hamtramck, and Northville. Hamtramck is a little city, only 10,000 people, inside of Detroit. That was not a smart move; that was a difficult one – pure industry and factory workers. Again, why we picked that one, I don't know but it worked out. I also, before I got Cap Cities, I applied for a little town in Tennessee and I got it. I didn't build it, though. I found myself too involved elsewhere and I sold it over the telephone. I'm almost embarrassed about that one. But at that time, that's the way some franchises were granted. I got another few franchises in Indiana, which we sold to another company. So that's how I got into the franchising cable development business and it worked out very nicely. Cap Cities decided they wanted to acquire ABC and they sold all their systems to the Washington Post, Katharine Graham's company. She was a friend of Cap Cities and took that over and then Cap Cities, later ABC was acquired by Disney, and of course the Washington Post still have their cable systems and it's grown into quite a company.

KELLER: Then you didn't stay with them?

HOARTY: No, when Cap Cities sold out and I was paid off and I was out of it – I actually didn't work for Cap Cities, I was a consultant and partner – and at that time I decided to become a cable broker. I was quite amazed to find out that there was no license to be a cable broker, unlike a real estate broker. There was no board of directors to report to. You just did it, and I began representing buyers and sellers in cable TV, which was a very interesting part of the business.

KELLER: How did you obtain your clients, both buyers and sellers?

HOARTY: That's an interesting question. I remember one client, a very strange deal – I telephoned another broker who also owned the cable system and I said, "I'd like to sell your cable system for you." He said, "Leo, you're crazy. You don't need the business." I said, "Yeah, I do and that's why I want to do it. I think I can get a better price for your system than you can because people will think you're very bias since you're a broker and you own the cable system. If I go in, I'm a third party, I can do a better job for you." He said, "You know, I think you're right," and I went ahead and sold the system for him. Another unusual case, I had a cable system in North Carolina – I moved to Raleigh, by the way, in 1981, Raleigh, North Carolina...

KELLER: Where we are today.

HOARTY: This cable system, which is not too far from here, we were at lunch one day and I was trying to get him to let me sell his main system. He said, "Leo, I don't want to sell my system. I want to buy my neighbor." I said, "Why don't you?" He said, "We don't talk to each other. He's a no good oh-oh-oh..." and so I said, "Well, that's why you need a broker." And he said, "If you can get him to sell, I'll buy." So I went over and talked to the other person and told him who I represented. I said, "I know you two guys don't talk but I'm an independent broker," and I told him my credentials. I bought that system for this other cable system. One of the most interesting and most prolonged deals I ever did was for my old friend, Ray Joslin, who we mentioned earlier. I was representing a group of systems that surround San Juan, Puerto Rico, and our negotiations with Ray and his associates, it took three years and we finally closed the deal. It was a sizeable deal, in the upper teens of millions and we had a celebration party. We declared it was the longest running negotiation in history and it probably was. Cable deals usually moved a lot quicker than that. Also, I got into some international work, did some surveys in Guatemala and Costa Rica, and I sold some systems in the Dominican Republic – places I had never been before.

KELLER: How's your Spanish?

HOARTY: Very, very poor. Very poor. But I didn't need to speak Spanish. Very truthfully, I was dealing mostly with people who spoke English and where I needed translation I hired it. In the case of the Dominican Republic, I had a system there I sold in Santo Domingo twice. The first buyers...

KELLER: Two commissions, huh?

HOARTY: The first buyers failed to build the system and the seller took back his franchise and what was there and said, "Leo, go sell it again." So I sold it again to somebody who built it and built it right.

KELLER: But weren't you doing other things other than just brokering or were you just simply in the brokerage business?

HOARTY: No, I did some consulting work. A law firm, and I really can't go into details of this, but a law firm was representing a converter company, a manufacturer – one that I had used in my business dealings. They were being sued by a cable system that wasn't happy with their converter and that was a sticky wicket, and they had been battling this out for several years, two or three years. The law firm said, "We got a recommendation on you from somebody, NCTA or somebody, and what we want you to do is come in and start reading. We have a roomful of paper and it's dragged on so long and with turnover and other problems we've kind of lost track of the case. We don't know whether we've got a winner or a loser. So your job will be to tell us if we have a winner or a loser and give us some advice on how to settle this thing." So for a very good fee I was allowed to work at home and read and study case after case of books of the various depositions, and then we went to deposition and I surmised that the company – my employer, the law firm's client – was right and that he should not settle but let's enter into depositions and the lawsuit. After a few depositions, the cable company and the two law firms, they settled for one dollar. My client was very happy, saved 60 million dollars. I got a very fat check and I was very pleased. Also I could work at home. I did some of that work; I did arbitration. I got listed with the Arbitration Association and I participated in several arbitrations.

KELLER: For values of systems, is that it?

HOARTY: Values of systems, disputes. I represented a dispute between some systems around Newark, New Jersey.

KELLER: See, you were with the mob!

HOARTY: Mentioning the illegalities, I'd like to say this: I was very proud of my association with Cap Cities, for instance. The chairman said, "We will not pay one dollar under the table. There was an awful lot of under the table deals in franchising."

KELLER: See, I dispute that.

HOARTY: I think so.

KELLER: I dispute that.

HOARTY: You may. But I was under orders, "Don't you ever buy one of those deals." And then there were some above the table deals, as they are today, I think. There are not many franchises around.

KELLER: A lot of franchise renegotiations.

HOARTY: Renegotiations, and it's above the table. I'd like to ask you a question.

KELLER: This is your interview.

HOARTY: You can't do it, okay.

KELLER: I can, but I won't.

HOARTY: I understand.

KELLER: How many arbitrations did you become involved in?

HOARTY: Three or four, three or four.

KELLER: Have you done much work with law firms?

HOARTY: Not too much, but to answer another question of yours, I did a lot of evaluations and it's something I did fairly well. I got into computers about 21 years ago and I developed a 900 line program so you could input every aspect of a cable TV system, every aspect of it. If I thought of a new one I added it. That gave me a lot of business. Evaluations were a tough thing. I even worked for a telephone company on one evaluation. I never thought I'd work for a telephone company.

KELLER: Neither did I until I did.

HOARTY: I evaluated a system in South Carolina, by the way, for a phone company.

KELLER: Well, when you were brokering, you had to do the evaluation for the value of it anyhow, didn't you, before you put a price on it which was agreeable to the seller?

HOARTY: Oh, sure. And of course personal recommendations go a long way in this business. One of my wonderful friends, Bill Bresnan's company, I guess I did 15, maybe 20 evaluations or appraisals or marketing studies or something for different cities that at that time that company represented.

KELLER: Did you make a distinction between an evaluation and an appraisal?

HOARTY: Yes, yes, yes. It would be hard for me to recall all the distinctions, but there is a distinction there because the industry in general appraised things and then the evaluations were more detailed, a lot more detailed.

KELLER: So which would you use if you were setting a price on a system to be sold?

HOARTY: I would like to do every one I could.

KELLER: I mean which one of those two, an appraisal or an evaluation would you do for a system that you had obtained to sell?

HOARTY: I think I would do both but I would prefer an evaluation in detail. I'll give you another interesting thing I did. One time one of the TelePrompTer system managers was driving on his way to a regional meeting of managers to set up budgets and he was killed in an automobile crash. The police impounded the car because it had an accident with somebody that was running drugs and they impounded both cars. So the job the regional manager put me on, he said, "Go visit his systems. He had 17 systems, and see if you can put together – very quickly – a proposed sales budget for those systems based on what records you can find because everything's locked up in his car and we can't get to it. That was one of the little unhappy, sad things, but an unusual type of thing I did. I visited his systems...

KELLER: Were you able to determine cash flow?

HOARTY: I did a fair job for them. They were very pleased. I know this, Mr. President offered me a job one time and I'm sorry I turned it down. It was one of those times after I quit working for cable systems but he made me an offer, I think it was for Oakland, California, and I wasn't interested. But he certainly was an interesting man; I think one of the great leaders.

KELLER: Who was this?

HOARTY: Bill Bresnan.

KELLER: Bill Bresnan – still is!

HOARTY: Still is, yes.

KELLER: He's the chairman of The Cable Center.

HOARTY: I had a lot of other experiences but mostly in the last years I was doing brokering.

KELLER: If you were to do it all over again, what changes would you make in your career?

HOARTY: I would have quit as a manager and gone into business earlier. That would be the main one. Also, I think I would be a little more careful in my contracts. I was a person that really ignored contracts. One time I made a deal with one of the Rollins managers – a little side issue – and we wrote it on a napkin. He said if you'll do so-and-so, I'll give you so-and-so, and I just made a note on the napkin and I did the thing – it was about a year later – and I took the napkin and said, "Do you remember this?" He said, "Sure do." And he paid me right off the bat. Most of my brokerage deals were, believe it or not, verbal. I was dealing with that kind of deal, people that trusted me and I trusted them, but if I had it to do over again, if I could start from scratch, it would be on paper in great detail. I think that was one of my weaknesses.

KELLER: You had a handshake mentality, huh?

HOARTY: A handshake mentality was not smart. Also, I had a client that died in the middle of a deal and anything can happen. I learned the hard way.

KELLER: Would you have gotten into the cable industry, do you think, once you'd been associated with it in any form? Would you have stayed in the cable business?

HOARTY: Yes. In fact, during my broadcast days I used to read broadcasting magazines. It was the only thing I read, and cable was buried in the back, little FCC notices, and I hardly knew anything about it even though I was in radio eight years. I told John Campbell when he hired me, I said, "I need some help. You got a manual?" He said, "No, you're going to have to go out and find out about the industry," because the industry was just not well-known.

KELLER: So you helped write the book.

HOARTY: I did help write the Cox book.

KELLER: And that serves as one of the reasons that we're interviewing you now.

HOARTY: Oh, thank you. And a copy of that book Cap Cities published for me, which we sold, we sold a good number of them, it was an operating manual.

KELLER: Do we have a copy of that in The Center?

HOARTY: No, but I will get you one. I have one. I think I'm down to two.

KELLER: I think we should have one.

HOARTY: O.D. Page was my editor, if you remember him, and John Vobrek was the president of my company. John's deceased now – he was president of our Illinois company.

KELLER: Before we wrap this up, is there anything else that you want to add to this discussion?

HOARTY: Well, I appreciate being invited. I was amazed that you would ask me. I'm not a cable pioneer. There are some wonderful people in this industry I greatly admired. They're all well-known and saluted in the industry, but I can remember being very impressed with so many – Mr. Hostetter, he was a success from the get-go, and I mentioned two or three others, but a lot of them helped me out, gave me business, gave me advice. John Willey was one of the finest men I ever worked for.

KELLER: President of the Blade Company, right?

HOARTY: Right. I still communicate with him and I hope you'll interview him.

KELLER: I hope, too. Leo, I think it's about time that we wrap this thing up. I'm delighted that we had the opportunity to visit and I think your story is going to be well-received in the archives of The Cable Center. This has been the oral history of Leo Hoarty, in my opinion an entrepreneur extraordinaire and an innovator in everything he's ever touched. This interview will be eventually on the website of The Cable Center and I very much appreciate you talking with us, Leo. Thank you very much.

HOARTY: Thank you.

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Jim Hirshfield

Jim Hirshfield

Interview Date: Saturday February 10, 2001
Interview Location: Sun Valley, ID USA
Interviewer: Liz Burke
Collection: Hauser Collection

BURKE: This is Saturday, February 10. I'm here with Jim Hirshfield. We're in Sun Valley, Idaho. This happens to be the 20th Annual Reunion for the Sawtooth Cable International Group. But we're also here doing oral history, and this oral history interview of Jim Hirshfield has been made possible because of a grant from the Gustav Hauser Foundation. This is part of the Oral History project that is sponsored by the National Cable Television Center and Museum in Denver. With that, I'd like to get a little bit of background from Jim on why you're here and what you're doing in Sun Valley.

HIRSHFIELD: This is our 20th anniversary, I guess you'd say. We have 20th anniversary shirts. I don't have mine on. This is a group that started with four or five of us who, after the Idaho Show one year 20 years ago, came up for a weekend skiing at Sun Valley. It's just grown to where every other year we come to Sun Valley. Every other year we go somewhere else. I think there are about 25 of us here, quite a few of whom are Cable TV Pioneers and all of whom have some connection to the cable TV industry. We think of it as a social thing, but it's amazing how much business does get done just as we walk with each other.

BURKE: And of course later this weekend we're having a panel. Can you give me a little information on that panel?

HIRSHFIELD: The panel is going to be people who have been active in cable TV in the northwestern part of the United States for a long number of years. We're just going to talk about the development of cable, regulatory, political, some of the people, and try to have a good time.

BURKE: You, yourself, are from Seattle, and you've been there for some time. You founded and started your own company in 1973?

HIRSHFIELD: Yes. Actually I will give you the whole nine yards. My father was in the service so I'm from a service family and lived a number of places, went to college in Texas, was in the Navy in California, went back to graduate school. In 1966 upon graduation with an MBA, I got a job with a small cable TV company in Seattle. So that's what took me to Seattle 35 years ago and into the cable TV business 35 years ago. I stayed with that company two years, started my own little company, ran that for four years, and sold it because that's what my major partners wanted. Then in 1973, I started Summit Communications which was the business I had until a couple of years ago –a cable TV company.

BURKE: Let's go back to before you had Summit. What was your interest in cable? How did you get involved and how do you feel about the industry?

HIRSHFIELD: I wanted a job, coming out of business school, as a financial guy in a small company. It just happened that that ended up being a cable TV company. I really didn't know a lot about cable before that time. So that's what got me into the industry. As a financial guy it was sort of easy to see the numbers, and spending a few months with them showed me this was a good business. I had been a ham radio operator in high school and in the Navy had had responsibility for active and passive electronic devices, so the technical part of it was sort of familiar. The financial part I liked. That was really the stimulation for getting into it.

Pause while video is being adjusted.

BURKE: I'd like to get back to those early years in cable. What was the industry like back then? What were some of the issues you had to deal with? You worked a lot with small companies at that time, right?

HIRSHFIELD: Yes. I think one of the things I remembered when you asked that question is – my sister asking me in the early years what she could tell people that I did for a living. I said, "Tell them I'm an entrepreneur." She said, "Well, that sounds like a dirty word." It was amazing the dissonance, I guess, so many of my friends and family had when I entered this young business. Actually, the company I went to work for, Telecable Inc., was one of the large companies in the industry. By '68, 1 ½ - 2 years after I got there, we had about 15,000 customers, and I wish I could remember all the numbers, but that was pretty sizable. That was top 10 or something like that. Companies just weren't that large. Of course, all our customers paid $5.40 a month for cable. That's another thing. And that was expensive. I think many of the other operators were charging $3.95 - $5.00 a month for cable. We were just getting, I guess you'd say, modern management techniques.

A lot of the early operators had financed their systems by just going out and building them, and if you wanted cable down your street, you got your neighbors together and you each paid a $100 - $150 one time fee, and the cable guy used that to run the cable that extra block. We were one of the early companies that would actually front the money to run the cable and then go in and try to sell it to everybody on the block. We would do things like 10-day free trial. We figured once people got on, they would never get off. That basically is what happened. We built markets that had none to two television stations off air. We would do 70% - 80% penetration right out of the box and keep it. Those were markets like Bellingham, Washington, Olympia, Bremerton, Mount Vernon, Sedro-Woolley, and a lot of little towns around Puget Sound in the Seattle area.

BURKE: So after you had that experience, what caused you to stay in the industry and start your own company?

HIRSHFIELD: Well, I sort of liked it. I was telling you I had a sense of how the technical worked. I understood that. And the numbers seemed to work. So when my first company, Telecable, got sold, I basically went out and started my own operation. I got married to my wife, Mary, from Seattle.

We came back from our honeymoon on a Sunday and on Monday we were in front of the King County Council. She was holding my charts and I was telling them why they should give us a franchise to operate in this certain area – the back of a hill – so that the TV signals would go over but the people on the back of the hill didn't get anything. It was about 500 homes in the area. I, then, was working for a fellow named Stan McDonald as his chief financial officer and building this business on the side. My wife had not yet gone back to work. She would go over to Pruzan, which is now part of Antec, and she'd pick up the bolts and the hardware and stuff that we needed for the next few days. She would drive them out to the construction crew that we'd contracted with to build the plant. On weekends I was down there. I was sometimes up poles on hooks. I hadn't been trained for that but there was nobody else to do that. I would hire people I knew in the industry to come in on the weekend and build this. We used the old SKL amplifiers and tapping devices. When you put the cable into these devices, they had a problem. The connection electronically wasn't very good. There were a lot of intermittents. So they developed this set of copper fingers that you curved around, just the size of the entry hole, and you stuck it in there such that it made contact with the shield of the cable and also the housing of the device. That allowed it to make good contact and operate correctly. So one of the things I did when I'd go out on the weekend and look at what the people who were helping me were doing, I'd go and look at the ground under each pole to see if there were any of those "fingers" there. I figured if they were on the ground, that that meant they weren't in the device up there, and we'd have to go up and do it again.

I guess the purpose of that story is just to say that even in 1968 when we were doing this, the technology was a long way from where it is now. We had solid state amplifiers that came in 1966, and that was back in my Telecable days. J.C. Sparkman, of TCI fame, was the Jerrold technical rep who spent probably three months living in Olympia trying to make those amplifiers work in our system. The hard shield cable, with the aluminum outer shield, came in about 1965. Before that we used copper corrugated stuff which is sort of funny, before that copper braid. These things didn't work as well. So when I came into the industry, it was a time when the technology was changing, but we still used a lot of old stuff.

BURKE: Obviously at this time there was a lot of new technology coming in. How did you keep up with all the technology changes in this new industry?

HIRSHFIELD: One thing - and I can't take any credit for this - but one thing that happened in Seattle was in about 1967. Jerry Laufer who was the vice president for engineering for Telecable and a guy named Bob Brown who held the same position for Teleview Systems, (Homer Bergren's company, which eventually became Viacom) built in Everett, Washington, at Bob Brown's location, a cable TV test lab. They had reels of cable so that you could run a signal through lots of cable. They had a temperature controlled vault so they could put things in there and run the temperature up and down. They actually tested a lot of components. We used to get these specification sheets that this amplifier will do this – 1, 2, 3. And when you tested it, more often than not it didn't do 1, 2, 3. It did 0 and 4, or nothing at all maybe. So this was the first effort I'm aware of to actually test the electronics, to see if they worked.

Of course, what happened very quickly was the vendors wanted to be tested, wanted that seal of approval - although it was nothing that fancy – to know that the gear worked. That not only helped the northwest, but Teleview systems all down the coast, quite a bit of it in California. I think that's where we really started to get hold of the technology, what worked and what didn't work. For years, we would go to the cable shows. Let's use amplifiers, to pick on them. Vendors would show us their new amplifier, and if you actually looked at it, it was last year's amplifier with a new label on it. That's the way the marketing went for many years. I think it's sort of like the way the computer industry has been in recent years, that they market it before it's actually developed. We had a lot of that. Sorting that out was really a big part of the industry, because you'd had what I used to call an electro-mechanical monster. You have miles and miles of cable that are connected and send signals, let's call it, through them. They're subject to all kinds of things going wrong with them. If any one of those things goes wrong on a certain leg, then your signal's impaired. So there were lots of pieces, and it was important to get them all done right. It was probably in this area where we started to get on top of that as an industry.

BURKE: How long did it take until you really felt your systems were reliable?

HIRSHFIELD: I think, in my business, I never felt they were reliable. I sold my company, as you know, two years ago. Even up until that time, we used to have monthly meetings where we would get the list of all outages where our system had gone out as opposed to service calls where there was something in the house. We used to have outage reports that we'd correlate. But we would sit down and ask what we could do about this and what we could do about that. Inevitably, stuff that you thought you couldn't do anything about, you could. So we were constantly working that problem. Our approach to customer service was, you don't have a customer service problem if they don't have any need to call. So we worked to make our system go well. I guess it's just a moveable feast. I think people don't know, or at large, understand the complexity the cable TV industry has always had in running these very large systems. There are lots of things that can go wrong. They're very complex.

So if you backed off and said back in the 60's, when did you think the gear could work, I think probably late 60's or early 70's we decided that the amplifiers, once your cooked them in and ran power through them for a couple of weeks and they sat there and nothing had broken, they were pretty stable. I'd say, at that time, the components started to become pretty stable – maybe early 70's.

BURKE: Is that when the big growth started in the cable industry?

HIRSHFIELD: Oh boy - no I don't think so. What do we have – in 1966...

BURKE: Late '60s.

HIRSHFIELD: Well in 1966 we had the freeze – I forget the actual word – where we couldn't bring distance signals into markets. Then in 1972 we had the Second Report and Order where we had a whole set of rules out of the FCC that said what you could and couldn't do. But the markets were not in good shape – the financial markets – in the early 70's. I sold my first company – as an example – for stock at the end of '72 to TelePrompter Corp. We shook hands on the deal a few months earlier. TelePrompter was at 41. We closed right at the end of '72 and TelePrompter was at 36. Eight months later, TelePrompter was a 1.5. So we had that kind of stuff going on in the financial markets. That, of course, meant you simply couldn't get the money to build these things because cable was expensive to build.

The '84 copyright act really settled out the terms under which you could bring more stations in. Then the big thing that drove the industry, I think, was in the late 70's – the satellite – which gave you product. You had markets where you couldn't sell them anything they didn't get until the satellite. We put our first satellite dish in in 1979, I think. It was a 10' satellite dish and it allowed us to bring 3-4 more signals into this town than we could simply receive off air. Of course, that's what stared this trend toward 50 and 100 and 150 channels, 500 channels. Until the satellite came as a method of distribution, we didn't have any way to bring people more than they could get. So probably in the 80's, that's what drove the building of the major cities.

BURKE: The satellite period was very interesting. I understand that was a big event for cable and for some of your small systems.

HIRSHFIELD: I want to tell you about Buhl, Idaho. We decided we'd try this satellite stuff, but try it first in this system. We bought a 5-meter dish so that's about 16' in diameter. It cost $30,000 - $35,000 and we had it shipped to a yard at one end of town and we put it all together. Then we hired a crane, and we had a big advertising campaign. The crane picked the whole dish up pretty high because it had to be high enough for the 16' dish to be well off the street. We drove all the way through the center of town out to our headend site on the other end. We actually had people out watching the dish go through. Our theme was "Buhe, Idaho from candlelight ('cause the town was formed in 1906) to satellite." We put the satellite in and we added 4 –5 signals. That was a big day. That really wasn't too much. We had people in the industry putting in 10-meter dishes, 33' dishes at $100,000 and more just a year or two earlier.

By the mid-80s, the actual dish, not the electronics, went from $30 - $35,000 down to just several thousand, $3,000 - $5,000. So you had the ability to put them into lots of cities.

BURKE: Even before the satellite came in as increased distribution, satellite was growing. You were in the position where you'd worked for some companies. You had your own company. What are some of the stores of getting the franchises and getting in to towns and actually building in complicated towns like Seattle?

HIRSHFIELD: We did two things. But back up on my history, I worked for Telecable from '66 –'68. Then I built my own company while I worked for another company as chief financial officer. Literally then, from '68 – '72 I had my own company which we merged into another company, and they sold it to TelePrompTer. I started Summit Communications in the fall of '73 and in the spring of '74 needed a job so I went to work at Seafirst Bank as controller of the bank. So here I had this little company. I'm working about 60 hours a week at the bank, and I'm working about 20 hours a week at my company. I would get up at 5:00 Saturday morning, for instance, and go catch the 7:00 ferry to the town of Friday Harbor on an island north of Seattle where we were building a cable system, build a headend and stuff like that, come back Sunday night and go to work. I did all that stuff.

If fact, let me sort of run this story out. So '74 – '76 I worked for the bank. In '76 we bought two cable systems – one in Oregon down on the coast, and one in Bishop, California. That allowed me to leave the bank and go full-time in the cable business. So now I'm operating out of a desk in my basement. My wife and two neighbor ladies are doing the accounts receivable for my systems. We had, of course, a phone with an answering service. By '78 we had gotten a bit bigger – 6,000-7,000 customers – and I was going to hire a full-time employee. My wife and I had this serious discussion where she told me I could not hire this woman and put her in the basement with me, that I had to go get an office. So we went and got an office. That was '78 or something like that.

By 1980 we were about 9,000 customers. We sold our St. George, Utah system because it was growing so fast we couldn't keep up with it financially. It was just too much for us. Out of that we grew some more. Our Bishop, California system we sold in '86. We sold that one (about 1/3 of the company) because my wife used to say, "If we're doing so well, why don't we have any money?" In cable TV, you didn't make any money running the business. If you generated any cash, you put it back in because you had all these investment needs. Really the only way you could take money out of the business was to just sell it and sort of start over or retrench. So we did that in '86.

To just run this string out, we went from 15,000 to 10,000 customers in '86 and by '98 when we sold the company, we had about 42,000 customers. Much of that was internal growth. We bought a system in Seattle, and we did some franchising, so we had a mix.

BURKE: So you bought and built systems.

HIRSHFIELD: Yes. One of my favorite stories is Port Townsend in '75 when we were franchising that operation. I had to wait for the public discussion. One guy wants to talk to the city council. He says, "You know, you picked my dog up. The dog catcher picked my dog up. I went out and asked why he picked my dog up, and I took pictures of other loose dogs running around which he didn't pick up." He held up and unfolded this series of photographs that were taped together so they went down to the ground. He said, "These are all dogs running loose." The mayor turns to the dog catcher and he says, "Fred, do you have anything to say about this?" Fred says, "Well, it's a lot easier to take a picture of them than it is to catch them." To me that was what I saw probably more than anything else in franchising. It was always the dogs. We would always be sitting there waiting for the dog issues to get done. These were smaller towns across the country. I had the mayor of Friday Harbor explain to me why the big cities had problems. His explanation was that he made $6 a month being mayor and that's why Friday Harbor didn't have any problems because everybody was too busy getting on with life.

I don't know if I told you – I did. I told you the story of – I should let me wife tell this, but – you try to dress appropriately for the town. But one day our lawyer came in in this sort of pinkish-reddish suit. I don't know where he got the thing. I could tell you some fun things that happened in Bishop. We bought the Bishop cable system from one of the big companies. They sold it because they had come in and told the city they were going to increase rates. The city told them they had to go through this process and they said they badly needed a rate increase because they were having financial troubles (which they probably were). "We're going to increase rates a week from Friday." So, of course, the mayor calls up the local judge, and the local judge has a hearing with the city and issues an injunction saying that the cable company can't raise rates. All these people are watching their TV on cable. There was no TV in Bishop if you weren't on cable. So these guys said, "Well, we can't deal with this politically," and they sold the system to us.

I went out to visit the system to see if we wanted to buy it. Bishop, California is some 200 miles from the transmission towers in Los Angeles. It's up in the desert up on Highway 395 sort of central east California. They had an antenna that was 240' sort of in a semi-circle, 60' high, and screened. That all focused the signals back to a focal point where the antenna picked the signals up. So if it was hot weather, the signals weren't as good as maybe if it was cold weather and if you had temperature inversions the signals would sort of miss the focal point and you just wouldn't have them. Of course, there was no satellite so that's all you had. So from here you went six miles into town and then you went six miles in a couple of other directions to serve these communities. These were with these old amplifiers that perhaps weren't as stable as they should have been. So anyway, the manager takes me out to one of the ends of the system. We're 12 miles from the headend. It's a hot summer day. We go into this house, and they turn on the TV for me. There was actually nothing there but the housewife just clicks – there's channel 4, there's channel 5. There's nothing there. There's snow. And I said, "Well, how do you like the cable?" She said, "Well, actually it's wonderful. On these hot summer days, as you can see, it doesn't work as well as it might."

What struck me out of that was that you could run our business, like any business, I guess, two ways. You could actually fix things so they worked or you could tell people that this was normal. Since the people in Bishop had no choice, they thought this was normal. Well, we did buy it, and we fixed it. It actually worked pretty well. We had, through the years, a number of rate increases. In those days, the cities had to approve all the rate increases. The city of Bishop actually sent out a questionnaire asking everybody in town whether our rates should be allowed to go up. I think something like 39% of the people said yes. I appeared before the city council and said, "This is really incredible. Can you imagine 39% of the people saying it's fair for my prices to go up?" But that's the kind of environment we dealt with.

We had a fellow who owned a radio station there. This is all in the late '70's, and he wanted to run like Home Box Office but his own thing – pay TV programming. So he bought video tape players and movies, and he was going to put them into our system. But we didn't any deal. We weren't adverse to him doing this, but we wanted to make some money on it too.

So one day, I came down there. I used to go down there every 2 – 3 weeks. His pictures were on our cable system. We went over to our little building. He had actually drilled a hole into this sort of equipment building and run a cable from his studios over, put it in there, tapped into our lines, and was running his business. So we disconnected him and he sued us. A day later, we're in court. He was trying to enjoin us from doing that. Turns out that the judge is his godfather. We're in court. The judge is his godfather. But to his credit, the judge did the right thing and said, "You can't do this." These are some of the things. This same guys actually did the same kind of thing up by this big antenna site I described where he cut into our cable there and ran it over to a microwave site he had and microwaved our signals 10 miles down the valley to a little cable system he was building. The same kind of thing. It was sort of a cowboy area.

BURKE: Refer to the wild west.

HIRSHFIELD: Both as to the cities and also the people you had to deal with.

BURKE: You go away for two weeks and you come back and people are hooked up to your system.

HIRSHFIELD: We solved the problem by buying him out, of course.

BURKE: Very interesting. While we're on the topic of the wild west, why don't you mention again your stories about Anacortes, because it was pretty wide open in those days.

HIRSHFIELD: Well, this was a system we built at Telecable. The antenna site was on Mt. Erie which is now a park. You couldn't put anything else up there. But in those days it was just the top of a bit of a mountain on an island north of Seattle, Fidalgo Island. Then behind Mt. Erie is the town of Anacortes with about 5,000 homes maybe. So the way you ran the cable from the antenna site on top of the mountain down to the cable system was to put the cable reel on top of the mountain and lower it down the hill, paying out the cable. But as it turned out, the lowering mechanism broke, and the cable reel went top to bottom, crashing its way. But the cable was all right.

BURKE: The cable didn't break.

HIRSHFIELD: So we used the cable. I was telling you, some time later in that town, driving around, there was a house with an antenna, and the antenna wasn't pointing at Seattle where the TV towers were. It was pointing where nothing was. I wondered what was going on here. My wife would tell me I was nuts always looking at antennas. We had the technician climb the pole and look. Apparently this guy, because who else would do it, had drilled a little hole through the shielding of the cable so that all the signals were not only going through the cable but they were radiating out right at his antenna. So he clearly was picking us up on his antenna. He's got great cable TV. He's not paying for it. He's placed us in violation of FCC regulations because you're not supposed to radiate outside the cable, for good reason. That was another one of those kind of things.

BURKE: So in addition to dealing with franchises and sort of the wild west mentality, you also mentioned you were dealing with FCC rules. What was that like in the early days?

HIRSHFIELD: I think in the early days - and there's almost an internet tie here – if you had information, you had an advantage. The FCC, in 1966, said you couldn't import distant signals into markets. I think that arose out of San Diego, Lee Druckman, in bringing in distant signals from Los Angeles, when San Diego only had two networks at the time. He did very, very well. The local networks in San Diego, of course, didn't like the competition. That all ended up in the '66 freeze. The FCC was studying it.

Then in '72, they came out with the Second Report in Order which was a fairly thick, small-print book. If you read that, knew it, had some sense of how those rules might be applied, that gave you an advantage going forth in the business. That's really a theme that we ought to mention as a theme. So much of the regulatory stuff that came down over the years, where local and federal government tried to shape cable, really just became barriers to entry. So if you were there and you understood this stuff, you only could run your business as well as you might be able to under these rules – that was the negative.

The positive was that it was very hard for somebody else to come in. That takes you back to franchising. The typical thing that started to happen at about that time – and I'll give you counterpoint story in a minute – was that cities started creating franchises, monopolies, and selling them to the highest bidder.

So the story I'll come back to – Seattle, in 1966, adopted it's first franchise scheme. The scheme was this: you could get a franchise for the whole city if you were qualified. Qualified meant by character, financially, and by your understanding of the business. But that was about it. It wasn't because you promised to plant trees or something silly. Everybody got a franchise. I think there were 12 or 15 outstanding shortly thereafter. You then could get permits to build cable on city streets. But you couldn't get more than 50 miles of streets worth of permits, and there were 1,600 miles of streets in the city. And you couldn't keep the permits for more than six months. You had to be done. What happened was, I think five or six companies came in and started the second phase of build-out. Seattle actually had had cable since '52 which is yet more story. But they started the build-out and of course, after awhile, as happens, you run out of money, you have to make this investment you've made pay off before you can then invest the next bit of money. A lot of Seattle got built in that way.

In '72, Seattle adopted a new franchising scheme where they created districts. They did this because they had different companies already built in different places. You then got a monopoly right to build the district, but you were required to build it out. So that was '72. As late as the early '90's, many of those districts were not built out. So the regulatory scheme was that we give this guy a monopoly, we require him to do things like provide local programming (that was one of the big ones), and he'll build the whole area. But the regulatory mechanism wasn't sufficient to get the area built. They didn't know what was built or not. But it was sufficient to give them a monopoly to people who had these areas. What happened was that construction in Seattle slowed down significantly. The town really didn't get built out until the late '90's. It's always been my belief that had they just stuck with the first system, they'd have been built out 20 years sooner. They removed the incentive. And a lot of cities did that.

BURKE: You actually built in Seattle, so how did you deal with sort of this patch-work regulation?

HIRSHFIELD: Of course my first company, Telecable, Inc., got one of those 1966 franchises, and we built maybe 50 miles of cable in an area called Ballard. We had local origination there which didn't do much for us. We thought it would, but it didn't. And I have to tell you another thing we thought we had. We had Telecable 5 Star Theater. The boss, the head of Telecable, and his number two guy, (I was chief financial officer at that time), met a fellow named Lee Cook from, I think, Houston, Texas. Lee had the right to sell movies for you to run on cable along with his associate, Felix somebody – I forget his name. So we thought this was great. I said that I was sort of busy with my financial stuff. I didn't need to be involved in this. The marketing guys went to town and they put on Telecable 5 Star Theater. We were showing, pretty much, movies that had just come out of the movie theaters.

That went on for, I don't think, more than maybe 10 days. On that day in our office, I think I was the only officer in our office, several guys came in to Adie Miller, the receptionist, and they had suits on and they had FBI badges. They said, "We're here to pick up your movies." Of course we were pleased to do whatever they asked us to do. It turned out that his fellow Cook didn't have authorization even though he had apparently presented something to us. I think he owned movie theaters or somehow was taping these in movie theaters. I'm not sure how he got them or what the deal was. I think he went to jail over this. I remember the name Felix because I remember he got to go into the Army instead of going to jail, which in 1967 was probably a brave choice to make.

Another guy that built a system at that time was Phil Hamlin. That's a name the industry knows. I think Phil, by the early 70's had 15 million cable converters out. His was the cable TV converter that worked. He had them manufactured overseas in Japan and brought them in through Seattle and distributed them to the country. He had built this system in Seattle in order to test his converters, but decided he wanted to be in the converter business.

That was my first company that I owned a piece of. I came in and bought his company. So we were on Capital Hill in Seattle. Again, I think there was only about 20 – 22 miles of cable. The city was going through this refranchising deal. I managed to get myself appointed on the cable committee, the theory being that they should have somebody from the industry sitting there while they're going around making all these rules up. They had university professors and people like that on this committee. That resulted in this 1972 thing right about the time we'd sold our company, and I've talked about that sale. Then in about 1980, the city franchised a minority area. They franchised it to a fellow who was a very nice guy. The company was Vanhu. I remember that. V-A-N-H-U, meaning "of the people" or "for the people", a Swahili word. He was a local guy. But he never got this area built. So here's one of these districts that the city has created, these monopoly districts, sold to the highest bidder. They wanted this to be minority owned. They accomplished that, but it never got built.

So finally, early 80's – several years after he had it – they voided his franchise with much angst. I was not involved in that. They awarded the franchise to guy named Bill Johnson out of Ohio, who was also a minority. Bill built the system. He built it about '83 or '84. By '85 or '86, Bill also had financial difficulties. The banks wanted him to start paying them back, and he didn't have the money. This was again pretty typical of cable. You've got all your money invested and sometimes it didn't come back as quickly as you wanted. But you sure could invest a lot.

It ended up, we bought Bill's system. In going through the city of Seattle for the franchise transfers, we had this minority overlay where people wanted this to be a minority franchise, but there was nobody of that qualification who was going to step up and actually put the money in it that needed to be put in there. That took nine months to get that thing transferred. It was sort of difficult trying to do the right thing and say the right thing, and yet all these various interest groups work their way through and have their say. So we ended up finally owning that system.

I'm going to go back a little. In 1982, we had built a system in downtown Seattle, again an area that wasn't constructed, because a couple of companies were building major apartment and condo developments there. There was no cable, and they wanted cable. I knew one of them. He called me up. So we went to the city, and we asked for permission to do this. They said, "Well, no, we have to go out to bid for that franchise district. Until we go out to bid for the franchise district, you can't build cable in there." So these apartment guys came in and said, "Well, we want cable." And the city said, "Well, I'm sorry. This is the way it works."

So we went out and started to run the cable within the block. So we were within the buildings. We had a dish on a building and antennas. We actually had the dish on the roof of the lowest buildings so all the high buildings blocked the interfering microwaves because the telephone company was nearby. Their microwave operated on the same frequencies as the satellite did. So we had to have the dish on the top of a building but also in a hole, if you will, with high buildings around. So we got that all figured out. Well then they started to build the next block. Now we had this street crossing. They said, "We're opening the street. You can run your cable across." So we put a piece of conduit in, and the city inspector came and took it out. He said, "You don't have a franchise." So we went to the city and said, "How do we get a franchise or a permit?" We did this same thing again. Well, it ended up about nine months later, we're sitting there with our lawyers, and we said, "Here's what our lawsuit looks like. We don't having any interest in having a lawsuit. Just let us cross this street."

At that point, the city then passed an ordinance that had lots of qualifications, but it was such that it let us cross that street. It probably didn't let anybody else do anything. So then it got sort of silly. They kept building these apartments through other blocks. We would do things like go out in the middle of the night and run our cable on the underside of the elevated expressway. We'd do it Saturday night because we knew there were no regulators out. There might be somebody out on a Tuesday morning, but not on a Sunday morning.

One Sunday morning, I think about 7:00 AM or 8:00 AM, one of our guys was doing that, and he saw this police car come charging down toward him. He said, "Oh, gosh, we're busted." But then he realized it was a black-and-white. That's sort of a California police car. It wasn't Seattle. Then it had California plates. As the story unfolded, they were actually filming a movie there. So this was the chase scene, early morning before there was anybody out on the street. This was about 1985 probably. So Mike keeps running his cable, and pretty soon there are Seattle police out controlling the crowds. They naturally assume he's part of the film crew, and he had a very productive day that day because they helped him to get into all the areas.

We would do things like – we would go down to the area where the homeless people would hide under the freeway. We would hire them to dig the underground, because there was dirt in that area, to run our cable another block. Our theory was that the inspectors don't like to come down there because maybe they think it's unsafe or maybe it's just different than what they're used to. We had to do this kind of stuff for six or seven years before we finally got authorized to operate this cable system legitimately. The way that came about was this. Twice the city went out to bid on this central district franchise, but it was a monopoly sold to the highest bidder. They asked for things that nobody would bid for. They either got no bids or they got bids that just weren't responsive and they would reject them.

Finally, TCI came in and said they wanted to build this area. At that time we had applied, I think, for another seven miles of permits under this screwy rule. The city said, "Oh good. Now we have two people who want it. We can have a bidding process." To his credit, I think it was the city attorney, who said, "Haven't we been trying for 10 –15 years to get this area built? Why don't we just let these guys build it. We don't have to have a bidding process." To their credit, that's what happened. Those are just some of the stories of the silliness that goes on.

Seattle, just last week, issued a third cable franchise. The hullabaloo was that these people are going to invest $500 million. They're going to upgrade all the city's facilities, of course, and give the city some other goodies, and we'll now have competition. You have two guys in there. Now you have a third. I think there are 2 –3 more trying to get in. This is sort of Jim Hirshfield's rant against cities in general. They're always creating franchises and trying to sell them rather than finding ways to invite in competition.

[Editor's note: At 11/01, the 3rd company had disappeared from the scene.]

BURKE: I think the cable industry was built in spite of all these things that happened to the people who decided to be in the industry.

HIRSHFIELD: I think in the early years we had less of this. For instance, Seattle, up until 1966, because we just weren't on anybody's horizon. But as soon as the municipalities found out that they could tax us, they did that. When we sold our company in Seattle, we had about 20,000 customers in Seattle. We paid the city of Seattle significantly more than we made out of that system. We were paying them about 13% of the gross which amounted to almost $1 million a year in taxes just for the right to be there. That's another story that people don't really appreciate – the tax load that this industry is carrying.

BURKE: Seems like some of these challenges are what led you to get involved in state organizations and national organizations. Is that a fair assumption?

HIRSHFIELD: Yes, you know, how do you affect these? I think, to me, it was a double-edged sword. You try to affect the environment you're in and you also try to understand it. I think more and more as we kept going as a small operator and the number of large operators got put together and became larger, I thought it was important to know these people so that they just wouldn't do something, unthinkingly, that caused me a lot of problems. So not only the governmental agencies, but the big operators as well, were an issue. I was one of the founders of the Washington Cable Association in '72.

We had a Pacific Northwest Cable Association but we weren't dealing in state issues. We started about that time to have things happen at the state. An example would be the state licensing board saying that cable installers have to have an electrician's license in order to run cable wires in a house. That's a significant apprentice program. It's a union program. Those jobs carry much higher wage. But arguably, there was no need to do that because cable is very, very low power – a different beast entirely. So fighting things like that, we got active.

Later I remember appearing before a state regulatory committee about all these issues. I had a little presentation and I had a cartoon. In the cartoon, the guys are sitting around a conference table and they say, "Gee, I know we're supposed to protect small businesses, but if we protect them, then they'll become large businesses and then what are we going to do." To me, that was sort of the dilemma. The regulatory people would talk about protecting small business, but they would continually do things that caused you problems.

In 1981, I joined the NCTA Board. That was the 3-year run up to the Copyright Act of '84 which was a pretty positive act for cable in that it clarified what our responsibilities were in terms of paying for product we used. There was never any problem with paying for product we used. There was always an argument of how much. But the big issue was to get the issue settled, and we did that. I then took six years off. Then from '90 – '96, I was again on the Board of NCTA. I spent one year on the Executive Committee. That was in '84. In that period, I also chaired the Telecommunications Committee, what's going on in Congress and the FCC in terms of setting policy that may impede our industry's ability to sell telecommunications products as opposed to, let's say, entertainment products. I also chaired the State and Local Government Committee – what's going on in states that's being repeated around the country such that they become national issues.

There was a lot of that as, let's say the telephone industry, our potential competitors, became aware that we were going to be able to sell telephony products and then digital products which could be telephony and other things. They started, in a lot of states, working to have laws passed and regulatory rules issued that would impede our ability to do that.

Other things included pole rentals. We had the FCC adopt formulas for what could be charged for poles. That still, in the industry, is the third largest expense. We used to pay, per year when I first came in the business, any where from $1 - $2.50 per pole for the right to attach to that pole. It wasn't a right to use the right of way. We paid the city for that. And we couldn't put up our own poles, even if it was cheaper because the city wouldn't let us. So whoever owned those poles, which were the power companies and the telephone companies, really had a monopoly right. They had the pole line and everybody had to use that pole line. They started to figure this out, and I think one of the early abusers were the public utility districts in the state of Washington in the late '70's and early '80's, I think it was. They started raising the rates to like $12 per pole per year. There are 40 poles per mile, 35 maybe. So you're dealing $400 - $500 per mile per year just for the right to have that attachment.

I always felt the city of Los Angeles, Los Angeles Water and Power, fixed all of their safety violations on their poles from the make ready charges they would charge cable. Before you could actually pay that annual cost to be attached, you had to pay to get the pole in a position where you could safely attach. So you not only moved things that accommodated you, but you usually cleaned up the last 10 – 20 years worth of problems that nobody had cleaned up. I heard numbers on the order of $20,000 a mile of make-ready in the city of Los Angeles. We were a customer of LA Power & Water in Bishop and in some of those communities as well. In the early '90's, late '80's, we were being offered pole rental rates of $25 per pole per year, inspection fees on top of that, and of course make-ready. Conduit was $1 per foot per year.

So the regulation of this, since it was a monopoly right, was pretty important. Of all the natural monopolies that affected our industry, that was probably the biggest one. Cities created artificial monopolies, but the pole line was a real one. I could see why you don't want a pole line on each side of the street, you want just one. So maybe that made more sense.

BURKE: I'm sure it kept you very busy. You were building a company, you're dealing with the franchises. The Seattle story is very interesting. You got involved in the state level, and of course, the National Cable Television Association has grown to be a very big organization that deals with the national issues. What other states were you involved in?

HIRSHFIELD: Our company operated in a number of states – Washington, of course, Oregon, Idaho, Utah. We had, in our company, two other people who were president of the Washington Association. We had two who were president of the Oregon Cable Association, and we had one who was president of the Idaho Cable Association. Our corporate engineer not only was president of the Oregon Association, Gene Fry, but he also was pretty active in the Society of Cable Television Engineers in the northwest. So we gave a lot of support to these organizations. As I said, it's because it gave us information and maybe we could help affect what was going on.

I think there were two kinds of companies in our industry. There were a lot of companies that did that. There were a few companies that were free-riders, that didn't get involved. But I thought it was necessary and that we had to do that.

BURKE: There was a lot of camaraderie in the early days. It seems like it extended to all these groups. Was it that way as cable continued to grow? How did that affect the cable industry?

HIRSHFIELD: Well, if you sort of come to the last ten or so years, as the companies got bigger, as long as it was the same company, they usually would be the same people and would tend to operate the same way. If somebody new came into the industry, often they would issue edicts that nobody can go to the cable meeting – to save money. So it wouldn't be different. It would be that they simply weren't there.

We had one of the large cable operators, their head guy in the state of Washington, appear at a Washington state meeting and talk about the importance of political action. That afternoon when we went over to the capitol to talk to all our elected officials, there was absolutely nobody from his company, largest in the state, with us. So I'd say it was just their absence that we saw.

BURKE: Are there any very meaningful relationships that have kept you in cable and have been very significant to you?

HIRSHFIELD: I don't know that they've kept me in cable, but I was thinking of some names. The fun story of my first boss, Richard Evanson, Telecable, who hired me in '66, sold the company in '68. A couple of years later he bought an island in the Fiji group, divorced, moved there, and semi-retired - he was a young man. He still lives there and it's now called Turtle Island. It's a very up-scale resort. Every now and then I see him on TV advertising it or talking about it. He sort of likes to be .... I call him the local bwana, although that's probably not a term for the south Pacific. He's been there ever since. He was very acute. He built Telecable from '63 – '68, from nothing to 15,000 customers.

I mentioned Jerry Laufer, Bob Brown and the technical lab. I think that was pretty significant. There was a fellow named Jim Straley who was head of the investment department at Home Life Insurance Company who used to make loans with equity paper, (but that was fair) where banks wouldn't make them. In fact, in my Capital Hill system in Seattle, '68 – '72, we didn't' have any bank debt. We had Home Life Insurance debt. He did that deal. He died young – probably within ten years of that. But he was a significant player in the industry. Probably, from that point until Drexel started doing the high-yield debt for our industry and others in the mid-'80's, he was a major financial player.

I always liked Ted Turner. Ted did a lot for the industry. He did a lot for himself, but it was always very positive. Some of these other vendors ... I had one satellite vendor describe to me that these guys are as incompetent as alternate vendor A and arrogant as alternate vendor B. So now you had all three of them being sort of unpleasant to deal with. TBS, CNN, those guys, were never unpleasant to deal with. They sometimes caused us financial problems, but never over a time-frame that was too short to deal with.

There were a lot of other people in that end of the business who were much, much less pleasant to deal with. I actually had ESPN come in on a Thursday with a contract that was all agreed to, ready to sign, and say, "Well, we've decided no to do this. You have to sign our standard contract or take the signals off Saturday." That was not an unusual way of negotiating. So you see enough of that and it was nice to have the other.

I was looking back through my calendars trying to just remind myself, and in June, 1977, about a year after I left Seafirst Bank where I was controller, a friend of mine – a lending officer, said, "What are you doing this morning." I said, "I have some time. What's up?" He said, "I'm talking to these cable guys. I have absolutely no idea what it's about. Why don't you come sit in on the meeting." It was John Malone and Donne Fisher. I got to sit there, the ex-banker, and sort of talk to Ralph, my friend. These guys were out, of course, looking for money. Things were tight. They were doing what they had to do. It struck me that 20 years later, everybody says, "Oh, TCI and the owners of TCI, John Malone, they had it made. They're too wealthy." But it didn't happen because it happened. It happened because they worked very hard. Even in the late '70's it was touch and go as to how that was all going to come about.

I think, though, the best answer I'd give you – and I wish I could just run off 20 names – is all the small operators I know. There are guys like Mike Fairheart who built Morton; Bob Smiley who built over in the Olympic peninsula; Ed Varhaug built some little systems in our necks of the woods. It was people that would go out and just, from their own resources, build towns of 500 – 800 homes, maybe get 200 – 400 customers. If they were lucky, they'd grow that. But they brought cable TV to all the smaller markets, and in some cases small parts of the bigger markets. Those are really the heroes in this story. But none of them, in themselves, is enough of a name for anybody to care, I suppose. But as a group, I think that's what the cable TV industry is – is all those men who did that.

BURKE: So local heroes as well as people that impacted this industry at every level.

HIRSHFIELD: Yes.

BURKE: One of the questions I've wanted to ask you is would you have any advice for people who are considering careers in cable from your past experience? Looking ahead, what would you tell people about the cable industry?

HIRSHFIELD: I don't know how good I am at advice, but it reminds me of a story. My brother-in-law had a career in the steel industry. Maybe ten years ago or so, my wife and I went and joined my sister and brother-in-law in Colorado to ski for a couple of days. We joined them with a group of their friends who were out for a week. In the evening at dinner, as we were chatting, all these people talked about were the problems and issues they had and how difficult last year had been, and how difficult next year was going to be. The reason I tell this story is, when I'm with cable TV people, it's 180 degrees opposite. It's always, "Boy, what's the next thing that's coming" and "Look what we overcame last year". I even get more animated telling the story. It's just so positive. To me that still is the industry, that people in it are "up", they want to do things, they want to go forward. They're risk takers. That enlivens the atmosphere. That gives you opportunity.

Beyond that, I think it's probably like most jobs – if you perform, you get ahead. Maybe in the cable industry, things are still tight enough that it's harder to ignore the performers. There are some old-line industries where maybe you want to move the performer out because he threatens your job. But in cable TV, things are still pretty tight financially. If you can produce, you're a hero and you get ahead.

BURKE: I also want to ask you about the phrase 'level playing field'. What does that mean to you?

HIRSHFIELD: That's the mantra that the industry used through the '80s and '90s, saying politically, "Just give us a level playing field. Let us compete on an even basis." Other industries have picked that up now as well. The first I heard that was when I used it. That was at a Senate field hearing in Seattle in the late '70's. I tried to find the date, and I couldn't pin it down in my records.

Senator Packwood from Oregon and Gorton from Washington were out in Seattle conducting hearings on what became the '84 Cable Act. I was on a panel with the city of Issaquah and several other municipalities. I think I was the only cable operator. My plea became "Cities, just let us get out there and compete. Make the playing field level." I remember actually on that panel, in front of the two Senators, I applied for franchise in Issaquah. They had problems with their local operator, and they were telling the Senators how terrible it was. I said, "Give me a franchise. I'll come and build it. They'll shape up with competition." It turned out that's not what the city of Issaquah wanted.

What we always wanted was an industry with a level playing field. What I always wanted was the right to compete. Where there were certainly benefits from having these monopolies the cities sold you, I always thought I could have done better if I were simply allowed to compete. That's what we did in Seattle my last 10 years there. We competed head-to-head with TCI, now AT&T, and that was a nice business. That was just fine.

BURKE: Looking back, what are some of the things that you are most proud of in the cable industry or that you feel are some of the most important contributions that you helped with?

HIRSHFIELD: People used to ask me, back when, "You're a business man. What do you do for society?" I said that I employ 80 people. That would be the end of my discussion. I always thought that was pretty good, and running a local business, running a business in Seattle, we created jobs there – well they're not there now since we had to sell the company.

I also tell a little story that sort of illustrates how I think about this. I was a history major in college so that's where this comes from. In the Thirty Years War, which was located in Germany from 1618 – 1648, most of Europe was involved, as you know. I think Spain and Sweden and several other countries had like 10% of their population under arms. If you took that to the U.S. today, it would be like having 27 million people in the military. Some 20% of the population of Germany was destroyed. Large areas of Germany were populated simply by wolves. This was basically a religious war between Protestant and Catholic, people who wanted to control what... Of course, Germany then wasn't Germany. It was lots of smaller municipalities or duchies or call them what you will.

It took them five years to make peace on that war - the Treaty of Westphalia. There were something like 100 nations negotiating the peace. Up till that time, they had used an emissary system, I guess you'd call it, where the king or the ruler would send an emissary to negotiate the treaty. Then the emissary would get the new stuff, and he'd go back. Of course transportation being what it was, this took months. They'd go back and forth. They didn't get that treaty signed and that dispute settled until they changed to what I call the ambassador system.

The difference between an emissary and an ambassador was that an ambassador actually could make decisions. He had the king's general desires at hand, and he could commit for the king without traveling back and forth. That's how they got that war settled. In German history, up to World War I and II, that was probably the worst war that had ever happened.

The ambassador system, in my mind, kept working until about 1990 when the CNN system took over. That system is Sudam Hussein calls in the CNN reporter, and he lays out his negotiating position. Other countries do the same thing. So no longer do you have the need for an ambassador. You have an instant communication, all parties see what your point of view is. I call it the CNN system of negotiating. Maybe there's another way to term it.

But I think one of the things I'm most proud of is that I've done a part, a small part but not an immaterial part, in creating the distribution network that allowed the CNNs and the FOXs and 200 other channels to become worldwide entities and, among other things, facilitate this kind of worldwide communication. There are lots of other derivatives you could draw from that point, but nations negotiate differently now, and we had something to do with that. Long story.

BURKE: You've had a long and productive career in cable. You're still very active in education. I can notice from this event with the Sawtooth, this is an example of the many lasting friendships that are created in the cable industry.

Are there other things about the cable industry that I haven't asked you that you just think are important to share?

HIRSHFIELD: Thanks. I think one point that I don't think we've put on tape yet is why was cable successful. What was it about cable that allowed it to be what it is? To me, it's always been a, what I call, a monopoly of the frequency spectrum. In nature, there's one frequency spectrum at any location. You can only use that once in a location. If you try to reuse it, it doesn't work because you have two things that are interfering with each other. What cable did was overcome that monopoly by allowing you to create a frequency spectrum each time you put a wire or, in the last decade, a fiber. So now every time we want to reuse that frequency, we simply put up another fiber or another cable.

That is the essence of what cable has done. That not only has worked for the last 50 years, but that's going to work going forward, whether we call it cable or what we will. That's the engine that drives this economic machine, and that's still very much in existence I think.

BURKE: It's been very exciting and interesting to interview you. I'm very proud to be part of this project, and we look forward to having you at the rest of the oral histories that will be part of what's available at The Cable Center in Denver.

HIRSHFIELD: Thanks. I appreciate, very much, the opportunity to be part of it.

BURKE: Thank you again for your time and you input.

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Leo Hindery

Leo Hindery

Interview Date: Tuesday August 07, 2001
Interview Location: San Francisco, CA
Interviewer: Tom Southwick
Collection: Hauser Collection

SOUTHWICK: We're with Leo Hindery in his office in San Francisco, California. It's August 7th, the year 2001, and this is part of the oral history program for The Cable Center. Leo, if I may, I'd like to start by asking you to tell us a little bit about your early years as a kid growing up, your family, if you want, and tell us about some of the interests you may have had as a young man.

HINDERY: I was raised, Tom, in the Pacific Northwest. I was born in the state of Illinois, but at a very early age moved to the state of Washington and was raised in northwest Washington. I spent a lot of time on farms growing up. I was a farm worker at an early age, started working away from the house when I was nine years old and spent many, many months of my early years just working. I was educated in a combination of Tacoma, Washington, where I mostly went to grade school and high school, and Seattle, where I went to college at Seattle University, which is a Jesuit University. I was in the merchant marine while I was in school, worked in shipyards. I worked for United Parcel, lots and lots of employment to get myself through school. After I got out of college I spent some time in the Service and ended up at business school at Stanford in 1969, and stayed two years there. I worked my way through Stanford as well, and in 1971 I graduated and began just a magical decade with a fellow who became for me a mentor and a father figure, someone not unlike, in my later life, Bill Daniels, who is so important to the history of the cable industry, and later John Malone. I spent a decade in the mining industry with a company called Utah International, which was at the time the largest natural resource company in the world.

SOUTHWICK: Who was this mentor?

HINDERY: A wonderful fellow named Ed Littlefield, Edmund Littlefield, who was the chairman and the CEO, and my first job out of business school was as his assistant. I just had the privilege, as I've said to many people, of staying in school longer than other people. I kind of migrated from Stanford Business School, which was a fabulous experience; to this even more fabulous experience with Ed Littlefield, and it taught me a lot. I didn't have a lot of role models, growing up, in business. My family was a difficult growing-up environment and it didn't afford a lot of role models. I remember interviewing with Ed, I qualified for the interview by my academic accomplishments, but I had a resume that was "sheet metal worker", "merchant marine", "farm worker", "United Parcel employee", etc., and he reached out to me for reasons that I still never really know and he saw something that I was always grateful he did see.

SOUTHWICK: What gave you the ambition to go from sort of blue collar jobs to wanting to become, I guess, a businessman?

HINDERY: Lots of demons, lots of devils that have always caused me to want to succeed. I was blessed with some intellect; some intellectual curiosity as well, that just drove me. A lot of my early influences came from the Jesuits. I was Jesuit trained at both the high school level and at college, and that was a discipline and an environment that sort of forced you to excel, rewarded you for excellence, gave you this intellectual curiosity, and I always knew that I wanted to be something special. I don't mean that self-servingly, but I did want to succeed and be well thought of. It was never about the money, it was just this sort of interest in excellence. I give a lot of the early, early credit to the Jesuits, later credit to Ed Littlefield, and in subsequent years Bill and John. But I have some demons that drive me – I think all of us do in the business that you're doing these interviews with probably do. I started from a family of very low means, not for me a very pleasant growing up experience, and I sort of wanted to leave that side of my life behind and accomplish other things, more professional. I spent ten years in the mining industry; it was wonderful. We merged in 1977 into the General Electric Company, and our company changed as a consequence of that and the people I'd grown fond of and for whom I worked were retiring. At the time of the merger, it was the largest merger in the history of the world. It pales in numbers to the ones that I've done since then and been involved with, but it was still dramatic. It was great fun. I really, for a decade, stayed in school.

SOUTHWICK: What did Mr. Littlefield teach you?

HINDERY: He taught me the continued imperative of excellence. He taught me to be sensitive – I always tried to be on a personal level, but he reinforced it – to the people around you at every level. The cardinal rule, or the one that sort of imprinted on me most, was he said, "It's always better to be pushed up from the bottom then pulled up from the top," and I have always tried to have that sense of my role in organizations. I love the support if I can get it of the people around me and the people that work for me, and I spend a lot of time on the employee side of whatever I do. I think we have a short life here and we need to leave a legacy, and the legacy I want to be remembered for is not these financial achievements, but how we did it, sort of the grace with which we went through our careers. I've had the privilege, with John Malone's help, of making history in the cable industry, and people would argue that we made history financially; I would argue we made history otherwise. What John and I did, I hope in people's minds, is go through the cable industry with a sensitivity and a grace that they'll talk about long after they talk about our stock price and what we brought to the shareholders. My whole life, business-wise, has been about recognizing constituencies and trying to give them their due. I said, when I went over to help John run TCI, that we had this overriding obligation to our employees and to our shareholders, to our customers, to our regulators, and to our industry itself. I felt, with frankness, that at the time we weren't doing the greatest job possible on any of those five. So for several years, John and I, I on behalf of John, just tried to do something magical – I use the word a lot, I know, but I don't mean it as haughtily as it sometimes sounds. I thought it was magical, we had a heck of a good time and we did it fairly well.

SOUTHWICK: Were you interested in politics as a young man? You speak of constituencies as a politician does, and I think look at it in the same way.

HINDERY: I'm a big D Democrat, but I believe in small d democracy. I don't like a world where people of lesser means have unequal opportunities. I don't like a world where people of color, women, gays and lesbians, don't have equal opportunity or the ability to grow and succeed, like I did. I wasn't poor, I just wasn't rich. I mean I didn't have any money, but I was white and I was male. It was structurally easier for me to overcome some of the difficulties. I gave a speech last week and I was trying to remind the cable industry again of these five constituencies and I said, "It's rude to rank them because they don't rank themselves. It's presumptuous for us to try to rank them." But on a very personal level, if there's one that always meant the most to me, it's the employees. I just loved the employees of the cable industry. I loved the way they lived in their communities, I loved the way they got up in the morning and worked their tails off and tried to give something back for their families and the places that they lived. Of all the criticisms of the cable industry, the one that I never could put up with was any inference or suggestion that the women and men of the cable industry didn't want to do a good job. Some of us perhaps, as managers, didn't let them do a good job, but these people live in these towns, their children grow up there, they pay taxes there, they retire there, they die there, and don't tell me they don't want to do a good job. What was fun for me and John at TCI was we engaged, or I tried to, all the employees in the ownership of the company and its potential success, we entitled them, we gave them the authorities to be successful, we decentralized from what was at the time a highly centralized perspective in the industry. I hated centralization, so we changed that, and we just went out and had the time of our lives, to be honest with you.

SOUTHWICK: After the mining company merger, what happened then?

HINDERY: That was serendipity. That was a circuitous route. I went from the mining industry, where I'd been in charge of the financial activities of the company...

SOUTHWICK: And that was based where?

HINDERY: Here in San Francisco. I was responsible for development and finance, and I'd actually lived in New Mexico for a couple of years on the Navajo reservation and ran some coal mines down there, which I thoroughly enjoyed. I had these large operating roles but over time I took over all the financial and development activities of the company, and went from there to Wall Street. In 1985, January of '85, I returned to San Francisco.

SOUTHWICK: Wall Street in what capacity?

HINDERY: I was CFO of Becker Paribas, which was a large Wall Street firm that merged into Merrill Lynch late in 1984, so in January of '85 I moved back to San Francisco with my family to become the CFO and COO of a family-owned media company, not my family, but a family-owned media company called Chronicle Publishing Company, which had a mix of media properties; to be frank, a smattering – they had newspapers, cable and broadcast.

SOUTHWICK: The San Francisco Chronicle was...?

HINDERY: Was the flagship asset, but it also owned Western Communications, which was under Ed Allen, one of the great, great pioneers of the cable industry, and we had a broadcast group, and a newspaper group.

SOUTHWICK: How did you come to work for them? A headhunter?

HINDERY: A headhunter searched me out and asked me to come back and run it. I think life is serendipity, but that was, as a single event, one of the three events that most influenced my life as a business person. The first was Ed Littlefield, the second was taking this job in the media industry in 1985, some fifteen years later, and the third was meeting John Malone as a consequence of coming into the cable industry. I did a lot of deals for Chronicle, we tried to grow it and in most people's minds we ran it pretty well, and were fairly clever. We bought a bunch of the Storer cable properties, and in people's minds I think we did it fairly cleverly.

SOUTHWICK: What was your "brief" when you got there? Was it to grow the company in any direction you wanted, or did they kind of know that they wanted to focus on cable?

HINDERY: Well, it was a bit of a mess. I did two things: I shut down twelve or thirteen things we were doing that made no sense to me, very distracting and without particular focus. I then began to assess the three remaining legs of the company, broadcast, cable and newspapers, to figure out if we should stay in them. The media industry, this is back in 1985-86, is an industry that is like a great white shark. You swim or you sink. You grow or you die. You grow or you sell. I looked at the three and I tried to figure out if we were material enough, important enough potentially or currently, to stay in those three businesses. I liked them all; I thought our broadcast side was about the right size. The newspaper side was undernourished, so we bought some newspapers in the northeast, the Worcester Telegram and Gazette up in Massachusetts. In cable we were in nowhere land; we were hanging on and I decided that we should sell it or grow it, and that's when I met Bill Daniels. This was 1985 and I, with Bill's help, formed some conclusions as to growing the asset. He was very helpful for me to get a sense of what was possible.

SOUTHWICK: Tell me about the meeting with him and your impressions of him and how he operates.

HINDERY: Well, he was the next Ed Littlefield. So much so, Tom, that later on when I went to work for John, before saying yes to John, after he was generous enough to give me the invitation to come and help him out, I actually got on an airplane and went and saw two people – one was Ed Littlefield and one was Bill Daniels. It's going to sound corny, but I literally asked them if I should do it, and I wouldn't have if either had said no. Bill became for me the next Ed Littlefield. He was generous with his emotions and his intellect and his wit and his soul, and became no less important to me emotionally than Ed had been. Again, I didn't have a lot of these models growing up, role models, so I found in first Ed Littlefield, and later in Bill Daniels, people that I loved. I loved them. There's a Jesuit priest in Seattle that's sort of the third leg of that triangle. These are men now, one has passed, two are aged, and all three changed my life.

SOUTHWICK: What's the name of the Jesuit priest?

HINDERY: Father Bill Le Roux, who reached out to me when I was in college. Bill Daniels convinced me that the industry had opportunity, but again, it had to be pursued. Through Bill, Brian Deevy became a cherished friend, and Brian and I and Bill set about growing Chronicle Publishing Company as a cable operation.

SOUTHWICK: How many cable subscribers did Chronicle serve in those days?

HINDERY: Oh, I think we had 60 or 70 thousand.

SOUTHWICK: And where were the systems?

HINDERY: They were here in northern California; they were adjuncts of our local broadcast station. We, as a company, owned KRON, which was the NBC affiliate in San Francisco, and you may remember that there was a time when broadcast chased the cable industry. Broadcasters, before the rules changed, thought it was to their advantage to own cable, as it would be an alternative distribution vehicle in the market. So Chronicle bought some properties here in the Bay Area, Concord, California most notably. We had about 60,000 subs and we needed to sell them, to be honest with you, or we needed to buy a whole bunch more. So we went out and bought some more and I did so in a way that I think, in the eyes of the industry, was clever and sensitive. I also began to develop my sense of regional concentration that I became somewhat noted for in the industry. That's when I met John. Late in 1985, Bill said, "You've got to meet John." John, bless his heart, let me meet him. I flew to Denver and met John in what was then the old single story TCI office building, and realized I was sitting across from one of the great, great forces in American industry, in the cable industry, and in academia, because John is fundamentally an academic. I fell in love with him. I love John like a brother. I revere his intellect and his sensitivity and his friendship. In December of 1987, I decided, with a lot of pushing from Bill, to start my own cable company.

SOUTHWICK: Before we get into that, was there a signature deal that you did to grow Chronicle that stands out in your mind?

HINDERY: I've done so many of them, I literally can't remember, but there was a group of Storer Cable assets that needed to get sold and Marty Pompadour, who had just started ML Media, and I came together and bought them. I took northern California and Marty took southern California, and it was reminiscent of the Westinghouse deal, the Group W deal in '86, but it was even more clever. We were very sensitive to the tax side and did some stuff that most people thought was quite clever. The cable industry is always generous with its review and praise and they wrote about it in a complimentary fashion, and I think it deserved compliment. It was clever and I sort of forced it through. I began to realize the power of partnership and doing things collegially through the industry. I was always struck by the fact that my franchises were inviolate and that it was an industry that rewarded collegial behavior, unlike any other part of the media industry. It was easier to work laterally and collegially than other parts of the media industry. Every other part you're sort of roughly in competition with your peers; in our industry you're benefited by working with your peers.

SOUTHWICK: You mentioned the tax issues – are there particular aspects of the cable industry that are unusual, if not unique?

HINDERY: The amortization of the assets is extremely high. John taught me a long time ago to not pay any more than you have to, use the amortization to your advantage. You essentially use it to buy the holidays, or the windows, to build out your assets. You're not using cash to pay taxes currently, you're putting that cash back into the ground, and you're building value for investors and shareholders.

SOUTHWICK: So instead of reporting profits...

HINDERY: We're the kings and the queens of EBITDA, we're all about cash flow, pre-tax cash flow, and we try not to pay taxes. And I don't view that as anything but positive. I never felt like I was doing anything but the right thing for the country and for the shareholders because we were putting those resources back into the ground, so to speak. But I like to think that – and I'm not, again, trying to blow smoke here – I like to think that John and I are among the best in the industry, if not the best, at complex deals. I started that back in the '70s. Working for Ed Littlefield, I became famous for complex deals. I do tough deals. I did some fun things for GE when they acquired us and I like that side of it. I like to run stuff a lot, but I also like to do fun, complex transactions. So, that's how I got started, and it's fun to reminisce on how InterMedia got started.

SOUTHWICK: Before we get away from that, there was also an investment that you were looking at that didn't work out, as I recall, involving a young man named John Hendricks.

HINDERY: That was a heartbreaker. I had agreed to buy 25%, subject to board approval, of this nascent network called Discovery.

SOUTHWICK: And this was in the 1980s?

HINDERY: 1986 or '87. For six million dollars. John Hendricks was then, and remains today, a visionary in content and I thought it was a thoughtful diversification for us, and it yet related to our cable involvement. I became friendly with John and handshook this deal and...

SOUTHWICK: Was six million a lot?

HINDERY: It wasn't for me. I took it to the board and they turned it down, and the board was an amalgam of three family interests, the descendents of three parts of one family, and they used to torture each other, sort of goring each other's ox, so to speak. If one of the three groups embraced something, invariably one or both of the other two groups would naysay it. And so they used to fight their fights, that dated back 100 years, at the board level. Hugged at Christmas and kissed each other at christenings, but other times their behavior was bizarre. So we turned it down – they turned it down. I remember calling John Hendricks and I was mortified because it was a spectacular opportunity for the company. I was mortified because I thought we could get it done.

SOUTHWICK: That six million dollars would be worth how many billions today?

HINDERY: That six, it would be worth two and a half to three billion dollars in 15 years.

SOUTHWICK : Even more mortified, by the way, was John Hendricks.

HINDERY: And Hendricks, my little friend, went and gave it to John Malone, who now has it for Liberty, along with all that value, simply because John had the courage. But it was in part because of that single deal that I realized Chronicle wasn't my company, and I don't mean that in a possessive sense, but that it was in fact a family company and it was their prerogative to say no. It wasn't thoughtful to say no, but it was indeed their prerogative. And so in early December of 1987, on a rainy, crummy night in New York, Gerald Hassel from the Bank of New York, who was so important to the cable industry, and I were having dinner and he said, "Have you ever thought about doing it for yourself?" I said, "Oh, I've always worked for other people. I'm not sure that's my disposition." And we thought about it, talked about it, I went and saw John and John said, "If you can get it started, I'll probably – not promise – probably help you." And that's when I met and fell in love just as much with Donne Fischer, who was John's CFO. I next went and saw Bill because I only had 20,000 dollars in the bank – my wife, I don't think to this day, knows how strained we were financially. We had worked hard, but we had an infant daughter, and you know, 20,000 dollars in the bank was actually not bad. But it sure as hell wasn't enough to start a cable company, and I figured that I could leave Chronicle, bring some friends in, and last four months. Bill, bless his heart, said, "If you screw it up, I'll hire you so your wife and daughter don't leave you." I thought that's okay, that's typically Bill Daniels. When you need just a little bit of courage to fly out of the nest, Bill would usually push you, and just knowing that I had this support – the soft support of John and Donne Fischer on the one hand, and Bill on the other – I went out and I tried to start InterMedia Partners.

SOUTHWICK: Okay, so you're out on your own. What's the first thing you did?

HINDERY: Well, I ran pretty hard, Tom. As I said, I had 20 grand in the bank, and it was a purposefully different approach to the industry. It was an intended mix of banks and insurance companies, of which Bank of New York very generously agreed to be the lead; one industry investor, which was TCI; and then some strategic investors that had developed close relationships with the cable industry or wanted to. One of the latter was Sumitomo of Japan, and again, this is 1988, and the first off-shore investment in the U.S. cable industry was into InterMedia by Sumitomo, which led to Jupiter for TCI and Liberty later on, so all of John's activities in Japan today were outgrowths of my outreach to Sumitomo in 1988.

SOUTHWICK: How did that happen?

HINDERY: When I was in the mining industry, my company was a global presence in mining and we did a lot of business in Japan. I first started going to Japan in 1976, and had developed a strong friendship with Sumitomo. Sumitomo is a trading company that has a multiplicity of interests – especially natural resources – and like the other trading companies of Japan, it had this nascent or budding interest in media. So that was how Sumitomo got involved. John and Donne Fischer, I've talked about, that was sort of an outgrowth of my outreach to John in 1985 when I was still at Chronicle, and then representing, so to speak, the banks was Gerald Hassel at the Bank of New York. Against those three I set off to raise 100 million dollars of equity. Again, this was the spring of 1988, and again, all the time this gun, this April 30th gun that I had imposed on myself, was about to go off, which was literally when I would run out of money. I ended up raising 192 million dollars – about twice what I set out to raise – and that became known as InterMedia Partners One, and there grew to be six of them, successive funds. John, bless his heart, and Donne Fischer were involved in all six of them. The Bank of New York was, Sumitomo was, but others came in over time, and we grew InterMedia to being the ninth largest company in the industry in a decade, roughly.

SOUTHWICK: And then you began to go look for cable systems to buy?

HINDERY: I went hunting. I'm so Type A that I was hunting while I was raising money, and the first acquisition we did was Hearst Cablevision. We bought Santa Clara County from Hearst. I had known the Hearst family from running Chronicle. Hearst and Chronicle were partners in San Francisco in the newspaper here, and I became very fond of Frank Bennick, still remain very close to Frank, and Frank was at the same crossroads that I had been when I was at Chronicle, which is he had a neat little asset but it wasn't defining. He either needed to grow or sell, much like I had concluded when I was at Chronicle, and I showed him a very clever way to sell that asset to me. It was the first use of a like-kind exchange that wasn't really like-kind. Frank said that he wanted to sell to me, but he couldn't afford to pay the taxes on the sale because there was no basis in it, and I said, "Well, if I can solve that problem will you sell it to me?" And he said he would and I persuaded the IRS to let me exchange Santa Clara, Hearst Cablevision, for a 20% interest in ESPN, so Frank got a tax ruling that I constructed that allowed him to sell me the cable system and roll the proceeds into a 20% interest in ESPN, which was being sold in the market at the time by RJR Nabisco, and it was the one and only time the IRS has allowed a like-kind exchange of what was, to be frank, not all that like-kind.

SOUTHWICK: Because they weren't two cable systems?

HINDERY: They weren't two cable systems, they weren't two anything. One was a programming service and one was a distribution network, and I convinced them, since the distribution carried programming, that they were in fact like-kind. They subsequently...

SOUTHWICK: So you actually bought the 20% interest of ESPN?

HINDERY: I locked it up and swapped it. I think Frank's 20% of ESPN is probably worth, I don't know, about five billion dollars today.

SOUTHWICK: And Hearst had made the decision they wanted to stay in the programming side?

SOUTHWICK: Yeah, and so that was number one. Again, my whole premise of InterMedia was to buy smart, which I thought I knew how to do; finance smart, which my partners – my banks and insurance company investors – certainly helped me do well; and run well, and John, bless his heart, helped me run well. I thought I could run them well, but being John's partner meant I could really run them well.

SOUTHWICK: And did you have the advantage of being under the TCI umbrella in terms of programming deals...

HINDERY: Right.

SOUTHWICK: And hardware deals as well?

HINDERY: Yes, we were a full affiliate of TCI. John, bless his heart, you know, how many of us did he launch? Bob Rosencrans and Bill Bresnan and myself...

SOUTHWICK: Lenfest.

HINDERY: Gerry Lenfest, Steve Myers, are the ones that come most to mind.

SOUTHWICK: What does that mean, in terms of let's say when you bought the Hearst system, then these programming contracts for those Hearst systems come under the TCI umbrella, does that reduce the operating costs substantially?

HINDERY: It's damn good frosting on the cake, I'll tell you that. If you run them badly it's a safety net, and if you run them well it's great frosting. The cable industry is unavoidably about scale in two areas. One is programming, which is the most talked about, and the other is technology, which became en vogue, and we'll talk about it later when I talk about why I... sort of the "summer of love" and what I was trying to do with AT&T, but in 1987-1988, we weren't much of a technology industry, we were pretty basic. We were simply wires down the street. I could pretty much buy my copper, Tom, at the same price you could buy your copper, but if I was a TCI affiliate I could buy my programming, frankly, a lot cheaper than you could buy yours. So it was a huge plus. I promised the investors that we'd buy smart, finance smart, and run smart. Later on, I grew to conclude that there was a fourth leg, which was selling smart, that as a fiduciary you have to realize these values for your investors, but early on it was for me, as I said, buying, financing, and running well.

SOUTHWICK: What did running well consist of when you bought the Hearst systems and the other early systems in InterMedia?

HINDERY: Well, I work hard and people around me work hard and not to suggest that the others don't, but it was our reputations and our livelihoods and our families' interests, and certainly my investors' interests at stake. We worked hard at it. Again, I always had a practice of making everybody an owner, so we shared equity.

SOUTHWICK: But in terms of operating the systems, does this mean upgrading the plant, or...?

HINDERY: In 1987, to be honest with you, it did not. It wasn't until the early part of the '90s really, in reaction to the '92 Act, that upgrades became imperative. '87 to '92 we were a 35 to 50 channel environment, pretty same old, same old. It was in 1992-93 that John began, on behalf of the industry, to see a world of much increased capacity and much more technology. Prior to that, the hallmarks were just clever, honest operations. I like to think that I had something to do with convincing the industry of the desirability of owning assets regionally. I thought that we could run better with scale in a market. We could compete better if competition was to come our way, etc. So even in '87 when I started InterMedia, and later on I bought Cooke, which we'll talk about, for me it was always about concentrating assets in regions as opposed to...

SOUTHWICK: And why is that important?

HINDERY: It's important because one marketing manager, Tom, can handle 100,000 subs just as readily as she or he can handle 50, but if you had 50 and I had 50 and they were side by side that's an absurd waste of overhead.

SOUTHWICK: Because we both have marketing managers.

HINDERY: We both have marketing managers and building services and truck maintenance responsibilities. Just at the overhead level of the company, size is rewarded. I knew that our day of not having competition was going to go away, and it was probable that we were going to compete most particularly with RBOCs in some fashion or another, public utilities, whatever, somebody else, who similarly had full market perspectives. If our industry owned franchises while our competitors owned markets, we were going to get killed. We were going to get killed because our cost structure was going to be higher; we were going to get killed because we couldn't market ourselves. An example would be in the Bay Area, where there were nine operators at one time. Pac Bell and PG&E run ads on radio and on television that cover the whole market. No cable operator prior to consolidation could afford to run a radio spot marketing himself, because you had to buy the whole Bay Area. So, I knew that those days were going to change and so I became just rabid, I became passionate about guys in the industry, myself and my peers, owning chunks of markets. I was ahead of John a bit on that, and ahead of some of the other guys, and so everything I did from '88 on was about concentrating markets.

SOUTHWICK: Which led to a lot of swaps of systems.

HINDERY: Yeah, it led to... well, there was a two-year period of time in 1997 to 1999 when between 40% and 50% of the subscribers of the industry changed hands. I'm not talking about the sales or the mergers, I'm talking about the swaps – a world where every market in America was shared to a world where all but four markets in the whole United States are now shared. The "summer of love" was about mergers and acquisitions underway, and about the most dramatic swapping in the history of any industry, and that dates back to 1988 as well. Jack Kent Cooke put his cable systems on the market. I went out of my way – I was going to make that the hallmark acquisition of InterMedia, and with the help of Marc Nathanson, Bob Rodgers and Fred Nichols, Carolyn Chambers, Bob Lewis at TCI, Dan Millard at Adelphia, there were six of us that went after the Cooke assets. Brian Deevy and I did it.

SOUTHWICK: As a group together?

HINDERY: As a group together, and it was a two-fold undertaking. One is by coming together we controlled the sale process because all the logical acquirers were part of our group.

SOUTHWICK: So there's no bidding war.

HINDERY: No bidding war, and if he wanted to sell it he was going to sell it to us. He could elect not to sell it, but if he was going to sell it we were the buyers. The other thing was, I sort of literally sat in a room and Brian and I and these guys figured out who was going to get what. What was going to enhance their regional concentration over time, and that was a defining transaction for TCA, Falcon, certainly for InterMedia, Adelphia, Chambers, and even TCI. John got stuff that was helpful to his agendas.

SOUTHWICK: Now when the Westinghouse deal was done, as I recall, or Storer, maybe...

HINDERY: The big three chunky deals in the history of the industry were Group W, Storer – Group W was '86, Storer was '86 and '87, and I did that with Marty Pompador - and then in '88 and '89 was Cooke.

SOUTHWICK: Now, were you required to continue to operate Cooke as an entity because I thought with Storer you had to do that, didn't you?

HINDERY: No, Storer was made complicated because it became what was known as a mixing bowl, in that you couldn't break it up, and that was a nightmare.

SOUTHWICK: For tax reasons, right?

HINDERY: Right. I figured a way to break up the mixing bowl, and we used a lot of tax certificates in Cooke, so we essentially broke up Cooke, didn't pay the taxes because we used certificates. Storer was done from the top without certificates, so to protect the tax positions of everybody they had to leave it and run it jointly for several years. Our companies, the six of us, weren't capable of doing that. We weren't organizationally or emotionally ready to live in what's called a mixing bowl environment. So I had to... and Cooke was all about finding the right buyers, staying collegial and tough, allocating honestly, and figuring out a tax structure that made Cooke sell it to us.

SOUTHWICK: How do you do that? How did you use the tax certificate? What is a tax certificate and how do you use it in this situation?

HINDERY: Tax certificates, which are now gone – they died in the Viacom transaction, which I also did, for John – were about introducing into the ownership of the industry people of color, and the seller, Cooke, by selling to a company that was controlled by a minority, could defer his gain and not pay current taxes. And so Cooke bought some assets with his proceeds, essentially rolled them over, and he also got some deferrals and the combination was sufficiently appealing to him that he agreed to do the deal.

SOUTHWICK: And who were the minority participants that made this possible?

HINDERY: The most notable was an old friend of mine, an African American named Frank Washington, and Frank became a partner of InterMedia, my company, and we set up something called Robin Cable Systems. Robin is my daughter's first name, Robin Cable Systems. I always joked that Marc Nathanson had this Falcon, this bird of prey, and I had this little teeny Robin. I love Marc like a brother, he's very important to me, but we were not without competition, my Robin to his Falcon, and he kept telling me that his Falcon was going to eat my Robin. So we had to show him. Those were defining transactions for the six companies. Defining. That began a decade, literally exactly one decade, until the industry had gone from 300 participants to 100 to 20 to 7, and it was all about the efforts that began in 1988.

SOUTHWICK: Talk a little bit, if you will, about the political climate in the late '80s and what led to the '92 Act.

HINDERY: The cable industry receives these gifts from these communities – the franchises. It's the greatest gift you can receive because you're allowed to come into someone's community and be their sole cable operator, and you'd better not screw it up, and you'd better give them the quality of service and the sensitivity to rates to which they're entitled, and to which you have obligated yourself by being a monopolist, so to speak. In the late '80s, early '90s, we abused that privilege. Not everybody, but the problem with the cable industry is a couple of guys can sink the whole Navy. A couple of bad boats and the whole Navy sinks. This wasn't the Titanic, this was a flotilla of ships and you say, "But geez, my ship is fine. I'm a good guy, I don't raise rates more than inflation, I give good service, and you don't." Congress doesn't enact legislation regionally or market by market, it does it nationally, and by the fall of 1992, October '92, we had as an industry, to our eternal discredit, abused our fiduciary responsibility as monopolists, and the cable industry was re-regulated. In 1986 we were de-regulated, and in 1992 we were re-regulated.

SOUTHWICK: One of the systems that figured in this was a system in Tennessee that you ended up owning after some of the problems had occurred. Can you tell us what that was about?

HINDERY: In the history of this industry there were really three systems that became lightening rods for political concern – Honolulu, Hawaii; Jefferson City, Missouri; and West Tennessee, a rural part of Tennessee. All of them, for a variety of reasons, had attracted political attention, and John Danforth in Missouri, Al Gore in Tennessee, and Daniel Inouye in the State of Hawaii. I'm not trying to be critical here, but perhaps the most egregious was the system in Tennessee. Its owners, which were new owners, elected to raise rates three and four times, Tom, in less than a year and half's time. It was like every three or four months, and it just became, in the eyes of then Senator Gore, just unconscionable.

SOUTHWICK: And this served his hometown?

HINDERY: It served his father's farm. Senator Gore came from Tennessee, a place called Carthage, and the system should have served his father. But then his father was not able to get service at the farm. You had two issues: one is you had next door rate practices that in the eyes of the then Senator were very aggressive, and on his own family farm, the operator decided not to give them service. So I had already acquired from Cooke properties around Knoxville and Nashville and I wanted to be the king of Tennessee. I wanted to own all the cable systems in and around Tennessee because that was part of my regional consolidation strategy. I actually swapped out of Santa Clara and we became the dominant cable operator in the states of Tennessee, the western Carolinas, and Kentucky. When InterMedia went out of business that was its focal point. So these were cable systems I thought I could run well. I went and saw then Senator Gore and his chief of staff and I said that I would run them well, I promised. I said that it was not my role to tell them not to be critical of the cable industry, I wished they wouldn't be, but that was their political prerogative, and to be honest with you, we had done some things that deserved criticism, so I wasn't trying to be a Pollyanna here. I simply said that if this system runs well then you've got to acknowledge it the day it does. So I went and fixed it.

SOUTHWICK: What was the reaction of Senator Gore and Roy Neil to that? Did they listen?

HINDERY: Yes, Al Gore listens well. He understood that he should only criticize systems that were worthy of criticism and if I fixed this one, and he was a tough taskmaster, he was from Missouri, no pun intended back to John Danforth, but "Show me". And when I showed him and we became not the poster child for egregious behavior, but the poster child for sensitive local management, he and Roy, bless their hearts, did what they promised, which was they kept up the drumbeat on the cable industry but they stopped drumbeating on this particular system.

SOUTHWICK: Did you run a line out to the farm?

HINDERY: Oh, yeah. Oh, yeah. That was one sweet drop. They now get a lot of cable out on the farm.

SOUTHWICK: So we were talking about TCI and the loss of Bob Magness...

HINDERY: Well, again, it was November of '96 and Bob, who was so vital, just got this horrific case of cancer and in weeks we lost him. As I said, if Ed Littlefield and Bill Daniels were my father figures and mentors, then Bob was John's. I loved John and John was dying at the loss of Bob. TCI also wasn't running very well. In October of '96 I think John had come to a realization – this was weeks before we lost Bob – that TCI was in a lot of trouble. It wasn't, to my earlier comment, it wasn't addressing the needs of its several constituencies, its stock was approaching an all time low, customers were outraged, and regulators were back on the warpath, and we had lost our standing, in my opinion, with the industry.

HINDERY: Was this after the Bell Atlantic...

SOUTHWICK: Yeah, this was two years after. In 1994, John and Ray had tried to do – Ray Smith – had tried to do Bell Atlantic, so this was roughly two years later. To give you an example, Tom, of the breadth of the problems, I had seven times cash flow as my indebtedness at InterMedia and TCI was selling for six times cash flow. I was blasted, I hadn't missed a forecast, but for the '92 Act, in my entire time in the industry. Neither had Marc Nathanson or Bill Bresnan or Alan Gerry or any of us. We'd all worked pretty hard, and here was the mothership trading for six times cash flow and we had equal that or more in debt. In December of 1996, at Christmas time, I was recovering from a broken neck. I'd broken my neck car racing, and my wife and daughter and I were scheduled to go skiing at Beaver Creek and I sure as heck wasn't going skiing. I had this funny thing around my neck and I was one sort of bored puppy sitting up at Beaver Creek and John was alone in his office. John and I met and talked several times and in early January we took those conversations to the point that John asked me to become president of TCI. He would step up to be its chairman and I would become president, which was the title he had held until Bob's passing, and as I said, I love John, I love John like a brother, I love John for the leadership that he brought to the industry, and it was a tremendous offer. It was also terrifying. In 1995 I had had some illness of my own and had actually contemplated leaving the cable industry to get involved in some charity and things of that sort, so I wasn't totally sure I wanted to do it. I did love John and if he wanted me to do it I certainly was going to think about it hard. So I went and saw, as I said, Ed Littlefield and Bill Daniels, and the three of us decided that in fact that's what I was supposed to do, I kind of – and I don't mean this in a corny fashion – but that's what I was born to do which was to help John in 1997.

SOUTHWICK: Any thing about those particular meetings with Ed Littlefield and Bill Daniels that sticks out in your memory?

HINDERY: There were times in my life that relationships with men had become really important and this was my 26th year with Ed, my 12th year with Bill, and that's what it was all about. I think we knew, the three of us, that that's what I was born to do. Ed Littlefield always knew that I was trying to find the next Ed Littlefield. Having never worked for Bill it was not as obvious to Bill what my demons were about, but my demon was to find the next Ed Littlefield, and John was my next Ed Littlefield. While John and I are closer in age, John for me is the consummate partner/boss in my life other than Ed. I had had some great times and I thought I'd done some things pretty well from the time I left Ed to the time I went to work for John. I was certainly proud of InterMedia and what I tried to do in the industry, but sort of my wilderness years were the period between Ed and John. So on February 7, 1997, I went to work for John.

SOUTHWICK: What were the immediate issues that you faced?

HINDERY: Those five constituencies in flames. The stock blasted, weeks later Rupert announced the ASKYB initiative and the stock, what little breath in it, it took its last one, the stock was like 10 bucks. The employees – the person who had been helping John had RIF'd people in November of '96 and RIFs are pitiful.

SOUTHWICK: Reduction in force – layoff.

HINDERY: A RIF which goes across an entire company is absurd. It demoralizes everybody. For God's sake, take the time to... if you're going to cut back – I'm not suggesting the company didn't need to be cut back – do it on an individual basis, don't do it across the board because you fire the wrong people.

SOUTHWICK: And you create fear in everyone else.

HINDERY: We had raised rates roughly three or four times inflation in 1996, so the customers were not thrilled. We had abandoned our leadership role in all of the cable industry initiatives. We were the lobo wolf in my opinion, and the regulators – my God! They were just flying; they were fuming. We were losing franchises; we were in revocation hearings on franchises. Friends of the industry in Congress were saying "Enough's enough. We're going to go back to having rate hearings again." And this was a year after the Telecomm Act was passed, so if in February of '97, a year after the February '96 Cable Act, people are saying we're just going to tear your heart out, it was just a mess. I'm not going to sit here and blame people, I'm simply going to say that people who should not have let John down let him down. John is the best and if he has one fault he is too trusting, and he trusted some people who let him down. You say, "Well, geez, why didn't John do it himself?" It was because he wasn't supposed to do it himself. John was supposed to be the chief executive and the visionary and he hired some people to run the thing and they broke his heart. Anybody who suggests that John was indifferent to that or insensitive to that, doesn't know John. John is the best, and John asked me to fix it for him and I fixed it for him. The most incredible two and a half years of my life, other than the ten I had spent with Ed Littlefield, commenced on February the 7th of '97, when I moved into Bob's office. John and Bob had an arrangement where their offices were back to back with no door in the middle, and the privilege of first sitting at Bob's desk, who I loved, and having behind me, this open pathway to the greatest intellect in the history of the industry, of industry let alone our industry, who would walk through this doorway without a door, this doorway and trust me to fix his company... It was his company. My employment arrangement with John was one page, a one page letter, and it said he could fire me at any time and I could leave at any time, it largely said that I couldn't race cars, and it said I didn't have to stay in the TCI apartment, which I hated, the TCI apartment in New York. It was like Stalag 17 at the TCI apartment, and if you've ever seen Barney Shodders in his under shorts you'd know why I wasn't going to stay in the TCI apartment. You know, March of '99, 25 months later, we merged TCI into AT&T. We'd increased shareholder value 9 ¼ times in 25 months, all the pieces...

SOUTHWICK: Let's talk about some of the specific things you did. Decentralization?

HINDERY: Well, the first thing I did was in six weeks I fired 25 officers. I hope I was gracious about it; I didn't try to be anything but gracious, but they weren't the women and the men that were going to run TCI for me going forward, and we replaced 21 of the 25 internally. This wasn't about TCI; this was about some of the people who were running TCI.

SOUTHWICK: Was part of the issue that these folks had come from outside the industry and really didn't understand how the industry worked... I don't want to put words in your mouth.

HINDERY: It was very much that. It was a sense of indifference to the customers, and I don't mean that as critically as it's going to sound, but it was very centralized, took authorities away from the field, put them in Denver, brought people in who didn't know anything about the industry, let them run it, and geez... Wow! Why am I surprised it didn't work very well? These weren't bad people, they weren't untalented people, they just weren't cable people.

SOUTHWICK: Right. So they'd come from a culture that was different.

HINDERY: Yeah, or even if they had come from the industry they had somehow developed an insensitivity to the traditions of the industry. Al Neuharth, in describing his newspaper empire when he ran Gannett, coined the phrase "Don't out-local the local", and I've used it a thousand times in talking about the cable industry. It's a local business. It's the women and the men who run the industry at the local level. So we cut the headquarters staff by half – although we didn't fire anybody. In two and a half years I fired nobody but 25 officers. We added more people than anybody in the history of the industry. It wasn't about changing anybody in the company but 25 people, but it was imperative for me, Tom, that the replacements come from within the company. If I had come in and replaced the 25 with 25 people from outside the company, it would have demoralized the place. So, Anne Koets and Steve Brett and Tony Werner and Bill Fitzgerald, and just so many of them that had been in some role of the company, just elevated their status, and David Krone and Matt Bond and just some of the most incredible people it will ever be my privilege to work with. Lela Cocoros, just on and on. So 21 of the 25 were there, they just moved up and ran it for us. I didn't even remotely think I was going to run it. Marvin Jones, bless his heart, he came out of semi-retirement and saddled back up for me for a couple of years and we just kicked the heck out of it. It was spectacular.

SOUTHWICK: You spent a lot of time going around to the systems as well.

HINDERY: I spent a lot of time going around everywhere. I flew, in the two and a half years I worked for John – actually I only worked for John, technically for 25 months because by March of '99 we had merged and I essentially went over and worked for AT&T, but in the two and a half years that I was at TCI/AT&T I flew 900,000 air miles. I flew 1,000 miles a day, including Saturdays and Sundays and holidays, and I met with literally every employee, I went to every industry thing, I went to every regulator, I went to every Congressperson, I went to every shareholder, I did it all. And the reason I was able to do it – and it sounds like how is that possible – is because behind me sat the most incredible women and men in the history of the cable industry, because I could go out there and Barb Wood and Anne Koets and Steve Brett and Derek Chang and Bill Fitz and Matt Bond and David Krone and Tony Werner and 38,000 other people were doing their jobs brilliantly. We gave, in the first several weeks I gave options to 650 employees, every manager in the company – that number previously was like 20 to 25.

SOUTHWICK: So they had options to buy stock in the company, which meant that if the company did well, they did well.

HINDERY: They did well. I gave equity to every employee in the company through employee plans, so at the end of the day I think Anne and I and Steve thought that we had something like 93 to 95% of the employees being shareholders of the company. I've got to give credit to Grace de Latour, who was there with me and was the head of human resources, who I should have named. But I've got to be real careful, because I'm telling you, it was everybody. That was the most unbelievable bunch of people in my lifetime, and it was like a battle.

SOUTHWICK: You sold the company planes.

HINDERY: Yeah, yeah. I did everything that showed them that we were going to do this together, but I put back employee benefits, I rescinded the cut in salaries. This wasn't going to get better or not based on whacking employees. This was going to get better based on running it better, and so we cut overhead, but the overhead I cut was sort of my overhead, or the corporate overhead, so we got back in all the associations and paid our dues and we went and saw our constituencies, all of them. We gave our employees back their cuts, we restored marketing budgets, and then I held on, because if it hadn't worked I was going down the tubes, because I had actually increased the expenses of the company. But I knew that this group of people, this unbelievable group of women and men, could in fact get the revenues to support the expenses.

SOUTHWICK: Where did those revenues come from?

HINDERY: Subscriber growth. We had lost subscribers as a company at a time when everybody in the industry, everybody, Tom, everybody had grown subscribers. We were the only cable company in America that couldn't grow subscribers.

SOUTHWICK: Were you losing them to direct broadcast satellite, or just no service at all, or do you know?

HINDERY: I didn't even ask. I just knew that I'd grown subs at InterMedia and TCI lost subs. I knew that I had, I think, a 52% operating margin and had kept rate increases at or about inflation, and TCI was in the 30s and had raised rates three or four times inflation. I knew that I had the squeakiest, tightest corporate overhead per customer in the industry and we had the worst at TCI. And so we just fixed all that stuff. But we held on, we trusted each other, and it was unbelievable. I don't sleep much, and so I used to get in early, and bless their hearts, they began too, and we worked late, got in early, and traveled on weekends and ate more crap food than I'll ever eat in my life.

SOUTHWICK: You also took kind of a leadership position in terms of the industry, in terms of some of its organizations like C-SPAN, which had not been the TCI style in the past. What was your thinking on that?

HINDERY: Well, you can't be the industry leader because of your size, you have to be the industry leader because of your actions. So we re-engaged with all of the industry initiatives. We had been irresponsible in dropping C-SPAN.

SOUTHWICK: They dropped them from your systems?

HINDERY: Yeah, I mean fix the company, don't drop C-SPAN. Fix the company, don't fire employees. Grow subscribers so you don't have to fire people. Grow subscribers so you don't have to drop C-SPAN. For God's sake – how little we saved in association dues, but by pulling out of the associations we killed them. We were TCI, so if we left the Idaho State Association there was no Idaho State Association. We were Idaho.

SOUTHWICK: So tell me how the deal with AT&T came about.

HINDERY: I had a sense, as I said, Tom, that TCI needed a partner, a strategic partner. I thought far too much of our current stock valuation was based on things we hadn't done yet and much like this Internet bubble burst of the last year, you don't want more than 20-25% of your shareholding value to be stuff you haven't done yet. The market's expectations get ahead of you. Digital cable and digital phone and digital data were things we hadn't done yet in the rebuild, and I knew we could sort of get there, but I thought that if we got ahead of ourselves or missed some timing we could have some problems for our shareholders. The one company who had a national agenda gone awry was AT&T. Everybody else wasn't as attractive or as obvious, but by the summer of '97 we had repositioned ourselves, we had announced digital, we were extremely well-thought of, I think, by the marketplace as to how we were running the company. If there was ever a time to broach the prospect of a transaction with AT&T it was then. It had been tried by predecessors of mine many times to no particular effect. So in August of '97 I went and saw Bob Allen and began a dialogue that went nowhere, but by October of '97 when Mike Armstrong came, heated up. We began to talk about the At-Home asset, as to whether or not TCI and AT&T should develop some sort of partnership around At-Home. It was sort of like chumming the water, it was sort of a way to begin a relationship. By January-February, it was clear we weren't going to do much around At-Home, but that we had sort of engaged intellectually, and perhaps strategically, and by May of '98 AT&T had convinced itself with John's and my help that we in fact represented an opportunity. They contrasted that opportunity with Bell South. Unbeknownst to many people, we were in a bit of a horserace against AT&T buying Bell South or buying TCI. It was sort of zero sum. If they had bought Bell South they sure as heck weren't going to buy me, and if they didn't buy me nobody else was. That wasn't a disaster; I mean, I wasn't unconfident of our ability to continue to run TCI well, I just believed that the last big push of shareholder value was going to be achieved through an external transaction. You're rewarded as a fiduciary by having a vision and executing that vision, and that's all pretty good, but if you really want the last big whack you have to realize the value through a transaction. And so, in June of '98, as you obviously know, we announced the merger. We put every attention we had onto it. We did – Steve Brett, and I and Derek Chang and Anne and Barb and Bill Fitz and others – we really worked hard on the merger and by March of '99 – we announced it in June of '98 – nine months almost to the day later we closed it, which was months in advance of anybody's expectations. And so 25 months and two days after I joined John, March 9, 1999 from February 7, 1997, the largest merger in the history of the media industry was closed and the fate and destiny of TCI forever changed. And in that 25 months, if you took Liberty and TCI Ventures and TCI, which were the pieces that John and I were responsible for, they had gone up in value 9 ¼ times, and it was the greatest restoration of shareholder value, the greatest creation of shareholder value, of any major cap company in the history of the United States.

SOUTHWICK: Wow! And what was your role at AT&T Broadband, then, after the merger?

HINDERY: I was president and CEO of AT&T Broadband from March 9, 1999 to October 31, I guess it was, of '99.

SOUTHWICK: And what went through your mind after the merger took place? Did you plan to stay on the long-term or did you think you'd stay there for awhile?

HINDERY: I had a contract that as part of the merger I was required to stay. It was a disappointment to me that I had to stay, not because.... I didn't dislike AT&T, that's horribly unfair to suggest. I didn't. I was identified with TCI; I sold TCI, I fixed TCI for John, I ran it well, and I sold it. And on a very personal level I'd kind of wished I'd been allowed to go home at that time. But that was the deal, the deal was I had to stay, and I tried hard. I mean, I worked hard for them. I just had a different sense of what to do than they did, and they were the buyer, it was their prerogative to have a different sense. My style was compatible with John's and it proved to be incompatible with AT&T's. They're not right and I'm wrong, or I'm right and they're wrong – it just was different. Mike bought it and Mike should have run it, and in October of '99 he decided that he would prefer to run it, and I was thrilled. Then I went to the Eastern Show in late October of '99 and I picked up the Bill Daniels Award for Operator of the Year. I cried, and people that meant a lot to me stood and cried, and it was over. It was unbelievable. One week before the merger into AT&T, in March of 1999, Fortune Magazine said to all the world that TCI was the second most admired telecommunications company in the world, second only to SBC. We weren't on that list in any measure ever before. We didn't go from fourth to second, or eighth to second. We weren't on the list. And in March of '99 they said we were the second most admired telecomm company in the world, ahead of AT&T, ahead of everybody else but one, and there wasn't one cable company anywhere near the list. We had raised shareholder value 9 ¼ times, we were the operator of the year, we had done it well. We had more women in management, more people of color, more outspokenness on AIDS and HIV and on content, and it was over. I damned near died emotionally in October of '99 when I left it. It damned near killed me. It was in Baltimore (the Eastern Show) and it was wonderful and awful, and I got on the plane and went back to San Francisco.

SOUTHWICK: And did you immediately go with Global Crossing?

HINDERY: A month later.

SOUTHWICK: A month later, where you were CEO?

HINDERY: CEO of Global Center and later, briefly, CEO of Global Crossing.

SOUTHWICK: Before we run out of time, I wanted to ask you about racing. How many people in the cable industry like to race cars? I know you and Marvin Jones.

HINDERY: Marvin and I. I think Marvin and I, and Marvin and I.

SOUTHWICK: Frank Drendel?

HINDERY: No, Frank Drendel's son.

SOUTHWICK: Okay.

HINDERY: Frank Drendel's son. I got involved in it... I raced stock cars through '96 when I broke my neck, and couldn't race stock cars anymore because I can't stand another big wreck. So in '98 I started racing sports cars badly, I mean like really badly. I didn't know how to race sports cars. I knew how to race stock cars; I was pretty good at racing stock cars. Richard Petty had taught me to race stock cars, and I was pretty good at it, but then I had this accident in the fall of '96, just before Bob Magness died, and by late '98, early '99 I'd actually gotten pretty good in the sports cars again. So I did the 24 hours of Daytona in January of '99 and now I race professionally for Porsche and I think I'm eighth or ninth in the world in GT sports car racing.

SOUTHWICK: And you're still racing them yourself, not just owning the car?

HINDERY: No, I race them.

SOUTHWICK: Wow! And you mentioned that TCI forbade you to race, but you managed to somehow...

HINDERY: It largely said I couldn't race, but it didn't say I couldn't test, so we redefined racing and testing. I remember a great one is that Richard Petty asked if I wanted to test at Indianapolis, and that's like going to heaven, and so I said, "Damn right!" And Kaitz week of '98, I think it was actually Kaitz week of '97, I flew from New York – it was called Hell Week – and I flew from New York to Indianapolis test a car with Richard and Kyle Petty, and I'm talking to John on the phone and this unbelievable noise is in the background as these stock cars were screwing around. It was the day after the Brickyard 400, and we kept some of Richard's cars around and we were screwing around. Bobby Hamilton and Kyle and Richard and I were screwing around at Indy, and the noise is just cacophonous, and John kept saying, "What's that noise?" I kept saying, "I'm at the airport. It's an airport!" Unless John sees a copy of this tape, John never knows that I snuck off and did Indy, and by '98 TCI was running so well that I talked him into letting me race despite my letter. So I laid out in '97, and part of the reason I laid out in '97 was my arm was broken, and my neck was broken, and I couldn't race anyway, so John didn't get much out of his letter. But I didn't have to stay at the TCI apartment either, so that was good.

SOUTHWICK: Very good. Anything else we missed?

HINDERY: No. It was special. January 1988 to October 1999, it was something special. That excludes the Chronicle years, but the years of my own ownership and TCI, it was just unbelievable.

SOUTHWICK: Well, congratulations and thanks for spending the time.

HINDERY: Thanks for letting me work up a sweat with you under these lights.

SOUTHWICK: Happy to do it.

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  BACK TO ORAL HISTORIES

Les Hilliard

Les Hilliard

Interview Date: Saturday February 10, 2001
Interview Location: Sun Valley, ID USA
Interviewer: Jim Keller
Collection: Hauser Collection

KELLER: This is the oral history of Leslie P. Hilliard, Les Hilliard, a real cable pioneer. He's actually a member of the Cable TV Pioneers also, but goes back in the early days of cable, back to 1953 when he met one of the premier people in cable television, Bill Daniels. Leslie operated in and around the Nebraska, Colorado, Wyoming, Montana area after that and will be a real background in telling the story about the development of small systems in that area. We are here at the Sun Valley Lodge in Sun Valley, Idaho at a meeting of the Sawtooth Cable Professionals. The date is February 10, 2001. Your interviewer is Jim Keller. The interview is sponsored by a grant from the Gustav Hauser Foundation as part of the Oral History Program of The National Cable Television Center and Museum.

Les is from Scottsbluff, Nebraska and had his first meeting and his first introduction into cable television in that area. Les, you want to start out with your meeting with Bill Daniels in Scottsbluff in 1953?

HILLIARD: Actually, I didn't meet him personally at that time. He was visiting with my father.

KELLER: You were just a baby at that time.

HILLIARD: No, I was a senior in high school. My father had tried to raise money to build a TV station in Scottsbluff. In order to do that, he put in a cable TV system up and down one of the alleys on Main Street.

KELLER: Where did he get the idea to put in a cable system?

HILLIARD: I don't know where he got the idea, to be honest with you. I just know that he wanted to try to get people to subscribe to stock so he could raise enough money to put in a transmitter and everything else. He bought a Dumont Camera chain and built a shadow box so he could show movies. He established the whole thing in the studios of his radio station, KOLT in Scottsbluff. I remember we also televised the 6:00 News live so people could see that. But there basically were no TV sets in the area.

KELLER: Was there an allocation for television station?

HILLIARD: Oh, yes, there was an allocation. He had Channel 13, I think, was allocated for Scottsbluff. He was trying to raise the funds to build the station there. In the process, we built this cable system and ran drops into all the hardware stores and furniture stores that had TV sets. But there was no signal in the area to be picked up. So we had to create a signal, and we had to do this. We showed a lot of old movies that we were able to get for free.

KELLER: So you did your programming right from day 1 almost.

HILLIARD: Day one. And I was the one that ran the camera. There would be this blank spot while I moved the dolly over and shoved it into the shadow box. Then I'd run around and turn on the 16 mm. projector. That's the way we were introduced to it. Then one day, this guy came to visit my father.

KELLER: That was Bill Daniels.

HILLIARD: Bill Daniels. He was trying to convince my father to go ahead and expand this out and to put it into homes and things. Bill was trying to put together a microwave system from Denver up through to Casper where he wanted to build a cable system also. The Duhammels up in Rapid City, South Dakota, were putting on a TV station up there, and they were trying to get a microwave feed up there so that they could get network signals up there. So there was a lot of vested interest. Scottsbluff kind of sat in the "Y" between Casper and Rapid City. In my father' conservatism, he shook his head, "Bill, I don't think this cable business will ever amount to anything."

KELLER: How did he ever get into the radio business? Maybe radio wasn't going to amount to anything either.

HILLIARD: I don't know. My father was a pioneer in there. In 1929, he put on a radio station in Scottsbluff, and the Department of Commerce came out and told him he couldn't do it without a license and shut him down. Then he applied for a license and built his first radio station, the radio station there – KGKY – in 1930. So when I was born in 1934, I was born into the communications family and we've been in the business ever since. My younger brother ran the station after my father retired. The family owned that station for over 50 years. Then we got into cable. My two brothers and I went into cable as partners. In the interim, after '53, I had gone into the service and come back out, but still had an interest in cable and was fascinated with it. They built Scottsbluff.

KELLER: Bob Magness did, didn't he – TCI?

HILLIARD: Bob Magness did.

KELLER: It wasn't TCI then, but whatever Magness called his company then. I don't remember.

HILLIARD: Well I don't remember what they called it. The first development Magness did was actually Bozeman, Montana, with George Hatch.

KELLER: Right.

HILLIARD: They ran a microwave out of Salt Lake to build that. But when they built Scottsbluff, my home town, they of course got the power company there weren't going to let them on the poles. They had to set their own poles throughout the entire town. Then later on, some other people built the outlying little towns – Mitchell and Morrill and Bridgeport and Bayard. That person built it with twin lead. These things were all about twelve miles apart. We had twin lead running, when we bought that system. My brothers and I bought it. My younger brother ran that. What we did was we got the microwave feed from TCI and ran it over the twin leads to these little towns. Then we did have a TV station there finally that somebody else built. We picked that up off the air.

KELLER: Where was the television station built? In Scottsbluff?

HILLIARD: In Scottsbluff, yes. Later on, we put in a microwave system to feed all those systems, but we always picked the local channel off air. Of course, the most logical place to put a microwave was on the water tower. So we were on the water towers of all these towns up and down the valley there.

KELLER: You had, in Scottsbluff; you had a tower for your radio transmitter, didn't you?

HILLIARD: Yes. That's where we originated ... We took the microwave and shot it up into a fly swatter, a reflector, and reflected it both up and down the valley. That's the way it was put in there. We fed it all the way down to Bridgeport at that time. That was our initial entrance into the ...

KELLER... and you bought the systems then in those small communities around Scottsbluff?

H Yes, we bought those. My brothers and I each put up $10,000. So I went into the cable business with a $10,000 investment. We built that up, and we bought some cable systems up in Montana that I operated. My younger brother operated the ones in Nebraska. My older brother was living in Texas, and he wanted to get into the cable business. So the family partnership got him started down there. We bought a cable system down there. We had an arrangement where the operating brother got 40% and each of the other brothers got 30%. Later on, we divided these systems up so that we each owned and operated our own systems.

KELLER: Was one of your brothers named Russ?

HILLIARD: Russ. He's my younger brother.

KELLER: Okay. I've met Russ before. I've never met you, but I've met Russ before.

HILLIARD: Then we had an older brother Bill.

KELLER: Bill I don't remember. I do remember Russ.

HILLIARD: Well, Russ is still in the business and still going very active down in Kearney, Nebraska.

KELLER: Is he an engineer?

HILLIARD: Yes. He was a radio ... He had his first class radio engineering license. But he was not trained as an engineer. He's got a degree in business.

KELLER: So then you built the systems around the Scottsbluff area. You went up and acquired some small systems in Montana?

HILLIARD: Well, see, I was living in Montana. I had graduated from college and went to work for Texaco. They shipped me up there. I still had this interest down in Nebraska, and I wanted to get into business for myself. I didn't want to work for somebody else. So we made this deal, and we acquired two systems up in Montana in the early '70's.

KELLER: What were they?

HILLIARD: That was the Rattlesnake Valley, just outside of Missoula. It was owned by Glen Tarbox and – I can't think of the other guy's name – two guys that ran that up there.

KELLER: Were you trying to get microwave from anywhere into those systems, or did you?

HILLIARD: No. TCI had the microwave system. George Hatch and Bob Magness had built a microwave system from Salt Lake up into Bozeman and then over to Billings and on up into Helena and to Great Falls and that area. They started building all of that area. H&B America built Missoula. Glen Tarbox was their manager. He actually built the Rattlesnake Valley before H&D built Missoula, and he got it going. So we always purchased our microwave service from TCI or, back then they called it Western microwave. I can remember that I did my due diligence on the acquisition of Laurel, went through all the contracts, and I was assured that everything was A-okay with my microwave feed, and that they had no plans to change anything or any rates or any thing else. So we signed the contracts on a Friday afternoon, and I took over possession. The following Tuesday I've got a registered letter from Western Microwave, TCI. They doubled my rates. I was just furious about it.

KELLER: Larry Rommrell?

HILLIARD: Larry, yes. Anyway, Bill Daniels owned a couple cable systems up on the high line in Montana.

KELLER: Remember, we're still talking about the mid-'50's now right?

HILLIARD: Well, no.

KELLER: Have we gotten into the '60's?

HILLIARD: No, not mid-'50's. I spent that short time in '53. Then I went into the military. I got out of the military and finished my business degree at Colorado State University. So it wasn't until the '69's until my brother and I started investing in these things.

KELLER: So we're in the mid-'60's.

HILLIARD: Mid '60's, early '70's is when we got into systems up in Montana. There were a lot of systems built up there by that time. Bill Daniels owned a couple of cable systems up there – Glasgow and Sidney. He also got microwave feed from TCI. So that's how I tied up with them. I said, "How do I protect myself?" They said we'd have to make a filing with the commission. I said, "How do I do that?" They gave me the name of their law firm.

KELLER: This was Bill?

HILLIARD: No. It was his managing operator. I can't remember the guy's name. He was just a really wonderful guy. Bill had a lot of super people working for him.

KELLER: Present company excepted, because I was with him at that time.

HILLIARD: Were you? No, he was a .... I don't remember. It was John Saeman.

KELLER: No. Saeman came much after that.

HILLIARD: Alan Harmon? No, it wasn't Harmon. Anyway, he advised me ...

KELLER: Dick Cox, Winton Cox's son?

HILLIARD: No. I knew Winston Cox. He was in the oil business in Billings. When I was with Texaco, I met Winston Cox and worked with him there and knew who he was then.

KELLER: He backed Bill in the early days, didn't he?

HILLIARD: Oh, yeah. Bill returned that. He gave Rocky Mountain College $1 million in Winston Cox's name as a gift to memorialize Winston. Winston took his life some years later. You're thinking of Dick Cox.

KELLER: Dick's his son.

HILLIARD: Yes, and Dick ran the Billings system. I think Dick still lives there. He does a lot of real estate there in the Billings market. Really nice people.

KELLER: You've got the microwave from them at that point, bringing into Laurel.

HILLIARD: We always did. We had to fight them, and it was a futile fight. We had lost before we had even made a filing.

KELLER: Now, you lost because you took the service from TCI or Western Microwave – or from the Daniels organization?

HILLIARD: No, no. The Daniels organization and we both took it from TCI ...

KELLER... who had built the system from both Denver and from Salt Lake.

HILLIARD: Yes. But the one from Denver didn't come up beyond Casper. Another group picked up the signal out of Casper, and they brought it up to Sheridan, Wyoming. But that's as far as that link went. The one from Salt Lake came up into Montana and split outside of Bozeman and went north to Helena and to Great Falls. Outside of Bozeman it also turned and went east over to Livingston and Billings and over to – on up to Glendive and to Sidney that way. So you had two arms of this thing stretching out there. Bill Daniels took feed from Western, as well as us there. So as a group, the independents went together and tried to fight the rate increase, but it was a futile fight. But I did get connected with Cole, Raywid and Braverman as an attorney and have been with them ever since. Bob James handled that case back then, and Bob and I have become personal friends. I know Jack Cole and have met a lot of the people in the organization. Lately it has grown so fast and so big that there are people in that organization that I don't know. I know the older guys, but I don't know the young ones.

KELLER: So where did you go after Laurel? What did you do?

HILLIARD: We had the Rattlesnake Valley and that. So then I started buying up little cable systems in and around the Billings market. I bought Big Timber which was built by Mac Clark. Do you remember Mac? Mac sold his cable systems. He had Big Timber and Harden. He sold those to George Hatch. Later on, I bought them from George. He only held them a couple of years, and I bought those two and combined them with my organization.

KELLER: For the record, George Hatch owned and operated the Salt Lake City Tribune Company and published the newspaper in Salt Lake City. He also had a television station there, as I recall at one time or another.

HILLIARD: Yes, he did.

KELLER: He was also the original partner of Bob Magness in their original venture throughout Wyoming and Montana.

HILLIARD: Yes, he was. He was a delightful gentleman. I flew down to negotiate with him. Bruce Dickinson, with Daniels & Associates, helped me on that acquisition. We sat there and talked for about an hour and came to terms on the thing. Bruce took a lot of notes. George just said, "I'll have a contract typed up and send it to you." It was probably the fastest cable deal that I've ever done. It seems like the longer you've been in the business, the longer it takes to negotiate deals. Nowadays, you're lucky if you can get them done ... I've just sold a cable operation down in Texas to Time Warner. That only took nine months. You know how that is.

KELLER: So then, as you continued to expand your operation, would you buy and sell or did you buy and retain the systems as you moved on?

HILLIARD: To be honest with you, this one that I just sold it the first cable system I've ever sold. I've always bought and retained.

KELLER: Over the last forty years, you've been just buying and retaining them.

HILLIARD: And upgrading. Seems like I always buy systems that are in just desperate need of rebuilds. I end up rebuilding all these systems. No, I haven't grown very fast or very big, but have enjoyed the industry over the years. I think the largest I ever got was up to about 16,000 subscribers. I just sold off about half of my subscribers just this last month.

KELLER: How did you get down to Texas?

HILLIARD: This is where my older brother was.

KELLER: Oh, that's right. You bought those systems down there.

HILLIARD: He wanted a partner down there. My younger brother didn't want to go in with us. So I went in with him, and we bought a cable system down there, and then built the one next door to it.

KELLER: Where was that?

HILLIARD: Silsbee, Texas and Lumberton, Texas. They're just north of Beaumont. As a matter of fact, you just cross the bayou there. One side you're in Beaumont, the other side you're in Lumberton, so you're there – just like that. But we just finished rebuilding that thing into a 750 MHz, two-way, with 75 – 80 miles of fiber in that system. It's just a beautiful system.

KELLER: That's the one you sold?

HILLIARD: This is the one I sold. We put in a new headend building, concrete floor, concrete walls, and concrete roof. I mean, it wouldn't burn no matter what. It had an Onan generator out there, enough air conditioning. When we put the air conditioning unit in down there, the guy said, "What are you building here, a meat packing plant?" "No. We're just going to keep all this electronics really cool." We put in all the wires that came in overhead and dropped down into the racks. All the racks were on wheels, and we could literally roll them back and clean underneath them and roll them forward and keep them all in line. It was just a beautiful, beautiful system, the fiber lasers in there.

KELLER: What did you propose to do by building the fiber in a small market like that?

HILLIARD: Well, we tied these two systems together. There were two systems of over about 3,500 subscribers each. I put in a synchronous ring in there. What my intention was to do was to bring in internet and HITS. But I had this crazy theory that the deeper you can get your fiber into your system, the less problems you're going to have with your electronics, the closer you're going to be to your customer, less ingress you're going to have through your low frequencies. The more fiber you put in, all of a sudden your problems disappear. So that's the reason we did it. I'm redesigning, redoing my cable system up in Laurel right now.

KELLER: You still own the same system. That's right; you said you didn't sell any.

HILLIARD: SA is designing it for us.

KELLER: Scientific Atlanta.

HILLIARD: Yes. I got a hold of my rep down there and he said, "How deep to you want to go?" I said, "I want a node for every 150 homes. I want to go really, really deep with fiber." You know, the biggest expense with fiber is the construction. The cable is not that expensive, if you think about it. Once it's in, they keep upgrading what you stick on the ends of it, so to redo it is no problem at all. So when I get done with it, I want to put in about twice, three times the number of fibers I need so that if something might change in the future, I can have it.

KELLER: Did your system in Laurel require rebuilding?

HILLIARD: No.

KELLER: You're just adding fiber, then, to the existing system.

HILLIARD: Yes, and we're going to upgrade the electronics.

KELLER: How many subscribers do you have in Laurel?

HILLIARD: In Laurel we have about 1,600 – 1,700.

KELLER: That's probably one of the smaller markets that has the fiber system.

HILLIARD: Well, but no. The smallest market in Big Timber, Montana. It's got a synchronous ring in it, two-way. It's got 600 subscribers.

KELLER: That's your system also.

HILLIARD: That's my system.

KELLER: What are you doing with it?

HILLIARD: We're tying it in. We're going to put in a Cisco router for our internet. We're going to put in HITS. We're going to go first class with it, all the way, a 750 two-way. I'm crazy, but I made a statement one time, "If you're ever going to get to the altar, you've got to be a beautiful bride." So I'm trying to make all my cable systems beautiful. I'm at that age where I'm thinking of retiring.

KELLER: Then why did you sell the ones down in Texas?

HILLIARD: To be very honest with you, they made me an offer I couldn't' refuse.

KELLER: I figured that was it.

HILLIARD: We had just completed it. We hadn't rolled out the internet yet. We hadn't rolled out HITS yet. It was just finished. They made us an offer.

KELLER: Time Warner?

HILLIARD: Time Warner.

KELLER: Bowman?

HILLIARD: Yes.

KELLER: Beaumont.

HILLIARD: Beaumont, Texas. That used to be a TCI thing. Then they combined with ... TCI combined with Time Warner and Time Warner took it over. Then TCI sold out to AT&T. That's a story in itself because they wanted to buy me. They redid the price. We all agreed to the price, but they didn't know who was going to buy me.

KELLER: Just at that time.

HILLIARD: At that time because they didn't know what partnership or what entity was going to buy us. So this thing got drug out for a long time. We ended up with a company called TWAN – Time Warned Advanced Newhouse Communications.

KELLER: Newhouse? That's right. Newhouse would be in there.

HILLIARD: Advanced Newhouse Communications. When we went to the city councils, we had to get them to approve, pre-approve, the merger of AOL/Time Warner and the assignment of the franchise internally from TWAN to Texas Cable Partners Limited, I think it is. Anyway, that partnership is AT&T and Time Warner.

KELLER: Did the city council people understand it?

HILLIARD: Oh, yes. Everybody and one particular lawyer did. He was the lawyer for the city of Lumberton. He was really, what you would call, a dog in the manger. He could find every reason in the world not to approve the transfer. The transfer was all right. They didn't like these mergers. They didn't like these assignments. Well, between the first and the second reading of the ordinance of transfer, AOL got their approval to take over Time Warner, so we had to modify it. That got us beyond that problem. They had to put in specifically that it had to be a partnership controlled by Time Warner. Well, Time Warner runs it all, you know. But this guy – he loved to play the country bumpkin. My attorney just pulled out his hair. He said, "This guy's not an attorney." But it was a lot of fun and very frustrating because this guy would not call Time Warner and ask them what they wanted. He wouldn't talk to them. They had to call him. He just was delighted that the Time Warner attorneys at Holland and Hart out of Denver had to call him. He would be busy or they could call him tomorrow, but he would never call them. My attorney kind of got in good with him, and he, at one time in the conversation, said he was a pirate. So my attorney always would call him and say, "What's an old pirate up to today?"

KELLER: Let's talk a little bit about some of your more memorable experiences in operating small systems.

HILLIARD: That's maybe where we'll run into a problem. I think I have Alzheimer's setting in. I don't remember all the things I ever want.

KELLER: Some of the things you do remember that you either had great memories, fond memories of, or not so fond memories of.

HILLIARD: Probably one of the fondest memories, or most hilarious memories that I have, is that I got called on the carpet by a little city council down in Forsyth, Montana. They wanted me to come down and answer some questions from some of their citizens. I didn't know where I was going to be so I took my attorney, Jim Murphy, with me. We drove down to Forsyth which is about 100 miles east of Billings there. Through the process of the whole thing, it seems that on Nickelodeon, in their teaching little children numbers and everything else, some family had determined that we were bringing Satanic messages to their children and they wanted to know why. They just read us over the coals.

KELLER: What did you say to them?

HILLIARD: I said, "I have no idea about this. This is an educational program. We think Nickelodeon does a marvelous job. We've have nothing but high praise for Nickelodeon from anybody. You're the first people to ever say anything about it." Anyway, through the whole process, they said, "You'll have to take it off."

KELLER: Who did? The council did?

HILLIARD: The city attorney.

KELLER: The city attorney?

HILLIARD: The city attorney for the city of Forsyth told us we were going to have to take this thing off.

KELLER: Because one family complained?

HILLIARD: That one family complained. I said, "Just a minute. This is where we run into a problem because we're independent operators, and we operate under the First Amendment to the Constitution. You can't tell us what we can put on our cable system." This guy jumped up and said, "I don't care what it says in the Constitution. Here in Rosebud County," (that's where Forsyth is); "the First Amendment does not apply!" I turned to my lawyer and I said, "Jim, tell me about this. Why doesn't the First Amendment apply here?" He said, "Jeez, that's news to me too."

KELLER: So you know, no one ever called him on it – that's the only reason.

HILLIARD: That's right. But we never did anything about it. We still operate there. The whole idea that the First Amendment didn't apply was hilarious to me. But you don't run ... You run into these weird things at the darndest times in your cable business, and it's usually when you're dealing with city councils.

I guess my most memorable council experience was in the city of Missoula because our little cable system in Rattlesnake Valley was part way in the city and part way out of the city so we needed a franchise to operate inside the city. This is before franchises ever came into existence. We, prior to this just operated under just a city license. They decided that we all needed new franchises so they brought in a consultant out of Portland. He was an interesting guy because his training was avionics engineering. How he got into the cable consulting business, to this day, I don't know.

KELLER: Do you remember his name? It's not important. I just wondered if you had or not.

HILLIARD: No, I don't remember his name. If I would have had a chance to talk to Jim, ... Jim Murphy, my attorney's here. But this guy was something else. It was all obvious what the consultant was for – cross the city's palm with green and you can get your franchise. Well, we argued over the rate and everything else. Then they wanted to create a public access channel. They wanted us to buy all the equipment for the access channel. They wanted us to pay the salaries for everybody in the access channel. I said, "No – can't do."

KELLER: How many subscribers did you have there? How many then?

HILLIARD: Then about ...

KELLER: This would have been '84 or '85.

HILLIARD: In '84, '85, we probably had 1,200.

KELLER: Oh, boy.

HILLIARD: But we were dealing, at the same time, TCI. They were trying to get us both, see. TCI said, "Rather than fight it, here's the money to buy your equipment and everything else. We'll pay you the franchise fee," and went on. So we went round and round. I just refused to buy them all kinds of equipment. I'm going back for a renewal on that same franchise and the city's saying, "Well, we want to upgrade all the equipment in our public access channel." I'm not too excited about this because between TCI and ourselves, they take in about $150,000 a year and they pay out over half of it to the administrator of the access channel. That's almost more money than I'm making running my own systems. Of course, the city of Missoula had to shut down their public library last summer because they didn't have enough money to run the public library. But they sure have enough money to spend on this access channel.

KELLER: Do they use it?

HILLIARD: Does who use it?

KELLER: Missoula. Do they use the access channel?

HILLIARD: They show the city council meetings, and they have a number of preachers that use it. Other than that, it's mainly alpha/numerical notice of meeting type thing. I don't think it's very well used. What's happened since this whole thing started in Missoula was the university there got a PBS channel. They have a nice PBS operation there, excellent, well-done operation. The one in Missoula is tied to the one in Bozeman. They got that tied together with fiber, and they run them as kind of a single entity.

KELLER: You carry it on the system though?

HILLIARD: No we don't.

KELLER: They don't give you direct ...

HILLIARD: We carry it on the system in Missoula but no other systems. We carry it there, yes. And we carry the Spokane PBS there too because they have a satellite.

KELLER: Does the Missoula system give you a direct feed to your headend?

HILLIARD: No. We take it off air.

KELLER: Okay.

HILLIARD: I would like to have a direct feed.

KELLER: Have you ever asked them for it?

HILLIARD: No, we've never done that. We have a direct feed from the TV stations there through the now AT&T operation, but because our systems butt up against each other, we bring their signal right into our headend and then out again. We have our own satellite dishes, and we are inter-tied with them. We get this public access channel through their system too. It's kind of a convoluted arrangement.

KELLER: But you don't actually serve the city of Missoula, do you?

HILLIARD: We only serve the Rattlesnake portion which is north of the Interstate [highway] there. The main body we do not. But our franchise allows us to.

KELLER: So you have a franchise for the entire area?

HILLIARD: For the entire area, and they have a franchise for the entire area also. We are on a good relationship. We've always had a good relationship. We don't step over their line, and they don't step into our line. The guy that used to run that – Steve Proper. Steve is now AT&T's director of franchising and administration out in Salt Lake City. I just spoke to Steve not more than a week ago. We both have to go back to the city council for renewal of our franchise.

KELLER: They both come up at the same time?

HILLIARD: Yes. We have a very peculiar franchise there. We have a one-year franchise. They have a 15-year franchise. Ours is renewed every year -

KELLER: Wow.

HILLIARD: - automatically.

KELLER: Automatically.

HILLIARD: Yes.

KELLER: I didn't think the '84 Act allowed that. I thought you had to have a termination date on your franchise.

HILLIARD: Well, it's a yearly franchise. It's a termination date. It comes up in February of each year. To be honest with you, I've not been to the council meetings when they voted on that thing for the last five or six years. It's just automatically renewed. See, in the state of Montana, we didn't have a franchising ordinance. So we operate in all of our cities on a city license rather than a franchise. Only in Missoula's do we operate under franchise. But this is going to be in question now too because the city of Billings decided that they wanted to raise revenue, and we've got a couple of telephone companies over-building the Qwest system there. As a result, the ...

KELLER: You mean the telephone system. Qwest does not have a cable system in ...

HILLIARD: No, no. They have the telephone system. There are a couple of other ones going into it – Avista is going into there. Montana Power's telephone system called Touch America is building there. So when we're all done, we'll have three telephone systems in the city of Billings. As a result, they've had to cut some streets and do some things like that. So the city council decided, "Hey, this is the same as cable TV. We should charge them right-of-way access." So about two months ago, they imposed a 4% franchise fee on the gross revenues of these three telephone companies – not only the telephone companies, but of the gas company and the power company and all the utilities.

So Montana Power Company and Montana Dakota Utilities, the gas company there, have filed suit against them under the logic that the franchise fee is based on a percentage of sales and if you don't take gas or you don't use electricity, you don't pay this. Same way if you use Qwest but you don't use these other ones, you don't pay this franchise fee. It's a lot like cable. If you get your TV off over the air or if you get it from MMDS, or if you get if from DBS, you don't pay a franchise fee. So basically it turns out to be a sales tax, and in the state of Montana, it's illegal to charge a sales tax because we don't have a sales tax. So now they're taking this to court and saying, "It's illegal for the cities to charge a sales tax."

KELLER: Don't the telephone companies and the power companies operate under a Certificate of Convenience and Necessity issued by the state and are subject to the Public Utilities Commission up there?

HILLIARD: Yes.

KELLER: That ought to be an interesting case.

HILLIARD: Yes, but now they put this over on top of them because they say, "We are local rule over our particular entity so we can impose these requirements on these people." It'll be interesting to see. In the cable industry, it's so commonplace to pay franchises that we never ever tried to fight it. We are allowed to pass through those costs so we do. Power companies and telephone companies and gas companies have never run into this before. So we have this case being heard up there. It's going to be interesting.

KELLER: How did a small town boy like you get into Harvard, and what was your experience back there?

HILLIARD: Well, I didn't get into Harvard actually. I went to one of their advanced management classes.

KELLER: How long did it last?

HILLIARD: It lasted for three weeks for three continuous years. I have never, ever enjoyed anything more than I did that. If they would have allowed us to continue every year, I'd still be going back there. It was more fun. You were in among people that had their own businesses. I was in a class with just little over 100 people from 31 different nations in the world. It was just fascinating. Harvard is where it is because of its professor. They have the most marvelous professors. These guys are top flight. When I went through school, went through college it was just drudgery. You had to do this and you had to do that. This was totally different. It was all exciting. It was about ... everything was business. That's what I enjoy.

HILLIARD: These professors led you, led the class. They would throw out questions and then you would respond to it. You'd hear from somebody and it was really interesting. We had a gentleman from Spain, and he wanted to tell a joke. He said, "Forgive me for my poor English" and everything. But he told a joke and it was really good. But everything was that way. It was just marvelous. These people are brilliant people that I was there with. The professors guided this thing beautifully.

You do everything by case study there. We came up with a personnel case study about the cable industry. This was a continuing case study that went over about four or five periods. Before we started, the professor got up there and he said, "Les, you cannot ask a question, and I don't want you to talk to anybody else about this." So this was a personnel thing. Basically they put it in the Minneapolis area. It was about this guy who had been hired to do all this stuff, get the cable business going. To hear everybody talk about this guy and how after he tried to get everything through the city council, meet all the obligations that his bosses had committed to the city council and everything else, we went through all this. He finally got to the end of it, and they fired the guy. They got rid of him. So that was the end of the discussion. They said, "Okay, this is where the case ends. What do you think? Was this guy any good? Did he deserve to be fired? Did they just use him or what was it?"

So there was a big debate about it, and they finally turned to me and said, "Les, what do you think?" I said, "I thought he did a marvelous job. This was during the franchise wars where you promised the moon, and you got the franchise. Then you start building as fast as you could and then you had to renege on some of the things, the promises you couldn't make or fulfill. The guy did a great job. He did everything I would do." So later on they said, "Yes, as a matter of fact, he got out of the cable business. He went to the city of Washington, D.C. and went into real estate and made literally millions of dollars." So the guy was not a dummy.

KELLER: So he was an actual man?

HILLIARD: He was that. Every single case study that Harvard does is a true and honest case study. It's really interesting. None of these studies that they do at Harvard are any creations. Now they may change a name to protect somebody. They may change some dollar amounts not to disclose the dollars that a business did. But the actual case is an actual happening. What's interesting about Harvard, you do these case studies, you debate these case studies, and then when it's all over, this is the end of it. Then they will interview the person or the company CEO that the case study was written about, and they'll show you what this guy actually did. They allow us to determine what the guy should have done, but then they show you, in an actual interview, what he did do and how he did do it.

KELLER: That Minneapolis system was a case study in itself with franchising battles up there.

HILLIARD: Oh, yes. And I think that's where it was arranged. They just said Minnesota. I just assumed it was either Minneapolis or St. Paul or some one of those around there.

KELLER: Minneapolis was a real donnybrook.

HILLIARD: Oh yeah. Harvard is a marvelous place. I've never enjoyed myself so much.

KELLER: Do you like Boston?

HILLIARD: I love Boston. What a beautiful city that is. We were there long enough that I got to learn how to run a scull and get out there on the river and paddle up and down the river there. I went over to the Weld Boathouse there at Harvard, and they taught us how to do it and put us in a scull and got me out there on the river. You know, you don't do too much of that in Billings, Montana.

KELLER: No. There's not much water up there.

HILLIARD: It's fun. It really is.

KELLER: What are you going to do now for the remaining years that you're going to work?

HILLIARD: I don't know. I'll be very honest with you. My cable systems have been listed. But I'm treating them as if there's not going to be a buyer, and I'll be back here next year as a cable operator and going forward. I'm 66 now, and I've sold off my Texas operation, and I plan to sell off my Montana operation. I hope to go into retirement.

KELLER: AT&T is a natural for your Montana system.

HILLIARD: That's true, but AT&T has Montana and Wyoming on the block. They've been ...

KELLER: Well whoever owns it; it's a natural for you to pick up that one in Missoula.

HILLIARD: All those around there. We also own the cable system outside Spokane, Washington that serves the Air Force base there. The AT&T and our system have fiber that meet at the Sprint point of presence. Yes, that's a natural for them too.

KELLER: Then what are you going to do when you stop working?

HILLIARD: I have two sons. My oldest son is going into the coffee business – coffee kiosks – those little kiosks. He wants to get in that business. He's out in the Portland area. I'll try to help him in any way I can. My youngest son works for HPC Puckett in the brokerage business.

KELLER: San Diego?

HILLIARD: No, he's actually in Topeka, Kansas. That's where Tom started and most of his staff is in Topeka. My son is there on an internship. I told him that I wanted him to learn how to buy and sell companies, not necessarily cable companies, but to do the due diligence to run the mathematics, to find out just how you go about ... You can buy cars and sell cars, but buying businesses and selling businesses is a completely different ballgame. There are a lot of details you've got to know. There are a lot of legal things you have to go through. I said that there's no better way to do it than to actually get in and get involved in it. So he was involved in the Texas operation. He's involved in the preparing of the book for our Montana systems. But he's doing a lot of other stuff.

KELLER: He's going to be the broker, obviously.

HILLIARD: Yeah, right.

KELLER: Les, we're getting right near the end of the first hour, and I think this may be a time to wrap it up. Anything else you want to add to it before we do so?

HILLIARD: I think cable's been a marvelous industry. I really, really do. It's been good to my family. Both my brothers have been in the business for years and years. My sons have labored in the business. I started out wearing jeans. My wife reminded me just a few minutes ago where one time my insurance agent said, "Les, you must be doing better. You're not coming in here with dirt on your jeans. You're wearing some decent clothes for a change. It's been good. It's a marvelous industry. There are a lot of marvelous people in it. I had a beautiful introduction to the business through my father's association with Gene Schneider and Bill Daniels and a lot of people in the cable business – of which he never got into. But he knew these people and they were his friends. They treated me royally throughout the years. I cannot find fault with our industry at all. We've been generous through our CTAM and through all the different organizations. Look at what Dan Ritchie has done down there at the University of Denver and the Cable Museum and everything else. Look at all the money that Bill Daniels has given away over the years. It's been a very generous industry, not only to each other, but to America. I feel very fortunate that I've had a little part of it or been a person on the side-lines watching.

KELLER: Let me say "amen" to that. This oral history has been brought to you through the courtesy of a grant and donation from the Gustav Hauser Foundation and is part of the Oral History Program of The National Cable Television Center and Museum. I appreciate it very much, Les. Thanks very much.

HILLIARD: Thank you.

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Earl Hickman

Earl Hickman

Interview Date: Thursday April 16, 1992
Interview Location: Casa Grande, AZ
Interviewer: Archer Taylor
Collection: Archer Taylor Technical Collection
Note: Audio Only

TAYLOR: This is Tape 1, Side A. I'm interviewing Earl Hickman in his enormous hangar with some five airplanes that he has either built or remodeled and a truck that his son has remodeled. We're going to talk about things that happened a good many years ago in cable television.

Earl, it's really a pleasure to get together with you after all these years. Tell us a little about your background before you got into cable. What's your education? Where were you born? Where did you come from?

HICKMAN: Well, I actually went my last two years of high school in Bisbee, Arizona. That's sort of how I got into electronics was in Bisbee, Arizona. I went to work for the Copper Electric Company. The Copper Electric Company, besides having an electric shop which did motor rewinding and all kinds of things that you can do in an electrical shop, also owned the local radio station. The call letters were KSUN. So I went to work for them sweeping their shop and just doing all the odd jobs that a fourteen year old kid could do.

So the first thing I knew I was a full-fledged electricians helper. I don't really know exactly how they ever let me into the radio station but somehow - it's not clear in my mind exactly how it happened - but I wound up building some equipment that they were building for the Cochise County Sheriff's Department for a new two-way radio system that they were installing. They were using Motorola radios in the cars but the base station was a home-built base station. I can still remember that it had a pair of 211's in the final. You probably remember the 211's.

TAYLOR: Yes indeed.

HICKMAN: Carbon anode, 50 watt base vacuum tube.

TAYLOR: The number of people that remember what that is are beginning to get pretty few.

HICKMAN: Strike that. They were not 211's. I'm sorry. They were 203-A's which are very similar to 211's but a little different. They were modulated with a pair of 838 variable mu carbon anode tubes.

I remember that pretty well considering that it was that many years ago. That must have been about 1940 or early 1941 that I actually was doing work on this. While I was working there I got my second class radio-telephone license.

TAYLOR: Did you do amateur radio?

HICKMAN: I didn't do any amateur radio up to that point. In fact, I held a first class commercial license before I ever held an amateur license. So while I was working there I wanted to be a radio amateur so I taught myself the code and all that kind of stuff, you know. I used to listen to KFS and Press Wireless and things like that. I can still remember KFS because they had such a pretty call sign you know. Dah-dit-dah: dit-dit-dah-dit-dit-dit. I thought that was really beautiful. But anyway, I don't want to dwell on those things any longer than you want me to dwell on them.

TAYLOR: No, just keep going as you remember it.

HICKMAN: So anyway, working in the electric shop and working in the radio station, I don't really know how I ever got to doing it but the first thing. I'll never forget the first radio announcement that I ever read on the radio. It was for a soft drink called Vanti Papaya. Do you remember that?

TAYLOR: No, I don't.

HICKMAN: Vanti Papaya. One of the announcers there--one of the engineer/announcers at this little 250 watt radio station said, "Earl, read that over the air." So I read it. Well, anyway, to make a long story short like I said, I got my second class radio- telephone license there. And I heard about an opportunity in Phoenix at Southwest Airways. By now we're talking early 1941. Excuse me, strike that. I'm off on my timing here a little bit. I went to work with the Copper Electric Company in about 1940. I graduated from high school in 1942. And it was June of 1943 when I went to work for Southwest Airways.

By that time I had just taught myself, I had never had any formal training in electronics or anything, but I taught myself enough that I went to work for Southwest Airways as their radioman at Falcon Field in Mesa, Arizona. That's where I got my first airplane ride. So between repairing all the radios in thirty-two AT-6's that they had there--AT-6 North American trainers--I installed electric intercoms in sixty-four Stearman biplanes that they had that up to that time had had gosports instead of electric intercoms. A gosport is a speaking tube. You speak back and forth between the cockpits with a speaking tube. As a matter of fact, you didn't speak back and forth because it was one way. Only the instructor spoke to the cadet.

TAYLOR: Directional coupler, I'll bet.

HICKMAN: Right. I'll never forget those little electric intercoms that I installed. My memory is quite clear on that because I used a 1-T-4 vacuum tube ... 45 volt B battery and a 1.5 volt filament battery--A battery.

TAYLOR: You built these, then?

HICKMAN: Well, I did not build them. They were a mil spec item and all I did was install them. But I remember what they had in them. I simply installed them and I used throat microphones in the Steermans.

But, anyway, what I was leading up to is that I got my first airplane ride there. I liked it so much that I just bummed a lot of airplane rides. I had a real close relationship with several of the instructors, mostly over in the Steerman group--the primary group--to the extent that I learned to fly an airplane there. I liked it so well that I went down to the local Army Air Corps office and signed up for aviation cadets.

In December of '43 they called me up. In the meantime, by the way, when I was working for Southwest Airways I got my first class radio- telephone license. Although self-taught, I was, if I have to say it myself, a pretty good electronics technician by that time even though I was quite young. At the age of seventeen I still was the best that they had at Falcon Field ... I was all they had at Falcon Field. You see what I mean.

Anyway, in December of '43 they called me up for aviation cadets so my job at Southwest Airways ended and off I went to be in Uncle Sam's Air Corps. While in the Air Corps when I was in pre-flight at Santa Anna you qualified for navigator, pilot, or bombardier or all three or two or whatever. Well, I wasn't really all that hot for navigator and bombardier. My grades were only seven--they graded you from one to nine. I had a seven for navigator, a seven for bombardier, and a nine for pilot. So I was slated to be a pilot. By now it's up into '44 and they said, "We've got an awful lot of pilots and we don't have an opening in pilot school for you right now. So we're going to send you to Taft, California, and there you're going to do maintenance on airplanes and things like that while you're waiting to go to pilot school."

Well, that played out and they shipped me out to Des Moines, Iowa, to go to a college training detachment because they were eventually going to make me an officer and they had to teach eighteen year old kids how to be a gentleman, also, so ...

TAYLOR: That's a tough job.

HICKMAN: At least they wanted me to see what the inside of an institution of higher learning looked like. So they sent me to Drake University in Des Moines, Iowa. While at Drake I picked up thirty-two units of college credits which is not bad. And I did very well back there, especially in math and physics and stuff like that.

But to make a long story short about my military career, it turns out that while I was waiting to go to pilot school in Douglas, Arizona--they had shipped me down there for awhile doing the same thing--there was a notice on the bulletin board that said we have an opening for four people if they would like to go to gunnery school in Las Vegas, Nevada, and then go on from there to navigator school in Hondo, Texas. Well, here I was just spending the war wiping the underbellies of airplanes and things like this. So, I went and talked to my commanding officer and said, "Well, if I do this does it automatically lock me out of going to pilot school?" He said, "No, you can go to pilot school considering your grades and everything." But he was worried that I might not make it through navigator school because I only had a seven in that. But by now I had gone through Drake University's thirty-two units and had gotten a little smarter.

So to shorten that story a little bit, I did go--I volunteered to go--and I went through the gunnery school and I graduated in the top 5 percent of the class although I never did hit the sock. I was pretty good at taking the gun apart and putting it back together but wasn't much of a gunner. Then I went to Hondo, Texas, to be a navigator and did a pretty good job there. I graduated as a second lieutenant and got my wings in July of '45.

The war ended in August of '45. I was out of the Air Corps in October of '45, a month before I reached my twentieth birthday. So my military career was over before I reached my twentieth birthday.

TAYLOR: Before you got started.

HICKMAN: Yes. So I never saw any combat or anything else and I didn't get to fly as a pilot. That still upsets me to this day. So when I got out of the Air Corps in '45, I went back to the Copper Electric Company and KSUN and worked as a radio operator in the radio station there. I also did some work out in the electric shop but it was a little higher caliber work than I had been doing previously. I forgot to mention that in my spare time when I was in the Air Corps down at Selman Field in Monroe, Louisiana, they gave me a job of teaching electronics to officers who were about to go back into the civilian world. That was my last job before I, myself, went back into the civilian world. Of course, how much electronics can you teach guys who didn't know an ohm from a volt in thirty days? Obviously I didn't teach them very much. But I guess I did get them through Ohms Law, maybe, without them really understanding Ohms Law. As you know I couldn't have gotten very deep with them.

Anyway, when I got out of the Air Corps I went back to KSUN and I was one of the operators there--operator/engineers they called us--and I worked in the electric shop. I did that until 1949. By this time I was the chief engineer of KSUN and I guess that also made me the chief engineer of the Copper Electric Company, too. I believe that was in June of '49.

Of course, by this time I was a ham radio operator. W7JJN was my call. I got my ham license in '45 when they first opened it up right after the war. Right at the end of 1945 or the beginning of '46 they opened it back up and I got the call letters W7JJN because they had just switched Arizona out of the sixth district into the seventh district at that time. That's been my call all these years--W7JJN. I used to be very active on the ham bands--had a full kilowatt on the air with a pair of 250 TH's modulated with a pair of 810's. You know what I'm talking about?

TAYLOR: Yes. Are you still operating ham?

HICKMAN: I haven't been active in years. Just haven't been active in years. I still have my license, it's still current. I keep it renewed but I just haven't used it in years. In fact, I haven't used it hardly at all except on rare occasions since I got into cable television. But I used to be very active. In 1946, '47, '48, '49, '50 up through maybe '52, I was pretty active.

In June of '49 I decided that I really couldn't go any farther in the electronics world without getting a degree. I was about as good as I could get on my own, you know. I had read everything that Terman had ever written. I was country-fair at the mathematics that an electrical engineer must know. In other words, I could handle complex algebra and things like that, you know. I knew what the operator J was all about and all that kind of stuff. But there were a lot of gaps in my education and I just couldn't fill them in myself. So I decided that I had better get into an honest-to-God engineering school.

So through ham radio I met Paul Merrill, remember the name Merrill--W7PMJ. He was the older brother of Bruce Merrill. See we're now starting to get into cable. Bruce Merrill's older brother, Paul Merrill--W7PMJ. And Paul, over the ham radio, gave me a job of convenience, really, at KGLU in Safford, Arizona. The idea was that I would go to work for him at KGLU. He was the general manager of the Gila Broadcasting Company. The Gila Broadcasting Company at that time owned a station in Globe and Miami. They owned the one in Safford and one in Coolidge, Arizona. They owned three radio stations at the time. So I went to work at KGLU in Safford, Arizona, working nights and going to school at Gila Junior College in the daytime. So I went my first year in electrical engineering, which would be just general engineering since this was the first year, at Gila Junior College. Then I transferred to the University of Arizona at Tucson and, again, Paul gave me another job of convenience working as the chief engineer. Now I was not the chief engineer of the Gila Broadcasting Company or of KGLU or of anything when I worked at Safford, you understand. I was just a night operator. But he gave me the job of being the chief engineer at the Coolidge radio station which was KCKY. What I did there, now this was really a neat job of convenience and Paul Merrill was just like a father to me--even better. He set it up so that I could go to school all during the week but on weekends I would show up at Coolidge, Arizona, which was roughly sixty-five miles north of Tucson, on Saturday morning and open up the radio station--the transmitter building--turn the transmitter on and work until midnight. That's an eighteen-hour shift in case you've lost track of the time. Then after I'd shut it down I'd do whatever maintenance was required on the transmitter and also the studio equipment downtown. I had to take care of all that ... open the transmitter building back up. The studios were downtown and they operated it from down there. Then on Sunday morning I'd open it up again at six o'clock and work it until midnight Sunday night. So I'd put in four operating shifts there ... well, thirty-six hours. That's pretty close to a forty-hour week.

TAYLOR: Pretty close.

HICKMAN: With all of my maintenance and things that I did in there, I worked a forty-hour week in two days. The other five days of the week I could go to the University of Arizona. I've carried sometimes as many as twenty units in a semester at U of A. It was typical for me to carry seventeen to nineteen units and that's a lot of units when you're working also.

TAYLOR: Now you met Paul through radio conversations?

HICKMAN: Ham radio. All the good things that ever happened to me in my life ...

TAYLOR: Now was he a technical man himself?

HICKMAN: Yes. Paul Merrill also had a first class radio-telephone license. He had been in the broadcasting business. I think KGLU went on the air in about 1937 or '38 so Paul had been a ham radio operator and a commercial radio operator. Of course when I first met him on the ham bands he was the general manager of the Gila Broadcasting Company. So for my second year at the University of Arizona I wound up with that again.

TAYLOR: I was thinking that you must have had some fascinating conversations with Paul Merrill that he realized your capabilities to sponsor you the way he did through that period.

HICKMAN: Well I did. Paul Merrill is probably really my favorite guy in all my life. My own father was killed when I was just a baby so I guess Paul was kind of substitute father to me. I learned a lot of things from Paul about business. I've never known anybody of a higher moral character than Paul Merrill. I just couldn't say enough good things about him. He was really my favorite guy.

TAYLOR: That's a very enlightening experience.

HICKMAN: Anyway, I finished up at the University of Arizona and got my bachelor's degree there in 1952. I don't think I need to dwell on any of that stuff except to say that while I was in my sophomore year at the University of Arizona I rebuilt the studios of KGLU in Safford. During my junior year I put a radio station on the air for them in Winslow, Arizona. Gosh, I can't even remember the call letters of it now, isn't that awful. But anyway, it was a 1,000 watt radio station, had a two tower directional and it put out a figure 8 cardioid pattern that was just running right along what's now called Interstate 40 but it was Route 66.

TAYLOR: Old Route 66.

HICKMAN: So that's where I got my first experience in directional broadcast work. It was out of necessity. I had to learn it because I had a radio station to put on the air. I had to design the phasing cabinet, you know, and the whole thing which was pretty good experience for a guy in his junior year in college. Good on-the-job training. Then in my senior year I designed and built for them a new transmitter for KCKY. It was a 1,000 watt transmitter and I designed it myself. It really wasn't very sophisticated but it was a nice transmitter. It used a pair of 833-A's in the final--modulated with a pair of 833-A's. Ran about 3200 volts on the plates. It was a nice broadcast rig. It was state-of-the-art in those days. I used a lot of inverse feedback in it. It was quite extensive because I ran the inverse feedback clear from the output of the modulators all the way back. That's kind of hard to do, as you know, because you can get into some weird phase shifts and stuff like that. So I learned a lot about handling that kind of stuff there. Anyway, I graduated in '52.

Here's an interesting thing that happened. I believe it was about November of 1952, I got a phone call from Paul Merrill and he said, "Earl, have you ever heard of community antenna Television systems?" I believe that's what he called them. And I said, "No, what is that?" So he said, "Well, I've got an issue, I believe it's the November issue, of Electronics Magazine." You remember Electronics Magazine?

TAYLOR: Exactly.

HICKMAN: I believe it was the November issue of '52, I'm not sure. But there was a write up in there about Marty Malarkey's cable television system--community antenna.

TAYLOR: This is interesting because probably that very same issue is what got me started.

HICKMAN: Am I right on that one?

TAYLOR: Close to it anyway. They called it community television. They didn't have antenna in it at that time. I'm not sure about the date but it was late 1952. I know, because I was a consulting engineer up in Missoula, Montana, at the time and one of my clients was Norm Penwell. I had helped Norm get a radio station--got the licensing and all that stuff. He called me one day and said, "What do you know about community television?" I said, "All I know is what I read in Electronics Magazine." He had some due bills at the radio station from a flying service and he said, "I'm going to charter and go over to the West Coast to Chehalis and Centralia and Bellingham and Seattle and we'll look at some of the systems over there and see what it's all about." So we did and that's how both of us got going on it at the same time that you did.

HICKMAN: Isn't that something.

TAYLOR: From the same source. That's very interesting.

HICKMAN: I really didn't have any experience in television at this point. I had quite a bit of broadcast experience, you know. I could take a bunch of field measurements and calculate the RMS field of a directional antenna and calculate the ground conductivities and all that kind of stuff, you know, which made me, as country-bumpkin radio engineers go, a cut above average for that time. But I didn't know anything about television. I hardly knew how they did it. I remember my first television set was a little seven inch Hallicrafters. You probably remember those things.

TAYLOR: Oh yes.

HICKMAN: But anyway, Paul asked me about this and I said, "No, I didn't know what it was," but he explained it to me over the phone. He said, "What if I come over to your house and we'll discuss this?" By "my house" he meant my Quonset hut because at the University of Arizona I lived in the veterans' housing project and my house was a Quonset hut. I lived there with my wife and two kids. Paul Merrill came over to the house the next day or two later--drove over from Safford where his office was--and we discussed cable television.

Now by this time we had built another radio station. I did not put this one on the air. I should go back and tell you that this one actually went on the air while I was working my first year in Safford. An engineer by the name of Wally Hitt ... I don't know whether you've ever heard of him or not. But Wally Hitt built the radio station for the Gila Broadcasting Company in Globe and Miami--KWJB, that was their call letters. So Paul asked me, "Do you think we could build one of those community television systems in Globe and Miami, Arizona?" And I said, "Why not?"

TAYLOR: At that age you could do anything.

HICKMAN: At that early age I was not only immortal but I could do anything. You know how that goes. I think you've been there, too. So anyway, I said, "Sure."

We, of course, had to look for equipment to build this with. I didn't know anything about building cable television equipment. I hardly knew how a television worked. So Paul did all the legwork on this. He rounded up brochures on RCA equipment. It was RCA, and I even remember the name--Antennaplex equipment.

TAYLOR: That was what Martin Malarkey used when he started.

HICKMAN: Yes, that's where we got the lead because in the article it described some of the equipment. It was RCA equipment. Well, we got the idea from the article that RCA made everything that you'd ever need to go in the cable television business. So, we not only threw in with RCA but we became their southwest distributor for Antennaplex equipment.

Well, we started constructing the system in Globe and Miami. In the first place our antenna site was located four and one-half miles south of Miami, Arizona, on a peak called Madera Peak. We could get one station from Phoenix--Channel 5 from Phoenix--and we could get one station from Tucson--Channel 13. In fact that was all that was on the air at that time--two channels. In the process of building the headend and everything, Channel 12 went on the air in Mesa, Arizona, so we had three channels. We used Channels 2, 4 and 6, strip amplifiers, and we converted Channels 12 and 13. I've forgotten now but I think Channel 5 wound up on Channel 2 and Channel 13 wound up on Channel 4 and Channel 12 wound up on Channel 6. That's exactly what we did. So we used RCA converters, RCA strip amplifiers in the headend, and all that. And then strip amplifiers, individual strip amplifiers, down the hill ... this four and one-half mile line.

You've got to understand that we were rank amateurs. We knew nothing about what we were doing. But we found out about K-14 cable. Remember K-14 cable?

TAYLOR: Yes, I remember.

HICKMAN: Which was about the lowest loss 75 ohm cable that you could get at that time. So we not only put in K-14 cable coming down that four and one-half miles, and then the other six or seven miles it seems like between Miami and Globe, Arizona, the ultimate line of amplifiers. I think we had about fifty-four of them in cascade or something like that.

TAYLOR: Still Antennaplex strips?

HICKMAN: Yes. Well, we didn't get through those fifty-four with the strips.

TAYLOR: Oh, I should think not.

HICKMAN: But we got through ... let's go back to the four and one-half miles. The four and one-half miles we buried the cable--put it underground--so it was an underground system. I had to line power it because it seemed logical to feed the power back up the same lines. You see the center conductor was the equivalent of a No. 9 wire and you didn't have to be very smart to calculate the voltage drop in this thing. So what I did was I took a 2400 volt pole pod and just used half of the voltage on it. In other words I took the primary and instead of taking 220 into the primary I put 110 in so that gave me 1200 volts on the output side. Okay? Then at each amplifier location coming down the mountain I put a pole transformer in there and, with no help from anybody--just out of my own calculations, I made up my own networks for putting the 1200 volts on the K-14 running up the hill to power all of the headend equipment and all of the amplifiers coming down the line. So this was an underground system. We're talking about late 1952, early '53, okay.

TAYLOR: You had 1200 volts on that K-14?

HICKMAN: I had 1200 volts. It was line powered with 1200 volts. Well, you can see why I had to have 1200 volts because those strip amplifiers took a lot of power to begin with.

TAYLOR: That's right. Oh, they were hogs.

HICKMAN: And I was also taking care of all the power in the processing in the headend plus the lights in the headend building and all that stuff, see. So it all happened right on the cable there. So early on I got some experience at line powering, like from day one.

So we built a cable television system and we became sorely aware right away that RCA did not have a complete line of equipment to do the work with. Pressure taps were the only thing that were available. In fact, I don't believe RCA even had an honest-to-God pressure tap at that point. It doesn't stick in my mind. I don't exactly remember the configuration. All I know is that it didn't make sense to a young electrical engineer. You know, the ink was hardly dry on my diploma. But it didn't make sense to just be hanging shunts off of a transmission line and doing nothing to correct the impedance, the shunting effect of the impedance.

So about this same time, when I realized that not only were these double-tuned amplifiers that were used in those strips not going to make it through much of a cascade, I became aware of Spencer-Kennedy amplifiers--the distributed amplifiers. By this time I had also done as much reading as I could find literature on to read about distributed amplifiers, which I think consisted mainly of an article in the proceedings of the IRE which was written by Fitzroy Kennedy or maybe by Spencer, but I think ...

TAYLOR: No. Spencer was a businessman; he was not an engineer at all.

HICKMAN: I think it was written by Kennedy. I think it was in the proceedings of the IRE.

TAYLOR: I think it probably was. I'll try and find out more about that from some other people.

HICKMAN: I wish I were clearer on that--it's not real clear in my mind. But I remember I read all that kind of stuff and I read all the stuff that Lou Ridenhauer had to say in his book on amplifiers in the Radio Laboratory Series. Then there was another book that came along later that influenced me but it was written by Martin at the University of Arizona. I think that came several years later.

But anyway, I then became aware of another company called Jerrold about this same time. It seems like Paul wanted to get in with Jerrold but there was some problem. It had to do with the business relationship of getting in business with Jerrold.

TAYLOR: Well, maybe I can fill you in on that.

HICKMAN: I don't remember exactly but Paul found it not to our advantage to get into it. I don't remember.

TAYLOR: Well, I'll tell you what we found. You see, when we went to the West Coast, we bumped into Phil Hamlin who had just that day been appointed Jerrold-Northwest. So we tried to get Jerrold equipment and we couldn't get it because they had this service contract that you had to agree to.

HICKMAN: That was it.

TAYLOR: And the service contract required five dollars out of every installation fee and twenty-five cents a month out of every monthly fee and the contract failed to give a termination date. This was forever and ever.

HICKMAN: Yes, it comes back to me.

TAYLOR: And they vaguely said what they would do for you for that is that they would keep you up-to-date and they would make sure you did things right. We were four engineers trying to build a system. We had gone out and raised money. We couldn't ...

HICKMAN: Well, we didn't have all that much money. You've got to understand, we didn't have all that much money.

TAYLOR: We sure didn't. One interesting thing just on this point talking to Ken Simons, Ken pointed out what I have always felt that there was some merit to Shapp's position that he didn't want to just sell equipment because it might reflect back on him. He wanted to sell a system and see to it that it worked properly. But he didn't have the manpower to carry through neither did they have the knowledge to carry through. So it was really a terrible thing.

HICKMAN: I should go back and fill you in on one thing before we get too deeply involved with all the technical end of this thing here. And that is because what we're talking about here is the beginning of Ameco. Because this company now that Paul Merrill formed, due to going in with RCA Antennaplex .... I don't remember which person actually came up with the name but it was either Willard Shoecraft or Nelson Wirick, one or the other and I'll fill you in on who these people were later, who came up with the name Antennavision--kind of like Antennaplex--Antennavision. So that was going to be the name of our new company, Antennavision. Okay? And it was. It was Antennavision in Globe and Miami, Arizona. That's where we started. And as far as I know, we were the first honest-to-God cable television system in the state of Arizona. Two or three other people may claim to the same thing and I don't really care. All I know is what I was doing at the time. I don't know what they were doing. I thought we were the only ones out there but maybe not. I don't know. All I can remember is that it was very difficult to get satisfactory equipment and that's what we were talking about.

But getting back to Paul Merrill. We obviously had to come up with some money to go in business. I was fresh out of the University of Arizona and I had $1,000 dollars to my name when we started Antennavision. The Valley National Bank of Arizona loaned me another $1,000 on a 1950 Hudson that I had. So that made about $2,000 I had to put into it. As I recall, it took about $3,500 to ante up in Antennavision to pay your share. There were seven of us that formed the company. The other $1,500 they gave me because I was doing most of the work.

TAYLOR: What you call "sweat equity."

HICKMAN: Right, "sweat equity." It may be of some interest to you to know who those people were--the seven beginning people.

TAYLOR: Yes, it would be.

HICKMAN: Okay. There was Paul Merrill and Earl HICKMAN:--of course, me--and Bruce Merrill, Paul's younger brother.

TAYLOR: Younger brother?

HICKMAN: Yes. He was younger than Paul by about fifteen or sixteen years. Bruce was an accountant--a CPA. He had his own accounting firm. So it was only logical that he become our bookkeeper right away, and he did. Then there was Nelson Wirick. Nelson Wirick was married to Paul Merrill's son's widow. Paul Merrill's son was married to this lady and Paul Merrill's son was killed in World War II and Nelson Wirick married this lady who was Paul Merrill's ex-daughter-in-law. So that was their relationship. They were all good, close personal friends of Bruce and Paul Merrill. Then there was Willard Shucraft who was the manager of the radio station in Globe and Miami. It was only logical that he be in on the thing because we were going to build a cable system right there in his own backyard. But he worked for Paul because it was one of the stations of the Gila Broadcasting Company.

Oh, I might add that ... I should tell you about this before we go any farther. The Gila Broadcasting Company was the owner of the radio stations.

End of Tape 1, Side A

TAYLOR: We're now on Side B of Tape 1 interviewing Earl Hickman.. Go ahead, Earl.

HICKMAN: Okay. Radio Associates was the operating company and it was Radio Associates that formed the cable television company called Antennavision. It was the officers and directors of Radio Associates that actually formed that company. But Willard Shoecraft was one of the officers in Radio Associates so it was only logical that he become one of the officers in Antennavision. Then there was Bill Parody who was the manager of KCKY in Coolidge, Arizona--the Coolidge radio station. Then there was one more, Edward Furman. Eddie was sort of like the business manager of the Gila Broadcasting Company. I don't remember exactly what Eddie's title was but he was Paul Merrill's right-hand man, anyway. So there were seven people.

TAYLOR: Of the seven, you and Paul both were technically oriented.

HICKMAN: Yes.

TAYLOR: Were any of the others?

HICKMAN: No. In fact, Paul and I started the whole operation. We really started it and then immediately thereafter Bruce came into the deal and then all these others just followed. We almost were all in there together.

I give Paul Merrill credit for being the founder of the company because as far as I'm concerned it was his idea. So he was it.

TAYLOR: Now the purpose of the company was to build equipment?

HICKMAN: No, to build cable television systems not to build equipment. We talked about that and we decided that we knew from experience in the broadcast business that you were better off not to build equipment if you could avoid it. We didn't want to water down our ... what we wanted to do was get subscribers as fast as possible. So we didn't want to get into the equipment business.

But I guess it's time to talk about how we got into the equipment business. It just simply was out of necessity. We couldn't get delivery on equipment. The cost of the equipment was too high; the quality was too poor; and pressure taps never did make much sense to me.

So while I was dealing with all of the problems associated with trying to squeeze television through coaxial cable through miles and miles of amplifiers. By this time we had experimented with Spencer-Kennedy amplifiers, also. Spencer-Kennedy amplifiers were actually pretty good. They were about as good as you can do with twelve 5654's or 6AK5's in a distributed amplifier. They worked pretty good for their time. But the only problem is we had started out on the basis of channels 2 through 6 so we obviously weren't spaced to use the full capabilities of a Spencer-Kennedy amplifier, which went up through channel 13. In fact, we really didn't think much about building cable television systems up that high. Two through 6 was about as good as anybody would ever want to do anyway, we thought. That shows how wrong we were.

After I got out of the University of Arizona I moved back to Safford, Arizona, because that's where the corporate headquarters were for the Gila Broadcasting Company. So while I was living there in Safford, Arizona, I built a broadband amplifier on my dining room table. That broadband amplifier was influenced by an article in the "Proceedings of the IRE." I can't remember who wrote it but I'll bet you I've got a copy of that article--the "Proceedings of the IRE."

TAYLOR: This is not the Fitz Kennedy?

HICKMAN: No, it wasn't Fitz Kennedy's article at all. It was after that.

TAYLOR: A later article.

HICKMAN: Yes. It had to do with stagger damped tuning. Does that ring a bell?

TAYLOR: Yes indeed. I think Don Kirk has cited such an article. I may have that.

HICKMAN: He probably read the same article. I'm sure we were all reading the same things. But I would like to give credit to this person who wrote that article on stagger damped tuning but I'm just darned if I can remember his name. But it was a heck of a good article.

TAYLOR: Maybe when I get the stuff from Don that he's going to send to me there will be a reference to it.

HICKMAN: Okay, great. But I do remember that that's what it was all about. So I read that article and I just built up a little two tube amplifier. I think I was using 6BK7s or something like that. I don't remember for sure. They were a pretty high mu twin triode .... I built up this little stagger damp tuning amplifier and I had it playing there. Paul Merrill, you know being technically oriented, he asked me what I was doing. I said, "Well, I built this little amplifier." By this time I had a sweep generator and things of necessity in the cable system. The amplifier looked pretty good. I had it so that it worked from 54 through maybe 110 MHz with fair response. So Paul said, "Maybe we could use these in the system." I said, "Well, we might be able to use them for line extenders or something like that." I don't know whether we called them line extenders in those days.

TAYLOR: I think that came in later.

HICKMAN: For that purpose, anyway, we had line extenders whether we called them that or not. Most of the time in the early days we, just like Jerrold and RCA did, we even tapped the trunk. Of course I got away from that right away. That didn't make much sense at all. That was my first amplifier and I added another tube to it somewhere along the line and made it a three tube amplifier with a nominal gain of something like 26 dB's or something like that. I think we spaced them on the cable at around 20 dB's or something like that.

It was immediately apparent to me after we got in business with RCA that you could not build amplifiers doing what RCA said that you would do--feed out with a +60 level and come in with a zero level ... 60 dB's per amplifier station just simply didn't work. One of my early ventures with the RCA amplifier was to split them in two and make them into 30 dB stations instead of 60 dB stations. Of course I could get much better signal to noise ratios by doing that. I just couldn't get down the four and one-half mile mountain run with any quality signal at all using 60 dB stations.

So it was more or less just trial and error. I built this little amplifier and the first thing I knew we had built several hundred of these darn things. By this time some of Paul's friends from out of town had heard about this amplifier and Paul was building them for the people outside. Then our company became a formal little company. I had a little building over there in Safford, Arizona. It was about 35 by 35 feet in size. So we called ourselves the Antennavision Manufacturing and Engineering Company. That abbreviates to Ameco. That's how it all started right there. It started in Safford, Arizona. That was 1954, I guess.

By this time we had done a lot of other things besides just this. We had built one of the first microwave links in existence and I think that we might have built the longest one that was in existence at the time because it was ninety-two miles long. As you know, in 1954 there was really no processing equipment for feeding microwave shots. So I did the logical thing. I got hold of a Conrac tuner and modified it so that it would feed the video out of the Conrac tuner to modulate the repeller of the klystron in the microwave link. There was a modulator on the market. I can't even remember who made it--might have been Kay Electric. I know that Kay Electric made a sweep generator but it seems like they also made a modulator about that time. I don't remember. But I got hold of one of those modulators which subsequently wasn't any good. It really was lousy. It wouldn't hold the visual to aural separation properly. It was just rubbery. It didn't work very well.

One of the things that the microwave link used was a sub-carrier sound system. I think it was about 6.8 MHz. In the process of feeding the audio through, it was all distorted and this and that. So it became apparent to me .... Now I don't know who did all this first or anything like that and I'm not going to try to address who was first at doing what. I can only speak from where I was because I really wasn't following any leads. I just had a job to do in Safford, Arizona. So it became obvious to me that one of the neat ways to feed the aural information over the microwave link was simply to take the natural 4.5 megacycle beat out of the Conrac tuner and feed that .... Instead of using the sub-carrier generator and the microwave link, just use that right straight on through.

TAYLOR: As a sub-carrier.

HICKMAN: As a sub-carrier. And likewise in the modulator, to just simply beat it back up. You know, clip it, process it and feed it out as the aural carrier, and then remix it as the aural carrier. And I did that. And for the first time we had satisfactory sound on our microwave systems. We didn't have to set the modulation level or anything like that. It was set for us. It was pretty obvious if you knew how a television set worked to do that. So we just used inter-carrier sound over the thing.

About this time I was thoroughly disenchanted with the modulators that were available. We had an engineer working for us at this point by the name of Larry Wilson.

TAYLOR: This is still in Safford?

HICKMAN: No. By this time we had moved to Phoenix. We're now up to 1956 and we had moved to Phoenix on 2949 West Osborn Road.

TAYLOR: Now was that Bruce's accounting firm?

HICKMAN: No. We built a building there. It was near his accounting firm which was in the vicinity of 16th Street and Camelback in Phoenix. It wasn't too far from his accounting firm.

But now we're up to '56. We'd been building equipment. By this time we'd built just about every kind of amplifier that you could build. We tried distributed amplifiers but using matching devices on their input and output as contrasted to the coaxial input and output lines which was one of the downfalls of the Spencer-Kennedy amplifier if you recall. They were kind of crude as far as the impedance match and the frequency response was done in considerably. If you could get into the amplifiers okay and out of the amplifiers okay, you were in great shape. So I concentrated on trying to build some matching networks to go on the input and output.

And I was following the lead of an engineer who worked at Motorola. A fellow by the name of Russell Yost. He wrote an article ... I don't know whether it was in the proceedings or where I read this article. But he wrote an article on multi-pole matching networks. In other words, they were impedance matching bandpass filters. Which is, of course, old hat now. But believe me, in the early '50s that was great stuff.

So I used Russell Yost's paper that he had written as the basis for all of the matching input networks that I used on the Ameco amplifiers. And the output networks as well.

I told Larry Wilson, "Larry, I tell you what I want you to do here as a first project. I want you to build a good modulator to work with the microwave links." So he designed and built a modulator and we called it an Ameco-Tran. We built several of them and used them on the microwave links and they were just marginal in the operation. The biggest problem with them was the vestigial sideband filter. Well, that wasn't really the biggest problem. There was another problem, too. Well, I won't get into all the technical problems that we had with the thing.

But anyway we finally worked out the problems with the vestigial sideband filter and got it working at least as good as a typical broadcast vestigial sideband filter. We were using them in all of Ameco's microwave links and things like that. Before this we had come up with phase problems with picture and sound carrier diversity problems in Globe, Miami, especially. That was my first crack at individually processing the visual and aural carriers to stabilize them. The first time I did it I think I did it at 21 MHz in the old black and white IF band.

TAYLOR: Oh, yes.

HICKMAN: I think that's where I did it the first time. Now I don't know when Jerrold started doing the same time ... picture and aural carrier processing.

TAYLOR: I'm not sure either.

HICKMAN: They probably did it about the same time that I was doing it. But I was doing it really for myself and out of necessity on our system. But I can't speak to who did it first. It never seemed like there was anything in there that was patentable to me, anyway, because all we were doing was just copying TV sets and whatever.

TAYLOR: About that time or maybe a little earlier, you're talking about '56 now?

HICKMAN: Well, I'm talking about earlier than '56. I dropped back there on you. I know I did this individual processing of the visual and aural carriers before we ever moved out of Safford which would have been prior to '56. It probably would have been like in '54. Because we early on experienced picture and aural carrier diversity problems like you wouldn't believe at that particular site in Globe-Miami.

TAYLOR: Well, this has come up elsewhere and I probably can get track of that through somebody up in the Pacific Northwest--maybe Charlie Clements or Phil Hamlin. I suppose it's a legend, I don't know, but one of those guys took a TV set--the RCA TV set--and actually put a motor-driven control on the sound volume. They individually processed that way. I think that set had separate carriers.

HICKMAN: Well, it got so bad in Globe-Miami, that I finally out of desperation broke it clear down to video and audio and just remodulated a modulator with it. Eventually I moved the antenna site and solved the problem.

But these are some of the early signal processor experiments, if you want to call it that, which ultimately eventually led up to the Channeleer.

TAYLOR: That's right.

HICKMAN: Years later it became the Channeleer. But this was all vacuum tube stuff that I'm talking about now. You've got to understand, it's all vacuum tube stuff.

I believe it was 1956 that we actually built a formal modulator that might be suitable for the outside world--vacuum tube modulator. And Bruce sold a bunch of them. By now he was selling amplifiers. We had a production line going there, selling vacuum tube amplifiers and all that kind of stuff.

TAYLOR: How many people did you have working in the shop down in Safford?

HICKMAN: Oh, I don't think we ever had more than five or six people there.

TAYLOR: But you were just producing amplifiers for your own use out there?

HICKMAN: That was mainly for our own use. Some of Bruce's friends on the outside, and Bruce had a lot of friends in the cable business early on like Marty Malarkey. Because while I was back home working on trying to make the damn stuff run, Bruce was out really meeting the people that he should have met if he was ever going to do this kind of thing. And I think that Bruce early on realized what he was going to do. I think that he was planning on being in the manufacturing business when I wasn't really planning on being in the manufacturing business. I was just planning on trying to ...

TAYLOR: ... making the stuff work.

HICKMAN: ... make the stuff work that particular day, you understand. Because you're right, I was just the technical part of it. And a rank amateur at that. I remember in those days meeting some people of interest at Jerrold. There was Caywood Cooley, Roger Wilson. Did you know Roger--later of TelePrompTer?

TAYLOR: Yes, sure I know Roger.

HICKMAN: This is just aside from what I'm talking about on my own stuff but I think it was in Denver, Colorado, in about 1954 or '55 that Roger was telling me about one of Jerrold's--he was with Jerrold at the time--experiences in Dubuque, Iowa, where they had a problem feeding a long way down a hill. See, we were comparing headend runs.

TAYLOR: Not Quite Video?

HICKMAN: Yes, NQV---Not Quite Video.

TAYLOR: Don Kirk was a prime mover in that. He was telling me about it.

HICKMAN: Do you remember them describing the dehubbubers?

TAYLOR: Yes, exactly.

HICKMAN: You should get the Jerrold guys to tell you about this.

TAYLOR: Did you hear about the HLD?

HICKMAN: No. What was that one?

TAYLOR: They were getting crosstalk between these cables, of course, because it was RG ... he says 59 which surprised me. But anyway, it was braided cable and the crosstalk was pretty severe. So they found that if they would bury this stuff they'd get some isolation between these cables. So Don called it high-loss dirt--HLD.

HICKMAN: Great. Why not. I'll never forget that and the reason that I bring this NQV thing up is that later in my cable television experience it greatly influenced some of my thinking.

TAYLOR: I can understand that.

HICKMAN: It also influenced Bruce Merrill's thinking. Roger Wilson explained that NQV thing from Dubuque, Iowa, to me. And I thought, you know, that sounds like a pretty good idea. But at the time it occurred to me why they had to have the dehubbuber. And I had an idea around that, you know. But naturally I didn't work for Jerrold so I didn't get into that. And I let the whole idea just drop and that was it. But the reason that I brought that up was because some people try to lay claim to originality in what they do.

You mentioned about the subsequent thing that I did in Huntsville, Alabama, with the individual trunk lines feeding. Well, that was essentially a Dubuque, Iowa, type thing. It's just that it used a slightly different frequency band. I didn't harmonically relate within the pass band. And that was the only thing that made it work pretty slick. It didn't harmonically relate within the pass band. Which is, as you know, a no-no unless you're awfully good at building amplifiers. So anyway, that's all I wanted to say about that.

I guess this leads me up to ... I'll just jump ahead here a little bit and say that I left Ameco in June of 1958. At the time that I left Ameco we were just starting to experiment with solid state devices. By the time I left Ameco in 1958, we had developed a pretty country-fair vacuum tube modulator, a pretty good vacuum tube amplifier, some pretty good tap-off devices that would tap the signal off of the line without screwing up the impedance.

TAYLOR: You used directional couplers?

HICKMAN: Yes, we were using directional couplers by this time. But in order to make them cheap I had built a lot of tap-off devices which were not directional couplers in the higher ranges but they were actually essentially ... a lump parameter transmission line was the theory of them. So essentially each tap just loaded the transmission line a little bit. So it was a regular 75 ohm characteristic impedance lump parameter transmission line. In the higher values it didn't even use directional tap capabilities. Only in the lower tap values did it use the directional coupler.

And the directional couplers were not the type directional couplers that you think of now days when you think of a directional coupler. They were the lump parameter equivalent of what Scotty Gray used to use in his open wire transmission lines. Do you remember that?

TAYLOR: I remember about it, yes. I didn't know what it was.

HICKMAN: I ought to tell you about open wire transmission lines, too. I wish I could get some order to this chaos. Open wire transmission lines .... I never had any experience with G-lines. You mentioned in here G-lines.

TAYLOR: You didn't?

HICKMAN: I had nothing to do with it.

TAYLOR: I thought you did.

HICKMAN: This all took place during the eight years that I was gone from Ameco from '58 to '66. I was gone completely from Ameco from June of '58 until March of '66. I was with Kaiser during that time.

TAYLOR: So it was somebody else that did the G-line?

HICKMAN: Yes. You should talk with Milford Richey. I don't know that Milford was the actual brains behind this because I don't think he was. I think he just actually brought it to fruition. He just built it, you know. But Milford could tell you all about that.

TAYLOR: Okay. I don't know where Milford is anymore.

HICKMAN: I hired Milford just before I left Ameco in '58. I think I hired him maybe in the later part of '57.

TAYLOR: He came from Collins, is that right?

HICKMAN: No. He came from Channel 10 in Phoenix. He was the chief engineer of Channel 10 in Phoenix--KOOL. And a very good television chief engineer, I might add. So I never had any experience with G-lines so I can't really speak to that subject.

TAYLOR: I thought I had heard you talking about it.

HICKMAN: Open wire transmission lines I can tell you about because I fought, clawed, scratched and did everything I could do short of just plain out and out resignation over open wire transmission lines.

A fellow by the name of Scotty Gray from Los Angeles came into Phoenix one day and met with Bruce Merrill. I wasn't even in on the meeting. Essentially what he convinced Bruce Merrill of was that I was just a clean cut incompetent because I had not used any open wire transmission line in our system. So Bruce put us in the business of using the open wire transmission line. Not selling it but using it. We bought all the stuff from Scotty Gray. I really never had anything to do with it. I told Bruce what was going to happen and it all came to pass just the way I said it would be.

TAYLOR: He had what he called a black box that made the open line work. I remember that.

HICKMAN: I don't even know what that would be. I don't know what he was talking about. I never had any black box that made it work.

TAYLOR: I didn't either but at one point somewhere he ...

HICKMAN: Would this have been after I left there? Would it have been sometime after '58? Maybe so.

TAYLOR: I would guess so. When was the Pat Weaver business in pay TV done there? And that was killed by referendum. It was either late '50s or maybe early '60s. This was about that time.

HICKMAN: It's probably during the time that I was not in the cable business.

TAYLOR: That might well be. But Gray wanted me to come to work for him. I just sensed that this is a charlatan.

HICKMAN: Well, I really wouldn't have any bad things to say about Scotty Gray except that he was saying bad things about me that I don't think were true. It was obvious to me just from the examination of the transmission line equations that there's radiation from an open wire transmission line. I could tell just simply by writing you the equations that I'd studied in school. There was radiation from the open wire transmission lines and it seemed obvious to me that this was going to cause problems. Because people could steal it from you just as well as not and they did.

TAYLOR: They did.

HICKMAN: Of course there were impedance matching problems and all kinds of things associated with it because it was hard to make a turn in the cable without throwing in a rather large discontinuity in the transmission line. So I never was a proponent of open wire transmission lines. I liked the lowest loss coax you could get your hands on. That's what I liked better than anything else.

TAYLOR: Another thing maybe I erroneously attribute to you but did you work with FM transmissions?

HICKMAN: I built the first one.

TAYLOR: You did. I mean FM video.

HICKMAN: Yes. I built the very first one as far as I know. And the very first FM transmitter was a modified sweep generator, a modified Kay sweep generator. You know where you beat two klystrons together. I had a requirement ... I'll tell you how it grew up. Do you want to hear the story of how it happened?

TAYLOR: Sure.

HICKMAN: The Globe-Miami, system--the same four and one-half mile line. The date is probably 1956, perhaps '55. I'm not absolutely sure. In that period somewhere. I'm trying to tie it into Larry Wilson and their times with the company and whatnot. But this one, I was entirely to blame for it. I remember the whole thing.

I took this Kay sweep generator and rather than sweeping the klystron, you know, with a sawtooth wave form, I cut the sweep generator loose from it and I applied video to the repeller of the klystron, beat the two klystrons so that they were 15 megacycles apart--15 MHz apart--and I deviated the klystron so that I had roughly about a 10 megacycle bandwidth of interest. In other words it used fractional modulation index. It was about the equivalent of what you would have in a microwave setup of that day and time. Again, it was centered at 15 MHz and I had it operating in the band from 10 to 20 MHz, okay, centered at 15. Note it's not harmonically related. And even in those days I was smart enough to avoid the harmonic relationship which was one of the downfalls of the company that later had the FM system back in New York. You know the one that had the broadband FM system that was tried out in Colorado Springs. Remember that one?

TAYLOR: Yes. Was that Joe Vogelman?

HICKMAN: Yes, he was the engineer. In fact, I consulted to that firm and it was my painful duty to have to explain to them mathematically why it did what it did. How phase distortion ultimately showed its manifestation in much the same way for FM that inner modulation distortion does on amplitude modulation.

TAYLOR: Well, that outfit was a real charlatan. The surprising thing was that Joe Vogelman is a highly regarded electronics man.

HICKMAN: Well, it was Vogelman, himself, and his boss who actually hired me to come in and shoot them down. So I can't really say anything against him. In fact, they might not have liked what I said but I'll never forget that when I left town to come home they met me as I was leaving with a present for my wife--a string of pearls for my wife. So they obviously knew that I was operating in good faith.

TAYLOR: I got up and walked out of a meeting with Joe Vogelman one time in a hotel in Washington because he was just insulting my intelligence. I'd tell him things and he would just walk right over them. I finally got up and walked out.

HICKMAN: I think that maybe this was right at the end and it was pretty obvious to him that it wasn't going to cut the mustard. Well, anyway, I didn't want to get into that.

This FM thing, what I wanted to do .... We came down the mountain like this and we split and went to Miami and Globe. We had a television studio in Miami and I wanted to feed back up to this split point and then feed to Globe, you see. Well, we had all this nice K-14 cable in there but it was several amplifiers back to this split point here. You follow me up to now?

TAYLOR: Yes.

HICKMAN: Okay. So what I did was I fed the FM television from our local studio. That was the carrier for it--was the FM. I don't know why I got involved with the FM except it just seemed to me like FM was kind of a neat way to do it. I put it down in this band of frequencies and I designed, as far as I know, the very first complementary filters used on cable television for reverse feed on the same cable. I don't know anybody else that built it sooner than this. But there was nothing tricky about it. They were just simply complementary filters right out of Terman's handbook. So I didn't invent them. I just designed them.

TAYLOR: Sure.

HICKMAN: So I'm not laying claim to any great shakes here. Frederick Emmons Terman wrote the equations that I used to design the filters. I made the crossover points of these .... They were M derived end sections of M = .6 in which case you can leave out the shunt elements. So you can tell I was there. Right out of Terman's handbook.

TAYLOR: That's right.

HICKMAN: So these complementary filters had a crossover, I've forgotten the exact frequency now. Oh, I know what they were ... I called them CF-33's. They had a 33 megacycle crossover point. Right below channel 2 and right above my 20 MHz, you see. In fact, if you took 54 and 20 and took the geometric mean of it, it's probably 33.

TAYLOR: What year was this then?

HICKMAN: This is either '55 or '56. Right in there somewhere.

TAYLOR: Did you know of Earl Cullum, a consulting engineer out of Dallas?

HICKMAN: Yes.

TAYLOR: He had been Eisenhower's communications aide during the Normandy Invasion.

HICKMAN: I didn't know him but I knew of him.

TAYLOR: A very fine gentleman. I did get to know him personally quite well. But when the Commission was, after the war, beginning to activate television again, he urged them strenuously to change from the amplitude modulation to a frequency modulation.

HICKMAN: Is that right? Well, I'll be doggoned.

TAYLOR: ... because of the interference situation. He urged and it took too much bandwidth and they couldn't provide it.

HICKMAN: Yes, because when you start to operate with a fractional modulation index, you start to get away from the advantages.

TAYLOR: That's right. It's closer to AM.

HICKMAN: Right. But it just worked beautifully. This thing that I designed just worked beautifully. And I'll never forget that I fed that sucker clear into Globe, Arizona, and took it off the line after going through all these amplifiers and all these complementary filters and all that kind of stuff. It was just a beautiful picture. So immediately Bruce Merrill just fell in love with it. He said, "We've got to share this with the world."

So the first thing I knew, leading up to my last days at Ameco by this time, he sold a system to a guy in San Angelo, Texas. I'll never forget this deal. They had an RG-11 transmission line eighteen miles long, fifty some odd amplifiers deep.

TAYLOR: That wasn't Ken Gunter was it?

HICKMAN: Maybe it was.

TAYLOR: I know he was in San Antonio. I'm not sure about San Angelo.

HICKMAN: San Angelo. This was way before San Antonio ever had a system. By the time this came along we're talking about '57. But I'll never forget this thing--eighteen miles. They had a little amplifier that was made down in Texas. As I recall it was triple tuned. It had three bumps in it, you know. And after eighteen amplifiers, when you'd sweep that thing, you can imagine what it looked like.

TAYLOR: It had three fingers sticking up.

HICKMAN: It had three fingers sticking up like that. Well, I went through the amplifiers ...

TAYLOR: Was that Johnny Campbell's stuff ... CAS?

HICKMAN: Yes, it was Johnny Campbell's amplifier.

TAYLOR: Okay, CAS.

HICKMAN: You see, they couldn't get any pictures through this thing in San Angelo. They had built with Johnny Campbell's amplifier but they couldn't get any signals through it.

So Bruce Merrill sent me down there and I was going to get them three good channels through this thing. Well, when I got down there I had three fingers in the sweep generator, just like that, after these fifty some odd amplifiers. I couldn't even get my FM signal through that. I told the owner down there, I said, "I've got this FM system here but I just can't squeeze it through your system. I've got to have some even bandwidth for my FM dingus." And I said, "How would you like it if I could get you one good channel?" And he said, "I'll take it."

So I did. I went into Johnny Campbell's amplifier and realigned it. By narrowing it up, I could get fairly decent response. So after fifty some odd amplifiers, I wound up with something that looked like that and wide enough to get my FM signal through. I don't remember what my center frequency was but whatever it was, it was not in the 15 to 20 MHz band. It was up in their pass band. As a matter of fact, I centered it in about channel 4. It was somewhere in channel 4. I could figure it out for you exactly. There was 54 to 64, and there was 66 to 76, and 78 to 88. Those were my three channel frequencies, okay? So I put it in 66 to 76 and I could squeeze 66 to 76 through 57, I believe it was, of Johnny Campbell's amplifier.

TAYLOR: Good night!

HICKMAN: And I turned that sucker on and a beautiful one channel of television in San Angelo, Texas. I could have become the mayor, you know. They would have given me the town.

I went there with three sets of equipment. I could only use one of them and that was it. There would have been no way I could have squeezed any AM stuff through that thing but I got that FM baby through there. And the signal to noise ratio was good, you know. Real good because I really banged the heck out it. It was coming out of every amplifier with a lot of sock. Instead of feeding out of the amplifiers at say +30, I could come banging out of them at +60 which naturally improved the signal to noise ratio. Even though I was using fractional modulation index, I could simply get the signal out.

TAYLOR: Sure.

HICKMAN: Well, anyway, I got them one channel of television in San Angelo, Texas. I don't know what they ever did with it. I left town and that was it. I don't know what ever happened to the system.

And in 1958 I left Ameco and went with Kaiser as a senior engineer. The reason I left Ameco in 1958 was because things were slow in the cable television business in the middle of 1958. Just to be perfectly honest about it, Ameco and Antennavision, or whatever you wanted to call the company .... By this time we had a microwave company called Antennavision Service Company because when we went in the microwave business we went in as a common carrier. So by this time we had formed Antennavision Service Company which eventually became ATR.

TAYLOR: Oh, yes.

HICKMAN: ... and all that kind of stuff. I sold my stock in Antennavision Service Company before I left Ameco because I really needed the money and I sold my stock in it. Sold it to Bruce Merrill. Then in June of 1958 I left there simply because Antennavision just didn't have enough money to pay the salaries, you see. I told Bruce, I said, "Look, I can ..."

End of Tape 1, Side B

TAYLOR: This is Tape 2, Side A. We're picking up where we left off. All right, Earl.

HICKMAN: Okay. As I was telling you, I left Ameco in June of 1958 simply because I just felt that I was really a burden to them. I went to work for Kaiser as a senior engineer working in nothing that had anything to do with cable television. Won't get into what I was working on there but it had nothing to do with cable television.

TAYLOR: At the time that happened, Cox was joining in with Kaiser to ...

HICKMAN: No, this was later.

TAYLOR: Not a whole lot later but it probably was a little later.

HICKMAN: You have to jump to 1965 to do that.

TAYLOR: Gosh, I guess that's right.

HICKMAN: Because it was the later part of 1965.

TAYLOR: Yes, you're right. Okay. But I really thought that you had been involved in Kaiser's getting into the cable business.

HICKMAN: Well, I was directly responsible for it.

TAYLOR: Oh, okay.

HICKMAN: I take full responsibility for getting them into the cable television business.

While I was working for Kaiser, on the side I .... Now you've got to understand that I sold my stock in Antennavision--Ameco, Antennavision and all the companies. I owned 14 percent of it and I sold it in the early part of 1959 or maybe about the middle part of 1959 ... after I had gone to work for Kaiser. I still owned my stock but I sold it in 1959.

Well in 1962, besides working at Kaiser, I did a little consulting work for a fellow who was in the cable television business there in Arizona. I wound up buying a cable television system from him. The one in Douglas, Arizona. So I had a cable system of my own then in addition to my job at Kaiser.

The cable television system that I had bought needed rebuilding. That's the reason I could buy it so cheap because it needed to be rebuilt. So I needed some amplifiers and I couldn't afford to buy them so I built them. I built a couple of amplifiers for myself. My boss at Kaiser saw my amplifiers that I built for myself and he thought, "Well gee, that's a pretty good idea." We were in the military aerospace business, you know, at Kaiser but he thought it might be kind of neat to do something on the side like that. It might give us a proprietary product.

So we hired a new young engineer by the name of Don Gregory and recruited another engineer by the name of Dick McMillan. Does that start to ring a bell?

TAYLOR: The names are familiar, yes.

HICKMAN: So we started to build a line of cable television products for Kaiser. I think we first showed them in Colorado Springs in about 1965. I'm not sure of that date but I think that was about it. I think it was 1965 that we first showed the product.

TAYLOR: I can confirm roughly that.

HICKMAN: That's within ... not later than '65 but perhaps '64, but I think it was '65 really I do.

TAYLOR: I had just gone with Martin in Washington in late '64.

HICKMAN: Where was the convention? Wasn't there a convention in Colorado Springs in '65 or Denver, maybe.

TAYLOR: It was Denver, I think. I think it was Denver.

HICKMAN: Could be Denver.

TAYLOR: Mark Bartlett came to me or called me ... this was when Cox was getting interested in maybe joint venturing with Kaiser. And Mark asked me if I'd be interested in coming in to head some of the organization. It was a Peter Principle. It wouldn't have been any good for me to do it so I didn't.

HICKMAN: Well as I say, I was with Kaiser at this time and I remember the Cox venture and I remember going to Atlanta and meeting Leonard Reinsch and all those people. Edgar Kaiser was there. All of the big guns, you know, were there in Atlanta. And did they ever put on a dog and pony show for us. I met Dick HICKMAN: in Atlanta. And thought that was interesting, you know. My namesake here. He was chief engineer of their cable television operation at that time.

So the first thing I knew we were called Kaiser-Cox. I didn't really have anything to do with it. My title was Vice President, Manufacturing and Engineering of Kaiser-Cox. I've still got a business card upstairs. I can give it to you. There I was vice president in Kaiser-Cox. So we changed our logo and all that kind of stuff.

And I'll tell you why I didn't stay on with Kaiser-Cox. March of '66 rolled around and Bruce Merrill had George Green working for him. Remember George Green?

TAYLOR: Yes indeed I do.

HICKMAN: George Green called me on the phone when I was with Kaiser-Cox in 1966. You remember the meeting that they had in Los Angeles regarding the Second Report and Order of the FCC? It was the early part of 1966, like about in February.

TAYLOR: Yes, I can remember that.

HICKMAN: George Green said, "Are you going to Los Angeles to this?" And I said, "Yes, I think so." He said, "I want to talk to you while you're there." Well, what he wanted to talk to me about is he had brought a message from Bruce Merrill to me that he wanted me to come back with him and head up an engineering group for Ameco. In fact, it would be called Ameco Engineering Company. It would be even a separate corporation. Now if you can imagine Ameco Manufacturing and Engineering Company Engineering Company is what that would be--Ameco Engineering Company. Well, I wasn't worrying about the name or anything like that.

The thing that interested me was that he would start me out at 50 percent more than I was making at Kaiser-Cox as the head dog there. And it sounded pretty good to me because I needed the money.

TAYLOR: It's nice talk.

HICKMAN: So I said, "Sure." Because I never have had any bad experiences with Bruce. Bruce, to this day, has never treated me anything but good. And his brother treated me nothing but good. So I have nothing but good to say about either one of those guys because they've always treated me great. I'm well aware of the reputation that Bruce enjoys or maybe doesn't enjoy in the cable television business. But I, personally, have not shared in any of those bad experiences.

TAYLOR: I'm glad to know that.

HICKMAN: Except only in so far as it adversely affected my own career, you understand. What rubbed off on me is what I'm trying to say.

But anyway, I went back to work for Bruce in 1966. Now there are a lot of things that happened between 1958 and 1966. In fact, probably most of the good things that happened at Ameco happened during those eight years that I was gone. And I can't claim responsibility for any of those good things that happened.

But I can tell you that coaxial connectors, for instance, there's no doubt in my mind but what Ameco--Bruce Merrill, et al., did more in the coaxial connectors business than anybody else did. They were well aware, and I'm not so sure but I wasn't the one that made them aware indirectly to this extent. They had working for them a fellow by the name of Jim Connor. Jim Connor had worked for me at Kaiser as a technician. He had indeed worked for me in the beginning days of cable television and he was well aware of my dissatisfaction with the coaxial connectors that were available that would not satisfactorily match from the transmission line to the input of the amplifier ...

TAYLOR: You're talking about the so-called UHF connector?

HICKMAN: Yes. They simply were not adequate. And the connectors that Jerrold had, you know, and that other people had just were not satisfactory. So Jim Connor left us and went to work for Bruce Merrill and he took that thought with him. But he pushed through a program over there at Ameco on coaxial connectors and got Ameco into the coaxial connector business. It was sort of a joint venture between Ameco and Gilbert Engineering.

TAYLOR: Gilbert was involved in that, too?

HICKMAN: Yes. But anyway, they did that and I had nothing to do with it other than perhaps planting the seed in Jim Connor's mind on that. Jim Connor is the guy that was responsible for it. Now Jim Connor, as I understand it, was working under Milford Richey over there. But I'm sure that Jim Connor is the guy that really put it together, okay?

TAYLOR: Looks like Milford is somebody I ought to track down.

HICKMAN: Milford can probably .... Jim Connor is not alive. He was killed in a racing accident. He was a race car driver and he was killed. But you need to talk to Milford because those eight good years that Ameco had, Milford was the chief engineer. You really need to talk to Milford.

TAYLOR: Do you have any idea where Milford is?

HICKMAN: Well, the last time I heard from him he owned the cable television system in St. Johns, Arizona, and may even still own it. St. Johns ... Milford Richey.

Now you mentioned Rhinefelder. I never met Rhinefelder until after I went back to Ameco for the second time.

TAYLOR: I see.

HICKMAN: Rhinefelder worked with Richey and Jim Connor in the design and development of the first transistorized amplifiers that Ameco came up with. I had nothing to do with that. I can't claim that ... it wasn't mine. I'd like to. I'd like to say that it was mine, but it wasn't mine. It was Rhinefelder, Richey, Jim Tarbutton.

TAYLOR: Well, what I remember about that first one was the flop-up in Great Falls at TelePrompTer.

HICKMAN: Well, I know that they even went so far as to make a hybrid amplifier that used part vacuum tube and part transistor. Again, I'm not too conversant on that because all I know about it is what I heard through the grapevine. I have no personal experience with it and that's again why you need to talk to Milford. Milford could fill you in on that and that's probably the most interesting part of the Ameco history, the part that I can't fill you in on.

TAYLOR: Okay. That's a gap that I will have to fill in.

HICKMAN: And I'm sorry about that because this is also the time when they came up with a lot of the other goodies like the foam-filled taps, the complete line of directional coupler taps, and all those things. They did for their time a pretty good job of impedance matching and isolation and all that good stuff. You know, they may not have been world beaters by present day standards, but considering the advancement that they made, it was pretty darn good. I know because I was sitting over there at Kaiser trying to develop stuff that was as good as or better than theirs. And it was hard to do. Then I went back to work for Bruce. When I went to work for them I just couldn't believe how a company could be so screwed up. They had literally just spent their money on frills, you know. Every executive in the company had a car; they had a Lear jet. They had a contract with General Dynamics to build the equipment to carry the video signals to and from Launch Complex 39. You know the moon rocket launch pad. You didn't know that Ameco built the equipment that you watched the moonwalk on.

TAYLOR: I had a feeling there was some connection there somewhere.

HICKMAN: But anyway, when I went to work for them they had this contract. Bruce was telling me the things that I would have to deal with when I got there. He was telling me about all their projects and said, "And then there's LC-39." I asked him, "What stage is that in?" He said, "Oh, we're just about ready to deliver on it." You see what Bruce didn't know was that he was equating spending the development money to being ready to deliver. They had spent the development money ...

TAYLOR: But they didn't have the product.

HICKMAN: They had no product to deliver. Now comes where I pull the fat out of the fire for him. John Pranke, does that name ring a bell?

TAYLOR: Oh yes.

HICKMAN: John Pranke was an engineer who worked for Ameco at the time when I went back to them. He had been an engineer for Rome Cable that you were talking about. He came with Jack Woods to Ameco. John Pranke was an electrical engineer--a darn good electrical engineer, very conversant about coaxial cable because I guess he was the engineering know-how of Rome Cable. Anyway, he was with Ameco and I found myself his boss. He was one of the engineers. So I assigned John Pranke the job of LC-39. I found out what was basically wrong with their system. Basically the thing that they were ignoring was in the filters associated ... this was a three channel device. Kind of like the thing that you had at Charleston coming down the hill. That was an off shoot from the LC-39 project.

TAYLOR: Oh really. I knew it came from somewhere because it's special equipment.

HICKMAN: Well, it came from LC-39. But you see when I first went back to work at Ameco I recognized that they were being victimized by lack of knowledge in those things having to do with envelope delay in filters. So they were getting all of these so-called ghost effects, which is a manifestation of envelope delay, and pre-shoot and over-shoot in their video signals that they couldn't stand at Cape Canaveral. So by just imparting a little bit of experience that I'd had to John Pranke there, he was able to work that thing out to a successful conclusion. Of course, we overran the contract in doing it but Ameco didn't wind up in court. We delivered the LC-39 stuff and we delivered it on time. Not within Ameco's budget to do so but .... Bruce Merrill took a bath on the project because he had some incompetent engineers working on it. But we got it done.

Also in 1966 I asked him, "What are you going to show at the convention this year?" He says, "We're going to show our new amplifier," which I think he called a Nova or something like that.

TAYLOR: This is '66?

HICKMAN: I believe this was '66.

TAYLOR: Yes, it was a Nova.

HICKMAN: Once again I was appalled to find that they really had nothing. Would you believe that I took a couple of the engineers there and we were able to go to the convention, which I think was about a month after I joined the company. I joined them in March and I think the convention was in April. We showed a Nova amplifier and we did it in thirty days time--thirty days. Now what kind of an amplifier can you produce in thirty days?

Well, Bruce was blessed with a bunch of good salesmen and they sold a lot of Nova equipment that was just literally hashed together.

TAYLOR: When was the Huntsville project?

HICKMAN: Seems to me that the Huntsville project goes to 1969.

TAYLOR: Oh, later than this.

HICKMAN: Yes.

TAYLOR: I had always in my mind had it that Nova was an outgrowth of Huntsville.

HICKMAN: No. Nova, I think, happened before. Maybe it wasn't called Nova. Maybe it was called something else. I may be mistaken about the name Nova, you understand. You may be right, I just don't know.

TAYLOR: When was George Green there?

HICKMAN: George Green left right after I joined the company.

TAYLOR: So he was there before ... while you were away?

HICKMAN: Yes. He was there during the eight years, that's right. Who was their other guy there that came from the FCC to Ameco? You remember the guy that was the head of the ... no, came from the NCTA.

TAYLOR: Oh, Ed Whitney.

HICKMAN: Yes, Ed Whitney. He was there during the time that I was not there. All the good guys came and left while I was not in the cable business. I was out.

TAYLOR: Well, I guess one wonders. I knew George Green. He was with Greyhound in their investment arm. Greyhound had a bundle of cash and had to do some investing with it. He got interested in investing the money in cable television and contacted me. I spent some time with him and we entertained each other for awhile. Finally he left and I don't know whether it was then that he went to Ameco or whether he did some other things in there. But, at any rate, he had also worked closely with Don Spencer at Spencer-Kennedy. I think he got Greyhound to back some of Spencer's operating systems. And I don't how the timing is in there but after Ameco, George went with Spencer. They were really on the skids. George was going to try and help them pick up and it didn't work.

HICKMAN: I didn't know George Green all that well. What little experience I had with him he seemed to be very personable.

TAYLOR: Oh, he's a very likable guy, very enjoyable.

HICKMAN: I can't speak knowledgeably about his character or his qualifications or anything.

TAYLOR: I guess the only thing I can say is that the ventures he was associated with didn't seem to do well.

HICKMAN: I see.

TAYLOR: I don't say that that was his fault.

HICKMAN: I think you could probably say the same thing about mine as far as in the later days of Ameco because I just simply was not able to straighten out the mess that existed at Ameco when I went to work there--the technical mess that was involved. It wasn't just technical. The problems were deep rooted and I just never could straighten it out. And I feel bad to this day that I couldn't do it but I just couldn't do it.

It seemed like I met with obstacles at all turns. Like, for instance, I knew for a fact that Ameco should spend the development money to develop a good push-pull amplifier because I could see that that was the direction that we were all going.

TAYLOR: This is in the transistor period, now?

HICKMAN: Yes, this is in the transistor period. Ameco had a single-ended amplifier and before I left Kaiser I had already put the ball in motion for the push-pull Kaiser amplifier. It was not yet developed but I had already laid the groundwork for the push-pull amplifier at Kaiser and so I immediately thought that I would do the same thing over at Ameco. This was early 1966. I just simply was not allowed to do it. Rather than develop a transistorized amplifier, I had to try to convince people that single-ended amplifiers were just as good as push-pull amplifiers ... which they were not as far as second order distortion is concerned. They just simple weren't and how could I tell good and qualified engineers that their ideas were all wet. But that was essentially what I had to do.

TAYLOR: Were the engineers that were pushing the single-ended talking about the way you can phase out the second order?

HICKMAN: Well, yes. Of course you can do that to a certain extent. People know that you can do that.

TAYLOR: But it needs stability.

HICKMAN: But you have a stability problem when you do that. And, of course, that's what Ameco was pushing. Then, on the other hand, Bruce wanted to make a name for himself or Ameco or something like that. He wanted to do something that was drastically different. I think that's why he wanted to get in with Scotty Gray, you know. He wanted to do something that was drastically different from what everybody else was doing. And that's why we spent so much time at Discade and all kinds of weird things. We used to say that Bruce didn't believe in designing equipment, he believed in "divining" equipment. I hate to say that. That sounds kind of derogatory of Bruce. Bruce was not a technical man but he got too deeply involved in the technical end of his business.

TAYLOR: What got Discade going? Where did that come from?

HICKMAN: Well, I was thinking the other night how Discade actually got started.

TAYLOR: I ran into this in my files.

HICKMAN: Discade is something that .... I know that the basic ideas of it came right out of my head. I'm just trying to think of what precipitated it. In other words, what caused it all. I know that it came out of me sitting in Bruce Merrill's office and kicking around ideas on how you could do various things. And I think that he probably took one of these ideas and said, "Build it."

TAYLOR: It seemed to me that it's somehow related to the NQV.

HICKMAN: It probably did.

TAYLOR: ... single channel or two channel down at low frequencies. And to some extent the Huntsville effort. I think these were the granddaddies to that.

HICKMAN: I think that all goes back to NQV. That's why I mentioned NQV earlier because I think that greatly influenced ... it certainly influenced my thinking.

You also asked about how many patents came out of this thing. You know, I don't know. You'd have to ask Bruce how many of them ultimately were granted.

TAYLOR: I gather from what Strat said that Bruce wouldn't have any idea. What I'm going to do on patents, incidentally, is go through the Dialog database out there in California. I think we've got access to it and maybe we can trace down the patents that way.

HICKMAN: The cleverest idea that I had on the whole thing, it wasn't really very clever but .... We needed a twenty channel dial indicator and I came up with a Mobius strip. You know where you can print the numbers on both sides of the strip and still it's a continuous loop.

TAYLOR: I guess I knew about that years ago but I ...

HICKMAN: I put in a patent claim on that.

TAYLOR: Really?

HICKMAN: But I don't know whether it was actually granted or not. I think it might have been but I don't know for sure. But all these were in Ameco's name so those of us that made the disclosures and everything would just be listed as the inventors but the patents were all assigned to Ameco.

But there was a lot of interesting stuff that we did in that Discade. It was kind of an interesting thing but it was plagued with a lot of problems and most of them had to do with just crosstalk between channels. If we could have ever eliminated the crosstalk by the manufacturing techniques or the design and manufacturing ...

TAYLOR: You know dual cable plants are ... there aren't too many of them out now but San Jose, for example, and Media General up in Fairfax County, Virginia, and there are a few others. They worked quite effectively.

HICKMAN: The one we put in Charleston was a dual plant and it didn't crosstalk. It was pretty good.

TAYLOR: That's right.

HICKMAN: But I tell you, you get at these low frequencies like this ...

TAYLOR: Yes, at the low frequencies it's worse.

HICKMAN: See, these were at 7 to 13 MHz. You get in those low frequencies there and the crosstalk, the ground loops and everything can get pretty horrendous.

TAYLOR: There's one up in Ventura County. We did a big study for Western Communications and ran into this thing. They were having all kinds of trouble with crosstalk. But it appeared to be almost entirely due to the connectors. They had old-style, unsleeved connectors.

HICKMAN: The Huntsville headend didn't have any crosstalk in it and it was 7 to 13 MHz.

TAYLOR: Was it aerial?

HICKMAN: Yes, it was aerial.

TAYLOR: All the cables bundled together.

HICKMAN: Half-inch cable.

TAYLOR: I remember I met with Joe Hale one time a good many years ago up in South San Francisco. You knew Joe?

HICKMAN: Oh yes.

TAYLOR: South San Francisco at that time sat right under two full powered VHF stations on Mount San Bruno and Joe had a terrible time keeping them from ingress. Finally he was talking with the AMP salesman--connector salesman--and they had that big heavy high pressure crimp that made a hex crimp to put the connector onto the cable. But in order to put all that pressure on the aluminum they had to have something underneath it so they put a steel sleeve in there. Joe saw that and he said, "That's just what I need." And he put the sleeve in but then the problem .... And Jerrold then picked that up and I think Joe probably passed it along to them. But the trouble was that you couldn't get contractors to core the cable out to put that sleeve in. Because nobody could ever check it and consequently that was when the integral sleeve came along. Eric Winston, I think, deserves a lot of credit for that.

HICKMAN: Yes.

TAYLOR: But Bruce hired me one time to evaluate cost on Discade and I got a lot of figures from him. Any way you sliced it, as I recall it was probably three times what it would have cost to do it with conventional converters.

HICKMAN: You know that switch idea that I had for the Discade switch, it was actually pretty clever. You know the basis on which it worked? It was a lump parameter transmission line, that's the way it worked. In other words as you progressed through your various switches that tapped off of there, operated as a capacitive load with a slightly resistive component. But it matched the impedance. Of course you have to match the impedance pretty good at those frequencies or you'll get hellacious ghosts. But it acted like a lump parameter transmission line going through and these switches just were the shunt elements. In other words, where you'd go off to the individual switches off of this thing, it would just act like another shunt element on this transmission line. Well, anyway.

And then in 1971 ... I told Bruce about a year before I was going to have to leave Ameco, that I intended to go out on my own--run my own cable businesses--and that I would be leaving in January of '72. And I said, "You know, if you can get a replacement for me I'll go as quickly as you want. Or if you get a guy in here, I'll tell him everything I know about the operation. We'll try to make it as smooth as possible but I'm giving you a year's notice of my leaving." And that's exactly what I did. I gave him a year's notice and he hired Jack Blanchard.

TAYLOR: Oh, I remember the name.

HICKMAN: And Jack Blanchard came in and understudied me there and I made the transition and just moved out of Ameco and went on my own and that was it. It really wasn't a very heroic venture.

TAYLOR: I can't recall how long Ameco lasted after that.

HICKMAN: Well, I bought a lot of equipment from Ameco after that. I had a pretty good deal with them. I built a cable system in Payson, Arizona, out of Ameco equipment. I used some Kaiser equipment there, too--Kaiser-Cox equipment. Well, by that time I guess it was called Theta-Com.

You see what happened was at Kaiser, Cox decided they didn't want to be in the manufacturing business so Kaiser bought them back out. And then the Hughes Company came along and decided they wanted to get in the cable television business so they bought Kaiser out. Then I guess Texscan came along and bought Hughes out of the manufacturing business.

TAYLOR: Have you kept up at all with the new developments ... fiber, compression, HDTV?

HICKMAN: No, my son has. My son, John, is in charge of all of Cox Cable's outside plant construction.

TAYLOR: Cox, to my way of thinking, is one of the most solid organizations in the cable business. There's some that aren't so good.

HICKMAN: I think so. I sold my cable systems to them.

TAYLOR: Did you?

HICKMAN: They've been nothing but good to me, also. They have just treated me wonderfully well.

TAYLOR: Well, this has sure been fun and fascinating.

HICKMAN: What did I miss? I told you a whole bunch of garbage.

TAYLOR: Oh, I know what. When did Ameco get into the cable business, Ameco Cable ... were you there at that time?

HICKMAN: When did what? Oh, the cable business.

TAYLOR: The cable business ... when they bought Rome.

HICKMAN: They bought that before I came there because Pranke was there when I came there in '66.

TAYLOR: This is in '66.

HICKMAN: Yes. So they obviously had done it just prior to that time. And Jack Woods ...

TAYLOR: Who was the other guy with Jack, a big heavy set fellow?

HICKMAN: Oh, Sid .... What the heck was his name?

TAYLOR: I've been trying to think of it and I couldn't.

HICKMAN: I can't remember his name. [Sid Mills]

TAYLOR: Well, Pranke then left Ameco and went .... I knew him best when he was at Kaiser.

HICKMAN: By the way, you might want to know who was the daddy of the Channeleer. The daddy of the Channeleer, because I wrote out the project release for him and assigned him the job, was Gaylord Rogeness.

TAYLOR: Really?

HICKMAN: And Gaylord Rogeness left in the middle of the project and went with another company.

TAYLOR: To Anaconda.

HICKMAN: And I turned the project over to John Pranke. So John Pranke really wrapped it up and finished it. So the Channeleer was John Pranke's baby.

TAYLOR: What was the timing on that? What was the year of that, do you remember?

HICKMAN: Oh, let's see now. What would be the timing? The Channeleer showed at Chicago, I believe. I remember that the Channeleer got a lot of interest from Scientific Atlanta at that convention. Scientific Atlanta was looking hard over Ameco's shoulder at that convention.

TAYLOR: Scientific Atlanta was just getting into cable other than the antenna. They got in the antenna in 1960 or thereabouts, I think.

HICKMAN: But Ameco had a signal processor at the convention before Scientific Atlanta ever had a signal processor. I doubt if anybody ever had a signal processor before Jerrold--a signal processor of one kind or another. Because Jerrold had perfectly good vacuum tube signal processors, you know. What did they call them?

TAYLOR: Channel Commander.

HICKMAN: Sure, Channel Commander. Now, when the first vacuum tube Channel Commander came along, I honestly don't know. I think it might have happened about the same time that Ameco's Channeleer came out but I don't know for sure. I just don't know.

TAYLOR: I think it was out before the Channeleer.

HICKMAN: Was it?

TAYLOR: We got it in Montana ... I think it was 1960 or thereabouts that we got the Channel Commander.

HICKMAN: The vacuum tube?

TAYLOR: Yes. We had been using Conrac's.

HICKMAN: I'll tell you about Ameco's modulator. Do you remember? When I went to work for them in '66, by that time they had a solid state modulator.

TAYLOR: Yes.

HICKMAN: I'll tell you who built that modulator. It was Dynair right here in San Diego.

TAYLOR: Oh, Gary Gramman.

HICKMAN: And Gary Gramman is still a good friend of mine. I first met him in about 1956 or '57 when he was with Kay Electric.

TAYLOR: I've talked to him within the last year on something else.

HICKMAN: Gary Gramman is right here in town. And I remember one of my first jobs when I went back to work for Ameco the second time was I had to come over to San Diego and talk to Gary Gramman about the problems with the ... what did they call that thing? I can't remember.

TAYLOR: I can't either.

HICKMAN: Anyway it was a modulator. So I came over and we got a lot of the problems cleaned up in the modulator. But Bruce wanted to build our own modulators. So we started building modulators.

TAYLOR: You had a vacuum tube modulator early on?

HICKMAN: Well, that first vacuum tube modulator happened under my ... in the first time around. That happened a long time ago. That was the thing that was born out of necessity. But Dynair is the one who developed the Ameco modulator. Now the Ameco modulator was completely redesigned, I think, or was it? I don't remember for sure. I'm not so sure about that. I'm pretty sure about the Channeleer, the timing and everything, but I'm not too sure about the Ameco vacuum tube modulator. I'm not even sure that they had any other modulator ...

TAYLOR: You mean the solid state modulator?

HICKMAN: Yes, the solid state modulator. It's unclear in my mind what happened after Dynair quit building them. I'm not even sure Ameco built them after that.

TAYLOR: I'm very unclear. I don't know.

HICKMAN: It's not clear in my mind. I just don't remember. It must not have been a big part of my life.

TAYLOR: You left in '72?

HICKMAN: I left in January '72. The first of '72 I was gone.

TAYLOR: You left before the satellite began to be significant?

HICKMAN: Yes. The first experience I had with satellites was in my own cable systems. The very first one that I ever saw was the one that they put up in Yuma. I guess UA-Columbia owned the Yuma system at that time it seems like.

Oh, we were talking about cable.

TAYLOR: Cable. There were a lot of tricks in cable presentation.

HICKMAN: I just couldn't tell you about that because I honestly don't know. I never was a cable guy, you know. I always thought there was a lot of witchcraft involved.

TAYLOR: I think there was. Was Bruce trying to match Jerrold by being in every aspect of the business?

HICKMAN: I think at one time I came to the conclusion that Bruce wanted to try to be all things to all people in the cable business. And I think that Jerrold was the one that he was trying to out do.

TAYLOR: Jerrold had so many strange things at the very beginning, too. They were small and they made all kinds of mistakes. The service contract that was so despicable. And they got into an anti-trust problem when they were forced to sell their systems. There were a lot of bad things they did. And then the sale or rather bringing Harmon Kardon and Pilot in as managers. And Milt got interested in being governor rather than running the business. But still the business seemed to thrive. It seemed to keep going and has always been the dominant market.

HICKMAN: Yes, Jerrold has always been the leader. I've often thought over the years that it would be kind of nice to be remembered for something that I did in the cable business. The only thing that I can come up with is that I was just there early on and survived it for ... let's say from '53 to '70. Well, actually I sold out in '88 so I guess you could call that .... If you wanted to stretch your imagination, that's thirty-five years minus the time that I wasn't in it so at least I guess I was a survivor.

TAYLOR: That's pretty much a lifetime.

HICKMAN: But I can't think of anything really that I could say, "I was the ...." Well, I think I laid the groundwork for ... what's the company that makes the FM stuff now? They make all these FM processors and things.

TAYLOR: Catel?

HICKMAN: Yes, Catel. I think that I may have given Catel a lot of information early on. Imparted it directly to the guy who was the head of the company and his engineers. Because I can remember lengthy discussions that I had with those people when I was doing that Discade thing up in Daly City. They were friends of Buzz Gatlin or something like that. I can't remember his name--the manager of the system in Daly City. But anyway they were friends and I remember giving them a whole lot of results of my work in the FM thing, warning them of pitfalls and things like that, that I think was quite valuable to them. I think I saved them a lot of development time and money early in their career.

TAYLOR: Well it's been almost totally supplanted now by the VSB/AM fiber ...

HICKMAN: Sure, absolutely.

TAYLOR: When Jim Chiddix first began writing and talking heavily about the amplitude modulation of fiber or lasers, I just instinctively felt I'd rather see him doing it with FM ...

End of Tape 2, Side A

NOTE: The conversation started before the leader tape had passed and was therefore not recorded. The following is reconstructed from memory:

TAYLOR: We spoke earlier about the FM tramsmission you developed for Globe-Miami, and you spoke about the system Joe Vogelman installed in Colorado Springs. I had an experience with this system which he called "Laser Link" or "Quasi-Laser Link".

It is an amusing story. He asked me to come up to New York to demonstrate this. I don't usually go to those demonstrations but for some reason or other I went up on this one. He had two about 10 gigahertz horns, I guess, maybe thirty feet apart across the room and he was beaming a signal from one to the other. I asked him questions about intermode and signal to noise and so on. Why he can demonstrate to me signal to noise. Well, how do you measure it? "Well," he said, "you look at that picture. Do you see any noise in it?" Now he puts his hand in front of the beam to shade it a bit and that makes a change, "and when that noise looks equal to the picture ...." It was the most shady thing I ever saw. Then he took it to the FCC for type approval and never could meet the out of band emissions.

HICKMAN: Well, you knew that they put one of those things in the Colorado Springs system.

TAYLOR: Yes, I think I knew that.

HICKMAN: The guy that was in charge of the Colorado Springs system, he was the chief engineer for CableCom General--George Milner. It was about the time that I was leaving Ameco, in fact I had left Ameco, and he said he wanted to hire me to come up and do some consulting work. I got up there and lo and behold what he had was this thing that we're talking about that didn't work. It was loaded with intermode and was noisy and all this kind of stuff. These guys had represented it to them as being neither of those things--just plain good. As it turned out, I had had enough experience with the FM to realize some of the pitfalls and some of the traps that they were falling into. They had traveling wave tube amplifiers they were feeding. They'd feed these signals through these traveling wave tube amplifiers that were just loaded with phase distortion. Their phase characteristics were not linear. And when you feed FM signals through nonlinear phase devices, the ultimate manifestation is virtually the same as the manifestation to amplitude modulated signals--nonlinear amplitude characteristics. So you can't tell the difference in the finished product, if you know what I mean.

TAYLOR: Well, the push--the promotional bit--behind Vogelman was Ira Kamen. I've forgotten who it was that told me the story about Ira Kamen in Springfield, Illinois. He went up with the guy from JFD. He was the guy that was annoyed about cable television because it was going to kill the theaters or something like that.

HICKMAN: I can't remember.

TAYLOR: I can't remember names anymore like you.

HICKMAN: That wasn't Shyer, was it?

TAYLOR: No, that wasn't the one. But at any rate, Kamen was up with this group to get the franchise in Springfield. I think Ben Conroy or Jack Crosby may have been the guy who told me the story. But they're in their council meeting with a couple hundred people and the fellow in charge went up to tell his story about why we should get the franchise. After he finished he said, "Now I have my engineer Ira Kamen here. If you have any questions to ask, he's available to answer questions." One of the councilmen asked a technical question and so they called on Ira Kamen. He was sitting way in the back of the room. Have you ever seen Ira Kamen?

HICKMAN: Yes.

TAYLOR: He has polio, or the results of polio, and so he walks with arm crutches and braces on both legs. So he wiggled around, struggled himself up to his feet and then hobbled down to the front and said, "Now what was your question?" They didn't ask anymore questions after that. Ira could be an engaging person.

HICKMAN: You realize that I had the painful duty of telling him and showing him mathematically .... I had to write the report and prove that what they were doing was not technically feasible. I had to explain why they were getting the horrible results they were getting in the lab. I went back to their lab and showed them. This guy Vogelman was clawing and scratching all the way. But it was my painful duty to put that whole thing to rest. But apparently he took it ...

TAYLOR: He probably knew it was coming.

HICKMAN: By that time he probably knew it was coming. We've just covered cable television's history.

TAYLOR: Earl Hickman's career up to 1972. We haven't discussed much since then.

HICKMAN: Well, since '72 I didn't really have anything to do. I was just in the cable business as an owner. You mentioned that that large climate test chamber was in existence when I went back to Ameco.

TAYLOR: It was done in the interim period?

HICKMAN: They put that together before I came back there.

TAYLOR: My impression was that that was the first big test chamber.

HICKMAN: I think it might have been. It was capable of testing twenty amplifiers in cascade.

TAYLOR: I remember Larry Janes and I went out to run the Charleston ...

HICKMAN: I was there.

TAYLOR: You were there.

HICKMAN: But that chamber ... I didn't put that together.

TAYLOR: Larry never got over .... See that was a week before Christmas and we were out there. Larry had never been to Phoenix and he was so interested in going to Phoenix. We worked all night, as you remember, to get the cycling proper. And we came out at 6 o'clock in the morning and there was ice on the driveway in the parking area. He was so absolutely flabbergasted ... "Here I come all the way to Phoenix and you've got ice on the runway!"

HICKMAN: This large microwave network that came about, you mean ATR?

TAYLOR: Yes.

HICKMAN: Well, about all I can tell you about ATR is the first link of ATR was from Heliograph Peak in Safford to Clifton, Arizona, and I put it in. The second link was from Heliograph Peak to Silver City, New Mexico, and I put that one in. That was ninety-two miles long. The third link was from ...

TAYLOR: Was that 7 gigahertz?

HICKMAN: It was in the 6 gigahertz band. The third link of ATR was from Hutch Mountain to Winslow, Arizona, and I put that one in. And I built the terminal equipment for all of those. The first one was a Philco microwave link. The rest of them that I've told you about were Motorola and there was a another one in there. I can't remember who built it. All I can tell you is that it used a Raytheon klystron in the output. It was a Philco. It used a double cavity klystron in the output.

TAYLOR: I interviewed Don Kirk who left Jerrold in mid to late '50s over some disagreements and went to work for Philco in their microwave division. He didn't like what he saw. He was telling them that the microwave wasn't good enough and he wanted to redesign it. But they had to go through so much bureaucracy to get any redesign that he just gave up. It was then that he and Dalck Feith formed the organization K and F Microwave.

HICKMAN: I see.

TAYLOR: Built it and Jerrold sold it. It apparently went very well. It made Feith wealthy. It didn't make Don Kirk wealthy.

HICKMAN: Well, as a matter of fact, the way I got into cable television for myself in the latter years was I went down to Douglas, Arizona, to fix some microwave equipment for this guy that owned the system down there and he had one of these Philco links that I'm talking about with a double cavity klystron which sold for around $1,000 in those days. I modified the unit there. His klystron was shot and so, with a local oscillator in the receiver, I modified it to use a Varian reflex klystron. I built a real neat little highly regulated repeller voltage supply. And I rigged up an AFC circuit to go back and change the repeller voltage to have automatic frequency control on the receiver and did away with the dual cavity klystron so he could use these little cheap Varian reflex klystrons which, by the way, had a longer life than the big Raytheon dual cavity klystrons.

And that's what led up to the relationship between me and this guy which enabled me to eventually buy his cable television system and that's how I got into the business.

TAYLOR: Oh, I see. Well, Bruce made a pretty good thing out of the ATR at one time.

HICKMAN: Well, ATR was something that ... that name came about while I was gone. When I left Ameco it was still called Antennavision Service Company and they changed it to American Television Relay during that period of time--that eight years--while I was gone. All the good years that Ameco had were actually during those eight years that I wasn't with them. I wasn't with them during their heyday. I was with them during the rise and fall but not during the real heyday. I wanted to put that in the proper perspective for you. I think it's important to get the chronology as nearly correct as you can.

TAYLOR: Was the Lear jet while you were away?

HICKMAN: The Lear jet was there when I came back, yes. And it stayed there. I guess it was still there when I left.

TAYLOR: I think it probably was. I know Bruce came to Washington with the Lear jet, picked me up to come back to Daly City. There were a couple other people on there. Funny thing about that trip was that I didn't realize that it couldn't fly clear across the continent--they had to stop. And that kind of a plane stops in the general aviation where you get snack sandwiches instead of a place to eat.

HICKMAN: That's right.

TAYLOR: But coming back we got into Washington and just at the time we were due to arrive, and I had told my wife when I'd arrive, there was a small private plane that crashed into the lagoon off the end of one of the runways. This was reported on the radio just as Laverne was coming to pick me up and she thought, "Oh, my God ... small plane just coming in," just at the time we would have been landing.

HICKMAN: Well, you knew that we hit a tree on final going into Huntsville, Alabama, in that Lear jet?

TAYLOR: No, I didn't know that.

HICKMAN: We cut the top fifteen feet out of a fifty foot tree the first night that the new Huntsville Airport was open. That was November 1, 1969.

TAYLOR: Coming into the airport here in San Diego reminded me of the time, probably ten years ago or maybe longer than that. There was a retired admiral who was station manager down there, you may know who it was. He called me and said how many feet of the runway they lose because of the height they have to maintain over that ridge to come in. And he said if we could just get a cable system up on that ridge and get the tall antennas down, we could pick up hundreds of feet of extra runway. The runway is short anyway. Nothing ever came of it. I made him a proposal but nothing ever went from there. I thought of that when we came in today. I suppose those tall antennas are gone now.

HICKMAN: No, those tall antennas are still there. Well did we go over these questions?

TAYLOR: I think we did pretty well.

HICKMAN: Did we get all the stuff?

TAYLOR: I want to say that I certainly appreciate the opportunity to listen to you and get your story and so on. Was cable a good business? I mean the cable itself as a part of Ameco--the manufacturing of cable.

HICKMAN: I just don't know.

TAYLOR: As I said early when I met you out at the door of the hangar, Ken Simons was number one on my list. Fitz Kennedy, because of the distributed amplifier, was on my list. Fitz died three years ago so I couldn't talk to him. And the next one on my list was Earl Hickman but I couldn't find him. That was one of my problems ... I couldn't find him. But Strat Smith met with Bruce Merrill and got a lead that got me your telephone number. I certainly appreciate talking to you. You're certainly one of the prime leaders in the technology of this business.

HICKMAN: Well, I know I'm overlooking some important stuff but I just can't .... It's just been too many years.

TAYLOR: Well, what I've told other people is that as I go along with this and talk to other people, additional ideas and questions may come to mind. I've got an attachment so I can record from the telephone so I can ask some other questions by telephone. So I will keep that in mind.

HICKMAN: What I should have done a long time before now, but I never could really see any reason to do it, was I should have made an outline and tried to put all that stuff in the proper order. Because you're going to have a heck of a job trying to get something out of that tape.

End of Tape 2, Side B

TAYLOR: This is a postscript with Earl Hickman. I wanted to get some more things on tape that we have been talking about. Earl, particularly you made the comment a moment ago that a lot of things had to come together for the transistorized amplifier. Can you repeat that for the tape?

HICKMAN: Sure. Although at the time that Ameco and some of the other companies were developing transistor amplifiers, I was not really actively engaged in the cable television manufacturing business or in even the operating of systems. I was working as an electronics engineer for Kaiser and I was involved in the development of transistor circuits. So I saw a little bit of what was going on especially in the Phoenix area with regard to transistor amplifier development for cable television use.

I think we were talking about Bill Rhinefelder and Russell Yost, both of whom were engineers over at Motorola. I think I made the statement that I think that Russell Yost probably contributed a lot of his knowledge and expertise to Bill Rhinefelder's development of transistor amplifiers. I don't know that for a fact but I suspect that that's the case because Russell Yost was one of the best network men in the business. It was his article on multi-pole networks used for broadband impedance matching that influenced several of the designs that I had done back in the early vacuum tube days--transistor amplifier.

But I think that awhile ago we were also talking about how many things had to actually come together for there to be a successful transistor amplifier. Some of those things that I think about were the development of ferrites for the transformers used within the amplifiers. I think if there hadn't been that development of suitable ferrite devices to make those broadband transformers, and of course the tremendous strides in transistors .... Gosh, the speed of silicon transistors in, say, 1958 even was such that it was almost impossible to build a cable television amplifier. You might be able to build a single channel amplifier but that was about the extent of it. The reason I know this to be a fact is because I was trying to build such simple devices as video circuits and sweep circuits for use in a cockpit display device that Kaiser had. We were trying to develop it to a suitable stage for use in military aircraft. I just think that it's nothing short of a miracle the way that cable television engineers jumped in and actually came up with amplifiers that would work over what I, at the time, considered a tremendous bandwidth.

I don't know that the industry ever gave Bill Rhinefelder enough credit for what he did in those days. Rhinefelder didn't keep things to himself. He published a lot of his stuff. He wrote a book; he published several papers. I think that's to his credit. I've always kind of felt that maybe Bill Rhinefelder didn't get as good a pat on the back as he should have. I don't think that anybody ever mentioned Russell Yost's name but me. But I think that those are two perhaps unsung heroes.

TAYLOR: Russell Yost's article on the multi-pole matching networks ... when was that? Was that in the early '50s or earlier than that?

HICKMAN: I think that that probably goes back to '54 or '55, somewhere in there. I don't know how old the paper was when I first read it.

TAYLOR: Published in IEEE or ...

HICKMAN: I think it was just an in-house document at Motorola.

TAYLOR: I see.

HICKMAN: I honestly don't remember exactly where I read it. I might have read it in the "Proceedings of the IRE" because in those days I used to be capable of reading and understanding that. I haven't been able to do that for years.

TAYLOR: Not anymore, right. Well, while I've got you on a postscript here we talked about a couple of things last night. One of them was the homogenized Channeleers. Let's put that story on tape.

HICKMAN: Okay. I've forgotten exactly what year that was but it was '70-ish. It was probably 1970 or perhaps even '71, I'm not sure. John Pranke had just finished developing Ameco's Channeleer so that would probably give you the timing. I think that it was in Chicago that the NCTA convention was being held that year. Correct me if I'm wrong on the timing.

TAYLOR: Didn't we use Channeleers in Charleston? That would have been '68.

HICKMAN: Well, let's see. I don't know whether we used Channeleers in Charleston. Yes, I guess we did as a matter of fact. Was that '68 or '69?

TAYLOR: It might have been '69.

HICKMAN: '68 or '69.

TAYLOR: I know Pranke came out on that. I think they were Channeleers. It may have been the first year of them.

HICKMAN: Well, I don't think that this twenty channel Channeleer thing in Chicago was the beginning of the Channeleer. It must have just been that Pranke was going to have a real dog and pony show. He was going to have an actual working twenty channel headend.

TAYLOR: That's probably it, yes.

HICKMAN: And it was all based on the Channeleer. I guess I could go back and say that Pranke was the engineer who completed the Channeleer project. I think that you should give Pranke credit for the Channeleer. It was begun by Gay Rogeness but Gay Rogeness left the company and Pranke took the project over and completed it. But John Pranke himself had just finished putting together a complete twenty channel headend in the Ameco plant.

So John was going to take it apart and pack it up and ship it to Chicago and then reassemble it there and put it on display. So Jack Woods at Ameco's cable plant and Bruce Merrill decided that maybe a good thing to do would be to just ship it to Chicago in one of the cable trucks. They had a cable truck that was going back in that direction and they had plenty of room to take this on board. Furthermore, they said they could pack it up and just ship it intact so it wouldn't have to be reassembled when they got it to Chicago.

Well, it sounded like a pretty good idea to everybody and so it was loaded up in the truck and away it went to Chicago.

TAYLOR: What I understand from what you said last night is that you didn't think it was such a hot idea. You'd had some previous experiences with shipping.

HICKMAN: That's right. I'm glad you jogged my memory on that. Years ago, in fact this was about 1946, I was involved in building a radio station in Douglas, Arizona. KAWT were the call letters of that radio station. It went on the air in 1946. We were going to go on the air with a brand new Western Electric 250 watt low level modulation transmitter which you're very familiar with. It was to be shipped from Western Electric back east into Los Angeles harbor by boat, come through the Panama Canal, and then it would be shipped from Los Angeles to Douglas, Arizona.

Well, it turns out that they had a strike of the dockworkers about that time so it sat on the boat in Los Angeles harbor for several days if not weeks. Eventually the strike was resolved and we received our transmitter in Douglas, Arizona. The only thing is it was in much the same condition as what the Channeleers were in when they arrived in Chicago on the truck. It was just homogenized inside. I'll never forget how sad it was for me. I was a young man at the time and I had received this transmitter. My boss was waiting to go on the air with the thing and I literally had to just rebuild it on the site. I'm not sure that that transmitter ever was as good as it was originally intended to be. I had to rebuild its innards right there at Douglas, Arizona.

But anyway, the Channeleers, as you very well know because you were there and saw them, arrived in Chicago in pretty bad condition. Most of the components were in the bottom of the relay racks that they were shipped in. I think that one out of twenty of the Channeleers survived to the extent that it could actually be turned on and used. I don't know whether people thought that Ameco didn't really have a twenty channel headend at the time and this was some ruse to get around that. But I can assure you that Ameco and John Pranke had a very nice, for that time, twenty channel headend. I've always thought it was such a sad thing that it didn't survive that trip.

TAYLOR: Well, no one I talked to at the time had any doubt that it had been that way and great sympathy for Bruce and the company.

HICKMAN: Well, I felt especially bad for John Pranke because he had put in so much work on that and here he had to stand around and make excuses for the fact that his units were just, as I said before, essentially homogenized by the beating that they took in transit.

TAYLOR: How did Pranke move over to what eventually was Theta-Com? Did you have a hand in that, hiring him away from Ameco?

HICKMAN: No. I was still with Ameco--my second time with Ameco. John Pranke left Ameco and I think that he probably just got a better offer from Theta-Com. So he went with Theta-Com and immediately went to work in amplifier development for Theta-Com. I think that Pranke developed the new amplifier which was Theta-Com's stock in trade for several years after that. So Pranke took with him considerable expertise from Ameco and jumped right into that amplifier development over there--developing their new push-pull amplifier in the new big housing. You know when they went to the larger housing at Theta-Com. That was Pranke's baby.

TAYLOR: He has one of the classic papers in the transactions of the NCTA on composite triple beat and the measurement of it and so on.

HICKMAN: Right.

TAYLOR: You also indicated to me yesterday that you had been instrumental in hiring Burt Henschied.

HICKMAN: I hired Burt Henschied, yes. We were working at Kaiser on the automatic instrumentation of .... Let me go back and say what we were doing is building automatic check out equipment for several cockpit displays that were used in the A-6 airplane--the A-6A, the E-2F. You know, the airplane with the big dome on the top of it. What we designed and built at the Kaiser plant in Phoenix was the automatic check out equipment. It was computerized equipment that was used on shipboard on the carriers to check out. In others words they just plugged an umbilical cord into the airplane and it would check out all these systems. We'd check out, for instance, all of the shaft angle digital encoders that were used in conjunction with those systems on the airplanes. We'd check out the vertical displays and the heads up displays and things like that that were used in the airplane.

So I hired Burt Henschied to work on those projects. And Burt, as I recall, went back to Grummen Aircraft and worked for us as a field engineer back there for several months, if not years, before we got into the cable TV equipment manufacturing.

TAYLOR: I see. So he came into cable TV later then?

HICKMAN: Yes. But I think that I gave Burt his first job right out of engineering school.

TAYLOR: That's interesting.

HICKMAN: He was a wonderful young man and very smart and talented and above everything else a loyal and hard worker. I have nothing but the fondest memories of Burt.

TAYLOR: Another story you told me last night that I'd like to get on the tape was encountering the 704 signal level meter at Hoffman Television.

HICKMAN: Okay. I'm not sure that I would call it a 704 meter. It might have even been the forerunner of what you know as the 704, I don't know. All I can tell you is that it seems to me that the time period was 1953. It could even have been late '52 but I think it was sometime in '53. Of course, I was just getting into cable TV at the time. We didn't call it cable TV--Community Antenna Television or whatever.

But one of the problems that we had right away was how do you measure the signal level? Well, I had a ... I got it from RCA. I got a so-called portable .... I guess it was portable to the extent that it had two handles on it--it was movable. It was a twelve-inch television set and it had a meter up on the face of one corner. It had obviously been modified. RCA sent this thing to us. I take that back. RCA arranged for us to get this TV set but I think that's what led me to be back over at the Hoffman plant in Los Angeles. It's been a long time ago so you'll have to forgive me.

TAYLOR: That's understandable.

HICKMAN: I think I was over there to pick up this .... It was an RCA 630 chassis, remember?

TAYLOR: Yes indeed.

HICKMAN: ... RCA 630 chassis, twelve-inch TV. A meter in there and it worked, obviously, in the AGC circuitry of the thing. You had a calibration chart so you could read signal levels with it if you were lucky. You could switch it to the various channels and read the signal levels. It wasn't very good. It gave you the signal level in microvolts or millivolts. There was no such thing as reading it in dB's at that point or dBJ or dBmV.

TAYLOR: ... or whatever.

HICKMAN: In the beginning we didn't refer to them as dBmV's or dBJ's. Being an engineer, I just referred to it as dB's above or below a zero reference point which was 1 millivolt across 75 ohms. That was my reference point. I don't know how we all chose the same reference point but I think that it had to do with information that I picked out of the literature that I got from RCA. Because they said their amplifiers put out a 1 volt level across 75 ohms and that was 60 dB's above 1 millivolt. I don't know exactly how we got that zero reference point but that's how it turned out. It was pretty logical, I guess, to do it that way.

But anyway about the time I was getting this TV set for a signal level meter, I saw, I believe it was in the laboratory at Hoffman Laboratories in Los Angeles, a signal level meter. And if my memory serves me correctly, it was about the size of what the old classic 704 ...

TAYLOR: An old battery box on the bottom of it.

HICKMAN: Yes. A 704 Jerrold it looked like. And they told me that this is an experimental unit and it's soon going to be out and all this and that. I remember being impressed with it because it had a continuous tuner on it. Whether it was a prototype, which I thought at the time that it was, or it was one of the first of the production runs I just don't know.

TAYLOR: It was about that time or a little before that Ken had used the RCA unit and realized that that was not a workable piece of equipment. Since Ken was particularly interested in instrumentation and had learned to appreciate the DuMont continuous tuner, he just built that tuner into a meter to do exactly what the RCA unit did but get rid of all the extraneous material. And that became the 704.

HICKMAN: I saw this meter and I kind of got the idea at the time that it was actually being developed in the labs there. Now it may very well have been that what it was is they had acquired this device from Jerrold and they were using it in their lab but in the development of other things. That's possibly what it was.

It was quite awhile after that that I was able to lay my hands on the first 704 that I ever had. But I used rather crude methods of measuring signal level. Like in the early strip amplifier days with the RCA units, I used to use a vacuum tube voltmeter to measure signal levels with.

TAYLOR: That's logical.

HICKMAN: Oh, it was terrible.

TAYLOR: What has puzzled me over the years and I haven't got an answer to it, is why was it called a field strength meter because it was not a field strength meter?

HICKMAN: Well, there were such things as field strength meters in those days.

TAYLOR: That's true.

HICKMAN: In fact, I remember using one of the so-called field strength meters, I don't remember who made it, in doing the initial antenna survey, if you want to call it that, to look for a site for it. The first Ameco or Antennavision antenna site. They called them field strength meters. I suppose that may have all come from the broadcast industry because the meters were referred to as field strength meters in those days.

TAYLOR: Well, of course we had those a long time ago going way back into the '30s maybe even earlier than that, '20s I guess. Skifter from Minnesota had a .... But those were all low frequency devices.

HICKMAN: But, of course, the television broadcast industry, although I wasn't actively involved in it, I'm sure that they had occasion to read signal levels in the field and they probably referred to them as field strength meters.

TAYLOR: But of all the people you would think RCA would be the one that would be most interested in that and here they used the 630 chassis with a clumsy arrangement.

HICKMAN: But that's the way the cable television industry started.

TAYLOR: That's exactly right.

HICKMAN: We jumped right into the business and we didn't have the things to ... we literally had to invent, if you will. You know that necessity is the mother of invention, and out of necessity we had to invent test equipment, devices. You know, you might want to do something in the field. You might want to split the cable three ways or something like that and up to that point you had only split it two ways. So you sit down and design a three-way splitter.

Oh, I can remember those days real well. When you just literally would scribble on the nearest cardboard box the design of some new piece of equipment. Quite often it wasn't very elegant to begin with but that's the way we did things.

TAYLOR: Well, I don't think of any other of the things we talked about although I'm sorry I didn't have the tape recorder going last night while we were talking. There were a lot of interesting things. I'll put an end to this and call my other friend, Socks Bridgett, and we'll go from there. Thank you again, Earl. I appreciate this very much. I'll let you get back to your airplane.

End of Tape 3, Side A

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Ed Hewson

Ed Hewson

Interview Date: Friday February 09, 2001
Interview Date: February 09, 2001
Interviewer: Jim Keller
Collection: Hauser Collection

KELLER: This is the oral history of Edward H. Hewson, Jr., commonly referred to by his friends as "Hack" Hewson, Jr. He is past president of the Northwest Cable Communications Association, past president of some of the new ventures of King Corporation, the Bullitt family. He is currently the president of Coastal Communications, which is a cable television system, on the west coast of Washington, and has been involved in the cable television industry in the northwest for almost 40 years. Ed probably is as well qualified to talk about the development of and continuing operations of cable television in the Northwest than almost anyone that I know of.

This oral history is brought to you through the benefit of the Gustave Hauser Foundation and is part of the Oral History Program of the National Cable Television Center and Museum.

Ed, where should we start? Talk a little bit about your background before you got into cable.

HEWSON: Jim, I grew up in New Jersey, played ice hockey and soccer in college. Actually, I played ice hockey in high school with Bud Hostetter, otherwise known as Amos. I went to Williams College. From there, I was a fighter pilot in the Air Force.

KELLER: Is that prior to the time you went to B School?

HEWSON: Prior to the time I went to B School. I was spoiled. I got to fly the then world's fastest plane, the F 106. I met a really cute girl who was a ski racer. She laughed at me skiing. She actually lived here in Sun Valley for a year. I invited her out in front of her boyfriend, took her out for 30 straight days, proposed to her, got married in three or four months. We have three terrific children.

KELLER: Typical fighter pilot approach, huh?

HEWSON: Typical fighter pilot. I didn't have time. Before I met her I was stationed in Spokane. I was a Geiger Tiger. We used to take off, fly over Priest Lake, where we now have a home way up in northern Idaho, scream over a place called Linger Longer Lodge, pull up, do some rolls, went back to the base, jump in a convertible, put a boat behind the convertible. Everybody put their flight jacket on – three or four guys. We'd rip back up there, go in a bar and look for girls. If the owner saw us, we'd deny that we had just done that, but we always told the ladies. It was wonderful. The government spent a lot of money for us to have a good time. But then I got married and we had quite a few accidents in the squadron that were not pilot error. We had a terrific bunch of pilots. Some guys got killed. I got out, was lucky enough to get into Harvard Business School. I was the "poor Willy". Every class, every section has to have a "poor Willy" that the professor can point to. I was the guy who always had the obvious wrong answer. But somehow I got out of there.

KELLER: You know what they call a guy that's the last person in an MBA class, don't you?

HEWSON: What?

KELLER: A master of business.

HEWSON: A master of business, that's right. Yes. We had the guy with the worst grades, I think, became a millionaire first out of my class. He didn't have time to study. From there I was hired by Boeing, but I didn't like Boeing. King Broadcasting Company had approached me to come to work for them. I went to work at King for the munificent salary, in those days, of $9,600 a year, without stock options.

KELLER: What year was this?

HEWSON: 1963. I was the first business manager of a new magazine they started called Seattle Magazine. But I could see that I was a little more to the right, and they were a little more to the left on the magazine staff. So I quit, and Stim Bullitt who was a wonderful guy...

KELLER: The Bullitt family owned King.

HEWSON: The Bullitt family owned King. It was King Broadcasting Company. So he got me to come stay with the company. I had quit. I said "No more. This isn't going to make money."

KELLER: Couldn't handle the liberal, huh?

HEWSON: Yes, exactly. They weren't really liberal. Mrs. Bullitt, his mother, was a very nice lady and a very bright lady. She'd started the company, starting with King Radio, then King TV.

KELLER: Were those both in Seattle?

HEWSON: They were in Seattle. Then she got a television station in Portland, networks affiliates both – NBC. Then she got a KREM TV in Spokane, Washington which was ABC, then a Boise station – KTVB, Channel 7 in Boise, an NBC affiliate. Then we got another TV station in Hawaii. I think it was KHNO. It was an independent Channel 13, primarily sports. Back to Mrs. Bullitt. She is a terrific lady.

KELLER: What was her full name?

HEWSON: Dorothy Bullitt. If you had a business question, you talked to her, and she'd just say, "Ed, just do what's right." What was right to Mrs. Bullitt – she was generous. They said she was so tight with her money sometimes that when it snowed in Portland, she'd remember that there were chains hanging on the back of a door up at the TV transmitter up on the heights. But she gave land to the state of Oregon to build educational transmitters on, and whatever. Anyway, a great lady, good family. So I went from the magazine to helping get the company diversified. The first thing that we did, really, was to try to get in the cable business. King had backed out of some cable deals before. I believe they had negotiated a purchase in Pendleton, Oregon, originally and had backed out of that, and some other stuff.

KELLER: Where did the idea of getting into cable come from?

HEWSON: Well, I wasn't the first person to think of it. But it came as a defensive idea by broadcasters. They wanted to control their markets, and they were afraid that the cable companies ultimately could deny them access to homes. So the way to get into it was to get in where people could not receive broadcasting at the time. That extended their signal. In those days, I think, each viewer was worth ... Something called the Sidon Report – I think it was the William Sidon – said that each home watching a TV set was worth $60 - $70 a year. So the idea was to extend the signal and to control the fact that you have it.

KELLER: Well at that time you were prohibited from owning a cable system in your own television market.

HEWSON: Not true. Not true. I'll get into that in just a moment.

KELLER: I hope you would.

HEWSON: But we went from buying from Fred Goddard and Bill Schiller. We bought Montesano, Elma, McCleary and Westport, Washington which I think was ...

KELLER: For the record, those are all prominent names in cable television in the Northwest.

HEWSON: Schiller and Fred Goddard are. Bill Schiller. Good people. Fred Goddard, for example, had been a partner of Homer Bergman for, I think, $375,000 for initially 1,000 or 1,200 customers which we built up from there. Then we purchased from Dean DeVoe in Los Angeles. We bought a system in the Tujunga/Sun Valley area. Then we bought Ellensburg, Washington from perhaps John Saeman. It might have been his first sale for Daniels.

We grew from there. But at the same time we met with Homer Bergren. It was Homer's idea initially that he could have a much bigger, better business if, rather than fighting with broadcasters, if he melted with us in Seattle. So we purchased the three TV stations – King, Cairo and Como purchased an interest in Seattle. We called it Master Cable Television. Teleview Systems, Homer people, owned 28% and I think we each owned 24%.

KELLER: These were all in the shaded areas of Seattle?

HEWSON: They operated only in the shaded areas. At King, we had already previously made a shadow-map. Their television transmitters were all on Queen Anne hill. If you radiated those signals out with all the hills – like Rome with seven hills. Or it used to be until they took one down to do something – fill the mud flats. Then you could see where the shadow areas were. You could predict that, in areas like West Seattle along the water, you'd have everybody that had television set needed you. Whereas, in other areas as you got up and it got lighter and lighter, then you'd have lower and lower penetration. Finally we didn't believe anybody that could see a TV station would buy the signal.

KELLER: At that time it was true.

HEWSON: At that time it was true, except that right next to the towers they might have terrible reception because of bouncing signals.

KELLER: They had the same problem in San Francisco.

HEWSON: Right. So now what was the question you asked me?

KELLER: Whose idea was it to get into cable television?

HEWSON: You went beyond. You had a different question, which I was going to get back to.

KELLER: Oh, we were going into whether or not a television broadcaster could operate a cable television system within his own [??] area.

HEWSON: Here we were all operating. We bought this master. A man named Dougal James MacKenzie, a good guy, ran it.

KELLER: You bought what, please?

HEWSON: The system in Seattle. MacKenzie ran it. Homer Bergman looked over his shoulder, and he had other systems around there. He had system in Everett and wherever. He used to have meetings on a boat, his boat. They had to sit on his boat. Homer didn't drink. He's rumored to have made a lot of money during World War II playing poker. Because he didn't drink, he would bring home money. He bought a lot of land on Mercer Island. (this is the rumor - I don't know if it's true) during WW II which then was developed for a lot of money later. But Homer didn't drink. And he'd have meetings on his boat. The guys wanted to jump off because all he had was warm beer. He just didn't appreciate it. That was Homer. He used to come in a meeting and we wore a pork-pie kind of a hat, he'd sit down, put his hat on the table, and he was ready to go. He was ready to d3eal.

Before we were prohibited from owning in our own markets, we were working on that. Then we made a deal.

KELLER: Before the prohibition came out.

HEWSON: Before prohibition. So there we were building a system in Seattle. We bought a system from a man by the name of Defraidas, in parts of Portland, Oregon and Kingdon. Jim Defraidas. That was run by a man by the name of Carroll Sailing who was an old time engineer, still alive, great smart guy. So we had a cable system going in Portland, wherever, again where the hills were – Portland like Oswego. In order to get signal across the freeway, Carroll Sailing put a piece of fish line across the highway, ran it across with a fish line, he pulled something else across, because you couldn't get a highway permit. Ultimately, somehow, we ended up with a piece of cable going across the north/south Interstate 5 to serve another part. So we had those. Then the three broadcasters, together, not those three – but in Spokane – KREM, our TV station, Channel 2, Channel 4, and Channel 6. One guys name was Wayne McNulty. I don't remember who ran the other one anymore. But we applied for a franchise in Spokane. Then we also applied for a franchise in Sand Point, Idaho and some other franchises.

KELLER: Cox got Spokane didn't they?

HEWSON: Cox finally got Spokane...

KELLER: 'Cause we were involved in that also.

HEWSON: But Cox, I don't think, was the first to get Spokane. I don't know who got Spokane originally. But we had it locked up, as broadcasters. They had all the politics. Then the FCC came through with an edict that cross-ownership – you couldn't own TV and cable in the same market.

KELLER: But did you have to divest? I don't recall.

HEWSON: We did not have to divest, but it killed our franchise for the city of Spokane and you couldn't really acquire others within your market. So we sold Portland to TCI, and that's been a wonderful market for them, I think. Portland has also been a pretty liberal-thinking bureaucrats in the city of Portland.

KELLER: Portland was a very difficult build because they started to build right in the time when you couldn't import any signals into Portland. At that time there wasn't much other programming. They had a very difficult time.

HEWSON: Right.

KELLER: Liberty bought ... started really developing Portland.

HEWSON: Liberty and then was it Century Cable across the river?

KELLER: I don't remember. I do remember Liberty. It was a difficult time that they had – Carolyn Chambers and that bunch.

HEWSON: Carolyn came outside of Portland. She wasn't in Portland. She was near Portland.

KELLER: I think she was, but I'm not sure of that.

HEWSON: A guy that owns Bend, Oregon – or did own Bend, Oregon – ran the cable site for her and her broadcasting. She had broadcasting. Her husband had died prematurely.

KELLER: He was in the broadcasting business too, wasn't' he?

HEWSON: I don't know. He was in a lot of things. And I think she was on one of the regional Federal Reserve Bank boards – a bright lady.

KELLER: Very much so.

HEWSON: Very bright. Scott's a wonderful kid. I'm going to call him a kid. My wife called him a kid because we knew him when he was a kid. I think they sold out, didn't they?

KELLER: I think Carolyn's still operating right now.

HEWSON: Still operating?

KELLER: But I don't know what.

HEWSON: I think she sold Edmonds, Washington.

KELLER: She sold some of the other things in the San Francisco Bay area and other things like that.

HEWSON: Right. But we had to divest.

KELLER: Or you did not have to divest?

HEWSON: We did not have to divest, but we couldn't grow. So one of the main purposes of our being in the cable business was to protect our broadcasting empire.

KELLER: You had the same problem the telephone companies had when they were prohibited from operating in their own exchanges.

HEWSON: Exactly! So we had the same problems. Fortunately, we had profitable systems. We were negotiating to buy, in about 1970, .... Stim Bullitt, who was always about 15 years ahead of everybody, said, "Downtown Seattle is valuable, and I'm going to buy some land as I can where I can get a good price." We had some other ventures that hadn't worked out for him which I hadn't been involved in. One was King Screen Productions. He liked to do things right, like his mother. So they, in effect, bought him out, tossed him out – bought him out – and as part of the purchase price he got some of our cable systems. We had one in Long View/Kelso in partnership with the London Daily News, all the Montesano stuff, and I don't know what else he got. But he had about a 25% interest in the company.

KELLER: Cross ownership also applied to newspapers, did it not?

HEWSON: Newspapers too. There's an interesting one. Dick Evanson – there's a name for you – was our partner. He started a company – I can't remember the name of his company any more. Jim Hirschfield had at one time worked for Dick Evanson.

KELLER: I think they were in something together at one time or other.

HEWSON: He owned it. He had married a lady by the name of Kaela. He married, I believe, the daughter of Norton Klapp's third wife.

KELLER: (Laughter)

HEWSON: Norton Clapp was the chairman of Weyerhauser.

KELLER: Good marriage.

HEWSON: Dick Evanson's father had been head of the Teamsters Union in Portland – Kaela Henry, okay. Anyway, Evanson was a pretty sharp operator. He had a lot of the young people working for him - I don't remember who all they are now -who went into the cable business on their own in places. But he was our partner in Longview/Kelso. We went to city council meetings. He's fighting. The London Daily News wanted a franchise for the town. And we wanted a franchise for the town, and Evanson wanted a franchise for the town. So then we partnered with Evanson. We went out and sat in a bar some place, I suppose, and hammered it out. We made an agreement with him. He then later, because two operators in a single town double over cabling – anywhere we went, they went. Didn't make any sense. So then we negotiated with John McClellan to make a merger of that. And we did. His father, incidentally, John McClellan's father, who had the first dollar he ever made on the wall, was a really old man. He would sneak in next to a curtain. We knew he was there. He was listening on the other side.

KELLER: I'll be darned.

HEWSON: That was terrific. It was American business and the West at its best. They're very decent people. Each person tries his best.

KELLER: So then after the cross-ownership rules came in, you just concentrated then in the areas that you already had in Portland, Seattle, not Spokane because you dropped out of the franchise battle after that.

HEWSON: We dropped out of all of that and went about trying to acquire systems outside of that area. One system ...

KELLER: Tujunga came in at that time?

HEWSON: No. Tujunga came in 1966-67. Early on. That was one of our first acquisitions.

KELLER: But not in your own back yard though.

HEWSON: No Tujunga wasn't. LA wasn't out back yard.

KELLER: That's what I'm saying. You'd indicated, though, that your full intent was to save their own market, but you bought outside your market very early on.

HEWSON: Well, we wanted to make money too. But the first thought about why would you get into cable television was to enhance your own signal where you could. But then where you saw a business opportunities outside of that, we said, "Hey, we've got to make a business." And you want to buy things when they're priced – you shoot ducks when the ducks are flying. Tujunga was flying so we shot Tujunga. Golly, where else ...But we started buying after the cross-ownership outside of those markets.

KELLER: What other markets did you buy?

HEWSON: We were in Newhall, Valencia area of Los Angeles (which we developed in partnership with the Newhall Land & Farming Company. We were in Lake Elsinore. A large part of Lake Elsinore was in a partnership with another major builder. We bought out Gordon Rock in Lodi. Then we ended up with Lodi, Placerville, Jackson, Sutter Creek, Angel Camp, San Andreas, a whole bunch of beautiful little towns up there.

KELLER: Amadore County.

HEWSON: Amador County.

KELLER: The hold of Zinfandel.

HEWSON: We bought Mammoth Mountain, that area up in Mammoth Mountain from a buddy of the guy who was on the US ski team that developed Mammoth Mountain. Guy's name that sold it was Worta and his son, Dan Worta, stayed and worked for us. I said we bought Tujunga from Dean Devoe – I'm pretty sure that's who it was.

KELLER: Yes it was.

HEWSON: We bought chunks of Minneapolis/St. Paul from Gus Hauser.

KELLER: When was this?

HEWSON: That would have been about 1989 maybe.

KELLER: Much later than ???

HEWSON: Much later.

KELLER: Because that was a real battle in Minneapolis.

HEWSON: Oh, Minneapolis turned out to a be pretty exciting battle, with regulators and prices and must-carry. You had to spend a lot of money on doing local origination. But we ended up with St. Croix, Stillwater, Golden Valley – about 18 – 19 communities around Minneapolis.

KELLER: I didn't realize that King was up in that area.

HEWSON: Well, we didn't realize we were until we were, you know. We got there, and we paid a large ... paid Gus very well. Gus is very good at selling and a very bright man.

KELLER: Yes he is. Doctor.

HEWSON: What else did we own? Anyway we ended up at the end with about 250,000 customers. But Dorothy Bullitt died. Her two daughters, Harriet and Patsy, decided for a variety of reasons, that they wanted to sell out. They had given ... I think they owned about 70% of the company at the end. The company had been very good with stock, giving stock to people as compensation. They'd promised most of their money to environmental causes, and have done so.

KELLER: Can you focus back on the Seattle problem or the area of Seattle. I remember it as really a microcosm of all that was wrong with federal regulation of the cable television industry in the 70's and 80's when the major market – the top 100 markets – were prohibited from bringing in signals from other markets. However, there were certain areas of Seattle, shadowed areas, that you were operating in that couldn't receive even the local signals. Do you remember how that conflict developed or do you remember anything about it at all?

HEWSON: What do I remember about it? I remember urging King not to request non-duplication protection, said that it would be better off with your being friends of the cable operators rather than fighting them. We had somebody, Carroll Sailing would be one, who would go to cable conventions and just talk to operators and find out how it was going, what they could do to help.

KELLER: Did you ever give them a direct feed from your control room?

HEWSON: No, not that I'm aware of – not within Seattle. We may have done it much later, but that wouldn't have worried about it much later. You said, "all that battling". It was obvious broadcasters didn't want distant signals coming in. Particularly, they did not want ...

KELLER: The cable operators did though.

HEWSON: The cable operators did because they were dying. A lot of cable operators put a lot of money up, put a lot of plant up in the sunshine and had nothing. Unless people were getting some strange reflections.... They did not subscribe in droves. So in Seattle, you could drive for miles and hardly see a drop. When you saw a drop you wondered who the fool was that had bought cable television.

KELLER: This is important, again, for the record, because it was in that period of the mis-regulation of the FCC of the cable industry, in the late 70's – early 80's, that prohibited the development of the industry.

HEWSON: It really squelched the development for some time. Then we had people who wanted to bring in distant independents. You could see why broadcasters didn't want anybody to come in because everything cut market share. At one point, King might have 50% market share. We were the dominant station in the market. Other times Como was the dominant station. I don't think Cairo ever was. But there were distant independents that started to feature things – Atlanta particularly. How could you bring it in? There wasn't much you could bring in to Seattle that had been value over land. But when things went up on a satellite, then WGN in Chicago was attractive.

KELLER: Cubs baseball.

HEWSON: It was because of baseball.

KELLER: It was before you had baseball in Seattle.

HEWSON: Well we had baseball. Then we lost baseball. My wife just found the stub for the first ticket for the first not Mariners but Seattle Pilots game which I went to with a man in the cable industry named Ferris Perry.

KELLER: I remember Ferris very well.

HEWSON: Ferris is, or was, with High Speed Access. I've called him a couple of times in Denver.

KELLER: Is he in Denver now?

HEWSON: I have his phone number.

KELLER: I'd like to have that.

HEWSON: I don't have it with me, but I have it at home. He was, I think, a major operator/sales manager or something for them.

KELLER: He was probably one of the premier manufacturer salesman in the cable industry for a lot of years.

HEWSON: Exactly.

KELLER: He knows a lot of what happened, and where a lot of the skeletons are buried in that story.

HEWSON: He took me and Tom Boles, my vice president of engineering, to the first game.

KELLER: What year was that?

HEWSON: Golly – I don't know. '68? 70? It was pretty early on. I think he took us because he was selling, helping Jack Pruzan at the Pruzan Company.

KELLER: Yes, he was with them for a while.

HEWSON: I think he was with Pruzan. Jack Pruzan – there was another person that we could talk for a moment.

KELLER: The next question is going to be about the internal workings of King Broadcasting. You were primarily a broadcaster who was in the cable television business. Now there must have been some internal conflicts between those of you who ran the cable operation and the broadcasters.

HEWSON: Well, there were. But can I first tell you about Jack Pruzan?

KELLER: Yes, if you'd like.

HEWSON: Jack Pruzan was an important distributor to the cable industry. Then they were purchased by Anixter – bought them out, whatever. Jack Pruzan, every year, had a salmon fishing trip to Westport. Every year he would invite his best customers, and we'd go to Westport. He'd pay for everything you could eat and everything you could drink. Guys would stay up practically all night and then get out on this ship going up and down. About 10:00 AM, if things were boring, Jack would lean over, and he would pull out the biggest salami sandwich you ever saw – greasy, messy. And he'd start to eat it. Guys were puking over the sides. It was horrible. I had never gotten seasick in my life. Somebody puked on my tennis shoes, and I got seasick – the only time in my life. But he was a good guy. His son, Herb, took over and ran the business. That's my story.

Now, back. You want to know about conflicts between ...

KELLER: Between the broadcasting interests and the cable interests within King Broadcasting itself.

HEWSON: Yes. Obviously there were conflicts because as a cable operator, I wanted to make all the bucks I could, generate all the cash flow I could. And I wanted my friends to also, who were in the cable business.

KELLER: You were president of the cable division

HEWSON: President of the cable division, first vice president, then president of it. The broadcasters looked at us as sort of "nuts and bolts" people. We were relegated to servants. They called us originally cable antenna television (CAT). We were their antennas. It was their signal, and that's all you could have. You really didn't need to build any place. You didn't need to come up in the sunshine. You didn't need to provide more entertainment than they could provide. They didn't want everybody's butt glued to a seat watching King, Cairo, Como, Channel 11, 13, and even the educational – KSPS I think it was. That's in Seattle. So we had internal fights. They were very touchy things. It would be pretty hard for me to come in and say, "I want to start importing ..." It's okay for me to import. Now King into Ellensburg, all right?

KELLER: Because you were helping them there.

HEWSON: Because we were helping ourselves there. But the guys in Yakima, KIMA, they didn't want us bringing those in. They wanted to be protected. But nobody in Ellensburg wanted to be thought of as associated with Yakima over the hills with the Indians. They wanted to be tuned in to the big city.

KELLER: Did any of your other broadcasters in places like Yakima ever put any pressure on the broadcasters not to carry their signals in these other systems?

HEWSON: I didn't get that directly. No. I didn't get pressure through King or through somebody. But where I did get pressure was, "You don't really want to bring in a lot of stuff to divide up our signal more," and "Heck, you're a shareholder in King. You don't want to hurt yourself, do you?" Cairo and Como were far more protective of their territory. In particular, a man named Bill Warren, who had married into the Fisher Flour Mills family, owned KOMO and a station in Portland – he was our partner. He did not really want a master TV cable in Seattle to thrive too well. He didn't want us to import things.

KELLER: Well how could they justify the amount of capital that was required to build the cable if they didn't want to do anything with it?

HEWSON: They're making more money on the broadcast side...

KELLER: At that time.

HEWSON: ... -at that time – then they ever were in cable. I just remember Bill coming to meetings and he was deaf. He wouldn't hear what you said. Then when he heard what you said, he would sort of treat you like a flunky sometimes. I guess he had personal problems. I don't know. But it didn't make ... King ... We were kind of the good guys. A guy that I actually worked for at King initially in cable was named Jay Wright who had been with NBC.

KELLER: Went with Cox, then for a while, too, didn't he at one time?

HEWSON: I don't know if he worked for Cox. But he had been head of special secret inventions during World War II, and he was a Mormon from Salt Lake. But, Jay and I, when we traveled, I don't want to say. But he just a very nice guy and an extremely bright man. So we would try and calm down Bill Warren. Lloyd Cuney was running the Como side. He was much more of a salesman – I mean the Cairo side. Cairo was owned by the Mormon church. So there were probably things they wanted to import into Seattle, but not others.

There really wasn't a huge conflict except that we were second class citizens when it came to spending for equipment, when it came to making acquisitions or whatever.

KELLER: When you were in budget meetings, and you had X number of capital expenditure dollars for the broadcasting company, how much of that would go to the broadcasters and how much would go to cable – of that capital fund?

HEWSON: That's a good test. We got our share. But we could always... It was interesting because knew how to financially justify a return on investment.

KELLER: It's natural for ...

HEWSON: In fact, I was originally paid a salary plus a percentage of growth of operating income. I think it was like 5% increase. Whatever I got above my initial thing, less a deduction for interest on capital investment or acquisitions – whatever – which we would attribute something to, I got 5% of the increase in operating income for a while. They started looking at that and the broadcasters got a little nervous.

KELLER: You were starting to make more money that they were.

HEWSON: I was almost able to afford a car like they could and a house like they could. But we could always justify ours. If you could justify it, you could always get the money. Dorothy Bullitt didn't believe in borrowing for a long time. She had been through the depression. Her husband had died right after they had built a major building downtown in Seattle. She didn't have any tenants. So she went to New York pretending she was renting something in order to find the money and how to fill up her new commercial building – the 1411 Building, I think it was called. Then that worked for her.

KELLER: What did the board say to you when you came for $X million to buy a Lodi or a Tujunga or some other place like that, knowing full well that they're going to take whatever money that could be coming their way and putting it into something else?

HEWSON: "What was the return on investment?" That was it.

KELLER: You could always show a return.

HEWSON: Come in. Show a return on investment. Take Lodi. Show that it had so many customers. It was generating so much cash flow. We're going to put in, every year, we're going to put in so much capital investment. In those days remember, 330 for example, was a very nice plant.

KELLER: Oh, yes.

HEWSON: So if we could justify it, they would buy it.

KELLER: You had that good of a board over there.

HEWSON: Had that good a board. But they were not interested in really building and selling, so they did not want to borrow money because of Dorothy's experiences. They were pretty conservative. But they would buy it if you could prove that it fit.

KELLER: Didn't the broadcasting people sometimes say, "Well, we're making all of this money. All you're doing is throwing it into cable."?

HEWSON: Yes, they did. Exactly. They said, "We're throwing off all this money and you're putting it into cable television." And they said, "Yes, but you've go to lay off your bets." We invest in radio. Sometimes it was profitable, sometimes it wasn't. Television – it was profitable. Cable we proved was profitable all along. I'd forgotten all about some of that. We did buy broadcast stations for an awfully lot of money.

KELLER: Still at the same time?

HEWSON: At the same time. We bought radios stations. We bought Gene Autry's stations in San Francisco – KSFO. But they had the Oakland baseball team on. Gene Autry's picture disappeared from the front hall of KSFO on the day that the closing was going on. It was part of the purchase.

KELLER: You went head up against Cronn, then, in San Francisco?

HEWSON: We went up against Cronn in San Francisco. I didn't. Cronn also had cable operations. I think they sort of were fighting with a newspaper and television side. Isn't there a newspaper?

KELLER: They had both the newspaper, television station, and cable systems out in the east bank.

HEWSON: Right. We had pretty honest fighting. King was a very ethical ... They treated people very ethically. I felt like I was a second class citizen with some of the other broadcasters. But as you grew in stature, they started to buy you drinks. That's the way it works.

KELLER: You're contributing then to their stocks.

HEWSON: We were contributing to the value of their stock.

KELLER: At what point did your revenue and your cash flow equal and then top that coming from the broadcasters?

HEWSON: In the last several years of the company we equaled it and then the year we sold the company, 1992, I think