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Matt Polka - 2018

Matt Polka 2018 web

Interview Date: July 31, 2018
Interview Location: Anaheim, CA USA
Interviewer: Lela Cocoros
Collection: Cable Center Oral History Program

Cocoros: Hi, I'm Lela Cocoros and today is July 31, 2018, and we are in Anaheim, California, for the Independent Cable Show. I'm here with Matt Polka, who is president of the American Cable Association. Matt, thank you so much for joining us.

Polka: It's my pleasure once again to be here and help support the Cable Center.

Cocoros: This has been a fantastic show so far and I know you're very busy, so thank you for joining us.

Polka: Always happy to spend time with the Cable Center and thank you for coming to be part of our Thirteenth Annual Independent Show, where we try to make this event—as many say, like cable used to be. A fun family event with colleagues who come together, not only to connect, but learn, but also enjoy their company.

Cocoros: Great. Well, I know that several years ago, you did a very comprehensive oral history for the Cable Center. But why don’t we just do a quick recap of how you got into the industry and your career, early in your career, to the point where you're now with the ACA and have been for many years.

Polka: I think last time we talked, I had less gray hair, and that may be due to the fact that things in Washington are more difficult to function than ever. But yes, my career in cable, like many that I have talked to over the years and met with—whether members or otherwise—my career was accidental. I actually got a degree in journalism where I was a newspaper reporter for a couple of years and really enjoyed news and newspapering. That’s a comment in and of itself—newspapering, which doesn’t really exist in the same way as it did. Even when the last time I did my oral history. But I was a reporter, but I also always wanted to go to law school. I wanted to become a lawyer; I wanted to become a trial lawyer, in fact. So when I graduated in 1986, I went to a firm in Pittsburgh, where I lived—it's my hometown—and wanted to be, have a spot in the litigation department, and they basically said, “We have no spots. What else would you like to do?” I said, “Well, I have a background in communications. I was a reporter.” And I'm thinking First Amendment, and all of these things that a journalism student or a journalist would think of. And they said, “Great. We have this terrific new practice area in communications called cable television, where we’re doing lots of corporate deals, transactions, agreements.” And they actually said this to me. They said, “And that’s communications, right?” As if they were trying to sell this to me.

So as a young kid just out of law school who was afraid to say no, I didn’t say no, so I became a cable lawyer representing, ironically, many companies that are still are our members or have been our members through the years. Really learning about independent companies, smaller companies. And I did programming deals for them, mergers and acquisitions, stock transactions, asset transactions, things of that nature. And after several years of doing that, I actually went in-house with a partner that I worked with and became associate general counsel of a small cable company based in Pittsburgh. So for seven years as associate general counsel first and then general counsel for the organization, I was responsible for all the legal matters for a small company called Star Cable Associates. It was based in Pittsburgh, we had about 72,000 subscribers throughout the country, primarily in the Southeast and in the Southwest and some in the Ohio-Pennsylvania area. But I really learned the guts of what it takes to run a small business. From the operational technical customer service side of things as well as the political and regulatory and the operational legal aspects of the company.

In 1992, when I was general counsel of the company, Congress re-regulated the cable industry. They reimposed rate regulation. As a representative of a small company, we kind of felt, well, hey, all of the things Congress is complaining about, and why they justify regulating our industry, we didn’t do. We’re out serving our communities, we’re helping to be part of the fabric of the community and nobody was really speaking up for us to say, these companies are smaller, they're unique and they should be treated differently. So my company, myself, as well as 150 others came together in May of 1993 at the Airport Hilton in Kansas City where we came together for an emergency national meeting to not only talk about these problems that had a unique and disproportionate impact on smaller businesses in the cable industry, but then how we could create a voice. So at that meeting an association known as the Small Cable Business Association was born. That was May of 1993, and our association was a volunteer association for four years. So we did this by connecting with Congress through calls, letters, FAX trees—FAX, believe it or not, was the highest degree of technology we had at the time—to really begin to make our voice known. And I started to go to Washington much more regularly on behalf of the association. And then in a few years, by 1997, we realized you can't do Washington on a volunteer basis. You have to be there full time, you have to be committed, you have to be willing to plant roots. So let's go find someone. Let's go hire someone to do this for us every day. And I was on the board and we looked for lots of people in DC—whether they were staff people or former members of Congress. Or other regulators. One of the problems was we didn’t really have much money, so we couldn’t attract kind of the talent. So the board said, well, why don’t we ask Matt? And that’s pretty much how my career as an association head and as a lobbyist was born. But every step has been literally one door closing and another opening, leading me to this spot where I have been blessed and honored and privileged to serve our members literally for 25 years.

Cocoros: I love the story about how you changed the name from SCBA to ACA. Because you’re such a baseball fan.

Polka: And there's a little bit more to that as well. At the time, when we were the Small Cable Business Association, SCBA, the satellite industry, which was developing as a competitor to cable, was creating its own voice. And we have to remember back then, the satellite/DBS industry wasn’t just DISH and DirecTV. There were other entrants; there were other participants. So they had their own association known as the Satellite Broadcasting and Communications Association—SBCA. And we were SCBA. So the amount of confusion between the two groups was incredible. So that was another reason why in 1999 we decided to change the name. So there were three aspects of that. One, we wanted to avoid confusion: SCBA / SBCA. In fact, we had people at the FCC who told us, “You know, you so have improved our copy editing because now we can make a difference.” So we wanted to avoid that confusion. As you mentioned, I'm a baseball fan and so I thought, “We have the National Cable association, why don’t we be sort of the American League?” That’s how simple that came about.

And then last, but not least, at the time, it was kind of novel. Just about every association had four letters in their name. Actually, there was a fourth point. There were four letters in their name. So we said, “Let's just be three.” So we simply became the American Cable Association. And the last bit of reason why we changed to the American Cable Association was as a small organization trying to get a word in edgewise, trying to get to the top of someone’s list, we thought, well, let's be “A.” We’ll be literally at the top of the list…

Cocoros: The whole Yellow Pages trick.

Polka: So there we were. Those were the four reasons why we changed the name and it's served us very well ever since.

Cocoros: That’s great. Let’s move forward and talk a little bit about what's going on these days. I know there was just recently a decision by the FCC regarding the net neutrality. That was a very positive thing for your members. Maybe talk a little bit about that.

Polka: Sure. And it's ironic as well because the last time we talked, my comments were focused on the harm of imposition of net neutrality regulation, and how that would create a chilling effect on our members and the deployment of all Internet service providers to provide more broadband. And in fact, what we saw with the net neutrality order that was implemented in 2015 is that is what has happened. That is exactly what happened. Broadband investment decreased; it had a chilling effect on our members’ willingness and ability to deploy more broadband into the most remote areas of our country. Where Washington says we need to get more rural broadband out there, we saw just the opposite. We saw companies that are in the financial markets less willing to lend money to our members, so the capital markets dried up. And basically, everything we predicted would happen, did happen. Just the threat of that regulation dried up investment. So along comes a change in the election, in the last presidential election of 2016, and then the ascension of Ajit Pai as chairman, who in his tenure had fought against the heavy hand of broadband regulation, now as chairman having the ability to roll back the Title II aspect of net neutrality regulation. To basically say, look, we should not treat Internet service providers in a 21st century technology with regulations that go back to the 20th century and to 1934. It just makes no sense to treat Internet service providers as common carriers.

So he removed that threat of regulation. Immediately what we saw was investment flowing into the market, and our members deploying more services. It's amazing. You walk around here today, you talk to members. They're talking about deploying gig Internet speeds in some of the remotest places in our country, which is absolutely amazing. But that’s because of that order, and because of the confidence that they had that they could build a network to meet their customers’ demands, but also get a return on that investment.

So for us, at the American Cable Association, looking ahead to our members’ interests, the most important thing that we can do is to ensure that that order stays and remains as the law of the land, because that does a couple of things. One, as I said, it promotes investment and deployment, which customers want more of. It allows our members to be able to recover their costs as they build the networks. Plus, what it does—even though Chairman Pai rolled back a number of things related to previous orders, it allows our members to better communicate with their subscribers, given all the political misinformation about net neutrality to say, look, we’re here as part of this community. It is in our interest to give you the service that you want and desire without blocking, without throttling, without discriminating, without creating any kind of anti-competitive fast lanes. Because we want to work with you in making sure that our community is as well-connected as New York, Chicago, Los Angeles, Washington, DC. And that’s what we’re seeing.

So we’re very happy with Chairman Pai’s order. We really hope—one of our goals would be that Congress would actually see, rather than allowing this open Internet/net neutrality be basically a tennis ball that goes back and forth depending on who wins the presidential election, which is not good for consumers or for industry. We really hope that Congress and the leaders there, perhaps after the November 2018, election, will come together and say, look we can solve this problem. We can ensure by law that we take the open Internet principles of no blocking, discriminating, paid prioritization, throttling, etc., and we put that into legislation that protects consumers.

And it maybe also applies to perhaps one of the greater threats going forward for our members’ companies, and for consumers. And that is the growth of big tech: Facebook, Google, Amazon, Apple, Twitter, and the control that they have, not only of consumers’ data and how they use it, monetize it, in violation, in my view, of privacy rules that we live by as ISPs. But then also controlled speech. It was so fascinating to me, earlier this year, at a conference that I went to where Nicholas Thompson, who’s the editor of “Wired” magazine, was speaking. And one of the things he said about these big tech companies was ironically, today, even though we have a First Amendment that protects freedom of speech, that speech today is really governed more by big tech than it is by the law itself. And that’s pretty scary, for these companies that have far greater capitalization than even the largest companies in our industry, whether Comcast, AT&T or others. Big tech and what they have in terms of capitalization, is so much greater, and they can do so much more harm when it comes to anti-competitive action. Anti-competitive action gets consumers misuse of data, and controlling that speech in very, very scary ways, that it really worries me. And it's something that I have on my horizon as I think about what we are doing at the American Cable Association.

Certainly, last but not least, thinking about big tech and why there's potentially a threat out there, what's to stop a Google, tomorrow, from coming to any cable operator and saying, hey, I know this because the data shows me this, and in fact, I sell the data. That 95% of your ISP customers use Google as a homepage. So why don’t you start paying me $1 per subscriber per month, or $2 per subscriber per month. Or something like that. Facebook could do the same. We know that every one of your customers uses Facebook. How about you pay us $1 or $2 for access, or else they're blocked, or they're throttled, or they're discriminated against. That can happen. And there is nothing in our laws or regulations that can prevent that.

I think if there were to be legislation, it would need to focus on putting into practice the net neutrality principles that apply not only to Internet service providers, but also to big tech, these so-called edge providers.

Cocoros: How do you see this playing out? I know you can't necessarily predict the future, but are you thinking that they might see it from both sides?

Polka: Perhaps.

Cocoros: I’m seeing more negative press that were about some of these companies.

Polka: Let’s put it this way. Before—and maybe this has to do simply with the change in election and the fact that big tech had a well-worn path into the White House before 2016 and after 2016—you know, they're not as well-accepted, to be honest with you. You know, I think it has a lot to do with more disclosure about what these big tech companies—Facebook, Google, Twitter, etc.—are doing, and how they're controlling information, monetizing data and taking advantage of information that an Internet service provider couldn’t. But to use it in what are very threatening ways. Whether it's accepting money from outside groups that are trying to influence our elections or to use their platform to promote some causes rather than others. To become more political in many ways. And what's good about, I think, at least the development of the news, is there's a much greater recognition in Washington today that the big edge providers, these big tech companies, do seriously pose a threat to consumers and to our economy and to our political process. Now what that means in terms of how Washington reacts is always the tough question because Washington is very dysfunctional. It's hard to get members to come together on issues and this is a very big and complicated one. I would say this: what is likely to happen in my view in the near future, and I'm probably talking about over the next few years from today, is that Washington now accepts Chairman Pai’s order that deregulates Internet service providers—well, some parts of Washington do; other parts—the Democrats—are certainly trying to reinstitute it, but at least right now the law is Internet service providers are deregulated. So essentially Internet service providers and big tech are both deregulated.

So for now Congress and the FCC will watch that circumstance happening, and we’ll see what happens. But I would predict that going forward with certainly the disclosures of anti-competitive harm, anti-consumer harm that we've seen from the big tech companies, that if there is to be further action at some point, Congressional or otherwise, related to Internet service providers, it would also include some measure of regulation with the edge providers, too. It just has to. I cannot see how we could allow in our laws and our country a circumstance where Internet service providers would be regulated who are not blocking, throttling, creating paid prioritization fast lanes, discriminating. And these other big tech companies—the Facebooks of the world, the Googles of the world—who are doing that, they are blocking; they are preventing some voices and not others. They are abusing customer data. I could not see how they could not be regulated as well.

Cocoros: I think a lot of it has to do with how you tell your story as well, the industry. And cable has a lot of issues with the customers and the whole credibility and so I think it's time for the cable industry to really push more for kind of telling the story, communicating why it's important for ISPs to not have these restrictions. I think that’s kind of a piece that’s a little bit missing. You even have Burger King doing commercials about…

Polka: You know what's so ironic about that, and I actually tweeted about this a long time ago when that came out. How wrong it was. And just the level of misinformation—

Cocoros: Exactly.

Polka: —that largely was created by these big tech companies, who want to put the onus of regulation on Internet service providers who are their competitors. Big tech does not want to be regulated, does not want to be governed, does not want to be told to do. They don’t want any of that, but they want their competitors to be saddled with all of the regulations they resist. So that whole campaign was absolutely wrong because Internet service providers aren’t the ones who are blocking, throttling. As I was coming down today, there was news about Twitter, who has routinely gone ahead to block and throw out certain accounts, which quite frankly have a certain political leaning, and deemed certain accounts as objectionable or even hateful when there was a candidate running for office who said something very mean about the First Lady. And it was awful. Where Twitter did nothing to restrict that account, to delete it, to dismiss it as it did others. I mean, that’s wrong. Standards have to be standards. These companies—and it reflects that fact these companies have enormous control over the message, over speech and over consumers. And what consumers see. So, yes, I think that is something that we as an industry have to be very forthright and say, we’re part of the solution to help provide our customers the services they want. And we’re not causing these problems. So allow us to compete and allow us to give our customers what they want, and you can be assured that we will be a partner in this with you.

Cocoros: So just hammer that message out.

Polka: Exactly, exactly.

Cocoros: Let’s move on to kind of where you see the impact. What is the impact of the cable industry going forward in this kind of regulatory mess?

Polka: I think it really importantly comes down to our role in not only our national and global economy, but also being a vital part of developing and building what is now recognized to be an important part of our nation’s infrastructure. The broadband highways of the world are just as important as the Interstate system, where we drive from state to state and coast to coast. I think our country recognizes that we cannot be successful as a company in a global marketplace and in small towns, you know, big towns, medium-size towns, without ensuring that every citizen has access to a reliable high-speed broadband connection.

So our focus is what do we have to do to commit to that each and every day? And that certainly is the mission of our members to make sure that they are first and foremost broadband providers giving their customers, whether residential or business, the broadband connections they have. And then building that out into other places, whether it's medicine. I mean having the ability of someone in a rural area to be able to be seen by someone, for instance, at a Cleveland Clinic or a Mayo Clinic, or something like that. Which can happen with a broadband connection. Our schools, our colleges, our universities—ensuring that they have the connectivity they need to educate our leaders of tomorrow. Other institutions: governmental institutions. Just being part of the fabric of a community. To help promote local origination programming, etc. That’s our commitment. We want to be part of that, and we want to ensure that we are that provider who facilitates that broadband wire into the home, into the business, into the hospitals, into the schools, into the institutions, into the government buildings. And we’re not going to stop, because that’s our future.

Cocoros: Do you have any stories you want to share a little bit about your journey from your journalism days to cable?

Polka: Yes, I really do. A couple of things I learned—and I don’t even know if they teach this any longer and gee whiz, I don’t know how would you teach journalists today. But one of the things that has helped me as a practical matter probably more than anything else in my life, is the fact that when I was a young student going into high school, my mom said, “Matthew, you are going to take a full year of typing.” So I was like one of the few guys in my teacher’s class, my typing class, but I took a full year of typing and I learned how to type and to type well. And then I learned, as a result of being someone who went into journalism school, and the nature of journalism—which is organizing the information into what we called an “inverted pyramid.” You know, you start with the most important news, then you work down to the least important through the course of the story. It helped me not only to become a better writer, but even a better lawyer and a better advocate because now I use those skills, which include typing as well as advocating. Using those skills as a journalist to realize that when I'm speaking to a member of Congress, or an FCC chairman, or testifying, I've got to give them the information they need to know and then we can work through the details. So all of that background has really helped me to be a more effective advocate, which is something I work on each and every day as well as just speaking in general. But it's been a tremendous thing. I would encourage anybody in any industry—and this is something we’re losing today—learn the ability to write and to write well. It is so, so important because most of what I do, most of what I've done as a lawyer, as an advocate in my business, is written more than spoken. I do a lot of speaking, but I do a lot more writing and we do a lot more filing and we do a lot of other things from a written perspective. The ability to write well—if someone writes well, they will automatically put themselves at the top of the pile because you can easily distinguish good writing from bad writing. To me, when you see a good writer, it just changes the nature of your perception of that person. So in their message, because it's more credible, it's more thoughtful, it's more concise. That’s maybe one thing I've learned, too, is fewer words are usually better. So if you can learn to be concise, which my journalism background helped me to do, you can be more effective.

So very, very practical things that I've learned that have really—as I said, every step along the way, it's like the good Lord wanted me to be here where I am today as an advocate for small cable companies, but you know, I'm so glad to be where I am and it's all come to this point where I'm very privileged to do what I do for a long time, and hopefully for many more years to come.

Cocoros: Well, thank you very much. The industry is very grateful to have you as well.

Polka: It's been my pleasure actually. It's a service, it's a labor of love. Our members—I said this yesterday at the opening of our show here at the Independent Show—I mean, our members truly do inspire us. They really are our superheroes. We see what they do each and every day and how difficult their circumstances are, and how much they appreciate the work that we do on their behalf, whether as an advocate at ACA or whether as a business partner at NCTC. I mean, they see that, and they appreciate it because they don’t have the staffs, they don’t have the depth, they don’t have the resources to be able to do all these things. So when we come in to be their partner in those aspects, it is much appreciated. And it's very meaningful to them, and it's meaningful to us as well. So we’re honored to do what we do every day and we’re going to keep on doing it.

Cocoros: Well, thank you very much, Matt. I appreciate your time.

Polka: My pleasure. Thanks for the time.

END OF INTERVIEW

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Matt Polka - 2014

Matthew M Polka

Interview Date: September 22, 2014
Interview Location: The Cable Center, Denver, CO 80210
Interviewer: Stewart Schley
Collection: Cable Center Oral History Program

Schley: Hello. Since 1997, the voice of the independent cable industry has really been Matt Polka. We’re happy to have him today to talk to as part of the Cable Center’s Oral History Series. I’m Stewart Schley; the date is late September, 2014. It might even be the 22nd, I believe.

Polka: First day of fall.

Schley: Matt, it is a pleasure to have you in the studios of the Cable Center and to chat with us for a little bit today.

Polka: Thanks for having me here. I have been fortunate to have a long history with the Cable Center since its opening and our members at the American Cable Association have been proud sponsors of the Cable Center. So I’m glad to be here and glad you’re taking time to visit with our members this year in the oral history program.

Schley: You probably wouldn’t use the phrase “the voice of the independent cable industry,” but I really think it’s appropriate. So I want to talk about how that came about and your pathway into the industry and sort of where it all started.

You were originally a journalism guy.

Polka: I was.

Schley: Now you’re president of the American Cable Association. What happened?

Polka: It was a funny long story as you’ve heard it said before. And it wasn’t a radio station in Minnesota a long time ago, not one of those stories. But yes, I was a journalism major. I wrote on some newspapers, actually worked for the national boating newspaper called Soundings. I covered the maritime industry, out of journalism school at West Virginia University. I always had the dream to be a lawyer. So I went back home to Pittsburgh, and I went to Duquesne University’s School of Law and became a lawyer. In that process, I wanted to become a trial lawyer. So I was hired by a firm in Pittsburgh where I sought a spot in the litigation section and they said, “We’d love to have you here in the firm. Unfortunately, our litigation section is full. What else have you done in your background?” I said, “Well, communications. I’m a journalist, I’m a writer.” And I’m thinking, First Amendment law, rights to free speech and all of that and I’m thinking, we’ll be protecting the newspapers, right? They said, “Since you have a communications background, we have a perfect section for you called ‘investment tax.’” I hated tax. But what investment tax was was a section that actually represented cable clients doing mergers, acquisitions, sales transactions back in the late Eighties when there was a lot of activity to build the cable industry.

So I basically became a cable lawyer right then, and then worked in the cable industry for a couple of years in the law firm representing cable clients. In that process I actually went in-house with a small firm a couple of years later called Star Cable Associates, where I became general counsel of that company. I was general counsel of the company for seven years. So I did everything cable-related. That was from 1990-1997 when I was general counsel of the firm.

In 1992, Congress re-regulated the cable industry with the Cable Act, the 1992 Cable Act, where all cable operators came together and basically said, “What happened?” Particularly we as smaller operators of which my company was one—we had about 72,000 subscribers. So we got together actually through the help of Stan Searle and Dean Peterson, two independent operators who sent out letters across the country in early 1993 saying we need to have an emergency national meeting in Kansas City.

Schley: Why emergency? What was the dustup around that...?

Polka: Because there was around a foot-long stack of FCC regulations to impose rate re-regulation on the cable industry with a disproportionate impact on smaller businesses, independent companies that would be disproportionately impacted by this foot-long stack of regulations.

Schley: The 1992 Act was sort of a dark moment for the cable industry at large...

Polka: Very much so.

Schley: Because it had been a somewhat unregulated—the industry had won rate deregulation...

Polka: That was the irony of it. Before, you had municipalities imposing heavy regulation on the distribution of cable. In 1984 Congress lifted that to try to encourage the industry, but before 1984 and 1992 there were horrible stories of service issues and other things like that. So Congress in 1992 decided to re-regulate. And that’s when the law was passed, the regulations were implemented, rate re-regulation was imposed, retransmission consent was created and we as smaller operators basically said, “How do we deal with this? Because we don’t have the staffs, we don’t have the depth, this is really harming our business and our ability to provide service in markets—and re-regulating us in a way that we weren’t responsible for in the first place.” What we realized was we needed to go to that emergency national meeting because we needed to create a voice. So in that hotel, the airport hotel in Kansas City in May of 1993, we created the Small Cable Business Association.

Schley: SBCA.

Polka: SCBA. You’ve exactly pointed out why we changed our name and I’ll get into that. But Dave Kinley, who was a small cable operator at the time, became our first chairman and we created a volunteer organization to basically create a voice for independent cable companies in Washington because we realized that our paths, our interests, were different than some larger companies because of the rural nature of where we lived and worked, the fact that we served about twenty homes a mile. We were in smaller markets, rural areas, we weren’t in the urban areas. And we needed to create an independent voice for us at the time.

Schley: Can you drill down and just explain how the economics were different and how rate re-regulation maybe disproportionately affected a smaller operator you just talked about...?

Polka: It all comes back to cost of operation as well as return on investment. And when you look at our smaller markets where you essentially operated with twenty homes per mile, that doesn’t necessarily mean customers, but twenty homes per mile where maybe you serve twelve or fifteen, your entire return on investment is based for that mile of cable, which costs the same in the middle of Kansas as it does in New York City—is based on those fewer subscribers. So now if the government imposes rate re-regulation that suppresses what you can recover in terms of your costs then you’re basically underwater. And that’s basically what we started to say when we as a group came to Washington to say we weren’t the problem, we live and work in the communities we serve, we want to continue to provide this service but you have to give us some help and you have to ease up on the regulations. Basically it took us four years to get there but Congress finally eased up.

Schley: Pre-dating the emergency meeting and the need to find a solution, what happened whereby the smaller independent cable industry found itself sort of not being represented by for instance, the National Cable Television Association. There was a schism there, I guess.

Polka: I wouldn’t say that necessarily as maybe just at the time when you look back to 1990-1991-1992, things were going pretty well in the industry. We had won as an industry rate deregulation. There were threats of re-regulation in 1990-1991 and actually we felt pretty good as an industry at the time that we could weather the storm. It just so happened that in 1992 that circumstances came together that really allowed both Republicans and Democrats in Congress to come together and say, OK, it’s time to implement this law, despite the objections of the cable industry. And as many have said, that law that was passed by Congress was vetoed by the first President Bush, No. 41. It was the only veto of his that was overridden by Congress, so Congress actually overrode a veto to implement the Act and then what happened from there—particularly with the change of administration at the time with the new FCC that came in 1992, was very, very heavily regulatory. So the amount of regulations to be imposed on companies was really over the top. I mean, literally I would go out into our small communities in North Carolina and South Carolina and Mississippi in my job as general counsel and I literally would take the stack of regulations and plop them on the table and say, “Do you want to choose to regulate us by going through all this paper?” And the fact of the matter is our small communities didn’t because we worked with them. Again, we weren’t the problem. But this was what many other operators were facing and why it was so important for us to establish that voice.

So it wasn’t so much that we differ with the larger operators, but we have a different slice of views when it comes to who we are as smaller providers of service, and that’s all we do. Over the years that’s all our members do is provide today voice, video, broadband service. They’re not connected to content companies, they’re not connected to other large organizations, etc. What they do, they live and work in the communities they provide service. Plus we’re smaller so that has a significant difference too, as we look at the content world of things. It does create some different views, but we consider ourselves always pro-cable operator and have always spoken for the pro-cable operator issues, which we continue to do today.

Schley: Just a final piece of the political backdrop, there was an organization called the Community Antenna Television Association or CATA, and you know Steve Effros well. What was its role in the mix? And talk about sort of where the different associations fit including the SCBA at the time.

Polka: Yes, and ironically—and Steve will tell you this—CATA was formed pretty much for the same reason as we were: to be a voice more for the independent companies or for smaller companies. It was largely focused on regulatory issues as opposed to political but it would get involved in Capitol Hill as well. But what happened was a situation that happens a lot, I think, from my perspective as I look back, within CATA which is where larger companies become members, they get involved in the organization, and then as we were establishing ourselves, I think larger companies just basically said, we have two voices through NCTA and CATA and we really only need one.

So that led to CATA moving on but we continued to remain as an independent voice, but it’s something that actually as a student of history as we like to think of ourselves, we learn from lessons like that where today, regardless of how big or small your company is within our association, we have a very bedrock tenet—which is, one company, one vote. So our largest member to our smallest member—when it comes to our member votes, our board votes, etc.—one company, one vote. We do try to make sure that every voice is heard and we fully represent the interests of all our members.

Schley: So now, post-emergency meeting—it’s interesting from my view of your career, you’ve been general counsel for Star Cable, now you’re thrust into this role or anointed into this role that—you’re in the political environment suddenly and dealing with D.C. and the Beltway and all the regulatory agencies that flowed from the 1992 Act.

Polka: Washington is fascinating. I love working there. It’s dysfunctional and it’s gotten more dysfunctional as time has gone on but it is truly a fascinating place to work in this industry as well as just as a citizen—to see it work. It’s not perfect but it’s still the best system out there. But yes, we had to get involved. We were a volunteer organization. We had nothing, we had no infrastructure. Basically we had fax machines where we would have literally state fax trees, phone trees, where to get the message out, a state captain would fax another member who would fax another member and we’d make calls and send faxes and we would send letters—when you could send them at that time and actually get them in to members of Congress. We had to establish a voice and that was what was really was so important for us at the time in those early years and it took us a number of years, really, to do that.

Schley: What were some of the wins or how did you ease the impact of that 1992 Act? What were some of the things you were able to achieve?

Polka: Two in particular. We fought very hard at the FCC on the implementation of the rate regulations and in 1994, the FCC implemented its Small System Order, which basically provided rate relief for smaller companies. Which then, in 1996, Congress emphasized again, as part of the Telecommunications Act where they deregulated companies that had less than 1% of all cable subscribers across the country. So that virtually covered all of our member companies at the time. That was really important because again, the 1996 Act, even though it doesn’t mention the word “Internet” all that often, the idea was there’s a brave new world back in 1996 just as we’re encountering today in 2014. We need to be open to investment in smaller markets and realize that we can’t regulate small companies the same way we regulate maybe larger companies. So that was an important win for us to establish two important changes to the 1992 Act and the 1993 regulations following up with the 1994 Small System Order and the 1996 Act, which actually really, really helped to take off some of the pressure on smaller business to encourage investment and that led to quite a boom in terms of further growth within the independent cable sector to where many of our providers are still around today because of that encouragement back then...

Schley: They are and the flip side is, had you not worked with the FCC, I guess, to allow some permissiveness on rates for smaller systems, what would have happened to those companies?

Polka: It would have been, I think, disastrous because you simply have to face a situation where the small company with a small staff—certainly not a legal staff, not a deep technical staff—would not be able to sort through the regulations. The return on investment and the cost of providing the service, would outweigh the return. So what you would have had would have been just a slow trickle of companies closing and fortunately that didn’t happen. We think it’s directly as a result of those changes in regulation which again, encouraged investment, really laid the groundwork for what today is a broadband business that our members enjoy and our customers enjoy, and really set the stage for the future.

Schley: From the viewpoint of history, Matt, I think the other thing is that you have this threat of severe rate crimping going on from Congress and the FCC and that was around the time when the satellite television business was beginning to percolate...

Polka: Back then, it was a real concern. In fact, I used to go into it, as a volunteer lobbyist, and then once I was hired by the organization in 1997, I would go into some offices and some of the members of Congress that were promoting competition, you’d literally walk into their office and on their desk or beside their desk was a big satellite dish.

Schley: Yikes.

Polka: So you kind of knew where they stood from a standpoint of competition. That of course frightened us as an industry because we had never really had that competition before. But you know, you’ve always heard the phrase, “Competition makes you better.” It really did and it really helped our members to learn the value of their local connection. You might have an offer from a satellite company to maybe give you lower service but on the other hand, when you’re seeing your customers at the grocery store, in church, down the block, it makes a real difference. So it really helped our members to understand—they always understood it anyway but the importance underlying their localism, their local connection, the fact that they live and work in the community and are customers very, very loyal to them. But it did really make us think about having this competitor out there and you mentioned the satellite company—hence, the name and why we switched it and I have to come back to that.

Schley: They were...

Polka: They were the Satellite Business and Communications Association: SBCA. We were the Small Cable Business Association: SCBA. So we kept getting confused with them all the time. Even in FCC Orders, in implementation. So we decided in 1999, we said, forget it, we’ve got to end this confusion. So we changed the name and we said, what are we going to do? Well, we thought a couple of things. We thought, first off, most organizations have four names, four letters in their acronym. We said, let’s make it three. So we’ll change ourselves there. And we said, I’m a big baseball fan so American League, National League, you have the NCTA, we became the American Cable Association. The other benefit we thought was, for a small organization trying to get known, it’s not bad to be at the top of the alphabet so that’s where we ended up.

Schley: It’s the old Yellow Pages thing.

Polka: And after that, the FCC was very happy. I got a note from one of their bureau chiefs saying, “Our ability to proofread has increased dramatically. So you’ve changed a lot of errors here...”

Schley: It’s a much better name...

I want to go back for one more question. When you were doing the flurry of faxes and the fax tree and you’re scrambling to almost preserve the solvency of this category of the cable industry. What was fun about that? What was enjoyable for you?

Polka: It was just so exciting. We felt like and still do that you can make a difference. Your voice can be heard. And that was really the essence of why we started the organization from scratch because the voice didn’t exist but a voice needed to be created. And we realized that despite the fact that we don’t know Washington, we’re not experts, that the people that go there work for us. We send them there. We are important community citizens where we have a right to make our voice and our issues known, to work with members of a key committee. So I think it was that realization that even though you may not be large, sophisticated, deep, have tons of money, that you can, through hard work, through commitment and through desire, really change things.

Schley: So legislators, policymakers and their aides returned your calls? I mean, doors began to open?

Polka: Over time, yes. And it was a lot of tenacity. We were sort of breaking some eggs at the time because we had to get noticed in our issues because it’s still the case that big interests—and there’s so many in Washington—they have big voices and it’s hard to make sure your voice gets heard. But I always consider a compliment one of the things that was said to one of our founders. A lady by the name of Lynn Simpson, who was one of our founders and one of our first employees with the organization. She spent a lot of time in Washington and you know back in those early years, we were sort of the crazy uncle from left field, coming out of left field with these different views that made people a little bit nervous. And Lynn told us one time—and I will never forget what she said and we still have it up on the wall—that one day one of the big interests that we were competing with said to Lynn, “You know, you guys may be small, but you’re very annoying.” And we thought, that’s exactly right.

Schley: High praise.

Polka: We’re making headway and we are getting ourselves heard. Over time that’s what we’ve tried to do. Not in an annoying way but in a very credible deep sensitive way to help lawmakers understand that there are important reasons for them to care about smaller markets, rural areas, competitive areas and that we matter to the whole communications landscape. We’ve achieved that.

Schley: It’s interesting just in talking to you for twenty minutes or so, how the localism theme really was an asset for your community of members but for the association itself.

Polka: It makes a big difference and it still does today. Because again, the primary nature of who our members are, as small businesses, as family businesses. We have people on our board whose companies literally helped to create the cable industry in their various states. Martin Brophy, who’s now with Service Electric, his company, Shen-Heights TV, his dad was one of the founders of cable in eastern Pennsylvania as well as others from eastern Pennsylvania. But we have members from Kentucky and Oregon and other states that were leading the creation of the industry. So yes, it’s a different voice of people that are willing to commit their livelihood to providing service to their customers in the communities they serve. And it does make a difference, it really, really does to have that local connection.

Schley: Take us then to 1994 up to the passage of the 1996 Telecommunications Act rewrite. What was going on then and I know we’re going to talk about retransmission consent a lot in this conversation, but what were some of the issues you’ve then sort of segued into working on?

Polka: One of the first things we thought about in that segment between 1994 and really 1996-1997 first as an association is this work takes full-time commitment. We can't do this on a volunteer basis. So the organization—and I was very privileged to serve on the board at the time—said, we’ve got to hire someone, we’ve got to create staff. We’ve got to have people thinking about this work day in and day out, 24/7. We looked in Washington and again, it’s a very costly city. And as a small organization with very little to do from a standpoint of funding and compensation, it was difficult. So ultimately the board came around and said, well, Matt’s a lawyer, he’s been in the cable industry, he’s been in Washington for us for the last four years, why don’t we see if Matt would be willing to do it? I was, but really on one condition. I had little kids and I didn’t want to move to Washington. So I said, Washington is close enough so whether I drive or fly, I can get there and actually it will be cheaper for me to work in Pittsburgh. Which is still the case, by the way, for our home office to be based there. Plus the idea of being based outside the Beltway really has benefited us in more ways than we could ever imagine because we’re not perceived to be inside even though we have staff members that work there. So we had to professionalize and that’s what we did in 1997. I was hired and the lady that I worked with as my paralegal came on sort of halftime. So 1.5 people were hired at the beginning.

But then we really started to look at the issues going forward. We said, “We’ve got to be serious about what’s happening. And really, our first effort was focused on rate deregulation, again going back to our original principle because there were a lot of still legacy regulations that we needed to find ways to either provide waivers or exemptions or some relief for smaller companies. Then we really started to dig in on what were the content issues. Through merger reviews at the FCC that were taking place back then and when Cap Cities, Disney, ABC came together and other mergers during that time where we saw the beginning of combination of greater content interest to create more leverage. And at the same time we saw through that consolidation tying and bundling through retransmission consent. Where again, regulations were set up for a particular reason for cable operators and local general managers of stations to negotiate. Now those negotiations were being co-opted by the larger owners of content who said, hey, we control these stations. Why don’t we tie our programming to it as well?

So really the nature of the big bundle that we face as consumers today, increasing bundle, had many of its roots back in the early retransmission consent days.

Schley: Can you explain that in a sort of granular way, Matt? The relationship between a local TV broadcast station and the ability of a cable company to carry and distribute that signal really had vast implications for the national network cable programming scene...

Polka: Sure did, and in the second round of retransmission consent in 1996, that’s where the networks really saw the connection because ESPN2 was a retrans channel. FX was a retrans channel...

Schley: In other words, one condition of you getting to carry that local signal was, oh, I have a network I want you to put on your system...

Polka: In 1993, the first round of retransmission consent, it literally was a guy like me representing a small company, talking with local general manager, working out trade deals, advertising deals, bill stuffers, lots of things that provided more information in the community. And promoted the station. But by 1996, things started to change and we saw those deals start to happen. So after that, the era of bundling affiliated programming really became significant and now when you look at many of the channels that are still on today, they have their roots in retransmission consent and negotiations...

Schley: I always thought it was one of the great examples of an unintended consequence. Is that fair?

Polka: Absolutely. Without question. And from a consumer perspective today when they look at what they watch and particularly now that we’re in a marketplace that is based on greater choice, where consumers say, hey, I’ve got the ability with my iPad or with my laptop to watch what I want when I want it, why does that not apply to TV where I have to have everything whether I want it or not? And I get these big bundles that I may not like. So it’s really put a light to shine on the problem of the bundling which really had many of its roots going back to these early days of retransmission consent negotiations.

Schley: So you and your members could start to feel pressure on the programming side, even in 1997-1998.

Polka: Yes, without question. Because as smaller operators, again, we’re negotiating with large entities and it’s a question of leverage and scale and size. It’s so ironic when we hear today in our marketplace where a company like Comcast says, it needs to have more scale to compete. Good heavens! I’d love to have a tenth of that scale. We never had that and that’s the situation we find ourselves in. Consequently, we pay pretty much as much as you’re allowed to pay or that a programmer is willing basically to charge us and that’s it.

Schley: What as an organization could you guys do about it? How could you influence if at all that dynamic?

Polka: We couldn’t do a lot. That’s still the case, because again of entrenched interests where there’s lots of money involved. But we could be a voice. One of the things that we have said about ourselves as we look back at our history and as we look at our present. We oftentimes consider ourselves the canary in the coal mine where because of our independence, we can speak freely to issues that ever are occurring today, or we see happening in the future. Because we’re not connected to other content interests or other business interests through large combinations, we can speak freely to those issues to say this is a problem today that needs to be addressed and this is a problem of tomorrow. A good example is what today is occurring in the realm of retransmission consent and in the realm of reform of retransmission consent. I mean, we’ve been fighting this issue to try to bring fairness to these negotiations for more than a decade. Loudly. I mean, as a voice for this and for the first time ever, in 2014, you have the House that’s passed a bill that has included some retransmission consent reform. The Senate Commerce Committee just did last week. The FCC has already done so earlier this year and you have the prospects in 2015 of the beginning of an entirely new Communications Act update to get rid of these old laws and regulations, to change things for the betterment of consumers.

So we think it’s important to be that strong voice so we’re working on continuing to change outdated regulations while at the same time, we’re looking ahead to the world of online programming. Our members are broadband providers. Consumers love to use that service to get choice whether through Netflix, Amazon, Hulu, you name it. They also want more choice with us as well as their video provider and we want to give them more choice. So for instance, in the Net Neutrality debate today, and how Chairman Wheeler is looking at imposing regulations on Internet service providers to prevent blocking and discrimination. We’re saying the same thing ought to apply on the other end of the pipe; that someone that owns content shouldn’t be able to target ISP addresses to say some people can receive our content but others can't, particularly as a result of a programming dispute on cable.

So we’re already the canary in the coal mine again looking ahead on these issues saying, there are issues that need to be addressed, Congress has a role, the FCC has a role. The industry needs to be aware of these things and we’re going to fight for change.

Schley: You know, I had the privilege of doing some interviews at the Independent Show this summer with some of your members and I completely agree. There was a discussion about creative approaches to the business going forward that you really hear from your community not so much necessarily yet from the big cable companies.

Polka: It’s true. That one thing about our members that I have always said—I mean, I'm so proud of them. Contrary to what you said at the beginning as sort of the voice of the small cable operator, I'm privileged to work for them. They truly are inspirational and it’s a privilege for me to make sure their voice is heard. It’s their voice that I want to be heard, not mine. And I'm hopefully just a conduit to their voices. The thing that’s interesting, as small companies, they don’t have the levels of management, hierarchy, decision making where they can figure things out. I mean, a guy like Bill Bower at Windbreak Cable with a couple of hundred subscribers was on the leading edge of the development of broadband in rural Nebraska before some of the big companies were. We have dozens of examples like that across the country where smaller cable operators were making things work before the bigger companies were getting to it because they’re smart, they’re nimble, they are fast and they know how to get things done and they know how to deal with challenges because if you live and work in a small market, you’ve got to figure it out. You’ve got lots of challenges.

Schley: Broadband. So talk about that time in the development of the independent cable sector. You had some video pressure and some economic pressure and you could see maybe clouds forming on the horizon around where content was going. But we started to have this new business opportunity emerge around the Internet and high-speed delivery of the Internet. How did that affect or change the game for smaller independent cable companies?

Polka: It’s really become transformative. We look at ourselves today and I'm sure every operator does, but we look at ourselves today primarily as broadband providers. Because we see that’s what our customers want to consume more of. They want to use it for lots of different reasons, not only for video but now we hear this term the “Internet of Things.” Where homes are connected. I mean, your refrigerator is connected, your microwave is connected, your coffeemaker is connected so you can send a little thing from an app on your smartphone to say, “Start the coffeemaker.” You know, that sort of thing. Everything’s connected but that’s all through the broadband pipe and the broadband service we provide. And that’s on the residential front. Look at the business side of things, too, which is enormous in terms of growth and potential because businesses in small markets in rural areas want to be connected at the same speed and capacity as New York, Chicago, Los Angeles, and with the world. And we provide that.

So it really is transformative. As we see today the way the video portion of our business is changing, we as a broadband provider are going to be able to provide consumers those choices. Whether it’s continue linear video, but we see also the introduction of new competitors to the market. Here again, we’re sort of back to the days when we were the cable industry and now the satellite came in to compete. Well now you have announced at least new over-the-top providers that want to provide a virtual cable system over broadband. That’s a competitor to the cable service we provide but they also need a broadband pipe to deliver it. And we’re the pipe. So we see our members even more intricately involved in the lives of their communities, with their businesses, with their residential customers because every one of those customers is going to want to use our broadband pipe to meet their needs, whether it’s for entertainment or whether it’s for business.

Schley: Clearly from an economic standpoint I think—I don’t want to characterize broadband as the savior of the independent cable category—but it had a huge effect just on the ability to generate return on investment...

Polka: It’s a very good business. That’s why we’re very, very concerned about imposition of Net Neutrality regulations. In many ways where we are in 2014, speaking about Net Neutrality is similar to where we were in 1992 speaking about the re-regulation of the cable industry because we have a burgeoning industry that consumers like, whether business or residential. They want more of it. We have to provide that to them. We have to build and pay for the infrastructure to give them more of the speed and capacity that they want. But we also have to get a return on investment, particularly if Congress and the FCC want us to do more of it, right? So if you have heavy-handed regulation of the Internet, broadband service of Internet service providers, that’s going to affect the ability of smaller companies particularly to provide those services and to be able to try to meet the demand going forward. So we’re very concerned about imposition of regulation on the ISP—Internet Service Provider—but we also are a leading voice again on the content side of things. Because we fear that one of the things that could happen as our industry changes and as content companies look to continue to monetize their content, is we fear what we call the “cable-ization” of the Internet. By that what I mean, we take the wholesale programming model where content companies today come to us as cable operators and say, you will pay us a per subscriber fee per month to be able to receive our content on cable, basically doing the same thing on broadband. To give your customers, to allow them to have access to our content online, you will pay us a fee for every one of those consumers, whether they go to our websites or not.

Today actually consumers pretty much can go anywhere they want on the Internet and consume whatever lawful content they want. They may have to pay for it but it’s their choice. We’re not the middleman in that transaction. The cable-ization of the Internet would create that wholesale middleman status and would impose that content cost on the delivery of broadband and frankly, I think, have a dramatic impact on what we can deliver. It certainly would be a significantly higher price. We would see the same kinds of problems repeated on the broadband side that we’ve seen on the cable side with tying, bundling, increasing price increases, things of that nature. So we’re the canary in the coal mine on that issue as well.

Schley: You mentioned this earlier but I thought it was interesting that you guys have made very vocal use of social media at the American Cable Association. I think you were the first organization I ever heard of to twin this notion of certain content providers, only certain classes of customers can get their content over the Internet. I thought to make the parallel between that and what’s gone on historically on the video side is really interesting.

Polka: We have pointed it out. We think it’s unfair. When you look at a situation earlier this year where fifty or sixty of our members took a stand. They said, “We are not going to renew our big Viacom bundled contract because it costs too much, our consumers tell us they don’t want it and it’s not really compelling programming.” So fifty or sixty of our members representing about a million subscribers did not renew their contract. In retaliation what Viacom did was specifically target the ISP addresses of those companies’ broadband subscribers and block them from receiving the freely available content that Viacom would put online to everybody.

Schley: Right...

Polka: And basically said, your cable operator did this to you. Which was not the truth because the cable operator didn’t target the ISP and block it. Someone on the content side did that basically to create pressure to say, sign our big bundle deal and we’ll give you access. We think that’s unfair. That’s not right, particularly because the content itself was made freely available over the Internet. Now if Viacom wanted to charge, they’d charge anybody for it.

Schley: Directly to the consumer.

Polka: They wanted to charge the consumer directly, but they didn’t do that. They make it freely available, but then they block it because you didn’t redo a deal. We think that’s not right. We think that’s the same violation of Net Neutrality that would occur if the cable operator said, to get back at Viacom, we’re going to block our broadband subscribers from receiving it. Same thing. So we think Net Neutrality needs to apply fairly on both sides of the pipe in that regard.

Schley: That issue, Matt, and others you’ve dealt with, it’s complicated and it’s hard for legislators, it’s hard for policymakers to understand. Is there appreciation of these business relationships today in your view and have you helped to sort of foster that?

Polka: A lot of time when we have—and you’re right: it is complicated. Very, very difficult when you get into the nuances of the regulations and how they apply. What we oftentimes do is say, “Think of yourself as a consumer.” Because everybody we meet with in Washington—whether they’re a staff person, chief of staff, member of Congress or senator—they all have a subscription. Usually. Most of them do. They all know what it’s like as a consumer. So we say, “Think of yourself as a consumer. If you were trying to get access to something where it was blocked or denied. Or your local station was blacked out in a retransmission consent dispute where you couldn’t get access to the shows you like to watch or the games you like to watch. Think of those situations. Now let us explain why that happens and how the rules that were created by Congress and the FCC actually impact that.” It really helps in terms of creating a base of understanding to move reform efforts forward.

Schley: What is sort of the numbers on the American Cable Association in terms of members and the customers they serve today?

Polka: We have about 850 member companies. We’re in all fifty states, we’re in many territories—Puerto Rico, Guam, down in the Caribbean islands—a few places like that. We serve about 7.5 million video subscribers but interestingly, our number of broadband subscribers are increasing, either matching or—I think we’re at a point where our broadband subscribers are even greater than our video subscribers. And that’s a trend that’s happening for all ISPs and cable operators where broadband subscribers are now higher in terms of numbers than cable subscribers. As we see evidence of cord cutting, cord shaving, consumer demand toward more content choices online. So we still represent a small but very vocal group. It doesn’t seem like a lot in terms of numbers of subscribers, but it covers an enormous amount of land when you look at the country and how we have about 4,000 headends from our members that serve these 7.5 million subscribers. I mean, scattered literally across states, hundreds of miles apart, with technicians and other service people roaming states to provide service to their customers. So it covers a lot of land even though it’s not that big in terms of subscribers when you think of Comcast or AT&T or others.

Schley: I mean in wired cable subscribers, what are there? 60 million in the United States today?

Polka: Yes, about 60.

Schley: Over 10%...

Polka: We’re about 10%.

Schley: You’re bigger than you were when you started, too.

Polka: That’s exactly right.

Schley: Who’s your biggest company, how big are they and how small do you go?

Polka: Our largest company is Mediacom. They have about a million subscribers. We have hundreds that have literally hundreds of subscribers. The median size of our member companies is 1,500. And then when you look at the breakdown of our 850 members, about 20% of our members are larger members that are sort of 10,000-15,000 and up. But we have 80% of our members that are 5,000 and below. So it is a very, very small segment of the independent cable sector that is still very vibrant. I mean, I always get that question. Will small operators survive? Aren’t you guys sort of being bought up by the big companies? And the answer to that is no. In fact the big companies can’t wait to leave our areas because they don’t find them economically interesting or compelling to stay. So oftentimes our members have made businesses out of the systems that the larger companies wanted to sell in these smaller markets and less densely populated areas.

Schley: I think in many cases, unless I'm mistaken, correct me; many of the smaller companies remain family owned?

Polka: Very much so.

Schley: Do the founding families still control these companies?

Polka: It happens a lot. We see it on our board of directors and through our membership and with you being at the Independent Show, you had a good example of that cross-section of members. These are people that love their communities and love what they do and are sticking to it. And it’s generational where we see other generations coming into the business and taking over from the founders and now we’re in some cases on to the third and even the fourth generation of people taking over the business.

Schley: What’s the relationship between the NCTC [National Cable Television Cooperative] and ACA? How does that interplay work?

Polka: We’re strong partners representing independent cable companies. And over time, both of our organizations, when you look back at our history—and we just celebrated that with NCTC’s 30th anniversary at our Independent Show—we realize that we were created to meet a need specifically for the independent cable sector, whether it’s ACA from a political, regulatory, legal—providing a voice for the independent operator. Or NCTC. From a business perspective, realizing that there is strength through numbers. When we come together we can negotiate better deals, better pricing, better economics for smaller providers. What we realized over time as we first were founded and then started to work more closely together, we realized we were representing the same constituency as independent cable operators. NCTC was very helpful to ACA in our early years, helped to get us off the ground. And what we realized over time was that anything you do on a political level has a business component and vice-versa. So we realized that our fates and our futures were entwined even more significantly. In the year 2000, we created what still works today what we call a strategic membership alliance. ACA and NCTC are two separate organizations. We’re a Pennsylvania nonprofit membership corporation, they’re a Kansas cooperative corporation, but we created a strategic membership alliance where basically anybody that’s a member of NCTC can become a member of ACA simply by checking the box on the invoice that they receive from NCTC every month regarding our ACA dues line item.

So we have to earn the trust of our members every month. It’s not automatic. Members can opt out and there are a couple that do but the vast majority of members have continued to serve and support ACA and we’re very, very pleased for their help and support.

Schley: I was sort of captivated by the aside you threw out earlier about one vote per member. I'm just curious. Was that controversial or how did that sort of percolate early on?

Polka: At the time early on—and I give so much credit to guys like Stan Searle and Dean Peterson and Dave Kinley and Norman Mills, who’s since passed on but from Montana, a terrific, terrific member, and Lynn Simpson—who came together and really were mindful of history in the industry. And they realized that we have to have fairness among our membership regardless of size, and we can’t allow one voice just because they happen to be bigger to carry more weight than a smaller voice. We have to try to represent all of the members. So they made it very clear in our bylaws and in our foundation right then to say, one company, one vote. And that’s what we continue to do today and we’ve not moved from the one bed and I think it’s made us a stronger association.

Schley: Matt, maybe drafting off the recent Independent Show in Kansas City, what are some of the sort of cornerstone directional or trend lines that you see your operators beginning to carry out at a very local business level? What are some of the important things?

Polka: Mostly focused on broadband, trying to figure out where the industry’s going. I mean, we’re all trying to figure this out. We’re all trying to see who are the players, what our role will be as providers. Some have projected that we will become essentially what amounts to a broadband utility where we just simply send bits down and charge for bits. That’s a possibility. We may be more active as an over-the-top provider. We may be continuing to be active as a linear cable provider, phone provider. But it still ultimately comes down to service. Our members routinely survey their customers but as I said before, they see them everywhere they go. They’re taking to them all the time. And they know just as they are consumers of service, that so are we. Here I am, a guy who’s in my middle fifties, but I subscribe to Netflix, Amazon, Hulu—I do all of it just like anybody else, and I want more of that as well. I am I think pretty typical. Certainly not like the young kids who can do so much more but I'm pretty typical of wanting more of that choice and so what our members are focusing on, even though there’s so many uncertainties in the business, is how can we meet the needs of our customers, to give them what they want. There’s been a whole debate in our industry about should consumers have choice, and that leads to the word “a la carte.” Which for many has been a bad word for many, many years. We don’t think of it that way. We think that giving consumers what they want can't be a bad thing because if you are meeting the needs of the consumer, then that’s going to be a good business. It has to be a good business because you're connected to the consumer in ways that they want to be connected, giving them what they want.

So while we acknowledge there are lots of issues to the implementation of issues like a la carte that I believe someday will become either something we accept as businesses if not imposed on us by Washington. We don’t see it as a bad thing. So the more we start thinking progressively about our future, being willing and open to embrace those kinds of concepts, the better off we’ll be, because at the end of the day we’ll be giving our consumers more of what they want.

Schley: It was interesting to hear companies like Wave Broadband openly talk about the possibility of maybe not delivering a bundled video product in the traditional manner going forward. I'm struck by the thought that if that were to happen, or if a similarly sort of seismic change in the way services are rendered by the smaller cable community comes to pass, do you think it will ultimately influence the way the cable industry at large perhaps behaves? Is it sort of an incubation crucible if you will for change in some respects?

Polka: Completely. We’re seeing it today as our consumers migrate toward more of using their cell phones, their smartphones, their iPads, their laptops, on airplanes, hotels, wherever—using the device to see what they want when they want it. So yes, it is a crucible of what is developing and to me, it comes back to our members having the broadband pipe and the broadband service that our customers want, and enabling them to have the choices and the opportunities that they want. To provide the services, whether cable, phone, broadband, online video, over-the-top, and to be part of that transaction.

Schley: But I like your canary in the coal mine analogy. I think the other differentiating element is obviously this agility and nimbleness that smaller companies, less layered companies... bring to bear.

Polka: A good example you mentioned is Steve Weed of Wave Broadband. He was one of our former chairmen; we actually have three in Wave Broadband with Steve Weed and Steve Friedman and Patrick Norrell, all former chairmen of our organization. So very, very forward thinking, looking ahead, challenging our members and really causing our members at the Independent Show and elsewhere to think about, hey, I could survive, I can get through this. It’s not what I expected because when I got into this business I was a cable business and then I saw broadband and phone, etc., and now I've added those on. But now I can see truly the migration toward broadband as the central service we provide with everything springing up and I can survive as long as I'm willing to step boldly into that future.

Schley: There’s been a lot of effort made, Matt, at the federal government level—NTIA [National Telecommunications and Information Administration] and I think, the FCC, to understand where broadband is available in this country and to map it out. Nobody sort of knows exactly, but you take your best shot at it. But in some communities, are your members the sole conduit to the Internet...?

Polka: Absolutely, and that’s why it’s so critical when we look at the impact of regulation. If the impact of regulation is disproportionate again, often it’s cost and it’s a technology issue. You have to be able—it’s a return on investment issue—you have to be able to get a return on your investment to survive. And if the impact of regulation—for instance, we heard Chairman Wheeler talk about imposing Title II rate regulation, service regulation, etc.—it literally could be the difference between being able to provide a service or not. Because if you can’t pay for the providing the infrastructure, then you can’t make a go of it. So I mean it really is critical and in many of our communities, it that wired line broadband service is eliminated, it won’t be replaced. And that’s why we come back to oftentimes fundamental tenets of our advocacy, which is that companies like our members that serve in our markets matter. They matter to national policymakers. National policymakers say we have to have the same level of service in small markets and rural areas as we have in any major city. Well, our members are going to be the ones that provide it.

If you make it too difficult by the imposition of laws and regulations where they can’t provide it, then you’ve defeated the purpose of getting more service out there in the first place.

Schley: I think it’s a powerful statement: that that infrastructure likely would not be replaced.

Polka: It is a very real possibility. We are very concerned about Net Neutrality regulation, the imposition of regulation. It is very akin to what to what we saw back in 1992. If there were heavy-handed regulations imposed—much akin to 1992 and 1993—we would increase our voice, we would re-double our efforts and seek over time to try to win relief from those regulations. We are also very concerned—we don’t want to see them to begin with and would rather not see them imposed rather than having to fight to get relief from them.

Schley: I think I had a question percolating in my mind about what scares you about the possible outcome of Net Neutrality and I guess a Title II reversion would be right at the top of the list.

Polka: Very similar. It was a very scary time as a smaller operator in a small company in small markets where we were looking at the economics of providing continued cable service at the time. Again for the cable industry in 1992; we see the same thing here. Particularly at a time when with broadband there is an explosion about to occur of service, availability, of options, of being part of that, of giving consumers what they want. The last thing we want to do is dial that back and not provide consumers the speed or the capacity they want or even leave the market. That’s the last thing we want to do.

Schley: You don’t see Amazon, Hulu, and Netflix at all as the enemies necessarily of your constituency’s business.

Polka: We don’t. I don’t. I think again it forces us to be smarter about our business. It forces us to realize it’s not the same cable/phone/broadband business that we were in just a couple years ago. The pace of change and competition is changing much faster than it did before and we just have to be ready for it. But at the same time, all of those names that you mentioned require a connection, require a broadband connection. The best connection that’s out there is the one that our members are going to provide so we feel as if we’re part of that transaction to help to give consumers more of what we want. So obviously our businesses are evolving—the nature of our business as well as the regulation that affects it. As long as we embrace it and are willing to consider change and realize that we’re part of that important level of service to consumers, we feel like we’ll be successful going forward for many, many years.

Schley: Hopefully you’ll still be doing this in ten years and maybe we can reconvene. But whether it’s you or a successor, where do you see the American Cable Association? Do you still see it continuing on in the next decade, and maybe what would we be talking about ten years from now?

Polka: I do, I absolutely do. I had that question asked of me recently: where do you see the organization in five years? And I basically said, “I have a hard time seeing five days ahead let alone five years because we find ourselves involved on so many issues on our members’ behalf. We want to be in the mix because of again the importance of who our members are, the service that they provide and making sure that voice is heard. Making their voice heard.

So we feel as if the issues aren’t going to go away. They will change, they will be more broadband-centric. We’ll see much more Internet regulation issues. We’re dealing today with broadband subsidies in the marketplace similar to what we’ve seen with universal service so there are always those issues and fairness of providing funds where a broadband provider exists. There are always fairness issues there. So we see ourselves as involved as ever going forward because I don’t see the nature of the small company going away. Again, it comes back to who we are in our marketplaces, where we serve, the services our customers want, our ability to provide it to them and making that connection. And that’s something I think has survived for already 50-60-70 years and we see it surviving long into the future. As I've said oftentimes, the demise of smaller independent cable operators is largely exaggerated.

Schley: I want to close with a small question and perhaps a parochial one but I'm interested in it, and a big question. So the small is, I was surprised when earlier this year, late last year, President Obama’s Commission on Technology in Schools came out with sort of a dour report about broadband availability in public schools. Because, honestly, I had thought the cable industry and others had done a pretty good job of supplying connectivity. Do you have a perspective on that or a thought from the independent managers...?

Polka: My sense anecdotally is that’s not the case. To get back to your question before about how do you demonstrate on a map where broadband exists. It’s not an easy thing to do. Our members anecdotally tell us they’re very, very involved in providing services. In fact, it’s usually a condition of their franchising agreement. But they want to provide it. They want to be that connection. I mean, I have examples today where I think of companies like Chantelle in Virginia and West Virginia providing computers and iPads connected to their Chantelle service. Cable One just did something recently as well in a middle school in one of their marketplaces. Where our members are connected with their schools and being really the facilitator of more broadband service for their local schools. So I tend to think that may have been a question about what information may have been available at the time. We certainly don’t see it. It’s something I know is very, very important to our members and they definitely are part of the solution. They’re not part of the problem.

Schley: I guess the final question is in talking to you, you seem to have a genuine more than fondness—passion for this community, I guess. Maybe just invite you to talk a little about what drives that and what is inspiring about the work that you do.

Polka: As I said, I never expected to be doing what I'm doing. I mean, it literally was one door closing and another opened at the time. In 1997, when I was hired as president of the organization, I said to our board, “What do I know about running an association? I have no training in running an association. I know the cable industry, I know the independent cable industry and I can assure you that I will be focused on those principles.” So basically what has driven me is our continuing desire to be better for our members. I made a point in talking to our board way back when, to say, “If you're looking for overnight change, forget it. It’s not going to happen, plus it’s not the way you want to work in Washington because things are very fleeting. You have to plant roots, you have to commit to being part of that process and staying there and making a difference.” So I was committing to the board as now for a long slow climb-out of continuing success and commitment. That we will continue to grow. We will continue to do better what we do and what really has guided me through all of these years of not having any association training is when it comes down to a question of what to do. I always come back to the questions: what is the right thing for the members? What is the right thing for the members, what’s the right thing for the association? What is the right thing to do? And that has guided us through some storms, some difficulties through good times as well as bad over the years. It takes a long time to get stuff done in Washington and there are many years where you're more disappointed than you are pleased with what Washington does. But I’m very, very thankful that our board and our members have committed to that long-term view of Washington and then just seeing our members, seeing what they do day in and day out. That’s why I want you to get their story. They are the ones who do it day in and day out. I just repeat what they tell me about their communities. And they truly are—and I've used this word inspirational—they’re small businesses that matter. I know that they look at us and they are very, very pleased with the service we provide. They’re happy we’re in Washington and they don’t have to be in Washington all the time, although they always do a great job when they come to Washington. But they just have made such a difference in their communities. And when I see it, when I see them, I just want to be more successful for them each and every day.

Schley: We enjoy talking to your members. I've enjoyed this conversation a great deal because you have a perspective I think is unique in this industry. And really, thank you, Matt, for sharing...

Polka: It’s an honor to be here. Thank you so much.

Schley: ...with me and on behalf of the cable Center’s Oral History Series.

END OF INTERVIEW

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Thomas Puckett

Thomas Puckett

Interview Date: Tuesday March 06, 2001
Interview Location: Del Mar, CA
Interviewer: Jim Keller
Collection: Hauser Collection

KELLER: This is the oral history of Thomas F. Puckett, chairman and CEO of HPC Puckett & Co., brokers and financial investment bankers for the cable television industry. Tom is also a member of the board of directors of The Cable Center and is chairman of the national fundraising committee of that organization. The date is March 6, 2001; we are in the offices of Puckett & Co. in Del Mar, California. This is a project of The Gustave Hauser Foundation and part of the oral history program of The Cable Center. Your interviewer is Jim Keller. Tom, tell us a little bit about your background before you got involved in cable television.

PUCKETT: I was born and raised in Topeka, Kansas. My family is still from Topeka and so I still have the hay in my hair to prove it. I went to school there at Washburn University and got an undergraduate degree in business and economics with an emphasis in accounting, and then actually stayed there. I had a job and I met my wife Carol, who I've been with forever. I started dating her when I was 17 on her 16th birthday.

KELLER: Two years ago.

PUCKETT: Yeah, that's right. I had to find somebody before I lost all this hair and looked this way. But I went to law school in Topeka at Washburn University, graduated from law school and just prior to graduation, among other jobs I had, I took a clerk position at a law firm in Topeka. The name of the firm was Heristy Hall and Schlosser, and so that really was my introduction to the business world at that point in time. In fact, my first days with the law firm were actually a cultural shock to me and it almost got me out of it because they put me in a 10 x 10 office with an 8 x 8 desk full of tax returns stacked to the ceiling, and I'd never prepared a tax return in my life. So it was kind of a sink or swim scenario.

KELLER: You were an accounting major in undergraduate school, weren't you?

PUCKETT: Exactly, but you know, the difference between practice and preach are significant. So I started preparing tax returns and found very quickly that I had a niche in the sales and compensating use tax area, and so there was a client of ours, Capital Electric Line Builders, who walked in my office one day, and he said, "I don't think I should pay this sales tax." And to you and I and everyone else in this room it sounds like the most boring thing in the world, but to me as a young lawyer that was a challenge, and I looked at it and it was, to me, clearly a sales tax issue he shouldn't pay and it had multi-million dollar ramifications, so I filed an appeal with the Kansas Department of Revenue and took that sales tax up through the Kansas Supreme Court and we won. So that was really my first and last litigation that I ever actually had a trial on.

KELLER: Did you argue before the Kansas Supreme Court?

PUCKETT: We did, and successfully won. In fact, we threw the sales tax statute out; I did it again and then I threw the local sales tax statute out later in my career. But I only practiced law – this would have been, I graduated from law school in May of 1977, so by August of 1977 I was practicing law full-time and I quit practicing, really filtered it out in 1982, so I had a fairly short lived practice. But the other thing that we did, in addition to the sales tax work, which I was only really one of two attorneys in the United States that did sales tax work, so we represented all the power companies, the electrical line companies, Getty Oil, Phillips Oil, Kuwani Oil. If you look at a map of the United States, every oil pipeline runs through Kansas. So the great state of Kansas was after them and when we would win a case there it would have ramifications in other states, so we were all over the United States handling those type cases. But my true love came in doing merger acquisition work. Our little law firm there did a lot of M&A work for other attorneys who didn't do it, and because we weren't a full-service firm we certainly wouldn't steal their clients so we would do the merger acquisition work, and that's how I kind of got introduced into the cable business. Again, it was between the time that in January of 1977 I actually took a full-time position as a law clerk – they hired me as a law clerk knowing they were going to hire me as a young lawyer – and I was given a job about January-February of 1977 to file a revenue ruling with the Internal Revenue Service to split up a cable television company that was serving 13 communities in Kansas.

KELLER: Which one was that, do you remember?

PUCKETT: Tri-Cities Cable. The principle individuals in that were two good lawyers in Kansas, an old boy by the name of Hollis Logan, who is just a prince of a fellow, and Hollis was an attorney but he didn't practice law, and the other one was Bob Weary, who we talked about a little bit ago and Bob just passed away, I'm sorry to say, but Bob was a real statesman for the state of Kansas. He was cable television, and I have a number of Bob Weary stories that I'm very proud of.

KELLER: He ran the state association for years and years and years.

PUCKETT: Exactly. He was on the NCTA board, very active, had about five or six cable ventures, which I'm proud to say we were involved in some of them. Anyway, Bob was involved in that deal and we got to the IRS and the IRS was going to take a year or so to finish a revenue ruling so they decided to sell the cable systems and they actually hired Daniels. I can't tell you who the gentleman was from Daniels, but at the time, as a young lawyer, that was my first deal. I wasn't even out of law school. All of the other attorneys in the office were deep analigators so I got the deal, but because I had two lawyers for clients they didn't mind. They actually had hired a guy who had graduated, by then it was May, I had graduated but hadn't passed the bar to do their deal and we sold it to Stan Searle, he started a company at that time, there was a cable television business magazine and Stan and a guy by the name of Pat Patterson, P.L. Patterson, started Cardiff Cable and this was their first acquisition.

KELLER: That was the one that they sold to CableVision Magazine too, wasn't it? They formed Cardiff and then they sold tax via exchange...

PUCKETT: The magazine portion, that's exactly right. Later we sold Cardiff... actually, the timing here was such that we were selling Cardiff as a young lawyer in '77 and then after that transaction their attorney did such a lousy job that they retained me to do acquisitions for them.

KELLER: For Stan?

PUCKETT: For Stan and for Pat, and Bob was involved in it a little bit, but Stan was more involved in it. But Pat Patterson was the front man, Pat and his wife Rhonda – later, she was actually dating him when we did that '77 deal – and Pat and Rhonda joined with us and we did quite a few acquisitions with them and for them.

KELLER: But you were operating then out of the Hardesty Law Firm, is that right?

PUCKETT: That's correct, at that point in time, clear up until 1982 and then I broke off on my own to practice law in 1982 and then in 1983, September of 1983, I formed the investment banking firm.

KELLER: And that was originally Hardesty and Puckett, was it not?

PUCKETT: No, it was actually – there were three names on the door – two of us, it was Hardesty, Puckett, Queen & Co.

KELLER: Hardesty being the senior partner of the law firm you worked for, is that correct?

PUCKETT: And we thought that he was going to be active in that and provide money and he never did, and never was, so he never owned a nickel's worth of stock, never was involved in it, the name just kind of stuck for awhile, but Jim Queen who was a cable operator in business with Rodney Weary actually approached me to do it with me and I brought him in and he and I were equal partners in that from 1983 to 1987 when I bought him out.

KELLER: Then the original name of the firm was Hardesty, Puckett & Queen.

PUCKETT: Hardesty, Puckett, Queen & Co. and then as I told you earlier we should have named it after three dead people. It would have made life so much simpler. We eventually changed the name, I bought out Jim Queen in 1987 and it became Hardesty, Puckett & Co., and then in 1989 or '90 everyone knew us as HPC, I mean that's just the name that everyone knew us by, so it became HPC Puckett & Co., and you know, it's funny, because no one ever noticed. The only person that actually said anything was Leo Hindery called me to congratulate me and say, "I see you bought everybody else, congratulations." I said, "Well, Leo, thanks for the call. I really appreciate it," because he was really busy at the time. This would have been 1989 or '90, and I said, "The truth is I just changed the name." He started laughing and he said, "Well, congratulations anyway." I said, "Thank you."

KELLER: Had you done some work with Leo?

PUCKETT: We've done a little bit with Leo. I consider Leo one of the pillars of the industry and certainly anything that I could do to emulate his stature I would be happy to do. The nice thing about Leo is he's done it all and done it all in a gentlemanly fashion.

KELLER: Indeed, I agree with that. What was the first deal you made as Hardesty, Puckett, and Queen?

PUCKETT: My partner and I, at the time, got in the car – I'll tell you the date, it was September 9th, 1983 – because we got in the car on a Monday morning and we started driving and we drove from Topeka, Kansas for the entire week. We came home Friday evening, which was not unusual in those days. We almost always got in the car early in the morning at 4 or 5 in the morning and came home Friday evenings. Anything within 500 miles was easily reachable, remember we didn't have fax machines then, we didn't have emails, we didn't have portable telephones, and the calls you made were on the side in the phone booth. It was a different world back then, so that was the norm, you had to go and sit down and meet with people. We left and went down to southeast Kansas and listed a group of little systems there – Pitcher Quapaw, we listed the Christian County, which is south of Springfield, Missouri, which is Ozark and Nixum, Missouri, and we listed the Merrimac Valley systems around St. Louis, Salem, Missouri, West Plains, Missouri – we had more listings than we could shake a stick at. Got home and all of the sudden there was no money, I mean, the interest rates were through the ceiling, equity was as tight as can be.

KELLER: This was what, in the early '80s?

PUCKETT: This would have been in 1983, late 1983, so we sat there trying to figure out how to sell all these and the logical buyers were the rural classic operators. TCI would have been a logical buyer, Time Warner had some presence in that area but not quite that far south, but we decided instead of doing that that we would create a group of rural classic buyers, classic cable television buyers. We would create the market, we'd find the money for them, we'd help them buy them, and then we'd build in our sellers later, and it was a good strategy that worked very, very well.

KELLER: You say "build in your sellers". I don't understand that.

PUCKETT: For instance, Cardiff didn't have the funds so we went and helped Pat Patterson raise the senior debt. We talked a little earlier about a guy, Bill Petty, who had left the Cap Cities group and Bill started a company called Empire Communications. We put together – Rodney Weary, he was in the Missouri area right outside of Kansas City, and we made a buyer out of him. So within the first year, we probably would have made more driving taxis than we did driving the car, but after that things kind of hit and eventually we sold all of those systems and quite a few more and that would have been in 1984. Nothing spectacular, I mean, it isn't like you can sit there and say, "My first deal I ever did once the firm was formed was something to write home about." They were all small pieces in the 2 to 20 million dollar range, but in those days a 20 million dollar transaction was a pretty good piece of business and we were pretty excited to be doing all that.

KELLER: You made a statement earlier on that you would rather do ten 10 million dollar deals than one 100 million dollar deal. Do you want to explain a little bit about that?

PUCKETT: Well, it's been our niche and we're very, we think we're very good at doing that and have done a lot of them. Our deal transaction size runs from the lower size up to just north of 150 million dollars. Each year we find that we do a transaction or a couple of transactions in the 100 to 175 million dollar range, but most of our business is in smaller pieces. As we sit here today, the firm has done – since we started in 1983 – we've done a little over 5 ½ billion dollars in deals, but they've all been in small pieces, so it's not unusual for us to do 25 to 35 transactions a year at a 10 million dollar level. The fees are good at that level, it's what we do well, one of the things that has kept us alive when others haven't survived, and it's actually made a pretty good living for us, is that we do a great deal of detail in the projects, and I think that's maybe one of the things that I'm most proud of is the people who have been with the firm for such a long time and the amount of detail that they get involved with in the firm. I've got a young man in our Topeka office, Hiram Powell – I guess he's not young anymore, he's 42 years old, but he seems young – that came into the firm in 1985 and Hiram came to us with no experience but he had a master's in finance and a law degree from Kansas University, and he spends countless hours on managing a team that does all the closing procedures and all the detail, and our clients, large and small, have become extremely dependent on that to the point where... I'm very proud for instance of our relationship with Cable ONE, with Post Newsweek, which is now Cable ONE. And the entire senior staff at Cable ONE hired us to do a very decent sized project for them a couple of years ago, it was a 30,000 subscriber project and we were competing with all of our logical competitors for that piece business and they had never hired anyone to sell a property for them prior to this so everybody wanted that first date. The reason we got the date is because they had seen the detail that we get involved in and how we make it easy to close the procedures, so those kinds of things are important to me.

KELLER: Tell me about some of the details that you do that maybe some of the other firms wouldn't do.

PUCKETT: For instance, when we go in to gather the information, I think the other firms are pretty consistent with us about putting the documents together, the offering documents, but we will send someone on-site to virtually photocopy all of the enabling agreements – the leases, franchise agreements, access agreements, any FCC elements, financial information. Once someone is really kind of a firm client, we spend years helping them format all that information as opposed to just basically coming in and selling them. So it becomes somewhat of a career date so to speak.

KELLER: Do you do franchise transfers too?

PUCKETT: During the process of the closing we oversee those but we don't go to the communities and do them. There are specialists that do that better than we do, frankly, and usually, particularly your larger consolidators have their own teams that go in there and their regional managers that take care of that, but we do coordinate all that. In other words, in the closing process, if you've looked at an acquisition agreement recently, they're probably on average 70 or 80 pages, well, each of those tie to schedules and exhibits and we prepare all of those schedules and exhibits and do all the drafting of that and coordinate with counsel on both sides to do that, and the way it works is we have a team that goes in and that team will generally involve the people in our Topeka, Kansas office. That's where most of the paper is moved out of our firm. So they'll do a lot of that. We do, for instance, on the financing side of it we almost do all of it from nuts to bolts when we got out and put together a financing we will do all of the financial procedures as well as actually act as second chair on all of the bank documents and I think that's probably been something that I've enjoyed on the one hand, but our legal background has been very helpful, is that I read every single document that's involved with any of our clients, any contracts, any subscription agreements, any legal documents, we second chair them so that they've got at least two individuals in our office reading those as well as their outside counsel. And a lot of times outside counsel appreciates that. We certainly don't get their nose out of joint.

KELLER: What are you looking for? Some anomaly somewhere?

PUCKETT: Something that's unusual to the cable television business that otherwise wouldn't be a fact in a standard acquisition. So that if you've got someone in an office that is not a specialist in this industry they might not see that anomaly. The other element of it is maybe you've got a definition that is standard for the industry and is boiler plate, for instance, the definition of an equivalent basic subscriber, but there might be a reason that for this particular transaction it could be a major negative. I won't say the deal, but a gentleman who was with our firm for some time, a very close friend of mine, Jim Faircloth, and that's a whole other conversation I could get into, but Jim and I got a call one time at the NCTA in about 1991 and we were asked to get involved in a transaction just to help them define – the transaction had closed, but it was 144 million dollar issue over the definition of the subscriber.

KELLER: I have no doubt about that. I've been up against that for years.

PUCKETT: And it was a drafting problem, and the investment banker that handled the transaction was a Wall Street firm and they received over 9 million dollars in fees and they wouldn't come back and fix the problem, so we were hired to come in and do some consulting on just that issue.

KELLER: Tell me, what definition did you finally decide on?

PUCKETT: We argued – they bought us a first class ticket and I can't say where we were flying to because it would give them away – we were on the airplane for five or six hours and we argued the entire time. It was very unclear. The way it was drafted it was very unclear.

KELLER: 40 years in the business and I've been arguing it for 40 years.

PUCKETT: There you go.

KELLER: So what did you finally decide on?

PUCKETT: Well, they settled it, they settled it. There was a reasonable interpretation that we were consistent with, and I think in order to get to that interpretation you couldn't read it literally, you had to use a logical interpretation.

KELLER: Did it finally end up as a revenue source?

PUCKETT: This was ten years ago, but basically it was a squirrelly definition to start with and they went back to what two reasonable people would have agreed on.

KELLER: Total revenue divided by number of subscribers... and on and on and on.

PUCKETT: That's exactly right.

KELLER: If someone comes to you and says, "I want to sell my system," will you tell him how much it's worth or does he tell you how much it's worth and then how do you argue that out?

PUCKETT: Well, that's an interesting position. Usually we will allow the market to tell us what it's worth, but we will set some guidelines. The one thing that we probably lost more business to competitors in the past is by not telling them it's worth something that they want to hear as opposed to what we honestly believe.

KELLER: Say that in another way please.

PUCKETT: In other words, we've been asked to do beauty contests with competitors and come in and ask them why we should handle their sale or why... you know, and do a beauty contest with another firm, and we have lost some business because I will tell them what I honestly believe it's worth, not what I think they want to hear at the time we list it. An average retainer agreement runs for approximately a year and then there's a year tail on it for anybody you talk to, so if you list it and somebody really wants to sell it and you tell them it's worth X and it's really worth Y, the chances are if they want to sell it they're going to sell it for Y, even if it's not worth X.

KELLER: How do you tell them the multiple of cash flow to use, because I assume you're using a multiple cash flow, aren't you?

PUCKETT: Floating all over the place. In my opinion, the best way to determine value using cash flow or in some cases EPITDA, earnings per interest taxes depreciation and amortization, is to go in and determine what the revenue stream and the resulting cash flow is going to be on the system for a period, and you really have a number of elements – if it's a high growth area, if it's a classic cable system, if it's a suburban area, what the risk factors are, and those, by the way, those become more and more complicated every day with the new ancillary services. That's why some of us are sitting here going I'm not sure we're young enough for this anymore. And we will calculate that cash flow stream out over, hopefully, a ten year period and then we will add in the cap X and the other ancillary...

KELLER: Do you use multiples of future cash flow or multiples of present cash flow?

PUCKETT: Both. We net present value at back and then we look at what we think an X at multiple will be, we look at a reasonable rate of return. For instance, right now with the cost of equity being what it is and rates being what it is, I think a 15% net present value factor today would be a reasonable one, but we look at the cost of equity and we look at the cost of senior facilities, we look at the ratios the senior facilities are lending at that point in time, then we net present at that to today. The other thing we do though, and I think you have to do, is you have to look at what will be the effect of this acquisition be on the acquiring entity. I can talk about it now because it will be history by the time anybody ever sees it, but we're working on a deal with Charter right now where they're acquiring the Heger properties in Nebraska. It wasn't the cable systems alone that they were interested in, they have a 600 mile fiber network that ties all of the Bresnan systems that they acquired earlier into a single headend. So there's a real ancillary value there, so you have to look at what the economies of the new operator are going to be. In that respect, you almost do your client a disservice by setting a price because there are certain people who will stretch that price in a free market bid scenario. And I'll tell you, there are some auctions being run by our competitors out there that are just run brilliantly. I mean, I've seen some great auction processes going on and I can give them strokes for that, but we traditionally, in our classic markets, have a limited number of buyers for them so we tend to run a bid scenario but not an auction process. It's kind of a first one to date us the way we want to be dated. So we tend to find one or two buyers and focus in on which of those is the best transaction.

KELLER: At this date, early March of 2001, what would you say the multiple of cash flow would be in a system that would be sold today. I wouldn't hold you to it, but roughly what it would be. 15 or 20 times?

PUCKETT: No, we traditionally don't see those. We're not talking about multi-billion dollar transactions here. We're talking about smaller transactions so a reasonable multiple would be a ten multiple of the acquiring entities first year cash flow, which might equate to a 12 ½ or 13 multiple of a smaller operator without programming or synergies, but a reasonable multiple would be closer to ten, give or take, it could be less than that or it could be slightly more than that, and like any good businessman I'm going to put caveats on that.

KELLER: Of course!

PUCKETT: That would be, what is the growth factor? We've got a beautiful little system right now that has a somewhere between 11 and 12 per cent internal growth factor right now. That blows the charts off that number. So we've got some systems that need extensive cap X, you have to make adjustments for that.

KELLER: Explain cap X.

PUCKETT: Capital expenditures, in other words, plant upgrades, improvements, not to increase the revenue but to maintain the revenue with the competitive forces that are out there right now.

KELLER: If you were to have a raw franchise right now, and I would assume that there are going to be some deals that you make that are going to have a franchise that hasn't been built yet, how would you value that?

PUCKETT: The truth is I haven't seen a raw franchise for awhile, and that's the honest to God truth. We cut our teeth on raw – and that's a whole other discussion as to how we really got into the business in the early '80s – but we did a lot of raw franchise financing initially, construction, and then later sold them, even pre-sold them, but I haven't seen a raw franchise for years.

KELLER: How many years?

PUCKETT: Since '92? Something like that. There were a few county franchises out there at that point in time, but that's my best guess I would say.

KELLER: I want to talk a little about the valuation of a property, including the basis of just a raw franchise itself. How would you put a value on that, and then how would you go about getting the thing financed and built?

PUCKETT: You mean historically?

KELLER: Well, with any deal you may have made. Or let's say today.

PUCKETT: Well, there are no raw franchises now. Well, that's untrue. If you want to overbuild someone right now, if you want a competitive situation you can still franchise, but there are no virgin franchises to speak of. Every so often you'll find that there's a private access property, or a series of private access properties and you can apply for a county franchise and tie them together and there may be some stragglers, but that's a different beast.

KELLER: What is somebody came and said, "I have an SMATV system that serves 500 subscribers. What's the value of it?"

PUCKETT: What it's worth to tie in. At one point in time, it was funny because Kagan contacted us...

KELLER: I want to define that – SMATV.

PUCKETT: Private access agreement, in other words, non-dedicated streets or it doesn't pass public right of ways. It's basically under a private agreement with an owner or management company to provide cable television or other services, and again, Kagan came to us in the mid-90s and said, "In the last few years you did 90-something per cent of the private deals in the country." And I said, "I hope not." And we took a hard look at that because we didn't really want to be, particularly, in that business, but we did. We had several... Ritchie Pacific, Steve Ritchie, which is a Bruce Merrill takeoff from Arizona, it was here in San Diego...

KELLER: I said SMATV, I should have just said MATV – Master Antenna Television.

PUCKETT: Master Antenna, that's right. We did a lot of that stuff and mostly we sold it, we would sell properties to Times Mirror like crazy on the west coast, to Cox, probably did a couple of dozen of those deals. They were small in nature.

KELLER: Within their own systems?

PUCKETT: Within their franchised area so they could interconnect to them. We've done them basically in all major metropolitan areas. What normally happens is you find a larger operator of those facilities and then you sell them as a bulk and tie them together. There were some very specific FCC prohibitions and laws for awhile. Those have fallen by the wayside. I don't think we've done one of those for three or four years to speak of. There are some that are hybrids. We have a beautiful system in Arizona right now, as pretty a cable system as I've had the luxury of ever looking at. It's two retirement communities, they have private access but they also are franchised cable television systems, and they serve about 10,000 subscribers. Just gorgeous facilities. And those I don't classify with your trailer park or your apartment complex on a one off basis. Those systems tend to sell for what they can be integrated in at a lower multiple. Whatever the multiple would normally be, we historically have seen it at a couple of multiples less than a cable television property, but again, that's not the mainstream of activity for either our firm or anyone else. There's a gentleman who I really like, a great guy, you probably know him – Bob Berger with CEA, and Bob made a business out of that afterwards and I actually had to call him and ask him a question about one about a year ago because I didn't know what the values were, so we'd kind of gotten out of the loop on that a little bit.

KELLER: Well, if they were currently doing a multiple of services within the franchise area that they would then introduce into that system. You could assume at that point that the revenue is going to increase, is that correct?

PUCKETT: Right. Normally they would need to increase the bandwidth, which means getting into the complex and either post wiring it, or in the case of a trailer park they would have to dig up the streets, and increase the bandwidth, and normally those things are only at best an amp deep, or they become another node, so the larger operators now have seen them as a real business, and then they will get a long term access agreement with them and historically the Cox's of the world, who do a great job, will go in and acquire one of those and they never lose it again to one of the private operators. There have been different levels of veracity in that business. There are some guys that are great guys and have done a good job on it, and then there are some guys in that business who have promised the moon and not delivered, so you run into all types. But again, if you were to tie some of those in with a county it is conceivable there would be a franchise. The real franchising of, particularly, rural classic America, took place early in the days. I mean, you remember going out and garnering those franchises in the '70s and the early to mid '80s. By 1986-87, the only real new franchises that were out there were the metropolitan areas, the real large unbuilt areas that were more difficult to deal with, the kind of last of the great conquerors, and then the rural classic county franchises. We did a lot of that small town rural classic county stuff, particularly in the early '80s, late '70s. And what we would do is we would go out and we had all these little banks that had financed them, all the way from SBA loans to small guys who had put together a series of bank loans. I went from Topeka, Kansas – "I'm Tom Puckett from Topeka Kansas" (using Midwestern accent) and I went to Philadelphia and New York to the lenders and taught them to look a little different at rural classic cable. It was a good business, it has always had a cash flow in the 50% range, give or take. When large communities are doing 32%, a rural classic system can do 55%, even owned by an entrepreneur who isn't getting all the breaks.

KELLER: That's interesting, because that's just a switch to what it was originally.

PUCKETT: Of course, and what we find is that the banks were very receptive to batching those and they would...

KELLER: Well, you can prove the cash flow in those small markets, what it was going to be.

PUCKETT: They were very predictable.

KELLER: Year in and year out.

PUCKETT: A lot of them were built with 300 foot sticks and a lot of them were built on water towers. They were all over the place. What you need to do was bring in – I mean, this is early days – all that you needed to do was bring in a good off-air signal from whatever community meant something to them, and there are usually three of those, and then what you would try and do is bring in HBO and ShowTime and anything else you could throw on there. The Disney programming, when it came into being, was such a great thing to sell to good, clean cable. We had people running up and down the street – they didn't know that it was pay programming – they were running up and down the street looking for HBO. They didn't want cable, they wanted HBO. So that was a very good, healthy way to bring rural America into the communications world.

KELLER: But you could show the banker that if they were doing $30,000 a month, that that $30,000 a month would be there on end.

PUCKETT: Absolutely.

KELLER: And their cash flow probably was $15,000 a month and you could prove that.

PUCKETT: That's exactly right. Sometime prior to 1990, we had bankers always questioning the bad debt reserves that we were putting in, and so we took all of the systems that we had handled through that time and a wealth of information – at that time we kept every piece of paper we ever had, which was not necessary – but we went through and the bad debt on rural classic cable was ½ of 1%.

KELLER: I was going to say 2%.

PUCKETT: It was just negligible and you had all this customer base, you had no competition from any of the other satellite services at that time. There wasn't such a thing as Direct TV, there wasn't the NRTC licenses, there wasn't NMDS, there was none of that to deal with at that point in time, so what you did is you provided a service to the community and it kept people in the community, which was a good thing.

KELLER: How do you factor in the required capital expenditure to increase the channel capacity of a system in the smaller markets?

PUCKETT: Well, today, with HITS to Home and HITS, there is an excellent way... you'll find that, and again, smaller is definitional. What we try and encourage our clients to do, and we have a lot of still independently owned rural classic operators, but we also have a lot of very large companies that are operating rural classic systems all the way from AT&T down, and what we try and encourage everyone to do at this point in time is use fiber to integrate the systems and tie them together. It does more than just provide video, obviously it opens it up for a wealth of other information services...

KELLER: You can do it by microwave.

PUCKETT: You can do some of it by microwave. We've got some Idaho properties. There's no way to fiber them together, but they microwave a very beautiful network. A perfect example is there is a huge microwave system up in Truckee and we're just now fibering it together, but the microwave has sufficed. It was Gene Iacopi's old system. What we try and do is encourage them to fiber them together and turn multiple communities into a single headend. A perfect example, as a just mentioned earlier, the Hilliard properties in Nebraska, they have fibered some 20-odd communities into Kearney, Nebraska into probably the nicest cable system in the state of Nebraska.

KELLER: I want to be more specific in that, and I'd like your answer to it: you have a system that currently has 350 megahertz bandwidth capability. In order to do what the operator wants to do within that community, to bring in additional channels and so on to increase his cash flow, he has to bring it up to 550.

PUCKETT: 550 or higher.

KELLER: How would you figure in the capital as opposed to the purchase price of that system?

PUCKETT: Well, I think you have to look at what capital is going to be required. The problem we run into every so often is that someone will have just rebuilt it to 550 and 550 is inadequate. So that's more of a problem than anything. You look at, for instance, if there is any 330 plant out there right now, it's probably losing subscribers like crazy.

KELLER: But just re-spacing could handle that.

PUCKETT: Exactly, so from a non-technical answer, which is all I can give you, I would say that what we do is we look at the cost of upgrading the system in relationship to the valuation. In other words, we subtract it from the valuation, but we also have to look at if you're going to spend the money to upgrade it, what's the ancillary revenue that's going to correspond to that and usually it's pretty much of a wash.

KELLER: That's interesting that you say that that's pretty much of a wash, because that's the way I would figure it.

PUCKETT: But the most dangerous scenario is not to do anything, and we found that those companies and those clients of ours who have not been proactive have effective mitigated the value of their asset and that's something that we have to warn against, and part of our job in warning them against is oftentimes to find them the money to do it if they want to stay in the business. Fortunately for us from a revenue standpoint, unfortunate for the business, a lot of the independents are finally hanging up their running shoes and selling out. The prices have been attractive, the cap X has been very, very strong and burdensome and a lot of these operators find that they have more money than they'll ever want to spend and they're selling out. The fortunate part about that is we start seeing some of them come back again.

KELLER: That's great. Again, you say if a system is worth, let's say 12 times next year's cash flow based on what's given right there, and they need $500,000 to upgrade the system to where it's going to handle 5, 10, 15 more channels and it's going to give you another revenue, you say that you feel that in itself is going to pretty much wash, that the additional revenue will compensate in one year for the capital expenditures required to upgrade that system?

PUCKETT: Well, it depends on the demographics. If I went into Sun City and expected to retain within the first 24 months 10 to 15% of the subscriber base taking high speed interactive services I may be pleasantly surprised because a lot of those people are watching their stock portfolios and emailing their grandchildren, however this is a moving target. Five years from now it's going to be totally different than it is now. So whoever's watching this tape ten years from now is going to laugh at whatever I say.

KELLER: That's the dilemma of a broker.

PUCKETT: Yeah, exactly, it's always a moving target. But being optimistic, we believe that there is no poorly spent cap X if it enhances the revenue stream, that you will get that back with the same return that you would expect, and it hasn't changed a lot from when I got in the business in the '70s to today. If you can't generate some kind of return north of 20% or in the mid-20s, it generally isn't a well spent dollar, whether you're buying something or you're putting cap X on it.

KELLER: Return on investment?

PUCKETT: Exactly, you're internal return on investment. Now we went through years and years where we all expected 40% annual return in this business because we got a little greedy, and that was fine.

KELLER: Well, that's before we were paying out 50 and 70% for programming.

PUCKETT: And before we had competition, before we had rate regulation, before we had all these various and sundry items, and before we had... you know. But the cable industry, given all of the bad press it's gotten, it has a great conscience, and you have to go back and you have to go to square one. The cable industry has charged what they thought they were worth for their services, and there are always exceptions, but the norm of our industry has been to go in and improve the communities that we moved into. And if you don't believe that, look at the young people that are moving back into hogback USA that before would never have thought about putting their business in there, but they can get T1s in there and they can have high speed internet access in there, they can have communications in there, their people feel like...

KELLER: T1 being a reverse channel?

PUCKETT: Exactly. They can do anything they want. They can have two-way service in there, they can go back to hogback and frankly know... when I get on this telephone or I get on my computer, no one knows if I'm in San Diego or in hogback. I could be in hogback and nobody cares, and that's one of the things that the new communications world, despite Al Gore and some of the others that tried to reverse this, have been able to pull off, and our industry does have a conscience, and if you go and you look at rates as to what they could charge and what they do charge, we've made it a good business and it has a good return and Wall Street has rewarded us generally speaking over the years, but there have not been any grand slams as far as taking advantage.

KELLER: I think for data transmission and other things, those rates have yet to be set as to what they're really going to be.

PUCKETT: That's probably a good statement.

KELLER: What was your first deal? I think we talked about the first deal; what was your most memorable deal?

PUCKETT: The current one. Always the current one.

KELLER: Okay, always the current one.

(LAUGHTER)

KELLER: It's the one you're working on right now.

PUCKETT: It sounds a little corny, but I have truthfully taken the position that every single transaction we work on is equally important as the next. I will get just as excited and work just as hard for a little deal as I will a larger deal.

KELLER: I didn't say important, I said memorable.

PUCKETT: Memorable – I really don't know.

KELLER: What was the most difficult deal you've made?

PUCKETT: We've had a number of difficult transactions because a lot of times we get the difficult ones, and with the moving tax laws there have been a number of times when we would pull our hair out because everything was moving in the middle. I knew you were going to ask me that question and I don't really have a good answer. I would say that probably the most difficult thing was living with the changes in the market place so fast, because everything has changed so fast. We've gone through all of the '86 reform, we went through the tax laws that went away, the limited partnership rules went away, we went through highly leveraged transaction during the George Bush years, we went through the Jimmy Carter interest rates, we got creative during that time. We did more seller paper probably than any other firm, we got our clients to take paper back, and I never, ever had one of those go bad. We never had bad debt on any of that. Everybody always paid their debts. As a firm, for years, we took, and still to this day sometimes, take paper as a fee if it means getting the deal done.

KELLER: That's how Daniels made his money, originally.

PUCKETT: Well, I'll tell you what, Monty Rifkin, with ATC, made a lot of brokers rich giving ATC stock out in those early days. That was before my time, but that was not a bad deal. We're doing a deal right now where our firm is taking convertible preferred stock because we happen to really like the public company that's going to do it with our client. But I'm hedging on your answer because so many of them are so difficult. I'll tell you what I'm most proud of as a firm, I think, is the fact that we created so many rural classic buyers that we built up a little piece at a time and then eventually sold them out. In some cases we didn't get the sale, in some cases they went public or something else, but I can name 15 or 20 companies that were nothing when we started, that didn't have a cable deal, and we sold them their first deal, we sold them their last deal, and that's what I think is a tribute.

KELLER: Do you remember who some of those were?

PUCKETT: Oh, I remember all of them unfortunately, that's the sad part!

KELLER: Please do.

PUCKETT: Cardiff was the first one we started with.

KELLER: Stan Searle.

PUCKETT: Stan Searle. Bill Petty at Empire Cable. We had Jack Fullheart; he built up and we sold him something like 120,000 subscribers in the Midwest and in the Carolinas. We had Rodney Weary at WW Communications, and then Rodney sold out to C4. We didn't sell them, another one of our competitors got them, but we sold them close to 100,000 subscribers one little deal at a time over the course of a year to a year and a half. When we sold Rodney Weary's WW to them, we turned around and started him again at Cable Video, built him up again and sold him to Classic Cable. Classic Cable is another perfect one. We sold them close to 200,000 subscribers in the Midwest. We had WK Communications, which was another Weary. That was Bob Weary, one of his ventures, Bob Weary and Bob Kinocki. We started selling them some systems that I actually owned in a limited partnership, south of Kansas City, and they we sold them systems all the way down the Kansas/Missouri line in both states and then we turned around and sold them to Classic. We did an enormous amount of business with Falcon in the early days and then turned around and sold Cardiff to Falcon, for instance.

KELLER: That was Marc Nathanson?

PUCKETT: Marc Nathanson, and Stan Iskowitch was an attorney who was his right hand man in that operation, and just great to deal with, clear up to the day they sold this last year to Charter. It's kind of sad to see all these guys going out of the business, but it goes on and on. I can sit here and... the Hilliards, I mentioned before, are perfect examples.

KELLER: Did you ever do anything with Bob Fanch?

PUCKETT: Bob Fanch came and he was looking in '83 or '84 for new projects and we tried to get him one or two deals but we didn't close them, but I've driven hundreds of miles with Bob. He was a good guy. He beat me out on Fulton, Missouri. I flew in one of Rodney Weary's rickety airplanes. We flew in the worst storm over to Fulton, Missouri trying to get that, but Bob slipped in and in Monty's name got the deal and that started Fanch Communications. That's what he eventually started off on that, then.

KELLER: Leonard, did you ever do anything with Bob Leonard?

PUCKETT: No.

KELLER: I'm trying to think of some of the other small guys.

PUCKETT: Well, we...

KELLER: Roger Leonard, I'm sorry.

PUCKETT: Roger Leonard, Leonard Communications. He was out of Denver as well, but we did not do anything with him. We actually, in that circle... our presence has... we've done some stuff in the Southeast, but our presence is the Midwestern states. We've controlled those states and the Southwest. When I moved the office to San Diego in '87, I did it because it was hard getting people to take you serious being from Topeka, Kansas. So, that was a good move for us because Arizona was a very large presence for us. We had a number of options and activities in the state of Arizona.

KELLER: Jim Monroe?

PUCKETT: Jim Monroe, great guy, good for four or five deals with us. We just closed – he had little Julian, California – we just closed that this year. Jim is doing well, and looks well, and getting along very well. He's very good friends with Kerry Kelly, who is Sun Lakes Cable, another project of ours over there. It's the kind of places that I like to go, I find, that we tend to gravitate towards, and that's natural.

KELLER: Oklahoma?

PUCKETT: Oklahoma. Big state for Oklahoma. We sold Classic a ton of Oklahoma, we sold TCI a lot of their systems in Oklahoma. Originally the Cardiff people bought the eastern part of Oklahoma. Terry Thomas of Thomas Communications bought and sold through that. I owned a little cable system in Anadarko, Oklahoma; had it, sold to Cardiff and Stan didn't want to close, or couldn't close, on the 11th hour, and my client informed me he was going to bring Daniels in to retain listing and I said, "Fine, I'll just buy it from you." So two weeks later I owned a cable system. I thought I was going to hold it for a couple of weeks and just warehouse it and sell it, but the tax write offs were too good and we owned it for about five years, and then sold it to Rodney Weary when he had Cable Video Enterprises.

KELLER: You've mentioned Daniels and you mentioned CEA earlier on, Communications Equity Associates, were these difficult competitors over the years?

PUCKETT: The interesting part about that is despite all the problems they had with each other, and the way they liked to go at it with each other, we were kind of the non-threatening little guys, so never in the history of this firm have I ever had a problem with those firms.

KELLER: Waller?

PUCKETT: No. John – great guys. A couple of guys that worked for Waller I knew in different lives, and Jack Woodruff, for instance, in his days as a buyer was a great client of ours. I like Jack. Rick Michaels is as good a friend as I have in the industry. I thoroughly enjoy him. If you asked him, I'm sure he would say the same thing, that we have had a very honorable relationship. If we're involved in a deal and he's involved in a deal, we just do not rain on their parade, and in fact I felt comfortable enough to call one of his guys and ask him about a valuation. No, it's fortunate that... the bad news is that some of those guys have done a little more volume than we have through the years, the good news is that we've retained our relationship. We really have, and I'm proud of it, and my guys and ladies that have worked for us for years, know that paramount is we've maintained our veracity and honesty in the industry. There may be somebody that might disagree with something I've done, but no one's going to say that we ever did anything that wasn't aboveboard.

KELLER: I've never heard anyone say anything.

PUCKETT: We've been able to do that and I guess I'm as proud of that as anything.

KELLER: You mentioned before that someone came to you and said, "I've got $100,000 of equity to put into a system." How would you take that and how many subscribers could he get for that, and how would you finance it?

PUCKETT: Well, I'm going to pick on poor Bill Petty and he wouldn't mind me doing it. He had left Cap Cities, Bill James was the president of Cap Cities and you may remember, he made a run on the company unsuccessfully and the Washington Post bought the company and so he was without a job and went off. Well, Bill Petty was one of three senior vice-presidents at that time. Tom Bessinger took his position, but there was Bill and two other guys; Harvey Boyd was one of them and I can't recall the third one.

KELLER: The only one I knew very well was James.

PUCKETT: Bill left the company and came to us and said, "I want to buy a rural classic." I said, "Good, what do you have," and he said, "I have $100,000 of equity." I said, "Well, that's not going to get you much." He said, "Look," this was in a time when interest rates were 20%, and he says, "I'll give them any price they want as long as they'll carry paper on everything above what I can get at the senior bank level." So we set him up with a line of credit at Heller Financial, and he went out...

KELLER: Those are usually secondary markets, aren't they, at Heller?

PUCKETT: Well, at that time... it's now become Vanova, and Vanova's a senior lender and competes with anybody as far as pricing and everything, but at that time Heller and Indianapolis Mortgage Plan, which became First Mart, they were...

KELLER: Was that originally Economy Finance?

PUCKETT: Before my time, if it was. The first loans I did with them would have been in '77, '78, and Bill Kennedy and Bill Van Huss were the lenders back then and they would lend you money but it was 5 over. It was expensive. I remember saying to one of our clients, Hollis Logan, "You can't make money at 13%." And he said, "Watch me." And he did. But back to Bill Petty, we sold them systems anywhere. We sold them systems in Kansas, in Oklahoma, in Nevada. We sold him little Tonopah, Nevada, which had more brothels than it had cable subscribers, and he built that up into Empire Communications. We sold him about 25,000 subscribers and then we turned around and sold the whole package later, and he retired off of it. So he did very, very well, and it was that pioneer spirit, they're willing to reach for the brass ring.

KELLER: And Heller financed that deal?

PUCKETT: Heller financed it, and we had a lot of owner finance. We had some other side paper, maybe some First Mart financing in it, it wasn't the kind of deal that you would have taken to First of Chicago or Toronto Dominion. It was highly leveraged.

KELLER: How much have you done with the Canadian banks?

PUCKETT: TD we've been involved with a little bit, but nothing more than that. Early on we did... we've been so busy as a firm the last four or five years that we haven't done as much financing as we did before that. In the early days we did a significant amount and then we would do two to three deals a years after that. That was primarily Hiram Powell in our office who did a lot of that.

KELLER: Euro dollars? Did you bring any European dollars into it?

PUCKETT: No.

KELLER: So you stayed pretty much in the American...

PUCKETT: We have focused on this market and stayed on this... My hat is off to Rick Michaels who flies all those thousands of miles overseas. No thanks. My idea of going to Europe is to go to Paris and have a good time with my wife.

KELLER: I would agree with that, but he sure does it.

PUCKETT: He does it and he enjoys it. He thrives on it.

KELLER: Have the New York brokerage firms cut into your business at all over the years? The Lehman Brothers and other big firms that have been...

PUCKETT: Not into the type of business which we have traditionally handled. Had we been handling the larger transactions where a Times Mirror would sell to Cox, yeah, it would have shut us out of that business, but since we're not involved in that... Before Times Mirror merged we did probably 16 or 17 deals with them, but not above that magnitude. The largest one we did with them was in the 55 to 60 million dollars range. They hired us to sell off their rural Texas systems; there were three or four systems there and we sold that to TCI in those days. But that was the largest magnitude deal we did with Times Mirror, so when it came time for them to do that deal they hired Wall Street to merge with Cox, and that was a logical move for them.

KELLER: Tom, what was the largest deal you ever did?

PUCKETT: We have several that are in the same category – probably the American Cable Entertainment Scott properties. We did them in two pieces; we sold 165 million dollars of it to Rifkin, and we sold about 40 million of it to Classic, and the combination of that was probably the largest. So the largest deal we were actually involved in we were doing some consulting work on the Storer transaction on SCI Holdings. That was through Jim Faircloth, originally, and Jim Hall, who were with the firm at the time, but that wasn't a true brokerage activity.

KELLER: Everybody got in on that deal at one time or another.

PUCKETT: Yeah, everybody took credit for that one, so I don't really count that one. That would be out of school, and we weren't negotiating the deal points on that, but we were involved in a due diligence position on that. We had had other very nice size transactions, ones that I'm really proud of that were difficult, but the combination of American Entertainment and Scott were the largest. During the same time, we were also doing the Westar Properties, which was 84 million, so that was a real busy time there, and then I told you our firm also handles the wholesale optical business and we did the Hoya transaction, which involved the Hoya Japanese company getting into American market and that was 150 million dollars.

KELLER: But it wasn't a cable deal.

PUCKETT: It was not a cable deal. So all those interacted, but in the 100 million dollar range is a very good piece of business for us and we like to stay in that range. Something less than that we get just as excited about.

KELLER: What other types of things do you do? Do you do appraisals only for the sake of appraisals, or only in connection with a sale?

PUCKETT: Of course there's an inherent valuation process you do as part of the transaction...

KELLER: I understand, that's why I ask.

PUCKETT: But that aside, during the... when Saddam Hussein did his wonderful thing in Kuwait, as you know, the cable market for transaction business went from 10 billion dollars down to about 800 million, so it was about 8% of its usual. A lot of our competitors decided to fold their tents or they merged in with...

KELLER: That was also because of the impending Cable Act in '92.

PUCKETT: All kinds of good stuff. It was the Cable Act, it was the economy, it was the tightening of the credit markets, and during the end of '89-'90 area we did a lot of valuation and appraisals. There are firms out there that do that regularly, more than the transaction business, but we took a lot of them. We did about 15 appraisals for TCI during that period on the ACT properties, a number of other smaller stuff, but that fed us very well during those years when the transaction market was a little slower. Now remember, our smaller transactions, we were still doing 1031 exchanges and deals, even though there weren't any large deals...

KELLER: Explain a 1031.

PUCKETT: That's basically where you have a tax-deferred gain, you trade a like kind asset under the code and are able to carry your basis from your earlier property over to the subsequent property.

KELLER: Straight tax free exchange.

PUCKETT: Exactly. They're not always totally tax free, you have to match up like kind assets, but we did a lot of that. We still do a lot of that with larger entities by finding a third party. For instance, if AT&T wanted to sell a cable system I could find them a like system to buy, go through a third party intermediary, do the exchange and there would be no tax consequence to that, but that aside, we did a lot of appraisals. We have done a few fairness opinions, which make me very nervous to do, but when no one else will do something like that...

KELLER: What is that?

PUCKETT: A fairness opinion takes your appraisal or others appraisals and issues an opinion to the shareholders that the transaction is fair from an economic standpoint, and those carry a high level of liability and risk, so we're very cognizant of that whenever we get into those. We did some analysis work like that for Falcon, for instance, because they were such good guys. But those are the types of projects that we historically do when we have a little more time, but you're looking at a small firm who does windows and basically our guys have learned what lights are for, so oftentimes we don't have that luxury of time.

KELLER: What did you think of the contribution that Milken made to the industry?

PUCKETT: At a time when the industry needed money he found money, and you can criticize him or not criticize him for all the other things he's done, but he put money into great companies like Comcast, who are a lot better for it now, and I may be wrong, but I know of no bond issuances that he was involved in in the cable television industry where everybody didn't get all their money plus their interest.

KELLER: Oh, I agree with that. The junk bonds did well by the industry.

PUCKETT: They were great and it was good for our industry, and if I'm limiting our conversation to our industry I would say that as far as I'm concerned it was great business. One of the reasons we came to the West Coast was the awareness in the financial markets of the West Coast, in great part, created by him. So, I guess that's a good answer.

KELLER: I know Paul Kagan thinks that the sun rises and sets on him for what he did for the industry.

PUCKETT: You know, we needed capital, we needed to grow. If there's one thing we've learned in the cable television industry is if you stay still you'll pay. The running joke was that our clients never ever made a principle payment on their debt for many years. It was all... you rolled it every two years and it was strictly term loans.

KELLER: Or as Malone said, I'd rather pay interest than taxes.

PUCKETT: That's right. Well, we have matured some, but it's the Malones of the world that made this industry and make it fun. The meetings that I had with Dr. M. I will really cherish; they were great. Whenever you'd start to say something he was three lines ahead of you. In large part those were due to introductions made by Bill Bresnan for me. As I told you earlier, Bill is one of my heroes in the industry, if not my "Blue Leader". A great guy.

KELLER: And Bill owes an awful lot to TCI and Malone.

PUCKETT: And them to him. I think they had a great relationship, and hopefully, maybe with Liberty he'll get something going again. You just never know how something like that will come around. But Bill, he's one of the guys that introduced me... the interesting part about this is in December of 1986 I hired a guy named Jim Faircloth, and Jim was the regional vice-president for Storer, he ran a half a million subscribers. The thing that Jim did for our firm is it moved us out of being a regional investment banker into a national firm. He introduced me to the Bill Bresnans and the different people who then introduced me to other people in the industry, and it was so much fun because I'd get a wild hair idea... one of the ideas I had was that TCI should buy Times Mirror. That was at a time when Times Mirror had – oh, gosh – they probably had one million two hundred thousand subscribers or more, so Bill says, "Let's go see Malone."

KELLER: The Chandlers never did like the business, though.

PUCKETT: It was a great business, and they had the beautiful systems. They had San Diego and Phoenix, and they had a lot of rural systems with 70 or 80 thousand subscribers per headend. They just had some great systems. They had the Orange County system with Irvine Ranch. I mean, just great systems. So we flew out to Denver and met with John and Bill. Bill took me out there and we met with John and he said, "Well, why don't you talk to J.C., it sounds good to me." So we went in to meet with J.C. Sparkman, and J.C. said, "Let's do it! It's a good deal. Let's do it – right now. Go see what you can do." So I, a very close friend of mine was a board member at Times Mirror and he sold his publishing company to them – Herb Schnall – here in San Diego. So I went to Herb and Herb introduced me to four or five of the board members and I went to the board and they said, "Hmmm, the timing just isn't right." And that was the end of that deal, but the fun was having that chase. We had the same chase with, it was then Post Newsweek, now Cable ONE. We had the exact same scenario, same chase, went through the same thing, and they came back and said, "We just don't need the money." Those type chases, although they never materialized, were a lot of fun, and to have a guy like Malone who was three steps ahead of you the whole time, it was really a fun experience.

KELLER: How about with Comcast? Did you ever do anything with Julian Brodsky?

PUCKETT: Absolutely. We measured... I tried my darndest to... well, we've done some smaller transactions that we've actually closed with Comcast, very pleasant to deal with. They ask more questions and do more due diligence than any three of the other companies put together and as Art Bloch, who is one of their head attorneys there said, he said, "When you work for Julian, if you get Saturday and Sunday off, you think you've gotten something." But we all have our Brodsky lines. I was in a cab with him one time and I said, "I think you're going to be late for your airplane, Julian," and he said, "If you don't miss an airplane once a week you're spending too much damn time in airports." You've done an interview with him, you know what his lines are like. But we tried our darndest to fix, and it wasn't Comcast's fault and it wasn't Bill Jackson, at Cable America's fault, we tried to fix an overbuild in Huntsville, Alabama for years. We measured it by Julian's vacations; he always takes exotic vacations to someplace – Africa or China or something – we measured it each year by those, and each time the federal government or the city would shut it down. We tried and tried and finally one of our competitors was going to sell that to an overbuilder – another overbuilder – and I'm proud to say that I didn't take the deal because I was able to walk into The Cable Center board meeting and Julian said, "I see you sold that to this other company," Nologies, who bought it, and I was able – I lost a lot of money by not taking the deal, but I was able to look Julian in the eye and say, "No, I didn't." I think that was worth that to me, it was very important to me. Now, the company that sold it – the other company on the other side of the table – they are extremely reputable, we represent them, we do a lot of stuff, they're not bad guys, but they got into a competition area there that actually they didn't start, it goes clear back to the TelePrompTer days, when somebody came...

KELLER: That's one of the classic overbuilds.

PUCKETT: It is. They started overbuilding Bill Jackson first – Group W did – it wasn't TelePrompTer, it was Group W, because Group W, during Bresnan's days as president there, started overbuilding Bill Jackson, the local manager...

KELLER: Bill was at TelePrompTer.

PUCKETT: But then Bill ended up running, for Westinghouse, Group W for one year.

KELLER: I guess I don't remember that.

PUCKETT: Yes, in a transition period, and during that tenure this whole battle started, so we initially took Bill Bresnan down there and tried to buy both Comcast and the overbuild part, and Julian had agreed to it reluctantly, and Comcast was going to let go of the whole market. It was about 60 or 70 thousand subscribers, and a dentist on the city council killed the deal, and we tried our darndest and it turned out that Cable America...

KELLER: Did he just want the competition to remain, is that it?

PUCKETT: No, he was buying both sides.

KELLER: No, I mean the city council member?

PUCKETT: Oh, absolutely! He thought that was best for the city. Well, it ended up costing the city 11 million dollars on a judgment, so it wasn't a great decision to make at the city council level, but that was a fun project that was an "almost" over and over again, and it was the hardest thing. As a firm we have been very good; we have fixed between a dozen and 15 overbuilds. We have gone in and...

KELLER: By buying one or the other?

PUCKETT: One buying the other, a third party buying one, convincing the overbuilder to get out for the cost of their money, bringing three-way trades in. A perfect example is Kearney, Nebraska in the mid-80s, the Huntel Telephone came in and said, "We're going to put a simul-sat mutli-feed SA pre-req, pre-wired system in and TCI's going to go away." Of course they didn't go away. It got to be major litigation, it was a mess, so how we fixed it is we brought the Hilliards in and they bought both pieces and they traded TCI for some stuff around their Scotts Bluff, Nebraska system for their part, and we got it all fixed. It took a long time to do, but we eventually got that deal done.

KELLER: Most of your business coming in today comes in the door from previous clients, or do you actually go out and solicit business today, too?

PUCKETT: It comes in from previous clients and major MSOs. So we deal with... there are some major MSOs we just don't have the relationship with, but we have it with a number of them, and they either have a property they don't desire to have, or a property they do desire to have, or it's relationships out there. In this industry there's not that many of us left; you pretty much know everyone.

KELLER: I'm just wondering how long there's going to be for these great national shows when they're spending hundreds of thousands of dollars to put up there to attract who?

PUCKETT: Well, you know, the truth of the matter is that I'm not a big National Show or Western Show fan. I'm not a big cocktail party kind of person. You'll see me not in center stage at any of those functions, and the reality is that the small guys tend not to go to those shows and the large guys are overwhelmed at them. So, I'll still go, I'll be there, but it's a different flavor.

KELLER: You've always said that you like to remain in the background. Where did you achieve this humility?

PUCKETT: Well, it's not so much humility, I think we're all vain to some extent, it's just a way of doing business. I think that if we can do it quietly there's a level of trust there. I guess it comes from the legal background – everything's confidential and quiet, but a number of the transactions, Comcast is an excellent example, Times Mirror was an absolute – you could not even do a press release, they didn't want you to do a press release. You just did your thing, you did it quietly, and you tried to do a good job and get it done as quick as possible, and I think that's important. Our competitors watch what we do, they know exactly what we do, and it doesn't seem to bother them too much. I think they've got enough pie on their plate at this time.

KELLER: Where do you see your business going in the next five, ten years?

PUCKETT: I think it'll be alive and strong. One of the reasons is we got smart along the way. We do, in the last couple of years we've averaged about 800 million dollars per year in sales, in transactions. That is actually our best years on average, and I think one of the reasons that we're able to do that is we're pretty lean and mean right now. I have found that the people who are with the firm don't mind working hard if they get compensated well. At the same time, I think there's enough creative business out there to keep doing what we're doing for some number of years. I told you that we have an ancillary business in the wholesale optical business; that business has a certain amount of life left in it, but the cable business by itself, there's no reason to think we have to change. We have a little spigot that I can turn up and turn down so that I don't just burn everybody out, because it is possible to burn yourself and those around you, so we all have peaks and valleys. I'm ready for a little bit of a valley now, that would be all right, but my son – and I'm not really encouraging him, but he keeps saying keep the firm alive until he gets out of school – I think he has some fire in him to make some money, and he's only a first year college student, and I'm encouraging him to go to Daniels School of Business and go through The Cable Center as well, and get that experience for his MBA. And if he goes into peanut manufacturing, that's fine, but he has asked for that and I also have some people, as I've said, that have been with our firm. I have Sylvia Schiller, who started as my secretary out here, and has been with me for 14 years and does some very intricate work on presentation work and closing procedures now, totally different work. But she went to night school, we paid for all the business classes she would take and she's learned to do that. We have a lot of people, or some people, certainly, that have been with us for a long time, and I've got some brand new talent that's phenomenal. I've got a young man with an accounting background that's been with me three years now that's as good as anybody's got out there. So I look for them to take more of the burden going forward.

KELLER: So you're going to kind of be semi-retired here before too long?

PUCKETT: No, I'd get bored. But if it meant that the evenings were all mine, that would be good.

KELLER: You can't do that today?

PUCKETT: Pretty much. It depends on, you know, you run into times when everybody's all hands on board. To be honest with you, the thing I dislike the most is the travel, and when you spend so many years and so many hours in airplanes – Rick can have those airplanes. I don't care if he's going business elite or not, he can have those airplanes, and I would prefer to stay home if possible, or travel for leisure.

KELLER: What's the biggest mistake you ever made? In business?

PUCKETT: Oh, okay, well that simplifies things. No, I knew what you were talking about. Assuming that one wants this, I probably should have tried to escalate the size of the firm and become a registered NASD firm and go after a larger piece of the industry. It would have been very easy to do with our friends and family, but I don't really see that as... that's probably something in hindsight that could have been easy to attain. I don't see that as necessarily a mistake because we've had a pretty good life, and I think we would have lost some of that. And frankly, my children now are 22 and 19, I didn't see a lot of them as it was, I would have seen very little of them at that point. There's a quid pro quo there.

KELLER: We all know that.

PUCKETT: Yes. Also, there was a lot of good talent out there. I think one of the things I really in hindsight should have done was pick up some more of the good talent like I do have, because it would have made life simpler and different, and there is a lot of very good talent in our industry.

KELLER: But then you would have been just managing people and not anything else.

PUCKETT: I found that. At one point in time we had about 25 in our firm and I wasn't doing deals, I was managing people, and believe it or not, we did less volume with those numbers than we do now with the smaller numbers.

KELLER: This has been the oral history of Thomas F. Puckett, chairman and CEO of HPC Puckett and Company. This oral history is part of the project sponsored by the Gustave Hauser Foundation and it part of the overall oral history program of The Cable Center. The date again, is March 6, 2001, and your interviewer was Jim Keller. Thanks very much, Tom. It's been a great pleasure.

PUCKETT: It was my pleasure, thank you.

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Rex Porter

Rex Porter

Interview Date: Wednesday December 12, 2001
Interview Location: Denver, CO
Interviewer: Bill Riker
Collection: Hauser Collection

RIKER: This is the oral history of Rex Porter. Rex has been in the cable industry for over 40 years, and I have had the pleasure of knowing and working with him since 1984. Today is December 12, 2001 and we are interviewing Mr. Porter at the AT&T Digital Media Center in Denver, Colorado as a part of the Oral and Video History Program of The Cable Center, also in Denver. The project is made possible through a generous donation from The Hauser Foundation. I am Bill Riker, chief technical officer for The Cable Center. Now, Rex, let's start at the very beginning, as they say, where were you born and when?

PORTER: I was born February 14th, Valentine's Day, in 1939 in a little town south of Nashville called Fayetteville, Tennessee.

RIKER: And your family? How many brothers and sisters did you have?

PORTER: I had seven sisters, and along about the time I was ready to graduate from high school, I had a brother born into the family. So, I grew up in pretty much a female family.

RIKER: With quite a spread, as well.

PORTER: Yes.

RIKER: And then where did you go to school?

PORTER: I went to high school at Lincoln County High in Fayetteville, Tennessee.

RIKER: Then you moved on into the Army? Or the Air Force?

PORTER: No, we were raised in a pretty poor section of Fayetteville. We were out south of Fayetteville almost on the state line of Alabama and Tennessee. My father was a Nazarene minister, and had a small country church that didn't make a lot of money. So to supplement the income as a pastor, he did a lot of home repairs and construction work. Everybody in my family, the Porter family, had been carpenters or construction contractors but he was sort of the odd duck. He was the minister in the family, but he had been taught how to do carpentry work. So I grew up picking cotton and chopping cotton and working from sun-up to sundown out on other people's farms, and whatever money I had to make class trips or to supplement what I wanted to do in school I did from just hard labor out on dirt farms, and when I graduated from high school I was too young to go into the service because I was only sixteen years old. So I had to wait around a year and then finally I could enlist in the Air Force. When I was growing up during the Second World War, I had a cousin who had been an airborne radar operator and he had been shot down and died as a casualty during the Second World War. So, my family had made such a hero of that cousin that when I grew up I certainly always wanted to fly or be a radar operator in the Air Force. So when I went into the Air Force, that's what I applied to is radar, and actually spent eight years in the Air Force. The first four years I was a ground radar operator, and then the second four years I went back into the Air Force as an airborne radar operator, and actually trained right here at Lowery for airborne radar. This was from 1956 through 1963, the eight years that I spent in the service. And while I was in the Air Force, I started writing articles for the newspapers and I worked for the San Antonio Light and the San Antonio Daily News, and then when I transferred the last four years, I went up to Great Falls, Montana, and the newspaper editor up there found out that I had written for the San Antonio papers, so he put me to work. Even though I was in the Air Force, they would release me from duty so I could go cover basketball and football games for the Big Sky conference. So I traveled all over Montana, did a stint of work for the Canadian news service and covered their... they had semi-pro basketball teams, and the one that was local up there was the Broder Chinooks from out of Calgary. They had a semi-pro team. So they would go down to Dayton, Ohio and Columbus, Ohio, and they would play teams from Goodyear or BF Goodrich or whatever companies, U.S. companies, had semi-pro basketball teams. Originally, when I got out of the Air Force, I had planned to go back, and did go back, and apply and was accepted at the University of Tennessee, and I was going to be a writer. I envisioned myself as being the Earnest Hemingway of the 1970s and 1980s because he had always been my literary hero. So I went back to the University of Tennessee, as I said, and about that time, my brother-in-law owned a construction company down in Decatur, Alabama, and he was doing construction work building cable systems all over Florida and Alabama and Georgia, and he called me one day and said, "They've got an opening for an engineer that can work on microwave as well as work on amplifiers, and you've got a background. How would you like to come down and interview for the job?"

RIKER: So your radar background from the Air Force really was a big help there.

PORTER: Yeah, because once you've worked on radar, microwave was a fairly simple operation to get into real quickly. So I went down, and this gentleman's name was Helmut Dieter, and Helmut Dieter had worked for Jerrold Electronics, and he and another salesman, Pappy Rutherford, who actually formed United Artists with Ken Gunter, worked with Ken Gunter down in San Angelo later on, they had found a little town down in Decatur that didn't have a cable system in it – Decatur, Alabama – so they would leave Fayetteville, Pulaski, Lawrenceburg, where they were building the cable systems for Jerrold and go down and they got the franchise for Decatur, at least Helmut Dieter did. And Helmut had been – he was quite a colorful character – he had been a Luftwaffe pilot during the Second World War and because of his composure and his wide straight marching, you could almost imagine him clicking his heels – he had a lot of trouble. He was the eastern regional manager for Bruce Merrill's cable arm of Ameco. It was called American Cable TV, out of Phoenix, and he was trying to build microwave systems to take WGN all the way to Miami and then the western division of Ameco was trying to bring KTOA across Texas so they could have an independent television station.

RIKER: So WGN was the Chicago station and KTLA was the Los Angeles station.

PORTER: Yes. So I went down and interviewed with him on his front yard, and he asked me some basic electronics questions that I thought were so basic it was kind of simple to even use those as a test to see how electronic you were, but anyways, he hired me on. We had a chief engineer at that time by the name of Randy Fraley, and Randy had a first class FCC license. I didn't have a FCC license at that time and back then it was almost the Holy Grail as an engineer to have a first class ticket. So Randy worked on the microwave, but I don't think that Randy's heart was really in the microwave side; his heart was really more in the operations side, and later on it showed because when Helmut Dieter left to return to Phoenix from Decatur, Randy took over as the manager of the cable system and they made me the chief engineer of Decatur. So when I was there you didn't have a lot of formal training for the technicians. They would just hire a guy off the street and then try to teach him how to do installs and how to construct the cable system – how to hang the cable, how to hang the strand and so forth. So it was all on the job training and because I had this formal training from the Air Force, and then I also had taken some courses from Cleveland Institute of Electronics, they would have me come in and do evening courses for everybody that worked in the cable system and it was just part of my job. Back then they didn't pay you a lot of money to be a cable technician. As a matter of fact, when they hired you on, you had to buy your own tools, you had to buy your own belt, and what they would do is they would pay you your salary and they would take so much a month out until you had paid for all the equipment you were going to use on the cable system, and I think every one of the old technicians and engineers actually went through this process, that you almost had to pay your own way.

RIKER: And even today, on the job training is the norm.

PORTER: Yes, and so I went and got my second class ticket. I didn't require a first class because you could operate and maintain the microwave you would just get a first class ticket holder to come in and sign off because the first class ticket was the only one that could sign off and get the license renewed. This was old Raytheon gear, it was old tube type gear, and so actually I worked for two different... I worked for Ameco in the cable system, but we had a microwave hop that was up on a mountain called Capshaw Mountain, which was north of Decatur, and we picked up the Nashville channels. Our original plans were to bring those channels to the Decatur system and to the Huntsville system because Huntsville had three different cable systems in the city of Huntsville, Alabama. And then we were going to take and do links over to the TelePrompTer systems in the tri-cities, which were Florence, Sheffield and Tuscumbia. So I kept up the microwave and one of the reasons they wanted me to work in the cable system was there wasn't that much time you spent... you could sort of slough off if you were just working on the microwave, and they weren't going to let you get away with that. So the first thing that Helmut Dieter did was he said, "You go out and work with the construction people." Well, that meant that you were a grunt because you didn't know anything, you worked under the crews as they were working on the pole line, and they'd yell down, "Throw me up a three bolt clamp, throw me up a come along, throw me up whatever." And it taught you humility because here you were a trained technician, you had some licenses, but they didn't care. You were just a grunt, and the guy that was really making your life miserable – I can remember throwing up a rope so they could pull up the lasher, and there's a real technique to just throwing the rope up where they guy can grab it, so you really feel like a juvenile if you can't throw it up to where he can grab it on the first throw-up. So I worked there in Decatur for about two years, and as I say, one of the problems that Dieter had was he had that German officer look about him, and his job was to go in and get franchises, and to go out, once he got the franchise, he would have to go negotiate with the telephone company and the power company to get pole rights. The other thing he'd have to do is he'd have to go out and negotiate with these local farmers because he had to put the tower up somewhere on their property. Well, as he got further into the south, especially into Louisiana where there are a lot of French people...

RIKER: And he was German.

PORTER: They just couldn't abide him coming in, so if he was in competition with three or four people for the franchise, he was likely to lose. So because I had this radar background, he found out real quick that I could do – not to brag – but he felt I could do very superior signal surveys because I would make them very thorough. So he sort of took me under his wing, and he said, "Why don't I teach you what to say before the city councils and why don't I teach you how to get these pole contracts and teach you how to get these tower agreements signed?" So I started doing that, and I did it for quite awhile until I realized that this was silly. I ought to be getting my own franchises. So while I was still working for them – not undercover, of course they knew that I would go into another town in Georgia or Alabama or Tennessee – I would be getting franchises of my own, or helping locals get the franchises because back in those days, while cable television or broadband networking is a big industry today, back then it was a small mom and pop industry, and it would be pretty much like a dentist or a doctor in a town would hear that a town 30 miles over got a franchise and they didn't want somebody to come into town and get that franchise, so they would go apply for the franchise. And since they were local they would get the franchise, but once they had it they didn't know what to do with it.

RIKER: So you would partner with them?

PORTER: Yes, so they would call me and say, "I've got this franchise. I know I need to build a cable system. I don't know how to do that. Would you come in and I'll make you a partner?" Well, we didn't know what cable systems were worth back then. If you sold one you would get $200 a subscriber instead of the $4,000-$5,000 a subscriber they get today.

RIKER: Plus the rates have changed in between there, too.

PORTER: Yes. And I would work a deal with them and I'd say, "I'll come in and get the cable system built and I want 5% or 10% of the cable system." And they'd say okay because they didn't know how much money it was. Over the years we've gone into court because all of the sudden they'd say, "Well, wait a minute. That's too much money for you to make because you didn't do anything." And I'd say, "Well, of course I did."

RIKER: You built it.

PORTER: And they'd say, "Well, you never came back in and showed us how to operate it." I wasn't supposed to come in and show you how to operate it; I was just supposed to make sure you got an operational cable system. And it was pretty easy, Bill, because back then most everything was done by turnkey. So all you really did was set down some rules for Jerrold or Ameco or Viking or Entron to come in and they would build the cable system, and after it was finished you would go out and inspect it as the consultant.

RIKER: You'd proof it out.

PORTER: And you were through. You walked away and you had 5 or 10 per cent of a cable system, and never probably even thought about it in those days because you were so busy with other things.

RIKER: I remember a story when Jerrold was brought in to do a turnkey for a cable system and they went in, built the system, proofed it out and left, and a few days later the cable operator called up and said, "One of my amplifiers is out. Come out and fix it." And Jerrold said, "No, we built it. You need to have a maintenance crew on there to take care of the system from now on." So, I guess some people didn't realize.

PORTER: That was not unusual. As a matter of fact, I had a cable system that I got the franchise up in Creston, Iowa one time and that was a recurring problem in that they didn't have enough local technicians or technical help that really knew how to sweep or balance a cable system. So they would call me when I already had another job and say, "You've got to come back in here and help us." And you almost got into a big argument because you'd say, "Look at the contract that I have. It says very specifically 'advise and counsel' and once the cable system is built it is your obligation to operate the thing because you've got 80 or 90 per cent ownership. You're really going to make the money off the cable system."

RIKER: Now, I remember when you were talking to me once earlier about Decatur that the broadcast stations were doing what's called "cherry picking". What's that?

PORTER: Well, back in the early days, it didn't happen so much with NBC, as a matter of fact I don't know of NBC ever allowing television stations to cherry pick their signals, but ABC and CBS were not as strong as a network back in those days as NBC was, and so what would happen is usually you'd have a town that might have one television station that was an NBC feed, and then another station would come onboard and instead of being either an ABC or a CBS station they would cherry pick. The management of that cable system would take the best programs – what they considered the best programs from ABC and the best programs from CBS and they would actually mix CBS and ABC programs throughout the day, and it was their prerogative. It was their television station. And so, if you could come into that town that might even have two television stations, and as a matter of fact, Decatur was exactly that way; you could get NBC from Huntsville, you could get NBC kind of from Nashville but it would fade in and fade out and have co-channel interference from another channel four. So the local station was WMSL, which was one of the original UHF stations, channel 27, was a cherry picker. It carried some ABC programs and some CBS programs. So when we built the cable system we were able to pick up the Huntsville, the Nashville channels, and they were full-time NBC, CBS and ABC. Well, people wanted to get on the cable system because all of the sudden they saw programs they never saw before, or they may have seen when they went to visit Aunt Maude sixty miles away, and they said, "I never saw that program before." And they'd say, "Well, that's CBS." Well, they couldn't get it because at the time that that program came on, the cherry picking station had gone over to ABC. So that's what we meant by cherry pickers, and we loved towns where they had stations that cherry picked because they were absolutely golden opportunities for a cable operator to bring in full-time – and of course you had to carry theirs, but back then we didn't have the must carry rules. You carried whatever you could pick up, and if you could fill up twelve channels of cable television on a cable system, that was just wonderful. I remember the first time I ever saw twelve channels on one cable television system and I thought it was the grandest thing I'd ever seen in my life. Anyways, I got a call one day. Dieter had already left and gone back to Phoenix, AZ. Dieter went back and took over the microwave company that was bringing KTLA and WGN on the east coast and the west coast, and that company was called American Television Relay, and Bruce Merrill owned that company and he made Helmut Dieter the president of that. Like I said, Randy Fraley was made manager of the Decatur system. We had a lot of systems; we had Decatur and we had Panama City. Bruce owned a lot of cable systems. At one time he owned, I don't know, almost 90 cable systems – Yuma, Arizona; Oneida, New York; Daly City, California. There were some pretty large cable systems.

RIKER: He must have sold it to TCI at some point, because I worked there myself.

PORTER: Yes, he did. So, the eastern vice-president and the western vice-president were always at loggerheads with each other. Charlie Wigatow was one, and Vince Urikio was the other. I don't know what ever happened to them. I got a call one day from the western vice-president – and he's not my boss, the eastern vice-president was. I don't remember which was which. I don't remember whether Urikio was the eastern or if Wigatow was, but he said, "We want you to come to Waco, Texas." I had read about Waco. There were a lot of large cable systems back in the mid-60s, but Waco was one of a kind. It was going to be like 800 miles of plant, and there was not one single system... San Diego was already built, but San Diego was two or three cable systems and none of them were as big as 800 miles, but this was going to be one single owned cable system and it was going to be 800 miles. And they were going to have a lot of microwave in it. So, I got a call from the western vice-president, and he said, "We want you to come to Waco." And I said, "What for?" He said, "We want you to become the area technical supervisor. You will have Waco and Temple and McGregor and Mexia, Texas." And I forget the other systems. I didn't want to go. I kind of liked it in Decatur because all my family was in the Tennessee-Alabama area. So I said, "I don't want to go." And the eastern vice-president calls me and he says, "You tell him no." And so I said, "No." He said, "Well, we want you to just come out and look at it." And so I called the eastern vice-president of American Cable TV back and he said, "Well, you can go look at it, but you just tell him no." And so I get out there and they have more trucks than I had ever seen in a cable system. They had like 36 technician trucks. They had really gone gangbusters. They had a big warehouse that just housed what looked like a year's production of amplifiers and line extenders and construction gear, and beautiful offices on Bosque Avenue. So I went in and they met me. I went out and looked at the microwave, and the microwave was... that was the first time I'd ever seen a transistorized microwave system. Everything I'd ever worked on was tube. The headend, which picked up all the Dallas/Ft. Worth channels, was out in the middle of a cow pasture at a place called Wiggins, Texas, which is just south of Dallas/Ft. Worth. It was Collins microwave, and I'm going through looking at it, and I think this microwave has to be running at half power. So I threw some test equipment on it, and sure enough, coming out of the wave guides was about half power. Well, they had a power split, which shot half the signals in one direction to Waco, and one went south and went through McGregor and down to Temple, Texas because all those were cable systems that Bruce owned. So I asked them, "This microwave is in terrible shape." They said, "Well, you know, we're splitting the power." I was measuring before the power was ever split, but in their mind that justified the weak signal. So I got ready to go back to Waco. I had fulfilled my obligation; I had looked at the cable system. And I got ready to go back and they said, "Well, you're not going back to Decatur. This is your new job." I said, "No, no, wait a minute. You just asked me to come down and look at it." And they said, "Well, yeah, but we need you down here because the microwave..." everything depended on the microwave. So, they made me what I considered a good offer. Back then, if you made $340 or $350 a month that was big money. I can remember thinking if I could ever make $10,000 a year, I wouldn't have to work very long. I could retire. You've got to remember, it didn't cost a lot to live back then. You could buy a beautiful home for $15,000-$19,000 and pay it off. You could buy a car for $1,000 brand new. The first company car I ever had was a Pontiac GTO. You wonder why? I always wanted a GTO, they gave me a GTO.

RIKER: We used to go cruising in one of those.

PORTER: I think that thing cost me total about $1,300 or $1,400 right off the showroom floor. So it didn't take a lot of money and they gave me a company car. They said they would move me from Decatur – everything I wanted. So we moved down from Decatur, and I started working on the microwave. Lyndon Johnson owned a cable system; he was one of the owners of a cable system in Austin, Texas, and I guess the government figured out that it wouldn't be too good if the FCC started writing rules and regulations about cable systems and here the President of the United States owned one of them. So they decided to sell. Mid-West Video – General George Morrell was president of Mid-West Video out of Little Rock, Arkansas, and somehow they transferred ownership or bought Johnson's interest out. Well, he didn't need the microwave anymore down in Austin, so Bruce got the microwave from Austin, and when they brought it up they loaded it on the back of a flatbed truck, and like I told you, Wiggins was out in the middle of a cow pasture. Well, they would plow this cow pasture so there were furrows, uneven ground and I guess these guys went lickety-split with this microwave gear all the way out to the headend shed across these furrows and it's bouncing. It bounced all the AFC modules out, all the AGC modules out and it dropped the load isolators down in the wave guide, so now they got half power. Well, I'm kind of a novice. I don't know that you're not supposed to fix things yourself because when I was in the military you fixed things. You didn't send it back to Raytheon unless you just could not absolutely fix it. So I tear into the microwave and I pull all of the wave guide out because I could do that. If you remember, all television stations back then went off at midnight. They didn't transmit, and so you could work on anything from about midnight to 7:00 or 8:00 in the morning; that's when the stations came back on the air, so you could do a lot of maintenance. We miss that today because they're on all the time. So anyways, I went into the wave guides and relocated the load isolators and it was only later when one of the guys from Collins came out and said, "Who did this?" And I said, "I did it." They said, "We don't know how you did it. It's okay, but with the equipment," and you know we didn't have any equipment to work on anything back then, "with the equipment that you have, we don't know how you ever located those load isolators back in the wave guide so that you got full power." But the pictures really improved quite well. I can remember in the Waco system, there was a lot of rivalry between Jerrold and Ameco, and at one time, Ameco was running neck and neck with Jerrold as far as leadership in sales. One of the Jerrold salesmen, you know, they would come driving by your system, they came by and channel commanders had just come out. I had some real problems with off-the-air because the TV stations were right there in Waco and I was getting ghosting and so forth. Back then you could get away with some kind of substandard... people wanted television so bad they'd pay for snow almost, just something there. So the guy from Jerrold said, "You know, I could solve this problem if you'd let me put these channel commanders in your headend." Well, I didn't know any better. I thought if I can have a problem solved, let's do it. So I pulled the Ameco gear out and put the Jerrold stuff in. Well, the problem was solved, and I start getting phone calls – you never got phone calls complimenting you, you always got "I have a problem" – we actually were getting people calling in saying, "I want back on. I went to my neighbor's house; I'd gotten off because I couldn't even watch my local channels. I want to get back on." Our customer service just improved tremendously, and one day one of the guys from Ameco came into the headend. I thought he was going to have a heart attack. He said, "What are those three pieces of gear?" I said, "That's channel commanders for the local stations." "Get it out." And I had to replace it with the original Ameco gear. Well, I lost all the customers that I had gotten.

RIKER: Because the Ameco wouldn't perform as well.

PORTER: Yep, but they didn't care. That was heresy to have competitive equipment in your headend because it was an Ameco system. So I was called one day, they were trying to start the Texas State network, and the chief engineer of, I believe it's channel five was the big promoter of Texas State network in Ft. Worth, he called me and said, "We need to be able to get Texas State Network outside of the Dallas/Ft. Worth area, and you have microwave going south. If we could take Texas State Network programming," and it was primarily news back then, it was local and state news, "if we could get it as far as Temple, the radio stations could take those signals and tape them, and then retransmit them delayed, and we could go all the way to the Rio Grande valley. Is there anyway you could do that?" Well, I knew that I had sub carriers on all the microwave... and back then nobody thought about actually putting information on the sub carriers. They just wasted sub carriers, so what I did was I took Texas State Network and put them on the sub-carriers, shot them down to Temple, and Temple bought the radio station there and transmitted them, and so they just kept delay broadcasting until they could get 24-hour service to Texas State Network.

RIKER: Until the FCC came in.

PORTER: Yep, and then one day an FCC inspector came in and he said, "I want to look at your microwave." And so I said, "Okay." And he said, "What's this on the sub-carrier? What are you carrying?" And I told him. I was quite proud because the TV stations in the Dallas-Ft. Worth area gave me great stereo receivers so I could put stereo, great beautiful music, and I had like five channels of stereo that I was selling in Waco and Temple and McGregor. Well, I knew that if I took the Texas State Network off, they were going to take the receivers back and I was going to have the cruddy FM... but the FCC didn't care, and I always thought the FCC's focus was supposed to promote public service and the mere fact that because we weren't a common carrier, that microwave only supplied service to our own company. I thought it was very short-sighted of the FCC. They should have said, "For the good of the people of Texas, we're going to let you do it." But they didn't do that. They made me take it off, and Channel 5 came and got their stereo equipment because they had no deal anymore. And the other thing that I was involved with... I was only there in Waco for six months, but we did a lot of work in Waco while I was there. We finished the microwave system, I was involved with the Texas State Network there, and then Channel 9 – an educational television station, which still, as far as I know, is still in operation today – is owned by the University of Texas in Austin. They had planned to bring educational programming into the Dallas-Ft. Worth, Waco, Temple area and sell it to the schools, and had to deal with the schools because the only television station, educational television station, applied for the Dallas area and wasn't even in operation. So they thought that if they could get their program in real fast they could sell the programming and there would be no need for the educational television station to go on the air. They asked me if I would do a microwave link and take the Austin signal, the Channel 9 signal from the University of Texas, up through that link and back feed it, and so I did that for them, and there was a little German town – I can't remember the name of it now... Georgetown? Out around Georgetown. So I had to build a microwave pickup point there and then I had to shoot it over, I guess it was 20-22 miles, something like that, to Temple. The radio station in Temple was up in the top of a hotel building and our microwave shack was up in the top of that hotel building, so we finished that up for Channel 9. Now, I don't know what ever happened to that microwave link because I do know the educational station, but I remember when it was being built, Tommy Moore built towers. He was probably as big a cable receiving-transmitting tower builder as there was, and he sent a crew into this little town where I was picking up the Channel 9 signal, and there was always a cardinal rule that you never stand behind the gin pole. The gin pole is how you build a cable tower. You put the first section up – obviously you stand on the ground and put that first section up – and then you put an arm at the top of it with a pulley on it and you pull the next section up. You lock that down and you move the gin pole, and when you work in the tower and you're pulling sections up, you never stand behind the gin pole because if the gin pole snapped it was going to come right back into you. I remember I had gone away that day, this was 150 foot tower, and Tommy's crew had put the first couple sections up and they seemed to be moving along pretty well and the headend building we had already finished, so I thought, well, I'll take a break and go away. When I came back there was nobody there, and it was a pretty sad sight. This guy had stood behind the gin pole, and he had worked for Tommy for 8 or 10 years, and the gin pole snapped and when it came back it came right back into his face and it took all this half of his face right off of him. He went into a state of shock, and when you go into a state of shock you don't feel the pain, you don't feel anything, he was belted off, so the guy had to go up and belt him on and bring him down. I didn't know what happened, and later somebody came out and said those guys are at the hospital in, I don't know, whatever the closest town was, and I asked him, "Weren't you scared when you brought him down?" He said, "Yeah, I was scared that he'd come out of shock and feel the pain." The weird thing about that is within two years that construction guy was back working towers for Tommy Moore, and I guess, finished his career up doing work. Apparently those guys were used to those kinds of accidents. We had 500 and 600 foot towers later, and I remember when they would go out and work on those towers; rather than climb down the tower, or rather than winch down, they had little pressure devices that they would latch over the guy wire coming down, and if you can imagine riding a guy wire down 300 feet, and as they put more pressure on just this thing they've got in their hands it would slow them down, and they would come flying down this thing, and when they put pressure on this cinch that would cinch that guy wire, you could see smoke fly from this thing, and those guys lived on the edge of danger all the time. I always thought I would never want to be a tower guy, but these guys had a lot of excitement throughout their life, and if they didn't have it they'd make it. Like I say, I spent six months in Waco. It seemed like six years. When I got there I found out that half the town couldn't be served because they had a trunk line that was supposed to cross a U.S. highway. Well, they had 4,000 subscribers already signed up – in a file cabinet – signed up, no service although the amplifiers were ready to heat up.

RIKER: They just couldn't get across the highway?

PORTER: Well, the state wouldn't give us the permit to cross the highway. Well, like I say, I never knew that I was supposed to know any better, so I called my crew together one night, and I said, "Tomorrow morning I want everybody out at this highway crossing location. I want you out there at midnight and we're going to cross that highway." They said, "Well, you don't have a permit." I said, "This permit was applied for a year and a half ago. We're going to cross the highway." So sure enough, we worked all night and we went across the highway. It was just a highway crossing! The cable was already on both sides and was capped off, so we spliced it in. I told one of the guys, "You stay out here and watch all these trucks go in and make sure there's no question of clearance." We hooked up 4,000 subscribers as fast as we could hook them up, just because all of the sudden we got service. I did that right after I got there, and after about two months the state inspector came in; he was really huffing and puffing. "I want to know who gave the authority to cross the highway." I said, "Well, I gave it. I headed the crew up that did it." He said, "You don't have any permit." I said, "I applied for it. You said I was going to get it. Since I know I'm going to get it." He had said by telephone it's just an administrative thing. "If I'm going to get it anyhow, I went on across the highway." I always thought that was so silly, too, just the bureaucracy of going under a railroad or going over a railroad, you know you're going to get it – you've applied, all the paperwork's proper. They would make you wait for a year or a year and a half to get action on something that you know you're going to get and could stand in the way of millions of dollars of revenues and the happiness of the customers, I always wondered, "Why would they do that?" So I was always a man of action – do it! I never got into trouble. I guess they could have put me in jail, I don't know. Certainly the FCC could have put me in jail, and I guess one of the reasons that I left Waco was I was working really hard during that six months time, and that one episode where the use of the equipment was more important than the customer, that just went against my grain and all the training that I'd ever had. And the other thing was that the microwave that I had at the receiving point, I had a lot of problems with the baseline, and so I needed video clampers and I knew they had video clampers back at Ameco because they had ATR and you can't run a microwave network from the east coast to west coast and north to south without having video clampers. So I went out to Phoenix one day – I don't know why I went out there – but I was in the Ameco plant and I went over to ATR and there's just shelves and shelves of International Nuclear video clampers, and I only needed six. So I said to them, "I requisitioned video clampers. I need six of these things; you guys must have 300." "We can't help you." "Well, what are you using them for?" "They're for ATR." "But you're not using them. Let me at least use them until you need them." "No, you can't have them." So, I just decided I wouldn't stay at Waco. Back then you had big cable MSOs, nothing like today, but fairly decent MSOs that went from east coast to west coast, covering almost every state, and those would be like TelePrompTer, Storer, H&B America, and that ilk of MSO.

RIKER: How about American Cable?

PORTER: American Cable. And so I decided that I wanted to go to work for one of the other companies. TelePrompTer had always been a... I just always thought a lot of TelePrompTer, and so I put in my notice that I would leave in December of 1966.

RIKER: You were going to take a break for a little while.

PORTER: Yeah, I was going to go back home and just look around, send out my resumes and so forth. The manager at Waco decided if I was going to leave that he was going to leave too. He found out there was a company, a small MSO, by the name of United Video Systems that was headquartered in Kansas City. Mark Carlisle was his name, I don't know why I remember his name, but he was the manager at Waco, and so he signed a deal with this United Video. I'd never heard of them. I'd heard of United Video, but it was United Video, Inc., and they were a microwave company that bought WGN across. So, I started getting calls from a guy, Alex Shniderman, and Alex Shniderman said, "I want you to come up to Kansas City and I want you to be the chief engineer for United Video Systems, and I said, "I never heard of United Video Systems." He said, "Well, we own cable systems in Marshall; Booneville; Chilicoffee; Maryville, Missouri; Kansas City, Kansas; Columbus and Falls City, Nebraska, and we own 11 theaters in the Kansas City area. And I said, "I don't want to go to work for you." And he said, "Well, I'll tell you what. I understand you're leaving Waco and you're going back home to Tennessee." And I said, "Yeah." He said, "Well, are you driving?" I said, "Yeah." He said, "Well, if you'll just drive up through Kansas City on your way home to Tennessee, I'll pay all your expenses to go home." I thought I'd have to be a goon not to do that. What can it cost just to go look at this cable system? So packed my wife and we had a baby daughter then. We already had a son but he was back with the grandparents; they'd come out to see us and taken the grandson back, so we just had the granddaughter. So I thought, well, I'll just drive up through Kansas City; it's not that far out of the way. So we pack up everything we've got in a little you-haul-it trailer, attach it to our car and start heading up to Kansas City. So, I called ahead, and I called this United Video's office and they said, "We have a suite set up for you at this hotel in Kansas City, so when you get in here you just give them your name, everything's been taken care of." I'd never been treated that way, Bill. I'm thinking this is a small MSO, but they must make a lot of money with their systems and their movie theaters.

RIKER: Either that or they really wanted to impress you.

PORTER: So, we get in and the next morning we got breakfast in bed sent up and they had flowers in the room for my wife, and I'm thinking, I've never been treated this way. I was just an ol' country boy, as I told you. So, I get a call and this voice that I'd talked to before says, "This is Alex. I'm down in the lobby. Why don't you come on down at your convenience and we'll talk?" Well, he'd never seen me, and back then you didn't have magazines so regular that anybody could see anybody else's picture unless they were Irving Kahn or somebody really high up in the pecking order. So I go down, and I see him, or who I think is him, and I go over and I say, "Alex?" He said, "Are you Porter?" And I said, "Yeah." And he said, "Oh my God," because I was only like 29 years old, he said, "I expected somebody older than you." And I said, "Well, sorry. This is as old as I am." I was 27. He said, "Well, how do you know all this stuff?" I didn't even care about answering him, hardly, Bill, because I...

RIKER: You weren't interested in the job.

PORTER: That's right! I had performed my obligation by coming through Kansas City, and he said, "Well, I just want you to go out to Marshall; that's my biggest cable system." They had like 3,000 subscribers, and he said, "You're wife can rest there and I just want you to look at the system and tell me what we're doing wrong." That was the first transistorized system they had and my background had been transistor systems, and I guess it was fairly new to them because everything they'd had prior to that had been tubes. So, I went out and he introduced me and my wife and daughter to the local secretary, Carolyn Cosgrove – I don't know why I remember her name – but anyway, he said, "If you come to work for me, this would be your office." Marshall was a really modern... some of the storefront offices we had for cable offices back then were almost dirt floors and an orange crate and an adding machine that wasn't even electric. But this was a really modern office, had eight television sets on continually inside the office, and I always thought that was good for customer relations and so forth. So he said, "Why don't you just leave your wife here at the office. Carolyn will make sure if she wants food or whatever she'll be taken care of. Let's go out to my headend." So I said, "Okay," so we got out to the headend and I automatically start... his headend is in terrible shape, so I reset his headend, and I climbed his tower because I climbed towers all my life, and he's got a 480-foot tower in Marshall, and everything's wrong, Bill. He's got pre-amps where he shouldn't have pre-amps because he's got them in the wrong place; he's got stacking harnesses for the antennas that are cut wrong and you know it just looking at it. So, I work all day on this thing and he's in hog heaven. "You've got to go to work for me." And I'm saying, "I'm not going to work for you." So we spent the night in Marshall because it was so late. He said, "Well, tomorrow morning – I'll pay you – go to Booneville with me; I've got problems in Booneville, and look at my Booneville cable system. Now these are cable systems that are maximum 40 miles of plant, and they're kind of like toys. It would be kind of fun to keep these things up. There's no microwave, and so I go out to Booneville and I do the same thing, and he's rubbing his hands! His customers can even tell the difference in the pictures. He said, "You've got to go to work for me. I'll make you the chief engineer of United Video Systems and every system will answer to you." Well, I know this is going to make Mike Carlisle mad because he had been my boss in Waco and now I'm going to be everybody's boss. So, I said, "Well, you can't afford me." He said, "How much would TelePrompTer or one of these other companies pay me?" So I threw out some figure thinking it would shake him, and he said, "Okay. You go home to Tennessee, I'll fine you a home that you will like here in Marshall. You'll work out of here, everybody will answer to you. Go on home. When you come back, you'll be set up. Leave your trailer here." Well, I took my wife and we got back in the car and we went home to Tennessee. I called back and he said, "Oh, you're going to like this little home I got you." He found a little 3 bedroom, brand new home. He moved my furniture in for me, as best he could, and so I get back and I think, well, I might enjoy this after all. So we got other franchises in Kansas and Missouri and so forth, and one of the days in 1967 I get a call from Alex and he said... Well, prior to that, on Memorial Day of 1967, I'm at the office and Jack Mann is my chief technician, and Calvin Blumhorst – I don't know why these names are all coming back – is an installer and assistant technician. I had them out doing installs and riding the lines and I told you that Marshall had seven or eight television sets inside the office; they all go black. I think, well, we lost an amplifier out on the trunk line. So, I say to Jack Mann, "Drive the trunk line real quick and see if you can find out why we have no signal." He keeps going back and he's talking to me on the radio and he says, "There's a problem out at the headend somewhere. We don't have anything at all." I said, "Well, drive back to the headend." He calls me and he says, "There's a plane that crashed into the telephone poles and knocked power out, but it will be back on in about an hour or so." I thought, "That's strange." So I got in my car and drove out to the headend and when I get out there... I drive up and the police have got the roads blocked off but they let me threw. So, I go out and part of the tower is lying on the ground. It turns out that there were four people in the plane and they were going to the Indianapolis 500, and it was raining really bad on the day before Memorial Day in 1967 and they had gotten lost. The weather was so back they had struck one of the guy wires on this 480-foot tower, and back in the mid-west, you have what's called a star mount at the top of the tower and it's to keep the tower, with the winds they have out there, from twisting and actually twisting the tower to the ground, so you have a lot of guy wires on a tower that high and it had struck one of the guy wires. When it did, it pulled it completely out of its anchor and it just acted like a slingshot and flipped that plane all the way across the street and into a ditch and killed all the people. Alex Schneiderman comes out, and of course I learned a great lesson about records keeping in a cable system back then because I was a stickler of doing headend logs, and there was no requirement by the FCC back then that you do headend logs, I just like to write stuff down. So immediately when I found out what had happened, I went up to the headend check and I checked the circuit breakers for all of the tower lights and left them out and sealed them off with tape so nobody could push them back in, and I don't know why I did it, it just seemed like the right thing to do and I put the other circuit breakers back in place so that when power came back on we could have pictures. And of course it knocked some of the antennas down because they were at the very top 180 feet, which is where the star mount section was. So, I called Tommy Moore, good old Tommy Moore, and he sent a crew in and they brought a tower section in – we owned the cable system over in Seneca and Sabbatha, Kansas, and so he just transferred a section or two over and rebuilt the top of that, and I was scared to climb the tower almost because a plane hit it – but they checked it and said it was worthy of staying in place and would support everything, and it did for a number of years after that. But Alex Shniderman came driving in from Kansas City and it really shook him, you could tell he was really shaken – well, it was a bad tragedy – but he was almost visibly shaken and he said to me, "I'm never going to fly in a private plane again." And that stuck with me, just the emphasis he put on saying that, and a week later Calvin Blumhorst, who worked for me in Marshall was going to get married. So we were all going to drive over to Sedalia, which is about 30-some miles from Marshall, and we all piled in a car, our wives and us, and we drive over to the wedding. When we were coming back from the wedding, we've got the radio on and we hear an announcement on the radio that a plane crashed in Seneca, Kansas, and the vice-president of operations, Alex Shniderman, was killed in that plane crash. Alex had called me that very day and asked me to fly over and I said, "I can't because I have to replace some log periodic antennas." Scientific-Atlanta had some problems with their early version of their antennas – great antennas, but they had some structural weaknesses – and I had to replace some of those log periodics in Booneville, Missouri, and I said, "I ain't going." I know you don't tell your boss that, but I did. I said, "I'm not going, because those crews were coming in to replace those antennas.

RIKER: Not the first time you said that.

PORTER: Yeah, so I didn't go, and probably missed not getting hurt badly that way.

RIKER: Or worse.

PORTER: Yeah. So, anyways, as we're driving back – of course we're in shock because Alex is like the father of the company and was really the only one on the board of directors or really had any idea of what cable was about. The board of directors for United Video consisted of... the chairman of the board owned a construction company and built most of the big buildings in the city of Kansas City; there were two heart specialists; there was a brain specialist; there was a general practitioner; and there were two lawyers. So, if you tried to talk technical to them or talk cable, they didn't know what you were talking about, all they knew was you wanted some money to buy some more equipment. So they said, "Well, Rex, I guess you're going to take Alex's job." I never did think anything about it, so the next morning I get a call and they said, "You've got to come to Kansas City. We want you to become the vice-president of operations for United Video." I'm still 27 years old, or 28, so Mary and I get in the car and we drive to the board meeting and they announced, "You're the only person we've got that knows anything about cable. You're now the new vice-president; take over and run this thing."

RIKER: Just jumping back a little bit to Marshall, you have an interesting story related to the first Super Bowl.

PORTER: Oh, yeah. When I got to Marshall, it was a pretty friendly little town and that was the year of the first Super Bowl. That was the year that the Kansas City Chiefs and the Green Bay Packers played in Super Bowl I, and of course they had playoffs to decide who would go from the AFC and who would go from the NFC and Kansas City went through the playoffs and won the playoffs. So I get to Marshall and one of the things that Alex Shniderman said that I should do is join some of the civic organizations immediately and get to know the people there. So, one of them that I joined was the Optimist's Club. So I join the Optimist's Club and I'm thinking this is a pretty nice group, everybody's really jovial, and they don't know who I am, they just know my name because I've got a badge on that says "Rex Porter". So the meeting opens and it's a breakfast meeting as usual and the guy that's running the Optimists Club says, "I want to introduce to you, some of you people have already met him, Rex Porter who is the new manager of the cable system." Boy, all these people got sour looks on their face and I'm thinking, what happened to the jovial people that I thought were here in Marshall? And so the guy that was running the meeting said, "Mr. Porter, I think I ought to tell you that during the last playoff game the cable went off in the third quarter and never came back on for the rest of the game, and the mayor's wife was actually going out door-to-door up and down the street hooking people's antennas back up, and I have to tell you that (Kansas City had already won the playoff) the Super Bowl is a week from today and I have to warn you that the police have already told me that if the cable system goes off the air during the Super Bowl, you are subject to arrest." The chief of police was sitting in the meeting, and I think they were serious, so I took a room as close to the end of the line in that cable system at a motel, actually left my house and took a room, and I made everybody come in to work that day, and I made Jack Mann and Calvin Blumhorst ride the lines all day long to make sure that nothing happened in that cable system. I don't even think we had a flicker with the picture that day, and of course Kansas City got beat, but the cable never went off the air. I guess I sweated more that day than most days of my life, but it was always a cute story. I think they probably would have had some kind of ceremony to publicly humiliate me if that cable system had gone off that day.

RIKER: Something similar happened to me when I was working for AM Video that during the Super Bowl the first trunk amplifier died and we luckily only lost about ten minutes because it was so close to the headend we got right out there and fixed it, but from then on the GM and I would always spend Super Bowl Sunday at the headend waiting for calls to come in.

PORTER: Well, then, you know how you kind of sweat it out.

RIKER: Okay, so now you're General Manager and VP of United Video.

PORTER: Uh-huh. And remember I told you that the owners... these were all professional people, they're lawyers and high class physicians or owners of companies and the only reason they got into cable television was it was a good tax solution for them. They didn't want to necessarily make money. They actually liked the idea of breaking even or losing a little bit because it was a tax shelter for them. Of course, they never sat down and discussed that with me, but financially I knew that there had been a lot of discussion about cable being a good tax shelter. So they were quite happy. As a matter of fact, we only had $67,000 actual money in that company. The way they borrowed money was everything was turn-keyed, all the construction was turn-keyed, and if they needed money they just went down to the bank and borrowed against CDs that they had at the bank. So it was $67,000, I believe, $67,000-$68,000. Well, I took over and I started making these cable systems gain customers and they started to make money and all of the sudden we were paying off interest payments that we hadn't paid the bank, and we'd have to go back and renew or set new terms. Soon we were paying off interest and all of the sudden I started making payments on the principle. I thought that's what I was supposed to do. Well, it wasn't what I was supposed to do, and so I got a call one day from Morris Hoffman, who was the chairman of the board, and he said, "We want you to come in to the board meeting, we want to talk to you. We think we're going to sell United Video Systems. I don't want you to worry about it; Bill Daniels is going to handle the sale and of course we're going to pay him a commission, but we'll pay you a like commission." I thought that's pretty good, and I can always get a job somewhere else. I had never used anybody's gear while I was at United Video except Jerrold amplifiers, Jerrold electronic gear and Times Cable because at that time Times and Jerrold were like brother/sister companies. If you ordered cable JT-1412 or JT-1500, JT-1750 that JT stood for Jerrold Times, not common ownership, but common participation – turnkey, Jerrold equipment, Times Cable, and for years, if you bought a cable system and it had Jerrold equipment in it and Times Cable, you got a premium for that cable system when you sold it because it was known to be the superior products, and it went that way probably throughout the '60s and pretty much into the '70s. After awhile, that wasn't the situation. Ray Schneider used to call on me, and I always thought that was pretty nice because he was the vice-president of Times Wire and Cable and there was a local salesman that I had been an installer back in Decatur with, Don Atchison, and Don used to call on me, but he would bring Ray Schneider and Ray and I always thought a lot of each other, I guess. Ray, of course, had been the vice-president of operations for TelePrompTer prior to that, and then went to work for Times, and Ray had always said to me, "If you ever leave United Video for whatever reason, don't go back and engineer cable systems. You know the people here in the mid-west; come and work for Times." And I had been impressed with Times because they were owned by International Silver Corporation, and so if you did a turnkey with Jerrold, which we did always, you got Times Cable and Times would always have a beautiful silver tea service at the reception, at the grand opening of the cable system; they'd have candelabras. They promoted the idea that International Silver owned Times Wire and Cable. So, I'm thinking they're going to give me a commission on the sale because I'm going to protect the interests of United Video. Like I said, they didn't know what the value of that cable system was. So, I said, "Well, who wants to buy the cable systems?" And they said, "There's a gentleman by the name of Monroe Rifkin, who's trying to form a new MSO and he wants to buy the company." Well, I knew who Monty Rifkin was because he had been the Treasurer of TelePrompTer with Irving Kahn and Ray Schneider. So, Monty came in and he sent some of his people in, and I asked how much they were going to pay for United Video. Well, they paid 1.8 million dollars. Now, this is a company that had $67,000, but it was worth the 1.8. So, Monty asked me, "You are going to stay with the company, aren't you?" Talk about putting your foot in your mouth, and something that Monty Rifkin has never let me forget, of course I said, "No, I'm going to go to work for a big company." Well, of course Monty, as you well know, took that company as a flagship systems of ATC, which then became Time and then they bought Warner Communications and became Time Warner, and now is the biggest company in the telecommunications industry, and was even then, shortly after, the biggest company, biggest MSO there was. So, every once in awhile when I run into Monty he'll be reading Forbes Magazine and he'll look up and say, "Rex, have you found a big company to go to work for yet?" He never lets me forget it.

RIKER: So you went to work for Times?

PORTER: I went to work for Times.

RIKER: And you were in the Jerrold office in Kansas City.

PORTER: Yes, John Deikman was the regional sales manager for Jerrold Electronics.

RIKER: You also worked with a couple of friends of ours. Wendell Woody, J.C. Sparkman.

PORTER: Well, J.C. wasn't there then. Wendell Woody was there. John Deekman headed the cable television side of the business and Wendell Woody headed the distributor side, and that was called the DSD Division – Distribution

Sales Division or something. Anyways, we made cable for cable television, RG-59 and RG-6, and we had part numbers like MI-2029 or MI-2025 for the cable side. We'd make the same cable, which Wendell Woody would take to distributors around the United States and we'd call it CAC-59 and CAC-6. Well, the only difference was we stamped some CAC-59 and CAC-6. I was the first cable operator that Wendell Woody ever met, and I had lunch with him and John Deikman in Kansas City when I was running United Video Systems, and Wendell will tell you – he always remembered – he'd never met a cable operator. I think he was quite shocked by... he had heard John talk about me and he was quite shocked by my age to be running a company like that. Anyways, when I moved to Times, I located an office just next door to John Deikman's office and I used Wendell Woody's secretary. She gave me half her time and Woody half her time for administrative typing and filing and so forth. I had 18 states that ran from Montana to Texas that was my territory for Times, and then they decided that they would split the territory and Dean Taylor came onboard from General Cable, before it was ever Trilogy, and I gave him the icebox part of my territory. He never forgave me. I gave him Michigan, Indiana, Minnesota, and I kept Texas, Louisana, Arkansas, Missouri, Kansas and so forth. It was about that time – I told you that I had been an installer with Don Atchison and Mason Hamilton had been an installer with me down in Decatur, so we knew each other and we started a little power supply company called Power Guard down in Georgia. I don't remember... it didn't take much money to start a company back then, and today Power Guard is a pretty big company. I don't have any ownership in it; we sold out to, I think, Bormup & Sims actually ended up buying the company. But anyways, I worked throughout that 18 state area, and then I got a call from Ray Schneider – Dean Taylor had already gone to the east coast by then and was working out of the Wallingford headquarters of Times, and I stayed there in Kansas City – and he said, "I want to split the United States into an eastern territory and a western territory, and I want you to take the western half and Dean's going to take the eastern half and we'll just use the Mississippi River as the dividing point." So, I had five guys that had territories in my western division, and Dean had four or five guys that had the eastern division. At the same time, I was still building cable systems. When I went to work for Times I said, "Now you realize I have cable systems. I'm not going to give them up." Ray said, "That's okay. We'll sign a deal that as long as you don't sell cable to yourself cheaper than you're supposed to, you can continue to own your cable systems." So, while I was at Jerrold, John Deekman left and went back to Horsham, the Pennsylvania headquarters for Jerrold, and J.C. Sparkman came in as the regional manager for that area, and J.C. Sparkman had a secretary by the name of Lois Schott.

RIKER: You're doing good with names today.

PORTER: Well, it was easy because her husband was my – even before J.C. came in – Lois's husband was a CPA, so he did my taxes, and so one day J.C. said to me, "You know, Lois just gives me fits. She and her husband own a cable system and you've given away franchises," and I had. I know it sounds stupid and I feel stupid today, but there were so many franchises available, you couldn't get a franchise and keep it forever. You couldn't build that kind of cable system. So you would have a franchise that you would think, ah, I really don't want this franchise. Now, if you had a friend you'd just say, "I've got this franchise, how would like to take it off my hands?" And you'd give franchises away. He said, "I know you helped so and so start a cable system. Why don't you talk to Lois and her husband?" I said, "I know her husband. He does my taxes." So I went out and sat down with John and I said, "Where do you want a cable system at?" He said, "Well, I'd like to have one right here." He lived in the county where the Kansas City airport is, Platt County. There's a three-panel county judgeship, and he said, "For awhile, I was one of the judges. I think that you could get a franchise for the whole county." I said, "Well, that's kind of a novel thing." I wasn't used to getting franchises for a whole county, just a single town, and I knew that John's sister was a secretary to the governor of the state of Missouri, and I said to John, "Have her send me the statute book on franchises." Well, about a week later, there's a box, and every statue for the state of Missouri comes through the mail to me, or UPS or whatever, and I only wanted the one book. I think I've still got the state statutes for the state of Missouri. I started reading the statute book and find out that legally the only town or city in Missouri that could give a franchise legally was a class A city. None of the rest of the towns, which meant that if I really wanted to be a scoundrel, I probably could have sued to own every cable system other than Jefferson City and Kansas City because they weren't class A cities. Class A cities had to have a pretty hefty population. So that meant that Marshall and Booneville and Sedalia and all those cable systems, the cities acted illegally in granting a franchise they didn't have the authority to. Only the county had the right to grant a franchise. So, I go back to this three-judge panel and I have a meeting with them. I said, "I'd like to have the franchise for Platt County." They granted it to me. It was a half a page – I've still got the franchise – a half a page that said I had a franchise in perpetuity, no franchise fee whatsoever. Well, later on, the FCC said, "That's illegal. You've got to cut that back to 15 or 20 years, and you've got to pay them 5%." Well, you know me. I'm arguing with the FCC, "They don't want any fee." "We don't care; you've got to pay them." "But they don't want..." "We don't care." So anyways, we built the cable system there. We didn't have a lot of money; Jerrold turn keyed it. It was probably one of the last turnkeys that Jerrold did because they got out of the turnkey business. One of the cable systems that we had owned when I was at United Video was Kansas City, Kansas. We didn't sell Kansas City, Kansas to Monty; we just sold those small six cable systems. One of the reasons we didn't sell the system in Kansas City was our partner owned an electrical company in Kansas City, Kansas and we had made a deal that if either party decided they wanted out they had to sell back to the other partner. So we sold the 50% back. Well, Jerrold ended up with it, Jerrold Electronics, because Jerrold for a long time built cable systems as well as sold equipment and turn keyed cable systems.

RIKER: They had their own franchises.

PORTER: Oh, yeah! And I can remember sitting in the Jerrold office in Kansas City and the FCC was fixing to put the rules in effect at midnight and they had no customers. You had to have customers to be an operating cable system to meet the grandfather clause. We had one customer that we knew we could hook up that was in a trailer park. Now, I say "we", I'm still helping Jerrold because, you know, if you sold something to somebody or were a past owner, they kind of depended on you to help them out. It wasn't all about money back then, it was you helped each other. So, we laid cable all the way from the tower, from the headend, one line all the way down the road, laid it in the ditch, and ran it to this woman that lived in a trailer, and said to the FCC, "We're an operating system. We have a paying customer." And I think the deal was that that lady in that trailer, as long as she lived there, would never have to pay, no matter how many services came over the cable, she would always pay that one rate. I think it was like $4.95 or $5.95 a month for all the cable she could watch. So anyways, I'm working for Times, now there's an eastern division and a western division. The only plant that we have is at Wallingford, Connecticut, and AMECO owns a cable plant, AMECO Wire and Cable, and it's kind of a unique plant in that all the other cable plants on the east coast – all the cable plants at that time were on the east coast – the air was moist enough and you had seasonal difficulties that when you made a core for a reel of cable you had to put it into a drying oven because it would trap water in the dielectric and you would heat those cables, force air both into the inside of the reel and the outside, and you would dry it out. You would cure the core. Well, with the heat in Phoenix, you didn't need drying ovens. So what you'd do is make the cable, take it outside, put it in that hot sunshine and let the sun bake the moisture out of it.

RIKER: What kind of dielectric were you using in those days?

PORTER: Well, it was foam polyethylene, but it was before we had gas injected cables, and we had just...

RIKER: It was also polystyrene, wasn't it?

PORTER: Well, we had just introduced polystyrene. As a matter of fact, the first national convention I ever went to as a salesman – and boy, that was novel because I always went as an operator so people would buy you dinners and take you out, and now you've got to do that – was in San Francisco in 1969. It was a funny thing, Bill, because one of the problems with styrene was water.

RIKER: It sucked it up.

PORTER: And wouldn't you know that the theme at the San Francisco convention for Times introducing dynafoam cable was the Age of Aquarius and the marketing people didn't realize that the Aquarius, the sign Aquarius, is water-bearer. It turned out that that really was a water-bearer, but dynafoam took off real quick and one of the reasons was it had 20% lower loss – we didn't have gas injected cables. Dynafoam, or styrene cable, was the first use of gas injection to form the little bubbles, the foam. And the reason it had less attenuation was we had originally used chemicals. We'd mix chemicals in with the polyethylene pellets and put that into the extruder, put heat on it, and there's be little tiny explosions in there because the chemicals would react to the polyethylene and it would form a little cell, lots of little cells, those were the bubbles or the foam, but one of the by-products of the chemical agent was water, and it was always there. It didn't get any better or any worse, it was just always trapped in that cell of foam. Well, if you stopped using chemicals to blow the di-electric, or expand it and use gas, there was no by-product of water. So you had air inside that cell. So, voila, you had 20% better attenuation, same sized cable, same di-electric later, when we went to gas injected polyethylene, but we didn't know how to gas inject polyethylene. We discovered how to do that with styrene. Now, if you really took your time and really put connectors on and you had good watertight connectors, some cable systems used dynafoam and it worked with no problems. The Rock brothers up in Idaho, at Coeur D'Alene, they swore by dynafoam and it stayed in their cable system for years, but we weren't used to being real careful with cable back then, and because there was so much air in that di-electric, guys thought they could pull the cable off the reels like they did when it was just regular polyethylene, and they would kink it and break it and holes would show up in it, and sure enough, if water got in, it could travel through that di-electric or along the center conductor and later on what we did was we decided to put an adhesive between the di-electric and the center conductor and we actually do that today, or it's done today with foam polyethylene cables so that moisture can't get between the di-electric and the center conductor itself, and travel down the center conductor. But it was kind of a weird situation back then because dynamfoam was a Times product, but because the cable was styrene, everybody that made styrene, and they all followed suit – Commscope made styrene cable, Cero made styrene cable, Systems made styrene cable – but I'd get calls and guys would say, "You have to come out and fix this cable that you sold me." Well, you couldn't remember who you sold cable to, and I might be working on 100 accounts at one time because cable was exploding across the United States. You couldn't keep up; you were just taking orders and making lots of money selling cable. Well, you'd get out there and it would be somebody else's cable, and you'd say, "I can't help you. This is not my cable." "Well, it's Dynafoam." "No, it's not Dynafoam." "Well, it's styrene." "Well, yeah, it's styrene, but it's not Dynafoam." "Yeah, well, if it's styrene, it's Dynafoam." And that was one of the best marketing things that Times ever came up with. Commscope discovered a similar thing when they named their cable P-1 and P-3. It rolled off the lip so easy that today even though Times may be making the cable or some other company may be making that type of cable, they say it's P-3 type, or it's P-3 cable. Well, it's not really P-3; that's a product name and not a type of cable.

RIKER: Right, it's a technology. Okay, well, we need to take a break here and we'll pick up with your move to Phoenix and taking over the AMECO Wire and Cable plant.

PORTER: Okay.

RIKER: We're continuing the interview with Rex Porter for the Oral History Program, and where we left off was that Times Wire bought the AMECO plant and Rex moved to Phoenix in order to run that facility.

PORTER: Well, I didn't run the facility. I went out to head up the marketing and sales efforts for the Phoenix plant. The plant manager was transferred from the Wallingford plant; Kevin Lynch went out to actually be the plant manager. That became my headquarters for the western region, and the people that had been running the AMECO plant was Jack Woods, Mary White, Nat Marshall, they all went across the river and started their own company called Systems Wire and Cable, and that left the plant truly a Times Wire and Cable plant, which turned out to be a blessing in disguise because Ray Schneider had always wanted to buy that plant from AMECO and about three months after we bought the Phoenix plant, the Wallingford plant went on strike and had limited production out of it. It probably dropped their production capabilities down to 30 or 40 per cent of what they had been producing in cable. So, all of the production responsibilities fell on the Phoenix plant, and I moved out there and stayed out there from 1972 to 1976. I digress, one of the things I wanted to talk about was when I first went to work for Times, I told you that Ray Schneider had said to me, "If you ever leave United Video, I want you to come to work for Times," and he made a call to me after he found out that we had sold United Video and said, "I'd like for you to come up to the Michigan State convention and meet with me there, and talk about this territory." So, I fly up – it was the first time I'd ever flown on a jet airplane, and for some reason, they had a jet aircraft servicing Pelston, Michigan, which is way up on the Canadian border, and they actually held the Michigan state convention at that time in Canada. It was a ski resort, and I remember while I was on the plane I ran into a guy by the name of Ben Hughes. Now, I can't talk to Ben about why I'm going up to the Michigan show because I'm going up to talk about going to work for Times and Ben is the vice-president of Superior Continental, which was the predecessor of Commscope Wire and Cable. But while we're sitting there – I'd known Ben for a long time; I didn't buy a lot of cable from him, but he was just one of those guys you really liked to be around and liked to talk to – and so we got to doing some serious talking and he said, "You know, I always wanted to own my own company. Would you be interested in coming in as a partner if I decided I wanted to start my own company?" I said, "Well, sure. I trust your business judgments and so forth. You ever want to start something, let me know." So, about 1972-73, I get a call from Ben Hughes and he said, "I've decided I want to make tools." I said, "What kind of tools?" He said, "Tools for the cable industry." Well, before then we didn't have things such as coring tools. We used knives and pliers and hammers and whatever we could to pound a connector on, that's what we used. He said, "I want to come out with a line of tools where we can core the di-electric out and we can get the jacket off a jacketed cable, a line of very innovative tools for the technician." I said, "Well, see who you can get to come in and sure, I'd like to be a partner." So, as it ended up, there was Ben Hughes, myself, Wally Briscoe – Wally, at that time, was the executive secretary for the NCTA – and one other guy was a partner, Cy Guttenplan, who owned Telewire, which at that time was a very successful (not that it's not now, because it is) but at that time it was an individual, very successful distributor out on Long Island. Cy later sold that company to ANTEC and retired, but we were the four owners, founders and owners, of Ben Hughes Tools, which is better known, probably, today, as Cable Prep. I just wanted to touch on that because there were a number of companies that I got involved with back then that today are fairly successful companies. Anyways, now I'm in Phoenix. I'm the western regional manager, and I worked that territory with five or six guys under my direction, and one of the people that I'm really proud of today is John Patterson. John had attended Arizona State University and he needed a job while he was going to school and this is while it was AMECO in Phoenix, and the only job they had available was janitor, and I always thought a lot of John. Here's a teenage janitor of the plant so he would have a job, and from that he learned how to wind cable, he learned how to make cable, he learned how to jacket cable, and he ended up being the lead technician for all the cable that came out of that plant. And so I'm out in Phoenix and now we've bought the plant, and John Patterson comes into my office. Now, I know who John Patterson is; he's a worker in the plant. His abilities I don't know, but he comes in and he sits down in a chair in the office and he said, "I now have my degree in marketing from ASU and I want a job selling." Of course guys were always hitting you up for a job – "Why don't you give me a job selling cable. I could sell this cable." So, I didn't do anything. I said, "Well, I have to check with Ray Schneider. I'm not sure we have any openings." He said, "Okay, I'll check back with you in a couple of weeks." Well, about two weeks later he came in and he sat down in a chair across from the desk and he said, "Well, what about my job?" And I said, "You know, I just haven't had a chance to call Ray Schneider." He said, "Well, I'll just sit here until you call him." So I called Ray Schneider and I said, "We have John Patterson, who works in the plant, here." He said, "I've heard of John. I know he's a fine young man." I said, "Well, he just graduated from ASU with his degree in marketing and he wants a sales job." He said, "Well, have you talked to him?" I said, "He won't leave my office." He said, "Hire him." That quick. "Hire him." John turned out to be one of the better salesperson that we had at Times and today he's the western vice-president with CommScope. So, I always thought that that was a good success story for a guy who was willing to do the dirtiest job in a plant to ultimately to rise through the ranks of companies. I stayed in Phoenix until 1976, and I told you that I had the western half of the United States and Dean had the eastern half of the United States, and somehow in my mind I always supposed that if there were ever any promotions between Dean and myself it would go to Dean because the guy that's at headquarters has the ultimate advantage over the guy that's way out in Phoenix. I get a call from Ray Schneider in 1976 and he said, "I want you to move back to Wallingford." I said, "What for?" He said, "I want you to take over as the national sales manager." I said, "But we already have a national sales manager. That's Bud Desmond." He said, "Well, don't worry about Bud. I'm going to make Bud director of marketing." I always loved marketing better than sales, so I said, "I want that job." He said, "No, I need you for sales. You come back to Wallingford." So I packed my family up and we moved back to Wallingford, Connecticut, to Meriden – we lived in Meriden, the plant's in Wallingford. So, then Dean decides that he's going to leave, and he's going to go take the same job I have at Times at Hatfield Wire and Cable, and he does. He goes to Phoenix and becomes the national sales manager for CCS Hatfield. It's only about two months after he leaves that Bud Desmond has a massive heart attack and dies, and now we need a marketing manager, and Dean would have been the absolute... and Dean always kids me that his timing was terrible because if he hadn't have left, maybe he could have had the marketing manager's job. About six months after Bud has his heart attack, Ray had always been a heavy smoker – Ray Schneider – and he developed really bad emphysema and he was going to have to retire, but he's still working at the plant and about that time, we hire Frank Dabby and Ron Chesley from AT&T Labs as part of the company because they have the right to a patent that Bell Labs has to make fiber optic cable. So, they're hired in; we decide to change the name of Times Wire and Cable and now it's to be called Times Fiber Communications. There was a big change in management of Times then. Bob Burton had been the president of Times; Larry DeGeorge had always been the CEO and sat on the board of Insilco. Jack Arbuthnottt was the chief engineer, but they had a vice-president of engineering, all approaching retirement age, and now Bud has passed away, and Ray's in failing health and is getting worse and worse. So, Insilco at that time owned a lot of companies. They owned Red Devil paint, they owned Steward Stamping that stamped coins for Argentina and South American countries, they'd get the coins up not stamped and they would stamp them and ship them back to the country. They owned Taylor Publishing, which was the biggest publisher of high school and college annuals and yearbooks in the world. They owned Eyelet Corporation that was internationally making zippers for clothing and buttons and snaps. They owned a company that made crucibles for melting metals and forming metals and so forth. So, they were a pretty big company. They owned, of course, their own International Silver plant.

RIKER: Quite diversified.

PORTER: Yes. So the vice-president of engineering retired and so they never named another vice-president of engineering. They just had Jack Arbuthnott continue on as the chief engineer for Times Wire and Cable. Bob Burton they decided to send to rolodex, which is another company they owned. Secretaries used Rolodex and that was one of our companies, and that's before we had Palm Pilots or computers, so everybody had a Rolodex, which proved to be one of those things that didn't keep up with the times and now you don't see Rolodex much anymore, but Bob Burton went over and became president of Rolodex, and they brought Bill Lynch in. Bill had been with General Electric. He had worked in and been in management of manufacturing facilities that made ovens and refrigerators and all the appliances that GE makes. And then Ray got so ill that he decided to retire. Well, he had sort of groomed me to be the vice-president of the cable side because actually Times had two sides to it. It had Times Microwave, and Times Microwave was heavy into government contracts. They made cable assemblies for the atomic energy commission and the fighter aircrafts and submarines, anything military. And then we had the cable side, and I was to be in charge of the cable television... all of the production for that. But Bill Lynch didn't like... I'd never finished college, and I guess to his way of thinking, if you didn't have a diploma to hang on your wall, all your successes didn't mean anything because you couldn't back it up with a piece of paper to hang on the wall. So, he decided to bring his cronies in and they didn't know anything about what was being done at Times, so they would say things to me like "Don't you worry, nobody's going to bother you. I'm just going to sit over here and not bother you." But they were, in essence, my bosses, and I didn't like that. We went through two or three people and finally I just decided that I had had enough. Jack Arbuthnott, who was the chief engineer with Times, Larry DeGeorge had brought him on from Phipps-Dodge. Phipps-Dodge was the first company to make aluminum sheath coaxial cable, and so Larry enticed Jack to come on board and that's how Times got into making aluminum sheath cable. So they had a father-son relationship for years. But all of the sudden, Kevin Lynch and Jack Arbuthnottt wanted me to help them start a company. We could manufacture our own cable. So, Cerro closed their plant down in Freehold, New Jersey, and I knew that that plant was laying dormant, so I started looking around for some money, and I found an investor and I took Jack Arbuthnottt, the chief engineer from Times, and Kevin Lynch, the plant manager from the Phoenix plant, and we went down and started our own cable plant. We opened the Cerro plant and we called it Capscan Cable.

RIKER: Right, I remember Capscan. Going back to Times, when you started making fiber, where does the mini-hub come into play? Was that during your tenure there?

PORTER: Not really, because just about the time... I was there when the concept was laid out; I don't think we had actually... if we had sold a mini-hub, it was to Storer, and maybe we had sold one. Harold Null was a great proponent of the mini-hub and the idea of fiber. He always believed that fiber optics would work for much more than the mini-hub and much more than its common use in the original days, which was just to long line signals that were received at a remote earth station into a headend where they might be one or two or three miles away because that was the best reception for footprint, that was the best reception for that earth station, but the headend happened to be two or three miles away, and so everybody was just using fiber for the purpose, and Harold Null believed that you could actually build cable systems long before we ever built an HFC system, he believed that it would work.

RIKER: It was the first time that fiber went actually to the TV set.

PORTER: That's right because the mini-hub was a unit much like a pedestal or a power supply housing that sat in a person's yard or in an apartment house yard, and each individual apartment or home got their signal fibered right into a set-top converter that would accept that service and the mini-hub, was just well ahead of its own time. There are many engineers who believe that the concept of mini-hub will resurrect. We tried to find a mini-hub for The Cable Center for the museum. I think the only one we found that was still in existence was actually being used at the Chatham plant down in Chatham, Virginia, and they were using that to send signals back from the blockhouse where the cable core is sent down and I don't know whether you got that one from the Chatham plant or not, but they were having trouble finding them.

RIKER: No, we didn't get one yet, but I used to maintain a mini-hub at NCTA. It was put in there as a showpiece and I was very impressed with the technology at the time.

PORTER: Well, Larry DeGeorge came down from Insilco. Larry, early on in his career, was really the founder of Times Wire and Cable. Insilco bought it, they put him on their board of directors, and early on he decided that he ought to have really good formal education in finance, so he went back to get his degree in finance and went to NYU, or one of those, and I always thought it was grand. One of his instructors was Ayn Rand when he was in school and I thought that would be great to have Ayn Rand as a professor, but he was always real proud of that. But he got his degree, and Larry is a very astute businessman. There are no obstacles that you can throw in his way as far as forming, selling, taking companies public, taking companies private, and so forth – a very astute businessman. But then he came down and actually got directly involved with Times Fiber Communications. Insilco still owned them; Irving Kahn owned a piece of it, and Irving, at that time, was growing chips for LEDs. He had another company that he formed in New York City and actually they were growing the chips for LED because we didn't have lasers back then. We had the fiber and for a transmitter and a receiver you had a light emitting dode, which stood in the way of actually using the fiber out in the field like we do today because now we have good laser and so we can get high power to send the signal, but we didn't have that back in those days. In 1976, we brought one kilometer of fiber to the Western Show in December, and we demonstrated that one kilometer of fiber, and I never will forget, the engineers that are still even around today thought that was the funniest thing they had ever seen, Bill. I wrote an editorial not long ago in Communications Technology magazine, and the title of the editorial is "They Laughed" because that's what they did. I never will forget that; nobody had ever seen fiber at a cable show as a piece of gear that could be used in a cable system, and I remember Jack Arbuthnottt – we had not left at that point – Jack Arbuthnottt worked with... we didn't have any kind of sophisticated gear back then for lining the fiber up. You'd have to line the end of the fiber up with the end of a pigtail, and you'd have to line it up in the X axis and the Y axis, so when you got one just about right, the other one would start to move away. I remember he had a high powered microscope, and he's lining these two ends up, and when he got them to where he had a DB of loss, he had to use commercial glue and seat those as close as... he took and cleared the ends, and smoothed the ends and locked them in place, and then he glued that and let that sit, and then he had to go do the other end to the pigtail. So, he worked on that at the Western Show 'til like 4:00 in the morning in the booth, and you could tell he was really tired because he'd just get it and it would break, and he'd get it right and one of the other axis would break, but he finally got it all done at 4:00 in the morning, so we had to stay with him until he got that done, then we all went to bed. We got a limited amount of sleep, so Jack's in a grouchy mood anyhow, and so we're demonstrating this, we've got one channel over this one kilometer of fiber, and one of our competitor companies, and I won't say who it was, but it was a Phoenix company. The president of the company had been out, and I guess he had partied all night that night, so he was still kind of inebriated when he came to the show the next morning, and he comes down the aisle with a group of other people. They start to approach the booth and they're saying, "Well, what do you think of this fiber optic thing over here?" And this guy says, "It'll never work. They're tricking you. It's a trick. I'll just reach over here and break this fiber and when I do you'll see the picture stays there." Well, Jack Arbuthnottt heard him and Jack can only remember that he didn't have but about two hours sleep since about four o'clock in the morning. He starts to come over the side of the booth to throttle this competitor, and of course Ray Schneider grabs Jack and holds him back and security comes and carts the competitive president of this other company away and things settle down, but a lot of the engineers thought it was a trick. You just could not send a signal over light! You had to have RF; they were old RF engineers. So, at the following NCTA in Chicago in 1977, we demonstrated again and we were all given awards, plaques, we were given computer tea services with inscription on the bottom that we introduced fiber optics to the cable industry in 1977. That was kind of a proud moment for us, too.

RIKER: Sure, and the rest is history.

PORTER: So, anyways...

RIKER: Now you've gone to Cerro.

PORTER: Yeah, we go down and we open up the plant and we become kind of successful. We're really successful in the drop cable because it takes longer. You've got to buy new extruders, modernize your equipment to get up to speed on the aluminum cable, so we really put our emphasis on drop cable. I was always proud - one of the biggest customers that Times had had, and we were now competing with Times, was TelePrompTer, and TelePrompTer had just gotten the Irving, Texas franchise, which is where the Dallas Cowboys arena is, and TelePrompTer in Irving was going to use Siamese two RG-6 messengered to every home. Well, that stuff costs about as much as ½ inch cable did, and we got the contract for all of Irving, which kept us running at CapScan, and I stayed down there for about a year, and Kevin Lynch and Jack Arbuthnott stayed. I decided I just didn't want to work at that plant anymore, and so Burnup & Simms took it over and they continued on. I went back home to Wallingford, Connecticut. I still lived not too far from the plant in Meriden. I'd put out my resumes. I put out a resume to Scientific-Atlanta and to Andrew Corporation. We had conversations, we had meetings, and I'd fly back and forth, and to CommScope. I'm in my home and I get a call from Scotty Flink, and Scotty is still with Gilbert, as always. He's the perennial Gilbert man. I've known Scotty for years, and he said, "I want to come over to your house." I said, "Come on! We'd love to have you." So he came over and he said, "What are you doing right now?" I said, "I've got my resume out to three or four companies." And he said, "Well, the reason I'm here is Bob Spann," who was the president of Gilbert, "wants to talk to you." I said, "About what?" He said, "Well, he wants you to go to work for him." And I said, "As what?" He said, "Go talk to Bob. I don't know. I'm just here as the messenger." So I call Bob and he said, this is Thursday, he said, "Can you catch a flight tonight and be in to see me tomorrow?" And I'm thinking that's really quick, you know? But that's the way Bob Spann was – a man of action, very direct. So I grab a red eye special and I fly to Phoenix, I go into the Gilbert plant, and I always wanted to go back to Phoenix anyhow. I loved Arizona. I go into his office and we meet from 8:00 in the morning 'til noon. By noon he said, "You're now the vice-president of sales and marketing for Gilbert. Can you fly home, get some clothes, and be back here Monday?" I said, "Sure!" And I did. I remember they had no office for me and so Bob built a brand new office for me. I saw the invoice; he spent something like 17,000 or 18,000 or 19,000 dollars for a desk that went around the wall and offices because that's what I said I wanted. He gave me his secretary. He built the office with a partition so that her office opened into mine; it had just been open space before. He really treated me really well, and I think that all of his staff was astounded because Bob Spann didn't have anybody to sell and market except Bob Spann. We got along really great. I worked for Gilbert for about five years. Loved it! Just loved it! I always thought that he had laid that plant out in just a wonderful manner... you're toured through the Gilbert plant...

RIKER: I've been through it.

PORTER: You know that was a real interesting tour and you walked away feeling like that's a very great company to be involved in in cable television.

RIKER: And the employees seemed very enthusiastic as well.

PORTER: Uh-huh. While I was at Gilbert, I went over to the first U.K. show, which was held in Birmingham, England, and while I was there I ran into – you know, you get around the floor and you see everybody – well, the Times Wire and Cable people were there, or Times Fiber by now, and I ran into Larry DeGeorge and he says, "Come on, I want to talk to you." So we walked off to the side of the floor and he said, "You know, I had to retire." Insilco had a rule that Larry himself had enforced against other people that when you were 65 you retired, so they retired him! He didn't like it, and he said, "I want to do a leveraged buyout of Times Wire. We'll just buy that company away from Insilco." I said, "We?" He said, "Yeah, I want you to come in with me." I said, "I don't have any money," or something like that. He said, "I'll make you a partner. When I'm ready to do it, will you come on board?" And I said, "Sure." So I left the show, and that's all that was done, just conversation. So I left the show and went back to Phoenix. The minute I got back to Phoenix I go into Bob Spann's office and I said, "Now there's something you ought to know about." And so I told him about our conversation, and without hesitation, Spann said, "I could never offer you that kind of opportunity. I don't want to stand in the way when Larry calls. You go ahead and take it. It's a fantastic opportunity." I said, "Well, I don't know when he's going to call." He said, "Well, just go back to work; if he calls you go take it." So I didn't hear anything from Larry for about a year, and the phone rings one day and he says, "Get on a plane. We're going to go in and take over the Times plant Monday morning." This was Thursday. So I go into Spann's office and I said, "Larry called. Everything's set up and we're ready to go." He said, "Bon voyage, and the best of luck." So I got on the plant and I fly to Wallingford. Now, Larry has formed a holding company called LPL, Inc. "LPL" stands for Larry, Sr.; Peter, his son; and Larry, Jr., his son, and it goes on the New York Stock Exchange. We can't sell any stock because nobody knows who LPL is, so it just sits there on the New York Stock Exchange, and I walk into Larry's office and I say, "I'm here." And he says, "I have bad news for you." I said, "What's that?" He said, "Well, Insilco rejected our offer." I said, "Are you kidding me? I just left my job in Phoenix." He said, "Well, you know, you can go back to work for them. I couldn't say anything if you did, but if you'll just go back home and wait we'll make a different offer that they really will accept." If you'll just go back home, I'll send you a check every month." I said, "What'll I do?" He said, "Play golf, do whatever you want to." So I flew back to Phoenix and for six months waited for Larry to call, but he sent me a check every month, just like I was working for him. And in December he says, "They accepted our offer. Fly back. We will take over at midnight, December 31st, 1995." And so, we did. I never wanted to be a president of anything. I like being a vice-president. I always thought the president had too much power and too much obligation, and it was like a shirt position. I didn't like that. I liked being a vice-president. So, I took over as vice-president of sales and marketing for Times Fiber and was a partner of LPL, and then we started to grow. We bought a lot of companies, but one of the biggest acquisitions we did was we went out to Allied Signal in the valley, in the Phoenix area, and Amphenol Corporation was up for sale, so we bought it. Well, remember I told you nobody would buy LPL stock because they didn't know who it was, well, all of the sudden we owned Amphenol and that's a worldwide corporation. We said, "Well, let's make the holding company Amphenol Corporation." And we did, and of course the stock soared because people knew who it was. I stayed for two years. I had a three year contract, but I could leave at the end of any of the years, you just give up a third of your stock, and I just didn't want to work anymore, Bill. So I just went into Larry and said, "You know, at the end of the second year I'm going back to Phoenix. I don't want to do anything else." And the parting was amiable, and I went back. But I had a friend, Earl Gilbert, who had sold his company to Transitron, which was Gilbert Engineering, owned by Transitron, which was a chip maker back in the Boston area. He was like me, he could never get out of it, so he started another company called Pyramid, and Pyramid made connectors also. They made pedestals and housings. Earl was having his fits with his competitors, so since we had always been good friends I made a deal with him that when I left Times I would come back and work for a year as his vice-president of sales and marketing and we were successful. We got a patent for a two-piece connector, which really put him on the road. He sold the housing and pedestal division to somebody else, and actually ended up selling the company right back to Gilbert, so that Gilbert had a two-piece connector as well as a three-piece connector. So I did that for a year, and then Mid-West CATV, which was headquartered in Charleston, West Virginia was a national distributor, and they didn't have a west coast operation, so they asked me if I would come back as a vice-president of Mid-West and open up a big warehouse in the Phoenix area to serve the west coast, and I did that for a year. And then I decided I didn't want to do anything else. So I retired, fully retired. I lived on the golf course, still live on the 17th Fairway of the Arizona Golf Resort and I played 36 holes of golf for about seven years, everyday. When the sun came up, I drove my golf cart out the back gate; when the sun went down, I drove my golf cart back in. I didn't get any better at golf, but I played a lot of golf.

RIKER: Was it really seven years? It seemed like you weren't gone that long.

PORTER: Well, you've got to remember, the last portion of my time with Mid-West, Mid-West was getting ready to sell to ANTEC so I had a lot more time. That was from 1990 to – I went to work for Phillips Publishing at the end of 1995 – so it was almost six years or seven years that I was just retired. But I never got out of the industry. You were still with the SCTE, as president of the SCTE, so I used to go to the Expo and work for the SCTE. I'd go to the bookstore and I'd sell T-shirts and books and pins and whatever you had just because I was silly enough that I didn't care who I collared to make a sale to because I was retired. If I irritate them, what are they going to do? Not buy? I'm not selling anything, except selling SCTE stuff.

RIKER: You were always willing to help. I remember that from as I said, the first time we met was in 1984 when I came to work at SCTE, and you were on their board of directors, but you were also a charter member of the society, which was started back in 1969.

PORTER: At that San Francisco convention, where I said I went the first time as a peddler, or as a salesman. I had been both an operator and an engineer. I've worked both sides of the industry, and one thing that always stuck in my craw was the manufacturers of equipment, and I mean everybody was guilty of it – Jerrold, Vicoa, Ameco – they would work up some of these special plans and they would go to the owners of these cable systems and say, "If you buy $50,000 worth of equipment, we will send you and your wife on an all expense paid vacation to Paris." And the other company might say, "Well, we won't send you to Paris. How'd you like to go to Hawaii for three weeks?" So what would happen is the guy had no idea of which equipment would work and which wouldn't work, but he had an idea of whether his wife would love to go... So he would leave that poor engineer holding the bag with equipment that wouldn't even work in the cable system so he and his wife could go to Paris or go to Hawaii, and I thought that's terrible. Here's a guy making a decision – I don't care if he owns the cable system – he doesn't know which equipment will work and which won't interface with what's there, and I've seen guys literally crying tears because their boss is off gallivanting in some exotic location while he's out and snow's two feet on the ground and ice is on the cable and the cable system he's supposed to keep up, and he can't because that buffoon of an owner went off to somewhere and didn't care about the real operation of the cable system, and there were a bunch of us engineers that finally had our fill of that, and we said, "We're going to form our own society. Not our own association, our own society, and this way we can start to talk and share ideas and share techniques with each other." And we envisioned simply a society, but that it would never grow to the size that you guys actually drove it to. We started talking about this back at the '68 convention and we just couldn't get everybody to move on the thing. As a matter of fact, we passed the hat and we took some donations of $20 each, I think, and it didn't come to fruition. Then in San Francisco we said, "We're going to pass the hat again." I guess we probably got 70 people or 80 people to throw $20 in a hat passed around among the booths there, and we went off to a little room at the Hilton Hotel in San Francisco, and I remember there were operators there that were ferocious about... "You can't start anything. We know what you guys are trying to do! You're trying to form a union, and you figure if you stick together that you can get everybody's salary up." And of course, I infuriated them because I said, "If that's really what it did, I'm doubly into it." Not forming the union, but if I can improve the life and lifestyle of a technician or an engineer, I'd do it in a second, and I said to them, "You are guilty of doing the same thing. You're putting equipment in so that you and your family can enjoy something and make somebody else's life miserable." They didn't like that at all. They thought that was terrible. It was funny – when they wrote the book about the early days of cable, one of the things they put in was when we did start the SCTE there were people that were at that original meeting that were there to stop us from forming the organization, and later on, when they found out that we had charter members and they were made up of people that were there, they came back and said, "Would you help me get the SCTE to make me a charter member because I was there?" I'd say, "But you were there to stop us!" They would say, "But I was there." I don't care! You didn't join at that meeting. There are people that work the floors today that I remember really were vocal about don't start anything called the SCTE. They know I know. They know I would never say anything about it, but they know that I know exactly why they were there. But it's turned out to be... we went through some really rough times, but it was when they brought you on board to run the organization that you really made it work as an organization and as a business, and today, I think that the SCTE's probably the strongest organization within the cable industry. It's absolutely the most successful as far as I'm concerned. The other thing – a funny little story – we were talking about that I had served on the board of directors at the SCTE. I never ran for the board, never ran for the board. I got a wire – I've still got it at home – saying you were elected as an at large director of the SCTE board.

RIKER: Let me guess – that came from Judy Baer.

PORTER: I don't remember who it came from, but the real reason that I had been roped into doing that in that way was they wanted... the SCTE prior to your coming on board, prior to '83-'84, had always been considered to be a good ol' boys board of directors who did things the same way year in and year out, no matter who was on the board and the same people got elected to the board, and they said, "We really wanted you to come on board and we're glad that you didn't say 'I wasn't elected so I'm not going to serve.' What we want you to do is bring some new blood into the board for this next year." So they made me head up the nominations committee, and I was able to bring Dave Willis on board; I was able to bring Bob Luff on board; I was able to bring – there was an operator down in Missouri that finally had some medical problems, he's still alive but he's not on the SCTE board...

RIKER: Steve Bell?

PORTER: Steve Bell. There were about four people that I was able to talk into serving on the board that were completely alien to names that would have been accepted even a year to two years before, but they really were able to make the SCTE operate as a successful business society and grow in membership and training programs that we had needed for so many years.

RIKER: Okay, so then in 1995 you were called out of retirement?

PORTER: Yeah, Alex Swan – I had known Alex from years' past, when he was in programming up in the Canadian area – they needed an editor for CT Magazine, and I had always written articles for all the magazines, sort of historical, "would you believe that the reason we did so and so back in the old days was because of this", that ilk, not so technical as much historical. And I was also doing a cable trivia quiz each month, and they said, "Well, you're going to write for us anyhow. If you're going to work for us and you're going to go to the shows, why don't you just come on board and help us." CT had become the official trade journal at the SCTE when you came on board, but it had always taken a rear seat, a real rear seat, to CED Magazine, and CED is a fine magazine. I read it every month and I've read it always, but they were trying to get CT's position in readership and acceptance on equal par with CED and they just didn't know how to do that, Bill. So they figured well, here's a guy with the SCTE, has history as both an operator and as an engineer and who has some writing ability, not much, but some, so we'll bring him on board, and they did. And they brought me on board not so much to write but to get involved in the business policy making, so originally when I went to work for Phillips, I did a lot of travel back to Potomac, Maryland, which is their headquarters and I would do annual business reviews and projections – here's where I think the industry's going to go in the next three years, and so forth and so forth and so forth, and it's worked out real well. As it ends up now, it's probably getting to be to the point where it's about time to turn it over more and more to the younger generation because you don't want to keep doing things they way it always was, and you don't want to do that with a magazine either. So, it takes some of the newer, brighter, innovative ideas that generally come from younger minds and not from older minds.

RIKER: This industry is certainly changing very rapidly right now, and magazines have to keep up with that change as well.

PORTER: You know, this industry has been an industry of spurts, and I mean that from a sense that it seems like it's been cyclic in that every few years we're in the throes of "we're not going to make it", and then we have a five or six year run and then we go back into the bottom of the cycle and then back up to the top again. We've always had eras that... for example, when we came up with wide-band amplifiers that made a surge in the cable industry that lasted for awhile, and copyright got thrashed about and finally decided on and cable flourished. Then when microwave came along and we could bring in distant signals, cable flourished. Then when satellites came along, that really made the industry grow, and then we went into a depression again, even after satellites came along, in the late '80s and early '90s, it slowed down again. There's always something that comes along. With the HFC networks, the cable systems had to be rebuilt, and then in the early '90s to mid '90s, data came along, and then cable telephony came along, and now interactive television has come along. Now, interactive television is going to depend a lot on the subscribers themselves, and I hope that we change our thinking so that we understand that if there is not a driving need among our subscribers for interactive television you cannot depend on a limited segment of this industry to drive an industry, and that's a danger of interactive television. We've got to make it so that it's important to all of the masses out there that they have a need for inactive television. There are a lot of technicians out today that are worried about their job, the future – there's a lot of questions, as we all know – and the message that I think I would give the new technicians and engineers is you haven't seen anything yet. It is not far in the future that we are going to see fiber replace... the biggest part of the cable system today is not the trunk, that's a very limited portion...

RIKER: It's the last mile.

PORTER: Yes, well, it's the feeders themselves, too. We saw a real regeneration of business for cable television when we decided that we were going to become HFC networks because we had to replace all of the trunks with fiber and it meant revamping of headends and actual changes of headend concepts into NOCs, network operating centers. So there was a lot of business that could be made out there, and just the HFC evolution really drove our industry, but if you consider how much more feeder there is out there than trunk – 70-80% of every cable system is feeder and drops into the home – when we start to think about, and it's coming, the replacement of all those feeders with fibers that will probably come from the node all the way into the home itself and allow a complete evolution of the television set itself we won't need all the IF strips and the tuners and so forth with fiber. All of the sudden this industry is going to have a growth like we've never seen before and it's not too far out in advance, and I would say to the technicians and the engineers that are worried about everything being in the doldrums right now, we've lived through that many, many, many times. We've always recovered from that, so if you think you've seen real growth in cable television as we forget those old days of cable television, we're not cable television anymore, we're broadband, and when we're broadband we're a very sophisticated networking service that probably is going to look like something that you would take a complex chip out of a computer and start to magnify it and start to magnify it and all of the sudden that's your broadband network that is set down into a city, anywhere in the United States, anywhere in the world, that will be that sophisticated. It will be all fiber. The technicians and the engineers will all laugh at what we've limped at for all these years. They do it already. We talk about television sets with tuners 2-13; a technician today says, "What? I haven't seen one of those." They're not used to anything like that. Fiber will allow a very, very quick, fluid movement to technology like we never saw or thought of before. What we're doing is we're building the basis for that, and I see the new technicians today talk about "Gee, I wish I'd have lived back then. I would have got rich." It's easier to get rich today than it ever was back then because people are willing to accept ideas and they're living like they never were before. I remember going in to get a franchise and a mayor or city councilman would say, "What do I need a cable system for? There ain't but three networks or two networks so you just need two channels." "Well, what if one goes off?" "Well, we'll watch the other one. You're just trying to flim-flam and take money off of our people, our constituents." We don't think that way anymore. We believe. We've gone through the idea of having pocket computers. Palm devices. People would probably burn you at the stake fifty years go if you talked about things that we can do today. The young people of today grow up accepting that things are not strange, they are believable. You can do these things. So, young minds, young engineers can build real careers for themselves, and I think that where it used to be the owner/operators that got rich soon it will be the engineers and the technicians that demand the big dollars because the operators won't have a thing unless they have the people that can put the technology into operation. Just owning a cable system? There will be no cable systems, there will be broadband networks, and bandwidth allocations are going to become... that's one of the biggest headaches we have today, Bill. We work under the assumption – because we talked that more channels is better, is better, is better – there's no real reason for a viewer to have to go click, click, click, click, click, click, click to reach a channel he wants to watch. We ought to be giving him the entertainment television that he wants to watch and nothing else, but we don't do that. We say we have to have 200 cable channels or nobody's going to subscribe. I don't believe that, and if you believe that, go down to a mall and just stop somebody and say, "How many channels do you have on your television." They'll say, "150." "How many do you watch?" "14." Well, why not give them the 14. We're going to need that bandwidth for data, we're doing to need that bandwidth for interactive television, we already know we need it for data and telephony. The poor technicians and engineers are pulling their hair out because they don't have enough bandwidth, and instead of saying, "Let's allocate this segment of the bandwidth for this service, and this one for this," we say, "Well, first of all, we've got to have 200 channels, so we'll give you the end of the rope right here." We've got to change our thinking and say we're in a business of total communications, a broadband network. We'll give you this much entertainment television, you don't want the rest of it anyhow. Perhaps if I don't have enough bandwidth for the Golf Channel – and I love the Golf Channel – but maybe if I don't have enough bandwidth to put that on my cable system as a cable channel, I can put that on the streaming video and put it right over the computer if that's a customer at-home service or roadrunner service anyhow. My wife won't let me watch the Golf Channel on the big television anyhow. Why not just send me off to the office and let me watch it on... I can get as good a picture on my computer as you'll ever see on a television set and I do it daily. So, it's our way of thinking. I hope we old types haven't trained the broadband network people – and that's what we've got to think of ourselves as – that you've to operate these networks they way you've operated cable systems. You can't do it. This is modern day.

RIKER: Well, now, usually you're the one who's sitting in this seat interviewing other people for The Cable Center's Oral History Program.

PORTER: Yeah, I don't get a chance to say these things.

RIKER: Well, you certainly have had your opportunity today. How did you first get involved in The Cable Center to become involved with the oral history program?

PORTER: Actually, I was involved with The Cable Center when it was located back at Penn State and I had done an oral history, and originally I thought it was Ben Conroy that started my interview, but it wasn't. It was the FCC lawyer that started it at one of the national shows, and mid-way into it, I don't remember what happened, but we had some kind of calamity and they said, "We've got to stop it. We'll pick it up later." We never did pick it up so it was only half finished, but that had to be probably back in the '70s. Anyways, I was just delighted when I found out that The Center was going to move to the University of Denver and made it a point to meet with Marlowe Froke, who was at that point heading the whole thing up, the transition from Penn State to the campus here. I always liked Marlowe. I thought he was just a grand guy, and he is, so everything that he would say, "Would you help me do so-and-so, or would you help me with this," I would say, "Sure, I'll do that." And I remember one of the things that we wanted to do was start getting all the old stuff, what I call the old stuff, the antique stuff, was coming in from Penn State, and Marlowe says, "We've got a warehouse to put that in, but I really need somebody to catalog that stuff and categorize that stuff. Would you be interested in doing it?" Well, I couldn't do it, and so I said, "No, but I've got a guy that I know is just absolutely THE man. He knows more about the old stuff than anybody because he helped design some of it and certainly put it in use, and that's Dave Willis, and he's retired." "Do you think he would do that?" And I said, "Sure, let's give him a call." So we did give Dave a call and Dave said, "I'd be glad to do it." I've got fond memories of us going down to that warehouse and watching Dave Willis' eyes light up. One of the biggest fears we had was that he wanted to make it all operate and we told him he can't do that.

RIKER: He still does. I remember when I was with SCTE and I was on The Cable Center board of directors since 1986 and Marlowe and I partnered to started that collection by holding a competition called the classic cable competition to each of the SCTE expos where we would give prizes to people who would bring equipment to the expo and donate it to The Cable Center. People would come with trucks full of racks of equipment to the show and then it was our responsibility to get it from there back to Penn State and ultimately here to Denver.

PORTER: Yeah, I've helped you on some of those things and it's really funny, some of it – even as long as you and I have been in the industry – you look at some of that stuff and you say I never saw that before, or you've seen it and never saw it afterwards and think I wonder who used that or whatever happened to it.

RIKER: Did you ever work with a system that had amplifiers built out of coffee cans?

PORTER: As a matter of fact, I was sent into Powderly, Kentucky one time and they said, "We're going to build a cable system there." I said, "There's already a cable system there." And they said, "The guy doesn't know what he's doing and he's only got one customer. You go out there and do a signal survey." So I loaded up my van and they gave me a pistol and a rifle and they had never done that before, and I said, "What do I need firearms for?" They said, "Well, this guy that's building the cable system might take offense that you're up there and he might come hunting for you." I said, "I'm not sure I want to run a signal survey." But I drove up there and that was the first time I'd ever seen an earth mover mining piece of gear that could walk, and it literally could walk. It had hydraulics or nudraulics so that it would raise itself up and had a leg that would reach over and this thing walked up and down the mountain and its job was to dig out – they just dug coal out or whatever they were digging out and they would just level a mountain. So I ran this signal survey and they said, "Well, drive down and look at this guy's headend." This guy had built a 100-foot tower behind his house and the tower was not really stable, and I guess he was worried about it. He put his headend in his kitchen and he ran the cable bundle through the window to the headend and he ran the cable around the house, nailed it up the side of the house, all the way around the house, out to the road and he had set metal poles down in the ground. He had dug a hole a foot deep and set metal poles, and when the kids came along from school they'd push his poles over, so he went to the city council and asked them to pass some kind of city ordinance saying that it was illegal to push his poles over. Out on the highway when the trailer trucks would go down, the backdraft would pull them down. And they did build a cable system there and I guess this guy just folded his tent, but that's the first place I ever saw an amplifier actually set inside of a bread tin that the front opened up, much like a mailbox does, and he had the connectors come up through the bottom of the bread box and his amplifier was in there. So, yeah, I've seen some things that you just wouldn't believe that people would consider was a cable system.

RIKER: I'm almost afraid to ask this question, but is there anything that we haven't talked about that you'd like to discuss at this time?

PORTER: No, we touched on The Cable Center, and one of the things I'm real proud of as far as Dave and I are concerned, one of the things that Marlowe did, and I told Dave we've got to get a certificate for this, one of the things that Marlowe did was he made Dave and myself both industry fellows for our work at The Cable Center and I want to get a certificate for that. Some of the other things that I'm proud of is I belong to the Arizona Hall of Fame. I was inducted into that. I was the president of the E Tower Club in Atlanta after Miss Polly appointed me. Miss Polly Dunn, from down in Mississippi, could do a lot of wonderful things. She was one of those people that didn't need board approval, she just did it. So she sent me a letter one day and she said, "We would like for you to serve on the board of directors of the Tower Club." Now the Tower Club is the pioneer club for the southern cable association, which is now evolved into the Eastern Cable Association. But I was working in Phoenix at the time, but my background had been in the southeast, so I became the vice-president of the Tower Club, and then the president of the Tower Club and I can remember a lot of the southerners said, "He can't be the president of the Tower Club 'cause he don't live in the south." And Miss Polly said, "I made him the president, he's the president." And I served as the president for a couple of years, and then somebody else took over. I was quite proud to be inducted to the SCTE Hall of Fame. I forget which year, I think it was 1986, I was the Member of the Year of SCTE. So I've had a lot of recognition and I appreciate it, maybe not all of it was deserved, but you know, all the hard work doesn't go without recognition and I appreciate the accolades I've had down over the years, and I've always tried to help people as I've moved through my career and I think that's probably the happiest moments is seeing people, like John Patterson that I was talking about, make their mark and you like to feel like it's because of how you would refuse to not help them, you would always try to give them some of the training that you had or make sure they didn't have to stumble and make the same mistakes, which is really the reason that we formed the Society of Cable Television Engineers, or today Cable Telecommunications Engineers, was so that we didn't just keep making the same mistakes again and again and again.

RIKER: Well, there are certainly countless stories in this industry of people who have helped others work their way up the business. Certainly your role in the development of this industry has been very significant and I'd like to thank you on behalf of The Cable Center for giving of your time today. This has been an oral history of Rex Porter and was recorded as part of the Oral and Video History Program of The Cable Center. Your interviewer has been Bill Riker. Rex, thank you very much.

PORTER: Thanks Bill.

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Robert Pepper

Robert Pepper

Interview Date: May 2000
Interview Location: Washington, DC
Interviewer: Gerry Yutkin
Collection: Hauser Collection

YUTKIN: Hello, I'm Gerry Yutkin. This oral and video history is made possible by the Hauser Foundation Oral and Video History Project of The National Cable Television Center and Museum in Denver, Colorado. We're here at the offices of the Federal Communications Commission and we're talking with Dr. Robert Pepper, who is the Chief of the Office of Plans and Policy. Thank you very much for agreeing to do this. It's nice to see you again, it's been a long time and we appreciate you taking the time. You've been with the FCC now for about 11 years.

PEPPER: 14, I think.

YUTKIN: 14 years. And how long have you been with the Office of Plans and Policy?

PEPPER: That's been about 11. I started as Chief of the Office on an acting basis in December of '89 and then that became permanent a couple of months later. So, for a little over 10 years.

YUTKIN: In the last ten years, your duties have covered all kinds of areas, but a lot of it having to do with cable television?

PEPPER: It comes and goes. It cycles. The cable issues were probably the most prominent after the '92 Act was passed and then we created a Cable Bureau in, I guess it was '93 or '94 and then most of those issues went to the Cable Bureau, but more recently we've been working with the Cable Bureau on some of the issues having to do with the transition to digital television, cable compatibility questions and issues having to do with industry structure, and then convergence. So, it comes and goes.

YUTKIN: We're recording this in May of the year 2000, so let's put it in perspective. How many chairmen have you worked with? Chairmen of the FCC?

PEPPER: Well, when I came here, I actually worked for a different Commissioner; I was a senior advisor to Commissioner Dennis. At that time, Mark Fowler was Chairman of the Commission, and then joined the Office of Plans and Policy and Dennis Patrick was Chairman. I worked with Dennis and was on the staff and then his successor, Al Sykes, was Chairman and he was the one who appointed me Chief of the Office and then after Al, Jim Cuola was Chairman for an interim period. Of course, Jim had been here as a Commissioner for many years and then Reed Hunt was Chairman and now Bill Cannard is Chairman. So I've been here, I've seen a number of different Chairmen.

YUTKIN: But you're not in an appointed capacity?

PEPPER: No, I'm a career person.

YUTKIN: But you were still given your position, you said, at the pleasure of the respective Chairman.

PEPPER: That's right. As an Office Chief, I sit in my current position at the pleasure of the Chairman and if there's a new Chairman who comes in and wants me to do something else, then I'll do something else.

YUTKIN: Let's go back a little bit. You're involvement with cable television began a long time ago when you were in graduate school?

PEPPER: Yes.

YUTKIN: Now you're from New York, but this was at the University of Wisconsin?

PEPPER: Yes, that's right. Madison. In 1971 I started graduate school in Madison and I'd done undergraduate work there as well.

YUTKIN: In what field?

PEPPER: Communications.

YUTKIN: Oh, always.

PEPPER: Yes. And one of the professors who I worked with as a graduate student, I'd worked with as an undergraduate, Larry Litche, had just been appointed the executive director of then Governor Lucy's commission on cable communications. Larry had also been appointed – at the time there was a federal/state/local advisory committee here at the FCC created by Dean Burch, who was Chairman, to look at cable TV and the issues at federal, state and local levels. And Governor Lucy appointed Larry to be executive director of this commission to make legislative recommendations to the Governor and as the new graduate student on the block, Larry looked around and said, "Okay, PEPPER:, I need somebody to help me out." There were two or three of us who ended up staffing that commission. So that was in, I guess it was August, September, sometime in that time period, of 1971 and that was my introduction to the beginning of cable and cable policy.

YUTKIN: And from that they came out with recommendations?

PEPPER: They came out with a legislative proposal. They were a set of recommendations – "A Legislative Proposal for State Regulation". It created a state regulatory framework because of course there was no federal law at that time. That came out about the same time in '72 as some really important breakthrough new rules from the FCC, in a compromise that Dean Burch had worked out working with people over at the White House. It was the Office of Telecommunications Policy.

YUTKIN: Under the Nixon administration?

PEPPER: Yes, and the '72 rules eliminated essentially the FCC's rules that prevented cable from growing. I mean until then there were all these rules that basically said you couldn't bring in distant signals. You had these leapfrogging rules where if you were going to bring in a distant signal it had to be the nearest distant signal, it couldn't be from far away and in '72 those rules all began to change. The whole idea was that cable television was something that actually would be very consumer friendly, it was in the public interest. So the FCC was beginning to move to de-regulate cable and at the same time at the state and municipal levels there's a lot more interest in cable television and we were trying to create a framework at the state level. Then I worked a lot at that time with municipalities in Wisconsin and then the entire upper Midwest on local franchising. I remember in Madison, the original cable – what happened there was some guy came along and he applied to the city council to get a cable franchise.

YUTKIN: With a white hat and a Cadillac, right?

PEPPER: No, Madison at that time had three stations and they wanted cable TV and they could bring in an independent from Milwaukee or Chicago. Everybody wanted the Cubs.

YUTKIN: The Cubs.

PEPPER: Right, of course.

YUTKIN: Was that before the Braves?

PEPPER: No, the Braves were there, but everybody wanted the Cubs and of course there were the microwave systems, the old United microwave. And this guy applied to the city council but immediately the three television stations, the ABC, CBS, NBC affiliates, ganged up and went to city council and said, "No, no, no, no. This is going to kill free TV." You know how that worked.

YUTKIN: Sure.

PEPPER: So what they ended up doing of course, was they made this guy a deal he couldn't refuse and they created a joint venture that was one-quarter owned by the original applicant, one-quarter by the ABC, one-quarter by the CBS, one-quarter by the NBC affiliates. They got the cable TV franchise in Madison and then surprise, surprise, chose not to build, right? But they had this franchise.

YUTKIN: This was in '7-?

PEPPER: No, this was in the '60's.

YUTKIN: Oh, it was before.

PEPPER: This was before, and then the commission adopted, the FCC adopted cross-ownership rules in which they said the local broadcast station couldn't own the local cable system in part precisely for that reason, because the local broadcasters were basically strangling the growth of cable. So what was interesting was that two of the television stations sold their interest in the cable system, one of the television stations said, "There's a future in cable TV", and actually kept their interest in the cable system and sold their broadcast interest.

YUTKIN: Oh, really?

PEPPER: Yes, real interesting.

YUTKIN: Those were local owners?

PEPPER: Yes, there were some local owners in Madison who did that.

YUTKIN: Do you remember their name?

PEPPER: I forget.

YUTKIN: It wasn't the Fitzgerald's? CHECK TAPE

PEPPER: I don't know, it could have... It was the total... I think it might have been.

YUTKIN: We did an interview with Newton Minow, who refers to a very interesting situation in the creation of total television.

PEPPER: Well, David Walsh, who was their lawyer and then was involved in this - I think his father was involved in the original cable system in Madison - actually had been a legal advisor for Nick Johnson here at the FCC and then ended up going back to Madison. So it's a very small world.

YUTKIN: It's a very small world, yes it is.

PEPPER: But in any case, I got involved in that, so after the work with the Governor's commission, we then started doing a re-franchising of the cable system in Madison because they'd never built. So I'd gotten involved with a friend of mine, who actually at that point became mayor of Madison, and he knew I knew a little bit about this cable TV thing and he asked me to...

YUTKIN: A little bit at that time was a lot. You were an expert.

PEPPER: Oh, I'd been doing it for six months, right?

YUTKIN: In those days...

PEPPER: He asked me to help him pull together, again, a municipal city commission to evaluate the franchise and re-negotiate the franchise agreement. So I got involved in cable franchising from the municipal side, at that time, and again, that must have been '72, '73, in there, after having finished the work with the Governor's commission and meanwhile, I'm a graduate student and getting involved in city politics and city franchising and then ended up consulting with small cities through Wisconsin and northern Illinois and that whole region.

YUTKIN: Was there any competition at that point? Were other people interested in getting a franchise? Were there any companies that were applying? What motivated this other than the fact that the existing franchise owner did not build it?

PEPPER: Oh, in Madison it was, and again, I forget the details, I think it was a ten-year franchise that was granted in '65.

YUTKIN: Exclusive, at that time?

PEPPER: I don't know whether... It was an exclusive franchise, I don't know whether it was de facto or de jure. It was a single franchise, there was never any consideration for a competing franchise. I don't think it was somebody else that came in. The city, which was, earlier you had mentioned university towns, there was a lot of interest in public access in those days. Remember, the FCC had had local origination rules back in the early '70's.

YUTKIN: Oh sure. From the '60's even.

PEPPER: From the '60's, nobody had really done anything with that. There were community groups, university groups that were interested in local origination. There were people who – one of the things I did in Madison was hold hearings.

YUTKIN: Did anybody come out?

PEPPER: Tons of people and they were just hopping mad because they'd either been in other cities or towns where they had cable and they could see more than three network affiliates and a PBS affiliate. They wanted to be able to get Milwaukee stations, Chicago stations. The FCC eliminated these limitations. There were now these rules that were still anti-leapfrogging but Madison was a top 100 market so they could import, at that point, two distant signals, one of which had to be from the nearest top 50 market. So, one from Milwaukee, one from Chicago. So there was a lot of interest and the cable operator was saying, "Well, gee, now we're going to start building now that the FCC has changed these rules and we can actually get people to reasonably subscribe to cable." But it was at that point – it's all foggy now, it was a long time ago, it's 30 years – but at that point you were coming up on the end of the ten-year franchise and the question was whether we should let this company actually build out because it had never built and it didn't really meet the terms of its franchise. And so the questions was, what should the new ordinance be, what should the new franchise be that we negotiate, under what terms and conditions?

YUTKIN: ????

PEPPER: We held lots of hearings, we drafted a new ordinance, got city council to pass it. As part of that, they created a cable commission and we granted the franchise and oversaw the build out, which turned out to be an incredibly popular system. So it worked out very well and I remember, one of the things that we did was negotiate a local origination studio for public access, to which people said, "No, this is never going to work. Never going to work." In fact, there was an old storefront on the eastside of Madison that had been vacant and it became a public access facility and, in those days, one of the most active in the country.

YUTKIN: And that's kind of more common in university communities, probably to this day.

PEPPER: Yes, and later on we'll talk about Iowa City, but that was clearly the case and actually it worked to the advantage of the cable operator. Remember, that was before HBO on satellite.

YUTKIN: Before anything on satellite.

PEPPER: Before anything on satellite. This was before the crazy man, Ted Turner, thought about taking this UHF TV station in Atlanta that nobody's watching and putting it on the satellite and creating something called a Superstation. I mean, talk about genius.

YUTKIN: As I recall, WGN was put up on satellite and they were fighting it. They did not want to be on it at that time.

PEPPER: They didn't want to be on it because they had their microwave network distribution and one of the things in the franchising process, you may remember, that there was the urban institute. A lot of the cities, especially the smaller cities, as they were going through the franchising process in the mid to late '70's and there was this bubble being blown up about the enthusiasm about cable and then the bubble burst – share prices went down and there was some scandal with franchising and the CEO of one of the large companies actually went to the slammer.

YUTKIN: That was a long time ago.

PEPPER: That was a long time ago, I'm just saying there was a lot of enthusiasm about cable in the early '70's, right? And then people had a lot of difficulty actually fulfilling on that promise and it wasn't until the satellite service actually came at the end of the '70's, beginning of the '80's where things really took off. So there was almost this false start and part of it was because of the lack of programming and people were trying to figure how do you fill these channels.

YUTKIN: That's still a problem in terms of filling them for great periods of time. I mean, the networks are still having that problem too, with content.

PEPPER: Yes, but in those days the issue was, some of the companies were coming in and even then talking about a lot of the blue sky stuff. There was the Qube experiment, there was the beginning of the two-way...

YUTKIN: The CEA [???]

PEPPER: Right, that was later. But there was still a lot of... I mean, Ralph Lee Smith wrote the Wired Nation back in the early '70's and this was sort of the vision for public access and two-way services. It's actually a really interesting book if you go back and take a look at it and it was originally an article for The Nation magazine that he turned into a book back in the early '70's.

YUTKIN: Oh, a long time ago.

PEPPER: A very long time ago. And so there's a lot of companies competing with one another, even in the early '70's, on blue sky that nobody had any idea what it meant, nobody had any idea about the satellite services.

YUTKIN: Any examples, besides satellite?

PEPPER: Institutional networks, two-way, things that we're actually seeing now about linking up, wiring schools and there's a lot of that and a lot of promises that were being made and in working with municipalities, one of the things in the early '70's, even late '70's, that I did was try to separate – when companies would come in and make bids to cities or we'd open up a request for proposal and I started talking about the Urban Institute, they worked with the big cities and the little cities couldn't afford them so they came to graduate students like me and ...

YUTKIN: The price was right.

PEPPER: The price was right, helped them with drafting ordinances and negotiating franchise agreements and the things that I focused on in those small towns were things that people really wanted, that were practical. How many channels at what price and do I get the White Sox in addition to the Cubs. And that was what is important to them.

YUTKIN: Sure. So you were working on your dissertation at the same time you were becoming an expert in franchising.

PEPPER: Yeah.

YUTKIN: What was the topic of the dissertation?

PEPPER: It was a political comedy of the creation of PBS.

YUTKIN: Ah. Okay.

(Laughter)

PEPPER: Now you know.

YUTKIN: I don't want to get into that. Let's skip forward to Iowa City. You went from Madison to Iowa City?

PEPPER: Finished up in Madison, got my degree.

YUTKIN: Was that '7-?

PEPPER: '75 – '74,'75, in there. Went to Iowa City.

YUTKIN: As a ...?

PEPPER: As an assistant professor in communications. Became head of the, essentially the broadcasting program, chairman of the broadcasting program and mostly taught policy, law, political economy of media telecom and there was no cable franchise and I was doing consulting and got looped in and became chair of the Iowa City cable commission and we went through this competitive process to grant a franchise.

YUTKIN: Which was when we met, in I think 1979.

PEPPER: Right.

YUTKIN: At that time, Iowa had a referendum requirement.

PEPPER: That's right. I remember that.

YUTKIN: And prior to that, prior to the Iowa City franchise, I'd been with ATC, which is now Time Warner and I was in Council Bluffs and there were four or five, half a dozen competitors and there was a referendum held and ATC received a majority but not a plurality?

PEPPER: Plurality but not a majority.

YUTKIN: Whatever, it wasn't 50% plus 1. So there was a heated campaign going on. The results of the referendum were inconclusive in spite of the fact that the council had awarded it to ATC and then they went back and had individual referenda for each company, which was much more expensive, it took a long period of time and then ultimately ATC got the franchise. Iowa City, as I recall, was just around that time and followed thereafter. Were you involved during the franchising, at the beginning there?

PEPPER: I was involved in writing the ordinance and then putting out the RFP, holding the hearings and going through the referendum, but what was interesting...

YUTKIN: But it was an individual referenda, or...?

PEPPER: I don't this it was an individual... I don't recall.

YUTKIN: Or maybe there was just this one election and ATC got it.

PEPPER: But what was interesting about that was first of all the referendum law actually went back to the turn of the century to the utility law. And it was when people were actually voting on who their phone company and electric company should be. So even though cable was not a utility, although it was not clear what cable was in those days before the 1984 Federal Act, right?

YUTKIN: Sure.

PEPPER: In Iowa there had been some court cases that came under, for franchising purposes, utility law. So that's where the referendum came from. What we did was essentially put out a request for proposal, had a competitive process, held public hearing and then the city's commission essentially...

YUTKIN: Of which you were chair.

PEPPER: Right. So we did our evaluation and then made a recommendation to the voters.

YUTKIN: To the voters or to council?

PEPPER: To the voters. To both. As I recall, but I remember that we then actually, and the Iowa City Press Citizen was the local newspaper, there was an insert that the city had published with the pros and cons and it was basically ATC versus Cox, as I recall, in the final vote. And there was a recommendation on the pros and cons of which of the two proposals the city commission recommended and ATC won the election and was franchised and then we were sued by Cox because they wanted a franchise.

YUTKIN: I think that's a very important point because at that time it was wide open and there was no precedent.

PEPPER: Right, and Cox came in and said, "We want a second franchise." Because we made sure that we said it was non-exclusive, so it was a non-exclusive franchise, they wanted one, and ATC said, "Wait a second, our bid based upon the number of channels and the price and everything else assumed that we're going to be the only one, at least initially."

YUTKIN: Sure.

PEPPER: And so what we did, the cable commission's recommendation to council, which adopted the recommendation, was to grant, at that time I think we referred to it as the first franchise to ATC, but at that point to not grant a second until we saw how ATC did and it was at that point that Cox sued us in state court and demanding that we must give them a second franchise. Of course they weren't interested in a second franchise. They weren't interested in doing an overbuild. We said no and the court upheld us. It was kind of a really interesting time. I've wondered since then what would have happened if we had said sure. We'll actually do what only a couple of other cities had ever done and that was competition.

YUTKIN: I think, was it Allentown?

PEPPER: Allentown, there were about 20 cities around the country that had overbuild systems and it could have been a really interesting experiment, but see, we believed you Gerry, when you came in and said, "Oh, we can't afford to face competition", we said, "Oh geez, well let's see how you do first."

YUTKIN: Well, I don't know if we said that about facing competition. And then there was a very strict timeline for presenting.

PEPPER: A very strict timeline.

YUTKIN: I mentioned this before, but I'll mention it again, we were trying very hard to react and to build within the timelines and then we had a situation in which everything was going along but we had a problem with a tower. At that point something like 99% of the requests filed before the FAA permitted the towers to be built, but we had a problem because it was on the path to an airport and that put us behind just in that area. But why don't you tell us what you did because I thought that it was a very interesting way for you to incent, kind of a carrot stick situation, which of course as an operator I would say, well we didn't need that because we were doing it anyway, we were trying to get it through as much as possible. But I thought it was very unique the way that you and the commission handled it.

PEPPER: Well, as I recall... One of the things that we had done in the ordinance and in the franchising agreement, which was not typical at that time, as you know, was put in specific penalties for non-performance and to not make something a death penalty because all too often at that time the only remedy for a city, there was a performance bond and you could revoke – the whole thing would come do or you could pull the franchise. That never made sense to me, so we actually put in graduated penalties and that was part of the ordinance in the franchise and then when you were in non-compliance, we found that in fact you were not, you explained what the problem was, you were still in non-compliance. We went to city council and the penalty I think we got was 1,000 dollars a day.

YUTKIN: It was a fine.

PEPPER: It was a fine but got from the council sort of delegated authority back to the commission to implement that and then we met, right? To see whether in fact you were really – we tried to hold your feet to the fire. I forget, I don't think you paid anything or did you?

YUTKIN: No, we didn't.

PEPPER: You didn't have to.

YUTKIN: I think in fact, if I recall, council voted for it and you said, "Well, our relations have been pretty good with the company and we would suggest that you give us (that is the commission) the authority to impose the fine should we determine that they're dragging their feet." And as it happened, I'm almost positive that you did not defer and impose the fine.

PEPPER: I don't think we did.

YUTKIN: So everything went happily ever after I think. At that point, tell me, wasn't there a new library that was being built and the cable system was part of that.

PEPPER: Yeah, I was just thinking about that. I haven't thought about that in a long time.

YUTKIN: Now that doesn't compare to the trees in Sacramento that the city wanted.

PEPPER: No, in fact again, the approach that we took was more of a partnership.

YUTKIN: With the library and the cable company?

PEPPER: Well, the city and the cable company and the library was one of the things in which we implemented that. And that was the city was building a new public library and we were very interested in local origination. Iowa City is what? About 20 miles south of Cedar Rapids where the TV stations were. There was essentially no local news except if there was a car crash or something, or a fire. There was no local television news about Iowa City and we wanted local programming, local origination. And it was a university town, there was a lot of interest in public access. ATC had talked a lot about local origination of public access and we felt that you were very committed to that. We viewed it as a partnership. The company, ATC, was very interested in local origination and the public access, I mean, more local origination than public access. And in fact, it was in part because that's one of the things that differentiated Iowa City from Cedar Rapids, so more people, if there was actually local content, more people would subscribe to cable. The city was building a new public library and so viewing this as a partnership, what we did was we said, "Okay, fine. We will build the facility, you help fund its operations." As I recall.

YUTKIN: What about the equipment?

PEPPER: You provided the equipment. We provided the facility, brand new studio facility. We paid for the cable administrator. It was out of the franchise fees but at least we tried to actually... that's another thing by the way, we tried to use the franchise fees not to just go into general revenue but actually use the franchise fees to feed back into supporting the cable operation.

YUTKIN: That was unusual because a lot of the cities did not.

PEPPER: Took the money and run.

YUTKIN: Yeah.

PEPPER: We were very consciously trying to use that to reinvest in our side of the cable operation, to help fund. Drew Schaeffer was our cable administrator, great guy, and we had a lot of students and volunteers and so the company supplied the equipment and engineering support and we supplied the facility and some of the staff and we really viewed it much more as a partnership, risk sharing, as well as sharing benefits. That facility became a real model for local origination and public access.

YUTKIN: And you had a place to put the students too.

PEPPER: We needed a place to put students, you bet. I was still wearing that university hat, that academic hat. That worked, I thought, really well.

YUTKIN: It's 20 years later now. How's it doing?

PEPPER: I haven't gone back to Iowa City. I have no idea how it's working there. I assume it's still working well. The public access is one of those funny things where it was great in concept and it worked really well in some places but in lots of places it never worked. In fact, there's some places where not only did it not work, it ended up imposing such significant costs on the systems that it actually raised people's rates. I mean, I remember I was here at the FCC looking at some of these issues and there were some systems that were charging, I think at the time basic was 18 bucks, $3 of which was directly attributable to the costs of public access, and that is a very, very high price to pay and in fact I think if you said to most of the people in that community, would you rather pay $15 a month without public access or $18 a month with public access, given the level of public access or local origination or content in that community, which was a suburb of Chicago, this one in particular, that I think that the average person in that community would have said 15 bucks without it because there wasn't a whole lot. Now, I frankly think that in a place like Iowa City, because of the way we did it, I don't think the costs were – there was not a 20% cost premium, at least you never told me there was, I don't think there was. And I think even if it was that, although it wasn't even close to that, viewers in Iowa City valued the local origination because it was local city programming. There was news, there were talk shows, there was the public access program, but it was a lot of local origination programming as well, the city council meetings and so on, and I think people valued that. But it's a benefit/cost tradeoff and all too often the public access costs just so outstrip any of the perceived benefits by average consumers that I don't think it really has the kind of support today that it could have had.

YUTKIN: And with few exceptions, I don't think it had that much support in many of the cable franchises in the '70's and '80's.

PEPPER: Oh, I think that's right. In fact, some of the cities, two of the cities I worked with, Madison and Iowa City, are both college towns. A lot of support for local origination and public access and it worked. There were a lot of other smaller communities that I consulted with in which public access was not that important and the kinds of agreements we had did not reflect that level of commitment on the part of the company because the communities didn't want it or weren't going to use it and there had to be a balance.

YUTKIN: It sounded very good in franchising.

PEPPER: Oh, it was great in franchising! In fact, there's a funny story about back in the late '70's, what companies were promising and sort of sorting through what was real and what was unreal. And then of course, companies protesting that they could do more than the winning applicant because they were proposing all this blue sky stuff. The funny story was there had been a visiting professor at the University of Iowa, who was visiting from Australia.

YUTKIN: Communications?

PEPPER: Communications, from Melbourne. And she had been a member of the Australian Broadcasting Tribunal.

YUTKIN: Which was...?

PEPPER: Their FCC. And then it became the Australian Broadcasting Commission, so it's their version of the FCC.

YUTKIN: This is in the late '70's?

PEPPER: This is in the late '70's, actually she may have been in Iowa City in '80. I think it was '80. She went back to Australia and we corresponded. She knew I was doing a lot of work with cable and my franchising and the city commission and so on, and one day she called up and said that she was involved with some cable issues there in Australia and what they called the country or the regional broadcasters, who obviously were not thrilled with having competition from cable, were interested in having sort of an independent expert about cable in the United States because they were hearing a lot from the US cable operators who wanted to get into Australia.

YUTKIN: But at this time, the satellite was up.

PEPPER: Well, at this time they were proposing a satellite service for Australia, and so there was this issue of satellite versus cable TV. They wanted somebody to come to talk about the US cable industry from an unbiased perspective and they wanted me to come over and do these presentations figuring that even though I didn't support their position of strangling cable, because I thought cable was a nifty thing, whatever I would say would be enough to discombooble the whole debate. So I said, "Well, I'll do it but I will have a disclaimer saying that I'm not here representing their views, in fact they probably don't even agree with my views, but I'm happy to testify before the ABT."

YUTKIN: And they brought you over anyway.

PEPPER: They brought me over anyway, which was great.

YUTKIN: For you.

PEPPER: For me, and I did some other lecturing. I did a lot of work at the university there and so on. It worked out fine. This was, I guess I went over in November of '81. This was November of '81. I mentioned Cox, they were trying to get franchises all over eastern Iowa when ATC was competing against them and they got the franchises in Cedar Rapids based in very large part on their proposal for their index system, which was their two-way blue sky system. It was going to have all kinds of polling and two-way and interactivity.

YUTKIN: It was already on a beta test, wasn't it?

PEPPER: It was a beta test, but that was about all, and in fact, it was one of those technologies that never made it and there were a number of cities in which they never built it out and there were in some cases some suits and a lot of churn at the municipal level because of promises made, promises not kept. It was one of the things that we avoided in Iowa City by just trying to be more practical instead of... the blue sky was great, but that wasn't the centerpiece of our franchise. Well, that was Cedar Rapids and actually they pulled the plug on index at that point, when I went to Australia. So there's a whole series of witnesses testifying before the Tribunal and the witness right before me was a guy from Cox and he's talking about how cable television is going to change everything in terms of the media landscape in Australia and he started talking about index and he started talking about the two-way blue sky services and he used as his example Cedar Rapids, Iowa. He was going on and on about how wonderful all this was. That was fine, but of course they'd already pulled the plug on it.

YUTKIN: And he didn't know?

PEPPER: Either he didn't know or he didn't say. So I was next and I went to testify...

YUTKIN: Well, he certainly didn't know that you were next!

PEPPER: Oh, he had no idea who I was, right? I sit down, I do the introduction and I say, "And by the way, just before I start talking about the legal framework and the franchising structure and how cable has grown and the number of channels and the growth in subscribers and so on, I'd just like to point out that the previous witness talking about Cedar Rapids, Iowa is something I know a little bit about since it's 20 miles up the road and I can tell you that in fact it was a complete failure, they've cancelled the project, they pulled the plug on it and Cedar Rapids is suing Cox." And then went on to my presentation.

YUTKIN: Which was kind of pro cable, though?

PEPPER: Yes, it was, I would argue that it was pro consumer, more channels, more choices and cable was a real contributor to that in that there's sort of a balancing in trying to – yes, it could be viewed as pro cable. I like to think of it as pro consumer. People like more TV, but to do it, again, in a balanced way so that you would have, for example, the things that we were able to negotiate. Things like local origination, things like institutional networks where they made sense and so on. Meanwhile, these guys from Cox are in the back of the room mumbling, "Who is this guy? Where did he come from?" It was actually very funny.

YUTKIN: So what happened? Did they rebut?

PEPPER: No, not that I recall.

YUTKIN: And what happened with the commission?

PEPPER: Oh, well actually what ended up happening was the satellite interests killed cable in Australia. They still don't have it and it's just now beginning but basically the satellite interests in Australia killed cable because they basically said, "Look, we need satellite because we're a very large country, thin population, satellite gets everywhere, cable's only going to be in the big cities, and so on and so forth."

YUTKIN: You know, that kind of brings me to a point, because I remember being involved in the franchising process in several operations and I remember a phrase that was frequently used that was "When it becomes economically and technologically feasible." Now you just mentioned a few minutes ago, you mentioned local origination and how it sounds very good and everybody can get very excited about it but if you don't get the support from the community then it's...

PEPPER: Oh, public access. I think there's a difference between public access and local origination and we blurred the distinction purposely. And the difference was that of course public access depended upon people sort of walking in off the street or training themselves and you never know what the content is and you can't build a program schedule that people want. Whereas local origination you could.

YUTKIN: But it's still a question of what's going to be supported and watched by people.

PEPPER: Sure.

YUTKIN: I mean, in Iowa City maybe you did have a fair number of people watching council meetings, but in lots of other places...

PEPPER: But we also did local origination if you recall, there was also the local news, local sports, local current affairs or public affairs and so there was programming that people in the community had no other way of seeing and the company was actually producing some of it in conjunction with the city, which is different than the public access, which is just a walk in.

YUTKIN: Well, let me get back to my point, which was we would say when it's economically and technologically feasible. What that meant was if I'm selling you my company, I'm going to want to present it in the best light, the one that is going to be the most advanced, and index, the idea of index, in the same way Qube, which was an experiment in '78, I think, it was still a great idea and it had problems and it, I guess you could say, it failed, but the idea didn't. Its time hadn't come, it wasn't quite technically practical.

PEPPER: It wasn't practical.

YUTKIN: But it was a great idea. So actually, what I'd like to ask you is, if you would have been working for a cable company in the franchising process, how would you have sold something that was a little bit blue sky?

PEPPER: Well, look, from a franchising perspective, from the city's perspective, people were making all kinds of promises that, from our perspective, people were making promises they knew they couldn't keep. And they did so with impunity because they figured, well, we'll just, quote, try, and then we'll say but it's not economically feasible, the equipment's not really available, we thought it was going to be available, it costs too much and then we'll just renegotiate the franchise and not have to do it. There was a whole period of time when promises got out of hand because I think what happened was, there were companies that very legitimately were experimenting, right? But what happened was, people became so enamored with the vision of the experiment, they were no longer presented as experiments. Lots of experiments fail, they don't work. You don't do an experiment everywhere. And again, the average citizen wanted to know can I get a lot more TV, is it going to be at a really nice, good price, and can I get (this is before satellite, remember) this microwave stuff, can I get an independent station from Milwaukee, and independent station from Chicago, can I see the Cubs, can I see the Braves, can I see the White Sox?

YUTKIN: Well, but they weren't talking about two-way interactive at that point in terms of promising it.

PEPPER: In the late '70's they were.

YUTKIN: In the late '70's. After the satellite.

PEPPER: Well, the satellite started in '75. When did TBS go up?

YUTKIN: About '78, '79.

PEPPER: '78, '79. CNN, I can tell you is '81 – '80, '81, in that period. ESPN was '80, '81. I remember going to a meeting, I think it was 1980, it could have been '79 or '80, in Atlanta at Scientific Atlanta, Sid Topol was the president and they were a satellite company. They were in the business of selling satellite dishes and they were trying to get help to create a market for that. They had a presentation by a bunch of what at the time people thought of as crazy, wild-eyed visionaries. Fred, I forget his last name, the guy who helped create ESPN up in Connecticut and there were a whole bunch of these people who had ideas about delivering television by satellite to cable headends and that was actually a fairly new thing and it was going to be more than just...

YUTKIN: Well, HBO had already...

PEPPER: HBO was on.

YUTKIN: ShowTime.

PEPPER: Cinemax was the second, ShowTime was beginning.

YUTKIN: I think it was HBO, ShowTime, then Cinemax, then Movie Channel.

PEPPER: Right, but then on the non-premium it was WTBS.

YUTKIN: WTBS, and GN...

PEPPER: GN, reluctantly, they tried to fight it because they had this contract with, it was United, wasn't it, for the microwave distribution. There were these copyright issues that had been swirling around and resolved in the '76 Copyright Act, but the period between '78 and '82 when things broke open, you had MTV, you had ESPN, you had CNN, you began to have the proposals... One of the real geniuses in the programming side of this business is Herb Granath, who at ABC, on a shoestring, put together Arts & Entertainment. And remember – CBS Cable, they spent $100,000 on a party and they had this big roll out. It was sort of the platinum networks version of CBS Cable. It was going to be their classics... it was Arts & Entertainment, but not on the cheap. It was very risky to do, Herb did this thing at it was it. And so you have A&E, you have Lifetime venture, you have, they bought ESPN. There are all of these other programming ventures that ABC did and it was very risky at the time, but all those things started going up on the satellite around the same time, between '78 and '82, and that's what really drove... Remember, we talked earlier about the expectation of cable in the early '70's and then the bubble burst and then it started to come back again with the satellite and also some things we did here at the FCC changed in 1976 to eliminate the last remaining restrictions on the importation of distant signals and so on.

YUTKIN: Let me get back to the franchising process, because you certainly present a different viewpoint from the industry. How would you have handled something like that?

PEPPER: I probably would have done the same thing. But it was my job to be a cynic and to say, "Okay, of these promises, which of these are real?" And it depended upon the city and the market and that's what I was saying; when I was going to some of these smaller communities and we these presentations, and I said, "I want to hear about that. It's not going to work, it's not going to be economic in a small town of 10,000 people, it's not going to happen so don't even start promising that. I want to know and the people of this town – Ft. Atkinson, Wisconsin – people want to know am I going to be able to get Chicago stations?" And in Ft. Atkinson what was important was, I forget, they had a couple of elementary schools and a junior high school/high school combination, they wanted to link in a ring this school so that they could do cable class instruction but also be able to do sports, basketball, football and so on. So in working with cities what I tried to do was cut through what the blue sky was, another acronym is BS, and then...

YUTKIN: Blue Sky.

PEPPER: Blue Sky. And find out what was real and in some other places, local origination studios and libraries and public access were not blue sky because they'd be supported.

YUTKIN: But nobody knew, nobody really knew. It depends on the community.

PEPPER: It did, but you have to know your communities and that's the point. But everybody did know that the two-way interactive services were highly experimental, right? In fact, I don't think ATC was promising two-way interactivity in the late '70's.

YUTKIN: I believe that it was certainly included in proposals and I think that it was not something that we, you know, at such and such a date we're going to do this and we're going to deliver, because it was still in the formative stages, but I'm sure that it was included in terms of...

PEPPER: Oh, it had to be included at some point but there were some operators that were promising much more of that earlier on.

YUTKIN: Well, that's my point is that there were...

PEPPER: As a franchising authority you have to sort through and just be practical. Now, what in fact the industry was offering that people valued a lot that the companies could deliver on – it was hard to differentiate because it was available to all of you – were things like Nickelodeon, or Calliope, which came out of Columbus. Calliope became Nickelodeon and having something for kids was highly valued. So, programming like that. C-SPAN – why was C-SPAN created? It was part of the franchising process for the industry. It's a wonderful institution. Americans now, cable viewers, think it's sort of constitutionally required. So the industry does, because every time somebody talks about must-carry they say you're going to lose your C-SPAN, but that's another issue. There were things that were practical and there were things that were not practical. That's my point.

YUTKIN: But what you're really getting down to is the quality of the individual companies in terms of their ability to deliver, their desire to deliver...

PEPPER: And the credibility of what they were promising.

YUTKIN: Do you remember when, I think this was after the Iowa franchises, but they started in with what came to be known as "rent-a-citizen".

PEPPER: There were some things that were going on, not "rent-a-citizen", but other things. For example, again, there were other companies that wanted to fly our entire city council down to view their Florida system in January, just a field inspection and I basically told the council, you're not going to do that. We had a very strong city manager, a guy named Neil Berlin, who's terrific and we actually talked to the council before that. We also explained to council that any meeting they had with any company should be a public meeting. If you'll recall there were no meetings with individual council members that were private meetings in Iowa City, and they all agreed to that because they didn't want to be under that pressure because what would happen to these council members? They'd feel like they were under enormous pressure from these companies that were making all kinds of promises about schools and this and that and they didn't feel comfortable to be able to sort through what was real and what wasn't. So the deal was they could meet with these guys but it had to be either in public or with the city manager or myself or other members of the cable commission. We staffed the council member. We were their staff. They would politely listen but then they would turn to us to ask questions and there were a lot of companies that just did not like that because that's not how they operated. They like to sit down privately with the council members, they wanted to fly the council down to Florida in January from Iowa, that's not a bad deal, but they wouldn't do that.

YUTKIN: What if they would have wanted to do it in July?

PEPPER: I don't think they would have. First of all, I'm not sure the company would have but my recommendation would have been no. In fact, what we can do is we can drive to Davenport to see a cable system.

YUTKIN: Well, but they may have wanted to show you the latest in what they were doing.

PEPPER: Sure. That was always the argument. But I tried to keep it as aboveboard, as straight forward and as practical as possible to cut through... You know, I talked to friends of mine who were on the company side of this and it was real stressful for you guys as well having to go into cities and make promises that you had doubts about.

YUTKIN: I think we had doubts in terms of the timing on the delivery, or the deliverability, but yeah, franchising was a very difficult, interesting, fascinating, fun, and upsetting period for all of us.

PEPPER: A wild west period for everybody, yes, absolutely. And by the way, Cox is one of the absolutely best run cable companies in the country and they're just terrific people but you get in these franchising battles and you'll promise almost anything. They learned a lesson on some of that. They don't do that anymore, obviously.

YUTKIN: Well, at this point there's no franchising.

PEPPER: No, there isn't, but even later on. All the companies were doing that. ATC, frankly, less than the others and that was one of the things that, when I was in Iowa City, attracted us to ATC because it seemed to be more straightforward and more realistic and there were some that were way, way, way beyond index. Take a look at what happened in Montgomery County, which is a good example, we've been talking about the industry promising and some people over-promising. People would not have been over-promising if there hadn't been the expectation in a lot of communities to get them to over-promise. So, for example, I would argue that a lot of the franchising process and people in the municipal side, the franchising authorities, are, as much, I'd say in some cases, more to blame, for promises not kept.

YUTKIN: Because they were demanding them.

PEPPER: Because they were demanding them, in fact they were reading this blue sky stuff and believing it and it this community gets it then I want more and it became a game of sort of one-upmanship of how much more can I get. Again, losing the context or perspective of the consumer, the viewer, and if it's practical and if it's cost effective the viewers will love it and they love it today because interactive TV is growing finally. There's the Internet, people are willing to pay for these kinds of things but they weren't practical at the time but they were getting all these promises. You had communities essentially saying, "Okay, if we're going to give you our franchise..." we used to joke about fill potholes, plant trees...

YUTKIN: Sacramento was a classic – 3,000 trees or something like that.

PEPPER: Yeah, feed the homeless, clothe the elderly... It was stuff that had nothing to do with cable and yet it kept ratcheting up and the companies were coming in saying, "Sure, we'll promise this, we'll promise that, we'll promise anything." And there were municipalities demanding more and more and more. So if there hadn't been the environment of franchising authorities being unreasonable asking for increasingly more, the industries wouldn't come in. But it was a very symbiotic relationship that ended up with a lot of promises broken and a lot of very unhappy people. Montgomery County is a good example, right?

YUTKIN: Yes, tell us about Montgomery County.

PEPPER: It was well intentioned, they wanted the most cutting edge, high tech, and they basically required and got a franchise for, I think it was originally a dual cable system that didn't exist anyplace else. The technology did not work.

YUTKIN: This was in the early '80's, I think.

PEPPER: Late '70's, early '80's, yeah. They'd gotten public access commitments – I think it was 4 million dollars. That's a lot of money for public access support.

YUTKIN: In capital or in operating, do you remember?

PEPPER: Both, because I remember that there were people who were hired by the public access corporation in Montgomery County, or whatever they called it, who were being paid by the company, the cable company, before there was a cable system. Two years before there was a cable system. So I asked one of them, who actually turned out to be a former student from Iowa City, and I said, "Well, what do you do?" She said, "We're making lists of all the community organizations that might want to participate in public access." They'd spent most of the money by the time the cable system was up and running. It was a waste. Again, well intentioned, but it was one of these things where it sort of fed on itself. It was a waste of money, it increased the costs, it raised the cable rates, the average viewer didn't benefit at all. The company has now gone through several iterations, including, at one point, SPC, the phone company from Southwest. They sold it and we have a current operator, I forget who it is, and they're in the process of selling to Comcast. We still don't have two-way cable modem service. It's all one-way. They're just now upgrading to digital in one of the most affluent counties in the country. Why? Because of the legacy of very high cost promises that were just not practical and that, unfortunately, is not a unique example. So it was a process that I think, the franchising process in the late '70's, early '80's just got out of hand, on both sides.

YUTKIN: On both sides.

PEPPER: On both sides.

YUTKIN: And that's the point.

PEPPER: That's right. And my point is I was trying to be practical all along and try to get a balance that was fair to everybody and my concern was that the viewers, as consumers, got something that they valued at a reasonable price.

YUTKIN: Realistic.

PEPPER: Yes, try to be realistic. Push the edge of the envelope a little bit to keep you guys, you know. But there's an old saying, Gerry, that when you're on the cutting edge, be sure you're behind the blade and there are a lot of these systems that were out in front of the blade and that's just not practical, it's not realistic, and that's what happened. I think it took the cable industry a good deal of time to a) to get out of it and b) to recoup some credibility at the franchising level. So in the long run, it really didn't help, it was counterproductive.

YUTKIN: Well, but the franchises had to be granted.

PEPPER: Yes, but remember this was also before the 1984 Cable Act, which was the first federal act, which began to put some boundaries on what the cities could ask for.

YUTKIN: What would you say was the essence of that?

PEPPER: Well, it did a couple things. There were some good parts of it and some premature parts of it, not bad really, but it seems to me what it did was it created a federal framework, it capped the franchise fee - remember, there were some cities that were getting 10% franchise fees – and then it basically tried to make, it wasn't completely successful, tried to make explicit all the side deals that were costing consumers. One of the things that Congress did in the '84 Cable Act was basically try to make explicit what all of the subsidy stuff was because that was costing consumers and it was hurting the industry and hurting deployment.

YUTKIN: Well, I think it was about 10 years that cable companies started putting in franchise fees as a line item on the bills to the customers.

PEPPER: That's right, and the cities went berserk. They didn't like that. Now, one of the things I think it did prematurely was completely de-regulate cable rates back in '84. It was interesting because there was an assumption about DBS competing with cable TV. DBS was authorized in '83 but it didn't actually show up on the market until '93, '94.

YUTKIN: Promises?

PEPPER: Well, no, it turns out there were some problems having to do with the availability of programming and one of the things Congress did in the '92 Cable Act was put in program access. Without that there never would have been the DBS industry and from the cable industry's perspective that made sense because why do I want competition? I'm not going to sell to my competitor. It was rational but there was a market problem and Congress dipped into that. Now, having said, that I think that they prematurely de-regulated cable rates in '84. Actually things had worked their way through and in fact what's interesting is by 1990, in the 1984 Cable Act, Congress required the FCC to do a six year study, in other words, 1990, on the state of competition in cable and make any recommendations back to Congress that we thought were appropriate. And in that 1990 report we said that in fact there was insufficient competition to the cable industry but that the remedy was not to re-impose rate regulation because that would result in all kinds of distortions and unintended negative consequences for consumers in terms of program availability and so on, but rather we should focus on increasing competition to cable and made a recommendation about program access. We also, by the way, made a recommendation to Congress that one of the problems with the failure of competition was that too many municipalities were granting monopoly franchises. De jure monopoly franchises, and that the cities were as much to blame for the failure of competition in the video market place as the industry because the cities, by law, were saying we're going to grant monopolies. One of the important things the '92 Act did was repeal those exclusive franchises, not that it's made a whole lot of difference but it actually – in the upper Midwest, Chicago, the Ameritech system, there was enough overbuild...

YUTKIN: 21st Century, sure.

PEPPER: 21st Century, and now in combination with programming available from the early '90's to the satellite industry and now with the Satellite Home Viewer Act, satellite is a real competitor today. It's taken 16, 17 years longer than people originally thought or had hoped but...

YUTKIN: Well, it took 30 years longer for the cable industry to get going too.

PEPPER: Sure, but it's there and we have a completely new and different kind of multi-channel video market place today. Fortunately or unfortunately, we were prescient in our recommendation in 1990 to not re-impose rate regulation because that was one of the things that was incorporated in the '92 Act and of course in its initial implementations it had a very negative effect on the industry investment, upgraded systems, new channels and then the commission had its, what we called "going forward" rules and sort of changed that to become more flexible and since those went into effect, I guess those were in '95 or '96, we've seen investment again, and significant investment and upgrades. Channel capacity, programming, two-way cable modems, and so on, largely driven, initially, to respond to competition from cable but then also recognizing the opportunities in Internet access over the last two or three years and just now beginning, in terms of some of the voice telephony. Although Cox there has been a real leader. Cox was the early - the upgrades, the two-way, the voice, the Internet. Cox, five or six years ago, began making billions of dollars in investment early on. They were at, again sort of the old hackneyed phrase, they were at the bleeding edge of those investments because they were investing in technologies that were not proven. So maybe I'm contradicting myself on index, but that's... That was not based on promises, that was based upon business planning and they went in, they invested and they've actually – in Southern California they have a very nice telephony business. Where they provide the telephony product they are a big pain to Pacific Telesis, to Pac Bell, because they're taking real customers and they do a great job at it. So I think you can look at them and see where the industry's going.

YUTKIN: Why is that, do you think? Service? A combination of foresight, technology?

PEPPER: I think to some extent – they were essentially a privately controlled company. They were less worried about quarter to quarter. The Cox family, the Cox sisters supported Kennedy and Jim Robbins in making what were risky investments. Now, not the promises but actually making the investments. This is just a very, very high quality operation. They have some terrific management, they had some terrific technologists that understand the technology, and they were in it for the long haul. They took some hits on cash flow, but again they were able to do that, and it was hard and they could have been wrong, but they were risking their own money in a sense than publicly traded shareholder money and it made it...

YUTKIN: It's a public company.

PEPPER: But it's a minority of the shares. I mean the control of the company is with the family, with the estate, Cox, whatever, and that's given them a real advantage. I mean look at what, for example, Paul Allen's done with Charter, okay? He's betting his own money and he's making the investments.

YUTKIN: For explanation purposes, Paul Allen was...?

PEPPER: Was the co-founder of Microsoft.

YUTKIN: Microsoft, and since then he's gotten into...?

PEPPER: Baseball, football, cable TV.

YUTKIN: Cable TV.

PEPPER: Cable TV, and has bought cable systems, is upgrading them, is investing in two-way Internet services. Again, one of the other companies that was among the best managed cable systems was Continental. Amos Hostetter was running it, it was not a publicly traded, in terms of... It was a group that had voting control and they made investments and they were just a superbly managed company. They were investing in technology.

YUTKIN: And then they sold in '81?

PEPPER: They sold in '81.

YUTKIN: They're now...?

PEPPER: As we speak today, we're in the process of considering their application to be bought by AT&T.

YUTKIN: Somebody just today announced that.

PEPPER: Yesterday the Department of Justice announced that they were approving on the conditional approval for the merger with a consent decree to divest Roadrunner, the minority share in Roadrunner, by Media One and the merger is currently pending at the FCC as we're doing this interview.

YUTKIN: I won't ask.

PEPPER: Good.

YUTKIN: You wouldn't tell me anyway, even if you knew.

PEPPER: That's right.

YUTKIN: The industry is so much different and you've really seen it from even before the inception.

PEPPER: Yes.

YUTKIN: Are you proud of it? Are you happy to have been a part of it during all these years?

PEPPER: Oh yes, I'm thrilled! It's been terrific.

YUTKIN: What do you think the next 30 years are going to bring? Do you think more consolidation?

PEPPER: Oh, you know, depending upon what happens with the last batch of mergers, we've basically got two or three cable companies as it is anyway. I'm not sure you're going to see consolidation much more. I think what you are going to see is that cable already is morphing into...

YUTKIN: Convergence?

PEPPER: Convergence, telecommunications. I don't mean that in the sense of specific legal meaning of title 2 of the Communications Act versus title 6, but just in terms of an industry that's providing video, voice, data, Internet access, high-speed access and telephony. That's where I think the industry is going and I think it's going to be difficult to distinguish in the future between cable companies, phone companies and it's going to be service companies that want me as their customer. It will be an interesting sort of one web. One of the things we didn't talk about earlier was that between Iowa City and here...

YUTKIN: I wanted to get to Annenberg.

PEPPER: Oh, before Annenberg!

YUTKIN: Harvard?

PEPPER: Yeah. I took a leave of absence, actually it was a sabbatical with a research grant at the Program for Information Resources Policy, Tony Angers program up at Harvard – a wonderful guy – and took about a year working with him up there before coming to Washington and what I worked on actually, this was 1982, it was relatively early in this process. It was a research project and paper on cable telephony. Sort of a) predicting it and b) talking about the policy and regulatory structures needed to promote it and foster it because I...

YUTKIN: Was this before the AT&T breakup?

PEPPER: No, it was actually interesting, it was the year of the breakup. The breakup was actually announced – I remember this vividly because I was driving cross country from Iowa City to Cambridge on January 8th in snowstorms and I was listening to the radio and from the stage of the press club here in Washington was, I guess it was Baxter, who was the head of the anti-trust division, and the chairman of AT&T announcing the breakup of AT&T. It took two years to implement. So it was an interesting time. It was January 1st of '84, but it was an interesting time in '82. I was up at Harvard and working on this paper talking about the competition in telecoms and so on and how cable could contribute to that and then coming to Washington at the end of '82 and then '82, '83, working at that point at the National Telecommunications Information Administration, which was part of the Department of Commerce.

YUTKIN: And still is.

PEPPER: And still is. And we were involved in, from the administration side, at the time of course it was the Reagan Administration that broke up AT&T, working on policies having to do with the breakup and working with the FCC, which was implementing those policies. The FCC, of course, being the independent regulatory agency, the NTIA is part of the administration, and so working on the implementation of divestiture from that perspective but one of the things I'd been doing earlier that year, for the first three quarters or whatever of '82, was looking at cable's entry into the telecomm business and how cable could provide competition in telecomm and begin to introduce competition to the phone monopolies and that's one of the things that is to me, now, 18 years later, the most exciting thing about the cable industry, that in fact it is beginning to really live up to this potential in making these investments and we're beginning to see the fruits of that and I think that that is fabulous.

YUTKIN: So you think that the divestiture has been successful?

PEPPER: Oh, there's no question about it.

YUTKIN: Because there are a lot of people who say, "Oh, I wish we could go back to AT&T when they used to have..."

PEPPER: You used to have black rotary dial phones.

YUTKIN: But you had almost a benevolent company. The service was...

PEPPER: Prices have declined dramatically. The services that you have available to you, the range of services, is far, far greater. The kinds of competition that we're now seeing in the local markets with companies leasing the loops of the phone companies, the covads and northpoints of rhythm is doing the DSL. The kind of interconnection that companies like Cox, struggling, but they can get to provide competing telephone service. Remember, 1976, AT&T went to Congress and proposed a bill that was called the Consumer Communications Act of 1986. They just as easily could have called it 1984 because what it did was it codified the Bell System monopoly in the name of consumers. They said this is a natural monopoly and if you add competition it's going to destroy the system, it won't work. And in fact, in those days you weren't even allowed to plug your own phone in. Well, fortunately, Congress was too smart to buy that but that started a 20 year process of hearings and ended up with the Telecomm Act of 1996.

YUTKIN: But with that, hasn't there been a decline in certain kinds of service? I was driving in Oregon a couple of years ago and I found a telephone booth that wasn't an AT&T telephone booth and I couldn't get any service and it took my money and it was very frustrating and a lot of little things like that and I think that people are aware of the kind of customer service – sometimes we have an outage and I had one and they said, "Well, we'll get it on no later than tomorrow at 6:00." But of course they had it on 6 hours later. Is that a trade-off? But overall it's better now?

PEPPER: Overall there's no question that it's better. They can't ignore you, especially, by the way, if you're a business. As a business, you have someplace to go and in terms of the economy and the benefits to the economy of competition and telecomm have been enormous. If you didn't have the ability to plug your own phone into the phone network, there never would have been a modem, there never would have been an Internet, because you wouldn't have been able to plug your computer into the phone network under the old Bell System rules that said, no, you can't plug something in, it's going to destroy the network. That's crazy. Now, are there issues with consumer protection? Yes. In fact, one of the things at the FCC that we've recognized is that as we're moving to a world in which telecoms become more competitive and it looks like other industries, and you move away from the benevolent monopolist, what we do shifts. We don't have to worry about retail telephone pricing. Prices aren't going up, they're going down. Long distance they're going down.

YUTKIN: Long distance, yes. Local service?

PEPPER: Local service? In some places it's going up and actually if you take a look at it inflation adjusted, it's not going up and those prices largely are regulated by the states. If you look at other things, however, as we get more competition, we have to move from regulating prices or protecting against a monopolist to more general consumer protection and enforcement of rules, and that's one of the tricks. So, for example, we get, I think it's something like 20,000 complaints a year on slamming. Slamming is when your long distance company is switched without your permission. That is a very big problem. Well, when you had a monopoly you never got switched, right?

YUTKIN: That's true.

PEPPER: But your prices were a lot higher.

YUTKIN: Especially for what you got.

PEPPER: Especially for what you got, and then you remember – it's a long distance call, come quick! Don't talk too long.

YUTKIN: Sure.

PEPPER: And now you open up the paper...

YUTKIN: You couldn't even do direct dial. When I was a kid you had to dial 211 to get a long distance operator.

PEPPER: Yes, and then they would connect you. But even when you could do direct dial, it was very expensive, a dollar a minute. You can buy buckets of 5 cents a minute. So there's no question that there's a benefit. Now, are there unscrupulous people in the business like every other business? Unfortunately, yes. Unfortunately not everybody plays by the rules. So one of the things that we've done is we've reorganized to put all of the enforcement people from across the agency. We used to have enforcement in mass media, enforcement people in common carrier, enforcement people in different places. We have a new enforcement bureau and we have a new consumer information bureau. We used it for markets to where consumers have to be informed so that they can make reasonable decisions in the market and we have to have an enforcement bureau that enforces both rules of competitors, but also rules as they apply to consumers. If people get slammed, we go after the slammer and we're going to fine them. So what we do at the FCC is changing, and changing quite dramatically as a result of the competition. To me there is no question that we're better off and the proof of the pudding is that our economy today is the envy, literally, the envy of the world because of what's happening on our information technology side, which the base of that is the competitive telecomm market. So, now you have to choose your long distance company, but you know, I like that. Maybe you don't.

YUTKIN: Oh, no, no, no. I'm not saying that. It's just pros and cons as there were in the franchising days.

PEPPER: Oh sure, but I think here it's a common no-brainer in terms of the pros. You can quantify it economically – it's night and day.

YUTKIN: Thank you very much. This has been very interesting. I think we could probably go on and on.

PEPPER: We could go on for days, but these guys can't.

YUTKIN: They've got to go home now.

PEPPER: Yeah, "I've got to go back to work!"

YUTKIN: I appreciate you taking the time.

PEPPER: Thanks. This has been a lot of fun.

YUTKIN: It's been a lot of fun.

PEPPER: I've remember things I haven't thought about in years.

YUTKIN: Well, that's one of the purposes of the Hauser Foundation's grant to The Cable Center.

PEPPER: Gus is a great guy. He's terrific.

YUTKIN: We appreciate that. We appreciate you making facilities available to us and it was so nice to see you again.

PEPPER: Great to see you. Thanks!

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  BACK TO ORAL HISTORIES

Pioneer Panel 2: History of The Cable TV Pioneers Part 2

tcclogoblack

Interview Date: Tuesday August 14, 2012
Interview Location: 2000 Buchtel Boulevard, Denver, CO 80210
Interviewer: Les Read
Collection: The Pioneer Cable History Collection

Pioneer Panel - Today
Les Read, Moderator
Mike Pandzik, Jim Faircloth, Panelists

READ:   Hello, I’d like to welcome you to the National Cable TV Center here in Denver, Colorado. We are originating from the studios on a beautiful day in August and this is a special interview panel on the history of the Cable TV Pioneers which started in 1966. Joining me today is the new chairman,   been in the office for about two terms now, Michael Pandzik. Mike, why don’t you tell us a little bit about you and where you started and where you came from.

PANDZIK:     I started in the television business in 1966 as a cameraman, doing what these guys are doing. I entered the cable business in 1971 working for Dolph Simon’s in Lawrence, Kansa. I was in gradual, what my daughter later called gradual school, in grad school at KU in Lawrence and was doing a paper on cable TV and I find out that city had actually granted a franchise for Lawrence, Kansas but no one had ever built it. And I wondered why and I found out that it was the newspaper, the family that owned the newspaper owned the franchise. So I made an appointment to go see Dolph Interviewing for this paper and I thought it would be 10 minutes and I spent the rest of the afternoon and a week later he offered me a job. So I was the second employee hired helping build this cable system and that was 41 years ago.

READ:  Was there a little hesitation on your part to build a cable system for fear that it might interrupt the newspaper operation?

PANDZIK:  That wasn’t it. The problem was they were close to the Kansas – they kind of equilateral distance between Topeka, Kansas, the capital of Kansas to the west and the major market of Kansas City to the east. And with a wire coat hanger connected to your TV terminal, antenna terminals, in Lawrence you could get 12 or 15 channels. So I think that was the heart of Dolph’s hesitation – how’s this going to work out.  What am I going to sell these people that they can’t get anyway?

READ: Right.

PANDZIK:  So we gave them something they couldn’t get otherwise.

READ:  Channel 6.

PANDZIK:  Channel 6.

READ:   Magnificent job.

PANDZIK:  Still doing great after over 40 years.  It’s Lawrence’s TV station.

READ:    From cable TV you got into pay TV? 

PANDZIK:    HBO, worked there for some time in sales and marketing. Ran HBO’s regional office for some time and then moved to New York with HBO and worked in new business development. And while I was HBO in Kansas City, I was on the board of a guy that you know well, Rob Marshall, who ran the Mid-America Cable Television Association for 35 years at least.  Rob’s group used to have annual meetings and they had board of directors. The board would get together quarterly and I was an HBO guy in those days and so I figured a way to get myself on this board as kind of the associate representative. So after dinner every quarter, we’d go to his suite and we’d play poker and talk about the cable business.  And we all thought, me too, how ironic it was that the men and women who started the industry, the Budge and Marge as we used to affectionately refer to them at HBO, were now left as the only, through really no fault of their own, were left as the only cable operators paying this price for HBO, CNN, Showtime and so forth.  And wouldn’t it be interesting if the Indians could get together and do some kind of a purchasing cooperative. We talked about that for several years before we ever actually did anything. And then to tie this all up, I was in the Navy Reserve for a long time and was on active duty out in California, Coronado and I got a phone call. I think Robbie forgot there was two hours’ time difference, but I was up anyway at 5 o’clock getting dressed and he said “You know that idea we all talked about for a couple years about a co-op and what that might be and how that might work.”  And he said well we want to do and we’d like you to run it for us.  So we started that in the late 1984 and I was there 21 years until my retirement. It’s become probably the second or third largest buyer of program networks in this industry.

READ:  That’s amazing, absolutely amazing.

PANDZIK:  A big deal.

READ:   Joining us on the panel today is of course another old friend of mine.  Golly we go back -- Jim Faircloth. You’re career started back in radio days.

FAIRCLOTH:  Early ‘60s.

READ:   Early ‘60s.

FAIRCLOTH:  Right.

READ:    Oh yes, he covered the year and did the news and the rock and roll.

FAIRCLOTH:    Yes, radio disk jockey in the early ‘60s through really 1969 when the cable bug bit me.

READ:   Where were you then?

FAIRCLOTH:    I was in Tifton, Georgia.  I was really working too many, wearing too many hats at the radio station. I had some vocal issues from overwork and being out late at night and singing rock and roll in smoky venues. So I had to tune it down for a while and find something else to do and my first day back on the air after this 6 week respite was the grand opening of the cable TV system in Tifton. And I had met some of the principles a year earlier when they needed someone with a first class radio ticket which I had to sign some microwave logs. And they asked me to do the grand opening broadcast. So I worked with them for 3 or 4 days and they offered me a job. Not locally though. Over in Alabama. The pay was right. The opportunity was there and I could barely spell the cable terms at the time but it looked intriguing so I took the leap and it turned out pretty well.

READ:    And over the years you certainly have an interesting map of locations where cable has taken you. 

FAIRCLOTH:     Well, it’s not atypical of a lot of cable executives. We do tend to move around.  Because I landed with a company that was fast growing, fast moving, lot of cash.  Storer Broadcasting at the time. We were developing new markets before the franchising era which the earlier panel touched on today which really kicked into high gear in the mid to late ‘70s.  But we were acquiring new franchises and building new communities much earlier than that so a few management people on the team in the early ‘70s were promoted fairly quickly.  Which also meant you got to move to the next new location and the next one and the next one.

READ:    That was always one of the hazards of cable.

FAIRCLOTH:  I made 22 moves in 24 years. 

READ:    Well, I might also add that Jim, it’s been a pleasure to serve with him. He’s been the past immediate chairman and has gone through the chairs as we say at Cable TV Pioneers. The history if you tuned in earlier or caught the other show, you know that they started in ’66. It was a group of 21 individuals who were selected by a gentleman [Stan Searle] who was running a magazine at the time and he picked out, oh I think there were some 30 or 40 names that surfaced and 21 became the founders of the Cable TV Pioneers.  My background of course was that I started way back when after getting out of Syracuse as a boy in fighting blue as we used to say as a page at NBC. And I learned about this company called TelePrompTer. It was down the street and around the corner and I had an opportunity to go over. Started my career in prompting but they kept talking about cable TV. And New York is the last place that cable TV ever entered and this was back in ’64. I was suddenly told “Gee you might be good in cable TV.” And I kept saying “What is it?”  There was another gentleman who was the treasurer at TelePrompTer at the time, Monty Rifkin, and he and I went up in the Phoebe Snow, a train that left out of Hoboken, New Jersey to Elmira, New York. I found myself in a cable TV system and they left me there.  I remained for about a year and a half.  Monty went home, back to New York. It was an amazing start of a rocket ride of a career in cable because cable, it was snow free reception is what it was when we first started out. A couple of extra channels.  Of course, as we grew suddenly it became a numbers game because we went from 6 to 12 to 21 to what our good friend, Malone who not too many years ago said Oh, we’ll have 500 channels. But in the meantime, as Jim was just saying, the people that you’ve met over the years – you kept running into this group as they were truly dedicated to doing something in the developing of a modern communication, something that was better than was done before. We had nothing to go on. We really wrote the book as we went along. It was such a fascinating industry because again from the snow free reception days to today when we are talking about bundles and some of the new services that are going on. But cable you know about. Maybe the Pioneers you don’t know about and that’s really about what we are going to talk about today.  My first introduction came in 1977.  It was an interesting group because Bill Adler, who was the acting chairman at that particular point, got all snooty about the fact that this organization wasn’t going to last if they didn’t get some members. And at that particular time there really was about 50 members or 60 members.  And he proposed a class of 77 new members. (Laughter)

PANDZIK:     How long was that dinner?

READ:    It didn’t take too long because it was kind of…

PANDZIK:    Everybody up, everybody down?

READ:    Stand up. Sit down.  Of course, from that point forward, absolutely fascinating in the fact you were there and you were rubbing shoulders with the George Barco’s of the world, with the Ben Conroy’s and these were the people who kept the organization going over the years. But suddenly you were part of it and it was such a wonderful, absolutely amazing feeling. What year were you inducted?

FAIRCLOTH:    I was inducted in 1989. Same year with Paul Maxwell, Frank Hamilton, Tommy Gleason. It was a great class. I think there were about 20, maybe 22 of us.  But my favorite memory or particular story from that evening was that sort of tradition that you sit with your sponsor, right?  Well my sponsor was Bill Bresnan and my co-sponsor was Polly Dunn.

READ:   You were with royalty there.

FAIRCLOTH:    Polly was with a different group.

PANDZIK:     You were the crown prince.

FAIRCLOTH:     Well, and Bill was at the board table so I was seated at a table of strangers and a few people I knew but across the table from me was John Malone and Bob Magness. And it was the last time I saw those two gentlemen at a Pioneers dinner.  Knew they were there but they were at my table. So it was quite the evening.

READ:   What year were you inducted?

PANDZIK:    ’92.  I’ve been in a little over 20 years.

READ:   ’92.  Over the years it’s been kind of interesting because in the early days people were selected because what they had done in the industry and they were the ones who really put the money down to make it happen or raise the money to make it happen as it were. I can always remember the year when Irving [Kahn] got the first unsecured loan. It was a 20 million dollar loan from Chase Bank and that was news making kind of situation.  But over the years…

PANDZIK:  That’s a rounding error today.

READ:  Right.  It’s interesting to see what’s happened in terms of our class size. I know when I went back and looked at the minutes and the records they were concerned about holding it to five people every year to bring in.  And someone did the math that if the organization is going to continue and then as we have discussed a number of times what is a pioneer?  I mean it’s now to the fact you have the situation, number one, you have to have a sponsor and a co-sponsor, which is a pioneer – both pioneers in good standing and then the other issue which has really come about which I think has probably been the stronger issue and I know that you’ve been very keen about is what is the contribution been to the individual?  Why don’t you tell us a little bit about the blue ribbon committee function?

PANDZIK:  I was obviously – thanks, Les - I was obviously not involved in the selection process in ’67 and early ‘70s. I came along later. I’ve been on the board about 10 or 12 years and have been chairman. The way we do it is like a lot of groups do it. I was secretary and treasurer for a couple of years and then vice-chairman and now chairman for the last two or three years. But I think it was probably much easier in years past because the industry was much smaller and the guys, what was known as the Cable TV Pioneers Club in those days, they knew each other. I mean it wasn’t like you’d get a resume or an application package for an inductee, a nominee who wanted to be inducted. Today you see some that you don’t know who these people are. It doesn’t mean they are not worthy of being in the Pioneers. It doesn’t mean they haven’t made great contributions to our industry but the early pioneers, correct me if I’m wrong, but pretty much all were cable operators.  It was a little later in the process where they started inducting programmers or vendors, hardware guys or programming guys or association executives or attorneys or brokers. And all those categories today have representatives in the Pioneers.  I think every board, I think the 10th chairman in 47 years and I’m sure everybody who’s had this role and my replacement is in the wings, that’s Susan Bitter-Smith, who’s our vice-chairman. And she’s kind of come up through the ranks like I have and Jim before me. I think we all look at this like – if I can leave this place better off than I found it or at least as good as I found it and not ruin it on my watch. That’ll be fine. So everybody before me has tried to make it a little better and I introduced a few things that I think has made it better. And I know Susan will too. She’s very bright and the people who follow her down the road will do the same thing.

In my experience most industries haven’t done a very good job of keeping track of their early history. The telephone pioneers group I think has done a wonderful job. They’ve had a hundred and twenty years or whatever to do it. But many other industries I’ve seen have just not done a very good job and you get an industry that’s 40 or 50 or 60 years old and nobody really knows how it started.  I think the key to that in my view is that the people involved have to care about each other and they have to care about their industry and the way they’ve made their living and supported their families and hired employees and so forth.  They need to care about it. Pioneers is not, we're not involved in world peace. We’re not involved in nuclear disarmament. But in our little corner of the world I think we do a very good job. And this Cable Center in Denver is a great example of what can happen when you get a bunch of people together who care about each other and care about their industry and want to leave something of substance.  So I’m kind of moving on in the same process as Jim was as chairman before me. We want to make this thing go and continue to go well and our annual dinner is our big deal. And this one we had in Boston this year was very successful in a beautiful venue. I think everybody who was there had a great time.

READ:   I think that’s something for someone who’s tuning in – they’re probably not familiar with is that every year we’ve had a banquet of varying sizes and I guess, you went through New Orleans was it? Where were you chairman?

FAIRCLOTH:   My first year as chairman was New Orleans.

READ:   New Orleans.

FAIRCLOTH:    At the World War II Hall of Fame venue.

READ:    That’s right.  That was very…

FAIRCLOTH:    With no acoustics

READ:   No sound.

PANDZIK:    It’s a beautiful place but it’s not a great place for audio.

READ:   We've been to museums in Dallas. Did a magnificent dinner at the …

FAIRCLOTH:    Art gallery.

READ:   Art gallery there.

FAIRCLOTH:     The auto museum in Los Angeles.

READ:   Petersen’s Auto Museum with Burt Harris as chairman. That was a magnificent venue.

FAIRCLOTH:    Sure was.

READ:   You mentioned the one we just had in Boston. So each year – and we’ve grown from the original 21 that held their first banquet in ’67 to this was I believe our 46th annual banquet.  I guess that we just had in Boston.  The other thing for someone who is watching this presentation how does one get to be a Pioneer. What’s the process?

FAIRCLOTH:     Well, as you know as was covered in the earlier panel, 20 years minimum today. Had been 10, then 15 and now 20. And we say the significant contributions to the industry and it’s somewhat subjective, it comes up pretty clearly in the application process. You do need to be nominated by a Pioneer in good standing with a second from another Pioneer.

READ:    How often does this take place?

FAIRCLOTH:     Once a year. Every year. We have the opportunity and we have generally the last few years we’ve had anywhere from 20 to 45 applications. Mid-40’s is the highest number I recall in recent years and probably 22-24 the least.  And we’ve inducted fewer the last couple of years for various reasons. Consolidation in the industry. One thing we haven’t touched on, Mike was talking about the camaraderie and how things have changed. Some years ago, as you all know, we had the Western Show. We had the Mid-America Show. We had the Southern Cable Show.

PANDZIK:     Eastern Show.

FAIRCLOTH:    We had the Atlantic Show. 

PANDZIK:     New England Show.

READ:   Regional shows.

FAIRCLOTH:     Exactly. The regional shows where some of us appeared at or all. I mean I never went to an Atlantic Show without seeing a Paul Maxwell or a Bill Bresnan.  So you saw people and it gave the national leaders, if you will, the opportunity to see the southern leaders and the mid-western leaders. To know who they were and what they were doing in their region. So you would more readily recognize a CEO of a mid-size company in Topeka, Kansas than you might otherwise today.  But it’s 3 or 4 companies and a couple of phone companies dominating.

READ:   What’s interesting as a result, you mentioned Robby Marshall before, that the group from Mid-America started an organization called Pathfinders. And the same thing has happened in a number of other regional locations. One of the great pioneering organizations down south in your neighborhood is the Tower Club.

FAIRCLOTH:    Tower Club. Right. And I’m sure that was a 10 year requirement.

READ:   But again it’s an opportunity for the people who are really the backbone of the development of the industry being recognized in their own backyard.  Which I thought was really rather unique that – again if they don’t come to NCTA sometime… A great story was, we were in Chicago the year before last and can you remember the fellow’s name, his family shows up…

PANDZIK:    Oh yeah…

READ:   What the heck was his name? 

PANDZIK:    Must have had 14 family members

READ:    There were 20.  They were a local cable operator from Illinois. This is embarrassing that I can’t pull his name out. It was so amazing to see the support of all the family members. The grandchildren and everything else.

PANDZIK:    Had a great time.

READ:   They really did. And the amazing thing is he is the absolute perfect pioneer in that particular area and yet people around were like “Why is he a pioneer?”  (Laughter)  That you get that effect.  So it’s really important that if you are interested in the pioneering effort and getting into the organization, you have to let somebody know and stay active and be on top of it. As you say it’s a process that cycles once a year.

FAIRCLOTH:    Exactly. We were talking to some of the other panelists today about year in and year out, there are people who are very deserving and we have sort of an informal outreach committee of the board and we make phone calls to encourage people to nominate deserving would be pioneers. And I remember some of the best candidates of the last three years were I have a cruise or I’m going to go bike riding in the Himalayas or whatever. They don’t make the convention so they don’t get inducted that year and it drops another year and another year. Suddenly someone like Kay Koplovitz one year in New Orleans is sitting up being inducted 15 years after I was and I’m thinking how did this happen?

PANDZIK:    It happens.

FAIRCLOTH:     Timing. Timing thing.

PANDZIK:     It’s a group like many. It’s run by volunteers. It’s not perfect. There are some deserving people we all know who have not been inducted. They either didn’t show interest or nobody thought about it at the right time of the year to get their name in the hat. The Pioneer board members can’t sponsor or co-sponsor a nominee. So we informally sometimes if a great candidate name comes up, we’ll figure out a way, make a few phone calls to somebody to get the ball rolling.  But if there is somebody watching this who has been in the business a long time and made a real contribution and you know you can go to our website, the pioneer website, which is now on the Cable Center’s website. Later this year we’ll be on Facebook and LinkedIn separately.  You can see the list of pioneers that have been inducted each year over the last 47 years. And if you know a couple of names on there – give them a call. Tell them you’re interested. Tell them, remind them that you’ve been around a long time too and maybe they could be a guide to help figure how this works. Pretty simple.

READ:    I went back to the records, thanks to Ben Conroy for all his incredible notes, but they started out and the organization went from ’66 to about the later ‘70s and they figured well if we’re going to keep this going with the administrative costs they came in with the $25 a year dues.  Well, over the years we’ve gone to $30 to $40 and we’ve been at $50 since back in the late 80s.

PANDZIK:    A long time.

READ:    So the $50 dues but at the initiation there’s a $50 charge for initiation fee. And that’s usually covered by the sponsor or the co-sponsor that picks up on it.  So that we have a way of and we’re not into a lot of newsletters and we could do more now that we have the capability through digital and feeds that we could get more information out.

PANDZIK:     I think we’ll take advantage of that. I’m sure Susan will continue that effort.  I think in terms of the changes. Having this early panel talk about the early days of the organization. The changes I’ve seen either personally or heard about talking to you and other guys who have been around awhile, the initial groups, the initial club members if you will, when they had dinner it really was just a social event with their spouses. I mean it was not so many kids, but a guy and his spouse and that’s the way that kind of started. We got away from that in my era of the 20 years. It’s become more I think more of a professional deal. Many fewer spouses. I don’t know why that is but boy we sure welcome people to bring their spouses and their families especially if they’re being inducted. Bring you kids along and enjoy the evening.

READ:   It’s a family event.

PANDZIK:     I think another big change is in fact you told me earlier this morning that they had a made a rule years ago that we’re going to have these sponsorships. Well, let me tell you, if we didn’t have sponsorships to help us out, ticket prices would be unaffordable to many pioneers. We make no secret to the fact that guest tickets are twice the cost of a pioneer’s ticket because it wouldn’t be much of a dinner honoring pioneers if there weren’t any pioneers there. But those lower subsidized prices are true for the family members as well. So we really encourage them.

READ:    If you go back through the history again, the first dinners they held were like $40 and they said but that included the bar. (Laughter) And then they had a couple of dinners…

PANDZIK:     It’s a little more expensive today.

READ:    Where they lost money.  And our good old buddy Bill Daniels and Jack Crosby stepped up and made up the deficit on those events. 

PANDZIK:     Our goal with these dinners as long as I’ve involved with this has just been – we don’t see it as many groups do – this is their big kind of fund raiser deal.  I’d like to break even or make a little money. I just don’t want to lose any money on these dinners. The sponsorships have been extremely helpful and made that possible. 

READ:   They have and again fortunately we have a few pioneers that are in that area where they can say “Yup, we’ll help out.”  Which is… of course the other, Mike, I think over the years what we have done is when we can put some money together we continue to be very supportive because if you listen to the earlier panel about the early days, more and more of The Cable Center was… it was 1974, Ben Conroy wrote a letter saying you know the industry continues to grow and really should think about preserving the history of this organization. And it went through the phase of where’s it going to be and what’s going to happen.  George Barco was involved and Barco has some very tight connections. He was a very successful attorney in Meadville and had great connections at Penn State and that’s where we got involved there.  But the other interesting thing was that they always wanted the Pioneers to be represented in marketing, programming, and technical areas.  They didn’t want to be put in one college per se.  That was one of the bugs that kept bouncing back that Penn State said no, no, no. We’re going to put you in one college and that’s it.” 

PANDZIK:     It’s why it didn’t work out.

READ:   Exactly.  The flexibility didn’t stay at all and fortunately, as they explained in the earlier panel was great reception here in Denver.  Through the help of Bill Daniels and …

PANDZIK:     Denver was a much more obvious choice.  I mean in those years it was the hometown.

READ:   It was the cable capital.

PANDZIK:    Yes, this was the center of the universe for the cable industry. And it’s worked out great here. 

READ:    It’s a magnificent facility and again if you haven’t had the opportunity, you need to stop by anytime you’re in Denver, we really encourage you to come through and see the facility because again the mission statement of what the Center does has continued to change as the industry has changed. And one of the key areas that we boys had a tough problem with customer service and this is one of the very strong areas that continues to be developed here  - of how we can improve what we do for the customer and make sure they know what a good service this is.

PANDZIK:    This place is not just a museum of old equipment.

READ:   I was going to say if you’re as old as I am, [you’re] so happy when you go down to the – we call it the lower level – and you see some of the artifacts down there. In the early days when you had the blank out channels and the old comb would click around on the clock and of course the comb would break.

FAIRCLOTH:     Invariably had problems.

READ:   And had some complaints from broadcasters. It was absolutely amazing.  But it’s a terrific facility and I really do encourage you to stop by and say hello and we would of course always extend an invitation for you to contact any us if you wanted more information. What do you see as possible some of the future things that the pioneer group could do?

PANDZIK:     It’s really up to the members to let us on the board of directors know and up to the board. We talked in recent years about scholarship programs. Other groups have done a good job with that. I think what we struck on the last couple of years, I think is the appropriate place for us in addition to our dinner induction ceremony and so forth, is to support the oral history program.  If young people entering the business don’t know where we’ve come from, it’s not just a historical viewpoint; you may not know that we’ve already tried that. I mean you’ve got a new idea that you think is really cool. We tried that 30 years ago and here’s why it didn’t work or why it might work today.  So there is merit, it’s worthwhile to look backwards once and a while. Not just for an academic interest but to find out, where this industry came from.  The kinds of things we’ve done and so forth. That’s how we got here.  I’d like to see, we induct every year, the last few years some international nominees from Europe and Asia and elsewhere. I’d like to see that continue. I don’t know whether that’s feasible for us to say well let’s start an affiliate in Europe and have a European pioneer organization. Maybe they’ve already done that and I’m just not bright enough to know it. But, I mean that’s a kind of obvious line extension but for the moment I’m happy [to] keep on doing what we’re doing. I want to get more women involved. More minorities involved. That’s probably the one area since I’ve been on the board and in Jim’s tenure before me and Art Dwyer’s before him. We’ve really worked with this. The problem is in the early days of the organization, as I said earlier, everybody knew everybody else. They were mainly guys. So we nominate this guy or this guy and when his application came forward, it was like sure, why not. Next, you know. Now, it’s different because we can see on the blue ribbon committee which was, it’s a secret committee only because we don’t want these people to get lobbied. Imagine some people might actually lobby.

READ:   No.

PANDZIK:    Some would do that. So we don’t release the membership each year and it changes a bit from year to year. That’s why we wanted to change from a sort of this is a good guy, sure, next – to let’s see what this individual has done. First they have to have really proven 20 years in our business. We don’t even really take any application until they’ve met that test. And then beyond that we look for have they held increasingly responsible positions in the industry or did they start a company on their own. They may have had the same title all these years because they own their own company. Have they played a role in the industry? Have they been a mentor? Have they been an officer? It’s great to be a member of a cable organization but we like to kind of see somebody who’s been in a leadership position, either locally, regionally or nationally, on a national board of directors. And we also like to see somebody who’s played a role, a similar role outside the cable industry. 

READ:   Local community?

PANDZIK:    Absolutely. Again either from the community level or the state level or the national level.  So, just being in the industry and going to work on time for 20 years isn’t enough.  But we need other pioneers to continue as they’ve done in the past. Carry the ball by identifying for us people we may have missed as great nominees and let’s get them in here.  And I put the challenge out to the women pioneers to do the same. As we’ve, the organization now will be 47 years old pretty quick. A few of us were involved in the very early days and so we try to continue this thing and we know we need to do a better job with women and minorities. We don’t always know, I mean, you’re retired, I’m retired, Jim’s casually employed. We don’t always know the people. You could be in your late 30s and have 20 years’ experience in the cable business.  My kids are that old.  So we need some guidance. Some help. Some input from other pioneers.

FAIRCLOTH:     Well we have a very dynamic woman as chairman elect.

PANDZIK:    We do.

FAIRCLOTH:    We have an exceedingly dynamic lady on the board in Ann Carlsen. In the past few years we’ve had two other lady board members.  [???] got one more year. So that is improving at the board level and we continue our outreach to try to improve that on a general membership basis. I think we’re making some strides. 

READ:    It’s absolutely amazing because again, as you were saying before, Michael, about how over the years to see the development of the organization and with the roots being the good guy type of approach. Whereas today where you bring in a very large group of people and once a year, they see each other and it’s strictly a social function but it’s vendors, programming people and it’s people who make this industry so exciting. Again as you see an ESPN the way it’s grown over the years or the VH1, MTV groups, that continue to make changes and those things happen.  To the operators who I’m still amazed, you’ve seen it from the local small fellows and the co-op, to the larger MSO operations now where you’ve got 4 or 5 major companies.

PANDZIK:     Most programmers have 7 affiliates. They’ve got 6 MSOs in the co-op. And what’s left wouldn’t fill a teacup. I mean, that’s just the way it is. I think another big change that’s occurred in the pioneers, over the years, that I’ve been involved with, is it used to be more this kind of private boys club dinner, no sponsors allowed. Kind of, not so much secret but just for us.

READ:    They had limitations on the number of people you could bring.

PANDZIK:     Absolutely. I have pretty much steadfastly stood for, you know, if we’re going to honor significant careers in our industry why not do that in front of the largest crowd we can get. As we’ve expanding into programming and brokers and attorneys and association people and vendors of all kinds as well as operators, anybody can come to a Cable TV Pioneers dinner. Buy yourself a ticket and come. Bring somebody with you if you like. We’d love to have you come as a guest and those tickets and that stuff’s available, easy to do. We’d love to have you come. I’ll tell you, as long as I’m up and around taking nourishment as they say, even after I leave this board. I’m still going to come to this dinner because it is the most fun and I see people I never see during the rest of the year. So no matter when you entered the industry, whether it was 60 years ago or last week, come to the Pioneers dinner, you’ll have a great time.

READ:   Again, going back into the history and going through files, the group, I guess it was about early 90s, said well, gee, we make this trip to the NCTA convention which the dinner is always tied to and we should also say the NCTA has been very, very good to us because they handle booking arrangements for hotels for us but they also grant to the current pioneer a one-day pass, that if you are retired.

PANDZIK:    A hall pass.

READ:   You get to go see all the exhibits. And you get to the exhibit hall and that’s again the courtesy of NCTA, who worked with us.  It was interesting, Stan Searle, when they first came up with this whole concept, NCTA didn’t really want to have anything to do with the Pioneer group.

PANDZIK:     I don’t think they knew what to do with us. I mean I don’t mean anything bad, I just don’t they didn’t quite know…

READ:    Yes and here’s a group of 21 people in tuxedos. And the early days everyone wore a tuxedo.

PANDZIK:     I think we’re the last dinner in this industry that still, I’ve acquiesced to black tie recommended instead of required, which is the way it ought to read.  But it’s a lot of fun. I think the wives and spouses and girlfriends who show up and it gives them a chance to dress up for the evening too. It’s a lot of fun.

READ:    It makes the event look really sharp. There’s no two ways.

PANDZIK:     It makes us look a lot brighter than we really are.

READ:    Again, some history, Archer Taylor – wonderful engineer, wonderful guy – and he got so mad because it said tuxedo, he said I quit. He absolutely wrote a letter and he said not me. I don’t where tuxedos. Well, the last time we saw him was in Washington, DC.

PANDZIK:     I hope he had a tux on.

READ:   He didn’t have a tux on but he had a plaid jacket that was out of the ‘60s and it was just the most magnificent – Rex Porter looked after him that day and he was just, wonderful guy. He was the first guy that was really anti...and as you look at the numbers, I would say we were probably about 80-85 percent tuxedos in Boston. Good looking crowd.

PANDZIK:     I think, again I can only speak to the last 20 or 25 years but we used to try various forms of entertainment for the evening. A cocktail party before the dinner and during the dinner and the after party and stuff. I mean why we’ve tried pianists and if we’ve been in New Orleans, jazz quartets and stuff. And big bands and lets have a dance floor. You know what; these people just want to talk to each other. And it’s a waste of time and effort and money. And once we kind of realized, okay we’ve got it, we understand and moved away from the entertainment part, I think the dinner’s a lot more fun, a lot more low key, great to see you.

READ:   Bill  Daniels was a wonderful… he was a showman’s showman and I’ll never forget that we were at the Desert Inn, Las Vegas and he brings Abbe Lane in as the entertainer. Well Abbe Lane was a... she’s a show stopper and people just talked through her whole performance. It was kind of embarrassing.

PANDZIK:    This industry has kind of a bad reputation for that.

READ:    They didn’t want to be entertained, they wanted to talk.

PANDZIK:    I’ve been to probably 3 or 4 big time entertainments at various shows, the NCTA or CTAM or Western Show over the years. They brought in some huge entertainers that stopped the show about half through and said are you guys going to talk or am I going to perform? 

FAIRCLOTH:     Right, CTAM learned that lesson.

PANDZIK:     It’s kind of embarrassing but I think you’ve got to understand what people come for. They come to see each other and catch up and hatch new plans and new businesses and that’s what they want. So let them have that.

READ:    You mentioned CTAM and I was looking before at a list of the number of NCTA chairman who are all pioneers. The number of folks from CTAM who are pioneers. The SCTE people that are pioneers. That we have that kind of big representation of all those other, Women in Cable.

PANDZIK:    But Les, we have a ways to go because every year there is an honoree at the Hall of Fame who is extraordinarily well qualified for that honor but they aren’t a pioneer and it always tugs at my heart  -- how did we miss this woman, how did we miss this guy.  But you know, we did.

READ:    That’s like we were saying before that you have to let someone know that you are interested in being by the way the system works or hopefully, most of all our members somewhere along the way have sponsored or co-sponsored someone. I went through and looked at… you put a lot of folks up over the years before you were on the board and it’s pretty interesting. So we do constantly review and look for people.

PANDZIK:     It’s a work in progress.

READ:   And of course, I think, coming back to where we are at the Cable Center, I think we have a great deal of pride because as we mentioned before we’re not an organization that raises a lot of funds. We had a scholarship program, the Bob L’Heureaux scholarship program and that went on for a number of years and then they just ran out of money.  But over the years we’ve continued to contribute to the Cable Center and this is just been a magnificent piece because when you run down the list of people who have been big contributors, Alan Gerry for instance, he’s stepped up to the plate. Bill Daniels. He was one of the very early ones. Irving Kahn. George Barco. That these people really believed in this type and this is again the pioneering sponsorship, pioneering feeling for the industry and where we are.

FAIRCLOTH:     As a group I think that we’ve probably donated around 60 to 70 thousand over the years. But that is not our primary mission. You know we didn’t want to steal anyone’s thunder. If individual members of the Pioneers wanted to make a contribution, large or small to the Center, we felt that was a better way to do this. Our contributions lately have been to support the Oral History Program and I think that’s a good place for us to be.

READ:    Wherever we can… once a year we send out a letter with the dues statement which starts the cycle for the new year and the request for new members and in that particular letter, we are always encouraging them to – the Pioneer members to -- be active in supporting the Center.

FAIRCLOTH:     Well, as a board member for almost 20 years now since the early ‘90s, I recall going through all the officer positions, particularly my years as treasurer and our reserves have remained very constant through the years and anytime we’ve gotten a little pickup from a prior year where expenses have been a little less and contributions a little more, that’s when we’ve had a little excess to roll into other activities, particularly the Center.

READ:    That’s probably one of the other areas we’ve not mentioned today is that we were in the early years granted a 501(c) 7. Our good friend, Jack Cole, his office volunteered and took care of that filing for us that we still have today. So, it’s been a heck of a run. A terrific operation for 46 years and we’ll keep it going for a few more.

PANDZIK:    Absolutely.

READ:    We encourage the folks if they are looking for more information to contact anyone of us. You can get us through The Cable Center or as Mike said we will be online with better availabilities to be reached.  Anything you gentlemen would like to bring up?

PANDZIK:     Just our next dinner, our 47th dinner will be in Washington, DC, I think Sunday, June 9th, 2013.

FAIRCLOTH:     We’re that late next year?

PANDZIK:     Pretty sure. We’ve always piggybacked on the NCTA. I imagine their there so we’re going to be.

READ:   I encourage you if you would like to come to a grand dinner.

PANDZIK:     You’ll have a great time.

READ:   And of course I’d like to thank you gentlemen for taking your time and effort to come to Denver and sit with me on this special day. We want to say thanks of course to The Cable Center and again just showing you the type of things they can do and if you’re not familiar with them, it’s cablecenter.org. You can go and see all the many facets that they make available from information, research to some great pictures of some old pioneers. You can see Paul Maxwell in there in his heyday when he wore a tuxedo.

PANDZIK:     Half a tuxedo.

READ:    The jeans were pressed. Those were some of the wonderful memories that we have and we hope that you’ve enjoyed the presentation. We’ve been live at The Cable Center, now on tape. Thanks for tuning in and have a wonderful day.

 

 

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Pioneer Panel 1: History of The Cable TV Pioneers Part 1

tcclogoblack

Interview Date: Tuesday August 14, 2012
Interview Location: 2000 Buchtel Boulevard, Denver, CO 80210
Interviewer: Paul Maxwell
Collection: The Pioneer Cable History Collection

Cable TV Pioneers Panel – Early History
Paul Maxwell, moderator; Gail Sermersheim, Stan Searle, panelists.


MAXWELL:  Hello, I’m Paul Maxwell. I’m here at The Cable Center in Denver for the Cable TV Pioneer Oral History Project and to do that we thought we would go back to the beginning. I’d like to quickly introduce my fellow panelists here. Gail Sermersheim is a former senior vice president of Home Box Office, HBO and Stan Searle who was probably kind of the original pioneer. So in order to start, Stan at the time was a publisher and editor also, because you let your opinions show more than once, (Laughter) like I have too and a mutual friend of ours actually, Sam Street, suggested it [Pioneers]. So why don’t you fill us in on what Sam said and what you did to get this started.

SEARLE:  Sure, during the NCTA here in Denver in 1965, Sam suggested to me that we ought to do something to honor the pioneers of the cable business. I was not one. I was a neophyte. Had been associated with the cable industry about 4 or 5 years. Anyway Sam suggested to honor the people who had started the industry and I thought it was a great idea, weighed the cost and decided that it might cost us too many friends and customers to pick out a dozen or two people and aggravate and offend another two hundred. So it was actually following that we got up our courage to do the awards. To recognize the guys who had originated and had been leaders in the industry. So we made the presentation at the 1966 NCTA Convention in Miami.

MAXWELL:  So, to set the context, you were publishing a couple of magazines at the time. Tell us what they were.

SEARLE:  We published a magazine called TV Communications that had morphed into being called TVC at some point and CATV Weekly. And had by then had ownership interest in a little cable system or two but mostly we were in publishing.

MAXWELL:  So you promoted the whole concept of the pioneers and I assumed you covered it from Miami?

SEARLE:  Yes. What I did really was just get some plaques made. I asked three guys whom I trusted, who knew everybody to select the first honorees.

MAXWELL:  And they were really the guys who built the first systems. I think to name just a couple because remembering 21 of them is pretty hard for us at our age. Milt Shapp was the originator of Jerrold. Bob Tarlton. A lot of people from Pennsylvania, right?

SEARLE:  Sure. George Barco was the third president of NCTA. Martin Malarkey, who was the first and Bill Daniels. They were the leaders.

SERMERSHEIM:  Ben Conroy.

MAXWELL:  Ben was one. It’s an interesting thing because it wasn’t really a formal organization and somebody, do you remember who, called the dinner that happened at ’67.

SEARLE:  I have no idea. All we did was honor some people. We didn’t start an organization. It became known as the Pioneers Club, CATV Pioneers. But who convened the dinner in ’67, I have no idea, but 15 of the 21 showed up and after that it just spontaneously became essentially a social group.

MAXWELL:  It still is a social group, by the way.

SEARLE:  We’re in the building that the social group created.  Tens of millions of dollars.

MAXWELL:  Yes, that’s true and I guess we were all partly responsible for that at some point. The three of us are pioneers. When did you get inducted?

SEARLE:  1975.

MAXWELL:  1975. Gail?

SERMERSHEIM:  1982.

MAXWELL:  I was ’89. I won’t make any other comments about the timing.

SERMERSHEIM:  I’m very glad you asked because I didn’t want to be considered one of the originals. (Laughter)

MAXWELL:  Well, none of us was originals.

SEARLE:  We’re sort of the sons of the pioneers.

MAXWELL:  Right. How did it develop into a group? It kind of was self-perpetuating. Did you in ’67 and ’68 add people to the group?

SEARLE:  I never added anybody. Although I took some abuse over who didn’t get added over a number of years but I called on three people and they selected the first 21 and then that group, ever since the Pioneers have elected others to be inducted and honored.

MAXWELL:  It was just a handful in the beginning. What was it – 4 or 5 or 6 got inducted each year in the beginning. And at some point, it got a little bit more formal because it’s not easy to hold a dinner for a couple of hundred people. It kind of kept growing. This last year in Boston, it was oversubscribed. One heck of a nice party actually. And later one of the guys who put that together will be up here to talk.

SEARLE: The hosting of the dinners has been passed around so one of the Pioneers is assigned the responsibility for each dinner. It’s not an ongoing committee. At least it wasn’t before.

MAXWELL:  Now there is an actual formal board. Self-perpetuating, formal board. That is kind of cloistered I guess in one sense.

SERMERSHEIM:  I think if you look back at Ben Conroy’s oral history and see some of the history of the Pioneers; you’ll see that he took care of sort running things, if you would, those few years. Then there was Bill Adler and Ed Murphy, who also sort of morphed into helping out dinners and helping with events.

MAXWELL:  So how did NCTA come around to recognizing it?

SEARLE:  Well, the presentation for a first time took place at the NCTA annual banquet. And the presentations of the plaques were part of the program from the first, I don’t know, two or three years. Then we got excused from the program because frankly, this was the highlight. It overshadowed the paid entertainment. And Wally Briscoe… whoever was executive director…I think it was during Wally’s time, saw that this sort of hybrid commercial thing sponsored by a magazine was the highlight of the evening. It didn’t take very long but it was what people really looked forward to -- who was going to be honored. So after two or three years, the Pioneer dinner which had taken off spontaneously, was then where the honorees were presented the plaque and that’s what led to how many years been now?

MAXWELL:  Quite a few. It was interesting that the 15 original dinner persons, all signed this [letter sent to members] and sent a note to the six that weren’t there saying “Okay, all of us endorse your resignation” (Laughter) because they didn’t show up. But Ben Conroy signed it as social director. It was interesting in looking through the records that Gail dug up from the oral histories, Tom Southwick did a – he used to be my editor years ago – Tom had asked how did it happen and Ben sort of created it himself. If you look back, he decided he was the executive committee and he would make up notes and sign them as the chairman, even though nobody else was there. He was the only one. Although you see George Spelvin’s name. He began to creep up in those things and we even when I was working for you years ago, would treat George Spelvin like it was a real thing. Which was always funny. Do you know how George Spelvin came about in that?

SEARLE:  I don’t remember.  George Spelvin, isn’t it? Anyway it’s a theatrical name for somebody who didn’t show.

MAXWELL: Right.

SEARLE:  I don’t recall who invented that but there’s a core group of jokers, including Conroy and Adler and I suspect one of them was responsible for that. He got treated as a real person and half the group thought he really was a member. He never showed up but you know the story of the first secretary of the Cable TV Pioneers Club was Fred Stephenson. 

MAXWELL:  That’s right Fred Stephenson.

SEARLE:  You remember what happened to him?

MAXWELL:  No, you tell us.

SEARLE:  Well, he invented the logo which was a covered wagon with a yagi antenna on it and he was the first self-appointed secretary and social director. I forget exactly what happened but people didn’t show up, didn’t cooperate, didn’t respond, so he got mad and resigned in about a year.

MAXWELL:   He’s from Arkansas. He just had nothing more to do with it?

SEARLE:  Well no, he just quit trying to be the social director and Conroy stepped in and you know he was a serious leader for a long time. Well into the era, what was it called, the Cable TV Museum Center and Museum, I think.

MAXWELL:  At Penn State.

SEARLE:  Conroy took it pretty seriously.

MAXWELL:  Well, it was an interesting thing to see how that changed. It was informal but formal with Ben and then the University of --- Pennsylvania State University decided that – Ben had been a naval officer and he got involved with the oral histories at the War College that the Naval War College put together and decided something should be done about that. And there were people in State College in Pennsylvania who had been in the cable business that had talked to the school about housing it. And I guess that kind of is it got here in a roundabout way.

SEARLE:  Undoubtedly Jim Palmer took the lead there. He lived in State College. Recruited Marlowe Froke, who was the director of Educational Television at the school and involved in the cable industry.

MAXWELL:  Well, Jim was at C-COR.

St: Right.

MAXWELL:  He founded and created it. The University had some rules that sort of took way the control of the group, I guess, and turned it into an advisory function instead of something real. Then a great mentor of mine, ours, I think, Bill Bresnan got involved and it kind of got away from him and stayed at that stage.

SERMERSHEIM:  Also, when Penn State was involved there were the oral histories.  There was the oral history project going.

MAXWELL:  It was in the basement right?

SERMERSHEIM:  They had a museum of sorts but they had relegated it to the basement which didn’t necessarily please the Pioneers. There was a chair attached also. The Pioneers had raised two million dollars, I’m not sure. So, we got out of Penn State that educational aspect of it but they weren’t totally committed to the housing the museum of cable and welcoming visitors and such. And you’ve got to consider that State College a long way from most places. And while it was nice while the heart of the industry was in Pennsylvania and the East and people gathered a lot around it but as it grew and expanded in the ‘80s and such, why it became pretty apparent that the commitment wasn’t there from Penn State.  Truly, keeping it going the way the Pioneers would like and the advisory board and that, it was not going to be very relevant to the rest of the world because nobody could get there to see it.

MAXWELL:  It was hard to get there back then.

SEARLE:   State College was not the epicenter of anything.

MAXWELL:  No.

SEARLE:  Denver was.

MAXWELL:  Denver went well with Bill Daniels here, ATC and TCI and all of the different – Cablecom-General, just a dozen different…

SEARLE:  Jones.

MAXWELL:  Jones was here.

SEARLE:  Alan Harmon.

MAXWELL:  Alan Harmon. All of those guys were here and kind of this sort of the epicenter of the business before it got bigger and bigger and bigger.

SERMERSHEIM:  Right.

MAXWELL:  But it was interesting to me that Penn State went out and got a new head of the Educational Television part of it and the guy was a Brit. Came into Penn State and he wrote a paper saying that regulation should shift in the states and telephone should be the cable providers and that really stuck in Bill Bresnan’s craw as I remember.

SERMERSHEIM:  That did become a big issue.

MAXWELL:  It actually became a huge issue.

SEARLE:  And yet there was a serious investment, financial and emotional in the end at Penn State. So it was with some contention and …

MAXWELL:  Yes, real contention.

SEARLE:  I don’t know if there were any hurt feelings but it wasn’t as smooth transition to Denver. However, DU, the University of Denver, without the retention of control, generously under Dan Ritchie as chancellor donated the location. Donated the real estate and that coincided with Bob Magness and TCI taking some ownership in it. I remember I was asked to go see Magness initially to get money for the Penn State operation and it took him about just under a minute to politely dismiss the idea and get back to talking about cattle and horses. (Laughter) But when the operation was moving to Denver, he really took hold of it. I remember he said that The Cable Center would be the mother ship for the cable industry. And then the others, Carl Williams and all the people you mentioned took hold and Daniels was an active interest.

SERMERSHEIM:  It was Bill Daniels who gave the first million in dollars to do the initial planning and development for this facility.

MAXWELL:  Bill gave some money and a good healthy chunk. Half a million and then a million. He took it up to and Alan Gerry made it really real. He had just sold to Time Warner which gave him the wherewithal and kind of impetus to do so but it was a really big deal.

SEARLE:  The whole thing evolved into a completely different vision and mission. I remember when Bruce Lovett, who had been General Counsel at NCTA, passed on a while ago; he was the first one who said that the Cable TV Pioneers should be more than a dinner club. That we should have come up with some way to contribute to the industry. People who had made some money in [the industry] should devote some energy and funds to doing things for people in the industry, who might be in the industry and for the general public’s perception of the industry. And so Lovett and a handful of others said “Hey, we need to expand the vision.”  And they did.

MAXWELL:  They certainly did.

SERMERSHEIM:  I think we need to be clear though just what the Pioneer’s involvement was. They were the catalyst and as individuals, as people who really made it happen and gave the money to make it happen. But the Pioneers organization has never run the Center. It always had a separate…

MAXWELL:  Separate board.

SERMERSHEIM:  …advisory board and I think that was probably true at Penn State too, that there was a Pioneers Group and there was an advisory board.  Mostly made up of pioneers.

MAXWELL:  It was a pioneer…

SERMERSHEIM:  Technically.

MAXWELL:  I don’t know when the Pioneers actually incorporated.

SERMERSHEIM:  I think Miss Polly [Dunn] took care of that. In about 1977 or something like that, maybe. I remember she was doing the bylaws and the decided to make it more formal.

MAXWELL:  Make it real. It’s about in that timeframe. That’s before me, so I didn’t…

SERMERSHEIM:  Before Penn State.

SEARLE:  One of the questions suggested that we should talk about is what is the vision? What’s the plan for the Pioneers Group? There was no vision. There was no plan. We just honored some people and gave them plaques to hang on their wall and they got together and enjoyed being together in a social situation rather than as competitors or partners in the cable business. So that spontaneously created the Cable Pioneers Club and then the Club sort of evolved into the sponsors of something bigger and better. And each case, it went from honorees to a club to an organization and each one was not responsible for the next. It just happened.

MAXWELL:  It was spontaneous. Well, it was interesting because in the franchise era, cable operators were always competing with one another for the franchises but the collegiality of it was something from an industry standpoint a very unique business in that era of real growth. It was always kind of fun to see all the same group of pioneers getting together. Your friend, some colleagues, some enemies, some frenemies.

SEARLE:  Some were both.

SERMERSHEIM:  Depending on the time of day.

SEARLE:  You wouldn’t find in any business or industry, whether sports or cable TV, that kind of creativity and energy without plenty of ego in the room. So it was unique that they came together as a social group and grew into something a lot bigger. Sponsored something a lot bigger.

MAXWELL:  A whole lot bigger actually. What exists today is an interesting thing in that the industry enters into all kinds of new times as well. As this happened, talk about Dan Ritchie, Dan ran Westinghouse and bought TelePrompTer and became a cable operator. After he had – I forget why he left or when he left exactly but he wound up here in Denver. Actually bought the Grand River Ranch along the Colorado River outside of Kremmling. For anyone who doesn't know the Colorado River was once the Grand and that there’s Grand Junction out there. That’s why it’s called Grand Junction. The river changed its name in the ‘20s. Became the Colorado River. But Dan bought this ranch, which was a might big ranch, and got active in the Denver society, really and wound up chancellor of the University of Denver, which he actually turned into one hell of a magnificent campus and university. And it was his saying “Hey here’s this land here. Build a nice building and you get a 99 year lease for a buck” and created what then coalesced around this with Bill Daniels leading a lot of the way back then. The board got creative and some of us had been on it and off of it and on it and so on. It’s a real tribute to a bunch of pioneers thinking about things. One of the interesting things about this social club aspect of it was how it kept involving all of the people who created the business. Lots of guys who run these things still show up. Which is nice.

SERMERSHEIM:   There’s another element too. The Pioneers helped greatly with and that’s the Hall of Fame. When we started thinking about the Hall of Fame being one of the primary things that the Cable Center would do, the Cable Center wasn’t built. In order to have a ceremony to honor distinguished people you have to have an appropriate venue and you have to have some people come. And it was really because the Pioneers agreed that they would host it. They have the dinner established as an annual event at the NCTA. So what better place to launch the Hall of Fame than at the Pioneers dinner. The only problem was, I think, the first time we did that at the Fox Theater in Atlanta.  Beautiful venue and it was produced by CNN, one of the main CNN producers but it took about 5 hours to induct the pioneers and do an appropriate recognition of the first class of the Hall of Fame. So that was a year we will all remember.

MAXWELL:  It was a long night.

SERMERSHEIM:  And the next year, the Pioneers, likewise because again we didn’t have the facility and that was Chicago. And then I think in New Orleans, one more time they did it joint and then after that the Center was built and the Hall of Fame dinner became a fall event. I think the Pioneers were ready to go back to having their club atmosphere, if you would, instead of a major show going on.

MAXWELL:  That was an interesting process that wound up with. Some of the early times when you were covering it in the magazines did you give it much play in the beginning?

SEARLE:  I’m sure we did. It was a main event and when we had the sponsorship roles, I’m certain that we did.

MAXWELL:  Because by the time I got there, we weren’t doing it that way because it was totally separate by then. So how many years did it feature in the NCTA dinner?

SEARLE:  I think just two or three years.

SERMERSHEIM:  The dinners were always during the NCTA. Just a different day.

MAXWELL:   And the NCTA has always given a hall pass to everybody.

SERMERSHEIM:  Yes. (Laughter)

MAXWELL:  It’s not active anymore. But so many people stayed active. I mean in the beginning of it a lot of the pioneers were still running things. And that lasted pretty far into I think.

SERMERSHEIM:  And remember too, I think, the first group, the first groups, we had to have been in the industry 10 years. And then it morphed, I think, to 15 probably about the ‘80s. And then to 20. And so they wanted to keep it a truly a pioneer group. They did have to sort of move the mark.

MAXWELL:  It still has some fairly tough rules to get in. There’s a blue ribbon committee appointed by the board that makes the decisions on who gets. There’s still the nomination that you have to two -- a primary and a secondary. And there’s still the 20 year rule. And the way it reads is you really have to have actually done something. Not just survived or kept a job for 20 years. Of course, I never would have made if that was the rule.

SERMERSHEIM:  You’ve done a lot.

MAXWELL:  Yeah, but in different places. (Laughter) It was interesting way to build that thing. Now the board does an interesting thing. From the incoming class someone from that class becomes a board member which has helped greatly with the continuity of it. And that was started by one of the great pioneers, Frank Drendel.  That was his suggestion.

SERMERSHEIM:  Good idea.

SEARLE:   As Gail mentioned, a few years before they were inducting, I don’t know, 4 or 5 or 6 and somebody figured out that the actuary tables were going to do away with the Pioneer Club. There would always be 32 people so there was at least one or two years where they brought in a tremendous number and somebody figured out that wasn’t the answer either.

MAXWELL:  When was that that it exploded? 

SERMERSHEIM:  I think it was in the ‘70s.

SEARLE:  Probably, in the second decade. And they sort of moderated it back to a manageable number.

MAXWELL:  There’s 20 max.

SERMERSHEIM:  There’s about 20 now. Looking at the…

MAXWELL:  I’ve got say that the dinners are fun. And this last one in Boston actually was just very, very good.

SERMERSHEIM:  Well, they’d even be more fun if we could add more women.

MAXWELL:  True.  That is a very good point. And how can we do that?

SERMERSHEIM:  Well, let me talk a minute about the women that have been pioneers because we don’t want to slight them at all. Of course, the first group of 21 was all male. And in ’67, two of the most distinguished women I’ve ever met in the cable industry, Polly Dunn and Yolanda Barco became members. Miss Polly, as we called her, was probably the first lady of cable and always will be and was running the system in Columbus, Mississippi after her husband died. And Yolanda was a lawyer and worked with her father in Pennsylvania and fought many of the big battles in the cable industry. Very distinguished women. It was then 12 years before any other women were added.

MAXWELL:  Twelve years?

SEARLE:  Who was next? Dawn Fribley?

SERMERSHEIM:  No, Esther Walsonavich.

SEARLE:  Walsonavich.

SERMERSHEIM:  In ’79, Sally Davison in ’80. By 1982, 16 years after the organization started there were 4 women and about 200 men.  It’s somewhat understandable, I guess, because the first people who really were in the business and building systems were men. There weren’t a lot of women. I remember being involved with Women in Cable when we started it in ’79; our mailing list was probably 50 women. So, there weren’t a huge number of women. But then you think about the Betsy Magness’s.

SEARLE:  There hundreds of women who were heavily involved, they weren’t the CEO.

SERMERSHEIM:  Right and they were there. I think that was an error, an omission if you would, that a lot of those who truly help make this industry possible just didn’t get the recognition that they should of. We’ll talk about that later. And then, in ’82, that was my year, Carolyn Chambers, [?] and Sue Talbott. ‘83, ‘84, ‘85, ’86, there were none. At that same time Women in Cable had grown to about 4,000 members and 23 chapters. Okay. 87 to 95 about one every year. Again some outstanding names like Bev Harms and Millie Smith out of Mississippi and Linda Brodsky.  And then it started to pick up and I think a lot of this, again, is the timing of when how many years you had to be in the business changed. In 1996, we added 3 and it started to get into about 3 a year and then 2000s, it became about 20% of the class. So it would be like 4 out 20 our something like that.

MAXWELL:  So it was almost 20 years from the first explosion of programming too.

SERMERSHEIM:  Right, exactly.

MAXWELL:  Which had a large impact on more women involved in roles that were more prominent.

SERMERSHEIM:  So there are some reasons but it still leaves us of at the end with one not catching up very well because there are so many fewer women. I guess, it’s about 15% or 70 or so that have been named out of 5 to 600. So perhaps…?

MAXWELL:  You’re trying to tell us to do better.

SERMERSHEIM:  Yes, I think we should maybe even make a plan. We’ll have to talk to the next group that currently involved.

SEARLE:  You need to explain to the women pioneers about the nomination process.

SERMERSHEIM:  Yes, I think that’s a good idea. I think some of it is that, as Paul was saying, a lot of the women in our industry are now in the programming side. They tend to view themselves not as much as just cable pioneers. They tend to think of themselves in the whole telecommunications industry today. And when they think of their contributions, they tend to think a little bit more about what they contributed to their specialty; be they a producer, be they a marketer so they’re involved in CTAM and all. So they think about the contribution they made to the women’s movement as being very important, a true measure of what they’ve done. So perhaps we need to do a little more to explain the importance of the Cable Pioneers and what it means and it is inclusive and does want to recognize all those who contributed in different ways.

MAXWELL:  That’s a good point.  At the Hall of Fame, from the standpoint of the Cable Center, has worked hard to be more inclusive and to recognize across those kinds of boundaries and even into programming for example. Which of course, to your point, why have awards when there’s so many people. It’s a tough one. We have those on the board of the Cable Center in a big way. Why do you even have an on air person for example or others has had some serious pushback. I still think it’s better to be inclusive and to draw from more parts of these businesses.

SEARLE:  There certainly was not reluctance to honor and recognize women.

SERMERSHEIM:  No.

SEARLE:  Consider that Polly and Yolanda got [inducted] in the second class. The first 21 were nominated by three gentlemen, that I recall would have been Charlie Clements, Bill Daniels and Bruce Merrill. Then after that, it’s the group nominating inductees. In the very first class, were Polly Dunn and Yolanda Barco. So it certainly was no hostility toward recognizing women and there are, as you say, hundreds of other. Carl Williams and his wife ran a business and you mentioned Betsy Magness and hundreds of others we don’t even know about. So I think it’s fine to recognize women but it would be wrong to assume that there was ever any reluctance to if they would get nominated.

MAXWELL:  Almost a moral center for the business, for a long time.

SERMERSHEIM:  There’s a great story about Polly. She was the first woman on the NCTA board, of course. And she only wanted to run one term. At the end of that term, they realized what an asset they had. Take her to the FCC or whatever. There was nobody like the southern steel magnolia who could slice and dice and you never knew what was happening. Someone called Polly and their argument was do you want the NCTA board to be made up of all imbeciles?  I think that didn’t totally do the trick and so her quote was “And then all those very sweet men on the NCTA board all unanimously signed a petition to remain for another term.”

MAXWELL:  Polly was always something else.

SERMERSHEIM:  One of those sweet men.

MAXWELL:  She was actually a terrific person. So I’m not sure where we are in our…it’s like what else would you like to contribute to the conversation.

SERMERSHEIM:  Well, we can’t leave the early days of the Pioneers without thinking about Burt Harris who every dinner brought his camera and bow tie. Took pictures of all us. A lot of the memorabilia we have from those early days are Burt Harris photos. And he would send them out to you…

MAXWELL:  “No reply necessary.”

SERMERSHEIM:  “No reply necessary.”

MAXWELL:  Do you know that I have a Burt Harris story that really talks to the unique part that a lot of the people in this business. There were a lot of friendships that transcended the business side of things. When I was inducted into the Hall of Fame in 2004, on my table was a bottle of wine from the late Burt Harris, who had died two months before. But he had been a big proponent, I mean a big mentor to me. To have that on the table with a note from him that his wife and son got there. I thought that said a lot about this business, about how people behave in this business.

SEARLE:  Speaking of the way people behave. I remember a Pioneer dinner in Boston and there’s usually not a formal program but somebody bloviating. And Frank Thompson was speaking and talking and talking…

MAXWELL:  And talking.

SEARLE:  This says something about the spirit of the group. So two or three of us just sort of circulated the word and on a signal while Frank was still in full throat just got up and the room emptied. Everyone left. The program wasn’t over except it was over because we all left and Frank was still up there looking at the microphone.

SERMERSHEIM:  Well, you know, I hear but I was much too young but I heard that the early dinners were basically people just standing up and reminiscing about the days. Brief introductions of new people and it wasn’t until Les Read probably got involved we tried to streamline the presentation process. And we can’t forget about Sandford.

MAXWELL:  Sandford Randolph.

SERMERSHEIM:  Yes, the gold coat.

MAXWELL:  The gold coat that he wore.

SEARLE:  He was the executive of the Pioneers for what 15 or 20 years. A long time.

MAXWELL: And his gold coat is in a case here at the Cable Center. He retired it.

SERMERSHEIM:  Had a gold dinner jacket.

SEARLE:  And it fit him all 20 years.

MAXWELL: It did, didn’t it? I forget what year it was he passed away.

SERMERSHEIM:  I think he started in ’77.

MAXWELL:   He lasted a long time into that. He had a long run. It was always volunteer staffing at the dinners.

SERMERSHEIM:  It was a big job. It really was.

MAXWELL:  The Cable Center actually helps on the dinners, which is a big help.

SEARLE:  Well, the generosity of guys like Sandford and Ben Conroy and dozens of others that worked without worrying about who got the credit.

MAXWELL:  That was very common.

SEARLE:  That was sort of a hallmark in the Pioneers and maybe that’s what turned the recipients of the plaque and honor into a group that had a certain common bond.

SERMERSHEIM:  Help each other.

MAXWELL:  It is. It’s an interesting point and to your point that it was spontaneous is probably one of the more interesting aspects of how we even stuck together.

SEARLE:  You raised a question of how the dinners were like. There was no program.  It was a bunch a people having dinner together. That’s really all it was for a few years and some people with a little more vision and ambition created a mission statement at some point.

MAXWELL:   I’ve never read that.

SEARLE:  I assume it has one.

SERMERSHEIM:  It’s on the Cable Center’s website.

SEARLE:   I think the mission statement was “and let’s have dinner next year.” (Laughter)

MAXWELL:   In the first place it was, yes. And there’s nothing wrong with a social club.

SEARLE:  It’s the people in the business are what turned out to be the most important part of it for those of us long term survivors and we look back at battles and victories and a few losses and the friendships and the memories are more important than the Carter Mountain case and the copyright battles. Especially since the targets kept moving and our old enemies now own half the industry or two thirds. The Pioneer Club was sort of the focal point. The rallying point for the personal and social part of the business.

MAXWELL:  And it had some memorable dinners.

SERMERSHEIM:  Bonding opportunities.

SEARLE:  Especially for Frank Thompson.

MAXWELL:  (Laughter) That’s pretty good. I wish I had seen that one. That’s one of the characters. So I would like to thank Stan Searle and Gail Sermersheim for joining in me about talking about the beginning and some of the ins and outs of the Pioneers over the years. It’s one of the rare industries, I think, that turned into a people thing and a friendship thing and a fun thing instead of just a bunch contentious negotiations. Although I remember some tables that were doing that as well. I’d like to thank everyone for coming.

SERMERSHEIM:  Thank you.

SEARLE:  Thank you.

 

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Darlene Payne

Darlene Payne

Interview Date: Friday August 12, 2005
Interview Location: York, PA
Interviewer: Kristin Van Ormer
Collection: BCAP Collection

VAN ORMER: We're here today with Darlene Payne. Darlene's been an instrumental force in Heritage Weekend through the years and we're going to talk to Darlene about her involvement in the cable industry and about her involvement with Heritage Weekend here in Pennsylvania. So, Darlene, why don't we start with how you first got involved in the cable industry?

PAYNE: Thank you, Kristin. Wow, it was way back in January of 1971. I was bored with the job I was doing and I wandered down the street in McKeesport, Pennsylvania and there was this little storefront that said cable television. I did not know what it was and I went in and asked and they said, "Oh, we're going to be the industry of the future," and I thought so what are you? "Are you accepting applications?" and they said "You can put yours in," and I did. That's when I started, in January of 1971 and I've been with the same company but it has had six name changes. I started with Techs Video, then Center Video, then Telecommunications, Inc (TCI of Pennsylvania), AT&T Cable Services, AT&T Broadband, and today I'm Comcast. I guess I'm a survivor because I do franchising and not everybody wants to do franchising. The communities that I serve now in western Pennsylvania are 360 municipalities with franchises and that keeps us hopping because there's always one that's going to be expired and needs renewed. I love the industry. I've loved working with the people that I've met across the state and in the United States, and I guess that's how I got involved with Pennsylvania Cable Heritage because I got involved back in 1983 – then the name was the Pennsylvania Cable and Telecommunications Association – and I am still strong at heart for cable television. I get phone calls from the dish companies and I say "Sorry! I'm a cable subscriber." Proudly I say that.

VAN ORMER: That's great, Darlene. In 1971 when you went and put in your application, what was it for? What were you going to be doing?

PAYNE: Well, I didn't know, but I got called to become the administrative secretary and office manager. I didn't know what cable was. I had worked at U.S. Steel and at a radio station and I soon learnt what cable was. Boy, back in those days, when we took the payments, they had adding machines with those paper rolls on them and by the end of the day the roll would be all the way down the hall and the girls would have to roll it up. We had no computers, we had no cell phones – it was a different world back then, but we got through it and progressed with the industry and technology and it's just been a wonderful education.

VAN ORMER: Darlene, I know that the people that you've worked with are near and dear to your heart. Not to pick favorites, but do you have any that are particularly memorable that you've had memorable experiences with?

PAYNE: Jeez, I could talk about J.C. Sparkman, who allowed me to call him "Sparky". Back in those days, when we would do franchise renewals – "in those days" I mean back in the '70s – they would come in from Denver to see how we were doing with council meetings and last year at the Hall of Fame I saw J.C. Sparkman and he said, "You can still call me 'Sparky'." I had a lot of people that were memorable to me – John Malone, Maryann Novak, who was head of our industry in the western Pennsylvania area. I now work with a gentleman named Richard Emenecker and Richard worked for 15 years for the City of Pittsburgh as the cable advisory manager, for 15 years. And then when the new regime came in to Pittsburgh they changed everybody and he was let go, and in 1994 Jim Masure hired Richard, so Richard's on the other side of the table and I've really learned a lot from him. He's been on both sides and he now is engulfed in cable television. He likes that side of the table better and he is very knowledgeable and I really feel that he's been my prime supporter through these last few years.

VAN ORMER: So even though you work for Comcast, which is one of the top two MSOs in the country right now, you do work in the region of western Pennsylvania where the cable systems are small and I think you have a lot of one-on-one contact with your customers and with the city councils.

PAYNE: We do.

VAN ORMER: Do you feel your customer relations are better for that or how do you view your customer relations?

PAYNE: Well, I mainly deal with the local elected officials and I think that we have a good relationship with our local elected officials. I do know that if a local municipality has a complaint or a problem, they know me well enough that they call me and I can help them correct it and get the complaint taken care of. They sometimes go through me rather than our call centers because they have a personal contact, and that's why I think it's important to deal with our local elected officials, although I deal with state and federal, but it's the local elected officials who sign the new franchise agreements when they are up for a renewal and I would hope that that never goes away. I know there are things going on in the country for a state franchise agreement, but I don't know how that'll settle down with the local officials because they get a franchise fee check, and they look forward to it and it comes on time. It's like, "Oh, here's a paycheck." They don't have to ask for it and they appreciate that, and I don't know if that would go away when we have a state franchise agreement, how that would operate. I'm following it closely because of my friendships with the local elected officials.

VAN ORMER: So in 1983, you mentioned you got involved with Heritage Weekend or with PCTA or both?

PAYNE: Actually both. In 1983 I got involved with the Pennsylvania Cable Association doing grassroots lobbying and from there I grew into then it was called Cable Pioneers. Cable started in Mahanoy City in 1948 thanks to Walson and Bob Tarlton and so I went to the Cable Pioneers Weekend and it was just very encouraging to meet the people who had started this industry in the great state of Pennsylvania and I somehow got on the committee and in 1990 they said, "We need a committee to organize this every year," and I was the only female and I guess that's how I got to be chairperson, but my committee consists of many founders and pioneers and now we have a few new people coming on that want to learn more about this weekend. I think it was in 1996 that we changed the name thinking that if we changed to Cable Heritage that we would attract more of the younger executives so that they would become more familiar with how it all started, and that does happen, especially if we're giving out the awards they will come to the function and learn what's going on but they don't always come back. We can't draw them back; we're trying to figure out a way to do that. So in '96, that's when we changed the name to Cable Heritage Weekend.

VAN ORMER: And that was changed from what?

PAYNE: Cable Pioneers. Because actually we have been honoring the founders and then there's the pioneers, and then we had the Pride Award. The Pride Award is something we started probably in 1992, and it's for those employees who have worked with their CEOs or founders all the years, 25 years or more, but never got recognition. We have several people who have received that award. Cable Heritage, we every year have the Operator of the Year and the Associate Member of the Year, and we have a long list of Founders that have received their Founders Award. The Operator of the Year originally was selected by all the members of the State Association and we found that we were not getting all the surveys or replies back in a timely fashion, so it was decided that the committee would vote on who the Operator and the Associate Member was and we select from bios the three top companies that we think have progressed the most both as an operator and associate and then the committee decides on who that person will be to get the award for that current year. So it's pretty cut and dry that we watch how these – not just the big MSOs, and we don't have that many left in Pennsylvania and we won't have that many left in Pennsylvania, but it's the smaller operators, the independent operators. We have a lot of them in the state of Pennsylvania that have progressed right along with the big MSOs and that's important. I'm impressed with them. We have small operators whose fathers founded the companies and their families are continuing to grow and to go along with the technology.

VAN ORMER: Why do you think that's been so prevalent here in Pennsylvania? There are still so many family-run operators.

PAYNE: I think there's more in Pennsylvania, Kristin, than there are in any other state. I think it's because of the heritage. They started back in '48, the early '50s – there are several magazines and books out about cable pioneers in Pennsylvania that are really, really interesting, and we've had many, many college students come in to do essays on the state of Pennsylvania and the progress of cable in this state. Fortunately, their families have learned to follow their pattern of their families and I'm sure you're going to interview some of them later today or tomorrow that'll tell you how it all happened. I just think that it's an amazing thing for this state, and I know when I go to Denver I hear that cable started out on the West Coast. Well, there's a plaque in Mahanoy City that says it started in the state of Pennsylvania and I would like the Cable Heritage Weekend to continue. I would hope that it does. I would like to see more interest and as long as I have those founders that are still on that committee I think it will continue because I have some great committee members.

VAN ORMER: How did the event look back in 1983 when you were first involved? How was it then and how has it differed?

PAYNE: Well, you know, back in 1983 we had a lot more founders that we recognized, a lot more history. No, it wasn't videotaped back then because we weren't that sharp back then; we just did the awards. We didn't do Pride Awards then, or Associates. After we thought we had accomplished our goal of recognizing all founders, then we went on to recognize pioneers and then that's how the Pride Award was developed, and then the Associate Member. The Associate Member is based on the three top associate members who are programmers or vendors, suppliers, who have supported the Association through that year, and then we do a background on what they've done and how they've supported us. The committee, the Heritage committee, votes on who they think is deserving of the award. Usually the person that gets it is deserving of that award. The committee thought that they had found all the founders that needed to be recognized but this year we came up with one that hadn't been recognized and hopefully you'll interview him because his background is pretty interesting. We also have a pioneer that we had missed, so these things happen but people need to bring them to our attention so that we can recognize them for what they've done. The industry's phenomenal. It's grown and it's going to continue to grow. I hope the dish people can hear this because there's nothing better than cable. It's in my heart, it's in my blood, and I love the people that are around me and I love the people that I honor and I hope that this industry continues to progress the way it has been.

VAN ORMER: What do you think is the single biggest contribution the Pennsylvania cable industry has made to the overall business?

PAYNE: Their contribution has been really legislation. We monitor the legislation statewide so that things don't happen that we're not aware of. I think the Pennsylvania Association has been a leader of all the other associations, whether it's because the industry started here or whatever, but through my years with the association, I have seen other state associations follow our lead in many, many ways. I hope that we can continue that and we have good relationships with the other associations, but the big thing is legislation and regulatory issues. If we don't stay on top of them we're going to be smothered and we're going to take away all our rights. Cable is not a necessity, it's a luxury. It's just cable television, and enjoy it.

VAN ORMER: You had mentioned you got involved in 1983 by doing, you were involved in some grassroots lobbying – what were you working on specifically then?

PAYNE: The Cable Act of 1984, that's what we really worked on and we had busloads of us going to the capitol. I've never seen so many cable folk of all ages come into the Harrisburg area and go to Washington D.C., and you know, when I first started to lobby I thought how can I sit in these offices and talk to these elected officials? At that time I thought they were very special, and I thought I've got to tell them my side of the story and of my goodness, that's my elected Congressman or that's my State Senator – well guess what? You soon learn that they're just another human being one-on-one and you'd better talk to them and let them hear your side of the story, and we did.

VAN ORMER: So it really mobilized the community here?

PAYNE: Yes it did.

VAN ORMER: Darlene, what would you say your most rewarding career moment has been?

PAYNE: Wow! I would have to say, first of all, that I was lucky enough to get employed in the cable industry, to learn all about the cable industry, and to have the privilege of lobbying, being involved with the state association and the networking. I will always treasure the people I've met, the people I've worked with, and what the association has done for me. The association and my involvement in the cable industry with my employment has meant a lot to me. When the day of that big "R" retirement comes, I don't know how I'm going to separate myself, but I will always, always, always cherish the cable industry.

VAN ORMER: Well, I'm sure you will remain involved through Heritage Weekend and some of the cable events and your many friends in the industry.

PAYNE: Yeah, I think so, Kristin.

VAN ORMER: Is there anything else that we haven't talked about that you'd like to discuss?

PAYNE: I've seen my employees evolve so much. It's so valuable from when I started in '71. I mean it's an ongoing process of training. Not just the technicians or the CSSRs, but it's also the supervisors, the managers, the directors – it's endless and it has to be because of so many changes that are going on in the company. The technicians amaze me because they have to know everything. They have to know about the cable, the telephony, the voice over IP, or whatever else. They have to come in and be able to service a customer and answer all the questions. I've always said the two most important people in the cable industry are the CSSR, who answers the phone and makes the appointment and says, "Oh, okay, our tech will be there in 24 hours, or what's convenient for you?" That's the voice that the new customer, or the old customer, hears. That person is so important, but then when the knock or the doorbell rings and the customer answers the door, it's our technician who has to answer those questions because the customer is usually there and asking questions. That's the face and the voice, and the CSSR is the voice. They don't always see me or our vice-presidents or the general managers, but those two people, those people in those positions play a very important part in our industry and they are well-trained these days. They weren't years ago, but they are well-trained these days and I value their personalities and their intelligence and their answers to some of the questions. It's an important step. They are the front.

VAN ORMER: As the competition becomes more intense with the Dish Network becoming an increasing competitor, and perhaps the phone companies getting back in the game, what do you think that the cable industry has to offer that will differentiate themselves from their competitors and allow them to be competitive and relevant?

PAYNE: When I started doing franchise renewals, etc., we didn't have any competition. It was just us, and as a state association we would never overbuild each other. Many times I had phone calls, "We want your cable company and not that cable company," and we would tell them "You have a reputable cable company, you need to deal with them and work this problem out. We are not going to come in and overbuild." It's costly to overbuild. Once you overbuild there are two companies and then they get 50% of the subscribers and we get 50% and nobody makes any money. We're in a business – we're not a necessity, we're a luxury and we are in a business. So that's why our state association's been so successful because we protect each other. Well, along comes the dish and the satellite and now we do have competition. It's a different ballgame because the satellite dishes and the dish networks and what have you, they don't pay franchise fees, so when we negotiate we have to tell them, "You know, everybody we lose to the dish isn't going to give you any revenue back in your municipality because they don't have to pay franchise fees. They're up there in the sky." Well, then the elected officials perk up and they want to hear about that, and it's been pretty successful. Let me sidetrack a little. We have a dish buy-back at our company and I know some of the others do where we have telemarketers that drive around and see the dishes on the house and they give the house address and where it's located and what municipality and then the CSSR will call, or the salesperson will call and say, "Can I give you this offer?" And they give them an offer and guess what? We have a warehouse full of dishes that we don't know what to do with because they've come back to cable. There are many things we can offer on cable that a dish can't – on-demand and what have you – but the big competitor is going to be Verizon and it's there. The thing with Verizon is they're cherry-picking. They're only picking the municipalities that are affluent. They are not going in to every municipality, for example, in the City of Pittsburgh. They're cherry-picking a section of our Pittsburgh area called North Hills, which is pretty affluent. They haven't gone in to some of the other cities where we had steel mills where things are down. They want to do it without a franchise agreement. They want to go in there and say, "Okay, we are really a telephone company. We don't want a franchise agreement." Well, guess what? They have to have a franchise agreement and they're balking about that, but that's going to be our biggest competitor, is Verizon. It's there, we're working with it, and let's see if we get through it. We're a strong industry; we'll do it.

VAN ORMER: Well, is there anything else, Darlene?

PAYNE: I don't know, Kristin, if I've said enough or if...

VAN ORMER: Well, I think you could keep talking for the rest of the afternoon about all you know. Do you want to get more into Verizon? How involved have you been in the legislation?

PAYNE: Now I haven't been involved with Verizon but they are in some of the communities that I do franchise renewals with. Some of the renewals that I've already done, the municipality wants to go back and review it and it's a signed agreement. Our cable industry, Comcast, requests ten years. Years ago do you know that we had 30 year agreements? They're just coming up for renewal. 25 year agreements! The paper is so old it's crinkly. But you don't get them that long anymore and ten years is sufficient.

VAN ORMER: Was there anything more you wanted to address about the history of Heritage Weekend or do you think we've covered that pretty well?

PAYNE: I think I've talked with you, Kristin, about four years ago when we did the taping of several founders who were still with us and some of them aren't any more. I think if people go to Denver, Colorado, if they don't tour The Cable Center and they have cable television they're missing a lot because it's an awesome building, it has a lot to offer, they can go into the Barco Library and read and see whatever they want. I encourage anybody when they go to the City of Denver to visit The Cable Center because that's our history and it's important.

VAN ORMER: How do you think that having an institutional memory of an industry like this benefits everybody? What do you think the importance of that is?

PAYNE: I think it's very important for those that want to make their career in cable television. At some point in their lives, they should make a point of going to The Cable Center. I don't think they did when it was at a small place that it was in State College, but there's so much history here and if they're going to stay in the industry and climb that ladder, they'd better know how it all started and how it all got to be where it is and how the technology has progressed because it's phenomenal. Every day there's a change. There's something every day that you sit back and say, "Oh my goodness! That's going to happen?" And it is happening. It's happening! And it's not going to stop. It's going to continue.

VAN ORMER: Well, you've seen so many changes. How have you stayed so current and so on top of all the evolving trends in the industry and stayed excited about it? You're still so enthusiastic and passionate about it.

PAYNE: I am. Thank you. First of all, I read the trade magazines. I go to as many meetings as I can. We have emails flying in and out, which we didn't have years ago. We didn't have computers. But our department of government affairs and public affairs keeps us updated on all kinds of issues – federal, state, and not so much local, I do the local stuff, but you just have to keep them informed. You know the other thing is, Kristin, all through the years when I started going to council meetings for franchising, the elected officials didn't understand cable television and it was easy to get a franchise renewed because "Oh, okay, we want that picture on our television. Oh, okay, where do we sign?" I'm in my 35th year in this industry and the elected officials are much more intelligent now, much more. You have lawyers and doctors and what have you as elected officials for something to do outside of their profession and they ask far more questions. They study those franchise agreements. They know far more than what they knew 35 years ago. It's hard, sometimes, to talk to them. When they feel that they're not getting through they hire a consultant and pay extra money for that consultant, which sometimes they don't have to do because they aren't going to get anything more out of the consultant than they get out of my company. But that, truly, besides the technology, the education of the elected officials just boggles my mind to see how they've changed. It's a different world with these elected officials. The local ones, anyhow. But you deal with it.

VAN ORMER: Well, I think we've covered a lot of ground, Darlene, and it's very interesting. We appreciate being here at Heritage Weekend. We always enjoy seeing the founders and also the newer people that are involved in keeping the industry going.

PAYNE: Thank you, Kristin, for this interview. It's been my pleasure and you know the industry means a lot to me and so does The Cable Center in Denver.

VAN ORMER: Thank you, Darlene.

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John Patterson

John Patterson

Interview Date: Friday February 09, 2001
Interview Location: Sun Valley, ID
Interviewer: Liz Burke
Collection: Hauser Collection

BURKE: Good evening. It's Friday night, February 9. We're in Sun Valley, Idaho. This an oral history project for the Hauser Oral and Video project, part of the National Cable Television Center and Museum in Denver. We're here interviewing John Patterson from Kent, Washington, and talking about his 30+ years in the cable industry. He's had a lot of experience in CommScope, but he's had lots of experience with organizations and issues that go back to the early days of cable. We're going to pick his brain and see some of the highlights of what John has been doing in the last 30 years.

John, why don't we just start by how you came to come here today and what are you doing at Sun Valley?

PATTERSON: I'm here with a group called the Sawtooth Cable group. We met annually at some snow fall (hopefully) resort to ski, share stories, have some camaraderie, and basically bond. NO matter what our schedules are and where we're from, we tend to always try to get together once a year in February. It's usually right around Valentine's Day, as my wife fondly reminds me occasionally. That's why I'm here.

BURKE: And how many years is this?

PATTERSON: For me I think it's about 18. I've missed a few. We're in our 20th year, 25 years actually. Jim Hirschfield originally started this as just a meeting to bring people together to share industry stories, industry insight, and to get some pulse of what was going on in the industry that not all of us had. I think we have a cross-section of attorneys, cable operators, retired cable operators, and folks like myself which is considered a vendor.

BURKE: Well great. It's a pleasure to share this opportunity to be with your group today.

PATTERSON: It's indeed a pleasure to be here, Liz.

BURKE: I understand that you started out in cable in about 1969, so you must have been a very young lad at that time.

PATTERSON: I was. Actually I got into cable in 1967 through necessity. I was going to attend Arizona State on a baseball scholarship, but the competition was little more tough than I thought it was going to be. So I opted to go to work and earned my way through college. I started with Bruce Merrill, one of the fellow Pioneers, who had a company called Ameco Cable in the Phoenix, Arizona area. I started there right out of high school. Mr. Merrill was kind enough to let me work hours around my curriculum at Arizona State. Shortly after that, Bruce's company was purchased by Times Wire & Cable out of Wallingford, Connecticut, and they elected to let me stay on and do the same thing. Shortly after I earned my undergraduate degree, I went on to complete my graduate degree, and was offered a position in outside sales by Times Wire & Cable in 1973.

BURKE: So going back to the early years of cable, was there something in particular besides your boss that got you interested in cable?

PATTERSON: Well, I think back then, cable TV was a novelty. It was brand new, something that not very many people knew about. I think that some of the things ... My earliest remembrance is that I've always traveled in usually most of the western United States. When I would get on a plane and you would sit next to someone and you would discuss with them what you do for a living, I would say, "I'm in the cable television industry." There was always a question mark. Because unless you were in a rural area of an area that had cable TV, most of the population had not heard about that. Today it's just the opposite. When I'm sitting next to someone and they ask what business I'm in, I say, "Cable television," immediately there's recognition and they talk about all the brand new Internet services, digital programming, all the various and sundry programs that are out there. So it's gone 180 degrees from where it was when I started.

BURKE: What are some of your fondest memories of the early days of cable. What was it like back then?

PATTERSON: My fondest memory was going into a town and at the time being a new vendor and being it was a new industry. Everyone in town knew who the cable operator was that served that. And they knew where to find him. Most times they were found out on a hilltop, which is where the headends were located. And the people were the pillars of that community. They gave their time, their money, their blood actually, to be successful in those smaller communities, to build a master antenna network - Able Cable, as it was called in those days. The people were so genuine and open. Since we were all new in this new industry, it was like a fraternity. Everyone accepted you. I ended up ... I had many meals in people's homes and stayed in their homes. I basically didn't know them that well. Whenever I was in the area, I could pick up the phone and call them. It was, "Come on, let's go fishing," "Let's go play golf," "Where are you staying tonight?" and they opened their arms. It was just a wonderful industry. That's why I'm still here. It hasn't changed a lot.

BURKE: So you were very active in the role as the vendor. But as time went on, you got very involved in the whole industry. Why was that?

PATTERSON: I think a lot of us saw that our industry was under siege and not very legitimate in the eyes of the broadcasters and the regulators. The single event that probably put us on the map in my lifetime, was the Cable Act of 1975, I believe. We made several trips to Washington, DC to make sure we got a fair shake and that the copyright tribunal was set up correctly so that the operators would be able to pay for the programming and the retransmission consent, and so forth. But I think it took an effort by everyone in the industry at the time to make that happen. It crossed lines of operator, vendors, legislators, attorneys. I think all of us saw that to make it successful, we were all going to have to get behind it and push it. And we did. At that particular time, the operators had to spend all the money out of their own pockets to go back to Washington, DC and the delegations and the lobbyists and the attorneys, and it was just a wonderful effort. Whether they came from Montana, like one of my friends named Matt Clark or Sam Haddock from Idaho or J. B. Dyer from Oregon, Jim Hirschfield from Washington – everyone just got in regardless of their differences in the business community and the way they did business. They all got behind it and made it a reality for this generation to enjoy the success that they've had.

BURKE: So you would say that the industry significantly grew up right around 1975?

PATTERSON: I think so. I think '75, if you look at the Cable Act being adopted, the copyright tribunal, and then the thing that was right on the heels of that was the first satellite programming that HBO did in conjunction with UA Columbia down in Vero Beach, Fort Pierce – The Thrilla from Manila. That rally legitimized cable TV. Then you saw people like Ted Turned establish the superstation which was WTCG at the time that we know now as WTBS, and also CNN. I think those were events that all kind of fell right into the mid-70s there that really put cable TV on the map. Then the larger cities started to be added as well. There were not any major markets at that time. They were all smaller markets that weren't able to receive television signals off the aid.

BURKE: So did your job change – it obviously did – as the industry grew?

PATTERSON: I think so in that the number of customers that .... I've represented a coaxial cable manufacturer for my whole career - Times Wire & Cable and CommScope. At that time, the universe was a little smaller because there weren't that many operators. As the number of systems proliferated, so did our business. So there was more of a universe to sell our products and services to.

BURKE: Tell us more about what you did as a vendor.

PATTERSON: My job as a vendor was great for a single guy back in the early '700s. I usually got on an airplane, flew into a city, rented a car, and then drove to the hinterlands wherever there was a cable system. My first job I had 10 states. I had the Dakotas west, including Alaska and Hawaii. A typical time would be ... One of my favorite stories: I was brand new to the industry. I flew into a town called Liberal, Kansas. At that time, TelePrompTer was the MSO. They were the largest cable operator. There was a gentleman there named Waldo who made the purchasing decisions. He was at the headend. Like I said, that's normally where you found the operator. So I drove out there. In those days, all the signals were on a master antenna like I was describing. In Liberal, Kansas, there was a 400' tower. He said, "If you want to sell me something, you'll go up the tower with me and we'll talk." I never had been on a tower before in my life. But we climbed that tower – 400' up – to change out a beacon light at the time. I'd never been on a tower. Once you get up to the top, all the FM static is up there. So the hair on your head stands up and on your arm. You can feel the hair on the back of your neck stand up. You can feel like buzzing going on, and that's from the FM static. But that was one of ... I would not do that today, but when you're 23 years old, you're bullet-proof, and I thought I was.

BURKE: I can see how that would be absolutely horrible.

PATTERSON: But that was a lot of fun. The folks there in Liberal never bought cable from anyone else but me after that, because no one had ever been up on a tower with him.

BURKE: That's just great.

PATTERSON: Another story I had is: Growing up in Phoenix, Arizona, I wasn't used to the cold. There was a cable system being built in Sioux Falls, South Dakota at the time – a gentleman named Joe Floyd who's still in this industry. He was building a system there. I had flown up there in January, rented my car. As I'm leaving the rental car counter, a man hands me an extension cord. I looked at this extension cord and I said, "What's this?" He said, "That's to plug in your car at night." I had no idea what that meant. So I went, got in the car, drove to the motel, checked in, and as I left, I said, "Can you tell me about this cord they gave me?" He said, "Oh, that's to plug in to your engine block to keep your oil from freezing at night so your car will start in the morning." I thought the darndest things. The cable operators were working in those kind of conditions back in those days. It just amazed me that the cold, the environmental conditions – to deliver pictures to their constituents out there – just phenomenal. They really gave a lot, in those days, to their subscribers.

BURKE: Now when you were selling, were you selling to a lot of systems that were building? Did you actually go out as people were building systems"

PATTERSON: Yes. Normally what happened is, there was Al Warren published a publication called the Fact Book, and I think he still publishes it. He would print, in there, where the franchises were being awarded, the operator, the person, where they were going to build. That was almost a "Blue Book" or a blue-print where the cable vendors would go and who they would meet with. So it was almost a guide of where the cities were, who was building it, and what they intended to build.

BURKE: And you would contact these people?

PATTERSON: Correct.

BURKE: And was it a bidding situation?

PATTERSON: Most of the time. But I think this industry, for the longest time, people bought from relationships. There were very few coax cable vendors. But they bought who they trusted and who they knew and by reputation.

BURKE: Of course delivery was important.

PATTERSON: It was. So the people I met would give me recommendations and would call friends. Like I said, it was almost a fraternity organization. The Idaho operators knew the Washington operators and the Oregon operators because they all had similar interests, and similar problems. So the network was wonderful. If you did a good job for Sam Haddock in Moscow, Idaho, he would call J. B. Dyer in Tillamook, Oregon and tell him what a great job I did. Then J. B., sight unseen, would order product from me or Derrick White in Spokane. That's the way it was, all along. They basically helped open a lot of doors for me.

BURKE: I noticed that eventually you got involved in the state-by-state level with some of the cable organizations in the states that you served. How did that work?

PATTERSON: Well, each state, at the time, ... I was blessed to come to Spokane, Washington. I call it really the birthplace of cable TV, mainly just the area. I was able to meet Mr. Parsons in Astoria, Oregon, which there's a plaque there up by his headend site. The NCTA erected a plaque saying it was the first cable television system in America – first paying subscribers. But Ed Parsons was there. Every state had an association where they would meet annually and talk about the issues and basically provide a solid front, a unified front. I was asked, when I started, to be the vendor on the board to give them the vendor's perspective. So that just proliferated again from Washington to Oregon to Idaho to Montana to Wyoming – all of those states. Once you do it, it becomes a work of love.

BURKE: So how did you balance that – working and traveling. Were you serving on all these boards?

PATTERSON: Actually the people you're sitting on the board with are the same people you're selling to. So it became a sales call as well. Not that you always agree with them, but you see your customers in the room.

BURKE: You'd see their perspective. You'd see their issues.

PATTERSON: Right – and they'd see the vendor's side.

BURKE: Right. What about the technology? As you were involved in this, how did you keep up with the technology and how did the product that you sold actually change and evolve as the systems evolved?

PATTERSON: The channel capacity at the time when I entered the industry ... They had 12 channel systems, and that was the cutting-edge technology at the time. Tube amplifiers were just leaving and solid-state amplifiers made by Milton Shapp or Jerrold Electronics, as we know them, they became the cutting edge. They went from 12 channels to 20 channels. It then became a race for bandwidth. And I don't think we're done yet.

BURKE: We're not done.

PATTERSON: The race for bandwidth is 500 channels now. ISPs, telephony, security – it's all available. So we've come a long ways. But the actual product that I sell, which is the first name in cable TV, basically has only gotten better on specifications. But it's still made the same way it was 30 years ago in some regards. In some regards, it's just gotten better through technology, but it's still at the pipe for the industry. We also manufacture fiber cable for fiber optics which allows us to get rid of the electronics from the headend to the subscriber which is a detriment. The more pieces of equipment you can take away from the headend to the subscriber, the better signal, the better quality, the better reliability you're going to offer. And that's where the industry is headed and has headed over the years.

BURKE: So probably you were involved in answering some of the engineering questions, going back to headquarters, getting the right products. How did that work in your industry where it was competitive? Did you have to worry about the other vendors were doing?

PATTERSON: Not really because the SCTE, when they started, set up specifications and standards for connectors for cable so that everybody made the same size, everybody made it the same way basically. You could change some of the specifications but not the diameters, pulling tensions and those kinds of things so that there was lot of standards created that have gone through the test of time to work out very well.

BURKE: Now I understand that at some point you were involved with that organization?

PATTERSON: We did not have a chapter in the Northwest. Three of my fellow vendors and I and two operators started the Cascade Chapter in Oregon as the first SCTE chapter in the Pacific Northwest. We have a Rainier chapter now in the Seattle area. I think right now there are about 200 chapters throughout the United States for the SCTE. The whole mission was to train the engineers, the plant managers, the technicians on what's happening out in the industry to keep them up to speed, and also to get ideas from them on where we needed to go on training. Training has become such an issue for cable television.

BURKE: How do you deal with training in your company or just for you personally?

PATTERSON: I think training is continual. We, as a company at CommScope, hire college grads or people with a lot of pizzazz, a lot of high energy, people who are willing to learn new technologies. We send them though our indoctrination and travel with some of our seasoned veterans. Then most all of them ... I haven't had anyone leave our company since I've started that I hired because this industry is so dynamic. It gets such a hold on you. But the training is continuous because the technology changes, people change, organizations change. We're in a consolidation mode now. I think we're seeing the shake-outs again that have occurred in over the last 30 years. They continue to occur. The consolidation companies get bigger and a lot of friends leave but then find ways to get back in as well.

BURKE: So you're still working with a lot of the same people you started out with?

PATTERSON: Exactly, just different companies.

BURKE: Are there some particular people who've really had a high influence on you that have made it worthwhile to stay in the industry?

PATTERSON: I think when I look back at people, I try to take something from all of them. But Richard and Gene Schneider had a profound impact on me. Bill Daniels had a profound impact on me. Bob Magness. I was lucky to meet a lot of these people and socialize with them. Craig McCaw. Some of the ones I remember the best are the people that don't get a lot of recognition, people that helped me along the way. One is a gentleman named Dick Pew out of the tri-cities in Washington State, Sam Haddock in Moscow, Don Makin in Pullman, Washington, Rex Porter – the person who took a chance on me hiring me out of college, Ray Schneider who's deceased. There's been so many. It's kind of like accepting an Academy Award. I'm going to leave somebody out. But the biggest fan, of course, is my wife. When we married – another story is: She told me, when she found out what I did, and there weren't any cable systems in Seattle where we were living, she said, "What are you going to do when all the cable is sold? What are we going to do for a living?" So we're still answering that question 33 years later as the cable wears out and is replaced and somebody else steps in. We sell more cable every year than we did the year before.

BURKE: So it's very much been a growth industry from your perspective because the good years or the bad years, people are still building.

PATTERSON: That's correct. Subscribers are our king, and our industry and customers know that. Customers are king.

BURKE: Putting it in perspective, I mean, it has been an industry with really exponential growth. Why do you think that is? Why do you think it's grown so much?

PATTERSON: I think the need for entertainment and the need for information. I think we've bridged that gap, and we do it quite well, probably for the best value to obtain information and to give entertainment. It's just been a marvelous run, and I don't see it ... because information is continuing to grow,... and the way it's delivered. People still want it delivered into their home. They don't want to go some place else for it. I was reading an article the other day that we may be seeing the end of libraries. I never thought I'd see that. Our children don't go to the libraries as much as they used to. They go on the Internet. They go upstairs into their room and they're on a cable modem pretty soon and the information is instantaneous. They don't have to go look it up in the Dewey Decimal System anymore like they did when I was in college. So it's offering that type, once again, for information and for entertainment. We're very fortunate to be in an industry of telecommunications and broadband that offers that.

BURKE: It goes back to your earlier comment that we're still in the race for bandwidth. It's a broadband pipe. Where do you think that's going to lead to? You mentioned libraries.

PATTERSON: My boss is a gentleman, and the Cable Center is near and dear to him, named Frank Drendel. Frank Drendel's vision is the same as a lot of our vision is that there's no better way to deliver what we're delivering than on cable today, be it fiber, be it drop cable, be it coax. It's 'how far are we going to take it?' and I don't think we're there yet. I think there's a lot of blue sky out there. I think we've been discovered. I think that's why you're seeing some of the over builders come into the industry. I think that's why you see the satellite programmers come in, the DBS. But I don't have a crystal ball to see where it's going. But I think with the strength that we have in programming and the strength we have behind in the entrepreneurs that are still dealing in our industry, that we're going to deliver whatever the public wants, when they want it, and how they want it – which is more important – in their homes.

BURKE: So are you building bigger and bigger pipes or are you using the same pipes to deliver more service?

PATTERSON: We're delivering different pipes. Twenty years ago fiber didn't exist. Now everyone is saying fiber – fiber to the node, fiber to the curb. Some people are saying fiber to the home. There have been some field trials to run fiber optics to the home. It's very cost intensive, and that's probably what's stopping it. But also the devices that are out there, the flat screens, that everyone is touting, on TV sets. They still run by RF, not by fiber, not by lights. So there's going to be a challenge there. Maybe we'll see a fiber optic set 20 years from now. But they don't exist except probably in somebody's mind.

BURKE: So that's all new.

PATTERSON: That's going to be all new. But I think the services are being delivered basically the same way that Mr. Parsons delivered them 50 years ago. Once again, that's getting a signal off an antenna, running a line down from that antenna, and into somebody's home. It's pretty simple. It's like one of our professors told us in college, " 'KISS' is the best thing – just Keep It Simple, Stupid." We all know that. So we still do the job. We just do it better now, and we're continually doing it better.

BURKE: But 50 years ago there were 12 channels. What's the channel capacity now?

PATTERSON: There was only two. Ed Parsons only delivered 2 channels in Astoria, and they were from Portland. That's why he went up high on the hill to get the two channels from Portland and run them down over a flat line.

BURKE: So it went from 2 to 12 to 20.

PATTERSON: I think it went 2 to 3 to 4, yes.

BURKE: Over time.

PATTERSON: Once the franchises started out in our industry of one-upmanship, if you were going to offer 20 channels, I'm going to offer 28 channels. Maybe the technology wasn't there, but the entrepreneur and a lot of these cable operators found a way to get 28 channels. Then the next guy down the street or the next community would offer 35 channels, 38 channels. That's during the real intense franchise wars which we don't see quite that much anymore.

BURKE: Could you tell a little bit about how the cable industry was going through peaks and valleys by how much you sold?

PATTERSON: Definitely. And we still can. I think what we see is that there are operators who do a wonderful job in their communities and want to bring in all the new services and all the enhanced products they can. This takes substantial capital. That means new cable. It means new amplifiers, more fiber, cable modems – all very expensive, very capital intensive. Some of them have pulled back on that, waiting for a return somewhere else. And when they do that, that impacts all the people who sell cable, the modems, even the installers.

BURKE: Did you ever have to help your customers deal with financing?

PATTERSON: Only to the degree that they would ask me occasionally who was a good lender and who could they trust and if they had two people, who did I like. I would give them my two cents, if I did know those people.

BURKE: Tried to keep on top of those issues.

PATTERSON: Because the cable industry has tended to stay with those who 'brought them to the dance,' whether it was getting finance or getting them equipment, getting them cable. The relationships were very strong. It's a relationship business.

BURKE: Taking a step back, before you got your cable job, I know you were highly interested in baseball. I thought you might be able to tell us some good baseball stories.

PATTERSON: Well, my favorite one is how I ended up in the cable industry. I was an All-State baseball player out of Carl Hayden high School back in Phoenix, recruited by several schools. But I always wanted to go to Arizona State because it was local and they had a great baseball program. The coach at that time was a gentleman named Bobby Winkles, who went on to coach the Oakland Athletics to a World Championship. After he recruited me and I went and played my freshman year, one of the guys I happened to back up was a gentleman named Reggie Jackson, who ended up in the Hall of Fame. Coach Winkels called me into his office and said, "John, you're a pretty good ball player, but this is the competition you're going to have to face and they're not that good yet. You could probably play here, go to the minor league and play in the minor leagues. But I don't think you're ever going to get to the major leagues." I was just crest-fallen. My feelings were hurt because I'd played baseball my whole life. But he had some advice for me. He said, "Get an education while you're here, because most of these guys aren't going to realize that they're not going to play. But if you realize that and you go out and get an education, you'll be okay." I thought that was the best advice I ever got when I look back on it. Don't worry about sports. Get an education and move on. I've told that story quite a bit.

BURKE: Fairly significant.

PATTERSON: Fairly significant.

BURKE: Turning point and pretty young.

PATTERSON: Yes.

(Replace video tape change. Tape continues mid-conversation)

PATTERSON: I turned it on Monday and it flickered. My LED display was gone. So I thought I could download the information.

BURKE: Without a screen.

PATTERSON: Exactly – and you can't because I can't see where my cursors were.

BURKE: You know that's why we have one of these.

PATTERSON: I know. But the other thing that is different is that we depend on those so much anymore. It's all our information and our lives are in this notebook, which is different too.

BURKE: You must have taken some technology courses to get up to speed.

PATTERSON: Mainly through the SCTE and mainly through Cable Tec Expo, and you learn a lot from being around it.

BURKE: It's highly technical.

PATTERSON: Our product is not highly technical – it's a nuts and bolts type.

BURKE: Somehow you were able to communicate with the highly technical guys that needed your product.

PATTERSON: Correct. You have to know what they're doing, because they're going to ask you what your opinion is of what they're doing especially if they know you've been in the business or you know Joe down the street and what he's doing. There is still a lot of competitive one-upmanship going on in our industry, and there has been since day one except when someone wants to intervene. Then you watch them all become partners against it.

BURKE: Of course. Are we back on? (Technician replied "yes").

I had wanted to ask that question because I think you, more than anyone, has really seen the technology boom because you've sold to systems as they've grown. Probably your main contacts, you've had to talk to the decision makers, but also to the technology people. What kind of advice do you have to people who are interested in the technology? How did you go about learning about the technology, and how would you recommend that people learn about the technology?

PATTERSON: I think it would to enroll in a couple of courses that NCTI has and also get involved in their SCTE chapter. Any technology of any consequence is going to come through those two organizations – either the NCTI or the SCTE. I think the SCTE is a great collating point for technical information, specifications, uniformity throughout our industry. It has become the engineering arm of say the NCTA.

BURKE: Bringing up the NCTA, how much work have you done with some of the national organizations?

PATTERSON: A lot – earlier in my career, simply because at that time, we were trying to put a lot of bodies in front of our senators and our legislators and in front of Congress to sway them or let them hear our story on why not to regulate us, why we shouldn't have to pay exorbitant pole rates or copyright fees. That was my involvement is through the state associations and the regional associations. Anymore, I think with the professional folks that are there, it wasn't quite like that in the earlier days. But they have great teams there now to carry the load, and when they need you they will call you and you can go. Then everyone just picked up and went back there, no matter what they were doing.

BURKE: You talked quite a bit about the '70s, and that was a very active time. What was happening in the '80s in the cable industry?

PATTERSON: I think a little evolution was going on. I think we saw, once again, the major cities starting to be built and franchised, some consolidation, some trading - which is going on now – for clustering. Also I think we went from an engineering driven organization or companies to marketing. The networks were built, let's try to get the subscribers counts up. That's where most of the time was spent in these operators' offices getting the marketing plans together to go out and market cable television. I think that's where we saw our significant growth and subscribers grow. It also helped us when we went to borrow money from the lenders that we had decent cash flow and it wasn't blue sky. We were offering a valid service. I think we saw a lot of the MSOs start to congregate in Denver at that particular time as well – the TCIs, the United Cables, Jones Intercable, Rifkin & Associates, ATC (the predecessor of Time Warner). Denver became the cable capital at that time. I moved there for a short period of time.

BURKE: I was going to say that you did live there for a while.

PATTERSON: Yes. The same reason – the mountains won't come to you so Mohammed goes to the mountains.

BURKE: So those had to be real busy years for you.

PATTERSON: Real busy years, very intense in that the plans ... everyone was ... the gold rush was on ... was to get into the communities and establish your foothold. It was the first one in that built the network, got the subscribers. So the competition was fierce. As it did that, it drove the technology as well, because once again, one-upmanship was the name of the game.

BURKE: Would you say there was a contrast in the '90s after the high growth of the'80s?

PATTERSON: I think so. I think what happened in the '90s is as people said, "We've got the subscribers. We've got the networks. We need to find out how much money we can make and how much this is costing us." I think that was the '90s was for the bookkeepers. The accountants came into the industry at that time. People were more interested in cash flow than programming.

BURKE: It was kind of "If we build it, they will come?"

PATTERSON: Yes. But after they come, it's "how much are they going to spend?"

BURKE: Yes. Market driven.

PATTERSON: Yes. Market driven.

BURKE: Now I'm curious about how you see your role in cable in the future? What are some of your visions, both personal and professional? It's obviously an industry you really enjoy.

PATTERSON: It's a great industry. It's the only industry I've been in so I can't compare it to other ones. But it is still as dynamic as it's always been. It reinvents itself every year. We still do the same thing, we just do it better from year to year. Recently, my son decided to get into the cable television industry and started as an installer for AT&T, kind of where his dad started, because he sees a future in cable TV. He likes the aspect of the information and the entertainment on a course. I think we're going to be doing the same thing, Liz, that we did 30 years ago – taking a signal, processing it, getting it to the subscriber for a fair value, but also opening up the whole world to him on IP technology and telephony. So the cable operator that we used to know of will become a broadband provider and voice, video, and data. It's going to be just wonderful for everyone because the more technology and the more information we get out there, I think it makes our population better and people understand each other a lot better - the whole world that way.

BURKE: It's been a real race to build cable in the United States. But what about the rest of the world? Does CommScope sell all over?

PATTERSON: Actually it's our fastest growing area. The rest of the world is coming up to speed. What's great about the rest of the world is that they embrace new technology because they don't know any better. They'll start fresh with all the technology that we've brought to the forefront, the learning curve. They won't have to have the learning curve. They can start right out with the new networks, with fiber to the nodes, and so forth, that weren't available 10 years ago, that we evolved into.

The other thing about the world is that they embrace, I think, change a little better than most of America does. We're somewhat anti-change.

BURKE: We started a lot sooner.

PATTERSON: that's true. But they're going to get the benefit of all of our 30 years of experience right now, which is nice.

BURKE: I know there's a lot of things that I haven't asked you and you probably have one or two really favorite stories you'd like to share. Is there something that just sticks out in your mind?

PATTERSON: It's hard to single an individual, but I believe that when I got into cable – and it hasn't changed a lot no matter what - is that the person is in the cable system, who runs the cable system, cares passionately about it. It's almost a fraternity. No one ever leaves the cable industry for very long. They gravitate back. The stories I have is just showing up in lots of communities and asking where the cable operator was. Everybody knew who he was and what he stood for. And they were always quality human beings. I don't think that's changed in ... My story is just that it's been a wonderful ride, and I hope it never, never stops.

BURKE: It's a great story. I really appreciate your time. I just want to add that we're fortunate to have this oral history grant so that we can get some of this history for future generations. It'll be on interactive, multi-media out of Denver. Denver is the place that's really coming together.

PATTERSON: Great place for it to be is where basically the birthplace of cable is.

BURKE: So with many thanks to you.

PATTERSON: My pleasure, Liz.

BURKE: You had a long drive here to come and tell us your story.

PATTERSON: It was well worth it. Thanks for having me.

BURKE: Thank you.

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Richard Parsons

Richard Parsons

Interview Date: Tuesday June 24, 2008
Interview Location: New York, NY
Interviewer: Tom Umstead
Collection: Cable Center Collection

UMSTEAD: I'm Tom Umstead from The Cable Center and we're here with Dick Parsons, Chairman of Time Warner. How do you do?

PARSONS: Tom, nice to see you.

UMSTEAD: Nice to see you. First, let's clear the air a little bit. Do you we know exactly when you will officially step down as Chairman of Time Warner?

PARSONS: Not exactly. We have a sense of it and some plans and we've been constantly talking to our board and Jeff Bewkes, our CEO, but it hasn't finalized yet to a point where you have to make disclosures and that sort of thing.

UMSTEAD: When you finally walk out the door as Chairman of Time Warner, do you feel that you will have accomplished everything that you wanted to accomplish when you first walked in as Chairman?

PARSONS: No. There are some things... it's like anything else in life, these are always works in progress and there are some things that I would have liked to have done or seen done that just haven't gotten to the goal line yet, and then there are some things that got done that we never anticipated would need to get done. So it's been a mixed bag but there are a few things that if I could sort of make the world turn out the way I wish it would turn out that we'd still get done in the next several months here.

UMSTEAD: Anything in particular you can talk about?

PARSONS: It falls into two areas. Number one, I've felt and maintained for some time... well, let's start with the people side because I frequently say around here, and it's because I mean it, it's all about people at the end of the day. We had put in place some development people managing human resource tracking and systems that would put some flesh on the bones of the process of emphasizing the importance of your people and their importance to the enterprise, and making sure you know where the talent is, and that the talent knows that you know where they are and appreciate what they do. That you have good management development not only processes but training in place so that you're investing in your people and helping them be the best they can be, and in turn their loyalty to and commitment to the collective enterprise is heightened. We made a lot of progress in that area but there's still some distance to go and hopefully I'll be around to see it, I just may not be around in a titled position. So that's one area where I would have liked to see more progress. And the other is, I think that this is a great company that is not only great reputationally but great in terms of the value, the store value, in Time Warner. It's not only the world's largest and most profitable, but I think most valuable media and entertainment company and I'd like to see the market recognize that a little more, and I just think that's going to take a little more time.

UMSTEAD: Growing up as a young kid in Brooklyn, New York, did you ever in your wildest imagination believe that you would become a successful lawyer and end up running a multimedia conglomerate such as Time Warner?

PARSONS: No, I thought I was going to be a cowboy while we still lived in Brooklyn, and then I thought I was going to be Willie Mays when we moved to Queens, so I always thought, as a boy growing up I tended to think in terms of – well, once I got past the cowboy stage – athletics. It wasn't until I was a senior in college that I focused on going to law school, and it wasn't until Jerry Levin asked me if I wanted to leave the bank that I was the chairman of to come over here to be president of Time Warner that I thought about being a media executive. So these things just happened. It's not as serendipitous as it may sound, but it was not the result of a plan.

UMSTEAD: From what I understand, you graduated from Albany and then moved on and worked for Mr. Rockefeller for a time, and then moved on with him to Washington D.C. when he became Vice President. At the time, did you have any political aspirations for yourself?

PARSONS: No, not really, not really. It was actually quite by serendipity or accident that I ended up working for Nelson Rockefeller, who was Governor of the State of New York when I was in law school. I had an opportunity to go to work in his offices as a kid lawyer, is basically what it was, and over the course of the years when he was still Governor and I was working in the offices, we actually developed an interesting personal relationship. He obviously – well, it wasn't obvious at the start, but it became so at the end – he liked me and I liked him. So he would include me more and more in some of these road shows he would do and when he became Vice President he asked me if I would come to Washington to work with him as Vice President. So my first 6-7 years out of law school was spent in a political context but not because... I never thought about being a politician myself.

UMSTEAD: Do you have any aspirations going forward?

PARSONS: Not for publically elected office. It's too hard for too little yield in my judgment.

UMSTEAD: Going forward, you were Chairman and CEO of Dime Savings Bank, and then you go on the board for Time Warner at the time eventually moving into the president's position, and then Chairman and CEO of then AOL Time Warner. At the time, the company was in a little bit of chaos, a little bit of financial difficulty. What did you see in the company and also in your self that allowed you to believe that you could turn it around?

PARSONS: Well, you know what they say about the media and media coverage, you're never as good as you're reported to be when the cycle is up and you're never as bad as you're reported to be when the cycle is down. I think I would say that that was certainly true about Time Warner, or as it was called, at AOL Time Warner. On the backside of this "worst in corporate history" merger – and it was certainly from a financial perspective a pretty disastrous merger. Time Warner ended up merging with AOL right before the internet bubble burst in 2000, 2001, and literally hundreds of billions of dollars got evaporated in our merger. And so the media jumped on this thing and the general perception in the marketplace was that this was a total disaster, a total meltdown. In point of fact, the Time Warner constituents, if you will, the companies that came to the merged entity through Time Warner were all still in pretty good shape with the exception of our music company, which was not in disastrous shape, it's just that it was in an industry that was about to undergo significant change. So the real focus from my perspective as a manager in terms of what we needed to fix was the AOL side of the house because the rest of the house was actually still in pretty good shape. The extent of the difficulties were, I think, somewhat overstated in the popular media and by investors who were just seeing, as I said, hundreds of billions of dollars sort of evaporate into the ether. Now, it got compounded when the SEC and the DOJ jumped in, again, out of facts and circumstances that came, really out of one quadrant – well, it wasn't even a quadrant, one sector of our combined conglomerate world, which was AOL. But in theory it threatened the entire corporate enterprise. Managing through something like that was something I'd already done before at the Dime, and so long as the underlying business was sound and as long as we could continue to make money, pay our bills, keep the door open, the rest of it was just kind of like going through the swamp, or as Winston Churchill said, "Going through hell," but he also said, "When you're in the middle of hell the only thing you can do is keep going." So that was the challenge, just to keep going until we got to the other side.

UMSTEAD: What do you consider during that time period, from then until now, your greatest accomplishment at Time Warner?

PARSONS: You know, it would have to fall in the range or perspective of persistence. That's what we did, we just kept going. Probably that... So there were a series of challenges in front of us, any one of which if badly handled or if you just sort of gave up on it, could have toppled the company. But if you just kept at it, kept your head about you and your wits about you and kept moving in a positive direction because the underlying business was sound you'd get to the other side. So that, and then I think just getting everybody in the company refocused on succeeding as opposed to being sore about the fact that if you were old Time Warner, came from a Time Warner legacy company you were upset because your stock options had become worthless and your 401Ks had gotten crushed and it was all because of those bad people at AOL; and if you were at AOL they had been on a trajectory, they were the most successful company in America in the decade of the '90s in terms of stock price appreciation, and somehow the music stopped and you tend to blame not yourself but somebody else, not circumstances. So there was a lot of unhappiness at the time, and just getting people past the unhappiness and focused on how we were going to succeed together was important and we at least got that done.

UMSTEAD: In terms of the cable industry itself, you were a newcomer when you basically came into Time Warner, no?

PARSONS: Not exactly. My first involvement with what was then called Time Inc., prior to the merger of Time and Warner was in 1985, and I went on the board of a movie company that was being spun out into the public called Tri-Star, and I was on the Tri-Star board for a couple of years, and then Tri-Star was taken private by one of the partners. Then Nick Nicholas, who was then the president of Time came and asked me if I'd go on the board of ATC, American Television Communications Company, which was Time Warner's cable company. At that time it was a separately traded public company called ATC, or American Television Communications, but it was 82% owned by Time. So it was a Time subsidiary cable company. So I was on the board of the cable company and got to know a lot about the cable industry between 1987 and 1990 when Time and Warner came together and merged, and then I came on this board.

UMSTEAD: Where I was headed with the question is with the way the cable industry is now compared to what it was then, would you have ever imagined it would have gotten to this point?

PARSONS: Actually, yes because the guys were talking about a lot of the things that we see today in the late '80s and early '90s. The impact that digital technology was going to have on the cable business, the creation of that whole hybrid fiber coaxial architecture which was born in Time Warner Cable which was then called ATC, I was on the board at the time and we talked about it and what its implications for the future were, that cable was one day going to become more than just a video programming and delivery service. It was going to become a full-fledged telecommunications platform. People were talking about it back in those days but it was still far off in the future. But there were those around – Joe Collins and Glenn Britt in our company, in particular, at that time – who had the vision in their heads.

UMSTEAD: In terms of Time Warner and its vertically integrated company, it was pretty much a new format at the time and you guys perfected it going forward with HBO and several other entities on the programming side as well as the distribution side. Today, what would you say is the most important component of the cable industry? Is it the content or is it the pipeline that delivers that content?

PARSONS: I think that in its day the notion of vertical integration... the way that I always thought about it was, because I'm simple-minded, from manufacturers to wholesalers to retailers, and we had manufacturers in terms of our movie and television companies that were creating product; we had wholesalers in terms of our cable networks that were taking not only the product we created but others and creating a bundled, if you will, offering that had real breadth to it; and then retailing and delivering it to people through the cable company. So, as you know, the decision's been made now to sort of spin the cable company off and let it be on its own, so why is vertical integration no longer that important, and it's because, I think, in order for cable to realize its full destiny it needs to be on its own bottom because again, now, it's about delivering more than just the products that we and similar entertainment companies manufacture, namely TV signals into the home or even movie signals into the home. It's about voice and it's about data, importantly. And so, as I said, it's a full-fledged telecommunications platform, delivery platform, and therefore it needs to have the sort of financial characteristics and aspects and flexibility of other full-scale telecommunications enterprises if it's going to be able to succeed and compete, or compete and succeed in the 21st century.

UMSTEAD: Having said that, five years from now, if you could take out your crystal ball, what is Time Warner going to look like? Any idea?

PARSONS: Well, Time Warner is probably going to be a company five years from now that now longer has the cable or distribution arm that it has had for the last 15 years but that will still be focused on creating movie and television product and internet content. Whether the magazines are in or out, I can't say. I would think that the publishing arm would still be a part of it because all of these content creating enterprises are finding their way into the digital space. They're finding their way into using the creativity and skills that they've had in making either magazines or movies or television shows, using those same skills to create digital content that travels through the internet and enables people to access them that way. So I think the content still fits together.

UMSTEAD: You've been known as sort of a diplomat in terms of making deals.

PARSONS: Who said that?!

UMSTEAD: A lot of people have said that!

PARSONS: Show me the guy!

UMSTEAD: Making deals and being a behind the scenes calming effect in deals and negotiations. Do you think that congenial style that you have will positively or negatively affect your legacy and do you believe that you'll get the credit that you deserve for all of the accomplishments that you've had?

PARSONS: You know, I don't think about those things really. My view is you are who you are. Most people, I daresay probably everybody is capable... Your best self is the self that is consistent with who you really are. So if you're trying to pretend you're somebody else you're going to fail at that as compared to just being yourself. So I'm not affected in any of that behavior because I thought it was tactically or even strategically optimal at a point in time – it's who I am. The other thing I'd say is you try and do your job, right? You do the best you can, you give it your best shot and you move on. I haven't really thought about how all that plays into your legacy. That's out of your hands anyway, whether you get the credit you deserve. I was well-compensated and looked after when I was here, and so when I leave, I leave with no regrets.

UMSTEAD: When you do leave, you will be leaving as one of the most important and also most prominent African American employees, executives, in the cable industry. In your estimation, how far as the cable industry come with regards to diversity, particularly employment in the executive ranks?

PARSONS: I think the cable industry like American industry in general has made great strides from when I first started out in law and business 35 years ago in terms of being more inclusive, more a true meritocracy, and more reflective of the diversity of its customer base. That said, I think there's still a ways to go. I think the cable guys get it – I shouldn't say guys now, I should say the cable guys and gals get it. That the real competition now, who's going to win and who's not, depends on the talent you're able to bring to your party, and talent is randomly dispersed across humanity. It sexists in every race, every color, every creed, every gender (of course there are only two), and so the effort in the so called war for talent, the effort has to be to cast as wide a net as you can and find talent where it exists, and I think that's going to be the thing that enables the cable industry as well as American industry in general to get to the last rung on this ladder because they're going to recognize that at the end of the day it's the talent that matters and let's go get it wherever it is.

UMSTEAD: How about your efforts within Time Warner? Are you satisfied with the diversity within Time Warner?

PARSONS: No, because we aren't where we ultimately need to be. I think we've made some pretty good strides. Obviously you can't manage what you can't measure, so we measure all of these things. We have our statistics; we don't have hard quotas but we have goals and we have objectives and in all the measures we have that are reflective of the diversity of our workforce, of our vendor relationships, of our philanthropy, of the content that we put out, and of our investment activity in terms of investing in the enterprises of others, across all five of those spectrums we have seen improvement over the last 5-6 years, so that's a plus. Are we in the end zone; are we where we need to be? Not yet.

UMSTEAD: What's next for Mr. Parsons?

PARSONS: Don't really know. I will tell you this, I have a new grandson, see, so somebody's got to give that young fella some guidance. I'm having a lot of fun with grandkids. Grandkids are much better than kids. Much, much better. What I will do next other than pursue some personal things that have always been on my agenda, that I've always wanted to do but never had the time to do – we can talk about those in a minute – I don't know. I'm not up for running another public company. Right now my hope is that I'll find something in the education space that really can absorb a lot of my time and attention because I'm a big believer in education. I think it's the sine quo non to self fulfillment in the 21st century. You just don't have a shot going forward if you don't have skills, and the way you get skills is through the education process.

UMSTEAD: And you mentioned some other things that you'd like to...

PARSONS: Oh, there are some personal things... because this is kind of a transition year for me, being chairman is fun but it's not as demanding and consuming of your time as being chairman and CEO. So I've had a little bit more time and one of the things that I'm doing, I've always wanted to be a jazz disc jockey, so I'm working with a local radio station starting to put together a little jazz program that will be aired on Sunday nights just to sort of cool everybody out. So I'm very enthusiastic about it because I love music and it's a dream that I've had for a long time, just never had time to pursue it. And I'm doing a few other things, looking at some properties in the Caribbean, maybe putting a house down there, that sort of thing that are time limited but that are just sort of fun projects. In terms of what I would do next of scale, as I said, I don't really know but I would hope to find something to do around the education opportunities, maybe not full time but that would be significant, make a contribution.

UMSTEAD: Where do you see the cable industry moving over the next five years given competition and given everything that's chasing it at this point?

PARSONS: The cable industry – as we were talking earlier – it's changed into something that it wasn't. It's metamorphosized, if you will. When I started out with it, going on 20 years ago now, about 20 years ago, it was just about delivering television signals and packaging and delivering them to a home. It's now about delivering anything that can be delivered digitally in the form of bits so that it's not only video, but it's voice and it's data into the home, and then there are going to be wireless extensions around that. I think the prospects are bright for cable. I continue to be a believer; I've always been a cable bull. I continue to be a cable bull because they have so many advantages. One, they have the advantage of incumbency. They have the customers. And having been in consumer businesses before... I remember when I was at the bank, you had to run somebody off with a gun in order for them to stop being a customer. They'd have complaints – they didn't like this, they didn't like that – but they knew the bank, they were comfortable with their people, they knew even how to effectively complain, and if you told them, "Sorry, I can't help you. Go find another bank," they'd say, "No, no, this is my bank. You've got to fix it." People don't like to leave a relationship that they've had that has basically worked for them, and that's what cable has. It has the advantage of incumbency. Secondly, it has currently the superior platform. Now, what wireless will do to all that in the fullness of time, I don't know. I suspect the cable guys will keep up with it, but the fullness of time could be another 10, 15, 20 years. So not only are they the incumbent player, they've got the more robust platform plus – and this is probably the biggest change – the cable industry has stepped up the pace of innovation. Every time they're being chased by others they're staying ahead of others because they continually innovate off of that more robust platform. So they're offering more and better services in video, voice, and in data. And so it seems that's a pretty hard combination to beat. So I like cable's hands. I see them continuing consolidation because in order to be both competitive on a sort of geographic basis, you have to have enough scale to generate the kinds of revenues that you can then invest in advertising and marketing and innovation, and bring down the costs of your infrastructure. So I think there'll be more consolidation, but I definitely think there will be a couple of three big cable competitors out there for beyond the foreseeable future.

UMSTEAD: Having dealt with America Online and seeing the changes in the web space, where do you see the future of that arena, and is that a serious competitor to the cable industry with regards to content?

PARSONS: You know, one of the things that's going to drive continued growth in cable is because the bits got to get there somehow, right? And I don't see wireless technology developing to the state of robustness that in the next 5-10 or even 15 years it really will essentially "overbuild" the wired platform. The wired platform is always going to be more robust, at least in my lifetime, in the wireless platform which means you're going to be able to offer more with greater certainty and greater speeds. So as long as the bits got to get there some how, as long as the wire line platform – whether it's the phone company or the cable company – is going to be the preferred method of delivering the bits, cable's always going to be in the transportation business and then it's a question of how they innovate around the delivery of those bits, whether it's voice or video or data, to put other services and bells and whistles on it as to how they fare against the other wire line deliveries. So I think actually... the internet is one of the fastest growing products we've had at Time Warner Cable over the last half a dozen years has been high-speed data business because what it's doing is it's bringing the web into people's houses.

UMSTEAD: Video on-demand and other services that are on the digital platform as well have been driving the cable business going forward.

PARSONS: Cable – and I guess we should do a little commercial for cable here since this is, after all, sort of a cable underwritten enterprise – cable should do very well going forward because in all of their businesses I think they have advantages that their competitors don't. In the video side, the satellite's all digital, a lot of the cable is still analog and satellite has some interesting packages that they offer, but they aren't going to be able to offer – at least for awhile – the real killer app, which is VOD, which is the ability to sort of manipulate the video to your liking and in the way you want which cable can do. So one of the things we've been trying to do in our cable network side and our movie side is to convince everybody to put the whole networks out there on a VOD basis like HBO has been doing for years because consumers like that and it's not replicable by the satellite guys. On the voice and data side, again, the fiber coax architecture gives more speed, more robustness for the data than the competitive offerings currently by the telcos, and cable which is the newest entry into the voice business, they have the ability to bundle everything, bundling the first two offerings with a third with an interesting voice offering is giving them the advantages of convenience. So, as I say, I'm a big bull on cable.

UMSTEAD: Just a personal question – anything that keeps you up at night?

PARSONS: Not really. There have been two times in my business career where I've lost a night's sleep over what was going on in the business, but you know, if my wife and children are well, I'm usually in pretty good shape. Those are the things that are most important to me. There have been a couple of instances where, as I said, I've lost a night's sleep over what was going on in the business, but only a couple of times.

UMSTEAD: Is there anything I missed that you may want to add regarding Time Warner, the cable industry, or your future?

PARSONS: Well, regarding my future, no, because I've told you what I know which is that right now I'm in sort of chill mode. People ask me all the time, well, you must have a plan, you must want to go in some direction, and you're just not telling us. Not true. My son had it best. He said, "What are you going to do next, dad?" I said, "I don't know." He said, "Well, don't worry about it. It will find you." I believe that. Regarding the cable business, we've had an opportunity to talk about cable. I just think it's a very dynamic, high-growth, and ultimately high return – that's always been the issue with cable, when are we going to start seeing the returns because all the money went back into continuing to build the plants and enhance the capacity, but I think it's ultimately a high return business and I'm very bullish on its future. And regarding Time Warner, I think... at a point in time, at the right point in time, I'll be happy to give my valedictory to my colleagues and thank them because at the end of the day – when you were asking before was I ever worried about the company – no, we have 90,000 men and women who basically know what they're doing, who run these businesses as best in class businesses and have done a terrific job and could be counted on to make me look good, and they did so I'm grateful to them for that.

UMSTEAD: What would you say to those who are watching this and want to emulate what you've done here in the business and want to get involved in the cable industry?

PARSONS: Well, one, I would say the cable industry is certainly a good place to think about being because it's dynamic, it's growing, and it's still a business of the future, not just a business of the present and it's not a business of the past. It's a business of the future. And generally speaking, I would say to young people what I have said to them out on the road, there's no formula to how to be successful, but there are building blocks and I don't profess to know all the building blocks but I know three. The first that I always tell young people is believe in yourself. If you have a dream believe that you can do it. Woody Allen said it best, "80% of success is showing up." Believe in yourself, go for it, take the shot. Two, you have to have skills when you come into the workplace. There have to be things that you can do that add value, and the way you get skills is through education. So push that as far as you can as hard as you can. The third is simply just outwork the other guy. Success is a whole lot of perspiration. So those would be my suggestions to young people who are thinking how am I going to get ahead in this world. Believe in yourself; get a good education, develop the best skill package you can; and then work as hard as you can.

UMSTEAD: Again, you've been known for being a diplomat and having diplomacy, skills that are not en vogue these days, unfortunately. What do you tell some students who say, well, this is not the way we've seen other people get ahead. We need to be rough, we need to be aggressive, we need to be anything but diplomatic. How do you address questions like that?

PARSONS: That's a softer subject, but I always remember something my grandmother told me. My grandmother was a religious woman and she was always quoting the bible to us, to her grandkids, and one of her favorite sayings was, in essence, you reap what you sow in this world. It turns out grandma was right. You reap what you sow. You get out of this world basically what you put into it. So if you are respectful of other people, if you try and understand the other guy's perspective or the other gal's perspective, if you try and treat people with respect, as I said, that's what comes back to you at the end of the day. It is not true that nice guys finish last. In the main, good people finish in a good place. Another way of thinking about it, it's the only time I quote Steve Ross. Steve Ross was my predecessor in this job once removed – Steve, then Jerry Levin, then me. When I first joined Time Warner, Steve said to me, "Dick, as you're dealing with folks out there in the industry keep one thing in mind. It's a small business and a long life. You're going to see all these people again and what do you want them thinking when you see them again? Just treat people the way you want to be treated."

UMSTEAD: Thank you very much for taking time out to talk to us.

PARSONS: My pleasure.

UMSTEAD: It's been a pleasure. This is Tom Umstead from The Cable Center. Good night.

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  BACK TO ORAL HISTORIES

Leroy "Ed" Parsons

Leroy Ed Parsons

Interview Date: June 19, 1986
Interview Location: Anchorage, AK
Interviewer: Richard Barton
Collection: Penn State Collection

BARTON: This is Tape 1, Side A with Ed Parsons in Anchorage, Alaska, June 19, 1986. This is Richard Barton.

Ed, I'd like to begin if we can by your telling us about the situation right before you got into cable, the Astoria broadcasting situation what was that organization like and what were you doing with broadcasting before the cable development there?

PARSONS: During the Second World War the newspaper-owned broadcast station, owned by The Astoria Budget, was losing money. They petitioned the FCC to suspend operations for the duration of the war. At KGW in Portland, where I was working extra shifts as an engineer, I heard about it and I drove down to Fairbanks. I was well known in Fairbanks because I had operated a refrigeration/engineering/ contracting service before the war. I had closed it because I couldn't get civilian equipment, so I moved my operations to the Navy control plant in Portland. I went down and talked about purchasing the station from the newspaper. They hesitated selling it; they'd rather just shut it down. I went to the two banks in Astoria where I had done business with my refrigeration contracting company and suggested that I could run the station profitably. Went back to Portland, came down in a couple of weeks and I found that the newspaper was interested in selling the control at the station. I was able to leave my job as superintendent in the Navy station. I had it all running properly, so I was able to leave and buy myself a broadcast station in Astoria.

Within thirty days, I had the station in the black and had raised the prestige of the station tremendously by hiring more qualified personnel. Also the revenue shot up. Doing live newscasts was all it took to bring the station up to a profitable basis. So after the war, the broadcast station was doing so well that I got into other interests, including the flying school, the airport, and managing the airport.

At a broadcast convention in Chicago, my wife first saw a television demonstration in the basement of the convention hotel. She informed me on the way home that she wanted a television. I explained that the only television station was in Chicago; there was no station on the west coast. Television reception was physically impossible. Television stations started to develop across the United States and at the convention the following year, I think that was in Chicago, it was announced that there was to be a television station built in Seattle by KRSC. She said, "Now I can have television."

By working with my friend Bob Priebe, manager of the Seattle station, I arranged to be notified when the station was planning to broadcast a carrier. Throughout the summer of '48 I had pretty high phone bills in conversing with Bob Priebe. But I was able to establish the fact that there was a signal and able to search different areas for the signal. I found a usable signal up on the top of the Astoria Hotel. Got permission to use it to put an antenna up there. With the initial installation, I picked the signal up on Channel 5 and transferred it to Channel 2 for transmission across the street to my penthouse.

BARTON: Could you explain exactly how you found that signal? The way those fingers came through there and the equipment you used.

PARSONS: The first requirement, of course, was a signal-test generator. I took an FM receiver, changed its frequency range and put a meter on it and a pair of headphones, so I could listen and tune both the video and the audio. You could hear the blanking bars and so forth. And you could hear audio in the earphones which I had attached across the speaker leads of the set. And I put a field strength meter across the discriminator to show how much signal was being received. I built up a couple of these units from small FM sets that were on the market at that time. I installed one of the units in the company car and the second unit in my own airplane. I established that there was what would be termed a light effect, that signals coming over a rounded hill will focus to a point beyond the hill, several miles beyond the hill depending on the shape of the hill. If you were inside the signal, you could pick up many times the signal than what you would as a direct signal from the broadcast station. This produced a very usable signal. I was able to show off the signals to the public when KRSC started broadcasting the first program on Thanksgiving Day in 1948.

BARTON: The nature of these signals and the way you found them was a part of some testimony you gave, wasn't it? You offered to share this information with the FCC; you thought it might be of some interest to them?

PARSONS: Yes. I had discovered this phenomenon while doing police work with the state of Oregon. I had found that on the Dalles California Highway, east of the Cascade Range, there were spots where you could pick up the master station in Salem. I was curious enough to feel that I could pick up a possible signal from Seattle on television with this phenomenon of signals being focused down in valley areas beyond the mountains.

BARTON: Did anyone ever approach you with an offer to discuss this information, this phenomenon? Did the FCC show any interest in it? Did they follow up?

PARSONS: Oh, the FCC. I have some correspondence that you will be interested in. I'll show it to you when we get to Fairbanks. I did write a paper, which you will have a copy, entitled "The How of Long Distance Television Reception." That you will find interesting.

BARTON: Describe for us, the community at the time. What did Astoria look like in terms of populations, its economic growth characteristics, and so forth.

PARSONS: It had a population of about 10,000. Its main economy was processing ocean-caught fish. It is very near the mouth of the Columbia River. There was quite a boost in the economy when tuna was discovered a few years before off the Oregon coast. Big fish processing plants were built to take advantage of this bonanza. Before that it was thought that the tuna didn't come that far north. After the War, this was a big income in the Astoria area.

BARTON: So we had a community that was fairly well off economically or well enough off to take advantage of television if it came? They bought the sets?

PARSONS: They bought the sets, let's put it that way. Anywhere I could get a cable, they had a television set. There were a lot of comments, pro and con, about television coming to town. People who could get it, people who couldn't, and so forth.

BARTON: So you got the signal at the antenna on the hotel?

PARSONS: Yes.

BARTON: Then what happened?

PARSONS: Well, I strung a cable from the top of the hotel roof over to the three-story building where my penthouse was, and we had the television set in our living room. By the way, going back, after we heard Priebe was going to build a television station, I ordered a television set from Chicago. It was only a 9-inch, black and white set, and I bought it primarily because it was a hi-fi set AM/FM and a record player. I told the wife that we were wasting our money with the television addition, but at least I would try to get her television. It was a Howard set. I ordered it from Chicago and had it flown out to Astoria. Told her it would be a great waste of money, but if you want it, you can have it. Use it for furniture if nothing else.

BARTON: Do you remember how much that cost?

PARSONS: It wasn't under a $1,000, I'll tell you. And we weren't that flush. She had to do without other things to have the set.

BARTON: She was really determined to have television.

PARSONS: She had been a newspaper girl. In the first place the airplane was a magic carpet, but then she saw television. She figured I was an engineer, so there was no reason why she shouldn't have television. You probably have found yourself in that same position.

BARTON: Oh, yes. Who was working with you at this time? Were you doing all this yourself or were you starting to put a staff together?

PARSONS: I had a full broadcast crew including technicians working for me. My chief engineer of the broadcast station was Jimmy Titus. He had studied electronics in a class I taught during the war, training electronics people for the military. In one class I had about fifty students and I trained them so they were eligible for the first-class radio license. Titus got his license in that class and I hired him as chief engineer of the broadcast station. I devoted myself primarily to the management and development of the technology of the station. I personally built the actual amplifiers, converts, and so forth.

BARTON: I wonder if you could tell us about the important components that you developed at this point. Again, in as much detail as you can, would be very useful.

PARSONS: The first requirement was a receiver for the station. I designed and built a two-stage I-F amplifier and a converter to Channel 2 and a three-stage amplifier on Channel 2 as a signal-receiving unit. That was the basis for the start of signal reception before I transmitted across the street. And the receiver in the penthouse was a standard receiver at that time. I didn't need any other amplifiers, converters, or anything else. You tuned to Channel 2 and there was the signal. I might add at this time, when I bought the radio station, I found that at least half the receivers in town were inoperative. This was one reason that the station wasn't making money, so many people couldn't receive it.

BARTON: These are AM receivers?

PARSONS: AM. There was a ham radio operator in town who had been paralyzed from polio, but he could get around on crutches. Hano Ripola was his name. So in back of the studio I had set up a radio repair shop, and I bought all the radio repair parts that I could find around the country. And I kept Hano busy. When he would get caught up on repairs I would announce over the radio that the radioman was able to take more sets to repair. And he repaired, probably, thousands of sets. So I had facilities and parts to work with. But I personally designed and personally assembled the original amplifiers and so forth for the system.

BARTON: So you picked up on Channel 5 and relayed it on Channel 2 to avoid interference...

PARSONS: Yes, with the reception of the signal.

BARTON: What other components of that system did you design?

PARSONS: The first problem was too many people coming into our apartment or penthouse. We literally lost our home. People would drive for hundreds of miles to see television. We had gotten considerable publicity, as I will show you. And when people drove down from Portland or came from The Dalles or from Klamath Falls to see television, you couldn't tell them no. So I approached the hotel manager and suggested that it would be a simple matter to drop a cable down the elevator shaft and put a set in the lobby of the hotel. He thought that was a wonderful idea. So we did. A short time later, he asked me to remove the set because the lobby was so full people couldn't get in to register. So I approached Cliff Poole, who owned a music store the next street over, and suggested maybe he would like to have a set. Yes, he would and he would buy the set, figuring this was a good addition to a music store. So Cliff Poole was really the first customer for cable TV. I sold him the wire and the necessary equipment and the output of this amplifier/convert gave an acceptable signal. I built the first splitter to split the signal. So he had this set in the music store. The broadcast station was only on the air a few hours a day, usually starting in the evening for a few hours. When Cliff closed the music store, he would put the TV set in the window. People would group around to see the television picture.

BARTON: Was there a speaker rigged up for the outside?

PARSONS: I rigged a speaker for his TV set, yes. Put it out front. In fact, we added a p.a. amplifier to get additional volume. Years before the war, I had built a police radio system for Astoria, which, of course, was a tremendous help. When I got the broadcast station, I could broadcast on-the-spot news, police news, and that made the station more listenable. And I was still maintaining the police radio sets. I had built all of the master transmitter and all the mobiles for the police department. At the time there was no national manufacturer of police radios. Each city built its own in the early days. That was days before Motorola, General Electric, RCA got into the police radio work. So the police chief said, "Ed, you've got to do something about that set down there at Cliff Poole's. People are blocking the street and we are just not going to stand for it. That's all there is to it." I asked him for a suggestion of what we should do. He suggested that we had a servitor for the telephone cables, the power cables set the whole length of the main downtown.

BARTON: This is underground channels?

PARSONS: Yes. He suggested, "Why don't you go down in the servitor and put the sets in the bars." Every bar owner was anxious to have a television set. He would pay for the cable. I designed additional amplifiers on Channel 2 and put the signal down. Every bar in town had a television set. That solved that problem. Then people began to put pressure on to have cables in their homes, for their television sets. So that was another problem.

BARTON: How did you solve that? You'd get to the end of the block and then you had to cross and then you required another piece of equipment?

PARSONS: Well, we did that. We started out stringing wires across the streets as I mentioned. The city council looked askance to this type of business. As the cable system expanded we installed one amplifier on one side of the street where we had the cable, put another amplifier across the street, put an antenna on each side of the street, and transmitted the signal across the street, then ran house to house and covered a whole block. The people had amplifiers in their attics and in their upstairs rooms. Each person supplied the power for the amplifier. We ended up covering practically the whole town with cable.

Then I found better sources of signal on the side of a hill. Tested everywhere. There was absolutely no signal on Coxcomb Hill, the highest spot in town. There's a 100 foot column up there with stairs all the way to the top. I packed a test set clear to the top of that column. There was no sign of signal. Grace and I were out testing one night and went across a highway bridge up on the side of the hill. We picked up a signal, took the test unit and found the best signal that we'd ever found was underneath the highway bridge. It was the focus of signals there. So we moved the whole master station up there and fed the whole cable network from there. Then later over in the west part of town we found another finger of signal. So the west part of town was wired from that second source or the second master receiver. We ultimately ended up covering practically all of the town, still without a franchise. And the city council just plain refused to grant us that franchise unless I could get on the power and light poles. Ma Bell absolutely refused to let us on the poles.

BARTON: What was their reason?

PARSONS: The communications position on the poles was their property.

BARTON: Were they willing to rent?

PARSONS: No, absolutely refused. And throughout the west it was the same thing. Different towns took different approaches. Aberdeen/Hoquiam, the railroad, the Southern Pacific had a railroad track going clear through both Aberdeen and Hoquiam. Harry Spence and Lew Goddard got the right to go through the town on the railroad poles. That's the way we installed that system.

BARTON: I wonder if you could describe exactly your master receiving antenna in the first system.

PARSONS: I've got pictures of that in trade journals. We manufactured the antennas and sold them with the instructions on how to assemble them. We found that the fingers of signals hail seasonal changes, movement. I ended up designing quite a large antenna system to take into account the shifting signals, the shifting locations, which were probably due to foliage on the mountains. I originally started with multiple yagi antennas. And I developed the antennas extensively to improve signal levels. The first signals were usable, but by today's standards they would not be acceptable. Never had complaints on the quality of the signals.

Just to get television was something.

BARTON: So by the time you put the second antenna in the western part of town, had you changed its design much?

PARSONS: Oh, yes. Take Aberdeen and Centralia. There I used the ultimate antenna that I manufactured and sold. Realize before we had covered all of Astoria, we started making installations. I trained an installation crew, and almost every broadcast owner in the west wanted to get into cable television. I had been doing engineering work for a lot of the broadcast stations. If they approached me, I would take my test gear and see if there was a usable signal in their area. For example, for Aberdeen/Hoquiam, it was five miles out of town on the railroad track that I found on the hillside above the railroad track we could pick up the usable signal.

BARTON: By this time did you have a formula for finding the signal or was it still random?

PARSONS: No, I had formulas.

BARTON: So you could go into any new location and pretty much predict where you should start to look.

PARSONS: Yes. Sometimes I was wrong though. I ran some tests down in the Medford area and Roseburg area. Couldn't find a usable signal there using an airplane. I came in over Bend at 14,OOO feet with the monitor on. I dropped down slowly scanning the area to 2,OOO feet, decided there wasn't any signal, shut the gear off, called for landing instructions, and landed. The station owner with his chief engineer came out. He had hired me to run the test to see if there were any signals. He met me at the airport with his chief engineer, a beautiful day. I reported to him, and I think he sighed a sigh of relief that cable wasn't coming in to compete with him. But he asked me, "Well, now that you're here, how about taking my engineer up with you and showing him how you run the tests?" "Sure. Be glad to."

He got in the plane. I was using a little aerocoupe for testing, I had rigged an extra antenna and field-strength meter in. Realize there were no field-strength meters on the market in those days, no commercial meters. So I taxied down to the airport and while the engine was warming up, I turned the set on and explained how I adjusted it and how I ran the tests and so forth. And left it on as I took off. A couple of hundred feet in the air, I saw the needle flicker. I put the earphones on and heard snatches of audio coming in. So we zigzagged around and we found where there were signals coming in and it looked like, traced them with the airplane, that they might be hitting Powell Butte, the side of Powell Butte. So I landed and we called Astoria and I had a young blonde girl, I taught her to service TV sets and to run mobile tests. We called for her to come over and we ran the tests and we found that the signal was hitting the side of Powell Butte. A usable signal. So I reported it to them and they went ahead and put a cable system in. They bought the supplies from me. As far as I know at that time I was the only manufacturer of the equipment. And I have a price list, the original price list which you can make a copy of.

BARTON: At the point where you found this signal at Powell that we fought the battle for pole rights and franchises.

End of Tape 1, Side A

PARSONS: We had a problem after I began to get so much publicity. ASCAP wanted their fee. SESAC thought they should be paid a fee for everything that went on the cable. ASCAP was the problem area. And because I had a broadcast station I had an agreement with BMI, ASCAP, and SESAC. BMI and SESAC didn't make much noise, but ASCAP! I canceled my broadcast license with ASCAP for a whole year. Didn't play a single ASCAP-licensed record at the station.

BARTON: What did that leave you with? What kind of music did you play?

PARSONS: I had BMI and SESAC and because SESAC was mostly western hillbilly, I had no complaints from the public at all. Of course, they were fairly unaware of the problem, too. I requested a letter from the broadcast stations for rights to use their signals in experimental programming. I was not charging for the signal. Everybody paid for their own installation and paid the power that ran the amplifiers. It was strictly a cooperative operation.

BARTON: How much would it have cost me if I had been a user of your system?

PARSONS: It'd run about $125 for the hookup and that was the only charge.

BARTON: You had already fought some problems in your broadcast station. You had hung wires to help with your remote broadcasts. There was some concern from the phone company about radio interference?

PARSONS: Well, that was something else. I had a failure in the line from the downtown studio to the broadcast station. It was a leased line from the phone company, a legitimate line, and they had a failure. So I dialed the number on the phone, and I used it as a broadcast line, a regular phone line. The phone company took exception to that. It was their fault, so I didn't feel badly about it. But now it's permitted to tie up a regular telephone circuit for a broadcast. There are no objections to it. I did it for years for remotes without too many complaints from the phone companies.

BARTON: So by the time you began to install cable in other municipal areas, what other pieces of equipment had you developed?

PARSONS: I first developed a single-channel amplifier. Hadn't thought of broadband amplifiers then. One of the FCC engineers who was assigned to keep track of me, suggested I design a broadband amplifier that could handle more than one channel. So I did. It was his idea; it wasn't mine.

BARTON: Is this Mr. Smith?

PARSONS: Yes, I think it was Mr. Smith. When I saw the first commercial cable line, each channel was a separate strip amplifier. That was the Jerrold amplifier. I finally saw one of them in the early '50s. It was designed for four channels. I understand it was developed for feeding television into apartment buildings back in the east somewhere.

BARTON: When did you start developing the ability to carry the power on the line?

PARSONS: Aberdeen/Hoquiam was the first problem where power was not available. I had seven miles to bring the signal in. So the question was how was I going to get that power to these amplifiers, approximately one amplifier per mile. To build a power system out there would cost more than the cable system, and I could not put the power on the communications poles because there was no power position. So I designed a system to put 22O volts AC up on the coaxial cable to power the amplifiers plus the headend. And the system worked beautifully. Soon it became common to put the power at low voltage over the coaxial cable. I figured at a lower voltage I'd take too much of a voltage drop with all these amplifiers. I used four tube amplifiers, in-line amplifiers, and, of course, a front end that took probably 2OO watts. To get enough power, I designed around a 22O-volt AC system.

BARTON: Could you describe in some detail, the way you did for me yesterday, just how this cable was set up with this power going? You mentioned the choke...

PARSONS: Oh, applying AC or DC power to a cable is nothing more or less than a choke coil feeding the voltage into the cable so that you don't short out the signal at the same time. Power on the cable won't interfere with the signal because it's a different frequency.

BARTON: Did you have any maintenance problems with the tube systems at this time?

PARSONS: Basically, no. The basic problem was that each owner of the system, outside Astoria, was anxious to get people on his system. They were making it commercially, even without the franchises out the railroad track. They could reach a block either side with cable from the main cable. I don't know exactly what they were doing so far as the charges or financing in the other towns. But I know there at Aberdeen/Hoquiam, they were charging the people a couple of hundred dollars to hook up to the cable, and anyone along the railroad track could hook up. Some of the broadcast station owners carried enough weight in the small towns, of course, to hook people up without going through the franchise process.

BARTON: So you weren't plagued with a lot of maintenance problems?

PARSONS: No. Once I put a system in and turned it over, the chief engineers of the broadcast stations were supposed to carry it on and get new customers. That meant income that more than paid for the cost of the installation. Periodically they would add cable without knowing how to impedance match. These fellows carried first-class licenses. They had taken an FCC exam specifying impedance matching, but they would ignore this when they put drop ons. They'd wire them on like you'd add lights to an electric circuit. The reflectant rays would first gray the picture. They'd add a few more on and it would take the whole system down. I'd get called. Go up there. You'd have to start from the front end because they would put dropoffs all along, figure out what they did, and readjust the whole system. It had actually become quite a nightmare to undo the damage that these supposed-broadcast engineers were doing. And it was years after cable started before enough technicians could understand what they were doing.

BARTON: Did they send people to you for training from other systems? Did you take on that burden?

PARSONS: Aberdeen sent their chief engineer down and later he became a foremost cable engineer of the northwest. He came down and learned what we were doing. At the moment I can't think of his name, but Rogan Jones up there. He played it smart. He sent the man down and he really learned. These other poor fellows had to learn on the job. When I'd go and get their system back in operation, they would learn something more each time.

BARTON: I want to be sure I understand the progression, now. After Astoria, you went to Aberdeen. Was that next, to develop that system?

PARSONS: We will have to refer to the newspaper stories because it was all over the northwest, the tri-cities Pasco-Kennewick stuff that was somewhere in the early stages of cable television. I don't remember where Lewiston came in. I know an engineer from Bellingham came down and spent a couple of weeks with us to see what we were doing. I didn't deny anyone access to all the knowledge because they were customers for what we were building.

BARTON: Had you given your company a name yet, the company that was producing these parts?

PARSONS: We organized several along with different people for different phases. The manufacturing of parts incorporated as Astoria Electronics. But I joined in a corporation with Leroy McCall and the attorney that represented us. I was in several corporations in the different set ups.

BARTON: So you were still doing a lot of the designing?

PARSONS: I was doing ALL of the designing.

BARTON: ... all of the designing. And then you would contract people such as metal workers, sheet metal shops, and so forth ...

PARSONS: Yes, I'd design the chassis and then they would turn them out by the hundreds.

BARTON: Now, were you aware of developing interest in cable beyond the northwest at that point?

PARSONS: I was not aware of any other developments until I heard of Jerrold in the 195Os. Of course by that time I had written stories in the trade press, as well as an article in Popular Mechanics that went worldwide. I was swamped with letters from thousands of people all over the world and in all languages.

BARTON: The first thing that occurs to me after I realize what you began to develop here is what kind of patent rights did you seek? Protection for the equipment that you were developing? Could we run through that?

PARSONS: I have some correspondence that you will find interesting. Without the correspondence I can't recall the details, but basically I couldn't find a patent attorney that could understand what I was doing. So I decided to drop it.

BARTON: They lacked the technical knowledge?

PARSONS: Well, the general theory. I wasn't really developing anything new. The amplifier technology was common knowledge. Everything was available; the knowledge was available to engineers. It wasn't any breakthrough to design a new piece of equipment. The Heterodyne principle had been patented years before and the patent had run out by Armstrong. So you wouldn't know what to patent, actually. The biggest single problem was that everything was vacuum tubes; the transistor had not been invented yet. And the difficulty of powering things was a major problem.

BARTON: What about the problem of hanging stuff outside? Had past experience, past jobs, helped prepare you for how to protect these instruments?

PARSONS: Yes, there was no problem. The last time I was down in Raymond, Washington, I saw some of the boxes up on the poles yet. I don't suppose they are using the old equipment, but it was still there a few years ago.

BARTON: Some of the literature that covers your work mentions a Mr. Sloane and Mr. Roman. I wonder if you could talk about your relationship with them.

PARSONS: Roman was the manager of the Firestone store, an advertiser on my broadcast station. Television got going in Astoria. He couldn't talk Firestone into TV sales. Firestone sold all kinds of appliances, but he could not talk them into stocking television sets. So he quit them and came to me, said, "I'd like to start up an appliance store and promote television. Carry television." So I said, "Go ahead. I'll back you." So I financed him into the appliance business. He sold televisions like mad. Gordon Sloane was the attorney for my broadcast station. He helped organize the different companies and corporations and tried to keep me out of legal trouble.

BARTON: Did he?

PARSONS: I never got sued. I would say that's doing pretty good.

BARTON: Anyone else that was associated with you in the early stages of cable and not mentioned in the available literature that you think should be?

PARSONS: Well, Leroy McCall and different people that I built cable systems for. There was nobody else closely connected except Jimmy Titus, the chief engineer of the broadcast station. Then I hired my son-in-law and he helped on the pole work.

BARTON: What's his name?

PARSONS: Davis. In fact, I have a Father's Day card there from him.

BARTON: Where's Mr. Titus now? Do you have any idea?

PARSONS: He's in Astoria. After cable broadcast days, he went into the plywood business. And I think he's retired from that.

BARTON: What about Mr. Sloane and Roman?

PARSONS: I have no idea where Sloane is. Roman died.

BARTON: Meanwhile your radio station was continuing along during all this development?

PARSONS: Well, I had a problem in the radio station. The owner of the newspaper wanted a chunk of the cable deal. I refused him and sold my stock in the broadcast station. Then I built another broadcast station in town, a competing broadcast station.

BARTON: The call letters of the first one was KAST.

PARSONS: KAST.

BARTON: Then the second, what were the call letters?

PARSONS: KVAS. They are both in operation today.

BARTON: And the second one you built was both AM and FM?

PARSONS: No, it was strictly AM.

BARTON: Strictly AM. Was it daytime only operation or was it twenty-four hour?

PARSONS: No, it's a twenty-four hour operation. There was room for a second broadcast station in town by the time I put it in.

BARTON: Was that fairly successful?

PARSONS: As long as I devoted time to it, yes.

BARTON: Let's get into the whole issue of franchise and local government, and how that began to relate to your cable operation, and what kind of problems developed.

PARSONS: I decided that I wasn't going to accept any more installation in Astoria or in any other town. I made up my mind. I'd put my energies in other directions. So six men came into my office in Astoria and wanted me to consider putting a cable system in at Kelso/Longview. I told them, "I'm sorry. I'm not going to make any more installations. It's just too much hassle." "Well, what's the main hassle?" I said, "Poles, pole rights. Can't get on the poles." This is two or three years after cable's started. So the leader of these men said, "I don't think that would be a problem in our community." I said, "How come?" "We're the Board of Directors of the PUD (Public Utility District). We own every pole in town." I said, "I still think you have a problem because I don't think that you have the right to the communications position on your poles. AT&T has it." "Well, we'll go back and we'll see." I got a call the next day, said "You're right. AT&T has a right on those poles according to our attorney, but we are going to ask AT&T for right to put coaxial cable on them." Their attorney called me a few days later, "AT&T refused us the right to put the cables on our own poles, but in reviewing the contract there's a thirty day cancellation clause. We are notifying AT&T to get every telephone wire off our poles in thirty days."

I got a call from Washington, D.C., "Would you be agreeable to meet in Portland with representatives of all the power companies and telephone companies in the northwest to resolve this pole line problem?" We met three days in the Newhethben Hotel. We hammered out a pole line contract. And I agreed to it. I have a copy. Then Gordon Sloane applied for a franchise for Astoria.

BARTON: By then Astoria was out of your hands?

PARSONS: No.

BARTON: Sloane representing you?

PARSONS: Sloane representing me. But after taking some hard knocks from Eric Hockey, one of the commissioners, we were granted a franchise. I have a copy of that. They should be museum pieces.

BARTON: It's pretty clear to understand what AT&T's concern was with poles. But what do you think is the problem with franchises consistently? Franchises were a recurring problem in cable television in the early days. I'm wonder what the sticky wicket was.

PARSONS: I think it was purely the pole line rights. Nothing else. But have you seen the new court opinion?

BARTON: Yes, I wanted to ask what you thought about that? It essentially suggests no exclusive franchise for municipalities.

PARSONS: That's right. An interesting play. I don't see how they can have viable multiple franchises. Although there are power franchises right here in Anchorage, half of the city is on Chugach Electric, and other parts of it are the municipal utilities. You might find one block on one outfit and one block on the other. There's been a lot of talk about going to a single utility.

BARTON: Well, you know, in some of the larger cities it's not just pole rights that are a concern on the franchise. It's things like public access, promises by the cable system to provide a range of services and so forth.

PARSONS: That is a very interesting area. The different people applying for franchises for different areas of town. They promise a lot of give-away channels and everything else. I was mixed up with a group that was applying for a central area of Portland, and I'll supply you some of the material on that. They didn't get the franchise, but it was a minority-control deal. I did considerable engineering on it and I appeared at the public hearing. It was just an interesting experience. I didn't make any money out of it. But it brought me up to date on the manipulations of the city franchise-givers.

BARTON: Why didn't they get it?

PARSONS: I don't know.

BARTON: If we bracket the years that you were involved in cable, what would they be? From the very first search for that signal down through the point where you moved on to other things.

PARSONS: Well, I would say early 1948. I don't know when that cable convention was. Probably I can find the date of that cable convention.

BARTON: The Chicago convention?

PARSONS: Yes.

BARTON: '46-'47 is mentioned in the literature. You went to both of them.

PARSONS: Yes, I could check my pilot's log book, too, probably verify the exact dates. From the time that we got back from that convention, I started rigging test gear to see if we could get a signal. I think the first test signals probably began in possibly February. And I started to test, design, and rebuild. And I think Jimmy and I spent every weekend building a new antenna or amplifier or something to be ready for the next time they were testing the transmitter. In those days they had to run a lot of tests because it was so new. Putting a broadcast station on the air was a slow and tedious process.

BARTON: So what was the last year you were involved in cable?

PARSONS: Last week.

BARTON: The last week. Oh, of course, cable in the larger sense. What about the community antenna type?

PARSONS: The last cable system was initially fed from a VTR, and that was a Point Barrow, Alaska.

BARTON: If we forecast in the future, consider some of the problems on pole rights and so forth. Do you see any technology that's going to make that not an issue? Is there any way to get around the need for poles? Is there a technology on the horizon that you think will make cable television significantly different?

PARSONS: Well, around most of the cities it's going to be buried. The cable that goes by here is right out in front along with the power wire and the phone wires. They are all compatible.

We have fiber optics coming into the picture both for telephone and for television. I think the most promising thing from cable right now is handling computer transmissions. The regular telephone wires will not handle the higher speed computers, and that's a real handicap. The amount of time that you have to wait at an airport for the transmission signal to confirm a reservation is sizable. Cable systems could, along with satellites, make that instantly available. Saving a lot of time for both the customer and the airline.

BARTON: When did you begin to talk with people in other parts of the country who worked in cable? Begin to compare notes and ideas and experiences?

PARSONS: As a broadcaster, I attended the broadcast meetings and so forth. Cable television and television generally were pertinent issues at that time.

BARTON: So at those conferences it was a routine matter?

PARSONS: Yes. I was quite a person to attend business conferences or conventions.

BARTON: You flew to all of them?

PARSONS: Yes. Had my own airplane, so transportation was not a problem.

BARTON: And that's when Grace saw that Coca Cola demonstration?

PARSONS: Yes.

BARTON: And became fascinated with television?

PARSONS: Yes.

BARTON: What do you think about the discussion of what was the first cable installation? In the literature there is a lot of confusion about whether John Walson's in Pennsylvania was or whether yours was in Astoria? What's your response?

PARSONS: I don't know. I have absolutely no idea. I didn't hear of his work until somewhere in the later '50s. So as far as I'm concerned he might have been years ahead of me. I have no way of knowing.

BARTON: Have you ever met him?

PARSONS: Oh, yes. Quite a few times at broadcast conventions and Pioneer meetings. But it's nothing to me if he was first. Fine. I don't make any claim to being first because the technology was there for anybody to get it. I did it simply because of a demanding wife.

BARTON: That seems to be your approach to things in general. The problem is there and you try to solve the problem.

PARSONS: When there's a problem, there's an answer. So it's to solve it and get on to something else.

BARTON: I wonder if we could just go back to the first days of the Astoria cable operation, if you could talk about the peoples' response to it in a little more detail. What did people think of the ability to receive television, and how did it affect their lives? What kind of feedback did you get?

PARSONS: I have a lot of newspaper stories that were printed in trade journals and so forth in Fairbanks, which I will show you. I think they will answer your question and be very interesting. The question about children, the effect on their schooling, things like that. Diverse opinions.

BARTON: I remember one surprising response. A teacher said she thought television was wonderful. That it helped students understand the world. That's very different from what you hear now.

PARSONS: It had a tremendous effect of bringing the people of Barrow or Anaktuvuk Pass or Arctic Village into the present century. But pro and con articles on the effect of the people in Astoria were written for years.

BARTON: How did the other media respond to it in Astoria? Were they threatened by it? Did they see it stealing their audiences?

PARSONS: No, I wasn't. I owned the broadcast station. You'll find in the newspaper stories a lot of interesting things. I can remember the headlines, "Airplane Phones Newsmaker, Honest." This is big headlines. I had the first telephone in an airplane. And it was big news when I was circling overhead and I decided to call the newspaper. It made headlines.

BARTON: What kind of costs were associated with getting this company started? Was it overwhelming? I know your approach is to use what's available and to make things very cost efficient.

PARSONS: I had everything I needed to put the test gear together and everything else.

BARTON: That's a good thing because there was no place you could send away for it at that point.

PARSONS: No, there wasn't any gear available on the market, you could say that. The FM receivers, however, were available.

End of Tape 1, Side B

BARTON: Ed, as you know, we have contacted Fred Goddard and because of his recent illness, we can't talk to him at any great length. He suggested to us that you knew a great deal about his work in cable and that you and he had worked together. And I wonder if you could begin about how you worked with Fred, what that led to, and then as much as you can recall about his own work in cable after your collaboration.

PARSONS: I was contacted by the owner of the station, Harry Spence. He and Fred contacted me and said they were interested in putting a cable system in Aberdeen/Hoquiam if there was a signal available. And I told them about the pole problem. They told me, "Well, there's a railroad." They had contacted a railroad, and they could see that there would be no problem with getting through the two towns. So I flew up and ran some preliminary tests. The road didn't go near the railroad. It takes separate routes out of town. I found an acceptable signal about seven miles out on the railroad. So I informed them that this would be okay. They could put in a cable system and feed from this spot and they'd get satisfactory pictures.

There were no power lines within several miles of this site where the signal was, so a conventional front end that I had developed could not work unless there was a source of power. The problem was how to get power out to this site and to the amplifiers coming in. I designed the system because it was a one-channel system to reduce the frequency. It was the same as I was doing in Astoria except to reduce it to the lowest possible frequency to cut the line loss and to cut the number of amplifiers required. Then I redesigned my line amplifiers. I had installed previous line amplifiers in houses, but now I needed amplifiers that I could hang on the cable, on the messenger. So I redesigned that. We built a series of amplifiers. Lower frequency. Then I devised a method of feeding. We used 220 volts of AC to feed out the cable to run the line amplifiers and the headend. A very interesting installation and it worked fine.

In putting it in, we had to go through the town of Cosmopolis. There was a threat of a court action. Somebody in Cosmopolis was interested in putting in a cable system. First the police officer of Cosmopolis said that we couldn't go through the town and that they were going to get a court order to keep us from it. So we quit that section of the cable. Then Saturday morning through Sunday night we took the whole crew in and ran the cable through the town of Cosmopolis. We knew the court would be closed and they could not get an injunction. The only mishap is that somebody forgot to put a splice where the cables come together in about the middle of the town. I went back after midnight and climbed the pole and spliced that cable. So we completed that installation and got it running into the first town Aberdeen. And then I turned the cable system over to them, and they ran it. I lost contact with them. After I built the systems, I turned them over. Once I was called back to Aberdeen/Hoquiam. I don't remember the nature of the problem, probably the same old problem of not understanding the impedance matching.

While I was working on that, a call came in from the tri-cities. They needed me over there badly. There was a hell of a west coast storm. I took off to go to the tri-cities about ten o'clock at night, I think it was, in the dark, in the storm. The only navigational equipment I had was the aircraft radio. I had no automatic direction finder or anything else like that in those days. You used the AM signals from the beam. If you got an A-dot-dash, you were on one side of the leg of a beam and if you got an N-dash-dot, you were on the other side. If it was a steady tone, you were on the beam. So I took off directly east. I knew I had to go up high enough to get above Mt. Rainier, that was the highest obstruction. If I remember right, that was 14,000 feet. It was a tough bumpy ride and I had a 210 Stinson, it wasn't a Voyager. Somewhere en route to the tri-cities, I must have passed out. I remember I was in a hell of a storm. I came to and the storm had disappeared. I listened over the different radio frequencies and I couldn't find a beam of any kind to guide me. I thought I was on course toward the tri-cities, but I wasn't. I finally spotted a rotating beacon, the green and white of an airport. So I headed for that. I landed. The engine sputtered when I landed. I was out of gas. It was about 1:00 in the morning. I walked over to the weather station and asked where I was. They told me I was in Redmond, Oregon. That's over in the east of the mountains in Oregon. My airplane had probably flown south at least a hundred miles that I wasn't conscious of.

So I was pulled into the gas pit and refueled. I took off then on a new course to Pasco, the tri-cities. Landed there about 8:00 in the morning. The cable people picked me up. I found their troubles, straightened them up. Probably was there for two days, something like that until I located their problems. Took off and headed back to Astoria. I ran into icing. The propeller iced up in the Columbia River Gorge. I made it on through, however, and got to the Astoria airport. Went in and ended up in the hospital. Complete physical break down. The doctor ordered no visitors because people would call me when they had trouble with their sets, all over the northwest. So he ordered the phones disconnected. No visitors. I spent a couple weeks in the hospital.

The doctor came in on Saturday while Grace was there. He said, "I'll let him out of the hospital tomorrow if you'll get him out of the country where he can't be reached or bothered." So Grace came to the hospital the next morning, Sunday morning, put me and a packed bag into the airplane and said, "You're suppose to go to Vancouver now and stay with my mother for the next thirty days. Nobody's going to know where you are." I took off from Astoria. My next landing was Sidney. I was too weak to get out of the airplane, and the customs officers helped me out. They got a cab for me, and I went in a hotel at Victoria. I called up my mother-in-law and told her I loved her, but I wasn't coming to spend thirty days with her. I found out that up the Canadian coast at that time there was no airport within the range of the airplane. I wasn't about to turn around and go back. Had to figure out something. The next airport on the coast from Port Hardy is Annette Island, Alaska, and it was a good thirty minutes to an hour flying beyond the possible range of the airplane. Even if I had taken gas in the baggage compartment, I would have had to land somewhere. The only thing flying the coast was float planes. So I got out the maps and figured out that Sam Point was within the range of the airplane. That's out on the Queen Charlotte Islands, about three and a half hours flying over water but it would be a possible route. You should realize that my mental capacity had deteriorated, mainly from overwork, strain from installing cable systems, and flying around and getting in trouble at night.

BARTON: Was part of that strain the hassle of franchise and ...

PARSONS: The total deal. And realize I had gotten the city franchise, pole line rights. This Longview deal had broken the bottleneck with the phone companies and everything. So the pressure had been terrific. I had more possible customers than RCA or Ma Bell or anybody could have taken care of. Didn't have sense enough to say no, I guess.

I had been up the Alaska Highway with an airplane group in 1946. So Grace figured out when her mother called her that I was headed for Alaska. But in those days nobody flew the coast route on wheels. It was all seaplanes. I took off from Port Hardy. Filed a flight plan to Sam Point and about every thirty minutes I'd get a call from Port Hardy, "Are you all right? Where are you?" Made it into Sam Point, I think, with twenty or thirty minutes of fuel to spare. Refueled and then it was a comparatively easy hop back from the islands to Annette.

Because of my connections with west coast airlines in Oregon and Washington, I was pretty well known in the aviation industry. And the only flyers were Pan American pilots. They were flying DC-4s up to Alaska, and this was a refueling stop and a pilot change location between Alaska and Seattle. I identified myself and they put me up in their pilot quarters. I spent the night there. They refueled me. Took off the next morning and I went to Juneau non-stop. I knew the broadcast manager in Juneau at the broadcast station. Checked in with him, and I spent three days there just recuperating before I decided to go on to Fairbanks. I landed in Fairbanks the sixth day of April 1953.

BARTON: At this time, what cable operations and broadcast operations had you left in Oregon? What did you own and what did you not own at that point?

PARSONS: Oh, I had the broadcast station and the cable system. Grace was down there. She was running the system then. As far as I was concerned I had thirty days to get back. So I landed and refueled at, I think, Northway and again at Fairbanks. And I flew to Circle Hot Springs. That's a wonderful place. I got there about 3:00 in the morning. I couldn't find a soul around. There was a davenport in the lobby of the hotel at Circle Hot Springs, so I laid down and fell asleep. They woke me in the morning for breakfast. I had been to Circle Hot Springs in 1946, so I knew what the facilities were. And I had talked to Grace about it--I was going to go back to Circle Hot Springs one of these days. So she pretty well figured out where I would end up.

While I was there recuperating, I found out that they had absolutely no communications and for over six months a year the road was closed, so you couldn't drive up. The only way to get there in the winter was by plane or dog team. That hot springs and stuff was really what I needed. By the time my thirty days were up, I flew back into Fairbanks. When I was up here in 1946, I had gone to Wien Alaska Airlines. I was taking care of the radios on all the airplanes coming up here, fourteen planes. I needed some parts and needed facilities for repairs so I went to Wien's and asked if they had a radio shop. Wien's had a mechanic shop for their airplanes and I made some emergency radio repair there. So I knew a little about Wien's when I visited them in 1953 and talked to them about the lack of communications. Yes, they desperately wanted communications, but they couldn't afford it. They didn't have radiomat anything.

I decided to fly around Alaska a little bit. Immediately I found out unless you had gas caches throughout Alaska, you'd quickly run out of fuel and couldn't get back. I approached Wien's with the idea: I'll install radios around the villages; how about you supplying the gas for my airplane. I had discovered over at Circle Hot Springs a two-way radio. Before World War II, Pan American Airlines originated in Alaska and they did have a semblance of a radio network. Their old transmitters were still lying around all over Alaska, but none of them were operable. So by repairing these sets, I was able to get limited communications.

I found out that right after the war a subsidized airline, mail subsidy, was entitled to pick up, on a year's permit, surplus radio equipment from the CAA which is now the FAA. So I came on down to Anchorage, went to the CAA, told them about this law, and I said, "I want some of your equipment." Well, they were under the gun because here's a scheduled airline flying without any radio gear, any communications. The CAA was under orders to help the airlines get the required communications. So they made equipment available to me to set up a network throughout Alaska.

I figured I'd go back to Astoria in the fall. But after a couple of months of installing this network, Wien's offered me a job title, and that made me think twice. Noel Wien, who had originated the airline, had been in the states long enough to know what airline communications was all about. At the end of the work day, he would pick me up and drive me into town. I didn't have a vehicle. We would stop and have a drink on the road. I finally realized he was just trying to stall me, keep me from leaving him. So winter came and I was still here. Wien's gave me a vehicle, a pickup truck. And I kept delaying my departure until spring.

BARTON: Spring of what year?

PARSONS: '54. And I'm still here. End of story.

BARTON: Well, how did you resolve all of your holdings in Oregon. When was that racked up?

PARSONS: Grace stayed down there two years before I talked her into coming to Alaska. She very reluctantly let loose of everything. I felt I let a lot of people down because it was a good two years before people were trained well enough to find their own troubles. One thing that convinced me to move up here, was that Wien Airlines had two C-46s, that's a big freight plane. But they didn't have maintenance facilities here and they had to fly to Seattle about every three months for scheduled maintenance. By using these planes, I was able to bring all my radio gear and other equipment up here free of charge on those planes.

BARTON: So by '55 you pretty much wrapped up your holdings in Oregon?

PARSONS: Yes.

BARTON: What happened to the cable system, specifically?

PARSONS: Cox Cable System bought the cable system. I don't think I realized a nickel out of it.

BARTON: So, clearly, cable wasn't a money-maker for you?

PARSONS: Never had been. After spending a month up here, I decided that I wouldn't go back to the rat race. In fact, I actually felt that if I did go back, it would kill me. I couldn't have kept up that pace any longer.

BARTON: Before we get into the fascinating story of the system for the polar flights, I wonder if we could talk about how you began to develop cable. Took all of your cable experience from Oregon and begin to work on the installation of cable systems in the villages and in the regions of Alaska and the Arctic. Could you begin to trace that history?

PARSONS: Wien's was aware that I had started in the cable business and the director of operations for Wien's Airlines, Bud Hagburg, approached me about putting a cable system in at Barrow, and the owner of the taxi in Nome approached me about putting a cable system in Nome.

BARTON: About when was this?

PARSONS: Both of them were about 1955. I supervised the installation of both of them. Later in Nome, the taxi operator sold the cable to the owner of the theater who dismantled the cable system because it was competition to the theater. In Barrow, the same cable system exists today. I taught two young Eskimo boys, young men, how to make up coax connectors and hook up coaxial systems. By this time transistorized amplifiers and stuff were available. Distributorships in Seattle were available and I could buy everything I needed for the cable systems. So we didn't have to build amplifiers, splitters, or anything else. And both of them, Barrow and Nome, worked from video recorders.

BARTON: So your first systems used prerecorded materials?

PARSONS: Yes.

BARTON: Did you have to develop anything at all for these systems?

PARSONS: No.

BARTON: No design work?

PARSONS: No. The whole design work was in the communication networks.

BARTON: Who paid for the system at Barrow? Where did the money come from?

PARSONS: The commercial manager, traffic manager, Bud Hagburg and the owner of a restaurant and the theater in Barrow. One of the Hobson boys, I can't remember his first name. The two of them financed the materials and I supervised the installation.

BARTON: Was this a profit-making system?

PARSONS: It was intended as a profit-making system and it's still there today, so I assume that it hasn't lost money. It has passed through several hands. It's now owned by the native corporation.

BARTON: What kind of video content was in the early stages of the system?

PARSONS: There was a television station in Anchorage by that time and we recorded in the television station here, flew the tapes to Barrow, played them back over the cable.

BARTON: What was the scheduling like on that system? Just one part of the day you could use it or...

PARSONS: I didn't follow very closely once it was in and operation.

BARTON: Did you have any problems there? Did they have any problems with it even though it was a taped system? Anybody complain about it?

PARSONS: No.

BARTON: Any franchise problems?

PARSONS: No, there was no franchise problems. The power was generated up there by the VIA bureau in the affairs. You had the native hospital. Strictly a native Eskimo village.

BARTON: So this system and the one in Nome were pretaped systems.

PARSONS: Yes.

BARTON: What's happened to the one in Nome? You mentioned that the owner dismantled that because he owned the theater. When was that?

PARSONS: I don't remember when they dismantled it, but there is another cable system in Nome now.

BARTON: And you didn't have anything to do with that when they replaced it?

PARSONS: No.

BARTON: What was the next step that you were involved in after these first pretaped systems?

PARSONS: Television-wise?

BARTON: Yes, television, cable systems, and all that.

PARSONS: Oh, it was after the satellites came in. I installed several systems in the exploration camps and the remote oil camps.

BARTON: Could you describe the system that you developed in conjunction with satellites?

PARSONS: In the remote locations all the original communications were by HF radio, high frequency radio, and it was intermittent and sporadic at best. But it was the only source of communications. I first built a network for Wien Airlines. And we used that network for everything. It was characteristic of a statewide election not to have the election returns in from all the villages up to a month after the election. The mail planes flew to the villages and picked up the returns, and some of the villages had only one or two trips a month. Many times they did not know the results of an election for considerable periods of time. So, the Fairbanks News Monitor approached me with the idea of using the aeronautical net. Wien's aeronautical net had received considerable publicity, and by this time I had a radio transmitter at every village. So it was a practical way to get the returns in. But because this was an aeronautical net, you couldn't legally put the information over the air. So I petitioned the FCC for permission to gather election returns. And they granted it. Well, we got the election returns the same evening as the election. Everybody was impressed.

Then we petitioned the FCC to do kinds of communications over this aeronautical net because it was the only means of communications. They granted these permits one after another. I ran into the retired FCC administrator here a month ago. He's retired in San Diego, but he comes up here every summer. And he said I made his job very interesting, handling all these requests to do things that weren't in the book.

BARTON: Somewhere along the line I want to talk to you about translators. Is now a good time to do that, in your involvement with translators?

PARSONS: The real origination of the translators was radiating the signal across the street down in Astoria, Oregon. Then I was requested to build a pickup that would send signals from remote locations to groups of houses where a cable system wasn't practical. We attempted to license these transmitters. The FCC rejected the licenses, but the people took the responsibility. I built the equipment and they were running all over the west. The FCC made some efforts to close some of them down. And, of course, if you take television away from a group of people, you've got a fight on your hands. After the first few attempts they quit trying to enforce the requirement, but took the position they didn't have the authority to license them which is probably true. It took twenty years for Congress to authorize the licensing.

BARTON: So did you invent the translator?

PARSONS: I used the first ones.

BARTON: Was that patented?

PARSONS: No.

BARTON: That was just picked up? That technology or that idea was just picked up by others and...

PARSONS: Well, that translator idea is nothing but a repeater. Repeaters have been used since the first days of radio.

BARTON: But you were the first to use it for television?

PARSONS: As far as I know.

BARTON: And then it was just picked up as kind of a general routine?

PARSONS: Yes. I have a memo from the owner of Northern Television that started the installation of translators up here saying that at the first translator meeting he attended the speaker introduced the meeting with a story about the real origination of translators, was rather unknown, but he understood that a man by the name of Ed Parsons had first used this in the west.

End of Tape 2, Side A

PARSONS: And Arty Aberck included a copy of that speech. In the letter to me he says, "I think you'd be interested in this."

BARTON: Now, before we leave the "lower 48" and go back into your experiences in Alaska, is there anything that we've forgotten. Anything you developed, any people you worked with, any system that we've overlooked?

PARSONS: Until we go through those newspaper reports, I can't say.

BARTON: Okay. I'd begun to ask you about satellite-assisted cable systems and you suggested that we were jumping the gun. Where should we pick up after you introduced the pretape systems?

PARSONS: The satellites didn't come in for many years. It was many years of work up here before the satellite. And the first satellite receptions that I knew about in Alaska were over at the geophysical institute at the University of Alaska. They had rigged a series of antennas, not dishes, and were picking up the radiation from the satellites. I heard about it. I was not interested in the satellites or in the early days of satellites in Alaska. I was interested when I first inquired about getting satellite reception in Barrow. I was told emphatically, that it was impossible. That is if we installed a parabolic antenna 90 feet in diameter we might get some sporadic reception. So I devoted myself to the development of communications: radio beacons, navigational facilities, and so forth.

BARTON: So you temporarily took the advice of the memo and moved on to different things?

PARSONS: That's right. So until the days of the exploration of the petroleum reserve, I didn't bother myself at all with it. I followed the development, but I didn't get involved.

BARTON: Approximately what year did you look at that antenna system at the University and began to think about this idea?

PARSONS: Well, I knew the people over at the geophysical institute and what they were doing. I can't recall the names of the people right at the moment, but I will recall them. They were doing a lot of research on it.

BARTON: In the mid-'50s?

PARSONS: In the mid-'50s, yes.

BARTON: '56?

PARSONS: Yes. I don't think anybody realized that there were these possibilities.

BARTON: So after you started working on communication development, at what point did you come back to the satellite idea?

PARSONS: I didn't come to the satellite idea until I started the Pet-4 Program.

BARTON: Could you pick that up and describe how you worked with that?

PARSONS: Well, we had a letter in '76 from Washington, D.C., saying that it was impossible. But they hired me to get communications in the Pet-4. I explored the possibilities again and RCA had bought the Alaska Communications franchise from ACS, the Army Communications Corps. Previous to this, all of Alaska's communications were through ACS. And that was a sporadic deal. I'll show you the proposal that RCA put out to provide communications for the whole state. They called for bids. Many companies bid it, but the bid was never let. In the meantime, the state got into the act, decided to put satellite dishes in the villages that would theoretically pick up the satellites. And the state bought earth stations from RCA for most of the villages in central and southeast Alaska. This replaced the old single sideband HF networks that were providing communications around the state. One of the jobs that I contracted from U.S. Public Health was to install 125 single sideband HF transmitters in 125 villages in Alaska. That was strictly to handle medical communications, the whole network. I did apply to the FCC for a special emergency frequency for Alaska, and it was granted. This is the stuff that I want to show you in Fairbanks. When the FCC administrator says I made his life interesting, I have a hunch I did.

I put NAV-AIDs in practically all of the villages, non-directional radio beacons, so that instrument flying became possible throughout the northern half of Alaska.

BARTON: So where was the first use of the satellite dish to pick up video signals?

PARSONS: I don't know. It wasn't Fairbanks. But I think the first dishes were put in by RCA at these villages. Bought for and paid for. And one of the professors at the geophysics institute at the University of Alaska was hired as the engineer to design the statewide system which is still in operation today.

BARTON: And what's the first one that you installed for video?

PARSONS: That was Camp Lonely.

BARTON: Could you describe that system?

PARSONS: This was for the oil exploration of the Pet-4 reserve and we put in a total of five earth stations. They were called transportable earth stations. They were put in strictly for telephone purposes. Then I added television reception simultaneous with the two-way telephone circuits over the earth stations.

BARTON: When did you work on the Camp Lonely installation?

PARSONS: I would have to look that up. I could come up with the contract. Give you the date.

BARTON: Did you have to design anything for this application?

PARSONS: Nothing but the foundations. The station was complete.

BARTON: So you had a dish being used both for telephone and for television?

PARSONS: We had six channels, six telephone circuits plus two television channels in each site.

BARTON: And what satellite was involved for that first?

PARSONS: We first were picking up a Canadian satellite. America didn't have a satellite suitable for the area. Then RCA put up a Aurora I and all the dishes were switched over to Aurora I.

I haven't been as involved in the satellite field as many other people in Alaska.

BARTON: So, the Camp Lonely system was used primarily by Americans?

PARSONS: Yes, strictly government, USGS.

BARTON: What was the first installation of live video pictures from satellites that served the native population?

PARSONS: I think that was the state network. It was designed, I think, almost entirely by the professor from the University. I can't take any credit.

BARTON: Okay. But you have installed systems for natives that didn't exist before.

PARSONS: Oh, yes, but that's up north where it was supposed to be impossible.

BARTON: Yes. Could we talk about those systems for a few minutes? I'm interested in how you put those systems together? How the natives responded to them.

PARSONS: They're primarily for oil installation and remote. Barrow's the only one that was an existing system when satellites came in. I didn't put the satellite in there. The native corporation contracted with an outside contractor to supply the dish and to put it up. So I wasn't familiar with it whatsoever.

BARTON: I wonder if we could spend a few minutes talking about your feeling about the cable industry and what you think the current state of the cable is, given your involvement. What are its problems currently?

PARSONS: That's a very big "if."

BARTON: I'd like you to dive into that, wherever you think it's important.

PARSONS: Well, the cable industry enjoyed a monopoly for many, many years and it's been a generally profitable industry. I think the operators have taken advantage of the early technology, but I don't think they have applied themselves to the research necessary for profitable industry in the future. I may be mistaken, but I think the cable industry is coming in for competition. There are so many other fields, that existing cables are going to have to upgrade service and lower the price to stay competitive. That's my thinking.

Take fiber optics. When you put fiber optics around town, not only can it talk of doing what cable is doing, but the telephone service and everything else can be lumped into one, including computer service. I think cable should be aware of developments on the drawing board. Then going a step further, you've got direct satellite broadcast moving in the field. When we have the technology available, to build high-powered satellites, people won't need a big satellite dish to pick up these satellite stations. This has been set back maybe two or three years by the Challenger accident and the other satellite launches around the world that have failed. But I think it is only a temporary setback. Maybe in one to three years direct satellite broadcasting will be here. I see the day of the handy talkie telephone being able to access a satellite. I believe that some of the technology that the Russians are using with polar orbit satellites, relaying between satellites, is not being done effectively by our country yet. So I think these are all potential competitors to cable. I don't think that they will continue to enjoy a noncompetitive atmosphere as they have since the beginning of cable television.

BARTON: We've talked a little bit about the recent case that removes the exclusive franchise situation from municipalities. What do you think the implications from that ruling are for cable? Will it help cable over the long haul?

PARSONS: Well, it's going to be the same as the telephone company. There will be competition. See, Bell enjoyed a monopoly for many, many years, and I thought that it was well that they did. But when the Bell monopoly was broken up, all kinds of problems have shown up. Now telephones are a highly competitive business. And this Supreme Court decision taking away the authority of the city to limit franchises, will, I think, be a blow to the existing cable systems because it opens up the area to competition.

We've seen an example in Alaska. RCA bought out the Armed Services Communication Network which was the only commercial network in Alaska of telephones, telephone long distance. RCA paid a pretty good price for that, made commitments. They sold that right and the network to Pacific Power and Light based in Oregon and Washington. And in the last few years competitors, particularly General Communications, Inc., are competing for the interstate long distance service. And offering fewer service and as good a service as Alascomm is serving. Alascomm being the Alaska branch of Pacific Power and Light. Now with the advent of KU band satellites, there are other companies coming into the picture of offering long distance service, tying into the multiple long distance services that are competing with Bell. So you no longer have that monopoly position.

And this new court decision that takes the authority away from the cities to limit franchises and the FCC rules that have also taken a lot of the authority away from the cities, the days the cable industry can sit back on its haunches and rake in the money, I think, are limited. They are going to have to be innovative, aggressive, and explore the new horizons particularly in the computer fields, the computer transmissions. It's available to them and they are capable of handling it.

BARTON: I want to ask a final question for today. Would you have been able to do what you did in cable in the early years in Astoria ten years before you did it? Or did you need the experience of previous jobs to do what you did?

PARSONS: Yes, I think I was capable if there had been a signal available ten years earlier. I could have done the same thing. It would not have been a problem.

BARTON: You had the knowledge and expertise you needed at that point?

PARSONS: Oh, yes.

BARTON: Where did you get that expertise?

PARSONS: I don't know.

BARTON: Do you think you were born with it? Just understood the need to solve problems? Or where did you pick up the technical problem solving expertise to do what you did in Astoria? Did you pick it up from your broadcast experience or did you have it before you got into broadcasting?

PARSONS: I think I had it back when I was an engineer in the sawmill.

BARTON: So as you look at it there are just different problems requiring you to use a certain kind of skill you have.

PARSONS: Yes.

BARTON: ... and available materials, putting them together.

PARSONS: In the first place, I was raised in an early garage. In my school days I had access to the availability of the electronic art as far as it had advanced at that time. An example might be that another youngster and myself in the sixth grade, because I had access to spark coils, we made things a little bit difficult for the teacher, shocking kids and so forth. And to divert us from the angles we were on, she presented us with a book, Marconi's Experiments in Wireless. It was a hardback book. I don't think I've ever seen it again. I don't know what happened to mine. But that changed our channels. His dad owned the telephone system, the old Magnetos system. My dad owned the garage which had access to the coils. He had access to handsets and so forth. So we built a wireless system between our places.

BARTON: How old were you then?

PARSONS: I was in the sixth grade. Then when they took the equipment away from us, we worked out a system using the telephone wires for our dots and dashes. But we used a balanced system so it couldn't be heard on a telephone set against ground for sending the dot and dashes between our two places. And I even designed an interconnect so we could put it through the different party phone lines and could transfer the signal from one phone line to another.

BARTON: How many crystal sets did you build?

PARSONS: Oh, I played with them for years. But when vacuum tubes came in, I built vacuum tube sets. The last two years of high school I had a contract with the radio store in Portland to supply them with two radio receivers per week. They were three-tube receivers. They would pick them up and sell them in their radio store. This was in the days of the old regenerative receivers.

BARTON: Well, most people who have the range of experience that you have and have accomplished so much, usually have an inspiration, someone or some group of people who have inspired them. What's your inspiration? Who's your inspiration?

PARSONS: I don't know.

BARTON: I know Grace was for the...

PARSONS: Yes, for the cable deal. I had a little setback in the early days during World War I. When the military came in and took my spark coils and coherers and stuff. Up until that time Dad was very cooperative. Even before he was in the garage, he taught me how to test a dry cell with a high resistance wire which we used to get on tags that shovels and stuff would be shipped to the railroad crew. If the battery was good, it would heat the wire. If it was no good, it wouldn't heat the wire. Things like this. The difference between series and parallel hook up. When they electrified the railroad, Dad hooked a wire to the trolley wire and we had lights in our house, but it had to be five 11O-volt lights in a series because of the voltage on the trolley cable. Things like this. So I was exposed to it fairly young.

But Dad was very badly put out about this wireless. While I was building a radio set, I had a one-tube set, if he'd catch me playing with that, he had something in the garage for me to do. It was my second year of high school, I remember it was the initiation for the freshmen which was always done by the sophomores. And when I left the house, mother was listening on my headphones. She was becoming quite an avid listener. Dad wouldn't put them on. Nothing doing. But, when I came home that night, here was Dad sitting with the earphones. Mother had gone to bed. He announced at breakfast, "I'm going to buy you a loud speaker for that set." He was unaware that it would take two stages of audio amplifying to make it audible on a speaker.

But my brother and I had been saving our nickels and dimes. When a steam-operated automobile came up, we'd pack water for the steamer and things like that and got tips. I had saved all my tips and I had enough money to buy the parts to build one stage of amplification. I wouldn't tell my dad that that set wouldn't work. So I explained to my mother that I had enough money for one stage, but that it took two stages to drive a loudspeaker. So she made up the difference. A milk truck went to Portland every morning to haul the milk in from the dairies. I begged a ride on that milk truck. Bought the parts in Portland. Came back on that milk truck that evening.

When the speaker came, I was ready. The speaker was an overgrown headphone in the bottom of a horn. Not too good, but it worked. And I explained to Dad, he just bought too cheap a speaker. He sent the speaker back and ordered the highest-priced speaker on the market. It was a dynamic speaker. Made by Magnavox. It was the early days of Magnavox. We put the speaker out in the garage and we had dances every night from the radio.

BARTON: A very nice story.

End of Tape 2, Side B

PARSONS: When I came up here in '53, we needed a dependable communications network. The next few years I built up a network including a real high power station in Point Barrow and one in Fairbanks. And being a Norwegian, Sid Greene was familiar with SAS, Scandinavian Airlines. So when they asked him about the art of communications, they found there wasn't any excepting for the Wien's network. There was no art of communications and no NAV-AIDs, except Wien's NAV-AIDs. So he had the SAS engineer get together with me, and Wien literally loaned me to SAS for over a year. I worked first on the design of a communications set up. Their idea was to put an American station in at Barter Island which would be on a direct route from Anchorage to Copenhagen. It would be the great circle route. And I had had enough experience of working that close to the north magnetic pole that I knew that it was very difficult to communicate through the magnetic field of the North Pole. So I convinced them that we should put the international frequencies in at Point Barrow.

BARTON: What are some of the characteristics of the North Pole? What happens when you try normal routines of communicating? What kind of aberrations do you get?

PARSONS: If they put a station at Barter Island for the international flights and they came over the pole according to their flight plans, they would get very erratic communications. We had gained a tremendous amount of experience from our station at Point Barrow, and we were communicating with the Navy ice station, which I had established, in the Ice Islands clear to the North Pole. Over time we had six ice stations there. The Navy had them manned by the Arctic Research Lab under the University of Alaska. We pretty well knew the paths the signals took, but it wasn't any problem convincing SAS the way to go. So over a year's time I worked with SAS helping to develop their survival techniques and their flight plans, how they should be handled. To make their communications compatible with the Wien communications. Besides the Barrow beacon, we had a 3,OOO watt non-directional beacon at Barrow. They decided they needed another beacon farther inland and they had me install a beacon at Arctic Village, a very primitive Indian village up in the Brooks Range.

BARTON: Were they using the system yet?

PARSONS: No, it's been superseded with high technology now.

BARTON: I mean after you had the first beacon in, were they using that system before you added a second component?

PARSONS: Yes.

BARTON: They were already using that part?

PARSONS: Yes. The problem was when they come across the ice pack to have a suitable place to land, alternate places. And we traveled to Big Delta, all the different landing fields. Worked out the deal for the pilots if Anchorage was socked in, they could go to Fairbanks and if Fairbanks was socked in, they could go to Big Delta or some other. All the different possible alternates as safety measures. And I did the same thing later for all the other airlines that I helped set up. I think that was the most interesting of all my jobs. I built the original station at Barrow. We upgraded it to all the frequencies required. We had thirteen transmitters, all multiple frequencies. We carried all the international aeronautic frequencies. We carried all the Navy frequencies. And supplied communications for the weather flights. There used to be a weather flight to the North Pole every day. We relayed all that information to Anchorage and I designed the station so that we could throw the full power toward the North Pole or reverse the phasing of the antennas and throw the whole power to Anchorage. It was a very satisfactory operation to work as well as it did. And we operated that station for over ten years with women operators. We trained young Eskimo girls shortly out of high school, the boarding high school in Sitka, to operate the station. They were known as the Angels of the Arctic and they did a magnificent job.

BARTON: What were those ten years that this was in operation?

PARSONS: I'll have to look at the files. The girls were credited with a lot of rescues. It's all in newspaper stories. You might be interested in part of the philosophy. The owner of the newspaper, The News Miner in Fairbanks, thought there was too much free publicity by naming companies in stories, so he banned naming the source of information in a story. So I gave them my story. They carried it in the paper and they didn't say that Wien was the source of it. Realize we had the only communications in the Arctic. The only. And I informed Mr. Steden, the newspaper owner and editor, that if he didn't give Wien credit, he would get no more stories from the Arctic, period. They repeated the story three days in succession with Wien's name saying that Wien had supplied the system.

BARTON: He had no alternative.

PARSONS: Well, it was his choice. It took an operator's time, it took personnel time for them to have that news source. If you cut ninety villages off with no news, he wouldn't have too much for his newspaper.

BARTON: So this system was the source for all news from that region and that news only went around the world about that region.

PARSONS: That's true.

BARTON: Can you remember any incidents from those ten years? Any close calls that would have been disasters without the communications service that you established?

PARSONS: I would say that at least every third flight would have been a disaster without that. In fact, I don't believe it could have been started without that communications. This was one of the most satisfying jobs I ever did.

BARTON: I understand from our discussions that this ranks very high in terms of your accomplishment.

PARSONS: It certainly does. And probably I got more personal gain out of it because I had a blanket, must-ride pass for me and my wife on five different airlines anywhere in the world. Very few people ever had that. And I took advantage of it.

BARTON: People around the world recognized the importance of this system?

PARSONS: Oh, yes.

BARTON: Was this system copied for any other use in any other parts of the world, as far as you know, during that time?

PARSONS: Well, I was taken all over the world to help design similar communications. It was probably the longest signal jump without intermediate communications or NAV-AIDs at the time. Later I went down to Johannesburg, helped set up a network through Africa. We had some long jumps there, but I think the Arctic across the whole was the greatest.

BARTON: Did you ever ride in one of the commercial jets and monitor the system in action?

PARSONS: Every flight I took, I monitored in the actions. Like when they run the probing flights, the JAL flight, the Pan American Airline flight. I went to Tokyo before the start of the flight, helped plan the flight plan, then I went on around to Copenhagen and monitored the flight en route. I was there when the probing flight landed. I did that with almost every prober, initiating many polar flights.

BARTON: So up to that time there was virtually nothing to help guide these people?

PARSONS: Well, the Navy was running what they called the Tarnegan Flights, they were weather flights. They were running research out of Eielson Air Force Base near Fairbanks and they were running a flight a day up in the north. And they were using our station and the Air Force station at Eielson to track the flights. So we had considerable international communications to and from the Air Force plus the Ice Islands that we had established for the Navy.

BARTON: Now, was Molly part of that system?

PARSONS: Ironing out our operating problems, we had Mr. Rex Ouvocanna, a full Eskimo, whom Sid Greene had trained as an aircraft mechanic. His sister Mollia Ouvocanna was going to the Indian boarding school in Sitka. She graduated from the eighth grade and high school. And when she came back to Barrow, we hired her and trained her for the radio station. Made her a chief operator of the radio station and had her train additional Eskimo girls to run the radio station. Molly was a very bright girl and she trained qualified operators. In fact, I heard many international pilots say that the Eskimo girls were the best communicators anywhere in the world. I had taken advantage of pass privileges to go to Europe, to the Orient, and practically all over the world ... Sidney, Fiji, and all these places.

Grace and I decided to take a trip around the world with Air France visiting interesting places including the Taj Mahal. I had never heard of it, but Grace said she wanted to see the Taj Mahal. So we went to the Taj Mahal. When we were down in Sidney, Grace said, "I'd like to go back by way of Hong Kong." I asked SAS if they'd take us to Hong Kong. Fine. When we got ready to leave Hong Kong the station manager came aboard and wanted to know what our schedule was and when we were going to get into Paris. I gave him the dates that I had planned on for each of our stops--Karachi and Bangkok and all these places and how long we expected to stay at each of them.

When we were to make the final hop into Paris, Paris was socked in, so we landed at Marseilles down on the Riviera. We had never been on the Riviera, so, we thought, "Let's stay here." So we notified Air France that we were going to stay on the Riviera. Fine. They assigned a guide to us, got us a hotel room. We stayed there two or three days before we decided to go on to Paris. I was unaware that Air France had planned a big party for us in Paris upon our arrival. That was the reason the Hong Kong manager had asked about our schedule. When we got to Paris, they still had the party. They appreciated my part in the polar communications.

BARTON: I'm still not clear, I remember the story you told me early about how Mollio was celebrated around the world.

PARSONS: Well, it was very interesting. Molly Ovuocanna, now Molly Peterson. As chief operator of the radio station, I thought it would be a nice gesture if she would go to Europe. She said yes, she would enjoy a trip to Europe. She thought it would be interesting to talk to all the international pilots. So I dropped a short note to Air France saying that Molly had been chief operator for seven years at the Barrow station. I thought it would be a nice gesture if they would take her to Paris. A letter came back immediately. Two first-class, round-trip tickets to Paris on Air France. Grace was pretty familiar with the international deal, and she realized that Molly was probably very naive, to say the least. So she had her come down to Fairbanks and spend probably a week with us, coaching her on continental customs since she was going alone to Paris. We took her to Anchorage and we met with the Air France people. They recognized they had a publicity jewel, so when Molly boarded the flight, the mayor of Anchorage gave her a bouquet of flowers and reporters told of the Eskimo girl going to Paris. Then across the Pole they had her up in the cockpit so that she could talk from the other end to her cohorts down at Point Barrow, and they took pictures of her there. She went on over to Paris. They were taking her to every capitol in Europe--London, Madrid. They took her to bull fights in Madrid. And KLM realized that they would bring her to Amsterdam for publicity. The operations manager of KLM, Royal Dutch Airlines, had been to Barrow with me and had met Molly. That group flew to Paris and found out where Molly was staying. Told her that I had sent word that she was to go to Amsterdam with them. They got the publicity and got it in the papers in Europe and they beat Air France. It was quite a rivalry between international airlines. You'd almost call it kidnapping.

BARTON: So this incident must have changed her life or at least the way she thought about the world.

PARSONS: It sure did. Air France gave me the whole publicity file, copies of it. Several years later when Molly had children, I gave the whole file to her and it's probably still available.

BARTON: So how many women were associated with the system overall would you say? How many women had been trained for it and been through it? If you were to have a reunion, how many names would surface, do you think?

PARSONS: I have an idea we'd have about ten Eskimo women.

BARTON: And why do you think they were such good communicators? Was it a part of their culture, a part of their training, or a combination of that?

PARSONS: Because they were dedicated.

BARTON: They felt a real responsibility to the people they were serving.

PARSONS: They felt the responsibility. They knew it, what the Arctic was, and it would take but one minor mishap to be a bad break.

BARTON: What kind of tragedies can occur through just one miscalculation?

PARSONS: Well, the percentage of weather deaths, I would say, in the Arctic is probably ten times more than those in the "lower 48". It only takes a minor slip up to be too bad. You probably had some information from Max Brewer along these lines.

BARTON: Yes, and I wonder if you could fill that in. You mentioned earlier in our discussion that until quite recently people just assumed that if something went wrong in the Arctic it was just currents. Because of the communications system and because of your and Max Brewer's concern for survival training those odds began to be challenged. Could you explain how you were involved in some of that survival information?

PARSONS: Even last week, at Endicott Island, there was a communications failure and it would take nothing but an Arctic storm. For example if you get a northwest wind when an ice pack moves in, the ice pack that covers the whole Arctic all starts to move. Slowly, but the wind will start the move. There is nothing on earth that can stop it because you've got billions of tons of ice moving as a solid unit. That's a big worry with the ice islands that oil companies are establishing up there. They have tried to design the islands so that the ice would rise and fold back on itself and build its own barrier rather than destroy the island. We had a storm in the Arctic here quite a number of years ago. There was an oil barge there that had been taken up for oil for the exploration rigs. After the ice pack came in, the oil barge ended up five miles inland. It had been shoved back there by the ice. It hadn't been damaged, by the way. They pulled it back to the water with Caterpillar tractors.

BARTON: You've mentioned a number of things in our discussions that I find amazing about the characteristics of signals and waves and the characteristics of communication patterns in the Arctic. It almost reminds me of devil's trying the lore. And you mentioned that similar occurrences happen in parts off the Washington and Oregon coasts. Could you try to summarize some of the things you've learned about these bizarre patterns of electronic communication characteristics of the north?

PARSONS: Well, I have some theories of my own. They are unproven. I've heard many other theories. But without any question, the ionization of the atmosphere up there, the air currents, different densities tend to bend the waves as well as the magnetic field. And it's hard to predict where a signal is going to show up. There is a section in that manual detailing radio paths and path reliability. To go into it any further would be rather difficult and technical.

BARTON: But you've had to compensate for that wide variability of electronic characteristics, to overcompensate much more than you would have to do in the "lower 48."

PARSONS: Yes. When the government built the Distant Early Warning system, they connected the system with microwave sets, the same that's used by telephone companies across the United States. The system turned out to be so unreliable that they tore the whole system out and installed a tropospheric scatter system at tremendous expense to replace the microwave system they couldn't depend on. And they are having the same troubles up there today. They keep trying to reinvent the wheel, I think.

BARTON: Could you begin to talk about how you got involved with the Pet-4 project and explain some of the features of that installation that you designed? Could you start with the beginning and your involvement with that project?

PARSONS: Well, to explore the Petroleum Reserve #4, the Navy contracted with Communication Engineering Company of Anchorage for a communications network to support the drilling exploration in the reserve. They provided some communications for several years. I don't recall--two, three, maybe four years. They had such poor communications that the Navy terminated the contract and had Husky Oil hire me as a consultant to solve the communications problem.

BARTON: Now, where was Husky Oil? Where were they based?

PARSONS: I'll have to look that up.

BARTON: Okay. But they were an established company? They'd been around for awhile?

PARSONS: Oh, yes. Husky Oil is a big company, I think out of Texas. But they are a big concern. They got the Navy contract. So they asked me to go up and explore and write a report on what the difficulties were and the reason for them. I did that. About six months later they asked me to go up and re-evaluate, find out what was wrong. And I have those reports. When I came back from the second trip and before I wrote the report, I was asked by Max Brewer, USGS, what I was going to do to correct the situation. Told him it would be in the report. "Well", he said, "you're in charge." I said, "Nobody told me I was in charge." "Well, you are. You'll be informed." Which I was. I realized that it was such a big job that I decided to close my communications network. And I sold it and closed my engineering office. And worked full time to develop the communications necessary for the petroleum reserve.

BARTON: Roughly what year was that? When you decided ...

PARSONS: I will have to look the contract up. It's also in Fairbanks. But it was reasonably easy to establish the primary line of communications, but at every drill site I developed three different systems. One a primary system and two backups per every drill site. I had access to the DEW Line communications network, tropo systems, I had unlimited equipment and to form it all into a massive communications network was not too much of a job. Then I took care of the communications for several years. That we will have to look up, too.

BARTON: So we're talking about the ability of anybody associated with that project to pick up a telephone and communicate with anybody, not only with anybody else in the project but outside the project?

PARSONS: Anywhere in the world. We made up a program a year ahead. On that program I would detail for every drill site, every type of communications installation. That's what I gave you. And I could plan a whole year ahead. Actually it was simple. If they were going to drill a test, well, 100 or 2OO miles away, I sent a technician out with the necessary equipment. He set up a radio transmitter network. We would place a telephone on an empty oil drum, place a 12-volt battery under the oil drum and when the construction crew arrived, they could pick up that phone and they were in contact. When they got a site preparation far enough along, we put a complete communications module in there, down to a satellite earth station and everything.

BARTON: What did each one of these transmitters look like? What were the elements? When they decided that they were going to open another drilling site, what was that basic equipment for that transmitter?

PARSONS: Well, it was never the same. It would take a different combination. I developed six interconnect packages. One to work into a PBX; one to work into a dual line; one to work into an earth station, satellite station; one, I think, we called a subscriber station, it's another end of the circuit; and I don't remember the sixth one. It's in the manual that you have.

BARTON: Could you briefly explain the difference between a microwave and a tropo scatter system?

PARSONS: Yes. They work on entirely separate principles. A microwave is a line of sight. It behaves exactly like a light wave. In fact, I think now a days you might use a light wave instead of a microwave. A tropo system depends upon the air molecules to transmit the signal to the next destination because of the scattering effect upon the electromagnetic waves of the molecules. There will be enough signal if you have a big enough dish. They use massive dishes, parabolics, and a reasonably low frequency, usually in the VHF or the UHF band, and extremely high power.

BARTON: So they are less efficient than the microwave system generally speaking?

PARSONS: Yes. They are very expensive.

BARTON: What did you learn from the whole Pet-4 project? Not only technically, but what did you learn about such things as the likelihood of future development of the north and the communication systems required? And the culture of just surviving up there with a certain kind of communications system?

PARSONS: I would say that most of what I learned was what not to do.

BARTON: Which is what?

PARSONS: Use certain systems under certain conditions that are not going to work. And they still keep trying it. And they keep having failures.

End of Tape 3, Side A

BARTON: Could you start with the very first basic system you used to bring television?

PARSONS: Well, among other things, I told the company of Wien that I had originated the cable television systems in the northwest. The commercial manager of Wien plus a theater owner at Point Barrow decided that they would like to put a cable system in at Point Barrow. We videotaped the programs in Anchorage off-the-air, flew them up to Barrow, and played them over a cable system. Bud Hagberg, the commercial manager for Wien, was in a position to do me a lot of favors in the Arctic. He was half Eskimo. A very agreeable young man with a very responsible position for the financial survival, you might say, of Wien as he dealt with the post office department and subsidies and so forth. When he approached me about Barrow, I could see no reason why they shouldn't put one in. And he could videotape in Anchorage, or he could put a camera in and play movies over the cable system. They decided to go ahead with the videotape system.

I didn't want to use any of the Wien radio personnel from our maintenance communications department, so I trained a couple of young Eskimo boys that were out of work at Barrow. And followed up on them, checked their mistakes, had them redo them. Ended up with a cable system in Barrow, and these young fellows went ahead with the system and operated it. And the system is still in operation today.

BARTON: Now that first system, how many screens were there? How many monitors?

PARSONS: I don't have any idea. There were a lot of sets in Barrow. In fact, I think Max mentioned that many Eskimos bought sets when there was no source of programming.

BARTON: Well, can we jump from that to your most recent activity in getting television to this development now underway? What does that system look like and what are its objectives?

PARSONS: The first proposal using the satellites was for Point Barrow. They said it couldn't be done. That the satellites would not be receivable at Barrow. When the Pet-4 started, they leased two satellite earth stations from RCA for telephone service. We put them in. After the first two, they leased three more that were transportable earth stations. We put an earth station in at each drill site. And the Arctic Research Lab at Barrow was able to secure a Navy-owned satellite dish from the Antarctic. Somehow or other, they got it up to Point Barrow. We installed it in the lab at Point Barrow and it's still up there.

Then I took over the communications for the Frontier companies. They had a camp at Service City. And I told them since they were flying up videotapes, it would be quite a saving if they put an earth station in. They knew about the earth stations that I had put in throughout the Pet-4 program, so they asked me to get a figure on it. did. They said, "We'll put it in." So we installed the first satellite earth station for video at Service City. Now every camp up there has an earth station for video. Over in the Pet-4 project we used the earth station both for video and for two-way telephones.

BARTON: So how many channels does that get for video?

PARSONS: Twenty-four, some of which now are scrambled.

BARTON: So the project you are now working on for this island development will have a similar installation or will it be graded from that?

PARSONS: When the Frontier companies took the bid for building these buildings, one main question was who would supervise or approve the telephone, p.a. and the video systems in the buildings. It was announced at the bid conference that I would be the engineer and they would refer the problems to me. At the next bid conference, they asked me to go to Pasadena with them to meet with the Ralph M. PARSONS: Company, the engineers and designers. And they asked if I was going to see that the system was properly installed. I committed myself that I would. They asked me, "Well, what's the experience?" I said, "As far as I know, I have been installing cable systems longer than any other man alive." And sat down. That was the last question. They gave us the contract.

BARTON: So are you adding any new twists to the system?

PARSONS: No, this is strictly routine. I reviewed the plans, accepted them, and we subcontracted the contract, not even doing it with our own people.

BARTON: What do you foresee in this kind of installation as a technological breakthrough that's going to require you to go back and rethink the kinds of systems you are now working with? What's bound to hit next?

PARSONS: Well, I won't be involved in any parts. They will keep on making their mistakes and ultimately they solve them. They have other people perfectly able to do it. I won't be a bit critical of them. They have to learn, and they will learn. And there's a whole new breed of technicians and engineers coming along. They will make the same mistakes that we made. They'll solve them the same way.

End of Tape 3, Side B

BARTON: I see we begin around 1926 in your resume, and there are some childhood years missing. I wonder if you could tell us a little bit about your family, your childhood, your brothers and sisters. What's your recollections of your family?

PARSONS: Dad was working as a railroad section hand when I was born, and we moved to Hillsboro, Oregon. He was working on the railroad there as a section foreman, and that's where my first brother was born. Then we moved to Mayberry, Oregon, and Dad was section foreman on the Inter-Urban Line. It was a steam line then that went to Bull Run, east of Portland. My sister Mae was born there. And then we moved to Springdale, Oregon. My youngest brother and my sister were born there. Dad bought a garage and we lived next door to the garage.

BARTON: What did he do in this garage? Was that his new occupation?

PARSONS: Yes, it was a new occupation. He had taught himself to be a mechanic. In his early years, he had been a steamboat engineer up on Lake Chelan, Washington.

BARTON: So your dad was handy?

PARSONS: Very mechanically inclined, yes.

BARTON: So you come by that honestly.

PARSONS: Yes.

BARTON: What do you recall about your mother?

PARSONS: She was a wonderful woman. Hard-working.

BARTON: And where was she from originally?

PARSONS: Dad, I think, was from Kansas and she was from Ohio.

BARTON: What was her maiden name?

PARSONS: Gosset. Her dad was a Charlie Gosset. He was section foreman, I think, most of his life and blacksmith, mechanic.

BARTON: Where are your brothers and sisters today?

PARSONS: Both of my brothers are dead. The sister who married a Navy commander, has retired with him at Port Orchard, Washington. And my other sister, now widowed, lives in Portland, Oregon.

BARTON: So your family, including you, tended to stay on the west coast?

PARSONS: Very definitely.

BARTON: You mentioned a little about this in a previous tape. Do you remember any projects you were involved in with your father? Did your father ask you to help in some of the mechanical work he was doing? I'm trying to understand how you picked up the knowledge of mechanics that you took into your first jobs.

PARSONS: I can go back further than that. When I was in about third or fourth grade, we took a railroad car to Gresham once a month to shop. And I saw a toy, a little electric engine. Had a little coil in it. Was made to look a lot like a little steam engine, a single-cylinder steam engine that you see now. But it was electric coil. I saw that and I bugged my mother until she finally bought it for me. We went back to Springdale after the trip, and I remember mixing cement to make a little pond. I rigged this up as a little donkey or winch to pull sticks out of that pond as a toy.

BARTON: What kind of jobs did you have as teenager?

PARSONS: Dad was section foreman and I think I was nine years old when he hired me. The company paid me a dollar a day to go with the section crew and pack water for them.

BARTON: Was that hard work?

PARSONS: He made a sling that fit over my shoulders and I could carry two buckets a trip. And let me tell you, section people could drink a lot of water.

BARTON: That wasn't a job that took advantage of your brain power.

PARSONS: No, I don't think so. (laughs) I did learn a lot about speeders and cars. Dad had a Model T by that time.

BARTON: Did you work on that car?

PARSONS: I even got my head cut open a couple of times when the thing backfired when we tried to crank it.

BARTON: Anything else that you recall that's significant before you had that job at Bridal Veil? Before we go to that, is there anything in that period between your growing up?

PARSONS: In the garage, of course, we pumped gas, but my oldest brother and I, would rush to fill up the radiators and do the little chores including pumping gas. This was the day of the Stanley Steamers. There were a couple other makes besides Stanley. And they took a tremendous amount of water. We had a pitcher pump and had to pump water with it. We would get some pretty good tips. And I saved that money always to buy electronics parts.

BARTON: That's when you started building radios and things?

PARSONS: Yes. I had to have the first crystal sets. Played with them. There was one low-powered broadcast station in Portland. I could pick it up on a crystal set.

BARTON: How did you come to get the job as chief engineer at Bridal Veil? That was in '26, I think.

PARSONS: I was working for an electrical contractor who had a contract with AT&T to maintain the long distance lines from Portland to Hood River, a distance of about fifty miles. And he also owned the local Magneto telephone exchange. When we got a service call to trouble shoot these lines, which was frequently, he would trouble shoot them if he were available. If not, it was my job. And I remember some rather risky deals in ice storms. Climbing poles and repairing lines. AT&T put in two lines. These were open-wire lines in those days to Gresham. One line worked fine. Phantom across the two lines worked fine. But one line would not ring through one way. The construction crew, which I was not a part of fooled around. They worked for about a month trying to find the trouble. And Vern, the owner of the company, was called after the construction crews left. AT&T had adopted a policy. When they had a particularly troublesome line, they would send one man, and give him one day to find the trouble. Then they'd send a different man the next day, and so forth. They figured someone would solve the trouble. I remember that Vern called after he had worked all day and late into the evening.

The next day they called for me. The test set that AT&T supplied for the Magneto ringing was a broken-ring type deal. It didn't have a short indicator in it. I took the local telephone set, which I was not supposed to do. I was supposed to use the Bell set for testing. I spent half the day on a pole with the test board while they were testing one line, measuring. In those days the measurements were all DC on the lines. They didn't have an AC-type test. They would get on one line and I would splice it through and they would test. They'd tell me what they tested. Both lines tested the same. When they have one line that they were on, that meant that I was disconnecting the other line. I got my test set and hooked onto it. I found out that one line, 16 cycle, showed short, that was the ringing voltage. And it would indicate in at the test board. So I told them about this and got quite a lot of argument out of the test board. I was getting tired on this pole anyway. I said, "If you let me go on and trouble shoot it toward Gresham, I won't charge you for either the time or the mileage." They hesitated a little bit. "Well, go to the Fairview junction. We'll test there again. So, okay, that was half way. I went to Fairview junction.

You always had to put our come alongs and cut the wire and test these. So there. They tested the same way. So they told me to go on to the Gresham exchange, and I went there. I opened the leads to the repeating coil. They had to have a repeating coil because they had a phantom on the circuit.

BARTON: What do you mean by phantom?

PARSONS: It's where you use four wires, two pair, to get a third circuit. It was a way of multiplexing in those days. You took two phantom circuits and you got what they called a ghost circuit. This is going back in the history of the telephone industry. So I called and asked permission to rewire the circuit to where I put the repeating coil in the opposite circuit. Exchanged the two repeating coils to the other circuit and it showed up and was in the repeating coil. There was not a spare repeating coil, of course, there. They replaced the repeating coil, but that called attention to AT&T to me in trouble shooting. It was pure luck because I was using a test set that I wasn't supposed to be using on their circuits, instead of their regular test set. But they sent me on another job up near Hood River, another trouble shooting job. I didn't get back in time to change the coil. They sent a man up from Portland to change the coil. But they invited me into the test board and I was offered the chance to go to the new dial switching technical school. That opened the door for me to the telephone industry.

BARTON: And you were with them for ten years, is that right?

PARSONS: No. Bridal Veil Timber Company had their own PBX and they appealed to Bell for help. Bell sent me out to find the trouble. I worked about four months getting the phone system proper. They had some motors and electrical troubles. I repaired those and they made me chief electrician and directly chief engineer. I was 19 years old. I wasn't gray-haired then, so they didn't know how old I was.

BARTON: After you worked with Bridal Veil Timber, I believe you were a sales engineer for Harris Ice Machine Works.

PARSONS: Yes. I spent awhile in southern California, San Diego, before I went to work with Harris. Did radio/appliance repair in a little store in east San Diego. Then I was asked to go over to the Imperial Valley. Ended up working for Smith Electric. They had a contract to put in a border patrol radio network, the first two-way radio network, and they did the state police radio work, too. So I supervised that work until the heat got too unbearable and then I came back to Portland. Went to work first as an installation engineer and then sales engineer.

BARTON: Then you moved on to Dimick Parsons Company. How did that come about?

PARSONS: As sales engineer, I covered the whole west coast selling larger cold storage plants, fish freezing plants, locker plants, and so forth. I would design them and sell them. And Dimick owned a wholesale supply store in Portland.

BARTON: What was his full name?

PARSONS: Jerry Dimick. We decided to team up when the tuna showed up on the northwest coast and we realized that there was going to be a lot of business. Big plants being planned. So I resigned as sales engineer for Harris and formed Dimick and Parsons Company. And we were the Harris representatives. In other words, it was contracting in our own names with Harris supplying the manufacturing and the equipment.

BARTON: Was this Harris by any chance a company that eventually evolved into Harris Intertype later on?

PARSONS: No. The Harris had developed a line of ammonia compressors and large refrigeration machinery. It was a one-man company. Harris was an engineer who could take the old 1,OOO-horsepower steam engines, and convert them to ammonia compressors.

BARTON: Where does the domestic blue cheese story fit in? Which one of these jobs?

PARSONS: One of my customers on the west coast was the Langlois Cheese Company. It was located in Langlois, south of Bandon on the coast of Oregon. There was quite a number of cheese companies, including Tillamook Cheese Company, up and down the coast. And Hans Hanson was the owner of the Langlois Cheese Company. A man by the name of Thompson owned the Bandon Fish Company. They were somewhat associated. I would always know and recognize my customers. But one day Hans Hansen, owner of Langlois Cheese, walked into my office in Astoria and started talking about Roquefort cheese. I couldn't place him. Finally I had to ask him where he was from. He told me, Langlois. Well, that rang a bell; he was just out of place. Because of the war, Roquefort cheese was no longer available and he hoped to develop a Roquefort cheese out of what would be known as Tillamook cheese. I explained the conditions as he knew them. I made an agreement that we would build a pilot plant, run it for one year, and then I would design a master plant for him. This was agreed.

So I took off and flew down to Langlois the next day. He agreed to keep a field right behind the cheese plant mowed so I could land my plane. Went ahead and built the pilot plant. First I flew down there at least once a week. Then it got down to a couple of times a month and we would check the process of the cheese. They made it in five-pound blocks and used a standard cream cheese formula. He knew that the University of Wisconsin was producing the culture of this blue mold cheese and he got it in sealed quart cans. Cans just about like those you get oil for a car now. And he made a press with long needles that just fit these five-pound blocks of cheese. You'd put this can on top of the press and these long needles would go down in the cheese. The culture was inserted into the cheese. Then the blocks were put up on racks and the cheese would sweat. They would have to be taken off the rack every day, washed in salt water, and placed back on the rack.

When the first batch came out of the pilot plant, we took a block of what was called Roquefort to a little tavern down the road. I had never tasted strong cheese, Limburger and stuff like that, but I had never eaten any strong cheese. And this Roquefort tasted pretty strong to me. And I sat there drinking 2 percent beer, and found I developed a fond taste for blue cheese. I still have it.

Might put a sequel to that. When Grace and I were married, I took her down the west coast to show her this blue mold cheese. We drove down this time to enjoy the coast and Hans loaded up that car with probably a hundred pounds of blue mold cheese. We took it home and put it in our freezer. He brought blue mold cheese for a year.

BARTON: Are they still making it?

PARSONS: The plant was bought out by Kraft Cheese Company after I came to Alaska. After the war, they were sued by the Blue Mold Cheese Company in France, the Roquefort company. So they changed the name to Blue Mold Cheese, Langlois' Blue Mold Cheese. It's on the market.

BARTON: After that period begins a very significant period for people interested in your history with broadcasting, and that is as manager as Astoria Broadcasting. That, of course, includes the period in which you developed cable. I wonder if you could represent the high points of that '42 to '53 period.

PARSONS: During my refrigeration business with Dimick, the United States got into the war. The building of cold storage plants and processing plants was not permissible. Equipment wasn't available or anything. So I went back to work for Harris Ice, moved back to Portland. And Harris Ice Machine Works had been taken over by the Navy to make valves and fittings, specialty stuff for outfitting the baby flattops. I worked with them. Completed some of the cold storage work that was theoretically not permitted once we entered the war. While I was with Harris Ice, I worked nights and Sundays in the broadcast station in Portland. I had a first-class phone license and technicians were hard to come by. So besides holding down the job as superintendent for Harris Ice, I was also doing broadcasting.

I heard that the Astoria broadcast station had petitioned the FCC to shut down because they were losing money, but they wanted to retain their license until after the war. I went down to investigate it. It was owned by the newspaper. They decided that being in the broadcast business was not a viable business at this time. They wanted to be able to resume it later. So I made them an offer. Passed the word out around town. I was well known in town from my refrigeration business. The town wanted to keep the radio on because distant stations were not available to them. So two weeks later they said they would sell the station to me. I purchased it. Moved back to Astoria, and I was broadcasting when the war ended.

BARTON: That period was very busy for you. I know you consulted for other broadcast stations during that period. Can you summarize some of that other activity, up to the development of cable?

PARSONS: The broadcast station was losing money. Within thirty days I got it back in the black with special programs emphasizing primarily news coverage. I equipped a vehicle with a transmitter. Wherever there was news, the vehicle was there, too. And Astoria did make news. Besides the newscasts I broadcast nightly from each of the two night clubs in town. This was a military town by this time, and the commander at Tongue Point managed to get well-known musicians as draftees. It was his hobby. So he developed an outstanding orchestra. And after he had the orchestra, he had to have a use for it. So they'd provide a couple of broadcasts a week of excellent music. Then I developed a man-on-the-street program. With all of these innovations, the station became profitable.

BARTON: As far as you know, was that the first man-on-the-street set up?

PARSONS: As far as I know, it was, yes.

BARTON: About what year was that? Can you recall when you first started to do that man-on-the-street business? This is where you used the red wagon to carry ...

PARSONS: ... to carry the equipment. I think it's in one of those newspaper stories. I'm pretty sure it is.

BARTON: During this period you began to work on cable after Grace's insistence?

PARSONS: I was still operating the cable and I re-established the refrigeration business after the war. Leonard Washburn, who had been my assistant engineer in the saw mills, needed a job so we re-established the refrigeration business. I was still in that and the broadcasting long before I started developing the cable business. I also managed the airport for the Port Commission for a couple of years until we got it profitable.

BARTON: At what period did you begin to manufacture electronic components? That is, not refrigeration components but electronic broadcast or cable components? Did that begin before the cable business?

PARSONS: I had all of the fish boat maintenance there for years. When I was in business in Astoria, I operated that under the radio and electronics company and we sold transmitters for fish boats, depth finders. And I had quite a repair shop including a number of technicians working for me.

BARTON: So even at that point you were in the business of designing and putting together specialized equipment for specialized needs?

PARSONS: That's right, yes.

BARTON: Well, we've pretty much covered the cable story in a previous tape. Is there anything, on second thought, that we've left out of that discussion that we might drop in on the cable?

PARSONS: No, as a broadcast station manager/owner, I was very much interested in getting into television broadcasting. And I did apply to the FCC for an experimental TV broadcast station. I designed and built the station.

BARTON: Do you remember any of the details of that design such as power or proposed frequency? Any of that?

PARSONS: Well, I remember it had two 8O7s in the output. The capability of around 50 watts of video.

BARTON: What did you see that television station carrying? What kind of programming that would service the needs of that area?

PARSONS: I never got up to that point because I was rejected for the license. The FCC took the attitude that I didn't prove it experimental enough, that I was using the experimental license to go into the commercial broadcasting business.

End of Tape 4, Side A

BARTON: We are up to the point where you came to Alaska and the major component is your being assigned as assistant to the president of Wien Alaska Airlines and you're also director of engineering. Could you tell us about that period? The major highlights of that period as you recall them, '53 through '68.

PARSONS: Well, I ended up in Circle Hot Springs. Got my health back. Found out that there was very, very little communications within Alaska. If you wanted to make a phone call to the "lower 48", you lined up at the ACS office, waited four to twelve hours until it was your turn to talk. When you did succeed in getting a circuit, at least half the time you couldn't hear the other person or they couldn't hear you. I realized there was a real opportunity to do something about it, and I rigged up a short wave transmitter with my ham station. I could talk easily to the "lower 48" on it. Eighty meters talked through good. So there was no reason why communications shouldn't be developed in Alaska. So I saw a challenge.

I approached Wien Airlines. Yes, they desperately would like to have some communications but they couldn't afford it. So I made a deal. If they would buy the gas for my airplane, I would fly around the state and set up communications for them. And I did. I built a network including almost a hundred stations.

BARTON: Could you describe the basic components of those stations?

PARSONS: Because I had been building beacons and doing communications for West Coast Airlines out of Astoria, I was familiar with the law stating that a subsidized airline was entitled to request use on a use permit of surplus FAA or government equipment. And getting equipment was not too much of a problem. All I had to do was request it. The FAA, it was the CAA then, was anxious to get communications for safety purposes for the airlines. So I was able to get ample equipment. It was just a matter of modifying it and adapting it to the requirements. I got the best of equipment and installed it properly. It was a life-line to the Arctic.

BARTON: So if you were a pilot for Wien's, how would you use this system? Just how did it function? How did the pilots of Wien's use this system on a normal day? Could you explain how it worked in conjunction with their job?

PARSONS: According to regulations, the scheduled airline is supposed to file a flight plan with the FAA wherever it flies. And this was totally impossible. How would a plane fly at Point Barrow, file a flight plan with the FAA, when the closest FAA station was Fairbanks. So the first requirement was to have an air-to-ground system and then a point-to-point system. And that's what we developed. We had enough stations so that airplanes flying down from Barrow, for instance, or from Kotzebue or Nome, were always in contact with a station.

BARTON: Is there a significant difference between the system you put in and the ones used today for aviation in Alaska?

PARSONS: None.

BARTON: Are elements of your system still being used?

PARSONS: Oh, yes.

BARTON: So your association with Wien Airlines concluded when--'68 roughly? That's what's listed on your resume.

PARSONS: Yes.

BARTON: What happened to Wien Airlines at that point? Did you leave them before they were sold?

PARSONS: Wien and Northern Consolidated decided to consolidate. I couldn't see the consolidation absorbing the different top level deals. And I had exceeded my normal time in one occupation anyway. So as an airline official, I decided that it was time to resign and go into other activities. Communications was a natural because I already was in it. The network then belonged to Wien Airlines. Then following the resignation from Wien's, I took the job as sales manager for Northern Radio Company in Seattle. As the sales manager and field engineer I made five trips to Vietnam and after completing those assignments, I came back to Fairbanks.

BARTON: Could you say just a few words about the nature of your work in Vietnam and what kind of installations you were making there?

PARSONS: I was first asked to go to Vietnam by Jack Bullick of BNR Tug and Barge, BNA unit of the Calley Companies, Calley Transportation. They had a contract for off-loading the ships with barges and putting the war supplies on the beaches of Vietnam and up the rivers. I had turned them down. Then after I lost my wife, I decided that was the best thing to do. So I went over to Vietnam for them. Contacts I made over there, experiences I gained, why, MSTS, Air America, Morrison-Canetson, Page Electronics. I did work for all of these companies. The MSTS, the Military Sea Transport, and Air America were for the government. Made a total of five trips, up to three months each over a two to three year period.

BARTON: Now, just so we don't lose this in the chronology, we've talked about this in some detail, but exactly or roughly when did you develop the polar flight communications systems?

PARSONS: That was long before I went to Vietnam.

BARTON: You were still with Wien's?

PARSONS: Yes. I was in the first year with Wien's. I developed a high-power radio station at Point Barrow as a center of communications for the Arctic. And when SAS came to us, I recommended that we up-grade that station. We were already handling the Navy communications to the ice islands. They have five ice islands out there, so we had communications clear to the North Pole during the Navy's exploration of the Arctic. It was just natural to add the additional frequencies necessary for the international flights.

BARTON: Given the significance of that development, it was really relatively cheap, wasn't it?

PARSONS: Because of what we had. We had a full-fledged, high-power station there under Wien's so we just added some more transmitters and antennas. I developed a unique antenna there that was directional on HF. We could throw the full power directly toward the North Pole or by throwing a switch which reversed relays, it would throw the whole signal directly toward Anchorage. So we would pick up the polar flights, report every thirty minutes while flying across the pole and relay the information to the flight center in Anchorage, directly from Barrow. We didn't have to relay from Fairbanks at all.

BARTON: So included in the system as we've mentioned in the previous tape were the Eskimo girl operators. Who paid their salary?

PARSONS: They were on the Wien's payroll. We were reimbursed by Air, Inc., which is the organization of international airlines.

BARTON: Well, let's move to the period during which you owned Communications Supply, Inc.

PARSONS: When Wien's went out of the communications business for the public in the Arctic, it left a big void. When they merged with Northern Consolidated, the management no longer wanted to be in the public communications business. So they proposed to shut down their network except for the aeronautical sections. And at that time, I set up my own station and transferred all the public licenses from Wien over to myself and supplied all of the communications for the oil explorations and so forth from then on.

BARTON: It was during this period that you established close work in relationship with Max Brewer?

PARSONS: It was in the early Wien's days, Max Brewer helped set up the ice islands and the exploration of the Arctic for the Navy. Later he was with the USGS. I was handling communications for him back about 1956. Most of the time since I'd been in Alaska, since '53.

BARTON: So you'd worked with Max Brewer for quite a period by that time. You established Communications Supply and you continued to work with him.

PARSONS: Yes. I established Communications Supply while I was working for Wien's in order to buy transmitters wholesale. It took an agency for radios, both for our aircraft and for the ground stations.

BARTON: Could you give us an example of the kind of projects you were involved in when you were supplying telephone patches for oil exploration? What was it?

PARSONS: We had a high-power station and we had multiple frequencies. You'll see in the newspaper clippings the stories of when we got higher power, 1,OOO watts, and extra frequencies and got a statewide emergency frequency. People could go on and we monitored this emergency frequency and it was a full-fledged commercial station. We connected directly to the phone lines, offered service to the general public, and, of course, we were the only station doing that.

BARTON: I wonder if you could review the establishment of the public radio station at Barrow.

PARSONS: All the politics involved?

BARTON: Yes, as much as you think is pertinent here.

PARSONS: The Alaska legislature set up funding for educational broadcast stations around the state. Barrow was included. The director of the public broadcast station in Bethel was appointed administrator of this program. He allocated the money to the different towns that didn't have broadcast stations as directed by the legislature. Each village was suppose to appoint a board of directors to administer and build a radio station. Villages such as Kotzebue, Sitka, and Kodiak and other areas in the state.

With part of the money assigned to Barrow, the natives bought a house. They thought they'd have to get a manager, and the first thing they'd have to have was housing and housing was in short supply. The director of educational broadcasting took exception and withdrew further funding for the Barrow station. The natives at Barrow then approached me to see what I could do about getting that money returned. I was the only radio-minded person they'd had any experience with, so it was fairly natural that they would come to me. I was aware that the two-way communications station that the FAA had built at Barrow and tried to run remote from Anchorage had never been successful. And it was now surplus. So I went to the FAA. They didn't know what to do with the station, of course, and I proposed that they could donate it to public broadcasting to be converted to a broadcast station for the natives at Barrow. They agreed. The only hitch was that the station was on Navy property at Barrow, Arctic Research Lab property, actually. Max Brewer was director of the lab. It wasn't much of a problem to ask him to have the land dedicated to public broadcasting, one federal agency to another. So Max did it. We put in a 1O,OOO-watt broadcast station. The antenna wasn't high enough for the frequency, so we designed and installed a pretty elaborate top-loading system for the broadcast station. The broadcast station has been very successful.

BARTON: And it's still going?

PARSONS: Still operating, yes.

BARTON: When did you get rid of Communications Supply, Inc., and why?

PARSONS: Pet-4 contracted with me to design a communications network for the Pet-4 project.

BARTON: Pet-4 being?

PARSONS: Petroleum Reserve #4. It was a NARPL, Navy Arctic Research Laboratory before it was turned over to USGS. And I realized the magnitude of the job. I made two surveys on why the contractors could not develop the communications necessary and required for this program. When I wrote the second report, they said that the project was being turned over to me and I was to do what I had recommended. I realized that this was a big job. Too big to operate a business on the side. So I sold the whole network to the North Slope Borough because most of the area I was covering was within the Borough and they were very interested in getting into the business.

BARTON: If we look at your resume from '75 on, you were involved in consulting with Husky Oil, USGS, ITT, and so forth. Could you mention the high points of that period and bring us up to date with where you are right now?

PARSONS: We programmed when each test well would be drilled, starting date, completion date. So I drew up a chart to show when each type of communications was to be installed and put in operation.

BARTON: Let's look at that chart right now. I was going to do that later but this is an appropriate time. This is the chart that you are referring to.

PARSONS: This was for 198O. They programmed a well for Awhuna, drilling wells at Barrow gas fields, East Simpson, Eggpikpuc, Collectac, and Lisborn. And this chart shows two of those in May were stacked out to be finished the next year. Some of these wells went down as far as 2O,OOO feet and it took more than one season to do it. Most of the work in the Arctic, remote work, has to be done in the wintertime. It can't be done in the summer.

The tundra is too fragile. So as you'll see these programs where the areas are not soft tundra, could proceed through the summer, but the other areas have to be done strictly in the winter months. This one is '8Os, I think you also have an '81 program.

BARTON: Yes. But this chart which is listed in our documents as exhibit #9 allowed you to coordinate all the communications installation according to the drilling job that was being done.

PARSONS: Yes. And the percentage of installations made by the date that they were required for the proper operation of the drilling.

BARTON: Ok, what else were you involved in during that period with either Husky or USGS or ITT?

PARSONS: During the Husky, USGS operation, I devoted myself strictly to this. I was always experimenting, of course, but basically all the work was for them. Developed computer readouts by satellite. Developed the computer system for the gas well in Barrow.

BARTON: It was at this time that you developed the method of literally monitoring the drilling by television?

PARSONS: Yes. Every drill site has a computer to show the drilling people exactly what's going on down in that hole. And the computer reads the number of turns per minute that the drill is making, depth of the drill, the progress it's making, the density of the drilling mud, gas pressures that might be developed in the well. All this information is on a computer. I developed a means of compressing this information into a transmittable form and then expanded it at the Anchorage office into its original configuration on the monitor scope of the computer.

BARTON: Would you tell us the story of the time you were dropped off in the middle of nowhere to meet a cat train? It was during this general period wasn't it?

PARSONS: This was in the period when I was with Wien Airlines.

BARTON: Oh, it's earlier, but would you tell that story anyway?

PARSONS: Well, this is during the building of the DEW line about 1956 to '58, somewhere back there. The government decided to build these DEW line stations. They were very large stations. The problem of getting the supplies to the Arctic was the number one problem, and it still is at the Prudhoe Bay oil fields and others. So one of the methods of supply was to take cat trains into the Arctic up to these sites in the middle of the winter. You can't travel over the tundra in the summer. And for a short period they can use a sea-lift around Point Hope and supply the sites. So the cat trains were organized at the end of the road at Eagle. And they started across the Arctic entering Canada about fifty miles north of Eagle and continued on to places such as Great Slave Lake and the mouth of the Mackenzie.

BARTON: Can you describe what a cat train looks like? What its components are? How it moves?

PARSONS: The cat trains I used generally had two Caterpillar tractors followed by a fifty ton sled hauling a fuel tank plus a couple of other large sleds with buildings on them plus other supplies for the Arctic. And this first cat train going across that route was supported by an airplane flying between Eagle and the cat train, flying on skis. The plane disappeared, there was no radio communications. The communications radio transmitters had been installed on these cat trains but they were inoperative. They lost communications contact less than twenty miles out of Eagle.

So we organized a search to try to find the lost airplane. There were five planes of us, two men to a plane, that followed the cat trail out of Eagle. About every 2O0 miles we would set up a camp and search 100 miles each way from the camp looking for this airplane. We proceeded that way until we were up with the cat train. We called off the search. It was no use. The plane wasn't found until approximately a year later when somebody spotted it.

But the owner of the Alaska freight lines who had organized the cat train operations, Al Gezese approached me about a viable communications system for the cat trains. So my first job was this first cat train. We had the transmitter here in Fairbanks and another at Eagle in my network. We found out that seventy miles north of Norman Wells, is a hell of a long way up in the Arctic. We knew that the cat train would need propane for cooking, so we took a large bush plane and loaded it besides the transmitter and my tools. We finished the plane load with propane cylinders. And we followed the cat train's tracks up until we came to the cat train. This is winter and it's dark. But there's enough light to see cat tracks even just by starlight, moonlight.

When we found the cat train we buzzed it a few times so that they would know we were there. Then we flew onto a little lake a few miles ahead. Because of the fuel requirements and the cold, I got out with my transmitter and the propane cylinders on the lake and the airplane headed back to Norman Wells. They were going to wait for me to call when I got the transmitter working on the cat train. I don't think I ever felt so lonesome and deserted in my life as out there on that lake.

Probably the lake didn't even have a name. I worried about whether the cat train had spotted where the plane was going to land and if I could find them out there in the dark. I did have a flashlight. It must have taken at least an hour or an hour and a half before I got ready. I flashed my flashlight and got aboard the cat train. I got the transmitter working, tested, called Norman Wells, called Fairbanks. It worked fine. I stayed with the cat train three days to make sure that no bugs showed up. Then I called the ski plane to pick me up and bring me back to Fairbanks.

BARTON: Bring us up-to-date about what you've been doing since the consulting days with Husky.

PARSONS: The main construction contractor for Husky during the Pet-4 exploration was Arctic Slope/Alaska General. It was a joint venture between North Slope Natives and Alaska General Construction Company. They were supposed to pick up a telephone when they arrived at a designated site and call anywhere they wanted to. They knew the Pet-4 project was winding down. I was approached and asked if I would set up communications for them because they were getting involved in the Prudhoe Bay operations. So I agreed and I'm still doing it. The Arctic Slope/Alaska General was sold to Alaska General. Arctic Slope got out of the company. Then the parent companies bought Frontier Transportation and Frontier companies. And I'm still doing work for them. In the meantime, I've been called back by USGS to set up communications for contractors for USGS. I've done considerable work with FAA.

End of Tape 4, Side B

BARTON: Just to complete our thought that we had going, Ed. You are continuing to consult, but you are also continuing your work in experimentation and design. What are you working on now in that area?

PARSONS: I think there are some misconceptions on the behavior of the KU band satellite propagations. I have my own theories, and I'm in the process of putting up a dish to check them out. I fund my own research now, but I've been assured by both FAA and USGS that they would make surplus equipment available.

BARTON: A couple of random questions now relating to what we've talked about over the long haul. Of all the work you've done and all of the developments you've made in the field of communications, how do you rank them in terms of your own evaluation of their worth?

PARSONS: I think the Wien communications network I operated so many years saved more lives than anything else. On evaluation of personal satisfaction, I would say the transpolar communications that made possible the direct crossing of the North Pole would rate number one.

I would rate number two as the Pet-4 project. It is a thrill to be 2OO miles out in the tundra, no other person around and pick up a phone and talk anywhere in the world.

My number three in satisfaction is the development of cable television.

And I can go on down and name a dozen. Probably the development of the sky van and the Pilatus Porter bush planes. They were both built in Europe. The Pilatus Porter was built at Stodd, Switzerland, and the turbo prop was built at Bono, France, and the sky van was developed at Belfast, Ireland. They were interesting projects. That's probably as far down as we need to go.

BARTON: Don't forget your airplane heater.

PARSONS: The little airplane heater, I'm the only one that got any benefit out of it. But there's a lot of interest. I think I built three of them. I sold the airplane, so one of them left, and I have the other two.

BARTON: Another project that could have made you a millionaire but you moved on to other things.

PARSONS: There was no challenge left.

BARTON: I wonder if you could spend a few minutes telling what kind of man Max Brewer is. Just give us a quick portrait of that man because I know he's significant to a lot of your work up here.

PARSONS: I would say he's a wonderful man. He has probably done more to develop the Arctic and still has been the prime protector of the Arctic. He is very concerned that the Arctic not be destroyed. He has survived in the Arctic, been rescued in the Arctic. I think he does a wonderful job with each position he holds in the Arctic including the present one.

BARTON: I know you don't have much patience for environmentalists that just shoot their mouths off and don't do much, but you seem to have a great appreciation for Max Brewer who protects the Arctic. He uses actions instead of words. Is that a way to put that?

PARSONS: I think the environmentalists don't, as a rule, understand the Arctic. They are off on tangents, some good and some bad for the Arctic. It's possible for development to exist in the Arctic to benefit all mankind and still not destroy the ecology of the Arctic.

I can remember the controversy raised about putting the pipeline down the Anaktuvuk Pass. They forced the oil people to put it over Atigan Pass. It not only increased the cost of the pipeline, but it increased the transportation because of having to cross a higher pass than down through Anaktuvuk. They thought the caribou would be disturbed coming down through Anaktuvuk Pass. However, the caribou graze around the pipeline. They travel down the pipeline, and it has not affected wildlife one iota in the Arctic. So I think that we are paying that extra price for oil simply because of that. I think they were plain misguided.

BARTON: Ed, you spent a lot of time talking with, and in fact, living with the Eskimos. Could you tell us something about those people? Most of us have absolutely no notion of the Eskimo culture, of their habits, of their character, their skills, their relationship to the Arctic. What do you consider the central features of the Eskimo culture?

PARSONS: Number one, they don't think like the white man does. They're shrewd. They're adaptable. They make wonderful mechanics, airplane pilots. And they are just a wonderful people.

BARTON: Can you recall any specific examples of what an Eskimo did that you still think about and admire? Any incident in flying or helping you get through the natural landscape? Demonstrate some of the skills you recall them having?

PARSONS: We had an Eskimo pilot, shortly after I came up here, who was assigned to take a notable man up for a polar bear hunt. George Theo was the pilot. He's still piloting commercially. He flew this man out, probably 2OO miles north of Point Barrow out of the ice pack. Spotted a polar bear. He landed. They scanned out the bear. In fact, it was two bears. And he headed back for Point Barrow. This fellow said, "George, you're not going back towards Point Barrow." "Oh, yes, I am." "Well, look the needle on your compass still points north." George says, "I know. It don't work." This concerned me. Flying without a compass. I know compasses are not dependable in the Arctic, but they are a necessity as far as I'm concerned.

So this warranted a checkup. Being George's boss, I cornered him, told him I understood his compass wasn't working, informed him that FAA regulations prohibit the flying of an airplane without a compass. Asked him how long it had been inoperative. "Oh," he said, "about a month." I said, "Well, how do you tell your directions?" He looked very surprised. "By looking at the snow drifts." And I learned to pilot by the snow drifts because you have a prevailing wind and a very definite pattern in your snow drifts. And the Eskimos had learned that before the white man ever showed up.

BARTON: We are about to run through the documents and Ed's comments about the documents will be put in the order of the numbers for the exhibits that I read on to the tape.

Exhibit 1

Ed, here are two clippings from the Astorian Budget that refer to your television hookup--December 2 and December 11. And there is one item in particular in this news story that I wanted to ask you about. It quotes you and suggests that you are planning to work on eliminating some of the noise that's in the early signal that you got from your antenna. Let me read this, this is from exhibit 1, December 11, 1948.

"Parsons picked up the pictures broadcast by the station KRSC-TV, the Seattle television station, and showed them clearly on the screen of his television receiving set. He said he expects to improve the reception of both pictures and sound tremendously by screening out interference from automobiles, adding machines, neon signs and other sources that are found in the building below and on adjacent commercial street. 'This is one of the poorest locations in town for television reception,' Parsons said, 'because of this interference.'"

And Ed, the question I want to ask you that relates to this news story is how did you eliminate this interference?

PARSONS: Found a better signal up under a highway bridge.

BARTON: Using the same antenna?

PARSONS: I designed a new, more efficient antenna.

BARTON: And found a different signal location.

PARSONS: Yes.

BARTON: And that did it?

PARSONS: It was a continuous process of improving antennas and amplifier efficiencies and everything else. It wasn't one simple little job. I had acceptable pictures and pictures that people would pay for, but it wasn't good enough to suit me.

BARTON: A couple of names are mentioned in this article that I don't recall your talking much about. "Stan Daniels and John Langum of Alladin Electric Company continue to experiment with television receivers the company recently bought and they hope to demonstrate acceptable reception soon."

PARSONS: There was an appliance store at the west end of town that felt they were being let out and they did try and didn't succeed in getting satisfactory reception. In fact, I don't think they got any reception. They are two other radiomen in town with another appliance dealer.

BARTON: And they weren't working with you at all?

PARSONS: No.

BARTON: Exhibit 2A

Has to do with the constant continuing problem of poles and pole attachments. And I want to refer to this because it developed so early in your development of cable as an issue and as you know it continued to be an issue throughout cable's history. It continues to be. And there is one clause in the contract that I find very interesting. That is in the contract with the user of the cable signal you specify that there would be no guarantee of a permanent connection if service was interrupted. I assume that's because the uncertainty about the pole connections.

PARSONS: That was before the pole agreement was signed, isn't it?

BARTON: Yes.

PARSONS: Yes, well, we weren't using the poles but the problem of guarantee, we were taking power from individuals and everyone else. There were a lot of "ifs" in those days.

BARTON: Let me correct that, Ed. This was not before you were using poles, this is a '52 document and let me read what I have in mind here. Section 5: "... that the set owner understands that radio and electronics is making use of poles owned by the Pacific Telephone and Telegraph or the Pacific Power and Light Company or both and that the continued use of such poles is in no way guaranteed, so the set owner agrees he will not make any claim or undertake any action against either of them if the service to be proved by Radio and Electronics Company is interrupted or discontinued."

So that's the section that I'm especially interested in here. And the question that I want to ask you is did that ever happen?

PARSONS: No, it never happened.

BARTON: It never happened, but this was one way of protecting yourself against those claims?

PARSONS: That's right.

BARTON: ... that you had no control over.

Exhibit 2B

Also part of Exhibit 2, which I'm calling 2B, is the installation schematic. It's not really a schematic, but a diagram of the way you installed the system.

PARSONS: It was required, what poles we wanted to get on, we had to supply a schematic of the layout.

BARTON: Including the pole numbers?

PARSONS: Yes.

BARTON: And this was standard practice?

PARSONS: Yes, and I think it is today. I don't think there's been any change.

BARTON: Exhibit 3

This is from Electrical West the article about you and TV reception.

PARSONS: There's another. It was a double-page spread and I didn't find the other one. I'll have to look for it.

BARTON: I'm interested in what these two pictures represent? A type of dipole antenna used to serve fifty or so. And then I want to know the relationship between the antenna in the top picture to this antenna. Is this a series of antennas, and is this the first master antenna and these are components?

PARSONS: This was the early type of antenna I used. Because of the nature of the signal moving over due to the vegetation on the mountains that was focusing it, the signal would vary in its intensity. I later designed this type of antenna to solve the seasonal variance. We sold a lot of these antennas.

BARTON: So is it safe to say that this is the advanced design compared to with this one.

Exhibit 4A

It's a schematic and I'd like for you to tell me what it is.

PARSONS: This is a four tube in-line amplifier on the primary frequency, incoming frequency, using a 6AK5 gold-grid tube as the low-noise amplifier.

BARTON: So this would have been associated with the earlier system?

PARSONS: This was in all the systems.

BARTON: Exhibit 4B

In listening to the tapes we've made so far, I feel I haven't asked you enough about your work with translators and if my memory is correct, I think this is a schematic of a translator.

PARSONS: No, this is actually a transmitter. It's not a translator. It has no receiving function. A translator was a receiver and a transmitter. This is transmitter only.

BARTON: Okay, so what would be the application of this particular schematic be? What would you use it for?

PARSONS: As a second half of a repeater or translator. A translator or repeater are used synonymously.

BARTON: Exhibit 5

Is a letter from Cox Cablevision and it's to you inviting you to participate in a ceremony at Coxcomb Hill, Astoria, Oregon. "Mr. Marcus Bartlett, Vice President of Cox Broadcasting Corporation, Atlanta, will present to the city a permanent monument commemorating Ed Parsons as the inventor and the city of Astoria as the birthplace of cable television. Fred Ford, President of the National Cable Television Association, Washington D.C., and former Chairman of the Federal Communications Commission will be the dedication speaker."

I use this letter as a way to ask you what you recall about that ceremony and ask you to fill in some of the details of that ceremony.

PARSONS: I got the letter. Went to Astoria for the ceremony and that History of Cable TV does have the speech and the information on the placement of the monument.

BARTON: You'd been away from Astoria for about fifteen years and then you came back for the ceremony. What was going through your head then? You were in a quite different environment. Did you feel this is something that you'd moved on from? Was it a happy occasion?

PARSONS: It was a very happy occasion. That was before I was remarried and I invited Bertha, the gal I married, and her daughter down for the ceremonies, probably to impress her.

BARTON: Did you talk with a lot of old friends?

PARSONS: Oh, yes. I was really welcomed back because there was a lot of publicity connected with the placing of the monument.

BARTON: And as part of your papers we'll actually have a copy of the actual document that recalls that dedication.

Exhibit 6A

This is a letter from you. Not a kind letter, but a letter that clearly represents your concern about how communications should be developed for the Bush and the people who are dependent on communications in the bush. It's directed to Mr. Shirley A. Debenhem of Debenhem and Snow, 511 West 4th Avenue, Anchorage, Alaska. And just reading an excerpt from the letter.

"The present approach to the bush phone program is like installing an APBX in a town with a phone for every teenager. There would be no lines available for the people who pay the bill. The present expansion as now proposed would only lead to continual degradation of the meager long lines communications we now have due to increased congestion. The money being spent by industry and government agencies in their individual communications efforts channeled into a unified program could bring good communications to the bush of Alaska."

Could you talk a little bit about this situation? What was the main problem that you were concerned with?

PARSONS: There was a proposal by RCA for providing bush phone service. I don't recall the occasion when I wrote this.

BARTON: "I'm inclined to want to speak out," if I can just quote from this maybe this will help you recall the incident. "I'm sure that the conditions of sale of the ACS to RCA will go down in history as an asinine boondoggle by eggheads in Washington perpetuated on the people of Alaska. The bush telephone deal completely ignores the legitimate needs of the people, the industry, and the government agencies and instead provides an entertainment toy for the natives which under the present concept can never be dependable for communications in any emergency."

PARSONS: It was proposed as a VHF/UHF network with repeaters throughout the state. I think I have the manual they sent out requesting bids. It was a proposal by RCA to supply the bush telephone service. ACS and other people were supplying some service but it was pretty restricted. And what was proposed was just like a country telephone with no controls on it.

BARTON: So your concern was that it wasn't a sophisticated enough, a comprehensive enough, plan to really serve the people?

PARSONS: That's right, and it was never implemented. The satellite communications using Canadian satellites was the first bold bush system that provided the needs of Alaska.

BARTON: So, it sounds like your letter had an impact.

PARSONS: I'm not sure, but had my say anyway.

BARTON: After it's all said and done, do you think the service the natives are getting is much better than what was proposed here?

PARSONS: Oh, yes. It's a real good system. And it was implemented by the state and not by RCA.

BARTON: Exhibit 7

It's a document that reads as follows. It has a picture of a polar bear and a walrus sitting on top of the world with the word Arctic underneath and the words are "Know ye that by order of the great command pilot, ruler of the frozen northland, custodian of the aurora borealis, guardian of the polar empire, Mr. L.E. Parsons, honorary royal prince on this 2Oth day of September in the year 1955 did cross the Arctic Circle venturing into the kingdom of Borealis Rex. He's entitled henceforth to all rights and recognition of a prince of the Royal Arctic Realm."

And Ed, I use this document to ask you to talk about one important element of your experience that we don't have time to go into in great detail. Unfortunately, it would make a whole book in itself, and that is your experiences as a bush pilot. I wonder if you could just recall one story from the many you can tell that represent flying in the bush and its importance to you as a communications expert. Can you think of one example of that activity?

PARSONS: Well, I think the highlight of my Dad's life was when I took him for a trip around the Arctic, the opportunities of fishing through the ice with the Eskimos, running into a blizzard at Point Lay and visiting Barrow. According to my mother, that's all he could talk about for the rest of his life.

BARTON: So you showed him a side of your activities that ...

PARSONS: Well, a sight of the world he'd heard about but never expected to see.

BARTON: Was he frightened at all or was he just ...

PARSONS: He was frightened in the-blizzard at Point Lay, yes.

BARTON: But when it was all said and done he really cherished the experience?

PARSONS: That's right.

BARTON: Exhibit 9

Is the Pet-4's schedule which we already talked about earlier this morning.

Exhibit 1O

Is an information booklet, a flyer really, about the relocatable shelters, the modules, which you developed that included the communication engineering field units, self-powered, field offices, and so forth. I wonder if you could talk briefly about your work in this area.

PARSONS: I developed portable airport control modules and sold them to the oil companies for exploration in the Arctic. They contained a radio beacon, radio teletype, power plants big enough to supply airfield lighting, living quarters for the operator. It is two modules connected together by cable. And I built and sold a lot of them throughout the Arctic, both directly and through other dealers.

BARTON: How were those delivered? How did they get to their destination?

PARSONS: They were designed to fit inside a Hercules aircraft and they could be flown in on the frozen lakes in the wintertime and then used in the summertime for geological exploration.

BARTON: You mentioned you sold a number of them. How many do you figure?

PARSONS: Oh, I would say twenty or twenty-five.

BARTON: Are they still in use?

PARSONS: Some are. I see them occasionally. Once in a while I recognize them.

BARTON: Exhibit 11

Is the last one. And it's a 1984 memo from you and I turn to it because it represents some of your recent work. And it talks about the initial communications network installed by Communications Engineering Incorporated "was a repeater network from Barrow to Prudhoe with repeater installed at Cape Simpson, Olicktalk, connecting with stations at Barrow, Lonely, and Prudhoe. The system worked fine and provided all the long-haul communications needed to the drill sites on the coastal plain. The system continued to serve throughout the program and was transferred intact to the FAA as an operating network. When the exploration moved inland beyond the reach of the coastal network, the need for a second system was apparent. To get the communications needed, the TRN network was installed. It was a superbly designed and engineered system and would have been suitable anywhere except the North Slope. To explain, the repeaters were installed in the Hyde Bridges as is common practice. They were installed in a loop configuration which is also common practice. The problem they encountered is the repeaters were logistically non-supportable. The weather is such that the ridges are almost perpetually bathed in ice fog. Helicopters and bush planes can fly up the valley under the fog or above the fog avoiding the ice and conditions. But would ice up trying to get to the repeaters."

Well, this sets up the situation and I wonder if you could talk about how you addressed that situation, how you solved this problem?

PARSONS: I relocated the repeaters, reconfigured the communications setup that originally was set up by Communications Engineering and redesigned the whole Arctic communications. They did have some communications up and down the coast, but it did not serve the purposes of the drilling and exploration program.

BARTON: So, this memo represents that point at which you began to work on the total redesign of the system?

PARSONS: Yes, that's when I was hired to redesign it and make the system work. Provide the communications that were required for the safety of people and property throughout the Pet-4 project.

BARTON: And the end result of the work represented by this memo is the ability for anybody to pick up a phone at an oil drill and communicate with anyone in the world.

PARSONS: That's right.

BARTON: If I recall in your ranking this is a significant accomplishment in your long list of accomplishments. You feel it's one of the most important.

PARSONS: Yes. Besides, as the government says, I saved a million dollars a year.

BARTON: No small achievement.

Well, that represents the exhibits and this is right at the end of our tape. And what have I not asked you that we need to know about you? I know there are ten thousand things that we could uncover, but what do you think is significant for us to conclude with?

PARSONS: I don't know of anything.

End of Tape 5, Side A

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Mike Pandzik

Mike Pandzik

Interview Date: Wednesday August 11, 1999
Interview Location: Grand Traverse City, MI
Interviewer: Liz Burke
Collection: Hauser Collection

BURKE: Welcome to The National Cable Television Center and Museum. This is The Hauser Foundation Oral and Video History Project on August 11 in the year of 1999. We're interviewing Mike Pandzik, president and founder of the National Cable Television Cooperative and we're here in lovely Grand Traverse City Resort in northern Michigan. Mike, do you want to give us a little background about how this meeting came to be here and a little bit about your organization?

PANDZIK: Well, it's hard to talk about today without talking about where we came from. The National Cable Television Cooperative is a member operated purchasing group. It's the cable industry's premier wholesale buying group and this is actually our fifteenth annual members meeting, so we trace our lineage back to the first formative meeting, which was October 17, 1984. I'll tell you how that got started. When, for those people watching who don't know a lot about the early days of the cable business, the cable business really has had several eras. It had the beginning of the business in 1947 and for the next thirty years, really not much changed. There was no satellite TV; cable operators generally served smaller towns rather than big cities, systems usually had three to five or maybe ten or eleven channels, a little later in that period maybe twenty channels but most of them weren't filled yet and the business really didn't change much in that thirty year period. But starting in '75, the winter of '75-'76, a whole new era started and that was the era of satellite distribution of programming and that was started by Home Box Office, which had been around since 1972, but they'd just been distributed terrestrially in the Northeast, namely New York State and Pennsylvania and that winter, they did a deal with GE, I'm sorry, it was RCA, to go on one of their commercial satellites; the first time any sort of private venture like this, a commercial venture, had ever been on a U.S. government satellite and that started the satellite age. Let's call it 1976, and a few months later Ted Turner started with WTCG, which later became WTBS, which we now know as the Superstation. That was a huge turning point in the business and HBO and others did contracts with cable operators, what we call an affiliation is just another form of contract, which authorized the cable operator to carry HBO in a certain way 24 hours a day and so forth for a three year period. At the end of that period, what happened was, looking back it was easy to see how it happened, at the time we didn't realize what was really going to be the effect, what happened was some larger multiple system operators, MSO's was the acronym we used, when those first three year contracts expired in the late '70's, they negotiated renewals for another three years and they included, the operators and the programmers, included the concept of volume discounts and in the early days, HBO gave operators advance volume discounts. When that round of contracts expired in the early '80's, say six years after 1976, that second round of renewals became a very important time because the volume of deep volume discounts at the wholesale level was really instilled and instigated in the business. The result was a couple of years later, say in 1982, '83, '84, the men and women who really started the U.S. cable business, what we always affectionately called "mom and pop systems", these are the families that really started the business starting in the late '40's and on through that period, they were the only ones left paying list price and it was a terrible irony and a wholly unintended consequence of all this. At that time, I'm trying to get now to the early '80's, I started to work with Home Box Office as I ran one of their sales and marketing offices, regional offices, out of Kansas City, and I was on, as many of us were in those days, we tried to get ourselves positioned as kind of the associate member of a cable TV operator association board. So I was the vendor representative of a group called the Mid-America Cable Television Association, which is headquartered in Lawrence, Kansas, and run then and now by a guy named Rob Marshall and Robbie would hold quarterly board meetings for his association and we'd all get together and have dinner and then after dinner we'd usually retire to our hotel room and play poker, actually is what we did, and we talked about what most industry people do when they get together in any industry, you talk about business and what's going on and so forth. This subject of volume discounting at the wholesale level for satellite delivered programming, particularly Home Box Office in those days because that was the biggest, most prominent programmer then, and the irony in the unintended consequences as the whole thing kind of snowballed into the little guys who were represented in that Mid-America Association were really being taken advantage of. And even though I worked for Home Box Office and you would think there would be this terrible conflict of interest and I suppose at one level there might have been, but it was always my experience that regional people – see Liz, you ask one question and you get about a two hour answer.

BURKE: That's what I wanted.

PANDZIK: I think then, as now, regional representatives of those networks, and I think it's true today too, the regional people have a deeper affinity and a deeper connection with local cable operators then do the headquarter guys in New York or LA or wherever they are and I think that's perfectly normal. I'm sure it exists in most other industries, but the regional people really had this affinity and much closer personal relationship with smaller cable operators in the Mid-West or anywhere in the country, so even though I worked for HBO and I was kind of the enemy, sort of, in one sense in this scenario, we sat around playing cards and talking about what would happen if the "Indians" ever got together and what would that group look like? Would it be volunteers; could Robbie and his wife Nancy do it part time? Would Rob's board do this? Would they need to hire somebody? Would it be a different group, the same group? All these myriad questions you think when you are going to spin off another organization and no one's ever done it before; you always wonder about all the possible combinations and how you might do it and it was decided that Robbie couldn't do it, shouldn't do it, that it needed another organization, a separate group. So they picked a name, almost before they picked anything else, and I think originally the name was the Mid-America Cable Television Cooperative, which was fine except some of us almost at the outset knew that we wanted to be bigger than just Missouri, Nebraska, Kansas and Oklahoma, so then for a few months we had this very cumbersome name, I actually have some letterhead somewhere still that says Mid-America National Cable Television Cooperative, Inc. Imagine answering the phone with that. So, a couple months after I got hired, I'll jump back a little bit in a second, but a few months after I was hired, I said, "Look, guys." What they wanted was to recognize the heritage of the Mid-America group and I fully understand that, but the name was too long so we cut to the chase and made it National Cable Television Cooperative, Incorporated. So that first meeting at Robbie's, the Mid-America's group annual convention held in Kansas City, I don't remember the hotel anymore, but it's probably near the plaza, I remember the date, it was October 17th, because I asked Robbie a year or so ago for a copy of his agenda for that meeting because he keeps everything. I keep nothing. So that was the date we trace our... and in that agenda it says, meeting, 3:00 pm, whatever, cable operators only, no vendors, organizational meeting for group purchasing and they had about twenty or thirty companies represented at that meeting from those four states. Basically about twelve of those companies over the next few weeks pitched in, basically, ten thousand dollars apiece. I think a few might have pitched in fifteen thousand, a few, maybe, five thousand, but the average was probably ten grand apiece as seed money to get this thing going and most of that, not most of it, some of that got eaten up by legal fees as is the case when you establish a corporation. Some of that got eaten up, and by the time I came into the picture - that was in October - so then in November and early December, the original board, which was drawn from those twelve companies, there were about eight guys on the board, that original board hired a law firm in Washington, Fleischman and Walsh, which is still in existence and they basically do communications, cable TV kind of law. All we really needed was a set of by-laws and an articles of incorporation, this is kind of overkill with these guys, but they incorporated the group in Washington, D.C. and then, as now, I was in the Naval Reserve and Robbie caught me out at Camp Pendleton in probably mid-January of 1985, a few months later. I think he forgot about the time zone difference; I was getting up real early and putting my boots on and stuff, ready to go out in the field and the phone rang and it was Rob Marshall. He said, "Remember that idea we always talked about of getting the guys together and figuring out a way to do this stuff and forming this co-op?" And I said, "Yes, I remember seeing a notice in your agenda a few months ago." He said, "Well, we met a couple times and we want to go ahead with it, we've got a little money together and we want you to set it up for us." So I said, "Sure." I didn't know anything about what this was going to pay or where I was going to be, or whatever. I didn't really care because I really thought it was an important thing that needed to be done and it was, frankly, probably a better gig than I had at the time. It was a long time ago, but I really did feel a real serious affinity for seeing that the right thing get done in this case because it was terribly ironic, as I said before, that the men and women that started the business, inadvertently now, years later, just about six or eight years into the satellite age, get left as the only ones paying list price and big MSOs like TCI and others in those days, they could negotiate volume discounts that were much deeper, much cheaper than what the little guy could get. So I had basically, you know, my charter was I was executive director, I had a one year employment agreement, I had basically $165,000 and as long as I could make it last to see whether this thing could go, that was basically it. I had a set of by-laws which were kind of incomplete and we added to them and revised those a few times over the years, but basically our goal is the same as it's always been, the goal of the co-op has never changed, it's to reduce the operating costs of member companies through group purchasing methods, master contracts and so forth. From the beginning, we wanted to buy cable TV networks; that was our first goal and still is our biggest piece of business and we also wanted to buy hardware and equipment and then, thirdly, we wanted to learn how to buy services like business insurance, casualty and property, inland marine, all kinds of business insurance stuff. And other services like, as we do now, marketing support and stuff like that. But programming has always been our biggest deal because you build your cable system once, you buy one tower, you buy a set of antennas, you construct it, but you buy programming every month, month after month after month. That's by far, and I know you know, today programming costs, wholesale costs, for cable TV networks is by far the biggest line item in any cable operations business plan. You spend more for programming than you do on salaries, more than taxes. It's pretty amazing. So we saw that opportunity and if we could just figure out how to do it, it was a great idea but it was a big leap from nothing to something because this had never been done before. I had been at HBO about seven years almost, I knew from my years before that in the cable business and before that, in the TV business, I knew this was not going to be an easy deal because I think many programmers sort of resented, in a way, putting TCI in the position they were in by granting them deep volume discounts. I think that the men and women with some vision could see where this was going to go over time. You give a guy a 10% discount this year, next year he wants 20 or 30 or whatever. I think everybody could see where this train was going and it was just important to us at the co-op and at the Mid-America Association to make sure that independent smaller operators were not left at the station while all this big train march down the road towards volume discounts. That's basically what we, if you want a basic background, that's how it started. A lot of people ask how we funded all this because the money, with no further income, was destined to run out. One decision I made very early on was to run this, for at least the first couple of years, out of my home instead of spending a lot of our money, limited money, on travel and office space. Office space wouldn't really be a productive expense because we're a wholesale group. We sell to members, we don't do any retail. I didn't need a fancy office, I needed a phone and a copier and that was a place to work. My kitchen table became our conference table and an old Queen Anne desk I had from my old HBO office, actually, I bought that when I left, became my desk and we bought a copier, which I think we actually still have and it still works, which is kind of amazing. But I worked out of my house for two years, maybe two and a quarter years, and then we moved into our first commercial space which was a whopping 550 square feet. That was probably 12 ½ years ago, something like that, and then about 10 ½ years ago, I hired Dave Clark, who was my third employee. My second employee... I want to digress for a second. My first full-time employee - I had a couple of part-timers, gals who would come in and work. They had kids in school, so they'd come in and work from 10-2 and stuff. I had a couple of part-time gals that summer, the summer of 1985, but in November of '85, we really had too much; if I was traveling the phone wasn't covered. I only had somebody there from 10-2; it just didn't look like we were really in business if everybody that called got an answering machine. So I hired a woman named Cathy Swaboda, who is still with us, as my secretary-assistant-Gal Friday, and Cathy worked in my living room with me and she's still with us. She's now our vice-president in charge of program billing, which is a huge job and I'll get to that a little later. But my third employee was Dave Clark. Dave came along; Dave just celebrated his tenth anniversary with us last December, so he's been with us about 10 ½ years. Like a lot of businesses that get going, one employee leads to two, leads to three, and so forth. Now we have about 37 employees full-time, but we are efficiently run in the sense we're really heavily computerized so we can grow our business pretty exponentially without adding a whole bunch of staff all the time. It's not lock step where you add another million dollars in sales and you add another ten people. We've probably doubled in size in the last two years and we've probably increased our staff by 20%. So we do pretty well along those lines. That's how the cable co-op got started. We are still basically operated the same way we've always been operated, which is a member operated for the benefit of member companies. Our members are not really individuals. When your company joined, your company was the member. We only sell to member companies; we don't sell retail, we don't sell to non-member companies. We've always been pretty picky about that. When we have an annual meeting like we just finished here in Traverse City, the only vendors and programmers we invite to come are companies we deal with, that we already have a deal with. We made that decision consciously a long time ago, so that our little tradeshow, our little tabletop tradeshow wouldn't be filled with people who were there to pitch our members about products which they would not sell through us. So we made a deal with ourselves, which was if we don't have a master contract with you, you're not invited to our annual meeting. That's always been the case. We've had a couple of bizarre cases over the years where companies who wanted access to our members but didn't want to do it through us would actually show up at our annual members meeting and kind of hang around the hotel lobby, which is pretty odd when you think of it. That doesn't happen very often, but it's happened. It even happened here, actually. But that is the heart of this deal. It's really pretty simple. It's one of those things that's simple in concept, maybe a little more complicated in execution, but we operate for the benefit of our member companies. We put together master affiliation agreements, these master contracts with programmers. The first one we wanted to do was HBO, and I'll get back to that in a second, but those master contracts that we negotiate, Frank Hughes, who's our senior VP of programming and myself – these days Frank does most of that, I usually get in towards the end – but we would go to a CNN or an ESPN or HBO or whatever and try and put together a master affiliation agreement that would meet everybody's needs. It would meet our needs as an association, it would meet the members' needs and meet the programmers' needs and those needs were sometimes the same and sometimes conflicting, but that's the nature of good negotiations. You try to put together a deal that's equally good for all the parties involved. A lot of times that works out great. Sometimes it doesn't work out so well. But that's how we operate. We started with one, actually the first contract we tried to put together was the summer of 1985, remember I started full-time on March 1st, so it took about a month to get things pulled together and then I immediately started to contact HBO in New York. Remember, I worked there so I knew all the top people and that was the first deal we wanted to do. We picked HBO for a couple of reasons. It was the biggest, most important programmer in those days. More money was sent to HBO per subscriber per month than any other programmer and so they represented the biggest opportunity to save money for our members. I probably ought to spend a second and talk about how the business works because there'll be viewers that don't have your background and mine. There's sort of a food chain. At home there is the subscriber, the individual family or person who subscribes to cable TV at retail and he or she is paying a monthly subscription fee to a local cable operator to provide that service at retail. Now the cable operator, and in the example I use here would be a company that might join the co-op, the cable operator then has to go to each – he does a couple things – he carries what we call local off-air stations, the local NBC, CBS, ABC, public TV and these days maybe the local FOX or WB guy, carries those local off-air stations and he picks those up off an antenna on his tower. Each antenna is tuned for a separate channel. He picks those up off the air and that becomes part of the offerings that he makes to his subscribers. But these days, this is a lot different than it was in those days when we had one or two satellite channels, these days we have scores of them available to us. The way our business works is that cable operator has to go then, and now, if the co-op didn't exist, he'd have to go to each of those cable networks individually: CNN, HBO, ESPN, ShowTime, whatever, C-SPAN, you pick them. Each cable operator, if the co-op weren't in business, each cable operator has to go to each of those networks and negotiate and execute a separate affiliation agreement for each channel between that network and his cable company. Well, you know, you go back fifteen or twenty years and there's only one or two channels, that's a fairly manageable proposition, even though the contracts in those days were pretty long and hard to read. When you only had to do a couple of them it was one thing. Of course, today, we operate about 95 individual master affiliation agreements, which is a huge burden. Imagine if you're this little cable operator by yourself today, just the contract negotiation and contract administration part is such a challenge. Most of our members are little companies; they don't have an attorney on staff, they don't have anybody that's really an experienced reader/negotiator type guy so if we did nothing else but solve that problem, most of our members would be satisfied. The fact that we solve that plus bring them savings is what really seals the deal. The first deal we wanted to do was with Home Box Office. I'm going to get back now to the summer of 1985. The board and I, the board at that time was about six or seven of us, of them and me, we decided HBO would be our first target and again, I worked for that company fairly recently and I knew the senior players and stuff and that was the one where the biggest opportunity was because in those days, volume discounting started as low, and I'm not just revealing the HBO wholesale contract arrangements, this is fairly common throughout the industry, volume discounting started with as little as five or ten thousand subscribers. So if your company had ten thousand HBO subscribers, you would get a cheaper price than me with five thousand HBO subs. I want to go back a second, I'm sorry; I left out the part about how this business works. The way it works then and today, not counting the local off-air channels, cable operators pay a certain amount of money per month per subscriber to each network. That is what I refer to as a wholesale rate and that can range from nothing, for a very few channels like some of the religious channels that are free or virtually free, to a couple of pennies per subscriber per month, to ESPN is the most expensive basic network, that is an ad supported network, to HBO. HBO is a very, it's probably the single most expensive channel per subscriber per month that a cable operator buys. I'm still amazed sometimes when I run into a cable subscriber on an airplane we'll talk about what we do for a living and he'll say, "Well, I didn't think they had to pay for that." I just kind of wonder how you could get this far, but I guess there are people that think cable operators get this stuff for free and just charge a lot of money from them but then just keep it all, which is certainly not the case. So, I'll get back now to the HBO deal. That's the one we wanted to do because that's the one that had the biggest potential to really make an impact. I called some of the players, the principles, at HBO at that time. Bill Hooks was the guy who was the head of their affiliate relations department, dealing between HBO and cable operators. Ironically, he was the guy who hired me at HBO seven years earlier, now he's the guy I'm trying to negotiate this master contract with. So we had some conversations by phone and we decided a couple of board members and myself would go to New York and sit with Bill and talk about what we wanted to do. The premise of our visit, of our first contacts, was I'd developed this approach and the approach was that I was going to ask every cable network, every satellite network, I was going to ask them to identify for us the standards, this is kind of engrave on the inside of my eyelids, identify for us the standards upon which they hold big MSOs in return for which they give them deep volume discounts and give us a chance to meet those same standards. If we can meet them in a reasonable and business like fashion, we want that same volume discount treatment and if we can't, we will leave them alone. I probably said it in fewer words than in those days, but that was basically what we were after. So I said that to Bill at HBO. I said, "Tell us what hoops we have to jump through that are the same hoops that a big MSO of our combined size would have to meet and give us a chance to show you how we can meet it." So we, as you can imagine, they identified some standards, some of which were easy to meet, some of which were difficult, a few which were basically impossible to meet. I don't just ping on HBO in this point, because that wouldn't be fair. Some of the earlier deals we did or tried to do with networks that we weren't successful with in the first few years, the first number of years, their representative would basically – here's the tactical part of the negotiations – I would present what I just described and they would come back and say, well, you need to do x, y, and z. Well, x might be fairly easy, like collect subscriber data. Y might be collect the money. Z might be something really hard, like provide joint and several liabilities for payment, which for an organization like ours was basically impossible. We had, for the non-attorneys, like me, in the crowd, listening, joint and several liabilities for debt is sort of like co-signing for somebody's car loan, only it's sort of the corporate equivalent of that. It means that five or six of us, jointly and severally, make ourselves liable for debts, say we borrow a million dollars from the bank and then we go into business with this money and then it fails, we are all equally liable for the repayment of that debt by ourselves, each of us individually. In our history, we've had some publicly held companies as members. No board of directors is ever going to let my corporation be responsible for your corporation's debts. We also often had the situation of bank loans and loans from insurance companies, not to the co-op but to our members, which had loan covenants which said, here's your line of credit, you agree not to borrow anymore without letting us know and permission and all that stuff, so for a programmer to look to my group, The Cable TV Co-op, and say well, we'll do this and we'll do this, but you must do this and the "this" they're talking about is sort of corporately, business-wise, the same thing as saying, well, I'll do business with you, just show me that you can jump flat-footed from the ground to the roof of this two story building. That's all you need to do, no problem, very simple. You do that and we'll do business. They put the hurdle so high, on purpose. And again, I'm not just picking on HBO, although they are not blameless in this area. There were others who did the same kind of tactic to us. So one of the things we had to do was go back to Kansas and figure out how to jump flat-footed to the top of the two story building. What I mean by that is, if they wanted joint and several liability, we went out and said, okay, what you really want is not that; what you really want is you want to be paid the full amount that somebody owes you each month in the full amount at the right time, promptly and in full. You want prompt and complete payment. That's a better way to say it.

BREAK IN VIDEO TAPE

BURKE: We were talking about the early years of the National Cable Television Cooperative and in those years you were starting to negotiate big contracts, including attempting to negotiate with your former employer, HBO, and other programmers. You had to have a good idea of what programmers wanted and I want to get more into that and then later on talk about how you grew the members and learned what the wanted.

PANDZIK: Okay. Well, it's easy now to look back with some hindsight and find out what the programmers wanted. What the programmers wanted was for us to fail, basically. They had a vested interest, and I fully understand it, for the co-op not to succeed. I don't agree with it and I didn't then, but I understood it then and I understand it now. They'd had so much trouble with a few large MSOs who were negotiating ever deeper and deeper volume discounts; the last thing these programmers wanted to do was set up another one by themselves that didn't exist before, which would have been the co-op. If every cable network had just willy nilly did a deal with us with deep volume discounts and whatever, think of what that would have meant. They would have given up a lot of margin because they would have been giving us a discount that our members had not gotten before and they would have been giving up a lot of money that was on the table for them and now they were going to give it back to co-op members. They knew that the more successful we got, the bigger we'd get and the deeper the volume discounts... it's kind of circular in a sense. But of course, that's exactly what we wanted. If we had a million subscribers, we wanted the same prices, terms and conditions that an MSO with a million subs would get and I really was not inclined to take anything less than that. If there's one attribute that I have, and I think it's true throughout our board as well, is we don't quit. It may take awhile, but we never quit. I think once some of the programmers realized that paying lip service to us and empathizing with us and whatever thinking that we would go away, and once they realized that was never going to happen I think it's one of the things that sort of turned the tide a little bit. I want to go back to the joint and several liability issue because that is a key component that interestingly enough still rears its ugly little head today, in 1999. I described that as being like saying, well, I'll do this for you, just jump on top of this building flat-footed. It was a requirement that a few networks, a few networks, laid on the table for us, and it was just a few, that was easy for me to discern and my board to discern it for what it was, which was a bad faith negotiation ploy, an issue that they knew we couldn't do. We kind of re-trenched and thought about this a little bit and said, "Okay. I'm hearing joint and several, but I'm thinking prompt and complete payment every month." So in our view, what's another way that we could give them the prompt and complete payment without going over the joint and several. So we thought, well, you know, like a lot of deals, if you put some money in escrow or somehow show the guy you're trying to do this with that you've got resources and so forth. So we came up with a plan we called the escrow plan. It wasn't legally escrow and I'll get to that in a second, but what we did was we went to the cable operators and we said, "We're pretty sure we can get a deal if you're willing to put some money on deposit with us, the co-op, in Kansas City equal to forty-five days worth of service charges for your company for that particular service." We'll just do some math. Let's say this member had a thousand subscribers and they all watched CNN (I'll just make up some numbers) and CNN cost a dime per subscriber per month. That's a hundred dollars a month just for CNN. So I said to the members, "If you'll put an amount equal to forty-five days worth of your monthly service charges, which would be $150, it would be 1 ½ times the hundred dollars to get the forty-five days worth, if you'll put that amount on deposit with us, we'll keep it in a bank account in Kansas City. The co-op will keep the interest off of that account and then as your business grows and you add more subscribers and so forth, on occasion we'll bill you for the excess so that we always stay at about forty-five days." As you can imagine over a period of time, not only was it a successful approach to programmers because now we had something to offer them. We said, "Well, we can provide some liability for payment." Now, it's not cosmic universal liability for payment. We're not guaranteeing we'll pay this guy's bill to the end of the contract or to the end of time or whatever, but we said we'd do it for thirty days, a rolling thirty days. Remember, we were keeping forty-five days worth of payments, so our plan between the programmer and the member was, the member gives us forty-five days worth of service charges for that service for his company, we deposit it, we keep the interest and we operate the co-op largely on that interest for some years and then if this member ever stiffs us, and in effect stiffs the programmer by refusing to pay, we would give thirty days of that forty-five day service charge to the programmer as we notified the programmer that this guy wasn't paying his obligation, and we would retain the other fifteen days within the co-op as liquidated damages as a penalty to this guy. We had a pretty hard and fast set of rules that you can't do that and if you do it once, we'll give you one more chance, but you need to put in new escrow, a new initiation fee, and I'll talk about the initiation fee in a minute, remind me if I forget. We were pretty tough about that and if a guy stiffed us again, he was history. We threw him out and I've had, over the years, to do that six or seven times out of almost 1,100 member companies, which is a pretty small percentage and it was never very pleasant and sometimes heated with some of these guys, but I would just calmly remind them, all you have to do, all you ever had to do, to remain in good standing with us is pay your bills on time. I'm not going to use another member's money to pay this guy's obligation. We're not in that business.

BURKE: So actually at that point, you had pretty much solved a major issue, a major hurdle.

PANDZIK: We solved it in a business like fashion, but now, remember there were some programmers who were saying, "Uh-oh, but we really need joint and several liability. We've discussed this with our attorneys." Fine. You know why they would go back to that, because they knew we couldn't do it, which sets up a kind of a drama on Capitol Hill some years later. I guess I have to kind of place this a little bit. The U.S. Congress, in one of the cable acts, there were cable acts in '92 and '96 and in one of those acts we worked behind the scenes and some of our members had good relationships with some key U.S. Senators and some Congressmen and we worked to get, there were many people involved with this, my role was very small really, we worked to get a rule passed through the FCC – through Congress and promulgated by the FCC – that said if you were a vertically integrated company, and I'll define what that means. Classic vertical integration is the movie studio owns the movie theater, owns the popcorn factory, owns the seats. In our business, it would be the company that owns a movie studio, or the particular definition for us was, if you own a cable network and you also own cable systems, you were vertically integrated and if you were in that position, then you were forced by this legislation to deal with the co-op. There wasn't any two ways about it and there was some hardball played at some quite high levels and some of this I didn't want to know about. We got to a point, before that happened about five or six years ago, where we did most of the other deals that we wanted to do and what was left was a bunch of really big important networks owned by vertically integrated companies, like for example, Time Warner or Viacom. Disney never owned cable systems so they were never vertically integrated in those days. So that's kind of how we got into business with some vertically integrated companies that owned networks such as HBO, ShowTime, The Movie Channel, MTV and so forth. That came just fairly recently, about four years ago. Now we're sort of new best friends, I guess, because they realize what I've been telling them all these years was really true – that they were going to love this. Yes, they gave up some margin, but in return, we took over the contract administration, the contract negotiation, the data, the subscriber collection. Look, every network wants to know every month exactly where their network is being carried, the name of every cable system, the area served, many want to know, I don't know why, but what channel it's on, and there's some other harebrained stuff they want to know and they want to know very accurately every month. So we collect all that data and we do all of that better than anybody else. We have a better wholesale billing system than anybody. You've got to understand, some of these little cable networks, they send the cable operator a bill that looks like a dentist bill – it says: August - $12,000. Who's going to pay that? What is this for? How many subscribers is this? We have a billing system that we've developed over the last ten or twelve years that I'd put up against any; it's the best in the business. So every month what we do now, here's the business, I'm going to kind of bring this all to the future, here's the business we've had the last ten or eleven years in an ever increasing, ever sophisticated way. Now if you're the cable operator, instead of you buying HBO directly from HBO and negotiating your own contract with HBO, we have executed, negotiated and signed a master affiliate agreement with Home Box Office. I sign it and they sign it and it has lots of provisions, among which are common expiration dates, where every member of the co-op in good standing who joins that contract, we all expire on the same date, which gives you some obvious advantage at negotiation time. It has volume discount schedules built into it, just the same ones, we hope, as we would get were we a big MSO that size. Many, many, many other provisions and the way this now operates is, if you the member are current in your payments to Home Box Office or any of these channels, except for a couple of them, of our 95 channels probably 92 of them have this automatic provision to them, if you are current in your payments to that network, you the cable operator, your sole option, whenever you want, you can look at our deal, you can look at your deal and kind of put them side by side and if our deal is better, which it almost always is, you can move under the provisions of our master agreement and your old contract is, as the attorneys say, of no further force in effect. It's terminated. From that moment forward, we call that the date of election, when you move in to our deal, from that point forward, the programmer does not bill you anymore, the cable operator, they bill us for you on your behalf and we collect the subscriber data from you each month, not the programmer. In fact, we tell our members if a programmer calls you and says, how many subscribers do you have in Wolf Point, Montana, say, you're talking to the wrong guy. You need to call the co-op in Kansas City, here's their 800 phone number, because as anybody knowledgeable about this business knows, the number of subscribers you have depends upon the day of the month. You do your non-pay disconnects, if subscribers don't pay you, you do those on the fifteenth of the month following the service month and if the viewer has not paid you, you disconnect him on the sixteenth of that month. Well, if you call on the fifteenth you're going to get one number, if you call on the seventeenth you're going to get another number. So we don't want programmers to call our members. We try to educate them, don't do that, that just confuses things because we do the billing, we collect all that data and we present the programmer, now, once a month with a huge itemized statement, a cumulative statement of wherever his service is, member company by member company, city by city, area served, number of subs, blah, blah, blah. And we send the programmer that huge statement. In a lot of cases now, it's quite interesting, the statements go out in boxes they're so big. They don't fit in envelopes. Some of them are several boxes that go to one programmer because our business is so big, and one big check. We write some, to me, I remember the first time I signed a check for a million dollars, I thought, this is pretty cool. Now it's very common. We sign those checks by machine now, we send so many of them out.

END OF TAPE 1, SIDE A

BURKE: So that's brought us current. Today, especially in the last four years, as from the beginning, you've experienced huge growth. For purposes of comparison, back in 1985, you started with zero subscribers and zero member companies...

PANDZIK: Well, that first group, we had about twelve companies, we had about 110,000 subscribers. I don't remember the number of cable systems, but let's say 100 or 150, or something, all together. Today, in mid-1999, we have 1,100 member companies, all fifty states, including Alaska and Hawaii, I think every U.S. territory including Tinian, Saipan, Guam, American Samoa, probably, I know Puerto Rico, I know the U.S. Virgin Islands. I'm not sure if there's any place that's got a U.S. flag, other than an embassy, that we don't have a member operating somewhere. We bill, every month, 6,100 cable systems throughout that whole big piece of real estate. The cable industry today, depending on how you count and what you count as a cable system, has about 11,300 cable systems, roughly, and we bill 6,100 of them every month. So, it's maybe 52%, something like that. I think that number will continue to climb, even though the industry is consolidating, because we tend to more and more specialize in smaller and smaller companies with smaller and smaller systems. So, it may only be 12, 15, 16% of the subscriber base, but it is a majority, slim majority, of the franchise cable systems. So basically, when Frank and I talk to a network today, we're already billing half of his customers anyway, so when I might talk to one of them about, maybe we'll take over all of your wholesale billing; we're already doing half of it, we're just talking about the other half. It's an interesting conversation. I haven't talked anybody into it yet, but it is an interesting idea since our billing system is so good and so efficient and in our position, we see everybody's billing system, every individual networks' wholesale billing system and some of them are quite good, most of them are kind of average and some of them are just atrocious, you wonder what they're thinking. But then I'm sympathetic, because you can't go to some software company and have them take off the shelf, ah, the wholesale cable TV billing program. It doesn't exist, you've got to do your own. Like a lot of things, you either grow it or steal it. In our case, we'd be interested in licensing it, I suppose, to somebody else. That may be something we'd do.

BURKE: So that's a lot of growth. That's a lot of growth in systems, a lot of growth in subscribers. You started it, you built it, you've been successful with the billing systems and that brings you up to today. I'm just curious, what's the number of subscribers you bill every month?

PANDZIK: It's over 10 million subscribers. It kind of depends. With consolidation in the cable business, we're going to be more effected rather than less effected and it just hasn't started yet for us. Typically what's happened is one of our members buys another member company. Over the many years we've been doing this, we've lost very few members completely out of the co-op. Look, our members are companies that tend to specialize in providing cable in small towns, rural communities, smaller towns. It's not the kind of thing AT&T is interested in, but we know those winds are not going to die down. We know eventually we will be effected and I remind my board and I remind my staff and my dog, I mean, I remind them all once in a while, we had a great business with 5 million subscribers and our staff was about the same size then as it is now, so we've gotten more efficient as we've gotten bigger and we haven't exponentially added the same number of employees. I don't know if we'll ever be at 5 million subs again, but it's not something we sit in fear and trepidation about, "oh, what's the future got?" because I think it'll be fine. One thing we've learned as we've gotten longer in the tooth is, we learn more things to do for members, we provide more and more services that they like. We have a very modest profit motive. We really just want to pay our own bills. If we make a profit, we pay corporate income taxes like anybody else, but there's no real deep seated profit motive for us. As long as we pay our obligations and our overhead and salt a little away for a rainy day, I don't own this, there's no stock, I don't have a piece of it, nobody does, really. The closest I can come to describing who owns this thing, some wag told me once, it's sort of like the Red Cross; you can join the Red Cross and get a member card, but you don't own a piece of it and I guess that's as good a way as any to look at how we're organized. We've never issued stock, I don't really know who owns it – it's kind of an interesting idea. If no one else claims it, I guess I will. We only exist to serve the needs of members and whatever need that they express to us that doesn't seem too crazy, we go out and try to figure out a way to do it.

BURKE: I think that's a good lead in to go back and talk about your early members, who they were, how you found them. Because while you were growing this volume business, you were out looking for companies that needed these services so that you could sign them in and get them signed up so that you would have the quantity to make up what I consider to be the critical mass to get these big contracts.

PANDZIK: Like any business, I wasn't a business school grad, but I think there's this theory of adoption of a new business curve once you hit about 30-35% of wherever you want to go. It starts to develop some momentum on it's own. We had, if you recall, 12 or 15 early adopters, early members that joined us that sort of had religion in this area about this and really wanted to see this through and felt strongly enough about it that they put some money on the table. Talking about it and putting a check for ten thousand bucks on the table are two different things, I think most of us would realize. Today, for some of these guys, it's not very much money, but this was a long time ago. So we had this little core group of true believers, like Eric Hoffer would say, but to go outside of that group, I mean, we had no history, we had no deals, we had no billing system, we had one employee, I mean two of us, my living room was my office, my kitchen table was my conference room. I mean to say that it was kind of uphill is really being kind of mild about it. We had a great idea and that's about all. In fact, we got to a point about a year and a half into it where I looked at Cathy, and I didn't tell her this, I don't know that I've ever told her this, but we were almost out of money. Of the original $165,000 we had about $7,000 left. I had the deal that I'd just done with The Weather Channel and another one that I was just about to get closed with what was then called Christian Broadcasting Network, which then became CBN, which then became Family Channel, which now is Fox Family. So I knew, I had the faith that we were just at the corner, but I was getting ready to start paying Cathy's salary out of my own savings account, my personal savings, and I went to my board. I remember I called a couple of these guys and I said, "We're almost there," but I said, "look, in another two months if I travel..., I mean I'm not traveling now on purpose because I don't think we need to, but if we could get a little more cash, I am pretty sure we can turn the corner and make this thing go." So we instituted, the board supported me unanimously, we instituted a one time assessment, that's the polite way to put that, and it was equal, it's been awhile, but I think it was a dollar per subscriber with a maximum of like, $2,500 per member company. I collected, I don't know, $30,000 or $40,000, something like that. That was enough, it maybe doesn't sound like a lot today, but that was enough to get us around the corner and get some money coming in from these other deals and in the meantime, I did another deal and so forth. We have always sold hardware equipment, cable kinds of coaxial cable and electronic gear and stuff, so we had a little money coming in. We'd buy for a nickel and sell for six cents or whatever, and that was enough really to turn the corner for us. We've never borrowed money. We never borrowed a nickel. Our bank, of course, would love to have us borrow some money, but we've never had to, thank God, and we never had another assessment. So the way we've operated, some people might be interested in where all this money came from to run this thing because this is not a volunteer job for me, I have other things. We always had a one time non-refundable initiation fee for member companies that was for the first several years, I don't remember now, let's say three or four years, five years, the formula was it was a dollar per subscriber, per basic subscriber, that you own or control at the time of application, it was subject to a minimum fee of $500, that's all, and a maximum fee of $10,000. That was it. It was a one time fee. If you started as a, what the industry still calls a new build, a company that has a franchise but hadn't yet built a cable system, it cost you 500 bucks to get in. That's it. The next month you could have 10,000 subscribers, but it was a one time deal. Actually, we stayed with the dollar rate formula for probably ten years and I think about five years ago we changed that to a dollar and a quarter and we raised the minimum went to $600 and the maximum went to $12,500, I think. Then a couple of years ago, we raised that to a buck fifty. I mean, it's such a steal. These guys, our typical member probably saves enough to pay back his initiation fee in less than a month, sometimes a few months. A real big company who gets in a couple of deals right off that bat can pay that back in a week. It's just incredible what the savings are. So those initiation fees have always been kind of an important piece of business and to us the income today is pretty modest because almost everybody who could join has already joined. You either sold out to AT&T or joined the co-op. Another piece of income for us has been interest off the float. We make no secret of the fact that we pay programmers and so forth a little later than we collect the money from the member and that interest has always been a significant piece of money for us and the sales volume we're doing today is significant so that about half of our operating expenses is covered by the interest off the money that goes in the front door and out the back door. And then there are some other really modest sources of income like newsletter advertising. We have never really had the goal of making money on an annual convention; I always was happy if it broke even. One year we made a couple of dollars, the other years we've lost a couple, but it's basically a break even deal. Those are the main sources of income for us. Over the years, we did charge and do now charge administrative fees to members and to the vendors who we buy from, which have generally been, it's been up and down over the years, but generally been equal to about 2%. So let's say the member owes us a $100, we charge the member $102 and if we owed the vendor, the programmer, whomever $100, we pay them $98. It's basically 2 points from each side and that has been a good source of income for us and again, like I said before, our cost of operation has not kept in lock step with our growth so we get a lot more efficient every year. We do more with fewer people, which the board's always happy to see of course. So that's how we fund this thing.

BURKE: I think you could look back and say, this has been a really exciting ride and a really exciting industry and a very high growth organization and if you talk to the members, you get a lot of excitement about being part of this organization. What was it that excited you about cable and still excites you about cable?

PANDZIK: Well, I got into the cable business like a lot of people get into jobs; you just kind of fell into it. I think most of us, whatever we do for a living we look back and we think, well, I didn't really have a plan, it just kind of happened. I had done my undergraduate work at Nebraska, in Lincoln and in 1966, after three years of college, I was such a miserable student, I did not want to be there. So I dropped out of college and went to work in May of '66 for the phone company, the Lincoln Telephone Telegraph Company, as a tree trimmer. I don't know if you know anything about commercial tree trimming, but it has a lot to do with lumberjacking. It was one of the hardest, and I had a lot of hard jobs when I was young, cement finishing and stuff like that, this was a tough one, because this was an axe, a ladder, a rope and a chainsaw and in those days, long distance calls, well, you were in the phone business, long toll lines and it just seems like every farmer plants his tree directly under your line. So I worked for about 5 ½ months trimming trees and it got to be the fall, and I thought, hmm, Nebraska, winter time, not a smart place to be, working outside with an axe. So right after Labor Day, I walked into the local public television station in Lincoln, Nebraska, KUON TV, and I just walked in and said, "I'm looking for a job." And they said, these guys will love this, they said, "Do you know anything about running a TV camera." And I said, "Sure, no problem." I had never seen, in person, a TV camera. I'd seen pictures and I figured a picture is maybe good enough to get started. I'd done a lot of photography work, so I had a good idea about lenses and all that stuff. So they'd just happened to can some guy that morning and they said, "Great! Go to studio A." So I walked down, didn't fill out any paperwork or anything, walked down the hall, walked in, there was a camera sitting there all locked down, so I figured out which knob unloosened it and I did that for two years, mainly on their mobile unit which was a lot of fun and a great way to learn the business. A great way to learn the business. We gone all the time; 1968 was a really interesting year because it was probably the single biggest political year of this century, the '68 presidential elections. It seemed like everybody that could stand up was running for office, was running for president and we did shows with every candidate. Hubert Humphrey and Bobby Kennedy...

BREAK IN VIDEO TAPE

BURKE: Mike, we were talking about some of the exciting early years of you being a cameraman and being involved in video and television and in particular, your memories of 1968 because at that point there was a lot going on in early television.

PANDZIK: There sure was. Well, it was right in the middle of the Vietnam War, which was really tearing this country apart and the position I had was this little, tiny cog in a little, tiny wheel but we did get an opportunity being on that mobile unit, I got a chance to meet all those guys and set up situations like this and video tape them and stuff. It was really interesting to have that little role and it included everybody who was running for office that year. But eventually, I did that for a couple years, went back to college, graduated, got an undergraduate degree, got married, went to New York, worked at a lighting company in New York, a theatrical lighting outfit and decided to get back in the business, the TV, that kind of business. So I went to grad school. From New York City, I applied to three or four grad schools in the Midwest and I needed an assistantship, I had a wife and I couldn't just pay all of it myself. So I got a couple of offers for a grad assistantship and I picked the one at University of Kansas in Lawrence, Kansas and did an MS in Radio, TV, Film in two years. When I was about ¾ of the way through that, I got interested in cable TV. I didn't know anything about it. I just kind of heard the two words strung together. This was 1971, something like that, and I'd found out that a guy named Dolph Simons, who's family owned the newspaper in Lawrence, Kansas, The Journal Daily World, let's see, The Lawrence Journal World, had a franchise to build a cable system in Lawrence but had done nothing with it and so I called his office, I got an interview, I said, "Look, I'm a grad student. I'd just like to spend fifteen minutes with you and talk about what your plans are." So I went down and this has happened to me several times in my life, I guess it's something there, but instead fifteen minutes, I spent the rest of the day with him and we really hit it off. I had some, what I thought, were pretty good ideas about what to do and so forth and so a couple of weeks later he hired me as his second – he'd already hired a manager for the system – I was the second guy he hired to do all the programming and that side of it. So I finished up my thesis that summer and fall and graduated in October, but in '72 I went to work for him. That was my entry into the cable TV business. Remember, that was at the end – I wanted to talk about these three eras – that was at the end of this first era because none of the satellite age had started yet. In a city like Lawrence, Kansas, which had about 35,000 or 40,000 population then, about 30 miles from Kansas City, we always said with a wire coat hanger hooked up to the back of your TV set, you could get a dozen or fifteen channels, so there was a huge challenge to us in that cable system in those days to figure out what we could provide to people that would make them want to pay for something they could sort of get for free, most of it, anyway. So we did a lot of local origination, weather channel stuff, maps, advertising, community bulletin boards, all the stuff everybody did in those days and I was there a couple of years and then took a job with Hallmark in Kansas City as a TV director and did a lot of this production stuff for a few years. Eventually, in 1978 I was reading the Wall Street Journal, I was working for BF Goodrich in Akron, Ohio as manager of their visual communications department, and I was absolutely miserable in Akron, Ohio and I wanted to get back to Kansas City, I wanted to get back in the TV business and I was reading The Wall Street Journal and I saw this ad for Home Box Office and it said, "Need somebody to open a regional office in Kansas City" and it was just like a cartoon, you know, a little light bulb goes off over my head and I thought, that's for me. So I made some phone calls and I'll kind of compress this story, but I started interviewing. In those days, HBO, and they probably still do it today, in those days we interviewed new candidates until everybody was sick of the process. I probably had 14 formal job interviews with HBO, including the president of the company, before I got hired. I was one of nearly 500 applicants for that one job in Kansas City, and I thought, "Hell, if they put the rest of them through this, it's no wonder they haven't filled it yet." But there was kind of a if you hung in there long enough I guess they gave you points for that. So I started doing that. I replaced Bill Grumbles, who was at HBO Kansas City. He'd opened that office all of about three months earlier and then he went to Dallas and opened an office. So here I was brand new with HBO, maybe been there two months or three months and there was no one else to be the regional manager. I'd only been there three months, but I was there longer than anybody else, so I got promoted to be regional manager and I ran that office. When I left, we were probably, I think I saw an article in the Kansas City Business Journal once about that time that had the biggest companies in Kansas City by gross sales and stuff. We weren't listed, thank God, because HBO's always liked to have a low profile in that area, but I looked at that chart and I thought, "I'm equal to the 7th biggest company in Kansas City as far as the money coming through this office." So I ran that regional sales and marketing office with HBO for about five years or so until the early '80's. I went to New York with HBO, worked in new business development for about a year and a half and one other little gig in between for a few months, some consulting, and then I went to work at the co-op. That's when Rob Marshall called me, so that kind of ties it all together. I've got a good background for this kind of work, because I have that natural empathy for the little guy. It's a very American trait anyway, it's probably one of our biggest failings too, because it gets us in trouble sometimes. On a national stage we're so interested in looking out for the little guy you sometimes maybe let that get away with us, but when I talk to college classes, I often tell them, "I've got the perfect job for an unreconstructed '60's radical." Now in 1999, the kids go, "Huh?" I was never one of those but this job does have a certain amount of mission to it. It's not just, and I mean no disrespect, but it's not just selling a product, it's not just doing x and then you get a paycheck on Friday. There's more to this than just that because you can't sit back and let good people get taken advantage of and that's really what happened. It's important to state, I don't think, except for a few personalities, who probably felt this way, the industry did not start out to really do in the little guy. I don't think there were any huddles of big businessmen in New York saying, "We've got to make decisions now that will really put the screws to the little independent operator in ten years." It was all an inadvertent consequence. It was unintended. But that doesn't mean it shouldn't be resolved, this whole volume discounting inequality, this whole tilting of the money toward New York and LA and so forth and away from Middle America. It was a problem that needed to be resolved and we're still resolving it. We're still not there. Even after fifteen years, we know that big MSOs get better prices on many of the networks they buy then we do and it's not right and we haven't quit yet and we're not going to quit. I guess, one thing I've learned over the years is while government can help you here and there, there is no free lunch there. You let that camel's nose get under your tent and I guess, on balance, the times the government has helped us have probably been offset by the times they've hurt us, you know. It was important in a couple of places that we get a little helping hand, but when I look back, I think we would have succeeded anyway and we probably wouldn't have paid the price that cable operators have paid by what I consider interference on the part of government in a great little business that's not hurting anybody. Look, at the end of the day, it's people watching TV at home, through their toes. This is not rocket science, what we do, it's just entertainment and we're trying to bring it to as many people with as much variety as we can at the lowest price we can and that's kind of where the co-op enters the equation again. We know if we can hold down wholesale prices, then our operators can hold down their retail prices, but if we don't do that first job, they are dead meat on the second job because if there is a financial food chain with subscribers on the bottom of it, studios at the top, the next bump up from the bottom is the cable operator and the next bump up from there is the cable network and then the studios and stars, and whatever. And there is this food chain and cable operators are basically, they basically have no control over their wholesale prices other than the little work that we do trying to balance the field in terms of volume discounts. I have a lot of empathy for the subscriber as well as the cable operator because these rate increases that we all receive at the wholesale level naturally someday, somehow, in some proportion have to be rolled into subscribers. In any business, you think where the money comes from, it doesn't come from suppliers, it comes from customers. It comes from the eventual, in our case, this retail cable TV customer. Every nickel in our industry comes from people watching TV at home. So when the sports teams and sports franchises and the movie studios start jacking up their prices and putting competitors in bidding wars for product and stuff, when companies buy rights for the Olympics and other big events like this, and pay way too much for them and then what do they do? They turn around to the next chain down which is the cable operator, the only place cable operators get money is from subscribers unless they're making it in the backroom with a Canon Color Xerox machine, it's got to come from subscribers. So I guess it's a topic, you can kind of tell, I get a little exercised about because it's very important. All money in any industry comes from the eventual, the last consumer and I did a study a couple of years ago. I had a really good student intern, a guy from KU and I kind of laid out this project. I like to do projects with interns, something they can really do during the summer, and I said, "Look at our wholesale rate increases over the last year or two or three and then compare them with typical retail rate increases by our members and do it in broad brushstroke, it doesn't have to be perfect. I just want to get an indication for every dollar of wholesale rate increase, what is the dollar, or whatever, what value, what retail price increase is there?" And he did a really nice job. A very statistically valid little study the basically showed the cable operators only passed on to their subscribers less than 70% of the wholesale price increases they received from programmers, which means that our members are eating at least 30% or thirty cents on every dollar of wholesale price increase. They're not passing that on, they're eating it. You don't have to be a rocket science to figure out that if widgets cost you ten bucks to make and you sell them for twenty, you've kind of got a business there. If they cost fifteen dollars to make and you sell them for eighteen, you almost don't have a business and when they get sort of equal or even close to being equal, you've really got a hobby and when it gets upside down, you're out of business. I think one thing we tried to convince members on Capitol Hill of is that cable systems are no different than any other retail business like a shoe store or a grocery store. If we charge too much for our products we'll go out of business and if we don't charge enough for them we'll go out of business. There is a margin, a balance in there of fair play and fair profit that I've never seen abused really, from my end of the telescope looking at the cable business. I know some politicians don't see it that way, but that's their problem. Some of these guys have never had an honest job in the private sector in their whole life. I'm not just talking about cable guys, when you look to Washington and you see people who have made their whole career and never had a job in the private sector, it's easy to get a little bit bitter about them telling us what we ought to be doing. Anyway, I got a little off the subject.

BURKE: Well, I want to sort of build on that, that I can't help but notice and I've always known you to really enjoy what you do and your very amazing insight and understanding of the industry...

PANDZIK: Oh, shucks.

BURKE: From the subscriber to the operator to the programmers, and your sense of mission and I'd like to tie in with that the fact that you're involved with other cable associations including C-SPAN, Cable in the Classroom, The Cable Society of Cable Pioneers, the Mid-America Pathfinders, and now The National Cable Television Center and Museum.

PANDZIK: I think that's just proof if you stay around long enough you become a neo-geezer that gets invited to some of these things. I've been on Brian Lamb's board at C-SPAN for five years. I've had a great time doing it. It's a wonderful group of men and women. For those of you watching who don't know, C-SPAN is the cable industry's gift to the Republic, is the way I like to put it. It wasn't started by the government, it wasn't started by some clown with a crazy idea about making money. It was founded and run today, still run, by the cable industry. We support C-SPAN through our monthly subscriber fees we pay to C-SPAN. It's a great organization. Cable in the Classroom is another one of these really great ideas writ large to provide – if you're not aware of what it is, it's a program where cable networks have voluntarily, they run two or three hours a day during the school week of some of their best programming. They run it without commercials and they run it usually between 4 am and 7 am, or something like that, which is okay because many cable operators have provided free cable service to high schools and junior highs. Many of them have provided free TV sets and VHS tape machines and so forth. That way a teacher, if they're studying in the history class studying Panama Canal or early twentieth century politics, they can record an hour show or a thirty minute show on the Panama Canal with no commercials in it whatsoever and this is a gift to the schools. We don't charge anything for that. And then The Cable TV Pioneers, which is a national group, and the Mid-America Pathfinders, which has sprung out of Rob Marshall's Mid-America Cable TV Association, are groups that do some good work and try to recognize men and women who have made a contribution over the years and they're kind of honorary. It's kind of nice to be included in some of those groups. It's a great industry. When I've talked to college groups I say, I've worked a little bit in commercial TV (I left some things out when we were talking), commercial TV and public TV and corporate video and cable TV and from my experience, cable TV is by far the best place to be. When I worked around commercial TV, the only guys who ever retired with a paycheck were the owner, the chief engineer and maybe the owner's secretary. Everybody else was a bunch of kids getting burned out by the time they're 25 years old. The cable business is a wonderful spot for young people to get into. As you know, many of the biggest networks in the business are run by women, which show me a commercial broadcast network like CBS or NBC that's got a woman at the helm. A great place for minorities, a great place for young people. I think one thing I like about it is it's not a bobby pin technology where everything got figured out 20 years ago and we're doing the same thing, just another day. This is an industry that is a long run of interim technologies. We never resolve the end deal. It's just as series of interim technologies and it's sort of this technological river that comes screaming by your front door and you kind of wonder, cable operators today are trying to figure out how to enter the digital age. When do they step into that river; what are the chances of buying something that won't work in five years because it'll be overtaken by new advances? Well, the chances are pretty good, frankly. How do you pay for all this stuff? How do you compete against Direct TV and Echo Star and these other technologies? Congress, some of those guys think we have no competition. If they'd cross the Potomac sometime and come back home and go with cable operators to their cable systems, they'd see we have plenty of competition, yet we're still rate regulated. Well, actually, as of March we're not, most people aren't, but that took years to get to that point. It's a great business for young people to get into because it's not a bunch of, actually, a guy like myself, anybody in their 50's or 60's really doesn't have, other than maybe some more wisdom and some vision that maybe a young person doesn't have from experience, we don't have a huge advantage. I wanted to talk about those three eras, the first era went from say, '47 to '76, let's call it thirty years; the satellite age started in the winter '75-'76 and continues today; but a third era started about 1992 and that's the digital era and that has been a sea change for all of us. Kids watching this tape probably own a CD player of some kind, which is digital audio. For many years, the audio portion of Home Box Office and other satellite feeds has been fed as digital audio. The video might have been analog, but the audio was always digital ever since it was scrambled. The business, all of television, all of audio, all of radio, cars, anything with electronics in it is on this headlong rush to become digital and one of the last areas to be – the audio business, stereo business, that's been digital for a long time. You see a digital video disk, which is still kind of a new deal, that's such an improvement over VHS video tape, but probably the last thing is the hardest thing and that is the television business. Commercial broadcasters, cable operators, studios, everybody's struggling with what system to use, how to get the cost down. I'd love to jump ahead ten or fifteen years and see where this all ended, but you're going to see in the next couple of years, for example, you're going to see the end of movie theaters as we know them with actual film with light projected through them and displayed on the big screen. By the end of the first decade of the next century, other than film collectors, film buffs and film school, you probably won't see those anymore because there's technology now perfected that will allow movie theaters to use video projectors in their theaters instead of film. The films will be distributed via satellite rather than by truck and by huge reels and big heavy cans and stuff. That's going to be a major change. One of the great things about that is, you'd be amazed at the amount of money it costs to just ship these stupid film canisters around the country. Whole truck lines have sprung up over the decades just to move films around. That will be eliminated. A small town movie theater that struggles to play a big film like Saving Private Ryan or something like that, or this new Star Wars movie because of all the contractual obligations, when the film is beamed to your theater via satellite, you can have a different movie every night. You can have three or four different movies on the same screen every day. So that's going to be a real big change. Flat screen TVs are here to stay. It's such a great technology. I've got one of the new 27" flat screens; it's not one you hang on a wall, it's still a big picture tube, that Sony's just come out with and the screen is absolutely flat. I have no idea how they do that, it should not work but it's such a great picture. We're moving into this area of flat screen TVs you literally hang on your wall. I've seen a bunch of those now. They're for sale at retail right now, absolutely great pictures, unfortunately great prices. They're very expensive still. The whole industry is struggling with what to do with how to record this stuff at home. Analog is really a dead duck. It's going to be a digital format of some kind, I'm not sure exactly what that's going to be. We haven't even talked about high definition television, which is in my view, there's people that don't agree with me, but in my view it's the most superior way to watch television ever. It's a bigger leap for me from our normal NTSC color TV that we have now, to digital high definition, that's a bigger leap than going from black and white to color. It's a huge leap! The problem is we haven't figured out how to do it yet. We have hundreds of thousands of movies shot on a 3 x 4 aspect ratio screen and now we're what, going to play them on an aspect ratio that's 3 x 5.5 or whatever, I've forgotten some of the numbers, but that doesn't work very well. John Sie, who has been in the cable business for a long time, did a great tape I saw last year talking about how to fit a 3 x 4 on a wide screen and vice versa, and it doesn't work. So I think the solution, unfortunately, is going to take a long time. CDs took ten years or so to really become pretty common and I think this is probably going to take fifteen years, but I think people that can afford it will dedicate a room to their house as a kind of a viewing room and put a wide screen high definition TV in there and then the rest of the TVs in their house will be 3 X 4 analogs for a long time to come. Cable operators are struggling with the same kind of deal. How do you go digital? W have the technology to make a completely digital system today. The problem is, you can barely afford to build it for what you can charge at retail because of the wholesale prices you're paying on programming you're kind of stuck in the middle between those, so we got the technology, it's just kind of hard to roll out. In a big city system you can do that. If you're starting from scratch today you'd build a much different cable system then you would have built ten years ago. But now I'll come back to the co-op, what I do for a living, our 1,100 companies with 6,100 cable systems and 10 million basic subscribers or so, we know from studying it that the median number, if this is number 1 and this is number 6,100, number 3,050 halfway in between all of our cable systems, that system is 305 subscribers. That means half of our cable systems are smaller than 305 subscribers. That's a huge number of tiny cable systems. Half are bigger, but still, predominantly most of our cable systems are under 500 subscribers. Well how do you, I mean even if you don't have the technological background to understand what I'm going to say here, how would a little town of 1,200 population with 400 subscribers or whatever, ever build a completely digital cable system today? You could not make enough from subscribers to pay for what it would cost you to build it. So the industry is looking at some other methodologies that are digital, but other ways to skin the cat to bring digital TV to the home that don't require a complete rebuild of your cable system to a digital standard. There's a technology called HITS, head end in the sky, HITS, which is a system bringing several bundles of cable services through the satellite into the head end, down the cable system and then to a set top box on top of a subscriber's TV and that's a great interim technology. There are a couple other systems we're looking at as well. I don't know all the steps of how we'll get there, but I do know that digital is such a wonderful method of recording, of archiving, of playing back, of transmission, of reception, no question in mind this whole business will be fully digital at some time, I don't know what that date is when the last guy gets rid of his analog widget, ten or twelve years from now, probably fifteen years from now we'll all be completely digital, but it's where we need to be. It's a wonderful technology. We will think back on analog then, twelve or fifteen years from now, like some of us do wistfully thinking about crystal sets we built and one and two transistor radios we built and tube type radios that we used to have years ago. We'll look back at that as such an archaic kind of a deal, analog, but that's where we're going. We're going to make sure cable operators stay there and really can participate in that too. That's what I do for a living.

BURKE: Great. Well, if we have a few minutes left, I was just curious: how would you like people to remember the National Cable Television Co-op and any of the other very special cable organizations you've worked with. It's a two minute question.

PANDZIK: I'm old enough and a student of history enough to know that nothing lasts forever, nothing built by man lasts forever, and I'm sure there will come a day when the cable TV co-op that I started with a lot of other peoples' help and got to this point, I'm sure there will come a day when it is not necessary anymore. Frankly, I kind of hope that happens. I don't want it to happen tomorrow because I've got two kids in college, but I hope it happens where the day comes when what we do is not necessary anymore. What that will take is for programmers to charge every cable operator the same price for their services. If they would do that, I will go do something else, gladly, and I will make sure my employees are taken care of and we'll sell our used furniture and move on down the road. Nothing would make me happier than to have that happen, but I guess if there's a legacy, if anybody watches this tape years and years from now and they think back, how did this all get there, the fact that we helped the little guy is worth a lot.

BURKE: That's a wonderful sentiment and I want to thank you again for your time and your insights.

PANDZIK: You're most welcome. You asked me a couple of questions and I can go for about an hour and a half!

BURKE: I really appreciate it and many thanks from the folks at The Cable Museum.

PANDZIK: You're welcome, Liz.

BURKE: This oral and video history of Mike PANDZIK: was made possible by a gift from The Hauser Foundation Oral and Video History Project of The Cable Center Oral and Video History Program.

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James Palmer

James Palmer

Interview Location: University Park, PA
Interviewer: Archer Taylor
Collection: Archer Taylor Technical Collection
Note: Audio Only

TAYLOR: We are interviewing Jim Palmer in his lovely home in State College, Pennsylvania, and we are going to explore the history of C-COR Electronics and proceed from there. Let's start with your family background--where you were born, your education, how did you get into engineering, and so on.

PALMER: My family is from Nebraska. Both pairs of grandparents homesteaded in Nebraska, so I'm a Nebraskan from way back. My mother and father were both born in Nebraska ... father on the homestead property. My mother was born in a sod house, in north central Nebraska. She is still living ... ninety-nine years old and living in her home in Kearney, Nebraska, where I have provided round-the-clock care for her. Her mind is in pretty good shape part of the time. I was a product of the Depression. Remember the dust storms and the problems of those days? I'm somewhat frugal in many of my activities, and I think that really helped in building a company.

I went to schools in Elmcreek and North Platte and graduated from high school in Kearney in 1941. I graduated a year ahead of Peter G. Peterson, also from that high school. I had a Regent Scholarship to the University of Nebraska. Otherwise, I could not have afforded the $50 tuition. I also worked to pay my living and other expenses. My last job was with American District Telegraph, where I was night operator and guard from midnight until 8 a.m. I worked forty-eight hours one week and fifty-two hours the next week. That year I got higher grades than I did my freshman year when I received an award for highest freshman scholarship in the College of Engineering.

In June 1943 there was a great exodus for the service. I enlisted in both the Army and the Navy. The Navy called me up first and sent me to Iowa State. I was allotted four semesters in the Navy V-12 program. So by taking 21 credit hours per semester, I would be able to get my BSEE at Iowa State. The first semester there I was battalion commander since I had two years of ROTC at Nebraska. The last semester I was regimental commander. I graduated from Iowa State with a grade point of 3.95. I got a "B" in electronics from John D. Ryder, of quite some fame, in electrical engineering ... IRE and IEEE.

In October of 1944, I was sent to Columbia (New York City) Midshipman School, where I graduated as an ensign. I went from there to Bowdoin College in Brunswick, Maine, for three months of officer electronics training. I then went to MIT Radar School for four months. By that time all the shooting was over. VJ and VE days had passed and I was assigned as the electronics officer aboard a destroyer in the East China Sea. I had a nice shopping trip to China, Shanghai, Qingdao, Okinawa, Taku Bar that served Beijing.

Out of the Navy, I went to work for General Electric ... had offers for both GE and Westinghouse. I couldn't really differentiate between the two, but GE offered me $5 more a month which was not the criteria, but the only perceived difference. So I went to work in Schenectady in test and in the advanced engineering program which was quite a coup. They really taught you to think and to think in terms of problem solving.

I worked for General Electric for five years ending up in switchgear in Philadelphia. I was involved as project manager to develop a mechanical rectifier--a rectifier with contacts that opened and closed 60 times a second to convert AC to DC, which was successful. About that time solid state rectifiers came along, which were about as efficient as a mechanical rectifier with a lot less complexity.

TAYLOR: Could you put an approximate date on that?

PALMER: That would be 1948.

TAYLOR: When were you and Barbara married?

PALMER: We married in 1948.

TAYLOR: This was in Philadelphia?

PALMER: In Philadelphia. Salaries at General Electric had fallen way behind what they should have been, and I went to work for United Engineers and Constructors. Worked as an electrical engineer on the design of a polyvinyl monomer plant for Monsanto and on Gary Steel Works coal chemical facility for U.S. Steel. I didn't like the commuting to the center of Philadelphia so I looked for another job ... one with new interests and new directions.

I was attached to a position at Haller, Raymond and Brown, an electronics military R&D company, in State College, Pennsylvania ... a beautiful community. It certainly got away from the traffic and the congestion in Philadelphia. That move was 1953 and we've been in State College ever since.

At Haller, Raymond and Brown--now HRB Systems--I was a project engineer on a transmission system to transmit radar displays to remote locations over telephone lines using mechanical devices to make the translation. I also did a study for the Signal Corps of communication and navigation systems for Army aircraft. The Army had more aircraft than the Air Force did ... the Grasshopper, the Beaver and helicopters. That gave me an interest in flight that I didn't have before, although my father was a pilot in the First World War This was a propeller that he broke in 1919 [pointing to a broken propeller hanging on the wall].

TAYLOR: I was wondering about that ... interesting.

PALMER: Taxiing in a field of leaves, probably at Moffett Field, there was a ditch he didn't see and the plane nosed over. Busted the prop and he kept it.

TAYLOR: That was a long time ago, I take it.

PALMER: Yes, 1919.

TAYLOR: For goodness sake. Was he injured?

PALMER: No. Probably the only problem was the broken prop. They would have checked out the crank shaft to make sure that it was true.

After a year or so at HRB, the technical director and Walt Brown called me in and asked if I wouldn't look after a little organization that they had started on the side. I would be general manager and they would pay me in stock. This outfit was Community Engineering Corporation, which had one full-time employee, two part-time employees, and a negative equity of $10,000. Obviously, if I could have read a balance sheet, I wouldn't have taken the job, but I couldn't, so ...

TAYLOR: Can you put a date on that?

PALMER: That's 1954. I started with HRB in October '53 and this exchange took place in December of 1954, which I marked as my entrance into the cable television industry. I became general manager of that operation. Sometime in early '56 we decided that I was spending forty hours a week on this part-time job and forty hours on my other job ... I should go full time. We went up and down the streets of State College selling stock to our friends and neighbors and I went full time. I became president and was stuck with it for the next thirty-one years.

TAYLOR: This was Community Equipment Company at that time, which was known as Engineering ...

PALMER: Community Engineering Corporation.

TAYLOR: Also known as CECO.

PALMER: There was some problem using "engineering" in the name because none of those other guys were professional engineers, although they were all PhD's. I was a registered engineer. In fact, I was registered in five states at that time, at United Engineers and Constructors. But we had trademark problems with "CECO" which we had shortened our name to for use on our literature and products. There were many companies with the name CECO. The one that came down on us was Century Lighting who had trademarked CECO for a system of lights for the broadcast industry. They thought there would be a chance for confusion and they were going at us with a vengeance ... and they were serious!

So, we coined the name "C-COR" ... just a pure coinage. It maintained the same place in the alphabet and got a listing generally in the first of the "C's". It was clear from a copyright standpoint. So we proceeded to change our name to C-COR Electronics, Inc. To trademark it, service mark it--those things to give us protection. We proceeded to make C-COR stand for quality ... quality electronic equipment, quality amplifiers.

TAYLOR: I can certainly say that was successful, what I've seen in my experience. How did Centre Video get started? Was this about simultaneous with your getting into Community Engineering?

PALMER: The same gentlemen that started Community Engineering started a company called Central Pennsylvania Corporation to get a license for television broadcasting in 1947, '48, '49. They were unsuccessful in getting a TV license. I am inferring that since they had this corporation and some of the money raised, they said, "Oh, maybe we ought to get into cable television." So they built a cable system in Bellefonte which had early Jerrold equipment. It was a one channel system and probably dates from 1949.

Another group of people, overlapping personalities, built a cable system in State College called State College Television Cable Company. Walt Brown was involved with that ... with the antenna site on top of his house, which was on a higher portion of State College and, also, fairly central.

There was another company called Centre Video Corporation which was incorporated, again, by some of these same players. With its initial business as a distributer for Jerrold equipment--to sell, service, install Jerrold equipment--it got into arguments with Milt Shapp.

TAYLOR: Everybody did.

PALMER: Right.

TAYLOR: What was CECO or Community Engineering Corporation? What was their business?

PALMER: Their business was amplifiers.

TAYLOR: What kind of amplifiers?

PALMER: The first amplifier was to take a Jerrold strip, use the sheet metal, the tube sockets and to install distributed lines ... make those strips into distributed amplifiers. Plug into the same power supply but then cover bandwidth from 54 to 100+ megahertz.

TAYLOR: So, CECO, really from the beginning, was a CATV amplifier manufacturer?

PALMER: Our product was a CATV amplifier. It was broadband and it was a distributed amplifier using 6AK5 tubes.

TAYLOR: Right from the beginning, you started working for them as unpaid except by stock?

PALMER: Right.

TAYLOR: Interesting. That distributed amplifier, this is a transmission line, in the grid, in the plate and that sort of thing. I'd wanted to talk to Fitz Kennedy because I thought he had told me he had a patent. It turns out there was a British guy, I don't know his name, who had the patent on the distributed line and Kennedy got a license to produce it. He was with Spencer at the time building equipment amplifiers for laboratory purposes. They didn't know about CATV. He did have a license for it, but then when the boys down at International Telemeter ... George Brownstein and, I guess, Pat Court wasn't in that, but Ron Mandell, I guess, was in it. There may be some others. They started building distributed amplifiers and ignored the patent situation. They just did it! As a matter of fact, we used the International Telemeter amplifier in Kalispell when we started because it worked better.

PALMER: What year was that?

TAYLOR: 1953. But Fitz was pretty bitter about the fact that these guys were doing ... He had gone to the trouble of getting a license and paying a royalty and these guys just went ahead and did it anyway. Were you involved in any license situation or patent situation?

PALMER: No, we weren't. We used ... I am aware of information in Walt Brown's files that showed German development of the distributed amplifier.

TAYLOR: It could well be. It was Socks Bridgett that told me how this came about. He's like I am ... his memory is just a little weak and not detailed. It may have been a German, rather than a British. He said British.

Ed. Note: W.S. Percival, British Patent 460, 562 (1935-37) Reference in Rudenberg and Kennedy paper in ELECTRONICS, December, 1949 (McGraw-Hill).

PALMER: Now, our amplifier was different from the others because we did only the low VHF band. It was a low pass amplifier, and initially, did not attempt to carry the FM band but cut off between 100 and 105 megahertz. SKL's was an all band amplifier, as was International Telemeter. Entron at some point had a distributed amplifier, too.

TAYLOR: I've got Hank Diambra on my list to talk to yet.

PALMER: So first we did the strips to plug into the Jerrold power supply which may have been part of the WADO amplifier. But early on, in this same time frame, we did amplifiers in galvanized sheet steel boxes that were messenger mounted, cable powered, with the distributed amplifier circuit in it. And that was initially for antenna site runs.

TAYLOR: Now, this cable powering, that's another thing I've been tracking a little bit. Diambra used to claim that he had the first cable powering situation. Have you heard him make that claim? That's Entron.

PALMER: Not specifically, but you know, Hank talks a lot, so ...

TAYLOR: He does, no question. You did the cable powering 1954, '53?

PALMER: It would be '53.

TAYLOR: Okay.

PALMER: The company did cable powering before I got involved because after a while I changed the transformer approach. Walt Brown used a transformer they could use as an auto transformer to get the different voltages. I did not like that approach, so I changed the circuit and used custom design transformers, with an isolated secondary. This confirms that cable powering was in use at CECO before I arrived in 1954.

TAYLOR: Well, you say, before you were involved with this, they did these things. Were they building amplifiers before you got involved?

PALMER: Yes.

TAYLOR: I see.

PALMER: That was with their one ...

TAYLOR: Is this single channel?

PALMER: No, they would be broadband.

TAYLOR: That was distributed, was it?

PALMER: Yes. So I think that we can safely say that Community Engineering Corporation, and I think 1953 was the incorporation, always did wide band distributed cable powered amplifiers. Now the WADO retrofit was not cable powered because it used the Jerrold power supply.

TAYLOR: I see.

PALMER: But then, in addition to that, there were these big sheet metal boxes that had this little amplifier ... but that was to hang on the messenger strand. And then, we just expanded on that idea. Instead of doing the Jerrold strips, I had an aluminum box that replicated the strips, which did the same thing. Those went into St. Johnsbury, Vermont, for one place.

One of our problems with the sheet metal and fabrication where you had to have some volume, you had to get out of the model shop bit. And I had a manufactured aluminum housing, over a pan, and the chassis was a "z" shaped piece of metal. So, the grid line could be one side of the "z" and the plate line on the other side, and that made the 100 A amplifier 22 dB gain, which was our standard for quite some time. But that started, and maybe somebody else did some cable powering, but nobody totally embraced it for about everything that they did. So, C-COR used cable powering almost exclusively. Used distributed amplifiers for everything except antenna site stuff and messenger mounting. So, those were solid contributions to the ...

TAYLOR: I didn't realize that you were doing distributed amplifiers from the beginning. I didn't know that.

PALMER: I went full time as president of Community Engineering Corporation on August 1, 1956. On August 3rd, Community Engineering Corporation became the major owner of Centre Video Corporation which was the majority owner of State College Television Cable Company and the Central Pennsylvania Corporation. So three days after having assumed the presidency of the manufacturing company, CECO, I became very much involved in cable television operation. And for the first time, because I had no involvement with these other companies before that. State College Television Cable Company had 280 subscribers. The Bellefonte Central Pennsylvania Corporation had 500 very irate cable customers.

TAYLOR: Was it because of quality of service?

PALMER: Quality of service ... about ready to be thrown out of town. I think maybe both systems had about 1.5 channels.

TAYLOR: Back on the record Jim, I just looked at a chart that shows that in 1954 the sales of CECO were $24,000, and in 1959 sales were up to $110,000.

Ed Note: The following dialogue refers to catalog data sheets given to the Center.

PALMER: Now here are pictures of amplifiers. This was the housing and the messenger mounted cable powering, although this is a single channel amplifier for antenna site use. This was a marker generator, splitters and I think this was a strip that would be powered from a Jerrold power supply.

TAYLOR: I presume that you built your own test equipment pretty much then? Your marker generator, was that one that CECO built?

PALMER: Yes. We also built a sweep generator, which was a revolving open air capacitor driven by a little induction motor, which would sweep the low band. Interesting, since an induction motor was not synchronous, so you could detect hum on the system, because the hum would move across the screen.

TAYLOR: It would show up. How about signal level meters?

PALMER: No, we did not do that.

TAYLOR: You didn't do that. Did you have anything to use? Was Jerrold's 704B available at that time?

PALMER: A Jerrold meter was available, I don't remember which one.

TAYLOR: Probably the 704, I think so.

PALMER: I was a government witness at the Jerrold anti-trust trial, against Jerrold.

TAYLOR: This was the side Norm Penwell was in. I think this was the first anti-trust. Is that the one you were speaking of?

PALMER: Yes.

TAYLOR: Norm, was in that because we had been building ... I was in the hospital, but our group was building a system in Livingston, Montana. Phil Hamlin was the Jerrold representative and he was over working with Paul McAdam in Livingston. Norm and Jack Penwell and Bruce Hamilton were all building ... working on ours in Livingston. It was a cable race. Coincidentally, they all came in to a little coffee shop one time for coffee. Phil Hamlin and Paul McAdam were on one side of the room, and Norm and Jack and Bruce on the other side, and they began shouting invectives across to each other. Finally, Phil Hamlin said, "We are going to run you guys straight out of business!" It was that testimony, and some other things about the service contract that you had to sign, that Norm was one of the witnesses. But it was about, probably in the mid-seventies, that Norm was at one of the conventions, and Milt was there, and they met, and Milt wouldn't talk to Norman. He wouldn't even speak to him.

PALMER: Now this shows the ... here's the line amplifier, and this is the six tubes of the distributed and here is this "z" shaped chassis. So the tube socket was just perched on half the side, with the plates on one side, and the grids on the other, and this power supply and this cover over the top.

TAYLOR: Are those 6AK5 tubes?

PALMER: 6AK5's, and then later, 5654's, a military version. Now here's where the scope sweep generators, our own, I guess we had three varieties of this sweep generator--a Simpson model and a Kay. Now this doesn't seem to list a ... it says, "field strength meters four units." So I don't remember what the model number was ... now maybe we didn't call them out, because they were Jerrold.

TAYLOR: That could be.

PALMER: This brochure would have had to have been 1958, '59. There are some other items in here of this date.

TAYLOR: Is anything like this in the museum now, at the Center?

PALMER: Probably not. My intent is to have the oral history with Strat soon. I guess that "soon" is after we get back from the Cayman in March of next year, and to get all of this stuff to him with that recording. I'm going to save a little bit, probably. I'm a saver, but also we want to get rid of it for some other reasons. We need the space ... we are so much involved in art. You will see that later on with a tour of gallery A.

TAYLOR: Okay.

PALMER: Here we are talking about our "firsts" in the community television industry ... "wideband distributed amplifiers were RF distribution" ... we were the low band people ... "cable powered electronic equipment for systems ... messenger mounting" ... and then "ultra low noise preamplifiers with 3 to 5 dB lower noise figure than other units on the market."

TAYLOR: That was the thing I remember from CECO was the low noise preamp.

PALMER: We had cascade circuits. A preamplifier would be probably this kind of unit here. We had to do everything with a same mechanical housing, but then as soon as the planar triodes became available, and we started with a 6299, and then the 7077. The 7077 was ... General Electric made that tube, and it was going to revolutionize the UHF reception ... which it didn't and UHF reception never really got that big a go. We used that tube and General Electric ... they were wonderful in support. If we had a problem, we could exchange the tubes without really documenting what and when. They trusted us; they helped us and supported us. I think GE was a wonderful supplier to deal with.

We made very low noise preamplifiers. We got a patent on a socket for 7077. We had a cavity for UHF frequencies, which worked, works very well. It was just a sheet metal box of different sizes, with a screw in the back to tune it ... quite simple, model shop kind of construction that worked fine.

TAYLOR: Did that go into a preamp?

PALMER: Yes. Would this be the input stage?

TAYLOR: Yes, it would, if ...

PALMER: Let's return that, too.

TAYLOR: Okay.

PALMER: So we could ... we had equalizers. I think we had, early on, sound traps to attenuate the sound carriers. Well, this was a picture of all of our data sheets that showed our messenger mounting. Obviously, cable powering ... here's a 1959 price list of ... so this is, there is a sweep generator ... cable powering ... do you want to ...

TAYLOR: Is that really the earliest catalog?

PALMER: This is probably the earliest I have.

TAYLOR: That would be more useful than this ... first of all, it's undated.

PALMER: These things are undated, too.

TAYLOR: The price list is dated ... puts it in a time frame, anyway.

PALMER: This book was put together way back then. Another early thing that we did was pilot generated automatic level control system. "Maintains superior automatic level control in terms of a 74 megahertz reference signal, introduced at the antenna site." We may well have been the first to do that. And later on, I think we were the first to use two pilots. And we used that first in amplifiers that we supplied to Sruki Switzer for the antenna site run from seventeen miles west of Mississauga, Toronto, area. This was the amplifier which had replaced the two strips. You put it in our own sheet metal, so this could plug into a Jerrold power supply, or plug into our power supply. This was the automatic level control chassis for this.

TAYLOR: Now, when you came in with the two pilot, was that after the transistor development, or was that on tubes?

PALMER: I think that would be transistor.

TAYLOR: That was my recollection.

PALMER: We really didn't need it on a low band system.

TAYLOR: That's right.

PALMER: And our pilot was in the middle ... 74 megahertz, so we had three channels below and two above.

TAYLOR: And that was really just flat gain control, wasn't it, or did it tilt at the same time?

PALMER: I think it always was tilted.

End of Tape 1, Side A

Start Tape 1, Side B

TAYLOR: We are back on the record now. We missed a little bit, but I don't believe that it's anything especially critical.

PALMER: Now the rest of this book covers the cable systems.

TAYLOR: I see TV set rental. Is that a business you got into?

PALMER: Just in a peripheral manner in State College and in State College only. We owned and leased these television sets in the State College Hotel and the area hospital. The owner and manager of the State College Hotel was Matty Mateer, who was chairman of the board of our company. We owned the sets and the Women's Auxiliary in Bellefonte Hospital rented the sets to patients. That was their fund raising project.

TAYLOR: Primarily in the hospitals then?

PALMER: Right, but that was about the limit of it. Rest of this information ... to go on to Cablevision ...

TAYLOR: One thing of technical interest that was mentioned after the tape had run out is that Walter Brown used open wire line in the Bellefonte system.

PALMER: Yes.

TAYLOR: Which is interesting. Do you know the timing of that?

PALMER: That would have been before I was around.

TAYLOR: Prior to what, 1953?

PALMER: It would be prior to that. Let me see here. "In 1951, the Bellefonte Company, then the Central Pennsylvania Corporation, began a television cable service to Bellefonte, Pennsylvania" ... so that was 1951. "The system initially carried only one channel, Channel 13 from Johnstown, the only channel available at that time. The system was later expanded to carry three channels: Channel 8, Lancaster; Channel 10, Altoona; and Channel 6, Johnstown. Each channel will carry as Channel 2, 4 and 6 on the Jerrold strip system."

TAYLOR: There was a whole system up in White Fish, Montana that was originally built with two wire open lines. The taps were on some hooks that they hooked over the two wires. That was changed pretty quickly.

PALMER: Here are some claims that ... do you want me to switch?

TAYLOR: Fine.

PALMER: Follow this?

TAYLOR: Whatever seems to come naturally. I'd just like to cover these points when we get to them.

PALMER: Okay. Here it is printed in our loose leaf catalog, on a page dated '76, that "in 1953 we had the first messenger mounted; in 1953, the first cable powering; in 1954, first pilot controlled automatic level control system; in 1965, first use of integrated circuits; 1966, first high output solid state equipment." This use of integrated circuits would not have been for the main amplifier. This would have been for other uses ... control circuits.

TAYLOR: These were IC chips?

PALMER: Yes. Because our high output, solid state equipment ... We stayed with stud-mounted transistors in a cascade, I guess you would say, in a modified cascade output configuration, for quite a while, even after others were using the hybrid amplifiers.

TAYLOR: Did you ever have amplifiers that were strictly discrete transistors?

PALMER: Yes, since we had our own output stage, the rest of it would be discrete transistors, also.

TAYLOR: But not the integrated circuits?

PALMER: No.

TAYLOR: This was before the integrated circuits, then?

PALMER: Before the hybrid.

TAYLOR: Before the hybrid.

PALMER: The main amplifier integrated circuits ... My statement here on 1965 first integrated circuits were, "Integrated circuits in the control circuitry, not in the amplifier stage."

TAYLOR: I see.

PALMER: "'68, first used the modulated pilots." Now we felt, and I still feel, and I don't know what the practice is now, but that modulated pilot gives a lot of advantages over a CW pilot.

TAYLOR: Do you want to cite some of those? Is this modulation, special modulation or TV modulation?

PALMER: Special modulation.

TAYLOR: Special, okay. You don't have DC circuits to deal with?

PALMER: Right. You're dealing with AC circuits in the amplifier, not DC circuits. I guess that's the primary thing.

TAYLOR: I understand.

PALMER: "'69, first use of heat fins on castings; 1970, first UHF converter with crystal oven and a Schotke key mixer; '71, first AC power port for trunk amplifier stations." Well, we're reaching there ... "'72, first MATV amplifiers with a CATV quality. In '73, we had a hub antenna site, multi-output amplifier. '75, DC to DC standby power source, and '76, first loop back two-way amplifier with automatic reversing."

TAYLOR: Interesting. My recollection is that you were one of the first, if not the first, to use multiple output transistors, almost parallel hybrid, but not quite.

PALMER: Yes.

TAYLOR: I well remember when George Dixon was demonstrating that, and I was up at a meeting or something, I have forgotten what it was now, but talking about those two outputs, gave you the additional output capability. Not quite the parallel hybrid, because you didn't combine the outputs, but I guess you had a splitter at the drive on the two transistors. One of them you even had four, didn't you? Four output transistors?

PALMER: Yes.

TAYLOR: That didn't become very popular as I recall ... didn't go very well until they really came out. Well, feed forward was moving, and the hybrid was the answer to feed forward by some competitors.

PALMER: Oh, then along we came up with the philosophy that the amplifier spacing was a function of system size, which it is. And I did a IEEE paper in 1966, and you did some work for me on that. So we had three amplifiers, 22 dB gain, 32 dB and 40 dB. And we were quite successful in the 32 dB amplifier ... did a lot of systems with that.

TAYLOR: Would those be, then, the smaller systems?

PALMER: Yes, less length and have a higher ...

TAYLOR: Yes. One thing that has intrigued me for many, many years, is why 22 dB? It's a standard, it's common. They're up a little higher now. I remember when somebody calculated the Naperian optimum of about 9 dB, 8 something dB gain, and yet everything seemed to come up at 22 dB, or 21, something in that neighborhood. I always wondered, "what drove that." Do you have any thoughts on that?

An interesting sideline, I was called down to Allentown, by John Walsonavich's bank ... wanted me to make a technical review, because of some borrowing that John was doing. We went out to the end of his system, looking at pictures and checking some performance figures out there, and amazingly, you had 56 amplifiers in cascade, and yet we were getting good results out there ... at least acceptable results. So, finally I asked him for one of his amplifiers ... they were home built. I got them down to Washington, and we ran some tests on them, and discovered that they're an average of about 10 or 11 dB gain. Here was the Naperian number, showing up in actual performance, and you prove it! Took a lot of amplifiers ... 56 amplifiers would be equivalent to what ... maybe 28 or something like that, which was not bad. But I guess I often wondered what drove it up to 22 dB, and I suspect that it was not scientific logic, but maybe economic logic.

PALMER: Well, it probably was what Jerrold was offering and everybody ... you had to copy what Jerrold was doing.

TAYLOR: You're exactly right.

PALMER: There's other work. Derald Cummings did some work on optimum amplifier spacing. His work showed that the 9 dB didn't really work, because you couldn't maintain the low noise figure. It wouldn't have high enough output to drive the output device that had an optimum output. So, it was the inter stages of the amplifier which really drove what the amplifier ... what you could get the best overall reach ... optimize the noise, optimize the output, but you have to have them further apart than 9 dB, and to do that it would take more gain. Anyway, C-COR had multiple spacing and at one point, we were talking with 3M in St. Paul. They had a group that was developing a rural telephone system.

TAYLOR: I remember they had something or other, CS Cubed, or C-Cubed, or something?

PALMER: Oh, that's right. CS Cubed, CS Squared ... something like that.

TAYLOR: Something of that sort, yes, you are right.

PALMER: I was trying to come up last night with what that was called. Okay, I can't remember the guys name. They had a scientist, who I think was hired for that project, as well as a project manager, and I can't remember his name. Anyway, as we were getting ... I don't know if we had gotten the job, I think maybe we had gotten job, but they selected us based on reliability. They had an interesting ... well, it is a sophisticated company to begin with. I think it's one of our better technical companies in this country ... the way they function, the way they operate, the way they give their technical people 10 percent time to work on things that they want to work on, which has developed a lot of interesting things. You know, this "Post-It" thing, came out of that. In fact, I think it was a secretary that came up with that.

Anyway, this scientist called me one day, and said, "You know, if we get to looking at these systems, we ought not to be stuck with a fixed spacing. We ought to space these amplifiers at different spacing, depending on the length of run." I said, "Well, that's very interesting. I'll send you a paper on that!" I think generally that wasn't worth ... that was the only place where somebody was really excited about that capability. So we developed two, or maybe three amplifiers for them, for this telephone system. Built two systems, and they really didn't pan out. The telephone set itself was a transceiver. I don't remember what their telephone set was, so maybe I better not say that. Then later, we did work for Collins Radio, and Collins Radio wanted two-way amplifiers.

Well, let me go back to 3M. 3M selected C-COR because of our reliability. And what they did to determine what our reliability was, they went to cable systems, got in, and got to the repair technician, and audited his repair records. And they did this for half a dozen companies. Then they got to a system that was C-COR and found out that there were drastically lower repair frequency than other systems. I think after we got that, we had some information, but we started analyzing our own repair information. I've got that someplace ... repair cost as a function of sales volume. We started advertising reliability.

TAYLOR: Don Dworkin would certainly testify to that! You put the one in somewhere in Tennessee ... Manchester, was it? Said the screwdriver technician installed them, the way he was told to install them, and the thing checked out perfectly, and they never had to touch it. Didn't know anything about it.

PALMER: We set a hundred thousand hours MTBF. Then the next system, the telephone type system, we did ...

TAYLOR: When you say telephone type, was this to be in the rural areas to serve telephone as well as television?

PALMER: Yes. The 3M system was definitely for television and telephone.

TAYLOR: They were looking for REA money, is what they were looking for?

PALMER: Yes, they were looking for REA money. Now, Collins Radio did a telephone system, and I don't think television was necessarily a part of that.

TAYLOR: I see.

PALMER: Because the system was installed in office buildings. Of course, they could be interested in some video transmission ... there would be nothing to prohibit video transmission. So their system obviously required two-way. But their telephone set ... you pick up the set, signal was detected by a central computer, dialed the number. The computer then assigned a pair of frequencies to send and receive. So that, literally, there was no switching equipment, there was simply frequency assignments. They put one in one of their buildings in Cedar Rapids, and we supplied equipment to do an office building in Caracas. One advantage, you could move a telephone set any place in the system, and your telephone number remained the same.

TAYLOR: When was this? Was this in the seventies?

PALMER: It might have been later than that. Two-way amplifiers were pretty well known commodities.

TAYLOR: Oh yes. The two-way came in the mid-sixties I would say ... somewhere in there. I'm sure it was late sixties, probably.

PALMER: I think we did more midband split than most of our competitors, so we had more flexibility. These would have been midband systems, so you have about equal bandwidth in each direction.

TAYLOR: You still have problem with the ingress, unless you have the sleeve connectors and some other RFI protections. That was what the people at EIE experienced. They were one of the first to do a two-way I think, and they had a terrible time with the ingress. They couldn't figure out where it was coming up from for a while, but it was an awful lot of problem.

PALMER: Or look at the fact that ingress, is ...

TAYLOR: Is just coming from anywhere.

PALMER: All of this ...

TAYLOR: From the whole system.

PALMER: Right.

TAYLOR: So, it wasn't until we had the integrated sleeve, or integral sleeve, on the connector that we began to control that mess.

PALMER: I think there were ... weren't there some attempts to sectionalize the system so that different bands from different areas, to reduce the points of ingress.

TAYLOR: Yes, and of course that's going really to the end with the fiber backbone now. You come in, and divide down into small areas. Now you can handle the return from a very small area. Typically, currently, there are a couple thousand households, of which you've got a percentage of subscribers. Of those, only a percentage use the two-way. But now they're down to going to 500 homes per optical receiver, and almost certainly, will in the near future, go to 200, maybe even to 100.

PALMER: Would that be due to noise ... the return noise?

TAYLOR: No, this is due entirely to be able to use fiber efficiently and effectively and the deeper you can get the fiber, the more you can use it for other services like PCS, or alternative access, whatever.

PALMER: Well, I guess it's more and more like a star system.

TAYLOR: Yes, it is. It becomes a star. Although sometimes they put the fiber in a partial tree and branch, but that's limited.

PALMER: Here is a discussion, 1976, of hybrids versus discretes and that "C-COR insisted on doing the best possible job for its customers. Therefore, engineers choose the gain block, discrete or hybrid, that would do the best job of meeting performance specifications, and do it reliably." And our sticking with discretes a lot longer than others, was based on the reliability.

(Break)

TAYLOR: We were talking about hybrids versus discretes, and you indicated that you stuck with the discretes perhaps longer than other companies, based primarily on reliability.

PALMER: But at this time, the end of '76, I can tell by the way this is written, that "we choose whichever is best to do the job ... but reliability is part of it." But the fact that we are even mentioning hybrids here means that we are looking at hybrids. I am sure that we changed at least some of our amplifiers and maybe most of our amplifiers at that point. I maintained a close relationship with the hybrid suppliers. I have to believe that it was a closer relationship than our competitors did. I personally visited the TRW and Motorola every year and usually got to fairly high levels. On one visit to TRW, I met with the senior vice president that had responsibility for all solid state devices, because his people thought that he should talk to me.

Another trip to Motorola ... we were having ... the industry was having a hard time getting hybrids, because they were in short supply. Manufacturers said that they just weren't going to make so many, because they just weren't making enough money. That it was not as profitable for them and that's why they were not increasing production. But everybody was screaming for hybrids. And I told Motorola that, "Look, the solution is simple." I said, "Raise your prices!" "Well, we can't ... TRW over here." I said, "What do you think TRW is going to do ... raise your prices?" They were flabbergasted that a supplier would come and tell them to raise prices. And they said that. I really had a good relationship with both companies.

TAYLOR: When did the hybrids first come into the cable market? It would have been before '76.

PALMER: It would have been before this. I would guess maybe a couple of years before.

TAYLOR: It wasn't very long after that you did a hybrid selection and got up to 340 megahertz, upper limit with selected hybrids, as one of the first that got beyond 300.

PALMER: We really kept pushing the limits. I think we were, early on, higher and higher. And even today, and with some of the same technicians doing the one gigahertz amplifier for Queens, and that work, hybrids weren't available. C-COR did development on their own hybrid and then maybe forced hybrid manufacturers to come up with a ... I guess my information is very sketchy, but I have had that information. Now, hybrids are available for one gigahertz. But John Pavlic was making the first hybrids that C-COR was using for that job.

TAYLOR: For the Brooklyn-Queens?

PALMER: Right.

TAYLOR: John Pavlic, is he TRW ... I mean, Motorola?

PALMER: No, he's a C-COR un-degreed engineer.

TAYLOR: Okay. Colin Horton was doing some of that. Wasn't he involved in that to some extent?

PALMER: No. Horton has always been in the system design, the application, and not in the equipment development.

TAYLOR: Okay, he was just reporting on what was going on?

PALMER: Right. We had always been very much aware of the heat dissipation. I see here, in this '76 catalog, a section on thermal design. This was an area where I felt I had something specific to contribute and was generally in on heat dissipation methods. I had taken a General Electric in-house course on thermal design, heat dissipation ... used a book by King, and other internal General Electric information ... very excellent information and course. Which really led us to the fins, beryllium oxide as an electric insulator, which also is a decent heat transfer agent. I think we are going to see a lot more of this kind of thing, particularly, when we can artificially produce diamonds, because "diamond" is a material that is a good electrical insulator with very good thermal transfer.

TAYLOR: Is that a fact? I didn't know that.

PALMER: So that when we can make the deposited diamonds ... I was an investor and a board member of a company here--Diamond Materials, Inc.--which was engaged in that.

TAYLOR: It's very simple. All you have to do is press it hard enough and heat it high enough and you've got diamonds!

PALMER: Well, we were using vapor deposition methods. Had some success, but we were too early, and not enough money to back it up. The Japanese are doing a lot and there is a diamond material consortium at the Materials Research Laboratory at Penn State. There is something in this morning's local newspaper about diamonds and the diamond approach. Barbara mentioned it and I didn't look at it yet. I've lost enough money on diamonds for a while.

TAYLOR: Very interesting story on heat. Back in the early days of transistors ... Do you remember Hank Abajian.

PALMER: Yes.

TAYLOR: And do you know his story about Vermont? He claims to have built the first transistor amplifier in the cable business. He would use it for running down a mountain side. He said one of problems he found was that in the cold temperature, they all went to pot. So he had to put 10 watt heaters inside every chassis in order to keep it warm enough. That was the only time in history, I guess, that you ever kept a transistor heated! I have been trying to locate him, to get him to tell me that story on tape, but I haven't found him yet.

PALMER: "Duel pilot control systems." So we had that in '76--modulated pilots. "One of the advantages reduction of RF gain requirements, which simplifies circuitry and improves a reliability ... and then the use of AC amplifiers. Since our pilot control was slope controlled, in cascades up to 10 trunk, trunk amplifiers, single pilot is all that's necessary."

TAYLOR: And they were slope controlled?

PALMER: They were always slope controlled. C-COR's problem was we couldn't sell. We had to have a technical customer.

TAYLOR: How about Don Dworkin?

PALMER: And there were others ... Switzer.

TAYLOR: And Switzer, yes.

PALMER: Or, you know, Warner, Warner Amex. Who was the technical VP there? Peter Alden. One year they bought $10 million worth of amplifiers for C-COR. We did every major city they did.

TAYLOR: Didn't Dworkin then eventually go over to Warner at one time?

PALMER: Yes.

TAYLOR: I guess he's retired now, probably.

PALMER: I think maybe Dworkin was ... now, was he with ATC?

TAYLOR: No, he was never with ATC.

PALMER: He was never with ATC or Manhattan Cable?

TAYLOR: I don't believe so. He'd been with ... Of course, he started with Blonder-Tongue, then Arthur Baum of Vikoa. In fact, he did the first electronics for that company. Then he left that. Don't know if there was something in between. But when Irving Kahn sold his New Jersey group to the New York Times, Dworkin went to work for the New York Times.

PALMER: Okay, all right. Yes, and we sold a lot of the equipment.

TAYLOR: Now who was he with when he bought the thing down for Tennessee? Maybe that was Warner ... either Warner Amex or just Warner. I can't remember now. But he sure became a believer in C-COR at that time. Said it to me many times when I was down there.

PALMER: I guess our first success with ATC was with the Manhattan Cable System, although that was pretty late that ATC got involved. Well, anyway, Bob Tenten, and we, I sold them on ... finally on what they call their "block amplifiers." They had been using DBC, Delta-Benco-Cascade, because they had higher outputs. Said so right on the spec sheet.

TAYLOR: Dolan has been so tied in with Jerrold on everything, I'm surprised ...

PALMER: Now Dolan, this was ...

TAYLOR: This was after Dolan sold to Time.

PALMER: No, this was Manhattan Cable Television, which was a separate company.

TAYLOR: No, but that was started by Dolan, because I did some work for him. Then he sold it, well, because ATC was 40 percent owner, and ATC just bought the rest of it.

PALMER: Schultz was the guy that I started working with there.

TAYLOR: Oh, yes, Freddy. He's in Switzerland now.

PALMER: Freddy Schultz, he's in Zurich.

TAYLOR: Yes. I got Freddy that job at Manhattan Cable. And every time I go abroad and get into Switzerland, he's so grateful for me getting him that job. I didn't do anything, I just gave his name.

PALMER: He came to State College after I left C-COR, three or four years ago, and called me and came to see me over on Greenbrier Drive. And said, "Boy, look me up if you ever get to Zurich." Anyway, so we started selling some amplifiers to Manhattan Cable. I think that was Bob Tenten, but the higher output units, they still use DBC. Until one day they added the thirty-third channel and things went to pot. And so they started measuring, and found out in the real world, that our amplifier had 10 dB more output than these DBC amplifiers, so we supplied them with a lot of amplifiers. About 4,000 amplifiers in that lower half of Manhattan are all C-COR. Reliability was a part of that, and performance was part of it. This is a complete catalog at a given time.

TAYLOR: Might talk a little bit about the 400 megahertz bit. Sruki Switzer pushed that very, very hard, on the basis of Warner. No, it wasn't Warner ... Warner was his opposition, I think, in Atlanta.

PALMER: Would this be Rogers?

TAYLOR: No, maybe it was the Mid-America group. At any rate, he pushed very hard. I guessed he must have pushed on you, too, to get the 400 megahertz operation because you and I were on a panel together, and both of us were, I suppose we'd be called negative on the 400 megahertz. I felt it just wasn't ready and, I guess essentially, that's what you felt. I would be interested in your views, if you can recall, how it came about and whatever your thoughts are on that.

PALMER: My thoughts were that this was a franchise gimmick, a sales ploy and meant what I said, "It wasn't ready yet." But, I hope that was the truthful approach at that point in time, because there were other times when we used the frequency game, when we knew that we could do it and it was there, we used that as a sales plug.

TAYLOR: Well, that was a 340 megahertz thing. That was definitely a sales tool and caused us a little trouble in one of our franchise proceedings, because a competitor had come in and talked about spacing for 400, or something like that ... because C-COR amplifier was already there. But it was an interesting development. Many people at that time though, thought that, "Who needs fifty channels?" "Who in the world could use fifty channels?" This was happening really before the satellite revolution had really started to go. They had the Mississippi and Florida demonstration from the prize fight in Manila, but it hadn't produced much for the industry operator. It wasn't long after that the networks, the satellite networks, began to explode, and the need for fifty channels was soon apparent, very soon.

You've talked off and on as we go along about your manufacturing philosophy, and I think that's one of the key features that I know about C-COR. You may be interested in a little story that I was ... in making an investigation of different equipment for a client. And one of things I wanted to do was to check quality assurance programs. I came to C-COR, I went to Jerrold, and I went to Vikoa. And it's a classic distinction between those three. I went to Vikoa, probably first, and Vikoa's quality assurance was "all I want is to get paid." They had some charts and some things they worked with. I came to the conclusion that you can't have quality product when you have to hire people out of Hoboken. It's almost that simple. Then I went to Jerrold, and they were in the midst of quality assurance program for Western Electric. And Western had a booth, their own room, with all their test equipment, and they were going through the amplifiers. They were doing this on a lot basis ... standard sampling lot basis. And I guess it was a pretty good program. They had a regular ...

PALMER: A statistical program?

TAYLOR: A laid out program, a statistical program, yes. I came up to C-COR and C-COR didn't have any quality assurance program. They just hired people that did the job right to begin with! And of course, you ran tests, but it was dependent on the quality of people that were doing the work. It was so clear the distinction on these things.

PALMER: Well, on the hybrid bit we literally had a thirty channel test that ran on every hybrid on incoming inspections. So, we probably did more output testing of the ... as we characterized the hybrid on receipt.

End of Tape 1, Side B

Start Tape 2, Side A

TAYLOR: The leader has gone through ... we are back in business.

PALMER: I have always been interested in technical activities, in technical quality, engineering excellence. That's why we merged our cable system operation into TCI. I wanted to get out of that business. We did very well at it but ... You talk about the one thing that Irving Kahn did of putting together all those franchises in New Jersey. Well, hell, we had done that the decade before in Pittsburgh. Allegheny County has something like 125 municipalities. At one point, of those franchised, we had 80 percent of the franchises. I think in Allegheny and Beaver Counties we had 70 or 80 franchises that went together to make our system. So that was all our doing, our franchises and all C-COR equipment. Then we sold that to TCI ... We didn't sell it, we merged with TCI and got TCI stock, which hasn't done that badly.

Then Warner Amex comes along with the city of Pittsburgh, and that's all C-COR amplifiers. When they had their grand opening with the mayor and city council and everything else, they invited me to the opening. And I went, fortunately, and I got down there and started talking to Peter Alden and I said, "You know, I don't see any other vendors here." He said, "Well, they weren't invited." And I really felt honored.

TAYLOR: I should think.

PALMER: We were smaller than other companies because we didn't sell as well, I think. We couldn't get the pitch across of our technical superiority.

TAYLOR: Was there a price disadvantage? I can't remember now.

PALMER: I don't think there really was a price disadvantage when you really got down to it.

TAYLOR: Not significant. One difference was that the Jerrold's and the Magnavox's and so on, the Texcans, would deal and they would make discounts, ad hoc discounts and you would never do that. You had a volume discount, and you'd take this, or not. That may have hurt. To some extent, I suppose, with people like Gene Schneider and Chuck Dolan, they had been with Jerrold almost from the beginning and it's habit. They didn't see any reason to change.

PALMER: Well, and you can be ... You know, if you have a system that doesn't work and you're with Jerrold ... your stockholders, your investors they have a hard time criticizing you. But if you make a change and go to a small company, a "C-COR," you know, "Why did you make that change when everybody else is ...?"

TAYLOR: Yes, it's true, that somebody evaluating a property, it was better to say it was Jerrold equipment than it was to say it was somebody else's equipment. Not because it was necessarily any better, but ...

PALMER: And particularly if they couldn't technically understand why it was better.

TAYLOR: That's right.

PALMER: Gene Schneider had a chief engineer. I can see him, I can't come up with his name. It was under Richard, the next step down. He didn't believe probably any of the stuff that I've said this morning. I just hadn't sold him. I don't think he had the technical capability that Richard did.

TAYLOR: It was kind of a puzzle to me. If Richard was certainly capable of understanding it, there must have been something else in that set up. Gene may have been in close association with Jerrold and Shapp, but ... it's hard to say. They have done a great job of marketing, however, there is no question about that.

PALMER: Well, it's limited scope. We have limited our scope by avoiding all these other areas.

TAYLOR: Is that a conscious decision?

PALMER: Yes.

TAYLOR: To some extent, that may have been a problem, because in the earlier days--the developing days-- when new investors were coming into the business, they wanted a turn key. They wanted everything! And if they could get it all from one company, that is what they wanted. Well, Bruce tried to have cable along with all the other equipment ... converters. He had the whole works ... that didn't work out.

PALMER: I think some of my commentary letters ... Well, this is a commentary letter, . You got one of those every month. Talked about the failures in the industry, and there were plenty that failed.

TAYLOR: Yes, there were.

PALMER: They were chasing these other things, and making deals and getting business and no profit.

TAYLOR: SKL had some of the same problems. They made only amplifiers and passive devices, and not the rest of the equipment. So, somebody had to be knowledgeable enough to say, "Buy C-COR amplifiers, but buy Jerrold headend," or whatever. And they would go talk to the Jerrold people about buying a headend, and then Jerrold would talk them into buying the rest of their equipment. So, I suspect that was part of what hurt. On the other hand, whether the advantage would have been worth the cost, I don't know.

PALMER: I guess we have talked about most of these things, except "surge protectors."

TAYLOR: Yes, that was one of your developments that was innovative.

PALMER: Right. And I think that was a very important development, and a very important contributor to our reliability. I just have no question at all that was a major item.

TAYLOR: Do you recall when that began to be instituted, time wise?

PALMER: Let's see, I don't think it's in this, even in this catalog.

TAYLOR: Meaning it was after '76?

PALMER: Yes.

TAYLOR: Derald Cummings was involved in that, wasn't he?

PALMER: I think he was, George Dixon and Derald Cummings. It's a diac... that fired a triac.

TAYLOR: Where are those guys now?

PALMER: They are both in this area.

TAYLOR: Out of the cable business though?

PALMER: Yes. George had a shop on Benner Pike. He does some wood carving.

TAYLOR: Oh really?

PALMER: Yes. Cummings, I think he works for Locus. Well, he worked for Locus at one time ... maybe he's still there. I can't give you dates, but as the technology evolved, we went push-pull, feed-forward and parallel.

TAYLOR: Well, push-pull is really a function of the transistor ... perhaps a necessary function of the transistor. Is that a correct statement? So when you got into the solid state amplifiers ... well, though it was also the midband transmission.

PALMER: It was more than twelve channels, and you really had to have push-pull to cancel the second order products.

TAYLOR: To get through ... that's right.

PALMER: So, it was push-pull that allowed the ... to go beyond twelve channels.

TAYLOR: You never went through the single ended, second order cancellation that Sylvania and AEL went through. If you properly phase the amplifier, which is really done by biasing the transistor, you could get a periodic cancellation over every three or four amplifiers. The end product, at the end, if it were done right, was that the second order was quite reduced. Both of them tried hard to sell that. In fact, even up to the time Sylvania was acquired by Texscan, they were still using, on some of their amplifiers, the single ended second order cancellation. AEL, I guess, went out of that business before they went to push-pull.

PALMER: Yes. We never used that, we were always ...

TAYLOR: Feed-forward, that was how I first met Joe Prescutti. He did thorough analysis of that, and talked to me a good many times about it ... very perceptive. I learned a lot from talking to him about it.

PALMER: Yes, he did a lot of work in that. A lot of work analyzing it ... how an amplifier went together, and what ...

TAYLOR: He did very good work on that, very good work. And the parallel hybrid, that came from ... Well, I guess Jerrold had used it actually before it was hybrid, in a certain form, but it didn't work very well because their splitters were not adequate. So the real parallel hybrid probably came from Amperex, Magnavox, Philips, who put the device in single housing, and that seemed to be the first one that really took off.

PALMER: Now SCAT, my son Chuck had a lot to do with SCAT. I don't know who invented SCAT ... if it was me, or Joe or Chuck, or all three of us. From what I can tell, the system that we came up with is essentially ... I guess two or three years ago, I was at a cable trade show where I talked to the Scientific Atlanta guy. Went down there, interdiction system, or whatever they call it ... you know, and as I recall, it was feature for feature exactly what SCAT was.

TAYLOR: You know, interdiction is a jamming system.

PALMER: That's what SCAT was. SCAT is a jamming system, an interdiction, pure and simple, or pure and complex, purely. And the same as what Scientific Atlanta's ... are they selling it?

TAYLOR: A few. The idea of the compressed digital transmission compression has slowed it down, because people visualize that we're going to have to have a box in the house anyway to decompress the signal ... so they're not buying ... They're staying with the box.

PALMER: Well, I think we did. We spent a lot of money on SCAT. We thought we had a customer ... we had a customer named Westinghouse, Brad Johnson. Brad told us he was going to use this in a system and, I think, the system changed a couple of times. We built prototype equipment to go into this system. Built it, got ready to install it, wanted a date, and equivocations, etc. Finally he said, "Oops, we changed our minds." There was nothing we could do about it. The thing is, if we had a customer, a committed customer, that worked with us, and stayed with us, I think SCAT would be out there today as a viable process. I was really thrilled when I listened to the Scientific Atlanta guy describe our system. I really felt good about that.

TAYLOR: Boy, I had the wrong impression of SCAT. I had it all wrong. I thought it was basically an off premises switching system, convertor system. I'll be darned.

PALMER: Totally interdiction.

TAYLOR: What kind of jamming did it do? Like the Tanner negative trap or positive trap?

PALMER: No, they were ...

TAYLOR: Frequency hopping?

PALMER: Yes.

TAYLOR: Were they really? I'll be darned. I didn't know that.

PALMER: They were RF signals. Now, just how those signals operated, I don't remember.

TAYLOR: Is any of that in your material?

PALMER: I haven't looked through the rest of this. Chuck would know and remember. If you have an hour someday, you could give him a call. So our SCAT ... we put a lot of money in it. Our customers pigged out on us. And then we had one small customer who put it in his system and they've had a lot of problems. Some of which might have been, you know, cockpit problems ... customer problems. He was a poor customer. Technically incompetent or didn't have the technical ability to work with it and with us to come through an Alpha test, or a Beta test with the system. And eventually to be marketed, it had to be on integrated circuits. The guts of it would have to be large scale integration. I actually made a trip to Korea to talk with Hyundai, who was starting a large electronics company, on the idea of their developing, or their carrying forward on the development of the hybrid.

TAYLOR: The LSI.

PALMER: They expressed interest, and really at that time, I don't think they had the capability. The man that we started ... Hamied Hydery, he's now vice president of engineering at C-COR, went over there, made the first trip over there. He was surprised that the Korean man he was talking with had gotten his three electrical engineering degrees at Penn State. Then, by the time we got over there, he had just left the company and was coming back to the United States, and it was somebody else we were dealing with. But it turned out that we saw he and his wife in Seoul. Let's see, his relationship was his aunt is the registrar at the Palmer Museum of Art and her husband was the acting head of electrical engineering at Penn State.

TAYLOR: For goodness sake! Did you know this in advance? Was it the reason why you went to Hyundai?

PALMER: We knew that about the time we made the trip.

TAYLOR: I see.

PALMER: Since then, we've stopped in Tokyo and our guide in Tokyo was Suni, who was the registrar's sister. Her husband was a high-up official for IBM in Tokyo. We were in their residence, a 3,000 square foot apartment. They took just delightful care of us. They were Koreans but American citizens. We ate street food ... got to see the kids dancing in the streets on Sunday--just interesting things. We've seen them further.

TAYLOR: Good.

PALMER: Well, data transmission. Cliff Shrock worked on a lot of things ... was not too closely controlled. C-COR's treasurer failed to really keep tabs and a strict control over him and he spent himself into oblivion. I like Cliff, thought he was capable, and inventive but very difficult to control. As soon as I left the scene at C-COR, Perry went after him with a vengeance. I don't know what the eventual outcome was. Probably got his house and everything else because he felt that C-COR was really being taken. Yes, maybe that was it.

TAYLOR: Cliff is back with Cablebus. Our guy, Jim Kearney, was in Korea doing some work for a small company over there. They wanted some, I guess, home security type equipment. Nobody makes that here but Cliff was willing to provide it. He went to Korea and got the sale. But everything he had to build the stuff came C.O.D. and he was having money trouble meeting the C.O.D.'s, so you knew he was in financial straights.

PALMER: Always.

TAYLOR: I think he finally got the job done but it was messy. In those straights, he was cutting corners and one thing and another.

PALMER: Yes, I was really sorry about that. I thought that I could control Cliff from the technical end if our treasurer had really put the screws to him on the financial end.

TAYLOR: Well, it was the right thinking to get into the digital operation, and Cliff seemed to be a good one to move in that direction. But, as you say, other things conspired to prevent it.

PALMER: He lost a lot of money for a lot of people.

TAYLOR: Well, the Cablebus I guess ... Who were the original owners? It was one of the telephone companies--Pacific Bell or ...

PALMER: No, the originals were the head guy at Tektronics. Another, I think, was chairman, CEO/founder of Tektronics and with him was the head of another big electronics outfit out there. Maybe the outfit with the heads-up display. Then Cablebus was sold to Pacific Bell, whatever the telephone company is with headquarters in Vancouver, Washington. Cliff didn't get along with them and then couldn't ... Cablebus was in two sections. There was the labs and then the manufacture of the alarm business. And I went out with the Pacific Bell ... that name is not quite right.

TAYLOR: Maybe it's Pacific Northwest Bell?

PALMER: Bought Cablebus Labs from them. They didn't know what they had and they didn't want it anyway and were tired of ... They could get rid of Shrock in the process, so I bought it. I pumped money into it for maybe three years and then left.

TAYLOR: I get the feeling the Comlux division, that they have now acquired, is probably a good acquisition. I don't know anything about the financial details of it, but having that capability ... it seems to be a pretty highly respected capability to match C-COR's standards, or standards you set. At least you were in the right direction.

PALMER: Now, future switched star, now I'm with a company that has a switch star, but then that works. But that's done fairly well. Well, any success with that, has been pretty much Europe ... you know coaxial switched star. But even the activity there has slowed down. Broadband Network's push now is in distant learning systems. It's in AM video, multichannel AM video, and having some success to the system in Indianapolis for the school system ... million plus, it would be a lot of add on to that.

TAYLOR: These are broadband distribution systems?

PALMER: Fiber and multichannel, but analog. And we are working on a switch for that kind of system right now. We expect to have that in a few months.

TAYLOR: This will be an optical switch?

PALMER: Right.

TAYLOR: We tried to open a design group, independent like Terry Hulseburg down in Washington. Hired a guy who was beginning to do fairly well. He was innovative, beginning to move into the CAD area. Got us into, maybe, the wrong kind of material, equipment. But he then, while we were still in a losing position, raised his salary and the salary of the people who were working with him without telling us about it. Wholly-owned subsidiary that we were putting notes in to support ... He went pretty fast. I was sorry because I had gotten to know him personally fairly well and LaVerne and his wife were very cordial and did a lot of things together. It was sad but on a much smaller scale it's the same kind of thing.

PALMER: Here's an extra copy of some of the ... when we went public with ... [Pause in conversation while organizing papers. The following are comments made while going through papers that will be donated to the Center.]

TAYLOR: That's quite a plan.

PALMER: I designed all of the control circuits for that place ... the generators, the breakers ... the young pipsqueak at General Electric. This is a paper I published in the General Electric Review in 1949 on the coordination of protective devices.

TAYLOR: That's J.R. Palmer in his younger days.

PALMER: Right. Here's a GE patent I got. I got three patents at GE.

TAYLOR: Did you ever get any patents with C-COR?

PALMER: No.

TAYLOR: I guess C-COR has some patents, though, from other people?

PALMER: Right. Here's letters to our ... here was warranty costs as a percent of total sales in '73 and '76.

TAYLOR: Generally less than 1 percent.

PALMER: Yes, '76 is right around that.

TAYLOR: A quarter percent? What do you figure that the MTBF was that you quoted a figure earlier?

PALMER: Of these, 200,000 hours! It's obvious curves and space and sales ... this is a set of my commentary letters down through the years. You know, one thing that I am quite proud of in these commentary letters is that I, early on, got the word of the Harrisburg effect ... the interference of 118.25 MHz. I got a tape of the speech the guy was giving around to the FAA on ... Here's the letter I wrote long before the "shit hit the fan." "You thought you had a thirty channel system ... don't run for your technical type, do this exercise yourself!"

TAYLOR: This really happened long before this, because I was a chairman of an IEEE committee and we named Bob Powers as our sub-committee chairman to deal with this issue. Sid Lines came to the meeting and warned us that FAA is pushing us ... this was like 1970. That the FAA is pushing very hard to really tell cable that they can't use any of those frequencies. This is what that letter is saying. I think Garth Kanen was the guy from the FAA.

PALMER: That's right. But this letter was written shortly after Garth Kanen went around with this tape, and I have a copy of the tape.

TAYLOR: Okay, I've heard about that. I never did hear the tape but he's ...

PALMER: In this, I'd offered to stop by our booth. I'll let you listen to this tape.

TAYLOR: Well, in this meeting, probably in 1970 or '71, he said, "You fellows are using 250 watts on your networks." They said, "What!" "Yes, it's right in your literature ... 250 watts." I said, "Well, I know of nothing that's got 250 watts, anywhere, in any cable television network. Show me the advertisement." Never showed me, of course. He quit saying it, but that was the kind of reasoning this guy had ... he was awful. And Harrisburg, of course, just proved that all of his ...

PALMER: Well, Harrisburg was what he was ... okay, with that background I see he was just waiting for Harrisburg.

TAYLOR: That's exactly right. He was waiting for Harrisburg.

PALMER: Harrisburg was a ... really didn't prove the ...

TAYLOR: Harrisburg was asking for it in some ways.

PALMER: Yes, it was a real bastard situation.

TAYLOR: It sure was. I am going to change this over ...

End of Tape 2, Side A

Start of Tape 2, Side B

PALMER: There's 118.25

TAYLOR: It would have all been the same source, and wasn't synchronized.

PALMER: It wouldn't have nearly been the problem.

TAYLOR: But Harrisburg ... Jerry Looby who was with us for several years had been with Jerrold when they built the first Harrisburg system and it was just loaded with pressure taps. One of the funny things after the Harrisburg incident, by this time, Sammons had the system, and Hank Cicioni was in the meeting that I was in--an engineering committee meeting. We talked about pressure taps. And he's got a lot of pressure taps, all right, but the pressure taps are not leaking. He said, "I can prove that they are not leaking." Everybody in the room looked at him. He didn't convince anybody, but he still maintained that his pressure taps were not leaking.

PALMER: I guess the very nature of a pressure tap, leak or no, was going to set up a standing mismatch, or standing waves.

TAYLOR: It is a mismatch. It is inherently a mismatch, yes.

PALMER: It was inherently on the radio. Well, let's go get something to eat.

TAYLOR: All right.

PALMER: Here is a call on ATS-101 audio video system. Let's take that with us and look at it. Here is a surge protection module.

TAYLOR: Milford Richey was at Collins for a while. Would you deal with him at all in this?

PALMER: No. This is '73, surge protection module. That might have been earlier than that, but at least this is ... okay.

(Break for lunch)

TAYLOR: We are back from a delightful lunch at the country club which I enjoyed very much. Jim, I certainly appreciate the opportunity to probe the early history of C-COR and Jim Palmer, as well. We will be transcribing this, and after the transcription I will edit, and make any corrections that I notice. I will then send it to you for editing, additions, deletions ... anything that you want to do with it before it becomes finalized.

If I should find some things I haven't thought of here while we were talking, I have a little device that I can hook into the telephone and record by phone. So, I may give you a call and ask a question or two, and we'll finish it up that way.

PALMER: Good.

TAYLOR: Thank you again, Jim. I appreciate very much your sitting for this interview.

PALMER: My pleasure. You know, this may be an easy way for me to get some history recorded that I might not really want to or be moved to do without this process.

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Susan Packard

Susan Packard

Interview Date: July 27, 1999
Interview Location: Denver, CO USA
Interviewer: Unknown
Collection: WICT 20th Anniversary Collection Project

PACKARD: My name is Susan Packard. Susan Packard P-A-C-K-A-R-D.

INTERVIEWER: And the company you're with and your title.

PACKARD: I'm with Scripps Networks. I am Chief Operating Officer of Home & Garden Television and Executive Vice President of Scripps Networks.

INTERVIEWER: All right, just to get a basic history. Could you tell me how you became involved in the cable business?

PACKARD: How I became involved in the cable business was actually through a friend of mine. Out of school –

right out of school I worked in market research and she was working at HBO and she was having a lot more fun than I was having and she recruited me to HBO and I was there eight years and that's how I started in January of 1980.

INTERVIEWER: When you entered the cable business, what was the most striking aspect of the industry?

PACKARD: What was so striking about the industry in 1980 was that there was endless opportunity. It was a very exciting, high energy time. Back then -- the franchising had just been complete and we were -- the cable operators were building -- we called it new builds; now we call them rebuilds -- but they were just building the plant and the salespeople were selling what we called top down selling packages into the home and with HBO, we got into every home. We didn't know at the time, some of it was based on the sizzle of the product, but also the selling of the product, but it was a time of excitement, energy and just endless opportunity.

INTERVIEWER: A lot of successful women have said that it was easier for them to enter the cable industry during the formative years because there were more opportunities. Would you agree with that assessment?

PACKARD: I don't see a profound change in 1980 versus 1999, as far as entering the cable industry. In 1980, as part of my training, for example, at HBO, I had to climb poles with general managers, I had to be able to identify what was in a head-end, what was a receiver, what was a modulator -- I had to know those things. I had to be technically literate and at that point in time those were the kinds of things you talked about to your clients and you needed to understand what their issues were. And today, one still must be very technically literate but it's changed a little bit in that the discussion is now more on line, digital compression, pods, so the conversation's changed a bit, but I think you still have to have the same interests and understanding what your clients -- and the whole industry -- what the issues are in the industry and -- and I don't think it's changed remarkably. I think it -- as long as you have those interests and you have that sensibility, you can be successful.

INTERVIEWER: Okay, well, can I ask you to make a prognosis. Where do you see the industry going in the next five or ten years?

PACKARD: Well, we've seen quite a bit of consolidation in the industry and that we've been living with for the past year or so. We'll continue to see that -- we'll see more clustering, so there'll be a more efficient management on the cable operator level and, of course, there will be continued growth on the DBF level, so there'll be more homes taking all of these technologies and there will be more technology in a given home because that is going to be the way that the distributors are going to continue to make money and they have winning products and the idea of being able to go to one provider for a number of products is very efficient, but we all have to work out the operational bugs to get there, but the products are really winning new ideas, so I do believe that they're be more consolidation and there will be more products in the home and continued growth in the whole entertainment sector.

INTERVIEWER: Okay, where do you see the industry going in the next five or ten years?

PACKARD: Well, there'll be more millionaires. Sorry...there have been a hell of a lot in the last year or two. Seriously -- where I see the industry going in the next five or ten years will be continued consolidation on the operations side, continuing -- continued clustering on the operations side because it's the most efficient way to manage the business and in the home there will be more products offered, more products delivered, there will be a bundling of all of the products that are in the entertainment sector as well as phone and these new products are really very exciting. The challenge will be to get the customer to feel comfortable that it's easy to navigate these products. Once they understand what the benefits are, it's a slam-dunk in my mind, but we -- the challenge will be to train and educate the customer on what all the benefits are of the products. And I think they'll be -- because we're at a certain point in the history of the industry, there will need to be even more risk-taking on the part of programmers and on the part of the operations community because we really don't know what the last chapter is that's going to be written with this new technology -- and I think all of us have to work together and be -- and innovate new businesses and new products together.

INTERVIEWER: Let's step back a little bit and look at your success. Could you tell me -- what is your greatest professional achievement? What would you say?

PACKARD: I would have to say that my greatest professional achievement has been at Home & Garden Television. In four and a half years the network has grown to over 55 million homes, we're in four continents and a number of countries throughout the world and that's such rapid growth -- the management team at HGTV is responsible for that and I participated in that growth and it's one I'm most personally proud of.

INTERVIEWER: Yes, I read that HGTV made a profit before it was expected. Were you prepared for its phenomenal success?

PACKARD: We had a plan five and half years ago before we launched the network that it would be profitable in a certain year and it was. We had a very disciplined operation and the senior management team brings tremendous expertise to each of the functional areas so together we worked and we were successful.

INTERVIEWER: What were some of the elements, do you think that led to your personal success, like what personal qualities do you possess?

PACKARD: Some of the qualities that have helped me in my career are my tenacity. I instill trust and I deliver on that. I have very strong work ethic(s) and I have a fun-loving personality. Truly though, in this business you have to work hard and play hard -- it is the key to success and I do participate in that.

INTERVIEWER: Can you tell me about how you were initially recruited to work for HGTV?

PACKARD: How I was initially recruited to work for HGTV. There are two parts to that story. The first part was I was working at another programmer and scripts -- cable was still an entity -- before we sold the cable systems to Comcast and I was calling on them so I knew the company -- I knew the company very well -- but I had no interest in leaving my current job -- and a couple of gentlemen went to the Western Show and this would have been back in 1994, they went to the Western Show and circled the booth where I was standing and representing this particular network. Days on end. I mean after about day three they started to really annoy me and I went up to one of them and said, "Who are you and what do you want?" And they laughed and said -- they identified themselves and said that they had really wanted to talk to me about a position at HGTV. Now HGTV was just a glimmer Ken Lowe's eye at that point in time and Ken was one of these two gentlemen and they were from broadcast, so they were feeling very alien at the Cable Show. But we talked, I saw the presentation, I saw the thinking and was tremendously impressed and signed on.

INTERVIEWER: What was one of the more exciting aspects about starting the network?

PACKARD: There -- in this business there are -- probably the majority of the people in this business are start-up people. People I have met, the successful people, have the energy, the drive, the determination. Start-up is very exciting because you don't know -- you're writing it. You don't -- every day is a new day. It's completely unpredictable and you help put your own stamp on something that will hopefully live on for your children and your children's children and that's the exciting -- it's the unknown and every day was unknown and really we still -- I mean we're at 55 million homes for Home & Garden and 40 million for food, but we're launching another business in the fall and we'll continue to innovate and I do believe that's a way to retain the talent in this industry is you allow them to continue to innovate.

INTERVIEWER: You know that your network has often been praised as providing intelligent programming for women, I was wondering -- did you all sit down at the beginning and decide what is our programming going to be like? How are we going to speak to the women in America?

PACKARD: It's interesting because our programming is run by two men who have -- they're gender neutral in terms of how they view the content -- but what they had said from the beginning is, the mantra is to provide ideas, information and inspiration -- the three i's -- and they have just stayed true to that from the beginning to today and I think that kind of discipline and focus has been a key to our success. I have heard women who are at home say to me that they don't like to normally turn on television during the day because it's demeaning and they found Home & Garden as a source of inspiration and they're -- it's on for them often the whole day, which is a real compliment to our programming people.

INTERVIEWER: Maybe now we can talk a little bit about role models and mentoring. Do you have any contemporaries you view as role models?

PACKARD: There are so many women in the business today that I view as role models that I've learned so much from. A couple of women stand out in my mind -- June Travis and Ruth Warren. They have come from the operations side and that's a very tough environment to be a part of if you're a woman because there are very few women in it. Many more women in the programming and creative side and they have been true trailblazers and at all times that I've seen and talked to them, been with them, have carried themselves with so much grace and are probably a little bit understated relative to some women in the business today who tend to be spokespeople for any number of causes for women, but I think that's okay. I just have tremendous respect for them. I would name those two.

INTERVIEWER: I'm sure a lot of young people would use you as a role model. Would you have any advice to give them about entering the industry?

PACKARD: If people see me as a role model, that means I'm officially old, so I hope that's actually not true. Advice coming into the industry -- you need to be technically literate; you need to be comfortable with technology -- be able to talk about it, discuss the issues. You need to be well-read. Read as much as you can at all times. Read every interview, because you get points of view. Talk to people in the industry so that you're conversant and knowledgeable, but you must be comfortable with on-line, internet -- that is the future. Be honest, that's very important. And have fun. I mean it's just work -- it's not that serious.

INTERVIEWER: I'd like to talk a little bit more about women in the industry. Are you satisfied with the progress that women have made overall in the cable and telecommunications industry?

PACKARD: Women have made tremendous progress in the creative and programming sides. I've seen less progress on the operations side, so if I had to lodge a complaint it would be that I'd like to see more women promoted on the operations side. I think Leo Hendry and others have done a wonderful job of getting women in higher profile positions. There needs to be more of that. I'd also like to see -- it's been interesting watching the Case Organization, which is a minority organization, as you know, and in my experience there's been one African-American man honored and that was two or three years ago -- Bob Johnson -- and there have been no women, so I'll feel that the circle is complete when there's a Case nominee who is actually a woman.

INTERVIEWER: There was a lot of talk in the early '90s about a glass ceiling. Did you ever think there was a glass preventing women from reaching their full potential and does it still exist now?

PACKARD: There's been so much written about glass ceilings. I think glass ceiling boils down to lifestyle choices. There is some gender bias and there will be some gender bias. Hopefully the new generation of young adults coming into the business don't see. Hopefully everyone's gender blind. It still exists today for those of us who have been around for a while, but the bigger issue in my mind is one chooses to go as far as they want to go based on their overall lifestyle choices and historically, anyway, men have been very focused on career and the ladder -- stepping the steps up the ladder and career -- and women have had a much broader view of their life and the world, their relationships, their goals and their interests in advancing themselves in any number of ways. And if you want to say that that has created a glass ceiling, maybe that's true, but I do believe that we make our own success and we make our own life choices and I'm very proud, for example, of the ones I've made and I have pretty good balance in my life, but I have a lot more than just my work.

INTERVIEWER: Do you think women are shifting their attitude towards careers recently?

PACKARD: I only see women -- as far as shifting attitude toward their careers, I do see a number of women leaving corporate America. That is happening; that is a fact. And it has to do with the people running these various businesses and not being enlightened enough to recognize that their -- the time requirements of being a parent, a spouse, a daughter -- are such that flex time and other things -- benefits just must be taken up several notches if corporate America wants to retain talented women. They just go off on their own and they create their own businesses and then they have much more ability to structure their time the way they need to structure it and can still be successful.

INTERVIEWER: Okay. All right. You talk a little bit about balance and how you start to achieve balance. I'm sorry, back up for a second. I wanted to ask you about the culture at Home & Garden Television because I know you implemented the Women's Forum and you've done -- very conscientious about making sure that women can integrate their lives. Would you talk a little bit about Home & Garden and how you create a family from the work place?

PACKARD: You create a family from the work place if you have enlightened management and that's not just me. The team at Home & Garden and Ken Lowe who runs it were all supportive of family friendly policies because it's good business and it's been proven that it's good business. We have implemented the Women's Forum, which is a way for the employees to step outside of themselves, to see someone else that has nothing to do necessarily with our business, talk about issues that are relevant to their lives -- whether they're balance issues or ways to advance themselves educationally, whatever and this is hopefully relevant to men and women, although it's always -- the critical aspect of it is that it's always relevant to women, but hopefully it's relevant to everyone who participates.

INTERVIEWER: Well, as you know the industry is very demanding and people today are concerned about balance. In your life how have you been able to achieve balance or have you?

PACKARD: Life balance is an ongoing quest. I am very fortunate because I have a husband who quit teaching to do the parenting. I am very unusual. It's individual and it's one of those things that a woman who wants to have many dimensions to herself and her life has got to get comfortable with the fact that one can't be perfect really in any one of them, but you can only give the best you can give to each of them and you're going to spread yourself in any number of directions in doing so. That's okay. I mean, I think that's what makes life go round and -- but if you were to ask me -- do I feel I have achieved life balance? No. I think it's an ongoing goal.

INTERVIEWER: Do you think it's a reasonable goal for women to hold for themselves?

PACKARD: You know I don't know. If you were to ask women who are home, for example, raising children, I don't believe they would say they have life balance because a woman plays so many roles and is asked to do any number of things and this may sound sexist, but it's not at least historically what men have been asked to do. They are very focused on career, providing financial support, those kinds of things. Now again I hope this all changes and I'm seeing lots of changes with young adults coming into the work force, but I don't know that -- I would be surprised if you did a survey and you brought ten women in here and they were all from different walks of life if eight out of ten of them said they did not achieve life balance -- that would make sense to me.

INTERVIEWER: Was there a point in your life where you just -- where you struggled with the question or -- and then came to a reasonable solution or have you been just questioning all along whether or not your particular life is balanced?

PACKARD: It has helped tremendously that I have my husband doing the parenting and that was -- when we moved to Knoxville that was the choice that was made so we've been -- I've been with Home & Garden -- now I'm into my sixth year and that's been our situation since the beginning and it provides a great amount of comfort for me.

INTERVIEWER: Okay. Could I ask you a few questions about Women in Cable & Telecommunications?

PACKARD: Sure.

INTERVIEWER: Okay. I was just wondering how you see WIC influencing the industry of ours.

PACKARD: WIC is -- it's a tremendous organization that brings in a wide stratosphere of women from various walks of their career life and what's wonderful about it, especially in my mind, is the chapter branches who can localize but still provide -- they've got the discipline of the national organization behind them, but they can also localize to their community and in all cases it's educational so it advances you intellectually and it's social and it's just it provides a wonderful forum for young women coming in and for senior women as well.

INTERVIEWER: Do you remember how you initially became involved in it?

PACKARD: Pam and I were talking -- Pam Williams and I were talking about the fact that this is the 20-year anniversary of WIC and this is my 20-year anniversary in the business, but I don't think I was involved the first couple of years. The way I got involved was through the Michigan organization. I helped to found the Michigan chapter and then from there was involved as I moved to other cities in getting the other chapters. In many cases they were already up and running, but I was just involved.

INTERVIEWER: Do you see WIC at all -- has it changed significantly since you joined or do you think it stayed true to its original goals?

PACKARD: I had -- I had based on time constraints and challenges -- personal challenges -- I had, I don't want to say left WIC but I had not been active in WIC for a number of years after the '80s and then I got back involved I guess four years ago and was asked to be advisor on the board and was what I remarked upon at that time was how much more sophisticated the organization had -- had gotten. It's a very well-run business.

INTERVIEWER: I know you have a [???] expectations, questions that I might ask you. Is there any question that I missed that you would like to address or something you want to say that I didn't ask about[???]or the industry?

PACKARD: I don't think so.

INTERVIEWER: You talked a lot about how people need to be technological savvy. Do you think that these changes in the industry are going to have an effect on women? Will there going to be more opportunity?

PACKARD: So much is dependent upon your educational background and the degree to which more women get into the engineering fields, the computer science fields, the math fields, the fields that have traditionally been male bastions. We'll have the biggest influence on women. If they've got the schooling and the background and the comfort level with new technologies, new media and I do see -- if you look at Silicon Valley, for example, look at the number of women who are in very senior positions or CEOs, so I think this realm of new media -- as Ruth would call it, new media -- will allow women, allow more women to get into the business and be successful in the business.

INTERVIEWER: Well, thank you very much, I appreciate it.

PACKARD: Thank you very much.

INTERVIEWER: Thank you, Susan.

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Susan Packard

Susan Packard

Interview Date: February 4, 2005
Interview Location: Unknown USA
Interviewer: Steve Nelson
Collection: Legacy

NELSON: Susan, let's just start back, go way back and talk about your childhood, growing up, where you grew up and particularly what TV meant to you when you were a kid.

PACKARD: Well, I grew up in Detroit, so I'm from the Midwest and we had Canadian import channels as well as the broadcast nets because we were so close to the border. What did TV mean as I was growing up? It was a companion. We used it when we came back from school and we would do our homework to TV, we'd have dinner and the TV was on all the time. It was just part of our lives. My memories of some of my favorite TV shows were some of the sitcoms that were a lot of fun, Ed Sullivan, those kinds of shows growing up.

NELSON: And was something like Ed Sullivan kind of family get together and watch TV?

PACKARD: Yes, Sunday night family time, that and Bonanza. Those were...

NELSON: Put the show on and leave it on, no remote control.

PACKARD: Oh, no. Not even color. I guess I just dated myself.

NELSON: Well, maybe you just got color late, that's all. We'll just assume that.

PACKARD: That's right, that's right.

NELSON: So you grew up with TV in the background all the time, but did you have any expectation that this was something you would get involved in because we all grew up with TV in the background and most of us never thought we'd get involved in it.

PACKARD: No, not at all. No expectation. And even through school, even though my advanced degree was in telecommunications I wasn't sure what part of it because I was always more attracted to business than to pretty pictures.

NELSON: So what did you study when you went away to college?

PACKARD: My undergraduate was in advertising and then I stayed on and had an emphasis in telecommunications at Michigan State, but it was a lot of research and business and media classes, but more theory. So, I thought I might get into a research company or I might get into an ad agency, something like that, with that background, and actually I did end up getting into a research company. That was my first job.

NELSON: And what was that?

PACKARD: At Burke Marketing Research in Cincinnati and I wrote questionnaires and did field studies and did mall intercepts and went into people's homes and did all kinds of research work, which was pretty interesting.

NELSON: What did you learn from that because now you're getting an inside view of who these consumers are, what they want, what their tastes are?

PACKARD: It was absolutely the foundation for the work I've done here at Scripps Networks for the last ten years on the development of new businesses – starting with the consumer and what the consumer wants. Research is research. You believe research but then again you have to have your own intuitive feel and gut about what research tells you, but it is directional so that helped, that discipline of talking to the consumer and understanding what their wants and needs and passions were. It was very helpful and kind of laid the groundwork for the work I did in cable.

NELSON: I'm skipping ahead here for a moment, but today are you still using that... is there a heavy research component of what you're doing here? Are you really drawing on that?

PACKARD: Yes, in the last many years as we've developed new networks and new businesses we have. For example, Hispanic, which we're still evolving here, we've spent three years in the field talking to consumers about what they'd want from a Hispanic network. Certainly that was the case with DIY – all of them! Food we bought, so it was already up and running in 28 million homes.

NELSON: But everything else was really thought out in terms of what you were learning from the marketplace – not, hey, I've got this great idea, let's do it.

PACKARD: And some of it wasn't theoretical research. Some of it was, for example with DIY, when we started HGTV we started with a call center so we had people calling us, writing us, emailing us questions, things they liked and things they didn't like and that evolved and we saw that as we were evolving HGTV to be a broad lifestyle network we saw that we were leaving behind, if you will, the hardcore how-to user and viewer, and so we recognized that we had to have an opportunity to reach out to them and to offer them some kind of a dedicated television service.

NELSON: Okay, we'll get back to that, but I want to go back to now you're still in Cincinnati, you're still doing market research, how did you then move on from there and why?

PACKARD: Well, I'd love to say that this was a great master plan, but what ended up happening...

NELSON: We know that's not true!

PACKARD: It's not true! This girlfriend of mine was at HBO, and this was 1980, and HBO was just starting to staff up and she called me – I was in Cincinnati, she was in Chicago – and she said, "Look, I'm having the time of my life. This is a lot of fun. It's called subscription television. We need people. I know you could get a job here. Do you have an interest?" And I thought, hmm, write questionnaires or have fun in Chicago? It wasn't a hard decision, so I moved and started at HBO and that's how I started in cable television.

NELSON: But you went to Chicago. Was that at an affiliate relations office there?

PACKARD: Yes, yes.

NELSON: And you had really no background in cable? At that point were you a cable customer?

PACKARD: Oh, yes, I was a cable customer, and the other background I had was when I was at Burke in marketing research I wrote a paper on the Qube service that was up and running then. So it was all sort of theoretical background.

NELSON: Well, since that whole interactivity kind of comes into play later with the web and all that stuff, what was it you learned about Qube, which is a very famous episode in cable's history although ultimately unsuccessful and probably way ahead of its time, but what did you learn about that? Anything interesting?

PACKARD: Well, again, it was somewhat theory based, but there was an interest on the part of people and being able to interact with their televisions and having choice and control over their televisions. It was a little bit overwhelming for the majority of people because they didn't know really how to use it and they weren't trained to use it. So there were some good learnings back then about it, but frankly it all was put on hold, as you know, for quite a long period of time before the industry picked it back up.

NELSON: Okay, so we'll let you move to Chicago now. Tell us some of your early experiences. You suddenly show up, you're now in the cable TV business, and actually at a pretty interesting place, obviously, HBO. But affiliate relations – how did you pick that up? You didn't come there knowing a lot of cable operators at that point, obviously.

PACKARD: No, no. Well, the experience at HBO for everyone in that era was very team-based. You rarely would go on sales calls alone. There was a lot of training. HBO was great with training and so you were trained to sell, you were trained to negotiate, you were trained to close. There was a great foundation at HBO to go into sales and marketing. You had to have a marketing sensibility because not only were you selling distribution, you were selling the programs, the marketing programs, and that was a very important part of what you were doing so that it's obviously very different from basic, but you not only had to get distribution, but you obviously had to get penetration in a system, so you wanted to maximize the number of people that were actually going to subscribe to the service in a system. That was the marketing program we provided to the operators at HBO. I had a lot of marketing background, I had the research background, and selling is not... frankly everybody to a certain extent does some sort of selling whether they call themselves that or not. So that was the beginning of my career.

NELSON: When you got to HBO was there anything there that really struck you in your early days there like, wow, this is really interesting, this is a great business, I made the right choice, or what am I doing here?

PACKARD: No, from the very beginning I had a great feeling about the power of the business, the subscription business, and the offering. I thought the offering – movies, sports, specials – really covered the gamut, and the original movies and... It was led by a very smart team of people. To this day look at the success of HBO, so I was delighted, excited, enthused, and just had a great feeling that it was going to take off and it did. In the early '80s we had that blip with the VCRs.

NELSON: Right, right, which added a lot of value, obviously, to your subscription.

PACKARD: Yes, but there was a worry about VCRs. Oh my God, what did that really mean, and then you had the Blockbuster videos started coming. So there were these little blips along the way that we all took a pause and said, "What's that going to mean for the business," but they ended up, if anything it all enhanced the subscription business.

NELSON: Did you do a lot of traveling, going out to see cable operators?

PACKARD: Yes, yes.

NELSON: I know I've talked to other HBO people... as you said, you tend to go out there in teams as opposed to all by yourself. What was your sense at that point in time of the cable business and the people you were dealing with?

PACKARD: It tended to be... again, my territory was Midwest, so at that point in time I was moved quite a bit with HBO but in the beginning it was Midwest, so when I would go to visit these cable guys they would love to take me to pole climb and show me the headends. It was the beginning, and I actually was pretty interested in the technology, so we would do that and I would take them to lunch at the Shoneys and we'd talk about business and their families, but it was fine. I had territory responsibility as one of my jobs but then they moved me into something called area marketing management, targeted area marketing management, which was still a field job. What we tried to do was get DMAs cooperating because at that point in time, of course, there wasn't the clustering, so Detroit, Chicago, some of these territories I had you could have a dozen operators and so we tried to get them together to do united marketing programs and that was a real political challenge. HBO would come in with some financial support, marketing materials and bring them together. So I had that job, which really just tended to be a marketing job as well as the field responsibility for a period of time.

NELSON: HBO was always good about putting money in behind the operators and behind the programming, and in a way unique in that regard.

PACKARD: To grow subscriptions. It was all self-serving.

NELSON: But you left, you left HBO.

PACKARD: Well, I ultimately left, but I was there for eight years, and I was moved... I started in... I went from Cincinnati to Chicago, Chicago to Dallas, Dallas back to Chicago, Chicago to LA, all with HBO in eight years.

NELSON: And these were jobs in these places, not just traveling?

PACKARD: Yes, all HBO jobs, different territories, and then in '88 I left.

NELSON: And you went to a start-up network, essentially, with CNBC. Now was that at the very beginning of CNBC?

PACKARD: Yes, yes.

NELSON: Now why did you do that? By '88 HBO had become a real powerhouse and how you're looking at a start-up in an area where – in the late '80s there had been a lot of financial finagling going on out there in the marketplace. It was kind of a questionable proposition. FNN was going down the tubes, which was kind of ironic, a financial network going bankrupt. What made you make that move?

PACKARD: By the way, FNN going down the tubes wasn't the case when I joined.

NELSON: That was still going on?

PACKARD: Yes, it was still the competitor and there wasn't a sense that there were issues with FNN.

NELSON: So then why would you go to somebody coming in as number two in the market if you have an established competitor in that program area?

PACKARD: That's a good question. It's the flip of why I left HBO. I left HBO because at that point in time it was a powerhouse. I was a director for the Los Angeles market. What I did was go out and try to get operators to use marketing programs that were canned programs that I didn't create. It got to be a boring job, whereas the challenge of creating a new business, albeit that there was a competitor out there, with the resources of NBC I didn't think that this was going to be that... obviously I knew there would be risks, but I thought with those resources that... and I liked the team that I'd met and was just excited to start something new.

NELSON: So tell us about your first day on the job or your early days there. Impressions, people you worked with... now you moved, obviously.

PACKARD: I started in Los Angeles with them. I started in Burbank so I wasn't moved at that point.

NELSON: Oh, were you in LA at that point?

PACKARD: Yes, yes.

NELSON: Okay, it was one of your HBO stops. So you hopped out onto Burbank in LA.

PACKARD: Yes, went up to Burbank, but then eventually I did move to start up their Midwest area out of Detroit, which is home, so there was an attraction for me to do that. The early days were exciting and alive and we were all together choosing booth designs, just like a start-up. We did a little bit of everything – marketing, PR, obviously all the distribution work in the very beginning.

NELSON: Did that give you a chance to kind of expand your professional abilities at that point?

PACKARD: Yes, the good thing about... if I had a takeaway from CNBC other than another start-up and you have to be multi-faceted with start-ups, the other takeaway was my boss, her boss and his boss and his boss, they were all lawyers. It was very much populated with lawyers.

NELSON: In affiliate relations and marketing?

PACKARD: Everywhere.

NELSON: Hmm, that's interesting.

PACKARD: So while I wasn't trained to be a lawyer, I learned how to be a lawyer, if you will – on the job training.

NELSON: Talk lawyer-ese?

PACKARD: And do deals, and you know, it was pretty sophisticated stuff. Retransmission consent was part of what we did. Those were complicated deals, so that was a good takeaway for me when I left CNBC.

NELSON: So you had a lot of... because that was that '92 Cable Act, so you had a lot of involvement with retrans at that point?

PACKARD: I absolutely was one of the key team that did those deals, yes.

NELSON: Now, anything else about your days at CNBC before we move on and get to where we are?

PACKARD: I don't think so.

NELSON: Okay, then why did you leave? How did that come about because I know you joined, again, another start-up right from the get go?

PACKARD: It's the definition of insanity, by the way.

NELSON: I think you were number 2 employee, is that correct? Were you the second employee here after Ken?

PACKARD: Yes, if he counts!

NELSON: If he counts. So you've got this guy starting a network and he wants to bring you in. By this point, of course, CNBC has really got a lot of wind in its sails and is really moving. Now, once again, you're going to leave something that's really established for the challenge, and here you've got one guy saying I'm going to start this network and you jump on board. Why was that?

PACKARD: Are you basically suggesting that I'm out of my mind?

NELSON: No, I think you obviously were very much in your mind given where this has come! Maybe you're very omniscient. Got any bets that I can make?

PACKARD: It was a similar situation. CNBC was established. It felt like my job was done and I can't explain it any better than that, whereas here was a new opportunity. The reason I even knew about this opportunity as much as I did was because I was calling on, for CNBC, the Scripps Cable Group. So I knew Scripps from that standpoint, I knew their culture, I knew they were starting this home and garden television network. I actually thought it was a great idea. I was surprised that something like that hadn't existed yet. So I was excited about the idea and I met Ken Lowe and Frank Gardner at a cable show; they walked me through their presentation and their thought process behind why they thought it was a good idea. I totally agreed with them, and it just felt like the timing was right for me to start something new with them – great guys, great first impressions of them – and they also were going to allow me to stay in Detroit, which was home for me, and we owned WXYZ at the time, still do, Scripps does. So I set up shop at our television station and hired people and people started moving... well, most of the people I hired were from Detroit and they just worked with me at WXYZ, and those were the very early days, and then I realized as we were setting up here in Knoxville that it was actually harder on my family because I was here all the time, never in Detroit, that I might as well just move them to Knoxville and that's what we did.

NELSON: Talk a little bit about those Scripps cable systems because you had some different exposure to them than being part of the company. You were calling on them. What was your impression of those cable systems, how Scripps ran them, as opposed to, say, other cable systems that you had because you had dealings with a lot of cable systems in, of course, that territory, a lot of operators?

PACKARD: But again, my territory... well, of course I had had LA at that point. You're right. I was thinking Midwest. They were a classic Midwest operator. They were no different from any other Midwest operator. If you went to some of the more sophisticated territories, in LA, for example, you found that there was a difference in terms of the management.

NELSON: What was that?

PACKARD: Probably more marketing savvy, the need to be more marketing savvy. More than anything else I would say it was that. The technologies... they invested in the same way other operators invested and in that point in time... let's see, where are we now? It's 1995 – they were investing in upgrading plant the same way other operators were.

NELSON: Although some of the big investments that operators faced were really in the future, and that will lead us to, how in fact, they exited the business. But talk about marketing – essentially it's a company that has a lot of broadcasting properties, newspaper properties, was there more of a broadcast culture, would you say, that even permeated cable or did the cable companies because cable was for a lot of people very decentralized and they just had a system manager and he or she was just another person that was like any other system manager anywhere else?

PACKARD: Are you asking did the cable division have more of a broadcast culture?

NELSON: Well, I'm looking for how did the broadcast/newspaper culture spill over, if at all, into the way they ran their cable systems versus a lot of these guys that you talked about going up poles and taking them to lunch at Shoneys – guys that sort of came up in the cable business, that's all they knew.

PACKARD: No, I would say that that division was very cable-centric. It was not at all allied with... the divisions were pretty separate. The influence of broadcast was more in the creation of our division and even then there really wasn't much because while Ken had been a part of the broadcast division, when you think about broadcast all of the images of it being a mature business and those kinds of things, he was very entrepreneurial, so he broke stride with what the normal image of broadcast was in managing and leading us here in terms of the creation of HGTV.

NELSON: And of course one thing that's always driven broadcasting very strongly is programming, number one; and marketing, number two. Because broadcasters have always used their assets, their on-air assets, as marketing tools.

PACKARD: Yep, it's true, but on the other hand – you can look at the good or the not so good, there wasn't an understanding or a belief that cable was going to break out.

NELSON: It was still an inferior medium.

PACKARD: Yes, exactly, and they were mass media and they reached everyone and here was little cable coming along. They just didn't have the vision of what cable could do or be.

NELSON: But they did give Ken the money to start this network.

PACKARD: Well, "they" meaning E.W. Scripps. I'm just talking generally about the broadcast group. You probably should talk to him about that.

NELSON: Oh, I will! But I want to see from your perspective as somebody... Ken has the vision, he gets the backing from the company. I don't know how you two connected, but you did, and he said, "Well, come work for us. I've got nobody working for me but we're going to start this network," and you're saying, "Okay."

PACKARD: Yes, sure, no problem. Well, the reason I connected with him was through – he'll again explain this – the cable people gave Ken a list of who they worked with, the representatives that they worked with. I was part of that list and we were in good-standing and had a good relationship, and so he called me. He explained that this is how he had heard of me. He didn't go through headhunters or anything like that.

NELSON: This is through the affiliate relations with the Scripps cable systems?

PACKARD: Yes, exactly. So that's how it started and then we met at a cable show and he and Frank showed me the presentation and I really was blown away by it.

NELSON: Well, why? What was it in their presentation? Because you felt that, hey, why didn't somebody do this already, like one of those light bulbs goes off, and wow! Of course! Of course there's a niche for this!

PACKARD: Right, right. Well, again, comparing it to the other start-ups I'd been involved with – and I was also involved with some start-ups at HBO. I was involved with Cinemax and Festival, which didn't make it, and then of course CNBC and America's Talking. There was just so much more fleshed out thinking and consumer focus and analogies to print, analogies to... one of the things that Ken talked about is if you look at a newspaper and you look at the sections of the newspaper, why is it you have every other segment represented by cable networks...

NELSON: Sports, business, news, etc.

PACKARD: Exactly, exactly, just all of these things that came together and how big the idea was. When I first heard it I said, "I like it and it makes sense and I think it's going to have consumer reception, but I don't know big it is." And then you start thinking about every room of a house being a show and then you start thinking about what other categories could fall under this and you realize how broad the idea was. So it was all of those things that got me excited about it.

NELSON: But at that time, if you really look at even the more niche oriented cable networks, they were all really based around some entertainment premise – movies, music videos, or whatever it was. Other than news, the CNN type thing...

PACKARD: Or Discovery.

NELSON: Yes, or documentary, you didn't really have something that was quite as informational, not to be confused with DIY but sort of hands-on, here's something you can do. What gave you the sense that this was the stuff of TV shows?

PACKARD: Well, it was Ken's vision, not mine, and what he would explain to you is that he had built a number of homes. I had not built any homes at this point.

NELSON: It sounds like you were traveling too much!

PACKARD: Yes, I was lucky I even had a home. He had built, I think, three or four homes at that point and he had realized in his love of doing that and the exploration of that that there wasn't this dedicated resource that he was looking for. He could watch a show here or there on PBS, but to have a dedicated cable network, it didn't exist. Putting all of this under one roof was something where the time was right for it.

NELSON: So you bought into the idea.

PACKARD: Yes, it made sense.

NELSON: Who else came onboard as part of the start-up team that you were working with at the time?

PACKARD: Well, there were people that I brought in to the Detroit office – Doug Hurst, for example, who's now SVP of affiliate sales and marketing, he does the affiliate marketing part of our job; Annette Lindstrom, who I brought aboard and she's now HGTV's VP of marketing; Pam Tracy, who was with ESPN and she's now our SVP of National Accounts. There are a number of people that I brought aboard to work for me and then there were my colleagues, who you're going to talk to some of them today – Ed Spray, who came aboard to do the programming; Burton Jablin, who worked with him on the programming. And then here we had Jim Clayton, who was here. We had bought Cinetel, which was the production house here, and he was their financial person and he's still with us and he's our CFO. Who else was around in those early days? Mark Hale came aboard from E! He was with them and then he was one of the first people and he's now our EVP of all facilities ops. He runs all of that.

NELSON: It's interesting because you're ticking off lots of names of people who were there pretty much from the get go and that are still around. What is it that not only attracted people here but kept them here because it's a business where there are lots of opportunities and there's been lots of growth and there have been lots of new networks and all sorts of news technologies, and yet there's something about... of course, there's been a lot of growth here, too, but what is it that you see about this place that's kept people so involved and interested? Since you told us already that in your other jobs you got to a point where you got bored and it was time to do something else.

PACKARD: That's never been the case here, 10 ½ years later.

NELSON: When you joined HGTV, what was your position? What was your title? More or less.

PACKARD: EVP.

NELSON: EVP, but were you the person in charge of affiliate relations?

PACKARD: Yes, again, in the very beginning we did a little bit of everything, but the primary responsibility I had was distribution.

NELSON: Okay. So you had to go out, you had to talk to cable operators – hey, we've got this great new network, HGTV. What did they say? What kind of reactions were you getting? This was before you went on the air, I assume that you're getting ready and you're talking to people and saying, "Hey, how about carrying us. Here's the deal..." What were the reactions out there?

PACKARD: Well, it was a mixed bag. There were a number of short meetings.

NELSON: Why? Did people just dismiss the idea?

PACKARD: I think partly it was the fact that E.W. Scripps had never done cable networks below so there was some question.

NELSON: A little skepticism?

PACKARD: Yes, some skepticism. There was an inability... it was 99% male that I was calling on, and they couldn't relate. It's not like selling a sports network or something like that. Probably those are the two main reasons why. And then, of course, a third reason is they never want to carry anything new because there's a cost that's associated with it. So you always start from a position of having to work uphill to get to some position of balance and getting them to be convinced.

NELSON: And there were a lot of new networks trying to get carriage at that point.

PACKARD: Well, the going forward rules were in effect and there had been a paralysis of... there were a lot of networks trying to get launched, but until those rules actually came out, the operators didn't launch anything because they didn't know what the financial underpinning of what it would look like. So when those rules finally came out, there were a number of networks that were launched but that had not gotten any distribution for 24 months. So we were up against them and we were up against... our group was History, Golf Channel, Speed Vision, Outdoor Life, HGTV...

NELSON: You mean in terms of your timing? Your sort of class of?

PACKARD: Right, we all launched at the same time.

NELSON: And interestingly, most of those that you've named have done pretty darn well.

PACKARD: Not in the beginning. History and HGTV were the only two breakouts. With the others, either their models didn't work – Golf started as a premium service, that didn't work – and these were all owned by the industry and they still didn't work.

NELSON: Talk about that. You were not owned by the industry. One of the things that was characteristic of channel launches then is the operators would take some equity in the channel. You didn't go that route.

PACKARD: Not that they didn't ask, repeatedly.

NELSON: I'm sure they did. But you didn't want to do that.

PACKARD: No, I insisted that we didn't do it.

NELSON: Why? Because that seemed like the easy path to get carriage.

PACKARD: Because I was so confident in Ken's vision, but Ken's vision required us to be independent of... we had to be able to move quickly, we had to not have a huge cast of characters that we had to report in to. We thought very differently about the business than most cable networks. His vision was much broader than a traditional cable network. We were the only ones with a call center. We still have a call center. We wanted to relate directly to the viewer.

NELSON: So what was the deal? You'd go in there and say, well, we can't give you a piece of the network, but here's what we have – because you obviously got some carriage. I think you went on-air with what? Six, six and a half million homes, something like that?

PACKARD: Right.

NELSON: So what was the deal? What were you offering people, or did some people just buy into the concept initially?

PACKARD: Yes, there were a few programmers who bought into the concept, but overall it was a combination of Ken, who has got a great sales ability; I was out there, I had established relationships with operators and I think a lot of trust. We had a great presentation. Even though they were skeptical they couldn't deny when you looked at how big the idea was. We had a little bit of retransmission consent we threw in, but not a lot, especially not a lot relative to the CNBCs and the ESPN2s and those guys. We offered a year free. There are just little things we did and the combination of all those things got us into about six million homes.

NELSON: Talk a little bit about – you mentioned retrans consent, which was a big factor in a lot of places those days. What was it, how did that play into your gaining carriage? You had the Scripps TV stations in certain markets but that didn't cover much of the country.

PACKARD: No, it didn't, and that's a funny story too because when I joined Ken said, "We've done the analysis and we're going to be able to get 12 million homes out of retransmission consent at launch," and I said, "Boy, that's a big number!" I remembered my days at CNBC, I said, "Can I look at this analysis?"

NELSON: Were you already working here?

PACKARD: Yes! I should have looked at it before I joined! But there was a different group who had done this analysis and it turned out that they had counted every sub out of contour, hyphenated markets, dual carriage markets, they just didn't know, really, how to do the analysis to get the one-for-one which for the most part when you went out there for retrans you got a sub for every broadcast sub. So that twelve million ended up being four million and I had to keep sharing this bad news with Frank and Ken. Week after week I said, "You know, it's not really twelve, it's ten." "It's not really ten, it's eight." "It's not really eight, it's four." They were about ready to say ugh!

NELSON: Was this creating any sense of... maybe panic is too strong a word, but dismay?

PACKARD: Well, yes, but it was start-up.

NELSON: Because you had that expectation, but they were happy to get the four.

PACKARD: Well, we were happy to get the four, sure.

NELSON: And pretty much you got the four as part of the six start-up?

PACKARD: Yes.

NELSON: Now you also had some kind of arrangement where you used retrans consent from other TV stations in non-Scripps owned markets.

PACKARD: Correct.

NELSON: Can you explain what that was all about? How that worked?

PACKARD: Well, just that there were a number of other groups who had been unsuccessful in negotiating with cable operators. They didn't know how to approach them, they didn't have any relationships with them, anything they did have with them was negative. So we had a lot of relationships – this is at the broadcast level with E.W. – with other groups. So Ken and Frank and others facilitated us working with them. We created this larger group, but the four I'm talking about included that group.

NELSON: They already included that.

PACKARD: Yes.

NELSON: But you used their retrans consent rights and what did you give them back in return?

PACKARD: We gave them back a share of our ad sales so we had a formula, kind of a complicated formula, in our deals, which said that they could get a certain percentage of our ad sales but if we didn't make that number we gave them a floor and that floor was at that time 25 cents a sub.

NELSON: And did you feel comfortable about putting that floor out there in that deal?

PACKARD: Yes. The one good thing from the very beginning about this category was how robust the advertising sales were going to be. Again, you had furniture companies who had never really even been on television, they'd just been print based and were looking to television. You had the Lowe's, the Home Depots, you had so many endemics, gardening companies...

NELSON: That had no TV outlet, essentially, or being in an environment which didn't really relate to the product.

PACKARD: Correct.

NELSON: You mentioned Lowe's. I know they were very significant to getting started. Talk about that relationship.

PACKARD: Lowe's was very significant. Lowe's came to us and got it before we even went on the air and if they could have had their way they would have owned our air. There were days we felt they owned our air, but they were a wonderful advertising partner. They bought spots on cable systems to promote HGTV and to promote Lowe's. They were also very smart. They were creating new stores at this point in time, and this was in the mid-90s, so both Home Depot and Lowe's were really on a rampage to open new stores, and they did research that showed if HGTV was in a market prior to their opening a store there, when they opened a store there that store did better. So they had enough to suggest that they wanted to be a huge partner with us and they were in the very beginning. They still are! They've been a great friend and partner.

NELSON: And they also, as I understand it, brought in other advertisers. They took some kind of block of your ad time and brought in other people, so they didn't use it all themselves. So they almost became your agent, in a way, bringing other people into the deal.

PACKARD: Their vendors, so what it is those companies that were selling to Lowe's, yes, they would direct to us. It was beautiful when we launched. We had all kinds of great advertising on it, and again, back to the category, these people, the viewers, are really looking for this information and they don't see a commercial as a commercial. They see it as information. So there was so much satisfaction in the viewing experience, that started spreading like wildfire. The word of mouth just started spreading.

NELSON: Among the advertising community?

PACKARD: No, among the viewers!

NELSON: Among the viewers – "Have you seen this? Have you checked this out?"

PACKARD: Yes. "Does your cable company carry it?" So that was very helpful.

NELSON: Now you must have done research on this, as well. Obviously, I know from your research background. Did you actually find that people were much less likely, for example, to zap away from commercials because they viewed the commercials as sort of part of the informational content of the show? That you had that kind of loyalty?

PACKARD: Well, it wasn't that sophisticated way back then to know. The systems weren't interactive. We couldn't really know if they were... we knew anecdotally because our call center would tell us that they loved our commercials. Our advertisers would tell us because they would call them. Lowe's – it was funny because Lowe's does all kinds of research and their customers thought they owned... some of them thought they owned HGTV and some thought HGTV owned Lowe's, but the marriage was so tight, and it was really good.

NELSON: Well, that's unusual in terms of a cable network start-up because one of the rules of thumb is that to really get any kind of advertising you've got to get 25, 30, 35 million homes. That number has sort of crept up over the years. The target gets more and more elusive, but you really started in an unusual position by having this really strong advertising partnership, and I guess that was a reflection really of the market segment you were serving, which was unserved as a television market place.

PACKARD: And not just Lowe's. I mean, Lowe's was the largest, but Michaels was a big partner of ours. Gardenway, back then, was a big partner of ours. Troybuilt. There were a number of companies that got it and they were dying to have a cable television outlet because buying broadcast television just wasn't going to be efficient for them.

NELSON: How did that help you, because I know your growth in terms of cable carriage ramped up very rapidly, it wasn't one of these sort of hockey stick kind of things where you stumble along for a few years and finally you become successful, but did that help? The fact that you had that kind of advertising support? The operators could see that number one, the viewers loved it; number two, the advertisers loved it. That must have been a nice story to go in and tell somebody when you're trying to get carriage. Did that help you?

PACKARD: We would never tell the advertising story because the advertising story, the more you told that story, the more that would suggest you didn't need fees. So you don't tell that story, and we really didn't have to tell the consumer story although we did because they heard it because their phones rang.

NELSON: "I want my HGTV."

PACKARD: Absolutely. It was a huge, powerful tool for us, just that grassroots word of mouth.

NELSON: The market pull. You're definitely in the minority of networks that had that kind of impact. So is that what you really attribute that rapid growth to? It's really just the consumer saying we love this?

PACKARD: Yes, I think it's a combination. I think the number one reason is that the consumers loved it and it had a powerful pull. I think once they knew that, once the MSO knew it they're still reluctant to launch things because they're going to be costly but we had proved ourselves as a programmer, they liked working with us. We weren't one of the biggest guys so we were very agile as a mid-sized player. They trusted us. We threw a few good parties – you know how it goes.

NELSON: Well, that goes without saying! You've got to throw a few good parties, but it doesn't necessarily get you anything except people having fun at your party. I've been to a few parties of networks that don't even exist anymore. They were good parties, but... Because of this tremendous market pull, did you ever see yourself as sort of the Maytag repairman of affiliate relations? I don't need to do anything, I'll just sit back here. I'm sure it wasn't that easy.

PACKARD: No, it wasn't. And at that time, too, you had probably 20+, 25 important distributors, as opposed to seven or eight today. So you really had to get 25 deals done and then you had to work under those deals to get the distribution.

NELSON: Because they were umbrella deals, essentially, right?

PACKARD: Yes, so no, we did a lot of work.

NELSON: You worked hard, and I didn't imply you didn't but I wanted you to get that out. So talk about how the network evolves as this carriage starts exploding in your early first three or four years.

PACKARD: Well, we started more as a how-to network and as we had more distribution and we could talk to more people about what they liked and what they wanted to see from us, it was clear that we wanted to take a broader, more lifestyle programming point of view. And so we did. We started programming it in a broader way, and in '97 – we launched in '95 and in '97 the Food Network became available. So we ended up purchasing that and we had had a little bit of food on HGTV, so we sort of pulled back from that and dedicated our food programming to Food Network. There were tweaks and broadening of HGTV as we went.

NELSON: Now you had talked earlier about the fact that most of the operators were men. They would probably take ESPN6 and 7 before HGTV, and yet that changed. Was it really just the consumer acceptance that got them to say, hey, you know, we need this?

PACKARD: It was a combination of a number of things. I would say the consumer acceptance was the most important and the fact that they were hearing about the satisfaction from their viewers and they were also hearing, where it wasn't distributed, "I want you to carry HGTV". So those were all important, but again, I also think that being a mid-sized player we had proven that we could program it; we had proven that we were good for what our promises were on the delivery of this business. We lived up to that and they were comfortable with that and they were comfortable with the relationship we had with them.

NELSON: But how about... I'm looking now at just pre-Food, you're still an independent single network with a broadcast industry parent, so you're not really in the mold of a lot of the cable networks where they're putting out their second, third, fourth programming service and there's that relationship where you're coming back, hey, we've got a new network. How did that affect your ability to work with the operators to gain carriage?

PACKARD: We had a lot of work to do in those early days – '95, '96 to '97 – because we grew about ten million a year but that still meant that there were 60 or 70 million, so we were all over the country doing our missionary work, calling on cable systems to get distribution. It was a combination of salesmanship, the marketing we did, we did a lot of trade advertising. One of the interesting trade campaigns that I created put the faces of the operators – Rob Stengel, Lynne Bunning – who endorsed the business, endorsed the network and, as you know, it's a small group and they are very respectful of one another's opinions, for the most part. So that was helpful. So there were a lot of different things.

NELSON: The classic third-party testimonial, only with their peers as opposed to a consumer and that had a big affect.

PACKARD: Exactly, exactly.

NELSON: There was a period there where there was the pay for play going through the industry. I think Rupert Murdoch sort of triggered that with his ten bucks a sub. Did you get involved with that kind of activity?

PACKARD: We had a number of different deals out there. We had a free carriage deal, or you could convert that into... we'd pay you a stipend, or whatever, but none of those deals were all that dramatic. They were just ways to continue to negotiate and get new distribution. You had to do all of it. You had to do the marketing, you had to throw the parties, you had to have a great product, obviously, you had to constantly listen, and there was a point in time where the operator needed cash, there was a point in time where the operator needed free carriage and as long as you made sure that your deals were all uniform and that you didn't violate any... that everything was equal in terms of how you treated your operators then they all wanted to work with you.

NELSON: Because it was a small world and it has gotten smaller. Did you envision, when you got started with this, the kind of essentially universal carriage that you have? Did you say this would be a niche and there's 25 million people out there that we'll get in front of?

PACKARD: I thought 30. I remember, because Ken, every time we'd get another ten he'd say, so when's the next ten and I'd say maybe another two or three, and he thought I was the biggest sandbagger alive, but in my heart I really didn't believe it would ever get to even 60, 70, 80. When we reached 30 – and I guess we weren't making money but we were really close to making money at that point in time, we could see it on the horizon, us breaking even – I said, "Ken, anything else we get is gravy. This is huge for us to have hit 30 million subs," and here we are, almost 90.

NELSON: And as I said, it's pretty much universal distribution. One of the things that happened over time as your distribution grew, your visibility in the industry grew, the recognition of you had tapped into this incredible vein of consumer interest – other programmers kind of got on the bandwagon a little bit with home lifestyle oriented shows or reality shows, talking about Trading Spaces and things like that. Did that affect you negatively, positively, did it worry you when people started doing that? Hey, they're kind of eating into our audience?

PACKARD: Well, I think you would hear all of the senior team say that we operated with a healthy sense of paranoia at all times, and when one replicates what you're doing that's acknowledgement of success, so it's a compliment. We were very watchful, but nobody had a dedicated brand, so they could do those things but there was not a home and garden dedicated 24/7 network. We felt at times that it did help us because the confusion of where those shows were coming from we got attribution for. On the other hand, we've always been very watchful and we still are with what's going on in the home and food, mostly home, related shows.

NELSON: Obviously, one of the things that helps is people could tune in without knowing what was on the air and they would be in that space, in that environment, as opposed to tuning into Discovery and maybe they'd be looking at dinosaurs as opposed to that.

PACKARD: Exactly.

NELSON: That's one of the powers of niche networks, obviously, is that they really define an environment and people know they can be in that environment when they tune into it, and obviously you've been able to utilize that in terms of your carriage growth, your acceptance in the consumer market place, your viewership, your advertising, etc., etc.

PACKARD: Exactly. All of the above.

NELSON: And did that also, I assume, play into the other networks that you acquired and started which were other slices of that kind of thing?

PACKARD: Lifestyle networks, yes. So that convinced us that Food would be a good acquisition and it was. That convinced us that launching DIY made sense, launching Fine Living made sense, so yes. Our formula, if you will, was passionate core audiences, information and entertainment and really tapping unmet needs, and all of our networks do that.

NELSON: How about in terms of internationally? We've talked a lot about your domestic growth. What's happened on the international front? Take us back to when you first started looking, hey, maybe there's something beyond the U.S. borders that we should be exploiting here.

PACKARD: We have three fully dedicated networks up in Canada. We have HGTV Canada, Food Canada and Fine Living Canada. We're in 90 countries. Our formula for international has been to have a scrappy small team of people and to either create full brands where it makes sense, but for the most part to either have branded blocks, essentially branded blocks in the rest of the world. In English speaking countries one can make money. It's easier, it's an easier proposition internationally, so that's why we are so flush up in Canada with three brands. We're in Australia, not with full brands, but DIY has a huge presence in Australia. Not all of our brands are all over the world. Our two big brands are in most places.

NELSON: And is there a difference, say, let's say Canada as an example because that's the most fleshed out market, is there a difference at all in programming the network there versus what you would see here and what would that be?

PACKARD: In Canada, for example, you are allowed, as a U.S. partner, to own up to 1/3 of the network and they have a requirement that you have to have at least 50% Canadian content. So we are an owner and we are a program supplier, but we are also in partnership with Alliance Atlantis, which is our partner up there. They create content. It's very similar. It's called Home and Garden Canada – it's those categories. It's very similar to what we do. But in other parts of the world we're on a block on lifestyle networks or things like that and they will create their own local content and really that's the only way you can be successful overseas.

NELSON: And do you see that as a continued growth area? Obviously there's not much more you can get for carriage in the U.S.

PACKARD: Yes, absolutely. So we're excited about that, and part of the reason for Hispanic is recognizing that we can also appeal to different ethnic groups in a meaningful way and that's an impetus for us to do that.

NELSON: But that could also be within the U.S.

PACKARD: Within the U.S. or Latin America, as well, Spain.

NELSON: That brings up something because you mentioned before in terms of Food where you sort of off-loaded the food programming that hemmed in on HG over to Food because that was sort of dedicated. As you bring out these other related networks do you see that as in any way impinging on the coverage of what goes on on HGTV air, or is it, for example, with DIY that you sort of moved away from the real more hardcore do-it-yourself stuff so you found an outlet for it? I'm trying to get a sense of how these networks work together and how you adjust the audiences you're targeting for HGTV knowing that you have these other audiences you're trying to serve at the same time?

PACKARD: Can I ask you to ask that of Ed and Burton because I'm not programming the networks?

NELSON: Well, not from a programming sense, but from more of a general sense? Well, let's take it from an affiliate relations sense. You go out there, say I'm an operator and you go out there and you're trying to sell me DIY or Fine Living and I say, "Well, what do I need another one for. I've already got HGTV. Doesn't that cover it all?"

PACKARD: Our categories, while they're under the umbrella of lifestyle, are very discrete categories and there isn't much overlap. The overlap, if you will, is that the audience is an information seeker. They like information and entertainment but they're an information seeker first and foremost. So it's the psychographic of the audience, but the categories are pretty distinct.

NELSON: Now you've had responsibility here for bringing this kind of programming into new media areas. Talk about how you got involved with that.

PACKARD: Several years ago when Ken was made CEO of E.W. Scripps we reorganized here and I moved over to run an area called New Ventures. New Ventures was the start-up of new cable networks, so for example Fine Living and some of these other things that I did, as well as the start-up of interactive media, although we had websites up and running and things already operating.

NELSON: Very early.

PACKARD: Yes, but one of the things we tackled – myself along with Channing Dawson, who runs our emerging media area – is VOD. So we started with VOD and we created the platform from the standpoint of how we would program it, how we would choose the content, edit the content, deliver the content, work with operators in terms of what their needs were for the content. So we started with VOD and spent a couple of years – we're still in that business – and since then, of course, we've launched broadband, which was something we launched last year, 2004, and we have deals with MSN and Comcast for broadband and more deals to come in that regard. We're looking at everything now – cell phones – we're looking at every platform that is user friendly for our content. We own the content. One of the smart things Ken did from the beginning was he said, "I don't care if we have to pay a little bit more for the rights to own the content, we need to own it." So that allowed us to go overseas and to do all this interactive without having to worry about rights, clearances, those kinds of things.

NELSON: So when you went to do VOD, you had an enormous library of product that you already owned. You didn't need to do other deals with people, you didn't need to acquire it, so that was a real asset to be able to use. But talk about that VOD business because that is still very early and people are still trying to find what the appropriate model of it is – the free, the subscription, the purview, etc., etc. How are you seeing that evolving here?

PACKARD: Well, we still believe in free, but free means it has to have ad support. You can't operate this at a loss forever.

NELSON: It can't be free free.

PACKARD: Yes, it can't be free free. Ad support requires that our operators work with us and give us the appropriate data on take rates because that's what the advertisers are looking for and the degree to which we get that cooperation will lead to the success of free VOD for a programmer. There's going to be a point in time where a programmer's going to have to say, unless you give me this in this format, with this kind of granular information, it's not useful to our advertisers and therefore we don't have a revenue stream and we can't make the business work. So we're still in those discussions. It's a tension.

NELSON: And that bursts forth occasionally with anonymous quotes of people denouncing operators from some network somewhere. You're sort of leading the way in that regard because getting advertising onto a free VOD service – I really can't think of too many people that have been that successful at it, and again, it goes to that whole relationship between your programming and your audience and people seeing that as informational.

PACKARD: Yes, and our advertisers and the fact that we've done a good job of relationship building with our advertisers and they want to support these new platforms. Their point of view on DVRs and TiVo and everything else is of grave concern to them, so they're trying to find new ways to reach their audiences, but we have to be able to all work together on this and we're not quite there yet.

NELSON: All right, we'll leave it at that. Just one other question in that regard, though. The nature of the way an advertiser sponsors a VOD segment versus running a spot in a 30 or 60 minute show – my sense is that they have more involvement in those segments in that they're almost branded with an advertiser. Are you running spots or is it kind of a "this is brought to you by..."?

PACKARD: It's a mix. Where the advertisers have something that's fuller than a 30-second spot, if they have a five-minute or a six-minute segment that they're producing, we're happy to run those on the front or back end of our shows. So it's a real mix, but we also have traditional 30-second advertising that goes around our shows.

NELSON: And you found that works in the VOD environment?

PACKARD: We don't know!

NELSON: You don't know. The jury's out.

PACKARD: Yes, we think it does but again, we have to be able to know what the viewer is doing and how they're interacting, not only with our content but with the advertising, and the only way you can know that is to get the information through the operator.

NELSON: Now why did you take the free route versus other forms of paid VOD where somebody might say I'll pay – and I'm not saying they would – but I'll pay two bucks to look at this segment on putting up a fence, whatever it might be.

PACKARD: It's a good question. My experience at HBO was the cost of marketing to get a subscriber was so dramatic and the cost of getting and maintaining subscribers and the churn that comes along with it to have a subscription model was very tough. We couldn't rationalize a subscription model because we knew we'd have to put so much marketing into it. So really we didn't see a meaningful way to have a subscription model, which doesn't mean we're not testing them. Here or there we do test SVOD, but for the most part to be meaningful and to really get the number of subscribers you need, you're going to have to spend a whole lot of money on marketing.

NELSON: Of course what you have is you do have a lot of networks that you can do that on but then you're using up air that you can't sell to anybody else.

PACKARD: Not only that, but you can't use that airtime because that's 80 or 90 million homes when the universe is so small that you're wasting most of your message.

NELSON: Would that change as that VOD universe grows, which it is growing?

PACKARD: Maybe. It's just hard to rationalize the marketing costs.

NELSON: Do you see the free VOD as ultimately profitable or is it something that helps just to build viewer loyalty and promote the network?

PACKARD: No, oh no!

NELSON: You're in it for the money.

PACKARD: It needs to be profitable.

NELSON: And of course it's much too early to tell, but that's the road that you're going down. Just to kind of wrap up a little bit, kind of looking back at this whole experience, what do you think that you personally have brought to it and I hate to use this word, but I will anyway, what is the legacy that you've left here? I know you're still here and intend to be, but at this point in time, and maybe you've never even thought about this – do I have a legacy? – but what do you think you've brought to the party that's impacted this place, that helped make it what it is?

PACKARD: I'm very entrepreneurial by nature and what I've brought to the place and what a number of people here have brought to the place is that spirit. I'm also very competitive, and again, a number of people here are that too, so it's just a drive to cr