Interview Date: December 11, 2020
Interview Location: via Zoom
Interviewer: Stewart Schley
Collection: Hauser Oral History Program
STEWART SCHLEY: Greetings, friends, and welcome to a new iteration of the Cable Center’s Hauser Oral History Series. This is a special one, I think, because with me for the next hour is a gentleman who, if you’ve followed the modern era of the cable industry the name Edward Bleier was synonymous with what happened at the intersection of Hollywood and the television business and the cable industry. Really instrumental figure from a lot of different avenues. Left, I think, a big imprint on the way this business still works today. Coming to us from his home in Manhattan, Ed Bleier, it’s wonderful to be with you.
ED BLEIER: you. Nice to join you.
SCHLEY: There -- I want to start with an interesting tale.
BLEIER: A program underwritten by my dear friend, Gus Hauser.
SCHLEY: That is his name adorns the program. Ed, there’s this sort of romantic story that circulates in Hollywood about the kid who started his career in the mailroom and rose up to the big time. I always thought it was an invented fiction. I never thought that really happens, but did it really happen?
BLEIER: Well, there are three stories that I know. Two concern Barry Diller and David Geffen who worked in the mailroom of William Morris and who admittedly, so I’m not giving anything away, steamed open important mail so they could read it and find out what was going on. By contrast, between high school and college in the summer of 1947, I was hired by ABC as the messenger in the telex department. These big old teletypewriters that banged out the machines and they were open and my job was to deliver them to the recipients. And of course, if I saw someone important, I read more than his name. And I read the anxiety that ABC had about entering into television that year because it would kill their radio business before the television business was on a secure footing. I also was a summer replacement copyboy in the newsroom and ran copy on Sunday nights for Walter Winchell. So I’ve literally been involved in linear television since before its beginning through today. A good 75 years.
SCHLEY: How did you make the original leap from guy reading telexes you maybe weren’t supposed to read to having a job, a staff job, or even a management job ultimately?
BLEIER: I was a radio major at Syracuse University and unexpectedly in my junior year my mother died so I didn’t go back. The job I got was at Channel Five in New York. It was then the Dumont Television Network. And in the next office the research department was planning an appeal to the FCC’s allocation table that restricted let’s say commercial television only to channels two through 12, VHF channels. And it was perfectly clear to Dumont that no more than 20 markets would have three VHF stations and therefore there was barely enough room for what became ABC and almost no room for what dissipated which was the Dumont Network. That’s what motivated everything I did thenceforth. I understood before I read McLuhan that distribution affects content, that the medium is the message. So that when I -- and then I subsequently went into the Army and when I got out of the Army I was hired by ABC as the junior salesman in New York to get the retailers’ advertising. I’m very pleased I was successful with the movie industry. I remember Spyros Skouras, the head of Fox, saying, “You’re my competitor, why am I supporting my competitor?” And I said, “With due respect, Mr. Skouras, that’s where your audience went. Go follow your audience.” And I developed a package of movie premieres with spots for $5,000, run of station spots, and $1,000 to pay for the remote unit. I gave them a half hour of primetime for the premiere of The Robe, Demetrius and the Gladiators, Paramount with Strategic Air Command, Warner Bros. with A Star is Born, the Judy Garland version. And I really did break the back of movies advertising on television.
SCHLEY: Ed, what made you a good salesman? Why were you good at it?
BLEIER: Because I understood the dynamics. If you understand how a thing works and you can game plan it not only from your point of view but the other guy’s -- other person’s point of view -- I’m not going to take the trouble to be gender correct throughout this. I’ll use “guys” interchangeably. As a matter of fact our sales staff at ABC network were all male except for one woman whose name was Helen Guy. When I was sales manager, I could address “you guys” and be accurate. With some laughs along the way. But understanding your medium, understanding the market, and doing it from a standpoint of building the market in order to get your share of that market, especially if you were the third or fourth man in line. If the market were big enough, we’d succeed. I remember when ABC was going to merge with ITT Leonard Goldenson introduced me to the CEO of ITT as the man who ran ABC daytime and the CEO of ITT said, “We’re about to buy such and such a company, we’ll see that you get all the business.” I said, “With due respect, I now have all their business. What I need is for ITT to underwrite the public affairs shows of ABC because those are our loss leaders.” So I was not afraid of respectfully talking truth to power.
SCHLEY: Okay. And it’s -- when I think of Ed Bleier, I’ve always thought of you in a Warner Bros./Warner Communications capacity. How did that transition occur from the ABC network and station group to Warner?
BLEIER: My appreciation of cable was the important part of the transition. As a broadcaster at ABC with successful line jobs in the P&L responsibility, daytime television, children’s programming, sales department, sports programming, the heyday of Roone Arledge, I had a broadcaster’s mentality and believed that cable would never happen because it would take literally billions of dollars to build the cable infrastructure. And then I saw that there were pole attachment bills so cable could use the telephone company’s poles. And then I saw that cable was succeeding because people were getting broadcast television. And my first impression was cable will cost too much, it’s too rural, it won’t happen in big cities, and that was a defensive posture. Leonard promoted me into a staff job as chief marketing officer for the company, running the overall public relations and I put a caveat on that. I wanted a small planning unit. And Thanksgiving weekend of 1966 with my one colleague we analyzed San Diego. And we found that San Diego, which was barely a three-channel market because ABC was on the Tijuana, Mexico channel plus an NBC and CBS was importing cable like it was going out of style. What were they importing? The LA stations. And it wasn’t just to get LA baseball or basketball or to get the syndicated programming or the cartoons in the afternoon. But it was also to get syndicated programs at a different time on affiliated stations. The audience was neutral whether they watched the network programming on San Diego or Los Angeles and as many people were watching LA news as watching San Diego news.
And I realized that cable would succeed because people wanted more television and more flexibility. And I wrote that report for Leonard Goldenson and I said, “Leonard, cable will be, A, the redemption of ABC’s facilities disadvantage.” As cable grows the UHF stations will get an equivalent signal in the home. You will no longer be restricted to three people who had UHF receivers, but everybody who had cable would find the UHF channel if that were an ABC affiliate and we wouldn’t have the facilities disadvantage that we now had. And that it will in turn produce other programming and in producing other programming I was sure there’d be a 12-channel cable system. I couldn’t be sure how many more and I didn’t know whether it was three years or five years or 10 years. It was a modest but certain projection of the future and I said, “And in that if there’s an abundance of television it will no longer make ABC play NBC’s and CBS’s Hollywood game.” We could specialize in sports and reality programs because we have the best eyes in television in Roone Arledge and Chuck Barris with Dating Game and Newlywed Game. So I prepared -- never used slides because I hate half-darkened rooms. I prepared my 12 charts, stood up in front of the room. It was December seventh, 1966, a day that remains in my personal infamy. I get into the third chart and Leonard says, “Ed, what does the first quarter look like?” And I said, “Leonard, I’m trying to look five, 10 years ahead, can we do that and then talk about the first quarter?” What I didn’t realize was he was anxious that the merger with ITT would fall through and then we’d have really been exposed.
So I packed up my presentation about the future, we went back to normal business dealings. He changed the management of the network. My immediate boss was redundant. His replacement wanted his own staff guy so I was on the beach with a good package. I was always the bad apple at ABC. I had worked there five separate times and got up to two weeks vacation, but I put in 14 and a half years all told, from 1947 through 1966, ’67. When Steve Ross bought Warner Bros., Steve -- and he had bought a talent agency named Ashley Famous and with the people there, Ted Ashley, Spencer Harrison, Jerry Leider, said, “Warner Bros. is available. Why don’t we buy Warner Bros.?” Then they wanted a salesman in New York for Warner Bros. Television in program development and they recruited me and I showed them my presentation for ABC which said the advent of cable is the growth of outlets for what Warner Bros. does for a living. So I was no longer an advocate for reality and sports programming, but I was an advocate for more film programming. Ironically the FCC was about to impose the primetime access rule. So just as we started into business the Commission took almost 20% of the network market off the market and we had no traction. We had one ongoing show, The FBI. We had no established show runners. Universal had a huge made-for-television deal with NBC to produce, I don’t remember how many made for television movies that were, A, backdoor pilots and, B, advertised Universal stockpiling the best show runners in town and, C, dominated the NBC schedule.
So once again I said I’m now Warner Bros. television and I’m squeezed out of the market the same way that Dumont and ABC were squeezed out of the market. There were few markets for what we do for a living. So I said I will commit myself to the growth of cable. I will find a new market for our movies on cable networks. I will find a new market for our off-network series on cable networks. And Tom Wertheimer of Universal and Barry Meyer, my colleague at Warner, led the charge with the unions. So we no longer had to pay high broadcast residuals to run what was called a dog tag, to run a dog tag failed series on cable. We could pay a percentage of our gross income. So implicitly the best thing that happened to cable was the change in the regulations because the vast libraries were open for cable networks to compete with the broadcasters. Example: Law & Order. And at the same time President Nixon’s Office of Telecommunications Policy, Tom Whitehead, Clay Whitehead, was beginning to propose that cable operations be separated from programming. We don’t know how much of it was Nixon politically motivated, but they didn’t want the operators owning both sides of content and distribution.
And through my best friend, then a White House speechwriter named Bill Safire, soon to be the New York Times columnist and incidentally my Syracuse buddy (and Dick Clark announced), he wrote, I produced the same Syracuse undergraduate radio show. But through Bill I got to meet Whitehead and I said, “At Warner Communications we’re only going into the cable business to build a market for our software.” Incidentally, his head of public relations at OTP was Brian Lamb who started C-SPAN and his general counsel was Antonin Scalia. So my visits to Tom Whitehead have left me indelible memories. Tom became a very good friend and a man I loved.
SCHLEY: And, Ed, in this environment of swirling regulatory changes and opportunities for Warner the man you mentioned, Steve Ross, decided to roll the dice, right? Was it his decision to invest?
BLEIER: He rolled the dice buying Warner Bros. and I remember his philosophy. He says, “We’ll spend a couple of years trying to make movies. If they don’t succeed, we own 120 prime acres in Burbank.”
SCHLEY: (laughter) All right, then.
BLEIER: If we do succeed, we own four record labels that don’t require much physical capital anyway so we’ll have a music business and a real estate business. Now, the first year of our movie business we had two movies. One was called Woodstock and the other was called Klute. We were committed to the movie business. And then Felix Rohatyn, an investment banker from Lazard Freres, called Steve and said, “I want to talk to you about cable.” And Steve, “Ed, join the meeting.” And Felix walked in with a bunch of rural cable systems, those owned by Alfred Stern, I think it was called TVC, and those owned by Amos Hostetter. All rural except for Akron, Ohio where Stern built a two-way cable system that was prohibitively expensive. And Steve said, “We have no experience in capital intensive businesses. That’s not what Warner movies and records do, but we’ll do it to make a market for our movies and other programming.” And I encouraged that by showing him the ABC strategic plan. Al Stern had a black box so he said, “I have a pay-TV system and I have a black box that can scramble the signal.” So we all demonstrated in Sarasota, Florida. We dispersed ourselves throughout the community in subscribers’ homes. We flipped the switch on the black box and downloaded Klute. It was awful. Awful. What happened, nobody paid attention to the print they sent us. So they sent us an old used 16-millimeter scratched print of Klute. So here the cable operator promising that pay-TV would have these crystal-clear pictures, was delivering visual garbage. But we learned our lesson about how the pictures had to be clear, and we learned another lesson and this was critical.
That the movie business and the film business and the TV programming business was a chemistry business. It was moving and storage to build sets, it was recording images on celluloid. The minute that celluloid got transferred into pixels we said to ourselves, if we can transmit those pixels into the home why are we just supplying secondary marketers like cable networks or pay-TV systems? Why can’t we deliver something close to our first run movies directly into the home? And Steve and I at that point, with our other colleagues, said one mission of this company is pay-per-view, especially if HBO dominates pay-TV. We’re going to do pay-TV with The Movie Channel because we have to play HBO man for man. And interestingly, because Gus Hauser didn’t run HBO, which costs $4 a month wholesale, Gus put on The Movie Channel which cost him $2.50 wholesale and he pocketed the difference. Now, I learned several things from that. I learned that cable operators were penny pinchers and they were probably penny pinchers because of their covenants from the banks that financed their buildout. I learned that they weren’t as interested in the quality of the programming and I learned that HBO, which had so many more subs, could write the big check and pretty soon the studios would not be selling everybody non-exclusively. HBO and then Showtime would buy just enough exclusive product so that there was nothing left for The Movie Channel.
Bob Pittman was then running The Movie Channel and Jack Schneider had moved over from CBS and I had the biggest argument with both of them. Why theirs was a failed strategy, criticizing the other studios for going exclusive with HBO. And interestingly, I continued to supply Warner’s product to Movie Channel and Showtime even after we merged the two of them and owned 40% of Showtime, but I said to everybody my biggest obligation -- and this is the headlines today in the movie business -- my biggest obligation is to our profit participants. I can’t self-deal our in-house infrastructure at the expense of their revenue. So I’m going to make my exclusive deals with HBO. Every other studio said, “Shame on you, they’re the monopolist.” And I said, “they invented this game, they did it better than the other guys, and they write the big check. And I’m a fiduciary to Clint Eastwood and Barbra Streisand and Steven Spielberg before I am to the Warner Bros. treasurer, especially because we attract better talent because of our better results. And, at that point, PPV was wide open.
SCHLEY: Ed, you said two things that I think were really instructive. One, the cable industry owed a lot of money to a lot of banks. It was beholden to covenants and requirements and restrictions. And secondly you said the bosses of the cable industry were not terribly attuned to the quality of television that was their essential product. I think that’s interesting. What do you mean by that?
BLEIER: I never thought the description of “pole climbers” was a pejorative. I thought it was a descriptive. And I just found the culture of the cable industry was all about delivering the signals. Leo Hindery was a marvelous touchstone for me. Thoroughly adept at the cable culture, Leo nevertheless was open to new ideas and other ways of seeing things.
BLEIER: They didn’t much worry about the quality of the signal or anything else because if the antenna on top of the mountain reached into the valley and leapfrogged Los Angeles into San Diego or New York to Syracuse, which was my other model market, if the picture came through that was sufficient. They’d refine it later. I mean in many instances it got hopped on microwave with a certain degradation of the signals. One of the first things I was assigned to do at the MPA meetings was find Turner’s secret transmission because Turner said, “Me? I’m innocent. Southern Satellite is delivering my television station.” We were convinced there was a direct line from Turner to Southern Satellite and we had private detectives looking for the pickup relays. And Turner was a seminal moment because Atlanta was a three-channel market. Ted owned the single independent station in Atlanta, happened to be a UHF station. Ted was smart enough to realize that movies were presold programming, Looney Tunes cartoons were presold programming, baseball was presold programming. So he put together an Atlanta station with those three components and he called the salesmen from MGM/UA which included ironically about 300 of Warner’s earliest Looney Tunes cartoon which became a headache all through my career because I ran the main Looney Tunes library in color that we owned and Turner owned the black and white negatives earlier.
So I had to police that that’s all he was televising, that he wasn’t improvising new shows and using our copyrighted music, that he wasn’t using our copyrighted characters, he was using the specific cartoons to which he had license. And MGM made I don’t know how long a deal with him, 12 years, 15, that salesman said, “I had one customer in Atlanta and I sold out the library for all these years.” And the library became the nation’s superstation, WTBS. And Hollywood boycotted selling Turner new product until the cable copyright legislation went in so we got a percentage of MSO income as well as the Turner license. And we discovered something that Ted had said to me. “Eddie, if I’m playing Cool Hand Luke on WTBS and you think it’s interfering with your sale to WPIX in New York, tell them they won’t run against each other on the same day.” And it turned out that it was minimal competition. And I turned the argument around. I could then say to WPIX, “You had better buy the movies we sold to Turner or else he’ll bring them into your market.”
SCHLEY: Well, if I may, what’s so interesting is that you talked about the world of pole climbers, with due respect, and Hollywood and you had to sort of bridge those two. That was kind of your job, right? Was to bridge Hollywood with the cable industry.
BLEIER: I always thought strategically. And one of the things I’m most proud of, and I’ll come to that in a minute, in the early ’80s Frank Biondi, whom I knew from HBO and thought the world of, was the number two man at Columbia Pictures and there was a waiver under antitrust that horizontal competitors could get together on research projects. And Frank signed us up at the MIT Media Lab and we signed up four studios (laughter) Fox, Universal, Columbia, and Warner Bros.. I’m smiling because Fox backed out. What was his name? Jonathan Dolgen made a commitment to do it. When he went to Barry Diller for the $50,000 Barry said, “I’m not going to spend it. I’m not going to do it.” And Dolgen said, “I finally got the boss I deserved.” And I loved him for his humor, but I hated picking up a third of the cost. And in the first meeting Media Lab people said, “What is it you want?” And the guy from Universal said, “I want a videocassette vending machine” and I said, “I want to deliver my movies on cable lines. I want electronic connection into every home which the cable operator has and I want that to turn into pay-per-view provided that we can market the movies in a sensible way.”
Now, let me go way fast forward to the last significant thing I did prior to leading Steve into the Time Warner merger. Recognizing that the covenants -- let me back up. So I put a presentation together and made the rounds of the cable presidents. I said, “You could make an extra 50 cents to a dollar a month net if you dedicate four channels to near-movie-on-demand for pay-per-view. Why four channels? The typical movie runs two hours. You start four movies, hit movies, on a different half hour, one at 8:00, one at 8:30, one at 9:00, one at 9:30, so that the hit movies are easy to recognize from their movie marketing. So that the viewer can find pay-per-view from its simple organization on its cable with those four half hour starts manual, primitive, hopefully impulsive, ordering channels you could probably gross one movie a month at $2.95, $2, whatever, at a 50% split. You keep a dollar of that and you wind up with a dollar against the exposition of four channels.” I took that to everybody in the cable industry and they said, “But we really don’t have the four channels.” I took it to John, no second name necessary, and Malone said, “Eddie, it’s a day of rate regulation or of deregulation. If it’s rate regulation I put on four linear channels that may cost me a nickel each and raise my rates two bucks. So I have 20 cents of cost for four more versions of Discovery or of MTV or you name it. And if it’s rate deregulation then I’m going to add four more channels and raise the rates even more.” So John used his engineer’s mathematical analytical skills to count down to the mil how much he would make and take to the bottom line.
It so convinced me of John’s merit that I bought TCI stock and haven’t sold a single derivative share of it since then, but I was still out selling the idea of pay-per-view. And when I say fast forward, in the late ’80s I thought through the problem. The cable operator was upgrading from 24 to 36 to 54 to 100 to 102 channels, linear, analog. Digital is still down the road. He’s borrowed money from the banks with guarantees. He’s trapped. He’s not going to take any experiment. So I said, “What if we find a body of financing to sit on top of that bank covenant where we guarantee that we’ll get no income from the cable operator until his bank covenant is met, normal profit is met in the conventional sense of operation, and on top of that we upgrade it from 104 channels to 1,000 analog channels.” Because then you could split them digitally, the four for one digital. Which Warner Cable did in Queens? Dick Aurelio put in a 1,000-channel system in Queens and we devoted 156 channels to pay-per-view with X number of titles starting every half hour and we got a terrific result. Now, how are we going to do that?
Unbeknownst to me, Steve’s financial guru, a man named Oded Aboodi, who was never a formal part of the corporation, was the most brilliant finance man, maybe separately Malone, he took it to Mike Milken.
SCHLEY: Oh, man.
BLEIER: Milken said, “I can raise five or $6 billion with junk bonds to finance a layer of physical development on top of it.” And what we were going to do then? Warner’s would have a put on 10 of those linear channels for in-house Warner Bros. networks, a cartoon network, a drama network, a busted series network, you name it, we were going to get there. And what else were we going to do? We were going to dedicate a certain number of channels to pay-per-view which we would open to the other studios so all hit movies would rotate through near-on-demand pay-per-view channels. And then the operator would have the use of the others. Milken felt confident he could raise the money. He forgot one thing. He was about to be indicted and go to jail.
SCHLEY: There went that.
BLEIER: There went that. I’ve rarely told that story, but it was the culmination of my thinking strategically and thinking from the cable operator-- putting myself in the cable operator’s shoes. I learned a lot of that from Gus Hauser because when Gus did -- and I don’t want to forget this -- when Gus did Qube in Columbus everybody scoffed at it. It was expensive. It was analog. It was linear. It was 24 or 36 channels, but it was two-way and so forth and so on. When Warner’s business fell apart in the early ’80s, because Atari crashed and Atari put Warner Communications $1 billion into debt and we buried $1 billion worth of useless game consoles, we had to pull the plug on Qube. Our partner, American Express, had become our partner because Gus had an interactive two-way cable system that American Express wanted to facilitate transactions. Mind you, everything that we’re now so used to on the internet --
BLEIER: Gus, first by inventing Qube, got American Express to reimburse our costs in Warner Cable so we owned the cable hardware at zero cost. Secondly, because we had two-way interactive cable Gus went on a sweep of the table getting almost all the franchises. He got Pittsburgh, he got Kansas City, he got Dallas, Houston, he got New York, and others. The one he didn’t get was Boston which my friend Chuck Dolan got and Chuck and Gus and I were always talking about putting Cablevision in the pot because his Long Island systems and our New York systems were naturals together. American Express then backed out of Warner Cable because interest rates had gotten catastrophic and Sandy [Sanford] Weill had taken over American Express and he thought cable was a bad investment. Now, this also related to Time Inc. and HBO. I was on Steve’s strategic committee. In our strategic committee meetings Steve said, “We have a buy/sell with American Express. I want to buy the minute they put it. But at least Time Inc. was bidding up those systems, and we’ll have to pay more.” So I said, “I’m going to a cable convention this weekend, Steve, I’ll see what I can do.” So I hung around with Jerry Levin and Nick Nicholas and inevitably they were pumping me to find out what our intentions were regarding Warner Cable.
I just said the truth to Nick and Jerry. I said, “Steve Ross’s heart will be broken to lose our cable system.” They didn’t raise their bid. And American Express called Steve -- Jim Robinson called Steve and said, “I’ve got to get out.” Steve said, “I’m the buyer.” So we bought the other half of Time Warner Cable. Meanwhile the other benefit, because I have written that Qube was a huge success even though the history of the medium puts it down, the other benefit was in Columbus they developed the antecedents of what became Nickelodeon and MTV. In Columbus Gus said to me, “What would you do for a teenage show?” And I said, “It’s a no-brainer. I’d do Dick Clark’s Bandstand. I’d get a bus to bring students from four high schools into one gym and put on Bandstand every afternoon. In one month you had every high school kid in Columbus, Ohio on television.” All potential subscribers at no cost.
SCHLEY: Brilliant, brilliant. Well --
BLEIER: John Lack, who was running programming for Qube said, “We’re a modem system, I want to put on modern music.” He met with Mike Nesmith of the Monkees and Jac Holzman, who ran Elektra Records for us and was my counterpart on the Warner Communications tech committee and they told John -- his brother was head of news at NBC -- they told John Lack, “Videos that are made in Europe and Australia for the World Song Contest, they’re not made in America.” And Lack said, “I’m going to make it a program out of videos.” New modern video music. And the Warner music companies had no videos. Videos that were extant came from England or Australia dominated by Bertelsmann and EMI so it didn’t even help our own record companies, but that’s how MTV started and then when it was spun out, I make sure everybody knows that John Lack invented it. And now you notice [Bob] Pittman is credited as co-creator.
SCHLEY: I know. But through all this odyssey, Ed, how did you continue to advance the needle on pay-per-view and then how did that come to be video on demand? Because you kept working the technology, right?
BLEIER: I really didn’t advance the view on pay-per-view.
BLEIER: It took me a while to realize that the cable operators were handcuffed to their covenants. And when the industry then went to 1,000 channels analog, split digitally, and then went digital the test market for Time Warner Cable was Honolulu, Hawaii. And being the good company man, I sided with my counterpart running home video, Warren Lieberfarb who singlehandedly organized the hardware manufacturers and the studios into the first video disk [DVD]. It was a Herculean feat. Warren said, “It’s compatible, we must keep it simple, don’t wait for Blu-Ray, get video disks on the market quickly.” And we had to do that because videocassettes had a quirk in the copyright rule. For some reason when I licensed a movie to a network or to HBO or pay-per-view or a theater it was licensed, it was our property. They didn’t have physical possession. The copyright industry somehow interpreted the videocassette as tangible ownership including the movie placed thereon. So you could resell that -- you couldn’t exhibit it publicly but you could resell that cassette for anything. Now, the physical cassette cost four or five bucks plus of course the cost of the movie. So for movies that were pre-produced, put on a videocassette, we had a four or $5 video costs, perfect for sell-through. So Blockbuster got rich buying early cassettes for eight or $10 and then renting them 60 times for $3 until we got smart and we said, “No, a cassette for rental is $62.” The cost of the hardware might be four bucks, but we’re charging 62. So your first 30 turns pay off your rental; they screamed bloody murder. They wanted revenue share and we developed a formula for revenue share. Disney, which had sell-through keep stuff, was thrilled to sell videocassettes for $20 or $25 because kids were buying them. A big order for us to fill the rental inventory would be 200,000, 300,000 units. Disney could sell a million, two million units so they were happy to take the smaller margin.
SCHLEY: While this was going on though were you starting to get excited about the idea of electronic rental, of video on demand? Did you believe in it at that time?
BLEIER: Of course, I believed in it. That’s why I pushed for near-video-on-demand in Queens with the Warner Cable system and Dick Aurelio. And my proposed four-channel near-video-on-demand was the best they could seek from the industry. We legislated by manipulating windows. But the cable industry set up a pay-per-view distribution system called Viewer’s Choice. Now, cable operators were not horizontal competitors. So four of them owned Viewer’s Choice: Time ATC, Brian from Comcast --
SCHLEY: Roberts, right.
BLEIER: Brian Roberts from Comcast, Cox, and the fourth was, oh, Bob Miron from Newhouse. And I joined the consortium and they said, “We’re glad to have you here, we want Warner Bros. movies.” I said, “I’m here to tell you you’re doing it wrong. I am your critic. I am not your supporter.” And they had one channel. Why? Because it was the filter through which the events had to go. By buying en masse and having only a one channel distribution filter, the boxing people couldn’t go around them very easily. My colleagues at the movie studios, envious of Viewer’s Choice and saying, “They have their consortium, we’ll have ours” and we couldn’t do it for antitrust reasons. So Jeffrey Reiss set up a legal condominium that each studio had access to and I said, “You’re the problem, you’re not the solution because you’re trying to get video on demand on a single channel.”
SCHLEY: Oh, okay.
BLEIER: I participated, reluctantly, in both. I own a share of the condominium and owning one sixth of Viewer’s Choice and argued myself blue at board meetings to change it to near-video-on demand. When digital finally happened – they kept demanding, “It’s not fair for a movie to be released in theaters” which then had to go on HBO under a very rich contract 11 or 12 months later. They said, “It’s not fair to put it out in video in three or four months and then not put it on pay-per-view until it’s nine months old. We want day and date window.” And I said, “Pay us what the video store pays us and we’ll give you day and date window right now.”
SCHLEY: You have supplied me with a list of expressions and aphorisms and one of them seems very pertinent right now. And it’s from the economist John Maynard Keynes. He says, “The problem is not in the new ideas, but escaping from the old ones.”
BLEIER: Perfect case was we were now merged with Time. They were running the cable system. I was talking myself blue to my counterparts going nowhere. They were going to demonstrate digital in Hawaii. I said, “What a nice contained market. Why don’t we experiment in Hawaii, offer Hawaii pay-per-view to pay what home video pays per transaction, per turn, providing you get day and date window?” I said, “There’s no reason to worry about it because, A, I’m confident you’ll earn it back and frankly if you don’t, I’ll take Warner Bros. share of it and reimburse you. And secondly, if you don’t earn it back it’s just a test and, thirdly, if you do earn it back you then have opened up for day and date window on all the digital cable systems with no limits of channel.” Whereupon I heard from my counterpart at Time Warner Cable, “I will never put up a guarantee for anything.” I said, “This is a no-brainer, faultless, can’t lose guarantee.” “I am not paying guarantees.” I said, “It’s a fundamental cultural difference. It caused me to devise what I now call the Milken formula, to have done the same thing ad hoc on analog television.
SCHLEY: Well, to me there’s a great irony. I know you’ve observed this because you’ve written about it, but a lot of what you’re talking about, or were talking about, trying to bring to reality, is happening today except it’s happening over a different medium which is of course ISP internet. Could you see that happening as you were developing the business?
BLEIER: Well, before I left Warner I was invited onto the board of RealNetworks and I got approval from Warner because I had another year or two to go before my contract was up and I was for sure going to retire. Let me digress for a minute. I loved my job despite its frustrations at never launching real pay-per-view. But I watched the cable industry grow, I watched the networks grow, I made friends of the industry because I could take our schmaltzy folksy programs like The Waltons to the Christian Network and become friendly with Tim Robertson and explore with Tim Warner Communications buying out that network when it was very cheap. And if you recall, Disney ultimately bought it from Haim Saban for something like $5 billion. When Jules Haimovitz, formerly Viacom was running Hanna-Barbera, he said “Let’s take his cartoon library and Warner’s Looney Tunes library and start a cartoon network. I went to my management with the Family Channel with Cartoon Network. My number two, Eric Frankel, made several trips to Palm Beach to meet the kids who were starting Syfy Channel and we were going to take our movies -- because they had no money and I said, “I can’t sell you for no money but why don’t you give me nominal money and equity in the Syfy channel?” I think I recall it took a lot more equity and a lot of people went through it, but I think I recall Syfy Channel selling for $9 million, billion.
BLEIER: Billion. And I couldn’t convince my own Warner Bros. management to go into the cable network programming business. I learned the equity lesson from dealing with Bob -- BET.
SCHLEY: Johnson, Robert Johnson.
BLEIER: Robert Johnson. Bob said, “I’m starting a Black network, I want all your Black movies.” I replied, “Bob, we have some huge African-American winners. We have Cosby movies, we have Poitier movies, we also have a whole library of movies nobody will touch that are black exploitation, but I can’t sell you a movie at what you can afford, $2,500, a license fee for two years.” And I didn’t see, did not see, the ability to ask for equity on top of it. So finally I said, “Okay, Bob, I will sell you at something like your price provided that I have the option after two years of putting it to you on a renewal at more money or taking it back. I will listen to your wonderful appropriate importuning that America needs a Black-oriented entertainment network.” You know, the politics have since gone into social engineering, no longer entertainment. And I also realized that if Bob bought New Jack City or whatever those exploitation -- Come Back Charleston Blue, the exploitation movies were, that he’d be koshering them for me to sell to somebody else. So I learned a big lesson by making Bob Johnson’s deal and neglecting to try to get equity. I didn’t have the precedent when I had a chance to do a cartoon channel, family channel, and Syfy Channel.
Now, in fairness to my boss, Bob Daly, Bob was the single best boss I could have imagined. I had 90% latitude. He never second guessed my deals. Once in a while he would suggest something and invariably he was right and it was better for the client and better for me, but Bob just didn’t want to have to worry about my being wild out there running cable networks that were running up big deficits at the time.
SCHLEY: What did the RealNetworks exposure and experience tell you? What did you learn?
BLEIER: I wanted to learn where streaming would take us. And Rob Glaser invented streaming when he was at Microsoft and he could not get Gates to go into the programming business. And Rob wanted to go into the programming business. To one of my staff I said, “You must track the digital field and keep me up to date,” he showed up one day and he said, “I’ve made a deal with RealNetworks for our programs.” I said, “You can’t do that! First of all, we don’t have the rights in many foreign countries to the same programs. We don’t even own them in many foreign countries. Secondly, we probably have syndication commitments that preclude it. Thirdly, we probably even have cable commitments. That the problem with the internet is that it’s open and undisciplined.” Which of course is the social problem today in Facebook and it causes me a lot of grief. I tried to teach Rob that he couldn’t compete with ESPN by distributing it on the internet unless he was willing to put up the huge money or unless he was willing to buy rights directly. He made a one-off deal and for a year or two had the rights to stream the chat room of Big Brother. I could never disabuse him that what made the cable business so inherently strong is that it all focused down into that funnel.
SCHLEY: Key point.
BLEIER: It had a discipline around it. It wasn’t--. And now another radical new idea, competition raised prices, it didn’t lower prices.
SCHLEY: In the cable -- in the pay television business, is that what you’re talking about?
BLEIER: In the cable programming business. Because cable had a competitor called satellite. Cable was negotiating with Discovery or Viacom or even ESPN and it was willing to take a blackout. The satellite guy came in and said, “Oh, I’ll give you what you want” and then they’d go into the territory and they’d pick off subscribers. I remember Dolan’s fight over an RSN, DIRECTV said, “You cannot get that RSN, just subscribe to DIRECTV or” --
BLEIER: Charlie Ergen, whatever he called that. Since Charlie never paid his bills to us, I was never inclined to do business with him. The paradox was competition for the cable operator, I believe, raised the price of programming because the cable operator didn’t have much latitude. You know, I used to say to HBO, “I’m here for negotiation. I know you think my name is take it or leave it.” But I negotiated. I negotiated because I understood their business from the cable point of view as well as mine.
BLEIER: Quick note about movie libraries. I had to break the cartel of station syndication. When television started it never ran movies. So when a movie came out of the theater it was finished. And the first movies that played on television were on ABC in the early ’50s and they were a bunch of English movies. They weren’t American movies. And there was no market for movies until television grew out and then the independent stations like Turner, like WPIX, like independents everywhere, said, “If I could buy Cool Hand Luke that was presold in the theaters and it doesn’t have much of a market so I’ll buy it cheaply.” Now, they would buy it in seven-year packages. And the seven-year package would start when the most recent guy came into the market. So let’s say Los Angeles bought it day one, they had seven years. But New York bought it year six so it was committed to syndication for 13 years. And I said to HBO, “You must give me ammunition to get those rights back.” They said, “What ammunition do you want?” I said, “We have three volumes in syndication with wonderful movies, with Cool Hand Luke and other -- Wild Bunch.” No, not Wild Bunch. Doesn’t matter. But they were established movies. “Give me an order for HBO for those movies subject to my recapturing them.” They gave me a $20 million order. I forced a showdown with syndication. Syndication could at best say we had $5 million of revenue on the book. The difficulty changing habits caused me to call my syndication counterpart “the best of 18th Century Fox.”
Now, the bookkeeping also influenced those discussions because in the movie business -- I think I mentioned this in our informal conversation -- the first thing you asked yourself on the Monday morning meetings is what does the fourth quarter look like. And any way you could -- if you needed the money you could put money in the needed quarter. Then the accounting rules said if you delivered a print to a TV buyer you could then book his -- so it was a question of delivering many prints long before the starting date. Thus, “If you were extending a contract that’s an in-situ deal so the extension means that you can book” -- so there may have been 13 years left on some of the syndication contracts and the accountants kept saying, “Renew syndication” so we could book the extra revenue. I said, “Stop playing with the books and create a whole new market of far greater revenue to start a whole new market of new revenue.” Fortunately, our movie business was successful enough and fortunately our HBO secondary market was successful enough and I think we were then starting the home video business. That was successful enough. So we could take a chance, but it was the hardest job to make the internal sale and get the inventory and the minute it cycled through -- and HBO said, “We’re first run movies unedited.” I said, “You think your audience thinks that or do you think they think a lot of it is first run unedited? You can see the theatrical version with all the R rated inserts, but they just want good movies and if you’re offering them a good movie, they don’t care how old it is. And for most of the people it’s a first run.”
SCHLEY: My point, the moment you pushed press play it’s a first run movie for you.
BLEIER: I learned that consciously from -- oh my God. He ran Lifetime Network.
SCHLEY: Was it Tom Burchill? Nice guy. I know who you’re talking about.
BLEIER: No , Doug McCormick. Another lovely guy. Unfortunately, he was the wrong gender for the politically correct Lifetime Network later on.
BLEIER: No, it’s true. He did a brilliant job and he was putting the Lifetime Movie Network together on made for television movies. Now, made for television movies had a huge success. NBC had its huge Universal deal. Barry Diller the “Movie-of-the-Week.” Everybody was doing made-for- television. Barry now had a simple premise: You wrote the TV Guide log line that made you want to see it and that was it. “A plane crashes in the jungle, only the pilot is sighted, he is killed. His 12 blind passengers have to find their way.” That’s worth seeing, one time. Theatrical movies had production values so you weren’t so interested in the story line, you’re interested in the character development, the performance, the production values. And I kept saying, Doug, aren’t you taking a chance?” I had a huge library of made-for-televisions. I had most of the Hallmarks in our library. I said, “Haven’t the networks found out that after the first run they don’t rerun?” He looked me right in the eye and he said, “Ed, five years later they’re a first run, for the same women.”
SCHLEY: I’ve got two more before we round toward conclusion and I really wanted to ask you about an opinion that’s a little contrarian maybe, but it has to do with the bundle. There seems to be this sense that the old school bundle of channels was due to die and it was waiting to be replaced. I think you think that maybe we haven’t handled the bundle correctly.
BLEIER: Again, the problem is not in the new ideas, it’s in escaping from the old ones. If you were ESPN you were the 10,000-pound elephant and you said, “Here’s where I sit. I want $8.50 for ESPN.” When retransmission consent came along the broadcasters all said, “I want $2 and $2.50” especially for their NFL football game. And Disney cut the salami at both ends because ESPN paid for the NFL game but then put it on ABC. So ABC got retransmission consent largely for benefit of the NFL and the sports. Turner, smartly, put sports on TNT and WTBS. Essentially its programming was no different than USA’s. USA didn’t have sports. It had wrestling. So Turner got $1 more a home than USA got for sports. Then the regional sports networks came along. Well, how could you resist a network owned and showing most of the Knicks/Rangers game until they both forgot how to win? And how can you resist an RSN that had the home games of the Mets? The biggest RSN success was devised by our good friend Leo Hindery, who recognized the Yankees would rather have equity in a cable sports network they dominated, rather than just some more program rights income, which would have to go into the league’s common pot. YES was a huge success, and once again Leo inspired me by thinking out-of-the-box. Thus a New York cable subscriber could pay $10 a month for 4 RSNs, without ever watching. Charles Dolan profited on both ends of the MSG RSN – and its derivatives.
My four cable mentors were: Gus Hauser, John Malone, Charles Dolan and Leo Hindery.
Then the sports leagues started their own. MLB started its own network. NFL started its own network. Tennis started a narrow interest network. Everybody -- and that all just accumulated until buried in my cable bill was $40-45 a month of direct or indirect sports charges. Also “buried” in my cable bill was my access to the internet and $20-30-40 a month of equipment charges to feed the cable into other boxes long since amortized. But it was profit dollars to the cable operator. So he kept the equipment charge on there as long as he could. Also the cable operator was brilliant in providing better access and better delivery than the telephone competition. So cable owned 70, 80% of access, physical access, to the internet. I’ll come back to that in a second. Also buried in my cable bill was my switch to the cable operator’s telephone system. I could finally get rid of Verizon for a dumb wire into my fax machine or a dumb wire into my home. Thus, my bill was $300 a month -- of which only $80 was programming. Of the $80, $40 was really for sports. What I got on all those other channels turned to be a real bargain. If you were David Zaslav what alternative did you have to get an extra 25 cents but to say, “I’ll give you an extra five channels.” Or if you’re NBC cable what alternative did you have to say, “I’ll translate Bravo and Gerry Laybourne’s channel -- the women’s channel [Oxygen] -- into more reality channels.” So the reality channels duplicate one another. They’re coming out your ears. They’re all similar. Turner even turned its second news channel into a reality channel, HLN. And that was their only currency. They couldn’t strip it down and start all over again. Zaslav has used it to great advantage focusing the best of his reality programs to his over-the-top Discovery+ package.
Now, I will say this for my colleagues at Time Inc. I like them personally a lot. I thought of Jerry Levin as a good personal friend. I admire Michael Fuchs. The arrogance of HBO’s success could stand toe to toe with him and fight it out. I love that kind of relationship. I learned early, but even though they totally disappointed me on converting digital to the principal pay-per-view home entertainment delivery system by putting up minimal guarantees and changing the industry. They didn’t disappoint me when Jerry said, “We own better access to the internet. We are the fat wire compared to the telephone connection.” When Jerry made the AOL merger I said, “Okay, I’ll drink the Kool-Aid. AOL is this “great company”, but Jerry, I don’t understand something. Last week we were telling the world that cable’s broadband is so much better than telephone broadband and if I understand AOL it’s nothing but a dialup system having sent enough disks to enough homes to aggregate a chokehold on the incoming internet distribution systems so they could have a piece of many IPO’s. It is not a truly breakthrough delivery system and it is contradictory to our belief of cable’s ownership of the broad wire into the home.”
So that was one of the paradoxes. It’s interesting, Kara Swisher wrote a book about the failure of AOL and came to see me and I said, “It’s all in outlook, it’s all in cultures between the cable people who held sway at AOL Time Warner, and the AOL people who thought they were internet innovators.” Kara is, including today, writing some of the most informative material first of all about the undiscipline of the social networks and currently my former job allocating windows to lines of distribution.
SCHLEY: She does great stuff for the New York Times about what you’re talking about, Kara.
BLEIER: The podcast today is what I did, it’s part of my job. I allocated windows. I had a long, happy career marrying content with changes in technology. A practical Marshall McLuhan period. However, when HBO, Turner and Warner Bros. wound up in one giant enterprise, I “got no satisfaction” changing from “value added” to “transfer pricing.”
SCHLEY: Right, right. Well, I’m going to sneak in one more question, Ed, if I can, and this has nothing to do with television, but not long ago you were on the Charlie Rose Show talking about a tradition in America called Thanksgiving. You devoted a lot of thought and a lot of time and even wrote a book about how to honor the tradition of Thanksgiving. I just would like to invite you to say a couple of words about what you think about the subject and why you devoted a book to it.
BLEIER: It’s in the forward which was written by Bill Safire. If you have a copy of the book, or I’ll send you one, look at the blurbs on the back cover. Julie Eisenhower Nixon, Alan Alda and Arlene Alda, Steven Spielberg, Quincy Jones, Peter Jennings and his wife. I believed that Thanksgiving is the great universal holiday. I also believe it would not have occurred but for the beneficence and the tutelage and the security of the Wampanoag Indians. Yet three years later violent warfare and the Indians started to become eliminated. Now, I wanted to take the common conception of Thanksgiving -- one of my other aphorisms is true art is that which first seduces the audience so one can then nourish its values. I wanted to seduce the audience by feeding their common view of Thanksgiving and then telling them a version of the truth without losing my audience. I had a history of Seders in my parentage and the Seder was a ceremony around the holiday of Thanksgiving, of passing. So, I wrote a narrative with the history of Thanksgiving and hope to make it a universal, more meaningful holiday. If I’m right, if the book hits, it’s a perennial. We’ll reissue it every year, we’ll do a pocket size version that some marketer of Butterball turkeys can give away free with their turkeys and I’ll collect royalties on a book that goes on forever. Another maxim is the shortest oxymoron of my entire professional career: Book business.
SCHLEY: Understood. Sympathetic. Understood.
BLEIER: Also learned that from the movie business. Every editor buys a book, puts themselves on the line to get it out and make money this year. Next year they’re covering next year’s books, they’re not going back on library unless you’ve just blown them away on library sales.
SCHLEY: Well, it’s still a worthy look at a subject. I promise this is the last one and I think this is a hard question, but I’m throwing it out there. You’ve done so much and had such an imprint on the business, what are you most proud of when you look back on your career?
BLEIER: Today’s interview is lucky for me. It’s 15 years or so since I’ve been active-active. I’ve been pursuing ideas mainly on the internet. I’ve developed an environmental website that I think is a no-brainer, but like the environmental movement itself, it’s not urgent-urgent. It’s we’ll get to it tomorrow. I developed a sports idea I’ve tried to sell. I developed a labor of love for Washington, DC, a tourist attraction built around the play “1776” in Washington because Philadelphia doesn’t have enough tourists, Washington doesn’t have enough to do at night. Do a version of “1776”, a wonderful warm show, in a setting that includes a Revolutionary War dinner, includes exhibits on the early history of the country, which are nowhere to be found in Washington. You can’t get from the native Indians through the settlement of Massachusetts and Virginia through the Capitol in Philadelphia to Washington. You can’t do it. There’s no place that does it and I wanted to do that in that exhibit space which of course would have stimulated merchandising sales. It was a small business, but it was a labor of love. And it had to do with tourism. It wasn’t theater, it was tourism.
I found the then head of Disney parks, Tom Skaggs, who became the successor to Bob Iger until they finally realized they didn’t think he would make it and he left. And he said, “I’m putting billions into China, billions into cruise boats, I don’t have the bandwidth to support Washington” and he abandoned a lease he had on 100 acres just outside of Washington. He said, “But if you get it going, I’ll sell it. I’ll integrate it with what we sell.” I couldn’t find a strategic partner to do it because it fell between -- it lived in my head as pay-per-view lived in my head for all those years and it didn’t necessarily serve anybody else’s interest. I went to the powers that be at Marriott. I said, “I need about 30,000 square feet. It can be all underground.” And they said, “If we had 30,000 square feet downtown, we’d build more meeting rooms and more banquet rooms.” So I’ve spent these last 15 years pursuing my dreams without the success I’d love to have, but it’s honed my insights and it’s honed my second thoughts about the career I’d in fact had. Steve used to say, “Don’t ever ask for permission. Once in a while, not too often, ask for forgiveness.” And that was the professional culture I was raised in. Antithesis of the cable culture.
Overall, professionally, I am most proud of my innovations, such as initiating racial integration into TV’s soap operas, Warner’s development of cable and its programs, creating new “content” markets, and organizing 15 Aspen Institute retreats, over 20 years, where industry leaders contemplated our roles and responsibilities in society because of the work we all do.
SCHLEY: Right, it’s a wonderful thought to conclude on. There was a time when I was in Los Angeles as a reporter that you couldn’t go through two weeks without reading a comment from Ed Bleier in the business press or the sport of trade press and so to have a chance to sit for an hour and talk to you about the business, where it’s been, where it’s going, totally my pleasure. I thank you so much, Ed, for being with us today.
BLEIER: Thank you.
SCHLEY: It’s all good. And thank you for tuning in for this edition of the Cable Center’s Hauser Oral History Series. I’m Stewart Schley with Ed Bleier. Been a great conversation. Thank you much.
BLEIER: Thank you.
END OF INTERVIEW