Robert Rosencrans - 2000
Interview Date: Friday November 17, 2000
Interview Location: New York, NY
Interviewer: Jim Keller
Collection: Hauser Collection
KELLER: This is the oral history of Robert M. Rosencrans, godfather, if not the father of Madison Square Garden Network, BET, USA, sports, C-SPAN, many of the national programming, very early stages of the national programming in the cable television industry, entrepreneur A1, and overall great guy and one of the real founders of the industry. This oral history is a function and provided by a grant from the Gustave Hauser Foundation as part of the Oral History Program of The National Cable Center and Museum. The date is November 17, 2000. We're in the offices of Columbia Partners, Bob Rosencrans' present company. Bob, start off with telling us a little bit about your background before you got involved in the cable industry.
ROSENCRANS: Well, after a short stint in the Air Force, two of them, and after some college training at Columbia, I was in a very interesting business, which was the distribution of programming to theaters in large screen television to help the theaters offset the impact of home television.
KELLER: Was that through TelePrompTer?
ROSENCRANS: No, that was before TelePrompTer. That was a company called Box Office Television started by Sid Caesar and his attorneys and some other folks, and I joined them without much knowledge of television or closed-circuit television, and we were able to secure contracts with Notre Dame, carry their Saturday afternoon football games, and also the Harlem Globetrotters, and we would try to create programming that would give the theaters something to attract customers, and compete with what they were really concerned about, which was home television. We had some successful years. We also ended up doing a lot of industrial programs, bringing dealers together. For example, we did the introduction of the Edsel car. We had McNamara and Ernie Breach, who was then the president of Ford, and we televised the car and all the features of the car, and distributed it to about 30 theaters around the country where Ford dealers came to see this new product. The product didn't work very well, but the telecast was quite good. Then eventually we got into fights. The Robbins and Bascilio fights, that was a later time after I had joined TelePrompTer, but the concept of theater television shifted to hotel television where we didn't have large meetings there but we had meetings of perhaps 20 or 30 people in 30 or 40 hotels, all seeing the program as produced by the company, new products, new trademarks, new ideas, whatever the concept was. So we went from theaters to hotels, and then at that point... it was a difficult business because you never knew when your next show was coming, and we finally went over to TelePrompTer and became a division of TelePrompTer.
KELLER: Did Irving buy you, buy the company?
ROSENCRANS: No, he just hired us. There was not much to buy.
KELLER: So that's how you met Irving.
ROSENCRANS: Met Irving and worked for him for a while. We did a lot of industrial shows, and then as I mentioned we got involved in the Carmen Bascilio/Sugar Ray Robinson heavyweight championship fight, and I was handling the distribution of the fight contracting with theaters, auditoriums, promoters all around the country to carry the closed-circuit fight which was a ticket at a theater or an auditorium for let's say ten or fifteen dollars to see the fight. Home television couldn't afford to pay the big fighters very much at that time, but theater television was the answer at that particular time in history. During one of the fights, I got a phone call from a cable operator by the name of Bill Daniels, who was calling from, I think it was Casper, Wyoming, and he said I'd like to carry the fight on our cable system. So I said what's a cable system? He explained that to me, and I said, "Where is it?" He said, "Casper, Wyoming." So I said to Bill the telephone charges to get from Denver to Casper are going to overwhelm you, it'll just be too expensive to carry. He said don't worry about that, we have our own microwave from Denver to Casper. I said you have your own microwave? Why'd you do that? He said, well, we carry signals out of Denver into the Casper market. So I mentioned it to Irving and we said let's give it to him. It didn't amount to any money of any consequence, but Bill carried the fight, apparently successfully, and offered it as an extra bonus to his subscribers, and he said I'd like to come to New York to talk to you guys, which he did subsequently, and got into Irving's office and they were a great pair, two of the greatest entrepreneurs and promoters of all time. The upshot of that was that Irving Kahn's TelePrompTer bought several small systems, cable systems – Silver City, New Mexico; Farmington, New Mexico; Liberal, Kansas; and one other that doesn't come to mind – and all of a sudden, for the first time TelePrompTer had a business where there was money cash coming in every day and cash flow. Irving kind of kept it to himself, didn't share it much with me. The rest of the office kind of kept a little compartment. He had Hub Schlafly, who was well-known in the industry as his engineer, and Hub was always interested in pay cable and various futuristic things, but it was nothing that I had anything to do with. I was still running the large screen closed-circuit television.
KELLER: Was Rifkin running it, Monty Rifkin?
ROSENCRANS: Monty was the treasurer of the company, chief financial officer, and we were all quite friendly but it was kind of compartmentalized, and I was looking at this business which I knew was growing and offering continuing revenues as compared to my business which was a hit or miss situation getting a major company to agree to put on a 30 city show, which might cost them three or four hundred thousand dollars, and now videotape was coming into the picture and videotape kind of obviated the need for the closed-circuit end of it. You could just make a videotape and ship the videotape around and you avoided a lot of expense. So our business was not... the large screen closed-circuit television business was not progressing. So I was wondering what do I do next. Where do I go from here?
KELLER: You were still a very young man at this time, right?
ROSENCRANS: Yeah, I was probably in my early 30s. I was just married a few years, I think, at that time. Irving was using his company stock to buy cable systems, and the company stock had some bad days and it became ever more difficult for him to make transactions with offering a $30 stock which might now be down to two or three. There was one situation they were trying to buy in Pasco-Kennewick, Washington. It was owned by a pretty sophisticated man by the name of Newell Priest. He tried to make a deal with Newell and Newell said to them I only want cash, and TelePrompTer did not have cash at the time. Monty Rifkin handed me the file. Jack Gault, who also worked, handed me the file and said if you want to do something with it we're out of it, go ahead. I had a group of friends who were people that invested in companies. I met them on the golf course many years before, we became friendly, and I described what I knew about the cable business to them and they thought it sounded interesting. It had a cash flow component, had some growth potential.
KELLER: Who were these people?
ROSENCRANS: A family by the name of Strassler. They were in the business of buying companies that were failing with the banks. The banks came to them. They became prominent during the Depression when the banks were saddled with all kinds of bad loans, and they'd go to these people who would liquidate the assets if they could, build up the company, resell it, and pay the banks back. So they had a great reputation with the banks and they were fine high-quality people, and they were willing to back me if I could find a system.
KELLER: Did they know of your managerial ability or anything else about you at that time?
ROSENCRANS: No, they just knew that I looked all right.
KELLER: You were a good guy, a good golfer.
ROSENCRANS: A golfer. But we were family friends and they just liked the sound of the business.
KELLER: And they were very right.
ROSENCRANS: So I went out to see Newell, and he showed me the cable system, we talked for a while, he told me what his price was, and I came back and about two or three days later I called Newell, and I think we agreed to pay him $600,000 for, I think there were 3,000 subscribers.
KELLER: Still pretty steep for...
ROSENCRANS: How much is that a subscriber?
KELLER: $2,000 a subscriber, isn't it?
KELLER: 3,000 subscribers?
ROSENCRANS: That was 200 dollars a customer.
KELLER: You're right, you're right. I got the zero in the wrong place.
ROSENCRANS: So, we went through the contract stage and I left TelePrompTer, and all of the sudden we were in the cable business.
KELLER: You didn't put any of your own funds into it?
ROSENCRANS: Yes, I did. I had about 15% of the partnership, and most of it we had to sign our names at the bank. We borrowed the money, but we signed our names to the bank loan, so it was tantamount to putting our own money in. We closed; I think it was August of 1962. Does that sound right?
KELLER: Yes, that's about right.
ROSENCRANS: And the first thing we did was we... that couldn't have been August, I guess. In the spring, in May of the next year we had a Mother's Day special, a 99 cent installation special.
KELLER: Did you have a turkey special, too?
ROSENCRANS: I don't know. I don't think. We gained 300 or 400 customers over night and said, boy, this looks like... because there were a lot of people living there, but not many people on the cable system. The cable system at that time carried a couple of Yakama signals, and one or two Spokane signals, and that was about it. It was a 12-channel system, but pretty...
KELLER: Could they get anything off-the-air?
ROSENCRANS: Just a little bit out of Yakama, but not much.
KELLER: It was a classic system, then?
ROSENCRANS: Very classic, yeah, classic. Almost a few months after that we found out that the Pendleton, Oregon group was anxious to sell a system, and that was a true classic system. They were surrounded by hills and mountains, and you couldn't get anything if you didn't have a cable connection. We went down there and competed with Cox and a bunch of people, and we came away with that deal and all of the sudden we were an MSO, we were a multiple system operator in Oregon and Washington. They weren't far away and I used to fly out there every month, spend three or four days, review what was going on, and try to manage the system and make it grow, and build the cash flow.
KELLER: Is that how you got into your original idea of divided management?
ROSENCRANS: Well, it had to be because since I was living in New York I wasn't about to move, my family was young and growing. So we put in some very interesting budget controls, which you're right, it did create the basis for managing subsequently. We did everything on a budgetary basis, and every month we could see where everything was going, so if something was out of whack we had an immediate report on it, and we could make changes or change the budget, if it was necessary, but we depended on quality people locally and we found some that fulfilled the bill beautifully and others didn't. You depended on someone totally for their integrity because they were alone; you weren't in the city with them every day.
KELLER: Well, they wouldn't last long if they couldn't handle the job.
ROSENCRANS: No. We lost confidence in them and made a few changes, and some people, God, we stayed with forever, if they understood how good the system could work and how much they could know about what was going on through the budget. Everything flowed from the budget.
KELLER: Did your managers help build the budget?
KELLER: So they had the input into the budget.
ROSENCRANS: Yes, absolutely. It was their budget, it wasn't our budget.
KELLER: They committed to their budget and they had to make it.
ROSENCRANS: Yeah. And if they beat it, they did very, very well, and if they didn't maybe there were explanations for it, and we understood those.
KELLER: They didn't try to lowball you, though.
ROSENCRANS: No, no, they didn't because we knew what a customer should generate.
KELLER: How about capital expenditures? Did you do those?
ROSENCRANS: Well, capital expenditures, even to the very last day in the cable industry, we always underestimated.
ROSENCRANS: Things were always popping up, so we kind of always had to eat crow at the end of the year and say, well, we went about 20% over our capital budget, but the industry was moving so rapidly that what you started with in the beginning of the year, it was a different business in the middle of the year and at the end of the year. But that's how we got into the cable business in '62, '63, '64.
KELLER: So with the Pasco-Kennewick and Pendleton complex, how many subscribers did you start with?
ROSENCRANS: We each started with about 3,000-3,500, I suppose. We grew perhaps 500 or 600 each year, maybe more. Today Pendleton is probably saturated at 6,000 or 7,000, and Pasco-Kennewick at probably 20,000. Then one of the most interesting transactions, which really gave us some scope, was in 1967. Bruce Merrill had a company, a manufacturing company called Ameco, and they also had a group of cable systems, and Ameco was competing with the likes of Jerrold and Scientific-Atlanta, and it was a tough industry. All the money generated by the cable systems was going into manufacturing. So the banks forced him to – JP Morgan bank, specifically – "Bruce, you've got to sell the cable systems." So the bank told us to go out there and take a look at it.
KELLER: Had you had an in with that bank, with JP Morgan?
ROSENCRANS: Yeah, we knew them. In fact, they were our banker. I flew out to Phoenix. It was the middle of the summer, 1967, the time of the Six Day War between Israel and Egypt and the Arab nations because I remember the pilot telling us about the progress of the war over the loudspeaker, and I got out there and it was about 110 degrees. It was unbelievable. I flew from Phoenix to Yuma, met a man by the name of Marvin Jones who was running the systems, chief engineer kind of person, and Marvin took me for a tour of the systems over the next couple of days. There was something exciting about the area; the towns looked like they were growing. They were new cities, new towns that sprang up during the Second World War. It was just because the Air Force needed a base, they created a Yuma, Arizona.
KELLER: Worst place to live they put them.
ROSENCRANS: It was a lovely town and an interesting area, and Bruce Merrill wanted 4 ½ million dollars for 10,000 subscribers. I came back after the trip, I liked it and I was enthused about it. We saw pretty good cash flow. They had microwave bringing in LA independents, so they had a lot to sell. I walked into my office where Sam Strassler, the father of my contemporary, he was there on a Friday and he said how was your trip? I said, "I thought it was great. I loved the systems; I think they're going to do very well. They've got all the components. They have lots of signal to offer the public."
KELLER: Did they have Ameco equipment in it, and was it working?
ROSENCRANS: Ameco? Yes. It was working except when it got very cold at night or hot during the day, constant tweaking. It didn't work well, but that's what we had. That's what was there. So Sam said to me, "If you like it, why don't you call Bruce Merrill on the phone and say you have a deal and let's go." I said, "Well, I have to go home, Sam. I've got to see my son in a Little League game at 5:30, but I'll call Bruce right now. Maybe you're right. I'll call him on the phone and tell him I'll call him when I get home." So I called Bruce, and I reached him, and I said, "Bruce, we'll meet your offering price, 4 ½ million for 10,000 subscribers," but I said, "Bruce, give me a couple of hours. I have to take a train home to see my son place baseball but I'll call you later this afternoon and we'll confirm the deal. I'll send you a telegram or whatever." He said, "Fine." So I got home, watched the game, and got home and called Bruce, and he said, "Boy, am I glad you called me when you did because Leon Papernow also called, he met my price."
KELLER: At H&B American, right?
KELLER: H&B it was at that time.
ROSENCRANS: So a lot of guys were nipping at the deal but were always trying to cut the price a little bit, say, shave two or three hundred thousand dollars, but we didn't do that. We said if it's any good it's worth 4 ½ million. If it's not good it's not worth 4.2. So we proceeded to make that deal. So all of the sudden we had a California, Arizona, Oregon, Washington complex. It began to have some substance to it. It looked like it had some merit. And then I had a man by the name of Marvin Jones out there who was pretty competent, you know. He gave me a feeling of great confidence. He didn't say a great deal. He wasn't a verbose person. He answered yep and nope, but whatever he said was pretty much on the button. It felt that way, anyway. So we had the financing, the banks gave us very favorable financing because they wanted to get paid, and we financed some of the 4 ½ million with some long-term insurance debt, ten year straight debt with Home Life Insurance Company.
KELLER: Was that their first loan in cable?
ROSENCRANS: I think that was the first insurance loan, yeah. No equity, just a straight ten year loan. Those things don't exist anymore, but there were little windows there that opened up and we were able to jump through it.
KELLER: Especially when the insurance companies didn't know anything about the industry at that time, but you could show them a pretty good cash flow, though, couldn't you?
ROSENCRANS: Yeah, they saw how they could get repaid. We thought we had a $600,000 cash flow going in to that system so there was plenty of money available to pay the interest on the 4 ½ million.
KELLER: Did you get a moratorium on the interest at all?
ROSENCRANS: Not on the interest. The banks...
KELLER: Okay, on the principle?
ROSENCRANS: $500,000, I think, was our spread over ten years, evenly spread, and the other was a pretty conventional 6-7 year bank loan, but we put up capital too, we also put up some of our own. We didn't borrow the whole thing. We probably put in 2 million of the 4 ½, so there was plenty of coverage. That was late '67, so we had a nice little company. In '68 was the time companies were going public, and we felt we needed public money to begin to expand even further, so we went public in '68.
KELLER: You went public in the same year that... ATC went public that year, didn't they? And CPI?
ROSENCRANS: I don't remember the dates of those, but pretty close.
KELLER: Jack Crosby and Bobby Hughes.
ROSENCRANS: Bobby Hughes, yeah.
KELLER: I think those three companies went public in '68. The only other public companies in the business were TelePrompTer, and I think H&B. I think those were the only public companies at that time.
ROSENCRANS: Yeah. But we felt that we had something, we had a good story, and it might open up further expansion, particularly if we had some public money to deal with. Just as we went public, I guess late '68, I think I got a call from Jack Cole, attorney Jack Cole from Washington. One of his other clients was thinking of selling International Cablevision, and he mentioned that Ken Gunter spoke to him and he told Ken that Ken ought to meet me, and Ken said he didn't want to meet any goddamned New Yorkers and whatever.
KELLER: But you charmed him.
ROSENCRANS: I went down to Vero Beach to meet him. They had systems... they were the earliest public company of all, International Cablevision.
KELLER: I wasn't aware of that.
ROSENCRANS: They owned two properties. One was San Angelo, Texas, which was started by Ken Gunter's family, and the other was the Vero Beach-Fort Pierce system owned by a man by the name of Bonnie LaPorte, and Bonnie LaPorte and E.C. Gunter, Ken's father, got together and formed this company. They had two wonderful towns to deal with but they didn't have any capital, and the towns were... Vero Beach was about to throw them out because they needed a rebuild desperately. They were okay in...
KELLER: How old was that system? Well, it was buried, though, wasn't it?
ROSENCRANS: It was what?
KELLER: The cable was buried?
ROSENCRANS: Only under the river, the Indian River. It went through a conduit under the river.
KELLER: It couldn't have been that old, was it?
ROSENCRANS: I'm not even sure what equipment it was.
ROSENCRANS: There was a lot of salt air, a lot of corrosion, and again, temperature swings created all kinds of problems, but I met Ken and we met in Vero Beach. We had lunch and dinner and got along just beautifully. Ken is a very sophisticated guy in his own way, and even though he had a little suspicion, we hit it off, we just hit it off perfectly. He was very enthused about us coming into the picture, and I told Ken that if we make a deal we're depending on him to do what has to be done technically in Vero Beach and Fort Pierce, and also in San Angelo to make these systems really operate. We were competing with – all the people in the industry come up here – we were competing with Vicoa, the Baums.
KELLER: Arthur Baum.
ROSENCRANS: Arthur Baum, that's whenever the family was all together.
KELLER: Whenever they were all together.
ROSENCRANS: We had comparative meetings between the two buyers and the LaPortes and the Gunters, and at the end of the day I got a phone call in Miami where the discussions were held that they wanted to make a deal with us, and that was a stock deal. See, now we were a public company so all we did was exchange stock with them on some equitable basis. I don't remember the details of it right now, but...
KELLER: But they also then got an equity interest in your other systems?
ROSENCRANS: Yes, they became full equity holders, same basis we were on. We also had the 2-2 ½ million that we had raised from the public sale, which we could now put right into the cable systems in Vero Beach. Vero Beach was ready to throw them out, but Ken and I went to all these meetings, met with the city officials, and explained to them that we had the capital now to do this. Ken talked about the changes technically, I talked about the company, what we would plan to do, and we got the approvals and now all of the sudden we go to Texas and Florida, all good properties, all growing markets that had low penetration, relatively low penetration of cable subscribers, but plenty of room to grow. So it was a pretty exciting little venture. It was becoming substantial now, small in light of today's numbers, but at that time I think it was pretty good. We always had a balance sheet that was never overstretched. We had the wherewithal to do what we had to do to make the system develop properly, and then right after that it seems, like '69 or '70, again through the Chase Manhattan Bank – I'm not sure how they got involved – but United Artists owned a group of cable subscribers called UA Cablevision, and they were another set of nice sized towns: Laredo, Texas; Ft. Smith – great old traditional markets – also Brook Haven, Long Island, which was a little beyond the reach of the New York City signals. We worked out a merger with them. Our management was the thing... they were after our management because they had none. We integrated some of their people in the... some of the names escape me.
KELLER: How did they ever get into the business?
KELLER: How did they ever get into the business?
ROSENCRANS: How did they get in the business? Let me see... They had theaters in many of those towns.
KELLER: Oh, so the manager of the theater...
ROSENCRANS: The manager of the theater said look, there's a guy here with a little cable system, maybe it's a good hedge for our theater business to have this, and they, one by one, they picked off some pretty good cable operations, but they really had no depth of engineering. They had a theater mentality, which was a popcorn-peanuts kind of thing.
KELLER: Restaurant mentality.
ROSENCRANS: Yeah. So I had known, oddly enough, the head of the theater company, not the owner, but the operating head. He was one of the guys I dealt with when we sold the fights to theaters on large screen television. So he knew me and we had a fairly good rapport. So that deal progressed and all of the sudden we made a jump from a 70-odd thousand subscribers to 130,000, 150,000.
KELLER: About doubled, or more than doubled.
ROSENCRANS: So that was in what? The early '70s, just about 1970, '71. So those were all just extraordinary deals, the key ones being done for stock, so we weren't dissipating a lot of cash, we weren't putting ourselves under the gun, and we were a factor. It was a period when interest rates were moving sky-high. Companies like TCI were essentially bankrupt. TelePrompTer had gone through all kinds of trouble. Irving had his problems.
KELLER: And then there was that proxy fight for TelePrompTer.
ROSENCRANS: Yeah, Jack Kent Cooke was involved. I had nothing to do with him at that time. I had no connection with it. We were just simply minding our own activities and every year we had very nice growths, and fighting our way through rate increases by offering more signals.
KELLER: And starting to develop a reputation for excellence.
ROSENCRANS: Well, we did. We had Ken Gunter, who was a top engineer, the top conceptualist. Very few people are as able as Ken to integrate both the operational aspects of cable system and the engineering aspects. Some people who are experts on engineering couldn't begin to know how to operate a system. Ken knew both sides of it. Ken had a great education, and wherever he went he made an impact. So he was a very valuable guy. And then we had a wonderful array of people like Marvin, Jerry Cranford in San Angelo, Texas came out of a bank, a terrific guy, and we're all still very close and very friendly. And the Harmon brothers...
KELLER: Ed and Homer.
ROSENCRANS: Yeah, when we bought Yuma and El Centro, Marvin said you ought to speak to Homer Harmon. Homer came in and we hit it off. He's just the greatest guy in the world, and he knew exactly what to do with the systems, he had been there before, and another guy that gave you a tremendous sense of confidence. And he said, "Why don't you hire my brother, Ronnie?" because Marvin was going to Florida to rebuild the Florida system and Ronnie came with him. So we had Ronnie and Homer joining Marvin, Ken, myself, Jerry Cranford, and we had a great group of guys, and they were all totally trustworthy. They told you exactly what was going on. They put the budgets together and they told me when I was crazy, which they told me a few times, but we all had a lot of respect for each other. We all became very friendly as couples.
KELLER: Did they also get along with the board, with your associates?
ROSENCRANS: They loved them! We had great meetings because these guys would come to the meetings from time to time and they would be asked questions, and they were obviously competent. And UA Theaters loved it because our stock was moving up nicely, although at one point it went down, cut in half because there was a terrible time in the early '70s.
KELLER: In the early '70s and then the early '80s, too.
ROSENCRANS: Yeah. So we were buying in our own stock. We had a strong enough balance sheet to do that. But the cash flow was strong, we had the ability to borrow, and so in the early '70s we had probably the soundest company financially, not the biggest, by far, although I suppose ATC was pretty strong.
KELLER: In '71 they were just getting started, so they probably weren't more than 100,000 at that time.
ROSENCRANS: We had the foundation, and it was very rewarding. I started to mention the social connections, we bought a system in Aspen, Colorado, and I remember Marvin going there on his way to Florida from Yuma, he had no clothes to speak of, it was the middle of the winter, he had little moccasins on of some kind, and he's wading through the snow. He said don't buy this monster. We bought it anyway, but it became a place we all started to go together in late February, early January, like eight couples, and the Harmons and the Joneses and the Rosencrans's and the Gunters, although Ken had a lot of different wives during that period. We were never sure if he was coming and who he was coming with. And the Cranfords. It created a very connected company because we all knew we were together for the long haul.
KELLER: Frank Thompson ended up with that some years later, didn't he?
ROSENCRANS: Yeah. Let's see, what was the next key step? I think we got involved a little bit in the east. We had that Brookhaven system.
KELLER: Up in the New York area.
ROSENCRANS: Yeah, and in the early '70s I met someone who had some systems in northern New Jersey, and simultaneously with looking at that system, we were interested in pay cable in its very rudimentary forms which was... we connected with a company called Channel 100, which was run by a cousin of Marc Nathanson.
KELLER: That wasn't Jeff Reese, was it?
ROSENCRANS: Jeff Nathanson.
KELLER: No, I knew Nathanson, but...
ROSENCRANS: It wasn't Reese. He came later with Showtime.
KELLER: I thought he had something before that. Okay.
ROSENCRANS: We thought, you know, if you're going to go to a market like New Jersey, northern New Jersey where the signals, you got all the New York signals, you had to have something to sell. So we put Channel 100 in there and we put it in a number of places, but that was simply a 3/4-inch videotape play that had a schedule of maybe three shows a day, maybe two tapes a week, so you had a little variety, and we were going to charge 5-6 dollars a month.
KELLER: Over and above your basic fee?
ROSENCRANS: Yeah, it as a new service. And along with that we knew we could... we worked out a contract with Madison Square Garden to carry the Madison Square Garden's sports event live.
KELLER: That was a big, big turning point for your company.
ROSENCRANS: Yeah, those games were very important at that time. Chuck Dolan made use of them in Nassau.
KELLER: How did you ever get into a kind of a deal with Madison Square Garden?
ROSENCRANS: Well, it wasn't that difficult because they were already distributing it to the Manhattan Cable systems, and it was a matter of us adding subscribers to their network by taking it via telephone or microwave, however we were able to do it, into our headends in New Jersey and in Brookhaven, and we also said to them, "We'll work on expanding the microwave north and south, north of the Hudson River to other systems, and this will create a bigger market for yourself." So Madison Square Garden saw it as a way of building a bigger network.
KELLER: And indeed they did.
ROSENCRANS: And it was purely within their territories. There were no league issues involved. I remember, I was so excited about putting on the Knicks and Rangers because I was a great fan myself.
KELLER: You were always involved with sports, weren't you?
ROSENCRANS: Yeah, and I knew how the people that were excited about it would really be excited, and it was a piece of extra programming that we were including in the basic service, but all of a sudden someone who was happy with their off-air antenna signal had a reason to buy cable, and it worked immediately. We had subscribers come on out of left field, and all of a sudden we said why don't we franchise the rest of these markets. We had about six communities in Passaic County, which is really in the shadow of the transmitters.
KELLER: Was Gilbert working out in that area?
ROSENCRANS: No, Peter was in...
KELLER: He was farther out?
ROSENCRANS: Long Island. He was in eastern Nassau County? And I don't think he had the Garden. He had the Garden a little bit later. In fact, no, he was in Suffolk County. He was even east of where Chuck was. Chuck was in tough territory, too. He was in the same kind of territory we were in. So between the Channel 100, the pay cable service, and this, we thought maybe we have the ingredients to build a market.
KELLER: But you got involved in the system before you had anything to sell, and then you developed the product to sell, is that correct?
ROSENCRANS: Pompton Lakes, oddly, is sort of behind some hills, little impediments to signal reception in places in Ringwood and Wanaque, places that were not... some of the area where you could sell cable. We thought maybe just the pay service might be the key, but the Garden...
KELLER: You didn't built out into the heavily saturated areas, signal saturated areas until you decided to sell...
ROSENCRANS: Yeah, once we had the Garden we knew we had a winner, and then at that point we switched from Channel 100, which was the tape play origination, to HBO, who had started in New York City and were playing off a 2-inch tape machine, distributing it by microwave and cable, and their quality was far superior to ours because we were on a ¾-inch feed. We worked out an arrangement with Jerry Levin, which was a fairly standard one, and we switched to HBO with their name and promotion. They were struggling because each addition had to be interconnected, which was painful.
KELLER: They almost went down about that time.
ROSENCRANS: Very, very close. I didn't realize how bad they were until early 1975 when they were about to fold their tent, betting only on the success of the satellite.
KELLER: What a great bet that was!
ROSENCRANS: By experimenting as we were doing in New Jersey, we understood how valuable HBO could be but you had to get it there, and we were kind of stymied, but it was fine for us at that moment and we had the video tape player in San Angelo and Vero Beach and all these other places. And we were getting a few customers, but it wasn't outstanding and the picture quality was suspect. So in 1975 when Jerry Levin asked me to meet him in his office, he wanted to talk to me about a concept they had, and he and Dick Munro mentioned the satellite opportunity, and if they could find a cable company that would put in a 10-meter dish to receive their signal somewhere...
KELLER: At 100,000 grand plus.
ROSENCRANS: They would contract to put it on satellite. It was a big bet for Time, Inc., but it was the last chance, really. They had a serious commitment.
KELLER: I don't remember, had Time, Inc. bought into HBO by that time?
ROSENCRANS: They owned it.
KELLER: They owned it by that time?
ROSENCRANS: They owned it, yeah.
KELLER: Okay. I don't remember when that deal occurred.
ROSENCRANS: They had sold their broadcast stations and went into cable.
KELLER: They sold their cable systems, too. They sold their cable systems to us in San Diego, to ATC. That's the first time they were in it.
ROSENCRANS: Yeah, but they owned ATC.
KELLER: Well, that was afterwards.
ROSENCRANS: This was during that period they had ATC because that's how Monty got involved putting HBO on in Jackson.
KELLER: Time didn't buy ATC until '77.
ROSENCRANS: Oh, really?
KELLER: We had bought the systems in San Diego from Time, Inc. They wanted to get out of the cable business at that time. That's why I was wondering about when they had made the investment in HBO. But there was an affiliation between ATC and Time, Inc. They hadn't bought ATC yet.
ROSENCRANS: Okay, yeah, that's right. Okay.
KELLER: That's just timing, that's all.
ROSENCRANS: They said we want to do this but we have to have somebody agree to spend $100,000. I said, "How much is an earth station?" First, it had to be a 10-meter dish, 30-feet - a big earth station. It was $100,000. But having experimented with...
KELLER: You didn't blink though.
ROSENCRANS: It made a lot of sense because it was a one-time charge. Now if you create your own origination the cost goes on and on and on. Here it's a passive piece of equipment. So it sounded interesting to me and I said, "Well, let me get back to you on Monday," and I called Ken over the weekend and we spoke at length because I had just watched the British Amateur, which came to this country via satellite, and the picture was great and I said, "Gee, that's marvelous." I said, "Ken, is there any reason why this won't work?" He said, "It has to work. It's just a dish. It's no different than terrestrial microwave except it takes one hop up to the satellite and back down to the dish." And we discussed, why don't we put them in all our systems? So Monday when I got to the office, I called Jerry and told him we'll put them in all our big systems. We had the capital, but again, it was only because we were very comfortable financially that we were able to take that kind of risk.
KELLER: So you, by giving HBO the satellite distribution system, really made HBO.
ROSENCRANS: Well, it's what they needed. It created a story for them that they could go to Time, Inc. and say, "Look it, we've got now all of the sudden, overnight, when we put this on we've got six or seven systems with a couple of hundred thousand subscribers. We've got the ATC people to come along, and we expect the other companies will come along. Even though it's a big investment, $100,000 seemed like a lot of money, but it gave everybody something to get excited about, and then when they were able to book the fight, Thrilla from Manila on September 30, that added a little glamour and spice.
KELLER: Go into that story about Sid Topol's involvement in that, and how you finally got the dish down there. That's an interesting story.
ROSENCRANS: I don't know, but I think I spoke to Sid that Friday afternoon and he confirmed to me...
KELLER: Sid Topol was president of Scientific-Atlanta at that time.
ROSENCRANS: Scientific-Atlanta, and Sid is a great salesman, but he knew what he was talking about, and we were shooting for September 30, and I said, "Sid, if we buy a unit, a 10-meter dish, can you get it up and running by September 30th?" He said, "Absolutely." In the meantime, we had a lot of things to do at the FCC. We needed approval from the FCC, and for some unknown reason the people most effected adversely by the cable industry going into satellite, meaning the broadcasters and all of the people affiliated with the broadcasters, they didn't realize what was going on, or they felt they didn't need to object because it wouldn't accomplish anything anyway, but for some reason or other we passed that 30 day stage when anybody can object and stall it.
KELLER: The waiting period.
ROSENCRANS: And by God, the 30 days came and went. Either Wiley told everybody, don't object, you're going to be marked lousy at the Commission if you do, and we got through it. At the same time, I think Jerry or Dick, I'm sure it was Jerry, contacted the fight promoters and said we want to put this on via satellite in Vero Beach and Jackson, Mississippi, and they said fine, just pay us the normal fee the cable systems were paying. We were all then involved in the fights because they weren't interfering with the theaters because they were not in the same markets by and large.
KELLER: Bob, earlier than that time, I think as you will recall, Irving was selling the fights to cable systems around the country to be delivered by microwave and sometimes the microwave connection was so expensive you couldn't afford it.
ROSENCRANS: But they were not... as markets, the theater operator couldn't complain about it because the cable operators were 100 miles away, it didn't effect the market, and it was experimental, it wasn't a lot of money. So anyway, they got the promoters of the fight – I'm trying to remember who they were – to sell the fight signal to HBO, fed it to us, and fed it to Jackson, and we had that window from April to September to do a lot of things. We had to get the property necessary to build this earth station because we didn't have big enough headends. We had a headend between Vero Beach and Fort Pierce, but not enough land to build an earth station and the related headend equipment and so forth. So the first step was to find the land. We finally bought it from a farmer who was adjacent. I don't know how we got it, but we got that. A guy that we went to first who had good property near us, he was in the cable business, too – Wilmington, Delaware. He was in the pest business.
KELLER: He must have been Marty Malarkey's partner out there!
ROSENCRANS: I don't know. He was trying to hold us up for that adjacent... So we found a farmer who was more amenable, and we got the land, and we ordered the foundation for the dish, got it poured. Sid Topol delivered the material, and I think the afternoon of September 29th, the fight's the next night on the 30th, we had the dish up. It was huge! I mean, a 30-foot dish is a pretty big dish. We finally pointed it, found the satellite, and there was a picture on the monitor. It was extraordinary. And then we started sweeping out the headend. We knew we had something. Now we had to feed it over a...
KELLER: Did Scientific-Atlanta manufacture the receiving equipment, too? Not only the dish, but the receiving equipment?
ROSENCRANS: I don't know whose components they were. Sid would know, I don't know. But they delivered the whole package to us on-time because we had a lot riding on the next night. I remember we all sat at a movie the next night, the opening night, called The Gambler with James Caan. So that was a great combination, the two events.
KELLER: What did you charge for the fight, do you remember?
ROSENCRANS: Well, no, I think we just charged... it was on HBO. I think we gave it to everybody that night. It was like an open preview, the whole town had it, and I think we were getting $7 a month, $7.50 a month, something like that. But all of sudden, the next week or month, or months, we got an enormous reaction to the movies because the pictures were better via satellite than we were producing over our local facilities, microwave to terrestrial microwave. One of the commissioners who was a great enemy of ours, he just tried to fight us all the way, accused us of degrading the original signals to make HBO look better.
KELLER: It happened to a lot of us.
ROSENCRANS: Anyway, we overcame all those obstacles, and we knew we had something then.
KELLER: And then you started building.
ROSENCRANS: And we put them in Laredo, and San Angelo, and Pasco-Kennewick, and Fort Smith, and the bigger markets. I think we put seven of them in over the next several months. I'd got to all the openings and have a cocktail party, meet the city officials, and I remember in Laredo, I was there that night and the local priest came to bless the earth station, and that night we had a film called Mandingo. I said how do I get out of town? I didn't realize how bad that film was, and how offensive that was to a lot of people. That was the one problem that I think we had, and maybe it still exists, but maybe it's lost its intensity...
KELLER: Well, it's not any worse than commercial television now.
ROSENCRANS: Yeah, but in those days some of those things, some of those movie scenes were beyond the pale and we weren't happy with it, but on the other hand, I guess we justified it by saying they have to pay extra for it, they can screen it from their kids if they choose to. Who are we to be in a position to block it? There were some purists in those towns who were very upset about it. We leaned on the free speech aspect of it. So that's how that all became a reality, and it was exciting because we knew all of the sudden our other markets began to look more interesting. We weren't aggressive going after the big cities, the Denvers, but we knew our own markets would benefit, but we also felt we could begin to get very aggressive in New Jersey and West Chester and so on.
KELLER: That's the only place that you ever did any franchising, right?
ROSENCRANS: Well, also San Antonio, Texas.
KELLER: Well, that's another story.
ROSENCRANS: Yeah. So we went head to head with Chuck in Westchester County. We swept the boards there because we had a much better financial picture. We were a corporation, he was a partnership with very little liquid assets, few liquid assets, and San Antonio, which was probably '77-'78, we really felt like we were overbalanced in the east now. We had so much construction going on in northern New Jersey because we franchised about 55 communities that were adjacent to each other, and each one was a franchise hearing. Kay Koplovitz and Bill Koplovitz joined us at that time to do franchising.
KELLER: You brought another great person into the industry.
ROSENCRANS: Again, somebody out of the blue we didn't know much about, but she came with Bill to visit me one day and said they'd like to work on the company. I said how about franchising? They were great at it. They were really good. They're smart and they could speak, and they were loyal, and they were tough, you know. It was a great combination. So, again, we keep building this group with some wonderful people. Then San Antonio was the one big market we went after because... I'm not clear how we... I think it came to Ken's attention. It had been a franchise that was owned by...
KELLER: Ken was your number two guy in the company at that time?
ROSENCRANS: Yes, Ken was executive vice-president, but Ken focused more on the engineering and long-range conceptual side of the company rather than the day-to-day stuff. Marvin was head of the operations aspect of it. We had no public relations staff, we had no marketing staff, we thought that was all more a local function, give them the tools to do it locally and the authority to do it locally, and we just didn't bloat up the home office. We never had more than half a dozen people in the head office in New York. We had Scott Ledbetter, who joined us in the late '70s, came from the Chase Manhattan Bank, a young person, a very young guy who brought a lot of quality to the company. But we had a four or five man office, and everything else was out in the field.
KELLER: That's how it should be. I totally agree. We want to change tapes here in just a minute, but I want to get back into the San Antonio franchising effort when we start the new tape.
KELLER: Bobby, we were talking about your franchising effort in San Antonio, Texas. You wanted to get more involved in the Texas area now, and Ken Gunter had brought that to you, is that correct?
ROSENCRANS: Yeah, Ken said that he'd heard... there had been a company who had had the franchise and who dropped it. I'm trying to think of the name...
KELLER: Was it GE?
ROSENCRANS: GE, right, GE decided not to build it. This was all pre-satellite. There was nothing they felt they could offer to create a subscriber base.
KELLER: As I recall, GE never knew whether they wanted in the business or out of the business. They were in the manufacturing business for awhile, then they were out, and then they were...
ROSENCRANS: Yeah, they were not sure. Anyway, they turned the franchise back to the town. So there were some people saying why don't we re-franchise, and Ken went in there and met some of the key people and, well, make a proposal. So we put together a proposal, and we were pretty much the only one at that moment, and we thought we had an open road. We had our hearing, our first hearing, I think – Ken will remember this better than I would – and all of the sudden, Storer Broadcasting shows up. Michaels, who was the head of the company, was born or lived in San Antonio, and he said, by God, we should go after that, and they had a pretty successful airline?
KELLER: Yeah, Eastern Airlines, didn't they?
ROSENCRANS: Yeah, broadcast, they were a big company.
KELLER: Oh, yeah, they were in broadcasting big.
ROSENCRANS: So they come to town and enter in partnership with a guy by the name of Red McCombs.
KELLER: Oh, yeah, sports...
ROSENCRANS: The guy who owns, what was it? The Denver Broncos?
KELLER: No, he doesn't own the Broncos. He's up in Minnesota now, isn't he?
ROSENCRANS: Minnesota, right, Minnesota.
KELLER: The Vikings.
ROSENCRANS: And he had a basketball...
KELLER: He had the basketball franchise in Denver.
ROSENCRANS: He had the Spurs. And I knew that for us to have some success we needed a local sports component just like we were doing with Madison Square Garden. So I went to the Spurs, spoke to the people involved, and we got along pretty well, but they really said, "What do we need these guys for? We can own a piece of the system with Storer. Let's not deal with Columbia."
KELLER: And McCombs was the owner of the Spurs then?
ROSENCRANS: Yeah, so there we were with McCombs, and other local guys, and Storer competing with us, Columbia, from Connecticut, San Angelo, etc., etc. It was a very interesting mix of council people. There were several Anglos – it was about an eleven or twelve man council, thirteen council – four or five Anglos, about two Black members, I think, or one Black member, and a lot of Hispanics, among them Cisneros, Henry Cisneros.
KELLER: He became mayor of San Antonio.
ROSENCRANS: Mayor, and then Secretary of Commerce, or Housing.
KELLER: Housing, I think.
ROSENCRANS: Yeah. Wonderful guy. And we went down there and refined our proposal, and we went head-to-head with Storer. We'll get into it later with C-SPAN, but I remember one of the things we talked about was C-SPAN, and Storer knew nothing about C-SPAN and we were saying, at least in our proposal, we'll bring you C-SPAN which is the House of Representatives, etc., etc., and the next day Storer showed up at the next meeting – "We too have C-SPAN." I got them to sign up their whole company. (LAUGHTER) But when it came down to the votes, I think we won, like, seven to four. One of the councilmen was running around in a new car, everybody knew he was broke, and he was running around in a new car supplied by Red McCombs' used car agency. We won the vote, like, seven to four, and one of the councilmen said one of the nicest things I've ever heard, he voted for us, one of the Anglo councilmen, he said, "I'm voting for Columbia because I think they're people of better character." So when we heard that, that was a great thing, that was good, and we won the franchise.
KELLER: McCombs can be a little flaky and a little acerbic at times.
ROSENCRANS: Oh, yeah, and I said, about the Spurs, we can have the Spurs because if we don't give it to them, they know that they're going to sell it to us. Their stadium is sold out. They have no choice but to sell it to us, so don't worry about that. We guarantee you we'll have the Spurs.
KELLER: And you were able to build it then. How many television stations did they have in San Antonio at the time?
ROSENCRANS: I think they had two or three, maybe four. They had three plus an educational.
KELLER: It wasn't as shut out as Austin was.
ROSENCRANS: Yeah, and we could bring in a few extra... I've forgotten what the FCC limitations were, but...
KELLER: You had to pay for them as you brought them in.
ROSENCRANS: Yeah, but now we had Madison Square Garden Sports, although we couldn't carry the Knicks and Rangers at that time. But I think Ted Turner was... we had TBS, we had CNN, a number of channels that were available on satellite, so we had all those things to sell.
KELLER: I want to get into the negotiations you had with the various leagues, with the hockey league, with baseball, at another time. I think we could go on along the line. Let's talk about C-SPAN now. It was told to me by Brian [Lamb] that you were probably the most important factor in the development of C-SPAN.
ROSENCRANS: Well, next to Brian Lamb. Way down.
KELLER: He said without you – and he added John Saeman and Ed Allen – but he said without Bob Rosencrans this thing would never have gotten off the ground.
ROSENCRANS: Well, how that all evolved... I knew Brian. He was a reporter. He'd done a story on us, and I loved the way he interviewed me because he just set the framework for just coming through with a very logical, complete story. Brian had an idea, he was interested in politics, can we get the representatives' material back to their constituencies, and the only available thing at that point – this was pre-satellite – was by videotape. Satellite was in place, but there was no money around to buy a transponder and do all of those things, and that didn't really make a lot of sense. It was not very exciting. Then at one moment, Brian called me or told me that the House was going on television. Tip O'Neill had decided it was time to put the House on television. They would control the cameras, they would feed the signal to whoever wanted it. We now had Madison Square Garden Sports Network, which we started in '77. That was the first proprietary basic cable satellite service, the concept being that we could sell advertising and we could charge the cable companies a per subscriber fee. So that became the structure for all of the subsequent basic cable services, and we started solely with Madison Square Garden Sports, which was a 7-10 o'clock eastern standard time event, maybe five nights a week, and I think we charged initially by the game, a quarter of a cent per subscriber, something like that. And Kay Koplovitz, who had left us for a short time to work with HBO, had come back, I think, and then of all the people in the company who might be able to develop this, Kay seemed to be the right person. So the two of us together, we went to the Chicago convention and talked about our network and started to sign up a few subscribers. Guys would say what do I want hockey in Texas for? Nobody wants to watch hockey. But we had something to sell, and we bought it totally, our own company bought it, and a few others came along. We had a channel but with only a couple hours, three hours, at night, and we also put some children's programming in.
KELLER: You were paying for a full time transponder, though?
ROSENCRANS: Yes, it was a pre-emptible transponder, which made us nervous but we had no choice. So when Brian said they had the House, I said, "Well, we have the whole afternoon open. Why don't you put C-SPAN on our network during the afternoon? We'll charge you a nominal amount," I think it was $200,000 a year, "and you've got it." So all of the sudden we had the beginnings of...
KELLER: Had he already made his deal with the House?
ROSENCRANS: He didn't have to make a deal. Anybody had the right. The broadcast station could have taken it. Anybody can take it, as long as you don't touch it, as long as you don't add commentary, as long as you treat it solely as what you receive. So we said let's put it on our sports network as another component of the programming. So we began to have some hours. All of the sudden now how do you fill the rest up? And later, after that, Bob Johnson came to me, he was with NCTA, and said could he get a couple hours on Friday night to put on some programming for the Black population. So, great! It was not the all-news network, the all-sports network. It evolved in a different way.
KELLER: Now you were a magazine.
ROSENCRANS: Yeah, more of a magazine, that's right. So now that we knew we had a time slot, we had something we could show the House, now it made sense to Brian and to me, let's go out and get some capital raised. Who gave us this idea? Oh, Bill Donnelly was a young man with Young & Rubicam, who was very bright, and he said to me many times, there are several components you need to be successful in programming to generate advertising – you need news, you need sports, you need politics, you need children's programming, the whole array of things, and that was our framework at how we would develop the network. But all of the sudden with this time slot, it seemed if we could sell this to the cable companies that it would be a way that they could show we're doing public service.
KELLER: That's C-SPAN?
ROSENCRANS: Yeah. And public relations were terrible, congressional relations were terrible, and...
KELLER: But Brian will not admit to the fact his reasoning was to be a public relations overture for the industry. To this day he doesn't admit it.
ROSENCRANS: No, I don't think... It was good programming to show.
KELLER: But we needed it.
ROSENCRANS: But the industry needed it. So we didn't sell it on that basis, but we got Bud Hostetter, let's see, Russell Karp from TelePrompTer, Gus Hauser, they all kind of picked it up very quickly and we had a meeting, and I think a few weeks after that we had ten or twelve.
KELLER: The first issue was twelve at $25,000, was that it?
ROSENCRANS: Yeah, that was purely for capital, really, and maybe some operating, but that was to put the earth station in. We needed a transmitting earth station in Arlington, Virginia.
KELLER: That's where John Evans helped out an awful lot there.
ROSENCRANS: Yeah, and John was a great supporter.
KELLER: Yes, he was.
ROSENCRANS: It was not just the House of Representatives. We had a young person's component, which was the, it's still on, I've forgotten the name of the series, but it's high school kids that come to Washington. And Brian was going to put on the National Press Club luncheons, and the germs of all the later ideas were beginning to evolve. If you view cable as a need to provide this whole array of services, so when you walked in the door and tried to sell a subscription, if the kids liked sports and the mother liked fashion and the father liked whatever, you always had something to sell. So that was the concept that Bill Donnelly kind of drew a picture for us and we understood that. So C-SPAN filled that big gap for us. So I think that's why we were able to sell it because it was a unique piece of programming.
KELLER: But you really went out and pushed a lot of the operators into providing that initial $25,000, didn't you? Put a lot of pressure on them?
ROSENCRANS: We didn't have the ability to put that much pressure on them, but I said, boy, this is a great concept.
KELLER: But you spent time in going out and contacting these people.
ROSENCRANS: Sure, but Brian was the key. But our making the first pledge, Ken and I stood up and said we're in, it opened the flood gates a little bit.
KELLER: There were some that help out for a long time.
ROSENCRANS: Yeah, they did. Well, some people didn't understand the programming aspect of the industry, that if you're going to build these markets you had to have something for everybody to have a reason to buy cable.
KELLER: I remember when we almost gave away that right to program. Remember Fred Ford?
KELLER: I'll never forget that speech as long as I live, down in Miami. He said I can't make a deal right now to get all the distant signals we want if we promise not to do any programming. Remember that?
KELLER: Every time I think back on that, I just shiver.
ROSENCRANS: Then of course C-SPAN came after, I guess, CNN. So everything fit, everything kind of fit, and nobody dreamed – I don't even think Brian dreamed of what C-SPAN would evolve into.
KELLER: No, he admits he didn't.
ROSENCRANS: No, nobody did. None of us understood where we were going. We just took a little step at a time. But C-SPAN, I think, is our proudest moment because I think we've had a positive impact on the country.
KELLER: I don't there's any doubt about it. I think it's a great tribute to you and the other people who put up that initial cash to get it done.
ROSENCRANS: It's also, I think, it's also a component of the industry that we are not broadcasters. We didn't need the big audience to justify doing something.
KELLER: Selective audiences.
ROSENCRANS: Because we're a business of subscriptions, so like a magazine, as you said before, there are a couple of pages of things that maybe three people are going to read, but that's how you sell a magazine.
KELLER: But then this evolved even further, didn't it, from your Madison Square Garden network, and then it got into USA?
ROSENCRANS: Well, it was Kay's idea that Madison Square Garden was too limited as a concept and she wanted to develop lots of other programming, but during that intervening period we were able to write a contract with the National Basketball Association.
KELLER: That's a story in itself, and I'd like to hear that.
ROSENCRANS: Joe Cohen – I don't know if you know... Do you know Joe?
ROSENCRANS: Joe was with Madison Square Garden, and he and I got quite friendly dealing on the local level. Joe knew the head of the NBA, had gone to school with him, a fellow by the name of David Stern, who still runs the NBA. We knew that they weren't happy with the Knicks being all over the country. They wanted to stop it, and the only way they could stop it was to really write a league contract with us. So Joe and I put a proposal together to carry, I think it was a Thursday night game-of-the-week kind of thing, go all over the league, different games, and put it on Madison Square Gardens Sports Network.
KELLER: And you would hire local crews?
ROSENCRANS: Well, their games were already being telecast, so we took a feed and put in our own announcers. So it wasn't that expensive, and we did the same thing, about the same period of time with the hockey leagues. So between the Monday night hockey game and our Tuesday night whatever and a Thursday night basketball game, now how do we get baseball? I met Al Rosen, went to see Al Rosen, who was a former Cleveland Indian third baseman, great player, who's not the general manager of the Yankees. Good guy, great guy. We said, "How about putting the Yankees on?" because I couldn't get anywhere with Bouey Kune and the league at that moment. So, gee, why not? We'll give you our Wednesday, whatever game, a different game-of-the-week kind of thing. It was Friday night baseball.
KELLER: But only from Yankee Stadium, or even when they were traveling?
ROSENCRANS: I think it was all the Yankee Stadium games. They were there only ones they could really control. So we wrote a quick contract, and we started out with a game in April where the Yankees played Boston. It was a terrific game, a 14 inning game. Ron Guidry pitched for the Yankees, and I think the Yankees won 5-4 or 3-2, something in the 14th inning. We gave it away, our affiliates were carrying it, and the next morning I get a frantic call from major league baseball – "You can't carry the Yankees all around the country!" So I said, "Well, okay, but we tried to make a deal with you and you weren't prepared." So they said, "Oh, well, come on in, let's talk, let's talk about a league deal." So I went in and talked about a league deal, and they said, "You've got to stop carrying the Yankees and let's write a league deal right now," which we did. I called Al Rosen, told him what happened. We had a clause that if the league objected, threatened suit to prevent us from carrying it, we would stop. So he understood, and I was on my way the next day, I think to San Antonio, and I arrive in San Antonio and there's a phone call from George Steinbrenner. He didn't know me, didn't know me at all. "What are you doing canceling this contract? You have no right." I said, "Well, we do have a right if the league is giving us a formal objection." "Well, you better put those games on or I'm going to sue your ass off," or something to that affect, typical. We had a very unpleasant conversation and that was the end of it. In the meantime, then we had three leagues going, and we weren't paying a great deal. I think the NBA was a $400,000, $500,000, $600,000 contract, or $300,000, $400,000... something like that. And Kay was instrumental in being part of this whole group. Joe Cohen was... You see, Madison Square Garden was 50% partners with us. Kay was now expanding at USA into women's fashion and other things.
KELLER: Now Madison Square Garden became USA?
ROSENCRANS: I think she said it's got to have a more generic kind of name, a more universal name. So she developed the USA logo and the brand. But we weren't making any money with this whole thing, just breaking even. We never put any money into the network. We didn't have it, we didn't have it and the Garden didn't have it, but we were breaking even, we were able to sustain it. We were building a network, and we were getting some advertising. It was doing well, but I think we really were the first ones to create the concept of the two streams of income, which CNN then used. TBS couldn't use it because that's purely a... you can't sell the service. You can sell a signal, I guess, but there's no local advertising. All of the components that exist today were started at Madison Square Garden Network, and eventually led to Nickelodeon and CNN, etc., etc. So those became a whole new world of cable, too, I think.
KELLER: Sure did! As you well know.
ROSENCRANS: Yeah, and it was exciting stuff!
KELLER: I didn't overstate it when I said you probably were the godfather of cable.
ROSENCRANS: Well, Black Entertainment Television... I was amazed, I didn't think there was room for all of those concepts, and today I just came back from – we have a home in Florida – and Adelphia Cable purveyor, they put a digital box in Wednesday morning, and I think we had 140 channels! And some of the stuff is so different. There's something there for every niche of society. So that was kind of the evolution, but the greatest thing is still C-SPAN because I think we've done something for the country.
KELLER: For which we never got paid, nor did we want to get paid. It's one of those...
ROSENCRANS: It's something we just take a lot of pride in, and it's been run with such integrity.
KELLER: Oh, no doubt, no doubt. You mentioned politics and Brian Lamb in the same breath – he'd shudder.
ROSENCRANS: Yeah, he has no interest in it. His book reviews, they are so interesting.
KELLER: Well, he's such a great interviewer and it was so great to interview him because he's a master at it.
ROSENCRANS: He puts himself in the background, but just gets the juices flowing from whoever he interviews.
KELLER: They really are good. Then UA Columbia, which it was called by this time, was starting to grow pretty big. You were one of the major MSOs.
ROSENCRANS: This was late '70s, early '80s, we were building big systems in the New Jersey and Westchester, San Antonio.
KELLER: Now you're in it big time.
ROSENCRANS: Small compared to today's MSOs, but...
KELLER: Yes, but big for that time.
ROSENCRANS: We were like eight or nine or ten, somewhere in that range.
KELLER: Didn't you ever get up to... How many subscribers was it when you left?
ROSENCRANS: About 500,000. What happened, we had some people who'd been in our company since 1962. Now we're coming in out of the, almost like the twenty year cycle, and how do they get out? A lot of older people – how can they get full value unless we sell the whole company? I didn't want to sell the company because, again, we had very little debt. If we'd stayed with that company we had a good piece of paper in the stock, we had very little debt, we could have acquired enormous amounts of properties and integrated into a huge company, but we got into a little proxy battle because the UA Theater people, they didn't want to come out. But I went along with the shareholders that wanted to get out.
KELLER: They were your originals!
ROSENCRANS: They were my original partners. They only way you get out is to sell control of the whole company, and if you're going to sell control you don't want to stay in as a minority.
KELLER: Didn't they take any money out at the IPO?
ROSENCRANS: No, that was purely a secondary. Wait a minute, that's not a secondary, that was a primary. That was purely for the company. Nobody had taken anything out. If you sell the company it's worth $90 a share, if you just stay in the marketplace it's worth $40, $30, whatever. So it was very hard for me to say no to people for whom it was an opportunity to get out. Let the majority of shareholders make that decision. But UA Theaters, they wanted to stay in the business because they felt that it was a good business.
KELLER: But they didn't want to buy out the other shareholders, though?
ROSENCRANS: They didn't have the money to pay that price, but they found a partner, Ted Rogers, and the two of them came together – "We'll pay the price. We'll buy the others out."
KELLER: Did that include you, or were you staying with them?
ROSENCRANS: I didn't want to hold my stock because I didn't want to be a minority with those people controlling the rest of the company. So we all sold our stock, but I stayed with the company, as did all our employees including Ken and the Harmons and whatever, and we were now under the... what did they call it? Rogers UA. It was a contentious situation because they were putting us through legal hoops and they were trying to prove that I was working for my own benefit, etc., etc.
KELLER: What did they have to gain by doing that? After all, you'd built the company.
ROSENCRANS: Well, they didn't want it to be sold. They didn't want it to be sold.
KELLER: Oh, that's the UA people, not the Rogers' people.
ROSENCRANS: Yeah, Rogers came in as a third party.
KELLER: White knight type of thing.
ROSENCRANS: Yeah, they were the white knight, whatever.
KELLER: They were good operators in Canada. They didn't understand the United States, I feel.
ROSENCRANS: Not at all, not at all. Ted was petrified of the politics down here, maybe with good reason. But, you know, we all kissed and made up at the end of the transaction when the deal was done, but Ted and I didn't hit it off too well because Ted had his own view of how to run a company, which was totally different from... He said to me, "Bob, you have to understand the difference between managers and owners. I'm an owner, you're a manager," that was what he was telling me.
KELLER: Well, yeah, and you had already sold your stock.
ROSENCRANS: He was right! He was right, I had no stock.
KELLER: You were an employee.
ROSENCRANS: But I didn't look at it that way. It was still my company in an emotional sense.
KELLER: You had your idea of diversified management, and he wanted corporate structure, didn't he?
ROSENCRANS: Well, yeah, very much overlooking everything.
KELLER: Was that where the big point of contention between the two of you came?
ROSENCRANS: Well, no, I think... let's see.
KELLER: Stock options, you also mentioned.
ROSENCRANS: Well, that was with UA, later. See, what happened, you had a two-headed monster. You had UA Theaters owning 49%, Ted Rogers owning 51%, and Ted wanted to... he had a bunch of franchises or systems in this country, he some stuff out west that he wanted to sell to this joint venture, and UA Theaters asked me to evaluate them. So I said, "Well, I think they're not worth what he's asking." So that didn't sit well with Ted. The upshot of it was that they couldn't get along, so they had a breakup clause in their contract that said if one side can offer... well, the company would be split in two in terms of systems, and then the one that wanted the breakup, the other party could pick the half they wanted. So they asked me to divide up the systems. I wasn't really battling it too much at that point, but it was clear they couldn't get along and they had a lot of disagreements. So I built a western kind of group, which included Florida, Texas, the Northwest, and countered that with the eastern properties, and they were maybe about 300,000 each. So since UA asked for the breakup, Ted had the pick, and since we had about 200 franchises in New Jersey and Westchester, Ted said I don't want any part of that because when the renewals come up, a Canadian, they're going to kill me. I'll go where there's simple franchises like San Antonio. So he picked the west, UA picked the east, and I can now go with UA, and we have half a company but they're promising all kinds of things and half the employees were split, Ken stayed with me, some others had to go with Rogers, depending on where they were located. So the company was split. That was 198-... the company was sold in '81, was split in '83. So I'm working for UA and I keep telling them, you've got to give some incentive to the top management here. We can't keep them. You have to pay them properly, you have to give them stock options based on certain performance guides, whatever, and that's true of me, too. You've got to think in those terms, and all they were thinking of was in terms of theater managers who are not very high level, they don't have the jobs that cable managers have. We jockeyed around, nothing ever happened. We had a lot of interesting discussions. We had a discussion with Time, Inc. about merging Manhattan Cable into our group, one idea that came up that didn't go very far. Some guy called Bob Wright of GE one day and said how about us acquiring a percentage of GE cable systems, merge them into UA, we'll have a much bigger company, you'll have a share of a bigger company, and well-managed, etc., etc., and we finally worked out a very exciting deal and we were only paying $800-900 a customer, in effect, for the GE customers.
KELLER: In '83 or '84?
ROSENCRANS: Yeah, it was an extraordinary deal, and somehow UA got suspicious that I was doing something behind their backs, I don't know what it was. I guess part of it was we were working on health plans that each company had, and the GE people had a much better health plan than we did. So I said, well, I think we have to conform ours to yours because you don't want GE employees with less than... So UA was very upset with that, that they all of the sudden had to upgrade their health plan across the company. Anyway, the deal was choppy and they wanted to be in all the meetings because they didn't know what I was... but I told them everything I was doing. I put memos together, sent them, kept them totally informed, and worked out a wonderful transaction. The day after the transaction is announced they call me and say, "We've decided we really can't get along with you. We want to terminate you." So, whew! I was at a dinner up in Liberty, NY. I was getting an award for something or other with a foundation I was involved with, and I went down to the lobby of one of those hotels and took a blood pressure test, and God, the blood pressure was very high, but it turned out to be the best thing that ever happened to me. My contract was good so I got years of salary, and I think their plan was ultimately not to act as an independent company but to sell, and they wanted to control the whole ball of wax, which they did, finally, to TCI. So that was '84 or so, and I was sitting on my back porch one day and Scott Ledbetter, who had left the company earlier, who didn't like the UA characters either, he came over every morning and said let's start our own company. The people at Mutual of New York who had financed our other transactions called me and said, "Look it, we'll put up 15 million, you and Scott and Ken put up 2 million, we'll put up a blind pool together and you go out and buy cable systems," and that was 1984. I said, "It sounds good to me." As a general partner, limited partnership arrangement, which was very generous, so I said, "Great, let's go," and that's what we did. And that created Columbia International in '84 or '85, and we jumped out and we bought systems right and left. We bought Ann Arbor, we bought some systems down in Virginia, and we built five clusters of systems.
KELLER: How many subscribers did International have?
ROSENCRANS: At the end when we sold it, it was like 250,000.
KELLER: Who'd you sell that to?
ROSENCRANS: All in five properties, so they were big systems. They weren't those wide spots on the road. All of my old guys came back. Ronnie Harmon, Homer Harmon, Ken. Marvin didn't because Marvin had the opportunity, when I was gone to UA they made him the key guy.
KELLER: They put him in Denver.
ROSENCRANS: And it was fine for him, it was perfect. Our needs weren't there anywhere at that moment. They evolved as we acquired systems. But strangely enough, all the troops came back and we built a marvelous company again, the same principles, the same decentralization.
KELLER: You do your job, I'll do mine.
KELLER: Who did you sell International to?
ROSENCRANS: We sold that to three entities. We sold to Cox in Michigan, we sold to Jones in Virginia, and we sold to TCI in Portland, two suburbs of Portland, Vancouver, Washington and Beaverton, Washington.
KELLER: Where in Virginia?
ROSENCRANS: Prince William County.
KELLER: Oh, okay. Was that Virginia or was that Maryland?
ROSENCRANS: Virginia. Prince William County is just south of Fairfax. We had about five transactions putting the thing together into a big system, and my son Rick was responsible for that area. Beaverton was the last sale Cox made of their... that was their cutoff, they sold Beaverton, and we jumped in and made that deal. All the deals we made because we had the capital, again, in hand. I didn't take long. Three hours later... you know the business well enough, you know whether something's good or not, and we shook hands on a deal real quickly before the rest of the crowd would come in and push the price up. That was true of Ann Arbor. We bought that from John Saeman. We bought Beaverton from Cox. Bought Vancouver from... who'd we buy Vancouver from?
KELLER: Vancouver, Washington?
ROSENCRANS: Yeah, was that Cox, too?
KELLER: I think it was.
ROSENCRANS: No, we bought Beaverton from an independent by the name of Bill Bouse. Alan Gerry had the system and it was about to go under contract, then you had the crash of '87, looked like a crash, and he backed out. When he hiccupped we jumped in and said we'd make the deal and we ended up getting it.
KELLER: I didn't know that Alan ever went that far west.
ROSENCRANS: He did, at that time. He always rued the day that he lost... because Beaverton is just a tremendous market.
KELLER: Then what are you doing now?
ROSENCRANS: Well, I'm kind of involved in a lot of charitable situations. I'm involved with the Greenwich Hospital.
KELLER: You're not doing anything in telecommunications?
ROSENCRANS: Well, I am. I'm involved with Tom Semptonfelder. Do you know Tom?
KELLER: No, I know the name, but I don't know him.
ROSENCRANS: He worked for TCI, and he left TCI after they bought our system, and he started acquiring small systems around the country for very low prices when cable was very weak. He asked me if I'd invest, which I did, and we're about to sell all of those, we've sold them, and we're about to complete that partnership in the spring. We'll do very well with that. He has all small systems except one big one. The biggest one was Branson, Missouri, the music center. I'm involved with Andrew Tow, Leonard's son, in a programming venture called Global Japan, which has a long way to go. It's a programming service in Japan via satellite. I'm involved in a publishing company that published non-fiction books. One of my boys is in Ohio in the business of... he has a country club and builds homes, and I'm involved with him, and we've built a country inn and things like that. That's exciting. I'm involved with Rick in a number of ventures, my son Rick, and my son Ron has another business, and my daughter is a ceramicist.
KELLER: They all have their father's propensity toward entrepreneurship, huh?
ROSENCRANS: Well, yeah, a lot of things going on, and it's exciting. I'm invested in a few other things, which are all very... bring me into contact with some interesting people.
KELLER: You made a great, great contribution to the cable television industry over the years, no doubt about that.
ROSENCRANS: Oh, thank you, Jim. I appreciate that.
KELLER: I don't think there's anyone that would disagree with me on that at all.
ROSENCRANS: It's an amazing industry because you make so many lasting friendships.
KELLER: Isn't that true?
ROSENCRANS: When you walked in the door, I didn't hear the word Jim, I just heard Mr. Keller, so I didn't really... but the minute you walked in the door, it's funny, there's so many connections we all made over the years.
KELLER: You never really know, just over the time you formed these relationships and it's been great. Well, I'm going to end up, Bob, with the commercial at this point. This oral history was brought to you as a contribution and donation from the Gustave Hauser Foundation as part of the Hauser Foundation project of the Oral History Program of the National Cable Television and Museum. The date, again, is November 17, 2000. We're in the offices of Bob Rosencrans. Your narrator was Jim Keller. Thanks, Bob.
ROSENCRANS: Jim, thank you very much. I enjoyed that. Nice rethinking that whole time.