Interviewer: Kristin Van Ormer
Interview Date: August 6, 2005
Collection: Hauser Collection
VAN ORMER: We're here today with Martin Brophy. Let's just start out with how you first came to hear of cable television and how you got involved in the industry.
BROPHY: Well, actually my father started in 1951. He and his partner, George Uritis, started Shen-Heights TV. My father passed away in 1965 and being the oldest of four boys, I basically stepped into his role and been there ever since.
VAN ORMER: So, when he first started in the industry – that's very early in the game – what was his background, just briefly.
BROPHY: His background was that when he was in the Army he worked in the communications field in the Army, but he was actually a blacksmith by trade from when he used to work in the mines. But after he came out of the Army he basically worked forming veterans' posts and things like that, and he talked to a friend of his who actually was my godfather and they wanted to get at that time Yankee baseball into Shenandoah because you could only get very minimal television at that time because there were only three stations – 3, 6, and 10 from Philadelphia – and they said well, if you put an antenna up on the heights, which was the highest point around you could get it. My father did that with this friend of his and that's how Shen-Heights TV was born.
VAN ORMER: So they started it for their own personal desire to get baseball?
BROPHY: No, not their own personal – this guy had a taproom and he wanted the Yankee games for the taproom and that's how they started it.
VAN ORMER: Sure. When you took over the business about how many subscribers did you have, how big a system was it?
BROPHY: When my dad died we had approximately 2,800 subscribers. It only covered the borough of Shenandoah and West Mahanoy Township. After he passed away we approximately have 4,000 subscribers now. We cover the borough of Shenandoah, West Mahanoy Township, East Union Township, Union Township, and part of Hazel Township, which encompasses the new development called Eagle Rock.
VAN ORMER: What were some of the biggest challenges that you had to overcome initially? What were some of the technologies that you were using and did you have problems with them, did you make some changes?
BROPHY: Well, we went from the old tube systems, which every week you'd have to go replace a tube and an amplifier somewhere and the reliability factor just wasn't there, to completely state-of-the-art at that time transistor system, as they called it, when you used to have amplifiers with transistors and the signal would be steadier and you'd be able to actually have pictures for more than one day. You could actually transport it and you could have the amplifiers out on the poles instead of in people's basements.
VAN ORMER: Of the new technologies that are emerging today, in the context of being a small operator I suppose it's not possible to implement them all. What are your decision making processes within the context of being a small businessperson?
BROPHY: I always use the example of when we decided to launch digital television. I went to an NCTC contention in California and I heard Ben Hooks give this presentation on how he was going to go with HITS and he had two graphic slides that he put up. One was how much it would cost him to rebuild his system out to fit 550, I think it was at that time, and how much it would cost if he basically compressed the signal and went with HITS and did 12 to 1 compression and how he could add so many channels in so many megahertz, and I was so impressed by his presentation that I came out of that session and I said to myself, "This is what we're going to do. We're going to go to (at that time) 450 and we're going to launch digital cable and we're going to go with the HITS platform and I can put in 82 channels of digital service in only a minimum amount of space on my bandwidth and still have bandwidth for future channels. Well, I now have no analog space left, I have 8 pods off of HITS and I have high-speed internet access, so we've basically evolved from three Philadelphia off-airs to 56 channels of analog, 65 channels of digital and high-speed internet access. The next evolution to that would be VOIP – Voice over IP. Although that's a good idea for a small cable operator, it may not be because VOIP brings with it an awful lot of problems in that your pole attachment rental, you then go from a regular television company to being – not an information service – a telephone company, so your pole attachment rate almost triples and that for a small operator – small operators just can't afford it.
VAN ORMER: So technology is for a small operator a boon or detriment, a little mixture of both?
BROPHY: It's a little mixture of both. In a way it's a boon, but the boon is not as rapid as it is for larger operators. Small operators have to sit back and wait for everything to come down in price. Comcast, Suscomm, Time Warner, they could go buy video-on-demand equipment. They could go out and do the VOIP and not worry about pole attachment rates. A small operator with only 4,000 customers can't do that. We have to wait until things adjust.
VAN ORMER: If you can discuss your views a little bit on the topic of competition in the industry? It's opening up a little bit more – of course, the dish people and now Verizon entering the game. How do you feel that cable will be able to remain competitive and how will they differentiate themselves as a service from the other competitors?
BROPHY: Well, I think cable will always be there because cable in the long run is the best way. It's the biggest pipe to handle all the services that people are going to require. The only problem that cable has is the negative atmosphere that follows it. We're beat up as the bad boys and we're no worse than Verizon or Direct TV. Actually, if you look at it, we're probably more saintly than Direct TV and Verizon. Verizon basically wants their way and they don't want to do it our way. We don't get any governmental funding, we don't get a guaranteed rate of return on our investment. All our investments are private capital. Verizon is guaranteed a rate of return from the PUC and they lie to the customers, they literally lie to the customers and so does Direct TV and they're never called on it by the government. Never. You look at every single Direct TV ad, every one of them they lie to all their customers. They must have a year's contract or two year's contract. We don't have that in cable. You can get on today and off tomorrow. I just think that cable, if you really boil it down on a fair level playing field and put all three services together, cable will come out on top once people know the true facts and not the distorted facts.
VAN ORMER: So what's cable going to do, do you think? I know that you're involved with ACA – you're on the board – you've been involved, I think, over the years with public policy. What are you thinking is going to happen in terms of public policy in the future?
BROPHY: Well, the ACA is always trying to change the image of cable, especially for small operators, and the ACA has an on-going program with retransmission consent and programmer wars going on. If you look at most of the major programming that cable operators carry, it's carried by the big three – Disney, Time Warner and Viacom. What are you going to do? You have to have these services but to pay for off-air signals is ridiculous. I think the whole issue of retransmission consent has just been taken way out of proportion.
VAN ORMER: Do you think the original reasons for implementing retransmission consent are no longer...?
BROPHY: Valid? They really aren't because the must-carry rule was established to provide local broadcasters the opportunity to have their signals carried. Well, every one of our local broadcasters is carried and it's carried in a prominent position on the dial. Now the local operators can't send you a must-carry retransmission consent because the networks override them. They simply say you can't do that because we're selling you our programming and you're going to do what we want you to do, and I'll give you a perfect example of this. I had a retransmission consent letter sent from one station. Two days later, I got a letter from that same station telling me they're rescinding the must-carry letter. Two days later I get a letter that says we are now requesting retransmission consent. So within six days I got three letters and it was all tied to the Olympics. Once the network found out that the local broadcaster elected must-carry, they said, "No, you can't do that. You're going to elect retransmission because you're going to get them to carry the Olympics," and that's what happened, and that's the abuse of it and that's what Congress doesn't get.
VAN ORMER: Is there a way cable can get in there and...
BROPHY: All we can do is keep telling our story to the Congress, and I think that's where independent cable operators have done a better job of it because Comcast, the large MSOs – Congress looks at them kind of like they look at Verizon, too big. Whereas the small cable operators can get in one-on-one and talk to the Congressmen and tell them the real stories. You get most MSOs and their legal beagles into Congress – they don't know what's happening down in the trenches with the local customers. They can only tell you what they hear at meetings or in boardrooms. They actually don't know. I walk down the street and I hear it from my customers everyday, and so do all the other small cable operators.
VAN ORMER: How are you able to stay so viable as a company when so many of your fellow operators have been merged or sold to larger corporations and so many of, not your competitors, but your cable brethren are gigantic corporations at this point? How do you as a small operator really stay in the game and be so successful?
BROPHY: It's a lot more difficult now then it was before. Financing is a little tougher then it was a few years ago because of the nature of the beast. We're just a family-owned operation and we kind of just keep rolling along. That's why the addition of new services, although we would like to have everything that comes out you can't. There's only so many things you can do. You're limited by your capacity on your bandwidth, you're limited by your financial situation and different things like that.
VAN ORMER: So how do you overcome those?
BROPHY: You just take it one day at a time and see what you can do today or what you can tomorrow. That's the way you can do it. You can't say, okay, next year I'm going to spend $30,000 on this, because you don't know. You might have a hard winter and have a whole bunch of cable that comes down in the winter time that you have to replace and then that money would be gone for that.
VAN ORMER: Why do you do it? I'm sure you had many opportunities to sell out but you keep in the game. Why do you do that?
BROPHY: I do it basically because I like it. It's the only thing I've ever done and I basically like it. I like serving the people, but I also like the industry and the networking that goes on within the industry. I've developed a number of great friendships through the cable industry, both at ACA, at PCTA, which is now BCAP, and other organizations. Some of my programmers and suppliers and I are very good friends and it's that kind of camaraderie that keeps me coming back. There's a time and a place for everybody to say goodbye, but when that's going to happen I don't know.
VAN ORMER: In today's climate for small independent operators, I know there are a number of challenges. You've addressed a few of them. Are there any other significant ones you can think of, and what are the strengths of being a small independent operator?
BROPHY: One of the strengths, in my opinion, of being a small independent operator is my ability to walk into my franchising authority and talk to them one-on-one. If we have a problem with the franchise I can sit down with them just like I'm sitting down here with you today and discuss the problem one-on-one. If I'm Comcast or Time Warner, I have to send in my corporate counsel who don't know anything about the people they're about to meet and they're coming in with this set idea. I go in with the idea that if you have a problem what's the problem. Let's try to fix it. We work through the problem and most times without much to-do, it's fixed. That's the strength of being local. You get involved in community events, you know your customers. My office has a lot of walk-in traffic. Every day I get to see people. The difficulty is that you're limited to capital and sometimes you really can't provide all the services you would really like to provide. It really bothers me sometimes when I really want to do something and I know that it's going to take me two years where somebody else has it in one year. That's the difficulty. You want to try to be at the forefront of everything but you have to manage things a little more differently.
VAN ORMER: Maybe we touched on this a little bit already, but how is the cable business going to need to react to increased competition for the market to be able to compete effectively? In the next 5-10 years do you have a vision of what the face of this industry is going to look like, who the major competitors will be?
BROPHY: Well, your major competitors are going to be Direct TV and Verizon – I think Verizon more so than Direct TV because Verizon basically has the infrastructure in place. But I think in the long run cable is actually going to be the victor. Cable is actually going to be the victor because we've shown to Verizon that we can do what they've done better than they do it with VOIP and other things. Verizon's tried video over their plant and it doesn't work. Tom's River, New Jersey was a perfect example of everything.
VAN ORMER: Can you tell us a little bit about that?
BROPHY: Verizon went into Tom's River, New Jersey, wired Tom's River, New Jersey and decided to compete with Adelphia in a price war. Adelphia decided they weren't going to compete on price, they were going to compete on quality, and that's what they want because they know how to do it. Verizon doesn't know how to be a cable company; they know how to be a phone company and when you're a phone company you have such layers of bureaucracy you can't get anything done. Cable companies don't have that and that's what differentiates them, and that's what's going to differentiate them down the line because cable operators are interested in customers service and that's going to be the bottom line – who's going to deliver the best customer service and that's what makes small operators so good because our customer service is like personal service. The FCC came out and said you have to answer your phone within so many rings and a request for service has to be done within so many days. We get a request for service at 9:00 in the morning, it's done by 4:00 that afternoon. That's the way it is. You don't have to wait two-three weeks.
VAN ORMER: Yeah, a non-issue for you.
BROPHY: And Verizon – you try to get your phone hooked up. Just call Verizon and try to get a phone hook-up. You'll wait a week to two weeks!
VAN ORMER: Yeah, I just went through that fairly recently.
BROPHY: And that's what they call good customer service.
VAN ORMER: Let's get into programming a little bit. The more positive part first – as an operator, how do you think with all the content that's out there right now, and all the new technology platforms that are being introduced, how do you see the most valuable marriage of content versus deliverability through new platforms, and how do you think that's going to be most effectively driven and given to the consumer over the next decade or so?
BROPHY: Probably with the advent of digital television you're going to see a migration to digital television, for one, but that only rings true to the on-demand. That's where the content is going to go, on to video-on-demand, whether it be subscription video-on-demand or just regular video-on-demand because it provides the customer with the ultimate control, which is what the customer really wants. They want to be able to control the content and that seems to be the way things are basically going to shake out.
VAN ORMER: With there being so many small markets here in Pennsylvania, and so many of the original family-owned operations still in existence, have you worked closely... I'm sure you have, but can you tell us about some of your relationships with other Pennsylvania operators and how you've worked together to grow the business here in this state?
BROPHY: I've worked very closely with the Gans family, Joe and Irene Gans and their son, Joey. I've worked closely with Service Electric in Mahanoy City, Bill Brayford. I've worked closely with a lot of people, and when we upgraded our system and put our fiber backbone in, Joe Gans and Gans Multimedia basically helped me with the design of the fiber backbone. We basically have our systems interconnected, both his and Service Electric. We basically work together in a spirit of cooperation, which years ago that wasn't the case. In the early years it was every man for himself. Now it's everybody cooperates and that's the way things get done. I think it's a much more congenial atmosphere.
VAN ORMER: What do you think is the single greatest contribution that the Pennsylvania cable community has made to the overall industry?
BROPHY: I think it's brought a lot of recognition to the cable industry itself by being very forthright and always lobbying Congress and the Pennsylvania legislature to provide for the best business climate that cable could exist in. We've done a lot to keep cable very well in a prominent position in this state.
VAN ORMER: There have been so many innovations that the cable industry has implemented over the years. Do you feel that there's been maybe a singular one that you can think of, from your perspective, that has really been a pivot point that's changed the way that the industry operates?
BROPHY: Repeat that again.
VAN ORMER: If there's been one single technology that's been innovated and implemented in the industry, can you think of one that has really made the most difference, that's really signaled a sea change in the way that the industry operates and runs now?
BROPHY: It would have to be probably the advent of fiber, fiber optics, and the deployment of it throughout the state, and digital technology. Those two together.
VAN ORMER: What's been the most rewarding moment in your career so far?
BROPHY: Probably the highlight of my career was being chairman of PCTA at that time and my cable operator of the year award, being recognized by the state of Pennsylvania as a small independent operator and as cable operator of the year. Having the ability to become chairman of the Pennsylvania Cable Association, that was probably one of the highlights of my career.
VAN ORMER: Great. Is there anything else that we haven't discussed that you think is important that you'd like to touch on today?
BROPHY: I can't think of what you didn't already cover.
VAN ORMER: All right. Well, thank you very much for sharing your perspectives on the industry with us today.
BROPHY: Thank you.