CTAM Panel - Why CTAM?
Interview Date: July 2006
Interviewer: Steve Nelson
Panelists: Gail Sermersheim, Paul Maxwell, Greg Liptak
Location: Boston MA
Collection: CTAM Collection
NELSON: The roots of CTAM before there was a CTAM. Just tell me briefly what each of you were doing at that time, starting with you – Paul Maxwell.
MAXWELL: CTAM didn't exist but the NCTA had run a couple of marketing seminars, one in Atlanta, one in Denver and it was really odd – I'd been in the trade publishing business back then and we were just about to start Cablevision Magazine in 1975 and a meeting happened at the O'Hare Hilton in early September of that year, and for some reason I accidentally got to come along and almost every MSO was there. What we talked about was this word "marketing" which wasn't part of the lexicon. It just simply wasn't a part of the business back then. Everybody was worried about stringing the coaxial cable and what we're putting on the 12 channels or the 20 channels that we could program in those days. Right after the death of distant signals there was an FCC problem and a freeze and just at that period the idea of pay television was beginning to take hold. So there was this meeting and everybody talked about this concept of marketing, and nobody really could define it. That coalesced out of those meetings, out of the couple the NCTA had had, it seemed like somebody ought to do something about this. So these guys here with me this morning did something about it.
NELSON: Now, Gail Sermersheim, you were among the few people in the business who actually had a title and responsibility that... marketing was actually your job but that was a rarity at that point.
SERMERSHEIM: Yes, I was Marketing Director for a company called Telesis and it was a really big job because we had 55 systems in the Midwest with, I think, a grand total of about 20,000 subscribers back then, so it was a job traveling a lot. We were also one of the companies that launched pay TV very early on so I was involved a little before this meeting that Paul was talking about because I actually also went to the meetings in Atlanta and Denver that the NCTA had sponsored and got a phone call one day from Mr. Liptak about the fact that this pay TV product was going to have to be marketed, and as Paul said we didn't really know much about marketing then. To us...
MAXWELL: We could hardly spell it.
NELSON: So did you get that title by default or did you actually have some credentials?
SERMERSHEIM: My boss had several television stations so they must have had a marketing director somewhere so it seemed appropriate. Actually, marketing then was much more door-to-door sales. I started my career in cable actually as a receptionist at the cable system in Bloomington, Indiana before I got out of college and when I graduated just kind of hung on to run the door-to-door sales crews and then a year later became marketing director of Telesis which was the MSO that had the system. But really, marketing was very primitive as Paul was saying and consisted of either door-to-door or newspaper ads with pictures of antennas and ugly birds sitting on them and maybe a turkey at Christmas if you referred a friend.
MAXWELL: And Able Cable.
SERMERSHEIM: Able Cable, we can't forget. But the marketing really started in the cable business I think the day that Greg called and said we've got to start talking to each other.
NELSON: Okay, Greg Liptak – you called Gail. Why did you call her, what did you say to her, and who were you?
LIPTAK: All right. Here's what happened. I was Vice-President of Marketing for a mid-size cable television operator called Communications Properties, Inc. based in Austin, Texas and we had cable systems principally in the Northeast and we wanted to launch this product called Home Box Office or another pay television product. There were several at that point in time. And the way you had to do that at that point was you had to build a terrestrial microwave system to get the signal from one location to the next location and you had to build these towers every 25 to 30 miles. Very expensive, very time-consuming, and if you didn't build these towers to bring HBO in then you had to get videotape equipment and run these tapes and all sorts of hassle. So in June of 1975 there was an announcement that forever changed the cable television industry. At that NCTA convention in New Orleans, and the pumps failed, we all had trouble getting out of town, water all over the city – not nearly as bad as Katrina, but it was a bad situation. Two gentlemen, Jerry Levin from Home Box Office and Bob Rosencrans, a cable TV operator, announced that HBO on September 30, 1975 would go to a domestic communications satellite. So this was amazing! For the very first time, cable TV would no longer be this small mom-and-pop operation putting up big antennas to snatch signals out of the air or building microwave. Suddenly there'd be this wonderful bird in the sky that would bring signals to anyplace that the footprint of the satellite covered. And so it seemed to me that, wow! What an opportunity this would be for us in cable and as Gail and Paul said, we didn't know how to market the thing, we had several cable operators in the Northeast that were putting the HBO signal on their cable system and then billing people for it. Now that's something called the negative option and attorneys general in four states were very upset at that. So we knew that was a strategy we would not want to employ. So that's how things began and I got this idea to call the people that I could find that were involved and interested in doing pay television properly. Gail was one of them, and we invited Paul and we invited 53 other people, all identified as cable experts or want to be cable experts in pay television...
MAXWELL: A wannabe!
LIPTAK: That's right. ...to come to Chicago to exchange ideas. We wanted to know what worked, but perhaps more importantly, we wanted to find out what didn't work because we really didn't know how to do this.
NELSON: So this was the universe of cable marketing people – 53 – and they weren't even all marketing people.
LIPTAK: No, they weren't.
MAXWELL: They were mostly operations guys, and in a number of cases the CEOs...
NELSON: And journalists.
MAXWELL: Well, Paul Kagan and I were there and we were covering it. Paul was just getting out with the idea of IBITA instead of cash flow. Cash flow was the mantra instead of real profit. I was sitting around going, well, how does all this stuff work, and gee, it'd be nice to see some of these movies. The Thrilla from Manila was the launch with Ali and Frasier from Manila. It started in Jackson, Mississippi and Vero Beach, Florida, were the first two systems. We were sitting in this hotel conference room in Chicago at the O'Hare Hilton so nobody had to take a cab very far, I guess, and it was convenient. We talked about all of this and then just a couple weeks later I'm out in Vero Beach helping put the big dish in with Jackson Communications and then all the guys from – what was Rosencrans's company then?
LIPTAK: UA Columbia Cable.
MAXWELL: UA Columbia Cable, and all of those guys there, and it was just an amazing thing.
NELSON: Scientific Atlanta was on the dish sector.
MAXWELL: Yeah, it was SA that built the dish and Jackson put it in. You couldn't believe it – the concrete base was the size of this room, the dish was 10-meters and it was just amazing! It cost, what? $130,000-135,000 back then, and you think about the dishes all over houses now and how we missed that bit. But how were we going to talk about this stuff? And out of that one meeting everybody kind of walked away going, you know, we ought to keep talking, and then they took that seriously.
SERMERSHEIM: I think the really important thing to me about that Chicago meeting was that it was the most frank and open...
MAXWELL: It really was.
SERMERSHEIM: ...honest discussion I've ever heard in a business meeting before or since. Everybody was frankly in a slight panic at this point in time because we had a new product that had never been introduced to the world before and we were people who had no real backgrounds in marketing or product introduction, and likewise there were technical issues and we were all thinking, Oh my Lord, we've got to get this out in two weeks. What are we going to do?
NELSON: So you're confronted with this.
SERMERSHEIM: Yeah. So everybody talked about what they were doing that had worked...
MAXWELL: There were a few pay TV things by microwave and as Greg mentioned they called it bicycling, and believe it or not, all these videotapes would be put in a truck, taken to the next system, and then the new ones would come in and it was just a mess.
NELSON: And this was the HBO programming? It would arrive in a box?
MAXWELL: Well, not HBO. They never did that. They were microwaved out of...
NELSON: But there were, you were saying, competing pay services.
MAXWELL: There was Channel 100, there was Best Vision – I can't remember some of these guys because they came and went at an astonishing rate. We tried pay TV before in Etobicoke, Canada outside of Toronto, and in...
LIPTAK: Bartlesville, Oklahoma.
MAXWELL: Bartlesville, Oklahoma, with Famous Players. It was a movie company way back in the '60s. This was tried in what? '68, '69, I think it was, and failed. You put coins into meters in order to get it clear, and I've still got one of the meters from Etobicoke. There were guys with... Dore Schary, who was a really famous producer in that era, and I don't remember the name of his company, but you put a wax thing into a box and it melted and then that made it work. It was most frankly the damndest thing you've ever seen. So we were trying all these different things.
NELSON: It didn't sound like you'd replay it though.
MAXWELL: Well, you had to re-melt it. You had to go buy a new one and put it in the Wafer Vision. But we were trying all this stuff and nobody was really having a lot of success but the distribution changed so the economics changed and you could see this ability to make cable a bigger thing and that's why they wound up making it a bigger thing.
NELSON: Just for the record, the date of the Chicago O'Hare meeting?
MAXWELL: It was early September 1975.
LIPTAK: That Chicago meeting as the predecessor to CTAM was very valuable for one particular reason. Two of the people that I invited were executives from the Times Mirror Company of Los Angeles – major newspaper publishers getting into cable – and the rest of us had kind of grown up from other disciplines and quite frankly fairly unsophisticated, but they brought a corporate attorney...
MAXWELL: They brought two of them, remember?
LIPTAK: Well, David Lewine and an attorney. So a cable guy and an attorney. So, we're sitting there and discussions are going on and all at once we look around and they're gone!
MAXWELL: I remember it so vividly. I was right across the table from David. He stood up and said, "I'm sorry. We have to leave."
LIPTAK: I went out in the hall and I said to David, I said, "Phil, what's the problem?" And I wrote down this quote because I remember that – he said, "I've instructed my client to leave. There's a potential violation of anti-trust laws. Treble damages could be assessed and you could be held personally liable for organizing this meeting." Well, that was quite a shocker. I was very poor. My wife and I were very poor at that point and the concept of treble damages was not pleasant, but that was important because we then had to find a way in which all of these people could continue the discussion, and that way was to organize a not-for-profit trade association.
NELSON: So you couldn't hold some secretive cable cabal in a hotel room.
MAXWELL: And we learned right then, you never mention price. And that gave the seed to the idea to make it more formal, I imagine.
LIPTAK: It did. At the end of the meeting when there was a general assessment that people wanted this dialog to continue, and Paul was very vocal about it and talked about how valuable it was, I said to Gail, "Gail, if you will chair the steering committee to put this organization together I will agree to serve as its first president." And so we left Chicago and began work, and I went back to Austin, Texas and got our corporate attorney and convinced him to do all of these documents at no cost. We had $30 in the treasury of the organization at that point. That was the result...
MAXWELL: I think that was the tip that you stole off the table!
LIPTAK: So he started working, we got appropriate information from the State of Texas and the Internal Revenue Service about how to do this, and then Gail and I accumulated bylaws of the various trade associations – the RAB in particular was very valuable, the Radio Advertising Bureau, because it was similar. And so we started working.
SERMERSHEIM: That steering committee really met during the Chicago meeting, I think, at the end and sort of answered the big questions: one, do we want to keep this going, which again was universal. The second one was what should the structure be because there was still this thought that maybe the NCTA could have a subcommittee for marketing and that this would be the legal form under which we'd operate, and we thought about that a bit. But most of us really felt that what we needed was not an organization driven by companies and corporate agendas. What we really needed was something along the lines of a professional society with individual members who would come together to learn from each other and to want to develop their skills – nothing to do with sort of the corporate agenda. So that was the first big decision, and then the second was that we all... back then we had a lot of trade shows. We had state trade shows and regional and the Eastern and the Western, and with hospitality suites and exhibits and all this, and we never got a chance to sit down much and talk. The suppliers were always trying to sell us something, you're having dinners and all this. We knew we were entering an era where we'd have to sit down with each other, that we couldn't sell pay TV without having serious marketing discussions and business discussions with the operators in a non-contractual kind of environment. So we decided that the best thing would be to have everybody equal. There would be no associate membership, and there'd be no commercial activity. So we wouldn't have any exhibits, we wouldn't have tabletops and all that. We wouldn't sell sponsorships. We just wanted to get together and talk.
NELSON: So it was a professional society.
SERMERSHEIM: Yes, very definitely.
MAXWELL: Very much that idea at the beginning. It wasn't so much that they didn't want to market something and sell something, it was wait a minute, we need to learn together and not have... and the agenda needed to be how do we grow everything, it wasn't how do we just grow this or that. It was wait a minute, this is a rising boat chance and we need to take advantage of that. I can't remember how many subscribers there were around the country in 1975. What, about 20 million maybe?
LIPTAK: Or less, actually.
SERMERSHEIM: In '81 it was a 25% saturation so 12?
MAXWELL: It was 12 million, I think, if I can remember parts of that era, but it seemed to me, because when I first got into the business in late '69, early '70, there was like what? 8 million, 8 ½? Because we had the freeze then, and then it was just starting to loosen up and this was the chance to really offer something to a consumer that could change the whole reason why you built a cable system from just pulling the local signals into shadow areas and stuff, and I really believe we all could see how big we could be as a business and an industry.
NELSON: Was that sort of the first time you had that vision because just the growth of the industry, as you said, it was really a signal service until then.
MAXWELL: Yeah. We tried to do it with importing distant signals to have a better... that was the first effort at that, actually. It was okay, we built this, what are we going to put on this bandwidth? And the history of the business has been as bandwidth has increased, the programming and the services have exploded. We're in another era of it right now that is almost, if not more, exciting than what we did back then. But this was a chance to say it's not just what you can get over the air, it's special for you, and it was movies. It was uncut, uncensored, no commercial movies. How do you explain that to people?
NELSON: And that was function of the organization to figure that out.
MAXWELL: Right, right.
LIPTAK: We had a situation in the cable industry where the leaders of the industry were largely entrepreneurs, and I don't want to say they were cheap but the concept of spending money for marketing? This was foreign because the way cable was marketed in the so-called golden days when communities were separated by distance or terrain from TV transmitters was the cable operator would build the town, hire the local armory, get a sports or entertainment celebrity, all the TV dealers and people would come in. They'd leave that weekend with often 50% of the people signed up. Ballgame over!
NELSON: Who needs marketing?
LIPTAK: Suddenly we're starting to build cable systems where – holy cow! ABC, CBS, NBC, PBS are all available off-the-air and good quality on rabbit ears, so we've got to have product and then we also have to talk to people about the benefits they'll get from cable, and that's marketing. That was a tough road. As Gail mentioned, there were all of these drains on the money at the cable system level for all these conventions and so forth, so we had the perception in the early days that we might have a good deal of opposition from the leadership of the industry to create another organization with the perception that all these upstart marketing people are going to go have drinks. So what we did was the Chair for this meeting in Chicago was the retiring Chairman of the NCTA the previous year, a fellow by the name of John Gwin, who'd done a wonderful job on behalf of the cable industry. So by getting John and by getting some other people like Chuck Dolan and Bill Bresnan – people very familiar today – we tried to get some of those people to come in and we had a NCTA board member, George Sissin, who agreed to be the first Treasurer of this organization. So we tread very lightly and we asked those people who believed in this marketing idea and believed in the value of this organization to spread the word with their fellows, their colleagues and to let this organization exist and hopefully grow.
NELSON: So from the very beginning there was an issue of what is this organization, why does it exist and why does it exist apart from other organizations, right from the beginning.
NELSON: I want to go back to something you said about being able to get the off-air networks by rabbit ears and therefore you had to do something. So is this in a sense the first time the awareness of competition sprung up? Were you even thinking about competition at that point?
MAXWELL: I don't know if that's the right word.
SERMERSHEIM: We didn't think of television as competition.
NELSON: You were in a different universe in a way.
MAXWELL: Very much a different universe.
SERMERSHEIM: We were a delivery mechanism for it, so we didn't view it as the competition.
NELSON: But now you're starting to talk about original programming, uncut movies...
SERMERSHEIM: But we didn't have enough to sell. We could deliver what was there but that was it and they already got that, so we had to add new things or we had to encourage people to do that for us.
MAXWELL: And they had to beyond a little camera that would focus on a thermometer and then the wind gauge and then the clock.
NELSON: The goldfish bowl.
MAXWELL: That was in Kansas, actually. There really was a goldfish bowl, and it really...
SERMERSHEIM: It got more publicity than any channel that then existed.
MAXWELL: It had a little deep sea diver that came up and down.
SERMERSHEIM: That was the real sophisticated version.
LIPTAK: There's a famous story in Iowa – the cable operator to fill up some of his channel capacity got a couple of hamsters and they had a contest, the kids named the hamsters, and lo and behold one day the hamsters died and it was a major community crisis.
NELSON: They died on TV. Who knows who was watching at that moment, but... Let's go back now again to, okay, you're ready to go, you have a steering committee, you're going to form this organization – whatever it is, professional society – you get your lawyers down in Texas to draw up all the paperwork. Now somewhere in that paperwork you've got to insert a name and say the organization is ... So where did the name come from at that point?
LIPTAK: Well, I was originally going to name the society the Cable Television Marketing Society, CTM, very short. But then, one of the people in our group in the early days, Marc Nathanson who then went on to great fame in cable, built a terrific company, Marc said, "No. Again, we have to involve the leadership of the cable industry in this society. It can't be just marketing. Let's add the word 'administration'." So that's CTAM – Cable Television Administration and Marketing Society. That way we can attract people in the operations side of the business to be involved with us, and so that's the genesis of the name. It has since changed.
NELSON: In your meetings at the time, did these administrative operational issues come up or were you just still marketing guys?
MAXWELL: Well, there weren't really marketing guys yet.
NELSON: You didn't think of yourselves that way, right, because you didn't have the experience.
MAXWELL: Well, and there were operational people in the... there weren't vice-presidents of programming at the MSOs. There weren't people that...
NELSON: So the infrastructure that we know today wasn't even there.
MAXWELL: This is pre-Fred Dressler, think of it that way.
NELSON: Okay, okay.
LIPTAK: In the early '70s there were four of us that could be identified in the whole cable television industry in America that were specializing totally in marketing. Four!
NELSON: That was the full-time job for those people.
LIPTAK: As a full-time job, yeah. So Paul's actually right.
NELSON: And others that dabbled in that on the side.
LIPTAK: It was a side job.
MAXWELL: It wasn't that so much because you really didn't need it before. This was really in response to a real need, and I don't know how many of them really perceived it back then, but I know some of the guys running companies, like Chuck Dolan, Tom Johnson at Daniels and Associates which was a cable operator at the time, they looked around and went, oh my God, we've got to do something! Chuck was a big fan and a big backer in the beginning. He was a quick joiner, he got his people together, and it wasn't long before he had somebody running marketing because he thinks marketing. But if you think back to how he grew up in Sterling Manhattan and the difficulty of doing business in a marketplace like that, you can see why.
NELSON: So now you're at least organized on paper, you have another meeting? Is that the next thing that's happened?
SERMERSHEIM: Yes, I remember it well. That was the 99 guys and me meeting, which was depending on your point of view an improvement or not an improvement over the 49 guys and me at the first one.
MAXWELL: Right. She was the only lady that could spell it.
NELSON: So the first meeting was, you said, about 53 people?
MAXWELL: It was about that, right.
NELSON: A deck of cards and you. And now you've attracted another 40 or 50 guys for the next meeting. Word got out about Gail!
LIPTAK: She was getting very famous!
SERMERSHEIM: Those were the days.
NELSON: So how had things changed between the first meeting which was really very exploratory and "we're all here, we need to be doing something"? The second meeting now is much more purposeful in that "this is our next meeting".
SERMERSHEIM: That was in Atlanta and was called pay TV today, status today and it really was sort of a follow-up. We'd had another nine months or so of experience at actually launching HBO, so we had some real things to talk about. So that was the primary reason for that meeting but then we also developed some new issues and looking back they were things like how do we explain encores...
MAXWELL: Right, repeats. Because there was an odd complaint – "you're showing that movie again?"
SERMERSHEIM: And again?
LIPTAK: And again!
SERMERSHEIM: And there were 7-10 movies a month. That was all HBO was.
MAXWELL: Right, that was it.
NELSON: You got to see those pretty quick and then what do you do with the next 20 days?
MAXWELL: The Polka Festival didn't have any legs, did it?
SERMERSHEIM: No, not at all. Bad producer.
LIPTAK: And they didn't start on the hour. Mention that, that's interesting.
SERMERSHEIM: Didn't start on the hour.
NELSON: The movies didn't start on the hour?
NELSON: So was it when a movie ended at one hour and 40 minutes, the next one would start or it would start again?
SERMERSHEIM: A new one started.
LIPTAK: And then it would start again. And customers were saying, "Why is your movie beginning at 17 minutes before the hour?"
SERMERSHEIM: So, yeah, and HBO wasn't on in the daytime, so it was sort of that kind of issue.
MAXWELL: Right, it was just evening really.
SERMERSHEIM: And this concept of R-rated movies in the home!
MAXWELL: Boy, that was a big deal.
SERMERSHEIM: Really exploded on us.
MAXWELL: Nobody anticipated it.
NELSON: Did you overtly talk about that to the customer in any way, or did people just figure this out?
MAXWELL: Well, people were complaining.
SERMERSHEIM: They figured it out.
MAXWELL: Some were looking for it, some were complaining.
NELSON: Nothing has changed.
LIPTAK: Nothing has changed!
MAXWELL: It was an odd thing because we, of course, didn't really know what we were doing, anybody. Nobody had done this before – and neither did HBO by the way – look at how it compared... nobody thought competition yet. This was added in. They didn't think ratings yet. They didn't think any of these things. It was a fascinating time, and oddly enough you'd start marketing... HBO would come to these smaller towns because HBO financed all the dishes in the beginning, which was a very smart move, by the way, but this big dish would show up on a plain in Kansas and that would be a very big thing. So people would subscribe.
NELSON: In any town – just, what is this?
MAXWELL: Right, yes. It's space-age, right? And it wasn't a common thing at all, and people would come out and stare – remember when they were building the dishes out in the plains and in the mountains and other places? And then the new programming would start and people wouldn't understand it, and that fed more into what they were trying to help everybody do.
NELSON: So where did you go to next?
SERMERSHEIM: I just want to expand upon that because out of that first meeting was the first dialog with the pay TV supplier in this one-on-one kind of equal dialog.
MAXWELL: That's right. "What are you doing??"
SERMERSHEIM: CTAM really helped in the long-term to facilitate that relationship between programmers and operators to develop the product. I don't think it would have happened nearly as quickly had we not been in a form where we could talk to each other constantly about what the customers were saying, so this was a very valuable thing.
NELSON: Because until then, cable was a totally passive medium. You were just passing stuff through, so you have no say so in what anybody's putting on the air, or any ability to feedback to them.
LIPTAK: That's right. So a subcommittee was organized – it was called NAMAC, National Affiliates Marketing Advisory Committee – to HBO. Quite a number of people involved in the foundation of CTAM also then agreed to serve on this committee and to try and deal with these issues and make recommendations and have discussions with HBO about starting the movies at odd times and how to deal with Rs – they should be played late at night – and all these kinds of issues.
NELSON: And were they open to having this committee?
MAXWELL: Very much so, actually.
MAXWELL: It wasn't a "you can't tell us what to do" at all.
NELSON: They were feeling their way around as well.
MAXWELL: Exactly. Out of that grew better interstitial programming, grew better information to the consumer, better information to the cable operator too, because they sometimes didn't get the guides out. It was a tough time. Everybody was learning.
SERMERSHEIM: HBO's problem was that it wanted to have an advisory group but it couldn't politically pick the members without getting into hot water, so the fact that we could do that for their organization then really facilitated that happening.
NELSON: I'm just curious about one thing – when you started did you call it CTAM or C.T.A.M. initially?
MAXWELL: CTAM. That looks right.
NELSON: Just for the record.
MAXWELL: You always try to turn an acronym into a word.
NELSON: Right. We don't always succeed.
LIPTAK: Steve, one of the really interesting parts of the early days at CTAM was a committee called the Idea Exchange. This was a kick. We had the concept that in order to be a member of this organization you had to share an idea with all the other members.
MAXWELL: Preferably one that worked.
LIPTAK: Or one that abjectly fails.
SERMERSHEIM: So you really learn something.
LIPTAK: And you had to send however many copies were required – say there were 100 members you had to send 100 copies of that – to Gail. So if you can picture, in Gail's basement she's go these stacks and everybody in CTAM looked forward to them. We'd get them once a year, a whole packet of wow, look at that, and wow, isn't that terrible". So Gail, for what – several years actually...
SERMERSHEIM: Three years, I think we did that.
LIPTAK: ...sorted through this.
MAXWELL: It was pretty funny stuff, too.
NELSON: And of course as the membership grew...
SERMERSHEIM: It became unwieldy.
NELSON: ... more copies to distribute...
MAXWELL: It got way out of hand.
NELSON: ...or would-be members sending in their ideas. Can anybody remember what one of these was?
MAXWELL: I just remember all the bad clipart. I vividly remember all the bad clipart.
SERMERSHEIM: Yes, because either we had to draw our own or we had to cut it out of something and paste it in and use it.
LIPTAK: In 1976 in a little newsletter, somebody said, "What's the purpose of this organization? Write down the purpose." So we wrote – and it really applied then and applies today – "The society will endeavor by various activities to promote the means whereby members can exchange ideas and information." How simple. And the Idea Exchange was really the heart of that initiative in the early days.
SERMERSHEIM: It started the culture of sharing that has been CTAM's hallmark to this day.
NELSON: Absolutely. That's really interesting. Right from the beginning.
LIPTAK: Right. And then, at that early period in '76, in addition to the Idea Exchange committee that Gail organized, we had three other committees. We had a Pay Cable Committee to focus in on pay cable issues; we had a Basic Cable Marketing Committee to work on stuff other than pay cable; and a Cable Operations Committee. So very early on after the Society was formed, we started to develop some specialties within this marketing arena.
SERMERSHEIM: And we also started, I think around that same time, doing some regional level workshops because we had the once a year marketing conference. We actually had an annual management conference, too, and then we realized there weren't that many people who could travel – what were travel budgets back then, right? – so you couldn't come to San Francisco or Boston or something like that, so we had our members – again, this is a volunteer organization, and I want to re-emphasize this...
MAXWELL: This was all volunteer then.
NELSON: It still has the $30 in the treasury.
SERMESHEIM: That's right!
MAXWELL: What was the membership? $25, was it?
SERMERSHEIM: $20 to start.
MAXWELL: $20 to start, that's right.
SERMERSHEIM: I think it got up to $50 by '81 or '82 or something like that. But we had a lot of our volunteers like Don Mathison and Rick Barone and Ron Wren and others I remember in various locations who wanted to do something and so we'd have a conference in Hartford on door-to-door sales, perhaps, and one in Tampa on direct mail and things around the country that got more people involved and helped those that were starting off.
NELSON: But when you had these conferences, say on direct mail, were you drawing on – I hate to use this word – expertise within the cable industry at that point, or did you bring in people? Where did the knowledge about direct mail come from that was being delivered to everybody?
MAXWELL: Trial and error.
NELSON: Trial and error, okay. Mail them out and see how many of them bounce back?
LIPTAK: See if it works.
MAXWELL: And then tell somebody, hey! Try this!
SERMERSHEIM: That's very true.
MAXWELL: It was true.
SERMERSHEIM: I think the very first time we reached to others to learn from was the CTAM Goes Hollywood in 1977, and it was sort of really the statement to the industry that hey, we've got to grow up here faster than we're doing and there are people out there who know an awful lot more about marketing, in this case movies for example, than we do, and why not go talk to them.
NELSON: So you decided to hold a meeting in Hollywood, this '77 meeting?
LIPTAK: Right, and we had quite a representation from the motion picture community, and in fact at one point a Hollywood person joined the board of CTAM, was on the board for a couple years because they recognized that in those early days it wasn't a given that there'd be only HBO and Showtime. Hollywood was mounting its own product and so forth.
NELSON: But they really saw the value of cable as a deliverer of movies. This was a whole outlet that existed, and people have to remember... where were we with VCRs then?
SERMERSHEIM: Just barely.
LIPTAK: Just barely starting.
NELSON: But not penetrated.
MAXWELL: No, they began penetrating in the early '80s.
NELSON: Right. So to the viewer the only way to watch movies was either at the movie theater or broadcast when it got into that window with commercials, or all of the sudden this whole other way of looking at a movie on TV.
SERMERSHEIM: But there still was a very real concern back at that meeting about overexposure.
NELSON: From Hollywood?
MAXWELL: Exactly, from Hollywood.
SERMERSHEIM: Because we had several broadcast windows and now we're adding a pay TV window – this might be too much. People don't want to see movies that often.
MAXWELL: It was interesting conversation, but the studios then – as if that hasn't changed, actually – were very jealous of their product, I think is a fair way to put it, and of course they sued the VCR guys when they came along in the early '80s. That decision saved them, for one thing, but it also showed that the more the better, kind of, and ever since then we grabbed on to more choice – that became really cable's mantra – and as the bandwidth kept growing, we kept growing things. It's harder to market different things. How do you market to a niche? I remember early discussions in CTAM – things like "Sports? Nobody wants a sports channel." "News? News all the time? Leave me alone." It changed the whole nature then and we kept looking at new ways to do that and CTAM was always right at the forefront of trying to figure out, okay, how do we do this? How do we penetrate these markets? What are they like? And out of that grew an understanding of better research, out of that grew an understanding of customer service. Because when HBO came along actually with the satellite and the other stuff, there were truck chasers. Like the early days of building a system and it was wonderful, that's another golden era. So what we've been, I think, throughout the whole history of this group is okay, how do we do the next golden era?
LIPTAK: And we stumbled on one – and I do mean stumbled – we stumbled on a marketing technique that really helped the development of the cable industry and you can describe it as follows: you launch a cable system, you sell the services to people, you get 40 or 50% penetration, and then you come back and launch pay TV and you get about 20% of the homes passed by in pay TV. But if you start from day one and you package together basic cable service and pay service and present it as one offering to the consumer for a certain price, the numbers are just substantially different. It's called the new build phenomenon.
NELSON: The birth of bundling.
LIPTAK: Early bundling, absolutely.
MAXWELL: It was early bundling, it was the precursor.
LIPTAK: That propelled and gave operators the reason to go after these big town franchises because suddenly we had a product that, my gosh, maybe you could make some money with this thing.
NELSON: Now Gail, you referred to at the Hollywood meeting about Hollywood being afraid of overexposure. There was another kind of overexposure that perhaps they weren't anticipating.
MAXWELL: We were all young.
SERMERSHEIM: Yes, you must realize that this was a very young group.
NELSON: There was some kind of swimming pool party, I gather?
MAXWELL: We had a lot of fun in those days.
SERMERSHEIM: Yes, we did.
NELSON: All right, well, we'll just leave it unsaid at that. Those who know will know, and those that don't can imagine.
MAXWELL: Interestingly enough though, what Greg was talking about is really critical to why the business grew so fast after that. In the late '70s and the early '80s, the franchising boom, another wave of that, because the first franchising was all shadow markets, distant signal, other things like that, but boy, there's HBO and then Showtime came along and stuck, and the Channel 100s and some of the others disappeared and the better ones won. But then ESPN got started, and then Ted Turner looked at the satellite and went, wow! That's pretty cool. He put WTCG, Channel 17, on the satellite. He had microwaved all over the South and he said, "I can do this for the whole country now." And boom, he did it. And then CNN started. Those things, honest to God, changed the world in ways I don't think we completely understand yet. It made news available anytime, it made sports available, and you had channels on a system that served a purpose, and cable then began programming its channel lineup as opposed to programming a half hour at a time. It really changed the dynamics of television and how people experienced television, and that then gave CTAM a whole hell of a lot more to do.
NELSON: So then during this time period, was CTAM experiencing a lot of growth as an organization? From the 99 guys and Gail?
LIPTAK: You know, it was fairly slow in the first few years until this big city franchising started to occur and operators started to build and then by the early and certainly the mid-80s, oh, it was huge. Just huge.
MAXWELL: Yeah, the mid-80s, it was a big thing.
SERMERSHEIM: Again, it tracks with the hiring of marketing people in the business basically. It still, even in the '70s, was a pretty slow process of companies ramping up their marketing staff, and again, the number of people who could sort of maybe...
MAXWELL: Spell it.
SERMERSHEIM: ... be out and about nationally.
NELSON: So was it when the operators started adding these systems in more urban and populated suburban areas that they started realizing, okay, we've got to be able to sell things to our customers out there?
MAXWELL: Absolutely that.
NELSON: Because you're beyond the truck chasing thing at this point.
NELSON: So how did that start to change the organization, the flavor of the organization's nature? Because this was such a small personal group of buddies that got together...
MAXWELL: It was when it started.
NELSON: ... knew each other, and were there really from the beginning and had that camaraderie that comes from being in on something very early. Did that effect the organization as you now started to experience that growth?
SERMERSHEIM: I think it was still the same. I was on the board up through '84 or so and around after that, and I think the spirit, the excitement of getting together and communing...
MAXWELL: It was still there, yeah.
SERMERSHEIM: There's still so much going on and so much everybody had to learn that I didn't sense a change. I don't know about the last ten years, for example, but for the first 15 or so it was always...
MAXWELL: Well, it began to grow up, though and get more professional at the management level.
SERMERSHEIM: Oh, yes.
LIPTAK: Yes, yes.
MAXWELL: It naturally did that because more was demanded of it, and that was in response to the demands. But you know, it was collegial; they let me hang around a lot on these things. But it stayed that way for a long, long, long time. It was a comfortable place, you really looked forward to the meetings. I was on the trade publishing side always trying to figure out how to put the publication I'd just started into some room or do this and that, and I think they were the only people I never really argued with because from the beginning we all sort of bought into that this is collegial, this is to help each other, this is to help the industry.
NELSON: We're in this together.
MAXWELL: Yeah, we're in this together, you know. It was that way... it just was that way.
NELSON: But I have to say I think you laid a base there. That's what I was trying to get at, that even though the organization has grown enormously – you've got 3,000 people now instead of the 99 guys and you – there's always been that atmosphere at the annual CTAM, what we now call the summit of it is still collegial. Obviously you don't know everybody anymore.
MAXWELL: Not anymore.
NELSON: By a long shot. But I think you set a tone there. That's what I wanted to bring out. Just talk about that. There's always been, in addition to all the meetings and the important discussions, a kind of social component to it too, which does feed into business. Maybe you didn't have golf tournaments in the early days...
SERMERSHEIM: No, never did.
MAXWELL: No, we didn't.
NELSON: ...or big rock and roll parties, but...
SERMERSHEIM: We just danced and drank, I think.
MAXWELL: We did do a lot of that.
NELSON: But you had some fun at the same time. Were you having some fun at these meetings?
LIPTAK: They were great. It was fun, and it was fun because you learned, and you learned what to do and you learned what not to do. More importantly you learned what not to do. As CTAM started to grow, the leadership of the industry recognized the value that this kind of networking provided because you could translate it right into subscriber growth.
MAXWELL: You really could at that stage. The buy-in both from the vendor side and the operator side was substantial. It really was. The people that came, a lot were still the senior guys in the business and they really recognized that hey, this helps.
NELSON: So really you got beyond this point in the early days where "we better involve some people because we're afraid that people don't want this organization to exist" to people really now across the industry understanding its value, and that was a huge transition during this early period from this rump meeting in an airport to a really established organization that is valued by the industry.
SERMERSHEIM: I like to think about it sometimes, you know, the people who started the cable business were entrepreneurs and they did it by sharing and they talk about loaning each other money and equipment and all that, and I think CTAM just sort of picked up that torch and took it to a new level of sharing and working together and being collaborative and continues to do so.
LIPTAK: And we've always perceived ourselves as the underdog in this communications world, certainly back then and I think, perhaps, even more so today. I want to read you a two little sentence poem that my former boss and mentor and close friend, Glenn Jones, wrote in 1985 in a little poem called Shark Talk. He said:
They'll get you in the stomach
or they'll get you in the back
in the marketplace where it's
attack, attack, attack
There ain't no mercy there
NELSON: Well, we know what a great philosopher Glenn is. I didn't realize he was a great poet at the same time.
MAXWELL: He has many books of poetry, by the way, all on my shelf.
NELSON: So anything else that comes to mind to sort of wrap up the early period of CTAM, which is what we've been talking about here.
MAXWELL: We survived.
NELSON: That's certainly an important one. You survived and you grew.
MAXWELL: And the business did more than survive. It really got to be a major dynamic player on the world stage.
SERMERSHEIM: And I think CTAM contributed a great deal to that. It would have happened but not nearly as quickly as it did.
NELSON: Well, one thing I can say here, just having shared this with you, is the fondness and the warmth you all feel for not only that experience, but the continued relationship with the organization today.
SERMERSHEIM: 30 years later.
NELSON: Have we pretty much wrapped up our early years of CTAM?
LIPTAK: I think we have.
MAXWELL: Part one.
NELSON: Part one and more to come. Thank you very much, Paul, Gail, Greg.
MAXWELL: Thank you.
LIPTAK: Thank you, Steve.
NELSON: Very enjoyable, very interesting.