Interview Date: Friday July 10, 1987
Interview Location: New York, NY USA
Interviewer: Marlowe Froke
Collection: Penn State Collection
Note: Audio Only
This interview was conducted in two parts: July 10, 1987 and October 2, 1988
FROKE: This is an oral history of Irving B. Kahn being recorded by Marlowe Froke in the offices of Mr. Kahn at 375 Park Ave., New York, New York 10152. The date is July 10, 1987, and the time is 10:30 a.m. Sitting in on the Oral History today is E. Arthur Hungerford, a retired professor of Speech Communications at The Pennsylvania State University.
Irving Berlin Kahn, a cable television pioneer, is the founder, owner, and president of BroadBand Communications, Inc., a communications consulting company; founder and chairman of General Optronics Corporation, a laser design and manufacturing company; and founder and chairman of Choice Cable Corporation, a company that is developing a complex of cable systems in South Jersey using fiber optics. His career has been associated with the communications industry since the 1930s when he became a radio broadcaster. He moved to film in the 1940s to become head of the 20th Century Fox Video Television Division. He pioneered in pay television; developed the teleprompter, an electronic cue card used in the television and film industries; became one of the first multiple system owners of cable television systems, at one time owning more than 100 cable systems across the country. His first cable system was in a small community in New Mexico. He entered the cable business in 1959 or perhaps 1960.
FROKE: Mr. Kahn says 1959. Under Mr. Kahn's driving guidance his company proved to be one of the dominant companies in the business. From his earliest days in the industry, Mr. Kahn was a driving force for innovation. He is one of the early proponents for pay television on cable and gave a presentation about it to the NCTA, (The National Cable Television Association) convention in 1960, in Miami. He was an early advocate of satellite technology, which has led the cable industry to an important role as creator and distributor of original programming. He was active in the NCTA, serving many years as a director and was honored as the "Man of the Year" of the NCTA and the cable television industry in 1970.
In our oral history of Mr. Kahn, we plan to cover his life in terms of a biographical sketch, touching many aspects of his life. We plan to look at the founding of the TelePrompTer Corporation, which in the communications industry was a leader in many aspects of the development of electronic communications in the United States. Finally, we plan to move into the development of Choice Cable Corp., which is his current interest and which is leading the way in fiber optics and laser communications technology.
Initially in our oral history we planned to talk primarily about these aspects of his life and then move into reflections. As we began the conversation in his office in New York City, he began to talk about the future which has been a keystone of his entire life. So rather than move away from that aspect, we decided that we would explore his reflections of the cable television industry and of the electronic communications industry. The electronic communications industry has been his life's work. The perspective that you have, Mr. Kahn, is, in a sense, totally tied to the communications industry.
KAHN: Not necessarily.
FROKE: I relate the statement based on your radio career, your film career, your cable television career, your broadcast television career, and so on. Obviously, many other things have influenced you in terms of decisions you've made. Let me ask the one question that got us started this morning and prompted me to shift the tail end of the oral history up to the beginning. As we came into your office you said, "We'd better move fast because the cable industry might just be something that is ancient history."
KAHN: Let me clarify that.
FROKE: I misquoted you, I know.
KAHN: No, not really. I just want to see that our semantic rapport is worked out. I think "cable" is becoming a buzz word. Cable as we now know it within the industry‑‑the ownership, the management, and the way it is going‑‑in my judgment, is going to have dynamic changes. These dynamics will be brought about by technology. The cable industry has followed and is following a predictable pattern of other industries that have grown rapidly with generally entrepreneurial zeal and not a great deal of business control. I have never sat down to figure out how we could optimize our investment or how much research should we do to stay in front of it. We just sat back and said, "Man, we are making more money than we ever knew existed. Leave us alone."
Cable is not the right word anymore. You have a variety of technologies, like coincidence of design, totally unrelated to cable that have forced the development causing a total blending of communications. You have computer technology, which is emerging almost overnight, with a new design to do it quicker and do it better. When we started making lasers less than ten years ago, the average life of a low‑power ejection laser was in the 100‑hour range and the price was in the $1,000 range. Today, we guarantee our lasers for 10,000 hours, and on charts we project that they will run over a million hours. They have gotten so cheap that the compact disc, which uses a laser to read the disc, is being packaged and sold in the $5 to $10 range.
As recently as four years ago, we were thinking that if we could standardize fiber with 6 to 10 dB loss per kilometer man, we would have it made. If we could, in fact, get it to the point where we could go 20 miles without a repeater, that would be fabulous. With a conventional cable system you still need two or three amplifiers a mile. They are pretty damn big and somebody's got to maintain them and it isn't easy. Today we have, in fact, commercial installations in fiber which are over 100 miles without a repeater. Right now. The loss on the cable that you can buy today, in any reasonable quantity, will cost close to a nickel a foot, fifteen to seventeen cents a kilometer, and has a loss of .2 dB per kilometer. That's commercial. They have gotten even beyond that in the laboratory. To connect the fiber before, you spliced it. Today you can do a splice that I can teach a "grunt" to do in the truck in the field with a little portable machine so you can't see where he has made it. It will take him about a minute or 20 seconds, depending on his efficiency.
FROKE: About five years ago we put some fiber into our television system at Penn State, and it was a very complicated process to splice. Do you see the present ownership of the cable systems responding to your challenges?
KAHN: They are going to respond out of one emotion that exceeds greed: fear. Not out of love. I will probably continue to be "controversial" and relatively unpopular because no one wants to hear what you ought to do when everything is going so well. On the other hand, when you go back a little bit in history, I put in and installed the first transistor cable system in Great Falls, Montana. Bruce Merrill had a company that manufactured it. He made me all kinds of promises about how it would work and my engineers believed him. Well, we put it in. You know what, it didn't work. I had to go begging to Milt Shapp to quickly give me some of his amplifiers so we wouldn't lose the franchise. So we over‑built ourselves. A year later we started to use transistors, and what do you know, they worked. All of a sudden, tube amplifiers were out and transistors were in.
Other technological developments like the SLI, very large scale integrated circuits, began to be developed not by cable. If you took the three or four largest hardware suppliers in the industry, their contribution was taking advantage of status quo developments from other places. In the case of Jerrold, the largest, "Let everyone build one and make a mistake. Then we'll build one that works." They were a financial success. There has been relatively little technological R&D.
Ironically, the first coaxial cable that was used in the earlier systems and for which Times Wire was a pioneer in the field was army surplus. The damn thing was an inch and a quarter thick. But you could get it for four or five cents a foot in surplus, so why not. As soon as the surplus ran out you had to learn how to build cable that was going to work. So manufacturers stuck to it and came up with cable that would work a little better and was a little more efficient.
FROKE: Was that Times Fiber?
KAHN: Times Fiber was a company I put together. It was a consolidation of the old Times Wire company, which was going nowhere and whose profits were going down to hell. I had gotten hold of two young Ph.D.s out of Bell Labs who had developed fiber. My total engineering and certainly optics knowledge could be put on top of a nail. They had a little laboratory in South Orange, New Jersey, in the old Edison building. They were drawing one and two kilometers of this new magic fiber about as thick as your hair and that intrigued me. It was a challenge. I talked the Insilco company into spinning out of Insilco, Times Wire, and merging it with this new little fiber company, and renaming the company Times Fiber.
The plan was simple. If you were going to try to sell the stock of Times Wire, you would maybe get a multiple of five or six to one and nobody wanted to be in a commodity type business. On the other hand, if you changed the name to Times Fiber and became a high tech company, Wall Street perceived you as a multiplier of maybe 30 to 1. The customer base we were interested in was the cable industry which was being well serviced by Times Wire. If we could develop the fiber, we would phase out the wire, increase the fiber, use our marketing strength and let the profits, from the wire fund, such as they were, finance the development of the fiber. That deal was accepted by Insilco and we created a new company named Times Fiber.
FROKE: The principal purchaser of fiber from Times Fiber is really the Bell Systems.
KAHN: Times Fiber isn't making that much fiber. The principal source of money and revenue coming in is from coaxial cable which they are selling.
FROKE: Isn't Times Fiber the principal manufacturer of fiber right now?
KAHN: No. Not by a long shot. Corning is by far the largest manufacturer, and there are a couple of Japanese companies that are doing a good job. The irony is that we created this fiber company because we were operating under Bell Lab patents which circumvented the Corning patents and we couldn't get a Corning license in the United States. We found out, however, that once we took these bright young Ph.D.s who were drawing one and two kilometers of fiber and put them in a bigger place and said, "Now gear up to turn out 10,000 kilometers," we had a problem. It's a hell of a difference between a lab mentality and a production mentality. The truth of the matter is for many, many millions of dollars and virtually no results we were never able to mass produce a good piece of fiber that was competitive with the Corning technology at that time. The plan didn't exactly follow that way. Cable got an accelerated shot in the arm because of pay television and Times Fiber became very prosperous.
FROKE: So wire is still the principal product coming out of Times Fiber?
KAHN: Yes, sir. I am not now in any way connected with that company. Once we got into Times Fiber the same young Ph.D.s said, "Don't worry about lasers, RCA will have good lasers in another year at $60 apiece." I believed them because I didn't know any better. The fact of the matter is that was the furthest from the truth. Not that they were lying. They just didn't know. We found less than twelve people in the whole world who could grow the right kind of lasers.
You had two or three schools. You had the RCA school and you had the Bell Labs school. The Bell Labs school was a little further advanced. We found one in Russia who didn't go to either of those schools, but Russia was working on it and he wasn't going to be worth a damn and we weren't going to get him.
We found one or two in England and they weren't going to make any sense. We found three or four in Japan who had come out of Bell Labs but they weren't available. We finally found one who was one of the original guys, a Taiwanese who was born and raised in Taiwan during the Japanese occupation. He went to high school under a competitive system and got his original electrical engineering degree in Taiwan. Then under an American Science Foundation Scholarship, on which he scored very highly, he came to this country and got his master's and his Ph.D. in his area of expertise. This area was Gallium Arsonide, which is the magic word today in the same sense that silicone was 25 years ago.
FROKE: And the name of this person?
KAHN: Oh, Dr. Hwang. Dr. C.J. Hwang. He was not at Bell when I found him. He had written a paper at Bell, one of about forty that he had considered significant, and he submitted it to his boss, which was the procedure there, for approval. His boss said, "Great," and sent it back, but he had erased Hwang's name and put his name first and Hwang's name second on the paper. This was not an uncommon practice, I might add. That really ripped him off.
While he was at Bell, Hewlett‑Packard was recruiting. He called and said, "Are you interested?" They flew him out to Palo Alto, California, with his family and his furniture over a weekend so he wouldn't change his mind, and he went to work for Hewlett‑Packard. He was there for about four years and then he found there were other problems in this world. It's one thing to get your name changed but in a large corporation your relative advancement, technologically and every other way, is much more related to your boss's politics. He was dying because in the lab he had come up with some very viable lasers, but the politics within the company kept him from getting it up the line.
I caught him at a very low point in his mind and told him we would set up a deal. He would have technological freedom and we would work out a budget. He would be able to do what he wanted to. He didn't want to come east; he liked Palo Alto. I took him and his wife to dinner and she allowed that their seven years with Bell Labs were among the happiest in their lives and they had a lot of friends in that area. I said, "Tell you what. We'll do a very scientific selection of where we will put our plant: we'll put it right next door to Bell, so you can live in the same town." We then started General Optronics and we made Dr. Hwang the president, which proved to be an error. He should have been the chief scientist and left the business end to someone else. But we knew little about it and it seemed the appropriate thing. We went to South Plainfield and he lived right in the backyard of his old buddies. We outgrew that plant in about a year, a common failing of little companies. We had one built for us in a special industrial park and then we outgrew that. We had the second one and the third one built in a row, and that's where General Optronics resides today.
The competition is keen and our biggest competition is Japan. There aren't too many American companies that are competitive with us. Now, for the first time, we are actually selling in Japan. Now I have this big plant and now I have lasers and fiber. And I take a booth at the NCTA Convention and we start to approach some of our brethren in the cable business and the attitude is, "Go away, man. We are doing fine."
My argument then was almost identical to the type of arguments we had with satellites. "Don't put in your whole plant. Put in five or ten miles and get your hands wet and understand it because, believe me, this is where it's going." (We have always had to look for new technology.) New York is a pretty good union town, in case you didn't know. The electrical union is among the strongest. The head of it was the head of the Central Labor Council. It was costing us $30 a foot to dig underground. It came to $150,000 a mile to put a plant in there. I had a close associate and partner at the time who was an engineer and he was telling me about a new microwave thing that would go 100 miles. I said, "For God's sake, I don't want to go 100 miles. Get me something that will go across the street or get rid of this union deal and you've got it made." That was Hub Schlafly. Hub was a Notre Dame alumnus. He went to a class reunion and ran into a buddy who was with Hughes Aircraft. He told him about the hard time we were giving him.
We had gone to almost all of the then known microwave companies and they were all willing to try the experiment. They needed a year or more and the range of price was from a couple of hundred thousand to a couple of million dollars. The year wouldn't do me any good, but the money would not have stopped us at that point.
At any rate, his buddy said, "Hey, we just finished a government experiment and I'll bet you we can give you a prototype in ten weeks." They did. This was AML, Amplitude Modulated Links which is now, perhaps, one of the most fundamental backbones of cable throughout the industry.
FROKE: We are using it in the educational television network in Pennsylvania, PENNARAMA. Hughes put it in in the western part of the state.
KAHN: One other big reason that I got screwing around with fiber more seriously, I guess you can say, was largely an ego drive. I had been responsible for starting satellites. That was the long haul. I'd been responsible for AML. That was the medium haul. Now with fiber, dammit, that was taking it from womb to tomb, right into the home, and I wanted the satisfaction of doing that.
FROKE: I would like to go back to that theme. You mentioned the home.
FROKE: In some of your presentations to the NCTA and others, you said, "Whoever gets the coaxial into the home would then be controlling the communications industry."
KAHN: That was at that point, in relation to the telephone company which said, "You're nuts. All you need is a pair of Bell wires."
FROKE: That led to what we would regard today as some of the extravagant statements such as in The Wired Nation, the book.
KAHN: The Wired Nation, was that Ralph Lee Smith's book?
KAHN: Well, I spent many, many hours with Lee and he was and still is a good theorist and writer. It's only one thing to have a good idea, a really good idea. I think President Lincoln put it best when he said, "The difference between an idea and a success is that with an idea you start with 99 percent inspiration and one percent perspiration and if you reverse the formula it works." Having the ability to do these things is not in itself anything like the fact that you are going to make it happen. The resistance is incredible. You don't screw up the status quo.
FROKE: Which comes back to the point you make when you say, "The group that gets into the home with fiber...
KAHN: ... will control it for the next...Well, let's give you a simple way...
FROKE: You are now saying that the cable television owners do not have the perspiration.
KAHN: It's only going to be a short time in terms of history, like five years.
FROKE: Who is going to do it then?
KAHN: Largely it will be the "Little Bells," the independent telephone companies, and a new group that is evolving as fiber optic interconnect companies. They are following, almost directly, the way Bell put its television thing across the nation. A piece is going in here from Washington to Boston, a piece is going in from Chicago to here. They're not connected yet. A piece is going in from Denver to another spot. On the west coast they're going from San Francisco to Los Angeles. As they get closer and closer together, they are going to interconnect. Then you will have a coast‑to‑coast fiber network. Now let me over dramatize to make the point. Right now satellites are fantastic, right? They are doing a hell of a job. I can go over a hundred miles right now on a railroad right‑of‑way without a repeater. If I take 30 repeaters, I'm across the United States. If I do that with fiber, with say 144 fibers...
FROKE: the tremendous capacity which has...
KAHN: I'll show it to you physically. The comparison is unbelievable. The point will be obvious.
FROKE: Let me divert you for just a moment and state a proposition. Why could this not happen with a cable system such as TCI?
KAHN: Well, it could happen with TCI.
FROKE: Piecing it together...
KAHN: I don't think you are going to get Bob Magness convinced. I don't think Mr. Malone can afford the Wall Street shock of having to admit to the cost and the time that it's going to take to do it.
FROKE: So the financial resources that are necessary to do it...
KAHN: It's tremendous. You know, cable is a capital‑intensive business and right now you are talking about selling customers at approximately $2,000 a customer. That's the wrong way to figure but it's what the layman understands. You're paying this price because you are projecting that the system is going to have revenues twelve years from now as good and growing and you are going to increase your penetrations from fifty percent to seventy percent to eighty percent. All true, all possible. If you're in a vacuum. We're not in a vacuum. In fact, history strongly supports the fact that technology, particularly in this area and the cable area itself, has every seven years or less made a total change. In fact, the IRS no longer lets us get away with these long write-offs. Telephone companies were writing off cable for ten and twenty years but today you can't write it off by its useful life. You have to write it off by how much of it you are going to get revenue from. If something better comes along then you've got another thing.
FROKE: Using some hindsight then, the breakup of the AT&T system strategically put them in the position to capitalize on what was happening as a result of technology.
KAHN: Absolutely. They are doing it. They are doing it with a vengeance.
HUNGERFORD:: Can you comment on Sprint also?
KAHN: Sprint is not a hell of a lot different. They're making a little more noise and they're not as well organized, but the idea that they have the only fiber network across the country, at this time, is true. They have a lot of financial problems and so has MCI. Because of the rate deregulation, the great advantage they had is being eroded. They are all going back to the FCC and saying, "Raise the rates on long distance because we can't live with it." MCI is supporting it.
FROKE: Let me speculate on two different things.
KAHN: I just want to make one point.
FROKE: Okay. Mr. Kahn is reaching into his desk in his office...
KAHN: If you look through this you'll see that there are twelve little pieces of fiber in there. Any one of those twelve is capable of about 6,000...
FROKE: The width of this is about one‑eighth of an inch?
KAHN: Right. Now here are those twelve put together in another group. Twelve of those twelve put in here so I now have one‑hundred and forty‑four in here. This is made by AT&T. This is armored to go underground. Look at the thickness of it.
FROKE: The thin layers of insulation...
KAHN: Layers of metal for protection. If we had to we could put Kevlar on here and make it totally resistant to lightning or anything else. Kevlar is a DuPont material that has tremendous strength capabilities and it's very light and it's non‑metallic. Now the point I'm trying to make: if I were to replace what you see here with coaxial cable‑‑coaxial, what everybody in the world is thinking about‑‑it would have to be about a foot around.
FROKE: Instead we have something that is less than a half inch in diameter.
KAHN: About three‑eighths. Now to get back to the point to put this in context. If I work from the satellite and something goes wrong, I have to shoot a guy up in space and he has to go out and look around and find it. On the other hand, if I take this and run it across the 3,000 miles of the country, I am providing maybe 100 to 200 times the capacity of that satellite. It has cost me substantially less to put in the 3,000 miles of fiber and I don't have to send up another guy off a satellite, floating around up there to fix it. All I do right now with fiber is take a common device in fiber, a reflectometer, an optical reflectometer. We just shoot a signal down that field of light and if there's a break or something it stops within...you can get it accurate to within an inch to 1,000 miles. That's pretty good accuracy. I can identify, immediately, where the break is.
Once I identify the break I don't have to go with a Geiger counter along the ground like they now do to locate where the damn coaxial is when it's buried. I pull the thing up, I snip it. I now use an automatic connector that will connect twelve of these at a time and splice them. The splice will be so good you won't even see the loss. It's almost undetectable. Two years ago a connector for this with a reasonably low loss per connector cost as much as $300‑$400 dollars. We now can buy connectors that are infinitely better for less than five dollars. There's a very good chance within the next year that it will be reduced to within the one to two dollar range.
Incidentally, some of these are Bell patents which they must license by law. Ironically, I'm a licensee of Bell for one or two of the patents that Hwang developed when he was still at Bell. They have offered many times to have a free exchange: You give us what you have; we'll give you what we have and pay you your prices. Technologically, that's another big, big, big factor. You don't need to have a trillion‑dollar operation with a great amount of sophisticated material to develop some of these things. As you get the software, you need very little except maybe a good brain sitting in a garage.
FROKE: You're suggesting one financial strategy which, if the cable industry wished to follow, would be tied to reducing the operational maintenance costs over a period of time in exchange for a newer technology.
KAHN: I'm saying that as of today, right now, the day you've recorded, it is economically viable and possibly cheaper depending on the density to go fiber instead of coaxial. The cable industry doesn't know it or doesn't want to know it. They're just now beginning to get a little bit scared.
FROKE: To the best of your knowledge are there any cable systems at all that are laying fiber?
KAHN: Yes, there are a few and they are very limited at the moment. This is what I refer to as the Sheep Theory and it is going to take place. You have one major operator, I think it's ATC, that is redistributing its signal in Kansas City. It's overwiring itself so to speak. The traditional system is coaxial. In some cases they are twenty or more amplifiers from the headend. If they have a problem in one area, it covers the whole system.
Now what they are doing is setting up a lot of little hubs. No one hub has more than ten amp distribution. They are interconnecting these hubs with fiber. It has some great advantages. The signal is a hell of a lot better. If there is an outage, it doesn't knock your whole damn system out. You just have one little block.
You must remember that fiber is photopic energy as opposed to electronic energy. Therefore, on that same little hair I can go at 800 angstroms, which is a measurement of light, in one direction, and then 800 angstroms in the opposite direction on that same hair. Neither will create interference with the other. ISDN, where you can use many, many other technologies, are inherently simple in fiber but impossible in cable.
FROKE: ISDN is the acronym for?
KAHN: Integrated Services Digital Network. It's being able to use everything. There are so many of these deals.
FROKE: So you are saying, right now, it is possible for a cable operator to rewire using fiber.
KAHN: It will be possible.
FROKE: More economical than to...
KAHN: At least "as" economical. Let's make the assumption that it is not quite as economical. Now let's go and talk about five years of maintenance. I had a system in Elmira, New York, where I couldn't fire...
FROKE: One of your early ones?
KAHN: Yes. I couldn't fire the tech. His name was "Shorty." He is still alive somewhere. He's a chief tech somewhere. My recollection is that a few years ago he was still alive; I ran into him at a convention. Why couldn't we fire him? Shorty knew how to get in that bucket truck in the middle of the winter with a baseball bat and go around to the amplifiers, and he knew which ones you had to hit how hard to make the damn things work. He had an assurance of life. That's what we did. Now visualize that amplifier was not much bigger than the current one.
FROKE: We have some of those in our Museum.
KAHN: Right. Now, I'm going to show you...
FROKE: We don't have any baseball bats.
KAHN: Well, all right. Here is an analog and a digital amplifier that can go the distance that I was telling you about.
FROKE: About 100 miles?
KAHN: It would be capable, yes. One hundred miles. Here is the piece of fiber that comes out of it and actually this would be spliced into something more sturdy. This goes into this module. I'll show you the module. Where the laser is. It doesn't touch the laser, it's just setting against it. I can put this in a house, I can put this anywhere. If there is any trouble, I don't beat it on the head. I just disconnect it, put another one in, and take it back to the shop.
FROKE: Mr. Kahn is showing us a device that is about the size of a typical household outlet.
KAHN: Or less.
FROKE: Or less.
KAHN: Actually, we have some that are about the size of a penny match box. This is now used in not ten and not twenty but in the tens of thousands of these by largely telecommunications companies in the United States. They are the same things except one is analog and one is digital. This is a little bigger one. I think it's digital.
To get back to the engineering aspect, coax is approximately 550 megahertz. That's max. Our minimum on this is 1.2 gigahertz of bandwidth. Therefore, if I put this in today as a cable system, I'm using about ten percent or twelve percent of its capacity. I have available eighty percent or more that can take care of all of the telephones, all the computers and all the devices not yet invented. I went to a meeting many years ago at the NAB (National Association of Broadcasters). General Sarnoff was the chairman of the board and quite a visionary for RCA and he made the statement that, "Ninety percent of the profit of RCA was coming from products that didn't exist ten years ago." That was true. What I'm trying to tell you is, if you go state‑of‑the‑art coax, you're using up ninety percent or more of your current capacity. You're dead. You go fiber and you have enough capacity left to at least get into the 21st century. I have never felt that entertainment such as HBO and the other was the thing that Wall Street caught on to. One of the reasons they say cable is great is because you have this big income. In my judgment this represents five percent of the potential that will come out of business that doesn't now exist or that exists but is not now being taken advantage of. Not long ago, the cable companies were in the driver's seat. I've been Paul Revere on that horse, but with my weight I would have worn out a lot of horses, telling them, "Get in there and stake this out."
We laid out a test system for Henry Kaiser in Hawaii about 20 years ago. Here is one of the boxes for our first Pay TV deal that went into your home. This was designed for Mr. Kaiser and we installed the devices in Hawaii Kai and Honolulu as a test. It had buttons, and inside was a little speaker which invaded people's privacy. We used to call it a barker. If you didn't want the kids or anybody to order something, you just took the key out and they couldn't use it.
End of Tape 1, Side A
KAHN: Mr. Kaiser's favorite color was pink. We had to go to a plastic company to have special boxes made pink. His bulldozers, his barges, his trucks, and everything he used was pink. He was a hell of a guy.
He saw it and was willing to give it a try. We can readily document in speeches the things you're seeing here. We said, "This is where you are going to get your revenue. You are going to own it."
Now laws have been enacted and it is "cast in concrete" that a cable company can't be a telephone company. Who says it has to be the way they want to do it. The law doesn't. It will take a little fighting. When you get mentally fat and see other easier sources of revenue, you don't really sit down to develop something that will only begin to pay off in five or more years. One reason the teleprompter was as successful as it was, was because we were generally five to seven years ahead of the competition. It was the teleprompter and then came the cable industry. We tried out a lot of stuff, we missed on a lot of it, but we also hit on a lot of it too. AML made it possible to go into places that you couldn't think of going into before. I would venture to say if you would ask ten people off the street who is responsible for the cable industry's having satellites, my name would not show. In fact, ninety percent of the kids I see in this industry today are second generation removed. That's a matter of record at the FCC.
I think one of my greatest contributions to this industry was that we fought with the FCC so that the earth station on the ground could be owned by the cable operator and not the telephone company. We won and we didn't get that easily. I spent over $1 million of TelePrompTer's money and a great deal of time and a hell of a lot of energy. If we owned the earth station, we could do what we wanted to. If the telephone company owned it, as they wanted to, we would still be paying, even to the "baby Bells." I think that is one of the most significant financial contributions and I don't think that it is generally understood or a lot of people don't want to understand.
FROKE: Two of the devices that you showed us, the amplifier for manufacture by General Optronics Corporation, which is one of your companies, and connectors, are in production at the present time. Are they available and being sold?
KAHN: Oh, yes, yes. The irony of it is that our principal customers are telephone companies. That sure as hell didn't sit too great with me. It has taken years to accept the reality that...
FROKE: I'm going to go back to my two‑part question because you have set the stage for it. One is: looking at it from an ownership point of view or from an economic point of view or investment point of view, cable television generically could well continue to exist, but the ownership might shift then ...
KAHN: Your customer at home doesn't give one tinker's damn about how he is getting the signal. He just wants it. You've got to understand that when the technology shifts to fiber, several things will affect the customer. Number one: he gets the best damn picture he ever saw. Number two: a layman will see the improvement.
FROKE: Not only in terms of the distribution‑‑the moving of pictures from one location to another, and ....
KAHN: Hold it. Forget that. The limitation is his set. Now even that is being upgraded.
FROKE: With high definition television.
KAHN: Not even. Before high definition you had over 1,000 lines. I have a projection set at home that is now delivering about 520 vertical lines. Within two or three years you're going to have digital sets. Complete.
FROKE: Your consumers are going to be asking for better quality.
KAHN: They may or they may not. The point I want make is that it will be so obvious and the guy that has got it is going to scream about it. The guy in the next town may go to his neighbor's house and say, "Why is the picture so much better in your house?" It will be better or the equivalent of a true good movie.
FROKE: So your proposition is still, basically, the race is on. If present ownership of the cable industry wants to stay in the race, they'll have to get into fiber in a big way.
KAHN: I think it's almost too late for them to get into it in a big way. They weren't quick enough. I think the telephone companies and others have a big lead. I'm not saying cable owners can't get into it but I can't conceive of them, at this point in time, diverting and arranging enough capital. What I do see happening is that once they see the impact of some of these early fiber things, then you're going to have what I told you was my "sheep theory." They are going to run, man. They are going to try to salvage, exactly as the theaters did, and it's predictable that many won't make it.
FROKE: That leads into the second question.
KAHN: Excuse me, I didn't complete a major point in the first one. The advantages of having fiber are not limited to a better picture. That was one advantage. The second one is a greater amount of possible channels, immediately. I can give you 100 channels and you say, "What the hell am I going to do with 100 channels. I can't fill 30." You will be able to use them for different applications and different things and if you have the two‑way capability, you're creating a whole new area.
FROKE: In the same sense that you need several books in accessing them...
KAHN: The whole theory that has made cable a viable force has been choice. Interestingly enough, once you put cable into a home, for the first 90 to 120 days the customers play all over the lot. From studies we made, after it's in there, they settle down to four or five programs and that's what they watch. We have a very imperfect way of telling them what's on. The guides are hard to get and hard to read. What you'll end up having associated with this is a microprocessor which will give you a quick readout of what you've got or a video‑text thing built right into your set. Computer technology will become inherent in the television set. It's going to merge. Not necessarily into your living room but the total information channel in your home. It will do many, many more things.
FROKE: Can it lead us to shopping, banking, and education?
KAHN: Yes, sure, and you can make copies, which is a very important factor. Let's go a step further. First there is a better picture, very important; second, more choices and that's good; the third, and that's the killer, it will be cheaper. If you can go into a town and install a system and make it work, and if you can sell this service for $5 a month cheaper than now, that should be number one because that will make customers change. Economics. You are now a great big MSO, like TCI, who's buying every franchise in the book. How apt are you going to be to buy a franchise where you know that somebody is starting to overwire with fiber right now?
FROKE: One would not buy.
KAHN: I'm going to give you a practical opportunity. Turn that damn thing off.
(During the time the tape machine was off, Mr. Kahn described a new business venture that he is launching in 1987. When the taping resumed, Mr. Kahn and Mr. Froke were discussing the feasibility of using fiber to wire the interior of buildings.)
KAHN: If you take a piece of mainline supertrunk coax and you bend it too far, you've ruined it. You can take this damn thing and tie it in a pretzel knot and it won't affect it. Literally. You may not be able to do this with mainline supertrunk but you can bend it. It has much more flexibility than this. This isn't the only way it comes. Cable comes wrapped like this. This is one cable and they'll be able to put one, two and three in. Let me give you another example. This building that you are in right now has more telephones in it than 80% of the telephone companies in the United States. Just in this one building. It also generates more revenue because these are business phones and they use a great deal more long distance. Why then can't this building be a telephone company of it's own? The rooms that they have built to hold all the wires are so overloaded now that it's hard to snake another wire in for another phone. You can take a tenth of that real estate and rent it.
Now I'll go a step further. I have five lines on my phone. I'm sitting here talking to you and I haven't heard them ring, but I'm paying for five lines. If I had these centrally tied together through a switch, an optical switch, in this building, I could cut down my lines by 50% to 60% and have more efficiency.
FROKE: But yet the current lore of fiber is that fiber is good for the long haul, but when you get inside a building you have to go through cable.
KAHN: That's not true.
FROKE: That's what the engineer...
KAHN: I don't know where your lore is coming from. It is neither L‑O‑R‑E or L‑A‑W. It ain't so.
FROKE: So it's economically viable and technically viable to wire inside?
KAHN: What you ought to do is get on an airplane and fly to Japan.
FROKE: All right. I'm saying all right, but I probably won't do it.
KAHN: I'm saying it might be cheaper and well worth your effort so you get a perspective. You could go through the Toshiba building and there are two or three others that are completely fiber. We have a laser printer that we manufacture. It's a holographic scanning laser. We can take a LAN, you know what that is?
FROKE: A local area network.
KAHN: Right. Local area network. I can hook together sixteen machines, GE has done this. Right now you can have one little Cannon laser printer on each desk, which will turn out now with desktop publishing a pretty good page, not quite letter quality. They'll tell you it prints eight or ten pages per minute, but they don't tell you that it's only if you have two lines of copy. If you have a full letter and some graphics, it might take two minutes a page to scan it. In an experiment at GE with sixteen stations connected to it, our 28‑page‑ a‑minute laser printer delivered 825 pages per day, per station of a superior quality. That little Cannon laser printer can be bought today for $2,000 or $3,000. Our machine with all the whistles and bows will cost anywhere between $12 to $15, maybe $20 thousand, depending on how sophisticated you want to get. It's not only cheaper but infinitely better and more efficient. This is fiber optic interconnect.
I'll see if I can get Pete to show you the communications room on this floor. (Mr. Kahn is referring to the floor of the building he occupies in New York.) In every new building it's provided. I only need a tenth of that damn room to replace everything that's in it. One of the largest real estate owners in New York is a Canadian company called Olympia and York. They have had a study made to fiber all of their buildings and to put satellite communications on the roofs to handle their long‑distance communications to a central point. You know what? It's beginning to work. This is not ten centuries away, it's starting now.
Inertia will help lore prevail for a while. Implementation and demonstration will create the dynamics that will create the change.
I'm not about to tell you that cable is going out of business, or that tomorrow it's going to be losing money. It is going to be a very viable business. On the other hand, that viability is more than threatened. In my judgment, the people at my age level and even the next generation down are not going to stick their necks out to the extent that they have to. On the other hand, it is the telephone company's business to provide service and they have the incentive. The law that Judge Green is overseeing will be eroded. It is going to come back with new suits. Take HBO which is owned by Time Inc., ATC which is owned by Time Inc., that's a direct violation of the consent decree that the major motion picture companies went into. I can tell you that the Department of Justice is actively reviewing this now. TCI with its five million customer base, or six depending on who you talk to in what week, is in a position where it almost effectively controls what HBO will do. If it pulls out its customers, its knocked the hell out of the HBO base.
FROKE: TCI really made the Disney Channel?
KAHN: ...TCI just bought a control position in Ted Turner's deal. Theoretically, if he can't make it, it could be controlled by TCI. All I'm saying is, for the first time we as an industry have gotten so big. The regulation we're worrying about and the copyright is important, but nobody that I'm aware of is looking at the overall structure or is looking back historically. What happened to the movie companies when they got that way? What happened to the broadcasting companies when they got that way? Do you want to see what is going to happen here?
FROKE: That leads into my second question again, although I'm going to make an observation here. If you carry the TCI/Time Inc./Ted Turner thing one step further you also then have your corporate linkages with, say, Knight‑Ridder. TCI and Knight‑Ridder have some crossover.
KAHN: Knight‑Ridder conducted a very interesting, expensive, and unsuccessful experiment in Miami on Video Text. Video Text is working pretty good in England.
FROKE: The consumer was not yet ready to...
KAHN: Because the way Knight‑Ridder presented it. They said, "We want $600 dollars from you to put it in." In other words, it's there but there is another way to do it.
FROKE: With fiber.
KAHN: If you did it with fiber, you would only need a fraction of that money. Furthermore, in less than five years you are going to see a television set with a built‑in machine on the bottom which will be like facsimile but it will be more like a laser printer. Anything you've got on that screen, you press a button and you'll get a hard copy.
FROKE: I'm going to ask that second question now. You've been in the radio‑broadcasting business, television‑broadcasting, cable business, on the manufacturing side as well as the programming side. Why would the cable business not adjust and modify within the culture in the same way that radio broadcasting has? People predicted that it was going to die. Radio found a new role. Radio had worried the newspapers initially. Newspapers were battling radio because they thought radio would kill off the newspapers. But newspapers adjusted.
KAHN: I'll try to answer them all but let's do one at a time. Radio was a dominant force. When I got out of college, one of my first jobs was on the Kate Smith Radio Hour. Number one program in the United States. I was director on that and I worked with Young and Rubicon. When television came on the scene, radio ignored it. It then embraced it. Radio is still here but it's far from dominant. There are many more radio stations than there ever were, but it has become a totally different medium.
FROKE: With the programming that flows through, the technology is basically the same.
KAHN: Radio is here. I'm not telling you that cable will not be here. You're going to have it in a different form. What I'm trying to get at is that television came along and the movies said television was going to knock them out of business. Not only did it not knock them out of business, but it created a much broader‑based motion picture business. It did put out of business as a dominant force those major studios that were in control. The business per se, the software availability is going to be greater, but who is going to control it? Who is going to own it? What is going to happen to the ones that did?
There is no logical reason for HBO to be in business today and take sixty percent or seventy percent profit of a picture for doing nothing but distributing it. They produce nothing. One of the biggest strategic fights within HBO was a few years ago when Frank Biondi was the Chairman of the Board of HBO. He said, "We have to get into independent production." The bookkeeper said, "That's going to cost us money." They had a fight and he left and he's now heading up Coca Cola's business which ironically is in a partnership with HBO and the other, and he is producing films and making money like it's going out of style. HBO now sits in a dilemma. As long as there was continuing to be new builds of new homes, they could show a bottom line, including churn, of an increase of so many tens of hundreds of thousands of customers. That's running out. They're going to have to pay the piper very shortly, within the next two years in my judgment, unless there is a very dramatic change. And there might be. There might be a corporate change. They're not going to have the profit margins which are being eroded.
In the last few reports, they have told how many customers they have added. They haven't said how much revenue they have added. The fact of the matter is, with the deals they've been making, they have been lowering their prices to such a degree that even though they are adding many more customers, their gross revenue is nothing like it was. Without the gross, you haven't got the net. When you get to the point where that goes below the line, they will have to do something.
FROKE: If I understand what you're saying, the cable television industry has to become intimately involved with the programming side. Cable television, historically, has avoided getting involved in programming until relatively recently.
KAHN: Historically, they had twelve‑channel systems, too. The big thing was let's get Milton Berle into Pennsylvania. How are you going to keep them down on the farm once they've seen Paris? They get to the point where they want more because they've seen more.
FROKE: A little bit of local origination.
KAHN: Absolutely. I have fostered that and still believe that's one of the great functions of cable that was given up but now being resumed. That would have been economically viable and made cable a much more viable force in the community. We started public access. I did, personally.
FROKE: In New York City?
KAHN: Yes, sir. I did it because the FCC said to me, "If you don't do something different, we are going to go to the Department of Justice and tell them not to allow you to merge." One solution was that we ought to be local. Let's forget cable television and get back to what we called Community Antenna Television. Let's become the local soap box. We have the technical capability in a major city, or a little one, to block it off in ten‑block areas or twenty‑block areas where issues are different. In the system that I sold to The New York Times in South Jersey, the local news against Cronkite was outdrawing him with a young lady talking about the fender bumpers and the little local things that were happening in that town. The little league played baseball and we replayed it at night, 'cause pop was there to see his kid and say, "Hey, there goes my son."
When the local four football teams played it had a tremendous rating because it was local and the residents could identify with it. We even convinced local merchants to go on the air and do their own advertising. When political time came around, we gave a tremendous amount of time and invited candidates, who at first ignored and then begged for the ability, to get on.
FROKE: Based on fiber, using the technology then as a forecast of the future, you said two different things. One is the race is on and it may be too late for the cable industry as presently constituted in that race. On the other hand, you also say, out in Meadville, Pennsylvania, for instance, George and Yolanda Barco give Jim Duratz a couple of square block areas to experiment with fiber. So you're predicting that there might be a community role.
KAHN: Absolutely. It's not there might be; there has to be. Incidentally, they're beginning to find that out. I'm the guy who said, "Let's do advertising locally." I'm the guy who created a weather machine so that we can give you minute‑to‑minute weather and on the bottom we had a permanent box and we sold blocks of time. Twenty years ago we sold blocks of time to Coke and to other advertisers. I'm the guy who started the Cable Advertising Bureau so that we wouldn't be dependent on Nielsen and the others. So we went out and got our own ratings to prove that the cable customers were much more valuable customers, if you could identify them. With cable set up properly, I could do twenty different commercials in the same town. An agency would have a great benefit of testing their advertising with their live shows, with their hot shows on the air. It would be a simple thing to split it up.
FROKE: So the cable television industry then, in addition to looking at the technology for distribution, has to look at ways in which it can gain access to or control national sources of programming, regional sources of programming and also local programming. Then you have a mix of programming as well as technology.
KAHN: You said control; maybe control.
FROKE: Let's go back to your personal history. The American Film Theater.
KAHN: I still own the American Film Theater.
FROKE: Which gave you the break into...
KAHN: That would be a mistake. I was just plain bored. I know this sounds crazy. I had gotten in trouble and had just come out of being Uncle Sam's guest for something that I thought was one of the most unfair things that could happen to an individual, but it did. What could I do?
FROKE: I was jumping to the conclusion that you were moving into the acquisition of product, so to speak.
KAHN: I have considered it and I have had quite a few offers from my associates to go forward with that. It's not impossible sometime within the next few years, depending on what happens, that I might get involved in some form of production. There are just so many things that you can do. I have a beautiful boat that I just don't get on as often as I'd like to. It's very difficult to be a "little bit pregnant," either you is or you ain't. When I get involved in something, I have poor administrative ability; I get immersed in it. It's about time I got a little less immersed. Realistically, I'll be seventy in another couple of months and I still have damn near the same energy and pretty much the same interests. There are just so many years that you can argue against reality. My limitation of not getting involved would relate to the available time.
FROKE: Obviously, there has been a tremendous amount of fun in your career. You seem to enjoy what you are doing.
KAHN: I have tried retiring four times and each time it's lasted for almost a month. I got out on the boat for two weeks and the first ten days were fantastic. Before the end of the second week, I was climbing the walls. I came to the conclusion that you can't devote your efforts to twelve‑hour or fourteen‑hour days, six or seven days a week for many years and then press a button and say, "I retire." I honestly don't believe that in the past forty years I have worked for money, per se. I have been fortunate enough to do the things that I've enjoyed doing and that I've wanted to do. I've done pretty well by some standards, materially, but I never went into something saying, "We're going to make X amount of dollars." I went in because, to me, it was a challenge which is one way to get me going. That's how they got me into fiber. They said I couldn't do it and it wouldn't work and all of a sudden I said, "Dammit, it's got to work. It makes good sense. Let's try it." I did it. We didn't get into cable because we knew a damn thing about it; I got into cable to test out Pay TV. This is the truth. I went to the New York Telephone Company...
FROKE: ...because you were working with the boxing...
KAHN: Boxing was a very small part of it. I didn't have a chance to complete things that we did at 20th Century Fox. I went to New York Tel and I wanted to test Pay TV in the home. They agreed to wire 1,000 homes out in Long Island for me. For a quarter of a million dollars. They would let us pay it off over a ten‑year period. Great! We were right up to the point of signing the contract when I very naively said to the guy, "I assume at the end of the tenth year we'll give you a buck and it's ours." He said, "No, no, you don't understand the common carrier. You will keep paying." That didn't make good sense to me at all. I went to Washington to meet with a fraternity brother who was much older, a fellow by the name of Marty Kodell, who started the TV Digest. I told him about what happened. He said, "Hey, a guy came into my office just this week and told me he is going to start becoming a broker in a new business. If you come back to the office, I'll give you his card." He gave me his card and I called that guy up. That guy was named Bill Daniels. I think I was his first customer.
FROKE: You sent Marty Rifkin out to look...
KAHN: I sent Marty and Wilt Handler, who was my financial guy. They woke me up at two in the morning. It was Wilt on the phone, he said, "Make the deal. If it's a bad deal, it's a good deal. Do you know how much cash flow this is throwing off?" Would you believe, I didn't know what the hell he was talking about. I learned.
FROKE: I'm going to shift things just a little bit. We were talking about the future of the cable industry and the remarkable career that you had in all media, the unique perspective that you have. We've been capitalizing on those as they relate to the communications field. Let's shift now over to my area, which is education.
KAHN: All right. That's a very big area.
FROKE: How does an educational institution create in the mind set of faculty, administrators, and students...
KAHN: Here you've got a problem. Students are easy, faculty are difficult.
FROKE: But the perspectives that you have, where you have that remarkable ability to shift and change and shift and change, not only with social trends but also with the technologies.
KAHN: Let me give you my experience in education. There was an article in The Saturday Evening Post many years ago on me and on the teleprompter. A colonel in Huntsville, Alabama, in the guided missile or rocket school, read that article. He came up to New York on a routine matter and he called me. His name was Colonel Newhall and he was the CO of the school detachment in Huntsville. At that point in time the Sputnik had gone up and as a nation we were in a panic. The commanding general of that area was General John Bruce Maderis. Ultimately, he became one of my closest friends and still is. He is an Episcopalian minister now, which is an amazing story.
Back to the point I want to make on education. Colonel Newhall read about the prompter and they were having a tremendous problem with draftees. It took about fourteen months to train a draftee. The federal law said that you couldn't ship a guy out of the country if he didn't have at least one year of service left. Newhall said, "How can we accelerate the training process?" "Do you think the teleprompter could work?" That intrigued the hell out of me. I flew down to Huntsville, I went to the University of Alabama, by the way, although Huntsville was quite a bit away. The editor of the Huntsville paper was a gal who I knew very well when I was in college, Martha Witt‑Smith. She has since died. I talked it over with her about what was going on down there. I was absolutely amazed. Here, in what used to be a quiet little cotton‑trading town, as I refer to it, was an intellectual oasis in a cotton patch. You had these kids training and you couldn't do anything with them.
I came up with what I thought was a pretty good idea. We taped and listened to the lectures and found that the better the instructor knew the material, the worse he was at lecturing. He left out a hell of a lot of things that he just took for granted. We started to do side‑by‑side tests. I went up to Harvard to see, who was the guy on programmed education?
FROKE: The learning machine?
KAHN: Right, right. I can't think of his name now. We had a lot of discussions. I came up with the idea that we would speak to the best instructor there, with a stenographer, and take down everything that he had to say. We'd ask questions and rework the script. This was a sergeant but a good one. Then we set up two teleprompters in the classroom and wired another set into a central room. We had two or three other officers and/or enlisted men who were qualified to answer questions and there were microphones in the room. The guy read the text and if there were questions, the questions went to the room. The students didn't see who answered the questions, but they got a good answer.
Then we tried another experiment. We went through the ranks and picked from the sergeant group, guys who could speak and looked acceptable. A lot of professors are not exactly in that category. We taught them to read the teleprompter and they actually read the technical material in a good presentation. Then as the questions came in, they went back to the room to the guys who knew the answers. We then divided the school for thirteen weeks into two categories. One went on the regular methods of teaching and the other went our way. Take a guess as to what was the grade score of these guys that took the test from group A which was the teleprompter group, and group B which was the regular one.
FROKE: The teleprompter group probably scored higher.
KAHN: Forty‑one percent higher. Colonel Newhall ran up to General Maderis and said, "Look!" We then set up our second largest office in a motel in Huntsville. There were no buildings there; all the businesses that were doing business were in motels. That became our second largest office. We started sending prompters down and installing them and teaching the guys how to use them. Within about four months we had gotten under the twelve months. This was considered by Maderis to be a very important step.
Now we had another problem. We had to sell the guided missile program to Congress. You can't take a big God damn missile and fly it up to Congress and talk to them. Just about that time the Garroway show, which was the pre‑cursor of the "Today" show, was having an economic scare and they laid off about forty guys. I made a deal with General Maderis: I would hire every one of these guys. So we became a hot body shop. These were qualified, good technicians. They knew how to run a camera and they knew how to run sound. It was not exactly easy to sell them to go to Huntsville, taking a guy out of a New York environment and all. We did get a group together, a good one, and flew them down there.
With the open budget we bought cameras and everything. We must have spent about two and a half million dollars to equip the facility. Once we had it equipped, we started to make our shows which were reports from General Maderis to his staff or to the brass at the Pentagon. Finally, they said, "Hey wait a minute, we're going to have a thing at the Press Club in Washington and we're going to invite all of the press. We want to see what this program is all about." We did the first satellite transmission of an hour show from Huntsville to Washington. That budget request went through there like a dose of salts. It proved that you could do this for a variety of reasons, and for the educators it was terrific. At that time I said, "We have a hell of a thing here for education." Then we started to approach educators. We found out that "be not the first the new to try, nor the last to cast the old aside." Also, they were pretty damn good politicians by and large. We finally found one of them by the name of Dr. John Guy Folkes, who was Dean of the School of Education at the University of Wisconsin.
End of Tape 1, Side B
KAHN: I put him on our board of directors. When I gave a speech and met with educators, they were sometimes polite, sometimes not, "You don't understand education." But if I wrote the speech and gave it to Dr. Folkes to deliver it to the educators, "Brilliant!" Furthermore, at that time they were all getting a lot of subsidies from the Ford Foundation. John Folkes had some friends at the Ford Foundation. So we laid out a typical educational package from Dr. Folkes to the Ford Foundation and they "bought" it, before you know it the University of Miami had one of our systems in and Wisconsin had one in. We went through a lot of them. I can get you the list but I don't think it's important.
Out of that and from our experience in Huntsville with what the military calls "war rooms," we found, for example, from our studies in education if you take a group of kids or adults in a morning class and turn the lights out and put on a projector, man, you're losing fifty percent of that audience right away. That led us to develop a rear screen projection capability, which we took from my theatrical background. We brought in some optics guys and we designed the Telepro 8000 which was a rear screen projector. Now you're not going to sleep in this class!
FROKE: We had one of those on demonstration at Penn State.
KAHN: I wouldn't doubt it. And it works!
FROKE: Yes, it works very well.
KAHN: Then we had to get a bigger and bigger picture but we couldn't do that with the available light sources from a conventional television tube. We then went to the Eidafor System, which I had brought to the United States when I was with 20th Century Fox. We had the U.S. rights to it for theaters. I couldn't convince my boss to let us put it in the theaters in black and white. "No, color!" I said, "If we put it in now, we'll pay for the God damn thing in a couple of years and by that time you'll have color and I'm sure we'll have a way." We sent Hub Schlafly over to Switzerland and we bought quite a few rights from Ciba‑Geigy. We couldn't manufacture the damn things but he had been with GE. We went to GE and made a deal to manufacture these Eidafors. Now with an Eidafor, I could use a carbon arc. With a carbon arc, man, I could blow up a picture a whole city block. In fact, for a start I eventually did put a master block screen on the side of the Roxy Theater and we put a picture on it. It was almost a block wide television of what was going on in the Roxy. It worked. So we developed this technique of the rear screen projection and if speakers were presenting their speech from the teleprompter, we put little fingers on the side of the teleprompter and also put little silver strips on there. We tied that in with a series of rear screen blocks on a big screen. So we had the first multi‑media presentation. As the speaker spoke, he didn't have to worry. One corner filled with the picture. He kept going; he hit another corner and finally it filled the whole damn screen. We had this system, which ultimately became automated as the technology went on, and this is now the great big era of multi‑media presentations.
Out of the Huntsville experience came the realization that this applied to education and could apply largely to the military in what they called the "war room." Out of that I got an order to come up to the Pentagon and install the first war room for the Joint Chiefs of Staff. We did and it's still being used. They had a problem. When there was an argument around the table the voices became confused, so we ended up putting twelve or fourteen mikes around and feeding them into a master tape. That way you got each guy and you could identify by the mike number who the hell he was. He couldn't say that he didn't say it. It was a very complex; you have to remember that we didn't have microprocessors, we're talking twenty‑five years ago. I don't know how many war rooms we built in the Pentagon, at least twenty.
We put a big one out in Fort Huachuca, which was a strategic base. We put one out in Omaha for that general. I can't think of his name, a pretty tough guy. He really understood what we were trying to do. For about a year and a half that actually kept the TelePrompTer company alive because while our prompting was doing moderately well, we hadn't heard about cable yet. We were staging meetings for big companies such as General Motors. This business was real solid. Once we broke the educational field, via an educator, then we discovered another problem with educators; they were damn slow payers. You get your money but it takes a long time. We had to learn to increase the bill sufficiently to pay the interest. In the case of the military, they don't rush themselves to pay but military laws prevent them from taking a discount. They must pay. We gave an eighth of a percentage point discount on all military pay and I used to walk the check around for approval and get it cashed the same damn day we made delivery. Incidentally, if you look in the patent office, the glass thing that our good President uses today happens to be my patent.
FROKE: In fact, President Truman was the first to use your device.
KAHN: In my day, I worked with Truman; I worked with Eisenhower; I worked with Hoover; I worked with Kennedy; I worked with Nixon. We did the staging of both the Democratic and Republican conventions from 1952 up to 1960 something, and they became a nuisance to me. You would not believe some of the stories about that.
FROKE: In doing some of the background studies on your career, Mr. Hungerford ran across an article in The New York Times, by a Mr. Adams.
KAHN: Val Adams? I know Val. I haven't seen him in years.
FROKE: Mr. Adams was recounting the experiences of several Presidents who used teleprompters and one of them was Eisenhower. Eisenhower was quoted that he lost his place in the middle of the speech the first time he used the teleprompter and then he was heard to say, ...
KAHN: No, you have the wrong President, it wasn't Eisenhower. It was Hoover. That's what put us in business.
FROKE: It was Hoover who said, "Go ahead, dammit."
KAHN: Yep, yep, it might have been both! Incidentally, if you want a good history on that, Ray Hagen was the operator at the time. He joined the Navy and he just retired. He was with Eisenhower and traveled on the campaign trail and he was with me with Hoover when we did it the first time.
FROKE: In the 1952 convention.
KAHN: Right, Right. That really launched our company. I was just bored at Fox. They wouldn't do any of the things that I wanted them to do in television and I think if you came with a real mouse trap, I would have said, "Okay." This gave me an out.
FROKE: According to Val Adams story that Mr. Hungerford found...
KAHN: Gee, I haven't heard that name in so many years.
FROKE: He stopped in order to introduce an ad‑lib and told the teleprompter operator to go ahead, and Eisenhower said, "Go ahead, dammit!"
KAHN: Well, the guy with Eisenhower was Ray Hagen. He traveled on the campaign trail. He also was the operator with Hoover. The Hoover story is really amazing.
FROKE: I want to go back and talk more in detail about the teleprompter development and I would still like to stay with these reflections if I could. We were talking about education and, obviously, in that particular time period, you were seeing the new technologies as not only having applications in the entertainment field but to the educational field also.
KAHN: Not that we knew but by accident.
FROKE: Based on your mind set then, you went ahead to do research to prove the point.
KAHN: The guy that I went up to see at Harvard, I can't remember his name God, I'm getting old. I also went to Yale and spoke to the gal who was the social anthropologist.
FROKE: You should not be embarrassed. Mr. Hungerford and I should be embarrassed for not being able to call the name up.
KAHN: This guy was famous for his work in learning machines and program learning. He thought this was terrific as an adjunct.
FROKE: Let me pursue some of the asides that you were making which indicated which you were a bit frustrated by the approach of the educators.
KAHN: All my life!
FROKE: Did you back away from your experimentation and development of the learning machines for educational purposes because of economic reasons?
KAHN: We never backed away. Other areas started to open up. Here's one of my real faults. Once you get a thing solved and it becomes a business, any good business man or even a bad one can run it. I'm not a good day‑to‑day operator worth a damn. Frankly, I backed away from the other largely because of politics with these characters. It wasn't because of the technology. There was too much red tape and obstacles to implementation when there were so many other opportunities around. We stayed with it.
FROKE: You get frustrated by change whether the change process takes a long time in the cable industry or in education?
KAHN: Two and one half years and almost every one or two days a week in Washington to get the right, for instance, to receive that dish. I won't tell you how much money I put into the business of two Washington law firms that are now the biggest in the cable business. You go talk to Jack Cole and see how much time we spent on that. Smith and Pepper was an early firm in cable and one of the young lawyers out of the FCC at Smith and Pepper was Jack Cole. Strat Smith assigned us another lawyer. I said, "I don't like that, I want Jack Cole." He said, "No." I went to Jack Cole and I said, "Hey, you're not going to go anywhere here, I'll guarantee you a minimum of a years' salary to set up your whole damn firm and fees." He took another guy by the name of Zylstra and they formed Cole and Zylstra. We underwrote their whole year until they got started. They are still my attorneys and they are the largest. It's now Cole Raywood and Braverman. Zylstra died. They have a whole bunch of staff there now.
FROKE: Your interest then moved from the program machines for the types of reasons that you were alluding to.
KAHN: Another reason. I have a daughter who was an artist and was accepted at the Rhode Island School of Design, which is one of the finest art schools in the country. I got to know the President and the Dean and I offered to donate some equipment if they would set up a graphics school for television. We gave them quite a bit of equipment and the courses became very popular. Here they were turning out artists and here is this new medium and the art and the knowledge of what would work with television in the way of gray scale and color just wasn't known. I guess because of my daughter being at school there, I got re‑interested in trying to technologically do something with art and with education. A damn good President who was wide open to see the opportunity. I told him we wouldn't stop at the $50,000. I would get the industry to come in with this. They actually set up a special school for a while. I don't know where it is now, if it still exists.
Basically, my interest in education was rekindled at the time of the satellites. I started to think of the millions and millions of dollars of mortar and stone that are being put into education today and all these big endowments were for a guy to have his name put on the building and you send him a bill. The way they approached me was, "A few million dollars and this will be the Kahn School of Communication." I didn't want the Kahn School of Communication. I wanted to give them money but I also wanted to develop the technology that would implement education and take advantage of the technology instead of the damn bricks in the wall.
FROKE: Brick and mortar in your mind then was a representation of...
KAHN: ...of horse and buggy in a jet era.
FROKE: The difficulty of getting over the mountains and over the rivers...
KAHN: You've got it. Why the hell is it necessary? Right now, I live in Mamaroneck, New York. Depending on the traffic, it takes anywhere from forty minutes to two hours to come in here. Why should I take that time? With a cellular phone I can knock off a lot of calls, but that's a relatively new development. I spend a minimum of an hour to three hours a day in the car. When I get to my office the first thing I do is pick up a telephone. If you go look, I'll have thirty messages that I have to return. Most of my time in communication is spent on the telephone. I know that I could have a video phone. With this ISDN it's easy. It's going to be more and more available. Why can't I begin to replace more and more transportation with communication? Why can't I sit, as I now do occasionally, and take a little thinking time, come in a little later? People could call through the switchboard and they wouldn't know if I was in my car, in my home, or on my boat. Communication is perfect. In this world that we are living in with you fantastic forward‑looking educators, you're still thinking very much in the traditional methods of doing things. How many good professors can lecture to a crowd and really hold their attention?
FROKE: Probably fewer today than there used to be.
KAHN: And there didn't used to be too many either. Why then through communication shouldn't we be able to have a great professor talk to a couple of thousand kids and to work the same system except use a state of the art on the questions and answers? He could be just as effective in that medium as he could sitting here. Damn near. I did some work with Dr. Menninger of the Menninger Clinic on educating middle management of companies. The only thing that defeated it was the week‑long part that was emotionally stressful. After that there had to be a one‑on‑one session for a couple of hours to put people back together. We did several experiments. I haven't done them in a long time but I bet today even that could be handled.
We're spending fortunes on education now and it's only going to cost more. We're spending on a lot of facilities. I don't think that's the way to go. I also recognize that one of the most difficult groups to impose change on is educators. One of the most fearful groups is educators. They shouldn't be but they're human beings and they are fearful. This Cable Museum, per se, is very nice but somewhere there ought to be basic, fundamental research to utilize the current technologies. Why should a kid have to go through the basic education of multiplication, subtraction, and division by rote when he'll never use it when he gets out? You're not creating a thought process, you're creating a block to it. Why shouldn't we open up his mind to think and not waste his time on little things? Looking back now, I would say over half of the damn time spent in the lower grades is an absolute waste of state money in education. Kids in this country are way below the level of kids in other countries. It's incredible, it's a hell of an indictment. It isn't economics altogether.
FROKE: We have a large rate of dropouts in the formal education system.
KAHN: With good reason.
FROKE: And we are leading them to a high level of adult illiteracy.
KAHN: I'll tell you something else. Because young kids are taught mathematics in such a poor manner, not many of them pursue the sciences due to this bad taste. It isn't exciting. Early on we could educate them better by putting computers into schools so students could use them at a young age. That instrument is going to play a hell of a lot greater part in their lives in the next twenty years. What are you going to do with cable's 100 channels? There are a lot of things we can do with these 100 channels, but I don't think that many will come from status quo educators.
FROKE: You see that a strong relationship could develop between the cable industry and education?
KAHN: As I told you, in my judgment, the most viable path for the existence and the growth of cable is to "get religion," become reborn and go back to being a community deal. What the hell difference is it to get six more networks to duplicate NBC or CBS? It just gives you a few more choices of networks that are giving you the same piddle paddle. Cable has had one major destructive force on the networks: it's cutting down on their audiences. Why is it cutting down? Production is becoming so expensive that repeats are starting earlier and earlier in the season and the stuff you are getting, you just don't want to watch. Now it's getting to the point that the repeats of repeats are showing up on cable because they are cheap to buy and they are some diversion, but that's not where you are going to have your dynamics. You've got to have something better.
That's where, perhaps, you are going to end up with direct pay‑per‑view television. The first play of a movie won't be in a theater, it will be in your home on cable off a satellite. You won't pay HBO twelve dollars a month, but so much per picture. As soon as you get a critical mass, that area is going to tack on dynamics that can take several forms. Add to the capability if you come off a satellite for direct view, high definition, and stereo sound. On my satellite, I get fantastic sound. I feed it through my stereo amplifier. Within the next two years every broadcast station in the country will have stereo sound.
FROKE: When you make reference to brick and mortar and the limitations that you...
KAHN: I know this goes against the grain a little bit.
FROKE: No, no. You make reference to brick and mortar and the analogy is with the traditional higher education institution. I would guess that what you are suggesting is that the communications field could well develop a new type of educational institution that is based in communications technology.
KAHN: It should not just necessarily start a college. We have to educate teachers to teach better basic subjects. We have to stop wasting time with these kids. Go to any European school and see how they are teaching. We are not keeping up with the times. I certainly feel that there is a certain need for the classics and good English literature courses and a good cultural background, and today's students are not getting that. The teachers are not well qualified in many cases and I think that there should be a greater stress at an early, early age on science and physics. These kids are being led into a world not of electronics but of photonics. Completely. They are going to be part of that world and they have to contribute to it. The one good thing our educational system has, or should have because we are essentially a democratic government, is freedom of thought. At least we are turning out more broad‑based thinkers. We are not falling behind technologically at the level we are, but we are by numbers and by the number of hours that we work at it. That gets back to: why waste all that damn time commuting when you can be doing something in a much more leisurely place? Let's get back to our global village concept, if you will. You'll find that unlike most of your cable guys I think I had a broader‑base approach where cable was coincidental. The progress we made was the result of our unconventional approach. I didn't come out of a furniture store in a little town or as a television set technician with limitation of thought, which is going to offend many of my associates.
FROKE: It was a part of your family life and it was a part of your formal education.
KAHN: I'm pretty music oriented, you know.
FROKE: I'm going to get into that in more detail. I have only one more question related to the questions here. It springs from your reference to the global village. I'm going to take a literal rather than a figurative approach. Let's say that the fiber in the combination with lasers make it entirely possible to come up with the wiring of the nation that will bring about many opportunities.
KAHN: Whether or not we like it, it's going to happen anyway. If you would just take a physical count, which is not hard to do much research on, of the miles of fiber now in the ground and being used...
FROKE: Can you give me an estimate on that?
KAHN: I would judge you are looking at close to a half a million miles.
FROKE: Already in place in the United States?
KAHN: In the United States. Incidentally, more in Europe. We did the Biarritz thing. Are you familiar with that?
KAHN: That was the first time in the world that anybody put together a system that did the telephone, the cable, the directory, everything by fiber. It was financially a disaster but the government sponsored it, not to make money on it but to find out what the hell is going on. Now they are fibering Paris. They are fibering Germany and Switzerland.
FROKE: Is fiber then bypassing the satellite communications technology?
KAHN: Not necessarily. I think the reason it isn't is that the value of fiber vs. satellite is when the message density between the major cities is sharp enough. But it will take several years before the fiber structure becomes one total pattern. Then it might be questionable. For example, as long as you have a big message traffic between New York and Los Angeles, it's cheaper by fiber. If you're going to Tuscaloosa from New York, it doesn't make sense yet and won't for many years.
FROKE: Technically, however, the satellites will continue to play a role in international communications.
KAHN: Oh, yes, absolutely. In satellites you really have problems. The biggest thing they are afraid of at all the international conferences is that the footprint they can't accurately control will go over the border. You've heard of pirate radio stations and Luxembourg Radio. Well Luxembourg has a television thing, too. You've got to understand another fundamental: we are the only country in the world in which communications is not totally controlled by the government. We raise hell with the FCC, but if we were in Britain or in any other country, we'd find there is a level of control. On the other hand, the technology is emerging out of that. France is finally opening up Britain opened up commercial television. Most of Europe is beginning to open up. Italy is opening up, Switzerland is opening up, and Belgium is opening up. These are countries where I know they are doing work. As these open up, it will still be slow because bureaucrats give up slowly. They have another problem there too. Their biggest concern is that they don't want Germany's signal to get easily into France or England or England's signal to get into the other countries.
FROKE: You can't control it to that point.
KAHN: Not that good. You can try.
FROKE: Communications have really changed the international economic systems.
KAHN: The next major conference is in Geneva in 1988. Now we will get screwed. We're terrific but we are lousy politicians when it comes to being international negotiators. We'll send over Bob Lee who is a good friend of mine and former Chairman of the of the FCC, a Commissioner for many years and a hell of a guy but he's no international negotiator. We could get aced.
He gave satellite space up there to every country. Some of those countries have nothing to send up. Here is a good parallel. The Communications Act of 1934, as written, had education primarily in mind. Consequently, whether you know it or not, many schools got licenses, but what did they do with them? They sold them for a few bucks because it was money. Some of the biggest stations in this country today were given to educational institutions for culture and those institutions just blew it. That may happen again.
KDKA, if I remember correctly, was in Pittsburgh. My recollection is that that was an educational station that was sold to Westinghouse or through somebody else, early on.
FROKE: It was at a 1952 television conference at Penn State for the use of television in education, that Paul Walker, Chairman of the FCC at that time, made the announcement that the FCC had now reserved channels for non‑commercial television purposes.
HUNGERFORD: For one year you use it or you lose it.
KAHN: And what did you do, nothing?
FROKE: Yes, we did.
KAHN: I don't mean you, I mean on a national basis. Wayne Coy, as Chairman of the FCC, came to us and movie companies and said, "You guys have an understanding of the visual media. I'll give you New York, Chicago, Los Angeles, and San Francisco." I had them, we had the God damn franchise! This is one of the reasons I left Fox. I made a presentation to the Board of Directors and told them we would need an overall investment of about $10 million, but we'll never have an exposure of much more than two and a half because we can't go that fast and we should do it. Spyros, my boss, said, "Are you crazy, man?" He literally took me out of the room by the back of the neck. He was a hell of a guy in many ways. I used to send him a note around Christmas each year that said, "I thought you'd like to know that those five stations are..." I stopped sending it when he got in trouble and it wasn't so good. When I stopped, the value of those stations, conservatively, was $268 million dollars. He begged us to take them, he didn't just give it to us.
HUNGERFORD: Now Fox is finally going to have a network.
KAHN: Not the same Fox. It's quite a different deal.
FROKE: There is one other educational note that we could make at this point and that is that when you did get into the cable business here in New York City, you made an overture to the Roman Catholic Diocese.
KAHN: We put in a system and it's still being used. They have one of the smartest guys, he's now a Monsignor, Father Dempsey. Terrific let me tell you, boy he would make one hell of a businessman.
FROKE: I think the parochial or the Catholic parochial schools probably have made better use of educational television than public schools.
KAHN: As a matter of fact, regarding the same Bob Lee I was talking about earlier, we used to jokingly call him the Papal delegate to the FCC. Educational frequencies were allotted and the Catholic schools were the only ones to take advantage of it. They did it on a national basis. To this day they use it. Public educators didn't go very far. We then went out to San Francisco for the Archdiocese to duplicate the same thing we actually built in New York. The church can be damn political, too. Father Dempsey was the head guy in Brooklyn. But before we could get it through Cardinal Spellman in New York, we had to agree that we would use RCA equipment because he and David Sarnoff were pretty good buddies. The church had a good fix on how to get things done.
FROKE: We are sort of rambling here.
KAHN: I'm sorry. I'm very good at rambling.
FROKE: Another personal thing related to Mr. Hungerford. As we were talking, he had inquired whether you had ever worked with GPL which is a company he was affiliated with prior to ...
KAHN: Sure, sure. Herman Place! What do you mean did we ever work with them? We owned them; they were a spin‑off from National Theaters.
HUNGERFORD: That's right.
KAHN: You're damn right. They built the first projector. That was my projector. I knew Herman Place very well. He was from the Chase Bank.
HUNGERFORD: Did you know Dr. Garmen?
KAHN: I met Dr. Garmen. Herman Place was one of my godfathers. At one time, he was Chairman of the Board of Fox, when they had control of Fox. National Theaters owned General Precision up in Rochester where they started. They made the graphite camera. I knew him and his son.
FROKE: Mr. HUNGERFORD:, in addition to working with GPL and selling their Kinescope projectors, was also the first executive for META, Metropolitan Educational Television Association, New York University.
KAHN: That was Ford Foundation‑supported and sponsored for a while.
HUNGERFORD: It was for a while but now they are not. They finally went broke.
FROKE: We were fortunate that he maintained his interest in education and came to Penn State, active in the field of research and as a teacher.
KAHN: I brought Hub Schlafly into Fox out of the MIT radiation lab, where he had been loaned by Dr. Baker. You know what I brought him out for? The idea was a simple one. One of the biggest costs of making motion pictures was in the raw stock, the film. I made a study of the United States and found out that almost all, with exception of the three hours difference between time zones, started and stopped their features at the same time, within ten minutes of one another. My thought was, why can't we forget all these prints and do it by television on a screen? That led us to the Eidafors. We needed a smart young engineering guy. I was the only non‑engineer member of the SMPTE, Society of Motion Picture and Television Engineers. Earl Sponable was the inventor of sound on film and worked for Fox and headed up the lab. We had to get a young guy so we got Hub Schlafly down to New York.
I submitted my original plan to Mr. Skouras saying that Fox ought to develop this teleprompter, which an actor had brought into me and it didn't have a name. I named it the teleprompter. He brought it in on a roll of butcher paper with a script on it. Skouras told me to go away. I argued with him and I said, "You tell me I'm one of your best executives. While I was in the Air Force you gave away all your candy concessions." (In the movie business you paid off an executive. It was quite proper. We owned 586 theaters and he did a good job. He got one concession or two or three. There were none left. While I was gone they were all given out.) I said, "Instead of giving me the candy concession, give me the time to play with this damn thing. If you don't think it's so good, I do." He said, "All right. You can play with it until you lose $10,000 and then you have to stop and go to work."
I went over to Schlafly and asked him to evaluate the concept. He wrote a real solid engineering report on how great it was but it would have to be developed. I then went back to him and asked if he was willing to work on his own time to develop this, seeing as he believed in it and still worked at Fox. He said, "Yes." The guy who brought it to me was an actor, Fred Barton, who was in "Mr. Roberts" and he had a fourth lead in the original "Mr. Roberts."
Now an actor has his days free except on a matinee day, so his job was to run down a big typewriter. We finally persuaded Underwood to handmake us a typewriter. I'm telling you, you wouldn't believe what went into that. Now we had a typewriter. Schlafly then said, "We're going to do it with Selson Motors." Why with Selsons? We went down to Canal Street and you could buy thousands of them as surplus. We bought them for a buck. It came as a rude awakening when we finally bought up and used all the supplies of Selsons. When we had to start selling prompters because we had contracts we found out to make a Selson cost $350 dollars. We had quite a revision in our financial thinking.
We built these first prompters quite large. A guy carried one with a strap around his neck on the stage. You couldn't put it on the camera. Fortunately, there were union disputes. Now how could that ever be fortunate? The only fortunate thing was that anything that was left to complain about, they complained about. They forced us into improving our product. Not because they wanted us to. If we put it on top of a camera, a guy said, "Look what it's doing to my picture." We had to put some metal in between there to keep it from interfering with the picture.
End of Tape 2, Side A
KAHN: NABET was one union and IATSE was the other. Berle wrote about this in his book, by the way. If it wasn't for him, we would have been dead.
HUNGERFORD: We used to pay him by the day or the hour.
HUNGERFORD: I was at NBC.
KAHN: Oh, all right. Joe McDonald was the Vice President in charge of labor relations. Joe and I had more God damn fights because they would cap up the cameras on us. They wanted control. NABET wanted it, IATSE says, "It's on the floor, we got it." Finally they said, "Get the hell out of here. It's costing $25,000 an hour to cap the cameras." Berle finally said to Joe McDonald, "Look, you want a show, you'd better leave that prompter there. You take it away, you go do the show." He had a lot of muscle. He went to Texaco and said, "NBC is trying to kill us." They came screaming at NBC and Joe had to leave us alone. Finally, the way we solved it was to put one NABET operator and one IATSE operator in front of a duplicate set of prompters and the NABET operator read the IATSE script and the other guy read the other script. We had six prompters on the floor, three attached to one and three to the other and each one of the operators operating. We did that for two years!
HUNGERFORD: Did they get out of sync?
KAHN: They were out of sync frequently. We needed paper you could read. We prepared the script in an office environment and the paper was about this wide and they were fan fold. We loaded them onto the teleprompter and put them in the television studio where the lights were really bright. These damn things wouldn't uniformly shrink. That's when we came up with these silver strips. They would resynchronize every eight inches if they went off. That was Hub's idea. He's a bright man.
FROKE: This is the end of the tape sequence on your reflections about the cable industry and about education. I'm sure we'll come back to this later during our sessions. We'll begin next to talk generally about your life and do a general biographical sketch, which was where we were going to start in the first place but got so interested in what you were saying that we decided to put the end at the beginning.
End of Tape 2, Side B
FROKE: In some of your comments as we were reflecting on the nature of the cable television industry and higher education, you mentioned that the background you brought to the cable television industry is unusual.
FROKE: Different. As the conversation has moved ahead, it's obvious that there is a wide range of intellectual interest and a wide range educational preparation involved here. I would like to relate that first, not necessarily to your formal education but rather to all those other things that we would attribute to one in terms of ongoing curiosity as one goes through life. You were born in 1917.
FROKE: Your family lived...
KAHN: I think they had just moved up to Newark, New Jersey. I was born right here in New York Hospital. We lived in Alabama for a very short time but I was actually born in New York City.
FROKE: What had taken your family to Alabama where there was a question ...
KAHN: My father worked to develop something that didn't work.
FROKE: He had immigrated to the United States from Russia.
KAHN: From Russia, both my father and mother. My mother, when she was about five; my father, when he was about 14.
FROKE: They came to New York City.
KAHN: Yes, they both came to New York City. Then they went to Jersey, my father did. He had been shipped out of Russia in the pogroms. He was shipped to Liverpool. He got sent over here and he could speak virtually no English.
FROKE: This was at the beginning of the revolution in the nineteen‑teens?
FROKE: He was one who was able to escape?
KAHN: Yes. He was fourteen and his father and mother got him out.
FROKE: His father and mother stayed in Russia?
FROKE: What happened to them?
KAHN: I don't know. I had an opportunity as a member of Young President's Organization (YPO) when we were invited to go to Russia for a tour and I wanted to go. I had been in Air Force Intelligence and was a Russian liaison for a while. My passport went through but they redlined it. It was my one chance to go.
My father was born in a town called Vitams on the Don River, which is famous for Chagall who came from there. I wanted to go see some of the things he told me about.
Twenty some odd years had to go by before they would let me go behind the Iron Curtain.
FROKE: Your father and mother must have had a classical educational training in the...
KAHN: Not formal. My father became a jewelry designer and he was quite interested in chemistry and he studied on his own. He went to some night school and developed some of the early formulas for phenol formaldehyde resins. He sold one patent to Union Carbide. He was a creative artist and technology guy in chemistry without a formal education.
I think perhaps that's one reason why I went the exact opposite. I was interested more in the business end.
My mother had very little formal education. They worked in a sweat shop. Their big thing was to go to the Shakespeare readings and she did a lot of reading on her own. She subsequently became very interested in finance and quite an investor. She was very successful. I used to get out of high school and go down to what then was the Post Flag Office to meet her, which is now Merrill Lynch. We would sit by those tickers and she built up one hell of a nice portfolio.
FROKE: What would explain her and your father's interest in what I would regard as diverse and esoteric types of activities?
KAHN: They were both interested in art and they were both interested in music. They thought it was a very necessary part of existence.
FROKE: Did they do any formal studies under adult education programs out of schools or New York University?
KAHN: They may have but I'm not aware of it. On my mother's side there were three kids, five years apart. My mother was the oldest and then I had an aunt and my uncle was the youngest. He lived with us for a little while when I was born.
FROKE: This is Irving Berlin?
KAHN: Yes. There was a problem in naming me after him. According to the Jewish religion, you can't name anyone after someone who is alive. You can only be named after someone who is dead, but this was the first name they arrived at.
FROKE: He's 99 now. Do you still see him?
KAHN: I don't see him often, I talk to him though. The Irving Berlin Kahn thing was something at the school that they put in. My entire business career was done on my own. When I got out of OCS, he sent me a hell of a telegram. It said, "Would you please slow down, I'm getting tired of being called Irving Kahn's uncle. Congratulations!" I still have the telegram.
FROKE: Another quick aside here. At Penn State one of our alumni was Fred Waring.
KAHN: I knew him very well.
FROKE: You did?
KAHN: I certainly did. He was one of our prompter users early on. I knew his brother, too. We dealt with him on a lot of the business matters. Fred was quite a showman. We used to have our YPO conventions at Shawnee (Shawnee‑on‑the‑Delaware, Pennsylvania).
Do you know what YPO is? Young President's Organization. In order to be in YPO you had to be President of your own corporation before you were 40 and you had to be doing over $1 million at that time, and have over 100‑‑I'm not really sure what the employee number was. It was a group of overachievers. In my group, incidentally, was Milt Shapp, Warren Avis, Senator Percy who became quite a politician. We had an amazing group.
We were up at Harvard under the YPO program. On my Board of Directors was Paul Garrett who was the first Vice President of Public Relations for General Motors. He took a liking to me but he couldn't be on a Board until he retired, so the day he retired he joined our Board. He said, "Dammit, you have to get a little more straightened out." They got me a Sloan Fellowship at the business school. Thirteen weeks and I had a business going! Instead of two cases a day, we had four cases a day.
Frankly, the only other time I can remember putting in those kinds of hours was when I took over this business trying to talk to these Ph.D.s. I started reading over two hours a night and I still do, just to know what they were talking about. I have no background in science. Things are hard to visualize if you don't have that background. I found it interesting. If I had to do it over again, I would have undoubtedly taken a Ph.D. in physics. I really would advise that to a kid today who wants to live in this world. The business part he can acquire.
HUNGERFORD: You can do that as an M.B.A.
KAHN: Easy. MIT has a good M.B.A. program. Up until this year, I lectured every year at MIT, Yale, the Wharton School, and Alabama with the sole idea of attracting younger people to cable. I got a nice little group out of that with the opportunities that were there. I enjoyed it. These kids were pretty damn sharp. They really had a feel for what was going on.
FROKE: Fred Waring told me a number of anecdotes about his work with your uncle. One of them was the first orchestration and the choral treatment of "Give Me Your Tired and Your Poor."
KAHN: That was a score that he wrote for the Statue of Liberty.
FROKE: Your mother and father were probably responsible then to a great extent for instilling in you this great sense of curiosity that led you in first one direction and then another, whether it was in Shakespeare, in literature from your mother, or chemistry and physics from your father.
KAHN: I think so. I have a sister who says that she was raised in a one‑child family. I got a disproportionate amount of attention.
FROKE: What was your father's name?
FROKE: And your mother's name?
KAHN: Ruth. I have one sister. Still alive. My family encouraged me. I was the youngest Eagle Scout in the Eagle Rock Council. Scouting played a pretty good part in my early life.
FROKE: How long did you live in Newark?
KAHN: Not very long. Maybe four or five years, then the family moved to Montclair, New Jersey. I lived in Montclair up to the beginning of high school.
FROKE: Did you go to public schools?
KAHN: Yes. In Montclair. They encouraged me to take up an instrument. I didn't like the piano so I got a saxophone. I drove the neighbors nuts. I joined the band at Montclair High School when I was a freshman or a sophomore. It was only a three‑year high school. Junior high was seventh, eighth and ninth grades. When I got to the band, I made out all right in the tryout but hell, there were eight guys playing saxophones and they were all better than I. We didn't have a drum major.
FROKE: This was a marching band?
FROKE: I was thinking of bands in the sense of the big band sound which was a big part of your career later.
KAHN: I'll tell you later.
FROKE: All right.
KAHN: In summer Scout camp, one of our counselors was an Indian from Oklahoma and he got me interested in spinning a rope. I got pretty good at it. I was watching these other characters spin a baton so I chopped up a broom handle and started practicing. I didn't have any formal training so I did everything wrong, although I ended up looking the same way but I was doing it in an un‑orthodox way. I tried out for the band and I got it. There wasn't enough opportunity. Only the Catholic schools had the pipe, drum, and bugle corps and used to have regular competitions. When I got to the point where I was really good, I went down to St. Benedict's Prep in Newark and talked to a guy. I said, "You don't have anybody who can really twirl. How about it?" He said, "Sure, be glad to have you." It got to the point where they paid me five dollars a night for every competition. If it was a cup, they got it. If it was a medal, I got it. They still do have these organized pipe, drum, and bugle corps. I got really good at it. I won the Eastern State Championship and that opened up several scholarships that led to college: Ohio State, Michigan, LSU, and Alabama. It was a toss‑up but I went to Alabama because from what I could see it had a good school of commerce. I thought that maybe I wanted to get into advertising or something. I thought, "What the hell. If I don't like it, I'll go to it for a year and then I'll switch to Wharton." Wharton had a very good reputation. When I got down to Alabama, I did very well as a drum major and we had a hell of a football team. We went out to the Rose Bowl and I led the Rose Bowl band. I know it's hard to believe but ...
FROKE: This was 1935?
KAHN: 1938. In fact there are pictures. I was in the advanced ROTC and I started to twirl a saber. That got a tremendous amount of publicity for me.
FROKE: The knife had not been dulled at all?
KAHN: No. It had never been that sharp. Once in a thousand times I might get a little nick. The trick was to grab at it and keep on moving with it.
It took a hell of a lot more to twirl a baton when it was cold, to throw it up and catch it. That damn thing could break a bone coming down if you didn't do it right. That was a very important part of my life, the drum majoring about 70 pounds ago.
FROKE: The saxophone and drum majoring was your first touch of showmanship, so to speak.
KAHN: The saxophone was soon dropped. I played the sax and the clarinet and then I learned to play the drums in a dance band in Alabama. While I was in school, I went to work for Wilby‑Kincy Theaters in the advertising department.
FROKE: What was the name of the company again?
KAHN: Wilby‑Kincy. W‑I‑L‑B‑Y dash K‑I‑N‑C‑Y. I worked in their office after school for a Mr. C.B. Grimes. Fantastic guy. There was a guy working with me at the time as an usher in one of the theaters, name Otto Miller. Many years later we went for the franchise in Tuscaloosa. Otto was the manager of the cable system. We had to buy up stock so Otto went around to what must have been two‑hundred people in town who had a little stock in it and said, "You may not know Irving, but he used be the drum major in the band and went out to the Rose Bowl with us." While the other company was trying to buy up a couple of blocks we bought up enough of the little guys' stock so that we had control of the company. Tuscaloosa turned out to be one of our most valuable systems.
FROKE: So you enrolled in the University of Alabama in the School of Commerce?
KAHN: Yes. In Alabama the School of Education was terrible because the standards in the state were so low. The School of Chemistry, the Medical School, and the Business School had very high standards. Before you get to your specialty you have to take two years of accounting and such. I was quite active on campus and because of the drum majoring I was fairly well known and I was a fraternity member. That's not unusual, but what was unusual was being Jewish at that time in the south. Coming from the north was almost worse. The combination was something else again.
FROKE: What fraternity were you in?
KAHN: Phi Sigma Delta, which is now ZBT. They merged. I had decided I was going to be President of the Inter‑ Fraternity Council. There were three or four Jewish fraternities and about twenty‑seven non‑Jewish. I became President of the Inter‑Fraternity Council in my senior year. Determination is a very important factor in my life.
FROKE: Were you Orthodox?
KAHN: No, no. Not only were we not Orthodox, but my father had been Orthodox up to age 14 but when he had his wrist slapped so many times with a ruler... I never had a bar mitzvah, which is the tradition of becoming a man in the Jewish religion. Frankly, living in Montclair, I had maybe one Jewish friend just because there weren't any. My Scouting was in the First Presbyterian Church. I wasn't truly aware of the kind of anti‑semitism that prevailed in many places until I went to college. Then it was a fluke that I found out. When you enter you sign up what your religious preference is and you have the Newman Club, the Hillel Foundation, or what have you.
FROKE: You suddenly discovered there was no box to check off?
KAHN: No, I considered myself Jewish and I checked off one. I went to an open house at the Hillel Foundation. I was about to pledge Delta Kappa Epsilon which was a big house there and they were really rushing the hell out of me. The guy who ran the Hillel Foundation was a hell of a guy, just a right kind of guy to put on a campus. He said, "What fraternity are you going to join?" I said, "Well, my friends have been talking about the DKE." He said, "Did you tell them you were Jewish." I said, "No." He said, "Do they know?" I said, "Frankly, nobody asked." He said, "To save some embarrassment, you had better tell the pledge master." I did and that was the first time in my life that the problem of anti‑semitism or prejudice came up. He was very embarrassed because they were pursuing me. He said, "That might be a problem." So I never went forward with it.
FROKE: Did you participate in a synagogue?
KAHN: I went to services, largely because they were social. At our home, we went on the high holidays but we were not a member of a Temple. There wasn't a Temple in Montclair. It was in the next town down. My father resented the idea of seat money and all of the formal things that were involved. He felt it was wrong and he felt you could be a good Jew if you knew what was right and what was wrong. He went over things with me. The most formal education that I ever got was in my junior or senior year at the University. The Hillel Foundation was then headed by Dr. Kertzer, who became a lifetime friend. He just died last year. I just set up a foundation for him in Arizona.
FROKE: How do you spell his name?
KAHN: K‑E‑R‑T‑Z‑E‑R. He wrote a book. He wrote several but one was, With an H on my dog tag. He landed on Anzio Beach. He was a very prolific guy. He taught a course on the history of the Jews, written by Dr. Abe Sacker, who subsequently became the head of Brandeis University. He was quite a guy. I said, "What the hell. It's an elective and I might find out something I don't know." I did. I learned more about Judaism in this course than I had ever been exposed to in my life. It was Dr. Kertzer who actually talked marriage over with me because my wife is not Jewish. He met her and he's been in our home many times and he thought it made good sense.
FROKE: Are you active in your faith now?
KAHN: Not with any specific synagogue.
FROKE: So the pattern of your childhood has pretty much carried through your life.
KAHN: On the high holidays I still go to services. Anonymously, frankly I shouldn't be telling you this, I send 100 kids a year to Scout camp. It made such an influence on my life. I don't like charities where there are nine things between here and there so you put in a buck and maybe four cents gets to the main deal.
FROKE: Did you meet your wife at the University of Alabama?
FROKE: You had graduated from the University in what year?
KAHN: 1938 or 1939.
FROKE: With a baccalaureate degree in Business.
KAHN: B.S. in Business Administration. I came up to New York, thoroughly planning on getting a master's in psychology and maybe a Ph.D. because I had enough minor points that I could do it. Among other things while I was in school, I promoted a lot of dance bands. One of them was Larry Clinton, who was just starting. I went up to my Uncle's office to see him. I had been playing touch football with my nephew and had busted my ankle and was in a cast and I had to walk up the steps.
FROKE: You were about 20 or 21 years of age at that time?
KAHN: I got out of high school a little early. Anyway, I ran smack into Larry Clinton, who I hadn't seen since Tuscaloosa. He said, "Just the guy I'm looking for. We just got a booking into the Paramount and I don't have a press agent, and I know you can do the job."
FROKE: He knew what you did in Alabama.
KAHN: I said, "Larry, I don't know anybody in New York." He said, "You'll find them. You're hired." Literally!
FROKE: Were you hired on an hourly or a commission basis?
KAHN: No, a weekly basis. I think he gave me $55 a week and expenses for the first couple of weeks. Our vocalist was Bea Wayne whom I met two weeks ago in Palm Beach with her husband Andre Baruch. Andre Baruch was a roommate of Mel Allen who was my roommate in college with Ralph Edwards.
FROKE: Andre Baruch the orchestra...
KAHN: No, the announcer for Lucky Strikes.
FROKE: With a very strong powerful voice. Oh, yes, and Mel Allen was the sports newscaster.
KAHN: I brought Mel Allen up to New York and he stayed at our house. He was my close friend. He still is. We still get together quite often. Mel had an audition that Ted Husing had set up for him as a sports announcer at CBS. He won it. He was an associate professor of speech. Mel's speech would be perfect in a group like this. You talk to him in a group of southerners and he will revert right back to an authentic southern accent. Still around. He's a couple of years older than I.
FROKE: So Larry Clinton really provided your first full time job?
KAHN: That's right. About two months later I opened an office on 1619 Broadway with another young guy named Howard Richmond. He was also a press agent. Six months later, literally, we had Larry Clinton, Woody Herman, Van Alexander, and Guy Lombardo. We had a fantastically successful office. My forte never was in writing so we would go up to Columbia and hire some journalism assistants and they would write. The trick was planning it. I spent my first year or two, all night, looking out for Walter Winchell or Lewis Sobal and I got to know these guys pretty good.
FROKE: You would give them information about the bands?
KAHN: Every five items that you could give them...
FROKE: One would get in.
KAHN: No, no. They would get in but those five didn't necessarily have anything to do with you. This was the kind of stuff that they could use in their columns. For that five, they would put in one plug for you that you really wanted.
FROKE: So your contact with the show business world gave you the type of information that Winchell was looking for?
KAHN: We're young and it's kind of exciting but after a year or so it wears thin. We got a radio show for a cigarette company. It was the Pearl Marsh Company but it wasn't their lead cigarette. It was Sensation Cigarette. We had just made a short. At that time, when you went to a movie you saw a picture, a newsreel, and a short. That was it. We were proud of the fact that we were making this short. I asked the announcer to put in the script, "You'll be able to see the latest Larry Clinton short at the Paramount opening next week." The guy that was then the manager at the Paramount called me up and said, "Hey, what the hell did you do? People are coming in to see the short." No kidding! The idea hit me later.
If we could sell out on radio, why the hell don't the movie companies use this to sell their pictures? I started to make the rounds of the movie companies. I went to Warner, I went to Paramount, I went to MGM. I got real cold receptions, none were interested. The last company left was 20th Century Fox. The reason it was last was because it was on 10th Avenue and 56th Street, way the hell out there. I called up the guy who was the head of advertising and publicity, Charles E. McCarthy, one of my closest friends until his death. He had been quite a drinker but by the time I knew him he had slowed down and was the essence of the perfect executive. He lived out in Nutley, New Jersey, and he came in on the Lackawana Railroad and was sitting at his desk at 8:30 in the morning. I found out about this so I was waiting downstairs from 8:00 on, and sure enough at 8:30 he walked in. I walked in right behind him. I thought what the hell he can only throw me out and I walked into the office and said, "Mr. McCarthy I need to have about twenty minutes of your time." He said, "How did you get in here?" I said, "I walked in."
In the meantime I pulled a chair up and started talking. I told him about radio and how great it was. He had gotten either that night or the night before, a telegram from Zanuck. There is always a fight between the east and the west as to who was the boss. Zanuck was saying, "Buy out this contract. Get us the hell off radio. We want no part of it." So he says, "Do you really believe you can do all these things?" I said, "Yep."
He said, "How much you making?" By this time I was making about $500 a week, it was 1939, which was a lot of money and the taxes were nothing. I said, "I'll tell you what, give me my expenses and I'll prove it." He said, "What will your expenses be?" I said, "Whatever you think they ought to be." He gave me a couple of hundred dollars a week and I went to work.
The first picture I worked in was "Rose of Washington Square" with Al Jolson. I approached Ted Collins who was the major domo on Kate Smith and I delivered the stars and we had a piece of that show. I became very friendly with Ted Collins and subsequently we owned the show. At one point Colby Chester was Chairman of the Board of General Foods. He called me up one afternoon and said, "Can I have your permission for you to cut 30 seconds off of your show so I can get a commercial in there?" You'd have to know Ted Collins. He's a real tough Irishman who controlled Kate Smith like a puppet on a string. If he liked you, you were in. If he didn't like you and he couldn't make your life miserable when the chips were down, you were out. He liked me and we got to the point where we had about twelve or thirteen shows a year that were plugging Fox pictures.
FROKE: It probably would be good to emphasize at this point that the promotion of the type of publicity that you are talking about was revolutionary, using radio broadcasting...
KAHN: It sure as hell was! Not only that but the studios, Fox, bought out all of its stars' contracts for anything so they couldn't go on radio.
FROKE: Because the film industry was afraid of the local broadcasting industry.
KAHN: Exactly! Now, not only did we prove it made sense but less than a year after we got going, all the movie companies started to give it a second look. I was looking for a rating service and there was none. There was an outfit called Radio Reports that would tape. I made a deal with them to set up a movie penetration index and to count all the plugs of all the different companies in the course of a week and make a report and we bought it. We could go back to the ranch and say, "Look, bud, here is where we are."
FROKE: This is the forerunner of the A.C. Nielsens and all the rest of them.
KAHN: Nielsons were quite different. This was radio; there was no television. There was another service, Crosly. Nielson was quicker and he had the first audiometer count which is now obsolete. I tried to sell that for cable. I tried to sell to the networks to let us use our cable system to give them a couple of million sample instantaneously instead of waiting a few days for a couple of thousand. I got Proctor and Gamble interested and, incidentally, TelePrompTer did do some early experiments on our cable with P&G. We're talking over twenty years ago.
FROKE: What was the name of the publicity firm that you founded? Was it Kahn and Richman?
KAHN: No, just Irving Kahn. We were together in sharing space but we were separate.
End of Tape 3, Side A
FROKE: Your recollection is amazing. You have a much better memory than I have.
KAHN: I wouldn't say that, that's a function of age. I have a fairly good recall. If it weren't for that, I probably would never have gotten out of college.
FROKE: Was it during the radio publicity days that you and your wife met and married?
KAHN: My wife was first with MGM as a story editor and then she worked with me at Fox for awhile. While she was working at Fox, we were married.
FROKE: Let me then pick up the chronology. You had your firm that was concentrated mainly on radio publicity. You then interested 20th Century Fox, and then you shifted your career and became a Vice President...
KAHN: I worked at Fox initially as a radio contact, there was no such thing as television. Television was not a factor until I came out of the Air Force. I was radio manager for 20th Century Fox. One of my writers was a guy by the name of Norman Crow, one of the great writers. His brother worked in the publicity department of NBC, by the way, and was an assistant manager under Sid Igas. He was the head there. By the time I left Fox, every movie company had a Radio Department. They had all subscribed to the service. When I got into the service, they took my job and split it between three different people. By law, when I returned they had to give me my job back. When I came out of the Air Force in 1946...
FROKE: Even though the war had ended, you were still in the service for awhile?
KAHN: Yes, but I could get out on points. I had seventy‑six combat missions that I could count.
FROKE: Were you married when you went into the service?
FROKE: What military service were you in?
KAHN: Air Force. Air Force Intelligence. Through ROTC at Alabama, I had earned a commission twice. I took advanced military when I was still in school and that gave me a field artillery commission. When I took the physical, I was about four pounds overweight for an officer. They immediately put me in for a draft. I was all right as an enlisted man but not as an officer. If I had known, I would have slimmed down. But nobody told me. I just assumed I had the God damn commission. When I got in, I was kind of bitter because I had been through this damn thing. I had a pilot's license and they asked me what did I want to go into and I said, "The Air Force." When I was in college I had gotten my license to fly. My green ticket (instrument ready) was 1937 or 1938. In fact, I was grounded by the FAA inspector for flying under the Tuscaloosa Bridge. Just to see if I could do it! Really, it's funny but it's true! So I went in as a private.
FROKE: Then you applied for officer training?
KAHN: Not by choice, no. First I went back to Fort Dix then I was shipped to St. Petersburg, Florida, for basic training. I got involved with Information and Education (I&E) and stuff there and, man, I thought I had it made. My sister shipped my car down there. From my college background, I could have gotten into Intelligence or into the Psychological Warfare. They could have shipped me a lot of places. We were there for six months or so and we were losing a hell of a lot of troops. They had to clear out the permanent party there. A friend of mine, in A‑1, in administration, said, "Where do you want to go?" I said, "California!" He said, "Come on in and take a whole bunch of tests and I'm sure you'll pass them." So I did and that qualified me for damn near anything. The only thing that was open was a course in engineering operations and training in Los Angeles. I said, "What is it?" He said, "I don't know but if you want to go to California, this is the course." They put through the orders and I got on a troop train and went to Los Angeles.
I got to Los Angeles and found this school is in downtown Los Angeles. I lived in a little motel in a crummy district of Los Angeles with all the troops that were stationed there. I finally went to the school and began to see what we were doing. They were training guys who controlled the maintenance and the records of the planes.
At that time Rickenbacker had just flown off the ship into Tokyo. I went to the Captain and said, "Sir, we could put together a tremendous training record here, but you have to do a couple of things." He said, "What's that?" I said, "You've got to give me a chance to live in Los Angeles and I'll be here every morning as I'm supposed to be, but I have to have the freedom to mix with these people. I'll get the stars, I'll get the writers, I'll get the whole damn thing made." He said, "Are you sure you can do it?" I said, "It will take me two weeks. If I don't do it, I'm under your control." He said, "Okay."
A friend of mine‑‑Palca‑‑was with "This Is the Army," my uncle's show, and I wouldn't go with that show for fear there would be criticism. Another friend was a civilian, Ed Jaffe, who is still very much alive, and the three of us shared an apartment in Hollywood. Palca had to be on the set at seven in the morning, Jaffe was up all night, and I had the afternoon session at school. We each had possession of the car for one‑third of the day. Our apartment was $75 a month. It was right in the middle of Hollywood, right up the street from the Knickerbocker Hotel.
Anyway, I got up into Hollywood and the NBC studios were at Sunset and Vine. One night they had a lot of good shows and all the stars were there. I knew people and I knew the guys in the Royce, we used to do a lot of shows out of there. I got Palca, who was with "This Is the Army," and a writer to write me a 15‑minute script on the glass transcriptions we used to do. At that time they weren't on aluminum, they were on glass because there was a shortage. I went down to the transcription room and said, "I want to go into a studio. We aren't going to have much rehearsal on this, so when I call for the line please make this recording and I'll come down and pick it up." I ran into John Garfield in the hall, whom I knew. I said, "Hey, you've got to help me. This is a part made for you. Read it over. It's only twelve or thirteen minutes long." I said, "Do the damn thing cold, you can ad‑lib it. I've got to have it." I went to the sound guy there and I gave him a script. I said you can't add much to this but war sounds and what have you. In about a half an hour we called down to Studio Four and said we were going to do a cut with John Garfield for 15 minutes and we needed a 13/30 cue. They said, "Okay, you've got it in 30 seconds. You're on." We made our record in one take.
I took this transcription back with a special thing to play it on and I played it for the Captain and he flipped. Then we tried it on the class. The idea was that this engineering operation's NCO had failed to properly check and we lost six planes. It was put in a much more dramatic way than trying to impress on them that you're not just sitting there pounding on the typewriter.
My Captain decided he wanted to do something about it so he went up to Santa Monica to Command Headquarters. He took it to the General. The General listened to it and said, "That's terrific. How did you do that?" The Captain said, "I got a guy down there." The General said, "Let's bring him up here to Headquarters."
I switched from Los Angeles to Santa Monica and I was on the General's staff. Then I had a little more freedom and time so I decided to do something to pull my weight. The big item then was the big waste of food. The guys would go through the line, fill up their damn tray, and not eat it. I had an idea so I went to see the General. I said, "Sir, this isn't going to sound great to you but I think it will be dramatic." I said, "If you will make an officer available to me (because I don't think as an enlisted man I can do this), I will go around and measure the garbage at every mess hall. We'll make a chart and the outfit with the most garbage will eat K rations for the next three days." He thought that was a hell of an idea.
I told this to Jaffe and he got a friend at Life magazine who said, "This is terrific. Can we take pictures of that?" I went back and asked the General. That Lieutenant hated me! Here is a Sergeant and he's my God damn chauffeur. We literally went around and did it and you can see Life magazine did it. This General said, "This is very good." I got a stripe a month, honest. The General sends the stuff to the Commanding General of the Fourth Service Command in Denver, Colorado, Major General Kern. The PR officer encourages things, says "Transfer that Sergeant to this Headquarters." They called me and said, "Hey, you're going to the Commanding General's staff." I said, "No, I don't believe this, man. What am I going to do in Denver?" I got my orders and I was on my way to Denver.
Denver wasn't the worse place in the world to be. I got very friendly with the PR major there. In Denver, there were Buckley, Lowry, and another field. Three of the big fields. One of them was the photo reconnaissance training field and they had one of the biggest film processing labs in the country. That was primarily to teach the guys how to process aerial maps. It's unbelievable. We get in there and start to do a few things for General Kern and then it dawns on me that the Fox Inter‑Mountain Circuit controls God damn every theater within 200 miles of Denver. I knew the guy who was managing that very well, his name is Bernie Hienz. I went down to see him and said, "What would happen if we put together a special news reel on the Fourth Service Command for just this area and you just ran it in the Fox Inter‑Mountain Theaters?" He said, "Terrific."
I went back to the General and said, "Sir, I think we can put on a terrific PR thing for the parents, family, and everyone who lives in the area. I have to have a soundtrack and the only place I know I could get a soundtrack is in Hollywood. But I can't get it free." He said, "How much do you think it would be?" I said, "Well, they go for a million bucks or more but maybe as a patriotic gesture, I might get one of the studios to knock that down to maybe $100,000 or $200,000." He called someone and said, "Call the Officers' Club Surplus Fund and tell me if we could spare a quarter of a million dollars out of that for entertainment and well‑being of the troops." It was an unaccountable thing. They said, "Yes." He took his plane and his pilot and said, "Fly Sergeant Kahn to California."
I went to see Mr. Zanuck who hadn't been pulled into the service yet and said, "You've got to really pull off a big one. I want a whole sound truck and a whole deal. Don't tell me how much it costs. I've got two hundred thousand bucks to spend and it's coming out of Air Force funds and you have to do it." He screamed a little bit. I said, "I've got to have it and I've got to have it in a week." We got it.
We sent up an Air Force driver to Los Angeles to drive the truck and I got my truck. Then we went out and started shooting newsreels all over the place. I ran into Hal Canter who was writing for the Brigadier General at one of the bases. He was already a Tech Sergeant. Subsequently, he became a top comedy writer and has won an Academy Award, and he's done very well. He's a very good friend today, still. I said, "Hal, we've got to do this thing right. This General is making speeches all around." I went to the General and said, "Sir, if you can get us a guy to fly us a week in advance to the towns where you are making the speeches, we'll pick up some local color and we'll re‑do the speech. I think we can improve the whole deal for you. "He got us a Lieutenant Brady, a radio announcer, and he was tickled pink to be in on this with us. This wasn't "military;" we were all doing what we liked. I might add that we were working 14‑hour days, but it wasn't like I was digging ditches. I was doing something that I wanted to do.
We started to write speeches for the General and they were getting great reception. We had now trained guys from Buckley. Any guy who came through personnel showing any ability to work as a grip or anything was immediately sent up for an interview. We assembled a damn near totally good crew. We had sound guys who knew how to keep the boom out of the picture. We had guys who worked the levels, all the things that you have to know.
The newsreel wasn't kept quite to the schedule of two a week, but we were doing one a week. One of them got a great deal of praise. Somehow it got to the Air Force Inspector General's office. Somebody at the First Motion Picture unit in Washington said, "We don't have a unit out there. That couldn't be us." We got a telex that said, "Did you do this? Where did you get the equipment? What are you doing?"
Then they sent an inspector out and he said, "What is this, free entertainment for the troops?" Everything was accountable. He said, "You're not authorized. Your type of organization doesn't call for this." So the bastards took all of my equipment. They paid the Officers' Fund the depreciated value as they figured it and we were put out of business. We didn't have a camera crew any more.
So we were writing speeches for the General and my life slowed down a bit. He called me into the office one day and he said, "Now I know you like Chinese food. Can you speak Chinese?" I said, "No." He said, "Well, I'm going to the China/Burma Theater (CBI) and you're going to Officer Candidate School (OCS)." I said, "Oh, no, man." I had added another stripe. I was now a Staff Sergeant. He said, "I really think you ought to become an officer and I think you'll do it, so we're going to toughen you up a little bit." Instead of sending me straight to OCS they sent me to Amarillo, Texas. Here (Denver) I'm living like a civilian. I've got two uniforms. I have an apartment. I report to Headquarters in the morning and go home at night and do what I want. Have you ever been to Amarillo, Texas? Don't go. There was a song called, "The Sands of Amarillo Keep a Rollin' in My Heart so Take Me Back to New York." I drove my car there and I left it out the first night and it was God damn near sandblasted. Literally.
In Amarillo I ran into Freddy Bartholomew, whom I knew from Fox. I was about 40th on the OCS list because of the General's recommendation but they were only taking two a month. I said, "I can't stand twenty months of this. It will kill me." I called Hal out in Denver and he wrote me a script for a show. I called my uncle's office in New York to get me orchestrations from around Texas. I got a guy from Denver who was a comedian, Lou Black, to help me. Freddy Bartholomew emceed the show. We didn't know it but ABC picked it up as a network show. We got a terrific break. We got terrific reviews and it really wasn't a bad show. We had plenty of time, rehearsal, and talent. I got a commendation from the guy. I went into the Officer Candidate Review Board to go through my questions and came out very good. I asked the guy how I did and he said, "You just moved from fortieth to fourth." I was out of there in about two or three months.
Now comes the real killer. Here I am in my winter uniform from Denver and Amarillo and they give me a delay enroute so I can get rid of my car, and I have to report to Miami Beach, Florida. Man, I was the most unmilitary character you ever saw.
I report into Air Force OCS, spit and polish. The first thing the guy says in our class is, "There are thirty‑two people in this class and sixteen are going to fail." The golf course was our obstacle course. Oh, man! I took off forty pounds in the months that I was there. I survived it and got out of that. My friend Hal, who was then with the First Motion Picture unit, was about to go overseas. They had kept the place of a Second Lieutenant open for me and he said, "This guy is coming and he'll work with us." Some dumb son‑of‑ a‑bitch in the IBM office where they punch the cards punched in the MOS and reversed it. I go to get my money to go across country which I think was $7 or $10 a day and they give me $14. I said, "Hey, there has got to be a mistake I have to go to California." He said, "No, you don't." I said, "Well, my orders are sealed." He said, "We'll open them for you. You're going to Tampa, Florida, Third Air Force." He said, "You're a multi‑engine maintenance officer, are you not?" I said, "No!" He said, "That's what it says here. Straighten it out when you get there." OCS was a bitch. In mental terms it was nothing, but physically you were active every second.
I got to Tampa and they told me that I was going to stay at the Tampa Tropics Hotel. That was the military billet. Don't come in, crawl in twice a day. I said, "Sir, I am improperly classified. There is a unit that is going overseas and I've got to go." He said, "We are not letting you or anybody out of here until we get a replacement from personnel. We are very, very short." I said, "I couldn't turn a car engine." The guy said, "Okay, but you are still not going anywhere." I stayed there for about thirty days and I couldn't take it. In the meantime, I got a hurry up call from Hal. He said, "I can't hold it up we are shipping." He went to Eniwetok and I didn't go with him.
Now how do I get out of this place? Well, I go back in there and tell these guys to get me out of here. They sent me to the Third Air Force Combat Team in Tallahassee. I got there and took over I&E and I start looking through the book. Well, there was an advanced intelligence school for people with a psychology background. I went in and asked if I could apply for it and they said, "Yes."
I applied for it and I ended up in Las Vegas, New Mexico, not Nevada, in the old National Guard barracks. There was only a pot belly stove and we were there in the middle of the winter. It was rather interesting. I had not been involved in Counter Intelligence Corps (CIC) at all. While we were going through that they said, "Those of you in the upper two percent to five percent of the class will have an opportunity to choose what part of the world you want to go." I came out, I think it was in the two percent bracket and I put down China/Burma (CBI) and second choice European Theater (ETO) and thought there was no sense in putting down a third choice. Well, it didn't work like the man said. I get my orders and they give me an APO box in Great Falls, Montana. Where's my ETO? I thought they were crazy. I got talking to the guy and he said, "You're going to Alaska." He was right.
I got to Great Falls in the middle of the winter and it was 20 or 30 below zero. They have two airstrips there. One is about a mile below the other. There is no way you can tell what you're doing. I would hate to have to fly out of there regularly. They put you through a survival‑in‑the‑arctic course there and they issue the mucklucks and all the crap that goes with it. The Air Force mucklucks were canvas with a leather bottom. Then they tell me, "First you will go to Calvary for assignment. That's headquarters for our Alaskan Command going north." They put all this survival stuff in and you get on a T‑47 and we fly up there. We got there about six at night and we got off the God damn plane and all the guys were sitting with this Alaskan issue. Here were staff cars with WAC drivers, Canadian gals, to meet us. I never felt worse, like a real idiot. They took us over to Bachelor Officer Quarters (BOQ), we changed our clothes and went to the Officers' Club and it was fantastic. I did fly up to the Yukon territory and up as far as Nome. Then we went out to the Aleutians. I was not nearly as big then as I am now, but I wasn't thin. To get off that God damn plane you have to lean into the wind to walk.
It was quite an experience. That was the first time that my CIC training came in. My top assignment was I&E officer. My real assignment was to watch two or three guys on the base and in particular the Russians. On the surface we were friendly with the Russians.
Molotov came through there the second week I was there. When his plane landed we sealed the blue tape on the door and had our guys as well as his stand guard. We were friendly but we weren't too friendly. It was a pain in the ass to do a full day's work as an I&E guy and at night write another report which you personally had to send. I didn't have a hell of a lot to say. There wasn't that much action.
That was a rather interesting assignment. There I built the first war room. I had a Corporal whom I requisitioned from Amarillo who came to New York. In fact, he was in this office the day before yesterday. A damn good artist. He made a great big paper‑mache globe. We stole three Hammerland Super Pro shortwave radios. I shouldn't say we stole, but I had no right to requisition them. I got a couple of double Signal Corps guys to put up antennas. I knew the guy from my New York days, who was the head of United Press (UPI), Joe, I forgot his last name. I said, "Get me that God damn ticker. Who will know?" So we ran a line in and he let us tap and we got the UP newswire right in our war room. We were also able to get other programs. These Signal Corps guys were very good. They were ham operators. For this we got a hell of a commendation.
The war has been going for awhile and I'd been there through the winter and it was miserable. It was dark for twenty hours. General George was the Commanding General of the Air Transfer Command. We were showing him how great this was. He said, "That is a very nice project. I would like to have one of those across from my headquarters in Washington." His headquarters was right across the street from National Airport. This order I didn't resist at all. I got shipped to Washington. We put together more than what they had up there.
While I was there we had already won in Germany and it was a question of how you could get out. I had kind of a hardship case and I had these points by which they measured hardship. There was a major there from Arizona who wanted my job. I said, "Look, you got any friends in personnel? You get me the hell out and you've got the job." I got my release within two weeks.
That was my military career. When you look back, I probably did more good than I would have in any other area and it was an area that I knew something about. It was my know‑how, and also I knew how to get around. If you did it the military way, it would take forever.
FROKE: It all seemed to come together from the University of Alabama days.
KAHN: Yep, how else could you get a script written overnight. I'm sure that Hal Canter sat down all night, as I would have done for him, getting orchestrations. My uncle wasn't there but the people I called in his office went out and got them. If it wasn't a full orchestration, they got me a full orchestration. You did need the contacts, there's no question. The people we had were good. I was on Fox's set several years later and one of the grips came over and said, "Hey, remember me? I was in your unit." I didn't remember him but all the guys were really good.
FROKE: Following your discharge you went back to 20th Century Fox?
KAHN: I got back and, frankly, for a short time they didn't know what to do with me because they had broken my job up into three jobs. I got one of those jobs, one of three assistants without portfolio.
At that time, I ran into Marty Kodel. He was one of the owners and publishers of Broadcasting. When he went into the service, he gave up his half to Sol Taishoff who was the industry guy. Kodel was about to start a thing called TV Digest. Other than his office, I'm probably the only person in the United States who has Volume 1, Number 1 and all the other issues. It's quite a few years. That became the authoritative newsletter, still is. Al Warren who runs it today, is a very close friend. He was just a young kid them. I used to have it delivered to my house on Saturday night by special messenger. When I went into the office on Monday morning, I had all the inside dope on what was going on.
FROKE: Taishoff was a friend of yours, too?
KAHN: Oh, yes, a very close friend. I'm one of the founders of The Taishoff Foundation in Washington at the Press Club where we give scholarships. Kodel was a friend, and it was rather funny because they hated each other after they broke up. They were both very decent guys, at least to me. Sol used to fish with me in Palm Beach. I didn't know his son too well, but he was quite a power in the broadcast industry in Washington. He was very supportive, very anti‑cable, very pro‑broadcast. In the first few days he said, "Man, you're crazy. That business isn't going to be around for too long."
FROKE: You were working with ...
KAHN: I was back at Fox.
FROKE: As an adviser and a consultant.
KAHN: I finally got back to being the Radio Director at this point. With television coming on, I began to see that here was an opportunity. I went in to see Skouras and said, "We ought to be in this business." He said, "Nah." I said, "Well, let me use it for publicity." And he said, "Okay, fine." I said, "But you don't understand the advertising industry. If I go in there as a Director I can't talk to the Vice President so, therefore, I have to be a Vice President. At the moment I don't care if you pay me." He said, "If it doesn't cost any money, you're a Vice President." I became Vice President of Television and Radio. They subsequently paid pretty well but he didn't then.
Skouras went more by instinct than by any other training. I started calling the agencies and talked about what we could do. We made a contract with P&G to do commercials. One of them was for, I think, Duz, one of the soaps, and we built a big box and had a magician pop out of the box. He had two lines. We figured to shoot it in three hours and we bid the job that way. This son of a bitch couldn't remember his name. This is really true! I couldn't readily get another actor because the box was fitted for him to pop out. I would have to get another guy who was five‑foot‑eleven and would fit through the hole. I was very embarrassed because I told the company we were going to make money on this. My first day we shoot for two days.
The following week‑‑this is where fate has to be a factor‑‑into my office walks an actor, Fred Barton and he's got a thing, "to prevent actors from forgetting their lines." I said, "Come in!" I had just gotten my ass chewed out for going over budget on the commercial. He's got a butcher roll of paper with handwritten lines on it, like cue cards but on a roll. I said, "Hey, you know, that might work." That's when I sent the thing to Schlafly and he said it was a great idea but it would have to be engineered. Then they turned me down for my candy concessions and I started with that.
It was tough to get into studios. We got into CBS for test and I was carrying our stuff through the door and the union guys say, "You can't carry that stuff, that's what the IA is for. Put it on the floor. That's CIBEW's work." It wasn't too bad to get a settlement between the IA and the IBW because they were both members of the AF of L. NETA was a house unit and not a member. At CBS you had IA and IB, but at NBC and ABC you had IA and NETA. They hated one another.
End of Tape 3, Side B
FROKE: Would you go back and pick up your story again about your first meeting with Mr. Barton?
KAHN: His real name was Fred Barkow but his stage name was Fred Barton. He came from Cleveland, Ohio. He was an actor. He didn't know me. He came to me because I was Vice President in charge of Radio and Television. He was going to help actors not forget their lines.
FROKE: You immediately saw this as something that was needed?
KAHN: I think fate was a factor. If I hadn't had that experience with that guy in the soap box, I probably would have given him the same reaction as a lot of other people, "Who needs it?" He hit me right, the timing couldn't have been better. It was just a coincidence.
FROKE: What would be the circumstance that would prompt you to refer the matter to Schlafly?
KAHN: I didn't report it to Schlafly. I reported it to Spanavil who was the head of Research and Development. I could not give this an engineering or a mechanical evaluation. He oversimplified it. To find the problem, Spanavil turned it over to Schlafly. Schlafly was a very bright young engineer. Hub had a very good engineering record. He fit the thing to the letter. He wrote a report which said, "This is a good idea, however, we have to design a machine."
We originally talked about two machines, running in sync. One for the operator; one for the other guy. We never thought it would get to the point that we would use as many as sixteen at one time on a big dramatic show. He defined the problem, how he saw it, and he certainly thought it was an easy thing to do. He talked about Selson Motors for synchronization. None of us knew anything about paper getting hot in one room and cold in another or that 300‑foot paper could shrink as much as a foot an a half in two hours under the lights. You would never know that if you have never done it. We always thought that black on white was the greatest contrast ratio. When we went to National Cash Register (NCR), which produced our paper and our carbon, they made a study and it turned out that midnight blue on canary yellow was by far the best contrast ratio. All our paper was yellow.
The typewriter. You wouldn't believe what it was like to get Underwood to make one handmade typewriter. They had to handcut each piece of type. Remember, conventional type is that big, we wanted type this big. It took a lot of engineering to get that into a big carriage.
After I got one, I needed ten. I wanted a bargain price for the ten. We didn't have the money. Bill Arnold, who was the Vice President of Underwood at the time, saw the potential and he went along with us. I think in everyone's career you can sit back and think of five or six people, maybe more, who at a critical time said, "Yes," when the average guy would have said, "No." I don't care how lucky you are, if you don't hit something like that, you don't make it. The talent you may or may not have, the luck you can make by working, pull you have to make, too. If you pepper that with a serious amount of determination, the odds are pretty good. Such has been my experience in my lifetime.
FROKE: Fox reached a point where it was either go or no go?
KAHN: Well, not really. I had spent beyond the ten thousand dollars. My wife was pregnant for the first time and I was making at that time, when I left Fox, about fifty thousand a year plus a thousand dollars a month of unaccounted expenses. Taxes then were only four or five percent. It was unbelievable. The way I lived before I got married, I would not have a nickel at the end of the year. I could get into the Stork Club, that didn't cost me. That was on the cuff but at the 21 Club, my monthly tab was over a $1,000 a month.
FROKE: You were lunching with the actors and the actresses?
KAHN: That I could charge off to the company; this was on my time! This was stuff I couldn't charge off!
FROKE: You enjoyed New York?
KAHN: Yes, I did! As Charlie Skouras put it one day at a competitive hearing, "When I came to this country I came in steerage. When Spyros came, he came first class and has been living first class ever since." I started as a press agent for six months and then went to Fox and then left to start my own company. That was it. I can't say, like many people, that I had a real rough time. After a year we had "The Arthur Godfrey Show", we had Pearl, and it looked like we really had a business. But to answer your question about Fox, I went to Mr. Skouras and said, "I am going to leave because this thing is really working." Then he really helped me. He said, "I'm going to give you a year's salary to get the God damn thing out of your system. Then come back." That year's salary gave me the basic financing to get going. We created the company. We gave twenty percent to Hub Schlafly because he still worked at Fox and he was just going to do the engineering. Barton got forty percent. He was supposed to work during the day teaching the actors how to use this thing. My job was to finance and promote it. I got forty percent for that. I was working full‑time, Barton was working, virtually full‑time, and Schlafly was working part‑time. That's how we originally divided up the company.
FROKE: Do you still retain some of your interest in the patents?
KAHN: No interest with the company. But with the patent, believe it or not, it went 17 and 17. I think the last 17 years is about to expire. That's for the glass outright.
I have some pictures of working with Jack Kennedy on that thing. Harlow Curtis was a good friend of mine, President of General Motors, the Buick Division and was a big Eisenhower supporter.
We had to find a special kind of two‑way glass, titanium oxide molecularly‑coated glass. I called Harlow and told him we had a hell of an idea but we couldn't do it without this piece of glass and I didn't have any connections. He said, "We have a few. Wait fifteen minutes then call this guy." I said, "Who is he?" He said, "The President. Just identify yourself, you won't even have to mention my name." I called and got to his office and he said, "Oh, yes, Harlow just called." Within a week we had two engineers down there. In less than a month we had twenty samples. There was 80/20 transmissible glass and 70/30 transmissible glass. I don't think the whole damn thing took a month. TelePrompTer was a refined product, it went on the train with Ike. You talk to Ray Hagen on the phone and he'll give you the Hoover story, a great story. It is now in the permanent files of the Hoover Museum in Iowa. He'll give you the Eisenhower story and stories about some of the other people who worked with it. Things like that put us ahead years.
Up until now, the damn prompter was this big. If a guy used two of them, a third of the audience could never see him. Then they had one built into the podium. At the 1956 Convention, Leonard Reinsch was with the Democratic National Committee with Paul Butler who was the Chairman. He had an assistant, a fellow by the name of Elmo Ellis. He went to college with me. Elmo Israel, he was Mel's cousin. This guy said, "You can't do nothing to that podium." The night before the convention opened we were there all night. We went to one of the Chicago union carpenters and said, "Saw a hole in here. Here's fifty bucks." We needed a piece of glass to put over the hole‑‑this is the honest to God's truth‑‑we didn't think about that. Where are you going to get a piece of glass at two in the morning? I went downstairs and I went by the emergency room and there was a glass window. I went back up and got a glass cutter and went down and cut out a hunk of the window. Then we went to the painters at four in the morning, got it painted nice and neat. When my former schoolmate came in and had thought he had stopped us from putting one in, he found out and I thought he was going to have a heart attack! That is a true story and verifiable!
FROKE: All this time you were, in effect, developing the teleprompter as an instrument and at the same time discovering other applications for it.
KAHN: We went out for Hoover but we also went out for Westinghouse for Betty Furness to do commercials. We were sitting in a little room and every time there was a dull break in the convention there was a commercial. We had about fifty commercials. We'd roll through another one, She'd do it and Go... Then we had another character, who couldn't remember his name and I still don't think he can. An actor by the name of Ronald Reagan. He did the GE commercials for a long time. They were terrible, but he could read. He uses the teleprompter very effectively today. He was President of the Screen Actors' Guild and he had the GE commercials after Betty Furness for a long time. We used to work with him. I don't say that jokingly; his memory was not what you would call great. With the prompter, he really looks great. One person in 50, some people think they are bullet proof things. They don't even see them. I mean you see them but they don't distract you.
FROKE: Who was the first news broadcaster to use a teleprompter?
KAHN: Douglas Edwards. The director of that show is now a very famous producer, Don Hewitt, a very good friend of mine. Doug Edwards, who incidentally is an Alabama graduate, was on the first news show that used it every night. Then a fellow by the name of Ben "Buddy" Graver did a lot with it. John Cameron Swayze has always used it. Of the Fortune 500 companies, 375 were our customers.
FROKE: In the early days, it was necessary to send somebody out with it.
KAHN: We had a lot of people in our crew but I was personally involved. When you are working with a President, such as Mr. Sarnoff, he is not going to tolerate any little guy coming whom he doesn't know. He would call me early and say, "I have a speech. Would you mind coming over? "What am I going to do say, no?" It got to the point that I was sending maybe five different guys a week. I got a call from David Sarnoff and he said, "I was having dinner last night with a good friend of mine, who is the world's sixth most popular speaker and he's terrible. I told him about the teleprompter, so he is going to call you and I want you to give this your personal attention."
It was David Rockefeller. I got to know him very well. He would come over to our offices at night with just his assistant and rehearse. He was sitting there one night and said, "How are things going?" He had a very dry sense of humor. He really was terrifically funny but you had to know him.
I had just come back from Hawaii and just making a deal with Henry Kaiser. I asked Kaiser, who had just passed their billionth dollar earned, "How do you build a company like that?" Kaiser said, "It's going to be very easy for you." I said, "How?" He said, "Mentally resign as President and become Vice President in charge of enthusiasm. That's point one. Point two, go out and find yourself a dice‑shooting banker and you've got it made."
I was sitting with Rockefeller, going over a script and he said how is your business going. "I just came back from Hawaii," and I told him the story. At that time Chase was promoting the line, "You have a friend at Chase Manhattan." He looks me straight in the face and said, "Irving, didn't you know you had a friend in Chase Manhattan." I said, "Are you kidding?" He said, "No." The next morning I saw the head of the 54th Street and Fifth Avenue branch of Chase Manhattan, Frank Connant. He's still around. He said, "Mr. Rockefeller suggested I come and have a talk with you."
You couldn't get money at that time to finance cable; we had just started in the cable business. He asked me, "What is it all about?" I explained and he said, "How much do you need?" I said, "Frankly, if we had two million dollars it would be a good starting line." He said, "Well, Mr. Rockefeller thinks you might make it, so we'll charge you a point over prime." I said, "No, I want to be able to say that we were able to borrow at prime. I think this will help our industry. If you want to charge me one eighth of a point service fee, okay." He said, "All right. We'll give it to you for prime." We put out a big story, "Chase Manhattan Loans TelePrompTer Two Million."
FROKE: Which was a big breakthrough for the cable industry.
KAHN: You'd better believe it. That was the first breakthrough. I could go down a list with you of at least fifty first technological, creative, promotional breakthroughs that we instituted when the rest of the industry was just sitting there fat and happy. They were little guys in little towns. Where the hell was cable?
FROKE: What was the year that you left Fox to take off on your own with Teleprompter?
KAHN: Good question. About 1950.
HUNGERFORD: But it took to about 1955 to get going?
KAHN: Well, it depends on how you define "going." In the first year we made close to $15,000 a week. We rented out two prompters and a man for $30 per hour.
FROKE: Can I try that date again? Could it have been 1955?
KAHN: I'll have to find out for you. I don't know. We started in 1951 as a company but we were going at Fox without an incorporation. The year 1951 is when we officially incorporated. Then we got our first banker money. Over the counter we got a quarter of a million bucks. God it seemed like a trillion. We didn't give one share of stock, we didn't give one warrant. We had a very independent character.
FROKE: What explains the capital "T" at the end of the three capital letters for TelePrompTer?
KAHN: We had a quarter of a million dollars to get the proper trademark. It's a bad one because it's descriptive of what we do. Kodak is a good one because it means nothing. So by doing it that way, that's the way we registered the trademark. If you go and look in any dictionary, you will see TelePrompTer as a registered trademark. You won't find two dozen registered trademarks in the dictionary, and I will guarantee you any one of the companies that are in there has a net profit in the excess of the gross that we never came close to.
The other day there was a thing in the Post that my secretary, Linda, put on my desk. I was amazed because it has the right spelling, capital T, capital P, capital T. It was a story about "Dragnet" and that was the first movie that we ever got. Jack Webb said that the reason that he wanted the teleprompter was so they could shoot in two days and they wouldn't need the actors to rehearse their lines too much. He wanted them just to know enough about the script so they could ad‑lib if they wanted.
FROKE: Mr. Kahn gave us a copy of the New York Post, Thursday, July 2, 1987, edition in which Tom Hanks, who is playing the role of one of the cops in the revised version of "Dragnet," an old television series, credits the TelePrompTer as being largely responsible for the style of the highly successful "Dragnet" series. The article quotes Tom Hanks, "The shows were done in two days and they did everything off of a TelePrompTer. Webb felt that if you memorize the script you take pauses, and he wanted a staccato quality." Jack Webb was the actor in the original series and also the director and the producer.
One more question for a brief answer. TelePrompTer spun off then into a large number of other activities. You've talked about cable and so on. I think one of the firsts was televising boxing matches in the theaters. How did that come about?
KAHN: When I was at Fox with Schlafly, we had been working on large screen projection equipment with General Precision and with RCA. We had a joint development contract, originally, with Warner Brothers, RCA, and us, to develop a large screen projector for theater. We did, in fact, develop one but it was bigger than this table. You could lie across it. It was a Schmidt Optical System.
After we had this, I started to get involved in the other. We needed something that was portable. I went to Herman Place and he introduced me to his people. The idea was to make a smaller one. I think we used a five‑inch or a seven‑inch tube, I don't remember which. We lined up three of them. It was on wheels so we could wheel it around and we had a hell of a job packaging the damn thing because we had to ship them all over the country.
Nate Halpern came in later. He had a friend in the Garden and he bought some of that equipment and then he also bought an Eidafor.
When we originally got into boxing, my knowledge of boxing was zero. Frankly, what I saw in it was not boxing; I saw another entertainment event. We first got in it with Sugar Ray Robinson who didn't like the deal that he was getting from Madison Square Garden. Madison Square Garden had control of Halpern's deal. We started it at 20th Century Fox with large screen projectors. The trick was to get your hands on enough projectors. I used to have to go to Harlem in my limousine with my lawyer. We would have a discussion in the car and then we would go up and meet with Sugar Ray and a big Jamaican guy, his trainer. I was having dinner with Red Smith, the sports writer, one night after I had just met with them. I was telling Sugar Ray, "You know, we are going to have 250,000 seats available for your next fight." This Jamaican, George Gainsfree, tapped me on the shoulder and said, "Mr. Kahn, I hear you say 250,000. How many asses are you going to have in those seats." This is now the Gainsfree Theory, I told Red, and he wrote this in his column in the Tribune. Even now, when our people come in with a projection I say, "Have you applied the Gainsfree Theory?" Don't tell me what's available; what are we going to get?
FROKE: In a sense you're taking your publicity days from radio and your knowledge of the film industry and putting it all together with a little bit of fun in the boxing field.
KAHN: It also helped our entree into the cable business. The cable convention in Miami was the first one I ever attended.
FROKE: This was 1960?
KAHN: I don't know, I'll have to check. The night before the convention started, I had to be in New York because we were putting on a big fight. It dawned on me that I might introduce myself to the cable community this way. I had them install a large screen in Miami in the theater where all the NCTA people were together. After the fight was over, I had the guy put the camera on me and I said, "As you can see, I had to be here today but I'll be talking to you tomorrow and I look forward to coming down." Boy, it couldn't have been better. George and Yolanda Barco were telling me, "What do big town guys like you want in the cable business?" Yolanda was almost, not just argumentative, almost hostile. I took her on in front of the floor and explained to her what we wanted and what we were going to do.
FROKE: You and George and Yolanda went on to develop a strong friendship.
KAHN: I still do.
FROKE: From talking with George, I know that you were hoping to have Yolanda work directly in one of your offices.
KAHN: Not only that, I thought I bought that system of his five times in at least ten years. George wasn't going to sell.
End of Tape 4, Side A ‑ End of Session 1
FROKE: As we record, Mr. Kahn is just two days past the celebration of his 70th birthday. That celebration, incidentally, brought in people from all over the United States.
KAHN: And one guy came in special from Burma, Greg Harris.
FROKE: The guests represented many years of show business, your work in radio, television, film, and cable.
KAHN: Right back to my college days. They literally got the University of Alabama "Million Dollar Band" assembled and they played "Happy Birthday." It was really funny. The commentator on tape was Colonel Butler, who was Captain Butler when I was in school. He's retired and he has to be 88 years old or more. He picked me out of about thirty guys for the scholarship to lead the Alabama band when he was putting the "Million Dollar Band" together. He did the commentary behind the birthday tape.
FROKE: When I walked into the office this morning, I noticed a number of photographs that were on the partitions.
KAHN: That was for the party. We haven't had time to take them down.
FROKE: One of them showed you as a drum major manipulating an open‑sheathed saber.
KAHN: That was in the Rose Bowl. I led the Tournament of Roses band. That was taken in California in about 1938. I started to play around with my ROTC saber and found out that while it had a lot of engraving, it was balanced and could be thrown if I was careful and didn't catch it point down. I played with it then, borrowed my roommate's saber, and got to throwing two of them.
FROKE: No wonder you were named the National Collegiate Baton Twirling Champion.
KAHN: That was actually more formal. There was a series of competitions. If you see a man leading a band today, it will be a strutting drum major; he won't be a twirler. At that time, there weren't any pretty girls to twirl in front. In fact, at the request of Colonel Butler, I stayed down in Alabama one summer and taught a course in baton twirling for some high school teachers who came to summer school and who were going to teach the kids. There was a transition to pretty girls doing baton twirling and now there are tens of thousands of them.
Actually, prior to going to Alabama, I had won the Eastern States Twirling Championship. Ironically, I twirled for a Catholic school, St. Benedict's Prep. They used to pay me $10 a competition to represent them with the understanding that if the winning prize was a cup, they got it; if it was a medal, I got it. I got a lot of notoriety out of that and eight or ten schools offered me scholarships. Ohio State, Michigan, LSU‑‑I got a personal phone call from Huey Long and a big promise of what they would do. I didn't plan to stay down there, but I chose the University of Alabama because they had a good School of Commerce. I said, "What the hell, I'll go down there for a year and then I'll transfer up to Wharton." I was having so much fun down there and the School of Commerce wasn't that bad, so I went through the whole four years at Alabama.
FROKE: Incidentally, I did talk to your secretary just before the Alabama ‑ Penn State football game, but I did not call you afterward.
KAHN: Penn State invited me, believe it or not, and Alabama invited me. I couldn't go. It was a great game, it really was. That's a great coach that you've got there (Joe Paterno). I know people who know him and think highly of him. I was with Mel Allen watching the game at home.
FROKE: The great sportscaster.
KAHN: Yes, he was my roommate at school. I brought him up to New York on a Christmas vacation for him to do an audition at CBS. His name was Mel Israel, his family name. His family lived in Tuscaloosa. He stayed at my house and went over to do the audition at CBS. We were out late one night and he got laryngitis so my mother was giving him a honey and milk mix. He made the audition and Bill Paley happened to be the one listening to him. He liked his voice and they hired him. When they asked what his name was, they said it was a nice name but he needed something that was easier to remember. They asked if he had a middle name‑‑Allen. They said, "You're Mel Allen." That was it. He did a lot of things including the sports. He got friendly with another young guy by the name of Ralph Edwards and another guy by the name of Andy Baruch. The three of them had an apartment. When I got out of school, Ralph Edwards became a very good friend of mine. Mel was in law school while I was an undergraduate. In fact, he was an Associate Professor of Speech at Alabama. His diction can be perfect without a southern accent. Put him in with a group of southerners and in a minute or two he goes right back to it, even now. He got his law degree while he was teaching and passed the bar in Alabama, but I don't think he ever practiced.
FROKE: When we talked the last time, we had just begun the discussion of your career as you came out of the motion picture industry and began to see the possibilities of television and then saw the linkage between television and the old motion picture theaters. All of a sudden you were in the business of extending major public events into television theaters. What sparked that idea? Was it your experience and background?
KAHN: No, not at all. Getting into sporting events was based on a big dose of ignorance on my part of who controlled boxing and the kind of people that were involved. I am not now and have never been a boxing fan. The intrigue was that boxing might be treated as an event, such as a movie. It might be promoted. At that time, it never dawned on me that most of the major arenas were controlled by mob people and that was how they controlled boxing. If you wanted to have a world championship fight, you had to go to Madison Square Garden or you had to go to Chicago to the Stadium or to California or to Boston. You couldn't go anywhere else and the guys that owned them were all mob connected. They told you what terms you'd get where. In most cases, the boxers got very little, relative to what came in.
I had been playing with closed circuit with 20th Century Fox. The twin optical projector system that you see today was the development of the work that I did at Fox with Hub Schlafly, my partner in TelePrompTer. We brought him down from the MIT radiation lab to come to Fox to help us locate mountain sites. My original idea was to distribute all motion pictures via television. You know what? It's going to happen. I was about forty years early. The prints were expensive. In color they are very much more so. You were limited by the number of clients you could have, by the number of prints you had. You would air your premieres and then go to the next area and here you would get all this national publicity and there's nothing better than yesterday's newspaper. It didn't mean anything to help sell the picture. We made a study of all the first‑run theaters in the United States. We found that with the exception of the three‑hour time frame, there was less than a ten‑minute variation in the hours that movies ran the feature pictures in every theater in the country. My thought was that we would end up with three films for the time zones. Then we would send them by television to the theaters and put them on a large screen. We made a joint deal with RCA, Fox, and Warner Brothers to develop the large screen, a Schmidt Optical System, which is still being used in various forms. The one that we developed was about six feet across. You know those big spotlights used for opening events? That was roughly the size of a Schmidt system.
To prove our point, we took the Mass Theater in Philadelphia, I think it's just been ripped down, and we did the Louis‑Conn fight from Yankee Stadium. I took seven or eight limousines with all the top sportswriters from New York and drove them down there. I was in one car with Red Smith, who was a famous sportswriter and a very good friend. One reason we picked Philadelphia was because Philco had the only available microwave link from New York to Philadelphia. We got in the theater and if you have seen snowy pictures, you know what we had. I figured I really blew it. Not only did I have the best world press there, but they were going to look at this thing and it was going to be murder. It was so snowy you could barely see the fight. We had a full theater and you could hardly make out the fighters. It was incredible. The fans started to get up and cheer when there was a knockdown. They actually started to rip seats out of the theater. This was impressive to the press guys.
Even though the picture wasn't perfect, it was live, and we could see the damn thing. It opened my eyes. There was more here than when we started. Then I started to figure out how we could put these God damn things in the theater. This was before the consent decree had broken us up and we owned National Theaters. We went to General Precision Labs that used to supply National Theaters with equipment. Their guys to developed for me the first Kinescope projector.
HUNGERFORD: They made one hundred of them.
KAHN: That's right and we bought them for $3,500 bucks apiece. We had hustled them down from $7,000. They lost money on them. The outfits were portable, not unlike if you were to buy a whole hi‑fi deal with all the components. You've got a thing that moves around on wheels, only on top of it we had one projector. We were using the then state‑of‑the‑art five‑inch, three‑color tubes with mechanical registration to get the picture in. From that, I went to Switzerland and I bought the American rights to the Eidafor and we sent Schlafly over to live in Sweden to work on engineering matters.
FROKE: We bought one at Penn State.
KAHN: They didn't have it in color at the time. Hub had worked at General Electric so he knew a lot of the guys. As a movie company we certainly couldn't produce them so we made a deal with GE. We bought the rights when they were going to develop the Eidafor. They gave us about two years. I said, "Let's buy the black and white ones, put them in, and we'll get our money out and we'll learn how to do these things." In order to make this effective in California, I went to the forestry department and I bought the rights to a mountain top, Mount Tamble Pass which, incidentally, turned into one incredible asset that Fox didn't even know they owned. For many years every television transmitter in San Francisco worked from the top of that and we owned it. I didn't own it, Fox owned it. We had paid about $6,000 bucks to the Forestry Department for a 99‑year lease.
We owned practically all the first run theaters in San Francisco. We owned 500 theaters and bought a lot of equipment that General Precision made. Among other things, they used to make the speed graphic camera up in Rochester. That was one of three that we built with RCA. That's when I got to meet Dr. Zworykin. What a fantastic guy. Up until two years ago, I had at home, a 25‑inch television set that Dr. Zworykin had sent me, would you believe, thirty years ago. The only reason I gave up on it was there were no parts available and RCA refused to give me a service contract. The quality of that picture was damn near as good, and in some cases the color tones were better than the latest state‑of‑the‑art that we have now. It was a monstrous thing. They didn't know how to make the tube do the 115‑degree turn; it was a straight shot.
FROKE: From the Philadelphia success it just went on to ...
KAHN: That was in theaters. I had the rights to this damn thing and our good friend Ma Bell gave away ice in the wintertime, if it was real cold.
I wanted to start to move the damn signal and the only way I could do it was by microwave. Bell quoted me $14,000 an hour and that was good for thirty days. I could use it any time in those thirty days, but if on the thirty‑first day I wanted to do another one, I had to start all over again. It wasn't only the $14,000 a mile, I had local drops from their place to where we were going. It used to cost me an average of $5,000 to $6,000 a drop. That drop they never took out. Broadcasters had the same problem but it didn't bother them as much with special events.
Out of that came Bill Daniels, a fighter. He said, "Can you get me a signal in Casper, Wyoming?" So we went to the telephone company and they said, "Yeah, you've got to go from this loop to that loop." It came out to be about $9,000. I said, "Wait, there might be others." I said, "Bill, are there any others?" He said, "Yeah." He got me one in Eugene, Oregon; he got me other systems. I couldn't understand why the hell these guys were willing to pay to just put this in motel rooms or hotels or homes on this thing called Community Antenna Television. I had never had any exposure to it. That got me thinking. I remember in Eugene, when the hotel guy was willing to underwrite the cable system cost to bring it to town, I said, "What the hell, he has a one hundred and twenty room deal." What I didn't know was that he was getting $100 bucks a room just for the deal and he could well afford the whole damn thing. That kind of got me thinking.
I got into cable television as almost a direct result of this. I said, "Hey, there is a market here." While we were doing all these theaters, I wanted to test the market. I went to the telephone company, the only people you could go to then, and asked them to string up a thousand homes in Long Island, just to get a little bit out of New York. They quoted me a quarter of a million dollars, which wasn't too bad. They let me pay it off over ten years. That was almost too reasonable for them. I was having lunch with a fellow from Long Lines, with AT&T, and I hadn't signed the contract yet but we were really high because we were going to have a chance to test it. TelePrompTer was doing really well on its regular speech business so we could underwrite this deal. We had no place to go there were so many television stations in the country but we hadn't really gotten involved in public speaking. This looked like a real good shot. Near the end of lunch, when I mentioned to him that I assumed at the end of the ten years, I would hand them a buck and the system was ours. He said, "Oh, no, we're common carriers. We keep half."
That really ticked me off. I had some occasion to go to Washington the following week and I had lunch with a fraternity brother by the name of Marty Kodell, who started the TV Digest. Incidentally, Al Warren (now President), was a cub reporter on Marty's TV Digest. I was discussing it over lunch with Marty and told him what the bastards at the telephone company were doing and I said, "I have to run a test somewhere." He said, "I had a guy come into my office the other day and told me he was going into a new business. He's going to be a broker in Community Antenna Television. Come on back to the office and I'll give you his card." I did. I got the card and it said, "Bill Daniels, Casper, Wyoming." That's where he was then.
FROKE: You had had contact with him earlier.
KAHN: Just very casual. I called him and I asked what he had to sell in the way of Community Antenna Television. He said, "I have a 750‑subscriber system that is terrific." I said, "How much?" He said, "You can have it for $130,000." I said, "Own it?" He said, "Yeah." I said, "Working?" He said, "Yep." "Where is it?" "Silver City, New Mexico." Upon advice from my then controller, Monty Rifkin, and my personal financial guy, I sent Bill a $30,000 check as a binder. I think it was the first money we'd sent anywhere without even seeing something first, but I didn't want to lose. This was a lot better than the telephone company. It had another value. If you want to go to Silver City, you have to really want to go there. There is a grass airport. We figured if we tried out our Pay TV there and it was successful, who will know? We can hide it until we develop it. If it's a failure, who will know? It was a no‑lose proposition.
My accountant calls me about three in the morning and says, "Hi." I said, "What's the matter?" He said, "If you're one‑hundred percent wrong, you are one‑hundred percent right." I said, "What do you mean?" He said, "The cash flow of this thing is terrific. It's flowing over $30,000 a year now. "Believe it or not, I did not know what the system's cash flow was. He and Monty came back to New York and they were really enthusiastic. We bought it. Once we learned what the cash flow was, I went out within two months and bought Rawlins, Wyoming, and Farmington, New Mexico. Those were our first three systems.
We got Elmira later. We got Elmira for two reasons. It was owned by the Warner Company and they didn't understand it. Cable was in the sticks then. The belief was that if one television station came into town, you would start to lose your cable customers. If two came in, you've got big trouble. We found out that they were dropping a "v" (VHF) and another "v" into Elmira and Johnstown. This was where Al Warren was great. He used to report Commission doings. I knew on Thursday what the rest of the world knew the next Monday. I called up the guy and said, "I see you've got a "v" coming in. I was interested in your cable system. I might still be but it's a gamble. The price would have to be terrifically different. You know what happens when a "v" comes in." They were so damn scared that we knocked down the prices anywhere from ten to forty percent. We bought Elmira and then we bought Johnstown. The guy who built Johnstown wasn't very good. They had no franchises in those days. You got a city license for $25 bucks and that was it. I bought the Johnstown station and we spent about one million bucks making it a really good system. At that time, the prevailing brilliance in the cable industry was that you could get three dollars a month; when we started we went to five dollars a month. We cleaned it up and brought them in a better picture. The first system in Silver City charged $180 bucks to get on the system and when penetration of maybe fifty or sixty percent was reached, that was it.
I said, "What would happen if we cut the price?" You could hear the screams across the country of all the operators saying, "You're crazy. It won't work!" Well, the first time we went from $300 something to $180 or from $180 to $90 special, we added about ten percent more customers. I said, "Man, that's the way to go." We left our regular fee alone. Then in the next three months when that cooled off, we cut it again, in half to $45. We finally got it cut to zero. Then we had to find a reason to pay them to get on. This is no kidding. You can talk to Sandy Freeman who is now Vice President of Marketing for Comcast, in Philadelphia. He was my marketing guy. I used to call him the "Prince of Borax." In the industry, Borax was referred to as cheap advertising. I gave him a gold watch for something he had done and had inscribed on it "The Prince of Borax." Actually, we got into the premium business. He used to go and find little GE radios and other things, and we would give you one just to sign up for the God damn thing. It was incredible. For about ten years, the biggest day for cable sign ups was Washington's birthday. We used to buy thousands of cherry pies and we would give you a cherry pie as a premium and a free installation if you signed up. By the time we got out of there with close to a million customers, about ten to fifteen percent of a year's sign ups were cherry pie sign ups.
FROKE: In the beginning, you very skillfully moved away from 20th Century Fox to your beginning of your appreciation of cable television.
KAHN: I didn't know it. In the beginning I didn't say, "Hey, this is something that I want to do."
FROKE: Let's go back to the boxing. You mentioned that the arenas at that time were controlled by mob influence.
KAHN: That's correct.
FROKE: How did you get the rates then?
KAHN: Real easy. One of the greatest fighters of all times in non‑heavyweight was a fellow named Sugar Ray Robinson, whom I did not know very well. Red Smith had gotten me an introduction. I got to talk to his lawyer and I said, "Look, you get paid a percentage of what happens in the ring, but you get nothing. They go and sell the rights to Gillette for $25,000 bucks for the radio rights and then with closed circuit you don't even get a smell." I said, "You tell Sugar that we'll put a quarter of a million dollars, certified check, in your hands in escrow, and the second he walks in the ring, it's his, guaranteed minimum from just the non‑live rights." We couldn't come up with a name and one of the lawyers came up with ancillary rights. We went to court to argue that when a boxer agreed to box, he didn't sell his "ancillary rights." Those were his; all he sold was the box office that you got in the arena, Madison Square Garden.
FROKE: So you created a new property right?
KAHN: Right! And a damn new word, that to this day, everyone talks about ancillary rights. As far as I was concerned, ancillary rights consisted of television, radio, and motion pictures. I was still with Fox and they wouldn't take a chance at distributing. We made out this deal. If the fight lasted six rounds, they bought it. If it ran less than six rounds, they had an option and in most cases they didn't exercise it.
I got very friendly with Patterson through Gus D'Amato and with Gus. I said, "Look, I'm not telling you to prolong the fight. But if there is some chance that you feel sure that you can go past six rounds, you're worth an awful lot of money." In looking back on some of those early films, I think he could have polished them off a little quicker in some cases.
I had a deal with United Artists, with the guy who ran it, Bill Hynaman. If we went past six rounds and if we could have fifty prints in New York, Metropolitan, and mail to Chicago and Los Angeles by ten the following morning so they could be shown in the theaters, we had a contract.
From that, I used to get a guarantee of a quarter of a million dollars. In those times that was real money. The radio rights for $25,000 dollars was a gift to Gillette, but the mob controlled this. Jim Norris, who came from a very wealthy Chicago family, loved to associate with these mob characters. And there was this black lawyer, you wouldn't know he was black, named Truman Gibson who ran it and Ned Irish and Harry Markson, who was the promoter. When I came in to talk to them about the ancillary rights, they wouldn't even talk to me. I had a limousine then and my lawyer and I used to drive up to Harlem, where Sugar Ray had a night club, and we would sit in the limo to have a conference because it was the only place we could be sure nobody was listening. Then we would go back inside and negotiate. Once we put the money guarantee down, that impressed them.
FROKE: As you developed TelePrompTer in terms of the speech business, you had regional offices across the country. Were these also your regional offices as you went into the theater?
KAHN: No. When we had a sports deal, we did the whole thing out of New York. I bought into a little company that was trying to be in the closed circuit business. It had two principals, Bill Rosenson who is dead and another fellow, Bobby Rosencrans. Bobby had a desk right next to Monty Rifkin. They were always competitive. Bobby was really a nicer guy but very conservative. He came from a wealthy family. Our closed circuit business, other than the sports, wasn't going so well. We were in the red and finally we had to close it down. Bobby was such a nice guy, I didn't know how to tell him he was through.
FROKE: It came back again in the wintertime in the form of HBO.
KAHN: On my birthday, September 30, Vero Beach. Another guy who was up here the other day was Jerry Levin. Executive Vice‑President. He was a very good friend of mine. I was in Vero Beach for the first launch, which was on September 30th on HBO. I'll show you what he wrote on a little card he gave me. That was purely a coincidence.
FROKE: You were presiding over the TelePrompTer Corporation and about four or five different initiatives.
KAHN: In television we were very strong. That was frankly the results of the unions. Louie Yager, who was the head of Local 1 of the IA in New York, liked me. He let us hire people to do prompting, at less than half of what he let the network hire the same guy to do the prompting. It was cheaper for the networks to rent from us. Furthermore, there had to be ten or fifteen different versions of teleprompter invented. If they would ever go into a CBS studio where the IA was on the floor, there would be power failures. I got a call from Louie one day and he was a real New Yorker, he said, "Irving what are you doing? Come down to the office." I would go down to his office and sitting on his desk are the Cannon plugs with a snipped piece of wire.
He'd say, "I came into the office this morning and I don't know where these came from. What are they?" I'd say, "Hey, Louie, I want your help but this much we don't need." He said, "What do you mean?" I said, "Why are you being so nice to me." He said, "We're letting you get fattened up. When you get big enough, then we'll hit you over the head." He was a great help to us. I got a contract to provide all the prompting for CBS, minimum guarantee, if I can remember correctly, for over half a million dollars. Here is Jerry's card, it says, "9/30 I love the date."
FROKE: It was very significant for cable.
KAHN: And that was what he was referring to. Jerry and I have been good friends for many years.
HUNGERFORD: Do you remember the time when the Chicago IA people came into town and put their guns on the table?
KAHN: I don't know about putting their guns on the table, but they were a tough union. I hated the God damn NABET bunch. They had a guy out of Chicago who was the President and he was absolutely crazy. At CBS you had the IA and the IBEW, each with two AF of L units. They divided up the jurisdiction and it wasn't too much of a problem. If our panel was in the control room, IB ran it. If the panel was on the floor, the IA ran it. Incidentally the guy who brought this in was here the other day. He was one of our first and probably the only still‑living guy who used to carry the prompter around his neck like the gal would carry a cigarette thing. It was heavy as hell, must have weighed 25 pounds. Our cable was surplus cable that we bought from Larry DeGeorge for about twenty or twenty‑five cents a foot. When we came to the realization that we were going to have to build our own, we went to get cable and cable made new cost $4 or $5 bucks a foot. We finally got it thinned down. The cable was real thick stuff. With the old kinds of cameras, on a dolly and weighing about a ton, they would roll over that cable and you had a problem.
End of Second Interview ‑ Tape 1, Side A
FROKE: You went out of the closed circuit business because it was not profitable for you.
KAHN: No, we didn't go out of it. We changed from sports events to running meetings for General Motors. They called their managers in from all over the country and we did teleconferencing for Philco, General Motors, and practically every major company. They were individual deals and very expensive because of this damn 31‑day rule and the microwave cost. We used to get $100,000 or $200,000 bucks from the company to do the show. Incidentally, for the Republican Party and the Democratic Party we did more fund raisers at that time with closed circuit. That became a very good department. We rented some of the theaters which we had put stuff in for group meetings. We didn't have large screens but we had the same GPL projectors and, believe it or not, there are still a couple of them in use today.
The Eidafor was very good. The only bad thing was that it was an expensive installation. We ended up making a deal with some of the arenas so they would permanently install four Eidafors to show a fight or any event to all the seats in the arena. It was a damn good picture. It took GE five or six years, but the bastards studied and came up with a GE projector that is just like an Eidafor but it skirts the Eidafor patent. They got most of their development money through the military. There are a lot of those on military installations for briefings. Today, I think, they are selling far more big screen projectors. Do you know how you lay tiles on the floor? Well, we experimented and made up a one‑foot square tile. We literally put three little, dinky, red, green, and blue lights in there, 525 of them across. This was before we had microchips.
I sent Hub Schlafly to Japan because I heard that they were playing with a better way to do it. You're talking about over twenty years ago. My idea was a very simple one. As long as we kept the three to four aspect ratio, which pictures came over and we had these tiles, we could run any size picture. My dream was to run a picture on the side wall behind the Roxy, a whole block big. In Japan at the fair last year or the year before, Sony did almost that. A gigantic picture. Back then there was no such thing as fiber optics. That is really a piece of history. The idea that we had cost a fortune. We made up the one block. It had to be done under a microscope. There wasn't much power, but we had to get 525 lines running into each one of those and then have a side edging so we could plug it into something else. By doing that, I could have done away with the Eidafor and I would have had a flat screen.
One of the flat screens that is coming out at the end of this year, the one that Westinghouse fell on, will be pretty much the same principle brought up to the technology that we have available today. Not more than five years from now you'll have a screen the size of that picture at an affordable price. You've got another technological problem for the cable industry that just may set it completely on its ass. That's also called a flat screen but it's a flat receiving dish. It was invented by Comsat, licensed in Japan and is now selling in Japan for $1,200 bucks. It went on sale September 1st and it's on sale in Europe. This is a flat screen that is 15 inches by 15 inches. Put it on a window outside there and you've got forty channels. The problem is you've got to get another bird up there, like the Japanese have, with 200 watts of power. No problem within another eighteen months. In the meantime, they will have refined all the bugs. Furthermore, this is a quarter of an inch thick and it's got a three‑quarter inch backing.
Cable is a capital‑intensive business. You want to go into the cable business, you have to lay down a trillion miles of fiber. That would be a capital investment. With this deal, you don't invest a nickel until you have a customer. Then you buy a couple thousand of these flat screens, you come in and put it in, put a decoder device like Drendel has. It's not the best one but it will do. The installation cost and the price of this whole package in any kind of quantity are going to come in at under 1,000 bucks. This is not money you have to put up front. This does not require a license, a franchise. I can cherry pick Park Avenue, 5th Avenue. I have no obligation. Legally, I'll be a son‑of‑a‑bitch if we can figure out how you can stop it.
This does not mean the cable business is going out of business tomorrow, but if the cable business reacts as it has traditionally, they'll lose out. Once Wall Street gets the smell, and Wall Street is starting to get it... Ironically, the over‑wiring is beginning to scare them. This might make your Museum totally different. You might have to make room for a lot of old, obsolete equipment. This deal that we did in Vero Beach required a thirty‑foot receiving dish that cost $100,000. What I'm talking about is a dish that you can put in the window and it will receive all these channels off the local satellite.
There are so many technological things now. For example, cellular telephones are hot. There is a technology that can knock them right out of the ball park. It's nothing more than satellite distribution with a switch on the satellite. You won't have to make a call to go to the earth station to the satellite, back down to the earth station to you. The switch is here now.
I went to a seminar in Washington two weeks ago, an invitational seminar. There were about forty or fifty people. Every one of them made it. All the big apples are into it and they are government‑subsidized. They will get it developed. Motorola is already making the receivers. Motorola is now producing the first thirty thousand units that you'll put in your truck and in headquarters. You'll have a screen and they'll press a button. You won't have to tell where you are, they'll know where you are. They can give you instructions where to go. It will follow you right to the satellite. You can't lose it. For the military, this has a tremendous application. This year alone, digital sets will be in fifteen to twenty percent of the homes. It isn't like when we started television, when we had to put factories together. Here we're going to go up exponentially because it's nothing more than changing over a set of chips.
FROKE: You don't have to create a new industry.
KAHN: All the supply lines and everything are there. Why do you think they've slowed down on video recorders? The new VHF recorders which will give you stereo and which will play the discs that are almost a commercial three‑dimension. I saw three‑dimensional video the other day with the group I had an investment in. They're getting there, man, it's not far out.
My talking like this for the cable industry, they've got to say, "Well, he's seventy. He's getting a little soft up there." The truth of the matter is cable is beginning now to take a very, very serious look at fiber. They're only ten years late, but they are taking a look. I did some statistics so I'll have some facts for my speech. How many miles of coaxial cable do you think there are in the United States today, functioning, in all cable systems?
HUNGERFORD: About five million.
FROKE: I would probably double that.
KAHN: Well, you'd both be way off. It's approximately 750,000 miles. Right now, in the entire United States.
FROKE: I thought there would be more than that.
KAHN: Yes, so would I. How many miles of fiber do you think was installed as of January 1, 1987?
FROKE: By cable systems?
KAHN: No, everybody. By cable systems it would be a fraction of a tenth of one percent. If that.
FROKE: I think it's about 250,000.
KAHN: You're as wrong there as you were on the other one. There's over 980,000 miles of fiber in the United States. When I give a speech now, you may think it's off the cuff, but any numbers I quote have been researched. I mean really researched. I don't take any guesses or chances. When you're out on a limb and talking about things people don't want to hear, you'd better be right or your credibility will be shot. Credibility is hard enough to keep when you've got the facts, but if someone can pierce it with something less than the facts, they will. That audience is not going to like me in Atlantic City, I can tell you that.
Then I'm doing another seminar with Paul Kagan on overbuilds on the 22nd of October. We'll be announcing then what we're both doing. The reason I am doing this is because I think I can get a five‑year amortization which I think will be very safe. I also think about what we are going to do to cable value. I hate to tell you. I sure don't want to be quoted on it. Nynex has been installing at the rate of 30,000 miles.
FROKE: Do you have a figure on the number of miles that have been installed by cable systems?
KAHN: It is so minuscule. What's encouraging is that some companies are now overwiring themselves, like ATC in Kansas City. I had a meeting yesterday with the top guy of one of the largest systems in the country and he got shook up a little with those numbers. They are taking a very serious look at this time. To my knowledge, at least one of the major cable operators is seriously looking at fiber. If you take a look at the existing cable systems in the United States today, that are well over eighty or ninety percent at 300 MHz of bandwidth you've got a problem because the broadcasters have a bigger one. Yesterday there was a press conference in New York where RCA demonstrated a new NTSC‑compatible high definition standard.
FROKE: We're now talking about high definition television, obviously, related to fiber delivered.
KAHN: No, not necessarily. Related to existing cable systems. Most of them are using all the capacity they now have. The best available information indicates you are going to need at least 12 MHz of bandwidth. When we tried this at Fox, we applied to the FCC for 20 MHz and the movie companies wouldn't go along with this. AT&T walked in and said, "We're common carriers. We should be doing this; you don't belong. You can't even get two of your own companies to agree." The FCC said, "You're right." That was when we were playing with the television large screen projector. This is not a new idea. The broadcasters have got a bigger problem. They have six MHz of bandwidth. The spectrum was pretty God damn filled and now the mobile services are all trying to get some of that additional spectrum and are entitled to it and the broadcasters are saying, "Don't give it to them. Save us some. We need it for high definition."
There have been a lot of studies and a lot of work done. I think they have come down with the compression so they might be able to get away with eight or nine MHz. Even that for a broadcaster isn't easy. Where are you going to get those extra ones? They're scared to death. Now you go back to a direct‑broadcast satellite. There is nothing but space on there. You've got twenty‑four transponders on it and you take a more powerful bird and get a few less transponders, but you can pull down the most beautiful picture. It is absolutely superior, not equal, to 35mm projection in a good theater.
The important thing is the way RCA got a jump on the world with color. They had something that was compatible so if you didn't have a color set, you could still see it in black and white. They also changed the aspect ratio from three to four, to three to five, which is the aspect ratio that the theaters use. You look at a television picture today and the best they can do is cutting the edges.
Several suppliers are building boxes that will not only give you stereophonic sound, but will also give you high definition interconnect from a satellite. They are almost all set up so that you don't have to put in a total new two‑way system. They have it set up so that you can just pick up your telephone, place your order, and it will release through your scrambler and you will get high definition. That is definitely here. Sony is fighting like hell to make it a world standard, but Sony standards are not compatible with NTSC. On the other hand, they are doing pretty good in Europe. The Europeans aren't too happy but they don't want the Japanese to get it either. They don't want to lose the chance to get into that market. The technology of high definition is here, ready to go and fantastic. The technology of politics of high definition is to be decided.
Here is what Queens Cable is now offering here in Manhattan: 63 channels. Do you know what their monthly average fee per customer is? Guess?
HUNGERFORD: Twenty dollars.
KAHN: Double it and you're still a buck low.
FROKE: That's including pay services and the basic?
KAHN: That's their bill each month, and it's voluntary. They can order up these extras and they are getting a little cheaper initial tier of the basic services to start with. Basic service is about $13 or $14 plus they order what they want. You've got, at the outside, 550 MHz, and if you've got a well tightened up, efficient system, you can get about seventy‑three channels. You have ten channels of breathing room, which will just about give you the possibility of four to five, I'm cheating; really more like three, high definition. Here is a state‑of‑the‑art system. There are not five percent of the systems in the United States like this. Incidentally, they are using a little fiber optics, too. They would have used more if they didn't get chicken. It cost more when they were planning this, about twenty‑five percent.
FROKE: That gives me an opportunity to go back then to some of your early pioneering work. You were one of three cable television systems out of TelePrompTer. TelePrompTer being one of three. You were granted an experimental license by the Board of Examiners here in New York City. That was back in 1964. The experimental channel ran for about four or five years?
KAHN: I don't remember how long but we then converted it to a ten‑year franchise. It has a zinger.
FROKE: TelePrompTer has no interest...
KAHN: TelePrompTer doesn't exist anymore.
FROKE: But the rudiments of that system don't exist anymore either do they?
KAHN: Oh, yeah. Oh, sure. Until they re‑wire or re‑fiber. They have now merged what we had and what Time Inc. had into one system. Westinghouse sold off TelePrompTer and it was split up between four or five companies. Westinghouse sold it for $2 billion, 100 million. Time Inc. was one of the buyers.
What they bought, among other things, was the upper half of Manhattan, which they didn't have. They have merged that in with their lower half so they now have all of Manhattan, which is very little compared to the different boroughs and places around. The franchise for those two systems worked for ten years. In there was a clause that said, "If at any point in time any other system comes into Queens, Brooklyn, or any borough and the technology is related, that system has the obligation to bring its technology up to that existing system." The Queens standard is going to be upgraded very shortly. There is a multi‑hundred million dollar investment that's got to be made. Add to that the peril of direct broadcast satellites that don't need a franchise, add to that the flat receiver that I'm talking about. Look down the road at five years at a maximum. If they could just knock off ten percent of the subscribers on any one of these systems, there goes your cash flow, your bottom line. Do this in Los Angeles where it is even more precarious. Go down the list of these suburban systems that pocket this area. This is a very bleak medium to long term view of cable.
You may have the honor of starting a museum and finishing it in your lifetime. Or at least starting another one next door to it. No, it will be an ongoing thing. I'll tell you this, the cast of characters of employers almost certainly is going to go that way.
FROKE: On the other hand, if you go back twenty years, Mr. Kahn, to your beginning, where you, in effect, led the way in so many different aspects...
KAHN: We were the first company to come in and start to put them together in New York City. I used to laugh to myself. I used to hear these characters saying, "Those crazy guys in New York are paying us one and half times cash flow." Then it got up to two and a half, then three; then three and a half; then four. Every time I added one of those systems I would be paying in paper generally and we had a multiplier of sixty or seventy. Multiply sixty or seventy times the revenue that these generated. Our stock went way the hell up there. It was TelePrompTer up here and about ten blocks back was the rest of the industry. The net cash flow that we generated then...
FROKE: Was about four million?
KAHN: I don't remember the number. I did take a look at it a couple of years ago. It was incredible. It was within pennies of what Westinghouse was doing with over two and a half times the customers. We used to bring down to the line sixty percent cash flow. Not the other way around. This deal in New Jersey, in the Times yesterday, they are barely pulling forty percent. It's costing them two or three times as much. On the other hand, people are paying $2,000 a subscriber.
FROKE: Let me just mention the types of things that existed back in the 1960s. The Federal Communications Commission then was saying on your experiment in New York City, that there would be no Pay TV. That was a restriction?
KAHN: At the beginning.
FROKE: They also said that you could bring in no distant signal.
KAHN: That was Henry Geller, as the general counsel and Ken Cox, who was a very good friend of mine. We had hours, and hours, and hours of debate. His argument was, "God dammit, if they could get three networks and one independent, that's all they need." I kept kidding him, when he left to become Vice President of MCI, which he and Bernie Strassburg really thought up. Bernie was head of the Common Carrier Bureau. I would say that Ken was one of the most brilliant, legalistic, imaginative guys, with what was in the public interest, of any of the commissioners that I can remember, and I've known a lot of them.
FROKE: About the only restriction that is still on the cable industry that was in place at that time is the obligation for the local channels.
KAHN: Right, and, boy, have they screwed that up. I have a place in Palm Beach and I was down there last week. Comcast just bought it. Channel 4 Miami used to come in on channel 4. No more. There ain't no channel 4. They are bringing in the local NBC or CBS outlet. I need a card to find them. Channel 7 used to come in on channel 7, same for Channel 10. No more. They have taken all the good, basic channels and put in Pay TV. They've put others on there, too. They've scrambled all these others all over the lot. Everybody is screaming.
FROKE: In effect, what they are doing is building up their original programming...
KAHN: Right. The networks and the local stations are losing their identities on the cable. If I wanted Channel 5, Palm Beach, I had to go to channel 3 and that was a local channel.
FROKE: You alluded a moment ago to some of the legal issues in the FCC right about that same time that you were developing an experimental system in New York City. You got hit by a suit from Columbia Broadcasting System, this being the one that led to the definition of a cable system as a transmitter or a receiver.
KAHN: Do you want me to tell you the truth? I don't remember. I had so God damn many of them. We were fighting all the time at the FCC. I can tell you this. One of the biggest single expenses that we had, ongoing expense, was lawyers.
FROKE: Because you were plowing new legal ground?
KAHN: Right. Everywhere we went we were fighting. It's ironic how the cable guys are now doing the same God damn thing. Trying to keep out the others.
FROKE: This is the whole process of change.
KAHN: Absolutely. They're the ensconced people and they don't want any overwiring; they want protection.
FROKE: In 1965, CBS sued TelePrompTer barring CATV from transmitting programs without permission of the copyright owner.
KAHN: That started our copyright issue. I was on the NCTA Copyright Committee for many years. Frankly, we figured out the minimum that it was going to cost us for copyright. We knew we were going to have to go, and we figured out what the legal bills would be to keep it in court. So we kept it in court and then we couldn't keep it in court anymore. We did not win that Supreme Court decision. Louis Nizer lost it. He's quite a guy. As you know, you appear before the Supreme Court in tails and striped pants. He is a brilliant speaker but his ego... You do not go to the Supreme Court and start to give them a lecture on what they are supposed to know. Whizzer White went at him and a couple more went at him. They gave him ten or fifteen minutes of that. The buzzer went off and he didn't get to make his argument.
FROKE: So the broadcasters lost it simply by strategy, lawyers' strategy?
KAHN: Yes. There were a lot of facts in their favor. I want to tell you that I had a very big personal conflict. My uncle (Irving Berlin) is probably the biggest earner for ASCAP in the world. Tied to this copyright bill was the ASCAP suit. We kept them from getting any changes or improvements. I definitely cost them plenty of money. "Alexander's Ragtime Band" went into public domain this year, its 75th year. They changed the copyright to say the copyright protects fifty years after the copyright owner dies. On much of his other stuff he's protected. He used to call me and say, "Why are you screwing around with that thing?" I said "This is life and death to us."
FROKE: It was during those years, too, that all the basic issues related to the jurisdiction of the FCC, the local, state, and federal government were being turned around.
KAHN: Right, sure were. Frankly, I think one of the most important contributions that I ever made was the fact that we went before the Commission and put on a very strong fight so that the dish, the passive receiving dish on the ground, could be owned by the cable system and not by the common carrier. We won. Hughes Aircraft was my partner on this; we did it together. We brought in Pierson, Ball & Dow. Young Peirson is now 50. His father was active at the time. I honest to God believe, in terms of real money and materiality, that single step was probably my most valuable contribution to cable. If the carrier owned the receiving dish, the carrier could lease it to you at any price he wanted.
FROKE: You brought to the cable television industry a perspective, a level of sophistication from a point of view of financing, legal and so on, that had been lacking.
KAHN: We got the first non‑secured bank loan from Chase Manhattan Bank. The guy was here the other day.
FROKE: It's your work and the work of such people as Bill Daniels, that got the attention.
KAHN: Bill did the most fantastic job of interesting major entities in the cable industry and seeing the possibilities. More so than anybody. I bought my first three systems from Bill.
FROKE: You mentioned a while back, Hughes. Was this the Theta Project?
KAHN: Theta. I told you what Theta stood for, didn't I?
FROKE: Go ahead, again. I've got a bad memory.
KAHN: We had a very good relationship with Hughes. They had over $100 million invested in TelePrompTer. I've had and until this day still have very good relations with them. The Hughes situation was, because of our relationship with them we were able to apply enough pressure for them to build a satellite. Until the time that they built a cable satellite they were not interested. One of the principals said, "Why the hell should we build a satellite that's over $100 thousand when we can get $9 or $10 million from the telephone company and from the government?" I started to point out, "Yeah, but how many of those can you sell? Look what you can sell here." Finally he said, "Bypass those idiots and you go right to Doc Rosen." Dr. Rosen was the man who invented synchronous satellites. He is still at Hughes. I had a meeting with him and outlined what we needed. I said it had to come in under $100 thousand. "Is it doable?" He said, "Yeah it is."
By God, in less than six months we had a prototype. I had a small problem of trying to sell this to the cable industry. That took me eight years and I failed. That's the irony of this thing. Why did I fail? Because all the other guys saw this as a way for TelePrompTer to make more money, not what it would do for them. I offered to create a corporation in which every cable operator who came into the deal could buy an amount of equity equal to the number of customers that he would contribute to the system. That got a little warm but still didn't work. We had three birds built, $32 million bucks invested. The President of Hughes called me and said, "Irving, I got a dilemma." He said, "We got a chance to sell those three birds. It would take us a year to make new ones for you. Do you think you can wait a year?" I felt so God damn guilty for getting them into this, I said, "Go ahead." What was built for the cable industry became the Canadian Satellite and it's still up there.
End of Second Interview, Tape 1, Side B
KAHN: The irony is that, the bird, the work, and the effort didn't have anything to do with the acceptance by the cable industry of what we did. So it got to cable in another way. Andy Inglis, who is on my Board now and is one of my oldest friends, was the head of RCA‑American, their cable division. He had talked RCA into building a bird and launching it. They put a bird up there and he couldn't sell any customers. Then he had lunch with a guy he went to college with, Jerry Levin. Jerry was about to be fired at HBO because he wasn't getting any customers. The two of them cooked up a deal where it looked like each one was investing millions and millions of dollars, but it was a contract that had a 90‑day cancellation. They put HBO on that and had its initial thing twelve years ago at Vero Beach on my birthday. That caught on.
There are so many things that are not on your Museum project directly. On the other hand, if you take another year to put this thing together, which would not be unusual, there are going to be many new things. They will have an impact on what is going on. It won't change overnight. You can only be revolutionary with ideas. For implementation, it has to be evolutionary.
I gave a speech once in San Francisco to a group of engineering types. It was "The Last Quarter Inch." I can go forty thousand miles in nothing flat but if I really want to get that idea to work, I would have to go from the outside of your headend to the inside and that last quarter inch was a bitch. You just didn't do it overnight. Nothing has changed in that regard.
FROKE: As you have talked through these various tapes, the overall image that comes through is that you were looking at the cable field from a total point of view‑‑programming, distribution, and business...
KAHN: Not from the beginning. Let's be honest. Originally, I didn't know what cable was and I wanted a place to experiment with Pay TV. That's what got me into it. When we got there, we began to see opportunities. I began to see many more things and I began to feel that our strength against the networks and all the others was not going to be in our own networks right away. We were community antenna television.
The point can easily be made in New York and I made it 100 times. The local NBC serves fifty, sixty, seventy, communities as far out as seventy miles. Now how many times a year can it do anything local unless there is a murder or robbery or a fire? Its chances are zip. Cable, if it is designed right, has a soapbox on a block‑by‑block network. You lay out your system that way. That would build a strength. Furthermore, it would set you up with a local advertising deal where you could identify the customers. You knew how many were living here. You could get feedback. I went to Nielsen and said, "We can give your customer, just within our system, a hundred thousand reactions at the end of the program, right in his office. He can see who is listening."
This people meter that they are doing now is a big improvement. Look what it did in the first few days to the ratings. It's changing the hell out of them. Before mama filled out the damn thing and said, "Yeah, 'Cosby.' That's what we like." Even if they didn't watch it, it became Number One. Now you've got buttons and papa does a lot of button pushing and all of a sudden Dan Rather is back to being Number One when he has been third, and sports are getting a much more significant play because that's what papa watches. There is a tremendous shift to reality as a result in the implementation of a more technically, user friendly piece of hardware.
FROKE: When we talked earlier, you emphasized that one of the opportunities for the cable television industry to continue as a strong communications medium rests with closer relationships to the community.
KAHN: One of the things that I am going to say in Atlantic City is that nobody can come in and overwire an existing cable system where the cable operator has been attuned to the voice of the town and has provided good service, good picture and is a part of the community. Those who have given that up have left themselves wide open to somebody else coming in. If I came in at half the price and this guy had a good local rapport, I couldn't come in.
We put a young girl against Walter Cronkite, named Mary Jule Mitchell, in the exact time opposite Cronkite and we outdrew him almost two to one. What the hell did she talk about? A fender bender on Main Street, or a local league ball game that was coming up, or a local election that the people knew. We had local advertisers. Man, this was corn of the worse kind. This guy did a pie‑in‑the‑face routine; it was the proprietor of the local shoe store and his business went up. We proved it. We went into the Philadelphia market and the local market and we were starting to get advertising bucks. I preached this as hard as I know how.
Finally, you'll check and see that we had a little bit to do with the founding of the Cable Advertising Group. We could start to get non‑broadcast statistics. This overbuild thing is not going to be the death but it could be.
FROKE: What you've got to do is continue to link the concept of programming with an emphasis on...
KAHN: No. It's really very, very simple. Cable came into being, literally, because of two words: more choices.
You know Milt Shapp. We were very good friends. He was building a twelve‑channel amplifier. I said, "Milt, let's get some more." He said, "What the hell are you going to put on them?" I said, "You build it. We'll find something to put on it." We got up to twenty. I argued with the Jerrold guys to give us more capacity. When we got thirty‑six channels, 350 MHz, I don't think they thought I was crazy because we had made too much money doing what we had set out to do, but they sure didn't believe that it would take more. Now they have 550 MHz but they haven't implemented it yet. Ninety percent or more of the systems in the United States are at 300 MHz. When they let the franchises for New York go, it's going to take a minimum of five years to build them. By the time they've got them built the telephone companies are going to have fiber all over.
The guy that gets that piece of fiber into your house, owns the house. This is a statement I have made publicly many, many years ago: the guy that gets the piece of coax into your house, gets the house.
AT&T was represented on a panel with me and he said, "That's a very interesting proposition but we think a piece of Bell wire is pretty good." We've got the quotes on that. In Salinas, California, right now one of the telephone companies has petitioned the Commission to hook together 5,000 homes with a piece of Bell wire the best piece of coax and a piece of fiber and it's going to cost them over $20,000 a mile. They are going to then have a comparative, scientific analysis of what you can get out of each. The cable industry is fighting them like hell. You can't stop it. While they are doing that, the public utilities are overwiring like mad. They don't figure on one or two years; they are making twenty‑ and thirty‑year projections. They've got deep pockets and they aren't regulated like the communications companies are.
You don't have to be very brilliant to look into the future. The future is now. These people have been so engrossed in their own little world and they are so successful that they are saying "Go away boy, you bother me." Now they are coming to a realization. This is identically what happened to the theaters and to radio when television came in. CBS almost got aced out of the television business because Bill Paley didn't believe in it. Finally, at a tremendous cost, they ended up buying WCAU in Philadelphia and it cost them a fortune. Then they got back in and built a network and proved that programming is a very important part of this deal. With programming they got audience.
Now, suddenly, the cable industry has become visible and sure enough the Department of Justice is seriously looking at why a cable company should be able to do what they stopped the motion picture companies from doing when the facts are worse and much more provable. You can look for some sort of an active thing that lawyers will carry on for several years and then you'll have a consent decree. What they will do is break up, so the cable companies can't own their programming, and own the system, and own the distribution of the other networks. It's as sure as you are sitting there.
FROKE: So the stock holdings that some of the cable systems have in cable programming could very well be ...
KAHN: Will be valuable if they spin them off. In fact, they may turn out to be more valuable than the cable systems. Software can go anywhere.
Frank Biondi took over at Viacom a few months ago. He used to work for me at TelePrompTer, then he went to HBO and became Chairman of the Board. He got into an argument on this very point. You can't be a middle man doing nothing, you've got to produce a product. He left there and went to Coca Cola and made a trillion dollars for Coke doing that, and very recently went over to Viacom as Chairman of the Board where he will be making product. There never was, and I don't believe there ever will be, too much good software. How many pictures come out a year that are worth a damn? Very few. How many shows succeed on Broadway? Relatively few.
FROKE: Mr. Kahn, several people have mentioned to me that had it not been for an incident back in the early 1970s that took you out of the cable television industry for a number of years, the cable television field would be an entirely different type of operation.
KAHN: I believe that it would be somewhat different. We had not only a power base, but the acceptance and the organization that moved us along based on my beliefs. When I got out of there, in an effort to boost the short‑term profits, we cut out local origination, we cut out a lot of the computer, we cut out about eighty percent of research and development. All American firms‑‑not just cable‑‑that are publicly‑owned have a big problem. Every thirteen weeks they have to report an increase in earnings. It doesn't matter if the stock really went down. That doesn't happen in Japan. They can take a five‑year development period. They by‑pass us. We create the technology, not so much now but we did then and they in turn make it work and they don't rush it to the market.
The computer is a classic example. The Japanese had nothing to do with it; computers were developed in the United States. By the time the Japanese started to see a market there, we were up to eight bit chips. They could have come in with sixteen but they didn't. They could have come in with thirty‑two, but they didn't. They hit that market like dynamite with sixty‑four and they took their time in getting there. They own the video cassette deal. That's American, too. They're just not forced to show a profit in a short time. The government allowed them, in fact, forced them, into a cartel that's totally illegal in the United States. They'll develop something technologically that is sponsored by the government and when it's completed they'll break it up and give each company a piece. You can't do that here. If you even sit in the same room, that's anti‑trust.
FROKE: The story of the Johnstown matter, is well known and has been written about. Briefly, the mayor and two councilmen, after the Justice Department starting stirring around a bit, made the allegation that you and TelePrompTer had paid them so many dollars...
KAHN: Fifteen thousand dollars.
FROKE: Fifteen thousand dollars. Then when the thing went to court...
KAHN: We did give them fifteen thousand dollars.
FROKE: All right.
KAHN: We were so God damn stupid about it. We've never had to bribe anybody to get a franchise. We would just come in and make a presentation. We were so much stronger. We got eighty or ninety percent of all the franchises we applied for. You've got to remember that I owned that system in Johnstown. Then the state of Pennsylvania passed a new law that said that cable systems had to be franchised, they couldn't just be owned. You were either a class A town, class B, or class C. That meant that Johnstown had to get a franchise. In almost every other city in Pennsylvania, it was automatic. The company that was there got the franchise. Our Johnstown manager Walt Knish called me one day and said, "You'd better come down here. I've got a problem." He said, "The mayor has threatened to put our system up for bid." I said, "He can't do it." I might add that because I didn't know much about Pennsylvania and the law, I immediately called a friend and hired him as our special counsel. A guy by the name of George Barco. He gave us a reading on the Pennsylvania law and what the hell was going on. He said, "They can't do that."
I don't know about your experiences with going from New York to Johnstown or from Pittsburgh to Johnstown. Weather being what it is, eight out of ten times the flights in the winter don't land in Johnstown. You're headed for Johnstown, but you end up in Pittsburgh, Altoona, or Martinsburg. I ended up in all those places. For me to take a day off, with two lawyers and someone who knew the technical end of cable to go down and argue with Johnstown, we figured it would cost $3 to $4,000 bucks a day to go down there. It wasn't a great town to go into with a private plane because they didn't have great instrumentation. Finally, at one of the meetings either the Mayor or someone suggested that if I were to contribute $5,000 bucks apiece to three of the campaigns, we would get the franchise. My lawyer, was dead against it. Barco said, "You don't have to do that."
Frankly, here I was sitting thinking we were going to have to make ten more trips back to this place. That was my mistake. In hindsight, I should have given them the money, but I should have brought the FBI in and we would have gotten it anyway.
Incidentally, that didn't automatically get it for us. We still had to bid. I wrote out three bids and I put them in my pocket. They weren't going to let me bid. I said that I would give the bid to the publisher of the newspaper so there would be no monkey business and he could present it at the town council meeting.
I got the sense of the meeting and I took the middle‑highest bid. I gave that to the newspaper guy and when they opened it, it was high. We would have gotten it anyway.
On the other hand, if the town wants to give you a hard time, they will. I've been in towns where a cop will ticket a truck and it will have twenty‑five tickets on it. He'll just stand there and every fifteen minutes he'll write up another ticket. There are many ways that they could be very troublesome.
I finally made the decision that what the hell, we'd give the guy the money for the campaign.
We were so inexperienced in doing that. Had we given it to him in cash, nobody would have had a case. We gave each one of them a check. Then we hired the Mayor's son to do a survey for us. He did do it but we could never find it. It wasn't worth $5,000 but it was done. They didn't have much of a problem proving it; we admitted that we gave them the money.
Had the federal government had the option to try the case in New York, it wouldn't have been bribery; it would have been extortion. They didn't want that because I was a more valuable newspaper name to them. The guy who was the Assistant U.S. Attorney, the one who went out to get the publicity against me, is now coincidentally defending John Zacarro in the bribery thing in New York. He's gone into private practice.
Anyway, I didn't attach much importance to this. They wanted me to fly up. I was in the Bahamas with my wife and kids for Christmas on the boat, and they said, "Come on up here and we'll go over this." I said, "What have I got you lawyers for? Don't bother me." I had never been in a criminal action before in my life. The worst thing I ever did was maybe get a speeding ticket. I just didn't take it seriously. Until one morning I woke up and they said, "Look, if you'll plead guilty to one count of a misdemeanor, we'll drop everything."
I literally told them to drop dead. I said, "Why should I plead guilty to a misdemeanor?" It's like a guy who walks down the street, gets hit over the head, then you pick up the paper the next day and it says, "Joe Dokes participated in a mugging." That's literally what it was and we couldn't get them to change the jurisdiction to New York. I said, "They don't have a case."
Anyway, it went forward and they called me in front of the grand jury. I had never been before a grand jury and I had no experience. My lawyer was in Texas and he wasn't available. They had told him they were only doing this to keep the statute of limitations running because it was running out. All they wanted was my name, rank, and serial number. Instead, they said, "You're a target." I didn't know what they meant. They started to ask me about my company. Well, I'm naturally enthusiastic, particularly about something I believe in. What I didn't realize was that in a grand jury if you say "about two weeks" and it turns out to be "about three weeks," that's perjury. I didn't know the numbers. They would ask, "How much money do you make?" The truth was I didn't know my salary because it was a base plus whatever we earned. "How many shares of stock?" I didn't know how many shares of stock. I said, "You've got that, it's public record." They asked me a whole bunch of questions. When I came out they let us know that they had me on sixty‑nine or seventy counts of perjury. However, if I would agree to one deal, they would drop everything and it would be one misdemeanor and they would get it out of the way. I still refused. They came in with a sealed indictment with the seventy counts of perjury and all the other stuff that went with it.
Then my lawyer got together with the other attorney and said, "Look, you didn't give this guy a fair break. Let's have him sit down and we'll go over this for two or three days and we'll give you an exact statement of all the facts as they happened. He was not trying to withhold; he just didn't know." Frankly, I could have taken the fifth amendment, but here I am President and Chairman of the Board of a New York Stock Exchange‑listed company and I couldn't see myself taking the Fifth Amendment. Had I taken the Fifth, they wouldn't have had a case. These are things I subsequently learned.
Anyway, we went through the motions and I did two nights and three days with about five lawyers grilling me. With all the records they put together a seventy or eighty‑page document which they then gave to the U.S. Attorney and he was supposed to replace that. Instead, when we got into court they didn't even need me. I indicted myself with my previous statement and my new statement on perjury. As far as the money goes, there were physical checks as evidence. We never denied that we issued them.
Then there was another factor. There are twenty‑five judges in the Southern District Federal Court. They told me in front of twenty‑five judges, "We are not worried one bit about what could happen. This is such an obvious case. They are not going to send you to jail. They'll slap your wrist, maybe." They were worried about two judges. One was a guy who thought he was still a U.S. Attorney and he was going to be rough. Then we had a black lady judge who hated whites, hated corporations. There was nothing you could put down that wouldn't be wrong. I had testified before her seven weeks earlier as the chief expert on copyright and I'd successfully gotten her to see our side. She should have disqualified herself from this case but she wouldn't. Our lawyer didn't push hard enough. I had with me as witnesses the four prior Chairmen of the FCC and the current Chairman. They waited out in the hallway for hours to testify. They were my character witnesses. Quite a few very prominent people.
The case went very quickly. We came to the sentencing and she gave me the maximum she could give me under the law. Five years on each count and they all ran together. The only way that I could possibly get out of that was if we went for cert to the Supreme Court. We didn't get it, the Court refused to accept review and all the lawyers thought they would. I had to serve twenty months, the absolute minimum. I was out in twenty months. That's Johnstown.
FROKE: During this time, you left the Presidency of TelePrompTer. Your colleague Schlafly was then named President.
KAHN: I put him in.
FROKE: Prior to the Johnstown incident you had gotten into a corporate relationship with a company by the name of H&B.
KAHN: Yes, we bought H&B.
FROKE: As part of the re‑organization of H&B, Mr. Cooke then became prominent...
KAHN: Yes, and the only way the FCC would allow him there was if we could prove that there was no way Cooke could take control of the company. We had to do something creative, in the public interest, to give the FCC the basis to say okay. I came up with the idea of local public service broadcasting. When the Department of Justice queried the FCC, they gave us a clean bill of health and it then sailed right through. Cooke was bigger on number of operators and subscribers but his bottom line was not very good.
Bill Bresnan, who later became the President, I fired. Cooke said, "Please don't fire him. He's been with us for a long time." So I didn't. I made him Vice President of Engineering on the west coast to get him the hell out of the office. He's not a bad guy but he wouldn't be my choice to run a company of any size. (Cooke is back into it up to his ears. He got in all kinds of trouble with some radio stations in the U.S. before the FCC. We did a thorough background on him because we were going to use this for a fight.) He was smart. Cooke talked Schlafly, who was my closest friend, into going out to California to a board meeting and Hub called me at four in the morning to tell me what had happened. (Schlafly was voted out as President and became Chairman of the Board.) I said, "Why the hell didn't you tell me?" He said, "I was afraid if I told you, you would talk me out of it."
FROKE: Then Cooke, in effect, took control of the board, Governor Schaefer was then moved in.
KAHN: A real nothing. They tell me he's not a bad guy but, Jesus, a judgmental thing. He didn't know what the hell was going on.
FROKE: Then Bill Bresnan was moved in as President as part of that total package.
KAHN: Right. While I was at Eglin, I kept driving the stock down and I had it down to where I thought I could buy the whole damn company for about $1.20 or $1.30 a share. Through my brokers I made a bid. I almost got it. But then running it remotely was not feasible.
I had many lawyers coming down to visit me. In order to find out how I was going to be doing with the Commission, while I was in prison at Eglin, I had bought two little systems at McGuire Air Force Base and Fort Dix. It was in my name, one hundred percent on top of the paper. I wanted to see how they would react to my name. One of my friends on the Commission said, "Get in and apply for an educational microwave, which almost certainly will be routine." He said, "If the application is made out right, they won't even look to see who signed it."
Well, they came down there with the lawyers and I filled out the application and the warden was the notary. We sent it back up and it went through the FCC like a dose of salts. In the meantime, we improved the systems at Dix and McGuire and we got letters of commendation from the Commanding General. Some departments say that if you have a felony conviction, you can't own anything. FCC isn't that way.
While I was down there, they brought down a plot map for Jersey. When you have a lot of time on your hands and nothing to do, you sometimes think. I looked at this thing saying, "This isn't 2,500 here and 5,000 here." Those damn towns, you couldn't tell the difference between one and another if there wasn't a sign. Later we took those little towns and put them together. We hooked up enough to have 250,000 subscribers. We took advantage of my background at AML. Then I got my TelePrompTer guys involved. We microwaved across on our own and we were able to put together not only 250,000 homes but we had no expensive maintenance. We developed studios and then we developed portable studios. We serviced all the local football games. We would do three games a week, that would be six towns. The saloons loved us. The people would say, "Hey, that's my son." We covered the very thing I've been telling you about, local community. It works. I'll prove it to you again very shortly.
FROKE: TelePrompTer had grown under your leadership into a national company. Every household in the country knew the name TelePrompTer.
KAHN: Look outside there, at that picture of Mr. Hoover. When I rehearsed with him I said, "Remember Mr. Hoover, if you go fast, the machine will go fast. If you go slow, it will go slow. Just you start talking at the red arrow and don't worry." He got the biggest ovation that he had ever gotten in his life. He was a terrible speechmaker but he was a really brilliant guy, and this made him look good. Here he was talking, no notes, no nothing, so where the hell is it coming from?
Finally, he stopped on the arrow and apparently forgot that he should start talking again. Then he said, "Go ahead teleprompter." The whole world heard him.
If you take a look at that picture, there was like a runway in a theater. On the side of it there were maybe four hundred to six hundred U.S. and world press people. They all heard this word for the first time. As soon as the speech was over, they all ran up to the platform and asked, "What the hell is this teleprompter?" Then they saw this little machine. We got a seven out of eight‑column layout on the front page of The New York Times. You couldn't believe the change. Overnight this was quite a different company.
FROKE: You left TelePrompTer. As a result of the court decision you were also required to divest yourself of holdings.
KAHN: I had to give up my voting trust. Under New York state law, you couldn't hold a voting trust in a public New York corporation if you had a felony conviction.
FROKE: As a result of your leaving TelePrompTer, things started to happen at TelePrompTer.
KAHN: They sure did. I believed my lawyers and thought I was going to be out of there in ninety days.
End of Tape 2, Side A, Second Interview
KAHN: There was about a two‑ or three‑month delay between the time I was sentenced and the time I had to check in. I was sitting in Palm Beach on the boat and it almost seemed as if I told them (TelePrompTer management) to go that way, they went the other way on almost every item. I finally got so God damn mad, I called my broker. I said, "Sell all my TelePrompTer stock." In one afternoon I got out.
Now I had a new problem. I knew I had a good salary and I was, frankly too damn busy to spend it. I knew that I had a lot of pieces of paper in the vault but it didn't occur to me that they were worth a lot of money. I never managed money. I knew that I didn't want to invest in a company in which I knew nothing about the management. I went into all kinds of tax deals. I went in with Frank Purdue in chickens; I bought about four or five million chickens. I would buy them as eggs in November then I could charge off the fees and everything we paid. By the time they would hatch and by the time they became broilers and they ate up all the stuff, this was all an expense. The revenue came in after January in the next tax year. I made a fortune on this. Then I got a little greedy and I said, "Jesus, this is too easy."
Then I got into turkeys. We owned twenty‑six million pounds of turkey at one point. It takes twenty‑six weeks to get a turkey up to the maximum weight. When you've got it up there, you have to sell it and get rid of it or kill it and put it in a freezer. Purina controls about eighty percent of the freezer space in America. These things came up to weight and they weren't ready to buy in the market. We couldn't freeze them so when you stop feeding them they get thin and you lose all your money. Well, I didn't do well in there and I lost money on it.
Then we got into cattle feeding. One of my lawyer's father had a big cattle feeding business. We got into eggs. We had cattle feeding going on in Kansas, Colorado, California, and Florida. We did pretty good. It's a very standard tax thing. You can't do any of those today under the new tax laws. It served two purposes.
In the interim I had gotten into Allenwood and that was a culture shock. You're running a company with 3,800 employees, and then you check into prison with the U.S. Marshall. He apologized and said, "I'm sorry. We're going to have to put handcuffs on you and we have to put leg chains on you. It's the law." Presumably nobody knows it, but every reporter knew it. You're there and there are pictures and it all goes with it. Then you go to Allenwood.
The first five days are an incredible adjustment. The first four to five weeks were very, very difficult. Then I decided I was going to beat this system. So I got involved. I even got a course in becoming a cable technician from Penn State. I'm a certified technician, sir. I want to tell you something. Had I taken that course earlier, it would have saved me millions of dollars. Not that the course was so great, but it covered the points that I never got involved with. I'm buying millions of dollars worth of hardware on the recommendation of guys that I have no way of reviewing. I learned a lot.
FROKE: I never knew that you had signed up for a course and done that.
KAHN: Not in my name. I got it and they sent it down to me.
FROKE: What was the name that you used? Do you remember?
KAHN: Either Tom Trohler or I don't remember. I can find out. Yours was the only course at the time. Palmer was pushing that at the time. We even supported it financially as a company. That was one of the things that I did. Then I got subscriptions to every trade, every magazine. I used to get forty different publications a week, plus The New York Times and the Wall Street Journal. They hated me at the post office. Once I finished, I put the stuff in the library and made it available. When I got out, I wasn't more than five or six weeks behind the industry. If you follow the trades on a regular basis, you don't really get the insider thing. If you know what's going on, you can put things together.
The thing that amazed me was here I had an almost unique status of leadership, philosophically and financially, and in the twenty months I had been gone, nobody moved into that vacuum. Nobody. I had no intentions in going back in on a great big grand scale. In fact, I was a little bit bitter. I didn't need the money and I decided I was going to go fishing for a while, and I did. I went down to Mexico on my boat for ten days. By the tenth day I could not take any more.
FROKE: All of that time and energy and imagination that you had put into the development of TelePrompTer, and as you noted earlier in our conversation, TelePrompTer really does not exist anymore...
KAHN: But some of the people are. That's some of the greatest gratification of this whole deal.
FROKE: You meet a lot of people.
KAHN: I go to a lot of conventions. Some people I don't remember and they come up to me and say, "Thanks for giving me a chance to do this or that." It's incredible. It's as recent as the Las Vegas convention (1987). They put together a TelePrompTer alumni thing and they managed to get together thirty or forty managers. They put a little luncheon together, on the spot. It wasn't a planned thing.
HUNGERFORD: What about the patents?
KAHN: TelePrompTer's patents I had in my name and they ran out.
FROKE: Before I lose the line of questioning I was involved in, I guess what I was looking for was the type of emotional shock that comes from something that you have built and developed and so on that sort of disappears in front of you. You've adopted your own personal philosophy that let you handle that very well.
KAHN: The first months were very difficult. I'm a pretty determined character, in case you didn't recognize it. Once I make up my mind, I'm going to do something about it. You've got a hard job getting off.
FROKE: There is another perspective on it and that is yes, there is that difficulty and the embarrassment and so on.
KAHN: I was embarrassed and it hurt me because my family was hurt. Both of my kids were in boarding school and I tried very hard and I think I was successful in keeping my uncle's name and our relationship out of it. As for my wife and kids, I think it was much tougher on them than it was on me.
FROKE: The general public would not really appreciate the detail and would not know the context in which the incident occurred.
KAHN: I had a problem several years before when we were doing boxing. Life magazine did a thing on the mafia control of boxing. I was considerably heavier, if you can envision that, swarthy, dark. They ran a group of about ten pictures and included me as one of the mafia guys. The assumption was, how could I possibly get all these fights if I wasn't in the mafia. The article was not well‑researched. On my Board of Directors was Paul Garrett, who had been Vice President of Public Relations at General Motors. He was a great personal friend. I said, "Paul, I want to sue the hell out of those bastards." He says, "You know what? You'll win. But just remember they own Life, they own Time, and they own Fortune, What are you going to get out of it? $100,000, $200,000, $1 million, $2 million for the rest of your life? When a story comes up, every guy on that staff will find a way to screw you. Do you really need it?" He talked me out of it and I didn't sue them. I'm glad I didn't.
Meeting Paul came out of the Hoover convention. Rick Curtis was a Republican delegate. He wasn't President of General Motors at the time, he was head of the Buick division. He called Paul and said, "What is that God damn thing called that they read the speeches off of? Hoover looked great. See what it is." Paul's office was in New York and our offices were at 270 Park Ave., a very nice address except it was in the maids' room in the Margory Hotel. In the advertising business, people didn't come to your office but you needed a good address. They were ripping down the Margory and they couldn't get everybody out so they used to rent the rooms. We had the can and the maids' room. That was the TelePrompTer office, but the mailing address was 270 Park Ave.
We got a phone call from Mr. Paul Garrett. I didn't know who the hell he was. The gal who answered the phone said, "There is a Mr. Garrett from General Motors who wants to talk to you." I took the telephone. He said, "Mr. Kahn, how long would it take you to get your equipment together and fly out to Detroit and demonstrate this for a few of our executives?" I thought someone was putting me on. I said, "Frankly, we are not that big of an outfit. We don't have that much equipment and we certainly cannot afford it." He said, "We'll provide the airplane. We'll pay all expenses, we'll put you up at the General Motors Executive Hotel, it's right in the building. And we'll give you a $5,000 bonus for coming. Can you leave tonight?" I said, "Can I call you back?"
FROKE: If you did this for Hoover, can you do this for General Motors?
KAHN: He wanted to show Curtis what the hell we had. He didn't see it. I called back and sure enough there was a Paul Garrett and I said, "Hey, this is for real." I spoke with him and said we'd do it. We loaded up our equipment. We had one of their cars take it out to the airport and we put it on the General Motors' plane and they flew us out to Detroit. Then they set us up and we set the prompters up. The head of the Pontiac division was there and Charlie Wilson was there. He was then the President. Everyone who came in said it looked pretty good. Then Mr. Curtis came in and they damn near popped to attention. What I didn't know but they did know was that Wilson was retiring in a couple of days and Curtis had been elected President of General Motors. They were really clicking their heels. He looked at it and said, "I like it." Then all of a sudden everyone was saying, "Yeah, it's great, isn't it?" A whole chorus of these Senior Vice Presidents. He was one of my very good friends and he was very active in the Eisenhower campaign.
When I invented the Outrigger, we had a hell of a job getting the right kind of glass. I called him and I said, "You want Ike to look good. I do not have access to the glass companies and they won't listen to me." He said, "I can help you out there." He gave me a guy's name, I don't remember what is was, but he said, "He's President of Libby, the one who made the car glass." He said, "You get off the phone, wait ten minutes, and then call that number and talk to him and you tell him what you want. If you don't get results in an hour, call me back." I called and he says, "Yes, Mr. Kahn. I just got a call from Mr. Curtis. What can we do for you?" I said, "We need some glass." He said, "We'll have one of our engineers out there tomorrow." And they did. In about three weeks I learned about titanium dioxide molecularly coated glass. They make it in all different degrees, twenty percent translucent, thirty percent, forty percent. We tried it, and in about two months we had the Outriggers. We patented it. That was my patent. You see it in all the pictures with Reagan and others. There isn't one person in fifty who knows what it is. Most people think it's a piece of bulletproof glass. Actually, it's a little periscope that goes down to the ground, where there's a regular mirror that reverses the images and the speaker reads that.
Then we built this podium for Curtis and he wanted us to spiff it up for Eisenhower. We had to make it portable so we could put it on the campaign train. Then we assigned one operator to Ike. It was Ray Hagan, who incidentally, called me from San Diego recently saying he retired and couldn't come to the party. He wrote a Hoover history and our whole story is in that and it's in the Hoover Museum in Iowa. There is a big story about the incident that happened at the convention.
FROKE: How did you develop your great sense of optimism about tomorrow?
KAHN: I don't know. My dad...
FROKE: Obviously, your successes are directly related to...
KAHN: Luck among other things. Being in the right place.
FROKE: But you create your own luck in a sense.
KAHN: Sometimes. Seeing something before...
FROKE: The excitement that you convey when you're with people.
KAHN: Well, that's a matter of general enthusiasm. My dad was a very, very, creative designer. He was a lousy businessman. He sold patents to Union Carbide. I think he got royalties of about a couple of hundred dollars a week. If he got nothing, it wouldn't have bothered him. By God, it worked. When you see this in an environment, you have the tendency to go the other way.
I was always very aggressive. At a very early age, like about ten, I found out that I could earn money for myself.
FROKE: We are putting on a video cassette right now that I'm guessing is the video cassette that was sent by the University of Alabama.
KAHN: You're guessing right.
FROKE: Very good. We'll try to get it on the tape recorder. With the expertise of three television specialists we have to call upon Bridget Buchanan to operate the television set.
Tape "In the fall of 1935, my first days at Alabama as Director of the Million Dollar Band. An enthusiastic young freshman who said he was from Jersey and was the nephew of the famous songwriter Irving Berlin, applied for membership. That was you Irving Berlin Kahn! Your qualifications were an expert twirler of two batons and an accomplished saxophone player. I shall never forget how very much your personality, showmanship and ability to dangerously twirl two sabers added to the performance of the University band. I am proud of the University of Alabama in honoring you Irving Berlin Kahn on this your 70th birthday! Happy Birthday, Colonel Barton!"
FROKE: He must be 90 years of age.
Tape (Happy birthday song is sung by the Alabama band.) (Cheers) "Mr. Kahn we have just learned that you are celebrating your 70th birthday. As a part of that celebration we want to bring you back to a very significant part of your past."
KAHN: That's the President.
Tape "We want to show you some very familiar scenes on your college campus, scenes that are very similar to the scenes you saw when you were a student. We also want to show you some very different scenes. Some new facilities, some new concepts, that this University is developing. Concepts in which we feel you will have an active interest because of your really remarkable history in the communications industry. In addition to seeing scenes and familiar places..." (tape broken off)
KAHN: I don't know what happened, somebody did something.
FROKE: So they provide you with a visual tour then a tour of the facilities.
KAHN: Not only the campus. That you can construe as a pitch. They want to name the School of Communications after me and I told them I wasn't interested in bricks and mortar and I'm really not. I would be interested if they put together a School of Technology where they would recognize that we are replacing transportation with communication. That would make a lot of sense. They have one of the finest optical engineering schools down in Huntsville.
Tape "Fifty years ago there were 5,000 students matriculated at the University and today we have 17,000. I wish you a happy birthday, but I want to be honest with you, I thought you had already reached 70. I understand that you haven't. I'm just a few years older than you. On my next trip I'm going to call you up, I have your name and address. I hope that you will make it your business to come down, just call me and we'll try to get you a ticket to a football game and I'm sure we can arrange it. Happy Birthday and God bless you."
KAHN: The next fellow in that picture is Otto Miller.
FROKE: That was very nice.
KAHN: Alabama did play a very big part in my life and I made a lot of acquaintances and friends that I still have today. Next year will be my 50th anniversary year and I'll probably go down there. The man that read that commentary had a fifty year marriage anniversary and, man, I was right in the middle of a deal, but I changed the deal and went down for it. I had been with him over thick and thin and he picked me over about thirty guys and I got a full scholarship for music for my sax and clarinet playing. I never played the sax or the clarinet the whole time I was there, except in the winter band.
During the football season, we were on the road thirteen weeks of the year. Alabama had a hell of a good band.
Back in my fraternity house I had two poles. We used to call ahead to the towns we were going to and find out how high the trolley wires were. I would string those wires and I would spend hours practicing marching so I could just reach up and make it look so easy. It worked perfectly for years. Nobody told me in New Orleans the trolley tracks are about six or eight inches above the street. I threw it up and for the first time in years it hit the wire. I said, "God damn it. I'm losing my touch." I actually missed. I realized what was wrong and I threw a little harder and we went on with the parade.
We used to go all over with that band. When we got the invitation to the Rose Bowl, the school was not going to send the band out there so they invited me to lead the Tournament of Roses Band, and I did, in 1938. It was in the newspaper, that was an Associated Press wire photo. I had a ball.
It played a very important part in my life. Enthusiasm you're born with. I went to Hawaii and saw an article in a trade paper. Henry Kaiser was going to put a cable system into Hawaii Kai. I said, "What the hell, I'll call him." Sometimes on the telephone you get right through and I did. I got right through to him. I said, "Mr. Kaiser, I just read this article. I understand you're going to put a cable system in and if you want good hardware, you're doing exactly the right thing." I said, "If you want good software and you want something to go on that system that's right, I think you should give me about an half hour of your time. And if you will do that, I will fly out there." He said, "Well, son, you don't want to come all the way out here from Oakland." I said, "Sir, I'm not in Oakland. I'm in New York and I'll be in your office tomorrow morning at nine o'clock if you will see me." He said, "Well, if you are crazy enough to come all the way out here from New York, you come on out here."
I took my financial guy with me. I got my technician out of Eugene, Oregon, to meet me in San Francisco. We had five hours in our favor. We got on that God damn plane and wrote out the plan. When we got there we met with Henry J. and that half hour turned into thirteen hours. We spent the whole day with him. His company was just becoming a billion dollar company. I said, "How do you become a billion dollar company?" He said, "It ought to be real easy for you." I said, "What do you mean?" He said, "Well, you've got to do two things. The first one is resign mentally as president and become vice‑president in charge of enthusiasm. Second, go find yourself a dice‑shooting banker. You get those two and you'll make it, that's how I did it."
About two weeks after I came back, we were doing a rehearsal with David Rockefeller and he said, "How is your business going?" I said, "You know, I just came back from Hawaii." I told him the story. (David Rockefeller has a very dry sense of humor. I know him very well. In fact, I got a letter from him for this party thing and his main guy was here.) Chase Manhattan had just come out with their new slogan that year. He said, "Irving, didn't you know you had a friend in Chase Manhattan?" The next morning Frank Conant was sitting in my front office. He was here the other day for the party. He waited for me for two hours and when I got there he said, "Mr. Rockefeller suggested I come and have a talk with you." He said, "What is your problem?" I said, "Real simple. We need some expansion capital." We negotiated the first non‑secured prime loan.
That changed not only me but the cable business. Prior to that we were getting real high rates. After Chase, I went to Mass Mutual and I got the first insurance company offer. I didn't give them anything. It wasn't one of these deals where you give them a big chunk of the action to get their money. I think in that area I made a very strong contribution to the maturity in the industry. We were out of Shylock and into the loans we got. Prime at that time was 5 and 7/8 percent and that's what we paid. The last major loan that I took from Chase was $150 million, non‑secured. I have quite a line of credit with them.
FROKE: Your enthusiasm is going to move you into a presentation in Atlantic City in the next few days and then another presentation in which you will be talking about new initiatives in the telecommunications field.
KAHN: Well, it depends on how you define new. I've been playing with this thing for the past eight and a half years.
FROKE: The one in New Jersey.
KAHN: Yeah. I haven't been very successful in selling it to the industry so I thought I had better try it myself.
FROKE: But, in effect, you are going to establish in New Jersey the 21st century version of cable television using fiber.
KAHN: No. We are going to establish an alternate source, which everyone should have. We called our company Choice because this will give a choice. If you want to know what telephone company to use, well, you have a choice. If you want to know what kind of local bread there is, you've got a lot of choice. Where is it cast in concrete that you should only have one cable company that can determine what you are going to look at and more importantly, what you are not going to look at? Consequently, we are getting involved in creating, not an overbuild, that sounds like a nasty word. If a cable operator is providing good service to his people and if he is functioning as a community antenna service and is a force in the community, he won't have any problem. You can't overwire him; it wouldn't make any sense.
If you go to fiber, you'll be able to offer them more channels. With fiber, we will give them a 100‑channel capability, high definition, stereo sound, direct broadcast satellite. We will do what I have tried to do most of my years in this business: provide a state‑of‑the‑art system and provide more choices. That's what cable is all about and we'll give it to them cheaper.
FROKE: When will you have a system in operation?
KAHN: We've got several franchises involved. The first several are being physically processed on paper. Paperwork takes time. I'm not doing this with borrowed money or bank money, and I can assure you that both are begging to be part of the action. I'm doing it with my money because if it works like I want it to, then we'll talk about bringing people in. I'll bring them in when the risk is gone and they will pay for it, I assure you. As of now, I have to prove it. I think I can prove it. In less than a year, in my judgment, there will be tangible evidence to show that we are on the right track.
FROKE: In 1976, you returned to the cable industry and were invited to be a principal speaker at the NCTA convention. In my recollection from reading the notes from that convention, you began your talk with, "As I was saying before I was rudely interrupted..."
KAHN: Exactly right.
FROKE: Immediately the convention burst into applause and you got a standing ovation from your colleagues in the industry. Approximately ten years later on your 70th birthday...
KAHN: I'm not sure what kind of reaction I'm going to get. On the other hand, whether I get a reaction or not, I will be doing them a favor. At worst, I'll scare them and they will look a little bit. If it isn't going to be me, it's going to be someone else. I don't like to want to "kill my children," so to speak, for something that I help create. If we don't make the stand, a few years later it is going to be done for them and they won't have that many options. They don't have that many options now, as a matter of fact, but they don't realize it.
Having an unpopular position is almost a hallmark of anyone who has pioneered at anything. I can tell you when we first started in cable, when we cut the connection cost in half, the opposition said, "You're crazy. We can get that money for nothing." Nobody sat down and figured that's just a one‑time cost. Let's get that guy on cable. When we went from five dollars to three, they said, "You're crazy." Then we said that we could get films and we could be an influence. Almost everything, or at least a large percentage, came to pass. You've got marketing on television. Twenty years ago I was dealing with Sears to do the same thing. Key TV, that little box, that's what that was. This thing I showed you for the press conference at 21, that was to launch that in Hawaii. Why Hawaii? Because it was isolated and we could control it. Kaiser was a very forward‑thinking guy.
FROKE: The regard that the cable television industry has for you is phenomenal. When we began this taping session on October 2nd, it was just two days after, literally, scores of your colleagues had come from all over the country to wish you a Happy Birthday. If you will permit me, I'd like to close this interview by reading the poem in TV Digest that Al Warren wrote. He is the publisher.
KAHN: A real old friend.
FROKE: He was here and he delivered a framed poem that he had written.
Poem "Let's sing the praises of Irving Kahn.
That tireless, disagreeable, curmudgeon.
Meek, mild, never anything to say,
That my friend will be the day!
Never content to let sleeping dogs lie,
He buries cable in the ground and sends satellites to the sky.
Yep, he's just the same old Irving,
Ever probing, never swerving.
That's our buddy, middle name Berlin,
Pulling new things out of a hat, like the magician Merlin.
Just when you think he's done enough,
He lays it on again, a la McDuff.
So on reaching the newest, three score and ten,
You can expect him to stir up the cats again."
FROKE: Mr. Kahn, thank you very much for consenting to doing this oral history and I hope that we can update it some time in the next twenty years or so.
KAHN: Thank you. My pleasure. We're almost on the button.
End of Second Interview, Tape 2, Side B