Development of Cable in Texas
Interview Date: April 19, 2002
Interview Location: Austin, TX
Interviewer: Jim Keller
Panel: John Campbell, Ben Hooks, Jake Landrum, Bill Arnold, Ken Gunter, Herb Jackson, Ben Conroy
Collection: Hauser Collection
Keller: This is the oral history of cable television in Texas from Day One, which goes back to the very early fifties up to the present time. We are in Austin, Texas, which is practically not only the center and capital of Texas, but it seems to be the center of cable in the state of Texas. I'm going to let each of the participants in the panel introduce themselves. I must say sufficiently that today is April 19, 2002. We are in Austin, Texas, and I will ask them to start with Jack. Jack Crosby, will you please introduce yourself and tell us who you are, what you do and what you have done?
Crosby: I'm Jack Crosby. Rumor has it that I was floating on a tortilla down the Rio Grande River outside the town of Del Rio, just south of Ben's hometown of Uvalde. Got into the cable television business back in 1954, '55. I have my tutor standing beside me. First of all, I'm just very pleased to see this group alive and kicking at this function and I'm especially indebted to the Cable Center for bringing us together. It's a great reunion. We've been in the business now off and on—actually we've been in and out seven times since 1955. It's been a wonderful experience for us.
Conroy: Ben Conroy, started in Uvalde, Texas, 1955. One of the first cable people I met was Jack Crosby down the line in Del Rio, about 70 miles west. He and I were later on hooked up in the Genco operation, in Communications Properties and some unnamed places out of state, which we won't discuss. Once CPI got sold, I got back into business for myself with several systems in central and south Texas and left active cable around the mid-80s, stayed with—well, the pioneers are there in Texas too. And then was active with the Cable Center and Museum and that brings us up to date.
Arnold: Bill Arnold. I got into the cable business in 1966 when I went to work for Jack and Ben when they were forming Genco along with the Schneider brothers and a couple of investors that were not that active in the business in the Tyler-Jacksonville area. Stayed on the operating side of the business until 1982. In 1982 I went to work for the Texas Cable Association, from which I'm happy to say I'm recently retired. And enjoying every minute of it.
Keller: I heard you left two days early.
Arnold: Three months late.
Hooks: Let's see, I started in the business in 1967 and I was in diapers then. Came to Texas in 1972. I'm proud to say I'm still an active operator, still operating in Texas and I think it's going to be really exciting as well because you can really see a paradigm shift on what broadband's all about.
Keller: Parenthetically, Ben was the recipient of the Johnny Mankin award this year, is that correct?
Hooks: That's right.
Keller: Congratulations. You're next.
Landrum: My name is Jake Landrum. I entered the cable business in 1959 in another state. Wound up in Texas in 1962-63, working for the gentleman who will next introduce himself. I worked for several companies through the years, I've recently (August, 2001), like Bill, I've retired and tending to my wife's list now rather than the industry's list.
Keller: You're next, Ken.
Gunter: I'm Kenneth Gunter, I'm from San Angelo. I was born and raised there, went all the way through public schools in San Angelo, went to Rice University, graduated there in 1958. I thought I was going to medical school, but I really was burned out on school so my dad talked me into coming back to San Angelo and building the first cable system. My history with my father being in the appliance and radio and television business in San Angelo is very similar to Jack's.
Jack Crosby's father was in a very similar role there. So my father encouraged me to do that because I'd always liked electronics and science and I jumped off at the right time and to the right place and didn't even know why. But I've always been grateful for the cable television experience I've had. I've been blessed with a lot of good partners. I've been also the director of several of our public companies and been involved in several private partnerships. I sold my last cable interests in 1996.
Campbell: I'm John Campbell. I presently live in Grandbury and I'm retired. I started in Mineral Wells, Texas, in 1951. I was working in the theater as a projectionist going to a junior college in the little town of Clifton and I read about cable television and I said, that's for me. I went to Mineral Wells, which seemed to be an ideal location where you could receive signals off the air on the mountain. We started piece by piece building a cable system. In my oral history, they asked me, "Well, you never went back up to Pennsylvania to see a cable system?"
I said, "No. I couldn't afford a trip to Pennsylvania." But I did afford a trip in 1953 to the second or third annual CATV convention. A gentleman from Brownwood, Lindsey Dublin, went with me and when we came back, we stopped by our—we visited with some wholesale houses in Fort Worth and Dallas. They wanted to get into the cable business and they organized a little meeting. If you're interested, I'll get into that later.
Keller: All of this Texas.
Campbell: All this was Texas. But I built that system in Mineral Wells and I did help a few other people around, like Lindsey Dublin in Brownwood. Then I sold that to Bob Magness in 1962 and got the franchise here in Austin and started building the system here. That's where I met Herb Jackson. And that's where I converted him. Anyway, we sold the system here to the LBJ folks—
Keller: We're going to go into that in some detail.
Campbell: OK. I had started manufacturing equipment to a small degree in Mineral Wells, building stuff because we couldn't buy it or couldn't afford to buy what was available and I liked that part of it. I got tired of twelve years of running and answering the phone in my home at night. Anyway, when I came out here to live the year in Austin, I decided to go somewhere else so I went to Irving, Texas, and started CAS Manufacturing. Later we went public and called it TOCOM, Total Communications. The brokerage people told us the manufacturing name didn't sound too good, call it something else. So we called it TOCOM. I sold that in 1984 to General Instrument, which is now Motorola. And the boxes that you see on the TV sets of Motorola are out of our design and are still in that box. Now I didn't do it. I had great engineers who did the design.
I'm retired now and live down in Granbury. I still keep my hand in.We have a Channel 45 there and I've been programming it for four years, just part-time, kind of a hobby. Enjoy it. So that's about my history.
Jackson: Herb Jackson. I was with the power company in the city of Austin and John found me. I started kind of moonlighting on the side and drawing up plans and then go approve them the next day. [Laughter] That was probably one of the only illegal things I've done.
10:04 Then we got in involved there and I would do the drawing and layout and stuff like that and I laid out about fifty miles of systems and I asked John, "What does a piece of coax cable look like?" He managed to find a piece to show me. We sold out to the LBJ group and then we headed on and I started building systems out of state and we started building lots of the little mom-and-pop systems all over the state. Just a small contractor and that kind of seemed to be what the public needed at that time was a small contractor to go into these little towns and build them.
I've two or three times built up construction crews and along with installs, I'd sell off the construction and buy back the installs and do it again. I'd do it again. I've done it about three or four times. The last group, I think they want to keep it. But presently I'm doing work for Time Warner. I've got about seventy men and we do contract installs for Time Warner now. I've got good men running it for me so I can go play bingo and just kind of oversee generally what's going on. So life's pleasant for me now. I won $700 today. [Laughter] That's why I was late.
Speaker: That's just Herb's average winnings...it's not an unusual amount.
Jackson: You have to have a second occupation.
Keller: Your moderator is Jim Keller. I started in the business in 1960, thanks to Bill Daniels who brought me in. I've been in various companies, I had the dubious pleasure of working for Monty Rifkin at one time and Glenn Jones at another time and other great people in the business. I'm having a ball and re-living my past forty years in doing these kinds of things on a regular basis. I've had the opportunity to do some of the oral histories of many of the people here at this table, and I want the viewers of this panel discussion to realize that every one of these people in here has either done an oral history, which would be available both on the website of the Cable Center or the transcript and the video, if the video has been accomplished. One should look at that individual oral history in conjunction to what is being said here today. So that future scholars know that you're not lying, guys.
We're going to start out then with the first topic, John, the first system in Texas.
Campbell: Mineral Wells!
Keller: How did that develop?
Campbell: Like I said earlier, I read about this—Bob Tarlton, in an article that was published in March, 1951. And I immediately decided to go with this and I looked around and Mineral Wells seemed ideal. I went in there and got the franchise. The way I got the franchise, I hired an attorney, Tom Creighton, a lot of you know Tom, and we wrote a franchise and it was approved by the city council just on short notice, and in September of 1951, we made our first connection.
Keller: Did they know what they were approving?
Campbell: No. The only objection to the franchise or the permit was by a radio technician that maintained the power company two-way radios and that was on the adjacent hill too, and he thought there would be some interference from his equipment to the reception of television and he was against it. One of the city councilmen said, "Why don't we just go ahead and give it to him? I don't think it's going to work anyway." [Laughter]
So that was that and—
Jackson: Did it work?
Campbell: Well, a little bit.
Speaker: Equipment that you made yourself?
Campbell: No, first we built a little tower, 100-foot tower up on the mountain just to get a little bit of extra height. The hill was about 200 feet below where we were going to serve the first customers. I put up stacked Yagis on 4 and 5, a four stack on Channel 8. You have to remember those stations were operated at a very low power at that time and Fort Worth was running off their studio and Dallas was running from downtown Dallas. So it was very difficult to get a good picture but we got a good picture on the hill, a reasonable picture.
And the first equipment that I found was at Wholesale Electronics, a business in Dallas, by the name of John ?Ledem. Taco-Plex was a company that built apartment house systems. Their strip amplifiers were similar to Jerrold. Jerrold's first equipment was apartment house equipment and they converted it to very similar to CATV. I bought one of those units and bought two or three of the Tacos. And we used that as headend.
We first ran cross-country down the hill and hooked up a couple of the houses and then put cable on the poles. We bought a lot of surplus cable, RG-11 cable. It had a steel jacket on it. I understand it was made for use on the aircraft carriers for radar systems and stuff. I sometimes wonder why the trend didn't go to 50-Ohm cable but it had a bigger semi-conductor and better for line powering, but it was to go with 75 on cable, 72 on cable. But we got it working here and then we got it working another block and then another block and we'd hook them up at ninety-five bucks and then go and buy some more cable. Couldn't get anybody interested in--the bankers told me they didn't think it was going to work. The day that I knew we'd made it we come down the hill, crossed over to Fourth Avenue and went down the street, maybe thirty, forty, fifty people on the cable at the time. Old Ben Yeager, he was the banker and I ran in there one day to cover a check or something. He said, "Johnny, come here. You run the cable in front of my house?" And I said, "Yeah." He said, "Hook me up. I'm tired of fooling with that old antenna." He couldn't get a picture. He said he went to the Baker Hotel and saw a good picture.
At that time I knew we'd made it.
Keller: Did he provide you with any money?
Campbell: Oh, you bet. Not loans, but he paid for his installation.
Keller: No, I thought just a loan. He didn't come through with that...
Campbell: Later on, Ben Yeager sent this guy up here that I knew and he knew and he was trying to borrow some money from Ben. And Ben says, "You go up there and if you tell Campbell to sign the note, I'll lend you the money." Know what I told him? I said, "You go back and get Ben Yeager to sign it and I'll loan you the money." Anyway, that has nothing to do with cable.
Keller: Jack and Ben, would you tell us about the early days in Del Rio and Uvalde?
Crosby: This Yankee came down to Texas.
Conroy: I learned all about cable during my years in the Navy so I didn't have to learn very much--hah. This was a learn-by-doing thing. I got to Uvalde in January of 1955 and we had an arrangement with Jerrold Electronics to use their equipment and their"expertise." We actually started construction in April, but in the meantime I'd learned quite a bit about it by walking the poles and making the measurements and talking with the phone and power people about where our cables could be put relative to theirs. We opened up in June of 1955. Now we were 90 miles west of the transmitters in Del Rio—in San Antonio. And we started with two channels. The state-of-the-art equipment we used in those days was three-channel. So we were almost full up. And San Antonio only had two channels at the time.
The theory in the beginning according to Jerrold was to charge high installation fees so that this covered your cost of construction and a low monthly fee. So we started off with $125 installation fee and four bucks a month. Well, that high fee was a bit of a barrier. So we started taking antennas in trade and we got a few of those $125, we sure got a truckload of antennas. That four bucks a month just didn't go too far so as time went along, we revamped that to installation fee of $10 and then $5.95 a month, which was much of an improvement. We got a bunch more people on.
We really started putting them on in earnest when we were able to carry, thanks to a microwave arrangement with Jack—and he'll tell you about microwave in Del Rio. But we carried the Spanish language Channel 41... you know, from San Antonio. And then the whole west side of town started to hook up and the system really became profitable at that time.
But in the meantime, I heard about Jack and went over to see him and he was using the same type of equipment and the same pole arrangements and so forth. At 90 miles distance from the stations, we used to have a lot of what is called "co-channel interference." And you know all about that, particularly when these occluded weather fronts would come in. We would get telephone calls and telephone calls and I remember getting on the phone one time and of course, these people are irate—they're paying four bucks a month and they're supposed to get good reception. So they say, "What are you going to do about this stuff?" And I said, "Well, you can help me. Will you say after me 'Our Father who Art in Heaven.'" I said, "That's the only way I know." And I tried to explain the thing. But ultimately microwave pretty well solved that problem.
But I'll tell you, co-channel was a bane of our existence. We were carrying four channels—4 and 5 from San Antonio and we'd get 4 and 5 from the Valley, we'd get 4 and 5 from Dallas and nothing from San Antonio. It all looked like parallel bars on your screen. Those were great days. [Laughter] Why don't you go, Jack?
Crosby: When Ben first came down from Island Pond, Vermont, I said, "Boy, this Yankee is not going to make it here." And in no time at all, he had ingratiated himself to the townspeople in Uvalde and became a great friend of John Nance Garner. And most afternoons they would "strike a blow for liberty" together.
Crosby: 5:00, 5:00. So he became a Texan very quickly. Ben says his signal was pretty bad, being 90 miles away from San Antonio with the signal. We were 70 miles further on than that, which presented a bit of a problem. I'll never forget calling—I heard about a tower manufacturer in Oklahoma City. So one day, I'd been talking to Ben a lot and getting a lot of good advice from him and I said to him, "You know, it's time for me to fish or cut bait." So I called this fellow and said, "Listen, how much would you charge me to put up a 450 foot tower with a bunch of antennas on it?"
He said, "Where?"
I said, "Del Rio, Texas."
He said, "What for?"
I said, "I want to put it up here and see if I can get any television."
He said, "Buddy, save your money. I can tell you that you're not going to get anything."
I said, "I really didn't call you for an engineering opinion. I just asked you, how much would you charge me to put the tower up with the antennas on?"
He said, "Well, let's see. It would cost you $13,000."
I said, "$13,000. I'll tell you what. Let me ask you another question. How much would you charge to put it up, leave it there for 30 days, and take it away? OK?"
He said, "I never heard that before...well, it's mostly labor so it'd cost you $10,000."
I said, "You got a deal. Come down here and stack it up."
So he came down and it was the biggest thing happening in Del Rio since Dr. Brinkley put in his radio station across the river and started selling genuine statues of Jesus Christ glow-in-the-dark for $1.95. So anyway, this tower goes up and we put a little bus out there and a guy out there with a field strength meter and a television set and we said, "Write down when you can tell which team has the ball." You could see a football game going on but it was hard to tell which team had the ball, it was so snowy. So we tracked it, you know. And after 30 days, I decided that my Scotch upbringing wouldn't let me pay him the $10,000 to take it away. So we went down to the bank and pleaded our case and started to build a cable system. Actually it was twice as bad as it had been so we decided to charge twice as much. [Laughter] By the time you put the 8% excise tax on it, $145.80 installation, we had to get that money back pretty quick. It was like Johnny ws talking about. And then we charged $9.72 a month. Now our calls at night—the daytime calls I'd handle; at night, my wonderful wife, Joanne. The phone would ring, I'd be sitting over there reading my book and she would go like this, "Oh, Mrs. Smith. Oh, you're trying to watch it? Oh no, that would hurt your eyes. We sure don't want you to be upset. Jack's not here, he's out at the tower working. But I'll tell you what—we don't want you to be upset. So let me have your telephone number and your address and I'll make sure Jack gets it disconnected tomorrow. Oh, you don't want it disconnected; you just want it to be better. All right, I'll tell him that." That went on for a long, long time.
Anyway, we finally got the signal out there and then we were instrumental in helping the Escarga family from Mexico develop more programs in the Spanish language because they needed it and we needed Spanish language programming and the one little station in San Antonio was the only one at that time. So we became shareholders in their company, SIN, the Spanish International Network, to help them develop stations over here because being aliens, they could only have ____________________. That's kind of the way it got started in Del Rio.
Keller: Ken, how about you in San Angelo?
Gunter: San Angelo is a similar story. My father knew the old two-way radio expert in San Angelo. He installed all the sheriff's and police department's radios from the Thirties forward, Highway Patrol. Fellow named Wilbur Anderson. Wilbur and my father worked for Enstrom in the old days and he really was the one who my father was willing to trust because I was just fresh out of college and my dad was not really one to trust someone wet behind the ears. So Wilbur and Dad had talked about it two months before I graduated in 1958 and came home. They had already strung some cable and they had begun to Chinese copy the amplifier design that you came up with. You told me years ago it's a 36 CB6's, the 12—
But the first thing I did, my dad said, "Well, we don't know hardly anything about where you can find the equipment." We bought a whole truckload of RG-11 World War II surplus cable and we used a 109 steel Messenger and J-hooks to hang it on the poles and lashing it up with I think one of the early C-lashers. "Why don't you—you got a car, when you leave Houston coming home, go straight over to Tyler, there's a guy over named Johnny Mankin that I've already talked to and he said he would be glad to spend a night and make his supper and show you the Tyler Cable System." So on the way back, I stopped at Mineral Wells. because Wilbur Anderson knows this guy named John Campbell. I found someone that showed me around the Mineral Wells system and the headend...
Campbell: Great headend.
Gunter: It was a rat's nest. But most of our headends in those days were.
Then I didn't do it that very trip but about a week later, Wilbur and Dad sent me down to see Louis Bone at Gatesville and this is another of the homebrew experts.
Campbell: Louis was making those amplifiers, too.
Gunter: He made the same one.
Campbell: Same amplifier.
Speaker: Copied whom?
Speaker: Prince Albert can.
Campbell: I bought some 200 Ohm resistors because I had a bunch from...I used them as the bias resistor on the 16-bit 6 tube where the manual tells you to use 180, but I had all these resistors. He went out and bought these special 200 Ohm resistors to be exactly the same. If you look at the tube manual, you see that it calls for 180.
Gunter: This is amazing. Even in the late Fifties, there was no remote powering. We had to have about three of those, I believe, for every mile of RG-11 on the trunks, wasn't that roughly right. Every one of these stations had to have its own power meter set, right? And that's all we had. And that ran until about ' 61. We had not even thought about it at the time, building microwave to really bring Dallas/Ft. Worth to San Angelo, until we began to watch the results of the Brownwood operator—
Campbell: Johnny Andrews originally and his son-in-law.
Gunter: Johnny Andrews was the guy who built it, then the son-in-law, ?Evans, those guys had built a microwave from about Lingleville up around Stephenville area and picked up some pretty good Dallas/Ft. Worth pictures. We then—although Jack and Ben Conroy had the good sense and taste, I think, to try common carrier microwave at first.
Conroy: That's Jack's common carrier.
Gunter: Yeh, but you shared it.
Conroy: We shared some sites together.
Gunter: Common carrier. We were beginning in the early Sixties to just develop an awareness and a little fear factor about common carrier because it made you buy license conditions to sell to anyone who might want those pictures. So in the early days, and this came from our Florida partners we just picked up in Vero Beach and Fort Pierce. At that time, the turnkey was finished by Entron, Hank Diambra, and Hank was very paranoid about anything resembling common carrier. So we applied for the first business radio licenses from the Commission and that took a little trouble in time because there was already an early—in the Sixties—an early paranoia and resentment from the broadcasters themselves. As you may recall someone here will hit me with the timing later.
My first recollection of other people we depended on or needed and their order of growing fear about who we were and even hostility at times was never the phone company or the power company. I walked into city councils in the early days just like you fellows did. Said I want a cable TV franchise. Most of them said, what's that? But three weeks later they came back and picked it up. The third reading will be whenever. That happened well into the Sixties, even early Seventies for me. The joint use agreement was telco and power. $1.50 a pole a year. They didn't either one have any real fear of who we were. The very first recollection I can name for you were I saw another industry reacting to us was AMST. That was the broadcasters who formed their own group and saw us as a potential source of audience fractionalization, maybe even competing someday for advertising. Help me on this one, Ben. AMST was the Association of Maximum Service Telecasters.
Conroy: The Association of Minimum Service because they tried to avoid...
Gunter: In fact, the hilarious part of course is that is those people formed this and because they were licensed by the FCC, they were the first to go to the FCC and protest my kind of microwave applications and really delay them. So we had to put up with all that. But Channel 9 in Abilene filed for a Channel 3 VHF satellite in 1962, somewhere in there, and that was going to be a bad blow because that would put local NBC in San Angelo and that was about half of what we could offer. So we applied for the same Channel 3 if for no other reason to buy time and kept finding these microwave licenses through the Commission to get to Brownwood to link up with their Dallas feeds. In the meantime, we were joining up as partners with Vero Beach-Fort Pierce, Florida, where we ultimately put the first receiver on the earth station.
So in the early Sixties a lot of things were happening—I think I'm correct, Crosby can probably correct me on this one. I think we really were although there were holding companies like Gulf and Western and even TelePrompTer, who did other things, that had some cable holdings. But we were the first IPO in cable, International Cablevision Corporation, San Angelo, Texas, Vero Beach-Fort Pierce, Florida, under the tutelage of Hank Diambra of Entron. We went public in '61 and that's another story about how the visits with the New York banks went to borrow money, to go into debt, to go with the equity of the offering and I won't use up more time than that to say that's where San Angelo started and within two or three years, it was linked up with Florida partners and had a parent that was the first public IPO in cable, and some of these early warnings that came from broadcasters. If you all recall, we had also because of the trade-in antennas; we all took them down. I bought a Tom Green County, Texas, caliche pit to dump all of our towers and antennas in and just push dirt in. We traded those and took them off the roofs and put in cable, usually for the hookup fee, but guess who also formed an industry association of their own to fight us. Winegard, Channelmaster, people like that. We were threatening their tower and their antenna and their rotator businesses. Do you all agree with that?
Several speakers: Oh, yes.
Crosby: TAME, remember? Television Antenna Manufacturers Assocation...
Gunter: T-A-M-E, TAME. Television Accessory Manufacturers Entity or whatever. But those were the first signs that I had as an early cable operator of any paranoia or hostility forming about what I was up to. It was years before the phone company, General Tel, had headquarters in San Angelo, came to me and started talking in a very friendly way about, "Stop building all that expensive plant. We'll build it for you and we'll lease it back to you." Because they were beginning to get the early warning signal that we really might be in the telecommunications against them someday and they wanted to own the plant.
But I'd like to hear from the other experts around the table. Is my chronology right? That was my first wake up signal since not everyone loved us to death. The first television stations, the broadcasters, then the manufacturers of antennas, then—diplomatically, but later they became a little more ugly—the telephone company—
Conroy: We saw some of their activities as early as 1958.
Gunter: When did you see that?
Conroy: 1958. And this was in a connection in a system that Jack—
Conroyl: Telephone, telephone.
Gunter: The telephone companies you saw...as early as 1958, did it come out in the joint use agreements? What sort?
Crosby: I went up to Uvalde to talk with—I got a call from Eagle Pass one day from a fellow named Tommy Witt. And he says, "We've got one of these licenses like you've got but we don't know how to do it. Would you help us build a cable system down here in Eagle Pass?" We were very pleased to hear somebody else in the area was going to build a system because we were trying to build this common carrier microwave system and we needed other customers to comply with the FCC's requirements. So we went down and I started visiting with the people in Eagle Pass and decided it was a viable situation and so it fell to my task to go to Uvalde or the district headquarters for Bell Telephone at the time and to visit with a fellow about getting a pole attachment agreement. So he said, "I'll have to call St. Louis." And fortunately my grandfather and his two older brothers had put in the telephone systems starting in San Angelo at the turn of the century, so I knew a lot of those people. That later became General Telephone.
Gunter: You were in a rush to send them.
Crosby: I'm sorry, that was me. That's my middle name. All these years, Ken hasn't figured out it was me. [Laughter]
Gunter: It was John Y., whatever, your great-great-uncle or something, John Y. Rush started the original independent company in San Angelo.
Crosby: Correct. By the time I got out of school, I was going to go back and run this telephone company and then they converted to dial and then when they did, they sold it to AT&T. And they kept the toll system. And then the local exchanges became General Telephone in the Southwest. Anyway, we're off track. Go back to Eagle Pass. So I went up and I said, "We need a pole attachment contract."
Gunter: An independent telco?
Crosby: Southwestern Bell. Their office was in Uvalde. So he said, "Come back next week. I'll talk to St. Louis." So I go out next week and he gives me this contract. He says, "Here, we got this all worked out for you." I looked at it and said, "Mmm-hmm. Thank you very much." Put it back over there in front of him. He said, "But you didn't sign it." I said, "I can't sign it. You come over and sit in this chair and you read it and you sign it for me, OK?"
I said, "You want to charge me--" I think it was $8.00 a year for the pole attachment rights. Eight or ten dollars. There was a stipulation in there if I recall that said, if and when the telephone company ever got authority to own these systems, they wanted to buy this system and have an option and depreciate it.
Keller: It was a five year contract. They reserved the right—
Conroy: At the end of the five years, to buy it at its depreciated cost.
Crosby: If they were able to, in the event that the law let them. That's good at that point in time, if you hadn't stopped them from doing anything. But anyway, so—
Keller: How about re-arrangement costs in that contract?
Crosby: Unbelievable cost.
Keller: ...build their whole plant.
Crosby: So anyway I said, "Well, thank you very much." And he said, "Let me know what you're going to do." So about a week later I got a call from this fellow. And he said, "We've just been informed by the plant superintendent, our plant superintendent in Eagle Pass, that there are two railroad cars that have just arrived at the depot down there and they've got little-bitty old wooden poles on them." He says, "Now you wouldn't be stupid enough to build a pole system in Eagle Pass, Texas." I said, "Lord, do you think we'd do something like that?" So we did. [Laughter]
Conroy: Did you have 25 foot Class Nines?
Crosby: 20 foot Class Nines. The guys would come over from across the river early in the morning and put them in the ground. We put them in the ground for ten dollars. So we had our own pole system. That was the first beckoning you know, the telephone company. Somebody would find another way to do this other than knuckle under to their demands and so it served us in good stead past that point. We didn't want to tie up the money to build a pole system but we couldn't do anything else if we were going to build a cable system. That's the way—
Gunter: This was the late Fifties.
Crosby: This was 1958.
Keller: Had you had any dealings with the AT&T companies at that time? Or were they all local companies?
Gunter: In 1960-61, when I became vice-president of engineering at the Florida, new partners in Florida and our company, we were dealing with Southern Bell and Florida Power and Light there. They were like bosom buddies. $1.50 a pole. Come on down. Drill holes in our poles and put your cable up. And that's why the chronology of this surprised me because Southern Bell in Vero Beach/Fort Pierce—east coast of Florida—where we were, as I said, bosom buddies with them. We were good pals. $1.50 a pole, no problem. Same with Florida Power and Light. I didn't run into much of that at the time.
Conroy: When we started, in 1955, Jack and I—you were General Telephone—but pussycat contracts were a dollar and a half, you had bonding and insurance requirements and of course, you did the make-ready. Same with the power companies...dollar and a half and it worked out fine. It was about 1960, after this 1958 event, that the phone company woke up like Goldilocks and the Three Bears. "Somebody's putting cable on our poles." They woke up to this fact. About that time, there were grumblings about pay TV and so forth so they started to put restrictions in their contracts, they went from a dollar and a half to three, and in Texas, we joined up with the other Southwestern Bell states—this wasn't a power company, this was a phone company—five states, which was Missouri, Kansas, Oklahoma, Arkansas and Texas. We got representatives of all of them and sought to agree. "Do not accept this three dollar contract." Some people in Oklahoma got antsy and they bowed under and took it so there went the house of cards.
A few years later, they were trying to go to five dollars but we held together and held together and they never made the five dollars. We had the same five-state organization, organized by our Texas people.
Keller: You took that association nationally though, too, didn't you, when we were fighting the national telephone—
Conroy: It flowed downhill. You see, Milt Shapp was then on the NCTA board and it was he who formed the first Pole Line Attachment Committee and in 1958 or 1959 in Chicago, he got representatives all over the country; he communicated with them. "Tell me the situations in your areas and then meet in Chicago." Because we were worried about the rates, we worried about the bonding requirements were going up, worried about the make-ready, worried about insurance. From that came the first NCTA Pole Line Committee. So it really started there and then flowed down into the states where we were taking our own positions.
Keller: Anyone else have any major problems with the telephone companies or were you the only one that didn't have any problems?
Gunter: Why don't you restrict it to Texas right here? When I got out—my public company merged in 1969 with Rosencrans, Columbia Cablesystems. We went on to merge with UA in 1973...so by the mid-Seventies we were in fifteen or sixteen states. Yes, indeed, we had some troubles there. I'm only talking about the early days, differing slightly with Ben and Jack's troubles with the phone companies. I didn't have this trouble.
Landrum: I had the original problem.
Keller: What was your experience with the telephone companies?
Landrum: Well, all over the state of Texas, there are a whole lot of those Class Nine 20-foot poles. [Laughter] Just a bunch of them. I don't recall that General Telephone was that hard to get along with as far as getting on their poles.
The big culprit was the big boy himself, Southwestern Bell. I built several systems in the state that we said we just could not get on the Southwestern Bell poles. Just could not do it. This went on up into, I guess, late Sixties—we were still setting poles. And I want you all to know that Jack set some good poles because in the Seventies I wound up operating that system in Eagle Pass. Those poles were still there. [Laughter]
Gunter: There's no water in Eagle Pass to rot the poles.
Landrum: They won't rot from rainfall, that's for sure.
Conroy: Jim, this is just an aside and it's not the state of Texas, so I won't say where. But Jack and I combined our resources on a system in another state north of here and neither the power company nor the phone company, which was General at the time, would allow us on their poles. So we set poles. They had already done the engineering for us; where there was a pole, we set it right alongside.
Gunter: When the wakeup call came, telco first and even power later, began to get a little stiff. But the timing, the chronology is what's important. What year was that?
Gunter: Well, that could be that early still.
Crosby: We had another one where the city council wanted a system but—
Keller: Wanted to buy a system?
Crosby: No, no, they wanted it to be built. But neither the power company nor the telephone company were receptive so one night we went out and put three metal poles in the ground, three 20-foot metal poles in the ground. Painted one black, one silver and one green, dark green. The next day we had the three ladies who were the presidents of the three garden clubs in town running out there and we said, "Ladies, we're going to build a cable television system in your town." Oh, they liked that, you know. We said, "So we need you all to pick out the color of the pole that we should put in this town." They all picked dark green, they signed a little letter saying, "We want the cable company to put dark green metal poles in this town." So we took that to city council and that's the way we got permission to put the poles in.
Gunter: One other permutation—the moderator may want to move on after this one. But this is another one. The first early warning sign I saw came from General Telephone. By that time, we were in several places around the state. It wasn't even their own pole plant. Most of the power plants in Texas had still not ever seen us as anything but extra revenue, just money on the vine for pole rental. They didn't see us in any way as a business competitor. The phone company was starting to wake up to this possibility and we had a lot of power poles in this community. I recall that the first strategy they used to keep us off the poles and building cable plant, was to say that yes, these are power company poles, but we were the first kid on the block here and we control the communication zone. Therefore we don't want your cable a foot above us anywhere. That one did emerge in the early, mid-Sixties a time or two. It was the first time I saw it. It could be because we knew so many of the General Telephone of the Southwest executives right there in San Angelo. That may have made it somewhat easier or at least it was later starting in our case. It could be part of it.
Keller: Bill, could you indicate from the Association's standpoint the problems you've had with the telephone companies over the years?
Arnold: Well, in the early Seventies is the first time that I remember the Association being involved in a pole attachment case and it had to do with Southwestern Public Service—not Southwestern Public Service but the electric utility in the Panhandle's southern—no, Southwestern Public Service, that is right. Thank you, Jim. It was over contract terms, it was over rates and so forth. The Association had to make an assessment on the members in order to fight that particular case and we were successful in doing that. Then in later years after the pole attachment statute was passed in 1978, CPI, Gencoe-CPI, became very active in pursuing pole attachment cases and we began to win several battles with Southwestern Bell and with other electric utility companies that dealt with General Telephone and at that point in time we did have a little luck with General Telephone because the general counsel for General Telephone at that time was an old personal friend of my wife's so we had a little entrée that you didn't otherwise have in order to sit down with them. Then, I guess by the late 1970s, early Eighties, we had done much what Ben had mentioned to you earlier on. The state of Texas kind of played the lead, but we went with the five states that were the Southwestern Bell territory and we took on the phone companies or the electric utilities and whenever we did, we attempted to take them on on behalf of the Association representing as many of the members as would let us do so in a given state and would extend that to other states where we had problems with a particular phone company or utility. I guess without boasting I would say we've been very successful with that today.
Keller: You indicated that the broadcasters gave you more fits than the telephone company. I think probably that was the case with everybody here sooner or later.
Gunter: At the regulatory level, there's no question that they were the first to stir up trouble with the FCC in licensings and consents that we needed in our industry. The broadcasters were the first on the scene to raise all that hostility at the FCC about this emerging cable business.
Crosby: Don't forget the theater owners and the film companies.
Keller: How about the cities themselves? How were your franchise relationships with the cities been? Has this been another problem over the years?
Conroy: Probably it's worse now than it was before but in the early days, I thought we had good relations with the city and it was up to the owners or managers to keep those good relations going.
Keller: You became mayor of Uvalde, didn't you?
Conroy: No. I did serve on the city council and guess what I ended up being. Utility commissioner. But we ran the utilities.
Crosby: You got a permanent visa at that time.
Conroy: A little aside from that. At that time, Southwestern Bell was coming up for a rate increase with the city—and this is apart from cable. And of course it fell into my pocket there as utility commissioner. Well, I let it drag on for about eleven or twelve months and they'd be bringing these expert dudes down from Dallas and I was asking them all sorts of questions about their depreciation schedules and the manager right in the meeting says, "Are you wanting that information for some other reason than just this meeting?" I said, "You bet your ass I am!" [Laughter] So after eleven months, we gave them what they asked for except only 50% of it.
Keller: Ben, how about your relationship to the city of Tyler? How have they been over the years?
Hooks: One, I want to thank all of you because when I got here in 1972, you really had cleaned a lot of stuff up. I won't mention the state I came from but I thought I was pretty good because I could send signal down open wire. Those of you who have had experience with that, it's like a challenge between how much signal flows off the wire and how much comes in and then I had the most powerful diddlestick in the industry. I learned how to tap on tubes all day long to get the signal up. Even if that created more snow in the picture, I was happy I had more signal. This was in the Sixties, but Bill Daniels hired me basically—I won't mention the other state that brought me to Texas in 1972. In fact, I started in the systems at Waco, Temple, Killeen. I remember Copper's Cove, Harker Heights, all that. The Waco-Temple area was owned by AMECO, if you all remember them, which was a manufacturer of equipment—which was a great experience because I got to go from tube amps to transistor amps but I found out if you blew on a transistor, it would go out. So new challenges. But thinking through all the franchising, where I really got involved in franchising was pretty late, probably in the late Eighties. We must have built over 1,000 miles of plant, believe it or not in Texas. How many systems did we have? You probably knew better than I do. It's probably 200 small community systems in the late Eighties that didn't have any signal.
Keller: What company was this?
Hooks: This was Buford Television. But anyway, we got on a campaign—
Keller: They were all broadcasters, weren't they?
Hooks: Yes. In fact, Buford had predominantly been broadcasters until really their last station in 1990.
Gunter: Channel 7, Tyler, the Bufords were forming forces of AMST.
Keller: Marshall Finger. Great old name.
Hooks: In fact, I think it was started by the mother—oh, gee, fifty-some years ago, Channel 7, and then they had a sister station in Lufkin, Channel 7.
Crosby: Ross Lansing?
Hooks: Yes. In fact, that's correct. Bob's son was named Ross, I think. In any case, it was like starting all over again in history. It's hard to believe that in the late Eighties, that there were so many communities without cable so we just built a whole lot of systems and our relationships were wonderful. I still think that the relationships in smaller communities are easier to maintain than it is your major markets. I think we've had a pretty good reputation.
Keller: We want to get back to the Austin—for lack of a better term, situation, during the early days of the system here. As I remember it, there was one television station in town and it was the largest market in the country that had only one television station at that time for various reasons, one of which was the President of the Senate, or the Majority Leader of the Senate at that time, Lyndon B. Johnson, who then went on to become Vice-President and then President.
Crosby: That was the main reason.
Keller: They'll get into that. They have firsthand knowledge. In any event, how were you able to get the franchise in the first place?
Campbell: The first thing about this Channel 7 was here. When they allotted these channels, there was a freeze on them before they were built around, except the Fort Worth/Dallas area. The freeze on the brand of station...permits to build on the VHF spectrum. Channel 7 was alloteded for Austin and there's no way they could fit in another channel unless in any capacity unless it was UHF. That was not really visible...technically they couldn't. 4 and 5 here. Anyone calls an adjacent channel interference. So they had Lady Bird and...they built the station and it operated very successfully for a number of years. In 1957, Midwest Video...what's his name?
Speakers: George Morrell.
Campbell: George Morrell. I should never forget George's name. They had a number of systems in Texas. Victoria, Bryan, College Station, Paris, Texas, which were ideal CATV. George got into it early. And he had the money and built these systems. Anyway, he came in and formed a company called Capital Cable, applied for the franchise, I believe in was 1957. They got in kind of a wrangle about it and LBJ's group got with Capital and they made a deal that whenever they built the system, they would have the opportunity to buy 50% of it at cost.
Keller: Morell applied before he got involved with the Johnson group?
Campbell: He applied and there were several other applications. The deal was that LBJ made a deal with Capital Cable that if they built the franchise, he could buy 50% at any time at cost. And I've seen the agreement.
Keller: Now Morell was well connected in the Democratic Party, is that correct also?
Campbell: I think so, probably.
Gunter: He was from Arkansas...he could have been Bill Clinton's grandfather for all we know.
Keller: Could very well be.
Campbell: Anyway, after that deal was done, nothing happened with the franchise. It just sat there and nothing was done. It just went to sleep until 1963. The local newspaper—that's when Lyndon Johnson was Vice-President—the local newspaper tried to get the franchise.
Well, a lot of the other companies came in. Charles Sammons, several of them applied at the same time. It was kind of a funny situation. I never thought we'd ever get a franchise down here, but my partner was Tom Creighton, he was in the Senate and his very close friend was Charlie Herring, who was in the law firm of Small and...anyway, we just kind of monitored the situation. Then the city said, well, we'll give a permit franchise to anybody. Just to anybody, because there was so much pressure. City-wide franchise. The telephone company said—tMorrell claimed that he had a deal with Southwestern Bell already before. At least that was accepted as common knowledge. We said, "Well, let's just give it a try." A one-page letter went to the city council one morning before the meeting. I was in the business, from Mineral Wells, and the city attorney read the letter. I didn't even read the letter. He immediately said, "Oh, let's give him a franchise." There was so much pressure. Capital Cable/LBJ would have had the franchise...
Keller: ...putting pressure on him, too? Yes or no?
Campbell: Whose guy?
Keller: Your guy. The guy in the Senate.
Campbell: He didn't have that much, not really. All the pressure was coming from LBJ. Again, as Vice President, he didn't have the ability or the strength that he did as Senate Majority Leader. Anyway, the city council said, "Just give him a franchise." I just stood up and said, "Hi." One of the councilmen came in later and said, "Johnny, let me kiss you." He said, "Man, you saved our life." What happened, because nobody wanted the franchise because they couldn't get on the telephone company poles.
Keller: ...didn't have a pole contract.
Campbell: Supposedly. The city said, "We'll let anybody on our poles." It was a city utility, electric company. Just before my letter was read to the council, after applying for the franchise, the telephone man got up and he'd had a lot of pressure on him. He said, "We, like the city, have agreed that anybody gets a—that the city grants the franchise to be on our poles."
Keller: More than one?
Campbell: More than one. What happened then was they gave us the franchise and the next day signed a contract with the telephone company and the power company and two days later, I had cable in a South Austin warehouse and a few days later, we were stringing cable, weren't we, Herb?
Keller: Now you'd already made your deal with Herb.
Campbell: Not right then. It kind of came. It took us a week or two, didn't it? (Laughter) But the way I looked at it, we could put up a tower in South Austin, we could have a good system in South Austin. There were, what, 10,000, 12,000 people, or whatever it was at the time. But what we decided to do—and I had already had some experience with the West Texas microwaves. So it came through Mineral Wells and I actually worked with the engineer for Collins coming through Mineral Wells and well-versed on the microwave and I knew the people at Collins. So we had them immediately come in and design a system for us which would start in South Austin, would beam to three other locations or four other locations around Austin, which would be hubs, and we'd just go out from there.
Campbell: No, that's before. This was the old klystrons. Anyway, we ran out of money pretty quick. I had a little money. I'd sold Mineral Wells, I applied for an SBIC loan, an outfit out of Gulf Western, out of Houston. They participated with some people out of New Orleans because they couldn't loan so much money. $150,000 was probably their maximum loan.
Anyway, they got them involved in it and they said, "We're going to approve your loan." Well, it didn't happen. The day they were to give approval, they said, no, we can't do it, period." So then—it came from Johnson...and the New Orleans people said, "We're not afraid of the Vice-President. We'll go with it." So they got somebody else to participate with them and we borrowed the money and got started. Really got started by that time, didn't we, Herb?
Jackson: We had $400,000.
Campbell: It didn't go far.
Jackson: We had a stack of bills.
Campbell: But we had a lot of credit. We had credit with all the suppliers. Anyway, talk about gambling everything, I did it and so did the rest of us. What had happened, we started building, we had plant going, and the people hooked up in a matter of month or so.
Keller: Where were you getting the signal?
Campbell: What we were doing, we built a tower down close to San Marcos, picked up the 4, 5 and another one down there.
Jackson: Picked up the Spanish station mostly and the three network stations out of San Antone and then we microwaved them into South Austin in an inner city microwave.
Campbell: So it was a real fast process of getting signal around town.
Keller: Excuse me, did the FCC have to approve that microwave?
Campbell: That was part of the problem. Jack Cole, who everybody knows, was working with Strat Smith at the time, in his firm. Jack took on the project and ...had a lot of pressure on him and I knew it at times, but he was representing us and he represented us to the best of his ability. What he first ran into, we got the technical stuff done and I think that was all approved, but it came up to approval with the full Commission and they kept asking for delays. So I went down to the city council. I was supposed to report every week or two, progress, and I told them we couldn't get a permit. The government wouldn't let us have a permit. There was a writer called Jimmy Banks for the Dallas Morning News was there, and he wrote a story on it and wham! The next day, the permit came through.
Keller: The next day?
Campbell: The next time they met. They just kept putting us off, putting us off. Later on, we agreed to non-duplication, which was a story—they were cherry picking. They would go to 11:00 news and they had an additional primetime. They'd run two different programs so 11:00 news, instead of 10:00 news, so they got in an extra hour of primetime. So when it was ABC, we had to do non-duplicate on all of them, all three stations.
Keller: Did you build a switcher to accomplish that?
Campbell: Yes. We bought it. Herb used to get up in the morning and go by and set the switches for the day and come to the office, right?
Jackson: I'd make a mistake every once in a while. (Laughter)
Campbell: I thought for quite a period of time maybe they would never start. Their program was to go up on the Channel 7 tower, 500 or 600 feet, pick up the signals, which I think they could, out of San Antone, and then we were going to hardwire this typical cable. So they wouldn't have to do the non-duplication because they were not using microwave. I thought for a while maybe they would never start because we had poles and Herb knew when they were asking for poles and they would get the design and stuff and send it off to Jerrold and then six weeks later, they'd get it back and by that time, we already have cable on those poles.
Keller: Parenthetically, at that time the only control that the FCC had over cable television systems were those being fed by microwave.
Campbell: If you didn't agree to non-duplication--even though to start with we agreed to non-duplication, they weren't going to give us a permit.
Keller: That's ridiculous.
Campbell: They just kept delaying it and delaying it. Then Jack went in and asked for relief under the non-duplication because it was a competitive situation, and had that pretty well along but the FCC kept delaying it. Kennedy and Johnson had come to Texas. "Let's give this another week to make the decision." And Jack told them OK. And then, the assassination. George Morrell and I were in the office. George and I weren't talking very well. Tom Creighton and George were talking. George Morrell told Tom--we were in Herring's office, Charlie Herring, this is Clint Small's firm. He said, "The President of the United States is now my partner." That's what he said.
Keller: Morrell said that?
Campbell: We had already had so much plant in place and they were just starting and although they were catching up to us...Tubby Flynn came by one day for George Morrell and said, "I want you to get with us and try to just resolve this thing. Dual systems, overbuilds, no good." That led into a meeting in Little Rock. What was the old gentleman's name in Little Rock? Hamilton Moses. Hamilton Moses was Mr. Arkansas Power and Light. He had formed that, and his law partner, McClellan, was in the Senate. We sat down with Hamilton Moses, Bill Demius, who was the lawyer for Johnson's group, was... and Mr. Moses started. He was a real nice old gentleman. He said, "You know, I've put together these power and light things for years and competition is no good. You've got to combine them." And I said, "Why then did they start to overbuild us?" He said, "Well, (he pointed to the lawyer), they told us that they could cut your money supply anywhere you went. You get in there and start building." That's what we did.
Keller: You were still getting money from the SBC?
Campbell: We had used that up and we were asking for more.
Keller: From that government agency.
Campbell: No. SBIC is Small Business Investment. They're like the SBA except it's an organization that they loan themselves to small...and they're controlled by the federal government. Anyway, Mr. Moses said that's what happened. So we agreed to meet with their board that night...this is Capital Ward up in Little Rock. Had dinner. Mr. Moses said, "We've got a deal here." Now I forget exactly what the deal was. He said, "I'm going to tell my board tonight what it is in the morning. We'll confirm it so we'll have breakfast."
Keller: You agreed with that?
Campbell: We'd agreed. The one reason we agreed was because our bankers from New Orleans said, "We want out. We want out."
Keller: How long had you been operating at that time, John?
Campbell: Six or seven months.
Crosby: Did you mention before something about Tubby Flynn?
Campbell: Tubby came by on behalf of Morrell and said, "You ought to get with him." I said, "I'll visit with him anytime he can come around."
Crosby: He'd be there.
Keller: How could this guy tell you that the banker was going to cut off your funds?
Campbell: The banker? Well, they weren't going to loan us anymore and they just said, "We want out. We want to sell."
Keller: Did they give you a reason?
Campbell: As in SBIC, they took an interest. They had 25% interest option on the stock. You know we couldn't have gone anywhere else even if we had somebody because they already had a...
Keller: Do you feel that was because of the pressure from the White House?
Campbell: Oh, no question. They said we weren't concerned about vice-presidents as we were about presidents.
Jackson: Creighton wouldn't let John go to the final meeting.
Campbell: Final meeting: George Morrell said John shouldn't be at this next meeting and so Tom went to represent me, which I trusted him as much as I trust my brother. He called me several times. He said, "Here's what they're offering. What do you think?" So it went back and forth. Finally they came up with a deal that was very lucrative to me. Something over $1 million over a period of time and everybody else was getting...SBIC was making their money back plus I think even paying off all the debts because I owed a couple of cable companies about hundreds of thousands of dollars. I forget how much it was now, but they assumed all the debts. Like I say, I wasn't at the meeting. Tom called me and told me what the deal was and I said, "Go ahead." So they did a one-page agreement and it was later reduced to a contract that they would take over. But it would not be announced until after the November elections. This was probably June or something. I don't remember for sure.
Crosby: How many customers did you have then?
Campbell: Close to 4,000.
Jackson: About 400 miles of system, too, and four headends.
Campbell: At that time, after the assassination there were several—Washington Post, Wall Street Journal—several papers were down here looking into Johnson's affairs. Wrote a big article in Life magazine. Something about Morrison, the guy that represented him and was a trustee for him. The private telephone lines that were put in; they found them.
Arnold: Ed Clark...
Campbell: No, no, Morrison was his name.
Arnold: I thought you'd mentioned somebody else.
Campbell: Clark was one of the attorneys. So he was a partner...
Campbell: One thing I didn't tell you: the next morning, before the last meeting, we had breakfast. I sat next to Mr. Moses here and Tom was sitting over here and the rest of his board over here and he said, "I'll tell you what the deal is." It was just half of what we agreed to the night before. I looked at Tom and Tom looked at me and we looked at our man—the banker. I said, "Let's go talk." We already had our bags checked out from the hotel; we were getting ready to check out. We just picked our bags up and went to the airport.
Crosby: Who told you that gave you the terms?
Campbell: This was the first meeting. I'm sorry, I got ahead of...I didn't tell that part of it. George calls up and said, "Tom, where'd you go?" The next meeting is when it was settled.
Keller: Did they go back to the original price?
Campbell: Yes. Or maybe a little better; I can't remember exactly. Anyway, we took a real hefty down payment and then they would get established and they would pay the rest of it. Had to sue them for the rest of it.
Keller: You had to sue for the rest of it?
Campbell: And then I had to settle. You know, Charlie Herring, he was a lawyer, he said, "Johnny, you just don't understand. Johnson owns this town. Don't you know that?" I said, "I found out." [Laughter] I said, "But we made a deal."
"You think that makes any difference to them? It doesn't make any difference to them. If they can cheat you out of your part of it, they're going to do it."
Keller: I think this is the first time that this story has been told.
Campbell: In my oral history, I've been reading it again. That's been sixteen years.
Keller: But not as specific as you're bringing it up right now and that's what I wanted.
Campbell: I'm not exaggerating anything. It's exactly the way it happened...
Gunter: I think we've all just heard bits and pieces before. This is more connected.
Keller: Right from the horse's mouth.
Arnold: Johnny, were there only two systems here or was there at one time three systems in town—two north of the river and one south?
Jackson: No, we had four different hubs with the inter-city microwaves from the south to three other hubs. And then we built distribution out of each one of those. Instead of using trunk lining, we used microwave.
Campbell: To get it to the hubs. They were building just a conventional cable system.
Jackson: They used what they called "super-trunk," they called it.
Keller: Could you estimate in dollars what this meant to the President of the United States?
Campbell: I don't know. They sold it a number of years later. Maybe they'd know more about it—what the price...
Crosby: I've forgotten the number. They had a 50% interest in it...the Morrell group had 50%, I believe that's right.
Arnold: Jack's right. Morrell had 50%. That was part of the deal that John mentioned to begin with. That was how Morrell—
Campbell: They had an option. They didn't put any money into it. They had an option to buy it at cost. We forced that contract—Jack Cole did, forced them to provide a contract...they didn't do the option for several years.
Crosby: How long did they own it together?
Arnold: Oh, I bet eight or nine years.
Crosby: Morrell never charged me for service when I moved to Austin.
Arnold: The other interesting thing about Austin was the basic cable rate was $4.95 and they never raised the rate. When you kidded them about it or talked to them about it, Morrell's gospel was you don't raise the rate and nobody will ever bother you at the city. So we don't have to talk to anybody about doing anything. And the rate stayed $4.95, I think, until they sold the system to Time Warner.
Keller: No one knows what the sale price was though, right?
Arnold: I imagine it's public record because Time Warner purchased their interest in 19—
Conroy: You mean the Johnson part.
Arnold: You might not have known what Johnson's interest was, but at that time—
Conroy: I think before the Time Warner thing came along, the Johnson Midwest Video thing had been settled and Midwest Video ended up the sole owner.
Jackson: I think ATC had the system for a long time and then they raised the rates during that particular period. John got even with Morrell. Morrell told him, "You sold me a bunch of old cheap cable and amplifiers and stuff like that." John said, "I got just as much for that as I would the good stuff." (Laughter)
Campbell: Integrated Messenger. You had to. In fact he put it up fast. We didn't think it was going to last a year at least.
Conroy: Morrell didn't know the difference...
Jackson: Now it's self-support 408 we put up there.
Conroy: Morrell built crappy systems from the start. I'll tell you, they were awful.
Campbell: Oh, he ran some bad systems, didn't he? I was flying a lot on a little airplane and Herb got a few trips. Anyway, I flew into the little airport here and I got a hangar while I was here. And I'll tell you what, everytime I went out there, I sure did look that plane over good.
Jackson: I did, too. (Laughter)
[videotape 1 ends here]
[start of part 2]
Gunter: The history of microwave, both common carrier and CARS and business bands, is sort of a Bell Curve. We built it up rapidly in the Fifties, Sixties, and maybe 1970, to do the inter-city, big city relay to feed our systems something worth having. Because it preceded 1975 when we put the first earth station up and could relay even Ted Turner's WTBS. That was the only independent we had at the time. Who was handling it out of Tulsa then? United Video?
Several: United Video.
Gunter: United Video was doing the relaying of that one. Then suddenly we were able to release relay out of state, much less out of town. Leading up to the first part of the Bell Curve, we were all building these things to Del Rio and Uvalde and you built all that from Aledo all the way down I-20 to Abilene. I fed off of it at one point after I got tired of dealing with Brownwood. You remember? Those things began to proliferate, then began to atrophy and there the Bell Curve went over because suddenly—1975, we've got magnificent technology called "satellite relay." Also we had legislation that eclipses some of this. We had rules that for some length of time we couldn't even import—when did the rules change, 1977? 1976-77, whenever the Third Report and Order, whichever one it was?
Arnold: The Third Report and Order was in 1972.
Gunter: It was the Third Report and Order of 1972 which then said you can import up to three independents, but even by that time we were leading right up to—
Keller: Depending on the size of the market.
Gunter: Yes, the top 100. That was restricted to that. At the same time, you have technological and you usually had—it was warming up rapidly in the mid- to late-Sixties—you had legislative regions for making decisions that you made at the board meeting today, and then you had technological decisions and then you had banking decisions. And all of these intermix and eclipse one another.
Arnold: In cities like Abilene...things like that went from one network station to three network stations so you didn't need to go to Aledo to get "the other two networks" to bring them to West Texas.
Gunter: ...our lifeblood importing better stations, bigger market stations into these little outer market places where cable in Texas had emerged. The very reason we needed it—we didn't need it after about the mid-Seventies because here came the satellite, here came other technologies—
Conroy: 1975 changed all of that. September 30, 1975 changed all of that.
Gunter: The "Thrilla from Manila."
Conroy: Yessir, and forget all those funny rules.
Gunter: It changed the landscape forever in this business.
Conroy: It means you could build cable in the big cities.
Gunter: It's really what happened in San Antonio. When I went into San Antonio in the fall of 1977, partying around just eating good food and seeing friends on the Riverwalk, and staying at La Mansión. I was real angry one night to see they still had kind of an MATV system but there were three channels you could see and two of them were half snow. This is La Mansión, downtown San Antonio. The next morning after breakfast I got up and went to City Hall and I met the city manager—Lou Fox at the time, I believe—and then a fellow named Cipriana Guerra, a retired Air Force colonel that went to work for the city government and Lolly Cockerell was there. She said, "Mr. Guerra will take you to lunch today and tell you why we don't have cable here in Bexar County, San Antonio." It was a very strange story. Everything in Austin was driven by politics, high-level federal level politics á la LBJ. Strangely, 65-75 miles down the road, there's San Antonio and when we opened up the war to win all those franchises ultimately, the one major market in Texas, the south, the table was swept clean. They cut Houston into a pie to appease all the important applicants. They cut Dallas/Fort Worth into five or six pie slices to appease all the applicants to do the politically correct thing. But we actually swept the table in sixteen cities and all of Bexar County by understanding it wasn't really politics, it was a multiculture different battleground. We had to talk to the Blacks and the Browns and hire people and lawyers who knew how to really skate on thin ice with all these various factions that were not really driven by even state level, much less federal politics. So it's interesting to see the contrast between—this is the most interesting story in the state, of course, the history of Austin and it's because of the LBJ influence and yet, look at San Antonio and all we had to fight down there was one competitor. Storer Broadcasting announced at the 1978 New Orleans convention that they had just earmarked $100 million for expansion, be it broadcast, be it broadband. We were just opening up our first reading for UA-Columbia in San Antonio.
Crosby: Storer Broadcasting's a very close friends of Ben's. [Laughter]
Gunter: Two weeks later I get home from New Orleans, and San Antonio is in the papers. Storer Broadcasting has now filed a competing franchise application in the city of San Antonio at least against UA-Columbia. That was all we had to do. By the way, that was my first taste of Rent-a-Citizen. Storer Broadcasting headed right for Red McCombs and the Straus families and said, "We're going to carry you for 20%. You just handle City Hall. We get the franchise, you're on board for 20%." Those were the beginnings, the late Sixties, early Eighties, back in there—I mean late Seventies, early Eighties, when we began to knock heads as co-applicants and compete with each other for the first time in a decade or two. Suddenly you had maybe even good friends in the same franchise reading room, a co-applicant for that franchise. And therefore they were out making deals. I think our friend, Irving Kahn, made a deal or two in New Jersey trying to rent a commissioner. He went to the pen for that one as I recall. There were many other deals worse than that; he just got caught. Where we built libraries for city governments to get favorable consideration for franchises and we certainly rented super-citizens like Red McCombs to go intervene at City Hall on our behalf.
Keller: No one ever did that at this table.
Gunter: What is the statute of limitations on that one? If it's past, we may talk about it today. [Laughter] But that's what happened and they really beat the drums and paid off the right people and how we prevailed through all that storm I don't know.
Keller: When you use the term "paid-off," you mean as far as a percentage of—
Gunter: I mean a carried percentage á la 20% of a huge company worth $150-200 million dollars when finished. They would have been carried for that if they had just beat the right drums and blown the whistles well at City Hall and gotten them all the franchise they wanted.
Keller: But you never gave any of the percentages or paid off any public officials.
Gunter: We did not.
Keller: Or anybody.
Gunter: We were too cheap to.
Keller: I wanted to bring that up because we did a lot of deals but never with—
Gunter: I'm happy to say that no, we did not. We really assembled a marvelous team down there with the right law firms and the right people representing us with the cultural factions—and there were two or three very strong ones there. Yet it totally, totally differs from your Austin experience.
Keller: Can anyone talk about two other situations here in Texas? One is Dallas, and the other one is Houston. And what developed, what happened there.
Crosby: We were approached early on in the game from people from Houston to build a system in the city of the area called Bellaire.
Keller: They had already provided the franchise. They said they were going to issue...
Crosby: They were in the process of applying for the franchise. They were local people and they were in the process of applying at that time. So they needed somebody to back them up. Being very responsible and noted local citizens, they still needed somebody to back them up from the technical standpoint. So we went in and—when did that system get built? I'm trying to remember what the dates were. But anyway that was the first system that was built to the best of my knowledge...
Arnold: In the Seventies. We'd already acquired _____ systems when that occurred and Tower had occurred.
Crosby: That was just a little part of—
Keller: They divided what, five parts, didn't they, or was that Dallas?
Crosby: I think so. I think it was five parts. That was the first one, I think, built down there.
Campbell: Part of South Dallas the city council granted one franchise. Now there's Irving, Mesquite and Garland—all those different cities around granted their own franchises, but Dallas granted a franchise to Times—Warner Cable. It was Warner Cable...
Jackson: Storer had all the little cable systems around Dallas. Sammons...
Arnold: Sammons had University Park, Highland Park. It was his home, that's where he lived.
They were the first one in the area and they had Highland Park and University Park, the Park cities, but he was never able to get the city of Dallas to grant him that franchise, much to his chagrin.
Keller: Didn't Harriscope have a portion of Dallas, or Heritage rather, have a portion of Dallas?
Arnold: Heritage came along after Dallas changed hands several times because it was a terrible market. For many, many years, penetration never exceeded 20% of homes passed.
Hooks: Didn't they put the Qube system in there?
Campbell: I was involved very closely with that whole process in Dallas. They started in 1979-1980. Warner had just received a franchise in I believe Pittsburgh and they wanted it on their Qube system. The technical aspect of the Qube system, which was a copy of TOCOM.
Keller: Pittsburgh or Columbus, Ohio?
Campbell: We were Columbus. Columbus was Qube and we had a system up there, too.
Keller: I didn't think it was Pittsburgh.
Campbell: And then Woodlands was one of ours and Houston was one of our first systems. But they won that franchise up there on the basis of the Qube and Charlie Sammons' people came to us and said, "How do we out-Qube Qube?" I said, "We built the system several years ago and you wouldn't buy it. If you put up $200,000 we'll put a group of engineers in coming up with a system that will do more than the Qube system."
Keller: Who was "we"?
Campbell: TOCOM. But you don't have an exclusive. I can't remember who all else came in. Sammons, Cox, four companies gave us $200,000 front money to enhance the system that we had and we called it the 55 PLUS System, which had a lot of the bells and whistles more so than what the Qube system because we could take 55 channels of regular television and put at least 55 more channels of graphic channels on the vertical interval. Does that make sense?
Keller: To explain this a little bit: the Qube system is a two-way system over the cable with the equipment to be able to both generate a signal on both ends. And the Qube system, was that a new development...?
Gunter: It was an 'interactive set-top device.
Campbell: We showed a system in Chicago on the first try, 1972. A two-way interactive system. We'd hired computer engineers to help develop the computer end of it and TOCOM was providing—we weren't even TOCOM then. We became TOCOM later. It was an interactive system and we installed—when this something thirteen the federal government came out with they build like Woodlands. They call it Chapter...? Anyway, the government was backing—if someone would come in and build a community completely self-supported and everything, they would—HUD funding was available for it. That was the way Woodlands was built. And there was one out of Little Rock. There were thirteen of them around the country and we had every one of them signed for a TOCOM system. Some of the Warner people came down and we thought they were another customer and we took them down to Woodlands and showed them how it worked and about six months later they announced Qube. It was basically the same system. They had improved on it with remote control.
Campbell: Columbus, yes.
Gunter: Who was Cox bragging about the same time in Omaha, Nebraska?
Campbell: They were using our system—they were going to have their own system—
Gunter: But they had their own pet name for it.
Campbell: I don't remember what they called it, but we worked with them on that and then...by this time, the technology had left me. I'd graduated from vacuum tubes to transistors and when the integrated circuit came along, I relied on our engineering group. We had some very fine engineers from the Dallas area out of TI and a number of those...they did the development work. I basically would go and make a box that will do this. And they said, "Yes, here's how we'll do it." But I visited the Qube system in Columbus one time and looked at it. Anyway, I started to tell you that one of the engineers came down. We took him down to Woodlands, or some of our guys did, showed them all the system and didn't hear from them till late. That's the Qube system. Pioneer built that for them, Pioneer Electronics, the Japanese company. We kind of waited around and they got the franchise for Mesquite or one of the towns in suburban Dallas.
Crosby: Outside of Dallas.
Campbell: And they started all their Qube stuff and we slapped a patent suit on them. That was alive all during the Dallas franchise thing, but all of the applicants except ATC of the Dallas franchise used the TOCOM system in their basic application. Warner beat us out, everybody. Charlie Sammons, we thought they had it, because they were their local and he was a big contributor to the whole community. But Warner got the franchise for Dallas. We later replaced our boxes and went in and replaced their boxes, the converter boxes. Our technology was based on what we call baseband. It's where you tune a signal, take it down to baseband and then you re-modulate it back up, just like they do on a VCR now. What came out was Channel 3. While it was baseband, there's a lot you can do with it. You control the sound, generate your own graphics to slip in there and that stuff was carried over just like captioning is done. It's carried on the vertical interval. There's some space in there you could put data in and we used that to have the additional channels. Nobody ever put the system in because there was not a whole lot of income derived from it. But there was from the security systems. We had some very successful security systems.
Crosby: ..outside of Texas, but given the pattern, I think, for dividing the cities up into different franchise areas was probably set by Philadelphia many years ago with Jerrold being there. And the city in its infinite wisdom decided that the four geographic areas and to show what Johnny was talking about, by the political influence the so-called best area, the more affluent area of town to the Inquirer, which was the bigger newspaper. The Bulletin got the second best area, Jerrold Electronics, which was a Philadelphia company, got the third best area, and Fred Lieberman and I, with our little bitty company, got the terrible area between Broad Street and the Schuylkill River. [Laughter] Fred picked me up at the airport and said, "I'm going to show you our franchise area." And we started in the area and he said, "Lock the windows and the doors." Then we started down and I said, "Who's going to collect? The Philadelphia Eagles for crying out loud in this area?" Anyway, the point being at that very same time we went ahead and built in the face of about eight off the air signals. And it was the first one to be built there for many years. Most of the people didn't build. But we were building a cable system in Midland, Texas, at the same time and we could cover with a mile of cable in the row area in Philadelphia, we could cover about eight times the number of potential customers than we could with that same mile of cable in Midland, Texas. That was the forerunner, I think, of splitting the cities into geographic areas. It was political as much as anything else.
Keller: We're going to be running down here pretty quick. I want to wrap this thing up for about a half hour from now. You haven't had much to say, Jake, nor have you, Ben. Do either of you want to add anything at this time?
Hooks: Well, I'll just say I'm learning a lot about history of cable. I thought I'd been in this business a long time, 35 years, and sounds like it's closer to 50 around this table.
Keller: I think there's probably about 600 years of experience at this table.
Hooks: But I'm very honored to be here. I've had a lot of experiences, of course, in cable but I'm not sure they're historic yet. I thank you for being here.
Campbell: When Jake was in Austin—was it Lastiger that brought you in? Bill Lastiger?
Landrum: Bill Lastiger brought me in from Mexico.
Campbell: Were you with Brown Walker at the time?
Campbell: Now that's another story of Brown Walker, isn't it?
Keller: He told it, he told it.
Landrum: It's a shame that Brown isn't here to tell some stories. I'm not sure any of the others of us would attempt to tell stories because Brown had a background in cable and electronics.
Campbell: I sponsored him into the Pioneer Club and he came up—gosh, I don't remember what year it was. He was living down in Mexico and he came up and spent a week with me at home and we went to the Pioneer Club dinner in Dallas—what year, I don't remember.
Jackson: John used to call in the printer and put all the specs on something there and then go to the lab and start to build it to match what he'd written up. That happened a lot of times.
Campbell: Herb, he laid out the PC boards and he did a lot of stuff.
Jackson: Yeh, Lord.
Landrum: There have been a lot of big systems and a lot of little bitty systems built in the state of Texas by a lot of different people having to use different methods to get it done.
Jackson: We went through that _____________ systems and then they started building the big towns and then they started going back out there and if there's 400 people there, build it. We got mixed up in all that building just little spots in the road it seemed like.
Landrum: But there were hundreds of those built.
Keller: It's interesting though. Jack made a good point, though. It's not necessarily the number of subscribers you have per mile of cable, but how many homes per mile of cable that can pass. If you pass 1000 homes and get 10% penetration, you've got 100 subscribers per mile.
Crosby: In that city system we could break even and cash flow at 30% saturation.
Jackson: The criteria on the little bitty systems was it twelve a mile you'd build it. [Laughter]
Arnold: The basic rates weren't $4.95 either.
Keller: Bill, from the Association standpoint, I'd like to have you wrap it up.
Arnold: Well, I think what you've seen from when I came to the Association as a fulltime employee in 1982, there were still a large number of what I would refer to as individual operators. There were big operators, but they were not predominant operators. Today, five companies have 98% of the subscribers in the state of Texas. Five companies have 98% of the subscribers in the state of Texas. There are less than forty entities owning 10,000 or less subscribers in the state of Texas. So over this period of time, consolidation has really changed the way the industry looks in Texas. It's changed the way members rely upon the Association because twenty years ago a large number of people relied upon the Association for a great many more things than they do today because as consolidation has come, those companies have that sort of expertise in house. So the Association today is more and more called on to be a governmental entity that provides lobby support and representation than it was twenty years ago. In fact, twenty years ago, we had a very conscious effort to be out of sight, out of mind, and we managed to do that for about eighteen years.
Keller: Two minutes, Jack. The future of the industry is allotted two minutes, no more.
Crosby: The future of the cable television industry?
Keller: Whatever you're going to talk about. The telecommunications industry.
Crosby: Still here to stay. No question about that. Broadband brings a whole different approach to the business but cable is still an integral part of it. I don't think it's going away. It's I think further consolidation—if you can believe that—further consolidation is still around the corner. From a financing standpoint more than anything else. We've caused a lot of our own problems, as Bill will indicate. I will verify things in the rate area by these systems being acquired and leveraged highly. That's been a part of the ills of the industry; that's not going to solve it other than additional financing as the business goes on.
Keller: Ben Conroy.
Conroy: Well, when cable came in and started to grow and came into the cities, we were the competition for the networks, still are, and the stations. And of course, now the satellites have created cable's competition because you've got Direct TV and so forth. I think cable's holding up quite well with that. They're having their own series of problems, but I just hope that the major companies in cable keep their noses clean. I'm sorry to see my friend John Rigas having difficulties similar but on a much smaller scale to Enron. It can happen, I know that. I just have to think with a wry kind of a smile in the back of my head that AT&T, with their big wide open mouth, they couldn't swallow what they bid into and I'm sorry for the people that got involved in that from the cable side. But cable is here, cable is going to stay, it's going to have to fight as always for its place in the sun. But we're not going to go away. We're here.
Arnold: I agree that we won't go away and I think Jack's entirely right. I think given time, you may very well see only one or two major companies owning 75% or 80% of the subscribers in the country today.
Hooks: I think there's a change in the industry like when you went from horse and buggy to a car or automobile. I think that our core business for a long time is going to be video and there will be enhancements to that or video-on-demand, that sort of thing. But I think things like IP telephone, I think data is really where we're going to grow our business. I'm starting back in it again and I'm real pleased with the foundation of our business as we've always been but I don't see our growth coming from there. I think it's going to come from these ancillary services. I think it's bright. I think it's very bright.
Gunter: I tend to agree that it will be around but not at all in the same shape or form. I had several classmates in college tell me of reported companies in their senior years, "Gunter, with a personality like yours, we think you're going to do real well if you can find an unregulated monopoly." [Laughter] I stumbled into one. For all the similar reasons that Jack Crosby did. But Dad thought it would sell more Magnavox and RCA TV sets if we just brought some more channels to town to pick from. And he was right. We got into the business for the wrong reason. He got into business to sell more television receivers in a multichannel market that cable would bring to town. We did all those things and yet all of those cozy days are gone. Cable today is the farthest thing in the world from either being unregulated or a monopoly and that's the problem. As a young guy, twenty-five years old, leading cable crews down the streets in San Angelo, Texas, running cable, people stormed out of their houses to the street and said, "Just as soon as this is turned on, hook me up." And the next couple of decades or more of my cable career were very much characterized by that kind of behavior. We were in the only game in town. We're not the only game in town and wireless is going to continue to erode the wired base. I used to believe it would not but that was before they learned how to digitize and compress data. We thought we'd run out of spectrum if we got too aggressive with wireless vs. wired. Not true. And now the very people that used to have a monopoly are now competing for high-speed modems against DSL. And that battle will get more fierce as it goes along. You've got the same people that had to have your cable system drop from that pole to their house and those same people now are in significant numbers calling up Dish and DTV. It doesn't mean that the cable industry is dead by any means. It just means that the landscape is changed forever and they'll have to fight for their lives along with all these other rivers that are merging in telecommunications.
Keller: You do see a merger between wireless and cable.
Gunter: Absolutely. They will co-exist and they may even complement each other in many ways. I don't mean that they're natural enemies. I just mean that there are market forces that none of us in this room saw the first halves of our careers or even understood.
Keller: John. Future.
Campbell: Well, where I live in Pecan Plantation—this is a community of 4500 people. It's a homeowners' association. We have our own cable system, Charter Cable, which is out of Fort Worth. And I was asked the other day by a guy who puts out a newsletter if I would write something—they're building fiber optics and what does this mean? I made a rather short but it went to the crux of the thing because a lot of people are going to dishes because the cable hasn't been that good. A lot of outages. I said, if Charter does what they're supposed to be doing, and will spend the money to do it, cable is going to be the best delivery system because of the modems and because of the capacity. You know, you take ten fibers in one cable—they're just using one now. With the capacity they have there's not going to be that much spectrum available on two-way and I've always been a believer that two-way was someday going to make it and we tried it twice and it didn't make it. But I still think that cable is the delivery system.
Keller: And will be.
Campbell: And will be.
Jackson: I've had a lot of fun in the cable business. A lot of times you'd build one and you'd have to get out of town pretty fast [Laughter]. But as an install contractor right now, we do very little business it seems like of install; we're putting in modems and the Roadrunners and all that. I wouldn't even attempt to go out to hook up a house anymore. There's a lot of training in the boys to get that all done, but it's here to stay.
Keller: What do you see the future as? Do you see the future in other services other than video?
Jackson: They come up with something every day. I wouldn't estimate what could happen.
Keller: What were you going to say, John?
Campbell: I want to tell one story on Herb. In building Fredericksburg, Texas, little town, what was it, forty-mile plant? I went down for the turn-on. Flew down in a little Comanche and anyway we went out to lunch. And we got the lunch and Herb was going to get it because he handles the expense account. We got up to the checkout counter and the man says, "How much do you want on your ticket today?" [Laughter] What Herb did, he bought out all our equipment when we decided to stop during turnkey. Went on his own and was very successful. He came into the office and he had his American Express card. He hated to give that up. I took a scissors out and cut it in two and gave him half of it back. [Laughter]
Jackson: He cut that other half in a lot of little pieces.
Keller: Gentleman, we've got to wrap this up right now. It's been a great pleasure coming back to Texas and meeting some old friends and it's always a delight. The Oral History Program has given me the opportunity to relive my past forty years through the eyes of people like you. I very much appreciate it. Thank you for coming, only to say here that also you've said some things about Qube and about Warner, but the guy that's picking up the tab for this thing is Gus Hauser through his foundation and we're very grateful to him. We appreciate it. Again, thank you for coming. Your moderator was Jim Keller. Appreciate it. Thanks, guys.
END OF PANEL DISCUSSION