Interview Date: Friday January 21, 2000
Interview Location: Austin, TX
Interviewer: Jim Keller
Collection: Hauser Collection
KELLER: This is the audio and video history of Jerry D. Lindauer. This video history is brought to you by a grant from the Gustave Hauser Foundation in conjunction with the video history program of The Cable Television Center and Museum. We are meeting in the offices of Prime Cable in Austin, Texas. The date is 21, January, 2000. Good morning Jerry.
LINDAUER: Good morning, Jim.
KELLER: Jerry, tell us a little bit about your background prior to getting into cable.
LINDAUER: Well, basically, I grew up in Louisville, and that's another story which we won't go into, but I was an orphan and a lot of other things, but worked my way through college and eventually graduated from a local college here called Bellarmine College, which I'm now on the board of trustees of.
KELLER: It's a Jesuit school, isn't it?
LINDAUER: It's named after a Jesuit, you're quite correct, Robert Bellarmine, but it was a black Franciscan school. And so the arch diocese named it after Robert Bellarmine, but the Jesuits weren't there. So, I graduated from there in '57 and in '57 I went into the Marine Corps and became an officer, a 2nd lieutenant, in the Marine Corps, and basically had a very interesting career for twenty years. I was a company commander in Vietnam. I was wounded in Vietnam and have a lot of history of Vietnam in my head up here, which I could do an oral history on also, and then I became a lawyer in 1973 I moved to Austin in '68 after Vietnam. They had me teach at the University of Texas with the NROTC unit, and '68 is when I met Bob Hughes and Jack Crosby. But I got a law degree from the University of Texas, and then went back to the Marine Corps from the University of Texas while I did both, while teaching and getting a law degree, and when I went back to the Marine Corps, I practiced law, criminal law, for a couple of years, and then I was pulled in to be a military assistant in the office of the Secretary of Defense, and I worked for Jim Schlesinger, Don Rumsfeld, and Harold Brown. I traveled all over the world with them and that was a very, very interesting career, but I decided to retire the minute I had 20 years in, because I'd gotten a law degree and I decided I wanted to go practice law and try the civilian world, although I think I had a very good career in the Marine Corps and could have stayed for thirty five years, I guess. So I interviewed with several law firms in Texas upon my retirement and two of them, the two leading firms here in Austin, wanted to hire me, but Bob Hughes, who I'd been friends with now for almost ten years – social friends, we golfed together, we played tennis together, we did a lot of things with our wives, and basically became a good friend, and we stayed friends in the four years – from '73 to '77 – while I was still in the Marine Corps. And so he was coming to town, to Washington, and he would stop by the Pentagon and see me, and we'd also go to dinner, and he wanted to know what I was going to do and I told him and he said, "Well, I think you ought to think about the cable industry and come with our company." I said, basically, "Why?" So that went over a period of several months, and basically I had the law offers, I had another offer from a manufacturing firm in Houston, all of whom offered me a lot more money than Bob Hughes was willing to part with, but for some reason I just liked the story about what he thought cable was going to be, and of course none of us knew what it's turned out to be, as this was in 1977 and the satellite had just gone up, or was getting ready to go, with HBO and he said, "I don't know what you can do, but we'll figure out something. I just think you ought to come." Jack Crosby, of course, was involved in that also. Jack and Bob were partners at Communication Properties, Inc. and Jack, ironically, was on the board of directors at the company in Houston that also wanted to hire me.
KELLER: Was it Prime or Community Properties, Inc.?
LINDAUER: It was CPI, Communications Properties, Inc. So I went with CPI because of Bob and also because of Jack. They initially made me, I think my title was Director of Labor Relations and Personnel.
KELLER: Interesting title.
LINDAUER: That was my first title. I think that title lasted about six months or so.
KELLER: You went on the franchise trail, didn't you?
LINDAUER: Yes, almost from the beginning I was on the franchise trail, basically, but then they changed my title to Assistant to the President and we decided to go after franchises in the '78 timeframe, and the main franchise we had, one of the most important ones we had that we'd never built was Louisville, Kentucky. You may have been involved in Louisville.
KELLER: Yes, I was a referee on that one. We never got anything in Louisville.
LINDAUER: Right, with Monty...
KELLER: In fact, I didn't do anything in Kentucky. I struck out in Kentucky.
LINDAUER: Nothing – you struck out! Well, Monty had a lot to do in Kentucky, ATC, and so many other companies, and what the problem was, as you may recall, and I'm sure anybody who knows the industry, is that we hadn't built those cities because we had no product to bring to those cities. So, when the satellite went up and we thought we could microwave different things and maybe would have more programming, we decided that we would build Louisville, Kentucky, but as it turned out we had other cable operators who also... so they tried to get the franchise revoked because we were non-performers, even though they were non-performers in other places, and my first job, basically, was to save that franchise. And ironically it was my hometown, although I had no political sway, I grew up sort of on the wrong side of the tracks and I wasn't a big political operative, but I knew the town and it gave me a lot of credibility as time went on. Simultaneously with the decision to rebuild in '78 Jack, Bob and Fred Leiberman, who was the primary shareholder in CPI, made a deal with Times Mirror to sell the cable company, and so at that time it was the largest cable sale ever. The sale was about 134 million dollars, which was a lot of money and it was the largest cable sale that had ever taken place. I think we were the 8th largest cable operator then.
KELLER: This was in '78-'79?
LINDAUER: "78-'79. So Times Mirror came aboard and we started going through the transition and I met Ralph Swett and Dow Carpenter, who was his boss at the parent level, at the Times Mirror company, and they said in one of the deals that they had made within CPI, in the negotiations, that they wanted the Louisville franchise, the unbuilt franchise. It was very key. They didn't really share that with me, but they said, "You've got to get that franchise." And so I went to work and I spent a lot of time in Louisville working with politicians, as you do, that's what your experience is, and convinced them that we were the best company and to leave us in place as we didn't do anything wrong, and we were going to build it and live up to our promises, and tried to explain...
KELLER: Were you doing this as CPI or doing this as Times Mirror, at this point?
LINDAUER: CPI, but the acquisition didn't take place until '79, but it had already been announced and we were going through the regulatory hoops. We had already been trying to save the franchise and then I went back in and was explaining to the politicians in Louisville that this was going to be great! Not only were we going to build it, but now this big company from California with all of substantial wherewithal was going to build it, so it made my job a little bit easier. So, we saved that franchise, and that basically, I think, in a way, made my career when I was first starting. That all happened in the first 12 to 18 months.
KELLER: You got your feet wet in a hurry!
LINDAUER: Got my feet wet! So, Times Mirror, who would come and watch me perform in Louisville, they'd come to the hearings and all these various things – it was very contentious – so after all that then when the acquisition took place, Bob was going to form another company, but he didn't have any place for me in it. I decided that I'd go to one of these law firms. I'd only been there a year and a half, because no way did I want to move to Los Angeles, but Times Mirror approached me and said, "We want you to come with the acquisition," and made me a very nice offer. In fact, the offer was probably five times what I was making with CPI at the time. So it was very lucrative, but I said, "I've been in the biggest bureaucracy in the world, which is the Marine Corps, for twenty years, and I really don't want to move to LA and be part of a big company." So then they came back to me and said, "Okay, here's the deal. Will you consider this? You can stay in Austin and you can keep your office here. You'll have to come out to LA some." They sweetened the offer some more, and so I said, "Okay, I'll do that." That was in '79, and so I stayed with Times Mirror from '79 until '83, and of course that was a very unique experience and I was always glad that I did it in retrospect because I really learned what big companies were all about. At least that big company, and a lot of them mirror each other with the way they think and do things. They all have their own unique personality, but they're not entrepreneurs.
KELLER: That's for sure.
LINDAUER: They don't have the same... they're different in negotiations, they, I think in many cases, against an entrepreneur, since you're dealing with someone that only usually has stock in the company or something, they don't look at it as... whatever they're giving away or surrendering or doing, they don't look at it as coming out of their pockets, per se. So they have a tendency, I find them easier. I found the same thing with the RBOCs through the years that we did, deals we did with them. I liked dealing with them. Not that they were not tough.
KELLER: RBOCs – Regional Bell Operating Companies.
LINDAUER: Regional Bell Operating Companies. Not that those big corporations aren't extraordinarily good, it's just from an entrepreneur's sense, I just always thought that we were better at the negotiating table. I hope this doesn't go to my friends in the RBOCs.
KELLER: It's all right. We're all coming together anyhow, so it doesn't make a whole lot of difference.
LINDAUER: So I learned a lot. In my job, when I went with them, was to win franchises for the new company, Times Mirror Cable. Also at that time, Ralph Swett... Well, let me go back a little bit, let me go back to CPI. When Bob was president of CPI in '78...
KELLER: Bob Hughes?
LINDAUER: Bob Hughes. ...he was also chairman of NCTA.
KELLER: That's the National Cable Television Association.
LINDAUER: Bob told me he wanted me to start going to board meetings with him. He was vice chairman of NCTA at the time.
KELLER: He was chairman from '78-'79.
LINDAUER: '78-'79. Either '77-'78, I can't remember. But anyway, when he was vice-chairman I went to board meetings, so then when he became chairman, he says to me, "I want you to be chairman of the EEO Committee," which was a very high profile issue. And the gentleman who had been the EEO Committee chairman for the last couple years was Dick Munro, who was the heir apparent to Time, Inc. at that time.
KELLER: Chairman of Time, Inc.
LINDAUER: Right. So, I said to Bob, I said, "Bob, you've got to be kidding me. This is a very touchy issue within this industry, and you've got a real high profile guy here in Dick Munro, and you're putting me in, assistant to the president of CPI, with no profile. I think you ought to get somebody that has stature." He said, "Nope, you're going to be it." So I did that and that's how I made my entrance, basically, into the politics of NCTA.
KELLER: Now, you went with Bob when he was president of CPI. When you went on the board, then, you went on the board representing Times Mirror?
LINDAUER: Times Mirror, right. One board meeting I wanted to mention to you that I always think, and maybe other people on the board at the time remember it, but I remember the board meeting at the Western Show, it was probably '78, late '78, in December, I would guess, and Ted Turner came to the board meeting to make a presentation on CNN. I wasn't on the board, but I was in the room, and they weren't interested in Ted's presentation, but Tom Wheeler and the board gave him 15 minutes to make his pitch.
KELLER: What was the purpose of his pitch to the NCTA?
LINDAUER: CNN – he wanted to have an all news channel. He was going to launch this all news channel, and he wanted the industry's support.
KELLER: Okay, so he was asking the NCTA board to speak for the industry in giving him support, was that it?
LINDAUER: Right. He wanted support, he wanted to brief them all, tell them he was going to come see them, this was his vision, and this is what he was going to do. He made, in typical Ted fashion, a great presentation to a rather stone faced board, and when he got through...
KELLER: He was an unknown at that time.
LINDAUER: Yeah, he was basically unknown. He was Captain Courageous from the America's Cup, so the board listened to him and he asked for questions, there weren't any questions. He left and basically everybody thought it was not a good idea, it would never work, never do anything. But I'll never forget, Ted, of course, being tenacious as he was, we did end up supporting him and it was one of the best moves the cable industry ever did in the long run, but it was interesting that there was really no interest as he made his presentation.
KELLER: This was before you were on the board?
LINDAUER: This was before I was on the board. I was an observer.
KELLER: And you went on the board, then, in what? '79?
LINDAUER: In '79, and usually on the NCTA board...
KELLER: And you're still on the board, is that correct?
LINDAUER: I'm still on the board today. Ironically, as we sit here, I'm going to my last board meeting in Washington next month, because the company I'm with now, Prime Cable, has sold all of its assets to Cox and Comcast and various other larger MSOs.
KELLER: So, all you'll have is money.
LINDAUER: Well, I'll have some. The industry's been very, very good to all of us.
KELLER: To all of us, you're absolutely right.
LINDAUER: I never dreamed I was going to be a Marine for 20 years. But in 1977 I decided to try the civilian world, the reason being is that the Corps sent me to Austin and I got to like it so much while teaching at the University of Texas. When I retired, all I thought I'd do is just augment my 20 year retirement and eventually make a nice living as a lawyer and everything, and I got in this industry and it turned into a big homerun for everybody that stuck with it. There were some painful times, but it proved more than I ever dreamed of, so I'm very lucky. I love this industry. I don't love it that I made money in it so much, I love it because of the people I knew for 20 years, 22 years now. And they are great friends. It was a collegial industry to the degree that, as you know, we never competed directly with each other in the '80s and '90s.
KELLER: Not in the operations.
LINDAUER: Just on franchising. Franchising was a bitter, bitter contest, there's no doubt about it, but after those days were over in the mid-80s really, so to speak, there was nothing to fight about except to align... on public policy we were always together, and so it was a collegial industry and I've made lifelong friends who will be my friends forever, in this industry, and watched it grow and watched it turn into what it is today, which we never dreamed it would do.
KELLER: Whatever that is. I can't define it today.
LINDAUER: Yeah, I can't either. It's another world. I really don't think there's going to be a cable industry per se by the year 2010 at the latest. It might be sooner.
KELLER: Especially after the Time Warner AOL merger. It's going to be very difficult to see where that's going to go.
KELLER: But you're back, you're on the board in 1979. That was the beginning of some of the changes in the industry leading up to the '82 Cable Act. Can you give us a little bit of insight as to how the board was functioning and looking at that potential Cable Act in '82?
LINDAUER: Well, the Cable Act of 1982, let's see... We got de-reg in '86, right?
KELLER: Well, I'm sorry. '82 would have been the telephone company act, the phone company act.
LINDAUER: Pole attachment.
KELLER: Pole attachment, right.
LINDAUER: Before I got on the board, John Saeman pulled me into his team on pole attachments and I lobbied a young administrative assistant to Tim Wirth named Tom Rodgers - who as we know, went on to be very successful with NBC and has now moved on to be CEO of a large media company and Senator Tim Wirth, who I became good friends with. Tim was our mentor, although he was very, very tough. Timmy was a very, even though he's from your state of Colorado, was a very liberal guy and very regulatory oriented, but we were able to convince him – by "we" not just a few of us, but the industry working together.
KELLER: Who were the other people involved in that?
LINDAUER: Well, it was Tom Wheeler, John Saeman, myself, and then there were other people... we lobbied him a lot, though, just met with him a lot and talked to him. I think John did a tremendous job in getting the pole attachment act.
KELLER: This was late, because the Hanover case, that was back in the mid-60s with United Telephone Company and the city of Hanover, where I thought was the beginning of what looked to be like a telephone company control of the industry within their own franchises, within their own exchanges. FCC overturned that, I think the courts overturned the Hanover case eventually
LINDAUER: Well, you know, the pole attachment, I had just gotten in the industry, but it was obvious that there were some usurious charges being made to get on their poles.
KELLER: No question.
LINDAUER: This industry, the history of it, basically, through the '60s and on up to the late '70s, we had to pay pole attachment fees, and then in addition to that we had the broadcasting industry – we had nothing but enemies and not much help. Certainly no help from the financial community – they didn't believe cable was ever going to go anywhere, so we had a lot of hills to climb. But in answer to your question about how the board operated then, the board operated very collegially. There wasn't a lot of disagreement on that particular issue. We wanted pole attachment relief and we wanted to be treated fairly. And so, because, as you know, the phone companies had the right of way, they'd hang the poles and they would make charges for make ready and they were outlandish. So when they got this through it was a very euphoric thing.
KELLER: They were trying to force us into leasing back the facilities from them, at that time, and at one time they wouldn't even permit pole attachments.
LINDAUER: Right, they could arbitrarily tell you that you couldn't get on. So the industry struggled, and that particular act was a victory for us. It was our first legislative victory that we'd ever really had, and the first time, I think, that NCTA had ever really done anything. They'd been a lobbying force. Bob Schmidt had done a good job and laid a lot of groundwork.
KELLER: Sometimes negatively, but...
LINDAUER: Yes, and then Tom Wheeler came onboard and we became a lobbying force, that was the beginning of it as that act gave NCTA a lot of credibility.
KELLER: Tom Wheeler was the president of the association.
LINDAUER: President of NCTA. He was the successor to Bob Schmidt. The reason I was on the board and represented Times Mirror, and I know you'll interview Ralph Swett, who is a fine gentleman and a good friend, Ralph did not want to be Mr. Outside. He wanted to be Mr. Inside. And so, when I came on board, the first thing they told me is they wanted me to get elected to the board, did I think I could get elected? I said, "Well, I've been in this industry two years. I've been chairman of EEO, but you know, we'll see." But anyway, I did get elected to the board in '79, and that's how I got on the board. Then after... somewhere in '82, Tom Wheeler, which I don't think the presidents today would do, but he pulled me aside and said, "Would you like to be on the executive committee?" I'd been on the board three years, and I said, "Yeah, sure." And so Doug Dittrick put me on the executive committee. At that time, the executive committee did most of the yeoman effort, although the board was effective too, but a lot of the work was carved up in the executive committee.
KELLER: So, then, after the '82 Act, then there was a concerted effort to relieve the industry if some of the onerous restrictions put on it – the non-duplication requirement and so on. How did that play out at the board level, do you remember?
LINDAUER: Well, I don't remember... I don't recall... I know that issue, but I mean, those are issues that we were always united in, so it didn't play in... When we got into the '84 Act, or the...
KELLER: '86 Act.
LINDAUER: '86 Act, when we got de-regulated on rates and things of that nature, there was a lot of fraction from some players in our industry, and the board... In fact, we were sued by Leonard Tow, who was not on the board, and Leonard was never on the board. He's obviously very successful and I like him and his wife, Claire, very much. He had no use for the NCTA board, thought we were making a bad deal. He's never liked any deal the NCTA's ever done.
KELLER: Well, he didn't want any regulation at all.
LINDAUER: Yeah, he just thought we shouldn't compromise, we shouldn't do anything, this is a bad deal... so he sued us. It was an ironical suit, it obviously didn't go anywhere, but he did make the lawsuit – not only the association, but each of us individually. (Laugher) But that issue, there was a lot of debate on what each MSOs wanted in that particular area.
KELLER: We were starting into the National Cable Television Association's board, deliberations prior to the 1986 Cable Act.
LINDAUER: Right, and one of the things in my career on the NCTA board that happened in that interim period, right around '82, yeah, in '82 – we had board elections, and I was on the executive committee at that time along with Gus Hauser, and let's see, John Saeman, I guess, was chairman. He had it for two years.
Usually NCTA elections are automatic, the executive committee decides who's going to do this, so Gus had made it known that he wanted to be vice-chairman of the association at that time. Gus had been president of Warner, had promised the Qube, which was a revolutionary system that Warner Brothers had, but unfortunately he had been removed from the company and they brought in Drew Lewis in '82, I guess.
KELLER: Because it was bleeding money.
LINDAUER: Yeah, so Gus and Steve Ross went their separate ways, and Gus founded his own company, Hauser Communications, but he wanted to be vice-chairman, and there was a group in the industry who were divided on whether Gus should be vice-chairman and then chairman.
KELLER: For what reasons were they divided?
LINDAUER: The ostensible reason was that Drew Lewis and Warner were reneging and getting a lot of publicity on not delivering on Qube and was cutting and slashing – Drew Lewis... that's what he was brought in for, and Warner was getting a lot of bad publicity and Gus was the father of the Qube.
KELLER: The Qube was the two-way system, on-demand system, in Columbus, Ohio, right?
LINDAUER: On-demand... it was going to do all the things that the Internet now does today, but it was 15, 17 years ahead of its time. Or maybe... yeah, that's right, 15, 17 years ahead of... if it had made all those promises it was going to do everything, and obviously it couldn't do all that. They tried hard and lost millions of dollars on it, but people just... there was a contingency, a certain segment of our industry did not want Gus to be president, and also there was bitterness...
KELLER: Even though he had, by this time, left Warner.
LINDAUER: He had left them, but it was very recently, and of course, he had... I don't know – he owned a few subscribers someplace but he hadn't really made his big acquisition, I don't think, at that time – Montgomery County, and so on. So he had some subscribers, had some systems, so he was eligible. But they just didn't feel that he should... I think there was also – we went through some bitter franchising; as I said earlier, it was a collegial industry, but during the franchising days you could bruise each other up pretty badly, and I think there was a lot of resentment of some of Gus's successes with this technology that was bogus to begin with, and he had won some franchises against some other people.
KELLER: I don't think it was bogus in Gus's mind, nor do I think it was bogus in the minds' of the Warner engineers.
LINDAUER: No, they thought they could pull it off. I totally agree.
KELLER: There was nothing to program.
LINDAUER: And that's pure conjecture on my part. So a group of people approached me and said, "We want you to run against him."
KELLER: Here you're in the industry five years or so?
LINDAUER: I'd been in the industry about five years. I said okay, so my constituency was basically Bud Hostetter and my backers, Doug Dittrick – who was no longer chairman at the time, I think John Saeman was chairman – Bill Strange, and a host of other people, and so it got to be... there were some contested elections, but very, very rarely. There were for board seats, but not for the officers too much. And so, I can remember going to the board meeting, I think it was down in Sarasota, Florida, and one of my votes did not show up.
KELLER: One of the people backing you?
LINDAUER: One of the people backing me did not show up, which was crucial because I ended up losing by one vote and it would have swung the whole thing around, and I would have probably won by one vote the way this worked out, but as it turned out, I did lose. But I remember – it was the only election I ever remember in my twenty years on the board – where we were questioned, Gus and I, on our positions on various issues.
KELLER: Like what?
LINDAUER: Oh, well, I can still remember my good friend, Bob Johnson, who was then on the board as a programmer...
KELLER: The Black Entertainment...
LINDAUER: Network. And Bob says, "What do you feel about EEO?", and these questions, and so I'd give my answers trying to be very diplomatic and what I thought were the concerns, and they'd ask some other questions, "Where do you stand on...", but we had to answer questions from the board on what our positions were on all this stuff.
KELLER: You can't remember what any of the other questions were?
LINDAUER: No, not really. They were pretty mundane. I just remember Bobby, because Bobby was a friend but he voted against me because he had a deal with Gus, and I've never let him forget it. It was the only time we ever had a contested election – it may have happened back in the old days but not since.
KELLER: I don't believe so.
LINDAUER: I don't think it ever occurred again. But we had to state... which we didn't know when we walked in there. It had never happened and they started asking us questions. I can't remember – I just remember Bob because he was trying to pin me down on something I was saying wrong about EEO, or something.
KELLER: This was what? In '81?
LINDAUER: No, this was '82. It had to be '82, because I left Times Mirror the following year.
KELLER: So, by this time though, the satellite programming, HBO, was going very well, and I think by this time Ted had brought his...
LINDAUER: CNN had launched and things were...
KELLER: And also WTBS was up on the satellite too, wasn't it? So the industry was starting to pick up and roll very quickly at this point. But you don't remember anything else about the discussion of which way the legislation was going to go leading up to the '86 Act?
LINDAUER: Well, you're talking about de-reg.
KELLER: Yeah, the de-reg of '86, yes.
LINDAUER: That's a little bit away. Several things happened in my career. The first thing that happened was that I left Times Mirror; Bob Hughes had formed Prime Cable. He had a few, I don't know, maybe 50-60,000 subs, and he wanted me to come back. And once again, he made me an offer I couldn't refuse. I was making a big salary with Times Mirror, more than I'd ever dreamed I'd ever make in my life – stock options, all the perks, and Bob cut all that by at least a third and said, "But I want you to come back." And so, once again, I put my faith in Bob and came back to Austin. In the interim, one thing I did – as far as Times Mirror, the Times Mirror treated me extraordinarily well, and they finally came back to me and gave me a beautiful subsidized condo on Balboa Island in Newport Beach so that I could commute. They wanted me to start being out there more, so I commuted back and forth. I still had an office here, I had an office out there, and I spent a lot of time on the road in the franchising days, but they were a great company. Bob Eburu was the CEO, he was very nice to me. But one thing that hindered them in the franchising wars as we went forward, I should indicate, is that I had to meet – I met with Bob Eburu, who was CEO of the corporate Times Mirror company that owns the LA Times and the cable and everything – I also met Otis Chandler, I met Franklin Murray, who is a legend in the Times Mirror Company. He's a doctor, I don't know if he's still alive. But they set me down and explained to me the rules they wanted to play by in the franchising, because they were very proud of their heritage and their integrity in the LA Times, and I could do nothing that could ever embarrass them, and the one thing I could NOT do was give political contributions.
KELLER: Well, we all were under that – most of us were.
LINDAUER: Well, no, not everybody.
KELLER: Except for a couple, and I won't go into that.
LINDAUER: And I always felt – and there wasn't anything wrong with political contributions. It was a legal thing you could do, just like you could give to CablePac. It was a little shaky, different rules, but you could...
KELLER: Yeah, but not when the deliberations were going in city council for a franchise.
LINDAUER: No, but I mean you could give money for re-election, whatever. I'm not saying... but that was just the way the system operated, and a lot of guys did.
KELLER: I was always told just walk away. Anytime that happened, just walk away.
LINDAUER: So we never, ever played politics at all, other than by force of personality and meeting people. So it was interesting how the game was played, and who your rent-a-citizens were, and how you went about it, and who you got as partners, and everything had to be just up and up at Times Mirror.
KELLER: They, as I recall, they had connections and influence with various newspapers around the country, which in some cases help you, didn't it?
LINDAUER: Well, no, not really, because we weren't successful in winning many franchises. I won Brookline, Massachusetts for them, ironically, and came close in Montgomery County, Maryland, but by that time, the Times Mirror Company had decided they weren't too enamored with cable even at that early stage. They didn't understand it and I don't think the corporate gurus liked it. So it became sort of a stepchild and they eventually got out of the industry not too many years later, eventually sold it.
KELLER: Well, we met in Lexington, where we both lost.
LINDAUER: Right. We both lost. I gave a stunning presentation. I can remember the headlines. And Joe Collins, and Monty were there.
KELLER: Joe Collins – it was the only time Joe ever came in.
LINDAUER: Yeah, Joe came in, and ATC... you guys, I think it was you guys, brought in the former president of the board of Aldermen of Louisville and you hired him as your lawyer.
KELLER: Um hmm.
LINDAUER: He was a real good guy, and I knew him because I came from that town and we were friends, or we used to be friends. So he came... they brought him to Lexington and then he started asking me hostile questions from the audience about our Louisville situation and how screwed up, how can you... .Creighton Marshon was his name. But the presentations, as you recall, cost thousands of dollars. We had Ed McMahon as our video voiceover and on-camera presence to talk about all Times Mirror was going to do for Lexington with horses, and all these things, and I got up and got beat up by some planted questions and things.
KELLER: That's happened to all of us over that time.
LINDAUER: There was a headline in the Lexington Herald that basically said, the next day, it said "If the vote was taken on presentations, Times Mirror Company won." But it wasn't. As we know, Telecable from the Norfolk area came up with it.
KELLER: I've got some stories to tell about that someday. But, then what? You say the only one you did win then was Brookline...
KELLER: ...Massachusetts. Any reason why Times Mirror...? They just didn't feel they were competitive?
LINDUAER: We did great jobs, we made great presentations, we just never really had the politics in a lot of cases, even though we had some very good prominent local people. One great example, which was the acquisition – I also started getting involved in acquisitions at that time – is that we became partners with Bruce Merrill in Arizona, and Bruce is an old pioneer, in those days he was already an old pioneer, and we became his partner and so we got the city of Phoenix to approve the transfer to our new partnership, which was a battle in and of itself because Bruce had bruised a lot of people. You either love him or you don't love him, and he bruised a lot of people in Phoenix and then we went after Tucson and thought we could win that because we had just gotten the Phoenix franchise and were going to build out the city and all that, and we had a very good group of local partners, but the Tucson people really didn't like Bruce's role at that time. He had bruised them somewhere back in the '60s or whatever had happened, so that was sort of an albatross around our neck and we came close, but Cox, I think, ended up winning Tucson.
KELLER: Cox did win Tucson.
LINDAUER: So, you know, as far as... Times Mirror wasn't willing to do anything... There were a lot of things, if you want to say we always took the highroad, there were some players who played a different game then we did, and we were sort of ones to play white knights and did not want to get in the trenches to do anything – I'm not talking about illegal – but just even anything that could even look like it cast any kind of aspersion on Times Mirror. Anyway, that brings us up... I left Times Mirror, joined Bob again, and we at that time were on... my first job with Bob was to really divest of everything they owned, to sell everything, and we wanted to start a new company, which is what we did, and I was off the board for one year and then I went back on the next year.
KELLER: This is the NCTA board?
LINDAUER: The NCTA board. So it was a one year period, or a few months period, that I was off the board, and Bob didn't want to be on the board. He'd done it all, he preferred to be Mr. Inside, so to speak, so once again I was the person out in front for Prime Cable in the national scene.
KELLER: Were you also involved in the Texas Association?
LINDAUER: No. Bill Arnold, who didn't work for Prime, but he worked for CPI, he's not the executive director, and I'm sure you know Bill. He's a colorful guy.
KELLER: He's on the board of the Cable Center also.
LINDAUER: We had a few properties here and there, but nothing of consequence. So we kept our corporate headquarters here in Austin because we like to live here, it's a great place. As you can tell now, if you ever pick up Fortune or Business Week, it's either number one or number two as the best place to live in America for lots of reasons, so it's a wonderful town. We wanted to live here. So we didn't have many Texas properties. Old CPI did, but then we didn't at Prime.
KELLER: What properties did Prime start with?
LINDAUER: Prime – when I arrived, Prime started with, the biggest acquisition they made was Buffalo, and they owned Buffalo, Hoboken, New Jersey, we had a little town outside of Corpus Christi, we had Springfield, Illinois.
KELLER: Was it the city of Buffalo?
LINDAUER: Yes – no, no! The county. We owned the county.
KELLER: Yeah, I was going to say I thought TCI had it.
LINDAUER: Yes, we had outside the golden ring, and so we had a partner who was very colorful, it's too bad you can't interview him but he's been dead for a number of years, his name was Peter Gilbert.
KELLER: I remember Peter.
LINDAUER: Peter Gilbert was colorful to say the least.
KELLER: Long Island!
LINDAUER: Yeah, he was a very colorful guy. But that was one of my first jobs when I came to Prime, was that Peter was a very difficult partner. He was our partner; we were the majority owner.
KELLER: He knew how to play politics.
LINDAUER: He was tough, let me tell you. You don't want to know what Peter did because I don't know, but I've got a feeling.
KELLER: I don't want to know.
LINDAUER: But my job – Bob said "Your first thing is to cultivate Peter Gilbert and become his friend," because Ron Dorchester and Keith Cunningham, another gentleman who used to be with Bob, they just couldn't, it was all out war. So I spent a lot of time in Buffalo having dinner and watching Peter chain smoke himself to death and drink red wine, and going to Buffalo Sabers hockey game where he had a minority interest in it. He was a very colorful guy. So Peter and I hit it off and over time, we were able to convince him to sell, so that was one of my first assignments. As we got rid of Buffalo, we ran into the Atlanta situation...
KELLER: Tell me about that.
LINDAUER: Well, Atlanta was franchised, the franchise was won by a company called Cable America, and Cable America was owned by a guy named David Graham, who's a story unto himself also, and another gentleman who is very prominent, Jim Mekeson. They were a Canadian company, they won that franchise, and they proceeded to build it with whatever their operational style was and it was a disaster.
KELLER: Well, yes, because it was prior to any time they could deliver any signals.
LINDAUER: It was total, total disaster. So Drexel Burnham, in the form of Leon Black and Mike Milken, had talked to Toronto Dominion, who was the lead bank who was going to take a terrible bath in this deal, and they wanted to get somebody else to buy it and step into their shoes and see if we couldn't turn this thing around, and that's exactly what happened. Chuck Dolan and Cablevision tried to be the operator to get it, but for whatever reason Drexel and Toronto Dominion chose our company and we went in there and...
KELLER: They floated junk bonds on that thing.
LINDAUER: They what?
KELLER: They floated junk bonds on that as I remember?
LINDAUER: Yeah, it was a junk bond thing. A total junk bond thing. Went out and made presentations to Michael and all that kind of good stuff. So we took over that franchise and turned it around.
KELLER: Incidentally, and as an aside, Paul Kagan attributes the savior, financially, of the industry to Milken.
LINDAUER: Yeah, well, the junk bonds helped a lot. I don't know whether I'd attribute everything, but it...
KELLER: Well, he said from a financial standpoint, when things were really tough...
LINDAUER: Right. Well, banks still weren't... until we were able to convince, and of course, I think John Malone was one of the great lobbyists with the financial industry, the cash flow was what we should be judged from not earnings, which we didn't have earnings in those days. The public companies now are getting around to where they have earnings, but it's still pretty diminutive.
KELLER: How about the AT&T stock?
LINDAUER: But when that happened in the banking, we had banks and in fact I remember a story Bob Hughes told me one time, and if you talked to him I'm sure... He basically, I think, CPI stock went public at 10 and somewhere in the mid-'70s it was down to 1 and 5/8s or something, and the banks were all over him, so he just went to a meeting and threw the keys. He said, "If you guys want it, you can have it." So they of course surrendered basically, and made reasonable terms so that the company could survive, so it was tough times in the '70s to make this cable thing go. So we were dead in Atlanta, and then in the NCTA board at that time was when we were getting close to the re-reg, or de-reg, or '86. Somewhere in '84 or so, Tom Wheeler resigned and he had brought in a young attorney by the name of Jim Mooney, and Jim became the new president of NCTA. I was on the executive committee all this time. I was on the executive committee, even though I got off the board for a short while, when I got back in a few months later I was right back on the executive committee. And so, I'm trying to think... but Jim came on board and we started to work the de-reg, and Jim did a great job, and he was a hero because we finally won a battle with de-reg. There's a lot of debate about the compromises we had to make to be quote unquote deregulated because we were never really deregulated, but we had relief and we were able to raise our prices and do things and not have to go through the onerous rate making cases before city councils who really didn't even have the expertise to understand it or anything, as you'll recall. It wasn't like you were going to the PUC, who at least when you present them they've got all these experts that understand what it is you're presenting to them. We'd go through these elaborate rate making cases and some... I remember going to Springfield once when I was at CPI and I was stunned by the hoops we had to jump through.
KELLER: Massachusetts had a state cable commission.
LINDAUER: They did, a state cable commission. So, anyway, the de-reg contentions were, other than a lot of lobbying, were never – I don't remember them being that fractious because we wanted to be deregulated. Other than Leonard Tow, who wanted no bill and didn't want us to compromise.
KELLER: But at that time there was no chance at that, as I recall.
LINDAUER: No. It wasn't the real world, but Leonard – he was not on the board, but he was a very strong person and I think Leonard was so upset with the board that he sued the board, not only the association but each member individually. It obviously didn't go anywhere, but the threat was made and I think he filed the lawsuit.
KELLER: This was prior to the act being enacted.
LINDAUER: Prior to the act, and he may have filed the suit after the act was passed, I can't remember. So, Jim Mooney was a hero after that bill, and from '86 through '88 he was doing extraordinarily well, Jim was. But Jim's biggest mistake as the leader of our industry, so to speak, of our trade association, is that he didn't understand that he had to treat everybody, all his constituencies, pretty well. Jim, and I would tell him this also, he's a fairly arrogant guy. He got caught up in that he'd done so great, he thought he was bullet proof, he'd had the de-reg bill, and I used to always tell him, I said, "You stumble once and you're going to be in trouble." So, I got elected vice-chairman finally, some 7 or 8 years later, I guess in '89.
KELLER: That was what? '89?
LINDAUER: '89. And Jim was the president, and this is when the re-reg – we had raised rates according to the regulators and we were always the whipping boy of the press and the media, and so on and so forth.
KELLER: Enter Vice-President, then Senator, Al Gore.
LINDAUER: We had a new entrant into the cable industry at that time, in '86, which ironically we brought in to the industry to a degree. This was a man named Marty Pompadour, and Marty Pompadour owned some systems in Tennessee, but we sold him a system in Prince Georges County where we had bought it for – I'll give you the economics of this deal – we bought it from Storer for 49 million dollars.
KELLER: In that Storer fiasco between TCI, Comcast...?
LINDAUER: No, this was when they were still an operating company.
KELLER: Prior to that? Okay.
LINDAUER: They won the PG County franchise and they decided they wanted to divest of it.
KELLER: As a note, excuse me Jerry, as a note to this, anybody that would be interested in the Storer TCI deal please review the oral history of Julian Brodsky. Just as an aside.
LINDAUER: Oh, Julian? Julian, I'd love to see Julian. I love him, he's a great guy. But we bought that system, I think we bought it for 49 million dollars. We must have bought it in '84, somewhere in there, it had 30-something thousand subscribers, we paid them 49 million dollars and put 10 million dollars worth of capital in it and increased the subscribers within two years to about 77,000, and then this Marty Pompadour had a fund out of Merrill Lynch and decided he had to have a system besides what he had in Tennessee. So we put it out for sale and he paid us 198 million dollars for it, in two years, so that was our first big hit.
KELLER: Did he hire Dave Van Valkenburg then, as president of that – what was it called, Multichannel, or Multivision?
LINDAUER: Yeah, Dave – I don't know when Dave went with him, but he had another guy as his chief operating officer names Chris somebody, and Chris was the guy that caused us to have... Marty didn't understand the industry or the implications. He was a Wall Street kind of guy and looked at bottom lines, but didn't understand the politics of what he was getting into, what the franchising was all about, the transfers of franchises, what it took, and Chris went down there, and so we had been de-regulated, and they took over these franchises – I've forgotten who they were – and they arbitrarily raised the rates quite a bit.
KELLER: Quite a bit!
LINDAUER: Quite a bit, and then made statements like "We don't care what you think," to the city councils, to the congressman, "I've got a business to operate and we just paid a lot of money for these and this is what I'm going to do." And that cause Al Gore to get extraordinarily upset because it was in his state and Al...
KELLER: He was looking for a populist cause.
LINDAUER: A populist cause, and he's a populist kind of guy, and so he definitely took this cause up.
KELLER: Jerry, we just started to talk about the advent of then Senator Al Gore of Tennessee picking up the populist cause of anti-cable in Tennessee. What was the reaction of the board of the NCTA at that time?
LINDAUER: Well, we tried to explain to him that this was a maverick, that this wasn't our normal track record, but he had the issue and he just ran with it. And of course we had Tim Wirth there who was our sort of savior and was our proponent, and as you know in the re-reg act of what was it?
LINDAUER: '96, I guess, Tim, when he was still the Senator went out and got it, filibustered it and did a lot of other things, so he was a great supporter of our industry and Al Gore just stayed an enemy and it got exacerbated even after they re-reged us because he had no use for John Malone, he called him Darth Vader, they had a very hostile relationship. When you have the largest company, in the form of TCI at the time, and take on Al Gore in the public arena, it is not a good thing. I would tell John or anyone – despite their great, great success and deal-making, I think John Malone is one of the smartest men I've ever met, but he never had any sense of the public relations and the politics or it could be he just never cared..
LINDAUER: And John, when you talk to him, really just wasn't interested in that. He was interested in his shareholder price and what his company was going to do and what the technology was and what the new products were. He crossed all disciplines. I've often said about John Malone is that you could put him on a panel of nothing but experts in their respective field, be it financing, marketing, programming, engineering, technology, whatever it is...
KELLER: Except public relations.
LINDAUER: Except for public relations he was a tour de force. He can cross all disciplines. You know, a lot of us have been successful, we all have our certain niches and things, and we have a broad outlook. But nobody that I know ever had maybe the total grasp of these things as he did. Bud Hostetter is also superb, but he's a different type of personality.
KELLER: Bud's not an engineer though.
LINDAUER: No, he's not an engineer. So, John just had this breadth of knowledge and he was just totally impressive, but he had a deaf ear on PR and dealing with politicians and I don't think they ever realized how important they were to the industry and how important it was for them to really be a good example for the industry.
KELLER: They didn't up until the time that Hindery came on.
LINDAUER: That's right, they were the same way. John Sparkman was... sometimes you'd talk to John about something and he said, "Well, I'll talk to John and those guys about that," and Sparkman just didn't care. I mean, I like John, but they just didn't care about the relationships with the cities and the mayors and things, and it cost the industry.
KELLER: Very much so.
LINDAUER: It hurt the industry quite a bit in those days.
KELLER: Malone was never on the board of the association, was he?
LINDAUER: Oh yeah!
KELLER: Was he?
LINDAUER: Yeah, he was on all the time I was on the association. He got off sometime, I guess right after, somewhere in the early '90s after I was chairman, but he was on the executive committee, all the years I was there we were on the executive committee together. And John, the executive committees could get somewhat fractious to a degree because you'd have John on one side and Bud on the other side, and Hostetter and Continental were the paragons of virtue, so to speak, that did everything right, that had great relations with their cities and they walked on water, and you had John over here who was trying to run a great business and make acquisitions, grow the company, do all those things that he loved and cared about, but had sort of a tone deaf ear to the other thing, so you would sometimes get in interesting debates within the executive committee, but they always worked out. We were always concerned, I know I was when I was vice-chairman and chairman, that TCI would pick up their marbles and leave, and some people thought that would be good, but nonetheless they were our biggest dues paying member and we needed them inside the tent not on the outside.
KELLER: There was a time when TCI refused to pay the NCTA dues, wasn't there?
LINDAUER: Yeah, there was some debates as I recall on that, and they held back and things, so they wanted their way or no way on certain issues, but it never... while there may have been compromises to keep them within the association, it was never something that was really a deal breaker to everybody else. Whatever it was, and I don't remember all the little nuances and things, a lot of it had to do with personalities and different things, the industry for the most part stayed together. Except when, as we get to the re-reg in '92. Now I took over, I was vice-chairman in '89, and took over as chairman in '90-'91, and Jim Mooney was the guy, the president of our association. And when de-reg started picking up steam he tried to do it, and we did a lot of lobbying with Senator Danforth, who was also a cable hater, which also was a basically TCI problem in a city in Missouri...
KELLER: St. Joseph's?
LINDAUER: ... where they were sued and lost the case.
KELLER: And Jefferson City also.
LINDAUER: Jefferson City, and I think there was some fraud connected with it and somebody got fined or went to jail, or semi-close to it, and so it was a very bad scene. And so Senator Danforth was a very righteous kind of guy, very difficult to lobby. He was an Episcopalian minister by background. He was a very difficult guy, and so I started going up to see him and trying to placate the TCI situation, and once again, it's just like Marty Pompadour, these are aberrations and so on. And all of that of course fell on... they were going to re-reg us.
KELLER: I don't think there was any question. By this time Al Gore is Vice-President of the United States, isn't he?
LINDAUER: No, no, no, no. He didn't become Vice-President until '92. This is in...
KELLER: In the development of re-reg.
LINDAUER: In the development of re-reg, so this is the first – I mean, we had two bills. The one in '96 we had re-reg...
KELLER: '92 and '96, yeah.
LINDAUER: And then we had the one in '92. The one I'm talking about is '92 right now.
KELLER: Right, that was the harsh re-regulation.
LINDAUER: That's when they wanted to roll back our rates, which they did eventually. So none of our lobbying did any good. So then our strategy turned to – and there were great debates over this – is that George Bush was President and there was a group that wanted to make a compromise on the bill and there was a group that said "Damn Congress, Bush will veto it." He hadn't had anything vetoed. That debate went on for months and months. I'm trying to think of the sequence here. Oh yeah, Jim Mooney had arranged what he thought was a great compromise and he called me one day and said we've got to have a telephonic executive committee meeting, he laid out what this proposal was and he said that the Senate had to know in two hours.
KELLER: Do you know what his proposal was?
LINDAUER: Well, the proposal was the it was going to be a compromise but we were going to give up program exclusivity, which was a big issue, and so we...
KELLER: I don't understand. You give up program exclusivity from what standpoint? As far as selling it to other providers?
LINDAUER: Other providers. And so we... but the way he laid it out is that was an issue that we were going to get to keep. That was the deal. He had been called up to Danforth and I forget what other Senator staff and said here's the deal we'll give you guys. And the deal basically said everything was okay, and he told us we had to give them the response within and hour to two hours. It was crazy. I was very frustrated; I was chairman and I'm saying, "I can't believe this Jim. We're talking about an industry here, and you're telling me these guys need to know an answer in the next two hours and we can't debate it more?" He said, "I'm telling you, that's it." So we had the conference call committee, we gave Jim a thumbs up on a compromise as he laid it out, which included protecting program exclusivity. Then he went back...
KELLER: Because TCI would never have agreed to that.
LINDAUER: And then we had a press announcement and so on that everything was going to be hunky dory, and then when the deal came down in writing – because that's what I wanted, I said, "I've got to see this in writing. You're telling me orally." – when the deal came down it wasn't anything like the deal that he had laid out to the board. One of them was program exclusivity which we were going to lose.
KELLER: Did lose.
LINDAUER: And did lose. And so the board was less than sanguine about that particular development. So Jim, who had burned a lot of bridges through his own demeanor in a lot of ways with a lot of people, and I would tell him that if the ship ever got wounded he was going to be jettisoned, which he was. But once that hit that we lost that battle and then he, of course, was a proponent particularly of the Bush veto strategy – he laid out alternatives but when we knew we lost the compromise and then Congress attacked him – he lost his credibility, Jim did, because they said that he was a liar and misled them, told them we had a compromise, and we the cable industry backed out of the deal. Well, our version was that no, Jim laid out to us a deal we were willing to accept and we accepted it and then you drafted the legislation and it wasn't the deal we had accepted orally. So Jim got caught between having his credibility destroyed sort of on both sides, and that cost him his job because once your lead association guy loses his credibility with the public policy constituency you're pretty non-effective. So that cost him his job and we used to have this... we of course got re-regulated, but not on my watch. Bobby Miron was the chairman when I was vice-chairman and he said, "Good luck. It didn't happen on my watch." So then I got to be chairman and we fought it through my whole year as chairman and we weren't re-regulated and so then I turned the reins over to Joe Collins, and I thought that if we're going to get re-regulated it couldn't happen to a better company than Time Warner, although I love those guys. But they had been quite contentious – it's tough up there. All companies do what's in the best interest of their shareholders and their company. There's nothing wrong with that. But you have great rivalries between those larger companies particularly. The personalities get mixed into it a little bit and it's just very... sometimes it was difficult at that time to keep everybody together and on the compromise that we thought we had, when it unraveled there wasn't any way of putting Humpty Dumpty back together as far as the industry wanting this.
KELLER: So the act did pass. Bush did veto it.
LINDAUER: The only legislation he ever had overridden. Of course, then he lost the election six weeks later. Then of course our lobbying efforts turned to the FCC who were going to actually implement the re-regulation, and trying to get them to understand why...
KELLER: They didn't know whether they were swimming or on horseback at that point.
LINDAUER: Yeah, well we spent a lot of time over there with the various commissioners, and I've forgotten who was chairman before Reed Hundt, but he was the guy, I guess, for the most part, that's right, Clinton had come in – trying to convince them and lay out lots of models why our rates were justified and that we shouldn't be reduced, and of course history proved out they knocked us down 16%, it hurt our industry immensely, but like everything else that happened to us from the federal government, or any government, we bounced back and found a way to survive in that environment and then we got ourselves de-regulated.
KELLER: At that point they did, they knocked down the rates and it did hurt us – Kagan gave me a figure, something in the trillions for awhile – overall, but they did leave that loophole of allowing us to charge for other things that we'd never charged for before, as I recall.
LINDAUER: That's right, that's correct.
KELLER: I think it was TCI and Malone that took advantage of that to the greatest extent and it helped an awful lot as I remember.
LINDAUER: But we lost additional outlet revenue, if you recall. That was a big... we charged for every, as you know, couple bucks or buck and a half, or whatever it was, so we were still able to charge, we could have, but then we ended up giving it away.
KELLER: But immediately then, the industry started toward the act that finally ended up in '96, which was then to do away with much of what had occurred in the '92 act, and how did that develop?
LINDAUER: Well, that developed, I think, as I recall... I was off the executive committee I guess in '93 because as an ex-chairman I stayed one more year, so I wasn't in the inner sanctum per se, I was just a board member after that, but that came about because we had to have relief and we had a new president in the form of Decker Anstrom who was 180 degrees different from Jim Mooney, had developed great credibility, was able to bridge a lot of gaps and we were able to win over, through our performance, what our products were becoming, what the industry was becoming, and he and many others carried that message to the Congress and to the FCC, but Decker was extraordinarily deft and diplomatic and never bruised anybody as he moved through the halls of Congress or the executive branch of the FCC. Everybody like Decker and he had great credibility and he had no ego whatsoever and he just did a great job and built that association – over those four years, from '92 to '96 – to where we had credibility, we weren't looked on as an industry like we were Darth Vader, as Gore still looks on it. I can tell you that I had a basically one on one meeting with Al Gore – I say one on one, there were three others of us there – in Las Vegas.
KELLER: Now he's Vice-President?
LINDAUER: He's Vice-President, and we owned the system in Las Vegas by that time. We also had owned Atlanta, we had owned a lot of major markets around the country, and so while we were a mid-sized company at the time, we lobbied him in '96, I guess it was, that particular time, to get some stuff out of re-reg. We met with him and he knows our industry, asked a lot of questions and you answer them, so at the end of this – we were trying to get relief because there was some portion of the bill, I can't remember what it was, but it really hurt small operators and he was going after big cable operators. I guess this was '9... Let's see, we got re-reged in what year, '92 was it?
LINDAUER: Okay, so this was definitely the de-reg but there some portions of the bill that were still bad and he was still wanting to get TCI and so on and so forth. I'll never forget this meeting because he listened and then turned to his chief of staff, whoever it was, the guy he had with him, and he said, "You know, I think these guys," it was myself and a couple of associates, and he said, "I think they've got some good points and I think we should address that because we don't want to penalize these small guys but we still want to get the big guys." I just can't remember the issues, I wish I could. We were elated.
KELLER: Well, with rate regulation was it for systems under a certain number...?
LINDAUER: Yeah, that's it, it was something... We needed relief on something, and he agreed. He said, "So you work with Jerry," he told this guy, "and see what we can come up with on this." So then we were small talking, we were at a fellow's home in Las Vegas, and this guy comes over to me while we're having tea or whatever we were having and he said, "Let me talk to you minute." And he pulls me aside and he says, "You realize the Vice-President can't deliver on anything he just said." I said, "No, I'm not aware of that. Why do you say that? I just heard him say yes, that he wanted to get us some relief. He's the Vice-President." He says, "Well, you know, you're pragmatic," he says, "You know and I know that Senator Hollings and Vice President Gore do not get along, and I can assure you," and Senator Hollings was controlling...
KELLER: The Senate Commerce Committee at that time.
LINDAUER: ...Commerce Committee. He says, "I can assure you that you will not be able to have the Vice-President making any inroads." Which I always thought was so interesting. How that worked, it just stunned me that you could have the Vice-President of the United States, who's still in the room, over in another corner, and he has told you that he's going to work with you and within five minutes this guy is telling you he can't do what he said he's going to do. I mean they didn't even wait a week or two or not return my phone calls, it was just the end of the deal.
KELLER: It seemed to become a regular situation with the Clinton administration.
LINDAUER: Well, that's another story.
KELLER: Totally another story.
LINDAUER: Totally another story.
KELLER: But anyhow, with these conversations then it started to lead up to the idea that maybe we were over regulated, which then led to the '96 cable act, which then took off some of the more onerous restrictions on the industry.
LINDAUER: Right. And the industry, even though we will always get bad press for raising rates, and all our presidents, now we have Robert Sachs there, his first speech to the industry more or less was hold down rates, and we've held them down. We're expecting other revenue sources as we move forward, as you know, over the digital systems and the cable modems and all the good things that are on the horizon, and there will be other revenues. But rates still have to go up. I always had a difficult time, not a difficult... I never could quite understand why Congressmen who thought that's the only issue they really understood about that rates, because that's the only thing the constituents ever complained about, but they never had any empathy that we had to raise rates. We needed to do that. We had bankers, we were the most debt-ridden industry in the world. To build this industry we had to raise rates and we thought they were relatively modest, but it was always with the press who were always saying "They're raising rates 12%" or they'd take one of the tiers that was going up 35% maybe for a few customers and say, the headline would be "Time Warner," or "Prime's raising rates 28%" and that wasn't really the whole picture, but we got hammered on that and we'll always get bad publicity.
KELLER: There have been some of my interviews in the past that have postulated that there may be a day when we'll give away television reception free, as a loss leader for some of the other services we'll be producing.
LINDAUER: Yeah, one can postulate that, but first we have to really... you know, the jury is still out. I mean, our stocks are up, everything's up. We've got the Silicon Valley that's pretty much convinced that broadband pipe is the way to go. When Comcast got the billion from Bill Gates that was really what started it, gave everybody a lift because our stocks, even in a bull market, had been never reactive. They were just flat. Paul Kagan can of course explain that much better than I can.
KELLER: Jerry Levin almost lost his job because of it.
LINDAUER: Yeah, so they gave a, you know we got new revenue sources that we hope and are real confident are going to come down the line, but in a few years...
KELLER: As of now though...
LINDAUER: Yeah, as of right now they're still de minimis and it's an evolving thing and if we don't get those extra revenue services don't think you'll be giving away cable television.
KELLER: Maybe not the pay service, maybe the basic reception service.
LINDAUER: I think there was another story I was thinking about... when I was chairman, one of my first jobs as chairman had been a constant beat from the programmers that they wanted a seat on the executive committee, and to show you how these big companies... The one that was selected by the programmers to get this seat if I chose – the chairman gets the sole right to choose a couple of members that are not officers, of the non-officers there are another three or four that he picks as his chairman's choices to be on the executive committee – so I was going to choose Tony Cox of Showtime because I thought Viacom was a big company, at that time they still had cable operations, they were a big programmer, and that they should be at the executive committee level, and so...
KELLER: John Goddard was on the board at that time?
LINDAUER: John was on the board and he had been chairman and he had been through, but he wasn't on the executive committee anymore, and so I thought Viacom should rightfully have a place at the table on the executive committee, and so there had been a lot of lobbying before that, and so I get a call one day from Joe Collins and he says you can not put Viacom on that board. I said, "What do you mean?" That was when Viacom was in a lawsuit over whatever it was, Comedy Channel or MTV, or whatever, they were all suing each other. So I remember telling Joe, I said, "Look, I hear your problems. I know you don't like Viacom and Viacom doesn't like you, but I don't have the ability, I'm not involved in how you do your business or who you sue or who are your enemies, but they are a viable representative and have a big interest in this industry and should have a seat at the table, not withstanding the fact that you guys don't want them on." Well, they were not happy about that and so I had to fly to New York to see Nick Nicholas and he and I had an early morning breakfast. We were worried that they were getting so angry about it they were going to make a tremendous issue out of it. So I had to go visit with Nick and we had a very nice breakfast, and he in no uncertain terms let me know his displeasure with my decision.
KELLER: Nicholas was chairman of HBO at the time?
LINDAUER: No, no, he was president of Time, Inc. at the time.
KELLER: President of Time, Inc., okay.
LINDAUER: He was the president of Time Warner at the time, they'd already done all that. And so I was able... Nick said he understood my position and they would abide by it, but it just shows you how there were a lot of personalities and dislikes.
KELLER: And the reason Collins made the call is because he was on the board?
LINDAUER: And he worked for Nick Nicholas, he reported to Nick Nicholas, and so he made the call because...
KELLER: Because he was a member of the board.
LINDAUER: ...Nick didn't want him on, and I'm sure Joe didn't either. It wasn't Tony personally. Of course Tony used to be an ex-Time Warner employee, but they didn't want Viacom in there. They were big enemies in the courts at that time. So that was an interesting thing. One other side thing that was, when I talk about our industry being collegial, we used to get a lot of trips, HBO takes people on trips and you do these boondoggles, but there was a trip that we made in '86 that Ted Turner put together, and he took a group of us, a large group of us, to Moscow. Every big MSO, CEO was there. For the most part, Gene Schneider, and Phil Lind from Rogers, and all these... everybody was there... Jim Robbins. And that caused – we were together for a week over there in Russia when it was still a communist dictatorship basically, Gorbachev was just beginning – and for some reason that trip really bonded us together even more so. It was mid-80s and it was just the collegialness and the fun we had and the adventures we had in that whole process. John Malone was there, Ted of course was there, and they were quite a pair. We saw John have a very, very good time in Russia. He let his hair down – he never had that much – but he had a ball.
KELLER: I want to end our discussion with your recollection of some of the very memorable characters that you've met in your term in the industry. Where would you like to start? You mentioned before, we already mentioned Julian Brodsky, who is by the way, one of the great characters of all times, and one of the great minds, great financial minds. Julian is vice-chairman of Comcast and is putting that whole deal together and we had the opportunity with Julian to go into some of the financial mechanizations of the industry and how he got Comcast going, etc. But what about some of the other people you were mentioning? You mentioned Crosby.
LINDAUER: Jack Crosby who really was the founder of CPI. But for Jack I wouldn't have ever had the opportunity to be in this industry. Jack was just the greatest guy. Jack was rich before anybody was rich here.
KELLER: How many times did they sell their system back and forth to each other, Lieberman and him?
LINDAUER: Jack in the '70s was perceived as one of the most successful men in the Austin area and then he sold CPI and he became richer. He had some tough times in the real estate business and things of that nature, but Jack stays the same whether he's worth x millions or whether he's had some down times. You never know. He's just a charming guy and a great conversationalist and loves to do deals. Even to this day, Jack is I think 10 years old than I am, I'm 63, I think he's 73, he's got two artificial hips, he's on an airplane every week trying to find other deals to do. So he'll never... But I owe him and I owe Bob, who I know you're going to talk to, the reason that I'm here. If it hadn't been for those two guys, and Bob was the one who really closed the sale, I would have never been in this industry. I met a lot of, from the very beginning I met a lot of interesting people, and of course everybody knows Ted Turner, but I met him before I was on the board. Bob took me when he was chairman to have lunch with Ted Turner and Bob Schmidt, who was then the president of NCTA and we were going to walk over and meet FCC Chairman Fowler. As I remember Ted at this luncheon, who had just won the America's Cup, and he had made somewhat of a... got a lot of bad press out of it, because he was inebriated too, listening to his story of how unfair it was and why that New York yacht club deliberately screwed him basically. He says, "We won that race, we're happy, we're drinking champagne, we're having the best time, and about an hour and a half later they come down and said you've got to have a press conference." Well, anyway, he explains all this away in only his inimitable style. He is, without a doubt, one of the most colorful guys.
KELLER: I think you can use that term.
LINDAUER: He was a visionary, he still is to a certain degree – I mean, he never loses his vision, he just doesn't have control of the company anymore. But he did a lot for our industry. Ted is the only guy, and I know him quite well in a business sense, but I've spent a lot of time on trips with him and I've been on the board with him all these years, but he speaks what's on his mind and he can say things that you or I or anybody else could say and we'd be fired, but Ted gets away with it because of his unique personality. But he is a very colorful guy.
KELLER: Bob Miron.
LINDAUER: Bobby Miron. Bobby Miron, who is one of my dear friends, was president of Newhouse Broadcasting and Cable Division. Bobby came on the board somewhere right around the time Doug Dittrick's chairmanship was over, so sometime in the early '80s, and Bobby is not a politician and it was a contested election and he got elected to the board.
KELLER: Who contested it? Who was his opposition?
LINDAUER: They had a whole slate, and there were only so many at large seats and there were probably eight guys running.
KELLER: Oh, you mean as far as membership on the board.
LINDAUER: Membership to get on the board. But he got elected, and so, we used to sit in the corner of the board rooms and he and I became good friends and Bobby through the years, he was chairman right before I was and then he was re-elected chairman here a few years ago, and did that I think when somebody couldn't serve, I've forgotten who it is, for business reasons or something, and he just kept the seat warm or something, but he did that. And Bobby is a guy who works for a very private company. I mean, they never get political. He's not a member of CablePac or anything because their company won't allow them to do anything, they're very private. But Bob has been, I would call him the great compromiser and conciliatory guy. Bob is always there when the association needs him. He's there for tough committee jobs and things. He's also there and bridges a lot of gaps between adversarial positions and tries to get, particularly with a larger company, to do it. So he's been a great thing. Bobby used to be concerned about making public talks and things of that nature because that was not his forte, but he actually got very good at it, and he had to work to overcome his natural reticence not to be in the limelight. Bob's a great guy.
KELLER: Bud Hostetter, or as he wants to be called now, Amos Hostetter.
LINDAUER: Amos, yeah, well he was Bud when I knew him. I still call him Bud now and then. He never does correct me, but I guess maybe... Bud was the Mr. Prince Charming of our industry and he's always had that reputation because he's testified before Congress probably more than anybody else in our industry because he's very credible and his personality is very disarming although he can be strong in his positions and his company was very civic conscious. Continental always was rated the best or near the best in any survey, and Bud was a very near and dear friend for many years. Still is, we just don't see each other very much. Recently he's come to some board meetings with his new affiliation.
KELLER: How's he going to fit into that culture of AT&T?
LINDAUER: I would think it's difficult, but I mean... I don't know. He's a non-executive vice-chairman, or whatever, chairman, I think it is, and he sits on their board. I don't think he's going to take an active role in operations or anything. Probably they're going to utilize him where he does best, to talk to his fellow cable operators who respect him a lot, to represent AT&T's position. Probably within the circle he'll try to help Armstrong understand these guys that he's dealing with and where they're coming from. I don't think he'll take a seat on the board or anything like that, but he's very active and of course his net worth is tied to AT&T, so he has to be cognizant of what's good for AT&T is good for Bud Hostetter.
KELLER: Obviously so. Right now, we should have gotten into this earlier, but you've been on the board of C-SPAN almost from its inception.
KELLER: Talk a little bit about that and about your relationship with Brian Lamb, and how that whole group came together. I know who was involved in it, Bobby Rosencrans and John Saeman, and...
LINDAUER: Bob Hughes was involved in it early on too, but when I came with the company, or I can't remember... but I went on the board. I think I went on the board in '79 for Times Mirror, so it was founded in '77 or somewhere in there. Brian had this idea, as you heard many times, and he brought it to the industry and Bob and various people put up $25,000 and got this thing kicked off. And Brian is practically a household word now in our country, and who would have ever dreamed that, particularly since he didn't aspire to be, but he's on television all the time.
KELLER: But he is non-political.
LINDAUER: He is very non-political. If you get him a cocktail, he has certain opinions.
KELLER: I know. Oh, he has opinions, but he's never going to bring them out publicly.
LINDAUER: Never publicly. So, you know, interviews with him, and his reviews, obviously, he just asks questions. He's a wall that speaks, so to speak, he doesn't ever interject his opinions or anything. That was a passion of love for Brian Lamb and to his credit, as he moved through that, he could have had lots of lucrative opportunities to leave that job, make a lot of money like everybody else has in the industry side of it, but he never... he wanted... this was his baby, it's like his child, and it is his child because he's a bachelor, and it is his baby and he has made that thing through the force of his personality, which is a very gentlemanly personality, to get the industry to back him even though he had some tough times with some of the players. They wouldn't give him carriage in the early days and there were a lot of battles to fight, and we on the board would call the recalcitrant MSOs and try to get them to carry C-SPAN, and eventually we got 100% carriage. I know TCI was reluctant initially, but they came onboard through the years, but then he got C-SPAN 2, and that was the Senate and we had a channel capacity problem. So he wanted everybody to carry that 100%, and so he got mad at me in, I think in Las Vegas. We could only carry it partially. We didn't have a new plant that had channels, and he just lobbied you all the time and made you feel like you were violating your constitution, your country, everything, if you didn't carry all of his channels 24 hours a day. And he still doesn't have C-SPAN 2 totally carried, but he's got it pretty way up there in the 80s, I'm sure. But Brian was just, you know, he helped our industry a lot. C-SPAN did a lot, and it took a long time, to give us credibility. It was a public service that the cable industry provided. For many years nobody knew that, and to this day a lot of people don't know it, but with Congress, which was our main constituency, and since we're televising Congress, they knew who was doing this, and while it didn't influence their votes they just knew that we were, it gave us another notch of credibility, and we never had credibility for so many years.
KELLER: I mentioned that to Brian. I said the industry needed political clout, and he almost took my head off when I used political clout, but it was true. We did need it at that point.
LINDAUER: We needed it, and that's...
KELLER: Political recognition that we were doing something right.
LINDAUER: The recognition that we were doing something good, so while it may... I don't think anybody had any ulterior motives. The motive in founding this, because I was there, was basically that we needed to do something to give back to the American people as a public service. And also, there was the secondary reason that we needed something to say good about ourselves when all we were doing was raising rates, and doing all these things and not living up to our franchise promises as time went on, and things of that nature. So C-SPAN was a great...
KELLER: I don't think there's any question. C-SPAN and CNN, I think, are probably the two greatest things that have happened to this industry.
LINDAUER: I think Doug Dittrick was a great interesting character. He was the first guy that really in the modern era served two times as chairman. He was one of my mentors as I moved through the industry.
KELLER: And a former boss of mine.
LINDAUER: A what?
KELLER: A former boss of mine.
LINDAUER: I always loved Doug – I never worked for him, but I loved him. We had a lot of fun. I remember when I had been in the industry for two years he made me chairman of the convention in Los Angeles. So I did that. All these guys, they were mentors. Bill Strange was a mentor to me. I don't know if you've done Bill yet?
KELLER: That was Sammons, wasn't it, Sammons Communications?
LINDAUER: He was with Sammons, but Bill was a mentor that helped me understand the industry in those early days and always pushed me out in front on issues and so on and so forth. He was just a great politician and a great, great guy, and a great friend. John Saeman, not many people remember John. He sold out and has gone on – took his money and made more money in other avenues, investment avenues, but John was a great chairman and a great friend, and did a lot for the industry in those early days, particularly in the pole attachment days, things of that nature. Michael Fuchs was an interesting guy. I always liked Michael. There are always mixed verdicts on Michael, but he was a visionary in his own right with HBO, and I think HBO, that product, did a lot to help our industry immensely and gave it a lift. I think Michael should get a lot of credit for that.
KELLER: Chuck Dolan?
LINDAUER: Chuck was obviously a real pioneer. He goes back to the beginning, was basically one of the founders or the founder of HBO, and then built his company into the great company it is today. Chuck was selfless; he has a very low-key manner. When you first meet him you'd never know that he is the mogul that he is today, but he was the same when he was just starting to be a mogul, you know, way back 20-30 years ago. Though Chuck is very effective in politics, he's a great lobbyist, he understood New York politics, obviously quite well. But he's just a gentleman, he's tough in the clutch, but he's a fine gentleman. I've always admired Chuck. I think Leo Hindery is sort of a newcomer to our industry, although he was president of Western Communications in the Chronicle days and things. I think when Leo took over as president of TCI and restructured that company, he did the industry a great service, because he took a company that was basically, that the cable industry itself wasn't very fond of, and it was for sure that the congressional and the FCC and the cities weren't fond of, and he turned that company's image around immensely.
KELLER: In a very short time.
LINDAUER: In a very short period of time. He also turned it around fiscally. So Leo, in this new history of ours in the late '90s, was a major player and did a lot of good for this industry on a lot of ancillary issues, whatever his causes were, and he put his money where his mouth was on so many things. He was a great guy. I mentioned Decker earlier. I think Decker Anstrom... all of our presidents were good guys, and they all had done good for the industry, and most of them left on their own. Jim was a little more cautious. I mean he left on his own, but he was encouraged to leave on his own. But Decker...
KELLER: Peter Barton. Did you know Peter?
LINDAUER: I knew Peter very well. Peter, when he was John Malone's assistant, and I was chairman and on the executive committee, whenever I'd see Peter for whatever reason, he would tell me how totally screwed up this industry was and how all of us guys on the executive committee had our heads in the sand and we were dumb about this and dumb about that, and I got to like Peter a lot. I mean, I loved Peter, and we went on some trips together and had a good time, but Peter has a Barton theory and that usually prevails in his mind.
KELLER: Oh, no doubt about that!
LINDAUER: He's very strongly opinionated. There's no doubt about that. Peter was great.
KELLER: John Sie, as long as we're on that same boat.
LINDAUER: Yeah, I had some contact with John, but not a lot through the years. He was always on the programming side, and he wasn't involved in NCTA politics or anything. I'm trying to think... there are so many that I can't...
KELLER: Spencer Kaitz.
LINDAUER: Spencer was, is, president of the California Association, has been a tour de force with them and has a tremendous track record. I never dealt, I never was on the California Association, and so I didn't spend a lot of time except when I was president of the NCTA, talking and doing various things, but the California Association is great and it's been under his leadership since his father died, and it was their idea to find the Kaitz fellowship and things of that nature. So, Spencer and his dad before him were great assets to our industry, and Spencer still is. I'm trying to think of some other... Gus Hauser was a colorful guy. I liked Gus, even though he beat me that time for vice-chairman and we beat him the next year for chairman.
KELLER: Did you know Irving Kahn?
LINDAUER: After he got out of prison or something he came and talked, but I did not know him. I thought I might have seen him before he went to prison. When did he got to jail, in the '80s?
KELLER: I don't remember the exact date, but it was somewhere along in there.
LINDAUER: Bill Bresnan has been an institution.
KELLER: Yeah, he still is.
LINDAUER: He's been on the board. He has been on the board longer than I have, Bill has.
KELLER: He's chairman of The Cable Center, as you're aware.
LINDAUER: Yeah, that's right. So, Bill is a wonderful guy, always there when you need him, just a real gentleman. If I had a list here I could talk about every one of them.
KELLER: Oh, I'm sure. I just wanted those that you could remember right of the pat. What about some of the Texas people? You mentioned Bill Strange and Crosby and Hughes, which are probably... Ben Conroy?
LINDAUER: Ben Conroy. Ben was chief operating officer when I joined CPI and I worked with him for a year and a half. He was a very lovable curmudgeon and a tough nut. There were some internal things that were going on at CPI that he didn't like at the time, and I don't think Ben really wanted to sell the company when it got sold. I'm just conjecturing, but it did get sold. He has been such an industry stalwart, was so involved in the Texas Association, and even in his retirement - he owned some cable systems, but I don't think he's owned any for a number of years now.
KELLER: He hasn't.
LINDAUER: He stays very involved. He is a reservoir of knowledge about our industry from the beginning days. He is a great piano player. He is a charming guy. But I never had – other than that year and a half – I haven't really been around Ben except to say hello or see him at something like that.
KELLER: Jerry, before we wrap this up, is there anything that you want to add as a tag? We've been going almost for two hours now.
LINDAUER: Yeah, well, I'm sorry.
KELLER: No! Not at all! It's been extremely interesting.
LINDAUER: The only thing I'd say is what I said earlier. It's been a great ride. I had a twenty year career in the Marine Corps, which was a great career, I've had 22 years with this industry. I couldn't have had two more divergent, different careers, and I have loved them both and have dear friends in both, and I will always be grateful to the guys that founded this company, Bob and Jack before him with CPI, and grateful to so many guys down through the years that have helped me. I've learned lessons from them and I've just thought this was one of the greatest industry's I've ever seen, and to be part of it during these growth years. I never knew that when I got in it. I don't know, as I said earlier, whether there's going to be a quote unquote cable industry anymore. It's changed dramatically, but we did, and I was part of that group of entrepreneurs that built it up to where it has the platform that had so much credibility and the vision – not that I had because I wasn't a real pioneer, I didn't come in – but I don't know whether they had a vision, but they knew they had something that was going to be good and good for them economically, but also good for the American consumer. It took a lot of battles, we had a lot of enemies on many, many fronts, and today it has grown into one of the major industries in this country and is going to merge with the internet world and it's going to be a different deal. So it won't be the same battles, and I don't think the industry can stay as collegial as it used to be, because they do now compete, not in the cable television product, but the internet product and many other things, and many have their partners on one side and enemies on the other side – competitors on another side, I should say – so it's not quite the same group. It's a different set of dynamics.
KELLER: It's almost like incest now, isn't it?
LINDAUER: Yeah, it's hard to figure out, and I think Bob Sachs, our new chairman, it's going to be interesting to try to hold this group of rather large companies, the big seven so to speak, and I don't know which one of those will go next, to be united on public policy issues. Because there are going to be a lot of issues that it's not going to be, as I started to indicate awhile ago, each of these companies are always going to do what is best for their shareholders and debts for their company.
KELLER: And they have to.
LINDAUER: That's their row, and sometimes they just have to march to their own drum and that's happened throughout my tenure. Some company just will not support a position and you just have to either not do it or do it without their support and keep marching anyway. So anyway, it's been a great time.
KELLER: Jerry, we appreciate it. It's been a fun conversation.
LINDAUER: Okay, Jim, thank you.
KELLER: This has been a presentation of the oral history program of The Cable Center, and thanks to a contribution and donation from the Gustave Hauser Foundation. Your interviewer was Jim Keller. Again, thanks very much Jerry, we appreciate it.
LINDAUER: Thank you.