Invasion of the Cable Snatchers
While the mayor and city council sat by with a rubber stamp, Houston wheeler-dealers carved out their own electronic empires.
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But he didn’t go directly to the studio from the personnel office. Instead he called home to tell Barbara that so far everything was working out. She then mentioned that he had had a phone call from Karen Possner, an old friend of his on the House Subcommittee on Communications—something about doing some consulting work on cable TV for the City of Houston.
As soon as he got home that evening, he called Possner. Yes, she said, Houston was looking for a cable TV consultant, and she had recommended Sadowski. The city seemed interested in getting some help, she said, and so he should call as soon as he could. A week later Sadowski called William Earle, director of Houston’s Public Service Department.
When Sadowski walked into Earle’s office the following week, there were two other people waiting to meet him—Jerlyn Mardis, Earle’s top assistant, and Adrian “Ardie” Baer, an assistant city attorney assigned by the Legal Department to draft the franchise ordinance. Earle, Mardis, and Baer presented Sadowski with their dilemma—namely, that none of them knew the first thing about cable TV. They had been reading as much as they could, but now that most of the applications were on file, they were going to be hard pressed to come up with any recommendations to the city council by the December deadline. They needed an expert to sort out the important issues, and they needed him quick.
Sadowski was flattered and intrigued. He was familiar with cable, having prepared a report on the subject for Philip Hart’s Senate Antitrust Subcommittee; he loved research; and he wanted to please his friends at the Communications Subcommittee. The only problem was that Earle seemed to want only a very limited study—to be done in perhaps 150 hours—and Sadowski had just started a new job. “But then I thought, wow, this is the nation’s fifth-largest city about to make this very important decision,” he said later, “and I didn’t see how I could turn them down.”
Before accepting, Sadowski tried to work something out with KUHT, but the management was adamant: Sadowski had to choose between the city and KUHT. If he chose the city, there was no guarantee he would have a job when he finished the 150 hours. Sadowski thought about it for several days, figured he could still make $4500 in two or three months if he took the consulting job, and reluctantly submitted his resignation to KUHT. The decision made his wife nervous, but Sadowski placated her. “This city deserves the best cable TV system in the nation,” he said. “I think Houston will be a model for the rest of the country.”
In March 1978, a full seven months before Sadowski was hired, Chamberlain returned to Runnells’s office with great news. He had been to see McConn, and the mayor couldn’t have been in a better mood. Not only was he willing to consider Gulf Coast’s cable application, said Chamberlain, but he wanted to actively encourage cable TV during his first term. They had the green light. Chamberlain said he would manage Gulf Coast’s cable campaign, provided Runnells would defer to him on political strategy. Runnells was more than willing.
Chamberlain’s first step was to get some legal muscle. He advised Runnells to hire Bill Olson, a former city attorney now in private practice. (The best reason for becoming a city attorney in Houston is to become a former city attorney, thereby attracting clients who want to get things done at city hall.) Olson was the best candidate for yet another reason.
During the ill-fated franchising process of 1973, Olson had written the recommendations the city council eventually accepted, and he had taken good care of the local interests. Of the five companies that applied, three were among the largest in the country: Time Inc., Teleprompter, and Cable Vision of Houston (owned by investors with extensive holdings in Pennsylvania). All three were rejected. The two hometown companies with only minimal experience—Greater Houston and Gulf Coast—received a favorable recommendation from Olson.
Once Olson was on board, Runnells and crew designed a campaign based on three principles: (1) avoid another referendum by getting the council to approve at least two companies, (2) don’t leave out anybody who could hurt us, and (3) pursue a doctrine of “manifest destiny” for Southwest Houston. This last principle derived from the logic that since Gulf Coast already had franchises in Bellaire and Memorial Villages, a major trunk line would eventually have to be routed from the Bellaire base through a large portion of Southwest Houston.
Southwest Houston is the kind of area cable entrepreneurs dream about, a fact not lost on the triumvirate of Runnells, Chamberlain, and Olson. Southwest Houston would probably become one of the nation’s most lucrative areas for cable TV properties—first, because it is densely populated and therefore less expensive to wire; second, because it is still being developed; and third, because most of its residents, especially the thousands of apartment dwellers, are between 18 and 35, the prime viewing ages.
Plans were made, meetings held, engineers hired, and maps drawn. The first proposal, never actually presented to the council, asked for the sun and the moon. Gulf Coast wanted all of western Houston, encompassing about 700,000 people who live on the boom side of Interstate 45. “We never expected to get it all,” said Chamberlain later, “but we knew that people were going to start chopping us back. I wish now that we had asked for even more, because it turned out, we got chopped back too much.”
In late spring Gulf Coast requested a hearing before the council, asking for the right to start building the connecting trunk line across Southwest Houston. Everything was happening on schedule.
Bob Sadowski reported to work on October 20, 1978, still flushed with civic pride and anxious to impress his new boss, William Earle. He went first to the Public Service library, pulled several bulky proposals out of the file, and took them home for three long nights of reading. “I was thinking, ‘Gee, these are real live proposals for a big American city,’” he said, “and I’m going to have an impact on what happens to them.”
The first proposal he noticed was an expensively bound, two-volume tome inscribed with the logo of Cablecom-General, a Colorado firm owned by RKO General, which in turn is a division of General Tire. Even though Cablecom doesn’t win many franchises, it invariably impresses consultants hired by city councils because of its commitment to services like local programming, public-access channels, and first-class studios. Because of its bulk, Sadowski decided to read Cablecom’s proposal first.
It took him most of the night, but the more Sadowski read, the more impressed he became. Especially helpful was Cablecom’s extensive market survey of the Houston area, which set out the preference of viewers, the special needs of certain civic organizations, and the clear demand for strong local programming. The proposal backed up the survey with some attractive promises: several access channels, a $200,000 studio staffed by nine professionals, and a more than reasonable subscriber rate of only $6.95 per month for basic service.
The next day Sadowski returned to city hall, brimming with enthusiasm. He saw Bill Earle in the hall and casually mentioned the proposal. “If all of these proposals are as good as Cablecom’s,” he said, “then this city is going to have a first-class system that will serve as a model for the nation.
“So you like Cablecom?” Earle said.
“Don’t you?” replied Sadowski.
Earle mumbled something and walked away.
Later Sadowski ran into Ardie Baer and repeated his opinion of Cablecom’s proposal. Baer didn’t appear to be interested.
On June 14, 1978, still four months before Sadowski launched into his research, the city council met to consider cable TV for the first time in five years, and Clive Runnells was ready. Standing before the council, he asked for the right to bring cable TV to all of Southwest Houston, as well as to parts of the northwestern and southeastern sections—in all, an area comprising about 43 per cent of the city. Runnells is a lean, handsome man with a tennis tan and a rapid, fluent manner of speaking, and his presentation was excellent. Olson and Chamberlain were both pleased. Now all they could do was wait for the expected flood of competing applications.
It didn’t take long. Within two weeks, Chamberlain learned that a new company had entered the fray: Houston Cable TV. Despite its innocuous name this was no ordinary company. Chamberlain had never heard of Houston Cable, but he knew the man behind it very well: Walter Mischer, the Houston developer, banker, political fundraiser, and contributor to Jim McConn’s campaign (see Reporter: “The Kingmaker,” TM, February 1980). Mischer, too, knew something about getting the best legal talent. He had hired his own former city attorney, Jonathan Day, who now worked for Butler, Binion, Rice, Cook & Knapp. That firm had never been far from the political vortex, and as a matter of fact, one of its recent alumni had just gotten a new job with the city. His name was Bill Earle.
Actually, Chamberlain was relieved to get the news. Mischer’s group included a lot of conservative Democrats, who would have to be part of the final equation approved by the council. Work with Mischer, Chamberlain told Runnells. He represents a constituency we need in order to avoid another referendum.
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