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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Runnells worked with Mischer, but he was not exactly pleased about it. For one thing, Houston Cable TV’s application included about 30,000 homes that Gulf Coast wanted, and that area—between the Katy Freeway and the Hempstead Highway—was prime territory.
Mischer had more than Jonathan Day working for him. His list of stockholders read like a Who’s Who of Texas politics: Allan Shivers, former governor and chairman of the University of Texas Board of Regents; W.E. “Eddie” Dyche, a powerful political lawyer and contributor to conservative causes (who ended up with more stock than Mischer); Gerald H. Smith, president and chief executive of Allied Bancshares; Marvin Leggett, a real estate developer who had contributed more than $12,000 to Jim McConn’s campaign; Ralph Hull and his father, T.P. Hull, Jr., both wealthy attorneys; John T. Jones, nephew of the legendary “Mr. Houston,” Jesse Jones; and Tolbert Foster, then president of Austin’s KVUE-TV, which at that time was the highest-rated UHF station in any major VHF market. Foster, who had built systems in Center and San Augustine, was the only investor with any cable experience.
With two former city attorneys now carrying the ball for two potent groups of investors, there was a possibility of an embarrassing standoff. Chamberlain’s advice to Runnells: “Don’t force the city council to play Solomon. The last thing they want to do is thrash through a lot of thorny issues. Make it easy for them.” So Olson, representing the Runnells group, and Day, representing the Mischer group, set out to make it easy. More meetings were held, more maps drawn. Mischer’s group insisted that Runnells was asking for too much. The disputed area included only 30,000 homes. Runnells would still have 240,000 others. So Runnells finally capitulated. The map was redrawn, the applications amended. Gulf Coast would settle for a boundary at the Katy Freeway.
Bob Sadowski had been working only a week, but he already felt that the city was rushing things. Bill Earle had reminded him several times that the council needed the franchise recommendations within two months, but Sadowski was still hoping that the city would reconsider. There were too many unanswered questions. All he had to work with were two documents for each company: a proposal and a questionnaire. The proposals had no standard form, ranging in size and quality from a brief proposal full of painful syntax, hastily slapped together by a man in the East Texas town of Henderson, to the extensive text of Cablecom. His other source was a long but sketchy questionnaire that had been mailed to the companies before Sadowski was hired. Baer and Mardis told Sadowski that since they hadn’t known exactly what questions to ask, they had copied most of the questionnaire from a Harvard Law Review article.
Still, the answers to some of the questions were unsettling. One day Bill Earle sauntered over to Sadowski’s desk in the library and casually asked how he was doing. “This latest proposal,” said Sadowski, “is not going to make it in its present form. Many of the questions have not even been answered, and they apparently don’t even intend to offer local-origination programming. I don’t think I could recommend this company.”
“Which one is that?” asked Earle.
“It’s a company called Houston Cable TV,” said Sadowski. “Anyway, they want the same area that Cablecom wants, and Cablecom is far superior.”
Earle didn’t mention it, but he was well aware that Walter Mischer and his colleagues were behind Houston Cable TV and that his friend Jonathan Day was their attorney. He started taking notes. “Well, then,” he said, “could I say that we’ll favor Cablecom because it happens to be applying for the same area, but if Houston Cable applied for a different area, you might approve them?”
Sadowski was surprised. “They haven’t asked for another area,” he said. “And now that we’re talking about it, this is a heck of a way to solicit proposals. The companies are telling the city what areas they want, instead of the other way around. Why couldn’t we open up the process again, advertise nationally, and get a bunch of proposals in here for areas designated by us?”
“We don’t have time,” said Earle.
Sadowski didn’t consider that an answer, but he let it pass.
Later another thought occurred to Sadowski. “We did advertise nationally for proposals, didn’t we?” he asked.
“We may have,” said Earle. “I’m not sure.”
The real answer was “No.” The only out-of-state companies that had submitted proposals had heard about Houston through the grapevine, and at least one major cable company—American Television and Communications—had been furious when it realized that the deadline for proposals had passed, since it had been researching the Houston market for over a year.
Everyone—that is, the Runnells group, the Mischer group, the mayor, and the council—agreed on one thing. When it came time to give out franchises, one of them had to go to black businessmen. The blacks had been instrumental in defeating the franchise of 1973, and the city’s most influential minority law firm, Jefferson and Maley, had contacted the mayor in late summer, 1978, to make certain they would not be left out. That firm is headed by Andrew Jefferson, and old ally of Barbara Jordan’s and one of the first black judges to serve in Houston, but the job of securing the franchise fell to a younger partner named John Sherman. Sherman had set up a partnership of black investors—primarily doctors and hospital administrators—to seek a franchise. Yet none of the eleven owners of the company, named Houston Community Cablevision, had previous experience in any kind of medium, much less cable TV. They didn’t even know precisely what to ask for.
When the application from the blacks came in, though, it meshed nicely with the others. It included part of the Northeast Houston—the Third and Fifth wards—and the downtown area. It didn’t infringe on any territory that Runnells and Mischer wanted. Chamberlain said that he enjoyed working with Sherman and respected his opinions. Privately, he told Runnells that the franchise would never be built without outside help. And it would take a big company to help.
bob sadowski continued to read proposals, with growing disbelief. After Cablecom, it had been all downhill. In his mind, the single most important criterion for a franchise should be the company’s commitment to local programming. An expensive undertaking, local programming is generally the last thing a cable entrepreneur wants to spend money on. But it’s the one way a city council can insure that the community gets more out of cable than movies and sports. On this point most of the proposals failed miserably.
One company, Westland CATV, had made some effort to assess local programming needs, but its proposal was so small—it asked for a mere 20,000 homes—that Sadowski found it hard to take seriously. For the rest, local programming goals were either nonexistent or vaguely defined. Not one appeared to have a clear idea just what would happen once it got a franchise.
One company’s proposal stopped him dead in his tracks. The company appeared to be owned by blacks—which was good, because the FCC encourages minority participation—but judging from its brief proposal, it didn’t intend to do anything for blacks. He turned to the questionnaire. Amazingly, the company’s owners had no intention of even building a studio. They planned no local programming (usually what blacks want most in any franchise package). And they intended to use a “turkey” engineering system, meaning that their own staff engineers would not have access to the inner workings of the system. Sadowski made a few furious notes on a legal pad, wrote “reject” in the margin of his master list, and turned to the first page to get the company’s name: Houston Community Cablevision.
The news making its way to Clive Runnells’s Galleria office late in the summer of 1978 wasn’t pleasant. The give-and-take was not yet over, he was told by Olson and Chamberlain. Someone else wanted into the Houston cable business. The entry this time, they had heard, was a partnership called Westland CATV, controlled by a group of Jewish businessmen affiliated with Columbia Communication Corporation. Fortunately, they had not hired a former city attorney to represent them. Unfortunately, one of the partners was a man named Marvin Katz. He was Mayor McConn’s personal attorney.
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