Sometime around the completion of the uplink, another problem emerged. My lawyers explained to me that the FCC had rules against broadcasters sending their own signal outside their broadcast tower’s footprint. Microwave distribution passed muster because the cable operators owned the relays, but in the case of satellite distribution our company wasn’t allowed to own the uplink or the lease for the satellite transponder. A third party, or “common carrier,” would be required. We looked at different scenarios like putting the uplink company in my wife’s or my children’s names, but the lawyers made it clear that the distributor had to be completely independent from the broadcaster.
I had to find someone to run an independent satellite uplink company so I called the first person I’d met in the satellite business, Western Union’s Ed Taylor. I explained to Ed that I needed to set up an independent company to carry the TBS signal and asked him if he would leave Western Union to own and run our common carrier. He told me he was making about $60,000, and with RCA poised to take the HBO business, he didn’t see a bright future for Western Union’s satellite operation. I assured him that by this time, Don Andersson, Terry McGuirk, and our sales team had spoken to enough cable operators to know that a great many would pay for Channel 17 and the fee we had discussed was 10 cents per subscriber per month.
We expected our subscriber base to start at close to a million households and grow quickly into several million, so the revenue for this business could get very big very fast. The math was easy and Ed knew this could be a great opportunity. When he asked me how much it would cost him to take all this over I asked him to hand me a dollar bill. After he pulled one out of his wallet and handed it to me, I shook his hand and said, “Congratulations, Ed. You’re now our common carrier!”
Ed started a new company called Southern Satellite Systems but he needed more capital to get it off the ground. The primary expense was the lease on the RCA satellite, which was about $100,000 per month. I knew he didn’t have this kind of capital but by this time our company had a lot of experience borrowing money, so Will Sanders, our CFO, agreed to help him raise the cash he needed. It wasn’t long before Southern Satellite Systems became an extremely profitable business and I think it’s safe to say that Ed Taylor made one of the greatest $1 investments in American business history.
A TED STORY
“A One-Man Circus”
—John Malone
(JOHN MALONE JOINED TELE-COMMUNICATIONS, INC., OR TCI, IN 1972 AND BY 1981 HAD HELPED BUILD IT INTO THE LARGEST CABLE OPERATOR IN THE COUNTRY. TODAY HE IS CHAIRMAN OF LIBERTY MEDIA CORPORATION.)
I remember the first time Ted came out to the old TCI headquarters in Denver. We had all of our management team gathered in a conference room and Ted was there to pitch us on carrying WTCG as a distant independent station and perhaps even getting together to help put up the money to get him on satellite. I think I had met him before at some industry functions but this was the first real meeting I’d ever had with him. Not knowing him too well, we all thought he’d had too much coffee or something. He put on a real dog-and-pony show—a one-man circus like only Ted can. I remember at one point he got down on the floor and crawled around on all fours and said, “Whose shoes do I have to kiss?”
I thought he was hilarious and had a great sense of humor but I do recall trying to explain to him that there were legal restrictions on the importation of distant broadcast signals and the local cable company had to pick the two that were closest to them. We also told him that satellite receivers at that time had to be ten meters and had to be fully licensed—that this would be quite an economic impediment to keep him from distributing his station in a very large-scale way. The reality was we were desperate for more content and there was no question that if he could get it up there, by God we were going to carry it. The real question was how realistic he was being about all the obstacles in his way.
But he didn’t care about any of that, and that was classic Ted. Ted asks himself the question, “If a rule doesn’t let me do something that’s so logical, it must be a bad rule. And if it’s a bad rule I ought to be able to change it or it should just go away.” He’s always had that kind of basic, almost childish, logic about him that refuses to accept artificial impediments. I think one of his big secrets of success over the years is that the things that most of us would sit there and ponder—all these regulatory and legal reasons why it might not be something you could do—Ted would just say, “Oh, hell, you can overcome those kinds of things,” and he’d just go do it.
The first satellite transmission of WTCG occurred on December 17, 1976. Months before, someone in our promotions department had come up with the idea of calling the local station “Super-17.” I liked that a lot but once we were beaming the signal off the satellite I thought we needed something more. I was playing around with the word “super,” when it just came to me—“SuperStation!” The name had a great ring to it and would convey to people exactly what it was. I also decided to change the station’s call letters. Since we had moved into broadcast media we changed our corporate name to Turner Broadcasting System, Inc., and I decided to convert WTCG to WTBS. Now that we were competing on a national level, I also liked that “TBS” sounded like “CBS” and we were soon referring to the channel as “SuperStation TBS.”
Once it became clear that I was serious about getting national distribution for a local station, we ran into problems with our program suppliers. Our syndication deals with Hollywood gave us rights in the Atlanta market only. Pushing farther into the Southeast via microwave didn’t seem to bother them, but going national on the satellite certainly got their attention. As for the Braves, Major League Baseball knew when I bought the team that I had been considering broader distribution but I don’t think they thought it would ever really happen. It was one thing for Braves games to be beamed to places like Montana or New Mexico where a competing franchise didn’t exist but it was quite another to go into major markets like Detroit or St. Louis and compete for viewers against their home market team. We were also carrying Atlanta Hawks games at this point and the NBA raised similar concerns. Local broadcasters also lined up in opposition to us, claming that the SuperStation violated established rules about the redistribution of local TV signals. (Leapfrogging a signal via microwave had been bad enough, but satellite, in their view, was far worse.) They claimed that since the SuperStation beamed into their territory with shows that they had licensed for that market, we were violating their rights to exclusivity.
In a short period of time we’d managed to alienate Hollywood, the sports leagues, the broadcast networks, and local stations all over the country. Each one of these groups had big-time lobbying presence in Washington and with the FCC and Congress ultimately presiding, Washington became a primary battlefront and I started spending a lot of time there. I participated in numerous hearings and tried to be on a first-name basis with as many influential politicians as possible (including a young congressman from Tennessee named Al Gore). My early training as a debater served me well at congressional hearings. My opponents had skilled lobbyists and a strong case against me. Logic was not always on my side so I had to be passionate and appeal to people’s emotions. When those testifying against me said that I was “stealing” their programming or encroaching on their territory, rather than defend my own position I would go on the attack.
“If there are any real thieves here it’s ABC, NBC, and CBS!” I argued. “
They’re
the ones who convinced the government to hand over incredibly valuable VHF licenses all over the country completely free of charge! They’ve used the public airwaves to make a fortune and never once paid a dime for that right!” I’d go on to argue that no one would ever dream of letting a paper company cut timber on federal land or an oil company drill offshore without putting those rights up for bid. So why should TV companies get these rights for nothing? A free license might have made sense in the beginning when the business was just getting started but what about now, when these broadcasters were making millions? “When these licenses come up for renewal every three years, why not put them up for bid?” I asked. “These companies would probably fork over enough money to pay off the national debt!”
When it came to the sports leagues I painted a picture that the owners basically sat around a table a long time ago and said, “Okay, I’ll take New York, you get St. Louis, and the guy over here gets Chicago.” They colluded to create local monopolies, I said, “And I thought that one of the roles of government was to regulate monopolies!” I asked legislators to imagine a world where the heads of Ford, GM, and Chrysler sat down and the Ford guy says, “I get everything east of the Mississippi. General Motors, you get west of the Mississippi, and Chrysler, you can have the state of Michigan. If we agree to this, we eliminate competition and we can charge $10,000 for a car instead of $2,000 and we’ll make a lot more money.”
Baseball’s commissioner, Bowie Kuhn, tried to counter by saying that the importation of games into other markets would disrupt things to the point where the league’s viability might even be threatened. “How is that possible?” I asked. “The owners are all millionaires, we’re paying millions to our players, and guess who gets left holding the bag—our fans!” And whenever I debated league rules in Washington I always tried to conclude my point by saying, “The law of the land takes precedence over the law of the league!”
My overall theme in Washington was consistent. I was the underdog—an entrepreneur trying to compete in a world dominated by oligopolists. Television needed an independent voice offering more choice and more variety. While the broadcasters were filling the public airwaves with a lot of garbage—sensationalized news, violent dramas, and such—the SuperStation, with its wholesome movies, sitcoms, and sports, would provide a welcome alternative.
These issues were uncharted territory. All of us—the regulators, broadcasters, program suppliers, and leagues—were sorting things out on the fly. My hope was that if I could just keep moving and stay on the offensive, we might have a chance to pull it off. I was working as hard as I could. I’d go all out during the day, working on sales, distribution, regulatory issues, whatever the battle happened to be, and I’d work right up until it was time to fall asleep. I had a pull-down Murphy bed in my office and I would literally work until the point of total exhaustion. Then I’d put my head on the pillow at night worried about problems, then wake up and spend the entire next day trying to solve them.
All the hard work paid off. The FCC ruled that as long as our signal was distributed by a common carrier, the SuperStation could continue to exist as is. The programmers may not have liked what we were doing but over time we worked out terms (in many cases, increased license fees) that everyone could live with. The sports leagues were frustrated but eventually learned to live with the idea that Atlanta games would be seen all over the country (and it wasn’t long before we started calling the Braves “America’s Team”). Meanwhile, cable operators were thrilled to add a wholesome, high-quality channel to their lineup and, as I’d predicted in Washington, consumers wound up being winners, too.
At first, being delivered nationally via satellite didn’t make the job of selling advertising much easier. Nielsen, the company that measures viewership of television stations, refused to document our audience outside Atlanta. They claimed that it was prohibitively expensive for them to measure a channel whose distribution was so spotty across the country, but I was suspicious that their real motivation was to avoid upsetting their customer base—the broadcast networks and local stations that were our competition.
Regardless of their motivation, Nielsen’s refusal to work with us forced us to devise our own ways of proving to national advertisers that people were actually watching. I had hired a creative research specialist from Cox Communications named Bob Sieber, and he realized that, once again, direct response advertising could be a solution to our problems. Since many of our orders for direct response products came in the form of personal checks mailed directly to our Atlanta offices, we could tell where they were coming from based on the postmarks. Every day, Bob would bring in a mail sack and dump it out on the conference room table. He and a couple of others would then sort the mail—one stack for letters postmarked in Atlanta, and another with letters from places outside Atlanta.
As the SuperStation gained distribution, not only did the overall volume of letters increase, postmarks from places in Alabama, Mississippi, and Florida were soon joined by others from as far away as New Mexico, Illinois, Hawaii, and Alaska. With Nielsen reporting our viewership levels in Atlanta, Bob and his team would count the number of letters mailed in locally, then tally the number of letters we received from elsewhere and back into a rough estimate of what the size of our non-Atlanta audience was. This was hardly a bulletproof scientific process but it was the best we had. Part of the fun was watching how quickly the “non-Atlanta” stack grew, going from just a handful of letters at first to a pile that ultimately dwarfed the size of the local one. The mailbags started to get so full they looked like Santa Claus’s in
Miracle on 34th Street
.
While sorting this mountain of mail I also came up with a way to save the company a little money. Occasionally, I’d find letters whose stamps had not been processed by the post office and before tossing these on to the pile, we’d carefully remove the stamps and use them again on our company’s outgoing mail. I don’t remember what regular stamps cost at the time, but there were days when we’d collect almost $20 worth. Every little bit helped at that point. We were really strapped for cash and I had to do everything I could think of to keep us above water.
A TED STORY
“Captain Teddy’s Kiddy Hour”