Interviewer: Stewart Schley
Interview Date: December 11, 2017
Abstract
Ed Breen describes his start in cable at Jerrold Electrronics as a marketing assistant in the new set-top box division. He remembers that the main products of the company were installing outdoor equipment, amplifiers, taps, and other cable components. He discusses his job in sales management and moves on to recall his career progression, ending up as vice-president of sales for the converter group, eventually becoming head of global sales for the company. He describes the culture of the company, how he learned about technology, and how Jerrold, also known as General Instruments, achieved so much success. Breen comments on how cable evolved and transformed. He goes on to discuss the outsize influence of John Malone, and the acquisition of VideoCipher, leading to the development of digital set-top boxes, as well as how the switch from analog to digital had to be embraced by all the system operators in the industry. He notes that Wall Street investors financed the move. He names Frank Drendel as his mentor, the sale of the company to Motorola, and the decision to manufacture cable modems. He reflects on moving out of the industry to Tyco and DowDuPont, and the different corporate cultures. He concludes with further comments about the cable industry, entrepreneurs as managers, and the opening of the Ed Breen Technical Archives.
Interview Transcript
STEWART SCHLEY: Greetings and welcome to a next episode of the Cable Center’s oral history series. This is a really special interview and it’s a really special day. This is December 11, 2017. The Cable Center christens and opens the Edward D. Breen Technical Archives later this evening, which is a managed collection of some of the key and critical technologies that helped build this industry over time. Speaking of which, we have to talk about that. Edward D. Breen himself is no less than one of the most revered and best known corporate executives on the global stage, the CEO of DowDuPont. He previously ran and resurrected Tyco International, but for our purposes, he was the face of General Instrument for a long period of time, a run in which the industry was utterly transformed, partly because of the work Ed and his team did. So thank you for being with us.
ED BREEN: It’s great to be with you, Stewart.
SCHLEY: This is awesome. I love to start at the start because it’s always interesting to me how people got into this crazy world that was cable television at the time. How did you?
BREEN: You know, I graduated college and was going to get married at 21. So my wife pretty much was, go out and get a job. I wanted to go for MBA. She said, “You better go get a job so we can get on with this.” And I interviewed. I had two job offers. One from IBM and one from Jerrold Electronics. I remember this because it was probably the luckiest thing I ever did, starting my career. I ended up picking Jerold Electronics and all of my friends, my family, were, “How could you possibly not take the IBM job?” And I said to them, I remember it to this day, when I went to interview, I said, “It was a like beehive around that place.” I didn’t even know what they were doing, but it was people yelling down the hallways and I said, “It just seemed exciting.” And boy, was it.
SCHLEY: What was your education background going up to that moment?
BREEN: So that was also interesting. I graduated a semester early because I wanted to get a jump on things. So I went to Grove City College for 3½ years, got a business and economics degree.
SCHLEY: And then you had heard of IBM, probably hadn’t heard of Jerrold.
BREEN: That’s correct.
SCHLEY: I don’t know how much research you had done, but thus history was made. You were a marketing assistant, I think, when you started.
BREEN: Yes, so I got hired in as a marketing assistant for the set-top box division, which was really just starting at the time. Back then, it was just old push button converter boxes. I didn’t really know what it was when I started because cable was still just in the small towns of Pennsylvania, a little bit out in the West. No one really knew it at the time.
SCHLEY: What was the state of the industry? How would you characterize it? Twelve-channel systems or less?
BREEN: About twelve channels and we were expanding just during those years, like in the late 70s, early 80s, to add channels. There was no remote control back then. I remember one of our set-top boxes, there was a big wire that went under your rug so you had a little device sitting next to your couch.
SCHLEY: Did you ever worry you’d made the wrong decision?
BREEN: No, I didn’t. I was in the company just months and I ended up loving it. We were working six days a week, we worked all day Saturdays. The company was growing like a weed, which is always exciting. So there was always something to raise your hand and volunteer for.
SCHLEY: And just to kind of set the market stage, Ed, the primary product was the converter box, right? It was the set-top?
BREEN: Well, the whole company was the outdoor equipment, the amplifiers, the taps, and all that. We were the biggest at that. And the set-top box business. But the outdoor equipment was a way bigger division at the time because the set-tops were just starting.
SCHLEY: Were you calling on customers? Did you have exposure to the buying community?
BREEN: Because of the job I was in, I was the key interface with the whole sales force. So really quickly, I got to know all the salespeople and they were just a bunch of great characters. They basically built the industry. They were the first generation salespeople, so that was fun. And what happened is I was in the company about a little less than two years and because all our salespeople were kind of in their 50s, they were entering their 60s, it was that first generation kind of getting close to retirement. The company was worried about, what are we going to do? And they said, let’s try a couple of the young guys in the company or gals and see if they can make it. And we don’t even want engineers. Let’s put them in and see how they do. So I quickly volunteered for it.
SCHLEY: And this is sales?
BREEN: Yes.
SCHLEY: Were you good at it?
BREEN: I think I was pretty good at it. I started doing that when I was 23, and that’s what really got me excited about the industry. I got a little bit lucky. I ended up working for a great gentleman who spent his whole career in the industry, John Deekman. He was the district manager for the Northeast. They gave me the state of Pennsylvania and New Jersey, which could not have been better because that’s where—
SCHLEY: The heartbeat of cable.
BREEN: Literally where it started. So I started calling on all the people that started the first cable systems.
SCHLEY: So tell me, what was a day like? What did you actually do. 8 to 5, or 9 to 5? Were you on the road?
BREEN: I was on the road 90% of the time. And traveled the whole state. I would leave Monday, come back Friday night. And I was also fortunate because two of my larger customers were Gerry Lenfest, who became a great personal friend to this day. And the Roberts family of Comcast, because they were in Pennsylvania. They became two of my friends and great accounts.
SCHLEY: You were well-placed. But it was an industry—share with our audience—that was not compartmentalized or consolidated. It was very diffused…
BREEN: Every town was a different owner. Some entrepreneur got found and a lot of times it was the Jerrold Electronics salesperson that would go to a town and try to find someone to actually do it.
SCHLEY: No kidding.
BREEN: Oh, yes.
SCHLEY: To obtain the franchise?
BREEN: Yes. Get the franchise and—
SCHLEY: You’re kind of building your own business that way.
BREEN: Correct.
SCHLEY: You caught the eye of somebody or multiple people. You just kind of take us through the job and your career progression at GI.
BREEN: So I was in sales for I think six years and then the company, the people around it at the time, Frank Hickey and a few others, said, “Look. If you want to progress in the company, then you’ll look like you’ve got to have a great opportunity. If you want to, you’ve got to come back in and get into management.” So I ended up taking over vice-president of sales, I think, in like 1986.
SCHLEY: Of the converter group?
BREEN: Of the converter group, yes, which obviously I knew that inside and out at that point in time. I came in, did that for a couple of years and then, the big thing for me was they said, “All right, go back and be a head of global sales for the company.” Then I did that for quite a few years.
SCHLEY: I wasn’t joking on the introduction. You’re known and revered as a management savant. I mean, you’ve taken companies in really difficult situations and made them whole again. But when you first had that first marketing job and you had reports—I mean that first management job, you had people reporting to you—was it unnerving, were you good at it, natural at it?
BREEN: At that point it just seemed natural. I knew everyone in the company. Maybe the thing that was a little unnatural, I was young to be in that spot so that most everyone that worked for me was older than I was. But on the other hand, we all respected each other so much. I just kind of eased into it, I thought.
SCHLEY: Jerrold internally was sort of a flat organization, would you say? Was there a lot of hierarchical structure?
BREEN: Very flat.
SCHLEY: You saw the big boss from time to time?
BREEN: All the time.
SCHLEY: The governor? [Milton Shapp]
BREEN: It was nice because—I considered it a small company at the time. I’m doing $300-400 million a year in business. So everyone knew everyone. The head of the company knew who you were, you were in a lot of meetings with them. So it was fortunate for me because it really, I think, helped me develop at a young age because I was hanging around a lot of smart business people. Because I went into sales at such a young age, by the time I was 30, I knew everyone in the industry and just watching them do deals and all was, I thought, was just really invaluable for me.
SCHLEY: You’re seeing, it was just literally growing up in front of you. Were you a technologist?
BREEN: No.
SCHLEY: What was your relationship to the—
BREEN: I was a business background, but I knew if I was going to be successful in the industry, I needed to learn the technology, so I spent a lot of time really studying it hard. You know, the set-top boxes I knew inside and out. I was pretty much an expert. But I didn’t know all the outdoor equipment and how a system was built. So I had to spend a lot of time learning that, talking to the engineers, but it was fun.
SCHLEY: It’s interesting. I never quite understood the interplay between technology development and what happened on the consumer-facing side of the business. Over time, the amplifiers could spurt out more signals, and the boxes could receive and tune more signals. There was almost a virtuous cycle, right?
BREEN: You know, what was fascinating about it, I think, is one of the great secrets of the industry. I have heard John Malone say this many times. Our network, the cable network, never obsoleted. It always evolved and transformed, and we expanded on it. Where a few were a phone system with twisted-pair cables, it became obsolete. But because of the way we architected the cable systems, when fiber optics came along, all of a sudden we could start putting fiber into the network a little bit deeper and the rest would still stay coaxial cable. Then the set-top boxes came and kept adding more channels. So it was a nice evolution where nothing kind of got obsoleted, you just kept going along expanding for the consumer.
SCHLEY: You ran global sales then in the mid-90s, I guess?
BREEN: In the late 80s, early 90s.
SCHLEY: What made Jerrold/General Instrument successful? You had competitors. It wasn’t a “gimme” market.
BREEN: No, it wasn’t, but I would say we were very entrepreneurial. We moved fast. Our R&D machine was second to none. And we had an aggressive sales team that wanted to win. And it was a fascinating start to my career, such a winning culture in the company. Like, we’re going to win this deal, we’re going to win every deal, we’re going to be the biggest and the best. And the company just always had that attitude. It was great.
SCHLEY: Where did it come from, the attitude?
BREEN: Great background. John Malone was there and ran Jerrold. So there’s one of the key individuals right there. But we always had a leadership that wanted to be first. And we did deals. One of the best deals, and I think, the transformative deal the company did, was buying VideoCipher, which became the company that developed all the digital technology for General Instrument.
SCHLEY: So set the stage in terms of what you saw happening in the market in the early 90s. DirectTV goes up in 1994, they’re raining down lots of digital channels on America. It’s a pretty compelling product. How did that influence the direction of the cable industry and your company?
BREEN: We were working on digital technology at our VideoCipher division since the late 80s. And I think it was around ’92 or so, we went to John Malone and to some of the other operators. But John was the key person at the time. I said, “Look. We can develop this digital technology for the cable system. But it’s going to take some years.” And probably there were many delays from when it was supposed to happen, but eventually we got to the point where—the key was we had the digital technology, which was the compression technology, but we were also the experts at encryption technology. And you had to secure the signal so it couldn’t be stolen. We married the two together and came out with the digital set-top box. We made our first deliveries in 1997. So the satellite industry did have a few-year jump, which was a real competitive issue at the time.
SCHLEY: It was, and before we talk about that transformational deal on the digital boxes, can you go back to VideoCipher and tell me what that company did and why you were attracted to it as an acquisition target?
BREEN: So they were part of M/A-Com, and there were a few great things that came along with that deal. One was the VideoCipher division. Also what came along with that was CommScope and what also came along with that was my dear friend, Frank Drendel.
SCHLEY: Ok, CommScope…
BREEN: CommScope was the largest coaxial cable manufacturer for the industry, and probably had two-thirds of the volume in the whole business.
SCHLEY: Why did VideoCipher exist at that time? What was the market for it?
BREEN: They were working on HDTV or on high-definition TV technology. But what they did is they secured all the big C-band satellites they used to deliver, and they had a virtual monopoly of that business. It was the VideoCipher technology. So they were very deep in encryption and all those types of technologies, which then morphed into let’s try to create a digital set-top platform for the cable industry.
SCHLEY: You may remind us there was a period of time during which if you had a big C-band satellite in your backyard, you kind of had free rein to television, right?
BREEN: You did, you did.
SCHLEY: VideoCipher solved that.
BREEN: That’s correct.
SCHLEY: They solved that. Let’s talk then about the cable industry’s—I’ll call it a catch-up or an equalization play for digital video. Operators like John Malone needed a lot of boxes in order to transform their consumer base to a digital platform. And that meant a lot of money would have to be outlaid. How did they solve the problem?
BREEN: It was interesting for General Instrument and it was fascinating because we were the largest analog supplier to the industry. And we probably had 60% market share of the set-top boxes, and it was a very profitable business. We had to win the digital business or GI would have been a small portion of what it used to be. I mean, the company would have been over.
SCHLEY: It was clear this is where—
BREEN: It was clear the world was going there and it was clear we had to get there, and every major company and technology thought they were going to get it. Sony thought they were going to win, Microsoft thought they’d win, Cisco thought they were going to win. And here was the two embedded analog companies, Scientific Atlanta and General Instrument saying, we’ve got to get there first. What we did, General Instrument got there first and got the technology done and demonstrated it to the industry. The dilemma was at the time the box cost us about $400 to make it. And the industry said, we can’t afford that. That was the dilemma we found ourselves in at the time.
SCHLEY: What was the price point for a state-of-the-art analog converter around that era?
BREEN: $100.
SCHLEY: It was a big leap forward.
BREEN: It was a big leap.
SCHLEY: What did you do?
BREEN: What we did is really fascinating. I had a lot of conversations with John Malone. I knew we needed it, we needed to roll it out in a big way in the industry, but they couldn’t because of that price point. So our big argument was, look, we need massive volume so we can really run these things like Chiclets down our production lines.
SCHLEY: Bring your costs…
BREEN: Bring our costs way down, and then over time would also cost-reduce the box with our engineers. But it’s going to take us time. But I need big volumes, and that’s how we started talking about, look, if we can get the industry together to make a big purchase, then I could offer the boxes at a lower price point. And so long conversations with Dr. Malone turned into why don’t we do a deal where for every box that an MSO cable operator, bought, we would give them warrants or stock in General Instrument. And our thinking was, first of all that would be motivating for everyone to get going, but we assumed if we had big volumes, the stock price of General Instrument would go up significantly. And Wall Street would help pay for the upgrade. So that was the deal we constructed.
SCHLEY: And if I understand correctly, the deal that the good doctor [Malone] negotiated prevailed across the entire industry.
BREEN: Yes, it was so great because after months of negotiating a contract with TCI, and many other people were involved in it, we then structured this warrant deal. The way—I won’t bore you with all the nuances—you had to sign every cable operator up at the same day so the warrants were done right from an accounting standpoint with the SEC. So we had one week where we did the deal with John, and then we said, we’ve got to go get every other cable operator to go along. So the argument was, it never happened in the industry, for everyone knew John would have the best deal because he was the largest cable operator by far. And we said we’ll just give everyone the same deal. John agreed with it. That’s what really motivated medium-size cable operators and all, like, wow, I would never get a deal like this and plus I’m going to get ownership in GI and hopefully the stock does well. So we took one week. I remember two nights in a row I slept in Ted Forsman’s office because he wanted to be updated.
SCHLEY: He was your investor.
BREEN: He was our large shareholder. So Frank Drendel and I hooked up together and pretty much visited every cable operator. We were on the phone day and night, negotiating the deals. Now they were easy because we said we can’t change anything. It’s the Malone contract. So that made it easy from that perspective. But we got to the end of the week, we signed everyone up on the same day. We kept it totally quiet. Nobody knew what was going on because we didn’t want the stock price to run up on rumors, or it wouldn’t have been as good a deal. So nobody leaked it, nobody had a clue that we had done this deal.
SCHLEY: Was it a Friday…?
BREEN: It was. I forget if it was Monday we announced it or a Friday, but we announced a 15-million-unit order. It was $4.5 billion, which at the time was humongous. Our company wasn’t near that size and it was literally enough volume for a few years. But the key was, it wasn’t just the 15 million. You knew once you were in a town or a city, it was your technology. They had to continue to buy your technology. So as the person who sold it, we just wanted to get our headend and our technology everywhere, and then we had a franchise for the next twenty years.
SCHLEY: What happened to the warrants for the new investors you had?
BREEN: The conclusion of it was that the stock went up literally about 800% over just a few-year period, and we ended up selling GI to Motorola for $18 billion. And they all had the warrants and people could cash out at different times. But literally when you do the math, you reverse the math. Wall Street paid for the whole digital upgrade for the industry. It was really something.
SCHLEY: How did you and Malone come up with the inspiration in the first place?
BREEN: So the conversation was, boy, we’d like to own some stock in the company. And we also, when we did the digital deal, said to John, we should own the Headend in the Sky, the big facility outside of Denver. Because the cable industry’s not going to trust that you are going to control all the programming down to their cable system. If you remember—
SCHLEY: TCI.
BREEN: Yes. The small operators, which was most of the country, couldn’t afford the digital headends. They were really expensive. So what John did, which was brilliant, he built this Headend in the Sky, it was called, and he could just deliver the signals very cheaply to a cheap headend that we developed. The Headend in the Sky was all GI technology also. We built it so we knew it inside and out. We were like, not only would we do this deal, but you sell us the Headend in the Sky. We will then go sell all the cable operators the boxes.
SCHLEY: It’s an early incarnation of cloud computing sort of, in a way, and it worked.
BREEN: Yes.
SCHLEY: How did that financial transaction change everything? How did it change the industry?
BREEN: I mean, look, I think fiber optics was transformative, but I don’t know another deal in all the years I was in the industry that was more transformative. It just took overnight the industry to 500 cable channels. And it wasn’t just delivering video. You could now see the evolution was now going to bring broadband high-speed Internet. It was right on the heels, it was the same technology.
SCHLEY: You were sending bits down the pipe.
BREEN: Correct. It was the technology that really made this industry what it is today.
SCHLEY: You mentioned an individual called Frank Drendel, who was part of your acquisition of M/A-Com, or VideoCipher.
BREEN: Correct.
SCHLEY: Why was Frank instrumental or important or influential…?
BREEN: Well, first of all, Frank’s bigger than life and he is one of the founders of the cable industry. He founded his company with $10,000. And Frank coming in to GI was the best thing that ever happened to me because he knew of me, but we had never met each other. But he always heard about me in sales. And I had always heard about him. I looked up to him, but I never had met him. When he joined the company, he kind of took me under his wing and said, “You’re going places.” And I’m like, “OK, I’ll listen to that.” To this day we’re still best friends and I consider him my mentor.
SCHLEY: You know, I hate to put people on the spot, but in addition to Frank, maybe Dr. Malone, are there a small handful of people who were disproportionately influential in your cable industry career?
BREEN: Yes. When I was in my early 20s, a gentleman from Williamsport, PA, John Roskowski, he took me under his wing, and he built cable systems. So I sold him a lot of technology that he would then go build cable systems all over. And he was very instrumental then. But I would say, obviously, Dr. Malone, Frank. I would clearly say Ted Forsman had a big influence on me for a few years, very key years in there, because he owned the company for about ten years, and was influential in ownership in the company. And I would also put the founders of Comcast, Dan Aaron, Julian [Brodsky] and Ralph [Roberts] and certainly Brian [Roberts]. That would be my group.
SCHLEY: Using the Roberts family maybe as an example, what was the attitude, the culture, how would you express what the cable industry was like to be in and to work in and to have even personal relationships in?
BREEN: That’s what made it so great. I never thought of leaving through all those years. I was in the industry 24 years. And we literally were friends with each other. It was that close-knit. And the cable operators really didn’t compete with each other. They did a little bit, trying to get franchises, but you know, you’re in your own territories. And everyone was friendly with each other. So it was just a fun industry to work in. Honestly, I never considered it a job. We were building an industry. And it was fun to be part of building something and you could see—you know, I started in 1978 and there weren’t many believers. And I’m not sure I was a believer. But you could start to see, oh, my gosh. There’s something huge here and it’s happening in front of us. We were in the middle of it.
SCHLEY: Do you ever allow yourself to think about how the IBM choice would have changed your …?
BREEN: I’ve never forgotten…
SCHLEY: Nothing against IBM.
BREEN: No. I would have never had the career I had and the excitement I had and the friends I have.
SCHLEY: Can you take us up to the acquisition of General Instrument by Motorola, how that came about and why that came about?
BREEN: This was when Frank Drendel again became very important in my career. He called me up one day and said, “Ed, I was just at a Nextel board meeting, and there was a gentleman by the name of Keith Bane on the board.” And Keith was the number two or three at Motorola. “And he said, “Frank, I’ve got to confide something in you. We’re seriously looking at buying Scientific Atlanta.” And Frank said, “Why would you do that when the best company is General Instrument. Have you even talked to them?” He said, “No, we haven’t talked to them. We’ve been talking to the other guys.” Frank said, “You have to meet Ed Breen. Just give him one day and you really need to talk to him. Even if you still want to go do another deal. You’d be making a mistake not talking.” And he said, “We will be ready to meet you at any time.” We got a call the next day. They said, “Can you come up Sunday to Chicago?”
SCHLEY: Motorola headquarters.
BREEN: Yes. “We want you to come on the weekend so nobody sees you here.” We went into a basement in a car and we snuck up. And Frank went with me, by the way, to the meeting and we presented for about four hours.
SCHLEY: To the board?
BREEN: The whole senior management of the company.
SCHLEY: And how did it go?
BREEN: Great. We were negotiating literally starting the next week. We very quickly had a deal done.
SCHLEY: I didn’t understand at the outset. This was a new category for Motorola, right? A participation they hadn’t had in an industry. I think some of us regarded them as a consumer facing CE electronics brand. How would you describe the interest and what was the appeal?
BREEN: Well, the appeal for them was they were making cable modems. They were one of the original vendors. And they saw the potential of what was happening. So they thought, wow, this is a new big opportunity. And they were good at that type of technology also. So that was their interest level, and then obviously they were studying it. So we were just starting to ship cable modems also. We had already done the digital set-top box. On the heels of that, the DOCSIS standard got set. Half the intellectual property was out of General Instrument on the DOCSIS platform. So we started making cable modems and that started going through the roof.
SCHLEY: Was there a general belief in that there would be this convergence of the two platforms…of Internet and…?
BREEN: Internet—at the time you could see the evolution. The set-top box came, then the cable modem for Internet and then you knew telephony was coming. That was the quick evolution over a few-year period.
SCHLEY: And you stayed aboard, correct, with Motorola?
BREEN: I did.
SCHLEY: Why?
BREEN: Well, so my commitment was, I’ll stay at least a year because I loved General Instrument and they were all my friends. And we did so much together and I wanted it to go well. That was really my motivation. I didn’t necessarily want to sell the company, but for $18 billion, you do the right thing for your shareholders.
SCHLEY: It wasn’t for sale necessarily.
BREEN: Right. No. So that was my commitment. Motorola started having issues during my first year there, and they asked me if I would then be president of the company and help out. And get things righted.
SCHLEY: You know your company was so intertwined with the cable industry’s fate and fortune and we started to see competition from other telecommunications providers. Telcos, we had the satellite guys in the sky. Did you ever feel like you were at risk with your position, being so wedded to that industry?
BREEN: No we didn’t, but it was an awkward feeling because when the telephone guys said they were going to get into the business, we were there and we were winning huge contracts with them.
SCHLEY: With the telcos?
BREEN: Oh, yes.
SCHLEY: For a different version of a converter box.
BREEN: Basically the same. And you felt very conflicted, because all your friends were the cable guys, and here they are coming to compete, but in the world that’s evolving like that, you had to sell to everybody. So it was a little bit nerve-racking because we didn’t know the phone guys well. On the other hand, they didn’t have much of an option. They had to talk to the incumbents because we had all the technology.
SCHLEY: And the scale.
BREEN: Then we got to know them.
SCHLEY: Ted Turner once told me, he said, when satellite TV came in, “You know, Stewart,” he said, I can’t do his drawl, of course, “we’re a television programmer, we’ll sell to anybody.” You have to adjust to the market.
BREEN: And so did the cable operators where all the programming gets sold.
SCHLEY: Did you have relationships between your company, a technology company, and the programming community—I am just curious—in the cable industry?
BREEN: We had a close relationship with the programmers because we sold all the DigiCipher technology, that carried all their signals securely. So HBO was a large customer of ours—they all are. Turner.
SCHLEY: You’re enabling them. And then your exit from Motorola came when, and what were the circumstances?
BREEN: So I was there for two years and quite frankly, at that point, thought I would stay for a really long time when I was president. But it was interesting, the Tyco opportunity came along—
SCHLEY: You’re charitable to call it an opportunity.
BREEN: Yes, and I just got really intrigued by it. It was a huge company. They had 250,000 employees. It looked like it was in real big trouble, potentially go bankrupt. And I liked a lot of the businesses they were in. I studied it a lot. So I thought, you know what? This is really, could be something real interesting.
SCHLEY: What is instructive about that experience? I know that you really changed out the entire senior management or a good portion thereof. You changed a lot of the board pretty quickly. Hard decisions, I’m presuming.
BREEN: Look, there were six or seven agencies investigating us, including the DOJ. And we were threatened that we were going to be indicted as a company my first week there. So I just made—sometimes you just have to sit back and say, “What do I need to really do here?” And I said, “I’ve got to get rid of the whole board and I’ve got to get rid of the whole senior management team.” Because every meeting I would go to with the SEC, the DOJ, the New York Attorney General, they were all like, “It’s a dirty company. There’s too many people that were in on the in.” So I made the decision my first month after they hired me, I went to the board and I said, “You all need to step down if we are going to save this company.” That turned into a three-month battle with lawyers involved, and eventually they all stepped down. And now the management team, I got rid of about 290 out of literally 300 during my first eight months there.
SCHLEY: You are a very personable human being and you seem like a nice guy, but you had to be tough, right…?
BREEN: You had no choice. I mean sometimes you have to do what you have to do it. It was interesting; when we made the announcement with the board, and when we made that announcement, I also announced a couple new board members that were very prestigious, well-known executives. And, all of a sudden, everyone started backing off. Just like, OK, it really is a different company. Ed’s running it, the board’s going to be different. He’s brought in people from GE, Honeywell, and this is truly a different company. And it really helped me get over the issues.
SCHLEY: You know, I’ve always been intrigued. I can ask you this because you’re an expert, you can tell me, having worked in the cable business and then gone to two industries with very different competitive dynamics, Tyco and DowDuPont. Really intensive competition among multiple providers. Did it feel different structurally moving from the cable industry to kind of a free-for-all sort of marketing environment?
BREEN: You know, the difference was when I at General Instrument, I was the head salesperson even though I was the CEO. And I knew all the customers and they knew what they needed. I was very close to them. When you go to a company like Tyco or DowDuPont, there’s thousands of customers everywhere. You touch so many industries that you don’t have the intimacy with the customer base. That was the big difference. But I’m always asked, how can you run so many different kinds of companies? You know, a chemical company, a multi-conglomerate, a technology company. Your management style’s the same no matter where you go. You have a management systems-style the way you do things. I really think most people could run multiple kinds of companies.
SCHLEY: What was terribly tremendously fun about cable? You’re in your run. I mean, beyond the financial rewards, being a CEO, and the prestige. What was fun about it?
BREEN: It was a family. It was just a family atmosphere. You never would think your customers are your friends, your best friends, but after we would do a deal or meet, we always went out to dinner together and carried on and had a great time. That’s very special.
SCHLEY: Is legacy important to you? I mean, we’re about to open up the Ed Breen Technical Archives.
BREEN: When I was asked about the archives, what I really liked about it was the technology people in the industry had a lot to do with what happened. And you know I’m very proud of what all the cable operators did. I mean, they were the ones who put their money on the line and risked their net worths. They were great entrepreneurs. But really there were so many great technology people that really enabled it to happen, and that makes me proud to look back at that. I just feel great that I was part of it. It’s fun building an industry and look where it is today.
SCHLEY: Did you ever have a moment or two of reflection where you thought, I’ve kind of done what I need to do as a businessperson, and go hit the golf course? You have not chosen easy successive projects.
BREEN: So I had that feeling right after Tyco. I did ten full years running it. It was great. We made six companies out of it. They all did well, and I thought, OK. Let’s go hit the golf course, as you say, and about a year into it, I’m like, this isn’t that fun.
SCHLEY: Interesting.
BREEN: Here I am back again.
SCHLEY: No kidding. What, when you look at the future of the cable industry, and you know people and you’re friends with a lot of people in it, do you have any counsel or advice or thoughts about where it should be headed—it’s a very changed environment, both for video and for telecom services. But you know, if you were back at the helm of a company of the stature of GI in the day, what would you be looking at investing in, or pursuit?
BREEN: Look, I think the cable industry is in as good a spot now as it’s ever been. But the landscape’s changing quickly. The one thing I love about the cable industry is people know how to move and change course. And it’s always been what’s great about it. I’m so lucky now because I’ve been on the Comcast board for many, many years now, so I’m very involved still in the industry from a very big player. Just to watch what’s going on. Just in the last three years, the cable operators have deployed Wi-Fi hotspots all over the country. Now we’re into the mobile phone business. Who would have ever thought? And you tie mobile together with Wi-Fi hotspots and you’ve got a competitive advantage, done right. And who would have thought that five, seven years ago?
SCHLEY: Someone once—Paul Kagan, you remember, he called the cable industry a “great parlay industry” because of what you just described. Does that analogy make sense to you? You can sort of fit one business on top of the other.
BREEN: You can.
SCHLEY: Play the game that way?
BREEN: I think we’re still at the cusp of great things.
SCHLEY: What haven’t we addressed that you’d care to impart or talk about as it relates to your time and influence in cable?
BREEN: I don’t know. Can you think of anything? You covered it pretty good in that…
SCHLEY: Here’s my thought; that you had this perch, this seat, at the helm of the biggest technology supplier, that you could see everything happening. And I think it’s an unusual vantage point to, like you said, watch an industry grow up in front of you.
BREEN: It was fascinating. But you know, it was so different. I hate to say this because I’m probably considered a professional manager now, but there was no professional management. It was entrepreneurs that wanted to build. And that’s what made it so fascinating. And every year you knew that they were literally putting their neck on the line. They were living shoestring to shoestring, raising money, and I learned so much from that because you can’t go in any industry; I couldn’t have taken a job at IBM and ever learned or saw anything like that. It was an incredible thing to know.
SCHLEY: I had the chance to have an interview with Julian Brodsky a month or so ago here. He said, “You know, we never met a cable system we didn’t want.” That’s what he said. And I can’t remember who was the more risk-averse guy—was it Dan Aaron, I’m not sure.
BREEN: I would say probably Dan; certainly not Ralph. Ralph would have liked every cable system he could have gotten. But probably not everyone figured that out either. John Malone figured it out: get everything you can get your hands on. There was only five or six at the time that figured it out and started to try to consolidate the industry.
SCHLEY: And that was the game.
BREEN: That was the game. And it was the right thing to do. And very fascinating that, led by TCI, after everyone kind of gobbled up everything, what was fascinating is they said, you know, this isn’t put together quite right, because we’ve got systems in California here. And then the industry started to do a rationalization, start swapping systems, which I thought was brilliant.
SCHLEY: That patchwork quality was always—well, Malone has said, “It was the one albatross we couldn’t get around for a long time.” Because he’s a scale guy, he wants scaling. He couldn’t get it with the quilt.
This has been great. Thank you for—congratulations—
BREEN: You’re easy. You’re a good interviewer.
SCHLEY: Congratulations on the archives. One of the top ten interviews from the oral history series. I’m privileged to have conducted it. For the Cable Center, I’m Stewart Schley.
