Interview Date: May 25, 2005
Interviewer: KC Neel
Abstract
Fred Dressler talks about his introduction to the cable industry through Bill Daniels. He describes his first job at ATC, the Mile Hi system and eventually winning the franchise for Denver, the “cable capital” of America. He discusses new opportunities in programming, the evolution of agreements with ESPN, and importance of pricing and expansion of the subscriber base. He compares the early relationships in the industry with the current situation. He covers the issue of retransmission consent, negotiations around compensation for broadcasters, and suggestions for redress through must carry rules. He stresses the usefulness of unique programming as well as how the changes in offerings and technologies such as DVR and video on demand affect the economy of the industry. In this vein, he discusses content and need for better marketing. He explores the analog to digital transition, the importance of HBO, and the question of interactive TV. He concludes by reflecting on his cable career.
Interview Transcript
KC NEEL: Hello, I’m KC Neel. It is May 25, 2005. I’m here with Fred Dressler, the Executive Vice-President of Programming for Time Warner Cable. We’re here to talk to Fred about his career in the cable television business and to get his perspectives on the industry. Good evening.
FRED DRESSLER: Hi, how are you, KC?
NEEL: I’m fine, thank you. How are you doing?
DRESSLER: Good, very good, thanks.
NEEL: Welcome back to Denver!
DRESSLER: Well, this is still considered home in my book, so it’s great to be here.
NEEL: Let’s kind of go way back. Let’s go all the way back to when you were a little kid, and talk to me a little bit about what television was like for you when you were a little kid. What were your favorite shows? What kind of impact did that have on you?
DRESSLER: I guess the two things that stand out in my mind as a real young kid growing up were Howdy Doody and watching baseball games with my dad on TV. We didn’t watch a lot of television. I can’t remember that far back as to whether there was a lot to watch, but we went to bed early and we read our books and we studied and we did our homework, but we watched Howdy Doody in the afternoon and if there was a baseball game on, particular on the weekends, we would watch that as a family. So those are my early memories of television.
NEEL: Now I know that you attended the Newhouse School of Communications, and in fact you’re still extremely involved with that organization, yes?
DRESSLER: That’s correct.
NEEL: What made you determine that you wanted to get into the communications business? How did that whole thing evolve?
DRESSLER: Well, my dad was in the advertising business in New York, so I frankly thought that that’s what I would probably end up doing. The communications program at Syracuse is very heavy on writing – it was then and it is now. So I always felt that being able to write would be a key to success in anything that I chose to do. I didn’t have a specific target to be in the television business when I entered the school but when I was a freshman I paid a visit to the local radio station, the campus radio station, and was sort of blown away by everything that I saw – the activity and the enthusiasm and the excitement that was going on there – and so I stuck my head in to meet the general manager of the station, and it was a student-run operation, and the guy who was the general manager of the station at that time was a very erudite, even then, gentleman who was definitely in charge and sort of appeared to know everything. I think he went on and had a pretty decent career, and I’ll mention his name in a minute, but he got me involved very early on in just being on the air as a disc jockey, writing some news, writing some sports, going out on the street and covering things and pretty much just got me so excited about what was going on and then you’d go back to the dorm and you’d find out, gee, the kids actually heard you and you became a minor celebrity as a freshman, that was a big deal. So my mentor at that point was a guy named Ted Koppel.
NEEL: No kidding!!
DRESSLER: But I went to school at that time with a lot of people who then went on and became on-air people, as frankly I did when I started my career. I didn’t go on to the success of people like Marv Albert, who was a classmate of mine, and Dick Stockton, and people like that, but I frankly got out of school and came to Denver, Colorado and was on the radio and then on television until I got introduced to cable television.
NEEL: How did you get introduced to cable television? What made you want to go from broadcast to cable, and when was it?
DRESSLER: It was in 1968. There was a gentleman who tried to get the cable franchise in Denver, and I was a reporter for the all news radio station here in Denver. So in covering activities at City Hall I began to cover this series of hearings that took place about the launch of cable television in Denver. At that time I met the guy who was leading the effort and that was Bill Daniels. He was unsuccessful in 1968 in persuading the city council to give him a franchise, but he and I began to have a working relationship. Bill was just a terrific human being as everybody in the industry knows, but he was also very active in civic affairs here and in the sports world. So as a reporter at that time, he became a very important person for me. He owned a basketball team, he ran a car at Indianapolis, and he was behind a prize fighter named Ron Lyle who ultimately fought Mohammed Ali for the world heavyweight boxing championship. He was a Republican National Committee man, he ran for Governor of the State of Colorado. So during that whole period of time I got to know Bill more and more. Frankly it was at the Republican National Convention in 1972, in Miami, that I finally sat down with Bill and said, “What is this cable television all about? I don’t get it.” He explained it to me, which at that time was largely a replay service of the broadcasters and he took me to his office and he had this magnificent model of the Rocky Mountain West laid out in his office on a huge ping pong table and it was a model that had every mountaintop with the snow on it and telephone poles and power poles going all across the Rocky Mountains, and he showed me his vision which was to bring the television stations from San Francisco across the Rocky Mountains and from Los Angeles across the Rocky Mountains into Denver. I looked at Bill and I said, “But it’s the same television stations as we have here in Denver, Bill.” And he said, “Yeah, but the shows are on at a different time.” Wow! Time shifting back in 1972. That was his vision. Then he said to me, “You ought to think about getting into cable TV. It’s a burgeoning area.” I said, “Bill, not for me. I’m a TV star here in Denver. Cable’s not for me.” But the truth of the matter is that in 1975 when HBO went up on the satellite he called, asked me to go to lunch, said to me “What do you think about this?” and I said, “I get that. People will buy that. If we can build on that, there’s a business.” So it was on that basis that Bill convinced me to get into the business. He offered me a job with his company. He suggested that I go to Waco, Texas and run a series of systems that he had down there and I said, “Bill, Waco?” He said, “Fred, you should never say no to anything without at least checking it out.” So I got on an airplane and I flew down to Waco and the engineer of the system picked me up at the airport and we drove around, and he then said, “Should I take you to the hotel?” I said, “Do you think you can take me back to the airport?” Which he did. I took the next plane back to Denver and I called Bill the next day and I said, “Bill, I’m from New York City. I don’t think I’d do Waco.” So he said, “Well, it’s all I’ve got at the moment, but let me call my friend Monty Rifkin over at ATC,” which Bill did, and he sent me over to see Monty and Monty said, “What do you know about cable TV?” and I said, “Not a lot.” He said, “Well, if Bill thinks you’re a good guy we’ll find something for you.” So he said, “Why don’t you go down to Shreveport, Louisiana and help us build this cable system down there.” I said, “How long am I going to be down there?” He said, “Not long, but just go down there. You’ll learn and it’ll be a good experience for you.” So I said okay because I thought if that worked out I’d get back to Denver where the corporate office was. The next day I get a call from Bill, he said, “Oh, you won’t do Waco but you’ll do Shreveport?” I said, “Yeah, but I sort of had a promise I was coming back to Denver. You didn’t make that promise to me, Bill.” So that’s when I joined ATC and effectively that’s the same company that I’m with which is now Time Warner Cable almost 30 years later.
NEEL: So how long were you in Shreveport then?
DRESSLER: I was in Shreveport for a little less than six months, and in that time we erected the tower to launch the system and we built a building in six months, sort of a prefab building, but we got it up and it’s still the building, it’s been added on to, but it’s still the headquarters for the Shreveport cable system all these years later. After six months of being the assistant general manager down there they shipped me off to Fresno, California and made me the general manager of a new cable system that they were going to launch there. I worked another six months launching that cable system there – a little over six months – and then Monty had an opening for a position back in Denver and he called me and offered me the chance to come back to Denver which I jumped at. I was in Denver from that point on until Time Warner Cable moved to Connecticut in 1988.
NEEL: Now were you the first GM for Mile Hi?
DRESSLER: Yes.
NEEL: You helped get the franchise, did you not?
DRESSLER: That’s sort of one of the highlights of my career, I feel. One of the jobs I had after moving back to Denver was being responsible for most of the franchising efforts that we had in the country. We had a pretty good team and I became the vice-president of franchising and worked on acquiring franchises from Council Bluffs, Iowa to Kansas City, Missouri and the like, and put together the partnership and the deal to try to seek the franchise in Denver. I went to Monty Rifkin at that time and I said I thought it was important that we have some local people be involved and one of those local people I thought was critical was to have Bill Daniels be a partner in that venture. He was still in the cable business but he was one of the smaller cable operators. His focus at that time was largely as a broker, but Bill became chairman of the board of the Mile Hi venture that we put together and we started that in 1978. We worked on securing that franchise for four years. He had been turned down, as I suggested earlier, in 1968, so it was ten years later we were putting this new deal together. It took four years. In 1982 we were successful in winning that franchise; United Cable and TelePrompTer were the primary competitors. It was very hard fought and with me considering this my hometown and Bill considering it his hometown, it was certainly very gratifying, although at that time it’s important to note that this was the cable capital of the nation and United’s corporate headquarters were here, TCI’s corporate headquarters were here, Jones’ headquarters were here, and there were at least another ten or twelve cable companies that were headquartered here. So winning the franchise in your hometown, and then what was considered the cable capital, was certainly a very, very exciting thing for us to happen. Then what happened after that was we got sued by a couple of different organizations trying to block the franchise, some people saying that it was illegally granted and others simply saying it needed to be ratified by a vote of the public. So it took, after winning in February of 1982, a little over a year of winning lawsuits and winning public elections before we finally secured the franchise and then actually launched the system in June of 1983, which was a big red letter day in my life.
NEEL: That’s awesome. It was complex because of all the ownership structures, is that not correct? TCI wasn’t involved then at the very beginning – it was just you and Bill, ATC and Bill.
DRESSLER: And Bill and some local citizens who were also partners and advisers to the project, yes. Then ultimately other people came in and became partners. In fact, Scripps became a partner when they were in the cable business. They owned some cable systems and I got to know some of the people from the Scripps organization at that time, and then I believe that Scripps sold out to TCI and they became involved, and then ultimately after about five years of running that cable system, when we were finished with the construction of it, I then moved on to another position in the company.
NEEL: At that point did you go pretty much corporate from then on?
DRESSLER: Yes. Well, as you know, the corporate headquarters for ATC at that point were here in the Denver area, so I didn’t have any desire – I was raising a family at that point – to move again if I didn’t have to and so I had a conversation with Trygve Myhren, Joe Collins and Jimmy Doolittle at that time, who were the leaders along with Monty Rifkin still, and we talked about what might be the opportunities after building out the Mile Hi cable system might be. The thought was that programming was sort of a new area that number one, we should get involved in as an investor and that we should help develop programming, and that we needed to do a better job of contracting with the program suppliers than we had done up until that point. At this point it was 1987, end of ’86, beginning of ’87, something like that. There were a number of networks but not anywhere near where we were then, and nobody really knew the programming business, so that was another opportunity for me. I didn’t know it either but I had some experience. Somebody said, “Well, gee, weren’t you on television once?” That made me the expert in the cable industry on programming at that point, at least from the cable operators side of things. So I got involved and we did launch some networks and we did get involved in developing some new projects, and then supporting the development of networks that people came to us and wanted to get launched and needed distribution and haggled over how do you determine what the price is. One of the interesting stories I think is in the early days, and a lot of people forget, when ESPN initially launched in the cable business, the first contracts that they signed with cable operators, they paid us, and a lot of people forget that. That was sort of the beginning of what I’d like to think for a long time, for over 20 years now, has really been a pretty good partnership between the operators and the cable networks because it didn’t take long before ESPN came back and said our paying you is not a model that’s going to be successful for us and if it’s not successful for us then we’re not going to be able to provide the programming for you to sell to your customers, so do you think we can sort of make this free? You don’t pay us, we don’t pay you. We worked up a long-term contract at that point and entered into a new long-term contract where there were no license fees. Well, it didn’t take ESPN long to come back and say, you know, this free model doesn’t really work very well for us. Do you think you could pay us something like a nickel or a dime? We, Time Warner, ATC in those days, and all the other operators ripped up those contracts and we started paying. Well, that sort of opened the floodgates to where we are today. Then it was once you determine that we’re paying then it was how much are you paying? For a long time we always fought about the nickels and the dimes, and in those days, the pennies and the quarter of a cents – in fact, I remember being on vacation once and negotiating with somebody and we were literally haggling over the last quarter of a cent and whether we were going to pay two cents or two and a quarter cents for a network, and my mother was listening at her home where we were on vacation, when I hung up the phone she said, “I can’t believe that you people spend hours haggling over a quarter of a cent.” So I sat down with a pad and a calculator and I showed her how a quarter of a cent times millions of subscribers was real money, and she had a new respect for what it was all about. There was opportunity in those days to grow the number of subscribers, so whether you got the last quarter of a cent that was on the table or not was sort of made up at the end of the day by the fact that you got more subscribers then what the operator had when you started to do the deal. The difficulty that we face in today’s environment is that there’s sort of a zero sum game. There aren’t that many new subscribers coming on so we’re sort of, both sides of the industry and each company, faced with the same dilemma. We all want to grow, we all have budget targets, we all want to grow double-digit, we all want to tell Wall Street that we’re going to continue to be the growth stock, and there isn’t room for everybody to grow double digits because is we grow double digits then we have to take it out of someplace else because there isn’t enough growth for everybody to do that. For awhile there, the programmers thought it didn’t matter – when the satellite guys got started – because if they lost a couple of cable subscribers, why they picked it up on the satellite side and were probably charging higher prices, so that all worked out. Where we are now is everybody’s paying about the same thing and if we lose a subscriber the satellite guys pick it up, and if the satellite guys lose a subscriber we pick them up and the programmers don’t get any more subscribers at the end of the day. So all of the sudden that extra quarter of a cent that we were fighting about ten years ago becomes even more important to everybody and that’s what’s really led to the contentious atmosphere that exists today, is the fact that everybody’s trying to do an honest job of doing what’s best for their company. The beauty of our business is that none of these fights are usually personal in any way. People understand that you work for a company and you’ve got an obligation to the shareholders of that company to maximize the value and so you fight about it in an ethical and in a business sense, but then the beauty of our business is that you can go out and party afterwards and everybody gets along pretty well.
NEEL: Do you think that contentious is going to just continue to intensify? Is there a way to avoid that, and how important is it that the programmers and the cable operators work in tandem?
DRESSLER: Well, I think it’s critical that we work in tandem and I think what we’re experiencing is sort of an inevitable thing that happens in a lot of businesses as they grow up and they mature. The tension, I think, is going to continue and I think it will probably even intensify. A lot of that is because institutional memories and relationship memories disappear. You worked things out in the early days and you made friends with the people that you fought with and you grew the business with, and you had something in common and you could stand back and say, gee, we created this together, and then the new generation comes along and they had nothing to do with that and they had nothing to do with building the relationships between the companies and somebody has a job and they want to be successful and they want to prove to their boss that they can grow this thing. On the other thing you’ve got the same thing going on. So there’s nothing of that history, there’s none of that joint experience any longer, which is what kept the business together as an industry. All of that is sort of disappearing. There’s still a little bit of it left; some of the older folks who have been around for awhile still appreciate that, but it is hard and I think it’s inevitable that you’re going to see some more of that stress.
NEEL: Does that make your job much more difficult? Does it take away some of the fun?
DRESSLER: Yeah, I think it does take away some of the fun because the collegiality of the industry has changed dramatically. I think you see it at the cable shows now. There just aren’t the parties that there used to be and people aren’t personal friends like they used to be. I’m not saying that’s bad from a business perspective. Maybe in terms of looking out for shareholders’ interests that’s a better way to do it, and I don’t want to sound like the old codger and say things were better in the old days, but they were different, that’s for sure. I miss it because the people that you grow up with and who were your friends are sort of moving on and retiring or doing other things and it’s just different.
NEEL: The relationship between the programmers and the cable operators – I’ve heard other people say they’ve pinpointed the beginnings of that contentiousness with retransmission consent. Would you agree with that?
DRESSLER: Well, no. I feel that there was always a tension that existed before. My view is that up until then, most of the leverage in the negotiations was with the cable operators, and I think that the cable operators for the first time maybe in their careers all of the sudden had a counterbalancing weight against them, and it was like, oh wow! We can’t just dictate all of the terms all of the time. So it was an eye opener, but the tension was there. I think if you talk to the programmers they’ll tell you there was tension before. Maybe as cable operators we didn’t feel it as much because we were able, especially if you were a bigger operator at that time or really growing pretty quickly, it was pretty easy to dictate the terms of contracts in those days. I think retransmission consent flipped the balance of power a little bit, so it was just as contentious except that all of the sudden you had this grand awakening which was you didn’t have all the control anymore.
NEEL: Let’s talk a little bit about retransmission consent and what it has meant for negotiating contracts with programmers and how it has changed the way you do things now.
DRESSLER: Well, the problem that I saw with retransmission consent was that it was set up at least to appear to be a fair and balanced way to negotiate and the way the government, as I understood it, had set it up was that a broadcaster could choose must carry, in which case there was no negotiation and the cable operator must carry the channel on the channel position that the channel had in the market and that was it. If a broadcaster chose retransmission consent there could be a negotiation over what the compensation might be. Now, what makes that fair is that the broadcaster assumes entering into the negotiation that his programming is very popular and that the cable operator will want to carry that programming, in fact would want it so much that they would pay in some way, compensate the broadcaster to do it. The thing that makes it a balanced negotiation is that I presumed that if you couldn’t reach terms that the cable operator could say despite the fact that you’re a popular network I’ve decided that your compensation is more than what you’re worth and therefore I will not carry you at all. And we would fine out, gee, well, it might cost the cable operator some business but it might cost the network some business too, if they weren’t on the cable system. Well, what we found out through a very, very hard lesson was gee, that wasn’t really the government’s intention at all. The government wanted us to compensate the broadcasters but we did not as cable operators have the right to say no, that we will not carry you. So all of the sudden negotiation was about you must carry and how much are you going to pay. It wasn’t whether you were going to pay at all or whether you had any other option. So that was the big eye opener and we learned that from a very, very hard lesson that became a cause célèbre in the cable and the broadcast industry when we took on a fight with the Disney Company’s ABC broadcast network. We felt that as Time Warner at that time that ABC was seeking compensation that was far beyond what it was worth and the timing of that negotiation was also somewhat interesting. It was right after Time Warner had announced its merger with AOL. We in fact had a handshake deal with Disney the week before the AOL deal was announced. ABC decided once we announced this that they had some new leverage, that they could either fight the AOL merger in Washington and try to upset that merger, or get something more out of their negotiation with us on ABC. So they reneged if you will on the deal that we had had the week earlier and said they wanted to reopen the negotiations, and frankly had asked for tens of millions of dollars in compensation more than what they had asked for the week earlier. We felt that that was an unfair ask and we were willing to draw a line in the sand and not make that compensation. So on May 1st of 2000, the ABC television stations on all the Time Warner markets went dark and it caused the biggest uproar that I had ever seen then and to this day in the cable industry and the broadcast industry and among the politicians in Washington and in every market in which we operated. It all of the sudden became very clear as I indicated earlier that none of those politicians ever expected that a broadcast station could actually go off the cable system and they demanded that the broadcasters go back on. I believe it was 24, no more than 48 hours after they went off the air that they went back on and we entered into the negotiation that led me to the conclusion that this was all about how much we’re going to compensate the broadcasters, not whether we were going to compensate them, and that’s what’s led to the difficulty in the negotiations with all of the broadcast networks and why I feel that the government really needs to take a look at the law because this has had unintended consequences. If it was in fact set up to be a balanced negotiation, it is not a balanced negotiation, and the people at the end of the day – and this is what we try to get the politicians to understand – who are paying for this are their customers, their constituents, and if they think that there isn’t a cost associated with this they’re fooling themselves. All of these new networks that are being launched cost money. There’s some value but I can tell you that the broadcast networks not only seek to launch new networks, they also seek extraordinary rate increases on the other networks that are already being carried all on the theory that if we don’t pay them that we could lose the television stations again and that the politicians will come down heavy on the cable operators. It’s difficult and I’m hopeful that the Congress, as we speak now, has at least had an open mind, at least in some areas, to reexamine the must carry and the retransmission rules. I think it’s critical or something is going to have to happen to change what’s become just an unbalanced and, I believe, an unfair situation that is costing all of our customers and all the politicians’ constituents enormous amounts of money inappropriately.
NEEL: What needs to be done? How would you like to see that law changed?
DRESSLER: I think it’s simple. I think that the broadcasters should have must carry. They get the benefit of being carried on the cable systems. The argument as to why they thought they should get retransmission consent at the time was, gee, broadcasting is in trouble, if the government doesn’t support it and give it a chance to get money in some other fashion it’s going to die. Well, broadcasting hasn’t died. Their audiences have gone down but their advertising rates and revenues have gone up significantly. They’re a very healthy business and have been for the last decade and continue to be. The only people who are paying are cable customers and satellite customers who are paying for what is otherwise a free, over the air service that is being offered because the government has given the broadcasters a free license. So, it just seems to me that it’s wrong and it needs to change and must carry solves it.
NEEL: Now, when it comes to programming, you spoke of this a little earlier about how you guys felt at ATC and subsequently, obviously, Time Warner, that having your own programming was very important. At that time, when all of the sudden everybody was rebuilding their systems, there was a lot of room, the industry was deregulated, there was a lot of need for that. Well, at this point, you do have a lot, there’s a lot of programming out there, and yet I’ve heard you speak of wanting more programming, and just recently in talking about thinking about wanting proprietary programming for cable operators and wanting to have more of that, how do you envision that all coming about? For one thing it would be against the law, would it not? You’d have to change that law as well, the proprietary programming aspect of it, yes? And is there such a thing as a linear network anymore? What kind of programming are you talking about?
DRESSLER: Well, there’s a lot in that question, KC.
NEEL: That was a lot, wasn’t it? I kind of overloaded you there! Sorry.
DRESSLER: It’s hard to know where to begin.
NEEL: Let’s start with the programming part of it. Is it still important to own programming, to launch programming, to have programming that is differentiated on cable systems? Aren’t people willing to provide just about everything you would want to you?
DRESSLER: Well, in the case of Time Warner Cable because we are part of a larger company, Time Warner, Inc. which owns HBO and owns Turner, Time Warner Cable, unless it’s a very localized network, our cable company isn’t going to be launching any national networks. We’re going to do some local things that no national programmer would be interested in doing, and we’ve done that on the sports front, we’ve done that on the news front where we can do hyper local newscasts, and nobody else can make that go. We can afford to do that because we’re serving our customers with a hyper niche service that we think keeps them loyal to us and so we can absorb that cost in our operating budgets if it helps keep the customers on the cable system. Other cable companies, I think, have taken a look at having their own networks I think for two reasons. One, it’s a good business, so why not? And secondly, since this is a lot of leverage in the negotiations it’s helpful to a cable operator to have networks to sell to somebody if they’re also buying networks from that person as well, and it helps balance the negotiations sometimes, so I think that’s largely what’s happening there. When you talk about creating new programming, yeah, there are plenty of people who will do that for you. The question is at what cost and do they have the same agenda that you do. If we can find people who are willing to do that for us on reasonable terms we’re happy to do business with them and we’ve demonstrated that all the time. The one area that is important, I think, that you’re seeing the cable operators get more involved in is the sports area because sports programming has become so expensive. If it is at all possible to eliminate the middle man it’s just a way of keeping the costs down to the customers. It’s not of any benefit to the cable company to increase the price to the customer and simply pass that through to the teams, to the team owners or to the players. There’s no ultimate benefit at the end of the day, so that’s just a method that we’re using these days to try and dampen down the pricing on what is otherwise extremely expensive programming in the sports area.
NEEL: And is that where a lot of that proprietary programming that you talk about, that you’ve spoken about in the past…?
DRESSLER: Well, what I’m talking about there is at some point, and I think we’re approaching that point, cable companies and satellite companies have to differentiate themselves more than just on price. One of the ways that we differentiate ourselves as cable operators from the satellite guys is that we also provide high-speed data and telephone service, but for the most part, virtually all of the programming that we offer is available on satellite. The satellite guys, on the other hand, right now can’t do high-speed data and can’t do telephone, so what are they doing to differentiate themselves? They’re coming up with exclusive programming, proprietary programming, starting with the NFL Sunday package, and I’m going to assume coming down the pike is going to be additional exclusive programming. I would also assume that whether it’s through partnerships or otherwise, the satellite guys will then end up being in the business of being able to offer to the customer a package that includes high-speed data and telephone down the road. So how do you differentiate yourself? If your competitor has proprietary programming, you can’t have only programming that they have and nothing different. The current law, which may or may not be changed in the future, still doesn’t preclude us from having proprietary programming. It simply says that the cable operator can’t own that programming, but for instance if the cable company were to buy the NFL it could have the NFL exclusively, or if we bought the NBA or if we bought a package of movies from somebody who wasn’t a cable operator, that could be exclusive programming. I think what we’re going to have to find, though, is unique programming. I don’t think taking something that people currently get as part of their package and then all of the sudden making that proprietary or exclusive to one platform or another is the answer. You’ve got to come up with something new. One of the things that we’re taking a look at is now that Howard Stern, for instance, is moving off of broadcast radio and he has a segment on the E! Network on basic cable that everybody carries, if cable could get the new Howard Stern show off of Sirius Radio, which one would think might be a little racier than it’s been on broadcast and offer that in a pay-per-view or video on demand exclusive basis on cable, that might be some new content that’s new, different and distinguishes cable from the satellite guys, and if we start thinking that way I think that’s the kind of proprietary programming, or that kind of is the direction that I’m thinking we need to head. It’s got to be something that’s got high value to at least a large enough segment of the audience that they’re willing to be cable customers rather than satellite customers or telephone company customers.
NEEL: In looking at the way you look at programming, do you think that coming from the operations side of the business and having a broadcast background for that matter, do you think that that’s helped you morph into figuring out what’s the right model for a programming package to provide to customers? Going from operations into programming is not a normal trajectory for most people.
DRESSLER: Well, I don’t know what’s been normal in the cable business. That’s been the beauty of it, is people could do almost anything. There was no expertise in the business so you got educated or you educated yourself and you became an expert in a particular area. You know, everybody’s an expert in programming. We all know what we like. We have hundreds of channels available to us now; we didn’t when we were growing up. Even my kids today, who maybe had 20 or 25 channels all of the sudden have hundreds of channels today plus all of this content on demand and more on demand content coming. DVDs that they can purchase, DVRs that allowed them to time shift what they want to watch. Everybody is a programmer today and there’s no right or wrong answer for “the entire audience”. That’s the challenge; frankly, of the programming world going into the future is how are they going to make those businesses work when everybody is a programmer. Everybody programs their own viewing habits. They watch what they want when they want to watch it. My own personal view of the future, frankly, is that there’s going to be a huge consolidation, a collapsing of the number of linear networks that exist today. I don’t think that we as a public are going to be able to support that many linear networks which get an audience through channel surfing. If you don’t find something on your favorite channel now, you surf to find what you want, but if you know you turn to your favorite network and the program that you wanted isn’t on and you know you can go to the on demand space and get that programming now, then you’re not going to surf the other 200 or 300 channels that are there. So I think you will consolidate down into something like 100-125 or so, just an arbitrary number, it’s not scientific, but the programming that exists on these 500 channels, a lot of these networks have two or three shows that are really gangbusters and then they have 22 hours of the vast wasteland of television. So those two or three hours will get on the server and will have an audience and they’ll probably have advertising to support it and they’ll be a license fee whether it’s directly from the customer or a license fee paid by the operator of the model to be worked out, but the best of what’s on television. People will never say again “there’s nothing to watch that I want to see” because the answer is everything they want to see will be available to them. Now that’s going to upset today’s economic models.
NEEL: And when does that happen? When do you envision this?
DRESSLER: Well, it’s an evolution. It’s happening with DVRs, it’s happening with video on demand today. It’s slow, it hasn’t totally disrupted any of the models yet and it’s not like anybody’s going to turn a switch and what I just painted is going to happen. It will evolve over time and as the networks or the content providers figure out how to deal with the transition of the revenue streams, they’ll figure that out. The model that I look to, I think, as sort of interesting is look what’s happened in Hollywood, and I’ve dealt with the people in Hollywood for 20 years now, and they always resist change because they have had this model. If you think back to their history, the movies were produced by the studios and they were played in their own movie theaters, and then the government said, well, you can’t own the movie theaters. So they then had to deal with somebody else who owned the movie theaters, and then along came television and they said, we can’t play movies on television, it’ll ruin the business of the movie theaters. But they found out, guess what? They could be compatible and they could gain another revenue stream. And then, my God, what happened when HBO came along? It was going to take movies off of broadcast television and it was totally going to destroy the movie theaters. And then I remember when Blockbuster came along and we were trying to get movies on cable TV and they said, we can’t give you those movies on cable TV because look at the money that we’re making from movie rentals. And then along came the DVDs and the said we can’t have DVDs because it’ll destroy the Blockbuster business. Well, guess what, it evolved over time, now they don’t care about the Blockbuster business. And we say give us the movies for video on demand and they say we can’t do that; it’ll destroy the DVD business. Well, the same thing is going to happen here. It will evolve and as the money is figured out, how the chain of that works, and the food chain is all determined, then the content will evolve and it will be played in a way that works for the customers because at the end of the day, the old argument about is content king or is the distribution king, I think we all know the customer is king and we now have both technology and content that the customer can manipulate to his own liking and that’s nirvana for the customer and so nobody has to be a programmer other than yourself.
NEEL: So how do you envision the marriage of content with the delivery platforms? If there is no such thing as the development of linear networks how does that effect how you do your job and what is a consumer going to get at the end of the day? How are they going to make that work? How do you know what you’re going to want to watch?
DRESSLER: Well, number one, that’s why I say there still will be linear networks, but if you think about the money that is spent on creating programming to fill 24 hour a day, 7 day a week networks, and the cost to deliver that, if that money all went into marketing the two or three great shows that you had and worked with the cable operators to do that and there was a revenue stream, a license fee, that came along with advertising for that product and eyeballs went to that content because you marketed it… Why is it that people go to the movie theater on Friday? How do they know which movie to go see? Nobody has ever seen the movie before. How do they know they want to go see Star Wars versus something else? It’s marketing. So we’re just going to have to be better marketers of our content.
NEEL: How has the transition from analog to digital gone in your perspective, from your view? Obviously we’re not at a fully digital place yet. When do you see that happening and what’s your opinion on how it’s gone so far?
DRESSLER: I think that the transition first of all is a technological transition that is irrelevant to the customer. The customer is interested in getting the content that they want. The fact that the picture’s are better on digital, it allows them to manipulate the pictures better is important to some people and as a result more and more people are subscribing to the digital service. We still have lots and lots of people out there who don’t want a set top box, or have second or third or fourth TV sets in their house that don’t have a box and that need an analog feed in order to have all of their needs met in the household. So I think the transition is going fine and when it makes the most sense it will flip over and I think that they customers won’t even know that there’s a difference. The big question is the broadcasters and how they actually make it work for them. I think as digital gets to the point where it is so deeply penetrated on cable systems that the last handful of people in the marketplace who are either not a satellite customer or not a telephone customer or not a cable customer are given whether it’s by the government or through some kind of subsidy a digital set top box then it will flip over one day, everybody will be digital and it will be irrelevant from then on.
NEEL: Of all the innovations that the cable industry has incubated, launched and gotten off the ground in your tenure in this business, which do you think has had the biggest impact on the industry?
DRESSLER: I’m not sure I follow your question.
NEEL: Was it putting HBO up on the satellite, was it getting high-speed data, was it… a lot of the things that the cable industry has launched over the years, of all the things you’ve seen how the industry has morphed and grown and introduced, is there something that stands out as a defining moment in the industry’s success, something that really turned everything else on its heel?
DRESSLER: Well, to me there were two defining moments during the tenure of my career, I guess you could say. One is the launch of HBO. It not only got me into the business, I think it’s what got cable into the major markets and made it a household product that everybody wanted to have. HBO in the early days was cable television. I remember in Denver they had an MDS service here, which was a single channel over the air service of HBO and that’s all you could get was HBO, and you had this little cone and it picked it up, and then we launched cable television on Mile Hi Cable in 1983 and we had 50 channels of cable. We knocked on people’s doors and said, “We have cable TV,” and people said, “We already have cable TV,” and we said, “No you don’t.” They said, “We have HBO.” To them that was cable TV. So that to me was probably the single most important thing that actually launched the cable business as we know it today. The second thing I would say is the launch of high-speed data on our cable systems. It demonstrate what we had been thinking and saying for a long time which was that we had a pipe that was superior to anything else in the industry and we could start doing other things then just being traditional cable TV, just traditional television, and turn this enormous investment into a goldmine, if you will, for the companies and the investors who supported it. High-speed data then led to telephone and who knows what the next thing is, but the pipe that we have is so much more than television and we’ve only begun to tap, I think, its long-term potential.
NEEL: Of the things that the industry is working on today, the things that the industry is incubating and launching and creating, do you see that same kind of seminal pivot point in the industry looking forward? There’s obviously going to be one at some point in time. Is it in its infancy or is it being incubated now or is there something else out there?
DRESSLER: What’s being worked on, and I don’t know, we’ve talked about this and experimented with it for a long time, we now have the technology in place to see whether we can make interactive TV work. The question still remains, I think, whether the consumer wants to interact with the television set or whether they just want to be entertained, if you will, by the television set. That’s still a big unanswered question. We don’t know that until you put the technology in the hands of the consumer and see how they respond to it. The first step in that direction, and I think it is inevitable, is the on demand world, which requires the customer to actually actively involve to push buttons in order to get the programming rather than just sit back and have somebody program it for them, but once they pick something they can still sit back and enjoy traditional television at that point. So that won’t prove the case, but right now I think we’re experimenting with games, with answering trivia, with playing along with the reality shows, and we need to find out whether or not that’s something that is pivotal. We’ve seen in Europe, particularly with BSKYB that people like to gamble and that they do interact with the television a little bit but that the thing that drives the interactivity and the success of that is gambling. So, is there anything else other than gambling, which is probably not going to happen for a long time, if ever, in this country where you can actually gamble over the television. Are there other interactive applications that capture the public’s imagination? I personally have my doubts about that but it’s in the incubation stages and I think that we’ll find out in the next few years.
NEEL: Did the full service network give you guys a glimpse of what that should be? In that experiment that a lot of people still think was a failed experiment, but I don’t necessarily believe that.
DRESSLER: I think to the extent that people think it was a failed experiment it was because it was overly hyped. It was launched in a way that people said this isn’t a test, this is the future and we’re rolling the full service network out everywhere. The fact of the matter is that what we were doing in Orlando with the full service network is exactly what we’re doing, and every other cable company is doing today with the two-way, with on demand content, with high-speed data, with telephone – it is a full service network, which is what this cable was hopefully going to do for it and we’ve proven that to be the case. So it was hardly a failed experiment because everything that we’re doing today is really built off of the back of what we learned there, and what we learned was that people loved the on demand, the ability to choose the programming that they wanted. Some people like to order a pizza; that’s sort of the question, is that an application that’s going to have legs that people really care about? We still don’t know the answer to that, but it’s off of what happened in the full service network and now what’s happening in the on demand world now that the technology is catching up in all systems across America that we’re going to see the tipping point when it will be unacceptable to people to not be able to have their favorite shows available on demand. So what else came out of that is really sort of ho-hum and common today in all of our cable systems, so it was an enormous success if you want to look at it from the fact that it was necessary to do that in order to get to where we are today. It was a failure if you thought everything that we did then was going to work.
NEEL: I’d kind of like to go back to your early career for just a couple of seconds.
DRESSLER: I would too!
NEEL: When ATC moved back to the East Coast, to Stamford, a lot of people left, and a lot of people that you had worked with for a long time and you called Denver home, and yet you went back. What made you want to go back there? Denver was the cable capital; it wasn’t like it probably would have been very difficult to find a job with somebody else.
DRESSLER: Well, I was lucky. I had found a home with this company. I’m still with the company 30 years later because I really like the people that I work with. I like what I do and I could probably do that with another company for sure, but I really like the people that I work with and the change in the personnel over time has largely been consistent. I think that I’ve seen over the years that each one of the MSOs has had its own personality and I just feel comfortable. I fit in the personality of Time Warner Cable. So given the opportunity to stay with the company it wasn’t a hard decision. There was a little interesting story, not whether or not I was going to stay with the company, but whether or not I would move back to the East Coast having left there after college and moved to Denver. Joe Collins, who was the new Chairman and CEO, came to see me and said that we were moving the company’s headquarters from Denver to Stamford, Connecticut and that he would like me to move back there. I suggested that we were still leaving some people here and had an office here in Denver and that virtually all of the programmers that I dealt with come to Denver now and would probably be willing to continue to come to Denver. In fact, the way I put it to him was everybody that wants to see me is willing to come see me, so why do I have to move. He just looked at me deadpan, as only Joe Collins could, and said, “Not everybody.” And I said, “So when are we moving?”
NEEL: That’s great. What would you consider the most rewarding moment in your career?
DRESSLER: I think the most rewarding moment was the night we won the cable franchise in Denver. It was the culmination of a multi-year effort, of a partnership that I had pulled together with my mentor, if you will, Bill Daniels and my boss, Monty Rifkin, and some other people who were important to me in my career at that time, to work together and be successful, to win the franchise in the town that you live in, in the cable capital, and a hard-fought victory was clearly a highlight. There was a news photographer who captured a photo at the instant that the vote was announced in the city council meeting with myself and Bill Daniels and Trygve Myhren at that time which I still have on the wall in my office because it just symbolizes that great moment in my career.
NEEL: That’s neat. How do you view your personal and professional legacy to the industry? How would you characterize that in a sound byte?
DRESSLER: Well, I guess it’s a bit humbling to think you’ve left a legacy. I’ve been in the business for a long time, and I think to the extent that after you’re gone a year or two that anybody even remembers who you are, that the impact would be that I was part of a group of passionate people who built something that the American people now don’t feel like they can do without. We built systems amplifier by amplifier and drop by drop, and we built networks one at a time, and we developed them and we launched them and we built friendships along the way and we built an industry, privately and successfully, and nobody helped us, not really, and to look back and say when we started there wasn’t much there and we built something that is now just expected to be in everybody’s home is sort of rewarding. Nobody does anything by themselves, so my legacy is to be a part of the group of pioneers that helped create that.
NEEL: Thank you so much.
DRESSLER: Thank you, KC.
NEEL: I appreciate your time. Have a great day. Thank you!
ADDENDUM
NEEL: What would you tell, say a high school senior is coming to you or a kid who has just gotten out of college and wants to get into the cable business, what kind of advice would you give them? What would you say to them?
DRESSLER: Well, I guess I would give them the same advice, if you will, that I got when I tried to get into the broadcasting business at that time because times are different. You need to get your foot in the door, you’ve got to be passionate about wanting to be in the business, and you have to not be afraid to start out at the bottom and demonstrate to people that you’re willing to work and be on the team and learn. My concern is you’ve got too many kids who come out of college today with their 4.2 grade point averages and they think they ought to be the executive vice-president of something right away and they’re not going to take some demeaning job, and anything below executive vice-president to them is a demeaning job, and that’s a problem. This field – cable and broadcasting and whatever – just is a magnet, the entertainment industry is a magnet for people, it has always been that way. People just line up to get into this business and if you’re not willing to take the lower jobs and be willing to demonstrate your enthusiasm for learning along the way, you’re probably entering the wrong job, entering the wrong business. It’s different when you get in on the ground floor of something that’s not built. Kids that got out of school when I was starting in the cable industry, you could jump in and be a senior executive pretty quickly because you weren’t displacing anybody and they just kept hiring and hiring and they didn’t have enough people so you learned on the job. But once you get to a mature business, which is what cable has become, just like broadcasting, then you’ve got people who have been in their jobs for awhile and you have a natural progression and you just have to accept that. Go to maybe the next thing, which is the internet, and maybe that’s where you want to go because that will also develop. There’ll be video product in that platform. There’ll probably be a whole new set of experiences that evolve on that platform, but if you want to get into cable or the broadcast business to me you’ve got to be willing to take that low level job and then just be passionate about it and prove to people that you can do the job and that you will do the job.
