Interview Date: June 14, 2014
Interviewer: Brian Lamb
Abstract
John Evans describes how he got into radio and communications, becoming a news director for a college campus broadcasting network. After being drafted into the Navy, he became a television officer and became acquainted with a closed-circuit system, explaining how it was like a cable TV system aboard ship. Next, he discusses his first job in cable with ATC in 1972 as a manager first, and then regional manager. He reveals that the toughest part of starting out and running a cable system was finding good technicians and engineers. He also explains that weather was a major problem, using the example of lightning sometimes striking and blowing out amplifiers. Next, he talks about becoming a regional manager, overseeing systems in the Midwest. Evans recalls the first offering of original programming prior to the satellite era. He moved on to working for the federal government at the Health, Education and Welfare department, specializing in the areas of technology, community, and education. He was then recruited to build out a cable system in Arlington, Virginia, raising funds to do marketing and engineering studies, but acknowledges the challenges of financing, particularly in a market like Arlington, where there were multi-unit dwellings that required complex building techniques. He comments on Monty Rifkin, and his style of corporate culture, and names Doug Dittrick as a mentor, and how he learned from him about FCC regulating as well as capital investment. He goes on to describe other early systems developed in Virginia and Maryland in the 1970s, and applying for an FCC waiver that came to be known as the “ARTEC Waiver.” He explains the expense of building a satellite dish, a partnership with HBO, and why partnerships are so important in general. In that vein he states that the business itself is really a partnership between the consumer, the community served, the company, the employees and the capital markets. Evans describes meeting with Gus Hauser, and eventually becoming president of Hauser Communications, getting on the board of NCTA, and developing strategies for dealing with the FCC and the local community. He details a failed operation in Montgomery County, and the subsequent very expensive teardown of the plant and the rebuild. Next, he discusses the acquisition of Storer and Westinghouse systems in Minnesota. He goes on to clarify his belief that the most important job that a CEO or COO does, is to determine the culture of a company, noting that the culture is either going to be fear-based, or open and transparent, instilling trust in its employees. He notes the demise of a company that failed to do the latter. He regrets that he did not buy more systems, but also reflects on how he and Gus Hauser at some point, decided to sell, considering the major upgrade needed. He explores why he created the Evans Foundation to focus on AIDS vaccine research, higher education, social justice and global health. He reports on his interest in the digital preservation of intellectual property. He names technology and broadband as the most important impacts on society. He concludes the interview by describing his support for programs that advance the human rights of LGBT people around the world. He also explains what he believes are the cornerstones of human freedoms.
Interview Transcript
BRIAN LAMB: John Evans, where did you grow up, what year were you born?
JOHN EVANS: Born June 3, 1944, in Detroit, Michigan. I grew up in Grosse Pointe. My father was the CEO of Evans Products Company, which was a Fortune 500 company. My grandfather died at a very early age in 1945. He was 66 and my father, being the oldest twin by twenty minutes, took over Evans Products Company. Why that’s important is because in 1926, Grandfather went around the world and set the world’s record. He went around the world in twenty-eight days. There’s a book out by Linton Wells, who I think you remember from being a White House correspondent. Linton and my grandfather set the world’s record a year before Lindbergh [flew across the Atlantic in 1927].
LAMB: What kind of plane?
EVANS: Multiple planes. And he wanted to demonstrate to the world and more importantly, to the industry in Detroit, that flight was here to stay. So he invested in and became a controlling shareholder of Detroit Aircraft Company. The year would have been 1925, maybe. Along the way he became the majority shareholder [87%] of Lockheed and ran it, among other of his companies. During the Depression, Lockheed and Detroit Aircraft went into receivership. A group of investors bought Lockheed in 1932, I think it was, for about $40,000, and of course for Lockheed, the rest, as they say, is history. But more importantly is it taught my father and thus me about entrepreneurship and risk taking.
LAMB: Mother?
EVANS: Mother grew up in Boston. Her father moved to Detroit sometime in the Twenties. She came out at that point in Grosse Pointe society. They had coming-out parties when you became of age, so she came out, met my father, they were married in 1933.
LAMB: Brothers and sisters?
EVANS: I have an older brother and an older sister. My older brother is an entrepreneur as well, also now retired. My sister also was a trust officer and is also retired.
LAMB: When do you first remember being interested in anything communications?
EVANS: As a weatherman.
LAMB: At what age?
EVANS: Thirteen.
LAMB: What circumstances?
EVANS: I was fascinated by the weather and so I would always watch the weather shows or listen to the radio weather shows, ultimately of course on television. Then as a junior high school, I got a National Science Foundation grant to study under Dr. Vincent Schaefer, one of the world’s great meteorologists who invented, along with Dr. Langmuir of GE, cloud seeding and the whole concept of cloud seeding.
So I went to the University of Michigan, went into engineering, I was going to be a meteorologist, but honestly the First Law of Thermodynamics sunk me. So I could tell this calculus was not going to be one of my strong suits nor was biology, so I decided to go into the College of LS&A.
I joined WCBN as their weatherman. And that’s really how I got into radio and communications. I switched my major, wound up being the news director for WCBN, which stood for the “Campus Broadcasting Network.” Then, when President Kennedy was shot, I was sent to Washington to represent our radio station and Robert Abernathy and Eileen Shanahan, with the New York Times—Bob Abernathy was with NBC—took me under their wing and got me White House press credentials and I reported back to the campus the events of President Kennedy’s assassination. Fascinating time. As a result of that, I became chairman of the board of the radio station, rebuilt the radio station and then was drafted. It was during Vietnam.
So I was drafted. Having come out of Michigan with a communications degree—then they called it a “speech” degree—I went in the Navy and was sent to Fort Benjamin Harrison, which was the Navy PR school, and then was shipped off to the USS America [CVA 66]. I arrived as a television officer and assistant public affairs officer. I arrived several weeks before the Middle East war of 1967. And that summer, of course, the Israelis attacked Egypt and press was sent to the America. Bob Goralski, who I think you remember, Bill Gill, who was then the White House correspondent for ABC, were among them and I was standing on the bridge with the captain and I hear this “crackle, crackle, crackle” over the speaker on the bridge. I hear “This is the USS Liberty, this is the USS Liberty, we are under attack.” The Israelis had bombed, strafed and torpedoed our communications ship. Thirty-Four of our sailors were killed [75 wounded, total ship’s crew 230]. Our ship, of course, went immediately to general quarters. The ordnance was coming out of the magazines as fast as they could get it on deck, planes were taking off and this was in the early afternoon—somewhere around 2PM [June 8th, 1967], as I remember. [See: https://en.wikipedia.org/wiki/USS_America_(CV-66)#Attack_on_USS_Liberty and https://en.wikipedia.org/wiki/USS_Liberty_incident ]
Now we’re at sea. That night, Bill Gill had a standup piece from the USS America broadcast on ABC. And Secretary McNamara was furious, wanted to know how Bill Gill was able to do that. Of course, I was responsible; [when America went to “general quarters”,] I was instructed to round up everybody [in the press corps] and put them in the wardroom. I couldn’t find Bill. I looked all over the ship. I couldn’t find him. Meanwhile, it was chaos going on. You’ve got almost 4,000 people that are in general quarters and doing their job. So we did an investigation after this was all done. We never knew. How did he do this?
It was not until five years later, when I ran into Bill—I was out of the Navy—and I said, “Bill, okay, you’ve got to tell me. How did you do this?”
He said, “Well, remember the big black cases we brought on? One of them was loaded with Scotch. We handed out the Scotch because your pilots loved Scotch. We handled out bottles of Scotch. And when all hell was breaking loose, as they’re coming out of the ready room, I nabbed this one and this one and this one and I was able to piece it all together. We went down to our stateroom, took some lights out of the head, and created a little studio. I did my piece, we shot the film just as everyone was going out to man their jets. But then I had to get it off the ship. There were courier onboard deliveries—those are planes that deliver mail and take personnel off –. Some of those personnel were men to go ashore.” So he took one of those sailors, gave him 100 bucks and he said, “Look, this is really important for my family. Would you mind giving this to so-and-so in Athens?” So the sailor did that and presumably had a good time with the $100. And it flew to Rome and it appeared on ABC that night.”
LAMB: What year?
EVANS: 1967.
LAMB: Where were satellites?
EVANS: The satellite uplink was only in Rome. That’s why it had to go from Athens to Rome. They could uplink it to New York and that’s how it appeared on ABC News that night.
LAMB: What were your interests at the time about the new communications? What did you know about new communications?
EVANS: Since I was television officer, I got to know a closed-circuit system. It’s kind of like a cable TV system aboard ship. Then I was detailed to the Sealab Project out in Long Beach, California. The Sealab Project is where we sent aquanauts down to 300 feet. As a television officer, we had set up underwater cameras to observe what was going on. Unfortunately one of our aquanauts was killed: Berry Cannon. They ended the project.
But at that time the CNO [Chief of Naval Operations] was Admiral Thomas Moore. And Admiral Moore directed that there be a study on television. I apparently developed a reputation and so I was ordered to the Pentagon with a captain—Rudy Longo—and for six months, we did a study of how television was being used.
I wrote the study in my Georgetown apartment because they [the Navy] didn’t have quarters for me and as a result of that [the report], the Vice-Chief of Naval Operations and the CNO read the report and the VCNO made it a [special] project [4-69]. He had a number of recommendations. So I was detailed to the staff of the VCNO to run the project. Only the Navy was crazy enough to take a 26 year-old, give him 4,000 people, $100 million worth of assets and say, “Fix it.” So I got into it—and I got into shipbuilding and I got into how cable and amplifiers and cameras and all that sort of stuff. I got quite an education.
So it was natural for me then to spend some time in radio—because I’d come out of radio. My family had bought a radio station down in Charlottesville [VA]. I became president of that, but it was clear to me that this was not a sunrise industry. So the year would be 1971. It became clear that radio was a great industry but it was not going to be a sunrise industry.
LAMB: Back to the study you did for the Navy and the involvement, what was the outcome of the study?
EVANS: The outcome was we [OpNav] centralized management because what was happening is every command was buying their own stuff and they wouldn’t be talking to each other. So it was going to be centralized under OpNav, which was the CNO’s office, to write the specifications. A certain amount of frustration on my part. Just a quick story. I was dealing with a GS-16 and for all intents and purposes, I was speaking on behalf of the Vice-Chief of Naval Operations.
LAMB: GS-16 being a government employee.
EVANS: Being a government employee.
LAMB: Fairly high-ranking.
EVANS: Very high-ranking. So I went into his office and I said, “This is what we want to do and I’m speaking on behalf of the Vice-Chief.” He said, “Lieutenant.” [I’d made full lieutenant by that time.] He said, “Lieutenant, I’ve seen your type before. They come and they go. They come and they go. And long after you’re gone, I’m still going to be here.” And you know what? He was absolutely right.
LAMB: What impact did that have? Did he get in the way of it then?
EVANS: He got in the way. I mean, he got in the way of it. So I wasn’t able to accomplish as much as I had hoped that I would. It’s like docking the Queen Mary, to use a metaphor. It worked very, very slowly. It would trickle down and get stuff done. But what it did teach me—now going into my cable career—it taught me project management. It taught me how you take an idea and then lay that idea out in steps to bring it into reality.
LAMB: Your first job in cable. What year?
EVANS: It would have been 1972 with American Television and Communications, ATC.
LAMB: How’d that happen?
EVANS: It was clear to me that I needed to move from radio to cable. So a friend of mine introduced me to Amos Hostetter. I went up and talked to Amos. He did not have a job for me. They weren’t hiring but he sent me out to Monty Rifkin [CEO] at ATC. So I interviewed with Monty and Doug Dittrick. And then a guy named Jim Stafford, who was their operating guy, called me and he said, “We want to send you to Charleston.” I said, “Oh, wow, that’s really great. You know, I’m a former Naval officer, Spanish moss hanging down from the trees. It’s a great port.” There’s a pause. He said, “No, no. I’m talking about Charleston, West Virginia.”
So that was my first job. I became manager and then regional manager.
LAMB: Was there a cable system already in existence when you got there?
EVANS: There was. It was called Capitol Cablevision. It was sold to ATC by local investors. One of the great things about our industry is that we had lots of entrepreneurs all over the country that were building these new systems and then we went through, and in some ways are still going through, a consolidation. So local investors built the system, sold it to ATC. ATC then put their own management in. I was fortunate to be selected to do that.
LAMB: How long did ATC own it by the time you got there?
EVANS: Gosh, I want to say a year.
LAMB: How big was the system in subscribers and how many…?
EVANS: It was about 12,000 subscribers so it was a pretty big system. Charleston you know is on the Kanawha River and so it’s surrounded by mountains. So the headend was up on the mountain and the cable was run down. It was a 12-channel system. That was a really big deal then because most of the systems back then were 6-channel. But this was a 12 channel system.
LAMB: Any original programming?
EVANS: No. Well, there was a camera on a goldfish bowl with the weather in the background. But no, there wasn’t.
LAMB: So what kind of channels did you bring in? Or was it strictly local?
EVANS: No, it was from Huntington, West Virginia. I think we had an Ohio channel [all distant signals]. Remember this was before satellite, before TBS, which was 1976 roughly. No HBO. So it was strictly off-air.
LAMB: Can you remember the kind of money the system generated in your first year?
EVANS: Its rates were like $4.95 a month and I have to do the math, but it was probably under $1 million.
LAMB: What was your toughest part of starting out, running a cable system?
EVANS: People. Finding good technicians, finding good engineers. I carried a set of gaffs—those are what you strap on your legs to climb a pole. And many times I would go out and have to do a reconnect or look at something that was on the pole. I burned a pole. That’s where your gaffs don’t hold and you go sliding down the pole and that’s not a very pleasant experience. I decided maybe I ought to have other people do that, but people and technology, weather—and I found the same point when we started to rebuild Montgomery County, which we’ll get to in a minute—weather is a very big issue. You get a lightning strike and it blows some amplifiers and you’ve got to stock them and then go change them out.
LAMB: Who were you answering to in Denver?
EVANS: A guy named Jim Stafford. That was early on and then they did some consolidation and I wound up answering to Joe Collins, who later went on to do great things within Time Warner.
LAMB: You say you went from running the system to being a regional manager. When you were a regional manager what year was that and what were the systems under your control?
EVANS: You may remember that Time, Inc. was in the cable business. The year was 1974 when they sold all their systems to ATC. Those systems at that time—their larger systems were in the Midwest. So it was Battle Creek, Michigan, Oscoda, Michigan, Terre Haute and Marion, Indiana. That was my region. I wound up doing a lot of traveling. In addition to—because we kept our costs low with overhead—I continued to run the Charleston system. But then I had the managers reporting to me for those systems. I had my first union fight in Terre Haute and the IBEW came in and they wanted to unionize and I sat with the employees and walked them through what the consequences were.
LAMB: How was the vote?
EVANS: They voted for me. They did not vote for the union. Then I went up to Oscoda which was already IBEW and I convinced them to de-certify. The vote was very lopsided and they did de-certify them.
LAMB: What was the capacity then of the system and the amplifiers?
EVANS: All systems were 12-channels.
LAMB: What was the megahertz? Remember?
EVANS: I want to say 300. I’m not sure of that…
LAMB: What was the penetration in most of your communities?
EVANS: Over 50%.
LAMB: When was the first time in your life as a cable operator that you had original programming to offer?
EVANS: It was probably with ATC and probably in Marion and Terre Haute because Time, Inc. was starting to go down that path. The year would have been 1975 maybe.
LAMB: Was it stand-alone or satellite?
EVANS: It was stand-alone. They had a camera and little studio. We didn’t start putting dishes in until after ’76. I left in ’76.
LAMB: Why?
EVANS: You may remember the Office of Telecommunications Policy was vacant and the Ford administration was looking for a new director. Some friends of mine in Washington said that given my Navy experience and my cable experience and my broadcasting experience, that this might be a good job for me. So I made a run at it and I was one of the four final candidates. The White House brought me to Washington, parked me over at HEW—what it is now HHS but then HEW—and I was in the technology, communications, education area. Along the way, I got a call from Jerry Greene, who was one of the deans of our industry, and said that he would like me to consider running Arlington, Virginia [cable system], and building it. [Note: the company was Arlington TeleCommunications Co. “ARTEC”]
LAMB: Who owned it then?
EVANS: It was a group of locals. There was a law firm headed up by Fred Ford and Lee Lovett here in Washington. Fred Ford, you may remember, was the former chairman of the FCC. He had made a business out of getting [cable] franchises. He put locals together, who paid them the money, and he got them the franchise. So it was with Arlington. There were a bunch, I think there were fifty, fifty-two shareholders in Arlington that had put money in and they got the franchise. You have to keep me honest here; you were at the moment before me—you were the Washington bureau chief for Cablevision magazine. I believe that was the first franchise that was issued. Gaithersburg and Reston were small cities way outside of Washington, were already built. But then Arlington was the next. So they interviewed me. I got the job and what they didn’t tell me was, “You’ve got to go raise the money, too.”
So I called on some family friends that introduced me to Thomson McKinnon [Then a US security and investment banking broker] here in Washington. We raised $265,000 to do marketing, engineering studies. Again, I’m very process-oriented so I laid out a whole spreadsheet and timeline of what I thought needed to be done. I’d already run the numbers. Remember that was just the first time that the Bowmar Brain, the little pocket calculator (it was about that big), had been introduced. So it was all done by hand. We didn’t have VisiCalc or Lotus 1-2-3 or Excel. So I did it all by hand.
LAMB: Can you remember the date that you started working for them?
EVANS: The date would have been the fall—I think around October 1, 1976. I made a decision at that point that I would not pursue the government OTP job and as it turned out, wisely, because President Ford lost to Jimmy Carter. But I worked with them; after my day job at HEW, I would go over and work with them free of charge. I wasn’t being paid to do the consulting work and then I joined them fulltime.
LAMB: In 1976, you were how old?
EVANS: I would have been thirty-two.
LAMB: You mentioned a bunch of names that you got to know in the cable business. First, Jerry Greene that you mentioned. What was he doing that he called you?
EVANS: Jerry had come out of TelePrompTer and was doing, I think he was doing consulting work because he had been hired as a consultant to the Arlington folks, to help them. Jerry had heard about me through Cable Data because I was one of the first systems to convert to computer.
LAMB: Which system?
EVANS: It was the Cable Data system. They’re in Sacramento—
LAMB: I mean, what system…?
EVANS: That would have been Charleston. So Charleston converted over and we had put terminals in and we’d send the tapes at the end of the month to Sacramento. They’d print the bills out. But the conversion went really well. Unbeknownst to me, word got back to Jerry that I knew something about running a cable TV system and that I was technically inclined. And that’s apparently how I got the call.
LAMB: If my memory serves me right, you went on to win the Jerry Greene Award.
EVANS: I did.
LAMB: Why was there an award named after him?
EVANS: Jerry died in a plane crash. You may remember the year. I don’t. But because of his service to—and he was young—he was under forty. Because of his service to the industry, the industry wanted to recognize his contributions. He was with TelePrompTer, I believe, and had done some really fabulous work so they named an award after him. I was honored to receive that award in 1984. Jim Heyworth, who was president of HBO, had received it the year before.
LAMB: You mentioned Monty Rifkin. You mentioned Doug Dittrick. You mentioned Joe Collins. Give just a quick thumbnail sketch of each of those people from your perspective at the young age of late twenties, early thirties.
EVANS: First of all, I have the highest regard for all of them. All of them took risks, took financial risks, personal risks. They all had a vision. The creation of corporate culture is really important and as often happens in any entrepreneurial environment, things can get tense and sometimes the culture can be negative as opposed to positive. But all of that said, Monty had a vision and he had connections and he was financially oriented and knew how to lay out a plan and execute the plan…
LAMB: What did he want from you?
EVANS: What he wanted from me was to be a successful regional manager and feed the cash flow that was coming out of the region so that he could continue to invest that both in acquisitions as well as investing in the system.
LAMB: How many subscribers when you were regional, do you remember?
EVANS: I don’t.
LAMB: And do you remember what percentage of cash flow that he wanted from you, what was the margin?
EVANS: All the cash, almost on a daily basis, all the cash was taken out of our repository and sent to Denver, which was just good cash management, by the way. So John McDonough, who was then the CFO, went on to be the CFO for Blount Industries down in Alabama. John had set up a wonderful cash management system so he could aggregate the cash from all over the country, invest that in overnight repos or other instruments so they could be earning on that. And then they would deploy that cash, both for capital investment as well as for acquisitions.
LAMB: Doug Dittrick.
EVANS: Great operator. Doug left ATC to go on to Tribune. Wonderful mentor to me.
LAMB: How?
EVANS: Remember I’m in Charleston, West Virginia. So Doug at that point was an industry leader and I was just beginning to understand, think about all the regulations at the FCC, and what Capitol Hill was all about. I was just focused on operating and doing the best job I could for the subscribers, so there was this whole other netherland out there called regulation and politics. So Doug taught me that. He taught me how to invest capital when you’re making capital decisions that will give you a return on that capital. Very important lesson.
Joe Collins: Probably one of the brightest guys I’ve met in our industry. Encyclopedic memory, something I wish I had. Encyclopedic memory. A good leader, good with people, and then of course went on to run HBO and do lots of other things in the industry. Harvard MBA and I’ll always remember a trip that we did throughout the Midwest. We were going to our systems, Marion and Terre Haute. Very probative, asked really insightful questions. So that was a learning experience for me as well. Hopefully I taught him some things too, but I’d call him a digger. He would continue to dig to get to the bottom and dig deep into it, so he would understand.
LAMB: Up to this point in your career, what was the biggest problem you ever had?
EVANS: The biggest problem with respect to Arlington—let’s go to Arlington because the biggest problem was financing. Now we were a stand-alone company. I had convinced General Electric to invest in us and they looked at 200 deals and they took one deal here—that was us. Later on, as I got to know Pedro Castillo, who ran GE Venture Capital, known as GEVENCO, I asked Pedro, “OK, Pedro, tell me, how do you choose? I mean, you looked at 200 deals. Why me?” He said, “John, first of all, the business plan has got to make sense. We have to understand the business, numbers have got to tie and we have to think that there’s a good possibility of meeting your projections.” But he said, “At the end of the day, it’s here.” [Pointing to his gut]
I said, “What do you mean, it’s here?” He said, “It’s here. It’s how I feel about the people I’m dealing with.” And it wasn’t until later several years later that I understood what it was that he was teaching me. So going back to your question, the toughest part for Arlington was raising the money to do Arlington.
LAMB: How much did you need?
EVANS: I needed $6.7 million.
LAMB: What was the history at that point of urban cable television?
EVANS: Awful. I say “awful” only because in the Arlington market, 50% were multi-dwelling units apartments. The industry was just beginning to understand how to wire these. How do you wire them? Well, there are cement floors so you have to develop core drilling techniques so you had these great drills, big drills, hammer drills, that drill down so you can go vertically and then you’ve got to figure out how to go down the hallways. We had to devise molding that would go down the hallway and we would drill into each apartment, hopefully into a closet. And yes, we made some mistakes sometimes and it wasn’t always pretty. But we had to develop those techniques so that’s one reason that Chemical Bank and a number of New York banks would not invest. A guy named Clark Madigan, who was then the loan officer for American Security Bank [a local Washington, DC Bank], said, “It’s in our backyard.” I gave him a crash course in cable TV. He had confidence in GE and GE was there. So he committed the money, loaned us the money.
LAMB: All the money?
EVANS: All the money. All the money we thought we needed at that time—turns out I needed more money. I’ll get to that in a minute. You may remember in 1980 we started to see inflation. We started to see prime interest start to rise. I’ll never forget the day I was with Pedro, we were doing the final negotiations for the American Security Bank loan. So to Clark Madigan, this loan officer, we said, “We want to cap the interest at 12% so our interest could never go above 12%.” We were paying like prime plus 3½. So he came back and he said, “You know, we don’t want a cap.” Pedro said, “If it goes above twelve, then we are ‘a borrower at prime.’” He took me aside and said, “The prime rate has never gone above 12%.” We gave him the point, but I felt like we got something, right?
Prime went over 21%. So I could meet the interest payment but I couldn’t meet the principal payment because I was chewing up the principal [cash] I was going to pay on the principal. So we had to extend that out. Then we found that we had more homes than we thought we had so I needed more money to build out those homes.
LAMB: How big was Arlington?
EVANS: Arlington was 72,000 homes.
LAMB: You said you started with them in 1976. When was the first cable subscriber hooked up in Arlington, Virginia?
EVANS: That would have been in July of 1978. Commissioner Jim Quello, who was down at the FCC, came to the inauguration of what was then known as MetroCable [FCC Chairman Joe Forgarty was the featured speaker] and we launched it. I might back up a minute because this is an important part. There was another really important issue that I needed to get resolved and that was: under the FCC regulations, we could not carry the Baltimore [TV] signals.
LAMB: Forty miles from Washington.
EVANS: Forty miles from Washington and the master antenna systems on all these apartment buildings were picking up and they were carrying on their master antenna systems. I’m selling against a master antenna system that gets all the Baltimore signals; and so I filed for a FCC waiver, now known as the ARTEC waiver and it started out to be a close vote but then FCC Chairman [Richard] Wiley and [Commissioner] Abbott Washburn concurred; it was seven commissioners at the time, so it was a 6-7 vote. Finally doing away with the distant signal rule.
LAMB: You talked about being in Charleston, West Virginia, when it was a twelve-channel system and your biggest problem was people. You’re now in Arlington, Virginia. How many channels was the system then?
EVANS: I committed to 35 channels with Scientific Atlanta and we didn’t have 35 channels of content.
LAMB: What did you have though that was different from West Virginia?
EVANS: First of all I had all Baltimore signals. At this point, I had all the Baltimore signals, I had the Washington signals, had more PBS signals, I had HBO because we put a satellite dish in. I had HBO, I had TBS, CBN and C-SPAN.
LAMB: How big a deal was it to build a satellite dish back then? How much was it a drag on your balance sheet?
EVANS: That’s an insightful question because it was expensive. So my deal with HBO was that they paid for the earth station and they financed my headend, which they did. They financed at 8%. This brings up another point that I think is important because Arlington was a special system in that it was the first in Washington under the shadow of the Capitol dome. We had Dick Wiley, Charlotte Reid—these were all [FCC] commissioners—Dick Wiley was chairman of the FCC, Charlotte Reid, Bob Lee, Bob Kastenmeier, who was then chairman of the copyright committee; all these folks lived in Arlington. They didn’t really experience cable. They didn’t know what cable was all about. There was a responsibility on the part of our company and me personally because I became the spokesperson for our company to demonstrate what cable was all about. Tom Wheeler was then the president of NCTA and would bring people over. We would give them tours. Bob Johnson, who was then at NCTA—who later went on to create Black Entertainment Television—was one of the first that would start bringing people over. He was involved with the government relations folks.
So we really had a dual purpose. First to take care of our customers but secondly, on behalf of the industry, to really be a showcase for the industry. That’s how I pitched it to our partners because throughout my life, I believe in partnerships. You pick your partners carefully but I believe in partnerships. So I went to HBO, I said, “I need your help. We’re a small company. We’re financed, not overly financed but we’re financed. So if you want to have HBO in Washington,”— and it was important for them for their reasons as well—“then I need some help here.” So they agreed to finance our entire earth station and headend for 8%. It was a five-year deal. They provided some help with the earth station [engineering].
Then Westinghouse got into the satellite news business and they came to me and said, “We need Washington.” I said, “OK. It’s going to cost you an earth station.” So they built the earth station for us. Remember in 1978, this was before CNN, before the Weather Channel, before Discovery. We launched [July 18, 1979] nine months before C-SPAN, which was March 19, 1979. As new product was coming on—the Weather Channel, MTV, Cinemax and all those—we developed the partnerships because they needed to be in Washington.
Remember in 1980, when CNN was launched, the only place you could see it was in Arlington. It was fondly known as “Chicken Noddle News” back in those days. Then we went to George Mason University. We struck a deal with them where they would use their ITSF frequencies in order to get CNN and C-SPAN into the Washington, DC, area.
LAMB: How many people worked for you in the Arlington system?
EVANS: It started out as one—me. Then I got half a person for a secretary or assistant and we grew to thirty over a period of time.
LAMB: Total number that you ever had? Thirty?
EVANS: No. By the time—we probably had sixty or seventy people by the time we sold it to Hauser Communications.
LAMB: In those early days, as you’re building the system, did you run into any glitches from the money standpoint?
EVANS: No, thank goodness. I’m a numbers guy so we were doing cash flow projections out on a rolling basis. There was a time when I knew about nine months or ten months out we were going to run out of cash. So I called Pedro—
LAMB: At GE.
EVANS: At GE. I called Pedro and I said, “I’m seeing a problem. It’s both a good problem and a bad problem. The bad problem is I’m going to run out of money. The good problem is I’ve got more homes than I thought I had and I’m going to develop more cash flow than I thought I was going to develop, but I need to finance it.” So he sent his CFO down by the name of Lynn Saylor, who came down. He started on Monday morning. He might as well put a Greene eyeshade on. On a Monday morning in our conference room and he did spreadsheets about that thick [½ inch] with my help, running through every aspect of the operation, projecting it out over a five-year period. With a pencil and an eraser and a calculator. At the end we decided we needed some more money—I think it was another $2 million. And the bank agreed. We showed them the work and the bank said, “We’re in”. And we wound up selling the bank on the idea.
And then GE came to me, the year was 1982, and said they had made a decision to get out of the cable business. Now remember GE had invested in Cox. They’d sent Bob Wright down to run Cox. Of course, Bob went on to run NBC. But they made the decision they were going to get out of cable altogether.
They had their GE cable operations, they had their investment in Cox and through their venture capital arm, they had invested in us. We were separate and apart from any of the other aspects of that. But they made a decision—Reginald Jones was then CEO of GE—made the decision they were going to get out. They came to me and said, “We want to sell your company.” Which they had the right to do. And I had been elected the NCTA board in 1981 and I met Gus Hauser who was then head of Warner [Cable] and then Warner AMEX. Gus and I had this conversation by the tennis court in La Quinta, California, at an NCTA board meeting. And I said, “Gus, I just read that you’re leaving Warner AMEX. GE has advised me they want to sell my company. Chase Manhattan Bank has said they’ll provide the debt financing but I don’t know the equity markets. Is this something that would interest you?” And we began a dialogue. Daniels and Associates and my good friend, John Saeman, was representing us. We hired Daniels on behalf of GE and our shareholders. I could not participate in the negotiations because it was likely I was going to go with our new company. So I could not have a conflict of interest.
LAMB: How was the penetration at that point?
EVANS: Penetration would have been well over 50%. I’m doing this from memory, but that’s some 30,000 subscribers we had.
LAMB: What year was that?
EVANS: This would have been 1982. Gus agreed to buy the company and we created Arlington Cable Partners. Gus then made me president of Hauser Communications and then we started acquisitions. We’ll talk about that in a minute. It was a very smooth transition. Franchise transfer was very smooth. We had just had our franchise renewed and Dick Wiley, former chair of the FCC, headed up the Arlington citizens to review all of the operations. We passed with flying colors, which was one of the reasons Gus wanted to buy it. We closed the deal in December of 1983. I was on the NCTA board and Gus was on the NCTA board. One of us had to go because you couldn’t have two directors from the same company. So I stepped down. Gus was vice-chairman. Gus ran the following year, in 1984, April of 1984. Gus ran for chairman. He was beat out by Ed Allen, and retired from the board and called me and said, “There’s a special election to fill your seat. Would you go ahead and run?” So I was off the NCTA board for about five months and then I got my old seat back and I’ve been there now for thirty-three years.
LAMB: What would you say was your approach to your relationships with like the Federal Communications Commissioners and the Arlington County Board, and if we were sitting in a classroom somewhere and the students in business wanted to know what do you have to do in order to get your rate increases which they don’t have to do anymore but you used to have to do that. What were your techniques?
EVANS: Openness and transparency. The coin of the realm was trust. And authenticity. Don’t play games. First be who you are. Secondly, be centered and thirdly, lay it out. Lay out what your needs are because in the final analysis, it’s a partnership between the consumer, the community that you serve, the company, your employees and your capital markets. All of those have to work together. Of course there are going to be needs and wants and some are going to want more than others. And you’re going to have to try and navigate through all that.
LAMB: Did you ever have a fly in the ointment?
EVANS: Sure. You run into some—
LAMB: And if you did, why…?
EVANS: Let me answer the question this way. Gus and I later went on to purchase Montgomery County.
LAMB: Around Washington.
EVANS: Around Washington. It’s a suburb, a very large suburb in a county outside of Washington. And we bought it from the Tribune Company.
LAMB: Doug Dittrick.
EVANS: Doug Dittrick. The Tribune Company had decided to implement a technology called “TRACS.” They took the converter box out of the home and they put it on a pole.
LAMB: Outside of everybody’s home?
EVANS: Outside of everybody’s home. If you wanted four TV sets, you had four wires going into your home. It was a failed technology and when a thunderstorm, as happens in Washington, comes through, a lightning strike—it blows the box. They had 21,000 subscribers and they were running about 20% service calls because these boxes were failing. Montgomery County sued the Tribune and the Tribune countersued the county. It was a mess. So the Tribune said, “We’re out of here, we’re getting out of cable, this is not our strength”. And so we wound up buying the Montgomery operation because we were local here in Arlington. We went in and just told them the truth: “We’re going to have to tear the system down, we’re going to have to rebuild it, we’ll do the very best job we can in cutting over subscribers; but you’re going to have to be patient.” There were 1200 miles of cable plant that we had to rip down and start all over with. It was a $40 million purchase and ultimately it was a roughly $250 million project. All along the way, I and some members of my staff, kept the county informed. We ran into problems. We would dig up a street or something would go wrong. We would screw up in some way. Call the county, tell them we screwed up, we got this problem. Now we did a lot of things right, by the way. In fact, I would argue we pulled their bacon out of the fire. And we did everything on time and when we said we were going to do it, we met all of our deadlines.
The fly in the ointment: when it came time that we decided it was time to sell the properties. We went to Montgomery County and said, “We want to sell.” And in that conversation they said, “OK, we want $10 million to transfer the franchise.” I said, “What?! You want how much?”
“We want $10 million to transfer the franchise.”
By this time we had paid them over $100 million in franchise fees for the period we had been there. I’m skipping forward, but the year was 1992 or 1993, when we announced the deal. I was livid. That’s not the way I do business because we lived up to all of our franchise—so I asked him, “I said, where in the franchise does it say that you get $10 million just to transfer the franchise?” They said, “Well, it doesn’t, but that’s what we want. If you don’t give it to us, we’ll go through a whole process and it’s going to take a lot of time.” So I’ll never forget—then we go back to our Minnesota operations in a minute—I’ll never forget the dinner I had with my partner and dear friend, Gus Hauser. And Gus and I had never had a disagreement. We had lots of passionate discussions [over the years] and I’d have a solution to a problem and he’d have a solution and usually neither one of our solutions survived. [A far more elegant solution evolved.] [He was] one of the great teachers and mentors to me—and I’m so fortunate to have been and so privileged to be with him and with also his wife, Rita. But on this occasion, my own ethics and morality was getting in my way.
So we had this discussion over at the Hyatt Hotel in Arlington; He said, “John, first of all, you’re right.” I said, “It’s illegal, we can sue them and embarrass them.” He said, “You’re absolutely right. We’ll probably win and it will probably take us three years.” Now remember Gus is a lawyer. He’s got three law degrees. And he said, “You’re probably right but you’ve got to ask yourself, ‘Do you want to do the deal or don’t you want to so the deal?’”
Now remember you’ve got shareholders, partners, you’ve got your banks. We have our employees and we have our consumers. On balance we have to decide whether having a fight is going to help them along with ourselves or is it going to put the operations in jeopardy? And as I began to look at it in that framework and look at the total responsibility that we had, I came around. I said, “You’re right.” So we wound up paying them $6 million instead of $10 million, and SBC, as I remember, had to pay them something when we sold the company. That was a real lesson for me in overreaching on the part of a local government.
Lamb: You sold in 1992?
EVANS: We announced a deal in 1993 and we closed in 1994.
LAMB: When had you bought that…?
EVANS: 1986.
LAMB: 1986. And you sold it to?
EVANS: Southwestern Bell, now AT&T. It’s the first Bell operating system to buy a facilities-based cable system. It set the market—it was the highest price ever paid.
LAMB: What’d they pay?
EVANS: It was $3000 a subscriber. It was a $650 million, you take into account some of the other accounting, it was really $675 million but it was announced $650 million deal. For every dollar that our investors put in, they got $21 back.
LAMB: By now, you’d made some money. What has happened to you as you’re making money? You came out of a family that had made money. But you were making this money on your own. What’s the impact on your life?
EVANS: First of all, it’s been a wonderful impact. My father said to all of his children and said to me, when I was commissioned as an officer in the Navy, he said, “I’m done. I’m so proud of you for being a Naval officer, I’m going to buy all your uniforms for you.” Because at that time, you may remember, you had to buy your own uniforms. “But you’re on your own.” So I was on my own. I didn’t go into the family business. I took a totally different way.
So as I began to have liquidity events selling our properties—we were also the largest cable operator in Minnesota, which is a whole other story—as we began to sell our systems off to further the consolidation of our industry, my cousin, Jane, said to me, “And now you will have the adventure of wealth.” I sort of knew what she meant, but I didn’t really know what she meant.
Gus and I had this conversation and he said to me (he gave me some wonderful advice), he said, “Look. I know you really well. If you make any more money, it is not going to change your life. But you have the opportunity now to do some other things with your life if you wish.” And at that time, Clayton Dubilier, who were investment bankers, arranged a meeting with me and said, “Look. We can raise a billion dollars for you. You can multiply that on six to one because you could usually take—for every dollar of equity, you could borrow usually six dollars, seven dollars in our industry.” You can’t do that anymore but back then, you could. I could have had a war chest of six or seven billion dollars. And I said to myself and in talking to Gus, “Now you know you’re right” Because I could see another fifteen or twenty years keeping my feet on the sticky paper. Where the time is not your own. The business is not only getting more complicated—and for me that was in a fun way—but maybe I could take what I’ve learned and do some other things with it.
So I chose to be associated with and be on the board of Nelson County Cable so I could give back to—
LAMB: Where is that?
EVANS: That’s down in Wintergreen, Virginia, outside of Charlottesville. It’s about forty-five minutes west of Charlottesville. I’m still on their board and still guide them. I created a foundation called the Evans Foundation. We’re involved in higher education and social justice, global health and specifically AIDS vaccine research.
LAMB: You alluded to the Minnesota properties. Did you buy two up there?
EVANS: Bought two up there.
LAMB: And who owned them? And what year did you buy them? And then what year did you sell them?
EVANS: 1985, we purchased the Storer systems. Storer was getting out of the business and they had overcommitted, which was not unusual. We went through a franchising period where dual cable systems and all these promises were being made but the financial models to support that weren’t there. Frankly, technology was not there. So Storer won the franchise for some of the suburbs of Minneapolis-St. Paul. Brooklyn Park, Golden Valley, Bloomington, and so we went up there and purchased those systems. They wanted to get out of the business. They had built a dual-channel system so they had two cables. It’s really cold up there and they weren’t working very well, so we told the community, “We’re going to shut cable B down. We are going to run a single cable.” Then my staff up there said, “OK. What are we going to do with the rest of it? It’s inventory hanging in the sky.” So we took all the amplifiers out, put them in a warehouse. We wound up using those up over a period of time.
Westinghouse did the same thing. They had the other half of the donut for Minneapolis-St. Paul. So when Westinghouse was sold and there was a consortium—it was Daniels, it was Comcast, TCI, I don’t think Cox was in it—then we became a part of the consortium. So we took over the Westinghouse portion of Minnesota, which made sense to us because we were right next door. That year was 1986, so that was a year after we purchased the Storer system. Same issue: shut down a B cable, streamline the operations. I consolidated the operations. They had offices in all these various places; I consolidated the operation, brought our costs down, started generating cash flow and we also had a wonderful partner, Continental Cablevision. They were our 50% partner up there in the Westinghouse deal. Of course, it was great to be back with Amos Hostetter who had originally brought me into the industry, sent me over to Monty, so Tim Neher, who was his chief operating officer, and I became close as a result of that. And of course, it was great being with Amos.
LAMB: What was the total number of subscribers that Hauser Communications had when you were at your biggest?
EVANS: The biggest was close to half a million subscribers.
LAMB: What year did you sell them all off?
EVANS: The Storer system was the first to go and that was, I want to say, 1988 or 1989, and Westinghouse—we sold the Storer systems to King Broadcasting. Going back to one of your earlier questions, the most important job that a CEO does or a chief operating officer does, is set the culture. And the culture is either going to be a fear-based culture or it’s going to be a transparent, open trust-based culture, authentic culture. I go for the latter, not the former. The forty years that I’ve been in this industry, forty-two years this year, that I’ve been in this industry, I’ve seen both. I’ve seen companies that have been run by fear and I’ve seen companies that are run by openness and transparency and trust with employees. Over that forty-two year period, the companies that are run by fear, have been mediocre or have been subsumed by other companies.
So when we sold to King Broadcasting, about six months later, the CEO of King Broadcasting comes to me and says, “John, I don’t know what you guys did, but when you left, you took the magic with you.” I said, “Ed, what do you mean?” He said, “It’s not running the way you ran it. it’s not delivering the kind of cash flow…” And what I wanted to say, but I didn’t, was, “What you did was you injected fear in the organization. And when you inject fear in the organization, you diminish risk-taking because you always want prudent risk-taking. You diminish the employees because you’re not empowering them and they become apparatchiks. You don’t allow them to solve their problems and to grow, because you either grow or you die.” And that’s been my experience.
So we sold to King and then we sold to Jim Cownie and I’m drawing a blank on the company.
LAMB: Heritage?
EVANS: Heritage, yes.
LAMB: They had re-constituted.
EVANS: They had re-constituted themselves.
LAMB: What was the last day of your ownership other than your Nelson County experience in Virginia? What was your last day that Hauser was a company?
EVANS: The last day of operating was in January of 1994 but we had a five-year warranty period with SBC that if things had gone wrong, we were responsible. So Gus and I stayed pretty much in constant contact during that. We’re still in constant contact now, but from a professional standpoint over that five-year period.
LAMB: Biggest mistake you ever made?
EVANS: I would have liked to have bought more systems. I’ll give you an example. I still look back on Prince Georges County, which is right next door to Montgomery County as part of the donut around Washington. I really wanted to buy that system. It was owned by Metrovision; there was a north and a south that went through some hard times…
LAMB: Run by Henry Harris?
EVANS: No. Early on—then they sold it—I can see his face but I don’t remember his name, an entrepreneur in the north—they sold it anyway. I ran the numbers on it. I could not make it work at the price they were asking. Prudence said to me, “Don’t do it.” In hindsight now, we probably should have done it. It probably would have worked out fine. I won’t say that was the biggest mistake I made, but that was certainly one of the mistakes that I made.
LAMB: Why did you and Gus Hauser decide to sell?
EVANS: Technology is moving faster and the ability to process from a computer chip standpoint is like Moore’s Law. It continues to double. So Gus was about to turn 65. We were looking at having to do a major upgrade. We were still hub-and-spoke so we had a hub and then spokes out as opposed to what we knew we’re going to have to do is to build a SONET ring, so we had to build a ring all around and connect. Put fiber in. So it was going to be a major upgrade. And it was going to be a long-term payback. So Gus—and I can’t speak for him, but my guess is he and Rita were saying, “OK. I am 65 now and there are some other things I want to do with our life.” Indeed, he has gone on to do some extraordinary things with the Hauser Foundation. He and Rita established the Hauser Foundation, convinced me to establish the Evans Foundation and they’ve gone and done some really spectacular things, stepping away from the cable business.
LAMB: What’s the rule of thumb when you create a foundation? I know this is not cable related but a lot of cable people have done that. How much money on a percentage basis do people put in a foundation and why?
EVANS: At the end of the day, my own value system is that we’re nothing more than stewards. Yes, everyone knows I do believe in reincarnation, I think we’ve done this lots of times. That which has been entrusted to us—whether they’re assets or whether they’re people or whether it’s intellectual capital—we’re just the stewards of that for the 70, 80, 90 years that we’re here.
The reason I created a foundation—and it varies from family to family, individual to individual—was that I saw a way in which I could take what I have learned and maybe make a difference in higher education; one of my passions is AIDS vaccine research because I want to see the AIDS pandemic end in my lifetime, and use the technology that I’ve been schooled in and that is moving [rapidly] forward to connect people, connect ideas, preserve content so that if we don’t—if we don’t understand history, we’re likely to repeat it.
As you know, I’m very big into digital preservation. Whether it’s for the C-SPAN archive or whether it’s with the Academy of Higher Education’s libraries, we’ve got to preserve our intellectual capital. I use the foundation as a vehicle for me both to give ideas and seed grants. We’re a small foundation, it’s all public, we’re about an $11 million foundation. We give away about $500,000-600,000 a year. This is not the scope of a Ford Foundation or a Gates Foundation. But what it does do is allow me to bring the skills that I have at this point in my life to help solve social problems. I’ll give you a couple of examples.
A couple of years ago, Dr. James Hilton, who is the [University of Michigan] dean of libraries right now but was then the CIO for the University of Virginia, called me up one day and said: “John, I’ve got a really stupid idea or it’s a really clever idea. I’ve very concerned that the libraries of our higher education are vulnerable in the digital age. Remember, 2000 years ago the great Library of Alexandria was destroyed by the Romans, so if an asteroid hits the planet, or if we do something really stupid and blow ourselves up, how do we preserve man’s knowledge? We learned from the Space Shuttle. The Space Shuttle had three independent systems that all three had to agree and if they didn’t agree, it [the command] got kicked out to a human. What I propose is three—[now five]—but I propose we have three repositories…”
And you may remember the University of Michigan was the first, and now it’s Harvard, Stanford, Virginia and a number of others where Google and others have digitized their entire libraries. As we speak today, we are ingesting into five sites all the digital material from these libraries that will be maintained forever.
Now there are three parts to it [The Archiving]: First, the written work. So when you publish your book—which by the way, I loved your last book—when you publish your book, once the ink is on the page, you can’t change it. But if it’s digital, you can change it, you can corrupt it. So there are five repositories for all the written work. [Second] Then you have research data and big datasets. And [Third] you’ve got multimedia. So at some point for example, I would like C-SPAN’s entire archive to go into the digital repository so that if anything happens, we can at least go back and see what our leaders and how our leaders dealt with so many of the issues which are likely to come back up again 100 years or 200 years from now.
LAMB: Go back to your career in cable. The first year was 1972. Your last year was 1994.
EVANS: As an operator.
Lamb: So that’s 22 years of being an operator. Your cable system in the beginning was twelve channels. What was the biggest cable system channel capacity in 1994 for you?
EVANS: We had not yet gone digital in 1994. So when we sold; it was probably 60+ channels, I would guess.
LAMB: Your first cable system was $4.95 to the customer. What was the last one?
EVANS: On a per subscriber basis, we were probably pulling in $50-60 a month. Now my cable bill is $300 per month for broadband, for telephone, and for pay TV and the rest of the content.
LAMB: Your view of the programmers and the cost of programming over the years?
EVANS: First, we collectively created an ecosystem which was really quite extraordinary. And there’s always been this tension between the content providers and the distributors. So remember the building blocks of the digital age. The building blocks are technology, distribution and content. At first, we in the cable industry were in the distribution business and we were kind of in the technology business. Now when we signed the deal—and I’ll never forget the Sunday night in 1993, February, 1993, at my apartment in Arlington—I was the last one to sign all the papers to sell our company to Southwestern Bell. I knew when I hit the send button on my FAX machine at home, the entire landscape would be changed forever. Because now we were getting a Bell operating company, we were getting the cable industry, content providers—we were all starting to come together and merge all these technologies. We’ve also along the way had seen our costs go up, content costs go up. Content costs have gone up faster than inflation and this is a sore point with so many of our consumers. Specifically we’ve seen sports costs go up, disproportionately. I’ve tried to resist that.
When I was running our company, we had local sports here; you may remember Home Team Sports here in Washington. They wanted to be on Basic and I would not put them on Basic because I felt strongly that people who wanted sports should pay for sports, but I shouldn’t force sports down the throats of all of our subscribers because that was the most expensive product that we have. Now today of course we’re seeing the cost of sports, whether it’s a regional sports network or ESPN, or the NFL Network or the Big Ten Network—all these costs are now being aggregated and being passed on to our subscribers and we’re seeing real resistance. I don’t know what the answer is, but I do know the ecosystem is at risk today and that’s an ongoing issue for us as an industry.
LAMB: Over the length of your career in communications, what has been in your opinion, the most important discovery or the biggest change that has a significant long-term impact on society?
EVANS: It’s clearly technology and broadband. I’m really passionate about the industry, of course. This industry stepped up, took enormous risk using its capital to deploy a system we now know as broadband, which we now know as the Internet. It wasn’t financed by the government, it was all risk capital, the industry spent, the last number I got was $220 billion, to wire America. By the way, we wired it for content. What cable did—back up a minute to the 1970s—what cable did was create a level playing field for content for people all across the country, whether it was in Charleston, West Virginia, or Terre Haute, Indiana, or Washington, DC. Of course what C-SPAN did was to open government up so all of us could see what our elected officials were doing on our behalf or not doing on our behalf. The industry then built on that and said, with the Internet, with IP, Internet Protocol—we can use this network to connect digitally. We can connect computers. Now of course we can connect smartphones and we connect wirelessly. We do all kinds of really neat things. So the most important thing that our industry did was to continue its passion, continue its focus, continue its vision of using technology, which has a multiplying effect.
And I would argue we are in the second Machine Age today in 2014, that we’re seeing a combination of all these technologies coming together on various platforms, but being driven by our industry because we created the network, we created the ecosystem that is allowing this.
Let me take you back to 600 AD. In 600 AD, there was a guy that created the game of chess and his emperor (it was India) was really pleased by it. And the emperor said, “I’m really pleased by this wonderful game. I would like to reward you. What would you like?” He said, “I just want rice to feed my family. There is 64 squares on my chessboard. If you will give me a grain of rice on the first square and double it for every square [thereafter], I will be a very pleased man.” The emperor said, “So be it.” It turns out it’s 18 quadrillion grains of rice, more rice than has ever been produced in world history. More rice than the height of Mount Everest. By the time you get to square 34 on the chessboard, you’re at about four billion grains of rice, which is about the equivalent of a very large field of rice, which would probably have been OK with the emperor. Once the emperor discovered he had been duped, he beheaded the guy. [So the story goes.]
So the point I’m trying to make is we’re at square 34 right now metaphorically on the chessboard. From a technological standpoint and a distribution standpoint. Go back and look at a computer of 1996, the government developed the ASCII-RED computer, $55 million, 1.5 teraflops of capacity. Big computer. 100 cabinets and ¾ of a tennis court. Nine years later—that’s $55 million—nine years later, the Sony PlayStation comes out, same capacity, at $500.
So what we’re seeing now is this industry through Comcast X1 Box through what is now known as a Gigasphere—it’s DOCSIS 3.1—we’re going to put a gigabit connection into your home. We’re seeing this multiplier effect. But none of that would have happened if it hadn’t been for the industry stepping up and saying, “We can do this.”
LAMB: Final couple of questions for the MBA students or people that have an MBA or people that like entrepreneurship. From the beginning of your time in cable until you sold, did you ever personally have to invest any money in cable?
EVANS: Yes. I invested in every one of our operations from the time I came to Arlington. I took risks. In fact, when I first came to Arlington, I had stock options. My stock options were about to expire. So I went to Clark Madigan—he’s ARTEC’s banker at American Security Bank—and I said, “Clark, my options are going to expire. I need to buy them, but I don’t have the money.” He said, “That’s all right. We’ll loan you the money.” I said, “I don’t have the interest to pay on the loan.” He said, “That’s OK. We’ll loan you the interest to pay the loan.” You can’t do that today. It was a partnership, it was a relationship and they believed in me.
At the end of the day for the MBA student, it boils down to people and it boils down to trust and it boils down to your handshake. An example that comes to mind is a five-year contract that I did with Peter Frame, who was executive vice-president of HBO. We negotiated that in a restaurant over dinner and no one had any paper so I took the linen napkin and I wrote the deal down on the linen napkin. And I gave him the linen napkin. I said, “That’s the deal.” Reached across the table, got a handshake, that’s the deal.
LAMB: Did you pay the restaurant for the linen napkin?
EVANS: I think he paid but I’m not sure who paid. I don’t remember who paid. But we did tell the maitre’d we took his napkin.
LAMB: This is probably very private, but what you sold your company for, Hauser Communications to Southwest, did you sell the 500,000 subscribers to them?
EVANS: No, remember there were tranches of 500,000, so we had about half of those up in Minnesota, a little less than half. A little more than half were here in DC. So we had three transactions. First was Storer transactions, which we sold off. We sold off Westinghouse transactions and then we sold off the Washington, DC, transactions.
LAMB: The reason I ask that is (this is going to be our final question, I think) is was it ever public how much you sold your company for?
EVANS: Yes. It was $650 million. It was all over the papers.
LAMB: For everything, or just the Southwest…?
EVANS: Southwest Bell.
LAMB: So you had the other tranches?
EVANS: Yes, right. And I don’t recall—in fact, I’m not even sure at the moment I can remember the numbers without doing some homework what we sold the systems for up there.
LAMB: You said earlier — and this is the last — you were going to come back. You were just here functioning as a steward. When you come back in your next life, what do you want to be?
EVANS: A geek.
LAMB: Would you like to define that?
EVANS: Sure. Technology is playing such a large part in our world I want to be a part of envisioning and helping to evolve mankind for that. So the work I’m doing at the State Department right now—Secretaries [of State] Clinton and Kerry appointed my partner and myself to the Global Equality Fund [to support programs that advance the human rights of lesbian, gay, bisexual and transgender (LGBT) persons around the world.]. There are 76 countries where it’s illegal to be gay. Uganda and Nigeria will put you in jail and kill you. There are eleven [donor] countries—Sweden just contributed $14 million to this, so that’s part of my social justice activity in addition to my work with HIV. And of course my work with C-SPAN now. One thing we have not talked about but I want to say is I’ve done so many wonderful things in my life. One of the things I am the most proud of is what you and I and our colleagues have done for C-SPAN in opening our government up.
Our freedoms rest, in my paradigm, on five cornerstones. A strong defense, including homeland security; strong economy; an informed electorate; social justice and economic opportunity and global stability. And if we as a free people don’t nourish all five of those, we too will go the way of other great societies of our last 3,000 years. And I take you back to June 22, 1897. On June 22, 1897, a quarter of the world’s population was given the day off and paid for it. Now think of that. A quarter of the world’s population given the day off and paid for it in celebration of Queen Victoria’s Jubilee. And in twenty short years, the Great British Empire was near bankrupt. Through Boer War I and II and World War I and they came to us for Lend-Lease. So the challenge we have as a free people, which tie into our industry because we’re the connectors, and to our content providers, is how do we navigate through these compelling times in a thoughtful, responsible way for the next generation? Obviously I don’t have the answer. You have more answers than I do, I suspect, on this but I don’t have the answers to that.
As I look back over my career, I think I would argue that we probably as a country made four mistakes which are probably irreversible: The first is we did away with the draft. Because when we did away with the draft, we did away with the skin in the game. When I was drafted and when you were drafted, draft cut across the entire socioeconomic fabric of our society. My Navy career was some of the most important learning experiences I’ve had in my life. It sure taught me a lot, particularly as we’re bringing the body bags off the USS Liberty, how precious our liberty is.
The second mistake we made was we substituted the media for the smoke-filled back room [to select candidates for public office]. Now I know there are problems with the smoke-filled back room and I’m not sure I know what the right answer is to this; but once we did that, once we turned the vetting of the candidates over to the media, it became more sensational and private lives are really delved into. Now we can argue whether that’s good or bad, but the first one to fall that I remember was Gary Hart aboard the yacht “Monkey Business” with his girlfriend.
The third mistake I think we made was [gerrymandering] using supercomputers to really refine gerrymandering.
And the fourth mistake we made was the Citizens United decision by the Supreme Court, which allows money to go almost unfettered into the election. Combine all of that and we have a government which is not—I would almost say dysfunctional but is not functioning as well as it was when I first came to Washington in 1969.
I had the occasion to be with Doris Kearns Goodwin who is just one of my favorite historians and we were talking about this, and I asked her the question: has she ever seen our government as dysfunctional as we are now? She said, no. So the role that our industry plays is to be perhaps to help heal us and bring us together in ways that we haven’t done yet. That’s part of our challenge. That’s the wonderful challenge that C-SPAN—and I bust with pride and there was never a more prouder moment for me standing next to you and the President [George W. Bush] when you received the Presidential Medal of Freedom.
LAMB: John Evans, we are out of time and I thank you so much.
