Interview Date:, July 21, 2014
Interviewer: Paul Maxwell
Abstract
John Goddard remembers his introduction to the cable industry when cable pioneer Ed Parsons came to his hometown to start a cable system. Next he describes how he worked summers for the company doing drop installations, construction and sold subscriptions. He talks about problems installing cable, and a unique solution. Goddard also worked for TeleVue Systems and explains how CBS acquired the system, and the spinoff of the properties because of vertical integration. He further explains how Viacom was created. He states that a decade later he became president and CEO of Viacom, in addition to holding various other positions in the company. He names Walter Kaitz as one of the outstanding leaders in the California cable industry, and why he was so important. He explores the issue of the industry’s efforts to establish its First Amendment rights in the face of FCC restrictions. Commenting on the relationship of broadcasters and the early cable companies, he discusses the formidable issue of must-carry and syndicated exclusivity, using ESPN as an example of the expansion of the programming aspect of the business. Goddard moves on to describe the rebuilding of a system in California, and the provision of high-speed data and electronic programming guides. He then describes the work of CableLabs in standardization of DOCSIS modems, and reviews his own involvement with the organization. He examines the benefits of set-top boxes, including the feature of scrambling or encoding to make sure programming was secure. Next he recounts the beginnings of C-SPAN, and reflects on Ted Turner’s success with TNT.
Goddard reveals the industry’s dilemma in allocating resources to provide good customer service versus the demand for higher cash flow percentages. He then describes his own commitment to serving customers well and somewhat sacrificing cash flow. He concludes with thoughts about challenges for the industry, including what he calls the creative destruction of other technologies as well as the quality of journalism. He reflects on issues regarding regulation as well as the problematic schism between programmers and operators.
Interview Transcript
PAUL MAXWELL: The Cable Center Oral History program. Today is Monday, July 21, 2014. I’m Paul Maxwell, a board member of the Cable Center here to interview John Goddard.
John, how did you get into the cable industry?
JOHN GODDARD: I am a second generation cable operator. My first recollections of the cable industry is Ed Parsons from Astoria, Oregon, coming up to Aberdeen, Washington, where my father was in the radio station business, and started a cable system, and he was on the roof of our house looking for television signals off-air that came from Seattle. Because Aberdeen was a classic market with no television reception at all because of the distance from Seattle.
MAXWELL: How far was it from Seattle?
GODDARD: It’s about 100 miles.
MAXWELL: Oh. Quite a ways.
GODDARD: And then after that, my next recollection is a couple years later, when Dwight Eisenhower was being inaugurated as President of the United States in January, 1953—if my dates are correct—the cable system had been built partway through the town and they had it installed in a hotel in downtown Aberdeen and everybody in the community got together to see the inauguration on cable television.
MAXWELL: How big was the TV?
GODDARD: It was one of those small kind of green-tinted and kind of rounded—it wasn’t rectangular-shaped by any means.
MAXWELL: How many people were there?
GODDARD: Probably 200-300 people. I mean, it was a major event in the community to have television. Then after that as the system was constructed in Aberdeen and I was in high school, I ended up being vacation replacement for the field employees doing house drop installations and construction. But then I went off to college and I while I was in business school I started 2 cable systems with three other young men who had associations with the cable industry. We built the cable systems in Pinole and Crockett. I was going to school and on the weekends we went out and built plant, went home, took a shower, cleaned up and went out and sold door-to-door. It actually was order-writing door-to-door because everybody was so desirous of having television reception.
MAXWELL: That was chasing the vans, chasing the string while stringing the cable along. This was all above ground and all…
GODDARD: One of the interesting things that happened—part of this town, Pinole, was underground and we put conduit in and we didn’t have our engineering totally correct. We were trying to pull in long sections of cable and the cable would bind to the vinyl of the PVC and we would have a hard time pulling it through. So the solution was to go to the supermarket and buy soap, detergent soap, and put it in the conduit to facilitate it being pulled through. There was one interesting outcome of that. Guess what happened when it rained in the winter? We had soapsuds all over the subdivision coming up through the concrete vault boxes.
MAXWELL: That, I guess, went away after a couple winters or a couple seasons of rain. But that took away the friction so you could do that.
GODDARD: So after that, after I got out of business school, I went to work for a company called TeleVue Systems, which was a series of partnerships of cable operations in the Bay Area and I’ll move along pretty quickly. I stayed with them for three years and then CBS came along and bought out TeleVue Systems as well as the remaining interest in their cable system from the Iacopis in San Francisco. But it didn’t take the FCC very long to decide that vertical integration wasn’t proper for one of the three major networks. So the FCC mandated the spinoff of the cable properties and their syndication business. Two very dissimilar businesses into a new company called Viacom.
MAXWELL: Back then it was pronounced “Vee-a-com.”
GODDARD: It was pronounced “Vee-a-com” because that was the way Ralph Baruch pronounced it.
MAXWELL: So what year was that?
GODDARD: That would have been in 1971 and at that point in time, it was probably pivotal in my career whether to continue in an entrepreneurial sense or to stay with the bigger organization. Looking back, it was probably a flip of the coin because I was pretty intolerant of the bureaucracy of the big corporation. But it all turned out for the best and I had various jobs with Viacom and became the CEO and President in 1980, and stayed with them until 1996 when it was sold to TCI.
MAXWELL: So we’re all done? I’m kidding.
GODDARD: You asked me how I got into the business and that’s a quick track record to where we are.
MAXWELL: You had some partners in the beginning, including some friends.
GODDARD: The original partners that were involved were Claude Cody, who was involved in a construction company, and Scot Bergren, who is still a current friend of mine and his father was in the cable business with my father, and another young man by the name of Richard Spight, whose father was a partner in Tele-Vue Systems in the Bay Area. And the four of us put in the capital and built the two systems in Pinole and Crockett.
MAXWELL: Where are they exactly in the Bay Area?
GODDARD: They’re on the edge of the Bay and they would be northeast of Richmond so if you go Berkeley, Richmond, El Sobrante, Pinole, Crockett. Crockett is where there’s a bridge over to Vallejo to get across the Carquinez Straits.
MAXWELL: So you got involved—obviously the FCC made a big decision that changed everything—who owned whom for what reason. So you got involved with the California Cable Association pretty early, I bet.
GODDARD: Yes, it would have been in the early Seventies and I went through various officer positions with the Association and working with Walter Kaitz.
MAXWELL: Walter was a force of nature for the cable industry in California.
GODDARD: Absolutely. And I considered Walter one of my mentors in the industry. I came out of high school, college, biz school and thought I had all the mechanics, but knew nothing about politics and he took me aside and taught me the facts of life about how to be honest and fulfill your obligations to your legislators to succeed. It was a very important element of business besides just selling something to the consumer.
MAXWELL: Especially as the cable industry grew in California and became a center. The California Show became a major factor. What about the other personalities as you were growing up through the cable industry in those early years?
GODDARD: The other people that I would consider are my mentors would obviously include my father for his entrepreneurial spirit which he passed down to me. Homer Bergren, Scot Bergren’s father. I admired him for the fact that both Scott and I are the same age. We were in our mid-twenties, out of college and he gave us the operational responsibility of these cable systems. Scot managed half the systems and was responsible for all the marketing. I ran the other half of the systems from an operational sense and did all of the financial budgeting/controller type work. We were given a huge amount of responsibility and authority at a very young age and it was a wonderful learning experience on the job.
MAXWELL: Do you remember any mistakes?
GODDARD: There were lots of mistakes. We won’t go into those.
MAXWELL: Fair enough. In those early days of the industry—it started in the Fifties, you’re doing this in the Sixties and early Seventies. What were the things that were really serious problems that had to be overcome by the industry?
GODDARD: I think probably as a category, rather than individual events, I would consider it critical for the cable industry to establish its First Amendment rights. This would have covered everything from a compulsory copyright license to the Second FCC Report and Order which placed all kinds of restrictions on the industry in terms of importation of distant signals, warehousing, movie product, prohibiting pay cable—all these items. These were eventually overcome through a series of court cases and legislation. But it was a long, slow, gradual process earning our ability to be true First Amendment speakers.
MAXWELL: If I remember right, there was the freeze in the Sixties—1966, was it?
GODDARD: 1968—I think the FCC froze expansion of cable systems in the top 100 markets.
MAXWELL: And that didn’t loosen until the early Seventies?
GODDARD: I think about 1972.
MAXWELL: 1972 or so. There was a Report and Order then that I remember. The process then wound up resulting in—because there was no copyright at that time…
GODDARD: No, copyright was in 1976.
MAXWELL: That was a large industry argument. It had two sides of it. One to gain that right to pay copyright in order to take away a whole bunch of other problems. How did the fight go within the industry?
GODDARD: I don’t have a total recall of that but as you said, it was a fight in the industry and I think the most important part, it gave us legitimacy in the marketplace. The people that created the intellectual property were compensated for it. I think that was the most important part of it.
MAXWELL: That was a huge step forward at that time. In all of this era of making more viewers for broadcasters, what was the relationship between the early cable companies and the broadcasters?
GODDARD: Must-carry was probably the biggest issue and also syndicated exclusivity. The local broadcasters obviously wanted access—particularly the weaker stations. It didn’t so much involve the three major networks and then Fox and PBS. I mean, everybody wanted those signals but the smaller UHF stations obviously were very desirous to have parallel access to the cable industry and to the cable subscribers.
MAXWELL: Which brings us to the point of content was so important and the big three networks and whatever else you could get. It wasn’t until the late Seventies or so that programming became part of this business. What was it like when the first guys knocked on your door to get carriage for something different?
GODDARD: I can remember when ESPN used to pay us for carriage.
MAXWELL: It was a dime, wasn’t it?
GODDARD: I think it was a couple of cents a customer. But obviously the advent of non-broadcasting independent programming allowed the industry to build into the major metropolitan markets that had good off-air reception. So it provided an element of exclusivity and diversity for viewership that drove the ability to drive subscriber penetration to pay for the construction of the systems. As the technological capacity of the industry expanded in terms of channel capacity, the programming side of the business came along to fill that need and to be able to drive demand and penetration in the major markets.
MAXWELL: Which was interesting because it then let companies like Viacom, which was then spun off of CBS because of vertical integration, to vertically integrate.
GODDARD: Right.
MAXWELL: And to create different kinds of programming.
GODDARD: Viacom eventually did buy CBS later and then spun it off.
MAXWELL: And then spun it off again.
GODDARD: But now they’re talking about buying it again.
MAXWELL: Yes, they are. But that has to go by Sumner first, of course. So as you continued to be promoted within the company, what were some of the accomplishments that you were part of that helped shape the industry today?
GODDARD: I think probably the one that is the most important to me would be the rebuilds of our cable system in Castro Valley. We had purchased that cable system as a dual cable system. It was basically a total wreck and we decided to rebuild it and we decided to do some limited experimentation and the two things we did in this cable system, which would have been in 1994, was we provided high-speed data and the StarSight electronic programming guide. What amazed me when we installed the high-speed data into homes and into libraries and schools and watching the consumer experience and watching the experience of people in libraries was how fascinated and how pleased people were with the accessibility of speed. Before that, everybody talked about, what? 250 kilobits a second? We were talking megabits per second. And this experiment in Castro Valley predates @Home and Roadrunner, but it was the first step and proving to the industry and a lot of people and CableLabs that there was a real business in high-speed data. There was a real need to be filled.
MAXWELL: That was a significant step. That changed from dialup to access to the AOLs and the Compuserve, if you remember some of those businesses.
GODDARD: And then CableLabs’ efforts to standardize the DOCSIS modems so that if you were a customer, you could take your cable modem with you if you moved to San Francisco to Manhattan and went from Viacom to Time Warner.
MAXWELL: Or whomever.
GODDARD: Whomever, yes.
MAXWELL: So you were involved in CableLabs from its beginning.
GODDARD: Yes.
MAXWELL: Tell us a little bit about what that was like from an industry consortium getting started. It’s the one that worked.
GODDARD: It worked, not without its battles, which would be expected. But Dick Green was the first president and he just did an absolute outstanding job maintaining peace in the valley between the competitive players in the industry, particularly the large operators and the small operators. And really driving the culture of standardization so that the industry could compete with scale in terms of cost of equipment and manufacturing. I spent a good deal of time with CableLabs even after I formally left the industry as an operator at Viacom when Viacom was sold. I stayed on their audit committee until a couple of years ago.
MAXWELL: And it’s now doing the next steps in that technological standardization. So in the beginning you just connected the cable to the TV. And then set-top boxes came along. Then set-top boxes have changed radically. Can you take us through some of the development of that you got to implement?
GODDARD: We tried a lot of different set-top boxes and I guess what you could say when you’re on the cutting edge of technology, sometimes you get cut.
MAXWELL: Right. That’s true.
GODDARD: I don’t want to go into the names of the specific manufacturers…but obviously they served to expand channel capacity over the tuner of the TV set and then they also added the feature of scrambling or encoding so the programming could be secure. Those were the major benefits.
MAXWELL: Theft was a big problem in some of cable’s early days of people creating their own drops off of the trunk lines running. So the scrambling helped change that part of the business, I imagine.
GODDARD: That and traps, but traps were terribly labor-intensive and particularly underground subdivisions, people learned how to take the traps out.
MAXWELL: Yes. Pretty easy actually. It’s very easy. Where were some of the people that were peripheral to the industry that had an impact on it? I’m thinking like you talked about being involved with the start of CableLabs. It would up in Boulder County because of the Congressman from Boulder, Tim Wirth. Were there some other players that helped influence how cable developed and grew? I’m thinking like Van Deerlin and C-SPAN, for example.
GODDARD: Yes. Van Deerlin was, I think, a good friend of Walter Kaitz over the years and he was very helpful in shepherding probably the first cable act that went through.
MAXWELL: He was a California Congressman.
GODDARD: Yes, he was from San Diego.
MAXWELL: San Diego, right?
GODDARD: Right.
MAXWELL: And if I remember right, when Brian Lamb wandered in to talk to him, he was very helpful in actually gaining access to the House Floor, which allowed cable to create C-SPAN.
GODDARD: They created C-SPAN and now the multiple versions of it, but it was a way for the industry to give something back to society and it opened the door on the legislative process.
MAXWELL: That was a big singular accomplishment for the industry over the years and you could get to look at some dark sides of it, I suppose. Other people that you’ve had interactions with. I’m thinking of the guys like that get all the news, like Turner. Characters that have been in this business that made a big impact on the programming side, which you, of course, helped push.
GODDARD: Programming is a mixed blessing with me because I worked for a vertically integrated business, Viacom (Vi-a-com), after Sumner bought it. It was “Vee-acom” with Ralph.
MAXWELL: I know.
GODDARD: There was obvious competition for cash flow and where the money was going to be spent. Do you spend it on bidding and franchising for new cable systems or do you do more programming? Obviously Viacom has had a lot of successful networks.
To talk about Ted Turner a little bit, I have quite a few memories of Ted getting started with Channel 17 and then after that, putting CNN on the satellite. Then after that, buying MGM and getting in…
MAXWELL: Over his head.
GODDARD: …deep financial trouble and the memory I have of that event, was that—this would have been 1987, I think, and he ended up selling about 35% of his company. But the meeting that put this all together was HBO’s Super Bowl weekend for all of us affiliates. During this event in the Virgin Islands, a whole bunch of us were shuttled aside to hear Ted make his pitch in two sentences: to start TNT to provide the cable industry another element of exclusivity, and also to buy some stock in his company. That was Ted at his best, being a salesman and that’s the background story of how TNT got started and bailed out Ted and sold interest in his company and it all turned out for the best at that point in time.
MAXWELL: And nobody lost, right?
GODDARD: No. Everybody made money on that stock. There’s no question about that.
MAXWELL: That’s pretty good. So other players in the business, like HBO. Viacom competed with— “Vee-acom” at the time—competed with HBO launching Showtime. And Showtime started in your systems.
GODDARD: It started originally in our systems out on Long Island. But Showtime lagged HBO in getting on the satellite and the early versions of Showtime were taped and played back at the headends. So you can imagine the quality control problems, the labor problems and everything else to make that work successfully. It was challenging, but Viacom made the right decision and eventually got on the satellite with everyone else.
MAXWELL: That must have been some interesting conversations between the two sides of Viacom at the time. Because it was clear HBO was on the right track.
GODDARD: And way ahead.
MAXWELL: Ralph Baruch was an interesting person to have worked for.
GODDARD: I consider Ralph one of my mentors based on the strength of his personality and character. Ralph—I think most everyone knows came from France just prior to World War II. A real survivor, but has the highest degree of honesty, integrity and competiveness. What I remember most about one of his great successes was actually the HBO suit vs. the FCC, and pay cable. That was one of the First Amendment victories that primed the cable industry with another source of revenue. But Ralph was the real—although it was titled the “HBO Suit”—Ralph was the real industry leader who organized that campaign, that legal battle that the industry won.
MAXWELL: Another impact out of the California group that you were part of: when Walter Kaitz died, the industry was quick to rally around an idea of doing something in his honor and created the Kaitz Foundation, of which you were a major part of as it was organized.
GODDARD: I was involved then; I was a Kaitz director for a lot of years. At one point in time, I was acting chairman between minority chairmen of the foundation. So I spent a lot of time particularly helping Spencer and the rest of the board pushing that organization along and it’s still doing well. It’s under the auspices of the NCTA now and still has an annual fundraiser every year.
MAXWELL: I remember when we all started that. It was my pleasure to be there along with you on all of that stuff.
GODDARD: And Ray Joslin.
MAXWELL: Right. Very important.
The industry has done an awful lot of giving back, I think. The Kaitz Foundation from diversity and minorities involved in the industry, from the C-SPAN that it created, yet it has a lot of trouble with its audiences, its customers. The cable industry always comes out pretty bad in customer service and things like that, yet it seems to deliver something everybody wants. It’s an interesting conundrum for the business.
GODDARD: Absolutely. I would like to think that I would be remembered for my viewpoint on customer service. As you pointed out, it’s a real dilemma. There’s the issue, as we got into pay cable, whether we could sing in the shower and chew gum at the same time, in terms of providing good customer service and getting things done. But the real issue came down to spending the money short-term for hiring enough CSRs, providing enough training vs. the financial community looking at the industry and demanding higher and higher cash flow percentages to drive the stock prices. So this was always a balancing act between do you get the long-term benefit of having happy customers or do you appease the financial community and have the best metrics for today’s stock price. It’s still an ongoing problem today.
MAXWELL: One that won’t go away.
GODDARD: No, absolutely not.
MAXWELL: So from the standpoint of other influences in your career, any other highlights of people you looked up to or argued with or disagreed with?
GODDARD: I can’t think of any individual I want to comment on, but I’d like to share one humorous event of my experience in the cable industry. At one point in time, there was a newspaper article in the local paper in Petaluma and the title was something to the effect, “Bugs in the Box Delay Implementation of Pay Cable.” Well, “bugs in the box” was not a technical problem. It was real bugs. Somewhere—and again, I won’t mention the manufacturer—somewhere along the manufacturing process, they were stored or in a bad environment and quite a few of the boxes ended up with cockroaches in them. Unfortunately we installed a few of these boxes in customers’ homes before we realized the problem and obviously we ended up then having to pay for exterminators and overcoming the bad PR…
MAXWELL: That would be pretty bad PR. A nice stain on the record there.
GODDARD: Yes.
MAXWELL: From a social standpoint or societal standpoint, how has cable changed America and the world?
GODDARD: I think probably the most important aspect would be its provision of the diversity of voices and speakers. Then in addition to that would be the technological advancements when the industry went digital and high-speed data. I would think those would be the two major areas where the industry has contributed to our society and across the world.
MAXWELL: It’s certainly changed how information moves.
GODDARD: Yes. And the number of speakers. You would think back to the Fifties and Sixties, we had three networks and maybe PBS. We had a very, very closed entertainment society and very few voices.
MAXWELL: That’s true; very few. Although there were more newspapers then and there are fewer of those today. But it’s an interesting point about the voices. Now it’s cacophony instead of the pipeline of just the three. And it wasn’t until the Fifties really that they even began—the late Fifties really—till they began serious news coverage.
What do you hope your personal legacy from being in the business will be, or do you think about that much?
GODDARD: I don’t think of that a lot. I think probably the experiment that we ran in Castro Valley…
MAXWELL: It helped jump start the whole data…
GODDARD: The whole high-speed data situation. And also my commitment to customer service and being willing to spend a little more money and sacrifice current cash flow.
MAXWELL: And pay for exterminators.
GODDARD: And pay for exterminators.
MAXWELL: What’s up next for cable? We’ve watched it change—I mean, from your first experience, were you twelve-channel in the systems you built in Crockett?
GODDARD: Those were twenty channels.
MAXWELL: Twenty channels. OK.
GODDARD: Well, I think going forward, the challenge for the cable industry is to avoid the creative destruction of other technologies. You kind of touched on it when you mentioned newspapers. We have seen high-speed data have a significant impact on the number of newspapers. But the other important area there is the quality of journalism. I think the same challenge is going to exist for the cable industry when it comes to avoiding cozy capitalism and legislation and regulation. Specifically in today’s terms, making cable a public utility or a utility. I think we have—the industry has to be prepared to defend itself so they can maintain the quality of the programming that’s provided. If the industry gets fractionalized between the programmers and the operators and the revenue streams get disrupted, that’s ultimately going to affect the quality of the programming that the public receives.
MAXWELL: It’s an interesting point. Cable has grown and developed and shifted so that it’s far more than just connecting that television like you did in Crockett and the other town. And that metamorphosis of what it actually does and what each of the companies do, we’re watching right now more consolidation within this and how far can that go?
GODDARD: Consolidation is driven on cost scale. And that’s because of the scale of the industry’s competitors. The Amazons, the Netflix and the Googles and all.
MAXWELL: So it’s a re-definition of the landscape.
GODDARD: It’s a re-definition of the marketplace.
MAXWELL: And where’s it going to go?
GODDARD: I don’t have an answer to that. I think it’s going to continue to be extremely competitive on all fronts.
MAXWELL: On all fronts and all different aspects. So how about the globalization of the business? It’s not just an American thing anymore and it seems to be growing in lots of parts of the world. There’s interesting things stuff happening in Europe, for example, and in China.
GODDARD: Obviously Liberty Global has done very well in Europe and they’ve been at the forefront of a lot of technological changes in high-speed data faster than exists here and many places in the United States.
MAXWELL: And all those things will keep growing, I presume.
GODDARD: Hopefully, yes.
MAXWELL: So you’re still playing any part of the cable industry?
GODDARD: My tenure in the cable industry is coming to a decline in a couple of months. I’m still on the board of BendBroadband, the Tykeson family company in Bend, Oregon. That company was recently entered into contract to sell and that will close in early September and that will be the end of my active day-to-day participation and involvement in the cable industry.
MAXWELL: So it’s been a pretty long career from pre-high school…
GODDARD: Right, like 1956, 1957 to 2014.
MAXWELL: So a nice long trip. What’s next?
GODDARD: A lot of duck hunting, a lot of skiing and a lot of fishing.
MAXWELL: Good, thanks. We appreciate your time and appreciate the conversation.
GODDARD: Thank you.
MAXWELL: Thank you.
