Interview Date: October 6, 2005
Interviewer: Kristin Van Ormer
Audio only
Abstract
Madie Gustafson describes her start in cable as an attorney for United Cable. She recalls Marvin Jones, the takeover by United Artists and then by TCI. She discusses her move to handling franchises, negotiating consents for the transfer process from cities. Next, she talks about how important Women in Cable and Telecommunications (WICT) was in her career, and comments on her involvement in the Betsy Magness seminars and Leadership Institute. She discusses the critical regulatory issues she dealt with at the local level, the power of cities to grant franchises and gain authority over the cable operations, and industry’s challenging negotiations. She demonstrates the complexity of contemporary franchise agreements, the difficulties ensuing from the AT&T/TCI merger, and the threat of regulation as a common carrier. She names the entrepreneurial spirit of the industry as the engine of its great success, and the diversity of programming as its greatest legacy. Gustafson concludes by characterizing herself as creating bridges between cities and the industry, mentions her return to law practice serving cable clients, and exploring her training program for franchising and negotiating skills.
Interview Transcript
MADIE GUSTAFSON: My name is Madie Gustafson and at the end of my career with cable companies I was Senior Vice-President of Government Affairs and Franchising for AT&T Broadband, but how I got in the industry was really enormous, wonderful luck.
I had graduated from law school in 1981 and went to work for Holme, Roberts and Owen thinking I’d be an oil and gas lawyer and after a year doing actual coal work instead of oil and gas work, I was transferred into the corporate department and grabbed by Dean Salter who was the partner in charge of the United Cable Television Corporation account and for a period of about four years I did cable work from a transactional basis. I did deals, I did stock offerings, I did acquisitions, I did sales, I did limited partnerships, and in 1986 United Cable approached me and said, “Would you like to come in-house at United Cable and be an attorney for us?” and one of the things I’ll never forget is going in for that interview with Gene Schneider and Gene said to me, “Madie, why would you want to leave the most prestigious law firm in Denver to come in-house with us?” I said, “Gene, I have sons that are 1 and 4. I don’t ever see them. I work 24 hours a day, seven days a week doing your various transactions and I don’t get to see my kids.” Gene looked at me and said, “A mom needs to be with her kids.” So the deal that we struck was that I would come to United Cable and I didn’t have to work nights and weekends unless it was an emergency and it was a great gift to me and it was a great gift to my sons, and Gene’s word held true until 1988 when United Artists decided to acquire United Cable Television Corporation and I was in charge of obtaining the regulatory consents for that process.
1989 is when the transaction was completed and I ended up at United Artists with Marvin Jones who was the CEO of United Artists Cable. A wonderful group of people from Daniels, great people from ATC, great people from TCI and United Artists was about the most fun of any place that I’ve ever been at in my life. It was a great organization. One of my fond memories from United Artists days was a meeting that Marvin had for all of the managers and the senior staff people up at Keystone and Marvin had just taken up golf and was obviously not a very good golfer and the system manager from Grand Junction finally said to him, “You know, Marvin, I really admire your sense of calm because if I played golf as badly as you do I think I’d be throwing my clubs.” And Marvin said, and it’s something that I remember often, he said, “I’m a new golfer. Anger is a function of expectations. It is not appropriate for me to have expectations at this stage of my development as a golfer.” That statement of Marvin’s has made me go back so many times to think when I get angry about something, what’s my expectation here, and is that expectation an appropriate expectation that’s led to my anger? So it’s one of my favorite stories and one of my favorite things to remember about Marvin.
United Artists was bought by TCI in 1991. TCI had owned a piece of United Artists, but TCI acquired all of United Artists in 1991 and that was a difficult transition for me because I was general counsel of United Artists Cable Systems and I became a staff attorney at the much larger TCI, but it was also a great opportunity to work with new people and develop new areas of expertise and at TCI I was really asked to focus on government affairs and franchising – franchise transfers, franchise renewals, franchise compliance – everything related to that contract between a cable company and a particular operator. I became known in my career as the “Queen of Transfers”. I oversaw more transfers of franchises from one company to another then anybody else in the industry and while being “Queen of Transfers” is not a great title, it does give one an opportunity to be a queen and it does give one an opportunity to develop an expertise in a critical area of cable because cable could not do the transactions that it did unless it got consents for the transfer process from the cities.
So what was the single most significant accomplishment that I made that’s helped shape the cable industry? The most significant thing that really happened to me is that I was introduced to WIC – Women in Cable, now Women in Cable and Telecommunications –and up to that time I had not met many women in the cable industry. I kind of felt like the Lone Ranger at United Cable. There were some women in the marketing department but certainly not in most of the departments at United Cable and I was introduced to women at the Betsy Magness Seminar and these women absolutely shaped my career – many of them remain lifelong friends today. I was put in charge of running the Betsy Magness Seminar for several years, and then through that was very instrumental in getting Bob and Sharon Magness to contribute the money to Women in Cable to create the Betsy Magness Leadership Institute and in fact I flew back to Chicago with Bob and Sharon when they made the $100,000 contribution to WICT that funded the Betsy Magness Leadership Institute and I think it’s had a profound and wonderful effect on the industry and on the women who have had the privilege of participating in the Betsy Magness program.
The challenges? Well, my view of the challenges obviously comes from the challenges that I got to deal with and the challenges that I got to deal with were the regulatory challenges for cable. Unlike telephone or unlike broadcast, cable was regulated at the local level and we were required by federal law to have a franchise with each community that we served and that gave the cities enormous power and authority over all aspects of our operations and it was always a challenge to both keep on very good relationships to the extent possible with the communities so that we could run our business the way that we needed to run it, to challenge the communities when we thought that they were overstepping their appropriate regulatory boundaries, to spur the corporation on, to deal with the complaints of the cities because we knew that those complaints would lead to more and more regulation if they weren’t taken care of, and those were always the challenges with which I had to deal in an industry for the most part that resented being regulated at the local level and I understand that resentment. In 1993 when Bell Atlantic was talking about selling TCI, the telephone company didn’t know what a franchise looked like and they came to my office and said, “Well, we want to see what these franchises look like,” and I gave them a one-page letter from a mayor in Pennsylvania dated 1948 that said, “You can use my right-of-ways to provide cable.” And I said to them, “This is my very favorite kind of franchise. It allows us to use the rights-of-way and it doesn’t regulate us and it doesn’t have a term of use, but unfortunately most of our franchises don’t look like that.” Today I’ve just finished negotiation on behalf of Adelphia and I just finished negotiation on an 80-page franchise and a 90-page enabling ordinance and that’s what’s happened in the process is that the franchises have become more complicated. The cities are trying to regulate much more then they used to in the past and that is a constant challenge for the cable industry. AT&T bought TCI in 1998. The deal closed in 1999 and I spent most of 1998 and a good part of 1999 getting the consents. We had to get consents from over a thousand communities for the AT&T/TCI merger and in that process the city of Portland decided to require TCI and AT&T to allow non-discriminatory access by all ISPs, an issue that the industry called forced access and an issue that our competitors, who had the much better term, called open-access, and that was one of the greatest challenges that we had to overcome to try and get those consents and try and stop the proliferation of the lawsuits such as the Portland decision because of cities deciding that they wanted to regulate cable as a common carrier.
The greatest success of the industry? What do I attribute the greatest success to? You know, everybody’s greatest strength is their greatest weakness and the greatest strength of the cable industry was its entrepreneurial spirit, its willingness to make decisions and what we at TCI sometimes called the “ready, fire, aim” nature of the industry. You’d fire and then afterwards you’d look at it and go, “Oh, I could have aimed a little better,” but you moved, you know, and it was just an extraordinary ability of cable companies to make decisions and move on a dime that I think has contributed to their success and they made mistakes – of course they made mistakes – but the momentum was more important ultimately than the mistakes and the momentum is what has led the industry to the extraordinary technological improvements – digital cable, high-speed internet access, the proliferation of programming and the enormous diversity of voices that cable provides to the American public. So its greatest strength was its ability to make unbelievably quick decisions on a moment’s notice and it was also its greatest weakness but I think the strengths outweighed the weakness.
Let’s see… do I feel that the cable industry has had a societal impact through the wealth of programming content? You know, absolutely. If you go back and look at the framers of the Constitution and what Madison, for example, who put the First Amendment into the Constitution wanted, they wanted the First Amendment to serve and the communication industry to serve as a basis for a wide variety of public discourse and a wide variety of voices and opinions so that the public would be more informed, more able to participate in this wonderful new democracy that was created by our founders, and cable has contributed enormously to that diversity of voice and to the fact that we have an informed electorate, informed citizens, people who can choose the wonderful programming on C-SPAN to see actually government in action, or the news programming from CNN or MSNBC, or the entertainment that’s available from so many different programs and the fact that we have programs that appeal to just a particular interest. So I think that the diversity of programming and what it has done for the public has certainly been the greatest and most enduring legacy of the cable industry.
My personal legacy? Well, I don’t know if I have a personal legacy other than being the queen of transfers. I think that in the industry I was widely regarded as trying to create bridges with the local franchising authorities in order to have cable operate its business the way it wanted. I took time to educate cities about our business and why we needed to make the decisions that we needed. I think the cable industry always saw me as fair but trying to understand, perhaps, the cities’ side too much and the cities saw me as fair but certainly understanding the cable position way too much. So given that both of them thought I was fair and both of them thought I was a pretty fierce advocate for the other side, I think that’s a pretty balanced view of how I was regarded in the industry.
So what am I doing now after AT&T acquired TCI in 1999? I had an opportunity to leave the industry in 2000 when AT&T acquired Media One and my energy to be a transfer queen had just been exhausted, and so I took some time off to be with my younger son. Both my sons hadn’t seen a lot of me during the AT&T/TCI merger, but my older son was in college and my younger son was just starting public high school and I had an opportunity to be with him. Cole Raywid and Braverman, the greatest law firm in the communications industry, approached me and said, “Would you like to work with us?” and I said “There isn’t a group of people I’d be more privileged to work with,” so since 2001 I have been a partner in Cole Raywid and Braverman. I am their Denver office. I am a solo office. I work in my home and I have a wonderful group of clients – Adelphi and Comcast and Charter are my primary clients – and I do the things for them that I have always done well, which is franchise transfers and franchise renewal and franchise compliance, but I also have had the privilege to do my greatest love which is training. I have done a lot of training for Adelphia and a lot of training for Charter and it is truly what I enjoy more than anything else, so I am not out of the industry yet, I am just one of those outside counsel people, but I had an absolutely wonderful, wonderful 16 years within the industry and I’m not out yet.
KRISTIN VAN ORMER: Madie, what kind of training do you do?
GUSTAFSON: I do training on all of the issues relating to franchising, so I train on how to do negotiations, negotiation skills. I train on what are the appropriate ways to accomplish a franchise renewal, what are the issues that are important to cities, what are the issues that are important o operators, what’s the law behind it, what’s the business basis for taking a particular position, what would be the effect on the operations of the system if you agree to one provision over another provision. So that’s basically the kind of training that I do. Operational, franchising, negotiation skills – that’s the kind of training that I do.
VAN ORMER: Madie, thank you so much for sharing your experience in the cable industry with us today.
