Interview Date: December 4, 2007
Interviewer: Kristin Van Ormer
Abstract
Douglas Holloway describes his start in cable at CBS, his involvement in moving the network to satellite, Bill Paley’s creation of CBS Cable and support for original programming. He discusses the launch of CNN, his work nationally selling the CBS channel to cable operators, and the reaction to him as an African-American. He explains why the channel ultimately failed. He notes his interest in affiliate relations and his next venture in the organization of the innovative cable guide, TV Cable Week. Holloway explores his move to the USA Network, meeting Kay Koplovitz, and his appointment as Director of Affiliate Relations at the network. He describes the development of systems to increase ad revenue and help operators offset fees. In addition he talks about the serious competition from TNT, the genesis of the Sci-Fi channel, his involvement in Cable & Telecommunications Association for Marketing (CTAM) and his role in the creation of the National Association for Multi-Ethnicity in Cable (NAMIC).
Interview Transcript
KRISTIN VAN ORMER: Hello, today is Tuesday, December 4th, 2007. I am here interviewing Douglas V. Holloway, President of Cable Investments for NBC Universal for The Cable Center’s Oral and Video History Program. Welcome, Doug.
DOUGLAS HOLLOWAY: Thank you.
VAN ORMER: One thing that really comes across as I’ve read about you and talked to people about you is you’re universally respected and admired in the industry and I was just wondering if you could tell me in your formative years what maybe shaped or molded your personality in that aspect the most and who were some of your early mentors?
HOLLOWAY: Well, I’m originally from Pittsburgh, Pennsylvania and if you know anything about Pittsburgh is they’re pretty salt of the earth people and I grew up at a time in Pittsburgh when Pittsburgh was in its heyday. From my parents I really received a lot of spirituality as well as being a credible person. My father used to always say, “Your word is your bond.” You’ve got to really stand up for what you believe and be a very righteous person. Treat people the way you want to be treated, a lot of really core values that I carried over into business and I think it’s really served me very well.
VAN ORMER: And your educational background – can you tell us a little bit about what you studied and why you studied the courses that you did?
HOLLOWAY: Well, educationally I’m really kind of a mixed bag. I’m from the inner-city of Pittsburgh, a community called Homewood. In 1964, I was part of the early busing of black youth into white neighborhoods for educational purposes and integration of schools. It was a very difficult in the United States and in my community not unlike many of the other communities around the country and I was given a lot of values of education. My parents really stressed the fact that it was important to get a very strong education. Even my grandmother who lived with us at that time – my grandmother was basically illiterate. She grew up in the 1800s, so she valued education extremely highly. So I was given all those reasons to really pursue an educational background. It was funny because I originally wanted to be an entertainer and I was very heavily influenced by the entertainers of the day – Harry Belafonte, Sammy Davis, Jr., Bill Cosby, Dick Gregory, Sidney Poitier. I studied acting, I studied dancing, tap dancing, and I did a lot of acting. I studied at the Pittsburgh Playhouse all throughout my formative educational years, and when it was time to go to college, my parents basically said, “It’s all well and good for you to be an entertainer or an actor, but we really think you should have something more stable to fall back on.” So I decided that what I wanted to do was to go into television and I would study television, but as it turned out I got a five year scholarship to Northeastern University in Boston and it was for journalism, and so I decided to go into journalism originally. Right after I was accepted into Northeaster, I found out about this school, a small school in Boston that really had a television program and it was called Emerson College, but by then I had already agreed to go to Northeastern. So since it was in Boston I figured that at a later date I could transfer, and so I went to Northeastern and studied journalism for two years and it was a very, I think, good, solid education, really honed my writing and proved to be beneficial to me later on. After my second year at Northeastern I transferred to Emerson College where I really pursued my television desires. Originally I wanted to go into being a director and a producer and so I studied that. That’s what my basic undergraduate degree is, a mass communications with a specialization in television production. Being an actor and studying acting, I worked well with talent and really got to understand the talent process and how television worked and I really became fanatical about it, became a first-class licensed engineer and a camera operator, and I decided I was going to do everything I could in television, I was going to make that my career. As I was approaching graduation, I met a man in Boston. We did volunteer work actually, working for the Boston Black Reparatory Company, which was a local theater company and he was at Harvard getting his MBA – his name was Peter Bionow. I didn’t know anything about an MBA at the time and so I decided I wanted to go on to grad school and I was going to go into grad school pursuing my television creative activities, but Peter said, “You should think about an MBA.” He was in the MBA/JD program. I spent a lot of time talking with him and researching what an MBA was because I didn’t know at the time, and I never will forget, I came back to my counselor at school and he said, “Well, you know, we really haven’t had many people go on from our school to get MBAs so I can’t really help you very much.” At the time I also had a part-time job as a news writer for WEEI Boston, the O&O CBS radio station in Boston. It was an all news station and I was a news writer so I had to write the news for the local newscasts that were done. The general manager there was a gentleman by the name of Gene Lothery and he was a black man. He was young, I would say at that time he was in his early to mid 30s, and I ran into him in the hall one day and I had no idea that this guy was the general manager and somebody said, “Yeah, he’s the general manager.” I said, “Who is this man?” I went up to him and I said, “I would like some career advice. I work for your station here and I would really like for you to help me out in formulating my career because I want to be in television in the communications business, and I want to work in New York, and I want to work for a big company.” So he said, “Sure.” I was a college student, I was I guess 20 years old at the time. He said, “Sign up with my secretary and get an appointment to see me.” I week or two later I did and I went in to see him when I got off my shift and he sat me down and he said, “You know, you need a plan. You’ve got to have a plan. You need a 20 year plan.” So I went back and I was talking to my counselor thinking what I was going to do and talking to friends of mine I start writing down notes about what I really wanted to do. Did I really want to be a director? Did I really want to go to grad school? What I wanted to do long-term. Where I wanted to be in 20 years. At 20 years old it’s a pretty foreign concept to think where you’re going to be in 20 years, but I did and I formulated a plan, which was my 20 year plan. This mind you is probably in 1975. I graduated college – early – in 1975. I was in the class of 1976. I decided I would get an MBA and my long-term plan in 20 years was to be president of a television company, a major television network or company. Now mind you, for a black man from the inner-city at that time it was pretty far-fetched and when I shared it with friends of mine they thought I had really gone off the deep end, and probably I had. But I decided that’s what I wanted to do and one of the things Gene told me was I should in fact be very specific about the plan, what jobs I would have, what companies, where I would work, for how long, and as long as a stayed with that plan it would keep me on track. So I decided to go get my MBA and I had really one choice that I wanted to attend and that was Columbia. It was my first choice and one of I think three that I applied to. I never will forget, I applied to Columbia and I figured that because of the school I was coming from, Emerson, which was a small college, wasn’t a feeder school to any Ivy League universities and certainly not to MBA programs, that I needed to increase my probability of getting accepted by coming and meeting and having an interview with admissions. If I told them my story and they could see me and hear what I wanted to do with my MBA that they would give me a shot. I was a decent student. The first two years of college I was a C student, but the latter years I made the dean’s list and graduated cum laude. I never will forget – I put on my polyester blue suit, it was the only suit I owned which was my graduation suit from high school, and I traveled to New York, went to Columbia for the first time, went to the interview…
VAN ORMER: Was that your first visit to New York?
HOLLOWAY: No, it wasn’t my first visit to New York but it was my first visit to the campus of Columbia. Actually, my first visit to New York was the weekend before my parents dropped me off at college, and I kid my mother about this story all the time because I was 18 years old, I had never been away from home by myself at all. We drove to New York for the weekend prior to them taking me to Boston, we spent the weekend in a hotel and visited some of my father’s relatives in Harlem and we toured the city. The asked me what I wanted to do, we’re here in New York, we’re three days in New York – so the first thing I did was I took them to the movies to see Super Fly, which they didn’t really appreciate but nonetheless we did. Then two days later we ended up in Boston. This is true story – my parents had never been to Boston before, they moved me into my dorm, I had to go check in to the bursar’s office and do all the registering, and the next morning we had breakfast and they dropped me off in front my dorm and they drove away. They said, “Here’s $200, we’ll see you for Thanksgiving.” And that was the start of my college education. But this was not my first time to New York. So I go to this interview and I meet a woman who originally was from Pittsburgh, she was originally from my neighborhood, and she said, “I can’t believe you’re here. There’s this connection with you.” She grew up a block away from where I grew up and her family had moved away in the flight of the ’60s out of our neighborhood. She said, “You deserve a chance. You deserve a real shot to reach your dream.” Having been bused and all I’d had to go through being a kid that was bused in the ’60s and ’70s and all that went on because I was in Boston during the whole busing issues in Boston and the things that were going on in the universities in Boston at that time. She said, “I’m going to give you a shot.”
VAN ORMER: That’s remarkable!
HOLLOWAY: That’s exactly what she said.
VAN ORMER: And she was in admissions at Columbia?
HOLLOWAY: She was in admissions at Columbia and for the life of me I don’t remember her name, but she gave me a chance and I went to Columbia that next fall and became an honor roll student and graduated – took marketing and finance courses, and graduated near the top of my class and at that point I decided that I was going to execute my 20 year plan. My first job out of Columbia was at General Foods and I decided I was going to go into marketing. Well, I had two primary goals to get a job that first year out of Columbia and one was to work, ironically, at NBC and get into their associates program and as luck would have it, the day that I was to have my final interview and get my offer, supposedly, from NBC the major snowstorm of 1978 hit. I never will forget calling and calling NBC trying to get the people on the phone, the whole city was shut down and I was so intent on not losing this job opportunity I walked in the snow from Columbia to Rockefeller Center, showed up and was told by the security guards that the company is closed down today except for essential personnel, there’s no one here, and I’m sorry but you have to go home. I never got another chance at the interview. For whatever reason I got lost in the shuffle, never got my job offer, but my fallback position was to go to work at a marketing company and go into product management because I felt that when I wrote my plan that if I could spend several years in a major consumer goods company that I would learn general management, I would learn sales, I would have a lot of credibility behind me in terms of being a sophisticated marketer or businessman and I could transfer that into the television business later.
VAN ORMER: So your 20 year plan still entailed the television aspect?
HOLLOWAY: Yes, it was a sideline to go into marketing and then go into the television business. And so I went to work for General Foods. I was one of their top draft picks that year and got a choice of assignments, which I chose Shake ‘N Bake because they were a big television advertiser at the time, it was one of their key brands in the main meal division, and I went there and I worked for two years and went through their training program and as it happened one of my best friends from college, from Emerson, who was also from Boston, we had gone to Columbia together, I encouraged him to go and he ended up getting a journalism degree and an MBA from the journalism program at Columbia, jointly. He had gone to CBS and gone into their training program in finance and after two years they were building a strategic planning group. He called me up and said, “Doug, we’ve got some jobs open here at CBS in the financial planning area and it’s strategic planning and it’s going to be the hotbed future career opportunity in the television business because we’re going to figure out where the future of television goes and how to get there.” So I went for the interview and I ended up getting the job. It was a small group of four people at the time and everybody had to pick straws basically, or choose areas of expertise that they would delve into, so you become an expert in something. Because I was the new guy I got something that no one else wanted, essentially, which was cable television and satellite distribution of television signals. So I became the cable television expert and also an expert in satellite distribution, so I knew everything about it and at the time the CBS network was being distributed via landlines, telco lines and we weren’t in on the satellite, so I helped create the plan that eventually moved CBS to satellite distribution. I also did a lot on the production facilities side, which was the milk factory now on 57th Street, the expansion into kind of what it is today, a state-of-the-art… I did all the financial analysis back then. I became an expert in cable programming. There were only a couple networks just getting started, and this is now circa 1979, ’80, and one of those ideas that was being circulated around CBS was CBS Cable. Charlotte Schiff-Jones, who was a producer and a big name in entertainment and television for a long time, had the idea of creating an arts channel and sold the idea to Bill Paley. They incubated it in the stations division and because I was the network person, I was involved in that as well and it was interesting because part of my job… we used to write the strategic plan, the long-term strategic plan, for the network and we used to write speeches for Gene Jankowski who was the group president of CBS Television and Jim Rosenfield who was the president of the television network in those days. We used to talk about the fact that cable was not going to be a long-term threat to the broadcasting business and that it was never going to be really an ad supported vehicle and cable networks would never really amount to anything. But Paley believed in it so he green lit CBS Cable, which was a 24-hour arts channel, but high arts. As a matter of fact, the host wore a tuxedo and it was ballet and jazz and symphonic music and Broadway productions and it was really the fine arts. We had a huge budget for original programming because a lot of this programming didn’t exist outside of the PBS universe and so we produced probably 60% of our programming in the first year. What happened was the way in which I ended up at CBS Cable was they were putting together their management team – Charlotte Schiff-Jones was VP of marketing, there was a guy by the name of Bob Mariano who was an ex-Qube-er, he worked for Warner at Qube in Columbus and was one of that early team that did interactive television with cable. Interestingly enough, I didn’t really know much about cable. I had never seen a cable system except my junior year in college one of my uncles moved outside the city of Pittsburgh into a small town called Meness and he was an officer in the police force, I think he was a captain or a sergeant. We went to his house for Christmas dinner and he had cable. He had, I never will forget, a push-button remote and he had about ten channels. That’s the first time and only time I had ever experienced cable first-hand.
VAN ORMER: Do you remember what some of the channels were that he was getting at the time?
HOLLOWAY: They were all broadcast channels and he had HBO and that was pretty much it.
VAN ORMER: Were you fairly intrigued with it when you saw it for the first time at your uncle’s?
HOLLOWAY: I was fascinated by it. It was foreign concept to pay for television, number one. And number two, to have this remote box that you pushed buttons to change the channel – that was totally new. But the interesting thing that I was really fascinated by was that he had more than three channels and in Pittsburgh all we had were three channels. I think he had about ten in total but they were channels from other cities. I think they had a channel with just the weather dial on it and another channel that had a crawl on it, so there really wasn’t much programming on it other than HBO and maybe one other entertainment channel of some sort.
VAN ORMER: So as a long-time aficionado of just television as an industry, when you first started to get into this cable project at CBS were you right away certain that cable was going to become what it was or was that a progression over your time there?
HOLLOWAY: It was a progression. I thought it had some merit. It’s funny because I used to have to write documents that talked about cable not being much of anything but just kind of pass-through technology, but I always thought there was something more there and while I was doing that job CNN was announced by Ted Turner and CBS Television Network was known as the Tiffany network at that time and we were the most highly acclaimed news organization in the country. So we really thought it was very humorous that Ted Turner was launching a 24-hour news channel and we just said there isn’t that much to talk about, and who is he, by the way? So it was an interesting time, and ESPN also announced its launch and we studied those programs very closely, those networks very closely, and the whole economic model is different because ESPN initially came out paying and I believe CNN initially was free, and so the model for CBS Cable was going to be an ad supported model because that was the business that CBS knew and we did not think at that time that we could get cable operators to pay money for channels. And so as it turned out, I really didn’t want to go work for CBS Cable; as part of my long-term plan I wanted to go pursue my career in the area of sales, and so I wanted to go into advertising sales and I wanted to work at the CBS Television Network in advertising sales. So I had focused really all my career efforts moving into the ad sales business but because I was coming out of finance I ran into a lot of opposition. It didn’t really matter even though I had been professionally trained in selling by General Foods, it was just a very closed shop and very difficult to get in. I had a friend that I met while I was at Columbia. He was the program director – his name was Dennis Waters – he was a program director for the jazz station here in New York in the late ’70s. When I was at Columbia there was a tenured professor who I became very friendly with who was very into jazz by the name of Morris Holbrook, and Morris and I created a predictable research model using psychographics to predict your preference in artists and kind of music and we sold that idea to the local jazz station and it helped change their programming around for the better. Dennis’s good friend who started out in radio with him was a guy by the name of Bob Pittman, and the rest is history with Bob Pittman, right? So I had gotten to know Bob Pittman because Dennis used to sponsor seminars about new technology coming, whether it was radio or television, and often I would be one of his guest speakers to talk about cable television. I got to know Bob Pittman because Bob Pittman was there talking about an idea and the creation of a new product that he had because he moved on from WNBC radio, and as a matter of fact Dennis and I joined forces with this professor to create a research firm, and we sold research to Bob Pittman. So I got to know Bob Pittman because he used that research to program his radio station. He moved from there over to WASEK (Warner Amex Satellite Entertainment Company) which was just being formed and he became, I believe, program director for the Star Channel which was the predecessor to The Movie Channel. When he was there he would attend these seminars and we would talk to anyone that was interested that would pay money about what was on the horizon for television. His big thing at that time was this music channel, little did we know. As we all now know, it turned out to be MTV. Well, Bob Pittman also knew this man Bob Mariano who was putting together the original sales force for CBS Cable, the affiliate sales force, and so Dennis Waters told me, “Why don’t you go talk to this guy? I hear he’s hiring, I know you want to get into sales. This could be a way for you to get into sales.” So I went and I called Bob Pittman and I said “Bob, you know this guy Bob Mariano,” because they had connections through WASEK, he said, “Yeah.” I said, “Would you give him a call, tell him that I’m interested in potentially working for CBS Cable in the sales area and I’m having a tough time getting into sales and that’s the next step of my career plan.” So as far as I know he called him, I got an interview with Bob Mariano and ended up getting a job with CBS Cable as part of the start-up affiliate relations department as they were pulling it all together. On that team were some other notables. Bob Mariano had assembled a team of our initial salespeople that included Mark Rosenthal and Nora Ryan. Mark went on to be Chief Operating Officer of MTV later in his career, and Nora Ryan went on to be president of Rainbow Programming Services under Josh Sapan for a number of their networks and also, I think, Voom. I got hired into that group, there were four of us, and we covered the entire country and our job was to go out and sell CBS Cable, this fine arts channel, to the cable industry. I was given a territory of about 25 states beginning with Ohio west to California and the cut-off was Bakersfield and everything north above that line. I call it my trains, planes and automobile days because basically what we would do is go out on the road for two or three weeks at a time, fly into a central location, whether it was Chicago or Denver, and then you would travel using that as a hub. I would travel throughout the West, generally, throughout the Mid-West, the Pacific Northwest and basically fly and drive my way across the country over a two week or three week period going from mom-and-pop cable system to the next, to the regional offices of then TCI or ATC, and selling cable.
VAN ORMER: So what was the reaction from some of these Midwestern, more rural mom-and-pop cable owned companies to this high-end arts and entertainment channel?
HOLLOWAY: It was interesting. The bigger reaction was to me because here I was a young black man coming from New York, coming from CBS to Wauwatosa, Wisconsin or wherever, selling a programming concept that was foreign, and there were only a handful of cable salespeople in those days and so first they had to get over me, who I was coming in, and then we got into the programming. These were a lot of small mom-and-pop cable systems. You did have bigger MSOs, but you have to remember the MSOs were all under a million subscribers so they were still small businesses and it was a difficult sale but mind you, it was a free sale. We did not charge for CBS Cable so they had to just put in the equipment, but the bigger issue initially was the satellite dish. Many cable systems didn’t have satellite dishes, or if they did have a satellite dish it was already dedicated and that was before the multiple feed horn of the satellite dish. So you had to have basically a dish dedicated to a network and it was a very expensive proposition. So that was the bigger issue of do I install a dish, do I have a dish, do I install another dish, what satellite are you on, and then we got down to the fact that it was free and the concept of the channel and the like. Ironically, though, after the first six months of being really out there pounding the pavement we had a lot of success. We were one of the fastest growing channels. We launched around the same time as MTV and MTV took off like a rocket and our channel did as well. In the ’81, ’82 time period a lot of cable channels were launched. You had Alpha/Beta Network which was the predecessor to A&E. You had Cable Health Network. You had CBS Cable, MTV, The Movie Channel, Showtime had already launched by then, but a lot of channels were out there being launched and so there was a lot of activity. It was kind of the frenzy that we saw a few years ago with the internet where companies were just popping up overnight and cable systems were being franchised in the larger cities and the rural areas were expanding rapidly. Suburbanization was in a high growth mode. So there was a lot going on and so we had a huge job.
VAN ORMER: So what ultimately brought down CBS Cable ventures?
HOLLOWAY: A number of things brought down CBS Cable. The first was that it did not have the internal support of the senior management at CBS in the television side. They had it reporting up… and I learned a very valuable lesson where you don’t put new ventures in often established business’s reporting structure because we had a lot of handcuffs in terms of our inability to get things done. For example, if you wanted to advertise on CBS Cable it was a minimum 1 million dollar buy. You couldn’t just come in and buy several spots for several hundred thousand dollars, even. You had to make a huge, major commitment so that was a big hurdle and they refused to let that go. They overspent on our programming budget. There was no such thing, really, in terms of off-net syndication that we could buy so they decided that they would produce a lot of programming and the repeat factor of the programming was not what it should have been. They should have repeated a lot more programming. And then we overspent to wow the cable operator. As a matter of fact, we had parties that are still memorable to a number of people in the cable business. We had a huge party on the Queen Mary at the end of 1980 at the Western Show. We had probably the biggest party in the cable business, or the most memorable party in the cable business, which was the party in the desert, the Desert Oasis, which was in 1981 at the NCTA convention in Las Vegas where we literally turned several acres of desert near Wayne Newton’s ranch into an oasis complete with kind of a nomadic village complete with live animals and the party was in multiple states. I mean, it was a 300 hundred thousand dollar party in 1981, so you can only imagine. We had all of these props and it was transportation to and from, and it was an unbelievable party. We had a huge launch party at the public library on 42nd Street. Everything we did was grandiose and you just can’t run a start-up business that way.
VAN ORMER: So it was really more the infrastructure of a secure, money-making business running something as opposed to the more stringent structure it really needed as opposed to people not being supportive of the cable venture at CBS or was there some of that as well?
HOLLOWAY: There was that as well. One of the things I think management in the television side of the business wanted to make a statement that television on cable was not a sustainable business by advertising. In the late stages of the venture we actually did try to convert our distribution, which was about 3 million, from free to pay at a charge of like 3 cents a sub, but by then the hit was put in and they had pulled the plug on the venture. And we lost about 20 million dollars in 18 months which in those days was a lot of money.
VAN ORMER: So CBS Cable shut down and where did you find yourself?
HOLLOWAY: Well, interestingly enough, Jim Rosenfield, who was president of the network, and I really had a fairly close relationship and Jim wanted me to come back to the network in a financial or sales capacity but by then I had really gotten the cable bug. I never will forget, I had a meeting with Jim Rosenfield, who was president of the television network, in his private dining room and he’s like, “Doug, you know, if you want to come back to the network we would welcome you with open arms and there are a number of career opportunities for you here. We’d really like to have you,” because I used to write speeches for Jim, and I said, “You know, Jim, thank you but no thanks. I think I want to pursue the cable business. I really have it in my blood. CBS really is not going to move in that direction and I want to go out and get another job in the cable business. I love it.” And I’d made a lot of friends in cable because I travelled so much and it was just an exciting time in an exciting business, and we felt like we were really doing something and we were creating a new career path. The affiliate relations business was a brand new business because it was done very differently than affiliate relations for the television networks, and we were really selling and we were making things. Coming from New York we were kind of the drum, if you will, the communications link to the rest of the country because you’ve got to remember, there were no cell phones, there were no faxes. Information traveled fairly slowly out to the hinterland parts of the country with respect to what was going on in the industry and the business and so it was great. I wanted to continue to be a part of that. So I went and found out – I believe it was a headhunter who called me and said, “Time, Inc. needs someone like you. They’re putting together a new affiliate relations group to start a magazine.” I said, “Oh, great!” “And it’s going to be a video product of sorts and it’s never been done before.” So they were going to create a new product that had never been done before and I decided I was going to take a shot with this new product. I had done new ventures now, I’d done strategic planning. At General Foods one of the things I did was help launch Oven Fry which was the biggest product introduction for General Foods at that time, so doing new things, building things, really had gotten into my blood. So I ended up taking a job as part of the startup group to put the plan together for TV Cable Week, which turned out to be another failed venture ultimately, but it was a revolutionary venture in that we created something that had never been done before which was a weekly cable specific guide with broadcast listings. I was the top salesperson, as it turned out, there and worked with a lot of great people and it was just a fun time. We lost though 38 million dollars in 18 months and Time, Inc. ultimately shut it down. There was a lot of political jockeying between the magazine group at that point within Time, Inc., video was coming into its own, and then you had ATC which were the cable systems. There was an internal struggle within Time, Inc. to have this new cable product report in to either HBO or ATC, and as it turned out the magazine group was the stronger group at that point and they ended up getting the report in structured through them and I think the cable group never let them forget it. So ATC was the most difficult sale we had and as a result since we could not sell ATC systems, although we did sell a few – I sold Mile Hi Cable, which was a new build at that time in Denver and being run by Fred Dressler who is a noted Time Warner Cable person – but we had very few ATC systems which ultimately became Time Warner systems. As a matter of fact, one of the bigger deals that we did was I sold the General Electric cable systems and we had broad distribution within that group of cable systems.
VAN ORMER: So that publication lasted how long?
HOLLOWAY: That publication lasted 18 months. I think we did about 10 different issues, customized issues, and it was such a communications story at the time that Chris Byron ended up writing the book the Fanciest Dive, which is about the whole history of that magazine, its rise and fall within Time, Inc. and all the players within Time, Inc. jockeying and everything that went about that transpired in that whole process. One of the great things about it is the fact that we created a new computer system. Not we, but the management team created a computer system which took up an entire floor of a huge office building in White Plains, New York, and I’m sure the computing power of that computer could now be housed in a laptop, but that’s the kind of power you needed at that point in time, in 1982, to create a customized, system-specific guide.
VAN ORMER: Amazing to think about that today.
HOLLOWAY: It truly is.
VAN ORMER: So you had a couple of short-lived but valuable learning experiences with CBS Cable and then with TV Cable Week, and when that shut down… How did you meet Kay Koplovitz and how did you get into your long career at USA Networks?
HOLLOWAY: Well, I had met Kay Koplovitz at some cable event, had been introduced to her by my boss from CBS Cable, Charlotte Schiff-Jones, but we really didn’t know each other. I’d just met her in passing. At the time, in the middle of 1983 when it was announced that TV Cable Week was shutting down, Time, Inc. owned 1/3 share of USA Network, which was a network that was at that time about 4-5 years old but only 2 ½-3 years old in its current incarnation of USA Network because the original network was called the Madison Square Garden Sports Network. It was an all sports network that Kay Koplovitz had founded under UA Columbia. She worked for UA Columbia, Bob Rosencrans, and they had created this network called Madison Square Garden Sports and that network morphed in 1980, or ’81, I believe it was, that network morphed into the USA Network and so there was another Madison Square Garden sports network and then USA Network became a sports and entertainment network. As it so happened, USA Network in 1983 was owned by Time, Inc., Paramount Pictures and Universal Pictures, and so at that point in time of USA’s history, HBO was handling all of the affiliate relations for USA Network and there had been, I think, some discontent by the two movie studios about what was going on in terms of how USA was being represented. It was losing money, it had about 12 million subscribers, 10-12 million subscribers, a number of those were part-time, and they had a deal that was free for 10 years in many cases, I believe. At that point, I had now become friends with Don Anderson, Patrick Mellon, Nate Garner, Stan Thomas, all black major players in the cable business. Stan and Don Anderson were executives at HBO; they were both vice-presidents, and they had become my mentors. Nate Garner had worked for ATC. Patrick Mellon had worked for TeleCable at the time. Out of this group, actually, earlier in our career we started, among other people, NAMIC – the National Association of Minorities in Cable – to further the careers as well as the entrepreneur opportunities in cable franchises with black executives and black entrepreneurs. So I had become very tight with them and Stan Thomas and Don Anderson came to me and said, “Look, Doug, we really would like for you to stay within the Time, Inc. family. We have a job for you here at HBO in affiliate relations. You’ll be a fast-tracker here, you’ll be great.” And the personnel department came to me from Time, Inc. and said, “Look, Doug, we like your work. We think you’re a great executive. We would like for you to stay within Time but we have another opportunity which we want to open up to you because we’re ready to start an affiliate relations department for USA Network, a stand alone department because it’s currently being handled by HBO, and so we want you to meet Kay Koplovitz.” And so I said, “Great!” I never will forget, I came to her office at 1230 6th Avenue and we had a meeting and we had several meetings after that, and she said, “We’re going to start this affiliate relations department, we want you to play a pivotal role of starting this department and really pushing our business to the next stage of its development because we’re losing money and we need to break even, and affiliate relations is the cornerstone of our future.” And so I decided, and I never will forget, I went and had a conversation with Stan and Don and I said, “Guys, I love you and I know if I come to HBO it’s a great opportunity and HBO is the industry leader (in 1983), but I’m going to take my chances at another start-up of sorts. I get to be the start-up guy here. I’ve built affiliate relations departments before; I know how to do this. I’m in a small company, I can really kind of set my own course and I’m being hired by the founder and president.” And they said, “Godspeed and good luck.” And so I accepted the job as Director of Affiliate Relations for USA Network and I never will forget, Kay Koplovitz said, “Well, you know, our offices right now are in New Jersey – Glen Rock, New Jersey.” My whole career had been spent on 6th Avenue except for the time at General Foods, so I was accustomed to very nice corporate surroundings and she had a very nice office but there was no one else there, maybe a secretary and one or two other people in the office on 6th Avenue. She said, “We’re going to be moving you into New York next year or sometime soon, but right now we’re in New Jersey so you’re going to have to bear with us.” So I said, “Okay.” She said, “Report to work at this date,” and it was December 13th, so my anniversary’s coming up very soon, in two weeks, and she said, “Here’s the address in Glen Rock, New Jersey.” And so I drive out to New Jersey the 13th of December and I’m riding up and down this road looking for the address and I can’t seem to find it, so much so that I am now late. What she didn’t tell me was it was a bank building. It was like in a little strip mall.
VAN ORMER: You didn’t even have your own building!
HOLLOWAY: No, it was a bank! The offices were upstairs in a bank. I don’t even remember the name of the bank, to be quite… It was a regional, local bank in New Jersey, in Glen Rock, New Jersey, and there were a bunch of people huddled up in little offices. I went to report to the chief administrative officer there, and he also oversaw personnel, and he said, “Well, Doug, you know we are going to be moving our offices but right now we want you to take this desk in front of our head producer,” a guy by the name of Jim Drake, who ran our sports department, and it was a desk outside of his office and in the corner were a bunch of boxes, maybe four or five boxes, with contracts in them, no alphabetical filing or anything, just boxes with contracts, and they said, “Here’s your business.” From that we built a distribution department and the rest is history about USA Network in terms of it being a multi-billion dollar business and having complete full distribution. But it was a great time, those early days. And then they hired a gentleman by the name of Gil Fasio, who came in as Vice-President of the department about six months into my tenure there and together we built that business. He left after four years and in 1987 I took over as head of that business and brought it to where it was when NBC purchased it in 2004.
VAN ORMER: So at USA there were programming networks popping up all over the place. How did USA Network differentiate themselves from the pack?
HOLLOWAY: Well, the thing that we identified early on was we thought that if we could build the local advertising business for the cable networks and USA would take the lead on that then we could have a reason for the cable operators to buy us because in the early ’80s and mid ’80s there weren’t a lot of channel availabilities on cable systems and a lot of channels were trying to get on at that time. The local cable advertising business was a fledgling business. A lot of cable systems didn’t sell any advertising at all and those that did didn’t sell a lot of it, and so what I decided at USA was that we would make our mark being the premier local advertiser supported network. So we invested in research, we put together kits, we created a department to go out and train and sell the inventory for the cable systems and that really enabled us to differentiate ourselves and we created a model that showed where a cable system could sell our advertising and offset the fees that we were charging. There was a major push in the late ’80s by all the cable networks to increase the revenue generated from affiliate relations because programming costs were escalating so rapidly that we couldn’t generate enough advertising on a national basis to support the model. So we decided that if we could show where they can make money off of us locally and we would support that with marketing programs as well then we would have an inside track to get greater distribution, to be more of a benefit to the cable operator and get much closer in terms of their business. So I spent those early years at USA crisscrossing the country, learning the local cable business in a way that I hadn’t learned it before and really putting forward new programs that created the local advertising business in support of what we were trying to do because we were under a lot of pressure to have better programming, more programming, fewer repeats, higher quality programming, and eventually move into original programming. And that’s where we also, from a programmatical standpoint, really tried to make our mark. USA Network was the first network to produce original movies, the first basic cable network. We were the first network to produce original dramatic series, and we were the first network to buy big, off-network syndicated shows like Miami Vice and Air Wolf. As a matter of fact, Air Wolf was the first show that was an original production of sorts. We bought the original Air Wolf and then to cut costs we used the action sequences that were produced for the original series on CBS of the helicopter and then we just shot new specific footage of the characters interacting and then any time there’s an action sequence they would bring out the library footage from the original series and so we were able to have a new continuing series at a fraction of the cost of what the original was. So that really kind of created a lot of momentum, one to get our advertising rates up, and two to really boost our affiliate revenue.
VAN ORMER: At what point was there a decision made to branch out and launch some other networks under the USA Network umbrella like the Sci-Fi Channel?
HOLLOWAY: Well, from the very beginning we wanted to launch networks. Well, not from the very beginning, but by the time we became profitable in the late ’80s, when I had taken over the affiliate relations department in ’87, we were then profitable, we were looking to launch networks. We had a network that we wanted to launch that was action/adventure. We looked at buying the Nostalgia Channel, we looked at starting a sports network, we looked at any number of businesses but could never get anything green lit from the movie studios. We even looked at and were very close to buying the Hanna Barbera library when Ted Turner stepped in and bought it. We felt that we had a large kids business at that time and we felt that moving into a 24 hour kids’ channel was a major opportunity. We even were getting ready to get into the financial news business. We had a deal with Dow Jones to buy Financial News Network and in the 11th hour the movie studios pulled the plug on our deal. We had a terms sheet and everything and we would have created our version of CNBC, but as it turned out they bought Financial News Network instead and the rest is history with respect to that. But we saw a need to move into new cable networks and in 1987 when Ted Turner launched TNT that need was driven home in ways that we had no idea whatever transpired, and that was Ted had gotten Glenn Jones, who owned Jones Intercable, to agree to drop USA Network on the date of the launch of TNT and as it turned out that was a major milestone in, I think, network and cable operator relations and probably changed things not for the better that had a very long-term impact because that feud went on for almost two years and involved a lot of the same people that are still around in the business today. I was really at the forefront of that and it all really began when TNT announced that they were going to do one price for all cable networks. Let me go back. It all began when TNT announced that they were going to have one price for all cable systems regardless of size and there was a lot of back and forth in the cable business because there were huge discounts on the rate cards of the cable networks based on size. They were all volume based discounts. It was good news/bad news for USA. Strategically we decided that we were going to use that announcement because they were targeting their network directly at USA Network and we were the industry leader in basic cable at that time. What we decided to do was to collapse the discounts on our rate card but we had a huge increase which was unheard of at that particular time, which were two five cent rate increases over two years. Glenn Jones got together with Ted Turner from what we understand and agreed to drop USA Network based on our rate increase notification and then carry TNT. It set off a huge war which changed the way contracts were written since then for cable networks because what happened was he dropped us in 1.3 million homes and then we went into a local combative mode where we talked to local political figures, we got local community groups to support our efforts – newspapers, radio, anyone that we could at that time to support getting USA reinstated. They actually kept us off for the better part of 2 years until we negotiated a settlement. We filed suit, we tried to get a court injunction against them of which we were unsuccessful, and Carl Vogel and myself and Steve Brenner, our general counsel at the time, negotiated over several months a settlement which enabled USA to be reinstated.
VAN ORMER: So there were also a lot of partners involved in USA Networks, one of which was Time, Inc., and in ’86 they sold out. Can you describe the impact that had on the progression of the network’s development?
HOLLOWAY: Well, Time, Inc. was unhappy with its movie studio partners, Universal and Paramount. They were fairly difficult partners. Time, Inc. wanted to grow the business in ways that the other two didn’t. In some respects the studios used USA Network to offload a lot of syndicated programming and movies and Time, Inc. wanted to move more aggressively into original programming and grow the business in a much bigger way because they had tremendous success with HBO and that company. They were moving aggressively into cable system operations; they wanted to own other cable networks, basic cable networks, but were restricted by the covenants of the deal of the movie studios, of the partnerships. So they couldn’t own another basic cable network outside of that partnership and the partnership was not allowing USA to expand into other networks. So they felt that they were better off selling out. I believe the valuation in ’86 was for 46 million dollars. But once they sold off it really set, I think, a lot of things in motion for the company. Ultimately, Paramount sold out but those companies each went through their own set of transitions because Paramount was purchased by Viacom and then Universal, which was owned by MCA sold to Matsushita and Matsushita ultimately sold Universal to Seagram’s and so we were going through a lot of management tugging and pulling and finally by 1991 I identified and we had conversations with Mitch Rubenstein, who had created the concept of the Sci-Fi Channel, and part of what I was doing in those days was also looking for new channels to buy or to start and the Sci-Fi Channel had been out in the marketplace for a concept for about a year and a half or so, and Mitch Rubenstein was a small cable operator and television and radio station operator out of Florida and he came up with the concept of the Sci-Fi Channel based on going through a bookstore and seeing what the largest selection of books… what genre those were and they were sci-fi. So he teamed up with some people and created the Sci-Fi concept and we ended up buying that concept. We were able to sell the studios on the concept because finally they realized that a lot of network’s concepts had come and gone, a lot had been successful or were in the process of being successful that we had wanted to do and there were the development of the network groups – the Turner group and the Time, Inc. group and you had the Warner Amex group. They were all gaining shelf space and leverage in the industry and we were not gaining, although we were one of the larger networks stand alone, and we felt that we really needed another brand. The thing that they liked about Sci Fi was that they had sci-fi libraries. As a matter of fact, Universal has probably the largest sci-fi libraries of movies and series, and Paramount had a substantial number of titles as well, so that provided them with an opportunity to repurpose a lot of their library product. So we launched the Sci Fi Channel in 1992 and it was a very aggressive launch. It was actually during the freeze imposed by the government on cable system launches and networks being launched, and it was a very difficult time. As a matter of fact, in the first 18 months we had almost no growth and we were very close to being shut down because the Cable Act and the investigation into the cable business by the government put a freeze on pricing and rate increases and made it very difficult to get a cable network launched on a cable system. It was around the same time that Direct TV was preparing to launch, and it was really Direct TV’s launching that basically saved our business because the studios were in favor of shutting the network down because they didn’t see an end to the freeze and we were off our growth projections because of what was going on in the marketplace. I did one of the first basic cable deals with Direct TV. A good friend of mine had worked there, Keno Thomas, and I made a deal. I said, “Keno, you can use me to get other cable networks to sign,” because everyone was afraid to sign up with Direct TV because of any backlash they would get from cable operators about distribution or deals being done, and I said, “Look, you can use me secretly to say you have a deal with USA Network and you can use me publicly if you get HBO and ESPN and a Turner network signed up, then you can come out with a major press release, but until then you can just quietly whisper in people’s ear that you’ve get USA in your pocket, and if you do that then we can get the Sci Fi Channel launched and both of us can have a win/win situation.” And so that’s kind of what happened and so they used us and we got distribution of Sci Fi and when the cable operator saw Direct TV beginning to grow and Sci Fi being everywhere that they were… the freeze on distribution was lifted by the government and the rate increase moratorium was lifted, and then cable systems were able to put networks on and Sci Fi became one of the fastest growing networks through the ’90s as a result.
VAN ORMER: And then of course after the freeze was lifted in the late ’90s there was a lot of consolidation that started happening and USA Network was not immune to that. Vivendi Universal acquired USA Network assets in 2001 and then two years later, of course, NBC and Vivendi Universal merged. What direct impact did that have in your career at USA and how did that affect the network?
HOLLOWAY: Well, you know, it actually dates back to 1997 or late 1996. I was then at USA and a funny story… I was interviewing to leave USA Network to become president of distribution for the Home Shopping Network which had been recently purchased by Barry Diller. Right at that same time Viacom decided they wanted out of the USA partnership because they wanted to expand more aggressively into other basic cable network and they were prohibited from owning networks outside of the partnership. And so by now Universal had been sold to Seagram’s and Edgar Bronfman who was friends with Barry Diller had gone to Barry and they cut a deal that if he got control of USA Network he would then sell the television assets to Universal which would include USA to Barry Diller. Barry Diller had decided that he wanted to get aggressively back into the entertainment business. So Viacom cut the deal with Seagram’s in late ’96 and then in ’97 Seagram’s cut a deal with Barry Diller’s company which was then Home Shopping Network to sell him the domestic television assets of Universal which included USA Network and the Sci Fi Channel. Barry bought them and he renamed his company USA Networks, Inc., and then at that point in time I took control of distribution for the Home Shopping Network, and that was the irony of it was that I was at the time getting an offer from Barry to be head of his distribution and he ends up buying the company so I ended up working for him anyway. I took over distribution for Home Shopping Network and the thing that Barry had envisioned for his company was that we also owned 12 Silver King stations, which were about 40% of the distribution of Home Shopping Network, and he wanted to uncouple that distribution so that he could create hyper-local TV stations around the country in the 12 markets and unleash the value of those stations. And so I was given the task, working with John Miller who was then head of the TV station group, working with John and others to create a strategy that would remove HSN distribution from the TV stations and allow John and his group to go program the TV stations, and then we had to resell HSN into the local cable systems that carried the retransmission of those TV stations. So it was a 3 ½ year process, roughly, that it took us to redo the distribution for Home Shopping Network all the while continuing to grow USA and Sci Fi. So it had a huge impact because it was a monster of a task to get accomplished, which was to resell everywhere we had distribution for Home Shopping Network in 40% of our homes, and ultimately we accomplished that and then Barry sold those 12 stations to Telemundo, and then along the way we purchased from the CBC, the Canadian Broadcasting Corporation, we purchased Trio, which was a fledgling network, and News World International, which was a domestic and international news service.
VAN ORMER: So it really expanded a lot, and then of course… Where in the timeframe did NBC enter the picture and the merger?
HOLLOWAY: Well, that all took place between 1997 and 2001, I believe, and then Barry Diller ended up selling all of his television assets with the exception of… well, he sold the Universal television assets with the exception of now Home Shopping Network, he sold them to Vivendi. Jean-Marie Messier, master of the world! But he kept a position in the company and Jean-Marie, as you know, had this huge international conglomerate which was Vivendi, which they renamed or named Vivendi, and loaded that company up with debt. We almost went bankrupt in 2002 but the French government and French banking system bailed him out because it was an international embarrassment and Vivendi decided… they brought in a new CEO after about a year, Jean-Marie was booted out, and then they sold it – ultimately they had a Dutch auction and ultimately sold the company to NBC in 2004. Along the way, I think probably the biggest impact on me professionally was the fact that all of the people that I had started with at USA Network were gone. They were all casualties. Kay Koplovitz left in 1997 and Steve Brenner, our general counsel and ultimately became president of the network, left around 2000, and all of the executives that I had worked so closely with for the better part of 15-20 years were all being moved out. Between ’97 and 2004, our company was just a revolving door of executives.
VAN ORMER: Well, how did you so successfully navigate those waters and why? Why did you stay on during such a turbulent time?
HOLLOWAY: You know, I don’t have a good answer for you as to how I was able to stay on. I really put my nose down to the grindstone. I decided that I was going to be totally versatile and flexible with each new change in management and I was going to continue to do the best job I possibly could and work as hard as I could and be smart about it, and just try to bend with the wind and read as many of the tea leaves of the corporate politics, which in those years were quite substantial, and to get through it, take one day at a time.
VAN ORMER: Well, you did well and then here you are, finding yourself at NBC, kind of full circle from your grand 20-year plan to work for a television network.
HOLLOWAY: Well, kind of going back to that 20-year plan – if you recall, my 20-year plan was to be president of a major television company in 20 years and I got my presidency when I was 43, actually it was 22 ½ years it took me to do that, and the interesting part of it was I did stay on track. I did track all along the way and I did do all the things that I had set out to do.
VAN ORMER: Were you ever tempted to veer off of your plan?
HOLLOWAY: Many times, many times. There were periods at CBS Television Network where I had really difficult bosses and some very difficult assignments and politically I was out of step and was very close to leaving or abandoning the plan. From the period of ’97 to 2004 when Barry came in and bought the company and we had just a complete turmoil of executives and many executives just wanted to make me road kill that came through and I just fought and stood my ground and tried to continue to deliver exceptional results, which I was able to do – never missed a budget, always exceeded plan, always did what I said I was going to do, and so those were really difficult times because there were a lot of people that didn’t know me, I was the only black in the executive suite, a lot of people by then had heard about me, I had a reputation in the industry, I was a very visible figure. In the early ’90s, I believe it was ’91 or ’92, Kay Koplovitz and I set off on a strategy to also help make USA have a bigger presence in the industry and part of that strategy was for me 1) to be chairman of NAMIC and she was very supportive of that, to address the whole diversity issue in the cable business, and 2) was for me to become very involved in CTAM, getting involved on the board, become an officer, and that was around the same time that Char Beales had rescued CTAM. She came into CTAM in the early ’90s and CTAM was almost bankrupt and she was brought in to really resuscitate it and change its mission and whatnot, and I joined the board not a few years after that, but I got involved in the local chapters and the goal that Kay and I had kind of established and the strategy was that I would, because of my profile in the industry from a business perspective running USA Network’s distribution and being involved in the executive committee because I sat on the executive board for 17 years at USA running the entire company with her and others – Steve Brenner, and our head of programming, David Kennon, and others – but was to have more of an impact. We were trying to bring about industry change that would benefit us as opposed to hurt us because we were a stand alone company and we had a fledgling network by then, which was the Sci Fi Channel, but we really wanted to play a bigger role at the table, and so she was on the NCTA board and I would attend NCTA board meetings and gather intelligence kind of sitting around the back of the room, and then I would become active in CTAM which ultimately led to me being the longest tenured board member in the history of CTAM. I served longer than anyone else and also was a chairman of CTAM. Under my guidance as chairman of CTAM, we created the CTAM Foundation which established the CTAM educational program that we now have at Harvard, which has trained hundreds of executives. It began at Northwestern University and we moved it to the Harvard Business School a number of years ago. Those were major things to have an impact on and things that we were proud of, and ultimately it did help the network because there was a time when I was running distribution that there wasn’t anything that went on, whether it was political in Washington – I did a lot of lobbying for a number of major cable initiatives in Washington and state offices, state houses around the country – we had a positive impact on our business and I think also on the industry.
VAN ORMER: Well, you’re still very active in the industry and I don’t want to suggest that you aren’t still making contributions in the future, but from your vantage point right now what would you say your professional legacy has been to the industry or what do you envision it being when your career is done?
HOLLOWAY: I’d like to think my legacy was to be one of the pioneers in the affiliate relations business, helping to establish these networks, these cable networks and the health of the cable systems, and now cable representing at least 50% of the profits of NBC and cable networks representing a lion’s share of television viewership, and then also helping to bring diversity to the executive ranks of these major media companies which now run the cable business, and a survivor. Friends of mine call me the Mohican because I have survived longer than pretty much anybody else in my side of the business.
VAN ORMER: Today we sat with Douglas Holloway and learned of his career. His interview will be available as part of The Cable Center’s Oral and Video History collection and can viewed on the website, www.cablecenter.org. Douglas, thank you very much for your time today.
HOLLOWAY: Thank you.
