Interview Date: Thursday March 02, 1989
Interview Location: Washington, DC
Interviewer: Max Paglin
Collection: Penn State Collection
Note: Audio Only
PAGLIN: This is the beginning of a taped oral history of Jack Matthews, a prominent attorney representing many clients in the cable television industry during his years of practice in Washington D.C. It is March 2, 1989. We are in the offices of Dow Lohnes and Albertson in Washington, D.C. in which firm Mr. Matthews is a partner. My name is Max Paglin and I am the Executive Director of the Golden Jubilee Commission on Telecommunications. This oral history is a joint endeavor with The National Cable Television Center and Museum at Penn State. The objective of this interview, among others, is to record by a series of interviews the recollections of the leading figures in cable television and those who had a role in the evolution and development of cable.
This is the first interview in the series. What I’d like to do in this first session is to get some information from you on your early personal history and then we’ll go into your first involvement in cable and so on.
MATTHEWS: I’m going to give you a short biography, Max, for the file that is in the firm’s large brochure. I’ll just verbalize a little bit. I was born and raised in central Massachusetts. My father died when I was quite young and I was raised by my mother who was a school teacher and town clerk.
PAGLIN: What town was that?
MATTHEWS: North Brookfield, Massachusetts. Near the second largest city in New England, Worcester, where I went to Catholic boys prep school.
PAGLIN: Tell me first, when were you born?
MATTHEWS: I was born on August 2, 1932. I’m 56 years old. My father’s name was Everett C. Matthews.
PAGLIN: And your mother’s name?
MATTHEWS: Vera Brucker Matthews. My mother was the daughter of Irish and German immigrants. My father was from a New England protestant family that has been here a couple hundred years.
PAGLIN: Came over on the Mayflower, so to speak.
MATTHEWS: Ironically, she was much better educated than he was.
MATTHEWS: My father’s family went back a long way in Massachusetts and central New York. We never paid any attention to the history.
PAGLIN: Really. Why was that?
MATTHEWS: Well, I think the emphasis when I was a kid was more on my mother’s side of the family. Those were the relatives who lived near us. My father’s relatives were either dead or lived in another state. Except for his sister who went on in her later years to marry retired Senator Flanders in Vermont, his second wife. We didn’t see a lot of that side of the family.
PAGLIN: Did she move to Vermont?
MATTHEWS: Yeah, she was in her 60s or 70s at that point.
PAGLIN: Your father died when you were quite young.
MATTHEWS: Yes, it was a terrible thing. He died on V.J. day 1945, the whole world was celebrating the end of the war and my mother’s husband died. He had a severe ulcer for many years that he hid from my mother.
PAGLIN: Stomach ulcers.
MATTHEWS: Yes. And it exploded on him and he went to the hospital and two days later he died. In those days I’m not sure they could have saved him, but they didn’t have the microsurgery techniques that they have now.
PAGLIN: How old was he?
MATTHEWS: He was 48 years old.
PAGLIN: A young man.
MATTHEWS: My mother lived to be 93. Never remarried.
PAGLIN: While your father was in business what was his line?
MATTHEWS: He started out with an eighth grade education working in a local small New England factory. They manufactured rubber placemats and shoe heels and so on. He ended up being the production manager. My mother always worked. She was a schoolteacher. I got her brains.
PAGLIN: I hope so. Didn’t you say she was a town clerk?
MATTHEWS: After my father died she was elected town clerk and gave out all the licenses and that supplemented her income.
PAGLIN: In those days they didn’t leave much insurance, did they?
MATTHEWS: Just a few thousand dollars to pay off the mortgage.
PAGLIN: Did you have any brothers and sisters?
MATTHEWS: I had a brother and two adopted sisters.
PAGLIN: Were they adopted when you were a young boy?
MATTHEWS: Yes, my mother had lost a couple of girls in childbirth and one in an automobile accident, so she adopted two girls. My sister Pat was only six months old when she came with us and I was only three.
PAGLIN: So this was your sister.
MATTHEWS: They were my sisters. My sister Rosemarie lived with my mother all of her life. She never married. She was a nurse. I owe her so much. I just bought her a house several years ago.
PAGLIN: She still lives up there. And your brother?
MATTHEWS: My brother lives in Florida. God help him. He works for George Steinbrenner. George owns a couple of hotels of which my brother is the general manager and vice-president.
PAGLIN: He doesn’t work on the ball team.
MATTHEWS: No, he doesn’t work on the ball team. Although I gather from time to time that he has to be in charge of catering the All-star functions or something and the World Series parties.
PAGLIN: Where is that?
MATTHEWS: Tampa. My brother is 62.
PAGLIN: He’s 62. Does he have children?
MATTHEWS: He has four children.
PAGLIN: You started telling me where you went to school.
MATTHEWS: I went to a Catholic teaching brothers prep school in Worcester, a city about twenty miles away. It was called St. John’s, an excellent school.
PAGLIN: When you say teaching brothers, is that a denomination?
MATTHEWS: Yes. As opposed to nursing brothers or serving brothers. These were the Xavierian brothers for St. Francis Xavier.
PAGLIN: You started there in grade school?
MATTHEWS: No, I started there in high school.
PAGLIN: Were you active in extracurricular activities in high school? Athletics and the like?
MATTHEWS: Yes. Well, I wasn’t a very good athlete but I was very active as captain of the debating team. I was the school orator as they call them. Acting, also.
PAGLIN: You were in drama?
MATTHEWS: Yes. An editor of the paper and yearbook. Things like that.
PAGLIN: Then you went on where?
MATTHEWS: To Holy Cross College in Worcester, a Jesuit School. In those days we considered Georgetown a second rate playboy school.
PAGLIN: (Laugh) Has it changed?
MATTHEWS: Yes, it’s come up a lot.
PAGLIN: At Holy Cross, what were some of your other activities?
MATTHEWS: Basically those same kinds of things. I didn’t have those titles but I sang in the glee club for four years. I have wide range but I sang bass in the choir. We had a lot of fun there. Holy Cross was a very strict all boys school then. We had a lot of athletes in the glee club and the reason we all wanted to be in the glee club was because it was a big social thing. We used to go on tour every year and we gave a lot of joint concerts with girls schools. That was always a lot of fun. We had a wonderful time. We sang with the Whiffenpoofs. We sang on the Ed Sullivan Show.
PAGLIN: What years would these be?
MATTHEWS: This was ’50 ‑ ’54. I was very active. One of the reasons I was able to afford to be a border at the school was that I joined the Naval ROTC. I got a four year full scholarship. There are 50 odd naval ROTC colleges in the country. You get commissioned as a midshipman and you go on the same cruises as the Naval Academy does for three years. It was right in the beginning of the Korean War and since we were appointed midshipmen we didn’t get drafted. We were actually in the service. I was commissioned the day I graduated. We had our naval uniforms on underneath our caps and gowns.
PAGLIN: When would that have been?
MATTHEWS: June of 1954. And off we went.
PAGLIN: Where did you go from there?
MATTHEWS: Three years on an aircraft carrier.
PAGLIN: What sort of carrier?
MATTHEWS: USS Tarawa.
PAGLIN: Did they see action?
MATTHEWS: No, we were in the Atlantic fleet and in the Mediterranean and in the Caribbean.
PAGLIN: Well, you were already commissioned.
MATTHEWS: Yes, I was a regular commissioned Ensign and Lieutenant j.g. I knew I wanted to go to law school; I knew I wasn’t going to make the Navy a career. I was fortunate in that in addition to being an officer of the deck and a regular naval officer, I wormed my way in to be the assistant legal officer to the legal officer on the ship.
PAGLIN: On the Tarawa?
MATTHEWS: Yes, and they sent me to the Naval Justice School at Newport, Rhode Island which was a four month course. During my service and for the last year I was the legal officer on the ship and I was the only, to my knowledge, non‑lawyer legal officer of a major combatant ship in the Atlantic Fleet. I had to get a waiver to be a legal officer. Tried fifty or sixty court marshalls before I ever even went to law school.
MATTHEWS: So things like evidence and procedure and all that sort of stuff were kind of easy for me in law school.
PAGLIN: You say this was the only instance where a Naval legal officer wasn’t a lawyer?
MATTHEWS: At the time I was told I was the only non‑lawyer who had a legal officer billet on a large ship.
PAGLIN: What was the size of the crew?
MATTHEWS: The crew, plus the embarked squadrons–we probably had 2,500 men. It’s like being the D.A. for a small town.
PAGLIN: That lasted until ’57. Then where did you go?
MATTHEWS: I went to Georgetown Law School.
PAGLIN: You came to Washington?
MATTHEWS: I came to Washington. I knew that I had wanted to go to law school. I had known that since I was a kid and Georgetown was an excellent law school. They offered me a full scholarship.
So I came down to Georgetown. Another thing that commended me to Georgetown was because I had three years in the Navy. Georgetown during the Korean War had put in a two year program, instead of three years. They kept it and I just squeaked into the last class. You went twenty four months round the clock, no summer vacations. It was a twenty four month program. It was the identical program as the three year program squeezed into two years. You didn’t take one course less. Most of the guys that took this were veterans, there were about a hundred of us and we were a little bit older.
PAGLIN: Did you have the G.I. Bill?
MATTHEWS: Yes, I had the full G.I. Bill and I was also in the naval reserves, so I didn’t have to work. My family couldn’t support me; we didn’t have any money. But between the G.I. Bill and the scholarship and making fifty bucks every couple of weeks going to a naval reserve meeting, I saved money. I actually saved money.
PAGLIN: Fifty bucks a month in those days, I think you could do it probably.
MATTHEWS: That was marvelous. The other great thing about Georgetown was that the D.C. Bar had a rule then that you could take the bar exam if you had started your last semester of law school. I made that by a week.
PAGLIN: You seem to get in under the wire.
MATTHEWS: Yes, and I took the bar exam before I graduated and knew that I had passed the bar before I had graduated. There were about ten of us that did that. I remember taking my labor law exam, there was a marvelous long‑time character who was a professor at Georgetown called Dr. Walter Yeager who wrote the definitive work on contracts.
PAGLIN: Yes, I know the name.
MATTHEWS: He and Williston were the two big contracts men. Georgetown used his treatise and Harvard used Williston’s.
PAGLIN: Columbia used Williston’s too.
MATTHEWS: Dr. Yeager died recently in his late ’80s, early ’90s. Around for years–a marvelous fellow. He also taught labor law. For some reason we took the final exam in labor law in the evening; and the night of the exam there were six or seven of us in the class who had passed the bar and the results had been announced. Yeager had us stand up and take a bow. As I sat down, the guy sitting on my right leaned over and said sarcastically, “You think you’re going to have any trouble passing this one.” I got something like a 98 on my exam–I don’t even think he read my paper.
PAGLIN: I would think it was kind of unnecessary after you pass the bar. That’s unusual because I never heard of that particular thing. In New York we just sweated it out all the way.
MATTHEWS: This is something they put in during wartime. Again, I was part of the last twenty four month class and I think that was the last year and then the bar association changed the rule that you actually had to have graduated before you could take the bar. Of course, I guess if you had taken and passed the bar and for some reason you didn’t graduate, malfeasance or something else, they would have had a problem on their hands.
PAGLIN: The problems with the dean’s daughter, so to speak. They would have a problem on their hands.
MATTHEWS: I have great feelings about those days. I was an editor of the Law Review.
PAGLIN: You were an editor of the Law Review?
MATTHEWS: Yes. It was wonderful experience. It’s always something we looked for in people here at our firm.
PAGLIN: In the case of Georgetown being so close to the major law firms in Washington, particularly Dow Lohnes and Albertson, they hired right from there?
PAGLIN: And some of the other firms did too. Did they teach any communications courses in those days?
MATTHEWS: No. I don’t say this very often, but for the record I’m very proud of the fact, I graduated first in my class in law school.
PAGLIN: That is very important.
MATTHEWS: My wife tells everybody that.
PAGLIN: Well, what’s wrong with that?
MATTHEWS: I then went on to a Federal clerkship. I took the one that John Sirica offered me. He was a relatively junior and unknown federal district judge in those days. That would be ’59. He was a Georgetown graduate and liked to hire Georgetown clerks. I clerked for him for about a year and a half. During that period I had some time left on the G.I. Bill so I took a Masters of Law at Georgetown. Mostly it was adjunct professors and it was a lot of fun. Dick Wiley and I were classmates.
PAGLIN: Really? He didn’t originally come from Georgetown.
MATTHEWS: He came from the Midwest.
PAGLIN: Right. Illinois.
MATTHEWS: Dick was an army “JAG” (judge advocate general) so we were into a lot of classes together. That’s when we first met. I remember he used to come in from the Pentagon in his captain’s uniform.
PAGLIN: He must have, in those days, made an imposing figure.
MATTHEWS: Dick always did make an imposing figure.
PAGLIN: He didn’t come to the Commission until 1970.
MATTHEWS: Even then.
PAGLIN: You spent the year and a half with Judge Sirica?
MATTHEWS: And again I was lucky to get several offers around town.
PAGLIN: What was the first firm you went with?
MATTHEWS: This one is the only one I’ve ever been with.
PAGLIN: You came right to DL&A.
MATTHEWS: I came right to DL&A. Bill Sims hired me. In, I guess, 1960-1961.
PAGLIN: You came in as an associate.
MATTHEWS: Yes, and I’ve been here ever since.
PAGLIN: There aren’t many who have been around that long with one firm.
MATTHEWS: We had some major decisions to make about ten or twelve years ago. We opted to grow and quadrupled in size. It’s unfortunate–you’ve got to do that to survive.
PAGLIN: What is the professional roster of DL&A?
MATTHEWS: We are up to about 200 now. I think I was probably the twentieth or twenty‑first.
PAGLIN: At the time?
MATTHEWS: At the time.
PAGLIN: When the firm was 20 lawyers you were then in the Munsey Trust Building, if I remember correctly. So from 20 to 200. So this was 1960. If you were working with Bill Sims, you got directly into broadcasting.
MATTHEWS: About the first year, you may recall that Newton Minow was chairman of the FCC. They were deintermixing the VHF and UHF TV channels. You were, I think, general counsel at the time.
PAGLIN: I was general counsel.
MATTHEWS: They were deintermixing the country and in addition to the overall UHF deintermixture where they were going to intermix and add UHF channels, they were going to deintermix some markets and change VHF assignments to UHF. Of the eight targeted markets, we represented VHF stations in four.
MATTHEWS: This was life versus death to these people who owned the VHF’s.
PAGLIN: What markets were those?
MATTHEWS: Well, the two I worked in were Columbia, South Carolina and Montgomery, Alabama. Small markets and they were owned by a company called Cosmos Broadcasting. Still a client of ours and then headed by one of the great gentlemen in broadcasting. He went into cable eventually. A fellow named Dick Shafto, G. Richard Shafto, was a marvelous man, still in good health.
PAGLIN: He’s a very good‑looking guy, if I remember.
MATTHEWS: Sure is. Bill Sims sees him all the time. Dick has a beautiful home down in Myrtle Beach. Their company was in other businesses and Jimmy Byrnes (former Secretary of State and Supreme Court Justice) was close to them in the marvelous old South Carolina operation.
I’ve got some favorite people from those days when I was a kid starting out. John Rivers Senior was one, Dick Shafto was another and Leonard Reinsch was another. Curly Van de bon Coeur was too.
PAGLIN: From Syracuse.
MATTHEWS: I’ll tell you an interesting story about Curly Van de bon Coeur going back to his early TV days. Syracuse was where the Newhouse people have their flagship station. For some God awful reason, the headquarters is still up there.
PAGLIN: Is Curly still alive?
MATTHEWS: No, he died last year. Syracuse was a two V market and they were going to drop in the third V. Of course we opposed it as long as we could. Going back, by the way, to the deintermixture. They didn’t deintermix one of those markets.
PAGLIN: Of the four. What were the other two?
MATTHEWS: Well, there were four more. They ended up not deintermixing them.
PAGLIN: What were the other two that the firm represented?
MATTHEWS: Johnstown was one.
MATTHEWS: Johnstown, Pennsylvania. Earl Stanley handled that and I can’t think what the fourth was. We had four of the eight. These were major cases. They thought if they went to UHF, this was before high power and whatever, that it was going to be the death for them. The UHF, the All Channel bill, hadn’t come through yet. Sets couldn’t receive UHF, the antennas hadn’t been made. I became an expert on the effect of leaf foliage on UHF and rainfall on UHF.
PAGLIN: Yes, I remember that very well. Commissioner Bob Lee later commissioned a study. This was before the New York UHF Experiment, was it not? That came later.
MATTHEWS: Yes. Anyway, that’s how I started to tell you a story about Curly Van de bon Coeur. They were going to drop the third V into Syracuse that had already been allocated. And the appeals had been exhausted. We were all watching for the applications. My instructions from Bill Sims were now, by God, you check every damn day at the FCC to alert Curly on this application by whoever it was, as soon as it is filed and get all the details. Digest the application and get a complete copy of the application. So, I said, “Yes, sir.” Well, the day the application was filed, I immediately sent Curly a telegram. The telegram said, “Application for Channel 9, Syracuse filed, details follow.” It took me two or three days to get the details up to him. In those days we didn’t have Federal Express, Fax or telecopiers or anything like that. So it took him about five days to get it. What I didn’t know was that Curly never got the telegram and he read in the paper about this happening. A week later, Fred Albertson, who was our beloved founder and senior partner, came into my office with a letter and he said, “Jack, I can’t understand this, you’ve been with us a year or so, you’ve done excellent work for us and I can’t understand you dropping the ball on this one. I said, “What are you talking about, Mr. Albertson?” He gave me the letter and it said:
I just want you to know that I learned through the public press of the filing of this very important Channel 9 application in Syracuse, three days before hearing about it from your office. Thank you very much for your prompt attention to my interests and important affairs.
Curly Van de bon Coeur
And I said, “Mr. Albertson, I sent him a telegram as I was instructed to do.” I told this story at Bill Sim’s 30th party with Curly sitting out in the audience. I told this story at the Congressional Country Club to an audience of two hundred people. Fred said, “We always save copies of telegrams. You get me a copy of that telegram.” I got him a copy of the telegram. He called Curly up on the telephone and Curly wrote me a letter of apology. I thought that was very big of that guy. I was just a kid.
PAGLIN: Yes. Curly was a real gentleman.
MATTHEWS: I was just a punk kid. I told Bobby Miron that story and he told Donald Newhouse that story. That’s the way Curly was. Thirty years later, twenty five years later I told the story to a whole bunch of people and I got a big laugh. He had forgotten all about it. It was typical of Curly to write the nasty letter but it was always typical for Curly to apologize if he had done anything wrong.
PAGLIN: So you got involved in the deintermixture of the U into the V markets.
MATTHEWS: Basically, that was the only broadcasting I did. After that our clients started getting into cable.
PAGLIN: So, you worked only with Bill Sims or did you work with some of the others like Tom Wall?
MATTHEWS: Mostly Bill Sims and Johnny Rafter.
PAGLIN: And you helped build up the firm.
MATTHEWS: Yes–and regarding retirement, you are an active partner as long as you want to be. There’s a nice generous retirement stipend.
PAGLIN: When did you get into cable?
MATTHEWS: ’61 ‑ ’62. Around there. Two things happened that got me in cable. This is a good bridge. We had a little section in the firm then headed by a fellow who is still alive named Joe Keller. Very ably assisted by a guy who’s been our friend for years–Jerry Heckman.
PAGLIN: Is this the Keller and Heckman firm?
MATTHEWS: Well they were with Dow, Lohnes, and Albertson first.
PAGLIN: Originally, before they split off?
MATTHEWS: That’s right. A fellow named Bill Borqhesani and a fellow named Mike Meehan. They were practicing mobile radio law and microwave law and things of that sort, and represented a number of major trade associations in those fields. You may recall, Max, that in the early ’60s, the frequency spectrum fights really started in earnest with people vying for the spectrum. Their user groups, all these business groups, the petroleum radio association and all that sort of stuff were going after television spectrum.
PAGLIN: Because it was in the VHF.
MATTHEWS: It was in the VHF band. The conflicts became insurmountable. They left and it was a rather amicable parting. As a matter of fact as I recall they leased space from us for a while. They set up their own firm which is still in existence. A marvelous firm.
PAGLIN: Keller and Heckman?
MATTHEWS: Keller and Heckman, and Jerry’s been the active partner for years. He’s a close friend of some of us. Dick Brownstein, particularly. We see him socially, occasionally. There was just enough business left from what they didn’t take. Some of these companies were owned by broadcast clients of the firm so naturally they stayed with us.
PAGLIN: They used it for field broadcasting.
MATTHEWS: Well, for example, WELI up in New Haven, Dick Davis’s station. It was the voice of Long Island Sound. He put a big antenna farm up and had the boat radio and the mobile radio for the whole New York ‑ southern Connecticut area. It was a very lucrative business. These were all common carriers. There was just enough of that work to keep one young associate busy. Leonard Reinsch and some others had gotten into this new cable business.
PAGLIN: Leonard was with Cox Broadcasting?
MATTHEWS: Yes, I’ll get to that in a minute. So it was just enough of this non‑broadcast work to keep one young lawyer busy. I was kind of junior man on the totem pole and they called me in and gave me no choice about it. They said, “You’re going to handle this stuff.”
PAGLIN: When Joe and Jerry left?
MATTHEWS: When Joe and Jerry left and when we were also getting some cable business at that time. I was furious. I had been in this exciting television business. I thought that was a lot of fun. What was all this new crap that they were going to make me try. Anyway, that’s how I got started in cable law and off broadcast. And I built a major practice in it.
PAGLIN: Who were your first clients? In other words, you were the guy that was designated by DL&A to handle cable television work as it came in.
MATTHEWS: Basically, it came in initially through existing clients, like Leonard and Dick Shafto, broadcast clients who decided to get into cable. If you want some anecdotes on that…
PAGLIN: Yes, tell me.
MATTHEWS: They were very highly criticized for that and the clients were called traitors by some of their fellow broadcasters. Absolute traitors. I don’t know how true it is, but I was told that for years Leonard Reinsch didn’t receive the NAB’s Distinguished Service Award (which he ultimately got) because there were people who were blackballing him because of the pioneering role he had taken in cable TV.
PAGLIN: He was then with Cox Cable/Broadcasting.
MATTHEWS: He was president of Cox Broadcasting. He was also the executive director of the Democratic National Committee.
PAGLIN: He used to be shown in all the TV coverage of the Democratic conventions, with Leonard in the background on the platform.
MATTHEWS: Great things went with that because he always used to get to judge the Miss America contest. Leonard was a broadcast pioneer and a cable pioneer too. I was told he didn’t get that award for a number of years for that reason. But Cox was then and is now, the largest single client of this office. We’ve been their general counsel. That is, we’ve done essentially all of their work for forty or fifty years.
PAGLIN: Tell me, because this will be the first chance we have by someone who is Leonard’s counsel, Cox, broadcasting client, do you personally recall how Leonard, who was their spokesperson…
MATTHEWS: Got in it?
MATTHEWS: No, but the guy that could answer that and I’ll check with him would be Bill Sims. Bill is probably ten, fifteen years younger than Leonard but Bill was his closest legal confidante. Leonard was always ahead of the game. He just saw it coming. He said this is crazy not to get into cable. We’re in the communications business, we’re not broadcasters, we’re communicators. Of course, he had started out in the newspaper field and went into radio. Governor Cox, who was a Democratic presidential candidate in 1920, (Roosevelt was the vice‑presidential nominee) hired him to run the growing radio operations.
PAGLIN: Yes, I remember history, anyway.
MATTHEWS: So Leonard said, “I’m going to get my company in the cable business.” I think, if I’m not mistaken, that Bill Daniels probably brought him to the first few systems that he bought. I know the first cable television deal I ever closed for Cox was up in The Dalles, Oregon. They bought The Dalles, and Astoria…
PAGLIN: That’s where Ed Parsons “discovered” or invented cable television.
MATTHEWS: Yes, and Lou Davenport, who just retired from Cox, that’s where we got Lou. He was part owner of the Astoria system. I remember flying up there with Cox’s check in my hand. This was a big deal for a young lawyer. I handled what I think was a ten million dollar deal and it’s just petty cash, walking around money these days. We got a lot of subscribers.
PAGLIN: It was the Astoria system or The Dalles?
MATTHEWS: One of the complexes. They ended up buying three or four complexes up there but this was the one, as I recall, that was closer to the coast. This may have been Aberdeen. As a matter of fact, even the smaller names are coming back, Hoquiam, and Aberdeen. Some of those.
PAGLIN: They were all Ed Parson’s originals.
MATTHEWS: He was part of that deal. A number of the old northwest cable pioneers all had 5‑10% of the action.
PAGLIN: How many subscribers were involved in this ten million dollar deal, do you remember?
MATTHEWS: I don’t know. I think we paid two or three hundred dollars a subscriber for it. Which was a high price.
PAGLIN: In those days, two hundred dollars per subscriber was a high price.
MATTHEWS: I remember when Leonard bought San Diego for six million bucks. What’s it worth now, a few billion?
PAGLIN: God knows how much.
MATTHEWS: They all said, “That crazy Reinsch is paying those high prices again.”
PAGLIN: He knew what he was doing. So that was your first exposure to cable, in terms of direct client.
MATTHEWS: Yes, I was basically assigned at a very young age to be the general counsel of Cox Cable. We didn’t have the title as such but that’s what I was. I just grew up with Cox Cable. The guy I worked with was the fellow who ran the television side of Cox Broadcasting, a marvelous guy. Frank Gaither ran the radio side. He’s still alive, teaches at Emory, it’ll come to me. Marcus Bartlett, that’s his name.
Anyhow, he is the fellow that I worked with on a daily basis. We went all over the country getting franchises and submitting applications.
PAGLIN: By that time, and Cox , of course, is still a client of DL&A. Have you stayed with it? Are you active now? We’ll get to that later, but…
MATTHEWS: I was a senior advisor all those years.
PAGLIN: Cox now has what, I could look it up in the TV Fact Book, how many systems?
MATTHEWS: I think they are the fifth or sixth largest.
PAGLIN: Fifth or sixth largest.
MATTHEWS: With a couple of million subscribers.
PAGLIN: Probably Al Warren’s Fact Book would have them.
MATTHEWS: Then, just about that time, the practice kind of exploded. There weren’t many cable lawyers around, Strat Smith had his firm. Jack Cole was with Strat then. They represented TelePrompTer which then and for several years was the biggest company in the business.
PAGLIN: Irving Kahn.
MATTHEWS: Yes, we picked up Jerrold Manufacturing as a client at a very early stage. Picked up Jerrold as a client in ’62 ‑ ’63. Welch and Morgan had been their counsel. Dan Aaron, from the Philadelphia Inquirer, became the Jerrold Cable Operations Director. [Discussion re Strat Smith and the very important Carter Mountain case which gave the FCC jurisdiction over cable systems using microwave relay systems to deliver programs to CATV systems.]
End of Tape 1, Side A
PAGLIN: You were telling me about how they brought in distant signals before satellites.
MATTHEWS: Yes, via terrestrial microwave. The common carrier frequency is in the four to six megahertz band, which got us thirty, forty miles a hop. “CARS” (Community Antenna Relay Service) came later and we got a little less.
PAGLIN: “CARS” being…
MATTHEWS: Community Antenna Relay Service. In order to serve some cable systems that Jerrold was thinking of buying out in Illinois and Indiana in ’62‑’63, they were going to buy a microwave system owned by a family called Nelson. I remember Dan Aaron calling me up, and he is still a “white knuckle” flier. Dan called me up in the middle of a terrible, terrible, weather period and he said, “I need you to go to Chicago with me tomorrow. Can you go?” Jerrold had just hired us. I said “Sure, why?” He said, “Because we are going to buy a microwave system and I need you there.” That’s the first time I ever met Dan Aaron. We’ve been friends ever since. We were reminiscing about it last week at the banquet.
PAGLIN: This was about what time?
MATTHEWS: Oh, ’62, ’63, around there.
PAGLIN: What was the name, do you remember?
MATTHEWS: I think it was Mid‑West Video or something. Midwestern Relay.
PAGLIN: It couldn’t have been Mid‑West Video, that was my client. It wasn’t Eastern Microwave.
MATTHEWS: No, Eastern was on this side. Newhouse ended up buying and owning them and New York Penn microwave. It was Mid‑West something. Then Jerrold (then owned by Milton Shapp) ultimately in the ’60s became the largest operator of cable systems, after TelePrompTer, in the country. It was the second largest dues payer to NCTA. Milt Shapp, of course, dominated NCTA in those days.
PAGLIN: Milt Shapp.
MATTHEWS: In talking about the legal business, Jay Ricks and Hogan and Hartson hadn’t quite come in yet.
PAGLIN: Jay Ricks.
MATTHEWS: Yes, not that he’s a late comer. He isn’t. But Jay came in a few years down the road. Three or four years down the road. So there weren’t many of us doing cable or microwave work in those days. Strat Smith had most of the business when Jack Cole was with him. But a lot of it started coming into us. That is not just from our broadcast corner. Part of it was due to the fact that I guess we had done a good job for Jerrold–and I have told Milt this many, many times. He was great to me as a young lawyer starting out. He used to tell everybody, “Get my lawyer, Matthews. He’s terrific. He’ll do a good job for you.” So I got a lot of new clients through Jerrold references. Sammons, who is still a client, came in that way.
PAGLIN: About what time, well maybe it will come later, the business that’s come up in some of these oral histories about Milt’s company getting involved with the tie‑ins, with the equipment.
MATTHEWS: That was before my time, that was in the fifties. That was an anti‑trust case. The Supreme Court came down on them hard.
PAGLIN: So this was long before you got here.
MATTHEWS: Well, it was three or four years earlier.
PAGLIN: Come back to your contacts with other cable pioneers. You told us some of the things about Leonard Reinsch and Dick Shafto. Who were some of the other people you came into contact with who served on the NCTA Board in the early days?
MATTHEWS: Well, all of the people on your list. Ben Conroy, Bill Bresnan.
PAGLIN: Did you represent any of those?
MATTHEWS: No, they were represented all those years by Strat. Then when Jack Cole left Strat, a lot of the business, including TelePrompTer, went with them. They were their largest client.
PAGLIN: When he left Strat Smith’s firm?
MATTHEWS: Just looking at the list in your book here, Max, there’s a whole bunch.
PAGLIN: It’s at the back of our proposal, The Golden Jubilee proposal for the project on oral histories of cable pioneers.
MATTHEWS: Most of the very early pioneers were clients of Strat’s because he had been in there five or six years earlier. More of our clients were either broadcast clients of ours who expanded into cable or companies who came into it somewhat later on. Gene Schneider, Ben Conroy, Irving Kahn, Bill Daniels, Johnny Campbell, Bob Tarlton, people like that were all clients of Strat’s. Although Archer Taylor and Marty Malarkey became clients of ours.
PAGLIN: Marty Malarkey and Archer Taylor.
MATTHEWS: Yes. I argued a non‑duplication case for Archer when he owned Kalispell Montana CATV. It was in the Ninth Circuit, U.S. Court of Appeals. Henry Geller (FCC General Counsel in late ’60s) may deny this story. This was probably in the late ’60s. To make a long story short.
PAGLIN: Why make a long story short? I’ve done Archer Taylor’s oral history and he’s told his side of it.
MATTHEWS: They had an absolutely crazy situation where they were importing, by off-air pickup and then four or five microwave hops and everything else. Picking up Washington or Oregon‑‑I can’t remember which‑‑TV affiliates and bringing them down to Kalispell, Montana. A local broadcaster had a lousy ten watt translator up there. His station was located, I don’t know whether it was Dick Dudley or who it was, somebody down there, a very anti‑cable broadcaster. Fighting cable broadcasting up and down the Rockies.
PAGLIN: It wasn’t Ed Craney?
MATTHEWS: It was Craney, that’s who it was. He had a translator up there and with that poor quality translator, people couldn’t watch it. Your non‑duplication rules gave the translator priority over this beautiful, clean microwave signal. But because it was imported, it was called a distant signal. The people were screaming and everything. So Archer decided to fight these cases. You couldn’t win non‑duplication cases. I’ll get into it in a minute as to why it was a big mistake politically for us to fight those. Anyhow, we lost at the Commission, naturally, and Archer said, “How about the Ninth Circuit.” I said, “Archer, nobody has ever won one of these cases, even though Fred (Ford) later would tell everybody they could. It was very tough. They wouldn’t hear the first amendment arguments.
The way the Commission won them was very, very slick. Henry Geller always kept a rule making going. Proposing to change a rule. When you went into court and screamed “Mandamus” or whatever, Henry would get up and tell the court, “Mr. Matthews may be absolutely right about his client’s injury but we’ve got a rule making pending that may get him exactly the relief he wants.” We’d scream and you’d get up and say, “Well, they have had seven of these things and this is unfair.” But this was a way out for the court and the court would issue a little opinion saying, “Well, come back later if and when the Commission doesn’t give you the rule making; but we’re going to defer to the administrative expertise of the FCC.” Geller did it over and over again. He used to drive the cable Bar crazy. He was very slick the way that he did it. Henry would say that he was only following Chairman Rosel Hyde’s instructions.
PAGLIN: This was after my time.
MATTHEWS: After your time, you weren’t responsible for any of this. Anyhow, we argued a case in the Ninth Circuit and the only thing I could think of to do was get up and talk about, “Here’s the general counsel of the FCC shooting fleas with a shotgun again. My poor little client up there.” I drew them this convoluted map of how terrible all this was and everything else and the government shooting this little flea with this big shotgun. I said, “Just to show you how outrageous this is, they didn’t even send one of their deputies out! The general counsel of the FCC flew 3000 miles to argue this case.” So Henry came up to me later and said, “Gee, Jack, I know you’re young but it’s kind of a personal shot there. Did you really have to say that?” I said, “Yes, I had to say something.” I said, “Well, why did you come all the way out here?” He said, “I’ve never seen the Grand Canyon.”
PAGLIN: That doesn’t surprise me.
MATTHEWS: He was going to take a little side trip and decided to come out and argue this one himself. It was no landmark case at all. We lost.
PAGLIN: I remember…I shouldn’t go into my own, but at about the same time, no it had to be earlier because I was the Chief of Litigation at the Commission, so it would have to be ’59 and Strat represented what was her name in Helena, Montana? (Editor’s Note: Charlotte Braden) I’m trying to remember, we had a rule of some kind like that. The Ninth Circuit was in conference in Glacier National Park. Strat got this local lawyer to go up and get a stay of our order without notice. I get a call from the clerk and he said “Your order is stayed”. I said, “What, what? I turned to the rule book. You can’t do this. You need thirty days notice to the Attorney General. Can we meet with the court?” “Oh no,” the clerk says, “they’re on vacation. You can’t come until August.” We argued out in the Ninth Circuit and it turned out that Bazelon (of the D.C. Circuit) was sitting out these on circuit at the time. It was a jurisdictional kind of thing. The case had been already argued in the District Circuit. When I walked in there, I didn’t know that Bazelon was going to be on circuit.
MATTHEWS: What did they do, kick the case back?
PAGLIN: I was citing all these cases that had been issued on that point in the D.C. circuit. It just took the Ninth Circuit one hour and they kicked them back. Then I went on another case to San Francisco and for three days they didn’t tell me that the case had been sent back. Anyway, whatever happened? They sent it back to the Commission?
MATTHEWS: No. I just took a loss on the merits. They decided to rule and said the FCC rule is the rule.
PAGLIN: That was it.
MATTHEWS: And that was the end of that. You could not win the non‑duplication cases during that period. Henry, I’ll tell you, has always been on the other side, pretty much, of the table from me, I think. He is, present company excluded‑‑Mr. PAGLIN: excluded‑‑the most brilliant and formidable governmental adversary I’ve ever had. I would think that, and I include Harry in that.
PAGLIN: Harry Plotkin?
MATTHEWS: Yes. I would think that opinion is shared by most older members of our Bar–and he was a straight shooter–not devious at all, but clever. I think that Henry is practicing a little bit of revisionist history these days when I hear him talk about how good he was to cable.
PAGLIN: And the First Amendment rights of cable.
MATTHEWS: We’re all entitled to some editorial license, I guess, twenty years later. He was tough and he was good. He knew the appellate system inside and out. You came around a corner and there was another roadblock. He was good.
PAGLIN: That’s true. He was very good on his feet. He was my deputy when I was General Counsel. I’ve watched him countless times in court and before the Commission. He’s very good. He does a lot of lecturing in these seminars. He’s just excellent on his feet.
MATTHEWS: The law needs people like Geller.
PAGLIN: So those were the kinds of cases in those days. What other types of litigation were you involved in, with the Commission or the Courts at the time?
MATTHEWS: Well, some firms didn’t get into local or state issues, but Jack did and Strat did. Some firms just handled the FCC as part of things, but our relationship with our major cable clients was such, Cox, for example we were their General Counsel, that we did it all. If there were a local problem, we handled it. I spent many years of my life franchising cable systems.
PAGLIN: Hold, we’re going to get to that.
MATTHEWS: Working with local lawyers, participating in probably one hundred franchise fights all around the country or more.
PAGLIN: You understand, I’ll say by footnote, in one of the other sections of the outline that I sent you, this is very important because we haven’t gotten anybody yet, a lawyer for the cable people who will give us the story as to what it was like.
MATTHEWS: Jack Cole will.
PAGLIN: He hasn’t been done yet.
MATTHEWS: There weren’t too many of us who did that. George didn’t do any of it. I don’t think George did any of it.
PAGLIN: George Shapiro?
MATTHEWS: Yes, and I think Jay Ricks has probably more recently done some, but not in those days.
PAGLIN: Jay’s specialty was the pole line attachment cases.
MATTHEWS: Yes, he came in a little bit later. You say what else did we do? If there were problems with the phone company, and there were problems galore in those days, a number of our clients, rather than using local counsel, we were more expert and they tended to use us. If there were a problem with a state regulatory agency, Connecticut and Nevada, for example, had jurisdiction, we handled it. We tried the cases.
PAGLIN: What I am going to do afterwards and I’m not going to keep you too long now, is to get into some of these things with some specificity. For example, FCC cable regulatory policy that we would maybe pick out certain principles.
MATTHEWS: In the ’60s there were always rule makings. We were constantly doing rule makings. In terms of definitive cable actions in the ’60s, there wasn’t a heck of a lot. They were all microwave fights and they were fights involving non‑duplication protection and they were fights involving attempts to import a few lousy distant signals. In every market there was probably one major broadcaster, usually represented by Ernie Geness (of Covington and Burling law firm).
PAGLIN: It was the Maximum Service Telecasters he represented.
MATTHEWS: Maximum Service Telecasters, I’ll tell you, those guys did one hell of a job. They were the hated enemy of cable in those days. In terms of doing the job for their client, they played a major role in keeping cable essentially held back for about ten years, during that decade. With the help of the government Covington and Burling.
PAGLIN: I’m trying to remember, who was the executive director of MST, just recently…
MATTHEWS: Les Lindow?
PAGLIN: Yes, that’s who it was. Les Lindow.
MATTHEWS: I’m not suggesting anything improper here, quite the contrary. They were extremely effective in representing their clients and using all appropriate legal techniques to block us, and boy they did. In spades.
PAGLIN: They did it up on the Hill.
MATTHEWS: They did it on the Hill.
PAGLIN: Tell me a little about some of your representation of your clients in some of the congressional hearings of this time. Remember there were bills to license cable.
PAGLIN: What were some of the things that you got involved in?
MATTHEWS: I got involved in all of that. Mostly for Jerrold. When Milt Shapp was president. Milt was very active in that. He and Irving Kahn tended to dominate the cable board and I participated in almost an endless round of hearings over the years preparing testimony for various clients. Harley Staggers (Congressman) of West Virginia, was the Chairman of the full Commerce Committee on the House side. The Senate didn’t take much of a role then, but they would later.
PAGLIN: A little bit later on.
MATTHEWS: Torbert McDonald was chairman of the Subcommittee…
PAGLIN: In Connecticut.
MATTHEWS: Of Massachusetts.
PAGLIN: Was he of Massachusetts?
MATTHEWS: Yes, he was Jack Kennedy’s Harvard roommate. McDonald was chairman of the Subcommittee and after he died, Harley Staggers took over.
Anyway, Jerrold was very active in those proceedings and NCTA was a lot smaller. Basically, the fights in those days were carried on by the major companies. NCTA had a total staff of a half a dozen people and were constantly changing presidents. Most of the work was done by the major companies and their Washington counsel, Jack Cole and Strat were very, very active in those days, as was I. We had, if you pardon the expression, just what I call a series of “jerk off” hearings. You knew in your heart of hearts that you were never going to get anything, but they were nice to you and you went up and lobbied and they had a couple of days of oversight hearings and a couple of your friends would introduce a bill and nothing would happen. The broadcasters were very sophisticated and very powerful. Had absolute top quality lobbying talent. Much, much better than ours. We were never successful in getting any help from the Congress. Basically, the reason was that we didn’t have the constituency. Cable didn’t have 51% of the American homes then–they had about two percent of American homes. I can remember sitting with Bob Beisswenger, the president of Jerrold and listening to Van Deerlin who was the Congressman from San Diego…
PAGLIN: Who was a broadcaster.
MATTHEWS: A former broadcaster. He was calling cable “parasites”, using all the buzzwords and Bob who was rather an emotional guy, and me having to restrain Bob and kick him under the table to stop him from getting into a shouting match with the ranking member of the Subcommittee. Lo and behold, when Cox had a hundred thousand cable subscribers in San Diego, Lionel Van Deerlin became one of the best defense lawyers cable ever had. I wondered what happened to change his mind?
PAGLIN: Ditto. The story has been told by a couple of them and particularly and most recently, Archer Taylor of that, how shall I call it, debacle that took place in the Senate when everybody went forward for a cable bill that Senator Pastore first supported–but tell that story through your terms.
MATTHEWS: I have no firsthand knowledge. That happened in ’58, ’59, something around there. Three years before I got into cable, but I have heard that story from Milt, fifty times and from Jack Cole, who was just in the practice then, and from Strat and others. I’ve been told that the Cable Bill was a reasonably good compromise bill. I don’t know whether it’s true or not, but someone, I think Jack or someone told me that Strat was advising Milt heavily in those days because he (Strat) was the general counsel of NCTA. Harry Plotkin, having left the Commission, told him not to go for the bill. That it was the camel’s nose in the tent and that they shouldn’t go for government regulations. It’s amazing how things have changed over the years. They had a good deal, in retrospect, but didn’t take it. Milt, relying on such advice and his own instincts before he got into politics himself, single handedly turned it around. Again, this is all hearsay. I was told that Senator Bob Kerr of Oklahoma, a major power in the Democratic party, got turned around by the Shapp wing of the conflicting groups of NCTA. He beat Pastore, he beat the Subcommittee chairman on the floor by one vote. Gordon Fuqua has told me stories about this.
Anyhow I was told by people in the gallery that Pastore stood in the well of the Senate and shook his finger at the gallery and said, “You don’t do this to a chairman of a congressional committee.” He warned them, he said, “I’m not going anyplace and you will be back to me.” And they were. Over and over again. You couldn’t even get in to see that guy. With the greatest of auspices, you only got to see Nick Zapple, his assistant. Nick was the door keeper on cable and the door to the Senate was closed to cable as long as John Pastore…
PAGLIN: I remember that he vowed that no one would ever do anything like that to him because he went out on a limb. Then to get turned around.
MATTHEWS: Yes, he sure did.
PAGLIN: Then to get turned around.
MATTHEWS: At the last minute.
PAGLIN: You know, Pastore, a little Italian guy, like Napoleon, you don’t do that to him.
MATTHEWS: And you know, even today, I don’t think Milt thinks he was wrong.
PAGLIN: But it cost cable.
MATTHEWS: It sure did. The whole town knew that this powerful man was anti‑cable. I shouldn’t say anti‑cable, certainly but I do have firsthand experience all through the ’60s. Representing clients and being able to get no place with the Senate side and with the Senate staff of that committee–getting anything favorable to cable. They were always very nice, polite, and terrific. I had lunch and dinner with Nick Zapple many times with a lot of clients but never got anyplace.
PAGLIN: And Nick was known to promise you, “I’ll see the boss, don’t worry about it.” And then nothing.
MATTHEWS: I can remember when Bob Beisswenger who was a pretty sophisticated guy and he was a two or three times chairman of the NCTA board. I was offered the job of president a couple of times, but I don’t know if you know that or not.
PAGLIN: You were? No, I didn’t know that.
MATTHEWS: Well, some of these guys are dead now, but there were other people there at the time. They thought a different kind of hand–by being a private lawyer–might help. They said, “Why don’t you take a leave of absence?” Rather than practice law.
MATTHEWS: But anyhow, when Fred Ford was president of NCTA, he would go up and see Harley Staggers of West Virginia (Fred was from West Virginia), and he would go over and see Nick. He’d come back and tell Bob and say, “Bob, we don’t have anything to worry about, I just saw Harley Staggers, a close personal friend, and he told me he would never do anything to hurt us.” Bob used to tear his hair out. He would say, “Fred! That’s not the question. The question is, did he promise to help you! Go back and ask him the right question.”
PAGLIN: I know because I was counsel to Fred at that time, if you remember ’65, ’66. We used to have a devil of a time because the poison had already been thrown into the well. It was almost impossible to fight against.
MATTHEWS: What turned it around is that as cable grew, what turned cable around was the bird, the satellite. Everything started with that.
PAGLIN: That’s what the general opinion is.
MATTHEWS: No question about it.
PAGLIN: Bill Daniels and everyone said, “This is prehistoric history because when satellites came along and HBO was the first one. That just changed the …
MATTHEWS: I’ll tell you this though, Max, from a regulatory standpoint, we lost time earlier–and I’m not going to mention names. I guess I’m being critical of some of the pioneers.
PAGLIN: No, that’s all right. That’s what a history is about.
MATTHEWS: Cable… I don’t know, maybe they’d feel that we were tainted because we had broadcast clients, that we represented television stations. We were not pure–that is the law firm was not pure–and represented only cable as Strat did. I think a lot of the regulators would tell you, and a lot of my friends and I think Jack would agree with this–cable made a mistake in those days. The early leaders of cable made a mistake in those days, for never being perceived as willing to compromise. They fought the network non‑duplication battle forever. That’s where the local broadcaster lived. They fought that over and over again. The battle had been lost for years but they didn’t know it or would not accept it. They were still running around the Commission, seeing you guys and Dick.
PAGLIN: I was already in practice then.
MATTHEWS: I can remember one commissioner telling me, I won’t mention his name, that he used to go and hide in his bathroom. They came around and he’d duck out and take his papers with him.
PAGLIN: That story has been told, by the way.
MATTHEWS: Yes, the legal assistant would be out talking to cable. He was the chairman, as a matter of fact. There were opportunities during those periods, but when Leonard Reinsch and Mark Bartlett who were the first TV broadcasters on the NCTA Board, rightly or wrongly, they had the perception–we did a little bit too–that some of the cable members felt they were always kind of tainted because they were broadcasters. Where did their loyalties really lie? If you weren’t 100% with us, you were 100% against us. This is all hindsight. But there could have been a lot more sophistication and Washington savvy brought to some of the cable fights in those days. You say, “Well, you were a part of it, why didn’t you do it?” Well, I was a thirty year old lawyer. Thirty two, thirty five year old lawyer. Jack Cole was young also.
PAGLIN: I remember it very well.
MATTHEWS: Do you disagree with what I am saying?
PAGLIN: No, I don’t because I was then also representing people like George Morrell of Mid‑West Video. These individuals who said, “I have a right to do this.” You’d say, but yes, this is Washington, there’s a Commission, there’s a Congress.
MATTHEWS: You’ve got to get along with them.
PAGLIN: You’ve got to get along with these guys. And they’d say, “How dare they call me pirates,” and so forth. I’m their lawyer, I might not. But let’s face it. I remember, if I may get personal, when I was working with Fred Ford, the first speech he made as president at the Philadelphia cable convention in 1965. We tried to talk them into it, we sat them down at the board–we talked copyright. I mean he’d say, “You have a chance now, to get these guys for practically nothing.” And the cable people would say, “How dare you? Nobody pays for this. You just take it off the air. Why should we pay for it?” It went on and on and on. These guys were hard headed, individualists, Mom and Pop type guys.
MATTHEWS: By the way, I consider the passage of the Copyright Act and the sophistication of that as critical to cable’s future and it was over, if you recall, the dead bodies, the leading bodies, of the early pioneers. The fights that went on, the impassioned pleas by the Pennsylvania people at the Board of the NCTA. I sat there and listened to all this. Selling it. They said, “We won the TelePrompTer case in the Supreme Court, why are you doing this?” We said, “Well, we are doing it because it’s the sophisticated thing to do. They can’t call us thieves anymore.” However, the passage of the Copyright Act slid right into the critical 1972 Report and Order. Some of the interim orders that led up to that.
That was one of the key elements in the late ’60s, early ’70s, that changed the regulatory complexion. And it was a close fought campaign. I hope that people who read this or listen to it, take what I’m saying in the right spirit. It isn’t hindsight. A lot of people have looked back on it and we talk about it over a drink here in town. There were some serious policy battles then. Let me put it this way, I think that some of the cable leaders in those days, made it much easier for the enemy. Much easier for the enemy to stall and delay as long as they did.
PAGLIN: Because by their attitude, Jack, which you have been describing, which I know personally as a fact, gave their enemies ammunition. They walked over and they just handed it to them. And they didn’t have to. But I think it was because, as you say, with all due respect, the lack of Washington sophistication, savvy. You called it savvy. They didn’t realize they were in a different league. And that the broadcasters were very powerful.
MATTHEWS: Yes, and in fairness to them, I didn’t know it at the time, but it had become more sophisticated as the years have gone on and the lobbying has changed in town. They didn’t have the bank roll and they didn’t have the heavyweight lobbyists in those days. They were just outgunned and outmanned.
PAGLIN: The thing again, for example, when I went into practice in ’64. George Morell was one of my first clients, Mid‑West Video…
MATTHEWS: He was one of Bob Beisswenger’s closest friends and they felt very much alike on that. The difference being Bob was always ready to cut a deal. He was a salesman.
PAGLIN: And Morell got into trouble with the Commission. That’s how he came to me, as an “ex parte case.” To give you an example, and again, I really shouldn’t be telling this, this is your story–not mine, but it fits in. His stance was: “The Constitution gives me a right as a citizen to petition my government. The fact that I get my congressman and senator to write to the Commission on my behalf, what’s wrong with that?” I say to him, “George, there is an adjudicatory case going on. This is called ex parte. You are not allowed to do that.” He said, “That’s my right as a citizen. I want my senator to go up there and talk to the commissioners.”
MATTHEWS: A guy named Richie Mack (FCC Commissioner) went to jail for it.
PAGLIN: He didn’t go to jail, he died.
MATTHEWS: That was a hung jury, wasn’t it.
PAGLIN: Yes, but that was George’s attitude and he believed it sincerely. Years later he said, “Max (he had an accent) taught me one thing‑‑Never go near the Commission!” It was because he truly believed that he had a right to do these things. The fact that you couldn’t do this‑‑I got him off the hook‑‑but that was an example. To call him a pirate or something like that, he’d get very angry about that. Also with the board–I’ve seen him operate with the board in the same way.
MATTHEWS: He quit for a while.
PAGLIN: He did. That is fascinating because your reflection on things with the benefit of hindsight–as you say at the time, you saw these things coming. Well, I think this would be a good break place.
PAGLIN: I would appreciate it then if we can go next time into the section having to do with your recollection of some of the local government problems ‑ franchising and the like.
MATTHEWS: A lot of funny stories.
PAGLIN: They would be beautiful. Listen, we’re talking about Irving Kahn’s experiences and things like that.
MATTHEWS: I think there’s been a lot of undue criticism of Irving. I never represented him a day in my life, but I always felt sympathy for that situation.
PAGLIN: Absolutely. We were all asked at the time, as you remember to write letters on his behalf when he got in trouble.
MATTHEWS: This is not to condone perjury before a grand jury. There were circumstances there that, in my view, didn’t lead to a five year sentence, first time, white collar…
PAGLIN: I want to go into that. We’re getting the story from various people and he will… By the way, Irving Kahn’s oral history is being taken by Marlowe Froke, the director of the program at Penn State.
MATTHEWS: He had one of the best lawyers in New York, Bill Shea.
PAGLIN: I’m going to shut this off now, at 3:45.
End of Tape 1, Side B
PAGLIN: This is Tape 2, Side A in the oral history interview of Jack Matthews. We’re in his office at Dow Lohnes and Albertson in Washington, D.C. It is March 13, 1989. Good morning, Jack.
MATTHEWS: How are we doing, Max? It’s good to see you. It’s Monday morning.
PAGLIN: Jack, you will remember that on March 2, in our first session, we generally covered your personal history, your education, your military service, your first legal jobs and your early involvement with the cable pioneers. I think you gave us some very interesting information about your contacts and work with the law firm’s clients in the early days and the work done with them at the FCC and elsewhere. By the way, before I go any further, I noticed when I looked at my notes, I didn’t get any information about your marriage, wife, family and the like, so before we start, will you just fill me in on that?
MATTHEWS: Well, my wife, Meriam, is the best thing that ever happened to me. It’s a cable industry marriage. Meriam is several years younger than I am, and she’s the daughter of the late Dave Brody who was a long time, NCTA board member, a member of the pioneers. He was Senior Vice‑President, in charge of all of Jerrold’s operating cable systems. They were the third largest cable operator in the country. They had twenty or thirty cable television systems. Dave grew up with that division and ran it. Every year he used to have meetings for all of his managers as a lot of companies then did, and some of them still do. I was routinely invited to these meetings to give legal lectures on FCC regulations and things of that sort.
One particular year, Dave was having the annual Jerrold meeting in Las Vegas–he liked to gamble–and my mother‑in‑law, Fay, who is still alive, used to be his hostess. They’d hold a big annual banquet, the president of the company would come, Milt Shapp would go out and they’d give gold watches and stocks and bonds and things to people and Fay was always the official hostess. Well, one year she was ill and couldn’t go, and Dave said to his daughter, Meriam, “Why don’t you come out to Las Vegas and have a free vacation on the company and be my hostess at this big meeting we’re having?” She said, “Fine, that’s a terrific idea.”
So the company’s bachelor Washington lawyer meets a client’s daughter.
PAGLIN: In what year was this?
MATTHEWS: Las Vegas. It was 1970‑71. We fell in love and a little over a year later, got married.
PAGLIN: So when did you get married in ’72, ’71?
MATTHEWS: We got married in ’72. I tease Meriam that the account was in some difficulty and I’d do anything to keep a client. And I got to marry the client’s daughter.
PAGLIN: So her maiden name was Brody.
MATTHEWS: Yes, Brody. Dave died a few years ago.
MATTHEWS: No children.
PAGLIN: And you’ve lived most of the time, where?
MATTHEWS: Potomac, Maryland.
PAGLIN: Same house?
MATTHEWS: No, two different homes. But in the same general area. We live in a community called Potomac Falls. Several of my partners live nearby. That’s coincidental, but four or five of our partners live out there. Horace Lohnes had a huge estate on River Road and he used to host the Federal Communications Bar Association annual outing every year where we played…
PAGLIN: Touch football.
MATTHEWS: Touch football and softball and we used to play against the FCC. Vince Pepper and I used to split the pitching assignment against the FCC and we always used to let the FCC win the softball game.
PAGLIN: Wally Johnson was our pitcher.
MATTHEWS: I thought you were going to deny that we always let you win, that you did it alone?
PAGLIN: Of course I am going to deny it. But you know I lost an eardrum at one of those outings. We had that one year, after which they never played touch football anymore because…let’s see. I lost an eardrum in a contact with Kelly Griffith, if you’ll remember Kelly. Arthur Gladstone nearly had his coccyx broken. Gene Malik had his eye torn up. All in that one day. After that I think it was decided that we were getting a little too old for touch football and we switched to baseball. Oh yeah, those Horace Lohnes outings with the Texas son‑of‑a‑bitch stew. Remember that? His brother owned a place down on 9th Street where it was the only place you could get beef in those wartime days (Korean War).
MATTHEWS: And they had a secret society called the Yellow‑Dogs.
PAGLIN: They still do. So much for that. Now, at the end of the last session, we were in the midst of your role in the cable experience with the FCC regulatory policy. We were going to talk about some of your activities and experiences with regard to that, the developing FCC regulatory policy, and some other congressional hearings you may have participated in. The fights with the broadcasters. I remember your telling us like Leonard Reinsch and Cox had that problem where some of the broadcasters were made to feel as if they were traitors because they went into cable.
MATTHEWS: Yes. And conversely, some of the cable guys I don’t think completely trusted him.
PAGLIN: That’s right.
MATTHEWS: He was really one of the guys that helped make a breakthrough in terms of getting recognition for cable because he was such a well known and respected broadcaster. He was close to the Democratic administrations. I think when Leonard Reinsch brought Cox into cable, they were the first major broadcaster to come in, that it helped cable a good deal overall. We always took a good deal of pride here in the firm, Bill Sims, particularly, the head of our firm, for that happening. For practical reasons during those days we encouraged our clients to get in. The Newhouse family came in shortly thereafter and became a major force. Then other major broadcast companies came along later. This was a good way to bring the competing camps together. It took several years to do it.
PAGLIN: Oh, yeah. Again, I know I shouldn’t get into this personal experience. When I got into practice…it was in 1965 that I was invited to speak at this panel at Georgia Institute of Technology. It was the first time they got the broadcasters and the cable people together. Most of my work was already in cable at the time–Midwest Video, George Morrell and the like. I gave a talk about the need for the cross‑pollination in the industry, because of the talents, experience, and resources that broadcasters had, as against cable which had their own talents and resources. This was a natural telecommunications complex. I could not understand, in theory at least, why there wasn’t a crossover. Of course, it took many years later when that happened. To me, I could see that coming or at least that it should come.
MATTHEWS: It’s just interesting. There’s nothing surprising about this, but some of the broadcast companies, Storer was one, who were the most aggressive and vigorous and effective opponents of cable in the early days, of course got in with both feet later on, and became the biggest supporters of cable. That was all very healthy.
PAGLIN: Sure, because they’re all parts of the complex.
MATTHEWS: It’s all part of communications. The public doesn’t care how you get the signal there. They really, really don’t.
PAGLIN: To them, they want to see the picture on the box, that’s it.
MATTHEWS: And it’s a question of price and service. They don’t really care whether it’s satellite, or cable or broadcast or whatever.
PAGLIN: Now, tell me something about your experiences, your role, in some of the congressional hearings in those days.
MATTHEWS: We had an active role. It wasn’t a lot of proposed legislation because there was really no way to get it through. There were continuing oversight hearings. I used to just think they were a pain frankly, to the growing cable industry. But every year or two, not on the Senate side, for the reasons we discussed in the earlier interview, but on the House side, Harley Staggers and Torbert McDonald. Harley Staggers, being the Chairman of the full Commerce Committee, and Torbert McDonald, being the Chairman of the Communications Subcommittee, would have cable hearings and everyone would come in to testify. Some of our major clients participated. Jerrold, taking a real lead, would be a very aggressive, articulate, spokesman for the cable industry. We would assist in the preparation of testimony.
I can remember once, Milt Shapp was in and he and I were cranking out copies of this testimony at 1:00 in the morning, the day before the hearings. He said, “This is kind of silly.” He was in his stocking feet and he always had different colored socks on. I said, “I’m standing here with a multi‑multi millionaire and we’re cranking a xerox machine.”
PAGLIN: And two different colored socks.
MATTHEWS: Two different colored socks on. He didn’t care. Irving Kahn was also very active in those days, in terms of testimony. You simply couldn’t get anything done from a lobbying standpoint; basically the Congress wasn’t anti‑cable, there just were a lot more powerful broadcasters. Cable had not grown sufficiently to the stage where they were getting a lot of consumer outcry about freeing cable.
PAGLIN: That was probably about the mid‑’60s.
MATTHEWS: Every year we went through this process. The breakthroughs came around ’70.
PAGLIN: I remember when I was active with Fred Ford, the proposed legislation, the license, if you remember that, was up and back, up and back.
MATTHEWS: The Commission of course, was having a series of rule‑makings all this time which some people felt were just intended to keep a process going to stall it as long as they could. I don’t know, I give them the benefit of the doubt. Maybe there was sincerity involved there. The real breakthrough was probably, I think, decided in the Dean Burch (Chairman of the FCC) years in the Second Report and Order, which was released in 1972. That, at least, allowed us to import a limited number of distant signals to these new major markets that we were trying to serve.
Right before that, the Commission adopted a rule where the cable people in effect had to prove a negative in order to bring a distant signal. For example, to bring a Philadelphia Independent station into Harrisburg, Pennsylvania, you had to prove the negative, that it would not harm the local broadcaster, but you were not allowed access to the confidential financial records of the local broadcaster. So you weren’t allowed to have the evidence to prove that you were or were not hurting or harming them. I remember once a whole group of Washington lawyers representing all the major cable companies getting together in our office of DL&A and Jack Cole was there and a number of others and we were going to try to have a big test case. Everybody was going to contribute to, to see if we could prove…
PAGLIN: To support it financially.
MATTHEWS: Yes, to try to prove that we weren’t going to hurt these very powerful and financially lucrative local TV stations. We brought in to interview, a very respected economist who had been around for years and years. I’ve just drawn a blank on his name–he’s a very, very tall guy, he’s in his late ’70s, he was a “New Dealer”, very prestigious.
PAGLIN: Did he have a very heavy, deep voice?
PAGLIN: Robert R. Nathan, maybe?
MATTHEWS: Bob Nathan, of course.
PAGLIN: My dear, dear old friend.
MATTHEWS: We brought Bob Nathan in and we were going to pay Bob Nathan $100,000 to do a big study for us and everything else, so I explained the FCC rules. Bob Nathan looked at all these high powered lawyers and said, “Let me understand what you’re asking my company to do. You’re asking us to prove that if your clients perform a certain act, it will not harm another company financially. Second, you are telling me that I will not have any data from the other companies to establish how successful or unsuccessful they are in terms of their broadcast operations.” I said, “Yes, that’s accurate.” Nathan closed his briefcase and said “Gentlemen, I don’t think I can help you,” and left the meeting.
He was being very honest with us, didn’t want to waste our time or money, and that was the end of that. We sat there and looked around and said, “If Bob Nathan feels that way, we’re not going to get some schmuck who is going to take our money and not be able to prove anything.” That was the end of the test case.
PAGLIN: That’s a fascinating story.
MATTHEWS: Yes, a true story.
PAGLIN: I know because Bob and I…he was the first president of the John F. Kennedy Lodge in the neighborhood and I was the next president. Knowing I was in telecommunications, he’d always be pumping me about the subject.
MATTHEWS: He was one of F.D.R.’s (Franklin D. Roosevelt) whiz kids. I’ve read a lot of the old Life Magazines where I’d see him, he was a bachelor in those days, he’d use to have that big pipe and he was in his ’30s.
PAGLIN: Big in the WPA (Works Progress Administration). He’s still around.
MATTHEWS: I see him on the street once in a while.
PAGLIN: He has his offices on 16th street.
MATTHEWS: Brilliant man.
PAGLIN: Oh, he is. He’s a great human being. So that’s a fascinating story. Also, I’m sure your firm must have gotten involved in some of the early litigation, I know that other firms did. What were some of the other cases that DL&A had?
MATTHEWS: I handled most of them myself with my small but growing cable television practice here. The cases were non‑duplication cases that were critical to a particular client. I even had a couple of mandamus cases where, having exhausted every other means of getting the Commission to act on a particular petition, we went to court‑‑the Toledo Blade, for example, in the Sixth Circuit, we brought a mandamus action. I had one in the D.C. Circuit just begging the court to direct the Commission to take some action of some kind, any kind, but just act. Henry Geller, particularly, was very skillful. The General Counsel’s office was very skillful. The Commission always had a pending rule making. That among other things proposed to give cable relief and perhaps allow them to have additional different signals. I may have told some of these stories earlier.
PAGLIN: Yes, you mentioned how you’d always say…
MATTHEWS: You would be in screaming to the Court that justice delayed was justice denied. By the way, the mandamus (for the laymen) is an action, a very unusual action which courts grant in maybe one out of a thousand cases, where they direct an independent regulatory agency to do something, where the delay has just been egregious. Very difficult to do and I would explain to the clients that these were terrible, terrible long shots, but they wanted to go forward. We knew we didn’t have much of a chance. We’d be in with a wonderful pattern of Commission delay where two years had gone by for cable; yet all these other petitions had been acted on by the FCC in the broadcasters favor. But they weren’t acting on this, that or the other for cable and this was terrible. The Court would then say, “What does the FCC have to say about this terrible situation?” The Commission would get up and Henry would get up and say, “Mr. Matthews, we really apologize for all of this delay, but we’ve got this rule making pending and docket such and so, and I can’t tell the court exactly when the Commission will act on it, but we’re going to do it, expeditiously. One of the proposals is to give the cable industry generally the specific relief that Mr. Matthews’ client is asking for in this particular case.”
Of course, that gave the court a way out. I would get up and scream and rebut and say, “They’re never going to do it. Don’t trust them,” and all this sort of business and the court would say, “No, no, no.” Then a court opinion would come out and say, “You’ve really been mistreated, but we don’t want to second guess the Commission and Mr. Geller tells us they are going to act very promptly. But if they don’t, Mr. Matthews, you and your client come back and talk to us again.” Well, by that time a year’s gone by. That happened over and over again.
The other cases basically in those days, and we all had them, were non‑duplication cases. The courts refused to hear the constitutional issue…
PAGLIN: Being what?
MATTHEWS: Being a First Amendment issue, prior restraint. They refused for fifteen or twenty years. They finally picked it up in the “must‑carry” case. They tipped that off in the pay TV cases. There were some lovely footnotes in the opinions that some of us old timers said, “They must have been reading our old briefs. We told them this twenty years ago and why didn’t they do it for us then?” Anyway, they refused to hear the constitutional side of non‑duplication and went with the Commission every time. No one won a non‑duplication case in those days.
PAGLIN: For the record of the transcript, for this particular instance, define non‑duplication.
MATTHEWS: Non‑duplication meant that if you (the cable system) were importing from an overlapping market from Baltimore into Washington, for example, the NBC affiliate in Baltimore, it could not duplicate any of the identical programs broadcast by the NBC affiliate in Washington. In those days, it’s not true of the same percentage now, 90% of the programming was…
PAGLIN: The same.
MATTHEWS: The same. You were blanking out about 90% and your cable clients were screaming because a lot of the cable clients in an overlapping market situation, where the more distant market was, let’s say, sixty miles away, a good strong rooftop antenna could bring in that signal, perhaps with some snow on it. Here were people in let’s say, Alexandria, Virginia who were able to get the NBC affiliate, not too well, but at least on a viewable basis off their rooftop antenna from Baltimore and then the cable system, this is hypothetical because there wasn’t a cable system in Alexandria then. The cable system came in, provided them with that signal and had to blank out 90% of the stuff that if they switched to their antenna, they could get. They simply couldn’t understand this. The consumer couldn’t understand this.
PAGLIN: The original non‑duplication rule had a twenty four hour wait, didn’t it?
MATTHEWS: That’s right. Later on it became simultaneous.
PAGLIN: What other types of cases and litigations did you have?
MATTHEWS: Well, on the federal side, on the federal appellate side…
PAGLIN: We’ll get to the local side later.
MATTHEWS: On the federal appellate side, I think I was probably in eight or nine or ten circuit courts back in those days. I’d have to go back and check my little certificates. Never won on even one occasion and no one else did either.
PAGLIN: I heard last week when I was doing the oral history for George Shapiro, we were talking about the famous or infamous Eighth Circuit case of Mid‑West Video.
MATTHEWS: Well, at least he won.
PAGLIN: If you remember the Court at that time said that Southwestern Cable had come up to the Supreme Court and the Eighth Circuit said, “Well, let’s wait to see what they do.” It was the same kind of problem.
MATTHEWS: George got reamed, initially. The second time there he had one of the first breakthrough cases. He had the second Mid‑West Video case. A nice clear win for cable. We were just batting zero, up till then. A lot of the larger clients, who could afford the litigation cost, felt that there was some merit to just keeping the pressure on. That was the reason, in part, for bringing some of the lawsuits.
PAGLIN: Just by way of footnote, Jack, we talked about the possibility of your being able to provide the Museum’s archives some of the significant briefs and maybe even pleadings in some of the key cases and some articles that you may have written for Georgetown, speeches, they’d be very, very valuable.
MATTHEWS: I’d be happy to.
PAGLIN: Unless there’s something else on the federal litigation side that you feel you’d like to tend to and reminiscing or recollection.
MATTHEWS: You could refresh my recollection if someone else has come up with some other things. Basically the categories then were because those were the only rules on the books. Everything else was rule making. The cases basically were cases trying to get petitions for special relief.
MATTHEWS: Waivers. Waiver cases and non‑duplication cases. That was basically it.
PAGLIN: And that ran on until the early ’70s, right?
MATTHEWS: Yes, right to the Second Report and Order.
PAGLIN: It’s been mentioned and I’m sure you would, the whole question of importation and distant signals kind of went by the wayside once satellite came in.
MATTHEWS: That took several years until enough programming went up on the “bird” (satellite). For a couple of years there was only one signal up there and that was HBO. Clearly the thing that turned cable television around was the bird. Absolutely no question about it. So now, cable systems don’t go to any kind of extraordinary lengths at all to import an overlap network signal. They don’t have room. Now it’s a question of not having room on the cable system. The 54 channel system could be filled up if you have co‑channel problems. They aren’t able to carry some local ETV, religious stations, or specialty foreign language stations that, back in those days, they’d be screaming to carry.
PAGLIN: In order to fill up the channels.
PAGLIN: And now it’s all satellite programming.
MATTHEWS: Now it’s all satellite programming. So it’s come full circle.
PAGLIN: Now proceed to the next area in that outline for the kinds of things we’ll talk about.
MATTHEWS: Local franchising?
PAGLIN: Right. What I want to explore with you now, in the time available at least to start, is your recollection of some of the local government regulatory policy in the early years regarding things like franchising and the problems with the telephone and utility companies regarding pole attachments and competition for the franchises. Some of the problems in building the early systems, if you go back that far. You may not go back that far.
MATTHEWS: I came in when cable was moving out of the classic towns. Those were the towns that had little, or no acceptable television service, where the communities begged people to put in cable television. The franchises were written, I used to say, on the back of a blotter.
PAGLIN: Or a luncheon napkin.
MATTHEWS: That’s right. They almost paid you a fee to put the signal in.
PAGLIN: Your client, Archer Taylor, has told reams of stories about the franchise that…
MATTHEWS: What do you mean franchises? They were licenses.
PAGLIN: Kalispell, Montana.
MATTHEWS: Sure, you had a little business license. In the early days the cable people would walk in and the town would say, “Well gee, you have to have some sort of business license.” What do we do for the local laundry or the local newspaper? They have a little license they have to tack up on the wall and they pay us a $50 fee or something. Like we get to practice law, Max, and that’s what they did. Franchising came along right before I got into it and it was a very active part of my practice. I and others. I think that Jack Cole had a good bit to do with it also. We, the Washington lawyers, developed a number of the franchise documents, the things that became a national standard, in effect.
PAGLIN: With the municipalities.
MATTHEWS: With the municipalities. We created them. There was nothing to go on.
PAGLIN: No precedents.
MATTHEWS: No precedents whatever. We developed them and we gave lectures on how to do it. We wrote a “how‑to.”
PAGLIN: To whom were these lectures given, the National League of Cities or something?
MATTHEWS: We did meet with them, but we gave them to cable television conventions and meetings and things of that sort. I remember doing a lengthy paper on it back in the early ’60s–the mid‑’60s were big out for it. It contained the elements of good municipal franchise and got reprinted in national trade publications. Of course, we wrote them from our client’s point of view.
PAGLIN: Would a document like that, Jack, still be available? That would be very interesting to see how this thing originated.
MATTHEWS: I think that would still be around.
PAGLIN: That would be very interesting to see how this thing originated.
MATTHEWS: It would be twenty odd, twenty‑twenty five years old now. We all kind of worked together and shared ideas; that is, the Washington crowd just kept refining these franchise documents. I got in, as I say, at the second stage where they were going from the Williamsport, Pennsylvania that didn’t have a single viewable signal, to the Peorias and the Harrisburgs and the cities of thirty, forty, fifty, eighty thousand people. That had one or two local grade A signals at least. In some cases, even local television stations. There started to be some competition for the franchises. I don’t recall any of the frenzied kind of competition back in that period that we got into in the late ’70s, early ’80s. There were certainly no city consultants. There were no professional paid people hired by the cities to advise them on it.
As a matter of fact, this law firm (and I have talked to Jack Cole about it) and some of the other Washington lawyers, as we became more well known, were asked any number of times to represent cities. We concluded here at DH&A, as a matter of policy, that we could not represent a city even though we did not have a direct conflict in that particular city. That is, that a client of our office, to our knowledge, was not an applicant for the city franchise. And the reason for that was twofold. One–we thought there could have been just a general legal conflict or the appearance of a conflict that we wanted to avoid. Secondly, just because a client didn’t have an application involved going in…I could have been retained by a city and then six months into the process had a major client at the office come along and apply for the franchise. Then I would had have to resign as counsel to the city and I wouldn’t have been doing them a service.
I remember the Mayor of Syracuse calling me up, Mayor Alexander, a long time ago, and asking us to serve at significant fees as advisor and counselor to the city. I pointed out to him that, among other things, we represented the Newhouse people in Syracuse and whether he might want to reconsider…
PAGLIN: His opposition to cable?
MATTHEWS: No, his request to ask us to serve. He said he appreciated my candor and thought that was a good idea. I referred them to Jack Cole but I don’t think Jack took the case either.
PAGLIN: In the early days, I don’t know if anybody has gotten into it, other than the applicants themselves, whose oral histories we’re doing. But from the lawyer’s standpoint, what was the nature, if any, of the proceedings that a city would have?
MATTHEWS: There was city council meetings, in those days. I don’t recall an awful lot of necessarily aggressive lobbying, the kind of thing that came along later, with local consultants, local partners, and things of that sort. It went through a number of stages. Basically, it was just a matter of explaining to the city what you wanted, what was required, what the cost to the city would be, and whatever. Some of them were pieces of cake. I can remember spending a good part of one summer with Joe Floyd, Sr. of Midcontinent Broadcasting. The company is now run by his son, Joe Floyd, Jr. and Larry Bentson‑‑the Bentson and Floyd families had owned it for years. They were in broadcasting and cable. They have five television stations in the Dakotas and they decided they were going into the cable television business. I probably went up there six or eight times with Joe Floyd, Sr. and we used to fly around in a private charter plane, making presentations to Pierre and Winner and Huron and all these pretty good sized towns in the Dakotas. In some cases there was competition, but usually not. But there were the local broadcasters opposing Floyd.
Floyd was, of course, a television broadcaster himself, but his opponents who were not applying for the franchise didn’t want him to get it. I can remember once, being in a town in the Dakotas with Floyd. Some clients would introduce their communications counsel as their “FCC lawyers” and that was the phrase they used. Floyd got up and made a speech that Mr. Matthews was going to take over the presentation and Mr. Matthews was his “FCC lawyer.” Well, the local TV broadcaster, sitting in the back of the room, thought that Floyd was telling these people that I was an employee of the FCC and he got up in the back of the room, I can’t think of the guy’s name now, and screamed, “That’s a lie! This man is not from the FCC, he’s a hired gun brought in by Mr. Floyd to deceive you.”
PAGLIN: What town was that, do you remember?
MATTHEWS: I can’t remember the town and I don’t even remember the guy’s name. I just remember that it happened and what this fellow didn’t know was that of course, we had met with the city council and the mayor a day or two before and they knew who I was and so the mayor shushed him and said, “You owe Mr. Matthews an apology. We know he’s not from the FCC. We know what his law firm is and all that sort of thing.” It was an amusing incident that happened back in those days.
PAGLIN: You didn’t have conditions other than the contract that the municipality had been into.
MATTHEWS: God, if we could get those contracts back. They were just marvelous things. They were, in some cases, modest fees, 1 or 2%.
PAGLIN: One or two percent of the gross revenue.
MATTHEWS: Yes, or flat fee, they were very happy with that. They started to see it as a source of tax revenue, so the % happened. My first five years in franchising, and we did a significant amount of it here. Some Washington law firms do strictly FCC work. Some of the small boutique communications firms did strictly FCC work for their clients and their clients looked to other legal firms, locally or statewide, to handle what they saw as local or regional matters. Jack Cole did a lot of the same kind of thing that we did; however, our clients looked to us not only to do the FCC part of it, but they thought we were cable experts. So they got us very actively involved in franchising for them, also, usually with the advice and counsel of a good, solid, local lawyer. I think it was the height of ego for a Washington lawyer to come in with his big black bag and say, “I’m the expert, listen to me”. I always associated myself with a good, solid, local fellow. If he were politically well spoken, all the better. If he were an ex‑Mayor or something ‑ fine.
PAGLIN: In the early franchises, the systems were what? Twelve channels in those days.
MATTHEWS: Yes, they were all twelve channels.
PAGLIN: So you didn’t have any problem about public channels or anything like that, did you?
MATTHEWS: No, that came in the Second Report and Order and there’s a story about how that happened.
PAGLIN: It had an impact on the local communities, obviously, didn’t it?
MATTHEWS: Oh yes. There were these local origination channels that were just starting to creep in and it was all tape, of course, in those days and a little bit of local camera work. Very, very primitive studios with the Vidicon camera on someone reading something or other. My God, they had an FM background music channel in the early cable systems.
One of the guys at Jerrold got the bright idea of focusing a Vidicon camera on a big fishbowl with a lot of tropical fish in it while they played this soothing F.M. Muzak stuff in the background. It became very, very popular. It became an industry standard and I had clients tell me that people used to give the fish names and when one of the fish died and was taken out of the tank, they’d notice it. They got phone calls from some little old lady who said, “What happened to the big tiger fish that you used to have in the tank?”
PAGLIN: You used it for transcendental meditation.
MATTHEWS: Somebody ate the tiger fish. Yes, that’s how hard up we were for programming.
PAGLIN: Then also they used to focus on the weather.
MATTHEWS: The weather scan, sure, of course, was big. That was just a rotating device. That was popular in farm and rural communities. The weather channel, the weather scan, was a very popular device and a selling device to local communities. Then they had such things as emergency alert systems, you know where you could tie in the civil defense aspects of all of this kind of thing. Anything to fill up those twelve channels. Anything at all.
PAGLIN: In fact, you’d be interested to know that when I was at Penn State last April, or was it October, the Museum already had equipment of the old days, including an old weather scan.
MATTHEWS: Then they got more sophisticated.
PAGLIN: Basically, these were the very early days when franchising was not the heated battles that you saw later.
MATTHEWS: No, but as I say, as they moved into larger towns, and the Commission did open up a couple of distant signals, all done by terrestrial microwave in those days. And, of course, in the minor markets, you were able to import outside certain television markets, you were able to import distant signals. Jerrold built the whole lower Rio Grande Valley of Texas, with a community antenna relay system (CARS). That’s a twelve Gigahertz microwave system, picking up, what would it have been?
PAGLIN: Out of Texas–you mean, Dallas, Fort Worth?
MATTHEWS: I don’t think it was that far north. It was, whatever was the major market north of the McAllen ‑ lower Rio Grande River. We must have had twelve hops of twelve Gigahertz microwave down there and built all of these towns. These were not small towns by cable standards. These were twenty ‑ thirty thousand home towns. McAllen and…
MATTHEWS: Alice was on the way down. Alice wasn’t down there. That’s where “Landslide Lyndon” had his ballot box thing. We had a microwave site in Alice.
PAGLIN: Small world. Lester Kamin was my client in 1965 when Jerrold built those systems for him.
MATTHEWS: Jerrold bought the systems.
PAGLIN: Yep, later on.
MATTHEWS: Then Sammons bought the system from Jerrold and then Sammons sold the systems. Those systems have been sold six or seven or eight times. I fell in love with the lower Rio Grande Valley. I probably was down there on legal matters, mostly dealing with the phone company, a dozen times.
PAGLIN: How did the phone company get in it?
MATTHEWS: The phone company had the pole attachment agreements. They owned the poles.
PAGLIN: Yes, I want to get into that, too, in a general sense.
MATTHEWS: They prohibited‑‑you talk about anti‑trust–those contracts prohibited anything other than the transmission of broadcast signals. They prohibited the cable system from going into any business that the phone company thought it might want to go into over its wires. That included the furnishing of FM background music and local origination channels. In the lower Rio Grande Valley of Texas, of all places!
PAGLIN: The name of the company down there was what?
MATTHEWS: Southwestern Bell. I think your client may have put them in before Jerrold bought them. Anyway, there was a Spanish language local origination channel.
PAGLIN: That was the first, we called it the “Head Start Channel.” It was even before L.B.J.’s “Head Start Program.”
MATTHEWS: We had a commitment to do that. Well, the phone company objected. That technically was in violation of the contract. We, i.e. Jerrold, got a letter of revocation of our pole attachment contracts in seven communities from the general counsel of Southwestern Bell. That was death mail. The reason cited was that we were violating the contract by having a local origination channel, and because‑‑listen to this from an anti‑trust standpoint‑‑this is a business we (the phone company) may go into. We are the monopoly owner of telephone poles and we are going to deny you from furnishing to the consumer something that we may, ten years from now, business‑wise want to go into. This went back and forth for months and in two or three meetings and everything else. Finally, we were screaming to go public with this and whatever. Someone with an ounce of sense in the phone company, with some degree of sophistication in terms of the anti‑trust issues involved said, “Ok, look. We are not going to enforce that provision of the contract. We are going to withdraw our letter of revocation if, Matthews, you agree in writing, not to tell anyone about it.” That was the deal!
PAGLIN: That is funny!
MATTHEWS: That is the deal we shook hands on. They wanted to be able to enforce the contract other places in their operating territory and they didn’t want to establish a public precedent. They didn’t want the cable trade press, such as it was in those days, to say, “Jerrold Wins Fight in Face Down With Phone Company; Allowed to Originate Spanish Language Programming,” or whatever. We were able to do it as long as we didn’t tell anybody.
PAGLIN: This had to be in the late ’60s. I left Les Kamen in ’66. Arthur Sheiner took it over. I didn’t know that story because I went back to the Commission at that time, but Lester built all those systems. McAllen, Alice, and so on. As I recall, Jerrold did the building.
End of Tape 2, Side A
PAGLIN: Jack Dille was another broadcast-cable pioneer.
MATTHEWS: Jack Dille, Jr.
PAGLIN: His father‑in‑law.
MATTHEWS: No, his father was a famous publisher. Very creative.
Going back to the ’20s, their publishing family was from the Chicago area, and evidently had a number of noted physicist friends from the University of Chicago. They used to get together socially and they would predict all of these things that later came to pass, that is, backpacks in space and space walking and shuttles and all of that kind of thing. The father was fascinated by it and commissioned a noted artist to develop a character space man and that’s how Buck Rogers came to be. They copyrighted it and made a fortune.
PAGLIN: This was his father who did this.
MATTHEWS: This was his father who did that. Jack, now, of course, is in his 70s and they are still our clients. They’ve been our clients for forty or fifty years. I love Jack Dille.
PAGLIN: Oh yeah, he’s a delightful fellow. I met him when he got attached to NAB (as chairman).
MATTHEWS: He’s another one of those broadcast pioneers like Leonard Reinsch who brought stability and sophistication as they got into cable. We had a good bit to do with making that initial Dille-cable marriage with Jerrold. One of my funny stories about these cable system openings is that there was a fellow, since deceased, named Spiro Pappas, who was the president of Alliance Amusement Co., a theater company, who was also Jerrold’s one third partner, along with Dille, in a group of Indiana systems. I was out there for the opening of one of these big cable systems and Spiro was one of the speakers up at the head table and the governor was there and the mayor and everybody else.
PAGLIN: This was where?
MATTHEWS: This was in Indiana. I can’t remember the town exactly but they had franchised four or five towns. They had won some and lost some. So Spiro got confused as to what he was an officer of and where he was and got up and made this marvelous speech about how wonderful it was to be here and he gave the wrong town.
PAGLIN: …the wrong town…
MATTHEWS: And of course, the place just roared and he didn’t think and he repeated the mistake about two or three times. Finally, somebody kicked him or something and he finally recovered by saying, “Oh my God, well, we’re spending so much money in your town and we’re going to contribute so much to the local tax coffers that I got so nervous that I forgot where I was. Of course, everybody laughed.
PAGLIN: Did you have any more trouble with some of the phone companies, in terms of pole line attachments?
MATTHEWS: Yes, consistently. The phone companies during that period also decided that they were going to go into the cable construction business. They developed what was known as a “lease back contract.” The cable system would say to the phone company, “I want you to build a cable system and then I want to lease it from you.” The phone company took the following position in a number of states and they won in a number of states, namely that they did not need, and therefore their lessee did not need a local franchise. That the phone company in some of the early western states, by virtue of the state constitution and or state law, had a broad easement, if you will, and a broad communications authority to provide this service and they didn’t need a local franchise.
In Maine, among other states, the question went to the Maine Supreme Court and they said, “You’re absolutely right. You don’t need a cable franchise.”
PAGLIN: Because they had, as a utility company,…
MATTHEWS: As a utility company they had all the authority they needed and they were very successful in that regard. Well, what that led to, in a number of instances, was that there would be a competitive franchise proceeding and the winner before the city, would get a franchise. The loser would then rush to the phone company and say, “I don’t have a franchise but I’d like you to build me a cable television system.” The phone company would say, “We’d be very happy to do that for you. You don’t need a franchise and here’s the contract.” The fellow would sign the contract. Then the winner of the franchise, not knowing about this, would come to the phone company later and say, “Here’s my franchise from the city and I’d like you to give me a pole attachment contract.” The phone company would say, “Oh, we’re sorry. We just signed a lease‑back contract with your friend down the street, who lost the franchise, and we only have space for one cable system on our poles for safety reasons. So, you’re not going to get a pole attachment contract.”
Of course, the litigation that came out of that. We just played into their hands. Litigation took years and years and years. Jack Cole and Al Raywid of Jack Cole’s firm had one of the great cases in, I think, North Dakota, as I recall. Jack will tell you about this, but I think it took him seven or eight years. In the meantime, of course, the client had no cable system. They finally won and got significant damages, as I recall. But it took forever. By that time, of course, the legislative relief had come through. There were enough of these abuses.
PAGLIN: You mean this wasn’t an isolated situation.
MATTHEWS: No, it happened all over the country. The phone companies stalled and stalled and stalled.
PAGLIN: Did the power companies take the same position or only the telephone companies?
MATTHEWS: Mostly the telephone companies. (Usually the phone company controlled the “communications space” on utility-owned poles and vice versa.) I don’t recall having any difficulty with power companies. Two events occurred that solved the problem: One ‑ cable had an increasing lobbying effort in Washington and there were such significant abuses. We finally got some relief from the FCC, as I recall, during Dick Wiley’s tenure as Chairman over there. Then the Congress passed the law that gave us fair treatment.
PAGLIN: What legislation was that under?
MATTHEWS: There was a bill passed with respect to pole attachment.
PAGLIN: Oh, I see, the pole attachment law.
MATTHEWS: That’s of more recent vintage. That’s been ten or twelve years ago. The thing that solved part of the problem was the telephone company, surprisingly, for some reason built a lousy cable plant. They really did, even though it was a pretty simple thing to do in those days. They relatively soon became very disenchanted with the lease‑back business. It was thousands of a percent–pennies of the gross income of the local telephone company. It was a pain in the ass for them after two or three years. They didn’t withdraw their lease back tariffs for lease back service for quite a while. They just decided they weren’t going to aggressively promote them and lease backs dried up. Ironically, as things come full circle you now have a phone company built plant in the new D.C. cable system.
(Editor’s Note: Additional experiences and opinions re the “lease backs” will be found in the oral history of Harold Farrow, a part of this series.)
I had any number of presidents or senior vice‑presidents of Bell operating companies tell me we wish we had never started into the cable lease‑back business. On at least three occasions, I can recall, clients of our office, I hasten to add who were not losers in franchise things, decided for cash reasons or other reasons that they wanted the phone company to build cable systems for them. In all three instances they were broadcasters who didn’t have a lot of cable experience. They said, “Well, we’ll have the phone company build the system for us.”
For example, there was a lease back system initially in part of Toledo, owned by the Toledo Blade newspaper. Our client, Cosmos Broadcasting did that down in the Carolinas and Gannett who owned a couple of small cable systems, believe it or not, did it up in Geneva, New York. Well, within just a couple of years, I was negotiating a purchase of the lease back system by the cable lessee from all of these telephone company lessors. They just wanted to get out of the business, and so they sold the lease back system back to us. I negotiated about three of those contracts.
PAGLIN: Talk about how it turned around.
MATTHEWS: It came full circle. I think the real reasons that the thing softened up was that the telephone industry from originally not allowing us on the poles, because they fought it, but later allowing the cable situation to settle down and give us access to the poles, because of their concern about the serious anti‑trust violations which were involved. But secondly, the fact that they then decided, “We simply don’t want to be in this business.” They had other more important fish to fry and didn’t want to get heavily bogged down in this fight.
PAGLIN: Peanuts, mere peanuts.
MATTHEWS: And they got out of it.
PAGLIN: Is it true that Jerrold was one of the originators of the so‑called “turn-key” operation, where it was very much like a lease back, wasn’t it?
MATTHEWS: Certainly. Jerrold built the whole system for you. The promotion and everything else and they gave you the key and you turned the key in the door and opened it and went into your office you had an operating cable system. Unlike the phone company deal you didn’t lease the plant–you owned it.
PAGLIN: Did they have any remainder interest, should we say, like the lease backs did?
PAGLIN: In other words, it was just a deal, we’ll build the system. Here’s the key ‑ go operate the system and that’s it.
MATTHEWS: If you buy the equipment, we will also construct the system for you.
PAGLIN: There had been some talk about this time that Jerrold had made, shall we say, certain unreasonable…
MATTHEWS: That was fifteen years earlier, Max.
PAGLIN: Yes, I’m saying, when I say about this time…
MATTHEWS: That was back in the ’50s.
PAGLIN: Yes, long before you guys…
MATTHEWS: As I recall it, there was a unanimous Supreme Court decision which invalidated a number of what we call service tie‑in deals.
PAGLIN: Right, the tie‑in deals. So that’s long before your time. It’s come up in a number of these oral histories.
MATTHEWS: Then there’s the classical anti‑trust violation, that is, if you want to buy this from us, we got the tabs on that. You’ve got to buy this other from us.
PAGLIN: I wouldn’t be surprised if Milt Shapp (Jerrold) learned it from the motion picture companies.
MATTHEWS: I don’t want to comment. It was before my time.
PAGLIN: I know, I know. Not before mine though.
MATTHEWS: Bob Wright broke up all those when he was Assistant Attorney General in the Justice Department.
PAGLIN: You know all that came out in the old Paramount Merger case. Fred Ford, myself…
MATTHEWS: I was a young lawyer when I was Law Clerk to Judge John Sirica. We had a long anti‑trust case which had a number of these issues involved and I became the world’s expert on that whole series of Paramount Pictures Anti‑Trust Cases.
PAGLIN: You and I should sit down and talk because I spent‑‑together with the Common Carrier Bureau Hearing Division Chief, my old friend, Jim Juntilla‑‑six weeks in the summer of 1951 in the stacks of the Justice Department, digging out all the old anti‑trust cases. I, too, became a kind of expert in the case. In fact, remember the name Austin Keough, the General Counsel of Paramount Pictures Corporation? In the Paramount Merger case, I had him on the stand for seven days, and he just opened up on all these old anti‑trust cases. To the company it was just a cost of doing business. Their budgets would set aside so much and so much money for damages each year. They were so candid about it. Some of the lawyers, Leonard Goldenson (later head of ABC Network) was there at the time. Duke Patrick of Hogan and Hartson was Paramount’s counsel.
MATTHEWS: Leonard Goldenson?
PAGLIN: Leonard Goldenson and that whole gang. And they sat there with their mouths open as Keough was just spilling his guts all over the record on the anti‑trust history. But to him, I mean, there was nothing wrong with that. It was just a cost of doing business in the motion picture industry.
MATTHEWS: The Federal government counsel, in the cases that it brought him in the District Court was a fellow named Bob Wright, who was Frank Lloyd Wright’s son. He lived in a Frank Lloyd Wright house here in Washington. I got to know him because he was a plaintiff’s counsel in the case that we had when I was with Judge Sirica. Marvelous, anti‑trust trial lawyer. Boy, he was good. Really first rate.
PAGLIN: Is he still around?
PAGLIN: All right. Well, you really covered a good deal of these things about the competition for franchises.
MATTHEWS: Well, this is back in that period. The competition was relatively benign and the fights, even to the extent that there was competition between parties were, I’ll use the word, much nicer and cleaner, if you will, than they became later.
PAGLIN: When we stopped last time, you mentioned‑‑I checked the tape‑‑that there were some things with discretion that you thought you would tell us about, having to do with Irving Kahn’s experiences in Johnstown, Pennsylvania.
MATTHEWS: I’d be happy to give my personal opinion.
PAGLIN: That’s all, your personal opinion.
MATTHEWS: We’re not, and never have been counsel to Irving. But I’ve known him well all these years. There was such criticism of Kahn in those days. I used to tell people, without condoning it at all, that it was one of the first abuses of the “RICO” statute. It had just been passed during Bobby Kennedy’s time.
PAGLIN: The mid ’60s.
MATTHEWS: The mid ’60s. As I understand it the extortion attempt in Johnstown, it was not the usual case. This is all second hand knowledge, Max, I want to be clear on that. It was not the case of a person attempting to bribe an official, that is, initiating the payment to an official to grant a franchise. The Johnstown system had been a TelePrompTer system for years and this was a renewal of a multi‑million dollar asset, and the municipal officials, in effect, extorted Kahn. That is, they came to him, as I understand, and said, “If you want your franchise renewed, it’s going to cost you X thousands of dollars.” After several attempts, he capitulated and I guess, according to the trial record, in fact, made the payment. I really don’t want to talk about the facts because I don’t have that clear of a recollection of it. I thought that even having said all of that, it occurred to me that it was somewhat of a different situation. Not like a fellow that was running around the country, bribing officials to get cable franchises. There were charges of that much later on against others, none of which were ever proved. Not against Irving, but against a whole bunch of people. I thought some of the criticism of him was unfair.
PAGLIN: At about that time, as I think you averted to just in passing, in terms of the local situation, what they were doing was‑‑correct me‑‑I didn’t get involved in it fortunately, because my principal client, George Morrell of Mid West Video, didn’t work that way. The business of taking in local people in the cable company and giving them…
MATTHEWS: 80‑20 split was the usual deal.
PAGLIN: That was SOP.
MATTHEWS: Standard Operating Procedure. That only came into play when competition came into play. Obviously, if there wasn’t any competition, you weren’t going to give anything away.
PAGLIN: Why should you? But that later became the way to go.
MATTHEWS: Standard. Absolutely standard.
PAGLIN: I would expect, from the stories I had heard, and you had heard I am sure, that that provided the fertile field for abuse.
MATTHEWS: I am amazed and continue to be amazed after all these years that there were so few cases of proven illegal activity. I am trying to think, there may have been a recent one a few years ago, in Massachusetts–I can’t recall– ask Jack Cole about this. I can’t recall a single criminal indictment, never mind conviction, of a cable company official arising out of that second stage of frenzied franchise activity. That’s always been a source of absolute amazement because the climate in those days, people were just running around with consulting agreements. Things that didn’t exactly go over the line, but in terms of the appearance of things, came very close to it. Thank God our clients didn’t get involved in it. In fact, I can recall several situations, that I won’t mention, where clients of this office actually walked away from situations where they simply would not participate.
We actually prepared, after researching the conflict of interest and ethics laws and criminal codes of many states, codes of good conduct for several of our major public cable clients which became an official part of company franchising policy. I am not saying that they were all saints. But I’ve always felt that they were, or we were, trying to be like Caesar’s wife, try to be. Jack Cole and I and the so‑called, “Gray Beards”, talk about this from time to time, we get together for lunch. It’s amazing. Several other lawyers I know have similar memories.
PAGLIN: Is this a little group called the Gray Beards? Jack Cole, yourself…
MATTHEWS: Somebody gave us that name. We get together…
PAGLIN: Who else is in it?
MATTHEWS: Jay Ricks, George Shapiro, Jack Matthews and Jack Cole. All of whom are in their mid to late ’50s. Jack’s the oldest by a year or two. We have been getting together for lunch every two or three months for about five, six, seven, eight years. Someone gave us the name, “Gray Beards.”
PAGLIN: That’s cute.
MATTHEWS: Recently at her request, we have added to this august group, Brenda Fox.
PAGLIN: Brenda Fox ‑ a Gray Beard?
MATTHEWS: Brenda Fox is our first distaff member…
PAGLIN: I wanted to say, “this I must see.”
MATTHEWS: …of this distinguished company.
PAGLIN: She’s relatively young.
MATTHEWS: Well, she said she wanted to come in and she asked us a couple of times and we said, “What the heck? Liven it up a little bit.” I told Brenda that she was not going to hear a lot of super‑secret gossip, behind the scenes heavy, heavy stuff. That it was going to be 50%, a bunch of aging men talking about health problems and golf scores.
PAGLIN: Like we started this morning!
MATTHEWS: That’s right. It’s like, “Did you hear about so and so?” “Oh yeah, let me tell you about my brother‑in‑law.”
PAGLIN: The funny thing with Brenda was, of course, the switch. She was counsel to the broadcasters (NAB) and then switched over to NCTA (Cable Association) and people kind of raised their eyebrows at the time, if you will recall, as I’m sure you will.
MATTHEWS: She is, by far, a heck of a lawyer.
PAGLIN: A very, very bright gal. Articulate.
MATTHEWS: She tends to be, and I’ve told her this, in person, and Meriam and I socialize with Brenda and her husband. We’ve been to each other’s house several times. She’s a very partisan advocate for her single client and there are downsides to that. But that’s her role. She has built an exceptionally good in-house legal department at NCTA. That’s not always true, as you know Max, of trade associations.
PAGLIN: Oh no, they are very weak, usually.
MATTHEWS: Not only that, but they can’t pay as much, there are a lot of reasons. The more aggressive lawyers tend to want to go, at a different track. She’s just built a heck of an in‑house staff over there. I don’t want to comment specifically, but there was a time when the NCTA’s legal staff, with some exceptions, was just…
PAGLIN: Mediocre, at best.
MATTHEWS: Yes, and you are saying that from an FCC standpoint. I’m not just reflecting the government’s reaction, the briefs were just not well done.
PAGLIN: I know because when I was in practice, I used to work with people there.
MATTHEWS: Some of them are still around so I don’t want to talk about them.
PAGLIN: I know what you mean. But Brenda is tops. She’s a top attorney ‑ legal talent.
MATTHEWS: She is, no question about it. People around town share that view of Brenda, no question about it. And Mooney (Jim Mooney ‑ head of NCTA) is the best thing that has happened to the industry, times ten. I’ve known eight or ten NCTA presidents, like you have, good and bad. He’s first rate.
PAGLIN: By the way, very early in the game, back when the Golden Jubilee Commission was first formed, even before our association with Penn State on this project, we went to see him and he saw us, even though cable really didn’t come along in the days we were working with him. At that time in terms of the Jubilee Commission’s historical approach to telecommunications, he was very encouraging and then on this oral histories project, particularly. They have, as you know, given the Museum a great deal of materials. They are very, very cooperative. He’s been good for the NCTA. He really has.
MATTHEWS: Times ten.
PAGLIN: All right. We’re approaching noon and I think if it’s all right with you, we will break at this point and then next session I’d like to get into an overall assessment and your …
MATTHEWS: We haven’t talked a lot about the Second Report and Order and the evolution of that and the evolution of the Cable Act. Add that to your list of things that I’d like to contribute.
PAGLIN: I want to say this in general. This is a general outline, just a guidance. It’s like a road map. But by all means, anything that either we have left out or that you feel is something which is insufficiently stressed, this is your game.
MATTHEWS: The development of the Second Report and Order is a fascinating exercise in administrative law and governmental processes and how that came to be and the task force that was appointed.
PAGLIN: I remember.
MATTHEWS: One of the fellows is on the Supreme Court now. The general outline of the cable-broadcaster consensus agreement which was finally worked out–that was what it was called–was about five pages long. It was negotiated, finally, by top representatives of the broadcast and cable industries. The movie people had something to do with it also. Then it came to having to put the flesh on the bones. So the way it was set up was bizarre. The way it was set up was the cable industry appointed three lawyers to be their team. The broadcast industry appointed three lawyers to be their team and the movie industry had three lawyers. John Guinn, who had been working for Cox was Chairman of the NCTA board and he appointed to the cable negotiating team, Jack Matthews, Jack Cole, Gary Christiansen, and Bruce Lovett, who was then the general counsel of the NCTA. The NAB representatives were Vince Wasilewski, and Doug Agello. The third was probably Ernie Jennes or Mike Horne from Covington and Burling, but I’m not sure of that. Then Jack Valenti and whoever his general counsel was, and some general counsel from the motion picture people.
Of course, the cable people were outgunned two‑one because the broadcasters and the movies were in cahoots so it was six against three usually by Sol Schildhause, Nick Johnson, Ken Cox, etc. Basically, drafts of rules got put together by the FCC and then the industries met by themselves at the White House, the administrative offices, the executive offices of the White House, for months going over and changing the FCC drafts. Jack Cole tells me never to tell this story, because we didn’t come out too well in terms of some of the details of the rules because we were outmanned. He says, “Don’t tell people we were involved in that.” We used to go over in detail these huge drafts of things and we’d try to get what we could. Clay Whitehead, Head of the White House Communications Office, presided and was involved. The guy who was at the White House later on was Nino Scalia. He was in on the later stages of this part of this process, as I recall. He is now on the U.S. Supreme Court.
We would fool around with all of these drafts, then the drafts would go back to the Commission and they would make the changes and new drafts would come back. There was no rule making involved. Then those drafts would go back to the FCC where everybody would have a shot at it. Sol Schildhause and Commissioners Nick Johnson and Ken Cox were very active, Rex Lee was also a commissioner then; they were very active in all of this. Then the Commission would make more changes and then their changes would come back to the White House working group and we would agree or disagree. The government was, in effect, a fourth partner in this whole process. No administrative proceedings access, no public proceedings, nothing. This is just the way it went. There was nothing secret about it, everybody knew this was happening ‑ even the President.
PAGLIN: It was truly a collegial operation.
MATTHEWS: It was a collegial operation and the result of all of this was about a two hundred page official, published Second Report and Order.
PAGLIN: That was 1972.
MATTHEWS: The consensus agreement of course, was the broad outline. We had gotten our two distant signals and we had gotten waiver criteria and all that sort of stuff. We saw Schildhause (Chief of Cable TV Bureau) about this a lot because all of the crap, if you will, that was in the Second Report and Order about mandatory local originations, etc. You talk about the poor public, the access channels, and the citizens channel and all that sort of stuff and everything else. That stuff came right out of the Commission. Broadcasters didn’t propose it and didn’t much care about it. The movie people didn’t propose it and for sure, the cable people didn’t propose it. But it was basically, in order to get some votes at the FCC. Rex Lee was very hot on this, Nick Johnson thought it was terrific, Sol Schildhause was head of the cable task force in those days and drafted a lot of that stuff. He felt very strongly about having it.
PAGLIN: By that time, it was a Bureau already.
MATTHEWS: They thought this was just wonderful. All this stuff would come back and of course, the broadcasters would say, this is a burden on cable, we don’t care about it. Valenti didn’t care about it. We were stuck with it, and later on, some of the very people who created this kind of thing were out later in private practice filing the lawsuits and screaming this is unconstitutional and this is terrible and one thing or another. It came right out of their heads! The “Grey Beards” have talked about this many times.
PAGLIN: I remember this was toward the end, when I was Executive Director of the Commission, because I think I left already at the end of ’71. I was there at the beginning when all of this stuff was going up and back.
MATTHEWS: Steve Effros (now of Community Antenna TV Association) remembers those days. Steve Effros was a very young staff attorney.
PAGLIN: He was a kid then. He was an entry grade attorney.
MATTHEWS: Some of my DL&A people, Donna Gregg and David Fleming and those guys were all working in the Cable Bureau in those days. That’s the way it worked‑‑it was bizarre. I always used to say that if I ever went down to some law school to teach administrative law or something, I’d give the kids a description of this and it would be a one question final exam and for every fault they found with it–the more faults they found the higher their grade would be because if there were ever a way to run a railroad around the requirements of Administrative Procedures Act, this was it. But that was the only way it could have been accomplished. And of course, it all finally got a formal, legal blessing.
PAGLIN: But on the contrary…
MATTHEWS: We couldn’t get the job done otherwise.
PAGLIN: That’s my point exactly. When I called it a collegial operation, again, I believe in these things, I always have. I’ve always been a proponent of a real pre‑hearing conference when you go into adjudication. The presiding officer is supposed to use it to resolve issues, so when you get to the hearing you get to the things that really matter. When I went over as the head of the Atomic Licensing Board at AEC at that time in ’71, ’72 whenever it was, I used to use that “to a fare thee well” and the other lawyers would say, “Well, we never did that around here.” I then said, “Well, before we start the hearing, we’re going to have an understanding.”
MATTHEWS: A good Federal district judge does that, too.
PAGLIN: He has to. So that the actual trial of the hearing is limited only to a number of important issues.
MATTHEWS: An example is of how Judge Gesell is handling the Ollie North case. Just knocking heads. You’re right. We saved a lot of time, and obviously the industry got some relief. It was one of the two breakthroughs. The second one being the technical breakthrough of the satellites. It was worthwhile but gee, it was an unprecedented…
PAGLIN: I remember at the Commission we had some lively discussions. As an Executive Director, I wasn’t involved in policy fights. I remember one time in Chairman Burch’s time we had Jack Pettit…
MATTHEWS: Jack Pettit was then general counsel; he was my law school classmate.
PAGLIN: We had Jack. Sitting at the table was myself, as executive director, Jack Pettit was general counsel, Dick Wiley (former GC) was up on the bench, Henry Geller, also former GC, was head of Plans and Policy office. I remember Burch saying, “We have four general counsels around here. Can’t we get an answer to this question?”
MATTHEWS: That’s right. Henry Geller, when the Republicans went in, was so valuable. He just moved down the hall as a Democrat and got a new title.
PAGLIN: The story there was Dean Burch called me in and said…Henry had stepped down, of course as G.C. And Dick Wiley came in as G.C. and it was an embarrassment. Dean Burch called me in, but he didn’t really know me from a hole in the wall. He said he had heard things, that I was pretty good and whatever. He said to me, “My colleagues tell me that the FCC doesn’t throw away assets. I understand this fellow, Geller, is very good.” I said, “He’s one of the best lawyers around.” He said, “Well, can you work something out so that he doesn’t have to leave?” Of course he stepped down as general counsel, and it will take a while to succeed him. I said, “Mr. Chairman, you know we have had a problem here about adequate resources for making plans and policies and so on, and we don’t have a unit.” He said, “So what do you suggest?” I said, “Well, I think it would be very useful if the chairman had an assistant for plans and policies.” And he just set it up. That was the beginning of the Office of Plans and Policies.
MATTHEWS: And, Max, I’ll tell you, on the outside, there was a lot of criticism for that by the Republicans. Of keeping this active Democrat in a high senior position in the government.
PAGLIN: They couldn’t understand it. But to Dean Burch’s credit, when it came to me, a lifelong Democrat, he called me in and said, “I understand that you’ve been around for a long time and you’ve been a General Counsel and that you really run a good ship as Executive Director and I’d like to work with you.” Well, I found him to be absolutely ideal to work with. I mean, he’s a gentleman, smart as a whip. Just call him, what’s the problem, lay it out, what are the alternatives. One ‑ two ‑ three what do you recommend? Boom ‑ do it. That’s beautiful. This is the kind of thing that is vital to this kind of operation.
MATTHEWS: Jack Cole was also involved in the White House discussions.
PAGLIN: And he’s probably gone into it too.
MATTHEWS: We probably had a dozen or more meetings. My wife would say, “Where are you going?” I would say, “Oh, I’m going down to the White House today, dear.” She would later say, “Have a nice day?” “Yes, I’ve been at the White House all day.”
PAGLIN: We used to pull that as Executive Director, we’d go for the defense meetings. Same thing ‑ “Well, where have you been?” Well, I was at the White House in the Situation Room. “What were you doing there?” “Well, I can’t talk about it.”
We’ll go into this stuff further in our next session in terms of the policy stuff and also the other stuff that we want to go into. All right. It’s high noon now. Pull out the revolvers. I want to thank you, Jack, and I’ll close out right now.
End of Tape 2, Side B
PAGLIN: It is June 12, 1989. We are in the office of Jack Matthews in the law firm of Dow, Lohnes and Albertson to resume his oral history of his activities as a lawyer specializing in cable television matters. This is in conjunction with the program and project of the Golden Jubilee Commission. The National Cable Television Center and Museum at Penn State is doing a series of oral histories of cable television pioneers. Our last session, you will probably remember, was on March 12.
At the end of that session, just to refresh your recollection, some of the sub items dealt with the development of franchising criteria which you had already discussed and the problems with the telephone companies regarding pole line attachments and some of the problems about the competition for franchises. Is there anything else that you could think of that would be useful in terms of recollections having to do with some of these local problems?
MATTHEWS: I think that the time frame that we are talking about there was mid to late ’60s to early ’70s. The significant regulatory problems had to do with getting as much independent station TV signals from the Commission as we could. Beg, borrow, or steal it any way we could. Big, huge, towers to reach out as far as you could and then of course, this was pre‑satellite to stretch the six Gigahertz common carriers and the twelve Gigahertz band as far as you could to bring in those major city independents TV station programs. In those days, there were very few UHF independents.
PAGLIN: You were using those frequencies for six and twelve.
MATTHEWS: The six Gigahertz were the common carriers and quite often the common carriers were owned by the cable systems. They simply had to get into that business to serve themselves. The Commission then, had the policy that, in order to be a common carrier, you had to meet the 50% rule, which meant that 50% of the customers had to be totally independent in ownership from the common carrier. The Commission didn’t crack down for quite a while. They discovered to their horror after the first renewal period or even the second three year renewal period that these “common carriers” that they had authorized turned out in operation not to be common carriers at all. They were serving all affiliated customers. Then you came in and you promised to go out and get independent customers and sometimes you did and sometimes you didn’t. You tried to maintain the status or fiction of being a common carrier as long as you could. The Commission got very tough on that after a while.
It became less important, the six Gigahertz frequencies although they went farther, became less important when the equipment was developed for the twelve Gigahertz band. When the twelve Gigahertz band was made available in the Community Antenna Relay Service (CARS) the common carrier problem disappeared. The twelve Gigahertz band had some propagation problems that high up in the spectrum with rainfall, forestation, leaf attenuation. All the lawyers became expert on pine trees and that the signal was better in the fall and winter than it was in the summer and spring.
PAGLIN: Somebody figured out, it must be because of the foliation.
MATTHEWS: That’s exactly right. Of course, the same thing happened in the satellites. I had a client that told me just a few years ago that they put their dish up and they were having some trouble getting signals and they couldn’t understand it. There was a stand of big trees all around this field that they were in and they said, “Well, maybe it’s that big pine tree over there.” Then they said, “Well, we’re going to take the tree down and literally as the tree fell…
PAGLIN: The signal came up.
MATTHEWS: … the picture appeared on the screen.
PAGLIN: That’s funny.
MATTHEWS: And when it hit the ground with a big, mighty crash, there was a beautiful picture on the TV monitor. This was very technical kind of stuff. These were not policy fights. These were ad hoc fights to get additional microwave paths. They were often protested by the telephone companies because of alleged interference. Local broadcasters protested them willy‑nilly. I had one senior partner in a Washington firm who is now retired tell me that he didn’t care what the merits were, any time I put a microwave hop within the Grade B contour of any television station he represented, I was going to get a protest on some basis. It was as simple as that. That’s really what we were doing from a technical standpoint here. There wasn’t a lot of Hill politicking involved in it. It’s whether you could get votes or not. Sol Schildhause was…
PAGLIN: Was he still head of the Task Force or the Bureau by that time?
MATTHEWS: He was still head of the Bureau and he was just outmanned and outgunned on the eighth floor (Commissioner’s Offices). And I don’t know whether it was fair or not, but Sol was always considered, I think, by some of the commissioners, quite frankly, to be very much a cable partisan. It didn’t help cable overall to have that Commissioner feeling. We didn’t do very well up on the eighth floor under Rosel Hyde’s tenure as chairman with whatever cases that eventually did get to the eighth floor, and a lot of them did not. The name of the game before the satellite technology came in was to get as much distant independent signals in there as you could. We were talking about long hauls from Chicago, Philadelphia, New York, Boston, Atlanta, New Orleans. My God, the only independents south of the Mason Dixon Line and in the southeast were Miami, Atlanta, and New Orleans. That was it.
PAGLIN: For the record, when you’re talking about independent signals you’re talking about non‑network affiliates.
MATTHEWS: Those were the things that people didn’t get and they all had sports affiliation, all of them had major league sports affiliation. They didn’t have football, but they had baseball. Basketball wasn’t on TV then. You could build and sell cable systems in a two station town if you could bring them in a couple of independents and two or three big city networks that had enough nice movie packages, even with non‑duplication making a difference. That made a cable system go. Some of these microwave systems went seven hundred miles.
PAGLIN: I was about to ask that, how far some of those hops ran. So that was a considerable amount of building involved, because a microwave hop is thirty miles, forty miles.
MATTHEWS: Yes, less for twelve Gigahertz (GHz).
PAGLIN: That was quite expensive wasn’t it?
MATTHEWS: It was and there are others more expert than I am. I have a recollection that the twelve went thirty to sixty miles, depending on where you were. If you were up in the Rockies in clear air and whatever, you would fifty, sixty, seventy miles a hop. Sure it was as expensive as hell.
PAGLIN: Because I can recall that some of the early long distance microwave hops were like…I represented George Morrell’s system in Rapid City, South Dakota. He was bringing signals from Denver. This was of course, the Rockies. He could do it because of the nature of the terrain up there.
MATTHEWS: Archer Taylor’s system in Kalispell, Montana, we brought stuff all the way in from Oregon and Washington.
PAGLIN: I remember Archer telling about the stuff he was bringing in from Spokane, for example.
MATTHEWS: The thing that made the lower Rio Grande Valley go, there were some big towns down there, McAllen, Hollinger, twenty, thirty, forty thousand people. We had a twelve hop, twelve Gigahertz private microwave system. All the way in from wherever it was. San Antonio.
PAGLIN: That was Lester Kamin’s system. I set that up when I represented him.
MATTHEWS: That’s right. Jerrold bought those systems from Kamin.
PAGLIN: Right. I was his lawyer and we put them in. McAllen and Alice and all those places.
MATTHEWS: Alice yes, “Landslide Lyndon Johnson.”
PAGLIN: That’s right. Four votes.
MATTHEWS: He won by four votes.
PAGLIN: Whatever. Those were the kinds of problems in those early days.
MATTHEWS: Those were the day‑to‑day problems that kept half a dozen people in this firm busy. I used to draw my own microwave sketches in those days.
PAGLIN: Another one that I handled at the time, you will recall is Westinghouse’s first entry into cable.
MATTHEWS: In Georgia.
PAGLIN: Valdosta, Georgia.
MATTHEWS: That’s right. Micro‑Relay and there was a red headed guy out here in College Park.
PAGLIN: I don’t remember his name but…
MATTHEWS: He put that system in. He was one of the pioneers.
(Editor’s Note: Probably Hank Diambra)
PAGLIN: And I represented him. John Lane, you know, represented Westinghouse.
MATTHEWS: It was Micro‑Relay of Georgia.
PAGLIN: That’s exactly what it was called. During the Broadcast‑Cable Interface Seminar last Monday, they had a guy from Westinghouse and he was talking about how they got into the draw. I sat there taking notes and I thought, my God, this goes back to 1965 and he said he told them, as broadcasters, “This is the future, we’ve got to get into it.” Now, they’re (Westinghouse) not into it anymore. Did you also at the time and we’re talking like you say, the late middle ’60s, early ’70s.
PAGLIN: At that time, were you and your firm here, your representation of cable clients, running into problems with state commissions and the regulatory problems. What were the nature of those?
MATTHEWS: Yes. Well, there weren’t too many state commissions. New Jersey had one. Connecticut, New York came into existence around that time. Since most of our clients were not based in those states, we did all their work, even though our firm wasn’t located there. We had a very active local and state practice, sometimes you had to associate with local counsel. You certainly do in New Jersey. I tried a couple of cases before the Connecticut PUC ‑ transfer cases. Jerrold bought the franchise for Waterbury, Connecticut and was protested. We won that case two‑one, as I recall. A Republican voted against us.
Nevada was a PUC state. There was a multi‑franchise application proceeding for Las Vegas and several of us, Washington lawyers, represented parties to it. I’m trying to remember. I had a client out there, I’m trying to remember who it was. Oh, I know who it was. He (Pivlio) represented Hank Greenspan, a local publisher of the Las Vegas Sun. I represented a fellow named Phil Zone, who had a group of investors from northern California. We were out there off and on, staying in motels for a couple of months trying that case. It was a comparative hearing. The chairman of the PUC, I’m trying to think of his name, went on to become the chairman of the Interstate Commerce Commission under Nixon, Reese Taylor.
PAGLIN: Oh yes, that name is familiar. Wisconsin also had…
MATTHEWS: Yes, but not very active.
PAGLIN: How about California?
MATTHEWS: No, they still don’t.
PAGLIN: Really? Hmmm, that’s surprising.
MATTHEWS: Connecticut was the most active, New Jersey came a little later. We were active with Jerrold in the legislative aspects in putting together the New Jersey regulatory scheme. I was up there quite a bit on that in Trenton. New York became very, very, very active. John Davis, of this office has practiced before the New York Cable Commission for twenty years through their various chairmen.
PAGLIN: This must have been before the Commission’s change in policy when they turned over all this stuff to the local municipalities in the states.
MATTHEWS: Not too much before.
PAGLIN: That’s an interesting situation which hasn’t been explored very much. In your view, knowing what you know about the Commission and your activity in these areas, state and local, what do you think was the reason why the Commission decided this was the kind of things, better left to them. Was it because of the political state at the time?
MATTHEWS: Yes, I think so.
PAGLIN: That there was a decentralization philosophy in Washington at that time. That was always what I thought. Logically, that and workload were the two feelings I had as to why they did it.
MATTHEWS: They had a low budget here and the cable business was always the bastard step child. Until we started having to get the certificates from the cable field, they had precious little to do. Most of it was policy and rule making.
PAGLIN: I would say and I want to get your view, that in terms of shall we say, regulatory policy, administrative agency, especially since the tabs they kept on it, anyhow it was like a big brother type attitude, wouldn’t you say?
PAGLIN: That is, they would review what the procedures were at the municipal level, or perhaps even at the state level and if they satisfied “due process”, that there was a hearing, Ok, then we, the FCC, don’t have to do it.
MATTHEWS: The industry at the time, we had an awful lot of input into that criteria. We really did. People were generally satisfied with the way that worked out and before the franchising frenzy that came later on, the cities, by and large did adhere to the federal guidelines and criteria and didn’t fight with them a lot. The industry and some of the lawyers, most of whom you are talking to, we did have an awful lot of input into that.
PAGLIN: It came about as a rule making as I recall, so it was filings in the rule making.
MATTHEWS: A lot of informal contacts and they really, for the third time, we did have an awful lot of input.
PAGLIN: It made sense. That kind of thing always makes sense. That is to say, you go and talk to the people who know something about it, who live with it, who can give you some advice. Scholars are ok for pushing out the outer limits of the mind, so to speak. When you are setting up new rules, my feeling has always been that you talk to the people who do it every day.
MATTHEWS: We were dealing then, the classic cable systems were getting all filled by that time. They had a parade for you when you came in to build a cable system for them. Then we were going into the second grade of systems, Champaign, Illinois, the larger towns, the Peoria, Illinois, the bigger towns. The 100,000, the 200,000 towns, not the big cities where they have local television. But we could give them more. Give them four or five more signals and you had to give them a big package, you had to promise. Of course, those towns had greater tax problems and that’s when the whole question of the franchise fees came up. The competition got a little more intense and you started having to go with your local partners and it was usually the eighty‑twenty standard deal where the proper local people came into it for twenty percent. The “consultants” with quotes around it and whatever. That’s when it would get a little more distasteful.
PAGLIN: Basically, it was a payoff.
MATTHEWS: In hindsight.
PAGLIN: Whatever you call it, that’s how you had to get in. You had to get in that way because, as you say, it wasn’t there for the taking like the old days where they welcome you with open arms or as Archer Taylor said when the guy came up there and instead of franchising they said, “What do we need a franchise for? We’ll give you the business license instead.”
MATTHEWS: We’ll give you a business license. I used to say you could write it on the back of a blotter. I had clients who built systems without a written permit and then got them later on. The telephone guy said, “Gee, I ought to probably make a record.”
PAGLIN: Then at that time, because small towns needed this and wanted it and the people wanted it, you wouldn’t have any problems with the utilities. The Mayor would call them up and say, “Look, John, our people need this. You’re going to cooperate, aren’t you?” “Yes, sir, Mr. Mayor, we certainly will.”
PAGLIN: Those were the good old days.
MATTHEWS: Till they, the utilities thought they were going to go into the business themselves, then they started.
PAGLIN: Yes, with the lease backs.
MATTHEWS: But that didn’t last too long, they got sick of it and they got out of it.
PAGLIN: You know I told you about the old, “What goes around, comes around.” Here we are, 1989, and the big problem that cable is facing, like the other day at the seminar. Most of what they talked about is telco entry into cable, “What are we going to do about the telephone company?”
MATTHEWS: It’s not going to happen for a while.
PAGLIN: You don’t think it is.
MATTHEWS: Not for a while.
PAGLIN: Yes, well, we’ll get to that because I am interested in your views since you’ve been so involved with this stuff. All right, if there’s nothing else in this field, the local government, that you think would be useful, should we go on?
MATTHEWS: That era, the non‑frenzy era in the second stage of development that came after the early ’60s, early ’70s was, I guess, I probably spent half my time with federal stuff and half my time on local and state regulatory things. Did an awful lot of traveling, an awful lot of franchise appearances and we were putting together, at that stage, pretty fancy brochures and almost like a television application at the Commission. And you were hiring consultants like Archer Taylor and Bill Adler was a consultant and some of the other people. He’s one of the old pioneers, I haven’t seen him in years.
PAGLIN: Who, Bill?
MATTHEWS: Yes, we used to travel a lot together. So it became a more expensive proposition. We had to hire a couple of lawyers and an engineer and sometimes you had to get a Lloyd Wright to do a tower study for you, if there were an FAA problem. I had a case once out in Kansas City with Rosco Turner, the old airplane race driver. He owned an airport and he used to protest every goddamn tower that came close to him.
PAGLIN: His name has come up in these things before.
MATTHEWS: Yes, well, he used to fly with a little Tiger Cub and he was a real hero. Jerrold was putting some systems in out there and I had two or three hearings out in the Kansas City regional office. We beat ’em, but Jerrold had to spend money to fly us out there to go for a week and go through all of that.
PAGLIN: That’s interesting. His name has come up before. You would think that he wouldn’t be.
MATTHEWS: He had a little strip. It wasn’t like a big damn airport, just a little airport that he owned.
PAGLIN: And he didn’t want any interference.
MATTHEWS: He didn’t want any sticks (antennas) around there at all.
PAGLIN: Right. I can see that. So, let’s pass along to the next topic. What I have in mind now, you’ve given us the particulars and what I have in mind is to get some of your views down ‑ an overall assessment of the early years and their impact on the problems today. Are there any things that happened then that you think had a direct impact on what happened later on?
MATTHEWS: No, I think that I should probably give this more thought before I answer, but my gut reaction is that what happened to cable in terms of slowing down its regulatory process, or to put it another way, the imposition of, in some cases, clearly unofficial restraints on its progress, by virtue of its ability to obtain a product. Even after favorable Supreme Court decisions in the copyright case, in the United Artists/Fortnightly case and the TelePrompTer cases, say yes…even after those occurred. I think they were due strictly to what usually happens in the Washington environment and that is a small emerging industry versus a very large sophisticated well entrenched industry. In hindsight, I think looking back historically, it shouldn’t surprise any of us that it took cable as long as it did, to get through those restraints. The broadcast representatives did a hell of a job in holding back and thwarting this emerging industry that they thought was going to harm their industry and some of their predictions in terms of how many homes we were going to serve and whatever, ended up to be absolutely accurate.
PAGLIN: Their nightmare predictions.
MATTHEWS: In their worst nightmares they couldn’t think it was going to be so bad.
PAGLIN: Let’s call it the worst case scenario.
MATTHEWS: The worst case scenario.
PAGLIN: Has been beaten.
MATTHEWS: Has been beaten and so I think that’s really, to be philosophical about it, I think that’s what happened over the years. I think that there were some moments in time when cable might have been able to make some settlements or some concessions that might have given them a little bit of a loaf, that might have given them a breakthrough here and there. I’m not sure it would have made a lot of difference in the long run, but I guess what I’m saying is probably that more systems could have been built quicker if the industry as a whole had taken advantage of some of the opportunities with the more moderate‑‑I won’t call them responsible or irresponsible‑‑wing of the broadcast establishment which came to be after a while, in the majority. Because they were all getting into cable themselves, even just to test the waters or to hedge their bets.
PAGLIN: Those others then, Ed Craney and people like that.
MATTHEWS: That’s right, when the Coxs get in and when the Newhouses get in, and when the Storers got in, when the big hitters get in, in the broadcast establishment the game is over. We like to think we had something to do with that. Most of them, or a good many of them, were our clients. We encouraged them to get in cable. Cox is still the biggest client in this law firm. That had a lot to do with it. As more cable subscribers came on board, the politicians paid attention. The Hill got a little more reasonable. That in turn, influenced the FCC. That’s the way public policy gets developed. I guess the consumer… It was a little bit a mouse trap, but that’s what happened. It took probably five to ten years longer than it should have.
PAGLIN: I was about to say, the figure has been given by others in the field that in years, they felt it was really ten years that was lost in terms of…
MATTHEWS: It could have been.
PAGLIN: To say nothing of the technology of the satellite.
MATTHEWS: That’s right. Forgetting about that.
PAGLIN: That it was really ten years delay in development.
MATTHEWS: I think I would come very close to agreeing with that figure. Certainly seven, eight, ten years. It’s just a combination of a lot of things. It was a slow, hard, son‑of‑a‑bitch of a fight. That whole time we were really up against it.
PAGLIN: The other side of the coin is you will say, how much would you attribute to‑‑what has been referred to by others‑‑the fact that you were dealing with an early literal pioneer, an individualist who said, “What the hell are you talking about? This is mine. I put a stick up. I bring the signal in. What do you mean, call me a pirate?”
MATTHEWS: Both sides.
PAGLIN: I mean we had those guys, the little Mom and Pop guys who built these early systems and would not listen to anything.
MATTHEWS: We had it on both sides. If you ask me to balance, I think there were probably just as many broadcasters, probably in the smaller markets and the mid‑west particularly, who were scared to death of cable and what it could do to their small operations, family owned. There were just as many of them as there were of the guys I used to tell you about. Some of the guys from Pennsylvania if they could, they’d repeal the income tax. We all would.
PAGLIN: What was George Morrell doing? What was her name in Rapid City, Helen …
PAGLIN: She was one of those. Boy, she fought George Morrell in Mid‑West Video.
MATTHEWS: Look, they were very principled people. On both sides. They were really entrepreneurs. The Barco’s of Pennsylvania. I’ve never met a brighter woman than Yolanda Barco.
MATTHEWS: I really like that lady. But boy, inflexible.
PAGLIN: She’s still that way.
PAGLIN: (She’s going to read this!)
MATTHEWS: I think you and I have talked about the times when God, those cable guys beat that network non‑duplication thing. Beat that dead horse and when they were being lead by some industry leaders down here who felt the same way. You and I have talked about some commissioners we know that used to go hide and didn’t want to hear that anymore. There were others of us who were trying to get some compromises going, but for a while we didn’t have any luck and then we did.
PAGLIN: Then, if I recall correctly, the time that Fred Ford became president of the association and I was his counsel, when copyright reared its head.
MATTHEWS: The delegation came down. I remember the NCTA meeting well, we were selling our birthright. People were talking about paying some fees. What, are you crazy?
PAGLIN: That’s right. We tried, if you remember, your firm and I did and Fred made a speech and we were sitting around with people like Milt Shapp and we said to them, this is the beginning, you have a chance to get this for nothing. He said, “Hell no, we wouldn’t pay them a dime.” Look where we’re at today.
MATTHEWS: They said, “It’s in the airwaves. We shouldn’t have to pay for it.”
PAGLIN: The interesting thing is that as you say, events overcame their opposition.
MATTHEWS: Technology and the consumer got in. It was a better mousetrap and it ultimately prevailed but you know when you start assessing, not blame, but who could have done this or that, I think there were just as many really old curmudgeons, very principled, unyielding types on both sides. I think that the ones on the broadcast side or members of the various association boards probably made it difficult for the moderates and the more sophisticated people.
PAGLIN: AMST (Association for Maximum Service Television).
MATTHEWS: AMST was composed of a lot of those broadcast people and then nobody wanted to break ranks either in the cable industry. Then the cable industry got the younger group in. The second generation–the Bud Hofstetter’s came in at that point. The Henry Harris’s, the guys who were in their mid‑’40s. The guys who are my age now came in about then. They had their MBAs and they were money managers and they were result‑oriented. They were not the original entrepreneurs, a lot of them. They were willing to compromise, willing to settle things, whatever. And things started changing. They simply started outvoting the others. I think probably the same thing happened on the broadcast side too. Although it took longer there because they were kind of on the defensive at that point. That’s kind of my assessment of it but was there time lost that didn’t have to be. Yes.
PAGLIN: Yes. Very interesting. And put the way you’re putting it is unique, too.
MATTHEWS: I’m interested that other people share the same feelings.
PAGLIN: Oh yes, sure. From the very beginning, the people we’ve been talking to, the people I’ve been talking to, they had their pointed enemies in the regulatory field. You know who they were talking about at the Commission level. And the broadcasters, the Ed Craneys, and so on, who wouldn’t listen to reason.
MATTHEWS: Did they conceive that there were some problems on their side too or not?
PAGLIN: Well, I would say they recognize the same kind of thing.
MATTHEWS: Have they mellowed at all? That’s what I am saying.
PAGLIN: No, they’d say, I’m not talking to them. In other words, they expressed the same views you did about the small mom and pop guys and some of the bigger ones too, that were “absolutely adamant”. “This is my right. I can take it out on the edge just like anybody else.”
MATTHEWS: Actually, Max, they blamed…I had small system clients who used to sit in my office and blame their problems, i.e., when Washington started paying attention to them, and they had to start filling out forms and ownership reports and things. They blamed it on the big guys getting into the cable business.
MATTHEWS: Oh, sure. They said, “We were ok before these son‑of‑bitches got into the business.”
PAGLIN: That I never heard before.
MATTHEWS: Sure, there was a good bit of that. Absolutely. I used to say, “Look, these guys are going to help you. They’ve got some clout, they’ve got some muscle.” Sure, there was a good bit of that kind of feelings.
PAGLIN: That’s interesting.
MATTHEWS: That they were ok until that happened. Then, I’ve got mine and they were interested in their little system in Podunk, they didn’t care about overall industry growth. A lot of the major broadcast establishment didn’t bother one way or the other. I used to say, back in those days and I’d match notes with Jack Cole and people like that, you never got a protest from a network affiliate station in New York City, for example. Or Philly, or Boston. I can’t remember ever having one, we may have had a few, I guess. WNBC in New York protesting some signals we were trying to put out on Long Island within their Grade B contour. Their markets were so big, they didn’t care. WSB, Atlanta, a Cox station, they were in the business, but they weren’t running around protesting little cable systems. It was the small market guys who were really worried and really, really concerned. I think probably with some justification.
PAGLIN: Sure, it was a matter of relativity. Size is a matter of relativity. That’s interesting.
MATTHEWS: And as it turns out, it hasn’t hurt anybody. The stations are selling for bigger and bigger pieces.
MATTHEWS: Multiples are getting bigger.
PAGLIN: And the price per subscriber…
MATTHEWS: And the price per television station, too. Look at what UHF stations are going for, everywhere.
PAGLIN: In your day, in my day, would we have believed that a television station in any damn market, however big it is, would sell for a half a billion dollars? Man, you’ve got to be kidding. That’s fantasizing. And cable systems. Whoever thought that a cable system would sell for $2500 a subscriber?
MATTHEWS: An offer was just made for a cellular company. Three hundred dollars a pop. And that’s what cable systems used to sell for, not too many years ago. Now cellulars are up to $300.
PAGLIN: Well, we’ll see.
MATTHEWS: That question you just asked, is a good question to ask everybody. When you’re looking back on this thirty or forty year period, to read some of those particularly responses to that kind of question. I’m not sure it does a lot of good except for these historical records about individual people.
PAGLIN: No, but only as types.
MATTHEWS: There were some guys that were just very bright and leaders in their respective fields that felt very strongly. The Commission, Henry Geller and Ken Cox were just top notch, first rate, bright people and they felt very strongly about these things and they had a lot of sway and they carried a lot of votes with them. There were certain broadcasters who were prominent, certain cable people who were prominent.
MATTHEWS: But I think the cable thing started changing when the younger crowd got in and when the broadcast people, when the Mark Bartletts from Cox, and people like that, started serving on the NCTA board. They brought in more sophisticated staff people over there, that’s when things started changing on the cable side, and conversely, the same companies had representatives on the NAB (National Association of Broadcasters) board and saw it from both sides also. That’s when we started sitting down in rooms cutting deals.
PAGLIN: Then, of course, not long after, was the quantum leap in technology when satellites came along with HBO and that just changed everything. In the same vein, what do you think in terms of the future role of cable in the overall development of telecommunications. I have always visualized cable as a part of the overall telecommunications complex and I think it’s turned out to be that way, without the blue sky stuff about market quotations and all that stuff. What do you see for the future role of cable? Is it going to be an entertainment media only, or is it going to be something else?
MATTHEWS: I think it’s going to be something else, but I think the phone company will have a major role. We’re constantly asked–we have done in‑depth studies for a number of our major clients. We have gone out to the mountain top and communed with nature and invited in learned experts and prepared reports for boards? We’ve spent a lot of time on it. We’ve done that with people, as I’m sure other firms have, who are expert, who are former commissioners, and general counsels who know their business and the big question we’re always asked with respect to the telephone company is, “When? “Not if–when?”
I guess people probably started asking that question six or seven years ago and if you told them eight or ten years, then you were almost… It hasn’t happened now and it’s not going to happen in five or six years from now. We think that–and this is based on our latest in‑depth analysis–we think there is a very substantial impediment that remains from a policy standpoint, and not only on the judicial side with Judge Green. I mean, he could die tomorrow and someone else could come in with a new approach. The executive branch and the Congress are also concerned with the telephone company getting in full‑blown–to the entertainment control aspect of total content control distribution.
End of Tape 3, Side A
PAGLIN: We have changed the tape to side B.
MATTHEWS: I was just saying that notwithstanding that probably inexact estimate–the worst case telephone scenario could occur, so we really have to keep an eye on things. We’re telling our clients to be cautious and prudent– hedging bets. I can see a day coming when we see all sorts of joint ventures, between the BOC’s (Bell Operating Companies) and cable in various areas. The phone company (C&P) has now built the Washington cable system. I can think of a couple of major cities that have clients of ours that have been franchised, one or more of them, or have progressed to the state of applying for the franchise. They clearly will have, I can tell you, the phone company build at least the downtown portion of the system for them.
PAGLIN: This is not unlike the old lease back.
MATTHEWS: Well, it is. That’s basically what it is. There are all sorts. Chicago is happening right now. We were asked to represent the situation. We felt that we had just a conflict and wouldn’t be able to take that.
PAGLIN: Represent who?
MATTHEWS: The people who were making the joint venture with the telephone company in the Chicago area. More and more of those things are going to happen. I think you have to hedge your bets and keep an eye on things, but at the same time, probably use the same tactic and device against the telephone industry that the broadcast establishment used against us for so many years. Delay, delay, delay. Stall, stall, stall, but at the same time, keeping your options open and being sophisticated about it. Getting the best kind of technical advice you can on the degree of fiber optic construction. That’s not going to happen all at once and in the same place. It’s going to be different in the South than it is in the North.
You’ll replace a plant faster where it’s older and it’s going to happen differently in different parts of the country, and some BOC’s are going to be a lot more aggressive than others and some aren’t going to care. So it’s going to be a cyclical thing, and it’s going to be a regional thing and a local thing, as to how fast the telephone company attempts to get in. Even if they had the legal authority and they haven’t got it from three places. They haven’t got it from the Commission, they haven’t got it from the Judge and they haven’t got it from Congress. So they’ve got to go three different places to get it.
They started to talk about the NCTA, (National Cable Television Association). MATTHEWS: said, “Not only do they have, and this has been true for several years, a very sophisticated board in place, really the cream of the crop, the top businessmen in this country.”
PAGLIN: And Jim Mooney is the head of it right now.
MATTHEWS: I’ve got to tell you, it’s the best leadership, times ten, that they’ve ever had and I’ve seen them like you have for thirty years. Whatever it takes to keep him, they do.
PAGLIN: They even got him married.
MATTHEWS: Even got him married.
PAGLIN: That will keep him happy.
MATTHEWS: I called him and told him that he should always remember Matthews first two rules. (I didn’t get married until I was 37 myself.) Matthews’ first rule is remember that all women are clinically insane. Matthews’ second rule is never forget the first rule.
PAGLIN: Boy, that’ll get you somewhere. My Paglin rule was, “Before you ever think about such things, concede immediately that women are smarter than men. And you’ll have a fine marriage.” That’s what I tell the young guys. Anyway, listening to this, “Broadcasting‑ Cable Interface III Seminar that they had last week, very fascinating panels. It seemed to me and I’ll get your views on it, which you’d like, is that, philosophically, they did not seem to be offended or worried, frightened or anything by telcos being technologically involved. Everybody started talking and what they kept concentrating on was, “Wait a minute. Who’s going to handle the contact with the customer?”
MATTHEWS: The cable people will tell you that they are not in the wire stringing or the wire burying business. That’s the pain in the ass part of the business.
PAGLIN: Well they’ve had to do it for over forty years.
MATTHEWS: They’ve had to do it for over forty years. Who cares how it (the program) gets there. The consumer doesn’t care. They’ll all tell you that. All the CEO’s will tell you that. That’s where their problems come in. That’s the day to day stuff that drives them nuts. This problem or this hold up or whatever. So maybe there is a way to work all of this out.
PAGLIN: Which is not to say, in your view, that for example, the current type of operation which is so well served by satellites, is going to disappear. We’re talking about multi‑channel. That’s what the name of the game is. Is that correct? Quality?
MATTHEWS: And I don’t have any great fear that satellite DBS (Direct Broadcast Service) if you will, the fifty channels to the $30 parabolic antenna on the top of my dish, which is being stamped out in Japan, is going to happen in the near future. And there’s a lot of technical reception problems with that, as you know, too. The phone company shouldn’t be in the content business and I don’t think they are ever going to be.
PAGLIN: I don’t think they will. Anybody who, let me say, you’re the interview, but I know I go back to the old, old, days and my history tells me that I’ve read that the reason the telephone companies that owned the original broadcast media, as you may remember back in the early, early ’20s, it was then AT&T, even then they were afraid of the public response to the phone company owning also broadcasting programs. And so they backed off. My own feeling is that it is going to happen here too.
MATTHEWS: They’d be better served.
PAGLIN: It’s too chancy, too risky. Because God knows phone companies have never been loved by anybody, except they love the service. Particularly legislators. I don’t know. The industry has to worry about it. They have to talk about it. They have to reason on it.
MATTHEWS: They’ve not given an inch.
PAGLIN: That’s right. But ultimately, it’s the technology by the phone companies. Isn’t that right?
MATTHEWS: I think so.
PAGLIN: But as you see it, the cable companies will continue to serve as they are serving now?
MATTHEWS: As far as I can see.
PAGLIN: That’s not going to go away. The public wants it, right?
MATTHEWS: I can assure you, it will get better every year. And it’s getting more and more into content and whatever. You pick up Multichannel News, Broadcasting Magazine, it’s 75% content oriented. Program oriented. That’s what the stories are about. Just interestingly enough, at the Commission a couple of weeks ago, nobody was surprised I guess, last week, they voted in various ways to eliminate the compulsory license. They don’t have jurisdiction to begin with. But forgetting about INTV (Independent TV Stations Association) for a minute, the broadcast establishment is all upset about that now. Why? Because they take away the compulsory license for the local stations to be carried. Which means they get dropped by cable systems.
PAGLIN: Right. And they would.
MATTHEWS: Sure. So it’s in nobody’s interest.
PAGLIN: I mean that’s only a proposal.
MATTHEWS: Well, it’s got to go on the Hill. It’s a compulsory license. It’s a statute. It’s a lot easier to defeat a statute than get one passed.
PAGLIN: That’s absolutely correct. I’d like to get your views on another matter. There was a lot of talk and there has been a lot of talk on the subject and we haven’t heard this since the early motion picture industry. Vertical integration. Because of the natural development, that’s what it is, the natural development, we now have situations which so resemble the motion picture industry in the ’20s, ’30s and ’40s, where there was vertical integration of production, distribution and exhibition. What do you see of this?
MATTHEWS: Oh, it’s an easy target. That’s one of the problems.
PAGLIN: It’s happening more and more in the cable industry.
MATTHEWS: It sure is and you’ve got a merger going again. You’ve got another big one come along, which will probably go through and Warner‑Paramount‑Time and Warner‑Time and whoever succeeds in that, it’s an easy target for the politicians. It’s got a lot of ammunition. I think some of the major companies are positioning themselves to take as small a hit on it as they can, if in fact it happens.
PAGLIN: By spinning off.
MATTHEWS: Yes, that’s right. Exactly. And doing some things of that kind. Malone has stated that publicly several times.
PAGLIN: John Malone from TCI.
MATTHEWS: He says that he’s positioning himself that way and others are. It’ll affect first and foremost the public companies and then the privately owned ones. I just happen to think right now, that’s just political fodder and it’s a trendy thing, not that it’s not an important issue, but it’s an easy target to go after. We don’t here expect short term to see any legislation passed along those lines.
PAGLIN: Of course, both the House and Senate committees, Markey and the rest of them, they are going to have hearings.
MATTHEWS: Well sure they are. It’s here. It’s going on. They went out to the Convention, I wasn’t there but my people told me.
PAGLIN: NCTA in Dallas.
MATTHEWS: Yes, they went out and deliberately tried to scare the hell out of people about rate increases and everything else. You get the LBO’s (Leveraged Buy‑Outs) and they get these new guys coming and they’ve got to fire the employees and churn the rates up to pay that heavy debt back, and they do it too many times and a State has a senior representative or committee chairman on the Hill, they’ve got trouble for the whole industry. That’s what happened down in Tennessee. They were screaming bloody murder. Guys went down there to kick rates up. Probably overdue to be kicked up. Cable is still a hell of a bargain. Mooney (NCTA) is beside himself with some of the cable rate increase things that are happening. He can’t control the rate increases. I suspect he’ll use the same ploy that every industry does first, they’ll use self policing…
MATTHEWS: Self-regulation and they’ll have codes of conduct and they’ll appoint committees, they’ll try to stall and testify and beat their breasts and they’ll quiet down for a year or two and then they’ll start again.
PAGLIN: And if the codes of conduct are effective, as they were in the NAB, the court will then hold it to be anti‑trust.
MATTHEWS: That’s right. But NAB played that game beautifully for twenty‑five years. And it worked.
PAGLIN: Who’s to say that it didn’t benefit the public? I think it did, as a listener.
MATTHEWS: And not a moralist or a professional.
PAGLIN: That’s interesting because what, as you say, this is the kind of thing which makes headlines and if history serves us, it isn’t until the vertical integration actually produce adverse consequences, that things get stirred up.
MATTHEWS: If history teaches us, it isn’t until the mail gets heavy that we’ve got to worry.
PAGLIN: That the little guy starts getting screwed and he goes to his congressman and he says, “Look what these guys did, they put me out of business. How can I compete?” You have a few thousand of those and you have the motion picture industry break‑up all over again.
MATTHEWS: That took a long time.
PAGLIN: It did take a long time. It took twenty years before the Consent Decree got adopted.
MATTHEWS: They started in the thirties and went until after the war.
PAGLIN: No, it was in the twenties.
MATTHEWS: Twenties, and it went until after the war. Because Frank Lloyd Wright’s son, Bob Wright, who I knew, was one of the Justice Department guys who headed up that task force.
PAGLIN: That was the second one.
MATTHEWS: Right, late ’40s, early ’50s.
PAGLIN: All right. Do you have time for one more?
MATTHEWS: Oh sure.
PAGLIN: I think we can wind up. Finally, tell me what you think about the future course of cable technology. I’m talking about when we have it. Whether there will be a need if any, for federal and or local regulation in the cable industry in the years ahead. I’m talking about the technology which we have here now. DBS, HDTV (High Definition Television), telco’s entry as we’ve talked about.
MATTHEWS: Technical regulations.
PAGLIN: Well, I mean regulation because of the development of the technology. In other words, you’re talking about telcos and that’s a technological development, right? Fiber optics. That may lead to regulation. What do you think about things like DBS, or HDTV in terms of those technological developments, and will therefore, regulation follow?
MATTHEWS: We’ve always considered them to be bridge technologies here. Well, that alphabet soup is–the point that they are limited in capacity–fiber optic and cable are not. Fiber optic is almost unlimited, cable is…
PAGLIN: Unlimited in what sense?
MATTHEWS: In terms of the capacity to deliver a product. So that the history of the DBS’s and the MDS’s (Multiple Distribution System), the alphabet soup, is that they have served as a bridge until something that was more consumer oriented came along. That’s what happened in Washington. I was a single channel MDS subscriber out in Potomac with HBO for a couple of years until I bought a satellite dish. I’ll never get cable where we are. I have a dish out back. I love it.
PAGLIN: I see.
MATTHEWS: But that company really isn’t in business anymore. That little single channel that I bought.
PAGLIN: But they are all multiple channel MDS’s now. Do you see that there would be anything more than the normal regulation by the locality, the municipality?
MATTHEWS: I don’t see a big need for any change in the regulatory pattern right now. I think that the positive aspects of some degree of regulation for entrenched establishment was something that the early cable pioneers didn’t quite fully comprehend. It’s a fairly sophisticated concept. Regulation can be quite a protective device when you are the ins and not the outs. And the broadcasters knew that very well for a long time.
PAGLIN: That’s basic ad (administrative) law.
MATTHEWS: It sure is.
PAGLIN: The telephone carriers knew it long before the broadcasters.
MATTHEWS: The collateral issue to go with that is how much protection. Bill Sims, my partner, wrote a paper on that issue long ago for AMST for some of the sitting board members, Dick Shafto, and Leonard Reinsch. He who seeks too much government regulation pays the price, basically. That goes along with it. You have to be careful how much you ask for. How much economic protectionism you go for. That’s very true also. I think if the telephone company makes a major, major move on all three fronts, then full scale war is declared.
PAGLIN: All three fronts being what?
MATTHEWS: Legislative, judicial and administrative. Then I think all bets are off in terms of the policy direction and re-regulation. On another front, some of the cities and some of the state agencies clearly want to undo some of the Cable Act. But that’s not going to happen. Their trade association didn’t go for it last year and I think that was a key act when that didn’t occur.
PAGLIN: Are you talking about the Cable Act of ’84?
MATTHEWS: Yes. There are a lot of people who are angry about rate increases and that sort. I think Mooney (NCTA) probably has that under control. There will be a lot of jaw boning and maybe ten, fifteen, twenty bills get introduced both sides. The Senate doesn’t seem to be all excited about it, although they have always let the House take the lead in these areas. Senator Hollings doesn’t seem to be concerned about it all that much. I’m not actively involved anymore but when I am here in D.C. though it doesn’t seem to be a super serious issue. But it is a thing that people need to keep a close eye on, spend a lot of time on. But there will be a lot of Congressional jaw boning this year and next year. No question about that.
PAGLIN: And the increased rate problem?
MATTHEWS: Other major problems and issues include vertical integration and the telco thing, and why don’t we let them in. And some of the cities are going to be in screaming and shouting and there will be a lot of anecdotal evidence about this abuse and that abuse. We’re going to take our lumps.
PAGLIN: So you foresee a good period of what–three, four, five years of all this before it kind of settles down?
MATTHEWS: Yes, and then intense actual warfare might start again. This is not to say that we’re not going to take a lot of heat for a while and I think we need to behave ourselves.
PAGLIN: The cable industry.
MATTHEWS: Yes, just generally. A lot of these people I really commend. I think that leadership is very sophisticated across the board.
PAGLIN: Let me put this to you, Jack.
MATTHEWS: And some of them that didn’t have them before have finally gotten sophisticated Washington representatives.
PAGLIN: Some of who?
MATTHEWS: Some of the major companies. And they don’t just rely on lawyers. They’ve got other full time people here now who are good at what they do.
PAGLIN: Analysts, legislators…
MATTHEWS: Lobbyists, whatever. Good at what they do. Mooney needs that kind of help. These people are good from what I hear and so are the ones I know.
PAGLIN: It’s like a network started five years ago and always has been.
MATTHEWS: That’s why the broadcasters were so effective against us. Their lobbying guys were here every day and they saw these FCC people regularly. They didn’t come charging in every three months with some big group running up and down the Congressional and FCC corridors, screaming and shouting that you’ve got to do this for us, or you’ve got to do that for us. Just worked at it on a continuing basis.
PAGLIN: You guys represented NBC in some things, didn’t you?
MATTHEWS: We represented the station affiliates organization in some matters.
PAGLIN: Who was the guy years ago…
MATTHEWS: When NBC first tried to get into cable news, I represented them.
PAGLIN: That was later on. Early in the game there were two guys, one for CBS and one for NBC who were their lobbyists. The CBS guy was a little guy by the name of Earl Gammons.
MATTHEWS: Joe Boudino was the guy from Westinghouse.
PAGLIN: It was that kind of ilk that knew their business, knew their way around and more important than that‑‑and I say this from the other side‑‑AT&T had a wonderful guy, Elmer Pothen. You came to trust him.
MATTHEWS: One of the reasons you FCC people did, was every time you saw these guys they weren’t asking for something.
PAGLIN: And if you needed information or if you came and gave them information you could trust them.
MATTHEWS: Never bullshitted you. We tried to do that here at the firm. We had close personal friends in government. I used to follow an absolute rule of my own. Chairmen, mayors, judges, Congressmen–in a social setting I just thought it was the height of bad manners.
PAGLIN: To do what?
MATTHEWS: When you had someone as a guest in your house to…
PAGLIN: …to talk business…
MATTHEWS: … to talk government business. I really did.
PAGLIN: I agree wholeheartedly.
MATTHEWS: But some of these guys, they were so heavy handed, the tickets and all that sort of thing. I used to take an FCC guy to lunch and not even talk about business–how’s the wife and whatever. No one was unsophisticated enough to know one of the reasons that you had a social relationship was because of the mutual business you were in and I frankly, thought it was easy to do because usually the government guy would bring it up i.e.: business. You’d just have to sit back and wait because one of the things you had in common, maybe you had a golf game or something, one of the things you had in common was that maybe you were both in the same business. So you’d say, “What do you think of this and what do you think of that?” But I never did that. I think most people were the same way, but some of the other guys, they weren’t in town a lot and boy, they came charging in and …
PAGLIN: Turkeys, turkeys at Thanksgiving.
MATTHEWS: But people are human. Harry “Turkey Tannenbaum,” of St. Louis, lost the damn television license because of alleged “ex parte” activities.
PAGLIN: Absolutely. And he was one of the pioneers of UHF, he put a bucket of money into UHF work. He really didn’t think he was doing anything wrong, he wasn’t.
MATTHEWS: When you think about it, poor John, he takes one lousy ride on the Storer airplane,
PAGLIN: John Doerfer (Chairman of FCC in 1955). Not airplane–boat.
MATTHEWS: One lousy trip. (Editor’s Note: Two)
PAGLIN: Right. And that killed him (forced by the White House to resign).
MATTHEWS: These guys are running around the golf tournaments.
PAGLIN: Let me ask you something, Jack. Give me your ideas about, you know, the nature of the industry. You guys here at DL&A have represented the old time broadcasters, newspapers, cable, etc. When you see these as what’s happening today, we were talking about vertical integration with the big corporations, with the big balance sheet, and the multiples the day after and so on, and they’re coming into this industry in takeovers. But they are coming in as a business, you know, I won’t mention names but you know who I am talking about. What is your impression of that in terms of coming in and taking over in an information industry, in a news industry, in an education industry, entertainment industry.
MATTHEWS: I’ve thought about it a lot.
PAGLIN: In your view.
MATTHEWS: My personal view only, I’m not speaking for the firm.
PAGLIN: Of course, I understand.
MATTHEWS: Because we represent a lot of investment bankers and a lot of investment houses and banks and we’re special counsel to lenders and deals and you know, the independent directors, and the takeovers, etc. There’s an awful lot of that kind of work here. My personal views, I want to emphasize that, is I have really mixed emotions about it.
MATTHEWS: Yes, I have mixed emotions about it and so do some of my old time clients who are dear friends of mine. I can think of a couple, one a Deputy Chairman for a very large cable company and one who is the President of a very large privately owned company and that’s another one. These guys are close personal friends and we’ve talked about it and it is a change. Things are different–these new guys are meaner and tougher and they don’t have “the people feeling,” the compassion. Maybe we’re up on our high horse because we’re getting older.
PAGLIN: No, no because…
MATTHEWS: We used to think that we were lawyers and these guys thought that they were running companies with attention to the human side of the equation. And in particular, when you talk to people who have been in the newspaper business all their lives and that will always be their first lives, the print media think that they are head and shoulders above any other and they probably are.
PAGLIN: Well, they are dealing in a different world.
MATTHEWS: It’s more content oriented and it’s more in depth and whatever. The media is changing and they are troubled by it. It’s not a nasty thing necessarily but it’s kind of a nostalgic thing where they are saying, we were nicer guys or our people were nicer guys or people were nicer then to our people. These new guys‑‑some of them are sharks and some of them are sons of bitches and some of them aren’t. Some of them aren’t as good as everybody else was, and everybody else weren’t all saints in those days, either. But is there a change? In my personal opinion, damn right there is. Is it good? I don’t think the public will notice any change, necessarily.
PAGLIN: Maybe, maybe.
MATTHEWS: The people in the industry that work in it, maybe they will, but do I have an opinion, yes. Have I talked about it with people in the industry, have old dear friends of mine who are prominent in the industry talked to me about it? Damn right they have. They kind of feel the same way I do.
PAGLIN: Isn’t it also, Jack because of …
MATTHEWS: That’s the strongest speech I’ve made in three sessions.
PAGLIN: That’s right. But it’s very, very important, because it’s based upon, twenty, twenty‑five years of experience whatever, with some of the top people. Isn’t it because of the nature of the beast? It’s because of the nature of the thing, that they were involved in, which is not selling apples, it’s not an oil company, it’s not a construction company, it’s not a biscuit company. It’s something which affects… I’m giving my opinion, but I just want to get your reaction to say this because I’ve been in this business forty‑seven years now. I think it’s the most exciting and important thing that ever existed in the history of man because it impacts the life of every man, woman and child every day‑‑in ways that we don’t even know. That to me, is the difference between this and the Nabisco company. My question to you is, do you think that the takeover by the large corporations who are totally unrelated, I’m not talking about stores going in…
MATTHEWS: That’s the key and I’m glad you made that distinction because if it’s a very large media company, it’s different. Well let’s take Gannett for example. We have represented Gannett for years and years on all sorts of things. It had a couple of small cable systems, both of which were lease backs, by the way, who bought them back from the phone company, which we negotiated up in Geneva, New York. Let’s assume that Gannett decided to get back into cable in a big way. Well, that would be in my opinion, not just because we represent them, they are a responsible organization, that would be a hell of a good thing.
PAGLIN: For the good of the industry, for the public.
MATTHEWS: Sure, they are a solid newspaper company. They do a good job. They are involved in broadcasting and whatever. But if the biggest manufacturer of …
MATTHEWS: Tires or chemicals with a whole bunch of bottom line guys in their command, I don’t know what that does for you. Again, I want to emphasize these are my personal opinions and a lot of what I feel and some of my friends feel in the industry has to do with what’s been going on on Wall Street the last four or five years, it’s just a monopoly. A billion here and a billion there and this guy makes forty million dollars on this attempted takeover and stock goes up and how does that benefit anybody?
PAGLIN: You made a remark and let me get you on this, that you didn’t know that the public was directly affected. What would be your opinion if, in fact, as a result of the takeover and as you say the big multiples and the large takeover debt, if in fact it did happen and it has in many instances as you well know, had a direct impact on the nature of the programs going to the public.
MATTHEWS: Well, then you’d see Congress getting involved.
PAGLIN: And they are.
MATTHEWS: Yes, ultimately. Only I think it’s the nature of the beast and I think we have to be very careful about how we do this. Remember I said to you earlier we’ve got to behave ourselves.
MATTHEWS: That’s Mooney’s biggest job and I think he’s very good at it. He knows these guys and he strokes and he’s got a lot of egos to contend with. My sense of it is that he’s very clever at this, and they’ve got to really keep an eye on that. We haven’t seen a lot of that in the industry, yet, but if we don’t keep an eye on it, then bad things will come of it. I remember once, recently a guy sat in that chair over there in his early ’60s, he’d been in business forty years, kind of phasing out now, and he said, “Jack, when I’d fire a regional manager or something I’d be up half the week, thinking about the guy and his family, but I’ve got these guys new, young guys now who report to me and in the same circumstances they just do it and boom ‑ you’re gone!”
PAGLIN: That’s true. You read these stories and I’ve been talking to people, just to take an example, CBS, first thing you know two hundred people in the news department, two hundred people get fired ‑ they’re earning too much. That’s the reason. They’re earning too much. Not that they’ve had thirty‑five years as journalists and they’re the tops in their profession, they’re earning too much. I can’t afford this guy. That’s got to have an impact, don’t you think on the quality of programming?
PAGLIN: And the public. But like anything else, if it goes too far, somebody’s going to pull that damn pendulum.
Jack, this has been fascinating. What else do you want to tell me about ‑‑ how great you are?
MATTHEWS: Well, I’m having a lot of fun doing what I’m doing now, semi-retired–which isn’t much. I’m really enjoying it.
PAGLIN: You earned it. I think that this kind of thing and I have a feeling that you believe it too, is going to be very, very valuable. These are oral histories from people like yourself for future use by researchers. The government would be well advised also to learn from these oral histories. You know what they say, who was it, Santana, “Those who ignore history are doomed to make the same mistakes again.”
MATTHEWS: I never thought I’d hear you quote a Jesuit.
PAGLIN: Why not? He’s a great man. A great man. He studied the Old Testament, too, by the way. I don’t know if I mentioned this to you, that the latest news from the National Cable Television Center and Museum indicates that these oral histories and the other documents and things that they have there are being used by students, graduate students, people in the industry, almost on a daily basis. And they don’t even have their own building yet. So this is going to be very, very useful. I think it’s also the first time, to my knowledge, that an effort is being made in an industry, to get together what I call the living recollections of people who made the industry.
MATTHEWS: Well, you know, when you get all done with our little professional group here, I’m going to be interested in seeing how close Jack Cole and I, and Jay Ricks and George Shapiro and some of the others mesh on some things. I’m going to read those transcripts. Do you keep copies here?
PAGLIN: Oh, absolutely.
MATTHEWS: The only restriction that I would put on is that before anything was published I would want to review it.
PAGLIN: You will see it, absolutely.
MATTHEWS: I mean published in the context of someone using it, to put various restrictions on it.
PAGLIN: No one will get to see this except you, I…
MATTHEWS: But researchers will see it.
PAGLIN: No they will not see it until you have given the Center a deed. You will be presented with a deed to sign which says, “I hereby release this under whatever conditions you want.”
MATTHEWS: Well the only condition is that if it’s going to be published…
PAGLIN: Published in the sense of we know it legally.
MATTHEWS: A legal publication is something I want to see because I don’t want it taken out of context.
PAGLIN: You will have an opportunity to edit the thing and if you feel that there is something there that you don’t want said. For example, in the science of oral history, understand that it is a regular technique now.
MATTHEWS: I wouldn’t have said it if I hadn’t thought of…
PAGLIN: That you will say for example, in some instances people will say, not in this context but in others, “I don’t want this used or seen by anyone in the next twenty years or until I die.” But none of that is involved here.
MATTHEWS: No, this is for students. I want them to use this.
PAGLIN: You will sign a document which will say that “I hereby deed this for these purposes.” Then it’s put out there and you’ll see the pictures of the library and all that.
MATTHEWS: I ought to get up there one of these days.
PAGLIN: One other thing, we talked early in the game about the possibility of you also making available…
MATTHEWS: Some documents.
PAGLIN: Briefs, pleadings and principal cases, articles you may have written.
MATTHEWS: Would you do me a favor just so I don’t forget. Drop me a little note to that effect, outlining the category of things. Then if we still have them in our archives you are welcome to have them.
PAGLIN: Very good. And I would suggest also, and I think that I have a copy of it here, that would interest them in who is this guy. I’m going to send that up with it, together with your biography because people who look at this will want to know, who is this kook that also got this stuff together. I’ll be damned, he’s also a pioneer in his field.
Well I thank you again. I think it’s going to be very good.
End of Tape 3, Side B