Interview Date: Monday December 23, 2002
Interview Location: Denver, CO
Interviewer: Jim Keller
Collection: Hauser Collection
KELLER: This is the oral history of Daniel W. Shields, attorney and formerly vice-president of both Telecommunications, Inc., and United Cable Television Corporation, a cable television pioneer both in reality and as a designation by the industry. The date is December 23, 2002; the place is The Cable Television Center in Denver, Colorado. The interviewer is Jim Keller. Dan, before we get started on your cable career, tell us a little bit about what you did before you got into cable.
SHIELDS: Well, I was anti-cable.
KELLER: I understand that.
SHIELDS: I was in the broadcasting industry. I started out at WFMY TV in Greensboro, North Carolina as a TV cameraman and that was in 1950 and worked my way up through the broadcast world with a short stint at the BO Advertising Agency in New York – a checkered career.
KELLER: Was this after or before you got your law degree?
SHIELDS: This was all before. I went from college right to a year with a retail outfit in Greensboro and then had an opportunity to change over to broadcasting through a classified ad in the local paper.
KELLER: It changed your whole career, your whole life, didn’t it?
SHIELDS: It sure did!
KELLER: Your degrees are in what, other than the law?
SHIELDS: Economics and Sociology.
KELLER: Where?
SHIELDS: At Princeton.
KELLER: At Princeton. So you’re an Ivy Leaguer all the way. I know you want to live that down but we’re not going to let you do it.
SHIELDS: Alright. I was sent there by the United States Army. That’s how I got into Princeton.
KELLER: When did you get your law degree?
SHIELDS: 1960 – going to night school while I was at the NAB – National Association of Broadcasters.
KELLER: You had made a remarkable – and I use that term advisedly – quote about cable television at one time while you were on the staff of the NAB, something that had to do with cable stealing the programming of…
SHIELDS: Oh, yes. We knew that as a fact. The cable people were just pirates. They were stealing the signals of our good broadcast members of the association and selling them to their subscribers. Now that’s piracy.
KELLER: When did you change your mind?
SHIELDS: When cable hired me.
(LAUGHTER)
KELLER: Okay, I won’t call you names.
SHIELDS: No, it did change. It changed slowly through the years. But it was in the days when, for instance, as examples, in northeastern Pennsylvania the cable companies by such people as John Walson, John Walsonovich originally, would take signals from New York City with great big antennas off-the-air and provide network television to, say, Mahanoy City in Pennsylvania, but they wouldn’t carry the local UHF signals. The local UHF signals were dying trying to get audience.
KELLER: But they were trying to get the cable systems to carry them, were they not?
SHIELDS: That’s correct.
KELLER: And also the other VHF stations in Pennsylvania were very solicitous of the cable operators in these small communities to carry their signal outside of their areas.
SHIELDS: Absolutely! There was a great dichotomy there.
KELLER: Yes, there was. And so the idea changed when they start to come into their own communities?
SHIELDS: Well, must-carry became important, of course. So if you were a cable system outside of anybody’s coverage, grade B coverage, broadcasters’ coverage then everybody would love you because you were bringing signals – somebody’s coverage, somebody’s signals – into areas they couldn’t reach otherwise. But when you started bringing signals into another broadcaster’s area then the broadcaster felt a little bit unhappy about that.
KELLER: Well, the broadcasters were only one of the enemies of cable in those days.
SHIELDS: That’s true.
KELLER: Tell me some of the others. The antenna manufacturers, the movie people…
SHIELDS: Yes, and the translators.
KELLER: And the translators. Tell me what a translator was, or is.
SHIELDS: Is, yeah, still is today. Translator is a small broadcast signal that is typically built and maintained by a small community way outside of a broadcast area and bringing broadcast signals and translating that signal, let’s say Channel 6 out of Philadelphia, translating it into another frequency, usually UHF and beaming it down into the small pocket in the hills of Pennsylvania or wherever.
KELLER: So they were doing the same thing that cable was doing.
SHIELDS: That’s correct.
KELLER: Extending the signal of the broadcast signal.
SHIELDS: With one notable exception – very difficult for them to maintain revenue because it was only by the grace of anybody who wanted to volunteer to pay money to keep them going.
KELLER: At one time didn’t the television stations subsidize translators?
SHIELDS: Oh, yes. They owned them!
KELLER: I didn’t realize that.
SHIELDS: There were four or five of them, for instance KOAT TV in Albuquerque would spot around the edges of New Mexico and amplify as it were the Channel 7 signal.
KELLER: There was a distinction between a repeater and a translator, is that correct?
SHIELDS: Right.
KELLER: What’s the difference?
SHIELDS: The repeater basically repeated the same frequency and with a directional antenna would push it beyond the edges of the grade B or the end of the regular broadcast signal.
KELLER: And there were many repeaters as well as translators in Colorado at one time, were there not?
SHIELDS: I don’t remember. I don’t know about that.
KELLER: I think at one time our great Senator, Senator Johnson was very much of an advocate of repeaters and translators in the Colorado mountains.
SHIELDS: Repeaters were tough because of course they would be on the same frequency and there would be places where they’d fight each other, the same channel.
KELLER: So they were interfering with their own signal, would you say?
SHIELDS: That’s right.
KELLER: When did you join the cable operations?
SHIELDS: Well, I moved from the National Association of Broadcasters to an outfit called Steinman Stations.
KELLER: Tell me, before we get into that, what did you do with the NAB?
SHIELDS: Well, it was a host of various things.
KELLER: Other than fight cable.
SHIELDS: Mostly administrative. I worked for a man by the name of Thad Brown who was the vice-president for television of the NAB. I did all the various things that a trade association does on behalf of its members and would put out… for instance, in the very beginning the television broadcasters were radio broadcasters who didn’t know a damn thing about television, and so we would write manuals on let’s say what film was all about and why you needed a film department, etc. So it was pretty basic stuff. And then of course you would from time to time find yourself on the Hill and talking to various legislatures about the woes of the broadcasters and how we were being maligned by the cable people, etc.
KELLER: And you cried a lot.
SHIELDS: Oh, yes.
KELLER: And then we’re getting into when you left the NAB and became legitimate in cable.
SHIELDS: Well, I left the NAB for a broadcast group. That is, a broadcaster that owned both TV and radio stations around the country, and the Steinman Stations was located and headquartered in Lancaster, Pennsylvania, and that’s where I moved and worked there during most of the ’60s. It was there that cable television was really getting its feet on the ground and getting started. Lancaster was in the middle of the eastern section of Pennsylvania.
KELLER: It was a one or a two station market, wasn’t it?
SHIELDS: One station. Channel 8 was the only VHF station between Philadelphia and Altoona and everything else was UHF. It had great circulation as you can imagine. In any event, people loved to watch, of course, Philadelphia if they could get it, or New York if they could get it, or Baltimore if they could get it, and so we decided – we being the broadcasters in the company – decided to put a cable system in Lancaster itself. Rather we do it then a competitor do it.
KELLER: And so this was as a defensive mechanism in Lancaster?
SHIELDS: Correct. So we had 12 channels which was as much as you could do in those days, and we built a cable system. My first intro was to head up the cable operation.
KELLER: So you were doing for the Steinman operation the same thing that other cable television operators were doing against other broadcast signal operators, and you were combining the two of them.
SHIELDS: That’s right. If it made money and it was necessary to do so, we did it.
KELLER: And did you get a franchise?
SHIELDS: Oh, yeah! We got a franchise. The application for the franchise was about four or five pages long, double-spaced.
KELLER: What year was this?
SHIELDS: I’m guessing, Jim, it was ’63, or something like that.
KELLER: But you were the only television station in town so you had a pretty good swat at the members of the council.
SHIELDS: Oh, yes. And we had both newspapers.
KELLER: They were your partners or you owned them?
SHIELDS: Yes, the same company owned both newspapers, a radio station, an FM station, and the TV station.
KELLER: All in Lancaster.
SHIELDS: All in Lancaster.
KELLER: Well, some of that was prohibited in future years, but at that time it was not.
SHIELDS: That’s right, but at that time it was okay.
KELLER: And you had the cable television system also.
SHIELDS: Right.
KELLER: It was kind of a monopoly, didn’t you think?
SHIELDS: It was lucrative.
KELLER: It was a communications monopoly. Use the term, will ya! (LAUGHTER) Again, it was what the broadcasters had been fighting against; it was what the industry had been fighting against, the cable industry had been fighting against monopolizing. Did you build the system? You did build the system in Lancaster.
SHIELDS: Yeah, we built the system. I was a vice-president of the Pennsylvania Cable Association.
KELLER: What did you do at the cable system in Lancaster?
SHIELDS: Just management. I hired a system manager and did the financial work.
KELLER: So you were still with the Steinman group.
SHIELDS: I was still working with the broadcast side as well, yes.
KELLER: Talk about conflicts of interest, but we won’t go into that.
SHIELDS: Thank you.
KELLER: Well, how about going into it. Did you ever find yourself in conflict with yourself?
SHIELDS: No.
KELLER: How about with the other people? You never had any conflict between the broadcaster and the cable operator in Lancaster?
SHIELDS: No, we were actually… Channel 8 was a friend of the cable industry in Pennsylvania because of course we were carried, Channel 8 was carried, by a myriad of cable systems throughout the state and we had one man whose sole job it was, was the care and feeding of cable systems that were carrying Channel 8 and we made sure that we’d give them antennas, we’d help them put the signal on the air and we’d send engineers if necessary to help the cable system get Channel 8 to be in a good position on the cable dial, etc.
KELLER: So the Steinman people just did the opposite of what you had as a basic tenant in the NAB?
SHIELDS: Well, the NAB was starting to see that there was a two-sided sword here. That some broadcasters liked cable, and some broadcasters disliked cable; it was all depending on whose ox was being gored at the moment, you might say.
KELLER: But yet they had a solid front when they went before Congress though opposing the industry, and the FCC and so on.
SHIELDS: By and large that’s true.
KELLER: Was this before Cox got into the business as a major broadcaster who…?
SHIELDS: I don’t know. I don’t know when Cox got in the business.
KELLER: When did you leave Steinman?
SHIELDS: I left them in, I guess it was about 1969, and went for a short period with a radio broadcaster in Princeton, New Jersey. He had great hopes – privately owned – of getting into cable TV in New Jersey, and it never came to pass.
KELLER: Who was that?
SHIELDS: His name was Herb Hobler, and it was Nassau Broadcasting. I was just administrative head of that operation which was two or three radio stations, and a nascent cable operation which never got off the ground.
KELLER: Why?
SHIELDS: He didn’t have the wherewithal, the finances, and so we never got around to it. Finally he said to me one day that he couldn’t afford to carry me any more and I was in effect fired.
KELLER: Had you ever applied for franchise under that name?
SHIELDS: No, we never had. We were always about to or going to. He had many irons in many fires.
KELLER: But cable was never a hot one.
SHIELDS: That’s right, never hot enough. So then I sent some correspondence out to my old broadcast friends and said I was available, and George Hatch of the TV station, KTVU, I believe, in Salt Lake City got one of my letters and it was just about that time, Jim, that the FCC said that a broadcaster could not own a cable system in his own market, and so Hatch thought it would be a great idea for… Hatch was involved with TCI at that point.
KELLER: He also owned the newspaper in Salt Lake City, and the television station.
SHIELDS: This is true, right. And also what he had that TCI was interested in was a microwave network throughout the West carrying KTVU and other Salt Lake City signals up through into Montana and into Wyoming and throughout the far West.
KELLER: Which indeed they did.
SHIELDS: That’s right, and he and Magness got together and that was one of the other arms of TCI at that point was Western Telecommunications. In any event, he thought it would be a great idea for Bob Magness to hire me, who knew all the broadcasters, and have me go around and buy up the cable systems in their hometowns because they had to get rid of them because the FCC said to.
KELLER: How many were there then?
SHIELDS: Oh, there were bunches.
KELLER: Within the grade B contour of the Salt Lake City station, how many?
SHIELDS: Oh, but this was throughout the whole country, whether it was in Baltimore or Lancaster or Atlanta, Cox’s operation, it didn’t matter where. So he got a hold of Bob Magness and I went out to Denver and got interviewed and Bob hired me. I stayed right in New York. I was living in Princeton by that time because I had been working for this radio operation and worked for TCI for a year during 1970 trying to go around and see my old broadcast friends and say, “You’ve got this cable system you’ve got to get rid of. Why not sell it to TCI?”
KELLER: What was their reaction?
SHIELDS: Very predictable. Unfortunately for us, being TCI at that point, the FCC gave them ten years to divest. So they were going to take that ten years and build it up into as big an operation as they could before selling it.
KELLER: Weren’t you aware of that clause?
SHIELDS: Just didn’t think of it, I guess. So I chalked up a big fat zero that whole year.
KELLER: But you were an attorney at that time, too, weren’t you?
SHIELDS: That’s right. I had become an attorney while I was working for the NAB going to law school at night.
KELLER: Where were you licensed?
SHIELDS: In Maryland, where I lived at that time, and later here in Colorado.
KELLER: Are you still licensed in Colorado?
SHIELDS: Oh, yeah.
KELLER: So if we ever get in trouble we’d still come to you then?
SHIELDS: Well, I’m retired now.
KELLER: Retired from everything.
SHIELDS: That’s right.
KELLER: Dan, how many contacts did you make with broadcaster who owned cable systems in their own market, do you recall?
SHIELDS: No, I don’t recall but it was in the dozens of course, by telephone and so forth, and I visited some of them. But as I said, they were just not interested in selling at this point. They had ten years to enjoy the profits of the cable industry, cable systems that they were owning. And so I chalked up a big fat zero. A year later, at the convention when I was out there with Bob Magness in Chicago that year at the cable convention, Bob said, “Following an amen, we’ll move over 400 hours to Denver, Colorado.” So I became Bob Magness’s assistant at that point.
KELLER: What year was that?
SHIELDS: 1971.
KELLER: And you moved to Denver.
SHIELDS: And the rest is history.
KELLER: Well, that’s what we’re after! We’re after that history! So what did you do for Bob in the early days?
SHIELDS: It was minister without portfolio, and I would do whatever needed to be done and it was financial and operational, troubleshooting.
KELLER: Tell me about your troubleshooting.
SHIELDS: Well, the system had some problems or had some…
KELLER: You sure couldn’t go out and fix it.
SHIELDS: No, I didn’t climb poles. Never climbed a pole except in the Army. Then Malone came along about ’73, I think it was, ’72 or ’73.
KELLER: John Malone.
SHIELDS: Yes, thank you.
KELLER: Who at that time was president of the Jerrold Corporation.
SHIELDS: Of Jerrold, um-hmm. And I had known John because I’d gone to Jerrold in terms of buying equipment for TCI and negotiating terms – that was very important in those days because the early ’70s were hard times and the cable systems generally, TCI particularly, were over-extended in their debt. They made a fine art of leverage and that’s one of the reasons that Bob evidently got John Malone to join him together and then I became Malone’s assistant, assistant to the president still, and I worked for John Malone.
KELLER: Tell me about how he operated.
SHIELDS: Very casually but very sharp. Just a couple of incidents – I was for instance involved in going down to negotiate and buy a cable system in Columbus, Georgia outside of Fort Benning and I remember doing the deal and working to get the financing for it, bought the system, and years later, for some reason we were in a meeting and the issue of the system’s purchase price came up. I said, “Oh, I’ll go get the file and find out how much we paid for it.” John says, “No, I’ll tell you.” And he gave me right out of his head all the details of how much debt and how much equity we put up to buy the system and how much it took to pay off the debt and all the rest, just out of his head. He knew those kinds of details all the time.
KELLER: Well, he had to know because no one else was able to figure out what was going on in their balance sheet for years and years and years.
SHIELDS: As my wife said as I would come home, “You, Dan, should be paying them for all that Malone is teaching you.” I didn’t even know what the cost of money was, the future value, and calculations in that regard.
KELLER: Well, he sure could tell you.
SHIELDS: Oh, yes, and he taught me how to do that and many, many other things, and then as the years came by of course the franchising issue became very paramount, the large cities.
KELLER: TCI never really got involved in the franchising efforts, though, did they?
SHIELDS: It did. It showed the flag. One of the ones I worked at very hard was Pittsburgh, which was as you remember Warner. Warner got the franchise. But one thing John would never do was promise more than he could deliver.
KELLER: Everybody else did but he wouldn’t.
SHIELDS: He wouldn’t. So we always lost. And so we would lose one after the other, and then of course he would march in two or three years later when the system was being built, or built, and losing its left and right, losing all its money, and buy it for cents on the dollar. A perfect example was Pittsburgh, he bought from Warner.
KELLER: What other ones did he buy on that basis?
SHIELDS: Oh, Jim, at my age my memory’s shot and I don’t remember, but there were bunches of them.
KELLER: Some of which he applied for the franchises and then lost them?
SHIELDS: Oh, yeah, they applied for the franchise in…
KELLER: I know Pittsburgh was an example, but any others that you can recall?
SHIELDS: Sacramento, Knoxville, Memphis.
KELLER: Did he acquire Memphis?
SHIELDS: It was 50/50 with ATC at that point. That was a good system, is a good system. So that’s what I did with John Malone, and toward the end of the ’70s, ’78, ’79, ’80, two things were happening. One, John brought me in one day and said, “Well, I think you should become director of franchising,” and at the same time, Gene Schneider who was the president and CEO of United Cable Television had put an ad in the broadcasting and other magazines, trade press, looking for a general counsel.
KELLER: You didn’t like the idea of doing franchising?
SHIELDS: That’s right, full-term. It’s not a fun business, especially when you never win.
KELLER: That’s true. Dan, we want to get into your United experience after we change tapes. Dan, when you were offered the job of director of franchising for TCI you turned it down because you didn’t feel it was productive because you weren’t winning any. There were no hopes of winning them?
SHIELDS: Not really, not when other people were promising all sorts of impossible things that you put them on a spreadsheet and you just go down into the negative so fast that you can’t believe it.
KELLER: At that time, TCI was the largest in terms of number of systems and subscribers in the industry, is that correct?
SHIELDS: I think that’s right, and we did that by purchase of systems, not by franchising.
KELLER: Was that the reason that they felt they had to, as you pointed out, show the flag to apply for these franchises?
SHIELDS: I never questioned why we had to show the flag except that we were a leader and it was something that… there was a possibility we could always win. For instance, I’ll never forget the Scottsdale franchise and the franchise renegotiations. That was an anomaly in that the city council of Scottsdale consisted of businesspeople. They all knew what we needed to do, i.e. make a profit. In fact, they were insistent that we… sometimes they would say you’re taking too much money here, you need to make enough money to make a profit so that it will become a good system. Time value of money was something they understood, they understood ROI, all the…
KELLER: Return on investment.
SHIELDS: Yes. All the sophisticated things that you needed to bring out to make yourself a viable operation in a city and it was a pleasure doing business with them because they understood your needs and wanted to accommodate them, but at the same time get the best for their subscribers.
KELLER: Did you win the franchise?
SHIELDS: Yes.
KELLER: Then you were successful there!
SHIELDS: This is true.
KELLER: Now, you mentioned something else about franchise renegotiations. TCI, and I don’t know whether this was on your watch or not, had a series of difficult franchise renegotiations – Jefferson City…
SHIELDS: That was after I left. The name of the man who did become the director of franchising, I forget.
KELLER: Paul Alden.
SHIELDS: Yes! Thank you.
KELLER: Was that not his name?
SHIELDS: That was his name. You asked before about John Malone’s modus operadi and how did he work day in and day out. He let you sink or swim, hang or succeed on your own, pretty much, and he didn’t micromanage at all. For example, I’ll never forget the time I walked in his office after the Pittsburgh franchise had been awarded to Warner and I told him this and I said we’d lost and Warner had won the franchise, and he said, “Hmm, okay, here’s the application for Memphis. Why don’t you see if you can get that.” That was the end of it.
KELLER: He was aware of what Warner had promised on the two-way system, the Qube system they called it at that time.
SHIELDS: That’s right, up in Columbus, Ohio.
KELLER: And on that basis got Pittsburgh.
SHIELDS: Oh, they got a lot of systems that way. Everybody derided Qube because it never made money and never worked, but it got them a lot of franchises.
KELLER: Yes, it did. Then you decided not to do franchising full-time, and you wanted to get back into the legal business, is that right?
SHIELDS: Well, I never was in the legal business as such.
KELLER: You wanted to get into the legal business.
SHIELDS: That’s right, that’s right. My wife was a lawyer, my daughter was a lawyer and I thought, well, maybe I should try it too. As I said, Gene Schneider was looking for a general counsel so I…
KELLER: That’s at United Cable Television.
SHIELDS: United Cable Television, here in Denver, so there was no moving or anything like that involved. So I walked across the street and talked to Gene and he hired me.
KELLER: As general counsel?
SHIELDS: As general counsel and I worked for United Cable as their general counsel for ten years until the big changes came when United Artists came in and then TCI took over United Artists.
KELLER: Well, let’s go through these one at a time because you as general counsel of United were in a position to be involved in these deals, is that correct?
SHIELDS: Not too much. I saw my clients, if that’s the phrase, as the cable systems where the rubber meets the road, where we get our money. My main thrust, my main job, as I saw it was the care and feeding of United’s cable systems’ legal problems throughout the country, and I would work with local attorneys with all the problems, whether it’s re-franchising or whether it’s somebody shooting holes in the cable amplifiers, whatever it was, personnel problems, that was my job as I saw it. I did not work as closely perhaps as I should have with the board of directors and the top management in those kinds of deals, which were financing deals and ultimately mergers and acquisitions.
KELLER: Well, you mentioned some of the specifics of things that you did – franchise negotiations, renegotiations – did you ever sue anyone for deliberately damaging a system?
SHIELDS: Probably, yeah, I’m sure we did.
KELLER: Did you win it?
SHIELDS: Oh, yes.
KELLER: I see, I see. You can’t remember specifics though?
SHIELDS: No, no.
KELLER: What was your most vexing problem as general counsel of United Cable Television?
SHIELDS: The vexing problem was the care and feeding of the local attorneys. It was amazing to me then, as it is now, how venal – well, that’s the wrong word, that’s too strong – how interested the local attorneys were in billing these big companies from the big cities. For instance, they’d take us…
KELLER: Greedy.
SHIELDS: Okay, that’s a good word, that’s a good word. I like that. And they were a lot more self-centered in that regard then let’s say a big firm in a big city, like Holm, Roberts and Owen in Denver, which they were very good. But even those people I had to do care and feeding of the law firms. I’d get the bills every month. This is a bit of minutia, and for instance, they’d bill me for the time of two lawyers to read and go through a contract or a document and obviously one was a young guy or gal just coming in and the other was the senior partner. I wouldn’t want them to teach this young guy on our dollars. That was all fine, they would take the money off and so forth, but the little guy out on the Hustings would take you to lunch and then bill you for the lunch, as well as his time taking you to lunch!
KELLER: That’s why you never, never allowed an attorney to buy you lunch, never. It’s that plus 15%.
SHIELDS: (LAUGHTER) That’s right.
KELLER: The greed of the local attorneys, and these were generally small town attorneys, correct?
SHIELDS: Yes.
KELLER: And they thought they found someone with deep pockets, how long did you keep them around if they continued to do this kind of stuff?
SHIELDS: Well, I talked to them and they’d understand. They realized that we were not falling off turnip trucks around here and would back off pretty well because you needed these guys. They had the wherewithal, the political wherewithal, to keep in good spirits with the local city council and the local people that were involved in whatever community it was.
KELLER: Wasn’t this the responsibility of your local manager, though?
SHIELDS: He did it to, of course. Yes, we would work hand in glove often. I enjoyed that very much, by the way. In passing, I’ve got to say the local system managers, whether it be TCI or whether it be ATC or United Cable, were a very solid bunch of people, both male and female, and it was a pleasure to go out in the field and work with them, get out of the office once in awhile.
KELLER: Can you remember any of the other problems that you worked on?
SHIELDS: Just the usual ones.
KELLER: I don’t know usual.
SHIELDS: Okay, well, there’d be, as I say, personnel problems from time to time. There would be, as I say, the accidents of vehicles, but normally I didn’t get involved at that level. It was just when things really got serious and people would… we didn’t get much in the way of FCC problems, although I did work with the commission a lot in getting, for instance, licenses for a translator or for a microwave system to bring a signal in from a distant area, and I did work a lot with the FCC those years.
KELLER: Now your history spans from the ’60s through the end of the ’90s, or middle ’90s, you saw an awful lot of changes in regulations by the FCC and some court mandated. Which of these do you feel had the most dominant effect on the industry?
SHIELDS: Well, I think a tough one was the limitation on importation of distant signals.
KELLER: In fact it killed the industry for a number of years, correct?
SHIELDS: Until of course the satellite came along and HBO started that abrupt change in bringing signals in. I remember when I was with TCI, one of the side jobs I did was buy movies from 20th Century Fox and others and bicycle them, as we called it, from system to system trying to get in some product, some programming other than the local stations to give the people a reason to buy the cable system because we had no signals other than the local signals.
KELLER: But there were many signals that were grandfathered and this particularly applied to the smaller systems that you had.
SHIELDS: This is true. That’s right, that’s right. No, it’s the ones in the bigger cities like Corpus Christi where we had to bring in product and run movies ourselves with videotape in addition to running the broadcast signals. And then of course everything changed when the satellite came along.
KELLER: And then also a certain amount of number signals were permitted if you paid copyright for them.
SHIELDS: This is right.
KELLER: Did you ever get involved in any copyright issues?
SHIELDS: Only in the administration of it. Filing those copyright reports every six months for the hundreds of cable systems that United had was a big administrative nightmare. Lots of details, lots of… I remember I had a big fight about the fact that the FCC wanted original signatures on the hundreds and hundreds of documents, and I quickly had a rubberstamp made of my signature, and they sent them all back and said, no, they had to be original signatures. I would get mad and tell the FCC staffer, I said, “Look at your own paycheck. Is that an original signature there?” But no. That was an administrative headache mostly, and of course the dollars involved.
KELLER: The copyright tribunal though was an effort to do away with a lot of this minutia, a lot of this minutia that you had.
SHIELDS: That’s true. I did not get involved too much in that.
KELLER: A single payment went to the tribunal and they in turn distributed it after that.
SHIELDS: And they did cut the melon, that’s right, that’s right.
KELLER: When you were working with United, it was bought by…
SHIELDS: Well, eventually, TCI.
KELLER: There was an interim step.
SHIELDS: Yeah, it was United Artists.
KELLER: And these were the motion picture people?
SHIELDS: Theater.
KELLER: Theater people.
SHIELDS: Theater people, and that was a short period of time.
KELLER: How long did they own?
SHIELDS: It was a year or two, that was all, and then TCI came in and bought that out.
KELLER: Why were the Schneiders interested in getting rid… they were a public company by this time, were they not?
SHIELDS: Oh, yes. The whole time I worked for United it was a public company, and why they were interesting? I think it was a matter of growth.
KELLER: Well, the Schneiders always went from one major pocketbook to another major pocketbook over the years in the history of their development.
SHIELDS: Sure, they were owned by Livingston Oil at one point in Tulsa. That was their first big system, was Tulsa.
KELLER: A disaster for many, many years too, as I recall.
SHIELDS: I think that’s right because there were no signals.
KELLER: A financial disaster.
SHIELDS: Right, right, and then Livingston Oil got involved and then they spun off from Livingston Oil in a stock, I think it was a divesture.
KELLER: And that’s when they became United Cable Television.
SHIELDS: That’s correct.
KELLER: And then I had forgotten that United Artists had bought…
SHIELDS: I think it was a merger more than a… but that’s a technicality.
KELLER: United Artists had some other partnerships, didn’t they, that they were involved in? Weren’t there others involved in that deal?
SHIELDS: I don’t know because I was not involved in that. By that time I was not involved in that kind of operation.
KELLER: And then as the coin would flip and turn again, United by this time was, well, both United…
SHIELDS: I left and retired at the very same time TCI moved in, but remember Daniels was purchased or merged with United Cable, too. Daniels cable systems.
KELLER: I don’t recall that at all. Was that with one of their limited partnerships?
SHIELDS: No, I don’t think it was a limited partnership, but I could be wrong. I don’t know, Jim. But that was all at the same time, and I worked down at the Daniels operations in Cherry Creek for awhile.
KELLER: Doing what?
SHIELDS: By that time it was programming. I was involved on the programming side of things.
KELLER: In their operating systems?
SHIELDS: Yeah, um-hmm.
KELLER: Reporting to whom?
SHIELDS: Fred Yara.
KELLER: Fred was then at Daniels?
SHIELDS: No, he was at United Cable, president of United Cable.
KELLER: He was the beer salesman that became president of United Cable.
SHIELDS: Something like that. That was Samsonite.
KELLER: Was that Samsonite? I thought he was with Coors.
SHIELDS: No. He may have been before Samsonite, I think you’re right. You have a good memory.
KELLER: Well, no, I don’t but I’m just trying to recall some of these details. How long was Daniels involved in the Daniels operations?
SHIELDS: Not long because then TCI… it all became a big blur in my mind, United Artists and then Daniels and then TCI, and it all merged together and then very shortly thereafter Malone got rid of the theater side of United Artists. He didn’t want the theaters and by that time I was retired.
KELLER: Who was the Englishman?
SHIELDS: Yes, I remember, but I can’t remember his name.
KELLER: I can’t either. He was just short-lived in the business and then I think he took United Artists then, didn’t he?
SHIELDS: That’s right, he took the theaters out.
KELLER: Took it out and ran those for some time. Stewart…
SHIELDS: That’s it, Stewart, Blair Stewart – or Stewart Blair!
KELLER: Stewart Blair, that’s correct.
SHIELDS: Very good!
KELLER: Between the two of us we have one memory. You retired then and never got back into the business?
SHIELDS: Never got back into the business. Never did any more legal work and been happily retired ever since.
KELLER: Let’s go back, and other than John Malone who were some of the memorable people that you were associated with?
SHIELDS: Oh, there was Fred Lieberman who was with, oh, what was the name of the… TeleSystems, which was a…
KELLER: A Pennsylvania corporation.
SHIELDS: Which was a Pennsylvania corporation that did turnkey. This was a great need and help to broadcasters and other independent people who didn’t know doodly-squat about cable TV and he would turnkey them. Jerrold did, too.
KELLER: Yes, well, Fred came from Jerrold.
SHIELDS: That’s right, and he was quite a character.
KELLER: He and Jack Crosby were associates, as you recall, and they kept selling the systems back and forth to each other every time they’d run out of depreciation. They admit that, and I’m not saying anything out of school.
SHIELDS: No, that’s right! Every seven years, that’s right. But I remember the final definitive contract I made with Fred Lieberman to build the cable system in Lancaster was like today, two days before Christmas and he was in a Santa Claus suit. We have the pictures, the corporate pictures of the signing of the contract with Fred Lieberman in a Santa Claus suit, nice Jewish boy that he was.
KELLER: Yeah, to do a turnkey for United?
SHIELDS: No, for Steinman Stations.
KELLER: Oh, it goes way back to that?
SHIELDS: That’s right.
KELLER: Well, I guess there was no one else to do it at that time except Jerrold, and Fred took that concept and brought it out. Did he take a piece of the action?
SHIELDS: No, it was cash on the barrelhead.
KELLER: I see. And then he had a construction crew?
SHIELDS: Um-hmm, yeah.
KELLER: Okay, now that was Fred. Who else can you remember had a direct impact?
SHIELDS: Oh, there were so many characters. I remember dealing with Ted Turner in the early days when he had the… what did he call them? White Columns was the name of the building that the Turner operation was in for awhile. I did some sort of a deal with him. I just remember…
KELLER: Were you with TCI or United at that time?
SHIELDS: TCI at that time.
KELLER: He wanted carriage on systems, didn’t he?
SHIELDS: Yes, oh, yes, it was a UHF station, right.
KELLER: His original station.
SHIELDS: Um-hmm.
KELLER: And he wanted carriage in the cable operations.
SHIELDS: That’s right. Well, that’s what made him. He encouraged this UHF station to be carried outside the Atlanta area and it kept him alive.
KELLER: He called it a superstation, huh?
SHIELDS: Yes, that’s right.
KELLER: Who else?
SHIELDS: Oh, I really… you caught me.
KELLER: Anybody at TCI that you remember other than John, and of course Bob Magness.
SHIELDS: Bob Magness, and Bill Brazile was a great guy. He was another example of Malone’s way of doing business. Toward the end, the late ’70s, Bill Brazile, who was head of operations for TCI had a double, triple, something like that, bypass and was not totally well and was going to retire at the end of the year or something like that, and Malone said, “Well, there’s this one operation in Colorado that wants a cable system,” and that was Steamboat Springs, and Bill could charm the birds out of the trees…
KELLER: Yes, he could.
SHIELDS: He was a great, great, sweet guy, and Malone said, “You go up there to Steamboat Springs and get the locals together for the requisite 20% and get the franchise for TCI.” So Bill did as he was told and he went up there, and I went up a couple of times with him and talked about details and what the terms of the franchise should be and that sort of thing, and he was good and he got the 20% minority local partners, and we got the franchise. At the end of the deal, Malone got the franchise and said to Bill, “Now you can retire and that 80% of Steamboat Springs is yours.”
KELLER: I’ll be darned. I didn’t realize. I knew he had ownership in it, but I didn’t know it was that much of it.
SHIELDS: Yes, Malone just gave it to him as a good-bye present.
KELLER: And then wrote it off, I’m sure.
SHIELDS: Right, right.
KELLER: Bill was an interesting guy and he was a great loss. Did you ever work for Frank Thompson?
SHIELDS: No, I’ve met him but I never worked for him.
KELLER: Then you weren’t involved in that Vail operation of his?
SHIELDS: No, I was around when the plug was pulled on Vail, again by Brazile.
KELLER: Tell that story. I think that is a story that we haven’t heard before in any of the oral histories.
SHIELDS: Well, that was a story in the early days when of course we did by microwave bring these Denver signals into Vail, which had no television at all, it’s in the middle of the mountains in Colorado, and the system was built and was run, and for whatever reasons which are lost in the mists of history, I’m sure it’s written up somewhere, the city council did not like certain things that TCI was doing. TCI was pretty hard-nosed in running its systems, as you know, and shortly before the Super Bowl…
KELLER: Was that Frank Thompson? Was he running the system at that time?
SHIELDS: No, that was after Frank Thompson.
KELLER: Oh, that was after Frank Thompson?
SHIELDS: Oh, no, let me see, Jim. I think Frank bought it from us later, that’s right, that’s right.
KELLER: Okay, later, okay. Wasn’t he the manager at the time, or was he? I don’t recall.
SHIELDS: I don’t remember, I don’t remember. He may have been, I just don’t know.
KELLER: In any case, what did TCI do?
SHIELDS: Well, TCI was told that the franchise is hereby revoked and you have to come in and renegotiate it, and so Brazile said, “If you revoke it, I guess we can’t operate,” and he pulled the switch and it went dark, two days before the Super Bowl. The citizenry were not happy. We put up a slide on the screen that said “This has turned dark. If you have problems or questions call the city manager, 443-4214”, whatever. That was hard-nosed.
KELLER: It sure was. How many calls did the city manager get, I wonder?
SHIELDS: We were back on within a couple of days, I think.
KELLER: I think TCI had done that more than once, did they not, over the years? Pulled the plug?
SHIELDS: Maybe, I don’t remember.
KELLER: Okay, but that one you do remember?
SHIELDS: Oh, I do. That was…
KELLER: Had Bill consulted with you prior to doing that?
SHIELDS: Oh, no.
KELLER: No, you weren’t in the legal aspect at that.
SHIELDS: No, I had nothing to do with the legalities in those days. I just kept my law degree in the back pocket. So that’s my career.
KELLER: And Bill, and you didn’t do much with Frank Thompson?
SHIELDS: Of course I knew J.C. Sparkman well.
KELLER: Tell me about J.C.
SHIELDS: Well, J.C. was, again hard-nosed. His job was to keep the systems running – this is in the early ’70s, mostly – and to generate as much cash flow…
KELLER: Now this is as Malone came into the company, is that right?
SHIELDS: It was before Malone and after Malone, both.
KELLER: TCI was in dire financial straits at that time, is that right?
SHIELDS: Well, it was in financial straits, that’s true. J.C.’s main job was to keep the thing running and keep the cash flow coming, and he would do anything that he had to do. The trucks were never repaired; I remember seeing TCI trucks where the doors had to be wired shut on the passenger side because he didn’t get them fixed. He was very hard-nosed about not extending an extension that wouldn’t pay off the dollars involved in building it, the capital investment. He was very hard on the crew and on the operations people, but he kept the place alive. You’ve got to give him credit for that. I remember one young man that was working for operations at TCI’s headquarters coming in at some event, J.C. Sparkman had pulled something that he didn’t like and this young man went into Malone and complained and said that J.C. was terrible and they ought to get rid of him and so forth and so on…
KELLER: Was this an assistant manager, or was this another headquarters person?
SHIELDS: A headquarters staff person. And Malone said to him, Joe, or whatever his name was, the moment you find someone who can bring me in the cash every month to pay the bills the way J.C. can, I will fire him. But until then, J.C. is going to keep running this system.
KELLER: And it never happened.
SHIELDS: It never happened. Nobody could do it like J.C.
KELLER: Until the day he retired.
SHIELDS: That’s right.
KELLER: Dan, we were talking about the people you remember that you did business with that were not only characteristic of the industry but added a little bit of flavor to the industry, and you mentioned people like John Malone and Fred Lieberman and Ted Turner and J.C. Sparkman. Any others that you can remember and what you were involved in?
SHIELDS: Of course I’ll remember it as soon as we turn the tape off, but there were so many of them and they’re all such characters. I don’t know why but the cable industry did seem to be a magnet to guys who were characters in the industry. Some of them were less so than others. Some of them were great guys like Trygve Myhren.
KELLER: Oh, Trygve Myhren, is that who you’re talking about, at ATC?
SHIELDS: Yeah, Tryg’s a great guy, and Monty Rifkin, but I didn’t work closely enough with them to have any nice anecdotes like the time Malone threw his car keys on the table to the bankers. That was a fun time.
KELLER: Tell that story.
SHIELDS: That’s the time that, this was shortly after he came onboard, and we were not only not paying principle, we weren’t even paying interest because we didn’t have the money. This was mostly First of Boston was our lead lender, and a guy by the name of Ira Stepanian was the banker that we were doing business with. They were just making the usual banker noises in the boardroom that well, you know, we just have to exercise our rights to the collateral if you can’t pay the interest. Malone took his car keys out of his pocket and threw them on the table and said, okay, you want to run the systems, go ahead. This is your chance because you have the right to take them over right now. And of course they backed off so fast because they didn’t know anything about running cable systems and that’s when he was able to really exact some changes in the terms and conditions of the loan.
KELLER: That was the turnaround for TCI.
SHIELDS: That was the turnaround for TCI being able to get out of it. You know, the cable industry did become very adept at handling its debt and when we would build a system we negotiated long and hard with the banks on the terms and conditions of the loan agreement. I remember one time I was in Minneapolis, First of Minneapolis, and I think it was a cable system in North Dakota, maybe even Minot for all I remember, and we were negotiating the terms and of course the Minot bank was too small to carry the loan and First of Minneapolis was the lead bank, but Minot had a piece of the loan, and so there was an officer from Minot Bank at the negotiations and during a coffee and donut break I was standing around and I overheard the Minot officer talk to the First of Minneapolis officer and say, “This is really strange because when we lend money we just put the document in front of the people and they sign it. We never negotiate these terms and conditions.”
KELLER: Malone and…
SHIELDS: And Magness, too.
KELLER: He and Magness were tough with the banks.
SHIELDS: That’s right. Debt was very important to the cable industry, such that every once in awhile in an acquisition we’d come across a cable system that was mostly equity and there wasn’t much debt, and Malone and Magness would just shake their heads because if you didn’t maximize your debt position you just weren’t doing your job. The job of management was to maximize as much debt as you could in order to spread your equity, what equity you had, as far as you could to build and grow your company.
KELLER: I had once heard that Malone made the statement that he would much rather pay interest than taxes.
SHIELDS: Oh, I’m sure that’s true, I’m sure that’s true.
KELLER: Of course if you’re making a lot of money you don’t have any debt, so you’re paying taxes.
SHIELDS: That’s right. I never heard him say that but I wouldn’t doubt it a bit.
KELLER: I had heard it from someone and I don’t remember who it was, but it didn’t surprise me at all.
SHIELDS: Well, you’ve heard a lot of people in your years.
KELLER: You were involved in the resurrection of the Colorado Cable Television Association back in the early ’70s, is that right?
SHIELDS: Well, I’d call it making sure it didn’t die. By that time, actually I think that was by that time the ’80s, when I was with United.
KELLER: Was it ’80s? Yeah, I guess it was ’80s, yeah.
SHIELDS: TCI had, and still has in its present iteration now as Comcast, a lot of cable systems in the mountains of Colorado.
KELLER: They virtually control the state.
SHIELDS: That’s right, and at one point Art Lee, I think it was, was the regional manager in this area, decided why spend the money on these associations when it really wasn’t doing anything as far as he was concerned and there was nothing at the State House that you could garner anything by being a member, and somehow I remember being part of the group that persuaded Art Lee to keep TCI’s systems members of the association.
KELLER: Well, there were two associations involved, as I recall. One was the Rocky Mountain Regional Association made up of all the states in the Rocky Mountain area, which TCI I think had a great interest in. The other one was the Colorado Association itself.
SHIELDS: Right, there was sort of a pressure between the two of them.
KELLER: There was a specific instance, though, which bonded the other operators in Colorado with TCI and which then convinced TCI to stay involved in the Colorado Association.
SHIELDS: Don’t know about that!
KELLER: That happened… you remember, I’m sure you do. At the State House, when the telephone companies were not going to allow us to get on their poles and they were… don’t you remember this?
SHIELDS: No, I don’t.
KELLER: They were not going to allow us to get on the poles and they asked for an act from…
SHIELDS: A piece of legislation to…
KELLER: From the Colorado legislature to forbid us to be on their poles as a hindrance to public safety.
SHIELDS: That’s right.
KELLER: And all of us went down at that time, as I recall, and it was the resurrection of the cable television association in Colorado, and you played an important part in that.
SHIELDS: Better catch this before we lose all our minds.
KELLER: You did, you did, and then we went down there and hired an executive director at that time who was a State Senator at the time.
SHIELDS: Oh, yeah, Durham.
KELLER: Steve Durham, right.
SHIELDS: That’s right.
KELLER: Bob Clark?
SHIELDS: Yes, I remember Bob Clark.
KELLER: He was our lobbyist at the time. So it became a very, very functional association.
SHIELDS: That’s true, that’s right.
KELLER: After nearly dying, as you pointed out.
SHIELDS: I think, Jim, by that time I was over at United and was not as involved in Colorado as I had been when TCI was operating, when I was with TCI.
KELLER: Of course it’s difficult to separate the two in my mind because one seemed to run into the next one.
SHIELDS: Unfortunately it’s difficult to separate in my mind, too!
KELLER: Gene Schneider.
SHIELDS: Great guy, great, great, guy. Loyalty is very important to Gene and as a final anecdote, I remember the time I went from TCI to United and one of the things that was extant at that moment was the fact that my wife was ill with lung cancer, and as you well know, in those days the health insurance generally would not cover somebody with any disease that they already had when you came onboard. So I told Gene that and he puffed his big cigar and humped and harrumphed and said, “Come back tomorrow.” He made a phone call and did whatever he had to do, paid whatever he had to pay, so that Madeline, my then wife could still be covered in the company’s health insurance. Shortly after that, and still before I joined TCI, I had a significant physical problem of my own, had to be flown back from Pittsburgh, had to go get surgery and all the rest, and at that point I was then going to have a pre-existing condition as well. So I went to Malone and I said, “John, I really can’t ask Schneider to take me on with two pre-existing conditions, so can I come back at least at minimum wage and stay with TCI until my problems are over.” Of course John said, “You can stay here as long as you want, full salary, just keep on going like nothing had ever happened.” So then I went and told that to Gene and Gene said, “Come back tomorrow. I’ll take care of it.” And sure enough, he took care of two people, that’s the kind of guy Gene is, as was the United people. If you were doing your best, even if you were just the best 12 channel engineer that ever was, and we’re now up to 50 channel systems, they’d keep a place for you. Maybe sometimes that’s a little bit too loyal, but I don’t think so.
KELLER: David Schultz.
SHIELDS: Good man. Dave Schultz was a fast learner.
KELLER: MBA, wasn’t he? A young MBA?
SHIELDS: Yes. He was one of John’s people, young, as you say, and he had his big days at TCI after I left so I knew him but I didn’t know much about him. I remember he, I believe it was Dave, who was married by Dave Willis. Dave Willis, as you know, is the veteran engineer of TCI who once got a degree in what would you call it? A church degree.
KELLER: Ministry?
SHIELDS: Ministry, yes.
KELLER: I didn’t know that. An engineer, huh?
SHIELDS: Yes, and he married Dave Schultz and his wife one lovely fall afternoon, I remember. It was very nice.
KELLER: The late and very much missed Peter Barton.
SHIELDS: Also a great young man, and he will be missed. I never knew him except through the industry context. He came on after I left.
KELLER: Anyone else you can think of?
SHIELDS: Well, so many people. A good friend of mine, yourself of course, and your career. You haven’t been interviewed yet, have you?
KELLER: We’re not talking about me. We’re talking about you.
SHIELDS: We need to one day. Ed Callahan, who was the vice-president of engineering… Schneider did not take the vendors word for the technical specifications of all the equipment that he would buy from the various guys that were out there selling amplifiers and the like, so he had an engineering research department and Ed Callahan, who had his degree in engineering, would put them through their tests. He had a cold chamber, he had a hot chamber, and he’s a good man.
KELLER: He was in his element doing those kinds of things.
SHIELDS: He loved that, yes.
KELLER: Dan, I think it’s about time that we wrap this up. This has been the oral history of Daniel W. Shields, a cable television pioneer, former attorney for United Cable Television, and in operating positions with TCI. Dan is a long time member of the cable television, in my opinion, elite, and Dan, it’s been an interesting interview. This has been an interview with Dan Shields, the date is December 23rd, 2002, and this is brought to you as part of the funds of the Hauser Foundation, the Gus Hauser Foundation, and oral history program of The Cable Center. The date again is December 23rd, just before Christmas of 2008. The place is Denver, Colorado. Thanks Dan, I appreciate it very much.
SHIELDS: Thank you, Jim. Thank you, Gus.
