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Bob Magness
BACK TO ORAL HISTORIES
Interview Date: August 1989
Collection: Penn State Collection
Note: Audio only
SMITH: This is Tape 1 Side A of an interview with Bob Magness, Chairman and Founder of TCI--Telecommunications Inc. The interview is part of the Oral History Program of the National Cable Television Center and Museum at The Pennsylvania State University at University Park, Pennsylvania. This program seeks to develop an authentic record of the past and continuing development of the cable television industry through the memories and files of the early and current leaders in the industry. Bob Magness qualifies on both accounts. I am E. Stratford Smith, Professor of Cable Communications at Penn State and Director of the Oral Histories Program. It is my privilege to interview Mr. Magness. Bob, the first question that I would like to ask you is about your name. I think in the entire 30 years that I have probably known you, I've never seen your name, except once or twice, other than Bob. Is your name Robert, or is it Bob?
MAGNESS: Well, Strat, it was probably Robert when I was born, but my father was Robert Magness. In growing up and trying to do our various businesses, it became much more easy for me to use Bob. We once got some money in my bank account from his check, and we joked about it for quite awhile. I said "Now you got it in there, why don't you get it out." I got a birth certificate when I was in the Army that said Bob, and I've used that ever since.
SMITH: I've noticed that apparently, you do it religiously. I did see a short biography done by somebody on you that indicated your full name was Robert John Magness?
MAGNESS: That's right.
SMITH: But as far as you're concerned, it's Bob.
MAGNESS: It's Bob, and that's the signature I use.
SMITH: Did your Dad ever get the money?
MAGNESS: Yes, he got the money, after I had a little fun with him.
SMITH: Let's go to the very beginning, Bob. Would you tell us when you were born, where, and a little bit about your boyhood background.
MAGNESS: I was born in Clinton, Oklahoma on June 3rd, 1924. The whole family, both my mother's side and my father's side, were principally in agriculture. My father's dad was killed when he was 16, hauling a load of cattle back east, on a train accident. So my father got out of school to finish raising the family. He was the only person that wasn't pretty well involved in agriculture, and generally in cattle.
SMITH: What was your father's ethnic background?
MAGNESS: You mean the nationality? Magness is English. His mother was Scotch-Irish, her name was Henry. On my mother's side, my grandmother's name was Gee, which is Irish. My grandfather's name was Cook. He was French and Indian. His father was a French-Canadian. They had built the railroad right-of-ways all the way from Canada clear down into old Mexico. So my mother sort of grew up in a sort of a tent city that was building these railroad right-of ways across the country. They settled and started farming down in Oklahoma and the Texas area.
SMITH: And you were born when?
MAGNESS: Born in 1924, June 3rd.
SMITH: Do you have any brothers and sisters?
MAGNESS: Have no brothers and sisters.
SMITH: What places did you live in Oklahoma, as a boy?
MAGNESS: I lived in Clinton, where my parents lived. I spent all the summers with my grandfather, down around Indiahoma and Lawton, Oklahoma, on his cattle ranch.
SMITH: Was that your mother's grandfather?
MAGNESS: That was my mother's father.
SMITH: You mentioned that your grandfather on your father's side was killed in an accident?
MAGNESS: He was hauling cattle back in a cattle train, and they called him back to have coffee when the train stopped. He hopped out, but he was over a bridge.
SMITH: Oh, dear. Were there any other areas that you lived in Oklahoma, while you were a boy?
MAGNESS: No, that was all.
SMITH: What were your principle interests and activities as a youngster?
MAGNESS: Of course, I liked hunting and fishing, sports. I enjoyed going down on my grandfather's ranch and riding horses and taking care of the cattle.
SMITH: Tell us about your early schooling.
MAGNESS: I don't think I did anything outstanding in early schooling. I attended school, I graduated in 1942. That was right in the War. I went to Oklahoma University for about three-quarters of a year, and then the government gave me the Greetings. First 18 year old draft in Oklahoma.
SMITH: Would you like to give us a little background on what service you went into and some of the activities you got involved in.
MAGNESS: I didn't do a whole lot in the military. I, of course signed up for the Army Air Corps, and went through part of cadet training. They released us for the convenience of the government in mass and sent us to Europe. So I wound up the war in Europe in the Armored Infantry.
SMITH: I read someplace that might have been with Patton's Army, was it?
MAGNESS: Part of the time with Patton. Part of the time with Hodges.
SMITH: Were you an enlisted man?
MAGNESS: I was an enlisted man.
SMITH: Would you like to tell us about any engagements or activities you might have been in?
MAGNESS: Not really. We worked our way from the edge of France to the heart of France, on up into Bavaria. Wound up in the edge of Austria at the end of the war.
SMITH: You were discharged from the service when?
MAGNESS: Spring of 1945.
SMITH: Then back to Oklahoma?
MAGNESS: Back to Oklahoma. At that time went to Oklahoma State College. I got out a little too far into the semester to feel safe to just go back to OU, so I went to a smaller school. I came to love it, and stayed there until I finished.
SMITH: When did you graduate?
MAGNESS: I believe I graduated in 1948.
SMITH: Where was this college located?
MAGNESS: In Weatherford, Oklahoma.
SMITH: What did you do on graduation?
MAGNESS: I went to work for Anderson-Clayton. It was the largest cotton company in the world. I went to work in the office, then found it was much better to be out buying cottonseed. So we worked in the cotton and cottonseed business for about nine years.
SMITH: When you say buying cottonseed, would you explain a little bit about what that process is?
MAGNESS: The farmers take their cotton into the cotton gin to have the seeds taken out and have it cleaned and baled. The seeds are valuable for a source of oil and margarine and this sort of thing. Cottonseed oil was probably at its peak about that time. So we were out to hustle all the cottonseed we could to our particular oil mill. Of course, at the same time, we'd buy cotton if we needed to. We were out to be of service to the cotton ginner. Everybody paid about the same price, so he usually sold to people he liked the best or thought would treat him the best . It was a very pleasant time in my life, because I carried a set of golf clubs, a fishing pole, a jug of booze... whatever the ginner wanted to do, we did.
SMITH: Anderson-Clayton was a cottonseed oil producer?
MAGNESS: They were a cotton company. They were the largest cotton brokers in the world, and probably the largest cotton oil producers. They were a very large company, headquartered in Houston, Texas. I spent most of my time in Texas, working with them. It was during that time that I began to see some cable systems cropping up.
SMITH: After you got back from the service, you got married. Can you date that for us and work that into this next subject.
MAGNESS: It was June of 1948. I graduated from college and I interviewed a person or two and the people that I liked the best were Anderson-Clayton. So I said I believe I needed two weeks before I start. The manager who later became a great friend of mine said "What are you going to do?" and I said "I'm going to get married." So we had an engagement from 5 o'clock one afternoon till 5 o'clock the next morning. And we went up to New Mexico and Colorado fishing for two weeks.
SMITH: Is that right, your engagement officially was only for that short period of time? When did you first meet her?
MAGNESS: I had been going with Betsy about three years, during that time.
SMITH: Did you know her in college?
MAGNESS: She got out of college as I went in. She took over the rent control office in Clinton. My mother was doing the ration office in Clinton, so they knew one another. She went with one of my fraternity friends, so we got acquainted fairly soon after that, and we'd been going together all the time I was in school. She was only located 15 miles from the school.
SMITH: And you just went to see her after your interview with the Clayton people and proposed to her and got married?
MAGNESS: She thought that engagement was about right because if it had been any shorter she couldn't have gotten ready, and if it had been any longer, I might have backed out.
SMITH: I like to see things done that way. Tell me a little about Betsy's background.
MAGNESS: Betsy grew up on a cotton farm near Elk City, Oklahoma and had gone to the same school that I went to. She had gone straight through during the war and was the president's secretary. Put herself through school, and graduated summa cum laude. In her whole career she had one B, everything else was A's. So she was a good student.
SMITH: Could you tell us a little about Betsy's family?
MAGNESS: Betsy had a fairly large family, she had seven brothers and sisters. They were all very fine people. They had come from Kentucky, and got to farm cotton when the tobacco started diminishing in Kentucky. The whole family had been raised in Oklahoma on cotton farms back in the days before it was mechanized. There was lots of hand labor, it was hard work. And it took big families to be successful.
SMITH: What national background did her family come from?
MAGNESS: Her family was straight English; her name was Preston. He mother's maiden name was Combs.
SMITH: When did you and Betsy have your first child?
MAGNESS: We had our first child in about 1954.
SMITH: This would have been just about the time you were developing your interest in cable, would it not?
MAGNESS: It was a little bit before. But yes, it was about a year before that. Year and a half, maybe.
SMITH: How many children do you have?
MAGNESS: Two boys. We now have two daughters-in-law and three grandchildren.
SMITH: What are the boy's names?
MAGNESS: Kim is the oldest one and Gary is the younger one.
SMITH: What are their activities?
MAGNESS: They work. Kim looks after several family investments. Right now he's pretty heavily involved in a polyurethane plastics company that we have investments in, substantial. He looks after several of our family investments. Gary looks after the cattle operation, pretty much exclusively. Kim helps with the horse operation in California. So they stay pretty busy.
SMITH: I want to get into those other activities of yours in a little bit more detail later on but, we had gotten up to the point where you had said that you had started getting interested in cable. I guess in those days both of us called it community antennas, instead of cable. What was the occasion of your first learning about, let's call it CATV as a compromise?
MAGNESS: I was at a cotton gin one evening and two gentlemen came walking in. They had lost a rod in a pickup down on the Four Sixes Ranch. We were down kind of in the middle of nowhere, where the Pitchfork and the Four Sixes and Wagner and the Matador all kind of comes together. It was 30-35 miles to a village from there. They were afoot and I thought I've got a flat tire in my trunk and I could be afoot too, so I took these guys back to Paducah, Texas, and stayed on the highway. During the time we were going back, they were talking about this new community antenna system they just put into their town. So I listened and thought a little bit about it. About a week later, I thought I'd thought enough about it. I went down and looked them up and talked to them some more. The gentlemen were very kind to help me and show me everything they were doing, tell me where you buy these things, where you learn how to do this and so forth. So about 30 days later, we were stringing wire.
SMITH: That fast?
MAGNESS: We didn't know it would last as long as it has. When I was young we had a radio aerial. Some of the people called them community aerials, if you remember. They lasted three or four years. Then pretty soon radios got better and we didn't need those. People didn't know that they wouldn't be having relay stations all over the country, because they were still establishing the policy for the Commission up there, for broadcast policies at that time. So we thought we'd better get in pretty fast, and get our money back.
SMITH: When you drove up to Paducah and talked to these gentlemen...you were married then, weren't you?
MAGNESS: Yes.
SMITH: When you went back home and discussed it with Betsy; can you recall that conversation. Obviously, this had to be a big family decision that was being made.
MAGNESS: It was a big family decision. She was wholeheartedly in favor of it. She didn't want to go back to the cotton farm any more. We had a little batch of cattle that we'd been gathering up for a few years. We sold the cattle, and went to the bank, took that money and borrowed some from the bank; borrowed 2,500 dollars from my dad. When we had our opening, Betsy used to say that I had spent all the money we had, and left her 267 dollars in debt. We had a partner at that time because we just didn't have enough money to do it ourselves. It was W. A. Simmons, the superintendent of the cotton oil mill where I worked. He and I built the cable system.
SMITH: And that first cable system was where?
MAGNESS: Memphis, Texas.
SMITH: How did you get the franchise. Is there any interesting story about getting permission to build it?
MAGNESS: It was a nice community. Part of the cotton oil mill's business was trade development in the area. We had good reputations in the town, it was my job to see that we did. The mayor was a banker and one of my hunting friends. We went down and talked to, Bus Helm was his name, and he seemed to think that was alright. Then we had two competitors when they had the second reading. Larry Boggs, that most everybody knows, was there from Vuemore. They had several systems around. Another gentleman from Tyler, Texas. They came up and made real grandiose appeals and told all about it. We sat back there not knowing too much about it. When we got through, the counsel said "Well, if Bob and Doug can't get this system built, we sure will come see you guys." So we had to deliver, then. We went with Jerrold. At that time they had some engineering packages that you could buy. They kind of showed us how, and we strung it on the poles. We had a little help and a little training. Doug's brother-in-law was working in construction in Tyler. He'd come on the weekends and help us. We had a division office of General Telephone there, and had some golfing friends that were district people. They traded out there cable installations and helped us on weekends. That worked for a few weekends. Then we had to kind of finish it ourselves.
SMITH: It does sound as if, rather than experiencing a lot of antagonism, that it was a rather cooperative endeavor in the community.
MAGNESS: Oh, very cooperative. Everybody helped us to no end. The town had a pretty good policy of drafting for your power bills and your country club bills and these things. We drafted our bills. So at the first of the month, Betsy would take down drafts to one bank and drafts to the other bank. We didn't even have to send bills out, you just made the deposits. There was only one person who didn't have a bank account, on our whole system. The rest of them were handled by the draft system.
SMITH: Did the bank help you with money for building the system?
MAGNESS: Helped us a little bit. They did help us.
SMITH: That's unusual for those early days, wasn't it?
MAGNESS: It was. They probably loaned the money to us and said that we had some money to go with it. They matched the money that Doug and I were able to gather up. Another thing about Buster...remember we had a microwave freeze about that time, wouldn't let us build microwaves. We had an application in. He went back as mayor, testified in Congress, and got the very first license after the freeze back in 1956.
SMITH: I didn't realize that. I was well aware of the freeze of course, because as you know I was very active as an attorney in the microwave area. How many subscribers did you develop in that system?
MAGNESS: I think about 700, maybe 750.
SMITH: How big was the community?
MAGNESS: About 4,500 people.
SMITH: That would mean that you had almost all of the homes there.
MAGNESS: Nearly all of them.
SMITH: Was there any off-the-air television?
MAGNESS: None at all. Hardly at all.
SMITH: Do you recall what stations you received?
MAGNESS: We received stations from Amarillo and Lubbock, Texas.
SMITH: How many stations in all, do you recall?
MAGNESS: I believe that we had six stations. The Lubbock stations weren't very good until we put a microwave system in. We got that in sometime in early 1957, late '56. I could look back, I've still got the first set of books. When we got that in, we brought in very good quality from Lubbock. We were bringing signals for about 80 miles out of Amarillo, over some very rough terrain, and about 140 miles from Lubbock with a 440' tower and lots of antennas.
SMITH: You don't, by any chance, have any photographs of that original installation, do you?
MAGNESS: Might have.
SMITH: If you happen to have one that you can give up out of your memory files, we would certainly like to have it.
MAGNESS: I'll go through them. I'll see if I can pick out something.
SMITH: What came next, as far as cable was concerned, after Memphis?
MAGNESS: We ran Memphis for a period of time. I moved on in to Plainview, Texas. Anderson-Clayton closed the mill down in Memphis because the cotton business was in a consolidating state at that time. There were some 411 cotton oil mills. Last time I looked, there were about 75. They were going toward bigger mills and longer season crushes. My business was up on cap rock. We put the microwave in. It was very good. We also put in Wellington and Childress. One day Larry Boggs came to see me and said "We'd sure like to get that service, and don't you think you need a contract from us." I didn't know much then, I said, "Maybe I should have one, but I figure once you turn it on, you can't ever turn it off. So we got the contract out and got it signed. Then he said "Would you sell that system." I'd never had anything that somebody wanted bad as that so I put a price on it. Suddenly, I was out of business. Had a job, but I thought I'd better build some more cable systems. I got a bunch of maps and started looking around on where to go. I learned about taxes, suddenly. I moved from there to Montana, Bozeman, Montana.
SMITH: I think I may have missed something. You sold the Plainview system.
MAGNESS: No, I sold the Memphis system. I was still working for Anderson-Clayton in Plainview. We were working evenings and weekends, running our cable system. We sold the Memphis system to Larry Boggs. You'll remember that contract. We had the contract on one sheet of paper. Today it takes 150 sheets. After we sold the Memphis system, I moved into Bozeman, Montana. About this time was when Daniels and Associates had just started their business and had communicated with me. I called Daniels and said "I need another cable system." Sure enough, Larry Pae had had his accident on the way home from a convention.
SMITH: Was he not flying home from Washington, D.C. in an airplane accident over West Virginia?
MAGNESS: He had just bought the Bozeman, Montana system. It was in an ill state of repair. It had three signals, but they were all the same network. We bought that system from Larry's estate and I moved up there in September of '58. Of course, when we got there, they had put in an off-air microwave receiver that went to Idaho Falls to Billings to Great Falls. All three stations were taking their feed off of the same off-air service. So we built a microwave system from Salt Lake City to Billings.
SMITH: When you say we, Bob, who was included?
MAGNESS: I met a fellow who lived in Montana named Paul McAdam. Paul had the same problem in his system in Livingston and in Lewistown. I stopped to meet him on the way into Bozeman. He wasn't very interested at that time. I went back up about a week later with my family and so forth, and he's coming home with me this time, wanting to build a microwave. So we got busy and built what was then the longest baseband microwave system in the country...from near Salt Lake to Billings, Montana. Built it serving several cable systems along the way, and broadcast television. It continued to grow until we finally served virtually all the cable systems in the state, and all the broadcast stations in the state.
SMITH: And that was Western Microwave? That one of the early legitimate microwave common carriers, wasn't it? By legitimate I mean they served customers that they didn't own.
MAGNESS: Right. They served broadcasters as well as cable systems. They had a rule at the Commission at that time that you had to have fifty percent outside customers, which we always managed to have. The system is still intact after all these years. It's certainly been rebuilt a few times.
SMITH: Was Paul McAdams a partner of yours in that system?
MAGNESS: In the microwave system, he bought in 50-50. His cable systems and our cable system, we kept separate. Occasionally, because the microwave system would lend itself to developing a new location, we'd go 50-50 on the franchise deal, like Butte, Helena.
SMITH: Paul is one of those very early pioneers who died quite early. Do you recall when that was?
MAGNESS: I'm going to say that it was about 1967.
SMITH: I visited with Paul at his home in Livingston once many years ago, and I'm trying to recall whether you were present at that meeting. Do you have any recollection of seeing me at his home?
MAGNESS: Yes. Paul and I were working on the microwave and developing more cable systems in Montana, sometimes for ourselves, sometimes for the microwave system, for others...from 1958 until 1965. Paul lived till about '68 or '69.
SMITH: Paul was in the motion picture, theater business.
MAGNESS: He had been in the motion picture, theater business and the radio broadcast business prior to entering the cable.
SMITH: The reason that I diverted to Paul a little bit was that there is no way that he is going to be a part of this oral history record if those of us who knew him don't mention it. So I wanted to identify him. I did not realize that Paul was a full partner of yours in Western Microwave.
MAGNESS: He was. We could talk about Paul...he was one of those rare characters. We could talk about Paul for the rest of the day. It's too bad we can't have an oral history for him in there.
SMITH: Yes, it is a shame. I will make another comment about Paul on the record. It was entertaining to many of us, but it wasn't particularly to Paul. He was a good friend of Fred Stevenson, who was another early pioneer in the industry. Fred, some way or other, got wind of the fact that Paul couldn't tolerate being referred to as 'the sheepherder.' Apparently, those were words of a serious program in Montana. So Fred started to call Paul a sheepherder. Paul just went through the ceiling every time he did it. Finally, some of us had to get on Fred's back and tell him to knock it off; it had gotten beyond the point of being a joke.
MAGNESS: Yeah, those are fighting words in Montana. No, Paul was quite a character. Paul would go down to fish with Fred, bass fishing in Arkansas. One time he was going to come up and fish with Paul and me. Fred calls me and says "Now when should I come up. Paul just says 'Come any time you want to." He said "I know you'll tell me the truth. Now when do I come up?" And I said "Well, really, any time you want to. Come when the weather's good, it's more fun. We'll catch fish when you're there. We'll just fish in different places, depending on the season." So Fred did come up. Paul must not have been too mad at him; he came up and fished for a couple weeks.
SMITH: Well, they really were good friends.
MAGNESS: They were. And both great guys.
SMITH: For the record again, Fred Stevenson died several years ago, too. They were two of the first of the very early group to pass away. Bob, you moved to Montana to buy the Bozeman cable system from the estate of Larry Pae. What kind of shape did you find it in when you got there.
MAGNESS: As I said awhile ago, it had three pictures. I was the old W-strip amplifiers, built out of surplus cable, so it wasn't anything to write home about. But the community was great, still is. We immediately put in new trunk lines, and put in what we thought then were broadband amplifiers.
SMITH: Which ones were they?
MAGNESS: The GBC-13, or 12 is the first little broadband one Jerrold made...trunk amp. They got us by for awhile. We got the microwave in, brought five channels of microwave in from Salt Lake. From that time on, we just continued to keep upgrading the system. Every time we got a few dollars ahead, we spent it on the plant. It's been extremely good to us for these forty-some years.
SMITH: Is that still in the TCI system?
MAGNESS: Still in the TCI system. I always considered it maybe as the founding system of TCI.
SMITH: How large has the Bozeman system grown in those 40 years?
MAGNESS: That I can't tell you. I should know.
SMITH: A five-channel system in those days, and with microwave, had to be pretty good quality television service in the community. Was there any off-the-air service in Bozeman?
MAGNESS: There was one channel from Butte that was owned by Ed Craney. Ed was one of our first and most effective adversaries in the business. He had a station up on the mountain to the east side of Butte that could get into Bozeman and do pretty well. That was all. It was all mountainous country, so they would be spasmodic places that they couldn't get service.
SMITH: Now, there was not a local station in Bozeman?
MAGNESS: No local station. There were two radio stations.
SMITH: Do you recall who owned them?
MAGNESS: Yes, I do. Dale Moore owned one.
SMITH: My recollection is that people who got into cable were in them, and I wanted to establish that link.
MAGNESS: Norman Penwell, Archer Taylor that you still know, and several of those people had built the Bozeman system originally, before Larry Pae got it.
SMITH: After you got Bozeman running along, what were your next franchising activities in Montana and that region, including Idaho and wherever you franchised in those states?
MAGNESS: I believe we went to Dylan and Butte. Part of the reason we did those was to get spots along the microwave system so we could keep maintenance people and could tell where it was working and where it wasn't. We went, later on, out in the western part of the state, into Glendive, Williston, some of those places. Deer Lodge. We tried to franchise anything that didn't have a cable system in it at that time.
SMITH: Do you have and recollections of particular experiences that were interesting and challenging in the development of those franchises.
MAGNESS: The Butte franchise was a wild one. That was the home of Ed Craney. Joe Sample was just in the process of buying Mr. Craney's station. Joe Sample was a broadcaster in Billings, later in Great Falls; very active broadcaster. George Hatch from Salt Lake City, who was then president of one of the NAB boards. They had a construction permit for another TV station in Butte. Skinny Reardon was a radio broadcaster in Kalispell and some other places. We didn't feel that any of us could get a franchise by ourselves, so we went to see George Hatch first. The way we got to see him was we got on an airplane that he was on; flipped a coin to see who got to ride the plane. One had to drive. We got a meeting set up with all those broadcasters, a two-day meeting in Butte. Keep in mind, we'd been fighting some of them for years, heavy competitors. They had a small-town hometown free TV group that that the NCTA sued for anti-trust, if you remember that suit. They scared them pretty good. We had three of them there. So we met and decided we'd go for the franchise. This was a real fiasco. I remember one night, after the city council meeting, Joe Sample was walking out and he said "I don't know really know if I want the franchise, I'd like to have the broadcast rights to this." It was thirteen councilmen, each had a podium like a judge, about six feet apart, around this room. It was pretty intimidating. Had a big squabble between the union and the company; Anaconda being the company and the miner's union. They really got along better, but they each thought they had to get out and put their show on. We made the early mistake of going with the company attorney that was a good friend of ours and a very fine guy. Lar D. MacDonald. So we had a fifty-fifty split. Finally, after about three meetings, they began kind of falling into shape. The TV repairman got their union people in, so they decided they could switch and go with us. It was a long, drawn out franchise. All done verbally, no written proposals, no experts. But Butte was a very frontier town. Still had slot machines, even though they weren't legal. At 2 o'clock they turned the signs out instead of shutting the bars. There were lots of trials and tribulations in that system.
SMITH: Thirteen councilmen for a city the size of Butte is quite a few, isn't it?
MAGNESS: I imagine Butte was about 40,000 at that time. It's diminished substantially since that. You know, they got the big open pit mine. They have mined down deep in areas where the town used to be. I haven't been in Butte in years, but it was fabulous for places to eat and gamble and party.
SMITH: You mentioned a 50-50 split. Was that on the council, as to whether or not they were going to grant, or who they were going to grant...
MAGNESS: Wasn't anybody else in the running. It was just whether they were going to grant one or not.
SMITH: What was the source of the most serious opposition?
MAGNESS: I think it was purely a competition between the union and the company. And the company had their councilmen, and the union had their councilmen. They just weren't going to get together.
SMITH: Was it the union or the company that was negative as far as the..
MAGNESS: The company, of course, supported us. The union just took the opposite side. I think if it had been the union's supporting us, the company might have taken the opposite side. That was the way of life in Butte. I will never forget that franchise.
SMITH: You mentioned something that I have not thought of for years and years, about one of the very early opponents of CATV. That was the TV repairman. Would you like to elaborate a little on the record about the reason for their opposition?
MAGNESS: As we did out in some of the smaller, remote areas. They usually had put up the translator, and usually it wasn't legal. But they put up a translator, and they collected money for operating it. This was a source of quite a little bit of the problem. Of course, the dealers would sell their sets, and repairmen were a lot of times the dealers too. I think in the cases that I saw them be against us, it was usually when they were operating the translator and they were collecting fees from the populous to support it. We were just kind of bringing in those signals, and they no longer had to pay the translator operator. But he still had to keep it going, because he had people that were out in the farms and ranches, remote areas that didn't have cable. So there were places where that was a problem.
SMITH: I have seen, in a number of the very early franchises, provisions that prohibited the cable system from repairing televisions. Was that a problem with these men in the Butte situation?
MAGNESS: No, that wasn't a problem. We never did want to repair television sets or sell TV sets unless we just had to from dire competition. And in very few places did we ever do that. We did in a place or two, opened our own store. But we certainly didn't think that was our business and wasn't the way we wanted to make our money.
SMITH: You mentioned several broadcasters that were involved with you in that Butte application. Did you wind up as a separate company in which they were stockholders along with you? I take it your wife Betsy was a stockholder in these companies with you?
MAGNESS: That's right. Yes, Betsy and I used to split everything pretty even on that. Yes, we went into a separate corporation, for Butte alone because we had these other people in it. One by one, we bought most of them out. Joe Sample had to sell his when he bought the TV station. Reardon bought a TV station in Kalispell or opened one. This was probably our first venture with George Hatch. He was later on one of our founding directors in TCI.
SMITH: We were talking about broadcasters who were your partners in the Butte system. You mentioned that over a period of time, you bought them out. I was thinking, their hearts were never really in the business, were they?
MAGNESS: Most of them weren't. I think that they really were more broadcasters than they were cable oriented. However, if you reminisce a little bit you find some of them like Bill Grove became quite involved in cable, even to the extent of giving up his broadcast operation. George Hatch kept his broadcast operation, but he certainly expanded very heavily in cable. I think several of them did see the light, in that there was room for both. For a period of 25 to 30 years, we more supplemented one another than competed.
SMITH: I think that is true. I would ask you about Ed Craney. You referred to him earlier on the tape as one of the very strong and effective leaders of the broadcasters against the development of the community antennas and cable systems. Can you give just a little bit more background about Ed Craney for the record.
MAGNESS: Yes, I think that if I get out of line you can close me up. Ed was a real pioneer. One of the guys that I'd get along with him personally quite well, but in business it was almost a death struggle all the time. Ed would put on all kinds of programs, I still have some of them on tape, which he would show all the TV stations on a map and "Cable TV is going knock this tower down." He'd have the towers on hinges, and he'd gradually flip them all down. This panicked people all over the state, to some extent, because not all of them had access to cable. Of course, if they weren't close to a broadcast station, there wasn't any way for them to get television in those days before the VCRs and the satellite transmissions and so forth. Ed, being a pioneer, had started off in some very lucrative towns out in this area at least, in the Rocky Mountain area and Butte, Missoula , Spokane, Helena. But there was something in Ed's personality that he wanted to be the only show in town.
SMITH: And you're referring to the radio business.
MAGNESS: This was TV. In the radio business, you couldn't be the only show in town, but in the TV he seemed to feel that he had to be the only show in town. Without exception, every time he got competition, he got out of that broadcast. Once we understood that, he was much easier to get along with. But he viewed if cable or another broadcaster was coming in, that it was going to ruin the market. It really didn't, but just because he'd had it all by himself so long, he kept that feeling in his personality. I think that's the reason he fought so hard. I think he told me that if was younger, he'd have joined cable at one time, because he really did think it was going to take him out. But of course, it hasn't closed down any station in that area and they've continued to develop new ones.
SMITH: Do you have any specific recollections of Ed, before the Butte City Council, when you were going after that franchise?
MAGNESS: Ed didn't show up at the city council. He didn't send anyone, he didn't show up. Now whether he was behind the scenes or not...But keep in mind at this time, the NCTA had...do you remember a hot spots committee at one time? Homer Bergman and some of that group? Part of that deal is we met with Ed. Joe Sample had agreed to buy the TV station in Butte. Probably it was the deal that he was getting out anyway, so he probably didn't care that much. Even while Ed was alive, we put a microwave repeater in his TV station and his engineers took care of it. While he was tough and ornery, he did have a kind spot here and there. Now, he never would let me do it, he always wanted George Hatch to be the one who signed the paper.
SMITH: Is that because George Hatch was a broadcaster?
MAGNESS: George was a broadcaster. I think we probably still have a microwave in that station. Last I knew we did, but we did for years and years, even while Ed still had it.
SMITH: What we want on this record Bob, is what you say, not what I say, but I had very intimate experiences with Ed Craney. I always found him to be a very charming guy. He entertained me in Butte once, took me to his station, and took me out to one of those very fine places for dinner. He was just as gracious as he could be, but oh, what a fighter.
MAGNESS: He could be very gracious. I've seen him several times since he's been out of the business. But he was a real fighter when he was fighting.
SMITH: Did you encounter Ed in any legislative battles in the state.
MAGNESS: Every other year. Montana had in those days the deal... they brought up only budget bills one year and in the off years we always had a couple of bills that Ed was responsible for.
SMITH: What were the nature of the bills? What was he trying to get the legislature to do?
MAGNESS: He started off with one that would just be a catastrophe, would close us down. And he'd have another one in there that wasn't too bad, but bad enough. And he knew we had to fight the catastrophe. So he hoped he would let one slip through. We really had a pretty good lobby effort. Most of the operators in the state just moved into Helena, for some of every week during the legislature.
SMITH: Every other year?
MAGNESS: Yes. And learned to work the streets on the off years too.
SMITH: Did any legislation ever actually get passed by the Montana Legislature that was contrary to the CATV interest?
MAGNESS: Not while I was there. Reasonableness always prevailed. We were scared a few times. You had to fight and defend yourself. But I don't remember anything there that was detrimental to the development of cable. The customers still liked it.
SMITH: That has always been the salvation of the industry, hasn't it. The customers liked it.
MAGNESS: That's been right. Even in today's problems with the hearings that went on last week, we didn't see any customers up there.
SMITH: I've been following that in the newspapers. Ed Craney, as we know, was very prominent in that organization of western state broadcasters that finally went into Washington and asked the FCC to take jurisdiction over the cable industry. Are you familiar with those activities. Did you play any personal part in the oppositions?
MAGNESS: Certainly did.
SMITH: Would you mind reminiscing a little bit about it?
MAGNESS: Well, it's been so long that some of that is a little hazy. They were obviously not out to help us very much. I think the anti-trust suit that the NCTA and you lodged on them, got an awful lot more attention than people thought it did at the time. I know that years later, Dave Glassman who was George Hatch's father-in-law, and George got me out to one lavish entertainment one time and said "Can't you get them to drop us out of that lawsuit?" And we had several of them with that kind of a feeling. I think that was about the most effective thing, that and the hot spots deal where they went out to look at places that were creating problems and try to resolve them in some fashion or another. In several occasions, it wound up in more friendly broadcasters buying out the ones that were less friendly. I think that we had peace for a number of years and it went along quite well. Sometimes, in those days, you almost felt you almost had to slip into town when you got into the broadcaster's town. Then some of them came around pretty well and mellowed out, and some even joined us, and spent their last times on the cable side of it.
SMITH: Ed Craney had a particularly powerful political friend in Montana, didn't he?
MAGNESS: He did have. Burton K. Wheeler. When Ed dropped out of his Butte system, Wheeler and Wheeler became Western Microwave's attorneys, at their suggestion and are still their microwave attorneys. That was back in the early '60s.
SMITH: Do you know what influence Ed might have had in getting the Senate Interstate and Foreign Commerce Committee to start that first investigation of the community antennas and the illegal boosters and translators?
MAGNESS: I would imagine that Ed was fairly prevalent in the background. I don't have any real first-hand knowledge on it. He even supported the translators, the so-called illegal translators at that time, long after he was out of the television business.
SMITH: Anything to support what was against cable. I was exploring with that question, Bob, to see if you had any recollection of the days when Burton K. Wheeler was, I believe the chairman of the Senate Interstate and Foreign Commerce Committee. When he went out of the Senate, Washington state senator Magnusson took his place. They were great friends. I just wondered if in your experience you'd seen any of that relationship working in order to get that investigation started?
MAGNESS: I don't remember anything that I could say that is accurate enough to put it here. I know that obviously Burton K. Wheeler was influenced by his client and associate, Ed Craney. I'm sure that he had the power to do those things. I know that while he was active, he had an extreme amount of power. It lasted clear up until the time that he retired. I remember one time when we'd been trying to get a microwave contract into the SAC base in Great Falls and in Glasgow. As we'd been messing with the Pentagon and everyone we could find and lobbyists, he said "Well, I still have some friends out there." He picked up the phone and they met us at the gate. They sent me my first contract and said "Now just sign it, it's not negotiable." But we signed it and that opened the door for more microwave grants, because we then were a necessity. If you remember back in those days, prior to that you'd helped us get some CPs. They were very difficult with the Commission then that had supervised the broadcasters for so many years and the phone company for so many years. Any protest might hold us up six months or more. This just took some of the onus out of the protest.
SMITH: It certainly had to help. There have been few senators, I believe, ever, who were more powerful and influential than Burton K. Wheeler, and that power and influence had to last long after he left the Senate.
MAGNESS: Sure did. The firm still is a very fine firm under Ed Wheeler's guidance right now. I have a book somewhere that Burton K. gave me, an autobiography. I guess all senators write them now, I've been reading in the paper lately. Said he's the only man he knows that turned down the presidency of the United States when he didn't run with Truman.
SMITH: I hadn't heard that story. Very few people remember much about that very early history in the industry. It emanated so much from Montana, is my recollection on it. Then down into Wyoming was Bill Grove.
MAGNESS: Of course, we had some very strong senators from Montana in Mike Mansfield, of course Magnusson from Washington, and McKay from Wyoming. We had the great Arkansas senators down there... Fulbright, Harris and some of those. Without those people, our industry certainly would not have fared as well as it has. I've just named some, but they kept enough reasonableness that we could continue to grow.
SMITH: Would you comment that they tended more to be statesmen really interested in what was right for television than perhaps we're seeing these days on the Hill?
MAGNESS: I think they weren't politicians, they were statesmen. They tended to look at the big picture and the long picture, and this sort of thing. For some of us that have been in the business a long time, it's probably just as well that this industry developed slowly. And it had all of the trials and tribulations in Washington and other places, because if it hadn't, a few big companies would have come in and wired the country up in two years, or three years and I would have all been over. But the way it worked, they get frustrated and they can't move fast enough. Those of us that kept just pecking along at it could continue to grow. In time you got healed from one investment, maybe you could find another one, maybe you had enough money to make it. While I look back at all that and worry about it, I also have to say it may have been a blessing in disguise.
SMITH: Could you tell us about any of your personal experiences in Washington? I know that you were in there frequently in the lobbying activities.
MAGNESS: Let me think about that for later. That's been so many years that I hadn't thought about that.
SMITH: That was a pretty general question too.
MAGNESS: We're looking back 30 years or more. Most of those things I haven't thought about for 30 years.
SMITH: Let's switch over to another subject. You mentioned George Hatch from Salt Lake City, a gentleman that I personally knew very well and regarded as a personal friend. Although for a long time, I thought he was the enemy, then of course, he became a partner of yours. Was your first association with George Hatch at the time of Butte, Montana? And also, give a little background about George, so we can talk about him.
MAGNESS: George is married to Jean Glassman. Cecil Highstall, ex-representative and radio broadcaster was married to Jane Glassman. Abe Glassman was sort of the leader of the family. They had been in newspapers, theaters, radio, TV, and cable. About 1965, Paul McAdam had a heart attack. So Abe called me and said "Look, do you think that Paul would like to sell out to us. And would you be agreeable to it?" I thought a lot of the family, Abe was a great old man, fair but tough. So I said "Well, I'll talk to him as soon as he's able." Paul was willing to sell to Abe because he'd been in the theater business and the radio business, and respected him. The next move was to think about financing it. So George and I went back to New York and started visiting with some banks. By the time Paul was up and around, they were ready to buy him out. And he needed to. I talked to his doctor of course before I did to him. His doctor said he needed to. Paul was amenable. He and I got into Salt Lake one afternoon, and spent the evening going over it, getting the price and so forth for next morning we went in and George said "Will you tell him?" I told him what Paul wanted. Abe said "Sounds like you're trying to be fair, let's take it." So that was George's major entry into cable television. George actually ran the cable section from pretty much then on, for their family. They had three systems in Nevada that we merged in with Paul's—Betsy and me, and that was the beginning of TCI.
SMITH: Would you name those systems, please?
MAGNESS: Sure, the Nevada systems were Lake Tahoe, Carson City, Elko, all Nevada. We had Dillon, Butte, Anaconda, Deer Lodge, Helena, Bozeman, Livingston, Lewiston, Mile City, and half of Glendive. I believe that was it; I'm pretty close.
SMITH: And that was the nucleus of TCI?
MAGNESS: Started our office in Bozeman. Ran it from there until it got too hard to travel.
SMITH: Is that the reason for moving to Denver?
MAGNESS: We had to move because, in the first place, no one wants to come and see you in Montana in the winter. I was traveling an awful lot, every week, somewhere. We were still trying to expand. We had microwave, down in western Colorado. We had Vernal, Utah, was another town. So we were expanding out through Wyoming and Montana, because we liked this area. We still found out, when we went and talked to banks, that we had to get some towns that they knew. We had to get some places that were east of the Mississippi River, because they didn't think we had much. If it was west of the Mississippi River you couldn't count on it, you know.
SMITH: Would you repeat that?
MAGNESS: To borrow money from the national banks, in those days, you really needed to have some scattered out systems and some of them needed to be east of the Mississippi River.
SMITH: Couldn't be Huntsville, Utah?
MAGNESS: Right. So we probably had a few more smaller systems at that time. So we were expanding, but I had to move somewhere. I selected Denver, because once I got a car in Butte and one in Billings. You couldn't get to Bozeman direct. You had to go somewhere to leave. We moved down here, principally for the transportation and the fact that the people who were traveling would stop here and see us, and save us doing some of the traveling. Of course, Denver has turned into a fairly good center for cable television at this time.
SMITH: I guess it's the cable capitol of the country.
MAGNESS: I would suppose. Virtually every supplier is represented here. Quite a few of the operators. It's a real good place to do business on a national basis. Time zone is right, transportation is right, climate's great.
SMITH: Close to the skiing?
MAGNESS: Close to skiing, mountains.
SMITH: When you formed the early TCI in Montana, how did the ownership shake down between the Utah group and yourself and Betsy?
MAGNESS: The Utah group was actually two groups. It was the Glassman family, which was George Hatch Cecil, didn't take a very large position in the cable because he at that time moved to Honolulu and they did the TV stations in Honolulu and Hilo. So he really didn't ever take a very active part in the cable side. George looked after their part. And the third partner was Kerns-Tribune, which publishes the Salt Lake City Tribune. They were also involved in the Nevada microwave systems with the Glassman's, and at one time had a small interest, 35% interest I think , in the TV station which has all been straightened out over the years.
SMITH: Are you referring to the TV station in Salt Lake City?
MAGNESS: In Salt Lake City. It's KUTV. At this time it's an NBC station and has been for 20 years. It was an ABC station when we joined them. So basically, the Glassman group, Kern-Tribune group, and Betsy and I. I think that Betsy and I wound up with 37% of it and some options, which we exercised later. I think we had five directors Betsy and I, George Hatch, Jerry O'Brien and Abe Glassman.
SMITH: Jerry O'Brien?
MAGNESS: Was with the Kerns group. He's now the publisher of the Salt Lake City Tribune. Still on our boards, been secretary since Day 1.
SMITH: That's the Paul J. O'Brien that I see? You mentioned a little earlier, the name of Blaine Glassman. I knew Blaine. I went to school with him. I'm a native of Ogden, Utah. Was he very active in working with your CATV group?
MAGNESS: He came in as a director, probably ten years after we formed it. I think, when we formed, we needed to kind of balance the board. This was after Abe had passed on. Abe's brother was Blaine's father. He went on our board; I can't tell you exactly when. I think it was about ten years after we formed TCI.
SMITH: Is he on the board now?
MAGNESS: No. When we did the Kansas City network deal...
SMITH: Was Blain Glassman still active in cable with your company?
MAGNESS: No, he was active as a director from about 1973 or '74 until probably 1983 or 1984. They founded a company, which was the Glassman Company; decided they needed to consolidate their holdings. They were having some problems with personal holding company status on their IRS forms. They picked a set of TV stations that they assisted us in buying, which was the Kansas State Network. They had about five TV stations in Kansas, one in Joplin, Missouri.
SMITH: Would you identify those?
MAGNESS: Garden City, North Platte, which is actually Nebraska but it's on the Kansas border, Wichita, Joplin, and one out near Dodge City. They later added Topeka station to it. So actually we made a trade with the standard TCI stock for the five TV stations and certain other assets. There were seven or eight packing plant warehouses and this sort of thing that were in that Kansas City Network company. Of course, at that time, Blaine Glassman, and of course George Hatch, were the two Standard directors. They resigned from the board. That was about when that happened.
SMITH: When you refer to the Standard directors, that's the Ogden Standard Examiner owned by the Glassman family?
MAGNESS: That's right .
SMITH: Do I understand correctly that TCI bought the Kansas Network from them with TCI stock?
MAGNESS: No, TCI bought the stock of Kansas State Network in what turned out to be a friendly acquisition and exchanged certain of the assets, for the TCI stock that the Standard Corporation held; their founding stock. At that time, the Standard had two directors, Blaine Glassman, and George Hatch. They of course, resigned, and tended to their consolidation of their assets.
SMITH: Then I take it they're not in the cable business anymore?
MAGNESS: They are not in the cable business now. They were in the cable business because Kansas State Network also had some cable systems. Kansas State Network had a tax certificate on the divestiture of their cable systems. We did go into a 50-50 joint venture with them up in the Chicago area a very few months after we had made this exchange. That was later exchanged for a group of systems in Idaho. We have been with them until about 30 days ago. They did another consolidation within the Standard Group, and it became necessary for them to sell their Idaho cable systems, so TCI purchased them just about 30 days ago.
SMITH: TCI was formed in roughly 1968, is that correct?
MAGNESS: We really formed the cable separate. First the Glassman people brought the cable from Paul then later on, they bought the microwave. Then they were consolidated. I think we went public early in 1970.
SMITH: Let me go back a little bit. In reading some biographical information that was published with respect to your late wife Betsy, a couple of years ago, it was mentioned that a lot of decisions were made over the kitchen table. Could you tell us a little bit of that for the record.
MAGNESS: When we built the Memphis cable system, I mentioned we used the draft system instead of sending bills. They were prepared right on our kitchen table, the only office we had for two years was the kitchen. People didn't come there very often. We didn't open an office until I left Memphis.
SMITH: With the draft system, you didn't need one.
MAGNESS: Didn't really need one. Took the trouble calls at home. Then when we moved on to Montana, Betsy spent a lot of time in the office. I was traveling virtually every week. Probably four days a week, maybe more some weeks. She kept things in the right order, all the ducks in a row. She worked in the office, some full-time, usually part-time, until we left Montana in 1965. She'd been a founding director of the company and of course was a director until she passed away.
SMITH: It would it be fair to describe her then as a co-founder of TCI?
MAGNESS: Sure. Certainly. You bet. She had to listen to me all the time. And she put her time on it too.
SMITH: Was she ever able to change your mind on anything if you had an opposing point of view on something you were trying to get settled?
MAGNESS: I hope she was.
SMITH: I ask that question clumsily, but she was given credit in this article I read...I think the words were that on the TCI Board of Directors, she was not a mimic of her husband.
MAGNESS: That's definitely right.
SMITH: She made her own contribution.
MAGNESS: You bet. She was a good director.
SMITH: You and Betsy, I understand developed quite a collection of artwork, of western paintings. That's sort of relevant to your background.
MAGNESS: Of course we'd grown up in the west, we liked the west. We like animals and cattle and horses, frontier, mountains, water. We really first started the collection when we were in Montana. Of course that was Charlie Russell country. You saw lots of those paintings. You saw lots of reproductions. We both liked it extremely well. So when we had money, we collected. When we didn't, we kind of coasted. We have collected quite a few pieces of Western art and enjoyed it. We had one deal between us that if we didn't both like it, we wouldn't buy it. That kept us from lots of mistakes. It was very interesting. I still have a lot of it , still like it. So it's been rewarding. The Denver Art Museum just opened their Betsy Magness Western American Art Gallery, February of this year. We got a real heavy push to put some good pieces of art in it. They did an extremely good remodeling job on the sixth floor. It created quite a lot of attention and interest. Smithsonian is sending out a western art collection exhibit to hang in it, very quickly. I think she'd have been very happy with that.
SMITH: I understand she became very active with the gallery. My guess is a side interest, was it?
MAGNESS: Betsy was very active in the volunteers. When we first came down here she headed the volunteers for the then new Denver Art Museum. She put together a team of something over 300 volunteers to service and work the museum. We went through a series of directors that didn't care for western art, so people kind of drifted into other volunteer work. She was a trustee on the Denver Art Museum. Of course, when she passed on, they asked me if I'd take her place. I really didn't need another job, but I thought that was something I should do.
SMITH: I notice behind you on the wall a painting of mountain sheep. I think that even with my eyesight at my age, that I can see it is a Clymer.
SMITH: I have to comment that for somebody who I had read in the trade press worked under Spartan conditions, this doesn't look too Spartan, Bob.
MAGNESS: That's one of Clymer's wildlife paintings, actually. It's of course a rugged, rocky mountain scene. If it had a couple of Indians in it, it would be worth twice as much. On the back wall is Captain Cook, and the others have Indians, which sell for a lot more. They're later paintings of his, but they seem to demand a little higher price when you have a little bit of cowboys or Indians or trappers. Of course, Clymer painted much more in that era of the trapping days and the early exploration days than some of the modern cowboy artists do.
SMITH: Was he essentially a western artist?
MAGNESS: No, he was a New York artist / illustrator. The first painting I saw of his, I liked. It was on Flathead Indians on the backside of the Tetons, where I'd surveyed microwave sites for years. I knew the country extremely well. I thought that was an awful nice painting. Betsy said "Go ahead and buy it." I said I'd never heard of him and I wasn't going to pay that much for an artist I've never heard of. I came back here a day or two later and called the gallery. They didn't know him. Looked in the gallery artist's book. He wasn't listed. So I didn't buy it. I was down there later with Carl and Jenny Williams from Tel-Events. We were in with Jenny buying Carl a Christmas present and Betsy said "By the way, what happened to that Clymer painting? He said "Well, McCracken bought that for the Whitney Museum in Cody." So we immediately bought one, and we have liked him very well. He's not painting very much anymore, he has bursitis in his right shoulder. I guess that's a little hard on an artist. He lives in Jackson Hole. He's been out there for ten or fifteen years. I know him quite well.
SMITH: You take much more pleasure in a painting when you know the artist.
MAGNESS: I think it helps. Or you know the history. Like anything else, if you understand it, if you're traveling and you know the history of the area you're in and how it was developed and why, I think it's much more interesting than if you're just looking up at the buildings.
SMITH: To me it is. I have a very modest collection, most everything done by friends I've know personally. I love to be able to talk about my friends when I'm showing the paintings.
MAGNESS: So much more pleasure than just nailing a picture on the wall. You learn to live with them, and you miss them if they're not there.
SMITH: That you do. You mentioned Charlie Russell, another western painter.
MAGNESS: Charlie Russell was an early Montana cowboy. He came out there at an early age and painted without lessons. I'm not sure that he has ever had a peer as far as painting western scenes, Montana scenes, Rocky Mountain scenes, Indians, animals. He was working with limited amounts of paints, and no fancy paintbrushes and all these things. And no high speed camera, which the artists have today so they can catch an animal in motion. He had to look at it standing there, and know how it looked. I think he still...for authenticity and this sort of thing, may be still the best. If the price of the paintings is any judge on what people think, that's true. Because today they have the high-speed cameras that anybody can have. They can get multiple shots. They've got the colors there for them, the whole thing. But he had to paint from memory, or from sitting out on a log and watching it. He told stories with his paintings. He was, I think to me, the best to depict the history of this region. I've always felt that Remington did maybe a bit better on bronzes and Russell did a bit better on paintings. He tells a story and they're not stiff; they're not a photograph. Denver should have western art here, it's the last gateway to the west.
SMITH: Perhaps you can give us some background on your interest in Arabian horses.
MAGNESS: We've been into Arabian horses for quite awhile. I met my first one in Austria right after the war, when I took her off of a plow. We were given passes to go out and hunt deer, and bring in any POWs if we could find them, or happened to run into them. Meanwhile, we were having horse races on the weekend. We'd run in our own battalion on Saturday, and then on Sunday we'd go to Division. Obviously we didn't have pari-mutuel but we did wager a little bit on these horses.
SMITH: I don't like to interrupt, but you were racing horses when you were in the military in Austria?
MAGNESS: After the war was over. It was sport and fun. That was the first Arabian horse that I have ever seen to know what she was. I didn't really know exactly at the time.
SMITH: Tell me about the track, and where you got the horses, and the story.
MAGNESS: This one had a big swastika on her shoulder. Our division wound the war up down in Austria in what you call a redoubt down near Hitler's summer home. Officers had brought their military horses in that area, but most of them had been gathered up by the farmers and they were being used for whatever purpose that they used them. They had this horse hooked on the plow with a couple of oxen. I didn't really believe she belonged on the plow, so I went down and liberated her. At any rate I fell in love with the little horse. She won substantial amounts of money. We didn't run her too fast right at first. As they got to know her better, we put lighter people on her. We were there for several weeks after the war was over, probably two months or more. So we had horse races; it was more fun than softball.
SMITH: Who sponsored the horse races?
MAGNESS: It was an impromptu deal. We met, just like you go out to play softball or something, but we'd go out and pick them.
SMITH: Was this just solely a military group, or were their locals too?
MAGNESS: Just soldiers. They'd all bring their horses in and see who had found the best horse. I fell in love with this little horse; tried to bring her home with me. Unfortunately shipped out before we could get all the papers done. I was willing to pay her way home. Then moved to Montana and I saw another horse that looked just like her and said "There's that horse." Turned out to be a direct offspring of some of the horses that Patton had brought home. I guess I bought the first Arabian in 1963. We moved some of them out of Montana with us and continued to add them here. We've been riding Arabians on our ranch here that we bought in January of '66, since that time. We've raised a few and had a stud that I was much in love with several years ago, then decided there wasn't that much money in it. Along about 1982, I saw a picture of a horse that I thought looked like about the best I'd ever seen. When I saw the horse I said "I've got to have that horse." In '83 we took him to Paris and he won the World Champion Stallion.
SMITH: The name is Gondolier. Where did you see the horse and decide that you had to have it.
MAGNESS: Saw him in Scottsdale, Arizona. Saw his picture just a little bit before that. He had just come over from Poland. Betsy and I, by this time, were racing quite a few horses. Once we had acquired the bulk of this stallion, we then had to get some heirs that were befitting. That set us out here, trying to buy some extremely fine mares to go with him. We specialized in the Polish-bred Arabian, that have a history in Poland since about 1810, when they brought the first war horses back from the campaign. They bred them for warhorses until World War II, and since that time have bred them primarily for racehorses. We have established those, and in so doing we went around to sales and traveled, read magazines and tried to acquire some pretty decent horses. We've gone to Poland several times to buy horses. I think four out of the last five years we've bought the most expensive mare at the Polish sale, which I think are the finest breeding horses in the world, because they've been bred long enough that their breeding is predictable.
SMITH: By that you mean...
MAGNESS: They've been bred long enough as a strain. In breeding horses, you line breed horses that have the same genetic pool. You build up characteristic traits that you want, genealogical type and phonological type. Then you can go for an out-cross and you can out-cross within the same general families or you go for a total out-cross to some strange horse. Well, the out-cross is never going to breed true for the first few generations, because you've bred one line bred to another line bred. So your genes and chromosomes...you don't know which they are. They'll be one or the other. But after about eight generations, you then can get back to fairly straight breed again. So we have stuck pretty much with the Polish horse, which is generally an athlete. He's been bred for athletic ability, running, battle, and these things. The original Arabian horses were bred for battle, down on the desert. They have paid less attention to the beauty, but more attention to the performance. Our show horses are principally out-crosses between our American domestic Arabs that have been bred for beauty and the Polish horses that have been bred for stamina and athletic ability. We were locating horses for this stallion and so doing, we found some other stallions we liked. You can't breed them all to the same one. You have to find somebody to breed the daughters to. We had been in that for some period of time. During this, we bought a substantial number of horses with another individual that was in the Arabian breeding business full-time. We met Sharon when she worked as sales manager for this farm. She worked there for probably three or four years, that we knew her. She went into the horse insurance agency, and sold insurance for a period of time.
SMITH: When you say we, Bob, you're referring to....
MAGNESS: Betsy and I. Betsy knew Sharon very well. Did more business with her than I did.
SMITH: Then she went into horse insurance?
MAGNESS: Yes, equine insurance they would call that. She started helping us with our horses, and she runs the administrative side of our breeding operation now; registration, shipping them from place to place. We have most of the breeding stock in California, at a place near Santa Ynez. It's about 40 minutes north of Santa Barbara, up where Reagan has his house, in that area. So it's horse country; thoroughbreds and Arabians, principally. Then we move the young foals back here to Colorado, when they're weaned, and grow them up here till they're about three years old. They are either sent back for breeding or sold go to show ring or for riding horses.
SMITH: You just make your judgment on what you observe and study about colts? I gather from what you're saying that you're not interested in racing, or are you?
MAGNESS: We race horses. We've got three Arabians in race training now that will race this year, or are racing this year. We're in a joint venture that has eight thoroughbreds, so we're not just not totally against other horses. We keep a few racing Arabians all the time. We're breeding those that will race. Arabian racing is still somewhat in its infancy. So we don't want to go too heavy in it at the beginning. It's about doubling every year.
SMITH: It surprises me to hear you say that Arabian race horsing is in its infancy. To my mind, the Arabian was always the glamour horse of horses.
MAGNESS: I should say that it's in its infancy in the United States. In Europe, it's a very predominant racing breed. Poland, very predominant, Russia, very predominant. Over here we've had the quarter horse and haven't had a lot of Arabians. As I said earlier, the Arabians over here were bred more for beauty as they came over, to be docile and to be pets, and less for athletic ability. We didn't really have a lot of Arabian racing develop over here. The Arabian race is normally about twice as long as a thoroughbred race. So they just didn't have that competition. It's growing in leaps and bounds, and we'll be racing Arabians here regularly in the very near future.
SMITH: What tracks do you race them at?
MAGNESS: We raced in Delaware, Delaware Park. Laurel, we don't have any Arabians there this year because ours are all on the west coast. Hialeah has raced Arabians. We raced a few in Colorado; quite a little bit of Arabian racing in California. It's a chicken in an egg situation, where you have to have enough Arabian racehorses at a place to get a matched field. We're busy garnering racehorses that will go, and tracks that will have them. It's a situation that if things go over very good where they race and where they have enough of them. We just need to give some time to get more of them in. It's fairly expensive to train and maintain race horses. And you need to win. You have to have enough people, and it takes about three years before a colt's ready to think about running lightly, about four years old before he can run the longer races. So it's not something that's done with a stroke of a pen. It takes time. Racing is increasing in popularity, amazingly fast right now. I think it's a good opportunity for cable programming. One of the reasons I've kind of dabbled in it. We had thought about putting about 20 Arabians in training this year; talking to a trainer, but we couldn't get a visa in time for him to get him started. Maybe we'll do that next year.
SMITH: American trainers then really would not be qualified to handle those horses the way you'd have to have them handled?
MAGNESS: The Polish trainers are more used to the Arabian horse. In America there are many race trainers, but they specialize in quarter horses, for a quarter of a mile or a little more. They specialize in thoroughbreds that run seven eighths of a mile to a mile and three sixteenths. The Arabian horse will start at about seven eighths of a mile up to two miles or two and a half miles. They're a different type horse. It isn't that you couldn't take an American trainer and have him understand it--but they're specialists . Certainly some American trainers have become very adept in training Arabians. But there just aren't that many of them. It's like the early days of the cable business, when there were only a few chief technicians. The horses have to be grown up, or you have to wait for them to grow up. We have young horses that are in that stage of growing up. We'll be putting them in training as they get older. We try to cut out the part that look like they'd be race horses, and get rid of those that don't look like they're anything but riding horses. We keep a very few for breeding horses. Of course, you keep many more fillies, much bigger percentage of fillies than you will colts.
SMITH: Is Gondolier still at stud?
MAGNESS: He's still at stud. Breeds about 85 mares a year.
SMITH: Does he command a pretty good price?
MAGNESS: His stud fee is about $10,000. We certainly, in today's world, with the market down, will give discounts, so he's probably about $5,000 real money.
SMITH: I think you indicated a few minutes ago, that by and large, the horses you have an ownership interest in that are racing, are doing pretty well.
MAGNESS: The thoroughbreds are doing extremely well. I've been very satisfied with them this year. They're running in the biggest tracks in the country. Most of the time, run in the money. They've won quite a few firsts.
SMITH: Do you do much traveling to the tracks to watch the races?
MAGNESS: Not near as much as I'd like to. But we go some.
SMITH: Do you get real excited when one of your horses is racing and you're watching it?
MAGNESS: It's pretty exciting. It's more fun if they win. We don't get to go as much. There have been several on the east coast this year, and that's a little far to go. We go to Remington Park in Oklahoma City, we'll catch some of them. We have some running in Chicago and some in Ohio right now. We'll probably try to catch a race or two on them. We've seen several on TV.
SMITH: It takes a rather substantial staff of people to run your horse operation?
MAGNESS: It takes quite a few people in the breeding part. Not a great number, but fifteen or twenty. In racing, it depends on the number of horses. A trainer can take care of three or four horses. You've got to have grooms for them, this sort of thing. The breeding operation probably takes about twenty people.
SMITH: Earlier in our discussion, you mentioned that you had gone into some other business interests that your sons were managing for you and with you. Would you mind mentioning some of those businesses, and how you happened to get interested in them.
MAGNESS: We have a cattle operation that our younger son Gary principally operates. We have an extremely fine herd of limousine cattle up a Platteville, which is about 15 miles north of the Denver Airport on the Platte River. It's one of the top three herds in the nation, if not the world. They do quite well with that. We raise those cattle for sales to other breeders, and for bull sales. That entails quite a lot of time on the show circuit. We have people out showing the cattle, as well as the horses, principally, six months a year. Cattle and horses of course, are totally different, they go to different shows. You have to show them if you're going to get good prices for them, because no one knows you have them. No one has seen you compare them. We have to take them out to the shows and expose them. Then you have to win if you want good prices. Gary tends to the limousine breeding operation, pretty much exclusively. He also, at that time, looks after the physical part of raising the young foals. He spends pretty much full time doing that. He also assists us with the commercial cattle operation in southern Wyoming that has about 3,000 mother cows. Kim, my older son, (Gary is 35, Kim is 37) is looking after other family investments and family interests. Actually, in these endeavors we're really attempting to find the thing that these boys want to do for the rest of their lives. We're in it because it's something the family's interested in. It gives us something to do together. Mostly, it helps them find what they want to do, how they can be their own boss and "hang their own moon." Kim looks after the plastic company, which is actually a technology company that uses plastics, principally polyurethane. It makes building panels, siding, and usonian block. That was the block that Frank Lloyd Wright designed. He's built several buildings like the Biltmore Hotel in Phoenix with usonian blocks. Most blocks weighed about 80 pounds and he really wanted to design something that could be built by a couple. An 80-pound block's a little heavy for a girl, most girls, and some of us guys. We've got this block, with far better insulating qualities, down to about 31 pounds. We're working on ditch liners for irrigation ditches. He tends to that part, and certain other family investments. We have investments with other people in several farming operations, cattle feeding operations. They stay pretty busy.
SMITH: What is the feature that makes the usonian block usonian?
MAGNESS: We deal with Taliesin, a very fine caliber architectural school in Scottsdale founded by Frank Lloyd Wright, on that. They're interlocking blocks that are held together with a compression ring, and held down. You can build them in all kinds of configurations. They're a foot and a half long, or you can build them two foot by four foot, or whatever. They're built in a mold, with various and sundry types of filler in them. The one that we like best has polyurethane and marble and some other ingredients that we don't mention, for propriety or patent reasons. They are interlocking, kind of like the kids have. They're held together with a compression ring, that gets extremely good insulation qualities and strength qualities. They can go up very simply and very quickly. They've got some coverings that are made out of similar material that are facing for small buildings and this sort of thing. He's having a lot of fun with that right now. Some of the products are quite intriguing. It's kind of a interesting thing; I'm very interested in the ditch liner, 'cause we waste an awful lot of water out here in the west in moving quantities of water for irrigation, out of the rivers and down the ditches. Of course places like California, where they move the water to the cities for long distances, those things could be very important. We're working on a deal right now, under a grant from Montana State, supervised by Montana State University, on the ditching. It could save as much as a third of the water that's used.
SMITH: That would be very significant.
MAGNESS: We lose about a third in the ditch, seepage, evaporation, and amazingly to feed trees. It's amazing the gallons of water that a great big tree on an irrigation ditch will use daily. It shocks you. You shut all that out, and you supposedly get there with nearly everything you left with.
SMITH: The ditch liner is made of plastic.
MAGNESS: The liner is folded into the ditch, foamed and poured right into the ditch. Just a machine that goes along and lays it. It's extremely tough. Cattle can walk on it, deer can walk across it. If you happen to get a hole, you can go back and patch it by hand with a squirt can. Those things are quite interesting, and I'm watching those with enthusiasm.
SMITH: We were talking about your cattle operations, both in Wyoming and, am I correct, in Nebraska?
MAGNESS: No, in Colorado.
SMITH: You mentioned the limousine cattle. I got the impression that you're not raising those cattle for slaughter, but you're raising them for breeding and sale, is that right?
MAGNESS: Right. They're what they call an exotic breed. They really came here from France, the early ones by way of Canada. They were a French breed of cattle that were bred as beasts of burden principally, from dairy stock. They give pretty decent milk. They don't have fat like our English bred cattle have. Don't build up layers of fat on them. You don't have to trim them; they say they're genetically trimmed. You have tender, tasty meat without the marbling effect, that people who don't want cholesterol should seek out. It's a very tasty beef, and they are also quite large. We have improved the cattle in the United States, so we only bring in French cattle now, or foreign cattle for out-cross purposes, because our cattle here have been bred up better, because we bred them for meat production. They work great as a terminal bull. They're a little expensive to use to cows, for mother cows. You put a terminal bull on a mountain cross cow that would be maybe an Angus- Hereford cross, or a limousine-Hereford cross. You get an outstanding steer to go in the feed lot. They draw a premium at the market. Should draw a premium at the packer because their cutability is better; they don't have to cut off fat. We have had extremely good luck using them in commercial. We sell females to other breeders. We sell bulls to other breeders. We sell bulls to lots of ranchers. We use about 50 of them ourselves a year in our commercial operations.
SMITH: As a member of the public, how would I know if I were buying limousine beef. How would I know where to go to ask for limousine beef?
MAGNESS: There are some places out here that specialize in it. It's sort of a new thing to be vertically integrated in the beef business. There are several deals that specialize in it, out in this country. I doubt seriously if it's spread very far, because it's fairly new. Remember a few years ago we had the black Angus, which is very good beef. It still has more fat than we want today; than the public seems to want today. They make great crosses for breeding cattle. The way we get ours is we feed them ourselves, and we have them butchered for ourselves. It's got me so I seldom order beef away from home. These draw a small premium at the market. When we first started, they weren't drawing that premium, but each year we sell a little better, and they bring a little more. We haven't got it worked out here in our marking system.
SMITH: You don't feed it steroids or any particular type of chemical or growth drug?
MAGNESS: We don't in our own feedlots. We do have an ownership in a commercial feed yard that uses hormones. You get a better growth. The hormones don't really affect it and won't really affect us. Our USDA hasn't been able to find any adverse effects in it. You get a 12 to 15% better rate of growth. That's the reason that they're fed in most commercial feedlots.
SMITH: Your cattle operation in Wyoming...is that an operation for slaughter and so on?
MAGNESS: Straight commercial for slaughter. We do have a few Charlais purebreds, about a hundred head up there that we raise bulls. Use some ourselves on a terminal bull, cause some of those sell pretty well. They have been there so long. The ranchers have gotten so many bulls a year that it's just worthwhile to keep it. We don't have to make any effort on sales, they just call in and say they want five or fifteen, whatever. So we kept that one. We use it for some terminal crosses. It makes a much bigger beef, but I don't eat one.
SMITH: When you and Betsy started out in the cattle business, you sold your cattle, mortgaged your house to build your first cable system. Now you're the biggest in the world in cable, and you're back in cattle very heavily.
MAGNESS: Long way from biggest in the world. It's fun. We enjoy the cattle. Betsy used to like nothing better than to go out on the weekend and check all the cattle. The guys were busy during that time of year, so they always expected us to go out and see if any of them were injured or needed any attention, be sure they were still on our property, this sort of thing. We did that for years and years. It's quite rewarding
SMITH: You were both outdoors people. Camping? Fishing? The cattle, the animals you said you loved. You haven't said anything about hunting.
MAGNESS: We lived in Montana for a long time. When we moved up there, everybody thought about their deer and their moose and their elk, maybe two deer. Yes, I like to eat game. I like to hunt. But I don't go out and hunt like I used to. I go bird hunting two or three times a year, pheasant hunting. Kim and I always go on a couple of trips. Gary has looked at them so much, and fed them so much and raised them so much, he don't like to shoot them. We get enough caught in the fence to keep alive. If there's one that Gary can nurse back to health and turn loose, he'll do it every time.
SMITH: That's a nice quality.
MAGNESS: Costs me a jar of honey and a carton of milk every day. He likes that. We don't really hunt a lot. We might hunt once a year, and maybe we don't hunt at all, other than birds. We've kind of had our share.
SMITH: I'm going to take you back to the cable business, because you've mentioned some names in passing that I should have brought up before. There were two names we mentioned who were acquaintances and maybe even more than that of yours in Montana, that I wanted to get in here. One of them was Norman Penwell. I ask you about Norman and your possible relationship with him because Norm, I believe was at least one who was responsible for blowing the whistle on Jerrold, with the Department of Justice in certain of their early sales practices, tie- in practices. Since he was in Bozeman at one time and you were there, did you have any contact with Norman and any background with him in that?
MAGNESS: Yes, I knew Norman, and his brother Kenneth worked for me for many years. Norm had left the Bozeman system before I got there. He did live in the town some. He'd gone into a radio station. The problem on the tie-in and so forth, I believe came out of the competition in Livingston, Montana. By the time I got to Montana, had all been settled and done away with. I really wasn't a party in that. I was aware of it. Norm worked up in Montana for a long time. I still see him occasionally, haven't for a couple years maybe. I meet him at NCTA things and other places. He and a group of other Montanans had gone around the state and put together several cable systems and radio stations and this sort of thing. So we kept crossing paths. I got along with him extremely well. Of course Kenny worked with me until Carl Williams at Televents needed him one time. It was not a steal situation, it was a discussion. Last I knew, Kenny was working in Buffalo. Norman was very instrumental in the very early days of cable and radio and so forth in the Montana area. He went to work for Carl and I saw them not too long ago. Now we've bought Buffalo, (Televents) so he may be back in the fold, who knows.
SMITH: What contacts did you have with Archer Taylor?
MAGNESS: Well, I had more contacts with Archer than I did with some of the rest of them. He was still active in the business for some time after I moved up to Montana. So we did a lot of things together, and almost joined forces at one time.
SMITH: Where was Archer's principle interest in cable when he was an operator?
MAGNESS: I think he was instrumental in Bozeman, Helena, Missoula, maybe Livingston. He would know that better than I would. I have extremely high regard for Archer. When Malarkey-Taylor was forming, Archer went there and here, and we had discussions. I thought that much of Archer.
SMITH: You had another fine engineer and beautiful guy associated with you back in the days when George Hatch was with you, Charlie Clements.
MAGNESS: Charlie was here after George. Charlie worked in Denver with us for a number of years. He wound up his career here. He worked pretty well in his own thing. He still does some appraisals, one thing and another. Charlie worked here for eight or ten years in Denver. He never did move here. Lived in his hat and slept on a plane. Charlie would come down and stay a few weeks, then he might take a week off at home. He'd bring his wife down occasionally; spend a week or two. We never had any problem with Charlie; you always knew you were getting your money's worth with Charlie. One of the more personable engineers I've ever met. He knew everybody; probably didn't have an enemy. Would do anything for anybody in the business.
SMITH: Just a thoroughly decent person.
MAGNESS: Absolutely. I just don't know a criticism for him. He and I worked pretty much directly together all the time when he was here. I have just the highest regard for him.
SMITH: When you worked at Memphis and in Montana, in developing your systems there, you did pole climbing and cable stringing and line work yourself?
MAGNESS: First system. My partner and I pretty well built the system ourselves. We conscripted a little help here and there, but we climbed the poles, strung the strand and lashed the cable and made the installations. Even climbed our own tower.
SMITH: That 400' tower?
MAGNESS: Did that until I found the guy that would climb it for twenty bucks. We had two pre-amps in those days and they had to be changed pretty regular. I suspect you can still find some fingerprints on that first tower I climbed.
SMITH: Bill Bresnan, who was the president of TelePrompTer for many years, and then Westinghouse Cable for a short period afterward, prides himself that he was the only chief executive of a major MSO in the country that had come up from pole climbing to the top of the heap. I just had the feeling Magness did that.
MAGNESS: I took my climbers with me to Montana. Those poles got awful cold out there in the middle of winter, and when they get cold they get hard. The ground is like concrete, froze five feet deep. So I climbed a few up there, and then I moved the amplifiers down to the ground, so I didn't have to climb the poles after that.
SMITH: Oh, is that right. Tell me about that.
MAGNESS: Put them down. Had a local sheet metal shop make me an amplifier box and put them down to the ground so one fella could sweep the system instead of having to have someone down on the truck, reading the meter. It worked much faster and much better. Eric Craney put the state inspector on me a said "That's dangerous." I said, "I don't know why." We checked out and he couldn't find anything dangerous about it. Bell-Telephone was going about it, and I noticed over here by my house they've got three or four of them that look like they copied my design. But we moved all of our amps down to ground, locked them, of course. Grounded them well. That was back when we were still using tubes.
SMITH: Was there much more temptation at that time for vandalism because they were lower?
MAGNESS: We've had pretty sturdy boxes. We locked them with good locks and we wired them in conduit. So they were probably safer.
SMITH: Do you think you might have been the first to do that?
MAGNESS: I did it because of convenience. That's when I gave up my climbers. It was very much handier, and you could go troubleshoot so much faster. It was very satisfactory to us. But I noticed the telephone company's using the same things down here now.
SMITH: In Montana, did you have any significant problems with the telephone and power companies about attachment rights?
MAGNESS: No more than anyone else did. Every so often, something would erupt. Generally speaking, we needed to get along with them. They had the only poles. So we made it our business to get along with them. We didn't have any more problems than I think anyone else. And probably less because we got acquainted with them. The power company were great people. They owned most of the poles. The telephone company always wanted to rent us all of them. I think we got along with them with a minimum amount of problem.
SMITH: The telephone company did want to rent the space on the power company's poles.
MAGNESS: Power company didn't like that too well, because the phone company wasn't paying them as much for the whole space as they were charging us. It worked as well as could be expected. And it kind of spread...once you work in one region pretty good, those guys talk. And it worked through that whole 14-state area pretty decent.
SMITH: Speculating, I wonder if the problem of attachment space rights and so on wasn't a greater problem in the east than it was in the west.
MAGNESS: I think it probably was. Certainly because their poles had been in a lot longer. They'd had a lot more time to get cluttered, bird nests. Houses were a lot closer together. In business areas, they attached the buildings. I think it was a much bigger problem in the east than it was in the west. We sort of found that as we expanded in those areas.
SMITH: Is your mother's full name Charlotte Leona Cook?
MAGNESS: That's right. That's her maiden name.
SMITH: And she is still living today?
MAGNESS: Yes, she lives here in Denver. Just had her 85th birthday, late in June. In extremely good health, very active.
SMITH: And you see her frequently, obviously.
MAGNESS: Obviously.
SMITH: And your father was Robert Henry Magness.
MAGNESS: Right. He passed away in April of 1970.
SMITH: I wanted to mention some of your personal non-business related activities that I find interesting. You mentioned you have an appointment at the Denver Art Gallery, today where you will discuss the gift of a painting that you are going to give the Gallery in memory of Betsy.
MAGNESS: We have a painting that we're going to present to the Museum in memory of Betsy. They're setting up a committee to accept funds to acquire good western art on a permanent basis. There is also an executive meeting of the Board of Trustees.
SMITH: You mentioned that you were asked to be the chairman of a collector's choice committee.
MAGNESS: They have a collector's choice fund raising every winter. It is really a series of social events that is used to secure funds to buy pieces for the Museum. Normally they have about four different segments that each try to raise the most funds for their particular interest. After the totals are all tallied and they have a big party and dance and dinner, the group that gets the most money gets all of the funds for their particular endeavor. This year the Museum has decided to make their entire effort for western art, and has asked me to chair the Corporate Committee, to get various businesses behind the program.
SMITH: What official positions do you hold at the Museum?
MAGNESS: I'm on the executive committee, two or three other committees. I am a trustee for the Museum. It takes quite a bit of time to make all those meetings. I do the best I can; I don't make them all.
SMITH: Did this all develop out of your interest for obtaining a Clymer that you said you saw?
MAGNESS: Betsy and I developed a liking for western art when we were in Montana. We had of course always liked the west, but of course this was Charley Russell country and there were lots of prints of Russell and other great old artists, that were available, and of course a lot of original works are there. So during that time, we acquired this love for the western art and have followed that for these last 25 or 30 years.
SMITH: Did either you or Betsy have any formal art training in art history?
MAGNESS: No, really not. We had collected over that period of time and have really got some very nice pieces. Fortunately, we started early, before the prices got so wild.
SMITH: You've also mentioned that you are the Chairman of the Colorado Racing Commission.
MAGNESS: I really accepted appointment to the racing committee because our horse racing facility here in Colorado had suffered, and had to file Chapter 11 during the time that they were moving the track from some valuable land out to the suburbs. I really accepted the position because I wanted to get the racing reestablished in Colorado. I certainly didn't take it on because I needed another job.
SMITH: When did you receive this appointment?
MAGNESS: About three years ago.
SMITH: How is the program going?
MAGNESS: It looks like we're just about to announce reopening of quality horseracing in Colorado.
SMITH: Where will the track be located?
MAGNESS: It's located at the southeastern edge of town, actually in Arapaho County. The track is built and completed, but ran out of money in the first season, because they weren't finished in time. They had to offer too much money in the prizes to attract the horses. It left them in quite a dire financial position. The financing was so involved that it couldn't be separated from some other development land. We think we have the people now who are doing that.
SMITH: I noticed that you are a director of Republic Pictures. Also, I noticed in a release that Republic Pictures was a TCI subsidiary, which quite surprised me. From my boyhood, I knew it as an independent motion picture producing company.
MAGNESS: Actually, years ago we had FCC regulations for mandatory origination. Of course, the motion picture product was pretty well tied up in the theater industry. We found we could buy that whole production company cheaper than we could lease the films from it. TCI maintained that for a number of years. We spun it out to our shareholders about four years ago, as a dividend.
It's still an existing corporation. It does a limited amount of production. I think we produced four or five made for television movies last year. They were aired on CBS and ABC. We do one series. The principle activity is about 1,600 prints from previous productions. They provide those to TV and cassettes.
SMITH: Does TCI have any active management responsibility for it?
MAGNESS: No, TCI doesn't have but, of course, the principle shareholders at TCI are the principle shareholders at Republic.
SMITH: Were you in Washington, and a participant in the lobbying of S-2653, which put television directly under the FCC for the first time? It had strong industry support and strong industry opposition.
MAGNESS: I remember that well. Yes, I was certainly there. I was in a little awkward position because this bill was strongly supported by Oklahoma, Texas, Arkansas, and areas down in the southwest. I had moved to Montana where the northwest association was strongly opposed to it. I was a director of the NCTA at the time. As such, had responsibility to the northwest association, which I sort of represented. I was in the hot seat during that bill.
SMITH: I take it you had to support the opposition to it?
MAGNESS: I didn't really support the opposition to it. I had to take a more neutral position than I would have ordinarily.
SMITH: Do you remember what the vote was on the floor of the Senate?
MAGNESS: I believe there was one vote difference. Thirty seven-thirty eight, I believe.
SMITH: Have you had any afterthoughts about the impact on the industry of its decision to withdraw its support for that bill?
MAGNESS: I think that there were some repercussions at the beginning. I think it injured our relationship with some of the senators. I think that probably with the passage of time, it hasn't made that much difference. I think the Commission would have probably been a little more favorable toward us. Certainly, other legislation would have been easier to come by. All in all, I'd have rather not be regulated as try to get good things, because when you go after things you want, you nearly always get some restrictions along with them.
SMITH: Was there a conscious or deliberate decision on TCI's part to go more in the direction of acquiring MSOs and larger individual systems that owners really wanted or needed to sell, as distinguished from going into that franchising frenzy that took place for seven, eight, ten years?
MAGNESS: We tried for a long time to grow on sort of a balanced growth. We tried to grow a third acquisitions, a third internal growth, a third new franchises. But we followed the opportunity whenever we saw it. We tried to stay somewhat balanced on that. We did avoid the frenzy of the top hundred-market deal. We spent enough money in applications, just to be sure someone isn't going to steal a few. We had some that we got early. We really noticeably backed away from those highly restrictive type franchise obligations that didn't make any sense for the people or the operator. These were with the outside consultants giving grandiose proposals that sounded great to the city but weren't very practical. So we kind of took a furlough and we really tried to go out and continue franchising in areas that we could get a workable franchise in. We always tried to grow around our existing operations. If we bought a package that didn't have any opportunity for us to grow around it, we usually tried to get out of that area. We got tagged on clustering when it wasn't even us saying it. Because it's straight economy scale to operate the bigger batch in a closer proximity. If we consciously got traded or sold, or got away from something that stuck out way away from anything we had or if we didn't think we could grow around it. That basically is how we moved the thing on. It was just a step at a time, just like taking a walk. Sometimes you walk faster, and sometimes you have to slow down a little. After the frenzy subsided, and people found that some of these big commitments weren't that great, we found it sometimes easier for a new kid on the block to come in and get a franchise changed as a city, than it was for the operator that already had it. So we picked up a few of those that way.
SMITH: I can think of three major cities where I observed you do that; Washington, Miami and Pittsburgh. Weren't you original applicants in all three? And finally went in and bailed out the operation that was awarded the franchise?
MAGNESS: Yes. We've got several of those. We get wrapped around here and there, but we're in several fairly large cities now, like those you mentioned...Chicago, St. Louis, Kansas City. Have a very big presence in Denver, now, that people hadn't bothered to think about. We share Kansas City with ATC. They operated Denver. Of course, we took the United Cable. Didn't do it on purpose; it just happened to fit. I'd really rather not live in the city you're in. So we're fairly balanced, I think on that at this time. We continue to fill in the pieces. It is fairly hard to buy cable systems today, you've got to have a lot of confidence in them. As much difficulty as we have penciling profit out of them, or even a payback. Either we'll grow into it, or interest will change the price. That's been our philosophy. We're still doing a lot of smaller deals all the time. We buy and sell and do a little exchanging. I'm sure we average more than one a week. They're not substantial enough anymore that we have to make much disclosure on them. We have been very happy to split some of them up; that seems to be acceptable.
SMITH: Doesn't TCI often lead the consortium that negotiates the deal? You seem to put the groups together, or certainly are effective at it.
MAGNESS: And we divide them up. And there are some bigger deals that you don't mind having some help in. Usually you find some that fit some other people better than they fit you. Also, the people in Washington don't get near as strung out as they would if we tried to take a few of them ourselves. Would you agree to that?
SMITH: I would agree to it. I think it's going to be more of a problem in the future than it has been for the past five or six years. The Republican Administration has really not looked at cable mergers and acquisitions with too jaundiced an eye as far as anti-trust is concerned. Earlier they did.
MAGNESS: We've had two or three of them stopped. The only thing to do is to back off. They weren't that big a deal. We've had several stopped. They seem to have a change of idea. I don't think that was either Republican or Democrat, I think that was a surplus of personnel that was left over after the phones split up.
Certainly there were some critical moves that we made that were vitally important, that hit at the right time. There were some others that just happened to hit because the timing was right for it. We reached pretty hard for a period of time in there, because we had just done private placement. After the market closed up for eight or nine years, maybe ten, we
John and I had to sit down and talk about it and say now "These guys expect us to do something with that money. If the price goes up we're going to look like heroes, and if it goes down, we're going to have a lot of egg on our face." We figured they didn't raise us that money to put in bank. So we went ahead. It turned out we were at a real opportune time to take on some real nice acquisitions. But we sweated a little bit and we were careful with them. We knew they were a little expensive, they still are today. It doesn't take much change to make today's price look reasonable. Some of them look a little wild, at least from the outside.
SMITH: Do you have any that you're worried about today?
MAGNESS: No. Happy with every one. You don't buy them unless you're a little ahead of the market. And we bought lots of them. Sometimes in a group, you get a little better looking package because there are simply fewer people out there bidding against us. The group man would rather sell them all than to keep his dogs. If he sells them out by individual bid, he's going to wind up with the dogs. Usually that's the ones he wants rid of because the generally require a bunch of rebuild and some money spent in them and maybe some holding time while the public gets confidence again. So that's basically how we've come along very simply with a very simple operation. We have got our areas broken down in regions, divisions, so we can take on a pretty good package and not really disrupt the organization that much. We take it over and continue to operate it and improve it. We always budget some improvements in them and expect them, nearly always have to put some money in them.
SMITH: I'd like to ask a little bit about what was going on the inside in your operation down in Miami. The consultants recommended TCI to the Miami City Council as the company to select for the franchise. It was very close to a unanimous vote to give it to the company operated by a man named Charlie Hermanoski. There was a lot of uproar about it. All at once we wake up one day and TCI is back in there, apparently lending the expertise or capital to do the job that Mr. Hermanoski couldn't do.
MAGNESS: When it got right down to the uproar, they insisted we come into it. It took some time to get things worked out. It took a long time to get these things straightened out. Cream rises to the top and the sand settles. I did go down on that franchise application. After we once started in the operation, I didn't have much to say in that. I heard about it. We have walked from several when the midnight phone call comes. Thank God we never did answer one of them. Okay? That area was probably one of the blacker parts of the history of our growth and development. It wasn't extremely prevalent, but it went on enough. The bad thing about it was you never really knew; it always was a bagman---an attorney or something of this nature.
SMITH: Would you say that by and large, considering the opportunities for that kind of abuse, that the industry kept a fairly clean nose?
MAGNESS: I think they did, I really do. When you think about the opportunity for the abuses, both really an abuse, really a bagman, or really an opportunistic attorney or consultant, I think they've kept an extremely clean nose on it. I think we can be proud of them for that. There have been some abuses where a few operators have not upgraded and up-built quick enough. We've seen a few places where they've jumped the rates a little too high. But all in all, I think they've been quite responsible. I think because they have, it's going to serve us well. Maybe that's unjust optimism, but I don't think so.
SMITH: How much do you think the industry itself contributed to that problem of the excessive bids and the promises of everything under the sun in order to get a grab? How much tongue-in-cheek was there while all of that was going on with the individual operators?
MAGNESS: I think there was quite a lot. I think they wanted to be sure that they weren't going to be embarrassed by letting people come in and steal something right out from under their nose. I think, by and large, the bulk of those were not really cable builders, they were companies that were getting in, or they were new money, they were local deals. I think some of the frenzy on overpaying is caused by tax deals, not the old-line operator. I think there was some frenzy and it certainly wasn't anything that we had to subject ourselves to. I think there were some people who thought "I'm in this business. They've kept me out of these places so long. I can't let a bunch of outsiders or newcomers get all these big markets. I've got to get in here and at least play policeman. Every so often they get in there and you get caught in your own enthusiasm. We've all done that. I think there was some of that. There was always optimism to say "We can always go in and change this thing." When you look back on it, there was a lot of money spent on the franchising process. There weren't an awful lot of those systems built. It might have caused some problems for the existing operator because they read the papers about what all they're promising X-big city and say why aren't we getting that here. That probably was the biggest cost to the industry.
SMITH: In part you're saying it was partially invited, then.
MAGNESS: Yeah, and not only that, some of the existing systems, like a State College that would say if they're going to get this, why aren't we going to get this? I think there was some of that. People were thinking the big city cousins were going to get more than we're getting. But I think that's all gone away. Probably turned out to make our industry a little more temperate and our customers more temperate.
SMITH: The franchising activity, except for renewals, is over with.
MAGNESS: It's amazing because as long as it was held up, that technology didn't jump us in some of these cities.
SMITH: Would you indicate for the record the companies or programming services that TCI had an active interest in?
MAGNESS: We've had a basic corporate philosophy from the time they were delivering programming by satellite that we would really rather pay for it if someone else did it, than to do it ourselves. Direct our attention more at the cable operations in general. As the programming need developed to more and more programs, it seems that it's more necessary for the cable companies to further support the introduction of original programming to enhance our offering, to serve our customers better. We have started making investments in various programming services. All of them are, I think, minority investments. Most of them in the 25-49% area. The first one that I remember, we were the founding capital for BET Network, years ago. We have had a very active involvement in Discovery Channel. Of course, we're very active in the Turner organization, with CNN, CNN2, and TNT. We were instrumental in forming CVN Shopping Network. Involved in American Movie Classics and several other programming services. At this time, we're actively developing some regional sports networks, and hopefully we will be able to feed programming from one region to another region, during times when they don't have sports in their own area. We think all of this just adds to the value of the cable offering as to customer satisfaction, to increased penetration. I think we'll continue to do this sort of thing.
SMITH: Would you foresee the day when TCI might undertake to develop programming services in which it would have a controlling interest?
MAGNESS: It might. From time to time you seem to evolve into some of those as people's needs change. It's not our objective, however. We are always perfectly content to co-op that with other operators. In most cases, when we are doing something like this, we seek out other cable multiple system operators to assist in this, because our needs are concurrent.
SMITH: In developing the sport networks that you just mentioned, are you doing that jointly with other MSOs?
MAGNESS: Yes, we are. We're doing the one in this area and some in the southwest with Daniels, who's not really an MSO today, but has been several times in his career. We are cooperating with people who have needs in the same areas that we do.
SMITH: Daniels was himself always a great sport fan, and at times has been a sports promoter. Seems like a natural activity for him to be in.
MAGNESS: He seems to have followed that through basketball, racecars, fighters and so forth. He seemed very interested in it. It gives him a good background certainly to acquire the programs and put the network together.
SMITH: I wonder if you could indicate your activities with the National Cable Television Association, and also with the state and regional associations.
MAGNESS: It's been some time ago, probably late '60s, early '70s, I was very involved with NCTA. Served as a director. Of course with the regions when I was actively operating the cable systems, we were active in state and regional associations, helped form several of them. I believe in the ability of the states and regions to influence a lot of regional legislative activity. I kind of evolved into a situation today that we have our operating personnel active in state and regional associations, and certainly in the national association. So I really sit back and watch the rest of them do all that now.
SMITH: You were on the Board of Directors for some years, were you not?
MAGNESS: Yes, I think it was probably late '60s, early '70s. I think when I finished the term after John Malone joined us, we ran John for the job. He's had it several times since then, and does very well.
SMITH: Do you recall specifically any industry committees you might have served on?
MAGNESS: I really don't, it's been so long ago.
SMITH: Let me ask about the acquisition by Time-Life of Warner. Do you have any feelings as to whether that is a good thing for the industry?
MAGNESS: I think that if there was going to be a consolidation, we felt like that was the best one and would have a better chance of continuing with some cable programming. We'd have a better chance of getting along with them than if someone outside the industry had taken it. I think that with the development of the international companies, that size and power is necessary. So probably, it's as good for the industry as any of the options that were presented or suggested.
SMITH: If one of the options were no merger at all, would you have preferred it?
MAGNESS: Not really. I think that we'll be able to deal with them. I think we'll have a very good block of buying power and producing power and so forth, that it will probably turn out to be an asset for the industry.
SMITH: TCI has a reputation of being a tough negotiator with the program suppliers. Is that a fair statement for me to make?
MAGNESS: I think that's a fair statement. I don't know if it's deserved. I think some suppliers have indicated that. I think most of them that indicated that have been the newcomers and the smaller offerings and the ones we didn't choose to deal with. I think that's where most of the criticism has come. I don't really think that we've hurt HBO or Showtime or ESPN or people like Turner. I have seen several items in the press referring to someone that we didn't happen to put on. Obviously, why we don't put them on is we have to select what we think our customers want up to the carriage capabilities. There is just not room for all of the shopping networks and all of the newcomers because most of our capacities are filled right now.
SMITH: You mentioned the shopping networks. I don't think you mentioned TCI having an interest in one. Am I correct that you do?
MAGNESS: We have a substantial interest in CVN. We have an interest of course in QVC, a fairly substantial interest. They're in the process of merging right now. We expect to wind up with a substantial interest in the merged company.
SMITH: By and large, you've indicated that TCI has been active in taking minority positions to help cable oriented programming networks get into operation.
MAGNESS: Or improve their programming offering and this sort of thing.
SMITH: Does TCI have a specific philosophy about local origination by its own subsidiary operating companies?
MAGNESS: I don't know if we have a corporate policy as such. We certainly do local origination's, in areas where they are needed and sometimes when they're required. I think that you can't really originate quality programming on a continual basis in a lot of areas. It takes a certain size community. Takes some demographics that make it important or you really don't have much with local origination. But we have no corporate philosophy as such that says we do this or do that. We gear it more to the need of the community.
SMITH: Do you think it's more a matter of leaving those decisions to your local personnel as to whether it's going to serve a useful purpose?
MAGNESS: I think that decision originates from the regional managers, certainly approved with our corporate officers. I'm sure if some local manager wanted to start something, he could bring it up through the chain and it would get started. Not everybody can originate well, not all areas have enough true originating opportunities. Different regions have different kinds of needs. Certainly some are served by local TV stations, some aren't. I think the needs vary from locality to locality, and vary with demographics.
SMITH: You mentioned the period when the FCC adopted rules that required origination by cable systems. We called it mandatory origination in those days. Do you recall what your specific reaction was to that proposal by the FCC?
MAGNESS: I think in those days, we probably didn't have the capability. The equipment certainly wasn't great. I'm sure we weren't extremely happy with that regulation. In fact, I think that we fought on it some. I think it went before the 8th Circuit Court and was rescinded. There wasn't a lot of outside programming available. The electronic equipment hadn't been designed to work like it does today. It would have been a much bigger operation at that time. We did origination in several locations during those periods of time, so we knew what we were about to get in.
SMITH: TCI is pretty much a supporter of the First Amendment speaker rights of cable television today?
MAGNESS: Very definitely.
SMITH: At the time that the FCC ordered that you speak, do you recall considering it a First Amendment violation at that time?
MAGNESS: No, I don't believe the industry had matured to that point at that time. I think we were really adapting to the circumstances that we found in our own operating areas at that time. I don't think we had solidified as an industry. We of course had NCTA, but we were busy fighting battles from competitors and this sort of thing and trying to stay alive. I don't think we had gotten refined enough to think about First and Fourth and Fifth Amendments and so forth.
SMITH: We're still fighting battles.
MAGNESS: Right. They're a little different type, but we're still fighting battles and have had something in front of us virtually every day since I've been in the business.
SMITH: Thank you very much, Bob.
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