“The Black Box” (How Hollywood’s Movies Wired America)

 

Milwaukee 1972

Geoffrey and Jack Valenti

Advice from MPAA head, Jack Valenti

.

I looked around me at the other guest speakers on the dais. They were all important men, representing various facets of the motion picture business. The annual meeting of the Midwest division of N.A.T.O. (National Association of Theatre Owners) was being held in Milwaukee, Wisconsin at the Phister Hotel.

pfister

My participation was arranged by my cousin, Jerry Gruenberg, a Milwaukee theatre owner. Though I had few credentials of my own at the time, the Emcee’s introduction mentioned that I had come from a long line of theatre men including my father, Gilbert Nathanson, who had been a movie distributor as well as the owner of a chain of theatres himself in that part of the country.

My most significant credential however, was my name Nathanson. As happens my dad’s uncles, Henry and Nate, “NL” Nathanson were motion picture pioneers who had owned or controlled most of the movie houses in neighboring Canada, during the first half of the twentieth century.

Though I didn’t know any of the speakers personally, I recognized their names as being big hitters in the “movie” business. The only person who stood up to shake my hand as I took my seat on the dias was a man with a broad smile named Jack Valenti, who I recognized as the president of the MPAA (Motion Picture Association of America).

After alluding to my family’s history, the chairman explained that I had been invited to speak on the subject of Cable Television and its potential as a conduit for pay TV. There were some murmurs in the crowd.

Sarnoff

General David Sarnoff

mccormick

Colonel Robert McCormick

I opened with television’s long and colorful evolution, dating back to the 1930s when RCA Victor and Zenith Radio were advocating two very different business concepts for financing the new medium. General David Sarnoff, the chairman of RCA Victor and the NBC radio network, believed that television should, like radio, be advertiser supported, whereas Colonel Robert McCormick, another veteran broadcaster and owner of Zenith Radio, proposed that television be commercial-free and subscriber supported on a monthly rental basis similar to the “Rediffusion” business model in Great Britain.

I followed with a brief history of the cable business and its original purpose to provide television programs and improved technical quality to people living in cities and towns where off the air reception was poor or simply unavailable.

Moving on I explained that cable was technologically capable of delivering more to its subscribers than conventional broadcast television stations.

cable lineman

Building the “Wired Nation”

Having come from a theatre owner’s family I was well aware of the impact that the advent of television had on the movie business back in the 1950s. I remembered when some of my father’s theatres ran double bills which they changed as often as three times a week. Those were the days when Hollywood produced over 400 new features a year. At the time of my talk however, the studios were releasing less than 150.

I went on to explain that cable could utilize specially dedicated channels to bring live sporting events and recent movies into the American home after (and I emphasized the word “after”) their theatrical run.

I suggested that they, as movie theatre owners, get on board while they can and buy or invest in the cable TV business. I introduced another possibility which involved the leasing of cable channels from CATV companies for the purpose of running movies in the cities and towns in which they owned theatres.

Though I certainly heard a few murmurs during my talk, not one person in that ballroom raised his hand with a question upon its conclusion. I looked around at the other speakers on the dais. With the exception of a smile and what might have been an approving nod of his head from Jack Valenti, my talk had the impact of a ripe tomato.

henry plitt

Bricks & Mortar’s Henry Plitt

The chairman thanked me, and I returned to my seat. Whereupon my neighbor on the dias, a man named Henry Plitt, rose up to speak. Plitt was a World War II hero who owned a large chain of movie theatres. With a nod in my direction Plitt thanked me for alerting them to the “threat” that had the potential to “destroy the motion picture theatre business.”

“We all have tremendous investments in our movie industry real estate,” said Plitt, who went on to say, “What this young man is advocating will destroy the bricks and mortar of our business.” Then turning to me he said in a stage whisper, “Your Uncle Nate would turn over in his grave.”

I sat there in a fog throughout the balance of the morning session which was devoted to other movie industry issues. The meeting took a break at noon. As we left the rostrum, a couple of men, old friends of my father, thanked me for coming. Jack Valenti handed me his card and suggested that I stop in and see him the next time I was in Washington.

Still in a fog, I watched everyone else file out of the meeting hall. As I left the hotel, I realized that no one had so much as suggested that I stay for lunch.

Observation: It’s interesting to note that few movie theatre owners ventured into the CATV business even in their own communities. As a matter of fact, very few television station owners invested in cable during its early days, and the same can be said for the three major TV networks.

Background

Lucy and Ethel… still going strong, thanks to cable.

Bugs “Wabbit” ears

Burt Harris and I, with the encouragement of our financial partners, Irving Harris and Don Nathanson, and of course a couple of banks, bought our first cable businesses in Palm Springs, California and Flagstaff, Arizona in 1965. Back then those towns had no TV stations of their own and depended on cable to import and recirculate programming from stations in Los Angeles and Phoenix. TV reception in the big cities on the other hand was available to virtually anyone with rabbit ears or a rooftop antenna.

I believed, as did others, that the future of cable TV expansion lay in the larger cities, and the only way for them to be commercially viable was to offer entertainment that was not available off the air on local television.

Studies had been conducted affirming that cable subscribers would pay extra to watch movies and blacked out sporting events that were not carried on conventional TV. Obviously those studies proved to be correct. Today cable subscribers in Los Angeles and other major markets can select from a potpourri of programs carried on several hundred TV channels tuned through those little ‘black’ boxes on top of their TV sets.

Who needs wires?

Satellite television has taken it a giant step further. Virtually all the programs available on cable can also be seen via satellite service to the home with the simple installation of a small dish on the roof and a subscription to “Direct” or “Dish” TV.

How did it happen? How did we get there, and where was Geoff Nate? It’s certainly worth a blog.

Brief History of Pay TV

America’s first ‘Black Box’

In 1953 a company called International Telemeter in partnership with Paramount Pictures launched a wired pay per movie TV test in Palm Springs, utilizing coin boxes installed in the homes of its customers. Another wired system called Telemovies was tested in Bartlesville, Oklahoma in 1959 where customers could rent a special TV channel to view recently released movies. Zenith was the first to test an over-the-air pay TV system called Phonevision in 1962 utilizing a UHF television station in Hartford, Connecticut. A customer would order the program of his choice over the phone.

Flanked by Subscription TV’s Pat Weaver and Bob MacLeod

In July of 1964, a company called Subscription Television (STV) launched a pay TV test in the Cheviot Hills neighborhood in Los Angeles. It was headed up by former NBC President, Pat Weaver. Coincidentally, a tennis buddy and neighbor of ours in Malibu, Bob MacLeod, had moved out from New York City to manage the project.

STV utilized closed circuit lines leased from the telephone company and proposed to deliver movies, sports, children’s and cultural programs on three channels. Unfortunately STV never really had a chance to test pay television’s potential in California. The motion picture theatre owners banded together to fund an initiative via a statewide ballot measure to outlaw pay TV. Circulars were passed out in movie lobbies urging visitors to vote “No on Pay TV,” claiming it would destroy free television. Anti-Pay TV commercials (see below) appeared on theatre screens and were carried on local TV stations as so-called “public service announcements.”

The initiative passed in 1965. It was later challenged and reversed by the courts, but by then STV was bankrupt and out of business.

Coincidentally, as mentioned earlier, 1965 was the year Burt Harris and I bought  the cable TV system in Palm Springs. Perhaps it was the town’s pay television history or the idea’s potential that continued to intrigue me, because three years later I left our burgeoning, by then publicly held cable company, to take a shot at “FeeVee” as the trade magazines called it.

I believed that the timing was right for a marriage between cable and pay television.

Optical Systems Corporation

First Team: “Visionary” Miles Rubin, This Blogger, Tech Wiz, Pat Court and The indispensable Elaine Paris

With the encouragement of a close friend, Miles Rubin, and seed capital from one of his existing public companies, Optical Systems Corporation, we retained the engineers who designed the original pay television system utilized by Paramount Pictures for its pay TV experiment in Palm Springs.

Miles was, and still is, a bold visionary. We set up offices and laboratories in West Los Angeles. The engineers, Patrick Court and Ron Mandel, brought in technicians and set up a laboratory to develop a pay television technology that could interface with existing cable TV systems. I moved out of my Harriscope office, hired a new secretary, Elaine Paris, (later “Stewart”), and brought in additional people as needed.

Optical Systems’ business at the time of the merger was in the process of developing a new method for creating animated cartoons. It moved its Hollywood laboratories into our West LA facilities. This blog also features a segment dealing with our adventures in the animation world. It makes for entertaining reading.

CATV Convention

.

The CATV industry scheduled a convention in Washington D.C. during our first year of business. Though we weren’t anywhere near completing the design of our set top box, we arranged to take a suite at the Willard Hotel to demonstrate our new pay TV technology and hopefully attract some of the important people in the cable industry.

Geoff Nate’s ‘Black Box Office’

We needed some kind of demonstration, so I hired a guy to cut a slot and add a couple of push buttons to the top of a plastic Kleenex dispenser. I carried that prop, our empty “Black Box”, around the country with me for two years.

Our demonstration in the hotel room was also fabricated. Our engineers found a way to simulate a scrambled signal in the hotel room’s TV set. I dropped a card in the top of our Kleenex box, pushed a button and one of our guys in the room next door did something that cleared up the picture. All the technical CATV guys knew it was a phony, but most of the visitors just nodded and listened to our sales pitch.

A year later at the annual CATV convention in Anaheim, we rented a bus and drove a group of industry big wigs down to the Cox Cable TV System in San Diego where they could see the real thing.

The Movies

Active supporter, Gil Nathanson

Fifty years ago, as was pretty much the custom, a movie ran for a few weeks or longer if it had legs or Academy Award potential. Most of the better films were sold to the networks for telecasting in a couple of years. The rest were also held back and sold in packages to TV stations for later release.

The rejection I received from the theatre owners in Milwaukee didn’t slow me down. My father was also a believer. When Burt and I and our partners bought the CATV business in Palm Springs we invited my father to invest in the company, sell his movie theatres, move to the desert and take over the management of our new cable adventure in that town.

Team players: Sherrill Corwin, Actor Henry Fonda, MPAA President Jack Valenti

As happens, Dad had a friend who owned the movie theatres in Palm Springs as well as in Santa Barbara and several in downtown Los Angeles. His name was Sherrill Corwin. Actually, Sherrill also owned a classical music FM station in Los Angeles and had been a big supporter of ours when Burt and I started our FM Magazine.

After a year of rejection I was almost ready myself to believe that pay TV channels on cable would never become a reality due to a lack of encouragement bordering on rejection from the movie industry… and then a fortuitous thing happened.

Sherrill Corwin was elected President of the National Association of Theatre Owners. Sherrill, who was also a motion picture producer, was a prominent industry figure. He was known as a creative progressive thinking professional. I made an appointment to see him at his office in Los Angeles.

I didn’t have to do much of a selling job on Sherrill Corwin.

He was, of course, familiar with the Paramount Pay TV test in Palm Springs, the results of which were impressive but didn’t justify the expense of wiring a whole town just to sell movies. However, the idea of piggy backing on an existing cable TV installation was intriguing. He immediately recognized its potential.

From Sherrill’s perspective, the practice of withholding a movie’s release to television for two years, virtually gathering dust, made no sense. He believed that if there was a post theatrical market for a movie while it was still popular, the studios could enjoy higher grosses per picture. The result would mean more capital for investment and therefore more movies for an industry desperately short of product.

My pay cable idea had just received encouragement from one of the most highly respected men in the motion picture business. A week or so later in his speech at an industry convention Sherrill Corwin reproached his fellow theatre owners for their ‘heads in the sand’ attitude toward cable TV and its potential, essentially locking themselves in their ‘brick and mortar’ movie houses, settling for 150 movies a year when the public was demanding more, much more.

.

Sherrill’s speech made headlines in Variety the next day as well as in the newspapers. The timing was right… or so I thought. My company was ready to launch its first pay cable operation in San Diego, which at that time was home of the largest CATV system in the United States. We had leased several channels from the cable company which was owned by Cox Communications. We were in the process of setting up an office and studio, and we had made a deal to telecast the blacked out home games of the Conquistadors, San Diego’s professional basketball team.

Perry Leff and his beautiful bride, Abbe Lane.

But without movies there was no way we could possibly open our doors. We didn’t have product to conduct so much as a test.

Shortly after Sherrill Corwin’s publicized encouragement, I received a call from a man named Perry Leff, a well-respected theatrical agent who had been following the growth of cable TV for some time. Perry, who is married to beautiful singer and actress, Abbe Lane, personally believed that cable’s future depended on offering its subscribers more than just improved reception of network TV programs.

20th Century Fox Visionary Gordon Stulberg

I invited Perry to come over to the office for a demonstration of our pay TV technology. He was impressed, and said that he too believed in the future of pay cable and offered to introduce me to an important studio executive who might perhaps be interested in providing films for a test in San Diego.

Perry arranged a meeting for me with Grodon Stulberg, the President of 20th Century Fox Studios. We met in Gordon’s office at Fox and later at my own for a demonstration. I was very candid with Gordon. I explained that we had the “highway” (the cable system in San Diego), and the vehicle to deliver the product. We just didn’t have the product, which in Gordon’s case were his movies. Gordon asked a lot of questions, and sent Dennis Stanfill, the Chairman of the Board of ‘20th, over for a demonstration, the next day.

20th Century Fox hits kick off pay TV.

Coincidentally, Twentieth Century Fox was coming off several good years. They had introduced Planet of the Apes in 1968, which was a big hit. “Patton”, their top grosser of 1970, won eight Academy Awards, and “The French Connection,” their most recent box office champion, had just won the Academy Award for 1971’s “Best Picture,”  “Best Director,” “Best Editor,” and “Best Screenplay.”

Several days after the Stanfill meeting, I received a call from Perry. Fox had decided to give us “The French Connection” to launch our pay cable test in San Diego. It made big news all over the country. Twentieth Century Fox, in the face of pressure from the theatre owners and TV networks, was nevertheless giving us the number one grossing picture in America.

In addition to “The French Connection” Stulberg also promised us “Patton”, and “Planet of the Apes.”

Pay TV was off and running… well… almost… Perhaps “jogging” would be more appropriate.

Stulberg had made it clear however, that we would first have to get the various motion picture guilds to wave their onerous pay TV restrictions, a problem of which I was at the time unaware.  All of the union contracts contained clauses that triggered big premiums in the event that a movie was sold to pay TV.

Pay TV test earns guild waivers

As the former head of the Screen Writers Guild, Gordon helped arrange such a waiver for us on the grounds that the release to pay cable customers in San Diego was merely a test. He referred me to Jack Dales and Chet Migdon of the Screen Actors Guild who also came into our offices for a demonstration. The Directors Guild came around as did the Producers Association, thanks to the encouragement of Jack Valenti.

Forman’s ‘brick and mortar’ flagship

Of course, Twentieth’s decision made headlines in the trade magazines. Rest assured Henry Plitt was not happy nor were most movie theatre owners including Bill Forman, who headed up Pacific Theatres here in California. Forman, who also owned Cinerama and a number of drive-ins, is supposed to have threatened that if Stulberg sold the French Connection to pay TV, he would never buy another movie from Twentieth Century Fox (a threat by the way that had a very short life).

Hollywood opens its doors to pay television

Fox was just the beginning however. There were six other studios that had to be sold on our pay cable test to assure our customers a steady stream of recent movies. Once again Perry Leff’s connections helped open doors. Locally, Paramount agreed to give me “Serpico” and “True Grit”. Warners said they would think about it but later gave us “What’s Up Doc?” and Blazing Saddles”. Universal referred me to their distribution department in New York City. The management of United Artists, which at the time was releasing MGM films, was also in Manhattan, as was Columbia.

No one at Disney returned my calls.

“What’s in a name?”

So off I went to New York where my cousins, Leonard and Jerry Gruenberg, both at the time movie producers, helped me set up meetings. My first stop was the Universal office where I was scheduled to meet with Hy Martin, the studio’s marketing director. I remember vividly walking into his office. He was talking on two phones at once. As I remember him, he looked a lot like Steve Martin. Maybe they were related. After about five minutes, he put his hand on the mouthpiece and said, “What can I do for you?”

I said I needed a couple of pictures for a pay television test.

“We don’t sell to pay television,” replied Hy, picking up an incoming call. I waited another five minutes until he finished.

“What did she, (referring to his secretary), say your name was?” he asked looking up at me.

‘NL’ Nathanson, movie mogul

I answered.

“Nathanson?” he said. “Any relation to NL Nathanson of Famous Players in Canada?”

“He was my uncle,” I replied.

I nodded and watched as he reached for a phone once again. There was a short pause before someone answered, and Hy spoke into the mouthpiece.

Lew Wasserman, movie mogul

“Lew, NL Nathanson’s nephew is here in my office as we speak. He wants a couple of pictures for a pay TV test in San Diego. I’d like to give them to him.” After a brief pause he put down the phone. “You’ve got some friends out there. That was Lew Wasserman; we both read about Sherrill Corwin’s speech in Variety. Besides, I want you to know that NL Nathanson gave me my first job in the picture business up in Toronto. How about our new Burt Lancaster Western for starters?”

My meeting with Norm Levy at Columbia that afternoon didn’t go so well, but ultimately he came around a few weeks later with “Easy Rider,” followed up with “Five Easy Pieces.”

David Picker at United Artists was a young guy whose company distributed the James Bond Films as well as MGM releases. They couldn’t give me any of the Bond films, but I did get the big 1970s hit “Midnight Cowboy” and “Sleeper”, the hot new Woody Allen feature.

Irving Ludwig… too busy for pay TV

Back in Los Angeles I took a shot at Disney and was referred to Buena Vista Films, Disney’s distribution entity. I really needed some children’s movies. Someone arranged for me to meet BV’s President, a cantankerous guy named Irving Ludwig. I was ushered into his Burbank office where Irving greeted me with “Make it quick, I’m very busy.”

Right place, tough sell

I noticed there was also a young fellow present who appeared to be Irving’s assistant. Before I could begin my pitch Irving said, “You’re the pay TV guy right?”

I nodded.

“Not interested…  We’re in the movie business…. Don’t start.” Irving interrupted before I had a chance to go into my pitch, “I’m a busy man.”

“But…” I interjected.

Card Walker… Right guy

“No buts… show the gentleman out Semel… Disney doesn’t do pay TV.”

semel flipped

Terry Semel… OK guy

With that I left for my car accompanied by Irving’s assistant who introduced himself saying, “Irving’s not the man to talk to. You have to see Card Walker, the President of the studio.”

Ultimately I was able to meet with Card Walker at lunch in the Disney commissary, and in time I got a couple of Disney pictures, not the animated classics, but good family fare. As an aside; the Ludwig assistant who gave me encouragement was Terry Semel, later to become President of Warner Brothers Studio.

Political Problems

Tough competition

Ruling the waves

I was amazed that despite its potential, pay cable had few friends. Notwithstanding Sherrill Corwin’s endorsement of the concept, and encouragement from the studios and the guilds, movie theatre owners hated the idea and the TV networks were certainly opposed to anything in television that might syphon audiences away from their program schedules. Network affiliated TV stations as well as the independents were terrified that pay TV might lead to the demise of advertiser supported ‘free’ television.

The TV powers with their political muscle created one road block after another to stop pay TV. In fact even some of the big cable companies, despite its potential, tread very lightly on the subject, preferring to call the new concept “Premium TV” rather than “Pay Television” or even “Pay Cable”.

The NAB (National Association of Broadcasters) joined NATO (the movie theatre owners) and lobbied on all levels of government against pay TV as they had back in the days of Pat Weaver’s ‘Subscription Television’ attempt in Los Angeles.

Dean Burch (center) and his all-powerful FCC team

The contentious issue was brought before the Federal Communication Commission, the government agency that controls radio and TV broadcasting. Hearings were held in Washington.

Charlton Heston joins our team.

I was invited to speak along with officers from two of the major cable companies. We were joined by representatives from the motion picture studios and the various guilds. As I remember, actor Charlton Heston spoke as President of SAG, (Screen Actors Guild). Coordinating the proponent’s testimony and supporting our arguments relative to the benefits of “pay TV” or “pay cable” or “premium cable” (whatever people called it), was MPAA President and chief lobbiest, Jack Valenti.

Jack had clout in Washington, lots of clout, thanks to his White House service as special assistant to President Lyndon Johnson. He requested my participation, having met me a year or two before at that NATO conference in Milwaukee and later at a cable convention in Anaheim.

The night before the FCC hearing, Valenti arranged for several of us to join him at dinner with the Reverend Jesse Jackson, who Jack had flown in from Chicago to appear as a friendly witness. Jackson was primed to speak on the opportunities that cable television opened up for Afro-American entrepreneurs who had been virtually shut out of TV station ownership. I was at that meeting, and I can only say that Jesse was a quick study and appeared to be very enthusiastic about minority involvement in cable TV.

The “other” Jesse Jackson

The next day, all of Jack’s people spoke about pay cable’s potential and its importance to the American family, including the opportunity to view first-run motion pictures and blacked out sporting events in the comfort of their homes. Speaking in opposition to the new technology, and warning of its perceived threat to free television were the networks, represented by CBS president Arthur B. Taylor, and the stations by a lobbyist from the NAB.

When the commissioners called for comments from outside the industry Jesse Jackson took his seat at the table. To our amazement instead of speaking of the merits of our cause he exploded into a harangue about the perils of cable and pay TV in particular. He spoke eloquently on the “threat to free TV and the burden that pay television would create for poor black people in particular.” He maintained that pay television would destroy free television and pose “a tremendous hardship for the nation’s poor minorities.”

We in Valenti’s group looked at each other in amazement. Was this the same Jesse Jackson we had primed last night at dinner? Impossible.

ABC’s Leonard Goldenson

A few weeks later I heard a rumor that the Reverend Jesse Jackson had breakfasted the morning of the hearing with Leonard Goldenson, the chairman of ABC Television. The rumor goes that several weeks after the hearing, Jesse Jackson’s “Operation Push” charitable foundation received a very substantial donation from an unnamed contributor. Boy was I green.

I learned a valuable lesson on that trip to Washington and my appearance before the FCC. The other side was formidable, and when dealing with the regulatory system, nothing can be taken for granted.

Cable’s friend, Chairman Dean Burch

No decision relative to pay cable came out of that particular FCC hearing, though it was apparent that powerful Chairman Dean Burch’s questions relative to the testimony certainly favored our position. Ultimately, the commission took no action to stop or discourage our progress, in essence giving pay cable the green light.

Technical Problems

When I left the cable business to go into pay television I hired, as mentioned earlier, the engineering team who had developed the technology that was used in Paramount Studio’s pay TV test in Palm Springs back in the late fifties and early sixties.

The Little Black Box that couldn’t

Our people had designed a system that utilized photo cels which could read special pre-punched cards that a cable subscriber could purchase for insertion into our card reading set top box. After about two years of development, we assigned the manufacturing of the box over to TRW, one of the world’s largest aerospace companies.

America’s first pay cable company- San Diego, CA 1973

The set top boxes were introduced in San Diego, the location of our company’s first pay cable facility. We utilized private channels leased from Cox the cable TV company in that city. Though the public response was good, the test was unfortunately a technical failure. The boxes themselves were a problem and required constant service. TRW could send rockets to the moon, but they couldn’t make a simple little card reading device that could function reliably in our customer’s home.

Cable box, but no pay TV

We were forced to replace our card reading box with a simple set top converter that offered additional channels but made pay-by-the-movie TV as we had envisioned it unmanageable. Without our proprietary technology our company was reduced to the level of program supplier and in direct competition with such companies as HBO, the far better financed subsidiary of Time Inc.

Dore Schary and his device

Optical Systems may have been the first, but we weren’t the only people trying to buy movies for pay TV. As happens Dore Schary, a former president of MGM, had been lured out of retirement to head up a pay TV test in Sarasota, Florida with a device that chewed up movie tickets a customer could buy in his supermarket. Unfortunately, Dore’s box chewed up itself, and his test folded.

Nevertheless, pay TV via cable in some form was off the ground. However our company, at great expense, had to maintain origination facilities, which included film projectors and the people to man them at each cable system. That proved to be a heavy financial burden, at least in those early years. We were burning through money fast.

The Satellite

Western Union’s million dollar satellite salesmen

One day a couple of young men from Western Union came into my office. They were familiar with our operations and offered what they deemed to be a much simpler method of distribution that would not require the installation of separate origination facilities in each cable community.

As happens, Western Union had an operating satellite at the time. They proposed to take all of the Channel 100 programming originating at our Los Angeles office, upload it to their satellite and beam it down to each of our participating cable TV systems who were spread across the country.

The dish that changed the game

Such a possibility would eliminate the necessity of maintaining individual studios and a Channel 100 staff in each cable city. All we would need was a big satellite receiving dish in the cable company’s back yard.

The satellite concept in those days was way over my head, something out of Buck Rogers. “How much would it cost?” was my confused response.

Just $1,000,000 a year

“For a million dollars a year you can rent an exclusive channel on our satellite,” replied one of my Western Union visitors.

“Oh my God,” I thought. “This would enable us to transmit pay TV programs anywhere in the world. We could originate movies from our offices right there in West Los Angeles.” The savings benefits were going round and round in my head.

All it took was lots of $$$$

Then I came down to earth. Where were these guys a few years ago when I had five million dollars in the bank? Business is all about timing. We just didn’t have the money. When we passed up the opportunity, the Western Union guys took their idea to Time Inc.’s ‘Home Box Office’… and the rest is history.

Optical hung in there for another two years, but ultimately sold its patents and proprietary knowledge to a leading cable TV equipment manufacturer. Much of the science developed by our company led the way to the introduction of new and innovative services for hundreds of cable and satellite channels and the public’s ability to enjoy the amazing abundance of programming that followed.

Conclusion

America’s menu

So where are all the players today?

“Black Box” ala 2014.

When I spoke before the FCC back in 1972 there were some 2,500 cable communities in the United States serving approximately 4 million homes. Today cable is available in over 35,000 communities, presently reaching 60 million homes.

In the early 1970s, the cable industry found a way to increase the number of VHF channels on a subscriber’s TV set from 12 to 20 channels with the installation of a set top box. Today, some forty plus years later, his “Black Box” is capable of delivering programming on over 900 channels.

As for pay television’s threat to broadcasting and the future of the three then existing TV networks as predicted before the FCC by CBS’s Arthur Taylor: Well today, there are over 50 broadcast networks, and CBS itself owns 29 TV stations and now offers programming on six different cable/satellite networks featuring entertainment as well as news and sports.

Introducing: The Multiplex

And what about pay cable’s perceived threat to the health of the movie industry? When I spoke before the NATO theatre owners in Milwaukee back in 1972, the studios were producing less than 150 films a year. Today the industry is releasing over 400 features as well as thousands of hours of programming for the TV, cable and satellite networks.

Movies’ other business

Finally, as for Henry Plitt’s prediction of pay cable’s threat to the “bricks and mortar of the movie theatre business”: Well Henry, wherever you are, the number of movie venues in this country has doubled in just the last twenty years. Today there are over 40,000 screens in America’s theatres. Also by the way, the average ticket price has jumped from $4.00 to $8.20 during that same period. Then of course there’s the concession stand business which grosses an average of $3.00 to $4.00 per attendee, on which by the way, the movie theatre enjoys an 85% profit.

Yes Dear… and what’s comin’ next?

Let’s not forget the other big players in the game. There’s the satellite TV networks reaching another 30 million homes, and of course the internet, with Netflix and Hulu and Amazon and whatever’s coming next, all of which can be streamed to our TV sets with Google’s Chromecast, a little $35 device that looks like a flash drive.

Hats off to Jack Valenti, Sherrill Corwin, Gordon Stulberg, the FCC’s Dean Burch and all of the other people of vision who, during my brief foray in the business, helped launch American home entertainment into the twenty-first century.

Now here’s that little side story you don’t want to miss.

Click Mickey.

Click me!

1 Comment

One thought on ““The Black Box” (How Hollywood’s Movies Wired America)

  1. Nancy Bloch

    Brother ,loved this Blog! So interesting to read all your ‘history’ with Cable Television. The Pink Floyd animation is amazing. Love you so, Nancy

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: