Blackout as Franchise Leverage

“Even before I could find my way around the squat one-story office in Denver and settle into the financial problems at TCI, I stumbled into a political showdown in November 1973. The city council of Vail, Colorado, a tourist town built on ski resorts and condos a couple hours west of Denver, had refused to renew TCI’s contract unless we met certain demands. TCI had then failed to meet deadlines to rewire the system. So the council called a meeting, and with no public hearing or due process, canceled our franchise agreement with the city. I felt like the town was playing hardball, which many cities were willing to do when it came to the cable franchise, so we played hardball, too. Since we couldn’t legally operate a franchise, we opted to pull the plug on the system after 6 p.m. on November 2, 1973, about ten minutes into *Bullitt*, an action flick with Steve McQueen. In its place, we ran a scrolling text of the names of the mayor and the city manager, with their phone numbers. The blackout continued Friday through Monday, eclipsing a Denver Broncos game. It didn’t take long for the phone lines to spur the politicians. By Tuesday, we had hammered out an agreement with the council. We were also putting cities on notice if they were mulling franchise renewals for TCI: don’t threaten our livelihood and expect TCI to simply roll over.”

“I could see what was coming: once Warner got everyone hooked on free content with MTV, it was going to increase the price down the road. So I needed to throw a monkey wrench into their IPO plans for MTV. So I wrote a letter to Warner that stipulated that, absent a mutually acceptable agreement, we were dropping MTV from all of our systems. I knew this would interrupt the MTV prospectus (the offering document for the IPO), because it would be considered a material change if the largest distributor planned to discontinue carriage. Drew, whom I liked, was on the plane and sitting in my office the next day, and Warner and TCI struck a long-term deal that protected us against the increase in rates. Quality content would become much more valuable. Already cable was outgrowing its amateur-hour status compared with the broadcast networks. CNN was now in 26 million homes, with a George Peabody Award in journalism. HBO would win its first Emmy in 1988 with a documentary.”