Wired to Win:
Entrepeneurs of the
American Cable Industry
by Kathi Ann Brown
view the excerpt on a pdf
Chapter Seventeen: Ralph J. Roberts – Comcast Corporation
Ralph J. Roberts was born in New York City on March 13, 1920 to Robert and Sara Roberts. Five years later, the family moved out of the bustling metropolis to what was then still country: New Rochelle in New York’s Westchester County. “There were farms all over the place,” recalls Roberts. “New Rochelle was known as the Queen City of the (Long Island) Sound. All the kids went sailing in ‘cat boats.’ In fact, kids got boats before they got cars.”
Roberts demonstrated an interest in business at a very young age . . . initially to Sara Roberts’s dismay: “The first business thing I remember is digging up my mother’s marigolds and selling them to the neighbors,” her son recalls with a grin.
The youngster’s wares were ill-gotten, but Roberts came by his entrepreneurial streak honestly. His father was a manufacturing chemist and pharmacist who developed medicinal products, including a throat spray for singers that was endorsed by legendary contralto Madame Ernestine Schumann-Heink. Bob Roberts also owned a prosperous chain of drugstores, one of which was located in the lobby of Manhattan’s Biltmore Hotel, a frequent gathering place of the city’s Democratic power-brokers in the 1920s. There, in the orbit of fast-talking Mayor Jimmy Walker, Bob Roberts probably caught the investment fever that proved to be his undoing. He apparently took to heart Walker’s boosterism of the city’s real estate market and tied up a significant portion of the family’s money in property. When the market cratered in the early 1930s, so did the Roberts family fortune. To make matters worse, Bob Roberts died in 1933 at the bottom of the Great Depression, leaving behind a widow and three children.
To make ends meet, Sara Roberts sold insurance in New Rochelle. “My parents had been a popular couple,” notes her son. “She had a lot of friends. I think everyone in New Rochelle bought a policy from her that first year.”
But “there it stopped,” says Roberts. To economize further, Sara Roberts moved her family out of their house and into an apartment building. Determined to contribute to the family’s coffers, Roberts sold ads to local merchants and printed them in a daily schedule for the bus that ran from the apartment complex into the city. Roberts also earned spending money as a member of a “little dance band,” explaining cheerfully that he was bandleader because he “wasn’t good enough to play an instrument.”
In 1936, Sara Roberts moved her two younger children to Germantown, an old neighborhood in Philadelphia, so she could be near her terminally-ill sister. Her oldest son, Joe, remained in New York City to attend Columbia University. While Sara nursed her relative, 16-year-old Ralph and his younger sister Shirley adjusted to life in a new city. Although they missed their friends in New Rochelle, the transition was relatively easy: Roberts had no trouble with the high school academics and found time to act in the school’s Shakespeare production his senior year. Making a decision about which college to attend was not difficult. The University of Pennsylvania was located within easy commuting distance of home.
Roberts paid part of his way through school by adapting his successful bus schedule advertising concept to a new audience. “I sold advertisements, but this time printed them on ink blotters,” he says. “Then I would pay kids to slip them under the doors in dormitories and fraternities.” Roberts clinched ad deals by telling merchants that his delivery system was less expensive per customer than mailing ads using a 3-cent stamp.
Roberts’s experience in self-employment took on vital importance when his mother died his junior year at Penn. “Somehow you survive,” says Roberts of losing his second parent before he turned 21. Fortunately, before long, he met his future bride, Suzanne Fleisher. The couple married in August 1942, after Roberts graduated from the Wharton School at Penn with a degree in economics and entered the Navy by way of Penn’s officer recruitment program.
Roberts spent the next four years wistfully eyeing the military ships departing from the port of Philadelphia. His superiors had decided that his aptitude for business made him more valuable on land than at sea. After being sent off to learn industrial production methods at Westinghouse, he reported to Philadelphia’s Navy Yard, where the military brass assigned him to ship construction and repair for the duration of the war.
It was at the Navy Yard where he teamed up with the engineer to start their new business venture. Before the golf club episode brought the partnership to a hasty conclusion, the pair managed to try their hand at several products. One was a mechanism for lifting a crate’s worth of soda bottles by the neck, for use on an assembly line. “That seemed to work pretty well,” says Roberts, “better than the scented ink” that the two tried to market to women to use in writing letters to their beaux.
After he and his partner went their separate ways, Roberts deemed it wise to put his entrepreneurial talents on hold. The time had come to get a regular job to cover the rent for the apartment he and his wife, Suzanne, had taken. By then, he knew that marketing was both his passion and his forte, so he put together a resume, opened the telephone book to “Advertising Agencies” and hit the pavement.
The firm of Aitken Kynette was his first stop . . . and his last: “I just walked in off the street and handed the owner my resume,” says Roberts. “He looked at me, and said, ‘What did you do, come in here first because our name started with an A? Or were you impressed by our list of clients?’ I said, ‘I must admit, I started with the A’s. And you have a terrific client list—but if you don’t take me, I’m going to the B’s.’ He hired me.”
During his two years at Aitken Kynette, Roberts rose quickly from researcher to copywriter to account executive. His clients included El Producto cigars, a large Philadelphia liquor maker and the local Muzak franchise. Roberts’s creativity impressed the Muzak people enough to garner him an offer to work for the company itself, which he accepted.
Moving over to Muzak was more than a job change: It opened a whole new world to the 30-year-old. He was introduced to people of national prominence, including William Benton of the Benton and Bowles advertising agency (soon-to-be Senator Benton) and Anna Rosenberg, who held high-level posts in both the Roosevelt and the Truman administrations. “I was brought right into their inner group,” says Roberts, still sounding a little awed after more than half a century. “I was so impressed and so afraid that I wouldn’t be up to the intellectual standards of these people.”
Although Muzak’s offices were in New York City, Roberts commuted from Philadelphia every day. “I didn’t want to move because I wasn’t certain how long I could stay in this job,” he says.
Even after being promoted to vice president at Muzak, Roberts continued to feel uncertain. His angst came to a head one day in 1950 when Senator Benton walked into his office. Recalls Roberts: “Benton said, ‘I’m going to fly to St. Louis tomorrow, and when I get off the airplane there are going to be a lot of reporters there. I want you to give me one line that I can say that’s going to be quotable. See you in an hour.’”
Roberts came up with something that pleased Benton. “I don’t remember anymore what it was,” he confesses, “but the pressure was tremendous. Benton thought I was a great copywriter. I knew I wasn’t.” By the time Roberts reached home that night, he had decided it might be a good idea to look for another job.
Luck was on his side. Roberts was approached by a recruiter to join the Pioneer Suspender Company. The company’s chief was in his 80’s; his son and successor suffered from a debilitating case of diabetes. Roberts agreed to come aboard, on the condition that if the owner ever decided to sell the company, he (Roberts) would have right of first refusal. Roberts had always wanted to follow in his father’s footsteps and own his own business. Pioneer, he thought, could prove to be the opportunity that would make his wish come true. Two years later, the owner made good on his promise and Roberts headed for the company’s banker, the Philadelphia National Bank, to borrow the necessary funds. The loan went through without a hitch, somewhat to Roberts’s surprise. “How will I ever pay the interest?” he asked. The banker smiled: “Easy. Raise your salary.”
For the next five years, Roberts thoroughly enjoyed his role as president of Pioneer. He had plenty to keep him busy. The company distributed its accessories to no fewer than 15,000 stores. Marketing Pioneer’s products was more than half the fun. From putting on musical shows in New York City during Fashion Week (in which his actress wife Suzanne usually played a role) to creating eye-catching retail displays, Pioneer’s owner reveled in dreaming up ideas to sell his company’s products.
In 1961, Roberts began noting trends in fashion that did not bode well for the long-term health of his accessory lines. Beltless slacks were coming into style. “I began to get a little nervous about the belt business, which was our main item,” says Roberts. “Plus men were wearing fewer ties.” Shirts with cufflinks were likewise losing ground. Rather than wait for fate, Roberts availed himself of an informal standing offer from competitor Hickock to buy the business.
With money from the sale of Pioneer “burning a hole” in his pocket, Roberts set up a small investment capital firm in office space in Bala Cynwyd, a close-in suburb of Philadelphia. There the 42-year-old might have remained but for a chance encounter a year later. While strolling down Chestnut Street in Center City one autumn day in 1962, Roberts crossed paths with Warren “Pete” Musser and Daniel Aaron. He knew Musser from the Young Presidents Organization; Aaron was a stranger. The moment the pair spied Roberts coming down the block, Musser decided on the spot that the dapper executive was exactly what he was looking for: someone with the wherewithal to take a struggling cable system in tiny Tupelo, Mississippi off his hands.
Aaron, Musser’s cable broker, was happy to follow his client’s lead. Finding an investor for a system located in territory rife with civil rights tension was a disheartening prospect. He had despaired of finding any takers.
“Where is Tupelo,” Roberts asked innocently, “and what’s a community antenna television system?”
After Aaron explained how cable worked, Roberts did a bit of research. He got back to the pair a few days later: “I’ll buy it,” he said, “because it sounds great. It’s the simplest business I’ve ever heard of. You put up an antenna, run a few cables on telephone poles, and then you charge people money to watch television.”
Roberts had one stipulation: Aaron had to agree to manage the system, because one of Roberts’s tenets was ‘Don’t go into a new business without an expert.’ Says Roberts: “Dan said he could and he would. So, that’s how I got into the cable business . . . pure chance.”
Not long after Aaron joined Roberts in the tiny office in Bala Cynwyd, Roberts’s accountant Julian Brodsky decided that he, too, wanted in on the action. Brodsky’s past clients included a couple of CATV systems in Pennsylvania, and he considered cable to be “the greatest business in the world.” Roberts wasn’t too sure about adding yet another body to the cramped headquarters, but Brodsky showed up two weeks later with his own card table and chair, and the irresistible news that by putting him on staff Roberts would save two-thirds of the fee that he had been paying Brodsky’s employer for the accountant’s time. “That was the clincher,” says Roberts.
Brodsky had a good gut feeling about his decision: “I thought that Ralph was a terrific person and a terrific businessman, so that was encouraging, coupled with the fact that I had this fond spot for community antenna television. I thought it was a growth industry in that so many parts of the country were unwired. At the time we did this there may have been 600,000 subscribers in the whole country, something like that. It wasn’t yet a million. The business was great because it had so many nice tax attributes. And because of the recurring nature of the income, it lent itself to lots of financing techniques.”
Roberts had no way of knowing it at the time, but he had just assembled a management team destined to thrive for more than 30 years. “They were all three different personalities,” notes Bern Gallagher, who once served as the company’s treasurer. “Dan was an operating guy and worried about everything. Julian was a financial guy and everything had to be proven to him. And Ralph was the visionary.”
“Dan and I were very close,” says Brodsky. “But in business, we were always on the opposite sides of arguments. The genius of Ralph is that he managed, out of that crucible, to get the best possible decisions and the best possible results. There was never any second-guessing once the decision was made. We would argue until we were unanimous.”
Initially, Roberts had no plans to add to his original investment, but the deal brought with it two unbuilt cable franchises, in Laurel and West Point, Mississippi. As he began to build the systems, Roberts got an education in some of cable’s more serendipitous aspects. The Laurel system suffered outages during every rainstorm, thanks to water seeping into the cable. When Aaron, working on location, asked for help with the problem from engineers familiar with the system, he was handed a sheaf of bamboo rods and instructed to “beat the hell out of every inch of the cable.” Fortunately, a new type of coaxial cable soon took care of the problem.
In spite of such vexations, Roberts and his team could not resist some new opportunities, especially those handed to them on a silver platter. One acquisition—Meridian, Mississippi—came out of a fortuitous encounter at the Queen of Hearts roadhouse, halfway between Tupelo and Laurel. Roberts struck up a friendly conversation with a fellow craps player who mentioned that the local cable franchise was going to be awarded the next day to a man who didn’t particularly want it. Roberts dropped by the winner’s office to introduce himself and inquire if the franchise might be for sale.
“Mr. Roberts,” the man replied, “everything I have is for sale, including them,” pointing to a picture of his wife and two daughters.
“So we made a deal. I bought it. The franchise, not the family,” quips Roberts.
The local political shenanigans that ensued taught Roberts the value of having a “good old boy” on his side: “As part of the requirements of the Meridian franchise, we had to post a $100,000 performance bond by noon, one week after the award. The franchise required the cable operator to deliver service to 90 percent of the town’s residents who asked for it, within 12 months. We would forfeit the bond if we didn’t meet this condition. About two days before the deadline for the transfer, we were horrified to receive a telegram from the casualty company canceling the bond. I called them immediately and asked what the trouble was. Their senior vice president told me that his agent in Meridian had called him to let him know that the city fathers were sure we could never meet the 90 percent requirement. In fact, they already had plans to spend the forfeited $100,000 on new voting machines.
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