THE CITY WIRED-FOR FAILURE

IT’S OVER. No more broken promises. No more bitter arguments. After three and a half years of marriage to the city of Dallas, Warner Amex decided to throw in the towel. The divorce is final. The grounds: mental cruelty, lack of services, incompatibility. In short, irreconcilable differences.

When Warner Amex came to Dallas back in 1979 to bid on the cable franchise it eventually won, the perception of Warner as a company on the leading edge of the cable business was not unfounded. It had pioneered interactive television; Warner subscribers in Columbus, Ohio were already talking back to their television sets. And boy howdy, if those Yankees were taking that big step into the future, we would, too. Dallas would get what was rightfully hers, the best and the biggest state-of-the-art cable system in the country.

Cable TV was here, touted as the best thing since sliced bread. But the next thing you know, the bread fell-jelly side down. Customers calling for assistance were left on hold, forced to listen to elevator music. Eager thousands waiting for their happy hookup took off from work only to wait all day for servicemen who never arrived, thus dooming them to miss the entertainment event of the century for another two weeks. I know. It happened to me. And I worked there. Finally, Warner realized that it was impossible to fulfill an agreement rife with requirements too expensive to deliver. Hence the great divorce.



I STARTED WORK at Warner about two weeks before they fired up the system on January 6,1982.I was a writer for the Qube interactive shows. According to Gustave Hauser, our CEO before Drew Lewis, interactive Qube programs would “take us into a whole new era, the way television super-ceded radio.” All of us believed this in the beginning. We thought we were in on the ground floor of something really big. But it wasn’t long before we realized that we weren’t on the ground floor of anything. We were in the basement.

One of the technical marvels of Qube was that we could tell instantly how many viewers we had watching any particular show. But this was a double-edged sword; it also told us how many weren’t watching. We knew that 50,000 homes had cable-and we would work all week to crank out shows that maybe 10 people watched. Knowing that your work is being seen by tens of people isn’t exactly great for morale.

About 78 percent of the households who had cable had a Qube console, which was a necessary piece of equipment to receive the pay-per-view movies and some of the premium services. The console was attached to the television by a long, black wire, and it was used to change channels and to “touch in” on interactive shows. A computer at Warner headquarters in East Dallas kept tabs on who was watching what at any given time. Although viewers were “anonymous,” we were able to see the names and addresses of anyone tuning in.

During an interactive program, the host would pose a multiple-choice question to the viewing audience. The viewer would then pick up the console and punch in the number that corresponded to his or her answer. In a few seconds the results of the question would be processed by the computer and appear on the screen in percentage form.

On average, we might have 15 viewers watching one of our interactive shows, which cost roughly $3,000 to produce. Out of those 15 viewers, six were employees in the building. So we’re looking at something like a net viewership of nine people watching a show that cost $3,000 to produce, not taking into consideration state-of-the-art equipment or the mortgage on a million-dollar studio. We used to joke about how much easier it would be if we just took the names and addresses of the viewers off the computer and mailed each of them a check for 300 bucks. We would still have 300 left over to buy Paula Drew Fleming, our prima donna program host, a one-way ticket to Alaska.

One night at the studio we realized how thankful we would have been for nine viewers. We were doing an interactive show, and when the host asked a question, not one person responded. The computer operator confirmed that there was no error; not one of the 50,000 Qube households was responding. There was a bit of panic in the control room as the host stalled for time. Finally someone shouted, “Well, put something up there!” and the computer operator obeyed, plugging in a series of bogus numbers on the screen. At that moment George Orwell was spinning in his grave, and it was only 1982.

Despite the fact that most Qube programs had an insignificant number of viewers, we may have influenced the events of Dallas in an indirect way. On several talk shows we used to do, we invited a series of distinguished business and civic leaders to discuss topics of interest. Guests would be told they had a potential of reaching 60,000 Dallasites. We wouldn’t mention that, more than likely, only two hundredths of one percent of those 60,000 would be watching. During the show the host would ask a question. The computer would poll the audience response and the tabulated results would appear on the screen in percentage form. The guest never knew that maybe only three or four people were responding, unless the distribution of responses was too perfect. For example, if a question had three possible answers and each answer received 33 percent of the vote, the chances of each answer getting exactly 33 percent of the vote would be very small-unless, of course, there were only three people responding. A quick check of the computer would have confirmed the guest’s suspicions. Many times, just one response could drastically affect the outcome of a poll on a particular issue. Many guests left the Qube Studio wondering how they could have so grossly misread “public opinion.” I think we can safely say that the guests’ appearances probably made no significant impact on the public. I wish we could say with equal certainty that appearing on our programs had no effect on them.

The failure of interactive television was not the main reason for Warner’s demise in Dallas. But it was a symptom of bigger problems, and it showed that one of the main lures Warner used to secure the Dallas franchise was not at all what it had promised. Another problem was the wiring of the central business district downtown. After spending nearly $6 million to hook up the area, there are still no customers. But a promise is a promise, and the Cable Board was there to see that Dallas got its pound of flesh.



WHAT HAPPENED? Dallas was the perfect market. Warner was the perfect company. It seemed like the perfect marriage. What went wrong?

Despite the perception of Warner Amex as a lying, cheating, conniving group of inept businessmen, they really tried. Even the Cable Television Advisory Board, set up by the City Council to oversee the operation, is in agreement here. Cable Advisory Board chairman Joe Barta bears no ill feeling toward Warner. “Warner gave it a tremendous effort and we can’t fault them for that,” he says. Barta believes Warner’s biggest problem was its failure to capitalize on the apartment market, where roughly 50 percent of Dallas’ population resides. He also feels that, from a technical and engineering standpoint, the system was riddled with problems. And when people began calling about technical problems, in addition to installations and billing questions, Warner was swamped. When the Cable Board tried to get to the bottom of the problems, the results usually made headlines, and the negative publicity made Warner’s situation even worse.

Charles Gramlich, Warner’s general manager in Dallas, says the negative press has given Warner some heartaches, although he does not deny that Warner caused enough of its own. “Since we have stopped having negative newspaper articles-since April- we have had a net gain of 10,000 subscribers,” Gramlich says.

Gramlich is careful not to blame the Cable Board for Warner’s woes, but he says the board made things more difficult than they already were. He contends that other cities with similar cable problems haven’t had to deal with them in the public arena the way Warner was forced to.

“Even the phone company took 80 years to get their total service. It’s reasonable to expect the cable industry to take four or five years to accomplish a similar task,” Gramlich says, pointing to an 80th anniversary Bell Telephone poster hanging in his office.



ONE OF WARNER’S biggest stumbling blocks was customer service. Like any new technology, cable came with its own set of problems. Dallas was the biggest system in the country, and it would take a while to work out the bugs, especially the blips, outages and glitches awaiting the lucky few subscribers who were hooked up in the early phases. It wasn’t long before the phones started ringing off the wall at Warner, and customer service went out the window.

“It’s incredible to me that Warner never really got their act together regarding customer service,” says Ed Bark, Dallas Morning News television critic. “It seems that more than the programming or anything else, this is what really did them in. Customer service was just abysmal.”

This sentiment was echoed throughout the city. As a Warner employee, I was sought after by friends, in-laws, friends of friends, even enemies, who begged me to cut through the mess and get them service or repairs. It didn’t take long before Warner Amex was being perceived by the public as a corporate Humpty Dumpty. The whole operation seemed to be breaking apart, and no one was able to glue it all back together again. Warner’s credibility with the public was shot. The Cable Board’s patience was exhausted, as was Warner’s willingness to further invest in what turned out to be a losing proposition.

Cable Board member Al Calkin, one of Warner’s most persistent gadflies, feels that Warner’s downfall began as soon as it opened for business: “I think from the very outset, Warner Amex established an environment of deception, half-truths and so forth in dealing with the city, dealing with the Cable Board, dealing with the public. Their statement the day they went on the air, that they were living up to all their commitments of the franchise, proved to be an error from the very first day that they began the service.”

And so it went. Three and a half years of bickering back and forth. Then, after a $20-million loss in 1983 and $34 million in 1984, Warner announced in May that it had reached a tentative deal with Heritage Cablevision of Des Moines, Iowa to sell the Dallas, Farmers Branch and Mesquite franchises for $110 million.

Given the legacy of Warner Amex, why would anyone being of sound mind and body want to operate a cable system in Dallas?

“We think Dallas is a fabulous city and a great market generally,” says Jim Cownie, president of Heritage Cablevision. “It has been a promising cable television market for a number of reasons, but we think now that the system is built and now that things have settled down, there is an opportunity for Heritage, with its commitment to customer service and good management practices, to improve the situation that now exists.”

Cownie also says that because Heritage bought the system at the bargain price of $110 million, they will have $50 million or so to make a few changes. Probably the most dramatic change will be doing away with the problem-plagued Qube converter. Heritage will substitute a more user-friendly and dependable version. According to Joe King, Heritage general manager in Dallas, the switch to a new wireless converter will have a tremendous impact on the public’s perception of cable. The switchout will begin in November on a small scale; Heritage plans to deliver and install the rest of the converters to subscribers through April, when King estimates that, barring unforeseen circumstances, the switch will be completed. King believes the new converter will also reduce the number of complaints coming in because of converter failure, thus freeing up service people to deal more quickly with more serious problems. Despite the history of cable in Dallas, King remains bullish.

“I think cable can provide better TV than you can get off the air,” King says. “There’s a lot more variety and a lot more choice. And I think the economics in Dallas that make it a very vibrant and growing city also make it a good cable market.”



KING ISN’T the only optimistic party. Joe Barta, the outgoing Cable Board chairman, thinks the picture looks pretty good for Heritage.

“You’ve got 11 council members loving them, I think you’ve got 15 Cable Board members loving them, and you’ve got a whole ton of citizens who want to fall in love with them because the promise is there and they seem to be everything they say they are,” says Barta. “They’re not promising bells and whistles and magic powder. I think they’re going to succeed.”

Heritage probably will succeed. They have made a few pragmatic promises-better customer service, a cleaner television signal and the wireless converter. And that doesn’t sound like pie in the sky. If Dallas has learned anything when it comes to cable television, it’s just that: If it sounds too good to be true, it probably is.