A cofounder, president, and CEO of the Comcast cable empire, Daniel Aaron emigrated with his family to the United States in 1937.
In 1955 Daniel Aaron (born January 27, 1926 in Gießen, Germany; died February 20, 2003 in Philadelphia, PA), a business reporter for the Philadelphia Bulletin, became curious about Jerrold Electronics, a Center City concern that sold coaxial cable and signal repeater technology to the infant cable television industry. Aaron wrote an article on the company’s entry into the cable franchise business with the purchase of a cable television company in Dubuque, Iowa, which caught the eye of Milton Shapp, Jerrold’s president and the future governor of Pennsylvania. Shapp liked the article so muchhe hired the twenty-seven-year-old Wharton School graduate to author Jerrold’s annual reports, a part-time job that launched a thirty-five year career as a Jerrold employee and eventual cofounder, president, and CEO of the Comcast cable empire. Aaron’s rise to a position ofindustry leadership is one of the more unlikely stories in the annals of American business.
Daniel Aaron emigrated with his family to the United States in 1937, two years before the outbreak of World War II. But years of anti-Semitism and state persecution, and the stresses of exile led to the tragic double suicide of his parents within two years of the family’s arrival in New York—a life-altering trauma which forced Daniel, in his own words, to walk “in the shadow of the Holocaust.” Passed along with his brother through a series of foster homes, he survived thanks to the Pennsylvania region’s Jewish relief agencies which eventually placed him and his brother with a supportive foster family and gave him numerous leadership opportunities in their network of summer camps and boys clubs.
Self-discipline, organizational talent, and a management style that he himself characterized as gemütlich (roughly translatable as “unhurried”) served Aaron well not only as a youth leader, but also as a student at Temple University in the 1940s and as a member of army intelligence in Germany at the end of World War II. Aaron in his years at Comcast was in charge of setting up and integrating individual cable franchises that made Comcast the nation’s fourth largest multiple system operator (MSO) at the time of his retirement. While one partner, Ralph Roberts, orchestrated the purchase of the mom and pop cable companies and the third member of this management troika, Julian Brodsky, found financing, Aaron traveled around the country hiring operations managers, smoothing over relations with local business leaders and politicians, and going door to door to market television-on-a-wire. Expert at the logistics of running a cable operation from the ground up, and with a reputation as a “Mr. Fix-it,” Aaron also rose through the ranks of the National Cable Television Association, the industry’s lobbying arm, and became its chairman in 1977. More than twenty years after he stepped down from day-to-day management at Comcast, the company he helped create in a 700 square foot office in Bala Cynwyd, Pennsylvania, ranked 81st on the Forbes Global 2000 list (as of April 2012).
Diagnosed with Parkinson’s disease in the early 1980s, Daniel Aaron became a leading philanthropist in medical research and rehabilitation in the Philadelphia area. Through his own treatment, Aaron got to know the medical community and charities that focused on research into the cause, treatment, and cure of Parkinson’s and, in the 1980s, founded the Greater Philadelphia Parkinson’s Council. After his retirement he expanded his efforts on behalf of Parkinson’s patients using his social and business contacts to create the Dan Aaron Parkinson’s Disease Foundation, and ultimately the Dan Aaron Parkinson’s Rehabilitation Center not long before his death in 2003.
Daniel Aaron was born on January 27, 1926, into a Jewish family in Gießen, a university town in the state of Hesse with a population of roughly 33,000 inhabitants at the time. His father, Albert, was born on February 13, 1886, in Bobenhausen near Frankfurt. His grandfather, also called Daniel Aaron, had been a businessman. Albert Aaron studied law and became a lawyer who dealt primarily with contractual and real estate cases for members of the Gießen farming community. In addition to a thriving practice which he ran from his large and comfortable home on Bahnhofstrasse 46 in the center of the city, Dr. Albert Aaron also served as a state representative from Hesse for the Social Democratic Party. Daniel Aaron called him an “archetypal German intellectual who ran his family with rigid discipline and unquestioned authority.” His mother, Lili (neé Bamberger, born October 28, 1889; wed July 14, 1924), on the other hand, was remembered fondly as a gentle woman who ran the household and took good care of her children.” Albert Aaron’s political activities made the family early targets of the Nazi regime. Anti-Semitism also stalked Daniel and his younger brother Franz (born December 7, 1928) at their elementary school, the Goetheschule. Singled out as non-Aryan by school officials, Aaron remembered enduring relentless taunts at school and on his way home, and recalled one incident in which “a heavily booted, common worker, who, sporting a swastika armband, followed me home from school one day and with every step I took, kicked me in the rear.”
When the Nazis arrested and briefly interned Albert Aaron in the spring of 1937, the family began to make plans for immediate emigration to the United States. Aaron’s aunt, Bertha Katz of Philadelphia, sponsored the family, and with the elder Aaron’s release from custody and the surrender of the family’s assets to the authorities, the Aarons sailed from Antwerp on the Königstein and arrived in New York City on September 24, 1937. They would have their German citizenship revoked a year later on August 16, 1938. As Aaron tells it, the family managed to stabilize their fortunes temporarily thanks to the 10,000 Reichsmark his father secreted behind the lens of a Leica camera. They found temporary refuge with relatives in the Bronx, and in his memoir Daniel fondly remembers being welcomed with open arms by the thriving Jewish community there.  The family then moved to Kew Gardens, Queens—“[i]t was in Kew Gardens . . . that Frank and I started our Americanization”—where Daniel picked up English slang and the ins and outs of American sports culture on the city’s streets. His parents, on the other hand, felt their fall in status acutely as they struggled to learn English and Albert was unable to find even the most menial of jobs. The circumstances overwhelmed Daniel’s mother and then his father in quick succession in the summer of 1939. Daniel remembers being woken in the night and summoned to the director’s office while at YMCA camp on Staten Island, where he was informed that his mother had committed suicide. Unable to take care of the boys, Aaron’s father sent them back to camp, and three weeks later took his own life. “Physically numb and mentally drained, confused and incoherent,” Aaron closed himself off emotionally and resolved that he and his brother would survive this cataclysm.
Both boys lasted a month in the Philadelphia home of their aunt, Bertha Katz, who, at sixty, did not have the stamina or resources to care for them long term. Unable to gain admission to the Foster Home for Hebrew Orphans, and struggling with a series of difficult foster placements, the children were eventually taken in by Rabbi Charles Mantinband and his wife Anna in Williamsport, Pennsylvania, in March 1940. The Mantinbands provided stability for Aaron. He began to do well in school, worked as a caddy at the local Jewish country club, and continued his affiliation with the YMCA camp system, becoming president of the Williamsport chapter in 1941. This small season of security ended in the fall of 1941 when the Jewish Relief Board recruited Rabbi Mantinband to run the U.S.O. at the Aberdeen Proving Ground in Maryland. The loss of the Mantinband home further scarred Aaron. He returned to the Philadelphia foster care system until his first year at Temple University in 1943. Old enough to find regular work, he applied to the S.G.F. Vacation Camp, an affiliate of the Philadelphia Federation of Jewish Agencies geared towards underprivileged Jewish boys, and worked as a camp counselor. Aaron recalled that the camp earned all his loyalty and became his “fraternity” and “alumni association.” He remained at the camp for six years, first as a counselor, then director, board member, and finally the organization’s president at twenty-six.
After a year at Temple, Aaron was called up for military service in 1944. An earlier attempt to join the army and enter officer candidate school ended in frustration when he was rejected in 1943 because of his status as a resident alien. Aaron, a private first class assigned to the 8th Armored Division (The Thundering Herd), participated in the crossing of the Rhine in February and March of 1945. His journals of his service describe the sounds of “ack ack” artillery and the arc of tracer fire, but he does not dwell on his own combat role, preferring to ascribe the fighting to “our troops.” Military records of the 58th Armored Infantry Battalion, however, note that Aaron earned the combat infantry badge. And while reticent about his personal valor and the importance of the 8th Armored Division, press reports at the time confirmed that other armies made “whirlwind progress” across hastily erected pontoon bridges while Aaron and his comrades in arms were “being held down by the stiffest resistance encountered on the east bank of the Rhine.” Reassigned to military intelligence by war’s end, Aaron used his native fluency in German to help establish military governments.
After the war, he returned to Temple University on the GI Bill and graduated witha degree in economics in 1950. Two years earlier, on December 26, 1948, he had married fellow Temple student Geraldine “Gerrie” Stone. The match met with considerable opposition form the bride’s parents. Her father, Edward, was a well-regarded lawyer and journalist who did not think highly of the prospects of a German refugee. Aaron recounts that he was so poor that he had to borrow $50 from his father-in-law to pay the honorarium to the rabbi at his wedding. Nevertheless, over time, Aaron credits his wife and her family for providing the grounding he sorely lacked after his parents’ deaths, and he counted his parents-in-law as not only good friends but surrogate parents. Dan and Gerrie had five children: Erika (born 1953), James (born 1954), Kenneth (born 1956), Judson (born 1958), and Alison (born 1961). They first set up house in Levittown, Pennsylvania, and later outside Philadelphia. Gerrie provided indispensable support as her husband’s business endeavors frequently took him away from home for days at a time and she was left to care for their multiple small children.
Unable to find meaningful employment with a bachelor’s degree, Aaron got a master’s in economics and journalism from the Wharton School at the University of Pennsylvania. While at Wharton he sought out the mentorship of school economist George W. Taylor, who had served as Roosevelt’s head of the War Labor Board. Not only did Taylor help secure Aaron’s first job as a reporter for the Philadelphia Bulletin, but he impressed upon Aaron the idea of equitable settlements between management and labor and the workers’ right to strike. Aaron respected Taylor for having the intellectual courage to promote economics that “dealt with the fair distribution of income…based on the philosophies of Karl Marx and Friedrich Engels, Immanuel Kant and Georg Hegel.”
The Early Days of Cable: Daniel Aaron, Milton Shapp, and Jerrold Electronics
Today nostalgia channels celebrate classic television from the 1950s in endless rerun, but give no inkling of the limited viewing options that confronted the viewer at the start of the television age. Lucky city dwellers in major media markets could count on receiving the “Big Three”—CBS, NBC, and ABC—but even as little as sixty miles from the urban core, households struggled to pull in more than one or two signals from the major broadcasters. The worst off were communities tucked into valleys which no signal could penetrate. The Federal Communications Commission (FCC) denied developers the licenses to start up local stations to meet this pent-up demand for clear signal until a system for selling off valuable ultra-high frequency (UHF) and very high frequency (VHF) could be established. The FCC “freeze” of 1948-1952 forced some to take matters into their own hands. Leroy Ed Parsons, an engineer living in Oregon, called up Radio and Electronics Company of Astoria, Queens, and used their coaxial cable, splitters, and signal amplifiers to connect to a large hill-top antenna in early 1949. He thus brought down Seattle programming to his entire neighborhood. Another amateur community antennae television operator, Robert Tarlton of northeast Pennsylvania, turned a scheme to bring CATV (Community Antenna Television)-quality picture to his television showroom into the first for-profit cable franchise, Panther Valley Television, in 1950/51.
The most dogged entrepreneur in the new market for community antennae television was Milton Shapp. An electrical engineer by training, Shapp founded Jerrold Electronics in Philadelphia in 1946, and earned his money selling the Jerrold Electronics Mul-TV antenna. A box with a signal booster, and multiple coaxial cable jacks, the Jerrold device made it possible to wire an entire apartment building to one roof-mounted antenna. When one of Jerrold’s engineers, Don Kirk, showed Shapp an amplifier he developed that could push a signal even further—through thousands of feet of cable and out into entire neighborhoods and towns—Shapp used Kirk’s invention to dominate this new start-up industry. Jerrold Electronics equipment soon appeared on telephone poles across the country. To keep out rivals like Radio Corporation of America (RCA), Shapp signed the early CATV systems to exclusive service contracts which provided in-house service from a cadre of Jerrold engineers who custom built entire CATV systems for their clients. Almost immediately Shapp partnered with local businessmen like Panther Valley’s Bob Tarlton, buying an ownership stake in the systems that used Jerrold equipment. During the early 1950s, Shapp scoured the country on the lookout for under-served television markets and masterminded his plan to build or buy cable companies from his office on Lehigh Avenue in Center City Philadelphia.
When Daniel Aaron met Milton Shapp in 1955, his company had built and owned a piece of 190 of the nation’s 450 cable systems from Williamsport, Pennsylvania, and Tupelo, Mississippi, to Laguna Beach and the San Fernando Valley in California. Aaron, the business editor for the Philadelphia Bulletin, had come to Shapp looking for an interview for an article he was writing on Jerrold’s acquisition of a cable franchise in Dubuque, Iowa. He was impressed with Shapp’s business model as he continued to attract capital and clients to a market given up for dead after the FCC lifted its bandwidth freeze in 1952. Likewise, Shapp found Aaron not only a good writer but a quick study. He did not forget the excellent publicity Aaron’s March 1955 Philadelphia Bulletin article brought Jerrold and eight months later, called Aaron to offer him a part-time position writing for Jerrold Electronics.
Aaron’s first assignment was to produce the company’s annual report. Soon he was put in charge of marketing and promotions for Jerrold Electronics. Shapp barnstormed the country holding press conferences on the virtues of cable and spoke routinely before Congress to educate the government about CATV. As Aaron himself saw it, “If anything, my job was to help him [Shapp] keep his enthusiasm in check.” Shapp’s eccentric but charismatic performances encouraged investment houses like Goldman Sachs to continue to invest in Jerrold Electronics, and to take an ownership stake in each new franchise. He was also an expert at convincing city councils to choose Jerrold over the local competition. While rivals objected to contracts awarded without competitive bidding, city governments like the one in Logansport, Indiana, chose Jerrold based solely on a proposal conducted “with an educational advertising campaign.” Often town fathers were allowed to invest in a Jerrold system. Shapp would then typically keep a 10 percent to 35 percent ownership share and use this type of leverage to expand into more markets.
Aaron’s responsibilities expanded along with the size of Jerrold’s operations and he was appointed president of the cable division in 1957. Daniel Aaron now managed the acquisition of mom and pop franchises for Jerrold’s multiple systems operation, or the construction of new cable operations from the ground up. Through a process of trial and error, he became an expert in siting antennae, stringing cable, mounting signal boosters, negotiating bond agreements with local municipalities, hiring operations managers, and creating marketing strategies to meet subscription targets. In the case of the 1,700 subscriber system in Tupelo, Mississippi, he and the operations manager even brainstormed home-grown content for the new five-channel service that included a “weather channel” with a live feed of a barometer, a “24 hour news channel” of no more than a fixed camera on an Associated Press ticker, and a “music channel” where a goldfish turned in syncopation with background music. Aaron argues that the “mystique” that surrounded early television allowed him to use what amounted to stunts to boost subscription targets. By the early 1960s, Aaron had become highly knowledgeable in the cable television business.
But he reached a ceiling at Jerrold Electronics by 1962. More and more of Jerrold’s business model involved the creation of “turnkey” cable franchises in which Jerrold found financing, a construction crew and a management staff and turned the operation over to a third party for a fee. Milton Shapp’s heart seemed to have gone out of the business as he turned his attention to a life in electoral politics—he was to become governor of Pennsylvania from 1971 to 1979—and Aaron turned down an offer to join Shapp on his rise to the governor’s mansion. Instead, he wanted to try his hand as a cable television broker.
The Comcast Years 1963-1980
In 1963, Aaron and his client, Warren “Pete” Musser, were unable to unload Musser’s cable franchise in Tupelo, Mississippi. Aaron understood the Tupelo market better than anyone, and realized that northerners with money to invest had no interest in a cable company in the heart of Dixie at the height of the Civil Rights Movement. As Ralph Roberts, one of the three founders of Comcast recalled: “One day [Dan Aaron] and Pete were walking down the street and Pete said to Dan, ‘Here comes our fish. He just sold his business and he’s got a lot of money.’ So between the two of them they sold me Tupelo, Mississippi, and that was the beginning of our introduction to the cable business.” Roberts, a former advertising executive turned venture capitalist, knew nothing of the cable television business and he agreed to the sale on the condition Aaron would run the Tupelo franchise. On June 28, 1963, American Cable Systems, Inc., was founded by Ralph Roberts, Daniel Aaron and Julian Brodsky, who joined the business as its only accountant (the name would be changed to Comcast Corporation in 1969). Unbeknownst to them at the time, the three men would make a successful team for the next thirty years: “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.”
Julian Brodsky observed that the cable industry of the 1950s had been run by the engineers who knew how to cobble together the new technology, but as the equipment and installation became standardized, the 1960s belonged to the “bean counters.” Cable systems were extremely expensive on the front end, with huge capital outlays for equipment and infrastructure. A good accountant, ideally one with a deep understanding of the ins and outs of venture funding, could wring ever tighter profit margins from a competitive business model based on constant expansion and increasing economies of scale. The age of mom and pop cable operations was ending and only a handful of companies were capable of surviving the transition to multiple system operators. In this regard, Comcast was extremely fortunate. In addition to the Wharton-trained Brodsky and Aaron, founder Ralph Roberts knew the bankers of Philadelphia well from his years running his men’s belt company on the city’s South Side. While competitors struggled to find investors willing to wait a decade or more for a return on their investment, Roberts drew his capital from long-time partners like Philadelphia National Bank, and could go back to them over and over again to ask for more funding or more time. Everyone in the industry knew that if a company could weather the liquidity crises of the early years as the systems were built, mature franchises with reliable subscriber revenue could in the words of Ralph Roberts, “print money.” Survival in the early days, therefore, depended on bringing in contracts at or under budget, especially when Julian Brodsky had leveraged Comcast as much as eight times its market capitalization. It fell to Daniel Aaron to make sure that the systems were built and run properly. This meant that he had to get back on the road and supervise the management of the Comcast franchises from the field.
Aaron’s first assignment sent him back to Mississippi, the state where he cut his teeth with Jerrold Electronics in the mid-1950s. Much had changed since his experience with the five-channel, 1,700 subscriber system in Tupelo. In addition to Tupelo, Comcast had acquired contracts for two unbuilt systems in West Point and Laurel—one hundred and seventy-five miles to the south—giving the company an early broadcast hub in the Deep South. Most of Aaron’s time was spent on U.S. Highway 45 traveling between the three operations as the supervisor of construction, operations, and marketing. Unlike the five-channel operation in Tupelo, West Point and Laurel inaugurated the use of unproven ten-channel technology, a wrinkle that almost upended the company’s first venture. Shortly after wiring the first neighborhood, complaints began to roll in about poor reception and Aaron discovered that rain was leaking into the coaxial cable. Soon a package arrived with the fix: a box full of sawed-off broom handles and instructions to “beat the hell out of the cables.” Aaron and his support crew succeeded in clearing the lines and installation of improved coaxial cable solved the problem.
Aaron’s experience with the ups and downs of cable technology taught him the value of hiring the best local talent he could find to run the day-to-day operations of the company’s individual cable systems. A good operations manager was responsible for system performance, fielding customer complaints, and maintaining cordial relations with town hall, which often had the last word on where cable could be hung. Ideally, good support staff could be expected to improvise and even step into the spotlight on the other side of the camera if necessary. Ralph Roberts credits Aaron as one of the greatest marketing innovators in the cable industry, once claiming Aaron “made a big success of it, so much so that we were willing to go on and buy more.” Traditionally, CATV operators introduced their product in the showrooms of local appliance dealers, but Aaron wanted to be more aggressive. He published “fake” newspapers heralding the arrival of cable in certain neighborhoods; brought in school field trips to visit the system antenna and broadcast the visit for parents, and gave away clocks from a local jeweler to new subscribers. In the end, Aaron became the first to introduce door-to-door sales. Creative financing and marketing made Comcast profitable in the 1960s, but, in the end, salesmanship could not compensate for the industry’s principal liability: it carried someone else’s signal and content and offered no content of its own. Once the under-served markets were mined out, the industry had nowhere else to go.
The Cable Revolution of the 1970s: Superstations and Satellites
The breakthrough arrived in the form of a new kind of cable television entrepreneur. In 1969, billboard advertising scion Ted Turner purchased a worthless UHF station in his hometown of Atlanta. Counterprogramming cartoons and “Honeymooners” reruns against the local evening news, Turner began to turn a profit on his new station, Channel 17. In 1972 he added Atlanta Braves broadcasts to the lineup and offered it via microwave relay to the TelePrompTer cable system and its franchises throughout the southeast. When challenged by local broadcasters for entering their markets with his Atlanta station he simply answered “if we can get our signal there, it’s our territory too.” Other regional stations—WPIX in New York, WGN in Chicago, and WSBK in Boston—duplicated Turner’s broadcast model and began distributing content to regional cable providers. The era of the cable “superstation” had arrived, and for the first time a cable subscription promised more viewing options than there were to be had in many of America’s largest cities. Attempts to block Turner’s rechristened WTBS and the other superstations as predatory “common carriers” failed when the stations sold the microwave relays and transmission equipment to third parties like RCA, leased it all back and still kept control of broadcast content. This divestment satisfied regulators who also ruled that the increased choices that superstations promised were in the best interest of the consumer.
As Ted Turner was pioneering the superstation concept, Gerald Levin, the future head of Time Warner, Inc., was putting the final touches on cable television’s content revolution. Hired by the Time Life company to oversee their video-based tourist guide, Time Live broadcast in the hotels of southern Manhattan, Levin added conventional viewing options like movies and sporting events to this closed feed for the hospitality industry’s business clientele. He convinced his bosses at Time Live that this type of proprietary cable entertainment had a potential far greater than a few thousand rooms in the hotel industry. In November 1972 he got the green light to transmit his creation, Home Box Office, on a microwave feed to a cable system in Wilkes Barre, Pennsylvania. Years before the arrival of “The Sopranos” and “The Wire,” HBO showed sports events and a handful of first-run movies in heavy rotation, and championed a business model that sold the service to customers for a set monthly rate.
Ironically, the first flat-fee movie channel belonged to Jerrold Electronics and debuted in Bartlesville, Oklahoma, fifteen years earlier in 1957. Partnering with a local movie theater and cable owner Henry Griffing, Shapp and Aaron offered the booming oil town on the southern plains the chance to view popular, new releases like “The Pajama Game” for $9.50 per month. Successful at first, Jerrold T.V. could not survive the onslaught of local television broadcasters who buried the new service with their own lineup of recent releases and sports programming. Aaron came away from the experience convinced that subscription movie channels and specialty programming would eventually out-compete local broadcasts in both quantity and quality. To capture more customers and raise revenues for improved product, which would in turn perpetuate a virtuous cycle of more customers and profit, HBO and the rest of the industry looked to the skies.
As early as 1962 with the launch of the government’s Telstar satellite, cable executives dreamed of beaming their signals to a transponder some twenty-two thousand miles above the equator and then back to all their customers simultaneously. RCA and Hughes Corporation created this hoped-for satellite infrastructure by the late 1960s; it was up to the government to make the final decision to allow commercial broadcasts on systems like Western Union’s Comsat. CBS, NBC, and ABC joined their rivals in the cable industry to push for the adoption of satellite as the television transmission standard, since the networks’ uplinks to their affiliates through earth-bound options like those offered by AT&T were costly. After three years of lobbying, testimony, and investigations, the FCC issued its “Open Skies” ruling in June, 1972, and agreed in principal to the commercial use of space communications.
It was Daniel Aaron and Comcast who put the finishing touches on the new cable viewing paradigm. While HBO split half its subscription revenue with its cable partners in the early days, Aaron believed charging for the service as a stand-alone product was not the best business model. He reasoned that the customer would be far more likely to purchase HBO if it were bundled along with offerings like Turner’s Cable News Network and the new 24-hour sports channel, ESPN. Packaging channels together prevented the churn in membership when the viewer inevitably grew bored and canceled after half a year. A tiered platform was also likely to pull in an entire household with a selection of lifestyle programming. Comcast was the first multiple system operator to offer the tiered pricing model to its Flint, Michigan, subscribers in the late 1970s, and the experiment was an unqualified success. Aaron believed the only thing that might thwart cable’s dominance of the national television market was the FCC.
As confident as Aaron was about the future for Comcast as a player in the national cable market, innovations in satellite technology and the rise of the superstation and cable-oriented content like HBO represented the end of the mom and pop franchises and the pioneer era of the industry. During the 1950s and 1960s, CATV was literally little more than television on a wire. It was the kind of small-time operation that was founded by hobbyists who knew their way around coaxial cable and signal boosters. Franchise capitalization costs were typically between $22,000 and $110,000, and hook-up fees of as much as $200 a household allowed companies like Bob Tarlton’s Panther Cable to compete with little in the way of investment capital. In this new era, tens of millions of dollars were required to obtain satellite transponders, build receiving equipment on the ground, and buy content from a growing menu of providers like HBO, Cinemax, and ESPN. Only those corporations like Comcast that had diversified into different geographic regions and built large multiple systems operations in the 1960s had the resources or the reach to compete in the 1970s and 1980s.
Daniel Aaron, President of the National Cable Television Association
The movie industry, CBS, ABC, NBC, and the National Association of Broadcasters never liked cable, but they tolerated it in the early days expecting it to disappear when the FCC ended the bandwidth freeze of 1948 and new stations introduced free signal to push out CATV. After it became clear that the cable industry was in fact growing after 1952, the fight moved to Washington and the Federal Communications Commission. At issue was whether cable television was a simple conduit for existing service (nothing more than a collection of hardware legally no different than a TV-top pair of rabbit ears) or if, in fact, it provided a unique “communicative service.” If the FCC were to find for the broadcasters and declare CATV a service provider, the infant industry would be subject to a host of penalties: an 8 percent excise tax, which would cripple capital investment, as well as the imposition of a fee to be paid to broadcast television for carrying their signal. Most frightening of all for cable operators, a ruling that found CATV to be a new type of service provider meant that intellectual property lawyers would descend on cable offices demanding royalties for copyrighted content from the major networks and the movie industry. To head off the FCC, cable providers formed the National Community Television Association in 1951, and found relief at the hand of Eisenhower regulatory officials. FCC Chairman John Doerfer agreed with the broadcasters that cable disrupted the local television market and siphoned off ad revenue, but his free market orientation carried the day and, in April of 1958, he convinced the commission to rule that delivery of signal by wire did not meet the definition of broadcaster and, therefore, the FCC had no jurisdiction over the cable industry.
Failure with regulators in the executive branch shifted the prospect of regulation and oversight of CATV to Congress. Senator John Pastore (R-RI) tried to satisfy both broadcasters and CATV owners with a compromise bill. Introduced in 1959, Pastore’s bill would require CATV to carry local broadcast content with a “non-duplication” clause that would prevent a rival station on the CATV system from showing the same program. In return, the bill did not grant property rights to re-broadcast content and shielded CATV system owners from royalty fees. When cable industry leaders like Milton Shapp came out against the bill, fearing the “must carry” clause, Daniel Aaron became the architect of the bill’s defeat. Shapp asked Aaron to organize the opposition, and Aaron set up a war room in a cable-friendly senator’s office and kept a running tally of how he thought the vote would turn out. He also sent telegrams to every member of the NCTA to come to Washington personally and go to their legislators’ offices to speak against the bill. “As a result, the long corridors were clogged with cable operators trying to find their way to their senator’s offices. It was complete mayhem, but perhaps the confusion convinced the senators that these were truly local constituents.” In the end, the bill was defeated by one vote and the industry avoided congressional oversight for the next eleven years.
However, a change in the regulatory climate in the 1960s under the Johnson administration resurrected the perceived threat from the FCC. In 1966, the commission reversed its 1958 finding and declared that cable posed an economic threat to broadcasting and, furthermore, that the FCC reserved the right to regulate cable under the Communications Act of 1934. The commission immediately ruled that CATV be barred indefinitely from nearly all urban markets—representing 90 percent of American homes—to prevent harm to the struggling UHF portion of the broadcast spectrum. In December 1968 the commission denied a waiver to allow CATV to operate in the one hundred largest urban markets. The one bright piece of news for the industry in a decade of regulatory defeats was the Supreme Court ruling in June 1968 that found cable to be a transmitter of signal only, not a performer of copyrighted material, and, so, not party to any intellectual property infringements or liability.
Daniel Aaron won election to the NCTA executive board in 1972. He defeated an executive from the Time Life Corporation largely due to his reputation among smaller operators as a long-time cable hand who knew how to build and run a cable franchise from the ground up, and who, therefore, understood the concerns of both the mom and pop businesses as well as the larger multiple system operators like Comcast, Storer Cable, and ITC. Aaron believed his role on the NCTA was to promote the acceptance of the cable business as the peer of the broadcast industry and find a way to allow cable operators to compete in the national television market. He measured success as the extent to which the FCC and Congress abandoned their opposition to unregulated access to satellite broadcast, and lifted the restrictions banning cable from urban television markets. In 1977, he was elected chairman of the NCTA and essentially left Comcast for a year spent delivering speeches to convention halls filled with association members and franchise owners, lobbying the FCC, and providing depositions and testimony to Congress on the state of the industry. His principal achievements were twofold: winning passage of the Wirth Bill (H.R. 7442), which was signed into law in February 1978 and created nationwide standards for pole-attachment for cable carriers, and paving the way for the Communications Act of 1984 which streamlined oversight and regulation of the cable industry. As Aaron said in his congressional testimony, he and the NCTA proposed “that local or state authorities still be permitted to choose who will provide service to the community, this choice would be subject to a federal requirement that due process and fair treatment be provided in the initial franchise award as well as in any renewal.” Creating federal guidelines that stipulated how franchises would be awarded while letting local governments control who received franchise licenses let large operators like Comcast into the urban market for the first time, and deregulated the amount they could charge their new customers.
Aaron refused a second term at NCTA, as he recognized that he had succeeded in raising the prestige of the industry as its chief lobbyist. “You can see it even in the Washington salons, in the questions asked of industry witnesses by senators, by congressmen, by their staffs. For the first time, you see respect for the industry’s accomplishments, an awe for its potential.” Under Charles D. Ferris, President Carter’s FCC chairman, rules against simultaneous broadcast of content, barriers to long distance signal carriage, and concerns over syndication rights were all swept aside, and as the industry entered the 1980s, Aaron’s advocacy and the general climate of deregulation heralded cable television’s golden age.
The Comcast Years 1980-1991
Between 1980 and 1985 Comcast tripled the number of subscribers from one hundred and sixty thousand to half a million. At the end of the century—as the world’s third largest cable company—it served four million customers. As Aaron, Roberts, and Brodsky predicted, the end of regulatory barriers and the use of satellite relay to receiver dishes transformed how viewers consumed television content and effaced the semantic difference between watching cable television and watching “regular” television. Fiber optic technology and its ability to provide digital signal compression promised to raise the viewing options from fifty channels to five hundred and increased bandwidth came with the possibility of interactive cable, high definition clarity, and the eventual introduction of high speed cable.
Competing in this new service industry required a new approach to pay for increasingly complicated and expensive upgrades and infrastructure improvements. In the 1960s, a call from Ralph Roberts to his bank could get another line of credit, or extend the terms of the repayment of a loan another two or three years. Each addition to the company—Laurel, Meridian, Sarasota, Flint—was financed independently so that no one deal had the power to disrupt the operation of sister franchises or wreak havoc on the company’s long term strategy. Discrete, long term investment kept growth steady and predictable. By the early 1970s, bidding on a single satellite transponder for a new satellite might cost as much as $14.4 million, 120 times Ralph Robert’s original 1963 investment of $100,000. The only way to secure this kind of financing was to take the company public, and in 1972, 430,000 shares were issued at $7 a share.
Like many telecom companies in this period, however, Comcast issued preferred stock; the investor got their equity but not voting rights. This allowed the Roberts family to keep control of the company while raising the necessary capital, and it made certain that men like Daniel Aaron use their expertise to maintain investments in long term growth. Perhaps most importantly, as Julian Brodsky notes, it protected the company from hostile takeover during a period when the company used the junk bond market of the 1980s to leverage their most ambitious projects. Chief among them was the penetration of the urban cable markets. Comcast as a hometown company had begun negotiating for a Philadelphia contract in the early 1960s. By 1984 the city council and Mayor Wilson Goode approved Comcast as one of four providers of cable service in the city and the first customer went on line in 1986.
Comcast with Daniel Aaron as president of cable operations continued to innovate in the 1980s and 1990s, becoming the first cable company to bring fiber optics to its customers, and to venture into the content business with the founding of the QVC home shopping network. In 1987, Aaron received NCTA’s Distinguished Vanguard Award for Leadership, a prestigious national recognition of “the best and the brightest in the cable and telecommunications industry leadership. . .whose leadership and foresight have placed the cable industry in the vanguard of American business. The individuals recognized by these awards symbolize the highest level of excellence reached by leaders of [the] industry.” The Comcast company eventually captured the entire Philadelphia market and when Daniel Aaron finally stepped down as vice chairman of the cable division in 1991 (he remained on the board of directors of Comcast until 1997), he and his partners became the first entrepreneurs in the history of American commerce to take their business from startup to a Forbes 50 corporation. In 2002, Aaron was inducted into the Cable Hall of Fame, based on his “outstanding dedication to and impact on the cable industry.”
Shortly after his retirement from Comcast in 1991, Daniel Aaron and his wife, Gerrie, took a trip to Gießen. Contacted by a German professor in 1978 looking for information about Aaron’s family, Aaron had decided to return to his birthplace. While he keenly felt the loss of Gießen’s once vibrant Jewish community and a hollow feeling in its absence, Aaron was able to reconnect with a number of childhood friends. He found some measure of closure as he visited his childhood home and school.
When he was diagnosed in 1980 in his early fifties with an aggressive form of Parkinson’s disease, Aaron’s philanthropic impulses turned toward engagement with the diagnosis, treatment, and eventual cure for the disease. With the help of Comcast’s director of development, Abe Patlove, Aaron founded the Dan Aaron Parkinson’s Disease Foundation. He also sought out the physicians and clinicians in charge of the Parkinson’s Movement Disorders Center at the Graduate Hospital of Philadelphia, and offered to help create a board of directors to help with finances and oversight with the creation of the Greater Philadelphia Parkinson’s Council. The success of the council’s fundraising not only helped to underwrite the Movement Disorders Center, but also led to the creation of the Dan Aaron Parkinson’s Disease Foundation. Ultimately Aaron’s foundation work provided the Movement Disorders center with the funds to create a satellite rehabilitation center in 2000 named for Aaron. The first outpatient treatment center in the Philadelphia region, the Dan Aaron Parkinson’s Rehabilitation Center, has grown from one physical therapist into a center with two physical therapists, an occupational therapist, two speech therapists and an extended team of counselors, equipment specialists, and local exercise professionals. Daniel Aaron passed away in 2003 of complications from Parkinson’s, but his family still works closely with the center, and the Parkinson Council of Greater Philadelphia established the “Danny Award” in Aaron’s honor in 2008.
Daniel Aaron once claimed that the secret of Comcast’s success could be best understood if one imagined that the business was a car with Ralph Roberts steering, Julian Brodsky with his foot on the gas, and he himself with his foot on the brake. For while Roberts drove the company to enter ever more television markets, and Julian Brodsky found the financing to fuel this expansion, it was Aaron who cautiously made certain that the pieces fit and that the parts were well integrated into the nationwide system that is today the largest cable company in the world. Beginning in Comcast’s earliest days, Aaron hired the local management teams; did the technical troubleshooting; created early, albeit primitive, content for new channels; and, most importantly in Ralph Roberts’ estimation, pioneered the sales and marketing of cable subscriptions through promotions and door-to-door marketing. Aaron made certain, after taking the main chance in joining the fledgling cable business, that Comcast’s growth was deliberate and thoughtful.
A patient, team-oriented approach undoubtedly emerged from Aaron’s experience growing up as both a political refugee and orphan. Not only did the Jewish relief services of Philadelphia and the greater Pennsylvania Jewish community offer him and his brother foster homes, but they provided Aaron with the discipline and structure that he keenly wanted but had been deprived of with the suicide of his parents. First as a caddy at the Jewish country club of Williamsport, then as a counselor at both YMCA and S.G.F. youth camps, Aaron worked his way up to leadership positions (and maintained an influential role in the S.G.F. program well into his twenties). These experiences served him well as he made his way through the ranks of the lobbying arm of the cable industry. Aaron served on the National Cable Television Association board first as chairman of the committee for the future of cable television, then eventually winning election as the governing body’s chairman in 1977. During his tenure, Aaron was credited by many with promoting the industry as the peer of the broadcast giants, CBS, NBC, and ABC, and pushing for the regulatory streamlining at the federal, state, and municipal levels that allowed the large cable providers to expand into urban markets and create enormous economies of scale (although some would argue not with the resulting reduction in prices that were anticipated).
While Aaron believed that the greatest obstacle to the well-being of the cable industry was, in fact, a government bent on overzealous regulation, he still maintained a basic respect for the fundamental need for some regulatory structure as well as the needs and opinions of labor (a sentiment surely born of his heritage as the son of a social democratic, German legislator). He also nurtured a lifelong interest in promoting the interests of women and minorities both on the NCTA board and at Comcast. As Aaron recounts: “Many a staff meeting would conclude with discussions concerning prejudice and other social ills of our times. These meetings were to become incubators of ideas for me as I forged my own thinking and ideology about business and inequalities in our society.” Years later as chairman of the NCTA, Aaron spearheaded an affirmative action program within the organization. He recruited Bob Johnson to run the NCTA’s lobbying related to pay cable, which helped launch Johnson’s career in the industry leading to his founding of Black Entertainment Television (BET). Aaron also made it a point of his tenure to lobby the leaders in the industry to push for the hiring of minorities for each NCTA department. He continued to play an active part in local charities his entire adult life, and when he found himself in need of care for Parkinson’s disease, he improved the treatment not only for himself but for others with the creation of the rehabilitation center that bears his name.
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