Cable television is such a fixture of modern life that it might be easy to forget that its development from a method of delivering distant broadcast signals to a sprawling industry that has effectively subsumed the broadcast networks within it and constitutes an important distribution platform for many of Hollywood’s films was actually contested by a number of interests during the late 1960s and early 1970s. Local governments, civic organizations, the broadcast television networks and movie theatre owners all attempted at some point to influence the new medium’s growth, and perhaps even stop it outright. Obviously, these efforts were unsuccessful: according to the National Cable and Telecommunications Association, cable television companies had 46.1 million customers in 2012 [1] and satellite-based digital television services DirecTV and DISH claim approximately 33 million customers. [2] Only theatrical film exhibitors continue to fret about the continued growth of television and its impact on their livelihood, as their recent complaints over the increasingly small windows between a film’s theatrical exhibition and its release to video-on-demand services or on DVD and BluRay. [3] Most likely the current fight will end in the same way that the anti-pay television fight did: with exhibitors having to accommodate to a new business model that further minimizes their primacy in the exhibition business model.

As theatre owners find themselves in this familiar if unwanted position, it would be beneficial to look back to that previous battle – to the seven-year campaign that the primary trade organization for exhibitors, the National Association of Theatre Owners (NATO), waged to make the needs of its constituents part of the national debate on the then-burgeoning cable industry. This battle included lobbying efforts before Congress, the FCC and local city councils, as well as a public relations campaign that attempted to persuade audiences that pay television would deprive them of their right to free broadcast television. This irony of this latter argument – that television was a public good that needed protection – was not lost on exhibitors who had considered the medium their mortal enemy since its advent in the late 1940s as the nation’s preferred source of entertainment. Indeed, it would form part of the basis on which several theater owners questioned the anti-pay television battle and instead argued that NATO should encourage its members to invest in the new medium. Unable to persuade the public or legislators of the new medium’s risks, NATO shifted its focus to one of accommodation by reaching out to cable television proponents and encouraging its members to investigate cable entrepreneurship themselves or upgrade their theaters. The story of the pay television fight thus demonstrates the flexibility exhibitors needed to not only survive but expand within a rapidly changing industry.

This essay focuses first on the organization’s attempts to persuade the viewing public that pay television was a dire threat, and then turns to the internal debate about the wisdom of opposing the new medium. [4] Methodologically, it seeks to bring together media industry and exhibition studies, to position theater owners as actively involved in the larger film industry. As Thomas Schatz has noted, the corporate control of Hollywood makes “industry studies… both fundamental and necessary to the analysis of American films and filmmaking….” [5] The 1960s and 1970s are among the most important decades in American film history; during this period the attenuated remnants of the studio system began to be transformed into the current conglomerated entertainment industry. Histories of this period have focused on the structural changes to production–distribution and their impact on American film culture. For example, in his seminal piece “The New Hollywood,” Schatz traces the increasing importance of high concept films, massive opening weekends and ancillary markets to the studios’ business models over the 1970s and 1980s. [6] Jon Lewis in particular has been an active chronicler of the period, tracing the role of reduced censorship, [7] corporate machinations [8] and franchise-friendly auteurism [9] in the industry’s resurgence in the mid-1970s. These historical accounts have been augmented by the work of political economists, including Janet Wasko, [10] Paul McDonald, [11] and Eileen Meehan, [12] who have centered their research on the corporate structures and strategies that shape industrial practice at a given time.

The exhibition sector of the film industry has also been a ripe and productive subject for research, as demonstrated by the works of Douglas Gomery, [13] Kathryn Fuller-Seeley [14] and Gregory Waller, [15] among many others. [16] As I have argued elsewhere, [17] much of film exhibition scholarship has focused on the practices of local theater owners or the innovative activities of specific exhibition magnates – with the unintended result of bracketing exhibition from the rest of the film industry. While the impact of cable television’s rapid growth in the 1970s has been studied from the perspective of the television industry [18] and of the production-distribution sector of the film industry – that is, the major studios [19] – the impact that it had on the exhibition sector has not been closely examined. The collective decisions and actions taken by the exhibition sector of the industry or its representatives has not received the same level of attention as, for example, the studios’ debates about the adoption of sound technology in the late 1920s or the arbitrage of Kirk Kerkorian in the late 1960s and 1970s. [20] I intend to provide exhibition with this kind of attention, to incorporate the historical and political economic approaches of media industrial studies in order to position theater owners as dynamic and active – if not necessarily always politically successful – forces within the film industry. Such an approach expands the field of media industrial history by offering insight into how theater owners understood their role within the larger film industry and society in general, and how they fought to maintain that role by either resisting or accommodating change.

Saving Free TV
NATO formed in 1966 via the merger of two other national exhibitor organizations, the Theatre Owners of America and Allied States. TOA, which represented the largest theatrical chains in the nation, had begun an anti-pay television campaign in 1958, partnering with other regional exhibitor groups and civic organizations to fight the licensure of cable systems in specific communities. [21] NATO inherited these campaigns and paid close attention to the Federal Communication Commission’s initial, halting efforts to develop a regulatory policy for the burgeoning industry. The trade organization applauded the FCC’s claim of jurisdiction over cable television in its 1966 Second Report and Order [22] but was disappointed when, in the Fourth Report and Order of 1968, the Commission regulated what kind of programming pay cable systems could offer. Of particular concern was what came to be known as the 2–10 rule, which prevented pay television services from offering films that were more than two years but less than ten years beyond their release dates. For example, under this rule, a pay television service in 1968 could have shown Stanley Kubrick’s 2001: A Space Odyssey (1968) or The Killing (1957) but not Spartacus (1960) or Dr. Strangelove (1964). The purpose of the 2–10 rule was protect the broadcast industry, which relied on relatively recent films as an important part of its broadcast schedule. NATO was concerned that it would encourage the film studios to release their films directly to pay television and bypass theatres entirely. These fears would seem to be fulfilled when Columbia released Cactus Flower (Gene Saks 1969) to pay television less than a year after its theatrical release. Although the studio asserted that it did so for purposes of research only, [23] the quick release was an uncomfortable reminder of the studios’ decision to license films to broadcast television in the mid-1950s.

In the wake of the Fourth Report and Order NATO decided to take aggressive action against pay television in any form. At its January 1969 meeting in San Juan, Puerto Rico, the Board of Directors authorized the creation of the Pay-TV Committee (PTC). Led by Martin Newman of the Century Theatres chain, the PTC would undertake a national effort against pay television services of any kind, broadcast or cable. The committee would be funded by voluntary $50-per-theatre contributions by individual theatre owners. Newman acted quickly to drum up support among NATO members; in the January 1969 edition of the NATO News, the PTC published an article, signed by Newman and titled “Protest Now! Save Free TV!” [24] The article presented pay television as a “threat… to the future of exhibition” because it had the ability to offer to home viewers “virtually every motion picture release in this country.” The article also demonstrates what would become the PTC’s central strategy in the public pay television fight: downplaying the direct threat to the future of theatrical exhibition by connecting it to alleged infringements on the rights of all Americans, Newman asserted that unnamed legal experts had informed NATO that pay television “denies the Constitutional ‘equal access’ to millions of poor people who cannot afford Pay-TV….” Newman’s article understandably elided the question of why Americans had a Constitutional right to see Hollywood’s finest via broadcast television but not fee-based services, as well as any explanation of why broadcast television, which had been the a dire threat earlier in the decade, was now something that the nation had a legal right to. Instead, it was a call to action to exhibitors to accept the existence of one enemy and turn their efforts to preventing the growth of another.

Exhibitors were not the only members of the film industry who believed that pay television would have the greatest impact on lower and middle class Americans. The production and distribution sectors of the industry also agreed, but disagreed that the new medium constituted a threat to citizens’ right to free over-the-air broadcast service. The Screen Actors Guild went on record as believing that pay television would “supply cultural and entertainment programs desired by many citizens, without adversely affecting the present form of free television, and indeed through competition will cause free television to expand and improve programming,” [25] while Jack Valenti, the president of the Motion Picture Association of America (MPAA), made several appearances in the early 1970s to promote pay cable as “the channel for public choice” [26] or “family choice cable.” [27] In remarks before Congress, Valenti argued that theatrical exhibition was a luxury beyond the reach of “lower income families because they can’t afford to leave their homes and pay high prices for what is being shown in theaters, movie houses, concert stages and arenas.” [28] Although SAG and the MPAA both that pay television would stimulate production and thus improve their bottom lines, their primary argument in favor of pay television was one of concern for society’s unprivileged.

To hone its message that pay television would threaten those unprivileged Americans, the PTC worked several public relations firms. In April 1969, it hired Sindlinger & Company, Inc. (SCI), to conduct a telephone poll to determine how the general public felt about pay television. [29] SCI telephoned homes during April and May to inquire about their interest in a form of pay television that more closely resembles modern pay-per-view services – the offering of new movies, concerts and sporting events for a per-program fee and without commercial interruption, and delivered the results in a study, titled “Subscription or Pay-TV from the Point of View of the Public Interest,” to the Committee in December. [30] The study found that in the late spring of 1969, quite a few Americans were wary of the new medium. Only sixty three percent of respondents had heard of pay television, and of them forty percent had a negative opinion of it. Of those respondents who had not heard of pay television, nearly half of them reported a negative opinion of it once it was explained to them. Among those least interested in pay television, according to the report, were those who had college educations and were more affluent. They frequently attended both legitimate and movie theatres as well as sporting events, because “they enjoy audience participation. That is why they go out,” the report asserted. [31] Others who indicated they opposed pay television indicated they objected to having to pay for television programs they already received for free.

To develop the media contacts necessary to promulgate its warnings about pay television to the American public, the Committee contracted with the public relations firm of Martin E. Janis, Inc. in July 1969. Janis compiled the “Pay TV versus the Public” guide, which it described as “a major data source for all media contacts.” [32] As would be the case in other PTC communications, the guide downplayed the potential threat to exhibitors, addressing it on only one page out of twenty. The bulk of the guide emphasized that the nation’s most vulnerable – the elderly, impoverished and hospitalized – would feel the harshest impact if pay television were allowed to replace broadcast service. Janis attempted to interest national newsmagazine Newsweek and syndicated newspaper columnists Frank Mankiewicz and Evans & Novak in covering the topic. All declined to pursue the story, as did television talk show host David Susskind; according to Janis vice president Irving Paley, “[Susskind preferred] a somewhat more sensational topic, like wife swapping, child beating and the like.” [33] Janis was able to get the PTC’s message in newspapers such as Chicago Today, the Chicago Daily News, the Long Island Entertainer and the Washington Post. [34]

The PTC developed its own ideas about how to publicize its message and, as might be expected from members of the film industry, it resorted to showmanship to do so. On the night of March 31, 1969, New York City’s exhibitors shut off their marquee lights to present what the city would look like if it had no movie theaters; the darkened streets were intended to represent increased urban blight if movie theaters were forced to shut down because pay television services siphoned first run movies from them. At a press conference the following day, Newman emphasized that in the Committee’s view that FCC had no statutory, constitutional or moral right to make any policy that would harm theatrical exhibition – but he also stressed that the growth of pay television would “put [an] unfair bite on the public’s pocketbook.” [35] The PTC encouraged exhibitors to publicize the dangers of pay television inside their theaters as well. Beginning in February 1969, exhibitors could purchase from NATO a “Stop Pay-TV Kit” at a cost of $9.25. It featured in-lobby displays to encourage patrons to sign petitions calling on Congress to preserve broadcast television, and a color trailer to be spliced into the coming attraction reels shown before the feature film. The trailer dramatized the unhappy future American families faced if pay television were to flourish. A husband, wife and children gather in the family room to enjoy televised entertainment – but rather than simply flick the power switch, the husband must put coins in a collection box on top of the set in order to watch television. [36] (Although such a payment method seems quaint at best now, the set-top coinbox had been introduced by Telemeter during the 1950s. [37] ) The Committee also sent out fake cable bills for theaters to display to their customers, indicating charges of $60–70 a month for pay television services that offered programming already available on broadcast television. [38]

Despite such crafty appeals, the “Save Free TV” campaign failed, although the PTC could claim some small, short-term successes. Its argument that pay television could lead to urban blight was cited by Boston mayor Kevin White when he decided to slow the growth of pay television in the early 1970s, [39] and several city councils temporarily halted the introduction of pay television services after lobbying by NATO lawyers. [40] But these were temporary victories in a larger war that the PTC was losing. Throughout the 1970s, the FCC aggrandized more and more regulatory authority over cable television, stripping local governments of their ability to tailor cable services as they saw fit, [41] a pattern that continued until 1977 when a federal appeals court ruled that the FCC’s anti-siphoning rules, including the 2­–10 stipulation, were beyond its authority. [42] And although the SCI poll of spring 1969 had indicated a fair amount of skepticism about the benefits of pay television, more and more people signed up for local cable service as the industry spread throughout the 1970s. [43] By 1973, the public relations campaign of marquee messages and bogus bills had come to a halt. The PTC would occasionally tout studies that purported to demonstrate that urban communities would wither before the onslaught of drug dealing, prostitution and other street crime, [44] but it primarily focused its efforts on lobbying the FCC and Congress to include exhibitors’ interests in future cable-related polices and legislation.

The PTC’s argument that pay television threatened one of the last outposts of vibrant city life was, of course, rather disingenuous. A greater threat to urban centers was the suburbanization of American society that occurred in the 1950s and 1960s; although movie theaters certainly suffered from the flight of families to housing developments on the outskirts of town, theater owners followed them to those outskirts to erect first drive-in theatres and later multiplexes, [45] with little concern for the plight of other suffering downtown businesses. Throughout the 1950s and 1960s, to counter the decline in city life brought about by post-war white flight, cities engaged in urban renewal projects; although such projects tore down neighborhoods and displaced thousands of mostly minority families across the country, in some instances they did have positive impacts on downtown economic life.  Atlanta-based theatre owner Frederick Storey pointed to one such project when he informed Newman that urban moviegoing in his city was strong, thanks to a recently erected office tower (albeit one that stood on the site of a demolished movie theatre). “The fact is,” he wrote in a letter accompanying a contribution to the PTC, “the tax rolls were vastly improved by the office building, and pedestrian traffic in the area was greatly increased by the office workers in the building.” [46]

Storey’s sanguine attitude about business at his downtown theater reflect a disconnect between the expectations of exhibitors and the realities of the film industry in the late 1960s. As has been well established, the decade was a perilous time for Hollywood. Film studio profits were down, as the big budget spectaculars that had kept them afloat drew smaller and smaller audiences. Universal, Paramount and Warner Bros. were purchased by conglomerates MCA, Gulf + Western and Seven Arts, respectively. Movie theaters were shuttering across the country. Yet some exhibition executives were behaving rather bullishly on the industry’s future. Multiplex innovators General Cinema and National Cinemas were throwing down inexpensive cinder-block theaters next to suburban shopping malls. [47] Some urban exhibitors were having success with adapting the suburban multiplex experience, including building their own parking lots adjacent to their theaters [48] – investments with the potential to have a positive impact on urban economies overall because they facilitated further commercial traffic. The transformation into art houses or grindhouses also kept some downtown theaters in operation by targeting specific, albeit smaller, audiences. Certainly such urban renewal efforts were far from uniformly successful in restoring urban life but they do demonstrate that movie theaters were hardly the final bulwark against the collapse of urban life. However, all of the above actions by theater owners – construction in suburbs, renovations into multiplexes or specialty theaters downtown – required them to make capital investments into their properties. The Committee acted not out of civic-mindedness, concern for the nation’s underprivileged or even to protect theatrical exhibition as an important part of the cinematic experience: It challenged the growth of pay television to protect its members’ business investments. This is a far more likely explanation for the anti-pay television campaign, though the PTC itself rarely offered it. [49]

Joining Pay TV
The potential to grow their businesses despite the uncertain future of theatrical exhibition, or at least to hedge their bets on that future, fueled the debate within the Committee about whether an anti-pay television campaign was the wisest approach to take to the new medium, or if NATO should encourage its members to pursue investment opportunities in it. NATO’s first president, Sherrill Corwin, gave voice to this sentiment in 1965, at the last national convention of NATO’s predecessor, TOA. Corwin related how he had successfully fought to protect his theater business by preventing the introduction of cable television service in a small Northern California town in the early 1960s, only to see the pro-cable forces renew their efforts the next year. Finally, in 1964, Corwin decided to form a partnership with a local television station to offer pay cable in that town. The result of this partnership, he claimed, was an increased supply of films in the town but depressed attendance at his theatres. His advised his audience to follow his lead, both in investing in pay television and in regretting its spread:

Be alert – CATV is one of the fastest growing industries in America today – it is being fully financed by banks and small business investment companies…. Be prepared to get into it yourself. … If necessary, join hands with your local TV station or stations in making an application [to offer pay television service]. Your local investment and participation will give you a big edge over any outsider – Yes, just one footnote – cable TV systems are even now negotiating to run on their own projectors and from their own studios as a local origination – THIS, in addition to the never-ending film on [broadcast television] – Need I say more? MAKE MINE A MOVIE – IN A MOVIE THEATRE. [50]

If Corwin ended his speech with a rallying cry to preserve the movie theatre, his simultaneous decision to financially partner with an industry that he had spent the first half of the decade fighting as a threat to its very existence spoke to the lucrative opportunities that awaited those willing to join the new medium – and awareness that pay television would not go away quietly, if at all. Corwin’s lesson, however, seems not to have been heard in the early days of the Pay-TV Committee. Notes from the PTC’s earliest meetings do not indicate much debate about the importance of the pay television fight, or that its strategy should be anything other than to block the spread of the service wherever possible. However, within two years, the PTC was facing internal dissent about its “Save Free TV” campaign. Exhibitors who either intended to follow in Corwin’s footsteps or who still saw broadcast television as the greater enemy pressed for the Committee to recognize the benefits of pay television investment and encourage its growth. This debate would contribute to a cash flow crunch that would bring the PTC’s mission to an abrupt end.

Most prominent among those who saw not danger but opportunity in cable television was Salah Hassanein, of the United Artists Theatre Circuit (UATC). Hassanein was actually one of the founding members of the PTC. However, from the beginning, he disagreed with its goal of strangling the new medium in its crib. Instead, he asserted that NATO should encourage its members to invest cable television as an addition to their brick-and-mortar theatres. In a January 1971 letter to Newman, Hassanein wrote that he and UATC “have always maintained that exhibitors should be the CATV operators wherever they operate theatres if possible.” [51] Indeed, UATC had already invested in cable systems in the Long Island, NY area, and believed that any attempt to limit or prohibit pay television was against the company’s economic interests. Newman spent the next eighteen months attempting to persuade Hassanein to support the official committee position, but to no avail. In September 1972, Hassanein resigned from the Pay-TV Committee and informed Newman that UATC would no longer contribute any money to the committee’s activities. [52] Newman continued to lobby Hassanein for his and UATC’s support, pleading with Hassanein to not consider the cable investment as important or more important than the theatrical investment. “Although your company has substantial investments in CATV, the major investment is still in theatres,” he wrote to Hassainein in early 1973, “and I do not understand your objection to supporting NATO’s position to protect [the theatrical] investment.” [53] Newman’s pleas went unanswered, and within three years UATC was joined by the Wometco theatre chain in the cable field. Wometco invested heavily in pay television by buying television stations, production companies and setting up a pay-per-view service in hotels in its hometown of Miami. In 1977, it moved up the eastern seaboard to initiate Wometco Home Theater, an over-the-air pay television service in greater New York City area. [54] By 1979, Bruce Corwin, the son of Sherrill Corwin and president of the Pacific Theater chain, had invested in a pay television company in the East San Fernando Valley in southern California. [55]

Not every exhibitor who supported or at least accepted the development of pay cable would resign from the committee. In 1972 John Stembler of the Georgia Theatre Company suggested that the best exhibitors could hope for would be an agreement with the studios or government that movie theaters would be preserved as the first platform for the most important films. “I suppose locking in the sequence by FCC order or in the tightest manner possible, with as much clearance as we can get, [is] the most we can hope for,” he wrote to Newman. “[If so], I am wondering if it is not possible for NATO to cut back expenses with its Pay TV activities.” [56] Three years later, M.A. Lightman, a Memphis-based exhibitor began to forcefully argue against the committee’s recent support for the broadcast television industry. In August 1975, Lightman suggested that NATO should focus its efforts on opposing the FCC’s 2–10 year rule, which kept films more than two years but less than ten from being aired on cable television. “This clearance,” he argued, “would artificially force Pay-TV to compete with theatres for early product. Without such clearance, Pay-TV would raise substantial film rental from many older pictures now being shown on free TV. This additional film rental might finance new product for a healthier industry.” [57] Then, in October, following a late September committee meeting, Lightman sent another letter to his colleagues. Insisting that the PTC should make its slogan “an admission price for every important picture made for theatrical use,” he described the broadcasting of movies on free television as “a parasitic cancer to the industry” because it kept 150 million viewers at home and not in theatres. He also explicitly broke with NATO’s position that it opposed the growth of pay cable television because it threatened the public’s right to free television. “There is no God given right for the public to have free movies on TV just because it ‘owns the airwaves,’” he argued. “The public also owns the air but does not ride free on planes…. Let’s make this point in hearings or court! We must eliminate this gigantic giveaway of our product….” [58]

Lightman’s admonition that pay television should instead be used as leverage against the broadcast industry resonates with Sherrill Corwin’s and Salah Hassanein’s arguments that exhibitors should at least consider investing in cable television in their local markets. Both theatrical exhibition and cable expected patrons to pay for the right to see programming; broadcast television instead offered truncated Hollywood movies for “free” (although audiences were expected to sit and watch commercials sprinkled throughout the program). The logic of theatrical exhibition and cable television is thus more similar than that of exhibition and broadcast television. The importance of paying customers to the future of exhibition is evident in Lightman’s apparent disdain for the broadcast television audience; rather than vulnerable families in danger of losing their rightfully free broadcast service, they were self-entitled freeloaders who should have to pay for their entertainment at home or on the town.

The dissent within the PTC was mirrored by apathy without. NATO’s rank and file members did not react to the perceived threat of pay television with the alacrity that its leadership felt was necessary. Throughout its life, the PTC struggled to collect dues from theatre owners who had pledged support. In April 1969, five months after its formation, the Pay TV Committee had to send a memo to NATO members, imploring them to “get with it” and support financially the campaign to turn Congressional opinion against the development of pay television. [59] NATO president Paul Roth remarked to Newman at the end of 1973 that exhibitors seemed to have more enthusiasm for beginning causes than for funding them, and didn’t expect the rank and file to agree to increased dues to make up for the funds that exhibitors pledged to the Pay TV Committee but never paid. [60] Although some exhibitors made additional contributions to cover unpaid pledges [61] or offered to lean on colleagues who had not sent in contributions, [62] by the middle of the 1970s the PTC was running desperately short on cash. Theater owners also were reluctant to participate in PTC projects designed to demonstrate the threat that the forces of pay television posed to them. Many declined to provide any business information that might be used in anti-pay television studies or the PTC’s lobbying efforts. Two examples from 1976 demonstrate this. The PTC hired Dr. Thomas Guback of the University of Illinois to complete a study on the effects of pay television on theater owners. Although he did complete the study and even presented it before a Congressional subcommittee, during its writing Guback complained to Newman that NATO members were uncooperative in providing information he needed or were unaware that pay television services were available in their communities; he singled out Sumner Redstone, then a former NATO chairman of the board and soon to become the leader of the Viacom conglomerate, for promising but never providing useful material: “He strung me along for the better part of two months [and then] backed out at the last moment….” [63]  That same year, NATO counsel Marvin Firestone implored theatre owners to chip into the committee’s efforts to influence cable rates in New York state. When they did not, Firestone sadly remarked to Newman, “unfortunately, as I have learned from hard experience, I can lead the NATO horse to the bar; but I can’t necessarily make it buy a drink.” [64]

By that time, however, the PTC apparently began to wind down its operations. At its September 30, 1975 meeting, the Committee agreed to pursue closer negotiations with the studios in order to establish a ninety-day window between a film’s final theatrical play date and its first appearance on pay television, and set a $25,000 budget. [65] But within seven months, this amount appears to have been spent. In April 1976, Newman informed Firestone that NATO could not afford to intervene in court cases that challenged the FCC’s power to preempt all state regulation of cable. [66] The committee also declined to make a contribution to the campaign of a senator sympathetic to its cause because, as Newman wrote in his notes for the April 27 committee meeting, “we have no funds available.” [67] When the FCC decided to appeal all parts of the HBO v. FCC ruling except the 2–10 rule, the PTC could not afford to file an appeal. NATO did provide information about the effects of cable television for an amicus curiae brief but did not itself initiate any legal activity regarding pay television after 1976. The purpose of the brief was not to urge the Court to find the FCC had no right to authorize pay cable but rather to ask it to “ensure that whatever is done, the interests of motion picture exhibition is [sic] taken into account and adequately protected.” [68] Although Newman would represent exhibitors in public discussions about pay television in 1977, discussed below, the PTC appears to have disbanded entirely sometime during that year – no announcement of its dissolution appeared in any NATO publication, and the archive of NATO material at Brigham Young University contain no record of any meeting in which the decision to discontinue was made. [69]

It would, however, be a mistake to see the efforts of the PTC as entirely unsuccessful. It failed in all of its efforts to persuade the public that pay television was a threat, clearly. But even as it was trying to keep cable from growing, the PTC was building connections with representatives of the cable television industry who were interested in attracting exhibitors into its ranks – and in so doing facilitated the connections that would help NATO as an organization begin to embrace pay television as part of its future. From the beginning of its mission, the PTC collected brochures and magazines from pro-cable forces, and these provided early connections between PTC chairman Newman and representatives of cable companies. He made an appearance at an October 1973 seminar run by Paul Kagan Associates, a company that promoted the growth of the cable industry. In his remarks, Newman made perhaps the first public retreat from the Committee’s message that pay television constituted a threat to the future of theatrical exhibition. He stressed the need to protect the nation’s exhibitors during the growth of pay television – but not from the growth of pay television by terminating the new medium in its infancy. He offered a plan for distribution that sent most features to movie theatres first, then to pay television a year later. This, he said, would allow exhibitors to maximize the theatrical potential of a film, while also building positive word of mouth for the film’s eventual appearance on pay television. [70] Throughout the mid-1970s, Newman spoke as an invited guest at cable television conventions, including the Western Cable Show in March 1975 and the North Central Cable Television Cable Association convention in February 1977. In these speeches Newman continued to refine the new party line that exhibitors opposed the introduction of pay television stations “[only] when attempts are made to take away our life blood (motion picture films).” Newman also stressed the economic logic that drove exhibitors both to fight and to embrace the new industry: “Just like theatre owners, you [cable system operators] invest your capital to build a system and then you are at the mercy of a film distributor to determine what you are going to put on the screen.” In a display of solidarity, Newman even warned his new cable friends that the studios were already looking for new ways to wring more money out of them. [71]

The cable industry also reached out to exhibitors. Late in 1973, Frank Merklein of Digital Communications, Inc. contacted Newman directly to bemoan exhibitors’ antagonistic attitude towards the development of cable television. “I cannot understand why [the Pay TV Committee] is not directly negotiating and maintaining a liaison with the pay TV [sic] proponents as a much more natural affiliation [than with the broadcast networks]…,” he lamented. Echoing Hassanein’s argument that pay television was a sensible addition to UATC’s theatrical exhibition business, Merklein asserted that “it would be a natural for theatre owners to branch into entrepreneuring [sic] the mid bands of CATV” because pay television and theatrical exhibition served different audiences and would therefore complement rather than compete with each other. Furthermore, he added, many parties in the pay cable industry supported providing movie theatres with twelve-month exclusivity on first-run feature films because it helped build demand for films once they did reach pay channels. [72] In April 1974, Smith, Cooper Associates, a cable television consulting firm, sent letters to various theater owners, copies of which were then forwarded to the PTC. The firm suggested that a theatre owner “can fulfill [his] natural role as a motion picture exhibitor by bringing first run films to the television audience.” [73] In October 1976, Bob Weisberg, the president of TeleMation Program Services Inc., sent to Newman box office grosses that suggested the Z Channel’s recent presentation of Lina Wertmuller’s Swept Away (1975) had actually served as free advertising for a subsequent theatrical run of the film at a Santa Monica, CA art house. [74]

Newman’s tour of cable television conventions was complemented by similar appearances at NATO functions by cable television proponents and executives. The 1975 NATO Convention offered a panel that encouraged exhibitors to become more comfortable with the new medium. The speakers included Gerald Levin of Home Box Office; Allen Adler, the executive in charge of cable and pay television policy at Columbia; Jack Valenti, offering again the MPAA’s vision of “Family Choice Cable”; and Irving Kahn, a pay television entrepreneur. Newman did not participate; NATO president Paul Roth was the only exhibitor on the panel. As might be expected from the line-up, the presentations and ensuing discussion encouraged theater owners to at least accept if not embrace pay television as a complement to theatrical exhibition, not a competitor. The standard plans for the orderly release of films first to theaters and then to pay television were offered, as were suggestions as to how exhibitors could become more involved in pay television service in their localities. Although he expressed some personal unease about pay television, Roth echoed the harmonious rhetoric of the cable representatives on the dais and urged his colleagues to “analyze the pay-TV industry, and not take an adversary role.” [75]

By 1977 NATO’s leadership had begun to present the new competitor as manageable, and to promote the idea that the sale of films to pay television would stimulate the film industry as a whole – arguments that pro-cable forces had been making for nearly a decade. That year, NATO News noted that the presale of films to television, then becoming common as cable stations grew and hungered for programming, “may encourage more product for theatres.” [76] A more positive outlook towards the survival of exhibitors in the age of pay television also can be found in the 1977 NATO Encyclopedia of Exhibition, a yearly compendium of exhibition-related statistics such as the number of movie screens nationwide and average ticket costs. Each volume also presents written remarks from NATO’s president, as well as from others involved with theatrical exhibition. In his essay, president Marvin Goldman acknowledged that pay television and other home video technologies were potential threats to theatrical exhibition – but threats that could be managed if theatre owners worked together for the common good. [77] A few pages later, the public relations director for Kerasotes Theatres, a Midwestern chain, offered a list of ten most important legal issues facing exhibitors; pay cable television was listed ninth, after (at number seven) sanitation laws that affected concession stands but before environmental laws that regulated where sewage could be dumped. Competition from local college screenings of films was apparently more worrisome than cable television, as it was eighth on the list of problems facing theatre owners. [78]

The 1980 Encyclopedia further downplayed the spread of cable and introduced a new line of argument was introduced into the pay television debate; rather than simply fight pay television or join it, exhibitors were encouraged to use it as an impetus to improve their own service. Instead of a danger to the entirety of theatre owners, cable television and home video threatened primarily smaller exhibitors, wrote president A. Alan Friedberg in his essay. Friedberg argued that the remedy for cable was not government regulation of cable, but “a new technology for theatres which cannot be duplicated in the home – a technology that creates a greater illusion of reality than ever before achieved.” [79] Harmon “Bud” Rifkin, the chairman of NATO’s Technical Advancement Committee, agreed, encouraging theatre owners to improve their venues’ picture and audio qualities, and promote them as a superior alternative to television’s still flat visuals and tinny sound. [80] The Encyclopedia also contained an article about recent technological developments in the cable industry, as well as the future plans for growth of the major pay cable channels. It contained no warning to exhibitors about any potential for harm to their livelihood, but rather was strictly an informational essay, almost as if for the edification of those who might be considering entering the cable industry themselves. [81]

By the middle of the 1980s, the role of television in the new entertainment industry had become established, and accepted by exhibitors. What had begun as a life-or-death battle for exhibitors against a new facet of television that could do nothing but destroy them had been transformed into a recognition of a new industry that exhibitors could invest in or try to compete with by improving the image and sound quality in theatres. During the 1980s, theater chains like Cineplex Odeon began to transform the multiplex experience from the spartan auditoria with concrete walls, cramped seats and poor sight lines into inviting spaces with art deco-inspired fixtures, comfortable seats and improved projection and audio systems. [82] And, although ticket sales were relatively stagnant throughout the decade, [83] the number of new movie screens grew rapidly – as Stephen Prince notes, “by mid-decade exhibition was seeing the biggest yearly increases in total screens since the late 1940s.” [84] These screens were well-stocked: as pay television proponents had predicted, film production increased in the 1980s as well – mostly though independent companies that relied on the potential of profits from ancillary markets for production funds, [85] and the studios that began to strike more prints of their films. [86]

But if theater owners were able to adapt to and survive the establishment of pay television, it is not clear that it will be able to do so now. The industry that exhibitors face today is substantially different than the one faced by the Pay TV Committee in the late 1960s and 1970s. The opportunities for investment in cable have shifted dramatically. The cable market of forty years ago had room for Los Angeles’s Z Channel or Wometco Home Theater, or other local channels on which theater owners and other entrepreneurs could partner; it is now dominated by national cable companies like Time Warner, Comcast and Cox, which offer their own video-on-demand services as well as premium channels like HBO and Showtime. Online VOD sites like Netflix, Hulu and Vudu further limit exhibitors’ options for branching out into new exhibition platforms. The sole major attempt by a theater chain to profit from the current pay cable structure – Landmark’s partnership with HDNet Movies on Bubble (Steven Soderbergh, 2006) – was a dismal failure, at least from the perspective of its theatrical run, where it grossed only $150,000. [87] Additionally home theater systems have progressed to the point that it can provide an audio-visual experience on par with that of movie theaters; it is therefore not clear that exhibitors will be able to craft a technological advantage over television the way it was able to in the 1980s. Theatrical exhibition survived its battles with television, broadcast and pay, by finding new niches within the shifting entertainment marketplace; the continuing decline in ticket sales [88] in the United States suggest that even those niches might have finally closed off. In a sense, then, theater owners not only lost the battle against pay television in the mid 1970s, its adjustments to the new television reality might have done not much more than delay its ultimate collapse.

NOTES

[1] https://www.ncta.com/industry-data