QUBE
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QUBE was a cable television system which played a pivotal role in the history of American cable television. Launched in Columbus, Ohio in December, 1977, QUBE introduced viewers, and the international press, to several concepts that became central to the future development of cable television: pay-per-view programs, special-interest cable television networks, and interactive services.
Warner Communications chairman Steve Ross was inspired by a closed-circuit television system at the Otani Hotel in Japan to wonder what might be done to improve the performance of Warner’s tiny cable television division. Ross was intrigued by the potential of delivering Warner Bros. movies directly to home subscribers.
At the time, Warner Cable was a tiny division of Warner Communications, run by a former Western Union telecommunications executive and attorney, Gus Hauser. Ross surrounded Hauser with entertainment industry executives--Jac Holzman, who had sold his Elektra Records to Ross in 1967; Mike Dann, the CBS programming wizard responsible for The Beverly Hillbillies and Green Acres; former CBS general counsel Spencer Harrison, who was the primary reason why My Fair Lady got produced on Broadway; and super-agent Ted Ashley, whose talent agency was Ross’s first show-biz acquisition.
Pioneer Electronics was hired to “build the box” that would transform the cable TV service in a few hundred thousand households into a device that was intended to change the entire entertainment landscape.
The service was first launched in Columbus, Ohio amidst considerable national and international press coverage, featuring shows such as a reworked version of The Original Amateur Hour (whose hook was jerked by the interactive audience), Wonderama (starring a local TV clown), and The Today Show (complete with a big window--but in Columbus, without any actual human beings outside the studio). In 50,000 homes scattered around the city and its suburbs, QUBE viewers could choose from thirty channels including ten pay-per-view movie channels and one adult channel, and ten original channels, including the first weather channel, a children’s channel that become Nickelodeon, and endless innovations, including infomercials (both infomercials and pay-per-view were begun at QUBE, as was MTV).
At first, every QUBE console was equipped with five interactive buttons which were used to play games, shop at home, and answer questions like “Who should be the next mayor of Columbus?” Home viewers considered the on-screen choices, and then selected their favorite by pressing--or touching--a button on the console. Six seconds later, 50,000 homes were polled by what was then state-of-the-art technology, and the results were posted on the screen for all to see, live.
The system proved so popular that Warner Cable began to win valuable cable franchises--the right to build and operate cable monopolies--in large markets throughout the country.
However, building new cable systems caused Warner Cable to rack up significant losses. By 1982, Warner Cable was running a $99 million loss, and by 1983, the total debt was $875 million). Consequently, the cash-rich American Express was brought in as an investor. Warner-Amex Cable Communications was formed with a stellar board of directors, including American Express chairman Jim Robinson and President Lou Gerstener, and the former head of Shearson, Sanford Weill. However, conflicts between Warner and American Express led American Express to make an offer to buy Warner’s position. Instead, Warner chose to buy out American Express.
By this time, MTV and Nickelodeon were becoming meaningful endeavors in their own right, with powerful leaders in Bob Pittman and Geraldine Layborne. And QUBE was either up and running or already built in Pittsburgh, Cincinnati, Milwaukee, Dallas and elsewhere. Warner Cable was no longer a fledgling 200,000 subscriber operation; there were 2 million subcribers, roughly 1/10 of the entire subscriber universe. Pittman led an unsuccessful effort to buy MTV; there was also an unsuccessful attempt at a public offering. Gus Hauser was gone, replaced by Reagan’s future Transportation Secretary, Drew Lewis. Lewis renegotiated with municipalities to ease the burden to Warner of some of the cable franchise deals, but in order to keep the cable operation going, Warner Cable had to sell MTV and Nickelodeon to Viacom, and the QUBE systems were phased out over a period of years, with the last QUBE boxes being phased out in 1994.
