Hi, Ed. 

I worked at TelePromTer Cable TV in Reno, Nevada, during the latter half of 1976.  My job was called Field Marketing Auditor, but it was basically door-to-door sales of the cable TV service in the Reno area.  In Nevada even today there are a lot of people moving in and out.  At that time the telephone company in Nevada issued phone books twice a year because there were so many changes in phone listings.  My job helped sign up people who had recently moved into places that had been vacated by former cable subscribers.  At that time CNN, ESPN, C-SPAN or many of the cable channels commonly available today did not exist.  There was Ted Turner’s WTBS out of Atlanta and HBO.  TelePrompTer carried some channels out of the San Francisco bay area.   

At the beginning of 1977 I moved to Sacramento to take up a new job in journalism there.  I

Best regards

Charles Signer

Many American towns were wired for cable television in the 1960s. So by 1972, Trentonians were clamoring for the new technology, which promised to take static and snow out of television pictures that in those days were picked up strictly by antenna. 

What was taking cable so long - and why it would be another decade before Trenton was finally wired up - came out at the Mercer County Courthouse in the winter of 1972 during a sensational trial that starred a few characters whose names still ring today. 

There was charismatic young Councilman Martin J. Hillman, on trial for allegedly demanding a $50,000 bribe from a cable company magnate four year earlier, telling him: "This is the way business is done in Trenton." 

Hillman's alleged accomplice was former Council President Peter W. Radice, a popular banker who said he met secretly in 1967 with the cable bigshot's lieutenants only because one of them was a boyhood friend: "I've dedicated my life to helping my fellow man," he told the jury. 

Another suspect was the nervous head of Trenton's housing authority, Joseph Tysowski, who was so loosely tied. to the alleged conspiracy the judge summarily acquitted him in mid trial. Tysowski promptly fainted. 

Never seen at the trial but on the mind of many was an indicted cohort best known as a former star city athlete, lawyer Richard Gray, who allegedly was the "bagman" for the bribery scheme. 

Bill Mathesius, who would go on to become Mercer County executive, was the 30-year-old prosecutor. One of the defense lawyers was George Pellettieri Jr., whose trial performance and death at an early age helped make him a legend in Mercer legal circles. 

And, hardly least, there was Irving Berlin Kahn, the famed composer's namesake nephew, who owned the company that developed automatic cue cards for television actors and anchormen and was predicting that all America would be wired for cable by the end of the 1970s. 

The case pitted the word of the popular local figures against the testimony of out-of-town tycoon Kahn, who had been convicted of bribing an official in Johnstown, Pa., to get his company a monopoly on cable television service there. 

The trial centered on what took place at Hamilton's Homestead Inn on Sept. 19, 1967, when Hillman and Radice allegedly cut a deal to get $50,000 for the four council votes the visionary millionaire needed to bring cable to Trenton. 

Radice and Hillman maintain to this day that they met with representatives of Kahn's giant TelePrompTer Corp. in the restaurant kitchen that day merely to gather information. But Kahn's lieutenants, including a boyhood friend of Radice, testified that a payoff of $50,000 was negotiated after the men broke bread. 

Only days later, for whatever the reason, four city councilmen voted to award TelePrompTer the lucrative right to be the only cable television distributor in Trenton. 

By the end of the 1960s, however, nothing in Trenton had been wired for cable, even though there were rumblings that the skids had been plenty greased for the project. 

Enter Mathesius, a young former assistant U.S. attorney for Trenton who was interested in fighting political corruption and, if the defense lawyers were right, making a name for himself so he could get into politics. 

"There had been talk on the street about possible payoffs for some time," Mathesius recalled last week. "So when I came in I started subpoenaing people to come in and talk to see if we could get anywhere." 

By March 24, 1971, after a few stories about the scandal showed up in Trenton's newspapers, Mathesius was ready with his indictments. They alleged that Radice and Hillman had negotiated the bribe, that Tysowski showed he was in on it by calling the councilmen at the restaurant that day, and that the payoffs were funneled through popular lawyer Gray. 

News reports said Mathesius had grand jury statements from Kahn about Hillman coming to his New York City office on Oct. 30, 1967, to insist that, to get the contract, he'd have to submit the best bid, plus the $50,000 under the table. 

"This is it," Kahn said the then-30-year-old Hillman told him. "'This is the way business is done in Trenton. You'll have to pay $50,000 and put in the best bid." 

Mathesius also had the testimony of the two Kahn lieutenants who were at the meet at the Homestead, Robert S. Symons, a TelePrompTer vice president, and Thomas Moscarello, a friend of Radice's since childhood who was a Hamilton representative for the company. 

Symons told the grand jury that Hillman and Radice never spoke about money to him, but he sensed that's what they wanted from their talk in the Homestead kitchen. After they all stepped outside, Symons said he suggested Moscarello offer them $75,000.

Symons said Moscarello told him $50,000 would suffice and that, after stepping away from him to consult with the officials huddled nearby, he returned and told him Hillman and Radice had agreed. 

From there, Moscarello told the grand jury, he and the councilmen went to his Hamilton home, where Hillman explained that Tysowski had called him at the restaurant earlier because he "wants in on the deal." He said Tysowski showed at his home soon after and seemed annoyed with Hillman and Radice until they spoke to him privately and he started smiling. 

With help from TelePrompTer, Mathesius also got records showing more than $100,000 in payments for not much work to lawyer Gray, a former Trenton commissioner and state assemblyman whom the prosecutor had indicted in the hope of grilling him on the witness stand about where all the money went. 

Weeks before the trial started, however, Gray, 50, fell ill with kidney problems, which prevented his testimony and prompted Judge George Schoch to order him tried separately from the others later. Gray died before coming to trial. 

The prosecution's case was hurt, but Mathesius said he pressed on confident that the trial testimony of Kahn, Symons and Moscarello would convince the jury the three Trenton officials were crooked. Mathesius also wasn't concerned that, months earlier, star witness Kahn had been convicted of paying a $15,000 bribe to the mayor of Johnstown, Pa., and then lying about it to investigators.

In late January, 55-year-old Kahn took the stand and said he got mad when Symons told him about the deal that allegedly had been cut at the Homestead. When Hillman came to his New York office on Oct. 30, 1967, five weeks after the meet at the Homestead, Kahn said he tried to convince him that TelePrompTer should be selected because it was the best in the cable business. 

Hillman cut him off, Kahn testified, telling him about "how business is done in Trenton." Kahn said he reluctantly agreed to pay the $50,000 bribe. As they headed out, Kahn testified, the councilman told him "a Mr. Gray will be getting in touch with you" about the payment. Weeks later, Dick Gray showed at his office for a meeting to work out the details, Kahn said. 

On cross-examination, Pellettieri attacked Kahn as a briber and liar. In addition to getting the magnate to admit that he had been convicted in connection with the Johnstown case, Pellettieri brought out that Kahn stood to lose millions of dollars if TelePrompTer failed due to this and other investigations of corruption in the cable industry. 

Pellettieri also brought out that Mathesius, Mercer's first assistant prosecutor, was handling the case because county Prosecutor Bruce Schragger feared his past representation of a company competing for Trenton's cable monopoly would pose a conflict. 

The suggestion at the trial, repeated last week by Radice, was that the officials were targeted because competitors like Schragger's former client wanted the TelePrompTer deal tossed out.Then, according to the defense theory, other firms could get another shot at the Trenton market, which was so lucrative 11 companies had put in bids. 

n his closing argument, Mathesius scoffed at the notion that TelePrompTer competitors had worked behind the scenes to get Hillman and Radice because of the millions of dollars at stake. To believe this, jurors would have to believe the authorities had joined in a giant conspiracy with the cable competitors, Mathesius said. 

Pellettieri responded by saying in his closing that Kahn and TelePrompTer were hoping their allegations about what happened in Trenton would convince the feds handling the Johnstown case that, far from seeking out officials to bribe, the company was being extorted right and left by municipal leaders all over the country. 

"Can you take the word of this man Kahn, whose God is money, and ruin the life of Marty Hillman and take him away from his wife and children?" Pellettieri asked. "Ask TelePrompter if they didn't have a motive to lie to you." 

As the jury went out to deliberate, it had only the fate of Hillman and Radice to consider. A week before, the judge acquitted Tysowki, based on his lawyer's argument that prosecutors simply didn't have enough linking him to the bribe.

Tysowski, visibly shaken as his lawyer made the motion, collapsed in what appeared to be a heart attack when Schoch announced he was a free man. 

On Feb. 4, after seven hours of deliberation, the jury came and announced the verdicts: Not guilty on all counts. The officials emerged from the courthouse and, after accepting the cheers and pats on the back from family and friends, headed to the Homestead for a celebration. 

"I feel sorry for the people of Trenton," Mathesius said after the verdict came in. But last week, he said it wasn't a total loss: "We ended the careers of a couple of politicians whose careers should have been ended." 

But Radice, Hillman and Tysowski weren't really ruined.

Radice got back his job as a vice president at a Ewing bank and moved to Lawrence, where he was tapped by local officials to head a charter study commission on changing the form of government, as he had done in the early 1960s in Trenton to get his start in politics. 

"When you're in politics, you're in a fishbowl and someone is always trying to catch you," Radice, 71, waxed philosophically last week. His ordeal never turned him off to politics, Radice said, but he expressed disappointment that none of his six children are interested in government service now because of what he went through while they were youngsters. 

Hillman, now 62, remained on City Council for another three years after his acquittal and worked as an administrator for the housing authority until appointed to the director's post in 1979. Hillman, who could not be reached for comment, held the top housing authority job into the 1990s. 

Tysowski, who died several years ago, spent a few days in a hospital recovering from what was diagnosed as extremely high blood pressure after his collapse at the trial. Then he returned to work at the housing authority and his position as a director at a local bank. 

Mathesius went on to become Mercer prosecutor and county executive, a job he decided not to seek reelection to in 1991 after it came out that he had put an inmate on the county payroll as a way to save money on prison maintenance and renovation jobs. 

Radice, calling his trial "political," last week admitted he was glad years later when Mathesius got in trouble over the payroll flap, which an investigating grand jury criticized but found short of criminal. Said Radice: "All I want to know is, why wasn't Mathesius indicted?" 

As for Kahn, after serving 20 months in federal prison on the Johnstown bribery charges, he started another cable television business that he sold to The New York Times Co. for $82.7 million in 1981. He went to his grave in 1994 insisting that American pols always approached him about payoffs. Last year, Kahn was named to the cable industry's hall of fame. 





Irving Berlin Kahn, namesake nephew of the famed composer, founded TelePrompTer before going to prison for bribery. 

TelePrompTer inventor  Irving B. Kahn
born on 9-30-1917 in New York, New York
expired 1-22-1994   age 76

WATCH MIKE CLARK WITH HIS CARTOONIES SHOW! STREAMING BROADBAND    ---ONLY!

Regarding this ad..

http://www.smecc.org/teleprompter/tales_sony_teleprompter_3.gif



Naturally, there is a story behind it.



While working in the Marketing Department at Teleprompter Manhattan, the
uptown cable system, I took a phone call from an advertising agency that
represented SONY.  After listening to the pitch, I gave them the name of
Andy Goldman at the Teleprompter Corporate office.

A few weeks later, I get an assignment. To find a lobby in our franchise
where a Lobby Demonstration could be staged, much like is shown in the ad. I
presented a slate of apartment buildings as potential sites, with the caveat
that we have a TV studio, we could produce it in house.  The agency wanted
realism, so they visited the lobbies of the buildings that I had suggested,
either upper east side or upper west side of Manhattan.

The agency didn't like the sites and decided to stage the shot in a studio
after all.

The ad ran on the back of NEW YORK Magazine.



Steve Goldmintz
Managing Director, Cable & New Media Recruiting
AE Feldman Associates (est. 1967)

1970s
Serving the up-and-coming cable television industry became a more prominent role for Scientific Atlanta in the 1970s. By 1972 sales to the industry had grown to 15 percent of total revenues and pioneering landmark events for Scientific Atlanta and cable providers were imminent.

At the NCTA’s National Show in 1973, Scientific Atlanta teamed with Teleprompter Corporation, the nation’s largest cable operator at the time, and a little known pay channel called Home Box Office (HBO) to demonstrate the cable/satellite interconnection. The live boxing match delivered to the HBO customer party was over in only two minutes and meant little to the boxing world, but those short on-air moments marked the beginning of satellite-delivered programming for the cable industry.

Things progressed into 1974 and 1975 when Scientific Atlanta was asked by RCA and HBO to help them launch a new cable service. Scientific Atlanta installed earth stations to receive the program signals at two cable systems in Mississippi and Florida, RCA provided the satellite transponders, and HBO provided the programming, the Ali/Frazier “Thrilla in Manila” heavyweight championship bout. Viewers witnessed the launch of the first satellite-delivered cable television service as we know it today. This innovative programming delivery breakthrough provided the momentum that has resulted in the hundreds of channels of programming available today

WFUT-TV

Bright House Networks

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The Bright House Networks logo.

Bright House Networks is a cable company owned by Advance/Newhouse, headquarted in Syracuse, New York. This cable service currently serves cable in Indianapolis, Orlando, Tampa Bay, Birmingham, west suburban Detroit and Bakersfield. Most of its business is concentrated in Central Florida, where Bright House is the dominant cable system in the Tampa Bay and Orlando TV markets.

These systems are all owned by the Time Warner Entertainment - Advance/Newhouse Partnership but, under a deal struck in 2003, Advance/Newhouse took direct management and operational responsibility for portion of the partnership cable systems roughly equal to their equity. Ostensibly, this was due to A/N's dissatisfaction with Time Warner Cable's strategic direction.

Before 1994, some of these systems were fully owned by A/N under the names Vision Cable and Cable Vision (no relation to Cablevision Systems). In some areas, Bright House is the successor to Teleprompter Cable TV, Group W Cable, Paragon Cable and the Time Warner Cable systems in Florida.

[edit]

External links

• Bright House Networks Main

[edit]

Regional Websites

• Indiana (Indianapolis, Marion)
• Central Florida (Orlando)
• Bakersfield
• Cantonment (Pensacola)
• Defuniak Springs, FL
• Elmore, AL
• Eufala, AL
• Birmingham, AL
• Michigan (Farmington, Livonia, Novi, Redford)
• Tampa Bay
• Wellington, FL (Palm Beach County)

 

THE LAST LINK

The Glorious Revolution of 1971

During the last year while researching and writing a book about community and technology, I discovered, much to my surprise, that I lived through a great revolution when I was in high school and I didn't even know it had happened.

It all began just three days before our annual celebration of another, earlier revolution. On July 1, 1971 a seventeen year old boy confined to his home following a series of brain tumor operations participated in a history class via interactive cable television technology. Sitting in front of a video camera and aided by a special keyboard which enabled him to communicate with his teacher in an experimental studio-classroom four miles away, Jeff Hubert watched his teacher on his home television while she, in turn, watched Jeff on her monitor in the studio. The experiment was the initial step in a plan by TeleCable Corporation of Norfolk, Virginia to develop interactive cable television to serve communities. Said the company president, Rex A. Bradley,

"We feel that the addition of a two-way capability means the entire community has the opportunity of acting on the cable. A politician can propose a new idea and ask the viewers what they think of it. The people can push the Y button if they say yes or push the N button for no." (Rensberger, 1971)

Observers and practitioners predicted that the new technology could:

• provide up to 50 channels of recorded music,
• offer specialized news services in which a subscriber could enter codes and receive news about areas of interest,
• enable subscribers to "dial up" pre-recorded pictures and textual information such as product ratings by consumer organizations,
• provide "electronic mail delivery that would, in effect, print out telegrams at home or office," and
• make the television keyboard and screen a computer terminal "by which the subscriber could dial up specific reference information and perform mathematical calculations" and have the answers printed on the screen. (Rensberger, 1971)

On that day, two Manhattan cable TV stations, TelePrompter and Sterling Manhattan Cable Television, became publicly available so that groups or individuals could apply for free on-air time on a first-come, first-served basis. "Supporters have hailed the program as the first genuine 'Town Meeting of the Air,'" said George Gent in a New York Times news article, "and a major step toward the political philosopher's dream of participatory democracy." (Gent, 1971) A Teleprompter brochure defined the station as "a whole new concept in television." It is "TV by the people, for the people" enabling "any groups or individuals of any belief, purpose, or persuasion, to demonstrate their talents." If these people do not have the equipment or expertise to use this opportunity, the station will provide without charge studio space, at least one television camera and a director. It will also provide portable equipment "to cover events in the community, like block parties, park openings and church functions." (Gillespie, 1975, p. 6)

Other pronouncements from the early 1970's offered similar visions. From a 1971 report from Princeton's Center for analysis of Public Issues, we see the hope that the technology will enhance civic enterprises:

"Free access public TV channels have the potential to revolutionize the communication patterns of service organizations, consumer groups, and political parties, and could provide an entirely new forum for neighborhood dialogue and artistic expression." (Center for the Analysis of Public Issues, 1971, p. 3)

"make it possible to find our what's going on in your town, your neighborhood--even your block. Cable TV can provide local information the way the newspaper gives local news. But it can do more than the local paper. Cable Television can make it possible for your community organization to conduct a meeting of all the people in your neighborhood, without any of them having to leave their homes." (Price & Wicklein, 1972, p. 2)

"Together, then, the elimination of channel scarcity and the sharp reduction of broadcasting cost, can break the hold on the nation's television fare now exercised by a small commercial oligarchy. Television can become far more flexible, far more democratic, far more diversified in content, and far more responsive to the full range of pressing needs in today's cities, neighborhoods, towns, and communities." (Smith, 1972, p. 8)

". . . [C]ivic bodies must become thoroughly involved with the consideration of design and control of a wired city. For the first time there is an obligation to involve both individual private citizens of the most humble stature and community communications committees in planning the design and future control of an all-pervasive and revolutionary fact of city life. There is now an obligation on the part of the major city governments of Canada and the United States to maintain and invite a defined share of access for individuals and citizens' groups to the proliferating channels of cabled communication in the city. The city fathers must now nurture and eventually react, if they are not already doing so, to many new decentralized sources of local propaganda." (Gillespie, 1975, p. 2)

Just check out the recent Wall Street Journal article with the wonderful title of "Future Schlock: Today's Cyberhype has a Familiar Ring" to get a glimpse of the amazing claims made about telephony during the early part of this century as noted by Carolyn Marvin, author of When Old Technologies Were New. Daniel Pearl illustrates Marvin's research by pointing out that the telephone would, it was claimed,

"bring Peace on Earth, eliminate Southern accents, revolutionize surgery, stamp out "heathenism" abroad and save the farm by making farmers less lonely. The picture phone was just around the corner, and in 1912, technology watcher S. C. Gilfillan predicted that a "home theater" would, within two decades, let people dial up symphonies, presidential speeches and three-dimensional Shakespeare plays. The cost would be low and the "moral tone" would be excellent, since only the best material would survive. Novels, orchestras and movie theaters would vanish, and government as we know it might not survive either, he wrote." (Pearl, 1995, A1)

So what happened to the public access revolution of 1971? Read Price and Wicklein's warning:

"Cable has gained so much momentum already that there is little chance it will be stopped. But if the Wired Nation does emerge, for whom will it be wired? If the public does nothing, the answer to that is easy: The nation will be wired primarily for the benefit of private entrepreneurs. Cable will then be much like broadcast television and radio before it. Programming will be restricted to mass-appeal entertainment, superficial reporting of news, and minimal discussion of public affairs. Cable subscribers will be sold to advertisers at so much a thousand, as the over-the-air audience are sold to them today. Community service and public access to the systems will be given lip service only, as they are in most commercial television and radio broadcasting. The opportunity for a revolution in communication through cable television will be lost." (Price and Wicklein, 1972, p. 18)

REFERENCES

• Center for the Analysis of Public Issues. (1971, July). Public issues supplement no. 1.
• Fraser, C. G. (1971, July 2). Cable TV has block party. The New York Times, p. 67.
• Gent, G. (1971, July 1). City starting test of public cable TV. The New York Times, p. 95.
• Gillespie, G. (1975). Public access cable television in the United States and Canada. New York: Praeger Publishers.
• Lappin, T. (1995, May). Deja vu all over again. Wired, 1995 p. 175.
• Pearl, D. (1995, September 7). Futurist schlock: Today's cyberhype has a familiar ring. The Wall Street Journal, p. A1.
• Price, M. E., and J. Wicklein. (1972). Cable television: A guide for citizen action. Philadelphia: Pilgrim Press.
• Rensberger, B. (1971, July 2). Cable TV: 2-Way teaching aid. The New York Times, p. 16.
• Smith, R. L. (1972). The wired nation. New York: Harper & Row.

Copyright © 1995 by Stephen Doheny-Farina. All Rights Reserved.

Wow, TelePrompTer was the cable TV company here in the
Tacoma area before they were bought out by GroupW, which
was bought out by TCI, which was bought out by AT&T,
which was bought out by Comcast... Around here the only
local origination they did was a computer generated
screen with time and temperature. They actually had
studios in some cities?

David Breneman david_breneman@ yahoo.com

http://www.ketupa.net/westinghouse.htm

     Group W and TelePrompter

During 1981 Westinghouse Broadcasting & Cable acquired the TelePrompter cable television group for US$646 million (including some US$70 million to Jack Kent Cooke). TelePrompter was rebadged as Group W Cable but proved disappointing, with cashflow not compensating for pressures to upgrade the network.

Westinghouse sold its WOWO radio station and its lighting operations. CBS was concurrently selling its stake in Satellite Network News, buying a stake in the SportsChannel regional sports networks with Washington Post, and forming Tri-Star Pictures with HBO (Home Box Office) and Columbia Pictures.

     a decade of churn

1984 initiated a decade of churn, as a succession of chief executives and advisers grappled with demands for higher growth and improved strategic direction.

During that year Westinghouse unloaded its industrial fan operations and its education products arm, buying robotics manufacturer Unimation. In 1986 it sold Muzak, buying a Los Angeles TV station. A year later it sold Group W Cable to Comcast, AT&T and TCI. It bought radio stations in Sacramento and Chicago, a waste-disposal business and electrical equipment operations. Asset-shuffling gathered pace with sale of its elevator division to Schindler, its transmission division to ABB Asea Brown Boveri, its rail/peoplemover division and 7Up bottling division.

Survival Arts Media, I 595 Bdwy., NY NY 10012

Page 127

Page 128

        Thomas A. Seaton, Oakland, Cal., Jerry R. Prothro, Midland, Tex., Jack W. Thomson, James J. Coleman, Sr., New Orleans, La., Harold R. Farrow, Oakland, Cal., for defendants-appellants.

        W. Dean Hester, Malcolm Harris, El Paso, Tex., for plaintiffs-appellees.

        Appeal from the United States District Court for the Western District of Texas.

        Before JOHNSON, WILLIAMS and JOLLY, Circuit Judges.

        E. GRADY JOLLY, Circuit Judge:

        This diversity action involves the right-of-first-refusal clause in a stock transfer restriction which was part of the stock subscription agreement for the purchase of El Paso Cablevision, Inc. (El Paso) common stock. Parties to the agreement included the four plaintiffs, four other non-party individuals, and one of the corporate defendants. The four plaintiffs are minority shareholders of El Paso stock. The three corporate defendants include Teleprompter Cable Services, Inc., (TCSI), the majority shareholder of El Paso stock, Teleprompter Corporation (Teleprompter), TCSI's parent corporation, and Westinghouse Electric Corporation (Westinghouse) whose wholly owned subsidiary owned 100 percent of the Teleprompter stock.

        The court below found that the merger of Teleprompter and Westinghouse's second-tier subsidiary constituted "an other disposition" of the El Paso stock owned by Teleprompter's subsidiary, TCSI. The court enjoined the corporate defendants to honor the first-refusal option by giving the plaintiffs the right to purchase the El Paso stock at a price reflecting the pro rata cost to Westinghouse of purchasing the Teleprompter stock. Finding that the court has clearly misapplied the law to the facts, we reverse.

I.

        In 1967 the City of El Paso, Texas, noticed an intention to franchise a cable television system for the city. Jack Kent Cooke (Cooke) and Jack Kent Cooke, Inc., (Cooke, Inc.) subsequently expressed an interest in obtaining a franchise for installation of the system. Wishing to obtain local ownership in the corporation to operate such a system, Cooke and Cooke, Inc., decided to form the El Paso Corporation with plaintiffs and three other non-party individuals, all El Paso and Tucson, Arizona, businessmen. On September 29, 1967, the seven individuals and Cooke, Inc., entered a stock-subscription agreement for the purchase of 100 percent of El Paso common stock at $10 per share. The plaintiffs purchased 17 1/3 shares of El Paso, Cooke purchased 70 shares, and three other individuals obtained the remaining 12 2/3 shares. The agreement obligated the majority shareholder, Cooke, to provide all funds, personnel and services to finance the installation and operation of the cable television system. Cooke was to be repaid with interest before any distribution was made to the minority shareholders.

        Paragraph 8 of the Subscription Agreement, at issue here, stated as follows:

All shares of stock shall be subject to further restriction that in the event that any of the stockholders propose to sell or otherwise dispose of all or any part of his shares after 18 months from date of issue, said stockholder shall sign and deliver to the other stockholders a written notice stating as follows: That he has received a bona fide offer of purchase of a designated number of his shares of the corporation; that he proposes to accept said offer; the name and address of the real party in interest making such offer; the price per share; and the terms of payment, and the other remaining stockholders on a pro rata basis shall have the prior right for twenty (20) days thereafter to purchase such shares on such terms.

        Notwithstanding the foregoing, Cooke and Company shall have the right at any time to sell, assign or otherwise transfer all or any portion of their stock free and clear from any restriction imposed by this Paragraph 8 to Jack Kent Cooke or any member of his family, to Directors, Officers or key employees of Company, to

Page 129

        Within the eighteen-month period after the formation of the corporation, and thus exempt from the stock transfer restriction, Cooke transferred 4 of his 70 shares to plaintiff, Richard Miller, and one of the non-party individuals transferred his 4 2/3 of El Paso to Cooke, Inc. On December 24, 1969, twenty-four months after the effective date of the transfer restriction, Cooke transferred his remaining 66 shares in El Paso to Cooke, Inc., thus divesting himself of personal ownership of any El Paso stock. Two years later, Cooke, Inc., exercising its right of first refusal, acquired another four shares of El Paso stock from another non-party individual. As of August 1971, the plaintiffs owned 21 1/3 shares of El Paso stock, and Cooke, Inc., owned 74 2/3 shares. That ownership continues to date.

        On October 21, 1968, before Cooke, Inc., acquired any shares of El Paso stock, Cooke sold all of his shares in Cooke, Inc., to H & B American Corporation (H & B) in return for 33 1/3% of the outstanding shares of H & B. Cooke, Inc., thus became H & B's wholly owned subsidiary. Two years later, on September 17, 1970, H & B merged with defendant, Teleprompter. Teleprompter was the surviving corporation, and Cooke, Inc., became a wholly owned subsidiary of Teleprompter. One year later, Cooke, Inc.'s, name was changed to TCSI with all of the El Paso stock registered to and voted by TCSI.

        In 1975, two of the plaintiffs, Pratt and Engel, threatened to sue Teleprompter ¹ if it failed to purchase their El Paso shares. Four years later the same two plaintiffs filed a derivative action against El Paso, Cooke, Cooke, Inc. (TCSI), Teleprompter, the two other plaintiffs, and various other present and former El Paso officers. Teleprompter and Cooke, Inc., were never served, and Cooke was later dismissed from the suit because, as the court found, he had sold his El Paso shares in 1969, had owned no shares since 1969, was never an El Paso officer and had left the El Paso Board of Directors in 1975. He thus had no connection with El Paso and could not be held liable in a derivative action.

        During the pendency of the derivative action, Cooke negotiated an agreement to sell his Teleprompter stock to a Westinghouse subsidiary as part of the proposed merger of the Westinghouse subsidiary and Teleprompter. The proposed merger and Cooke's part therein were reported on the front page of the October 20, 1980, edition of the Wall Street Journal and duly noted by plaintiff Engel. One month later, Westinghouse and Teleprompter executed a merger agreement by which a wholly owned Westinghouse subsidiary was to purchase all of Teleprompter's outstanding stock, the subsidiary would merge into Teleprompter, and Teleprompter would survive the merger. ² Teleprompter's shareholders

Page 130

        Two months later the plaintiffs to this lawsuit (Engel) demanded that Teleprompter and Westinghouse comply with the right of first refusal in the El Paso stock-transfer restriction. One week later, on July 30, 1981, the FCC approved Westinghouse's application to acquire Teleprompter's outstanding stock.

        The next day, the plaintiffs filed the instant action, requesting an injunction to halt the sale of any shares of Teleprompter, TCSI, or El Paso. An ex parte temporary restraining order issued, effectively prohibiting the Teleprompter-Westinghouse merger. A hearing was held on the plaintiffs' Motion for a Temporary Injunction on August 5, 1981, at which time the plaintiffs argued that Westinghouse would acquire ownership and control of El Paso if the merger was consumated, and that they had potential purchasers for 100 percent of the El Paso stock. At the hearing, however, the plaintiffs' counsel conceded that rather than seeking to enjoin the merger, the request for an injunction was to keep the El Paso stock in limbo. This request was granted, and the Westinghouse subsidiary merged into Teleprompter, with Teleprompter surviving and itself becoming a subsidiary of Westinghouse.

        After a bench trial on the merits three months later, the district court concluded that: "After the merger, JACK KENT COOKE (or any exempt transferee of the Cooke shares under Paragraph 8 of the Subscription Agreement) no longer owns or controls any shares of EL PASO CABLEVISION, INC." The court thus found that the merger between Teleprompter and Westinghouse's second-tier subsidiary amounted to "an other disposition" of the 74 2/3 shares of El Paso stock within the meaning of the stock transfer restriction. Accordingly, the court enjoined the corporate defendants to honor the first-refusal option of the El Paso stock subscription agreement by giving the plaintiffs the right to purchase the El Paso stock at a price reflecting Westinghouse's pro rata cost of purchasing the Teleprompter stock. The corporate defendants filed a timely appeal.

II.

        The corporate defendants (denominated Teleprompter) have raised six arguments on appeal to support reversal of the district court's ruling below. ³ Our disposition of this case, however, does not require us to reach each of Teleprompter's arguments. As we view the case, the sole question that we need to decide is whether there was a transfer, sale, assignment, or other disposition in July 1981 of El Paso stock to a non-exempt transferee. In other words, did the merger of the Westinghouse subsidiary with Teleprompter constitute a sale, transfer, assignment, or other disposition of the

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A.

        The district court characterized H & B's acquisition of the Cooke, Inc., (TCSI) stock as a merger in one instance and Cooke, Inc., as a wholly owned subsidiary of H & B in another. The terms "merger" and "stock acquisition," however, have two entirely different legal connotations.

        A merger of two corporations contemplates that one corporation will be absorbed by the other and will cease to exist while the absorbing corporation remains. United States v. Philadelphia National Bank, 374 U.S. 321, 331 n. 7, 83 S.Ct. 1715, 1724 n. 7, 10 L.Ed.2d 915 (1963); Kemos, Inc. v. Bader, 545 F.2d 913, 915 (5th Cir.1977). A subsidiary corporation, on the other hand, is a legal entity separate and apart from its shareholders, notwithstanding the fact that its principal shareholder is another corporation. International City Bank and Trust Co. v. Morgan Walton Properties, Inc., 675 F.2d 666, 669 (5th Cir.1982).

        In a merger, both the assets and liabilities of the disappearing corporation are vested in the surviving corporation. PPG Industries, Inc. v. Guardian Industries Corp., 597 F.2d 1090, 1096 (6th Cir.1979); Vulcan Materials Co. v. United States, 446 F.2d 690, 694 (5th Cir.1971). A purchase of stock in a corporation, however, does not constitute the purchase of the corporate assets, just as a transfer of the stock of a corporation is not a transfer of the property and assets of the corporation itself. United States v. Niarchos, 125 F.Supp. 214, 228 (D.D.C.1954); Department of Transportation v. PSC Resources, Inc., 419 A.2d 1151, 1154, 175 N.J.Super. 447 (1980); Glazer v. Cambridge Industries, 281 Pa.Super. 621, 422 A.2d 642, 644 (Pa.Super.1980); McClory v. Schneider, 51 S.W.2d 738, 741-42 (Tex.Civ.App.1932).

        A detailed analysis of the nature of the transactions involving the El Paso stock is thus crucial to a resolution of this case. Under Texas law, shares of corporate stock are personal property. Griffin v. Jones, 518 S.W.2d 435, 437 (Tex.Civ.App.1974). The El Paso stock thus constituted a personal asset in the hands of its owners.

        When H & B purchased the Cooke, Inc., stock from Cooke in October 1968, Cooke, Inc., became a wholly owned subsidiary of H & B. The transaction did not constitute a merger where Cooke, Inc., was absorbed by H & B and where H & B succeeded to all of Cooke, Inc.'s, privileges, powers, rights, and duties. Rather, Cooke, Inc., became H & B's wholly owned subsidiary, a separate legal entity possessing its own separate assets and liabilities.

        One year later, when Cooke, Inc., acquired the El Paso stock, that stock became the asset of the subsidiary, not that of the parent, since a corporation's acquisition of an asset does not constitute an acquisition by the corporate shareholders absent some actual or bookkeeping transfer of the asset from one entity to the other. City of Woodway, Texas v. United States, 681 F.2d 975, 980 (5th Cir.1982). There was no such transfer here. ⁴

        The next pertinent transaction was H & B's merger with Teleprompter in September 1970. At the time of the merger, H & B wholly owned and operated seventy-three

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        The final transaction relevant to this case was the merger of Teleprompter with a Westinghouse subsidiary in July 1981. Teleprompter, as the surviving corporation, retained all of its previous assets. The record shows specifically that the Westinghouse subsidiary-Teleprompter merger did not involve the sale of any of Teleprompter's assets. As the surviving corporation, Teleprompter continued to own the Cooke, Inc., (TCSI) stock, and TCSI continued to own the 74 2/3 shares of El Paso stock. The record thus supports a conclusion that the El Paso stock is now, and has been since December 1969, owned by Cooke, Inc., (TCSI).

B.

        We next must determine the exempt or non-exempt status of the parties to the transactions. We would note at the outset that our reading of the stock transfer restriction itself requires the following conclusions:

1) those transactions exempt under the agreement were any sale, transfer or assignment of El Paso stock by Cooke or Cooke, Inc., (TCSI) to Cooke; Cooke family members; directors, officers, or key employees of Cooke, Inc., (TCSI); any company in which Cooke owned a majority of the outstanding stock or that company's directors, officers, or key employees;

2) the transfer restriction applied to an exempt transferee, enumerated above, should it decide to sell, assign or transfer any of its El Paso stock to someone other than another exempt transferee.

        Applying the facts of this case to the stock transfer restriction, it would appear that the right of first refusal attached when Cooke transferred his 66 shares of El Paso stock to Cooke, Inc., (TCSI) in December 1969. ⁵ At that time Cooke owned no stock in Cooke, Inc., a wholly owned subsidiary of H & B, nor did his ownership of 33 1/3% of the outstanding shares of H & B constitute a majority ownership of Cooke, Inc.'s, parent.

        At the preliminary injunction hearing, Engel's counsel stated that Cooke, Inc., is "exempt regardless of who owns it or when they own it and so forth ...." On appeal, however, Engel concedes that Cooke's ownership of Cooke, Inc., through ownership of H & B was "eighteen percentage points short of the ownership percentage literally required of the contract" to qualify as an exempt transferee. ⁶ The district court nonetheless categorized Cooke, Inc., as an exempt transferee by reading the stock transfer restriction as exempting "transfers

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        We are thus faced with the fact that Cooke, Inc., (TCSI), the owner of El Paso's 74 2/3 shares of stock, has been a wholly owned subsidiary of another company since its acquisition by H & B in October 1968. From the record we also note that Cooke has never owned a majority position in any of Cooke, Inc.'s parent corporations. It is thus difficult to determine from the court's finding why Cooke, Inc.'s, status as an exempt transferee in December 1969, when it was a wholly owned subsidiary of H & B, is any different from its status as a wholly owned subsidiary of Westinghouse's subsidiary in December 1981 when the judge made his findings of fact.

        The district court found that after the merger of Teleprompter, TCSI's parent, and the Westinghouse subsidiary, "Jack Kent Cooke or any exempt transferee of the Cooke shares under paragraph 8 ...." no longer owned or controlled any shares of El Paso. ⁸ Without any definition of "controls," we think this same statement would be equally applicable to December 1969 when Cooke transferred his El Paso shares to Cooke, Inc., a wholly owned subsidiary of H & B.

        The court below further found that all of the El Paso shares in question were registered to and voted by TCSI, formerly Cooke, Inc., on the one hand, but its legal support for finding that the Teleprompter-Westinghouse subsidiary merger amounted to an "other disposition" of the 74 2/3 shares of El Paso was a 1979 Tenth Circuit case which defined "other disposition" as any transaction "in which the individual in question passes on ownership to someone or some entity." Debry v. Transamerica Corp., 601 F.2d 480, 493 (10th Cir.1979) (emphasis added). The holding in that case, hinging on a transfer of ownership as it obviously does, is clearly distinguishable from the instant case.

        Since Cooke, Inc., (TCSI) has owned the El Paso shares since December 1969, and since the court below found that Cooke, Inc., was an exempt transferee, implicit in the court's holding that no exempt transferee now owns or controls ⁹ the El Paso shares is a finding that someone other than

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        The district court's findings fail to conclude who in its opinion now owns the El Paso stock in question; the findings simply state who does not own the stock. Engel, however, claims, as it did below, that Westinghouse owns 100% of the El Paso stock formerly owned by Cooke, through its wholly owned subsidiaries. To find that Westinghouse now owns the El Paso stock would be to disregard totally the separate corporate existence of two legitimate Westinghouse subsidiaries, Teleprompter Corp. and TCSI. ¹⁰

        A parent corporation possesses a separate existence and is treated separately from a subsidiary unless there are circumstances justifying disregard of the corporate entity. Chrome Plate, Inc. v. District Director of Internal Revenue, 614 F.2d 990, 996 (5th Cir.1980). Here we have been presented absolutely no circumstances, factual, legal, or equitable which would require us to disregard the separate legal existence of the two subsidiaries in question. The mere fact that a wholly owned subsidiary of Westinghouse owned 100% of the stock of Teleprompter which owns 100% of TCSI stock does not justify the conclusion that Westinghouse is the owner of the assets of its third-tier subsidiary, TCSI. Walker v. Newgent, 583 F.2d 163, 167 (5th Cir.1978). As we have stated earlier, ownership of the stock of a corporation is not synonymous with ownership of the corporate assets.

        In the absence of justifiable grounds for disregarding the separate legal existences of Westinghouse, Teleprompter and TCSI, we adhere to our conclusion that TCSI owns the El Paso stock in question and that there has been no sale, transfer, assignment or other disposition since the initial transfer of the Cooke shares of El Paso to Cooke, Inc., (TCSI) in December 1969. Concisely stated, transfer of the stock of a parent corporation does not affect the ownership of assets held by a subsidiary.

C.

        Engel finally alleges that allowing Cooke to sell his shares in the transferee corporation (without specifying who the transferee corporation is), without complying with the first-refusal option would nullify the rights of the minority shareholders.

        Under Texas law, however, stock transfer restrictions are not favored and are to be strictly construed. Earthman's, Inc. v. Earthman, 526 S.W.2d 192, 202 (Tex.Civ.App.1975). To give the plain words of the agreement the interpretation that Engel now urges would be contrary to this Texas principle. ¹¹ Neither law nor equity favors

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        El Paso's minority shareholders have the same rights and privileges today that they acquired in 1967. Ownership of the majority shares of El Paso remains with Cooke, Inc., (TCSI), one of the original parties to the stock subscription agreement. The fact that ownership of Cooke, Inc., has changed is irrelevant to the question of ownership of the El Paso stock in question. The El Paso stock subscription agreement restricted transactions in El Paso stock alone; it did not restrict transactions in the stock of any other corporation.

III.

        After a careful reading of the stock transfer restriction agreement in question and a detailed analysis of the facts and the law applicable to the facts, we find that the district court has clearly misinterpreted the subscription agreement by its implicit finding that the right of first refusal was triggered merely by a transfer of the control of the El Paso stock rather than a transfer of the ownership of the stock. The court furthermore has misapprehended the legal consequences attaching to the ownership of the assets of a corporation when 100% of its stock is acquired by another corporation. Thus by the misinterpretation of the agreement and by a misapplication of the law to the facts of this case, the court has erred in its conclusions. For these reasons, we reverse for dismissal of the complaint and entry of judgment for the defendants.

        REVERSED.

        JERRE S. WILLIAMS, Circuit Judge, concurring specially:

        I concur. The holding and the opinion of the Court effectively reduce a complicated series of business transactions to their critical elements. I wish, however, to place brief emphasis upon certain aspects of our decision.

        It deserves emphasis that the only critical transaction in this case is the 1981 merger under which Teleprompter became the wholly owned subsidiary of Group W which in turn is a wholly owned subsidiary of Westinghouse. All of the relevant aspects of this entire corporate history of El Paso Cablevision Corp. and the controlling Paragraph 8 of its Stock Subscription Agreement are to be evaluated solely on the basis of that 1981 merger and the situation which prevailed when it took place.

        It was at this time that Jack Kent Cooke for the first time sold out his large financial interest in Teleprompter. Plaintiffs claim, with some support in the record, that as Chairman of the Board of Teleprompter

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        The opinion of the Court speculates upon whether the 1969 transaction of Jack Kent Cooke's transfer of his sixty-six shares of El Paso stock to Cooke Inc. was an exempt transfer or not. The opinion concludes that there was no clear error in the district court finding that this was an internal or exempt transaction under Paragraph 8.

        I would not engage even in this much speculative evaluation. It is obvious that all of the parties treated the transaction as an internal transaction under Paragraph 8, and the corporation's stock transfer records note that the transfer was one authorized by that paragraph without first refusal.

        I would place full emphasis upon the fact that the Court in finding that the conclusion of the district court was not clearly erroneous settles once and for all any issue concerning the 1969 transaction. It was an exempt transaction under Paragraph 8. This, in turn, leads to the critical implications of the current status of the parties. I agree that the El Paso Cablevision's stock has never been "sold or otherwise disposed of" within the meaning of Paragraph 8 of the Subscription Agreement since 1969, and that was an exempt transfer. The stock continued, therefore, as a block of stock never sold or otherwise transferred when the parent companies owning it engaged in corporate mergers three different times.

        The final conclusion must be that after this decision the El Paso shares are still subject to Paragraph 8 of the Subscription Agreement. They may not be sold or otherwise transferred (converted into some other kind of shares or asset) by Teleprompter, the subsidiary of Group W, the subsidiary of Westinghouse, without granting the first refusal rights to plaintiff stockholders. I would not concur in the holding of the Court if this continuing right were not recognized. To find that it has been lost, somehow, because Jack Kent Cooke sold his shares in Teleprompter in 1981 would be a conclusion that something had happened by way of sale or other disposition of the El Paso Cablevision shares at some time since 1969 which ended the first refusal restriction. Paragraph 8 contains no provision which would do this.

        Appellant Teleprompter stresses strongly that the investment of the plaintiffs in El Paso Cablevision was very small, and it now is very valuable. The majority opinion makes some reference to this situation. I find it of no relevance at all unless we were engaging in an equitable balancing under a determination to pierce a corporate veil. We properly do not do so. We should not leave an implicit conclusion, however, that the plaintiffs are not entitled to any serious consideration of their legal rights because they invested so little in this company at the beginning. It is clear from this record that the major original investor in El Paso Cablevision, Jack Kent Cooke, realized a huge profit when Teleprompter bought him out. Teleprompter is hardly in a position to buy out Jack Kent Cooke, giving him the full return on his profitable investment in El Paso Cablevision, but then insist that the other stockholders are being unfair and unreasonable when they claim the full benefit of their investment, which included the right of first refusal of any non-exempt sale of El Paso Cablevision's stock. That restriction properly continues. But with no sale or other disposition of the El Paso

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---------------

Megan Mullen

On Sabbatical for 2005-2006 Academic Year

University of Wisconsin-Parkside
900 Wood Road
Kenosha, WI 53141-2000

262-595-2664 (office)
262-595-2271 (fax)
mullen@uwp.edu