Episode 3: Radio to Television - A New Age Dawns

Even as radio companies were reaching the height of their influence, David Sarnoff, Bill Paley and others manuevered to introduce a new technology called “television” to mass audiences. But like the wireless, scientists worked futilely on early television experiments in isolated locations with minimal commercial support, some as early as the 1890’s. David Sarnoff was so sure about television that he organized a public exhibit at the 1939 New York World’s Fair. Then World War II intervened, and radio again took center stage.

Because of their influence over radio, NBC and CBS were relatively free to maneuver around each other when the time was right to exploit the new technology. The fascination with television after World War II, however, dovetailed with a steady decline in radio advertising revenue in the 1940s. By 1951 network radio ads had fallen by more than 50% from 1946. Both NBC and CBS hedged their bets by funneling radio money into television.

Other forces also came into play. Television’s first “gold rush” began with the FCC’s allocation of licenses in 1945, and was already dominated by the rivalry between NBC, the largest owner of network radio stations, and CBS, the leader in advertising sales from its popular radio shows. NBC took the lead by backing RCA’s design for “simultaneous” black and white television receivers that would only operate on RCA’s system, and soon developed plans for a color set. NBC then purchased five television stations under the new television rules. CBS invested over $60 million in its own “sequential” color system, but purchased only one TV station in 1946. Both companies then proposed to the FCC that their color systems be recognized as standards for television.

NBC and CBS each scheduled tests for FCC commissioners to make their case. In a press release NBC admitted some flaws in its tests, but emphasized the “compatibility” of RCA’s color system with existing black and white television sets, the majority of which RCA sold in America. Witnesses to the CBS tests described those images as “exceptionally clear and steady”, and noted FCC Chairman Charles Denny's enthusiasm.

Nevertheless, the commission favored RCA’s color system, stating “receivers that are built for the (CBS) sequential system would not be able to receive programs from television stations broadcasting on a simultaneous system.”, and noted that “many of the fundamentals (of CBS’s system) … have not been adequately field tested.” Months later, Chairman Denny resigned from the FCC and accepted a vice presidency at RCA.

Other developments further compounded CBS’s problems. Since the end of the war, the FCC was inundated with new applications for television licenses, and then numerous complaints from existing stations of “snow”, “ghosts”, and other forms of interference. Soon it was clear that the commission needed to revise the nation’s television standards. In May 1948 the FCC announced that changes in channel allocations were necessary before any more new licenses could be granted. As a result, the FCC ruled that all requests for licenses would be halted indefinitely, and no hearing dates for new applications would be scheduled until the current allocation table was revised. The license “freeze” would last until 1952.

The ruling had profound effects on the Columbia Broadcasting interests. Satisfied with CBS’ lead over NBC in radio, CBS President Paul Kasten and Vice President of Research Frank Stanton advised Paley in 1945 that there could be two color television systems, one on VHF, which NBC dominated, and another on UHF, an unused higher frequency band. The CBS executives were so confident in their assessment, and on the FCC’s decision to accept their proposal, that they passed on four opportunities to buy VHF stations in 1946 and 1947. The gamble failed miserably. In short order CBS was hit with the rejection of its color system, and the FCC “freeze” on new licenses.

Paley quickly discovered that existing television licenses steadily increased in value. As he later observed:

…when we came to buy the four more television stations CBS was entitled to under FCC rules, the value and price…increased tremendously. Nor was it only the price we would have to pay. The time, the effort, tensions involved were incalculable. When we wanted to buy, television station owners did not want to sell… It was a sellers’ market.

RCA and NBC were well positioned to take advantage of Paley’s miscalculation. In 1947 the New York Times estimated that RCA’s 90% market share in black and white television set production was worth almost $65 million annually even before color sets could be introduced. In September 1947, Sarnoff predicted the market for televisions would grow to 750,000 in the next year. In 1948 sales of TV sets actually reached 975,000, and by 1953, one year after the freeze was lifted, over 7 million were sold. Most were tuned to NBC stations.

Sarnoff’s further prediction that station investments and programming would grow also proved to be accurate. In 1951 Paramount Pictures used money from the forced sale of its theater chain to purchase NBC’s old “blue” radio network from a business man who purchased it in 1943, and immediately applied to purchase five television stations in the same cities. (NBC had neglected the stations it acquired during the divestment of the RCA partnership.) That year Paramount formed the American Broadcasting Company, or “ABC”, a third television network. RCA solidified its own position by extending the NBC network to include independent stations that would air NBC produced shows. The other networks soon followed.

In the 1950’s the commercial structure of American television began to emerge, made up of a new triumvirate consisting of NBC, CBS, and a newly created and distant competitor, ABC. As the license “freeze” lifted, each company purchased its alloted television stations, and created partnerships with independent stations they now identified as “affiliates”. The majors also produced their own branded shows, had their own stable of stars, and competed largely among themselves for advertisers. By the 1960’s the transference of control to television by remnants of the old radio group was complete, a situation that would bring immense wealth to the industry for the next two decades.

Television and Society

Outside the corporate boardrooms, however, the changes brought on by television were more profound. In the 1950’s many people sensed the impact television was having on American life. New York Times television critic Jack Gould noted that "[television]...is influencing the social and economic habits of the nation to a degree unparalleled since the advent of the automobile.” Gould based this observation on a series of reports from Times correspondents in 100 communities across the country. A dramatic change was occurring in the way Americans were spending their leisure time. Gould associated sharp declines in movie attendance and numerous theater closures to the introduction of television in large cities.

In New York, for example, the Times reported the closing of 55 theaters. In southern California 134 closed. In eastern Pennsylvania 70 theaters closed, followed by 64 in Chicago; and another 61 in Massachusetts. In fact, according to Gould, most major cities reported movie box office declines of 10 to 40 percent. In Hollywood the motion picture industry reported a loss of more than $90 million and nearly 5000 craft jobs between 1947 and 1950.

Gould reported that television was having a similar impact on radio. In an article entitled "TV Makes Inroads on Big Radio Chains", Gould noted that major radio network programs were losing "a sizable portion of their after-dark audience", resulting in revenue loses and the curtailing of some operations at all three network operations. The effects were felt in several cities. Evening radio listening in Philadelphia was off 25%, Gould reported. Detroit radio stations reported evening audience declines of 60%, and 30% loses before 6 pm. In Cleveland, a large radio station was forced to reduce its selling price from $3 million to $1.25 million because of the unfavorable market. Another radio station, WINX in Washington D.C., was sold for only $120,000 in 1951. It had been purchased for $500,000 in 1944.

Gould’s article prompted a full page reply in the New York Times by NBC, even as Sarnoff was preparing to inundate America with television sets. "Yes Mr. Gould", the notice began, "Television does have impact but...Network Radio Reaches More People in More Places At The Lowest Cost." NBC then claimed that network radio was still heard in 41.9 million homes, in 19.1 million cars, and "is the only open channel of communication open to all America".

While the degree of influence attributed to television during this period was significant, Sarnoff was correct: in 1951 only 62% of the population could watch television at all. The FCC’s license freeze left the nation with only 108 television stations serving 63 cities. When it was lifted in 1952, large urban areas, including New York, Los Angeles, Chicago, Boston, San Francisco, Philadelphia, Baltimore, Detroit and Pittsburgh, were served. But entire states, including Idaho, Montana, Nevada, New Mexico, North Dakota, South Dakota, Vermont and Wyoming had no channels at all. In Arizona, Arkansas, Maine, Maryland, Minnesota, Mississippi, New Hampshire, Oregon and Utah only one city was served by a television station.

This disparity was an incentive for some individuals to find ways of bringing distant TV signals into their homes. In many small towns appliance dealers, repairmen, electricians, ex-military radio operators, even radio broadcasters, set their minds to work. As viewers they had been attracted by television’s flickering images. Most of them merely wanted to see what the press was raving about. Their efforts are recognized today as the birth of cable television.

Next time: The Birth of Cable TV

Copyright © 2007 R.E. Xavier