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Preface

Part I
The Emergence Of American Television: The Formative Years

  Chapter 1

  Chapter 2

Part II
One Nation Under Network Television: The 1950s

  Chapter 3

  Chapter 4

  Chapter 5

  Chapter 6

Part III
The Years Of Plenty: The 1960s and 1970s

  Chapter 7

  Chapter 8

  Chapter 9

Part IV
Toward and Video Order: the 1980s and 1990s

  Chapter 10

  Chapter 11

  Chapter 12

 

 

The Freeze

The acceptance of television by the public and by advertisers was all the more impressive since in mid-1950 the United States was a nation once again at war. Little more than five years after the end of World War II, American manpower and industry were geared up for armed conflict in Korea. And just as World War II had arrested video development, so too did the Korean War raise the possibility of a similar fate for TV in these first years of national popularity. Some radio executives even expressed confidence that wartime curbs on television would give their old medium a "second chance" for survival.

Although the Korean conflict remained a limited war, thereby making it unnecessary for the federal government to require a thorough retooling of the electronics industry, throughout the period 1950-1953 there persisted the chance that expanded hostilities would blunt, if not fully arrest, the televi­sion boom. Yet, except for the restrictions placed on the use of cobalt needed for the production of color TV, Washington did not impede the fledgling industry.

Popular confidence in TV was striking, too, because a "temporary" freeze on licensing new stations severely limited the number of outlets and the availability of the medium. The hiatus was ordered by the FCC in September 1948. Expected to last six months, it was not ended until April 1952. The freeze was the result of poor planning by the Commission. It had anticipated neither the sudden popularity of television nor the technical problems widespread acceptance quickly precipitated. Although the Commission had issued 108 licenses by the fall 1948, there were hundreds more applications pending from across the nation. The FCC used the freeze years to negotiate industry agreements on such matters as frequency allocation, signal interference between cities, tropospheric interference with broadcast signals, creation of standards for color television, establishment of educational television stations, and creation of additional channels through the opening of the UHF spectrum.

In terms of video availability, the freeze affected only the issuance of new construction permits; those companies already holding licenses were allowed to build their stations and begin operations. Television continued to spread across the continent, although at a slower pace. Whereas 37 stations were telecasting in 21 market areas at the beginning of the freeze, 108 stations were telecasting by the time it was lifted. Nonetheless, in fourteen states—New Hampshire, Maine, Vermont, South Carolina, Arkansas, Mississippi, Kansas, North Dakota, South Dakota, Montana, Colorado, Wyoming, Idaho, and Nevada—no transmitters were yet authorized. Although residents in half these states could receive transmissions from adjoining states, there remained seven states in which television was not available.

Moreover, hundreds of important U.S. cities missed the first years of popular TV. Located great distances from functioning video transmitters, communities such as Denver (330 miles), Wichita (230 miles), and Little Rock (133 miles) had no television in the freeze years. Even in states with operating stations there were important cities too far from a transmitter to receive a signal: El Paso (225 miles); Tampa-St. Petersburg (170 miles); Fresno (152 miles); Spokane (230 miles); and Portland, Oregon (142 miles).

For all the inconvenience it created, the freeze blunted neither the explosive popularity of TV nor the fierce competition being waged by the networks as they maneuvered for power within the industry. Whereas less than one-half of 1 percent of the nation had TV in 1948, by the end of 1952 more than one-third of U.S. homes owned a receiver. By the latter date, too, TV advertising revenues were already 70 percent as large as those for radio. And TV set production increased six fold between 1948 and 1952.

The freeze years also allowed the networks, specifically NBC and CBS, to extend their dominance over national video. If network success lay in the ability to deliver large audiences, the talent pool and financial strength of NBC and CBS provided leverage absent at ABC and DuMont. In many markets, moreover, this leverage was magnified by the fact that TV was controlled by companies already operating NBC or CBS radio affiliates. And in small markets, where a single station might be affiliated with more than one network, NBC and CBS made wide use of coercive "option time" contracts, which gave them first rights to place their shows on the air ahead of ABC and DuMont programs offered at the same time. As Allen B. DuMont explained the situation, "the freeze reserved to two networks the almost exclusive right to broadcast in all but 12 of the 63 markets which had television service. It meant that the other two networks did not have...more than a ghost of an opportunity to get programs into the markets so necessary...[to] attract advertisers from whom revenues and profits must come.

Proof of DuMont's lamentation was in the statistics. Between 1949 and 1952 network billings for NBC and CBS rose from $9.9 million to $152.3 million, more than 84 percent of all network time sales. Figures for ABC and DuMont increased from $2.4 to $28.5 million. Were it not for a windfall of $30 million acquired through its merger with United Paramount Theaters (UPT) in 1953, ABC probably would not have survived the competition. Lacking a similar infusion of capital, however, the DuMont network continued to atrophy until it went out of business in 1955.

Regardless of the intense business struggles behind the scenes, Americans wanted television. This was evident in the rapidity with which new outlets were approved and made operational following the lifting of the freeze. Within a year 70 new stations were on the air, and the FCC approved an additional 280 broadcast licenses. By 1955 there were 422 stations in the United States, and 485 by the end of 1958.

Popular acceptance of video was obvious, too, in the dissemination of receivers. The number of households with TV, which had risen steadily throughout the freeze—from 3.8 million in 1950 to 15.3 million in 1952—swelled from 26 million (55.7 percent of all U.S. households) in 1955 to 38.9 million (78.6 percent) in 1957 and to 43.9 million (85.9 percent) in 1959. There existed no better indication of the video success than the profit levels of TV stations. After a few years of losses, by 1954 the average station realized profit margins of 35 and 40 percent.

With all its positives and negatives, national television had arrived by the mid-1950s. Now in control of a multibillion-dollar industry, the networks would spend the rest of the decade streamlining their business. By eliminating inefficient practices, maximizing profit potential, narrowing the scope of their operations, and holding close to the ratings as a guide to program life or death, CBS, NBC, and ABC solidified their domination of American video and spent the rest of the decade making money.

When David Sarnoff guided his son Robert to the presidency of NBC in December 1955, Sarnoff the elder observed that the network now possessed "the best and most complete organization we have had since the advent of television." Indeed, it was a golden time for NBC, and for all broadcasters who had survived the formative years. After absorbing massive financial losses, television began to turn a profit in 1953 and never looked back. The freeze was now history, and the exodus to TV was in high gear.

At the time General Sarnoff was anointing his son, there were 39.4 million sets in use in the United States; 70 percent of all U.S. homes had television; and there were 331 VHF and 106 UHF stations operative in the United States. The president of the Radio-Electronic-Television Manufacturers' Association, H. Leslie Hoffman, was ecstatic when he hailed television in 1955 as the greatest retail value of any consumer commodity—costing only three cents an hour to watch, including set depreciation and servicing."

Advertisers that year spent more than $1 billion in TV, and NBC's gross billings topped $140 million. Total profits for the three networks were $68 million—a rate of return of more than 116 percent against the value of depreciated tangible property. Although ABC, CBS, and NBC owned only 25 percent of all industry assets, they earned more than 45 percent of total industry profit.

The euphoria in Sarnoff's words could certainly have been shared by William S. Paley. CBS may have lost the technological competition against RCA, but in 1955 CBS made more money than NBC. Paley and his network moved to the head of the ratings race with America's favorite television programs. He later recalled the events of the years. "Being the most popular network was a nice position to be in," Paley wrote, "and though we could hardly expect to stay there undisturbed forever, we would always try." CBS's preeminence would endure for twenty-one consecutive years.

Even inglorious ABC had reason to gloat. It had avoided bankruptcy and survived the final cut. With DuMont shrinking out of the picture and with new management brought to the network through its merger with UPT, it was time for the junior network to makes its bid for industry respect and profitability. Soon, as the most innovative operation in network TV, ABC would be taking the company, the industry, the nation—indeed, the globe—in new directions.

 

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