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`Current performances would ultimately fade, because no more satisfactory
`plan than that in use could be found.
`The publishers, who had taken no public stand, suddenly found them-
`selves confronted in early 1952 with a crisis of their own, which threatened
`to overturn their distribution plan: 55 percent for performances, 30 for
`availability, and 15 for seniority. Ralph Peer was the first publisher to take
`advantage of the appeal machinery insisted upon by Timberg and his staff.
`He sent a representative to appeal before a newly organized classification
`arbitration panel on behalf of the major ASCAP holding, Southern Music.
`The committee—an ASCAP publisher, an ASCAP writer, and an outside
`expm-t—-found for Peer, raising Southern’s availability from 250 to 450 points,
`a position among the society’s forty leading publishers.
`It also recom-
`mended a broad revision of the availability ratings of all publisher mem-
`be,-5, with an eye to evolving a new formula for computing their standings.
`The decision and the recommendation revived a proposal that many of the
`]arge firms had long advocated, a straight 100 percent performance payoff,
`or at least an increase of the performance factor to the 60 percent level of
`the writer system. With appeals to the arbitration panel piling up, and the
`seventeen—year publisher distribution scheme apparently falling apart, AS-
`
`CAP’s executive committee and legal department, under the direction of
`Herman Finkelstein, worked to prepare a new system that would be ac-
`ceptable to the younger publishers.
`As anticipated,
`there was no serious disruption of the status quo. The
`new system, devised to measure the important publisher availability factor,
`became effective with the October 1952 distribution. It rated the availability
`of every song more than two years old, by the use of IBM machines, on
`the basis of its radio and television performances during the previous five
`years, or eight quarters. This was hailed as a milestone of the society's
`history. For the first time, the value of each work was reckoned in terms
`publishers understood. Performance, availability, and seniority were re-
`tained. Any impact from a change in measuring seniority was cushioned by
`a guarantee that income could not fall below 80 percent the first year, 70
`the second, and 60 the third. Under the new plan, whose major emphasis
`remained on old copyrights, the powerhouse firms—Harms, with the high-
`est previous availability rating, 11,000 points, MGM’s Big Three, and Max
`Dreyfus’s Chappell group—continued to take the lion’s share of distribu-
`tion. Middle-sized firms viewed the new system as an opportunity to grow
`by securing more air play. Only the standard—music houses and new small
`companies suffered. Without a 100 percent current performance payoff that
`recognized recent hits, the latter could not increase their availability ratings
`or their ASCAP earnings until their copyrights went beyond the eight-quarter
`limitation.
`
`Damaged by distribution that effectively allocated 85 percent of all pay-
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`ments on the basis of broadcast performances, which their music houses
`had difficulty in securing, the standard-music publishers had two options.
`They could fight for an increase in the value of performances of classical,
`standard, and art music by broadcasters, as well as in public concerts, or
`they could form BMI-affiliated companies. Many of their best—known younger
`composers, among them William Schuman, Norman Dello Joio, Roger Ses-
`sions, and Walter Piston, had moved to BMI, where Carl Haverlin was
`ready to give financial support to modern concert music and those who
`created it. During the war Aaron Copland resigned to join ASCAP, but the
`American Composers Alliance had moved back to BMI after a short asso-
`ciation with ASCAP. When ACA’s contract had come up for renewal in
`1950, Haverlin proved to its negotiating committee that he was, in the words
`of Otto Luening, who was one of them, a man who “knew the difference
`between long—term projects and speculation with short-term results. He
`understood that time was needed to launch and to make accessible and
`popular certain kinds of music and he gave us all the support that he could
`get out of his board of directors throughout the years of his office.” BMI
`took over all performance licensing on behalf of ACA and paid its mem-
`bers, as well as other modern composers, advance guarantees against earn-
`ings, generally out of all proportion to actual collections. The ACA library
`of manuscript scores and parts and its Composers Facsimile Editions were
`moved to the BMI premises. Tapes and recordings of ACA members’ works
`were sent to radio stations and the conductors of symphony orchestras. Re-
`cordings of ACA and other BMI-licensed music were subsidized, as were
`live performances, including the first public concert in the United States of
`taped music. Conducted by Leopold Stokowski, it was held at the Museum
`of Modern Art on October 28, 1952, and inspired Time to observe that “the
`twentieth—century instrument is the record machine——a phonograph or tape
`recorder.” These projects all served to assist Haverlin in his campaign to
`secure an improved national public image for BMI, through increased in-
`volvement in and support of minority music.
`In pursuing that ambition, and because of the competition engendered for
`the services of composers of “serious” American music, higher income
`could be expected. But as ASCAP’s collections from symphony orchestras
`and concert—hall managers and local impresarios demonstrated, there was
`so little profit in licensing them that any figures reported publicly were
`highly exaggerated. The society collected directly from the country's sym-
`phony orchestras for blanket access to its music on a descending scale,
`beginning at $1,000 a year, down to inconsequential fees from lesser—known
`organizations. The two major concert-artist management corporations, one
`owned by CBS, and many of the other’s artists under contract to NBC
`before the FCC ordered their divestiture, collected a fee of 1 percent on
`behalf of ASCAP from performers and local entrepreneurs. Using their best
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`Efforts, together they did not realize more than $12,000 for the 1951-52
`Season. BMI did not yet license either symphony orchestras or concert halls.
`With so small a return, few performances of large—scale works on radio,
`and none on television, ASCAP attempted to subsidize its serious compos-
`ers, who in 1943 had represented one out of every four writer members, by
`dipping into the availability fund to compensate for the “cultural impor-
`tance" of their music. When 85 percent of distribution was measured by
`performance, under the first revised plan in 1950, and the value of works
`between thirty-six and forty minutes in length was fixed at sixteen points,
`the society’s serious composers found their checks smaller than ever. In
`October 1952, the value of such “unique and prestigious” works was raised
`to forty—four points,
`the total distribution available to them was fixed at
`$35,000 a quarter. When the annual guarantees offered by BMI to several
`ASCAP members surpassed the society’s fixed budget, few resisted BMI’s
`blandishments. The raiding proceeded with certain success, and Starr and
`Dreyfus were asked to intervene and promise any potential defectors sub-
`stantial guarantees against all income, including their ASCAP checks,
`in
`order to keep remaining eminent composers in the society. A large number
`of ASCAP publishers shared the attitude of an unidentified Tin Pan Alleyite
`who was quoted in Bi!!bom'd.' “We must encourage American composers
`of the type of Leroy Anderson and the late George Gershwin, etc., but to
`hell with those longhairs who write compositions for the oboe.”
`The second modified ASCAP writer-payment plan was accepted by the
`Justice Department in June 1952 with its usual “we do not disapprove”
`statement. The proposal was the handiwork of a committee headed by Stan-
`ley Adams, with suggestions from several perennial stormy petrels, one of
`them Hans Lengsfelder, a Viennese composer who had joined the society
`in 1942. After winning success with a few popular hits, some of which he
`published in part himself, he became a leading spokesman for the small
`publisher and new authors and composers in the society.
`The Adams committee plan changed the 60-20-20 three—fund allocation
`to a four-fund formula. The 60 percent performance factor was split into
`equal parts, a sustaining fund and an availability fund. The remaining 40
`percent was divided equally into current performance and accumulated
`earnings funds. Writers had the option of either a ten- or a five-year—basis
`for the sustained performance rating, and availability was cushioned against
`a drop in income, remaining fixed for five years, which in effect placed
`major emphasis on old music.
`With at least half the membership expected to receive higher payments
`under the new play—those in the lowest classifications to gain the most on
`a percentage basis—ASCAP authors and composers on both coasts ap-
`proved the scheme without opposition. Irving Berlin was hailed for accept-
`ing an annual reduction of $5,000 from the $72,000 he had been receiving
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`each year since October 1950, “as a contribution to the general welfare of
`ASCAP.”
`Rather than reduce the income of the special top writers, and some in
`the AA group,
`the new distribution method actually increased their take
`beyond expectation. Berlin received $87,000 for 1952, during only one
`quarter of which the revised plan was in effect. Cole Porter was immedi-
`ately behind him with $78,000. Four estates, those of Jerome Kern, George
`Gershwin, Gus Kahn, and Lorenz Hart, and Rodgers, Hammerstein, Harry
`Warren, and Ira Gershwin received between $40,000 and $44,000 each.
`Johnny Mercer, Jimmy Van Heusen, Dorothy Fields, Jimmy McHugh, Johnny
`Burke, Arthur Schwartz, Frank Loesser, Jule Styne, Leo Robin, Harold
`Arlen, the estates of Walter Donaldson and Sigmund Romberg, and a few
`others were paid between $23,000 and $26,000 for 1952.
`In October 1952, speaking to the West Coast membership in the third
`term of his presidency, a tiring Harbach predicted that the society‘s income
`for 1952 would reach an all-time high of about $15 million, four of that
`from television, and would certainly make forthcoming writer and publisher
`checks larger. In spite of his wish to retire, or probably because of an
`expressed desire for a younger man by the same important writers who had
`voted Ahlert out and him in, which irked Harbach, he agreed to accept a
`third one—year term. Regarded by most of the membership as indispensable,
`particularly because the society had not yet found a successor to John Paine
`as general manager, Harbach was considered the best man to present a
`persuasive case on behalf of ASCAP in Washington, where hearings were
`being held to change the law so that the operators of jukeboxes would pay
`for the music they used. Only Stanley Adams and Oscar Hammerstein II
`had been considered to succeed Harbach, but Dreyfus was still not per-
`suaded that Adams was the man. On the crest of a wave of success in his
`collaboration with Richard Rodgers, which had already produced Okla-
`homaf, Carousel, South Pacific, and The King and 1,
`the veteran lyricist
`and librettist Hammerstein was not ready to give up writing.
`During copyright hearings in connection with a revision of the law in
`1909, music publishers had shown little interest in having the coin-operated
`phonograph business made liable for payment when it used recorded copy-
`righted music, unless admission was charged. Committee reports, accom-
`panying the completed legislation, made reference to statements by some
`publishers that the machines were a chief means for promoting their music
`and should not be touched. The coin-operated music industry was enjoying
`a boom that had begun in the early 1890s. The precursor of the modern
`jukebox could then be found in greatest number in the nation's penny vau—
`devilles, where the latest musical cylinders were offered. The first of these
`emporiums, with nearly 100 ear-tube—equipped Edison Penny Coin Slot Ma-
`chines, was opened on Union Square in New York, operated by a corpora-
`tion capitalized at $500,000, which eventually built up a chain of thirteen
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`additional locations around the country. On a single holiday, an estimated
`g00,000 people crowded into these fourteen vaudevilles and spent at least
`ten cents apiece. Any city of more than 10,000 inhabitants could support
`such a business, and it spread rapidly, yielding substantial profits to the
`Owners. The automatic-phonograph industry did not use disks until 1908,
`when the first automatic coin players went on sale, but by that time the
`nickel—in-the-slot Peerless Player Piano was beginning to replace recorded
`music with that of the paper music roll. Within a year or two, the end came
`for the coin-slot autornatic—phonograph business, but it returned in the early
`1930s, when desperate economic times brought back the poor man's con-
`cert
`Spearheaded by ASCAP, the popular-music business waged an unrelent-
`jng campaign to change the 1909 copyright law in several particulars, chiefly
`compulsory licensing and the two—cent record royalty. Beginning in 1926,
`these matters got out of various Congressional committees only twice,
`reaching the House floor in 1930 and that of the Senate in 1935, only to be
`tabled. In 1940, ASCAP was active in support of a pending bill that was
`expected to yield a fee of five dollars a month from every jukebox in Amer-
`ica. The struggling BMI promptly offered its music to all coin-machine
`operators without charge and urged their cooperation in fighting the soci-
`ety's “practical monopoly of popular music.” For years after, a friendly
`relationship continued between the coin operators’ trade association,
`the
`Music Operators of America, and BMI.
`During the 80th Congress, Representative Hugh Scott, of Pennsylvania,
`made a strenuous but unsuccessful try to end the jukebox exemption and
`obtain passage of his “Interpretation Bill," which proposed copyrighting
`of recorded versions of previously copyrighted musical works. During the
`same session, another Pennsylvania legislator, Congressman Carroll Kearns,
`tried, without success,
`to have phonograph records labeled either “For
`Commercial Use” or “For Home Use Only.”
`In the 1951-52 Congress, Scott again introduced a bill removing the
`jukebox exemption, only to have its place on the agenda taken away by the
`Kefauver-Bryson bill, which exempted the owner of a single jukebox, but
`required all others to obtain a license and pay a weekly penny royalty on
`every copyrighted work inserted into their machines. The MOA spokesmen
`suggested that “it was false and misleading to assert that jukeboxes do not
`pay for the music they use.” Coin operators were, in fact, the largest single
`users of phonograph records, purchasing about 15 percent, or 50 million
`disks, annually. The top twenty-two songs of the period December 1950 to
`September 1951 had sold 53, 535, 551 records and received $1.003 million
`in royalties. The best-selling “Tennessee Waltz" sold 4,225,000 disks and
`received $79,580 in copyright fees. “Mule Train,” with 2,663,303 records
`sold, received $53,183 in royalties, and “Some Enchanted Evening,” sold
`2,565,514 records and got $51,205 in royalties.
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`in a
`Testifying on behalf of the record manufacturers against the bill
`written statement, Mitch Miller incurred even greater enmity from old-line
`music companies by telling the committee that the coin-machine operators
`were chiefly responsible for making those songs into hits. His bold assertion
`that “some of the most successful” songwriters by—passed the music com-
`panies and went directly to the record companies to place their material
`negated much of the MPPA’s testimony regarding the important role of the
`music publisher.
`Despite appearances by a formidable group of ASCAP supporters, testi-
`mony by and about the music business was so contradictory that the com-
`mittee reached no conclusion. Bryson filed only a minority report recom-
`mending the legislation, which died in late 1952.
`With Otto Harbach ineligible and unwilling to serve for another term, in
`April 1953 a younger man took his place as ASCAP president: Stanley
`Adams, forty-five, an attorney before he became a working songwriter in
`the early 1930s. As a writer-director since 1944, he had built a reputation
`as a dedicated committee worker, ready to take on the most onerous chores,
`and a shrewd negotiator. His participation in the 1941 antitrust lawsuit and
`his activity in organizing the still—shadowy Songwriters of America, put him
`in the forefront of the reformers. The most powerful publisher members of
`the ASCAP board,Starr and Dreyfus, had switched their support to Adams
`in time for him to be voted in by unanimous acclamation.
`In a further
`reshuffling of the board, Louis Bernstein, a major MPPA official, was named
`vice-president, sharing the office with Fred Ahlert.
`Ahlert, who had become a familiar figure to Washington legislators dur-
`ing previous copyright hearings, was put in charge of the presentation to
`the Senate Sub-Committee on Copyrights,
`to which the battle against the
`coin-machine business had shifted.
`In July, while music-business propo-
`nents were testifying on behalf of a bill similar to Kefauver—Bryson, Sydney I
`Kaye of BM] threw what Variety dubbed “a Kaye-bomb” into the pro-
`ceedings by joining ASCAP in the copyright fight. This marked the first
`time since BMI’s formation that it took an active stand in support of any
`ASCAP position, and it broke its long cooperative association with the MOA.
`No new bill emerged from the deliberations.
`The sudden reversal of BMI’s position on jukebox exemption was due to
`the equally dramatic reversal of BMI and ASCAP in their position on the
`nation’s coin music machines. In a December issue of Cash Box, a trade
`paper originally intended for the coin operators, but becoming a successful
`competitor of both Billboard and Variety because of its increased music
`coverage, a poll of all subscribers put BMI music in an 81.8! 18.2 percent
`position over the ASCAP repertory in the pop, country—and—western, and
`rhythm—and-blues categories currently most popular on America's juke-
`boxes.
`
`Such an astonishing share of the market was first forecast in October
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`1951, when BMI-licensed music took the first three places on Billboard's
`nflonor Roll of Hits,” as well as the sixth and ninth positions,
`its best
`Showing since 1941. Most significant was the fact that four of the five were
`cslcgitimatfi pop songs,” firm evidence, according to Billboard,
`that BMI
`publishers “could hustle and promote in the same league with top ASCAP
`pubbers, particularly in view of the new position radio deejays play in the
`current pattern of exploitation.” The number—one song, “Because of You,”
`was a revival of a 1941 BMI copyright; in second place was Hill & Range
`Songs’ “I Get Ideas," set to the music of the old Argentine tango “Adios,
`Muchachos"; Acuff—Rose’s Hank Williams’s country hit “Cold Cold Heart”
`was third, now a Mitch Miller triumph in Tony Bennett’s version, which
`had already sold over a million records. The other two were the William
`Saroyan—Ross Bagdasarian (his nephew) “dirty old Armenian man” song
`urging all pretty young women to “Come On-A-My House,” sung by Rose-
`mary Clooney and produced by Miller, and “It Is No Sin,” written by two
`Philadelphia writers and popularized by the local Four Aces quartet on a
`master they paid for themselves, which, in turn, was purchased by Decca.
`Since January, BMI had tasted the fruits of success with “The Tennessee
`Waltz," “The Thing," “The Rovin’ Kind,” “Goodnight, Irene,” and “On
`Top of Old Smoky," the last four published by Howard Richmond.
`In the annual letter to stockholders, Haverlin noted that the company had
`paid $2.6 million in performing rights, from an income of $4.8 million,
`representing an increase in payments to publishers of $400,000 over the
`previous year. BMI had also made one of its annual rebates to all broadcast
`licensees, a 25 percent reduction during the last three months of the fiscal
`year. The strong relation with broadcaster customers was due in great part,
`Haverlin wrote,
`to the nationwide program clinics that had begun in the
`mid—1940s with demonstration in New York of a model music library, con-
`ceived by the company’s station-relations staff as an educational service to
`station managers.
`In 1947, soon after he joined the company, Haverlin
`changed the emphasis of this promotional activity to programing and pro-
`gramers, with BMI-subsidized meetings in some major markets. Following
`invitations from many state broadcaster associations, some created for the
`occasion by Haverlin’s friends in radio, BMI covered thirty—five states an-
`nually, with a road company of four specialist speakers,
`including a BMI
`executive, which joined local panels to discuss the latest developments in
`programing and strategy to cope with the looming specter of television,
`before an audience of local broadcasters. Taking over a natural function
`that the National Association of Radio and Television Broadcasters (the
`NAB brought into the television age) had overlooked, the clinics proved so
`popular and effective that Haverlin was offered, but finally declined, a bet-
`ter-paying position as president of the NARTB.
`ASCAP executives and its board looked with suspicion on the clinics,
`muttering darkly that they were gatherings where broadcasters, determined
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`to destroy the society, plotted together to push BMI music into popularity
`and ASCAP music into oblivion. ASCAP, too, had continued to ignore that
`large and vocal body of grass—roots broadcasters whose programing held up
`the mirror to changing American musical tastes. Throughout 1951, the so-
`ciety's problems were numerous and proliferating. Hollywood appeared de-
`termined to let the blanket licensing of motion pictures hang until ASCAP
`accepted a token payment. Authors and composers were arraying them-
`selves on separate sides over the issue of equitable distribution, and the
`SPA was making its bold bid to take over the role of spokeman for song-
`writers. In the face of an ongoing mysterious government investigation of
`the music business, whose true goal was uncertain,
`the ruling block of
`motion-picture—owned publishers feared that the studios might be forced to
`divest themselves of their music interests, as they had been of their theater
`chains. The All-Industry Television Committee had dug in its heels, refus-
`ing to accept the most recent ASCAP per-program proposal, and, as pro-
`vided in the consent decree, asked the district court in New York to set a
`fair fee. The annual membership gatherings and every ASCAP board meet-
`ing were interrupted by complaints about the foothold BMI and its publish-
`ers were getting on the leading music trade-paper charts. Since 1949, there
`had been few weeks when a BMI song was not among the top ten hits, and
`recently its share had jumped to a steady three out of ten.
`Two efforts by ASCAP’s membership to correct at
`least some of the
`society’s problems were taking shape. The first was an offshoot of the short-
`lived Forum for Songwriters, in 1941, and the action by fourteen songwri-
`ters against the networks, BMI, and the NAB, charging them with conspir-
`acy to destroy ASCAP. Stanley Adams had been at the head of this militant
`group of young ASCAP writers. It was at the insistence of leading publish-
`ers, who had promised to dispose of the action as part of the price for an
`end to the ASCAP-radio war,
`that Adams, Paul Cunningham, and other
`leaders of the plaintiffs agreed to accept $15,000 toward legal fees.
`The music business first became aware in the late spring of 1951 of
`activity by Adams and other former plaintiffs in the 1941 action to do
`something about BMI. First identifying their organization as the Guild, or
`League, of American Songwriters, later the Songwriters of America, a steering
`committee, whose members preferred to remain unknown for the time being,
`solicited contributions to a $250,000 fund from the 100 ASCAP writers
`whose income from the society aggregated one million dollars. The money
`was to be used to fight not only BMI but also the “unfair treatment by
`publishers, record company domination of the song business, payola, artist
`favoritism, moving picture company power in the music industry, and the
`closing of avenues for the display and performance of a song.” Publishers
`were not asked to support the organization, because “a canoe with both
`writers and publishers is sure to rock.” The group's attorney was Robert
`Daru, who, as chief counsel to a Senate committee in the early 1930s, had
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`conducted an investigation into underworld activity in American business,
`and had represented the plaintiffs in their 1941 suit against BMI.
`spokesmen for the organization were quick to point out that the fund was
`being collected to defray legal expenses,
`including any for an appearance
`before the Supreme Court, and that neither ASCAP nor the SPA was in-
`volved, though known to be sympathetic. By October, the fund had grown
`to $300,000, helped by a checkoff contribution of 5 percent of ASCAP
`writer royalties, and Dam had been displaced by John Schulman. With
`most of its anticipated funding in hand, in late 1951 the group announced
`that action would await the outcome of a complaint against BMI filed with
`the Justice Department during the summer.
`That petition was made in connection with an appearance by ASCAP, in
`August 1951, before the New York district court, responding to a demand
`by the All-Industry Television Committee for a fair rate from the society.
`ASCAP asked Judge Henry W. Goddard to approve the terms it had offered
`in March to the committee, which represented fifty-six stations, or about
`half of those in the industry. ASCAP had already stopped accepting interim
`payments from the litigants, a move agreed upon in a pact made early in
`1950, which called for eventual payments retroactive to January 1, 1949.
`In the meantime, a lump sum, based on each station‘s income, was being
`put into escrow each month.
`-Simultaneously with its plea, ASCAP filed a 100-page document, known
`as the Harbach Affidavit, asking for new language in the amended order of
`1950. It argued that broadcasters would “skim off” the society's ‘‘gems’‘
`and devote the remainder of their programing to the BMI repertory. If the
`plea was granted,
`the society could refuse a per—program license to any
`radio or television station that had a blanket BMI license. The claim was
`
`made that otherwise BMI had an unfair competitive advantage. Remember-
`ing that the society had been told in early 1941 that “when BMI became
`big enough to hurt ASCAP" the government would step in and change
`things, legal counsel and the board anticipated an early favorable action.
`The Harbach Affidavit was passed to the Justice Department, and a lengthy
`investigative process began, which eventually produced a lengthy request
`for information on eighty—six points. Disturbed by the inaction,
`in March
`1952 ASCAP reminded the public and the press of its plea for relief by
`filing a formal request for an investigation of the charges incorporated in
`the affidavit, essentially that BMI operated as a combination in restraint of
`trade through its relations with the broadcasting industry, which made BMI,
`in effect, its creature. Paul Ackerman of Billboard, who had been covering
`the BMI-ASCAP situation since its genesis, wrote in April
`that while
`ASCAP “has endeavored to set itself up solidly in TV, and while it has
`been fighting to re-establish itself in films,
`it has been constantly losing
`ground on another front—promotion .
`.
`.
`it has steadfastly refused to pro-
`mote itself to music users. The result has been that BMI .
`.
`. has run the
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`is a wholly-owned corporation, the
`latter a very fast race. BMI, of course,
`structure of which permits money to be freely expended for promotion.
`ASCAP has always taken the position that such funds as are collected must
`be distributed to the membership.”
`Rising economic stakes and the changing balance of power in the elec-
`tronic entertainment business were major factors in the continuing strained
`relations between broadcasters and ASCAP throughout this period. Almost
`overnight, the value of television as a source of income to the society had
`grown to undreamed-of proportions. In early 1946, television had not yet
`become a big business, and ASCAP was content with its dollar-a-year ar-
`rangements with stations. Anybody with the modest sum of $272,500 could
`buy all the equipment needed to go into television, according to a promo-
`tion pamphlet designed by Dumont Laboratories’ sales department to sell
`the Paramount subsidiary’s transmitting technology. In thirty months,
`the
`sales pitch continued, the station owner would make a net operating profit
`before taxes of $47,983.97, or 17.6 percent of his capital investment. Crit-
`ics argued that profits should run even higher, because advertising time
`rates had been increased. The constantly rising valuation placed on the Blue
`Network, after the Supreme Court upheld an FCC order to RCA to divest
`itself of its second network, dramatically illustrated the profits being made
`in broadcasting.
`To comply with the court’s ruling, NBC had formed a separate corpora-
`tion, the Blue Network, Inc., which owned WJZ, New York, WENR, Chi-
`cago, and KCO, San Francisco, and then sold it to the Life Saver King,
`Edward Noble. The sale was finally approved in the fall of 1942, provided
`Noble disposed of radio station WMCA in New York, which he had ac-
`quired for $850,000 but which was now worth over $1.5 million. During
`the protracted negotiations, the Blue Network not only showed no loss for
`the first time, but also made a million-dollar profit, which went to Noble.
`He changed the network’s name to the American Broadcasting Company
`after recouping a fifth of his investment in the first year of operation. Be-
`cause of the boom in building new radio stations after the government lifted
`its wartime freeze on new construction, ABC grew from 195 affiliates in
`1945 to 282 five years later. One reason for its success was the presence
`on the schedule of Bing Crosby, who had helped to build CBS into a major
`network before moving to NBC in the early 1930s; he now became ABC’s
`most
`important personality and introduced the taped radio program to
`broadcasting. Taping resulted in considerable savings for ABC, which oth-
`erwise would have paid overtime to talent and engineers for repeat broad-
`casts to the West Coast. With tape simplifying recorded broadcasts, ABC
`was the first network to adopt disk-jockey programing on a national basis,
`in 1947, followed reluctantly by CBS and NBC.
`In 1950, with a television network of thirteen stations, ABC ran a poor
`fourth to its rivals, NBC, CBS, and Dumont, the last of which had a net-
`
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`I941;1953
`
`311
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`work of fifty-two affiliates, making it second to NBC. However, ABC had
`become, and remained, a target of vital importance for motion-picture com-
`panics that wanted to get into the new picture—and-sound medium. In late
`1943, 20th Century—Fox offered $15 million for the ABC radio and tele-
`vision networks, the latter including owned-and-operated facilities in New
`York, Chicago, Detroit, Los Angeles, and San Francisco. The deal fell
`through only because the film company would not meet Noble’s asking
`price of $21 million. CBS began negotiations in the spring of 1951 to ac-
`quire the ABC network for $26 million, so that it could add the Chicago,
`Detroit, and San Francisco television stations to the only two video facili-
`ties it actually owned, New York’s WCBS-TV and KNXT—TV in San Fran-
`cisco, the cornerstones of its operation. William Paley intended to sell off
`the ABC radio network, now with about $35 million in billings, and its
`New York and Los Angeles television stations, to parties unknown, for $20
`million. Because of its complexity, the CBS—ABC transaction broke down,
`but offers followed at once, from United Paramount Theaters and Inter-
`national Telephone and Telegraph,
`to purchase Noble’s holdings. The ITT
`offer was withdrawn. The Paramount negotiation terminated when Noble
`insisted that he receive sufficient UPT common stock to give him a major
`controlling interest.
`to let
`UPT officials, principa