American Broadcasting Companies (ABC), Inc. (Specimen)

American Broadcasting Companies (ABC), Inc. (Specimen)
Item# 4361pu

From the organization of the first true radio networks in the late 1920s, broadcasting in the United States was dominated by two companies, CBS and RCA's NBC. Before NBC's 1926 formation, RCA had acquired AT&T;'s New York City station WEAF (later WNBC, now CBS-owned WFAN). With WEAF came a loosely organized system feeding programming to other stations in the northeastern U.S. RCA, before the acquisition of the WEAF group in mid-1926, had previously owned a second such group, with WJZ in Newark as the lead station (purchased by RCA in 1923 from Westinghouse) . These were the foundations of RCA's two programming services, the NBC "Red" and NBC "Blue" networks. Legend has it that the color designations originated from the color of the push-pins early engineers used to designate affiliates of WEAF (red pins) and WJZ (blue pins).

After a three-year investigation, the FCC in May 1940 issued a "Report on Chain Broadcasting." Finding that NBC Red, NBC Blue, CBS, and MBS dominated American broadcasting, this report proposed "divorcement", requiring the sale by RCA of one of its chains. NBC Red was the larger radio network, carrying the leading entertainment and music programs. In addition, many Red affiliates were high-powered, clear-channel stations, heard nationwide. NBC Blue offered most of the company's news and cultural programs, many of them "sustaining" or unsponsored. Among other findings, the FCC claimed RCA used NBC Blue to suppress competition against NBC Red. The FCC did not regulate or license networks directly, but it could influence them by its licensing of individual stations. Consequently, the FCC issued a ruling that "no license shall be issued to a standard broadcast station affiliated with a network which maintains more than one network." NBC argued this indirect style of regulation was illegal and appealed to the courts. However, the FCC won on appeal, and on January 8, 1942 NBC decided to separate its Red and Blue networks with the intention of divesting itself of the latter.

The task of selling of NBC Blue was given to Mark Woods; throughout 1942 and 1943, NBC Red and NBC Blue divided their assets. A price of $8 million was put on the Blue group, and Woods shopped Blue around to potential buyers. One such, investment bank Dillon, Read made an offer of $7.5 million, but Woods and RCA chief David Sarnoff held firm at $8 million. The Blue package contained leases on land-lines and on studio facilities in New York, Washington, D.C., Chicago and Los Angeles; contracts with talent and with about sixty affiliates; the trademark and "good will" associated with the Blue name; and licenses for three stations (WJZ in New York, San Francisco's KGO, and WENR in Chicago — really a half-station, since WENR shared time and a frequency with "Prairie Farmer" station WLS, with which it would later merge under full ABC ownership in 1954).

RCA finally found a buyer in Edward Noble, owner of Life Savers candy and the Rexall drugstore chain. In order to complete the station-license transfer, Noble had to sell his New York radio station, WMCA. Controversy ensued at FCC hearings over Noble's intention to keep Mark Woods on as president, which led to the suggestion that Woods would continue to work with (and for) his former employers. This had the potential to derail the sale. During the hearings, Woods said the new network would not sell airtime to the American Federation of Labor. Noble evaded questioning on similar points by hiding behind the NAB code. Frustrated, the chairman advised Noble to do some rethinking. Apparently he did, and the sale closed on October 12, 1943. The new network, known as "The Blue Network", was owned by the American Broadcasting System, a company Noble formed for the deal. It sold airtime to organized labor.

In mid-1944, Noble renamed his network American Broadcasting Company. This set off a flurry of re-naming; to avoid confusion, CBS changed the call-letters of its New York flagship, WABC-AM 880, to WCBS-AM in 1946. In 1953, WJZ in New York and its sister television station took on the abandoned call-letters WABC and WABC-TV. (Westinghouse later reclaimed the WJZ callsign when it acquired a Baltimore television station in 1959.)

Faced with the expenses of building a radio network, ABC was in no position to take on the additional costs demanded by television. Yet to secure a place at the table, in 1947 ABC submitted requests for licenses in the five cities where it owned radio stations (which together represented 25 percent of the entire nationwide viewing audience at the time). All five requests were for each station to broadcast on channel 7; Frank Marx, ABC's vice president in charge of engineering, thought at the time that the low-band (channels 2 through 6) TV channels would be reallocated for military use, thus making these five stations broadcasting on VHF channel 7 the lowest on the TV dial and therefore the best channel positions (such a move never occurred, although fortuitously, 60 years later the Channel 7 frequency would prove technically favorable for digital television transmission, a technology unanticipated at the dawn of TV broadcasting). The ABC television network went on the air on April 19, 1948. The network picked up its first primary affiliates, WFIL-TV in Philadelphia (now WPVI-TV) and WMAL-TV in Washington (now WJLA-TV) before its flagship owned and operated station ("O&O;"), WJZ-TV in New York (now WABC-TV) signed on in August of that year. The rest of ABC's fleet of owned-and-operated major market stations, in Detroit, Chicago, San Francisco and Los Angeles, would sign on during the next 13 months, giving it parity with CBS and NBC in the important area of big-city presence, as well as a long term advantage in guaranteed reach over the rival DuMont Television Network, by the fall of 1949.

For the next few years, ABC was a television network mostly in name. Except for the largest markets, most cities had only one or two stations. The FCC froze applications for new stations in 1948 while it sorted out the thousands of applicants and re-thought the technical and allocation standards set down between 1938 and 1946. What was meant to be a six-month freeze lasted until the middle of 1952. Until that time there were only 108 stations in the United States. Some large cities where TV development was slow, like Pittsburgh and St. Louis, had only one station on the air for a prolonged period, many more of the largest cities such as Boston only had two, and many sizable cities including Denver, Colorado and Portland, Oregon had no television service at all until the second half of 1952 after the freeze ended. For a late-comer like ABC, this meant being relegated to secondary status in many markets and no reach at all in some. ABC commanded little affiliate loyalty, though unlike fellow startup network DuMont, it at least had a radio network on which to draw loyalty and revenue. It also had a full complement of five O&Os;, which included stations in the critical Chicago (WENR-TV, now WLS-TV) and Los Angeles (KECA-TV, now KABC-TV) markets. Even then, by 1951 ABC found itself badly overextended and on the verge of bankruptcy. It had only nine full-time affiliates to augment its five O&Os;—WJZ, WENR, KECA, WXYZ-TV in Detroit and KGO-TV in San Francisco.

Noble finally found a white knight in United Paramount Theaters. Divorced from Paramount Pictures at the end of 1949 by the U.S. Supreme Court decision United States v. Paramount Pictures, Inc., UPT was cash-rich and controlled much valuable real estate. UPT head Leonard Goldenson (whose printed signature appears on this piece) set out to find investment opportunities. Barred from the film business, Goldenson saw broadcasting as a possibility, and approached Noble in 1951 about buying ABC. Noble was being approached by other suitors, including Bill Paley's CBS, so he was not in a hurry to accommodate Goldenson. After some tough negotiations, a merger with UPT was eventually agreed to in principle and announced in the late spring of 1951. Since the transfer of station licenses was again involved, the FCC set hearings, which proved to be contentious.

The FCC focused on the Paramount Pictures-UPT divorce; were they truly separate? What role did Paramount's long-time investment in DuMont Laboratories, parent of the television network, play? After a year of deliberation the FCC finally approved the purchase by UPT in a 5–2 split decision on February 9, 1953. Speaking in favor of the deal, one commissioner pointed out that UPT had the cash to turn ABC into a viable, competitive third network. The corporate name became American Broadcasting-Paramount Theatres, Inc. Edward Noble remained on the new ABC's board of directors until his death in 1958; he and Goldenson would disagree at times over the direction ABC would now take. Robert Kintner, the network president originally hired by Noble, was forced out by 1956 despite Noble's vigorous objections, as Goldenson and the executives he brought on board eventually took solid command.

Shortly after the ABC–UPT merger, Goldenson approached DuMont with a merger offer. DuMont was in financial trouble for a number of reasons, not the least of which was an FCC ruling that barred it from acquiring two additional O&Os; because of two stations owned by Paramount. However, DuMont's pioneering status in television and programming creativity gave it a leg up on ABC, and for a time appeared that DuMont was about to establish itself as the third television network. This all changed with the ABC-UPT merger, which effectively placed DuMont on life support. Goldenson and DuMont's managing director, Ted Bergmann, quickly agreed to a deal. Under the proposed merger, the merged network would have been called "ABC-DuMont" for at least five years. DuMont would get $5 million in cash and guaranteed advertising time for DuMont television receivers. In return, ABC agreed to honor all of DuMont's network commitments. The merged network would have been a colossus rivaling CBS and NBC, with O&Os; in five of the six largest markets (all except Philadelphia, which would later become an O & O). It would have had to sell either WJZ-TV or DuMont flagship WABD-TV (now WNYW) as well as two other stations (most likely WXYZ-TV and KGO-TV) in order to comply with the FCC's five-station limit. The merged network would have also acquired the aforementioned monopoly in Pittsburgh with DuMont-owned WDTV (now KDKA-TV, and ironically now a CBS O&O;) being part of the merger. However, Paramount vetoed the sale. A few months earlier, the FCC ruled that Paramount controlled DuMont, and there were still lingering questions about whether the two companies were truly separate. By 1956, the DuMont network had shut down.

After its acquisition by UPT, ABC at last had the means to offer a full-time television network service on the scale of CBS and NBC. By mid-1953, Goldenson had begun a two-front campaign, calling on his old pals at the Hollywood studios (he had been head of the mighty Paramount theater chain since 1938) to convince them to move into television programming (within a few years shifting television programming from predominantly live shows from New York to films made for television in Hollywood). And he began wooing station owners to convince them that a refurbished ABC was about to burst forth. He also convinced long-time NBC and CBS affiliates in several markets to move to ABC. His two-part campaign paid off when the "new" ABC hit the air on October 27, 1954. Among the shows that brought in record audiences was Disneyland, produced-by and starring Walt Disney... the beginning of a relationship between the studio and the network which would eventually, four decades later, transform them both. MGM, Warner Brothers and Twentieth Century-Fox were also present that first season. Within two years, Warner Bros. was producing ten hours of programming for ABC each week, mostly interchangeable detective and western series. The middle 1950s saw ABC finally have shows in the top 10 including Disneyland. Other early hit series on ABC during this period which helped establish the network included The Lone Ranger (ABC's only Top 10 show before Disneyland), The Adventures Of Ozzie And Harriet, (starring the real-life Nelson family), Leave It To Beaver (which moved over from CBS), The Detectives and The Untouchables. However, it still had a long way to go. It was relegated to secondary status in many markets until the late 1960s and, in a few cases, into the 1980s.

In 1955, ABC established a recording division, the AmPar Record Corporation, which founded and operated the popular label ABC-Paramount Records (which became ABC Records in 1965) and the noted jazz label Impulse Records, created in 1961. ABC-Paramount subsequently purchased more labels from the Famous Music division of Gulf+Western – Dot, Steed, Acta, Blue Thumb, and Paramount, along with legendary Country and R&B; label Duke/Peacock in 1974. The entire group was sold to MCA Records in 1979; as a result of subsequent takeovers, the remnants of the ABC music group are now owned by Universal Music Group. After the merger with Disney, ABC became sister company to a record label group once again, the Buena Vista Music Group (which included such labels as Walt Disney Records and Hollywood Records).

While ABC-TV continued to languish in third place nationally, it often topped local ratings in the larger markets. With the arrival of Hollywood's slickly produced series, ABC began to catch on with younger, urban viewers. As the network gained in the ratings, it became an attractive property, and over the next few years ABC approached, or was approached, by GE, Howard Hughes, Litton Industries, GTE and ITT. ABC and ITT agreed to a merger in late 1965, but this deal was derailed by FCC and Department of Justice questions about ITT's foreign ownership influencing ABC's autonomy and journalistic integrity. ITT's management promised that ABC's autonomy would be preserved. While it was able to convince the FCC, antitrust regulators at the Justice Department refused to sign off on the deal. After numerous delays, the deal was called off on January 1, 1968.

In 1968, the parent company changed its name from American Broadcasting-Paramount Theatres, Inc. to American Broadcasting Companies, Inc., formally dropping the Paramount name from the company and all subsidiaries which bore that name. The network would continue to have an association with Paramount Television in the 1970s, however—many of its television programs would come from Paramount, and most of the shows would bring ABC great success in the ratings.

In 1984, ABC acquired majority control of 24-hour cable sports channel ESPN.

By the mid 1980s, founding-father Goldenson had withdrawn to the sidelines. ABC's ratings and the earnings thus generated reflected this loss of drive. Under the circumstances, ABC was a ripe takeover target. However, no one expected the buyer to be a media company only a tenth the size of ABC, Capital Cities Communications. The corporate name was changed to Capital Cities/ABC.

In 1996, The Walt Disney Company acquired Capital Cities/ABC, and renamed the broadcasting group ABC, Inc., although the network continues to also use American Broadcasting Companies, such as on TV productions it owns.

Close Up of Vignette:

Certificate: Convertible Subordinated Debenture Bond, specimen, 1960’s

Printer: Security-Columbian Bank Note Company

Dimensions: 8” (h) x 12” (w)

State: NY-New York

Subject Matter: Sports and Entertainment | Radio and Television Companies | Music and Related | Specimen Pieces

Vignette Topic(s): Female Subject | Electronics Featured | Globe Featured

Condition: No fold lines, punch hole and stamp cancels in signature areas and body, some toning and edge faults from age.

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