The Television Industry

THE TELEVISION INDUSTRY

Two Thriving Industries

The "television industry" actually comprised two industries: one that manufactured television receiver sets, and one that manufactured the shows that people watched. Both of these industries developed quickly in the years after World War II, and both were thriving by the middle of the 1950s. The percentage of American homes with television sets rose dramatically throughout the decade, from slightly less than 20 percent in 1950 to nearly 90 percent in 1960. By then few aspects of American life remained untouched by the new medium.

A Long Infancy

Industry pioneers such as Sarnoff, president of the Radio Corporation of America (RCA), had waited several decades to offer television for mass consumption. Sarnoff had followed research on the broadcast of images since the mid 1920s. By the late 1930s several companies, including RCA, were Broadcasting experimentally in large urban areas. In 1940 there were twenty-three stations in the country, offering limited schedules of sports, filmed stage plays, old cartoons, and government documentaries. That year RCA planned its first large-scale test of the medium, building twenty-five thousand sets for sale in New York City to receive broadcasts from RCA's transmitter in the Empire State Building. The Federal Communications Commission (FCC) gave approval for the test but then reversed itself, and RCA was suffered a substantial financial loss. In May 1940 President Franklin D. Roosevelt declared a state of national emergency as the United States edged toward entry into World War II. Further development of television took a backseat to military production.

Rival Networks

After the war ended production on television sets began in earnest. The "Model T" of televisions, the RCA Victor, received a ten-inch, black-and-white image and sold for $375 in 1946. By 1950 the Sears, Roebuck catalogue offered Silvertone receivers for less than $150. Most families who owned sets lived in or near "television cities," such as New York or Los Angeles, where several different broadcasters were in operation. The National Broadcasting Company (a subsidiary of RCA) and the Columbia Broadcasting System, which had been rival radio networks, now competed in the television market. CBS and NBC each offered a nightly schedule of variety shows, comedy series, and drama series produced by the network.

The Industry's Structure-

The network structure of television was established early. Broadcasters around the country applied to the FCC to be assigned a frequency, or channel, in their area. Approved stations then affiliated with companies such as NBC, agreeing to broadcast programs produced by the network in return for a share of the profits the networks made selling airtime to advertisers. Stations also produced their own local programming and sold time to local advertisers. But as competition in each television market grew, affiliates broadcast a greater share of the networks' more popular and profitable programming.

"Television Cities."

In the years 1948 to 1952 television made its way into more and more American homes, from 6 to 42 percent of the nation's total. Television sets were bought as quickly as they were produced. Broadcasting was not yet available in all parts of the country, however. In 1948 the FCC froze the number of licensed stations at 108 until some of the medium's technical difficulties were resolved. The freeze was originally supposed to last six to nine months, but, because of general production restrictions on the industry during the Korean War, it remained in effect until the war ended in 1952. During this time "television cities" had full television service, but other large cities—Portland, Oregon, for example, or Little Rock, Arkansas—had no television at all. Where television was available, sets sold briskly, an average of 410,000 a month. Social observers who contrasted the television and nontelevision cities sensed that American life would soon change dramatically. In 1951 television cities experienced a 20 to 40 percent drop in movie attendance; in nontelevision cities attendance stayed the same or climbed. Attendance at sporting events declined in television cities, as did business in restaurants and nightclubs. Public libraries lost circulation, and bookstores reported falling sales.

"HEY CULLIGAN MAN!"

Since Emmitt J. Culligan began his water softener firm in 1924 in Saint Paul, Minnesota, the company had suffered through long and expensive lawsuits and through the Great Depression, when no one wanted the two-hundred-to-four-hundred-dollar softener apparatus. The distraught entrepreneur took a job with National Aluminate Corporation in Illinois. There he found an answer to the problem of high cost: do not sell the softener, sell the service. When Culligan started his new, ser-vice-oriented business in 1936, he installed the water softening machines at no cost to customers who paid two dollars a month as a user fee. Under a "no deposit, no obligation" arrangement, customers could cancel the service at any time. By 1938 he started to franchise outside Illinois, and within ten years the Culligan dealer network serviced six hundred thousand subscribers at an average monthly fee of $275 to $3.00.

The 1950s brought another major hurdle, though. A change in consumer attitudes led to hesitation on the part of housewives to let Culligan dealers into their homes. The Culligan network had relied on in-home sales; but the "traveling salesman" was becoming obsolete. Culligan developed a successful advertising campaign in 1959, designed by Dassas Williams Productions of Los Angeles. The ads had a female voice call "Hey Culligan Man!" and suddenly the hostility toward home demonstrations by the Culligan dealers evaporated. Thanks in large part to the ad campaign, the Culligan company's sales had risen to $11.2 million by 1961.

UHF versus VHF

The freeze kept down competition in the developing industry. Most areas were served by one or two stations, and CBS and NBC dominated them. Only thirty-three areas were assigned three or more stations by the FCC, and only seven areas received four or more assignments. In this atmosphere companies such as Mutual and Philco abandoned plans to operate networks, and two smaller networks, the American Broadcasting Company (ABC) and the DuMont Network, struggled to hang on. One way to increase competition was to allow stations to broadcast on ultra-high frequencies (UHF) as well as very high frequencies (VHF), increasing every market's number of potential channels from 12 to more than 80. The FCC debated the merits of UHF and VHF during the freeze and in 1952 assigned 1,319 UHF channels as well as 276 additional VHF channels. Practically, however, UHF-stations were at a disadvantage. Since most television sets only received VHF signals (channels 2-13), UHF-station owners had a hard time convincing networks or advertisers that anyone was watching. Between 1952 and 1956 the FCC received and approved applications for only 363 of the 1,319 available UHF assignments. Of those, 151 never went on the air, and 56 went bankrupt. In 1961, with the passage of a federal law requiring that all new television sets be able to receive UHF channels, the survival of UHF operators was finally assured.

Educational Television

Hoping that television would be used in the public interest as well as for profit, the FCC reserved some UHF channels for noncommercial, educational programming. Those stations faced even greater financial difficulties than commercial UHF operators. Much of their programming came from a production center called National Educational Television (NET), which made programs for distribution around the country. NET was founded in 1952 with a grant from the Ford Foundation. Even with the support of NET, noncommercial stations struggled. One such station on the VHF waveband, KQED (channel 9) in San Francisco, raised funds by holding an on-the-air auction in 1955. Other educational channels around the country tried KQED's idea, with some success.

The Birth of Color

Meanwhile CBS and NBC/RCA continued to compete for control of the commercial television industry. (ABC, through a fortunate merger with the United Paramount Theatres movie-house chain, found the capital it needed to survive its lean years. Du-Mont was not as lucky: the network ceased operations in 1955.) Controversy between the two industry leaders over color-television broadcasting began in 1946. That year CBS president William Paley introduced a successful color system; but the color set could not receive black-and-white broadcasts. Sarnoff ordered RCA's technicians to produce a "compatible" set in six months. Almost four years later RCA researchers finally demonstrated a usable system. In the meantime the FCC had ruled that the CBS color system should be the industry standard, a decision that was upheld by the Supreme Court in May 1951. Undaunted, RCA continued to refine its system.

RCA's Triumph

In 1953 the National Television System Committee (NTSC), a group of experts from all segments of the industry, endorsed the RCA system and petitioned the FCC to reverse itself. By that time even CBS executives did not seriously object to the committee's conclusions. Over half of all American homes had black-and-white sets; families could hardly be expected to own two televisions, one of which could only be used to watch the occasional color broadcast. The FCC accepted the NTSC's recommendation and approved the RCA color system as the industry standard in December 1953.

Expensive Sets

The first color-television receivers, offered to the public in 1954, were expensive: between nine hundred dollars and thirteen hundred dollars for a set with a fifteen-inch screen, four or five times the cost of a black-and-white set with a twenty-one-inch screen and about one-quarter of an average household's yearly income. Not surprisingly, the sets sold poorly. People found the screen too small and the price too large. Within a year sets were selling for slightly less than five hundred dollars, still a major expenditure for most Americans.

Color Spectaculars

Network executives tried to stimulate interest in the new product by offering viewers exciting color programming. The rivalry between CBS and NBC continued, each network attempting to outdo the other with spectacular, colorful productions featuring famous stars. In 1955, for example, when NBC produced a color version of Thornton Wilder's Our Town starring Frank Sinatra, ABC countered by offering a special with Judy Garland. Over the course of the decade, however, NBC made the strongest commitment to color Broadcasting—perhaps because RCA had invested so much in the production of color sets. But the dominance of color television was still a decade away: black-and-white sets outsold color models until 1968.

The Biggest Casualty

Perhaps the biggest casualty in the growth of the television industry was radio. Production and ownership of radios continued to increase throughout the decade, but radio programming changed considerably. American families no longer thought of the radio as their main source for news or dramatic entertainment. Radio could not promise success stories like Hazel Bishop's: after advertising on television the cosmetic company's sales shot from fifty thousand dollars in 1950 to $4.5 million in 1952. Radio advertising rose from $605 million in 1950 to $618 million in 1957; by contrast, over the same period television gained over $1 billion in sponsors. Advertisers had abandoned radio like "bones at a barbecue," as comedian Fred Allen put it in 1952. Radio looked in new directions: some stations programmed "Negro music" stations aimed at African-American audiences. Panels on radio talk shows discussed issues more frankly than they ever could have during radio's golden age. Critics complained that television programs required more attention than radio programs, taking away from other pursuits. Some claimed that radio news programs covered events more thoroughly and insightfully than did television. Still, by the end of the decade television's dominance in both information and entertainment seemed assured.

Sources:

Erik Barnouw, Tube of Plenty, second revised edition (New York: Oxford University Press, 1990);

William Boddy, Fifties Television: The Industry and Its Critics (Urbana & Chicago: University of Illinois Press, 1990).