The Network Paley Didn't Found -- Revisiting the First Year of the Columbia Broadcasting System

By Elizabeth McLeod


William S. Paley is a towering figure in the history of American radio broadcasting -- for over fifty years he personally guided the development of the Columbia Broadcasting System, and his influence continues to permeate that organization nearly two decades after his death. By the time of his passing, Paley was revered as the "Founding Chairman" of CBS -- but although his career abounded in notable accomplishments, the founding of CBS was not one of them. Although a well-oiled corporate publicity machine worked tirelessly over the decades to elevate Paley to that status, the deliberately-obscured reality is far more interesting than the Paley legend -- filled with chicanery, hustling, and comic-opera manipulations that can be as entertaining to a reader today as they were exasperating to the bumbling executives who found themselves caught up in their swirl nearly eighty years ago.

As far as the public was concerned, the story of CBS began in the fall of 1927. Readers of Radio Digest magazine opened their September issue to find the following headline:

 
COLUMBIA SYSTEM READY TO GO

Beginning Sunday afternoon September 18, the competitive element in nation-wide broadcasting enters by way of the 16 carefully selected high powered radio stations included in the Columbia Broadcasting System's network, which covers the United States east of the Rocky Mountains.

In spite of the fact that this is still a day of pioneering in Radio, the new Columbia chain enters as a lusty full strided youth, and a well manned organization, and a wealth of musical and entertainment experience as a background.


Bold, brave words for a new venture entering a field already dominated by the mighty National Broadcasting Company. But the Radio Digest article, ground out by a hard-working publicist, deliberately avoided the less dignified elements of the story.

The Columbia Broadcasting System didn't begin its life with that name. Originally, it wore the label United Independent Broadcasters, one of several corporate entities formed by  talent packager Arthur Judson and promoter George Coats in 1926-27 -- and the more you look at their activities during this period, the more you have to wonder how they managed to stay out of jail, let alone how they managed to stay in business.

Arthur Judson was a promoter in the Sol Hurok sense of the word -- a well-groomed impresario who mixed only with the best people, and specialized in presenting high-class concert artists on various New York stages. But his associate George Coats seems to have been more of a promoter in the Kingfish sense of the word -- a fast-talking, fast-moving hustler with the habit of setting up grandiose-sounding corporations and lining up investors -- only to have those corporations never quite live up to their prospectuses.

Judson was originally less interested in starting a radio network than in finding a new outlet for his roster of musical artists. His first venture in this direction was the Judson Radio Program Corporation, formed in 1926. His idea was to act as a middleman between sponsors and networks -- an independant packager of radio programming, using talent under contract to the company. He approached David Sarnoff with this idea in the fall of 1926, but was shown the door almost immediately -- the better for Sarnoff to help himself to the idea, and use it as the basis for the NBC Artists Bureau.

Judson and his associate Coats then decided to try to start a network of their own -- and they had everything they needed to do it except money, radio stations, and any knowledge of the broadcasting business. So they went right ahead and had certificates printed for stock shares in United Independant Broadcasters and divided them up among themselves -- and then without the slightest idea of how to start a radio network, Coats hit the road to find affiliates. The idea was that UIB would pay each affiliate a flat rate of $500 for a guarantee of ten hours per week of broadcast time -- and most stations of this era being shoestring operations, most of them jumped at the chance -- even though the network didn't exist anywhere but on paper. With nothing but promises, Coats signed up a dozen affiliates -- but still didn't have any way to deliver on the promises.

The main challenge was raising the money to lease the network lines from AT&T - and this was where Coats got lucky. In the spring of 1927, Coats managed to convince the president of the Columbia Phonograph Corporation to buy $163,000 worth of time on the new network -- and pay cash up front for it. The idea was that Columbia Phonograph would then resell this time, in ten-hour units to other clients. The Columbia Phonograph Broadcasting Company was set up as a paper corporation to handle this work -- with its stock divided up among a number of additional investors, none of whom had anything to do with Judson, Coats, or UIB.  The only link between the two corporations was the contract for Columbia to buy the time from UIB.

Columbia handed over the money with no guarantee that Coats and Judson would ever get the network off the ground, but they were able -- perhaps with a bit of political arm twisting -- to get AT&T to lease the necessary lines. Meanwhile, Coats and Judson finally realized they knew nothing about broadcasting, and sold Major J. Andrew White 200 shares of stock in UIB in order to get access to his expertise. However, even White was unable to do anything meaningful in the way of lining up clients because of the clumsy arrangement with Columbia -- no sponsor wanted to share sponsorship credit with another company for its programs. It was perhaps because of this that "Phonograph" was never actually used on the air as part of the network's name

After months of bumbling behind the scenes, the Columbia Broadcasting System finally managed its inaugural broadcast on the afternoon and evening of September 18, 1927. With the corporation lacking the funds to purchase a New York station, the L. Bamberger Company station WOR in Newark was signed to provide a New York outlet. But lacking appropriate switching and control facilities at WOR's Manhattan studios, the new network was forced to set up a temporary Master Control room in the largest available space -- the WOR men's room. The inaugural program itself, a hodgepodge of musical talent capped by a performance of Deems Taylor's American opera "The King's Henchmen," was not without its technical challenges -- a massive thunderstorm across upstate New York managed to obliterate much of the broadcast for listeners in the midwest.
Only sixteen stations participated, with WOR joined by WEAN, Providence; WNAC, Buffalo; WFBL, Syracuse; WMAK Buffalo; WCAU, Philadelphia; WJAS, Pittsburgh; WADC, Akron; WAIU, Columbus; WKRC, Cincinnati; WGHP, Detroit; WMAQ, Chicago; KMOX, St. Louis; WCAO, Baltimore; KOIL, Council Bluffs; and WOWO, Ft. Wayne. But due to the storm, few listeners west of Buffalo were able to actually hear the program. And once that first program signed off, there were no sponsors impressed enough to move the network forward.

The corporate situation remained just as chaotic as the on-air presentation. When the new network finally signed on, there were three corporations involved -- Judson Radio Program Corporation, which assembled the programming -- United Independant Broadcasters, which arranged for the network lines, and Columbia Phonograph Broadcasting Company, which fronted the cash and made its contract talent available for broadcasting. None of these three corporations had any control over the others, and all were most concerned with their own interests. Columbia Phonograph lost $100,000 on the project over the first month of the project, sold no sponsors whatsoever, and dropped out. That cut off the cash flow before the network was a month old. They did, however, leave their name behind -- figuring any advertising is good advertising -- and also retained the block of time they had bought, to be used for their own "Columbia Phonograph Hour," at that time the only sponsored program on the chain.

It was here that George  Coats saved the network. With a mountain of debt, no source of income, no future prospects, and no assets other than a pile of essentially worthless stock certificates, Coats sold sporty Philadelphia building contractor and Republican political operative Jerome H. Louchheim an interest in the company and got him to agree to put up the money to keep it running. Loucheim then pooled his shares with a minority interest Coats had sold to Philadelphia dentists Isaac and Leon Levy -- who had founded station WCAU as a hobby -- and took a controlling interest in UIB. Judson and Coats retained most of the rest of the stock, as well as control of the Judson Radio Program Corporation, which had a five-year contract to produce programs for the network. A few sponsors signed on -- very few -- but the losses continued to mount.

Over the next eight months, Louchheim flushed a fortune into UIB, and lost it all -- although he got plenty of additional stock certificates to show for his investment. Finally, in September of 1928, Louchheim -- to whom Coats' charm had long since lost its luster -- jumped at the chance to dump the whole soggy mess into the lap of a snappy-dressing 27-year-old millionaire whose family's company -- Congress Cigar Co. -- was one of the few Columbia sponsors, due perhaps to the fact that Leon Levy was about to marry into the Paley clan. William Paley then convinced his father and several of his uncles to join him in the venture -- and took a three month leave of absence from the cigar business to see if the new purchase was worth anything.

One of the first things the new owner did was clean up the messy corporate structure. The Columbia Broadcasting Company was dissolved, but its name was kept -- and on January 3, 1929, United Independant Broadcasters officially changed its name to Columbia Broadcating System Inc. Judson and Coats retained Judson Radio Program Corporation, along with their minority interest in the new CBS -- but from here on, Paley was in control. The network lost over $380,000 thru the end of 1928, but it would never have another losing year. Paley's affliation with prominent West Coast broadcaster Don Lee and a complex stock swap with Paramount Publix Corporation in 1929 provided a sufficient infusion of cash to see the network over the worst years of the Depression, and provided a solid foundation for future growth.

Over the years, CBS managed its publicity far more efficiently and effectively than NBC, and Paley himself was very adept at ingratiating himself with the media, when it suited his purposes to do so. Ill-suited to the image of class and sophistication Paley desired for his organization, the bumbling ineptitude of George Coats and Arthur Judson and the desperate gullibility of Jerome Louchheim were pushed further and further into the background and finally disappeared completely from view. Today, as the network approaches its 80th anniversary. the comic-opera ineptitude of CBS's first year has been quietly erased from the official record. "Authorized" accounts of the origins of the network have more to do with furthering that one-man's-genius-started-it-all image than they do with the reality of what actually happened. But as much as CBS might not care to acknowledge Judson's and Coats's role in their origin, the "Tiffany Network" is, in fact descended from what looks for all the world like a poorly managed, rickety promotional scheme in which none of the principals seemed to know quite what they were doing. How the network survived long enough for William S. Paley to salvage it remains as one of the great forgotten stories of American radio broadcasting.



Copyright © 2006, Elizabeth McLeod                                                                                                                          Back to Broadcasting History Links