CBS: The Power and the Profits

However the Toynbee or the Gibbon of the future adjudges what happened to American society, he will need to reckon large with the impact of radio and television. By the 1950s, TV had become the greatest new instrument of political and social influence in the nation. How that happened, how TV became both a shaper and a creature of politics, both a maker and a prisoner of public tastes, is most simply told as the story of one broadcasting network, of its founder and indomitable chairman, William S. Paley, and the men who helped make CBS into Paley's golden candy store. David Halberstam has written that story as part of a larger work in progress about centers of power in America and the ways they have been affected by science, technology, and modern communications. This is the first of two installments.
4. The Chairman's Dilemma: A Corporation with a Conscience?

Great newspapers might see themselves as being in part consciences of a society, but they were not giant corporations. U.S. Steel and Standard Oil were, like CBS, great corporations, but they did not contain small units dedicated to public service and to being a national conscience. CBS was special, a corporation with a conscience, and rarely did the twain meet, though they were always aware of each other. (Jim Aubrey once told Fred Friendly that he thought both men were being used. "They say, to me, 'Take your soiled little hands, get the ratings, and make us as much money as you can'; they say to you, 'Take your lily-white hands, do your best, go the high road, and bring us prestige.'") The conflict was built in, And ironic.

In the spring of 1974, when the President of the United States was locked in an epochal struggle with, his adversaries in Congress and the media—including CBS News—and when fears at CBS's corporate level about its role in the fight were greatest, the corporation was attaining unparalleled success. Though much of the nation was in a deep recession, CBS was generating more money and profit than ever before—perhaps because free entertainment during a time of economic sag was attractive to viewers and thus to advertisers. In the second quarter of 1974, a record period, CBS earned $34 million net profit. One CBS executive congratulated Robert Wood, president of the television network, on this success. Wood, however, seemed to wince at the idea of it.

"What's wrong?" his friend asked.

"Do you rea1ize that what we just accomplished now becomes the norm?—that we must go against it in the future, and if we slip below it it means we've failed," said Bob Wood. And he was right. The pressure continued to make even greater profit, and in the second quarter of 1975, CBS made $58.1 million net profit, just $10 million less than in all of 1969.

Yet that world was very different from the world of watching television. Paley, like many of the men in television, was a purveyor, not a receiver. How different those worlds were he found out in the mid-sixties when he finally realized one of his life’s ambitions, to open a restaurant, this to be in the new multimillion-dollar CBS building. The name of the restaurant was The Ground Floor, and friends had not seen Paley, a total food nut, so excited in years. He was always downstairs checking on the decor, sampling the soup, tasting the sauces. All he wanted, he told friends in 1965, was a simple place where a secretary could go downstairs and have lunch for seven or eight dollars. His pleasure was enormous when the restaurant finally opened, and his disappointment equal when it was not a wild success. At one point Paley, puzzled by the lack of its success, turned to the restaurateur running it for him, Jerry Brody, and suggested that they might try a supper club for those who eat around 11 P.M., something that Paley liked to do after an evening of concerts or theater.

“Bill,” said Brody, "there ain't no supper business in this town."

"No?" answered Paley, puzzled. "Why not?"

"Because everyone's home watching the tube."

Even when Paley made a disastrous deal, it did not seem to matter; the sheer force of television and American demographics pushed his company ever upward. In 1951, CBS bought a company named Hytron. It was a major mistake. CBS wanted to go into manufacturing, and Hytron manufactured television sets—bad ones, it turned out. Paley traded away to the Hytron people almost a quarter of his company's stock in the deal, a total failure that ended up costing CBS as much as $250 million. Even this fiasco did not seriously damage the company's strength. At the heart of Paley's success was a dual genius: his cold, shrewd business sense and an instinct for what was marketable as mass entertainment. First the business ability. He was and is able to read the bottom line of a report faster than anyone else around him, to ask the one question that subordinates least want asked. At meetings he waits, like a dozing crocodile. If an aide's voice is confident, sure, loud, he sits quietly. But if the official lowers his voice, if there is any sign of weakness, Paley, suddenly alert, is ready to pounce.

If Paley had been in Hollywood, friends think, his shrewdness about entertainment would have made him the greatest movie mogul of them all. He has a sure sense of what the public wants and will accept; and, equally important in the world of Madison Avenue, be knows how to sell his ideas.

A legendary story in broadcasting tells how young Bill Paley managed to sell a show to George Washington Hill, then head of the American Tobacco Company, the most important of all possible customers in those days. Hill was completely committed to NBC, at that time the giant among networks. Paley worked carefully and shrewdly on Hill, charmed the old mart, brought the best ideas be had, and finally realized that no matter how well he got on with Hill, no matter how much personal rapport he achieved, Hill was not going to accept someone else's ideas for a show. The ideas must seem to Hill to be his own. And so, on the umpteenth visit, Paley took the idea of a program featuring martial music—everyone liked martial music—and slowly let the idea slip out as if it had come from Hill. And as Hill warmed to his own idea, Paley, just a fraction of a step slower, warmed too. Yes, it did have possibilities, and he congratulated Hill on his originality. And CBS wound up with a program sponsored by American Tobacco, an important breakthrough for small CBS against the mighty NBC.

Paley's ear is still renowned. In the twenties, he took an ocean cruise and heard records of a then unknown singer named Bing Crosby. He wired back orders to sign Crosby immediately. His ear remains exceptional. Blair Clark, general manager in the news department in 1961, went to the opening night of Camelot with Paley and was astonished by the latter's sense of the show. It was as if Paley was always a beat ahead of everyone else in the audience in laughing, in keeping time to the music. Clark was sure that Paley, who had put up money for the show, had been to rehearsals. But it was not true; Paley had never heard the show before. His sense of entertainment simply made him that much quicker and more responsive than the rest of the audience.

He knew talent and he knew people. He had a talent for hiring the best people (almost the entire top team at ABC News today worked for CBS at one time and went to ABC only out of career frustration, chiefly because the top jobs at CBS were already filled). Even in the early days in broadcasting when CBS was a tiny company and NBC controlled two networks, Paley had an instinct for talent far greater than that of David Sarnoff. Paley wanted the best people around him; Sarnoff believed that he was the best, and at times his company was notable for its shortage of outstanding executives. (Indeed, Sarnoff once told Ralph Cohn, Paley's lawyer, "Bill likes to surround himself with geniuses. I don't want anyone around as smart as I am.") But all of Paley's talent did not necessarily make for a happy kingdom; rather, the conflict between idealism and materialism was a constant problem. The king remained supreme, but a vast number of princes and consorts left CBS in varying degrees of bitterness: Ed Klauber, who set standards for newsroom integrity in broadcasting, Lou Cowan, Elmer Davis, Ed Murrow, Fred Friendly, and Frank Stanton. Yes, even Stanton, the man who had done more than anyone else to create the image of CBS (and Paley), left disappointed and bitter, barely able to suppress his rage at Paley's treatment of him. Upon Stanton's departure from CBS, involuntary as it was, these two titans of broadcasting squabbled over the size of the office space and the amount of secretarial help Stanton was to retain, a dispute so intense that it went to lawyers.

And Ralph Cohn, who was for over forty years Paley's and CBS's lawyer, left under the most strained circumstances of all. No one served Paley more loyally for so many years, sharing not just the CBS association, but an affinity for the cultural world of New York, the world of concerts and museums. Both were on the board of the Museum of Modern Art, though Cohn, a descendant of "Our Crowd," New York's German-Jewish aristocracy, was by background more at ease in that world, while Paley was a bit more of an arriviste.

Nonetheless, it was a good and mutually beneficial relationship until 1969, when Bill Paley, acting as if he could operate as president of the board of the Museum of Modern Art the way he operated at CBS, violated the laws of the museum and arbitrarily fired a director named Bates Lowry without consulting the members of the board. Cohn, for reasons which at times must have bewildered both men, dared at a subsequent meeting to challenge Paley to say, yes, Bill Paley had violated the laws. His protest had no effect; Bates Lowry remained fired. The only real effect was upon Paley, who was furious. Two days later he summoned Cohn to his office and fired him as his personal lawyer. He did not stand when Cohn came in the room, nor did he motion Cohn to a seat, but he announced that he had given the matter considerable thought and decided to terminate the relationship. He said that Cohn would still represent the company. A few months later, when Paley was in the Caribbean, Frank Stanton was dispatched to tell Cohn that his firm had also lost the CBS account

The sting was real for Cohn, an urbane and sophisticated man, and the incident bothered him for some time. Eventually he called Paley and asked to come by and see him. Cohn went to see the Chairman and very quickly made it clear why he was there. He was bothered by this scar, the abrupt loss of a great friendship. It was still very difficult, particularly because they saw each other at so many social and cultural functions, concerts, museum openings. Couldn't they at least on the surface still be friends? Ralph Cohn long remembered Bill Paley's reply: "Ralph, we were never friends. You were my lawyer."

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