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He was young and the industry was younger. He had started in the family cigar business, which was very successful, but he was nonetheless restless for something a little different, he did not simply want to repeat his own father's successes. He did not know very much about radio, which was then very new. A friend had one of the early crystal sets, and Bill Paley tried to buy a radio for himself, but in those days radios were not for sale in stores, and so he had to have one made. He became a devoted radio listener, the little machine seemed to open up a much larger world, and he often found himself staying up very late at night listening. He also found that many of his friends were doing much the same thing. One summer in 1925 when his father, Sam, and his uncle Jake were away and he was in charge of the company, he, experimented a little with the advertising budget and for the grand sum of fifty dollars a week sponsored the "Miss La Palina Hour" on WCAU, the local Philadelphia radio station. Miss La Palina was, of course, named after the cigar, which was in turn named after the family, Paley, and for the fifty dollars he got not only the singer but a ten-piece orchestra as well. When Jake Paley returned from the trip and very quickly spotted the fifty-dollar expenditure, he was furious; Jake Paley was not a frivolous man and he did not do frivolous things like listen to the radio. He demanded to know what the money had gone for and his nephew tried to explain. "That's nonsense," said Jake Paley, "that machine is never going to work," and so Miss La Palina quickly departed Philadelphia's airwaves. But in the next few weeks Sam Paley, who was a very smart man and a very good listener, was struck by how many people stopped him on the street to ask what happened to the "Miss La Palina Hour." He wondered aloud to his son Bill how he could spend half a million on print advertising and get so little response, and then spend only fifty dollars for radio and everyone missed his singer. Soon Jake Paley checked the books and found that sales had gone up because of the radio advertisements. Shortly after that Miss La Palina went back on the air and very soon after that Bill Paley went into radio.
Sam Paley had made his money in cigars, the Congress Cigar Company, and indeed the woman on the wrapper of the La Palina was said to resemble Goldie, wife of Sam, mother of Bill. Sam Paley's father, Isaac Paley, had been a prosperous businessman in Russia; he had been in the lumber business in a small town outside Kiev, and he had been a good deal wealthier than most Jews in Russia in the latter part of the nineteenth century. But he was discontented with the restrictions which the Russian society placed on Jews and the anti-Semitism that hung so heavily in the atmosphere at all times, and so he had often thought of emigrating to America. Unlike most Eastern European Jews who dreamed of America as a distant miracle and who, if they came to this country, came blind and by steerage, Isaac Paley, deciding that America was worthy of his interest, had bought a first-class ticket and taken an investigatory trip to the United States. He had liked it here, and had returned to Russia to bring over his entire family, including the youthful Sam, around 1890. Isaac Paley had settled in Chicago, investing his money in a number of stocks. He envisioned a life of genteel semi-retirement, sitting around the samovar with his friends, discussing serious intellectual subjects, sipping tea the Russian way through the sugar, enjoying the intellectual ferment of the old world while buffered by the greater freedom of the new one. He did not intend for his son Sam to work; he wanted him instead to be a full-time intellectual. Unfortunately Isaac Paley's investments were not worthy of his dreams, the stocks went bad and he lost all his money. So as a boy Sam Paley went to work to support his father, something that Isaac Paley never entirely realized. Sam Paley was very bright and ambitious and entrepreneurial and soon he was rolling cigars and selling them, and soon after that there were others working for him, and soon after that there was a factory, and after that, other factories. He was a man of great driving energy and a genuine skill in the blending of tobacco. He had a feel for the texture of tobacco, how to take two or three different strains and anticipate the blend that they would create. He proved to be a masterful cigar maker, the most successful one in the country at the time, and his success was genuine. He eventually sold the business for $30 million just before the Depression.
Since he had had a dilettante for a father, Sam Paley was more determined than most men that his own son would be a serious young man and would know the meaning of hard work. Not only would Bill go to the best American schools, to the Wharton School of Finance and Commerce at the University of Pennsylvania, but he would be required to work at every level of the cigar company from the bottom up. So Bill Paley did just that and he found that the cigar business was a hard taskmaster, there was very little room for either generosity of spirit or of bookkeeper error in the making of cheap mass-produced cigars. The edge of profit was simply very thin. Sam Paley was pleased by how well his son did in the business, Bill was a good tobacco buyer and he was a very good salesman, particularly gifted at making other people believe that what he wanted was what they wanted as well. But Sam Paley was not a dogmatic man; it was not necessary for his son to take over the family business for Sam Paley to validate his own life. So in 1928, when through family friends and in-laws the chance came along to buy into a fledgling radio network called CBS, Sam Paley, already impressed by radio's possibilities, quickly encouraged his son to get in on it, and put up some $400,000 of the family money. The Congress Cigar Company had just been sold to Dillon Read and while he and Jake had five-year employment contracts as part of the deal, Bill did not. He was free to go to CBS. Sam was enthusiastic about his son's idea: he had decided that one of two things would happen with CBS. Either it would very quickly turn out to be a bust, and thus smaller than the cigar business, in which case he would get his son back with very little heartbreak, or it was going to be very big, in which case it would turn out to be liberating for a talented young man like his son, William Samuel Paley. Radio turned out to be bigger than cigars.
At the time the Paleys bought into CBS, Bill Paley was all of twenty-seven years old. Because the network was being very poorly run, he had intended to spend some time in New York reorganizing the business structure before returning to Philadelphia and the family business. He never went back to cigars. In those days, NBC, all of two years old itself, was the dominant network, so dominating that it had in fact been split into two networks, the Red and the Blue. (The Blue network, at government orders, was sold and became ABC in 1941.) Whether CBS would even survive when Bill Paley took over was highly questionable. Radio had no past, the present was very shaky, and most solid responsible people did not seem to think there was very much future. To the degree that network radio existed, NBC was it: NBC controlled the wires, it had signed up the best concert stars for its programming. CBS in 1928 owned no stations of its own, had only sixteen affiliates, lost money, and was housed in one small floor in the Paramount Tower.
Bill Paley changed all that. He was for fifty years the supreme figure of modern broadcasting, first in radio, then in television. Very simply, he merchandised more products for more different companies, and sent out more different entertainers on more different programs, than anyone in the history of mankind. His was one of the staggering success stories of the American twentieth century, a century whose early genius seemed to flower in production and. whose later genius emerged, fittingly enough, in sales and promotion. Bill Paley was right at the center of the era's most powerful forces, he had combined the prime energies of American huckstering with the explosive new potential of American technology. He and his imitators achieved vast power and influence over American taste and culture. He made the American home the focal point of the American marketplace. Whereas at the turn of the century only an occasional door-to-door salesman visited the American home, by the middle of the century a ceaseless stream of the most subtle electronic impulses created by the nation's most richly rewarded hucksters was beamed into this new marketplace, relentlessly selling not just the American dream but an endless series of material products through whose purchase that dream might be more quickly achieved.
He was in any real sense the father of modern broadcasting, a towering figure in this newest of professions, his maturity spanning almost the entire history of the institution. He was, in the savage, predatory world of broadcasting, not just the first, but the best. For almost fifty years he had swum in waters with some of capitalism's greatest sharks and there were no tooth marks on him. He was tough and shrewd, and he survived and endured, creating with his desires and ambitions the modern structure of broadcasting, with its brutal ratings system and its unparalleled profits. He more than the other early figures of broadcasting was fascinated by entertainment and programming; it was devotion to every detail in programming which made him so important in American life, for he helped determine what the nation first heard and then saw in its home every night. His chosen instruments, particularly with the coming of television, were by the end of the sixties more dominant in most American lives than newspapers, churches, and often the family itself. It was his decisions which created broadcasting as it exists today, with the power and taste-making centralized in the network. He brought to his new career an extraordinary assortment and blend of skills; he was a shrewd and imaginative businessman able to see the future and carve it up, even as it was just arriving; he was a wonderful salesman, subtle, low-key, well briefed on each client, with the marvelous ability to make his ideas seem as if they had originated with the client; and in addition he had a natural feel for entertainment. He both loved it and could judge it.
That last was a crucial advantage. There were other men who were good businessmen and others who were deft salesmen, but the feel for talent, that was something else, and it was essential in so public and volatile a profession as broadcasting. He had an absolutely brilliant ear and later, as television arrived, a brilliant eye as well. He had almost perfect pitch in terms of entertainment. For almost half a century, he had a better idea than anyone else in the country of what would play and what would not play to the largest possible audience. He was totally without sentiment: he knew what was good and would sell, what was bad and would sell, and what was good and would not sell, and he never confused one with another. If his own personal taste happened, as it did, to be exquisite, he never confused his taste or that of his very silky friends with that of the larger audience. He was very simply a genius at mass entertainment.
The critical years were the early ones. What he had from the start was a sense of vision, a sense of what might be. It was as if he could sit in New York in his tiny office with his almost bankrupt company and see not just his own desk, or the row of potential advertisers outside along Madison Avenue, but millions of the American people out in the hinterlands, so many of them out there, almost alone, many of them in homes as yet unconnected to electricity, people alone with almost no form of entertainment other than radio. It was his sense, his confidence that he could reach them, that he had something for them, that made him different. He could envision the audience at a time when there was in fact no audience. He not only had the vision, he knew how to harness it, he could see that the larger the audience, the greater the benefit to the network, because it would mean that many more advertisers would want to participate. If the larger audience meant better advertisers, then it also meant more money, which meant better programs, which meant larger audiences, and which meant that more stations would want to affiliate with CBS.
Whereas in those days NBC was trying to make a large part of its money from its affiliate stations by charging them for carrying many of its shows, Paley envisioned a different route, designed to reach the maximum audience as directly as possible. It would make things easier and cheaper for the affiliate and thus inevitably minimize the affiliate's role. All he wanted was a guarantee of the maximum audience. The larger the audience, the more time he could sell. To achieve that goal, he had something to offer—indeed to give away—by making his programs available to affiliate stations. As Erik Barnouw writes in his excellent history of American broadcasting, The Golden Web:
He began by making the entire sustaining [unsponsored] schedule free to affiliates. At any time during network hours—ten to twelve hours daily—the affiliates could plug into CBS without cost, using its offering of the moment. The affiliate was under no obligation to use any of the sustaining programs but could use all. To many stations the arrangement was a windfall, particularly as the Depression deepened. It was also convenient, eliminating much haggling and book keeping. In exchange for the bonanza Paley wanted something: an option on any part of the affiliate's schedule for sponsored network series. He found little resistance to this. The option meant that Paley could sell time to a network sponsor without any uncertainty as to clearance. He could sign a contract with a sponsor for time coast to coast, then instruct the affiliates to clear the time. At first, this required only two weeks' notice.
The small station owners loved the idea; they were desperate for entertainment and lacked the resources to develop their own programming. Now they were getting something for nothing. And there was a geometric progression to it, since the richer CBS became, the stronger its programming, which made CBS that much more desirable. And if CBS preempted, the more the stations were paid. The very announcement of Paley's new idea almost doubled the number of affiliates. In the first year of his stewardship CBS went from a gross earning of $1.4 million to $4.7 million, and to $27.7 million by 1937; the number of stations reached 114 in the first decade he was there. Success had come and it had come very quickly.
He was perfectly suited to this new profession, All his personal qualities seemed to aid him, he was a sensualist and hedonist who was, at the same time, a rigorously disciplined and organized businessman. This meant that he could be at ease with and understand the entertainment part of his coming empire, while still dealing with the business part. There he was as alert, farseeing, and coldhearted a taskmaster as the cigar business had ever produced. More than anyone else in broadcasting, he always knew the entire profession: he knew more about the entertainment side than the other businessmen, and more about the business side than the other entertainment people. He was always ahead of everyone else.
No one read a business report better than Bill Paley; he had an unerring instinct for the bottom line, just as he always seemed to ask the right question at every business meeting, the one question which uncovered the fatal weakness in any proposal. It was, thought a colleague, as if he could sense, from the tone of someone else's voice, the level of confidence, where the flaw lay. When the voice was confident, Paley dozed, and when the voice faltered, suddenly, like a crocodile awakened, he bore in. But it was more than just a pure business sense that made him so successful. The world, after all, was filled with coldhearted, shrewd accountants. Paley had something else, flair, an extra sense about talent, a touch and feel for it. It was all intuition, all taste, there was no way it could be studied or memorized. He could, in 1931, three years after taking over the network, go on a shipboard cruise and by chance hear the early records of a then unknown singer and know instantly that the singer was big, very big, and send back a cable telling his subordinates to sign Bing Crosby immediately. Some thirty years after he first heard Bing Crosby he took Blair Clark, one of his news executives, to the opening night of Camelot, and Clark was absolutely astonished by Paley's sense of the show. It was as if Paley were always a beat ahead of everyone else in the theater, laughing at the lines and keeping time with the music. At first Clark, who knew that Paley had put up some of the money, was sure that the Chairman had seen the show before, but he soon realized he was wrong. It was simply that Bill Paley's sense of entertainment was so true, he was just that much quicker than anyone else in the audience. In the same instant, he could hear it, understand it, consider it, and know it was going to work. So that was an advantage, a gift of the gods, an ear totally pure.
Excerpted from The Powers That Be by David Halberstam. Copyright © 1979 David Halberstam. Excerpted by permission of OPEN ROAD INTEGRATED MEDIA.
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Posted May 21, 2012
This book is a true achievement by David Halberstam. It is really something and I highly recommend it.
The book follows the evolution of the information distribution business (aka: "The Media") and how the industry directly shapes our political institutions, foreign policy, war fighting, business environment, and culture. Halberstam details the origin and emergence of four icons of the media business: CBS News (radio & TV), Time, the Washington Post, and the LA Times.
When I started this book, I knew a bit about a lot of the subjects (Vietnam War, Media, Congressional and Presidential History, etc), but this book did something remarkable. It connected the dots for me by demonstrating how information distribution is a connective tissue running between these topics.
Another fascinating aspect of this book is all the parallels between the events documented in the book and the current revolution in the information distribution business as driven by the Internet, social media, etc. The technology may be different, but the manner in which these changes reshape society is striking.
As the speed of information distribution increases, it alters the balance of power between institutions. Whether it's television enabling the President to directly reach citizens, thereby tipping the balance of power away from Congress and towards the executive branch. Or, the new media leading to the elimination of the old Party Bosses, whose primary function (gathering a crowd to ensure that candidates had access to the voters) and base of power was undercut by the ability of the candidates to appeal directly to voters. The speed of information reshapes the institutions of this country.
And, it's hard not to see parallels between modern companies like FaceBook and the story of the L.A. Times. During the War, shortages of raw materials led to the imposition of strict rationing of supplies on newspapers like the Times. The Times was locked in a battle for supremacy with another local morning paper. The Times had to decide where to cut back in the paper, basically it could maximize revenue by cutting back on substantive content while maintaining its advertising/classified ads OR it could focus on the substantive content and building its subscriber base at the expense of advertising revenue. The Times decided to focus on substantive content of the war, losing advertising to its competitor. However, when the war ended, the advertisers came flocking back to the Times because of its massive subscriber rates, which made the Times the dominant paper and ensured its prominence in the market.
In short, much like FaceBook, it matters less whether you have strong current revenue stream, just so long as you have the ability to reach a massive number of people. The mere ability to communicate information to a wide market of people is a tremendous asset, even if you have yet to monetize that asset. Of course, long-term, you have to be able to monetize it, but there is tremendous power in being able to distribute information.
Overall, this book is tremendous and remains as timely and relevant today as when it was first published.
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