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Get Four
|  | JUNE 1, 2004
Bill Paley: Molder of Modern Media The CBS founder is known as a programming genius. His other masterstroke was understanding the role of advertising As TV viewership becomes more and more fragmented, both audiences and advertising dollars continue to shift from the Big Three networks to cable. In fact, the cable network with the most innovative weekly programming, HBO, takes pride in saying it's not TV, "it's HBO." It wasn't that long ago, though, that the networks were the most important cultural media. And it was usually the self-proclaimed "Tiffany" network, CBS, that broke new ground, from introducing "block" programming to offering controversial new shows like the '70s' All in the Family. The brooding, insecure -- but brilliant -- man behind many of these broadcasting innovations was CBS founder Bill Paley. While Paley is often considered a programming genius, a less understood element of his legacy is how he stood the broadcasting business model on its head, smoothing the way for rapid industry growth. Before Paley came along, other entrepreneurs -- including his own father -- viewed radio stations as akin to a local newspaper: a stand-alone outlet for some advertising and perhaps some light entertainment. The radio stations bought the programming from the network, so they were the network's clients. TWIN INSIGHTS. Paley, however, realized the singular importance of the advertiser in the equation. He started providing programming to radio stations at a nominal fee, to get the widest distribution, and made the advertisers his primary clients by charging more for the ad time. With this twin understanding of the potential reach of broadcasting and of American popular culture, Paley built CBS into the one of the most powerful communications companies in the world. William S. Paley -- he gave himself the middle initial as a 12-year-old wanting a little more panache in his name -- was born in Chicago on Sept. 28, 1901. His Ukrainian-immigrant father, Samuel, ran a successful cigar company, eventually making millions and moving his family to Philadelphia in the early-1920s. He sent Bill to the University of Pennsylvania's Wharton School of Finance & Commerce to prepare for the family business. But the younger Paley's career took a different direction when, in 1927, Samuel and some investors bought an interest in a down-and-out Philadelphia radio network called Columbia, which had just 16 stations in the chain. The idea was that the cigar company could use the radio stations to promote La Palina cigars in local markets surrounding Philadelphia. TALENT POACHER. When Bill, now an executive at his father's company, targeted the desired female audience with a hilarious half-hour program Miss La Palina, featuring a breathless female voice fending off a bevy of male admirers, sales jumped from 400,000 cigars a day to a million. Realizing Bill's knack for programming, Samuel made his son, at the age of 27, president of the network. Paley's next programming coup was Amos 'n' Andy in 1929, and he continued to saturate his radio network with new entertainment programming. Because Paley made his profits from the advertisers, the cost for the stations was virtually nothing to receive the content, and Paley's network exploded with growth. His ability to stay ahead of the main competition, David Sarnoff's NBC, depended on recognizing, and occasionally poaching, talent. Early radio stars such as Fats Waller, Bing Crosby, Fred Allen, Will Rogers, and Jack Benny each jumped from NBC to CBS at one point for a bigger payday. While Paley's talents were many, they didn't include "vision." He actively fought against CBS entering the TV business, thinking it would dilute his hard-won stable of radio talent. As was his wont, though, when he decided to dominate TV, he brought new advances to it. RETIRE? HAH! A good example was the CBS news operation, which, in today's term's, had the equivalent of Tim Russert, Wolf Blitzer, Tom Brokaw, and Dan Rather on the same "Dream Team" of broadcasting talent. With his reports from Europe during World War II, Edward R. Murrow, with Paley alongside him as a Colonel in the Office of War Information, became the voice of broadcast journalism. He eventually handed that mantle down to CBS colleagues like Elmer Davis, William Shirer, Charles Collingwood, Howard K. Smith, Eric Sevareid, Walter Cronkite, and Dan Rather. As author Sally Bedell Smith said in her 1990 biography of Paley, "The flickering images on CBS represented the soul and sensibility of Bill Paley. He emphasized news shows and made sure his network served the public interest -- in large part to keep his burgeoning broadcast empire out of government hands and away from strict regulation." Paley was a ruthless executive as he clung to power at CBS decade after decade, ignoring the CBS rule of compulsory retirement at age 65, outflanking expected successors, and forcing out protégés like Frank Stanton and Murrow. But his programming success continued with shows like I Love Lucy, The Beverly Hillbillies, Gunsmoke, 60 Minutes, and M*A*S*H. In 1985, however, he formed an alliance with Laurence A. Tisch, the head of the Loews hotel chain, who started gutting the network's once-vaunted news division as Paley faded into the background. By the time Paley died in Manhattan on Oct. 26, 1990, NBC had long since taken over CBS as the number one TV network. But as Donald West wrote in The New York Times in 1976, Paley was to broadcasting "as Carnegie was to steel, Ford to automobiles, Luce to publishing and Ruth to baseball."  As part of its 75th anniversary celebration, BusinessWeek is presenting a series of weekly profiles for the greatest innovators of the past 75 years, from science to government. BusinessWeek Online is joining in by adding more online-only profiles of The Great Innovators. In late September, 2004, BusinessWeek will publish a special commemorative issue on Innovation By Mike Brewster in New York
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