Founders: William S. Paley.
Distinction: Made television journalism respectable and influential.
Primary business: TV and radio programming.
Annual sales: $7.373 billion.
Number of employees: 28,900
Major competitors: ABC, Fox Entertainment, NBC.
Chairman, David McLaughlin; president and CEO: Met Karmazin.
Headquarters: New York, N.Y.
Year founded: 1927.
When Walter Cronkite returned from a reporting trip to Vietnam in 1968, he solemnly
took his familiar place behind the CBS Evening News anchor desk and changed the
course of a war. After the camera’s red light blinked on, the “Most Trusted Man in
America” stared momentarily at his immense but invisible audience. Then, he gravely
dropped his bombshell. “Our nation,” Cronkite began, carefully measuring his words,
“is mired in a stalemate” in southeast Asia that can only be ended by negotiating with
the enemy. Over at the White House, President Lyndon Johnson grimaced. “If we
have lost Walter,” he told his aides, “we have lost the country”.
Many journalists who traveled to the war zone around that time also returned with
similar pronouncements. That was one reason why Johnson and his initiatives were
rapidly losing public support. But when Cronkite said the cause was hopeless, the
opposition rose to new levels. CBS News shaped public opinion almost without peer
in those days, and its venerable anchor was revered by millions. Even the president
recognized it: if Cronkite said the war was lost, then the war was lost.
Such was the impact of the Columbia Broadcasting System’s TV news department. It
carried weight on a par with the nation’s top newspapers–sometimes even surpassing
their influence. Its relevance grew as Edward R. Murrow, Eric Sevareid, Howard K.
Smith, and a handful of others first earned their stripes covering World War II for the
CBS radio network. After the war, CBS moved into television and maintained its
journalist momentum with Murrow’s breakthrough documentaries, along with his
scathing 1954 report on Sen. Joseph McCarthy, which ultimately brought about the
crusader’s downfall. It also leveraged these triumphs into other
programming areas filled with the brightest stars on TV, becoming widely known as
The Tiffany Network and exuding an aura of respectability that was never seen in
broadcasting before (an rarely seen since).
The network with the “eye” logo had come a long way since William Paley first
pulled it together precisely four decades earlier, and for Americans it was the only
broadcaster worth watching. Successors to Paley, Murrow, and Cronkite did not
always take heed. And when network television in general hit difficult times at the
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close of the 20th Century, CBS was one outlet that fell particularly hard.
William S. Paley was born in Chicago in 1901. His welltodo
family owned the
Congress Cigar Company. When Paley graduated from the University of
Pennsylvania’s Wharton School in 1922 he entered the family business. After signing
a contract to advertise the company on a new local radio station, however, Paley grew
increasingly enamored with the upstart medium. In 1928, he decided to switch from
tobacco to broadcasting.
Paley began by purchasing a small group of radio stations that he renamed Columbia
Broadcasting. To quickly establish it as a significant force in the industry, he
relocated its headquarters to New York’s Madison Avenue and revamped the way it
contracted with affiliates. (At the time, broadcast leader NBC charged stations to
carry its programming; Paley, on the other hand, gave his shows away in return for
five hours of affiliate airtime each week that he could then sell to advertisers). The
change was wellreceived
and boosted his affiliate total 47 after one year and 70 after
Much like Internet visionaries would discover in later years, Paley also recognized
from the start that a key to the medium was controlling its content rather than the
boxes that it played on. He understood that future growth and profits would come
more easily if he concentrated on improving the quality of this content, so in 1930 he
initiated broadcasts of the New York Philharmonic’s Sunday concerts along with
other original programming. He also created a musicians’ booking agency called
Columbia Concert Corporation, and turned Columbia Records into a recording
These innovations caught on, and Paley utilizes similar ideas to build the industry’s
top news staff. He excused himself from the network’s daily operations after the war,
but continued overseeing the new associated television network as it climbed to the
top rung in broadcast programming. Under his overall supervision, CBSTV
breakthrough dramatic offerings with exciting game shows, and highbrow
fare with lowbrow
soap operas. Respected reporters were signed to bolster the news
department, while popular performers were brought aboard to lead the entertainment
division. With homegrown stars (such as Lucille Ball) and those plundered from other
networks (including NBC’s Jack Benny), CBS rose to the top just as TV hit its stride.
The golden age of television continued through the 1950s, and CBS was among the
biggest beneficiaries as millions of Americans added sets to their homes. Its march
was slowed briefly, when the decade’s infamous quizshow
scandals touched the
CBS entry in the genre, The $64,000 Question. Louis G. Cowan, who
created the series before becoming president of CBS television, was forced to resign
in 1959 when it was revealed that his show was among those that had been secretly
scripted to ensure a specific outcome.
But the slowdown proved to be only temporary. Cowan’s successors boosted profits
through the mid1960s
by canceling classy (but expensive) live dramas and replacing
them with silly but popular halfhour
comedies (such as The Beverly Hillbillies).
CBS lost to rival RCA around that time in the race to develop the first massmarket
color set, but it refocused on content and maintained its ratings lead. This continued
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into the early 1970s when CBS–still building on the serious impact that Cronkite and
his news division were making on the national conscience–introduced
groundbreaking “realistic comedies” such as All In The Family to go along with its
newsmagazine, 60 Minutes. Once again, it was turning the medium in
The network stayed atop the industry for another decade, when it was overtaken by
perennial rival NBC. But the proliferation of cable TV, satellite transmissions, and
videocassette recorders ultimately proved a far greater threat to its survival. The rapid
growth of this technology gave viewers more choices than ever, and they began
turning away in droves. The simultaneous appearance of newcomers like Fox–and,
eventually the Internet–took additional slices out of the viewership pie.
Ironi9cally, deregulation boosted profits for all when it was initiated in the 1980s.
Broadcasters were no longer required to air public affairs and children’s shows,
which freed their schedules for more marketable programming. At the same time, the
number of commercials that could be run each hour was increased. These changes
attracted outside corporations suddenly interested in owning a chunk of the highprofile
industry. During a brief period in the mid1980s,
major purchases were made
by Capital Cities Communication (ABC), General Electric (NBC), and Time (Group
W Cable). CBS joined the parade when it was absorbed by Laurence Tisch of Loews
Corporation, a conglomeration of theaters, hotels, tobacco and insurance companies.
In less than a year the new CEO divested CBS of its recording, publishing, and
magazine divisions. He also cut millions in overhead, primarily through massive
layoffs that included more than 200 staffers from CBS News.
When founder William Paley died in 1990, the writing was on the wall. Tisch’s
moves had come amidst increasing competition and the aging of the core CBS
audience, which most observers took as an unmistakable sign that the Tiffany
Network’s glitter was serious tarnished. In 1995, Westinghouse Electric Corp. bought
Tisch’s stake and the turmoil deepened.
By the late 1990s, CBS television was struggling mightily, but its parent corporation
was forging ahead with big plans. Westinghouse CEO Michael Jordan announced that
radio and broadcast TV holdings would be integrated with new Internet and cable
ventures. Fresh shows were being prepared for younger viewers. And work was
progressing to regain rights to broadcast National Football League contests, which
were lost to Fox in an embarrassing fiasco that proved to be one of the biggest
disappointments in CBS’s 700–year history. Rumors of another buyout–perhaps by
the newly merged Time Warner, or Barry Diller’s USA Networks–circulated
regularly, but Jordan and other execs consistently denied them.
All that changed as the century’s end drew near and Jordan announced his retirement.
He was replaced by Mel Karmazin, a creative wheelerdealer
who had sold his chain
of radio stations to CBS in 1997 but stayed on to run them. (He also became the
company’s largest individual shareholder through the deal, and was accordingly
added to the CBS board.) Within months of his absorption into the CBS fold,
Karmazin, convinced Jordan to let him run the television stations it owned. In short
order he was president of the company and a major industry player.
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After Jordan stepped down, Karmazin really became aggressive. He spun off some of
the company’s business, and increased its presence on the Internet. He boosted sales
efforts, cut costs, and regained rights to the NFL. Most significantly, he also
engineered the biggest media merger of all time: Agreeing to allow CBS to be
acquired by Viacom Inc. By combining Viacom’s Paramount film studio, it’s MTV,
VH1, and Nickelodeon cable networks, and its Blockbuster video chain with CBS’s
TV network, 16 ownedandoperated
television stations, 160 radio stations, and
various other holdings, the deal was designed to create the secondlargest
in the world. Whether it can regain the cachet enjoyed during its influential heyday,
of course, still remains to be seen.