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TV'S SEISMIC SHIFT IN THE BEGINNING, THERE WERE SPONSORS; WEAVER'S SEMINAL PLAN MOVES POWER TO THE BACK SEATS

By Published on .

The battle to control American TV was fought quietly but fiercely between the networks and advertising agencies. The fact that agencies today produce commercials and not programs is a direct consequence of the outcome.

This was not always so. If you are an ad person of employable age today, it's unlikely you know that in radio's heyday, ad agencies such as Young & Rubicam and J. Walter Thompson Co. and Batten, Barton, Durstine & Osborn were show-business kingpins. They owned the stars, created the shows, wrote the scripts, dictated the schedules.

What of NBC and CBS? Merely switchboards, as powerless over their programming as AT&T is over callers' conversations.

This was because network television began in the business culture of network radio. In 1945, ad agencies found themselves on the ground floor of TV with total power over networks in matters of content, programming and schedules. This is the story of how they lost that power.

Go back to 1935. Network radio is everywhere. TV is an unborn dream. Sylvester "Pat" Weaver, 28, has just arrived in New York from California, where he learned the basics of radio production at CBS affiliate KHJ. He marches into the CBS lobby at 485 Madison Avenue and asks for the production department. That's when he gets the start of his life.

"We don't have a production department," he's told. "We don't program our shows. We don't even own them. The advertising agencies put the shows together and bring them to us. They own them."

Weaver is astonished. "You mean CBS is merely a technical facility for the convenience of the ad agencies?"

"That's about the size of it."

Network radio evolved this way because it was a child of technicians, not showmen. In building the hardware, they ignored the software. Before they realized their mistake, advertisers-through their agencies-had entered show business to fill the vacuum. Agencies that had supported the editorial products of magazines ended up owning those of radio.

It was a sexy business. The golden age of radio was really the golden age of the ad agency. Creative departments were a generation away. The main creative function of an agency serving a national account was creating programs, not commercials. The theory was the message was less important than its environment; that listeners would be grateful to sponsors for providing free entertainment and buy their products out of gratitude; and that over time product and program would become one by association.

Sponsors exercised often extraordinary control over performers. In 1944, Rexall Drugs forced Jimmy Durante to cancel an election-eve appearance on a four-network Democratic campaign extravaganza. The ultra-conservative company wouldn't have its star radio comic soliciting votes for the hated FDR.

Network management literally danced to the sponsor. George Washington Hill, chairman of American Tobacco Co., which sponsored "The Lucky Strike Hit Parade," made Merlin Aylesworth, president of NBC, fox trot with his secretary to test the tempos of the songs for danceability.

Not even news was beyond the reach of agency control. "Having a sponsor was enormously important in radio," recalls distinguished newsman Robert Trout, whose income suddenly went from $100 a week as a CBS staffer to $100,000 a year in 1946 as anchor of Campbell Soup's "The News 'Til Now." "I was to have a 10-year contract with one-year options. So the agency made me go to Philadelphia for a physical to make sure I would last out the contract. I was 36 at the time."

Campbell's commitment proved less-enduring than Trout's health, which remains as resilient as his famous voice. The agency dropped him when Edward R. Murrow became available in 1947.

Another fortress of agency control was the "time franchise," which permitted advertisers to select certain time slots and hold them as long as they wished. Only later did the networks begin to see the strategic nature of scheduling and realize what they had surrendered. By the mid-'40s, a good time slot had become a piece of property; a show couldn't be moved without its sponsor's consent, not even a weak show.

In 1945, with TV on the scene, NBC radio had the most stations, the biggest stars, the largest audiences and the least incentive to change anything. ABC, which had been created from the old NBC Blue Network of radio, had all it could do to survive.

CBS, which basked in its recently acquired prestige in news, was the restless one. Founder William Paley had enough of prestige. He wanted to challenge NBC for supremacy in the mass market. And the key to Mr. Paley's plan was network independence from agency control.

In 1945, he set up CBS's first programming department-radio, of course. It had two mandates: develop new shows and offer them to advertisers, especially comedies relying on original concepts, not big stars. Next, produce them in-house and get the production profits going to agencies.

Because Mr. Paley proposed to compete directly against an entrenched agency function, the first thing he did was to hire away promising agency executives, including Hubbell Robinson from Y&R and Harry Ackerman from Foote, Cone & Belding.

By 1948, CBS had developed 36 radio series, put them on the air unsponsored and crossed its fingers. They included "Our Miss Brooks," "My Friend Irma," "Life with Luigi" and "My Favorite Husband," which rescued a pretty redhead from a fading film career, only to evolve further on TV in "I Love Lucy."

The agencies, which pumped $193 million in ad revenues into network radio in 1946, understood what CBS was up to and didn't like it. CBS was offering commercial minutes in programs whose content and scheduling were not theirs to control.

Their first instinct was to resist buying off the rack. But agencies also saw a way to avoid potential risk to their clients and embarrassment to themselves. If the show was a turkey, it would be the network's loss, not the agency's.

Madison Avenue decided the trade-off was worth it. More than a third of CBS' original shows had national sponsors by the end of 1948. But to the network's regret, all the agencies really gave up was the drudge work of production. Once a show like "Our Miss Brooks" was bought by a powerful sponsor such as Colgate-Palmolive, it faced as much control as the agency wished to flex, including scheduling.

By the end of 1949, Mr. Paley's move, combined with a raid on NBC's talent, gave CBS 12 of radio's top 15 network shows, and for the first time it topped NBC. If the victory was more ceremonial that substantive-network radio was, after all, on its way out-it nevertheless left CBS with a strong programming department that would prove its value in TV by building hit shows around Ed Sullivan, Arthur Godfrey and Jackie Gleason, all CBS productions.

By summer 1949, Pat Weaver had come a long way since learning the facts of life in the CBS lobby-first at Y&R, then on the client side with American Tobacco and, after the war, Y&R again. Years of experience within the agency-client chambers, combined with a refreshing skepticism toward authority, had brought him to a disturbing conclusion about his industry: agencies should not run programming; networks should.

Since the dawn of radio, agencies had bought time in 15-minute blocks on behalf of single sponsors that provided both program and commercials. In prime time, the agency would buy 30 minutes at a time-or perhaps an hour or even 90 minutes-and schedule strategically within that franchise, letting one client benefit from the strong lead-in of another's show. Agencies learned the dynamics of programming long before the networks.

"I would discuss these ideas with my colleagues at Y&R," he says. "And they'd give me rather suspicious looks, as if I were fomenting some kind of revolt against the agency and the whole agency system."

In a way, he was. When Mr. Weaver quietly suggested CBS set up a TV production company with himself as president, he was surprised to learn Mr. Paley had no real vision for TV. NBC was not much further along. It had a major stake in making its huge investment in TV research & development pay off.

NBC began courting him in 1949. He said he would come only to produce programming, not sell time. NBC agreed and, in June, Mr. Weaver became VP and head of NBC-TV.

Though his long-range goal was network control over programming, his immediate problem was rising production costs. TV in 1949 was America's least-tested yet most-expensive medium. Its costs had a life of their own, driven by the enforced scarcity of an FCC license "freeze" and expensive talent.

Both agencies and networks were scared. Kudner Agency spent $8,000 a week on Milton Berle's "Texaco Star Theater" in 1948. By 1951, it was $38,000. Frigidaire was paying $100,000 for each Bob Hope special. Mr. Weaver could see the day when no one sponsor could afford an hour or half-hour in prime time.

In September, he answered with a history-making memo outlining a "magazine concept." The only way to amortize such costs, he felt, was to allocate them among several sponsors within a show. And therein lay a revolution in the selling of network time-participating sponsorship.

The Weaver plan meant cutting the basic time unit to one minute, a move that effectively could eliminate sponsor control and even agency-owned programs, leaving only time to spot commercials within shows originating with the network or independent producers chosen by the network. Some cheered him on.

"If television is not to follow [a ruinous path]," critic John Crosby wrote in Life, "it must run its own shop."

Madison Avenue let fly large squawks. "I'll fight this to the death," grumbled one agency chief to The New Yorker. "Who does Pat think he is? Hell, in the old days he was the greatest believer in agency programming!"

In fact, Mr. Weaver probably believed programming control belonged wherever he happened to be. But if the big advertisers felt betrayed, there were hundreds of smaller ones for whom participating sponsorship within a magazine concept would mean affordable access to network broadcasting for the first time.

Between 1950 and 1954, NBC targeted its magazine strategy in fringe time by developing "The Today Show" with Dave Garroway; "Home" with Arlene Francis; "Broadway Open House"; and, starting in September 1954, "Tonight" with Steve Allen. All were successful.

Mr. Weaver's assault on prime time was spearheaded by "The Saturday Night Revue," a weekly extravaganza that included Sid Caesar, Imogene Coca and "Your Show of Shows." It was such a hit, advertisers wanted in, even on NBC's terms.

As network production grew, the race for real estate began. Theaters in midtown Manhattan were leased and renovated. In 1951, CBS began construction of Television City in Los Angeles and NBC broke ground for its own complex in Burbank; both opened the same week in 1952.

If production was one tactic to edge out agencies, scheduling was another. In 1954, NBC and Firestone had a shootout over the time franchise.

Since 1928, on radio, "The Voice of Firestone" had served up a half hour of light music every Monday night at 8:30. The audiences were modest, but the sponsor was content. The problem was that by 1954, it was pulling a 6 rating on TV against Arthur Godfrey's 45, making it worse than dead weight. It was a roadblock in NBC's plans to anchor its Monday night with a new Sid Caesar show. The network tried to negotiate, but Firestone believed 25 seasons gave it equity in its 8:30 position.

Alas, this was TV. Mr. Weaver cast both sentiment and a long-time client relationship to the winds and repudiated the time franchise concept.

The program-a low-key oasis of light culture struggling to survive in a sea of slapstick-was perfectly cast to make Firestone appear noble and NBC look like a schlockmeister. But a passing PR wound was a small price in the fight for control of night-time audience flow.

Agencies continued to squeal, yet handed TV its first billion-dollar year in 1955. "We are embalming the old radio sales patterns," NBC boss Robert Sarnoff boasted in Variety. "Five years ago network salesmen sold the network's facilities. [Now they] sell our shows."

Not quite; not yet. Though the process was in motion, there was to be no summary expulsion. A war of attrition was underway between powerful adversaries. Madison Avenue's imprint, though challenged by rising costs, was still evident in "The Dinah Shore Chevy Show," "The Buick Berle Show," "The Kraft Playhouse" and others.

Instances of agency nitpicking over scripts were also still common. The American Gas Association pressed CBS to purge the word "gas" from a "Playhouse 90" script about the war crime trials. Miles Laboratories prohibited headaches in its shows. Ronson banned matches. By the time BBDO got through with a "U.S. Steel Hour" drama about a black youth lynched in the South, he turned into a foreigner in New England.

In 1956, Business Week reported that 75% of TV advertisers were multiple sponsors. But that didn't tell the real story. The 25% that still hung in as single sponsors were the biggest advertisers and the least reluctant to give up the old radio faith in sponsor identification and audience gratitude. They still dominated a major share of network shows, many of them network produced.

Yet, attrition in the form of rising costs would wear down solo sponsorship almost every year after 1956. In fact, agencies had little to complain about: "The greatest boom in the history of advertising," Fortune called the '50s in 1956.

The biggest agencies still had considerable bargaining power. BBDO alone, with $75 million to spend on TV, was still producing 17 network shows in 1956. But increasingly, agency production was turning from programs to commercials.

By the late '50s independent packagers, which included major talent agencies, film studios and producers, rapidly moved into the vacuum created by departing ad agencies. These profitable sources of program inventory not only pleased the networks, they reduced their own incentive to stay in production.

The push toward network production begun by Bill Paley and Pat Weaver as an anti-agency strategy had lost its tactical purpose. Soon independent producers were dealing directly with the networks, and sponsor influence diminished still further. By 1964, production licensed by agencies had dwindled to 8%.

For a decade the networks had been quietly taking control of their houses as rising costs chipped away at advertiser resolve. The forced retreat into participating sponsorship was everywhere. By the end of the '50s, after a long line of skirmishes with the agencies, the networks had come a long way toward their goal. What they needed was closure.

Enter "Dotto," a Colgate/Ted Bates & Co. quiz show that mysteriously vanished without explanation from its Tuesday night slot on Aug. 22, 1958. This spark would become a public conflagration within a year.

The so-called quiz show scandal, in which some contestants were given answers in advance, takes on a different perspective when seen in the larger context of the network-agency battle. Suddenly, it began to look suspiciously like a red herring cooked up by the networks to catch the agencies in a crime that was not a crime at all.

Though this was not a plot by the networks to diminish the agencies' influence, the affair nonetheless provided a cue for politicians and prosecutors to shed crocodile tears over a presumed betrayal of public morality.

For all the outrage, it was easy to forget that no laws had been broken and that show business is the pursuit of illusion. The networks played it skillfully. By using the quiz-show brouhaha as an excuse to view with alarm, they turned a tactical defeat into a strategic victory. Their fight against the agencies could now be wrapped in the moral authority of Congress and public opinion. The networks professed to be as deceived as anybody, just another outraged victim of Madison Avenue double dealing.

"We just rented them our studios," they said. The fact that CBS and NBC had owned "The $64,000 Question" and "Twenty-One" since they had become hits was inconvenient. But the networks were willing to be embarrassed because the public's memory is short and network interests are forever.

CBS and NBC accepted enough responsibility to justify draconian action. CBS President Frank Stanton said as much when he fell on his sword before Congress: "The American people hold the networks responsible for what appears on their schedules. The time has come to make certain we are masters of our own house. From now on, we and we alone will decide not only what is to appear, but how."

The networks had turned themselves into the good guys. TV Guide said Mr. Stanton had "located the real ailment-lack of network authority. We trust the other networks will be .*.*. masters of their own houses."

At the same time, Advertising Age, which had been urging agencies for several years to stick to commercials, told its readers in no uncertain terms: "It is time for advertisers to get out of show business. .*.*. The quiz scandal has placed its mark on sponsors and agencies [who] must not continue in a position in which further blows of this kind are possible. The `magazine concept' cannot be put into effect overnight. But the movement toward separation of sponsor and program should be hastened."

Was programming better off? Network broadcasting went on to become a numbers-driven business. Under the old system, a sponsor was permitted his low ratings as long as he paid his time bills. Many did, because they regarded their programs as expressions of institutional values. It didn't matter to Alcoa that "See It Now" drew a small audience. It drew the right audience and associated the company with Ed Murrow.

That became impossible under the new rules. As networks took over, they were drawn into a ratings competition to drive up rates and profits. Programming strategies designed to build the largest audience flow permitted no weak links that might injure adjoining programs.

Fortunately, the public is not entirely benighted. For every celebrity bio TV would offer, there would be a series like "The Defenders" or "Hill Street Blues." As for the agencies, a few continued in programming on the strength of major hits, such as shows starring Andy Griffith and Dick Van Dyke, both of which were handled by a partnership between producer Sheldon Leonard and Benton & Bowles. But agency row was on the verge of a revolution of its own.

From the '30s through the '50s, Madison Avenue had pursued programming and produced few creative legends it could call its own. It may be no coincidence that the end of this era roughly coincided with advertising's "creative revolution" of the '60s and '70s and the flowering of William Bernbach, David Ogilvy, Mary Wells Lawrence, George Lois and others. In freeing themselves from programming, the agencies found their identity as a modern marketing institution.

John McDonough writes on cultural issues for The Wall Street Journal and other publications.

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