The Quest to Form a Third Radio Network in the Early 1930s

As radio exploded onto the American landscape as a form of popular entertainment in the 1920s, radio station operators were faced with a problem not unlike that confronting many internet publishing efforts today, namely, how to make a profit from a service which, by its very nature, can be freely accessed by the public. In short order, the concept of sponsored programming became the primary model for economic viability. Advertisers would buy a block of radio time and fill it with an entertainment show peppered with promotional announcements for the sponsor. This seasoning was light at first, usually only the briefest mention of the sponsor’s name, but before long radio was engaged in the sort of blatant huckstering of products which served as the all-too-familiar model for television advertising.

As sponsored programming became the norm, it soon became apparent that this was not a concept which could be applied with equal success in all radio station situations. A New York City station would have little difficulty assembling deep-pocketed sponsors and a reliable talent pool to produce a 365-days-per-year program schedule. The same could not be said for a station in Mississippi City (now part of Gulfport, MS). The solution lay in the development of a system that would allow high-quality programs produced at one or more of the major metropolitan centers (where writing and performing talent was most concentrated) to be distributed to stations nationwide. As an added bonus to such a system, national advertisers could engage in “one-stop shopping,” buying advertising time in these nationally distributed programs, rather than having to sponsor individual local programs at stations around the country.

This national distribution system was network radio. Originating mainly from New York City, the radio networks sent live programming over special American Telephone and Telegraph wires to the ever-expanding national radio market. After a period of experimentation (and litigation) involving early and limited network operations by A.T.&T., General Electric, Westinghouse and others (including a GE/Westinghouse joint venture, the Radio Corporation of America), large-scale national network broadcasting began in earnest with the National Broadcasting Company (jointly owned by RCA, GE, and Westinghouse) in 1926. By 1927, two more national networks arrived on the scene. NBC launched a second network, and its dual operations became known as NBC Red and NBC Blue. Meanwhile, a group opposed to the domination of national broadcasting by RCA managed to launch a network that, after some early, rapid changes in ownership and name, became the Columbia Broadcasting System. 

Even with three national networks, many local stations were still without network affiliation. In a city with four or more local stations, the networks would characteristically choose to affiliate with the stations with the most powerful signals, leaving the weaker stations, already at a competitive disadvantage, to fend for themselves. Similarly, a rural station, even if it was the only station in town, was often passed over by the networks, since network sponsors generally were interested primarily in having their commercials heard in populous areas. In both cases, stations without network affiliations struggled to cobble together a program schedule of local and recorded syndicated programming: poor competition for the top talent of the network shows.

During the early 1930s, several attempts were made to form a new radio network to compete with NBC’s Red and Blue networks and CBS. These efforts were usually dubbed “third” networks because the quirky nature of NBC’s dual personality generally led to it being considered as a single entity, rather than as two separate networks. The quest to form a lasting “third” network has been completely ignored by most broadcast histories and only briefly mentioned in others (a six-sentence footnote in Barnouw’s Golden Web and one sentence of text in Sloan and Startt’s Media in America). Yet the nature of these operations and the reasons for their failure provide a greater insight into the state of American broadcasting in the early 1930s than can be gained from looking simply at the broadcasting success stories. This essay will examine two of the highest-profile third-network start-ups of the period and offer speculation as to why they failed while another entity, Mutual, was able finally to emerge as national competition for the two established networks.

Amalgamated Broadcasting System

In the spring of 1933, Ed Wynn, one of the most popular comedians on the most popular radio network (NBC Red) announced his intention to form a new national radio network to be known as the Amalgamated Broadcasting System. After months of planning and promotion, the new network premiered with a four-hour inaugural program carried on fifteen east-coast stations on September 25, 1933. In stating the goal for the organization, Wynn and his colleagues borrowed a term from the overwhelmingly popular new U.S. president, Franklin Roosevelt, saying that ABS would offer listeners a “new deal” in radio by reducing the amount of advertising in programs. It was hoped that the new network would soon present a fifteen-hour daily schedule to a network of over one hundred stations covering the entire country. As it turned out, the entire enterprise lasted only five weeks (“Ed Wynn”).

Things went badly from the start. Listeners who tuned in to the opening night noted “a high noise level.” An ABS official ascribed the problem to a large studio audience during the broadcast. More likely, though, it was the result of ABS’ s distribution system. NBC and CBS were distributed through the American Telephone & Telegraph Company’s highest-quality telephone lines. Use of these lines was extremely expensive (Douglas 139; Barnouw, Babel 222, Web 58), so ABS opted instead to distribute its signal through the less-expensive lines of Western Union. These lines, however, were built and intended for the transmission of simple telegraph signals, not for the range of frequencies contained in the human voice (to say nothing of music). Earlier attempts to use Western Union’s system for network radio distribution had failed due to the poor sound quality, and engineering assurances that use of an “equalizing apparatus” at each network affiliate would solve the problem were evidently overly optimistic (“Amalgamated”; Douglas 87; Barnouw, Babel 87, Tube 47).

Even more ominous on opening night was the absence of the network’s president and presumed star performer, Ed Wynn. The explanation was that he was in Hollywood, starring in a feature length movie. While this was true, it also happened that, unbeknownst to his ABS partners, Wynn was already preparing to abandon ship. Although he was under contract to Texaco to continue his “Fire Chief” program on NBC (the comedy/variety program was named after Texaco’s premium gasoline), he had announced during the planning stages for ABS that he would also appear on the new network as a “master of ceremonies” between programs (“Amalgamated”). Additionally, he and his partners apparently hoped that Texaco would be persuaded on short order to move “Fire Chief” to ABS. Instead, Texaco exercised the exclusivity of its contract, which barred Wynn from appearing on any program other than “Fire Chief,” making any MC duties on ABS an impossibility (“Ed Wynn”). To lessen the sting for Wynn, and simultaneously seal the doom of ABS, on October 23 Texaco offered Wynn a new long-term contract, paying him $7500 per week to continue starring on “Fire Chief.” Wynn accepted their offer and resigned from ABS on the same day (“McClelland”).

The Amalgamated Broadcasting System lasted just one more week. The “30 sponsored programs” that were to be the financial cornerstone of the operation never materialized, and the network lost $38,000 over its five-week lifespan. In a last ditch effort to save the network, ABS officials attempted to sell the company to Metro-Goldwyn-Mayer, the motion picture producing subsidiary of Loew’s. Inc. Although MGM was extremely interested, the deal fell apart when WBNX, the New York City-based flagship station of ABS, inexplicably refused to sell its 10% share in the network. Insisting upon total ownership or nothing, MGM withdrew. At midnight November 1, 1933, ABS ceased operation, laying off its staff of two hundred. Two days later its meager assets were placed in the hands of a receiver for liquidation to satisfy creditor claims (“McClelland”).

American Broadcasting System

Even with the failure of the Amalgamated Broadcasting System still fresh on everyone’s mind, the spring of 1934 brought word of no fewer than four new networks in various stages of planning. Some of these were to be extensions of existing regional networks, and few got much farther than the talking stage. One that did actually make it to the air was the American Broadcasting System (hereafter referred to as “American,” to avoid confusion with the other ABS just discussed), headed by George Storer, an experienced broadcaster who owned radio stations in Windsor, Ontario (just across the border from Detroit); Toledo, Ohio; and Wheeling, West Virginia (“Four”).

For its network center, Storer arranged to use WMCA, a New York City station that had figured in another of the spring 1934 network plans. After four months of “experimental service” to five stations in the New York-Washington corridor using Western Union lines, American was able to come to terms for the use of A.T.&T.’s lines for network distribution. On October 14 it began a broadcast schedule of sixteen hours per day (9 a.m. to 1 a.m. EST) to eighteen stations. As with ABS, the stations were primarily concentrated along the East Coast, but an additional network line fed stations along the rim of the Great Lakes, with the network’s western terminus located in St. Louis, Missouri (“ABS Chain”).

American’s business strategy was founded upon two cornerstones which Storer and his associates hoped would allow them to survive in a world dominated by NBC and CBS. First, American would make its programming available to the type of small, low-power station which was unattractive to the other networks, who wanted powerful affiliates that could blanket the entire country with a network signal, delivering a truly national audience to their advertisers. As democratic as the ideal of a network serving underdog stations sounded, it failed to address the very same national advertising pressures that drove the major networks. This would quickly prove problematic (“Third”).Second, American would attempt to counterprogram to the major networks, providing the listener with a true alternative to the entertainment program types popular on the other networks. To this end, American would specialize in sports broadcasting, live events, and “special features of a spectacular nature” (“ABC Under Way”).

Although American’s affiliation roster was up to twenty-three stations by the beginning of 1935, reaching as far west and south as Memphis and Little Rock, the operation was not paying off, and its flagship station wanted out (“ABS May”). Unraveling WMCA and several unhappy backers from the network required financial reorganization and a new name: the American Broadcasting Company. Despite the problems, the new American was able to switch its base of operations from WMCA to WNEW in New York City without any interruption in its sixteen-hour daily programming schedule, which now included four commercially sponsored programs (“ABC Network”).

Still, time was running out for American. Although it had captured audience and critical attention with its live coverage of the trial of Bruno Richard Hauptmann, convicted of kidnapping and killing the infant son of famed aviator Charles Lindbergh, and of the federal inquiry into the fire aboard the passenger ship the Morro Castle that killed 134 (“ABC Makes History”), the network was losing huge sums with no foreseeable turnaround. In March 1935, American dropped its thirteen “western” stations and announced plans to restructure yet again, this time as a ten-station East Coast regional network. Although retaining his ownership interests and his position as network president, George Storer withdrew from day-to-day management and returned to Detroit. Arde Bulova, watch manufacturer and part-owner of American’s flagship station WNEW, assumed management of the network (“Continuance”). After less than two weeks, on March 26, the scaled-back American ceased operations entirely. WNEW continued a regional feed to three New England stations, while American’s former flagship, WMCA, fed some stations on the southern part of the chain (“ABC Demise”).

Mutual Broadcasting System

The trade publication Broadcasting noted the failure of the American Broadcasting System/Company as “another indication of the futility of attempting to inaugurate a ‘third chain’   . . .” (“ABC Demise”), an ironic statement since, in fact, a lasting third chain had already come into being with very little fanfare. The Mutual Broadcasting System had begun as a program-sharing cooperative between four large stations in October 1934, just as the American Broadcasting System was making its debut. Starting with WGN, Chicago; WOR, Newark (New York market); WLW, Cincinnati; and WXYZ, Detroit, this cooperative had grown by decade’s end, into a full-fledged national network, albeit one with weaker local stations and, hence, inferior national coverage than NBC and CBS. The key to Mutual’s success lay in the strength of its four founding members. These financially secure stations with strong in-house program production staffs and large local audiences already possessed the programming and advertising contracts necessary for a fledgling network to succeed. Although operating a network was not part of the Mutual stations’ original intent, it developed as a natural, logical outgrowth of their program-sharing cooperative. Since A.T.&T. lines would have to be secured to connect New York, Detroit, Cincinnati, and Chicago anyway, why not serve small stations located along the routes of those lines? The success of this venture assured the acquisition of additional lines to eventually cover the entire country.

Conclusions

The Amalgamated Broadcasting System and the American Broadcasting System/Company failed due to several circumstances. The biggest problem with ABS seems to have been too many grandiose intentions and no sound business plan. In writing its epitaph for ABS, Broadcasting noted a paucity of “practical broadcasting brains” in the organization and, referring to an earlier editorial, continued that “we predicted the project was doomed unless experienced broadcasting executives took hold. . . . It is regrettable that ABS could not have accepted a little advice, not merely from us but from many other well-intentioned sources, before it launched its ill-fated enterprise” (“ABS Swan Song”). However, as American would prove, even having a raft of experienced broadcasters at the helm was not alone sufficient to float a start-up network in the early 1930s.

A difficulty experienced by both ABS and American was attracting national advertisers. The period 1933-1935 lay in the depths of the Great Depression. Although radio listening had virtually become a national obsession, program sponsors were extremely cautious with their advertising dollars. Most concerns that used radio advertising were apparently well pleased with their long-term relationships with the NBC and CBS networks (“Makers”; “Leading”) and were reluctant to buy time on the new networks, no matter how low their rates were. This situation would be paralleled in the early television era, when the start-up DuMont network found it difficult to lure advertisers away from NBC, CBS and the new ABC (the former NBC Blue), which had carried many of their sponsors into television from radio.

With both ABS and American, the perceived “need” for a third national network was based on the rather large number of independent radio stations operating in the early 1930s (1939 Yearbook). Most of these stations were independent because they were small stations with weak signals that had been passed over by the major networks in favor of their more powerful local competitors. Most of these small stations desperately desired the type of reliable, quality programming that network affiliation provided; without it they were left to fend for themselves with local shows (heavily reliant on playing recorded music) and transcribed (recorded) syndicated programs which were usually not as popular as the programs carried by the major networks. However, as noble as the idea of a network to serve the needs of these stations might have been, and as sound a business proposition as it may have seemed judging from the sheer numbers of these “orphaned” stations, the small coverage area of these stations made them unattractive to national advertisers. Without a strong base of commercially sponsored programs, a network could not succeed. As reported by Broadcasting upon the demise of American, “Good outlets in major markets are lacking, it was pointed out, and the salability of a network of that nature has proved difficult” (“Continuance”). 

This scarcity of national sponsors and good outlets inevitably brings up the anti-competitive strategies of NBC. In announcing the findings of its investigation into the business of network radio in 1941, the Federal Communications Commission made several striking observations about NBC’s Red and Blue operations. While these observations specifically addressed the impact of NBC’s business strategy on the Mutual Broadcasting System, the findings apply equally to ABS and American.

First, with regard to commercial sponsors, the FCC found that “under the NBC policy, a discount up to 25% is granted to advertisers based upon the amount of business they do with NBC. This gives the Blue network, for example, a marked advantage over the other networks in getting the business of a national advertiser who is already sponsoring a program over the facilities of the Red network” (“NBC’s Red and Blue”).

As to the line of demarcation between the Red and Blue networks, the FCC noted that NBC’s network affiliation contracts do not specify whether a given station is to be affiliated with the Red or the Blue network. NBC retains the right to shift a station from one network to the other, regardless of the station’s wishes.This power gives NBC undue control over its affiliated stations. . . .

NBC is able to arrange certain of its most attractive facilities into one combination. In view of the differences between power and frequency of individual stations, NBC’s ability to substitute a more desirable station if an advertiser is dissatisfied with the one customarily provided puts its competitors at a decided disadvantage.

. . . [T]here is no complete allocation of stations or programs between the Red and Blue networks, nor any clear line of demarcation between the properties, personnel, income or expenses of the two networks (“NBC’s Red and Blue”).

The Commission concluded that

. . . it seems clear that the Blue has had the effect of acting as a buffer to protect the profitable Red against competition. Available radio facilities are limited. By tying up two of the best facilities [stations] in lucrative markets . . . NBC has utilized the Blue to forestall competition with the Red. We have already noted that Mutual is excluded from, or only lamely admitted to, many important markets.. . . The existence of this situation can hardly fail to discourage anyone who might otherwise seek to enter the network broadcasting field. (“NBC’s Red and Blue”)

The findings of this investigation and series of hearings became the foundation for the FCC’s “Chain Broadcasting Regulations” which, after litigation with an unwilling NBC, resulted in the Blue network’s being spun off as an independent entity in 1943 and renamed the American Broadcasting Company (no relation to the earlier ABC) in 1945. Interestingly, because the FCC had the power to regulate individual stations but not networks, it enforced its order for NBC to divest one of its networks by threatening to revoke the license of any station that “affiliated with a network organization which maintains more than one network” (“NBC’s Red and Blue”).

As a final thought on the failed third network attempts of the early 1930s, it is fascinating to muse on the possibilities if Loew’s/MGM had bought the Amalgamated Broadcasting System. The most consistently profitable of the major film studios throughout the 1930s and falling only to second place behind Paramount in the 1940s, Loew’s/MGM would seem to have had the financial muscle and the talent pool, particularly in the form of the era’s most popular film stars, to operate a national radio network. Furthermore, the company may have even been willing to operate a radio network at a modest loss in exchange for the publicity the network could give to its films. Had the proper pieces fallen into place, Loew’s/MGM could have used its radio network as a springboard to a television network in the 1940s, as did NBC, CBS, and ABC, and could have become a powerhouse television program supplier from the 1950s onward. None of this happened, of course, and MGM began a downward slide in the 1950s from which it has never recovered.

Richard Ward

Department of Communication

University of South Alabama

UCOM 1000

Mobile, Alabama

Works Cited

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