Earlier this year, Viacom cable companies split from a new company called CBS Corporation that includes the CBS and UPN broadcast networks, Viacom Television Stations Group, Infinity Broadcasting, Viacom Outdoor, Showtime, Simon & Schuster, CBSNews, and Paramount Parks. But this new media giant started out in the back room of a humble house in Chicago in the 1890s where Paley family members, Russian Jewish immigrants, rolled cigars until they could create enough demand to build a factory.
William S. Paley was president or Chairman of the CBS Radio and Television Networks and Columbia Records for most of the 51 years from 1929 to 1990. He born in Chicago on Sept. 28, 1901. He attended Chicago public schools, Western Military Academy in Alton, Illinois, and graduated from Schurz High School in Chicago in 1917. He studied at the University of Chicago from 1918 to 1919. Paley followed his family to Philadelphia about 1920 when the headquarters of his father's cigar company moved there. He graduated from the Wharton School of Finance at the University of Pennsylvania in 1922.
Bill's father was Sam Paley who had emigrated to Chicago in the late 19th Century. Sam was president of Congress Cigar Company and he created the popular La Palina Cigar brand. Sam made Bill a vice president of Congress after his studies at The Wharton School. Congress Cigar acquired a small group, not even yet a true radio network, with 16 affiliate stations in 1927 primarily for the purpose of advertising La Palina Cigars.
After some false starts, the commercial potential of the new medium of amplitutde modulation (AM) broadcast radio through advertising revenues was just beginning to be demonstrated in the late 1920s. The first commercial broadcast was in November 1920 on KDKA in Pittsburg. Only five years later, more than five and one-half million radio sets had been sold and 500 stations of various sizes in the US were broadcasting. President Calvin Coolidge signed the Federal Radio Act on Feb. 23, 1927 to create the Federal Radio Commission to bring order from chaos in assigned frequencies and the wattage of power a transmitter could use to broadcast. That act helped to transform radio from a popular hobby to a medium to invest in.
The sales of La Palina Cigars doubled in the first year of Congress Cigar owning the radio affiliates. In 1928 and 1929 the Paley family acquired majority ownership and Bill renamed the network as Columbia Broadcasting System (CBS) and became its president. He siezed upon new programming ideas all the time and would lead the company as either president or chairman for most of the next 52 years until his death in 1990.
Paley married Dorothy Hart Hearst, the first wife of William Randolph Hearst, in 1932. They adopted two children and divorced in 1947. His second wife was Barbara Cushing Mortimer who died in 1978. The second marriage produced two more children that were born to Barbara and Bill.
Bill Paley realized that providing high quality program content to CBS radio affiliates at a low marginal cost to the affiliates was a sound business model. He increased the number of affiliates and listeners and the larger audience allowed him to charge better ad rates for national buys. He introduced talents such as Frank Sinatra, Kate Smith, Bing Crosby, Ed Sullivan, Jack Benny and those he could not sign up he raided from other networks. CBS gave the affiliates a share in national advertising revenues so long as they carried the network content and then negotiated what local times the individuals stations could have in the broadcast schedule to sell local advertising. He would repeat the content formula in television in the 1950s.
During World War II, Col. Bill Paley served on the staff of Gen. Dwight D. Eisenhower as deputy chief of psychological warfare plans. After the war, Paley became Chairman of the Board of CBS in 1946 and turned over the presidency of the combined radio and TV network to Frank Stanton who held it until he died in 1973. Paley believed in a strong news division and cultivated his news stars such as Edward R. Murrow even though some of Murrow's programs on TV cost the goodwill of advertisers. Paley promoted the entertainment side of the network as "The Tiffany Network" and was successful in seeking upscale advertisers.
Paley retired as Chairman in 1977 at the age of 76 but he kept coming back as a result of various corporate intriques and shakeups in the board room. He continued to exert great influcence on network affairs because he had the largest voting bloc of stock. He came back as Chairman in 1986 to back Laurence Tish as president and stayed in the top post until his death in October 1990 at the age of 89. Bill Paley and his second wife Barbara were leaders of New York society and Bill served as an active trustee of the Museum of Modern Art from its founding in 1929 until the 1980s. Paley is a member of the Radio Hall of Fame.