THE BIG SWITCH: JACK BENNY'S MOVE TO CBS



“…meanwhile, no situation in the history of radio has produced as much speculation as the Benny et al CBS-vs-NBC situation. Where will it stop? was one question. Will it go into the station field as well, with CBS attempting to raid NBC’s top affiliates? was another. How will NBC counter with it’s Sunday night schedule?”

                                                                                      Billboard, November 27, 1948

Following is the story of one of the biggest news events of the first 40 years of American broadcasting: how the CBS radio network lured Jack Benny away from NBC, his loyal radio home for 16 years. There’s a lot of intrigue, lies and denials in this story; there’s also a lot of talk regarding income tax, capital gains, incorporating businesses, contractual legal stipulations and other fun business subjects; I’ll try and keep those to a minimum. It also is a tale of many acronyms: NBC (National Broadcasting Company), CBS (Columbia Broadcasting System), ATC (the American Tobacco Company), and MCA (Music Corporation of America).  This article will also go into Jack Benny’s 1947 contract in some detail; as a long-time fan of Jack Benny  I find that kind of thing a fascinating “behind the scenes” look, though of course YMMV (another acronym~!)

An important part of the story is just how much power the sponsors wielded over both the radio networks and the performers at the time.  With the exception of “sustaining” shows (programs the networks paid for themselves), the sponsors were pretty much in charge of most, if not all, aspects of the radio programs.

The performers signed contracts with the sponsors; the sponsors then in turn signed contracts with the networks to provide them with a program. Typically each radio program had one sponsor; Rexall for Phil Harris and Alice Faye, Lucky Strike for Jack Benny, Pepsodent for Bob Hope, etc.  It was a system that would gradually begin to change over the next few years subsequent to the events in this article…it would still persist into the television era, but not for too long.  In some ways, the switch of Jack Benny from NBC to CBS helped bring about some of the transformation.

If the idea that a performer switching from one network to another could cause such a mainstream news sensation 63-64 years ago seems silly or quaint, consider the tremendous media coverage devoted the David Letterman/Johnny Carson/Jay Leno Tonight Show war in th1 1990’s, or the Jay Leno/Conan O’Brian debacle of a few years ago.

 

1.  SOME BACK-STORY


By 1948, the association of Jack Benny with the NBC radio network had reached back 16 years.  Jack’s first starring radio show was “The Canada Dry Program”, first broadcast on NBC on May 2, 1932.  When the show became the famous “Jello” program in October 1934,  with General Foods as the sponsor, Jack moved into the time slot that he would come to “ own”….Sunday evenings at 7:00pm Eastern.  And “owning” in this case is not just a figure of speech: according to several contemporary accounts, and Benny himself in his later-published autobiography,  Niles Trammell, NBC’s President, had guaranteed Benny the 7:00 pm Sunday time slot for “as long as he wanted it”; reportedly the only guarantee of its type in all of radio.  The March 6, 1947  American Tobacco Company contract signed by Benny states “sponsor acknowledges that BENNY has furnished it a copy of a letter purporting to give BENNY the exclusive right to the aforementioned time  (7:00 to 7:30 p.m. then current New York time) over the National Broadcasting Company network” (capitalization per the original contract).  Despite the fact that the Lucky Strike sponsorship coincided with the extremely popular war years of the Benny program,  it could be argued that more people actually remember the Jello/Jack Benny association more, even today.  After all, there was no Lucky Strike equivalent of the still-remembered fondly “Jello again, this is Jack Benny…” greeting.

Jack Benny began his association with the American Tobacco Company (manufacturers of the Lucky Strike brand) by signing a contract with the American Cigarette and Cigar Company, Incorporated on April 10, 1944 (the contract was assigned to that corporation’s parent company, The American Tobacco Company, on September 25, 1944).  The contract began on July 1, 1944 and was set to run until June 30, 1947, with renewal options for a period of an additional three years.  The contract called for 35 broadcasts a year, with the season starting on the first Sunday in October.  Per this contract, Jack Benny would be solely responsible for furnishing what was called a “complete package”---meaning Jack was to provide the services of the regular cast, additional actors, a male vocalist, an announcer, an orchestra leader and 17 musicians, plus all of the scripts, material, and sound effects.  The only production details that didn’t fall on Benny were the commercials; the contract called for two commercials for American Tobacco products, one at the beginning of the show and one at the end. Benny had the option of inserting a “comedy” commercial for American Tobacco in the middle of the show, which he frequently did; however at this point it was still under his discretion.  This contract with American Tobacco paid Jack Benny $22,000 per week, with $200,000 also provided by the company for advertising, publicity and promotion, and $50,000 a year to cover transportation and traveling expenses.

In what would later become a crucial sticking point with America Tobacco, the contract also stipulated that Benny would require all permanent members of his cast to agree not to appear on any other radio program without prior written consent. It further stated that Benny agreed not to give his consent to any cast members appearances on any program advertising any non- American Tobacco Company cigarette or tobacco products.

 

2.  BENNY SIGNS WITH TALENT AGENCY MCA


In August 1946, Benny signed with a new talent agency, Music Corporation of America Artists Ltd. (MCA). MCA’s president was Lew Wasserman, with Taft Schreiber as executive Vice President in charge of western operations.  At this time, the high rates of income taxes were really killing some of the higher-earning radio performers; those in the top salary bracket could expect to pay up to 88% of their income to income taxes.  But Wasserman came up with a novel way around this; he suggested that his top clients incorporate themselves as businesses, with their radio shows/films categorized as their “product”.  So rather be taxed on their salaries as individuals at the then-regular rate, they would be paying only the corporate tax rate, which at the time was capped off at 25 percent.  This idea was obviously very attractive to the entertainment community, and those performers who followed Wasserman’s advice became almost instant multimillionaires. Naturally, this in turn attracted more clients for MCA.

Near the end of 1946, after Benny had signed on,  MCA informed the American Tobacco Company’s executive Vice President Paul Hahn that Benny was dissatisfied with his current ATC contract, going so far as to suggest that ATC should not exercise it’s renewal option.  Among a host of other reasons given, primarily Benny was tired of handling all aspects of the production of his radio show himself.  Hahn in turn expressed to MCA that American Tobacco wasn’t exactly too happy with the Benny contract either:  ATC wanted to secure Benny’s personal services for a longer time than was currently called for; it was unhappy with the fact that, after the signing of the 1944 contract both Dennis Day and Phil Harris had started their own radio shows, with both playing the same “characters” as they did on the Benny show;  ATC wanted to be certain that the “Lucky Strikes”  radio program would continue even if, for whatever reason,  Jack Benny should no longer star on the show; and lastly,  it wanted the Benny mid-program “comedy commercial” to become a permanent part of the show, rather than just added in at Benny and the writers’ whim.  Meanwhile, American Tobacco’s contract with Benny was due to expire on June 30, 1947.

The outcome of all these talks between MCA and American Tobacco, and between Wasserman and Benny, was that Jack Benny did indeed form his own corporation, Amusement Enterprises, on January 29, 1947. American Tobacco would contract with Benny individually as the star of the show, and with his Amusement Enterprises company for the production of the show.

 

3.  JACK BENNY’S 1947 CONTRACT(S)


On March 6, 1947 American Tobacco Company signed contracts with both Benny’s company Amusement Enterprises, and Jack Benny as an individual performer.  Following are some details of this contract. Anything in quotations is taken directly from the contract; it refers to Jack as “BENNY” and to American Tobacco as “Sponsor”.  The contract with Amusement called for a “complete entertainment package” excluding (their emphasis) the star of the program. The contract term was for 364 consecutive weeks (7 years) beginning on July 1, 1947, terminable by ATC upon the termination or expiration of their contract with Benny.  However if American Tobacco’s contract with Benny did expire first, American Tobacco would be required to pay a penalty to Amusement Enterprises of not more than $75,000.  American Tobacco agreed to pay Amusement Enterprises $27,500 per week for each radio program episode that it provided. The “complete entertainment package” was the Benny radio program; it was to be broadcast each Sunday at 7:00pm EST for 7 seasons of 35 consecutive weeks, with each season to begin on the first Sunday in October (younger readers should note that the notion of a comedy program producing 35 new shows every season would probably give sitcom writers of 2012 a nervous breakdown).  

Some other interesting things for Jack Benny fans to read, from Benny’s March 6, 1947 contract; the name of the “Lucky Strike Program” was subject to Jack Benny’s approval:  “The only product to be advertised by Sponsor upon the Program shall be Lucky Strike Cigarettes, and the title of the Program shall be subject to BENNY’S approval. BENNY is to render his services upon the Program as the sole star of the Program, and he shall receive sole star billing upon the Program, and in any and all advertising and publicity released, or authorized to be released, by the Sponsor in any way pertaining to the program”. The contract also provided at least theoretical independence for the program from sponsor interference: “…it is specifically agreed that neither Sponsor nor any agent of Sponsor, nor any other person whatsoever, shall have any right to interfere in any way whatsoever with the performances of BENNY upon this Program, and it is further agreed that BENNY shall have sole, exclusive and complete control over the manner, means and details of the performances upon the Programs hereunder.”  Jack was able to arrange his own guest appearances on other radio programs, provided that they did not advertise any tobacco products.  The contract also covers potential future television appearances, something becoming much more important in 1947.

It also covers what would happen if Benny was to get sick and miss the program; it says that Jack himself would be responsible, at his own expense, a “substitute artist” in his place.  The contract further stipulates that Benny would have to produce “extra” broadcasts added at the end of the season (but no more than four) equal to the amount of broadcasts he had missed. 

Also discussed is “electrical transcriptions” of episodes, (shows recorded onto discs for rebroadcast) giving American Tobacco the right to make transcriptions for their own use, and for transcriptions to also be used for a re-broadcast “at a time not earlier than 7:30 pm nor later than 10:00 pm” Pacific Standard Time on the same Sunday as the original live broadcast, for eight listed radio stations in California, Washington state and Oregon.  However, during Daylight Savings Time, American Tobacco had the option of requiring Benny to do a second live broadcast Sunday from 11:30 pm to 12 midnight Eastern Standard Time for those same Pacific Coast radio stations, “without any additional compensation to BENNY hereunder”.

Further minutia from the Benny contract;  if NBC pre-empted the Benny program for any reason (for breaking news reports, etc), it could “substitute for such scheduled performance another hour and date acceptable both to BENNY and Sponsor”.  Clause 16 of the contract is the American Tobacco Company’s version of the dreaded performer’s “morals clause”…it states that “BENNY agrees that he will not knowingly or willfully act or conduct himself in such manner that the reasonable and possible consequences thereof will expose the Sponsor to contempt, ridicule, or (word partially obscured) and thereby cause the Sponsor to suffer injury or damage”.

Notably, as noted above, by demand of American Tobacco the mid-program “comedy commercial” now became a required portion of the program, no longer placed at the discretion of Benny or his writers.  This gave ATC three total commercial breaks for their “Lucky Strike” brand during every Benny show; the opener, the mid-show (usually provided by Don Wilson and/or the Sportsmen Quartet) and the closing.  Amusement Enterprises was in charge of almost all aspects of the show; it leased the premises, opened up bank accounts, and signed contracts with the supporting cast of the program.  I think it’s worth noting that, while  on July 19 1947 Amusement signed 7 year deals with Mary Livingstone and Eddie “Rochester” Anderson, it signed up Phil Harris for 3 years, and Dennis Day, Don Wilson, and the programs’ writers for only 1 year.  It would seem that Benny (and ATC) felt that both Mary and “Rochester” were equally vitally important, irreplaceable parts of the Jack Benny program.  The difference in the deals may also possibly reflect American Tobacco’s disappointment in both Harris and Day having their own radio programs.

Also on March 6, 1947, ATC executed a contract with NBC as well, purchasing the network time on Sundays from 7:00 to 7:30pm EST.  The term of this contract was for 14 weeks, beginning on September 28, 1947 and ceasing on December 28, 1947;   ATC had options to extend this agreement with NBC for 11 additional periods of 13 weeks each.  This method of extending agreements for radio shows in 13 or 14 week periods was fairly standard at the time; it doesn’t reflect a lack of faith in the Benny program itself.

The ATC contract with Jack Benny himself covered a term of 156 weeks (3 years), also beginning on July 1, 1947, with two options to renew for 104 weeks each. Benny would be paid $10,000 per week; certainly still a nice amount for 2012, but very impressive for 1947.

 

4.  CBS’ PLAN


According to Michele Hilmes’ book “NBC: America’s Network”, in May 1948 the CBS Chairman of the Board William Paley received a memorandum from an (un-named) NBC Vice-President, gloating over NBC’s  Hooper ratings dominance over CBS; this was the impetus for Paley to begin an audacious new plan. MCA head Lew Wasserman helped Paley with his plan, using the MCA “incorporated business” idea as a lure for some big-name radio performers.  The plan: CBS would begin an aggressive policy of pursuing and purchasing other networks’ radio programs (some would call it “stealing”) which CBS would then lease or sell to the sponsors of the programs to air on the network.  While there had always been so-called “sustaining” programs that the radio networks owned or paid for themselves, these were usually public affairs shows, or programs that just couldn’t attract any commercial sponsors for one reason or another.  Traditionally it had always been the sponsors themselves that actually owned the radio programs; the Jack Benny show was actually “The Lucky Strike Program”, etc.  CBS was now turning this established practice on its head by purchasing the radio shows outright.  The first “big” program that CBS managed to snare away was the “Amos and Andy” show, which had been broadcast on NBC for the last 19 years. While by 1948 the show was not the ratings powerhouse that it had previously been, this was still an audacious move by CBS.

 Of course, now thanks to the maneuvers of MCA, it was technically Amusement Enterprises that owned the Benny radio program.  In September of 1948, MCA and Wasserman approached William Paley to determine if CBS would be interested in buying stock in Jack Benny’s Amusement Enterprises from its four stockholders.  MCA informed Paley that Amusement owned the Benny program outright (with the exception of Jack Benny himself, who was under contract directly to American Tobacco).  If CBS purchased or gained controlling interest in Amusement Enterprises, they would be in prime position to put into effect the biggest “talent raid” of them all…grabbing the Benny program away from NBC.  On September 15, 1948 Amusement’s stockholders gave MCA exclusive rights to represent them for a period of 6 months of negotiations for the sale of Amusement’s stock.

Then in October 1948, when MCA informed American Tobacco that the sale of Amusement was under discussion,  for some reason American Tobacco  in turn informed NBC that this was going on.  Of course NBC was not too please, to say the least.  Around this time Jack Benny told his lawyer Loyd Wright (who was also one of the four stockholders in Amusement Enterprises) to temporarily cease negotiations with CBS, to give NBC an equal opportunity to buy the Amusement stock if it wanted.  Although this could be regarded as a tactical move, it is more likely that the good-hearted Benny typically felt that he owed this consideration to NBC after his long and profitable association with the network.

 At this point Niles Trammell, NBC’s president, requested assurance from Wright that if NBC purchased the Amusement stock that they would have a “call on Mr. Benny’s personal services”.  In other words, NBC did not want to pay to buy Amusement Enterprises, only to subsequently have Benny leave the network anyway. Trammell wanted this provision written into the stock sales contract, but Loyd Wright and MCA refused to discuss Benny’s personal services and threatened to break off the negotiations with NBC. Then Trammell wanted a clause inserted into the sale contract that the “legality” of any eventual stock sale of Amusement must meet with the approval of the Internal Revenue Service. This tactic in turn served to make Loyd Wright again threaten to stop negotiations with NBC.

 In early November 1948, Trammell flew from New York to California for further negotiations; a tentative contract of sale was written up for NBC to buy Amusement Enterprises in full, with a purchase price of $2,260,00; it did contain Trammell’s  requested “tax clause” in which the selling stockholders could withdraw from the sale if the IRS deemed the capital gains tax rate provision illegal. This purchase price was determined by it reportedly equaling 10 times the estimated annual earnings of Amusement Enterprises, plus a commission paid to MCA for handling the negotiations.  On November 11, 1948,  Niles Trammell requested a delay of a few days time to further talk over the potential contract and purchase in New York with members of NBC’ board.  Because of this delay Benny’s attorney Loyd Wright refused to continue the negotiations with NBC, and the negotiations were again broken off.  That same day, CBS head William Paley called Jack Benny to express his disappointment that CBS had somehow now become closed out of the whole negotiation process; Benny suddenly seemed resigned to stay on NBC.  After consulting with Loyd Wright, Benny informed Paley that nothing had actually yet been signed with NBC, and that the stock in Amusement was still available for purchase.  This was a break that CBS had been waiting for; Paley and his attorneys flew to Los Angeles right away, and were shown a copy of the potential contract which had been drawn up for the sale of the Amusement stock to NBC.  Paley and the CBS attorneys agreed to accept the contract as it was.   It was around this time that Benny began to sense that, while for some reason NBC seemed to be doing it’s best to stall and delay the deal, conversely Paley and CBS seemed extremely eager and willing to work with him---the fact that the CBS Chairman himself suddenly flew to Los Angeles just to discuss the deal left a very favorable impression on Benny.  It did seem as if NBC was now taking Benny, and his loyalty, for granted. Considering the way Benny had kept NBC in the “loop” during this whole situation, he had to have been disappointed with his treatment.

Despite the fact that American Tobacco’s President Vincent Riggio and CBS Chairman William Paley had spoken several times during the entire negotiation process thus far, the position that the American Tobacco Company had taken for the whole duration was that they did not have a preference as to whether the Benny program stayed with NBC or moved to CBS, or even if they would agree to switch the program if the stock in Amusement Enterprises was in fact purchased by CBS.

 

 5.  BENNY SIGNS WITH CBS


 “New York, November 20.  As of 7:30 o’clock last night (Friday) the Columbia Broadcasting System (CBS) had not signed Jack Benny. Nor were any developments expected over the weekend. This from Frank Stanton, CBS president.  Stanton’s denial spiked a report persistent late in the week that the Benny deal was set, carrying with it to Columbia Phil Harris-Alice Faye (Rexall), Edgar Bergen (Coca-Cola) and other top programs from the National Broadcasting Company (NBC). NBC appears resigned to one development; that is that if Benny goes, so may Fred Allen and others. Mentioned among the latter are Bob Hope and Red Skelton.  American Tobacco top execs met virtually all day Friday, presumably discussing the advisability of shifting the Benny show from NBC to CBS. Reports that Vincent Riddio (sic) the LSMFT President, was seeking a “guaranteed” rating from CBS, comparable to that achieved by Benny during his NBC career, were also denied by Stanton. The story was that Riddio (sic) wanted a reduction in the package price if the ratings deteriorated.  Reports that Benny was also being paid off in part by CBS stock were denied…”

                                                                                ---Billboard, November 27, 1948

On November 13, 1948, Paley and CBS agree to the purchase of the Amusement Enterprises stock.   With the deal now in place, Paley subsequently returned to New York.  On November 15 the stock sale contract was signed by the Amusement stockholders, followed within a few days by the signing by Paley and CBS.  CBS purchased 70% of the stock, with CBS subsidiary Columbia Records buying the remaining 30%. CBS then immediately began negotiations with American Tobacco for the services of Jack Benny directly.\

During this time, the contract between American Tobacco and the NBC network for the Sunday at 7:00pm time slot was in its fourth renewal period, set to expire on December 28, 1948.  Under the terms of the contract ATC had to declare it’s notice not to renew by November 28; they sent a letter announcing the “non-renewal” to NBC on November 26.

On November 24 CBS and American Tobacco signed the deal and agreed to switch the Jack Benny radio program from NBC to CBS, effective as of January 2, 1949.  The contract was for a period of 91 consecutive weeks, cancelable by the American Tobacco Company at the conclusion of any 13 week period.  According to the contract, the “gross weekly billing” was $17, 814, “subject to discounts”.  Despite strong official denials by CBS to the press, CBS in fact did agree to indemnify ATC if the Hooper rating of the Jack Benny/Lucky Strike program fell due to the switch of networks; the contract refers to a “supplemental agreement” attached to the facilities contract providing for rebates to the American Tobacco Company “if the Jack Benny program failed to maintain its Hooper rating”.   CBS would wind up having to pay out on the agreement, as the ratings did decline. 

Jack Benny agreed to this switch of radio networks…or, more to the point, he didn’t have any objections to it, nor did he apparently exercise his veto power as given him in his 1947 contract. He had remained theoretically neutral during the negotiations between NBC, CBS, Amusement and American Tobacco; although as noted earlier he did feel slighted by NBC.  Reportedly his “personal services” contract with ATC was never even discussed during the negotiation period. However, on the other hand it’d be naive to believe that Benny was totally disinterested, or that did not stay updated on the events.


On November 26, American Tobacco sent the following letter to NBC:

Attention of Mr. Walter Scott;

 Gentlemen;

This is your formal notice that we will not renew nor extend the agreement between us dated July 2, 1947, for the facilities of the National Broadcasting Company for the program known as “The Jack Benny program” after the broadcast of December 26, 1948.

Will you kindly acknowledge receipt of this non-renewal by signing and returning the enclosed copies of this letter to Mr. Frank Silvernail, Batten, Barton, Durstine & Osborn, Inc, 383 Madison Avenue, New York 17, New York.

Very truly yours,

F.X. Towers

Advertising Department

 “….New York, November 27.  A battle of comics in the choice 7pm Sunday nighttime is shaping up as a result of the shift, formally announced yesterday (Friday) of Jack Benny to the Columbia Broadcasting System (CBS)…..Benny’s shift to CBS was formalized with a simple announcement…No details were forthcoming, but it is presumed that CBS has bought out Benny’s Amusement Enterprises, Inc. However, the debacle many expected, insofar as NBC programs are concerned, has not yet materialized. It was expected that both Rexall and Coca-Cola would, virtually automatically, spot their Phil Harris and Edgar Bergan shows to CBS, if Benny shifted. That has not developed yet.  Benny’s deal is said to be for less money with CBS than with NBC, which would not go along with terms outlined by Music Corporation of America (MCA)…NBC was prepared to pay $2,000,000 for Amusement Enterprises, plus $315,000 for it’s assets, plus 10 per cent commish to MCA.  Reports were that Benny is burned at NBC, allegedly because he felt NBC had “instigated” Washington reports of a congressional investigation into capital gains deals.  The Benny-CBS deal ends one of the closest relationships between performer and network in the business.  Benny has held the same NBC spot since he started for General Tires in 1932.  Some years ago, Niles Trammell, NBC President, with whom Benny has now broken, guaranteed the comic his 7pm time as long as he wanted it, giving Benny the choice and approval of sponsor, the only deal of it’s kind in network radio.  Now, Benny’s departure means a knock-down, drag-out fight between CBS and NBC, each of which is going all out to promote it’s own 7pm Sunday night candidate.  The Benny shift to CBS was finalized when American Tobacco, his sponsor, failed to renew its NBC time, which expires December 26.  NBC had been advised informally, earlier in the week, that it could expect this development. Vincent Riggio, American Tobacco’s President, is reported saying that, since the networks are about the same, he had okayed the change in order to keep Benny happy. Reports, officially denied by CBS last week, still persist that CBS, as owner of the Benny package, is guaranteeing American Tobacco a rating comparable to Benny’s average, with a $3,000 per Hooper point forfeit allegedly involved.  Meanwhile, the CBS-Benny deal is the largest, most important and most dramatic program deal ever engineered in radio”

                                       ----Billboard, December 4, 1948

On December 22, 1948, there was a non-broadcast episode (titled “Experimental Broadcast #1” in Jack Benny’s personal papers) that seems to have been an in-house try-out (done by CBS?) before switching networks (the episode is a reworked version of the 12/24/1944 episode).  Then on December 23 there was a closed-circuit program broadcast in-house by CBS to their affiliates, starring Jack and Amos and Andy (the other stars that CBS had “stolen” away). It was a 15 minute program done without an audience and introduced by CBS head William Paley.  Jack appeared no less than five times that week on CBS, plugging the network switch; Monday on the Lux program, Thursday on Suspense, Friday on The Bob Crosby Show, and twice on Saturday, New Year’s Day; in the afternoon during the intermission of the Rose Bowl game broadcast, and in the evening on the Gene Autry show. Jack’s last broadcast for NBC took place on December 26, 1948, and his first program for CBS was broadcast on Sunday, January 2, 1949.