Friday, May 12, 2006

The RKO Radio Picture

The peak RKO radio station lineup consisted of WOR-AM in New York, KHJ-AM in Los Angeles, KFRC-AM in San Francisco, WHBQ-AM in Memphis, CKLW-AM in Windsor Canada, and the Yankee Network and its flagships WNAC-AM in Boston... (The Canadian government later tightened rules on foreign ownership of radio and television stations, forcing RKO to sell its CKLW-AM to a Canadian-based company in 1970.)

A radio picture? Radio doesn't have pictures, that's the point of radio...
RKO was formed in 1928 as a massive merging of four parties:

1. Keith-Albee-Orpheum (KAO) theater chain
2. Film Booking Office of America (FBO) studio
3. American Pathé film studios
4. Radio Corporation of America (RCA) Photophone division.

The prominence of the word "radio" in the corporate name reflected RCA's 66% holding. It is claimed that the broadcasting-tower logo of the production arm, "Radio Pictures," was suggested by David Sarnoff himself, but the reference is arcane and unproven.

In 1933 the U.S. Justice Department forced a re-org of RCA, requiring that RCA sell off a portion of it's RKO holdings. This change shifted power to investor Floyd Odlum and the Rockefeller brothers. In 1932 during the height of the great depression it went into debt. A corporate re-organization in 1936 made for a leaner more profitable company.

ten years later Howard Hughes gained control by buying 25% of the outstanding stock. Within weeks of taking control, he dismissed 66% of the staff and as a result production was shut down for six months! Hughs spent the time investigating possibly communists in the filing cabinets and under the carpets. As a reward, In the fifties Hughes got whacked with an anti-trust lawsuit and had to sell off RKO theaters.

With the loss of his theater division, Hughs focused on TWA and his aviation division. It was the Korean war after all. Hughes found the steady stream of lawsuits from RKO's small shareholders pesky. So since he was the worlds richest man, and a nutjob, he bought them all out in 1954. it cost $24 million. then, seemingly on impulse six months later he resold RKO to General Tire for $25 million. We all know what happened to him after that....

General Tire restored RKO's links to broadcasting. They already owned the Yankee network and in 1951 bought General Teleradio. But licensing problems with WNAK and KHJ hampered growth for the next 20 years! 1965-1987. Tt began with a simple license renewal. Fidelity Television claimed RKO General forced it's vendors purchase advertising time on RKO stations. Then the dirt came out from under the carpet: General Tire had bribed foreign officials, they had misappropriated foreign corporate funds, they bribed elected officials, RKO misled advertisers about its ratings, engaged in fraudulent billing, lied to the FCC about a destroyed audit reports and filed false financial statements etc. The FCC considered this gross misconduct. In 1980 the FCC stripped RKO of the two licenses.

In 1987, judge Kuhlmann found RKO unfit to be a broadcast licensee and recommended that the FCC strip RKO of its licenses. Kuhlmann based his ruling on numerous instances of dishonesty by RKO. RKO sold off it's remaining licenses shortly thereafter. Remember back when large corporations used to get punished by the government? Because the governments job was to serve it's citizens? Today I am reminded regularly by headlines that those days are long gone.