William S. Paley, who took a handful of small radio stations in the 1920s and built it into the Columbia Broadcasting System, announced today that he will step down as chairman of the $4 billion media conglomerate in April.
Although Paley will remain a director, consultant and major shareholder of CBS, his departure from the corporate chairmanship represents the end of an era for the broadcasting, record, publishing and film giant.
For as a broadcasting pioneer, spokesman and symbol, Paley has been perhaps the central figure in moving both radio and television from an infant technology to the most powerful means of communication in the world.
"I founded CBS nearly 54 years ago, and except during World War II I have served the company full time since its inception," Paley, 81, told CBS employes in a letter distributed today. "I take great pride in CBS." In a brief interview Paley said he had "nothing to add" to the letter.
Paley's decision to leave the post after 36 years as CBS chairman had been disclosed by friends and associates two weeks ago. He is to become a partner in Whitcom Investment Co., a partnership that owns Whitney Communications Corp. Paley also will receive half his current salary of $339,746 from CBS for the consulting work, in addition to maintaining an office in CBS headquarters here.
Whitney Communications, which was founded by Paley's former brother-in-law, John Hay Whitney, owns one-third of the International Herald Tribune, 10 magazines and several cable television ventures. Paley will join the board of directors of the Paris-based International Herald Tribune, which also is owned by The New York Times Co. and The Washington Post Co.
Paley revealed his plans at a CBS board of directors meeting today. The board immediately announced that CBS President and chief executive officer Thomas H. Wyman, who came to his current position in 1980 after tours as vice chairman of Pillsbury Co. and president of Green Giant Co., will be elected to the chairmanship when Paley leaves the position April 20.
"In resigning as board chairman, I am reflecting my complete confidence in Tom Wyman and his skilled, dedicated management team which heads various CBS operating and staff units," Paley wrote. "I feel the time has come for me to relinquish a full-time commitment."
Paley, however, will leave a rich legacy in terms of both the broadcast technology CBS utlized and the development of a CBS mystique he is widely credited with creating. In his 1979 autobiography, "As It Happened," Paley said CBS' reputation "as a quality organization has been earned day by day" over the network's half-century of operation.
"It permeates the organization and can be seen everywhere; we spare no effort, no amount of money to produce the best of which we are capable, from our news programs to our entertainment shows, whether they are serious drama or the lightest slapstick comedy designed for pure enjoyment," he wrote. "The quality is there, as it is in the design of our every product, from records and books to toys for children."
Paley's CBS reign began in 1928, when he left a family-run cigar firm in Philadelphia and bought United Independent Broadcasting, already known as Columbia Broadcasting System, for $500,000. He set out at once to challenge the dominance of NBC by chasing high-priced talent and visible, but reluctant, advertisers.
In 1946 Paley took over as chairman and chief executive officer of CBS, after an era in which CBS News developed a reputation as being in the forefront of radio coverage of World War II. CBS broadcasts from newsmen such as Edward R. Murrow and Walter Cronkite became symbolic of that period in radio's history.
Although CBS Television began as an experiment in 1931, it did not become profitable until 1953. But after that point CBS led the ratings sweepstakes in 22 of the 26 years ending with 1981, with Paley's imprint on much of what CBS telecast, shows ranging from the Ed Sullivan Show to Playhouse 90 in the 1950s, and more recently the Mary Tyler Moore Show and the Waltons.
"The challenge is to know what the public is seeking before the public even knows it is looking for something else," he wrote.
But much of CBS' luster has dimmed in recent years, and Wall Street analysts frequently have criticized Paley's inability to give up his control of the company at a time when he no longer is on top of the industry's technological developments.
"For all his pluses and minuses, he did create a major company, and along with [RCA founder] David Sarnoff he created the business," said John Reidy of Drexel Burnham Lambert Inc. "But the business is changing, and the technology is taking its toll."
Anthony Hoffman, an analyst with A.G. Becker Co., said that, under Paley, CBS operates in the 1980s under "a very sedate, almost sleepy, atmosphere toward its competition. They have the feeling that CBS can do no wrong. Most of the things he [Paley] could be proud of came early in his career," he said. "Paley is stepping down from a business where his showmanship is less important."
The move comes at a critical juncture in the company's history. The three commercial television networks are suffering from eroding ratings, as the development of cable and subscription television, video cassettes and other home entertainment technologies increasingly are luring consumers away from the fare of CBS, NBC and ABC.
In addition, the record industry is sagging, and CBS, along with Warner Communications Inc., dominates many segments of that business. Record sales are likely to suffer a 15 percent drop this year, analysts say.
CBS, meanwhile, is likely to lose as much as $30 million this year on a pet Paley project, CBS Cable, a cultural network that has won critical raves while struggling to win advertiser and cable system support.
It is the most visible of a number of CBS ventures, such as videotex and teletext systems, and video games, that have been designed to ease the company's dependence on network television.