TELEVISION : How ABC Changed Hollywood’s Mind About TV

I n this excerpt from his forthcoming book “Beating the Odds,” Leonard J. Goldenson describes what happened immediately after he merged his company, United Paramount Theatres, with the American Broadcasting Co. in 1953. The struggling ABC network “had no hit shows, no stars and nothing in prospect but struggle,” he writes. ABC was deeply in debt and had only 14 affiliates compared to CBS’ 74 and NBC’s 71. The network ran no programming until 6 p.m., and on some nights ended programming at 9 or 9:30.

The only network-owned program ABC had was “Ozzie and Harriet.” Goldenson helped develop the Danny Thomas series “Make Room for Daddy,” but ABC got its biggest push from deals with two entertainment giants: Walt Disney and Jack Warner of Warner Bros. Pictures.

Late in 1953 I got a call from Walt and Roy Disney. They wanted to come see me.

The Disneys said they wanted to build an amusement park in a dusty little California town called Anaheim. Walt had always had something like this in mind. After he brought in Stanford Research, however, he’d decided not to put it next to his studio in Burbank.

ABC was really Disney’s last hope. He’d gone to the banks, and when he tried to explain what he wanted to build, they just couldn’t grasp the concept. They kept thinking of a place like Coney Island. Very risky. They turned him down.

Walt and his wife, Lily, borrowed against their life insurance to pay for a scale model. They’d gone to see (network founder David) Sarnoff at NBC, offering to give him access to the Disney film library if he’d finance the park. “Cartoon films? Television will never be a medium of entertainment,” said Sarnoff, showing them the door.

Then they’d gone to see (William) Paley at CBS. For months he kept them on a string, refusing to say yes or no, but extracting Disney’s promise that he wouldn’t talk to anyone else about it until CBS decided. Finally, Paley said, “No.”

I asked Walt how much they thought it would cost to build Disneyland. He said, “About four million dollars, maybe five million at the most.”

That wasn’t going to be nearly enough, I said. Probably it would take more like $10 million or $15 million. After all, after construction they would have to staff it, train people, and operate at a loss for some time. (As it turned out, it cost $17 million, the first year alone.)

I offered to take the Disneys in to see our board. But as a condition, I said, “I want a one-hour program, every week.” And of course I wanted access to their 600 animated-feature film library. In exchange, I offered one minute each week, free, to promote Disney’s latest film. With hundreds of (United Paramount Theaters) theaters to show these movies, that wasn’t a bad deal for us.

At first my board opposed the deal. After all, they said, CBS had turned Disney down. NBC had turned him down. And the banks had said no. More to the point, where were we going to get financing?

I talked to some of the New York banks. They were reluctant to lend us $10 million or $15 million for Disneyland. Then Sid Markley, my Harvard Law roommate, who was in charge of UPT’s southern theaters, suggested we talk to Karl Hoblitzelle.

Karl was owner of Interstate Theatres. He’d started his career as a booker for Keith-Orpheum, and wound up with several theater circuits, a fortune in oil--and chairmanship of the Republic Bank in Dallas.

I got to know Karl very well when I was in charge of Paramount’s theaters. He was a very big man in Texas, widely known for unstinting philanthropy, and was active, behind the scenes, in state politics.

In 1946, Karl had called me from Dallas and said, “Leonard, there’s a young fellow, schoolteacher, running for Congress in the Johnson City area. I’d like (United) Paramount Theatres to support him with $10,000 for his campaign.”

I said, “Karl, you’re running things down there. You know the situation. If you think it’s right, we’ll support him.”

This young fellow, Lyndon Johnson, won his seat by a handful of votes. Not long afterward he came up to New York, and I met with him. I brought Ed Weisl along, and they became quite close. Ed became his counselor, in a sense.

Karl agreed to have Republic put up $5 million. After that, other banks got in line to lend us the rest.

Then I hammered out a deal with the Disneys. We would put in $500,000 and guarantee the loans. In exchange, we took 35% of Disneyland, and all profits from the food concessions for 10 years. That could be a gold mine, I knew.

And of course there was programming. That’s what I really wanted from them. We agreed to a seven-year deal, with an option for an eighth, at $5 million a year. At $40 million, it was then the biggest programming package in history.

“Disneyland” went on the air in 1954. Hour-long dramatic segments were tied in to Disneyland theme areas such as Frontierland, Tomorrowland, and Adventureland.

The following year Disney gave us “The Mickey Mouse Club.” This was followed, in the fall of 1957, by “Zorro.”

At the end of the seventh year, Walt and Roy came to me and said they’d had an offer from NBC--really from RCA--to go into color with “Walt Disney’s Wonderful World of Color.” RCA was willing to pay a phenomenal sum. For RCA, it was a way to sell color television sets. They owned all the patents and got a royalty on every color set sold in the world. The Disneys offered us the opportunity to match RCA’s deal.

I said that we couldn’t afford to do that. We just didn’t have the kind of money that would allow us to bid against RCA. Furthermore, I thought it was time we re-evaluated our whole relationship with Disney. The only reason we’d taken a position in Disneyland was to get them into television, but the Disneys had turned out to be terrible business partners. Disneyland had become enormously successful, but Disney kept plowing his profits back into park expansion. I feared that it would be a very long time before we started seeing any return on our original $500,000 investment.

Since ABC needed cash to finance our own growth, we made a $17 million deal to sell back our share of Disneyland, and we parted company. We took $7.5 million in cash and Disneyland’s concession profits for five more years. I felt they would bring in about $2.5 million a year, and I wasn’t far wrong.

After I made the deal with Disney, in 1954 I called Jack Warner. We had dinner at the LaRue Restaurant on the Sunset Strip. We ate and talked and talked. I was trying to persuade him to go into television.

Jack said, “Leonard, I made those quickies 30 years ago, and I’m not going to make ‘em again.”

I said, “I don’t want you to do that either. This is different. I want to use your library. I want you to put young management in charge of this. And I want to give you one minute a week in every program to promote your motion pictures.”

After 4 1/2 hours he finally agreed. Jack put his son-in-law, Bill Orr, in charge of television, reporting to Ben Kalmenson, executive VP and general sales manager. Kalmenson and I sat down and went through their entire library, looking for films upon which we could base an hour-long series. We selected “Cheyenne,” “Kings Row” and “Casablanca.”

Originally we called the program “Warner Brothers Presents” and rotated each series in turn through the same time period, starting in the fall of 1955. No one had ever done this kind of programming before. Almost everything then was live. We were breaking a lot of new ground, so of course we were making a lot of mistakes as we went along.

“Kings Row” and “Casablanca,” though very successful feature films, were doomed to fail as television series.

“Disneyland” and “Cheyenne” went through the ratings roof. “Casablanca” and “Kings Row” died. But “Cheyenne,” the first Western series made for TV, was a watershed. “Cheyenne” started the Western trend. CBS and NBC countered with their own shows, most notably “Gunsmoke,” in the fall of 1955. By 1959, there were 28 prime-time Westerns on the three networks.

Walt Disney instantly grasped the power of television promotion for his theatrical features, and he used his weekly free minute very effectively.

Jack Warner went on once to promote his pictures, and after that he said, “Aw, who wants to bother?” It cost him millions of dollars. But Warners was soon providing us eight hours of weekly programming--40% of our prime-time schedule--a highly profitable arrangement for them.

In 1955, ABC had an opportunity to buy “ Warners’ whole film library,” Goldenson writes, “everything up to 1950, for $15 million. And after we got our money back, ABC would split profits 50-50 with Warners.”

Goldenson favored it, but another executive opposed it. Goldenson didn’t want to override him, and the deal fell through. “That library would have been worth a fortune to ABC,” he writes. “I’ve kicked myself many times since . “