This case study is distinctive because it focuses, first, on a pre-Reagan era of financialization and, second, on corporate financialization specifically. Wielding many definitions, financialization refers to the increasing power of financial institutions, actors, and ideologies in nearly all aspects of the economy.⁵ A romantic perspective on media financialization—whether contemporary or historical—might frame it as an outsider versus insider battle that vilifies finance capital and exalts artistic production. However, the relationship between finance and culture is more intertwined and ambivalent. Although financialization is traditionally associated with the rise of complex financial instruments and institutional investors in the 21st century, meso- and microeconomic approaches have pointed out that financialization is not merely a matter of external capital pressuring an innocent nonfinancial firm into short-term, profit-seeking behavior; financialization can also represent an internal reorientation of nonfinancial firms and practices.⁶ A body of critical finance and accounting scholarship has narrowed in on the contemporary process of “corporate financialization,” which can be measured using three key indicators: a rise in debt and financial assets within nonfinancial firms, an increase in intangible assets relative to tangible assets, and a rise of the shareholder value orientation.⁷ These forces have reorganized corporations from “a system of production to a system of investment.”⁸ Archival trade sources suggest that ABC and its parent company pursued some of these objectives and represented an early, perhaps primitive, form of corporate financialization. In addition, this case study is distinctive because most recent scholarship (justifiably) focuses on either the post-2008 financial crash or the liberalization of financial markets. Critically, however, there have been earlier cycles of financialization prior to the 21st century, and financialization is a fundamental consequence of capitalism, rather than an aberrant manifestation of it.⁹ It is valuable, therefore, to take a historical approach to media financialization by charting the continuities and changes in the film and television industries before the late 20th century.

This is not to say that media researchers have ignored the relationship between Wall Street and media industries. Andrew deWaard, for example, has detailed the infiltration of financial actors like private equity firms into Hollywood after the 2008 financial crisis.¹⁰ Colin Crawford has also studied how financial logics within the television industry have led some streaming television executives to construct “investor lores” to inflate their market value.¹¹ With financialization at the center of contemporary media industries research, it is worth turning the field’s attention to the seeds of financialization present earlier in the 20th century. Media historians have certainly charted how media conglomerates became more adherent to the demands of Wall Street and shareholder value, in part due to the deregulation of media industries.¹² Similarly, political economists have studied earlier manifestations of financialization, such as how early radio and cinema served as critical tools for financial and imperialist powers in the interwar period¹³ or how New York banks shaped the early Hollywood studio system.¹⁴ Considering these earlier works, this case study is not an “origin” of media financialization. Rather, it contributes to a body of scholarship that is “integral to our efforts to understand the history and present reality of the political and economic forces that structure our profoundly unequal world.”¹⁵ Still, this article’s meso-level approach is distinctive because it details how post-war media corporations were restructured from the inside out, rather than the outside in. In doing so, it suggests that studying media history in particular offers insights for financialization scholarship outside of media studies, in that early cultural industries are paradigmatic of the type of corporate financialization that has come to define nearly all industrial sectors today.

There was nothing natural or inevitable about the structure of US network television or the primacy of its three players. A series of cross-industrial, political, financial, and cultural factors affected the structure of early television.¹⁶ Media historians, such as Michele Hilmes, Christopher Anderson, Tino Balio, Douglas Gomery, and Jennifer Porst, have detailed the complex relationship between the US film and television industries in the network era and the critical role of many interindustry stakeholders, such as advertisers, the Nielsen Corporation, and the US government, particularly the Federal Communications Commission (FCC).¹⁷ Still, the finance industry has yet to be a central focus of critical¹⁸ television scholarship, so this article adds to the important historical work on the relationship between television and film by detailing how Wall Street contributed to the entrance of Hollywood in television.

There are also plentiful industry-level studies of network television¹⁹ and firm-level case studies on CBS and NBC,²⁰ but there remains less work on the third-place ABC. Television historians Christopher Anderson and James Baughman have offered accounts of network-era ABC, including its relationship to Wall Street, and detailed ABC’s weaker competitive position relative to CBS and NBC. Historian William Boddy suggests this disadvantage was largely due to FCC actions like the licensing freeze and ABC affiliates’ weaker frequency allocations on Ultra High Frequency (UHF) channels.²¹ In response to its poor position, ABC sought out finance capital in order to build new stations and improve program quality, but in the process of acquiescing to Wall Street, ABC became vulnerable to financialization. A thorough history of television’s relationship to Wall Street would help contextualize these industrial shifts, changes in corporate governance, and the complex business logics undergirding the range and nature of network-era television programming. This article offers a small contribution to this piece of media history.

Critical political economists of communication have long debated how to conceptualize the television audience, particularly considering the medium’s unique economic features. Dallas Smythe first argued that television audiences provided the industry with “free labor” by watching advertisements. The television industry thereby exploited audiences, turning them into an “audience commodity.”²² This dynamic intensified in the 1950s when the industry transitioned from the sponsorship model, whereby companies and their advertising agencies produced and financed programs to promote their brands, to the spot advertising model, whereby networks and production companies produced programs with a variety of pre-paid advertisements during breaks; in the latter context, networks sold audiences to advertisers rather than simply time blocks on their schedules.²³ Critics of Smythe’s theory, however, note that he overlooks both audience agency and the constructed nature of audience ratings.²⁴ Eileen Meehan would also shift Smythe’s framework from one of audience exploitation to one in which the industry ignores real audiences altogether.²⁵ Meehan argues that advertisers purchase a network’s “commodity audience”: a small but shifting group of viewers who are the most likely to buy advertised products. As a result, “real” audiences are consumers of none of these markets and are instead commodities exchanged alongside ratings and television programs.

Other political economists have since used the audience commodity formulation to address exploitation in other contexts.²⁶ I contribute to this body of literature with a new commodity audience formulation: the financial commodity audience. Unlike Smythe, who grounds his thesis on labor exploitation, I, like Meehan, place the locus of the (financial) commodity audience firmly within industry discourse, not within the act of watching television. As this case study suggests, there has existed, for decades, a discursive exchange whereby networks pitch and negotiate the value of their audiences to financial stakeholders.

ABC was formed in 1943 when the FCC forced the Radio Corporation of America (RCA) to sell its second-tier radio network “NBC Blue” to an outside buyer. RCA found a buyer in the “candy tycoon” Edward J. Noble.²⁷ Although RCA was the product of a financialized political economy, ABC was less so because it was initially an independent firm owned by one individual: Edward Noble. Over time, however, Noble would accumulate unsustainable levels of debt: US$4 million to help purchase the network in 1943, another round of debt financing to launch a television division in 1948, and a revolving line of credit to build new radio stations between 1943 and 1950.²⁸ By the early 1950s, commercial banks refused to loan Noble more money, and the company’s outlook was too dismal for additional stock issuances.²⁹ Near bankruptcy in 1951, Noble had almost no option but to sell to an outside party in the hopes of recouping his investment. Luckily for Noble, ABC received an offer from United Paramount Theatres (UPT)—the theater chain formerly owned by Paramount Pictures.³⁰ After two years of review, the FCC approved UPT’s US$25 million purchase of ABC in 1953.³¹ Altogether, the plight of Noble foregrounds the unsustainability of single-industry, privately owned media firms like ABC because, on the one hand, the network needed outside capital to compete against larger diversified oligopolists like RCA (NBC) and CBS, but, on the other hand, it needed to cede power to finance capitalists in order to do so.

Initially, brokerage firms and other “financial men” had strongly advised UPT’s chief executive Leonard Goldenson that he should not to acquire ABC. Wall Street was wary of the “unconventional merger” due to the general uncertainty of the broadcasting sector, the belief that there was no “room for three networks,” and the poor competitive position of ABC, which had low clearance rates, few affiliated stations, and UHF channels that many set owners could not access.³² In response, Goldenson crafted a compelling pitch to convince his investors that he would grow the newly renamed American Broadcasting-Paramount Theatres (AB-PT) and become a legitimate player. However, in the process of following through on his pitch, Goldenson and his executives would open the door for ABC’s gradual financialization. In what follows, I expand on how this process unfolded by offering six key structural changes that fundamentally reconstituted ABC during this period.

First, AB-PT was already subject to the explicit oversight of finance capital before the ABC acquisition. The company’s seven-person board of directors included two Wall Street members: one from a brokerage firm and one from a prominent bank.³³ Although these board members did not necessarily oversee the firm’s day-to-day operations, they could exert power through allocative control, which includes setting long-term company policies (including financial policies) and allocating resources.³⁴ The presence of finance board members suggests that Wall Street could have constrained ABC’s resources or encouraged a prioritization of financial objectives over employee welfare, viewers, or the public good.³⁵ While it is tempting to look at ownership and board memberships to identify explicit evidence of financialization, this, as David Hesmondhalgh notes,

Therefore, a more informal and discursive manifestation of financialization—beyond ownership or explicit directives—constituted ABC’s reorientation under finance capital.

Indeed, the second indicator of ABC’s financial reconstitution was Goldenson’s reliance on personal Wall Street connections. For example, before proposing the ABC acquisition in 1951, Goldenson urged his board to meet with his close friend on Wall Street, Harry Hagerty, the Vice Chairman of Metropolitan Life Insurance, to placate their concerns about the broadcasting sector and ABC’s lack of stars and abundance of low-rated programming.³⁷ These types of relationships and informal meetings were not uncommon in the television industry at the time.³⁸ During this pivotal meeting prior to the ABC acquisition, Goldenson made two concessions to Hagerty and UPT’s board that, according to Goldenson, had a significant impact on the network’s programming for years to come. Specifically, he agreed that he would, first, use his connections to foster partnerships with Hollywood studios and, second, shift the network’s prime-time schedule from live to pre-filmed programs.³⁹

The promise to move from live to telefilm series and thereby the emphasis on intangible assets represented a substantial shift from the ABC of Noble, who spent most of his final annual report celebrating the growth of brick-and-mortar assets like stations, office facilities, and equipment.⁴⁰ Critical to the corporate financialization of ABC, Wall Street’s preference for pre-recorded telefilm series reflected a growing predilection for intangible assets (i.e., intellectual property) over tangible assets (e.g., stations and equipment) in the second half of the 20th century. Such a prioritization would allow ABC to more easily inflate the value of telefilm series⁴¹ on its balance sheet by categorizing them as intangible assets or “goodwill.” Although this accounting practice would become common as industries became increasingly service-based in the late 20th century, it was less common in the postwar period.⁴² Put another way, cultural institutions and their products were particularly susceptible to financialization due to their intangibility and pliability. This demonstrates how studying the history of media industries in particular is valuable in trying to make sense of financialization in general.

Third, Goldenson would solidify ABC’s reliance on established financial institutions for credit. For example, to afford the expensive licenses for Hollywood telefilm series, Goldenson secured a 1956 loan from six different banks, one of which was Metropolitan Insurance, where his friend Hagerty was a vice chairman.⁴³ Notably, this loan consisted of US$37.2 million to pay down ABC’s old debt and only US$27 million in new credit to support production costs, leaving ABC in a cycle whereby it took on new debt to pay off old debt. In the following year, AB-PT again turned to Wall Street for more debt financing (US$60 million),⁴⁴ and in 1964, it would debt finance to cover the costs of converting its operations to color.⁴⁵ Overall, debt financing offered Wall Street another way to influence ABC’s allocative strategies, even if these lenders did not have board seats or ownership of AB-PT.

Fourth, most broadcast groups in the 1960s needed to “go public” through an initial public offering (IPO) in order to access revolving lines of credit and allow executives to compensate themselves via personal stock holdings. Before an IPO, however, a broadcaster needed to find an “underwriter” (i.e., an investment bank that could sell its stock) that recognized its “growth potential.”⁴⁶ Thus, as more broadcasting groups and networks went public in the 1950s and 1960s (Figure 1), they may have catered their products to the ideologies of Wall Street or at least been cognizant of them. In the case of publicly traded media firms like AB-PT, this could have led executives to construct target audiences and programs that banks and analysts were amenable to. This often meant that public investors and their financial intermediaries pushed networks to produce high-brow programming that financial stakeholders found tasteful and to transition to telefilm series that could inflate balance sheet value.

Fifth, as more television companies went public and analysts deemed the sector “secure,” institutional investors increased their ownership stake in the industry. By the early 1960s, mutual funds and pension funds had funneled cash into station groups, telefilm companies (i.e., television production companies), advertising agencies, and the three networks.⁴⁷ Some investment funds even held ownership stakes in more than seven broadcasting stations, thereby violating FCC rules. Fidelity Trend Fund, for example, held an ownership interest above 1 percent in more than 90 broadcasting stations.⁴⁸ For AB-PT, mutual funds held approximately 28.1 percent of its common stock in December 1962.⁴⁹

Ironically, broadcast executives in the 1950s yearned for legitimacy in the eyes of institutional investors and the access to capital that such “partnerships” could provide, but as networks became more financially “secure” in the mid-1960s, executives relinquished equity to public investors and, therefore, to the ambivalences of finance capitalism. Common institutional ownership, even if investors are “passive,” can lead to anti-competitive outcomes, increased prices, and other “hidden social costs” for consumers.⁵⁰ These passive investors “need not explicitly communicate their anticompetitive incentives to management for the documented outcomes to materialize.”⁵¹ Even though institutional investors collectively maintained only a 20–30 percent ownership stake in ABC during this period, they would go on to control over 70 percent of publicly traded media firms by 2020.⁵² Therefore, the financialization of ABC in the postwar period represented the seeds of financialization in its contemporary form.

Sixth, institutional investors’ preference for risk mitigation incentivized broadcasters to diversify beyond a single industry, which led to the internal transformation of nonfinancial television firms into financialized entities that pursued diversified portfolios. During the postwar period, fewer and fewer firms focused on a single business or consumer base. Of the 100 largest US companies in 1939, 77 focused 70 percent or more of their business on just one industry; however, by 1979, only 23 concentrated 70 percent or more of their business on a single industry.⁵³ This trend was no different in broadcasting. According to Television, most broadcasting companies “eyed diversification” once public because they wanted to prove to investors that they were “not happy with a lump sum of profit every quarter.”⁵⁴ In addition, industry executives believed that there was a correlation between acquisitions and stock prices, so they were personally incentivized to pursue mergers and diversification.⁵⁵

ABC was no exception. In the 1950s, AB-PT—which initially relied on its television division for more than half of its revenues—further diversified into related and unrelated assets. Due to FCC ownership restrictions, AB-PT looked outside television to find acquisition targets. After purchasing ABC, for example, AB-PT invested in industries as eclectic as plastics, manufacturing, and real estate.⁵⁶ It would also later invest in other entertainment sub-sectors like music, publishing, and amusement and in complementary targets like Microwave Associ-ates, which presciently offered an opportunity to expand into global satellite distribution.⁵⁷ In diversifying beyond broadcasting and film exhibition, Goldenson would proclaim in 1961 that AB-PT was not a media company but “an investment company.”⁵⁸ This statement succinctly betrays the financialization of the nonfinancial firm, whereby corporations became containers that maintained diversified assets, rather than organizations that created economic, social, or cultural value. Political economists Stephen Maher and Scott Aquanno note how, even during the post-war period, “as top executives moved away from operational roles in specific businesses and into general entrepreneurial or investment functions, they came increasingly to resemble finance capitalists” who saw their subdivisions as “a portfolio of financial assets.”⁵⁹ Although the financialization of the nonfinancial firm is traditionally associated with the period beginning with the economic downturn in the 1970s, ABC’s envelopment into a media conglomerate reflects how corporate financialization was present in media industries just two decades after World War II.

Diversification motivated by finance capital can also result in negative outcomes for media divisions relative to non-media divisions. Media economists Dan Shaver and Mary Alice Shaver find that, in comparison to non-diversified media companies, diversified conglomerates are far less likely to reinvest their profits back into their media units; they instead transfer excess capital to dividends or other divisions in the company.⁶⁰ In other words, “owners of media accept that owners must make negative financial decisions for greater public obligation” (i.e., shareholder value).⁶¹ To satisfy its shareholder obligation, AB-PT’s board indeed pursued financialized objectives that were not directly beneficial to ABC. For example, AB-PT often provided outsized dividends to investors—at relative rates higher than those of CBS and RCA (NBC) (Figure 3), even though ABC’s stock was consistently cheaper (Figure 2). Goldenson and his board likely decided to keep dividends high, even when earnings dipped in 1963, because they wanted to change ABC’s reputation on Wall Street and “warm bankers up” to the network. Through this process, however, AB-PT transferred the wealth created by ABC and its employees to the financial elite in order to satiate the doctrine of shareholder value.

ABC’s pursuit of diversification was also an attempt to insulate itself from the unpredictability of television and Nielsen ratings. For example, when ABC attempted to merge with the telecom giant International Telephone and Telegraph Company (ITT) in 1967, executive testimony revealed the power of financialized logics in ABC’s corporate governance. In its hearings with the FCC and Department of Justice, ABC’s legal team tried to justify the ITT deal by arguing that ABC needed to diversify “so that every adverse rating doesn’t produce a disastrous drop in the price of the stock.”⁶² Clearly, a more diversified scope of operation would have also insulated AB-PT executives (and their paychecks) from the vicissitudes of cultural production. Further, investors were attuned to network ratings and factored the commodity audience into market pricing. However, it was more than just audience size that determined the value of ABC’s financial commodity audience.

Between 1952 and 1959, there was a notable shift in ABC’s prime-time schedule and target audience. Initially, ABC under Noble had copied the other networks’ content strategies by relying on popular radio genres like variety shows and anthologies (Figure 4; see also Appendix, Table 1). Believing that the only way to compete against NBC and CBS was to “counterprogram” against their schedules,⁶³ Goldenson would later transition ABC from news and live anthology series to pre-filmed Hollywood genres (Figure 5; see also Appendix, Table 2).⁶⁴ According to Goldenson, “Hollywood production values” would differentiate the third-place network and break away from the perceived low quality of live content. By improving the quality of its programs, ABC aimed to attract more affiliates and improve its “clearance rates” (i.e., the percentage of ABC programs that affiliate stations “accepted” to air).⁶⁵ In addition to improving quality, pre-filmed content was, according to ABC’s bankers, cheaper than live content and provided producers with long-term assets that could provide recurring cash flows.⁶⁶ By 1959, 62 percent of ABC’s schedule was non-live programming, which far outpaced CBS and NBC.⁶⁷ The move to telefilm transformed the ephemerality of live television into a tangible asset portfolio of pre-recorded content that could be mined for profits in the future. Thus, ABC’s telefilm assets finally provided investors with more than just a “lump sum” of capital every quarter.⁶⁸

To fill out its prime-time schedule, ABC started to form partnerships with Hollywood studios and experiment with different programs and genres in the mid-1950s. Initially, in 1954, it licensed “serious” programs from studios, such as high-brow adaptations of classic feature films like Casablanca (Michael Curtiz, 1942) and Kings Row (Sam Wood, 1942). However, when these adaptations proved to be critical and commercial failures,⁶⁹ ABC pursued a previously overlooked demographic: children and housewives who were “dissatisfied with radio-style fare.”⁷⁰ For example, ABC counterprogrammed against the popular (and older-skewing) variety show Arthur Godfrey and His Friends (CBS, 1949–1959) with the children-oriented Disneyland (1954–present), which quickly became a top ten-rated program.⁷¹ The network subsequently added two additional Disney programs: the three-part Davy Crockett (1954–1955) in December 1954 and The Mickey Mouse Club (1955–1959) in October 1955.⁷² In addition to Disney, Warner Bros. would go on to provide ABC with some of its most popular youth-oriented series, such as the western Cheyenne (1955–1962) and the detective series 77 Sunset Strip (1958–1964). According to Baughman, these series targeted not only children but also young women because the leads were “young and handsome” heroes.⁷³ Moreover, westerns, country music programs like Ozark Jubilee (1954–1961), and rural sitcoms like The Real McCoys (ABC, 1957–1962; CBS, 1962–1963) appealed to audiences in the South and Midwest, where more stations were launching after the licensing freeze ended in 1952.⁷⁴ In sum, between 1952 (Figure 4) and 1959 (Figure 5), ABC shifted its prime-time schedule from primarily news, anthologies, and variety programs to nearly 50 percent westerns and detective/crime series, which were in sharp contrast to the “adult” genres like anthologies and news programs still on NBC and CBS (Figure 6).

Thanks to these programming strategies, ABC-TV (the broadcast division of AB-PT) became more financially and commercially successful by the late 1950s. In AB-PT’s first full year of ownership of ABC (1954), for example, ABC-TV increased its revenue by 67 percent and sold its entire inventory of prime-time advertising spots.⁷⁵ By the end of the decade, ABC would also have seven shows in the Nielsen top 30 (Figure 7), advertising revenue for the entire industry would eclipse US$1.35 billion, and television’s home saturation would reach nearly 90 percent.⁷⁶ Even though ABC remained the third-place network, the outlook for the entire industry was overwhelmingly positive for investors, and each network was growing considerably. However, AB-PT still struggled to “legitimize itself” to Wall Street. Seemingly nothing, not even the legitimacy of ABC’s Hollywood deals, would “warm bankers to the third network.”⁷⁷ Relative to RCA (NBC) and CBS, ABC’s stock price remained low throughout the 1950s (Figure 2), even though the three networks had similar stock prices at the start of the decade, and ABC consistently returned relatively higher dividends and earnings per share than its competitors (Figure 3). Even as late as 1963, when ABC-TV was profitable, brokerages still advised against purchasing AB-PT (see stock prices in Figure 8).⁷⁸

Why did ABC’s market valuation remain flat between 1954 and 1960, despite its improved ratings and financial performance (Figure 7)? Why would investors seemingly “leave money on the table” and ignore ubiquitous financial metrics? In part, this aversion to ABC can be traced to class-based taste cultures and the centrality of hegemonic ideologies in industry discourse. First, regarding taste cultures, ABC’s turn from “prestige” programs (i.e., musical specials, variety shows, and anthology dramas) to “genre” programs (i.e., westerns, detective serials, rural sitcoms) was received poorly on Wall Street, according to Television magazine. For example, when ABC dropped Voice of Firestone (NBC, 1949–1954; ABC, 1954–1959), a long-running variety series featuring opera and classical music, investors were “indignant” because this may as well have signaled “the end of culture in America.”⁷⁹ In other words, Voice of Firestone connoted a particular upper-class taste culture for investors. Second, Wall Street’s negative view of ABC also derived from the social status of ABC’s imagined viewers: children and their mothers and, to a lesser extent, rural and suburban audiences. Foundational scholarship in television studies has noted the distinction between “Quality TV” genres like anthologies and certain dramas, which are masculinized and associated with other already “legitimated” urban art forms like theater and art cinema, and culturally denigrated genres, which are often feminized and associated with commercialism.⁸⁰ Altogether, the simultaneous stagnation of ABC’s stock value and improvement of ABC’s corporate finances and programming suggests that there was a perceived value, however imprecise, that white male Wall Street stakeholders placed on audiences.

AB-PT did its best to try to promote the value of its viewers to Wall Street. In its 1955 annual report, the firm touted that The Mickey Mouse Club was not only the highest-rated show for children but also attracted women in the daytime slot.⁸¹ Similarly, in response to complaints about Voice of Firestone in 1959, Goldenson urged investors that those viewers were not “the audience we want anyway”; instead, they wanted “bigger younger audiences.”⁸² Goldenson even claimed that ABC wanted to lure “the young housewife—one cut above the teenager—with two to four kids, who has to buy the clothing, the food, the soaps, the home remedies.”⁸³ Nonetheless, financial stakeholders were resistant to this “investor lore” because Wall Street deemed these audiences “niche” and preferred elite urban viewers who watched, for example, anthology dramas. Altogether, Wall Street’s preference for particular programs and audiences exposes “the difference between the commodity audience and the people who actually watch television.”⁸⁴

Indeed, the broadcasting industry has (almost always) valued a specific segment of prime-time audiences: white working adults, primarily men. As Meehan suggests, even profit maximization reaches its limits in the face of other social and identity-based power dynamics.⁸⁵ In this case, Wall Street overvalued urban white male audiences in primetime, viewing them as the audience, even though housewives were (according to another patriarchal ideology) the primary buyers of advertised household items.⁸⁶ In addition to sexism and class elitism, racism was also “priced into” financial markets because the ideal commodity audience remained white; however, race was exnominated altogether and not observably addressed in this discourse. Although contemporary economists might deem this lack of objectivity from Wall Street an aberration or a “market error,” ambivalence and contradiction such as this are fundamental to the operation of a hegemonic capitalist system.