1960 - 1966: Call it 3MBS

By April 1960, the future for Mutual was looking brighter: the network had trimmed its operating losses to $25,000 a month. But there was still doubt in the advertising community that Mutual would be around next year, next month, even next week. That uncertainty, according to MBS president Robert F. Hurleigh, cost the network several big accounts that would have brought the network into the black.

For the McCarthy-Ferguson team that now owned MBS, that meant putting more money into Mutual (probably another half-million dollars) until it turned a profit, probably in 1961, and only a small profit at that. Plus, they had other needs for capital in the meantime. So McCarthy and Ferguson decided to sell.

Enter the Minnesota Mining and Manufacturing Company - commonly known as 3M - which purchased the network in April 1960 for about $1.3 million. The McCarthy-Ferguson group essentially broke even on the deal, which - considering how earlier owners fared - wasn't too bad.

So why did 3M buy?

In announcing the sale, 3M President Herbert Buetow said, "It appeared to be a new direction for us . . . the opportunity to acquire a potentially profitable enterprise and at the same time perform an important public service." At 3M's annual meeting the next month, he explained further: "Our directors have felt for some time that we should direct some of our energies and resources to strengthen the free enterprise system under which we have grown and prospered. Mutual in our opinion provides such an opportunity."

Was it? Take a closer look at the money league 3M traveled in, and the public service explanation holds merit. Mutual's $5-million in 1959 revenues would have been but a tiny drop in 3M's $500-million-a-year sales bucket (with a profit of more than $63 million); either a profit or loss for the network would be insignificant. A 3M spokesman said, "If money were all we were interested in, we could have invested it better elsewhere."

3M brought three things to Mutual that the network badly needed: deep pockets, stability, and a hands-off approach. Hurleigh said 3M gave him three instructions at the time of the takeover: 1) keep the operation clean, 2) don't forget public service responsibilities, and 3) in doing these two things, if you can make a profit, then make a profit.

The sale gave Mutual an instant shot in the arm: almost immediately after it was announced, three new advertisers (Curtis Publishing, Champion Spark Plug and Phillips Petroleum) signed up. MBS also picked up six stations that had been hesitant about affiliating. Those six stations were among 41 that signed onto Mutual in 1960, bringing its total to 453.

While new stations were signing on, some of the network's longtime affiliates were dropping out: in May 1960, Detroit-Windsor's CKLW terminated their 25-year affiliation, replaced by WKMH Dearborn. In August 1961, Mutual lost the last link to its beginnings when one of its founders, WOR, said goodbye. But WINS signed on as MBS' New York flagship, replaced a year later by WHN.

With the financial pressures gone, MBS could concentrate on programming. The basic Mutual service included two five-minute newscasts each hour from 6 a.m. to midnight, one for network sale, the other for sale by affiliates. Also, four 10-minute and two 15-minute commentaries, plus the daily 25-minute award-winning feature, "The World Today." In addition, two 15-minute and two five-minute sports programs daily from Bill Stern and Sports Director Van Patrick, the Army football schedule each fall plus coverage of major sports events like the 1965 Cassius Clay-Sonny Liston fight.

Gabriel Heatter stayed on until 1961; Fulton Lewis jr. continued his daily commentary until his death in 1966 (he was succeeded by his son, Fulton Lewis III). Other names heard on Mutual in the early 60s included Arlene Francis, Bess Myerson, Whitney Bolton, Galen Drake, Leo Durocher, Jack Allen, White House Correspondent Bill Costello, Dick Rossé (who was hired away from the American Forces Network in Germany and stayed at Mutual until the bitter end), Frank Singiser and Tony Marvin. Best known as Arthur Godfrey's suave and unflappable announcer, Marvin secured his place in Mutual history with a delightfully inebriated 1963 newscast that included a live commercial extolling the virtues of milk - while the sponsor listened in at a Mutual affiliate! They were not amused; the incident reportedly brought Marvin a two-week suspension without pay.

Mutual was also able to do things the other networks were either unable or unwilling to do. Some examples:

The programming brought in listeners, but how many? The accuracy of ratings for both radio and television have been debated since they were invented. In 1962, the radio networks started complaining. MBS President Hurleigh said in the network's May newsletter, "A tv minute on prime network time now costs anywhere from 50 to 70 times as much as that same minute on network radio. Certainly, it can't produce 70 times the audience. Nor can anyone convince us that it's 70 times as effective."

The issue came before Congress: in March 1963, a Special Subcommittee on Investigations of the House Commerce Committee heard testimony from broadcasters and the rating services. Hurleigh didn't question the ratings service's integrity, but rather their methodology: Nielsen's samples in 32 major markets for its network ratings using a sample of about 1,100 homes "cannot possibly come up with accurate and reliable figures as to the size of Mutual's audience which is in 513 markets." Hurleigh also testified that Nielsen had no sample homes in the Mountain Time Zone, where MBS had some 50 affiliates. He said that control of only ten or 12 Nielsen homes would give the network a one-point rating increase, which would mean an extra $1.5 million in annual billings.

Hurleigh advocated a single rating service for network radio to replace the competing services of Nielsen and Sindlinger. (That would come to fruition in 1968.) But while undermeasurement was an issue, Sindlinger's April 1963 network numbers showed surprising strength for newscasts, even when compared with daytime tv shows:

Average Audience
ABC4 / 3,378,0006 / 2,491,0006 / 1,813,00016 / 2,458,000
CBS3 / 3,767,0005 / 2,178,0001 / 2,071,0009 / 2,695,000
MBS4 / 2,260,0005 / 1,712,0005 / 1,002,00014 / 1,636,000
NBC5 / 3,427,0006 / 2,352,0006 / 1,873,00017 / 2,499,000

Mutual's increased workload prompted a move to new headquarters. Although there was no longer a connection between MBS and WOR, the network had kept its facilities at WOR's headquarters at 1440 Broadway in New York. But in February 1964, Mutual took over the entire 16th floor of the new American Management Association building on 50th Street (near Rockefeller Center). The move more than doubled its physical setup, with four studios and a tape center - each self-contained and designed to take over immediate control of MBS' 490 affiliates at a moment's notice.

The sales picture improved: Mutual reported profits of more than $4 million between 1962 and 1965. It seemed as though Buetow's prediction of profitability was on target. But the numbers may have been misleading: years later, it was revealed that the network turned a profit only because 3M bought up most of the network's unsold time. Without that revenue, MBS would still have been in the red.

Profitable or not, Mutual became attractive to potential suitors. In November 1964, Metromedia surprised 3M with an offer to buy the network. The offer was first believed to be around $5 million, but was later estimated at around $3 million. Its fate hung in the balance while 3M President Bert Cross was on a business trip to Japan. When he returned in December, he refused not only Metromedia's offer, but "all offers sparked by the Metromedia bid," indicating that others had also showed interest in buying the network.

3M was also considering branching out into station ownership. But the company was facing rough times ahead: in early 1966, 3M pleaded "no contest" to five counts of a 1962 antitrust indictment over alleged unfair trade practices. The judge recommended that the Justice Department keep a close eye on 3M in the future. Broadcasting later reported that 3M had at that point changed its mind about buying any stations.

It may also be that the company thought that keeping a low profile might be a good idea, and one way to do that was to exit the radio business - a business that seemed an odd fit for such an industrial, albeit creative, company. Mutual's standing in the 3M structure had changed as well: in 1960, it was one of five 3M subsidiaries that reported directly to then-President Herb Buetow. But by 1965, MBS was part of 3M's "Advertising Services and Protective Products Group" that included not only the National Advertising Company and Videotape Productions, Inc., but also such related outfits like Big Rock Stone & Material Company and 3M's "Roofing Granules Division." What's more, 3M gave Mutual scant attention in its corporate press; a look at the company's annual reports find barely a mention of the network after 1961.

So in July 1966, 3M cashed out, selling Mutual for $3.1 million to a group of conservative investors. In saying goodbye to Mutual staff, 3M summed up its ownership experience:

"We hoped to give Mutual's exceptional management, staff and
talent . . . the opportunity . . . to preserve and further develop
one of America's great national radio networks. This you have achieved.

"We're proud of you. This achievement, however, regrettably ends the
need for 3M participation . . . While such an ending was inevitable,
since broadcasting has always been your art and your business rather
than ours, nonetheless we find it also regrettable, since we have
enjoyed so much the association with you."

When 3M left, the stability that had been carefully built up over the previous six years went with it.

Some information on this page came from various issues of Billboard, Broadcasting, The Wall Street Journal and Variety.

Text copyright © 2008 Kenneth I. Johannessen.

No challenges to logo, sound or image copyrights are either inferred or implied.

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