California Nearly Killed HBO

Today in Tedium: Nearly six decades ago, residents of the state of California passed a ballot initiative that was so tough and finalizing that it would have likely shut off most innovation in the television industry for decades. It would have forced us to watch new movies in theaters. It would have made television a far less appealing medium long-term—and it would have harmed the long-term viability of one of the state’s largest job-generators. But just a year later, the state’s supreme court stepped in and prevented the ballot initiative from taking place—effectively stopping all these things from happening. And it was the result of a political campaign led by entrenched stakeholders that nearly did the deed. Today’s Tedium discusses the “Save Free TV” campaign. — Ernie @ Tedium

(Raysonho/Wikimedia Commons)

Why would anyone fight back against cable TV?

We’re generally quite used to paying money for good TV these days; after all, the actors, the writers, the studios? Everyone needs to get paid.

(After all, that’s why the actors are still on strike … and, until recently, so were the writers.)

But Hollywood, for various reasons, saw television as a dangerous enemy for a time. To give you an idea, the reason why we have letterboxing today is because the film industry, worried about the threat of television, changed their screen size so the TV industry could not directly compete with the medium.

And it’s with this in mind that the film industry took steps to defend itself against television, despite the fact that, well, television production was often much more frequent, less costly, and more lucrative than making a movie … and often relied on the same studios. It was just as profitable, perhaps even more so, just different. Literally, the only part of the film industry that lost out on the success of television was the actual theaters, who had a glowing screen constantly competing against them in every home.

(One factor of this, which we noted around pandemic time, is that, thanks to a consent decree, studios were legally barred from owning movie theaters for many decades. This meant that butts in seats and concessions were in many ways the whole business if you screened movies.)

One of HBO’s first promos, dating to 1975.

The film industry’s folly could best be seen through the eyes of Home Box Office, or HBO. Founded in 1972 by the magazine giant Time Inc., the pay-TV network would come to upend the economics of releasing a film, ensuring that films could live multiple money-making lives—and eventually would become far more closely associated with Time’s later merger partner, Warner Bros.

While it took a few years and a whole bunch of forgotten Cable ACE Awards ceremonies for HBO’s model to truly go mainstream, it eventually did.

But a long-forgotten ballot measure could have ruined the whole thing. Just eight years before HBO first came online for a total of 365 subscribers in Wilkes-Barre, Pennsylvania, the movie theater industry was trying to do an end-run around HBO’s entire business model in the very state where many of the jobs created by HBO would eventually be located—California.

And the pitch that voters heard was a complete manipulation of the situation.

It came down to three words: “Save free TV.”

Don Belding, shown with Mrs. Frederick Spencer of the California Federation of Women’s Clubs, had a horse in the race beyond being a concerned citizen: While retired, he was a major stakeholder in a prominent ad agency that specialized in television advertising. (Los Angeles Public Library)

The man who nearly convinced California to kill pay TV

Before Don Belding was cable television’s earliest thorn in its side, he was an advertising legend, a man who was instrumental in helping convert Hallmark’s primary media marketing presence from radio to television as a primary stakeholder in the ad agency Foote, Cone, and Belding.

But Belding was retired by the time the 1960s came, having decided to step down from his day-to-day role with the ad agency to devote himself to “civic endeavors,” as a biographical thesis paper put it. Some of these endeavors were fairly innocuous—he is the founder of the Freedoms Foundation, a nonpartisan patriotic organization that is still active today, for example. He led the Defense Orientation Conference Association, a continuing-education organization built for U.S. military alumni that, as part of his duties, took him to military bases around the world. He served on the Los Angeles Airport Board, and he was even instrumental in getting many Los Angeles buildings to build accommodations for handicapped individuals, decades before federal law mandated it.

He was a big enough deal in Los Angeles that he was even given his own day in 1961 by the city. Everything was coming up Belding.

But Belding, who had ties to the advertising industry and helped to create a successful ad-driven TV franchise, became the lead figure of the California arm of the Citizens Committee for Free TV, a political pressure group formed ahead of the 1964 election to support the passage of a ballot measure that would put an end to experiments to create pay television within the state.

The campaign, launched by movie theaters in the Los Angeles and San Diego area, leaned on a simple, three-word slogan: “Save free TV.” Millions of dollars were put up for this campaign, which literally implied boogeymen were going to separate you from your money.

Save free TV would even get its own ad, titled “Monsters Do Have Their Place,” which argued that Pay TV was a monster that did not belong in your living room. While I have seen different dates for this ad’s creation, based on Congressional testimony I found, at least one variant of this ad was used during the 1964 campaign. (Props to Southern Methodist University’s G. William Jones Film & Video Collection for doing a 4K conversion of this ad, directly from a 35mm film source, about a year ago. It looks great!)

The ad pointed out that a petition could be found “in this theater,” which is the clear tell—this petition was meant to get the initiative on the ballot, and was intended to get people who go to movie theaters to be opposed to having to pay for television in their homes.

Of course, the truth was that it was never an either-or option, and it was only in a very basic testing phase, led by a company called Subscription Television, Inc. The firm’s founder, Sylvester L. Weaver, knew what pay TV was going to bring—more options for the average consumer, who up to this point had a total of three options in many cases, four if they were lucky. In an Atlantic essay from 1964, he defended pay television’s basic right to exist:

To the layman this is a long-awaited breakthrough in programming. Commercial radio and television have been predicated on the sale of advertising, and consequently built their business against a bulwark of criteria dictated by the needs of the sellers, not the needs of the buyers. For, the buyers were the public, and no easy reports on how the habit-viewing mechanism of radio and television became the most important selling and social force in the nation can overlook what we did not do. We did not offer to people with special interests any regular, convenient, in-depth, uninterrupted, full-length presentations. The hope that educational television can complement the commercial networks is unrealistic. Educational TV has tried, but it will never have the money to produce one thousandth of the material we ought to have.

Subscription television will offer the variety we must have, the new usefulness we all want. In cable service, there will be no interference with ordinary television, either in the operation of the set (we merely connect our selector to the antenna leads outside the set) or in the commercial programs. The major influence we will have will be to encourage people to buy color sets and to upgrade their equipment. They will insist on decent in fidelity sound, which television does not give us with present equipment, but which we can deliver into hi-fi systems over telephone wires as part of our service.

Admittedly, at least some of Weaver’s essay is wishful thinking, a good chunk of that sounds a lot like what cable television actually became.

The text of the ballot initiative that California’s voters foolishly passed in 1964.

But the power of free is very compelling, and one could imagine the ballot initiative, which “provides no charge shall be made to public for television programs transmitted to home television sets,” would have sounded pretty good to passive voters. (After all, they didn’t know what Breaking Bad was.)

Don Belding, the kind of guy who gets the key to the city for decades of success, probably had his own calculus at play. After all, he was retired from the ad agency named after him while still a partner in that very ad agency, and a law that allowed for pay TV could threaten to damage the very business model that made him rich. The Citizens Committee knew what it was doing, too—it was astroturfing public support at a time when people didn’t know what astroturf was.

When all was said and done, on the day that Americans voted to give Lyndon Johnson a full term, voters in the state had been convinced by this simple message: The implication was that free TV was under threat of going away, but the truth was that pay TV providers simply wanted the right to test out the technology to see if it was viable.

The campaign, led by an official whose successful company made a huge chunk of its money from television ads, did its job. Just one problem: Ballot initiatives could be challenged in court, and this one was. In a ruling in the 1966 case Weaver v. Jordan, the California Supreme Court found that the ruling violates “free speech and press guaranties” by preventing businesses from operating in any way they so choose.

“Monopoly in the field of communication can best be avoided by permitting the growth of that field of endeavor in directions and through media which will provide the widest possible range and choice of ideas and of expression,” he wrote.

(Little did they know that the monopolies would happen anyway—but otherwise, yeah!)

There was a certain irony to this situation, at least in the case of the ad industry. After all, what happened with ads on cable television was not binary—we paid money AND we watched ads. And if we didn’t watch ads, we paid even more.

If anything, Don Belding spent millions of dollars of other people’s money fighting against his own interests as the owner of an ad agency.

An example of a few newspaper listings that shouted out the “save free TV” slogan in 1969. A number of newspapers had ads like these. (The Record/Newspapers.com)

“Save free TV” didn’t die with the California Supreme Court

California’s law did not withstand the scrutiny of the judicial system, but “save free TV” did not go away quietly into the night. Five years after Don Belding led a successful campaign in California to almost kill it, the phrase re-emerged in newspapers around the country as the Federal Communications Commission approved pay-TV technology for normal use and began handing out licenses for the purposes.

The reason? Movie theaters, which paid for advertising to promote their movies every single week, were starting to bury the slogan in ads for new movies. Essentially, they were going to buy the ads anyway, why not stick some light propaganda in the white space around those ads?

By this time, it became obvious to any lay observer with an interest in the topic that the movie theater owners were arguing in bad faith, but they had a megaphone—one that was slowly being met with skepticism.

As Milton Moskowitz, a newspaper columnist later famed for writing The 100 Best Companies to Work For in America, put it in a 1969 column:

Such concern for the welfare of the American public is touching. The theater owners used to hate television. Now they suddenly appreciate it. They want to safeguard it against such interlopers as pay TV and cable television.

Could it be, though, that the theater owners are motivated by crass commercial interests of their own? Movie attendance has gone down steadily since the advent of television. If first-run movies were beamed into homes, what would happen to theater attendance then?

The way movie admission prices have skyrocketed in recent years, a pay TV system would be competitive even if it charged $1 an hour. Nov do you think the theater owners are aware of this possibility? If so, why don’t they tell it “like it is?” Why resort to this sham “save free TV” appeal?

Theater owners of America, we know what’s bothering you. Make a clean breast of it. Just tell us: “Save 50-cent buttered popcorn at the movies.” Now that’s something we can understand.

Given that cable TV became a successful, mainstream technology anyway, it’s pretty easy to determine that this approach, despite leading to an interesting piece of vintage propaganda, just didn’t work out for the theaters.

Good thing too: Just imagine the many TV shows in California alone that wouldn’t have been made if we only had three networks. It would have cost the state billions.