NBC

From the organization of the first true radio networks in the late 1940s, broadcasting in the United States was dominated by two companies, CBS and RCA's NBC. Prior to NBC's 1926 formation, RCA had acquired AT&T's New York station WEAF (later WNBC, now WFAN). With WEAF came a loosely organized system feeding programming to other stations in the northeastern U.S. RCA, prior to the acquisition of the WEAF group in mid-1926, had previously owned a second such group, with WJZ in New York as the lead station (purchased by RCA in 1923 from Westinghouse) . These were the foundations of RCA's two distinct programming services, the NBC "Red" and NBC "Blue" networks. Legend has it that the color designations originated from the color of the push-pins early engineers used to designate affiliates of WEAF (red pins) and WJZ (blue pins).

After years of study, the FCC in 1940 issued a "Report on Chain Broadcasting." Finding that two corporate owners (and the co-operatively owned Mutual Broadcasting System) dominated American broadcasting, this report proposed "divorcement," requiring the sale by RCA of one of its chains. NBC Red was the larger radio network, carrying the leading entertainment and music programs. In addition, many Red affiliates were high-powered, clear-channel stations, heard nationwide. NBC Blue offered most of the company's news and cultural programs, many of them "sustaining" or unsponsored. Among other findings, the FCC claimed RCA used NBC Blue to suppress competition against NBC Red. The FCC did not regulate or license networks directly. However, it could influence them by means of its hold over individual stations. Consequently, the FCC issued a ruling that "no license shall be issued to a standard broadcast station affiliated with a network which maintains more than one network." NBC argued this indirect style of regulation was illegal and appealed to the courts. However, the FCC won on appeal, and NBC was forced to sell one of its networks. It opted to sell NBC Blue network.

The task of selling of NBC Blue was given to Mark Woods; throughout 1942 and 1943, NBC Red and NBC Blue divided their assets. A price of $8 million was put on the assets of the Blue group, and Woods shopped the Blue package around to potential buyers. One such, investment bank Dillon, Read made an offer of $7.5 million, but Woods and RCA chief David Sarnoff held firm at $8 million. The Blue package contained leases on land-lines and on studio facilities in New York, Washington, D.C., Chicago and Los Angeles; contracts with talent and with about sixty affiliates; the trademark and "good will" associated with the Blue name; and licenses for three stations (WJZ in New York, San Francisco's KGO, and WENR in Chicago - really a half-station, since WENR shared time and a frequency with "Prairie Farmer" station WLS).

RCA finally found a buyer in Edward Noble, owner of Life Savers candy and the Rexall drugstore chain. In order to complete the station-license transfer, Noble had to sell the New York radio station that he owned, WMCA. Also, FCC hearings were required. Controversy ensued over Noble's intention to keep Mark Woods on as president, which led to the suggestion that Woods would continue to work with (and for) his former employers. This had the potential to derail the sale. During the hearings, Woods said the new network would not sell airtime to the American Federation of Labor. Noble evaded questioning on similar points by hiding behind the NAB code. Frustrated, the chairman advised Noble to do some rethinking. Apparently he did, and the sale closed on October 12, 1943. The new network, known simply as "The Blue Network," was owned by the American Broadcasting System, a company Noble formed for the deal. It sold airtime to organized labor.
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