Broadcasting Company of America

From Wikipedia, the free encyclopedia

The Broadcasting Company of America was a former, briefly-lived subsidiary of AT&T.

When AT&T employees, notably Lee DeForest, developed advances in vacuum tube technologies in the 1910s, the telephone giant entered the radio business. Throughout the 1920s, AT&T was involved in patent disputes with RCA (then the Radio Corporation of America). At the same time, it was also involved in a rivalry in broadcasting with RCA, with AT&T focusing its efforts around a network built around its New York station WEAF (now WFAN), and RCA competing through its network built around WJZ (now WABC-AM). Generally speaking, WEAF had a significant technological advantage over the WJZ chain, in that the telegraph lines the latter were forced to use (owing to a refusal by AT&T to lease the lines to RCA) were not as effective in transmitting radio broadcasts.

AT&T decided to exit the broadcasting business, in part to end the disputes and in part to focus its efforts on telecommunications. On May 15, 1926, the Broadcasting Company of America was formed to hold AT&T's broadcasting assets. The stated purpose (see the Iowa City Press-Citizen, May 15, 1926, page 3) of the this transaction was to recognize the growth of the radio operations and the special issues related thereto, but subsequent events make it clear that the disposition of the radio assets was also a factor.

By contract dated July 1, 1926 (in the NBC History Files at the Library of Congress), AT&T sold the assets of BCA, principally WEAF, but also the Washington, DC station WCAP (BCA), to RCA for $1 million. In reporting this transaction, the September 13, 1926 edition of the Oakland Tribune noted that this price represented a substantial premium over what radio stations were commanding in the marketplace, and reflected WEAF's position in the industry, as well as its access to AT&T's superior lines. The Tribune estimated that 4/5ths of the purchase price for WEAF represented good-will and the access to AT&T's lines. On that same day, the formation of the National Broadcasting Company was announced.

WEAF would go on to be the "key station" for the NBC Red radio network. WCAP (BCA) was shut down upon its acquisition by RCA. The leased lines that figured so importantly in the acquisition of BCA would form the backbone for both NBC Red and its sister Blue Network for the next fifteen years.

For more information about the rivalry between AT&T and RCA, and the formation of the Blue Network, consult the entry for the Blue Network