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Phonevision: The Forgotten Story of How Pay TV Began

October 21, 2013

It is amazing how the roots of innovation can be essentially lost over time. Technological advancements now arrive at such a staggering rate that the gadgets of the past—that very ones that led us to the present—are forgotten and virtually unknown. Phonevision is one such invention.

Developed by the Zenith Radio Corporation and its founder/president, Eugene McDonald Jr., Phonevision was the first pay television service the world had ever seen. As early as 1931 the company had looked into the idea of subscription television, believing that many stations couldn’t survive on advertising dollars alone. In July 1947, Zenith announced the Phonevision system, which would allow films, Broadway plays, sporting events and other special programming to be broadcast in the home—commercial free. Homeowners with a special receiver/unscrambling device connected to their television set would select from a list of available content and then call Zenith to request the program they wanted to see, which would then be transmitted at designated times via telephone lines into the receiver. A $1 charge, per program, would be added to the homeowner’s monthly phone bill.

In these early years of television, McDonald theorized that TV and the advertising industry were caught up in a “vicious triangle,” where advertisers wouldn’t spend money without a large audience, but large audiences wouldn’t watch without quality entertainment, and the private companies that owned stations didn’t have the money to pay for such programming. McDonald—an interesting figure, who could be described as part Steve Jobs, part P.T. Barnum—believed his pay-as-you-see model wouldn’t just benefit the television industry and consumers, but would also “save the film industry financially unless someone fumbles the ball.” Not one for false modesty, he was fond of quoting a friend’s prediction: “The American family, put on the road by Henry Ford, will be brought back home by Gene McDonald.”

The biggest obstacle facing Zenith was the reluctance of the film companies to license their product. The movie studios didn’t want to upset theater owners and they were bound by contract to keep music from films off of TV. To negotiate with the movie studios, Zenith hired an IRS collector by the name of James P. Finnegan. He was so convincing that the studios not only relented, they didn’t charge Zenith a dime. Mr. Finnegan was later indicted by a federal grand jury for various misdeeds.

United States Patent for Subscription Television Decoder Unit, issued June 27, 1961, object ID 90.1.1746.25, from Mel Boldt and Associates records.

In 1949, Zenith received authorization from the Federal Communications Commission (FCC) to test its service, and would begin the experiment the following year in Chicago, with three hundred households signing up to try Phonevision.

Subscription television made its global debut on May 1, 1950, with the tryout lasting ninety days. “It was successful far beyond our expectations,” McDonald declared, while the Theater Owners of America—somewhat unsurprisingly—had a conflicting opinion, and proclaimed Phonevision “a monumental flop.” According to Zenith’s numbers, Chicago families had viewed films 1.73 times a week, which was almost four times the average movie-going rate over the same period (McDonald, exaggerating somewhat, claimed it was thirty-three times the average). Even though all the films aired during the test were over two years old, 92% of those who used the subscription service said they would rather watch from home than go to the movies. It appeared theater owners were in trouble and Phonevision was on its way to sweeping the nation.

More testing was conducted during the spring of 1954 on WOR in New York City. This time airborne signals were used instead of phone lines (the public wasn’t involved). The results were overwhelmingly positive, proving the system worked even in densely populated areas with tall buildings, resulting in a change to an “over-the-air” transmitter set-up (though the name Phonevision could have been considered obsolete at this point, Zenith stuck with it). The company had also developed different means to watch programming. One way was via a coin box decoder, while another device would unscramble the picture after the viewer entered the correct combination.

In this design, a coin slot is built in to the left-hand side of the decoder. United States Patent for Subscription Television Decoder with Coin Slot, issued June 27, 1961, object ID 90.1.1746.23, from Mel Boldt and Associates records

In the fall of 1954, ABC passed on airing a television ad for the service, and in April the following year CBS followed suit, stating, “Phonevision is not a product, it’s a controversial issue.” Zenith was not amused, charging CBS with “arbitrary and unwarranted censorship.” In May, the go-ahead was given for a month of testing on WMAL in Washington, DC, so Zenith could audition Phonevision at a broadcasters’ convention, as well as for the FCC and Congress, with fifty systems installed in the capitol building (the company was still attempting to secure the all-important FCC approval of Phonevision as a broadcast service). In June, Zenith licensed Phonevision to the United Kingdom, Ireland, and the Channel Islands, having inked a similar deal for the Australian and New Zealand markets the previous year.

Eugene McDonald Jr. passed away in 1958, but Zenith’s belief in Phonevision was unwavering, and by 1961 the company had invested millions refining their subscription television system. Yet the jury was still out at the FCC.

United States Patent for Subscription Television Decoder Unit, issued June 27, 1961, object ID 90.1.1746.24, from Mel Boldt and Associates records.

The company’s next test, in collaboration with RKO General, would take place in Hartford, Connecticut. Beginning June 29, 1962, UHF station WHCT would continue to broadcast commercial television during the day, but switch to Phonevision programming in the evening. By 1964, Zenith began to have doubts about the service, and though the Hartford test lasted until January 31, 1969, they never obtained the subscriber numbers needed.

Come April 1969, word was that FCC approval was imminent, and while Zenith was still optimistic about its product, it was cautiously so. By the time the FCC made its decision in 1970, finally giving pay television the green light, Phonevision was no more. Part of its downfall could be attributed to the fact that programming was still only viewable in black and white.

Over-the-air systems reappeared for a period beginning in 1977 (ON-TV, an example of what was available in the Detroit market, broadcast films via WXON in the evening hours), but ultimately lost out to cable television. Pay-per-view TV, which took hold in the early 1980s, can be traced to Zenith’s service, as can the very idea of purchasing commercial-free content for home viewing. Today, movies and television shows can be downloaded via Amazon and iTunes and watched on devices like Roku and Apple TV, while untold hours of media can be streamed on Netflix and other services that offer “on demand” content—without commercial interruption. While it is also possible to view said content on mobile devices—far from our television sets—in a sense, Eugene McDonald Jr. has finally brought us all back home.

Zenith "Phonevision" Subscription Television Decoder Unit with Control Panel Open, 1958, object ID 90.1.1746.21, from Mel Boldt and Associates records.

Nearly a decade after his death, Mr. McDonald was inducted into the Broadcast Pioneers Hall of Fame, for, among other accomplishments, his role in the development of subscription television. The service he so passionately promoted ultimately failed, but the concept has proved incredibly successful. Though Phonevision is now largely forgotten, it was the true beginning of pay TV.

Bart Bealmear is a reading room assistant in the Archives & Library at The Henry Ford.

Resources

Hallowell, Mary Louise. The Cable/Broadband Communications Book, 1977-1978, Communications Press, 1977.

Mullen, Megan. The Rise of Cable Programming in the United States, University of Texas Press, 2003. More here.

Segrave, Kerry. Movies at Home: How Hollywood Came to Television, McFarland & Company, Inc., 1999.

Sterling, Christopher H. Biographical Dictionary of Radio, Routledge, 2011.

The Zenith Story: A History from 1919, Zenith Radio Corporation, 1955.

“Phonevision,” Life, February 5, 1951. More here.

“Proposed Phone-Television System,” Popular Mechanics, October 1947.

Various Time articles, 1947-1964.

Various New York Times articles, 1955-1969.

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