General Electric Company (GE), AT&T Inc. (T): The First Broadcaster and the Original Computer Bug

On this day in economic and business history…

The first national radio network in the United States was formed on Sept. 9, 1926, when RCA — in conjunction with General Electric Company (NYSE:GE) and Westinghouse Electric — established the National Broadcasting Company. In a press release announcing the new network, RCA noted that there were then 5 million homes equipped with radios and perhaps 21 million homes without one. NBC would help expand the distribution of “programs of the highest quality,” and RCA admitted that it would need the public’s support to have any chance of success in a largely untried format:

We have no hesitation in recommending the National Broadcasting Company to the people of the United States.

It will need the help of all listeners. It will make mistakes. If the public will make known its views to the officials of the company from time to time, we are confident that the new broadcasting company will be an instrument of great public service.

This pioneering radio network was made possible by a deal struck between RCA and AT&T Inc. (NYSE:T), in which the radio manufacturer spent $1 million (worth a comparatively minuscule $13 million today) to buy out the telephone company’s test-bed WEAF broadcast station, located in New York City. This solved two problems: RCA badly wanted to expand its broadcast network, and AT&T Inc. (NYSE:T) felt that focusing on expanding telephone access would be the key to its future. In the process, RCA gained access to AT&T Inc. (NYSE:T)’s high-quality (for the time) telephone lines for long-distance transmissions, solving the problem it had previously had with transmission over weaker telegraph wires. Radio finally had the bandwidth to go national.

NBC launched in November of 1926, and by 1927 it had already been divided into two “networks,” branded as Red and Blue, which provided separation between entertainment programs and news or cultural broadcasts. By the spring of 1927, NBC had gone truly national with the launch of the Orange network on the West Coast. A year later, RCA became the first and only true radio-focused company to join the Dow Jones Industrial Average in an index restructuring that expanded the Dow to 30 stocks. Westinghouse Electric also joined the Dow at this time, making it the only time in Dow history that the three companies most directly responsible for the spread of radio were on the index at the same time. 

The network continued to expand despite the onset of the Great Depression, but at the tail end of the 1930s RCA’s dominance of American broadcasting drew the attention of antitrust regulators. RCA lost its final appeal before the Supreme Court in 1943 and was forced to divest one of its two major networks (the Blue network), which became the American Broadcasting Company in 1945.

NBC and ABC have both found their way to new corporate homes in recent decades. In 1985, both networks were involved in major acquisitions: NBC rejoined General Electric Company (NYSE:GE) when the energy conglomerate acquired RCA, and ABC found itself acquired by a smaller broadcaster called Capital Cities in a leveraged buyout typical of the era. Today, NBC is a subsidiary of Comcast Corporation (NASDAQ:CMCSA), and ABC is a big part of the The Walt Disney Company (NYSE:DIS) entertainment empire. Neither network commands the same audience it once did, but both remain important parts of the American entertainment landscape.

Bugs in the machine
The first example of a computer “bug” was found between the relays of the Harvard Mark II electrical relay calculator on Sept. 9, 1947. It was an actual bug, which operators taped into the day’s log:

Source: U.S. Naval Historical Center, via Wikipedia.

Since this first example of “debugging,” computer hardware and software flaws have become a multibillion-dollar drain on the global economy. A Cambridge University study, released in 2013, found that the cost of fixing software bugs now exceeds $300 billion dollars a year. That’s more than was spent to deal with the costliest “bug” in human history: The cost of making the world’s computers Y2K-compliant was later estimated at roughly $200 billion. That’s a whole lot of bugs to zap.

The article The First Broadcaster and the Original Computer Bug originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of General Electric Company and Walt Disney.

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