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The transition of Radio Corp. from a communications company to an entertainment company is a story in several chapters. In 1919, when Radio Corp. was formed, it was organized solely for the purpose of transmitting wireless messages. At that time Great Britain, long dominant in cable communication, was also the outstanding leader in wireless. World's greatest wireless company was British Marconi (Marconi's Wireless Telegraph Co., Ltd.) which controlled American Marconi (Marconi Wireless Telegraph Co. of America), leading U. S. wireless concern. British Marconi was attempting to buy from General Electric Co. exclusive rights in the Alexanderson high-frequency alternator, which first made long-distance radio communication possible. From the Inter-Allied Conference on Radio at Paris to Manhattan went Admiral William Hannum Grubb Bullard, U. S. N.,* talked with General Electric's Owen D. Young, pointed out that control of the Alexanderson alternator would solidify Great Britain's position as wireless dictator. Mr. Young promptly terminated negotiations with British Marconi, though in so doing he sacrificed a $5,000,000 order and his only visible customer.
He resolved to organize a potent U. S. wireless company which would enable U. S. wireless to compete on equal terms with British wireless, and be a customer for the Alexanderson alternator. General Electric bought out the British Marconi company's interest in American Marconi, organized Radio Corp. of America to take over the business of American Marconi, which thereupon became defunct. Associated with General Electric were American Telephone & Telegraph, United Fruit Co., and Westinghouse Electric, of which only Westinghouse remains an important factor. Thus U. S. wireless became strong and vigorous, developed a three-second trans-Atlantic service, carried many a code message for many an efficient corporation.
First step in Radio Corp.'s change from communications to entertainment came with the development of music and voice broadcasting. Endowed with many a vital patent (it has licensed 25 set-makers to manufacture under its patents), Radio Corp. grew with radio, found that Station-to-Home transmission was far more profitable a business than Shore-to-Shore or Ship-to-Shore transmission. In 1921 Radio Corp.'s entertainment business totaled some $1,500,000, or about 36% of the company's total business. In 1922, entertainment totaled same $11,250,000, or about 80% of total business. Last year Radio Corp.'s gross sales were approximately $87,000,000, and its $6,000,000 income in patent royalties was slightly larger than its total income from communications.
From radio the expansion into the phonograph business was logical inasmuch as the old-style phonograph, failing to compete with radio sets, went, in for electric reproduction and also for combination radio-phonographs. Radio Corp. entered the phonograph field by supplying Brunswick-Balke-Collender and later Victor Talking Machine with the radio and the electric drive for their combination machines. Last winter Radio and Victor directors agreed on Radio's absorption of Victor. Radio-Victor Corp. is now a wholly owned subsidiary of Radio Corp.