For guitar aficionados, 1965 is an important year.
Specifically, January 5, 1965, marks the fateful day when Leo Fender sold his guitar company to, of all people…CBS?
Yep, the Columbia Broadcasting System. The same people who brought us such hits as Survivor and NCIS bought a guitar company because…well, why would a TV company want to make musical instruments, anyway?
Leo Fender thought he was dying
Leo Fender was a sick man. At least that’s what he told himself. In the 1950s, he went to the doctor due to ongoing health concerns and was diagnosed with a streptococcal sinus infection. The effects of his illness lingered on for years and were so bad, it seems, that by 1964 Leo thought the end was near.* He decided to get his affairs in order, which meant selling Fender.
He first went to his business partner, Donald Randall, and offered him a deal to buy the company for a cool $1.5 million. Randall didn’t have that kind of money, but he told Leo that he would attempt to find a buyer.
Randall eventually found CBS and they became interested in buying the company. Leo agreed to sell Fender for $13 million (that’s $118 million in 2022 dollars), and the contract was signed just after the turn of the new year in 1965.
A more diverse CBS, but not in a good way
In the 1960s, CBS was on a mission. That mission could be described in one word: diversification.
CBS’s goal was to treat their business like the stock market by purchasing holdings in a number of different industries, which is exactly what they did. During this time they acquired such varied holdings as Woman’s Day magazine, Steinway pianos, Fender, and —yes, really — the New York Yankees baseball team.
Diversification is a good idea in a financial portfolio, but it’s not always the best business strategy, something CBS found out the hard way.
Prioritizing cost over quality
Once they purchased Fender, it was clear that they did not understand the guitar market or what players actually wanted. CBS’s main goal…