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 was to cut costs and maximize profits, which resulted in changes over the next 20 years that led to a significant decrease in the quality of Fender guitars.
The material used to fabricate pick guards was changed. They changed the finish on guitars from nitrocellulose to polyester, resulting in a less natural feel. Name-brand tuning machines and quality nickel hardware were replaced with cheaper alternatives. The traditional four-bolt neck pocket was redesigned with just three bolts.
Buying back the brand
The result of changes like this and additional cost-cutting measures caused a series of quality issues with Fender guitars. By the mid 1980s, the brand was hurting. In 1985, Fender employees took the matter into their own hands by buying the company back from CBS, and the present-day Fender Musical Instruments Corporation was born.
Fender started over again. They literally closed down the factory and retrained every employee, and in the ensuing years they began to see an increase in quality. Today, of course, they have a very good reputation among players and are back to being one of the top guitar brands in the world.
As for CBS, they also divested themselves of Steinway and several other musical instrument companies when they sold Fender. (And they sold the Yankees to George Steinbrenner in 1973.)
Leo Fender and others believed that the CBS acquisition would help the guitar company by bringing in more money and personnel. Instead, the “CBS years” became a dark stain on the Fender company because of their shift to focus on mass production over quality.
*Leo Fender ended up going on to start Music Man and G&L guitars. He passed away in 1991.
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