How CBS Bought, Sold Out and Sold the Name
One particularly fascinating--and sad--chapter in “Fender--The Sound Heard ‘Round the World†is the one in which author Richard Smith chronicles the sale of Fender Musical Instruments to CBS in 1965 for $13 million (virtually the same amount CBS had paid the year before to buy the New York Yankees.)
Reproduced at length is an analysis prepared by CBS consultants regarding the prospective purchase of Fender, a report that previewed the corner-cutting that would evolve under corporate ownership--effectively decimating the hard-won Fender reputation. (Very quickly after the purchase, Smith notes, collectors coined the term “pre-CBS†to refer to the most valuable guitars and amps.)
One example given by Smith of the shortsightedness during the CBS years: “To save a few pennies on each pickup, purchasing agents ordered a different type of coil wire. Dipping the coils in hot wax--the old method used to prevent microphonic feedback--melted the new wire’s insulation. So, the new CBS-Fender pickups had no wax, sounded different, and squealed at lower volumes than the old pickups had.â€
Only after a group of employees bought the company from CBS in 1985 did they manage to revive some of the cachet that the Fender name had held under its founder. Ironically, CBS sold it to them for $12.5 million--$500,000 less than they’d paid Leo for it 20 years earlier.
