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The Business of America

What Desi Wrought

June 2024
6min read

When Jerry Seinfeld pockets $250 million for the syndication rights to his show, he should thank the man who loved Lucy

Oscar Hammerstein I, the great theatrical impresario of the turn of the century, once famously said that “there is no limit to the number of people who will stay away from a bad play.” Hammerstein, who had his share of flops, knew what he was talking about, and his dictum remains every bit as true today.

Of course in Hammerstein’s time the opposite—that there are strict limits on the number of people who can come to a good play—was equally true. Only about eighteen hundred people can fit into even the largest Broadway theater, so a sellout show has to run well over a year before a million people can see it.

Today technology has changed that completely. A hit movie can be seen simultaneously in thousands of theaters, several times a day. Titanic has been out only about a year, but something on the order of half the human race has seen it already.

Television is even more of a mass medium. When Cinderella , the only television musical written by Richard Rodgers and Oscar Hammerstein II (grandson of the impresario), had its one performance, on March 31, 1957, 107 million Americans watched it. That’s more people than had seen all the theatrical productions of Rodgers and Hammerstein’s first musical, Oklahoma! , throughout the world since the original had opened on Broadway fourteen years earlier to the day.

Television’s unparalleled power to reach a mass audience is the reason that Titanic was not the biggest entertainment moneymaker of 1998. Titanic ’s worldwide box office is well over a billion dollars, and that, to be sure, is a long way from hay. But it’s easily trumped by the $1.7 billion that was paid for the syndication rights to “Seinfeld” in 1998, especially when you consider that a movie’s take at the box office is gross and the sale of television syndication rights is pure bottom-line profit.

Syndication is simply the sale of rights to broadcast old episodes of a television show. This is big business. Anyone with a couch and a clicker can, in the course of an evening, channel-surf through the whole history of television sitcoms, from “The Honeymooners” to “Bewitched” to “M.A.S.H.” to “The Mary Tyler Moore Show” to “The Golden Girls” to “Cheers” to “Laverne and Shirley” to “Cosby” to “Seinfeld.”

One of the nicer aspects of syndication is that the major creative artists involved in the original production, not just the “suits” who finance it, are cut in on the action. Jerry Seinfeld, who was the co-creator as well as the star of his eponymous sitcom, will bank an altogether tidy $250 million from the sale of its syndication rights.

The reason for this is not any excess gratitude on the part of the suits, I assure you. Rather it is that the very idea of syndication was dreamed up by a very savvy businessman who happened to be the husband of—and straight man for—a very funny woman named Lucille Ball. Desi Arnaz’s gifts as a performer helped mightily to make “I Love Lucy” the first great television sitcom, but it was his gifts as a businessman that made the Arnaz family seriously rich.

Desi Arnaz was born in 1917 into Cuba’s small and vastly privileged upper class. When Desi was a teenager, a revolution against the utterly corrupt regime of President Gerardo Machado forced his family to flee to Miami, leaving their wealth behind. Desi got a job with a canary dealer that paid fifteen dollars a week.

That was not bad money for a teenager in the middle of the Depression. But when he was offered a job with a Latin dance band, at a seemingly princely thirty-nine dollars a week, he jumped at it. His family had wanted him to become a lawyer, and he had never even thought of a career in show business, but Desi Arnaz had stumbled upon his destiny.

Xavier Cugat, then the king of Latin music in this country, caught Arnaz’s act one night and hired him, but for only twenty-five dollars a week. Arnaz took the job despite the salary cut and soon proved so popular that Cugat raised him to thirty-five dollars. Before long Arnaz decided he could do better on his own and told Cugat he intended to return to Miami and form his own band. Cugat offered to let him bill his new act as “Desi Arnaz and his Xavier Cugat Orchestra.”

Arnaz said he’d pay a royalty for the use of Cugat’s name, and Cugat asked how much. “The same as you paid me when I started, twenty-five dollars a week,” Arnaz—already a businessman—told him. “And like you told me then, if we do good, we’ll renegotiate.”

The opening, with scratch musicians, two of whom were not even Latin, was a disaster. But the next night, desperate for a Latin beat his orchestra could play, he came up with the conga, then unknown in the United States. It was a sensation. Before long Desi Arnaz was the headliner at a New York nightclub called La Conga. It was there that he was spotted by Richard Rodgers and his partner Lorenz Hart and offered a part in their new musical, Too Many Girls . When Too Many Girls was made into a movie, he was offered the same part in the film. One of the other principals in the film was Lucille Ball.

They were soon married and, if hardly Hollywood stars of the first rank, they made a very comfortable living in films, radio, and live theater. But after World War II, a new medium, television, began to make serious inroads on the audiences for both films and theater. By 1948, the year Milton Berle first appeared on TV, there were nearly a million sets in American homes. Berle was such a hit that one year later there were four million, and the number was growing exponentially.

While still making pictures, Lucille Ball had been starring in a hit radio comedy called “My Favorite Husband,” which CBS wanted to transfer to television. Lucy demanded that Desi be cast as her husband. The suits at CBS were appalled. “Who would believe her married to a wop?” asked one, not even getting his ethnic slurs straight.

“What do you mean nobody’ll believe it?” asked Lucy. “We are married.”

After much give-and-take, a pilot was shot of what was then called “The Lucille Ball-Desi Arnaz Show.” Because Arnaz was principally a singer and bandleader, not an actor, his part was in effect his real-life persona, and the original concept involved a good deal of his nightclub act.

In the early days of television, sponsors were usually involved in the actual production, rather than mere time-purchasers, as they are today. Cigarette manufacturers were major advertisers at the time, and Philip Morris was interested but wanted to judge reactions. So the kinescope (a film made off the television signal of the pilot, the only way then to preserve a live broadcast) was shown to a few people. One of them was Oscar Hammerstein II, who, along with his many other talents, was known as a great “play doctor,” someone who knew how to fix a show that didn’t work.

His advice was succinct: “Keep the redhead, but ditch the Cuban.” Told that was impossible, Hammerstein said, “Well, for God’s sake, don’t let him sing. No one will understand him. Make it a warm, human story built around a wholesome, lovable, dizzy couple.”

At the time, CBS thought yesterday’s TV shows were worth about the same as yesterday’s newspapers.

“I Love Lucy” was born.

But if the basic creative decisions had been made, the business ones had not. CBS wanted the series done live in New York. The East Coast was where the audience was, and if the show was done in Hollywood, the East Coast would have to see blurry kinescopes. Lucy and Desi wanted to stay in Hollywood, so Desi negotiated. He suggested using their production company, Desilu, to film the show ahead of time. This solved the quality problem but would considerably increase the production costs, originally budgeted at what now seems a minuscule $19,500 an episode. Desi, picking a figure out of thin air, guessed that the increase would amount to $5,000.

After much hemming and hawing, Philip Morris and CBS agreed to come up with an additional $2,000 each. But Lucy and Desi, who were to be paid $2,500 each and own half the show, would have to take a thousand-dollar salary cut between them on each of the first thirty-nine episodes to make up the difference.

Arnaz made a counteroffer. He and Lucy would take the salary cut, provided CBS gave them sole ownership. Since in 1951 most television shows were done live and preserved only on kinescopes, yesterday’s TV shows, CBS thought, were worth about the same as yesterday’s newspapers. So CBS readily agreed. The suits figured they weren’t giving up much.

But Arnaz knew that he and Lucy weren’t giving up much either. “In our income tax bracket,” he explained, “we might have ended up with about $5,000 of the $39,000 we were losing [in salary cuts]. So in effect, we were buying the other half of the series for $5,000.”

That, of course, turned out to be the bargain of the century. Because “I Love Lucy” was filmed, not performed live, for the first time in television, there was something worth selling after the original broadcast was over, and because “I Love Lucy” turned into one of the biggest hits in the history of show business, there was no lack of offers to buy.

There still isn’t. Today, forty-eight years after its premiere, the price of broadcasting a single episode of “I Love Lucy” is $100,000. That’s not much compared with what “Seinfeld” will get in syndication, but it’s twenty times what Desi Arnaz paid for half the rights to all the episodes.

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