Zenith's Bright Picture

After years of disappointing flicker, the color-television industry at last shows signs of firming up. Besides RCA, which has been the only major manufacturer in the field since 1956, General Electric plans to start making color-TV sets again in the fall. And in Chicago last week, squads of engineers were busily tooling up a production line for Zenith Radio Corp.'s new color set--a product that will be unique in at least one respect. Zenith's prices, company officials proudly claim, will start well above those of competing models now on the market.

This seemingly suicidal pricing policy is part of a formula that, in practice, has given the 43-year-old Zenith Radio Corp. one of the brightest pictures of any radio-TV manufacturer. During the 1957-59 shake-out in the overcrowded TV-equipment industry, many companies cut prices and skimped on quality. Zenith, instead, kept both quality and prices high and, in the process, nudged RCA aside to become the nation's biggest maker of TV sets. In 1956, before the great shake-out began, Zenith's sales were $141,500,000, its profits $6,200,000. Last year sales, though off from 1959, stood at $254 million, profits at $15.2 million.

Tight Controls. Zenith is led by Scottish-born Chairman Hugh Robertson, a vigorous 74-year-old who prides himself on the fact that Zenith is not one cent in debt. Day-to-day management of the company is left to lanky Montanan Joseph Wright, 50, who joined Zenith as a lawyer in 1953, became president three years ago. Since Zenith's headquarters and production facilities are all centered in Chicago. Wright and a platoon of bright, aggressive vice presidents are able to keep a close personal watch on every phase of the company's operations. "With each of us knowing what is happening in the other departments," says Wright, "we can meet problems quickly."

Zenith has probably the best inventory control in the entire radio-TV industry. Each week the company's 600 distributors send to Chicago complete sales reports on each model line. If a model is not selling well, production is immediately cut back. Says Wright: "We are not trying to break production records, but only to meet true market demands." As a result, Zenith's entire factory inventory turns over once a month.

Zenith's greatest asset is its reputation as a quality producer. Assiduously cultivated in the company's advertising ("The Royalty of Television Sets"), the reputation is deserved--though Zenith does not get into the really expensive custom field. Every sixth worker on the Zenith production line is a quality inspector, and TV sets that have already been cleared for shipment are pulled back at random for further testing. Six years ago, when most other makers of TV sets began switching heavily to printed circuits, which were cheaper to make but difficult to repair, Zenith stayed with easier-to-fix hand-wired circuitry. In gratitude, thousands of TV repairmen became enthusiastic pushers of Zenith products.

Bid for Growth. Though Zenith helped pioneer the development of radio, it has been inclined in recent years to let others do the costly research and development of new products. It counted on making the same products later--and better. But under Wright's prodding, Zenith has more than doubled its research outlay. One result is a new system for broadcasting stereophonic FM. Anticipating a mass switch by stereo buffs from records to radios, Zenith is preparing to produce a new line of stereo-FM radio receivers.

Zenith's most daring bid for continued growth is pay TV. Though other TV-equipment makers profess to see little future in pay TV, Zenith has spent more than $10 million perfecting its Phone-vision system, which transmits by air a jittered picture that is then decoded by a device installed in each subscriber's set.

To test the potentialities of pay TV. Zenith got FCC permission to conduct a three-year test in Hartford, Conn. The experiment has been stalled by lawsuits brought by local theater owners, but Wright hopes to be able to push on with it within nine months. If the Hartford test is successful. Zenith will be in the enviable position of holding patents for the nation's first proven system of over-the-air transmission of pay TV to private homes.

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