Invasion of Britain

Many a U.S. manufacturer has hungrily eyed the underdeveloped British TV-phonograph market: only 65% of all British households have TV sets, v. 90% in the U.S. But the market is tough to bite into; purchase taxes and distribution costs are high. Philco sold its British subsidiary after trying; other major U.S. manufacturers shied away. Last week Magnavox Co. announced that it will go out after the British market in force.

Magnavox acquired 70% of the stock of Collaro Ltd., British manufacturers of record changers used by Magnavox. The move's real importance is that the rest of Collaro's stock is held by Great Universal Stores Ltd., biggest retail and mailorder chain in Britain (2,700 stores, 34,000 door-to-door salesmen). With this readymade sales organization, Magnavox will distribute its own British-made TV sets, radios and phonographs. Says President Frank Freimann: "We're ready to expand. This gives us a real springboard to move fast into the English market."

Tremendous Confusion. Broad-shouldered, hoarse-voiced Frank Freimann, 53, has kept once slow-moving Magnavox clipping along at a fast pace. He will shortly introduce a new electronic organ for the home (price: $700 to $1,500). In stereo, he pushed Magnavox ahead of the field by switching over its entire phonograph line to stereo in 1958, bringing a mass-produced stereo set to market before any other U.S. firm. His bet on stereo's future paid off handsomely. Magnavox sales jumped 36% to $107 million in 1959, and profits rose 85% to $4,500,000. The company now sells 20% to 25% of all stereo sets over $250, expects stereo sales alone to hit $70 million in 1960. Says Freimann, in a swipe at competitors : "There's been a tremendous confusion about what stereo is supposed to mean. One set I know of has 15 knobs, and some advertisers say you can only hear stereo properly if you sit in the middle of the room. That's ridiculous. The fact about stereo is that it is simple."

Lifetime Critic. Hungarian-born Frank Freimann has been a critic most of his life. Brought to the U.S. by his mother, he went to work for an Indiana radio-phonograph company after leaving technical high school. He criticized the company's sets so much--and proved that he was right--that at 19 he was made chief engineer. After a series of other jobs and two trips around the world as a ship's radio operator, he founded his own company in Chicago to manufacture custom sound systems. In 1932 he sold 30% of his stock to supplier Magnavox, a company that made only components.

Freimann became executive vice president of Magnavox after the two firms merged in 1938. He took a hard look at the growing competition that had forced Magnavox $400,000 into the red, persuaded the company that its future was not in components but in consumer products. Magnavox took his advice, quickly slipped into the black. But consumer products also had their dark side: Magnavox was hard hit in 1949, when the introduction of the LP record and industry confusion about new frequencies and TV-tube size caused a slump in consumer buying. Overloaded with sets, Magnavox saw its stock plummet, its losses rise. To raise more working capital, it sold 100,000 shares of preferred stock for $1,300,000, stepped up sales -- and has not reported a loss since. When President Richard A. O'Connor moved up to chairman in 1950, Frank Freimann took over as president and chief executive officer.

How It Sounds. Freimann works 18 hours a day at company headquarters in Fort Wayne, Ind., sleeps in a room ad joining his office. A demanding perfectionist, he visits the company's nine plants unannounced, dresses down plant management when things are not ship shape, sometimes takes a soldering iron and a screwdriver to go to work on a problem himself. The largest single Magnavox stockholder (167,000 of 2,350,000 shares), he relaxes aboard the 62-ft. company yacht, Magna Mar, fishes for marlin off Florida. A music lover, he has little confidence in engineering graphs and charts that prove his product is perfect. When he wants to judge, he cocks his ear, decides how it sounds to him.

This file is automatically generated by a robot program, so reader's discretion is required.