Fender - Sale to CBS

In early 1965, Leo Fender sold his companies to the Columbia Broadcasting System, or CBS for $13 million. This was almost two million more than they paid for The New York Yankees a year before. CBS entered the musical instruments field by acquiring the Fender companies (Fender Sales, Inc., Fender Electric Instrument Company, Inc., Fender Acoustic Instrument Company, Inc., Fender-Rhodes, Inc., Terrafen, Inc., Clef-Tronix, Inc., Randall Publishing Co., Inc., and V.C. Squier Company), as well as Electro-Music Inc. (Leslie speakers), Rogers drums, Steinway pianos, Gemeinhardt flutes, Lyon & Healy harps, Rodgers (institutional) organs, and Gulbransen home organs.

This had far-reaching implications. The sale was taken as a positive development, considering CBS's ability to bring in money and personnel who acquired a large inventory of Fender parts and unassembled guitars that were assembled and put to market. However, the sale also led to a reduction of the quality of Fender's guitars while under the management of "cost-cutting" CBS. Several cosmetic changes occurred after 1965/1966, such as a larger headstock shape on certain guitars. Bound necks with block shaped position markers were introduced in 1966. A bolder black headstock logo, as well as a brushed aluminum face plate with blue or red labels (depending the model) for the guitar and bass amplification became standard features, starting in 1968. These cosmetic changes were followed by a new "tailless" Fender amp decal and a sparkling orange grillcloth on certain amplifiers in the mid-1970s. In the early 1970s, the usual four-bolt neck joint was changed in favor of using only three and a second string tree for the two middle G and D strings has been added in late 1971. These changes were said to have been made to save money; while it suited the new 'improved' micro-tilt adjustment of the neck (previously requiring neck removal and shimming), the "Bullet" truss-rod system and a 5-way pickup selector on most models, it also resulted in a greater propensity toward mechanical failure in the guitars.

During the CBS era, the company did introduce some new instrument and amplifier designs. The Fender Starcaster was particularly unusual because of its semi-hollow body design (while retaining the Fender bolt-on neck) and completely different headstock. The Starcaster also incorporated a new Humbucking pickup designed by Seth Lover. This pickup also gave rise to 3 new incarnations of the classic Telecaster. While more recent use by Johnny Greenwood of Radiohead has raised the Starcaster's profile, CBS-era instruments are generally much less coveted or collectable than the "pre-CBS" models created by Leo Fender before selling the Fender companies to CBS in 1965.

The culmination of the CBS "cost-cutting" may have occurred in 1983, when the Fender Stratocaster received a short-lived redesign without a second tone control and a bare-bones output jack as well as redesigned single-coil pickups, active electronics and three push-push buttons for pickup selection (Elite Series). In addition, previous models such as the Swinger (also known as Musiclander) and Custom (also known as Maverick) were perceived by some musicians as little more than attempts to squeeze profits out of factory stock. The so-called "pre-CBS cult" refers to the popularity of Fenders made before the sale.

After selling the Fender company, Leo Fender founded Music Man in 1975, and later founded the G&L Musical Instruments company, which manufactures electric guitars and basses based on his later designs.