Broadcasting (Oct 1931-Dec 1932)

RCA and Associates Separate Under Consent Decree Terms NBC, RCA Victor Among Subsidiaries Involved; Patent License Set-up Is Altered by Court Mr. Sarnoff RADIO Corporation of America and its various subsidiaries, i n eluding NBC and RCA Victor Co., become wholly independent in status by virtue of a consent decree entered by the Federal District Court at Wilmington, Del., Nov. 21, settling without prosecution the anti-trust suit instituted against RCA and a dozen associated and affiliated companies in May, 1930. Under the decree, General Electric Co. and Westinghouse Electric and Manufacturing Co. must divest themselves entirely of their present stock control of RCA. Involved in the settlement is a realignment of the radio patent situation, in which some 4,000 patents, heretofore pooled in RCA under an exclusive arrangement, become non-exclusive. RCA, however, retains the right to continue to grant licenses to other manufacturers, not only under its own patents, but also under the patents of G. E. and Westinghouse and American Telephone & Telegraph Co., and to retain the royalties received from such licenses. Thus RCA continues to be the sole organization empowered to grant licenses to others under the radio patents of all the companies with which it was formerly associated, including until 1955 the patents of A. T. & T. and the two electric companies. Period of Adjustment UNDER the decree, two and onehalf years are provided for adjusting the RCA's business to its new status. During that period, General Electric and Westinghouse are not free to manufacture radio devices under their newly acquired rights, except insofar as each of them may operate under its own patents. RCA under the decree can manufacture as well as sell transmitters and transmitting tubes which, under earlier agreements, were manufactured by the two electrical companies. In a statement to stockholders, David Sarnoff, RCA president, emphasized that RCA, through its established subsidiaries and with its present personnel, will continue to function as heretofore in broadcasting, transoceanic communication, ship-to-shore communication, radio manufacturing and entertainment. RCA, he said, also receives patent rights and licenses for the manufacture and sale of radio devices useful in other than the generally recognized lines of radio business, and will be enabled to extend its manufacturing into new phases of the electronic arts. While G. E. and Westinghouse immediately relinquish the exercise of their stock control over RCA, they are given three years in which finally to divest themselves of all their stock. Within three months, however, they must distribute ratably among their stockholders substantially one-half of their stock. Debt Wiped Out AN ITEM of nearly $18,000,000 currently owed by RCA to the electric companies was disposd of through purchase of the RCA Building in New York by G. E. at its present book value of $4,745,000 and through issuance to G. E. and Westinghouse of 10-year debentures in the amount of $4,255,000. As part of the readjustment, the balance of $8,938,733 is discharged by the two electric companies in consideration of the new agreement. Simultaneously, announcement was made of a successful termination of negotiations with Rockefeller Center, Inc., by which commitments for broadcasting studios and office space undertaken when the Radio City project was conceived three years ago now have been reduced to the present requirements of RCA and its subsidiaries. The modifications of the Radio City leases in the amount of space to be occupied and the rentals to be paid, according to Mr. Sarnoff, are being readjusted through the issuance to Rockefeller Center of 100,000 shares of "A" preferred stock in RCA. In a statement the Department of Justice, which instituted the RCA suit, said the decree em bodies all the relief necessary to meet its objections. Should the decree be violated, the case automatically can be reopened and the defendants held in contempt. The defendants consented to the decree on condition that it would not constitute an admission or an adjudication that they had violated any federal law. Mr. Sarnoff said it is hoped that the ending of the litigation will have a salutary effect upon the entire radio industry and will stimulate research, advance the new service of which the laboratories give promise and pave the way for further industrial progress in radio and allied fields. Oswald F. Schuette, copyright director of the NAB, who as representative of independent set manufacturers several years ago launched the battle against the RCA, called the consent decree "the greatest victory ever won in the court of public opinion, just as it is the largest combination that has ever been dissolved by the government of the United States." WBMS Silenced WBMS, Hackensack, N. J., was ordered off the air by the Radio Commission Nov. 29 in denying the application of Lloyd B. Marsh, receiver, for authority to continue operation. The station had been assigned one-fourth time on 1450 kc. with 250 watts, sharing with WHOM, Jersey City. WNJ, Newark, also assigned to the wave, on Nov. 21 was ordered deleted by the Court of Appeals of the District of Columbia, which sustained the Commission's decision refusing renewal. Thus, WHOM acquires three-fourths time, and the way is paved for full time operation through denial of the WBMS renewal. YEARLY PROGRAM AWARDS URGED O. H. Caldwell Suggests That RMA or Non-Radio Group Might Sponsor Contests to Aid Industry Mr. Caldwell AWARDS for the year's best programs, to sti m u 1 a t e impro v e d production and to raise standards, were suggested by O. H. Caldwell, former Radio Commissioner, in an address Nov. 14 at the NAB convention in St. Louis. The donor might be the Radio Manufacturers Association or any other agency interested in exerting a powerful beneficial influence on radio programs at relatively small expense. Substantial prizes in cash and other awards of distinction could be conferred by a group of distinguished laymen, not connected with radio but representing a variety of informed good taste, Mr. Caldwell suggested. Distributed among a membership like that of the RMA, he pointed out, the expense would be relatively small. Pointing out that awards for excellence to announcers already have stimulated them to better work, Mr. Caldwell predicted that a plan for program awards would tend to improve the quality of broadcasting, would have a good influence on broadcasters, advertisers, advertising men and the listening public. He said some $50,000,000 a year is being spent on broadcast advertising. "The only standards to guide the continuity writers are the lower limits set by the tolerance of listeners and broadcasting stations as to how much advertising 'the public will stand for,"' he added. Mr. Caldwell, now editor of Radio Retailing and Electronics, called for cooperation between broadcasters and set manufacturers. Manufacturers, he said, are building circulation for broadcasters, and modern receiving sets perform remarkably in quality reproduction of programs. He declared that set sales are increasing and that apparently the radio trade is beginning to "round the corner". In a graphic address, illustrated by slides, Mr. Caldwell reviewed the progress in industry being made by the electronic tube, or electric eye, which is the offshoot of the radio vacuum tube. He predicted that within the next few years the vacuum tube will be identified with "everything we do, see, eat or hear." WIBO vs. WBBM; $900,000 is Asked WBBM Denies Suit Charges In Formal Statement THE FIRST damage suit ever instituted by one broadcasting station against another now is pending in the Superior Court in Chicago and involves a claim of $900,000 damages made by WIBO against WBBM, both of Chicago. Filed Nov. 12, by the State Investment Co. and Nelson Bros., Inc., owners of WIBO, the declaration alleges that Ralph Atlass, Leslie Atlass, Thomas J. Johnson, the Johnson-Kennedy Radio Corp., and CBS, as interested parties in WBBM, "conspired to compel" the owners of WIBO "to sell or abandon the WIBO franchise and wave length". It is alleged further that the "conspiracy" began in August, 1929, following refusal by WIBO of an offer made in that month by WBBM and CBS to buy WIBO. In a statement to Broadcasting, Messrs. Atlass and Mr. Johnson said : "There is absolutely no basis for this suit. It was begun without any notice to us and our first knowledge or indication of it came from the notices in the public press. The facts set up in the declaration are absolutely untrue. Inasmuch as we are unable to ascertain any grounds against us, we feel that the suit must have been activated for some foreign purpose. We will hasten the litigation to an early conclusion." Among other things, WIBO charges that "false and malicious statements concerning the length of time WIBO would be permitted to operate" were circulated, and that advertisers were induced not to use WIBO "by representing that WIBO would soon be owned by other interests." The petition said that "false, slanderous and libelous information disparaging the quality of entertainment and performances broadcast over the air by the said radio station WIBO" were also circulated, "thereby unjustly and wrongfully injuring the worth and reputation of said radio station." Operating on 560 kc. with 1 kw. night and 2% kw. day, WIBO has been on the air since 1924. The station, along with WPCC, also of Chicago, now has an appeal pending in the Court of Appeals of the District of Columbia from a decision a year ago by the Radio Commission, ordering deletion of both stations and assignment of their facilities to WJKS, Gary, Ind. The Commission's decision was based on its quota regulations, Illinois being greatly overquota and Indiana underquota. The Johnson-K e n n e d y Radio Corp. is the licensee of WJKS, while Ralph Atlass is listed as commercial manager. Call Changes A NEW addenda sheet to the call letter list issued Jan. 1 has been prepared by the Radio Commission, containing changes up to Nov. 1. Copies may be procured from the Commission or from Broadcasting. Page 16 BROADCASTING • December 1, 1932