American television directory (1946)

Photograph by Larry Colwell THE ECONOMICS OF TELEVISION How soon can a television station owner expect to turn a profit? Here is some realistic thinking on the subject. _ By LEONARD F. CRAMER Executive Vice-President, Allen B. DuMont Laboratories, Inc. HAT ABOUT television as a busi¬ ness; does television make economic sense? DuMont experience dictates an affirmative, realistic “YES.” DuMont’s more than 4 years of tele¬ vision broadcasting make it possible to project the operation of a typical, aver¬ age-size full-service television station. Costs will vary, naturally, in different cities but, in the main, this is the basic thinking that must be done by a pros¬ pective station owner. First, what is a reasonable estimate of capital investment required for a full-service television station? DuMont’s recommendation, with prices necessarily subject to revision because of uncer¬ tainties in material and labor costs, are provided in the box below. Now, our prospective owner is ready to ask: What is a reasonable estimate of the annual operating costs of a fullservice station? He should select an average period after the shakedown in¬ terval, say the third year of operation. Let us assume that his thinking is in terms of a one-studio station, on the air 7 hours daily, 49 hours weekly, 2548 hours annually.Two full crews, working a 48-hour week, will be required. His 12-months’ operating cost statement is likely to shape up like this: Annual Operating Cost Rental and maintenance of 12,000 sq. ft. of floor space @ $2 per sq. ft. per year . $24,000.00 Payroll : Administrative Personnel Station Manager, Program Man¬ ager, Sales Manager, Chief Engi¬ neer, Accountant, 3 Stenogra¬ phers, 2 Announcer-Producers.... 40,675.00 Technical Personnel 2 Audio Control Operators, 2 Stu¬ dio Control Operators, 4 Video Pick-up Operators, 2 Mike Boom Operators, 6 Studio Assistants, 2 Film Projectionists, 4 Master Con¬ trol Technicians, 2 Transmitter Operators, 4 Scenery Shifters and Property Men . $117,232.96 Federal Unemployment Insurance and Old Age Benefit . 3,168.16 Amortization of Capital Investment averaged over 10-year period at 5% interest . 34,743.75 Replacement of technical parts . 8,000.00 Maintenance of fixtures . 2,000.00 Power for technical equipment, gen¬ eral and studio lighting, and air conditioning (at N. Y. C. rates)... 15,000.00 Sustaining Programs 30% of Air Time: 70% films, 30% live talent studio shows and pick-ups of local events, sports, parades, educational affairs, club and church programs, etc., including rentals, royalties, scenery, properties, records and transcriptions . 27,500.00 Advertising, sales promotion, merchan¬ dising cooperation, market surveys. 25,080.00 Travel and entertainment expense.... 10,000.00 Miscellaneous: Stationery, telegrams, telephones, postage, etc . 7,500.00 Total Estimated Annual Operating Cost . $314,889.87 No one knows what constitutes a fair rate for “television air time.” But tele¬ vision can be compared to other estab¬ lished advertising media, in this wise: 63 typical half hour, full net¬ work radio programs over a 2month period cost the ad¬ vertiser . $ .00136 per listener for time and talent The average advertisement of % page or larger in 3 major weekly magazines in a recent 3month period cost the ad¬ vertiser . 00465 per reader for space and preparation The average of all half and full page advertisements in 67 newspapers cost the advertiser .00928 per reader for space and preparation Noted marketing authorities agree that commercial television — sight-plussound selling — carries a sales impact fully 10 times greater than radio (sound alone), and enjoys an equally impressive advantage over most and possibly over all visual mediums (sight alone) . Logically, therefore, television time may be priced somewhere between radio and magazines . . . say a rate of $.003 per person per half hour evening program. At the end of the second year of op¬ eration, any television station in a major trading area of 250,000 families will be able to reach at least 20,000 television receivers. (This represents only 8 per cent of the families — and THE CAPITAL INVESTMENT REQUIRED FOR A TELEVISION STATION }* Two DuMont Studio Cameras, with push dollies DuMont Studio Control Desk Specially Designed Mobile Camera Dolly DuMont Master Control Board Studio Lighting and Audio Equipment Two 35 mm. Special Film Projectors @ $6,000.00 ea. Two 16 mm. Special Film Projectors @ $2,000.00 ea. Two DuMont Film Pick-up Cameras DuMont Transmitter 25 KW peak Video and equivalent peak Audio . Suitable Antenna with supporting tower located on same building . . Spares and Test Equipment . DuMont Field Camera Pick-up Equipment, including two cameras . Field Audio Pick-up Equipment DuMont Field Relay Transmitter DuMont Relay Receiver . Truck with Generators and Antenna Sub-total . . . 23,000.00 2,500.00 35,000.00 10,000.00 12,000.00 4,000.00 6,000.00 65,000.00 10,000.00 13,000.00 24,000.00 1,500.00 8,000.00 2,000.00 5,000.00 $221,000.00 Auxiliary Equipment, Installations, etc. (costs dependent on local conditions). Installation of Television Broadcasting Equipment Structural alterations to an existing building, electrical wir¬ ing, studio soundproofing, etc. Fireproofing of Film Projection Room Furniture, fixtures and decoration Sub-total . Total Initial Capital Investment $ 15,000.00 25,000.00 1,500.00 10,000.00 $ 51,500.00 $272,500.00 40