Broadcasting (Oct 1931-Dec 1932)

BROADCAST II The NEWS MAGAZINE VOL. 3, NO. 6 WASHINGTON, D. C. THE FIFTH ESTATE MBER 15, 1932 $3.00 PER YEAR — 15c A COPY Copyright Contracts Puzzle Broadcasters By SOL TAISHOFF Schuette is Negotiating for "Sustaining" License Fee Cuts; Definition of "Net Receipts" Causes Most Trouble HAVING accepted the new percentage copyright scale of the American Society of Composers, Authors and Publishers, broadcasters now are busy studying the terms of the new contracts presented to them by agents of ASCAP throughout the country. From the tenor of the inquiries being received by the NAB from many stations, broadcasters are at a loss to understand some of the provisions and desire to have several phases cleared up before they agree to the new scale, calling for 3, 4 and 5 per cent of their "net receipts" over a three-year period, plus readjusted "sustaining" licenses. A number of stations are carrying on individual negotiations with E. C. Mills, general manager of ASCAP, seeking downward revision of their sustaining licenses. On behalf of the industry as a whole, and armed with full information from a large number of stations, including members of the NAB as well as non-members, Oswald F. Schuette, director of copyright activities, is endeavoring to procure reduced sustaining fees for the stations and it is presumed that he will later take up the other problems in his talks with Mr. Mills. Attack Threats Subside TALK about attacking the new royalty scale, accepted under protest by the NAB board of directors Aug. 24, is subsiding for the time being. The stations which threatened such actions have been dealing individually with Mr. Mills on the "sustaining" license, and until they either arrive at a satisfactory basis, or definitely break off their negotiations, their future course remains undecided. Both NBC and CBS, it is understood, have definitely completed their new contractural arrangements with ASCAP, not only for their New York key stations but for the other outlets they own and operate. Subsequently, Mr. Mills drafted a new contract form for submission to all stations but initially to those of more than 500 watts. Those of 500 watts and under have been granted extensions of their present flat-rate contracts until Oct. 1. Greatest apprehension among broadcasters has been expressed over the meaning of the term "net receipts" as described in the new contract form and on which the percentage royalty is to be paid under the three-year contract. This term is described in the contract under Article 8, paragraph (d): "The term 'net receipts' from the sale of its broadcasting facilities shall refer to the full amount charged by and actually paid to licensee for the use of its broadcasting facilities (sometimes known as 'time on the air'), after deducting commissions not exceeding fifteen per cent (15%), if any, paid to the advertising agent or agency (not employed or owned in whole or in part by licensee)." Stations point out that in many cases they are forced to pay two 15 per cent commissions for placement of business. Under the contract, however, only one such commission would be deductible. Broadcasters long have battled the double-commission and time-broker problem as one which is almost tantamount to rate-cutting. Some stations, therefore, see in the single commission stipulation a possible means of combating the doubleedged commissions. What of Talent Costs? ALSO growing out of the "net receipts" clause is the question whether deductions for talent costs and line charges are permissable. Such items do not come under the WHAT EFFECT REPEAL ON RADIO ? Brewers Say They Will Spend Generously to Stage Pro grams Revolutionary in Excellence Mr. Neff By WALTER NEFF Ass't Director of Sales WOR, Newark BREWERIES and wineries are polishing up their apparatus against the day when Congress lifts the embargo against the sparkling beverages that exhilarates or damns according to one's personal lights. What effect will nullification of the Volstead Act and the repeal of the Eighteenth Amendment have on radio ? What will radio's attitude be ? Shall we hear the merits of this and that brew ? Shall we hear of the benefits of a magnum of this or that champagne ? What sort of progi'ams will be put on the air by their manufacturers as good will creators ? For radio there has been no precedent such as has already has established by newspapers. One does not have to stretch his memory very far to recall the advertisements published in the daily press before the advent of prohibition. Beer, wines and liquors furnished no little part of the revenues of the Fourth Estate, and business managers of the daily papers would certainly welcome the space displays of so important an industry. WOR Studies Problem RADIO, unlike the newspapers, has no declared public policy or political affiliations beyond carrying out the public convenience and necessity clause of station licenses. The great majority of metropolitan dailies have been frankly outspoken against prohibition as a matter of infringement on personal rights and irrespective of its economic aspects. Not so radio. Neither the antis nor the pros have been permitted to discuss the subject unless the other side had an opportunity to present its arguments. The same is true of every other issue that directors believe is inherently controversial. Thus far, the managers of major (Continued on page 2i) head of the sale of broadcasting facilities, which is construed to mean the price actually paid for what goes into the microphone. Networks, for example, bill their clients separately for talent and line charges, as do some stations. Many stations also have inquired whether the percentage royalty is to be paid on time sold for political addresses, since no copyrighted music is used in their presentation. In connection with this inquiry and with that pertaining to the 15 per cent commission deduction, Mr. Mills has stated that no deductions will be allowed in either case. While immediately after the negotiations were concluded, Mr. Mills declared that no items would be deductible beside the 15 percent agency commission, Mr. Mills now takes the position that bad debts may be deducted from the royalty remittance to ASCAP, but if these are paid later the royalty then shall be accounted for. Transcription Royalties THE QUESTION of the payment of the royalty on transcription business, on which a specific royalty previously has been collected by the same copyright owners, through the Music Publishers Protective Association, or some other agency, also has been raised. MPPA, which recently reached an agreement with transcription companies and advertising agencies on copyright royalties, is declared to be independently operated, but is known to have a definite tieup with ASCAP. Finally, many stations have expressed vigorous opposition to the contract demand that ASCAP shall have the right "by its duly authorized representative" to inspect books of any station to ascertain that payments are being made properly and honestly. They object to having the local representatives of ASCAP, who also may be counsel for their competitors or organizations with which they do business, prying into their books. The new contract states that ASCAP shall consider all data and information coming to its attention as a result of the examination of broadcasters' books to be "completely and entirely confidential." It is felt, however, that such inspection should be made by a firm of certified public accountants under the seal of confidence — men who could not have any interest in (Continued on page 30) September 15, 1932 • BROADCASTING Page 7