Broadcasting (July - Dec 1938)

instance the viewpoint appears to be that if the Commission approves a transfer involving a price more than the value of the tangible assets, it is in effect allowing a wavelength or license or some other interest to be sold. He contended this theory is fallacious because the new licensee must still come before the Commission for periodical renewals of his license, must expressly waive any claim in every application for renewal, and must accept a license which, on its face, says he has no right of ownership, just as does the statute itself. If any theory is adopted, the Commission must be consistent in applying it, Comdr. Craven stated. "It is just as illegal to pay $25,000 more than the value of the assets as it is to pay $1,500,000 more. Every such case would have to be decided (so far as price is concerned) purely and simply on the basis of evidence as to the value of the property. Yet in recent months we have repeatedly approved transfers where the undisputed evidence showed that the price was substantially larger than the value of the property. The only distinction between this case and others is that a larger station and consequently, larger sums of money are involved." Declaring he did not believe the "bare bones" policy could be justified legally or practically, Comdr. Craven said that it would lead to difficulties in administering the Act and places a "terriffic obstacle" in the way of progress in advancement of the industry. An immediate problem would arise, he said, in reference to sales of stock in corporations that hold radio licenses. Stock in a number of these Serial Security BECAUSE the Johnson Family, heard on MBS, is wholly dependent upon one person, its creator, Jimmy Scribner has been insured for $100,000. So effective is his personification of the 22 characters appearing in the sketches that listeners still send in fan mail addressed to the individual characters mimicked by Mr. Scribner. licensees, such as RCA and CBS, is freely traded in on the large exchanges. It is impractical to say that a man who holds 10 shares of such stock may sell it at the market and then turn around and say that a man who wants to sell 51% of stock in the same corporation can only sell it at a price based on the value of the physical assets, he argued. The Tax Angle Moreover, he said there would be the problem involved in disposition of an estate if the Bureau of Internal Revenue says that the estate tax must be fixed on some ratio of price to earnings "and yet we do not permit the stock to pass at a price that is sufficient to meet the Federal tax." Discussing other theories regarding transfers, Commissioner Craven said he would not venture to say what the ratio of sales price to earnings should be. Perhaps it should be ten to one or more or less, he declared. "However, I can readily see the danger of the Commission adhering to such a theory. AFTER an address on "The Economic and Social Aspects of Radio" by W. B. Ryan, NBC sales manager in San Francisco (left), President Don R. Harris (right) and his fellow members of the University of California chapter of Alpha Delta Sigma, scholastic advertising fraternity, recently broadcast a half-hour roundtable, ADS Examines Radio, on KRE, Berkeley, first program from the new KRE studios. It runs the danger of tempting licensees to extract the highest possible profit out of a station to justify highest possible purchasing price. It will prove unjust to institutions which have operated their stations on a non-commercial basis, and who find it desirable to dispose of the stations." Commissioner Craven concluded he had no definite pronouncement as to the proper theory "other than to state that it is my opinion that in all such cases involving transfer of licenses the fundamental factor to be considered is the interest of the public rather than the price paid by the purchaser. "In the consideration of a price the Commission may properly take into account accumulated losses of the past due to causes such as. pioneering expenses, development of a listening audience, and operation of the station on the basis of a high class program service under a heavy economic disadvantage," he said. "While it may be advisable for the Commission to take into consideration as a factor of public interest the ability of an assignee to operate a station successfully from a financial standpoint,, the Commission should not be eager to insist on immediate profits. It should be recognized that in any long range development it is not unsound to operate a business at a loss in the early stages. Therefore the Commission should not be restrictive in such cases, but should consider the matter with foresighted liberalism on a sound business basis. "While the Communications Act of 1934 clearly indicates that licensees have no ownership in frequencies and that no frequency can be sold, there is nothing in this Act which precludes the Commission's granting an application to transfer a station's license to another licensee when it is clearly shown that the operation of the station by the new licensee will be in the public interest and provided that in the transfer the frequency itself is not sold and provided the transactions are made by honest business men as a result of the application of sound business in accordance with the laws of econom MARLIN RAZORS, B r i d g e p o r t, Conn., on Nov. 9 began local sponsorship of the MBS cooperative show, Famous Jury Trials, on WICC, Bridgeport. Account is handled direct. lhloUNCINGr IOOO WATTS NIGHT A BROADCASTING • Broadcast Advertising November 15, 1938 • Page 47