Broadcasting (Jan - June 1941)

tor Wheeler had fought vigorously several years ago against the ""death sentence" power given the SEC and that Congress, after a heated debate, by one vote passed this legislation. But he said the language was carefully drawn and the Commission was restricted in "what it could do, with the orders made appealable directly to the Cir•cuit Court of Appeals. This, however, he said, is not the FCC's idea at all. After only 18 hours' notice to other mem"bers of the Commission, it put through regulations which gave NBC only 90 days to sell the Blue Network and then provided that in order to get an extension they "would have to plead for it "with Tiat in hand". Recalling Chairman Fly's testimony that there might be five or possibly six networks as a result •of the rules. Judge Burns said this amounted to "wishful thinking". The present state of the industry is so confused, because of these regulations, he said, that he did "not think that "even Edward J. Noble, new owner of WMCA, would ■dare to start a new network under the rules". Since there is doubt on the Commission that it has the power. Judge Burns asked why it should not weigh every doubt in favor of the industry and go to Congress to resolve those doubts. He •concluded with a plea that the committee approve the White Resolution. Trammell Recites ■Reasons for Passage Niles Trammell, NBC president, took the witness chair and explained that he would make the only appearance for the network, :save for a discussion of the jurisdictional phases by Duke M. Patrick, NBC counsel. Frank E. Mullen, vice-president and general manager of NBC, and Mr. Patrick, sat on either side of the NBC president. Reading a prepared statement, Mr. Trammell urged the committee to approve the White Resolution, citing three reasons. He said it was his firm belief as one who liad been in radio since its inception, that the rules "will disastrously aff'ect the entire broadcasting structure of the nation; that the issues raised by the regulations are not merely industry issues but -are distinctly public issues, in that they affect the users of 50 mil NOW THEY LOOK LIKE THIS See page 36 Get the facts from WOLWASHINGTON, D. C. Affiliated wHh MUTUAL BROADCASTING SYSTEM National Representatives: INTERNATIONAL RADIO SALES PHOTOGRAPHS ON PAGE 36 in same (1 to r) order show: (1) O. B. Hanson, NBC engineering vice-president, who was radio operator on the British steamer Stephana, plying between New York and St. Johns, Newfoundland, when it was torpedoed off Nantucket Light by a German submarine just prior to the United States entry into the war. (2) G. W. (Johnny) Johnstone, former NBC and WOR publicity chief now doubling as radio director of the Democratic National Committee and the President's Birthday Ball Committee, who was a "ham" when he enlisted at the Brooklyn Navy Yard in 1917, served on munitions carriers between New York and France and was on the USS George Washington as one of President Wilson's confidential operators when he went to Europe in 1919. (3) Earle J. Gluck, manager and chief owner of WSOC, Charlotte, N. C, who since last April has been on active duty as assistant district communications officer at the Navy Yard, Charleston, S. C, having been called up as a Lieutenant Commander, U.S.N.R.; he enlisted in the Navy in 1917 as a radioman third class, serving on cruisers, subchasers and transports and being mustered out in 1919 as chief radioman. lion receiving sets, thousands of radio programs, the business life of the nation and the morale and welfare of the American people; and third, that a national radio policy defined by Congress is urgently needed now to protect by clear mandate the freedom of the air against either private or Governmental control, and to insure the continued operation of broadcasting under the American system of private enterprise. Stating frankly that the operations of NBC are "seriously affected" and that the welfare of 2,300 employes is at stake, Mr. Trammell said these interests are closely interwoven with those of the many public groups served, the independent stations of NBC and the radio audience who so heartily has approved past service. Points to Changes In the Industry He said he was not opposed to the proper regulation of broadcasting under the licensing powers authorized by the Congress and administered by the FCC. Such regulation, he said, is essential but "we are operating under a law conceived 14 years ago and before the present problems of network broadcasting could be foreseen". The vagueness of the old law, the lack of clarification of certain vital principles and the limited rights of appeal "all argue strongly for new legislation as the only solution of the major problems confronting us", Mr. Trammell asserted. Disclaiming any intention to de fend all of the business practices of the industry or to maintain that service cannot be improved, Mr. Trammell said he felt there are no substantial abuses. He said he did not believe that competition has been or is being restricted and that the whole history of progress in the last 15 years of NBC operation refutes these charges. Predicting that the changes decreed by the FCC will disrupt the present orderly distribution of broadcast service, Mr. Trammell held they were not the result of public demand or a deficiency in service. "They are the result, apparently, of unproven charges of domination, control and monopoly. They stem from the competitive cry of those who seek, through Commission edict and without competitive effort, to replace the pioneers who developed our American system of network broadcasting". Under the rules, the Commission essays to regulate the business practices of radio and that constitutes the great danger, Mr. Trammell told the committee. He said the industry never believed that Congress intended to give the Commission the power to prescribe business rules or program practices, but that it meant to give the Commission power "to regulate the industry, not to operate it". After quoting from the FCC minority report that the rules would create "anarchy" or a kind of "business chaos" in which the public would suffer, as well as Senator White's observation during the hearing that the Commission has tended to assert authority it does not have, Mr. Trammell observed that broadcasters, the Commission and Chairman Fly do not know how the American system of broadcasting "can operate under the rules as it has in the past". Post Mortem Relief Arouses Apprehension The Commission promises in its report, he said, that if the new order does not work, it will appeal to Congress for legislative help. But "we of the industry appeal to the Congress for relief and clarification now", he said. "I believe that we are properly apprehensive about the willingness of the Commission to perform a serious and perhaps fatal operation, while limiting Congressional help to post mortem relief", said Mr. Trammell. Pointing to the confusion and bewilderment created by the "startling change" wrought by the regulations, Mr. Trammell said that neither court determination of the intent of Congress under the present law nor the mere modification of the new rules, leaving unlimited discretion in the hands of the Commission is sufficient to enable broadcasters "to go forward with any confidence as to their future status". He said he was convinced there is no substitute for legislative study and action on the problems that confront broadcasting. Like previous witnesses, he referred to the Pottsville decision by the Supreme Court which summarizes the distinction between the remedies of litigation and legislation. Declaring that the industry has set up its own machinery for selfregulation to prevent and correct bad trade and program practices, Mr. Trammell declared that the industry has come down a long road to the point where the Commission now demands that the industry yield to it the control of business practices, under the guise of its authority to grant licenses in the public interest, convenience and necessity. He described this as a real issue and contended that it can only be resolved by law, not by Commission edict, and that the law should be so defined that the industry will know how to proceed. Alluding to Chairman Fly's testimony that the new rules constituted "a Magna Charta for the broadcasting industry" on the one hand, and that the regulations really meant "a minor operation" on a few small clauses in station and network contracts, Mr. Trammell asked : "Magna Charta or minor operation — which is it?" Rules Give FCC Limitless Power He pointed out that the Commission in its report said that if the rules do not achieve the purposes hoped for, then Congress should amend the law to authorize "direct regulations appropriate to a noncompetitive industry". In other words, he declared, the Commission foresees the possible breakdown of broadcasting by private enterprise. age 42 • June 23, 1941 BROADCASTING • Broadcast Advertising