Broadcasting (Jan - June 1941)

year ago; they now operate, he said, with separate sales and promotion staffs and "they are doing extremely well". Resuming his direct statement, Mr. Trammell vigorously denied Chairman Fly's contention that the networks controlled not only the time of affiliates but the public opinion of the country "through a vicious restriction of the stations' freedom of action". Asserting the ■contrary is true, he declared stations affiliated with NBC always have had the privilege of rejecting network commercialc; or sustainings in favor of programs of local importance. He submitted a list of network commercial rejections showing 2,091 commercial program cancellations by stations during 1940 and 1,902 during the first five months of 1941. "I feel," he said, "that this is the best evidence we can present to disprove the charge of domination over our affiliated stations, or the contention of Chairman Fly that the local station is prevented from carrying a broadcast by the Daughters of the Confederacy or a Senator, to take a network program consisting of a blonde gal from Hollywood who might happen to be on a commercial progx-am. We have never forced them to forego broadcasts of local interest in favor of those offered by the network." Believes Rules Foster Monopoly As to exclusivity, Mr. Trammell declared the new rules forbid any station to contract for exclusive network service and make it impossible for any network to render it, thus making it "impossible to assure religious, educational and civic interests, as well as advertisers, either completeness of coverage or continuity of service. "In essence," he said, "the rule more viciously fosters monopoly than could any possible restraint which now exists in the industry. If there is 'dominance' in the fact that four competitive networks serving 500 stations now operate in the standard field (and no such dominance has been proved), what would happen if the best programs, the best features and the largest advertising accounts gravitated, as they would, to the 50 or 60 most powerful stations in the country? Yet that is exactly what would happen under the so-called non-exclusivity rule." Senator Wheeler then pointed MTIONAL RIPRESENmnVIS EDWARD PETRV 4t CO. ON THE NBC RED NETWORh out that NBC has non-exclusive contracts with WDAF, Kansas City Star station, on the Red, and KSO, Des Moines Register & Tribune station, on the Blue. Mr. Trammell, admitting this, said as a matter of practice WDAF actually takes NBC-Red exclusively, though KSO does take some MBS programs. Senator Wheeler observed that perhaps their independence was attributable to their powerful political positions by reason of their newspaper ownership. "Under the new rule," Mr. Trammell continued, "all will be chaos and confusion. Stations will rush for the best features of every network service. Advertisers will try to preempt the best hours on the best stations. Time brokers will inject unfair methods of competition. Advertising agencies will make their own arrangements for 'frontpage' positions with the bigger and better stations." He continued that, without exclusive tieups of stations with networks, the possibility of getting satisfactory lineups for public service features becomes remote. "Every public service program which NBC would offer would be measured by the stations against the commercial and public service offerings of every other network for that period. There would be no incentive for public organizations to build up such programs ; no reason for any network to spend the sums they now spend to build competitive recognition and prestige. Whatever element of public service remains will be local service. National service will become the exception, not the rule." Option Time ISot Objectionable It would be a simple matter, Mr. Trammell explained, for advertising agencies, already equipped with expensive production departments and studios, to build up their own wire hookups. Even now, he said, many advertisers custombuild their own networks to their own distribution needs but within requirements set by the networks. Yet whereas 10 years ago an advertiser could purchase as few as 10 NBC-Red stations during evening hours, today it is necessary to buy a minimum of 60 outlets. In May, 1934 the average number of stations on an evening Red program was only 40; by May, 1941 it had increased to 73, he said. Chairman Wheeler at this juncture observed, "I can't see any excuse for not giving you option time if I were a station and wanted to give it to you. Unless there is some reason I don't know of now, I think the Commission is wrong." Mr. Trammell pointed out that already competitive advertising media are making capital of the present plight of the networks in Washington, and expressed fear some advertisers may be deflected away from radio. The new regulations, he went on, make it impossible for NBC to maintain these minimum require ments. "We charge that the Commission, unwittingly perhaps, in its efforts, as it says, to free the stations from the domination of the major networks, has successfully thrown the domination of radio into the hands of a limited group of stations and a few large advertisers." "All the advertiser has to do," he observed, "is just rent a theatre and order phone lines." Mr. Trammell then showed the committeemen three projected maps of the kind of networks the advertisers might order if given free choice to operate their own switchboard hookup. The first map, outlining what he called the No. 1 Advertiser Network, showed 64 stations affording effective groundwave coverage of 92.4% of all the radio families in the United States; its time, 9-10 o'clock Monday night, could be purchased for $12,015. A second map showed what a second advertiser would then be left to buy even to approximate the same coverage; it showed 160 stations covering 76.4% of the radio families of the country, and the hookup would cost $14,788. A third network would be virtually impossible to set up to give comparative national coverage, regardless of the number of stations the advertiser desires to buy or the amount of money he has to spend, he said. Fears Advertiser Corner on Networks "The significance of these maps," Mr. Trammell asserted, "is somewhat startling in contrast with Mr. Fly's statement that he believes that five or six national neworks are possible under the 'new freedom.' It looks to me as if even three would be impossible." After reiterating his conviction that the bulk of the advertising revenue under the new regulations "will go to a relatively few of the country's major stations," Mr. Trammell was asked by Senator Wheeler whether this contingency can be remedied by permitting option time. Mr. Trammell replied that no network now has a corner on major stations, but under Mr. Fly's "scrambled system" he said the advertiser will get the corner. Senator Wheeler inquired how NBC operated before it had exclusive contracts. Mr. Trammell replied that the radio advertising business has changed considerably since the old days; when NBC had no exclusive contracts, it was doing some $19,000,000 worth of business, whereas now it does $45,000,000 or more. Explaining option time requirements, Mr. Trammell declared the prohibition on option time "strikes directly at the heart of network broadcasting." "In building up radio," he said, "it was found to be in the common interests of stations and networks to reserve, or option in advance, definite hours for network service to individual stations, so that there may be a fixed time for fixed features and the proper balance between local and national programs." By this means the listener knows when and where to tune in for programs of his choice; the advertiser is assured of definite time and definite coverage; the station can dispose of its hours as between local sustaining and commercial programs; and networks are enabled to plan in advance, as they must, their schedule of operations." Time Reservations Insure Stability NBC recognizes the needs of local service, he said, and options from its affiliates 10-12 in the morning, 3-6 in the afternoon and 7-7:30 and 8-11 in the evening, with slightly different schedules for Sunday. Since most stations operate 18 to 20 hours daily, this gives NBC a call on less than 50% of the station's operating time. He offered a chart to show that national network time sales amounted to less than $71,919,428 out of the $154,823,787 worth of radio business sold during 1940, according to the FCC's own recent figures. He went on to show by the figures that the total sale of time by the networks is less than the sale of time by the stations themselves; that local sales went up 20% last year as against 15% for networks; that stations affiliated with networks do better in local time sales than those unaffiliated. "The truth is," he asserted, "that under NBC contracts with its affiliates, local stations always have had and have now the right to reject or cancel any network offering. Time reservations are made for the purpose of insuring stability of operations, not to impose restrictions on local station management. "Under the chairman's new pro 5000 WATTS OVER METROPOLITAN NEW YORK BROADCASTING • Broadcast Advertising June 23, 1941 • Page 47