Broadcasting (July - Dec 1941)

Radio Avoids Heavy GunniDg In Senate Propaganda Inquiry Subcommittee Indicates It Will Probe Deeply Into Alleged Efforts to Wave War Banners WITH THE radio angle obviously relegated to a secondary position, a subcommittee of the Senate Interstate Commerce Committee last Tuesday started lengthy public hearings looking into the alleged use of motion pictures and radio to spread pro-war propaganda. Although the five-man subcommittee, dominated by isolationist and non-interventionist members of the Upper House, gave early indication that the movie industry would come in for some heavy body blows, it appeared during the first three sessions of the proceeding that radio would receive credit for its blessings as well as blame for its alleged shortcomings. Willkie's Barrage The Senate hearings are being held in connection with a resolution (S Res-152) introduced Aug. 1 by Senators Bennett Champ Clark (D-Mo.) and Nye (D-N. D.), authorizing a full-committee investigation of the movie-radio propaganda charges. However, it is generally agreed that the subcommittee proceeding, complete with official fanfare and columns of newspaper coverage, in effect will be as extensive and accomplish the same purpose as the proposed fullcommittee proceeding. Apart from appearances by Senators Nye and Clark, citing the background for their investigation proposal, the opening stages of the proceeding, which has played to a packed house, featured a barrage of printed statements by Wendell L. Willkie, counsel for motion picture interests, in answer to verbal charges of Senators Nye and Clark and comments by subcommittee members. Under a majority ruling announced in his opening remarks last Tuesday by Senator D. Worth Clark (D-Ida.), chairman of the subcommittee, Willkie was advised he would not be allowed to examine or cross-examine witnesses before the committee. The only other witness was John T. Flynn, newspaper columnist, economist, one-time radio news analyst and chairman of the New York unit of the America First Committee, who appeared last Thursday. Although witnesses for the radio industry proper are not to be called until the movie phase of the inquiry is completed, probably in October, two Hollywood movie columnists and radio commentators — Jimmie Fidler and George Fisher ■ — were scheduled to appear before the committee Sept. 15. Some concern arose in broadcasting circles when Senator Nye on Sept. 2 introduced an amendment to the original resolution which would permit the committee to look into monopoly aspects of the movie-radio question, as well as the charges of propaganda. According to an explanation by Senator Nye to Broadcasting, the amendment was designed not to reopen or continue the intensive monopoly inquiries made of the industry during the last three years, but only to make the monopoly question germane to the general subject of the inquiry, with particular attention to the motion picture industry. Although radio received only passing mention in the testimony of the first days of the hearing, NAB President Neville Miller last Wednesday released a letter to Chairman Clark taking issue with statements by Senator Clark regarding the misuse of radio facilities for propaganda purposes. Emphasizing the important defense and morale functions of radio, Mr. Miller declared in part: "The American people, and they alone, exercise a day-to-day control of broadcasting far too powerful for anyone, even the Government itself, to interfere with." head of the Anti-Trust Division of the Department of Justice, for approval before they are signed by the broadcasters or ASCAP. The suggestion that this be done is reported to have come from David Podell, on leave from the Department of Justice to serve as special ASCAP counsel in the preparation of the proposed suit against NBC, CBS, NAB and BMI, charging conspiracy to bar ASCAP music from the air. This suit, as well as all actions against the networks and their affiliates for copyright infringements since Jan. 1, will be dropped coincidentally with signing of the contracts. Meanwhile, attorneys for NBC, CBS and ASCAP were still engaged last Friday on their seemingly endless task of getting the contracts into final form. Network executives expressed hopes, however, of getting the contracts mimeographed and mailed to their affiliates early this week, or possibly during the weekend. In sending contracts to their affiliates, NBC and CBS will also enclose letters analyzing the advantages of the terms and forms of ratification of the network contracts, which the networks will urge the stations to sign and return immediately, regardless of what they decide to do about signing with ASCAP for the right to use its music on their local programs. Terms Not Disclosed Terms of the several contracts, while known in a general way, were being withheld from publication until the newly-constituted ASCAP board could pass on them at a meeting on Monday, Sept. 15. John G. Paine, ASCAP general manager, it is understood, insisted upon this procedure, because of the far-reaching changes in terms and language made during the protracted executive committee deliberations, and the subsequent refinements sought by CBS last week. There was even some question of ASCAP board approval. Basically, the network blanket contract prescribes a sustaining fee for every station on the chain, of $200 annually, for which the network would not be reimbursed. The network commercial fee is 2%% on revenue realized from the sale of time. Deductible items are frequency discounts, agency commissions, line charges and a 15% sales commission. It is claimed this actually amounts to about 2% of net time sales. Affiliated stations, under this contract, are asked to reimburse the network 2%% of their network income. The network, however, in making its payment to ASCAP, first computes 2%% of its income after deducting frequency discounts and agency commissions. Then, in computing royalties on compensation paid affiliates, it deducts line charges and the 15% sales commission. The station, how ever, reimburses the network on its gross network income. $3,000,000 for ASCAP It is estimated that ASCAP would realize an income of approximately $3,000,000 if the form of contract acceptable to NBC and CBS is applied horizontally to the industry. This compares to approximately $5,1000,000 estimated as the 1940 ASCAP income under the old 5% blanket license plan, and some $9,000,000 that would have accrued under the graduated tax proposal proferred by ASCAP in 1939, which resulted in the open music warfare, in which ASCAP has been all but scuttled by virtue of BMI's success. Under the blanket form of license offered individual stations, they would pay 2^/4% of their net operating income. The latter figure takes into account deduction of frequency discounts, agency commissions and a 15% sales commission. It was estimated that, because of this base, the percentage figure actually is 1.91%. On the local commercial license, which constitutes the per program proposal, there would be no minimum guarantee, in compliance with the ASCAP and BMI consent decrees entered into with the Department of Justice. The fee, however, would be on income from programs using ASCAP music, and 2% on incidental themes, background (Continued on page Agreement Seen To Kill Time Tax Final Action Likely Tuesday: Will Study Franchise Levy ALTHOUGH officially unconfirmed, it is understood House-Senate conferees on the 1941 Revenue Ace last Thursday agreed to the Senate's action in deleting from the tax bill the House-approved proposal for a 5-15% Federal tax on radio's net time sales above $100,000 annually. But with the House and Senate expected to draw the curtain on the final episode of the radio industry's latest tax adventure early the week of Sept. 15, when they approve the conference committee's report, franchise tax proposals are scheduled to put in an increasingly prominent appearance. Ready for Final Action Although a five-man Senate committee and a seven-man House committee have actually completed unofficial conferences on the bill and formulated their report, they will not be officially named as conferees until Monday, Sept. 15, wheni the House reopens after a recess, i Final action is expected by both; houses by Tuesday or Wednesday, j It is understood that House conferees agreed to deletion of both the radio and billboard advertising) taxes with the understanding that a radio franchise tax would be considered later, presumably in the coming bill effecting administrative changes in the Revenue Code. It is not expected House hearings on this measure will start until November. Cigar Announcements WEBSTER EISENLOHR, New York (Tom Moore cigars), on Sept. 15 starts a 10-week campaign of transcribed and live chain-break announcements five times a week on the following 16 stations: WFAA KRLD KRRV WDAF KFH WLOL WDSM KVOX KATE KWNO KDGE KGCV KLP]\I KDLR KRMC KABR. Agency is N. W. Ayer & Son, New York. Milk Campaign STATE OF NEW YORK Bureau of Milk Publicity, Albany, on Sept." 29 is launching a 26-week campaign of spot announcements and partici-' pations on 17 stations in New YorkState. List includes: WOKO WNBF' WBEN WEBR WKBW WENYWABC WJZ WNEW WHAM' WHEC WGY WAGE WFBL WSYR WTRY WIBX. Agency is J. M. Mathes Inc., New York. ' Schumacher's Week F. SCHUMACHER & Co., New' York (Waverly Fabrics), on Sept. 22 launches an intensive one-week campaign of participations on women's programs in 25 cities to tie in , with local dealer advertising. Anderson, Davis && Platte, New, York, handles the account. Page 8 • September 15, 1941 BROADCASTING • Broadcast Advertising