Broadcasting (Oct - Dec 1945)

100-w Station Tests Radio Sales Tax New Mexico's License Law Challenged by NAB Aids A LOCAL station well in the interior of New Mexico, KGFL RosWell, is serving as the technical guinea pig by which a three-judge U S District Court will determine whether the State of New Mexico has the right to license broadcast stations and impose a 2% gross sales tax on them as operations m intrastate commerce [Broadcasting, Nov. 12]. NAB is joining the Nov. 19 legal battle, acting as a friend of the court, in an effort to have the tax declared unconstitutional. Twentynine other States have sales taxes which might be aimed at broadcast stations should the New Mexico impost be upheld by the court. Signal Measured All last week Howard S. Frazier, NAB director of engineering, toured New Mexico and neighboring states in a car equipped to measure KFGL's signal. These findings will be presented to the court to show that a station s signal, even if a 100-watter well inside a state's borders, penetrates beyond state lines besides causing interference to other stations inside or outside the borders. New Mexico's gross sales tax law was passed in 1935. A State Revenue Bureau ruling held broadcast stations exempt as instruments of interstate commerce, a position supported by the Fishers Blend Station Inc U S. Supeme Court decision in 1936. The present state attorney general reversed the ruling, held the stations in the state subject to the tax, and even made it retroactive with interest charges. Brief presenting NAB's story to. the court was prepared by John Morgan Davis, NAB general counsel, and Milton J. Kibler, assistant general counsel. They went to New Mexico to participate in the hearing. Other New Mexico stations are plaintiffs in similar suits. KGFL was deliberately selected by NAB and the New Mexico broadcasters because it is well over 100 miles inside the New Mexico border and has only a 100 w signal. It was felt that no possible claim could be made by the state that broadcasters were picking a border station that obviously would have listeners in an adjoining state. NAB Brief The New Mexico attorney general contended that a local station of low power served only the nearby territory and was not an interstate operation. After reciting the history of Federal radio regulation, based on the premise that broadcasting is essentially a medium of interstate commerce, the NAB brief reviews court decisions applying to the New Mexico case. All point to the basic interstate character of broadcastPage 22 • November 19, 1945 ing as a business and the engineering fact that a radio signal is no respecter of state lines. Power of Congress is supreme, NAB points out, in explaining that where operations in interstate commerce also have purely local effects on intrastate commerce, the power of Congress extends to every operation of intrastate commerce which is comingled with operations in interstate commerce. The Fisher's Blend Station case held that a state occupation tax, measured by the gross receipts from broadcasting by stations within the state, is unconstitutional. NAB stresses that interstate and intrastate transmission of radio waves admit of no distinction, and that whether programs originate locally or in other states, the crossing of state lines by radio communications clash with, interrupt and distort the waves coming from out-of-state stations. In its conclusion, NAB argues that the power to regulate broadcasting is exclusively in Congress and to allow any state to place an excise tax on broadcasting is an infringement of that power. Power of Congress to regulate the industry, free from interference by state government, must be protected, it is argued. No matter in what part of a state a station is located, it cannot be brought within the accepted definition of intrastate commerce due to its uncontrolled nature, says NAB. Even assuming for sake of argument that a signal did not cross the boundaries of a state, says NAB, it does not follow that this intrastate zone is wholly free from Federal regulation since waves of the station may clash with waves from out-of-state stations. These waves must be given right of passage without interference from local stations, the brief points out. Cited was a principle enunciated by former Chief Justice Hughes in the Nelson Bros. Bond & Mortgage Co. case, that "no state lines divide the radio waves, and national regulation is not only appropriate but essential to the efficient use of broadcasting facilities." NAB goes into the business side of the state's 2% gross levy by showing how the tax does not take into account expenditure items and pointing out that many stations operate on small profit margins. Thus a 2% gross tax might amount to 50% or more of net profits and even amount to confiscation of a station licensed to operate in public interest. Washington-New York Coaxial Cable Line Opens in January Army-Navy Game Telecast Forerunner of New Link ; Facilities Offered to All TV Interests by Bell FORERUNNER of regularly scheduled intercity broadcasts by coaxial cable between Washington and New York, the Belt System will inaugurate its Philadelphia-New York coaxial cable on Dec. 1 when NBC televises the Army-Navy football game in Philadelphia for broadcast over its New York station, WNBT. Keith S. McHugh, vice-president of AT&T, who last week announced the coaxial system, described the Army-Navy transmission as "a preview of long distance television by cable." Already AT&T has arranged to make its Washington-New York coaxial cable available to CBS, NBC and the Allen B. DuMont Labs, for exchange of telecasts between the two cities. Each telecaster will use the cable two nights a week during the experimental stages. AT&T will make the coaxial available also to others interested in TV, including motion picture producers and theater operators, when they have facilities available. The Bell system has been using coaxial cable to carry telephone conversations over some intercity routes for several years. Present construction contemplates a network of coaxial and radio relay NO TELEPHONES but strictly personal contact was used by C. E. Hooper and aides in obtaining this sample of South Dakota pheasants. Group, which conducted its research on the farm of W. J. Asmussen, S. D. candidate for 1945 title of Typical Midwest Farmer, included: (Rear row, 1 to r) James H. Allen, promotion manager, WNAX Yankton; Robert Dooley, national sales manager, KFAB Omaha; Don E. Inman, general manager, WNAX Yankton; (front row, 1 to r), H. T. Enns Jr., national sales manager, Cowles Broadcasting Co.; C. E. Hooper, president, C. E. Hooper Inc.; Gene P. Loffler, program director, WNAX Yankton. facilities extending from coast-tocoast and from north to south. In 1946 the cable network will be extended south of Washington to Charlotte, N. C, and between Atlanta and Dallas. In 1947 the project will link Chicago and St. Louis and the southern route will be extended to Los Angeles. Plans call for construction of upwards of 1,500 miles of coaxial cable a year for the next few years. The coaxial cable is suitable for transmitting television signals or 480 simultaneous telephone messages. An experimental radio relay system is being built by the Bell System between New York and Boston. When the development is finished, the Bell System plans to use radio relay, coaxial cable or other means — whichever is most advantageous — to extend its television and telephone lines throughout the country. Faust Returns to WBBM As Assistant to Roberts NEWEST additions to WBBM, CBS Chicago station, include Dudley Faust as assistant to W. Donald Roberts,, western sales manager of CBS, and Tom Rooney, formerly with KMOX St. Louis, as WBBM promotion manager, replacing Jonathan Snow who resigned several weeks ago. Faust, discharged last week from Marine Corps, as a first lieutenant, went to WBBM in 1937 as salesman and in 1941 was transferred to CBS network sales. Bill Edwards, of CBS radio sales department, New York, will head the Chicago office of radio sales, instead of head of WBBM sales department as erroneously reported in Broadcasting, Nov. 12. Ernie Schomo is WBBM sales manager. TO ASSIST OWI employes who are not being transferred to the State Department International Informational organization, including a substantial group of press, motion picture and public relation specialists, the labor management committee of the Interim International Information Service has established a placement advisory service. Interested employers may contact the HIS personnel office at 250 West 5th St., New York. New Army Campaign U. S. ARMY has asked the Advertising Council, to aid in a campaign to maintain prestige of men in uniform. Newest Army assignment is entirely separate from paid advertising campaign to secure peacetime enlistments placed through N. W. Ayer & Son, Philadelphi; Agency, however, will serve as volunteer task force for Council's campaign in order to coordinate two programs. BROADCASTING • Broadcast Advertising