Broadcasting (Oct - Dec 1950)

RCA, CBS (Continued from page 21) ry generally, I am interested in Hir reactions to the complaints ":ade by these broadcasters. When you can find the time, I onld appreciate your frank com.nents on the problem. With warm personal regards. arnoff Reply Thank you for your letter of ug. 17 in which you quote from letter you have received from a roadcaster on the subject of the [forts of the Assn. of National Adertisers to obtain a reduction in )und broadcasting network rates. 1 July, ANA advised NBC that it ad prepared a study on the subject t network radio rates and invited TBC to attend a meeting on July S to discuss the study. Representtives of other networks were also ivited. Naturally, NBC declined ) attend a meeting at which rates ould be discussed with its cometitors. The other networks took 18 same position and the meeting J as not held. On July 28, the ANA ;nt to NBC a copy of the study hich was to have been the subject I discussion at the meeting. I !el sure you have received a copy om the broadcasters who have ritten you, since I understand the udy was Avidely circulated to roadcasters. The facts do not justify a reducon in network rates. An adverser today is paying the same netork radio rates he paid in 1940, Ithough the number of radio famies has increased from 28 million 40 million, and the number of its from 45 million to 86 million, nder normal circumstances a rate icrease for network radio would ,ve been clearly justified by this .rger circulation alone, to say )thing of the increase in operatig costs. During this same period, Ivertising rates in competitive edia have gone up steadily. Withi the past month, for example, ite increases have been announced f many leading national maga ec. 27-30: Mid Centuary Conference of the Speech Assn. of America, Hotels Commodore and Roosevelt, New York. in. 19: NAB TV Convention, Hotel Stevens, Chicago. m. 23: Academy of Television Arts and Sciences annual dinner, Ambassador Hotel, Los Angeles, m. 26-27: South Carolina Broadcasters Assn., Columbia, S. C. an. 31-Feb. 2: NAB Board Meeting, Bellevue-Biltmore Hotel, Bellaire, Fla. leb. 16-17: First Annual Regional Television Seminar, WAAM (TV) Baltimore. ipril 11: Brand Names Day 1951, Hotel ; Commodore, New York, fpril 15-19: NAB Convention, Hotel Stevens, Chicago. .pril 20-21: Southwestern HIE Conference, Southern Methodist U.. Dallas. jiRO ADC ASTING • Telecasting zines including the Saturday Evening Post, the Ladies Home Journal and Time. Network radio today is the lowest in cost of all national advertising media and no reduction is called for. Television rates, on the other hand, have been substantially increased during the last two years as the number of sets has grown. While many television stations are in or nearly in the black, the television networks are still operating at substantial losses because it is the network, not the station, that pays most of the enormous new costs of television program production. These include greatly increased amounts for studios, special studio equipment, facilities for scenery and stage properties and inter-city connections. Television rates will have to be increased further if television network broadcasting is to operate on a sound and profitable basis. As you know from the discussions we have had since you assumed the Chairmanship of the Committee, I feel deeply that this is a public interest question of the greatest importance. The indispensable role which television is destined to play in public education and morale and civilian defense activities in the stressful times ahead, is a newly recognized factor which should cause all of us to give serious thought to this problem. That is one reason I suggested a National Radio Highway which would reduce inter-connection charges in my letter of July 26 to Sen. McFarland, a copy of which I sent you. There may be other ways in which the government can help, such as providing means for a sharing of the cost of public service network programs. I do not mean to imply that the independent broadcaster is less important than the networks. Indeed, I agree with your correspondent that he is the backbone of the broadcasting business. Any solution of broadcasting problems which did not fulfill his needs would be no solution at all. I am grateful for this opportunity you have given me to comment on the subject covered by your letter. As always, it is a pleasure and privilege to explore with you these questions which are of such importance to every citizen. With cordial personal regards. Stanton Reply In response to your letter of Aug. 17 regarding rumors of proposed reductions in AM broadcast advertising rates, I want to report that insofar as CBS is concerned, there is nothing to such rumors. Over the course of many months, we have been approached by a number of advertisers and advertising agencies requesting AM rate adjustments and the reason given in each instance has been the inroads of television. We have not acceded to any of these requests. In July, the Radio & Television Committee of the Assn. of National Advertisers formulated a report on Mr. Richards Richards Named ROBERT K. Richards, director of public aff'airs for the NAB, has been appointed NAB stafi" representative on the Broadcast Advisory Council by Justin Miller, president of NAB and BAC chairman. Next meeting of the council is slated for shortly after Jan. 1. Mr. Richards and Ralph W. Hardy, NAB government relations director, will formulate plans for the meeting. The council held its first meeting in Washington Dec. 14, when the 19 members met with President Truman and other government leaders to discuss radioTV's role in the nation's economy and the preparedness program [Broadcasting • Telecasting, Dec. 18]. the effect of television on AM listening habits and requested meetings with the nationwide networks to discuss the situation as it affected the values of AM advertising. (Copies of the ANA report and the letter inviting CBS to participate in a meeting with the ANA committee are enclosed.) We declined to attend the meeting and no meeting was held. As I am sure you are aware, CBS is almost entirely dependent upon its revenues from AM broadcasting as our television operations are still substantially in the red and our income from the manufacture of phonograph records is not significant to our overall picture. It would be foolhardy for us to do anything which might jeopardize or diminish the value of aural broadcasting. Our record indicates our determination to enhance and preserve AM broadcasting as the widest and most effective mass circulation advertising medium known to date. For example: (1) We have invested very heavily in AM programs, both in the acquisition of outstanding popular personalities such as Jack Benny, and in the far more numerous radio programs developed by CBS itself. This policy stems from our belief in the future of radio. CBS has invested more money in the development of programs than any other network. We have not pulled in our horns or sold AM short. (2) May 12 this year we held a clinic in New York City attended by the managers of our AM affiliates located in cities which had television stations for the express purpose of outlining program, sales and promotion technique which would enable those stations to compete most effectively with television in their own markets. I am enclosing a copy of the agenda of that meeting. It was the unanimous opinion of all who attended that it was one of the most effective meet ings we had ever held. Item 4 on this agenda, "What CBS is Doing to Sell Radio," featured a presentation, "Radio's Extra Profit Margin." A copy is enclosed. Fifteen hundred copies of this were made available to our affiliates, their sales representatives, or network advertisers and their agencies. (3) We have analyzed for clients the values of AM network broadcasting and have kept our affiliated stations informed. An example is the enclosed copy of a letter dated May 23, 1950, which I sent to all our affiliates and which enclosed an analysis made for an advertiser on May 12. From this you will see that our program ratings are up. The number of families reached is up and CBS enjoys the lowest cost per thousand of any network and the greatest margin of economy over any printed medium. (4) The result of our continuing all-out belief in aural broadcasting and the steps which we are constantly taking in order to enhance its values have, as you might expect, resulted in favorable circulation and sales pictures for us. Every month for the past 18 months, Columbia's nationwide AM audiences — averaged for day and night — have run 20% ahead of the second network. These ratings are based on the Nielsen Radio Index, the only nationwide measurement service subscribed to by all four networks. CBS' AM network is enjoying an increase of sales over 1949 of approximately 7% and it is the only AM network which is showing an increase over last year. I would be happy to give you any additional information which you may desire. I would like to emphasize that Columbia's growth and position of leadership has been possible only because of income from aural broadcasting. Without the income which flows from doing an outstanding job in that area, we would not have been able, for example, to make the efforts we have to bring color television to the public. We, at least, cannot afford to operate AM at a loss. AF EQUIPMENT $600 Million Earmarked NEARLY $600 million worth of electronics, communications and other major procurement equipment was earmarked for the U. S. Air Force last week in a supplemental defense funds bill reported out by the Senate Appropriations Committee for action by the upper chamber. The committee approved a sum of $583,900,000 for that equipment, as well as over $2 billion covering electronics-communications equipment and detection warning systems for aircraft and related procurement. The group also set aside $470,000 for "operation, maintenance and improvement" of the Army Dept.'s Alaska Communication System. December 25, 1950 • Page 85