Broadcasting (July - Sep 1950)

ANA's Rate Putsch (Continued from page 19) 9 million TV homes by January 1951 we should be prepared to face losses in the m.agnitude of 22% or more in the number of homes using radio during prime evening hours, as compared with 1949. "B. Actually the problem is a series of local situations, each of a different magnitude at the moment and each growing more acute as more TV sets are installed. Consequently, the need for radio rate adjustments must be approached on a local basis in order to be equitable for both the network advertiser and the spot advertiser, for both the indi-stations and entire networks. numbers, not percentages," the report said. Even taking into account the increase in number of total radio homes, Nielsen figures show that fewer homes are being reached by these same programs, the report pointed out. "Consequently, between MarchApril 1949 and March-April 1950 there were alarming increases in average radio time cost per thousand homes reached — 21% in the case of the 19 CBS programs, 18% in the case of the 16 NBC programs," the report said. Despite a gain of 3.6% in the estimated total number of homes equipped with radio, Nielsen data for March 1949 and March 1950 "shows fewer homes using radio, except in the morning hours," the HE COULDN'T have caught more at the golf links. Jerome B. Gray, senior partner. Gray & Rogers, Philadelphia advertising agency, registers happiness and surprise as he receives more than 100 of the pellets — one golf ball from each staff member — as a birthday tribute. Mr. Gray plays in the 70's. must face the prospect of giving up radio or getting relief in the form of rate reductions," the report said. "At that same point radio networks will have to face the prospect of a growing ratio of costly sustaining time or probably less costly adjustment of rates to re-establish and preserve affordable time costs for advertisers. "Your steering committee believes that the time for rate readjustments by the radio networks is already here and that further adjustments will be required from time to time in the future until the relationship between radio and television audiences stabilizes." Turning to what it described as the "local problem," the report said: "While the problem of declining radio time values is national in total, it really is the sum of a number of local situations each of a different character and magnitude. And each situation will differ from itself with the passage of time, thus requiring periodic review and recalculation as TV continues to build up its encroachment on radio listening." Cites 60 Markets Television's adverse effect on radio listening occurs currently in only 60 city or market areas, the report said. "It is these — not in the hundreds of other station areas without TV — where radio values are being destroyed and the consequent need for rate adjustment exists. "It would seem fair that only the stations involved to an important degree should be the ones from which rate adjustments should be secured by their networks. Furthermore, the user of spot radio must be considered. He should be entitled to an equitable rate in each individual market. "Such adjustment on a local basis should be of vital interest to each station, since it must be able to sell spot time on an equitable basis or face the prospect of being eliminated by spot advertisers who can no longer consider it worth the price in terms ' of delivered audience." The report cited TV City Hooperatings showing TV share of total broadcast audiences in television markets as an example of "the extent and rapidity with which TV is taking over the total evening broadcast audience (radio plus TV) city by city." The committee proposed a method of rate adjustments by radio stations in TV markets "based on simple arithmetic growth of television homes." The arithmetic formula assumes that each new TV installation signifies the virtual elimination of one more home from the total of actual or potential radio listening during the evening broadcast hours. "There still is, of course, some slight degree of evening radio listening in TV homes," the report said. "Therefore, any calculation must be subject to whatever value one wishes to place on this vestigial radio listening in TV homes. In the calculations that follow, it is valued at zero." Method Explained The explanation of the method of readjusting radio costs was: "For the NBC and CBS networks we have listed every television city wherein the network has an affiliate. We have also shown the number of radio homes covered by the AM stations in each of those cities. These coverage figures are the result of a questionnaire sent to each of the stations concerned. In those instances where stations did not answer the questionnaire, we used the BMB nighttime audience figures based on listening one or more times per week. Where no BMB figures were available we used our own estimates based on the station's power and frequency. "We have also shown for each city the number of television homes within the 40-mile area as of Jan. 1, 1951. We used Jan. 1, 1951, as being the midpoint of the forthcoming broadcast year. The number of TV homes will actually be somewhat fewer in September and greater to an equal degree next June. "We assume that each television home was previously a radio home, but that after acquiring a TV set, reduced its (evening) radio listening to zero. Then the radio homes claimed by each station should be reduced by the ratio of TV homes to claimed homes. ". . . In some instances TV coverage areas are greater than AM coverage areas. In such cases, we have limited the percent of TV to; radio ratio to the percent of TV ownership within the 40-mile area. We have rounded off these percentage figures to the next lowest h% for simplicity's sake and have reduced the station's nighttime hourly rate by this percentage. When the gross night hourly cost of AM stations in television cities is (Continued on page 32) "C. A reasonable mathematical basis for recalculating radio time values to the advertiser in the light of local television development indicates that reductions in value for some individual stations would run as high as 50% and 55% of their present evening rates; and that the composite of individual station adjustments would work out to 14.9% for the full CBS network and (purely a coincidence) 14.9% for the full NBC network." Note of Thanks The report itself opened with a note of thanks to A. C. Nielsen Co. which "has generously made available to the ANA for this study certain of its copyrighted data and has offered us its help and counsel on a complimentary basis despite the fact that only a fraction of the ANA members using radio and/or TV are subscribers who support the National Nielsen Radio Index and the National Nielsen Television Index." Gratitude was also expressed to C. E. Hooper Inc. which "has been very liberal in providing copyrighted data from TV City Hooperatings and other Hooper services to facilitate evaluation of the situations being created in the local broadcast audiences through the advent of TV." The note of thanks added that "Mr. Hooper also has been generous in making his services available to your Radio-TV Steering Committee as a dollar-a-year consultant." The report drew upon Nielsen average audience figures to show that CBS and NBC evening programs occupying the same time periods without change during the compared years had experienced "significant declines in average audience ratings" in January-February 1950 as contrasted with January-February 1949. Also basing its remarks on Nielsen average audience figures, the ANA committee pointed out there had been a considerable decline In percent of total homes using radio. "In the face of these percentage audience losses, we often hear the proposition that there are more radio homes and radio sets, and that true values are expressed in report said. "Between 6 and 11 p.m. the total number of homes using radio was off 10.5%, but in premium 8-11 p.m. time the drop was 12.7%." "What's happening to the nighttime radio audience?" the report asked. "Is the radio audience just drying up, or is it being converted from radio to television?" Nielsen radio and television figures show a "severe decline in time spent listening to radio" in television homes. "Prior to the installation of TV," the report said, "377 out of 1,000 radio homes can be expected to be using radio, at the average minute, between 7 and 11 p.m. — and each sponsor can expect his share of this potential audience. "However, with television installed in each of these 1,000 homes, the potential for a radio program between 7 and 11 p.m. will be only 65 homes (instead of 377) or only 17% as many. Evening Loss "Thus it may be said that, based on indications to date, each radio home that has installed TV has lost 83 9c' of its evening potential for the radio advertiser." Acknowledging that these figures may not hold true in the future, the ANA committee said that for the time being "it is reasonable to take the position that each new TV installation signifies the virtual elimination of one more home from the total of actual or potential radio listening during evening broadcast hours." Noting that in March 1950 the total number of homes using radio during prime evening time was 12.7% less than it had been a year earlier, the committee said that as of April 1, 1950, NBC estimated there were 5,092,000 TV homes, or 12.5% of total radio homes. "By January 1951, we can expect about 9 million or more TV homes • — 22% or more of today's total radio homes," the report said. "Thus we should be prepared to face losses in the magnitude of 22% or more in the number of homes using radio during prime evening hours by January 1951 compared with 1949." The committee's conclusion at this stage of its report was that "time costs must come down." "At some point most advertisers Pago 30 • July 31, 1950 BROADCASTING • Telecasting