Broadcasting Telecasting (Oct - Dec 1951)

E Vol. 41, No. 16 WASHINGTON, D. C, OCTOBER 15, 1951 $7.00 A YEAR— 25c A COPY WHAT HAPPENS TO MBS? c° ^ ^ wo* ^ By RUFUS CRATER A MOVE toward unification of the ownership of Mutual Broadcasting System, raising the prospect of potentially far-reaching effects upon the network's position in both radio and TV, came suddenly last week with announcement of plans for merger of the radio and TV properties of General Tire & Rubber Co. and those of New York's R. H. Macy & Co. The new company, with General Tire owning "a substantial majority" of the stock, would have approximately 587c interest in Mutual. It would also own and operate the owned stations of Don Lee and Yankee networks, currently owned by General Tire, as well as WORAM-FM-TV owned by the Macy company through its subsidiary. General Teleradio Inc., and would operate the Don Lee and Yankee regional networks. Long-range effects and possible changes which might result with Mutual under the control of a single entity were not mentioned except for a short assertion of belief that Mutual "would be further strengthened and be able to render great public service." But there was immediate speculation that in the long run the effects might be sweeping, perhaps extending to conversion of the network to "old line" standard type of network operation, and that it may herald Mutual's entry into TV networking on a major scale. O'Neil Would Head With General Tire holding substantial controlling interests in the new company, Thomas F. O'Neil, vice president of General Tire and president of its Thomas S. Lee Enterprises Inc. (Yankee and Don Lee), would head the new organization. He already is board chairman of Mutual. Details of the merger plan were not disclosed — have not, in fact, been finally set, pending final determinations of values and inventories. But it is implicit in the transaction that General Tire will hold more than 75% of the stock of the merged companies. It was thought probable that in addition to a minority stock interest in the new company, Macy's would also receive cash or like consideration. New firm's name is not set. Spokesmen for the negotiators said they hoped to have final details worked out in time to file for the necessary FCC approval in less than 60 days. Mr. O'Neil told Broadcasting • Telecasting that no changes in Mutual operation are planned at present. Mutual's TV plans also are "status quo," he said. The merger itself, he made clear, does not involve Mutual but only the respective radio and television properties of the two companies. This did little, however, to still industry speculation as to the ultimate results. Assuming FCC approval of the merger, it was pointed out, the unified Mutual ownership will control three TV stations — Don Lee's KHJ-TV Los Angeles, Yankee's WNAC-TV Boston, and Macy's WOR-TV— and may have available WGN-TV Chicago via the 19.3% interest in Mutual held by the Chicago Tribune, owner of the WGN properties. With four TV outlets, Mutual would be only one short of the FCCset maximum held by NBC and ABC, and even with only three would be ahead of CBS-TV, which currently owns two outright and has a 45% non-voting interest in a third. (CBS-TV also has bought WBKB-TV Chicago, though this acquisition currently awaits FCC approval as a corollary to the proposed merger of ABC and United Paramount Theatres.) General Tire Holds 38.6% The new General Tire-Macy company's stock control of Mutual would derive from General Tire's present 38.6% interest (19.3 % via Yankee and 19.3 r\ via Don Lee) and the Macy 19.3 % holdings. A provision of Mutual's by-laws prohibits any single entity from voting more than 30%, but authorities appeared confident that this prohibition could be removed, perhaps by several methods, through votes of controlling stockholders. Announcement of the merger plan was issued Thursday by Mr. O'Neil and Jack I. Straus, president of Macy and chairman of General Teleradio (WOR-AM-FMTV). Due to FCC's policy limiting multiple ownership in AM to seven stations, addition of WOR would require General Tire to dispose of one of the seven AM outlets it currently owns. The one designated for sale is WICC Bridgeport, Conn., in the Yankee group. Thus, Messrs. O'Neil and Straus said "the ultimate purpose [of the merger] is to vest in one operating company the following radio and television properties : "Radio stations WOR New York, WNAC Boston, WEAN Providence, WONS Hartford, KHJ Los Angeles, KFRC San Francisco, and KGB San Diego. "Television stations WOR-TV New York, WNAC-TV Boston, and KHJ-TV Los Angeles, and the Yankee and Don Lee regional radio networks." The announcement said "no change in present operations or personnel of the constituent com(Continued on page 38) NBC PLAN REACTION A FEW RUMBLINGS were audible in the background, but for the most part, quiet prevailed last wreek as all elements of the radio broadcast field studied the far-reaching NBC blueprint which may affect their operating policies and their futures [B • T, Oct. 8]. Some early reverberations suggested it may have been the calm that precedes a storm. Industry officials almost unanimously pleaded for more time to study the NBC plan before commenting publicly and directly, but the week saw these developments in the wake of itse release: # The plan was slated for scrutiny in an NBC affiliates meeting called for Thursday in Chicago — a meeting to which NBC officials were not invited. That some complaints would be aired at this meeting was considered inevitable in view of the vehement opposition already expressed by some affiliates (see below). # The National Assn. of Radio and Television Station Representatives called a membership session for today (Monday) to explore the implications of the plan. 9 ABC, without referring specifically to the NBC blueprint, circulated a letter to advertisers and agencies noting that ABC has had "flexibility" for some time and inviting suggestions as to new ways it may serve advertisers. With a few exceptions, NBC Radio affiliates were reluctant to comment at all. They have not been advised what their individual situations are with respect to proposed adjustments in their respective network rates — one of the most provocative features of the overall plan. Double Response Those who devised the plan — affiliate representatives and network officials — conceded that stations for which a downward rate adjustment is indicated undoubtedly will set up a protest, "just as those which get boosts will applaud." But they were equally confident that in the long run the principles employed in the rate plan will be accepted as realistic, and that the overall blueprint will be welcomed as a realistic approach ROADCASTING • Telecastin; May Stir Storm to radio's present-day problems. NBC officials said the reaction they have received thus far from affiliates has been "very good." Advertisers and agencies also "showed great interest" in the new policy which henceforth will permit them to designate which stations they use, rather than force purchase of "must buy" stations. Agencies and advertisers already have been notified of this change and it is now in effect, though no new sales have been made. This new policy could not be expected to set well, it was felt, with some of the 29 "must buy" affiliates. The same would be true of those who lose rank in another feature of the blueprint — reclassification of affiliates. For instance, three of the 29 stations formerly classified as "basic," which were also must buys, will not be in the group — 40 to 50 — which will be designated as "primary." But NBC Executive Vice President Charles R. Denny, in announcing the new plan, emphasized (Continued on page 84) October 15, 1951 • Page 23