Broadcasting Telecasting (Oct-Dec 1956)

GOVERNMENT SIX FIRMS ANSWER CHARGES BY FTC Six of nine manufacturers admit radio-tv promotion practices, but deny they are illegal. Issue of legality will affect status of similar plans. SIX manufacturing firms last week admitted they participated in area merchandising plans with network-owned radio-tv stations and food or drug chains. But they denied charges by the Federal Trade Commission that such practices violated provisions of the Robinson-Patman Act. Thus, the FTC was in position to act on its complaints strictly on the issue of legality. The six firms last week answering FTC charges brought in July [B«T, July 30] were Sunshine Biscuits Inc. (cookies, crackers), Groveton Paper Co. (paper napkins), Hudson Pulp & Paper Corp. (paper napkins, towels), P. Lorillard Co. (cigarettes), Piel Bros, (beer) and Sunkist Growers Inc. (fruit juices). They asked dismissal of the FTC complaint. Also answering, but denying it dealt directly with food and drug chains because it sells only to its distributors (bottlers) was Pepsi Cola Co. (soft drinks). Two other firms included in the charges, "UNCLE EDDIE" MEATH CELEBRATES HIS THIS MONTH ! He and his "MUSICAL CLOCK" have always been ON TOP IN ROCHESTER ! , v \ \\\ I , Share of Audience 43.7* AND LOOK AT THIS GROWING RATING RECORD: 1951 .... . . 4.5 % 1952 .... . . 5.4 % 1953 .... . . 6.6 % 1954 .... . . 6.9 % 1955 .... . . 7.4 % BUY WHERE THEY'RE LISTENING . . . ROCHESTER'S TOP-RATED STATION NEW YORK 5,000 WATTS Rtpresenlatives: EVERETTMcKINNEY, Inc. New York, Ch/cogo, LEE F. O'CONNELL CO., Los Ange/es, Son Fronci5co Coca-Cola Bottling Co. (soft drinks) and General Foods Corp., asked for and received extensions of time to Oct. 31 to answer the charges. All the answers had been due last Wednesday at the FTC. The FTC charges that these firms favor some of their chain store customers over competing independents and others in violation of Sec. 2 (d) of the Robinson-Patman Act, which provides that a manufacturer or wholesale distributor must not grant promotional or other allowances to some of its customers without making the same allowances available to competitors on a proportionately equal basis. The firms granted added allowances to the food and drug chains, the FTC has charged, by buying advertising time on specific network-owned radio or tv stations at regular station card rates, in return for which the station arranged for special displays of the manufacturer's product in all the stores of the chain. The chain stores agreed to the in-store displays in return for free advertising on the radio or tv station, the FTC said. Although the FTC complaints implicate only network-owned stations, the action is looked upon as a threat to merchandising concepts developed throughout the broadcast industry in recent years. If the FTC finds the practices illegal and orders them stopped, and if the agency is supported by the courts in any possible appeals, then the whole concept of merchandising-promotion aid by broadcast stations will have to be curtailed or discarded. CBS, not a respondent although involved in some of the complaints, has petitioned to intervene in the case, but two FTC hearing examiners have recommended against this petition on grounds the network's interest is too indirect. The six firms admitted they contracted for time with ABC, CBS or NBC radio or tv stations at regular station rates after the network stations "as added inducement," told the respective firms they would have their products specially displayed in the chain stores. But they denied that such agreements and time purchases constituted a benefit to some customers, while others did not receive such benefits on a proportionately equal basis, as charged by the FTC. They also denied that the network or its owned station had served as a "medium or intermediary" between the manufacturers and the food and drug chains alleged by the FTC to have received allowances not made available to competitors of the chains. They also denied FTC charges that their payments to the network stations included compensation or payment to the allegedly favored customers for promotional service and denied the payments for time were made to benefit s'any customer of the respondent." The FTC charges, citing dates back to 1952, involve the firms with these stations: Pepsi Cola: WABC-TV New York, WCBS New York, KMOX St. Louis, WRCA New York. Hudson Paper: WBKB (TV) Chicago, WCBS, WRCA. Sunshine Biscuits: WBKB, WRCA, Page 78 • October 29, 1956 Broadcasting Telecasting