Broadcasting Telecasting (Apr-Jun 1957)

MANUFACTURING RCA QUARTER SALES SET RECORD • $295.8 million revenue 8% over 1956 period — Sarnoff • He forecasts decade of progress at stockholders meet RCA and its management team received an overwhelming vote of confidence Tuesday from more than 1,000 shareholders (representing a total of 14.8 million voted shares) at the company's 38th annual stockholder meeting at NBC headquarters in New York. Though there was no dearth of comment from "minority stockholders." The meeting was one of the most placid in post-war RCA history. Forecasting that "within the next ten years, RCA will equal or surpass the great progress it has made during the past decade," Board Chairman Brig. Gen. David Sarnoff reported an all-time record high of $295.8 million sales for the first quarter of 1957 — representing an increase of $20.9 million or 8% over the first three months of 1956. Gen. Sarnoff also told of other record strides and achievements in all fields of RCA endeavor: broadcasting, electronic computers, radar, government orders, phonograph and hard goods manufacture, research and development. In his annual statement, he alluded to last year's $1.1 billion business volume, noted that RCA had finally broken into the ranks of the select few companies doing over a billion dollars worth of business annually and reminded stockholders that share earnings "more than quadrupled" during the past 10 years. All in all, nearly everyone exuded confidence and buoyant optimism. Gen Sarnoff lauded RCA's new president, John L. Burns, as a man of high integrity and a "longstanding member of the RCA family." The United Shareholders of America presented the general with a suitably inscribed scroll, praised his "genius" and "leadership," and Mr. Burns declared that so far as he was concerned, the electronics industry— particularly RCA's share — is only on the threshold" of "big advances." The majority of the stockholders present backed the Messrs. Sarnoff, Burns, et al., when they supported an RCA-conceived proposal for a new stock option plan, 11.3 million shares against 498,083 shares. And they killed a proposal that would have restricted yearly compensation of RCA executive officers to $200,000 (or not more than 100% of an officer's base pay, whichever would be lower). While lamenting a low profit margin on RCA tv receiver sales. Gen. Sarnoff noted that "there is nothing wrong with the television industry today that cannot be cured by color." He found support for this statement from song publisher and talent agent Barney Young, although for different reasons. Charged Mr. Young: NBC is a Jim Crow network. The one-share stockholder explained that by allegedly refusing to hire Negro talent on a permanent basis, NBC hasn't "yet reached the state of segregation because there's nothing to segregate," ergo, it isn't ready to implement "integration" as it claims it's doing. After the demand to know where the RCA board "stood on this issue," Robert W. Sarnoff, the network's president, took the floor and replied. NBC, he said, picks its programs and performers on the basis of performance, not on race, color or creed. Though the network champions "integration without identification," e.g., starring Negro soprano Leontyne Price in NBC Opera Theatre's version of Tosca, Mr. Sarnoff continued, "We do not argue for preference . . . but for quality." Furthermore, he said, "the existence of all-colored shows depend primarily on their quality and sales prospects," adding, "many Negroes aren't in sympathy with all-colored shows." (Mr. Young, currently engaged with songwriter Gloria Parker in an anti-rock 'n roll campaign designed to force the three networks to divest themselves of interest in Broadcast Music Inc., said later he manages several Negro singers and actors and that he "isn't through yet.") RCA's advertising program also came up for discussion during the course of the two rise from within the ranks, and why offer him a 10-year contract? It was countered when Gen. Sarnoff claimed that as senior partner in Booz, Allen & Hamilton, Mr. Burns — being "thoroughly familiar with RCA administration and policy" — was "most qualified" to head the company and that the firm had to make as lucrative an offer as possible to persuade the management consultant to head RCA. Gen. Sarnoff also implied that under the stewardship of "such a fine group of men" as his, RCA could not be "a one-man organization." Though there was a flurry of verbal exchanges concerning the makeup of the board, the real fireworks did not come until after the meeting had adjourned. At that time Miss Parker cried that the general had glossed over that part of the agenda calling for "new business," thus cheating her out of making her anti-BMI proposal (also made at last month's CBS meeting). She berated the company's chairman faceto-face in full hearing of the assembly. The self-described "88-pound firebrand" yelled at reporters to take note of the "Sarnoff dictatorship." They failed to do so. So did the general, who brushed her off with a public "Darling, you've got lots of sex appeal" and then left the hall. RCA'S FIRST QUARTER STANDING 1957 Products and services sold $295,773,000 Cost of products and services sold and other operating costs 270,232,000 Profit before federal taxes on income 25,541,000 Federal taxes on income 12,731,000 NET PROFIT for quarter 12,810,000 Preferred dividend 788,000 Balance for common stock 12,022,000 Earnings per share on common stock 0.87 1956 $274,848,000 249,453,000 25,395,000 12,668,000 12,727,000 788,000 1 1,939,000 0.85 hour meeting. In reply to a stockholder demand. Gen. Sarnoff pegged RCA's total 1956 advertising budget at $35.2 million — 3.1% of its total earnings — and compared it to 1 955's ad budget of $30.3 million or 2.9% of the earnings that year. He referred another question, this one an allegation that an RCA franchiser had engaged in "nearfraudulent" advertising, to Robert L. Werner, RCA vice president and general attorney, who promptly disclaimed any corporate responsibility for "dealer advertising." Another stockholder query from the floor — namely that NBC's Sarnoff ought to have a regular spot during future annual meetings to answer questions regarding network operations— was promised "serious consideration" as was the demand that inter-studio tv be used "to bring the faces of management to the back of the room." Laughter rippled through Studio 8H as another shareholder wanted to know why Robert Sarnoff wasn't represented on the board. His father replied: "I might be prejudiced . . . but he might make it someday." Earlier in the meeting there was considerable discussion between the general and various shareholders concerning the appointment of Mr. Burns. The principal argument seemed to be: why pick a man who did not New Philco Firm in London SEMICONDUCTORS Ltd., London, has been formed by Philco Corp., Philadelphia, and Plessey Co.. London, to make transistors and other semiconductors in England. The Plessey Co., which has been called the largest electric component manufacturer in the United Kingdom, will hold 51% of the stock and Philco 49%. Philco Corp. and Philco (Overseas) Ltd. will furnish equipment, and the new firm will be licensed under Philco patents. To a joint board of directors Philco will name James M. Skinner Jr., president; Leslie J. Woods, executive vice president in charge of engineering, and Peter Marriage, member of the London law firm of Slaughter & May. The Plessey Co. will name Allen G. Clark, J. F. Mallabar and A. E. Underwood. IDEA to Sell Fm Converter AN fm converter for use on tv sets [B»T, April 8] will be sold in the U. S. by IDEA, 7900 Pendleton Pike, Indianapolis, Ind., according to the Canadian distributor, A. T. Armstrong Ltd., Toronto, Ont. The converter is being built by IDEA for the Canadian company and CHFI-FM Toronto, and is selling in Canada for $29.95. Page 98 • May 13, 1957 Broadcasting • Telecasting