Broadcasting Telecasting (Oct-Dec 1957)

BARROW REPORT continued justed the level of national spot rates of their owned and operated stations in order to influence the national spot rates of their affiliates." The report said that rate-making among the networks seemed also to have antitrust implications. The Network Study Staff found no evidence of collusion between CBS and NBC in rate setting but discovered that ABC, "which competes with CBS and NBC by setting lower rates for its affiliated stations," had sometimes consulted with the other networks before setting rates for its own affiliates. "The other networks have cooperated in providing the desired information," the report said. "This practice among the three networks is not compatible with the Commission's objective of preserving free competition and may have antitrust implications." The staff report also moved into the realm of programming — to the extent of urging that the FCC look more closely at program performance when considering license applications and renewals. "It is only through a consideration of service or programming structure that the public interest concept can be given meaningful content," the report said. The staff recommended that the FCC weed out licensees with questionable programming records and replace them with "more substantial licensees." (See summary of chapter 3 below.) The report examined programming only in respect to the Commission's consideration of that subject in granting station permits. Although the staff amassed much information about network and film programming, it was unable to complete its work in that field. The staff has recommended that its programming explorations be completed. Some of the Barrow report proposals would require legislation; others could be put into effect by the FCC on its own. The report was submitted to the FCC's Network Study Committee composed of Chairman John C. Doerfer and Cmrs. Rosel H. Hyde and Robert T. Bartley. This committee will study the staff's recommendations, adopt, modify or reject them, and pass its own recommendations to the FCC as a whole. It will then be up to the Commission to decide whether it wishes to act. If it decides to invoke any of the proposals, it must begin rule-making proceedings, which will involve public hearings. Here, in greater detail, are the main proposals of the Barrow report as listed briefly above: • Regulation of networks: The report urged the FCC to ask Congress for authority to "apply the pertinent parts of its rules and regulations directly to networks." Before making the request of Congress, the Dept. of Justice should be asked for its views, the report said. Pending the passage of such legislation, the FCC ought to beef up its own chain broadcasting rules which apply to all stations, including those owned by networks, to conform with general recommendations of the Network Study Staff. Page 32 • October 7, 1957 • Prohibition of option time: The FCC ought to rule out option time but should not ration or otherwise limit the amount of programming that a station may accept from any source. "The language of the Commission rule should be phrased so as to preclude similar or more restrictive arrangements which might appear if option time is abolished." • Prohibition of must-buys: The FCC ought to rule out must-buy requirements based on minimum station lineups (like those in use at CBS and NBC). The ABC version of a minimum network purchase in terms of dollars would be permissable. • Elimination of networks from spot representation: The FCC ought to prohibit networks from representing stations other than their own. "A reasonable period of time, such as two years, should be allowed for the stations to transfer their representation to a non-network organization." • Imposition of controls over rate-making: New rules should be adopted or present rules expanded to prevent networks from influencing the non-network rates of BARROW PROPOSALS IN FULL TEXT SEE PAGE 100 affiliates or using network rate-setting to influence program clearances. Evidence of both practices has been discovered by the staff, and it should be submitted to the FCC for action under present rules. • Tightening of multiple ownership rules: "In the long run," said the report, "the Commission should seek through its regulation a pattern of ownership which approaches as closely as circumstances permit the objective of limiting station ownership to one station for each licensee." Meanwhile, the staff recommended the adoption of a rule "which establishes presumptions that a local applicant will serve the community interest better than an absentee licensee and that an applicant who owns no other station will be in a better position to service the local community than an applicant who is already licensed to serve one or more other communities. The FCC ought also to rule that the present limit of five vhf and two uhf stations per licensee be retained but that no more than three vhfs may be owned in the top 25 markets. The staff suggests three years as the time in which multiple owners now having more than three vhfs in the top 25 markets would have to sell off their extras. Networks, it is suggested, should find it more difficult than other multiple owners to expand to their full limits. If networks, having been forced to dispose of all station holdings but three in the top markets, should seek to re-fill their station portfolios through acquisitions in small markets, the staff report suggests a hard road. "The presumption against a network multiple owner or local ownership and diversity grounds should, in a comparative hearing context, be overriding unless it can be demonstrated that acqusition of the station or stations is essential to the financial welfare of the network and that financing from conventional capital sources is not available. • Requirement that affiliation contracts be made public: The FCC should rule that networks must file reports of all affiliation changes and the reasons for them, reports of all requests for affiliation and the disposition of them, including reasons, and statements of criteria governing affiliations and disaffiliations. The FCC itself should make public the affiliation contracts, including compensation information, which licensees are now required to file. "The possibility of arbitrary, discriminatory or restrictive action in such areas as affiliation, disaffiliation, rates and compensation can be substantially reduced if adequate publicity is given to network actions," the report said. "In this way, these industry practices will tend to be self-regulating, and bargaining power may be kept within reasonable bounds without further Commission action." • Giving FCC the power to levy fines: At present the only sanction that the FCC can apply against a licensee is the removal of his license, an extreme penalty. The Network Study Staff suggested that the FCC ask Congress to empower it to assess fines for violations of its rules. "Since the magnitude and importance of the rule infractions are likely to vary from case to case," the report said, "the Commission should be permitted some latitude, within prescribed limits, in relating the amount of each forfeiture to the nature of the infraction and the particular circumstances involved." • Extending network service: The FCC should "seek comments" on the proposal that networks be required to provide affiliated stations in markets not ordered by an advertiser a chance to carry the program with commercials deleted, "upon reasonable payment by the stations to the network and the advertiser." The staff also recommended a rule requiring networks to place programs where the advertiser chooses when affiliates fail to clear. Here is a chapter-by-chapter summary of the report: chapter l Introduction It is the impact of network practices on competition that is stressed as the goal of the network study. This point of view is in Broadcasting • Telecasting