Broadcasting Telecasting (Oct-Dec 1957)

The Barrow Report an editorial SOME time will elapse before the full impact of the FCC staff Network Study Report is absorbed by all of the entities in television — and all are affected. It is a tough report, recommending for scrutiny by the FCC, Congress and even the Dept. of Justice, practically all of the network practices, real or imagined, that have figured in speculation over many months. The ponderous report — two years in the making — can be expected to bring volcanic eruptions from the old-line networks and many of the multiple owners. If implemented as written, which is highly unlikely, it will affect the operations of all stations and expose publicly the contractual relations of networks and stations, invading an area always regarded as beyond the regulatory domain. It would permit imposition of fines, and would make extremely difficult, if not almost impossible, the buying and selling of station properties. On the other hand, many stations, their representatives, non-network program syndicators, and all independent tv stations can be expected to applaud parts of the report. Even the networks might admit that it is not as extreme as they had expected, based on the kind of field investigations the Barrow staff had conducted. Actually, the study staff has not completed its work. There are no conclusions on programming and talent, a critical part of the overall study. Time ran out on the staff, which actually completed its field work last June 30 when its appropriation terminated. Since then the courts have sustained its right to obtain information from program syndicators, and this phase presumably will be completed by the new Office of Network Study established in the FCC's Broadcast Bureau. It should be remembered that the staff report (see pages 100 through 106 for full text of its recommendations and conclu sions) is preliminary. It was prepared for the FCC's Network Committee of three commissioners. Definitive action is unlikely for many months, since rule-making hearings would be entailed in the normal procedure, and these would come only after the Network Committee and then the FCC itself will have acted. But that does not mean the report will vegetate until the FCC acts. Copies, by request, have been supplied the committees of Congress dealing with communications legislation. The recommendation that networks be licensed, for example, is one that will be embraced by Sen. Bricker (R-Ohio) who has introduced bills to that end at the last two sessions. Rep. Celler (D-N. Y.) can be expected to pick up the Barrow ball to implement his pet projects. There have been no significant actions involving the network-affiliate relationships since 1941 and those chainmonopoly regulations were written in the heyday of radio and before television became a factor. Because of the tumult on Capitol Hill, a study had to be made. The Barrow report, involving an expenditure of $221,000, is the result. It is an ex-parte report. Because of the mandate under which the study group functioned, it could not possibly have come in with a clean bill. We think many of its recommendations are extreme and that some veer dangerously close to public utility controls. Ignored in the recommendations but woven into the narrative are comments that envisage program controls and a return to the "Blue Book" philosophy of back-door censorship. Other sections of the report are similarly loaded with time bombs. The sober, restrained, legal approach is deceiving. It is perhaps best appraised as a firm and not wholly unexpected first step. It cannot be taken lightly. bers of tv sets and homes have doubled from 1952 to 1956; the percent of tv saturation has almost doubled; broadcast revenues have almost tripled, and broadcast income (after federal income tax) has tripled. Network advertising, the document reported, accounts for 45% of time sales and half of total tv advertising expenditures for time and programs. There were around 350 network advertisers in 1956, the report said, with the top 50 network advertisers purchasing almost 75% of network gross time billings in 1956. TvB reported 4,400 advertisers bought national spot in 1956, the report stated. The top 50 national spot advertisers bought over 45% of the gross time billings in this category, the report noted. Thus, it added, since some advertisers are in the top 50 in both groups, fewer than 100 advertisers order the major share of network and national spot advertising. The report referred to the Celler Committee report which held that 15 leading agencies accounted in 1950 for close to 50% of all tv advertising billings. This is what the staff found to be the principal functions of a network: the sale of time or facilities of affiliated stations to a network advertiser; the production or supply of a comprehensive program service to stations, including both commercial and sustaining programs; providing the means of interconnecting affiliates via AT&T facilities. Networking, the report observed, was the "catalyst" which brought about wide public acceptance of the new tv medium. The staff referred to seven networks — ABC, CBS, NBC; the defunct DuMont Television Network; National Telefilm Assoc. (NTA); Sports Network and Program Service Inc. NTA is a film network; Sports Network provides regional sports coverage, and Program Service Inc. is an organization started by Sylvester L. (Pat) Weaver Jr. and designed to deliver live programming to independent stations. The report described the networks' station ownership, basic or primary affiliation list, secondary or optional affiliations, general details of affiliation contracts and facilities contracts (with advertisers). The three national networks, it was stated, have over $40 million invested in tangible broadcast properties, with total assets as of Dec. 31, 1955, of about $160 million. Both CBS and NBC have been "highly profitable" in recent years, the staff reported, while ABC within the past two years has broken even or made a slight profit. A similar description of tv stations is also included in this section of the report. Contained here was the finding that the average tv station programs for 109 hours a week, or 5,600 hours annually. The entire output of theatrical film from Hollywood, the staff found, would fill less than one-tenth of the average station's time. It was also noted that the stations rely on outside sources (networks, film syndicators, etc.) for more than four-fifths of the hours of programming they place on the air. Limiting local programming efforts by a station is the costliness of tv programming, the report observed. At the middle of 1957, there were 475 commercial stations operating, the staff stated. Station construction ranged from $250,000 to over $1 million in large markets. An "essential" requirement for profitable operation is a network affiliation, the staff emphasized. Most profitable have been the 100 pre-freeze stations in large cities and established before 1952. "Under normal circumstances such high profit would attract substantial new entry . . . [but this is] effectively limited by the insufficiency of the 12 vhf channels and the difficulties experienced in uhf operation." The report also delineated the operation and place of independent package producers, film syndicators (syndication film is a "staple" of tv, the staff noted), theatrical film, station representatives (responsible for all spot business which a station receives, except that from its own immediate area brought in by local salesmen), the primacy of "adjacencies" and what is meant by participations. The report stated there were over 30 station representative firms, handling from one to 39 stations. CBS and NBC also handle station representation for their owned stations and for some of their affiliates. In concluding this section, the staff noted that there were fewer than two dozen affiliated stations not interconnected; that AT&T has more than $200 million invested in program transmission facilities and that in 1956 the three national networks paid about $36 million for this tv service. chapter 3 Performance in the Public Interest Echoes of the FCC's ill-fated 1946 Blue Book attitude on programming are heard in the third chapter of the network study — with the bold recommendation that the Broadcasting • Telecasting October 7, 1957 • Page 35