Broadcasting Telecasting (Oct-Dec 1957)

BARROW REPORT continued Commission tighten its license renewal requirements to "invite" more applications from newcomers for existing facilities. "The question might therefore be posed," this section observed, "as to whether more rigorous renewal and transfer procedures, providing for comparative hearings, would not maintain a viable process of continuing licensee selection by 'weeding out' marginal performers and replacing them with more substantial licensees." Newcomers now are discouraged from bidding against existing licensees because in the few cases where it has been tried the Commission has favored the existing broadcaster, the report read. However, in order to upgrade programming — which the Commission has every right to consider, according to this chapter — the suggestion was made that the FCC set more rigorous programming requirements, thus enlarging the number of questionable licensees — and inviting more applications for these facilities from others. To prevent multiple owners from taking advantage of this situation, greater influence should be placed on the diversification of ownership issue, it was suggested. Since the vhf spectrum "for all practical purposes" is now foreclosed to newcomers (except through "the transfer route"), this would be one way of getting newcom ers into tv, the report implied. There is no doubt expressed that the Commission not only has the right to delve into programming, but also the duty. The Commission has, the report noted, disavowed any intention to censor programming, but has never made any bones about its right to look into overall programming. But, the report observed, specific Commission actions and statements indicate that "intervention into the programming area has been more extensive in scope." Not only has the Commission given weight in comparative cases to certain formats of programming, or types of programming, but it has specifically objected to spe BACKGROUND TO BARROW REPORT The FCC's network study — the first since the 1938 chain broadcasting inquiry — was instituted largely through powerful members of Congress, particularly in the Senate. Leading members of the Senate Interstate and Foreign Commerce Committee gave the FCC virtual orders to do a thorough report on network operations and practices. This mandate followed a 1954 inquiry into the uhf-vhf problem, headed by Sen. Charles E. Potter (R-Mich.). The Potter investigation was followed by special reports written by Harry M. Plotkin, former FCC assistant general counsel, and by Robert F. Jones, former FCC commissioner and former Ohio congressman. Both had been named as special counsel to the Senate committee for this purpose. Mr. Plotkin called for a general overhaul of network-station relations. He recommended the abolition of option time, exclusive affiliations and network spot sales organizations. He urged a study of AT&T line charges, multiple ownership limitations and the common ownership of radio and tv networks. Mr. Plotkin was selected in 1954 as Democratic counsel by former Sen. Edwin C. Johnson (D-Colo.), then ranking committee Democrat. Mr. Jones called for a further study of the entire tv question. He questioned whether the networks maintained a standard affiliation policy. He claimed his inquiry was frustrated by lack of financial information from the networks. Mr. Jones was named by Sen. John Bricker (R-Ohio), when he was chairman of the Senate committee. Both Sens. Magnuson and Bricker supported the reports. Sen. Bricker is the author of a bill (S-376) that would require the FCC to license networks. At the present time the FCC's jurisdiction extends only to .station licensees, but indirectly, because the networks own stations, FCC regulation does have impact on networks. Sen. Bricker in April 1956 issued a report on what he termed two-network domination of television in which he used hitherto confidential financial data. Its main premise was the purported exorbitant returns CBS and NBC have garnered from invested capital. Sen. Bricker also has suggested that station ownership by one person or company be limited to coverage of not more than 25% of the U. S. population. The last network investigation was undertaken by the FCC in 1938. It culminated in the 1943 Chain Broadcasting Rules. The right of the Commission to issue these regulations was upheld by the Supreme Court. For a number of years prior to 1955, the FCC asked for funds to conduct a network study. These requests never got past the Budget Bureau. In June of 1955, however, with the help of the Senate leaders, $80,000 was appropriated for the 1956 fiscal year to initiate such a study. The FCC had asked for $100,000. For fiscal 1957, Congress appropriated an additional $141,000 for this purpose. There was no such appropriation in the 1958 budget. The study was scheduled to be terminated last June 30 when the fiscal year 1957 ended. By FCC action, however, the study staff was continued to today, normal agency funds being diverted to this purpose. In the fall of 1955, a four-man committee of commissioners was appointed by George C. McConnaughey, then chairman, consisting of himself and Comrs. John C. Doerfer, Rosel H. Hyde and Robert T. Bartley. In September 1955, Dean Roscoe L. Barrow of the law school of the U. of Cincinnati was named director of the study staff (for biographies of staff see page 104). In November 1955 the FCC committee issued its Order No. 1 (see page 99). Beginning early in 1956, the staff swung into action. Its first moves were orientation meetings with networks in New York. Meetings were also held with other components of the broadcast industry — Station Representatives Assn., American Assn. of Advertising Agencies, Television Bureau of Advertising, the uhf -front Committee on Competitive Tv, AT&T, program producers, network affiliates' groups and non-network, independent station groups. The staff also reported plans to confer with viewing groups such as National Assn. of Parents & Teachers, American Assn. of University Women, League of Women Voters, National Audi ence Board and National Assn. for Better Radio and Tv. In the spring of 1956, the staff began sending out questionnaires. The first, in May, went to networks. It was a 12-part interrogation, asking dollars and cents answers to a series of inquiries ranging from networks' compensation to affiliates to payments to networks from advertisers. A similar Questionnaire went to affiliates that June. Other questionnaires were sent to advertising agencies, station representatives and program packagers. Four film producers balked at submitting what they considered confidential financial information and agreed only after the Commission issued subpoenas and a court ruled that the subpoenas were legal. This litigation took place only this spring and summer. One of the highlights of the staff's meetings came in March 1956 when Richard A. Moore, KTTV (TV) Los Angeles general manager, submitted a significant legal brief charging that the networks' option time practices violate the antitrust laws. The same charges had been made at a Senate Commerce Committee investigation of the whole television broadcasting industry. Mr. Moore also charged that stations' exclusivity provisions in film contracts is in restraint of trade. Late in 1956 and early in 1957, the Commission had before it several proposals to revise the multiple ownership rules and possibly to abolish them. These limit the ownership of radio and tv stations to not more than seven by any one person or company. In tv, the limitation further provides that no more than five of the seven may be uhfs. Dean Barrow in January of this year submitted an interim report on this subject which urged that the Commission withhold making a decision until the full staff report had been submitted. In this document, Dean Barrow traced recent trends in station acquisitions, including those by large interests and plans reported by major film producers to acquire station ownership. He stressed that unless limitations are maintained — or even tightened — there would arise problems of undue concentration. Page 36 • October 7, 1957 Broadcasting Telecasting