Broadcasting Telecasting (Oct-Dec 1957)

NBC-TV, the study found most based on the sponsor not having distribution in certain markets, a historical association between network and advertiser or instances that involved lack of film rights in specific markets. ABC-TV did not indicate any instances in which the minimum dollar requirement was waived, according to the report. While the majority of agencies queried indicated no instances in which advertisers had been forced to buy specific markets that were not desired, there were reports of seven advertisers who had had such an experience — one of them on four different programs since Jan. 1, 1954. Must-buy practices have not had any effect on the cost of television, the report said, pointing out that if there were no such requirement, network time and programs would still be too high for the small advertiser. The network's ability to select the stations to be included in the basic list gives it "a substantial bargaining advantage" in its relationship with these stations, it was said. This presents an important issue of public interest, the report added, in that the network may be in a position to persuade stations to carry programs that the affiliates otherwise would not be disposed to carry. In connection with independent stations, the study group said the must-buy policy is not a significant restraint on the non-network outlet. The independent's difficulty in getting network programs arises not from must-buy practices but from the territorial exclusivity clauses conferred on affiliates by their network contracts, the report said, noting the stands of KTTV (TV) Los Angeles, an independent, and WTVR (TV) Richmond, a former NBC-TV affiliate, both of whom charged that network practices precluded their use of certain national advertiser programs. As to the network contention that a minimum purchase requirement was necessary to prevent "fragmentation" of its service, the study held this to be without basis in that the demand for full scale network service was great enough that networks did not have to sell partial lineups. Similarly, the study discounted the claim that must-buy was tied in with the necessity of covering fixed costs of network service in that the criteria for establishing must-buy requirements related primarily to advertiser demand and were not related to fixed cost considerations. "The principal reason that the networks have not abandoned the must-buy practice apparently lies in the bargaining leverage it gives them in relations with stations," the report said. In noting that the minimum dollar requirement avoids "abuses" arising in mustbuy practices, it was recommended that should the latter practices be modified, rather than abolished, that the FCC not KCRA-tv [CLEAR 1 SACRAMENTO, CALIFORNIA . . . the highest rated station in the West ! CHANNEL: Broadcasting • Telecasting undertake to regulate the particular minimum requirements. The report said there was no objection to the 100-station minimum requirement of NBC-TV during specified night hours in that specific stations are not designated and the requirement is waived in the case of programs under the network's Program Service Plan. It also is possible, the report said, that an exception would be considered to the minimum buy requirement in the case of multiweekly programs sold in small segments to a number of different advertisers. chapter io Network Practices: Network Representation of Stations in National Spot Sales In recommending that the FCC adopt a rule prohibiting networks from representing stations in national spot sales, other than the networks' owned and operated outlets, the study took hard slaps at CBS-TV and, to a lesser extent, NBC-TV. ABC-TV does not have a spot sales representation unit. The Barrow group disagreed that network operation and the spot sales activity could function independently. At the policy level, the two units under common management will be directed toward the overall interest of the company, the report contended. This works adversely in the setting of stations' national spot and network rates as well as stations' choice between national spot and network programming. In connection with the rates allegation, the Barrow group conceded that ready exchange of information itself doesn't affect competition to a significant degree, but said that two-way exchange of this type normally does not take place between the network and the independent station representative. The report said that "in the case of CBS, the cooperation between the two departments has taken the form of a 'campaign' to equalize national spot and network rates." It was further charged that CBS Spot Sales sacrificed potential or actual national spot business "by helping to set the national spot rates of the owned and affiliated stations at a level that would reduce competition between network and national spot sales." Labeling this contrary to the interest of the represented stations, the report declared: "This joint action of CBS Spot Sales and network divisions has restrained competition, and raises questions with respect to possible violations of the antitrust laws and the Commission's regulations." Another "but less important illustration" of cooperation between CBS Spot Sales and the network was cited in connection with "cut-in" charges, the study report said. Cutins are insertions in the commercial message of the network advertiser made, at sponsor request, by the local affiliate and enable the national advertiser to tie in his message for the local dealer. Some independent representatives protested this was spot business, subject to representative commission and chargeable at the station's spot announcement rate, the report said. The network took the position that only a production charge should be made since time was already sold to the na LIVE PUBLIC SERVICE Public service is best when local and "live? Houston clergy and civic leaders unanimously commend KTRK-TV for its leadership in fulfilling its public trust. For example, the only "live" coverage of the recent sensational impeachment hearing was on KTRK-TV turn to . and covered in entirety. pQge 1 03 9= KTRK-TV CHANNEL 13 HOUSTON October 7, 1957 • Page 97