Broadcasting Telecasting (Oct-Dec 1957)

FOR THE RECORD BARROW STUDY HOLDS UP 37 WAYS TO REVAMP NETWORKS' STRUCTURE Verbatim text of recommendations to the FCC. Main story page 31 Recommendations In formulating the general philosophy underlying its evaluation and recommendations in the various areas under study, the Network Study Staff has been guided by the several doctrines through which the Commission, in the course of its administration of the Federal Communications Act, has given substance to the "public interest, convenience, and necessity." The fundamental objective of Commission policy is the best possible service to the public. The implementation of this primary objective has been sought through the policies of: 1) promoting competition and preventing undue concentrations of economic control; 2) diversifying ownership and control of broadcast facilities, and 3) fortifying the independence of station licensees in order that they may exercise a high degree of discretion in providing a service consistent with the needs and desires of the community reached by their broadcasting. In implementing these objectives, the framework of certain physical and operational conditions existing in the industry must be recognized. These are: 1) that television channels are limited, and that, in all probability, the present vhf structure constitutes the major portion of available broadcast facilities, 2) that the television industry will continue to be supported by advertising revenue, and 3) that the interconnected network organization will continue to be an essential component of the tv broadcast system. The task becomes one, therefore, of adjusting the primary regulatory policy objectives to the limits imposed by these basic conditions in order to attain optimum performance in the public interest. The Commission's doctrines emphasize competition as the means through which the public interest in broadcasting can best be assured. The dominant theme of this report is the importance of achieving or maintaining the conditions necessary for effective competition in the television industry. To this end a number of recommendations are made for the removal of practices, principally on the part of networks, which restrain or otherwise interfere with the free play of competitive forces. The option time and must-buy practices, and the use of network rates, including those of networkowned stations, to influence national spot rates are examples of practices of this kind. Some of the proposals of the Network Study Staff with respect to the prohibition of competitive retraints are designed to promote competition among the existing networks and to increase the possibility of competition through the entry of new networks. Other proposals are designed to increase the effectiveness of competition between networking and the national spot "system" of telecasting. Since there are only three major national networks, with little prospect for a fourth in the near future, the principal thrust of policies aimed at providing more effective competition must be in this direction. Consistent with this basic reliance on the competitive process as the best means of safeguarding the public interest, the Network Study Staff has recommended that the Commission not become directly involved in reviewing, with the purpose of approving or disapproving, the detailed business decisions of the networks. The staff believes that such day-to-day judgments must be left to the forces of the market place, and that the role of the Commission should be confined, to the extent possible, to the prohibition of practices which restrain competition or are otherwise contrary to the public interest. Thus, the Network Study Staff has rejected such alternative recommendations as a rationing of the time of stations among the existing networks and other program suppliers, and Commission review of individual network decisions with respect to network rates, compensation arrangements, and affiliation or disaffiliation actions. It must be recognized, however, that even if all of the existing competitive restraints were removed, the bargaining positions of the various parties would remain disparate. Although networks and their affiliated stations have a large area of mutual interest or "partnership," they also have conflicting interests. In this area of conflict, where use of the stations' facilities for competing with non-network groups may be involved, the major networks are likely to be in a strong bargaining position in many market situations. When disparate positions exist, it is imperative to insure that bargaining power is not used in ways that are incompatible with the public interest and impinge upon Commission policy. The prohibition of restrictive practices, as summarized below, will serve this end. In addition, the Network Study Staff has recommended that the salutary effect of publicity of network policies be used, in lieu of specific regulations prohibiting restraining practices, whenever it appears that publicity will achieve the objectives of the public interest. 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. In this way, these industry practices will tend to be self-regulating, and bargaining power may be kept within resasonable bounds without further Commission action. Another fundamental Commission doctrine, to which the network study has sought to give added strength through its recommendations, is that the station licensee must ultimately bear the responsibility for programming in the public interest the facilities licensed to him by the Commission as a public trust. This responsibility cannot be delegated to another party, nor should it be restrained by contractual or other relationships which interfere with its free exercise by the station licensee. Specific recommendations with respect to the option time and must-buy practices and to network-station relations in the rate area reflect this underlying philosophy. Also, it has been recommended that, through its policy on the renewal of station licenses, the Commission insure that this responsibility is exercised in a manner consistent with the public interest. A third Commission objective on which particular recommendations of the Network Study Staff are based is the establishment of a nation wide television system, providing the largest possible proportion of the population with at least one facility and as many additional communities as possible with two or more facilities. To a major extent, the establishment of a nationwide television system along these lines depends upon allocation policies with which this study has not been concerned. Within the scope of the study, attention has been focused on preserving the essential features of the networking system, which has provided the best basis for extending a quality program service to stations reach IN AKRON . . WAKR u tJt: at S\adie*tfe . . .tit Cow/tege, ly 24 Hour I r\ Ml New lusic Station If hUjU San ■ po. : HOOPER, Akron, O., July August, 1957 PULSE, Akron, O., July, 1957 NIELSEN, N. C. S. No. 2 IRKE-STUART, INC. Akron S Only 24 Hour Mf\ nil New York, Chicago, Detroit, Hollywood, News and Music Station If huKJ So n Francisco KEN KEEGAN PO. 2-8811, Akron Page 100 • October 7, 7957 Broadcasting • Telecasting