Broadcasting Telecasting (Oct-Dec 1957)

BROADCASTING THE BUSINESS V/EEKLY OF TELEVISION AND RADIO Vol. 53, No. 18 OCTOBER 28, 1957 THE TOLL TV SQUEEZE PLAY If subscription tv happens, economics will force broadcasters to join It became evident last week that unless the government or economic forces act to stop the development of subscription television, the big guns in commercial tv today will be the big guns of subscription tv tomorrow. Robert W. Sarnoff, NBC president, announced that if toll tv begins to roll, NBC will have no choice but to follow the tide (see below). He was the second network president to commit his company to that reluctant action. Two and a half years ago Frank Stanton, CBS president, said "economic necessity will force CBS to participate" if subscription television became established (Broadcasting, May 23, 1955). All three major networks are united in opposing toll tv. Mr. Sarnoff last week reaffirmed NBC's view that toll tv was against the public interest. Mr. Stanton has repeatedly stated that view. Leonard Goldenson, presi dent of American Broadcasting-Paramount Theatres, said in a news conference last week that toll tv could not offer better programs than those now on free tv. If toll tv gets a foothold, he warned, it will lure the best talent and programs from free tv. Mr. Sarnoff's speech last week followed the FCC's announcement of rules governing a proposed trial of subscription television in some 20 markets (Broadcasting, Oct. 21). Last week, in answer to a Broadcasting query, most vhf broadcasters in those markets refused to say whether or not they would apply for subscription tv. Five uhf operators said they would (see page 32). Plainly, the major broadcasters of the U. S. were still opposed to subscription television, but were considering prospects of entering it if necessary to protect the futures of their properties. NBC WOULD 'FOLLOW PAY TV TIDE' If pay television emerges as a replacement for free television, the networks will have "no choice but to follow the pay tide," Robert W. Sarnoff, president of NBC, told a luncheon meeting in his honor in Pittsburgh last week. The luncheon was arranged by William Block, publisher of the Pittsburgh Post-Gazette, owner of WIIC (TV) Pittsburgh, a new NBC-TV affiliated station. Mr. Sarnoff declared the prospect of an annual pay-tv income that could reach "hundreds of millions of dollars might appear tempting to a network organization such as NBC." But he stressed that the network is opposed to pay tv because of a conviction that such a system is "against the public interest." He warned, however, that this view may not prevail "and the pressures behind pay-tv may succeed in putting it over on the public. If it does eventually develop, we, like the public, will have no choice but to follow the pay-tv tide. With the prime television attractions bought away, with little left to hold a national mass audience, the free broadcasting enterprise would wither away." Mr. Sarnoff asserted there is no difference between the wired and wireless systems of toll tv insofar as the practical effect on the public is concerned. The revenue obtained from the public would enable either pay-tv system to outbid free television for programs, even if the pay audience were much smaller, he claimed. With the principal attractions of free tv "siphoned away," Mr. Sarnoff continued, free tv would "thus be forced into a downward spiral and might eventually disappear altogether." Mr. Sarnoff sought to demolish the argument by pay-tv proponents which claims that the success of such a system depends on the free choice of viewers. As an example, he cited the plans of the Dodgers and the Giants, in moving to the West Coast, to place home-game telecasts on a pay basis. "If these games are taken over by pay tv, the viewer who wants to see them at home will have no choice between pay tv and free tv," Mr. Sarnoff said. "Either he pays or he doesn't watch the games — hardly a free choice," he concluded. He said such examples can be multipled to cover all the key attractions of television today. Once they are taken over by toll tv, Mr. Sarnoff asserted, the only choice left to the public will be "pay-or-you-don't-see." In a discussion of the technical and philosophical distinctions between wireless and wired toll tv, Mr. Sarnoff noted, "The wire system does not involve the use of television channels dedicated to free broadcasting, which removes one of the philosophical objections. Its operation would not automatically black out a free program, and this removes one of the technical objections. But as far as the practical effects on the public are concerned, we see no difference between the two systems. If either becomes established, the end result, I believe, would be the replacement of a broad-based free service by a narrower service with a price tag on it." Mr. Sarnoff charged that the principal proponents of wired pay tv have "offered little except a decoder gadget, a paper plan and an opportunity for others to risk money to test their plan." He claimed the "astronomical sums required to launch such ventures on a large scale are seen in an estimate of $200 million to wire up the sets in metropolitan New York and $1.5 billion to cover all 262 U. S. metropolitan county areas. These amounts double when cost of installing collecting devices is included." He contended these built-in box-offices "are the instruments for recouping such huge costs from the public. For, as stated by an official of one of the principal pay tv groups: 'A monthly bill might never get paid, but with a coin box to take the money in advance we can nickel-and-dime them to death and they'll never notice.' " If the public and its representatives are not alert to the danger, Mr. Sarnoff warned, wired pay tv could start developing in various cities, first on a small scale, "then mushrooming as it gorges itself on the substance of free television. Once the cities are wired, it would take only existing intercity circuits to create a centralized system on a national basis, and if that happens, you can toll the bell for the end of free broadcasting as we know it — not only television, but radio as well." Mr. Sarnoff stessed that "once this process is launched, the viewers become its victims, their freedom of choice gone. For the pay tv-ers have seized upon an important Broadcasting October 28, 1957 • Page 31