Broadcasting Telecasting (Oct-Dec 1957)

SUBSCRIPTION TV continued discovery: the realization that some people would pay for television's key attractions if that were the only way of viewing them. If this discovery is fully exploited, it eventually could start a golden flow to pay tv; even if only 25% of the set owners paid to watch, the annual take could reach hundreds of millions of dollars." He explained that such a revenue prospect "might seem tempting to a network organization like NBC. Our business involves heavy commitments and high risks in maintaining a rounded national program service on a continuing basis, whether the costly entertainment, news and public service programs are sold or not. It is therefore conceivable that pay tv ultimately might provide profits larger and more stable than a network can realize. And we are, after all, strongly positioned to participate in pay tv in a major way, with the studio facilities, the programs and stars, the accumulated know-how of a pioneer television company. "So our attitude toward pay tv is not wholly a matter of self-interest; indeed, if self-interest were the prime consideration, we might well be hedging by laying out a stake in pay tv ourselves; or at least by adopting a noncommittal position; our view, however, is born of the conviction that pay television — whether wired or wireless — is hostile to the public interest." Should the networks be forced into pay tv, Mr. Sarnoff said, this is a prospect of concern not only to the public but to American business, "which relies so heavily on the advertising impact of television to sell its goods and services." He claimed it is "no coincidence that television's first 10 years as an advertising-supported medium parallel the 10 years of America's greatest economic growth. During this decade, advertising and merchandising have come to the forefront as the economy's prime movers; and among all merchandising media, television's growth has been the greatest." The NBC president said, "We can only speculate mournfully on what might happen if television's powerful advertising voice were stilled or reduced to a whisper. For even though it's likely that pay tv will seek advertising revenue, it is inconceivable that it will be able to deliver an audience of tens of millions hour after hour, as television now does." Without such a continuing mass audience, he concluded, television will cease to exist as a primary national advertising medium. Mr. Sarnoff said the effects which the development of pay tv, wired or wireless, would have on the public and the economy "must surely concern the officials of government. Yet, it is ironic that with such basic issues posed for resolution, the principal government preoccupation with broadcasting is devoted to searching for faults in the methods by which television stations and networks operate together in providing a free broadcasting service. It is also ironic that after two years of laborious investigation, a government study staff has concluded that although networks perform 'a major public service,' they should be barred from operations which most experienced Page 32 • October 28, 1957 NBC's Sarnoff Reluctant, but prepared broadcasters feel are essential to the network function." He continued: "I believe the preservation of free broadcasting calls not only for alertness against external threats like pay tv, but for caution in tampering with the delicate mechanisms The solidarity of television broadcasters against pay tv may not be as obdurate as appears on the surface. Many tv operators — including major vhf outlets — are not certain of their plans regarding participation in toll tv tests, following the FCC's order two weeks ago spelling out the details of applying for authority to engage in a three-year trial of subscription tv. In fact, some of them frankly indicate they are thinking of "wanting in." Thirteen broadcasters — out of 36 replying to a telegraphic Broadcasting inquiry last week — answered they were unprepared at this time to state what they would do. The inquiry was sent to stations in the 20 cities which may be eligible for pay tv tests under FCC proposals. Five broadcasters said they definitely were planning to apply to the FCC for permission to test scrambled pay broadcasting. Eighteen said unequivocally they had no plans to apply. The broadcast industry has been assumed to be solidly in opposition to pay tv — except for isolated uhf station owners. The industry's position was established under the imprimatur of NARTB. It was that broadcasters are opposed to on-the-air toll tv on broadcast frequencies. Among those who indicated they were undecided as to their toll tv position were the following: James M. Gaines, president, WOAI-TV San Antonio, Tex. — "Retel subscription television WOAI-TV policy one of watchful waiting." Walter J. Damm, WTMJ-TV Milwaukee, of the broadcasting structure. The heart of that structure is the network operation, and the maintenance of strong and effective national networks is the key to a strong and effective free broadcasting system. If it weakens or fails, pay tv will not falter in taking over. "Public, government and business interest in the developments I have discussed is unquestionably shared by the great majority of broadcasters. With stations, in particular, the emergence of wired pay tv might pose a very real question as to their usefulness. A wired system would not only take over the programs supplied to stations by networks and others, but would bypass the stations completely in transmitting programs to homes. This would seem to leave the station little choice other than to become a broadcast museum or a public library." Mr. Sarnoff expressed optimism, however, over the future of free tv. He said that each year more Americans spend more time viewing television and products advertised on it "continue to pour forth in increasing abundance." "This is a vibrant, strong and growing industry in which you are now participating," he said, turning to Mr. Block. "With the support of an informed public, the free system will continue to flourish and your fine station will flourish with it in serving the public." Wis. — "Have arrived at no conclusions yet." Paul W. Morency, WTIC-TV Hartford, Conn. — "Have made no decision whatsoever in matter of subscription tv." Ward L. Quaal, WGN-TV Chicago, 111. — "Appreciate your telegram re subscription television do not desire to comment at this time." Richard F. Wolfson, WTVJ (TV) Miami, Fla. — "We are awaiting congressional or judicial action before making any final determination." Clair R. McCollough, WGAL-TV Lancaster, Pa. — "Retel subscription television WGAL-TV not yet in position to release information regarding future pay tv plans." Walter Koessler, WPST-TV Miami, Fla. — "Have made no arrangements or decisions regarding subscription television to date." Eugene J. Roth, KONO-TV San Antonio, Tex. — "In answer to your telegram with regard subscription television tests I think it would be very premature and unadvised on our part to give you an answer to your question with regard to our intent. We do not know at this particular moment just what our course of action will be but we will act." The five broadcasters who said they were considering pay tv in their operations were S. Ranulf Compton, WKDN-TV Camden, N. J. (ch. 17); Mortimer W. Loewi, WITV (TV) Fort Lauderdale, Fla. (ch. 17); Sherrill C. Corwin, KBAY-TV San Francisco, Calif, (ch. 20); Lou Poller, WCAN-TV Milwaukee, Wis. (ch. 25), and proposed owner of WOPT (TV) Chicago, 111. (ch. 44), and Norwood J. Patterson, KSAN-TV (ch. 32). Only WITV and KSAN-TV are Broadcasting ON THE HORNS OF PAY TV DILEMMA