Broadcasting Telecasting (Oct-Dec 1957)

TRADE ASSNS. continued GOVERNMENT BROADCAST MERCHANDISING USE SCORED IN FTC INITIAL DECISION Critic Gould Chides Radio-Tv On Special Interest Censorship Radio-tv executives were chided Tuesday by Jack Gould, radio-tv critic of the New York Times, for submitting to the pressures of special-interest groups in censorship of programs. He said ij is time management realized radio and tv "are journalistic media with complete freedom." Speaking to the Radio Pioneers Club in New York, Mr. Gould cited broadcasters' failure to fight demands of certain Cabinet officers and other government officials ("not the President") for pre-broadcast editing of programs in which they appear. Concerning President Eisenhower's "unfortunate" remark about CBS-TV's interview with Russia's Nikita Khrushchev, Mr. Gould said he was "ashamed" for the broadcasting industry for failing to answer "not one word in protest, even if it was the President." Johnson Heads AFA 7th District Martin J. Johnson, head of Martin J. Johnson Adv. Agency, Mobile, was elected governor of the Advertising Federation of America's seventh district in Memphis last week. Other district officers elected for oneyear terms include Clayton Cosse, DoraClayton Agency, Atlanta, first lieutenant governor; Charles E. B. Gordon, Pepsi-Cola Bottling Co., Nashville, second lieutenant governor; B. H. Cox, advertising manager, Kwikcheck, Montgomery, third lieutenant governor; Elizabeth Kennedy, sales promotion and public information, Red Cross, Mobile, secretary, and Oscar Goldsmith, Southern Hotel Journal, Birmingham, treasurer. Celler vs. Porter on Toll Tv Rep. Emanuel Celler (D-N. Y.), chairman of the House Judiciary Committee, and Paul A. Porter, former FCC chairman and now member of the Washington law firm of Arnold, Fortas & Porter, will debate the pay television issue tomorrow (Tuesday) before a roundtable luncheon of the Radio & Television Executives Society at the Hotel Roosevelt, New York. Rep. Celler will argue against pay-tv while Mr. Porter will express his views favoring the pay plan. Edward J. DeGray, ABN vice president, and Robert T. Teter, vice president of Peters, Griffin & Woodward, New York, roundtable committee co-chairman, will preside. Alabamans Hit Smothers Bill Alabama broadcasters are planning to meet with the state's representatives and senators to oppose provisions of the Smathers bill (S-2834). The bill would divorce networks and stations from music licensing and recording ownership. At its Oct. 10-11 meeting Alabama Broadcasters Assn. adopted a resolution "resenting charges" that broadcasters would yield to pressures in selection of music for broadcast. ABA deplored promotional efforts to influence the public into the belief that such discriminatory practices help determine what numbers are performed. William W. Hunt, WCOV Montgomery, is ABA president. The legal thread by which station chainstore merchandising plans have hung since last year became more tenuous last week, as a Federal Trade Commission examiner recommended prohibiting six large grocery manufacturers from using broadcast in-store plans unless all store customers are included. All six manufacturers will appeal the proposed decision. Advertisers' use of station promotion plans involving chain stores first was questioned by the FTC last year, when it issued complaints against nine manufacturers charging violation of anti-discrimination provisions of the Robinson-Patman Amendment to the Clayton Act [Advertisers & Agencies, July 30, 1956, et seq.]. By availing themselves of store merchandising benefits offered by stations, manufacturers grant promotion benefits to favored store customers, the FTC contends. Promotion plans in question were offered by ABC, CBS and NBC on owned radio and tv stations in New York and Chicago. Called "Mass Merchandising" or "Sell-A-Vision" by ABC, "Supermarketing" by CBS and "Chain Lightning" by NBC, the programs feature in-store display for an advertiser as a minimum-buy bonus. Stores get free air time from stations in return for display space. Such plans are in use by hundreds of tv stations and by more than 1,500 radio stations, it has been reported. The three networks were named in the complaint but were not defendants. CBS and NBC had filed amicus curiae briefs asking dismissal of the complaints. Respondents are Groveton Paper Co., Groveton, N. H.; General Foods Corp., White Plains, N. Y.; Sunshine Biscuits Inc., Long Island City, N. Y.; Piel Bros. Inc., Brooklyn, N. Y.; Hudson Pulp & Paper Co., New York, and P. Lorillard Co., New York. (Three others cited in the 1956 series of complaints are being otherwise disposed of by the FTC.) FTC Hearing Examiner Abner E. Lipscomb, according to his initial decision announced Friday, would forbid these firms to participate in the merchandising plans, unless benefits are available to all stores on a proportionately equal basis. His decision may be appealed, stayed or docketed for review. Respondents may file notice of intent to appeal within the next few weeks. At issue is whether advertisers bought station schedules to benefit favored customers, financing free time for chain stores by payment of their own contracts. The answer is yes, according to Examiner Lipscomb. To the manufacturers' argument that their contracts were separate from those between stations and stores, the examiner said the contracts were "not independent transactions but parts of a larger plan." Without the merchandising benefits offered, manufacturers would not have bought broadcast time in the amounts they did, the official said, "since broadcasting time in 1950 and 1951 was in fact hard to sell." Moreover, the advertiser "made the only money payment involved in the whole transaction, and was therefore the sole support of the plan. . . . Respondent, as the sole financial supporter of the plan, paid for the broadcasting time granted the chain-store for in-store promotional displays, as well as for the broadcasting time purchased for respondent's own use." All six manufacturers named in the FTC action will appeal to the Commission, according to Cyrus Austin of Appell, Austin & Gay, New York, attorney for the sextet. He called the decision "erroneous and unjustified by the facts" and pointed out that a hearing examiner's decision "does not become the decision of the Commission unless and until affirmed." NBC and CBS Radio both issued statements: NBC said the merchandising plan run by its owned stations has been revised and now complies with the FTC examiner's ruling, while CBS Radio reported it would support the manufacturers' appeal to FTC. ABC officials declined comment pending further study of the ruling. Thomas B. McFadden, vice president in charge of NBC Owned Stations and NBC Spot Sales said the decision did not affect the current "Chain Lightning" plan used by NBC owned radio stations. He said the plans on which the examiner's ruling was based made free time available to certain chain stores but not to smaller merchants. The ruling, he continued, "related to an earlier form of the 'Chain Lightning' plan which has been superseded by a broadened plan offering participation opportunities to all food retailers regardless of type or size. The current 'Chain Lightning' plan offers its promotional benefits to any food retailer who desires to participate on an exact proportional basis, without discrimination of any kind. "A typical example of NBC's 'Chain Lightning' is in the New York metropolitan area, where WRCA is operating the plan with more than 3,300 individual participating1 stores. Of this number, 55% are independents and cooperatives and 45% are chain stores. "Our attorneys advise us that since the current 'Chain Lightning' plan gives every food store an equal opportunity to participate, it meets all legal requirements set forth in Mr. Lipscomb's decision." Announcing CBS Radio's decision to support the manufacturers in their appeal, Mrs. Geraldine Zorbaugh, vice president and general attorney for the network, asserted: "CBS was not made a party in these cases. However, because we believed the plan initiated by us for the purpose of increasing sales of radio time was the real target of complaints in these cases, we filed a supporting brief. In our judgment, the supermarketing plan and participation in it are Page 64 • October 28, 1957 Broadcasting