Broadcasting Telecasting (Oct-Dec 1957)

ADVERTISERS & AGENCIES CONTINUED FILM counts. J. Walter Thompson Co. will continue as agency, for Scott's Emulsion, also manufactured by Ritchie. "The change in agencies," Maurice E. Bale, president of Ritchie, said, "is taking place in spite of the fact that our present agency has done an excellent job for us over the years. The fact is, however, that we have come to a point in our growth where we have increasing need for the kind of marketing services which a larger agency is better equipped to provide." Kiley, Nicholas Join to Form Their Own Indianapolis Agency William F. Kiley, general manager of WFBM-AM-TV Indianapolis, and Ted Nicholas, who has been in a radio and tv sales post at the stations since 1947, have formed their own advertising agency, Kiley & Nicholas, in that city. Offices have been set up in the College Life Insurance Co. Building at 3445 Central Ave. The agency reports that it initially has 18 advertisers in central Indiana which it represents in the placement of advertising in various media. Crotty Heads Ellington Radio-Tv A. Burke Crotty, executive producer for the Ellington Co., New York, for seven years, last week was named vice president in charge of radio-tv for the agency. He has been with Ellington 16 years and is considered a pioneer in the field of remote telecasting. In his new post, Mr. Crotty succeeds Hal James, who has joined Doherty, Clifford, Steers & Shenfield. New York, as that agency's vice president in charge of radio and television. MR. CROTTY Falstaff Backs Giants on Radio The Falstaff Brewing Corp. of St. Louis will sponsor exclusive play-by-play broadcasts of all San Francisco Giants baseball games for the next three years, on California's Golden West Network and at KSFO in San Francisco, it was announced last week. EWR&R Resigns Cribben & Sexton The resignation of the Cribben & Sexton Co. account effective Nov. 15, because of a client product conflict, was announced last week by Erwin Wasey, Ruthrauff & Ryan Inc., Chicago. The client has been a radio-tv advertiser. The conflict was posed by C&S's purchase of the commercial division of Magic Chef. McGraw-Edison's Toastmaster-Griswold Div. (commercial cooking equipment), was a client of the previous Erwin, Wasey agency before its merger with R&R. The second conflict was that of Cribben & Sexton's Universal Gas Range line with the Caloric line of Caloric Appliance Corp., an R&R client. Page 56 • November 4, 1957 AGREEMENT REACHED ON N.Y. FILM TAX • NBC-TV not completely happy • Talks have lasted 3 years Representatives of the three television networks and of independent tv stations in New York last week were reported to be in "substantial agreement" with the City of New York on the rate of sales tax to be paid on rentals of films telecast from the city. Television executives have been conferring with city officials for more than three years on this issue and the rate to be levied has been the stumbling-block. NBC-TV reportedly still is not completely happy with the "final" proposal of the city and though other networks indicated they would go along with the city formula, they said they would join NBC-TV if a more favorable rate could be obtained. A meeting with city officials is expected to be held after election day tomorrow (Tuesday), but no date has been set. By city definition, a rental of personal property is a license to use, and is considered a form of sale in that it is a transfer of property. The rental therefore is subject to the 3% retail sales tax under a specific section of the city sales tax law. About 12 years ago, the city was sustained by the New York Court of Appeals in an action brought against United Artists Corp. for a tax on exhibition of films in theatres. Therefore, the distributor of films collects the percentage from the individual theatre, the ultimate user, and pays it to the city. The city, therefore, has contended that rentals on all films telecast from New York also are subject to the sales tax. Television representatives have not contested the city's position on the subject, merely the rate to be applied. They point out that about onehalf of the independent tv station's audience lies in the city proper and only about onetwentieth of the network's audience is in the city. At the outset, stations argued for a rate equal to 50% of 3% of the rental costs, and networks 5% of 3% of the costs. The proposal that city officials claim is "final" is 65% of 3% for independent tv stations and 15% of 3% for networks. Robert Dreyer, general counsel of DuMont Broadcasting Corp., served as spokesman for the three independent tv stations — DuMont's WABD (TV) as well as WPIX (TV) and WOR-TV — during the negotiations. He indicated the city's proposal is acceptable to the stations. WATV (TV) Newark, which also telecasts in the New York area, is not involved in the negotiations because it does so from Newark. The anticipated settlement is expected to bring the city "several hundred thousand dollars" in retroactive tax collections for the six or seven years that tv film presentations have been a major factor in tv. Television executives said they had not computed what they would have to pay. Under the city's proposal, all films telecast from New York are subject to the tax. This would include shows filmed expressly for tv, including commercials as well as products released to tv from theatrical film sources. In their arguments to the city, television executives mentioned that an objectionable rate might drive film originations out of town. One spokesman said it is possible a station or network could originate its filmed shows from Newark or from Hollywood, where there is no city sales tax on film exhibition. It could not be ascertained whether the network or stations are strongly considering the shifting of their point of origination of filmed programs, even when an agreement is reached with the city. Though the overwhelmingly large bulk of filmed programming is produced in Hollywood, a spokesman said, "a sizeable proportion" of network shows originates from New York. Networks are reluctant to shift some programs to the West Coast because the larger advertising agencies, based in New York, want to maintain close liaison with the networks on such activities as screening and integration of commercials. Another consideration is that the large film distribution companies are centered in New York and the networks prefer to remain close to their source of supply. Live television programs are not at issue in the current negotiations. It is. said that such productions pay city sales taxes in many areas, such as the retail sales tax on furniture and equipment bought for staging and the gross business tax of onefourth of 1 % on the enterprises. Network officials said there are similar taxes in Hollywood. United Artists Announces Plan to Make Films for Tv Although no details on operation are to be made known for "at least" two weeks. United Artists Corp. last week made public its intention to form a new subsidiary which not only would produce special films for television, but also sell them to advertisers and agencies. UA's intention to enter this field first was disclosed in an exclusive Broadcasting interview last spring with the firm's president, Arthur B. Krim [Film, June 10]. These tv properties would be produced along lines similar to UA's system of packaging theatrical films: financing independent producers in exchange for distribution privileges. Some 50 such projects are said to be under consideration and UA hopes to have such properties ready for sale and showing in the 1958-59 season. UA is growing rapidly, according to figures released by Mr. Krim. Not only has the firm diversified by establishing various subsidiaries to handle such activities as music publishing and phonograph record production, but UA last week also announced it has entered theatre management in New York. Gross revenues in the nine months ended Sept. 30 have risen from $47 million (for the similar period in 1956) to $52.5 million and unofficial figures point to a 10% gain in net income for that period. By 1959 UA hopes to be earning $100 million in revenues and be firmly entrenched in the tv financing-distributing business. Broadcasting