Broadcasting Telecasting (Apr-Jun 1963)

Fm to lead am by 75, projections show A series of fm growth projections, based on a study conducted by Harvard Graduate Business School, estimates a steady growth in fm radio through the sixties, with fm passing am radio by 1975. The study was presented to National Assn. of Fm Broadcasters at its March 30-31 meeting held just prior to opening of the NAB convention in Chicago. T. Mitchell Hastings Jr., Concert Network, outgoing NAFMB president who became board chairman, incorporated the Harvard study in his presidential address. Mr. Hastings explained the Harvard figures "represent historic trends of revenues and costs projected into a meaningful picture of the future." According to the Harvard figures, radio (am-fm) found a level in the national advertising picture in 1962, or 5.83 % of the national advertising expenditure. Using National Planning Assn. projections, the study shows total national advertising expenditures for all media rising steadily from $13 billion in 1963 to $16 billion in 1967 and $20.5 billion in 1973. National fm revenues (fm-only), Harvard predicted will rise from the $7.1 million FCC fisure shown for 1961 to $9.8 million in 1962; $13.7 million in 1963: a big jump to $19.4 million in 1964: a still bigger jump to $27.4 million in 1965. Then national fm revenues are expected to jump in spurts to $101.2 million in 1969; $141 million in 1970; $197 million in 1971; $270 million in 1972 and $374 million in 1973. In projecting independent fm revenues, the Harvard study predicted the turning point at which am revenues will start to decline will occur in the year 1971 at a little over $900 million am revenue, compared to less than $200 million for fm or a total radio income around $1.1 billion. Radio's total will move upward, but by 1975 am radio will fall under $600 million whereas fm will pass $700 million, with a top figure of $1.3 billion for am and fm combined. Circulation of fm will increase steadily during the next five years, it was predicted. Taking factory totals, Harvard's figures predict that annual fm set output by 1967 will equal am output at a little over 9 million for each. Output in 1968 was estimated at 1 1.4 million fm sets compared to 9.2 million am sets. In 1962, 2.5 million fm sets were produced compared to 9.7 million am sets; the 1963 output is estimated at 3.4 million fm sets and 10 million am sets. Harvard predicted the number of fm stations on the air will rise from an average of around 1,300 to 2,200 in 1967; as choice markets are saturated, a slowdown will set in until a total of 3,200 operating fm stations will be on the air by 1975. An average profit position is anticipated for 400 independent fm stations in 1964, according to the Harvard analysis, pulling the medium out of the red. This will be a slim $1,500 profit for the average station. In 1965, 469 independents will have an average $6,450 profit which will rise to $12,100 for 550 fm independents by 1966. These figures assume the number of fm independent stations will continue to grow at a rate of 17% (the 195661 growth rate); they assume average per station costs (1962-66) will increase at a rate of 50% of revenue increases. 1500 1400 1300 1200 1100 £ iooo < -j 900 o Q 800 Ll_ o co 700 z ° 600 _j _i § 500 400 300 200 100 NATIONAL RADIO REVENUES * TOTAL RADIOREVENUES •> -"s — \ AM REVENUES \ J FM REVENUES 1956 1958 I960 1962 1964 1966 1966 1970 1972 1974 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 END OF YEAR to develop equipment and to obtain recognition and audience. He said stereo is now broadcast by 200-odd stations in 160 markets and hoped the FCC's fm freeze will be lifted by the summer recess. New action looking toward elimination of background music simplexing was taken March 28, by the FCC, he said (Broadcasting, April 1). Mr. Sandwick, urged fm stations to get off the defensive and lauded lowpitch commercials. Eric Isgrig, Zenith Radio Corp., said fm stations should intensify efforts to develop co-op ad vertising but said he had heard about dubious billing practices by stations plus fictitious rate cards. In one Zenith check during the fall of 1962, Mr. Isgrig said, the company's distributors had spent only 38% of the Zenith co-op budget. "Somebody isn't selling these distributors," he suggested. He said some agencies complain about the difficulty of documenting fm's audience and coverage. John Coyle, KVIL-FM Dallas and head of Commercial Recording Corp., advocated use of station-break jingles in stereo and explained how tailored jingles are produced for advertisers. Understanding ■ Stephens Dietz, senior vice president and marketing services director of Kenyon & Eckhardt, said fm's problem is mainly one of getting advertising people "to understand and act on the change brought about by fm radio." Mr. Dietz added, "You have given our media buyers a new alternative to consider — and you therefore automatically become a problem to them. Change doesn't happen: somebody has to make it happen." Posing a rhetorical question, "What BROADCASTING, April 8, 1963 S3