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7/3/42
Mr. Fly predicted tremendous developments in television and frequency modulation,
’’Both of these fields”, Mr. FLy added, ”are set for un¬ limited commercial expansion immediately after the war, I have the greatest hope that these two Industries will flourish during the immediate post-war period.
"There is already one FU network and the linking of tele¬ vision stations into one or more networks is clearly foreshadowed. "
Mr. Fly said before the war the Commission had prepared to study the clear channel situation as ordered to do by Congress but was prevented from doing so by a shortage of engineers. Basic¬ ally he suggested the clear channel situation is an engineering problem and a very interesting one.
Mr. Fly produced an exhibit which he said shows "that in 1941 the Columbia Broadcasting System* had a net income, after Federal Income tax had been paid, amounting to 55.8^ of the total depreciated value of all of its property, tangible and intangible. In the case of NBC, the comparable percentage is 67.8.
"Mutual shows no profit as an independent entity, but, of course, the stockholders do show substantial profits. Page 2 of the exhibit shows that the consolidated net broadcast income of seven Mutual stockholders for 1941, be f o re payment of Federal income tax, amounted to 67.5^ of the depreciated value of all their broadcast property. Note that the Mutual figure is before Federal income tax. Figures after Federal income tax are not available since the tax cannot be allocated between the broadcast and the nonbroadcast Income of these seven Mutual stockholders.
The witness also introduced an exhibit which he said shows that whereas the NBC Red and CBS networks have 40.2^ and 37.^ of the total nighttime power, the Blue and Mutual have only 8,7% and 8.5^ respectively. The importance of these figures is not that two of these networks are bigger than the other two. On the contrary, the important thing is that two of these networks do not have sufficient power to be audible throughout the nation.
It is the listeners deorived of Blue and Mutual network programs rather than the networks themselves whom we should consider. The exhibit also shows that only 6.3^ of the nighttime power of the country is unaffiliated with any national network. Obviously, no new network can enter the field if it must seek its affiliates only from these small and scattered independent stations. "
Chairman Fly then took up the various regulations as
follows:
EXCLUSIVITY OF AFFILIATION The abuse: In order to get programs from one network,, stations frequently are required to contract not to carry even a single program from any other national network. As a result, listeners in a number of cities are deprived of many network programs, and the country's radio service is limited.
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