NAB reports (Jan-Dec 1941)

Neville Miller, President C. E. Arney, Jr., Assistant to President Edward M. Kirby, Director of Public Relations : Joseph L. Miller. Director of Labor Relations ; Frank E. Pellegrin, Director of Broadcast Advertising ; Paul F. Peter, Director of Research ; Russel! P. Place. Counsel; Lynne C. Smeby, Director of Engineering FEDERAL TIME SALES TAX (Continued from page 623) decided to submit to Congress a recommendation to levy a special and discriminatory tax upon radio advertising. Doubtless every industry whose tax payments are to be increased by the pending proposal will urge reasons against the action taken affecting their particular field. I wish to emphasize, therefore, that the broadcasting in¬ dustry does not and will not seek to evade its just and proportionate share of the tax burdens which of necessity must be increased because of the present emergency. What we do object to most strenuously is the discrimination which is involved in imposing this special burden upon radio which places the industry at a disadvantage in com¬ peting for business with newspapers and magazines. I have received numerous telegrams and other communica¬ tions from broadcasters throughout the country urging that I submit to you the views of the industry and re¬ quest reconsideration of the action that has been taken. I, therefore, respectfully submit for your consideration certain factors which I believe should convince you that this penalty on radio advertising is unwarranted and that the committee should reconsider its action. These factors include: (1) This special penalty on radio advertisin': will undoubtedly drive many advertisers to newspapers and magazines or other forms of advertising. This loss of revenue would result in lessen¬ ing the ability of stations to serve the public. The inequity of a special tax on only certain forms of advertising seems obvious. (2) Although the tax appears to be in the nature of an excise, it is in reality a tax upon the gross income of radio stations. It is standard practice for the industry to enter into yearly contracts with advertisers at a fixed rate. Many of these contracts contain provisions protecting the rate to the advertiser for periods even in excess of a year. Even if the advertiser would pay an increased rate, many stations will be prohibited by contract from attempting to pass the increase along to the advertiser. Thus the certain result would be decreased profits and in many instances no profits. This would create a pressure to divert revenues which are now used in the development of a better radio service. (3) Under the proposals as suggested by the committee, many broadcast stations would suffer a reduction of 50 per cent or more in their net income. This is true even after allowing for any saving that would result from a reduction in the amount to be paid under the excess profit tax provisions. (4) Radio broarlcasting, under general corporate levies, is paying its share of federal taxes and would of course continue to do so, under any general increase in these schedules which Congress might adopt. 624 — July 25, 1941 (S) Earlier proposals for a special, punitive tax upon radio broadcasting originated with a small group purporting to repre¬ sent certain unions in the printing trades field. Radio employs many thousands of persons who are members of labor organiza¬ tions. I have been advised by the American Federation of Labor that it does not favor a special tax on broadcasting which would have the effect of penalizing certain of their members for the dubious advantage of other members employed by competing in¬ dustries. I know it is obvious to you that radio has a most im¬ portant function to perform in this crisis. Unnecessary obstacles which will impair our ability to do a real job must be avoided. We are willing, as all .American in¬ dustry must be, to make whatever sacrifices may be neces¬ sary. All we ask is equality of treatment and, I am confident, that upon reflection you will agree we are en¬ titled to no less. We are advised that Treasury estimates indicate that less than $5,000,000 in additional revenue will be collected from this source. Therefore the fiscal program of the government could not be seriously affected by eliminating this discriminatory levy. We are convinced that the harm that will be done to broadcasting because of the penalty upon radio advertising greatly outweighs any advantage to the government because of the revenues deriving from this source. I am transmitting these views on behalf of the Na¬ tional Association of Broadcasters, to the chairman and each member of the Ways and Means Committee of the House of Representatives. Newspaper Hearings Hearings by the FCC on the question of whether newspapers should be permitted to acquire either FM or standard band stations in the future started Wednesday, July 23, in the auditorium of the Archives Building. Just before the start of the hearings, the FCC announced that it had denied the petition of the American Newspaper Publishers .Association to terminate the proceedings. This action was taken in the form of the following order: Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. Docket No, 6051 In re Orders No. 79 and 79-.A Decisiotr and Order on Motion to Vacate Order This is a petition by .American Newspaper Publishers Association to vacate Commission Order No. 79 and Order No. 79-A and to terminate the proceedings instituted thereunder. Order No. 79, issued on March 20, 1941, directed that an investi¬ gation be undertaken to determine what statement of policy or rules, if any, should be made concerning applications for highfrequency broadcast stations (FM) by persons also associated with the publication of one or more newspapers, and concerning the future acquisition of standard broadcast stations by such persons. This order was supplemented by Order No. 79-A, issued July 1, 1941, setting forth the issues on which testimony would be taken. The hearing was originally scheduled for June 25, 1941, but was continued to July 23, 1941, on the petition of a committee repre¬ senting certain newspaper publishers.