Radio age research, manufacturing, communications, broadcasting, television (1941)

Robert W. Sarnoff, NBC President, tells members of the Senate Committee on Interstate and Foreign Commerce about NBC TV Network operations. The Role of the TV Network J_ HE Senate Committee on Interstate and Foreign Commerce was told on June 14 by Robert W. Sarnoff, President of the National Broadcasting Company, that the television industry's "vital objective" of developing the maximum number of stations should not be obscured or diverted by attacks on network operations. If such attacks should lead to restriction of network operations through additional government regulation, he warned, the "whole delicate balance of network adver- tising, affiliation relationships and service to the public could be upset." "Moreover," Mr. Sarnoff added, "various types of regulations which have been proposed could not be effected without regulating advertisers. Such a step would raise the most serious problems not only for tele- vision, but for the American enterprise system." The NBC President's 38-page statement included the first public report by any television network of its annual sales and income figures. These reveal that in its first eight years, from 1947 through 1954, the NBC Televi- sion Network incurred a cumulative loss of more than $4,000,000. Only in 1955 did the network achieve a cumulative net profit—which amounted to $2,315,000, or less than one-half of one per cent of cumulative net sales for the nine years of the network's operation. "These facts show that any claim of exorbitant profits from this high risk business is not in accordance with the economic realities," he declared. 6,500 Programs Yearly In giving the Committee a broad picture of the organization and operation of the NBC Television Net- work, Mr. Sarnoff said it presents annually 6,500 differ- ent programs, serves 200 stations and does business with over 200 advertisers of all types and sizes. He also high- lighted these factual points: —NBC produces less than one-third of the programs in its schedule. "Rather than stifling independent pro- duction, networks have provided an important encour- agement and stimulus for program development by outside producers," he explained. —Between 80^7 and 90 c c of the total hours on the NBC network consists of live programs. "Only through a network system can live programs be broadcast on a national basis," he said. —NBC's share of all national advertising revenue in 1955 was 2.7%; its share of all television advertising revenue was 21.7%. "No network comes near control- ling a share of the market large enough to approach a monopoly position," he said. —NBC has 37 UHF stations as network affiliates, accounting for over 40% of all UHF stations in com- mercial operation. "We feel that the best prospect for expanding television service is effective use of the 70 UHF channels as well as the 12 VHF channels ... a multiplicity of stations . . . would permit maximum competition at both the station level and the network level." —The NBC Program Extension Plan, designed to increase network revenue to smaller market stations, has resulted in a 113% increase of sponsored network pro- gramming on smaller market stations since last Fall. —NBC's total projected capital costs for the next five years are $80,000,000, including $13,000,000 authorized in recent months for color television networking alone. 10 RADIO AGE