Television digest with electronics reports (Jan-Dec 1958)

5 Nulual's New Ownership: The magic shibboleth “diversification” is the stated m.otivation of new owners, who this week made deal with oilman-art dealer Armand Hammer to buy Mutual Broadcasting System for “more than $2,000,000,” said to be mostly cash but partly stock in purchaser Scranton Corp., the company which last May purchased Hal Roach Studios Inc., Culver City, Cal. (Vol. 14:22). Scranton Corp. was formerly Scranton Lace Corp., Scranton (Pa.) manufacturer of cotton & rayon window curtains, dinner cloths, scarves. Actually, it’s a holding company which, besides now owning Hal Roach Studios, operates Craftspun Yards Inc., Kings Mountain, N. C. (yarns & fabrics) ; Lamiplex div. (plastic & cloth laminations) ; Eicor div., acquired last April, which makes inverters, dynamotors, transistorized motors, etc. in plant at Ogelsby, 111. Traded over-the-counter, Scranton is controlled by F. L. Jacobs Co., Detroit manufacturer of auto parts, listed on N. Y. Stock Exchange. Also diversifying, Jacobs not only sold Eicor to Scranton but recently bought Symphonic Electronics Corp., New Brunswick, N. J. (Max Zimmer, pres.), private-label phono manufacturer for Columbia, Westinghouse, Decca, et al, and producer of own-brand hi-fi (Vol. 14:20). .Jacobs last April reported to SEC it had acquired all stock of Storm Vulcan Inc., and its other subsidiaries include Continental Die Casting Corp., Detroit: Wills Industries, Detroit; Dyno Coip., formerly Selmix Dispensers Corp. * * * * Movie-maker Hal Roach .Ir., whose studios are humming with TV productions and identified with such filmed shows as Gale Storm Show, Oh Susanna, BloncHe, Telephone Time, Trouble With Father, Public Defender, Screen Directors Playhouse, Charles Farrell Show, becomes chairman of the new MBS board; A. L. Guterma, chairmanpres. of Jacobs and chairman of Scranton, becomes pres.; Blair A. Walliser, ex-WGN, Chicago, recently N. Y. mgr. of John W. Shaw Adv. Agency, exec. v.p. & gen. mgr. Exchairman Hammer is retained on 5-year consultancy basis and stays on board along with Washington v.p. Robert Hurleigh. Remainder of board have been as little identified with TV-radio as Guterma. They’re all from the Scranton and Jacobs operations Miami Ch. 10 — New Chapler: Seldom has an FCC hearing examiner held the power now in hands of Judge Horace Stern as he presides over Miami Ch. 10 “influence” hearing, which began this week and which so far has produced little more than an abbreviated reha.sh of the stormy hearings of House Legislative Oversight Subcommittee under Rep. Oren Harris (D-Ark.) [Vol. 14:6, et ,seq]. FCC’s hearing is for purpose of determining whether grant of Ch. 10 to National Airlines (WPST-TV) should be vacated ; whether ex-Comr. Richard Mack should have disqualified himself from voting because he’d been “approached” by parties; whether any parties had attempted to “influence” Mack. Mack resigned during the Hou.se hearings, and Court of Appeals ordered FCC to and/or boards, namely, Hon. Murray D. Van Wagoner, exGov. of Michigan; Joseph S. Gordon, Garland L. Culpepper Jr., Robert J. Eveleigh, Jack Rappaport. Scranton Corp. pres. Harold J. Megargel stated that “this transaction will provide radio time to publicize continuously the products of our company in every city of the U. S.” He and Guterma conducted the negotiations with Hammer; there was no broker involved. Tom O’Neil and his RKO Teleradio acquired control of Mutual in 1952 after deal with Macy’s for WOR-TV & WOR. He found stations paid off well but not the network, sold network without stations in Aug. 1957 to Armand Hammer group brought together by ex-FCC Comr. Frieda Hennock. Price paid w^s variously reported up to $800,000, with Hammer group assuming sizeable obligations and Hammer pumping new working capital into it. Story was repeatedly given out that network was in the operating black, though it was admitted that in first 7 months of new ownership it lost $680,000. Paul Roberts was first pres., Bertram Hauser exec. v.p. Though they and others in so-called “Hennock group” held stock, there was falling out with Hammer — presumably over costly operations— which led him to exert his control to oust them and make himself pres., George Vogel exec. v.p. last March. By June, Vogel was out and Hammer, now also chairman, brought in Larry Field, ex-Petry, as his right-hand man. In July, he brought in Blair Walliser. Besides Walliser, Hurleigh and Field, latter now national sales mgr., top staff, all being retained, include Sidney P. Allen, ex-NBC, sales v.p.; James Z. Gladstone, comptroller; Joseph F. Keating, program mgr.; Charles Godwin, station relations; Ray Diaz, station services. All sorts of rumors were floating around, intensified by threatened stockholders suit, but in April Hammer acquired options on stock of dissidents Roberts, Hauser, et al. [For various steps in Mutual’s checkered career since it was acquired from O’Neil, see Vols. 13:29, 30, 32 & 14:5, 9, 15, 18, 23.] Note: Sale of Mutual to Scranton Corp. requires no FCC approval, inasmuch as no station licenses are involved. Interest in deal is high, however, in view of FCC policy of encouraging competition (it has increased number of AM stations since war fi-om about 1000 to more than 3200). Financial ramifications of this deal and others that do involve station transfers may impel FCC to add more fiscal experts, or else collaborate with SEC, on cases involving increasing complex chains of ownership and control as well as public stock trading. conduct the hearing, which resumes Sept. 16 and is expected to last 2-3 more weeks. Examiner’s lecommendations have been merely incidental in recent years, frequently brushed aside and reversed by majority of commissioners. This case is different. There’s every indication that FCC picked Judge Stern — retired chief justice of Pennsylvania Supreme Court — so that it could pass the ball to him in a very touchy situation and virtually rubber-stamp his recommendations. This would insulate Commission from any possible charges of “influence” — of the type frequently thrown around during House hearings. Importance of Judge Stem’s role puts more-than-oi'dinary emphasis on point brought up during hearing by Norman Jorgensen, counsel for National: The judge’s sonin-law, Henry J. Friendly, is v.p. -gen. counsel for Pan American Woidd Airways which this week announced that