Television digest and FM reports (Jan-Dec 1949)

Special Report April 16, 1949 TV-FM BUILDING • 1519 CONNECTICUT AYE, N.W. • WASHINGTON 6, D. C. • TELEPHONE MICHIGAN 2020 Wayne Coy Analyzes Trends in Broadcasting and Impact of Television Salient Excerpts from FCC Chairman Coy’s Address Before National Association of Broadcasters Chicago, April 11, 1949 . . . Just before leaving Washington Friday afternoon I received a letter from Felix Jager of Look Magazine to which was attached an article entitled “Radio Is Doomed.” This article is written by Merlin H. “Deac” Aylesworth, first president of the National Broadcasting Company. The article is to appear in the [April 26] issue of Look . . . The thesis of Mr. Aylesworth’s article is that radio as we know it today will be wiped out within three years. “Powerful network television will take its place,” he continues, “completely overshadowing the few weather leports and recorded programs left to remaining single, independent (ear) radio stations.” Now there is a challenging bit of thinking . . . Even in his absence I think it important to explore the questions raised by his provocative statement that “Radio Is Doomed.” At this point a few statistics may provide useful background. Networks Up 7. .3%, Stations 7% Total broadcast revenues in 1948 for 7 networks (4 nationwide and 3 regional) and almost 1,900 standard broadcast stations are estimated to be approximately $408,000,000. This represents an increase in aggregate industry revenues over 1947 of about 12%. A large part of the increase in aggregate revenues in 1948 was due to the operation of about 340 newly licensed stations in that year. Thus, while aggregate revenues increased by $44,000,000, it is estimated that $18,000,000 is accounted for by the newly licensed stations in 1948. The remaining part of the increase, $26,000,000 was registered by the networks and the pre-1948 stations. The increase in revenues achieved by the networks and their key stations ($7,000,000) was approximately 7.3% while the remaining stations increased their aggregate revenues by $19,000,000, or 7%. Aggregate 1948 industry expenses are estimated at $342,000,000, or an overall increase of 14.5%. Eliminating the new 1948 stations, which accounted for $21,000,000 of the aggregate expenses, network and station expenses increased by approximately 10% in 1948. Thus, although aggregate broadcast income (before Federal income tax) decrea.sed by 8.3% for the industry as a whole, eliminating the new 19^8 stations, aggregate income (before Federal income tax) for the pre-1948 stations and networks decreased by 4.2%. One Out of 4 AMs Are Losers Financial reports for 1948 covering 1,448 of 1,830 standard broadcast stations show that more than one out of four stations incurred losses in that year. The greater number of these “losing stations” — stations whose total bioadcast expense exceeded their broadcast revenues — started operations in either 1947 or 1948. 58% of (he stations started in 1948 lost money that year. 34.2% of the stations started in 1947 lost money in 1948. 15.1% of stations started in 1946 or earlier lost money in 1948. A quick comparison of the 1948 financial experience can be made with the immediate pre-war period. In 1939, 32.6% of the stations in operation lost money; in 1940, it dropped to 24.7%; and in 1941, still further to 21.9%. The pre-war years, however, are not strictly comparable with the post-war years due to the fact that the composition of the industry before the war contained a relatively small proportion of new stations (8% in 1940 and 6.4% in 1941) as compared to 1948 when 19% of the total stations were new that year. In addition, almost half (44%) of the total stations in 1948 were in operation only two years or less. With respect to the 58% of the new 1948 stations which lost money in 1948, it should be noted that during the period 1939 through 1945, an average of 50% of the new stations during that period lost money in the first year of operation. The highest proportion during this period was in 1939 when 65.2% of the new stations in that year reported losses. After a steady decline in this percentage during the war years, the proportion of new stations losing in their first year of operation jumped to 62% in 1945 and 63% in 1947. Classifying the Losers In examining losing stations with regard to network affiliation, we find that although 15.1% of the total stations licensed in 1946 or prior years lost money, only 11% of network affiliated stations reported losses, while 32% of the non-network stations reported a loss. Of the 700 FM stations on the air in 1948, approximately 586 were operated in conjunction with AM stations with no separate time sales of the FM outlet. Of the remaining 114 FM stations, revenue data for 1948 were reported by 72 stations. The aggregate revenues of these 72 stations is estimated at $1,000,000. A projected estimate for all 114 stations amounts to $1,600,000 revenues during 1948. For the 72 reporting, aggregate expenses of $3,400,000 are estimated. Thus, an estimated loss of $2,400,000 has been incurred. Of the 72 reporting, four reported profitable operations during 1948. In each case, the station was on the air for the full 12 months. TV' Lost $15,000,000 Last Year During 1948, the four TV networks and 50 stations (total on the air during the year) reported aggregate revenues of approximately $8,700,000, aggregate expenses of $23,600,000 and losses of almost $15,000,000. All networks and stations reported a loss from operations during the year. No comparisons with 1947 are possible since during that year fewer than 20 stations were on the air ami commercial operation was negligible.