Television digest with electronics reports (Jan-Dec 1953)

affiliates. Networks cannot exist without stations. But it is equally true that many stations could not maintain their existing level of service and profit without a network affiliation. A high quality local service gives a station standing in its community and makes it attractive as a network outlet. A vigorous network service builds audience for the stations, enhances the sales value of local time, and thus provides the station with more revenue to improve its local programs. Strong local service and strong national service are essential to the American system of broadcasting and, what is most important from the vantage point of our industry, they are essential to one another. Interdependence of Networks and Stations In order to maintain the vitality of these two services, the economic relationships on which they rest must meet the needs of all parties to the arrangement. As we go through this formative period of television development and the changing circumstances of radio, conditions could arise which might strain these relationships. It is well for all of us to recognize the warning signals, some of which are already visible. For example, networks must assume much greater financial burdens and risks than stations. In order to provide a nationwide service, networks must maintain large organizations, continually increase their investment in facilities, and commit huge funds in long-term arrangements with talent. Despite all this investment and risk, networks’ profit in relation to their gross volume is very small. And anything which jeopardizes the economic stability of networks must in the final analysis concern the stations as much as the networks themselves. These facts pack an important moral for the industry. They demand that there be sympathetic understanding and cooperation between networks and stations. Only in this way can their common problems be solved. The fundamental interests of the industry — as they affect stations, advertisers and the public — are inseparable. Let us consider these mutual problems, first in radio and then in television. Radio Isn’t ‘Doomed’ — But It’s Changing In the spring of 1949, the cry went up that “radio is doomed.” Some of the prophets of doom predicted that within three years sound broadcasting over national networks would be wiped out, with television taking its place. I did not join that gloomy forecast in ’49, nor do I now. Not three but four years have passed, and radio broadcasting is still with us and rendering nation-wide service. It plays too vital a role in the life of this nation to be cancelled out by another medium. I have witnessed too many cycles of advance and adaptation to believe that a service so intimately integrated with American life can become extinct. We would be closing our eyes to reality, however, if we failed to recognize that radio has been undergoing fundamental changes. To make the most of its great potentials, it must now be operated and used in ways which take cognizance of the fact that it is no longer the only broadcast medium. A process of adjustment is necessary, and it is taking place. Nevertheless, it has been complicated by the fact that the changes in radio have not been uniform throughout the system. Radio networks have been affected differently from stations, and the effects have also varied widely from station to station. In areas where radio competes with television, its audiences have been sharply diminished during some periods by the attraction of the new medium. Rate changes have been made in appropriate cases to reflect this situation. As a result, radio today is an outstanding advertising buy in terms of the cost for what it delivers. It compares very favorably — and by a wide margin — with printed media, whose rates have been going up, without equivalent increases in circulation. Stations have been able to adjust their own sales patterns to the opportunities of the market and as a result many have prospered. Unless networks can work out arrangements with their affiliates permitting similar flexibility in network sales, they will not be able to take full advantage of sales opportunities available to them. This situation is reflected by the sales figures of the past few years. Since 1948, time sales on networks have declined 22%. During the same period, however, national spot sales by stations have increased 19% and their local sales have increased 35%. Sound Basis for Radio’s Co-existence Nevertheless, the over-all increase in time sales is proof that radio has continuing economic opportunities. Today there are 45,000,000 radio families throughout the United States. There are 25,000,000 automobile sets and many millions of portable sets. In 1952 alone, almost 10,000,000 radio sets were produced. Radio is being used widely and intensively — but it is being used differently. Family listening is giving way to individual listening. There are sets in kitchens, dining rooms and bedrooms, in workrooms and playrooms. They are used to meet individual interests in certain types of programs; and they are also used when the mood calls for something different from the television fare available at the particular time. Whether it be the printed word, the spoken word, or the sound picture, the value of their service depends not on their ability to undermine each other, but on their ingenuity in making the most of their individual appeals. Radio, for example, can maintain large and loyal audiences by providing more programs of broad and selected appeal, so that millions will turn to it for the satisfaction of their special interests. National advertisers can use radio networks and stations to reach massive audiences at low costs, just as they use selected magazines read by large groups with special interests. Networks and stations alike have a prime obligation to re-educate the advertiser in line with changes in audience and program. We have a solid basis for continuance of a vigorous national radio service that can co-exist with television. However, to build on that base solidly, stations and networks must strive to work out a balance of interests that will enable each to maintain economic health in the period ahead. TV Only on Threshold of Its Destiny In radio our goal must be to strengthen the economic base of a nationwide system already in existence. In television the goal is to complete the building of a nationwide system now in process of formation. Here, too, we face serious economic challenge. Building a nationwide television service is a gigantic undertaking, involving immense resources and large-scale enterprise. I know it has been the fashion in some circles to identify bigness with badness; to attack large-scale enterprise while demanding more and more of the benefits which only such enterprise can provide. I do not share these muddy views. I have learned from life — not from theory — that big enterprise is a quickening and constructive force in a huge and growing country. It calls into being and nourishes thousands of small enterprises. It expands production facilities essential to national security. It organizes mass distribution which cuts cost to consumers. It supports prodigious research and development that require the expenditure of vast sums without immediate return. It is from this research that the most important advances in American economy have come. Our own industry is the best proof of this fact, and television its most dramatic exhibit. Television didn’t just happen. It was created through continuous and costly research and development by a few large companies. The road they traversed was long and sometimes discouraging. But they were willing to back their faith with their resources. I am proud that RCA — which has put $50,000,000 into the development of blackand-white television and another $20,000,000 into color — was one of these companies. 2