Variety (May 1941)

24 RADIO Wednesday, May 21, 1941 CBS IN POINT-BY-POINT ATTACK ON FCC (As promised two weeks ago by William S. Paley in his original comment upon the FCC's 'monopoly' orders, a de- tailed analysis of the docu- ment itself and its implica- tions, as interpreted by CBS has been issued. This takes the form of a 21-page state ment headed 'What the' New Radio Rules Mean.' It is in- tended as a handbook for broadcasters, le'gislators, newspapermen and other in- terested parties. The docu ment is perhaps the most complete reasoned presenta- tion of network management philosophy to appear in a con cise statement. As just that, and as an official network rebuttal to the FCC's own lengthy report, the CBS state- ment IS printed, partly ver- batim, on this page. — Ed.) Strikes at Contracts Under Rules 1 and 2 the Commis- Cion denies the right of an individual radio station to make an exclusive contract with a network. BULE NO. 1 SATS IN EFFECT The Commission will take away the license of any station if it agrees to broadcast network programs from only one network even t?touph the station does not want and cannot find time for programs from more ihan one nettoork. '.ULE NO. 2 SATS IN EFFECT The Commission .will take ayiay the license of any station if the sta- tion makes a contract which with- holds from its competitors the 'bene- fits of its networfc affiliation. The first two of the new 'regula- tions' knock out the present con'- tracts between the' stations and the networks with which they are af- filiated. That alone would 'kill the kind of network broadcasting serv- ice the people of this country enjoy on a nation-wide basis. CBS and its affiliated stations now have a common-sense arrangement which provides that Columbia will not furnish programs to any station In a city other than its affiliated sta- tion (except In case of public emer- gency), and that the aililiated sta- tion,.will not carry program of any other national net:work. .That arrangement benefits all con- cerned, including the public. , It gives both our affiliated stations and the network a stable basis of operations, so that we, on behalf of both the stations and ourselves, can guarantee to the advertiser a definite coverage and an audience. The individual station's choice is a free one^, in a free market. Natur- ally, that station insists that It have the right to broadcast exclusively in Its listening area the network pro- grams which are available to it. These affiliates are both high and low-powered stations, situated in all sections of the country. Our service to them consists of commercial prO' grams, for which they receive a cer- tain percentage of the advertiser's dollar, and of sustaining programs furni^ed at- our expense:. The lat- ter include SMch broadcasts as sym- phony concerts, world news, educa- tional forums, religious programs and other programs that make for a vrell-rounded public service and help to increase the prestige and the liS' tening audience of the affiliated stA' I tions. • I jecause of Its contracts with af- m^ated stations—without .which it could not sell substantial amounts of time to national advertisers—CBS in the year 1940 was able to spend mil- li-ns of dollars for non-advertising p: 'srams, nearly all of which were of Ihe kind that a local station could £. create for itself. Only because CBS Is able to de- lJ\.!r guaranteed outlets for adver- ti-ing firograms is it able to maiij- tain for 16 hours a day, 365 days in a year, leased telephone lines link- 4iia these outlets throughout Amer- Ic:., giving,the entire nation constant ac :ess to network programs; to main- tains its studio facilities, engineering equipment, foreign representitives,' representatives in the nation's cap- ital, a. highly organized news staff What the New Radio Rules Mean (As Seen By Columbia) Sometimes you have to take a thing away from people to get them to realize what it means to lose it Look at Europe today. That is going to be true of radio broadcasting as we know it in America unless people understand what is happening and do something about it Last week the Federal Communications Commission adopted eight new 'regulations.' Most people will never see them or read them. They are wrapped up in a thick Ciovernment report. Like a bitter pill, they are sugar-coated with nice words and high-sounding phrases about the public interest. Then, to make the deception complete, they were handed out with a press release that would make people think the Commission is protecting what it is actually wrecking. Like calling a blitzkrieg a rescue party. Even if people read these 'regulations,' it would be difficult to see how destructive they are without an explanation of their hidden meaning and their ruinous effect on the American system of broadcasting. Columbia Broadcasting System states that, instead of benefiting the public, instead of promoting competition, instead of improving radio broadcasting, what the Commission proposes to do will have these effects: 1. It will threaten the very existence of present network broadcasting service and bring abont In- describable oonfnslim to radio listeners, to radio stations, and to the users of radio. 2. It, will serlonsly threaten the continuance to radio listeners of their favorlta sastalning pro* grams, such as the New Tork rhllharmonio 8]mi> phony broadcasts, Colombia's edaoatlonal and religions programs, Colombia's world new* servloe. We do not sea how, under these 'regulations,' we can afford to produce and broadcast programs of this kind. 3. It will establish radio monopolies In many sections of the country which are now served by competing stations and competing networks. 4. It will deprive hundreds of Independent radio stations of an Important aooroe of revenoe and seriously affect their opportunity to bnlld np their local audiences through network programs. 6. It will deprive business <^ an «(rderly and. ■table method of bringing spMUMred programs to the people. 6. It will weaken the ability of the radio in- dustry to give the kind of broadcasting servloe that people have come to demand, and encourage . the Government to take over broadcasting alto- gether. 7. it will open the door to. Government dlclaior- ■hip over what ^ograms go on the air, and thus make radio an> instrument of partisan political pow^r. 8. It will paralyse broadcasting as a national service at a time when radio ahoold be encour- aged to continue and enlarge Its contribution to national unity and morale.-' and all the other things that make network broadcasting possible. There is nothing sinister, unhealthy or monopolistic about this arrange- ment. Other magazines cannot ,^ell advertising in the columns of Time, Life, ITie Saturday Evening Post, or Collier's. The circulation built by a newspaper is used exclusively for its own benefit and that of its own ad- vertisers: It would obviously be ab- surd to require The New Yprk Times to make its circulation available for the benefit of the New York Daily Mirror. Circulation Is what a newspaper or magazine offers an advertiser. It Is circulation, In the form of guaran- teed station outlets- and their audi- ence, that a network offers to adver- tisers. The network has invested millions of dollars to help build up and enlarge the audience of its sta- tions. There would be no induce- ment for a newspaper to build up its circulation for the benefit of another newspaper. It Is absurd to expect a network to build up an audience for the benefit of another network. The network advertiser wants the biggest possible nation-wide circula- tion that he can get- He wants it at a reasonable price and he wants to he assured that he can keep It. so long as he gives the public, the kind of programs it want^ to hear. It Is this assxirance of nation-wide circu- lation year in ahd year out which induces the advertiser to spend tre-' mendous sums for programs which make possible in America the ex- traordinarily high type of entertain- ment that characterizes our broad- casting. It would be utterly Impossible for Columbia or any other network to do this if it did not Icnow from day to day what circulation it could de- liver, what stations it could call on, what time on those stations was available to it. Yet under the Com- mission's 'regulations,' CBS "would not know whether it could deliver a good outlet, or any outlet at aU, and the advertiser would not know upon what klild of circulation he could coimt. If you deny a station the right to the exclusive service of the network with which it Is affiliated, and deny the network the right to count upon that station and Its audience in sell- ing time to national advertisers, you destroy tiie basis of nation-wide net- work broadcasting as it has de- veloped in this country. All the evils that -you substitute for it can- not be forecast. But some of these evils are obvious. These new 'regulations' will stimu- late the formation of fly-by-night organizations which need provide no broadcasting service such as people know that service today, but which can serve merely as time brokers, clearing time for advertisers. Such time brokeca could, of course, cut rates to the advertiser and sell the audience of Stations which the pres- ent network have helped to build np through the broad and expensi';re service they have rendered. These fly-by-night thne brokers, having tio permanent relationship with the sta- tions, • need feel no necessity far rendering public service. Short Tenn Role Under Rule No. 3, the Commission would deny a license to any radio station which agrees to take the pro- grams of a network for a- period longer than twelve months. BULE NO. 3 SATS IN EFFECT The Commission will take away the license of finy station if that sta- tion tries to insure Its audience and Its existence as a networft affiliate— or if- it tries to insure a networfc of an outlet In its area—for more than 12 months at a time. The. Com- mission will do this even.thoush.the station and the network may have two, three or five-year, commitments for studio, 'talent, equipment and other broadcasting facilities. The third' of the new 'regulations' means that the wliole network busi- ness might be shuffled end scrambled every year because the Commission says it will not give a license to a. station that agrees to affiliate' itself with a network for more than one year (assuming a network could exist under the Commission's 'regu- lations'). This is thoroughly impracticable. Buildings have to be erected for more than one year. Costly studio construction lias to .be undertaken for more than one year; rented space for offices,. studios, news depart- ments, and so on, cannot be advan- tageously leased on a one-yezr basis. Outstanding features such as the Philharmonic Symphony Orchestra must be arranged on other than a year to year basis. Artists and fea- tures which build the character and quality of a network must be ar- ranged for over longer periods of time. Management and personnel must be stable, reasonably secure, highly trained, and experienced. Organization of this kind can be maintained only on a long-time basis. No responsible business management can enter into such normally neces- sary business arrangements knowing that it can continue to do business only on & transient basis. Option Time Under Rule No. 4, the Commission proposes to curtail the opportunity A an Individual radio station to ear- mark a portion of its time for net- work programs. BDLE NO. 4 SATS IN EFFECT The Commission will take away the license of any station if that sta- tion agrees to give a network a firm option on any part of its broadcast- ing time, even though this may be ^thi only practicable way In which the network can place nationally sponsored programs on the station. The fourth of the new 'regulations' would deprive s station of Its license if It gives a network any call on Its time. This is the arrangement com- monly known in the industry as 'option time.' 'Option time' simply means that Columbia has a call on a part of the affiliated, station's time, so that the network always knows that it can place its sponsored programs and that they can be broadcast simul- taneously throughout the country, or that they can be I^roedcast over one group of stations at one hour and over another group of stations at another hour. Option time Is the only method under which network broadcasting Is practical. It has enabled the net- works to perform the whole mhracle of radio, namely, that the finest en- tertainment, the most Interesting and dramatic events on the stage of the world can be heard In the homes of America at the very' time they are happening. Under present arrangements, local stations, because of the audience at- traction of the network programs, are enabled to sell time to local ad- vertisers at very much higher rates than they could otherwise command. They,are always free to displace a network program with any local public service program which they believe would be in the interest of their own communities. The net- works do not even come near taking all of the time of the local station. It is a combination of nation-wide network service supplemented by local service which gives the com- munity its greatest value in radio service as a whole. The plain fact is that this rule, In conjunction with Rules 1 and 2, would put an end to network broad- casting service as we know it In this country. People now enjoy the best nation-wide broadcasting In the world liecause under our free Amer- ican radio, certain things have been possible: (1) The network has been able to offer to the national advertiser' a definite field of circulation, and a definite time on which the adver- tiser may bring his products, or services to the attention of the public. (2) The network has been able to offer to the local broadcasting sta- tion an opportunity to use a portion of its time for nationally sponsored programs. (3) The network has, accordingly, been able to—and has—set aside a substantial part of what the national advertiser pays, to be used for the direct benefit of the public. In giv- ing them up-to-the-minute news of the world, bringtag them the music of great orchestras, providing them with forums for discussion of cur- rent events, and affording them a wide variety of programs of re- ligious, educational, cultural and en- tertainment value. The network of- fers these programs to the local broadcasting station, which can take them or not, as It pleases. The great nation-wide radio audiences of many of these programs speak for their popularity with the public, and their prestige and audience-building value to the local station. Thus, the local broadcasting sta- tion has been glad and willing to give the network en option on a part of Its' brbadcasting time: Flt'st, because that time at once becomes an Important potential ■ource of revenue and a means of building prestige and audience; and, Second, because, through the net* work affiliation, the station is en< abled to present to Its audience a wide variety of high-type news, edu< catlonal, entertainment, and cultural programs which It could not pos- sibly afford itself. \ Now .the Commission strikes at the essential elements of network affiliation end option time. If its ar. bitrary orders are enforced, the net- work organization will be unable to' offer a definite network of stations to the advertiser, or a' definite time on which he can broadcast. It will also be unable to build, produce or otherwise provide the news,, educa* tlohal, religious, cultural, and enter* taimnent programs which it now of-' fers to the whole country. That means two things: (1) It means that the relationship of national advertising to radio broadcasting will be thrown into chaos. (2) It means a sierious threat to all sustaining broadcasting. CBS does not see how under these rules it can maintain its .news reporting staffs throughout the world, provide the educational programs which now go into more than 200,000 classrooms in American public schools, broad- , cast the concerts of great musical organizations, such as the New York Philharmonic Symphony, or con* tinue the development of its. new Ijatin-Amerlcan network. That is why we say that these - 'regulations,'-and particularly Rules 1,"2, and 4, mean the eiid-of nation- wide network broadcasting service as we have luiown it In this country. Under Rule No. 6, the Ckimmission would deny a broadcasting license to any radio station which failed to reserve, in its contract with a net- work, the right to reject a network program. BVLE NO. S fMPLIES That the individual station does not now have this privilecre. The fact is that any network affiliate has the right to reject any network pro- gram, if in its opinion the public in- terest would be served by such re- jection. The fifth of the Commission's new 'regulations' serves no purpose whatsoever unless it is designed to create a public impression that the networks force upon their affiliated stations programs which the stations do not want. This 'regulation' says that the Commission will refuse to license a station unless the station retains the right to reject network programs. Stations already have this right. They are always free under existing practices to refuse programs which they regard as un- suitable to their communities. The fact that they do not do so is a testi- monial to the high quality and the high standards of the networks' offerings. But the Commission falls to point this out. N. and 0. Stations Under Rule No. 6, the Commission would deny a license to any radio station belonging to a network or- ganization which owns another sta- tion In the same area, or if other stations in the same area are not as strong in power or coverage as the network station. BULE NO. 6 SATS IN EFFECT: If there is a ringU strong radio broadcasting station in a community, able to -give better service than smaller stations^ in the same area, and it belongs' to a network, the Commission will cancel its liccTU^ It also says that, no network shall own two ttationt in the same area, CBS owns seven stations and lease's one out of a total of 122 on the Columbia network. It does not own two stations In any single area. Yet this rule' threatens Columbia with the loss of one or more of its owned stations. The rule is a plain attempt. to subordinate .the publie Interest in favor of a flat discrimi- nation against any radio station be- longing to a network. But if the Commission outlaws ex- clusive arrangements between af- filiated stations ahd networks, and outlaws option time, there -ia no (Continued on page 32)