Variety (May 1941)

28 BADIO Wednesday, May 28, 1941 BITTERNESS OF 'MONOPLY' nGHT ERUPTS "We Kdo't ins tigate FCC Investigation AS MUTUAL RELEASES A ^WHITE PAPER' General Denial of Interpretations Made by NBC and CBS—^Document Plays Up Rivals' Profits—Send 10,000 Copies to Congressmen, et al As an answer, in part, to the argu- ments advanced by CBS In a 33- page booklet, 'What the New Radio Rules Mean,' Vai week before, the Mutual Network sent ont Saturday (24) a pamphlet of 15 pages titled, •Mutual's White Paper.' In addition to analyzing, from Its own point of view, the causes and effects of the FCC's report on network broadcast- ing the Mutual booklet defends it- self from what it terms the many misapprehensions spread about the agreement that it had entered into evidence of a . bitter, unrestrained ■with the American Society of Com-' head-on attack by the WOB-WGN- posers, Authors and Publishers. Dis-' Don Lee group against' the older and tribution of the Mutual booklet, larger networks. Especially in- amounted to 10,000 copies, with the ' vidious to NBC and CBS are allu- addresses including the press, mem-!sions to the net'profits of the net- bers of Congress, educators, women's j works in relation to ownership of clubs, advertisers, broadcasters and tangible profits. NBC and CBS have received by the public, but on the contrary will stimulate an ever increasing improvement in the service. 'It does not lead to govern- ment ownership of radio or to re0ulatton such as is applied to common carriers, but, throuph the restoration of competition, has the very opposite tend- ency.' Bitter Attack Tlie Mutual booklet constitutes motion picture companies. These negative generalizations are made by MBS 'to focus attention on the real issues': •The Commission's order does not go as far as other interests would have the rest of the in- dustry. Congress, and th^ pub- lic believe. 'It does not abolish network broadcasting, any more than the dissolution of Standard Oil abolished the petroleum indus- try. 'It does riot do away with the Americon system of broadcast- ing, unless the American sys- tem has somehow become idcn- tified with entrenched monopoly and has discarded the ideal of competition. 'It will not bring chaos Into, the industry, unless we look on competition as chaos and on an opportunity for others to share in this form of public service as Tevoluttonary. 'It does not paralyze freedom of the air but preserves it from private domination by a few in- dividuals with headquarters in close proximity in New York and constantly exposed to the temptation .0/ collusive under- . staTtdings with each other. ■ 'It does not in ony respect threaten the continflance of the network program service now long argued that their net should be related to and judged by their gross. NBC and CBS have con- sidered it a witch-hunters audit to underscore plant investment. One part of the Mutual White Paper refers to the N.A.B. It reads as follows: 'The Natioiuil Association of Broadcasters, assuming the role of spokesman for the industry as a whole but actually- acting contrary to the real interests of a great 'majority of its mem- bers,' identified itself with the views of NBC and CBS. For this reason, as well as because of the NAB's attitude toward ond misrepresentation of the Mutual-ASCAP agreement, Mu- tual's principal stockholders have felt compelled to sever their connection with the As- soctatitfn, and to withdraw their representative on the Associa- tion's board of directors. In this connection, it is significant that NBC, owning and operoting 13 stations having a total power of 435,000 watts, paid $19,000 in dues to the N.A.B. in 1940; that CBS, owning or operating eight statiorts having a total power of 355,000 watts, paid $17,500 in dues for 'the same year; and that the stations owned and operated by the seven actual stockholders and two prospec- tive sfocfcholders of Mutual, ?uiving a total power of 141,250 watts, paid »24,040. This situa- tion becomes incomprehensible when If is remembered that NBC's net profits (before taxes) in 1940 were $5,800,000, and CBS's net profits were $7,400,000 (before taxes), while Mutual's gross business was consideraly less than NBCs pro/its. Under the circumstances, it could not be expected that JMufual's stock- holders would continue o mem- bership thof would in any way lend color to the N.A.B. spokes- man's ill-founded claim to speafc fot the entire broadcasting in- dustry.' Mrs. Milligan Endorses Investigation by Senate Of Chairman James Fly Mrs. Harold V. Milligan, long prominent in Women's Club broad- casting and associated with Mrs. Dorothy Lewis in the National Council on Children's Programs, spoke Monday (26) over the NBC Blue.' She praised radio as 'full- filling Us obligations to the women of the nation' and said that 'radio may count upon us to keep a watch- ful eye on developments which af- fect its (radio's) continued progress as a free enterprise.' The NBC speech originated at the Rainbow Room atop Radio City in the ^re^ence of delegates returning from last'week's Atlantic City con- vention of the General Federation of Women's Clubs. A Ijirge group of Clubwomen with Mrs. Milligan bad spent the day visiting NBC's radio and television studios. Mrs. Milligan endorsed, as did the Atlantic City convention, the White (Senate) resolution to investigate James L. Fly and'the Federal Com- munications Commission. M. H. Aylesworth is currently in Washington conferring with Chair- man James L. "Fly of the FCC on progress and problem of the Pan- American Cultural relations com- mittee of which he is the new radio, head. Ex-president of NBC and Fly are conflnii^ themselves strictly to a dis- I cussion of international shortwave Washington, May 27. l^f not .touching the present .'monop- Another draftee from the Justice OP'^ situation T.F. HARRIS JOINS FCC AS RAUH SUCCESSOR (Mutual Emphasizes In Its *White Paper*) Reflecting its own awareness that Mutual is being con- demned by others in the broadcasting industry as having given aid and comfort to 'the enemy' (i.e. the FCC) the following disavowal of trouble-making or malice is con- tained in the Mutual document which appeared this week in answer to Columbia's document, 'What the New Rules Mean/ issued last week. Says MBS: —— ♦ '... The Investigation and pro- ceedings resulting in the Com- mission's action were not In any sense instigated by Mutual or its stockholders or affiliates. The proceedings began with an or- der Issued by the Commission on March 18, 1938, and this or- der, in turn, was In response to a widespread demand within the Commission itself, in Congress, and among small independent stations that the manifest tend- encies toward monopoly and concentration of control exhibit- ed by NBC and CBS, and the resulting abuses of power, called for investigation and remedy. 'Mutual's first knowledge of the proceedings was derived from the announcement of the Com- mission's order initiating the in- vestigation. Like all other or- ganizations and persons affected. Mutual was called upon to fur- nish exhaustive information and to state its'views in response to inquiries from the Commission, and did so with all accuracy and frankness, through witnesses and latei: through briefs and participation In oral argument before the Cominission. It is childish to charge Mutual with responsibility for either initia- tion of the proceedings or the results. The latter were the di- rect product of facts shown by undisputed evidence* fo^ which the two older network companies cannot avoid full responsibility. Actually, the evils had been ap- parent to Mutual's original stockholders for years and had led to the action of certain of them 'in disassociating them- selves from the plder networks and later in founding Mutual. Had it not been for their inde- pendence of policy and opera- tion, network competition even to the extent it now exists would never have become possible. But it was not they who com- plained to the Government.' Brush-Moore Newspapers' FCC Heanhg Stands Washington, May 27. Another recent relaxation of the anti-newspaper bias was offset last week , when the Federal Communica- tions Commission remained adamant about holding a hearing on the pro- posed acquisition of controlling stock in WPAY, Portsmouth, O., by the Brush-Moore Newspapers. Recently the Commish,' despite its earlier declaration that the press would not be allowed to go forward with planned construction of new tran- .smitters, has ordered a construction permit for a FM plant issued to the Milwaukee Journal, one of the pioneers. String's were tied, though, in -the form of a clause that the grant is 'without prejudice to determina- tion of newspaper (ownership) is- sue.' Plea of 'Vee Bee Corp., holder of WPAY license, for a renewal with- out hearing was nixed with no ex- planation given. The Commish more than a year ago, in edging toward the newspaper ownership question, directed a hearing on the Brush- Moore request for consent to acquire additional stock and assume control of the plant.' Already individuals prominent In the publishing chain have a minority interest in the Ports- mouth plant. AYLESWORTH-FLY IN SHORTWAVE DISCUSSION ProtestsDouble Fees But Joins N.AB. Manufacturers Pay Only $500 a Year But Sales Reps, Who Consider Themselves Employees, Pay $1,000 Chicago, May 27. Free & Peters has repeated its protest against the associate mem- bership foes imposed by the Na- tional Association of Broadcasters on station sales reps but, at the same time, has applied foi^ membership at the disputed price of $1,000 yearly. Several of the- reps. Including Paul Raymer, have resented N.A.B. rating, them at $1,000 for associate member- ship where manufacturers of equip- ment and peddlers of services pay- only one-half that amount. N.A.B. assigns a free exhibit room at con- ventions to manufacturers as part of the return for membership but reps .£ay this has little meaning t<\ them. Re]bd have been of the opinion that the double fee for reps has an emo- tional grounding in the sub-surface feeling of many stations tl^at reps are too prbsperous.' Reps coifsider themselve^ hard workers and good - results getters, so fail to appreciate an attitude that picture? them as lazy beneficiaries, of over - the - transom orders. Free &,Peters' position at this time, however, is that it does not wish to Increase the volume of dis- sension within the Industry. James Fr6e accordingly wrote Neville Mil- ler, president of N.A3.,' the follow- ing letter last week: (Copy) As you know from our lengthy correspondence during the past several months, we sincerely feel the present scale of dues for lir.A-B. Associate Members is rel- atively unfair and dlscriminar toi7 to station representatives. We feel a station representative should not be asked to pay twice as much, but rather half as much, as d large equipment manufac- turer or transcription company, . for example. I have pointed out we neither need nor want an official ex- hibit at the annual N.A.B. Con- vention (the principal incentive offered Associate Members). We do no 'selling' at a convention. ■ We regard the stations we repre- sent as our employers —^not cus- tomers. Neither Mr. Peters nor myself attended the recent con- vention at St. Louis. ' We still feel, as strongly as ever, the present scale of dues Is unfair to us. The stations we ' represent have largely agreed with our stand. However, you have presented our views to the N-A.B. board, which I understand has declined to change this scale. More ' strongly than anything else, we feel everyone connected with the broadc^tlng industry should stand together today in support of the^ work you are doing in N.A.B." Therefore, we wish to make .application for Associate Membership in NA3., at $1,000 per year, as our- contribution, which really is also an additional contribution from each of our stations, to industry solidarity and to the splendid work you are doing. If you will send me another application blank ve will fill It In and return It promptly. J. S. Russell, farm editor of the Des Moines Register and Tribune, is now heard on a daily spot on KRNT. Department joins the Federal Com- munications Commission legal staff, while a special counsel gets a full- time job. The regulators last week picked Thomas E. Harris, one-time law secretary to Supreme Court Jus- tice Harlan F. Stone and more re- cently a D. J. attorney, to succeed Joseph L. Rauh, Jr., as assistant gen- eral counsel. Rauh has quit to go with the. Lease-Lend Administration after playing a major part in writing the FCC anti-monopoly report. After graduation from Columbia University Law School in 1935, Har- ris spent one year in Justice Stone's office and then was. employed for a year by a prominent local'firm that includes Dean Acheson, former head of the advisory committee on admin- istrative procedure. From 1937 to 1939, Harris was with the Justice Department lands divi- sion, specializing in appeals matters, and in 1939 was shifted to the Solici- tor General's office. He has ap- peared in' both appellate courts and the U. S. Supreme Court, taking part in two Wagner Act cases. Lucien A. Hllmer, a Harvard Law School graduate and another of 'the Frankfurter boys,' fills the berth left vacant since last fall when .George B. Porter quit to enter private prac- tice. Since Porter's departure, he has been in charge of legal work for the broadcasting division. Hilmer was in private practice for four years and in 1935 joined the Senate Interstate Commerce Committee to work on the railroad finance probe; In 1940 he was designated special FCC counsel. FCC Not Debating In Newsprint Fly Refers Statement-Seeking Louisville Daily to Original FCC Report SPONSOR HUBERT EBEGiXOH Springfield, Mass., May 27. Hubert Kregeloh, local foreign af- fairs commentator on WSPR,,ls now sponsored by the .^bany Packing Company for a 15-minute spot five days a week. Kregeloh offered bis services to the station last year, when he returned after five years in IfoUand, ' Albany Packing Is his first spon- sor. Louisville, May 27. Sunday's (25) Courier-Journal of which Mark Ethridge is general man- ager, carried comprehensive story on recently issued regulations of the Federal Communications Commis- sion. Story was headed 'Will Split- Up Help Radio—Or Cripple it.' Then followed this Editors Note: 'More than 50,000,000 radio sets are in op- eration in the United Stdtes today, and only a handful of Americans do not hear a radio going at some time of day or night. Yet an even small- er handful, perhaps, understands a development of vital concern to them—the. drastic changes in Amer- ican broadcasting' which would be. effected by the recently issued regu- lations of the FCC. 'In the hope of clarifying the issues involved, we condensed an interpre- tation of the new rules prepared by the Columbia Broadcasting System, and sent the'following wire to FCC Chairman James L. Fly: 'Courier-Journal to print Sun- day abstract of Columbia's in- terpretation of new radio rules. We are OTixious to have state- ment of .your Interpretation of these rules to run In parallel columns, or you can reply item by item to Columbia booklet if you prefer. Can we expect five or six hundred Words not later than Friday noon?' > Heter to Beport* To this inquiry Mr. Fly replied: "Commission prefers not to be in position of repeatedly arguing its decisions in various news-> papers. It welcorMa and will follow with interest any fair dis- cussion- of the merits if you yourselves want to accompany Columbia's argument with a statement of the reasons for commission decision. This can be really done by use of the re- port itself.' (Courier - Journal explained that though they would have preferred a statement by the majority of the commission which passed the new orders, they of necessity accepted the • Fly suggestion, and presented in the Sunday Courier-Journal a condensa- tion of the Commission's published views along with an abstract of the Columbia booklet 'What the New Radio Rules Mean.' BARRY BINGHAM, 35, AS NAVAL OFnCER LoulsvlUe, May 27. Barry Bingham, publisher of the Courier - Journal end Louisville Times, and owner of WHAS, last week joined the U. S. naval forces, having passed tin examination as a commissioned officer In the Navy. Bingham Is stationed at Great Lakes Naval Training Station near Chi- cago and has signed for duration of the present emergency. Bingham Is 39 years old, married, and father of three chlldscn. 'Ho lives at Glenvlew, Ky., and Is tho son of late Robert W. Bingham, for- mer ambassador to the Court of St. James. Maoon, Os. — Carl 'Williams re- signed from WBML commercial stall to rejoin Macon Telegraph.