Bad News for the Networks

Three years ago Maine's salty Republican Senator Wallace Humphrey White Jr., grandfather of FCC, took a squint at the nation's ethereal affairs, promptly clamored loudly for a Senate investigation of radio networks and of his grandchild. But before Senate guns could be trained on the agency, Franklin Roosevelt whisked lively little Trouble Shooter Frank Ramsay McNinch of the Federal Power Commission to the chairmanship of FCC. Chairman McNinch cut out a lot of FCC deadwood, then began an investigation of the whole radio industry.

Soon FCC findings on super power set 50 Kw. as the maximum strength for commercial transmission. Not so rapid was the progress of FCC's monopoly-investigating committee, first presided over by Chairman McNinch, later by fat-jowled, cautious Thaddeus Harold Brown, Republican wheel horse of the Commission. Starting in November 1938, with NBC's David Sarnoff as its first witness, the committee rambled on until the following May. Then it began to brood. Not until last week did it make known the results of its inquiry. They were enough to send a network tycoon gibbering to the hills.

The committee found undertones of monopoly all through the $165,000,000-a-year (1938) broadcasting industry. Whacking NBC and CBS around without gloves, FCC-men charged them with "many arbitrary and inequitable practices." Grimly they pointed out:

That of the 660 standard U. S. broadcasting stations operating in 1938, over half were on the three major networks, including practically all high-powered U. S. stations.

That outlet stations were contractually hog-tied to one network, prevented from broadcasting in their areas many programs the public wanted.

That many large corporations, controlling independently owned broadcasting stations through networks, were themselves controlled through proxy voting by a handful of people. The committee declared that R. C. A., which owns NBC, "is controlled by three persons who between them have only 5,829 shares of a total of 9,864,502 voted by them."

That NBC and CBS were giving their 253 independently owned outlets a financial tossing around, distributing among them only $12,267,560 of the $44,313,778 received for time sales in 1938.

Subject to approval by the full FCCommission, the committee recommended:

>Sterner Governmental supervision of the networks.

>Revision of network contracts with outlet stations, allowing station owners more say in the selection of programs, bigger chunks of the profits.

Just after filing his monopoly report last week, up for reappointment came Commissioner Brown. He faced unexpected opposition. New Hampshire's blatant Senator Tobey ignored his party line to belabor a fellow Republican. Equipped with a portfolio crammed with documents, Tobey bellowed a demand for facts concerning a "wild party" given in New York by WMCA's President Donald Flamm, and attended by Brown. When Brown refused to discuss the affair, Tobey leered and boomed: "And is it true that one of the men at the party ran his hand up a woman's leg?" Later on Brown privately revealed that Flamm was a friend of long standing, that the party (given at Billy Rose's Diamond Horseshoe) was fit for a "mother or sister."

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