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Regulation of Radio By EWIN L. DAVIS

ADIO broadcasting has become a RJ very important factor in our so- RESTRAINT OF MISLEADING cial, political, and economic life. It ADVERTISING takes into the remotest homes through- From the time the Commission was out the land the voices of the great organized, it has waged war against leaders of thought, and a wide variety advertisers who resort to false or mis- of music and other forms of entertain- leading representation to sell their ment. On occasions a large portion of products. our population are brought into a sin- The Commission has published six- gle radio audience. teen volumes of its orders. These In England and other countries the cover a period from its organization, cost of radio programs is met by early in 1915, to July 1932. In these charges to the owners of receiving sets. sixteen volumes, 2,781 cases are re- In the United States most programs ported in full, giving the facts found are paid for by advertising sponsors. and the orders issued. Of these 2,781 I am advised that for the twelve cases, 1,993 related to false and mis- months ending last June the radio ad- leading advertising. The remainder, vertising bill of the United States ex- 788, related to commercial bribery, re- ceeded $65,000,000. Yet the radio art straint of competition, price fixing,an d and the radio industry are still in their various other offenses under the Fed- infancy, and their potentialities are eral Trade Commission Act or the scarcely explored. I mention this to Clayton Act. Of the 1,993 cases relat- emphasize the importance of the sub- ing to false advertising, 456 involved ject. food, drugs, or cosmetics, and 1,537 Before specifically discussing the related to other articles of commerce subject of radio advertising, I wish to such as household goods, furniture, call attention to the authority and the lumber, forest products, seeds, cloth- duty of the Federal Trade Commission ing, fabrics of all kinds, and so forth. under the law, as well as to outline These reported decisions represent a what the Commission has done to regu- comparatively small percentage of the late and improve the character of other cases handled by the Commission. An forms of advertising. overwhelming percentage of all adver- The Federal Trade Commission Act tising cases have been settled amicably, of September 26,1914, declares "unfair usually by stipulation, without the is- methods of competition in commerce" suance of formal complaint. to be unlawful, and empowers and di- It should be clearly understood that rects th^jfederal Trade Commission to the Federal Trade Commission neither | prevent such methods. claims the authority to censor adver- ( The courts have uniformly held that tising, nor has any desire to do so. Its (tialae or misleading advertising consti- sole purpose is to curb unlawful abuses tutes saeh unfair methods within the of the freedom of expression guaran- ^•waning of tki» act. teed by the Constitution. To put it I- THE FUTURE OF RADIO ADVERTISING IN THE UNITED STATES 153 af speaking. Their salaries are too from being played every night in/the lc week on every station, if not on/every j\Let the broadcasting companies program. employ more and better judges for 11. Let famous conductors realize audition^ to give new talent a better that they are best developing a taste chance. for good music by arranging their 7. Let the broadcasting companies programs to interest ajfroping public use their susnuning periods (those not rather than to impress other conduc- sold to advertisers) for constructive tors or to satisfy themselves. experimenting instead of filling so 12. Put big nances on the air only much time with tfie same old orches- when and as long as they can do big tras and soloists—alWys making the things with gooa material. same sounds under different names and 13. Remoy/6 from the air all the hor- song titles. ror progranfe which send children to 8. Import more British dramatic di- bed frightened. rectors and give them time and money 14. Jjtt those who like good pro- for long rehearsals. Give e grams/write in about it, and those who directors the same chance. Network do n/t like bad programs do so too. profits would easily permit both. 5. Let the newspapers stop fighting 9. Encourage the best writers fid virtually ignoring radio (as they do composers to realize that radio is a newN /except in the time-tables which their medium which they must study as eaiv eaders demand), and start training in- nestly as they had to study sound pic- telligent critics who can give full and tures. Each has a technique which/aif- adult accounts of programs, with con- fers from the legitimate stage. structive suggestions (as a few do now 10. Keep popular songs frojft com- privately^) instead of smart remarks mitting suicide, by restricting them and trivia\gossip. Roy S. Dnrstine, A.B., is vice-president and gen- eral manager of the national advertising\agency, Batten^Barton, Durstine & Osborn;Inc, NehiYork City, tie was president of the American Association of Advertising Agencies in 1925-1926. As a pionser inmdio advertising, he has created and produced ra\ tfo programs since 1925. He is the author of " Mak- Ang Advertisements and Making Them Pay" (1920), "This Advertising Business" (1929), and "Red Thunder" (1934). AND JJUKElttfl WJHUU5KUB UUHUXXlUi

REGULATION OF RADIO ADVERTISING 155 tersely, the Commission does not dic- agents who write, encourage, and place tate what an advertiser shall say, but for publication such advertising, and may indicate what he shall not say. publishers who continue to publish The processes of the Commission are advertising copy containing false or not punitive, but injunctive. How suc- misleading representations, and such cessful this procedure has been is indi- broadcasting stations as permit such cated by the fact that during the nearly violations. twenty years since the Commission Ethical advertisers—and they in- was established, it has seldom had to clude the great majority—require little appeal to the courts to discipline re- or no regulation. Their own self-re- spondents for disregarding its cease spect and regard for the proprieties and desist orders. prompt them to tell the truth. How- A few years ago the Commission be- ever, among our vast population, there gan a more intensive drive against false will probably always be some unscru- advertising. When this campaign was pulous advertisers, and unless curbed begun, estimates were made that false by some authority, they are likely to and misleading advertising was costing trespass upon truth and decency. the American public $500,000,000 an- Not a small part of the mischief lies nually. in the fact that unrestrained, dishonest advertisers have in times past set a PUBLISHERS SUPPORT FEDERAL TRADE pace of gross exaggeration, if not out- COMMISSION right falsification, which the advertis- Upon request of the publishers, a ing agents of more ethical houses felt trade-practice conference was held un- necessary to follow to some degree, at der the auspices of the Federal Trade least, in order to get, or hold, business. Commission in New York, November The result of regulation of printed 12,1928, with approximately six thou- advertising has been that accurate sand publishers present. These assem- claims are now the rule, not the excep- bled publishers pledged their support tion. Readers of reputable publica- to the Commission in its efforts to elim- tions have come to understand that inate false and misleading advertising. generally they can safely rely upon All the reputable newspapers and what they read. magazines have given their hearty The National Industrial Recovery cooperation to the Commission in its Act, Section 3 (b) provides: efforts to prevent false advertising in After the President shall have approved their publications, and associations of any such code, the provisions of such code advertisers, advertising agents, and shall be the standards of fair competition for such trade or industry or subdivision publishers have adopted resolutions in thereof. Any violation of such standards recent years including 1984, condemn- in any transaction in or affecting interstate ing false advertising, in line with the or foreign commerce shall be deemed an position of the Federal Trade Com- unfair method of competition in commerce mission. However, there is always a within the meaning of the Federal Trade percentage of the people who will not Commission Act, as amended; hut nothing observe fajr methods of competition in this title shall be construed to impair the unless forced to do so by the strong powers of the Federal Trade Commission arm of the law. Because of this, the under such Act, as amended. Commission must continually exercise Numerous NRA codes contain pro- its authority against advertisers who visions against false and misleading resort to false advertising, advertising advertising. 156 THE ANNALS OF THE AMERICAN ACADEMY radio advertising is that the station or PROVISIONS OF RADIO BROADCASTING the system may be maintained finan- CODE cially for the purpose of rendering a A code of fair competition for the greater public service. If a station radio broadcasting industry was ap- lends its facilities to the dissemination proved by the President November 27, of false, fraudulent, or misleading ad- 1933. Among other things this code vertising, it grossly violates the public provides against "the broadcasting of trust. any advertisement of, or information When a member of Congress, the concerning any lottery, gift enterprise, writer took occasion to express his or similar scheme," and so forth. views with respect to the quality and While the statute directing the Fed- the volume of radio advertising, as eral Trade Commission to prevent un- well as the character of radio programs fair methods of competition in com- generally. However, this article deals merce, including false and misleading only with the problem as it relates to advertising, applies equally to all forms advertising continuities which violate of misrepresentation, yet until recently the laws under the jurisdiction of the the Commission has generally dealt Federal Trade Commission. with printed advertising and has had only an occasional radio case. This SCRUTINY OF RADIO ADVERTISING was due to the fact that radio adver- Last spring, the Federal Trade Com- tising is a comparatively new develop- mission definitely determined to take ment, and also that it was more difficult steps looking to a closer scrutiny and and expensive to scrutinize and deal more rigid regulation of the large vol- with it. ume of radio advertising. Conferences As a matter of fact, the Federal Gov- were held with leading executives in ernment is under a higher duty to keep the industry, who displayed a finespiri t radio broadcasts free from unlawful of helpful cooperation. As a result of advertising than to regulate any other various conferences and a careful study form of advertising. No broadcasting of the problem, it was decided by the station can operate without a license Commission to request the networks, from the Federal Government to do so. the transcription companies, and the Aside from the fact that such licensees individual broadcasting stations to file are given, without cost, very valuable with the Commission copies of their and much-sought privileges, the Gov- advertising continuities. The firstcal l ernment certainly cannot afford to be for these advertising continuities was placed in the attitude of licensing sta- issued on May 16, 1934, the request tions to violate the law or permit being made for such continuities to be others to do so. filed commencing July 1 and until fur- The statutory basis for granting a ther notice. broadcasting license is "public interest, In response to the Commission's re- convenience or necessity." In other quest, all of the 10 networks and all words, the station is authorized to of the 596 broadcasting stations com- render a service in the public interest. plied. All of the transcription compa- The primary function of radio is not to nies except a few small and unimpor- sell goods. There is no justification for tant ones responded. The Commission the Federal Government's maintaining has listed 49 stations as non-commer- an instrumentality for the benefit of cial, that is, stations which do not advertisers. The only justification for accept compensation for broadcasting AND f'UKBllrJN UUBOUiKUC

REGULATION OF RADIO ADVERTISING 157 continuities. These are operated prin- a conclusion. Generally such ques- cipally by educational or religious in- tionnaire calls for formula, sample, and ' stitutions, and state or municipal agen- follow-up literature. The formulae and | cies. the samples may be submitted by the • On July 30 the Commission advised Commission to other proper agencies I those stations which had complied that of the Government for tests and re- they might discontinue forwarding ports. These follow-up letters and continuities until further notice, al- literature frequently contain false or though the network and transcription misleading claims not contained in the companies will continue sending their contact advertisement or announce- continuities. Further calls will be ment. made upon the individual stations These radio continuities are being from time to time as the Commission handled primarily by our Special is able to handle the continuities. Board of Investigation. ; The Commission received 183,877 A cease and desist order against an s separate advertising continuities under advertiser is entered by the Commis- this initial call. By October 1 the sion only after the respondent has had I Commission's staff had completed a full opportunity to justify his claims, ' preliminary detailed examination of all and if not able to do so, then to agree | such continuities, of which 161,466 in writing to modify his copy to con- f were found unobjectionable and filed form with the truth. Otherwise, if the without further action. A total of 22,- Commission has reason to believe that 411 were referred to the Special Board the advertiser has violated the law, it for further study and possible investi- issues a formal complaint against such gation. However, it is probable that advertiser, who has twenty days within only a small percentage of this number which to file an answer, after which ; will prove to be unlawful. proof is taken before a trial examiner; This scrutiny of radio advertising is briefs are filedb y both sides, and the being conducted with a minimum of case heard by the Commission and oral expense to the Government as well as argument granted, if requested. The to the industry, by reason of the coop- decision of the Commission is subject ! eration of members of the industry and to review by the United States Court I the method of procedure worked out. of Appeals and finally the Supreme The broadcasters simply require their Court of the United States. However, advertising patrons to file with them a large majority of cases are settled by ; two copies of their continuities, the stipulation, and only a few are ever I additional copy being for use of the appealed from the Commission to the I Commission. courts. Publishers, radio broadcasting com- i PROCEDURE OF THE COMMISSION panies, and the advertising agencies in- j Reverting to the examination of volved may, and almost invariably do, these continuities, if they appear un- avoid being made joint respondents objectionable from a legal standpoint, with the advertiser by agreeing in they are filed without action. If it writing that they will observe the appears tlfat the advertising is objec- terms of any cease and desist order en- tionable or of a doubtful character, tered by the Commission or any stipu- questionnaires may be forwarded to lation made by the advertiser in such [such advertisers requesting informa- case. This has become an established tion to aid the Commission in reaching procedure with the publishers of news- 158 THE ANNALS OF THE AMERICAN ACADEMY papers and periodicals, and such broad- the convention adopted the following casting companies as have been resolution: cited have followed it as a matter of Resolved, that the NAB hereby pledges course. its full cooperation to the Federal Trade The Commission has been very much Commission in its efforts to safeguard the gratified by the splendid spirit of coop- people of the United States against all eration shown by those engaged in the forms of fraudulent, untruthful or willfully radio broadcasting industry. It is re- misleading advertising, and urges upon freshing that such an overwhelming every broadcaster the necessity for main- percentage of the industry are so taining a standard of advertising truthful- deeply interested and so fully appreci- ness which will justify and strengthen the faith of the public in the dependability of ative of the importance of permitting radio advertising. only truthful and honest advertising over the radio—thus not only prevent- The Federal Communications Com- ing the violation of the law through mission has shown a fine spirit of help- that medium, but also preventing ad- ful cooperation. vertisers from defrauding the public The Federal Trade Commission's and thereby causing a loss of listener success in its effort to stamp out false confidence in radio advertising. and misleading advertising, having as it does the support and cooperation of SUPPORT FROM NAB advertisers, the press, and broadcasters The writer addressed the Annual generally, affords an example of what Convention of the National Associa- may be done by the Government to tion of Broadcasters, September 18, protect legitimate business and the 1934, on "Radio Advertising and the public without recourse to drastic pun- Federal Trade Commission," and his ishment, penalties, and forfeitures. It explanation of the efforts of the Com- is largely a case of self-government mission to eliminate false and mislead- made effective by the aid of the Fed- ing advertising from radio met a most eral Government in restraining the sympathetic response and the strong- comparative few who are unwilling to est assurances of cooperation. In fact, play the game fairly.

Honorable Ewin L. Davis is chairman of the Federal Trade Commission. He was judge of the Seventh Judicial Circuit of Tennessee from 1910 to 1918; Representative in the 66th to 72nd Congresses, 1919 to 1933; and chairman of the Committee on Merchant Marine, Radio and Fisheries during the 72nd Congress. During his service in Congress he actively participated in the drafting and enactment of all radio legislation, including the Davis Radio Equalization Amendment, requiring an equitable allocation of radio broadcasting facilities.