THE ADVERTISING AND BUSINESS SIDE OF RADIO by NED MIDGLEY SALES SERVICE MANAGER, COLUMBIA BROADCASTING SYSTEM, INC.; SPECIAL LECTURER ON RADIO, SCHOOL OF ADULT EDUCATION, NEW YORK UNIVERSITY i÷i us9.1 U.A.L.t. El 141 1948 PRENTICE-HALL, INC New York STUDENTS' LIBRARY ST. MARY'SCOLLEGE HALIFAX COPYRIGHT, 1948, BY PRENTICE-HALL, INC. 70 FIFTH AVENUE, NEW YORK ALL RIGHTS RESERVED.NO PART OF THIS BOOK MAY BE REPRODUCED IN ANY FORM, BY MIMEOGRAPH OR ANY OTHER MEANS, WITHOUT PERMISSION IN WRITING FROM THE PUBLISHERS. PRINTED IN THE UNITED STATES OF AMERICA Preface BROADCASTING has been chronicled to the extent of many millions of words.These words have been devoted to the education, entertainment and news pouring from receiving sets throughout the land.Scant attention has been paid to broadcasting as a business-a business which should receive universal recognition as a stable, responsible enter- prise. The business of radio advertising holds more fascination for thousands engaged in it than even radio program pro- duction.It creates the foundation which supports the whole structure.The business principles, ethics, and prac- tices in broadcasting differ from any other business. It is time that they were drawn together into a complete framework.The following chapters devoted to the buying and selling of radio advertising will, we hope, chart the course, and show not only what broadcasting has to sell, but also how to sell it. Ned Midgley Acknowledgment THE ENCOURAGEMENT, advice, and assistance of many broadcasting experts have made this book possible.These are the people in advertising agencies, networks, and indi- vidual stations who have planned, administered, and devel- oped radio into the most effective advertising medium. The author acknowledges with sincerest thanks the in- valuable help received from William Ackerman, William Fagan, Louis Hausman, George Kern, Herbert Krueger, Linnea Nelson, Ted Oberfelder, James Parker, Frank Sil- vernail, Charles Smith, Harry Trenner, Kingdon Tyler, and Kenneth Yourd. In addition, the author is particularly indebted to the four major networks, the Yankee Network, C. E. Hooper, Inc., the Nielsen Radio Index, the American Association of Advertising Agencies, and numerous radio stations for source material and illustrations. Ned Midgley Contents I.THE AMERICAN SYSTEM OF BROADCASTING Government licensing of radio stations.FCC political broadcast requirements.Growth of radio stations and set ownership.Broadcasting-the new advertising me- dium. II.How BIG Is RADIO? 15 News by radio.Cost of radio listening.Extent of radio set use.Use of broadcasting by product types.Dis- tinctive characteristics of radio advertising. III.ELEMENTARY ENGINEERING FACTS . 32 - Ground wave and sky wave.Directional antennas.Sig- nal strength measurements.Special lines for network broadcasting.Short-wave transmission. IV. NETWORK BROADCASTING . 44 Network organization.Arrangements with affiliated sta- tions.FCC rules on chain broadcasting. V.NETWORK BROADCASTING-COMMERCIAL . 55 Basic, supplementary, optional, and bonus stations.Net- work rate structures.Discounts on network station costs. Local and sectional announcements on network broad- casts.Network contract cancellation privileges. Net. - work political broadcasts.Effect of daylight saving time on network broadcasts.Network origination points. Network produced programs. VI.THE NATIONAL BROADCASTING COMPANY. 67 Combined red and blue network operation.Time op- tions and program acceptability.Stations planning and advisory committee.Managed and operated stations. Station option time periods.Rates and discounts.Sta- tion groupings.Estimate of station costs.Program standards.Listener survey. ix x CONTENTS VII.THE COLUMBIA BROADCASTING SYSTEM 89 Policies on children's programs and cathartics.Over-all program policies.Recommended placement of commer- cial announcements.Time options and program accept- ability.Affiliates advisory board. Company -owned sta- tions.Station option -time periods.Rates and discounts. Station groupings.Estimate of station costs.Summer hiatus plan. VIII.THE AMERICAN BROADCASTING COMPANY . 111 Daytime program development.Pioneering in evening programs.Daylight saving time plan. Owned and man- aged stations.Co-operative programs.Station group- ings.Rates and discounts.Estimate of station costs. Station option time. IX. THE MUTUAL BROADCASTING SYSTEM 136 Station groupings.Network option time periods.Rates and discounts.Estimate of station costs. X.REGIONAL NETWORKS AND THE CBC . 147 The Canadian Broadcasting Corporation.Group owner- ship of radio stations. XI.RADIO RESEARCH . 162 The Co-operative Analysis of Broadcasting.The Hoop- eratings.The Nielsen Radio Index.The Broadcast Measurement Bureau.Other surveys available to ad- vertisers.Individual station surveys. XII.PLANNING A NETWORK CAMPAIGN . 184 Evening or daytime radio.Network availabilities and costs.Program sources.The purchase of network time. Station clearances.Promotion and publicity.Studio reservations.Clearance of program material.Remote originations.Partial originations.Sectional and local announcements.Program interruptions.Network one- time omissions.Station one-time omissions. XIII.SPOT BROADCASTING 202 Radio station representatives.Electrical transcriptions. Transcription library services.Standard rate and data service.Advantages of spot broadcasting.Promotion and publicity.Disadvantages of spot broadcasting. The National Association of Broadcasters.Station rates for spot broadcasting. XIV.SPOT BROADCASTING-ANNOUNCEMENTS 217 CONTENTS xi XV.SPOT BROADCASTING FOR THE LOCAL RE- TAILER . ..... 227 Suggested plan for local selling.Period of inquiry.Pe- riod of planning.Period of execution.Period of expan- sion.The Joske experiment.The Rochester experience. XVI. PLANNING A SPOT BROADCASTING CAMPAIGN 244 Factors in selecting spot broadcasting stations.Time availabilities.A.A.A.A. standard contract for spot broad- casting.Electrical transcriptions.Promotion and pub- licity.Typical spot broadcasting campaigns. XVII.LOCAL STATION OPERATION AND MANAGE- MENT 260 Functions of general manager.Washington legal and engineering counsel.Operating departments.Functions of program department.Functions of music department. Functions of public service department.Functions of traffic department.Functions of engineering depart- ment.Functions of commercial department.Relation- ship with national sales representatives.Sales to local advertisers.Program availabilities for local advertisers. Local political broadcasts.Local vs. national rates.Re- lationship with network sales and program departments. Promotion and publicity. XVIII. FREQUENCY MODULATION BROADCASTING . 291 Problems of FM broadcasters.Frequency assignments for FM stations.Multiple market vs. single market li- censing.Facsimile broadcasting. XIX. TELEVISION . 304 FCC regulation.Color vs. black and white.Technical requirements.Television and the movies. Remote pick- ups.Television and the advertiser. XX. BROADCASTING'S CRITICS AND ITS FUTURE317 The FCC "Blue Book."Radio and the OWI. Radio and the Advertising Council.Listeners' opinions on broadcasting.Radio should answer its critics. GLOSSARY OF TERMS 337 BIBLIOGRAPHY 353 INDEX 355 THE ADVERTISING AND BUSINESS SIDE OF RADIO CHAPTER I The American System of Broadcasting More people spend more time listening to radio pro- grams than they spend doing anything else-except working and sleeping. THAT IS an amazing statement but a true one.It is both a tribute and a challenge to the American system of broadcasting.In just twenty-five years, broadcasting has carved out its place as an American institution, side -by - side with newspapers, the theatre, the movies, the sym- phony concert, the county fair, and a chicken dinner every Sunday.It is not strange that it has done so.When newspaper mergers were the order of the day, the phrase "retaining the best features of each" was coined.Radio has merged many longer established American insti- tutions-and retained the best features of each.It has resuscitated, streamlined, and welded them into a compel- ling force, giving them new life and deeper meaning.It is a blend of advertising, show business, the music world, the classroom, the politician's stump, and today's news, all gaited under a modicum of government watchfulness. Our system of broadcasting must be recognized first as a commercial enterprise dependent upon advertising revenue for its very existence.It is not a propaganda tool nor a government -operated activity feeding selected pap to an uninterested populace.It is a living, vital thing with its finger on the pulse of the populace, meeting its demands, catering to its likes and dislikes, building its hopes and 2 THE AMERICAN SYSTEM ambitions.American radio is today-and tomorrow.The world has never heard broadcasting equal to it. Broadcasting has faced itsfirst challenge.It seems something more than coincidence that it became twenty-one years of age just a month prior to Pearl Harbor.Immedi- ately it was faced with the most perilous war into which the nation had ever been plunged. Sunday afternoon, December 7, 1941, was a normal Sun- day afternoon-until 2:31 P.M. Eastern Standard Time. People were doing what they had been doing on other late fall and early winter Sunday afternoons.Crowds were gathering at the professional football games; families were enjoying unrationed Sunday dinners; millions were listening to their favorite radio programs or otherwise indulging in week -end divertissements.But at 2:31 P.M., the terse United Press dispatch,