‘- If: v o O .- . - l'~ ; 3:.fi-‘ft‘mf.’ _' ' r .‘\ ' .v ' .‘ ’>: _ 9' 'C' - ~ '- '. . . '\ '0“ \" t... _. f {on 0—.q“... I ' ' K v AN ANALYTICAL REVIEW OF THE mucus as THE FEDERAL COMMUNICATIONS COMMISSION REGARDING BROADCAST ADVERTIStNG Thesis for the Degree of M. A. MICHIGAN STATE UNIVERSITY Carl R, :Ramey' 1964 THEE-HS LIBRARY Michigan State University ABSTRACT AN ANALYTICAL REVIEW OF THE POLICIES OF THE FEDERAL COMMUNICATIONS COMMISSION REGARDING BROADCAST ADVERTISING The purpose of this study is to review and report the policies of the Federal Communications Commission re- garding the regulation of broadcast advertising. The height~ ened interest of the FCC in this matter in recent years has caused many to become cognizant of some of the inherent problems of this subject, and has also raised questions as to the nature and effectiveness of the various official controls purporting to protect the public from undesirable advertising excesses in broadcasting. This material reveals some of the ways in which the FCC has dealt with problems pertaining to broadcast advertising. The information in this thesis covers the thirty- six years between 1927 and 1963 and was obtained from Coma mission documents such as specific statements of policy, reports of administrative action and intent, and selected case decisions. The first chapter begins with the passage of the Radio Act of 1927 and contains a discussion of the early Carl R . Ramey formulation of Commission policy relating to broadcast ad- vertising. Particular emphasis is placed on the role or the Federal Radio Commission, the predecessor of the FCC. The second chapter deals with the advertising standards set forth in the Commission's "Public Service Responsibility of Broadcast Licensees" report issued in 1946. The third chapter reports some of the current policies and problems of the Commission applicable to broadcast advertising. 1 Among the conclusions drawn in the fourth chapter was that the Commission has consistently held that while advertising revenue exists as the sole support for broad- casting it must retain a "secondary" place and "incidental" character as the servant and not the master of community broadcast service. In following a policy which subordinates advertising to the public interest, the Commission has placed full responsibility on the broadcast licensee to select and control the advertising material which is broadcast over his facilities../ The Commission regulates advertising by virtue of a broad grant of licensing power contained in the Communi- cations Act of 1934, the criterion being the "public inter- est, convenience, or necessity." Because of the vagueness of this term, the Commission has been able to exercise broad discretion in formulating more specific standards. One consideration in a license proceeding is the overall program service of a broadcaster. In passing on Carl R. Ramey programming under the test of "public interest, convenience, or necessity" the Commission has had occasion to weigh the qualitative merits of advertisements, for example, adver- tising which is inimical to the public interest on moral or ethical grounds. Also, under a cooperative arrangement with the Federal Trade Commission, the FCC has attempted to facilitate an interchange of information regarding false, misleading or deceptive broadcast advertising. The Commis- sion's review of a station's performance also includes an inquiry into a disproportionate amount of time devoted to advertising which tends towards over-commercialization. Through the powers inherent in its licensing func- tion, the Federal Communications Commission is a potenti~ ally formidable force in the field of advertising regula- tion. In practice, however, the Commission has largely taken the position that the elimination of advertising abuses should be left to self-regulation by the advertiser and broadcaster. AN ANALYTICAL REVIEW OF THE POLICIES OF THE FEDERAL COMMUNICATIONS COMMISSION REGARDING BROADCAST ADVERTISING By Carl R. Ramey A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTSR OF ARTS Department of Television and Radio 1954 ACKNCRLSDGMENTS This is to acknowledge the patience and understanding of my wife, Maryan, without which this thesis would not have been completed. I am indebted to Dr. Walter B. Emery for his guidance, judgment, and deep personal concern for the welfare of the study and the Badent o Ignrw f‘fi'l‘f‘t‘ Li a. mall dun" TABLE CF C Chapter 3 I. m”? FtTKULATJCfl C? C ,. V -—q ‘Q'a HJVAAAIQJAJ o o o o o o o o o o o o L La} lDQié 1 Th Radio Act of 192 Q 0 O O O I O O O 9 Advertising Felicies of h“ ijcral H4113 (20111111155101. 0 o o o o o o o o o o o o o The L2m01"lC€LjG.S Act cf 1:31. . . . . . Lexly Aiv3 EISIHJ Prlities oi i1e {2-2121 Csmfiunicatiwns Cc*mission . . . . . . . ll 0 331'? sh; 31.13111 r . '8’; 'QLII :‘f ' ‘- ' LLUL 13be o o o o o o o o o u o o o o o o o o The Adoption Of the ELte F< s O O O I O I Ctiuihy {Lattices cu 13:2;.Q Ly the CUliudis-‘Si on. o o o o o o o o o o o o o 0 Another 'ecade of Advertisirg 32’;1:tian. III. F5122)??? CLIJIISSI-tfl leVgLiiFlSlixéG PCLJCILLS. . . . .u .: 1 n. ~~Qc-‘~IVLH‘|-Ly.} .L-sn. L w".- New Policies lnfl gch'IEtoib—hng...00.0.0.0... Commission Liono- sals negarding Btgadcust 11,... A UQItiSifly o o o o 0 o o o o o o o o o if L Jt: 1'1C. . ‘ ‘1 ‘.V’f: 1 eq- :v-‘Y '1 IV. ‘cw L"\.l.. .3 v11.) 0 o o o o o o o o o o o o o o o a Law: ” . “1"1'33,‘ iVQ FYV": r1»: "' r22. c ’7 L‘ .2 3" -: ‘9 "‘ A] d -‘...‘-Ia A... «I o .A ~. J- .,. . 1L. ... £1}. \." .. .I. v.-. 2.1 .u... L . hail O LD'WIHLJOLQHQ o o o o o o o a o o o " «nunsi’ility 1 Ezoadcest Nfdvcrtis ing. Refit ls tion of the uL‘litative A: pects of 5St "4V”IL-L...L'L:; o o o I o o 100 of t.ne inentitstive Aspects of ~t".;.~[t.laln” o o o o a o o o o Cbservetions of the - ‘5'" .C‘ "-': .2 ”WM" FL. 1. AI. ‘3: Au»... “Jung-{1 o o o o o o o o o o o o o “'w Vlfi ‘-~‘ L. ”j‘kAiwkl- I“ 1.. ”)3...V uritfilr. o o o o o o 0 Bl ELIE! Csi- L‘ Z1” 0 O O O I O 0 O O O O O O O O O O I O O "i " ‘VR 0.» 0 Ln A 0 ‘2 \IC‘} CD) 103 114 114 116 117 122 125 127 129 INTRODUCTION The Problem.-—Today, nearly thirty years after the creation of the Federal Communications Commission, there remains some question as to its regulatory authority regard- ing broadcast advertising. This is a study of the past and current policies of the Commission that deal with this matter.1 Eimitetions.-This thesis is limited to those pol- icies and regulations which are directed to the broadcast- ing industry by the Federal Communications Commission. This will necessarily exclude consideration of other agen~ cies of government such as the Federal Trade Commission and Food and Drug Administration, Congress, and the Courts, as they do not specifically influence Commission policy. gégnificance.-This study brings together informe- tion that is scattered through thirty-six years of the Com- mission's records. This thesis contains many of the rele- vant Commission statements that could be cited from 1927 through January, 1964. Son:ces.-The principal sources of information for this study were the federal Communications Commission Reports, 1Unless otherwise noted, "Commission" will refer to both the Federal Radio Commission and its successor, the Federal Communications Commission. containing decisions, reports and orders of the Commission; the _nnuel Pegorts of the Federal Radio Commission and the Federal Communications Commission; Pike and Fischer's figgig. Egguletton; and the appropriate available individual reports, orders, memoranda, and other public statements of the Com— mission. Several books, articles from law journals, and se- lected periodicals concerning the question of Commission policy in the matter of broadcast advertising have also been referred to. Crggnizetion.-The purpose of this introduction is to state the problem of the thesis and to give a brief review of the develOpment of advertising's relationship to broadcasting prior to the passage of the Radio Act of 1927. The first chapter will focus on the administrative standards for advertising developed by the Federal Radio Commission and evolved and implemented by the Federal Com- munications Commission. There will be an account of Com- mission decisions and policies regarding broadcast adver- tising throngh 1945. The issuance in 1946 of the Commiso sion's "Public Service Responsibility of Broadcast Licensees" report will provide the basis for the second chapter, which, in addition, will contain pertinent material to 1960. The current state of Commission policy and problems relating to advertising will be incorporated in a third chapter. The final chapter will summarize this material and suggest possible areas for further research. Eroadcast Advertising_Prior to 1927.-In the early days of radio, particularly after the medium had emerged from its infancy and was no longer considered a "gadget," there was a great deal of discussion in this country as to how the industry would be financed. The idea of advertising sponsorship as the source of radio's economic support shocked many people. Among the possible alternative expedients suggested in the early years of broadcasting was that "philanthropists would come forward and endow programs because of their educational 2 value." Various other suggestions were made, including support by the manufacturers of radio sets and transmitting equipment; public subscription plans;3 a government tax 4 and radio clubs whereby donations would 5 on receiving sets; be received to support radio. All of these plans proved unfeasible and consequently failed to materialize as a re- alistic basis of support for the new industry. It was 2Robert J. Landry, This Fascinating Radio Business (Indianapolis: Bobbs-fierrill Company, 1946), p. 4%. 3U.S. Federal Communications Commission, Interim geport of the Office of Network Studyr-"Responsibility for Broadcast flatter," June 13, lfidfi, hashington, D.C., p. 59. (Hereinafter cited as Interim Report). 48ydney 2»). Head, groadcasting in America (Boston: Houghton Eifflin Company, 1556), p. 123. 5 Landry, 0p. . cit., p. 45. apparent that they "were out of key with the destiny of the medium. "6 The problem, however, was soon solved by the indus- try's discovery that radio was an effective medium for ad- vertising various goods and services. Out of the experimentation in ways of rendering broadcasting economically self-supporting, adver— tising emerged as the principal source of revenue. So rapid was the evolution that before non-commer- cial alternatives had reached the state of public formulation and discussion, the nation was committed to a policy of broadcasting support by commercial advertisers.7 The genesis of the sponsored program occurred on August 28, 1922, when the first sale of radio station time for commercial purposes was made by the American TelephOne and Telegraph Company‘s station HEAF in New York City. The first account was for the Queensborough Corporation, selling Long Island real estate lots.8 The early acceptance of advertising on the radio, however, was not universal and unconditional for listeners, who were accustomed to broadcasts without advertising, and were annoyed by the commercial messages.9 With the advent of commercialism on radio, the dis- tinction between "direct” and "indirect" advertising was shead,‘gp. cit., p. 123. 7 Interim Report, op. cit., p. A-lB. 8Gleason L. Archer, gistory of Radio (New York: The American Historical Society, lnc., 13337, p. 276. 9Interim Report, op. cit., p. 59. made.10 The latter consisted of mere mention of sponsor- ship. "Direct advertising" referred to the articles adver- tised, including sales talk and price quotations.» In 1922, Herbert Hoover, then Secretary of Commerce, called the first of tour annual conferences in Washington of those interested in broadcasting. He realized the potential of radio and sought means to insure its future. At the third National Radio Conference held in 1924, Hoover advised the broadcast- ing industry that: . . . the quickest way to kill broadcasting would be to use it for direct advertising. The reader of a newspaper has an option whether he will read an advertisement or not, but if a speech by the President is to be used as the meat in a sandwich of two patent medicine advertisements there will be no radio left. To what extent it may be employed for what we now call indirect advertising I do not know, and only experience with the reaction of lis- teners will finally decide in any event.11 Hoover reiterated these views at the fourth and final Conference the next year. He suggested that the in- dustry establish a policy of "unobtrusive advertising," saying that "advertising in the intrusive sense will dull the interest of the listener and will thus defeat the in- dustry."12 In response to this proposal, broadcasters passed 10C. J. Friedrich and J. Sayre, The Development of the Control of Advertiging on the Air, Harvard University Radio Broadcasting Research Project—studies in the Control of Radio (Cambridge: Harvard University Press, 1940), p. 4. llLandry’ On. Cite, p. 490. 12Comments of the National Association of Broadcast- ers in the Federal Communications Commission's Docket No. 15083, in the matter of the proposed amendment of the Com- mission's rules with respect to advertising. September 30, 1963, pp. 6.70 a resolution which stated that the problems of radio adver— tising should be solved by the industry rather than by gov- ernment compulsion. The use of direct advertising over radio was deprecated and the Conference resolved that there appeared to be no necessity for any specific regulation in regard to the form of announcement in connection with a paid or any other program.13 In spite of the concern of the members of the Radio Conferences, other broadcasters, advertisers, members of Congress and the public, the tendency toward direct adver- tising increased as the "novelty” of the new medium subsided and sponsors sought more tangible results from their expendi- tures for broadcast advertising. Therefore, "by the time of the passage of the Radio Act of 1927, it had become apparent that revenues derived from the sale of time for advertising purposes would pro- vide the economic means to create and maintain continuity 14 It was clear that of broadcasting in the United States." the problems relating to broadcast advertising would be of imminent concern to the fledgling Federal Radio Commis- sion. 13Ihid., p. a. W 14Interim Report, on. cit., p. 59. CIL’iPTER I TI—E FORMULATION OF COM‘LISSION POLICY REGARDING BROADCAST ADVERTISE-£5 The Radio Act of 1927 —_ Two legislative acts, the Radio Act of 1927 and the Communications Act of 1934, have dictated Commission authority in all matters. They furnish the legal and log— ical base on which any Commission policy is formulated. The Federal Constitution gives Congress the power to regu~ late commerce among the states. It has been determined by the Courts that broadcasting is interstate commerce within the meaning of the Federal Constitution and is, therefore, subject to Congressional regulation and control. It follows that "if Congress has the power to regulate broadcasting as interstate commerce, Congress also has the power to regulate radio advertising, not because ad- vertising of itself is interstate commerce, but because it is radio broadcasting."1 The Congressional arm that was initially assigned the role of representing the govern- ment in this matter was the Federal Radio Commission. The Act of 1927 and Advertising.—~Relatively little w 1A. Bruce Bielaski, Jr., "Radio Advertising-—Con~ trol of Quality and Quantity," gir Laywpeview, 5 (July, 1934), 369. was mentioned concerning advertising during the debates pursuant to the passage of the Act. There was, however, criticism of the amended conference version of the proposed bill by Senator K. Pittman of Nevada. The Senator observed: No authority is given the commission or the Secre- tary of Commerce to limit the extent to which broad- casting stations may be utilized for purely adver- tising purposes. The owners of the 13,000,000 purchased radio receiving sets in the United States are interested in the character of the matter that is broadcast.2 He further cosraez'xted : There is one thing which you will find out, that if it becomes necessary to make money out of broad- casting, the broadcasting concerns, when they have sold all of the receiving sets they can, will shoot out through this country every night magnificent statements with regard to sausage and pigs' feet. why not? If they can be paid to broadcast adver- tising matter through the country, why should they not do it? It is fair to the broadcasters, but is it fair to the 15,000,000 peeple who have bought receiver sets? There should be some power . . . to place some reasonable limitation on the use of broadcasting stations so that they might be enjoyed by and be beneficial to the people of the country. But the conferees' bill does not prepose to do any such thing 0 3 Pittman unsuccessfully requested that the Senate return the Conference report to the House of Representatives for further consideration in this regard. The principal concern of the Congressmen in this area was the possibility of disguised advertising; 268 Congressional Record, 69th Congress, 2nd Ses‘ sion, February‘ia, 10;?) 410}. 368 Congressional Record, 69th Congress, 2nd Ses- sion, February is, 1&27, 4112. advertising not identified as such on the air. Representa- tive Emanuel Caller of New York appealed for prohibitory legislation. He wanted all-paid programming to be identi— fied as such, Just as newspapers are rem wired to identify advertising "to avoid the foisting of disguised advertising matter 'as reading noticss' or news."4 This plea for leg- islation was sffactiva and resulted in the only section of the Radio Act that made reference to advertising. Sectio , .19. All matter broadcast by any radio sta- tion is: which service money, or any other valu- able con sideration is directly or indirectly paid, or promised to or charged or accepted by, the sta- tion so broadcasting, from any person, firm, com- pany, or corporation, shall, at the time same is so broadcast, to be announced as paid for or fur- nished, as the case may Ls, by such person, firm, company, or corporation. Advo tisino Folioias of tho ., ‘ . . A“. . . .. , . .~ '3'“ l‘ L; J... (4.1 c '- j. . i'... J L!- -. . . .3. J .3 ~L'd‘i1 In is The FCC concepts and policies involving the rela- tion of broad cast a ivs—rtising to the "public intarest, con- venience, or necessity" derive, in great measure, directly from the concepts and policies worked out by the Federal Radio Commission in the early years of tie so: nistration of the adio Act of 1927. Gas of the first problems which confronted tho 467 C”'u£w&;i}nal Fscord, 69th Congress, lst Ses~ ‘2' I sion, January id, isgu, 2.o3. 563 Cahcrrc~irr*1fincord, 69th Congress, 2nd Sas- sion, January 27, 174i, Z501 10 Commission was the extent and character of advertising by the nation's broadcasting facilities. A problem with which the Commission is faced from time to time is the extent and character of adver- tising which will be permitted by broadcast stations. There is a tendency to make a distinction between "direct" and "indirect" advertising, but, obviously, there is no sharp line of demarcation between them. By "direct" advertising is usually meant the men- tion of specific commodities, the quoting of prices, and soliciting of orders to be sent directly to the advertiser or the radio station. By "indirect" advertising is usually meant advertising calculated simply to create or maintain good will toward the advertiser. In some localities, such as Iowa, di- rect advertising has assumed very substantial pro- portions. Soon after the Commission was established many objections to advertising were received by the Commission from listeners, and in the first allocation certain of these stations were given only limited facilities. hearings were held at the request of these stations, and the mass of doc- umentary evidence submitted seemed to show overwhelm— ingly that a majority of the public in certain areas favored direct advertising by radio of certain prod- ucts for farm consumption, having the idea that there were economic advantages in this method. One such station submitted evidence showing that it had received over one-half million commendatory letters in one year. On the other hand, there has been some measure of complaint by competing merchants who do not have broadcasting facilities to the effect that they were placed under an unfair disadvantage by such use of a Government franchise. The problem is far from being solved. It is manifest that broadcasters must resort to some form of advertising to obtain the revenue for the oper- ation of their stations. On the other hand, it is equally manifest that the advertising must not be of a nature such as to destroy or harm the bone-_ fit to which the public is entitled from the prOper use of broadcasting channels. The Commission has, of course, no power to censor programs and must procegd cautiously in its regulations on this sub- ject. 62 Annual Report of F.R.C. (1928), pp. 19-20. 11 Elsewhere in the same report it was further noted that: The Commission is not fully convinced that it has heard both sides of the matter, but it is willing to concede that in some localities the quoting of direct merchandise prices may serve as a sort of local market, and in that community a service may thus be rendered. That such is not the case gen— erally however, the Commission knows from thousands and thousands of letters which it has had from all over the country complaining of such practices.7 The Commission, as part of an overall statement relative to the "public interest, convenience, or necessity," de- clared that: While it is true that broadcasting stations in this country are for the most part supported or parti- ally supported by advertisers, broadcasting stations are not given these great privileges by the United States Government for the primary benefit of adver- tisers. Such benefit as is derived by advertisers must be incidental and entirely secondary to the interest of the public.‘5 The Commission, at this juncture, was more specific where a station broadcast a considerable amount of "direct adver- tising,“ including the quoting of merchandise prices. In this instance, said the Commission, "the advertising is usually offensive to the listening public" and "advertising should be only incidental to some real service rendered to the public, and not the main object of a program.“9 A result of the foregoing statements was that the broadcasting of direct advertising, in some instances, was 71bid., pp. 165-169. egocifcit. 9 . Loo. Cit. 12 made the grounds for reducing the power of stations. The Commission, in one of its earliest decisions reducing the power of station WCRM, located in Chicago, Illinois, stated: It is clear that a large part of the program is distinctly commercial in character, consisting of advertisers' announcements and of direct advertis— ing, including the quoting of prices. An attempt was made to show a very limited amount of educa— tional and community civic service, but the amount of time thus employed is negligible and the evidence of its value to the community is not convincing. Nanifestly the station is one which exists chiefly for the purpose of deriving an income from the sale of advertising of a char cter which must be objec- tionable to the listening public and without making much, if any endeavor to render real service to that public. It has been suggested that the Commission's decision in this and similar cases was motivated by more technical reasons than its claimed legal duty to protect the public interest. Elmer Snead, in "Freedom of Speech by Radio and Television," submits that "the fact was that criticism of this kind of advertising provided a convenient ground upon which it [the Commission] could select stations for reduc- tions of power where such action was necessary in order to stop the interference between stations which the failure of regulation in the middle 1920's had produced."11 These various pronouncements by the Commission in no way reduced the volume of complaints against radio 1131-4 0 , p. 156. 10 1IBlmer E. Snead, Freedom of 3§ och hy Padio and K eleVision (hashington: Puniic nizuirs KI555gfi1533), p. 29. 13 advertising. Listeners complained to the Commission, the stations, and to Congress. Indeed, the problem was discussed at the Congressional hearings to extend the life of the Federal Radio Commission, but no action was taken since the prevailing attitude was that the industry would regu- late its own abuses.12 Although the advertiser was welcomed as a necessary means of support, his activities continued to be viewed with some misgivings. The Commission's "new" application form for broad- cast privileges issued in its first year reflected a prudent interest in advertising practices. Information was required therein regarding the time devoted to advertising and the type of advertising presented. These forms were more de- tailed and required much more information than had previ- 13 ously been requested. The obvious result was that adver- tising practices became a major factor in the license re- newal process. In 1929 the Radio Commission issued its opinion 14 in the great Lakes Compenx Case. This case contained a rather comprehensive statement of general Commission pol- icy regarding its interpretation of the statutory standard- 1211.3., Congress, House, ggerings before the Com- mittee on Merchant Marine and Fisheries on ”.3. 8325, 70th Ff“ Congress, 1st session, iszs, pp.*133, 144, 138, so . 13Interim Report, o . cit., pp. 10~11. See 2 An- nual Report of F.R.C. (lQZSg, pp. 166-170. 14Ibid., p. 20. See, also: 3 Annual Report of F.R.C. (19235, pp. 32-35. 14 the public interest, convenience, or necessity. It is ad- ditionally significant since it includes several succinct statements regarding the development of Commission policy in the matter of broadcast advertising. On the subject of advertising, the Commission concluded that it "must be accepted for the present as the sole means of support for broadcasting, and regulation must be relied upon to prevent 15 the abuse and over-use of the privileges." Broadcast stations are licensed to serve the public rather than the private interests of individuals or groups of individuals. This, said the Commission, is the basic meaning of the "pub- lic interest, convenience, or necessity" standard. The only possible exception to this maxim is in the area of advertising because advertising "furnishes the economic 16 support for the service and thus makes it possible." In this respect, however, "the amount and character of adver- tising must be rigidly confined within the limits consistent with the public service expected of the station."17 The Commission must . . . recognize that without advertising, broadcasting would not exist, and must confine itself to limiting this advertising in amount and in character so as to preserve the largest pos- sible amount of service for the public. The adver- tising must, of course, be presented as such and not under the guise of other forms on the same prin- ciple that the newspaper must not present advertising 151b1d., p. 21. ISAC‘C «- Cit a 17g9c, cit. 15 as news. It will be recognized and accepted for what it is on such a basis, whereas propaganda is difficult to recognize. If a rule against adver- tising were enforced the public would be deprived of millions of dollars worth of programs which are being given out entirely by concerns simply for the result and good will which is believed to ac- crue to the broadcaster or the advertiser by the announcement of his name and business in connection with programs. Advertisinggmust be accegted for _tbe_preccrt as the solq_§:ens of suppggt far—broad- EastingL_and regulation must be relied upon togpiee Ef“t the sodas and over-use of the_3rivlie;e. (Sm- phasis 5upplied).13’ In its annual report for 1929, the Radio Commission reiter- ated these views when it informed Congress that "offensive sales talk is too common" but that because of the broad- casters' need the Commission "must confine itself" to lim- iting advertising "in amount and character so as to preserve the largest amount of service to the public."1l9 Despite the policy established in the preceding case and in similar pronouncements. the pressure for direct and increased advertising continued. The Chairman of the Radio Commission, Major General C. McK. Saltzman, was prompted to say that the continuance of the competitive broadcasting system might be jeopardized unless broadcasters "commence to take steps to make these sales talks more palatable."20 In the prevailing atmosPhere broadcasting was becoming a refuge for "hawkers of questionable commodities and services 1agoc. cit. 193 Annual Report of F.R.C. (1929), pp. 3, 5. 2olnterim Report, op. cit., p. 63. 16 which could no longer persuade most newspapers and magazines to accept their copy."21 Several other factors also led to increased radio advertising, often of an objectionable nature. When adver- tising agencies began to exercise a larger role in the con- trol of programming in the 1930's, all—out direct advertis— ing became the generally accepted practice.22 with the advent of the depression two other events occurred which increased the flood of complaints to the Commission. For economy reasons during these years, the commercial "spot" announcement was fabricated and "develOped into a fine art."23 Under these circumstances smaller companies became inter- ested in radio advertising, and the networks and independent stations reduced their rates to accommodate this new segment of business. The new spot announcements were more palat- able to small businesses because they were less expensive than the prior practice of purchasing a full program. Variety magazine, following this trend toward in- creased advertising, commented on "the advertising of un- listed and illegal stocks, fake hair restorers, phony lan- guage courses, quack doctors, real estate advertising of uncleared lands, and fortune-telling rackets whereby the advertiser built up a 'sucker list' of fan letter writers 21 22 Landry, C130 Cite, p. 480 Head, on. cit., p. 123. 23Smead, 0*. cit., p. 36. 17 which he later sold to commercial companies for their use in advertising campaigns.“ Probably the most annoying of these types of dubious advertising were those of "patent medicines which had gotten a new lease on life with radio since their distribution had been hit hard when reputable newspapers throughout the country decided not to carry ques- tionable copy."24 The Commission became increasingly apprehensive about the direction taken by broadcast advertising. In the often c1ted_§fK9 Broadcasting_Association Case, involv- ing Dr. John R. Brinkley who had repeatedly made extravagant claims for his medicine and cures over his station in Mil- ford, Kansas, one of the reasons which finally prompted the Commission in 1930 to refuse a renewal of license was the broadcasting of "doubtful" and "inimical" advertising.25 On this occasion broadcast advertising which was against the public interest was sufficient to cause a denial of license renewal. within a year, on May 31, 1931, the Commission ex— tended its Opinion in the Brinkley case when it advised the industry of the widespread complaints against the follow- ing types of programs: fortune telling, lotteries, games of chance, gift enterprises, medical advice, improper 24Friedrich and Sayre, c2. cit., p. 9. 255 Annual Report of F.R.C. (1931), p. 67. 18 language and misleading and deceptive advertising. The Commission felt that it was doubtful whether such programs were in the public interest and that complaints from a sub— stantial number of listeners would result in the institu- tion of revocation proceedings or the desig mtion for hear- ing of the application for renewal of license.20 During these years the industry, specifically the National Association of Broadcasters, had responded to the criticism being directed against broadcast advertising by 27 the issuance of a Code of Ethics. On December 21, 1931, the Radio Commission released a formal statement in which it urged broadcasters to adhere to the "Code of “thics” in- stituted by the NAB. If the broadcasters declined or failed at this Opportunity for self-regulation, the Radio Commis- sion felt that "the matter should be treated with proper legislation."28 In its notice, the Commission commented: The principal objection to programs under our sys- tem arises out of the kind of advertising that is allowed to be made a part of them. . . . There is not a single station that can escape responsibility. A heavy responsibility rests upon all chain companies. . . . If their (ti. Aber- ican people) share of this form of entertainment can be received only at the expense of advertising statements or claims which are false, doce13tive, 2°s Annual Report of F.12.C. (1931), p. 9; 6 932231 RelOrt Gf I“..io\.‘o (iii/52*), p. 120 27"Broadcastors Have Policed Selves for 32 Years," _§roadga§ti33, May 27, 1963, p. 28. 23 Interim Report, op. cit., p. 64. 19 or exaggerated, at the expense of programs which contain matter which would be commonly regarded as offensive to persons or recognized types of political, social, and religious beliefs, then they are justified in demanding a change in the ayatfimo The Commission concluded: The good will of the listener is the station’s only asset, and therefore this could rest with the li- censees of the stations. This problem should not be taken out of their hands until they have had full opportunity to make the necessary corrections. If they decline the opportunity or seizing it fail, the matter should be treated with proper legisla- tion 0 29 The improvement in the standards of broadcast ad~ vertising that did follow were primarily attributable to the networks. The National Broadcasting Company and the Columbia Broadcasting System both initiated measures that would prevent objectionable and questionable advertising. This, however, could not completely eliminate the problem; as Friedrich and Sayre point out: The leadership of the networks, however, meant little to the small station dependent upon local advertising for its income. The merchant down Main Street wanted to have all the details of his product on the air, and could not be convinced that when he "bought" fifteen minutes it was not wisest from his point of view to spend all of them in ad- vertising his goods. Such stations were in a shaky position financially and most of them would accept almost any advertising, so that talk of “restric- tions" or improper proorietary medical accounts was a little premature. 29 Loc._§§t. 3oFriedrich and Sayre, on. cit., p. 13. m Throuqhout this period, Con3res s was fully aware of the P' problems of radio aive si.g; i docd the matter was dis- 31 y cussa‘ at various -:ings pfirtli:iz] to racfi o regulation. In 1932, Senator Couzens of Mizhi; an L.Lm 2:33 Sonata Reso- lution No. 123 requesting the Son ission to survey and re- port to time Sons to on the following questions, among oti‘firs, Ha pertaining to the growing dissatis action with the use of radio facilities for purposes of commercial advertising: 1. hhat information there is available on the feas- ibility of Government ownership and Operation of Dro:dcasting faciliti 2. Po what extent the facilities of a representa— tive group of broadcast n; stations are used for commercial advertising purposes. 4. that plans might be acopted to recucc, to limit, to control, and perhaps, to eliminate the use of radio tccilities for conmcrcinl advertising purposes. 6. “hetncr it would be practicable and sstisfactory to permit only the announcement of b‘OPbHrahip of p.roorams by persons or corporations.33 i;e Lonuission suiw itted a detaileai rep :rt to these queries. In its statement it noted that the “system of competitive Operation of broadcast stations by private en- terprise has gr own up under the policy laid down by Congress in the radio act of 1327" in wt ich "a3 .1 the poo;.le of the I! United States get SOKL form of radio mbraaficsct sorvic ." '2 ‘1 nterim chcrt, on. cit., p. 6%. 32¢erat.e “orvnntt no. 137, W 3 C3: ;;J:, lst Ses— sion, gov'gjjfgujoio Ar‘mr-rHMm:JL A Lotto; from” the_ Chair- “an. 0f '4 a7. " " : 3;;1 ___"_‘ f C: k5 ‘ 3.1:;- .:..~.,:2. .Z. 1 I. (_.,;p:.";.;.LL-Lfl:';‘;} cw: ’. F" 6?? EU t?" 31V :10 o 375 o \ vanl‘ilzxzwtuud U . .3 o (:u 1ch m- nut r1. 41163319 crxics, 1.;2), o} v. -— 21 If the policy were changed, "then a thorough investigation of all the various possible methods of serving the peeple of the United States should be made and a policy detainined which would be satisfactory."33 The Commission classified programs as commercial or sponsored, and sustaining. Briefly, a commercial pro- gram is one presented solely for profit; a sustaining pro- gram is presented without compensation and is intended to satisfy the station's public interest responsibilities and build audience interest which enhances the value of a sta- tion's commercial time. What is contained in sustaining programs depends almost entirely upon the extent to which radio facilities are used for purposes of commercial advertising . . . both commercial and sustaining programs contain much that_is of an information and educational character.34 In answer to Question 2, the Commission submitted a survey of the offering of 582 stations at the time over a seven- day period which showed that 63.86h of the hours were de- voted to sustaining programs and only 36.14% to commercial programs.35 The Commission's answers to Questions 4 and 6 of the Resolution deal specifically with the problems involved in eliminating or restricting broadcast advertising. The 22 oyinions will be quoted, at considerable length, to illus— trate the evolutionary character Commission policy had taken in the field of advertising. In this respect, the Commis— ‘sion concluded that to eliminate broadcast advertising would "destroy the present systen of broadcasting." The Commis- _ 36 sion's response to Question 4 was as follows: Any plan to reduce, limit, and control the use of radio facilities for commercial advertising purposes to a Specific amount of time or to a certain per cent of the total time utilized by the station must have its inception in new and additional legisla- tion which either fixes and prescribes such limita« tions or specifically authorizes the Commission to do so under a general standard prescribed by that legislation. while the Commission may under existing law refuse to renew a license to broadcast _ or revoke such license because the character of p/" program material does not comply with the statutory standard of public interest, convenience, and nec- essity, there is at present no other limitation upon the use of radio facilities for commercial advertising. Such regulation, whether specifically undertaken by Congress or delegated by it to the Commission, could extend both to the quality and the quantity of commercial advertising. while the quality of J advertising might and probably would be difficult ,5 of adequate regulation, the quantity of such adver- tising could be limited to certain hours in the day or night and to a certain numoer of such hours; also, provision could be made limiting the adver- tising matter to a certain per cent of the time devoted to total programs or commercial programs. Any such system of regulation should, however, recognize and apply the differences in the needs and requirements of stations of the several classes; i.e., clear, regional, and local. Also, a basis for classification may exist in the fact that cer- tain programs are originated locally for local con- sumption, whereas others are originated by chain companies for the edification and entertainment of too country as an entirety or at least for very large sections thereof. 3° bi‘do, p. 330 23 In an amplification of this point the Commission further commontod: . . . A flat restriction placed upon the amount of time used for sales talks without regard to the location, povor, and activities of stations would, in all probability, work inequitable resu ts. More- over, and in any case or class, limitations Upon the use of time for commercial advertising, if too covers, would result in a loss of revenue to sta- tions which, in all probability, would be reflected in a refluction in the quantity and quality of pro— grams available to the outlic. In concluding its response to the present question, the Commission said: The radio act of 1927 was obviously designed to permit the licensees of broadcasting stations the maximum of latitude in the matter of program mate- rial. Such licensees are in a singularly favorable position to learn what the audience wants to hear and to make the necessary changes in progrnm mate- rial and in methods of prosontstion that will cause their programs to be favorably received by a sub- stantial majority of the listeners. Tue adoption of regulation of the sort herein described should be uncnrtnkoz only when it clearly appears that a majority or at least a considerable numtor of the licensees have failed to operate their stations , in a manner acceptable to a majority of the listen- ing Jublic. If, in the opinion of Congross, that time has now arrived, we conceive it to be advis~ able to enact such legislation as will permit the Commission to impose such regulations as tho cir- cumstances from time to time sssm to warrant rather than legislation imposing sgeoific rsstrictions and unf oxiolc linitstions.é7 In response to Question 6, the Radio Commission modifisd its previous policy against "direct advertising" when it replied that it would neither he practicable nor satisfactory to permit only the announcement of sponsorship 37Ibido, pp. 33‘340 of prOgrams by persons or coroorations. The Commission informed the Senate: The American sy3t3m of broalcaating is 1ru33c3tol uoon t.e use of radio facilities as a m3.?1um for local and nationil adVstibinJ. Upo.?1 thia u;e do- ponds the quanm dty and qualitj of couu33tial “3d sustaining p3o53333. Tue com,3 tition bntdsen al- Vertlaers inaures the employment of the best talent available and a variety in kind of commorc ial pro- grams. The comrcrclal prograws furnish th- ”rin- cipal source of revenue to stations. The quality and charactcr cf unstaining programs are degondent upon the revenue received from the sale of timo for commercial advcrtising pu.rpcees. The daily [abduFEJWC .Lual.iSAu-b a Fatal-1&1. It lléivJSLCan‘n C(m be $311 to two 33333r33t3 at a coat gre3tiy under the co at of pro Q3uction because it is used as a medium f3ra1vcztlslr.g, and that it ontains of a news, educational, literary, and entertaining vzlue Caponds almost entirvly uyon the rcvenue re- ceived from tn: sale of s>g ace for advertising pur- poses. uuilarly, a rad o broadcast statian c a present suataining grogr335 that are of great e3u- atlonal value and rich in entertainment only in a degree maaaurod by the revenue derived from the sale of time for purposes of commercial advartising. Information made availatle to the Commissio n shows that sponsor3hip of programs by name haul mount, in the ordinary case, only to good-will ‘trtising. .3 few prod chts arid their uses may be so well and generally known as to permit this. On the otner hand, and as to the majority of prod- ucts, such adv? :rtising would involve an evpezzse which nat103al advertisers are not now w3lling and in a position to bear. In any products have savcral us:: .3 which must be described to be understood and app oreciated. New products fr-ouontly need to be explain3d. Nearly every manufacturer scc's to develop concarning his product special characteristics which but it off from comgetir g grod3cts 33d m3ko it more ot33r3ule. Idea 3ityo 033ct, doscription of uses, and char- act3ristic3 must be woven into and become a part of the program to make it of valuo to the sponsor. What applies to the national advertiser aczlics in even qrc eater decree to t.he local adveLtiser. In such cases 163.tit{ by name only would be of little value to the advertiser. 23 It should be borne in mind that if a restric- tion permitting sponsorship by name only should cause a number of advertisers to discontinua the use of radio facilities as a medium for commercial advertising, such nonuse would immediately and in- evitably be reflsctsd in a decrease both in the quantity and quality of programs available to the public. A serious loss in revenue to the stations could, under our system of broadcasting, have no other result. As a matter of tact, the situation should have its own cure within itsalf. There should be a keansr appreciation by both the broadcaster and the adver- tiser that radio facilities not only offer perhaps the greatest Opportunity for reaching the greatest number of people, but that their use imposes upon them a very great responsibility for the manner in which programs are presented. By the use of these facilities the advertiser is permitted by the licensee of a radio station to visit in the homes of the listening audience. The value of his contract is dependent upon the amount of sales talk and the kind of entartainment he offers as well as the manner in which he chooses to express him- self. Those whom he offends can promptly eject him and deny him further admission. The broad— caster and advertisor who fail to recognize such fundamental principles and to make the adjustments in the content and method of presentation of proe grams desired by a great number of the listening public must suffer the natural consequences result- ing from the operation of the law of economics. The employment of national surveys of program and station popularity, better showmanship and tact by advertisers, and a strict supervision of all programs by the licensaos of stations should do- velop a technique that would be more satisfactory to the listening public and beneficial to the in- dU-‘iuy o Hare, as in our answer to the fourth question, if it is the opinion of Congrass that the situation justifies further and additional legislation, the proper solution would seem to lie in legislation authorizing the commission to enact certain regu— lations designed to govern the situation rataer than spacific agislation on the subject by Con- gress.$5 381bid., pp. 36-37. The Commission had concluded that it did not pres- ently have the prOpcr authority to control or limit the use of radio facilitics for commercial advcrtising. It distinctly informed the senate that the current system of broadcasting would be destroyed if afivortising were elim- inated, or drastically altered if Congress were to delegate to the Commission authority to place limits on advertising. Although the Commission would need additional legislative authority to control broadcast advertising, the latter should be included in toe strict supervision of all programs by station licensees. The Radio Commissi n also modified its \$\ aforementiOHed policy against "dircct advertising,” recog- nizing that in many instances sponsorship by name only was not sufficient. The control of advertising, noted tho Com- mission, could and should be instituted by a comoination of "strict supervision" by the broadcaster, cooperation of tho advertiser and the authority of the Commission to review station performance. The problems relative to advertising faced by the Radio Commission continued to exist in substantial propor- tions. In this respect, the Pedoral repeal of prohibition was not without its repercussions on the broadcasting in- dustry. On February 2, 1933, the Radio Commission was moti- H} voted to issue a news release in the matter 0 l tising.33 The Commission, in its statomcnt, ccllod the JgHarry P. Warner, fiadio and Tolov.sion Law, Vol. 1 (Albany, N.Y.: Matthew Bender and Compcny, 13437, p. 411. 27 attention of broadcasters to the "public interest” section of the Radio Act of 1927, and asked for intelligent cooperap tion insofar as liquor advortising on the air wan concerned. Although it noted that prohibition had been repealed by constitutional amendment and thus did not exist as far as Fe oral government was concerned, the Comrn sion com- mentod: . . . it is well known that millions of listeners‘) tnrougnout the United dtatos do not use intoxicat¢f ing liquors and many children of both users and ; non-users are part of the listenin.g public. was Commission asxs that broadcasters and adverti1., 2 fiF.C Calume accstir -3 Corner no hi - ”L .s'?;;‘.*i;1'.-':t1 o"? t, 13 .n44 L-J': 115.3 1'1‘71§C“"I1.L!:‘11 8.1., 2 FCC-Co 145 (1935). 39 held a station to "a high degree of responsibility" for not 3 safeguarding the public interest and not recognizing the ‘ falseness of the advertising it had broadcast.€5 In many other instances the Commission has indicated its disapproval of the qualitative or content aspect of commercial messages. Advertising has been considered ob- jectionable because of the nature of the product and the presentation. In other words, the product itself creates‘ V' the offense, so that no commercial for it could be satis- factory. For example, the Commission has considered com- mercials for birth-control devices to be contrary to the public interest.66 It has frowned upon advertisements by members of the clergy67 and the medical profession.63 Simi- larly, disapproval has been expressed regarding advertising offering advice on marriage or family matters,69 and the advertising of lotteries.7O As Commission policy evolved, it was evident that such practices would not be considered lightly in evaluating EDRQ 333mg: Broadcasting Company, 2 F.C.C. 79 (1935). f 60 .. . - - ,3... Krickgrbockcr troaficasting3CotL_lrc., 4 F.c.C. 76 (1935). 6 7.31.. A "I a A A D. *- I‘L .j ‘ He E5333} d hyates trg§3333c1n33ccgn., 2 r.C.L. 208, 218-19 (1335). ,9 6“Re Fagmers and Bonke ars Life In: once Conpnjx, 2 FoCoCo 455 (1.2.3.3). 69Re Eggc 3-jin and Coop any Bank, 1 F. C. C. 194 (1936). 7038 y?“L 93313 S 3‘1ffiz 132., 2 F.C.C. 687 (1936); KXL Broadcagtars, 4 E.C.c. ico (1L3i). 40 the past record of a station. Furthermore, the Commission policy in these cases has given impetus to the prohibitions against advertising content prong alga: afid by the industry. V/ "““‘itat vo A373cts of Brca”csst Aflvcrtisinc.- The Communications Ccmn.ission's dccisions, as rcflsctsd by cases in the earlyy ears of its fixiétnhCQ, do not indi- cate a great preoccupation with the quantitative angects of broadcast advc“tising. The Coamis sion did, h3*cvcr, in Lnited Statss B nadcestin3_Cnrycretionj et 81., say that it was in full accord with an earlier policy stated by the Radio Comrission that advertising revenue must rctain a "secondary" place and "incidental" character as tha servant and not the master of community broadcast scrvics.7l Else- where, in a case involving the transfer of a licenss assign ment, the Commission noted that the terms of the contract "might re suit in a tendency toward 3 acre rigi.d commercial- ization of the facilities-thus detrimental to the listen- 7 m 2 ihe Commission would have much more to say ing public." regarding the quantitative element of broadcast advertising in the ensuing years; this will be 6 s t with rather extsn~ sively in later sections. Secticn 317 of th Ccrntn“nt“*s Prt.n This section l _. fl...‘ 7136 United Ststss 263 (1313). "‘ - 3--.« - ‘ A .4- "‘-’{:‘F‘ .21. 5914:1713 C-f‘!‘:., 2 Fobobo ..- J. G ‘- 3 '3 '“Inos my sort-«1 41 9‘ v' T‘ v' "\‘5 '3 -'-'.' I:‘ F ’1 r‘ '2' 8“. & I '. s' - .L J "g ‘- g r. vd‘ ar- .r. g ‘ - . - scab. 6 r.c.c. 456 115335. 41 of the Act, the requirement that advertising and sponsored programs be announced, was rarely interpreted or enforced H 73 J .2 in the early years. The Rad-o Commiss_on on one occasion criticize;i sponsored programs in which the sale of securi- ties was advertised without announcing or divulging the 74 name of the soon; The Communications Commission, in The Prgcglyn Costs, condemned the cloaking of commercial 75 programs as religious talks. The general administrative i policy was to insure that advertising be pres-ntod as such and not disguised. On May 16, 1939, the Commission released a state- ment in which it called attention to section 317 of the Act and requested all licensees to conform to its require- ments. The Commission ruled that the practice of identify- ing a commercial prog cm by giving the sponsor's name was sufficient compliance with the Act.76 Suwmntion of Policy in the Early Yonrs.--Since 1935 ‘ —-~. R.‘ the Cowwsnications Commission has resorted dless to formal hearings and more to informal action when dealing with sta- tions which have broadcast questionable advertisin ng.77 For 73qarnsr, 3:. dt., p. 351. 741%id0 75 Ihid., p. 351; See: Re Ins Qrocrlyn Cases, 2 FOCOC. 208. Lia (1935). 76 ? .‘J' 173., p. 351. H 77Ibido’ p0 3100 42 example, in the year ending June 30, 1936, the Commission designated twenty stations for formal hearings for adver tising certain mc:.dic:a1 products and treat.unts. The Comp mission renezed tlm licenses, except for two which were also found to lack adequate financial resources for broaicastir ng.78 In June of 1336 the Cc v.1:sion called for hearing twenty stations which had boon ad.crti irg "Kn..olo, a reducing compound for which the Fo;aral Trade cor.-raioi had previ- ously issued a Congo and desist order. Eofore the hearing ‘33 s n (J H '4. U“ 1;;- date, however, all the stations notified t‘ 3 .67 that they had discontinued the advertising. The Commission subsequently revoked its order is: heali- 3 ex-zzpt for three v.1) In. I ' a Q ~09 [9 stations which had con itted adoitional orxcnoos. got the most part, this method of informally handling such cases continued to La Commission policy and practice. within the Commission in 1939 a policy commit*‘ suggested that it institute a code of its own that would clearly specify the minimum rcquiremex: ts for lroa dcasting in the public interest. Lnong the suggested p: in1ciples were: Programs containing "uninteresting and lengthy ad~ vertising continuity," lottery information, and false, iraudu lent, or nzislt eaoing advertisin snould not be allowed. In accepting copy for medical services or prod- ucts, advertising should be ”strictly truthful and Friedrich and Sayre, on. rit., p. 31. "fl. IJ _ 1:411:10, P. 320 43 decorous" and checked with the Food and Drug Admin- istration, the Post Office Department, The Federal Trade Commission local medical authorities, and FCC principles.L Tue idea of such a code was rejected by a majority of the Connmlssion members because they felt that it cazue close to vir lating the law restricting the Commission from cen- sorsnip of programs. it was resudiated on the further grounds that such standards would be bett er ir;ttiated by the indus- try.81 ,w The Commission regulates broadcast advertising by / { virtue of a broad grant of licensing power contained in the . Communications Act of 193 4, the criterion being "tm public I \/; interest, convenience, or necessity." Because of the vague- \ mess of this term, the Commission has been able to exercise Ibroad discretion in formulating more specific standards. “In passing on programming under the te.s t of the public interest, convenience, or necessity," the Com. ssicn has had occasion to consider the cuelitctfivg merits of broad- cast at vertising. The Commission has established as policy that one consideration in a license proceec ing is the over- all program service of a broadcaster. In e.:diticn, the Commission also deliberates the szctitatiye aspect of ad- vertising, fer erample, ca.- o-o-‘nw-v-v ---- mow“ _ I . . . “9.3—1-3...ATJ—VLJH, Join, p. 30 g gilt; 46 ok a ). 50 In the same year, in a dramatic execution of that policy, 300 licenses were put on temperary ren wals.7 In the next year, on Narch 7, 1945, the Commission issued the "Public Service Responsibility of Broadcast Licensees” report, com. monly referred to as the Llue Buck, declaring that a more careful scrutiny of each egplicc33 t's pt”: ‘ ance won id be made. The report was based, in part, on the "experience" Q 3 \ 8 accumulated curing tne iLuMLVPIiug pc:ricJ. +3 in? .-' r’r.;2'i‘-t'?*fi of “a? F"!‘.'-*e ‘E’x'v‘V A ,,,,, PM AA The Ccmmi ssic r3335 erted eLd codified its previous position with regard to the impgr a;1ce of pro gr3. service as a significant cvnponent of the public interest: & .r‘th'vie"-Cb}3&fi.. i: atlo:.s Act-.11}: tag-'2 Radio fct Cf 1’527, ‘ 3 i0 :t3 tae Cummission to grant liccn3cs and re- i ncx.r :313 cf 11 can: es only if public nte rers?;ip for puLlic service. ( 'F‘U ad- {4 E» is A third grQUp of nro1fic asters CQWt012c3 t“a tthey were unaLls to estimate the tire to be given sustaining pro~ grams because they could not predict the dom3nd for time from commercial advertisers. This, said the Commission, amounts to an abdication of control over the station by the licensee to the advertiser. Er road cra ast liccnu ass were informed that: The requirement of a wellnhalanced “rocr3m struc- ture, firmly founded in the public intcr st pro- visions of the Communications Act, is a reSponsi- bility of the station licensee. To permit adver- tisers to dictate either the proportion of time which tha sicticn sh311. dc wv to to cw‘tuiuing pro- grams or any other m3jor policy decision is incon- sistent with the b3sic nrinci p135 of lic*n333 re- sponsibility on which AK 3rican broadcasting has always restefi. One standard of ooLrstion in t.nc p;Llic interest, tharefore,w wo131d be evidorro cf 3 rt; :sonabls groportion of time devoto.d to sustairir g programs. Accordingly, h Commission statsd tLat in rsviowing the program sorvice of a station, its application forms would afford 3pglicants l“ ,3 Vlbido‘ p. $00 193 . Lac. cit. $8 an Opportunity to state whether they would render a well- balanced program structure composed of sustaining features or a specialized service emphasizing programs of a partic- ular type or types. {fivertigiqg_ V"¢°“”% Dofinfi 2“d ‘2“‘::£.4.-The Blue Book recogniz2d tfaat "advertising represents the only ; sou c2 of revenue for most Amoricen broa wting stations, ; p and is therefore an indispensable p2rt of our system of broadcasting." The idea of what constitutes the "public intarest" as it pertains to advertising had ind2ed changed from the cm 1y regulatory his cry of +12 Commission. the Blue Book 32222d to place upon direct adver tisir:g 2n offi- cial sham; of approval as indicated by the following comment: Advertising in ganaral . . . and raoio advertising in particular, plays an 2322nt.ial rol-a in tne dis- tribution of goods and s2rvic 23 witn.in our economy. During the postwar era if manufactur r213 are to dis— pose of the tremendous cutout of whicn our postwar industry will be cap2blo, they must k22n their prod~ ucts before the public . . . informative advertis- ing which gives reliable factual d2t2 congerning av2il2blo goods and services is itself of direct benofi t to the 113 tenor in his role 2.3 congunmr. Consumer knon:lodgo of the now 2r d im"roved product which contributa to a higher stancara of living is one of the stepsztowafid achieving that higher standard of living. Despi to tha legitimate into rest and place a: ivortis~ ing has in American broadcasting, the int2r22t of listeners still has strong precedence over that of advertiser”. The history of broadcasting, moreover, disclosos a limitation 59 on the amount and character of advertising as an element of public interest. The Commission indicated that there had been a gen- eral rs oxation of sovertising standards in recent years and that stations and networks were ignoring the RAB Code. i. Initially, the Commission noted that the proportion of commercial to sustaining programs was excessive and was the most pressing problem rogsrding broadcast advertising. The proportion of overall time devoted to advertising by broadcast stations had increased steadily since the early 1930's. In addition, the Commission suggcsted that indi— vidual commercial announcements more too long and that '1ere appeared to be little limitsti on on the use of spot announce- ments. The Blue Book intinotod that a onoaminuto or longer commercial was too lengthy. The Commission fUrthor implied that a standard be prescribed limiting the nunber of commer- cial spot announcements. For exsmgle, spot announcements in excess of 1,000 per week have been frowned upon. The practice of “piling Up comzrwrcials" was also disapproved. Listeners had come to exgect a commercial plug to intervene their enjoyment of one program to another. The "hitch-hiker" and "cowcatchsr" on network pro- grams, now rarer but not yet exterminatcd, have at times meant that a listener Cosiring to hear two consecutive network programs must survive five intervening commercial pluqs-the closing plug of the first program, a "hitch-hiker" plug for another product of the some Sponsor, a local plug in the station break between prerams, a "cowcatchor" for a minor product of the Sponsor of the second not- work program, and finally the opening commsrcisl 60 of the second program.21 The Commission also listed as current advertising problems the time between commercials and the practice of the middle commercial. Listener satisfaction may depend on the apprOpriate length of time between commercial announce— ments, and advertisers and broadcasters perhaps would bene- fit from certain periods of uninterrupted programming. Similar benefit might accrue from the elimination of the "middle commercial," announcements that come in the middle of a program such as newscasts. The subject matter of advertising is likewise con- sidered by the Commission in the Blue Book. Thepatriotic“ commercial, wherein the advertising message is linked to‘ a patriotic appeal, is severely criticized. The Commission, therefore, maintained that an improper appeal to the listen- er's patriotism in order to sell a commercial product is a violation of the public interest. In addition, the ghxsio- logical commercial, in which an appeal is made to the lis- tener to "take an internal bath," was viewed with disfavor. The Commission was concerned about this type of commercial because radio advertising of drugs, toilet goods, and patent and proprietary medicines were assuming a disproportionate share of broadcast time. The Commission, furthermore, made reference to_propaganda in commercials and the intermixing 211bid., p. 44. 61 of pragrams and advertising. Regarding the former, the Com~ mission stated that the place of the broadcast commercial in our society is to sell goods and services hanestly and not to propagand126 one side of a dcbutod issue. An 1.2615- criminate mixing of program CCKItBHt and advertising, such as having a news analyst also deliver c0922: 21215 in much the same style as his news, is thought to be an abuse of the public intercst.2‘ i In the matter of the preceding practicas the Com~ mission pointed out that it did not intend to cane 9rn itse 1f directly with advertising 9: :cosses other than a dis repor- tionate ratio of afivertising time to program time. There did exist, however, a need on the part of the iadustry to review current advertisi mg practi cos with the prcsgect of L1) 0 N u 3f ! establishing 221 enfcrcing co ncrcte st 22d2rd- 23 e913- lation. The Comfln 95109 itself "hPS no d29i.72 to concern itself with the pfirt ic n.32r lenfth, content, or irritsting "24 qualities of partiCL lar Cfl”“‘tC‘”l p. HTS. Since 1'? he sz 1211c interest requires that the amaunt of time devotad to advertising m2tLer 9h211 bear a roason~ able relation to progra 22mirzg, the Commission included in its application forms a requirement hat applicants and 22 ‘49 r 10-“.20' pp. 40’47. 9- “JinjJJo, p. ‘27. 241: ido, p. 56. 62 licensees specify the amount of time they prOpose to devote to advertising in any one hour.25 Specifically, the new forms elicited information regarding the number of spot announcements carried by a station, and an analysis of the division of time between commercial and noncommercial pro- grams. This information was obtained by the use of the so- called "composite week," in which the Commission selects, without advance notice to the licensees, seven days of the renewal period for an analysis of program 1093. The Blue Book is vague on the extent or percentage of time to be devoted to sustaining or commercial programs, and the number and length of COMmchials and.conmercial 5p0t announcements. The Commission did, however, implement this report with a series of regulations defining commercial, sustaining, network, recorded, wire and local live programs. Other definitions embodied in these regulations were spot announcements and noncommercial spot announcements. Tnis document was a more detailed review of broad- cast station performance in general, and advertising spe— cifically, than had ever before been issued by the Commis- sion. The Blue Book, although not having the force ofma formal Commission-regulation, does stand as one of the most comprehensive interpretations of the public interest clause of the Communications Act. Tie report, however, did not .9 ._. ‘ 63 prescribe specific standarde for advertising, stressing the idea that regulation in this matter should be aeeumed by the industry. Although advertising practices would fall under increased scrutiny at renewal time, tne report's major purpooe regarding advertising in broadcasting seemed to be to crystallize and reaffirm policy which had been formulated in the early regulatory h story of the Conn scion. (”F a \r gdverticing Practicea ?i""l 1” t:: or; L;bion (I - J g-d J In the years immediately following the isounnce of the Blue Book, the Commission had occasion to discuss the subject of excessive advertising in severrl decisions. In 1947, in the gggene J. Roth case, an application for renewal of license was designated for a public hearing ”to determine the extent to which app icant in the opera- tion of Keno had carried out representations made to the Commission with r epect to program service, the past pro» gramming practices and future program policies of KCRO."26 The representations made to the Commission in prior eppli- cations for renewal of license were that 40% of the station's time would be devoted to commercial programs and 60% to sustaining programs. The evidence presented at the hearing showed that the average amount of time devoted to commer— 27 cial programs extended irom approxiuately 82 to 92%. The ‘20 31-!fi'.r‘e VT. Rial-J-" 12 FOCOC. 132 (1947). I 'fl ‘4'- See 50 fie EiC‘w’Cl-u '3'."- 1.135% ...: .. "0C0“. " 0 a1 F _ A 9, 1° I L 91 (1347) 64 Commission also probed into the number of spot announcements carried by the station. The record revealed that "during the composite week of 1945, the station broadcast a total 0f 2, 291 cormvercial 5:301: announce1m-‘n;s.' "('9 ‘1‘5153 Cgrggglgfiion concluded in the case: It is evident, therefore, that the precaiation of program schedules had to a large extr rat b-een con- trolled by the availabi 11.ty of cammcrc i.al Spot an- nouncements and the Opportunities for financial gain rather than by an effort on the part of the licensee to furnish an ov-zrall program plan which would serve the varied needs and desires of the peeple of $.1n Antonio and it s e“virons, and a re- view Sof the financial position of the station c1e arly show that the applica.t mi3ht well have achieved a satisfactory program balance while at the sane time contir nice the financial soundnese of his broac- cast venture.‘ The station was grants :d its renc owal of license wk on it prom— ised improved performance, definite the Commie .tion's conten- tion tllat its a41vertising polj.cy he.d cluoed the mainten- ance of a wellnbalaHCed program service and that the quan— tity of c».awrcit15 was exceasive. In another 1947 case, involving station troL, the issues wer similar.30 The to'misCLOn ch "o’tvrirvd the program service of WTCL as "over-commercialized," since over ‘°{e a ~~v~ J. ‘1ffl, 12 F.C c. 105 (1947), A1.:o see Re warn-I Broariiw’5‘r‘vr3 «agar/m, 31:“ 3.1. (N. Y. m Cases‘ ), 12 -‘CI‘ '--F!|.‘~ "m‘a - =" ‘ ‘ :4 - 1 r 3- 1 FOVOC. UVJ .LJ‘L“ J) ; ‘\'C: at: .‘.' -... 1.21 .- 1.1 tr. vi: (’3. '3- aflfig’ 13 F.C.C. 520 (1949); R l. 133;y5 Fischer, 6 E‘I' 195 (19237. '6 vV— ‘— _' t.fi%'—“J .4. "’ ‘ . "~ -‘6 ‘ 0' .-- "' 'Tv‘ .v- eLA.Lw uinxu1\/, xire and ._A_ A" ‘ .4 .. 5! i "3 1 . 1 ‘ fie oucone J. Roth, 12 F.c.t. 108 (1947). 50138 Cam unfit-u, TJv-paAr-sirbif‘r‘! C""‘;"“"’ 12 FOCOC. 85 “— tw— (1947). 65 80% of the programs broadcast were sponsored. In addition, seven spot announcements within a 15-minute period were considered excessive. The following comment from the Com- mission's docision is significant: On the record, we conclude that the basic reasons for the program situation that existed at hToL were, first, failure of the owners of the licensee to par- ticipate in or closely supervise the day-to—day op— eration of the station; second, employment of a general manager in comnlete charge of day-to—dsy Operations on an incentive pay contract under which the monsoor's income was directly rclstcd to the amount of gross sales; third, preoccupation of the manacsmont and owners with the commercial functions at the expense of the programming and service func- tions of the station; end, fourth, failure of the owners to insure that program and sales functions should be segregated, and that control of program structure should be divorced from employees whose a1 primary functions were the sale of commercial time.” The Commission granted the station its renewal of license principally on the basis of representations mods to it that the program service would henceforth be improved. The 11» censoe agreed that commercial programs would not exces- 67% to 75% of the total broadcast time and that the number and length of commercial spot announcements would conform to more exacting standards, for examyle, three minutes of commercial continuity in a 14 1/2 minute-sponsored progrem.32 In still another 1947 case, the Commission seriously questioned a station's advertising practices on the principles elicited in the Blue Book. Among several other programming 0") UN lapses, station KEAC in San Antonio, Texa3, was qu3stioned regarding its prior representations with respect to commer- cial and sustaining broadcast ti me and the quantity of com— mercial zpo announcements. From the evidence adduced at the hearing, it wzn shown that the station's actual prac- ti co varied com: he 1:32:1‘r from r333333ntations made to the onmission regarding the amount of time devoted to commer- cial programs. The actual percentage of commercial time would have even been gre a or if the 3.3iiCdnt had followed the current method of program clossifization, in which each 14 l/B-minuto so3ment of a station's tro3dc33t day is treated as a complete 33 mercial sejment if one or more commercial Spot announcements apoear therein. In computing its per- centa3e cf cortorci 31 and 5323? i313; time, eta tion P3 AC had followed to older method of progr3m classifio3tio n in uh ch all periods of the broadcast day were tr33333 as sustaining unless they were actually paid for. In adfiition to a high proportion of conrorci3l time 3.1 its ovorall schedule, the applicant was shown to 1:3Jo Lr 33:1:33t 1,637 coinoiciel spot announcements during the Composite week of 345, 33d prior ‘to that had broadcast more than 2,233 spot announce:m.ts .in.a one—week period. The :rasti3e of 1:33:3133 in excess '11 (of four soot announcements in a;y given 15-minute segment (of the broadcast day was also considered inadvisable. The evidence in this 3333 indicated that the appli- <2ant had not at all times observed the responsibility to 67 serve the public which is incumbent upon him as a broadcast licensee. Particularly damaging to his performance record was an unbalanced program structure in favor of comiercisl progr ms and the broadcasting of an excessive number of com— mercial soot annouuccaunts. A renewcl of license was granted, however, when the Commlss ion was satisfied tLat the apgli— cant appeared to we cognis rant of his puslic scr'ice respon- sibility by virtue oi improved practices curing the hcsring emd prmmiscs 1.0): ilkcxudacsd ulversity of pr .3 r; .;1:‘I:ing .33 The Ccmntssion wittm} 1d action on se"e.rsl other applications for renewal of liccns e during those years on similar grounds, and used similar standards in the awarding of initial licenses. In the E111: