Speaking of further business regulation, take the case of the man who is applying for a radio station. In his application he is required to set forth in detail with exhibits the character and types of program service he proposes to furnish when the station finally goes on the air. He is required to show (p. 36, form 301, as revised April 25, 1944) the total average weekly time to be devoted to such program classifications as entertainment, education, religious, agricultural, fraternal, news, etc. He is further required to state the number of hours and percentage of time per month to be devoted to sustaining programs-those without paid sponsors—and commercial programs. The applicant is also required to state what percentage of the total monthly time will be used for network programs (if he contemplates an affiliation) both sustaining and commercial.

This, of course, is only a small part of his application and very simple to handle since the elapsed time between the filing of his application and the time of final grant may only be a matter of 8 months to 2 years, during which time prices, labor conditions, and community problems and development remain absolutely constant to fit the information given in the application.

To get to the point in this case let's have the station granted at once-and it has now completed 3 years of operation. It is time for license renewal. Time to fill out another application and to show again how much time is being devoted to all the types of programs originally set forth in the application, and to show again how much time is devoted to paid programs and how much time to sustaining programs.

This is the check-up. This information reveals to the FCC how the broadcaster is maintaining those percentages in program time that he originally said he would, and if he took a greater percentage of paid programs than he set forth in the original application.

And what happens if his percentages have changed with changing conditions in his town? A check-up is made by the FCC before the license renewal is granted.

This, gentlemen, is business regulation with a capital B under implied threat of losing a license to broadcast.

True, the provisions of the present act do not specifically state that percentages in types of programs and in sustaining and commercial time cannot change, but the Commission's prescribed right of inquiry and required reports in this connection constitute a serious business regulation through implied threat of losing a license or having it held up pending investigation.

Ask any broadcaster his reaction to showing his complete break-down by hours and percentages of his program structure for his renewal of license application and his annual program report, and let him tell you what he suffers and why.

With another example, I'd like to show how the declaration of the amount of time to be devoted to sustaining programs and commercial programs very neatly devolves into the most vicious type of business regulation.

Broadcaster X applies for a radio station. In his application he states that he expects (eventually) to operate his station on a 70-30 percentage basis. Remember, this statement is a requirement of the Commission. He eventually expects to have 70 percent of his time sold and on a commercial basis and the other 30 percent will be sustaining time-no income from it. During the first year of operation his progress is comparatively slow, and he has far less than 70 percent of his time sold commercially. He's just in the normal building up process so he gages his operation carefully, keeps his expenses as low as he can in order to get into the black as quickly as possible. Two more years of hard work pass and things are looking up. The station has been on the air 3 years, and the staff has grown to pretty fair size-operation costs have gone up with station growth. New equipment has been added. The station is building itself up inside as well as outside, and lo and behold the station manager finds that he has reached the point of having 70 percent of his air time sold commercially. This is slightly serious because that was the limit provided for in the original application. And just at this point, what happens? A new station is granted in his area and goes on the air. Bingo; competition. Newsprint loosens up at the local newspaper a bit and more advertising space is available over there. Conditions have changed and prices are sky high and some of the advertisers are getting a little jittery. Now, competition has set in, conditions have tightened up. Wages haven't dropped a bit and the squeeze is on. If competition forces an advertising rate decrease because the two stations split up the audience, how

can he keep his head above water unless he steps over the 70 percent commercial deadline? Can he afford to squabble with the Commission about that? Can he cut down his staff and let the other station beat him out? He's right in the middle, and that original required regulation making him state his percentage turned out to be a very rough business regulation.

Who is to say, and by what right, how much of its time a radio station can sell? What authority, constituted or otherwise, can assume the responsibility for public taste and preference in radio programs to such a degree as to presume to say what programs are in the public interest and which are not, and how great a percentage of time should be allotted to specific types of programs? And who shall specify that any programs are to be sustaining unless at the manager's discretion? Is there a law that a grocery store must agree to give away a certain percentage of its food in order to open up for business?

The natural law of preference on the part of the public has been the natural law determining the success or failure of private American business enterprise. The manufacturer, the individual merchant, the newspaper-all survive and thrive or decline and fall on the natural law of public preference. There is no longer the scarcity of frequencies in radio that makes a licensee secure without thought of programing or listeners. Over 100 radio stations in this country are up for sale on the present market, and many frequencies are going begging. Stations in AM are springing up at a tremendous rate since the wartime freeze has been lifted on radio station applications, and the prospect of over 700 new FM stations is a matter of record at the Commission.

Can there be any question that public preference and acceptance will determine which stations will thrive and grow and which ones, through inadequate programing and insufficient listening audience, will be dropped by the advertisers and subsequently forced either out of business or into new programing fields to hold their own.

All the business regulation that radio needs is open competition in its field, and the radio audience and the advertisers will become the most compelling and exacting regulatory forces that could be devised.

That is the basic American principle of free enterprise. I challenge anyone to say that radio has not earned its right to the freedom that other free, private business enterprises enjoy.

The CHAIRMAN. The next witness is Mr. Stanton of the Columbia Broadcasting System. I make the same request of you, that you do not cover the same ground in your oral testimony that is covered in your written brief.

STATEMENT OF FRANK STANTON, PRESIDENT, COLUMBIA BROADCASTING SYSTEM, NEW YORK, N. Y.

Mr. STANTON. My name is Frank Stanton. I am president of the Columbia Broadcasting System.

I filed this brief, and I would like to highlight some parts of it, if I may. To save time I would like to just read briefly from one or two pages in the statement that has been filed.

During the past several years we have actively participated with other members of the industry in discussions and hearings looking forward to a modernization of the radio law. We welcome the introduction of S. 1333 as calling attention to the need for changes in the law, and I appreciate this opportunity to express my views upon the proposed amendments to the Communications Act of 1934.

I might add that Mr. Joseph Ream, CBS executive vice president, will follow me as a witness, and discuss the procedural parts of S. 1333. Representatives of the Columbia Broadcasting System who have appeared in the past regarding broadcasting laws have emphasized one central theme in their testimony: The necessity for a free and democratic radio in the United States. William S. Paley, then president

of CBS and now chairman of the board, stated in 1942 before the House Committee on Interstate and Foreign Commerce that

the first and fundamental requirement for radio broadcasting is that it should be kept completely free freedom of the air is at least as important to

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the American people as freedom of the press.

Again in 1943, testifying before the Interstate Commerce Committee of the Senate, Mr. Paley said:

The one fundamental safeguard which is paramount if we are to avoid complate governmental control of radio is a straightforward prohibition against the Commission concerning itself with the program policies or business practices of radio stations.

There is no question in my mind that broadcasting must be free from government interference or control if it is to serve its democratic function in our Nation.

Unfortunately, broadcasting today is only half free. It has been singled out among all of the media of communication of thought for Government regulation. Although originally conceived in order to prevent technical interference among radio stations, the role of Government has continued to expand with respect to broadcasting until today there are regulations for business practices and recently for program content. This inching-up process by Government, if continued, will become a regimental march. This is not unusual; it is the normal concomitant of Government regulation, and is generally accompanied by the highest motive on the part of the men in Government who do the regulating.

It has been universally agreed that broadcasting is not a common carrier or a public utility. Nor is broadcasting like the ordinary manufacturing and distributing industries. It is rather an integral part of our great modern media of communication. Radio addresses the mind through the ear, the newspapers and magazines through the eye, but both communicate information and entertainment to the minds of the people. With the dissemination of news by facsimile broadcasting, even this difference will disappear. There is no doubt today that a free radio is as vital to a free press as the newspapers and magazines. Having gone through its birth and adolescence these past few decades, radio is ready to claim its majority: Equal rights with the press under the law.

To be as free as the press, radio must be equally free from Government controls of programs and business. As long as necessary, the Government should allocate frequencies and grant licenses to broadcast, just as the Government allocated scarce newsprint supplies to the printed press while necessary. Anything more is contrary to the public interest in furthering the free expression of ideas, free from governmental interference.

I say radio should be as free as the press despite obsolete but lingering theories that radio is a field of scarcity and natural monopoly, while the printed press is unlimited and democratic. History has caught up with these theories. During this year there are in operation or on their way more than 2,500 radio stations, and there will be still more. There are only 1,700 English-language daily newspapers in the United States. Theoretical scarcities in broadcasting have expanded into practical plenty; theoretical plenty in the newspaper world

has been contracting into practical scarcity. If in past years the scarcity theory had any validity as an excuse for Government intrusion into business practices or program policies of broadcasting, it is certainly not valid today.

Technical engineering considerations involving frequency allocations, station licenses, and station broadcast apparatus should not stultify the basic traditions of free press and free speech which are now applicable to radio. Radio, although as unknown to our founding fathers as our great modern newspapers, is just as much a part of our precious heritage of free speech and free press.

Thus I believe that the present act, as well as the proposed legislation, should be measured by the same standard as the press. That calls for a new approach to the Communications Act-certainly as the act has been recently interpreted and administered by the Federal Communications Commission. All provisions other than those relating strictly to the allocation of frequencies, the granting of licenses, and the technical operation of broadcasting apparatus seem to me inappropriate in the Communications Act.

I am not asking that radio broadcasting be placed above the law. Broadcasting is, and should be, subject to applicable general laws, just as are newspapers, magazines, and other businesses. There is no reason why broadcasting, which is not a common carrier or a public utility, should be subject to additional burdens from Government interference.

I want to urge as strongly as I can that anything short of a full recognition of radio's right of free speech is bound to result in compromises and uncertainties and increasing Government control. Nevertheless, since S. 1333 presents specific practical problems, I would like to comment briefly on some provisions which require special mention.

The proposed section 326 (b) should be the cornerstone for the foundation of a free radio. The cornerstone as it is now proposed, however, has a fundamental flaw. After providing that the Commission shall have no power to affect or control material to be broadcast, the section concludes with this proviso

that nothing herein contained shall be construed to limit the authority of the Commission in its consideration of applications for renewal of licenses to determine whether or not the licensee has operated in the public interest.

It seems clear that the rights sought to be conferred in the first part of the section are completely taken away by the proviso. Further, the proviso may well be construed as sweeping statutory authority for the Commission to inject itself even more deeply into the program policies of stations. It is my fear that if such a proviso were enacted into law, the program schedules of broadcasters would be even more directly influenced by what a governmental agency conceived to be "in the public interest."

The CHAIRMAN. You deny the right of the Government, I take it, from what I have heard of your statement, to look at the station program record of the station, in order to determine one of the considerations which would lead to a determination of whether that station should be relicensed or not?

Mr. STANTON. That is correct, Senator. That is my position. The CHAIRMAN. Well, I am sorry that I am just diametrically of the contrary view.

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Mr. STANTON. I have gathered that from the remarks that you have made, sir, to the other witnesses. I believe that it would be a dangerous thing if we gave the Commission more authority or any authority in the field of program review. I believe further that we are kidding ourselves if we talk in language of over-all review, because I believe that over-all review, to become operative, means specific review. That is a very dangerous thing.

In short, I think that broadcasting should be as free as the press in this country, and I think we run head-on into that problem, as I have already mentioned, and as other witnesses have mentioned, when we come to the day of facsimile broadcasting.

Senator JOHNSON. Do you make any distinction between your programing of advertising, paid for advertising and other forms of program?

Mr. STANTON. I am not sure that I understand the question.

Senator JOHNSON. Are you making a distinction now in asking for fewer restrictions in the two forms of program?

Mr. STANTON. No; and I am not asking for any distinction to be made in the freedom, programingwise, whether it be a so-called commercial program, or whether it be a so-called sustaining program. We are responsible for our operations to the listeners, and we treat that responsibility with the greatest sincerity and determination to do the best we can.

On that score, I believe we are operating much the same as the press operates and I think that we should be granted the same freedom beyond the necessary regulations that have to do with the electrical characteristics of the radio broadcasting system. I am not saying there should not be any regulation. I am simply saying that regulation should not invade the field of programing or the business field. Senator JOHNSON. You find it necessary to exercise restraint in your programs yourself, and you want that right without review.

Mr. STANTON. Yes, to answer you quite frankly, I do. In complying, let us say, with my request, you would be giving that right today to roughly 2,500 stations. I think that I would rather have that diversification than the right of control in a small group of people who cannot possibly know the day-to-day conditions in particular communities.

Senator JOHNSON. That is an arbitrary power, however. The restraint that you exercise, that the broadcaster himself exercises, is an arbitrary power, and the whole controversy centers on whether government should have any right to oversee the exercise of that power. Somebody has to exercise it, and you admit that when you say that you exercise it. Of course you do exercise it.

Mr. STANTON. Well, sir, I exercise the same rights in running a radio station as an editor or publisher exercises in the conduct and publishing of a newspaper.

Senator JOHNSON. Well, of course, I know you like to refer to the press, but there is a great difference between the press and radio, whether you recognize that difference or not, and I do not think that the comparison is a proof of your argument at all. There is a great difference, and that has been gone into hour after hour here in these hearings, and there is no use to go into them again. But there is a great distinction between a licensed industry and an unlicensed indus

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