By 1938, the charges of "monopoly" in the radio industry were nothing new. For several years, both houses of Congress had been badgering the new Federal Communications Commission (established in 1934, replacing the Federal Radio Commission) to investigate the networks, and discover whether the networks were copping control of commercial broadcasting. In the fall of 1938, they got their wish, when the FCC opened hearings into the monopoly matter.
The primary purpose of the investigation was to examine the physical setup of commercial broadcasting. There were 330 independent stations, while 340 stations were either affiliated with, or owned by the major networks. But while the independents had an estimated total maximum power of 190,000 watts, the network stations' total power added up to 2,800,000 watts.
But the network's dealings with their affiliates brought most of the complaints. Among them:
Even so, stations valued a network affiliation, for it brought big shows that built a faithful audience and attracted local advertisers as well as national spot programs. In addition, the empty hours could be filled by sustaining (unsponsored) programs that were free to the stations.
A committee of three FCC commissioners heard testimony on 73 days between November 14, 1938 and May 19, 1939. The hearings began with testimony from both NBC and CBS, focusing mainly on network operations, and agreements with stations and talent (NBC at that time owned an agency called the "NBC Artists Service."). When it was Mutual's turn, MBS board Chairman Alfred McCosker swung back at charges that his network was "parasitic" by testifying that Mutual was shut out in 30 markets where exclusive contracts existed, and that no matter how good the MBS program might be, Mutual could not break in while stations were tied up in exclusive contracts by the older networks. What's more, McCosker added, stations without exclusivity provisions still hesitated to take Mutual programs out of fear they would become outcasts.
The hearings resulted in the "Report on Chain Broadcasting," issued by the FCC May 2, 1941. They included seven regulations, each one directed at a particular practice the FCC found to be detremental to the "public interest." They included:
Along with the report was an order adopting the regulations, which were deferred for 90 days with regard to existing network-affiliate contracts (there would eventually be three more deferrals).
The new rules only intensified the fight. Within much of the broadcast industry, Mutual was seen as a troublemaker, having given aid and comfort to "the enemy" (i.e., the FCC). Sensing this, Mutual issued a "White Paper" with its answer to the critics:
were not in any sense instigated by Mutual or its stockholders or affiliates. . .
It is childish to charge Mutual with responsibility for either initiation
of the proceedings or the results. The latter were the direct product of facts shown by
undisputed evidence for which the two older network companies cannot avoid full responsibility.
The immediate result of the FCC's report was the "White Resolution," proffered by Sen. Wallace White (R-Maine), requesting an investigation of the FCC. Senate hearings started June 2, 1941 and lasted through the month with testimony from the networks and stations, much of it a reprise of testimony already given before the FCC. But the hearings faded after a month without any results.
So NBC and CBS went to court.
The two networks filed suit against the government on October 30, 1941. The aim was to stop the FCC from enforcing the new regulations. Mutual would intervene as a friend of the court when the case came up for argument in New York Federal Court.
Meanwhile, the radio business continued, and MBS took its on-air victories whereever it could get them. This was noted by Variety when it awarded Mutual an award for outstanding public relations in 1941. In its award, the trade newspaper recognized MBS' continual struggle:
Lacking programs that were "musts," possessing only an occasional star personality,
handicapped by budget limitations, complicated stock ownership of the web,
facing the bigness of its powerful competitors, Mutual has not been able
to afford the luxury of supposing anybody had to come to it.
No radio editors make their business headquarters at Mutual, few Mutual events are natural copy.
It is therefore an achievement of constant labor and alertness that ...
Mutual manages surprisingly often to get fairly equal breaks and consideration along with NBC and CBS ...
It was impossible to not recognize that Mutual ... is a sterling example of getting results.
MBS was hoping to get results in the fall of 1941, when it snared "Three Ring Time," a Friday night half-hour variety show featuring the unlikely teaming of Charles Laughton and Milton Berle. Sponsored by Ballantine Beer (the title was derived from the sponsor's logo), it was designed to make Mutual a major player in transcontinental broadcasting (Radio Guide called the show "Mutual's fair-haried child"). Premiering September 12, 1941, the show got good initial reviews (Variety called it "in the groove . . . it has the entertainment ingredients and a strategic spot to enjoy a hefty listening audience").
But by the end of October, it was the center of a beer brawl between the sponsor and two networks when Ballantine announced it was immediately switching the show from Mutual to NBC Blue. Mutual hit NBC with a myriad of charges, including: 1) that NBC reversed its own policy against beer advertising to get the Ballantine account; 2) gave guarantees to the agency and the account against any action for damages; and 3) of taking "Three Ring Time" from stations airing the program through Mutual only to feed it back a half-hour earlier the same night at 40% less compensation to the station (14 stations taking the Mutual feed were Blue affiliates).
According to Ballantine's agency, J. Walter Thompson, NBC had always been the first choice for "Three Ring Time," and had asked NBC to let them know immediately if they ever changed its policy against beer ads. Thompson said its reason for switching networks was that the show had been dropped by Blue affiliates in Providence, Cleveland, Bridgeport and Jacksonville. The agency asked for a release of its contract, which covered 52 weeks but bound Ballantine for only 13. "Three Ring Time" aired on MBS for the last time on December 5, 1941, moving to the Blue the next Friday.
While it may have been an important account for Mutual, the show made no impression on the audience, with ratings in the low single digits; or with its cast: Berle and Laughton clashed almost from the beginning, Laughton left the show a month after its move to the Blue, and "Three Ring Time" ended its run in June 1942, generally thought to be the biggest bust of the 1941 radio season. In the wake of the sudden move, Mutual slapped a $10-million dollar anti-trust suit against NBC.
Mutual had better luck - for a time, anyway - with another plum account, winning a million-dollar, 52-week contract with the Coca-Cola Company for a weeknight quarter-hour and half-hour Saturday series on 125 stations - "Spotlight Bands." (To celebrate, MBS installed a 120-bottle Coke machine in its New York headquarters. After G.M. Fred Weber drank the first bottle, Mutual treated all its employees to a Coke on the house.)
"Spotlight Bands" was a twist on the standard dance remote that all networks had at that time; a different band fronted each night of the 15-minute series, but Saturdays were reserved for the band who sold the most phonograph records the previous week. A popular series, within three months it was moved from its original 10:15 p.m. time slot to 9:30 p.m. But it only ran for half of its 52-week Mutual contract; with the U.S. in World War II by spring 1942, Coke wanted to take the show on the road to different military bases, something it's thought Mutual may have lacked the facilities to pull off. So the show moved to the Blue, renamed "Victory Parade of Spotlight Bands" as of September 1942 (it would return to Mutual, however, for an 18-month run starting in June 1945).
Not to forget that there were other Mutual programs making an impact in this time: "The Shadow" knew what evil lurked in the hearts of men every Sunday afternoon; Fulton Lewis jr. reported from Washington every weeknight at 7, with Gabriel Heatter insisting "There's good news tonight!" at 9; late weekday afternoons were for the younger set, with "Little Orphan Annie," "Captain Midnight," and even the venerable "Jack Armstrong" for the 1941 season. There was freewheeling, advertiser-bashing comedian Henry Morgan, whose dinner-hour series, "Here's Morgan," brought madcap humor to the air starting in 1940. For quiz fans, there was "Double or Nothing," which started its long run on Mutual in 1940. And don't forget the masked man of the old west, "The Lone Ranger," who rode with Tonto three times each week on Mutual until it moved to the Blue Network in 1942.
By 1941, nine stations and regional networks held stock in Mutual. Aside from WOR, WGN and CKLW, there was WFBR in Baltimore, WIP in Philadelphia, and WCAE in Pittsburgh, along with the Don Lee, Yankee and Colonial networks. In 1942, General Tire & Rubber Co. entered the MBS ownership picture by purchasing the Yankee Network.
While the networks were fighting at home, freedom was at stake on the world's battlefronts. With the onset of World War II, the networks were thrust into the role of news providers and morale boosters, especially after the U.S. entered the war in the wake of Pearl Harbor. Earlier, Mutual had been drawn into a small controversy in the Summer of 1940 when the Don Lee Network cut off a speech by Adolf Hitler that MBS was airing. Announcer Stu Wilson read the words of Don Lee head Lewis Allen Weiss after being ordered to cut off Hitler's harangue after 45 minutes: "In our opinion . . . Mr. Hitler should not be permitted to use our American facilities to justify his crimes against civilization itself."
Within an hour of Weiss' impromptu editorial, more than a hundred listeners phoned KHJ to compliment the station on its stand. The move sparked a debate about freedom of the press and the definition of propoganda. It also put Mutual in a tight spot when MBS broadcasts from Germany were stopped as retaliation by the Nazi government. It took more than a week of negotiations with German broadcasting authorities for broadcasts to resume, the first being a commentary by Sigrid Schultz in Berlin.
While Schultz reported from Berlin, Mutual aired reports from John Steele in London, as well as reports from stringers working for wire services, such as Walter Kerr of United Press. MBS also rebroadcast English-language newscasts recorded from European shortwave stations and the BBC - a technique praised by radio critics for allowing listeners to hear all points of view on the day's news. In addition, Mutual had analysis from Raymond Gram Swing and Quincy Howe.
Back on Radio Row, Mutual had 207 affiliates by the fall of 1942, with business up 46 percent over 1941. Several MBS stockholders felt it was time the network had a paid president. Aside from general manager Fred Weber, Mutual had no salaried officers, and the feeling was that the network's stature would be helped by having a salaried president who would command national attention and recognition. It was not necessary, they said, for him to have a broadcasting background, but rather somebody well known in the advertising, mercantile or political field. The man they chose fit the bill.
48-year-old Miller McClintock, came to the Mutual presidency after a year as executive director of the Advertising Council. Prior to that, the Nebraska native headed the Traffic Audit Bureau at Harvard and Yale, and had served as market research advisor to the can manufacturing industry. Although he had no radio research experience, he did have a reputation as an organizer.
Meanwhile, the networks' legal battle continued. The suits brought by NBC and CBS against the FCC had dragged on through 1942, with dismissals and reversals. Finally, an appeal reached the U.S. Supreme Court, which heard arguments in February 1943.
On May 10, 1943, the Court issued its ruling, and sent NBC and CBS away empty-handed.
By a vote of 5-2, the Court sided with the FCC, saying the commission had the authority to enforce regulations on chain (network) broadcasting. The regulations prohibited any affiliation contract which:
1) prevented a station from broadcasting the programs of any other network;
It was a clean sweep for the FCC - and for Mutual, which got essentially everything it had asked for. McClintock said MBS welcomed the application of the FCC's rules, saying, "We stand for such contractual relations between the network organizations and their affiliated stations as will result in the broadest possible program service to the public and in the maintenance of competitive enterprise."
McClintock, by that time, was also waving a white flag to the industry. At the Mutual affiliates' annual meeting that April, McClintock struck a note of peace: "We are not fighting anyone. We are not against anyone. We must have the capacity to serve and not tear down." Mutual chairman Alfred McCosker said the best was yet to come for the network, and the toughest experiences were behind it.
Soon to be in Mutual's rear-view mirror was Fred Weber. The network's longtime general manager and coordinator found his influence greatly diminished with McClintock now at the helm, and in July 1943, announced he was leaving Mutual to become a part owner and manager of WDSU New Orleans - a Blue Network affiliate. By the end of September, Weber had cleaned out his desk at MBS; they issued no statement about his departure.
But finding Weber's replacement was anything but easy. Mutual offered the job to a number of broadcasting executives, all to no avail - even after dangling an annual salary of $30-thousand a year (it was a lot of money back then). Among those reportedly wooed were CBS' Frank Stanton, NBC V.P. John Royal, and WLW G.M. James Shouse - and all turned it down. The G.M. post was still unfilled more than a year after Weber left.
By the time of Weber's exit, Mutual had 213 stations. Although they worked cooperatively on the network level, to a large extent they worked independently. The result was that advertisers would buy time on stations in only one region, rather than buying the entire network. The major stations - WOR, WGN and the Don Lee Network - also sold their own time locally. As a result, MBS found itself involved in a myriad of different deals with its affiliates, each of which had its own contract with the network, the main drawing point of which was the 15% commission Mutual took on all commercial sales. It was a great deal for the stations, but kept Mutual in a weakened state that kept it from upgrading its programs and services.
So in late 1943, Mutual threw out all its old contracts and put its affiliates under a standard agreement modeled after those of NBC, CBS and the Blue. Under the new plan, stations received no compensation for the first 16 unit hours of network commercial programs carried during each 28-day period; in return, MBS would pay all wire line charges. For the next 25 hours, Mutual would pay the station 25% of its average unit hour rate; 32½% for the next 25 hours, and 37½% for all hours in excess of the first 50.
The new contract was designed to give MBS more working capital for promotion, sales, research, and especially programs, with the bulk of the revenue earmarked for "creation and maintenance of a high-quality network program service." McClintock said the network's owners would not profit from the new set-up, retaining the cooperative and non-profit type of operation.
The funds would help implement a new "aggressive" program policy approved in July 1943. It replaced a policy that consisted largely of taking whatever its stations gave it. Since the network's beginning, Mutual's programs came mostly from wherever Mutual stations of sufficient showmanship had local programs available for feeding to the network. In theory, that plan was excellent, since it tapped regional springs for authentic American song and entertainment. In practice, though, the results were extremely uneven, precisely because there was no budget.
The new policy vowed to "eliminate various types of programs not currently suited to the overall program policy and replace them with name-star, dramatic and idea shows of outstanding character." The MBS board also approved formation of a Program Operating Board to analyze and solve program problems.
The new contracts and emphasis on programs were a good start on improving Mutual's fourth-network status - and image. However, much more needed to be done.
But just how to do it sparked conflict in the Mutual executive offices, and led to some resignations in 1944, including that of station relations head Richard Conlon, and General Sales Manager Ed Wood.
Then in October 1944, Miller McClintock gave his notice.
Mutual needed to find a "Lone Ranger" to straighten things out. He would come from one of its competitors.
Some information on this page came from various issues of Variety, Broadcasting, Business Week and Current Biography.
Text copyright © 2017 Kenneth I. Johannessen.
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