CLIFF DURR: WAVE-LENGTH WARRIOR

...As a Federal Communications Commissioner he has reiterated over and again : "Advertising is a traditionally accepted, and I think sound, feature of our system of broadcasting...

...If the former, how do they expect to operate the stations so that they will be self-sustaining and at the same time yield a fair business return on investments ranging from four-and-one-half to 10 times the investments of the former licensees...

...When Congress...

...The significant fact about this purchase is the price— $500,000, which is 10 times the net worth of the station, as carefully calculated by competent accountants, and 24 times the 1943 net profits before Federal taxes...

...Born 45 years ago in Alabama and receiving his college education there, he went to England as a Rhodes Scholar where he studied law...

...If more time is to be sold, will a reasonable amount of the free time still be left for local civic programs, educational programs, the discussion of controversial public issues, and other sustaining programs ? "Far from the least important features of our American broadcasting system is that the cost of establishing and operating radio stations has been within the reach of qualified individuals and groups having only moderate financial means...

...It is equally apparent that the purchasers are not paying on the basis of anticipated income, which would include the good will of the station, for the prices are far greater than the prospects of income alone would warrant...

...Upon his return to this country he practiced a short time in Alabama and then entered a Milwaukee firm...

...Are there elements of value in the transferors' properties and businesses which are not apparent from the information contained in their applications, or are they selling something they do not own and have no right to sell, namely, the use of a Tadio channel ? "Moreover, the new licensees are taking on financial loads many times greater than those of the old licensees...

...It is not surprising to find Cliff Durr on the side of small business and diversified, non-commercial radio, for he has been the champion of the latter cause since he was appointed to the FCC in 1941, and a friend of small business since he left his private law practice in Alabama in 1933 to spend "a few months," as he then thought, with the Government...

...The consequence to the small businessmen and labor unions or co-ops is equally serious...

...Because of his RFC experience, Durr is often consulted by liberal members of Congress on a sound postwar reconversion program...

...Durr's friends worried seriously for a time over whether Cox would resign from the committee or attempt to put Durr in jail for contempt...

...Today, he unhappily notes, most radio programs originate in New York, Chicago, or Hollywood...

...Certainly the inflationary trend should not be encouraged by permitting the capitalization of licenses...

...Cox had accepted a $2,500 check from a Georgia radio station to represent it in obtaining certain favors from the FCC...

...It is apparent that the purchasers are not paying these sums for physical properties, for the physical properties are worth only a small part of the cash outlay...

...Only one Federal Communications Commissioner, Clifford J. Durr of Alabama, dissented to the decision to approve these sales and in so doing he took a stand which merits the attention of the public both to the issue in the cases and to the man who saw the issue...

...However, it is one thing for advertising to be used as a means of supporting a very vital instrumentality of public service...

...Cliff Durr is one of the few...

...Yet now, by a process of business usage sanctioned by the FCC, this privilege suddenly becomes "property" and brings an enormous return to its holder on a relatively trifling investment...

...It is an entirely different matter when a vital instrumentality of public service becomes predominantly an advertising medium —and that is what our broadcasting system is rapidly becoming...

...The transfers ofstations WINX...

...Durr has been no friend of those forces in radio which make for cheap commercialization...

...The book value of WINX in Washington, D. C, is $48,000 and the replacement value of its physical property was $58,000.Radio has been small business, such small business that entry into it was possible for small groups of men with very limited financial qualifications...

...Representing a public utility gave Durr a practical knowledge of business which has been invaluable in his Government career...

...Is it anticipated that profits will be increased through more economical and efficient operations or by increasing the price per unit of time sold, or is it contemplated that a substantial amount, if not all, of the increased profits will have to come from selling more time...

...In the present cases, do the transferees regard their purchases as business ventures, or do they intend to operate the stations without regard to profit...

...If soap operas can sell, so can local little theater programs...

...and in Bessemer, Ala., another purchaser paid $106,000 for station WJLD, seven times its net worth and 21 times its net profits...

...It is because the stations are...

...The present inflationary trend in the price of radio stations, if continued, will tend not only to increase still further the already tremendous pressure on sustaining programs but also to push radio broadcasting more and more beyond the reach of any but the well-to-do...

...One of Durr's objectives for radio is the development of local talent...

...The entire radio system is thus coming under the dominance of a handful of commercial interests as the sustaining programs ¦—the round tables, the symphony hours, the educational programs—go out the window...

...Already radio's capacity to function as an educational for>'e has diminished under the encroachment of the advertisers' time, so that today most of the good radio hours are controlled by national networks which in turn receive 74 per cent of their revenues from four industries : food, drugs, soap, and tobacco...

...There, then, is the reason why radio stations are being sold at prices which show no relation either to earning power or invested capital...

...E. E. Cox, Georgia Democrat...

...For what is this excess being paid...

...It should be an instrument of local self-expression...

...Competition can be promoted by a judicious selection of operators, and as a precaution against the subsequent consolidation of interests which may then appear to be competitive, lease of the plants would appear preferable to outright sale...

...In many communities, all presently available standard radio channels are occupied and the only way for a newcomer to get into the field is by the purchase of an existing station...

...Many of the finest musical and entertainment programs would be impossible without it...

...All of these stations are commercial stations, and it is reasonable to assume that the purchaser of a commercial station buys with the expectation of earning at least a reasonable return on his investment...

...The inflated price of stations has perturbed the FCC for some time, and several other members apparently differ from Durr's conclusions only to the extent that they doubt their legal authority to meet the situation...

...Here is a set of high prices which cannot be attributed to the rising cost of living, for not even the most sky-rocketing cost of living figures begin to account for the sale of radio stations in 1944 for sums which run from 21 to 33 times their net income before taxes in 1943...

...The Battle With Cox Durr personally is mild almost to the point of shyness, and, though a vivid conversationalist, is distinguished almost alone in Washington by his capacity to keep quiet in conferences until he has something worthwhile to say...

...In Alabama his firm's principal client was the Alabama Power Company, a big local utility later swallowed by Wendell Willkie's Commonwealth and Southern...

...This was, on the surface at least, a patent violation of the statute forbidding members of Congress to lobby before Government agencies for pay...

...Why Those High Prices...

...Local music and discussion of local problems is as important in his mind as national programs or national "experts...

...But Durr wants radio to be more than a pipe line from an entertainment center to every American home...

...The problem has been put up to Congress, and in view of the attitude of the other Commissioners, legislation now is the only-remedy...

...In a 1943 speech he outlined his suggested plan: "War has accelerated the tendency toward economic concentration which has long been a characteristic of our economic system...

...A labor union or a co-op or a school with a desire to invest its funds or convey a message could have its own stat ion so long as the channels held out...

...But it carefully refuses to give the operator any right of ownership in the channel...

...He is convinced from careful polls that the housewives of the country believe that there are far too many soap operas, and too few daytime news and music programs...

...He is determined to preserve a decent proportion of the space on the new Frequency Modulation band, which will be developed into new, staticless stations after the war, for educational institutions...

...The problem was solved by Cox' resignation...

...As the price of radio stations goes up, it becomes necessary for the operator to take on more and more advertising programs and carry less and less free public service programs...

...Durr challenged the authority of the Cox Committee to seek certain personal information and finally publicly asked Speaker Sam Rayburn, Texas Democrat, to remove Cox on the ground that his record of financial transactions obviously disqualified him from conducting an impartial investigation...

...It also gave him some doubts about the moral sanctity of some of our larger business enterprises which has caused him to take nothing on faith since...

...His dominant characteristic, however, is an absolutely unyielding and fighting tenacity when he believes he is right...

...That quality showed itself most spectacularly recently when the FCC was being investigated by a Congressional committee headed by Rep...

...The Government licenses an operator to use a channel—and now most of the channels have been taken up by the 900 stations currently operating...

...Acts When Congress acts, it may profitably keep before it Commissioner Durr's dissent in these cases, and give its particular attention to these paragraphs: "In each of the three transfers under consideration, the price being paid appears, on its face, to be greatly in excess of any demonstrated value of the properties and business being sold...

...Commercial Interests Dominate Let no one believe that this development may not affect every radio listener in the United States and every small business man, or small newspaper, or local labor union or farm co-op or college that may ever want to buy a radio station...

...Yet under the current practice, the present station owners are allowed to take a completely unearned profit which boosts the pric> of the station so high that only the well-to-do or the wealthy will henceforth have access to the business...

...On the same day that the Federal Communications Commission, the Government agency charged with regulation of the radio industry, gave its stamp of approval to the WINX transaction, it also approved two other sales at equally fabulous profits to the seller: the New York Times purchased stations WQXR and WQXQ for $1,000,000, about four-and-one-half times the net worth of the selling corporation and nearly 33 times the concern's net profits...

...Yet this right is a privilege, granted by the Government at no charge, which the stations now barter and sell as if "their" Federal licenses were their own private property...

...Champion Of Small Business Washington is a city where everyone talks about small business and preservation of competition, but very few persons do anything about it...

...WJLD, WQXR, and WQXQ are not the first of their kind...

...Although he has been disassociated from RFC for three years, his efforts, as well as those of Interior Secretary Harold L. Ickes, to keep the Aluminum Company of America from monopolizing wartime aluminum production, are well remembered...

...Durr brings to his work on the FCC a cosmopolitan background...

...Cliff Durr : Wave-Length Warrior By JOHN and LORRAINE FRANK FOR a half million dollars the owners of the Washington, D. C, Post recently bought station WINX, a small station operating on a local Washington channel...

...As Assistant General Counsel of the Reconstruction Finance Corporation from 1933 to 1941, as well as General Counsel of the Defense Plant Corporation during the early war years, he did his best, against very heavy odds, to further the recovery and the wartime contribution of small enterprises...

...There is room on the standard wave length band for only a certain number of radio stations in the United States...

...in effect, selling what is not theirs to sell, the right to use a particular channel...

...In his dissent Durr took the position that the sales should not have been approved without a full hearing to ascertain "whether or not any part of the purchase price represents payment for a radio channel in violation of Sections 301 and 309 (b) of the Communications Act of 1934" and "whether the amount invested will affect the operation of the station from the public standpoint...

...Consideration should also be given to the retention of some of the plants for operation by the Government as yardsticks...

...The prevention of monopoly should be given great weight in determining the disposition to be made of Government-owned plants, particularly those producing such basic materials as aluminum, magnesium, rubber, and steel...

...Frequency modulation, he is convinced, will give education an opportunity it has lost with the disappearance of most college stations, except a few in the Middle West, from the standard wave lengths...

...But one Wisconsin Winter was enough for a Southerner and he re-entered practice in Alabama where he remained until 1933...

...Cox thereafter began an intensely hostile investigation of the agency...