High-Priced Revolution

The topflight admen who gathered last week at the annual eastern conference of the American Association of Advertising Agencies were not as cocky as usual. In Manhattan's Waldorf-Astoria Hotel the worried talk was all of television. Griped one adman: "The host of mysticism built up around television has top management scared stiff."

What scared admen themselves was the cost of television advertising. Though the youngest and least-tested medium, it was already the most expensive. Young & Rubicam's Director of Research Peter Langhoff estimated that a half-hour television show in New York cost an advertiser $60.17 for every 1,000 sets reached. Though not exactly comparable, the radio network cost is only $2.40. The villain was production expense. For example: production costs of Ford's hour of radio drama are $10,000 a week. Besides actors, ten production people are needed. Production costs of a similar Ford show on television (the Ford Theater) are $17,000; and a production staff of 40, including 13 stagehands and five men in the control room to direct them, is required.

Shirt Loser. Although high-salaried radio talent (e.g., Jack Benny, Fred Allen) still drives the cost of some sound shows far above television costs, television is rapidly catching up--and TV audiences are far smaller. Furthermore, to keep their clients up to the minute on television, agencies have built up expensive television departments. So far, income from television accounts generally is far short of covering the cost of writers, new art directors and surveys. "When we get into television," one adman admitted, "we lose our shirts."

The admen's plaints were echoed by many a telecaster. Of the 42 television stations now operating in 22 cities, not one has yet shown a profit, and many of them could not even see a clear prospect of profit. Small stations were losing between $10,000 and $25,000 a month, and even the big networks found it a heavy drain.

Short Cuts. The biggest drain came from luring advertisers into television with cut rates. TV has scored some impressive advertising triumphs. When Kraft Foods Co. plugged one of its lesser-known brands of cheese over TV, dealers in Philadelphia sold out the next day. Such success has brought new advertisers flocking in--their number rose from 243 in June to 495 in October--but at a very heavy price. The standard rate for one network TV hour in New York (exclusive of talent, production, etc.) is $1,000. Telecasters estimate that they need about $3,000 to break even. As a result, the entire industry is on a cost-cutting hunt. Some new twists:

P:: By recording both pictures and sound on a single 16-mm. film instead of recording them separately, as before, ABC and RCA expect to cut recording costs from $225 to $60 for a half-hour show.

P:: Philadelphia's WFIL picked up a radio trick and offered advertisers the "package rate" (including station time, normal rehearsal time, staff production fees, stock scenery, etc.). Although WFIL boosted its rates at the same time (from $300 to $400 an hour), advertisers thought the new system would eventually help them cut costs.

Most telecasters think there will be no drastic cuts in costs until the networks--and audiences--have greatly expanded. When the eastern and midwestern networks are hooked up in January (TIME, Nov. 22), telecasters can reach out for a potential audience of 11,400,000 families for a single show. Last week they got more good news. Set production in October for the first time crossed the 95,000 mark. And by 1952, the Federal Communications Commission's Wayne Coy predicted, there will be more than 400 television stations, a coast-to-coast network.

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