into existence after KSL and other clear-channel stations heard in the Rocky Mountain region had 50,000 watts of power. They do not appear to have been seriously injured, economically, by KSL or clearchannel broadcasting in general.

Senator JOHNSON. This is a selected group of stations. You do not mean that this is a total of all stations.

Mr. HARDY. I think we have already indicated, Senator, that this as the chart shows, is a selected group of 21 standard broadcasting stations located in the Rocky Mountain area.

Senator JOHNSON. Yes. You only picked out 21. You first asked the FCC for data on 38 stations, and you rejected that because it did not have the right kind of percentages, so you cut down the number to 21 in order to make a better case for yourself; did you not?

Mr. HARDY. That is one assumption that you might draw, Senator. Actually, the reason we requested a further refinement was to show a true condition in the area in which KSL operates.

Senator HAWKES. Mr. Chairman, may I ask this question? Unfor tunately, I have not been able to add my presence to these hearings for 2 days because of sickness. Have you given any picture of the over-all number of stations-local stations-that Senator Johnson is talking about?

Mr. HARDY. We have in this area.

You

Senator HAWKES. You have taken them all in and made the com parison, the same as you have on the 21? That is what I mean. have made a comparison of the earning power of these? Mr. HARDY. That is right.

Senator JOHNSON. That is right.

Senator HAWKES. I think it would be valuable to have a comparison of all the 38 stations that there are in that district if you have that. Mr. HARDY. The 38, Senator, include not only the entire mountain area but also the Pacific coast area-Los Angeles-San Francisco area. For that reason we requested the refinement of the study to be more typical.

Senator HAWKES. What I want to find out is this: Senator Johnson raised a point, and I would like to understand it. Are the 21 stations that you say you took out to refine the area to make it more typical-stations in which your station operates. Is that a correct statement?

Mr. HARDY. Your question is not clear to me. Might I indicate that I don't know what those stations are? Their character to me is anonymous.

Senator CAPEHART. The FCC furnished these figures.

Senator HAWKES. I do not quite have an answer to my question. My question is: Is 21 the total number of stations in the area that you call the Rocky Mountain area?

Senator JOHNSON. He testified there were 193 a little while ago. Mr. HARDY. That is not the total number of stations, Senator. Senator HAWKES. Have you any idea what the total number of stations would show on earning power over-all?

Mr. HARDY. I have no such idea, but that information could be supplied.

Senator JOHNSON. That is what I had in mind, and that is what I wanted to show. Do I understand in the 21 selected stations that you have gone into-do they go into the Los Angeles area?

Mr. HARDY. No; except the one class I station, which Mr. Cooper said was put into this report, because we have only two from which figures were available wherein we know our figures, and we would automatically know what the other one was if the third was not there. Senator CAPEHART. Did the FCC supply you with the records of earnings on all 193 stations in the States that you named?

Mr. HARDY. The FCC supplied us with none of those figures, Senator. We requested this committee to ask of the Commission that they supply, first, a group of stations from the whole Pacific and Rocky Mountain area; and secondly, we asked for a refinement of that to show, as I have indicated, the typical station situation in our area. Senator CAPEHART. And the refinement that you asked for was based on earnings or simply on geography?

Mr. HARDY. Ön geography.

Senator CAPEHART. Then the argument that you did something to these figures to prove something does not

Mr. HARDY. I cannot conceive of any merit to that argument. Senator CAPEHART. Have any merit to it. The selection was by geography, and not by earnings; is that correct?

Mr. HARDY. That is correct, Senator. May I place this on the record: That I think one of the most pertinent issues in this hearing which, with the exception of this information we have requested, has not previously appeared on the record, would be a careful financial analysis of the earning power of all local stations and all regional stations, and all class I stations?

Senator HAWKES. That is exactly the point that I had in mind. Mr. HARDY. Your committee has that information available to you from the records of the FCC. As it pertains to our area or some other area, there is nothing more pertinent to show whether a station is suffering economic loss or is losing money hand over fist than their earning record which they have to supply to the FCC.

Senator JOHNSON. Just to show you the great difference between the 38 selection and the 21 selection: With the 38 selection the class I stations show a 90-percent return, and the class II stations show a 30-percent return for 1946.

I haven't computed the percentage return for the class III stations yet. That shows you by refining, as you say, the stations that you select from, it makes a lot of difference in the figures.

Mr. HARDY. May I indicate, Senator Johnson, commenting on that point, that KSL does not live in Los Angeles or San Francisco. Its market factors, its population distribution, are totally foreign to that

area.

Therefore, we feel that the economic situation in which we have to live, and in which our competitors have to live, is the relative factor. Senator HAWKES. Mr. Chairman, if I may say it, I think you are absolutely right from your standpoint, and from your area standpoint, but I think the committee, as far as I am concerned as a member of the committee, would like to have the area picture such as you have given the different area pictures such as you have given for other areas, the picture of other areas such as you have given for other areas, and the total, over-all picture.

While I was out, Mr. Chairman, has anyone given any reason why these class IV stations, these little local stations, have such a large

75556-48-36

income? Is it because of the smallness of the investment or the low ness of the upkeep, or because of more activity in use, or what?

Mr. HARDY. I think there are several factors, Senator. I am not a economist, and I could not give an answer.

Senator HAWKES. Neither am I.

Mr. HARDY. I am only indicating that certainly one factor that ver clearly enters into it is the ratio of the amount of money they hav to put into their operation as against what they can take out.

Senator CAPEHART. We seem to be getting somewhat confused her on this matter. These figures should speak for themselves. Unde the chart which I hold in my hand which covers, I believe, 38 stations I note that of the class II stations, of which there are 4, unde stations 9, 10, 11, and 12, that in 1945 the original cost of the tangibl broadcast property in the case of No. 9 was $284,502. The incom in 1945 was $90,028.

No. 10 on the chart, original cost in 1945 was $75,235, and thei profit was $75,096.

No. 11 on the chart, their original cost in 1945 was $27,000, an their income was $197,681; while No. 12 on the chart: Original cos in 1945 was $110,228, and their income in 1945 was $198,385.

Take those same stations, 9, 10, 11, and 12, and we find in 1946, N 9 had an investment or original cost of $402.370, and their income i 1946 was $111,737. I find No. 10 had a cost of $76,922, with an incom of $5,387. I find No. 11 on the chart had a cost of $28,715, with a income in 1946 of $224,267. I find No. 12 on the chart in 1946 ha increased their investment. From 1945 to 1946, from $110.228 t $514,003, with an income in 1946 of $127,562.

I do not know why they would increase their costs from $110.22 to $514,003. There must be some reason for that. Even on an invest ment of $514,000 they made $127,000.

Senator JOHNSON. That particular station probably increased it power. That might be one explanation for that very wide dis crepancy.

Senator CAPEHART. It looks to me as if they showed poor judgmen in increasing their power, because in 1945 with an investment o $112,228, they made $198.385, and after increasing their power thei income dropped to $127,562.

As I go further down the line here on these stations, I find they ar certainly all making money. I find here a fellow with an investmen of $130,415 in 1946 who made $131,140. I find No. 22 on the lis with an investment in 1946 of $575,201 who made $408,470.

Then I find one here, No. 23, with an investment of $59,809 wh made only $8,716.

The record I hold in my hand, I never saw the record before, I un derstand the FCC furnished to the committee. Going through hurriedly it looks to me as if all these stations are making sufficien

money.

Maybe what the committee should be doing is looking into the rate rather than the power, from the looks of these profits. I am not s sure I am in the right business.

Senator JOHNSON. I have tried to check that same thing, Senato We have had a great deal of testimony on that point, and I hav tried to check a clear-channel station with the regional stations i the same city.

Of course, it does not show the same discrepancy and situation. and does not show the same favorable balance between the two classes of stations that has been testified to here several times during this hearing. I might say there is a wide range of profits and incomes between the clear-channel stations. I would imagine that there are some clear-channel stations that make 25 times as much profit as other clear-channel stations. There must be some reason for the low profit of some stations. The only way I can explain it, outside of the more profitable location, is that perhaps some of the stations that do not make such money render a far greater service of some kind or other.

I am quite certain that that is true. I am quite certain, for instance, that KSL renders a much greater free service than any other clear-channel station in the country.

Mr. HARDY. Senator, I am happy you raised that question again, because in Senator Tobey's presence that matter came up with reference to any special policies or unusual procedure that the station I represent might follow which would make its return abnormally low as against other stations in similar situations.

Senator JOHNSON. I am sorry if I was going over old ground. Mr. HARDY. No; no. It is a very pertinent issue. Senator Tobey asked the question. I think it should be answered, because it relates to the matter you just discussed. I would like to state for the record that KSL's board of directors would be amazed to hear a comment that we are not aggressive-let me just finish.

Senator JOHNSON. I did not make it.

Mr. HARDY. I did not say you made it.

Senator JOHNSON. All I have for KSL is commendation.

Mr. HARDY. I appreciate that, and we are grateful for that. May the record show that we pursue an aggressive policy; our ratio of free time as against commercial time will compare very favorably with the national average. There is no unusual category of special programing on KSL which would be considered as abnormal or even extraordinary as compared with other stations operating in similar situations.

Senator CAPEHART. I would like to read some more figures into the record, here.

Senator JOHNSON. Before you go to that, I would like to ask just one more question on that point: What about the rates of your station as compared with the Los Angeles clear-channel station?"

Mr. HARDY. There again, Senator, I have not at hand the rates of the Los Angeles station. My guess would be that their rates are infinitely higher than ours, for the specific reason that the audiencerecruiting facility of their transmitter is infinitely greater than is the audience-recruiting facility of our transmitter. That is a population

matter.

Senator HAWKES. Mr. Chairman, may I follow that thought just a minute, because I would like to have it consecutive. I understood from testimony I heard previously today that the rates of the station are made based upon the coverage and the number of the audience. Mr. HARDY. In a rough way, that is the formula.

Senator HAWKES. That is all it can be. In other words, in following that process, you are really following the same system the newspapers follow in establishing their advertising rates, because it is based on

circulation. In their case, they have a little more accurate way checking than you have, and that is why you say it has to be based o a rough formula in connection with the number who listen in.

Mr. HARDY. I think another factor that also enters in, and whic varies, as Senator Johnson has indicated, from community to com munity, is that the broadcaster doesn't charge more than people ar willing to pay, and that is determined in the normal course of eco nomics within the community in which it operates.

Senator CAPEHART. Do I understand from this chart that "four means the local station?

Mr. COOPER. Yes.

Senator CAPEHART. I would like to read into the record here station No. 34, fourth class: 1945, original investment of $47,148; profit in 1946 of $20,761.

Station 35: $18,655 investment; profit, $14,968.

Station No. 36: Cost in 1945, $15,071; profit in 1945, $17,642.
Station 37: Cost in 1945, $35,300; profit in 1945, $20,330.

Then I find in 1946 that station No. 34 increased their investment b $7,000 to $54,949 and made $46,117 profit.

Station No. 35 in 1946, with an investment of $18,655, made $14.43 With station 36, in 1946, on an investment of $15,751 it made $16.54 profit.

Station No. 37, with an investment in 1946 of $45,222, made $18.88 profit.

Pretty good business. I shall place into the record this chart show ing the original investment in 1945 and the income in 1945, and th original investment in 1946 and the income in 1946 of 38 class I. II III, and IV radio stations located in the Rocky Mountain and Pacific coast area of the United States.

(The tabulation follows:)

SELECTED FINANCIAL DATA FOR 38 STANDARD BROADCAST STATIONS LOCATED IN THE ROCKY MOUNTAIN AND PACIFIC COAST AREAS OF THE UNITED STATES, 1945 AN 1946 [NOTE. The individual stations contained in the following tabulation were listed in a attachment to the committee's letter of Mar. 29, 1948, requesting this data]

Standard broadcast stations—Original cost of tangible broadcast property and broadcast income (before Federal income tax) of 38 standard broadcast sta tions located in the Rocky Mountain and Pacific coast areas of the United States

1 Station is a "key" station of a major network. In the annual financial report filed for the station, com plete allocations of property costs and operating expenses covering the station operations as distinct from The network operations are not made.