What is the future of ASSOCIATED-REDIFFUSION?

John Spencer Will tells shareholders the ups and downs of the financial year 1960-1

Reading Time: 11 minutes

Mr John Spencer Wills reports.

Drawing of a TV camera

THE SIXTH ANNUAL GENERAL MEETING
of Associated-Rediffusion Limited was
held on September 19th 1961 in London, Mr.
John Spencer Wills, the Chairman, presiding.

 

Moving the adoption of the Report and Accounts for the year ended 30th April, 1961 the Chairman said:—

“You will have seen from the Accounts that the profit was just about the same as it was last year. It only appears to be more because we did not consider it necessary to repeat the £500,000 [£12m in today’s money, allowing for inflation] provision for obsolescence which we made last year and the year before that.

ADVERTISEMENT REVENUE

A gratifying feature of the year is the continued growth in advertisement revenue, which shows an increase of some 16% over that for the previous year. This must be accepted as a striking indication of the value of television advertising in the London area, which now has a potential audience of over nine million viewers. We have been glad to welcome many new advertisers.

In this year’s Budget, television advertising was singled out for special taxation in the form of Television Advertisement Duly. This was at the rate of 10% as from 1st May but was increased to 11% as from 26th July.

Any comment by me about this new impost would probably be regarded as wholly selfish, so I will content myself with quoting the well-known economist, Mr. Graham Hutton:—

The oddest net tax is that (ostensibly) on advertising by television. It is almost a classic offence against all of Adam Smith’s famous canons of taxation. Purporting to hit at the profits of the programme-contracting companies, it was admittedly expected to be passed on to advertisers. Since these people and their advertising agents work to budgets of their own, and TV has the biggest impact on their markets, its effect will be completely to bypass TV advertising, and come to rest on all other forms of advertising. It would have been far better (as Lord Hinchingbrooke and many others in all three parties in the Commons pointed out) to come out into the open with a straight tax on all advertising.

We took special steps to assist those advertisers whose budgets could not immediately be adjusted to meet the Duty. In the case of bookings which, under our General Terms and Conditions of Contract, were subject to eight weeks’ notice of cancellation, we reduced the cancellation period to one week for bookings within the eight-week period following the imposition of the Duty. In cases where advertisers had entered into non-cancellable contracts for guaranteed expenditure before the imposition of the Duty, we agreed that the advertisers concerned could, if they so desired, include the appropriate Duty in their guaranteed expenditure, the rate of discount remaining unchanged and continuing to be payable on guaranteed expenditure excluding Duty.

In 1960, over £134 million [£3.5bn] was spent on advertising in the United Kingdom Press. This is 17½% more than the £114 million [£2.8bn] spent in 1959 and is the highest annual expenditure ever recorded by The Statistical Review of Press Advertising. Expenditure on TV advertising also reached a record figure, the total for 1960 being just under £77 million [£2bn].

Television still has a considerable distance to go to catch up. Any tax upon advertising is a burden upon the export trade. But this new tax burden is more a matter for complaint by the advertisers than by the advertising medium.

OPERATING COSTS

Advert run by Equity in trade papers in late 1961
Policy statement run as an advert by Equity in trade papers in late 1961

Our operating costs have continued to rise and show an increase of some 14% over the previous year’s figure. There will be a further substantial increase in the current year. The production of television programmes is indeed an expensive business.

Our new million pound [£25m] Studio 5 at Wembley, now in continuous use, has proved its worth: the additional space and improved facilities which it provides have, I think, been reflected in improvement in the range and in the artistic and technical quality of our programmes.

It is not wholly surprising that an industry which earns large profits should be a target for the Trades Unions concerned. Very large increases in pay have been negotiated and it is inevitable that our friendly rivals, the B.B.C., should also have been affected. There is one application, however, which shocks even me, who has been closely concerned in wage negotiations in different industries, for a large number of years. And that has been lodged by The British Actors Equity Association, commonly called ‘Equity’.

When Independent Television started, the minimum fee payable to an actor in a B.B.C production was 6 guineas [£180]: this sum was ‘earned’ by an actor who walked on and said, ‘My Lord, the carriage awaits’. By negotiation, this minimum for a national appearance on Independent-Television was, from the start in 1955, increased to 7 guineas [£210] and, in 1958, was raised again to 10 guineas [£260]. Equity have now demanded, for a comparable actor, a minimum fee of 36 guineas [£900], an increase of 260%. They have also demanded, for the national appearance on Independent Television of an actor speaking more than ten words a minimum payment of 44 guineas [£1,100], an increase of 340%.

It is not normally considered good practice to discuss Trade Union negotiations whilst they are in progress but, in this case, Equity have publicly announced the calling of a strike. They have issued an instruction to their members not to accept any engagement in any ITV programme (except commercials) which involves any work on or after the 1st November.

The demands in support of which the strike has been called are so fantastic that negotiations are at an end. We, in television, need actors; we, in television, have given them very considerable support in many directions. We are not, however, prepared to accede to ridiculous demands.

It is not surprising that, in their latest instruction to their members, the Council of Equity said, ‘Our original proposals were made with full knowledge that we might well not achieve a new deal in Independent Television as a result of discussions over the negotiating table…’

PROGRAMMES

It has always been the Board’s policy to give the maximum possible responsibility and freedom of action to our programme planning and production staff and I think the staff are again to be congratulated upon the results of their work.

Although size of audience is not the sole criterion of success, it is pleasing to note that Associated-Rediffusion productions continue to figure prominently in the weekly lists of top-rating programmes. It seems to me that the test of success for any public service — particularly where an alternative is available — must, in large measure, be the extent to which the public use that service.

An outstanding event during the year was the production last March of ‘Laudes Evangelii’, a presentation of episodes in the life of Christ told in music, mime and ballet. This programme, which was transmitted at peak viewing time on Good Friday and seen by some four and a quarter million viewers, received unqualified praise from leaders of the main branches of the Christian religion in this country. This was, in every way, a most challenging production and, apart from the public and press response to it, the spirit in which the challenge was accepted by the very large number of staff concerned made the occasion memorable. The critic who accuses Independent Television of programme parsimony may be interested to learn that the cost of ‘Laudes Evangelii’ was £28,000 [£670,000].

“Intertel”

Another outstanding and adventurous programme development during the year was the formation of the International Television Federation, known shortly as ‘Intertel.’ This is an association of major television organisations in the English-speaking world which came into being on the initiative of Associated-Rediffusion. Our Controller of Programmes has been elected the first Chairman of the Federation Council. The member organisations have undertaken to produce, exchange and distribute, throughout the world, high class documentary feature programmes on current world problems. Our first two contributions, ‘The Quiet War’ and ‘The Heartbeat of France‘, each costing £20,000 [£475,000], have been shown to peak-time audiences in this country, Australia and Canada and on sixty stations in the United Slates of America. We believe that Intertel can do much to increase the knowledge and understanding of current situations and problems throughout the world.

I mentioned last year the recent establishment of an International Division. Measured in terms of revenue, it cannot yet be described as a major activity but you will be interested to know that Associated-Rediffusion programmes, including plays and drama series, documentary feature programmes and schools programmes, have been sold in thirty-three different countries. Some of our schools programmes have been sold in such remote and differing places as Ethiopia, Thailand, Saudi Arabia, Nicaragua, Southern Rhodesia and Australia, and America and a number of European countries may shortly be added to the list. Whilst these developments are not yet of great financial significance, you will, I am sure, be glad to know that an international reputation is gradually being established; the sort of reputation that could be of great value if, during the next few years, the international exchange of programmes by satellites were to become practicable.

Increasing use is being made of television programmes for schools, which Associated-Rediffusion pioneered four years ago. The number of schools taking the programmes has risen from eighty to fifteen hundred and may well exceed two thousand during the fifth year just commenced. We are grateful to Sir Ifor Evans, Provost of University College, for having taken over the Chairmanship of our Educational Advisory Council in succession to Sir Sydney Caine, whose resignation, on his appointment as a member of the Independent Television Authority, I mentioned last year.

At our meeting four years ago, I suggested that if you had not seen our schools programmes, you should take an opportunity of doing so. They are well worth viewing by adults and I repeat the suggestion now our French language series, ‘Chez les Dupré’, has, in fact, been transmitted in evening programmes and seen by audiences of over two million in the London area. The fact that close on 45,000 explanatory booklets were sold to viewers indicates the interest which was taken in this experiment in adult education. Another of our schools’ programmes, ’London, Capital City’ is now being transmitted in evening programme time.

THE FUTURE

To the Pilkington Committee of Inquiry which was appointed last year to consider and make recommendations on the future of broadcasting services in this country, we have submitted our views and evidence. The Committee’s Report is expected some time next year.

The facts that the Independent Television Authority is to cease to exist in 1964; that the contracts of programme contractors terminate in the same year; that there has been a great deal of publicity given to an enormous number of irreconcilable recommendations made to the Pilkington Committee — all these facts have caused, and are bound to have caused, some unrest and uneasiness among our staff. Are their jobs safe? Are they reasonably certain of continued employment? Is there any risk that they may have wasted their time? In my opinion there is no cause for alarm, no justification even for misgiving

The main shareholders in Associated-Rediffusion have been engaged in the provision and management of public services for two-thirds of a century — ever since 1896. I myself have been so engaged for forty years. Railways, tramways, trackless trolleys, radio stations, television stations, the generation and distribution of electricity, the manufacture and distribution of coal-gas, airlines, wired radio, wired television, motor omnibus services, road goods transport — all these activities, not only in the United Kingdom, but in countries all over the world, have been our life. The bus interests alone embrace 13,000 public service vehicles. Is it surprising that are should have been entrusted with the task of furnishing television programmes to the largest city in the western hemisphere? Sixty-six years of public service and, let it be said, of successful public service, on a large scale, cannot lightly be disregarded.

Railways, tramways, electricity undertakings and gas undertakings were mostly operated under individual Statutes. The air services were operated under short term licences granted by a Statutory Authority. The wired radio and television undertakings are currently operated under long term licences from the Post Office but, for many years, could have been stopped at short notice. The omnibus services have, for the last thirty years, been operated under short term licences. But always it has been the practice, provided that the operators properly discharged their responsibilities to the public they served, for the licences to be renewed without question.

My personal belief is that our staff have no reason to fear any departure from the licensing practice established over so many decades.

Our shares are widely held. The British Electric Traction Co. Ltd. have 37,500 shareholders, Rediffusion Ltd. have 12,000 shareholders and they, between them, are the virtual owners of Associated-Rediffusion Ltd.: that is to say, we are owned by nearly 50,000 individuals.

Why should any Government wish to shatter the existing scheme of things?

The main criticism hurled against us is that the State does not take a sufficient share of our profits. Let us examine the figures during the year under review. The Associated-Rediffusion Group’s gross revenue was in excess of £21,000,000 [£500m]. From this the State takes (including a substantial part of our payment to the Independent Television Authority) £5,000,000 [£12.5m] and our 50,000 shareholders will, if you accept your Board’s recommendation, receive £2,250,000 [£55m]. Had the Television Advertisement Duty been in operation during the year, the State would have taken another £1,470,000 [£36m].

Our shareholders took the risk of losing all their investment. At one stage, in 1956, they had, in fact lost the enormous sum of £3,250,000 [£90m]. The State took no risk at all. If the Company had gone into liquidation, the State would not have lost one penny.

As it is, out of the profits which have succeeded the losses, the State will receive nearly three times as much as the shareholders.

It seems to me that, if there is cause for complaint, the shareholders have more right to complain than anyone else!

The main criticism of the Independent Television Authority is that a large part of their work is done behind the scenes, that they do not publicly admonish their programme contractors if anything goes wrong. Those of us in the business know that the Authority keeps an eagle eye and a firm hand upon all that goes on. In my submission it is in the interest of all concerned — the public, the Government, the advertisers, the employees — that control should continue to be exercised quietly and tactfully. To me, personally involved in the settlement of an enormous number of problems during the formative years and since, it has been a matter of surprise and of considerable admiration that there has not been more friction between the Authority on the one hand and the Contractors on the other. No Government can possibly afford to throw over a body which has so happily and successfully carried out its difficult task.

My conviction is that whatever the Pilkington Committee may recommend about alternative or competitive programmes or any other of the many subjects to which they are devoting so much lime and attention, two steps are certain:—

  1. The Independent Television Authority will be given a new lease of life.
  2. The existing programme contractors will continue to provide television programmes.

SUBSIDIARY COMPANIES

The subsidiary companies this year have made a considerably increased contribution to the group profit and we are confident that this trend will continue.

The TV Times, owned by our subsidiary TV Publications Ltd., now publishes a Border Edition containing the programmes of Border Television Ltd., the new Independent Television programme company which commenced transmissions at the beginning of this month. Arrangements have also been made for the publication of a Grampian Edition to cover the programmes of Grampian Television Ltd., which is to commence transmissions very shortly.

We now hold all the ordinary capital, and all but an insignificant amount of the preference capital, of Wembley Stadium Ltd. The Board of that company has, during the past year, given very considerable thought to future development with a view to enhancing the world-wide reputation of the Stadium and Pool as first-class sporting and entertainment centres.

Plans for a 48-lane bowling alley, with the most modern restaurant and other necessary amenities, are now far advanced, and the project will be proceeded with as soon as possible.

Another interesting development is the recent acquisition by Wembley Stadium Ltd. of a 25% interest in Wembley Trust, Ltd., similar interests having been acquired by Allnatt (London) Ltd., Central and District Properties Ltd. and Warnford Investments Ltd. The Wembley Trust Company owns valuable properties on some 15 acres of land adjoining the Stadium grounds. It is too early for me at this stage to do more than report the acquisition.

MANAGEMENT AND STAFF

I have already paid tribute to our programme planning and production staff. You will, I know, wish me to express grateful thanks to all those who work for you, for their enormous contribution to the success of Associated-Rediffusion.”

The Report and Accounts were unanimously adopted.

About the author

Sir John Spencer Wills (1904-1991) was chairman of Rediffusion Television Ltd in the late 1960s, and chairman of parent British Electric Traction from 1966 to 1982

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