(See Cover)
One of the newest and lustiest youngsters in the industrial nursery is network radio. There are plenty of observers who would not look upon it in its 13th year and find the mark of genius. But last week, as the industry totted up its fall bookings, added the spring's and summer's and estimated income to year's end, nobody could deny that as a business proposition, radio was indeed a thriving youngster. It had come out of its second depression with more money than it entered it with.
Born of the boom and orphaned in 1929, network radio grew up lustily through the lean decade without ever having to go to a foundling home. In only one year, 1933, did it fail to pile up gross revenues to top all previous years. In 1934, gross incomes exceeded 1933's by 35.4%, 1932's by 9%. Radio's 1933 depression was not only brief, it was also noteworthy for being tardy, for other industries were near bottom as early as 1932. So network-sales experts have derived from that experience their characteristically optimistic axiom that in times of slump radio is the last industry to slip in, the first to scramble out.
Last year, when the ground started sliding away from under industrial feet, the axiom seemed due for testing. The networks began 1938 handsomely, ran up the biggest first quarter of their careers (11.4% above 1937's first quarter). The pinch came in April and some heads began to shake. But the axiom seems to be holding true. With an August boom, the networks began pulling out. Last week, gross revenues of the three major chains —MBS, NBC, CBS,—for the first eight months of 1938 came to $46,971,173, neatly topping the $45,551,198 of 1937's first eight months. With no more than the fall contracts already on the books, the networks could shut up their sales offices this week, sell not another minute of 1938 time and hit another new high.
Thus, although 1938 advertising appropriations may be shrinking, sales of radio time are obviously not feeling the pinch. These are taking as large a slice as they did in 1937, possibly larger. Last year, radio as a whole helped itself to about 17¢ of the U. S. advertising dollar,* running even with magazines, second to newspapers, which got 59¢. Of radio's 17¢, network-time sales took about 7¢. The remainder went for air time sold by individual stations.
Theories grow fast in any sort of advertising business, and radiomen have a theory to account for the behavior of their industry in hard times. Sponsored radio entertainment, they argue, creates a demand not only for the product advertised but also for the entertainment itself. When hard times bring cuts in advertising budgets, sponsors must think twice before they risk the popular vexation which might arise from taking from the public a favorite free show or a popular entertainer. Therefore, sponsors are slow to pull out of radio, quick to return.