ZB Stations Show Loss; YA Profit Of £99,382; Board's Policy.

Northern Advocate, 19 August 1938, Page 7

ZB Stations Show Loss; YA Profit Of £99,382; Board's Policy.

ISjyecial to “Northern Advocate.”? WELLINGTON, This Day. r rHE ANNUAL REPORT OF THE NATIONAL BROADCASTING SER--1 VICES WAS PRESENTED IN THE HOUSE OF REPRESENTATIVES BY THE ACTING-MINISTER OF BROADCASTING, THE HON. F. JONES. A credit balance of £99,382 is shown in the revenue account of the National Broadcasting Service for the year, ended March 31, 1938, An excess of expenditure over revenue of £7387 is shown in the balance sheet of the Commercial Broadcasting Service for the year. 9 The portion of the report dealing with the commercial service states that the year under review must necessarily be regarded as one largely of establishment. At the beginning of the year only one station of the proposed network was actually in operation and and that station had been in operation for a period of only four months. The last station of the network. 4ZB Dunedin, was not opened until as late as October 12, 1937.

Preliminary organisation involved a comparatively heavy expenditure for establishment costs, and. other items of a non-recurring nature. Referring to the establishment and organisation of the southern stations, the report states that an expenditure of £4520 was incurred before the stations became operative .and revenueearning'. That amount did not include a considerable sum paid to the staff of the southern stations who were attached to the northern stations for training purposes, and further expenditure due to travelling expenses, of executives and others in connection with the building of studios and erection of equipment.

Book-keeping Practice, The normal commercial practice of taking this expenditure as an establishment cost, and writing it off over a period of years, has not been adopted, and therefore the amounts had been taken into the operative costs of the stations, and were a direct charge against the year’s revenue. The report states that it was estimated that advertisers alone had spent during the year over £25,000 in feature programmes from the best studios in England, Australia, and New Zealand. In addition to the amount spent by advertisers, a further amount of £17,000 was spent directly by. the service in the provision of programmes. Of this sum £5457 was paid in fees to artists.

A staff of 280 was directly employed by the service, and of these 276 were engaged and trained locally. Sales Difficulties. At the beginning of the year, the report continues, the service was faced with serious sales difficulties, due partly to organised opposition by competitive forms of advertising media and partly to the natural reluctance of advertisers to experiment with a new form of advertising until it had proved its sales effectiveness. A table in the report shows that advertising revenue for the year ended March 31 amounted to £98,407, made up as follows:—1ZB, £39,055; 2ZB, £33,663; 3ZB, £15,524; 4ZB, £ 10,165. Advertising rates were based on the difference in population and coverage.

Copyright Fees,

“From the date on which station 4ZB was opened, the commercial service has been charged with a proportion of the fees payable for copyrighton all musical items broadcast, and for the use of gramophone recordings,” the report states. “Payment was made from the broadcasting account, but the amount allocated to the commercial service, £2747, has been included in the revenue account and added to the balance drawn from the broadcasting account, on which interest is charged. "Interest at 4 per cent per annum has been charged on money drawn from the broadcasting account for establishment of a commercial service, a sum of £1497 being included in the account for 1937-38, Heavy Loading. “It will be clear that, the inclusion of all charges other than capital expenditure represented by tangible assets has the effect of heavily loading the revenue account during the period over which the commercial stations commenced trading. Many of these charges might well have been temporarily centralised and written off over succeeding years.” Advances. To Commercial Service. The section of the report dealing with the National Broadcasting Service states that during the year £98,975 was advanced to the commercial service. At March 31, 1938, the sum outstanding amounted to £80.207. which included £11.271 net advances prior to March 31, 1937. The income and expenditure account of the commercial service shows that general administrative and running expenses amounted to £85,405; interest absorbed £1497; and an amount totalling £5482 was set aside to provide for depreciation. Expenditure on programmes amounted to £13,260, less £3215 represented by sundry programme charges borne by advertisers. The income side of the account shows that sales of station time amounted to £98.419.

individual item of expenditure was one of £109,525 on programmes, including the'salaries of the .programme staff. Maintenance of plant, including salaries of the engineering and operating staff absorbed £34,458, and general administrative and running expenses including the salaries of the administrative and clerical, staff accounted for £28,548. An amount of £34,766 was allowed, for depreciation of assets.

The revenue of the service amounted to £211,817. Of this sum, £308.022 was provided by the license fees paid by listeners. The other sources of revenue were interest payments, amounting to £3215, and £578 obtained from rents.

The report states that, partly due to increased transmitting hours and partly to the operation of additional stations, programme expenditure increased at the rate of £34,800 per annum, and maintenance costs at the rate of £14,000 per annum.