ATV financial results: 1961

MR. PRINCE LITTLER REVIEWS YEAR OF ACHIEVEMENT AND EXPANSION

The Sixth Annual General Meeting of Associated Television Limited will be held on September 28 at ATV House, Great Cumberland Place, London, W.

The following is the statement by Mr. Prince Littler, C.B.E., the chairman, which has been circulated with the report and accounts:—

As shareholders will doubtless have seen, a notice appeared in the national Press on July 21 which read as follows:—

 

“Associated Television Results

The Directors of Associated Television, for the year ending April 30, 1961, announce a profit of £6,411,899 [£118.4m in today’s money, allowing for inflation – Ed], against a profit for the previous year of £5,388,330 [£99.5m].

The Directors propose recommending the payment of a final dividend of 40 per cent against the payment for the previous year of 30 per cent”

 

I think that you will agree that this brief but highly satisfactory notice covers the first essential that our shareholders will want to know about their investment in this company, which holds the I.T.A. licence to operate commercial television in London at the weekends and in the Midlands during the weekdays.

There are, however, various sides to the company’s interests and at the end of this address I propose to deal in detail with the more important subsidiary activities of your company.

I think this is a suitable year in which to use our annual report to review what has happened in this company since its foundation, and also to bring our shareholders, as it were, into our board room atmosphere so that they will understand the thinking which has been behind the policies adopted by your directors and appreciate the very able way your executives have put these policies into operation.

In a review of this nature I think there is no better way to start than with an examination of the people who are responsible for running the business.

The Board of Directors supporting me so ably at this moment have all been with the company during its formative years and they are drawn from the learned professions, trade, show business, the Press, state broadcasting, the City, and the great engineering industries. This cross-section of British life at our monthly Board Meetings, on a great number of committees, and at many informal gatherings, literally “lives” television broadcasting and feels the great responsibility we bear in building this organization. In our work we have all been inspired by the adventurous spirit of pioneering in this, the most powerful form of mass communication.

Our Board has become a team where each member, retaining his individuality, has made his own contribution to the eventual unity of both opinion and decision which has marked the history of this company. This team spirit has permeated right down through the organization, and our executives who sit on the Board and those executives who do not, all have a feeling of enormous strength because of the single-minded support and understanding which they get around the board room table.

Many people in many places have argued at great length about who were and who were not responsible for starting commercial television. The point at issue surely is not who started it, but who were the people who have made it the enormous success that it is. I remember many of the arguments which were used on the floor of the House of Commons to show why commercial television would be a bad thing. Above all the arguments one stood out — the oft-quoted Gresham’s law that evil drives out good. A picture was painted showing commercial television as an evil thing likely to force the B.B.C. to lower its standards in order to compete. Looking back now, it is universally acknowledged that, from the moment commercial television started, the B.B.C. programmes became more diversified and the general standard improved, so that not only did the “evil” not drive out the “good”, but the good became better. We in this company recognize that there is a place for both the B.B.C. and companies like our own, and I trust that the feeling of toleration, and often of mutual admiration, will long continue.

When this company started, very few people had any clear idea of how the operation would expand or what the difficulties would be. I have told you at our previous annual meetings that the most prominent feature in those first three years was the rate at which it was possible to lose money. We also learned something else — how difficult it was to get financial support to replace the money we had lost, and therefore, at this stage, it is some gratification to all of us that the shareholders who had the courage to invest in difficult times, and who have gone on investing in this company, sometimes at what might appear to be very high prices, still placed their confidence in our ability to make commercial television broadcasting a success.

Our company has always believed in competition and the decision of the I.T.A. to limit our London broadcasting to weekends is far from our idea of true competition, but, at the time that broadcasting licences were given, we had no alternative but to accept. We believe we should have a competitive seven-day-a-week operation in London where there would be true competition between two commercial stations.

The Pilkington Committee

This brings me to the subject of the Pilkington Committee. This committee was set up by the Government to review the whole broadcasting position and to lay down recommendations for the future.

When the announcement of the formation of the Pilkington Committee was made, we immediately set up a study group to give expression to our own point of view and to give any help we could to the Committee, particularly with regard to the changes which had taken place from the technical and political points of view. Our study group reported that there would not be enough space in the existing television broadcasting bands to enable two competing commercial broadcasting stations to operate in all areas. This fact emerged without any regard to the claims the B.B.C., might make.

We therefore were at a loss to reconcile our belief in the necessity for the competition of a seven-day operation with the incontestable conclusion that there was not sufficient space in Bands I and III.

Your Board, ably supported by our technicians, has always held the point of view that broadcasting companies, commercial or otherwise, must give a lead in all matters of technical television progress. When we first obtained our concession we recognized that it was under technical standards which might have been satisfactory when Britain established the first television service in the world in 1936 but which today had become obsolete, and gradually we, together with others, would have to encourage scientific progress and the adoption of higher broadcasting standards. Our endeavours to deal with the dilemma of creating competition in the London area became the starting point of the proposals which we made to the Pilkington Committee on May 2.

The policy we put forward meant making considerable sacrifices and I am convinced that whether our proposals are actually adopted or not, something on their lines will figure in the recommendations of the Pilkington Committee:—

1. because our proposals are scientifically progressive;
2. our proposals demonstrate a progressive attitude on the part of a commercial television contractor offering to undertake a substantial material, technical and cultural responsibility at his own expense;
3. we offer a method of creating a spirit of competition between contractors;
4. we propose the adoption of new technical standards in line with the development in countries associated with the Eurovision system;
5. we would explore the use of equipment in a new part of the ether in order to make way for colour television and other services.

We confirmed to the Pilkington Committee that we accepted the recommendations of the Television Advisory Committee for the adoption of 625 lines as the British standard. In order to give effect to this we offered, on the days we were not broadcasting in London, to put out a new programme on 625 lines in the UHF band which would carry in addition one hour a day of 625 line colour broadcasting — all at our own expense. Surely this would be a great contribution, and something that would give encouragement to the scientists, the technicians, the script writers, the producers and all the many people who will benefit from an expansion of television broadcasting.

Six Years of Independent Television

When a completely new industry comes into being virtually overnight with the suddenness of commercial television, one of the great problems is that of staff.

Some people came over to us from the B.B.C. — by now some have gone back, this is a healthy interchange — and some, on the technical side, came from the electronics industry. Writers came to us from the newspaper and magazine worlds, and directors and producers joined us from the stage and the films. Thus we gathered together a body of experts in related activities, but, by and large, everybody had to make a fresh start and find the answers to a new set of problems in a new medium.

I remember an executive describing his excitement at joining commercial television and finding a desk with a sheet of blank paper on it — that was all — the rest was up to him.

It should be put on record that the efforts of the staff of our company have made the success of the business possible. Their intelligence, enthusiasm and long hours of gruelling work, often after the ordinary day’s work was done, were factors which not only gave great support to the Board but became the basis of our continuing progress.

I now come to the most important interest both to your Board of Directors and to the company as a whole.

When a television broadcasting station is started, everything centres around your audience. More than ever this was vitally important in the case of the establishment of the British commercial system.

A great battle had raged in the House of Commons about how commercial television would handle a potential audience. Everyone knew that Britain had established one of the finest broadcasting machines in the world — the B.B.C. — with enormous wealth, subsidized by licences, not answerable to the House of Commons, and with all the privileges which accrue to a state service. It was for the audience that had hitherto been served by the B.B.C. that commercial television had to compete, and this was the challenge which we took up. And now after six years of television broadcasting I say with confidence that we have discharged our responsibilities and we have given a service which can stand the most detailed examination.

And what else have we as a broadcasting company done? We have endeavoured, and to a great degree succeeded, in giving our public good entertainment. We all know that there is a small sector of intelligent people who think our programmes are bad because they give the public what they want to see and not what the intelligentsia think they ought to see. Television broadcasting is meant to be entertainment, and while we recognize that the standard of taste ot a great number of the viewers in this country could be higher, we feel it is essential not to get too far ahead of our public, but rather to lift, gradually, the quality of our programmes on a progressive basis.

Television in the Midlands

It is right to refer with emphasis to the importance of that half of our business which stands independently on its own feet as the Midland Television Broadcasting Station for five days a week.

Your Board from the outset has always considered the Midlands a self-contained organization and not an offshoot of a big operation based in London and has therefore appointed a Midlands Controller responsible for its operation.

The Midlands is a country all on its own, and with the new power from the Lichfield transmitter, 2,366,000 homes are covered nightly. Great towns like Leicester, Gloucester, Hereford, Shrewsbury, Stoke, Birmingham, Coventry, Walsall, Wolverhampton, Burton, Nottingham, Northampton, Worcester, West Bromwich, Dudley and many others are spread around in this independent-minded area.

In the South, viewers think of ATV as one of the two London Companies. In the Midlands, they regard ATV as one of the two Midland Companies. ATV is responsible for all the weekday programmes and to 5.4 million viewers in the Midlands, ATV is much more than a symbol on the television screen — it is an important and accepted feature of the Midland scene.

The Midlands programmes include many not seen on the London screen. Lunch Box, Britain’s first regular midday television programme, has now had an unbroken run of well over 1,000 performances. Each weekday in Midlands News (the first regional news programme on British television), the ATV News Unit brings to viewers an up-to-date account of local news and events in the Midlands, while the weekly events are reflected in Midland Montage. The documentary series Look Around features topics of interest ranging from the Severn Story to an investigation of witchcraft in the Cotswolds. The weekly programme Midland Farming not only informs farmers of the newest trends and techniques but instils in the town dweller a new respect for the countryman. New records in late-night viewing have been established by the weekly Midland Profile in which Midlanders tell their life stories. Other regular programmes include the highly popular Hook, Line and Sinker for anglers, features of interest to gardeners and special outside broadcasts of many kinds. A notable series of afternoon programmes has been presented from the famous Cordon Bleu Cookery School.

Last year ATV set up a special department for the development of its television service for Midlands schools, under the guidance of a distinguished education advisory committee. The first two series, French from France and Ici La France were produced by ATV entirely in France. They were first shown in the Midlands from January this year. From September these two series will be seen throughout the country, together with a new ATV series in mathematics. A further ATV schools series on chemistry will also be presented in the Midlands from the same date. These are just a few of the ways in which ATV is serving the Midlands of England.

The profits from this area have been most satisfactory. The standard of programmes has been high. The public has been enthusiastic about the entertainment; and our engineers have seen, by the establishment of a two-way television micro-wave link operating all through the day and night, that we have the closest communication between our two stations.

Profit and Loss Account

Now I will refer back to my opening remarks in this review and tell you about the profits for the year. You will see from the Consolidated Profit and Loss Account that the profit of the Group before taxation is £6,411,899 [£118.4m] as compared with £5,388,330 [£99.5m] for the previous year, an increase in excess of £1m [£18.5m]. This profit is after charging all expenses including depreciation. The provision for depreciation of £282,523 [£5.2m] shows an increase of £27,481 [£507,000] as compared with the previous year. It should be noted that directors’ fees and directors’ other emoluments are lower than in the previous year. Income from Trade Investments which forms part of your company’s profits, is £32,933 [£608,000] higher than last year.

From the profit mentioned above taxation absorbs £3,239,810 [£59.8m] and the profit attributable to outside shareholders in subsidiary companies is £25,037 [£462,000], leaving £3,147,052 [£58m] profit attributable to ATV.

After deducting the amounts retained in subsidiary companies of £84,348 [£1.6m] and adding the previous year’s unappropriated profit of £505,779 [£9.3m] there is £3,568,483 [£65.9m] available for appropriation.

From this figure has to be deducted the interim dividend of 20 per cent paid on January 24, 1961, leaving £2,998,858 [£55.4m] for disposal. In view of the results achieved during this period your directors recommend a final dividend of 40 per cent making 60 per cent for the year as compared with 50 per cent for the previous year. This increased dividend, if approved, will absorb £1,139,250 [£21m], leaving £1,859,608 [£34.3m] to be carried forward in the accounts of the parent company.

Consolidated Balance Sheet

Turning to the Consolidated Balance Sheet it should be noted that the accounts of our American subsidiary, Independent Television Corporation, have been included for the first time. This is reflected in the increase in goodwill, film rights, debtors, creditors and advances from bankers. The considerable increase in fixed assets is mainly due to the building of our new television centre at Elstree.

I feel that the item Trade Investments requires some explanation. Trade Investments have increased on account of additional investments in British Relay Wireless & Television Ltd. (mentioned elsewhere in the report) and in Canadian television and because of a revaluation of certain of our Australian assets. However, these increases have to a certain extent been offset by the removal of the investment in Independent Television Corporation, which has now become a subsidiary company.

The reduction in bank balances, deposits and cash in hand has been caused mainly by the construction of the Elstree Studios and by additional investment.

Bricks and Mortar

“Bricks and mortar” is the descriptive phrase the bankers use when they talk about the buildings on the asset side of a balance sheet. In a broadcasting service bricks and mortar come into your calculations at practically every turn.

In broadcasting you need big buildings and small buildings, buildings in this location and that location, and they are all part and parcel of your work.

If you try to centralize, too much time is wasted by important people travelling. Again, actors may be wanted for rehearsal at a moment’s notice and it is quite impossible to take them far from the location where they are appearing. Therefore, many buildings are necessary in many different places. Some, for instance, are wanted for quick rehearsals, some for storage for special materials, some for administrative offices near the seat of a particular operation. All of these buildings together with our centrepiece for production — Elstree — make up the pattern of our efficient ATV organization.

The Head Office building at ATV House, Great Cumberland Place, of 120,000sq. ft. houses the main administration, our sales organization, and also our subsidiary ITC. In the basement are recording studios for our associated company Pye Records, and a West End TV studio for special presentations and interviews with V.I.P.s.

When Elstree is fully completed the Wood Green Theatre, an ex live-variety theatre of 20,000 sq. ft. will still remain operational. There, shows like Startime and Saturday Spectacular, requiring audience participation are being produced.

Foley Street, in the West End of London of some 11,000 sq. ft. is the home of master control and is the switching centre.

With the growing importance of the Midlands we have outgrown our premises at Herbert House, Birmingham, and have taken a lease of the entire ground floor at Rutland House, a handsome new building in Edmund Street, Birmingham. Also in Birmingham we own and jointly operate with ABC the Aston Studios of some 22,500 sq. ft, where such popular shows as Lunch Box and all other local programmes are produced.

In Manchester we maintain an outpost so that our sales force can keep in contact there with agents and advertisers.

Finally, we have small but most important premises located at Hillcrest, Highgate, overlooking London, and a similar place in Birmingham where the signals are picked up and relayed to our master control centres.

Elstree Studios and our Technical Story

Many of the great television programmes of the future, not only on British screens but on screens all over the world, will show what will become a famous caption, “An Elstree Programme”.

We always planned, from the beginning of our contract with the Independent Television Authority, to have an imaginative yet highly functional group of buildings which would give the greatest possible scope to free enterprise television to create programmes of the highest quality.

Now, here at Elstree, on 31 acres, one can see this conception taking shape and, down to the last detail, the organization has been undertaken by our own executives. A team of experts has worked and striven for the last 18 months to take Elstree through its first stages, and engineers and production people have all contributed to achieve an outstanding result. Only people with great faith in the future of commercial television would have undertaken this vast operation. Now we are ready to give the best programmes to an expanding British television service; to give scope for their abilities to script-writers; to give producers and directors the last word in service, and to actors the best possible facilities.

Some of the techniques already developed by our engineers are being used by broadcasters as the basis for their operations in North America and the Commonwealth as well as in this country, and our new studios incorporate many new and valuable devices. In deciding the types of equipment to be used there were two major considerations — the need to allow for a probable change in line standard and the speed of technical advance. The electronics industry is developing new devices and components at such a rate that considerable imagination is needed to design equipment that will not be out-dated before it is built.

The new A.T.V. studios of 9,500 and 6,000 sq. ft. will accommodate not only the 625-line system but also the 525-line system of the United States and Canada. This is in keeping with our policy of creating a programme production centre, where the aim is to produce complete programmes which go out on wire, microwave links, video-tape or any other recording medium which may become available.

As far as equipment is concerned, ATV, here working closely with the Pye Group, has not only incorporated equipment which is unique and in advance of that used in any other studio but has adopted modular or “building brick” construction so that when improved components become available the “ building bricks ” can be replaced by pulling out a unit and plugging in a new and better one. Great emphasis has been placed on the use of transistors wherever possible and alt synchronizing signal generation, picture selection and switching is done by transistors. Transistors are commonly used in everyday devices such as portable radios, but their application to television transmission equipment and to apparatus that can accommodate 405, 525 and 625-line signals is quite new.

There are many significant new components being developed which permit the improvement and widen the scope of technical equipment. ATV’s development department, which is responsible for the design and construction of a large quantity of the new gear now installed has many developments to be introduced when the studio project has passed phase two at the end of this year. For example, the miniature transistorized microphone, used to very great effect on outside broadcasts such as the perenially popular Sunday Night at the London Palladium, is to be redesigned to give even better performance and a completely transistorized microwave equipment of small size and light weight is well advanced.

Developments are in hand on new methods of filming our programmes. While the bulk of recording being done in this country and in America is on video-tape, ATV engineers believe that the future for the interchange of programmes is in the use of a compatible medium such as 16mm film. The limitations on this system are being probed and new and radical techniques are being sought to improve the technical quality of recording.

The second pair of studios is well ahead and will go into operation this autumn. These two studios were planned to be identical with the first two, but within the the short space of time between the installations it has been possible to introduce even newer devices. These will make the studios even more efficient than the first Vauxhall site the company should have been forced to expand elsewhere.

In early 1962, the central technical area will be complete. It will contain all the switching and distribution equipment necessary to coordinate the activities of the first four studios — telecine, video-tape and film recording—and adequate space is being reserved for new developments.

It should be realized what an enormous apparatus, apart from the equipment and the manpower to operate it, is required to produce regularly the programmes which feed the 17in. and 21 in. TV screens of our viewers. At Elstree alone, some 350,000 sq. ft of built-up area are needed by ATV for this purpose.

In the television industry at least ten times the space is required for auxiliary and ancillary purposes as for the actual studio floor space. In consequence, each studio has technical and general control areas of between 12,000 and 15,000 sq. ft., and a technical facilities building exists of some 20,000 sq. ft. Also, we have a production facilities building of some 76,000 sq. ft. housing the carpenters’ shops which make our scenery, the painters who paint the backcloths and flats, and in the props department enormous quantities of used props that are stored for future use. At this moment a producers’ building is going up covering an area of some 82,000 sq. ft., which will house the producers, directors, production assistants, libraries, and provide 10 rehearsal rooms with a floor space of 17,000 sq. ft. So far we have been using 17 different rehearsal rooms spread all over London with a total floor area of some 20,000 sq. ft.

Wardrobe, make-up and dressing rooms take up another 20,000 sq. ft., and ATV is particularly proud of the dressing rooms provided for artists appearing at Elstree — there is even a separate “dressing room” for the performing animals which are often used.

In the transport building of some 41,000 sq. ft. are garaging facilities for ATV’s fleet of transport and outside broadcast vans, also modern workshops as well, where ATV manufactures a great deal of the equipment used in its studios. Finally, so that nobody has to go hungry, there is a canteen geared to serve food to 700 people at one sitting.

The fulfilment of the Elstree project has relieved one of the most pressing needs which had been facing the company. For its future needs the company had already obtained an option on a site at Vauxhall on the South Bank. Owing, however, to planning delays inherent in so centrally situated a site, the company was compelled to make immediate arrangements for the development of its own Elstree studio site. It is a significant indication of the growth of this industry that, while retaining the Vauxhall site the company should have been forced to expand elsewhere.

An Eye to the Future

Three factors condition our attitude towards trainees in the production and technical fields. The need to keep pace with a medium which is hungry for new blood, new ideas, new techniques. The need to train enough talent to provide a “bank” upon which we can draw for replacement. The need to look to the future and provide for the time when the creation of a new network or networks will inevitably result in a serious drain upon the existing talent and experience.

The pattern of training in both the production and technical fields is the same. Once the trainee has been chosen by the selection board, he is immediately put under the wing of a senior member, or members, of the department concerned. The method and length of his training varies from department to department; but, assuming that the right man is chosen, his initial training is designed to expose him as fully as possible to all facets of the business of mounting a television programme. Because this must be the end product it emphasizes an interesting feature in the selection of trainees. It would be safe to assume that the production department would be most concerned with the creative talent of a trainee, and the technical departments with his technical know-how. This is broadly true, of course, but television has had to breed a new body — the engineer with a creative and artistic flair and the creative artist with technical knowhow, and the ability to be aware of and use the facilities available to maximum effect

All training processes vary with the individual and, inevitably, the selection of trainees is much like taking a chance in a lottery. We cut down the odds as much as possible by ensuring that the selection boards comprise the most experienced men in the company. The training, however, can never be the same for each trainee. Some are slow starters and, in the early stages, do not fulfil the promise shown; some leap ahead and, much like the hare in the fable, outstrip their contemporaries. Some never make it at all. But all need patience, perseverance and understanding and in this business more than most others, temperament must be considered and foresight exercized if the full potential of a trainee is to be realized.

Initiative and ideas are the life-blood of television. To get the best out of those who work for us, a great deal of freedom of expression must be granted. Freedom here does not mean licence. It does mean discipline; a need for the individual to learn the rules, the grammar of his job, and to use all his creative and technical ability to express himself within those rules. Every facility open to his seniors is open to the trainee. The only limit to his acquisition of the necessary knowledge is the limit of his own ability to absorb and learn. We are proud of our trainees, and the system we use to train them. Our percentage of success is high, and there is ample evidence that this company, which started in 1955 with the cream of talent and experience available, is passing that know-how down to those who join us along the way.

Incorporated Television

Your wholly-owned subsidiary, ITC—Incorporated Television Company Ltd., is the biggest exporter of British television programmes. ITC is responsible for the production of films which are distributed in the Eastern Hemisphere, including the Iron Curtain countries, and supplies these films to our American subsidiary in the Western Hemisphere. ITC is already a familiar name on the network screens of the United States and Canada, not least through the conspicuous success of the series Danger Man starring Patrick McGoohan. ITC has produced over 1,600 half-hour programmes which have been sold throughout the world. Notable successes have included Robin Hood, Sir Lancelot, Buccaneers and The Invisible Man. It is not too much to say that ITC has contributed in large part to the country’s export drive and the earning of vital foreign currencies. ITC is currently engaged in the production of the series Sir Francis Drake, already sold to CBC in Canada and to the Australian Broadcasting Commission. This is being produced in association with ABC television. Also ITC is producing in conjunction with the Rank Organisation a new one-hour film series, Ghost Squad, already in release and the series has already been sold in the Canadian and Australian markets.

Australia

Every year we have further confirmation of how right was our judgment when we bought our interest in Australia a few years ago.

We have always realized the potential market of the television industry in Australia, and we had this in mind right from the first. Not only are we identified with one of the great radio networks in the Commonwealth, but we are partners in its expansion and in the extension of its reputation in Eastern and Southern Australia.

In addition to that, in so far as the Australian law permits us, we have entered the commercial television field in a substantial way through our organizations there.

Today, we have an investment in the following television broadcasting stations in Australia: Amalgamated Television, Sydney; Southern Television, Adelaide; Queensland Television, Brisbane; Canberra Television; Wollongong Television; Richmond-Tweed Television; Ballarat Television; and Country Television Services. We have no doubt that during the years to come, the same substantial development which our radio stations have achieved in the last 25 years lies in front of our television broadcasting operation.

In addition to ail this, Australia continues to expand as a market for our programmes from this country, and gradually the care and thought we have taken in sending to Australia the right programmes, is being reflected in the size of business we are doing.

Our North American Venture

One of the first plans our management had when we started to create programmes for our British audiences was to provide entertainment of a standard which would have a ready market overseas and particularly in the North American continent.

Here, we were conscious of the fact that the history of selling British entertainment in America has been fraught with difficulties, and in the case of the film industry – many failures. But we felt that to produce programmes of the quality that would sell to an American audience was a further spur to the competitive spirit which we believe is the basis of good broadcasting. We very quickly learnt that just to send somebody to the United States to sell programmes, without having an efficient and well-directed organization was merely a waste of time. For this reason, therefore, we decided some years ago to buy a half interest in a substantial American corporation — Independent Television Corporation.

In the light of experience we decided that if the operation of the American company was to be truly effective in your company’s interests nothing less than complete control would suffice. For that reason, as we reported last year, we bought the other half of the Independent Television Corporation. Having acquired control, we took steps to strengthen the management and reduce the overheads. We are now able to report that these steps have been successful and the operational period to April 30, 1961, has been a profitable one. We would congratulate our American management on their success.

The success of our American company depends on the quality and the amount of the films which the Incorporated Television company is able to make available. In the past, this vital supply was Insufficient, The measures which are being taken and which I have described to you should assure the supply for the future.

This will include Whiplash, Sir Francis Drake, Ghost Squad and Supercar with three more film series being prepared for production before the end of 1961.

Also on the American continent, we have continued to develop our interests in Canada by investing iq radio and television. Our Canadian subsidiary is Canastel Broadcasting Corporation Ltd. and this company now has interests in CJCH, the Halifax, Nova Scotia, commercial radio and television station, and in Vantel Broadcasting Company Ltd., the Vancouver commercial television station. Your board has other plans for developing the company’s interests both in the networking of programmes and in local stations.

The Link with Moscow

This year your company was responsible for providing “live” programme exchanges with the Soviet Union, and was the first to send back coverage of events in Moscow produced jointly between ATV’s production personnel and Soviet Union crews and technicians. The opening of the British Trade Fair in Moscow, at which Mr. Krushchev and many members of the Soviet Praesidium were present, was transmitted live from Moscow; the video-tape recording of the first programme from the Bolshoi Theatre to be seen outside Russia, and an outside broadcast video-tape recorded documentary on the Moscow scene have already been seen by our viewers.

Talks have taken place in Moscow with the USSR television organization and many more programme exchanges are planned for the future.

Gorki Street, USSR, a series of six programmes showing life in the Soviet Union, a programme series similar to the successful Main Street, USA, is in the planning stage, and in this series we will go to all parts of Russia, into the agricultural lands, into the industrial areas, as well as seeing life in the smaller towns.

An exchange of language programmes is being discussed similar to those already being produced in France for schools, and a joint production with Soviet television on the peaceful use of the atom involving both British and Soviet scientists is also in the early stages of planning.

Future plans covering programme exchanges with the Soviet Union include song and dance festivals and broadcasts from the Bolshoi and other famous Russian theatres.

British Relay Wireless & Television

Three years ago we took up half a million pounds worth of convertible loan stock in this company and, as this stock is on the point of being converted into ordinary shares, it is right that reference should now be made to this investment. Since we took up the loan stock, we have taken advantage of our rights to take up shares as if we had been ordinary shareholders in the company. The situation is that, when our stock is converted, we will hold 2,216,025 ordinary shares in the company.

This investment is very closely allied to our interests as television contractors to the Independent Television Authority. BRW & T is a company which was originally started as a radio relay organization and, some 10 years ago, it was amalgamated with the first television relay company in the country, the Link Sound and Vision company, who had an operation working in Gloucester. Gradually the field of operations of the company has expanded and, today, serves 17 metropolitan boroughs in London, has networks covering extensive areas of the West Midlands and Yorkshire and has recently extended its activities into Scotland.

Among the towns served are Ipswich, Peterborough and Corby; Smethwick and Oldbury and adjacent places; Leeds, Sheffield, Bradford, Halifax, Huddersfield and intervening and neighbouring townships.

In Scotland networks have already been established in the principal border towns and in Dundee, while concessions have recently been secured for the operation of relay services in Ayr, Kilmarnock, Cumnock and Irvine in the west.

We recognize that, in a relay business, a substantial amount of capital has to be spent in putting down miles and miles of cable to cover the areas where valuable concessions have been secured. These cables, the terminal units and the station equipment which are concerned with the installation, have to be depreciated; and it is only when the bulk of the depreciation has been written off that the profitability of the undertaking becomes apparent. We believe this is the case with BRW & T. In addition, we are confident that the system, on which both sound and vision services are provided, is the best system that has yet been put into use.

With the possibility of a Pay-as-You-View television service becoming available in Great Britain, we are convinced that it is networks like BRW & T which stand in a most prominent position to derive the greatest advantage from such a service.

In addition, as we have said earlier in our Report, British television has technically to advance, and the networks controlled by BRW & T, with the minimum amount of alteration, can take the 625-line system which is generally anticipated and provide subscribers with the benefits of colour television as well.

Planned Music Ltd.

It is now over three years since we started this important subsidiary operation with the purpose of exploiting in the British Isles and certain other countries in the world the American form of background music called Muzak.

The essential difference between the use of normally recorded music and Muzak is that music as usually performed relies for part of its effect upon great changes of amplitude, or loudness, but in the case of Muzak, the character of the original work is preserved by suitable transcription in a form which is performed without great changes of amplitude, and this results in the music being conveyed to the listener without him suffering or being inconvenienced by very loud or very soft passages.

At first there was resistance to this new amenity in business and commercial life. With so many opportunities nowadays of demonstrating Muzak in operation this resistance is vanishing. There has remained, however, the difficulty of the shortage of certain Post Office lines. In consequence, rather than stand still, Muzak has gone into some territories before the development of the service has made them, in an economic sense, fully ripe.

In America, the market for background music is enormous. Muzak is a multimillion dollar business, and has more than 60 per cent of the market. Background music has become part of life practically everywhere — in offices, factories, banks, shops, restaurants, airport lounges, trains, hospitals, and many other places. Characteristically, this development has not been so early or so rapid in this country. We now estimate, however, that over one million people are regular listeners to a Muzak service in England which shows a good rate of growth in a steadily expanding market.

The aim of Muzak is to make life more pleasant; the influence of music is subtle, it relaxes tensions, helps people to be cheerful, imparts a rhythm and a swing to a task and an interest to an enforced wait.

Over the years, a library of many thousands of recordings for Muzak has been built up. This is a priceless asset as it enables us to give a very much wider choice and scope for endless variation to users of the service. This library is constantly growing as new music becomes available.

During this year, the extension of the services of the Muzak organization on a regional basis has continued and national coverage has now been attained in England. Regional offices exist in London, Reading, Bristol, Birmingham, Manchester and Newcastle. Local and intensified development of the service continues in the main provincial centres. In addition, Travel Muzak is a new service now being supplied to airline operators and shipping companies.

A new company. Planned Equipment Ltd., has also been set up to handle public address and sound engineering services, including Audiomatic equipment. This is a machine which provides information in a number of different languages for foreign visitors to exhibitions. Our machines were a success at the British Trade Fair in Moscow and shareholders will be able to try one for themselves at this year’s Motor Show, where several wiil be installed.

Golden Guinea — and other Discs

In 1960-61 Pye Records Ltd., of which we own 50 per cent, had a year of continued expansion.

The record industry throughout the world has been passing through a period of change and experimentation. On the technical side we have seen the change from the old 78 r.p.m. shellac record to the modern long-player and more recently the development of the stereophonic record. Exciting as these changes have been, they have led to even more exciting developments in marketing techniques.

It was with the introduction of microgroove records 12 years ago that the “repertoire explosion” began. Suddenly, performances could be recorded and heard as never before. The parallel development of gramophone equipment which could do justice to these new recording techniques helped to accelerate the growth of public interest and new recordings were made and issued in ever increasing numbers. For a time the size of the market increased faster than the rate of increase in available recordings, but over the last few years it has become apparent that the industry is overproducing new products, resulting in a smaller sale of each production and a downwards squeeze on profits.

This has led the major companies, principally in the United States, to seek new and better ways of marketing their labels. We have seen there the development of low-priced mass-market labels as a means of producing business which places little reliance on the star quality of individual artists. We have seen in America, too, the sale of records through drug stores, supermarkets, and other outlets, and the development of record clubs run on similar lines to the book clubs.

This is not to say that our record business discounts in any way the value of and need for the established distribution pattern in this country. This is, after all, the backbone of the business; but if the industry is not to stagnate in the next few years new techniques must come, to be used intelligently and in such a way that all levels, i.e., manufacturer, distributor, and retailer, benefit from the overall increase in activity.

Last year was the first full year of direct to dealer trading, now developed so far that every important record retailer in the country is regularly visited, helped, and advised by our records van-man. The light blue vans with the Golden Guinea lettering are a familiar sight in every city and major town of the country.

Golden Guinea family-priced long playing records too are nationally known as the only range of records that give entertainment to all the family. One outstanding issue during the year on this label was the special presentation set of Handel’s Messiah on three records issued for Christmas.

In pops too our artists topped the popularity polls. Sales of their records continued to climb and this label now boasts one of the strongest line-ups of British recording artists in the country.

In Conclusion

In the foregoing I have sought to set out in more detail than in previous years the manifold nature of your company’s activities. In doing so I have paid tribute to the services rendered by the Directors and by our immensely able and devoted staff. I look forward to another year of progress in programme achievement, technical achievement and export achievement.