Purchase of YA Stations

Radio Record, Volume VI, Issue 17, 4 November 1932, Page 9

Purchase of YA Stations

Basis of Judge’s Assessments

HB text of.the award made by Mr. Justice Blair, who acted as arbitrator, in the dispute between the Government and the Radio Broadcasting Company over the valuation of the company’s assets which have beea taken over by the State was presented to the House of Representatives last week by the Postmaster-General (the Hon, A. Hamilton). In a covering memorandum the Minister states that the valuation of the assets of the company made by the officers of the Post and Telegraph Department amounted to £27,353, , but the company claimed £85,812. The price fixed by the arbitrator was £58,646 6/2. Incidental to the purchase of the plant and apparatus from the Radio Broadcasting Co., it was necessary to pay the company theAum of £5000/8/8, representing iuon the amount of fees collected on $ehalf of the company and held by the Post and Telegraph Department in the Broadcasting Fund, "In accordance With the Proadcasting Act, 1931, I required the Broadcasting Board to pay the sum of £58,646/6/2 for the stations and plant taken over by the jboard," stated the Minister. "That amount has been advanced by the Government to the board by way of a loan, repayable in quarterly instalments over a period of ten years, with interest at the rate of 6 per centum per annum, reducible to 5 per centum per annum if paid within twenty days of due date. The new agreement with the board provides for payment by the Department of fivesixths (ie, 25/- per annum) of the fees received from listeners. Of the balance of the annual fee (30/-), 3/per annum is paid by the Department for patent rights to Amalagmated Wireless (Australasia), Ltd." Plant Depreciation. "TJPon the question of the factors to be considered in the question of depreciation there was difference between the point of view of the Crown and that of the company as to what were to be considered as constituting’ depreciation," Mr. Justice Blair said. "The company did not dispute that wear and. tear, age, or obsoleteness were factors which properly came into consideration. The Crown, so far as the broadcasting plant was concerned, claimed that the factor designated as tbsolescence’ must also be consider"If the Crown’s contention be sound, then the purchaser of the stock-in-trade of a vendor of perishable goods-say. meat or butter-could say that as the stock would perish in a matter of days or weeks the true market value of the goods at the moment of sale must be ‘depreciated because of this quality of ‘obsolescence’ inherent in the goods themselves. This quality of ‘obsolescence’ cannot to my mind be divorced from and separately assessed from the market price, as the Crown has claimed to be able to do. "It is a taint’ inherent in all evanescent goods, and, as such, affects the

market price itself, but cannot be supersubstracted from the market price as a further depreciating factor separate and digtinct from the market price. I therefore reject the contention of the Crown that special depreciation must be assessed in respect of the quality of ‘obsolescence’ inherent in all broadcasting equipment. .... "This plant to-day," continued his Honour, "is worth the market price of such an equipment if purchased new to-day in competition with later, better designed, and more efficient plants, but, subject to the additional deduction due to the faet that the company’s plant is not new, but is second-hand." Although the company’s plant had been in use for four years or so, it was. to-day just as efficient as when it was new. And, given reasonable maintenance and renewals for certain wearing parts, such as valves, generator bearings, commutators, ang the like, the plant had more or less indefinite life. It may be said that having been. in constant use for three or four years, any hidden defects in manufacture had now had time to disclose themselves and be eorrected.. Lack of Practical Work. "THE experts for the department were handicapped by the fact that they had had little experience in the practical work of broadcasting, and their evidence was in the main theoretical and derived from study rather than practice. The expert for the company, Mr. Bingham, in addition to theoretical knowledge, hag behind him the valuable practical experience of supervising the company’s operations for about five years. This officer was being taken over by the department, and his evidence was given with the utmost frankness and sincerity, and, his engagement with the company being terminated, he had no possible interest in being other than fair to the department, which was now his employer. "Indeed, it might be said that as he will be in charge of the plant and responsible for its satisfactory functioning, his interest would be to point rather to its weaknesses than its strength... Future Developments. "PoE department’s officers all expressed the view that 60 per cent. depreciation should be allowed, but once the theory of obsolescence is rejected the whole basis of the Crown’s case is gone, and they do not help me by offering any alternative. A great deal of evidence tendered by the Crown dealt with the question of obsolescence, and with speculation as to the possibilities of future developments in the art of broadcasting. .. "If the department gone into the best markets in the world for the purpose of getting equipment equivalent in power to that used at the company’s stations, it would have been compelled to buy a plant similar in design to that used by the company, but with certain modern refinements. ; "Tf in a Year or two such advances

were made in the art of broadcasting as made that plant obsolete, this would not have affected the price the department would have had to pay on January 1 last for the latest system in vogue on that date. The company does not dispute that its plant should to some extent be depreciated in price by. reason of the partial ohsoleteness of. portions

of the plant, and by reason of. aod slight ageing or wear-and-tear in thd plant. ..The company for income tax purposes and possibly for the purpose of making generous provision for depres ciation made an allowance for deprecia tion of 10 per cent. per annum, but it contends that physical deterioration the plant is negligible." -=