Friction in Broadcast Group Has Diminished Its Clout

Cable World, June 23, 2003

Byline: ALICIA MUNDY

It is a crime to hijack an airplane. And a felony to hold someone hostage. But is it a crime to hijack a lobbying group and kidnap its president? If some folks on the board of the National Association of Broadcasters, in Congress, at the networks and at the Federal Communications Commission get their way, it will be.

For years, there have been various splits and schisms within the National Association of Broadcasters, yet none of them actually hurt the NAB's influence. Until now.

Insiders at regulatory agencies, politicians and the NAB's own board are alleging that the ever-deepening division between networks and affiliates, and the cracks in the standing alliance between large station group owners, large-market station owners and "the little guys" caused the NAB to seriously misplay its hand at the FCC during the ownership rule negotiations this spring, and cost it heavily in the final vote June 2 on duopoly relief and radio markets. Now it may also create a new network/owned-and-operated stations lobby and give succor to the cable guys.

"This is about a misallocation of resources and a muddled message," sighed one NAB TV station group member, describing "enormous losses" at the FCC. The NAB, said another, has tried to deal with the network/affiliate split as a "controlled burn - like Los Alamos. But it got out of control, and yet we still have people blowing on it!" Still another member snapped, "The affiliate guys just blew up the NAB. Ask them whether it was just an accident, or whether they deliberately did it to help the cable industry."

Even the extremely cautious Michael Powell, chairman of the FCC, said, "I think their well-publicized divisions make it difficult for them to make a clear and coherent presentation of their issues. The NAB is very effective - when it has everyone inside its tent."

Since early this year, the Washington telecom community has been awash in rumors that the NAB had been taken over by a strong-arming cadre from its own Television Operators Caucus (TOC), which some telecom insiders call the NAB's "dirty little secret - run like a fraternity." TOC's key members are also among the NAB's most pro-affiliate fans, pushing a petition on behalf of the Network Affiliated Stations Alliance (NASA). They include Andy Fisher, the loquacious rep from Cox Broadcasting; Alan Frank, of Post-Newsweek stations; Dave Barrett, from Hearst-Argyle; and their brief-happy lawyers in D.C.

When ABC became the final network to quit the NAB last week, its point man in Washington, Disney EVP Preston Padden, said the NAB had indeed been hijacked, and that the NAB apparently didn't consider its ABC affiliates "local" enough to matter. To his credit, Padden said it so smoothly that at the end of his press conference, reporters were ready to take up a collection to get NAB president Eddie Fritts released from his NASA captors, and distribute bumper stickers demanding "Free Eddie!"

The biggest losers in the NAB splits are the small-market station owners and the radio groups. Several telecom sources and FCC denizens complained that NAB's Fisher, Frank and Barrett pushed "relentlessly" for the 35% cap and inclusion of NASA petition issues for months. They weren't "thorough" when they came to the FCC with various duopoly proposals for smaller markets, such as the "10/10%" formula - for which they did not provide data for the record. Belatedly, NAB members learned that the FCC was not going to allow any two stations in the top four to be owned by one company, in any market.

So, just a week before the vote, a handful of station group reps and NAB staff proposed a unique "tiered" approach to loosening up duopoly for the smallest markets, where the costs of digital transition and cutbacks on network compensation have hit hardest. They got positive responses from some FCC staff, but were shot down by other NAB members. The plan died, and instead, the FCC proposed waiver provisions. "They blew it," said an FCC staffer. "They paid dearly for focusing everything on the cap and NASA."

On radio issues, the NAB apparently did even worse; FCC folks say the NAB came "extremely late" to the table, and seemed "shocked" that the agency planned to redefine radio markets to cut down consolidation.

Alan Frank said, "They didn't tell us they were doing this until late." But in February at a Senate hearing, the commissioners announced they would redo radio markets.

Frank said it's foolish to blame the cap fight for NAB losses elsewhere. "We did not take away resources. But, whether there was capital used up at the FCC on this issue is something else."

Furthermore, he notes that in January, "Powell was saying you couldn't retain the cap at all. We got it down to 45%. That," he said, "is a huge win." Even so, the NAB is pushing Congress to roll it back. But if they seek salvation on the Hill, they must do so without some important groups such as Belo Broadcasting, and without their top lobbyist, Jim May, who has left.

One consistent complaint from NAB members, Congress and from Powell himself is "inconsistency." "I sent the same message to consumer groups and to the industry - I had a consistent philosophy, and all parties were warned not to come in here asking for me to give them relief, but regulate the other guy," Powell said.