Caught in crossfire of stations vs. networks

Apr 16, 2001  •  Post A Comment

As the National Association of Broadcasters, one of the most powerful lobbying groups in the nation, heads to its annual convention in Las Vegas next week, the titan is hobbling.
NAB has been wounded in the economic firefight that has divided the networks and their affiliates, a battle that has recently spurred all the major TV networks except The Walt Disney Co.’s ABC to bail out of the organization.
As a result, some observers warn that NAB’s essential role as the industry’s champion in Washington is in jeopardy.
“It’s absolutely crazy for the broadcast industry to think it can splinter like this and not undermine the effectiveness of its lobbying,” said Preston Padden, Disney executive vice president, government relations.
Added Jim Hedlund, president of the Association of Local Television Stations, “If it goes on longer, it’s going to cause some real damage.”
The battle between the networks and affiliates has focused on the networks’ campaign to ax a federal regulation that bars broadcasters from owning TV stations reaching more than 35 percent of the nation’s homes.
The networks say they need the room to grow and compete with other media giants. But the affiliates fear that loosening the cap would give the networks too much power.
NAB has been in the hot seat because its affiliate-dominated TV board has required it to lobby for the cap-and that’s the essential reason NBC and Fox Broadcasting Co. have pulled their stations out of the organization in recent years.
Earlier this month, Viacom followed suit, yanking CBS’s 35 TV stations and Infinity Broadcasting’s more than 180 radio stations out of the trade group.
In Viacom’s case, it didn’t help that the Network Affiliated Stations Alliance, an umbrella group for the Big 3 TV network affiliates organizations, last month formally asked the Federal Communications Commission to investigate alleged abuses of the affiliates at the hands of their networks.
Then just last week, NBC got in another lick, announcing its boycott of the NAB convention.
“It would be inappropriate for us to be hosting a meeting at the NAB under the circumstances,” an NBC spokesman said.
Not everybody agrees CBS’s bailout will hurt NAB. Said Alan Frank, president of Post-Newsweek Stations and a member of the NAB TV board, “NAB’s effectiveness has not been diminished … while NBC and Fox have been out.”
According to broadcast industry sources, the only sure winners thus far are the cable TV industry and other broadcast industry competitors of broadcasters. While broadcasters are fighting among themselves, cable operators are focusing on achieving their legislative and regulatory agendas.
Industry sources said NAB also loses because the networks have their own top-notch lobbyists in Washington-and those lobbyists have been important allies of the NAB for years.
“It’s always better to have more troops,” said Blair Levin, a former top FCC staffer who is now a telecom analyst for the Legg Mason financial services firm.
The division will also add to the confusion about industry positions on Capitol Hill, a major annoyance for lawmakers.
“In the past, on broadcast issues, NAB for the most part represented the position of all broadcasters,” said Ken Johnson, a spokesman for Rep. Billy Tauzin, R-La. “Now we not only have to take into consideration what NAB wants, we also have to listen to what the networks want.”
Sources said nobody has been more aware of what is at stake than Eddie Fritts, NAB president and CEO. But Mr. Fritts, who declined to be interviewed for this article, could not find the magic formula to hold his organization together.
“Eddie Fritts is really doing the absolute best he has with the hand he’s holding,” said Robert Sachs, president and CEO of the National Cable Television Association.
“He hasn’t lost his fastball,” added Dick Wiley, a former FCC chairman who now heads his own Washington law firm. “His industry has problems.”
At least some observers believe the fissure can be healed.
NCTA represents the cable programming networks of all of the Big 4 TV networks, and the cable association’s positions sometimes run afoul of the interests of the major broadcast networks. For instance, NCTA is currently lobbying vigorously against interactive TV rules, regulations that Disney and Viacom heartily endorse.
“You have to recognize that you’re not always going to have total agreement,” NCTA’s Mr. Sachs said.
Some observers also say a strict policy of neutrality on divisive issues might do the trick.
“When we have an issue where there’s great division, we stay out of it, and that’s what I think the NAB TV board should have done,” said ALTV’s Mr. Hedlund.
Others, however, fear the split may be too deep to fix because it’s driven by a basic difference in business philosophy. One of the differences is that the networks want to emulate cable’s financial model and charge affiliates for carrying their programming, not compensate them as they have traditionally done.
In addition, the fact that the broadcast networks all control major cable networks gives them added leverage in their relationship-and the ability to grow outside of traditional broadcasting.
“The networks’ multiple distribution partners make it more complicated,” said Ben Tucker, NAB TV board chairman and president of Fisher Broadcasting. “That’s the cause of the schism.”
That’s making the situation particularly tricky, because denying the networks an opportunity to grow in broadcasting is likely to encourage them to expand their cable and programming industry holdings all the sooner.
Said Shaun Sheehan, Washington vice president, Tribune Co.: “In no time [they] will be taking positions antagonistic to the long-term interests of broadcasting.”