Washington watchdogs change spots

Aug 20, 2001  •  Post A Comment

For years, the media industry’s Washington trade associations have been fighting for deregulation.
As it turns out, that’s been good for the stockholders of many of the companies that survived the ensuing waves of consolidation and convergence. But it’s also been making life much more difficult for the associations themselves because it has meant dealing with a smaller pool of bigger and much more conflicted members.
The National Cable & Telecommunications Association, for instance, which once had its share of mom-and-pop operators, is now dominated by a handful of major corporations led by AT&T, which alone has interests in 38 percent of the nation’s 87.5 million subscribers to multichannel video services.
AOL Time Warner, NCTA’s other major power, owns systems reaching 12.7 million cable homes, along with the nation’s largest Internet service provider and many of the most popular cable networks, including CNN, TNT and The Cartoon Network.
Where broadcasters were once barred from owning more than seven TV stations nationwide, they can now own as many stations as they want-as long as those don’t reach more than 35 percent of the nation’s TV households. Still, some broadcasters are lobbying vigorously for the right to own even more.
With companies invested in sectors across the media universe, sources said it’s hard to tell whether the newspaper business is more important than broadcasting to many key National Association of Broadcasters members, including Belo, Gannett and Post-Newsweek Stations.
NCTA, meanwhile, recently changed its name from the National Cable Television Association to the National Cable & Telecommunications Association to reflect the growing interest of its membership in the broadband, Internet and telephone businesses. To cover its often conflicting interests, The Walt Disney Co. now has memberships in the NAB, NCTA and the Motion Picture Association of America.
Meanwhile, the Satellite Broadcasting and Communications Association, which once represented five direct broadcast satellite providers, now represents two-DirecTV and EchoStar Communications. And that soon may become one if Charlie Ergen, EchoStar’s chief, succeeds in his current effort to acquire DirecTV.
The fact that interests of an association’s individual members are diverging has resulted in several nasty intra-industry squabbles.
For instance, all the major broadcast networks except ABC have bailed out of the NAB in the past several years because the organization’s affiliate-dominated board has forced it to lobby against a network effort to ax the cap on broadcast station ownership.
In another shakeup, the SBCA’s two top executives-Chuck Hewitt and Andy Paul, the organization’s longtime president and senior vice president, respectively-resigned recently after DirecTV and EchoStar demanded a restructuring aimed at giving their interests a more prominent role in the organization.
And in a direct financial hit, News Corp. recently confirmed that it is considering pulling its newly acquired Chris-Craft Industries stations out of the Association of Local Television Stations. The 10 Chris-Craft stations have long been one of ALTV’s strongest financial supporters, providing an estimated 10 percent of the organization’s $2.2 million annual operating budget.
“At the end of the day, I don’t think all of these organizations will still be standing,” said Greg Schmidt, LIN Television general counsel and vice president for new development.
However, not all the associations are caught in the wake of marketplace churn. The Motion Picture Association of America seems to be floating in relatively calm waters, even though its seven member companies have conflicting interests, with Disney, Fox and Warner Bros. each owning a TV network and Viacom owning two.
Jack Valenti, MPAA chief, credits the collegiality to the group’s focusing on issues of importance to all the companies, such as international trade, anti-piracy and copyright.
“Make sure you keep your companies focused on the paramount issues where all their interests are at stake,” Mr. Valenti said. “Our strength has been in our unity.”
Here’s what key industry observers see as the major challenges for the industry’s associations in Washington:
The biggest bullet NCTA President and CEO Robert Sachs may have to duck soon is massive re-regulation.
Insiders predict the regulatory pendulum may soon swing back cable’s way because the local phone companies will fail in their effort to win legislation that would allow them to offer truly competitive broadband Internet service. When that happens, the phone companies, according to the analysis, will realize their only practical recourse will be to lobby for a level playing field that includes re-regulation for cable.
The major proponents of pending pro-Bell legislation are Rep. Billy Tauzin, R-La., and Rep. John Dingell, D-Mich. For the record, NCTA has made clear that it’s not opposed to their measure. But AT&T, NCTA’s biggest member, has been fighting the legislation tooth and nail, alienating Rep. Tauzin. Though AT&T has been lobbying the issue on its own, the regulatory backlash could hurt the entire cable industry.
Said Ken Johnson, a spokesman for Rep. Tauzin, “The fact that Congress is not talking about re-regulating cable or mandating open access has to be music to the ears of cable operators. But that could change if something isn’t done soon to jump-start competition in the broadband market.”
Still another challenge for NCTA, some insiders said, is that AOL Time Warner, the only cable company that currently faces broadband access obligations (in the form of regulatory conditions attached to the federal approval of the company’s merger) may lobby for a level access playing field with its cable colleagues, even though the NCTA thus far has been a staunch opponent of the access obligations.
Rep. Tauzin’s Mr. Johnson, meanwhile, warns that additional major consolidation in the cable industry could set off some “howls of protest up here.”
Sources said SBCA acting President Andy Wright’s most daunting challenge will be ensuring the group’s survival. The association has only two major members now-DirecTV and EchoStar-and EchoStar’s chief Charlie Ergen is currently trying to buy DirecTV.
If News Corp’s Rupert Murdoch nabs DirecTV instead, dropping out of the organization would be in accord with the News Corp. chief’s precedent. Mr. Murdoch is not a huge fan of association memberships. A stable of in-house lobbyists is already representing his interests in Washington.
One observer said that if Mr. Murdoch acquires DirecTV and stays in the SBCA, Mr. Wright’s challenge could be even more daunting.
“Rupert Murdoch and Charlie Ergen are two scorpions in a bottle,” said Andrew Schwartzman, president of the activist Media Access Project.
With Mr. Murdoch’s News Corp. considering dropping Chris-Craft stations’ memberships, ALTV President Jim Hedlund’s most pressing concern is also survival.
Industry sources said the best survival strategy would be for Mr. Hedlund to find an unfulfilled niche for the organization to fill for broadcasters. It’s not that ALTV hasn’t done things for the industry in the past. Indeed, it played a key role in persuading the Federal Communications Commission to relax duopoly rules that barred broadcasters from owning more than one TV station in a market. But the past is the past. The real issue is to figure out what ALTV can do for broadcasters that the NAB or another organizations isn’t already doing.
The MPAA’s Mr. Valenti has accomplished great things for the entertainment industry in the 35 years he has been heading the association. But he will turn 80 in September. He has shown no inclination toward retirement, and there’s no heir apparent.
Because Mr. Valenti is a far bigger star than most of the federal policymakers he hobnobs with, he will be a hard act to follow. But one source said that should a vacancy arise, the MPAA board is expected to attempt to recruit a luminary of equal or even greater intensity. One pos
sibility mentioned is former President Bill Clinton. Rep. Tauzin could be another choice.
The Association for Maximum Service Television, a relatively obscure organization that was formed in the 1950s to fight encroachments on broadcast spectrum, has successfully redefined itself to play a leading industry role on DTV conversion issues.
Among its claims to fame is that it’s the only organization still representing the affiliates and all of the major TV networks except Fox. The chief challenge for David Donovan, MSTV’s new president (who was formerly ALTV’s FCC lobbyist), will be to clean up the technical problems with DTV technology and promote the rollout. Another challenge may be keeping NAB from taking the DTV ball back if MSTV demonstrates an ability to get some long yardage out of the issue.
“We are taking a leading role in pushing the technical agenda in the transition to digital-and working with NAB in the process,” Mr. Donovan said. “All of the consolidation hasn’t really affected us because we’re focused on the technology side of the world,” he said. “Our objective is to make the free over-the-air digital platform work. And there’s universal agreement about the importance of this objective.”