NAB Loses on Three Counts

May 26, 2003  •  Post A Comment

Although major media companies will be the winners June 2, when the Federal Communications Commission is widely expected to radically loosen regulations limiting broadcast ownership, don’t expect any backslapping when the National Association of Broadcasters board convenes in Washington the following week.
The new rules will be another setback for the once-powerful NAB, which has seen its influence shrink in recent years with deregulation and industry consolidation. While the biggest companies will gleefully rush to buy up more stations, the decision will represent a lobbying defeat for NAB-a failure to deliver on its three major priorities for the reform measure.
“If this is the way it falls out, it is certainly not a good thing for the NAB or broadcasters,” said one NAB board member.
“I think they [top NAB officials] are worried,” added another well-placed industry source.
The NAB’s members charged the association staff with delivering on three major issues: keeping a cap that currently bars broadcasters from owning TV stations reaching more than 35 percent of the nation’s TV homes; winning the right for broadcasters to buy a second TV station in the nation’s smaller markets; and derailing an effort to tighten the market definitions the agency uses for radio ownership.
But according to agency and industry sources, the plan that the FCC’s Republican majority is contemplating would raise the national ownership cap to 45 percent, limit the right of broadcasters to acquire a second TV station to roughly the top 100 markets and rejigger the radio market definitions.
That NAB would come up so short at the agency comes as a surprise because the association is generally considered to be a major lobbying power in Washington, and one with particularly good connections at the FCC.
But sources said NAB’s campaign was a hard sell from the start, in part because the TV board-led by its vice chairman, Cox Television President Andrew Fisher-insisted on making a major priority of keeping the 35 percent cap.
The sales job was complicated by the fact that keeping the cap ran counter to the clear deregulatory druthers of FCC Republicans. “[FCC Chairman Michael] Powell had his mind made up,” said one NAB board member. Unfortunately for the NAB, ignoring what seemed to be an otherwise almost universally recognized fact sapped energy that could have otherwise been put into winning duopoly relief.
Alan Frank, president and CEO of Post-Newsweek Stations, said it was widely known in the industry that the Network Affiliated Stations Alliance was doing the major lobbying on the cap issue, not the NAB.
“The fight was led by NASA and that left the NAB free to take the lead in other areas,” Mr. Frank said.
Some sources said the fact that broadcasters were able to keep a cap at all was a victory of sorts, because the FCC’s Mr. Powell originally signaled an intent to ax the regulation.
Sources also said the decision to raise the cap was made at least in part to accommodate Fox and Viacom, networks that already hold stations reaching more than 35 percent of households.
“The FCC has a history of blessing people who cross over the line,” an industry source said.
One longtime industry observer said it also hurt the NAB’s case for duopoly relief that Clear Channel Communications, with more than 1,200 radio stations, emerged as a “sort of poster child for the problem of excessive deregulation.”
In addition, the fact that the FCC decided to review all of the ownership rules at once, instead of one at a time, apparently intensified attention on what the agency was doing.
Despite the association’s failure to realize its goals, key sources said industry representatives aren’t expected to blame Eddie Fritts, NAB president and CEO. “Tribune is completely satisfied with the fine efforts Eddie [Fritts] and John [Orlando, NAB senior VP] continue to make,” said Shaun Sheehan, Tribune VP, Washington.
The group went so far as to submit a new series of proposals last week for FCC consideration. The first would permit TV stations in every market to combine, as long as the market’s two top-rated stations didn’t merge. An option, according to NAB, would be to take a tiering approach, starting with a rule that would bar only those mergers in the top 25 markets that involve the four top-rated stations. In markets 26 through 75, only combinations of the three top-rated stations would be precluded. In smaller markets, combinations of the top two stations would be prohibited.
The FCC’s pending proposal would permit broadcasters to own two TV stations in markets with six independent TV stations, including PBS outlets, with the caveat that only one of the merged stations could be among the market’s four top-rated stations.
In its filing, NAB said the proposed regulation would generally limit duopolies to the top 100 markets, precluding mergers in most of the nation’s smaller markets “where the need for relief is the greatest.”
“We continue to vigorously make our case to the FCC on all of these issues and will continue to do so right up until the time of the vote,” said Dennis Wharton, an NAB spokesman.