Station Affiliates on Verge of Victory

Oct 10, 2005  •  Post A Comment

In a very public way, the defining moment in the transformation of the National Association of Broadcasters occurred on a warm April evening in Las Vegas last year.

Eddie Fritts, the then 63-year-old president and CEO of the NAB, looked as if he were near tears as he held an agitated conversation with Phil Lombardo, the NAB’s then joint board chairman. The location was an opulent ballroom at the posh Bellagio Hotel, during an invitation-only dinner to honor the TV industry’s top political contributors.

The Lombardo-Fritts verbal sparring went on in plain view of hundreds of guests, making many of them uncomfortable.

Rumors started swirling almost immediately. One had it that Mr. Lombardo was telling Mr. Fritts that he could count on two years of severance pay if he stepped down from his post the following month. Mr. Fritts had previously made it clear that he didn’t want to step down until his 65th birthday, 18 months later, which would mark his 25th year at the helm of the NAB.

Neither man would comment on the details of their almost surreal public-private chat, though Mr. Lombardo denied that he had made Mr. Fritts the severance offer. But he did concede that the two men had been discussing “succession planning” with regard to the NAB.

Affiliates’ Ascension

Whatever the exact nature of that conversation was, the following is fact: Mr. Fritts is soon to be replaced and David Rehr, a beer industry lobbyist with no TV experience-who is said to have the strong backing of Mr. Lombardo-is poised to become the NAB’s next president and CEO.

Mr. Lombardo’s day job is CEO of Citadel Communications, a company he founded and which is based in the swank New York suburb of Bronxville, in Westchester County. Citadel owns four TV stations, the largest of which serves Des Moines, Iowa, the nation’s 73rd-largest market.

The nimble Mr. Lombardo has unquestionably been the triggerman for the the TV affiliate members of the NAB, who, with the likely appointment of Mr. Rehr, have firmly become the major force in the organization. Mr. Rehr’s appointment will solidify their influence over an organization that some critics believe traditionally vested too much autonomy and power to the NAB’s staff.

What makes the affiliates’ successful ouster of Mr. Fritts and likely ascension of Mr. Rehr most remarkable, according to executives familiar with the machinations of the NAB, is that it is primarily the handiwork of just three men out of an NAB board that consists of 60 members.

They are Andrew Fisher, president of Cox Television; Alan Frank, president and CEO of Post-Newsweek Stations; and David Barrett, president and CEO of Hearst-Argyle Television. Mr. Barrett is no longer on the NAB board, but when he was he clearly helped spearhead the ascendancy of the affiliates, according to the executives with knowledge of the situation.

“In any organization, if you have two or three highly motivated people, they can move mountains, and they did,” said one industry source.

Though NAB board members have been complaining for years about what they perceived as their lack of clout over the organization, the affiliates got religion on the subject in the mid-1990s. That’s when the networks scored a major lobbying coup over the affiliates on the issue of the national TV station ownership cap in the Telecommunications Act of 1996.

Before the act, the cap barred broadcasters from owning TV stations reaching more than 25 percent of the nation’s TV households. The affiliates wanted to keep the cap at 25 percent, while the networks wanted to raise the cap to at least 50 percent.

Following its traditional practice on highly divisive issues, NAB sat out the fight, allowing the affiliates and networks to lobby the issue on their own.

When the legislative smoke cleared from the ensuing battle, the cap was raised to 35 percent, and many affiliates felt burned. “They felt that they were overwhelmed,” an industry source said.

So a couple of years later, when the Federal Communications Commission launched proceedings to consider raising the cap again, the affiliates voted to force NAB to fight to keep the cap at 35 percent-during a meeting at which at least two of the Big 4 TV network board representatives were not present, according to several accounts.

Continued squabbling about the cap and other key issues-including network efforts to slash affiliate compensation and limit the ability of affiliates to pre-empt network programming-eventually drove all of the networks out of the organization.

Network representatives were outraged that affiliates were using NAB funds to lobby against network interests.

Later, the affiliates used NAB funds to underwrite a legal challenge to network affiliation contracts by a separate organization, the Network Affiliated Stations Alliance.

Under a legislative compromise in 2004, the cap was set at 39 percent, after Republicans on the FCC had raised it to 45 percent.

Mr. Fritts, who has been NAB’s chief since October 1982, ran afoul of his affiliate-board bosses in part because they perceived that his efforts to keep the cap at 35 percent had been half-hearted at best.

Mr. Fritts had made little secret of the fact that he believed the NAB should sit out battles that divided industry members. He also irked affiliates with his complaints about their legislative wish list, which he considered hypocritical and inconsistent: to lobby for the retention of ownership restrictions on the networks while arguing for ownership deregulation the affiliates wanted.

The affiliates wanted NAB to lobby vigorously to win them a right to own additional stations in the same markets, and to try to overturn a rule that bars the owners of daily newspapers from buying broadcast stations in their markets.

“Eddie told them what they didn’t want to hear: that there has to be some consistency in position,” an industry source said. “He was right, but it cost him his job.”

In addition, at least some affiliates were believed that Mr. Fritts had been at the association too long and had become too powerful to represent their best interests.

An NAB spokesman declined comment.

Enter Mr. Lombardo, an NAB TV board member with a clear, no-nonsense style who had the time and inclination to throw himself wholeheartedly into industry issues.

It was Mr. Lombardo the TV board drafted to succeed Jim Yager, CEO of Barrington Broadcasting, in 2003, after Mr. Yager resigned unexpectedly as NAB joint board chairman.

Rocking the Boat

During the first board meeting over which he presided as joint board chairman in 2004, Mr. Lombardo upset association radio board members when he won approval of a proposal to scrap the winter board meeting, which traditionally consisted of a four-day junket to a pleasant resort, in favor of a couple of two-day bare-bones business meetings in Washington.

He also ticked off some board members by bringing a baseball bat as a prop to a private session, apparently a joking reference to his reputation as a tough guy. The stunt prompted some on the radio board to begin referring to Mr. Lombardo as Batman and Cox’s Mr. Fisher-a forceful advocate of the affiliate cause-as Robin, at least behind their backs.

Mr. Fisher, Mr. Lombardo and Mr. Frank did not return phone calls requesting comment by press time.

In the tumultuous aftermath of that very public spat between Mr. Lombardo and Mr. Fritts in Las Vegas last spring, Mr. Fritts, with the support of the radio industry board members of the NAB, won a temporary stay of execution: a contract extension that allowed him to stay as the NAB’s president until at least Sept. 1 of this year.

The deal included a consulting agreement good through April 30, 2008.

Despite the controversy, Mr. Lombardo was subsequently re-elected to a one-year term as NAB’s joint board chairman. That term expired in June.

With the help of his affiliate allies, Mr. Lombardo als
o emerged as one of the co-chairmen of the search committee that was charged with hiring Mr. Fritts’ successor. The other co-chair is David Kennedy, president and CEO of Susquehanna Media.

By a stroke of fortune, Mr. Kennedy became preoccupied with an effort to buy at least part of the on-the-block Susquehanna, leaving much of the responsibility for the search to Mr. Lombardo, sources said. Mr. Lombardo promoted Mr. Rehr as a candidate.

Even some of the strongest critics of the affiliates concede that Mr. Lombardo and his affiliate allies outmaneuvered them at NAB, largely because affiliate leaders were willing to put the time and effort into their cause.

Unlike the NAB’s radio board members, TV board representatives have also had a highly motivating issue on the table: what they perceived as a life-or-death power struggle with their networks.

Said one well-placed industry source of the affiliates’ winning formula: “They aren’t afraid to raise their voice. They’re not afraid to rile people. Most people want to get along and go along, and they don’t want to put in the time.”

“[The radio board is] often not effective,” said another industry source.

Said Bill O’Shaughnessy, a former NAB board member and chairman of Whitney Broadcasting, one of Mr. Lombardo’s supporters: “I can’t find anyone who more qualifies for the appellation statesman for the industry. He’s doing it for the good of our profession, and you can only admire the guy for it.”

At least some sources said that the affiliates have stronger support organizations than other NAB board membership groups, giving them an edge. Receiving particular mention is the Television Operators Caucus, a group for major TV station owners that is not open to the network membership and that meets privately to discuss industry issues and strategy, including affiliate plans for the NAB.

Cox’s Mr. Fisher, Post-Newsweek’s Mr. Frank and Hearst-Argyle’s Mr. Barrett are all TOC members.

Doubts Remain

Though many in the industry admire the steps NAB’s affiliates have taken to make the organization more businesslike and more responsive to board concerns, even some affiliate owners bemoan the fact that NAB’s affiliate-driven actions drove the networks out.

The Walt Disney Co. and its ABC stations recently rejoined the NAB, but it’s unclear whether other networks will follow suit.

“[Driving out the networks] was probably not a good idea,” said Gary Chapman, chairman and CEO of LIN TV. “I do think it would be healthier if we could have a unified industry.”

There are also those who insist that the affiliates’ battle to preserve the national ownership cap ultimately undermined the best interests of the industry.

“The move to shore up the cap conveyed to Congress that big is bad and conveyed to Wall Street that growth in broadcasting is bad,” said Shaun Sheehan, Tribune VP, Washington. “The only people who profited from that are broadcasting’s competitors.”

But Hearst-Argyle’s Mr. Barrett, one of the architects of the affiliates’ strategy, is unapologetic.

“We’re concerned about the industry and we want to be proactively involved in the affairs of the NAB,” he said, “because we’ve got a big investment in the NAB and it’s our lobbying organization in Washington.”