All four major broadcast networks have now quit the National Association of Broadcasters.
The Walt Disney Co.'s ABC tendered its resignation last Tuesday, saying it was pointless to belong to a trade group that's dominated by TV station groups that take policy positions inimical to network interests and trash their public-service commitments.
General Electric Co.'s NBC, News Corp.'s Fox broadcast network and Viacom Inc.'s CBS were the first to abandon the NAB a few years ago, each claiming they were paying about $400,000 in annual dues for the privilege of having the trade group lobby against them on Capitol Hill and at the Federal Communications Commission.
ABC hoped to keep the peace and stay within the NAB. But that effort exploded two weeks ago at a two-day board meeting, where a few affiliate groups bent on restraining network power refused to reach a compromise.
"Basically, there were two or three firebrand affiliates that argued against it, coming back together. And the large bulk of the board let those few firebrands run roughshod over the whole process," said Preston Padden, Disney's executive vice president of worldwide government relations.
Padden said he was one of the last within the Disney hierarchy that wanted to pull the plug.
"It's a sad day. I've been banging around that [NAB] building for 30 years," said Padden, who hand-delivered ABC's resignation letter to NAB president Edward Fritts.
Some sources stated that Andrew Fisher, president of Cox Television, was the most active board member seeking to purge NAB of major-network influence, and that Hearst-Argyle Television Inc. and The Washington Post Co. backed Fisher's effort. Fisher did not return a reporter's call.
The dispute at NAB came to a head June 2 when the FCC's voted to allow the Big Four networks to own stations reaching up to 45% of TV households nationally, up from 35%.
The affiliates fear that without the 35% cap, they will have to cede too much programming and financial control to the networks.
"I argued as best I could for two whole days that we had to change direction now that the FCC vote was behind us," Padden said.
What irked him, Padden added, was not so much disagreement over raising the 35% cap but the drumbeat by some NAB members (whom he didn't name) that TV stations owned by the networks were "lousy" broadcasters.
It was also frustrating that affiliates refused to budge on the 35% cap but urged the FCC to permit multiple TV station ownership in a market and allow TV stations and newspapers to combine in the same market, Padden added.
"It was such hypocrisy that at the end of the two-day meeting, we just decided that it wasn't all over on June 2 and that these folks were intent on using the NAB as a weapon in their business disputes with the networks," he said. "And they have all the votes, so it was pointless to stay."
Padden said ABC, NBC, CBS and Fox might create a rival organization designed to counter charges that network-owned stations are less committed to their local communities than independent affiliates.
"This would be an association of local stations, not networks," Padden said. More precisely, he added, the group would consist of "local stations that happen to be owned by the networks."
Sources at Fox and NBC said exploring the formation of such a group was a good idea.
Padden said he would like to name the new network-backed trade group "America's Greatest Local Broadcasters." Talks with the other networks have not gone too far, he acknowledged.
"We've have had one brief, extremely preliminary conversation," he said. The four networks combined own 113 TV stations, about 9% of all commercial outlets.
NAB spokesman Dennis Wharton downplayed ABC's departure, saying the trade group regretted the move but that it would not diminish its clout in Washington.
"Our effectiveness is based on the fact that local radio and TV stations are located in virtually every city and hamlet and every congressional district in America today," Wharton said.
Shaun Sheehan, vice president of Tribune Co., an influential company within the NAB, said the group's influence would suffer as a result of ABC's decision.
"I think it hurts NAB tremendously." Sheehan said. "I hate to see NAB blow up, and that's what happened."
With no network backing on various issues related to the digital TV transition, such as mandatory cable carriage, NAB should not expect its influence to grow, he added.
"Some of your more powerful allies are no longer with you," Sheehan said.
The NAB's hostility to networks will drive them to work more closely with other trade groups, such as the Motion Picture Association of America and the National Cable & Telecommunications Association, he added.
"If you tell the broadcast networks they can't grow in broadcasting, where are they going to grow?" Sheehan said.
NCTA's no foe
Padden mentioned that one reason Disney was not thinking about quitting the NCTA over ongoing cable operator bashing of Disney-controlled ESPN was that the NCTA was not lobbying the FCC and Congress to punish his company.
"We heard a very consistent message [at the NCTA's National Show in Chicago], that business disputes should be resolved at the negotiating table and not through trade-association advocacy," Padden said. "In fact, that's kind of the model we would like to see the NAB get back to."
Wharton said ABC's departure would have a minimal financial impact on the NAB. Padden estimated that Disney's NAB's annual dues ran $1 million, but Wharton said the amount was closer to $500,000.
In 2001, NAB had a $56 million budget and ran $5.8 million surplus. The bulk of NAB's revenue is derived from its annual trade show in Las Vegas.