NAB Still The Leader In A Changing Marketplace

Although there is considerable turmoil at this point in the National Association of Broadcaster's 78-year history, it is clear that both the association and the industry it represents are meeting the challenges head-on.

Indeed, as the television broadcast landscape continues to change in dramatic fashion, the NAB, which currently represents roughly 1,100 TV and over 6,000 radio stations across the U.S., has learned to weather the good with the bad. Like most media-related businesses, the NAB has not been immune to cutbacks this past year. However, it remains financially solvent at a time when most are drastically cutting back their operations. Citing the poor economy, the NABâs board of directors recently adopted a new budget for fiscal year 2003 that anticipates a 7 percent reduction in revenue to $54.4 million (from the $58.2 million it took in the current fiscal year, 2002). This includes the canceling of several ãminor conferences,ä such as a DTV sales conference at Northwestern University, and a conference in Latin America.

Yet, after expenses, the NAB is looking at a surplus of about $7 million this year and has amassed almost $80 million from past years. Nearly one third of the NABâs total revenue comes from its annual equipment convention in April. The rest comes from membership dues and ancillary activities.

ãWeâre not just a single-issue organization,ä said Dennis Wharton, the NABâs senior vice president of Communications. ãThere are a lot of issues, including the transition to DTV, that smaller broadcasters and network affiliates are relying on the NAB for to help shepherd [legislation] through some of the government agencies.ä

These ãissuesä include campaign finance reform, radioâs transition to digital (using in-band on-channel transmitters), and TV stationsâ transition to digital operation.

Although the organization has borne the brunt of the departure of CBS, Fox, and NBC from its membership in the past three years÷resulting in millions of dollars in lost membership revenue÷it continues to represent a strong lobby in Washington, DC for the causes most important to the survival of the independent station groups. Many smaller broadcasters say they would have no clout without the NAB, both in terms of policy issues and legal matters.

ãThere are a lot of areas where we disagree with what [the NAB] says and does,ä said the general manager of a small station in Iowa, who declined to be identified, ãbut we couldnât live without them, thatâs for sure.ä The growing rift between the networks and independent groups is at the center of the most recent controversy. The networks reportedly have pulled out because theyâre upset over the NABâs stance regarding the FCCâs current policy toward station ownership. As the rule stands now, a broadcast organization can only own as many stations as can reach 35 percent of the nationâs roughly 120 million homes. The major networks are said to want up to 50 percent, which has caused concern among smaller broadcasters that are leery of the networks controlling the airwaves. Recently a federal judge challenged the ownership cap, ordering the FCC to justify it, or throw it out completely.

The NABâs President, Eddie Fritts, and its board agree with the current rule÷a fact that has reportedly gotten the organization into some heated arguments. The NABâs stance prompted CBS (owned by Viacom) to revoke its membership last year, taking 35 TV stations and over 180 radio stations with it. NBC and Fox pulled out of the NAB in 2000, apparently over the same issue.

In a letter of resignation to Fritts in April 2001, CBS President Leslie Moonves wrote, ãWe must reject an agenda that is inconsistent and misguided, and which fails to address the very real competitive and technological challenges to our industryâs future.ä

The NAB continues to stand by its policy. ãItâs unfortunate that a couple of the networks have left, but weâve had networks leave before and theyâve come back,ä Wharton said. ãOnce this cap issue is resolved, we think thereâs a good chance that theyâll all come back again.ä

The associationâs other pet project is the DTV transition. Although it does not provide direct funding, the NAB has helped promote those stations that are on the air (over 240 at last count) with a digital signal, both in terms of its own public relations efforts and through a special TV and print ad campaign designed to sell the service to the public. The program, which was announced at last yearâs convention, is being carried out jointly with the Consumer Electronics Association (CEA) and debuted last month in Portland, OR; Indianapolis, IN; and Houston, TX. The Washington, DC market will be added soon.

Wharton said a special 30-second TV commercial has been put together by the NABâs board, that can include individual stationsâ logos, to help increase awareness of the availability of digital TV sets and of the local stationâs on-air digital broadcast schedule. Participating stations have agreed to air this spot for free, in tandem with sponsored product-related spots from retailers like Circuit City and consumer electronics companies like Mitsubishi and Zenith. The goal is to encourage consumers to buy digital receivers capable of displaying broadcastersâ DTV signals.

TV station members are also able to take advantage of special programs designed to help with legal matters, such as the locating of a tower where community opposition is strong, and obtaining a wavier from the FCC for not meeting the digital transition deadline. Addressing this last issue, the association worked with the FCC to establish a checklist procedure to explain the reasons÷financial, geographical (tower siting), and political (FAA issues)÷why those stations wonât make the deadline. The checklist form, if accepted by the FCC, grants a station from six months to a year extension.

ãThe NAB is one of the last full-service trade associations left,ä said Wharton. ãWe hold conventions, offer legal advice, and have made affordable health insurance benefits available to stations [both radio and TV] with as few as two employees. Weâre helping broadcasters in a number of ways.ä On With The Show Judging by the poor attendance at most trade shows since September 11 (the recent CES show attracted roughly 98,000 attendees, down from approximately 120,000 last year), the NAB expects its annual convention in April to be off slightly from the over 113,000 participants it reported to have had last year. ãWeâre not immune to whatâs happened to the economy in general and to our stations in particular this past year,ä Wharton said. Attendance aside, optimism is high for the 1,400 companies presenting equipment demonstrations at this yearsâ show. Over 850,000 square feet of exhibit space will dominate the convention, including a 30,000 square-foot booth from Sony Electronics, the conventionâs biggest one ever. To accommodate this growth in size, Sony has agreed to anchor the new South Hall exhibit area, which is accessible by walkways connecting it to the former main hall.

In another first, the Radio-Television News Directors Association (RTNDA) will hold its annual convention concurrently with the NAB. In fact, the RTNDA has signed a deal with the NAB to hold the shows together for the next five years. The RTNDA show adds star power÷like network anchors Tom Brokaw, Peter Jennings, and Dan Rather, who will participate in one of the TV news-related events÷and the much-needed buying power of station management that equipment companies will welcome.

ãWeâre going into this NAB assuming that weâll have the same high-level conversations we had last year,ä said David Netz, vice president of Marketing for Denver, CO-based Encoda Systems. His company will have the same size booth as it did last year. ãLast year we had less traffic, but more substantial conversations. Weâre assuming this year will be similar. NAB is a must for us and every manufacturer to network with the decision-makers. Regardless of the economy, companies understand the importance of the NAB show.ä Other highlights include the opening keynote speech by new AOL Time Warner Chief Operating Officer Richard Parsons; a one-on-one interview between ABCâs Sam Donaldson and Chairman Powell; and the New Media Professionals Conference keynote by Marc Andreessen, co-founder and chairman of Internet streaming media company Loudcloud.

For laughs, ãRowan & Martinâs Laugh-Inä (which appeared on NBC from 1968-1972) will be inducted into the NAB Hall of Fame at the organizationâs Television All Industry Luncheon. In addition, comedian Jay Leno will headline a special show at the Belaggio Hotel that will be open to approximately 3,000 select guests. To those that claim the show has gotten too big to be useful to broadcasters, Wharton said stations need to be exposed to new technologies and alternate distribution methods if they want to remain competitive. ãWe think that having everything under one large tent brings more value to broadcasters, allowing them to sample the new technology thatâs emerging, because the convergence of various media is clearly where the industry is headedä he said. ãOur convention is the premiere electronic media showcase in the world and we think that it will remain so in the future.ä

While challenges within its ranks remain, most agree that the NAB is best equipped to help stave off the competition from cable and satellite TV by pushing for government-mandated access to Americansâ homes. Broadcasters say the NAB must also continue to encourage the CEA to develop affordable products and lobby Congress to mandate built-in digital tuners.

All this while meeting the individual needs of 1,000 TV stations, both large and small, that must make the transition to DTV or face obsolescence. The NAB certainly has its work cut out for it. But it seems up to the task.