ABC, NBC Balk at Network-Integration-Fee Task Force

Association of National Advertisers, American Association of Advertising Agencies Invited ABC, CBS, NBC to Discuss Issue

By John Eggerton -- Broadcasting & Cable, 5/1/2008 4:05:00 PM

Two out of three networks, ABC and NBC, declined the invitation of advertisers and agencies to talk collectively about network-integration fees.

ABC, CBS and NBC collect the fees to the tune of about $125 million annually, said the Association of National Advertisers and American Association of Advertising Agencies, which want to find out why.

In February, the ad groups asked those three networks to create a task force with the ANA and the AAAA on the issue by May 1. Advertisers have questioned the need for the fees, which are not charged by Fox, the netlets, cable networks or local stations, they said. The fees are an artifact, they argued, of a time when there was a physical cost to manually integrate a commercial into the network feed.

In an April 30 update on the prospects for a task force, the ANA framed the networks' response as follows. "One network has agreed to meet to discuss their network-integration fees; one network is not prepared to join a task force, but is willing to discuss the issue with individual advertisers or their respective agencies; and one network has been nonresponsive after three requests."

ANA executive vice president Bill Duggan would not identify which network was which, but he said that if the networks did not identify themselves, the ad groups might eventually have to. "At some point, our members will want to know which networks said what,” he added. “At some point, we will be transparent to our members and, therefore, everybody will know."

ABC spokeswoman Susan Sewell said her company was the "willing to discuss" network.

"While we respect the ANA for all it does, we feel this topic is more appropriately discussed directly with our clients,” NBC Universal spokeswoman Liz Fisher said. That appeared to rule out option No. 1. A source confirmed that NBC was the network that had not responded to the request.

CBS had no comment, but there was only one option left.

So did one network constitute a task force? No, said Duggan, although he still has hopes. In the meantime, the ANA will encourage its members to keep raising the issue and “to understand the cost of network-integration fees for their own company."