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Don't cut off your nose…

CBS has reason to exit NAB, but its greater interests demand it remain 11/01/2008 08:00:00 PM Eastern

You don't often see the words "Karmazin" and "foolish" in the same sentence. But here goes: Viacom President Mel Karmazin was foolish to yank CBS out of the NAB. That's not to say the move wasn't understandable. The organization has fallen into the thrall of some station groups that ratted out the networks to the feds and are doing all they can to limit the number of TV stations the networks may own.

But it was still foolish. As a dues-paying member, CBS might not have been able to block the NAB board from taking positions contrary to the networks' interests, but it would have been able to moderate some.

For instance, several of the station groups were pushing the NAB to oppose a stay of the order requiring Viacom/CBS to come into compliance with the 35% station ownership limit by May. In deference to CBS and ABC, NAB's last remaining network members, the executive committee opted not to oppose the stay. The court subsequently granted the stay. I'm not saying that NAB's brief would have affected that outcome, but it could have. Now only ABC is left to take the anti-network edge off NAB's actions.

By bailing out on NAB, CBS has weakened itself politically in Washington. NAB is a powerful institution—although not as powerful as when it counted the four major networks among its members.

As this magazine has pointed out repeatedly, much of that power derives from the personal relationships that station-group executives and station GMs have with their senators and local congressmen. The NAB staff has encouraged those relationships and used them to rally deep congressional support for the cause du jour.

By itself, Viacom is just another fat-cat corporation, whose grass-roots political muscle doesn't extend much beyond the major markets, which, by the way, are not particularly well represented on key congressional committees. Without NAB, Viacom will have to find other ways to reach lawmakers from Montana and Utah and Wyoming and all the other un-major-market districts where CBS stations aren't. And those other ways are bound to cost money, perhaps as much as the $1 million a year it was paying in NAB dues. Hired-gun lobbyists don't come cheap.

In quitting NAB, Viacom is also leaving behind nearly $85 million. That's how much NAB now has in cash and investments, thanks to the annual convention that is throwing off about $30 million a year in profit. The funds are expected to grow at the rate of at least $10 million a year for the next few years. If I were Viacom, I would like to have a say in how the money is spent. I sure wouldn't put the checkbook in the hands of a bunch of station groups like Post-Newsweek, Cox, Hearst-Argyle that I felt were out to get me. I know that Disney/ABC is not about to let that happen. That's one of the reasons it's taking the hits and hanging onto its NAB seat.

Viacom may be a big multimedia company with cable networks and billboards, but much of its value still comes from broadcasting: TV and radio. In other words, Viacom still has a lot in common with the station groups and should be working closely with them.

So they can't agree on the ownership caps or must carry. What about really vital issues like spectrum?

I pointed out in this space several weeks ago that broadcasters have been sitting on a big hunk of broadcast spectrum for nearly 50 years—first because it would cause interference to stations and now because they need it for the transition to digital. Before it's all over, broadcasters—all broadcasters—may find themselves in a real fight to hang onto it.

There are other issues on which Viacom and the NAB ought to be working together: interactive TV, political advertising, copyright, copy protection, the DTV transition and content regulation. I'm sure they will work together on some of these on an ad hoc basis. But it just won't be the same. It's the difference between being married and living together.

Karmazin might be thinking that he can always come back to NAB if he needs to. Not necessarily. Without CBS, NBC and Fox, the station groups could rewrite the bylaws to exclude those broadcasters that also happen to operate networks. Indeed, nobody is saying this publicly, but some of the station groups couldn't be happier that the networks are quitting the NAB.

It's saving them the trouble of having to throw them out.

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