NBC Departs NAB Over Ownership Cap

The National Broadcasting Company has announced its withdrawal from the National Association of Broadcasters. The network is departing the industry's most powerful trade group in protest of the NAB's refusal to support the network's effort to raise the federally mandated cap on the number of stations that can be owned by a single company. A majority of NAB members support the current limits on ownership.

NBC, one of the original "big three" broadcasters, is now a unit of General Electric Company, and owns 13 television stations that reach about 28% of the national market. In a letter to NAB president Edward Fritts, NBC president Robert Wright said his network cannot support policies that "so clearly go against our best interests, and the interests of sustaining broadcasting as a growth business and vigorous competitor to pay television."

NBC is the second big broadcaster to leave the NAB, following News Corp.'s Fox network, which departed last year for the same reason. Present Federal Communications Commission regulations allow a single company to own local TV stations reaching as much as 35% of the country. NBC, Fox, and other big broadcasters want ownership caps raised to 50%, or eliminated totally. All of them are beneficiaries of the Telecommunications Act of 1996, which liberalized previous ownership restrictions by raising the maximum allowed percentage of the national market from 25% to 35%.

The NAB, whose membership includes big national broadcasters as well as local stations, has been torn over the issue. Small companies fear that further relaxing the rules on ownership will put them at a severe disadvantage. "Many of us fear what might happen if that cap is raised," said Alan Bell, president of Freedom Communications Inc.'s broadcast division. "Localism will expire if a few large companies buy all the television stations up." The NAB helped launch the recent wave of radio-industry mergers and acquisitions by supporting relaxed ownership caps in that industry, but has been reluctant to take the same stance regarding television. "Our board has spoken on the 35% cap and we support retaining it," said an NAB spokesman.