November 30, 2015

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Eddie Fritts: In The Line Of Fire (09/08/03)

By Reed Bunzel

Twenty-one years ago last month, Eddie Fritts, former president of Fritts Broadcasting and former Radio Board chairman of the National Association of Broadcasters, succeeded Vince Wasiliewski as president/CEO of the association. Think back for a minute: FM had just achieved listener parity with AM, the Big Three television networks still enjoyed 75 percent of the prime-time audience, cable was still in its infancy, and only a handful of stations had satellite dishes, computers or fax machines. Radio companies could own only seven AMs and seven FMs, and Radio stations still played music on vinyl discs.

Over the past two decades, Fritts has provided the leadership necessary for NAB to become one of the most respected and effective lobbying organizations in the U.S. Accepting a challenge issued by former Senator Bob Packwood (R-OR), Fritts set out to prove that the NAB could, indeed, lobby its way out of a paper bag. Taking a mandate from the association’s board of directors, Fritts created a team of lawyers and lobbyists that some Washington insiders say may be one of the strongest such rosters inside the Beltway.

Readily acknowledging that the real strength behind NAB’s many achievements lies in the grass-roots efforts of its member broadcasters, Fritts notes that the industry’s commitment to localism is the nurturing force in an increasingly crowded and competitive landscape. “Radio's single greatest strength is its ability to provide compelling local news, information and entertainment free of charge to listeners,” he says. “Localism is our franchise, and ours alone; it’s our ticket to a successful future even in a world of ‘new media’ competition.”

The former owner of a group of Radio stations in the mid-South, Fritts understands the value of local broadcasters' involvement in issues local and national. “It’s difficult to predict the future, but our greatest challenge going forward may involve a successful transition to digital,” Fritts observes. “Digital transmission offers enormous potential benefits to listeners in the form of a better-quality signal. Broadcasters will benefit by being full participants in the digital revolution, and by being afforded potential new revenue streams.”

Fritts is recognized throughout the broadcasting industry for promoting the public service activities of local broadcasters across the country. He actively has encouraged a number of opportunities for station community efforts by serving on the boards of The Ad Council and the National Commission Against Drunk Driving and numerous other organizations. He is on the U.S. Chamber of Commerce Committee of 100 and has served on the Individual Investors Advisory Committee of the New York Stock Exchange.

An "Ole Miss" Alumni Hall of Fame inductee, Fritts has served on the board of the University of Mississippi Foundation and currently serves on the business advisory board at the University. He received the Highest Effort Award from the national Sigma Alpha Epsilon fraternity and was the first recipient of the Ole Miss Silver Mike award for significant contributions to broadcast journalism. The Media Institute, based in the nation's capital, awarded Fritts its prestigious American Horizon Award for leadership in promoting the vitality and independence of American media and communications, and he was honored with the "2000 Golden Mike Award" by the Broadcasters' Foundation.

Consistently recognized by Radio Ink as one of the “40 Most Powerful People In Radio,” Fritts and his wife, Martha Dale, are involved in various civic, educational and charitable organizations in the Washington area. They have three grown children, three granddaughters and one grandson.

On the eve of NAB’s annual Radio Show on October 1-3 in Philadelphia, Radio Ink sat down with Fritts to look at what’s changed, and what has not, since he first sat down behind the president’s desk at 1771 N Street.

INK: Looking back at your 20-plus years at the NAB helm, what is the most important thing you learned about politics inside the Beltway?
I can tell you, the first thing I learned when I got to Washington is that they use live ammunition!

And you stepped right into the line of fire.
Well, think about how the industry has changed since the early ’80s. There’s been Docket 80-90 under FCC Chairman Ferris, and the discussion of whether broadcasting should be regulated or deregulated. We went through several ups and downs in the economy, but the net is that we’ve had, for a trade association, some pretty exceptional successes. Just in the last decade, we’ve had the 1992 Cable Act, the ’96 Telecom Act, satellite home viewer improvement for Radio, and the turnaround of Low Power FM, which threatened to put up as many Radio stations as there are gas stations in America. Stability in licensing was important, as was the elimination of “greenmail” that we all went through. We were actively involved in the extension of license terms from three years to eight years, changes in the fairness doctrine, and the issue of holding rules, which at one time said that a company had to hold a station three years before selling it. Then, of course, there was the McCain-Toricelli Finance Reform Act.

Would you say that NAB has had more victories than defeats during your tenure?
I operate on the premise that there are no final victories and no final defeats. If you go back to the very beginning of NAB in 1922, you’ll see that it was founded over copyright issues, and copyright issues are still at the forefront of issues we deal with today. While the issues may have different perspectives, they’re still issues we deal with.

NAB has emerged as one of the strongest lobbying forces in the nation’s capital. What’s the secret of the association’s success?
We have one of the most active and involved memberships of any trade association, and together we watch over what we believe is the first rule: that the government should do no harm. We operate on that thesis, and we’ve tried our best to mold and shape the policies that have affected broadcasting. The entire regulatory landscape has changed dramatically because the industry has changed in terms of the competitive threats. But broadcasting today still has the concept of localism as its fundamental hallmark. If we ever give up our franchise on localism, then there’s nothing special about local Radio and television.

Last month, NAB filed a challenge to the FCC’s recent media ownership rule changes, particularly the part that shifts market definition from the contour standard that has existed for years to one that uses Arbitron data. Was the FCC wrong-headed in this regard?
While I think Chairman Powell was certainly well-intentioned, as were the other Republican members of the FCC, NAB filed a notice to the Circuit Court of Appeals here in Washington to challenge those rules in court. We believe that the industry and the consuming public both are better served with the contour method without having these dramatic changes for Radio.

As I understand it, this was not something Arbitron asked for. As a matter of fact, there were numerous variances when they were finally asked about it and brought into the process. They pointed these out to the FCC, but it was too far downstream at that point for the Commission to make any significant changes.

What was the FCC trying to accomplish with this rule change?
I believe what Chairman Powell expressed publicly was symmetry in both Radio and television in terms of court challenges. We looked at the Arbitron definition of the markets, and most of our members told us that those market definitions can be manipulated by the various subscribers. You can add a county here, you can take away a county there, and clustering obviously has a big impact on that. If you think about the way Radio has grown up, we have all lived with contours — that’s the way our stations were licensed, and that’s the way we operated. Any change to that is significant. Also, one could assume, without a great leap here, that abandoning the contour method for the rated markets is an attempt to abandon the contour method for un-rated markets, as well. We need stability in the industry; we don’t need constant confusion in changing these market definitions. This is a rather dramatic change — clearly one I would consider analogous to changing the goal posts in the middle of the game.

Do Radio companies, some owning hundreds of Radio stations, still possess as strong a commitment to localism as they once did, or is Radio losing that edge by becoming “McDonaldized”?
I would hate to be a Radio operator who wasn’t committed to localism. You risk losing your audience, you risk losing your advertising base, and you risk losing your congressional support for what you do.

Virtually every broadcaster operates on this premise — that localism is the foundation upon which we build everything else. Absent that, there’s no difference between Radio and a jukebox, CD, satellite Radio or a Walkman. You must have local involvement.
Radio stations have to be mirrors of their local community, in their content and in the face they portray to that community. If you don’t do that, then you give up your franchise, and you give up your tie to the community. If we don’t do this, there’s so much competition in the marketplace that we’ll lose our audience. Without our audience, we’re out of business.

We have to reflect what’s going on in our communities in order to remain relevant.

How important is the deployment of HD Radio — In Band, On Channel digital audio broadcasting?
It’s really important that the FCC authorized digital Radio. The whole world is going digital, and if we don’t follow suit, we’re an analog medium in a digital world. That would be like fitting a square peg in a round hole.

Do you believe DAB, rather than the Eureka 147 system originally proposed, was the proper direction for the industry?
The transition to digital Radio as laid out by iBiquity is the right way to do this, because it doesn’t displace any customers. It’s an added benefit, and it ultimately will make today’s Radio station competitive in tomorrow’s marketplace.

How serious a threat is satellite Radio to terrestrial broadcasters? Can the two live side-by-side if satellite doesn’t encroach on the local franchise of terrestrial broadcasters?
Well, we uncovered some XM patent requests, which indicated that it indeed intended to have some form of local content. For a number of months — if not years — we’ve called for them to come clean on their business plan, and it’s interesting that the FCC has not issued its final rules on that. Radio has taken on all competitors, and the death knell for this industry has been sounded many times, but Radio again and again has proven its vibrancy. I subscribe to the idea that it’s been so successful through the years because it’s local — the one thing satellite Radio does not offer. Someone might ask, “Why wouldn’t you want satellite Radio to be local?” The fact is, it didn’t ask to be local when it received those licenses. If being local was a part of the franchise that they were granted, then I suspect many local Radio broadcasters would have wanted to get in that game at that time. Some people would call that a ploy — to get a foot in the door and then pry it open permanently. We’re comfortable that our position will help local terrestrial broadcasting be competitive in tomorrow’s marketplace.

Analysis of Arbitron PUR numbers shows a small but steady, across-the-board decline in audience over the last 10 years. Should this drop concern Radio broadcasters?
What has always impressed me about Radio is its creativity, its innovation and its competitive spirit. Radio was founded on those precepts and will continue to find that those hallmarks of our past success are also the guideposts for our success in the future. But we must be vigilant. There’s more competition today than there’s ever been, and we must remain relevant to the local community. We need to be the medium they tune to if there’s a tornado bearing down. We need to be the people who are out front, helping with the Amber alerts. If there’s a disaster in the community, whether it’s a train wreck or toxic chemical spill, we need to be the source of information. Broadcasters do many wonderful things in their local communities but don’t receive national attention.

Yet Radio’s critics contend that the industry isn’t as committed to local communities as it was prior to consolidation.
Just think about all the community organizations that would not exist if it weren’t for the support, airtime and exposure that local Radio stations offered. In our little community of Indianola, we used to do the annual Community Fund Day, and the Radio station was an integral part of that. Those things are the everyday norm for local Radio. They’re not the exception. In 2001, Radio and television stations provided $9.9 billion in community-interest and public-service programming, and I will tell you that Radio has been the principal contributor. The Ad Council praises Radio as the real heart and soul of what they do. That’s what broadcasters do when it gets down to the fundamentals: We get the word out.

Every year, it seems that campaign-finance reform reappears in Congress, with free airtime to candidates as one of the major objectives. Can NAB ever successfully defeat this legislation?
There are no final victories, and no final defeats. The interesting thing is that broadcasting is out front in promoting political discourse.

With certain politicians, the most dangerous place you can be is between them and a microphone. On other occasions when you offer free airtime, you find that many of them don’t want to be enveloped in debates or to talk about the issues; they just want attack ads. We deal with this every year. The latest incarnation of Senator McCain’s efforts is to offer a spectrum tax to every broadcaster, to offer a couple of hours of free airtime during elections.

At election time, there’s no shortage of candidates. How will this airtime be divided?
That has yet to be determined. If you’re in New York or Chicago or L.A, with parts of 33 congressional districts in your coverage area, how can you allocate that time appropriately and fairly to all candidates running for each of those offices? There are at least two major candidates for every district — often six or eight — so it’s a plan that’s built on a faulty premise. And that premise is that broadcasting doesn’t cover the elections. I’d be the first to tell you that I’m disappointed in the voter turnout every year in every election. There are some countries where, in order to maintain your citizenship, you have to go vote. It’s required. But America is a free country. People who want to participate in the political process are encouraged to do so, and those who don’t obviously don’t. That’s the beauty of America.

Having politicians decide whether they should get free airtime or lowest unit rate seems like putting the fox in charge of the hen-house door.
I can understand every politician’s wanting lower unit rates and free airtime. But you have to think about whether they’re getting free automobiles, or free gas, or postal service, or airplane tickets. In my estimation, the idea of free airtime is antithetical to the American spirit.

Advocates of the public process argue that airwaves belong to the public, that they’re free. How do you weigh in on this debate?
Broadcasting and Congress have a social compact. Congress established that it would allocate, through the FCC, the spectrum necessary to provide local broadcasting. In return, Congress asks us to provide community-service programming, as identified by the FCC. Over the years, we’ve had several incarnations of what the FCC thinks that community-service programming would be. The fact is, every 90 days, broadcasters must identify, in their public file, the top 10 issues in the community they serve, and what programming they have aired to serve those problems. We are licensed by the federal government for eight-year terms to broadcast in the public interest, and we are licensees of that spectrum. It is up to us to determine, with editorial discretion, the issues in our community, and we’re allowed to do that in a variety of ways. Essentially, we have a system of broadcasting that’s licensed by the government, and we comply with that mandate. Some people distort that mandate, but often they do it to promote what they would prefer vs. what the law says.

Many people wonder if this is the last year for the NAB Radio Show. What have you done to try to reverse this perception and improve the show?
Let me tell you, we’re going to have a crackerjack show in Philadelphia. It’s really going to be terrific, and we’re really excited about it. It’s the first time we’ve been on the East Coast in a decade, and there’s a great buzz about it. A huge number of Radio stations is located in the Northeast, and Philadelphia is an easy commute from anywhere in the country. We have a committee structure that has helped put this together, and big names will be there. We have Sean Hannity, Rush Limbaugh, and John Walsh coming; and Steve Harvey will emcee the Marconi Awards, with an all-star back-up band of Radio broadcasters from across the country. Steve Harvey is going to have a ball with his comedy routine and those musicians. Without a doubt, this is going to be the best content show we’ve ever had.

Still, consolidation has had an affect on industry meetings.
The changing face of the Radio industry has had an effect on the Radio Show. I’ll be the first to acknowledge that. But we’re ahead on registration, and we have a new concept in our exhibit hall. We are already booked next year for San Diego, a terrific convention location; and we are in negotiations with some northeastern cities for a future show. That just underscores our confidence that we’re going forward.

Has Radio consolidation affected membership and operations at the NAB?
It hasn’t yet, and I doubt that it will. We’re at an all-time high for membership in Radio, and that includes the fact that we lost the Infinity stations and the ABC stations. On the television side, there is a conflict over the ownership-cap issue, but in spite of that, we are almost at an all-time high with membership numbers. The broadcasting industry is finding value in what NAB is doing for them.

What pressing legislative and regulatory issues face the Radio industry?
Look at the challenges on the table. There are discussions about repeal of the Fairness Doctrine and discussions for taking the eight-year renewals down to three years. We know Senator McCain has passed out of his committee a new forfeiture that is a magnitude of 10 over what forfeitures used to be. There are 40 or 50 activist groups that have dialed in broadcasting as their target. While many don’t have broadcasting as their central issue, some groups like to organize around periphery issues. We also have Commissioner Copps, who says that, at license renewal time, he wants to hold license renewal hearings in every state.

It seems that Radio has become the focal point of many politicians and activist groups with a bone to pick.
There does seem to be a mentality of “piling on” right now. This is coming from any members of Congress who have ever had a talk show host go after them or speak unfavorably about them, or who watched a network program that seemed to attack them or their party members — or anybody who’s heard something on the Radio that they didn’t like. We have a thought process that things have gotten out of control, out of hand, they’re not like they used to be, and therefore we need to make changes. The fact is that Americans have more choice than they’ve ever had in entertainment, news and information; and it’s much more competitive today than it has been.

What is your long-term prognosis for the Radio industry in terms of financial growth, community service and overall business health?
The Radio industry has some of the most competitive people in the world — competitive not only with other media, but also competitive with their own medium. With all the challenges that are facing us, I’m satisfied that we will have the creativity and the innovation and the enthusiasm to continue to be cutting-edge. On the legislative front, we have a membership and an industry that is more attuned than ever to the issues that impact them. That’s been my mantra from day one: for everyone to get involved because our industry’s future is tied to the legislation and regulation that may come down the pike. Our job as an association and as an industry is to mold and shape the regulatory and legislative agenda, and over the years, our industry has enjoyed many of the good things that have come as a result of our molding and shaping that agenda.

After 20 years at the NAB helm, can you say you’re having more fun now than you had as Radio broadcaster in Indianola?
There are different challenges, and I’ll give you an introspective that I don’t normally provide. When I was in Indianola, I could feel the vibrancy of Radio in the local community. There was a lot of personal satisfaction in that. On the side, I had an airplane, a motor home, a Porsche, and a hot-air balloon that I flew. I was my own boss, I didn’t have 60 board members peering over my shoulder on a regular basis, and I thoroughly enjoyed it.

This is a different kind of enjoyment. When they brought me on board, I was told, “Look, we want a broadcaster who is sensitive to broadcaster concerns. Go hire the lobbyists, go hire the lawyers, and make sure that NAB always remains sensitive to the needs and interest of local broadcasters.” There is great satisfaction in being able to take some of those same precepts and put them into practice at NAB.

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