Consumer electronics 'baby' outgrows its lobbying arm

The Consumer Electronics Association (CEA), buoyed by the enormous success of its annual Las Vegas trade show, decided last month to pull out of its longtime alliance with the rest of the electronics industry and set up its own public-policy branch.

The move prompted questions about the future of electronics lobbying in Washington — in particular, whether the other groups in the Electronics Industry Alliance (EIA) would remain a formidable lobbying force without the CEA’s hefty membership dues.

CEA head Gary Shapiro, who hobnobbed two weeks ago with the Washington power elite — from House Energy and Commerce Committee Chairman Joe Barton (R-Texas) to Hollywood lobbyist Dan Glickman to Federal Communications Commission Chairman Michael Powell — at his group’s most recent blowout trade show, said that the CEA had simply outgrown the alliance.

“We have 140 employees now, 50 million in revenue as a standalone organization and 2,000 corporate members,” he said. “The break of our affiliation was more about a baby of EIA becoming bigger than its parent. We’re so large compared to EIA itself that it was appropriate.”

The CEA was the largest member of the EIA, which also includes the Telecom Industry Association (TIA) and four other industry trade groups. Last year, the CEA contributed $2.4 million in membership dues, royalties from the trade show and rent to the EIA’s $8.1 million budget.

EIA head Dave McCurdy, a former Democratic congressman from Oklahoma, said he was disappointed to see the CEA leave but confident that the alliance, which now represents 1,300 corporate members, would remain strong. “On the one hand, you hate to see anyone leave, but you’re also delighted with their success and want them to continue to succeed,” he said. “EIA still represents 80 percent of the electronics industry without them.”

The CEA has grown 300 percent in membership in the past five years, spurred in large part by a policy requiring that all trade-show exhibiters become members. The group intends to hire three or four new lobbyists to flesh out its own lobbying presence, Shapiro said.

The EIA’s lobbying staff will remain the same, McCurdy said. Because of the nature of the settlement with the CEA, he said, the CEA’s absence will not affect the EIA’s finances for five years. The EIA is “strong and healthy” financially, he said. Both groups will continue to occupy the same EIA-owned building on Wilson Boulevard in Arlington.

None of the CEA’s remaining sector groups has expressed a desire to leave the alliance. The EIA was successful in implementing 10 of the 40 legislative recommendations unveiled in May as part of its Policy Playbook on Innovation,
including an intensively lobbied earnings-repatriation provision enacted with last year’s corporate-tax bill. The EIA will continue to represent consumer-electronics companies through its popular Environmental Issues Council and other areas, McCurdy said. A number of consumer-electronics companies have expressed an interest in staying on as members of the EIA board.

Some lobbyists close to both groups said that a personality conflict between Shapiro and McCurdy in part led to the CEA’s decision to leave. “You had two ambitious, strong personalities. I think if you hadn’t had that, they would’ve stayed. McCurdy’s got some strengths in Washington that are worth having,” said a lobbyist who spoke on the condition of anonymity.

However, both Shapiro and McCurdy called their relationship cordial.

“We’re both professionals. ... I respect his abilities. I don’t think anyone in the world would be capable of putting the show together like he does,” McCurdy said.

“It wasn’t unfriendly. Our independence was natural. We’ve been phenomenally successful. We’re on a roll,” Shapiro said.

Yet Shapiro expressed surprise that the EIA would continue to represent the consumer-electronics companies on its board. “Ask how many of those companies are coming to their next board meeting. If three are coming, I’d be shocked,” he said.

The CEA’s withdrawal from the EIA marks the first time that the two groups will be entirely independent since their founding decades ago. The EIA traces its roots back to the Radio Manufacturers Association, created in 1924. In 1961, after the rise of television in the ’50s, the CEA was created under the EIA umbrella. The groups existed together until 1999, when the EIA allowed its member organizations to incorporate separately, giving each a measure of independence.