Wednesday, April 04, 2007

Rehr Makes Some Interesting Comments

April 4, 2007

Below are statements made by David Rehr in October of 2006. This statement is available on the NAB website HERE We have bolded what we feel are the most interesting items. Seems Rehrs definition of the competive marketplace changes like the wind. Seems he lists out a lot of competitors.......likely he will once again claim that it is one way competition.

“The Future of Broadcasting”
The National Press Club – October 4, 2006
Remarks of David Rehr, President and CEO, National Association of Broadcasters

Ten months ago, when I took this position at the NAB, I knew that joining the broadcasting industry would be exciting. But after seeing the dynamics of this business first hand, it is 20 times more exciting than I could have ever imagined.

One surprising thing I’ve learned is that most Americans are unaware of the dramatic changes taking place in our industry. And they are also unaware of the strength of broadcast radio and television among all media. Of course, part of this lack of attention to the changes in broadcasting is by industry choice. After all, it is the broadcasters’ fundamental job…

To make the audio and visual experience paramount;

To provide the best local news and sports, entertainment and music;

To offer outstanding network and syndicated programs;

And, to serve as a lifeline – often the only one – in times of peril.

This is at the core of being a broadcaster.

But with all the changes taking place around us in a fast-paced world, broadcasters must do a better job of showing the amazing transformation we are undergoing. You might say that we have inadvertently relinquished some of the excitement occurring in broadcasting to our competitors, by not being more proactive. That ends today, because we have a very compelling story to tell.

Broadcasting is a vibrant business. It is a business that embraces the future. We are switching from analog to digital technology, a literal “reinvention.” Digital technology offers broadcasters unlimited new ways to serve their audiences, along with grander picture and sound quality. This technological change, which fuels our future success, has also brought us an exploding number of new competitors. And we must chart new courses.

But, these new media competitors, if given the choice, would prefer to be in our position.

That is because, by any measure, broadcast remains the undisputed leader in news and entertainment – by far. And, as we look to the future, our competitors do not have the history, business cultures or experience to provide true localism – events, news, weather – the local link that has built the broadcast industry.

Today, my goal is to begin the dialogue on areas where broadcasters have enormous opportunities. We need to re-engage those who have a false perception of the broadcast industry and begin to correct it. I would like to focus on three areas that demonstrate the vibrancy, strength and reach of broadcast:

Number one – broadcasters are seizing new opportunities in digital media;
Number two – broadcasters are reasserting our unparalleled leadership as the media of choice;
And number three – broadcasters are leveraging our unique advantage of localism – enhancing community life and encouraging responsibility.

First – We are seizing opportunities in digital media. Going digital is spawning amazing new tools and business models for networks and local stations. Today, over 1,600 television stations are broadcasting in digital and high-definition (HDTV). Standard digital programming offers dramatically improved picture quality over analog TV. High definition is the highest quality viewing experience available. The majority of broadcast prime time scripted programs, major sports and entertainment are now delivered in HD. And it’s important to know that viewers with digital television sets, who rely on over-the-air broadcasting, receive a more pristine picture than cable or satellite provide. Anyone who has seen a golf tournament or a football game in high definition knows exactly what I’m talking about.

People get HD! They get it when they can see the individual blades of grass and even the logo on the golf ball.

But, the greatest potential of digital television is the ability to provide multiple streams of programming, which bring increased choices to viewers. With our advanced technology, digital stations can broadcast up to six different programs at once. And all of these program streams together take the same bandwidth required for just one current analog program. This offers a phenomenal opportunity to increase diversity of content and localism.

Some stations refer to their multiple program streams as “hyper local.” They broadcast local college and high school sports, gavel-to-gavel city council meetings, instantaneous local weather and other local programs. One of the first to go “hyper local” was KTVB in Boise, Idaho.

But this expanded content and localism, tied to our new technology, has not come about without a cost. To go digital, TV stations have invested anywhere from around one million in small markets to over 20 million dollars in large markets. What many people don’t appreciate is that during the DTV transition, broadcasters are literally paying to operate two stations – one in analog, and one in digital. For many stations, this has been a huge financial challenge, without offsetting revenue.

Congress has mandated February 18, 2009, as the date when television broadcasters will go fully digital, and return the analog spectrum to the federal government. But most Americans are not aware of this transition. One of the unintended consequences of the transition is the potential for 73 million analog television sets, currently in use, to stop working in February 2009. The federal government has recognized this challenge and is working with us to help solve the problem.

An important step in ensuring that no set goes dark took place just last week. NAB joined in an unprecedented collaboration with the Consumer Electronics Association (CEA) and the Association for Maximum Service Television (MSTV). Together we submitted a plan to the National Telecommunications and Information Administration regarding the initiative to protect consumers from losing access to television. Key to this effort is a program to provide digital-to-analog converter set top boxes to viewers. CEA President and CEO Gary Shapiro, and MSTV President David Donovan, deserve enormous credit for bringing the parties together to seek a common solution, so that no television set stops working.

The NAB Television Board has made it a top priority to undertake an aggressive marketing campaign to explain the benefits of DTV and the digital transition to the American public.

In the weeks and months ahead, we will roll out the specifics behind this concerted effort. And we will need your help. We have only 865 days left until the conversion occurs.

Radio is also undergoing its own digital transformation – “HD Radio.” A layman’s explanation of HD radio is as follows: HD radio brings FM quality to AM and CD quality to FM.

And HD Radio brings expanded program offerings – and less interference. More than 1,000 HD radio stations are already on the air, available to 75 percent of the population. Thousands more will be going digital soon. Like their digital television counterparts, HD radio broadcasters can also offer multiple program streams. More than 350 stations are doing just that – rolling out additional channels with new music formats, local information and local creative content.

By the end of the month, there will be 21 models of HD Radios available for consumer purchase from 14 different manufacturer brands. More digital radio products are coming to market before the end of the year. We at the NAB are working to accelerate the number of HD receivers in the marketplace, to increase the diffusion of this technology throughout the nation. In fact, it is a top priority of the NAB Radio Board of Directors to make this amazing technology commonplace.

Another benefit of digital technology is our ability to move content from one platform to multi-platform distribution – to expand our reach. Multi-platform generally means broadcast programs delivered on something other than the TV set or the radio. Not at the expense of our core business – but in addition to all that we do.

What makes multi-platform strategies attractive is having more convenient access to our audiences – such as radio on cell phones, and TV on laptops. We hear a lot about expanding to multi-platform at the TV network level and at broadcast stations in large markets. The networks take seriously the need to maximize the platforms available for viewers, so everyone can experience outstanding network programming. And they are creating much excitement across the entire media spectrum.

And in case anyone is wondering how the broadcast networks are doing in the new season, I will quote this week's "Advertising Age" magazine. "Broadcast TV is alive and kicking harder than it has in years. Audiences have shown up in droves for the fall season."

One reason for additional optimism is that small stations are also embracing multi-platform. This was confirmed by an NAB survey just last month. We surveyed stations from the smallest market in the country – number 210 in Glendive, Montana – with 3,980 TV households, up to the number 70 TV market – Tucson, Arizona – with 433,000 TV households.

Here’s what we learned:

72 percent are streaming video on their Web sites,
36 percent are sending text messaging to mobile phones,
And 88 percent sell advertising on their web sites.
Radio is also pursuing multi-platforms. More than 8,000 radio stations have Web sites, and many of these are being used as portals to stream their stations' audio. Radio stations earned more than $200 million dollars in revenues last year from online offerings alone.

But even with all of these expanded business opportunities, we must address new competitors.

Who are the newer competitors? On the television side, in addition to cable and satellite and the Internet, we now have Video on Demand, interactive TV, time-shifting, place-shifting, and much more. On the radio side, we have satellite radio, Internet radio, iPODs, other MP3 players, cell phones and others. How will we compete?

Our vision is a broadcast signal on all of these platforms, and on any gadgets yet to be invented. Broadcast signals will not only enhance the experience for the viewer or listener – they will also give the manufacturers that include us an advantage over competitors who do not.

This is already happening in radio. Motorola's I-Radio is merging the cell phone, the car radio and the MP3 player. FM adaptors for iPods are in the marketplace. It is no accident that Microsoft has included an FM tuner in its just-launched portable media player “Zune.”

Broadcast signals on all devices. That’s our future.

We also need more distribution of broadcast signals. For example, telephone companies should be allowed to compete fairly with cable in offering video services. Another competitor to cable and satellite will give consumers more choices. It will give them better prices. It will also give consumers better programming options, especially those broadcast multi-stream programs I mentioned earlier, which cable companies often choose not to carry.

So as you can see, broadcasters are rapidly seizing new opportunities in digital media. I’ve mentioned just a few. It is our future.

My second point today – broadcasters are reasserting our unparalleled leadership as the media of choice. Since the inception of radio and television, there has been fragmentation of viewer and listenership. This is a natural consequence of a vibrant business and has affected literally every industry in America. But as we’ve moved forward, we have allowed our competitors to create a false impression that they are more competitive with us and have a larger presence before the public than they really do. This misconception affects our ability to attract investment, ad dollars, personnel and create momentum in the market place. We are obligated to set the record straight.

First, let’s look at TV viewership.

If I asked you, “In the 2005 – 2006 TV season, where in the top 300 most watched programs would your favorite cable show rank? What would your answer be?

Well, for starters, broadcasters had the top 235 highest rated programs among all TV households. Cable's most-watched show was number 236. It was on ESPN.

In the critical 18 – 49 age demographic, broadcast grabbed 100 of the top 100 programs. We took the next 84 as well. In fact, in this important demographic, broadcast was responsible for 512 of the top 522 programs for 2005-2006.

So, what about specific cable shows? Where do they rank? According to the latest Nielsen figures:
Emmy award winning cable show “Monk” came in at 1,022.

Nip/Tuck came in at 1,403.

And Larry King Live ranks 1,883 on the most watched list.

I think you see my point.

What about local news? Let’s look at a typical American mid-sized city to compare cable news viewer-ship versus local broadcast affiliate news. In Spokane, Washington, in May, in the 25-54 age demographic, the combined viewer-ship for five Comcast Spokane cable newscasts available at 6 pm was 994 people. That’s a total of 994 Comcast subscribers watching CNBC, CNN, Fox News Channel, Headline News and MSNBC.

This compares with a viewership – in the same demographic – of 38,500 for the three local broadcast newscasts at 6 pm. Let me repeat: 38,500. That’s not even close. This is a good example of the value proposition of local news. We work hard every day for our audience, and the numbers bear this out.

And what about the misperceptions about radio? You hear much about satellite radio, XM and Sirius. The satellite radio companies have done a good job in creating excitement for their product and keeping Wall Street interested. But let’s look at the facts. Satellite radio says it has at most 12 million subscribers. By contrast, 260 million people listened to local radio last week. This is week in and week out. And we have recently learned that upwards of 500,000 of satellite radio’s so-called subscriber count are in empty cars that sit in dealer parking lots. In fact, the Securities and Exchange Commission is looking into how these subscriber numbers are counted.

But what about radio’s strength?

An Omnitel/American Media Services study released in August shows local radio’s continued impact:

21 percent listen to local radio more than they did five years ago;
Another 51 percent listen to about the same;
And 63 percent rate local radio as their primary source to learn about new music –20 points ahead of its nearest competitor, which is a category called "talking with friends."
I could go on and on with the facts. The bottom line is that broadcast television and radio are the overwhelming media of choice. And we need to continue to reassert that reality in people’s minds.

Three – Broadcasters are leveraging our unique advantage of localism – enhancing community life, and encouraging responsibility.By localism, we mean broadcasters are the integral part of our communities, promoting local causes, raising funds for charities and providing vital emergency information.

How many of you would turn first to a cable or satellite TV channel or satellite radio when a tornado, a wildfire or a flood is approaching your community? When you need information on school closings or Amber alerts, where do you turn first? The answer is and remains broadcasters.
And as you know, when the power goes out, the only connection you have is a battery operated broadcast radio or TV.

If you were in charge of the Race for The Cure for breast cancer in your community, who would you call first to maximize your visibility? Would you ask your cable or satellite company to sponsor the event, get the word out and send volunteers to work? Probably not. If there is a blood drive, coat drive or a need for volunteers down at the local boys and girls club, it’s the same thing – it is the local broadcasters who will take care of it. Local radio and television have always done these things for our communities. And it will continue to be our fundamental strength.

The NAB announced in June that in 2005, broadcast stations generated $10.3 billion dollars worth of public service in air time and local station contributions to worthy causes all across the nation. Many of our activities are not included in this $10.3 billion – such as the value of hundreds of hours of volunteer time given to local communities by station personnel. This commitment to communities cannot be replicated by our competitors.

We are also using our unique ability to connect locally to help parents work through the everyday life decisions of what their children should see and hear in the media. Broadcasters are taking a leading role in empowering parents to control what comes into their homes through television.

We have joined with all parts of America’s media – the broadcast networks, the cable industry, direct broadcast satellite companies, the movie industry, the consumer electronic manufacturers and others in what will be a $300 million dollar Ad Council campaign to reach every home in America.

The campaign has already been launched and has received strong positive reaction. It is the brainchild of one of our guests here today, my friend, Jack Valenti. Jack has led this unprecedented effort because he, other media leaders and broadcasters believe that parents have the total power right now to control what comes into their homes. It is parents, not government, who should decide what is appropriate for their children to watch. But we are obligated to give parents the tools they need.

The Ad Council has provided public service announcements and a new Web site, TheTVBoss.org, to our broadcasters to help parents block unwanted programming from whatever the source. TheTV Boss.org has already had more than a quarter million visitors. This will be an 18-month campaign to educate parents. Some of you might have seen the first wave of these announcements already.

Broadcasters have embraced this effort wholeheartedly …. running the public service announcements, featuring the campaign in local news, on morning shows, and linking the effort to their station Web sites. Our goal is to ensure every home in America has the opportunity to take advantage of this joint effort.

Let me conclude by talking about the specific role of NAB in moving the broadcast industry forward. As anyone in Washington knows, the best new business models of any industry can be stopped cold by wrong legislation or regulation. That is why NAB is taking stronger steps to ensure a regulatory climate in which radio and television can grow our business and better serve consumers.

Managing change and taking risks will not be easy as we move forward. Working out the copyright, technology and business models will take hard work and cooperation. It will take a concerted effort to update our laws and regulations to ensure that free, over-the-air broadcasting can continue to provide our great service to millions of Americans.

We are seizing the digital future.

We are reasserting our strength as the unparalleled media of choice.

And we are leveraging our localism to advance communities all across America.

And that is why the future of broadcasting is 20 times more exciting than anyone could imagine.

Labels: competition, david rehr, merger, nab