National Association of Broadcasters

April 24, 2006
Dennis Wharton
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NAB2006 All Industry Opening Address

Remarks of David K. Rehr NAB President and CEO
All Industry Opening at NAB2006

Thank you and good morning. I am delighted to address my first NAB convention.  And I am honored to have been selected as your president.

Today, I don't want to relive broadcasting's past glories... mourn its past defeats... or wade through a list of issues facing the industry. I want to talk about one thing – and that is where the NAB needs to go in the future.

I believe the NAB must move from an organization that is perceived as being on defense... to one that is on offense. We cannot afford to be an organization that is perceived as protecting the status quo... but rather, one that embraces change.

Ladies and gentlemen, my sense is that broadcasting has been defensive in its thinking for too long.  We can transform that mentality – and we can start today.

Confidence - not doubt or complaint - should set the tone as we move forward.

Certainly we have challenges - but broadcasting has a solid base of strength on which to support the dazzling new possibilities ahead.  We should not forget those strengths.

Broadcasting still has the eyeballs and the eardrums. 
For example, in the 2004-2005 TV season, broadcasters had the top 255 highest rated programs.  Cable's most popular show came in way down at 256. Ladies and gentlemen, that isn't even a contest! Furthermore, last year, the number of cable subscribers actually declined.

Satellite radio has supposedly 10 million subscribers total.  But 260 million people listened to broadcast radio last week alone. Furthermore, satellite radio lost about a billion dollars last year.  Its business model is bankrupt.  And this is even before our own digital HD radio has kicked in.

Our localism, our connection to the community, is also an advantage -- an irreplaceable advantage. Helping the community is obviously a social good.  Helping the community is also broadcasting's business plan and, frankly, it is our brand. We must continue to be evangelical about our community service and about our community content.

Now, upon the solid foundation that we have built, digital TV and digital radio are about to reinvent our industry. We are about to ride a new wave of technology that will take us places that we have never been before.

There are breathtaking changes taking place in broadcasting -- and across all electronic media. Broadcasters, cable, satellite -- and our advertisers -- are all part of a personal media revolution.

This is the day of consumer convenience and consumer choice.  For the first time in the history of media, the consumer is completely in charge.

Broadcasters have tremendous reasons to feel excited about this future.

Now, I realize getting to a new model for the future is easier said than done.  Words are cheap. Technology is expensive. Change is hard. And, yes, there are issues to be resolved – multicast carriage, compensation for content, leveling the playing field with satellite radio. But I know this:  the future is always on offense, and those who play defense will be left behind.

Let me give you five areas where we can go on offense immediately.

One. Our future hinges on our ability to exploit every new technology – on every new platform.
Yes, content is still king -- but distribution is key.

That's why broadcasters must move quickly to increase the number of distribution channels and platforms for our content. Broadcast signals must be everywhere in the culture. Our signals must go everywhere... to everyone... through every device.

Our future is a broadcast signal on every gadget – cellphones, laptops, PDAs -- and of course multi-channels of DTV and digital radio.

As I've been reminding my friends in new media, "TV and radio were wireless before it was cool!"   And that coolness quotient is set to explode.  

Apple I-Podders can now purchase video programs over the Internet – and watch them on a new class of I-Pods.  This is part of our future.

Motorola's I-Radio is merging the cell phone, the car radio and the MP3 player... while M-Spot offers streaming music over its phones.  This, too, is part of our future.
Verizon is going to pay CBS owned-and-operated stations for the right to carry its signals on Verizon's new home TV service.  This is part of our future.

FM adaptors for I-Pods are in the marketplace because listeners want local content and connection.  This, too, is part of our future.

Companies that have new media devices on the drawing board are taking a much closer look at the value of local radio content.

Every new device is a potential user of our content. And, every new stream of programming is potentially a new source of revenue. We want to be on new devices that haven't even been brought to market yet.

Yes, the copyright problems will be worked out. Yes, the technology will be worked out. Yes, the business model will be worked out. What is most immediate and important is our full embrace of this future.
For television, the future will enhance the definition of "must carry." For a distributor to have any hope of being a viable business, they "must carry" our programming. This will especially change the leverage we have in the future.

And, in addition to the term "must carry" -- we will hear the term "must share."

Networks and local affiliates must share in new revenue streams, as they are partners in building brands and creating value. This will also help ensure the continued viability of the invaluable network / affiliate relationship.

That partnership has preserved localism and resulted in Americans receiving the best TV programming in the world.

For radio, let's face it.  Local radio is a basic necessity. New media distribution technologies -- and new devices used for communication or entertainment -- will need  radio. Every electronic device you carry, or are in near proximity to, should have the ability to pick up local radio signals.  It's a lifeline; it's a friend. It's the primary media choice of consumers in the present and for the future.

I believe we will deliver great content to a myriad of devices in the years ahead. And what will be delivered to us in turn is our future.

Two.   We must promote the benefits of digital television and digital radio.

On the television side, we must show consumers the exciting possibilities of digital television before the DTV conversion... not when the DTV transition is upon us... but right now!

February 2009 is staring us in the face. Studies show that the majority of the American public still has a blank slate on what DTV truly means.

Ladies and gentlemen, the American people have to be educated. It is our responsibility to let consumers know the benefits of free, over-the-air digital television. They can’t absorb this through osmosis. It falls to us to let them know that one of the most pristine signals they can receive is over-the-air DTV.

They need to know what DTV multicast channels will bring in terms of choice and services.

We can't leave the job of educating the public on this issue to Congress.  We can't leave it to our competitors.  And, certainly we can't leave it to the guy who sells televisions at Best Buy.

And, we cannot let cable companies degrade broadcast digital signals and force consumers to pay unnecessary fees to have the full benefits of HDTV.

NAB will be announcing a comprehensive program to educate consumers about the benefits of DTV.

It is our job, and we need to get busy.

On the radio side, we must show consumers the exciting possibilities of HD digital radio. Radio is on the verge of its greatest transformation in history. Excitement is in the air.

700 digital radio stations are bringing their communities improved quality and greater choice. Thousands more are committed to joining this effort. Many stations are rolling out digital multicast or "side channels" of new formats and creative local content.

Our radio companies are undertaking a massive consumer education campaign, shouting the benefits of digital radio to consumers, car manufacturers and advertisers.

NAB itself has undertaken two major advertising campaigns to promote the overall vibrancy of free, over-the-air radio. But now, we must promote HD digital radio -- and get more digital radio receivers into the marketplace.

It is our job, and we need to get busy.

Three.  We must promote greater competition among cable, satellite and telecom companies. Competition means consumers will have more choices.  And it also means we will have more revenue streams from the content we provide.

NAB believes the telephone companies should be able to compete fairly with cable in offering broadcast programming.  To be a competitive player, the telephone companies will have to offer local content. 

Local content is us.   And, we will be compensated for that.

Satellite and telephone companies already recognize that they must compensate broadcasters... eventually, so must cable – especially as its own competitive position weakens. Frankly, it is only a matter of time.

Broadcast programs are the biggest choice by far of the American viewing audience and compensation for that cannot be ignored or denied.

Unfortunately, as we hold this meeting, the American Cable Association is attempting to use their special interest influence to change the level playing field of the current retransmission consent process.

Georgia Congressman Nathan Deal will be offering an amendment this Wednesday to put broadcasters at a significant disadvantage.

On your chairs, you will find a pink action alert. Whether you're a TV broadcaster, radio broadcaster, supplier or broadcasting professional – we need you today to contact these members with a loud and clear message: "This Deal is a bad deal. Vote NO on the Deal Amendment."

Our success and future depend on all of you to call or e-mail today. Imagine the strength of the broadcast industry if we are able to send 4,000 messages to the members of the House Commerce Committee, and what that will mean for our future agenda.

It is that important.

Another word about competition – this time, with radio. We are not afraid of competition to free, over-the-air radio.
A new study from Arbitron and Edison media Research finds that even with the availability of Internet and satellite radio, consumers are not cutting back on time spent listening to local radio.

Radio's history is one of meeting new competition head on and coming out on top.  That hasn't changed.  To our competitors, I say, "We will beat you!" All we seek is a level playing field.

Four.  Rather than being on defense about indecency, NAB is taking a leading role in empowering parents to control what comes into their homes.

We have joined with the cable industry, the movie industry, the TV set manufacturers, the networks and others in an unprecedented $300 million Ad Council campaign.  We intend to reach every home in America. Our purpose is to advance parental use of control mechanisms and the TV ratings system.

Unfortunately, most of the attention on decency issues focuses on broadcast TV and radio.

For television, we need to reframe the debate away from the stray, indecent slip-up.
Instead, we will explain to parents that they have total power – right now -- to control all TV programs in their homes.

On the radio side, the FCC needs to pay more attention to the obscenity and vulgarity that has found its home on satellite radio.

The vast totality of our broadcast media serves the American people well.  And we have no objection to playing by the decency rules. But we have to know what they are.  And unfortunately, the FCC's recent indecency fines did little to clarify these rules. We need clearer guidance from the FCC and Congress on where the lines are drawn.

We also cannot forget the importance of the First Amendment in this national debate.
Broadcasters feel strongly about free speech, and we will defend it whole-heartedly. 
But, no one should imply that protecting the First Amendment is tantamount to promoting the right to be obscene.

When it comes to the issue of indecency, the NAB is going to play a leading role to maximize one of America’s most fundamental axioms -- the need for personal responsibility. We will empower people to make good choices based upon their own tastes and values.

Finally, point number five deals with how the NAB works with the FCC and Congress.

We are moving away from using the word "lobbyist" -- which has been defensive and reactive. Instead, we are adopting the word "advocacy" -- which conveys positive offense in framing the debate – and thus the future. It is only a change in wording, yes, but it reflects a larger change in attitude.

The NAB needs you to be advocates for our industry, not just in Washington, but at home.  We intend to step up our grassroots activism of local broadcasters to educate Members of Congress, the FCC and their staffs -- about the realities of our business.

When it comes to educating lawmakers, no association in Washington can do this alone. Being an advocate also requires us to be more involved in electing Members of Congress who oversee the future of our business. We must have more pro-broadcaster Members of Congress. In fact, we must elect more broadcasters to Congress!

It is with this goal in mind that I encourage you to support the NAB Political Action committee.  It is unfortunate that money has become so important in elections, but it is a fact of life.  To be successful, we must be financially committed to those legislators who understand and support the value of broadcasting. So we hope – and I hope – you will support us in this effort.

Ladies and gentlemen, let me bring this to a close with one final thought. I grew up in a small house in Arlington Heights, Illinois.  I remember listening and watching the great Chicago radio and television personalities of the day. When I close my eyes, I can still hear their voices. I can still see their faces.

They helped shape my childhood.  They gave me a window to Chicago, to Illinois and to the world.  They took me far beyond the walls of that small house in Arlington Heights.

In 40 years, I believe my four young children will have similar warm memories of the radio and television broadcasters in Washington. These broadcasters are opening up windows for my children, as their counterparts did for me.  Local broadcasters are still the local, personal connection to the world.

I want each of you to know that I am so proud to be the president of this great association. I am honored to carry on broadcasting's rich tradition. And I am exhilarated by broadcasting's tremendous possibilities in the years ahead.

To each of you I say thank you for allowing me to be part of this great history and our even greater future.   I eagerly undertake your cause with all of my heart and energy.  Thank you.