NAB 2009: Q&A With David Rehr
The NAB president talks about importation of adjacent-market signals, Bob Johnson's Urban TV proposal and his concern over wireless companies eyeing broadcast spectrum
By John Eggerton -- Broadcasting & Cable, 4/19/2009 9:55:00 AM
Posted 9:33 AM ET, April 18, 2009
NAB President David Rehr remains bullish on the broadcasting business. For example, for his speech at the NAB Show in Las Vegas this week, he plans to quote from eternal optimist Teddy Roosevelt. But he also recognizes that the promising digital future won't be throwing off money immediately, particularly as broadcasters are facing immediate financial pressures.
That, he says, should be a sign to regulators to take a light hand.
Rehr says he thinks there is a way to allow importation of adjacent-market TV signals while still protecting in-market broadcasters, weighs in for the first time on the minority-targeted multicast program service proposed by Bob Johnson and Ion Media, and says there is reason to be concerned about wireless companies eyeing broadcast spectrum.
Rehr also says that among the things he has learned in his three and a half years atop the association is that he could have listened more to members early on, and says he is scheduling more face time with regulators and legislators.
On the eve of the convention, Rehr spoke to B&C Washington Bureau Chief John Eggerton about that and much more.
What should broadcasters take away from this year's convention?
That I went to the NAB Show and found ways to improve my business, reduce the cost of my business, discovered new, potential future profit sites for my business, and that I should be a little more optimistic about the future of broadcasting in a very difficult period.
And how many other broadcasters should I expect to find there?
You will say to yourself that there are less than 104,386 people at this convention [last year's figure], but there are more than I expected. It is going to be less. The business has been hit brutally hard, but I think our team has done a very good job of demonstrating the value to broadcasters of being there.
We just talked to someone in the business who said broadcasting was a dying business. How would you respond?
I have been here almost three and a half years, and even in the less challenging times, people have said broadcasting is a dying business.
Time Magazine, in 1958, said radio was dying. Television was dying 15 years ago. Television viewing is up. Radio listenership is up 3 million. We're moving television, of which 99% of video viewing is on traditional TV screens, to multiplatform. It will be different than it was 15 years ago, but I think broadcasting is a strong business.
I'll tell you what I gave to the investors up in New York. We have great brands that provide leadership positions in all the markets they are in. And even though we are being challenged with debt loads and interest, we still have good margins. We have to get it all reallocated, but it is not like the same margins at Macy's department store, which is 1.5%.
And then, to the credit of the television and radio board of directors, a couple of years ago we started making investments in looking for places in technology where we could advance the broadcast business. NAB made the initial seed investment in the Open Mobile Video Coalition. I think the potential for mobile video is phenomenal. Whatever we think about it, we are going to underestimate the potential of how it is going to change the television viewing experience for the better.
But can mobile develop quickly enough to help out now, or is it a long-term play?
I think it is both a short-term and long-term play. OK, we are going to have challenges because we were the first medium, and now there are more than us. We are always going to have challenges. In the ‘60s, there was only radio and television. Now, a lot more challengers. The important thing is how we are positioning ourselves to take advantage of the great brands and the dominance we have in local markets with our brands, the fact that we have strong margins, and the fact that we are applying our business towards the future. We will be different, but still strong.
Are you concerned about the reports of cutbacks in local news?
The terrible downside of our current economic situation is that stations and companies have to make difficult decisions, not only on personnel but on programming. We have major historical companies that are going to be going bankrupt soon. We persevere. We make the tough choices. We do the right thing to invest in tomorrow. And then, when we get lifted out of this, which we will as we have in past cycles, we will be stronger.
This also might lead to some additional ownership changes or purported relief at the FCC, because the commissioners I think will also recognize how difficult the business is.
Have you gotten a read on incoming FCC chair Julius Genachowski?
I met with him before the election. I think he is a very smart guy. He has had some experience in our business, which is a positive. He is very savvy. And I think he is also a transparent person. We may not win every battle at the FCC, but the table is set for broadcasters to make sure that our positions are heard and understood and thought about.
Well, on that "not winning every battle," it seems there have been a number of defeats on issues like white spaces, the XM/Sirius merger, which you opposed, and enhanced disclosure of station information at the FCC. What happened there, and is there anything you could or should have done differently?
On white spaces, it has not been played out. We were disappointed that Chairman [Kevin] Martin really flipped his position at the end. We filed suit along with MSTV [Association for Maximum Service Television]. I think on the facts of the case, we are going to do pretty well, but I think that is going to take a while to play out.
On XM/Sirius, we have moved on. Ironically everyone talked about them being the next great thing. No one talks about them anymore. It might have been the case where we lost the battle but will end up, because of a whole host of issues, winning the war.
Enhanced disclosure hasn't really moved yet. It hasn't been approved by OMB. It hasn't become the law of the land that our stations have to live under. We are prepared to do battle on that. We are the only ones who really have demonstrated through study the consequences through time and resources for a station, which are way beyond what I think the FCC originally thought.
Would you take that decision to court, too?
We will see how it shakes out, but I think that it is just onerous. There are additional issues with privacy. I think this still has a long ways to go.
Are you buoyed by the sense from some Democrats that broadcasters and newspapers may need help from Washington?
Yes, but now that we have their attention, we need to make the case. But I still think it is an uphill battle because there are some constituencies out there who think that any change in ownership somehow means the ending of civilization as we know it and don't really understand the economics of the business. We have to make the case.
I am also buoyed by the fact-even though the broadcasters were ready in February with the DTV transition-the Obama transition team all the way into the White House was very concerned about the impact that the digital transition-read "free, over-the-air television"-would have on America.
I think that gives us yet another very positive inclination on how they view what broadcasters do every day. I am further buoyed by the first press conference of President Obama where he cited a television station for being engaged with helping in its local community.
I would rather have the economy growing, but to have the president call out the broadcast business for being engaged in helping people and improving the quality of people's lives is very positive. I can't imagine the last president who has really done that?
On the DTV front, was it a political misstep not to take ownership of the DTV call centers? Cable got a lot of props for motormanning that effort
I think it depends on who you talk to. We set up the infrastructure for which the cable centers use the automated system. We haven't been out there pounding our chest on everything we've done. We have done a lot of great stuff. I would argue that part of the reason that the coupon program ran up a waiting list of 3 million people was because of the great effort that broadcast television and radio did to encourage people to get coupons.
To his credit, and for which I gave him lots of public recognition, Kyle [McSlarrow] and NCTA said, "We'll help out with the call-center program to make this better." My view is let's welcome everybody under the tent. Of course, they'll get some credit for it. But at the end of the day, if we are as successful as I think we will be, people will say that the television broadcasters, and the NAB and our great members mostly, did a yeoman's job in a smooth transition. But if cable gets part of that credit, good for cable.
We get the sense that the networks drove the NAB decision to support moving the DTV. True, and was it the right decision?
I would just move on.
We met with the Obama transition people, but broadcasters were ready. We went beyond, I think, everybody's expectations on delivering our part of the campaign. We had a problem with NTIA and coupons. And I think the Obama people recognized that. I think the networks recognized that. We recognized that. And we wanted this to be as smooth and seamless as possible. We can all decide whether it was the right or wrong decision, but I think, in retrospect, it helped reinforce with the Obama people the importance of free over the air and I think it put us in good stead with them that we wanted to do the right thing.
While we are talking retrospect, is there anything you would change about how you have approached either the FCC or Congress.
Yes. I am the kind of person who, literally every day, tries to think about how I can be better, do better, serve our members better. I think that I probably would have said less and listened more to our members. Retrospectively, I felt like I was the guy who had to prove myself because I wasn't from the business, and the business is really hard on people who aren't from the business. And maybe I was a little more anxious than I needed to be.
I have kind of reevaluated my time to spend more time on Capitol Hill and at the FCC. Being the president of NAB, you wear a lot of hats. But the most important hats that I put on are the Capitol Hill and FCC hats.
If Congress allows satellite operators to import adjacent TV station signals in markets that straddle state lines, won't that be retransmission consent reform by proxy?
Yes, but it really depends on how they would enact that.
If they enacted that there can be no adjacent-market signal unless the in-market signal is already provided-with a stipulation that it could never be used to alter the retransmission consent agreements going forward-then I don't think you would have that.
We are looking for some pro-active solution to the issues in a few congressional districts without upsetting network non-duplication and exclusivity.
So you think there is a way to target it sufficiently.
I think there is.
How important is maintaining retrans to the long-term economic health of this business?
I think it is very important. We recently produced a study on how retransmission consent works just like Congress expected it to, how people are drawn to having a negotiated settlement and how that benefits viewers. When I initially got here, the cable perspective was: "We're not going to compensate broadcasters" to "retrans is unfair" to then "broadcasters have to much market power." All of those have been cleared away based upon fact. [Importing] any adjacent market signal is another way to get into the door, but the overarching issue is that retrans works the way Congress intended it to.
The study calculated the probability of losing your service in a retrans fight, and it is something like .000000000089, which means it is 99.999999999911 effective. That is going to very tough for people to overcome.
Does a broadband-centric FCC help you because it may not be paying as much attention to your issues?
I think it does in part. I think we need to get as much focus as we can. We have many of our stations moving to multiplatforms, including streaming, so I think there is going to be a broadband component to the future of the broadcast industry. And I think we are going to have to see how the economy plays out.
Are you concerned about wireless companies making a grab for spectrum?
I think we absolutely have to be concerned about groups in Washington who are dismissive of the good that broadcasters do for America, and who for competitive and financial reasons would like nothing more than to see broadcasting go away.
My response to those special interest groups is this: Broadcasting was the original wireless. You'll also notice that not one of the upstart "wireless companies" now clamoring for our spectrum is planning to offer a service that is either free or local. Again, I point to the Obama administration decision to step in and delay the DTV hard date. That should have sent a strong message to one and all that the new Administration believes that free, local broadcasting still matters in this country.
How should the current economic hardships that many stations are going through change how regulators look at the industry.
I think that number one, they need to acknowledge it. Number two, anytime they think about any current regulation or any idea for a new regulation, they need to say, "Does this help local radio and TV stations provide more localism, yes or no?" And if the answer is no, they should discard it. Because I think ultimately the FCC should see its role as bolstering radio and television in a difficult economic period by not weighing them down with additional burdens, and if they can by relieving them of some burdens that are already being placed upon them.
Is broadcasting ownership diverse enough?
I actually think we need to continue to press for more diversity. Since I first got here, I have kind of made it a personal mission to talk about [how] broadcasting should be as diverse as America. Not only is it good business, but it also is the right thing to do. We have our NAB Educational Fund programs designed to encourage more diversity in ownership.
You can always do better. Frankly, it also helps us politically to have a more diverse ownership of business because Congress is becoming more diverse. There are some additional things we can do, like supporting tax certificates. From my first day until my last, it is something we are going to continue to focus on, and push and talk about.
In terms of diversity of content, I think we do a pretty good job. We sometimes don't think and talk about the diversity, and dominance, of programming content. In the 2007-2008 TV season, 488 of the top 500 [shows] were on broadcast TV. More people will watch The CW network in D.C. than will watch an HBO program. There is a lot to be said about the strength of broadcast content and the diversity that it provides. The challenge we have in this difficult economic period is that it is hard to have more diversity when your advertising base is reduced and your future digital potential is not where you want it to be, when costs are rising.
What do you mean "your digital is not where you want it to be?"
Making money off the Internet, going mobile. We are in the middle of doing a lot of cool new things, but they are not all throwing revenue off yet. But they will.
What do you think of multicast Urban TV service proposed by Bob Johnson and Ion Media's Brandon Burgess?
We don't think the giant cable companies like Comcast ought to be allowed to strip out or block multicast broadcast programming for competitive reasons. I'm not familiar with all of the details of the Johnson proposal. It sounds intriguing, and I'm sure the NAB Board will be interested in hearing more.
You have been at NAB three and a half years now. How long to you plan to stay?
I will respond this way: This is the most challenging yet most exciting thing in my life-helping this business, that is an institution in America, move forward in a whole bunch of different ways and also defending it from people trying to take it down or hurt it. As well as exciting when I see all the technical innovations, which will be at the NAB Show.
It is also a little inspiring. I happen to be the kind of a guy who likes inspiration and is positive. You meet some of our broadcasters and they tell you stories about what they do in their community. You look at these people, and I think, What can I do to help them do more of this? Because this is what makes America great.
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