There’s no doubt about it, business is better and the 2010 NAB Show in Las Vegas was the most upbeat in recent years. Yes, broadcasters still face important challenges, but at the same time the industry is moving full-steam ahead on some exciting things.
A year ago we saw the first prototype Mobile DTV receivers. This year, real consumer models were all over the exhibit floor in Las Vegas. Many are coming to a retail store near you in just a couple of months. As NAB President and CEO Gordon Smith noted, small, portable, battery-operated receivers will make local television stations an even more important link for emergency communications and, thus, make preservation of over-the-air television a Homeland Security issue.
That’s not to say that it won’t be a battle to keep FCC Chairman Julius Genachowski from grabbing more television spectrum for other uses near and dear to his heart. Whether or not his plan is truly “voluntary,” as he insists, the bottom line is that doubling up local broadcast licensees will reduce the number of outlets available to consumers. A broadcaster with 3MHz of spectrum can do regular digital and Mobile DTV, to be sure, but certainly not as many channels of either as with 6Mhz.
Do not kind yourself that the spectrum grab-back is dead in the water just because other Commissioners have concerns about it. The Chairman has a lot of power by controlling the agenda at the FCC. Also, with backing from the White House on a particular issue, he can bring a lot of pressure to bear on other Commissioners, particularly those of the President’s party.
3D television is about where Mobile DTV was a year ago – just beginning to be reality. We’re not expecting to see anyone shooting local news in 3D by the 2011 NAB Show, but the technology will roll out slowly, particularly for major sporting events. The cost of new receivers will be a drawback, since lots of consumers just shelled out for HDTV sets, but there will be early adopters who are not concerned about the price tag. The viewing glasses, however, are really obnoxious and a huge impediment to widespread adoption.
For radio, getting more receivers into the marketplace for HD Radio is still a focus. As more receivers are out there, broadcasters will be willing to spend more on unique programming. The chicken and egg balancing act will go on for many years. Creativity, though, is still lacking. Come on guys, now that the balance sheet is looking better, how about giving some enthusiastic young programmers a chance to strut their stuff on HD2 (or 3 or 4) channels, along with Web streaming to find new ways to interest the youngest demos in what radio has to offer? If you give lip service to HD Radio, how about some financial backing as well? You can’t harvest new listeners unless you plant some seeds.
A much bigger shot in the arm for radio, though, would be getting FM receivers into all new cell phones, which would quickly translate to nearly 100% penetration since people upgrade their phones quite regularly. As NAB Joint Board Chairman Steve Newberry told us, this is probably not going to come easily, but it is something worth pressing for. He is, himself, a proponent and his Commonwealth Broadcasting group is deploying Alert-FM to enable delivery of emergency text messages to RDS-equipped radio receivers and cell phones.
If you are in one of the 14 states where Alert-FM has been officially adopted as part of the EAS operation, we would suggest on-air promotion to put some pressure on the cell companies. “When you get a new wireless phone, demand one with an FM receiver and Alert-FM so WXXX can keep you informed in an emergency” is the type of message that will drive the point home.
The big threat to radio, of course, is the Performing Rights Act (PRA). Former Senator Gordon Smith seems to be just the right guy to be heading NAB as President and CEO in fighting this battle. As he noted, “the American people have had enough of bailouts” so broadcasters can claim the moral high ground in fighting this bailout of the foreign-owned record labels.
RIAA thought PRA would be a slam-dunk in this session of Congress. Instead, many Members of Congress that the record labels had considered easy votes to win were steered away as Black and Hispanic station owners took the lead in spelling out how many stations – particularly minority-owned ones – would be put out of business by PRA. Support for PRA probably reached its high water mark this session, which fortunately was not nearly as high as RIAA had expected, but this threat to the radio business isn’t going to go away. The fight will return in every session of Congress for the foreseeable future. No doubt it will be a hot topic when The Radio Show hits Washington, DC in September.
While advertising sales are getting better as the nation’s economy gets back on track, M&A activity in broadcasting is going to be slow to follow. Bankers were pretty much no-shows for yet another NAB Show. Our friend Dave Schutz reported a little pick up in deal-making interest, but that’s coming from a level of very nearly zero. Financing remains extremely scarce and there is still a huge gap between the bid and ask – so we expect a few more quarters to go by before deals between willing buyers and sellers (as opposed to distressed loan situations) amount to more than a trickle.
What about Lew Dickey’s $1 billion debt and equity war chest to go on a buying spree? Most broadcasters and brokers that we spoke with in Las Vegas were skeptical that the Cumulus-Crestview partnership will find much attractive inventory available at financeable multiples. But what the heck, Lew has made the public announcement to try to shake some good properties loose and get them onto the market, so good luck to him.
Meanwhile, the broadcasters in Las Vegas – both radio and TV – were just happy to be back to revenue growth and enjoying better relationships with their bankers. The M&A activity will follow, but right now it’s back to growing the business instead of agonizing over how to make more cost cuts when you’re already scraping the bone.
One thing that is really interesting about the spring show is how many people come to Las Vegas whose business is not concerned with either running radio or TV stations or providing anything to radio or TV stations. Particularly in the South Hall, a lot of the activity was in “new media” applications which are being instituted by broadcasters, but also by competitors who think broadcasting is a technology of the past that is fading away.
We overheard conversation by folks who dismissed Mobile DTV as laughable because, in their view, no one is interested any more in linear content. It seems to us they forgot that life is linear. People may want Super Bowl highlights as video on demand (VOD), but they still want the actual game as it happens. Live sports will be a big driver for Mobile DTV. Also, local news/weather/sports is going to be valuable content, regardless of platform, and nobody does that better than broadcasters – live or VOD. So, unless and until Google and Yahoo! start staffing local news operations in Yakima, WA and Evansville, IN, there will still be consumer demand for what broadcasters have been doing for nearly 90 years.
For that matter, we’ve heard that there are some companies focused on new media in Seattle. But who is providing hyper-local websites so that local residents like Bill Gates can find out if a new restaurant has opened up in his neighborhood? Fisher Communications. As CEO Colleen Brown told us, it’s all about brand extension and local broadcasters have valuable brands that can be used to open new doors in new media.
What started on one platform – AM radio – is now delivered on lots of platforms, but the demand for quality content has never been greater. And nobody knows more about how to develop and deliver that content than broadcasters.
RBR-TVBR Observation: In a nutshell – The business model for this decade is: Brand Extension and developing a Multiple Platform with the internet. RBR-TVBR made the pivot 2 years ago by expanding our content brands and fully engaging this content into the internet. Content is King – But, only if you Control the Content and with control you begin to monitize your web.
The web is the new asset builder for radio and TV. Think Multiple Platform starting today.
– Jack Messmer, RBR-TVBR Executive Editor