The National Association of Broadcasters has come out strongly against the idea of changing the FM booster rule to allow geo-targeting. It says such a change could undermine the very business model of U.S. radio.
The NAB filed comments to the Federal Communications Commission on the proposal from GeoBroadcast Solutions.
GBS has been garnering support from various stakeholders in and outside of radio; and the company has received a friendly hearing from at least two FCC commissioners in recent months. But NAB’s strong opposition introduces an important new element to the debate.
The association says enabling geo-targeting “will depress advertising rates and revenues at a time when broadcasters already face enormous economic and competitive challenges.”
“The vast majority of broadcasters — from a wide array of perspectives — agree that permitting program origination on boosters will almost certainly drive both advertising rates and revenues down even further as advertisers push to purchase geo-targeted ads,” NAB wrote.
“The outcome is unavoidable, given the obvious business incentives for advertisers to purchase spots that cherry-pick what they view to be their most desirable customers and at a lower cost.”
Further, it could “lead to cannibalization” among stations, and it could hurt smaller stations, including minority-owned ones, in particular. This is a notable point because the possible benefits to small and minority broadcasters have been one of the big selling points for proponents of the GBS system, which has attracted support from a number of minority advocacy groups.
Further, NAB feels that revising the rule could lead to listener confusion, hurting consumer perceptions of the FM service; and it could result in unwelcome “red-lining” of certain listeners.
“While geo-targeted news and information could benefit certain parts of a market, it could also facilitate the geo-targeting of advertising away from certain parts of a radio market based on the demographics of an area. If given the opportunity, radio advertisers may simply direct their ad dollars to zoned ads aimed at their favored customers, especially since geo-targeted ads will cost less than market-wide ads. Listeners in some sections of a market, such as low-income areas, could find themselves ‘redlined’ out of certain radio advertisements.”
Although noting that some broadcasters and other organizations have officially expressed support for the idea, NAB said its own radio members “overwhelmingly and vehemently oppose amending the booster rule. … Any potential benefits of permitting geo-targeting are speculative at best and far outweighed by the far more certain, potentially seismic risks to the business model of FM radio.”
(It added that most of the filed comments in this proceeding so far are “essentially identical and submitted by one attorney who represented GBS in previous requests to modify the booster rule.”)
NAB advised the FCC that if the commission still thinks the whole idea is worthy of further consideration, more real-world testing is needed.
GeoBroadcast Solutions issued a statement Wednesday that didn’t mention NAB’s comments specifically but said that it views the current phase as “the beginning of an active debate on innovation in the radio industry.”
It quoted GBS spokesman Robert Udowitz saying, “Some parties oppose new technologies and innovation, and that is a familiar story for those who have watched broadcast media evolve over the decades. However, a broad range of large and small stations and broadcast groups, the advertising community, and minority coalitions, have indicated their desire to embrace innovation and the future by using broadcast airwaves for a more personal and localized experience.”
Radio World will provide a sampling of other filed comments in subsequent reporting. Initial comments were due today; reply comments are due March 12.
[Related: “GBS Will Test Geo-Targeting in San Jose”]