National Association of Broadcasters President/CEO David Rehr says, "There's never been more innovation in radio than there is today."
As evidence, he noted that some 100 companies featured new radio devices at the recent Consumer Electronics Show, in a range that encompasses HD Radio to MP3 players. Eight of the top 20 free apps for the iPhone are radio applications, according to the NAB and Radio Advertising Bureau, whose chief executives attended the convention and talked up radio.
Rehr believes "radio is now becoming a more important component to consumer electronics." He talked with Radio World News Editor/Washington Bureau Chief Leslie Stimson about the consumer market, radio's economic challenges and how those forces may play out in Washington given the change in administrations.
RW: What are you talking about here?
Rehr: I did a panel … on what's going to happen in Washington. One of the things I talked about was our efforts to get cellular handset companies to either activate or put FM chips into handsets so more people have the opportunity to listen to radio. Two hundred fifty-three million people have mobile cell phones. I received an e-mail [here] that said T-Mobile was announcing a new phone that had an FM receiver in it. It's now permeating the cellular phone community — the benefits of having FM radio as another advantage.
I think it makes us more relevant as we go to multiplatform opportunities for people to receive radio.
IBiquity's Bob Struble shows NAB's David Rehr the KRI armband portable HD Radio receiver at the CES show. The device features MP3 playback capability and is the smallest device yet using an HD Radio chip. RW: If the DTV transition is delayed, how could that affect radio? A digital power increase is on the table at the FCC; and with a new administration coming in, people are telling me it might take until summer for [new commissioners] to get up to speed.
Rehr: My feeling is we've made a good empirical case for boosting the power on HD Radio. I think it's just going to be the mundane practicalities of Washington. It will move slower than everyone would like because of how Washington works generally, and, when you superimpose over that [a] new FCC, new commissioners, new chairman — people are just going to want to be sure that they're doing the right thing and that they're fully engaged and understand everything.
RW: But if there's a delay in the DTV transition and we know the FCC is really focused on DTV, does that have the potential to also delay the focus on radio?
Rehr: I've always thought that the staff in the Audio Division led by Peter Doyle, they're top-flight professionals. They want to keep things moving forward. There may be a lack of a lot of public attention [on radio], but I still think they're working every day. So I'm not too concerned about that.
I'm more concerned about, we don't know who the commissioners are going to be, who the chairman's going to be… Everybody wants to, rightfully so, give the new administration the benefit of the doubt of getting their people in, and then wanting to move stuff. It's going to take everybody a while to go through the piles of paper.
But I think we've made a good case for the power increase among large-to-small, urban-to-rural companies.
RW: I've been talking to people here about what kind of higher digital power testing they're planning such as asymmetrical sidebands, where you raise the digital power on one sideband only, away from the neighbor station. There are some other tests being discussed, too. My sense is that iBiquity, the commercial broadcasters and the non-commercial broadcasters are all talking.
Rehr: Yes, that's true. Which is a good thing.
RW: Is NAB a part of those talks?
RW: Because you want to speak with one voice to the commission …
Rehr: That's exactly right. So that's moving forward.
Also, we continue to see strong radio listenership numbers. We're at 235 million. We grew 3 million over the last year. Our Radio Heard Here campaign is really taking off. Which is good for business, we'd rather have more business opportunities in the category but I think the last volume of aggregate number of spots, number 10 was "Radio Heard Here." Everywhere I go, I hear it. …
It's helpful among consumers but it's also, quite frankly, great for our own people. Because we're in kind of a rough patch right now. That's when you need to have activities like Radio Heard Here, which is principally aimed at consumers and the advertisers, reminding them of the relevance and importance of radio; but for your own people, it fires them up. We have to have people who, every day when they go to work, at the end of that day go, "I should come back tomorrow because my future's bright."
RW: As opposed to, "I should come back tomorrow because they've laid all the other day parts off and I'm the only live jock."
Rehr: Yeah, or "There are no other jobs." Well, a lot of these smart, intelligent radio people could go other places but they love radio so we need to ensure they are enthusiastic proponents of the medium.
RW: Let's talk about the economy. Radio's in a tough place. People are preparing for horrific numbers in '09. What does that do to the effort to monetize multicast channels? I see an uneven effort in programming those channels.
Rehr: And with 16,000 radio stations in America, all of whom are entrepreneurial, you're going to see a wide variety of business results, challenges, opportunities, innovation. I think that's probably good.
I wish everybody was doing well and we had year-over-year double-digit increases in revenue. It would make everyone's life easier and it would make us economically stronger. …
Part of the challenge we've always had in radio is everyone has two opinions about everything. In prosperous times, that's not a problem, but when you have … adversity, people have to say, "What's really the core? What are we really about? How can we build the brands?" I think people are a lot more inclined to lock arms and stand together as an industry or a business.
The economic outcome really is dependent on companies. I don't want to be too pollyanish about it, but we do have a lot of small companies, small-market radio that's been able to withstand some of the downturns because, in part, they never really got the upturn. So they didn't really benefit, but now, when things change, they don't really see the dramatic declines that other people are seeing. …
One [NAB member] just sent me an e-mail that said last year was their best year ever. Now, that's not true of all 16,000 licensees, but it's good to have that glimmer, where it's not all doom and gloom.
I gave this in my speech in Austin, which I firmly believe in: We have to be really careful, kind of, controlling the amount of negativity that pervades our business. …
I don't want to pretend it's great, because it's not great. But when people look at you, whether it's other people in the radio business or your advertisers or your listeners, or people you deal with in your communities, if you have a sad face, they're even going to be less likely to want to be with you. There are some days when things are tough. I get up in the morning, I look in the mirror, and I say, "You know, things are tough today, but part of my job as president of the NAB, is to put a smile on my face and say, "There's a bright future." I believe that in my soul.
But if I walked around Washington, kind of like, "Wow, things are bad, things are bad for radio, people are going to be less likely to want to invest and to help radio and advance radio," I think it's better to say "Yeah, we have challenges. It's not as good as it could be. But you know what? In the future, if we execute our 'Radio Heard Here' plan, we get on cell phones, we're smart, entrepreneurial businesspeople, we utilize our spectrum, we stay close to our customers, we define localism, we're going to come out of this and we're going to be better." …
RW: I know you can't speak for RAB, but is NAB trying to help stations do that?
Rehr: We haven't really said, "Hey, here's how you monetize your multicast channel."
RW: Well, why not?
Rehr: Because, in part, we have some 46 different issues affecting radio in Washington … from the performance tax, to streaming … all things which [will] make multicast decisions even worse if our adversaries are successful. Some days, I'm just holding the people at the door, and wanting to be sure that we don't erode the bottom line of companies.
Our job is to ensure that the wolves at the door don't get in the building. So that's part of it. Another part of it is … to kind of run out of the building — I mean this metaphorically — run out of the building and look for ways that we can make the building bigger, that we can make our people stronger … and it just consumes 25 hours of the day.
RW: If we could just settle the Internet licensing issue …
Rehr: We're trying to negotiate with SoundExchange on that. I view the world as, sure there are a lot of challenges, but great entrepreneurs who make up the radio business also see great opportunity.
Sometimes people say, "David sees the cup as too full, and he should think about it more being empty." Believe me, I know it's plenty empty. I just think in the world of marketing and branding and business you have to be realistic.
But you also have to be sure that you're ready to put your best foot forward. Because this is still a great business. The margins are still a whole lot better than they are in retail and in automotive and in a lot of the companies whose spots and advertising we carry. …
RW: ... and it looks like people are still willing to invest in radio. If they're willing to put FM chips in cell phones for example, they see radio as a delivery mechanism.
Rehr: Yes, and it's a benefit to the public.
RW: The public service aspect.
Rehr: The thing I pull my hair out is when we've done all these studies about radio, the radio industry is the most negative about radio. I remember we did some focus groups awhile ago … and they were saying "We love radio!"… This is why I'm on such a big kick about how we stay positive, and making sure negativity doesn't infect us. …
We get little snippets from this first series of ads we've been running, where people, literally, send e-mails to the station or go on our Radio Heard Here Web site, wanting copies of the spots because they're so moved by them. I think that's a great thing.
There's not a silver bullet in this. We are not going to go from year-over-year double-digit increases in revenue with a silver bullet. So we have to do a lot of things, and we have to do some entrepreneurial things, and we're going to have to take some risks. Some of the things we're going to do are going to work and maybe other things we're going to do aren't going to work. …
RW: Do you think big companies that have gone public and are thinking quarter-to-quarter are going to be willing to take chances?
Rehr: Yes, because they'll have to. Some of our strongest supporters with our Radio 2020 initiative or Radio Heard Here program are the largest radio companies — I think, in part, because their CEOs really understand the need to reposition, better position, align the value of radio with the expectations of the advertising agencies. We know that there's an issue there that their people remain enthusiastic and fired up. They've been very supportive. And you add that with the small-market stations, who I love to say to people, "They believe."
RW: They didn't really benefit from the expansion after the Telecom Act. They kind of chugged along they way they were.
Rehr: Right, but they believe. They get up every morning and they run spots or they talk about something in their community. And they walk down Main Street and somebody says to them, "Hey Bob, that's great that you ran that." And they know instantly the reaction and the power of radio. The combination of the large, publicly-held companies and our small-market radio all working together really, in a coordinated effort, the first in a long time. I think it's very positive.
RW: CES attendance is much lower than in the past. Are you worried about attendance in trade shows in general and what that means for the NAB Show in April?
Rehr: Yes, we're looking at ways to add additional value in programming to the show. We're going to be doing some additional high-powered speakers. Our radio and television conference programs, we're re-aligning to help people to drive revenue … I mean real things that our people need at this moment in time that will make them more successful. Not that we've not done that before, but we're putting more emphasis on that. I'm hoping that we'll be able to hold the number. We had 104,000 people last year. We'll probably see a rise of international (attendance).
I love CES and Gary Shapiro, the CEO of the Consumer Electronics Association. He does a wonderful job. I generally say to people, "You come to look at the CES. You buy at the NAB." We're going to have a lot of cool things, particularly with radio this year. We will make it worth the investment to come. I like to think of NAB and myself and our board as big ROI people.
The flip side of having a more difficult period is the price of hotels in Vegas are down, flights are going to be cheaper, so there's going to be some benefit for the radio operator in coming, that they've not seen in years past, even if it may be more of a strain for them to find those resources to come to NAB.
RW: You're planning things to help people, even more so, make money?
Rehr: Our bottom line is we need to encourage radio to continue to be everywhere, online, in cell phones, in traditional ways people have heard radio, innovation through HD, through iPhone innovation.
We're the innovators and we just need to make sure people are aware of that and that the advertising agencies know that as well.
[For example,] one of the most requested attachments for iPods are FM radio.
Every day our Radio Heard Here Web site (radioheardhere.com) has new innovation in radio posted every day. A year ago we had all these bloggers saying radio is old, it's dead, it's not the future. Just in terms about the amount of positiveness about radio over the last year has dramatically changed.
RW: Positiveness among the public? Or…
Rehr: Among the bloggers, among Internet sites, articles generated about radio. … In this idea of re-positioning radio we've worked very hard, and this has been because of the involvement of radio broadcasters, that the messages now being articulated to people like yourself who write about us. [Given] the volume of PR efforts by satellite radio, to make us look old and outdated and past — in part, because of their less-than-stellar economic performance, and in part, more importantly because of the pro-active campaign we've engaged in, a lot of that has disappeared, and positive stuff about radio is dominating the media. …
RW: Still, I worry about this DTV transition dragging out and taking attention away from radio.
Rehr: I think it's important. Once we get the dates … our television broadcasters have executed a phenomenal effort. We're up to a $1.2 billion marketing campaign. And radio guys have been running the public service announcements on the DTV transition. …
At the end of the day, will the date be moved? Won't the date be moved? We'll see what Congress and the government tells us. We need to stay focused on radio and the commission needs to stay focused on radio because radio is important to 235 million plus people in this country.