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FOR IMMEDIATE RELEASE
June 27, 2008
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Dennis Wharton
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Rehr Delivers Keynote During Conclave Learning Conference

WASHINGTON, DC – NAB President and CEO David K. Rehr delivered a keynote address today at the 2008 Conclave Learning Conference. Titled At the Crossroads, the conference will take place June 26-28 in Minneapolis. Below is a transcript of his remarks.


***

Good morning. Thank you for inviting me here today.

It's always inspiring to see so many broadcasters come together to discuss and strategize about the future of our industry.

The theme for this meeting – "At the crossroads" is very fitting for the current state of our business.

I spoke in April, at the NAB Show in Las Vegas, about the fact that broadcasting is at a very critical juncture.

Never before have we faced as many challenges in the legislative and regulatory environment.

Never before have consumers had more options for their entertainment, news and information.

It's true that the media landscape is rapidly changing. But with the new digital age comes immense opportunities for radio.

Listeners still want what they've always wanted. Technology hasn't changed that, it has only changed the delivery of devices.

Radio is important to Americans and to America. It is one of the most accessible, portable and easy-to-use mediums. It allows anyone, anywhere to connect to a diverse world of information and entertainment.

But… we must acknowledge that like any long term relationship, things between radio and its listeners may have gotten a little stale over the past few decades.

Radio is so pervasive – like air, water and electricity – that many people take it for granted.

I believe we must do a better job reminding people why they fell in love radio. We must reignite the passion.

The truth is radio is becoming more and more relevant to consumers as it steps into the digital era. But we must tell our story. We must remind listeners of the value of radio in their daily lives.

If you attended the NAB Radio Show last fall, you may remember that we set an initiative in motion to do just that.

We call this Radio 2020 – a nod to radio's centennial and to our clear vision for radio's future.

We started with an unprecedented study involving thousands of Americans to better understand what makes radio so important to its consumers.

It came as no surprise that more than 92 percent of Americans say radio is important in their lives.

This study confirms what we've known all along: Radio matters to listeners.

The study also revealed something else: many listeners acknowledge that they take radio for granted.

Listeners don't really think about its value and importance.

This is where our Radio 2020 campaign comes in. We’ve identified four key areas for growth – opportunities to remind consumers of the value of radio.

1. Technology We must ensure that radio is incorporated on every new gadget, everywhere.

Technology adoption is the lifeblood for any medium, but it is even more vital for radio, given its image as universally accessible.

Consumers demand it, and manufacturers are starting to see that it is to their benefit that radio be available anywhere there’s a speaker or a headphone.

We've already reached out to many companies involved in radio technology, and the response we're getting is overwhelmingly positive.

We're also undertaking an effort to increase the number of FM radio receivers in cell phone handsets.

A recent NAB report shows cell phone service providers, radio broadcasters and handset manufacturers all stand to benefit from the expansion of FM-capable cell phones.

This platform could reach 257 million American subscribers.

That's incredible.

2. Playlist variety and format diversity

A primary strength of radio is the wide variety of entertainment, news and programming that is readily available and free for listeners.

We know that in this customizable era, consumers are becoming more selective and protective of their choices.

People want new, unique content. They want niche channels. And radio must respond.

We must continue to launch more eclectic formats, expanded playlist selection and increased local control. We must focus on content.

This brings me to the immense opportunities of HD Radio.

NAB has worked closely with the HD Digital Radio Alliance to make sure auto manufacturers "fully equip" their vehicles with HD Radio.

We have spearheaded numerous marketing efforts to target auto dealers and auto makers with messages about HD Radio. And it has been extremely successful.

Ford, Mercedes, Volvo and BMW are just a few automakers that have made major announcements about offering HD radio in their vehicles.

And radio stations are stepping up to offer the programming to support new multicast channels of HD Radio.

In fact, NAB worked with iBiquity and four broadcast equipment manufacturers to accelerate development of products based on next generation HD Radio "exporter" technology.

This technology, which was unveiled in April, will significantly reduce a station's cost to upgrade to HD Radio. It will reduce the size and cost of HD Radio transmission facilities – by as much as $10,000.

And all NAB members – regardless of size – are eligible for an additional discount because of the association’s initial contribution to the development of this new technology.

We still have a lot of work to do on this, but we are certainly headed in the right direction.

3. Building for the future

Radio's future is bright – but it can't afford to rest on its laurels.

We are working to help empower radio stations and their sales teams to be evangelists for radio, by sharing best practices and helping our radio loyalists tell radio's story.

And by working with agencies to develop and cultivate more creative and dynamic advertising.

Armed with what we learned from the survey and with what we know about our business, we must act now to ensure radio's value is realized well into the next century.

We have limitless opportunity, and we must capitalize on that.

4. Reigniting consumers

To reignite the public, we have to remind them of the many benefits of radio and the broad variety of people, places and purposes it connects.

With Radio 2020, we are reminding people that radio is unlike any other medium.

  • It's accessible and everywhere they are. You can turn on the radio anywhere, anytime and anyplace to discover diverse offerings and new listening opportunities.

  • That it's simple and convenient to use— there is no CD to change, nothing to download, nothing to subscribe to, no playlist to build and nothing to recharge.

  • That it's available to everyone, regardless of their education or economic status. Radio is a great equalizer, a great unifier.

  • It reaches out to you no matter what your status or station in life.

I'm preaching to the choir here. We all know the valuable attributes of radio. But we can't stop telling people.

This is the driving force behind Radio 2020. We have to remind consumers of the value of radio.

Radio has a story to tell. It connects, informs and inspires an estimated 235 million listeners each week.

What many people don't know is that number is up 3 million listeners from last year.

But if we, the radio loyalists and enthusiasts, don't start sharing this story, we leave a vacuum where critics can freely voice their negative opinions about radio.

We've launched the next phase of the Radio 2020 initiative – a campaign called Radio Heard Here.

This comprehensive, multiplatform, viral campaign includes a wide spectrum of promotional and educational initiatives designed to engage virtually the entire ecosystem that radio touches.

Through Radio Heard Here, we will remind radio insiders, the media industry and consumers of radio's value.

We've launched a great new Web site, radio heard here dot com, and have two blogs up and running, one at radio heard here dot com and one at radio creative land dot com.

We encourage you to explore these sites and all of the tools and information they have to offer.

And in the coming weeks, we'll be sending you talking points and an insider's guide – essentially a fact book containing what we need to tell people about radio.

In the coming months, you'll receive radio spots that remind listeners why they fell in love with this great medium.

So far the response to this campaign has been great.

The launch was covered by numerous media outlets from the New York Times to Advertising Age.

It is our hope, that armed with the facts and the good news about radio, you will join us in this campaign to reinvigorate this great business and secure a successful future.

Now, because NAB's main mission is to be your voice in Washington, I don't want to leave today without covering some of the major issues facing our business on Capitol Hill and at the FCC.

Day in and day out, we are aggressively advocating on your behalf.

And right now we are engaged in a number of legislative and regulatory issues affecting radio broadcasters.

1. Localism

Earlier this year, the FCC released the long awaited "Report on Broadcast Localism and Notice of Proposed Rulemaking."

And the FCC has tentatively concluded that they must adopt new regulations to ensure broadcasters are serving the needs of their communities.

You know, just a few weeks ago the NAB Education Foundation held its annual Celebration of Service to America Awards.

The event recognizes and honors America's television and radio broadcasters who serve their local communities in remarkable ways every day.

Throughout the evening we heard truly incredible and inspiring stories.

Anyone in that room, witnessing these stories, knows broadcasters are phenomenal public servants.

And I might add, that four of the five FCC commissioners were in the room.

These stories, and the many charitable activities you're involved in everyday, demonstrate why these proposed FCC rules are ineffective and unnecessary.

Quite frankly, these proposed rules reflect an outdated regulatory mindset.

Many have been tried and previously dismissed by the Commission as ineffective, unnecessary and too burdensome on broadcasters.

They include rules that would require all stations to form and meet with local community boards.

Rules that would, in effect, mandate prescribed amounts of local programming for every station...

And rules that would affect main studio location and unattended operation...

The list goes on and on.

We've been through this before.

These rules date back to the 1980s, when broadcasters faced a less competitive and more revenue-rich environment.

And the FCC decided that the rules were too onerous.

Now, as we know, broadcasters are facing more and more competitive pressures in today's changing media landscape.

So how can they justify forcing these regulations now?

The answer is…they can't.

Enacting these rule changes at this time is simply unacceptable.

We fundamentally disagree that this focus on re-regulation is beneficial.

Instead, this could actually undermine our ability to serve our local communities.

To dust off these regulations and attempt to apply them to an industry that is very different than it was 25 years ago would do more harm than good.

As broadcasters, the most important thing we do is support our local communities.

We provide community-responsive programming such as news, weather, emergency alerts and public affairs programming.

We already do this. And we don't need the government to step in to tell us how.

And NAB is driving that message home in Washington each and every day.

We have filed comments with the FCC that support our position that these new regulations will only harm local broadcasters' ability to serve the public interest.

We're also working with members of Congress to educate them on this issue.

Thus far, 133 members of the House and 28 senators have sent letters to FCC Chairman Kevin Martin asking him to reconsider the localism rule changes.

And, perhaps the most vital part of our efforts: several thousand local broadcasters responded to NAB's "Call to Action," and submitted comments to the FCC highlighting their efforts to provide service and programming to local communities.

NAB has relied on those comments to strengthen our position with the FCC that broadcasters serve their communities because the market demands it – not because the federal government mandates it.

NAB will continue to fight these rule changes on your behalf. We will not rest until -- with your help -- we are successful.

2. Performance tax

For more than 80 years, the radio and recording industries have enjoyed a symbiotic relationship.

Every day, your radio stations provide valuable promotion to record labels and artists simply by playing their songs – for free.

It's called free play for free promotion. And it works.

But the record labels want to impose a performance tax that could financially hamstring local radio stations, stifle new artists and harm the listening public who rely on local radio.

For the past year, we have been aggressively working to oppose the imposition of a performance tax on local radio broadcasters.

We will not let down our guard.

NAB, anticipating the introduction of performance tax legislation, secured the introduction of a proactive measure – H. Con. Res. 244, the Local Radio Freedom Act in October.

And recently, the Senate introduced a bipartisan resolution - S. Con. Res. 82 - recognizing the promotional value of free radio airplay.

This is a great step forward.

The momentum of our pro-radio, anti-performance tax resolution is strong.

We now have the support of 220 House members, a majority of the House, for the Local Radio Freedom Act.

And currently, 13 senators have expressed their support for the Senate companion bill.

Compare that to the number of cosponsors on the pro-performance tax legislation in the house -- 20.

We recently provided members of Congress and their staff empirical data demonstrating how local radio airplay generates sales for artists and labels.

In fact, a new econometric study on the value of radio promotion was released this past month.

The study was conducted by economic research expert Dr. Jim Dertouzos.

His research suggests that the radio industry provides anywhere from $1.5 to $2.4 billion in free promotional value to the artists and their labels each year.

That’s pretty compelling data.

But we have more work to do.

As expected, this week Rep. Howard Berman (D-CA-28), chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, held a subcommittee mark-up of his bill, H.R. 4789, the Performance Rights Act.

Chairman Berman, who introduced his legislation last December, has been working to move H.R. 4789 through the subcommittee before Congress adjourns this year.

And Thursday, the bill was cleared by the subcommittee by voice vote.

Now, the subcommittee is comprised of several members with constituencies of artists and record labels, so it was expected that the bill will be reported out of the subcommittee.

But there are more hurdles for the bill in the future.

  • First, it must still be considered by the full House Judiciary Committee.
  • Second, if passed by the full committee the bill would then go to the House floor for consideration, and currently more than a majority of the House is on our side.

This will be a multiyear effort – and here’s how you can help.

Ask your members of Congress to oppose H.R. 4789 and S. 2500 – both these bills would levy a new performance tax on local radio broadcasters.

Urge your members to cosponsor the anti-performance tax measure, the Local Radio Freedom Act - H. Con. Res. 244 and S. Con. Res. 82.

Momentum is on our side. The House sponsors of the performance tax bill have admitted that they do not have the support to move this legislation this year. But we must keep the pressure on. I believe with your support and action, we will be successful in this battle.

3. XM-Sirius For more than a year now XM and Sirius have been working to become a monopoly. That means higher prices, fewer choices and reduced services for listeners.

The U.S. Department of Justice had its chance to stop the monopoly, but disregarded the input and evidence of leading consumer groups.

And in March, the DOJ cleared the proposed merger of XM and Sirius – despite the opposition of more than 80 members of Congress.

The DOJ justified the decision by suggesting that XM and Sirius do not really compete with each other because they do not have devices that are interoperable.

Ironically, as you are well aware, the FCC required the satellite radio companies to design and make publicly available interoperable radios when it created the satellite radio service in 1997.

More than a decade since that explicit condition, no such radio yet exists.

And now these two companies are being rewarded for their bad behavior.

This was, of course, a disappointing decision by the DOJ.

But we are working tirelessly to ensure the FCC takes action where the Justice Department would not.

Given the satellite radio companies systematic breaking of FCC rules over their 11 years of existence, it is unfathomable that the Commission could now reward the companies with a monopoly.

We will continue to follow this issue very closely. We are continuing to make our case to the FCC and will keep you updated on our efforts as the process continues to unfold.

Today I've touched on a few of the radio issues we’re addressing in Washington, D.C.

We are advocating on your behalf, and we have the perseverance and the will to succeed.

I'll stop here so we have time for a few questions, but let me end with this.

We have challenges ahead of us. We have battles that may seem overwhelming.

But the opportunities ahead of us are incredible.

Radio's future is bright. And if we are persistent and consistent, we will win our battles….we will realize the enormous opportunities ahead…. ...and ladies and gentlemen, we will make radio new again.

We will be reinvigorated. And we will prosper.

Thank you. God bless you and God bless America.

***

About NAB
The National Association of Broadcasters is a trade association that advocates on behalf of more than 8,300 free, local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and the Courts. Information about NAB can be found at www.nab.org.

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