Las Vegas, NV - Apr 16, 2012 - NAB President and CEO Gordon Smith presented the annual NAB State of the Industry address during the 2012 NAB Show. A transcript of his remarks as prepared for delivery follows.
Good morning and welcome.
I must say that the energy surrounding this year's NAB Show is palpable.
More than 90,000 people from all corners of the globe are here this week, celebrating technology, connectivity and the remarkable media marketplace on display.
No matter where you travelled from, we thank you for being here. Seeing all of you, I am reminded of a story about Winston Churchill addressing an audience in America.
A gushing woman asked him, "Doesn't it thrill you, Mr. Churchill, to know that every time you make a speech the hall is packed and overflowing?"
"It's quite flattering," Churchill replied, "but whenever I feel this way I always remember that if instead of making a political speech I was being hanged, the crowd would be twice as big." I'm happy to report that I'm not giving a political speech this morning.
"And I hope you don't hang me at the end of this speech.
But what I do want to talk about is broadcasting's vibrant future, and how radio and television can remain the indispensable media - even in a world of digital dashboards, tablets and smartphones.
But first let me say a few words about the state of our trade association - the National Association of Broadcasters.
When I first arrived at the NAB, we were fighting passage of the Performance Rights Act, a bill to levy a fee on local radio that had the momentum of a fast moving freight train.
But because of some very smart leaders in both the radio and TV business, the NAB was able to thwart this piece of legislation that could have devastated the financial model of free and local radio.
On the TV front, this year we worked successfully with our friends in Congress to shape a piece of spectrum legislation that allows television stations to participate in a voluntary auction, but ensures that those not participating are held harmless.
Working in unity - small and large market stations ... networks and affiliates ... together with radio stations across the country - we averted a spectrum grab from misguided friends who would have you believe that broadcasting is yesterday's technology.
Ladies and gentlemen, the NAB is back... And we are keeping our eyes on the future.
The NAB has been blessed to have a unified board of directors, a remarkably competent and dedicated staff, able state association executives and industry visionaries who recognized two years ago that we would either hang together or hang separately.
We have embraced a new advocacy approach that has moved NAB away from a perception of being the "House of No" to becoming the "House of Engagement."
We need to be realistically engaged in the issues confronting us.
Everett Dirksen, the former senator from Illinois, also summed up this approach, proclaiming, "I am a man of fixed and unbending principles, and one of those principles is flexibility."
We have demonstrated that through engaging the other side, through our unity and by using all our tools, we can change the course of legislation that threatens the public's access to local radio and TV.
Others have taken a lesson out of our playbook.
Earlier this year, we witnessed a debate that pitted the content community against the technology community - you may have heard of SOPA and PIPA, they became household names overnight. The idea behind SOPA and PIPA was simple and straightforward: Don't steal our creative content.
But it didn't matter.
The technology community - the Googles and Wikis - used their medium just as we did - to create a powerful megaphone to change forever how battles are won, or lost, inside the Beltway.
Like us, they used every tool at their disposal to sway public opinion.
They changed the debate.
Shockingly, "Thou shalt not steal," became "Do not censor the Internet."
I share this to remind you that while we havebeen successful on two major issues facing broadcasters, we should never rest on our laurels.
Our recent victories were indeed game-changers.
They elevated the stature of the NAB in Washington.
But that can all change with the next issue, the next fight.
We still have some challenges that remind us to remain vigilant.
Recent press reports quote the telecommunications industry saying the spectrum legislation passed by Congress is only the beginning - a "down payment" of what they're seeking in terms of access to the airwaves.
They want us out of this game.
We can't let down our guard.
The American people need broadcasting and depend on what we do for our communities.
As we look to the next phase of the process, our mission is to work with the Federal Communications Commission to ensure that viewers' access to free, local broadcast programming is not harmed.
I don't envy the Commission; implementing the legislation that Congress just passed will be daunting, incredibly complex, and will take years to complete.
But rest assured, we are committed to working with the FCC, and we will continue to protect the rights of all viewers whodepend on their local TV stations as a lifeline for news, emergency information and, of course, entertainment.
We're also fighting to ensure that viewers continue to have dynamic content choices, by retaining a free market retransmission consent process.
Stations deserve to be allowed to negotiate for compensation of their highly valued programming.
Unfortunately, some cable and satellite companies don't want to pay a fair rate for the signals of local stations.
But that's what viewers want the most - their local news and the great content that broadcast TV offers.
In fact, of the top 100 primetime shows, 95 of them are on broadcast TV, not cable networks.
The other side says the market is broken, but with nearly all retransmission consent deals being completed successfully, the cable and satellite lobby's notion of "market failure" is simply false.
The current system is fair and benefits viewers.
We say, if it isn't broken, don't fix it.
As president of NAB, I pledge we will use every tool to protect your interests on behalf of our listeners and viewers.
That will involve traditional lobbying on Capitol Hill, on-air advertising, and yes, leveraging technology to carry our messages through social media.
We must continue to fight for our future.
We are harnessing the power of technology in Washington, DC.
My question to you is, are you prepared to do the same in the marketplace? I'm going to challenge you today. Because, I don'tthink you hired me to sugar coat our issues.
So here's the question, where do you want your businesses to be in 5 years? In 10 years? In 20 years?
A recent Wall Street Journal article had the headline "Don't Look Now: A Car That Tweets." The article said that Ford already allows drivers to send and receive Tweets, stream Internet music and accesspodcasts. And soon, drivers of other vehicles will be able to check Facebook and buy movie tickets.
How does radio fit into this scenario - what do we see as radio's future - is it streaming or over the air… or both? Some believe streaming is the future. Others believe it does not grow the bottom line - that stations should focus on bringing in more traditional revenues.
Are you feeling pressure to jump into streaming? Perhaps you are sensitive to criticism that if radio doesn't get into streaming, you will be left behind or seen as resistant to change.
Only you know the right answer for your business, but whatever path radio decides to take, NAB will be there to advocate on your behalf to help ensure a robust future for many decades to come.
On the TV side, we need to be aggressively pushing mobile and ultra HD.
I was thrilled to hear just this morning that more stations and networks have joined the effort to launch mobile in 35 markets. Delivering live, local and national news, sports and our great shows to viewers on the go - this is where our business is going. We must continue to look for ways to integrate the power of broadcasting and broadband to improve the viewer experience. Our adversaries - your competitors - are doing this.
They're smart. They're ruthless. And they are well-financed.
I have always heard broadcasting described asubiquitous. But ubiquity yesterday meant a radio being on the dashboard, in the kitchen and on the nightstand. Ubiquity meant a television in every living room - these days, almost every room in the house.
But ubiquity tomorrow must mean broadcasting's availability to all people at all times in all places and on all devices.
The current broadcasting model can be undone by technology... or government... or some unintended consequence from either.
It says in the book of Proverbs, "Without a vision, the people perish." I genuinely believe if we have clear-headed thinking and proper vision, our business will continue to prosper.
And I have no doubt about what that vision is: to educate, inform and entertain viewers and listeners through our one to many transmission… again, to all people, at any time and on every device.
The wireless industry wants to replicate what we do. In fact, they are developing their own mobile-TV network…but they say they need more spectrum. And they could get what they want… pending approval from the government.
So let me get this straight. Wireless carriers want to roll out a mobile TV service, just like ours. And they are asking the government for more of our spectrum to do it. And their service, most assuredly, would not be free. It seems to me that the government could be in the position of picking the wireless industry as the winner and the consumer as the loser.
Here's the problem: Even with all the spectrum in the universe, the wireless industry's "one-to-one" architecture could never match our ability to broadcast voice and video to the masses. Broadband can never replicate the lifeline role of the local broadcaster. Broadcasters are always on… always there when you need them. Especially in an emergency.
As a pea picker and a recovering politician by trade, I'll be the first to admit I don't have all the answers. But it seems to me that CharlesDickens could have written the script for today's broadcast business: It's the best of times, it's the worst of times. It's the best of times because even today, broadcast radio and TV are where the ears and eyeballs are. After all, more than 241 million people listen to free radio every week.
Even in an era of Pandora and Spotify, local radio is by far the number one source for new music. And this is just using our existing business model.
Radio has new opportunities including on mobile phones. This is a standard feature on cell phones in Europe and Asia. Many phones in the U.S. already have this capability, but the carriers don't make that known and may refuse to activate the chip. Why? Some say because they have a vested interest in charging consumers with fees for data streaming.
But given the certain failure of mobile phones in a lifeline situation, we're hopeful that over time, carriers will come to understand and appreciate the importance of having an activated radio tuner in these devices, and to off load their ever congested airwaves. Turning to television, more than 46 million viewers rely exclusively on over-the-air TV.
A Wall Street Journal article recently began with the sentence, "It's cool to have rabbit ears again." Generation Y gets it.
They know that digital, over-the-air TV affords viewers more choice and a clearer picture than their father's TV.
That's why in the past 18 months, the number of American households wired with only broadband and broadcast TV jumped 23 percent.
But naysayers might say we're in the worst oftimes, because competition for our audience is relentless. But despite the tired claims of our misguided critics, broadcasting is a robust business.
Both radio and TV have cycled out of the worst advertising recession in history. Yes, there are challenges, but broadcast revenues remain strong and growing.
And the future is bright. We're evolving onto new platforms. And it's not just on mobile phones. We also need to be on tablets, laptops and game consoles and on mobile devices not yet developed.
We expect our newly launched NAB Labs will be at the forefront of this initiative to push the limits of broadcasting. We will provide a platform for innovation and for testing new technology.
Our adversaries would like people to believe that the best days of broadcasting are over. We will prove them wrong. I am honored to be president of this great organization at this moment in broadcasting's history.
It's my view that our greatest challenge is not the FCC or the Congress. It's not the Internet, satellite, cable or the wireless carriers. Our greatest challenge is to have the courage to challenge ourselves.
Challenging our existing business models, looking around the corner and adapting to a media marketplace where only the technologically nimble will survive.
It is said that every moment can be golden for those who have the vision to recognize it as such.
What if this is broadcasting's new moment to flourish? Will we have the vision to recognize it? Will we have the courage to seize and invest in it?
Think big: We have what everyone else wants --airwaves, content and a local connection.
Ralph Waldo Emerson said that people only seewhat they are prepared to see. Ladies and gentlemen, are we as broadcasters prepared to see what is open to us?
I believe that we are.
And I pledge to you that we at the NAB will do everything in our power to help our members see and realize that vision.
Thank you very much.