Gordon Smith Remarks at The 2010 Radio Show

September 30, 2010

Washington, DC - Sep 29-2010 - NAB President and CEO Gordon Smith gave opening remarks during The 2010 Radio Show produced by RAB and NAB. The show runs until Oct. 1, 2010, in Washington, DC. This year's show brings radio broadcasters and industry colleagues together to share knowledge, discover the latest innovations, network with industry leaders and explore creative business strategies to help radio flourish in the digital age.

The full text of Smith's prepared remarks:

I want to thank Jeff and the RAB for their great partnership in hosting this year's Radio Show.

And I want to thank all of you for being here. It is vitally important that we come together to focus on the issues that impact the future of radio.

One year ago, I spoke to you as the incoming president and CEO of NAB. At that time, I was meeting many of you for the first time and learning more about the challenges and opportunities facing radio.

Looking back, I was struck by the innovation, passion and dedication among the broadcasters I met. One year later, my first impression of this business has grown tenfold. It's been an honor to work alongside you this past year.

Right here, at the Radio Show, we are demonstrating that radio is strong and thriving in the digital age.

Take a look at what's on display at this show. It's evident that radio is reaching new heights, increasing its relevance and growing its share of voice in the media marketplace.

Let's face it, there is a lot of technology competing for consumers' attention these days. And yet, radio has prevailed and endured. Radio is the ultimate survivor.

Many of you know I'm from Oregon. Out West, we are all too familiar with another kind of ultimate survivor -- the coyote. From the prairies to the mountains, both in urban and suburban environments, the coyote has found ways to survive in different -- and often challenging -- habitats. Like the coyote, radio, is clever, inventive and adaptive - always adjusting to the changing media landscape.

Since its early days, radio has adapted to new technology, inventing new ways to thrive, grow and succeed. Throughout the years, critics have predicted radio's demise with the rise in popularity of LPs, tape cassettes and CDs … and now with the rise of MP3s, iPods, smartphones and the Internet.

And yet, radio endures and continues to grow its listener base. And how has radio endured? Through innovation and responding to consumers' needs.

Radio offers more choices than ever before -- all for free. Through HD Radio and other delivery platforms, we're continually improving the quality and diversity of our content.

Radio is reaching more listeners every day. In fact, 239 million people listen to radio each week -- an increase of four million listeners in just one year. And we're working to ensure free, local radio is available for Americans anytime and anywhere -- on their cell phones.

Nearly everyone has a mobile phone, making it ideal for radio's emergency alerting capabilities. Yet carriers have not prioritized making free, local radio a standard feature on their phones in this country. By contrast, in Latin America and Asia, nearly half of all users list radio as one of their top three choices in choosing a mobile phone -- making it even more popular than mobile Internet access or even texting.

Radio could reach 257 million American cell phone subscribers if included in all phones - that's an incredible reach. From the Microsoft Zune to the Apple iPod Nano, mobile devices like these are making radio new again, creating a new base of radio fans.

But we have some work to do to increase radio's availability in mobile phones. Broadcasting is not only the most efficient medium -- reaching thousands with a single transmission - but it's the most dependable.

While phones and the Internet can be unreliable during disasters -- radio stations stay on the air, fulfilling the role of lifeline providers and first informers.

We saw this during 9/11, Hurricane Katrina and the earthquake in Haiti, just to name a few examples. What most people learned about the tragic events of those days was provided by America's broadcasters.

Even when cell phone and wireless networks go down, radio is always on … radio is always there.

--Continued on page 2

The WARN Act, signed into law nearly four years ago, set up the template for cell phone providers to send out emergency messages to their subscribers. But the resulting system preferred by carriers -- a text-based system with a 90-character limit -- still hasn't been deployed.

So why are radio critics opposed to ensuring the American people have easy access to radio on their cell phones? Maybe they view free, local radio as competition to the audio and data streaming services cell phone customers have to pay for.

Or maybe they are listening to misguided information. There's a lot of misinformation out there regarding radio-enabled cell phones -- myths about what we're trying to accomplish and what is technically feasible.

Today, I want to challenge those myths, by giving you the facts…the realities.

Myth #1: There is no consumer demand for radio.

Consumers tell us otherwise. Here's the reality: Americans would love to have free local radio on their cell phones. In a recent survey, 73 percent of cell phone owners said having free, local radio as an option on their phone is important to them.

Myth #2: Radio receivers would significantly impact the battery life of cell phones.

This, too, is untrue. A typical cell phone with a radio receiver could provide the user with more than a full day's worth of radio listening on a single battery charge.

Now, keep in mind most people charge their phones daily or every other day, which means a radio chip would have little to no effect on battery life.

Myth #3: Integrating radio into cell phones is a costly additional expense for manufacturers.

The reality is the cost to the manufacturers would be very low. When mass produced, radio chips can be integrated into cell phones for pocket change. In fact, three out of four cell phone owners say they would consider paying the one-time cost of enabling a phone with a radio receiver -- that's how much they want local radio.

Myth #4: Critics argue that the size and weight of a chip would be too big and heavy for consumers.

No one wants to bulk up their cell phone, even though we want more options and features. So luckily for cell phone users, a radio chip is smaller than the head of a nail and weighs less than a Tic Tac.

I hope that by sharing the realities, you can help to correct the false information that you hear. If cell phone service providers and handset manufacturers would look past the myths, they'd see that including radio in cell phones could open new revenue opportunities for all our industries.

I've mentioned how this platform would increase radio's reach -- potentially 257 million American subscribers. And through RDS, a song heard on the radio through a cell phone can be "tagged" for later purchase, giving consumers a direct sales point for music…and broadcasters and cell phone providers a new revenue stream.

And I'm told that HD Radio technology in a cell phone will be practical within about a year, creating additional services and revenue streams that become possible with a digital platform.

A radio receiver would also free up network capacity for mobile phone providers. Listeners seeking music could access news and entertainment over-the-air rather than through streaming applications that use the same network bandwidth needed for phone calls.

And as more cell phone providers offer pay-as-you go data plans, a free music alternative would be very attractive to consumers seeking more affordable options.

Clearly, the inclusion of radio in cell phones is a win-win situation for consumers, radio and manufacturers. So, how do we ensure all cell phones are radio ready?

As you know, this issue has been part of our performance tax discussions with musicFIRST -- the group that represents artists, record labels and unions. Our goal in entering into discussions was to shape a better outcome for the industry. And despite good faith discussions, we remain strongly opposed to the Performance Rights Act pending in Congress.

With your help, we have been successful thus far in staving off the Performance Rights Act in the House and Senate.

--Continued on page 3

And while this is an ongoing battle, NAB and radio broadcasters are in a strong position, due in large part to the grassroots efforts of our member stations. Because we are in a position of strength, we have been able to have a constructive dialogue with the other side.

While potential terms have been discussed, there is no agreement yet. But we have brought these terms to the industry for your feedback. We appreciate those who have taken the time to call and e-mail with your support, concerns and questions.

We've received a lot of good feedback. Many of you support our discussions…but there are also many of you who believe we should continue fighting as hard as we can. And still others who remain undecided and have a lot of questions.

We welcome hearing all of your views and thoughts on this. We know this is eliciting many strong feelings -- and that's not surprising. The outcome impacts the long-term success of radio -- that's our future.

But remember this: We are here to serve you. We are here to protect your interests and help build a strong future for radio. And though we have a voice, Congress ultimately has the vote. Congress will decide whether this comes up for a vote or if we keep on fighting to preserve radio's future prosperity.

But beyond our advocacy efforts on the Performance Rights Act, it's clear that ensuring broadcast radio is available in mobile phones is important to America's public safety. There's already congressional support for this effort. Last November, a bipartisan group of 60 House members sent a letter to Homeland Security Secretary Janet Napolitano and FCC Chairman Julius Genachowski encouraging the adoption of radio in mobile phone handsets to provide emergency information.

We just marked the ninth anniversary of one of the worst attacks on U.S. soil - the 9/11 tragedy. And in those nine years, the cell phone industry has not implemented a way to instantly and reliably inform their millions of users in times of emergency. Radio provides the most practical, efficient and cost-effective way to keep Americans safe and informed.

That is a fact.

Radio's enduring value has made it the ultimate survivor. As new technology has come and gone, radio has endured. But we must unite in our efforts to build a strong future for the industry. We must work together in order to continue to move radio forward.

And as we look to the future, we can find inspiration in something a great American innovator, Thomas Edison, once said: "If I find 10,000 ways something won't work, I haven't failed. I am not discouraged, because every wrong attempt discarded is often a step forward."

As we take the steps to build a vibrant future for the industry, we can expect to face some setbacks. But we won't be discouraged and we won't give up. We'll keep adapting, keep innovating and keep thriving. Because that's what survivors do.

The radio business is evolving right before our eyes, and we have the incredible opportunity to shape its path. We're building a bright future for radio, and today is just the beginning.

Thank you.

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