[BC] HD multicast alliance

[Davis, Steve - SVP]

> Message: 3
> Date: Sun, 11 Dec 2005 23:46:54 -0500
> From: Rich Wood <richwood at pobox.com>
> Subject: RE: [BC] While you are waiting for receivers
> To: Broadcast Radio Mailing List <broadcast at radiolists.net>
> Message-ID: <7.0.0.16.2.20051211233151.0764be20 at yahoo.com>
> Content-Type: text/plain; charset="us-ascii"; format=flowed
> 
> ------ At 10:42 PM 12/11/2005, Williams, Chris 
> \(Albuquerque\) wrote: -------
> 
> >In my opinion the IBOC alliance is a good step towards serving the
> >consumer only problem I see is the big broadcasters will need to 
> >make a profit to keep shareholders happy.
> 
> Why is collecting a group of "usual suspects" from all the Gargantua 
> Internationals going to help the consumer? Where are the small and 
> medium sized broadcasters in this wondrous collection? You know, the 
> folks who might actually know a few of their listeners personally. 
> You know, the people who are the most likely victims of this 
> technology. You know, the people who aren't investors in the 
> technlogy.
> 
> If this were the oil industry, it might be called a cartel. If this 
> were GE and Westinghouse, like in the 60's it would be called price 
> fixing or restraint of trade and forbidden under anti-trust. I think 
> the street term might be "railroading."
> 
> Where's Elliott Spitzer when you need him?
> 
> Rich
>

Rich and others,

As I speak with listeners and read posts at sites such as this, one
recurring theme is "It's the CONTENT stupid" or something similar.  I
hear people say that radio is stale, not innovative enough, and/or the
formats are too narrow or limited.  Satellite radio, which unlike free
radio is 100% controlled by only two companies (Elliot are you
listening?) on the other hand is lauded as an answer to these maladies.

So why can't the hundreds of free, over-the-air broadcasters provide a
challenge to the two national satellite companies?  One of the primary
reasons has always been the competitive nature of our business and
pursuit of maximum audience and profits.  Because each terrestrial radio
broadcaster only has a few "channels" (independent radio stations)
availble in any given market (FCC maximum is 8 in even the very largest
markets), no single broadcaster can itself provide a variety of
programming similar to what the two satellite providers, with their 100+
channels each, can provide.  And because there are so many competing
terrestrial broadcasters in each market, out of financial necessity we
have tended to compete over the most popular or lucrative formats.  The
result of this is that we don't have a variety of programming choices in
each market equal to the number of stations in that market.  Listeners
may have a number of country stations, a number of top-40, hip-hop and
rock stations, etc., but more eclectic, adventurous, innovative or
"niche" formats are few and far between.

The objective of the HD alliance is to learn from history and work
cooperatively to address programming diversity and meet the listeners'
needs BEFORE everyone is on the air with the new digital signals and
this becomes a big business, as traditional analog radio has become over
time.  The alliance isn't about "big vs. small".  In fact the plan
really can't provide maximum variety to the consumers unless ALL the
broadcasters in a market, large and small, participate.  We invite, and
in fact, implore, all broadcasters, large, medium or small, to join in
this effort.  Our studies of the number of radio signals providing
reliable coverage of each market have demonstrated that it will take all
of the broadcasters in each market cooperating to provide the variety of
program content that satellite can provide.  The innovative concept of
the alliance is simply about deciding on programming in a market FIRST,
and working together, to guarantee that no two secondary digital
channels in a market duplicate the same programming, and that maximum
programming innovation, diversity and CHOICE is available to the
listeners.  So we'll have a free radio service that is equivalent or
superior in depth, variety and diversity, to satellite.  If all the
stations each go their own way, do research, and then select the most
popular formats to compete over for these new secondary channels as
we've traditionally done with the analog stations, we simply won't
achieve this worthy and important goal of programming diversity.

As many have already correctly pointed out, if there isn't something
unique, better, and different provided by digital radio, it's going to
be difficult to get any significant number of consumers to invest in the
hardware.   Here then is something unique, better, different, and FREE!

What this is all about is saving free radio.  Listeners will be able to
get digital clarity, with variety on a par with what the satellite
services can provide, for free.  We can do this with the new digital
channels since they don't already have an entrenched listener base and
established revenue stream that we're depending on to keep the lights
on.  As with FM radio back when AM was king and FM was a novelty, we can
afford to do something new and different on these new channels.  So why
even consider programming each of those channels via the same
competitive paradigm as we've done with our existing analog stations?
To me that doesn't make a lot of sense.  It's a little like the classic
definition of insanity: doing the same thing over and over, but
expecting a different result.

Is this concept guaranteed to work?  No.  But I believe it's the right
thing to do at this critical time.

Also as a sidebar, I take excepton to the statement "Where are the small
and medium sized broadcasters in this wondrous collection? You know, the
folks who might actually know a few of their listeners personally."
Clear Channel Radio owns or programs roughly 1200 radio stations in the
US.  Far from a "monopoly" as we're accused of being, this amounts to
about 9% of all US radio stations.  Still, those 1200 stations are
programmed by 900 local program directors.  Those local program
directors live and work in their local markets and DO know their
listeners personally.  Just because their paycheck says "Clear Channel"
and they happen to work for a company that owns a large number of
stations, doesn't make them any less locally connected or committed. 

I love the radio business and am passionate about it, and I am
optimistic that these second audio channels will give us all a chance to
provide a new, relevant, meaningful service to the listening public, for
free, WITHOUT disrupting a service and business model that still
attracts millions of listeners (and dollars) daily and provides many of
us with our income.  Until we had the second digital channels we were
trapped in a "Catch-22": we couldn't afford to change (too much revenue
riding on the status-quo) but we couldn't afford not to (lest we get
left behind as people adopt satellite radio, cell-phone entertainment,
Internet Radio and iPods).

We stand today at a pivotal crossroads in the evolution of our industry.
My hope is that you and the leaders at your stations and companies will
join us in reinventing our business to maintain our vibrancy and
relevance into the 21st century.

Sincerely,


Steve Davis
Senior Vice President, Engineering
Clear Channel Radio
SteveDavis at clearchannel.com