[BC] HD Alliance

[Davis, Steve - SVP]

Rich Wood, in this forum, atated (about me): "
> When he becomes a programmer I'll respect his 
> programming comments as much as I respect his engineering ones.

I agree with Rich that I'm not qualified to program radio stations in
today's super-competitive environment, despite my few (early) years as
an air personality and programmer.  That was very long ago and things
were much simpler then.  I want to be clear though: I wasn't making any
programming comments, I was merely clarifying the role of the HD
Alliance, something about which I do have knowledge.

Dana Puopolo had some kind words for me and, Dana, I really appreciate
that!  Dana raised a question which begs a response, to wit:
> One question though Steve. To me at least, this smacks of a 
> cartel? How do you
> get around that?

Rich also characterized the Alliance similarly:
> What 
> I take from this cartel is "let's operate at 1Kw until we have enough 
> listeners, then we can bump it up to 50Kw."

Unfortunately while I'm admittedly not well qualified to offer
programming insight, I am even less qualified to offer legal opinions.
I will attempt to address this concern to the best of my ability;
however I leave it to lawyers, judges and the Department of Justice to
render the only opinion on this that will ultimately matter.

By definition, "A cartel is a group of legally independent producers
whose goal it is to fix prices, to limit supply and to limit
competition."  Since the programming offered by Alliance members on the
secondary channels will be provided free to all, and (at least
initially) without commercial advertising, there can be no price-fixing
component.  Further, rather than striving to limit supply, the goal is
to insure that the supply of diverse content is MAXIMIZED, giving the
customer (listener) as many choices as there are Alliance participants
in a market.  Since every channel offered by Alliance participants in a
market will offer different content, and participants MUST transmit at
least one digital program stream that differs from and is in addition to
their primary analog and digital streams, the more participants, the
more choices the listener has (so the "supply" is increased).  While it
could be said that there is an anti-competitive aspect to this (we won't
be beating ourselves up with five competing country or urban formats on
second channels in the same market), the defition of a cartel, like a
lottery (which you'll recall requires "Prize, Consideration and Chance")
requires the presence of all three elements.  Also to be sure we stay
out of this territory the Alliance is explicitly prohibited from having
any discussion of or impact on any stations' PRIMARY channels (either
analog or digital).  So broadcasters will continue to compete on their
primary channels just as they do now.

I'm not sure what Rich means by "let's operate at 1KW until we have
enough listeners, then we can bump it up to 50KW".  I interpret this to
mean that the number of employees dedicated to these channels, and the
overall level of support for these channels, at each participating
station, may not initially be at the level we hope to see when receiver
penetration becomes widespread.  If that's his point, I have to agree,
there is some truth to that.  Companies like mine are spending tens of
millions of real, hard dollars on the hardware needed to transition to
HD/IBOC.  We are making this investment in the interest of giving
listeners a level of quality, innovation and variety in free radio
similar to what satellite provides.  And, yes, with the selfish hope
that this will enable our industry to continue to grow and thrive in the
coming years, in the face of so many alternative entertainment choices
listeners now enjoy.

Also, the Alliance will have a finite life: stations won't participate
indefinitely.  This is just to help us to get HD off the ground by
maximizing the choices available to the listeners on free radio.
Someone elsewhere in this forum commented that Sirius receivers are
"flying off the shelves" whereas HD receivers, when available, are
languishing.  While I'm not a programmer, as a consumer I can see why
this would be the case: satellite offers something additional, new,
and/or different, which you can't get via free radio in some cases.  If
HD/IBOC is to be successful, I would think the consensus here would be
that free radio must offer the same thing.  To those who dislike the
idea of a cooperative effort like the HD Alliance, I solicit your
suggestions as to a better approach.  To date it doesn't appear that
having all stations go their own individual ways without any sort of
cooperation has resulted in the kind of format diversity we are seeing
with satellite or would like to see with free radio.

Some have said the problem with free radio is that there are too many
large corporate owners, such as Clear Channel.  To those who would say
that, I remind you that the two satellite radio semi-monopolies are
large publicly held corporations.  How is it that those corporations can
be creative and free radio corporations can't?  I've heard it asked,
"how can corporate 'suits' come up with innovative programming ideas?"
To ask that in this context is to misunderstand the Alliance.  Again,
the formats are discussed and agreed on by local market programming
personnel and managers, and the stations will be programmed locally by
local personnel.  The role of the Alliance is to facilitate these
discussions and serve as moderator/tiebreaker if it appears we'll have
format duplication among participants in a market.  

While I hate to repeat myself (from a previous post, for those who
perhaps didn't get a chance to see it), Clear Channel Radio owns,
operates or programs just over 1200 radio stations (of the 13,000+
currently on air), and employs over 900 local program directors,
residing in those local markets, to do this.  Music choices etc. are
made at the local level by those people.  Corporate people are not
selecting songs and people such as Mark Mays and John Hogan, both of
whom I believe to be visionary leaders who are willing to go out on a
limb and try something new to take our industry to greater heights by
backing initiatives like the Alliance, do not get involved in
programming decisions.

> How about local (non voice tracked) origination for all 
> stations first,
> before you start worrying about HD2? Or does "individually 
> and locally"
> still allow for voice tracking from talent outside the market 
> where the
> HD2 will be originating?

I'll try to stick with what I know and stay out of rendering any
programming opinions.  What I do know is, whether stations are owned by
the larger media corporations such as the one I work for, or by smaller
individual owners (and there are still THOUSANDS of individuals who own
radio stations, and companies that own fewer than five stations), those
owners, their shareholders, and even their employees count on the
revenues from what is still a very healthy business that appeals to over
200 million listeners a week.  There is too much at stake to make too
many drastic changes to a business model that is working for so many.
That is why many of us see the second audio channels as such an exciting
prospect.  It is a chance to innovate once again, in a "sandbox" where
there isn't as much to lose (since there are few listeners currently).
Much like FM radio in it's early days, or satellite in the very recent
past.  We can try ideas, formats, etc. and if they work, great, if not
we can try something else.  

As for "does 'individually and locally' still allow for voice tracking
from talent outside the market", the answer is, it could.  EACH MEMBER
STATION OR ORGANIZATION will determine, locally, HOW they wish to
program each of their channels.  Within the Alliance, participants agree
on what format each will do.  Other than that, the Alliance does not
interfere.  So if a station in Detroit elects to voice track portions of
their HD2 channel (most likely with local Detroit talent), and a station
in Boise elects to program with live personalities around the clock,
that will their individual choice. 

Speaking to something I do know, let me clarify my company's use of
voice tracking.  The vast majority of voice tracking in our group is
done locally by local people on their local stations.  Less than 10% of
our voice tracking originates from outside the market in which it is
heard.  Because our programmers (not me, I'm not a programmer) believe
local people who live in their local markets know best what their fellow
residents want to hear, what issues are important to them, what humor
will appeal to them.

To summarize, a number of posts in this forum postulate that there is
something wrong with free radio.  That satellite or IPODS are better,
that free radio is a dinosaur or used to be a lot better in some
previous era or decade, etc.  My opinion on that subject doesn't matter.
But what I will say is this: if radio is great as it is, then we don't
need an HD Alliance, or even HD radio.  Let's just keep doing things the
way we've always been doing them.  But if radio's business model needs
to change in the face of these new competitors for our listeners' time
and attention, doesn't it make sense that initiatives like agreeing on
providing format diversity in markets, providing more choices/channels
for the listeners, etc., is something at least worth trying? 

Besides all the philosophical arguments in favor of trying something
different (while still retaining a successful platform enjoyed by many
on our primary channels), from the self interest of everyone in this
group I would think this sort of thing would be embraced and applauded.
As an engineering leader for Clear Channel, I am constantly seeking more
engineers.  With all the work building new studios including live
performance studios in most of our markets, installing HD and HD2
systems including sourcing and transport mechanisms for them, tying in
traffic data and PAD and sending it to the transmitting sites, etc., we
simply can't find enough engineers.  The prospects for employment for
broadcast engineers have never been better, and pay has never been
higher.  And now we will be seeking more programming and promotions
people as well -- although as someone is sure to point out, that's an
area over which I have no direct control and thus little hard knowledge.

Thanks for listening.  If any of you have ideas for a better way to
handle these new audio channels than the way we're trying to handle
them, or any other advice for us on how we can keep radio a healthy,
viable, relevant and growing business, please let me know, either off
line direct to me, or via this forum.

Keep 'em on the air!

Steve Davis
Senior Vice President, Engineering
Clear Channel Radio
 
Voice: (918) 388-5211
Fax:    (918) 664-3066
SteveDavis at clearchannel.com