NAB Chief: Cable Will Pay for Retrans

Apr 24, 2006  •  Post A Comment

Almost five months into his new job as president and CEO of the National Association of Broadcasters, David Rehr is marketing a bold prediction: Cable TV giants will pay for the right to retransmit the TV signals of broadcasters, he said.

That’s a critical goal of the NAB lobbying battle plan that Mr. Rehr laid out in an interview on the eve of the association’s annual convention in Las Vegas.

In the interview, Mr. Rehr, former chief of the National Beer Wholesalers Association, also revealed why NAB is supporting initiatives to make it easier for the telephone companies to get into the pay TV business. In addition, he explained how he plans to revitalize a legislative initiative that would require cable TV operators to carry all programming streams multicast on broadcasting’s new digital TV channels-all as he strives to get the Big 4 TV networks back into the NAB fold while transforming the association into a proactive juggernaut for the broadcast industry’s cause. As it stands, only ABC is currently a member.

An edited transcript of the conversation follows.

TelevisionWeek: You’ve said one of your top goals will be to ensure that broadcasters receive retransmission consent payments for the carriage of TV signals. How are you going to do that?

David Rehr: There will be increased pressure for retransmission consent agreements based upon cash from large cable companies due to new entrants coming into the distribution arena. That is to say that I believe broadcasters are well served by having multiple distribution channels for their broadcast signal.

Northern Virginia-large cable companies there. Verizon wants to get into the market. Verizon will make a deal with the local broadcasters to pay them for their signal because they understand that it’s valuable.

TVWeek: Has Verizon agreed to do that?

Mr. Rehr: They’re sending signals. From an economics perspective, why would somebody shift from a cable carrier to a telco? The telco has to have at least all of the important channels or the important broadcasts on their operation.

TVWeek: So you have some leverage?

Mr. Rehr: So we have some initial leverage. We’re hearing in different parts of the country that rural telephones want to get into video franchising, rural electric, some electric companies. All these other kinds of standard utilities want to get into video franchising as well because they can get into the homes. That adds more leverage. And I think what’s going to occur over time is with the change in leverage, the cable companies are going to be forced.

Satellite pays currently; these new entrants will pay. Smaller cable companies are paying cash. At least that’s what a lot of broadcasters are telling me. The only ones that aren’t are the large nine or 10 [cable TV operators], and eventually the dam’s going to break and they’re going to have to. In my mind, it’s almost an inevitable thing.

Is it going to happen next week, next month, next year? I don’t know. It’s going to happen.

TVWeek: So broadcasters are for video franchising reform that will make it easier for phone companies to get into the pay TV business?

Mr. Rehr: The NAB board supports the telecoms getting into video franchising. We want new distribution channels.

TVWeek: Getting legislation to ensure that cable TV operators carry all of the signals that broadcasters multicast on their digital channels used to be a big issue. Has it fallen off the table for this year?

Mr. Rehr: There are two things we have to do with multicast. Number one, I think we need to reposition it a little bit. This is where I think cable did a very good job. They’ve given the false impression that broadcasters on multicast want more than they should have. Whether that’s true or not, and I think personally it’s not true, that’s the impression. So we’ve got to figure out how we can reposition this to change that perception. Maybe we change the language. Maybe we refer to it as anti-stripping?

Two, I think we need to talk more about local programming content and options and how the consumer will be better off for it, as a way for [congressional] members and their staff to go: “You know what? Cable has a lot of capacity. Let’s make sure broadcasters have the same 6 megahertz [for digital that they currently have for their analog channels]. If they can with digital television compress the signal and essentially get more channels, and provide local sports, local weather, special stuff for the community, we should let them do that.”

In fact, I just talked to one of our members, an L.A. company that is in the niche market for Asian television. One of the things they’d like to do with multicast is have a Chinese channel, a Korean channel, a Japanese channel, to serve more diverse communities.

We just have to think how we’re going to reposition. We’ve got a little time. Frankly, I think we have until Feb. 18, 2009 [the day after the Feb. 17, 2009, DTV transition set by law]. But we’ve got to better explain to people and better position the issue.

TVWeek: It’s not going to happen this year?

Mr. Rehr: I don’t think so. After the digital television fight last year, a lot of legislators are tired.

TVWeek: Before you arrived at NAB, all of the Big 4 TV networks pulled out in a dispute over media ownership deregulation and other issues. ABC is the only one that has since rejoined. Will you try to get the rest of the networks back in?

Mr. Rehr: Yes. It’s an important priority because I think it would send a signal to Capitol Hill that all of broadcast is standing together. How do we get them back in? The answer is really threefold. Number 1, we’re attempting to be very inclusive with all the network Washington reps, all the people in Washington who are their consultants. The signal I want to send to them is: We want to work with you.

TVWeek: You’re already working with them?

Mr. Rehr: We’re working as closely with the networks I think as we have from before they left the NAB.

TVWeek: But now they’re not having to pay you any money.

Mr. Rehr: So No. 1 is we have to show them that we want to be inclusive and we all want to work together. No. 2, we have got to demonstrate value for the networks and, frankly, for every single NAB member. No. 3, I think they’ll see a lot of personal communication from me, urging them to be involved and engaged. I think we’re much stronger when we’re all bonded together under the NAB umbrella. Is it going to be next Tuesday at 4 o’clock? I don’t think so. It’s going to take some time to do that.

TVWeek: You’ve been here a little more than four months. How are you transforming NAB?

Mr. Rehr: I am beginning to make a dent. You think of NAB as a large battleship that has been moving in a direction for quite a long time, and I want to move the battleship 4 degrees to the right.

TVWeek: Define in what way.

Mr. Rehr: Being more on offense, being more member-oriented, having our staffers experience the realities of TV and radio broadcasters that they experience every day, and getting the culture to be proactive rather than being reactive. Let me give you some examples of each.

Getting on offense: Using coalitions to get people together to think about, OK, we know these small cable companies are going to try to go after us on retransmission [consent]. Hopefully, we will be able to beat them back on the Deal amendment [a legislative proposal by Rep. Nathan Deal, R-Ga., to reform the retransmission consent process]. But they’re not going to go away. So what do we need to think of next? If we’re them, how do we try to get the broadcasters? And then what do we do to prepare so the next time the offensive comes our way we can be proactive about it?

Value added to the membership: In Ju
ne we will be doing a fairly comprehensive-I think it is a 12- or 13-page-membership survey, asking people about how they perceive their own business, how they perceive the industry. It’s never been done before. And then looking at all of the NAB programs and asking them to give us their subjective evaluation of how good they think they are.

TVWeek: What sorts of changes are you making in NAB’s lobbying?

Mr. Rehr: Basically, beginning to use every contact of every broadcaster and every NAB staffer to build a data file of the [congressional] members so we know where they’re going to be, and then keeping that updated, deepening those relationships, so we then can-if we need them-we know who to go to, what needs to be said, how to close the sale.

TVWeek: Have recent lobbying scandals had any impact on the way NAB does business?

Mr. Rehr: No. I think of lobbying as a competitive marketplace. You know, why would a member of Congress choose to see or remember what a broadcaster has to say over a cable person or over a doctor or over a teacher?

The way I view the NAB as an organization is we have a variety of tools at our disposal: our lobbyists, our members, our public service announcements, our data, our political action committee. Those are just a few of them. How do we employ those tools as to best maximize our ability to get the right answer from the legislator or the staff in a competitive marketplace when other people are using tools as well? The discipline of this business is knowing what tools you have, how to employ them to be effective, and how to keep a fine edge on the tools so they’re always at their optimum stage.

TVWeek: How is it going with Sen. Stevens? [Sen. Ted Stevens, R-Alaska, the chairman of the Senate Commerce Committee, wanted NAB to hire a former staffer as NAB’s CEO. Instead, NAB hired Mr. Rehr.]

Mr. Rehr: I saw Sen. Stevens and Sen. [Daniel] Inouye [D-Hawaii] at a lunch honoring former FCC Chairman [Jim] Quello. We had a chance to just talk for a couple of minutes. It’s going to take a while. I’ve been in to see his chief of staff, Lisa Sutherland-we’ve talked a couple of times. It’s all going to work out. They will like me because they will find me to be a very forthright, sincere person.

TVWeek: What are your priorities for the NAB?

Mr. Rehr: Priority No. 1 is to drive more value for our members. Every speech that I give I talk about how [NAB member] customers are demanding greater value from them every day. They need to generate revenue from which to pay all of their expenses and still have sufficient revenue to voluntarily belong to the NAB. So we have almost a stewardship in making sure all of our programs-all of our services, all of our seminars, the convention-provide them as much value as possible for their day-to-day business.

No. 2, I would like our NAB culture as we’re moving the big battleship to be more proactive rather than reactive, to embrace the future as opposed to kind of sticking our heads in the ground and saying we’re going to pretend it’s not going to come. No. 3, we have certain legislative issues that we need to advance.

Number 4, I’d like us to raise our visibility and our interaction with the FCC and the FCC staff over time. I’ve been over there countless times already. That’s our principle agency of regulation. We need to know them, and they need to rely on us for honest, direct, candid feedback.

The other thing is improving the value for our board meetings.

TVWeek: Anything else on your mind?

Mr. Rehr: It’s moving from the word “lobbyist” to “advocate.” Lobbyists, not only do they have a bit of a bad reputation now because of all the scandal, but the word “lobbyist” comes from the old days in the Willard Hotel, where legislators would meet and talk about bills and get their reaction. The important word there is “reaction.” Lobbyists wait for bills to be introduced and then they react. They wait to be asked to testify, and then they testify. I see that as kind of a defensive position, as opposed to the word, advocate.

I believe an advocate is someone who seeks out bills to be introduced, seeks out opportunities to testify, provides people with empirical data about the strength of their industry so they know how important it is to the American economy.

It’s somewhat semantics of changing the word. But in my mind, in the culture at the NAB, over time you’ll see us as we’re moving this large ship toward a more offensive position. So in a football analogy, we’re constantly trying to think how do we take the ball and move it a foot forward or 10 feet forward or we throw the pass to get the touchdown. But we’re always moving the ball forward.

TVWeek: How about a new slogan for NAB?

Mr. Rehr: Well, right now our slogan is we serve every local community. But we’ll need to refine that. I haven’t really discussed it with our brain trust of our board. Our staff had a chance to think through what our eventual slogan will be that will give people a way to identify us. So the current proxy for that is: serving every local community.

Determining NAB’s Policy Priorities

David Rehr, president and CEO of the National Association of Broadcasters, said he looks at NAB’s policy priorities as a multifront battlefield.

“We’ve got to keep probing and pushing and looking for weaknesses and opportunities to move downfield,” he said. “Retransmission is important to us; multicast is important to us.”

He also said he and his constituents are concerned about “this white space issue. We don’t want unlicensed devices to interfere with people’s ability to watch television.”

“Downconversion of cable is important to us,” he added, “because we don’t want people who make the investment in HD television not to be able to get the signal through their cable operator because their cable operator wants to make another 20 bucks a month requiring them to have a specific upgrade box for them to get that signal that other people are getting free over the air.”