March 5, 2013
Jeff Smulyan has assumed the role as point person in the movement to get FM chips activated in smartphones, what with Emmis securing a deal with Sprint to do so. Emmis has also sent out a memo to stations regarding participation and held a webinar to help interested stations prepare for the launch. While Smulyan refrained from going into more details regarding the Sprint deal, he asserted that this is just the first step in radio's quest to have FM chips activated in all smartphones, as he put it in context to the current radio environment.
Obviously, you've long been a strong supporter to get FM chips in mobile phones. Why do you feel it's so important?
I really got drafted in a meeting of CEOs five years ago. What we saw was that FM chips in phones was a standard in a lot of places in the world. And we remember that 25 years ago, they sold millions of Sony Walkmans, which also had radios in them. Of course, the Walkman has since been discontinued; the portable device of choice today is the cellphone - and most smartphones already have FM chips in them. So our job is to convince carriers that activating the FM chips made sense not only for our listeners, but for them.
Did you have conversations with other carriers besides Sprint in the past?
We talked to everyone, not only other carriers, but we talked to members of Congress, the FCC and Homeland Security. It became a labor of love for us because we believe this can be a game-changer - and we, as an industry, need a game-changer.
Reportedly, the deal covers Sprint's Androids but not iPhones. Are you still pursuing iPhones, not to mention Blackberries, as well as other carriers - or is everyone else waiting to see how this deal works out?
The Sprint deal is a preliminary arrangement which includes Android and Windows phones. Our goal is to have FM chips activated in every smartphone. How we get there is by talking to everyone ... and we are continuing to talk with everyone in our efforts to do that.
With Ford's aggressive pursuit of app development for cars, and GM's just-announced plans for Wi-fi in the car -- and many automakers now synching smartphones to the audio system via Bluetooth -- will all that have any impact on the pursuit of FM chips in smartphones?
All that only enhances our goal to get activated in cellphones. The American public has had unlimited data plans for a long time. Consumers used to have $30 unlimited texting, then it became unlimited data. That's been their baseline. As people consume more media, they're listening to more music, whether it's on my radio stations, Pandora or Spotify. Now when you put anything in a data network, there will be a cost to that; our cost comes from consuming bandwidth. The same is true for consumers, as they understand the cost of listening in a one-on-one environment.
There has been some concern about the amount of trade and revenue Sprint is getting. Are you confident that such a trade will be worth the investment? Exactly where do you see the new or increased revenue streams coming to radio from this...and if it's an increase, approximately how much of a bump do you expect to generate?
The revenue streams will increase for a couple reasons. 1) It changes the audience's perception of the next radio tuner ... the tuner of the future. It will change the relationship of the listeners with the stations. It will create a more interactive and visual relationship; we think that's very important. 2) Since people are carrying around these devices everywhere, with an activated FM chip, they'll be able to have instant access to free radio wherever they are. That should add 15% more listening than what people currently do.
Again, there are no guarantees, but that's our sense of it. The tuner will offer increased interactivity, which, for instance, will also enable the listener to download coupons on a local basis, which we feel can generate substantial revenues.
How far along is that development?
It's very far along. It will be part of our launch.
Have you come up with a certain benchmark of added revenue that will make the ROI worthwhile?
We believe that every new dollar in new revenue is a dollar the industry didn't have before. I hope we can change the perception that listening has to add a lot of new revenues, because there area lot of other ways the FM chip would benefit our industry instead.
You recently sent out a memo to stations about participation in this. How has the response been so far?
The response from the industry about getting involved has been remarkable. It's truly gratifying when not one broadcaster has turned me down.
Is there a "go/no go" number of participation you need to see from radio to proceed with this venture?
I'm not a big guarantee person, but based on the fervor I have seen from radio stations so far, I have no doubt that this will proceed. Remember, every station that is on your standard car tuner or your clock radio will be able to be heard on the tuner in your smartphone. That goes for every station in every market, even if the local station isn't currently streaming. Whether they will be identified on the tuner is up to each station.
It's like having a radio Walkman in your smartphone.
iBiquity has applauded this move because it could lead to HD chips. Do you agree, or do you believe that's a separate deal?
We're very hopeful this will evolve to HD down the road, so I agree with iBiquity. However, there is an additional cost for putting a HD chip into a smartphone, which is why we feel - and have felt all along - that all the parties just need to start with the current chip.
Could something like this ever work for AM - and if not, what future do you see in that?
The AM standard has a signal problem; it's very hard to work that technology into the current smartphone ecosystem. But that can be solved as HD Radio develops; plus a lot of AM broadcasters are going on FM translators. We're hopeful AM can be picked up there.
In regards to the current radio environment, what's your take on how the industry is doing now? Are you getting more confident about radio's growth?
It's growing a bit, but there are still challenges out there. Obviously, the industry grew by 1%. That's better than zero, but it's worse than 2%. There was a time not that long ago when the industry historically grew by 5-7% a year. We're hopeful that can happen again. Of course, it would help if the economy rebounds; but activating the FM chip in smartphones could not only help in that regard, but provide the impetus we need to reintroduce radio as something hip again. We can change radio's perception to a lot of people.
What predictions do you have for Emmis and for radio in general?
Again, we're hopeful that radio grows a bit more. At Emmis, we have fixed our balance sheet, which will enable us to tackle some new challenges, although we're not sure what they'll be just yet.
Emmis certainly went through a trial by economic fire during the recent recession. What have you learned from that experience that you feel with benefit Emmis in the long run?
You always do better managing in tough times. I was taught - which my kids have learned - that you learn great lessons in life by going through adversity. This industry had to go through a very adverse time, and it has made us all better managers
Through it all, you still maintain the two most successful and influential Rhythmic stations in the country in Hot 97 and Power 106. Not only did they have to deal with a recession, but they had to adjust to the PPM transition. What have been the keys to their perseverance and success?
No question about it, we knew when PPM first came in that we would face major challenges with the PPM. We have been very fortunate that we were able make the right adjustments that helped our stations' performance. The reason we were able to do that is due to the actions of our people. Hiring great people is always the key to success, no matter the challenge, and we have some great people there.
You still maintain just one station in L.A. Now that the economy seems to be getting a bit better - sequester notwithstanding - do you feel the time may be right to complement Power with another station in L.A.?
Well, we're going to see how things work out. We did have complement for Power for a long time, and we reached a point where we decided that the wisest move was to sell it. At this point, all I can say is that we never know exactly what we're going to do. It depends on the situation; from our standpoint, it's key to look at all of our options, but the bottom line is that we love the radio business. We love the media business; we're in magazines and we've been in TV and on the periphery in sports. We're energized about taking on some new opportunities.
Nationally, do you see Emmis standing pat with the radio stations it has, or will you grow or get leaner?
We're not going to be much leaner because we're pretty lean right now. If I had to guess, I'd say we'd probably do some growing.