Brandon Burgess, chairman of ION Media Networks, said Wednesday that the current credit crisis could potentially affect "the entire broadcasting industry."
"I am not aware of any broadcaster out there that does not rely on the credit markets, and most rely too much so," he told a Media Institute luncheon crowd in Washington, D.C., Wednesday.
Burgess said it is not just a Wall Street issue, but one of operations and jobs. But he did not confine himself to generalities.
"One of our deposit banks is Wachovia," he said. "We have a lot of our deposits in Wachovia." But even though the bank had millions of dollars in ION's money as collateral, it refused to loan ION $1 million so that it could open office space, pay one year's rent and hire people in New York, he said.
His point was not that Ion is not in good shape, or that it doesn't have the financial backing it needs, but instead that the financial crisis affected more than just Wall Street.
Given 20 minutes to talk about his company -- which he referred to jokingly as "the artist formerly known as Paxson" -- and more broadly about the future of broadcast TV, Burgess said both needed to expand their businesses beyond an over-the-air broadcasting model.
He added that broadcasting's future was unclear, but it included a technological makeover with an uncertain return on investment.
He also said that starting today with $2.5 billion to invest, buying TV stations (which ION owns) would probably not head the list and broadcasting is not "the college career of choice." He likened broadcasting to a PC and the Internet to a sexier Mac, saying this represented the challenge in recruiting the next generation of broadcast management.
Another challenge is that media companies themselves are de-emphasizing broadcasting -- he cited station sales by NBC and Fox.
And then there were all of those big debt levels, with lots of money betting that new revenues -- from the Internet and other delivery streams -- would eventually compensate for the loss of the old. He said the payoff remained an "open question."
But what wasn't an open question was that advertising alone would not be sufficient any more to cover the cost of producing product for a mass audience. He said the need for a more diversified base would be easier to mask for networks toward the top of the ratings heap, but less so for nearer the bottom.
Burgess outlined ION's strategy of broadening the base, which is: 1) HD programming -- he said ION would start broadcasting its programming in HD in January; 2) serving underserved communities -- kids, minorities -- with targeted programming; and 3) mobile video.
Burgess was the driving force behind the Open Mobile Video Coalition and pointed out that one way to get more efficient use out of the spectrum, to make broadcasting a more valuable service and to find some new ad revenue is to expand beyond the 110 million TV households to the 500 million mobile devices. He sees mobile TV as a see change on the order of color TV and the advent of HD.
Federal Communications Commission members Jonathan Adelstein and Deborah Taylor Tate were in the audience, and Burgess gave the commission a shout-out for being receptive to its concerns about carriage.
He also thanked AT&T and Verizon Communications for giving it help in that department, but refused to overtly criticize a lack of cable carriage, although he pointed out that it would help to get the minority-targeted programming to more viewers. He said ION would be willing to add more such programming if the number of eyeballs could justify the expense.
Burgess -- who has teamed up with Adelstein to promote so-called "soft" analog tests around the country -- said there wasn't a standard playbook for how to do those tests and for how long. “If it’s three minutes, fine, five minutes, fine," he said.
He suggested that the National Association of Broadcasters should get together with Promax/BDA, the broadcast-promotion and design association, which he added last week offered to come up with guidelines on how to market the tests.
