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INFORMATION AND INSIGHT FOR MEDIA FINANCE PROFESSIONALS
JULY/AUGUST 2019
THE FINANCIAL MANAGER
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INSIDE THIS ISSUE
The Financial Manager
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The Official Publication of the Media Financial Management Association is published six times annually under the supervision of:
10 Ahead of the Curve Change isn’t just good; it’s imperative for video content providers as consumer demographics and behaviors continue to evolve.
MARY M. COLLINS, President & CEO Mary.Collins@MediaFinance.org JANET STILSON, Editor TFMeditor@MediaFinance.org BILL KNIGHT, Art Director wknight5@nyc.rr.com
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14 Where We Go From Here
MEDIA FINANCIAL MANAGEMENT ASSOCIATION
Streamed services are gaining popularity, and there are some big issues related to advertising for consumers and marketers. 16 Anatomy of a Fraud
550 W. Frontage Road, Ste. 3600 Northfield, IL 60093 telephone (847) 716-7000 facsimile (847) 716-7004 and at www.mediafinance.org.
18 Defending the Realm
Subscription $69.00 per year. Copyright, 2019. All rights reserved.
With cyberattacks now a matter of “when,” not “if,” the tools and knowledge needed to protect companies are growing. 20 The Podcasting Explosion 22 What the Fed Is Watching
What is MFM?
The Media Financial Management Association is a not-for-profit corporation organized in 1961. The MFM membership includes more than 1,200 of media’s top financial, IT and human resource personnel, station general managers and other media management personnel as well as associate members in the allied fields of auditing, tax, software, sales and the law. MFM sponsors telephone seminars and conferences, publishes special studies and surveys, files position papers with federal agencies on behalf of its members and its industry, cooperates with other media industry groups and helps its members grow and learn both personally and professionally. MFM also is involved in media industry credit matters through its wholly-owned subsidiary, BCCA, which provides members with a Credit Inquiry Service, an annual Conference, directory of Credit Personnel, credit reports accessed via bccacredit.com online credit search, Commercial Credit Reports and a credit and collections handbook. The information and recommendations contained in this publication have been compiled from sources believed reliable. However, no warranty, guarantee or representation is made by the Association as to the absolute correctness or sufficiency of any representation contained in this publication, and statements contained in advertising and articles submitted to the Association are the responsibility of the authors, not the Association or its officers, directors, staff or members. Moreover, this publication is provided with the understanding that the Association is not engaged in rendering professional services through its distribution. The views and opinions expressed are those of the author, and not necessarily the Association.
25 A Photo Album From New Orleans A visual look back at the networking, sessions and music acts that were all a part of Media Finance Focus 2019.
CONFERENCE COVER PHOTO BY LUCY KENNEDY
DEPARTMENTS 4 From the President Eyes on the Audience 6 Dear Expert Newsroom Upgrades 7 Human Factor Luring Young Talent
8 Credit Where Due Accent the Positive 9 Board of Directors With Association News 30 Last Word FCC Inspection Files The Financial Manager • July/August 2019 3
FROM THE PRESIDENT
Eyes on the Audience
The strength and value of media initiatives relate to how well they focus on the end users’ appetites and needs.
A
“
good forecaster is not smarter than everyone else. He merely has his ignorance better organized.” Steve Swad, CFO of Vox Media, used this anonymous quote to set the stage for his New Orleans keynote. His subject was the future of media. I was reminded of this statement and Swad’s presentation when I read the pieces for this 2019 post-conference issue of TFM. In fact, it even suggested an organizing principal for my thoughts: focus on the audience. Consider TFM editor Janet Stilson’s outstanding recap of sessions she attended. She starts with James Carville’s opening keynote, honing in on his response to a question about leading presidential candidates for 2020. Carville begins with, “I think somebody’s got to offer the country the future.” Consider the audience. Stilson’s article goes on to lay out what she sees as two important themes running through the sessions. One is the growth of streaming services and the number of options available. The other is changes to the advertising model. The experts suggest that solutions to the problems both are encountering must be grounded in what the audiences want. Interestingly, Stilson’s summary of Aaron Beam’s keynote can be seen as a lesson in what happens when focus is on the wrong audience. Beam was CFO at HealthSouth when the company began misstating revenues to fulfill CEO Richard Scrushy’s promises to Wall Street. Beam served time in prison and now focuses on a new audience – one interested in learning about ethical behavior. Laurie Kahn tells This issue also includes conference summaries from readers who want MFM/BCCA’s new public relations consultant, Patricia to recruit young Andrews-Keenan. Check out her pieces about the Federal talent that they Reserve’s approach to full employment and price stability; podcasting; and cybersecurity. Each requires an audience must understand focus. Take cybersecurity for example, with a multibilhow this audience lion-dollar annual price tag, Andrews-Keenan explains why evaluates potential company insiders, who use and administer the systems, are employers. an important audience for loss-prevention tactics. Horowitz Research’s Stephanie Wong’s article describes young adults and their video-content consumption. This is the first generation that grew up with streaming content, and they are also the most diverse generation we’ve seen. Wong recommends adopting strategies to serve this growing audience. Our regularly scheduled columns can also be viewed through my audience-focus lens. In “Dear Expert,” HLW’s Keith Hanadel takes on the question of how to use technology to improve newsroom workflow. His response includes tips for developing a project plan to serve the users’ needs. John Sloan’s “Credit Where Due” column provides good advice for anyone who must deliver a report. He says communicating with the audience is as important as the report’s details. Media Staffing Network’s Laurie Kahn tells “Human Factor” readers who want to recruit young talent that they must understand how this target audience evaluates potential employers. Finally, in “Last Word,” Lerman Senter attorney Nancy Ory reminds broadcasters that license renewals have begun; not meeting expectations of the FCC online pubic files “audience” can lead to fines and renewal delays. Vox's Swad predicts that media’s future will include connected devices with faster speeds and more content consumption. He also stresses the importance of community and relevant data. Those last two pieces are in MFM and BCCA’s sweet spot: we offer Mary Collins is president members the community and data that make them more and CEO of MFM and BCCA; Mary.Collins@MediaFinance.org. valuable.
4 The Financial Manager • July/August 2019
EDITORIAL ADVISORY BOARD MICHAEL DENSON Director, Credit Services NMCP Inc. JOHN SANDERS Principal Bond & Pecaro Inc. MEREDITH SENTER Member Lerman Senter PLLC C. ROBIN SZABO President Szabo Associates Inc.
CONTRIBUTORS TIM EHRHART Chubb PATRICIA ANDREWS-KEENAN The Tallulah Group KEITH HANADEL HLW LAURIE KAHN Media Staffing Network NANCY A. ORY Lerman Senter PLLC JOHN SLOAN STEPHANIE WONG Horowitz Research
MEDIA FINANCE FOCUS 2019 CONFERENCE SPONSORS
Thank you from MFM/BCCA PLATINUM SPONSORS Deloitte Monday Morning General Session Szabo Associates, Inc. Opening Night Event Co-Sponsor
DIAMOND SPONSOR Chubb Tuesday Breakfast/General Session
GOLD SPONSOR BMI Tuesday Evening Awards & Concert Wednesday Lunch Entertainment
SILVER SPONSORS Hearst Television Chairmen’s Reception Nexstar Media Group Opening Night Reception in Exhibit Hall
BRONZE SPONSORS American Express Committee Luncheon Bond & Pecaro, Inc. CFO Roundtable Co-Sponsor EY Wednesday Continental Breakfast FastPay Lanyards KPMG CFO Roundtable Co-Sponsor
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Tribune Publishing WideOrbit Tuesday Afternoon Break
DEAR EXPERT
Upgrade Without Upsets
Tech specialist KEITH HANADEL explains how to avoid unfortunate surprises when making news-facility improvements. Dear Expert, My company’s news operations are about to receive a big technology upgrade to support our increased online activity and to provide a better workflow. How can we make sure we do this in the best way possible? Prepping in Pittsburgh, PA
the overall organization of the facility to be viewed. An accurate look at room sizes and distances is invaluable for understanding existing assets and challenges moving forward. Different versions of the plan drawings can be developed to look at the cost benefit Dear Pittsburgh, As these criteria are reviewed and devel- of various approaches to the required renFirst, congratulations on getting a green oped, they should be compiled into a proj- ovations. One proposed plan may require light on your company’s new technology ect program document. This becomes the too much time and have too many interim overhaul. I’m happy to give you some point- place where all the requirements – both the moves. Another may involve the relocation ers on how to make sure the whole process data points and the narrative – are noted. of critical systems or services that cannot goes as smoothly as possible. After the project program document is be interrupted. A third may result in the The first step is to develop a “project pro- thoroughly developed, use it to compare fu- relocation of building structural elements, gram.” Begin with a discussion among core ture needs with the facility’s existing rooms, causing it to be too costly and invasive. project team members when the technology spaces and MEP infrastructure. Broadcast As you study the options, an additionselection process is underway. This conver- technical requirements must be tested al approach may emerge that is more cost sation should focus on the operational effective and that would result in issues, activity sequencing and work Examining the entire workflow process fewer disruptions to ongoing operflow for each task within the entire ations. This previously unknown facility – even the ones that are not will add to the clarity of the results and solution then becomes the most likely may turn up unexpected information. slated to be changed. to achieve the crucial portion of the Examining the entire workf low project’s goals. process will add to the clarity of the results against the size and location of the available The entire planning process can help to and may turn up unexpected information spaces and the level of power and AC in each determine the level of renovation required that is valuable for an overall solution. space. Room sizes should be checked against to make operations run more smoothly. It The project program should take stock of staff levels and adjacency requirements. Ad- will not only help produce an “ideal” solustaffing needs for each task in the newsgath- jacencies must be reviewed and tested. tion from the standpoint of technology, ering operation. Consider the critical space Spatial considerations are key. Sometimes but also show your team the optimal way requirements. Is a given work area going when news operations are upgraded, the to utilize available resources and maximize to be occupied by one person or 10? Also work areas that make up the facility are the usefulness of the facility. This will all look at mechanical, electrical and plumbing overlooked, or a set of “workarounds” are support the organization’s mission and the (MEP) infrastructure requirements. established that can hinder a team’s ability creative staff’s work. Question every assumption about future to use the new technology to its best adToday’s successful media facility is built needs: the physical space size, location and vantage (or to its full potential). Production for a creative staff; powered by innovative infrastructure needs of each work space. and post rooms may be oriented in a way technology; and supEach activity in the workflow – from in- that makes more work for the staff respon- ported by clever use of gest and logging, all the way through to the sible for them. A room may be sized incor- space. By evaluating final edit and insertion into the rundown rectly, enclosed when it should be open, or the existing condi– has a specific set of space needs supported located at too great a distance from some- tions along with new by lighting, cooling, power and data infra- thing it should be close to. technology solutions, structure requirements. Accurately scaled plan drawings of the you’ll yield the most existing facility are a critical tool for the productive outcome. Do you have a professional puzzle that ultimate success of this step. These are Keith Hanadel is principal, media and MFM and BCCA experts might be able to sometimes available from a facility’s man- entertainment of HLW, which designs and builds answer? We’ll mine the contact base and find ager, but sometimes must be created for the the right person to answer your question. technology architecture. He can be reached at Just contact TFM editor Janet Stilson at (212) 353-4946 or khanadel@hlw.com. task. In either case, plan drawings allow for TFMeditor@mediafinance.org.
6 The Financial Manager • July/August 2019
HUMAN FACTOR
Like Bees to Honey
Hone the social media presence of yourself and your company and attract the savvy young talent that’s needed for future success. BY LAURIE KAHN
F
or many managers on the older end of the age spectrum, using social media can be a struggle. Not so for the younger generations of employees. We know that both Millennials and Gen Z’s are huge users of anything digital. Reports show that they can use five different devices at a time. Most are very research oriented and will do their homework before they ever consider speaking with a potential employer. Statistics show that 72% of all job seekers will search someone digitally prior to agreeing to a meeting. If they research you after agreeing to a conversation and don’t like what they find, they will more than likely “ghost” you. In other words, they won’t show up. As unemployment is low, with no change in sight for the near future, employers need to be more aware of their social media image. Onboarding is a hot term right now, and to me, it starts when a company promotes itself. Ironically, while media companies are used to branding their products and services, they don’t consider how prospective staff members will perceive their online presence. One of the most important factors to help build your image is your company website, especially the career page. Your site is a gateway to future clients and employees and should include a wealth of information in general. The career page should be a sales tool that shows why the sorts of people you want to hire should consider joining your team and how you can help them in their career. Include video testimonials from happy employees talking about why they joined your company and why they stay. Be sure to include a diverse group so that viewers can see how they would fit in on your team. Younger generations have a short attention span, so limit the length of videos to keep them tuned in; 8 to 10 seconds are ideal. Share your mission, how you help your
community and local charities. Illustrate how you have helped grow local businesses. Show that you care about your employees and some of the unique things you offer. Don’t be afraid to add in pictures of company events like holiday or birthday parties,
Include video testimonials from happy employees talking about why they joined your company and why they stay. group gatherings, team-building events or successful community gatherings. Tell them about your benefits and perks. Don’t forget to include your plans to train new hires and how they can grow. Review and update your company listing on Glassdoor.com. Unfortunately, disgruntled employees can post negative comments if they have had a bad experience. If this is the case, encourage happy employees to leave positive remarks to counter any damaging ones. Be sure to fill out the profile and include all that you offer employees. LinkedIn is still the premier networking
site for business. It is one of the first places most researchers will visit. So again, it’s critical to have a well-written and up-todate profile. If you don’t want to be bothered, have someone help you with it. A solid profile should include a friendly picture, preferably professionally taken, and give an accurate accounting of your work style and history. Use descriptive words instead of a title and include straight slashes in between to allow for stronger searching capabilities. Talk about yourself as a leader – your training process, your management style and what makes you stand out. If you have received awards, this is the place to include it and brag. You’ll build trust and interest by conveying that you are a strong, well-respected manager who is open to helping staff members and cares about them. Share how you started in the business and your promotions. Show your human side. I encourage all managers to Google themselves and their employer to see what is out there. If you are an avid Facebook user, utilize the privacy restrictions so that not everyone can see your posts. Use your company social media posts on Instagram, LinkedIn and Facebook to share news items about your company. Describe new initiatives, platforms or tools. Post info about any awards the company has received, or how it has helped the community, especially after a disaster. These tools will help you build a better brand. If you don't use them, chances are you will seem out-ofdate to younger generations, and less desirable as an employer. Laurie Kahn is president of Media Staffing Network, a search and consulting firm that is focused on media jobs. She can be reached at (480) 306-8930 or laurie@mediastaffingnetwork.com.
The Financial Manager • July/August 2019 7
CREDIT WHERE DUE
Accent the Positive
Leaven negative news in financial reports with a thorough analysis that includes solutions and deserved praise. BY JOHN SLOAN “The single biggest problem in communication is the illusion that it has taken place.”
I
– George Bernard Shaw
n Greek mythology Cassandra was a princess of Troy and was cursed with the gift of uttering prophecies that were always true but which no one believed. She was seen as a liar and always the bearer of bad news. As a result, her prophecies were ignored Credit professionals run the risk of becoming modern day Cassandras in that many times the events that they must communicate to management are negative. Over time some may fall into the habit of communicating only unfavorable news. If the only communication with sales or operational management is of that nature, then the recipients may want to avoid the messenger and/or ignore the message. The key to effective credit and collection communication is to establish a number of mutually agreed upon key metrics with management, create attainable goals and report on them periodically. What should a receivable report contain? Below is a partial list of items, the top six of which are essential: 1. Actual days sales outstanding (DSO), compared with the target DSO; 2. Year-to-date average DSO versus the average target DSO; 3. Current aging with percentages versus last month and the same month last year; 4. Actual collections versus targeted collections for the month; 5. Year-to-date actual versus targeted collections; 6. A list of the largest past due accounts (60 or 90 days); 7. A list of bad debt write-offs (if any) for the month with the reason; 8. Year-to-date bad debt write-off amounts; 9. Year-to-date invoice adjustment amount;
8 The Financial Manager • July/August 2019
10. The number of new credit customers
reviewed and approved/disapproved in the previous month; 11. A list of the largest outstanding discrepancies. The report can include other receivable measurements but should not be longer than one page. Charts showing historical DSO trends, actual versus targeted collections or other evaluations will make the report more readable and interesting to nonfinancial people. (For tips on setting
The manner in which the contents of the report are communicated is as important as the report itself. realistic and achievable collection targets please see my “Credit Where Due” column in the July/August 2018 issue of TFM.) The manner in which the contents of the report are communicated is as important as the report itself. Set up a meeting with the recipients to discuss the report’s contents. If an in-person meeting is not possible, then video or phone discussions are an acceptable alternative. The importance of an in-person meeting cannot be overemphasized. It allows you to leaven the negative portions of the report with some positive results and solutions to resolve challenging issues. For example, if there is a negative trend in DSO, or if the collection target is not met because of discrepancies with a specific customer, then concrete actions can be proposed to correct the issue. If sales department assistance is required to hit on the
right course of action, then a plan can be formulated within the meeting. If it is simply not possible to meet with sales and operational management in person then the report should be sent with a written narrative that highlights the positive aspects of the report and sets forth specific actions necessary to correct any negative trends that may be in it. The written narrative can also be distributed to the entire sales team so that they are fully aware of problems and successes. Regardless of whether the report is delivered in person or with a written narrative, if it contains positive results that occurred because of actions taken by non-credit personnel, then that individual or individuals should be recognized and praised. For example, if collections were increased because a salesperson or sales assistant resolved a large discrepancy, then bringing that to the attention of management will go a long way in obtaining that individual’s assistance in the future. A portion of the narrative should also focus on the targets for the upcoming month and specific areas where assistance may be needed to accomplish the goals. Mention specific advertisers and agencies that will drive the results. This is particularly important if one is experiencing collection difficulties or if large amounts are discrepant. A concise, positive monthly receivable report is an opportunity to highlight successes as well to communicate news that is unfavorable. Credit managers need to make it an essential part of their overall communication strategy. John Sloan is a former executive director of credit services for Turner Broadcasting System. He can be reached at john_sloan23@yahoo.com.
ASSOCIATION NEWS
MFM
Predictions, Packages and Powwows
BOARD OF DIRECTORS As of July 2019 CHAIRPERSON RALPH BENDER
Manship Media VICE CHAIR/CONFERENCE CHAIR MELISSA MITCHELL
Bonneville International SECRETARY/CONFERENCE CO-CHAIR DAVID BOCHENEK
Sinclair Broadcast Group
MFM is offering up different educational opportunities for the months to come. Among them:
Media Outlook 2020 — Mark your calendar for this insider’s view of how the next year will shape up. The four-hour program takes place Sept. 12 in midtown Manhattan. Check mediafinance.org for details. Distance Learning Packages — There are discounts available for advance purchase of Distance Learning Seminars (DLS) scheduled in September or beyond. A la carte remains at $50 for members and $75 for non-members. Advance purchases
of 11 sessions go for the cost of six regular registrations, $350. And a pack of six costs the same as four, $200. Corporate members get access to any DLS free of charge. Newspaper Fly-In — Roundtable discussions about the newspaper business will take place in late September at the offices of the Las Vegas Review Journal. Contact MFM’s Brendan Doyle for more information: Brendan.Doyle@mediafinance.org
TREASURER JEANA STANLEY
Hearst Corp. IMMEDIATE PAST CHAIR CINDY PEKRUL
WarnerMedia PRESIDENT & CEO MARY COLLINS
MFM/BCCA
MFM/BCCA DIRECTORS MARCUS ANJEWIERDEN
Deseret Management Corp. DAVE BESTLER
Hubbard Radio LORI BROCK
Meredith Local Media Group TRACY CLARK
PAUL NESTEROVSKY
Sinclair Broadcast Group CHRISTINE OLIVER
Deloitte KIM PARKER
Graham Media Group PAUL RAHMLOW
Hearst Television
Midwest Communications
LAURA GRAVES
ANTONELLA RICCIARDI
ABC-Owned Stations Group/WLS-TV
NBCUniversal
STEPHEN HALL
JOHN SANDERS
Las Vegas Review-Journal JENNA HARDY
Gearbox Software MIKE LAVEY
Tribune Publications LORI LOCKE
Discovery CAL MOSTELLA
BOND & PECARO The Basis for Your Decisions
ApprAisAls FeAsibility studies expert testimony And relAted FinAnciAl services For the communicAtions industry
Bond & Pecaro DEE STEVENSON
Gray Television MARIE TEDESCO
Beasley Media Group BCCA Board Member Rep EDWARD MOCKUS Discovery
1990 M STREET, NW SUITE 400 WASHINGTON, DC 20036 (202) 775-8870 E-mail: BP@BondPecaro.com www.BondPecaro.com
WarnerMedia
The Financial Manager • July/August 2019 9
CONSUMER TRENDS
STAYING AHEAD
OF THE CURVE Change isn’t just good; it’s imperative for video content providers as consumer demographics and behaviors continue to evolve. BY STEPHANIE WONG
A
FEW WEEKS AGO, I WAS STANDING IN LINE AT A COFFEE SHOP WHEN I
heard a strange conversation. “I stan for the tea being served on this Insta channel even though it can be sus and extra,” said a young woman. “Facts,” her companion replied. “I was watching it live last night. Her guest totally slayed. I’m tots obsessed with her.” “What in the world are they talking about?” I asked myself. “Were they watching a show about tea?” I went back to the office and asked my younger, hipper-than-me colleagues for a translation. “Oh, they were talking about how they really love the gossip on the Instagram channel even though it’s not really trustworthy and can be over-the-top. And the other one was saying that a guest was doing a great job,” they told me. Aside from suddenly feeling like I was two days away from being the crotchety old woman yelling at kids to get off my lawn, the interaction highlighted a few important things. The young adults in the coffee shop were watching live video, and they were doing so on Instagram. They were also talking about the Instagram channel as if it were a TV show, and they were watching it on their phone. It struck me then that younger consumers are fundamentally different in how they grew up with content. We talk about how viewers will “return” to cable when they get older or start their families, but for this next generation, their default is not cable. There is no returning – and that has major implications for the future of the television industry.
GEN Z & CHANGING DEMOS
Those young women in the coffee shop were probably 21 or 22. They were either recent grads or on the verge of graduating college, living out in the “real world” on their own for the first time, and maybe even getting ready to start families. They are also part of Gen Z, which the Pew Research Center defines as the cohort born between 1997 and 2012. When it comes to video, Gen Z is a whole new animal. 10 The Financial Manager • July/August 2019
The Financial Manager • July/August 2019 11
Share of Weekly TV Content Viewing by Platform 49%
White
45%
Hispanic
11%
11%
Think about it this way: the first video on YouTube was uploaded in 2005, and Netflix 41% in Black began streaming video content 2007. That means that the oldest Gen Zers, who are turning 22 this year and entering theAsian economic ecosystem of media, 39% were only eight when streaming video became available. In another 10 years’ time,VOD/DVR the cohort of Trad. Live young adults moving into the world on their own will have never known a TV ecosystem without online video. And their racial and ethnic makeup will have changed. There is a clear trend by age. Half of Americans under 18 are multicultural. In contrast, just over one-third of people aged 35-64 are multicultural, and less than a quarter of those 65 and over are multicultural. That’s according to Horowitz Research’s analysis of the U.S. Census Bureau’s 2017 American Community Survey
5%
16%
4%
9%
16%
8%
11%
2%
12%
2%
Viewing & Streaming 2019 report reveals that while the gaps have shrunk quite a bit, VIEWING BEHAVIORS multicultural11% viewers continue12%to lead 3% the 12% 4% 16% Age is a major factor in driving more rapid way in streaming: 78% of Asians report adoption of digital technologies and plat- streaming; 72% of Blacks; 68% of Hispanforms. Multicultural audiences, who22% skew ics; and 63% of 7% 2% 16%white, non-Hispanics. 13% 1% younger, have always been on the leading Not only are multicultural viewers streamedge of TV and video technology. That’s ing more than white, non-Hispanics, they beenDVDs a consistent finding of Horowitz’s realso spend more of their time streaming. Stream to TV Stream to Stream to Stream to search, which has been tracking the pay-TV Among white, non-Hispanics,Other 35%Handheld of TV Computer Smartphone/Tablet market and adoption of new viewing be- viewing time is streamed; among HispanSOURCE: State of Viewing & Streaming 2019, Horowitz Research haviors and technologies for over 25 years. ics, 41% is streamed; among Blacks, 43% is In 2013, when streaming was still in the streamed; and among Asians, just over half earlier stages of adoption, 61% of Asian (51%) is streamed. (See chart below.) survey respondents said that they streamed Streaming is fundamentally changing at least some of their content. Hispanics consumer expectations around how they and Blacks followed, at 51% and 48%, access TV and video content. Those changrespectively. On the other hand, just 39% ing expectations are, in turn, changing the of white, non-Hispanics (who skew older) way consumers calculate the value of their reported that they streamed content. subscription services. The latest edition of Horowitz’s State of In the latest “State of Pay TV, OTT & (ACS) one-year estimates. (See chart below.)
Race by Age Under 5
50%
26%
13%
25%
14%
51%
5–17
55%
18–34
21%
63%
35–64
16%
White
Hispanic
Asian
12%
Other
5%
3%
7%
8%
Black
5%
6%
14%
77%
65+
5%
7%
1%
5% 1%
9%
Multiracial
SOURCE: Horowitz analysis of U.S. Census Bureau, 2017 ACS 1-Year Estimates NOTE: Based on the way that the ACS asks about Hispanic origin, Hispanics are counted here as Hispanics of any race; some Hispanics may identify as multiracial.
Share of Weekly TV Content Viewing by Platform 49%
White
Hispanic
45%
Black
41%
Asian
11%
11%
12%
39%
Trad. Live
VOD/DVR
7%
DVDs
2%
Stream to TV
5%
4%
4%
16%
16%
16%
9%
11%
11%
22%
16%
Stream to Computer
Stream to Smartphone/Tablet
8%
12%
12%
13%
2%
2%
3%
1%
Stream to Other Handheld
SOURCE: State of Viewing & Streaming 2019, Horowitz Research
12 The Financial Manager • July/August 2019
CONSUMER TRENDS SVOD 2019” survey, we asked TV viewers how important various content and features were when they made subscription decisions. Overall, Hispanic, black and Asian viewers – who are heavier streamers – are more likely to consider features associated with streaming as important in their subscription decisions. THE NEED TO ADAPT
In addition to shifts in viewing behaviors, there is also a growing demand and expectation that television programmers do a better job reflecting the diverse world we live in. Over the past couple of years, there have been some standout moments. Black Panther and Crazy Rich Asians are the most obvious success stories. Black Panther is now one of the highest-grossing domestic box office releases of all time. Crazy Rich Asians outperformed initial expectations, posting one of the strongest opening weekends for a romantic comedy in years. Despite those success stories, nearly half (49%) of blacks and a third of Hispanics (36%) and Asians (34%) say that they often feel personally offended by the way that people of their race are portrayed in TV shows and movies. Younger white, non-Hispanics are also concerned about TV reflecting the world we live in: 41% of them in the 18-34 year bracket say they often feel offended by the way that Latinos, blacks, Asians and other diverse/minority groups are portrayed in movies and on TV. This drops to 20% among whites over the age of 35. Indeed, more Americans are embracing and even seeking out opportunities to better understand people from other cultures and to be more inclusive. Among those surveyed, nearly six in 10 of the 18-34 yearolds (58%) and 35-49 year-olds (57%) said that they look for opportunities to incorporate elements from other cultures into their own lives, like food, music and TV. Among white, non-Hispanics aged 1834, 60% say that it is important for them to be able to interact and socialize with people from other cultures. These data suggest that there is still a great deal of room for improvement in creating engaging, authentic content – and that there is an increasing sensitivity to negative stereotypes in the media, especially among young people.
CHANGING THE CONVERSATION
When cable TV came onto the scene decades ago, many people wondered who would pay for it, since content had always been free. The answer, as we all know now, was “most people.” Because of its breadth of content, convenience and reliability, cable TV offered a value proposition that nothing else on the market was able to match, and subscribers lined up. Now, the streaming video competition is about to intensify. Apple TV announced
TECHNOLOGY’S
LATEST TWISTS
F
OR THOSE WHO ARE UNWILLING
to cut out traditional television completely, antennas are re-emerging as a viable option. According to State of Pay TV, OTT & SVOD 2019, 34% of TV content viewers today use an antenna at home. Stronger signals, improved picture quality and innovations in antenna design are making people revisit a question asked when cable first emerged: “Why pay for TV when TV is free?” Newer technology offerings – like TiVo’s Bolt OTA, Plex and Amazon’s Fire TV Recast – allow consumers to record over-the-air content. This recording capability is empowering viewers to piece together a “cable experience” using subscription-on-demand services and over-the-air options, often at dramatically reduced costs. With subscription-on-demand services providing the breadth of content and over-the-air providing live and local content, viewers who have created their own video bundle do not feel as though they are sacrificing much, if anything. In the coming years, ATSC 3.0 and 5G technology will bring yet another layer of complexity into the video ecosystem. ATSC 3.0 will introduce even stronger signals, making over-the-air more accessible to even more viewers. It will also provide 4K and HDR [high dynamic range] support, appeasing the picture purists. And there will be improved mobile support, giving viewers on-the-go access. ATSC 3.0 will also offer more sophisticated forms of addressability, giving advertisers greater ability to target the demographics they want to reach more easily.
its streaming service in March; Disney has released pricing for its Disney Plus, and WarnerMedia and NBC are expected to release details about their subscription on-demand services later this year. What’s more, advancements in broadcast and cellular technology are improving video delivery outside the traditional television ecosystem. (See sidebar below.) As viewers become increasingly reliant on streaming, traditional television will struggle to assert its value proposition. Many viewers, especially Millennials and Gen Zers, use a multitude of services to access their video content: Netflix, YouTube, Hulu, Instagram, Snapchat, HBO Go, Sling TV, ABC, WWE, ESPN+, the list goes on. They do so in large part because TV and video streaming technology has improved to the point where accessing different video sources is as easy – or, in some cases, easier – than navigating a set-top-box menu. Gone are the days when consumers that wanted to stream content on their sets would have to change HDMI inputs. Today, the majority of services can be accessed in one central location given the widespread app support for streaming boxes and sticks, smart TVs and gaming consoles. On some of the latest models of TVs, even antenna TV shows up as an app, making switching to live TV via an antenna even easier than switching to a cable box that is in another HDMI input. We need to shift the conversation in the video industry so that there’s more of a focus on what made cable so valuable when it came onto the scene: its ability to bring a wealth of content into one, streamlined, aggregated system. With so many services and apps at play, there is more of a need than ever before for a managed experience. But that managed experience needs to take into account all of the changes in viewing behaviors and content demands that the next generation of TV subscribers will be expecting. The question now is who can get there first? Stephanie Wong is director of insights and strategy at Horowitz Research, which provides consumer market research specializing in media content, services and technology. She can be reached at (303) 284-6879 or stephaniew@horowitzresearch.com.
The Financial Manager • July/August 2019 13
WHERE WE GO FROM HERE
T
HE POLITICAL STRATEGIST JAMES
Carville laid the groundwork for Media Finance Focus 2019 during his opening keynote address as he described how many 2020 presidential hopefuls were focused on the past – from President Donald Trump’s “Make America Great Again” rallying cry to Vice President Joe Biden’s interest in returning the country to the state it was in during President Barack Obama’s years in the Oval Office. “I think somebody’s got to offer the country the future,” Carville said. “It seems to me the future is being abandoned. And we’re having some kind of fight about the way the country used to be.” As Carville noted, media businesses are all about figuring out the future. And during the more than 80 sessions over the course of the conference, the past generally was discussed as a jumping-off point in order to understand where various media sectors are headed. The topics ranged far and wide, from sessions on valuations of different types of media to music licensing. Among them were several sessions that shed light on two topics in particular: first, the rise of streaming services and how they are likely to transform as time goes by, and secondly, how advertising dynamics are changing.
STREAMING GROWTH AHEAD
Big changes lie ahead. Streamed services are gaining popularity, and there are some significant issues related to advertising. By JANET STILSON
14 The Financial Manager • July/August 2019
Steve Swad, chief financial officer of Vox Media, noted in his keynote that the overthe-top (OTT, or streaming video) business in the U.S. is now estimated at $60 billion. And the growth projections for streaming are huge. In fact, today more consumers subscribe to streaming services than they do to cable and satellite pay-TV services – 69% vs. 65%, respectively. That’s according to the results of a late 2018/early 2019 Deloitte consumer study, which was discussed in a session on digital trends. This is the first time, in the history of the annual study, that streaming has surpassed pay-TV usage. However, “with all the options and choice, there’s a little bit of friction. People are finding that they have to manage
ANNUAL CONFERENCE ROUNDUP
a lot of different subscriptions in order to find content that they want. And even though streaming services can be cost effective, they can also really add up,” said Jeff Loucks, executive director of the Deloitte Center for Technology, Media and Telecommunications.
or six. My guess is that it will be less than 10,” said Swad in his keynote, speaking of all forms of subscription services, including audio options like Spotify. With expectations like that, “we’re seeing a very heavy investment in a direct relationship with a customer.”
Google and Apple. And I’m on the fence about Roku. It just keeps getting better.” Offenberg was not hopeful about the fate of traditional local media, notwithstanding its ability to deliver market-specific news, weather and traffic reports. “Traffic now comes from Google Maps and Waze. The
A BUNDLING COMEBACK?
“IT SEEMS TO ME THE FUTURE IS BEING ABANDONED. AND WE’RE HAVING SOME KIND OF FIGHT ABOUT THE WAY THE COUNTRY USED TO BE.”
PHOTOS BY LUCY KENNEDY
— JAMES CARVILLE
On average, the Deloitte study showed that people subscribe to three different streaming services. And interestingly, consumers in the lowest income quintile have the same average number of streaming services as those who make $125,000 or more. The biggest reason consumers say they sign up for OTT services is to get access to original programming. Indeed, Loucks cited an FX Networks research report showing that for the first time, there were more original series on streaming services last year than on broadcast TV, 160 vs. 146, respectively. That trend sparks a big question that the next few years may answer: how many streamed services will consumers be willing to subscribe to if the costs for the services rise because of all those original shows? “There’s a belief that we’re not going to have 20 subscriptions. We might have five
Another related phenomenon is at play as well. In his presentation on the future of media, Loyola Marymount University associate professor David Offenberg quoted Jim Barksdale, the former president and CEO of Netscape Communications: “In business, there are two ways to make money. You can bundle, or you can unbundle.” Offenberg noted how cable packages grew to include hundreds of channels over the decades. Then many consumers got sticker shock and, as streaming options emerged, they chose to cut the cord. Instead, consumers started putting together their own ad hoc packages of services that might include optons like CBS All Access, Crunchyroll and Starz. “But we’re at a place where it’s time to re-bundle. Consumers are frustrated,” Offenberg said. “You’ve got different bills coming in at different times of the month. If you want to turn something off because you don’t watch it anymore, you’ve got to remember how the heck to do that.” Offenberg noted that services like Amazon, Apple, YouTube and Hulu are all bundling on a primitive level. And that will become more sophisticated – hopefully at affordable prices. “What will happen will be you’ll have one screen, just like cable, and when you pull up that screen whoever your bundler is will have an algorithm that looks at all your content and then picks six things that it thinks you’ll want to watch.” There may be a button in one corner of the screen to opt in or out of ads, expanding or contracting the content choices accordingly. And there will be one bill, once again. “I expect there will be three dominant bundlers within the next 10 years,” Offenberg said. “You may call them Alexa, Google Voice and Siri. You might call them Amazon,
“WE THINK THERE’S PROBABLY 10 ADDITIONAL STATES THAT ARE ABOUT TO PASS THEIR OWN PRIVACY LAWS. IT’S LIKE A NIGHTMARE, TRYING TO NAVIGATE ALL THESE DIFFERENT REGIMES.” — PATRICK DOLAN, INTERACTIVE ADVERTISING BUREAU
news comes from Twitter,” he said. “Local news is going to get destroyed, which is a shame for our Democracy. Everything is moving online. It’s moving off of linear.” ADVERTISING SHAPE-SHIFTS
Another huge topic of discussion during several panel sessions was advertising. In one focused on digital strategy and disruption, Patrick Dolan, president and COO of the Interactive Advertising Bureau (IAB), referenced a new digital report recently released by his organization and PricewaterhouseCoopers (PwC). “The big news is that the total Internet advertising revenue for 2018 was $107.5 billion. It was up 22% year over year. It’s now The Financial Manager • July/August 2019 15
ANNUAL CONFERENCE ROUNDUP
“[ADVERTISERS] THINK DIGITAL PRODUCTS ARE INTERESTING TO BUY, BUT NONE OF THEM DO WHAT THEY SAY THEY’RE GOING TO DO.” — BILL DAY, MAGID
same digita l-disruption session, Bill Day, a vice president at the research firm Magid, pointed to a study that his firm conducted in first quarter 2019, which surveyed 4,000 advertisers. “Generally, they’re not satisfied with virtually every digital product in the
ANATOMY OF A FRAUD
R
ARELY ARE SESSIONS AT MFM’S ANNUAL CONFERENCE CONFESSIONAL IN NATURE.
But that certainly applied to the keynote delivered this year by Aaron Beam, who talked about his descent into a hellish life after committing fraud. Beam was co-founder and the first CFO of the rehabilitation health-care company HealthSouth. And he helped grow the business into a Fortune 500 business. During his speech, Beam described how he was initially dazzled by HealthSouth’s CEO, Richard Scrushy, falling so completely under his spell that he helped Scrushy cook the books, taking part in one of the largest accounting frauds in U.S. history. After serving time in federal prison, Beam became an author and has given hundreds of speeches about ethical business behavior and how to prevent fraud. He noted that the leaders who are at the center of major frauds, such as HealthSouth or Enron, often have similar traits. “They have bigger-than-life personalities. They get people to follow them because of their charm or intimidation. And they measure success by how much money they accumulate,” Beam said. “Ethics doesn’t “IT TAKES COURAGE TO enter their radar screen.” BE ETHICAL — THE DAYBeam noted that usually the fraudsters have TO-DAY COURAGE TO DO enablers, and that person is usually the CFO. “People who major in accounting are pretty much backroom THE RIGHT THING. IT’S A people. They’re record keepers, and many times the LEARNED BEHAVIOR. AND leader can intimidate these people.” YOU HAVE TO WORK AT IT At the time Beam left HealthSouth in 1997, only EVERY DAY.” six people knew about the problem. But by 2003, hundreds of people were involved. — AARON BEAM “Most frauds start because of some kind of pressure,” Beam said. “I was the CFO of a New York Stock Exchange, Fortune 500 company. And believe me the pressure to deliver earnings was tremendous.” Beam said that his unethical behavior boiled down to a lack of courage. “It takes courage to be ethical – the day-to-day courage to do the right thing. It’s a learned behavior. And you have to work at it every day.”
16 The Financial Manager • July/August 2019
marketplace. They think digital products are interesting to buy, but none of them do what they say they’re going to do,” said Day. On the other hand, consumers aren’t happy with ads either. “They don’t mind advertising when it meets their needs or solves their problems,” Day said. “The problem is when it’s not relevant and it’s intrusive. And it’s maddening to the point that they abandon [a given platform].” He noted that there are lots of high-quality content alternatives that consumers can switch to. In his separate digital media trends session, Deloitte’s Loucks said his company’s research has shown that 66% of those surveyed said they would pay more attention to ads if they were shorter, under 10 seconds. And in his keynote, Vox’s Swad predicted that there will be fewer ads on digital platforms, but they will be more targeted and impactful moving forward. Another key trend pertains to the growing number of regulations that aim to protect consumer privacy. “Our industry is becoming regulated,” said the IAB’s Dolan. “The California Consumer Privacy Act is passed and will be in place next year. And that’s just the beginning. We think there’s probably 10 additional states that are about to pass their own privacy laws. It’s like a nightmare, trying to navigate all these different regimes.” The IAB has come together with the 4A’s (American Association of Advertising Agencies) and the ANA (Association of National Advertisers) to create a national set of privacy standards. “We have to build privacy by design into all our systems and technology. It should be akin to seat belts and air bags,” Dolan said. Janet Stilson is editor of The Financial Manager. She can be reached at (212) 694-0126 or TFMEditor@mediafinance.org.
PHOTOS BY LUCY KENNEDY
larger than broadcast and cable combined and pretty much every media platform that’s out there,” Dolan said. One of the biggest drivers of the growth is video advertising, up 37%, to $16 billion. But 65% of the $107.5 billion – $69 billion – came from mobile, which grew 40% last year. Research from PwC and the IAB also showed that 75% of Internet advertising revenues in last year’s fourth quarter were concentrated in 10 companies. That marked a 3% share increase over the percentage reported in 2017’s fourth quarter. Companies ranked 11th to 25th accounted for 7% of revenues in Q4 2018, a one percentage point decrease from the 8% reported in Q4 2017. Yet advertisers and their agencies aren’t thrilled with digital advertising. In the
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ANNUAL CONFERENCE ROUNDUP
DEFENDING THE REALM With cyberattacks now a matter of “when,” not “if,” the tools needed to protect companies’ assets are growing, as are the lessons.
C
By PATRICIA ANDREWS-KEENAN YBERSECURITY IS NOT JUST AN ISSUE FOR
executives at the top of the corporate hierarchy. As time goes by, the responsibility for fighting cyber threats will extend to every corner of an organization, as well as to outside vendors and partners. The rapid shifts in technology, the growing volume and sophistication of threats, plus the bottom-line impact of cybercrimes require increased scrutiny.
18 The Financial Manager • July/August 2019
During Media Finance Focus 2019, the spotlight was turned on what it takes to combat these cyberattacks now and how big the problem has become. “The cost of cyber breaches is in excess of $600 billion a year globally, with insiders contributing to 46% of the losses,” noted Greg Page, vice president corporate compliance, Tribune Publishing. While Page revealed how his company fought off Continued on page 20
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The Financial Manager • July/August 2019 19
THE PODCASTING EXPLOSION
W
ITH PODCASTING REVENUE AND
STEPHANIE DONOVAN,
advertising opportunities climbing Triton Digital steadily, there’s no wonder a session on podcasting was one of the best attended during Media Finance Focus 2019. Some eye-popping statistics were shared by Stephanie Donovan, senior vice president of publisher development at Triton Digital, a digital audio technology and advertising company. According to Edison Research’s The Podcast Consumer 2019 study: ■■ There are 144 million podcast listeners nationally, representing 51% of the population 12 and older; ■■ Men and Women are almost equal listeners of podcasts: 36% men, 29% JEREMY SINON, Hubbard Radio women; ■■ The majority of podcast listeners, 54%, consider purchasing brands advertised in podcasts; ■■ On average, listeners tune in to seven shows per week. Jay Green, senior vice president of digital strategy and analytics at Cadence 13, said that U.S. podcast advertising revenue is expected to grow by more than 110% by 2020, to $659 million, according to the firm’s FY 2017 Podcast Ad Revenue Study. Hubbard Radio boasts more than 150 shows currently, and that number continues to grow, according to Jeremy Sinon, vice JAY GREEN, president of digital strategy, at the station Cadence 13 group. From April 2018 to April 2019 Hubbard experienced dramatic growth in podcast listenership with its weight-loss show, “Pound This.” It rose by 1,112%, he said. Sinon noted that podcasts helped to reenergize some programs on Hubbard’s AM stations. Among them are podcasts that are retransmissions of shows on its sports station Skor North. Cross promoting and marketing podcasts are essential to their success. And promotion opportunities extend to e-mail marketing, merchandising, social media, video, database targeting and live events, according to Hubbard’s Sinon.
20 The Financial Manager • July/August 2019
are improving faster than defenders,” Weaver said, adding that the time gap can last almost six months. Most hackers today are not seeking to make a political statement. It’s all about financial gain, Weaver noted. But somewhat alarmingly, only 55% of organizations feel they have adequate resources for handling security incidents, according to a KPMG Survey. One of the most important elements in fighting cybercrime is to keep your eyes open in anticipation of threats, Weaver noted. Expect that hacks will happen and have a plan for how to recover when they do. Because attackers are improving their techniques faster than most defenders can respond, it’s important to put in place stronger processes, more technology and better strategy. That trio will be an organization’s best weapon in the fight, according to Weaver. Companies must shift from being reactive to being proactive and resilient, and that means board-level awareness of emerging cyber threats and direct involvement in determining the response, Weaver added. Most company boards will want assurances that the chief information officer and/ or the chief information security officer will know when, and how, to take action when a cyber incident occurs, and that those officers are empowered to do so. It’s also important for executives to assess how cyber threats will impact various aspects of their business and get in front of issues. TOP THREATS & ROADBLOCKS
There are three current cybersecurity trends: extortion-driven attacks, ransomware and targeted phishing. As these threats have escalated, they’ve revealed most organizations’ cyber skills shortages. They’ve also increased the need to automate detection processes using artificial intelligence and security orchestration, automation and response (also known as SOAR). These technologies replace slow, manual analyst intervention with machine-speed decision making. The goal is to get “quicker, better, faster,” according to Weaver. All speakers covering the topic of cybersecurity during the conference referenced state laws that will shortly govern consumer privacy. California’s regulation for Internet-of-things (IoT) devices was cited several times. In September 2018, California Senate and Assembly bills were signed into law requiring all manufacturers of a “connected device” to equip that device with “reasonable” security features as of Jan. 1, 2020. A similar federal law is not
PHOTOS BY LUCY KENNEDY
CYBERATTACKS—Continued from page 18 an extremely damaging cyberattack, Wayne Weaver, a director at KPMG, discussed what companies can do to remain vigilant and focused on identifying and evaluating their vulnerabilities. “There is a growing deficit between how quickly attackers can compromise versus how quickly organizations can detect and respond. In other words, attackers
ANNUAL CONFERENCE ROUNDUP
THE CYBER
'TO DO' LIST H
ERE ARE SOME KEY TAKEAWAYS FROM THE
presentations from KPMG’s Wayne Weaver and Tribune Publishing’s Greg Page. ■■ Focus on awareness, training and accountability; ■■ Look out for both internal and external threats; ■■ Increase the strength of reporting structures; ■■ Invest in the cybersecurity of people, processes and technology; ■■ Leverage systems and tools, testing and monitoring them in the process; ■■ Only invest in technology when there’s a measurable plan; ■■ Attend to the basics first by building the right foundation.
far behind, perhaps within the next three years, Weaver said. In the future, threats from company insiders will be brought into greater focus. Technology improvements will allow visibility into credential abuse. Additionally, organizations will focus much more on the risks posed
by third-party vendors and suppliers. Advanced digital identities and authentication will improve the customer experience, secure data, prevent fraud and engender trust. These include facial scans, biometrics, multi-factor identification and digital wallets. They will control the customer experience and ensure more trust regarding the exchange of information. ANATOMY OF AN ATTACK
“THERE IS A GROWING DEFICIT BETWEEN HOW QUICKLY ATTACKERS CAN COMPROMISE VS. HOW QUICKLY ORGANIZATIONS CAN DETECT AND RESPOND.
Weaver’s overview of hacking trends and protective measures was complemented by Page’s recollections of an actual cyberattack perpetrated on Tribune Publishing. Page shared — WAYNE WEAVER, KPMG information about how staff members maintained operations during the crisis, as well as details about the communications flow both within the company and externally. The ransomware attack targeted Tribune’s critical operations systems and file sharing. That made it imperative for the company to ensure business continuity, stop the spread of the attack and make real-time decisions about pausing operations in certain scenarios so that the infiltration wouldn’t spread any further. Tribune officials learned a few different lessons.
The Financial Manager • July/August 2019 21
ANNUAL CONFERENCE ROUNDUP
“THE COST OF CYBER BREACHES IS IN EXCESS OF $600 BILLION A YEAR GLOBALLY, WITH INSIDERS CONTRIBUTING TO 46% OF THE LOSSES.” — GREG PAGE, TRIBUNE PUBLISHING
tration details that are set forth by the Public Company Accounting Oversight Board is helping with that. “Know what regulations apply and what legal notices are required,” Page advised. In evaluating cyberattacks, it’s important to find out who accessed what and when. Page explained that this requires revisiting record and data retention strategies. Also, expect that employees are using work accounts to access personal applications, leaving companies vulnerable to attacks. Page says that the use of cloud applications and strategy can both strengthen and weaken an organization’s cybersecurity. Protecting an organization with cyber insurance is no longer optional, but it’s crucial that key staff members evaluate present policy protections and other insurance options. Ensuring a comprehensive “belt and suspenders” approach to mitigating cyber risks is among the best practices a company can employ. As both Page and Weaver noted, cybersecurity is all about technology, process and people. In summing up, Page quoted what a famous hacker once said: “The weakest link in the security chain are the people who use and administer your systems.” Patricia Andrews-Keenan, chief strategist of The Tallulah Group, provides public relations services to MFM and BCCA. She may be reached at pkeenan1@comcast.net or (312) 206-2821.
22 The Financial Manager • July/August 2019
WHAT THE FED IS WATCHING
T
HERE WAS MOSTLY GOOD NEWS FOR ATTENDEES OF THE ANNUAL
MFM Conference in a presentation from Adrienne Slack, vice president and regional executive of the Federal Reserve Bank of Atlanta, who is based in New Orleans. She noted that the labor market remains strong, and economic activity has risen at a solid rate. At the same time, job gains have been solid, and the unemployment rate has remained low. However, growth of household spending and business fixed investment slowed in the first quarter. Yet overall inflation and inflation for items other than food and energy have declined and are running below 2% for the past year. What’s more, marketbased measures of inflation compensation have remained low in recent months, with longer-term inflation expectations remaining little changed. In her role at the “CONGRESS HAS GIVEN THE Federal Reserve Bank FEDERAL RESERVE A DUAL of Atlanta, Slack is MANDATE OF PRICE STABILITY responsible for the New Orleans branch’s AND FULL EMPLOYMENT.” board of directors and — ADRIENNE SLACK, the district’s Energy Federal Reserve Bank of Atlanta Advisory Council. She oversees the branch’s economic and financial education programs; advises on regional community and economic development matters; and she provides regional input into the Atlanta Fed’s monetary policy process. Slack likened the economy to a three-legged stool of growth, employment and inflation. One of her most important activities in helping to determine that is listening to reports from businesses and communities in order to understand how they are experiencing the economy. This information is shared with the Federal Reserve Bank of Atlanta president, Raphael Bostic, which ultimately informs his view of the economy with the Federal Open Market Committee. Slack’s work out in the field adds a level of real-time data gathering to a process that relies heavily on modeling scenarios and reviewing historical data, which is a “rearview mirror” perspective. “Congress has given the Federal Reserve a dual mandate of price stability and full employment,” she noted. That maximum unemployment is determined by a host of non-monetary factors, yet the current strong economy has led to record low unemployment. As it relates to price stability, the Federal Open Market Committee (FOMC) has chosen an inflation target of 2%. In outlining the current makeup of the Fed Board, Slack noted that there are currently five members of the board of governors, with two vacancies yet to be filled, and there are 12 Federal Reserve Bank presidents.
PHOTO BY LUCY KENNEDY
Among them: they needed to consider the pros and cons of a “power down” approach (fast decision making from executives at the top of the organization) vs. a methodical remediation process. What’s more, careful and limited communication became critical to managing speculation and maintaining privilege. With that in mind, Tribune utilized the services of lawyers, its public relations team and some limited third-party professionals. As Tribune emerged from the crisis, it began to evaluate the authentication methods of each of its layered financial systems to ensure that audit logs were available. Page said that the blurred lines between cybersecurity processes and Sarbanes-Oxley auditing and financial regulations are starting to clear. The security orches-
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ANNUAL CONFERENCE ROUNDUP
FROM MUSIC TO MEGATRENDS Media Finance Focus 2019 was a three-day affair to remember, as LUCY KENNEDY’S photographic look back makes clear.
Around 500 people flocked to the annual MFM conference this year — and almost 130 of them were newcomers. Those who came to New Orleans for the event had a chance to hear exciting music performances, learn about a vast array of media issues and network with friends.
The Financial Manager • July/August 2019 25
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ANNUAL CONFERENCE ROUNDUP
The Financial Manager • July/August 2019 27
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28 The Financial Manager • July/August 2019
ANNUAL CONFERENCE ROUNDUP HEADER
The Financial Manager • July/August 2019 29
LAST WORD
The Cycle Begins
Do you know if your stations’ FCC inspection files are complete? Heed the requirements or pay the consequences later on. BY NANCY A. ORY
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he Federal Communications Com- in mid-March. At that mission broadcast license renewal time, the commission staff cycle has just started to kick in. asked stations to acknowlApplications for radio stations in edge receipt of the Washington, D.C., Maryland, Virginia correspondence and and West Virginia were due on June 3. The submit informaradio renewal cycle will roll out every other tion about when the month over the next three years, and the licensee planned to television renewal cycle will do the same upload all required starting in June 2020. information. Now is the time to ensure that your There are over 20 different types of instation’s online public inspection file is in formation that are required to appear in the order. The license-renewal application re- online public inspection file. They include quires licensees to certify that all documen- station technical applications, ownership tation required by the FCC reports, equal employment rules has been placed in the Failure to comply opportunity (EEO) reports station’s public inspection with the public and audits, children’s telefile at the appropriate time. vision reports, quarterly inspection file Stations that have not Issues/Programs lists, time properly maintained their requirements will brokerage, shared service files have to disclose on the likely result in and joint sales agreements, renewal application that monetary fines and must-carry and retransitems are missing and/or mission consent elections delay the grant of have been filed after their and political advertising due date. Stations with sig- a license renewal information. nificant file omissions are application. Certain documents are advised to attempt to reautomatically linked to the construct missing information and outline online public inspection file from other steps taken to prevent such problems in the FCC databases (such as biennial ownership future. reports and children’s television reports). Because public inspection files are now However, the station licensee still has an maintained on the FCC’s website, the com- obligation to file the documents in a timely mission’s staff can easily scrutinize the con- manner. More information is available at tent of a station’s file and verify the timing publicfiles.fcc.gov under the “About PIF” of information uploads. Accordingly, it is dropdown menu. essential that the online file be complete The FCC rules require stations to preand that uploads are done on a timely ba- pare a list of programs that have provided sis. What’s more, any deviation from these the station’s most significant treatment of requirements should be accurately disclosed community issues during the preceding in the license renewal application. three-month period, known as “Issues/ProStations should be aware that the FCC grams lists.” The list must include a narrative staff has already been reviewing online describing what issues were given significant public inspection files. Last December it treatment and the programming that prosent warnings to some licensees informing vided this treatment, including the time, them that they have either failed to set up date, duration and title of each program. an online file or that certain material was Failure to prepare the Issues/Programs missing. lists or the failure to include the requisite Follow-up warnings were sent to licensees information in the list is likely to be the
30 The Financial Manager • July/August 2019
biggest pitfall stations encounter with regard to the public inspection file. The FCC views these lists as important because they provide evidence of how a station has served the public in its local listening area. It’s not enough for the Issues/Programs lists to merely report the public service announcements aired by a station or the community events attended by station personnel. Instead, the station should thoughtfully create a list of issues of concern to the local community and then air programming that specifically addresses the list of issues. Lists must be uploaded to the public inspection file by the 10th day of April, July, October and January. The second pitfall stations encounter with regard to the public inspection file is failure to prepare and upload an annual EEO Public File Report, which is required of all station employment units with five or more full-time employees. EEO Public File Reports provide detailed information regarding a station’s hiring and employment practices and supplemental recruitment initiatives during the past year. The public file should include an EEO report for each year of the license term. Be aware that failure to comply with the online public inspection requirements will likely result in monetary fines and could delay the grant of your station’s license renewal application. To avoid such consequences, stations should take the time now to carefully review their online public inspection files and remedy any omissions or incomplete information. Nancy A. Ory is an attorney with Lerman Senter PLLC. She can be reached at (202) 416-6791 or nory@lermansenter.com.
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