NAB Broadcast Leadership Training Program

June 18, 2016

Presentation Outline

• Cord Cutting and Return of OTA Viewing• ATSC 3.0: New Platform, New Services• Next Gen TV Revenue Models• Steps Towards Advanced Alerting• A New Technology Agenda

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Technology

PolicyBusiness

Our Niche:Techno-Political Strategy

Who We Are

Fiona James and John Lawson

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AWARN Alliance Key Signatory

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Americans Return to TV Antennas

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Role of Over-the-Air (OTA) Broadcasting

Trends defy conventional wisdom that OTA television is dying

Cord cutting is growing, led by OTA + broadband

The combined cable, satellite, and telco sectors lost more than 1 million video customers in 2015

The 2015 decline was more than 4x the 2014 decline and marked the third consecutive annual decline (SNL Kagan)

14.7% of US TV household’s (HH)22.5% increase from 2011

22% of African-American HH 83% increase from 2010

25% of Latino HH 23% increase from 2010

(GfK’s Home Technology Monitor 2013 & 2015)

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‘The big growth in over-the-air watching is coming from homes with broadband. Seems like the combination of free-to-air and Netflix is resonating for an increasing number of US consumers.’ – nScreenMedia, 05/2015

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Next Generation Television: New Platform, New Services

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ATSC 3.0: Next Generation OTA Television

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Visually stunning pictures on large-screen televisions with superior reception Access to unlimited viewing of local and national educational and children’s programming via

indoor, mobile, and handheld devices Multiple consumer-friendly features, such as interactivity and personalized audio Integration of broadcast programming with other Internet Protocol (‘IP’)/broadband services Enhanced opportunities for essential public services, including education and public safety Datacasting that will offer a new broadband data pipe into homes Localized, geo-targeted, accessible programming

Source: ATSC 3.0 Petition for Rulemaking to the FCC – signed by AMERICA’S PUBLIC TELEVISION STATIONS; AWARN ALLIANCE; CONSUMER TECHNOLOGY ASSOCIATION; NATIONAL ASSOCIATION OF BROADCASTERS

Single Frequency Network: Denser Coverage Ups the Return

Source: DARBS

SFN combines the ’the big stick’ of TV broadcasting with the ability to reach urban canyons and geo-target services.SFN retransmits/boosts the same signal within the contour, filling in areas of weak signal.

Source: Huffington Post

‘Cellularization’ of Broadcasting

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ATSC 3.0 = All-IP

ATSC 3.0: Commencing February 2017

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ATSC Countries

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Retain Spectrum and Innovate:The Financial Upside

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Pearl Cost and Revenue Study

• ISP Traffic to OTA• Mobile Traffic to OTA

• Subscription Services Capability (e.g. be your own MVPD, radio streaming, etc.)

• Automotive Connectivity

• Targeted Advertising (Demographic & Zoned)

• Programmatic ad sales• Interactive Advertising

• Ultra HD + HDR to enhance viewer experience

• Increase viewership & ad inventory through additional multi-channel capacity and programming

Core Business Enhancements

Advanced Advertising

Wholesaling Data Capacity

New Business Lines &

Ancillary Services

ATSC 3.0 Revenue

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Revenue Summary

Upside: FTI broke out the upside into two tranches: 1) with ATSC 3.0 upgrade only and 2) with SFN deployment .

With ATSC 3.0 Upgrade: Incremental annual revenues that range up to $12.2B1

• Targeted TV Advertising ($2.0 to $4.5B)• OTA Viewership Upside2 ($0.7 to $2.7B)• Datacasting (Up to $2.9B)• D2 Channels ($1.2 to $1.7B)• Radio ($1.0 to $2.1B)

With SFN Deployment: Incremental annual Revenues that range up to $7.4B• Mobile Video ($3.1 to $4.7B)• OTT/MVPD ($0.3 to $2.7B)

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Payback Period 1.58 Years

Payback Period 5.38 Years

Source: Pearl TV/FTI

Market Driven ConsumerTransition

ATSC 3.0 ‘gateway’ devices receive broadcast programming indoors, combine it with broadband to form a hybrid network, and retransmit the combined content via Wi-Fi throughout the home.

Source: ATSC 3.0 Consumer Experience, NAB Show 2016

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Market Transition to ATSC 3.0Public Private Partnerships

Revenue potential for ‘lighthouse’ station

Coordinate market transition to ATSC 3.0 with commercial broadcasters

Plan for shared SFN infrastructure and possible spectrum exchanges for mobile video services

Explore new ventures or leasing to generate revenue for non-commercial mission

On-going leasing potential for VHF mobile carriage on UHF station

Total transition predicted to complete in 7 – 10 years

Advanced Alerting:Rethinking a Familiar Service

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Broadcasters and Civil Defense

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Crisis!

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Cold War Angst

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9/11 and Katrina

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Digital EAS: Senate Hearing 2005

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IPAWS:

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Not This! FEMA department that spearheads public alerting

Integrated Public Alert and Warning System

Steps Toward Advanced Alerting

• IPAWS – Executive Order• WARN Act – Wireless Emergency Alerts

– PBS diversity pathway– Back up power to “harden” PTV stations

• Digital EAS – APTS-FEMA collaboration• Mobile EAS – Federal support but MDTV stalled in marketplace• Renewed urgency in Congress, White House, FCC, FEMA, NWS

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Current FCC Proceedings• Public Notice: Ways To Facilitate Earthquake-related Emergency Alerts - PS Docket

No. 16-32

• NPRM: Amendment Of Part 11 Of The Commission’s Rules Regarding The Emergency Alert System & Wireless Emergency Alerts - PS Docket No. 15-94

• Public Notice: Joint Petition For Rulemaking Of America’s Public Television Stations, The AWARN Alliance, The Consumer Technology Association, And The National Association Of Broadcasters Seeking To Authorize Permissive Use Of The “Next Generation TV” Broadcast Television Standard - GN Docket No. 16-142

• Order: Improving Wireless Emergency Alerts And Community-initiated Alerting - PS Docket No. 15-91 Adopted Nov 2015

• Proposed NPRM: FCC Chairman Proposal To Unlock The Set-top Box: Creating Choice & Innovation

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White House Earthquake Resilience Summit

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The FCC shall submit a report to Congress within 9 months of enactment of this act detailing all regulatory and statutory changes that would be necessary to ensure that earthquake-related emergency alerts using IPAWS and other associated alerting systems can be delivered to and received by the public in fewer than 3 seconds.

— House report language with the FY 2016 Omnibus Appropriations Bill

Shake Alert and a New Federal Commitment

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Not Just the West Coast

A series of earthquakes hit the New Madrid seismic zone of southeastern Missouri, northeastern Arkansas, and adjacent parts of Tennessee and Kentucky, in December 1811 to February 1812. These earthquakes were among the largest to strike North America since European settlement…The area that was strongly shaken by the three main shocks was 2–3 times as large as the strongly shaken area of the 1964 M9.2 Alaskan earthquake, and 10 times as large as that of the 1906 M7.8 San Francisco earthquake.

– U.S. Geologic Survey

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What Problem Are We Trying to Solve?

Cellular Limitations and Fragility

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EAS: Hacking Vulnerability

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• AWARN can deliver geo-targeted, rich media content– Video, storm tracks, plume models, evacuation routes, flood maps,

earthquake early warnings, and AMBER Alerts– Multilingual and accessible

• Reaching millions of consumer devices simultaneously – fixed, mobile, handheld – indoors or out

• Functions even when cell networks overload or the grid goes down• Can “wake up” devices

Watch a 3 minute video about AWARN at www.awarn.org

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A New Technology Agenda

• Harmonize channel repack with ATSC 3.0 conversion

– Use $1.75 billion, 39 month window to upgrade to Next-Gen TV infrastructure

• Plan market-based transition strategies with other broadcasters

• Prepare for ATSC 3.0 next-generation business models

• Embrace next-generation public services, such as AWARN

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ATSC 3.0 = All-IP

NAB Broadcast Leadership Training Program

June 18, 2016