RBR+TVBR 2019 Summer Special Report by RBR+TVBR

THE FACTS OF LIFE

It’s not easy to be a media finance executive in 2019. MFM + BCCA President/CEO Mary M. Collins puts its all in perspective.

13 REGULATION/ MODERNIZATION

What’s the right path for the FCC on media rule changes? Attorney Brad Deutsch has some thoughts you may disagree with.

WORKFORCE OF THE

15 FUTURE

AI can bring greater efficiencies to a media company. How can this be introduced without mass layoffs?

ALL ABOUT

19 BLOCKCHAIN

What exactly is “blockchain,” and how can a broadcast media company benefit from it? We have the answer.

NEXT-GEN TV REVENUES Is ATSC 3.0 the next HD Radio, poised for failure in a world where 5G technology could render it a wasted — and costly — endeavor? Don’t count on it, says Pearl TV Managing Director Anne Schelle.

The Best

Finance Leaders

Radio + Television Business Report STREAMLINE PUBLISHING Chairman: Eric Rhoads Publisher: Deborah Parenti Editor-in-Chief: Adam R Jacobson Director of Operations: April McLynn 331 SE Mizner Blvd. Boca Raton, FL, 33432 Phone: 561-655-8778 www.rbr.com Twitter: @rbrtvbr

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A Salute To Leading Financial Officers Of Broadcast Media Selected by RBR+TVBR

Rich Bressler iHeartMedia

Glenn Krieg Morgan Murphy Media

Marie Tedesco Beasley Media Group

Tom Carter Nexstar Media Group

Kent Nate Bonneville International Corp.

Sam Bush Saga Communications

John Abbot Cumulus Media

Evan Maysr Salem Media Group

James Ryan Gray Television

Lucy Rutishauser Sinclair Broadcast Group

John Drain Hearst Television

Victoria Harker TEGNA

Dave Bestler Hubbard Broadcasting

Marc Manahan Univision Communications

Paul Rahmlow Midwest Communications

The Best Finance Leaders

A spotlight on broadcast media’s financial stewards, according to RBR+TVBR readers RBR+TVBR, the publication focused on the business of broadcast media, is proud to introduce its first-ever Best Finance Leaders list. These honorees have been singled out for their leadership and accomplishments by RBR+TVBR readers, with reader nominations fueling a curated list of leaders produced in association with the Media Finance Management Association (MFM) and BCCA, the media industry’s credit association.

This inaugural list places an important spotlight for the first time on the individuals focused on finance, the stewards behind the plans designed for success — and profits. Strong leadership brings net revenue and net income success. It is the perfect time to recognize The Best Finance Leaders. Presentation of The Best Finance Leaders awards to all recipients is scheduled for the 2019 Media Finance Focus conference in New Orleans. Honorees were scheduled to receive their awards at a May 21 conference luncheon.

JOHN ABBOT

EVP/Treasurer and CFO, Cumulus Media

To say 2018 was a transformative year for radio broadcasting company Cumulus Media would be a bit of an understatement. One year ago, in May 2018, New York-based U.S. Bankruptcy Judge Shelley Chapman signed off on “findings of fact, conclusions of law” and the final order that confirmed Cumulus Media’s Chapter 11 plan SU M M ER 2019 · RB R .C O M · 3

of reorganization. This put the wheels in motion on a plan that eliminated half of the radio broadcasting company’s $2 billion in debt, and started a new chapter for Cumulus. As of April 8, Cumulus shares were trading at $18.41. A 1-year target estimate of $23.50 is in place. The market cap for the company stands at $306.5 million. Much of where Cumulus is today is thanks to an executive team comprising CEO Mary Berner and the company’s top financial executive, John Abbot. With their leadership, agreements to acquire WKQX-FM and WLUP-FM in Chicago from the Randy Michaels-led Merlin Media were scrapped, citing the stations’ shrinking in value from when a $50 million deal had originally been struck. But it is increasingly positive quarterly earnings that likely led RBR+TVBR readers to single out Abbot. Abbot has been with Cumulus since 2016 and was previously EVP/ CFO of Telx Holdings, a provider of connectivity, co-location and cloud services in the data center industry.

DAVE BESTLER

CFO, Hubbard Broadcasting

In August 1989, Dave Bestler took his first job in the radio industry, becoming an Assistant Controller at CBS Radio’s WCCO-AM in Minneapolis. He’d been a senior accountant at Ernst & Young, and was now on his way to a 30-year career in media finance management. By 1992, Bestler was Controller for CBS Radio and Television in the Twin Cities, a role he held for five years. He then turned to sales, becoming NSM for WCCO-AM and WLTE-FM in Minneapolis-St. Paul. Bestler would exit CBS Radio in 2002, taking a job in sales at Cox Radio’s Louisville stations, where he’d rise to Director of Sales.

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In 2004, Bestler joined Hubbard Broadcasting, taking the post of VP/GM for its flagship FM, KSTP “KS95” in Minneapolis. In May 2011, he earned a promotion — to EVP/CFO, a role he holds today.

Since returning to the Twin Cities in 2004, Bestler has been active in the community, becoming a member of the Children’s Cancer Research Fund — one of the charities the KS95 for Kids Radiothon supports, along with Gillette Children’s Hospital. He is also on the board of directors for Corner House Minnesota and the Minnesota Broadcasters Association.

RICH BRESSLER

President/COO and CFO, iHeartMedia

Over the last year, much focus has been placed on two big radio broadcasting companies that suffered from what many indignantly said were “debt bombs.” With high leverage and a need for a resolution, iHeartMedia voluntarily elected to become a debtor-inpossession, and start anew as a reconstituted company. As of press time, iHeart was well on its way to emerging from bankruptcy, with an initial stock offering in the works. By the time you read this, iHeart is expected to be publicly trading its Class A shares under a new ticker symbol, with its “stub” of publicly traded stock on the highly volatile OTC Pink marketplace a part of iHeart’s past. Much of iHeart’s efforts to enter the second half of 2019 with a fresh slate are thanks to President/COO and CFO Rich Bressler, who was Managing Director at Thomas H. Lee Partners before coming on board at iHeart. Before that role, Bressler served as Sr. EVP/CFO of Viacom Inc., where he managed all strategic, financial, business development and technology functions. Bressler has also been EVP/ CFO of Time Warner Inc. And it turns out Bressler and Hubbard’s Dave Bestler have more in common than similar-sounding surnames: Bressler was a partner at Ernst & Young before joining Time Warner.

SAM BUSH

SVP/Treasurer and CFO, Saga Communications

As RBR+TVBR went to press, Bush was traveling overseas. Today, he’s one week removed from releasing Saga’s Q1 2019 financial

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results as the Media Finance Focus conference gets underway in New Orleans. Bush is quite familiar with the event. From 2002-2010, he served as Chairman of the Board of the Media Financial Management Association, and he co-chaired MFM’s national convention for two years. That is largely thanks to his longtime role at Saga Communications, which owns and/ or operates 113 radio stations across the U.S. He’s been in his current post since September 1997, when he joined Saga following a nine-year run as a VP of AT&T Capital Corporation’s Media Finance Group, which provided senior debt financing to broadcasting and telecommunications companies.

TOM CARTER

JOHN J. DRAIN

CFO, Hearst Television

In October 2010, Hearst welcomed John Drain as its SVP/Finance. Today, he oversees all accounting, finance, IT and HR operations for Hearst’s 26-station TV group; he added CFO duties in 2016. Drain came on board after serving as acting COO of Ultimark Products LLC and, before that, as the seven-year SVP of Finance and Administration at Comcast Spotlight. While at Spotlight, Drain led all finance, human resources and legal operations and served as a key contributor to Spotlight’s expansion of market interconnects, strategic acquisitions and joint venture investments. Earlier in his career, he’d been CFO of the pioneering One-on-One Sports Radio Network, which became the Sporting News Radio Network in 2001 following its purchase by Vulcan Ventures. Drain also served as CFO of Hughes Broadcasting Partners from 1991-1995, overseeing KUTV-TV in Salt Lake City and WOKR-TV in Rochester, N.Y.

EVP/CFO, Nexstar Media Group

In August 2009, Tom Carter joined a broadcast television company with growth in its long-term sights. Today, Carter is the lead financial officer at Nexstar, an entity that is poised to complete its merger with Tribune Broadcasting. Carter played a key role in this deal — one that wasn’t supposed to happen, as Tribune and Sinclair were originally planning a wedding.

The Tribune deal follows the January 2017 closing of Nexstar’s merger with Media General, and has excited shareholders. As of April 9, shares were just below $112 and a 1-year target price of $119 was in place. At Nexstar, Carter has responsibility for all internal and external financial reporting, oversight of internal audit, compliance and controls and investor relations, and assists in strategic planning, business development, mergers and acquisitions. From 1985 until his 2009 jump to Nexstar, Carter was the Managing Director of Media Telecom Corporate Investment Banking at Banc of America Securities. In this position, he acted as the senior banker responsible for delivering bank products and services including M&A, private and public equity, high-yield debt, fixed income derivatives, syndicated financial products and treasury management for selected clients across the broadcasting, cable, publishing and media industries — including Nexstar. Carter began his banking career in 1980, serving for five years in various roles in Corporate and International Banking at a predecessor to JPMorgan Chase.

Broadcasters need to remain vigilant in leveraging the multitude of platforms available, both digital and linear, to deepen their unique connection with local viewers and local advertisers. — John Drain, Hearst Television

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Broadcast Media’s Facts of Life There’s a sitcom from the 1980s with a theme song that starts off, “You take the good, you take the bad, you take them both and then you have…” In 2019, an appropriate answer could be “the radio and television business.” Just ask Davis Hebert, Director and Senior High Yield Analyst for Wells Fargo Securities. Speaking March 7 at the MFM CFO Summit in Fort Lauderdale, Fla., Hebert summarized his view of broadcast media’s financial health and forecast by noting that there’s some good stuff, there’s some bad stuff … and there’s some ugly stuff. Mary M. Collins, President/CEO of the Media Finance Management Association and BCCA, the media industry’s credit association, recalls how Hebert contrasted sound corporate earnings from many media companies with emerging market woes and a widening Federal deficit. The ugly? White House turnover, and elevated geopolitical risks — not exactly things a media finance leader can control. But it puts the key money men and women in the C-Suite on alert that external forces could impact how they envision the next 12 months will look for their company.

STRENGTH AMID DISRUPTION Collins points to record advertising revenue of $213 billion in 2019, according to MAGNA Global, as proof that broadcast media still commands significant dollars from CMOs and media buyers. At the same time, digital disruption is a concern with no clear-cut remedy to employ. Mobile is driving ad growth, and Collins points to this “duopoly called Google and Facebook” as existential threats television and radio may battle for years. Meanwhile, there are other worries media finance leaders have on their minds. Automotive unit sales are tapering off. Consumer packaged goods companies are cutting costs. Retailers that advertise on broadcast media are impacted by Amazon. Throw in interest rate pressure — although not as great as it has been since the start of the Trump administration — and media industry consolidation, and one may wonder if exiting the media and

entertainment sector isn’t a great idea. “It is a lot,” says Collins. Perhaps the biggest eyebrow-raising worry is an inverted price yield — early signs that a recession could arrive in mid to late 2020. All of these things have the potential to directly impact broadcast media companies. But there are positives to be had, along with further growth opportunities. The 59th annual Media Finance Focus, held May 20-22, 2019 in New Orleans, serves as the industry’s key gathering place to discuss these topics — and bring key takeaways back home to serve as the ingredients for an action plan designed to keep revenue flowing. Two of the many topics on the agenda that stand out for Collins are the nextgen broadcast TV standard, ATSC 3.0, and programmatic advertising growth. “There are lots of potential opportunities, but a lot of decisions are still to be made as this technology won’t be in everyone’s homes overnight,” Collins says. “So … are you in ATSC 1.0 or ATSC 3.0? Are you hosting other ATSC 1.0 signals? Who is buying the equipment needed for ATSC 3.0, and what equipment do you need?” A discussion of ATSC 3.0 revenue and expense implications appears in this issue, with Pearl TV Managing Director Anne Schelle. On the subject of programmatic, Collins says, “Advertisers are feeling that it is not as beneficial as it could be.” Why? Because, she says, it does not have as much inventory as it could boast. Not scared yet? How about thoughts from Loyola Marymount University finance professor David Offenberg, who theorizes that three major competitors are typically what various industries end up with. With eyes on Washington, D.C., and hoped-for deregulation on the lips of many media industry C-Suiters, are we on the precipice of a major shrink-wrapped future? Don’t count on it just yet, because the digital darlings that have sucked away many an advertiser and consumer are in danger of a big bubble burst. “There could be a shakedown for OTT players,” Collins says, noting that the industry can’t support them all, especially as Apple enters the fray. With more than 200 over-the-top entities in the U.S. and subscription fatigue growing, broadcast TV could benefit if it plays its cards correctly. That’s because the long-term promise of

targeted ads to specific households — an ability cable networks have had for a while — is being universally cheered.

INCORPORATING TOP TECH TOOLS From new in-studio technology to ways to deliver audio and video programming, investment in new tools and software is essential for the continued relevance of broadcast media to U.S. consumers. Radio companies have responded, in particular with smart speaker skills. This has helped radio rather than allowing smart speakers to cut into radio consumption, as some believe they are curtailing TV viewership and even gaming. Meanwhile, technology is poised to bring back-office efficiencies and cost savings — and changes in the complexion of the corporate office staff. This is discussed in this issue by Karlie Humprheys of the Los Angeles office of PwC, as the “workforce of the future” for media and entertainment companies is very much that of the present for other industries. The key driver here: AI, and robotic process automation. “Instead of an entry level finance person taking data out of one program and reformatting it for another program, if it is the same data, you can write a little robotic process that pulls the data and puts it into the report you want,” Collins says. “You can now have that person doing something else that adds more value to the company.”

SALES EVOLUTION This edition of Radio + Television Business Report also features a discussion with key Washington, D.C., attorneys, who share some of the big topics broadcasters are inquiring about. One thing on the minds of radio station owners and management is CBD advertising — and spots involving cannabis. Further, sports gambling and adult novelties are categories of increased interest, with many wondering how far they can go without running afoul of decency laws and regulations that prohibit advertising of such goods. Over 2 1/2 days in New Orleans, radio and television industry financial leaders will have the opportunity to digest, suggest and, ultimately, do what they believe is best for their companies’ future. SU M M ER 2019 · RB R .C O M · 9

The Best Finance Leaders CONTINUED FROM PAGE 7

Speaking of the challenges and promises of being in broadcast TV today, Drain tells RBR+TVBR, “Digital content and advertising solutions continue to rapidly progress. It’s important that these evolving platforms and solutions are properly resourced and contextualized for content consumers and advertisers. Broadcasters need to remain vigilant in leveraging the multitude of platforms available, both digital and linear, to deepen their unique connection with local viewers and local advertisers.”

VICTORIA HARKER EVP/CFO, TEGNA

As the head of finance for a major media company, what is one of the biggest things on Victoria Harker’s mind as media companies like TEGNA strive to evolve smartly as digital “solutions” continue to grab audience and advertising dollars? “It is paramount that we diversify our revenue streams and capture a greater share of marketing and advertising dollars beyond traditional linear broadcasting,” Harker says, in recognition of her honor as one of The Best Finance Leaders according to RBR+TVBR readers. “Through TEGNA Marketing Solutions, our suite of products for clients that includes OTT ad network Premion, we are able to expand our client and consumer base, capture revenue beyond our station footprint and bring in new audiences and ad dollars. The continued growth of less cyclical, profitable businesses enhances our ability to create shareholder value in the future.” Harker has been at the company formerly known as Gannett Co. Inc. since July 2012. She was previously CFO and President of Global Business Services for the AES Corporation, a global power company. From November 2002-January 2006, she was CFO of MCI Group.

GLENN KRIEG

Treasurer/CFO, Morgan Murphy Media Morgan Murphy Media has been family-owned and -operated since its founding in 1890. While many in the radio industry are familiar with its

group of stations in Spokane, the company is actually based in Madison, Wisc., where it owns flagship CBS affiliate WISC-3 and Madison Magazine, in addition to digital marketing agency Phase 3 Digital. This diverse mix of media properties is testament to Morgan Murphy Media’s mission to retain its vitality, its commitment to the local communities it serves, and its commitment to remain familyowned and -operated. Krieg has served as CFO of Morgan Murphy Media since 1997. Before that, Krieg was in assurance, tax and consulting at Grant Thornton LLP for 18 years. On the philanthropic side, Krieg serves on the board of directors for Family Service Madison, a role he has held for nearly 22 years.

MARC MANAHAN

SVP/CFO, Univision Communications

“Marc is a one-of-a-kind CFO.” That’s what one RBR+TVBR reader said about Marc Manahan in making his nomination for Univision’s lead financial officer. “He partners with all the groups he supports,” this reader said. “Most of all, he is not an obstacle. He helps to get things done. He believes in the business and is a cheerleader for the Univision Radio and TV Group. Marc is easy to talk to, communicates well and has put together an outstanding team. He is a huge asset to Univision and has my support and the support of so many he works with at Univision.” Manahan has been with Univision for 18 1/2 years, and first joined the company’s New York offices as Director of Finance in November 2000. For eight years prior, he was a Senior Manager at Arthur Andersen. CONTINUED ON PAGE 16 S U M M E R 2 0 1 9 · R B R . C O M · 11

Regulation and Modernization Some 23 years ago, the Telecommunications Act of 1996, signed into law by President Clinton, had a profound effect on the state of the radio broadcasting industry. Rapid consolidation was seen, and bemoaned by some. Others cheered, as it jump-started an industry that was financially plagued by an early-1990s recession. Today, radio and television broadcasters could be poised to enter a new wave of industry consolidation — with TV already experiencing the fruits of rule “modernization” at the FCC under Chairman Ajit Pai. For Garvey Schubert Barer principal and managing director Brad Deutsch, obvious things stick out for media finance leaders who may wonder what Washington’s top communications attorneys are discussing and hearing around town.

First and foremost is the commencement of the FCC’s 2018 Quadrennial Review of Media Ownership Rules. This has teed up ownership issues and the question of whether that will open up new markets, leading to increased efficiencies, Deutsch says. For Deutsch, something stands out among the proposed changes media deregulation may bring. “The thing that is most interesting to me is, on the radio side, the NAB proposal that in markets smaller than No. 75, they are pushing for no ownership restrictions,” he says. “Everybody is competing in a postinternet world, a world that is changing every day.” For radio broadcasters, all are operating in a world created in 1996 — a world where digital competitors weren’t even thought of. With radio companies in smaller markets competing for ad dollars just as much as streaming audio pioneer Pandora, “the only way that radio as a platform can operate profitably is that you allow them to own all of the stations,” Deutsch says of the NAB plan for ownership rules in markets ranked

No. 75 and lower. He’s very skeptical that the NAB’s proposal will succeed in a rulemaking proceeding. “I’m curious if the logic of that holds up, based on market distinction,” he says. “Why only small markets?” In Deutsch’s view, owners in large markets are just as affected by local digital media as the smaller markets. He asks, “Why does that logic not lead you to deregulate in the larger markets as well?” As such, the FCC will have a difficult time getting regulations written with such a market distinction to stand scrutiny. “How do you write it?” he asks. “We are all competing for share of ear beyond radio.”

REGULATORY COST CONTROL For GSB attorney Deutsch, one other concern of key interest to the CFO or top financial leader at a media company is,

Congrats

and Thank You Glenn from your family at

You continue to make our business better and better.

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surprisingly, what keeps D.C.’s law firms profitable. The “unanticipated cost of regulation” is a problem, with respect to FCC complaints. “At the end of the day, in all likelihood, the penalty that is imposed pales to the penalty of the process,” Deutsch notes. “A $20,000 penalty? That’s nothing! How much do you have to pay lawyers like me to negotiate that penalty? Then there is the putting in place and administering of a compliance plan, which pales to the cost of the penalty. Again, the penalty is the process, and you don’t want to get stuck in the process — or get the door even opened. You want to mitigate the risk of having a complaint filed against you from the get-go.”

LEGALIZED, AND READY FOR ADS Another hot topic for Deutsch is cannabis advertising. In fact, Deutsch is a member of Garvey Schubert Barer’s Cannabis Industry Group, which sees him counsel businesses, investors and government entities on what’s permissible or prohibited. It’s not easy, given the tangle of state and local regulations and Federal laws that could conflict about what’s allowed. What can radio or TV do? “It really depends on how risk-averse

you are,” he says. “Obviously, marijuana remains illegal under Federal law. There is even a part of the Controlled Substances Act that talks about advertising for controlled substances and that being illegal as well.” From a legal perspective, it’s pretty safe with respect to general-issue advertising. Say there’s a group that wants to try to influence the Federal government to legalize marijuana. Airing that ad is just fine. “The subject matter would come down to a station,” Deutsch says. “In states where it is legalized, make sure you are in compliance with advertising restrictions for Federal and state.” That said, just as you have a cannabis industry growing in states that have legalized marijuana despite its prohibition by Federal government, there is a very good argument to be made when an advertiser proposes ads that are compliant with that state’s advertising restrictions. “On the legal front, it is not a big risk to give strong consideration to take that advertising,” Deutsch says. But are TV viewers or radio listeners ready for such ads? Deutsch was posed with a very realistic scenario: In Vancouver, Wash., Main Street Marijuana operates as the first recreational cannabis vendor in the greater Portland, Ore., area.

Washington state laws differ from those in Oregon. Therefore, what can a media company in the market do, if anything? Does it come down to the city of license for the station, with iHeartRadio’s Classic Rock KFBW-FM and Entercom’s Sports KMTT-AM, licensed to Vancouver, ripe for cannabis ads — even though its primary market is south of the Columbia River? “That issue has some history with respect to casino and lottery advertising,” Deutsch notes, adding that it is not a matter of a DMA, but where the station’s service contour is. “Are you reaching viewers or listeners in other states? You have to do a careful analysis.” For Deutsch, cannabis advertising is such a hot topic that he thinks marijuana legalization on a Federal level is ripe for discussion. “In terms of hot topics, not only will this be an issue on the national agenda, it is going to come up again in a big way — and it has nothing to do with radio and TV,” he says. “Critical mass is there already and we are holding on to some pretty antiquated policies. “I think our national attitude toward marijuana is so steeped in history that if it were discovered tomorrow, it would be a whole different thing. Why do we accept alcohol and not marijuana?”

Congratulations to all of the RBR+TVBR Best Finance Leaders

Your recognition is very well deserved. We salute your hard work, dedication and the important contributions you make to the media industry.

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Cost Efficiencies … at What Cost? When people think about robotics, few think of radio stations. For a TV station, robotics could involve the remote control of studio cameras, a technological advance seen across many small markets. But what can AI — artificial intelligence — bring to the back-office tasks? It is that very subject that is key to a discussion on the media and entertainment industry’s workforce of the future. In fact, it is a conversation that could involve the workforce of today, depending on the type of business. “What is the workforce of the future? It is really a shift in the operating model,” says Karlie Humphreys, a Los Angeles-based Director at PwC. How AI impacts finance and a media company’s operating model is one of Humphreys’ specialty areas. And she’s finding that broadcast media and much of the entertainment business — including Hollywood’s biggest employers — are a bit behind the curve compared to other industries. As Humphreys sees it, the finance process, the technology used across that process, and the roles and responsibilities of the people involved are key to long-term expense improvements at radio and television. Staffing size, and where the back-office staff is located, are integral to understanding the workforce of the future. “We have to think about process mining or AI or blockchain to automate some of the processes seen today,” Humphreys says. The benefit to the company is better business insight and deeper analytics, with workers shifting their focus away from mundane tasks and becoming more valued in their respective organizations. How should a media company build a workforce that is capable and agile, one that can meet the needs of a company — with reduced costs? Workforce reduction is certainly a thought. But mass layoffs would be highly unwise. “Be careful on what roles you’re talking about,” Humphreys warns. “Financial Planning and Analysis (FP&A) and Controller

roles will be less of an automated-activities role. Functional tasks, like paying vendors … those types of activities can be automated using robotics.”

UPSCALE, DOWNSIZE AI that is responsible for overseeing the company’s transactional activities while digitally upscaling staff so they can do more business analytics activities — that is what Humphreys foresees for broadcast media companies. Does that mean that all staff will have the skill set to do more analytic, strategic roles? Not necessarily, she says. This puts the onus on the employer to have individuals on board who have an understanding of data architecture. “This is hugely important,” she notes. Predictive analytics? Absolutely, she adds. This will put the media and entertainment sector on par with many of its advertising clients. From an industry perspective, media and entertainment companies are definitely behind the curve in comparison to consumer packaged goods (CPG) or manufacturing, Humphreys says. “You need standard processes that are streamlined and have to be repeatable.” The question now facing broadcasters: “How much do you want to invest in your processes?” Could M+E companies outsource their back-office finance functions, or put the activities in a shared-services center in a lower-cost organization? “The reality is that a tool can be licensed at a far more favorable cost than outsourcing,” Humphreys says. “It just depends on the tool.” That’s why it is more common to see a data scientist or engineer sit in a “Center of Excellence” under the C-Suite’s watch. The reason is simple for Humphreys: it brings

the data back in-house and brings responsibility inside the company. For those less tech-savvy or perhaps in mom-and-pop operations, what exactly could robotics provide? For one, a standard process such as invoicing within the Accounts Payable function could be free of a fully dedicated human. “You can set up a robot to do basic tasks — including a journal entry,” Humphreys says. “Anything you can build a rule against, you can build a robot to do.”

You can set up a robot to do basic tasks — including a journal entry. Anything you can build a rule against, you can build a robot to do. — Karlie Humphreys

Validation checks, also a rules-based process, can come under AI. What about talent vs. automation? “I am not saying that you take all of the human intervention away,” Humphreys says with care. “You can take all of those nonvalue-added activities because there are realities where individuals are doing manual tasks and do not require those costs to be spent. But there are roles that do require human interaction, and that goes across broadcasting, and finance, and planning and analysis.”

THREE KEYS FOR THE CFO What are the three biggest things CFOs need to consider about the workforce of the future? Working with studios, PwC’s Karlie Humphreys can say that when she talks with clients today, three things stand out. • Business partnering — “They need to focus on establish on efficient, agile and scalable” finance services. • Technology analytics and digital tools, with the CFO being the leader in the organization in terms of analytic capabilities. • Investing in the right talent — “Are they digitally literate to compete in the marketplace?”

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The Best Finance Leaders CONTINUED FROM PAGE 11 With C-Suite level change seen in the last year at Univision, Manahan’s tenure is certainly worth noting. Speaking to RBR+TVBR, he talked about his long-term commitment to making the company a leader in U.S. Hispanic media. “Focusing on investments that are part of our core business allows us to offer clients creative solutions that use the power of digital analytics, coupled with the mass reach of our stations,” he said. “We are focused on delivering the best content experience for Hispanic America across all platforms, which includes investing in digital solutions to engage our existing audience, and on attracting new audiences that can also be monetized.”

EVAN MASYR

EVP/CFO, Salem Media Group

“Evan has provided a steady hand as Salem grew over the years,” one RBR+TVBR reader said of Salem’s Chief Financial Officer, Evan Masyr. “He is a can-do person and will try to find a

way to accomplish the company’s goals within the framework of accepted practices.” At the station level, Masyr “translates the financial information that a GM needs into functional actions. He helps the company, as well as management, achieve their goals.” Masyr has been with Camarillo, Calif.-based Salem since February 2000, handling the finances for a media company known by many for its Christian talk and teaching and Contemporary Christian radio stations, in addition to a group of conservative Talk stations branded as “The Truth.” But Salem also has a publishing arm, making it a multimedia player in the media space. Masyr previously spent 6 1/2 years as a Manager at PwC. Asked by RBR+TVBR to share the biggest things on his mind as media companies strive to evolve smartly while digital “solutions” continue to grab audience and advertising dollars, Masyr said, “I believe it is imperative for all broadcasters to be in digital. Our listeners are there, and we need to be wherever they are, providing the content they want. In addition to using our own digital assets, we need to move beyond the walls of the stations and provide advertisers greater reach and access. This must be done, however, in a cost-effective manner, which requires significant planning to be profitable.”

KENT NATE

SVP/CFO, Bonneville International Corp.

Kent Nate has been an active member of the Bonneville family since the last weeks of 1998, when he was appointed VP/Controller — a role he held for more than a decade. In 2009, he took the reins as VP/CFO of KSL-5 in Salt Lake City, the flagship TV station for Bonneville. Then, in May 2011, Nate ascended to his current role. Prior to joining Bonneville, Nate served as CFO of Covenant Communications, President of Hiller Industries, and as Director of Finance and Operations for the U.S. Ski Team. He began his career in public accounting with Arthur Andersen & Co.

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Treasure Chest Advertising Company and, from 1988-1992, in various treasury positions with Laura Ashley Inc. and the Black and Decker Corporation. Baltimore is home for Rutishauser, who is a Towson University graduate and the holder of an MBA from the University of Baltimore.

JAMES RYAN

EVP/CFO, Gray Television

PAUL RAHMLOW

CFO and Secretary/Treasurer, Midwest Communications

Paul Rahmlow serves as the Chief Financial Officer of a company that owns 75 radio stations. He joined Midwest Communications in 1999 and has been integrally involved in its expansion into additional radio markets over the past 19 years. Before joining Midwest, Rahmlow held senior accounting positions at River Valley Bank and the Wipfli CPA accounting and consulting firm. Rahmlow began his career with entry level positions at E&Y and the tax department of small MVPD TDS Telecommunications, an ACA Connects member. Midwest Communications is owned by Duke Wright and his family and employs over 700 individuals. Among the newest radio stations in the Midwest Communications family are WIRL-AM, WMBD-AM, WPBG-FM, WSWT-FM, WNGY-FM & WXCL-FM, all in Peoria, Ill. In a deal brokered by Kalil & Co., Midwest in January agreed to purchase the stations from Alpha Media. Wright, who serves as Midwest’s President/CEO, said, “The first time my wife and I visited Peoria was to visit son Michael, enrolled at Bradley University. We were most impressed with the city and its radio stations. My thought was that here was a market that would probably nicely fit into the Midwest Communications radio group. “Many years later, when we learned that an acquisition of the market-leading Alpha stations was possible, we did our due diligence and found that the Alpha stations fit our business plan perfectly. The stations represented a market-leading operation in terms of staff, winning programming, technical facilities and balance sheet. We look forward to working together with the Peoria staff to continue to provide excellent radio service to Peoria and the surrounding area.”

“I prefer to stay under the radar and off the grid as much as possible,” says James Ryan, who would much rather put a focus on Gray’s growth than on his own efforts at the television broadcasting company. Ryan joined Gray in October 1998 following the company’s acquisition of Busse Broadcasting Corporation, where he served as CFO and worked in various positions for the previous 19 years. Ryan has been an SVP at Gray since 2002. Gray is a bit of a different company than it was when Ryan joined it. Much of the company’s evolution transpired over the last 24 months. But a 10-year review of Gray’s stock performance suggests Ryan has had a principal role in much of the company’s long-term growth plans. A decade ago, Gray Television‘s shares were in a stupendous free fall. By the start of 2009, GTN had lost 95.6% of its value compared to the start of 2008. With a mortgage crisis brewing and the Great Recession rearing its ugly head, Gray’s ad revenues suffered. The company’s leverage from the purchase of WNDU-TV in South Bend, Ind., in 2006, and its 2005 acquisitions of stations in Grand Junction, Colo.; Huntington, W. Va.; and Albany, Ga.; compounded the situation. This triggered a severe meltdown for GTN shares. Fast-forward to November 2012. With Kevin Latek on board as the new general counsel, new HD stations arrived in such markets as Panama City Beach, Fla., and Harrisonburg, Va. By 2013, Gray was a buyer again, snapping up stations in Lincoln, Neb.; Dothan, Ala.; Laredo, Tex.; and in Casper and Cheyenne, Wyo. In January 2019, Gray completed its merger with Raycom Media, cementing the company’s continued growth. As this edition went to press, Gray’s stock sat at a record-high $23.04.

LUCY RUTISHAUSER

SVP/CFO, Sinclair Broadcast Group

Lucy Rutishauser first joined Sinclair in 1998, when she became Assistant Treasurer. She then rose through the corporate financial ranks at the media company, becoming VP/Corporate Finance and Treasurer in November 2002 and, in December 2013, adding SVP duties. In January 2017, Rutishauser ascended to the roles of SVP/CFO and Treasurer, and in March 2018 shed her Treasurer duties. Previous roles include serving as the Assistant Treasurer for

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MARIE TEDESCO

CFO, Beasley Broadcast Group

Of all of the honorees featured in RBR+TVBR’s Best Finance Leaders list, Tedesco stands out as one of three female leaders — and the lone woman representing a radio broadcasting company. That said, Tedesco received a bevy of nominations from across the radio industry — and from individuals who work outside of the industry, such as an IT analyst at Carnival Cruise Lines in Miami. “She’s completely buttoned-up and the best in the industry,” said another RBR+TVBR reader. Meanwhile, Beasley employees were not shy in saluting one of their own. Said another reader, “She is results-driven, with tremendous business acumen. We adore her!” Tina Murley, Director of Sales for Beasley’s Boston station group, added, “Marie is highly collaborative and an excellent communicator. As a Director of Sales, it is refreshing to be able to have honest dialogue with your CFO. This dialogue allows us to do a better job with both the top and bottom lines.” Tedesco has been with Beasley since September 1991, when she was appointed VP/Finance. ABOUT RBR+TVBR’s BEST FINANCE LEADERS: This inaugural Honor Roll is produced from RBR+TVBR reader nominations, which were gathered in March 2019. Individuals are represented equally, in alphabetical order, to demonstrate each honoree’s contributions to the industry, rather than by ranking. © 2019 Streamline Publishing.

What Blockchain Can Do for You As the workforce of the future brings AI and new technology to the back office, much of corporate America has warmed to the advantages that come with blockchain. Chances are you’ve heard of it. But what exactly is it, and how can a broadcast media company benefit from it? The definition of the word “blockchain” is “a system in which a record of transactions made in Bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.” Are those in your C-Suite appearing as deer in headlights?

Perhaps Richard Taub, Managing Director of Pequan Group, can help. Taub led digital and broadcast client audits for five years at Media Audits International and from November 2010-June 2013 was CFO of Hispanic market educational media operation Vme Media. “There are a lot more eloquent lines, but my summation is that blockchain is a protocol to more efficiently track and distribute intangible goods or services,” he says, before pausing. He wants to put some flexibility on the word “intangible.” “It is the ledger that tracks them,” he adds. Taub also wants those unfamiliar with blockchain to take another look at the official definition, as it appears above: blockchain is not Bitcoin. Rather, Bitcoin uses blockchain technology. Still don’t get it? Taub suggests you do a Google search for Walmart’s blockchain. They’ve created an efficient way of look-

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Congratulations Marie Tedesco Chief Financial Officer Beasley Media Group

Named among the Best Finance Leaders Broadcast Media

We salute your outstanding leadership, achievements and commitment to the radio industry.

64 STATIONS

15 MARKETS

19 MILLION WEEKLY CONSUMERS

r , d e .

ing at the supply of vegetables, going from farm to store. “They can track exactly where that batch of vegetables can come from,” he says. “A batch is tagged and automatically logged, so there is no reconciliation and tracking needed.” That’s great should there be an incident where a batch of bad veggies causes an outbreak of E-coli or another medical threat. “It can now go from three weeks to two minutes to see where bad spinach had come from,” Taub says. Similarly, shipping has become more trackable, with real-time data on where goods can be at any time, and at any place. Who was the last person to sign off on the container? It’s now known, and “instantly clear and transparent,” Taub notes. But what does this have to do with running a group of radio and/or TV stations? That’s where Andrew Forman, a Performance Improvement Manager at Ernst & Young, can help. “What blockchain technology is really good at is a distributed database, so we can all look at a transaction,” he says. Then, a piece of content can be “tokenized.” This could be particularly useful with a license agreement, or with media space and media time. Forman believes blockchain is also beneficial for those things “that we can move between a business network in unique and interesting ways.” At E&Y, Forman put together a royalty solution for Microsoft to best manage payments tied to its Xbox product. A video game publisher typically offers a company like Microsoft a license. As the creator, the publisher gets a royalty for any of its products sold in the Xbox store. Forman says, “You can tokenize the software license to that content, with the percentage of royalties on that sale executable on blockchain.” Once the end user makes a payment, it can then go to publishers and suppliers in seamless, automated fashion.

“Instead of Microsoft reconciling transactions and making payments, you can do that once across multiple parties,” says Forman. “The reconciliation process gets streamlined.” At the same time, the finance department can employ individuals on less tedious tasks while reducing the legal risk, as a lawsuit or audit by a supplier can become less likely. In a blockchain world, Forman says, “You can now collaborate in a more frictionless way with the content supplier and end users.” In the media and entertainment sector, big Hollywood film studios seem to be ahead of the curve on blockchain. That’s an accurate assessment. “It’s just getting started on the TV side,” Forman says. “On the radio side, it started on royalty payments for music.” That’s particularly intriguing for any radio broadcast company. But would blockchain be effective in a smaller operation rather than a publicly traded top three giant? “It can be applied regardless of the size of the operation, and different solution approaches are being developed around this technology,” Forman says. It all comes down to the owner or C-Suite

finding the best answer to the following question: Where is the value in your company created? It can also be about unbundling, with opportunity for content management strategies. At E&Y, Forman is not building blockchain, per se. Rather, he explains, “We are building the application software layers, and building them out for the public network. Our vision is that we are building software that you would deploy in your company and post to a network that allows you to move this value. It is a better ecosystem, just not within E&Y’s four walls.” Meanwhile, Taub sees media ad sales benefits to blockchain, and Mediaocean and IBM are pioneering this on the TV side of the industry. “Right now [media] is engaged in an extremely laborious process with multiple stages of data capture and reconciliation, sent to another partner for their consumption,” Taub says. “There are delays in payment.” With blockchain, an ad is posted and consumed and recorded in real time. All of the participants are in a distributed ledger. “There is reduced labor and reduced cost,” Taub says. “And blockchain can accelerate data delivery and accelerate payment.” Should the HR leader be worried about job losses, or employer-paid retraining and skill supplementation? Taub says employee departures are inevitable. But it will not be to the degree that people might think in their first reaction. “Yes, this requires retraining,” Taub notes. “The workforce of the future will not be doing manual reconciliations. They will be checking and auditing the blockchain data. It is a measure of productivity. Will there be eight people in reconciliation in a movie studio? Probably not. But six will be more focused on value-added tasks.”

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DOLLARS AND BILLS: What ATSC 3.0 Will Bring There’s been a lot of talk about what the nextgeneration broadcast TV standard will mean for companies eager to bring “addressable advertising” to marketers who crave such an opportunity from free over-the-air channels. But is next-gen TV, “ATSC 3.0,” the next HD Radio, poised for failure in a world where 5G technology could render it a wasted — and costly — endeavor? Don’t count on it. For Anne Schelle, Managing Director of Pearl TV since June 2014, ATSC 3.0 is “an enhancement” to the current ATSC 1.0 platform. There’s much upside, she says, for the eight large U.S. broadcasting companies that have come together as Pearl TV. In fact, the post-Spectrum Auction repack process currently underway means stations — a lot of them — are moving to new channels. As such, are they looking to ready the station for ATSC 3.0? “A lot of them are,” Schelle says. What does getting ready for ATSC 3.0 really mean for TV companies? “They are automatically buying equipment that is software-enabled,” she notes. Specifically, broadcast TV is moving from older equipment that was static to upgradable equipment, and offering reduced cost for its new infrastructure. “This lessens the expense greatly, and it is a very important thing to note,” Schelle says. “You are buying stuff today that wasn’t available when you last upgraded your infrastructure, and in many ways exceeding your cap x.” And, when the equipment for ATSC 3.0 is purchased, the license comes from the Commission. Meanwhile, existing ATSC 1.0 transmitters can get ATSC 3.0 by obtaining exciters that can be tacked on. Schelle notes, “That is not a huge billing requirement — the cap x is pennies on the dollar.” 22 · R B R . C O M · S U M M E R 2 0 1 9

That, to her, is an important factor that often gets missed in discussions regarding the voluntary rollout of a new broadcast standard that is not backward-compatible. The next-gen standard is also, Schelle believes, a great way to add enhancements to ATSC 1.0. “It is also hybrid for 3.0 and for 1.0 because the application environment is coming all in one aggregated UI,” she says. The result: “You’re putting capital against your scale so you’re not having to put in a lot of capital to help build the business.” And, for those wondering if ATSC 3.0 could bomb, Schelle says, “HD Radio was going from analog to HD. We’ve already gone to HD. That was a much greater move; we couldn’t reuse things. Here, we are using a lot of the infrastructure, and that goes to a lot of the device side as well. We’re using the majority of the guts of a television and it is really just enabling a new chip set.” This means that those first HDTV sets in 1993, with a price tag of $20,000, won’t reappear thanks to ATSC 3.0. Today, Schelle predicts sets one-tenth of that price. Early devices will appear in 2020 and in 2021. According to the Consumer Technology Association, overall unit sales of total digital displays in 2019 will remain above 42 million units (a one percent decrease from 2018) and register $22.6 billion in revenue (a two percent increase from 2018). More than three-quarters of TV shipments will be sets with 40-inch screens or larger. Future upgrades will be driven

by 4K Ultra High-Definition (4K UHD) sets, which now make up more than half of all TV unit sales. 4K UHD will sell 22 million units (14 percent increase) for $16.4 billion in revenue (eight percent increase). Raising the bar on resolution, inaugural shipments of 8K UHD TVs will reach $545 million in revenue. And budding OLED shipments will reach 1.4 million sets with double-digit growth through 2022. “If the TV manufacturers put it in the majority of their model lineup, nextgeneration TV will be widespread,” notes Schelle. “Today in Korea, you can’t buy a TV set that isn’t ATSC 3.0-capable. I think that’s because it is market-led, and it is working.” Samsung, LG and SONY are each eager to bring next-gen TV to the U.S. marketplace. This requires a slight modification, mainly tied to a different broadcast band. Then there is the “upper layer” — based on the internet in the U.S., but based on HDTV in South Korea.

NOT A CABLE KILLER As of today, test transmissions of ATSC 3.0 are underway at Univision Communications’ Phoenix stations, the test facility for the “Phoenix Model Market.” Don’t expect to pick up the reruns of 4k content, such as NBC movies, on a set of your own. “The station is housed in a lab, and the only TV sets are prototypes and closely held by manufacturers,” Schelle says. “You’d have to go to the TV stations to see it.” Seeing the ATSC 3.0 in a cord-cutter

universe will require a digital TV antenna — perhaps a $21 Amazon.com buy in a big metropolitan area or a somewhat costlier antenna in an exurban zone. For those in outlying areas of even the biggest DMAs, such as Ulster County, N.Y., MVPDs and DBS providers will need to begin offering ATSC 3.0 signals. When will that happen? Time will tell, but Schelle says MVPDs will have the ability to roll out the signals without a huge infrastructure build — or a big bill. For the Phoenix Model Market, cable integration is in place. And, Schelle says, it is an easy integration. “We’ll bring value,” including improved audio, to cable providers. Importantly, Schelle believes ATSC 3.0 will not render the MVPD obsolete. “Business models and opportunities to work in a partnership, to improve the overall ecosystem, are there,” she says. “There are real interesting opportunities to do that. You get a happy customer who is getting what they want.”

CAPITOL INTEREST The next-gen broadcast TV standard has captured the attention of at least two of Washington’s top communications law attorneys. Scott Flick, a partner at Pillsbury Law, believes ATSC 3.0 creates a lot of

opportunities that aren’t traditionally available, such as more data streams and higher-quality broadcasts. “It opens possibilities to get more content out there, some of which may not be free content but subscription, or forms of data that need wide-band distribution that for whatever reason internet isn’t cut out for,” he says. This includes mobile broadband, with the ability to reach mobile devices “a huge benefit, allowing broadcasters to start competing with entities they haven’t really been competing with.” However, Flick believes there is a lack of clarity on whether big gains will be seen from ATSC 3.0 within five years, or if it will take longer. The gains and ubiquity of ATSC 3.0 could be the harbinger of further broadcast TV ownership consolidation. “It will become increasingly difficult to be a small broadcaster,” Flick says, because of the increasing sophistication of navigating “TV-everywhere” contracts. “They get much, much more complicated, and when the complexities go up, there is an obvious benefit of being a larger entity with deeper bench strength, in particular with technical capabilities.” Therefore, further consolidation will happen “just because it makes sense economically and demands on broadcasters

certainly reward the larger, deep-pocketed broadcaster.” And, Flick says, ATSC 3.0 opens doorways to other “TV on the wall, non-glass” markets. “HD is static technology, embedded in the chip,” Flick says. “You can do one thing with it. What makes ATSC 3.0 fundamentally different is that it is a software-based technology, constantly updated and modified. That’s why TV broadcasters will ultimately move to where the market takes them.” At Wilkinson Barker Knauer, veteran attorney David Oxenford believes there’s a big bet between over-the-air broadcasters and MVPDs taking shape. He sees ATSC 3.0 as a big opportunity for broadcast TV’s future, as it seeks other revenue streams beyond advertising and retransmission consent. That’s key, he believes, because these other revenue sources will make up for any loss of retransmission consent dollars. This is likely, as ATSC 3.0 will bring mobile reception. “Right now TV is not a player in this marketplace, but it will be,” Oxenford says. “ATSC 3.0 brings the ability to do more than just broadcasting.”

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