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Guest editorial: Consumers, Wall Street not buying HD

Posted on: 02/15/2008

by Bob Bellin
Admit it. You’ve secretly wondered why the radio industry has invested so much in HD radio. You’ve secretly wondered what the big payoff is. Here’s some advice if you still have a job in radio: keep it secret and don’t wonder out loud. In fact, you probably want to be seen gulping as much HD Kool-Aid as you possibly can, lest your name appear on one of those increasingly numerous slips that are coloring the halls of radio stations in Pepto-Bismol pink.

Here’s how it looks to me:

  • (1) The public has shown little interest in HD Radio. HD Radio was the biggest radio advertiser in 2007 and roughly 350,000 units were sold. By comparison, Sirius added over 900,000 in Q4 of 2006 alone, with a far less advertising support. At the rate HD Radio was adopted in 2007, it would take over 15 years to equal the current critical mass of Satellite radio.

  • (2) There is no apparent revenue model for HD Radio. How many HD radios would have been sold if the channels included advertising? Well, certainly not more.

  • (3) The Radio industry is embarrassing itself with its public support for HD Radio. Whether perceived as backing a loser or profoundly ineffective as an advertising vehicle, Radio isn’t representing itself well as a marketing vehicle or partner with its public support for this failing product.


So why is radio hitching its wagon to the HD radio star?


Could even “success” be successful?

Suppose that through some unexplainable act of God, they actually sold 15 million HD radios. (Don’t get me wrong, with less than 3% of that number in use despite the year’s biggest advertising blitz in radio in 2007, there is no real hope that anything like that will happen in the foreseeable future.)

Then presume that the delivery for HD radio was roughly equal to what now goes to satellite, roughly 6% of all radio listening. (Here again, not likely to happen — more money/effort is going into XM/Sirius, reception is better, plus they have big name talent). But there is no guarantee that the 6% would be incremental listening. Some of it would probably be INSTEAD of terrestrial radio, not in addition to it. So maybe you end up with 3% more real delivery than they had before.

That puts all radio (terrestrial and HD combined) delivery back to where it was sometime in 2006, under a scenario that’s so optimistic it has virtually no chance of happening.


So what’s the play here?

There doesn’t seem to be one. The Radio industry is correct to conclude that they need to make some changes to start growing again, but they seem to have made a bad bet with HD, and there doesn’t seem to be much percentage in staying the course.

Larry Rosin suggested that streaming highly-rated terrestrial streams would be more appealing than what is currently available on most HD channels, and he’s right, but the impact wouldn’t be enough to offer a real fix.

The radio industry has publicly touted a string of “doomed to fail” strategies to Wall Street since the great consolidation panic of 1996 (Ad buyers buying the whole country with 2 calls, “Less Is More,” the idea of radio-equipped cell phones adding $3 billion in revenue, etc.). Wall Street’s not buying in anymore. The radio industry’s aggregate stock price has fallen by roughly half in the last year. That’s double the loss of the most hard-hit markets in the housing sector. Wall Street (based on market capitalization numbers) has actually valued some decent sized radio groups at less than the value of some private houses in the Hamptons and many large banks have dropped analysis of the sector entirely.

One group head said recently that radio’s problem is perception. But, and this is a big “but,” perception of the radio industry will not improve while its head honchos publicly chase rainbows like HD Radio. It’s time radio faced the music on HD and let it fade to inaudibility, where it already is anyway for all but 400,000 people.



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Comment

  1. The only hope that radio has in this country if the government steps in and breaks up the monopolies like Clear Channel & Entrecomm!

    Richard Clifford · Feb 15, 08:36 AM · #

  2. I think that the CPB/NPR radio stations continue to bilk Congress out of our tax dollars for useless HD Radio upgrades for a flawed technology that no one cares about, except for radio-geeks. Interesting, that iBiquity leaves out of their PR-spin, that most of the stations converted are NPR/CPB:

    http://hdradiofarce.blogspot.com/

    PocketRadio · Feb 16, 01:43 AM · #

  3. As for that 400,000 number, don’t believe it:

    “HD Radio spinners claim a breakthrough year: Pulling a fast one”

    “According to a press release from the Alliance 330,000 HD receivers were sold last year. This is a 725 per cent increase from the 40,000 sets purchased a year earlier and therefore 2007 was a ‘breakthrough year’ for the technology. In 2008 they will sell a million of the things.”

    http://www.theinquirer.net/gb/inquirer/news/2008/02/08/hd-radio-spinners-attempt-fast

    With all of the returns, I bet that number is only a bit over 100,000.

    PocketRadio · Feb 16, 02:28 AM · #

  4. HD Radio jams competing stations. That’s why BigRadio wants it, PBS bilks congress out of millions for it, and consumers reject it.

    HD was to have its own band, to prevent interference to AM & FM. HD backers heatedly deny interference yet privately gloat over it. They denounce all who notice it. Nice bunch. Bridge Ratings states, the more people learn about HD, the more they reject it. BigRadio boasted ‘We could lose half the AM stations (to HD jamming) and no one would even notice’. Others gloated of increasing revenue by ‘thinning the herd’ of competitors, via HD jamming. Isn’t this like firebombing one’s competitors? Need we mention, these are our public airwaves the HD gang so proudly jams? HD? Here’s the juice: Older consumers reject HD. Younger ones laugh at it. Manufacturers dislike it. Retailers can’t sell it.

    Paul Vincent Zecchino
    Manasota Key, Florida
    16 February, 2008

    paul vincent zecchino · Feb 16, 03:20 AM · #

  5. Paul,

    Nice to read some truth about IBOC radio, it’s a lead balloon, going nowhere. I and many others continue to wonder why radio pushes this backwards technology, it cuts receiver range severely and interferes with adjacent channels, this is progress? This is supposed to help radio? I think that Kool-Aid you spoke of will turn out to be poison in the near future. I guess when you have this much money sunk into The Edsel of the 21st century you don’t know when to quit. The only people who seem to like it are the people who think they will make money from it, which has only turned out to be iNiquity so far. Despite all the ads and baloney the Alliance and iNiquity have spread consumers have proven that they are smarter than PT Barnum thought: (actually David Hannum) That there is not a sucker born every minute unless of course you count the stations who have paid to have this jamming technology installed which no one listens to. No, the consumers seem to know more about radio than big radio does, at least where HD is concerned, but then again it doesn’t take a rocket scientist to realize that HD is a big scam and will soon fade into obscurity along with the 8 track player which was a better idea actually, at least it worked the way it was supposed to. All many of us want to know is: Where is the egress?

    bobyoung · Feb 16, 07:42 AM · #

  6. HD Radio will save radio the way AM stereo saved AM.

    Robert Wood · Feb 16, 09:30 AM · #

  7. DEAD AIR: Radio’s great leap forward stalling in the Valley”

    “Retailers say no one is buying HD radios in South Texas despite scattered attempts by broadcasters to promote the digital signal technology…”

    http://www.themonitor.com/news/radio_7098___article.html/digital_new.html

    “HD Radio Has Yet To Take Off”

    “But the technology hasn’t taken off as expected. NBC 5 could not find one person who owns a hi-def radio and neither could KISS FM’s program director. I don’t know anybody that has one yet, Davis said.”

    http://www.nbc5i.com/technology/14878368/detail.html

    “High-def radio is here, but is anyone listening?”

    “But 19 Utah stations are broadcasting 31 high-definition radio channels with six more coming soon… It seems the stations are investing in technology the public isn’t quite ready to embrace…. Some have heard it referred to but never had cause to get one. Unless you are a gadget person, few of these radios have sold.”

    http://www.sltrib.com/technology/ci_7852904

    “HD’s here. Who’s listening?”

    “But consumers haven’t exactly been stampeding to electronics stores for the new HD Radio sets that are required to tune in the digital signals.”

    http://www.twincities.com/business/ci_7991990?nclick_check=1#recent_comm

    “Don’t touch that dial: Digital radio lags behind”

    “Digital radio — now synonymous with the HD Radio brand name — apparently has yet to catch on with listeners in this area…”

    http://tinyurl.com/2gdmca

    So, who does iBiqity think they are kidding?

    PocketRadio · Feb 16, 11:30 AM · #

  8. Interesting how the same characters who have been chased-off or outright banned from legitimate message boards are now relegated to haunting blogs and public comment area along the bottom of articles.

    Nice to see these monowatts have reached their level.

    LinoNYC · Feb 16, 12:12 PM · #

  9. HD Radio is the new AM Stereo.

    Clear Channel, Radio One, CBS, and the other major conglomerates have to be downright terrified of Pandora On the Go and the new Slacker portable. If personal radio services don’t put the final nail on the FM music coffin, WiMax-enabled devices certainly will.

    Lets be real honest here: adding an FM radio to mobile phones won’t stop the bleeding. Nothing can.

    Terrestrial radio has only one major option left at their disposal… live events. That’s it.

    Adam Carrington · Feb 16, 05:16 PM · #

  10. Right. Great to see the truth about HD radio at last coming to light.

    AM Stereo didn’t save AM radio but at least it didn’t jam, as does HD. What saved AM? Talk Radio. Talk Radio proved content – not 90s techno-jalopies such as HD – is what attracts and holds listeners. But BigRadio won’t spend money on content. They fired talent yet kept their corporate jets. But listeners like listening to talent. Some of us enjoy the sound of jets whooshing overhead, particularly during airwhows. But in radio, content rules. That’s why sign painters who fancy themselves broadcasters and their fellow travellers are through. Good news for live, local radio who well knows its audience.

    Paul Vincent Zecchino
    Manasota Key, Florida
    17 February, 2008

    paul vincent zecchino · Feb 17, 12:26 AM · #

  11. I know this will come as just the worst news; market #1 has just added a seventh AM IBOC station; Radio Disney’s WQEW 1560.

    There are now twice as many AM iboc stations as there were AM stereo stations during that tech’s peak.

    I can just hear the heads banging against the walls as they read this.

    LInoNYC · Feb 17, 10:13 AM · #

  12. It is important to know that the main promotors of IBOC own a piece of whatever profits happen in the future thru ibiquity. So when it becomes a iboc world the great owners like, cc, univision, ABC will have a piece. In the meantime I believe they have to put stations into HD to meet their commitments. Hence lots of HD stations with no real interesting content on new subchannels. Or AM HD stations that have such lousy coverage no one could hear them except across the street from the transmitter. This will not increase listenership.

    Link · Feb 17, 12:25 PM · #

  13. Just think if that comes to pass all you will hear on radio is one big whooshing sound and maybe a few very local stations. Sounds like a winning formula to me. I guess that’s why we have computers and internet radio along with Satellite.

    bobyoung · Feb 18, 06:45 AM · #

  14. The fact is that HD Radio has added to the unique nature of Radio in America and is catching on in Canada and Europe. It is also growing in the consumer market and is making headway in the mainstream tech press, along with the OEM Auto markets -(Does anybody know Ford???). Seems to me all the negative comments above are from the same 3 or 4 people that hate or at least don’t want HD Radio to succeed (For some reason). Here’s a question for all 4 of you… are you paid to blog against HD Radio or do you just hate HD Radio so much that you have nothing else better to do?

    Oh and by the way… iBiquity Digital is no where close to “Making Money”. They’ve gotten to this point by private investment and are not publicly traded… Still in the red and still working from private capital. Where do these lies come from???

    Happy listening… er…uh…blogging!!

    PRD · Feb 19, 04:37 AM · #

  15. HD Radio is NOT catching on in Europe. Field trial in Paris was closed and they deciced not to move on with the technology.

    Nils · Feb 20, 02:23 AM · #

  16. Nils… News flash: Paris is one City in Europe. There are many “Countries” in Europe. Lets not forget China… and other former Soviet states are considering HD as well. Also, there’s Brazil and Mexico… HD is “Catching on” face it.

    PRD · Feb 20, 03:08 AM · #

  17. PRD: another newsflash for you: Digital radio is dead in Germany, and dying in the UK after ten long years of their trying to push it, it has not gotten off the ground in Canada either, it has gone absolutely nowhere here in the US despite 350 million spent on advertising it last year, do you need more proof that HD is dead, gone, busted, is a has…., or rather is a never been?

    bobyoung · Feb 20, 01:48 PM · #

  18. Bob, HD in Canada is just now being adopted. The CBC has invested in it’s HD future -Where have you been??? I mean really Bob, why are you so hateful of this technology? Are you an old broadcast engineer that can’t get his mind around IT or new spread spectrum STL’s or what??? You’re truely an angry man that blindly fights against the new and exalts the, existing, status quo. Please know that HD is in fact: Not dead, Here to stay and really taking hold in smaller markets across the country. Not to mention that many, very smart, people in this industry have dedicated their lives to HD Radio and it’s impact will far outlive your small, negative, hateful rantings. Bob…. here’s another fact: The majority of those listening to today’s radio do not want to hear your crying about HD anymore. So stop.

    PRD · Feb 21, 02:11 AM · #

  19. PRD, I suggest you start reading with an open mind, Canada is not installing any new transmitters and they are stuck at 6 cities and questioning whether to keep pumping money into a technology that no one cares about, in fact they are considering shutting it down as has Europe with it’s shortwave DRM program just announced this week, look around you, it’s a goner all over the world. Canada has also outright rejected iNiquity’s IBOC as a jammer. The majority of those listening to today’s radio have no idea what HD is, they (if they happen to notice the 10 second misleading ads) think they they are already receiving it, even radio itself for the most part is only giving it lip service.

    It’s OK PDR I understand some people need their illusions. iBlock is dead, there is not a receiver to be seen in any store anywhere near me and I live right next to a Circuit City and many Rat Shacks and also live next to the 2nd largest city in New England. I’m not old and not involved in broadcasting except at an amateur level.
    If anyone has dedicated their life to HD radio I feel bad for them, they need to get a life.
    I dislike this technology because it doesn’t work, jams adjacent channels on AM and severely reduces receiver range on FM besides interfering with adjacents. Their is nothing wrong with analog radio, what is wrong with it is that consolidation ruined it, there is nothing wrong with the sound, there is something wrong with the bland countrywide boring sleep-inducing junk that emits from the speakers. Fix the programming and you will fix terrestrial radio. IBOC will just hasten it’s demise.

    bobyoung · Feb 29, 10:14 AM · #

  20. “Hello? The entire AM IBOC universe consists of 241 US AM stations, all of which are owned by iBiquity investors with the exception of about two dozen, and only a third of which are operating HD at night – that’s less than TWO PERCENT of AM stations on the air. The implementation trend is gradually downward. There is NO growth in HD-AM on the broadcasting side. Accounts of unacceptable adjacent channel skywave interference continue to accumulate. iBiquity has thrown up its hands about the Citadel, Cox and CCU problems, saying there will be no further development of HD-AM beyond the current state of the art. When it comes to HD-AM, it is what it is, and that’s the unsatisfying end of the story. NOBODY is buying HD radios which continue to dwindle in availability. Receiver sales are an embarassing fraction of the most guarded projections and reportedly most of those units have been returned as defective. iBiquity had to bribe most receiver manufacturers to display ANY HD products at the most recent CES. To this day I have never had a single listener or advertiser comment or question about HD Radio. I do not know anyone who owns or listens to an HD Radio, nor does anyone in my wide circle of friends, relatives, associates or clients own an HD Radio – even the CE of a local major group with several HD-operating outlets doesn’t own an HD Radio! In fact, I have met nobody outside the industry who even knows (or cares) what HD Radio is. And this is the business I’ve been in for almost 41 years!”

    Bob Savage, CEO, WYSL

    http://tinyurl.com/yvwmrm

    PocketRadio · Mar 5, 10:17 AM · #

  21. Any claims of success, by above posters, are all addressed here:

    http://hdradiofarce.blogspot.com/

    Come and get it, boys!

    PocketRadio · Mar 5, 10:24 AM · #

Commenting is closed for this article.


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