HD Radio Is In The Air
HD Radio is not exactly new, but the development of it has been relatively slow. About a year and a half after Kenwood sold its first HD-ready head unit, the next evolution in traditional radio hasn't truly captured the imagination of the listening public. But that may be about to change with the HD Radio Alliance launching a $200 million ad campaign. We spoke with the president of the alliance, Peter Ferrara, recently about the future of AM/FM and HD.
CA&E: Who is part of the alliance?
Peter Ferrara: It's made up of 12 U.S. licensed broadcasters. They run the gamut from the largest: Clear Channel and CBS Radio to medium-size companies to even a single station operator in Philadelphia.
CA&E: What does HD stand for?
PF: That was a product or brand name designed by iBiquity. I don't know if they ever said it was high definition. Clearly the alignment of HD to HDTV and the momentum that has going for it is obviously clear in the consumer's mind.
CA&E: What is the alliance doing in terms of OEM deals?
PF: I know that people like Delphi and Visteon are ready to go. It's just a matter of getting the manufacturers themselves to begin to put them in the cars, install them either as options or standard equipment. What the alliance is doing is rather than trying to do a specific deal with the OEM, like an XM or Sirius did, where they basically handed them a bunch of money and part of their company, we're offering them the opportunity to join us as marketing partners and getting a piece of the $200 million dollar plus marketing budget we're spending on the radio.
CA&E: Will traditional radio go all-digital any time soon?
PF: The opportunity to do that down the line is absolutely there. But I don't think that's going to happen until there is a high level of HD Radio-set penetration, for the simple reason that we don't want to make any current analog radio obsolete.
CA&E: Satellite radio seems to be here to stay. Are you going to be able to compete?
PF: I think satellite radio is kind of like HBO is. Yeah, it's probably here to stay, but it's a niche business, a small niche business relative to terrestial radio. A few people subscribe to HBO, but everybody gets basic cable. There are 240 million terrestial radio listeners a week. Even if you give satellite radio the opportunity to grow to 20 million-it only represents 10 percent. That's a niche business by any business model standard.
HD Radio is not meant to compete with satellite. This technology was in development before they ever launched their first bird in the air. So this is just the next advancement of an evolution of our medium becoming digital. But to compete with satellite-that's not what it's about at all. It's about getting our listeners more choices, about providing a better quality signal, with new and exciting things they can listen to for free on a local basis without a subscription. That's a pretty compelling proposition for the consumer.