"Consumers, Wall Street Not Buying HD!"
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 isnâEURO(tm)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.
"Consumers, Wall Street Not Buying HD!"
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.
http://tinyurl.com/3cqnyq
"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/inquir...s-attempt-fast
SUCKA!