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1 Millionth HD Radio Expected To Sell In 2008

Orlando, Fla. — Up until now, HD Radio, like satellite radio, limited the commercials it aired, but that is about to change.

The HD Radio Alliance announced today it will allow HD2 Radio stations to begin airing commercials, lifting a three-year ban.

In addition, the Alliance, at its annual press conference today, announced it expects the 1 millionth HD Radio will be sold this year.  

At present, more than 800 stations use the extra bandwidth from HD Radio to broadcast an extra channel — called an HD2 channel. An “oldies” station might add a “live rock” station, for example. But radio operators have been forbidden to air commercials on HD2 channels, with the slight exception that earlier this year they were permitted to mention the name of a sponsor only.

Now all restrictions are lifted although there are “private,” “suggested guidelines” for HD2 stations to follow, said Peter Ferrara, president and CEO of the HD Radio Alliance, at the conference.

HD2 channels are considered critical to HD Radio’s success. “For HD Radio to be a success, it has to be more than a better sounding radio signal. What’s driving it and will drive it is the type of content that will be unique,” Ferrara said, noting in Boston there is an “Irish” HD2 channel and an “iChannel” that is programmed by high school kids.

 The Alliance said there are 1,750 HD Radio stations at present (up from 1,600 in March) serving 231 markets, and it proclaimed digital radio is positioned to achieve mass-market status now that HD Radios have dipped below the $100 price tag. Radiosophy is now offering a $49 HD Radio model after rebate. 

“The price delta over typical radios is narrowing … and as the price differential drops, radio makers will opt to build more radios with HD Radio,” said Ferrara, noting that eventually most radios will include the technology.

Ferrara also announced he will step aside, taking a consulting role at the HD Radio Alliance starting in January, while Alliance executive VP Diane Warren will become president. He said now that digital radio has achieved 77 percent awareness, his skills in market development are less critical.

The Alliance also noted that its recent mobile texting campaign has been successful, with more than 62 percent of those solicited opting in to a “text to win” contest. Consumers send a text message for a chance to win an iLuv HD Radio and to hear information on HD Radio.

Ferrara said HD Radio is now available on 82 car models from 14 brands, including Ford, Lincoln, Mercury and BMW. The latter reports that the take rate for HD Radio is about the same as in satellite radio, which has been stated at about 50 percent to 53 percent.

The HD Radio Alliance is a cooperative of radio broadcasters to accelerate the rollout of digital radio.