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iBiquity: Stations Want More HD Radio Sales

Columbia, Md.

– Radio broadcasters are
waiting for further growth in the installed base
of HD Radios before they resume a more aggressive
pace of
station conversions
to digital broadcasting,
said HD
Radio developer iBiquity Digital.

“Broadcasters want to see some more
eggs before they take the next step,” iBiquity
president/CEO Bob Struble told TWICE.

Broadcasters jump-started the market
years ago by turning on stations before their
HD signals had an opportunity to be heard, he
said. (They converted hundreds of stations per
year, but the rate slowed to 135 in 2009, with 51 added so far this year to reach a total of 2,085 out
of about 13,000 stations. The 2011 conversion rate
won’t be much different than this year’s rate, he added.

Also slowing the station rollout were dramatic declines
in radio-station revenues, from about $20 billion
to $16 billion in recent years; major broadcast groups’
debt loads; debt-covenant profit requirements; and
Chapter 11 filings by broadcast groups.

Although radio station revenues are expected to
grow again in 2010 this year, and broadcast groups’
finances are stabilizing, radio stations are putting the
ball in the CE and automotive industry’s courts to move
HD Radio forward.

“We have a way to go,” however, to convince current
HD Radio suppliers to expand their selections and
entice more suppliers to enter the market, Struble said.
Many have only their “toe in the water.” Nonetheless,
the company is making headway, particularly on the automaker
side of the business, he claimed. “It felt like we
were pushing a rock up the [OEM] hill for eight years,
but now it feels like the rock is starting to roll downhill,”
he said, pointing to a forecast that about 5 percent of
all new vehicles sold in the U.S. this year will come with
HD Radio. The “competitive dynamic” is driving up automaker
adoption, he said.

In the CE industry, iBiquity’s challenge is to entice
60 current suppliers into expanding their existing selection
of about 100 home and car SKUs, get more suppliers
to offer it, and get existing retailers to stock more
models. The selection of SKUs held steady at about
100 in 2010, in part because of the economy and dramatic
reductions in subsidies that iBiquity, owned by
struggling broadcast chains, paid to suppliers, Struble
said. The selection will remain at about 100 in 2011,
although unit volume will be higher, he added.

As for distribution, Struble said, “We don’t need
more storefronts. We need a bigger selection in those
stores.” Best Buy, for example, offers about 15 SKUs,
but Walmart offers only three or four, he noted. More
than 12,000 storefronts already sell HD Radio, excluding
on-line storefronts.

To convince retailers and suppliers to step up their
commitment, Struble points to statistics showing that
HD Radio devices sell faster than their comparable analog
counterparts and drive up average selling prices
(ASPs). HD Radio technology adds about $30 to the
price of a radio at retail, he said. “Retailers can get the

Also to convince suppliers and retailers, he points
out that the potential customer base for HD Radio is
large. Although only 2,085 stations have converted out
of 13,000, the converted stations operate in markets
with 85 percent of the U.S. population and account
for more than half of all daily radio listenership, Struble
said. In terms of ad revenues and listenership, “4,000
stations matter, and we have 2,000 of them already,”
he said.

Another incentive for suppliers and retailers is rising
HD Radio sales and share in the car audio aftermarket.
Retail-level sales of aftermarket in-dash CD players and
mech-less audio head units with embedded HD Radio tuners
rose 58 percent in units and 78 percent in dollars during
the January to July period compared with the year-ago
period, The NPD Group told TWICE. The figures exclude
sales of mobile multimedia A/V head units, all-in-one A/Vnavigation
head units, and A/V mech-less head units.