Eight major radio-station groups, six of them in the top 10, formed an alliance combining their marketing clout to promote the rollout of HD Radio.
The group expects other broadcasters to join in short order.
“We need to do a lot more, sooner [and] faster,” admitted Peter Ferrara, CEO of the Orlando, Fla.-based HD Digital Radio Alliance. “I don’t know what took us so long,” other than the requirement for a “substantial capital investment,” he said.
“We’ve made the technical investment,” added Mark Mays, Clear Channel president and a member of the alliance’s oversight management committee. But broadcasters “need to do more than just make our plants technically able to broadcast [HD Radio],” he said. “Now we will get better at marketing and making a compelling consumer proposition” to drive volume up and price points down.
Alliance members said more HD Radio promotion is needed to compete for ear time not only with satellite and Internet radio but also with MP3 players and cellular-handset audio streaming.
With that in mind, the group will:
- coordinate promotions with receiver manufacturers, retailers, and automakers.
- convince automakers to offer digital AM/FM tuners as standard equipment, thus helping drive down the cost of radios through economies of scale. “Nothing is more important than becoming standard equipment in cars,” Ferrara said. The alliance will provide marketing and promotional support “to make it a value for them [automakers]” to sell cars equipped with HD Radio, he said.
- coordinate the rollout of FM multicasting to diversify terrestrial-radio formats in major markets to compete with the diversity of satellite and Internet radio. The multicast FM channels will be commercial-free “as long as necessary to drive consumer demand for HD Radio,” Ferrara said.
The alliance promises radio station promotions after Jan. 1, 2006, as the first step in what it expects to be two- to eight-year project. The group pledged $200 million worth of commercial airtime in 2006 to the effort and an unspecified amount of other marketing dollars. Early this year, 21 major groups announced an investment of more than $200 million to install HD Radio equipment in many of their AM and FM stations.
Six hundred stations are broadcasting in digital, up from about 275 in mid-2005, and that number will jump to 1,200 in 2006, said Bob Struble, president of HD Radio inventor iBiquity. Although iBiquity had played a role in trying to coordinate market launches, Struble called iBiquity “a technology company” and said “the industry has to take its story to the listener.”
One of the stories that broadcasters will tell is HD Radio’s ability to expand content diversity in the AM/FM market. To do that, the alliance plans to promote the launch of multicast channels in 25 top markets, where it will coordinate the selection of underserved content formats in each market. Once the alliance has selected which station group will adds what formats, then individual group stations will program the content themselves with local talent, said Ferrara. If the alliance decides that country music is underrepresented in the New York market and assigns the format to a specific group, it will be up to the individual stations to choose such country subformats as new country or classic country, program song selection, and choose on-air talent.
In all, “multiple hundreds” of stations will multicast in 2006, said Struble.
Alliance members in the top 10 radio groups by number of radio stations are Clear Channel Radio, Infinity Broadcasting, Entercom, Emmis Communications, Citadel Broadcasting and Cumulus Media. The two members in the top 20 are Bonneville International and Greater Media.
All told, all of the top 10 groups have committed to rollouts, including 18 of the top 20 groups and 22 of the top 27 groups ranked according to the number of stations operated. The 22 groups and public radio stations will add HD Radio to more than 2,500 stations.
Although commitments by the top 10 or 20 broadcast groups would represent a minority of all 13,500 U.S. AM and FM stations (including more than 2,000 educational FM stations), the top 10 operate stations in all of the top 100 markets, marketers note. In addition, Struble said, 80 percent of radio listening is done through 1,000 stations.
The top 10 own about 2,330 stations, or 17 percent of all stations, and the top 20 own 2,814, or almost 21 percent, iBiquity said.
The radio industry has a far better chance of promoting new technology now than it did in the early 1980s, when it launched AM stereo, because of the presence of large broadcast groups with marketing muscle and the ability to install new technology in multiple stations, receiver marketers said.
Suppliers and retailers can reach the alliance at its offices at 8718 Southern Breeze Drive, Orlando, Fla., 32836. Its number is (407) 354-5330.