In-car entertainment is becoming as sophisticated as multi-channel surround sound in the media room these days. Well, to a point. Consumers now have standard old FM and AM radio, hundred-channel satellite radio, iPod and other 10,000-song portable libraries and now even HD Radio. HD Radio is basically the same old content (I think) that is on the standard analog FM band, but with digital clarity and enhanced features. Do customers care about all this or are they interested in content over "crystal-clear quality"? Both XM Satellite Radio Holdings (NASDAQ: XMSR) and Sirius Satellite Radio (NASDAQ: SIRI) would argue that content is king, and 10+ million American satellite radio customers would back that statement up pretty nicely. What about terrestrial radio's comeback, as in HD Radio?
There are some industry watchers who say the death of terrestrial radio is imminent. Too much annoying advertising, deejays who have little to no function, boring and repetitive play lists and boring content in general are the standard gripes. But when HD Radio receiver units come to Wal-Mart Stores, Inc. (NYSE: WMT), will consumers pay for those radios to hear their "boring content" in perfect digital clarity? HD Radio, unlike satellite radio, is free to receive (no monthly costs), which is a boon to many listeners. Add to that the advertising spending the HD Radio partners are planning this year along with national station support (in a fight for survival, no doubt), and Wal-Mart becomes a powerful ally for the aging radio industry. Will consumers even notice though?
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Reader Comments (Page 1 of 1)
3-07-2007 @ 10:07PM
Ken Madsen said...
I am very frustrated with the performance of Sirius Radio and XM. Is this stock ever going to perform.
3-09-2007 @ 6:39PM
EMIL J KOVACH JR said...
HD Radio--Terrestrial Radio Is Far From Doomed.
Buy It's Role To Market Will Change, Terrestrial Is All About Local, As More Stations Appear On That Dial, And Fidelity Of Content, As To Music, And Content Is Near CD, As They Say, The Product Will Be Better.
What It Will Offer Is Better Traffic, Better Weather, Discussions Of Local Government Issues, And Boots On The Ground News, Not Available From National Market Providers Like SATRAD, Or A. Radio Wannabe, Internet Radio.
The Music Battle Is Lost Now, To Personal Players.
So Radio's Music Will Be More New Releases, Then Anything.
They Know They Cannot Compete With Personal Libraries.
But Your Ipod Is Second To New Releases, And Current Events In The News.
That's It's Future Roll.
HD Brings The Ability To Offer More Market Specific Content To Spanish, Etc., Concentrations In Various Markets, So HD And Terrestrial Will Be All About Local, And NEW Music.
NATIONAL Is SATRAD, As It Brings Sports, Financial, Talk, And Other Programming That Will Play In ANY Market. So SATRAD's Future Is To Find That National Content.
The Music Choice Channels Are A Big Plus For Them, All Sinatra, Or Hip Hop, Or Decades, 70's 80's, Etc.
Are Best For Them.
But SATRAD Lacks The Shows Of National Interest That Should Prove The 13.00 A Month Is Worth The Asking Price.
One Mistake I See With Both Is, They Want To Play COMMERCIALS, Which Should Be Their Trump Card.
Most People Believe 13.00 A Month Should Get You NO COMMERCIALS.
Look At This.
SIRIUS HAS 7-8 Million Subscribers @ 13.00 A Month, They Billed About 1 Million In Ad Revenue, For The Year.
That Lousy One Million, Took Away The Right o Advertise
COMMERCIAL FREE PROGRAMMING As A Kicker.
Was It Worth It?
Marketing Of This Product Properly And Concentration On Entertainment Only Available On SATRAD, Has Caused This Product To Have The Market Place Question It's Value At 13.00 A Month Rather Then Say "What A Bargain!'
Is A Merged Product Going To Be Better, NO.
All Those Choices Are There Now, Between Both.
A Merged Product Means The Entire product Is Governed By One Marketing Idea, And No Competition Means No Race To Find The BEST, Most Wanted Content.
Mr. Karmazin's Suggested Price Caps, To Get His Merger, Means One Thing, He Limits Greatly The Ability To Buy Superior Content, If It Shows Up, And If All Sports Programming Must Be Priced Higher, Because Of Better Content Or Other Features, He May Not Be Able To Pay The Price, So They Will Simply Leave.
Subscribers Will Pay More--If It's Worth It.
ONLY If It's Worth It.
And In The SATRAD Business, Two Hungry Competitors, That Want Your Subscription Dollar, Will Bring Out SUPERIOR Product.
No Monopolies Or Price Caps Wanted Or Needed.
By The Way, In Testimony, They Have Made It Very Clear, They DO NOT Need To Merge To Survive.
"Better Choice" Is Now The Argument,
Unfortunately ALL CHOICES Are From The Same Person, Mr. Karmazin, Is That A Real Choice?
One Of His "BETTER" Choices Will Not Be There, If He Gets His Way, Opie And Anthony, Will Be Invited To Leave, Most Believe.
That Right There Tell You, Market Censorship Can And Will Be A Factor,
One Persons Opinion As To What Should Be On Those 300 Or So Channels, Is No Real Choice At All.
EMIL J KOVACH JR
3-09-2007 @ 7:39PM
EMIL J KOVACH JR said...
CORRECTION--Ad Revenue--Last Year At SIRIUS 100 Million Typo Error.
EMIL J KOVACH JR
3-10-2007 @ 1:20PM
EMIL J KOVACH JR said...
RE: Advertising Revenue, It Looks Like SATRAD Too Will Be Soon Loaded Up With Commercials,
This Is Quoted From Release On MERGER.
Note--Mr Parsons Says "BARELY SCRATCHED THE SURFACE"
"A combined company will be more attractive to advertisers, Parsons said, pointing out that XM and Sirius barely scratched the surface when it comes to selling commercials. He said the AM/FM radio market was $20 billion in 2006 of which only $70 million went to XM and Sirius"
EMIL J KOVACH JR
3-11-2007 @ 3:10AM
Tim said...
That Wal-mart is jumping into the HD radio business really is just the next thing for a product that is still largely unfocused, unproven, and unreliable.
HD continues to suffer MASSIVE technical problems that if left unchecked will be the end of the AM band. The technical problems with the FM band are somewhat less severe, but suffer the same multi-path problems that TV signals do. That was never accounted for in the original specs for the technology.
In addition most station groups are simply using HD to broadcast other formats they are not playing on traditional radio, but without commericals. There isn't a single station in the country that has made $1 on HD radio. In that respect its a light year behind XM and Sirius.
There is much fixing to be done in the radio industry before HD is the be all and end all that some would have us believe.
3-11-2007 @ 1:04PM
EMIL J KOVACH JR said...
You are Right About HD, It Truly Is In It's Infancy.
And All Those Problems Are Indeed There.
But, It will Never Go Away, Either.
As More And More Radios Are installed In Cars, And Made Widely Available For Home Use, Market Penetration Will Become Higher And Higher.
It's Hard To Compete With Free.
But Free Is Generally Worth Free,
I see SATRAD As An ALTERNATIVE To What You Can Get..
For Free.
So SATRAD's Job Is To Bring PREMIUM National Content To Those That Will Pay For It.
HD And Terrestrial Will Concentrate On Local Market Penetration, And The WAR FOR CONTENT Will Soon Start.
SATRAD Will Be In Competition With HD, Terrestrial For Syndicated Products That Can Work On Local Or National Markets, And SATRAD Is All About National.
So It's REAL Salvation To Produce And Control Shows And Content, Of It's Own Making. It Must Be Unique.
And Here, Is Where It Dropped The Ball.
Almost Ten Years Old, SATRAD Is Doing Nothing But Selling On Other Peoples Content.
Soon To Be Widely Available From Others.
They Have Not Driven Sales "WILD" By A Need To Subscribe To It's Content.
It's Just Not there, So Now The Market Place Questions It's Subscription Price And Value.
As More And More Content arrives On Your Cell Phone, And Choice Of Content Can Be Instantly Made,
Is SATRAD Nothing More Than 10 Year Old Technology?
As The Internet Becomes More Widely Available At Faster Speeds, I Suspect The Lap Top, Or Home Computer Will Be FIrst Choice For Content, And Cell Phone Second, And That Car Radio, Will Be Last.
EMIL J KOVACH JR
5-08-2007 @ 4:55PM
Tony said...
Ther eis no interest from consumers, or automobile manufactures for HD Radio:
“HD Radio on the Offense”
“But after an investigation of HD Radio units, the stations playing HD, and the company that owns the technology; and some interviews with the wonks in DC, it looks like HD Radio is a high-level corporate scam, a huge carny shill.”
http://www.eastbayexpress.com/2007-03-07/music/hd-radio-on-the-offense
“Sirius, XM, and HD: Consumer interest reality check”
“While interest in satellite radio is diminishing, interest in HD shows no signs of a pulse.”
http://www.hear2.com/2007/02/sirius_xm_and_h.html
"U.S. automakers not jumping into HD Radio"
http://www.reuters.com/article/ousiv/idUSN2632750220070427?pageNumber=1
"Bridge Ratings: Sweat the cell phone and don't count on HD"
"In other words, Bridge says interest in HD radio is decreasing even as your station works hard to increase awareness. What can I possibly add to this honest and bleak picture that I haven't said before? My well-intended warnings about HD's "premature death" seem to be rearing their ugly heads almost two years later."
http://www.hear2.com/2007/04/bridge_ratings_.html#comments
"But is 'availability' of HD radios the problem?"
"And one broadcaster reported to me that he asked an iBiquity rep how many HD radios had actually been sold as of the most recent accounting. And this was his answer: 150,000."
http://www.hear2.com/2007/04/but_is_availabi.html#comments