Exploding Radio

Jeff Jarvis is wrong in his recent exploding radio post.  He says:

This got me wondering about what I would do if I were in Viacom’s shoes. I hope they don’t pluck the nearest Stern clone. It’s hard to call that the "safe" choice but it is; it’s the obvious and dull choice. They need to reinvent radio.

But then I thought about the man with the Sirius badge. It’s so much easier for him to reinvent radio. And for you, you podcasters, you.

That’s the obvious view from the outside looking in.  But it’s wrong.  Radio is re-inventing radio.  But they need new technology to do that.  They are getting that new technology.  It’s called HD Radio and its coming.

I believe that next year there will be HD Radios on the market for less than $300.  The following year, they should be less than $200.  You’ll start seeing them in cars, starting at the high end and moving to all cars pretty quickly.  You can get this cool Boston Acoustics HD Radio for your office soon.

The radio industry is already rolling out the new digital HD signal and they are going to get more agressive shortly as the new radios hit the market.

This digital platform will do for radio what the digital cable plant is now doing for cable.

Satellite radio is not the next big thing in radio.  It’s a head fake just like satellite TV was in the TV world.  Satellite TV can’t do what digital cable can do.  And satellite radio can’t do what digital radio can do.

Just think about this for a second.  HD Radios will be adressable and provide conditional access.  That means radio programming can be provided on a subsription basis and the programming and the ads can be targeted.  A typical FM station will be able to broadcast at least five audio streams on a given frequency.  And you’ll have tivo-like store and replay.

It’s going to take time for all of this to become a reality.  But with this kind of technology platform, the local franchises, and the exisiting base of listeners and advertisers, I wouldn’t be writing off broadcast radio so quickly. 

I think the broadcasters will be the ones to re-invent radio in the end.  If you don’t agree, go buy XM and Sirius at 36 to 150 times sales (there are no earnings).  If you do, you can buy Clear Channel today at 2 times sales and 11 times EBITDA.

I think I’ll take my shot with Clear Channel at those odds.