HD can help radio find momentum


If you’ve been reading the HD Radio analysis from our mystery correspondent, we can now reveal that it is not Bishop Cheen. In fact, the bond analyst from Wachovia Capital Markets has a very different take. Here is Bishop Cheen’s point-by-point response to Friday’s RBR/TVBR Blog Log.

HD can help radio find momentum

I can’t say if HD Radio will “make it” (whatever that means) or not, but your commentator’s six wooden stakes I think misses the point.  How about six cylinders that could help radio find some momentum?

 1)       Why be analogue in a digital world?  This nine decade old media has found a way to reinvent itself at crucial sea changes—TV, cassettes, CDs, internet, iPod—and HD is a chance once again for a redo.

2)       HD sounds great—much better than analogue and satellite radio.  The quality is there to hear and the alpha/numerics/ tagging and who knows what else are digital features that would seem to have value ahead.

3)       Complexity is simple—or will be.  Granted, the nascent receivers available are not overly simple and truth be told there are not many up and running HD channels.  Does anyone remember how user unfriendly FM, stereo phonographs, PCs, VCRs, the Internet, digital cameras, MP3 players, PVRs, PDRs were when first born?  I am old enough to, and they were all beasts.  They all became remarkably better, naturally, or else they would not have been able to survive and thrive.  Who says HD radio will not do the same?  No, I am not equating HD Radio’s value and popularity potential with all of the above, but it is way too early to act like this tech has no future. 

4)       HD is a new frontier. Nobody knows what economic models may emerge from HD—pay? subscription? ad-supported?—so why are we just to assume that it has to be spot driven?

5)       Cue the creative department.  One of the common criticisms of radio today is that the corporate consolidators have suppressed the creativity that made radio a mass media and a long term survivor.  HD is a perfect excuse for corporate execs to get their groove back.  The only rule I hope that radio execs will follow is that “no rules” rule.  I would tell my programming people to try anything and everything with my HD channels today (before there is critical mass of receivers) EXCEPT what I am programming on my main channel.  If radio simply reshuffles the corporate programming manual on HD, then it may indeed fail big-time.  This is the chance for radio to once again reinvent itself–hope it doesn’t blow it.

6)       Differentiate and aggregate. Soap makers discovered this strategy a half century ago.  If you are worried about shelf space, then own the shelf.  If radio operators are worried about being marginalized in an increasingly fragmented world, then HD allows more differentiated brands under one roof.  And, the investment into outfitting HD capability is not large compared to other capital intensive media. 

It will be years before anyone has a sense if HD will have the magnitude of FM, or turn out to be yet another failed innovation without a market (AM stereo, VuText, LaserDisc, minidisk, Irridium all come to mind). Yet even most failed technologies tend to be stepping stones to something better with real sticky down the line.  The jury is still out on HD because it is a newborn.  It deserves a chance to breathe.  Stay tuned.

Bishop Cheen
Wachovia Capital Markets LLC

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