December 6, 2005 1:23 PM PST
Broadcast giants join forces on HD radio
The networks also said they will collaborate closely as they divide up programming formats.
The big radio companies are the midst of a technology transformation--similar to what's happening in the television industry with HDTV--as they begin to broadcast in a new format called HD Radio. The new, high-definition format allows static-free signals on both AM and FM bands, and also allows multiple audio streams to fit into the same slice of airwave spectrum used for a single station today.
Nearly 600 radio stations around the country have already begun broadcasting in HD Radio. But few consumers are aware of the changes that the format is expected to bring. What's more, production of HD-capable radios has been delayed enough so that only a few will be on the market during this holiday shopping season.
The new group, called the HD Digital Radio Alliance, will bring together seven of the largest radio chains in an effort to jointly market the technology and coordinate the launch of new services.
"The radio industry in full force is going to step forward and promote this," said veteran broadcast executive Peter Ferrara, who will serve as the group's chief executive officer. "Our hope is that consumers start marching into (retailers) and start saying, 'Hey, where's my HD radio?'"
The radio industry is looking to the new digital format as the answer to satellite radio's growing popularity, and as a way to lure consumers away from portable music devices such as Apple Computer's iPod.
With technology created by a company called Ibiquity and approved by federal regulators in 2002, HD Radio sharply improves sound quality and allows broadcasters to expand programming with extra channels or streams of data such as traffic and weather information. At least for the first two years, Alliance members will offer these additional channels commercial-free, the group said.
The member organizations will be coordinating programming decisions on these extra channels, which the industry is calling HD2, hoping to avoid overlaps, Ferrara said. Thus, if two stations both want to broadcast classic rock, for example, the Alliance will assign it to just one station, pushing the other to pick a different format.
Ferrara said this arrangement, which will see rivals with substantial market power working unusually close together, does not present antitrust concerns.
"We have been very well-counseled from the antitrust standpoint and don't see that as an issue," Ferrara said. "It is tough to be anticompetitive when there are no radios out there for people to listen to."
Keith Dubanevich, an antitrust attorney with Garvey Schubert Barer, said the agreement was atypical but would depend on the details of how the group resolved disputes, and how easy it will be for nonparticipating stations to launch competing formats.
"It would start to look problematic if Nike and Adidas agreed that Nike would only make soccer shoes and Adidas would only make basketball shoes," Dubanevich said. "This is a little like that. But it is definitely not a clear-cut antitrust issue."
The alliance also will launch a nationwide consumer marketing campaign beginning in early 2006. The companies have jointly pledged to devote at least $200 million in commercial inventory, or advertising space, to the effort next year.
The companies involved include Bonneville International, Citadel Broadcasting, Clear Channel Radio, Cumulus, Emmis Communications, Entercom, Greater Media, and Infinity Broadcasting. Other U.S. radio networks are eligible to join, the group said.
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