Is Satellite Radio Killing Broadcast Radio?

By Douglas Hanna

Local radio has taken a beating from satellite radio. But are XM and Sirius capable of killing local broadcast radio?

The broadcasting corporations such as Infinity and Clear Channel are answering with an emphatic "no!" And they have a powerful weapon called HD Radio to back up their position.

HD Radio is digital radio. As such, it enable a dramatic increase in sound quality. In fact, it makes AM radio sound as good as today's FM and FM sound as if you were listening to a CD.

Other important reasons

But there are other, equally important, reasons why satellite radio will never replace conventional radio. First and foremost, is cost. Satellite radio costs anywhere from $11 to $14 a month and conventional radio is free. As a result there are only about 5.5 million satellite radio listeners in the U.S.and literally hundreds of millions of broadcast radio listeners. It's pretty hard to believe that satellite radio will ever have 100 million listeners, let alone several hundred million.

Second, satellite radio can't deliver local information or programming. People will always turn to their local stations for weather, traffic reports, news and to hear their favorite personalities.

Third, satellite radio cannot continue to hire personalities such Howard Stern and Bob Dylan to attract subscribers because the cost is just too prohibitive vs. revenue generated from new subscribers. In fact,J.P. Morgan just downgraded the stocks of Sirius Satellite Radio and XM Satellite Corp saying that these two companies face near-term challenges to subscriber growth.

With a new concept called HD2

Because HD radio is digital, it requires less spectrum. This allows stations to broadcast their primary FM channel in digital and up to two more subchannels. These subchannels, which are being called HD2, will be used by broadcasters for new programming content. For example, a station might broadcast oldies of the 80s on its primary channel and hits from the 70s on an HD2 channel. The subchannels will not only be free, they will most likely be commercial free to compete head-to-head with satellite radio.

In short, broadcast radio is not going to die anytime soon. Or anytime at all.

To learn more about HD radio, please go to my Web site, http://www.hd-radio-home.com, to get all the buzz.

Douglas Hanna is a retired marketing executive and the author of numerous articles on HD radio, old time radio and family finances.

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