After its lackluster appearance at the NAB Show earlier this year, HD Radio‘s new owners, DTS Inc., are trying mightily to demonstrate that the technology remains a viable future for broadcast radio. In May, DTS announced its first-quarter financials, representing the first full quarter of its ownership of iBiquity. As expected, the acquisition had a positive effect on DTS’ bottom line, no doubt from the revenue stream involving licensing HD receivers in cars (for which the company gets paid as much as $12 per unit).
Presently, however, HD Radio is found in just 37% of all new vehicles sold in the United States — a far cry from widespread penetration, but more than enough to move the needle in DTS’ ledgers. According to a company conference call earlier this year, the acquisition of HD Radio is part of a pivot by DTS away from developing/acquiring audio enhancement systems for home entertainment technologies (which are on the decline) and toward the mobile and portable device spaces (which are growing mightily). By the end of 2016, DTS expects its automotive division (which includes HD Radio) to account for some 40% of all revenues.
DTS also made its first foray into FCC broadcast policy with comments filed in the agency’s ongoing AM revitalization proceeding. It’s a loaded missive that encourages the Commission to utilize AM’s expanded band to aggressively develop all-digital AM-HD broadcasting, and to make sure that it does nothing to improve analog AM service that might detrimentally impact digital AM signals. DTS contends that all-digital AM-HD broadcasting could very well be “economically feasible” at this point in time, given the existing automobile receiver penetration rate. It even suggests that AM-HD adoption be mandatory for any new stations that sign on to the expanded band, calling it “illogical to introduce new AM broadcasts. . .that would require additional upgrades in the future in order to provide digital service.”
Until DTS removes the broadcaster license fee on HD Radio technology, and broadcasters themselves demonstrate some actual, tangible demand for moving AM radio to an all-digital environment, the FCC is unlikely to oblige DTS’ policy wishes. Meanwhile, continuing tests of the all-digital AM system by the NAB show that there are still problems with all-digital AM-HD’s nighttime performance, but the push is on to develop industry consensus that, generally speaking, all-digital adoption should not raise any new interference concerns for existing analog AM operations.
Finally, there are still signs that implementing HD Radio successfully in the field is far from a plug-and-play affair. DTS’ (née iBiquity’s) chief scentist penned a long treatise in the trades this spring about continued issues with stations unable to properly sync their analog and digital transmissions; if the HD stream drops out, the system is supposed to “seamlessly” blend back to the analog signal of the station, but if the two transmissions aren’t aligned properly in time the transition sounds like a stutter at best.
This ongoing problem is not blamed on choices made “in the early days of the technology’s rollout” that involved “budget constraints,” which “led to compromises in equipment selection that have had significant impact on blend performance.” The solution: rebuild stations’ airchains to make sure that analog and HD signals take the same aligned path from studio to transmitter, and to equalize their loudness. In an industry facing effectively flat revenue growth for the rest of the decade, just how likely is that to happen?