Gravity Medium

Caddyshack, a favorite movie from my teen and college years (oh, who am I kidding — it still cracks me up!) includes a scene with the late Rodney Dangerfield in which he’s on the phone with his stock broker. Dangerfield plays an obnoxious nouveau riche land developer by the name of Al Czervik.

Excitedly Czervik shouts into the phone: “Buy, buy, buy!” and after a pause to listen, “They’re all buying? Then sell, sell, sell!”

That last piece of advice now appears to apply to stocks in the broadcasting sector, according to a report in BusinessWeek, which includes this ominous quote:

Meanwhile, traditional broadcasters will probably remain challenged by secular factors such as audience fragmentation, as advertisers shift more spending to the Internet and other new media platforms, Amobi says. A terrestrial radio recovery could be impeded by a continued supply and demand imbalance, while the satellite radio companies have also seen anemic retail sales, even as they await a likely imminent regulatory decision on their pending merger proposal. However, TV advertising offers a bright spot, in our view, with a relatively strong 2007-08 upfront and scatter market for the networks, and a specter of record political dollars for local stations with the upcoming Presidential elections.

To be fair, this isn’t exactly breaking news. Audience fragmentation has been the hallmark of the 21st century as media outlets and platforms proliferate and the old media companies actually accelerate their decline by reflexively going for ratings with sensationalist and over-commercialized programming.

And on the matter of TV advertising, what happens after the 2008 election cycle? That’s not a pretty picture, even if it does come in HD.

Chart created by Bridge Ratings (2006). Click for a larger version.

Last week on the PUBRADIO mailing list, the topic of HD Radio came up again. Commenters went one way, then another — all talking about programming and broadcasting as they usually do. Technology didn’t really enter into the equation, yet it’s one of the core issues in terms of consumer adoption patterns.

Why is HD Radio failing to catch on? Lots of reasons easily come to mind:

• Broadcast audio streams aren’t something new — it’s called Radio and we’ve had it for 100 years; why bother to get a new radio when the old one works fine?
• The higher quality audio possible with HD Radio is nice, but in most listening situations (cheap radios, cars in traffic, noisy offices) the improvement over analog FM is negligible
• Multichannel service really hasn’t arrived at most HD-capable stations so far
• While HD Radio signals are less prone to some types of interference, real-world experience suggests it’s a generally weaker signal, especially if you’re comparing devices with internal antennas (clock radios)
• Though most consumers don’t know it, there are software revisions appearing with HD Radio right now, and most radios are not field-upgradable — it’s not “safe” to invest big bucks in receivers yet
• Satellite radio has blunted the multichannel argument and still offers less commercialism than an HD Radio multichannel service would (admittedly, you have to pay for sat radio, but many are willing to do so)
• Internet audio streams have a bigger audience already and are growing faster than all other streamed audio services

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