Local firm gets role in switch to digital radio

IBiquity to help Clear Channel in converting 1,000 stations

July 24, 2004|By Tricia Bishop | Tricia Bishop,SUN STAFF

Radio giant Clear Channel Communications Inc. has partnered with a Columbia company to begin the transition of 1,000 of its stations to digital - or "high definition" - broadcasting, which has been described as the biggest development in radio since the advent of FM.

The move could help speed the industry's adoption of the technology, which offers CD-quality sound and screen data displays such as song titles and weather alerts. The company hopes to stave off a decline in listeners lured away by competing satellite radio, a paid service.

"It's basically a major milestone in us achieving our ultimate objective, which is to roll out [high definition] radio across the country," said Robert J. Struble, chief executive officer of iBiquity Digital Corp., the Columbia firm that created the digital broadcasting technology.

Only about 125 of the country's 13,000 radio stations offer digital broadcasts, Struble said, and just three manufacturers make digital radios - JVC Co. of America, Panasonic Matsushita Electric Corp. of America and Kenwood Corp.

Thus far, the high-definition radios are sold only for autos and cost between $500 and $1,000. But Struble hopes Clear Channel's embrace will induce others to jump on board.

"Digital broadcast radio has the potential to be the most important development since FM stereo," said Laura Behrens, a senior media analyst with GartnerG2, a research firm in Florida. "The quality of the audio is stunning. ... It means that music can be played on AM again."

Clear Channel, which invested in privately held iBiquity in the late 1990s, announced the partnership Thursday, though terms of the deal were undisclosed. It owns less than 10 percent of iBiquity and has one seat on its nine-person board of directors.

By 2007, Clear Channel expects to convert 95 percent of its 1,200 AM and FM stations to digital in its top 100 markets, which include the Baltimore-Washington area, as well as New York and Cincinnati. The conversion initially will cost about $100,000 a station, but the price is expected to decrease as the technology becomes more popular.

"Digital radio is a transforming application and Clear Channel Radio is committed to passing on its benefits to our listeners," said Kevin Lockhart, senior vice president of the company's technology department. He said the acquisition would give the radio industry a "powerful advantage" over competitors.

In its second-quarter earnings report released yesterday, Clear Channel reported a 3 percent increase in radio broadcasting revenue over the corresponding period last year, driven largely by syndicated programs, which have recently put the company in the news for a different reason.

Clear Channel, whose stations have a combined 110 million listeners, dropped radio personality Howard Stern from six markets in February after federal regulators complained the shock jock's show was too salacious. Last month, Stern and his distributor, Infinity Broadcasting Corp., filed a $10 million lawsuit against the company, which counterattacked with a $3 million lawsuit filed Wednesday, claiming Stern broke his contract with them.

In May, Clear Channel agreed to a $1.75 million settlement with the Federal Communications Commission to resolve indecency complaints against Stern and other radio personalities.

To avoid content regulation, Stern has threatened to take his show to satellite radio, which is offered by two public companies - XM Radio Holdings in Washington and Sirius Satellite Radio in New York. They have a combined customer base of 1.5 million.

"Radio stations are going to have to go digital to compete with satellite," Behrens said, adding that content would make the difference later when sound quality was even.

Struble's company also supplies digital broadcasting technology to the two satellite broadcasters.

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