HD Radio: Fun with Math

Let’s pretend we fast-forward about ten or fifteen years to a time when, let’s say, there are 20 million HD radios in the hands of consumers. Although no radio group-head has, to my knowledge, provided any measure of what a successful HD radio distribution would be, I would have to believe they would consider 20 million radios to be successful.

And let’s further assume that these radios are only sold in the top 50 markets (for the sake of simplicity – it makes my argument stronger if we do NOT assume this).

If we then assume that radio unit sales are proportional to population, we would find, for example, more than 2 million radios in New York. If we assume that each radio is listened by by 1.5 listeners (it’s probably not that high in reality), that’s over 3 million listeners, meaning the entire distribution channel would have the cume of about two conventional New York radio stations or one really, really good week for Z100.

Now, let’s say HD yields roughly twice as many HD stations on the dial as conventional ones, and let’s just say that number is 60.

If we divide the number of listeners by the number of stations, we find that the average HD station in New York would have an average audience of 56,000.

And that’s New York.

In Washington, the number is 15,000

In Denver it’s 7,000.

In Columbus it’s 5,000.

In Memphis it’s 3,800.

And that’s with 20 million HD radios in circulation, a number we’re not likely to hit until many of today’s group heads have retired. A number roughly double the current distribution of satellite radio.

Now, these numbers are very, very rough. But they’re close enough to make a point crystal clear. So my question, in all candor, is this: What’s the revenue model here? I’m not being critical. I really want to know.

For satellite radio, a national service under one big roof with subscription support, I get it. But explain to me the model for HD Radio, please.

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