All Access Exclusive: A Changing Of The Guard As Diane Warren Succeeds Peter Ferrara At HD Alliance
September 3, 2008 at 11:46 AM (PT)
It's nearly 2009, and for the last two years, HD DIGITAL RADIO has been the most advertised product on radio. Has the campaign been successful? Where is this fledgling platform headed? In an exclusive interview with ALL ACCESS President/Publisher JOEL DENVER, current HD DIGITAL RADIO ALLIANCE President/CEO PETER FERRARA announced that he was stepping aside to become Strategic Advisor, and EVP DIANE WARREN is promoted -- replacing him as President.
At the same time, on the just-completed HD DIGITAL RADIO ALLIANCE annual update conference call, it was announced that "all of the major objectives for programming on which the ALLIANCE was founded have now been achieved and all restrictions on how member broadcasters can program and generate revenue from their HD2 broadcasts have been completely lifted. At the same time, the ALLIANCE announced that all member broadcasters have pledged to preserve the local diversity and consumer choice of their HD2 content, as well as the clutter-free nature of the programming."
HD will play a role in areas of content at the local level, which is what drives radio listening. We are up for and capable of the challenge of Internet radio.
Why is FERRARA stepping down? He said, "I was very heavily involved in the selling of this technology to the radio companies to get behind it. I also acted as an arbiter as we rolled out the Top 100 markets on a technical and format-diversity standpoint. I was also involved in the early initial deal-making with receiver makers, automotive companies and retailers. While most of the partners are in place, more deals are still coming. We have accomplished a big part of what we set out to do -- and while there is more to be done, the duties are more marketing and consumer-oriented and DIANE is more qualified and better suited to do this. It's a natural point to hand her the baton."
WARREN added, "We have a whole lot of folks who are very committed to HD RADIO and its growth and I think these changes will help make a difference and drive marketing and revenue. We will focus on consumers now. PETER will still be here on advisory level, with the new focus on showing consumers the benefit of upgrading to HD RADIO."
"We think it's time to put more control and priority at the local-market level to make it work in their market places. We are enlisting the entire radio army to get this done," added FERRARA.
Is The Radio Army Marching In The Same Direction?
Given the economic state of radio and the economy at large, where is this investment in resources, and the demand from the public coming from? Many radio broadcasters publicly espouse commitment, but don't have the monetary resources to adequately operate their current stations, much less another set of HD2 stations. Why are they going to spend money to develop HD2? And, with programmers strapped for time, overseeing several stations, do they have the focus or incentive to develop HD2, when the priority has been to drive more website traffic?
"Everybody needs to and will continue to keep current stations robust as it's the primary business, but they simultaneously see that growth left only to analog is not looking down the road 5 or 10 years," said FERRARA. "It's about doing today what will make more profits tomorrow. This is a call to everyone in the business to be a part of something bigger than what radio is today. It may be yet another new breed of people coming into the business, like the advent of FM radio. Many programmers don't think this is a pain in the ass, but see it as a a great opportunity.
"If all we were doing was turning this over to the local programmers, we'd still see this as an issue. We've also lifted the commercial restrictions. Now market managers can make money with HD2 and incentivize programmers. There is now sponsored content -- and this competitive spirit will take hold and management will now devote more resources to it. I think this will grow and this curve will ramp up fast," forecast FERRARA.
More Challenges Ahead
While neither FERRARA nor WARREN would quote an exact number of HD RADIO units sold to date, they did predict that "we will hit 1 million units sold sometime this year," crediting a wider range of receivers, lower prices and the added support of the auto industry.
Still, there is the question of poor reception issues plaguing HD2 signals and whether a power increase will be granted. There is also the number of choices consumers have: AM, FM, SIRIUS XM, iPODs and the Internet -- particularly the growth of IP-based car radios. And there is the question of a receiver that can receive them all.
FERRARA admitted, "I have a ton of HD radios and when you reach the outer fringes of the HD2 signal it drops off. Testing is being done on increasing the power for HD2. It's currently very low and it doesn't need to be that low.
"The bandwidth required to effectively do WIMAX in the car and have a legitimate business model is years and years away. It's not going to happen within the next 10 years. Within that time frame, HD will play a role in areas of content at the local level, which is what drives radio listening. We are up for and capable of the challenge of Internet radio. Additionally, HD RADIO will also provide data services, commercialization and two-way communication, being able to maximize the bandwidth to profitability."
There are going to be nearly 80 models of HD RADIO available by CHRISTMAS, and the highly-criticized radio campaign -- in some circles -- is being refocused on consumers.
Given all of that, the question was simple: "What are the three most important things that can be done to make HD DIGITAL RADIO and HD2 programming successful?" FERRARA said:
1. We need the people in the local marketplaces to make HD RADIO and HD2 stations a priority to themselves, advertisers and the listeners, setting aside the current resource and financial environment limitations.
2. The content that's on the air; people have shown over and over again that they will tolerate a bad signal or a poorly designed web page ... if it's got the content that they want. They will find a way to get it. They will find a way to buy the receivers to get the programming they are hearing a buzz about.
3. The companies and CEOs need to have a longer vision and continue to look out into the future. If I could have only known what FM would have become in 1969, the things I could have done from a visionary standpoint. A long-range vision and perspective -- we want to continue to foster that.
WARREN answered the same question:
1. Keep the drum beating to keep market managers and PDs focused on the potential to engage the process of growth.
2. Continue our consumer marketing at a high level of saturation, driving home the benefits of unique programming.
3. Implement creative consumer-targeted campaigns, like our text messaging. Done in two phases, they text the word 'win" to 34343, which starts the conversation. They can win a $50 rebate on any HD radio and opt-in and be registered to win one of 200 iLuv i168 HD radio devices. Then we continue to send them information. We have found that 65-85% of those who contact us are opting in, and HDradio.com has 82% of its traffic coming from new visitors. It's become a destination that gets good HD RADIO info into the hands of the consumer.
We are on road! HD2 users are still users of local radio and the more content that they can get, the more time they will spend with local radio. We have to give them enough diverse content and variety to be engaged.
HD2 Stations -- Is There A Buzz?
While a number of high-level radio execs and programmers have privately admitted that they are not feeling the needle move on their HD2 stations, GREATER MEDIA VP/Program Development BUZZ KNIGHT feels the opposite, and spoke about his company's commitment to HD2 programming.
"We are very proud of two great examples ... one of them is RIF2/DETROIT, with some of the finest programming on it that stacks up to terrestrial channels. Developed from SVP/GM-Interactive TOM BENDER's insight and passion and WRIF APD MARK PENNINGTON's passion, they are doing something special -- all with an eye on growing talent for our main stations and to do something in which they can instill pride and enthusiasm. RIF2 is a younger version of WRIF. More active and localized, it's an active part of the Rock scene in DETROIT. And RIF2 personality SUZY COLE has developed into a strong bench person for WRIF."
KNIGHT added, "The other great story is WBOS/BOSTON HD2. Called RADIO U BOSTON, it is more Alternative and adventurous than we can be on a regular station. We do some younger-targeted programming and cultivate new talent, getting kids from the community interested in our business, which is a challenge. This came out of discussion with EMMIS Pres. RICK CUMMINGS about bringing new folks into the business. LAUREN LAROQUE is one of our main RADIO U talents -- and she has come a long, long way. HD2 is about risk taking, and WBOS APD PAUL JARVIS runs this station, and embraces all of the challenges in a creative manner, and it's making a difference."