[BC] AP article re HDRadio - Inventory Figures

[Rich Wood]

------ At 10:26 AM 8/2/2006, Sid Schweiger wrote: -------

>They're so hot on this new tech, which no one has receivers for, 
>that they are completely blind to the economic joke they are playing 
>on themselves...doubling the number of FM signals out there without 
>any income to pay for them for at least two years.

I guess I have to figure this out and see if any General Sales 
Manager would clutch his chest when told he has to help come up with 
an additional $1.6 billion in 7 years or so. Mel Karamazin at 
Infinity couldn't get 8% growth with whips and chains.

Let's use your market, the Boston Metro (based on Radio-Locator):

31 total FM stations (not including WGBH's translator)
23 commercial stations in the metro
         With secondaries (one each) makes 46 "radio stations"
AM stations not included.
Very conservative inventory estimate of 10 minutes per hour - Talk 
stations have much more. Commercial trends lean towards :30s That's 
20 units per hour. :30s generally get 80% of :60s Gotta charge more.
240 minutes of inventory per day extra.

That's 87,600 additional minutes per station per year to be sold - 
double the existing undersold inventory. Very few stations are sold out.

For the market we're adding a conservative total additional inventory 
per year of 2,014,800 :60s or 4,029,600 :30s.

For a couple of decades none of those commercial minutes can be 
filled with network inventory or trade (no audience). No network 
would allow their inventory to run where there's no documentable 
audience. Advertisers would be cheated. Same with trade. A retail buy 
would require that the advertiser be told how tiny the audience is. 
It's hard to hide that from a local advertiser. So long as the local 
buyer is informed of the audience size and chooses to to buy, no one 
is being cheated. Stations will be using the inventory as 
(no)value-added and will have to come up with creative merchandising 
linked to their analog audience.

With all that extra inventory floating around (assuming a large 
enough digital audience materializes) I think it's a safe estimate 
that the value of your analog/main inventory might be reduced by 
about 40%. That's hard to pin down because all stations don't have 
the same numbers or rates.

I'd call adding more than 2 million minutes of inventory in Boston to 
be glutting the market. If this were oil in a free market we'd 
probably be paying 50 cents a gallon.

Remember that Docket 80-90 made selling what we had more difficult. 
More stations equals more inventory and fractionalization of the 
existing audience.

Rich