[BC] The economics of digital

[Steve Newman]

I'm the eternal optimist but this one doesn't make the cut. The figures 
do...the reality doesn't. (my opinion) Let's watch and see.

Steve


----- Original Message ----- 
From: "Mike McCarthy" <Towers at mre.com>
To: "Broadcasters' Mailing List" <broadcast at radiolists.net>
Sent: Friday, July 28, 2006 9:46 AM
Subject: [BC] The economics of digital


>I said this once before and it bears repeating.  The broadcasters of the 
>USA and elsewhere which adopt this system are merely a loss leader or maybe 
>a break-even point for Ibiquity. Ibiquity will not clear a dime selling the 
>transmit side of the equation. The "seed money" so to speak.  Even if every 
>single station in the USA buys the system, they're still in the hole by 
>many tens of millions.
>
> If/when receiver production/sales pick up, the royalties associated with 
> the firmware (license) loaded in each radio will be the big payoff.  At 
> $20/RX royalty, 10M radios yields the $200M investment made to date.  I'm 
> sure that royalty will scale down somewhat in future years.  But even at 
> $5/RX, 200M radios is $1BILLION.  (It is said we have something over 400M 
> radios in the USA at this time.)
>
> For the purpose of this argument, assume it takes another 10 years to get 
> to that 200M point.  I'll gladly take a 5X return on my initial investment 
> in even 10 years.  40% annual return. That's Wall Street's thinking....as 
> well as the broadcaster investors...
>
> NOW...having aid the above.  It's a HUGE gamble and the risks extremely 
> great.  There is no certainty to the payback or payoff.  But when iut 
> happens, it will pay off big to the backers.
>
> MM