Paul Gluckman

FCC set Feb. 19 deadline for comments, with replies March 21, on National Radio Systems Committee (NRSC) report recommending Commission’s adoption of iBiquity Digital in- band, on-channel (IBOC) FM system. IBiquity Pres. Robert Struble said company was “right on target” for commercial introduction of first IBOC receivers year from now at Jan. 2003 Las Vegas CES. Introduction of first IBOC broadcast equipment is expected at NAB convention in April. Meanwhile, iBiquity said at CES in Las Vegas Tues. that it had submitted test data on IBOC AM system to NRSC for evaluation. It said field tests were done at 2 commercial AM stations and one experimental station. Subjective listening tests found IBOC AM sound quality comparable with that of existing analog FM, it said. IBiquity has said IBOC FM system has “near-CD” quality. It also announced new licensing agreement under which Visteon will incorporate IBOC AM and FM reception capability into automotive OEM radios set for availability in time for 2004 model year.

LAS VEGAS -- Sirius Satellite Radio’s 2002 rollout plans will have predictable ring of familiarity as new CEO Joseph Clayton told news conference Mon. at Consumer Electronics Show (CES) here that aim would be to repeat successes of 1994 DirecTV launch over which he presided as senior Thomson-RCA executive.

Five years to week after departing CE industry, former RCA veteran Joseph Clayton Tues. assumed pres.-CEO post at Sirius Satellite Radio and told us in interview that learning “how to be retailer-friendly” would be company’s top priority as it prepared 3-city commercial launch Feb. 14. “We'll be putting on a full court press for CES,” Clayton told us. “First and foremost we have to learn how to be retailer- friendly.” Aftermarket sales of digital radio will be most important prong of Sirius’s strategy for 2002, he said, echoing letter and spirit of strategic plan expressed earlier by other Sirius executives. OEM factory build-in of receivers by automakers is priority that will follow later.

Following delays caused mainly by chip problems in its receivers, Sirius Satellite Radio Wed. set Feb. 14 launch date in Denver, Houston and Phoenix markets, saying national rollout would be complete by 3rd quarter next year.

Satellite radio operators XM and Sirius are facing major hurdles in beginning service, meeting financial requirements of their cash-intensive start-ups and gaining widespread acceptance, officials said. Neither is expected to hit subscriber targets by end of next year, and 2nd to market Sirius has delayed debut of its service until next year because of problems with chipset, Lehman Bros. analyst William Kidd said. Sirius continues to test its service and will “continue testing chipsets for some time,” spokeswoman said. Chipsets had been scheduled to be ready for receivers by late Sept. or early Oct. Sirius CEO David Margolese also announced resignation Tues. Kidd said he believed move was effort to restore investor confidence, but Sirius Senior Vp Doug Wilsterman said Margolese’s departure after 10 years as CEO was unrelated to latest delay in company’s commercial launch. Sirius will announce full range of plans in conference call Nov. 14.

Declaring that “the stage is set” for commercial rollout of in-band, on-channel (IBOC) digital audio broadcasting (DAB) radio next year, iBiquity Digital Thurs. hailed results of its digital FM tests submitted day earlier to National Radio Systems Committee (NRSC) as scoring high marks in crucial areas of audio quality, robustness of coverage and compatibility with existing FM infrastructure.

XM Satellite Radio Tues. became first of 2 satellite digital audio radio services (DARS) providers to attach specific dates to start of its commercial service, saying receivers and 100 channels of programming would be available for $9.99 monthly subscription fee in Dallas-Ft. Worth and San Diego starting Sept. 12. Introduction will be expanded to southwestern states encompassing 25% of U.S. in mid.-Oct., followed by nationwide debut in early Nov., senior XM executives told N.Y.C. news conference.

Suppliers shipped 227,349 DTV sets to dealers in 2nd quarter, up 166.7% from 85,241 in same 2000 quarter, CEA said. Statistics include sales of DTV-ready sets and those with integrated decoders. Dollar shipments climbed 90.5% in quarter to $406.68 million as average selling price fell 28.6% to $1,789. For first 6 months of 2001, DTV sales to dealers rose 162.4% to 461,907 sets and dollar volume grew 95.8% to $868.76 million. CEA praised DTV sales performance in June, when suppliers shipped 90,973 sets worth $159.46 million. CEA said June increase represented 3rd straight month of sales growth in 2001 and 82% rise from units shipped in June 2000. However, CEA said suppliers shipped 3.1% fewer DTV sets in 2nd quarter than in first (227,349 vs. 234,558) and dollar volume declined 12%. Nevertheless, CEA Pres. Gary Shapiro said 2nd quarter’s strong finish was proof that “consumers are clearly sold on digital quality.” He said “strong momentum” in DTV set sales should serve as “call” for broadcasters and other content creators “to provide more high-quality digitally originated programming” and for cable industry to resolve must- carry and cable-DTV product compatibility issues.

In busy week of developments, XM began $100 million offering in convertible notes and 5 million shares of Class A common stock. In SEC filing, XM said funds it raised through Dec. 31 would be sufficient to support operations through summer debut of commercial service. However, “substantial” additional funding may be needed if commercialization schedule is “materially delayed.” Company estimated it would need to raise additional $150-$175 million to cover funding needs through end of 2001, and additional $250-$300 million for operations through 2002. Already, XM has been beset by delay of Jan. satellite launch, which has been rescheduled for March, although company has said postponement would have little or no material effect on its financial viability.

Cable networks “offer advertisers unique opportunities” and industry must “exploit those opportunities because none of us is really satisfied with getting such a small percentage of the pie,” Viacom Pres.-COO Mel Karmazin told Cable Ad Bureau conference in N.Y.C. Tues. He cited statistics showing that cable accounted for only 5.5% of total ad pie as evidence that cable ads had bigger potential for growth compared with other media. Advertising “has become so much more important” than ever before that even in “unlikely” event of recession this year, ad dollars “will not dip” in 2001, Karmazin said. He said Viacom believes that overall ad revenue would grow 5.8% in 2001, with more “significant” increase likelier in 2nd half than in first because of “difficult” comparisons with first 6 months of 2000 owing to “dot.com” phenomenon. Karmazin said he started in ad business in 1967, “and in my entire career of selling advertising, I never saw anything like what we experienced with the dot.coms.” He complained that dot.coms were “freely” given “ton of money” by Wall St. to spend “in a manner that had no relevance to return on investment or toward getting results. It was all about getting more visible so they could sell more stock.” Future of cable advertising is even rosier than that of general industry, and if overall ad revenues are expected to grow 5-6% this year, cable ad growth will be at much faster pace, Karmazin said, without being specific. He said ad revenue had grown in every year since 1990 except for 1991 when Gulf War sparked recession. Chastising journalists, he said, who “write all those obnoxious reports” casting doubts about ability of cable ad industry to withstand recession, Karmazin said that in 1991 cable ad dollars jumped 14% when U.S. economy posted virtually no growth. He said factors that had made advertising relatively impervious to economic downturn included increasing competition, rising importance of branding and sheer growth in number of new products. He said proof that 2001 would be robust ad year could be found in results of CBS Super Bowl telecast; he said average commercial spot this year brought in $2.3 million compared with $2.1 million in ABC broadcast year ago, despite fact that number of dot.coms buying air time dwindled to 3 from 17.