December 30, 2021

As 2021 comes to a close, the subject of AM radio’s continued viability in the coming years has arose anew, driven by the decision of companies including Cumulus Media to surrender the licenses of stations that have had their fair share of challenges.

While some may shed a tear over these station’s final broadcasts, there is a bigger, more fundamental question that needs to be asked: Did the U.S. radio broadcast industry fail to future-proof itself when it decided to embrace in-band, on-channel HD Radio instead of progressing to DAB, which much of Europe and Australia have adopted?

Yes, and no.

While HD Radio has been an underperformer since George W. Bush was in the White House, shifting to DAB would have created two situations the industry worked very hard to successfully avoid.

First, media brokers trade AM and FM radio stations based on valuations largely tied to a “POP” statistic derived from a signal contour, and the total reach of a facility. In 2005, that made sense. Today, it’s sort of stupid, given the ZoneCasting follies set to commence, with FCC approval, and the push by narrow-sighted marketers for addressable advertising across every platform — even those built for reach, the greatest tool a savvy and seasoned marketer could ever want or desire. The valuation model is broken.

This supports our belief that the industry failed to future-proof itself 20 years ago in not going the DAB route, which has kept radio quite healthy in Europe and in Great Britain, despite the rapid consolidation of owners across the U.K. in recent years. DAB listening estimates for London and the U.K., according to RAJAR, are quite healthy. But what about stick value? Who cares. The value is the brand. There’s a reason why Kiss, Heart, Capital, Xfm, Absolute Radio, GHR, TalkSport, LBC and Magic, among other brands, attract listeners and advertisers. A home at 104.6 or 105.8 on the FM dial has little to do with it.

If only American broadcasters put their station valuations on content, rather than signal contour and “POP” value, especially at a time when “you can listen on your smart speaker” further erodes the old-school stick value model.

This tarnish to valuations is stronger, and more damaging, to AM radio stations, which didn’t receive “revitalization” with the FM translator but a Band-Aid of salvation by putting it on a band regularly consumed by the majority of radio listeners.

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Does this make AM radio “worthless”? Of course not. Multicultural and religious broadcasters have much to gain from the continued accessibility of AM radio, combined with audio streaming. HD Radio on AM has value.

But, perhaps most importantly, and backing our belief that, no, the industry did not err in rejecting DAB, is the relationship of AM radio to iHeartMedia, the nation’s biggest licensee.

KFI-AM 640 in Los Angeles
WOR-AM 710 in New York
KTRH-AM 740 in Houston
WBZ-AM 1030 in Boston
WIOD-AM 610 in Miami

https://www.rbr.com/is-am-radio-future-proof-saying-no-to-dab-impacts-the-answer/