[BC] The economics of digital

Mike McCarthy Towers
Fri Jul 28 09:48:17 CDT 2006


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


>I keep hearing all of this talk about iBiquity's "greed," yet no one 
>seems to want to acknowledge the 10+ years of R&D that iBiquity and 
>its predecessors (USADR and Lucent) put into development of IBOC 
>before they saw a dime of cash flow. They risked a lot of capital on 
>that project, and I suspect that they are still far underwater 
>financially when one considers their total investment.
>
>Bob ORban




More information about the Broadcast mailing list