DTS Cites Power of OTA Radio in iBiquity Buy

High-definition audio supplier also sees market opportunities in its acquisition of the HD Radio supplier
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According to DTS, its pending acquisition of iBiquity Digital is prompted by the strength of the HD Radio market and what the buyer sees as significant opportunities to expand its audio offerings into the automotive, home and mobile environments.

“DTS has long been at the forefront of the highest quality audio technology, and we saw a similar spirit at iBiquity, [where we saw] an opportunity to revolutionize traditional AM/FM broadcasting and capitalize on broadcast radio’s ongoing digital upgrade,” said Jon Kirchner, right, chairman and CEO of DTS, during a morning conference call. DTS grew out of the cinema sound market, and its current offerings include surround-sound codecs and implementations in consumer gear like Blu-ray players and car audio.

“This transaction extends our reach into the global and growing digital radio broadcast market. We believe broadcast radio has interesting opportunities for expansion in home and mobile markets.”

IBiquity’s penetration of HD Radio technology in the North American automotive market was a compelling factor in the $172 million acquisition, DTS said. On the station side, about a fifth of licensed full-power FM stations have adopted HD Radio, but iBiquity estimates that those account for about three-quarters of U.S. listening, and says it has been making inroads in smaller-market stations as well. Meanwhile each of the 36 major auto brands serving the U.S. market is offering HD Radio on some of their vehicles, and DTS expects the majority of North American vehicles to be equipped over time.

The company also pointed to the power of traditional over-the-air broadcast to provide compelling content and entertainment to listeners. Citing increasing costs that consumers face in using broadband for entertainment, “free over-the-air broadcast radio — upgraded to digital with HD Radio — has an important place in the range of options,” said Kirchner. “This was a natural fit for us,” he said.

Bob Struble, president/CEO of iBiquity, echoed that theme. “I view this as a strong vote of confidence for terrestrial AM and FM broadcasting,” he told Radio World during a phone interview. DTS, he said, is “a state-of-the-art tech company that has looked long and hard at the business we’re developing, one that is based solely on AM and FM radio, and come to the conclusion we’re a valuable asset that they want to have as part of their company.”

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