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Going Digital: Our Interest in Radio

DTS CEO says iBiquity Digital and HD Radio provide a strong growth opportunity for the company

The author is chairman and CEO of DTS Inc.

Oct. 1, 2015 was a great day for DTS Inc. Since our founding in 1993, DTS has been dedicated to making the world sound better by providing leading edge technology and innovative solutions. On that day, we expanded the scope of our business with the acquisition of iBiquity Digital Corp. and entered the world of broadcast radio.

HD Radio technology represents the biggest advancement in terrestrial radio broadcasting since the advent of FM radio and is poised for a very strong future in the USA and abroad.

Jon Kirchner As a technology company, we have a long history of innovating in well-established fields of consumer entertainment. We achieve this through a combination of cutting-edge R&D along with strategic partnerships and acquisitions. Over the years we catalyzed a revolution in the motion picture entertainment experience, developed widely acclaimed solutions for the mobile market, and have helped redefine the entertainment experience in the home, in cars and on the go via mobile and portable entertainment devices.

With a rich history of innovation, we are proud to have developed game-changing audio technologies like DTS Headphone:X, which delivers fully immersive sound through any headphones, and DTS:X, a next-generation object-based audio technology for cinema and home theaters, that will play an important part in how entertainment is delivered and consumed over the next decade.

This is important because the platform technologies we have developed serve as a key bridge to how we think about innovating within the radio space — where offering a more compelling, useful, interactive and value-added solution for broadcasters and consumers alike sets the stage for wider adoption of HD Radio and various DTS technologies. Also important is ensuring our efforts are geared to help preserve the business and future of the well-established and ubiquitous radio medium.

Fundamentally, we believe that iBiquity Digital and HD Radio technology provide a strong growth opportunity for DTS.

The companies have very similar business models, serve many of the same customers in the automotive and consumer electronics space, and collectively are well-positioned to operate an independent and neutral platform for the radio industry.

The fact that we are so similar gives us high confidence that we will be able to facilitate a smooth and fast integration, paving the way for us to focus our energies on addressing the challenges in the market and better serving our radio broadcaster, automotive and end-consumer customers.

This transaction is expected to increase overall awareness of DTS and perceived listener value. It also gives DTS a bigger footprint in the automotive space. Over time we believe that cars will become an ever more important intersection point for technology as consumers seek to have seamless, integrated multi-device content experiences across various listening environments.

One of the key considerations in this acquisition was the strong support of HD Radio technology by both U.S. broadcasters and major car manufacturers.

More than 2,300 radio stations have licensed HD Radio technology and have demonstrated a commitment to growing the market for digital radio services over the last 10 years. In fact, HD Radio technology has enabled the launch of more than 1,700 new HD2/HD3 radio stations.

Local radio is a fixture in daily American life — consumers love and depend on local radio. According to Nielsen, more than 90 percent of Americans listen to broadcast radio weekly, for more than 13 hours on average. This represents a huge share of relative entertainment consumption. Further studies show a high percentage of listening occurs in the car, which is one of the best places to truly immerse oneself in music and directly engage consumers on the go.

With the size and scale of these numbers, any technology and solutions that provide a better, more content-rich and compelling experience to such a wide audience provide clear opportunity now and in the future.

Importantly, all 36 automotive brands available in the U.S. now offer HD Radio technology in their vehicles across more than 200 different models. In 2014, HD Radio receivers were integrated into approximately 35 percent of all cars sold in the U.S. To date, just over 10 percent of the cars on the road in North America have HD Radio receivers, numbering approximately 25 million vehicles. That figure is increasing every day.

As we move into an ever-more network-connected world, the range of technologies that reach connected devices continues to evolve. Cars are increasingly being connected and thus, it’s strategically important for DTS to broaden our reach in both the radio broadcast and auto markets where we can play a bigger role in the coming age of deeper mobile and auto infotainment integration. Advances in sound technologies and data-driven services are increasingly converging in today’s “digital dash,” and new services and businesses will develop as a result of never before-seen levels of connectivity.

DTS is firmly committed to being at the heart of these next-generation opportunities, and to supporting and building an ever-broader future for the HD Radio technology platform. We look forward to working closely with our industry partners to roll out HD Radio solutions, educate consumers and invest in future enhancements to meet the needs of broadcasters, automotive and mobile manufacturers and consumers, making your radio experience better and more compelling in every way.