Hardware Suppliers Cautiously Upbeat - Radio World

Hardware Suppliers Cautiously Upbeat

Vendors anticipate a good year for gear sales, despite headlines about broadcaster debt burdens
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With two of the U.S. radio industry’s largest broadcasters grappling publicly with debt, conventional wisdom might hold that the coming year would be a tight one when it comes to capital expenditures.

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A row of racks is seen from the rear during an installation by an SCMS customer. Vendors report cautious optimism about the cap-ex outlook for 2018.

But several vendors contacted by Radio World, if not jumping up and down in expectant joy, said this should be a solid year for their business.

“I expect to see a lot of sales growth in 2018,” said Bob Cauthen, president of equipment distributor SCMS.

Another supplier, Eric Hoppe, founder of Progressive Concepts, said this year “should be better than 2017, which was better than 2016.”

Matt Lightner, founder of broadcast/AV equipment supplier Lightner Electronics, said, “I’m not sure what will happen with iHeartMedia and Cumulus Media — both of whom are having financial issues — but I do believe that sales to other radio groups and independent stations are looking up in 2018.”

Several manufacturers echoed those sentiments.

HOT SELLERS

With the Federal Communications Commission opening a fourth and presumably final window this month for AM stations to apply for FM translators, vendors expect sales of gear related to translator installations to be brisk. This is in addition to any business from AMs that already applied during three prior translator windows and are waiting on licensing.

“We are all still waiting for the licenses to be awarded from the first window for Class C and D AM stations” in the summer of 2016, Lightner said. Nevertheless, “we are seeing a lot of AM stations gearing up to add FM translators, which means that we are extremely busy selling FM transmitters to address this demand.”

Cauthen said sales are brisk, too, for antennas and related equipment that will be part of those translator systems.

He said the FCC’s TV spectrum “repack” — which will see 987 U.S. TV broadcasters change channel allocations for a share of $10 billion from wireless carriers — should result in FM equipment sales. As RW has reported, the TV repack process has numerous potential implications for FM operators (see “Hey Radio, Here Comes the TV Repack” at radioworld.com/ebooks).

Hoppe also has seen a big increase in sales related to webcasting. “Our new WebStation from D&R is a popular seller, along with the conventional software controlled studio mixers and consoles made by D&R,” a manufacturer based in the Netherlands.

Another continued big seller in 2018 are likely to be IP codecs used to send broadcast audio via wired or wireless means from studio to antenna site. They continue to grow their role in an STL market segment long dominated by microwave links.

“We have been seeing lots of codec sales to date, and expect them to increase in 2018,” said Hoppe. “Compared to conventional STL, codec-based audio delivery is more secure, more reliable and easier to troubleshoot.”

The codec trend is noticeable beyond STL applications. Manufacturer Tieline has quoted on systems to replace distribution and remote broadcast equipment for a number of networks in 2018. Jacob Daniluck, technical sales specialist for the Americas, said the company is “really positive” about the year, sensing interest in two main areas.

“The first area is syndication/distribution networks. As satellite costs have increased, engineers are looking for new and more cost-effective products to achieve a similar outcome over more affordable broadband infrastructure,” he said. “Transmitting multiple IP streams over affordable broadband with redundant IP streaming is now the benchmark for many networks. It’s reliable and delivers significant cost savings.”

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Working on W264BZ, an FM translator on 100.7 MHz in Tyrone, Pa. — a Lightner Electronics job for WTRN(AM). Activity from the translator segment was cited by several companies as a source of likely growth.

The second area is with remote gear, Daniluck said. “Broadcast networks are interested in codecs that deliver high-quality audio with multiple IP interface options, to cover every connection possibility. Multiple cellular, LAN and Wi-Fi interface options are essential, as is redundant IP streaming and IP bonding capability.”

Because ISDN and even POTS are still used by many networks, options for connecting over these networks are still desirable. “Simple and intuitive user interfaces, with one-touch configuration and connection capabilities, are also highly sought after.”

But IP-based technology continues to grow across the radio enterprise.

“We are seeing lots of IP console sales,” said Matt Lightner. “One reason radio stations like them is because these consoles can be diagnosed and reconfigured remotely, which is a real advantage for radio groups with shared engineers.”

Manufacturer Wheatstone says such infrastructure is changing assumptions throughout radio.

“In a few years, we might see an entirely different way of operating — regional centers, for example,” said Director of Sales Jay Tyler. “All that is going to be leveraged off of IP. And, fortunately, one of the benefits of IP audio compared to the traditional system is you don’t have to do it all at once. We’ve never really run our business on broadcasters’ cap-ex budgets for this reason.”

In the past, Tyler said, broadcasters budgeted hundreds of thousands of dollars for a new project, then did it all over again when things changed. “They don’t necessarily have to do that now; they can add onto their existing IP infrastructure. They are hanging onto their equipment longer and making changes as they occur.”

Thus, he said, while the industry is experiencing a second wave of audio-over-IP project buildouts, “we are also adding more and more functions and devices onto those studios that have been IP networked for some time.” Major-market groups are using virtual tools to add more customized workflows to studios, and smaller and mid-market groups are streamlining stations with IP connectivity and routing, many for their first time.

On the RF front, Bob Cauthen of SCMS hopes that synchronous boosters should be big sellers, helping FM stations fill in coverage gaps. SCMS was recently named U.S. and Latin America sales rep for the MaxxCasting system developed by Geo-Broadcast Solutions and GatesAir. It combines radio and cellular techniques to enable FM stations to enhance their signals by reducing multipath interference between main and booster transmissions by using a cluster of high-power, directionalized and synched booster sites.

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A studio used by Dutch DJ Ferry Maat, with equipment provided by Progressive Concepts.

DEBT

One big shadow over vendors’ business outlook is the debt situation of iHeartMedia and Cumulus Media, which have occupied industry business headlines of late.

“Because of the debt structure of these companies, their cap-ex have been very low compared to previous years,” said Cauthen. “This has certainly bitten into our sales. Fortunately we’re a 41-year-old company with no debt, but we still feel the effect of their lower purchase volumes.”

Harder to gauge is how much money might be owed to the industry’s various equipment suppliers by Cumulus, which is currently under a voluntary, court-supervised Chapter 11 proceeding to restructure its debts.

These trends do have a flip side: “We are getting lots of repair work from iHeartMedia and Cumulus,” said Lightner. “It makes sense: When you’re not buying new equipment, you have to fix what you’ve got to keep it running.”

Another factor to watch is how the recently completed merger of Entercom Communications with CBS Radio will affect equipment buying. Such mergers and acquisitions often are followed by a period of facility integration or conversions as the acquiring company begins to convert studios and RF plants to its preferred hardware brands or switches station business relationships to its favored dealers.

Tyler said the recent consolidations involving Wheatstone customers like iHeartMedia, Entercom, Beasley and CBS “didn’t really take IP audio expansion off the table. It might have even sped it up. And yes, we understand that there’s debt, but stations are still having to deal with leases that end and so forth. We work with broadcasters that don’t necessarily have the budgets for everything they want today, but we try to give them the upward mobility they’ll need to eventually get into their ultimate studio.”

Meanwhile the official end of the main studio ruling may translate into business and new product opportunities. And all of this plays out in a national context of generally soaring stock prices on Wall Street, low inflation and low unemployment.

Overall, the vendors who spoke with Radio World were cautiously optimistic that 2018 will be a good sales year for their market.

“There’s going to be a lot of business coming in, with all the FM translator sales,” said Lightner. “All told, things are looking up for us in 2018.”

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