New car sales were up one percent last month, and the auto industry is pacing to sell 16.2 million new cars this year. That’s down from 16.8 million last year. For radio’s effort to get next generation receivers in front of drivers, that matters. Xperi says it now expects a 20% decline in its revenue tied to products sold to the auto market this year, including HD Radio.
The impact, if any, of the second wave of COVID shutdowns has yet to be fully measured. But Xperi CEO Jon Kirchner told investors last week that the worst hit to their connected car radio business may be in the proverbial rearview mirror.
“We are seeing signs that the automotive market is starting to recover,” said Kirchner. “We expect to see a recovery of our HD Radio shipments in line with the market trends. The latest car sales projections released this month predict around a nine percent recovery in 2021.” Revenue for the company’s connected car business was down six percent during the third quarter, he said on a conference call with analysts.
Radio typically wants to drive new buyers into showrooms to help boost local dealer ad spending. But in this case, there is another bonus. Xperi said during the third quarter it had launched HD Radio in 14 new 2020 car models in North America.
Xperi also announced the Mercedes-Benz S-Class will offer the new advanced DTS Connected Radio technology as part of the Daimler MB User Experience under a partnership with Daimler. And Kirchner said he expects Daimler to roll the platform out “more broadly” across their product line. “This is the first of many OEMs that we expect to implement our Connected Radio platform,” he said.
Utilizing an IP connection in a vehicle, Connected Radio combines over-the-air broadcast radio with internet-delivered content. The platform aggregates metadata, such as on-air radio program and talent information, artist and song information, station contact information and more, directly from broadcasters.
On a global basis, Connected Radio is available in 24,000 cities and 48 countries in 14 languages with content sourced from 76,000 radio stations. “By 2025, according to recent market forecasts, we expect the total addressable market for our automotive connected media platform will reach approximately 75 million units worldwide,” said Kirchner.
TiVo Merger Suit Dismissed
It has been nearly a year since the $2.4 billion all-stock tie-up between TiVo and Xperi was announced. The deal closed in June, and the company disclosed in its quarterly report with the Securities and Exchange Commission that a lawsuit tied to the merger has been dismissed.
The class action lawsuit was filed in May by a pension fund that holds Xperi stock, alleging the company and its executives failed to adequately consider an all-cash buyout by Metis Ventures. As Inside Radio reported in February, that would have paid $23 per share, or $1.16 billion for Xperi. The board instead opted to go with the TiVo merger that valued the combined enterprise at $3 billion. Under terms of the merger, Xperi shareholders got about 46.5% of the combined business, and TiVo shareholders held 53.5%.
In the filing, Xperi said that it and the pension fund had both asked the judge to dismiss the complaint. It did not indicate whether their agreement included any payout.