Media Frenzy

By Rob Holbert Managing Editor

In 2005, satellite radio companies XM and Sirius claim to have increased their subscriber base by more than 4.9 million people, and are starting to liken their rise to the success of cable television in the ‘70s and ‘80s. But local “terrestrial” radio stations aren’t feeling hot breath on the backs of their necks yet.

Satellite radio industry leader XM now boasts more than 7 million subscribers and its competitor Sirius finished out 2005 with over 3 million subscribers. Both project exponential growth in the coming years, and XM expects to reach a break-even cash flow by the end of 2006. XM’s director of corporate affairs David Butler, says drawing comparisons between the growth of cable TV and satellite is fair, but that the goal of satellite radio is not to kill off FM and AM stations.

“When cable started to grow, plenty of people thought it would be the end of local television. I don’t see XM satellite radio as a replacement for local radio,” Butler said. “There will always be a place for local radio. XM is a national service. If the local stations find themselves embracing more local programming as a result of XM, then it’s all the better.”

The obvious benefits of satellite radio are the wide variety of stations, including news and weather and the commercial-free nature of many stations. The drawbacks are sometimes poor reception and, of course, a monthly fee. Critics also point to a disconnect with the local community that comes from non-local programming. But Butler contends that is already happening with terrestrial stations as they are increasingly part of media conglomerates that engage in “voice tracking” where the programming is done in a central location and pumped into various markets. He likens what’s happening now to what happened to AM radio in the 1970s.

“By the end of the 1960s, a lot of AM stations got fat and lazy. FM seized the opportunity. They played in stereo and were willing to play things AM wasn’t. In 2001, XM came along. XM is doing to FM what FM did to AM.,” Butler said.

But despite the growth of satellite radio across the country, local radio programmers don’t feel the threat posed by XM and Sirius is any greater than that posed by iPods, CD players and Web-based radio.

“I’m not really worried about satellite radio. What we’re worried about in radio is all the variety of choices,” said Tim Camp, partner and operations manager for WZEW and WNSP.

Camp agrees with Butler’s contention that the local nature of radio is the main thing that will keep satellite and other mediums from eating into radio listenership.

“Absolutely, the more local you can be, the better off you’re going to be. We’re more local than any station in the market, except possibly WABB and WBLX. They’ve got good people over there. But we’re not the corporate, voice-tracking stations produced in other markets. What we have to do to survive is do better jobs of that (offering local content). The better job we do of that, the better chance we have of surviving as a medium.”

Jammer, program director for WABB, said he believes Top 40 stations like his are more unlikely to be dented by satellite because the people who want satellite are looking for much more diversity in their music. He also echoed the sentiment that it is the “localness” of a station that can protect it from the encroachment of satellite.

“Top 40 is going to be the least affected, especially if it is a station that services people in the way it should,” he said.

XM’s Butler says the company has included some local stations offering unique programming in its lineup, making them available to a nationwide audience. Bandwidth constraints may keep XM from licensing a local station in each market, but he’s not ruling that out.

Camp says one of the things that will also help local stations stave off satellite listener drain is the advent of digital radio, which will allow local stations to broadcast several channels on their frequency to users with the right receiver technology. For example, WZEW could offer its usual fare on its main frequency and an all blues station on a second channel. The term for this is multicasting, and Camp said it is coming, albeit slowly, as the FCC continues to drag its feet in determining specifications for receivers.

“They set the standard for the broadcasting of it, but no standard for the reception of it. This caused the manufacturers to slow down on developing products,” he said.

Camp said everyone is kind of in a wait-and-see mode, because multicasting is not something done “with the flip of a switch.”

“There’s probably a $350,000 investment to do it,” Camp said. “It won’t take off until the FCC says ‘Here are the standards.’”

Both XM and Sirius project growth of subscribers in the millions for the next few years at least, and potentially a market penetration similar to that of cable television – 85 percent or more. But the bottom line for the local stations is to stay local.

“XM and Sirius don’t worry me as much as somebody’s CD player in their car does. At least that satellite user is used to listening to the radio and will come back for the local information,” he said.

Lagniappe on Comcast

In a bit of shameless self-promotion, I must let readers know a fascinating piece on Lagniappe will be running on Comcast’s Port City 6 channel in August. The producers of “In Mobile” chose to feature your favorite independent newspaper this month, giving everyone a look at the oh-so-fascinating behind-the-scenes activities that are part of running the Port City’s most vibrant publication. (OK, even I’m getting sick to my stomach here.)

Anyway, it rolls at 7:30 p.m. Tuesdays and 8 p.m. Thursdays on the aforementioned Port City 6. Set your TIVOs!

Rob Holbert is Lagniappe managing editor. Contact him at rholbert@lagniappemobile.com.

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