Satellite Radio: Will Howard Stern's move make us change the way we think
Howard Stern's plan to move to satellite radio in January 2006 marks a
major turning point for the radio industry. Not only has Stern brought the
possibility of subscribing to satellite radio into the minds of the
millions in his audience, he has also gotten more people to start thinking
and talking about what really distinguishes satellite radio from
Satellite radio was first authorized by the Federal Communication
Commission (FCC) in 1997, seven years after initial applications. The
delay in approval was in part the result of protests by the National
Association of Broadcasters which charged that the service threatened
"traditional American values of community cohesion and local identity."
Ironically, as these charges were being made, traditional radio was
becoming nationalized through use of more national programming and industry
consolidation under Clear Channel Communications and Infinity Broadcasting.
The FCC dealt with these issues by restricting satellite radio to only
national programming. Essentially this rule minimizes competition with
traditional radio stations that only reach local markets and get the
majority of their revenue from local advertisers. Despite there currently
being very few small, independent, local broadcasters to protect, this
remains the most significant regulation on satellite radio.
Today there are two main players in the satellite radio business: Sirius
and XM. Though Sirius signed Stern, XM is currently the leader in terms of
subscribers. Both companies have neared bankruptcy at various points in
their short history, and both have yet to make a profit. By signing Stern
for $500 million over five years, Sirius must gain at least one million
subscribers to pay this commitment. Clearly satellite radio has a long
way to go, but with steady growth and high-profile contracts (not only with
radio personalities, but with car companies who now install satellite radio
equipment in all new cars), the future remains wide open.
Satellite radio is subscription-based, commercial-free, and largely
unregulated. This last point appears to be the main draw for Stern. Since
the infamous Super Bowl incident this year, there have been calls for
significantly expanding FCC indecency regulations on public broadcasts.
Currently there is talk in Congress about increasing penalties for
indecency from $27,500 to $500,000 per violation and holding performers
personally liable. Stern is notorious for receiving indecency
violations. By switching to satellite radio, Stern declared the ability to
"bring my fans my show my way."
Traditional radio retains several advantages that are unavailable to
satellite radio. Traditional radio was granted free use of the airwaves in
1927 by the federal government and has the right to play music without