Skip to Content View Previous Reports

Guest Essay

Guest Essay

Satellite Radio: HBO for Your Ears

By Al Stavitsky, Ph.D.

Satellite radio in the United States has become the aural equivalent of HBO. While HBO audiences are still a fraction of those for broadcast TV networks, the pay channel has become the gold standard for television quality. Similarly, not quite three million Americans subscribed to satellite radio in the fall of 2004, compared to about 200 million weekly listeners to traditional (terrestrial) radio. But XM and Sirius, the two U.S. satellite radio providers, each doubled their subscriber bases from the year before while receiving favorable buzz from critics and consumers.

Both XM, based in Washington, and Sirius, based in New York, offer more than 120 channels of music and talk programming, most of them commercial-free, for about $12 a month. (Subscribers also need to purchase special receivers for their cars or homes ore both. Many auto manufacturers, which have invested in satellite radio, offer it as an option for purchase with new cars.) XM and Sirius transmit programs from their studios to satellites in orbit about 22,000 miles above the earth. The satellites broadcast the signals to subscribers’ car and home receivers, which have palm-sized antennas and special computer “chipsets” to unscramble the transmissions. The satellite providers also built transmitters on the ground in major urban areas where tall buildings may block the signals from space. The idea is to provide seamless national coverage; you can listen to, say, Sirius’s Left of Center independent-music channel all the way from Boston to Seattle.

The rise of satellite radio reflects popular dissatisfaction with traditional (terrestrial) radio. That kind remains ubiquitous, but ratings data show that listeners are spending less time with it. There are several reasons: annoyance with blaring commercials that consume up to 20 minutes each hour; homogeneous programming with the same songs playing over and over (“tight playlists,” in radio parlance); and alternative sources for music, such as the Internet and personal digital-music players. The local KISS-FM or Z100 holds little appeal for a college student with an entire music collection on an iPod.

In addition, traditional radio – the most local of all electronic media, considering that television stations generally produce little programming in-house beyond the occasional newscast, and cable is overwhelmingly a national service – has lost its moorings. The local DJ celebrated in film and song often isn’t local any more; he is “talent” working for a syndicator, coming in via broadband from either of the coasts. Or she prerecorded her airshift hours before the show, a phenomenon known as “voicetracking.” As radio ownership has become concentrated in the hands of large corporations such as Clear Channel, management control has often shifted from the community of license to company headquarters across the country. A New York Times critic referred to contemporary programming as “radio from nowhere, produced by nobody.”

While satellite radio is the antithesis of the local station, XM and Sirius have sought to position themselves as the redeemers of radio by building communities of a different sort, communities built on shared values and tastes.

Like rock music? Instead of the Top 40 and Classic Rock approaches that dominate traditional radio, satellite radio listeners can choose from a gaggle of rock-oriented channels on either service. Sirius, for instance, offers 17 channels including garage rock, hip-hop, jam-band rock, even an outlet for ’80s “hair bands.” XM’s 14 rock channels include a “café” for singer/songwriters, an “Unsigned” channel that features “unknown artists,” and a home for punk.

Ditto talk radio. Instead of Limbaugh-flavored commercial talk radio, satellite talk is left-wing, right-wing and wing-less. Al Franken’s “Air America” liberal channel is on the bird, as is the National Rifle Association. There are channels for women, gays and lesbians, and Christians, and shows for cigar aficionados and people searching for intelligent life elsewhere in the universe.

And XM offers not just one but two NASCAR channels.

Satellite radio has provided a haven for disaffected broadcasters. In a high-profile move last summer, XM signed the longtime National Public Radio journalist Bob Edwards to host a new morning show after NPR unceremoniously dropped him from his anchor slot on Morning Edition.

With the FCC cracking down on broadcast indecency, radio’s so-called “shock jocks” are looking skyward, too. Satellite radio, like cable TV, is not subject to FCC content regulation because it is less accessible to children than traditional broadcasting. XM recently signed the controversial talk team of Opie and Anthony for a morning show. The duo had been out of radio for two years after they were fired by New York’s WNEW for an infamous program that featured a couple describing a live sex act in St. Patrick’s Cathedral.

Similarly, the dean of shock radio, Howard Stern, whose program was dumped by Clear Channel in the post-Janet Jackson furor over indecency, has set up shop on satellite. (Congress is considering legislation that would extend indecency regulation to cable, and it’s conceivable that such a move could lead to regulation of satellite radio in the future.)

The satellite services are seeking to exploit their digital advantage as well. XM now offers a receiver capable of storing up to 30 minutes of any broadcast for later replay. Think of it as the first step toward an audio version of digital video recorders such as TiVo. Both firms offer receiver models that allow listeners to store the names of favorite artists and titles. No problem if you’re listening to another channel; your radio will beep to tell you your favorite song is playing, or switch you directly to the channel. Same thing if your favorite sports team is playing and the game is broadcast on Sirius’s NFL Radio channels. Other receivers can display continuously updated stock quotes.

By comparison, terrestrial radio has been slow to embrace digital transmission. Relatively few stations are broadcasting in digital mode and digital radio has received little of the attention paid to digital TV. Accordingly, don’t expect sales of receivers for digital terrestrial radio to take off in the near term.

Obviously, old radio is not taking the threat of new radio lightly. Clear Channel, the nation’s largest radio chain, announced that its stations would cut way back on the number of commercials they air. The move is intended to appease both listeners tired of frequent interruptions and advertisers worried that their messages are getting lost in the clutter. In addition, the National Association of Broadcasters is lobbying furiously to try to block the satellite services from offering localized traffic and weather channels in major cities.

Public radio stations find themselves in an awkward situation. While their listeners are often fiercely loyal to their local stations, many are also the kind of people who would – and could – pay for diverse radio programming. (XM was acutely aware of that when it signed Bob Edwards.) National Public Radio and Public Radio International, the leading U.S. producers of noncommercial audio programming, have agreements to provide content to the satellite services. But NPR’s member stations would not permit the network to make available its flagship programs, Morning Edition and All Things Considered. Some station managers fear that listeners may decide to shift their annual public-radio contributions to satellite-radio subscriptions, just as PBS affiliate managers worry about losing paying supporters to HBO.

All this is not to imply that satellite radio will kill off terrestrial radio. Old radio has been counted out before, and has proven remarkably resilient and adaptive. And for all the buzz, XM and Sirius are in precarious financial condition, with enormous capital and operating costs, formidable, well-established competitors, and the challenge of reaching consumers who have other alternatives for music.

But this is a story that bears watching on many levels. The rise of satellite radio – engineered through digital savvy and keen awareness of consumer behavior – reflects how the game has changed. Guardians of traditional media, take note.

Al Stavitsky, Ph.D., is a Professor of Communications and Associate Dean at the School of Journalism and Communication at the University of Oregon. In the past, he has worked as a radio talk show host and sportscaster.