Radio Daze at the FCC

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By Marc Fisher
Saturday, June 21, 2008

Why has it taken federal regulators 17 months to decide whether XM and Sirius should be allowed to merge? Because both of these statements are true: Even with a merger of the two pay radio companies, satellite radio is a dead man walking; and with or without a merger, satellite radio is poised to be among the most important content providers in a confusing new media landscape.

Even before getting to basic questions about the fast-changing nature of media, the quandary over whether to marry New York-based Sirius and Washington-based XM was a tough one for the Federal Communications Commission, whose chairman, Kevin Martin, this week announced his support for the merger. In 1997, the FCC gave its blessing to the two satellite radio companies on the condition that they remain separate and competing operations. With AM and FM broadcasters struggling to stay afloat in increasingly rough waters, the prospect of two of their most threatening competitors merging has sparked a battle of lobbying titans.

But all the legal and political wrangling at the FCC and earlier at the Justice Department boils down to one essential question: Do XM and Sirius compete merely in the narrow world of radio programming that is beamed up to a satellite and then sent out to be captured by listeners in their cars and homes, or are the satellite radio providers just one more source of news and entertainment on a new media menu in which broadcasters, bloggers, books, newspapers, magazines and movie studios all scramble for consumers' attention, regardless of means of transmission?

If you see XM and Sirius strictly as satellite radio companies, the idea of the government allowing them to halt their competition and become one more monopoly is hard to stomach. Consumers know just how much to trust the companies' promises that prices will stay low and programming will remain diverse. The main reason that these companies want to get together is that they are losing money separately; only by pooling resources and cutting costs can they hope to make big profits. That inevitably means fewer choices and lower quality for listeners.

But consider this alternative perspective: Although neither government nor industry knew it when the feds licensed XM and Sirius, satellite radio is an interim technology, hardly likely to survive far into the next decade. Once Internet radio is available simply and cheaply in Americans' cars, offering an infinite universe of audio programming, why would consumers want to buy a separate radio, antenna and wiring to pull in XM-Sirius? The enormous infrastructure the two companies have built over the past decade would become obsolete almost overnight.

Except for the programming. The satellite providers, separately or together, would move their wares onto the Web and fight it out with the sounds and stories offered by Clear Channel, Pandora, CBS, NPR, BBC, local radio stations and news organizations around the globe.

What exactly is so special about XM and Sirius that the government should grant them a competitive advantage in that marketplace? Should the government strengthen XM and Sirius for that inevitable battle of the content providers? Or should it tell them that because they were created to provide programming via satellite, the FCC remains obliged to assure continued competition in that technology until the day it dies?

Satellite was made to provide deeper and broader choice. And it has. But throughout its short life, XM and Sirius programming has edged ever closer in style and content to fare found on commercial AM and FM. I went back to the original promises XM and Sirius made and found fabulous lists of programs in many languages, with half a dozen genres of classical music, pop sounds from every corner of the planet, live radio dramas, high-end scientific and academic debate, and all manner of other esoteric and minority fare.

Then reality struck. Millions of Americans proved to be dissatisfied enough with AM and FM radio to pay $13 a month for 150 channels of music, news and talk. But what did they listen to on their new toy? The top pop hits, country, oldies, hip-hop, Howard Stern, baseball, news headlines, and traffic and weather reports.

XM and Sirius have maintained many services for smaller audiences -- channels serving up jazz, techno, Broadway tunes, bluegrass, presidential politics and Canadian news -- but despite having more than 20 million subscribers between them, the companies are in a bind: Their future depends on their ability to compete against other media big boys for Americans' ears. The history of media teaches us that big businesses in that position reach for mass-appeal content.

Is it really in the public interest for the FCC to foster yet another media flight from quality and diversity? The right move -- both to protect consumers and to position the satellite companies for the intense competition in the next phase of the great media shakeout -- is to force XM and Sirius to enter the new world not fat and happy but lean and hungry.

Marc Fisher, a Metro columnist for The Post, is the author of "Something in the Air: Radio, Rock, and the Revolution That Shaped a Generation."


© 2008 The Washington Post Company

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