Satellite Radio
Satellite radio may be the biggest thing to hit radio. For more than 100 years, radio had been transmitted by electronic analog waves modulated by voice or frequency variance. At the beginning of the 21st century, digital signals beamed from communications satellites could change American radio from a medium with thousands of local stations into a national radio service with only a few content providers. In the new system, a listener could drive from coast to coast and remain tuned in to the same CD-quality signal all the way. In the US, two corporations and hundreds of investors are betting billions of dollars that Americans will embrace the new digital system of satellite radio.
Two corporations are at the front of the race to bring satellite radio to American consumers: Sirius and XM. Both companies take a similar approach to satellite radio broadcasting. Each is beaming a digital signal from a satellite to antennas the size of a playing card. The antennas, mounted in the consumer's cars or homes by suction cups, feed the signal into digital radio receivers that produce CD-quality audio with at least 100 different format selections. As of early 2003, XM offered 70 music channels and 31 talk channels while Sirius advertised 60 music channels and 40 talk channels. Both companies have signed well-known stars to provide special programming for subscribers. Both companies are also charging monthly fees for their programming. Investors at XM and Sirius are gambling that enough listeners are dissatisfied with the current fare on AM and FM radio stations that they will be willing to pay a small monthly fee to receive programming unavailable on analog terrestrial stations. Executives at both Sirius and XM note that almost 30 percent of all recording sold at music stores come from artists receiving little or no airplay. The reasoning goes like this: There may not be enough fans for alternative country acts such as Lyle Lovett or Steve Earl or for new-age performers such as Yanni to support a local radio station format but there are enough of them scattered across the country to make a nationwide satellite feed economically feasible. Given the sheer costs of both projects, niche programming alone will not offer the kind of return on investment stockholders of either company are looking for. Thus, the need for big-name performers. XM gave a channel to Grammy-winning producer and composer Quincy Jones. Former Yes member Jon Anderson is using the same approach, while Ted Nugent gets his own talk show. If satellite radio succeeds, there will be some impact on local radio stations. First, three critical audience-rating categories could be affected: time spent listening (TSL), average quarter hour listening (AVQ), and cumulative audience numbers, or CUME. If enough listeners tune out local stations to listen to satellite radio, the local stations will report reduced numbers in those categories and will have to lower the rates charged for advertising. |
