Thursday, June 5, 2008

When Will the FCC Get Sirius About Satellite Radio?

As a graduate student in marketing, a fan of satellite radio, and a broadcast professional who started her career in local radio, I've been recently watching what's going on with the FCC's foot dragging over whether or not to approve the merger between Sirius and XM radio. I've found the blog Siriusbuzz is a good place to keep up with the latest developments, which today include FCC Chairman Kevin Martin telling CNBC that a decision is coming "soon." Blogger Tyler Savery makes a great analogy between that lame answer and what your parents told you as a kid when you asked "are we there yet" on a long road trip -- without satellite radio, of course!

There was recently an interesting op-ed piece about the merger issue in the Tennessean, written by Whit Adamson, the president of the Tennessee Association of Broadcasters. It got good back and forth discussion about the pros and cons of the satellite radio merger that helped me crystallize my own opinions. While I'm all for competition because it results in more choices (and usually lower prices) for the consumer, it appears that neither Sirius or XM will survive without a merger, leaving consumers with fewer choices, not more.

Adamson claims he's worried that the merger will give satellite radio an unfair monopoly. I suspect he's really more interested in eliminating competition for the over the air radio stations owned by his members. The radio section of the 2008 State of the News Media report by the Project for Excellence in Media says there's really no reason for him -- or other radio broadcasters for that matter -- to be afraid of satellite radio wiping out their audience any time soon. Some highlights (in case you don't want to read it for yourself):

*While Sirius ended 2007 with 8.3 million subscribers (up 38% from 2006), and XM grew to more than 9 million subs (up 18%), audience growth may be leveling off. Arbitron says awareness of both services was flat compared to 2006.
*93% of car radio users still favor AM/FM stations, compared to MP3 players (19%) and satellite radio (4%).
*233 million people over the age of 12 tuned into the AM/FM dial at least once during an average week in 2007. That's a 1.6% drop since 2000, a relatively small decline compared with other media that also face competition from new technologies, especially newspapers.
*7 out of 10 satellite radio subscribers anticipate maintaining their current levels of traditional radio listening.

Why? Because as great as satellite radio can be for listening to music, talk, and sports, it will not soon replace local radio. Local radio has local news, local traffic and local weather -- and, like it or not, advertisements for local businesses we like to patronize. And it's free!

Plus let's face it: even if the FCC doesn't approve the merger and satellite radio goes away, local radio will still face competition from iPods, MP3s, cellphones, and listening mediums we haven't even thought of yet. So instead of lobbying against the satellite radio merger, maybe Mr. Adamson would be better off spending his time thinking of ways to help make his members' products more relevant to the digital generation.

If you're one of my friends in the news media and you haven't read the 2008 State of the News Media Report, here you (or "yinz" if you live in Pittsburgh!) go. Read it and rejoice -- or weep -- depending on which medium you're in. Better yet, let it get you thinking and talking about what we need to be doing to make sure our media continues to exist in the digital age.


Andy said...

I'm sure it's a tough time for satellite radio which is a discretionary expenditure competing against free radio at a time when the the economy is dragging.

Anne said...

Andy --

True. But as some others have said, when you break it down to a daily cost, many people spend that much on a cup of coffee. It all comes down to what little luxury you would rather do without.