Essay About Satellite Radio And Howard Sterns Move

Satellite Radio and Howard Stern
Essay Preview: Satellite Radio and Howard Stern
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Satellite Radio: Will Howard Sterns move make us change the way we think
about radio?
Howard Sterns 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
traditional radio.
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.[1]
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.[2] 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.[3] Stern is notorious for receiving indecency
violations. By switching to satellite radio, Stern declared the ability to
“bring my fans my show my way.”[4]
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
paying royalties to performers. In exchange, the FCC has the right to
restrict the content of the radio broadcasts. Despite these content
regulations that seem to be a flagrant violation of the First Amendment
right to free speech, these restrictions are permitted and have steadily
expanded throughout the twentieth century. Alternatively, satellite radio
companies paid almost $200 million for their airwaves and pay more
royalties for music, but there are no content limitations.[5]
Two significant questions are introduced by Sterns move to satellite
radio. Will the FCC attempt to regulate satellite radio as its audience
grows? And if not, will the single advantage of free content be enough to
move satellite radio to the forefront of the radio industry?
Under its current regulatory status, satellite radio will remain free of
content restrictions due to its subscriber-only structure. This regulatory
status can be compared to that of HBO, or even the Playboy Channel, on
cable television. With such a comparison, it seems that satellite radio
has a completely unlimited ability to dictate content and include material
that would be deemed indecent or obscene on traditional radio. As such,
Stern is not the only one making the switch. The popular radio show “Opie