A Challenge from the Sky
Local stations feel the heat from satellite radio
by Deborah Potter

It's not news that radio provides less local news and information than it used to. Consolidation of ownership, program syndication and outsourcing of traffic and weather have turned many local commercial stations into mere transmission belts for content from somewhere else. What's new is that listeners now have a choice for at least some of that information, and some radio station owners are beginning to sweat.

Satellite radio providers XM and Sirius are known primarily as sources of commercial-free music for listeners willing to buy a special receiver and pay a subscription fee of $10 to $13 a month. Both providers also offer multiple channels of news, including CNN, Fox, Bloomberg and CNBC. And this year, they both added nonstop traffic and weather channels covering some 20 major U.S. cities.

Those are the channels that have the National Association of Broadcasters crying foul. The NAB, which represents commercial station owners, says the satellite companies are violating their agreement with the FCC not to offer localized programming to compete with "terrestrial" stations. The satellite companies say they're in compliance with that agreement, because all of their local traffic updates and weather reports are available nationwide. This begs the question as to why anyone stuck on a freeway in San Diego would really care to hear about the backup on the Washington Beltway. And it ignores the irony of local stations' fussing about who provides local content while offering less and less of it themselves.

What's really going on here? Are the satellite providers trying to usurp the role of local radio stations and drive them out of business? Not at all, says Chance Patterson, XM's vice president of corporate affairs. But he does see an opportunity to gain listeners, whom he calls underserved by local commercial radio. "Station owners believe that news doesn't drive advertising, so news will continue to disappear off local radio, and that's a benefit to us," Patterson says. "We think news is huge, and we're going to super-serve our audience with news."

To that end, XM is launching a morning news program hosted by none other than Bob Edwards, dumped earlier this year by National Public Radio's "Morning Edition." "The Bob Edwards Show" will air on a public radio channel that also features news and programs from Public Radio International, among others. Sirius has its own public radio channel carrying NPR programs.

So what's a local broadcaster to do? For WBUR, a public radio station in Boston, the answer was: Get on board. This fall, WBUR began providing 20 hours a week of news and information programming to XM, much of it live. "We think satellite radio is the future, and we're ahead of the curve," says WBUR spokeswoman Mary Stohn. For a station that already streams all of its programming on the Internet, satellite seemed like the logical next step.

Other radio station executives say the best way to beat the satellite threat is by staying local. In Baltimore, one of the markets where both XM and Sirius offer a weather-and-traffic channel, WBAL Radio News Director Mark Miller believes his station still has an edge, with its in-house traffic reporter, who can answer listeners' calls. "We provide personality and rapport you don't get from a satellite," he says. But Miller says that broadcasters who outsourced traffic and weather to providers serving multiple stations in the same market may be vulnerable. "News directors got bodies off the payroll and gave up hands-on control of the product," says Miller. "We have to fight to get control again. There's no advantage to having the same information as everyone else."

At this point, local broadcasters are still Goliath to satellite's David. Some 175 million listeners tune in to local radio every day. XM and Sirius combined claim fewer than 3 million listeners. But Sabrina Benton, director of research for Edison Media Research, says satellite radio is growing faster than expected and its listeners are loyal. "People who have it, love it," she says.

Even so, Benton doesn't think satellite will ever supplant local radio. "The weather and traffic they provide isn't specific enough for my needs," says Benton, an XM subscriber who lives and works in central New Jersey but doesn't bother with XM's New York City traffic-and-weather channel. "I listen to the trusty old radio as I drive to work for New Jersey news, sports, weather and traffic," Benton says. And even if satellite radio's subscription base skyrockets, Edison researchers say it's likely to top out at just 20 percent of the U.S. population.

Nevertheless, satellite competition already is changing the sound of local radio. Clear Channel, the largest owner of radio stations in the country, has just cut the number of promotional spots its stations can run in an hour. And as of next January, a new company policy will limit the number and length of advertising breaks. If that's what commercial-free music on satellite radio can do, bring on the news and information. Listeners, at least, have nothing to lose.

This article was originally published by American Journalism Review, October/November 2004.