Can a Satellite Merger Change Anything?

Satellite radio, the “savior” of the radio industry, is in for its biggest change yet.

XM and Sirius, the nation’s only two providers, are set to merge for a whopping $4.8 billion. As the press, the politicians, and the interest groups debate the legality and wisdom of the merger, a larger question goes unasked: is satellite radio really the future of the radio industry?

In its history, XM radio has never made a profit. Sirius has been beset with similar financial woes. Other than a few

confused luxury car owners, consumers have basically ignored the industry. Yet despite falling stocks, investors continue to have hope in the industry, refusing to acknowledge all signs to the contrary.

While Wall Street may not have realized it, it’s perfectly obvious why satellite radio is not making money: no one wants to pay for radio, especially radio with generic programming.

Since the FCC only regulates the content on “free-to-air” radio, listeners have the illusion that satellite radio, with Howard Stern as its icon, is more edgy than local radio. But other than the notoriously vulgar Stern, the bulk of satellite radio’s content is as bland and commercialized as the music in the Gap.

Satellite service is embraced as the future of radio because it is new technology, and new technology seems like the only way to save old-fashioned broadcast radio. But in placing itself in direct competition with broadcast radio, satellite radio only offers to reinvent the wheel, and does so poorly.

In many cases, it offers the same programming that listeners can get on regular radio stations, most notably on the nine stations owned by ClearChannel.

What new technology should add to radio is not just a commercial-free listening experience, but a way to give listeners more innovative programming options.

Ideas such as HD radio, which offers multiple programs on one channel and works on the same frequencies allocated to FM and AM stations, give local stations the ability to experiment with programming without risking bankruptcy or a significant drop in listeners. This versatility offers listeners an opportunity to decide whether or not the new programming is worth listening to.

If the programming is successful, radio stations will have data to go to advertisers with so they can continue to stay in business.

While HD radio remains costly at this point—listeners must pony up for new equipment to hear the other channels—web-only content offers many of the same benefits at almost no cost and allows listeners to tune in when they’re not near a radio. HD and streaming technologies both expand radio’s capabilities instead of creating competition through premium content services, as satellite does.

The debate over satellite radio shouldn’t overshadow the larger issues confronting the radio industry, namely figuring out ways to incorporate new technology with new programming strategies. Local programming, local personalities, local bands—radio is a medium that needs to be devoted to the communities in which they exist, not to Howard Stern’s deranged antics.

Historically, radio has been successful because of its ability to attract listeners and keep them tuning in for special broadcasts and new music.

Satellite radio has adopted the format of everything that is wrong with commercial radio today—generic classic rock and pre-planned programming sap any sort of individual character from the different satellite stations.

The radio industry needs to be focused on technologies that can bring radio back to what it does best in terms of live music and new ideas. Leave talk about satellite to the lawyers and the dealmakers; even after 100 years, traditional radio is still the future of broadcasting.

—Staff writer Kimberly E. Gittleson and contributing writer Evan L. Hanlon are the president and rock director of WHRB, respectively. Gittleson can be reached at gittles@fas.harvard.edu.