Radio Wave of the Future: Satellite Programming is a New Way to Listen, With No Commercials, Tons of Options _ and a Price Tag

WALNUT CREEK, Calif. _ The day Howard Stern announced he was moving to Sirius satellite radio, George White got on the horn and bought 300 shares of Sirius stock.

“I did it for two things,” says White, a graphic designer from Oakland, Calif. “I am a fan of Howard’s, though not a die-hard. But knowing he was going over to Sirius was going to open up a whole new realm for him. The stock for XM Radio (the other satellite radio carrier) was so high at the time. I thought Sirius could easily get up that big.

“He has a 12 million person fan base. Even if half of them go over (to Sirius), the stock is going to go sky high.”

In case you haven’t noticed, radio isn’t radio anymore.

Now there are satellites and subscriptions, podcasting and the Internet. Don’t forget high definition, if you want your regular old radio _ now referred to as “terrestrial” radio _ to sound like a CD.

Oh … and starting in 2006, you can also use your cell phone as a radio. That’s probably another story in itself.

There’s an explosion of interest in radio right now, with Stern about to pull hundreds of thousands into orbit with him on Jan. 9, when he makes the move to satellite.

Of course, it would be a great exaggeration to say that the landscape of radio is in the hands of a guy who once held a Miss Amputee pageant. But Stern is much more than just a shock jock; he’s a savvy businessman who has a lot to lose on what some believe is an unknown product _ pay-to-listen radio. But there’s no stopping change, and by abandoning terrestrial radio for satellite, Stern is accelerating that change.

“It’s a big deal, but it’s not everything,” says Patrick Reilly, a spokesman for Sirius. “He has probably brought a great deal of new subscribers. We have other things, too _ the NFL, Martha Stewart, the NBA, a Bruce Springsteen channel, a Rolling Stones channel, an Elvis channel. There’s 120 channels.”

According to Bridge Ratings, radio’s only weekly and monthly ratings monitor, Sirius will gain more than 1.3 million subscribers between October and the end of January. Though lower than initial estimates, that’s almost twice the subscribers as Sirius had a year ago. XM Radio, which will top the satellite market with 6 million listeners by year’s end, gained a million since September, even without signing someone as high-profile as Stern.

Still, Bob Dylan just signed up to do a weekly show for XM, which also boasts, among others, NASCAR, baseball, a wide range of music channels and Snoop Dogg as the executive producer of its classic hip-hop channel and host of his own show.

With combined subscriptions approaching 10 million, XM and Sirius are still dwarfed by terrestrial radio’s 245 million listeners. But the genres are seemingly going in opposite directions. Terrestrial radio has suffered a 13 percent decline in listening time over the past decade, according to Jessica Benbow from radio tracking service Arbitron. So while as many people are using terrestrial radio as 10 years ago, they’re more apt to change to something else.

XM and Sirius are counting on it. Yet experts say there’s reluctance among terrestrial listeners.

Specialized programming, sound quality and few or no commercials will cure them, responds Michael Saffran, an associate director of the Rochester Institute of Technology.

“Many fans of Howard Stern will follow him to satellite radio, but a considerable number of others will be reluctant to pay for radio,” Saffran says. “Long-term, satellite radio can be expected to diminish the audience for local, terrestrial radio. Satellite radio will continue to steadily attract new listeners, just as cable gradually pulled viewers from the major television networks.”

It wasn’t just technology that ushered in the shift. Once Congress passed the Telecommunications Act in 1996, it was suddenly much easier for corporations to buy competing stations in the same market. Which is why media giant Clear Channel Communications, for example, now owns nearly 1,200 stations (the company has invested in satellite as well).

A bigger corporate presence meant more emphasis on profit. Stations took fewer chances. Known personalities such as Stern and Jim Rome were syndicated to more markets and received bigger paychecks, necessitating more commercials and further irritating listeners. More image-conscious corporations, and increased pressure from the FCC on what could be broadcast, also turned off some listeners.

“The FCC really cracked down on Howard,” said Peter Van Slyke, a Stern fan from Vallejo who’s making the switch to satellite. “If Howard was just moving over for the money, I might not follow. But he’s doing it for the right reasons, and I want to make a statement. It’s a crying shame that I have to pay for radio I want to hear.”

Stern’s $500 million defection over five years shows how far satellite has come since launching in 2001. It also shows what kind of shape radio is in, which may only get worse for some stations now that Stern _ and a good portion of his 12 million listeners _ are moving on.

“A week before he announced he was coming, we had 660,000 subscribers,” Reilly says. “A year later, we had 2.2 million. We’ll end the year with 3 million paid subscribers. People thought they’d never pay for water,” he says. “We have a 95 percent satisfaction rate, and only a 2 percent drop rate.”

But don’t shovel dirt on earthbound radio just yet.

More stations are offering HD radio, which requires a separate receiver, broadcasts CD-quality and allows the listener to identify songs, as well as record and store music. San Francisco’s KYOU, owned by Infinity (which lost Stern from its KITS-FM in San Francisco), shifted formats earlier this year, playing almost all podcasts from independent podcasters. (A podcast is a show recorded on, and downloaded from, a computer.)

Other stations are combating satellite by going more local, including the aforementioned KITS (Live 105), which will replace Stern with a local morning “co-op” approach. While the ratings may not be as high, the overhead of paying for Stern decreases as well.

“With Howard Stern, it costs a lot,” says Sean Demery, Live 105 program director. “Now we can cut commercials in half and have more content. Plus, we’re going to play music. With Howard, you might have two 10-minute blocks of commercials an hour, meaning that one-third of the show is commercials.”

Of course, Stern’s new show won’t have commercials; listeners are paying for it, not advertisers. Instead, you have to buy the receiver (anywhere from $49 to $299), and subscribe for about $12 a month, the going rate for both Sirius and XM Radio.

“It’s been about 30 years since cable television really started its explosive growth, due primarily to … satellites and programmers with new visions about what the marketplace wanted,” says Dr. Richard Goedkoop, a communications professor at Philadelphia’s La Salle University. “But broadcast television still gets about half of the video audience because it provides local information and some programs that are not viable economically on a subscription basis.

“It will take time, however, to determine whether Howard Stern will become the functional equivalent of what Ted Turner (CNN, TBS) and HBO were in 1975,” says Goedkoop.

“My guess is that local radio will still be around in 2035, but as has been said before, ‘Old media never die, they just change functions.’”

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OLD RADIO, NEW RADIO

Here are some key differences between satellite and regular, so-called “terrestrial” radio:

_You pay for satellite, not terrestrial.

_No commercials on satellite so far.

_Whole channels of specific programming on satellite, with lots of easy-to-access options.

_Satellite reaches, pretty much, everywhere in the United States, which means more people have access.

_The reception with digital satellite radio is clearer than on terrestrial radio.

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BEAM ME UP

So you want to try satellite radio. You will need:

_The satellite receiver: These pretty much look like radios, and range from Walkman-size and car-stereo-size to units that fit into a boombox package. You can buy direct from the Web sites (XM is www.xmradio.com; Sirius is www.sirius.com), or through most electronics stores. Or you can link to various retailers through the Web sites themselves.

The receiver runs between $39 to $299, depending on what you want. If you’re installing one in your car, you can either try yourself (Sirius offers a guide on its Web site) or have it installed by a retailer, just like a regular car stereo.

One important thing to note is that you don’t have to necessarily choose between satellite and terrestrial. Satellite receivers can be added to your current stereo.

_The service: Satellite radio costs around $12 per month, plus a $10 to $15 activation fee, although there are various service packages that differ in length and price. The companies offer combination packages for both receiver and service. And, like every other gadget on the market, they also have rebate packages, provided you respond in time.

Once you get your radio, you can activate it by calling the provider, or going to the Web sites. Both XM and Sirius have comprehensive, easy-to-manage sites that take you through the process and show you all your options, including accessories.

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Tony Hicks: thicks@cctimes.com

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(c) 2005, Contra Costa Times (Walnut Creek, Calif.).

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