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Gotcha! Star Wars Just Heating Up

I commented here in January on apparent harmony between NAB and XM over the question of terrestrial repeaters. My optimism was premature.

I got burned by satellite radio last month.

I commented here in January on apparent harmony between NAB and XM over the question of terrestrial repeaters. My optimism was premature. Just after that issue of Radio World rolled off the presses and before it reached you, controversy erupted anew at the CES show on the topic of satellite localism.

It’s hard for me not to blame XM for the egg on my cheek. The joint letter it signed with NAB sure made it sound like the warring parties had solved their “terrestrial/local” issue. But it was a foolish thought on my part. In fact, the war with the Death Star may just be heating up.

And I wasn’t the only one lulled.

NAB President/CEO Eddie Fritts called XM’s plans for regional traffic and weather, announced at CES, “an appalling back-door attempt to bypass the FCC’s intent to limit satellite radio to a national service only.”

Fritts said XM’s plans “violate the spirit” of the recent agreement between the companies for suggested language regarding the terrestrial repeater rules. That language bars XM from using repeaters to insert local programming.

At the CES show, XM told Radio World’s Leslie Stimson that it is not violating the agreement with NAB because it will send its traffic and weather data as part of its satellite signal nationwide. “This will be a national service,” xm president/CEO Hugh Panero said. XM apparently is simply adding these geographically-specific channels and making them available to all subscribers.

But it sure sounds like XM is bringing the battle right to radio’s front door. It plans to introduce the service in 15 cities for no extra cost to subscribers in March. The list of cities is like a map of the IBOC rollout: New York, L.A, Washington, Dallas, Chicago, Houston, Detroit, Philly, Phoenix, San Francisco, Tampa-St. Pete, Orlando, Baltimore, Pittsburgh and St. Louis.

Shortly thereafter comes Boston, Atlanta, Miami-Ft. Lauderdale, Minneapolis-St. Paul, Seattle and San Diego.

So, tell me again what sets local radio apart from satellite?

‘Relentless ambition’

Separately, local broadcaster and Whitney Radio President Bill O’Shaughnessy has been outspoken on this topic. He, too, had reacted positively to the earlier news of the translator agreement (although he didn’t end up with a column that was out of date before it hit the street).

O’Shaughnessy issued a follow-up statement in January taking XM to task for “duplicitous, under-the-radar behavior.” Among his comments:

“I’ve had a lingering feeling that the final nail was not yet driven into the coffin of XM’s relentless ambition, even with last week’s feel-good announcement of the joint filing and agreement regarding restrictions on their patented technology.

“It’s like the Carnival of Venice. XM presents a different face to everyone and every entity with which it deals: one to the regulators at the commission; one to Wall Street; one to local zoning boards – even going so far as representing themselves as a ‘public utility’ and having ‘permanent authority.’

“They haven’t been candid or forthcoming with the commission, with poor NAB, representing all of us, and I suggest the American people. They say they’re a national service with no designs on local programming. But they are edging closer and closer. Now with that announcement out of Las Vegas, they’re at the door. They’ve also tried to navigate very skillfully between the International Bureau and the Mass Media Bureau of the commission, which regulates us,” O’Shaughnessy wrote.

“The whole thing is further complicated by the fact that Clear Channel, the nation’s biggest terrestrial broadcaster, is hedging its bets with a very substantial investment in XM. Pity the poor NAB lobbyist trying to determine, trying to intuit what’s in the best interest of his client. … Clear Channel is working both sides of this perilous street and covering its bets. …

“This Star Wars threat to established AM and FM broadcasters has been driven by the marketing muscle of GM. We know that. But it has also, I suggest, been driven by a pattern of duplicitous, under-the-radar behavior by XM, which built a terrestrial network right under the noses of the FCC. And all the while, refusing to reveal its ultimate goals and real intentions.”

‘Significant benefit’

We asked XM’s vice president for corporate affairs, Chance Patterson, to reply to what O’Shaughnessy wrote. His reply:

“What we are doing and have done is clearly consistent with all regulations. There’s no issue here as far as whether we’re doing something consistent with our license or not. It’s all going through the satellite. It’s a nationwide service.

“Say you’re a Washington Redskins fan. The game will be broadcast nationwide. Clearly the majority of people who would be interested in the game are in the Washington area … but fans in California can listen, too. The situation is similar with XM’s nationwide traffic service.

“The bottom line is our subscribers have indicated that this is a service they desire, so we’ve been fortunate to partner up with Mobility Technologies. They have a state-of-the-art traffic data system that will be a significant benefit to our subscribers. This is not only a strong consumer offering, it’s also going to be a public service in that it should help people avoid traffic jams and avoid accidents. So consumers will benefit from this.

“This is an issue about content. This is content that is useful for people who are on the nation’s roads and our content is what separates us from AM and FM, the lack of commercials, and programming that consumers desire,” Patterson stated.

I’m with NAB on this one. XM was launched as a national service; but now it wants a bigger piece of our action. It will continue to look for ways to take our audiences and revenue.

My prediction: the fight over localism via satellite will get nastier. Those bird boys have sunk a lot of money into this game, and if they turn the corner to profitability, they will be radio’s biggest nemesis for years to come.