This past week, Radio/TV state broadcast associations were in our nation’s capital meeting with their elected representatives in both the House and Senate about issues that are important to them. It’s the annual National Association of Broadcasters (NAB) State Leadership Conference.
More than 500 radio broadcasters from across America assembled to hear Senator Ted Cruz (R-TX) speak on his support of the “AM Radio for Every Vehicle Act,” and advocating for a level playing field in the advertising market.
Cruz is the new Chairman of the Senate Commerce Committee and he pledged a proactive approach to support broadcasters, create jobs and uphold free speech.
Free Speech
Brendan Carr is the new Chairman of the Federal Communications Commission (FCC) and in only a couple of weeks, since taking this leadership position, his actions have caught the attention of some members of Congress, who were alarmed by recent moves impacting broadcasters.
Representative Jerold Nadler (D-NY) expressed his concern over the Carr’s FCC assault on a media organization’s free speech.
“Exploiting his asserted ‘unitary executive’ powers, [President] Trump is unleashing his sycophant FCC Chairman, Brendan Carr, on every newsgroup whose news stories he does not approve of — actually threatening to pull the broadcast licenses for ABC, CBS, NBC, PBS, and NPR,” said Rep. Jamie Raskin (D-MD). “Is this North Korea?”
The President of Free Press Action, Craig Aaron, in testimony said that threats and opening investigations into broadcast outlets by the FCC is out of the norm.
“The FCC usually talks about licenses on very narrow terms, such as if an owner has committed a major crime,” Aaron said. “The idea that a news organization would be threatened because they asked a tough question of the President, or because they tried to fact check him during a debate, or because they edited their own news content before putting it out over the airwaves is preposterous, and it’s dangerous.”
DEI
Diversity, Equity and Inclusion (DEI) has been terminated by Carr at the FCC and he’s been signaling that the agency might go after FCC licensees over their own DEI programs.
Are DEI programs good for business? Apple’s shareholders think so, so do Costco shareholders, and Hyundai’s marketing executive, Erik Thomas, credits its DEI programs with driving the automobile manufacturer’s bottom line.
SiriusXM
Nine years ago I wrote an article with a title that sounded like click bait titled “SiriusXM Radio is Now Free,” which speculated when the FCC licensed satellite broadcaster would start offering ad-supported channels for free.
Four years later, I wrote that “Could 2021 Be the Year SiriusXM Adds FREE Channels?” speculating that new SiriusXM CEO, Jennifer Witz, would be pursuing revenue growth by leveraging the 132 million cars the service was available in. SiriusXM, like commercial radio over-the-air (OTA) broadcasters, knows that the competition for listener ears is in the car. The advantage the satellite broadcaster has over AM/FM radio operators is they know exactly what their listeners are listening to, and don’t have to rely on audience estimates that may or may not be accurate in today’s media saturated world.
Last year, what I have been predicting since 2016, became a reality, as I wrote in: “Ad-Supported SiriusXM Requires No Paid Subscription.”
Monopoly
One of the radio industry’s most respected researchers, Dr. Ed Cohen, wrote “The direct-to-consumer satellite radio business is a monopoly,” shortly after my 3rd article on this subject was published. Originally, the FCC offered only two satellite broadcast licenses, one went to a company called “Sirius” and the other to a company called “XM,” with the idea being they would be competitors and that the consumer would benefit by not having a single company – a monopoly – control satellite radio and what it could charge.
The two companies were supposed to never be able to merge, but in August of 2008, by a 3 to 2 vote of the FCC, that changed. Dr. Cohen does a really good deep dive into explaining how this all came about in his article “SiriusXM and the FCC: Is the Camel’s Nose Under the Tent?” Which is an allusion to a story that takes place in Arabia, with this metaphorical moral:
If the camel once gets his nose in the tent, his body will soon follow.
What the FCC never took into consideration was, how much damage might occur to local AM/FM radio stations, if and when, the new combined SiriusXM ever decided to provide an ad-supported free radio service.
Dr. Cohen believes that while this new free service from SiriusXM is limited in scope, like the proverbial camel, it won’t be long before the whole service becomes real competition for audio listeners and advertisers.
People Love Free
AM Radio vs SiriusXM
Dr. Cohen makes an excellent case for commercial radio broadcasters to be demanding, the FCC revisit the SiriusXM merger decision in light of this change by the satellite broadcaster.
By the way, public broadcasters also have a horse in this race, as NPR Now is part of the new free SiriusXM service.
“While the NAB is busy with getting Congress to force OEMs (Original Equipment Manufacturers) to include AM in every vehicle, the battle with SiriusXM’s ad-supported venture is probably more important to the industry in the long run,” says Dr. Cohen.
It’s The Economy Stupid
But the most important issue facing the commercial radio industry are the financial fears that have been generated by the Trump tariffs and fire hose of government regulatory changes that seem to come at us on an hourly basis. I wrote about this concern in February with an article titled “The Cost of Uncertainty to Radio.”
Now BIA Advisory Services this week updated its local advertising revenue forecast for 2025. Cameron Coats, in Radio Ink, reports that “over-the-air revenue [for radio] takes the largest hit, falling by 6%.” Digital radio, says Coats, shows a slight increase of 0.1%.
SiriusXM has enjoyed growth through the sale of new cars, but with the high tariffs Trump has announced, it wouldn’t be a surprise if people hang onto their current vehicles a little longer, which also means that AM radio will still be accessible. Without an economic downturn, the average life of a car in America is 12-years, up from 8.4-years in 1995. Progressive Insurance says that a well-maintained car will reach 300,000 or more miles, and those cars have both AM/FM radios as well as SiriusXM.
The radio industry’s most pressing issue is who wins in the car, and in that arena AM radio – a hundred year old medium is not our industry’s best play –
stopping satellite radio’s FREE ad-supported service is.
When the pie isn’t growing,
the game becomes who can cut the biggest slice.
Radio, like all traditional media, is in the economic fight of its life.
DickTaylorBlog 